All Forum Posts by: Clark Stevenson

Understood. I've done OK in my RE investment life. You get some losers from time to time. I agree with you...there are going to be some opportunities but from what I've seen so far, lenders and banks are trying to keep the failures out of the public eye for the most part. Let me know when you have an opportunity.

2 Votes

Quote from @Jay Hinrichs:

Quote from @Shirley Poon:

I got the same email for the capital call several days ago as well. The email commented that the asset management fee is deferred in which I think should be not be paid out until the investors are made whole. Furthermore, there is a comment saying 24 mos return on the capital call, so that is something we'll need to get more details on.

I've spoken to the rep in Ashcroft and looks like they've seem to exhausted a lot of options before approaching us. I think they are trying to pitch it as an opportunity for us to increase our share to when the sale happens foregoing the waterfall. I think there is more to dive into next week in the meeting and having seen the loans come up due and withholding our payouts to pay for the new floating rates. For me, I need to wait for the Vista to payout for it to then be placed for capital call for this fund. As far as they communicated, no other funds or syndications have asked for the capital call, only Fund I.

I'm sure if this is on Bigger Pockets there is a lot of their reputation on the line to make investors whole otherwise, no additional investors will invest further due to their capital call and even loss of capital. The email is very well thought out and a lot of solutions placed on the table prior to approaching us. However, I've seen other syndicates use hard money loans to cover and also sponsors that have created a new side car to add capital until relief can be alleviated so that investors are whole. I question if this is really their final approach and wonder changing the deal structure in times of the most dire situation during high interest era is the right approach.

The tight timeline of obtaining a % during 1 mos for those that invested more may not be feasible for those that may just invest $25k. Accounting for total amt doesn't seem to be taken into consideration.

To play devils advocate. why should the GP/sponsor solely take the hit on something that seems to be out of most everyone's control or anticipated.. Kind of like the GFC when trillions of equity was wiped out and thousands of RE companies and investors went under. ??

If you strangle the GP ability to survive how does that help the project?

I get it if the companies kind of abandon you and move on to other deals like we are seeing with some of the other Gps on this site.. These guys always struck me as pretty conservative and never posting pics of their lambo or jet or bragging about 1000s of units etc etc.. They seemed pretty humble at least to me.

@Jay Hinrichs you are absolutely right! GP shouldn't take the whole hit but we also need to realize that they already made 8 figures on the purchase of the assets and they also have a disposal fee in the subscription agreement so the GP's are not going to be losers in this deal regardless of their personal LP investments.

Ashcroft is waiving the asset management fee so that's a good concession. I've been in 4 syndications and 2 performed amazingly well but I'm thinking my investment in this fund is a total loss. Fortunately, I have not rolled returns into new deals so I'm at a break even right now (assuming a total loss) and my 4th was very selective so unless something goes haywire, I should be in a good position on the exit.

People have to realize that all investments of this kind are highly speculative investments and if you don't believe where it tells you that your "entire investment is at risk," you shouldn't be investing. I read that when I signed the subscription agreement and I believed them. You win some and lose some and you just hope your winners compensate for the losers. I can tell you that I will never do another fund. They have several solid communities in this fund but the losers are dragging the whole fund down.

2 Votes

Quote from @Paul Azad:

Quote from @Stef Irish:

Hi. About 5 months ago Ashcraft provided a warning about the trouble at that point the common equity was wiped out given that they were propping the properties up with their own cash. LPs need to ask if they see a path out by putting in new money or if they are throwing good money after bad. Here is a forum that has been tracking this firm with more analysis and called the capital call 5 months ago and says with the layered in preferred equity the original common equity is getting even more pushed down:

https://www.wallstreetoasis.com/forum/real-estate/another-one-bites-the-dustashcroft-capital

Thankyou for posting this link Stef, interesting discussion there and very interesting Video link to Ashcroft's 15 min webinar about 6 months ago about their predicament, WOW, they had to spend 18.6 million for 12 months of Rate Cap insurance up from 513K they spent for same insurance they got 2 years earlier, on their 9 properties, which was for 24 months not 12 months, so a 36 fold increase. I had no idea it was that bad. Mr. Roessler spends the bulk of the call hoping and praying for the FED to cut interest rates due to hopefully an impending recession. This literally appears to be their plan at that point 6 months ago. No wonder they gave 12.75% to the 48 mil pref equity bailout group. They do mention the supply strain of 33,000 new doors in Atlanta alone in '23, they don't mention the 672K new doors in '24 across country, but heavily clustered in Hot markets like where they are located. Good luck to the investors, but man o man, low likelihood of any LP seeing their money again. These syndicators took huge risks in acquiring these MF properties with the variable bridge loans with rate cap insurance in order to buy at lower cap rates than any reasonable investor with fixed agency debt could afford and apparently at LTVs approaching 80% too, in order to drive higher IRR 'projected returns" for LP investors. The people in the WSO are pretty tough on the LPs and perhaps that is deserved but I think we need to help LPs by getting GVT to increase accredited investor standards, both $ net worth, and perhaps requiring people pass a basic financial knowledge proficiency exam, just WOW, i'm sure Ashcroft isn't the only one.....

I was at the Marcus & Millichap's Southeast forum a few weeks ago and Buckhead and Downtown have a 10 year absorption supply in the pipeline to be delivered in the next 2 years. Atlanta may have a bright spot or two in micro markets but on the whole, nothing is going to improve from a valuation perspective. They revealed that 50% of the supply addition nationwide is going into only 10 markets and Atlanta is one of them. Paul, you are correct, it is going to get ugly for a number of sponsors, not just Ashcroft.

2 Votes

Unfortunately, I'm an investor in this fund. To answer a few of the questions I have read here, DSCR is horrible on the Atlanta assets and naked DSCR is abysmal. As their letter states clearly, if sold today, Class B is completely wiped out and Class A would take roughly a 30% hit! One of the selling features of the fund ended up being one of the worst features. They have several performing assets in the fund but a few stinkers are pulling the entire fund down. Under current conditions now is the wrong time to have to sell a MF asset so they are just trying to buy time.

I think they are very optimistic with their recovery plan and as a colleague of mine likes to say, they are passing around the "hopium pipe" with the wish that the market recovers in the next 2 years so everyone can escape with their hide somewhat intact. Each investor is going to have to decide whether they want to meet the 19.7% call.

I'm going to listen to tomorrow's (4/24) Q&A call and make my decision after that.

What I like about the stated plan: 1) they have clearly thought out next steps 2) they are making some concessions (although some are giveaways of things already lost- there will be no waterfall) 3) if everything works perfectly, they have shown they are pretty good at execution

What I don't like about the stated plan: 1) Atlanta has a ton of new units coming online in the next 2 years- MM says that Buckhead has a 10 year absorption supply in the pipeline 2) the sponsors have already made 8 figures in fees on this deal so minor concessions feel a bit empty 3) it requires everything to work perfectly in the hopes of getting principal back.

8 Votes

We are getting too busy with our construction projects and rental activities with our current 19 units to actively search and acquire new properties to rent or empty lots to build upon. We are searching for one or more wholesale people who can help us locate and then profit from helping us acquire new properties.

0 Votes

Does anyone know of a good property management firm in Tupelo, MS? I know it is not Memphis but it is about 90 miles to the southeast.

1 Vote

Memphis, Tennessee

All Forum Posts by: Clark Stevenson

Clark Stevenson has started 2 posts and replied 16 times.

Post: Ashcroft capital: Additional 20% capital call

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