Summary of Investment Rationale
Parmenter Realty Partners’ 25-year history and track record demonstrate that its strategy of acquiring distressed assets at significant discounts to their replacement cost produces attractive risk adjusted returns throughout various economic cycles. The company believes that the current real estate environment, which is characterized by weak rental rate and occupancy fundamentals, a significant number of over-levered properties and many poorly capitalized sponsors who are not adequately maintaining their properties, will enable Parmenter to acquire highly desirable assets at well below replacement cost, physically enhance the assets and benefit from improving real estate fundamentals as the economy gradually improves.
Competitive advantages for deal flow reside mainly in the long-term relationships of its seven senior executives with the major third-party brokerage providers and numerous other senior executives in the real estate industry. Historically, these relationships have provided numerous preferential “looks” at assets and in many instances have resulted in the company winning auctions without being the high bidder. Parmenter Realty Partners’ reputation for integrity, running an open underwriting process, and closing deals is attractive, particularly to sellers who place a premium on certainty of execution.
Parmenter’s investment approach has been demonstrated over the past 25 years by the funds in which it has sponsored. Such funds have primarily acquired distressed and value-oriented office buildings located in infill submarkets within the Southern half of the United States (excluding California).
More specifically, the investment approach consists of the following:
- Use network of real estate professionals and its extensively researched target asset list to identify attractive acquisition opportunities;
- Use acquisition and due diligence skills to acquire properties at significant discounts to replacement cost;
- Parmenter Realty Partners professionals - including professionals from the asset management, property management and legal, finance and accounting teams -formulate a comprehensive plan for the transformation of the asset;
- Use development skills to physically enhance the property and reposition it to compete successfully for tenants in the sub-market;
- Once renovations are complete, our hands-on property management professionals implements a comprehensive plan to create operating efficiencies (including sustainability initiatives) and reduce expenses, at each property;
- Parmenter Realty Partners seeks to aggressively lease the newly transformed property to stabilization; and
- Parmenter Realty Partners seeks to sell the asset to a Core or Core-plus institutional-grade buyer.
Parmenter Realty Partner’s investment program has typically focused on investments with following characteristics:
- Acquiring assets in need of redevelopment or repositioning and/or those which have not been adequately maintained, whose value can benefit from Parmenter Realty Parters’ extensive hands-on real estate management and operating expertise;
- Acquiring assets at a substantial discount to replacement cost which will generate positive cash flow after debt service once redeveloped and repositioned;
- Acquiring encumbered assets or non-performing loans at discounts to original loan value;
- Acquiring assets that are distressed due to market conditions, over-leverage, inadequate capital funding, and/or decreased cash flow;
- Acquiring distressed assets that have been poorly managed and/or are experiencing significant tenant vacancies;
- Targeting assets owned by distressed opportunity funds or funds seeking to close out the fund’s operating period;
- Targeting lenders who have significant non-performing loans;
- Targeting assets with ineffective ownership; and
- Targeting sellers in need of near-term liquidity.