The Lifecycle of a Commercial Real Estate Investment

All commercial real estate investments progress through three distinct stages, which together make up the asset ownership lifecycle. So, what are the three phases of a commercial real estate investment?

We differentiate them as acquisition, operation, and disposition lifecycle phases. The lifecycle of a commercial real estate investment can be a long one with many moving parts to keep in mind. Both new and seasoned real estate investors can benefit from a clear understanding of the ownership lifecycle, as each phase is characterized by unique objectives, risks, and rewards.

Acquisition

The first phase in any commercial real estate investment is acquisition. This begins by sourcing the right asset to fit the required return profile. Each investment firm has its own set of return requirements, strategies, and real estate class(es) in which it specializes. Our focus is on making core plus investments in suburban workforce multifamily housing.

At CEP, we evaluate dozens of leads each year but only undertake a comprehensive analysis on a few core plus investments that pass our initial screening. The business plan for a core plus asset is to generate stable cash flow for investors and increase the value of the asset over time. A typical plan may include steps to assess future market demand, estimate the return on investment for property improvements, and evaluate opportunities for new management to enhance revenues and better manage expenses. While creating a business plan, considerations such as market dynamics and desired purchase price are made. We then make offers on those assets where the business plan suggests we can make strong risk-adjusted returns. If our offer to purchase is accepted, we enter into contract with the seller, open escrow, and conduct final due diligence on the asset.

Due diligence is the investigation and audit performed to confirm the historical financial records of the asset. Due diligence provisions in commercial real estate can vary, but they generally afford a purchaser the right to enter the asset to inspect, examine, and test all aspects of the asset as the purchaser deems necessary. These investigations can include:

reviewing title and survey
inspecting the physical, environmental, and ecological condition of the asset
physical inspections of all structures and mechanical systems located on and servicing the asset

If due diligence confirms the business plan is viable, the investment is funded and the acquisition is closed. We then immediately enter the Operation phase of the ownership lifecycle.

Operation

During this phase, we begin the execution of our business plan. Any property improvements or management changes are executed based on the schedule of the business plan. This phase requires experience to be able to identify an asset’s potential. There is a need to focus on how and when to effectively execute upgrades that deliver maximum results. The timeframe in which these changes are implemented vary depending on the business plan. Adding return to an asset can take years to fully implement which is an important reminder of why commercial real estate is best considered as a long-term investment.

CEP brings an operator’s mentality to the table in its role as manager of these assets, something we call “asset management alpha”. We do not just buy assets and leave it to third parties to manage. We bring our experience from over 30 years in multifamily property management to drive the day to day operations and optimize the economic performance of these assets over time. We see this as a marathon, not a sprint.

Disposition

Within each business plan there is also an exit or disposition timeframe. Throughout the ownership of the asset, the market conditions are constantly evaluated to determine the best time to exit formaximized returns.

At CEP, we take the long view of investing (7-10 year horizons) knowing that somewhere in that timeframe we will find the optimal point to sell and reap the appreciation (increase in value) that we have garnered over time through the execution of the business plan. The goal of our core plus investment strategy is to produce balanced returns for our investors through a combination of cash flow and appreciation. These are lower risk investments when compared to short term value add investments, or investments in ground up development that deliver no cash flow and must rely entirely on quick asset appreciation (market timing) to generate returns for investors.

At CEP, we fund the investments by pooling our capital together with direct investments from individual accredited investors who have registered with CEP.

To learn more about direct invest real estate ownership check out our blog post.

If you would like to register with CEP so you can begin seeing investment opportunities from us

CLICK HERE

Nich Carlsen

Nich Carlsen joined the team at CEP Multifamily in 2023 as an Investment Analyst and holds primary responsibilities for sourcing, researching, and underwriting new markets and opportunities throughout the West. He is also responsible for analytics and research in support of Capital Markets, Asset Management, and Dispositions. Prior to joining CEP, Nich held positions in Research at Colliers and VTS covering multiple commercial property types.

In his spare time Nich enjoys golf, ocean fishing, travel, and supporting all things Oregon State athletics.

Nich graduated from Oregon State with a BS in Economics and is a member of the Urban Land Institute.

Jeff Anderson

In his role as Director – Capital Projects for CEP Multifamily, Jeff is responsible for the planning, management, and execution of all capital improvement and deferred maintenance projects, in addition to closely collaborating with the Property Operations team on asset preservation and best practices. Jeff joined CEP Multifamily in 2022 as part of our pursuit to expand our operational capabilities and to bring project management and asset preservation under our in-house suite of services to better serve our growing portfolio.

Prior to joining CEP, he spent over 14 years with Kennedy Wilson, a global real estate investment company, working in various Project Management roles for their Commercial Investment, Property Services and Multifamily divisions. Most recently he served as the Multifamily Group’s Construction Manager for their 20,000+ unit portfolio in the Western United States.

