Investment Strategy
Selective. Downside-Protected. Opportunistic.
-
Selective Acquisitions
We have built a strong track record on selectivity, choosing to forgo opportunities that are merely adequate, believing that patience always outperforms velocity. We adhere to strict criteria in our underwriting and due diligence to ensure the best results for our partners.
-
Downside Protection
Real estate investments bear inherent risk. We believe that buying assets at the right price, not the market’s price, is the surest way to safeguard any investment. We are meticulous with asset management and debt placement to mitigate any downside risk for our partners.
-
Opportunistic Investments
Our investments are meant to substantially increase the wealth of our partners, understanding that they could invest in numerous other options. We believe we can do better than the alternatives. We have consistently delivered outsized returns for the level of risk assumed by our partners.
While our investment mandate is broadly opportunistic and flexible, our investment strategy focuses on two resilient asset classes: small bay industrial and suburban retail.
Industrial
Thesis
Limited supply of small warehousing & light manufacturing, coupled with increasing demand for small business space or last-mile distribution, will create significant rental upside and exit value for small bay (sub 100,000 SF) industrial assets, particularly multi-tenant buildings.
Strategy
Acquire. Systematize. Bundle.
Historically, developers have underbuilt small bay assets, favoring the allure of deals from tenants seeking big box warehousing. This has left a significant dearth of small bay industrial assets built by professional developers. As such, many of these assets still are owned by local business owners who built these buildings decades ago for their primary business. With the retirement of the baby boomers, there is a niche opportunity to acquire small bay industrial assets far below their replacement cost and at attractive capitalization rates. Direct-to-owner outreach and off-market deal flow can obtain better pricing on these assets.
In addition, the lack of professional management of these assets has opened an opportunity for implementing triple-net leases (NNN) to maximize net operating income and enhancing exit value and takeover convenience. While these buildings are too small for institutional investors to acquire one-by-one, institutions have recently shown strong interest in acquiring portfolios of these properties.
Our approach will be to create a portfolio of these assets acquired at attractive capitalization rates, reposition them via modest capex improvements and professional management, and sell either individually or in a portfolio deal to an institution. We believe this window of opportunity is relatively short.
Retail
Thesis
Increased demand for essential goods from demographic shifts to the suburbs, coupled with high construction costs, will drive rent growth for existing suburban retail assets and allow for even greater upside by leasing to national credit tenants and selling at lower capitalization rates.
Strategy
Acquire. Improve Tenancy. Sell.
The work-from-home shift has created clamoring demand for suburban retail, with convenient locations, ample parking, and family-friendly environments. Suburban retail has been more resilient to competition from online retail than its metropolitan counterpart, due to steady demand for essential goods. Many of these assets are in emerging locations with local tenants on relatively short leases. Acquiring these assets at modest capitalization rates in growing locations will allow for gradual lease turnover to national tenants at higher triple-net (NNN) rents.
Our approach will be to buy these assets on a one-off basis, favoring locations with strong suburban growth with positive cash flow from day one. After acquisition, we will improve the tenancy of the building, continue to cash flow, and wait for an optimal exit point. Our advantage comes from our access to both off-market deal flow and relationships with national tenants via our extensive network of brokers and years in the industry.