Strategy

Acquisition and Operating Strategy

Alpha-One Capital Group seeks to find attractive multifamily properties with value-add opportunities. We deploy a systematic and rigorous research methodology to select the deals that match our investment criteria. Less than 10% of the reviewed projects are passed from the screener, and only about 5% can overcome the scenario stress test and move on to deal structuring.

Once acquired, through the implementation of our core value-add program, we will be able to improve the NOI of these types of properties significantly in the first three years of ownership. We develop a unique business strategy for each property based on project location, building condition, and tenant profile. For example, we explore energy efficient initiatives to meaningfully reduce operation expenses. We leverage expertise from property management so that each property asset undergoes a comprehensive repositioning to attract the highest market value with optimal operating efficiencies.

Depending on changing macroeconomic cycles and local market conditions, we sale, refinance, reinvest, and hedge our portfolio holdings to generate attractive risk-adjusted returns. The firm co-invests substantial equity in all of its transactions.

Investment Process

STEP 2

Location Analysis

STEP 3

Quote and Estimate Request for Insurance, Tax, and Debt

STEP 4

Build Underwriting Model

STEP 5

Scenario Stress Test

STEP 6

Go/No Go Decision

STEP 7

Raise LP Captial

Risk Control in Commercial Real Estate

The three primary kinds of risk in commercial real estate are: liquidity, market, and interest risk.

Liquidity

The value style of investing seeks to generate stable cash flows and gain capital appreciation over medium or long-term. Through a series of renovation works and more efficient management, the property value will be significantly improved over the 3-5 years holding period. One way to reduce the risk of liquidity is to refinance the property. In this case, the investor’s principal can be partially or fully recovered for future reinvestment.

Market

The market risk depends on the performance of the US economy. Other factors include market price, occupancy rate, and operating costs of the rent. Our investment research team are fully committed to the due diligence study to carefully select the target deals that have sufficient growth potentials. We will optimize the tenant experience to achieve high occupancy rate, and effectively control the operation expenses via detailed property management. When unpredictable major market risk occurs, we are confident to keep enough cash flow against various economic cycles.

Interest

We can choose either a fixed or floating interest rate on the loan. If we select the fixed rate, then during the entire loan period, the interest risk is effectively hedged. If we go with the floating rate, then the starting point of interest rate will be lower than the fixed counterpart. If necessary, we can also purchase interest rate caps to lock the maximum interest rate. In addition, our target debt service rate (Debt Service Coverage Ratio) is 1.40x, while the lender’s standard requirement is 1.25x. Therefore, our capacity to repay the loan is highly adequate.