The do’s and don’ts of investing in commercial real estate

I’m a HUGE fan of investing in commercial real estate, for various reasons:

  • Predictability of value and cashflows
  • Low beta compared to the stock market
  • Low liquidity is a minor issue for me (money management is something you do BEFORE investing, not after)
  • Perhaps most importantly, smarter people than me have said that real estate is one of the very few industries where mediocre people can succeed 🙂

Continue reading “The do’s and don’ts of investing in commercial real estate”

Opportunity in illiquid investments

All types of assets in the same asset class are not created equal. Although in general, markets tend to be more or less efficient (at least if you can wait by the river long enough), there are peculiarities in the efficiency. One of the most prominent of these peculiarities is the liquidity premium.

Continue reading “Opportunity in illiquid investments”

In commercial real estate, buying below market is essential

During my intermittent career in commercial real estate investing, i’ve found that entry yield is important, but lease rates and the price level relative to market value are occasionally even more so. Especially important in sale and leaseback (SLB) deals. The pitfall is, that frequently the deal being offered is not so much a real estate deal as a structured financing deal with inadequate collateral.

Continue reading “In commercial real estate, buying below market is essential”

A bit about my investment preferences

A little bit insight into what kind of asset classes i like and don’t like. Things to keep in mind:

  • Safety of cash flows is paramount.
  • Capital preservation is more important than capital growth.
  • This is not other people’s money so messing up and moving on isn’t really an option. You have to get more right than wrong, constantly.
  • My investment horizon is years to decades. The longer, the better. Liquidity for capital deployed is relatively unimportant, but money management is not.
  • Something that doesn’t provide a relatively predictable cashflow while maintaining it’s value, is not really a possible investment instrument. At best, it’s a hedging instrument. At worst, it’s a zero sum game with me as the lemur in a room with 700-pound gorillas who are smarter than me.
  • I operate in – and exclusively invest in – safe regions, where bureaucratic, tribal and warlord relations don’t affect property rights.

Continue reading “A bit about my investment preferences”