INVESTMENT PHILOSOPHY

Our investment philosophy seeks to maximize returns, minimize risk, and achieve superior risk adjusted returns. The Fund focuses on the multifamily sector and maximum value is extracted by leveraging collective relationships, a grounded approach and experience to make decisions driven by data to improve efficiency. The OREI team fosters industry-wide business relationships to discover favorable opportunities that meet our strategic investment criteria and leverage operational efficiencies with necessary third parties to conduct cost efficient, secure, and orderly transactions.

Industry Relationships

One Real Estate Investment has deep relationships with the full spectrum of real estate professionals. This provides OREI with real time feedback on the market, market demands, sourcing opportunities, execution of opportunities, collaboration, and implementing best in practice operations to optimize all processes. All of this translates to ensuring maximum success for assets acquired and managed.

Conservative Underwriting

While pursuing superior risk adjusted returns, we actively seek to mitigate downside risk by performing varying level sensitivity analyses, segmented outcome scenarios, and thorough market/submarket trends and patterns. When underwriting, contingencies and expense cushions are added to protect against any potential unforeseen event, specific to either the property or sector as a whole. After acquiring the asset, the team constantly oversees asset performance, and explores exit strategies that produce optimal returns.

Decision
Making

We actively seek opportunities with underperforming operations and functional obsolescence that can be improved to capture unrealized potential and maximize value by optimizing property management operations and making strategic capital improvements. With strong data, we can determine which improvements will generate the most return and keep the asset competitive in the local market.

INVESTMENT CRITERIA

PROPERTY TYPE

Class ‘B‘ or ‘C‘ garden-style apartment communities with repositioning opportunities

At least 50% of units available for value-add improvement program

Year of initial construction roughly within 1980s - 2000s

INVESTMENT SIZE

$20-75 million asset size

LEVERAGE

60-70% LTV with maximum available I/O

Preference for fixed rate facilities

Agency financing, Life Company, Regional Banks and debt funds considered in a competitive process

TARGET RETURN

5-8% average Cash-on-Cash over the Hold Period net to investors (gross of tax)

13-16% IRR (net of fees and promote gross of tax)

TYPICAL HOLD PERIOD

5 Years

TARGET METROS

Southeast United States and Texas Broader markets of Houston, Dallas, San Antonio, Atlanta, Raleigh, Charlotte, Tampa, Orlando and West Palm Beach

Regenerated or repositioned submarkets of 18-hour cities with strong population, employment and household income growth

INVESTMENT CONSIDERATIONS

Positive trending T-3‘s and T-6‘s from T-12‘s. Value-add properties with below market rents with common area improvement and in-unit upgrades

At least 30% below replacement cost pricing

No significant concession or bad debt over the past three years

SUBMARKET

Supply constrained submarkets or neighborhoods with high barriers to entry.

Stable and diverse employers with attractive job growth rate and household income levels

Above 90% submarket occupancy with sustained positive net absorption and rental growth for past 3 years

OTHER CONSIDERATIONS

Southeast United States and Texas

Single assets are preferred over portfolio deals

Preference for off-market transactions 50-80 days close period from the date of receipt of deal information