The Threshold Advantage
Direct investments in real estate partnerships, unlike stocks, bonds or mutual funds, are not directly subject to market driven forces. The return on investment here is tied directly to the performance of the underlying asset, which is ultimately the responsibility of the firm or sponsor. In comparison to other real estate investment firms, Threshold offers multiple points of differentiation:
Sharing The Risk
We are investors first and foremost and we place significant capital in every deal. Sharing in the investment risk with investors offers a high degree of comfort that our focus and attention is where it needs to be - on the assets. The founder and President of Threshold is the largest individual investor across our portfolio. In our opinion, a sponsor should share significantly in the risk reward with its investors. In short, we back our play.
Experience
Threshold’s President and other key members have transaction experience surpassing 50,000 units throughout their careers. With this level of experience, we have tremendous market knowledge and coverage throughout the country. While broad market knowledge is clearly important, understanding the dynamics at the submarket level is absolutely paramount. Given the unique nature of each property and its submarket, it is vitally important to have the experience to properly ascertain the strengths and weaknesses of the immediate competition. Potential competitive advantages are identified through detailed submarket analysis and Threshold executives are actively involved in performing a thorough market competitive study for each investment. Our strength is identifying the potential advantage and turning that into reality.
Deal Flow
Our industry can be very competitive, where transacting a deal quickly can separate yourself from the competition. Our underwriting and financing processes are highly regimined, allowing us to shorten our due diligence periods, while also limiting contingencies to sellers. With an established track record of closing deals timely, we offer certainty of execution to sellers and many times this gives us a distinct competitive advantage. We have also cultivated deep relationships with private owners, loan servicers, and the brokerage community, where we have access to many less competitive, off-market opportunities.
Access to Capital
Given the current upheaval in the capital markets, access to debt capital is vital. The agency lenders Fannie Mae and Freddie Mac are the primary choices available to borrowers today and are critical to purchase and refinance properties. Threshold's President has been involved with nearly $500 Million of debt financing with agency lenders and has an excellent reputation as a top-tier borrower. Threshold's borrowing experience and track record provides a distinct competitive advantage over less experienced operators, who may have limited success borrowing from the agencies.
Strategic Planning
A somewhat overlooked aspect of real estate investments is prudent strategic planning throughout the life cycle of an investment. In the multifamily sector, property characteristics can vary widely. This requires a flexible business plan based on the specific needs and major component life cycle of each property. While it is obviously important to have a solid business plan during the initial phase of ownership, a fairly large percentage of distressed assets fall victim to poor planning in the middle to late stages of ownership. While we believe the most money can be made on “the buy”, we strongly feel considerable money and value can be lost on “the hold”. To protect asset values, we continually evaluate each property's future capital needs, submarket activity, and potential supply considerations. Submarkets can evolve rapidly and adapting to the needs of each asset is key to countering the competition and preserving equity value
Added Layer of Protection
Threshold serves as an extra layer of protection and oversight that many investment firms do not offer. We have aligned ourself with top-tier management companies who directly oversee the day to day managment of the assets, while we serve to further monitor operations and fufill the business plans. Each professional management company is required to have excellent technology and accounting systems in place, allowing us to effectively monitor and track each asset through our own centralized reporting. This outsourcing model has proven to be very efficient and cost effective, as we can effectively focus on the properties and not other time consuming aspects of corporate administration and day-to-day property management. We prefer to manage money, not people.