Jeff attended Washington State University where he graduated Magna Cum Lade earning his BA in Business with an emphasis in Real Estate and a minor in Finance.

When he is not working, Jeff can be found relaxing on Whidbey Island, working on house projects, skiing or enjoying the various water activities the PNW has to offer.

Mark Whitcomb

As Director – Property Operations for CEP Multifamily, Mark leads the day-to-day operations of CEP Residential’s expanding multifamily portfolio. Mark is committed to executing core processes and fostering the growth of his CEP Residential teammates in the pursuit of asset and property management alpha.

Mark began managing his first property in 2001, two years after beginning his career in property management as part of an on-site team. Over the course of the next 20+ years, he worked in multiple capacities and markets throughout Washington, Oregon, Montana, and Virginia with portfolios totaling over 2,500 apartment homes and 49 communities.

Mark has always been passionate about developing both people and leadership skills through local and national multifamily housing associations. He was recognized as Property Manager of the Year in 2016 by Washington Multi Family Housing Association (WMFHA) and went on to obtain his NAA CAM and CAPS credentials by 2017. He spent two years as a Chairman on the Career Development Committee through WMFHA before being nominated and awarded membership to the NAAEI faculty in 2018. This allows Mark the opportunity to mentor emerging industry professionals seeking their own designations.

Mark has been married to his wife, Shea, since 2019. Together, they enjoy travel, cheering for their Seattle sports teams, and exploring the outdoors of the Pacific Northwest with their two dogs.

Jessica Disman

Jessica Disman joined CEP Multifamily in January of 2022 as Director of Capital Markets and Investor Relations and is responsible for new investor acquisitions.

She brings over 25 years of experience in sales and marketing in the investment and real estate industry. Most recently she spent 8 years at Broadmark Realty Capital Inc. and Broadmark Capital LLC, raising capital for a series of private lending REITs that ultimately led to the IPO of the company.

Jessica attended Bryn Mawr College where she earned a BA with a double major in English and Fine Art.

An artist at heart, Jessica enjoys drawing and painting and has paintings in collectors’ homes nationwide.

Karin Christianson-Hart

Karin Christianson-Hart serves as VP Finance & Administration for CEP Multifamily. As a member of the CEP Team, Karin oversees all finance, HR, risk management and administrative support for both CEP Multifamily and CEP Residential, the in-house property management division.

Karin has many years of property management experience from small startup firms to a large regional company. Problem solving, tactical management of multiple teams and a working knowledge of day-to-day business operations are strengths that Karin brings to the table. Other areas of expertise include captive insurance management and family office accounting for principal partners.

Karin earned bachelor’s degrees in Accounting and Business Administration from Central Washington University.

With a heart for missions Karin has most recently served on the Board of Hands for Peacemaking, a nonprofit that provides high efficiency wood burning stoves and clean water systems to the Mayan population in the highlands of Guatemala. Financial management support has also been provided to the Snohomish County Economic Alliance in its infancy along with a nonprofit football academy.

Outside of work Karin enjoys riding motorcycles, camping, and travelling with her husband.

Shawn Hoban

For over three decades, Shawn has been responsible for establishing and growing each of the operating businesses in The Coast Group of Companies and Hoban Family Office. It all started in 1987 when he co-founded Coast Property Management alongside his brother Tom after identifying the need for a high performing, values-based property management company. Coast has long since grown into The Coast Group which is a vertically integrated, privately owned family of real estate companies. Coast is one of the region's largest and most respected real estate services firms of its kind with offerings in property management, facility services, specialized construction, advisory, and investment services.

Shawn is an integrator and strategist for the Hoban's various ventures with a particular gift of taking complicated situations and making them executable. A leader with strong character, Shawn also
possesses a competitive streak that has shaped the success of their ventures together.

The Hoban Family Office, the holding company for the operating businesses, brings innovative ideas to the commercial real estate industry through Coast Innovation Center while serving the charitable causes of the Hoban family and the Coast Group. He is passionate about identifying and developing talent to
support their businesses, while mentoring the next generation of leaders inside and outside of his family.

His service and awards include Top 40 Under 40 Business Executive by the Puget Sound Business Journal, Director for The University of Notre Dame Alumni Association, Archbishop Thomas J. Murphy High School Board of Trustees Chair and Board of Regents, Fulcrum Foundation Board of Trustees, Vistage, Entrepreneur’s Organization (EO), and many other community organization throughout the Pacific Northwest and U.S. The brother’s ventures together earned them two very prestigious awards: The Washington State Family Enterprise Institute’s Family Business of the Year and The University of Notre Dame Alumni Association of Seattle co-alumni of the year.

Shawn holds a Bachelor’s degree in Business Finance from the University of Notre Dame and is both a Certified Commercial Investment Member (CCIM) and a Certified Property Manager (CPM) with the Institute of Real Estate Management (IREM).

Shawn and his wife, Kathie, enjoy travel and outdoor recreation on the Puget Sound while following the active lives of their four adult daughters and a growing generation of grandchildren.

