- Our long-term success in real estate investments has demonstrated - over time - the importance of adapting investment strategies based on current market conditions.
- Lexin's expertise lies in the creation of unique investment opportunities tailored to fit external market conditions. Diverse investment products and structures are utilized so the portfolio can be expected to perform well in a range of market environments.
- When creating an investment strategy, our first concern is risk or the potential cost of achieving targeted returns. We believe that opportunities based on optimal risk-to-reward ratios can best be identified through disciplined underwriting, prudent capital structuring and continuous monitoring of investments.
- We currently focus on entry-level residential housing developments and income-producing assets with high quality tenants under long-term leases.
Lexin Capital considers the dynamics of the capital and real estate markets in formulating its investment strategy. Lexin closely monitors the capital markets to:
- Assess the magnitude and direction of global capital flows in and out of real estate as an alternative class of investment. Capital demand for real estate as an investment class has at least as significant an impact on the pricing of real estate as do real estate market fundamentals.
- Identify the availability and cost of both equity and debt capital for real estate investments and identify specific real estate investments. Like any investment, cost of capital is one of the most important factors in investment in real estate.
- Lexin reviews several hundred potential investment opportunities annually. Individual investments are selected which, we believe, are best positioned to achieve attractive investment returns.
- Lexin conducts extensive due diligence on 20 to 30 properties per year and aims to invest in several projects out of that group. Our due diligence includes qualitative and quantitative analysis and employs third party professional firms in market research, engineering, environmental and legal fields.
- Lexin's due diligence process does not end with the closing of an investment. All investments are continuously monitored. We also monitor change in the financial condition of our tenants and our potential buyers that can affect performance.
- While real estate is typically characterized as having low correlation to equity markets, real estate returns can be variously affected by equity market developments. We continuously watch the capital markets and evaluate its impact on real estate.