“Working-Class Housing Opportunity Fund Launch”

By Tony Barkan – Founder, CEO and Managing Principal of Allagash Partners

Allagash Partners, a private equity real estate (“PERE”) investment management company, is launching their new Working-Class Housing Opportunity Fund. The Fund, the second PERE fund from the Allagash team, is designed to capitalize on the wealth of opportunities created by the intractable shortage in the supply of rental housing that is affordable for Working-Class communities across the US. Allagash focuses its partners 100+ years of experience and expertise exclusively on this opportunity set, seeking to provide projecting an 18% net IRR for investors and to preserve investor capital through active risk-reduction. The Fund will primarily focus on deep value-add investments while also including a significant component of adaptive re-use. Both types of investment should allow the Fund’s cost basis in its portfolio properties to be about a 50% discount to the cost of replacement/ground-up development. This allows the properties to be managed such that they can be affordably rented to existing Working-Class community members while still providing excellent returns for investors. In addition to investing into an opportunistically priced asset class, the Fund should lower investment risk by producing a significant portion of its return in the form of net income from the Fund’s property portfolio. Overall, Allagash is seeking to provide investors with a unique opportunity to invest into an advantageously priced, income-generating, inflation-hedging, highly scalable, geographically diverse set of assets that can also be expected to appreciate significantly as a result of the massive short supply within its marketplace.

Discussion Points:

  • The highly experienced team of Allagash Partners is launching its second private equity real estate fund focusing on the wealth of opportunities generated by the intractable shortage of rental housing that is affordable for Working-Class Communities.
  • Allagash projects the Fund to provide an 18% net IRR for fund investors while limiting risk through an active management style, investment focused entirely in one of the most resilient sectors during the GFC, advantageous purchase pricing, and a significant proportion of returns being generated through income.
  • This opportunity is extremely scalable as the Working-Class represents 45% of the US population and the shortage of affordable Working-Class housing is over 6 million units and valued at over $1 trillion.
  • Given the size of the rental property marketplace and this specific investment opportunity, most investors are dramatically under-weighted with only potentially some allocation, primarily single-property, to “workforce” housing.
  • In addition to being opportunistically priced, the Fund’s investment focus on Working-Class housing can provide investors with a uniquely high-income method for hedging inflation risk.

Tony Barkan – Founder, CEO and Managing Principal

Tony Barkan is the Founder, Managing Principal, and CEO of Allagash Partners. Prior to founding Allagash, from 2008-2015, Mr. Barkan was one of five Founding Principals and the Head of Commercial Real Estate at Seer Capital Management, an SEC-registered investment management company with $4 billion AUM. Mr. Barkan planned and executed Seer’s LMI workforce housing value-add strategy; developed and ran the second largest global CMBS B-Piece investment businesses, driving transactions on over $20 billion of US CRE properties; and structured and invested into significant Mezzanine Loan exposure. Prior to Seer Capital, from 2001-2008, Mr. Barkan built and ran alternative investment platforms at Clinton, Harbert, and Sailfish managing portfolios with peak investor equity over $1 billion, a peak long asset portfolio over $10 billion, and peak total market exposure of almost $20 billion while leading teams as large as 20 people.

Notably, Mr. Barkan was an early identifier of the real estate-led economic crisis and by the beginning of 2007 had migrated his hedge fund portfolio to be entirely short using real estate-backed credit derivatives . From 1997-2001, Mr. Barkan was a Senior Portfolio Manager and investment committee member at Pareto Partners (originally Forstmann-Leff). Mr. Barkan began his career trading a range of real estate, commodity, and currency products at Salomon Brothers, Goldman Sachs, and ED&F Man Group from 1988-1997 . Mr. Barkan supports Here Arts Center, Scholars at Risk, and CaringKind: The Heart of Alzheimer’s Caregiving. Mr. Barkan graduated from Princeton University where he was selected to the Honor Committee, and he is a member of the Triple Nine Society.

Allagash Partners offers institutional and HNW investors strategies focused on the wealth of opportunities within the US residential real estate market, stemming primarily from the longstanding, massive shortage in affordable working-class rental properties. These investments are currently being offered as both multi-property private equity real estate funds and as single property investments for compelling opportunities that do not fit within any current Fund’s mandate. The strategies are designed to be scalable and to consistently provide 15%+ net returns while also preserving investor’s capital. Allagash, through its subsidiary Allagash Opportunity Zone Partners which is in process of registering both with the SEC as an RIA and with the CDFI Fund at the Department of Treasury as a Community Development Entity, began active investment activities in 2019 with the Allagash Opportunity Zone CRE Fund I. The firm is now launching the Allagash Multifamily Opportunity Fund I, which seeks to opportunistically purchase, intelligently renovate, efficiently manage, and strategically sell underperforming working-class rental housing properties throughout the US.

 

Allagash was founded by Tony Barkan who serves as Managing Principal and CEO and chairs the investment and operations committees. Allagash’s senior partners bring over 100 years of commercial real estate experience with particular expertise in working-class multifamily housing especially in secondary US markets, which Allagash believes can provide investment opportunities with outsized returns and moderate risk. Additionally, Allagash believes that projects which actively seek to provide a positive social impact should generate higher returns while presenting lower risk. As a result, Allagash seeks to work closely with communities into which it invests in order to understand their community development goals and methodologies for improving stability and resiliency.