Northern Portfolio LLC

Northern Portfolio, LLC is a privately-held limited liability company which is affiliated with Northern Capital Group, Inc. and has been formed to invest in real estate securities. Northern Portfolio has invested funds in the securities of publicly traded real estate investment trusts (“REITs”). Over the next three to five years (2009-2014), we believe that selected real estate securities, and especially equity securities, will provide attractive risk-adjusted returns.

Business Strategy

Our business strategy is to invest in high quality REIT securities at prices we believe are below their long-term intrinsic value. Quality is the key term in our selection process. Our analysis will focus on the quality of a REIT’s properties, markets, capital structure and management.

Having high quality properties in strong markets, however, is not enough. REITs have complex financial structures, and most REITs have relied on leverage to finance their properties. For many REITs, refinancing and interest rate risk will affect company performance and the ability to maintain dividend levels.

Finally, the quality of a company’s management is a key component to our analysis. Access to capital and liquidity are critical to a real estate company. There continue to be  disruptions in the commercial real estate financial markets, and companies that have carefully managed their balance sheets and lending relationships will navigate any turbulent conditions. Lenders also will base their credit decisions on both the quality of the subject  property and its sponsorship. 

Investment Approach

There are over 125 publicly traded REITs and, clearly, not all REITs are the same. REITs are generally characterized by their property type, but there are significant differences within each category.  For example, REITs that primarily invest in office properties invest in different markets and have different financial structures.  The balance sheets of two REITs that invest in shopping centers may have dissimilar debt structures and present very different risks.  Our approach will include in-depth analyses of what we believe to be the critical fundamentals of a REIT. These fundamental factors include:

  • Property location and its strength relative to its market
  • Liquidity and debt structure
  • Quality of future cash flows and the ability to sustain revenues
  • Management

Research and Analysis

Like many investment funds, Northern Portfolio takes great care in its research, analysis, and understanding of its investments. We believe that we have a competitive advantage in understanding and investing in the REIT industry because we have managed a REIT and we are directly familiar with the properties, markets, and managers of many other REITs. Our analysis goes beyond the financial statements – we understand the people and the strengths and weaknesses of each company.

Experience

The principals of Northern Capital Group manage Northern Portfolio, LLC. These principals have, combined, over 75 years experience in real estate, finance, and property management.  Included in that work was the formation of Wilmorite Properties, Inc. and Wilmorite Holdings, LP in 2000, and the subsequent sale of these companies in 2005 to Macerich for $2.3 billion.  Both John Anderson and Mark Foerster teach real estate finance and investment at the graduate school level.

Northern Capital Group Investment Opportunities
Northern Property Fund, LLC

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