New Institutional Report Released
Access our strategic market perspective on necessity-based real estate and private credit fundamentals.
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REAL ESTATE / RETAIL
The market pays least for what people need most.
Necessity retail sits at the top of the commercial real estate yield curve and carries the lowest tenant default risk in the business. That contradiction has been true for years. It's 70% of our portfolio because we don't expect it to resolve in the market's favor.
7.3–7.7%Target cap rate range
5–15 yrsNNN lease terms at entry
70%Of aggregate capital deployed by OTIMA-sponsored Investment Entities
THE THESIS
Nobody is having a prescription pickup, a haircut, a dental cleaning, a $1 grocery run or an urgent care visit delivered to their door.
What's left standing is the retail people use on a weekly loop, at a location they can get to in under ten minutes. That's the whole category we buy.
WHAT SURVIVES
What survives is what people still need.
E-commerce didn't kill retail.It sorted it.
For fifteen years the market has priced all retail as one asset class in decline. It isn't. Amazon took the parts of retail that ship well - electronics, apparel, books - and left the parts that don't.
DEMAND
Weekly-use retail
The categories that remain are the ones consumers still need locally and repeatedly.
Pricing power
Retail is the only major CRE sector where effective rents exceed asking rents.
Limited supply
Availability is near historic lows and almost nothing is being built.
PRICING
Pharmacy
7.74% cap rate
Dollar stores
7.34% cap rate
Downtown office
Approximately 4.5–5.5%
THE APPROACH
Value-add, not value-hunting.
We don't buy stabilized, fully-leased, market-rent centers at a market cap rate. That's a bond, and there are cheaper ways to buy a bond. We buy necessity centers with a fixable gap between what they earn today and what they should earn.
WHERE WE FIND THE GAP
01
Below-market rents
Renewals create an immediate opportunity to move income toward market.
04
Deferred capex with a known number
Physical issues we can price, improve and translate into better leasing performance.
02
Vacancy we can actually lease
Strong trade area, viable suites, but insufficient leasing effort.
05
Expenses nobody managed
Recoveries, insurance and operating contracts that can be actively optimized.
03
The wrong tenant mix
Shift discretionary tenancy toward daily-needs and stronger credit.
06
Ownership ready to move on
Situations where execution certainty matters as much as the final price.
ACQUISITION CRITERIA
What earns a closer look.
Income first. Operational upside second. A clear reason to own the asset from day one.
| CRITERION | OTIMA FOCUS |
|---|---|
Asset Type | Grocery-anchored, service-oriented and daily-needs neighborhood and community centers; select single-tenant net lease in pharmacy, dollar and quick-service formats. |
Anchors | Investment-grade or nationally credited where possible. |
Lease Structure | NNN preferred · 5-15 year terms at entry · CPI or fixed escalators. |
Occupancy at Entry | 75%+ with a specific, costed plan for the remaining vacancy. |
Trade Area | Demonstrable daily-needs demand · positive population and income trends · minimal competing new supply. |
Markets | Texas core · Sun Belt growth corridor with an established local partner. |
WE PASS ON
Malls · power centers dependent on discretionary spend · unanchored strips with no daily-needs draw · anything where the investment thesis depends on redevelopment rather than income.
THE PROCESS
The rent roll and the building, at the same time.
Two workstreams run in parallel from day one: the rent roll and the physical asset.
WORKSTREAM 01
Rent Roll Side
01
Fill vacant suites with an active leasing strategy
02
Bring expiring leases to market rate
03
Improve tenant mix toward daily-needs credit
04
Re-underwrite the operating budget line by line
WORKSTREAM 02
Physical Asset Capital Improvement
We spend where the dollar comes back in rent, in tenant quality, or in exit value - not on cosmetics for their own sake.
Exterior Paint & Façade Refresh
LED Pylon & Monument Signage
Parking Lot Resurfacing & ADA
LED Site & Canopy Lighting
Landscaping, Planters & Screening
Common-Area & Tenant Upgrades
HOLD & EXIT STRATEGY
01 — TYPICAL HOLD
5–7 years
02 — INCOME DURING THE HOLD
Quarterly distributions throughout.
03 — EXIT OPTIONS
Refinance · Individual sale · Portfolio sale · 1031 exchange
04 — PRINCIPLE
No forced timeline. We exit when the market rewards it.
PARTNER WITH US
Have a center that needs a buyer who closes?
Send it. We'll give you a straight answer, with our reasoning, in days — not a maybe that goes quiet.
PORTFOLIO ALLOCATIONThree sectors.
Three sectors.
