Properties Starved for Capital

|Properties Starved for Capital

Properties Starved for Capital

One of the most straightforward, effective value-add deals to look for, acquire, and then reposition, is the asset that is starved for capital.

Many times you can find well located real estate that is simply not performing because it requires an additional capital infusion.

Think about a retail center with a large parking lot that is in horrible shape and desperately needs to be replaced.

Or think about the industrial building that is 50% vacant and can’t be leased because the vacant portion of the building’s roof should have been replaced ten years ago.

The entire success of these two hypothetical assets hinge on the respective parking lot and roof being replaced.

By simply acquiring that asset at a discount or potentially even market rate, and doing the necessary “work,” you can unlock significant upside value.

These assets deteriorate and find themselves in these positions, because for whatever reason, the current owners either do not have access to the capital necessary to do the “work,” or they simply do not want to invest in their current assets.

One warning; make sure the real estate is good and just starved for capital, not bad real estate that has gotten itself into a distressed situation for no other reason than it is “bad” real estate.

If you keep your eyes open for these situations while sourcing your next acquisition target, you may come across your next value-add “lay up” without having to use to much creativity.

2019-01-28T16:33:28+00:00

About the Author:

Mr. Grosso holds the role of Managing Principal at the firm. He is widely regarded as one of the leading authority figures and thinkers in the Commercial Real Estate Private equity business today. Under his leadership, FNRP has grown to become one of the preeminent Commercial Real Estate private equity sponsors in the United States. His responsibilities include leading investor capital-raising initiatives, strategic planning, portfolio management, business development, and overall investment strategy as an officer of the firm’s Investment Committee. Anthony is an active philanthropist with a history of supporting young entrepreneurs. He is the author of Value Added Real Estate, and is a noted public speaker.