The Capitas approach to real estate investment is centered around two key principles: disciplined underwriting and alignment of interests.
Capitas employs a thorough and disciplined underwriting process, with the primary objective of capturing the most compelling risk-adjusted opportunities that can withstand fluctuating economic conditions and impending market cycles. Each co-investment is structured to meet all stakeholders’ requirements. Whether Capitas, or a carefully selected local market sponsor, invests alongside our capital partners, the underlying objective is commitment to every transaction and clear alignment of interests starting at acquisition and continuing throughout the investment hold period until disposition.
Capitas’ investment strategy is formulated by consistently monitoring key drivers influencing real estate market fundamentals. Rapidly evolving global demographic trends, technology-driven market disruptions, capital market liquidity, and interest rate volatility, are major considerations underpinning Capitas’ acquisition strategy. Capitas identifies investment opportunities that are in harmony with these influences – turning perceived challenges into profitable returns.
|Macroeconomic||Rising GDP and favorable TCJA tax reform favor corporate expansion||GDP growth and infrastructure projects create more need to manufacture and transport goods||Housing costs higher and reduced incentives to own cause increase in multifamily renting||Wealthier baby boomer generation demands higher quality amenities and better service in seniors living|
|Demographics||Millennials are embracing office working environments leading to increased rents and occupancies in suburban office||People are using more data and internet usage requiring the need for new industrial uses such as data centers.||Urbanization and trends to live in cities is driving up multifamily rates and occupancies||Aging baby boomer population and longer lifespans continue to create annual demand for seniors housing|
|Technology||Co-Working space is occupying massive amounts of commercial real estate||Retail is shifting to online shopping which creates need for warehouse space to store and ship goods||Airbnb and booking sites are turning multifamily into hotels. Microapartments and co-living are changing residential floorplans.||Programs matching millennials with baby boomers to live together may change traditional need for senior housing|
|Banking and liquidity||Higher emphasis on tenant credit quality to obtain competitive interest and maintain profitable exit options||Rising interest rates and expected cap rate expansion creates the need for longterm NNN leases which have higher contracted escalations||The search for yield has become increasingly difficult with cap rates remaining low and interest rising. Need for value-add or other programs to increase income over hold period.||With perceived volatility on the horizon the focus remains on stable locations with strong fundamentals|
ORIGINATION AND ACQUISITIONS
Capitas sources investment opportunities in the United States and Europe through an extensive network of industry relationships with operators, property managers, developers, bankers and other intermediaries. The aim is to secure bespoke captive transactions. This imbedded exclusivity to each transaction is key to the acquisition strategy.
Once an investment opportunity is selected, it is then evaluated through an in-depth financial and technical underwriting process to ensure that the expected return is commensurate with the various risks associated with each transaction. The underwriting team rigorously assesses critical factors, such as, local market fundamentals, comparable transactions, tenant quality, building age, obsolescence and sustainability and counter party risk.
CAPITAL PARTNER SELECTION
In line with its investment strategy, Capitas invests time in understanding the investment appetite of each of its capital partners, enabling its placement team to match each new investment opportunity with a targeted group of investors. Upon selection, each capital partner is then fully engaged with senior management throughout the transaction, facilitating an expedited and timely decision process.
STRUCTURING AND CLOSING
Capitas legal team leverages its internal expertise to structure transactions to maximize returns while minimizing legal risks. Capitas leads outside counsel selection and oversees key elements of transaction execution from joint venture negotiation, offshore entity set-up, to tax modeling and legal closing.
Post-acquisition, Capitas closely monitors asset performance, counterparty risks, and market trends, while assisting in key asset and portfolio level decision making. Activities such as the approval and monitoring of annual budgets, leasing plans and capital spending, and development and oversight of business plans for each investment are all essential elements of the Capitas portfolio management support.