One rule: buy the income.
Our portfolio runs 70% retail, 20% healthcare, 10% multifamily - not a house view we defend in meetings, just where the risk-adjusted income is right now.
01 - RETAIL70%
Top of the CRE yield curve, lowest tenant default risk in the business. The market prices a pharmacy like a risk and an office tower like a blue chip. We built the portfolio on that disagreement.
02 - HEALTHCARE20%
The demographic trade. Demand you can see a decade out, and no way to build enough of it.
03 - MULTIFAMILY10%
Smallest position on purpose. Lower going-in yield, but it reprices every twelve months, so it keeps up when inflation does.
DIRECT PORTFOLIO ALLOCATION
MARKET CONTEXT
The market repriced. The demand didn't.
U.S. commercial real estate corrected more than 15% from its 2023 peak and has now posted four consecutive quarters of positive total returns.
01Cap Rates Expanded
A 5-cap in 2022 clears at a 7-cap today - same tenant, same rent, materially less money.
20225-cap
SAME TENANTSAME RENT
TODAY7-cap
02
$1T+
U.S. CRE debt matures in 2026-27
Most of that debt will be extended, but enough reaches the market to create real conversations with sellers who need certainty more than the last dollar.
03
New Supply Stopped
Construction starts across Retail, Healthcare and Multifamily have fallen sharply.
Whatever demand arrives increasingly meets a fixed building stock.
That is what protects rents.
RECOVERY COMPARISON
U.S. Recovery Advantage
U.S.6 years
U.K.10 years
EUROPE13 years
OPERATIONAL RIGOR
We're operators, not just capital.
Most of what determines a real estate return happens after the closing table. We staff for that.
01 — SOURCE
Strategic JVs and direct off-market. Fifteen-plus years of relationships means deals reach us before a listing does. ~200 screened a year.
02 — ASSESS
30+ operational and market data points, underwritten across the full cycle and stressed downside-first: anchor leaves, rates stay high, lease-up takes twice as long. If it still works, we're interested.
03 — ACQUIRE
Three to five high-conviction deals a year, financing locked before we bid. When we commit, we close.
04 — ENHANCE
Rebrand, reposition, re-tenant, re-lease. We manage our own assets. Occupancy up, expenses down, NOI up.
05 — REALIZE
Refinance, sell, 1031, or hold. No forced exits. Quarterly distributions while we work.
WHERE WE INVEST
- Headquartered in Texas, we know Houston, San Antonio and the Rio Grande Valley at the street-corner level — which tenants pay, which intersections work. That's why the bulk of the portfolio sits here.
- From there we expand along the Sun Belt corridor into markets with the same profile: population inflow, business-friendly regulation, constrained supply, and a local partner we've already worked with.
- We'd rather own the best center in a market we understand than a trophy in a market we visit twice a year.
OUR MONEY IS IN ITAlignment
Alignment
isn't a policy.
It's a wire
transfer.
01 CO-INVESTMENT
OTIMA principals co-invest in every deal, on the same terms. Investors are paid first, and our fees are performance-linked - we do well when the asset does, not when it merely closes.
02 DIRECT ALIGNMENT
You deal with principals directly, and you get the bad news as fast as the good news. That's not a service promise; it's how a firm this size should work.
PRINCIPLE
Investors are paid first.
TRACK RECORD
$205M+Assets under management since inception
68Completed deals
18.5%Average deal IRR
15 YearsYears operating
*Track Record & Prior Investment Experience: Information regarding prior investments, acquisitions, dispositions, distributions, operating results, or performance-related metrics is provided solely to describe the historical experience of OTIMA, its principals, and/or affiliates in specific prior transactions. A principal's involvement in a prior transaction may have been in a capacity different from their role in future OTIMA-sponsored investments. Past performance is not indicative of and does not guarantee future results. All investments involve risk, including the possible loss of principal. Prospective investors should not rely on prior results as a prediction or guarantee of future performance.Read full disclosure →
RECENT PROJECTS
Northwest Marketplace
Houston, TX · Necessity Retail
Valley Crossing
McAllen, TX · Retail
San Pedro Towne Center
San Antonio, TX · Retail
Property Ownership & Management: Each real estate investment opportunity is sponsored through a separate special-purpose entity (SPE, LLC, or LP). The applicable Investment Entity, and not OTIMA Investments LLC or its principals in their individual capacities, acquires, owns, finances, operates, and disposes of the respective property. OTIMA or its affiliates may serve as manager, sponsor, or service provider as governed solely by the relevant Offering Documents.Read ownership disclosure →