ABOUT THE NEWPORT VENTURE

Opportunity

Qualified investors have the opportunity to achieve above market returns on core real estate property in the Greater Newport, Rhode Island area. The “Newport Venture” is not established as a traditional blind-pool fund. Instead, investors will be given the opportunity to invest on a stand-alone basis in individual properties. This gives Investors maximum flexibility and control to make investments that are right for the investor. The Newport Venture seeks to acquire between $20-30 million of real estate assets over the next 2-3 years and will target small to medium-sized mixed-use commercial and residential properties in Newport’s highly sought after Thames Street area.

Reasons to Invest

Superior Returns: The original premise of the Newport Venture was derived from the fact that core real estate in Greater Boston area returns generally trade for cap rates between 3-5%. Leveraged cash on cash returns are generally in the 4-6% range with IRRs of 7-10%. This contrasts starkly with Newport where cap rates range between 5-7% and total returns are in excess of 12%. Returns of this kind are typically reserved for tertiary or less desirable locations. However, the Greater Newport area still has strong fundamentals with Thames Street retail and residential vacancy of less than 5%. This venture combines the benefits of a popular summer rental area with the stability of year-round demand drivers (such as the US Naval Academy, Salve Regina University, and local businesses). The Newport Venture is specifically designed to identify this attractive arbitrage.

Efficient Management: Many of the commercial and residential properties in Newport were built in the 1800s and have been owned by families for generations. They have been run by a “Mom & Pop” style management with little focus on the details. By acquiring a critical mass, the Newport Venture will take advantage of greater economies of scale. This provides better purchasing power for investors.

Rental Growth: The Newport Venture will target properties with clear rental growth opportunities. Value will be added to properties through two primary ways:

     Value-Add Renovations Renovations and updates will create higher rental opportunities. Common examples of renovations include cosmetic upgrades to kitchens and bathrooms.

     Efficient Rental Management Many of Newport’s properties are year-round rentals. For example, a year-round 3 bedroom apartment typically rents for $1900/month. However, the same property can achieve winter rents of $1500/month and summer rents for $4500/month. Overall, this style of management achieves rents which are approximately 15-20% higher.

Portfolio Impact: The target exit for the Newport Venture is a large scale sale of the Assets within 7-10 years. By purchasing Properties within similar attributes in a concentrated geographic location, we can attract an institutional buyer or small private/public Real Estate Investment Trust. Small private REITs will be particularly attracted to the scale of the investment and will ‘pay-up’ for the opportunity to acquire core residential and commercial property. In fact, we believe that the exit portfolio cap rate will be 100-150 basis points below the purchase price of individual assets made by The Newport Venture.

How to Invest

Investors will be treated as Preferred Equity Limited Partners with a minimum investment of $25,000.  To learn more, please contact investor relations.