Investment Principles
The principles that guide our investment decisions
At Apparent Capital, we’re strong believers in real estate value investing. Leveraging our knowledge of real estate and our long-standing industry partnerships, we seek investment opportunities that offer the potential for long-term growth. Committed to a thoughtful, disciplined investment philosophy, we target a portfolio that is designed to thrive over the long term, preserve capital, deliver compounded returns, and protect against market dislocations.
To guide our investment decisions, we follow six enduring principles:
First and foremost, we are value investors who target assets that can be acquired meaningfully below their intrinsic value. The price we pay for an asset is the most critical business term of any investment, as it can’t be altered and it sets the stage for the risk we’re taking on. While we are highly attentive to the upside of every investment, we actively seek out superior real estate opportunities that we believe carry less-than-commensurate risk and select those investments where rigorous due diligence indicates we will meet or exceed growth expectations.
Our dedication to diversification means we can “go anywhere” within the multi-trillion-dollar United States real estate market, which has over a dozen unique property types that fall within our domain of expertise. We intentionally target investments that contribute to a portfolio varied by asset class, partner, geography, size of allocation, and other factors. Our approach to portfolio diversification serves to mitigate the risk associated with any individual investment while also protecting capital and increasing the probability of generating collective compounded returns.
Our goal is to compound our investors’ capital over a 10+ year horizon, while favoring reinvestment over distributions. At the individual deal level, we target internal rates of return of 15%+ over a long-term hold period. We take the trust conferred upon us by our investors very seriously, and it underpins and guides all our investment decisions. Free of the restrictions associated with a short-term fund horizon, we take a thoughtful, analytical approach to sizing our investments that leverages our deep experience and relentless focus on the long-term.
To best achieve portfolio growth and maintain balance, we aim to keep a significant portion of our capital liquid, ensuring that we have the flexibility to react to real-time investment opportunities as they arise. When making investment decisions, we think beyond individual opportunities, consistently evaluating the resilience of our overall portfolio with an eye toward keeping it nimble and responsive, and preserving our
decision-making flexibility.
Our long-standing partnerships provide our investors with significant benefits. Our partners know they can leverage our investment experience, our capacity to raise capital quickly and efficiently, and our strong balance sheet to strengthen any deal. In exchange, we receive equity partner status and a higher potential return than a typical investor or limited partner. We regard these ‘Apparent Edge’ opportunities as the highest and best use of our private capital allocations, and a significant proportion of our investments in private deals carry some level of this enhanced economic benefit.
We seek investment opportunities where all participants are well-aligned. We only participate in carefully structured deals where the sponsor, investors, and any other relevant parties share equally in both risk and reward. Every deal and partnership we consider goes through a thorough due diligence and reference-checking process.