- Acquire newer vintage properties below replacement cost to protect against new supply coming to market
- Lock in long term financing at favorable interest rates and net interest margin spreads (cap rate-interest rate)
- Low leverage conservative financing targeting 65-75% LTV
- Target high single digit cash returns with long term IRR in the 15-20% range
- Some opportunity for upside or increase NOI through light renovation, property management, tenant upgrade, lease roll opportunity, etc
- Increase occupancy of a property with high vacancy or below market rents with significant renovation or upgrades to the property.
- Target 20%+ IRR with shorter exit strategy typically 3-5 years
- Significantly increase NOI and stabilize property to sell
- Much higher risk profile to achieve outsized returns with shorter investment horizon
- Typical investments include ground up development, distressed assets such as note purchases, REO and/or foreclosure assets, bankruptcy, etc.
- Subordinate financing such as bridge loans, mezzanine loans, preferred equity or hard money lending