Property Details
Stabilized Occupancy  Stabilized Income  Ground-Up Development 
Asset Profile
Opportunistic

Allen Harrison Multifamily Fund III, LP

Texas

Multi-Family Fund
Allen Harrison Company, LLC Houston, TX
Allen Harrison Company, LLC
  • IRR 15-18%
  • Equity Multiple 1.75x
  • Hold Period 10Y Term
  • Minimum Investment $50K
  • Year 1 Cash on Cash N/A
  • Stabilized Cash on Cash N/A
  • First Distribution Dec 2022
  • Distribution Frequency Quarterly
  • Asset Profile Opportunistic
  • Loan-to-Value 65%
  • Current Occupancy N/A

About this Fund

"Allen Harrison Multifamily Fund III will make Limited Partner investments in class A multifamily communities developed by Allen Harrison Company. The Fund has an LP friendly structure with no Fund level promote, a subordinated GP interest, and below market management fees."

-Andy Pape, Allen Harrison Company

Fund Type Multifamily
Investment Timing Equity called over time
Market(s) Texas
Target Fund Size $25MM-$35MM*
Date Opened for Investments June 2020
Amount Raised $7.5MM
Amount Deployed $1.9MM
Est. Time to Next Investment 90-180 days
Est. Time to Initial Distribution 2-3 Years
*"While the Fund’s governing documents allow for
up to a $50M fund, the current target is $25-30M.”

Top Questions

All answers are provided by the sponsor, Allen Harrison Company, or its representatives.

 

What is your investment strategy/business plan for the Fund?

Andy Pape, Allen Harrison Company: "Allen Harrison Multifamily Fund III will be investing in assets developed or acquired by Allen Harrison Company. The Allen Harrison Company strategy includes a contrarian philosophy, a value-luxury approach, and a goal to create a bespoke product that distinguishes itself from the competition. This strategy ultimately drives superior investor returns."

"Allen Harrison Company created the Fund to be LP friendly with a subordinated GP position, no Fund-level promote, and lower management fees than similar funds.”

 

What are the most important aspects of the fund for investors?

Andy Pape, Allen Harrison Company: “The most important aspects of the Fund are defined by Allen Harrison Company’s investment philosophy and strategy:”

  • "The Contrarian Philosophy – strives to minimize competition through market timing, site selection or product type to generate outsized returns for the risk assumed."
  • "Value-Luxury Approach – high-quality product with immediate adjacency to high-growth locations allows flexibility to offer more competitive rents and still drive cash flow."
  • "Bespoke Product – a carefully designed custom product tailored to retain the characteristics of the surrounding community and offer a premium renter experience."
  • "Unique Fund Structure – the Fund is designed to emulate both the timing of cash flows and economic returns of a series of direct deal investments. While the Fund’s governing documents allow for the recycling of capital, the Fund does not intend to do so, and we have not done so in previously managed discretionary funds. We intend for Fund commitments to be called as needed for specific Fund investments rather than funded by distributions from previous Fund investments. When proceeds are available, either from operating cash flow or a capital event, the intent is for that cash to be immediately returned to Fund investors, not held and managed by the Fund."

"Additionally, a conservative underwriting philosophy helps mitigate downside risk and protect return. Conservative rent growth and higher-than-expected exit cap rate assumptions, plus underwriting above market rent concessions during lease up are a few examples of how Allen Harrison Company ensures each deal is underwritten to a standard which will help insulate it from market cycles and inherent uncertainty."

 

What are the risks and how are you mitigating those risks?

Andy Pape, Allen Harrison Company: "Risks include overall macroeconomic market volatility, multifamily market supply and demand volatility, lease-up risk, interest rate risk, construction risk, exposure to commodity driven markets, and changing demographic trends, among others."

"Allen Harrison Company mitigates risk by implementing its previously mentioned core strategies for each deal, specifically conservative underwriting and leverage. Allen Harrison targets 65% leverage on each project – this allows considerable margin of error to help mitigate the above mentioned risks and provide additional cushion for uncertainties that are inherent with longer term real estate investments."

 

How has COVID-19 impacted your business plan?

Andy Pape, Allen Harrison Company: "Allen Harrison Company has not been materially impacted by the COVID-19 pandemic. While the full extent of the economic impact from COVID-19 is constantly evolving, rent collections for April, May, June and July were strong, with the total Allen Harrison Company portfolio collecting 96.3%, 96.8%, 97.6% and 97.1% of billed rent, respectively. Leasing has also been strong across the portfolio, with four new properties netting 188 leases in Q2 2020, compared to 162 leases in Q1 2020. Given this, Allen Harrison continues to actively pursue new opportunities across all Texas markets. Also, conservative underwriting is prioritized more highly than ever, which fits well with our existing approach."

About this Fund

"Allen Harrison Multifamily Fund III will make Limited Partner investments in class A multifamily communities developed by Allen Harrison Company. The Fund has an LP friendly structure with no Fund level promote, a subordinated GP interest, and below market management fees."

-Andy Pape, Allen Harrison Company

Fund Type Multifamily
Investment Timing Equity called over time
Market(s) Texas
Target Fund Size $25MM-$35MM*
Date Opened for Investments June 2020
Amount Raised $7.5MM
Amount Deployed $1.9MM
Est. Time to Next Investment 90-180 days
Est. Time to Initial Distribution 2-3 Years
*"While the Fund’s governing documents allow for
up to a $50M fund, the current target is $25-30M.”

