Investment Strategy & Execution
Well before starting to search for multifamily assets that meet the investment criteria, Gray Duck Capital underwrites specific markets and submarkets to determine their desirability for investment. We target markets that demonstrate favorable demographic and economic growth. Gray Duck Capital is currently actively targeting assets in Minnesota, Ohio, Indiana, and Missouri.
2Source Apartment Acquisition Targets
After a market and submarket have been identified, Gray Duck Capital begins searching for assets that meet prescreening criteria through off-market and broker relationships. Prescreening criteria examine the age of the property, size, initial financials metrics, mechanical systems, and unit mix, among many others.
Once an asset meets our initial prescreening criteria, the team will undertake a much more in-depth underwriting and analysis of the asset and it’s operations. A proprietary underwriting modeling tool is utilized in the analysis. The data and assumptions are supported by information provided by property management organizations, rental comparables, general contractor teams, industry-leading research firms, and the team's market knowledge.
4Negotiate LOI and PSA
If the asset meets the initial underwriting criteria, the team will schedule a tour of the property and begin preparing an offer through a Letter of Intent (LOI). If the offer is selected, the team and the seller begin to negotiate the Purchase Sale Agreement (PSA) based on the foundation of the LOI.
After the PSA has been executed, the team begins a comprehensive due diligence process. This includes a detailed Property Condition Assessment which inspects every unit and all common areas. All historical financials are scrutinized and leases are audited amongst the additional layers of our due diligence process. During this stage, the team also finalizes the business plan for generating additional value from the asset. After completing the due diligence process which has indicated clear to close, Gray Duck Capital will open the investment opportunity to its passive investor partners.
6Close on the Acquisition
After completing all due diligence items, the acquisition of favorable financing, and the full subscription of equity from investor partners, Gray Duck Capital is ready to close on the asset acquisition.
Upon closing, Gray Duck Capital immediately engages its business plan. The business plan will typically include implementing new property management increasing operational efficiencies, and physical improvements to the units and amenities. All initiatives implemented are done so with the ultimate goal of growing NOI. Throughout the hold period, Gray Duck Capital will provide monthly and quarterly distributions to its investor partners and provide transparent updates and reporting.
8Capital Event: Sale/Refinance
One of the final steps in the investment strategy includes a capital event when favorable. Depending on multiple factors, this capital event could be a recapitalization through debt refinance or through disposing of the asset. Different considerations analyzed include tax implications, capital market environment, and the sales market.