Champion’s consistent investment success is attributed to six key factors that comprise its overall business philosophy:
Nimble Investment Strategies
Champion has developed an excellent reputation for implementing successful investment and operating strategies at the very beginning of a particular market cycle or trend. Furthermore, the firm has consistently shown the ability to adapt its operating and investment strategies to monetize asset values and exit/sell as certain cycles and trends mature, while simultaneously shifting into new and emerging opportunities.
Active Buy-Sell Approach
Champion strongly believes in having an active buy-sell approach within an ever-changing portfolio of real estate assets. Once certain value-creation events or thresholds are achieved for an asset, it is then typically sold or recapitalized. Champion targets investments with value-creation time horizons and holding periods typically ranging from two to five years.
Equity Joint Ventures
Champion has significant expertise and a proven track record in structuring successful joint venture transactions with large-scale institutional investors and smaller private equity firms. By utilizing joint venture equity, Champion has the ability to invest in larger asset/property portfolios and transactions, while still maintaining appropriate levels of risk-profile diversification.
Capital Markets Expertise
Champion closely tracks the real estate debt and equity marketplace and has successfully completed a variety of complex real estate capital markets transactions. Champion uses this expertise to pursue the optimal capital structure for each investment and to exit/sell at the appropriate time, all with a goal of maximizing risk-adjusted returns on equity.
Long-Term Relationship Focus
Nationally and within various sectors and disciplines of the real estate industry, Champion has developed extensive relationships that generate attractive business opportunities, including sourcing investment transactions, acquiring properties, identifying joint venture partners, providing debt capital, and securing leasing, management and other services.
Efficient Operating and Management Structure
Champion has an efficient operating and management structure, with a focus on proactive asset management. This structure includes hiring third parties to perform property-level activities, thereby allowing Champion to engage the best-suited firms for each investment and to properly incentivize them to produce attractive operating results. With this approach, Champion retains maximum corporate flexibility with decisions to purchase or dispose of assets being unencumbered by employee and staffing issues.
Prior to and during the current Covid-19 global pandemic, Champion has remained focused on investment opportunities within the office and industrial sectors. Looking ahead, the State of Texas, and more specifically the Dallas / Ft. Worth (“DFW”) region, is well-positioned to recover and expand far more quickly than the rest of the U.S. given its central location, business-friendly environment, and relative low-cost of living. The migration of companies and individuals from high-cost, high-tax, high regulation cities into Texas and the DFW region has been continuing for several years and has gained even stronger momentum during this Covid-19 pandemic. The following economic and business trends are all critical factors pointing to a more rapid recovery and expansion in the DFW region: on-line shopping and e-commerce, on-shoring and near-shoring of manufacturing, favoring safety inventory levels over “just-in-time” inventory, the movement to low-density office layouts in low-rise buildings, blended work strategies between home and office, focusing on health and wellness, and the desire to provide employees with attractive open areas and outdoor spaces.
Champion is targeting well-located, highly-functional office properties with occupancy and/or operational challenges, but which can be renovated, re-leased, and re-branded within 2 to 5 years at an all-in basis significantly below replacement cost. The debt and equity capital markets have historically been scarcer for office properties with occupancy and operational risk, thereby creating a better “risk/reward” metric for value-add and opportunistic investments, affording investors the ability to achieve high equity returns with incongruent lower levels of risk. In the face of conservative debt lending levels and flat-to-declining space demand, new office construction is projected to drop to historically low levels for the next several years, thereby allowing investors and owners of existing assets to be well-positioned for reaping value increases within their office investments as economic recovery and expansion occur.
Champion is targeting strategic industrial land positions in emerging and expanding submarkets in which large-scale distribution centers ranging from 400,000 square feet to well over 1,000,000 square feet can be developed. These large distribution facilities are in high demand today due to the accelerating growth of e-commerce fulfillment, better/smarter inventory management, and the need to bring critical manufacturing functions back to and/or close to the U.S. The corporate occupiers/users of these buildings are targeting the major regional commerce and population centers, including the DFW region, and include the likes of Amazon, Wal-Mart, Target, Georgia Pacific, Home Depot, Lowe’s, the major global food and grocery distributors, pharmaceutical companies, furniture and electronic companies, and others serving individual and business customers who are now relying much more heavily on e-commerce and on-line shopping. According to various experts and recent research reports, the total tenant/user demand for new industrial space across the U.S. is projected to range from 750 million square feet to as much as one billion square feet over the next five years. The majority of this new space will need to be developed in the major regional commerce and population hubs; namely, the DFW region, the Inland Empire, the NJ/PA/NY corridor, Atlanta, and Chicago.