What are asset backed and alternative investments?
Asset backed investments are secured by hard assets and typically at a low-to-loan value ratio. Alternative assets are generally categorized as non-publicly traded assets, such as private placements. These type of investments may be structured as private equity in general partnerships, limited partnerships, LLC and joint ventures. In addition, they may also be structured as financial instruments such as debt investments in the form of secured promissory notes for real estate offerings.
The syndicate or group investment option gives the individual investor the opportunity to participate with an organized group of investors in the ownership share of an income producing property. In most cases, the assets are purchased and professionally managed by professionals who take care of the day-to-day activities. The investor is able to deploy capital into higher yielding opportunities without needing the knowledge or time to manage the investment. An individual or group can diversify their funds, hire professional management and potentially reap higher returns compared to a direct investment in real estate property.
Alternatives typically have a low correlation to other portions of investor portfolios, such as stocks and bonds. The addition of alternatives to a traditional stock portfolio has the potential to enhance returns while reducing risk. We believe that investors should diversify by reallocating or shifting small percentages from other asset classes into alternatives. CEP has created a proprietary approach for private partners to diversify their portfolio via our passive alternative asset model (PAAM℠).
How can I become a private partner to invest in a partnership, turnkey or pooled investment opportunity?
CEP offers various investment strategies allowing private partners with wide-ranging capital limitations to reap the benefits of real estate investing. Since we are a private real estate investment firm, we prefer to meet with each potential private partner to ensure the best fit. We prescreen and prequalify potential private partners prior to extending any offers. This is to ensure investment appropriateness and fit for CEP and the investor.
We prefer to work with individuals that believe in the same core values and investment philosophy. Only after both parties have determined that their interests are aligned, will CEP extend an invitation to join. Upon completion of the exploratory process of extending an invitation to join our select private partner group, refereed to as “Royals” or “Team Royal”, we will then work with you to create a personalized capital commitment plan.
Individuals are offered various private partner membership levels. These levels represent various capital commitment thresholds that we refer to as silver, platinum and diamond members. In addition to each membership level, individuals may also obtain “Blue Diamond Elite” designation status based upon an initial capital commitment or lifetime cumulative capital reinvestment threshold establish by CEP.
Do you have a minimum investment requirement?
We do not set minimum investment criteria for our projects. Do to the nature of our business we invest in projects consisting of various sizes. The size of each project dictates the number of required private partners. However, we do limit to a maximum of 35 private partners for the syndication investment strategy.
We take pride in our ability to assist private partners who may have the need to diversify, but may lack sufficient capital. We offer various investment strategies ranging from joint ventures to pool investment funds. Our approach affords us to provide offering opportunities to accredited investors and to markets previously overlooked for passive private real estate investments.
Private partners are extended an invitation to join our family on various levels. Our select group is referred to as “Royals” or “Team Royal” representing three primary membership levels; Silver Royal, Platinum Royal and Diamond Royal. Each level represents an investment threshold allowing our private partners the option to make a personalized capital contribution commitment. Members unable to meet the establish thresholds, may also be considered for associate membership.
We also reserve an elite designation called “Blue Diamond Elite” for our long-term partners and individuals with an ability to meet an initial capital commitment threshold established by CEP. Each member has the opportunity to achieve “Blue Diamond Elite” designation at any given level. Regardless of the initial contribution level, each partner is considered a “Royal”, if a private partner invitation is extended. Additional membership benefits are provided based on membership level.
Why do you call your investors “Private Partners”?
We call our investors private partners due to our desire to foster a “long-term relationship” environment. We desire to establish longstanding relationships giving our private partners confidence in our efforts to bring each investment to a triumphant conclusion. CEP invites prescreened individuals to become part of our “Royals” or “Team Royal” in select private investment opportunities.
This select group also shares our investment philosophy vision and high integrity standards. We believe that our relationship with private partners extends beyond any capital amount invested with CEP. Therefore, it is important that we align our program with individuals who share similar principles.
CEP’s private partners are entrepreneurs, business professionals and high net-worth individuals seeking to enhance overall asset value through diversification. We strive to assist our private partners with building well-balanced, risk-reduced retirement portfolios. CEP takes on the management responsibility as the active partner, maximizing returns for our select group of passive private partners.
