Essentially my two deals (single assets) have paid decently well and marginally well, respectively. Both have current paused distributions. One has brought on pref equity, and one is likely going to have a small-ish capital call coming down the pike. But paused distributions in this environment is not the worst thing in the world. Most sponsors from this era are not doing fantastic and are underperforming at least.
Yes I might quibble with a thing or two about Joe and Frank, but since the assets haven't sold yet, I can't really say how things are going to work out in the end.
I probably got kind of lucky and am invested in the top half of assets they got themselves involved in--my properties are more than likely going to sell and who knows it might be for an IRR above zero, or who knows. I have no knowledge that my equity is going to get wiped out or anything.
So therefore I don't want to contribute to the scuttlebutt online about these guys are this or that, or they've done this or that. I'm not going to pile on until or unless I have been wronged by them. And thus far I have not.
Now, Brian Burke of Praxis notes that a lot of syndicators from the 2018-2021 era have done some things that could be likened to swimming naked, and when the tide goes out we are all gonna see. So I'm not going to speculate that Joe and Frank did X or Y that was ill-advised, unwise, greedy, or sheisty unless or until I have solid reason to believe--in my particular assets--that this is certainly true. Maybe I never feel that way, it's hard to say. I know some assets are ailing, and their Funds are roundly criticized online. My two just aren't (as of yet) terribly bad off.
One is a 1970s era property, and is suffering from some deferred maintenance that is just not in the budget to fix. So I'm not super jazzed about that, I will say.... In the other, we were all watered down by pref equity. However, they allegedly used that money to continue renovations--a must in this part of Dallas, I hear. So I guess it kinda had to happen. Desperate times call for desperate measures...
Since my assets are 2-3 years away from disposition, I would like to believe (hope?) that they are working as diligently and ethically as they can to get this plane landed safely! Word around the campfire is that they are fully engaged and "on it" as far as trying to solve problems nowadays. I heard a rumor that Frank relocated to be closer to the DFW assets, which if true is quite significant.
Whether Ashcroft's problems are self-inflicted is actually a bit hard to say--there are some opaque aspects to all this that perhaps time will tell about. Maybe lawsuits will uncover some significant misalignment, I do not know. Outright fraud or sheisty behavior? I would personally be surprised--but these things do happen with sponsors. One person in the know I am acquainted with thinks highly of them and feels they are duly engaged at this time. Says they probably could have walked away and been fine for the rest of their lives, but they are sticking it out and trying to right the many ships that are leaning in the water....
Will I invest with them again? If they land these two assets with a single-digit IRR, or a less-than-15-percent-loss-of-capital, I will compare them to other sponsors from that exact era and say, "hey everyone who wasn't on the sidelines at the time got screwed to some degree, so maybe these guys have learned the lessons that Brian Burke notes can only come when a sponsor has been through a significant downturn." And since BB calls what we are going through now "a multifamily depression", who is to say I would have done any better than Frank and Joe?
I will add that my Class A distributions were very significant for a few years there. Whether they *should have* paused them sooner--well that is hard to say. Perhaps the answer should be yes--since a capital call probably seems likely. I duuno.
Caveat: I am consulting someone good on Upwork to talk all this through, so perhaps I might one day want to revisit this review and downgrade it; time will tell.
This can be a rough business, investing--and all my paused distributions in a bunch of assets have proved it to me very clearly. Best wishes!
