Investment Strategy, Criteria and Process
- Targeted Properties.
Premier buys underperforming Properties that offer a significant “Value-Add” opportunity. These opportunities include the following:
- renovation (and repositioning) of “Work-Force” and “Student” housing (mid-rise and garden-style apartment complexes);
- conversion of traditional “long-term“ multi-family rental properties into “Co-Living” or “Short-Term” (Airbnb style) rentals;
- conversion of existing office space into multi-family apartments.
Premier targets properties throughout (ii) the Northeast (mostly Boston), and (i) the Southeast region of the U.S. Sunbelt (mostly Texas, Florida and North Carolina). Premier is “bullish” on these markets. While Boston real estate values are well supported by its world-renowned universities, hospitals and biotech companies, and for being a top cultural and historical destination, the Southeast region of the Sunbelt represents a landlord friendly market that is exploding with population growth.
- Investment Criteria.
Each acquisition MUST have the following:
- a significant “value-add” component
- a sufficient “cash-on-cash return” to pay monthly dividends to Investors (starting early in year-1)
- a projected 19% to 25% annualized “Internal Rate of Return” to Investors (pre-tax).
- Holding Period.
The duration of each investment, from initial capitalization to exit and final distribution to Investors, is typically 3 to 7 years (the “holding period”). The holding period for each investment (i) is always established prior to any investment being made, and (ii) is always set forth in the offering materials
- Risk Allocation.
Premier’s senior management team invests a large sum of their personal money into each new acquisition (they are always the largest investor), and their capital investment is treated exactly the same as that of all other Investors.
PREMIER IS 100% FINANCIALLY RESPONSIBLE FOR ALL ITS COSTS AND EXPENSES IF A TARGETED ACQUISITION DOES NOT CLOSE (INVESTORS WILL PAY NOTHING).
PREMIER GUARANTEES ALL BANK FINANCING (INVESTORS ARE NOT GUARANTORS).
- Evaluation Process.
Premier evaluates new opportunities every day, and the management team has been doing it for many years. They believe this evaluation process is the foundation to every successful acquisition, and their experience has made them very good at it.
Premier is a disciplined buyer that will walk away from any acquisition that cannot satisfy their “Investment Criteria” listed above.Premier’s evaluation process includes careful review and analysis of the following:
- Seller’s Financials (including rent roll, delinquency history, operating income and expenses)
- Property Condition (including review of environmental reports, engineering and HVAC reports, prior capital repairs and fixture replacements, 5 year insurance loss claim history, inspection of all apartments and common areas, and verification that the property is in compliance with all state and local laws, including those relating to fire and life safety)
- Title search
- Leases and Service Contracts
- Real Estate Taxes (including an understanding of how property values get re-assessed following a sale, which always requires a discussion with the local Assessors Office)
- Market and Economic Conditions (including projected and historic changes to population, rent, capitalization-rates, sale and rental comps, and new developments)
- Debt Structure (multiple options)
- Costs for proposed renovations and repair
- Supervising Party.
During the acquisition process, Premier handles all aspects of the transaction, including the following:
- Identify target Property
- Prepare detailed pro-forma analysis
- Negotiate terms of the acquisition
- Perform due-diligence, including each of the items listed above under “Evaluation Process”
- Engage and supervise legal counsel
- Arrange and negotiate acquisition financing
- Manage all aspects of the acquisition
- Attention to the offering materials for deal syndication
- Attend to all Investor inquiries