In November 2017, Performance Realty launched an offering for a workforce housing fund (the “Fund”) focused on mobile home parks and multifamily apartments.
The business plan contemplated acquiring, improving, managing, and selling residential housing, including mobile home parks, apartments, group housing, and other forms of rental residential income properties throughout the United States. For each acquired asset, Performance Realty planned to focus on revenue optimization, expense management, property enhancements, and sustainability and wellness.
Fund’s Single Asset Exceeding Expectations
As of Q2 2018, the Fund owned and operated a single asset, a mobile home park located in Oregon. The property results were exceeding projections due to significantly faster than projected occupancy growth. The asset’s occupancy had increased to 96% from 79% at acquisition.
Two New Acquisitions
During the third quarter of 2018, the Fund acquired two additional mobile home parks, also in Oregon and located within 15 miles of the Fund’s first existing asset. Performance Realty believed the Fund’s existing property had provided key knowledge of the market and offered first-hand insight into the high demand for affordable housing within this region. Overall, the Fund continued to perform well making distributions to investors at an annualized rate of 8%. Due to strong performance, Performance Realty was also beginning to evaluate a potential refinancing of the Fund’s first asset.
Throughout 2019, the properties continued to perform well operationally and Performance Realty continued to evaluate various strategies for the Fund (i.e., looking at additional acquisitions, evaluating refinancing opportunities, analyzing unsolicited offers, etc.). Ultimately, Performance Realty determined it was in the best interest of investors to proceed with an early opportunistic exit. The three assets in the Fund were successfully sold in August 2020.
Good business plan execution allowed Performance Realty to create safer, more attractive, and sustainable communities, which led to an opportunistic exit opportunity resulting in strong returns for investors, including a higher-than-projected IRR.
*Net of the most onerous fees charged to clients of CrowdStreet Advisors, LLC, our registered investment advisor subsidiary; an investor’s actual returns on a realized investment may differ.
This report contains explanations of a series of events associated with the Performance Communities Fund offering that resulted in an approximate 26% (net of most onerous fees) IRR to investors (including those from the CrowdStreet Marketplace). Certain aspects of the report such as dates of major events and the final outcome are easily verifiable while others, particularly underlying reasons behind the sponsor’s business plan execution, are not.
The report partially relies upon the sponsor’s explanations, the information contained within sponsor-produced quarterly reports, and conference calls. This analysis is not an assertion of independently verified facts but, rather, is for informational purposes only, to convey CrowdStreet’s understanding of what transpired.
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