Connaught is an opportunistic investor of capital that is both willing and able to pursue, underwrite and close complicated transactions across a myriad of real estate asset classes and financial structures. First and foremost, our goal is to be a capital source for owners and operators of real estate assets; that is, an investor who is actively involved in managing our investment, but not actively involved in the daily operations of the project. Given our extensive in-house expertise, Connaught can successfully act as an owner and operator of real estate, but ultimately exercises this option only as a necessity in order to protect our investment.
The following general qualifications further describe our appetite for capital investment.
Size: Connaught’s typical investment size is $2mm - $10mm. While we have closed on investments far greater than $10mm in size, as well as transaction below $2mm in certain circumstances, our preferred investment size falls within this range.
Asset Type: Connaught has historically focused and is currently most active with residential real estate. However, the following list includes asset types that Connaught is willing to pursue, underwrite and close, given the breadth of our in-house expertise and experience:
Financing Type: Connaught has pursued and closed on various transaction structures across the capital stack, including senior or first lien loans, second mortgage loans, mezzanine debt, joint venture equity investments and direct equity investments. More specific terms vary depending on the transaction.
Opportunity Type: Generally speaking, Connaught is most interested in shorter-term (12 – 36 month) transactions with a demonstrable potential to increase asset value by way of construction, renovation, re-positioning, performance enhancement, or some other significant change to the underlying real estate asset. For this reason, we focus on construction or development projects with plans to recapitalize the asset in the shorter-term, as opposed to buy and hold strategies or longer-term income producing assets.
Geography: Connaught is headquartered in Chicago, but national in scope. We focus on projects in roughly the largest 50 metropolitan statistic areas in the United States; that is, those with a population over 1,000,000 residents. Historically, Connaught has experience in the following sample markets: Atlanta, Austin, Charlotte, Chicago, Boston, Las Vegas, Los Angeles, Minneapolis, Orlando, Phoenix, San Diego and Washington DC.
Returns / Pricing: Connaught typically prices capital investments with both fees and fixed-rate interest payments. Depending on the investment type and circumstance, those fees and interest payments may be deferred until eventual repayment or due throughout the investment term. While Connaught is most concerned with risk-adjusted returns, target internal rates of return generally start in the high teens and range upward.
Distressed Investment: Given recent developments in local real estate markets across the country, as well as Connaught’s opportunistic approach in deploying capital, we do pursue investment opportunities in projects that are experiencing some level of underperformance or market pressure, and therefore require additional or new capital to maximize existing value. The following list includes examples of opportunity types that could be considered “distressed” and Connaught would pursue:
Investment Consideration: While Connaught has an extensive due diligence and underwriting process that must be completed prior to closing any transaction, Connaught typically requires the following items in order to provide an initial evaluation with the goal of issuing a written term sheet: