Value Strategy changes based on market and economic conditions. The Strategy has flexibility to make value based real estate investments throughout the capital structure across the United States with emphasis on strong recovery and high growth markets. Targeted property types emphasize multifamily assets to capitalize on the supply/demand imbalance, particularly class B assets Kairos believes are primed for capital and operational improvements.
The Credit Strategy seeks to generate current income through the origination and secondary purchase of real estate loans and real property in the United States. The primary target investments include first mortgages, real property, and other fixed income instruments such as B-pieces, mezzanine debt, junior secured debt, and preferred equity.
In 2017, as the United States economy transitioned into later phases of expansion, the Value Strategy focused on strong secondary markets obtaining exposure to new geographic areas which were later to the recovery. Kairos continued to deepen sponsor-partner relationships and gain local expertise. During that time, the Value Strategy increasingly deployed capital through joint venture partnerships in addition to preferred equity and senior debt positions.
The Impact Strategy invests in affordable housing within the United States, including low-income housing tax credit (LIHTC), senior housing, manufactured housing, and self-regulated market rate communities. The Impact Strategy seeks to provide a predictable cash flow stream, in addition to positive environmental and social impact. One of its main goals is to demonstrate an impact strategy can be accretive to returns.
In 2014, the Value Strategy increased interest in new geographic areas during the economic recovery. As Kairos deepened sponsor-partner relationships and gained local expertise, the Strategy increasingly deployed capital through joint venture partnerships in addition to preferred equity and senior debt positions.
2011: Value Strategy
In 2011, the Value Strategy had the flexibility to invest throughout the capital structure with a focus on strong secondary markets. The Strategy targeted several property types, including multifamily, student housing, grocery and pharmacy-anchored retail projects, office and light industrial buildings, manufactured housing, and affordable housing (including LIHTC). To help Kairos achieve a broader reach and higher level of operational efficiency, the Value Strategy leveraged the expertise and relationships of local sponsors to source and operate select deals, mainly through preferred equity and mezzanine debt positions.
2008: Income & Growth Strategy
The Income & Growth Strategy targeted stable assets with high quality tenants, high occupancy, and low tenant turnover. Focusing on income-oriented assets suitable for long-term investment horizons, the Strategy originally included medical office and student housing. Its investment thesis was fundamentally underpinned by the strong demographic dynamics of the baby boomer and millennial cohorts.
The CMBS Strategy followed a strict criterion to invest in “CMBS the Real Estate Way,” with a focus on underwriting the underlying real estate. The strategy was applicable and optimized during stages of the economic cycle characterized by widespread market illiquidity and flight to safety. The Strategy targeted discounted, high grade, performing commercial mortgage backed securities collateralized by commercial and multifamily properties.
Carl Chang partnered with Jonathan Needell to form Redwood Real Estate Partners, the predecessor to Kairos Investment Management Company. As partners, they continued the Chang Family's strong culture of discipline and alignment. Consequently, the Chang Family made the decision to invest in real estate exclusively through the initiatives of the firm alongside private and institutional investors.