Our Investment Strategy
Flagship REIT views both real estate investment and relationships as being long-term in nature. Investors pursuing portfolio diversification need sound alternatives to achieve a high rate of return. Our approach to outpatient healthcare real estate is an ideal solution.
At Flagship REIT, we feel strongly that attractive investments exist outside the parameters generally focused on by publicly traded REITs, typically core properties in the top 25 U.S. markets with deal sizes over $20 million. While we do participate in primary markets, our private REIT also seeks investment opportunities in secondary and tertiary markets where superior risk-adjusted returns may be found. Our fully-integrated platform allows us to leverage our capabilities to invest in value-add assets and development projects, generating higher returns for our shareholders.
Unlike a highly-correlated public security, an investment in Flagship REIT reflects the value of its underlying outpatient healthcare assets and performance and is not subject to market volatility. Any fluctuation in value would be driven by operating fundamentals and/or the value of our real estate portfolio, not by stock market swings.
More detailed information on valuation can be found in the FAQ section of our site.
Core properties typically have stable occupancy with long lease terms, investment-grade tenants and high-quality construction with few to no immediate capital needs. They also tend to be located within highly desirable areas in major markets. Therefore, core may be considered interchangeable with “income” in stock investing. Core property investors tend to have conservative profiles and seek to generate stable income with very low risk.
Core-plus properties are also typically high-quality and well-occupied. Owners of this property type are usually able to increase cash flows through simple property improvements and management efficiencies or by increasing the quality of tenants. This is why core-plus is often analogous to “growth and income” in stock investing and is generally connected to a low-to-moderate risk profile.
Flagship REIT invests in both core and core-plus opportunities and targets 60-70% of invested equity into such projects as part of our investment strategy.
Value-add properties are acquired with the intent to make improvements thereby creating value for ownership. At the time of purchase, such properties may have occupancy issues, management problems, deferred maintenance, a lack of relationships with providers in a market, lack of a coherent marketing plan or any combination of these. In stock terms, value-add may be seen as interchangeable with growth and is characterized by moderately higher levels of risk.
Value-add properties often have relatively low levels of cash flow at acquisition with a potential for increased cash flow after the value is added. Flagship’s fully-integrated platform enables leveraging our specialized expertise to capitalize on these types of investments by applying our knowledge of healthcare real estate, strategic planning and daily oversight.
Our strategy targets 15-25% to be invested in value-add properties.
Flagship's fully-integrated platform makes it possible to design, construct, lease and manage healthcare-related facilities. By developing projects in-house, Flagship REIT can obtain highly desirable properties at a lower basis than would be found on the open market. Our full-service platform allows us to provide options, solutions and opportunities for both healthcare tenants and investors.
Healthcare development is demand-driven, meaning some level of pre-leasing is generally present to reduce risk. Flagship’s existing relationships with healthcare providers allow the firm to uncover and capitalize on these opportunities, as opposed to being solely a capital allocator.
Flagship REIT's investment strategy requires an investment of 5-15% equity into development projects.