Dear Altus Insight Readers,
At Altus we take our commitment to providing Altus Insight readers with useful thoughts and analysis very seriously. Each month, hours and hours of preparation go into what you see as the final product. While we hope it brings value to our readers, it also brings value to us internally. Gaining a better understanding of the world around us allows us to be constantly challenging our assumptions and philosophies. The world is a little bit crazy right now from a geopolitical perspective. There is considerable uncertainty about our economic and investing future (and even if the data we are receiving is accurate). And of course…there is an election in just a few days. The future will not look like the past, so we need to stay alert, aware, and self-honest if we are to succeed in our investing endeavors. There is, and will continue to be, plenty to analyze and discuss in future Insights, but sometimes, Altus’s day job gets in the way. After years (literally) of largely fruitless searching for opportunity, over the past two weeks we have broken the log jam and now have more opportunity in our pipeline than we have ever had before at one time. The Discipline section of Altus’s Investing Fundamentals is worth sharing here:
- Discipline is the most important skill for underwriting, negotiation, due diligence and execution. Once identified, solid opportunities are pursued diligently and aggressively.
- Long term investments, in cash flowing assets, with high debt coverage ratios, transcend and mitigate market price volatility.
- Investments with similar and interchangeable tenants (or buyers) reduce catastrophic risk despite the extra asset management resources associated with such investments.
- An ideal investment has strong expected returns and a stabilized cost basis well below replacement (or liquidation) cost.
The opportunities before us are well below replacement cost, and if fully occupied, would comprise of nearly 1,300 individual tenants. Most of the purchases have existing, assumable, and fixed rate debt. The cash flow is strong to boot. We have agreed to terms on these opportunities, and we are now in the process of pursuing them diligently and aggressively. The time and effort required to execute means that we must eliminate other things from our schedules for the time being. In this case, it is the October Altus Insight. We apologize for not being able to share anything new with you this month, but we think the two Insights found at the following links are highly relevant to the current investment world, and to the wonderful opportunities that we all have in front of us.
Why Here? Why Now? — Altus Equity
Forrest’s Theory of Relativity (Reprise)
We will be back at it again for the November Insight. By then we should have a new president identified, and hopefully in a peaceful manner. As we go to the polls, let’s remember how fortunate we are to live in a country with the freedoms that we have, and in a government structure that protects those freedoms. And let’s make sure we hold onto those freedoms for our children and grandchildren’s sake.
