Alchemists create value in seemingly magical ways by combining vision and mixing the proper elements into a transformed outcome.
- We find extraordinary properties that are under-valued – this is the base metal.
- We create the vision and do the math based on diligent research. We are entrepreneurial and frugal. We have our feet firmly planted on the ground and our eyes pointed to the stars.
- We seek investment partners who understand the potential upside and the ways we identified and reduced risks. Our investors are opportunistic.
- We negotiate purchase price and deal structure that become the firm foundation for value creation.
- We assemble and lead a first class team of seasoned professionals well suited to each unique resort venture. We find that market’s best builders, land use attorneys, engineers, architects, designers and operators to brainstorm and execute cost effective projects.
- We add value via a new business plan and secure enhanced entitlements.
- We are thoughtful, sustainable, and ahead of our time
- We manage the project, the budgets and the money, carefully and constantly
- We negotiate novel hotel management agreements that support project financing, negotiate financing terms, development contracts, and arrange sales and acquisitions.
- We deliver the value added results via operating profits or sale of the improved asset.
Short List of Tasks Performed
- Identify market demand and trends
- Seek ideal locations and properties undervalued for a variety of misperceptions
- Pursue and negotiate property purchase agreements using creative deal structures
- Conduct thorough due diligence that is on point
- Secure financing based on financially feasible plans and knowledge of capital market structures
- Envision and execute asset business plans
- Assemble first class team of designers, engineers, land use attorneys, builders
- Lead project team with eye on financial feasibility and ways to enhance long term values
- Negotiate resort management agreements that reward performance and support project financing
- Manage the development and operation
- Manage risks effectively and respond calmly to external shocks of the market
- Lead the effort to arrange refinancing or sale of the property
- Deliver superior investment returns
As venture Sponsor, we believe in performance incentives. We appreciate the confidence placed in us by our investors. We typically structure investments so our investors are paid a preferred return until a certain return is achieved and thereafter split profits. During the development and operation of the property, we manage all aspects of the project and earn an industry standard management fee tailored to the scope and responsibilities of the particular project. These fees may include fees for acquisition, development and asset management, capital raising and disposition.
Because we are doing value creation and heavy lifting, we expect to earn a share of profits once our investors have earned their preferred return on investment. Again, the profit performance shares are within the customary ranges in the market and suited to the project circumstances.
Aligned Interests and Incentives
We believe it is critical that the objectives of the Sponsor and Investors be aligned and the financial rewards shared fairly given the roles and risks taken by all parties. The Sponsor “promote” or share of profits incentivizes Sponsors to exceed expectations and beat the original pro forma business plan. Because investors rely on the Sponsor to execute the items listed above, Investors want to incentivize the Sponsor to stay focussed on the success of the venture while managing through risks and market challenges. The promote structure can vary depending on the Sponsor’s experience and project complexity. The more the Sponsor has to work to generate the targeted returns, the more favorable the splits of the promote will be. The economic incentives are aligned and the more the Investors earn, so does the Sponsor who helped create the value.