We have over 100 years of combined experience with repositioning properties. The tourism dependent metros like Orlando are slated for continued issues as the economic challenges from the Covid-19 virus perpetuate. We believe that future asset potentials are dependent on future cash flows, which depends on unlocking asset values.Distressed asset opportunities arise at particular moments when the seller is encumbered and the market for such properties is relatively cool, creating a demand mismatch for capital. The ability to realize value from a distressed asset rests on a couple of things:Being able to identify and acquire the distressed asset at an optimal moment, given broader market and asset pricing dynamics.Having the resources, experience, and wherewithal to realize the untapped value of the distressed asset by managing through sale, repayment, or other resolution. Distressed assets are considered by some to be counter-cyclical investment vehicles and attractive diversification options during moments of public market volatility. Most fundamentally, future returns are determined by the future cash flows of an asset weighed against the price paid for those cash flows. Distress allows professional investors to capitalize on a lower price while also optimizing those cashflows through expert management.
Hospitality and retail operators are faced with increasing vacancies and will have to begin lowering rents to retain tenants and occupancy. This will begin a vicious cycle, reducing the value of the asset. The current owner may own more than one asset and their lender may be looking at reigning in their loans.
Success in distressed asset investing requires experience; the ability to accurately assess distress and opportunity; and sound strategies for realizing value and managing through uncertain times. We have been through these cycles and understand re-positioning. More importantly, we understand the value in the local market and how to identify assets and areas that will strongly benefit from the revitalization of the tourism industry.