Value-added Strategy

- We believe that the real estate asset class is favorably positioned compared to 'equities' due to bursting of the debt bubble and continued normalization of earnings and P/E ratios, and relative to 'fixed income' due to expected increasing interest rates from record low levels that have an inverse relationship on price. 

- Value-added real estate is the mid-range between stabilized 'core' and riskier 'opportunistic' approaches.

- This space offers compelling risk-adjusted returns and significant cash flow potential by capitalizing on value-added real estate market pricing and motivated borrowers and capital structures and special situations.

- Value-added strategy has a total return focus with an emphasis on asset appreciation through moderate debt levels.

- Sustainability emphasis preserves the environment, conserves energy, increases rental rates and occupancy, reduces operating expenses, increases NOI and reduces volatility of cash flows, as a 'value-enhancing strategy'.

- Niche assets will principally include recession resistant housing, i.e., multi-family, senior living, independent living, assisted living, mixed-use and a bold creative new model for affordable housing and workforce housing, of a smaller size in secondary and urban infill markets and often off the radar screen of larger institutional investors and investment managers, thereby complementing and enhancing diversification of global financial center weighted portfolios. 

- Portfolio construction process is built on solid fundamentals, diversification and empirical drivers of superior risk-adjusted return, first by local market, then by property type, then asset selection with consistent underwriting.

- Research-process driven approach combines industry leading research and top-down economic analysis and local market selection with consistent bottom-up risk underwriting of properties to produce risk-adjusted returns exceeding expectations.

- Invests in property level assets, which are repositioning and/or physical upgrade, lease-up or strategic opportunities.

- Asset level focus on growing rents and income to drive asset appreciation during holding period and exit when market conditions driven by job growth and increased space demand are conducive to optimal risk-adjusted returns.

- Preference for higher quality properties with secure income streams through motivated owners, lenders and capital structures as opposed to actual distressed properties.

- For larger assets we team up with development partners, strategic partners and / or permit co-investment by LPs.

- Multi-family housing is favored due to record increases in renter households driven by declining homeownership rates, stricter underwriting and increased preference for renting across most age groups including generation Y, baby boomers and married couples.

- Senior living is favored due to the graying of baby boomers and parabolically increasing record growth in the 65+ age population. 

- Focus on southeastern U.S. cities in our headquarters region, undeserved urban markets and secondary markets with favorable pricing and supply constraint/demand growth dynamics through high level relationships, specialized expertise and priority deal flow.

- Highest growth southeastern U.S. where 40% of population is projected to reside by 2030, where greater distressed deal flow exists from commercial lending and our backyard that we know well.

- Deal sourcing and execution leverages an established network of best-in-class partners and long-term relationships accessing specialized expertise and proven delivery that enables geographical reach and local market presence.

- May invest in some risk priced debt including distressed whole loans, mezzanine debt and CMBS loans, often to access physical properties through foreclosure.

- When offering exceptionally compelling investment profiles, may invest in limited redevelopment or actual ground-up development of real estate assets.