Allegiance Realty Corporation
ACQUISITIONS

Allegiance will continue to acquire assets that fit into our proven formula for success. The acquisitions strategy is an active approach using Authoritative Market Intelligence, seller profiling and a stress timeline to identify opportunities while remaining disciplined to fundamental baseline value and providing above market risk adjusted returns.

In a market that is forever changing, it is essential that we constantly evaluate market conditions and adjust our forecasts accordingly. For example, with interest rate risk we will create internal reserves, buy caps, increase proforma interest rates, and lock or float rates. We will always be proactive to changes in market conditions both at the macro level (i.e. economic job growth, interest rate risk, and catastrophic events) and the micro level (i.e. competitive set, occupancy, rate changes, and supply and demand).

ELASTICITY OF VALUE

At Allegiance we feel we never speculate how a property will perform in the market. We will never "stretch" a property more than it has been stretched in the past. The market, the tenants, and the owners, and even the property all have a memory of performance. Property aesthetics can change throughout time, ownership, etc., but a building will never forget the past. For example, an office building may have demanded its highest leasing rates at $25 per square foot in the late 1990's and then dropped to $15 per square foot by 2003. As markets improve and rental rates rise, we assume the property will likely not surpass $25 per square foot. Anything beyond the highest leasing rate or selling price is unknown territory or speculative. It is this speculation that Allegiance will not assume during acquisition, ownership, or disposition.