Castellan Real Estate Partners’ Investment Philosophy

Castellan Real Estate Partners

Castellan Real Estate Partners Business Philosophy

Castellan Real Estate Partners believes that it is important to have a set of guiding principles that help shape the firm’s investment decisions. The key tenets of Castellan Real Estate Partners’ business philosophy are characterized as follows:

Long-term outlook: Castellan Real Estate Partners’ investment strategy rests on their ability to add value to the asset over an extended period of time. Unlike many other owners, Castellan is able to allocate capital judiciously over a long hold period without the time constraints and pressures associated with a short-term investment horizon.

Solid Fundamentals: Castellan Real Estate Partners’ decision to invest primarily in multifamily rental properties in New York City is motivated by several key fundamental drivers: Vacancy rates, shortage of affordable housing, and the ongoing transformation of New York.

Conservative Capital Structure: When Castellan Real Estate Partners capitalizes deals, it builds in large capital expenditure reserves in order to have the necessary liquidity to carry out any contemplated renovations as well as any necessary repairs as they arise. Castellan’s portfolio is conservatively leveraged.

Asymmetric Return Profile: Castellan Real Estate Partners targets investments where it believes the upside potential exceeds the downside risk.

Local Economies of Scale: One of Castellan’s goals is to use its growing competitive advantage and size to establish local economies of scale. Castellan believes that a larger portfolio gives the firm more negotiating leverage with vendors, which helps them lower operating costs at the property level.

Responsible Ownership and Management: With regard to its residential portfolio, Castellan Real Estate Partners aims to add value to the properties invests in. Since 2009 Castellan has reduced the total number of HPD violations across all its buildings by approximately 96%. The firm believes the decrease in HPD violations not only attests to its commitment to being responsible, long-term property owners, but also demonstrates that that their value enhancement work has made the buildings far safer and has substantially improved the quality of life for the residents. Castellan also believes in regenerating their properties by implementing enhancement measures such as energy efficiency initiatives.

Relationships: Castellan Real Estate Partners’ ongoing relationships with the Northern Manhattan Improvement Corporation, Harlem Community Development Corporation (“HCDC”), and Community Environmental Center (Brooklyn) have resulted in weatherization grants used to make further enhancements to the properties.

Investor Communications: One of most important aspects of their business is the financial backing Castellan Real Estate Partners receive from investors. As such, Castellan believes it is important to communicate openly with investors and provide thoughtful, informative reports.