Investment Profile
While we have significant experience investing across the capital structure, geographies and asset types, in the present environment we gravitate towards “need” based real estate throughout the United States. As we define it, “need” based real estate is also resilient real estate. We wish to avoid “commoditized” circumstances, and instead utilize our efforts and capital where we can effect “transformative” results.
We are attracted to situations in which the investment thesis is not predicated solely on macroeconomic improvement. Instead, we are primarily focused on products that are affordable, targeted to audiences based on some combination of income, ethnicity, brand and location, and for which successful performance is generally a by-product of fixing asset or company level issues. Recent transactions and investment themes of particular interest include workforce housing targeted toward the Hispanic and Asian populace, affordable/subsidized housing and specifically project-based Section-8 multifamily, ethnic neighborhood retail, and select/limited service hotels. Typically, opportunities in which we invest are a result of some combination of the following circumstances:
- Fresh capital is required to effectuate a repositioning due to deferred maintenance, physical neglect, or obsolescence stemming from prior poor management or broken capital structures.
- Partnership restructurings necessitating the buyout of existing partners, an infusion of growth or rescue capital, or the buy down / payoff of debt.
- Via a targeted strategy there exists the ability to profit with a need-based product or within a needs based sector (often with other asset/corporate/partnership related issues).
- Distressed note acquisitions or REO purchases, either in conjunction with a current borrower or direct from the lender.
We deeply value and routinely rely on long term relationships in developing our proprietary deal flow, and are oriented towards developing durable and mutually beneficial operating partnerships as opposed to one-off situations. We believe that operational focus and expertise are critical and integral in creating sustainable value, and wish to forge long lasting relationships with practitioners who share these perspectives.
A real estate investment opportunity considered by Castle Hill frequently ranges between $5mm and $50mm in total capitalization, and $2mm and $15mm in total equity. We are pleased to invest in larger, more traditionally institutional sized opportunities with attributes consistent with our investment themes and focus. Required returns and holding periods are dependent upon perceived risk and the specific strategy. We invest capital in both short and long duration opportunities.