INVESTMENT PRINCIPLES
Although the company is opportunistic and strives to remain flexible in its approach to investments, Branch has found over the years that certain underlying investment principles continue to hold true through every real estate cycle – both good and bad.
There is no substitute for regional market expertise. Although Branch has made successful investments in other areas of the country, it has purposely limited the majority of its investment activities to the southeastern United States. As a result, Branch has developed extensive knowledge and industry contacts within this region that enable the company to evaluate effectively and efficiently competing real estate opportunities, thus mitigating risk to and maximizing returns for investors.
As elementary as it may sound, the most important component of any real estate investment is the underlying property. While factors such as favorable financing, master leasing by the seller, and guaranteed returns can improve performance, ultimately it is the location that holds the key to every successful real estate venture. Although Branch naturally seeks to purchase property for the lowest possible price, the company would rather pay a bit more for a premium location for it will ultimately realize the real value of that site, particularly in a weak real estate market.
Debt should always be utilized judiciously. The use of excessive leverage can be tempting, because it can dramatically increase investment returns. By the same token, in a highly leveraged transaction, a relatively small decline in overall value of an investment could significantly reduce or eliminate one’s equity. The significance of this principle is clearly evident in today’s market, as many owners, developers and investors struggle to deleverage positions taken during the past 5 years.
Every investment should be evaluated from a long-term perspective. Preoccupation with short-term returns can distract an investor from recognizing the true value of a property over the long haul.
The above principles represent Branch's core operating beliefs. They form the underlying philosophy through which senior management evaluates each and every investment opportunity. While simple in nature, they are also profound and powerful if adhered to in a disciplined fashion. These core beliefs have served the company well during the past 40 years, propelling its success and helping it to minimize pitfalls.