The Ashcroft Capital Value-Add Fund is a new fund focused on capital preservation and risk mitigation. By focusing on five to seven large-scale, value-added Class B multi-family properties in the south, the fund will rehabilitate these underperforming properties to maximize returns.
Evan Polaski, head of investor relations at Ashcroft Capital, told Commercial Observer why the fund is so desirable for investors.
Commercial Observer: Talk about some of the key aspects of Ashcroft Capital Added value Fand which will have a strong appeal to investors.
Evan Polaski: This fund pursues Ashcroft’s mission, which has always been the preservation of capital. We have always entered into transactions with prudent underwriting and an intentional business plan on assets that can create a very strong risk-adjusted return.
With the fund, we create a diversified pool of assets that can combine funds, so that investor returns are no longer tied to a specific asset, but rather to the overall performance of the portfolio. This reduces the risk of these returns while maintaining return levels comparable to one-off transactions.
The fund has several value-added assets. What exactly will it consist of?
We plan to purchase five to seven assets within the Ashcroft Value-Add Fund. Ashcroft’s traditional business strategy is to purchase large-scale, value-added Class B multi-family properties in large, high-growth metropolises in the Southeast and Dallas / Fort-Worth.
We are looking for areas where there is strong population growth and assets that would benefit from updated renovations. Our renovations to help bring somewhat dated properties up to current design standards, which in turn allows us to increase rents. These rents then flow into higher income and therefore a higher selling price when we exit the transaction *.
Why is this strategy advantageous to buy a newer construction?
That’s a higher return *. We are able to buy older units at a discount as they are dated units that require capital to bring them up to today’s standards resulting in disproportionate returns. Even after renovations, we are still generally at a lower rent than a new construction asset. A more competitive rental rate allows for a larger pool of potential tenants leading to higher occupancy rates.
Are there any other benefits of investing in this fund that potential investors should understand?
The biggest and most common question I get is to understand that this is a closed-end fund. This means that we are raising a set amount of equity and going to buy a set portfolio. We have a target end date and we are not recycling capital. When we start to sell portfolio assets, these products are redistributed to the investor. And once this last asset was sold, the fund was completely liquidated.
Talk about the markets you have selected for that.
We are targeting Dallas / Fort-Worth, Jacksonville, Orlando, Tampa, Atlanta, Raleigh and Charlotte. We are looking for large metropolises where there are diverse jobs, strong population growth, strong rental growth and future expected rental growth.
These strong rent projections benefit us and our buyers as we are selling a completely renovated property. The buyer’s advantage will be linked to the growth in rents year over year, so being in markets where rents are increasing by 5-6% per year, compared to 1-2%, they will see a lot more of future value. in the asset and, therefore, usually pay a higher price.
What makes Ashcroft Capital different from other multi-family investment firms?
The biggest differentiator for us is our track record. We have sold nearly 12 deals and have excellent historical returns on these assets *. But, beyond that, that track record leads to our acquisition pipeline, and it leads us to get more off-market deals and see more deals in general. This allows us to select the offers best suited to our investment thesis.
Another differentiator is our premier affiliated property and construction management teams, Birchstone Residential and Birchstone Construction. These teams create a significant opportunity to control the entire transaction lifecycle and prioritize the fund’s assets, as Ashcroft is the sole client of these affiliates.
What are some of the important factors that newbie real estate investors should consider before investing in this area?
Make sure you invest with someone you trust and who is willing to take the time to educate yourself and connect with you. Both new and experienced investors should seek references from existing investors and make sure they understand the sponsor, their background, and their business plan. Most of these transactions have limited voting rights or liquidity, so you need to do your due diligence up front.
What are the minimum requirements for investing in the fund?
We can only accept accredited investors as defined by the SEC, and our minimum capital investment is $ 25,000.
How will the distributions work?
Distributions are expected to be paid monthly, but will be based on actual transactions. These could vary, particularly in a downside scenario. Either we mail checks or we use an investor portal, where the investor could set up a [automated clearing house] so that their distribution is deposited directly into their account.
How long will the fund last?
We expect a lifespan of five to seven years.
In summary, what aspect of this fund has you most excited about its prospects?
For me, it is the diversification that it provides and therefore the reduction of risk. Ashcroft was very successful on the one-off deals we made and continued to build a value-added plan. and we anticipate similar levels of return for the fund as a whole. And, beyond that, the business plan has the capacity to generate solid returns, even in a slowing economy, through the value-added plan.
* The past performance of previous investments cannot be taken as an indicator of the future performance or success of the partnership. Ashcroft Capital is not an investment adviser or broker and is not registered with the United States Securities and Exchange Commission. The information presented in this document should not be used as the sole basis for any investment decision, nor is it intended to be used as advice regarding whether to invest, buy or sell securities. , nor should it be construed as advice designed to meet the investment needs of any particular person or entity or any specific investment situation. Nothing herein constitutes legal, accounting or tax advice or personalized investment advice.