Investments
Alpha Capital Partners is constantly adding to its portfolio of student housing and multifamily investments.
Our Approach
The team’s approach to sourcing investment opportunities centers on maximizing return and limiting downside risks. Known internally as the TREC Advantage, our vertically integrated team employs a disciplined and conservative approach to underwriting and implementation of project business plans.
FUND SUMMARIES
Investments in strategic real estate markets.
ARP I closed
Alpha Residential Properties I (ARP I) is the inaugural fund for Alpha Capital Partners. The fund was created utilizing a small-balance real estate strategy and comprises five multifamily assets. The fund’s geographic footprint spans across Tier II and Tier III markets in Dayton, OH, Cincinnati, OH, Urbana, OH, and Columbia, SC. All properties were acquired in 2015 and 2016 with a projected return profile of 47.36%. This fund is currently closed, with $1M of capital deployed into a total of $4.25M AUM.
ARP II closed
Alpha Residential Properties II (ARP II) comprises of a blend of four multifamily assets and three student housing assets utilizing a core-plus and value-add strategy. The fund’s geographic footprint is concentrated in Tier II and Tier III markets in Memphis, TN, College Station, TX, Denton, TX, and Mattoon, IL. All properties in this fund were acquired in 2016 and 2017 with a projected return profile of over 20% IRR. This fund is currently closed, with $12M of capital deployed into a total of $41.4M AUM.
ARP III closed
Alpha Residential Properties III (ARP III) comprises of a blend of one multifamily asset and four student housing assets utilizing a core-plus strategy with its geographic footprint concentrated in Tier II and Tier III markets of Oxford, MS, College Station, TX, and Memphis, TN. Acquisitions occurred from 2017 to early 2018, and the projected return profile for the fund is approximately 19% IRR. This fund is currently closed, with $14.2M of capital deployed into a total of $45.6M AUM.
AHG I closed
Alpha Healthcare Fund I (AHG I) is comprised of six medical office assets utilizing a core-plus strategy consisting of single and multitenant triple-net (NNN) medical office buildings. These properties have ten or more years of remaining lease terms with the majority of leases backed by corporate guarantees. The fund’s geographic footprint is in five growth markets: Houston, TX, Columbus, OH, Muncie, IN, Oklahoma City, OK, and Ocala, FL. Property acquisitions occurred between 2017 and 2018; the expected return profile for the fund is ~20% IRR. This fund is currently closed, with $10M of capital deployed into a total of $37.5M AUM.
GP Fund I closed
Launched in 2017, Alpha GP Fund I (GP Fund I) was created to capitalize on pricing inefficiencies in the middle-market space. The fund focused on investing in multifamily residential, student housing, and medical office buildings and utilized a core-plus strategy with a small component of value-add strategy implemented into the overall business plan. GP Fund I acquired assets in select major, secondary, and tertiary growth markets in the U.S., including Tennessee, Texas, Georgia, Mississippi, Illinois, Ohio, Indiana, Oklahoma, and Florida. Since inception, GP Fund I deployed $8.87M into 16 assets comprised of 45% student housing, 33% healthcare, and 22% multifamily.
Alpha OZF open
Created in late 2017, the Alpha Opportunity Zone Fund I (OZF I) is Alpha’s agile response to market opportunities. Our investments team sought to implement a value-add and opportunistic strategy and planned to acquire 8 -10 assets for the fund. The fund intends to source projects that fit a 40% redevelopment and 60% development (with future allocations in mixed-use, multifamily, and student housing projects, respectively) allocation.
Maintaining our firm’s strategic approach in both Tier II and Tier III markets, we sourced projects across a geographic footprint, collectively defined as our CHAMP footprint. The following markets represent our CHAMP footprint – Columbus and Cincinnati, OH, Houston, TX, Atlanta, GA, Memphis, TN, and Pittsburgh, PA.
ARG Fund I
Alpha Residential Growth Fund I (ARG I) was launched in 2018 and exhibits the characteristics of our diversified, value-add strategy, delivering risk-adjusted returns through investment in underserved middle-market real estate assets. Our investment opportunity is to acquire and develop assets often overlooked by institutional investors, undermanaged by current owners, and deprived of capital repair. Our investment strategy is focused on the multifamily and student housing sector in Tier II and Tier III markets. Leveraging our current operational footprint, we are geographically concentrated in six core markets, including Cincinnati, Columbus, Houston, Atlanta, Memphis, and Pittsburgh. To date, the Fund’s total capitalization is $130,000,000 across eight assets spanning both multifamily and student housing.
Alpha’s Philosophy
It is our belief these inefficiencies lead to above-average price appreciation and, subsequently, higher returns, on a relative basis, when compared to larger transaction sizes.
On average, this part of the market is too large for “mom and pop” buyers and too small for institutional buyers.
We have found this disconnect between market participants leads to a lagged “price” discovery as valuations will—post stabilization—migrate towards fair value while maintaining comparable cash flow yields.
INVESTMENT PROCESS
We apply strict screening criteria in our origination process, relating to local market rent growth trends, new supply, and high-level credit metrics. Once those projects pass the screen, we then apply a disciplined and conservative approach to underwriting. As a base case, we start by stressing both rent growth and operating expenses upfront and exit cap rates on the back end. This helps us forecast return profiles with a high probability of realization meeting or exceeding our internal hurdle rate. We look to identify assets with rents at a discount to the market average. We then develop a business plan, inclusive of capital improvements, to drive operating efficiencies and achieve market rents. For example, in a recent opportunity zone related underwriting, we found the asset showed an average rent gap of $140 per unit to the market average. This affords a great opportunity to drive rents and increase rent growth at the property. The key variables we focus on in our investment process include:
PURCHASE PRICE
In deriving an intrinsic value estimate, we combine top-down local market analysis with bottom-up fundamental valuation to determine a fair purchase price. This helps to avoid overpaying for low growth assets.
TERMINAL VALUE
Once the asset is up and running with strong occupancy levels around 95-97%, we look to exit based on the point in the cycle, strong unsolicited offers, or through a cash-out refinance.
DEBT & INTEREST RATE HEDGING
Lastly, we focus on debt underwriting by leveraging our developed network of relationships to maintain competitive pricing. This ensures our consistent access to debt capital for acquisition or refinance. In this same discipline, we are implementing a more aggressive hedging program for both short and long-term interest rate exposure on an opportunistic basis.
Investment Footprint
At Alpha Capital Partners, we strive to advance our investment footprint in established markets such as Georgia, Illinois, Louisiana, Michigan, Ohio, Pennsylvania, Tennessee, and Texas. We aim to acquire real estate properties located within a healthy market and a growing sense of community to cultivate our partnerships and help us grow as a business.
Investment Selection
Investments are available in regions across the country, including Georgia, Illinois, Louisiana, Michigan, Ohio, Pennsylvania, Tennessee, and Texas. To learn more about our current offerings, talk to an Alpha Capital Partners’ representative about our various types of multifamily properties available.