Offer the potential for substantial short-term profit or extended above-market returns. The approach utilized is based upon an evaluation of the specific facts and circumstances of each such opportunity, and the associated holding period will vary accordingly.
Are high-quality, fully occupied properties in prime locations that have significant profit potential due to rent escalation provisions or other unique physical or location characteristics. This type of property offers excellent cash flow for a typical five to ten year holding period.
Require the application of well focused talent and resources to deficiencies typically arising from prior under-capitalized and/or absentee ownership. The acquisition of assets with high vacancy, below-market rents, poor asset management and/or deferred maintenance issues, etc. create substantial investor opportunity upon resolution and disposition. The holding period for this type of investment generally equals the amount of time necessary to resolve the deficiencies, typically two to three years.
Stabilized Value-Added Properties
May be acquired with high occupancy established, but at rental rates that are below market. Existing tenants’ rental rates are increased as they expire, which increases the asset value, which promotes further rate and value increases and the ultimate sale of the property at a significant profit, typically over a period of three to seven years.
Raw land or under-utilized locations with existing structures offers numerous opportunities at various stages of development. Property may be sold with designs, upon entitlement approval, completion of construction or after the pre-lease of a majority of the space. Permanent financing may be secured upon completion and stabilization and all or part of initial investor equity may be returned and the project held for cash flow. Or the property might be sold at a significant profit. The course of action will depend upon which strategy achieves the highest return on a risk adjusted basis and the holding period will vary accordingly.