Rise48 Preferred Equity Fund / Capital Call?

[Account Closed]

Looks like another bad operator is at it again with an attempt to keep their poor investments alive, this time from Rise48. I received an email last week about the "opportunity" and watched Tyson Cobb's webinar. I've invested in two of the properties going into the fund and two others. I can't even understand how any of this is legal. Rise48 is raising preferred equity at a valuation that is not market, with income growth projections that are unreasonable, and putting $7,000,000 of new investor cash back in their pockets... $7,000,000!! and they're claiming that they are putting the first million into this fund. Math can sometimes be fuzzy for me but when you pay yourself $7 million and send back $1 million, you're not contributing. You're cashing out a net $6 million directly from investors that trust you with their savings.

https://41098383.hs-sites.com/share/hubspotvideo/18605256691...

https://www.wallstreetoasis.com/forum/real-estate/rise48-pos...

I believe this is the second attempt to raise preferred equity as well. First time was from investment companies but no one was interested, so now they're offering a 18% preferred return in hopes of getting more unsuspecting retail capital. I wanted them to sell these properties years ago but I guess I can officially say goodbye to my money. Is this not another form of a capital call? Needless to say, I won't be investing. Based on what I saw of the projections, this preferred equity investment will likely be instantly wiped out as well.

I know that there are a lot of ambitious capital raisers on this platform who have raised for Rise48 and I encourage you to please think about your investors before promoting bad investments again. I worked very hard for my money and I thought I was making sound investments with a trustworthy operator and it turns out to be the opposite, all the while being left in the dark until the last minute. These are a few of their oldest investments, so I'm assuming I'll be seeing similar "opportunities" on my other two investments in the future.

[Account Closed]

Out with more capital calls this month... If I'm counting correctly, that makes 10? but I may have missed one or two though. If you look at their own portfolio timeline, those 10 properties are first 10 on their list of 21 chronologically ordered so seems to reason another 9 more capital / "preferred equity" calls are coming. Possibly some of the 23 investments included as "cash flow positive" will also make this list as they are only cashflow positive because the over raised investor equity upfront to buy very low rate caps and are essentially just distributing initial equity back to investors. 

I'm proud that they finally stopped the marketing campaign of "we have never done a capital call and don't plan on doing a capital call in 2024". Key word 2024 because as soon as 2025 hit, they've done 10 capital / "preferred equity" calls. I wonder what this means for their new slogan... "we DO NOT plan to lose capital on any properties in 2025." As long as they're not planning on it, I suppose.

Old Marketing

New Marketing - Look familiar?

Last but not least, let's see how likely their projections are for their preferred equity fund (Credit m.stanfield on X). Red highlights are their projections, blue highlights are recent comparable sales. For their projections to come true, they just need the Phoenix market to double in the next 2 years and for 1960 - 1980s properties to sell on average for over $400 per square foot.