Rock Creek’s Investment Strategy
Rock Creek has a well-defined investment approach that is time-tested over many years. Strategic planning that leads to long-term value creation is a core investment expertise of Rock Creek. We think broadly about land in an effort to provide a range of alternatives that are vital to producing exceptional returns for our investors.
As investors, we pursue a broad range of transaction types including opportunistically acquiring and managing a diversified portfolio of developed and undeveloped land. Certain themes define Rock Creek’s investment approach and illustrate how we identify and underwrite investment opportunities to create value across a portfolio. These themes include:
Intermediate Deal Size
We generally seek to acquire properties in the $5 million to $25 million range. We believe that the market for deals of this size tends to be less competitive, because this size transaction is generally too large for retail investors and too small for many institutional investors. We further believe that the current market for larger transactions is exceptionally competitive, thereby eliminating or severely diminishing the “wholesale discount” in many of the largest transactions that institutional investors are currently seeking.
Higher-and-Better-Use Properties
Drawing on our extensive experience in owning and managing timber properties, we actively seek large acreage timber tracts located in recreational areas or near expanding population centers that may be better suited for conservation, residential or recreational purposes. We evaluate properties based on a number of factors, including proximity to expanding population centers, transportation infrastructure and the presence of special topographic, ecological or natural features that may increase a property’s intrinsic value. In addition, we target large acreage properties that are available at a discount but that have the potential to be divided into smaller investment units to take advantage of more favorable market pricing.
Unique Natural Features
We seek properties that, due to governmental or conservation interests, unique water resources, environmental or ecological traits or other similar property specific attributes, are undervalued relative to the returns available through the extraction of value from such characteristics.
Inefficient Pricing
We seek to acquire assets that are not easily valued. Rock Creek recognizes that distressed real estate is generally not synonymous with undervalued or quality real estate. Our vast experience with investments in both entitled and un-entitled raw land, developed land, commercial timber tracts, working farms and ranches give us a significant competitive advantage over others trying to value assets in this market. The collective experience of our management team allows us to identify those assets that have true market value from those that are rightfully distressed.
Structural Complexity
We actively seek transactions in which our willingness to tolerate complexity in deal structure narrows the competitive landscape and creates unique buying opportunities. Our ability to evaluate complex situations involving multiple assets, complicated capital structures and multifaceted tax, regulatory and environmental issues allows us to identify those assets that we can acquire and create value by “untangling the mess.”
Properties With Current Yield
We continue to build upon Rock Creek’s past successes and seek to acquire timber and farm land with potential for current income in the form of thinning trees, growing crops, leases or environmental credit sales.
Select Developed Land
On a limited opportunistic basis, we seek fully developed residential and commercial land. As a result of the bursting housing bubble, many homebuilders and developers are divesting large numbers of finished lots in order to shore up their balance sheets. We expect that when the market turns homebuilders will seek to repurchase high-quality, “right-priced” lots on an as-needed basis. In addition, many REITs, institutional investors and commercial developers are disposing of land to raise equity to weather a downturn in the retail sector. We believe that we will be able to acquire high-quality commercial land, at a significant discount, that will be highly marketable in the next economic upturn.