Investment Strategy

We invest in quality assets in the value-add middle-markets, focusing where we see outsized growth potential driven by economic and demographic trends.

Value Proposition

RedHill was founded on the premise that repositioning class-B apartment communities presents a tremendous value proposition for investors. As the company has grown, so has its strategy as it has acquired up and down the value chain to include non-subsidized workforce housing, conventional middle market product and core-plus properties in metro locations with value enhancement potential.

Over the Previous 10-Year Period RedHill has Averaged

40%

Project Level Returns to Investors on Value-Add Executions.

Our Capital

We are in partnership with some of the most recognized investor organizations in the multifamily industry including funds, separate accounts, various investment managers and allocators utilizing capital that once qualified, becomes dedicated and discretionary to a particular investment initiative.

RedHill Contributes the GP portion alongside its LP partners and is promoted for providing investment management services commensurate with the level of services to match the specific investment mandate.

Our Investment Thesis

We focus on population and employment metrics including growth rates, household formations, household incomes, age brackets, education levels, diversity of employment, and proportion of high-skilled industries, and the workforce.

Our team concentrates on acquiring in supply constrained submarkets with high barriers to entry. Assets in markets with highly rated schools, low crime rates, and access to retail and employment centers.

We like well constructed assets with limited-to-no functional obsolescence and a preference for unique features and attributes such as low density, attached garages, two-story product, and competitive amenities.

RedHill favors class-B communities which attract the widest demographic, including middle-market and workforce housing. Core-plus, assets that provide stabilized cash flows and near value-add risk adjusted returns are of high interest.

We underwrite utilizing a proprietary and comprehensive pro forma and sensitivity analysis to fully understand the economics of an acquisition which includes stressing the model to account for future impact on a property’s potential return.

Our team seeks to understand the complete story behind an offering—What are the drivers, where is the hidden value, what is the replacement value. What is the rationale to own a particular community.

Thinking out of the box enables us to see situational opportunities with arbitrage value including portfolios or troubled assets that can be acquired and repositioned with opportunistic yields.

We continue to build on our track record to innovate new value strategies, drive growth and serve our investors.

Our Thematic Investment Channels

Value+

Value enhancement of quality conventional middle-market apartment communities including work force housing. Targets range in class C+ to B range assets, in need of physical updating to avoid downstream functional and operational obsolescence. Generally, during a 3 to 5-year hold period, properties undergo deep interior and exterior renovation with intense property management focus on repositioning. Over the previous 10-year period we have averaged a 40% project level return to investors on our value-add executions.

Core+

The acquisition of class B+ to A- core quality properties built after 2005. Assets are typically acquired with moderate leverage and stabilized to provide early stage investor cash flows. Typically, ownership thresholds of 4-7 years, enable us to rebrand a community adding value through light renovation included updating unit interiors and amenities, restoring to near core. Focused asset management is critical in the reposition plan. This category provides investors with near value-add returns on a residual basis.

Opportunity+

Invests opportunistically in well-located assets or portfolios, nationally or regionally that are distressed or mispriced and require the application of special disciplines and innovative solutions to maximize investment value. Opportunities may include mismanaged or troubled assets, significant re-development opportunities, assets that are financially troubled or functionally challenged. We constantly look for opportunity where we can add value in a way that our competitors are unable.

Situational+

Thinking outside the box, we approach each situation to add value uniquely. Opportunities surface that interest us—cases include opportunities presented to us by LP’s or GP’s with an invitation to co-venture, recap, or to engage on a third-party basis as a manager or operator. We like opportunities where principals seek our “think” to evaluate, underwrite, help restructure or simply ask our opinion. We offer the complete dedication of the RedHill mindset and our resources to clients and principals that have an interest in situations that lead to partnering.

Originating Opportunity

Real estate markets are constantly changing including shifts in capital markets, trends, macroeconomics events and changing regulatory environments, RedHill has the capability to uncover, originate and underwrite sophisticated opportunistic events. They may range across the spectrum from acquiring irreplaceable assets in high barrier-to-entry markets to identifying and acquiring properties at or below replacement costs in markets where misplacing has occurred.

The Market