Private Lending hiccups

Japan and several of European countries around the globe got sucked into the negative yield vortex – interests rates dipped into negative territory. Depositors over there are paying financial institutions to safe-keep their money. Faced with inflated prices across asset categories, good deals in commercial real estate are harder and longer to come by these…

Pick the right jockey

Qualifying a Sponsor lies within the larger picture of a passive investors’ overall portfolio allocation strategy. By that I mean before rushing off to vet Sponsors, consider how you want to allocate your portfolio (paper securities v. physicals) and then for the physical portion think how you want to divide up the rest of your…

Other commonly used return metrics

Let’s cover off two other private real estate return metrics, after looking at IRR from our last blog: 1. Cash-on-Cash Return The formula for CoC = (Annual net cashflow, before income tax) / (Total Cash Invested). CoC is usually represented in percentage. In the case of residential scenario, it would be a fraction where the…

real estate syndication investing strategies

The 4 main investment strategies: Value-Add, Opportunistic (Part 2)

In Part 1, we covered core and core+ strategies.  In this Part 2, we’ll go over value-added and opportunistic strategies.  Both go up on the risks and returns spectrum. Value-Add: Medium-to-high-risk/medium-return strategy. This involves acquiring an existing asset with specific plan to spend meaningful dollars to upgrade an asset’s aesthetics (could be interior or exterior),…

Capital Stack is…

not a menu item, though I could envision a whopper be named after it. But personally I like the imagery of a layered cake much more…Yum! In financial parlance, Capital Stack (aka Capital Structure) is simply the aggregation of every type of funding –  common equity, preferred equity, mezzanine and senior debts, that goes into…

real estate syndication investing strategies

The 4 main investment strategies: Core, Core-Plus (Part 1)

1. Core: Core real estates generally employ no to low leverage (0-40%), consist of low-risk/low-return assets, earning premium return above that on the NCREIF Index with a meaningful current income component.  These assets are often located in gateway, primary cities (e.g. NYC, L.A., Washington DC, London, Hong Kong, etc), are newly-built, fully stabilized, either fully…