First Atlantic Capital takes a disciplined approach to selecting investment targets that encompasses a multilayered analysis consisting of identifying regulatory programs, market characteristics, ownership types and financial factors. Among the issues considered in the selection of targeted properties are those that either enable or inhibit the ability to add value to an asset. These include:
Restrictions or limitations on rent increases
Distribution of cash flow
Mortgage repayment
Refinancing
Distribution of reserve accounts
Rights and interests of ownership entities
Expired tax advantages
Exit taxes
Since added value strategies are largely dependent on increased income, analysis includes detailed rent comparisons, the terms and conditions of existing debt, and the potential for assumption, restructuring, refinancing or sale of the underlying security. Targeted properties with the most feasible financial indications are those with strong rental markets and controllable and predictable operating expenses.
Prior to initiating contact with an acquisition target, First Atlantic Capital would typically evaluate the following:
Refinancing and holding the asset after increasing rents
Processing mark-up-to-market of a 236 decoupling through HUD
Refinancing at the current rents and holding the asset for future disposition
Redevelopment of the asset combined with equity raised through the sale of Low Income Housing Tax Credits
Holding the investment for current cash flow and a future disposition or capital event
Potential sale of the asset