Yield Over Hype

Westlake is a fully vertically integrated real estate owner-operator. That’s the “what” but not the “why”. I’ve talked a lot about the “why” – it’s our family values and being stewards within our family and community. What we haven’t talked as much about is the “how.” As a family office, that’s where we differentiate ourselves from a corporate mindset. We invest to prioritize long-term value creation and yield. Today’s post focuses on yield and why it matters.

Unlike institutions who often underwrite to specific hold periods and aggressive exit cap rates, we focus on yield. What’s the in-place cash flow? How do we identify opportunities that get us to a outsized stabilized cash flow even if we have to wait 1-3 years to get there? We look for opportunities that may be too funky for a corporate investor because we can be creative on how we get to that outsized yield and how long we hold an asset.

This mindset is how we got into Industrial Outdoor Storage (IOS). It’s anything but a hype or sexy business – we’re talking trucking, automotive, construction yards, and equipment storage. But we absolutely love the yield. We remain convicted that it’s the best risk adjusted yield in real estate investing right now. We have 4 deals under contract that range from 7.4-9.8%+ stabilized yields in primary infill markets.

And why does yield matter? Yield buys you options. You can sell, refinance and pull out proceeds, or just sit and hold. We love these unsexy lower risk investments that churn outsized yield. Yield provides money to support the family, to compensate our employee family, and to support philanthropic causes and be responsible stewards in the communities we live in.

Patient capital means focusing on yield over hype. Feel free to reach out if you have any interest in investing in IOS with us – we believe the uncertainty in the market is creating unique wealth creating opportunities for those currently deploying capital.