Strategy
The principals of Bald Eagle Partners (BEP) recognized that the economic crises and resultant real estate collapse of 2008-2010 created a once-in-a-generation investment opportunity. As opportunistic investors, we seek out opportunities where there are a series of contributing factors that create a special investment opportunity. Our research and knowledge base led to our decision to accumulate a large portfolio of residential homesites in what were at the time distressed communities. We commenced this process in 2009 concentrating on the southeastern United States.
This investment initiative became the singular focus of Bald Eagle Partners and it has resulted in a portfolio with a value in excess of $100 million. This pure play residential investment initiative includes residential land investments in 16 communities in North Carolina, South Carolina, Georgia, Florida and Tennessee.
Details
Why did we pick this niche for our investment preference?
- We know it – BEP has decades of experience and dozens of investments in this asset class and region.
- The appeal of particular circumstances – the residential land sector in the southeastern US was hit as hard by the 2008-2010 economic collapse as any real estate sector. This created a unique investment opportunity. We are reminded of Warren Buffet’s classic “…be greedy when people are scared” and we chose to become greedy. There are multiple tenets to the investment strategy both demographic and fundamental:
Demographic
The region is the main beneficiary of Baby Boomer relocation and retirement patterns and thus benefits from a natural additional demand generator. The region is comprised of right-to-work states which have benefited from job growth at significantly higher rates than non right to work states.
Fundamental
Buy the best assets, at 50-80 discount to replacement costs, with low carry costs that enable a patient exit plan with no pressure caused by debt. Our portfolio is debt free. With a specific focus on secondary markets, we determined we would face less buying competition than for premier properties in primary markets. We avoid competitive buying scenarios.
Additional criteria for the selection of the markets in which we would invest:
- Exceptional real estate – top 5% of the residential real estate in any given market, with defining features such as water frontage, mountain views, location/proximity to critical needs, architecture, quality and breadth of amenities and so on.
- Less than one hour drive time from a Metropolitan Statistical Area (MSA) with a population of at least half a million.
- Less than 30 minutes from a quality regional/national airport.
- High quality hospital/medical care nearby.
- Proximity to universities and cultural centers.
- Completed homesites, infrastructure and amenities.
- Stable/healthy Homeowners Association and existing owner base.
