All Forum Posts by: John Teachout

Had you personally visited these properties prior to making your offers? We're no longer purchasing properties and are unwinding our portfolio so are in the selling mode. We have had some inspections done that suggested expensive repairs/upgrades and we've just been saying no. We price the properties according to their current condition. If we did everything on the inspection reports, then the property would be worth more so we refuse to play that game. When we were purchasing properties, we always made our offers all cash, no inspection, no contingencies and closed on every accepted offer. (we inspected the properties ourselves during the walkthrough prior to making an offer

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Sorry to hear that. There's lots of us that are suffering a similar fate even with well vetted syndicators. The crazily rapid rise in interest rates pulled the rug out from under a lot of investments. The ones we invested in were much more conservative in their projections but will likely all wind up in the same dung pile.

 I also think that interest rates, while likely getting a token reduction, are not going to decrease very much. Certainly not enough to bail out all the syndications that have short term debt requiring a rate cap or refinancing. ALL of the syndications/funds we invested in before the rising rates stopped distributions and only one has started them up again. (solid operations, 100% occupancy). The other ones will likely scrape by until things improve. Besides Ashcroft, it's possible that one more of them is at risk. It's a tough time to have recently invested in this asset class. The crystal ball is showing ominous days ahead.

So where is fund 1 at now? Did they raise enough capital to kick the can down the road?

We are unlikely to participate in the capital call when it comes because the fund's assets are performing well below the pro-forma. It's not generating adequate profit even with a cap rate currently in place. The performance of one of the properties is poor with a concerning low occupancy rate. And finally, we have no confidence they can "operate" themselves to a profitable position in the future which will likely result in a loss of investor capital.

Today we got a report on AVAF II. Although we haven't received a capital call for this fund, it's probably coming as they discussed the likely need for additional capital. Unless they have some really convincing data, we're not likely to participate. I would hate to lose the funds we have invested with them but at this point I have no confidence they can pull it out of the dive and I would really feel stupid if I added more money to what is likely to turn into a total loss of our position. And I also think it would be fair to include the status of their current funds in the PPMs or advertising of future offerings.

We're in fund II and at the moment if we get a cash call, we'll likely decline as I'm thinking it will be throwing additional funds down the well. I don't want to lose our investment but I also don't want to lose our investment plus additional funds. We're in 5 funds/syndications and only 1 of them seems to be doing well. If they all pack in, it will be a huge loss for us but we won't go without food.

I've just been deleting the additional offerings from Ashcroft. Sounds appealing but so did fund II. I'm not likely to invest with someone that has already proved they weren't prepared for the eventualities. We did a classic "buy high and sell low" move with all our syndicated investments it seems. We are still investing in multi-family but only with highly experienced operators. ie, they were doing it before 2008.

We watched the video report which was interesting. We're not in fund I but are in fund II. They indicated in the video that they don't anticipate cash calls for any of their other portfolios. Hope that stays true. My wife and I have already discussed what our reaction might be if we do get cash calls from any of our syndications/funds and while we would look at each situation in detail, it's likely we would refuse. The video was sobering in the fact that if the cash call fails and they have to sell, not even class A investors would get all their principle back and class B would be wiped out. This has helped me to realize that where one's investment is in the capital stack is vitally important. A cash call is somewhat ironic in essentially it's "This investment is messed up and at risk, can we have even more of your money?"