All Forum Posts by: Account Closed

 They have certainly paused distributions on some of, if not all of their deals.  I would ask again specifically what deals they have paused on and why they might be making misrepresentations like this.  

Their proposed deal:

We are excited to announce the potential addition of Related Companies as our new equity partner, leveraging their network to further enhance the performance of Preserve at Preston. With our existing senior debt at just 4.25%, our total weighted average rate, including Related, will be 6.18%, which is significantly below the current market effective rate of 8.75% (5.25% SOFR + 3.50% spread). Along with the favorable all-in cost of capital, this partnership will maintain your existing ownership position, as Related will be treated as debt for financial and tax-related purposes.

We have negotiated an equitable cashflow structure with Related, allowing a 6.0% payment on their funds from property cashflows first, and a share of 30% of cashflow thereafter. Upon sale, Related is capped at 12.5% total return, ensuring that LP’s and GP’s receive all subsequent funds thereafter.

This partnership will provide the capital needed to execute the new full-scope renovation strategy, which the Plano market is now demanding. Having completed ten (10) Halston level test renovations (Click Here to see a pic), we have identified an opportunity to achieve upwards of over $200 rent premiums on these units. As we bring the entire property up to this new scope, we anticipate bumping our current rent roll an additional 15%.

Based on our conservative and thorough analysis, we have identified this as the most accretive solution for the investment. Below is a matrix of returns comparing the outcomes of selling now versus partnering with Related, growing NOI and selling in 3 years. At all exit caps, holding the property longer creates higher returns for investors. The strategic partnership with Related not only provides potential for higher returns, but also offers us both time and flexibility. This creates an opportunity for the capital markets to stabilize, potentially leading to a more favorable exit at a lower cap rate.

Additional Terms and Projections:

Preferred equity amount: $12.0M

Cost of preferred equity: 12.5% per year

Projected distribution rate once preferred equity in place: 2-3% per year

Anticipated remaining hold: 2-3 years

We expect the market to improve over the next 2-3 years as we continue to execute our business plan. Our goal is consistently centered on what we can control -- specifically, increasing NOI and optimizing the operational performance and maintenance of the asset.

@Lisa Jones I didn't get a video link with my notification but I'm guessing we're all going crossing our fingers that we actually get the return of our capital at this point and not quite as concerned about the return on the investment.  It's about to get a lot more complicated and I suspect they couldn't answer any specific questions right now as everything is in flux. I don't expect to see any distributions until it's sold and feel like many sponsors are just kicking the can down the road with notices like this and the next step, capital calls.  

I'm not invested in their funds so it may be different for later deals but the property I'm in was purchased in 2019, meant to hold for 5 years and sell on - but I see that as highly unlikely now seeing as they're out of funds to renovate and occupancy is dropping.  

Anyone else getting notified this morning of paused Ashcroft distributions due to refinancing issues? 

We have been working on refinancing the asset in order to access the equity and create liquidity to earnestly restart the renovations. The new lender we initially signed up with for the refinance notified us that they would not be able to provide the new loan at the agreed upon terms due to current market volatility.

We continue to pursue alternative refinancing options and anticipate having a new loan closed within the next six months. To remain conservative with liquidity and continue increasing NOI through unit renovations, we are pausing distributions beginning this month. Your preferred return will continue to accrue and will be paid at the next capital event, or when cash flow allows.

While distributions are on pause, we are not collecting its asset management fee and Birchstone Residential is collecting a reduced property management fee.

@Julee Felsman  Thanks for the great info and we'll keep it in mind as we move forward.  We're looking in various locations and not opposed to putting more than 20% down if we come across the right place. Thanks again..Evan 

Hi BP,

I'm in the Portland area - interested in Multi-Family RE and house hacking - looking to learn more and network with like minded individuals.  We have a few single family rentals currently but considering house hacking a 4 plex in the near future if we can find a deal that works. Not put off by projects that need work and living on site would allow us to improve a unit at a time if necessary.  Look forward to connecting...

@Wayne Brooks Good point. May just end up being too complicated to structure but interested to know if we rolled into another house and then added an ADU to the property with our cash how that would be treated upon exit.

@Lauren Speidel Thanks for the information. When it comes time to sell the property is the how is the deal treated if the ADU is sold as part of the entire property or is it just better to completely sub-divide the property and treat the ADU as a separate deal? It may not be possible to completely subdivide the lot so just want to know about the treatment if we did have to sell it as part of a 1031 exchange.

We are looking at selling a single family rental we have in the Portland area and buying another house in central Oregon - ideally we would like to build an ADU on the same property and live in the ADU while keeping the main house rented out.

Can anyone advise if this is possible and if so how should we look at structuring the deal? I'm assuming that we will have to subdivide the property through the city, essentially making 2 properties, once the property has been identified and we will work with a local broker to ensure that any property is suitable obviously.  Does anyone with any experience in similar situations and in particular how the portion of the land that is transferred to personal use would be handled?

Appreciate any suggestions.