Prescott acquires individual properties and portfolios of assets as well as operating and investment entities with significant property holdings. Prescott invests in a comprehensive range of real estate asset classes in the U.S. and internationally and brings extensive experience and a thorough understanding of market returns and operating performance across multiple property sectors to each investment considered. Prescott acquires office, industrial, retail, hospitality and residential properties, as well as land held for future development.
Each sector of the property market is subject to unique constraints and opportunities relative to market performance. In considering investments in income producing properties, Prescott evaluates significant factors in each asset’s ability to generate attractive risk adjusted returns, including the near and longer term supply and demand characteristics of the marketplace; an asset’s specific location relative to its target market; its potential for appreciation and redevelopment; the character and economic terms of its tenancy or business base; its physical condition and adaptability to upgrading or reuse; and the effectiveness and cost of property management. These considerations allow Prescott to properly evaluate an asset’s market position and pricing relative to current and projected future value as well as to other appropriate parameters in addition to an asset’s anticipated ability to generate attractive ongoing returns. Prescott is willing to invest counter-cyclically, but only acquires assets if they have appealing return characteristics and are appropriately priced relative to the market and underlying value. Prescott continues to see attractive opportunities to acquire properties in multiple property sectors.
The onset of the global pandemic in Q1 2020 created significant disruption in the international property markets. The residual impact of the pandemic continues to vary widely by property type and market. The office sector is among the most significantly affected. The prognosis for the office sector, and particularly multi-tenant properties, remains unclear. For example, it is estimated that it will take several years before utilization of office space in Manhattan returns to pre-pandemic levels. Across commercial real estate sectors, industrial space will continue to be highly prized as the trend toward e-commerce accelerates and corporate warehouse, distribution and logistics facilities are all in demand. The retail sector will continue to be troubled at all levels except, perhaps, the most premium assets. The sector’s significant disruption and challenges pre-date the public health crisis and have merely been accelerated. While the hospitality sector saw a dramatic and immediate impact from the pandemic, its pathway back is more predictable and, in some sectors such as select service properties, already occurring. The residential sector, particularly multi-family apartment property, remains in high demand as a desired component of both institutional and private investment portfolios. Over the past twelve months, public health concerns and their economic impact have dominated markets; divisive political issues have remained unresolved; and many industries have continued to undergo disruption and sweeping transformational change. Many real estate investors have experienced difficulty developing a coherent strategy to achieve attractive risk adjusted returns on a programmatic basis. Transaction volume in the North American property markets remains significantly below pre-pandemic levels. Despite these challenges, many of which are ongoing, the economic impact of the pandemic and, specifically, the outlook for property investment is becoming clearer.