Summary of various strategies

Core and Core Plus

Core and core plus strategies generally are low risk, generate high current income, and have potential for long-term appreciation.

Hart Realty Advisers has completed over $1.3 billion core and core plus transactions, acquiring stabilized properties with strong credit tenancy. We believe core strategies -– when diversified with high-quality assets in expanding, generally nongateway U.S. markets – have the potential to provide competitively strong risk-adjusted returns.

Value-Added

Value-added strategies emphasize current income and capital appreciation with the potential to enhance total returns while creating additional diversification in a moderate-risk portfolio. Total return should be realized with approximately 50% generated from income and 50% from appreciation.

Since we began investing in value-added assets, we have completed over $400 million in value-added transactions. Risk-controlled strategies to reposition and/or renovate real estate in strong market locations produce premium returns when executed with local and specialized third-party service providers or joint venture parties.

Opportunistic

Opportunistic strategies are intended for investors with a high risk tolerance. All property types lend themselves to opportunistic development at different points in the general economic and real estate cycles. Generally, new construction in high-growth markets is involved, allowing for unique exceptions. The majority of the return will be realized from appreciation.

In most cases, we undertake development in partnership with highly skilled operating partners who co-invest in the project and receive promoted interests.

Hart Realty Advisers has successfully invested approximately $220 million in opportunistic real estate strategies after recognizing the unusually high risk-adjusted return potential of apartment development in specific markets at specific points in the real estate cycle.

Strategies

Developing a high-performing portfolio requires the right combination of assets.

Our extensive, long-standing relationships with prominent nationwide owner/sellers and brokers help us maintain a consistent pipeline of new investment possibilities. In many instances we negotiate originations directly.

Our ability to act promptly and decisively throughout our firm’s history has enhanced our reputation as a credible buyer with the ability to execute a transaction efficiently and on schedule.

We thoroughly evaluate the inherent investment potential of each prospective acquisition and how it meets specific portfolio objectives for income, appreciation, duration, and diversification.

Before a transaction is approved and allocated to a portfolio, a stringent, in-depth underwriting analysis of the property, its competition, and market position is undertaken. We then prepare a comprehensive investment recommendation containing the results of our underwriting and an analysis of financial, engineering, and environmental data; material risks, and exit strategies. An in-house valuation of the asset is also included. The entire recommendation is presented to our Investment Committee for review and final approval.

Hart Realty Advisers’ asset managers are regionally assigned with significant experience managing all property types. Their responsibilities begin at the time of acquisition. Improving the value of an asset means focusing on critical issues like risk diversification, increasing occupancy, cash flows, and achieving a dominant position within a respective market.

Each property is analyzed according to an established and proven asset management model based on portfolio objectives and market conditions. From this analysis our asset managers develop and implement property-level operating plans and investment strategies to improve a property’s performance and position the asset for sale in an environment that favors value enhancement.

We contract with on-site property management firms to provide the services required to operate each property. These firms are selected based on their market knowledge, service capabilities, and cost. To meet our high standards, Hart Realty Advisers’ asset managers take an active role in all material property management decisions. They ensure that each firm effectively budgets, maintains, and leases the assets in line with the approved investment strategy and annual business plan.

Determining when a property should be sold is based on a rigorous hold/sell analysis. We complete a qualitative and quantitative measurement of each property, the local market environment, and the investment criteria impacting asset performance over various holding periods. These results are evaluated against the client’s investment objectives. Our asset management team formulates a recommendation to sell an asset and presents it to the portfolio advisor and Investment Committee for approval.

Assets are reviewed yearly for disposition in conjunction with the annual business plan and internal valuation or external appraisal. The analysis is updated throughout the holding period, and the status is reviewed quarterly.

Hart Realty Advisers uses research-based methodology to support the decision-making process for acquisitions, asset management, and dispositions. We believe the best real estate decisions are made with informed judgment that comes from weighing all sides of various opinions formed through analysis of market data, multiple research findings, past experience, and current market knowledge.

In recognition of the importance of research, Hart:

  • Makes market-based data available to our professionals at their desktops.
  • Assists in providing specific data and reports requested by clients.
  • Creates property-type outlooks that detail market conditions, economic impact, leasing and occupancy trends, and sector forecasts.
  • Prepares economic and demographic data integrated with the investment knowledge of our real estate professionals to help formulate investment strategy and determine target markets.

In selecting target markets and property types with the most attractive investment potential, we employ a top-down view of current and expected economic and market conditions with a bottom-up perspective of local market knowledge. Because significant economic and real estate market differences often exist among metropolitan areas, research develops models based on fundamental assessments of demand-and-supply indicators to help identify those metropolitan areas where investments are most likely to produce excellent results. Hart will also invest selectively outside these targeted markets.

Close attention to client needs and keeping them fully informed is an important part of any successful investment relationship. At all times during the decision making process, the Hart team responsible for each portfolio advocates for the respective client by making sure there is no deviation from that portfolio’s overall investment objectives and strategy.

We continuously communicate with our clients and encourage their participation in the process by providing:

  • Detailed property reports.
  • Quarterly and annual performance reports reviewing the status of their accounts.
  • Access to senior professionals to review portfolio performance, provide insight into investment decisions, and interpret market trends.