Founder's Insights E12: The Story Behind Acquiring Cortland Copperleaf

we recently closed on our latest acquisition courland coaf a 240 unit 2003 vintage multif family property in Houston this was an awesome deal for us and our investors that we're super excited about one of the things that made this deal very unique was the fact that we actually purchased the property from uh the seller in a re structure so the seller owned the property in a private re structure to accommodate a foreign investor and this kind of created a more complex own ownership structure that made the property difficult for the seller to sell because what they were actually selling was not real estate they were selling a corporation and specifically they were selling a real estate investment trust which is what a Reit is and often times you'll see a Reit as a publicly traded entity on the stock market but there's also private reats and then this one is also unique because it's a single entity or a single property Reit you know typically a Reit will be many investors and it'll be a portfolio of properties but in this case it was a private Reit or also sometimes called a baby Reit and it made the deal more complicated so we said sure we'll give it a shot we put the deal under contract and before we even were able to sign the contract we had to go through a long month-long negotiation of finding the best attorneys and people to work with us to understand the concept of buying the reap and then negotiating the fine points of the contract with the seller on the re transaction so fortunately because of my partner Kent's background as an attorney and his great Network here in New York of of Savvy legal professionals we were able to assemble uh a great team to tackle this project and in the end we prevailed and we made it work and we successfully closed on the the Reit transaction it was a very smooth deal everyone was very happy and and even the seller was happy for with us and that was kind of the main thing that we were going for we really wanted to make a good impression on the seller to make sure that they would want to work with us again and something that my partner Kent mentioned to me is he said you know sometimes you put in the effort and you kind of build something and you build up a skill and then down the road it pays off well in this case it's paying off right away because as soon as we closed on courland Copp rela courland presented us another Reit structure to acquire from them called so we're able to just transition right to the next deal with the same seller and really the same ownership so it's very easy for us to negotiate the contract sign it right away and it's the effort of doing the small things and the big things well and on time that gave the seller the confidence to bring the deal to us because we were not the highest price for this deal and that kind of is one of the ways that you can create Alpha in real estate more so in other investment vehicles because if you're able ble to deliver well on terms or on your process then you don't necessarily have to be the highest price and in this case we're not the highest price so we're able to create more value and provide a better potential return for our investors all the time you'll hear private Equity professionals ask about the story everyone wants to know about the story how did you find the deal who is the seller why are they selling these are the questions that investors and we are asking all the time and people want a good Story I mean obviously a good story can imply that it's a good deal but I think even if the numbers are the same investors gravitate towards the deal with the better story and I think a story like this one where you have a relationship with the seller where there's complexity and things like that really resonate and I I don't I can't think of a better story frankly to set up a deal for future success uh because in a situation like this where you're able to basically buy complexity and sell Simplicity you create a lot of value and the reason why this is a buy complexity sell Simplicity type of deal is because when you acquire or when we acquired the Reit the very next day after closing we actually collapsed the Reit structure and just converted the property into direct real estate ownership so now we own the real estate directly so when we go to sell the property in 3 to 5 years we're able to just simply sell it as a regular real estate property and buyers aren't going to have to deal with with any complexity so that's how we're buying the complexity and getting the discount on the front end and then selling Simplicity which people obviously pay for a simpler experience to learn more about investing with us in these amazing opportunities please email us today at IR lc.com

Channel: Rob Beardsley – Lone Star Capital

Views: 105

Keywords: rob beardsley, multifamily, real estate, lone star capital, underwriting

Id: Berr7gH83LQ

Length: 4min 47sec (287 seconds)

Published: Wed May 29 2024