What is WelshInvest’s Investment Strategy?
The investment strategy of WelshInvest focuses on real estate opportunities that, through value enhancement and financial structuring, provide superior risk-adjusted returns on invested capital over a medium-term investment life.
When partnering with institutions or individual investors, Welsh principals and senior executives provide a portion of the equity needed for acquisition as a show of good faith and a testament to Welsh’s confidence in the quality of the investment.
WelshInvest specifically targets investments that:
Provide a strong annual cash flow, but also demonstrate strong prospects
for value creation;
Are being sold at a discount to the replacement cost;
Are portfolios from which component properties can be sold individually
to maximize returns;
Provide attractive development projects;
Are joint ventures with institutions; or
Are an opportunity to provide higher-yield mezzanine financing to
companies owning real estate assets.
Small-Cap Focus: As a vast amount of institutional capital continues to enter the real estate market, there is a greater need to deploy larger amounts of money on single transactions. WelshInvest frequently focuses on small-cap opportunities ($75 million or less) that, due to the size, traditionally do not attract larger institutional buyers. The small-cap strategy is to acquire well-located and functional assets that are priced at a discount to replacement cost, or may require an extensive capital initiative. These small, management-intensive properties usually require significant hands-on management that institutional buyers shy away from. With this approach, WelshInvest hopes to avoid competing with numerous buyers, whose presence often leads to higher pricing.
Portfolio Acquisitions: With an extensive pipeline of product available to purchase, an increasing number of assets available for purchase are portfolios. WelshInvest will focus on portfolio opportunities where value can be added by purchasing the portfolio at a lower cost than the aggregate price of the individual buildings if purchased separately. In many cases, a focused operating approach can create efficiencies not available on single assets. By purchasing in bulk and selling at retail pricing, significant opportunities exist for value enhancement.
Leverage: WelshInvest seeks to obtain financing for purchased properties to enhance return by obtaining positive leverage positions. Typically, the loan to cost ratio on any particular acquisition will range from 70-77% based on the risk parameters of the investment.
