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.
Champion is currently targeting well-located and highly-functional commercial property investments with occupancy and/or operational challenges, but which can be renovated, re-leased, and re-branded to within 2 to 5 years at an all-in investment basis significantly below replacement cost, thereby generating outsized risk-adjusted returns on equity invested. The following key points represent the central tenets of this current investment strategy and opportunity from the Champion perspective.
Invest Below Replacement Cost
Investing in commercial real estate at values and projected all-in cost levels well below replacement cost has been one of the best strategies historically for both limiting downside risk and generating future capital appreciation.
Attractive Risk/Reward Profile
The debt and equity capital markets have historically been scarcer for commercial real estate 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.
Disproportionate Employment Growth
Job growth is the key element affecting the office, industrial, retail, residential, and all other commercial real estate sectors. And in regard to job growth, Texas and the rest of the Southern U.S. continues to lead the nation by a wide margin, thereby resulting in these markets having the most favorable outlook for near-term and long-term commercial real estate investment performance.
Limited New Construction
New commercial real estate construction, even well into this prolonged recovery, remains at historically low levels when compared to tenant demand and job growth, especially in Texas and the Southwest U.S. This dynamic should continue well into the future as the overall economy approaches lower levels of projected growth in the face of ongoing construction cost inflation and conservative levels of debt lending, thereby allowing investors/owners of existing assets to be well-positioned for ongoing increases in the value of their real estate investments.