| Strategy
- Criteria
Broad
Network of Strategic Alliances.
ABR makes its property investments through joint
ventures established with local real estate developers
and operators. These joint venture partners,
who typically source the property investments,
possess expertise in their local real estate markets
and property types, and provide strong organizational
and entrepreneurial skills at the property level.
By making its investments through these joint
ventures, ABR is able to create excellent portfolio
diversification-investing in a broad spectrum
of property types in a wide variety of geographic
markets.
Joint Venture Structure.
Each investment is made through a separate joint
venture established at the property level.
All mortgages are also arranged at the property
level, with the terms of each financing customized
to suit the particular investment objectives and
circumstances of the property. The joint
ventures are typically structured as either a
limited partnership or limited liability company,
with both the joint venture partner and a wholly-owned
subsidiary of ABR serving as a general partner
or manager. Typically, the joint venture
partner participates in the economic returns of
the property investment after a preferred return
has been made to the equity investors.
Value
Added Investments.
-
Development satisfies unmet demand
-
Development conducted in areas with barriers
to entry
-
Property requires substantial renovation, repositioning,
recapitalization or financial restructuring
-
Property has unrealized potential
-
Purchase price is below replacement cost
-
Property is located in a growth area
-
Current owner is motivated to sell
- Focus on properties owned by motivated sellers unable to refinance and lenders with delinquent loans that cannot be extended
Investment
Terms.
• Mid-size
properties, typically requiring an equity commitment
of $3-10 million, with total cost generally between
$10-30 million
•
Joint venture partner equity contribution,
often equal to 10% of total equity commitment
•
Property holding period generally 3-7
years
•
Preferred leverage ratio of 65%-75%
|
