I have been invested in MC companies, Growth and Income Fund 1 for a little over 2 years now. I originally jumped on board for all the wrong reasons: this is Ken McElroy, the apartment multifamily guru, yada yada. I figured his name and reputation stood for something good. I also didn’t do enough due diligence upfront so I can’t really speak to that, I was just excited to get involved with a big name. I have invested in multiple other syndications with other operators during the same time. And I have to say by four this is the worst. We have not had a capital event, so I’m not talking strictly financial, though I can confirm I have not seen any distributions since the start of this fund, and shortly thereafter we were told that the market is challenging for everybody and times are not good, and the GPs are going to look for an opportunity to exit.
That itself is not the reason I gave such a low rating, a lot of my other deals are in a similar situation (though every other deal did at least start out by making distribution’s).
The reason I say this is the worst is because of a lack of communication. Most of my other deals report, monthly or quarterly on a consistent basis with thorough details. I believe it took MC 6 to 9 months to finally start quarterly reports which typically come in the form of a half page spreadsheet with financial performance and a handful of notes that speak to the spreadsheet, but don’t really give any overall assessment of the asset, update to strategy, business plan, or market conditions like my other investments do.
This is the only investment I am extremely concerned that I will lose money, where the other investments have said that they had long-term debt, significant, cash reserves, or some other form of mitigation strategy.
I believe the best case at this point is for MC to hold out as long as they can to look for an opportunity to exit, ideally without losing any of our money. That would be ok, except for the opportunity cost.
Additionally, it is frustrating to listen to Ken on his podcast, tell the audience that so many other operators are in Dire Straits and may be forced to sell, and that they do not have good plans in place. I feel like he is describing his own investment, and I do not have any confidence in his company’s ability to execute this deal. Once it’s over, I’m out!
They don’t go out of their way to communicate with investors outside of asking for more money for a debt raise to support the fund. That is the only time I have heard from them. To be fair, I have not went out of my way to ask them for updates. Based on my experience with the other operators, I have not needed to do so.
In my opinion when I have trusted them with a large sum of money and they are obviously behind on their business plan (and lay the blame on anyone and every thing exempt themselves), I would have expected them to reach out. I do not feel valued as an investor with this company and will not make that mistake again.
The only reason I did not give a 1-Star is because they are still communicating, and have not lost my money . If that changes I will try to update this review.
