Diverse Strategies Targeting Low-Correlation Investments
Single-Asset Syndication
Strategy:
- Multifamily Value-Add
Investment Objective:
- Produce income and capital growth
- Preserve capital
Investment Characteristics:
- Experienced operator, excellent reputation, established track-record of delivering on their promises
- Single-asset syndication
- Existing building
- 1960s-1990s vintage
- Legacy Owner
- Off-market
- Assumable debt
- Seller financing
Business Plan:
- Renovate and improve the asset
- Improve operations
- Stabilize
- Position for sale at an attractive exit that leaves sufficient upside to attract subsequent buyers
- Blended income + appreciation
- Distributions typically being 6-12-months following acquisition
- 6-12% income yield
- 3-5-year hold
- Targeted 1.8-3x equity multiple
Downside Risk:
- Local economic conditions
- National macroeconomic conditions including rising interest rates could impact exit timeline
- Renovations and improved management likely to increase NOI and produce cashflow
Hotel-Multifamily Fund Investments
Strategy:
- Diversification across assets and markets
Investment Objectives:
- Risk adjusted blended Income + Capital Preservation & Capital Growth
Investment Characteristics:
- Niche expertise in asset-class conversions.
- Experienced operator, excellent reputation, established track-record of delivering on their promises
- Operating Hotels
- Distributions are prorated, starting the quarter the investor joins
- Private Equity Fund, diversifies investor holdings and mitigates downside risk
Business Plan:
- Entitlement/Zoning
- Demolition/Renovation
- Stabilize & Lease-up
- Exit at peak ROI or hold for cashflow depending on market conditions
Downside Risk:
- Single asset underperformance is protected by overperforming assets across the fund
- Macro-level interest rate environment could impact ability to refinance or exit
Implication:
- Potential for lower yields or longer hold times
- Likelihood of continued income as cash flowing assets continue to produce income
Land Development
Strategy:
- Acquire off-market
- Discounted basis
- Purpose-driven entitlement for future buyers
Investment Objective:
- Capital preservation & Capital Appreciation
- 1-5-year hold
- 3-6x equity multiple
Investment Characteristics:
- Niche expertise in land development in targeted markets
- Experienced operator, excellent reputation, established track-record of delivering on their promises
- Low opex/maintenance costs
- All cash, no debt or note on the property to reduce and mitigate downside risk
Business Plan:
- Buy & hold
- Leverage network to locate interested buyers
- Purpose-drive value add via entitlement for future buyer
- Improvements as needed to position for exit
- Hyper-local niche expertise
Downside Risk:
- Macro risk
- Interest rates
- Political risk
- Implication
- In the event of a macro-level risk event, the investment term could be extended.