I’d like to share with you one of the great strategies that sophisticated commercial real estate investors utilize to generate significant risk-adjusted returns. It is the backbone of our investment strategy and the predominant strategy we utilize in our private equity real estate funds. It’s called:
“The Value Add”
Value-added transactions are all about transforming a piece of real estate from its current use and re-positioning it into a state of significantly higher value. Value-added players such as ourselves actively look for assets that may have operating, physical, or financing issues.
We acquire these properties at discounts to intrinsic value, correct the issues, increase net operating income, and unlock the true hidden value of the asset. Finally, we execute a clear and defined exit strategy and dispose or refinance the asset at the NEW higher price point.
We then rinse and repeat, moving our capital into the next transaction. When executed correctly, a savvy investor can build up a large portfolio of real estate, while recycling the same capital over and over again. The key to doing this is increasing net operating income through our value-added component to levels that support debt service.
If you would like to learn more about this strategy, click here to schedule a time to speak.