Investment & Management Principles
When we evaluate, plan and execute projects, beyond basic fundamentals, we focus on the following three factors:
Creative methods can usually be found to trade away substantial risk without a corresponding reduction in profits.
We have found that insurance against risk is usually cheap at the beginning of projects when we don’t need it – and very expensive later when we inevitably do.
Risk reduction methods:
· Additional due diligence
· Have secondary exits
· Reduce lag times
· Pay for flexibility
· Robust financial modelling
Discount to Replacement Costs
Properties trading at a discount to their replacement cost in supply-constrained markets offer risk protection and higher potential returns.
We have discovered that as long as we have a complete understanding of why a property is trading below its replacement cost, it will be very hard for a competitor to show up and eat our lunch. In our way of thinking, our project is already partially paid for by that discount.
Currently Yellowknife is supply constrained with high construction costs restricting the number of new developments. This represents an opportunity for redevelopers.
Finding & Unlocking Hidden Value
Our basic formula is to find properties that are undervalued or underutilized and redevelop them to their highest and best use – the classic buy low & sell high. Internally we call this process finding & unlocking hidden value.
How do we do this?
We keep on top of regulatory changes, try to package unrelated groups together and generally look for situations where the market is mis-pricing a property.
Sound vague? It is - if we had a secret sauce, this would be it; so we're reluctant to share the recipe.