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Monro Capital seeks to enhance the long-term value of well-located real estate. Value creation may come in many forms, but for us it entails improving underutilized assets through capital improvements, entitling, financing, marketing, and/or building conversions.
We serve our investors by going through the following 5
strategies. We call it THE MONRO WAY…
— Ben Graham
Our prerequisite underwriting criteria answers the following question: “Is the asset as renovated, repositioned or in its current state worthy of being a long term hold?” If the answer is “no,” the property will probably not be an acquisition candidate. Although Monro Capital may dispose of assets, our objective is not to flip marginal properties. The objective is to acquire assets that become better over time.
Low debt costs combined with high exit value assumptions inflate IRR performance.
Just like trying to forecast rental rates, we don’t think it is prudent to project terminal values like IRRs. Values can change due to factors out of our control, so we focus less on these metrics and more on stabilized cash flow.
Buying to flip requires reliance on market timing, which is unpredictable and risky.
Instead of relying on getting lucky with market timing, we steward our assets indefinitely. We don’t focus on trying to cash out upon disposition, hoping that the market has moved favorably in our direction. We prefer to focus on minimizing vacancy and lease downtime through tenant retention, regardless of the state of the economy
Interest rates are incredibly low right now, yet there is no way to tell if/when they will rise.
We purchase assets with conservative debt/equity ratios to protect ourselves from economic shocks. We tend to utilize Life Insurance lenders, as they often offer the most flexibility for our needs.