The Stone Bridge investment platform brings dedicated and efficient investment stewardship. Our firm approaches investing with a few key tenets in mind. The firm’s current industry partners and investor clients have chosen to co-invest with us due to the advantages our investment platform offers:
- Robust deal sourcing pipeline of both market and off-market opportunities identified through our deep industry network of owners, brokers, advisors, investors and operators
- Carefully chosen sponsors and/or operating partners with core competencies, experience and investment aptitude that compliment those of the firm’s principals
- Tremendous depth of knowledge and expertise in accessing accretive debt capital
- Institutional grade, ground-up underwriting
- Acquisition and disposition strategies that consider market fundamentals and momentum
- Streamlined operations with fully integrated business and accounting systems that provide critical investment data
- In-depth understanding of the financial and operational requirements of each investment
- Periodic, transparent investor reporting
While our firm typically benefits from co-investors, our investment philosophy is founded on the notion that we are investing for our own account. In return for placing our principal capital at risk in commercial real estate we expect to earn a healthy return, as our capital is invested in an illiquid asset that faces an uncertain future. We also seek to invest in situations where we can limit our downside risk.
All investments offer degrees of risk. Our firm’s ambition is to invest in situations where even if events move against us, we have a reasonable chance of recovering our investment and potentially generating positive returns.
In the fullness of time, the brightest hotel brand’s star will no doubt fade and all industrial tenants will either leave a building or go insolvent. Our firm seeks to limit investment risk by investing in properties that exhibit strong market fundamentals. This will ensure that future property renovations will allow a hotel to remain competitive, or in the case of an industrial building, allow the replacement tenant’s rent level to equal or exceed that of the prior tenant.
Commercial real estate developers are generally motivated by economic profit. New competitive buildings will enter markets as long as hotel RevPAR or industrial rent levels support reasonable returns on construction cost. Our firm targets investments at below replacement cost so that our buildings may remain profitable in times of reduced daily room rates or monthly rental rates.
Private equity investors are typically fixated on bottom-line EBITDA. There is, however, an ongoing cost of property upkeep associated with commercial real estate investing. These may include soft/case goods for hotels and tenant improvement programs for industrial buildings. Our firm’s financial projections always consider follow-on capital investments we anticipate as needed to keep our buildings functional and attractive to current and new guests/tenants.
Our firm generally targets growing markets since the upward drift of an expanding population- and economic base drives demand for lodging accommodation and limits the need for having to secure replacement industrial tenants. There may be specific instances, however, where asset pricing may allow us to invest in a property located in a more challenging market.
Since our firm’s investment programs rely heavily on leisure consumption and business activity to drive demand for lodging accommodation and industrial space, we avoid properties located in small metropolitan markets that exhibit limited demand drivers.
Our firm invests in properties that we project will provide attractive income and capital gains against manageable levels of risk. Given the competition amongst investors seeking to put money to work in U.S. commercial real estate, our investment approach yields relatively few investment candidates meeting our requirements. We prefer to make a limited quantity of investments to safeguard quality, as opposed to deploying capital against a set monetary volume target which may or may not result in attractive risk-adjusted returns.