The Mountain Town Opportunity
The US, specifically the Upper Rockies region, is experiencing a transformational shift in manufacturing and logistics investment, driving demand well past the supply of suitable large-scale industrial facilities.
While local population growth in mountain markets is driving record demand for housing with some spillover to industrial demand, the bulk of industrial demand is from larger regional and national employers expanding operations into the region. They are attracted to the lower cost of operations, business-friendly climates, and growing populations.
Investing In The Next Generation of Demand
We acquire, develop, and operate Class A and B industrial assets around identified demand from regional and national tenants.
We use a hands-on, vertically integrated approach to optimize asset performance and provide investors with an institutional investment and reporting experience.
We use conservative leverage and tech-forward operations to aggregate smaller assets into stabilized portfolios to sell to institutional acquirers at a premium.
Building Economics of Scale
Our mission is to control the demand funnel for industrial real estate in the markets we cover by being each market’s largest and most sophisticated operator of capable assets.
We concentrate on high-quality national and regional tenant profiles to maximize economies-of-scale in leasing, reduce deal risk, and lower operating costs.
As our portfolio scale increases, demand increasingly directs itself to us directly and via broker partners.
This demand visibility reduces our leasing costs and allows us to deal with risk in future acquisitions and development projects.
Our internal operating advantages allows us to maximize the universe of suitable tenants at higher rents with operate more efficiently to smaller scale operators.
We orient our decisions around a quasi-permanent hold strategy focused on maximizing after-tax returns. Our foundational investment principles:
- Don't Blow Up. We structure investments to minimize existential risk. When we acquire assets to reposition or develop new ones, we structure pre-lease and other risk coverage deals to minimize the chances of not covering carrying costs including debt service.
- Use leverage intelligently. We use low-to-moderate leverage to minimize economic volatility risk. We are conservative underwriters to ensure that in-place cash flows are sufficient to cover debt service through a variety of economic conditions.
- Deal by Deal Investments. We raise capital primarily on a deal-by-deal basis to avoid the pitfalls of "the imperative to deploy capital" that large funds face. We pounce when the opportunity is right and don't when it is not.
- Long-Term Oriented. We believe the growth trajectory of our focus markets will continue over time so we aim to hold assets for 5+ years. When we opportunistically sell assets, we structure reinvestment opportunities so we and our investors can remain invested in the market's growth.
- Tax-Advantaged. We operate assets to provide tax efficiencies to our LPs, delivering accelerated losses, tax-efficient return-of-capital events, and 1031 exchanges whenever possible.
- Cash Flow First. We focus on cash flows and avoid assets that are dependent on a buy-out or repositioning to meet our return targets.
Class B industrial assets with in-place rents and a clear ROI from light capital improvements and management improvements. Target Class B acquisitions include assets with a potential to serve next-gen demand and those where our operational leverage and leasing edge can increase performance.
Our value-add assets use moderate to conservative leverage (60%-75%) with target annual returns between 11% and 15% and strong unlevered interim yields.
We develop new industrial assets in supply-constrained markets and acquire existing single tenant assets to reposition as multi-tenant. Our preference (and current standard) is to partner with high-quality tenants who commit to leases sufficient to cover our carrying costs before delivery or acquisition.
This approach allows us to minimize risk, lower leverage costs, and eliminate lease up delays.
Development assets use varying levels of leverage (~50%) with target annualized returns over 20% with strong unlevered interim yields after stabilization.
Core & Core Plus
Class A & B industrial assets with in-place rents and high-quality tenants. We opportunistically invest in light improvements to increase rent performance mainly when assets lack specific features next-gen tenants require.
Our core and core-plus assets use conservative leverage (45%-60%) with target annual returns of 8%-12% and strong unlevered yields. Core and core-plus assets derive a greater share of returns from cash flows than market appreciation.