ELEMENTS OF OUR BUSINESS THAT WE BELIEVE TO BE UNIQUE
The Firm is always a significant cash provider of the equity in each of our
investments. Stephens family investment entities will provide at least 10% to 25% of the
equity in any given acquisition.
We are not "fee-driven" as are many firms in the investment business. With a large
(usually the largest) cash investment in each investment, our interests are exactly aligned
with those of our Capital Partners.
As a result of our large minimum investment requirement per member and our
strong suggestion that a new Capital Partner allocate sufficient funds to participate in
several separate investments over the first two years, to provide diversity, the majority of
our non-institutional Capital Partners are senior partners in private equity firms or plaintiff's law firms.
In a typical Stephens sponsored investment company, in the early years of an investment our Capital Partners are paid
quarterly cash distributions representing an annual
return of 6% to 8% on their investment, increasing to over 12% when the investment matures.
We have excellent relations with the legal and financial advisory firms and the
major industrial real estate brokerage firms in our markets. The firms know we have
capital available and will protect their interests. We have a reputation for closing on the
acquisition of properties that come under contract to us and for ensuring that the brokers
who bring us these investments receive their commissions.
Our primary compensation is a direct product of investment success
- we are well compensated only after our Capital Partners receive
a high profit on their investment. We believe that the alignment of our
interest with that of our Capital Partners is key to generating
a level of comfort for our partners and assuring that the
investment is managed in a way to best realize long-term strategic
and economic success.
Our excellent relationship with a major financial institution provides us with liquidity to
complete asset acquisitions quickly and without the typical financing contingency.
Our investment thrust is directed at the acquisition of industrial and R&D assets in the
greater Bay Area
– an asset category and geographic area we know well and one in which we
have been investing since the 1970s. While the income and value of this asset category has
varied with the economic climate over the years, it has historically come out of each recession
with a higher rental rate and a higher value than it had going in. Investments by the Firm have
historically provided high cash flow distributions to our Capital Partners during ownership and
a high internal rate of return on sale.
We organize our investment companies and acquire our assets with the expectation of
a long investment horizon. Our goal is to acquire good quality assets that will generate long-term,
increasing cash flow distributions to our Capital Partners for many years.
Each investment is located, put under contract for acquisition, financed and acquired
on a stand-alone basis. Often, our contacts in the real estate advisory community will
provide us the opportunity to acquire an investment asset before its availability becomes
widely known. Our quick response time, capital availability and commitment to commission
protection (even when the broker is not protected by contract) often make us the first client
called when a property becomes available.
These mutually beneficial relations with members of the real estate advisory
community have been established over many years. Client advisors who contact us with
investment ideas today range from those relatively new to the industry to those with whom we
did extensive business in the 1970s and 1980s.