Next Realty believes investment philosophies should evolve and adapt to align with shifting markets, changing industries and maturing investor goals and objectives. The company was established in 1998 to grow and manage investments in neighborhood retail centers. Over time, Next’s portfolio grew to include industrial, residential and redevelopment projects in targeted metropolitan markets. A constant strength of the firm has been the ability to acquire properties in strong locations and execute sound, quality business plans through hands-on property and asset management.
The principals of the firm began formulating and guiding the evolution of Next’s investment approach to meet the changing landscape and to offset the increasing challenges to (big box) retail property ownership. They concluded investment in “big box” retail real estate did not have a favorable risk-reward profile for a number of reasons, including:
- the concentration of the rental income stream in few tenants,
- the decreasing pool of potential replacement tenants, and
- the trending toward a binary outcome—whether a tenant remains in its space is more unpredictable and uncontrollable than ever.
Using the knowledge of these and other shifts in the commercial real estate environment, Next Realty strives to produce higher yields and better overall returns by executing a strategy that is multi-solution at its core. In practice, this strategy calls for acquiring properties that include the following characteristics to enhance value and yield:
Next’s multi-segment approach includes acquiring a variety of product types—retail, industrial, office, parking, medical or multifamily assets. This approach is not solely reliant on the success of any one property type, but rather the collective performance of a portfolio of property types.
Next’s approach is multi-market in nature. This strategy is not limited to one particular market but rather is focused on investments in select markets that exhibit dynamic economic drivers, high population density, and attractive asset pricing.
Next believes that a multi-tenant asset—whether it is a retail, industrial, office, parking or multifamily property—represents a greater investment opportunity. There is less inherent risk to cash flow and overall operations when there are multiple tenants in a property. It is easier to replace a tenant that occupies a fraction of the asset than one that leases the entire property.
There are, of course, exceptions to every rule. Next will invest in single-tenant net leased properties where characteristics of the property – most notably the financial stability of the long-term tenant – serve as a protection for the asset. Next will also invest in properties where the location of the asset adds an element of value that cannot be duplicated and will provide valuable balance to the portfolio in the event a “bad thing” happens to an otherwise good property.
A Multi-solution investment strategy translates to increased diversification.
This multi-solution strategy allows Next to provide greater levels of diversification, allocating capital across a variety of scenarios to reduce or, when required, to mitigate exposure to any one type of category, segment or geographical area. Further, our demonstrated strength in the areas of property and asset management allows us to move with agility between a variety of asset types.
In the end, Next Realty’s portfolio is diversified across alternative asset classes, geography and tenancy which enables the company to balance delivering current income yields with longer term potential for value creation and capital appreciation.