Tom Hoban

Tom has over thirty years of experience as a property manager, real estate advisor, and investor. In 1987, he co-founded Coast Property Management alongside his brother Shawn after identifying the need for a high performing, values-based property management company in the market. Coast has long since grown into The Coast Group, which is a vertically integrated, privately owned family of real estate companies encompassing property management, facility services, specialized construction, advisory, and investment companies. Today, The Coast Group is one of the region’s largest and most respected
real estate services firms of its kind as it is able to leverage the different companies' resources to provide the best possible returns for clients.

Built as an extension of their humble servant leader view of themselves, the Hoban brothers and their executive leadership teams have become synonymous with excellence, innovation, and reliability. Along the way, the brothers have been recognized for their professional accomplishments and work in the communities they serve, earning them the co-alumni of the year award from the University of Notre Dame alumni association and The Family Enterprise Institute’s Washington Family Business of the Year.

Over the years, they invited others who possessed complimentary if not superior talents to join them as partners and co-leaders in the Coast Group of Companies. In 2017, they formed The Hoban Family Office (HFO) to create a platform for innovation (Coast Innovation Center), talent development, and leadership in service to the Coast Group of Companies, their families and the communities they serve. It also serves as their charitable arm, with a focus on service to the poor and vulnerable and development of tomorrow’s leaders.

Tom leverages his vast network, engaging personality and refreshingly transparent approach into many venues, including his long-running column in the Herald Business Journal, as a freelance writer and as a guest speaker or lecturer all while serving on several boards or advisory functions, including Santa Clara University Real Estate School Advisory Board, Washington State University – Everett, University of Portland board of trustee’s, The Washington State Governor’s Affordable Housing Advisory Board, The
Commercial Broker’s Association of Puget Sound, Archbishop Murphy High School (Everett, WA), The Boys and Girls Clubs, chairman for the Snohomish County Airport Commission, The City of Everett
Economic Development Advisory Council, and others. The brother’s ventures together earned them two very prestigious awards: The Washington State Family Enterprise Institute’s Family Business of the Year
and The University of Notre Dame Alumni Association co-alumni of the year.

Tom graduated from The University of Notre Dame with a BA in Finance. A former coach, scoutmaster, and basketball referee, in his spare time today Tom continues to play recreational basketball, remains active in his church and enjoys time with his wife, two sons, and daughter on the Puget Sound.

Josh Jansen

Josh Jansen has over 20 years of multifamily investment experience, both as a broker and principal. As CEO, President, & Managing Partner of CEP Multifamily (CEP), Josh leads the firm’s strategic growth and acquisition, disposition, and asset management functions. Since joining CEP as a principal in 2012, Josh has played an integral role in growing the firm’s acquisition and capital raising volumes tenfold. Prior to joining CEP, Josh was a top national multifamily broker at Sperry Van Ness for multiple years.

Josh is active in his community and spent 9 years as a volunteer varsity football coach at a local high school. Josh also served as a founding board member of the Private Enterprise Coalition of Snohomish County, and was the Founder and Board Chair of Wildcat Football Academy (WFA), a Mill Creek, WA-based 501(c)3 nonprofit youth sports organization.

Josh attended Occidental College in Los Angeles, where he earned a BA in Politics, as well as All-American honors as captain of the football team.

Josh, his wife Cheryl, and their two children enjoy traveling, hiking, and snow and watersports.

Mike Harmon

In 2004, Mike joined the Coast Group of Companies as CFO and Managing Partner of Coast Equity Partners. Mike’s role is to drive the growth of Coast Equity Partners through the acquisition of investment properties that produce outstanding returns for our clients.

Mike brings many years of business leadership, entrepreneurial drive, and real estate experience to the table. He has held critical roles in the strategic management of high growth companies and early-stage technology start-ups. From raising capital on Wall Street to buying his first rental property while still in college, Mike brings a unique broad range of talents to Coast Equity Partners.

Mike’s entrepreneurial spirit is grounded in a solid business background. He has designed and managed the development of several mission-critical business systems for fortune 500 companies, participated in

the creation of new businesses and nurtured new growth opportunities for existing businesses. Mike has created and grown departments, successfully identified, negotiated, and closed strategic partnerships, managed key client relationships and secured new capital investments for the companies he has helped lead.

Since 1992, Mike has been engaged in the identification, acquisition and rehabilitation of real estate with excellent investment potential. His portfolio of properties includes residential holdings as well as rental properties in various markets throughout the Pacific Northwest and United States.

Mike holds a BS in Finance from San Diego State University and an MBA with concentrations in Marketing and Management from the University of Notre Dame.

Mike enjoys travel, youth coaching, winter sports, water recreation, golf and fishing. He lives with his wife and four sons in North Seattle and is active in his church, children’s schools and local community.

The Lifecycle of a Commercial Real Estate Investment : Acquisition, Operation, Disposition