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Expanding a Firm’s Property-Sector Reach

By March 2, 2015No Comments

Passco Cos.’ new VP investments Bob Peterson tells exclusively that his new position will allow the firm to augment its reach into various property sectors now that the economy is getting back on track. Following the recent announcement of his joining the firm, we spoke with Peterson about his new role there, how investors are standing out from their competition and the advantages of diversifying among property sectors when investing in real estate. What are you looking to accomplish in your new role with Passco?

Peterson: Although it began as a retail investment company and has been involved in all the major property sectors over the years, during the last seven to 10 years Passco has been really focused on multifamily investments in primarily stabilized properties. The firm is now making a push for the other sectors as well, and my goal is to expand on my capabilities in industrial, retail and office as well as to expand beyond stable products and into more value-add. What are the main ways investors are distinguishing themselves from their competitors in order to close deals?

Peterson: I’ve been through these cycles in the past. You have to be extremely responsive, move quickly from start to finish, do your due diligence and do what you say you’re going to do. It’s true in life and in acquisitions. Honor your word, and that will lead to strong relationships with brokers and sellers and allow you to succeed. What are the main differences in underwriting practices for the various property sectors?

Peterson: The first couple of things are very similar across all product types. You first take a top-down look, trying to understand the trends from a macroeconomic perspective such as the overall large companies and employers in the area, job growth, infrastructure, schools and quality of life. As you step down to the next level, you want to be in the proper submarkets and understanding those markets, as well as what your competitors look like. The next step down is where the differences lie. For example, in retail, you look at sales volume and how each tenant complements each other; in office, you look at the parking ratio; in industrial, you consider the number of docks and trucking and how access works. There are different factors you look at as you get down to the property level. What are the advantages of diversifying among property sectors when investing in real estate?

Peterson: There are advantages in diversifying to companies like Passco, but there are also advantages to investors. Passco has a tremendous platform in place that includes accounting, asset management and other services, and we can leverage off that as we grow into other product types as long as we have people with the right market knowledge—we can leverage off their reputation. The future advantage is we can be more efficient and go deeper into different markets. For the investors, diversifying is about supply and demand. With some product types, now might be the right time to buy, and for others it might not. Diversifying across product types allows investors to take advantage of the right investment opportunities at the right time given the fundamentals.

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