Channing acquires income producing, multi-tenant commercial real estate assets in select markets with conservative capital structures with the intention to provide investors with consistent, predictable, attractive returns comprised of current income and capital appreciation.
Direct real estate investing is the best asset class for long term wealth creation because there are three value drivers that can generate robust returns. Importantly, if one value driver falters, the other two provide downside protection and wealth generation.
Current Income
Current Income
Solid, consistent and predictable cash flow is a key feature of real estate investing. Current income that may be tax advantaged reduces the dependence on residual values to generate overall investor returns. Channing will target assets that can produce an average 9% current yield to investors.Loan Principal Amortization
Loan Principal Amortization
Matching an asset’s duration with the maturity of its liabilities is an important corporate finance discipline. Reducing outstanding debt balances further reduces risk and creates the opportunity for significant cash flow events upon capital transactions.Asset Price Appreciation
Asset Price Appreciation
Acquiring good real estate in strong locations, effectively managing the physical asset and taking care of the tenants should over time result in increases in asset value and more equity proceeds upon an exit or refinancing.Other advantageous characteristics of direct investing in privately held real estate include:
- Non-correlation and less volatility than publicly traded stocks and bonds. Publicly traded REIT returns are correlated to the broader public market, offering less portfolio diversification than privately-held real estate.
- Real estate is an effective inflation hedge given the hard asset protection with potentially compensating increases in net operating income.
- Direct real estate investing provides an opportunity to take advantage of the historically low interest rate environment and lock-in the arbitrage between borrowing rates and unlevered yields.