Absolute Return facility
Providing Fixed Rate of Returns backed by Real Estate, passively to the public
acm ABSOLUTE RETURN fACILITY
BI-LATERAL LOAN FACILITY
Seeking capital commitments for a Value-Add Real Estate Facility, that utilizes a bi-lateral revolving loan structure to provide lenders with fixed rate of returns, paid monthly.
TARGET ACQUISITIONS
New Construction and Fix & Flips of Residential and Commercial real estate within the United States. Currently focused on two key growth areas within the sunbelt and mountainous regions of the United States, partnering with established developers to help them scale and take advantage of existing synergies with their network of sub-contractors. Land acquisitions to be developed in established & developing areas. Rehab opportunities where asset Acquistions can be made at a meaningful discount to comparable market values.
CORE OBJECTIVES
Staying disciplined and measured to strategically deploy capital in key areas of focus. We are actively watching and analyzing the real estate, equity and debt markets, along with general economic and political policy shifts, in order to be nimble and swiftly manage headwinds. We are currently using loan proceeds to implement a get-in and get-out strategy, where we build to sell. The revolver allows us to locate and succeed on acquiring the right opportunities by avoiding negative carry or having to raise funds after an opportunity has been identified. Under this construct, pledged capital may be called upon when we’ve identified a worthwhile investment opportunity aligned with our core principles and targeted objectives.
CAPITAL PROTECTIONS
our Real Estate Holding Company, Apoxion Realty Group, oversees the development and indirectly owns all of the investment assets, along with capital reserves gained from the sale of real estate and or rents received on such propertIes. Apoxion Realty Group also takes a perfected security interest in the securities of each OperaƟng Company that receives proceeds of a loan.
Summary of Terms
Format:
Bi-lateral Loan
Base Rate of Return:
8% Fixed
Pay Frequency:
Monthly, in arrears
Pay Date:
15th of each month
Day Count Convention:
30/360
Investment Period:
3 years from date of execution
Reinvestment Period (at lenders option):
Optional renewal for 2 years (rolling) from the maturity date, lasting in perpetuity
Domestic Focus:
United States of America only
Documentation:
Loan Documents
Management Fees:
None
Expenses paid by lender:
None
Governing Law:
New York State
Market Overview
2024Q2
In analyzing the macro-economic factors that have weighed heavily on the real estate market over the past 5 years, we must look at economic policy spanning from pre-Covid to present. As we all well know, there has been a paradigm shift in interest rates as the Fed tries to combat inflation stemming from a shift in political regime in the 2020 US election. Current economic policies have been highly stressing the US economy and have resulted in a cooling off of existing home sales, as people with locked in low fixed rate mortgages are not selling, drying up supply and the Fed deciding to hold rates at higher-for-longer levels. Interestingly, the same cooling effect has not extended to new home sales, ie new construction. Builders are seeing very strong demand, especially for new spec homes, particularly within our key focal areas of the US, along the sun-belt and in developing mountainous areas. In these focal areas, we see a continued backlog of development with pent up demand for custom to semi-custom new construction single family homes, along with demand for retail to support such new development.
Then
- Bottomed-out interest rates
- Strong supply and demand factors led to a heightening of US real estate prices across the US, especially for single family homes in suburban areas
- Combined, these two above factors led to diminished supply and caused asset values to skyrocket
- COVID – remote work environment, unlocked new possibilities for workers previously “stuck” living in and around major metropolitan areas to leave
- Demand to move “out of the city” led to a surge of real estate exploration in suburban areas and boomed the single-family housing market
- Workers fled the Northeast and West Coast and moved to sun-soaked suburbs in and along the sunbelt, with many non-US funds sweeping in to purchase the very homes American’s are interested in, causing increased competition, further increasing asset values, and a strong rental market
- The rental market suited two types of people. First, those that realized COVID was a unique event and didn’t have certainty around the long-term effects of remote work and where to live; and second, for those that couldn’t or chose not to purchase for whatever reason (stage of life reasons perhaps)
Now
- High interest rates
- High Asset Values (some asset values are coming in, though moderately)
- Limited Supply
- Rents increasing
- Institutional purchasing of single family homes continues, especially along the “sun belt” of the US
- Discretionary consumer spending across asset classes (consumer, auto, etc.) is still very high relative to pre-covid
- Inflationary pressures remain concerning. Despite the Fed acting to combat inflation, doing so places further stresses on other areas of the economy and may lead to widespread / cross-sector defaults across America
- Cash reserves are diminishing with a debt bubble on the horizon, consumer cash drying up looking for other avenues to keep spending. Some have turned to the HELOC markets to withdraw equity from their homes, others have already defaulted with expectations of bankruptcies to increase
- We believe foreclosures are likely to occur across America, especially in the lower-middle & middle incomed class areas, creating buying opportunities
strategies
Strategies – Value Add, Residential & Commercial
Our investment strategies are currently focused on long term growth, through short-term investing. We are implementing a get-in and get-out strategy, to try and mitigate near-term market risks or disruptions.
