The company may focus on distressed commercial and healthcare real estate. The reasoning behind this focus is that the two real estate classes have a high tangible asset value, provide reliable cash flow and have a history of growth and predictability. Furthermore, property rarely loses all of its intrinsic value.
ACG has several key differentiators that provide an advantage over the competition and benefit investors. First, ACGhas an experienced team of commercial real estate brokers from all over the United States who source deals for them daily. Secondly, the company’s vast social network which includes industry experts allows them to find many off market deals before the competition. This network provides accurate appraisals on potential opportunities and assists in negotiations. Third, ACG’s sister company, Peak Construction Group, allows them to manage the construction of the property from start to finish, providing excellent service with one point of contact. This ensures a quick and cost effective construction process with fewer change orders. In addition, Alliance Creative Group has its own legal team to ensure contracts and change orders are reviewed immediately, its own accounting team to manage each asset's individual balance sheet and ensure construction is on budget, and its own management company to oversee the property after construction is complete.
HEALTHCARE REAL ESTATE
ACG's relationships in healthcare make this a logical choice to invest in. Approximately $25 billion of capital is expected to be allocated towards healthcare real estate this year, according to a CBRE report. That would mark a major increase from 2021, when transaction volume in the sector was just under $16 billion. ACG may act as the Landlord for some potential Nursing Homes, Drug Rehab centers, and other similar projects.
Furthermore, ACG has a large team of healthcare consultants who have decades of experience managing operations, processing insurance, performing risk assessment studies, and ensuring the safest environment is available to all patients and staff.
DISTRESSED COMMERCIAL REAL ESTATE
Distressed commercial properties that provide an opportunity to add value may be a high priority for ACG. The United States Commercial Real Estate Market is estimated to be valued at more than USD 1 trillion and is expected to record a CAGR of over 3.5% during 2023-2027. Alliance Creative Group’s economy to scale approach and Peak Construction as their partner, may allow the Company to create value at a lower cost in a quicker time frame. Further, the company may increase revenue by hiring a sister company to complete projects.
The reason we have chosen to invest in commercial distressed real estate is because the average annual return of commercial real estate over the past 20 years is roughly 9.5%, nearly 1% greater than the S&P 500's average annual return of 8.6% over the same period of time. Further, the market yields the best investment opportunities during and after a recession. Cohen & Steers, an industry expert, argues that the market is already in a “shallow recession” after a few quarters of negative GDP growth. They went on to say that Investors who can take advantage of the current real estate market dislocation will reap attractive returns in the next two years because of the big reset, 2023 and 2024 will likely be very strong. Additionally, interest rates may continue to rise in 2023 and 2024 until inflation shows signs of decline, this provides more opportunity to cash buyers and reduces the level of competition in the market thus bringing the price of real estate down.