JLM’s Criteria and Investment Strategy

JLM’s Criteria and Investment Strategy: Focusing on Core-Plus Assets with 10-Year Holds

At JLM, we have crafted an investment strategy that focuses on stability, long-term growth, and the consistent generation of cash flow. Our approach is grounded in the belief that smart, well-planned investments in core-plus assets can provide not only financial security but also an opportunity for meaningful, sustainable returns. By focusing on long-term holds, specifically 10-year holds, we aim to provide our investors with significant benefits in terms of cash flow, capital preservation, and growth.

What are Core-Plus Assets?

Core-plus assets refer to real estate properties that are of high quality and in strong locations, but with some value-add potential, such as minor improvements or operational enhancements. These assets are typically less risky than opportunistic investments because they are already performing well and are expected to continue doing so. Core-plus properties often represent a balanced mix of stability and moderate upside potential, making them attractive for long-term investment strategies.

Unlike opportunistic real estate investments, which often involve higher risk and the potential for greater short-term rewards, core-plus investments are designed to limit exposure to volatility. The focus is on properties that are well-positioned in the market, with a steady stream of income and the ability to appreciate steadily over time. By concentrating on core-plus assets, JLM can provide our investors with steady returns while minimizing risk.

The Benefits of a 10-Year Hold Strategy

At JLM, we focus on 10-year holds for our real estate investments. This long-term strategy provides numerous advantages, both from a financial and operational perspective. Here’s why we believe this is the best approach:

1. Steady Cash Flow: One of the primary benefits of holding core-plus assets for a 10-year period is the generation of predictable, long-term cash flow. These properties are typically leased to stable tenants and located in high-demand areas, which leads to consistent rental income. With time, rent increases, along with inflationary adjustments, can further enhance cash flow, making these investments ideal for investors seeking stable income.
2. Capital Preservation: A long-term hold strategy allows us to focus on the preservation of capital. By selecting high-quality core-plus assets that are likely to appreciate over time, JLM ensures that investor capital is well protected. The value of these properties typically increases as they age, especially if they are in desirable locations and have opportunities for operational efficiencies or minor upgrades.
3. Reduced Risk: The longer hold period inherently reduces the risk compared to shorter-term investments. During a 10-year horizon, market fluctuations are likely to smooth out, and the property’s value will rise in line with market trends. In addition, our strategy of avoiding opportunistic real estate means that we aren’t exposed to high-risk ventures that depend on market timing or speculative developments. We instead focus on stable, well-positioned assets with steady cash flow and growth potential.
4. Refinancing Opportunities: Holding assets for a longer period also provides the opportunity to refinance the property at a more favorable time. After several years of positive cash flow and appreciation, JLM can leverage the increased value of the asset to refinance at better terms. This allows us to return capital to our investors, provide additional liquidity, and continue maximizing returns.
5. Compounding Appreciation: The power of long-term appreciation is another key factor in our 10-year hold strategy. Over time, core-plus properties typically see gradual increases in value as demand in the area rises and properties are improved. By holding assets for a decade, we allow for compound appreciation, which leads to greater returns for investors when the property is eventually sold.
6. Tax Efficiency: A 10-year hold period can also bring tax benefits. Capital gains taxes on real estate are typically lower when assets are held for over a year, and the longer you hold, the more opportunities there are to take advantage of tax strategies like depreciation, which can offset rental income. These tax advantages contribute to the overall profitability of the investment.

How We Invest in Core-Plus Assets

At JLM, we have a disciplined and methodical approach to investing in core-plus assets. We focus on properties that meet the following criteria:

• Location: We invest in high-demand markets with strong economic fundamentals, such as growing employment opportunities, low vacancy rates, and a high quality of life. These locations are more likely to experience steady rent growth and long-term capital appreciation.
• Quality: The properties we target are well-maintained and in good condition, but they also have the potential for minor improvements that can drive value. We focus on assets with stable, creditworthy tenants and long-term lease structures.
• Stable Income: Our core-plus assets typically generate steady income from existing leases, providing immediate cash flow to our investors. This cash flow is reliable, which is a key element in ensuring the long-term success of our strategy.
• Limited Risk: Our investment strategy is not speculative. We avoid opportunistic real estate ventures that come with high levels of uncertainty and potential for loss. Instead, we focus on assets that provide solid returns with lower risk profiles, ensuring our investors can expect steady and predictable performance over time.

Conclusion

JLM’s investment strategy centers around acquiring core-plus assets with long-term, 10-year holds. This approach allows us to focus on properties that offer steady cash flow, limited risk, and long-term appreciation. By avoiding high-risk opportunistic investments and focusing on stability, we are able to provide our investors with a solid foundation for financial growth and security. The benefits of holding these assets for a decade, from tax efficiency to compounding appreciation and steady cash flow, make it an ideal strategy for those seeking reliable, long-term returns with reduced exposure to market volatility.