DIRECT ACQUISITONS OF REAL ESTATE
For select properties, PNT will acquire real estate assets directly. (See PNT acquisition criteria below.)
Via the financial and professional resources of its parent company, CMS Companies, PNT can close on properties with all cash with no contingencies needed to raise equity capital. In contrast, many private buyers require contingencies to raise equity capital from partners while 1031 Exchange or Tenant-in-Common buyers must wait to sell other 1031 properties to raise necessary proceeds. This certainty of execution (subject to normal due diligence and supplementary debt financing if needed) makes PNT an ideal candidate for sellers and brokers that value liquidity in this very illiquid marketplace of commercial real estate.
PNT welcomes brokers and sellers to contact PNT at (303) 333-2324 or to email property marketing materials to deals@pntcapital.com.
PNT DIRECT ACQUISITION CRITERIA
Transaction Size Criteria: Preferred acquisition total transaction size (including equity and debt capitalization) would range from $5 million to $50 million.
Asset Class Criteria: For direct acquisition opportunities PNT will contemplate almost any type of cash-flow-producing commercial real estate asset; however, due to asset management resources available in-house at its parent company CMS Companies, PNT prefers the following asset classes:
- multifamily-for-rent (i.e. apartments)
- full-service hospitality/hotel
- retail centers (anchored and un-anchored
Geographic Criteria: Direct acquisition opportunities must be located within a top 50 metropolitan statistical area in the United States or in the Canadian cities of Vancouver, Calgary or Toronto. No other geographic markets will be considered unless there is strong demographic or economic data to support investment in that region.
Upfront Cash Flow Criteria: PNT prefers direct acquisition opportunities that are already generating some cash flow upfront. Non-cash flow producing assets such as undeveloped land, fully-improved house lots or commercial land parcels or vacant buildings will be considered on a selective basis only.
Value Creation / Risk-Reward Criteria: PNT evaluates all opportunities on a risk-adjusted basis – if it believes that the projected returns are sufficient to compensate for the perceived risks taken, then opportunity has merit. Having said that, PNT prefers higher total-return opportunities in which total returns are achieved through a combination of current cash yields and capital appreciation. Below are the two primary value creation profiles that PNT pursues in its direct acquisitions:
- “Value-Add” Transactions: PNT prefers acquiring properties where value is to be created by improving operating cash flow over time (via the implementation of a management and/or capital improvement program) as opposed to relying upon capital appreciation for value creation. (These are typically referred to as “value-add” or “core-plus” acquisition opportunities depending on the perceived risk taken.)
- “Opportunistic” Transactions: PNT will also consider acquisition opportunities further up the risk-reward spectrum where the value creation is predicated upon a combination of significant capital appreciation and/or significant cash flow improvement. (These are typically referred to as “opportunistic”, and sometimes even “speculative”, acquisition opportunities depending on the perceived risk taken).
In select circumstances PNT will consider moving down the risk-reward spectrum to acquire more stable, income-producing opportunities when PNT believes such acquisitions could complement some of the lower current-cash yielding “opportunistic” assets within PNT’s overall portfolio. In the case of such acquisitions, value is expected to be derived solely from current cash yields and not from capital appreciation. (These are referred to as “core” acquisitions. Financial “sale-leaseback” acquisition opportunities also fall in this category).
