US Case Study 2

Richwood’s “Speed to Income” Investment Philosophy

Balance portfolio between assets with existing cash flow and assets requiring additional capital or repositioning to achieve stabilization.

12% IRR Value-Add Gross Return Spectrum1 17%+ IRR
Bucket 1 
Income  in Place
Bucket 2
Income Expected
Within 12 to 24 months
Bucket 3
Income Expected
Within 24 to 36 months
Targeted Renovation
Income in Place
Healthy ROE
Moderate/Heavy Renovation
Create NOI
Rebuild ROE
Major Renovation
Development Risk
Residual Drives Return
25% to 35% of portfolio* 30% to 55% of portfolio* 15% to 25% of portfolio*
Fund X as an Acquisition Case Study

*The spectrum of returns represents gross returns and performance metrics net to the vehicle (as opposed to the investor) and are net of joint venture level fees, expenses and carried interest or other incentive compensation. Thus, they are not to be viewed as an indicator of likely performance returns to investors. There can be no assurance that the investment objectives will be realized or that Richwood will be successful in finding investment opportunities that meet the anticipated return parameters. The diagram describes the potential types of transactions that may be made by a Fund, are illustrative only and such details may be subject to change. There can be no assurance that a Fund's investments, if any, nor the Fund's portfolio will have any of the characteristics described herein.

Portfolio Construction – Richwood’s Local Knowledge

Focused on secular changes and product opportunities, Richwood facilitates diversified portfolios across property types while leveraging its mixed-use expertise to capitalize on growing demand for live-work-play communities.

Office
Secular Trends Opportunity
  • Employees (“talent”) drive decision on location & building
  • "Space as service”: offices are taking on characteristics of  apartments and hotels
  • Changing work patterns influence demand
  • Properties are bifurcated into “haves” and “have-nots”
  • Three Fs: Fast, Flexible, Fun
  • Assets with embedded rental growth, near-term lease  expirations, and modest capex
  • Renovate properties with “good bones” conducive to  satisfying the demands of today's tenants
Multifamily
 Secular Trends Opportunity
  • Apartment demand bolstered by strong demographics  including Millennial, Gen Z cohorts and Boomers
  • Higher mortgage rates and limited tax benefits continue to  favor multifamily
  • Despite uptick in apartment supply, overall residential  construction levels remain below long-term averages
  • Target properties less than 20 years old with unit sizes larger  than new development
  • Medium to heavy rehab/adaptive re-use of Class A or B  assets in locations with outstanding demographics
  • Select development of state-of-the-art product
Retail
 Secular Trends Opportunity
  • Most impacted by secular trends and disruption
  • Shift by traditional retailers from brick-and-mortar to omni-channel retail has continued
  • Pedestrian-friendly urban retail in areas with strong  demographics
  • Focus on properties with the “6 Fs” - food, fitness, furniture,  fun, frugal fashion, and faces (cosmetics)
Hotels
Secular Trends Opportunity
  • Wider cap rates offer yield premiums
  • Supply is both a threat and an opportunity. We expect  supply to curtail over the next two years
  • Focus on higher-end select service with in-place cash flow  requiring moderate capex
  • Manage risk using moderate leverage and stress test  performance

RICHWOOD –We Know the US Gateway City Sub Markets

At Richwood, we priced ourselves on having the local market knowledge which drives risk adjusted returns and effective asset management and market timing.

Seattle
CBD, Ballard, Capitol Hill, Bellevue, Eastside, South Lake Union, SoDo
San Diego
CBD, East Village, Little Italy, Sorrento Mesa, DelMar, Kearney
Boston
CBD, Seaport, Cambridge, Allston, Somerville, S. Boston, Waltham
Portland
CBD, Pearl District, Central Eastside, Northeast
Denver
CBD, LoDo, RiNo, Cherry Creek, Tech Center
New York City
Midtown and Downtown Manhattan, Brooklyn, Chelsea, Greenwich, Hoboken, Jersey City, Long Island City/Astoria
S.F. Bay Area
SF CBD/SoMa, Mission Bay, Silicon Valley, Mid-Peninsula, Oakland/East Bay
Phoenix
Chandler, Tempe, Scottsdale
Washington, D.C.
CBD, H Street, NoMa, Shaw, Union Market, Bethesda, Reston
Los Angeles
West L.A., CBD, Arts District, Echo Park, Los Feliz, South Bay, Tri Cities, O.C. Airport Area, South O.C.
Austin
CBD, Zilker Park, Central Austin, Northwest Hills, Round Rock
Miami
CBD, Design District, Doral, Ft. Lauderdale, Midtown, West Palm Beach, Wynwood

To discuss how our local, proactive and professional approach could meet your needs, please contact us

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