Investment Principles

There are a number of factors that enter into the decision to make a real estate investment. The criteria below focus on Office assets.

  • SIZE – 200,000 SF and greater because of scale and ease of management. But we will consider a smaller location if we already own assets in the vicinity. Currently, however, the better opportunities lie in the larger portfolios.
    • 7 – 10 Cap on existing NOI is baseline, but variations on theme are considered as well;
    • Up to +/- $100 PSF depending on the usual variables (location, NOI, quality, occupancy, etc.)
    • 40% to 60% of replacement cost.
  • OCCUPANCY – Between 70 – 90% occupied with rental income upside.
  • HIDDEN VALUE – Upside can be in the form of extra land, under-market rents, vacancies, extra collateral etc.
  • TENANTS – Typically credit tenants with limited near term rollover.
  • FINANCING– Portfolios need to be cash flow generating and “financeable”.
  • CAPEX – We have no interest in “fixer-uppers” but we will invest when necessary.
    • Once the initial money is invested we never put in another investor penny.
    • We look at a property as if it were a child. Our role is to bring it up to its full potential.
    • We are NOI driven but also revenue driven
    • Our focus is on secondary and tertiary markets where there is no premium for “location”. Location is a feature which experience has shown does not necessarily translate into increased profits.
    • We never buy “empties” – let someone else be a hero.
    • We never develop – again, let someone else be a hero.
    • We buy “average” or “common” properties that do not deviate from the mean which makes them easier to rent and then resell. Unusual and architecturally interesting properties may be good art but bad business.
    • We want to finance out our cash – or sell the asset if the price is attractive.
    • If a deal is good, we can move very quickly because we are a private group and are not burdened by layers of reporting requirements to tiers of committees. This gives us preferential access when discretion and/or speed are required by the seller.
    • Our “hold” period is indeterminate. It is hard enough to find wonderful opportunities without having the added burden of disposing them. What is good for brokers is not necessarily good for investors. After all, “clipping coupons” is not such an unpleasant business.
The information on this website is intended solely for the benefit of firms and companies seeking private equity investment capital by providing general information on our services and philosophy. The material on this site is for informational purposes only and does not constitute an offer or solicitation to purchase any investment solutions or a recommendation to buy or sell a security nor is it to be construed as investment advice. Additionally, the material on this site does not constitute a representation that the solutions described therein are suitable or appropriate for any person.