Where do you target your investments for multifamily properties?
We focus on emerging markets within the US. At present, we have identified sub-markets located within Texas and Oklahoma areas. As opportunities arise outside of our primary markets, we will consider opportunities based on our ability to identify and expand our strategic partner network. These projects may take the form of multiplexes and /or commercial apartment deals.
CEP can create a personalize property search for investors seeking to fill their pipeline requirements. Our efforts can expand to various US regions based on specific investor needs including asset type.
Can you define your proprietary investment model (PAAM™)?
PAAM™ stands for Passive Alternate Asset Model. PAAM™ is our proprietary investment selection method used to help simplify the process of identifying the best portfolio diversification strategy for our private partners. Our proprietary method considers the investors profile, capital limitations, risk tolerance and investment time horizon, systematically aligning the private partner’s investment goals with our diverse service offering.
The results brings about a personalized selection process, which establishes a solid foundation for achieving partner’s preferences and objectives. We firmly believe that multifamily real estate is an excellent investment vehicle that can provide great benefits for investors at the accumulation, acceleration and preservation stages. Our private partners are able to accomplish this outside or within self-directed retirement accounts.
A single focused investment strategy in sync with a diverse service offering. It is refereed to as “passive” since our partners avoid the headache of personally managing investment properties, but reap the benefits of higher yielding return generated from professionally managed projects.
Where do you target your investments for multifamily properties?
We focus on emerging markets within the US. At present, we have identified sub-markets located within Texas and Oklahoma areas. As opportunities arise outside of our primary markets, we will consider opportunities based on our ability to identify and expand our strategic partner network. These projects may take the form of multiplexes and /or commercial apartment deals.
CEP can create a personalize property search for investors seeking to fill their pipeline requirements. Our efforts can expand to various US regions based on specific investor needs including asset type.
What is value-added multifamily investing?
Our goal is to make short-term to intermediate-term investment in properties that have value creation potential. We define value-add properties as projects that can be acquired below market or favorable acquisition values.
Value-add investing typically involves one or more of the following issues, deferred maintenance, poor management, high vacancy rates, inefficient utility structure or unfavorable underlying debt financing terms.
We employ a well-disciplined approach to creating value by maximizing the net operating income (NOI); therefore, forcing property appreciation. In summary, the value-add opportunity may consist of physical improvement or operating efficiencies gained by improved management.
How do you select the investment properties for syndication?
We must review several potential investment deals, in order to select a few for further due diligence review. CEP maintains a rigorous due-diligence process to determine the optimal offer price for our private partners. Each syndication dictates the return threshold, which is reflected in the specific investment offering memorandum.
The property must demonstrate the potential for significant upside in cash flow and capital appreciation. This may be accomplished via one or several of the following: filling vacancies, rent increases, management improvements and aesthetic upgrades. We view every option to increase per unit value by reducing expenses and/or raising income.
We select properties that are located in strong with above average long-term market growth potential. Our underwriting process focus on the following categories, city MSA profiles, physical property condition, proper economics and local area market analysis.
What happens to my investment if the property is destroyed by fire?
Property insurance is required by law and maintained for each property. The policy serves as a risk management plan to protect our private partner’s investment. The policy would payout the value insured for the building and private partners would have their capital returned.
Our private partners are provided the opportunity to reinvest their funds into other investments. This option affords them the ability to continue earning secured returns at their previous or new membership level based on capital threshold.
How do you keep your private partners informed regarding the status of the investment?
CEP takes pride in communicating with its private partners to the point that we actually included it in our vision statement. We use this as a differentiator to separate us from the competition. Based on our industry research, it was determined that investors were disappointed with investment sponsors who did not provide sufficient communication, even after receiving return of capital.
We seek to achieve the appropriate balance of communication that serves to keep private partners informed. However, if at any time our private partners want to know information, they are welcome to call or visit. We maintain an open book policy regarding our investments.
Our activities include regularly scheduled conference calls, newsletters and investor gatherings. Financial reports and updates include investor specific interest data, operating activity and reserve balances. Annual tax statements completed by a third-party are also provided to each private partner.
[h4]This is not an exhausted list of questions, so feel free to contact us with additional inquiries.[/h4]
