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Acquisition of the last mile (urban) industrial logistics units with identifiable problems provides for a prompt increase in occupancy rate and lease rates. Focus on smaller assets to avoid competition and form a diversified portfolio.
A hands-on approach to solving the identified problems of the property and exit from the property once the optimal revenue level is achieved.
The two major indicators of poor management will be:
- The high vacancy rate in locations with strong demand
- Lease rates lower than the market average
The following will be done to improve property performance:
- Monitor tenant satisfaction, identify and solve the most critical problems
- Perform landscaping and pay attention to details that matter to tenants
- Adjust the size of units based on tenants’ demand (dividing larger spaces or unifying smaller ones)
- Сonvert excess office space into a warehouse
- Optimize financing structure - check/amend leverage level if it deviates from our target leverage level of 50-70%; refinance an existing loan in case of the high interest rate.
Additional increase in expected return is attributed to higher than the average pace in demand for urban logistics units due to the rapid growth of e-commerce that drives demand for such properties.