Government backed Rent | Defensive Income

Strategy Overview

• Asset Acquisition: The Fund will acquire 100 condominium units in Parkchester, Bronx (New York City), a large, established residential community. All units will be leased to U.S. veterans through the HUD-VASH program (a federal rent voucher system), ensuring a stable tenant base with government-backed rental income.
• Financing Approach: The acquisition will be funded with conservative leverage – fixed-rate, fully amortizing debt at approximately 65–70% loan-to-value (LTV). This moderate debt level aims to enhance returns while maintaining comfortable debt service coverage.
• Hold Period: The Fund targets a 7-year hold, with flexibility for up to three one-year extensions (maximum 10 years total) to optimize the timing of exit and avoid forced sale in unfavorable market conditions.
• Ownership Structure: Investor ownership is tokenized, with limited partner (LP) interests recorded on a digital ledger. This structure provides transparent and efficient ownership tracking, and enables direct peer-to-peer transfers of LP interests (subject to securities restrictions), while all cash flows move through the Fund’s traditional bank accounts for security and control.

Target Outcomes

• Target Returns: Projected investor returns include a net internal rate of return (IRR) of approximately 18–20% and a net equity multiple of roughly 3.0× over the 7-year base case. In an extended 10-year scenario, the net equity multiple is estimated around 5×–6× with a similar IRR in the high teens. These targets are net of fees and based on conservative assumptions.
• Cash Yield Growth: The Fund is designed to produce steady cash yield on equity, starting at roughly 6% annually in the initial years. As rents grow and debt is paid down over time, the annual cash yield is projected to rise to approximately 30% by year 10 (if the hold period is extended), significantly enhancing investor cash flow in later years.
• Conservative Underwriting: All projections are grounded in conservative underwriting. The business case assumes a 5% vacancy rate (economic vacancy), maintains at least $5,000 per unit in reserves for repairs and contingencies, and assumes no gains from refinancing or other speculative events in the financial model. This prudent approach is intended to ensure that target returns can be achieved under routine operating conditions, with any additional upside (e.g. from market appreciation or transit improvements) providing potential outperformance.

Key Differentiators

• Government-Backed Rent Stream: The Fund’s income is underpinned by HUD-VASH vouchers, which pair Department of Housing and Urban Development rent subsidies with Veterans Affairs support. Rent is paid via Housing Assistance Payments (HAP) from local housing authorities, effectively a federal government-backed payment stream. This arrangement results in highly reliable collections, low delinquency, and reduced vacancy risk (historic occupancy for HUD-VASH housing is very high).
• Below-Market Entry Pricing: The acquisition price is approximately $350 per square foot, which is well below the prevailing ~$1,000/ft² valuations in other New York City submarkets that offer under-20-minute commute times to Manhattan. This favorable basis provides room for value appreciation as the Parkchester units re-price toward levels of comparable transit-accessible neighborhoods. In other words, the Fund is buying in at a significant discount to comparable assets, positioning investors to benefit from a potential price convergence over time.
• Transit Catalyst Upside: A new Metro-North rail station is under construction in the immediate vicinity of Parkchester, scheduled for completion around 2026–2027. This station will dramatically cut the commute to Midtown Manhattan (Penn Station) from roughly ~58 minutes currently to about 18 minutes. Shorter travel times are expected to increase housing demand and property values in the area. The Fund’s base-case projections do not rely on this improvement, treating it as pure upside – but if realized, this transit upgrade could accelerate rent growth and asset appreciation beyond the conservative underwriting case.
• Aligned and Experienced Sponsorship: The General Partner and operating principals are investing significant personal capital alongside LPs, ensuring full alignment of interest between the sponsor and investors. The management team has deep on-the-ground experience in Parkchester, with a track record of owning and managing hundreds of units in the community over the past decade. This local presence (including representation on the condominium board) and operational expertise enable efficient execution, favorable vendor relationships, and proactive risk management for the portfolio.

Liquidity and Reporting

• Transferability: The Fund’s tokenized structure enables peer-to-peer transfer of LP interests on a regulated digital ledger, should an interested buyer be available. This provides investors with a potential (though not guaranteed) path to liquidity by selling their interests directly to other qualified investors, subject to applicable transfer restrictions (e.g. holding periods and investor eligibility rules).
• Transparent Reporting: Investors will receive regular reporting to track performance. Quarterly Net Asset Value (NAV) updates will be provided, based on updated appraisals and portfolio metrics. Along with NAV, the Fund will report key performance indicators each quarter – including occupancy rates, debt service coverage ratio (DSCR), reserves per unit, acquisition progress, and other relevant metrics. Annual audited financial statements and tax documents (K-1s for U.S. investors) will also be provided. This robust reporting framework ensures institutional-grade transparency into the Fund’s operations and financial health.

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