We are focused primarily on new construction in prime areas across America and in buying distressed assets, to add value and resell in desirable locations.
This strategy and all strategies should remain subject to change depending on the overall health of the economy, the real estate and other markets, housing demand, cost of material and labor, cost of rents, consumer & discretionary spending, among others.
In this current era, it is important to remain informed, make sound unpressured decisions, to be agile and act swiftly to adjust the sails, when necessary, in order to efficiently and effectively maintain the course ahead.
strategies - a deep dive
Value add
Foreclosures & Liens
Market Timing
•We are a value-add focused investment vehicle, targeting: 1) land opportunities in developing areas – where we can develop to sell both residential and commercial; and 2) properties that are undervalued (~30%) to market, ready for improvement – where we can swiftly commit capital to improve the assets, resulting in forced asset appreciation and a profitable takeout strategy.
•In what remains a highly competitive market, having access to liquidity is key and this vehicle allows for quicker closings, quicker deployment of capital for improvements and an overall quicker turn on the assets, allowing for a prompt resale – thus minimizing the market risk element of time.
Market Timing
Foreclosures & Liens
Market Timing
•The rise in interest rates have caused us to shift focus away from a buy & hold strategy, into a rehab or develop to sell strategy, whereby we can realize quicker profits and be less exposed to market risk.
•With interest rates foreseeably coming down in the near-term future, we expect there to be an overall stimulation on buying across both the residential & commercial spaces. As such, we plan to setup capital to ‘stock dry powder’ for when the right opportunity arises, in order to purchase distressed assets at a significant discount to their fair market value.
•At present, we are primarily delving into the residential single family home market, where we expect overall supply to remain lower than historical norms, demand to continue increasing as it has with a growing population and home sales (new and existing) to further increase over the next 6-18 months, especially as lower rates bring greater buying opportunities for families and investors.
Foreclosures & Liens
Foreclosures & Liens
Foreclosures & Liens
•In targeting properties that are undervalued in otherwise thriving markets, this foreclosure and lien strategy offers some of the best value for investment with trapped-in intrinsic value.
•Here in purchasing assets under market value, we immediately realize built in equity, then further increase value and return by adding together elements of a rehab.
•Lien purchasing is another way to trap intrinsic value by assuming a senior creditor position on an asset. In employing this strategy, we can either enforce our rights earlier on to get paid on the lien or allow owners to remain in the property subject to our lien, accruing interest on the amount owed to us until the property is sold.
Fix & flip
Vacation rentals
Foreclosures & Liens
•Our focus here is on stable and developing areas with significant upside potential, where we can buy assets at a substantial discount to comparable market values, whereby we use capital to improve the existing assets, force appreciation and move to sell for profit.
•These “high-demand” areas have proven to be resilient as they are family focused areas where the growing middle class chooses to live and raise their families, with good school districts and other neighborhood factors that contribute to their overall stability and growth.
•With this strategy we are focused on entering and exiting the market as swiftly as possible, with a get-in, get-out strategy, to reduce market risks and quickly turn over assets for appreciable value.
•
Vacation rentals
Vacation rentals
Vacation rentals
•There has always been a demand for vacation rentals and with the growth of platforms such as Air BNB and VRBO, it has never been easier to market and lease private homes for vacation. The overnight rental market commands far high pricing than long term rentals (in desirable vacation areas) and this is one of the most lucrative strategies for buy and hold, if done correctly.
Fix to rent
Vacation rentals
Vacation rentals
•Value add here is an important component and one that we like to subscribe to. This strategy is very dependent on the cost of capital, ie the interest rate environment and the rental market (across residential & commercial).
