Financial Opportunities The deal structure for Aslan Realty Group is unique to each transaction depending on several variables including: acquisition price, renovation size, existing debt and financing options as well as a predicted future disposition price. Therefore, a “typical” transaction analysis is difficult to create. In general, the investment returns for equity contributions made by individuals averages 10% - 14% per year, assuming a two to five year holding period. These returns are commensurate with multi-family investments given the sector’s lower risk profile as compared to land development or office building investments. The specifics of each deal structure varies with the participation of the institutional equity partner. Some of our institutional equity partners include, AEW, Lehman Brothers, GMAC, and Buchanan Street Partners. The individual equity participation creates an opportunity to actually invest alongside these institutional equity firms. Generally, the individual equity investor receives a preferred return plus a percentage of the profits beyond the preferred return. The preferred rate is paid based on the performance of project and mandates that equity investors receive their initial capital plus the preferred return prior to Aslan Realty Group receiving any profit percentage. Thereafter, Aslan Realty Group is compensated for superior performance as project returns beyond the preferred return are split with the individual investor, the institutional investor and finally the remaining portion to Aslan Realty Group. As a result, the internal rate of return for the individual equity investor is underwritten to yield 10% - 14%. For investors who are more risk averse there are occasional opportunities to participate in mezzanine debt and preferred equity placements. These investments have a lower risk profile and generally return 8% to 10% on an annual basis. |
