Barron’s recently had an article about investors snapping up trophy office buildings at a 50-60% discount to peak pricing. 😯
This coincided with a similar private investment opportunity I recently shared with my clients for a fund that focuses on Trophy Office Properties in Manhattan.
These investments are illiquid, which means they’re easy to get into and impossible to get out of early.
You’re going to be in bed with the operators for 3-7 years, possibly more.
Here are a few things to look for when making a private placement investment:
✅ Does the General Partner (GP) have “relevant” experience and a verifiable track record?
✅ Is there an alignment of interests with the GP and limited partners?
✅ Does the GP have significant personal capital in the deal?
✅ Do you understand all the inputs that go into the model? Does the GP? Will they share their model?
✅ Do you know the entry and exit cap rate? Do you know the implications of cap rate compression or expansion?
✅ What are the terms of the debt? When does the rate cap expire? How much does the extension cost?
✅ Did they pay for an independent third-party, legal or due diligence opinion? Did you read it?
✅ Do you understand all the fees and all the ways the GPs get paid?
❌ Or did you just skip the due diligence portion and go straight to the part that promises pie-in-sky returns to make your decision? 😳
If you need help in your Due Diligence, I can help.
I can also put together customized portfolios that look very different from most cookie cutter portfolios.
Who’s helping you build your Monopoly empire? 🧐
#investments #duediligence #realestateinvesting #alternativeassets #officeproperties
