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Answering the Question “Is the Fund a Blind Pool?”

Another question that I’ve been getting more frequently from investors involves the fund. The question I’m hearing more as we near the fund launching is: Is this a blind pool? The answer to that is yes…and no.

Yes, it is technically a blind pool because you have less control over what we’re buying because we haven’t bought it all yet! And no, it’s not entirely blind because in any fund you’re considering, the sponsor will outline all the acquisition criteria that they’ll stick to. For instance, in our fund that means you’d see something like you’ve read in some of our past recent content, with assets that:

Are built after 1995

Are in the B+, A- range

Are light value add (we’re not looking to solve a lot of problems, just solve some by improving the units and improving the management efficiencies and running it better. That’s where we’ll increase our NOI, net-operating income.)

Are in a market with more than 70,000 people

Have a unit count of more than 180

So we spell all this out; what this does is boxes us in a little bit and you have an understanding of where those funds are going and what we’re going to buy with them. In a different scenario, if we found a deal that didn’t fit those parameters, but we thought it would really be a good deal, we would raise funds directly for that deal and we wouldn’t put it in the fund. In that example, we’d raise capital elsewhere and people would have the opportunity to say “yay or nay” to that particular deal. We’d then continue looking for opportunities that fit the fund parameters. So while the fund technically is a blind pool, you will still have an idea of the types of deals we’re looking for.

 

 

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