Acquisition Strategy

Cavanaugh Properties acquisition strategy is to purchase under-performing, multi-family properties that present compelling value-add opportunities in select high-growth Southern California sub-markets. Our properties meet strict underwriting criteria for asset quality and return potential.   Acquisitions are made only when all our requirements are met.  In certain situations for unique opportunities that meet our financial metrics not all of the qualitative criteria may apply.

Property Acquisition Criteria

  • Property Type: Apartment and mixed-use residential communities, garden-style or low-rise buildings
  • Asset Profile: Value-add and core plus apartment properties in supply constrained markets
  • Location: A+ to B+ locations in select Southern California sub-markets
  • Quality: B+ to C class properties in strong locations
  • Property Size: 15-50 apartments
  • Property Age: 1970+

Underwriting Criteria

  • Deal Size: $3-15 million
  • Transaction Type: Direct acquisition of existing operating properties
  • Debt: Fixed rate long-term non-recourse debt with DSCR of 1.25+
  • Hold Period: Long-term hold strategy, typically from 7-10+ years
  • Target Returns: Cash Return Average of 7%+, Internal Rate of Return of 13%+

Acquisition Process

Our typical acquisition process follows these steps

1

Identify Potential Investors

2

Identify and Underwrite Property

3

Negotiate Purchase Contract

4

Perform Due Diligence

5

Confirm Investor Members

6

Close Acquisition