At Rockspring Capital, we strive to maintain a diverse portfolio of properties that provide more control over returns for our investment partners. Recently, we’ve added “Covered Land Plays” to smooth the cash flows of our portfolios.
A covered land play is real estate with existing development that is industrial, commercial, residential or redevelopment parcels with existing leases. The real value in the purchase is the imminent shift in use to a higher value because of the changing nature of the area. Houston, without zoning laws, has many areas of town that are redeveloping and allow us to execute this strategy. Our other target markets also have opportunities to exploit but typically require re-zoning of the acquisition.
A good example of a recent covered land acquisition is our Yale St. property in Houston. This asset currently has one tenant with an active lease and is situated among several single-family and commercial developments. The Houston metro area and its transitional neighborhoods are one of a few areas in the city we are currently targeting for covered land play purchases.
The sizes can vary, but typically the covered land play property we are targeting is a smaller tract around two to 10 acres, but we’re also open to much larger lots depending on the opportunity.
This covered land play strategy benefits our investors on multiple levels. There’s positive cash flow, which results in enhanced returns. Also, this added income component allows for more flexibility to quickly secure other opportunistic land deals for our funds.
The potential for returns when utilizing this strategy is very promising for Rockspring and its investors and we’re excited to continue seeking out these opportunities in 2015.