•Our current focus is not to hold newly acquired real estate long term, but to seek capital appreciation by renovating, building, improving land and assets, however this may be a strategy that we return back to in the future.
Absolute Return Facility
Absolute Return Facility - How does it work?
Apoxion Capital Management delivers the opportunity to passively invest in real estate development opportunities by lending through a bi-lateral loan structure, to Apoxion Capital Management, secured by an indirect, perfected security interest in a mix of tangible real assets and/or cash.
Fixed rate of return
•Apoxion Capital Management offers lenders a fixed rate of return, paid monthly on the 15thof each month, on the amount of funds that have been drawn under the respective bi-lateral loan facilities.
•Fixed income investments may benefit Persons who want to earn a fixed amount of income by passively investing in assets such as real estate, without needing to ever put work into negotiating, acquiring the assets, securing financing, maintaining the assets, managing tenants or prospective buyers, having to repair or rehab assets or any of the work that goes into management of such assets. For lenders, this is purely a ‘hands off’ investment that puts the work on ACM and its affiliates to source, acquire and manage all of the opportunities that may come into ACM’s network.
Capital Call feature
•Committed Capital is pledged to ACM and available for when an acquisition opportunity has been identified or to further improve an asset, to make ready for sale or rent.
•ACM doesn’t ‘call the cash’ until we need it, which keeps funding costs lower by reducing negative carry, allowing us to prudently make unpressured investment decisions, rather than trying to force alpha by making hasty, untimely decisions.
•ACM has the option to have funds invested in short term liquid instruments (money market funds) to carry committed capital before deploying on assets.
No management fees
•Unlike other similarly focused investment vehicles, Apoxion Capital Management does not charge what many have considered to be the ‘industry standard,’ with respect to management, performance and/or other fees and expenses typically charged by other managers.
•Most, if not all of these vehicles charge these ‘industry standard’ fees, which diminish the overall return on your investment. These vehicles may claim to offer higher returns, but once you factor in the fees, expenses, the potential diminishment of the par value of your investment, you may be positioned to actually make far less.
•Investing in ACM, you simply start earning a fixed rate of return from the moment we draw on your facility, without any hidden fees associated, whatsoever.
•ARG earns money by being invested in the real estate with you and maintains skin in the game this way. We don’t get paid unless we can generate a return in excess of the fixed percentage that we are paying out.
Debt instrument
•Lending to ACM through this bilateral loan facility, places your interests above that of an equity interest, taking a more senior position in the capital stack, as a lender. Here you are either first or second lienholder on assets that are indirectly secured by Apoxion Realty Group’s perfected security interests in it’s operating subsidiaries, which in turn own the real estate.
•Assets become pledged to Apoxion Realty Group (“ARG”), our real estate holding company, which manages the operations of all operating subsidiaries within its control. Here, ARG is ‘ring-fencing’ certain of its operating subsidiaries, to take control and ownership of assets. Once pledged, those assets remain with ARG until they are sold.
•Lending to ACM differs from making an investment in a REIT. When investing in a REIT, the par value of your investment may change at any time, even in the absence of an event of default. This means that the value of your investment, when purchasing a REIT, may go up or down. If the value of your investment happens to be below the point at which you invested when you need to liquidate a position, then you will receive less principal than what you contributed, meaning you’ll receive less than par. In making a loan to ACM, the principal amount contributed will remain the principal obligation owed back to you, which is not subject to change or market fluctuation. Rather than facing a fluctuating rate of return, the agreed upon fixed rate will remain constant as a source of passive income.
Vertical Integration
We are the General Contractors
Apoxion Capital Management sources investor capital, delivering fixed returns to investors. The capital that is raised is deploy to Apoxion Realty Group, our sister company, which uses the capital to fund various operating subsidiary companies. The operating subsidiaries purchase and own the raw land and/or the existing real estate that is developed or rehabbed, prepping for sale. We also own and manage general contracting companies, whom have relationships with the subcontractors who are hired to perform work. We have commercial agreements in place with many of these contractors, which help us to effectively manage and reduce costs associated with such construction.
Alternative investments used to be a side dish in a portfolio, now they’re the meat and potatoes for the wealthy.
Tony Robbins
Summary
Thank you for visiting us!
If you are interested in earning a fixed rate of return and being passively invested in assets backed by real estate, then please consider whether Apoxion Capital Management is right for you.
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Apoxion Capital Management, LLC
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