Presidium Group

I invested with Presidium Group in the acquisition and renovation of a mixed-use residential and commercial campus in Maine. The sponsor’s original business plan centered on a value-add strategy. While the project achieved top-line income that exceeded initial projections, it faced significant cost overruns during the first two years. These budget gaps were primarily due to rising labor costs, insurance premiums, and debt service. In their initial underwriting Presidium did not correctly anticipate these operating and carrying expenses. Due to softness in the multi-family market, the property could not be sold for a profit under the original rental model. Presidium pivoted toward a condominium conversion and the separate sale of the commercial buildings. This shift required additional capital from investors and has extended the hold time significantly. However, the pivot appears to be working to preserve investor capital and maintain the potential for positive returns. Presidium has provided clear communication regarding these challenges and the resulting changes to the business plan. While I credit the sponsor for their creative pivot to protect the downside, the lack of accuracy in the initial expense projections is a big concern. Because of the cost overruns, the cash flow I originally invested for has not materialized.