We are a research-driven firm with the capability and contacts to purchase off-market transactions through many years of enhancing our business relationships and presence in the market. TerraCap operates within a limited spectrum of real estate investment, enabling us to invest with little competition. We are positioned comfortably between the extremes of individual investors and large, highly capitalized firms, enabling us to combine capital with creative deal-sourcing to acquire valuable properties in below replacement cost.
TerraCap acquires main stream property types— primarily office, flex, hospitality, multifamily, and retail. The firm avoids unusual specialty properties such as casinos, amusement parks, golf courses, hospitals, and other higher risk ventures. We focus on the Southern U.S. because population growth is rapid, supply is limited, and prices are low. Our emphasis is on well-established and well-built properties in strong locations, where potential for future competition is limited and the acquisition price is below the cost of replacement. Though our properties share the characteristics of population growth, modern infrastructure, low crime, and limited potential for new product, diversification is achieved through variety by type of property and by tenant base, in addition to geographic dispersion across many different cities and communities.
TerraCap employs its acquisition strategy in four phases.
1. Researching and analyzing properties and the market.
TerraCap uses a number of primary and secondary sources to collect relevant information about the property and its market prior to acquisition. Factors we take under consideration during the research and due diligence processes include:
- Present and projected economics of the market in which the property is located
- Seller’s financial distress
- Opportunities to improve management at the property
- Opportunities to increase leasing and rent revenues at property
- Whether the property meets environmental standards
- The extent of required repairs and improvements
2. Conducting necessary repairs, renovations.
Property repairs neglected by previous owners have the potential to increase operating income once completed. Additionally, any purchases of franchised hotels will typically involve a flag-mandated overhaul of the interior and sometimes exterior to comply with brand requirements. Upon acquiring any property, TerraCap’s asset management team immediately orchestrates any necessary maintenance, repairs, or other improvements by hiring the requisite engineers, architects, contractors, and facilities staff. Having established relationships with local businesses, TerraCap chooses its vendors through a highly competitive bidding process, ensuring that licensed professionals conduct the improvements well within budget.
3. Improving management at the asset level.
TerraCap often finds that simply addressing redundancies and inefficiencies in property management staffing and budget planning has the potential to raise revenues and increase the value of an asset. TerraCap evaluates each property to determine the level and type of staffing required to effectively manage the property, occasionally hiring local management professionals to conduct services TerraCap may be unable to conduct directly.
4. Making dispositions.
TerraCap holds properties for one to four years, with dispositions generally commencing in the third year of ownership.