Ratel Investments
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Why Invest with Ratel

Many private investors who understand the wisdom of investing in commercial real estate have found the actual implementation of this important financial diversification strategy to be a challenge.  Traditionally, investors have had two primary options: personally find and manage a property or invest in a real estate investment trust (REIT).  Ratel offers a third option for investors seeking to add commercial real estate to their investment portfolio.

Option 1: Individual Ownership
Successful direct ownership of commercial real estate assets is a viable option only if an individual investor has the local real estate knowledge and time to find, negotiate and finance a property or portfolio of real estate assets; the desire and skills to manage these complex assets; and sufficient capital to purchase assets of adequate size in order to gain the advantages of economies of scale.  Most high net worth individuals–even those with real estate expertise–find they have neither the time nor the inclination to take on the challenges and risk associated with sole ownership of large commercial properties.

Option 2: Real Estate Investment Trusts
While the underlying assets of a REIT are commercial real estate properties, REITs are publicly listed securities and, therefore, do not provide many of the benefits of directly owned commercial real estate.  REITs do not provide true economic diversification from equity and fixed-income investments and have higher volatility and are far less tax efficient than directly owned commercial real estate.   Click here for further detail on how REITS perform when compared to directly held commercial real estate assets.

Option 3: Investing with Ratel
In contrast to sole ownership of a property or purchasing a REIT, many high net worth investors find it more profitable and efficient to invest in commercial real estate with Ratel.  Our strong returns and the value Ratel creates at each stage of the investment life cycle reflect the strength of our investment model.  

COMMERCIAL REAL ESTATE INVESTMENT ALTERNATIVES1

Ratel’s role includes:

Partner Vetting

Ratel is highly selective when choosing our real estate operating partners.  We perform detailed due diligence on an operating partner prior to entering into a joint investment opportunity, including reviewing personal and financial references and thoroughly examining the historical performance of its real estate portfolio.  All of Ratel’s operating partners bring well honed acquisition skills, strong operating expertise, a deep local market presence, solid financial capacity and a proven track record to each new investment opportunity.  In return for their expertise and operational capabilities, our operating partners take an equity stake in the project and benefit via higher returns if the project flourishes.  As a result, the interests of Ratel’s investors and our operating partners are aligned around the performance of the property.

Investment Due Diligence

Ratel does not simply rely on the pro forma financial projections for an investment supplied by our operating partner.&nbsp Rather, we perform a thorough and independent due diligence and underwriting of an investment as a form of double checking.  We employ sophisticated quantitative analysis tools and calculate numerous financial sensitivities to evaluate how a property will perform under various market conditions.  We evaluate a property’s location in a sub market, local job creation, population growth patterns and operating history.  Based on our experience, we examine a property’s potential for an increase in value if a value-add program of enhancements is implemented.&nbsp We interview the property management team, speak with local planning department officials to determine the number of new building permits that could result in future competition and thoroughly analyze existing competitors.  Typically, we review and conduct due diligence on more than 50 potential investments for every one property in which we invest.

Sophisticated Investment Structuring

Ratel provides our investors with deal structures that are designed to protect and preserve capital financial structures which are highly difficult to replicate by individuals acquiring properties on their own.  We structure each investment as its own individual legal entity in order to cap an investor’s financial exposure to his or her initial cash investment; therefore an investor never has to worry about a future capital call for unanticipated events such as an economic downturn or an unbudgeted repair item.  Further, Ratel’s investors receive a preferred return on their investment; an investor’s initial equity investment and a preferred return have preference over the funds of our operating partner.  Finally, Ratel ensures that the structure of the debt underlying an investment is such that our operating partners, not our investors, assume the liability for all debt obligations.

Proactive Asset Management

Ratel oversees all asset management issues of an investment, insulating our investors from the time required and the management challenges typically associated with being a landlord.  We work with our operating partners to ensure that an asset is being efficiently managed and that capital improvement programs are executed on a timely and cost effective basis.

Transparent and Detailed Investor Communications

Ratel believes that the frequency and detail of our investor communications is unparalleled among private real estate investment firms.  Our investors receive quarterly financial statements and detailed reporting on the key operational metrics of the property, annual K-1 statements and periodic alerts for time-sensitive developments.  Further, we encourage investors to accompany us during our regularly scheduled site visits.

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  • Source: Ratel Analysis