The MF fund I am in is having trouble. The causes are complex, due mostly to the significant headwinds that all MF from the last decade now faces. I'm not getting distributions near where I'd like.
The good news is that it is largely due to no fault of their own.
In hindsight, variable rate financing and rate caps ended up costing a lot of money and I'm not sure if I prefer a syndicator who chooses that route--though obviously in a different macro-economic environment, I think they would have sold all the assets in the fund in like 2023-2024 and I would be having pina coladas on a beach right now.
The fact is that much of my MF portfolio is ailing, and many LPs know what this is like because they are experiencing the same exact situation. C'est la vie.
Though I have had some moments where I questioned much about multifamily investing in the last five or six years, I have never questioned their ability, their integrity, or their honesty. In fact, I think they are working hard to manage the assets and the properties well enough that eventually when a sale is possible for a non-negative amount, they will jump on it.
As he says in his book (paraphrasing here) unfortunate things happen in MF investing, but it is the integrity, the hard work, and the ethics of the sponsor that matter as much or more than any other factor when it comes to earning profit for investors in a timely fashion. Or when it comes to not losing LP capital.
Will I make the IRR I was hoping for? No. Am I happy with virtually ANY of the MF I bought in the 2020 era? No. Would I invest with them again? I just did, in their Healthcare Fund.
I probably came away from this era feeling that fixed rate, agency debt is advantageous--but the CEO Brian Burke makes a cogent and compelling argument that in most normal cycles (this is not one of them), variable rate financing + rate caps allows a certain nimbleness that fixed debt does not.
I think one can get a really good idea about what Praxis is all about by looking into videos, podcasts, and forums online, and if one does I bet they will come to believe that Praxis is a unique and trustworthy company based on the evidence that is out there.
"I Like Them Despite Trouble in One Fund"
The MF fund I am in is having trouble, due mostly to the variable rate financing they use, as well as the significant headwinds that all MF from the last decade now faces. I'm not getting distributions near where I'd like, and they brought on some pref equity to shore up one asset that encountered some physical issues.
However, never (except for the occasional late-night sleepless paranoid mind state that I've experienced quite a bit in the last three years) have I questioned their ability, their integrity, or their honesty.
I think they are working hard to manage the assets and the properties well enough that eventually when a sale is possible for a non-negative amount, they will jump on it.
Will I make the IRR I was hoping for? No.
Am I happy with virtually ANY of the MF I bought in the 2020 era? No.
Would I invest with them again? I just did, in their Healthcare Fund.
Brian's book indicates sponsor quality is #1, and as part of that integrity is important. I believe it.
