Joshua Davis, Partner at Baseline Partners, joined Julie Cooling, Founder and CEO of RIA Channel, at the GTE Wealth Forum to discuss a co-investment strategy driven by experts in local real estate markets.
Davis states that advisors can differentiate their practice by offering 1031 exchange opportunities and co-investing directly in real estate. In 2024, Baseline Partners was the largest buyer of office properties in Phoenix, Arizona, which provides deal flow from brokers and those offering off-market deals. Baseline is a preferred partner with a reputation for closing real estate deals.
Rather than investing in funds with multiple properties, investors in co-investment deals can perform due diligence on each potential deal. Liquidity of co-investments may be similar to that of funds, as many properties are held for 5 to 7 years, offering cash yields of 7% to 10%.
Baseline works with other sponsors nationwide on senior housing properties. Davis notes that this is an interesting sector, as Blackstone is selling a $1.8 billion portfolio at a 30% to 70% loss, which may be due to its timing. While relatively few new senior housing properties are being developed, demographics point to increasing demand from the aging baby boomer generation. Owning these properties may provide tax advantages, high current income, and long-term appreciation in value.
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