Investment Strategy

Philosophy

LRP targets opportunistic commercial real estate investments that offer the potential for increased cash flow and capital appreciation through active asset and property management. LRP focuses on investments that can support consistent investor distributions and generate total returns above typical market-stabilized returns.  LRP purposefully closes on only a limited number of investment projects thus allowing it to be selective in targeting only the best opportunities that meet its investment criteria.

Strategy

LRP uses a multi-dimensional investment approach to target investments:

  • Sourcing – Focus on off-market or lightly-marketed transactions by leveraging local market knowledge, relationships, and extensively researching deal-sourcing opportunities.
  • Active Management – Identify projects that have not previously been professionally managed or have deferred capex which provides opportunity for increased cash flow and returns through active asset management.
  • Multi-tenancy – Require tenant diversity so as to reduce concentration risk.
  • Generic Space – Acquire assets that require minimal tenant custom fit-out, often a hidden drag on returns.
  • Demographics – Target areas that demonstrate above-average household density and median outcomes.
  • Location – Pinpoint projects in well-located, high traffic areas with high visibility and good street frontage.
  • Valuation – Trade at a discount to replacement cost to avoid long-term valuation erosion and capture upside in a return to replacement value. 

Underwriting

Our underwriting strategy takes a conservative approach in order to develop a business plan that can outperform expectations and absorb unforeseen surprises that all markets and projects are likely to encounter.

  • Deferred maintenance, capital improvements, and tenant fit-out – Account for all the hidden costs of real estate that have meaningful impact to cash flow and impact investor returns.
  • Rental rates – Target to be at or slightly below the local market in order to support leasing activity.
  • Market cap rates and valuations – Underwrite stable cap rates and valuations over the investment period so any market improvements represent additional upside.