Acquisition Strategy
Somerset’s management team has been creating value for investors for more than 20 years by carefully managing risk and following a disciplined investment approach. We target undervalued assets with the potential for significant value creation through property improvements, lease-up, operating cost reductions, improved tenant services, and professional marketing. Somerset has the in-house capabilities to reposition underperforming assets by drawing on our experience and expertise in leasing, development, and management. Our approach includes:
- Focusing on office, industrial, and multi-family properties located in primary and secondary markets in the eastern United States.
- Concentrating on in-fill locations with barriers to entry for new development, and proximity to major means of transportation
- Pursuing assets that can be acquired at a discount to new replacement cost.
- Acquiring properties from motivated/distressed sellers.
- Completing an intensive market analysis. By understanding the competitive marketplace for each property we are able to design an achievable business plan based on real-time market conditions. By the time we close on an acquisition we have visited every comparable property in the market, and have verified market rental rates, operating expenses, leasing costs, and concessions.
- Financing deals with conservative leverage levels of 65% to 75% loan to cost.
- Capitalizing deals with sufficient reserves and capital budgets to properly renovate and improve the assets. Many property owners are unable to keep up with deferred maintenance and leasing costs. By acquiring properties at discounted prices, and supplying new capital to fund improvements we are able to restore the assets to a competitive market position.
- Conducting extensive due diligence which includes detailed analysis of financial reports and leasing files, physical inspections of building systems and structural components, environmental site assessments, and legal reviews.
- Knowing when to sell, refinance, or recapitalize an asset is an integral part of our investment strategy.