Investment Strategy
Altus employs a tailored investment strategy for each individual portfolio asset. Each strategy is shaped by the asset’s forecasted value enhancement opportunity, relative to the inherent risk of the investment.
We co-invest alongside our capital partners.
Our deal structures are based on transparency, alignment of interests, and communicating with clarity.
Our three-person investment committee is streamlined and agile. Unlike firms with larger investment committees, Altus can move quickly with full confidence in our committee’s proven approach.
Investment Strategy
Altus employs pragmatic investment strategies, developed and refined through decades of experience. Our vertically-integrated operations and teams of subject matter experts strive to optimize returns and mitigate risks on every asset.
Recognizing the importance of risk diversification, Altus funds invest in a range of properties, from core-plus to opportunistic opportunities.
Core-plus properties feature high occupancy rates, predictable cash flows, and consistent rent collection and provide the potential for low to moderate risk, compared to core properties, and higher appreciation of the asset over time. Altus works to increase cash flow through minor renovations, improving management efficiencies, and tenant diversification.
Value-add investments may require additional improvements with the goal of better positioning the assets to achieve greater total returns. Altus invests in value-add properties with strong existing net operating income but significant opportunities for improvement through strategic operational enhancements, capital improvements, or market repositioning.
Opportunistic properties require a high degree of enhancement. This risk category includes development of raw land and niche property sectors. Altus’ opportunistic investments include ground up multi-family developments and industrial assets.
Current investment and development activity is focused on office, industrial, retail and multifamily projects in St. Louis, Minneapolis, Kansas City, Denver, Nashville and other select Midwestern markets.
ASSET SELECTION
Strategic purchasing of assets in supply-constrained sub-markets ensures a stable workforce base to enhance leasing performance and occupancy.
Altus typically focuses on assets situated in proven suburban infill locations, wealth corridors, or favorable sub-markets with sound supply/demand dynamics and projected purchase prices that are positioned below today’s replacement cost, providing an additional margin of safety.
Assets acquired below replacement cost help ensure relative competitive positioning, particularly against new construction, a key strategy for adding value in the commercial real estate market. Significant consideration is given to multi-tenant assets with strong tenant profiles and staggered lease maturities which tend to minimize downside risk. High-quality, well-located, yet sub-optimized assets purchased at a discount to replacement cost can be repositioned for the modern tenant’s needs.
CAPITALIZATION
Thoughtful, judicious leverage is employed to enhance returns with a focus on flexible debt instruments providing downside protection and value enhancement opportunities.
A vigilant capitalization strategy has the potential to reduce investor risk. Ample cash reserves, utilizing lower leverage, and maintaining healthy debt service coverage ratios can minimize downside risk.
A sensible, data-determined capital strategy:
- Utilizes liquidity to pragmatically reinvest into its assets and hedge against market downsides through enhanced capital reserves.
- Allows for decision-making in the assets’ best interest, rather than managing banking covenants.
- Demonstrates sufficient cash flow to pay debt obligations through a healthy debt service coverage ratio. Typically, lenders require cash flow (net operating income) 1.25x in excess of required debt service. The larger that ratio, the more conservative the financing structure.
INVESTMENT CRITERIA
We are currently actively investing and acquiring assets, following a valueadd investment strategy, primarily targeting industrial and office assets with diversified multi-tenant income streams, institutional quality attributes, and infill locations.
ACQUISITION CRITERIA
SAMPLE DEAL TERMS
- Primary: Industrial, Office, Value-Add
- Secondary: Multi-Family, Retail, Core-Plus, Development
- STL, MSP, DEN, KC
- $10-100 million transaction range
- Fully raised and discretionary capital
- 500K-1M earnest
- 20-30 day due diligence
- 15-30 day closing
- Waivers on capital items (roof, HVAC) with pre-LOI education