Prudent Risk Taking and Conservative Due Diligence Success Stories

You’ve heard us say that at Wilson Investment Properties, we embrace prudent risk-taking and conservative due diligence with our investments. We’d like to highlight some recent successes that we’ve brought to our investors!

Our first ever industrial acquisition, Gamma Industrial Center, was projected to distribute a steady 8% preferred return without much appreciation in value, yielding a 15% IRR. Not only have we been consistently paying our investors 8%, but the tenant even negotiated an expansion of the facility and a new 20-year lease extension! The post-construction appraisal came in at $11.5 million after we purchased the property for $5.7 million only two years prior. As a result, we were happy to recently inform investors of an upward adjustment from 15% to 18% IRR!

Similarly, in our Paradise Valley, now referred to as Paradise Gardens, Assisted Living facility project, our valuation of the land erred on the conservative side. We were able to recently report to investors that we would not need to raise an anticipated additional $3 million in equity due to a significantly higher than anticipated refinance appraisal. That means original shareholders retain their stake value, and better returns overall!

Of course, it’s always nice when things work out better than planned. 

On the other hand, conservative underwriting pays off when difficulties arise. We purchased Plano Parkway Business Center with a single vacancy of 33%, and the strategy was to fill this vacancy and sell in 3 years. After a year of no results, we replaced the property manager with the top producing leasing agent for this asset type in the market, and after another year of still no results, we planned to subdivide the 30,000 sqft space into 3 smaller spaces. Thankfully, our financial model was considerably more robust, and the property was still slightly cash flow positive in spite of the large vacancy. We are happy to report to investors that the one known vacancy is recently filled with a national credit tenant paying higher than projected rents, we expect the disposition and total IRR to exceed projections!

Fortunately, prudent risk-taking and conservative due diligence mean surprises are frequently of a positive nature. Our Burleson Retail Center has delivered stronger than expected rental increases and net operating income. We’ve enjoyed healthy 100% occupancy rates and exerted strong control over operating expenses, paying investors 10% in dividends even though the preferred return in the PPM is 7%. The investment has also benefited from a rising local real estate market.

We originally forecast the Burleson Retail Center project market value at $3,534,259 after a ten-year holding period. But we surprised investors by estimating the current value at around $3,700,000. Due to that unexpected upside surprise, we’re now testing the water for a possible sale and early exit.

In our commitment to transparency, all projected and actual performance of our investments are publicly available at www.wilsoninvest.com/track-record.

When it comes to investing, the truth is that no one has a crystal ball. Surprises happen. But our philosophy is that with prudent risk-taking and conservative due diligence, not only can the unexpected be better managed, but when surprises do occur they are more likely to be in the form of positive news for our investors.