We’re heavily value-add driven
Most important metrics (in order)
1. Basis (you can show us any IRR you want and we’ll toss the deal if the basis is bad)
2. Exit basis - heavily tied to #1 (we won’t invest in deals where the exit basis is significantly above current market basis)
Most important metrics (in order)
1. Basis (you can show us any IRR you want and we’ll toss the deal if the basis is bad)
2. Exit basis - heavily tied to #1 (we won’t invest in deals where the exit basis is significantly above current market basis)
3. Stabilized cap rate (yield) - since we focus on value add, the entry cap doesn’t matter at all, as long as we can service our debt. We typically need to get to a 6.5%+ stabilized for a deal to pencil. How quickly we get there plays a role as well (quicker the better for IRR)
4. Unlevered vs levered - this is basically just a gut check to make sure that our leverage isn’t out of control
5. Multiple - we only check this to make sure that they’ll be enough promote for the deal to be worth our time (no point in 20% IRR and 1.2x multiple)
5. Multiple - we only check this to make sure that they’ll be enough promote for the deal to be worth our time (no point in 20% IRR and 1.2x multiple)
6. Cash-on-cash - We essentially ignore this metric and expect cashflow to be very low during the hold period (unless we’re working with a specific LP who needs cashflow). Often even have to make (planned) capital calls and have earn-outs built into debt covenants to inject more
capital for a value-add aspect of a deal (ex. Tenant buildout)
Since this isn’t really a metric, I didn’t include it, but the most important part of our analysis is whether the deal is actually good real estate
Investing in only *great* RE has allowed us to outperform
Since this isn’t really a metric, I didn’t include it, but the most important part of our analysis is whether the deal is actually good real estate
Investing in only *great* RE has allowed us to outperform
