Following a very successful divestiture of most of its portfolio properties in 2003, the Company has focused its efforts on condominium conversions, as well as land acquisitions for multi-use development. The Company is currently forming an acquisition fund targeted to exceed $50,000,000. The fund intends to acquire properties which can be developed, repositioned or rehabilitated and sold at attractive premiums. Targeted returns represent a significant spread above long term averages for real estate investments.
DEC is a "technical" investor, placing strong emphasis on quantitative analysis of the investment cycle with specific attention to individual markets and submarkets. Financial due diligence is concerned with "supply side" issues such as new construction as well as condominium conversions and single family home completions and "demand side" factors such as population growth, job creation and absorption rates. Extensive due diligence of all kinds is performed on target properties prior to acquisition, including market analysis, review of historical operating history, engineering review and assessment of the target's physical condition and intense modeling of anticipated financial results.
DEC has managed all of its portfolio properties with a reputation as a low cost, high quality property manager. Asset management is also emphasized. DEC employs a system of "financial engineering" designed to enhance internal rates of return through cost reductions and deferrals, revenue enhancement, close attention to leverage levels, sophisticated measurement of operating results and strong control of risk.
DEC also has vast experience in dealing with complex issues relating to all phases of the development process, including equity formation, asset acquisition and financing, asset and property management and property disposition. These strengths have allowed DEC to pursue "niche" properties in inefficient markets with significant pricing imbalance.
DEC investments are designed to produce the expected returns of its Partners. Traditionally real estate has produced returns, which are midway between low risk treasuries (5.2%)* and high-risk equities (11%)*. Real estate finds its place in the diversified portfolio by providing medium range returns (9.4% unleveraged)* with relatively low risk while providing a hedge against inflation. Real estate tends to prosper, with yields above long term averages, in higher inflation environments when equities, and especially bonds suffer. Real estate represents a tool, which allows the investor with a stated tolerance to risk to achieve "mean variance optimization", a proven principle of diversification theory, which uses non-correlating assets to maximize return and control risk. Simply put, an investor seeks to achieve his return objectives with the smallest risk consistent with his risk tolerance.