Size does matter.
While investing in real estate involves acquiring illiquid assets, the upside potential is greater when one removes the excessive volatility created by the noise in dislocated markets. In addition, when you remove volatility and account for steady cash flow streams from income producing properties, you are more likely to have a net asset value that is more predictable.
Sovereign Capital Management is active in today's real estate markets and understands values that are being created by the current dislocation in today's markets. Sovereign Capital Management's size prevented large runaway acquisition targets in the hope of earning large fee incomes. Rather, Sovereign Capital Management focused its efforts on completing the business plan on existing assets rather than grow beyond repair.
While no real estate investment company is without exposure to the market dislocations, the difference is in how the management of those assets affects the outcome and thus the bottom line for the investor.
Sovereign Capital Management is your partner in real estate investment and exercises judgment and caution over every dollar expended. Your capital preservation and profits are the keys to our success. We believe in every deal so that you, the investor, will believe in us.
The type of properties we invest in will fit primarily three defined strategies: Core, Value-add and Opportunistic.
Core commercial real estate programs generally use conservative strategies for lower-risk investments. Core properties are typically well-leased and well-maintained office properties located in well-established markets. Fund managers seek core investments that have stable, highly creditworthy tenants.
Core investment programs are long-term investments. Core investments are designed to protect against inflation, and have a primary investment objective of creating income and capital preservation. Typically core investments have a long-term holding period of 6 to 12 years.
• Conservative risk
• Long-term holding period (6 to 10 years)
• Objective is current income
Opportunistic real estate investment programs assume the greatest risk of all three asset classes, but have the objective of generating higher returns. These investments generally require the investment program to convert, redevelop, or reposition an existing property in order to seek its highest and best use. Acquisitions may be concentrated in limited geographic areas. Opportunistic investments generally have a short-term holding period of one to five years, and are geared to maximize appreciation. Opportunistic may also be known as value add.
• Higher risk
• Short-term holding period (1 to 5 years)
• Objective is significant value creation
• Absence of a public market for these securities
• Lack of an operating history
• Absence of properties identified for acquisition
• Limited transferability and lack of liquidity
• Reliance on the advisor
• Payment of significant fees to the advisor and its affiliates
• Potential conflicts of interest
• Incurrence of substantial debt
• Lack of diversification in property holdings until significant funds have been raised