Diversified Portfolio Investments

Prescott’s diversified portfolio investments are comprised of designated institutional quality commercial properties located in multiple U.S. markets. By investing in properties and portfolios sponsored by Prescott, sophisticated investors with smaller investment allocations can participate in the direct ownership of a diversified transparent portfolio of commercial real estate assets. By aggregating buying power, smaller investors at a lower investment threshold can own commercial real estate assets of a quality and sponsorship ordinarily available only to larger investors. These investments are further made available at fee loads more typically available only to larger institutional investors.

Portfolio Characteristics
Prescott’s portfolios are distinguished by the institutional quality of their assets, fully transparent underwriting, and the complete identification and disclosure of the assets to be acquired and the investment strategy before any commitment of investment capital is made. Investments are made in designated portfolios of commercial properties, thus eliminating the potential for internal conflicts and changing investment strategies. Portfolios benefit from Prescott’s close ongoing oversight and asset management and can be integrated with other wealth management products for the private client.

Emphasis on Diversification
Diversified portfolio investments are composed to reflect the concept of “Dynamic Diversity”. Properties within a portfolio are typically diversified across several of the following criteria:

Tenant: To reduce credit risk associated with specific tenants.

Business Base: So that no single industry dominates a portfolio’s underlying business base.

Lease Term: Affording protection against undue leasing risks.

Geographic: To avoid undue geographic concentration in a local or regional market.

Competitive Advantages
Prescott’s portfolio investments are structured with initial fees that reflect institutional pricing levels and compare favorably to fee loads of many competitive investment vehicles oriented toward the private client market, which can exceed 15.0%, including costs, for investment products oriented towards the individual investor at the retail level. Overall fee levels for Prescott’s portfolios are considerably lower than those of many other real estate products generally available.

Alignment of Interest
Prescott’s investment structure assures an alignment of interest between Prescott and the investor. The investor receives a return of capital and all distributions to a specified level before Prescott receives its carried interest in an investment. The division of the carried interest also allows the private client to receive the majority of appreciated asset value.

Portfolio Composition
Prescott invests in prime, institutional quality assets with attractive return characteristics, based on conservative underwriting criteria. Prescott often targets properties in the “Core Plus” and “Value Added” segments of the real estate investment market that represent especially attractive assets in the investment spectrum offering attractive risk adjusted returns. Prescott acquires properties that offer a positive combination of attributes and can achieve an optimal balance between operating risk and financial reward.

Prescott typically targets portfolios comprised of mid-sized properties, valued individually between US$15 million and US$75 million, to minimize specific asset risk across the portfolio and to afford maximum flexibility upon disposition. Portfolios are typically concentrated on one product type per portfolio, such as office, industrial, retail, residential, hospitality, or mixed-use. Prescott pursues assets that have intrinsic competitive advantages within their marketplace and are positioned to benefit from the economic growth of their market and region. Prescott’s target investment markets are carefully selected and constantly assessed based according to rigorous evaluation criteria. Important factors considered include barriers to entry for new development, favorable economic and demographic characteristics, positive conditions for continuing job growth, and a diversified business base.

Portfolio Investment Philosophy
In the creation of diversified portfolio investments, Prescott’s investment philosophy is based on the application of three fundamental tenets:

  • Capital Preservation - Through avoidance of excessively speculative transactions, application of market knowledge and conservative underwriting, diversification, and varied lease terms.
  • Current Income - Through accurate valuation and adherence to strict underwriting criteria and the prudent use of leverage.
  • Capital Appreciation - By capturing properties’ potential for capital appreciation through active and professional asset management and targeting assets with the possibility for “event driven” increases in value.