Tower 16 seeks new investment opportunities that offer strong value-add returns through physical and operational repositioning. Our investments generally range between $10 million to $100 million and are focused in our prime investment geographies. We seek investments that satisfy many or all the following characteristics:
Below Replacement Cost
The Company targets assets generally built within the last 30 years that have been neglected or under-managed by current ownership. Our goal is to acquire, reposition and exit our investments below current replacement cost.
When possible, the Company focuses on acquiring assets held by private individuals, family trusts or small investment firms. We believe these owners are more likely to under-invest or mismanage assets, leaving strong upside potential.
Tower 16 seeks opportunities to acquire from owners that need to sell or may otherwise find themselves in a critical situation. Some examples of these situations are partnership or family trust disputes, loan expirations, estate dissolution issues, management fatigue, etc.
Inferior Property Management
Property management is one of the most important factors when optimizing NOI at a given property and it is clear that some owners fail to emphasize this during their ownership. The Company focuses on acquiring assets where property management isn't being maximized or is ineffective.
Capital Improvement Upside
Our acquisition targets have a clear path towards growing revenue through a capital improvement program to communal areas, building exteriors and interiors. We seek properties that are well located but lack the physical updates, improvements and amenities to make the property competitive relative to its peers. Upon acquisition, Tower 16 immediately implements a program to update projects in order to better compete in the marketplace.
We seek properties with strong potential for capturing additional revenue streams not currently being obtained by management or with existing rents significantly below market. Dependent on the asset class, we will implement other income streams such as utility reimbursements (RUBS), parking charges, cable & internet master contracts, storage fees, market rate leasing fees and more.
Off-Market/Dislocated Marketing Process
As much as possible, the Company targets acquisition opportunities outside of the traditional brokerage process. This includes working directly with property owners, working on an exclusive basis with brokers or taking advantage of a dislocated marketing effort. We believe this practice enables us to acquire projects under favorable price and terms in most cases.
With regard to Multifamily acquisitions, we seek properties in growing markets that offer strong job opportunities and good affordability, catering towards the workforce housing segment of the market. In this investment class, we seek to keep our repositioned rents between 25% to 35% of area median income.