Investment Principles

There are a number of factors that go in deciding on a real estate investment. The criteria below focus on Office assets.

  • SIZE – 100,000 SF and up because of ease of management – scale. But we will consider smaller if we already have assets in the vicinity. Currently, however, the better opportunities lie in the larger around 500,000 SF and up portfolios.
  • PRICE – 10 Cap on existing NOI is baseline. Variations on the theme are looked at as well.
  • PRICE PSF – Up to +/- $80 PSF depending on the usual variables (location, NOI, quality, occupancy etc.) and 50 – 65% of replacement cost.
  • OCCUPANCY – The properties should be +/- 70% occupied leaving upside. Generally value-add. However, if the price is right, stabilized can also be an option.
  • HIDDEN VALUE – Could be anything from land coming with the deal to a 10 cap price on a 65% occupied building to the possibility of adding extra floors etc.
  • TENANTS – There is an expectation of some credit tenants with limited near term rollover.
  • FINANCING– It has to be financeable.
  • CAPEX – No interest in ‘fixer-ups’ but we will invest in what is necessary.
  • PHILOSOPHY
    • Once the initial money is invested, we never put in another investor penny.
    • The idea is to think of a property like a child: to bring it up to its full potential.
    • We are NOI driven but also revenue driven
    • The focus on secondary and tertiary markets where there is no premium for ‘location’, a feature experience has shown which 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 don’t deviate from the mean making it easier to rent and then resell. Unusual and architecturally interesting properties maybe good art but bad business.
    • We want to finance out our cash – or sell if the price is very attractive.
    • If a deal is good, we move very quickly as we are a private group not accountable to committees etc. 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 of 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.