Invest in distressed
multifamily real estate
We acquire distressed properties and add value through electrification and densification.
Use a 1031 exchange to defer taxes and buy the dip.
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fund deck.
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Projected program returns*
Our value add track record
*Estimated predictions of performance are not based on actual investment results and are not guarantees of future results.
*Representative performance of RTS EBMF Fund I from 2016-2022 net of fees. The fund followed a similar strategy of value-add improvements. Past performance is not indicative of future results.
**Total distributions across 16 value-add properties acquired between 2011 and 2017 with an average hold of 5.2 years.
Now is the time to
invest in real estate
Commercial real estate is a cyclical market and is prone to boom and bust cycles. The boom provided by exceptionally low-interest rates has given way to a period of contraction due to higher interest rates and tighter financing conditions. As with every cycle, the time to buy and diversify your portfolio is when prices are low - we believe that period is now.
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$850B wave of distressed mortgages coming due
Over $850 billion of low-rate multifamily mortgages are maturing by the end of 2026. Given much higher interest rates, many of these loans will be impaired at the same time banks have sharply curtailed lending. We believe this will force many property owners into distressed sales.[2]
$500B available energy incentives
The Inflation Reduction Act (IRA) provides an estimated $500 billion to $1.2 trillion in credits and rebates for climate change mitigation, renewable energy, and energy efficiency programs, including for multifamily properties._
AI tech wave is just beginning
The Bay Area is projected to add ~100,000 AI jobs by 2030. We anticipate an influx of talent into California more broadly which will lead to rising rental demand over the next decade as housing supply fails to keep pace.
New pro housing laws make ADUs easier
Recent California ADU legislation enables up to a 25% unit count increase and speedy approval for small-format unit additions to existing buildings.
The ArtHaus Partners Edge
Acquisitions identified using data, ahead of competition
We identify discounted and distressed acquisition opportunities by analyzing loan databases for early signals of distress, and utilizing our relationships with debt and multifamily brokers.
Track record of using government programs for density and solar
We have leveraged the state Density Bonus Law across 23 buildings and 1900+ units and State ADU legislation enabling up to 25% unit-count increase across 9 ADU projects. Our ~$4MWg solar installations powering 1500 units are designed to tap Inflation Reduction Act (IRA) Incentives, which REITs cannot.
Risk mitigation through efficient capital structure
We reduce our cost of capital by up to 170 bps through mission-based rate discounts from federal agencies, which affords us ~$1-2M in debt savings across the life of an average loan. We also underwrite the downside protection and maintain low leverage.
Design innovation & efficient construction
With decades of construction expertise, we efficiently develop small-format housing to add rentable square footage at lower cost. Our cost per residence is $250K vs the Bay Area average of $570K. Our timeline from acquisition to operation is 30 months vs the SF average of 72 months. We add units (ADUs) at a low ~$150K/unit cost.
Tech-enabled marketing & operational efficiency
We leverage technology to reduce leasing and operating costs including an integrated online leasing platform, virtual tours, and keyless entry. We've leased over 200 units without physical tours.
How we create value in the fund
Investing in value-add projects since 2012 has helped us refine and inform our process.
Source distressed assets through a proprietary database of maturing loans. Acquire distressed assets with strong fundamentals and value-add potential.
Learn more in the news
How to play the property meltdown in five charts
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How will the IRA impact commercial real estate?
See how we transform properties
Before
Before
Before
Rose on Bond
1638 47th Ave, Oakland, CA 94601
Value-add case studies
Niles Station:
a value-add case study
When we first encountered Niles Station through a trusted broker, the family who had owned the property for 40 years was ready to retire. We acquired this 50,000 square foot site for its strong fundamentals and ADU potential at a $3M discount to its pre-pandemic value.
Our value-creation process resulted in a cap rate increase of 178 basis points and a ~81% increase to project-level net operating income over the project's development period.
VIEW CASE STUDY
About ArtHaus Partners
ArtHaus Partners is a Bay Area-based real estate development and asset management company, focused on moderate-income and student housing in California. Operating in the Bay Area since 1977, we've profitably developed housing in California across 160 different residential and multifamily projects.
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FAQs
USD $250,000 (inquire about grouping).
For Accredited Investors only.
2.0-2.5x Net Equity Multiple, 12-17% Net IRR, and 9.5-13.1% Target Average Cash on Cash following investment period.
The fund target size is $100M with a $250M cap.
The fund will invest in distressed and other value-add assets with the potential for greater densification. The target properties will be located in Western U.S markets, primarily in California.
The investment term is 9 years with two one-year extension options
What are the Management Fees?
There is a 2% Asset Management Fee on effective gross income plus additional property-level construction, management, and financing fees.
Is there a Preferred Return?
Yes, Limited Partner investors are entitled to an 8% preferred return before the General Partner is entitled to any profit sharing.
Are there any Fee Discounts available?
Yes. Carried interest discounts are available for commitments made prior to the fund's first close on June 30, 2024.
After Limited Partners receive their 8% preferred return, the General Partner is then entitled to a 25% catch-up. Carried interest to be split 75% to Limited Partners and 25% to the General Partner thereafter.
The fund closing date is June 30, 2025. Carried interest discounts are available for commitments made prior to the fund's first close on June 30, 2024.
We can help with 1031 exchange opportunities. Contact us to learn more.
This fund is not a Qualified Opportunity-Zone Fund.
Contact us to invest in the
ArtHaus Value Add Program
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Source
- Freddie Mac AIMI - Price Index. Graph from late 2023 onwards is broadly illustrative of an anticipated trend, and not a projection, Sept. 21, 20232.
- Mortgage Bankers Association (MBA), Newmark Research, October 2023
- The Inflation Reduction Act: Here's what's in it, McKinsey & Co., October 2022
- Article by JLL Research, PwC, June 2023
- Including units in entitlement
- Installed or on the way
- Over 10 years on a $20M loan. Reflects a $220K rate buydown
- For ground up construction