Our strategy is to acquire underperforming multifamily real estate assets that are undervalued in select US submarket where M1 can add inherent value through professional property management, rehabilitation and repositioning.
M1 focuses on acquisitions principally between $15 and $50 million, a niche that is out of reach for most individual investors or small investment companies, and below the REIT and institutional investment company threshold.
M1 acquires targeted multifamily properties that are generally characterized by:
- Class B/-B quality, strategically located assets with substantial discount to replacement costs (40%-80% discount);
- Underperforming properties with the potential of repositioning to class B/+B or better through renovations, modernization and upgrading property management;
- Market driven investment parameters based on income growth over the holding period, not reliant on higher-risk strategies requiring financial engineering, condominium conversion, and momentum-driven quick selling of properties;
- Conservative underwriting across all types of assumptions (operational and financials) emphasized by M1’s investment philosophy;
- Day one cash flow and a focus on the balance between operating cash flow and distributions from back-end sales proceeds (minimize risk by not relaying on capital gain);
- Locating in infill markets demonstrating favorable long-term resident demand in high barrier to entry and supply constrained multifamily markets;
- Typically off-market transactions yielded by our wide and long-standing relationship with industry leading functions, enabling M1 to buy properties with below market prices per unit.
M1 maximizes the return on investments through raising rental rates to market levels over time, strategically reducing operating expenses and improving the resident profile through targeted capital improvement programs and repositioning.
Upon stabilization, M1 holds and operates the assets, selling each property or the portfolio when the managers believe the market conditions are most advantageous to maximizing returns. Refinancing during the holding period is also considered.