All Forum Posts by: Account Closed

@Spencer Cuello

Vanamor Investments - We provide mostly 506b offerings which allows accredited and non-accredited investors but non-accredited investors need to be what's considered sophisticated so we'll typically look to build a relationship first through phone calls and meetings so that we can assess the suitability. Feel free to contact me if you have any questions.

I've been investing in the industry since 2007 and spend the better part of the last 3 years patiently waiting for market fundamentals to improve which we believe they have and should have some opportunities in the near future.

Quote from @Carlos Ptriawan:

now I can understand few things:
- how the losses in the office is started to hit the bank and AAA tranche as LTV is over 100%
- while in multifamily almost every GP is very active in purchasing that distressed asset. The bridge-lender has really in good position here in the game of chess as their aggregated LTV is still below 100% , they received capital injection from government while at the same time they receive interest from the capital call. Even if they lost money a bit they can resell the asset to another GP. They still don't lost money if LTV is below 100.
- having said that the best strategy for the new GP that purchase the MFF, is just to simply buy 5-7% fixed CMBS rate with 60%LTV , while previous GP/LP is wiped out the new GP and/or lender)is really in good position. Almost like riding a riskless investment vehicle.

Is this a sense of optimism in new MF investments that I sense @Carlos Ptriawan? I never thought I would see this day.

Quote from @Jay Hinrichs:

That was one of those periods where every investment was sold, no matter good or bad. PDX market has been good to me since and really the only MF market where we're close on pricing today.

 MF got slammed in 08 to 2011, worse than today.

That's not a very good way to look at it. If the CC is successful, the final outcome for Class A is entirely unknown with the worse case scenario being 0% of your original investment returned. The issue for Class A in the event that the CC is successful is that there will be preferred equity from a third party and preferred equity from the capital raise that will all sit above Class A interest and will receive their investment back and 12.75% interest before Class A receives a distribution or initial capital back. Rough math, the properties will need to appreciate 7-9% per year for Class A to do better than the 70% if sold today. There is a very strong probability that does not happen.

@Kelsey Bowman Your question is actually very complicated. Normally, when the term dilution is used in a capital call scenario, it is your equity ownership that is being diluted. For example, you will go from 10% ownership to 8.35% ownership of the property because your $100,000 investment was initially 10% of the $1,000,000 equity required but with the capital call, there is now $1,197,604 of equity in the investment. In that basic example, all investors are the same share class and the capital call is pari passu, meaning no senior positioning of the additional capital.

From my understanding of the Ashcroft capital call, additional capital will be in a senior position to both of the original share classes and the capital call equity will receive a fixed 10% and 7% coupon that will be paid before the original equity is returned. Because of the structuring of fixed coupons and senior positioning, the original Class B equity returns will not necessary be reduced by just the 16.5% dilution. Time also plays a larger factor.

@Scott Trench

I think that would be valuable to LPs. A member also contacted me and asked about current offerings as well. Similar to a private investment group, a crowdsourced peer review forum isn’t a bad idea either.

I didn’t mean for this to be a Yardi promotion. Costar is another product that is useful as well. I was only trying to explain that a lot of us GPs have resources, along with obviously market expertise, to be able to provide quick feedback on specific investments.

Quote from @Jay Hinrichs:

Quote from @Account Closed:

@Jay Hinrichs

Ok so how does the average LP use or get that information I don't think they are going to spend 10 to 20k for it?  . I get it how if your the GP that would be a reasonable business expense.   Again just curious.  I suspect the bigger commercial brokers probably subscribe so they can share with their buyers/sellers ??

I doubt any LPs would subscribe to the service. I initial brought it up as an example of the type of current information I use to assess current market values which I would gladly provide feedback on properties. Very limited information is being communicated by sponsors, particularly those that used high leverage variable rate loans to acquire in 2021-2022, so LPs are commonly feeling left in the dark. Since there are a handful of good sponsors on here, I thought there could be a thread used as a resource for an LP to say “Hey, I invested in XYZ in 2021 and the sponsor is telling me everything is fine but I’m worried. What do you think the property/my investment is valued at today?”.

@Jay Hinrichs

Yes and pretty expensive, $10,000 to $20,000 depending on market coverage. Similar to Costar but more institutional. Yardi has better expense information while costar has better coverage of sub-50 unit properties and in my opinion, better qualitative reports.

@Jay Hinrichs

Yes. Yardi tracks vacancy and asking rents at each property over 50 units on a monthly, quarterly and annual basis. They also receive information on operational expenses through one of their loan servicer partners but I don’t find that to be entirely accurate. However, with tracking of rents and occupancy, I can at least ballpark pricing of a property in markets that I know.

It's a difficult time to be an LP, particularly those that invested between 2021 and 2022. You're likely reading the headlines about commercial real estate distress and wondering how your investments are doing. Kudos to the sponsors that are being transparent but many sponsors are not, and continue to provide the "we are not distressed" messaging up until the day that they send a capital call request to investors. Unless it's a catastrophic capex related issue, the need for a capital call does not come up overnight for sponsors and neither should it for LPs. 

To help LPs wondering what the market values of their investments are today, I thought it would be beneficial to have a thread where LPs can ask for valuations on specific properties and the sponsors in this forum can opine. By no means would these be exact estimates and they should not be solely relied on but with high level information, I think most sponsors would agree that they could provide feedback fairly accurate assessments within +/- 5%. We subscribe to a market research platform called Yardi which only provides information on multifamily properties 50 units and larger so if you are invested in a property that is 50 units or more, I would happy to provide quick "back of the napkin" valuation and methodology. You can DM me as well but there are many experienced sponsors on this forum that I think collectively can provide valuable feedback across the whole country.