Cambridge Realty Partners LLC
Cambridge Realty Partners was established in 1978 in Hartford, Connecticut and is now headquartered in Santa Fe, New Mexico.
Throughout its history, Cambridge has been a consistent contrarian, demonstrating an unfailing ability to acquire undervalued assets. Equally important, Cambridge possesses a strict disposition discipline which has resulted in Cambridge having sold its investments prior to every downturn in the markets in which it has operated. This discipline is reinforced by aligning our compensation with profits to our investors.
The 30-year history of Cambridge is best defined by the real estate and economic cycles of the past three decades. From 1978 to 1997, our primary focus was to acquire institutional quality office properties in recovering primary markets that had been through a period of substantial decline. The lingering vacuum of capital in the face of increasing tenant demand and below replacement cost pricing gave rise to outstanding buying opportunities and produced a low risk, high reward investment profile. Similarly for dispositions, ominous first evidence of market deterioration is often overlooked in an environment of apparent strength as new construction and excess capital often outpace market fundamentals.
These strategies were executed by Cambridge in acquiring properties in the northeastern United States from 1978 - 1986 and selling 100% of these assets by 1987 - the height of the region's economic and real estate cycles. Between 1989 and 1992, Cambridge capitalized on office opportunities in Texas that resulted from collapsing oil-based economies, over-building and recession. These assets were sold into the dot-com based euphoria of the late 1990's. In total, Cambridge acquired and disposed of over 4.5 million square feet of commercial real estate assets in the United States.
In 1994, Cambridge began to explore development opportunities in northern Mexico. Although seemingly contrary to our philosophy of buying existing assets at below replacement cost, the opportunity was in many ways the same - perhaps the mirror image. In the United States, Cambridge was buying at deep discounts to replacement cost but at market yields and with strong prospects for capital appreciation. Development in Mexico was, by definition, at replacement cost but it was also at yields that defied logic on a risk-adjusted basis.
Dollar financed industrial properties supported by dollar denominated leases to companies such as Johnson & Johnson were yielding unleveraged returns of 16% annually - 700 basis points above a comparable asset in the United States at that time. The prospect of NAFTA, and eventually the capital markets, correcting this unwarranted yield premium seemed certain. From 1995 to 2004, Cambridge developed or acquired over 3.4 million square feet in sixteen industrial properties in Mexico. All but one were sold between late 2005 and mid-2007 at capitalization rates as low as 9%. Capitalization rates had compressed from 700 basis points to 200 basis points above comparable U.S. assets in 10 years. Again, Cambridge had the discipline to sell into a pronounced capital markets bubble ahead of the economic uncertainties and credit crisis that emerged in August 2007.
Cambridge is proud to have shared its success with many individuals and institutions including the Harvard University Endowment, IBM Retirement Fund, AIG Global Real Estate, CS First Boston, GE Capital, Prudential Real Estate Investors, Heller Financial, CIGNA, and Equitable.
"We take pride in always maintaining the discipline to critically evaluate the fluctuating investment fashions which hold such influence over the investment community. We evaluate these fashions to invest counter-cyclically, buying when there is excess pessimism and selling when there is excess optimism. This boils down to strict fundamental investing."
Michael J. Falker, Managing Partner
"Cambridge invests in selected properties where our compensation is strictly aligned with profits delivered to our partners. This translates to focus and discipline at acquisition as well as at disposition. We have never been an advisor where maximizing fees and assets under management have influenced our thinking."
Mark R. Stone, Managing Director
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