Top Questions

All answers are provided by the sponsor, Allen Harrison Company, or its representatives.

 

What is your investment strategy/business plan for the Fund?

Andy Pape, Allen Harrison Company: "Allen Harrison Multifamily Fund III will be investing in assets developed or acquired by Allen Harrison Company. The Allen Harrison Company strategy includes a contrarian philosophy, a value-luxury approach, and a goal to create a bespoke product that distinguishes itself from the competition. This strategy ultimately drives superior investor returns."

"Allen Harrison Company created the Fund to be LP friendly with a subordinated GP position, no Fund-level promote, and lower management fees than similar funds.”

 

What are the most important aspects of the fund for investors?

Andy Pape, Allen Harrison Company: “The most important aspects of the Fund are defined by Allen Harrison Company’s investment philosophy and strategy:”

  • "The Contrarian Philosophy – strives to minimize competition through market timing, site selection or product type to generate outsized returns for the risk assumed."
  • "Value-Luxury Approach – high-quality product with immediate adjacency to high-growth locations allows flexibility to offer more competitive rents and still drive cash flow."
  • "Bespoke Product – a carefully designed custom product tailored to retain the characteristics of the surrounding community and offer a premium renter experience."
  • "Unique Fund Structure – the Fund is designed to emulate both the timing of cash flows and economic returns of a series of direct deal investments. While the Fund’s governing documents allow for the recycling of capital, the Fund does not intend to do so, and we have not done so in previously managed discretionary funds. We intend for Fund commitments to be called as needed for specific Fund investments rather than funded by distributions from previous Fund investments. When proceeds are available, either from operating cash flow or a capital event, the intent is for that cash to be immediately returned to Fund investors, not held and managed by the Fund."

"Additionally, a conservative underwriting philosophy helps mitigate downside risk and protect return. Conservative rent growth and higher-than-expected exit cap rate assumptions, plus underwriting above market rent concessions during lease up are a few examples of how Allen Harrison Company ensures each deal is underwritten to a standard which will help insulate it from market cycles and inherent uncertainty."

 

What are the risks and how are you mitigating those risks?

Andy Pape, Allen Harrison Company: "Risks include overall macroeconomic market volatility, multifamily market supply and demand volatility, lease-up risk, interest rate risk, construction risk, exposure to commodity driven markets, and changing demographic trends, among others."

"Allen Harrison Company mitigates risk by implementing its previously mentioned core strategies for each deal, specifically conservative underwriting and leverage. Allen Harrison targets 65% leverage on each project – this allows considerable margin of error to help mitigate the above mentioned risks and provide additional cushion for uncertainties that are inherent with longer term real estate investments."

 

How has COVID-19 impacted your business plan?

Andy Pape, Allen Harrison Company: "Allen Harrison Company has not been materially impacted by the COVID-19 pandemic. While the full extent of the economic impact from COVID-19 is constantly evolving, rent collections for April, May, June and July were strong, with the total Allen Harrison Company portfolio collecting 96.3%, 96.8%, 97.6% and 97.1% of billed rent, respectively. Leasing has also been strong across the portfolio, with four new properties netting 188 leases in Q2 2020, compared to 162 leases in Q1 2020. Given this, Allen Harrison continues to actively pursue new opportunities across all Texas markets. Also, conservative underwriting is prioritized more highly than ever, which fits well with our existing approach."

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Assets Under
Management

Currently
$616.81MM 10+ assets
Exited
$376.85MM 10+ assets
Portfolio LTV
65%  
Historical
Realized Returns

Total IRR
19.7%  
Equity Multiple
1.82x  
Annual Cash
N/R  
Years Of
Experience

As Principals
20+ years  
In Business
10 years  
Size
50 Staff * Dedicated investor relations
* All information is reported by Allen Harrison Company, LLC as of 7/27/2020.
Assets Under
Management

Currently
$616.81MM 10+ assets
Exited
$376.85MM 10+ assets
Portfolio LTV
65%  
Historical
Returns

Total IRR
19.7%  
Equity Multiple
1.82x  
Annual Cash
N/R  
Years Of
Experience

As Principals
20+ years  
In Business
10 years  
Size
50 Staff * Dedicated investor relations
* All information is reported by Allen Harrison Company, LLC as of 7/27/2020.

Financials

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Location Details

Texas

Andy Pape, Allen Harrison Company, LLC: "Allen Harrison Company’s target market continues to be the four major markets of Texas. In the first-half of 2020, Allen Harrison Company has underwritten over 100 properties across DFW, Austin, Houston, and San Antonio. Demographic trends in Texas continue to be positive and show resilience through macro and oil and gas market cycles. Additionally, as Texas maintains its business-friendly posture, Allen Harrison expects those trends to continue. The recent announcement of a Tesla Gigafactory in the suburbs of Austin is another great example of major corporate relocations to Texas."

“While Texas is the focus, Allen Harrison may pursue investments in projects located in other markets if they represent an appropriate strategic fit for the Fund.”

Documents

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Offering Agreement Documents

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