Underwriting

LANDCO’s Principals have well over 100 years of hands-on real estate experience among them. When they evaluate an investment opportunity, they are doing it with experience that spans several real estate cycles, both commercial property types, and an array of markets.

I. Risk Management

  • Overall risks include economic obsolescence, physical condition, and construction pipeline
  • Local issues include comparable rents & sales, market occupancy, neighborhood quality, prevalence of distressed property, infrastructure, amenities, safety, visibility
  • Projected conditions include such matters as changes in product supply and demand, construction and operational costs, and local employment prospects
  • Conjectural matters include the prospect of governmental action in a variety of areas (e.g. taxes, environmental law and zoning)
  • Managing risk of future value
    • Hedge underwriting by deflecting revenue and expense trend-lines
    • Increase exit cap
    • Maximize current cash flow (high IRR ratio)
    • Extend holding period while rents equilibrate
    • Employ debt with low pre-payment cost and/or collared variable with low floor
    • Blend portfolio with real property assets and discounted debt

II. Market Evaluation

  • Regional
    • Population gains
    • Employment gains
    • Diverse, growing industries
    • Non-exportable employment
    • Gateway/magnet communities
    • Renters by necessity
    • Own/Rent cost ratio
    • Housing permits, starts
    • Absorption
  • Sub-Markets – Qualifying standards
    • Population and vacancy
    • HHI and other demographics
    • Sale and rental comps
    • Transport nexus
    • Commute distances
    • Job base
    • Unemployment
    • Crime
    • Schools
    • Shopping and Entertainment

III.   General Business Issues

Area of Concern Approach
Management & Oversight Precise Execution
Uninsured Casualties Best Practices
Conflicts of Interest Avoid & Disclose
Tax & Securities Law Caution & Compliance
National & International Economy Diversification

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