Investment and Management Philosophy
Core Asset Group, LLC (“CAG”) investment philosophy is that real estate is a commodity subject to cycles, both in terms of its underlying supply and demand fundamentals and its pricing relative to other financial assets. Through the Principals’ relationships, experience and discipline, CAG identifies opportunities to create and maximize value, while minimizing risk, through opportunistic, event driven investment opportunities. Opportunities are often created by capital voids, supply imbalances, market and operating inefficiencies, cyclical trends and financial stresses.
We deploy a value-added asset management approach, which aggressively repositions and stabilizes under-managed and under-capitalized institutional quality assets; and practice a disciplined disposition strategy, which identifies an exit strategy before an investment is completed. Throughout ownership, performance is continuously reevaluated to seek stable and optimal results.
The importance of a disciplined disposition strategy drives CAG’s investment focus on well-located, institutional quality, assets within desirable markets, which are likely to have greater liquidity by appealing to a wider range of potential buyers. On a portfolio basis, CAG utilizes moderate levels of leverage, primarily through the use of non-recourse debt, which is structured to meet our return objectives over an expected average holding period of three to five years.
In seeking to deliver attractive risk-adjusted returns, CAG employs the following investment strategies.
STRATEGY: Single Asset Transactions
CAG utilizes the Principals’ real estate experience, expertise and long-term relationships in sourcing and selectively acquiring single asset investments, with an emphasis on well-located assets within our target niche, which possess institutional quality potential. CAG will focus on three primary strategies within single asset transactions:
1. Value Creation: CAG acquires real estate assets which have significant cash flow and residual value enhancement potential through creative and aggressive asset management, including targeted capital improvements, tenant lease-up opportunities and operating efficiencies.
2. Value Investing: CAG targets the acquisition of real estate assets at a discount to their replacement cost or, in some cases, below their current market value.
3. Niche Transactions: The capital constraints upon REITs and highly leveraged investors have created a capital void for all size transactions, particularly for assets with significant scheduled tenant rollover and/or capital improvement requirements. Credible buyers with identified and discretionary sources of capital and operating experience are more likely to succeed in acquiring asset at attractive pricing.
STRATEGY: Complex Ownership Situations
CAG seeks opportunities to acquire real estate assets, which present value creation potential due to the complexity or illiquidity of their existing ownership and/or capital structure with a primary focus on bank owned assets. In such situations, CAG will seek to actively work through the complexities, gain control of the asset, actively manage, recapitalize and thereby cause value creation.
STRATEGY: Illiquid Assets
CAG works with owners of illiquid physical or financial assets who seek to sell or dispose of their interests. These owners are typically banks or other passive financial investors.
STRATEGY: Entity Recapitalizations
CAG will make investments in entities which require additional capital to restructure their ownership, recapitalize their portfolios or fund additional acquisitions.
STRATEGY: Partner with Experience Operators and Private Equity Firms
CAG will consider partnerships with experienced real estate operators and private equity groups to expand its access to superior transaction opportunities in which CAG remains the controlling party.