HOW TO GROW WITHOUT UNDUE RISK
Searching for a new acquisition can be a daunting process full of risk and uncertainty, but the best solution in successfully reducing the risk and uncertainty could be to begin the search in your own backyard.
At the end of 2014, through an online platform, ownership acquired a 37,,000 SF retail asset and billboard about half a mile away from a long-owned legacy asset. Upon learning of this purchase opportunity, I immediately approached the ownership group from the legacy asset, and supported by underwriting, market expectations, financing assumptions, and exit strategies, I began explaining how it would be possible to achieve a fantastic return on this new acquisition, as well as some underlying strategic benefits to owning both.
We were already receiving many calls on the legacy retail asset, and knew the tenants and the market, including which would be a great fit at the new asset.
If sold together, the two assets would reach a value that would begin to attract institutional investors typically willing to pay more than local investors.
Lenders perceived the new building as less risky and provided advantageous financing, despite the high vacancy at acquisition, because of the history and operational success of the nearby legacy asset.
In nine months, the new asset increased its value by over sixty percent (60%) and served as a perfect strategic compliment to the legacy asset, setting the investors up to earn a multiple on their initial equity.
Other investors can take advantage of similar situations by leveraging online platforms or developing a relationship with a local broker to monitor both on and off market activity in a comfortable local submarket.
The pursuit of new opportunities is a passion of mine and I am always glad to discuss, partner or aid in a pursuit alongside ownership. If I can ever be of service, please contact me at email@example.com