Property Details
Stabilized Occupancy  Stabilized Income  Below Market Rents  Repositioning Opportunity  NOI Growth 
Asset Profile
Core Plus

Birgo Capital Fund II

Greater Pittsburgh Metropolitan Area and Surrounding Regions

Multi-Focus Fund
Birgo Pittsburgh, PA
Birgo
  • IRR 15-18%
  • Equity Multiple 3.5x
  • Hold Period 7Y
  • Minimum Investment $50K
  • Year 1 Cash on Cash 8%
  • Stabilized Cash on Cash 8% in Y1
  • First Distribution Apr 2021
  • Distribution Frequency Quarterly
  • Co-Investment 3.3%
  • Preferred Return 8%
  • Investor Profit Share 60%
  • Asset Profile Core Plus
  • Loan-to-Value 70-80%
  • Current Occupancy N/R

About this Fund

"A $30 million fund targeting stabilized but underutilized multifamily properties in Pittsburgh, Pennsylvania, and surrounding regions, along with some targeted exposure to office and retail properties. Currently seeded with $50 million in purchases and seeking additional assets with in-place cash flow of at least 8% with upside through capital-light improvements."

-Daniel Croce, Birgo

Fund Type Multifamily, Office & Retail
Investment Timing Equity called over time
Market(s) Greater Pittsburgh Metropolitan Area
and surrounding regions
Target Fund Size $30MM*
Date Opened for Investments April 2018
Amount Raised $22MM
Amount Deployed $16MM
Est. Time to Next Investment Q4 2020
Est. Time to Initial Distribution April 2021
*Up to $50MM

Top Questions

All answers are provided by the sponsor, Birgo, or its representatives.

 

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

Daniel Croce, Birgo: "Birgo Capital acquires and operates stabilized but underutilized multifamily properties that are often overlooked in the heartland of America."

  • "Building on a cash-flowing, seasoned existing base of $50 million in property"
  • "Seeking additional affordable multifamily properties as a vertically-integrated operator"
  • "Acquiring assets that are stabilized but underutilized: 90%+ occupancy and 8% yield-on-cost upon acquisition, and with upside potential"
  • "Deploying capital in the heartland of America: markets that are recession-resistant, undervalued, and affordable"
  • "Identifying inefficiencies by targeting assets that are too small for most professional investors: average purchase price of less than $5 million per property"
  • "The fund will be fully invested by the end of 2021, and is expected to be fully liquidated by early 2028"

 

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

Daniel Croce, Birgo:

  • "A sponsor who is co-investing $1 million, foregoing traditional asset management fees, and guaranteeing the debt of the fund shows strong alignment of incentives."
  • "Heartland affordable multifamily offers some of the best risk-adjusted returns in today’s real estate market: a target IRR of 15-18% and strong downside protection."
  • "This is an opportunity for investors to buy into a cash-flowing, seasoned portfolio of improved assets at cost."
  • "Vertical integration of property management and maintenance allows Birgo to control all elements of the investment process and reduce overall risk for investors."
  • "Strong tax incentives allow investors to participate in pass-through depreciation."
  • "The fund has been paying dividends for the past 7 quarters, demonstrating stability throughout the COVID-19 pandemic."

 

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

Daniel Croce, Birgo: "The fund’s primary risks are CapEx risk, unit turnover, tax reassessment, and commercial exposure:"

  • "CapEx Risk: The fund is likely to acquire housing stock that is largely dated and will require some updates throughout the hold period; this risk is mitigated by an exhaustive physical inspection process, careful planning for capital expenditures during due diligence, and drawing on previous experience operating very similar assets in a predecessor fund."
  • "Unit Turnover Costs: Workforce housing tenants at times do not leave apartments in pristine condition upon move-out, leading to unforeseen costs. These costs are actively avoided through excellent in-house property management, including tenant screening, move-out inspections, and strict security deposit return enforcement."
  • "Tax Reassessment Risk: This target geography is susceptible to property tax increases; these must be accounted for in underwriting and appealed in court whenever possible to obtain the best possible outcome for the fund."
  • "Commercial Exposure: The fund does have modest exposure to office and retail properties. Less than 10% of the fund will ultimately be invested in these asset types. The sponsor intends to take a conservative posture in managing its existing commercial assets to optimize for high occupancy, and may pursue preemptive liquidity events for this segment of the portfolio."

 

How has COVID-19 impacted your business plan?

Daniel Croce, Birgo: "Birgo's existing portfolio has thrived despite the pandemic, the tenant base has a resilient income stream, and multifamily properties are increasingly viewed as a safe haven for investors. Some notable points include:"

  • "Existing Portfolio: With respect to the fund’s current holdings, multifamily collections have proven to be remarkably resilient in Q2 and Q3 of 2020, and residential occupancy has remained healthy since the onset of the pandemic. Birgo's commercial portfolio collections and occupancy have remained remarkably strong as well. No concerning trends with respect to collections or occupancy are observed on a backward-looking basis."
  • "Tenant Employment: Birgo has also performed rigorous analysis to determine that the fund’s tenants’ sources of income are likely to be largely resilient to the potential impacts of ongoing virus concerns. Additionally, governmental support for the workforce housing asset class has been phenomenal since the onset of the pandemic."
  • "Valuations: Demand for multifamily properties has soared in the fund’s target market as a result of investors seeking the income and safety that residential investments provide; this is very good for the valuation of existing fund assets, and requires that we exercise discipline in acquisitions moving forward."

About this Fund

"A $30 million fund targeting stabilized but underutilized multifamily properties in Pittsburgh, Pennsylvania, and surrounding regions, along with some targeted exposure to office and retail properties. Currently seeded with $50 million in purchases and seeking additional assets with in-place cash flow of at least 8% with upside through capital-light improvements."

-Daniel Croce, Birgo

Fund Type Multifamily, Office & Retail
Investment Timing Equity called over time
Market(s) Greater Pittsburgh Metropolitan Area
and surrounding regions
Target Fund Size $30MM*
Date Opened for Investments April 2018
Amount Raised $22MM
Amount Deployed $16MM
Est. Time to Next Investment Q4 2020
Est. Time to Initial Distribution April 2021
*Up to $50MM

Top Questions

All answers are provided by the sponsor, Birgo, or its representatives.

 

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

Daniel Croce, Birgo: "Birgo Capital acquires and operates stabilized but underutilized multifamily properties that are often overlooked in the heartland of America."

  • "Building on a cash-flowing, seasoned existing base of $50 million in property"
  • "Seeking additional affordable multifamily properties as a vertically-integrated operator"
  • "Acquiring assets that are stabilized but underutilized: 90%+ occupancy and 8% yield-on-cost upon acquisition, and with upside potential"
  • "Deploying capital in the heartland of America: markets that are recession-resistant, undervalued, and affordable"
  • "Identifying inefficiencies by targeting assets that are too small for most professional investors: average purchase price of less than $5 million per property"
  • "The fund will be fully invested by the end of 2021, and is expected to be fully liquidated by early 2028"

 

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

Daniel Croce, Birgo:

  • "A sponsor who is co-investing $1 million, foregoing traditional asset management fees, and guaranteeing the debt of the fund shows strong alignment of incentives."
  • "Heartland affordable multifamily offers some of the best risk-adjusted returns in today’s real estate market: a target IRR of 15-18% and strong downside protection."
  • "This is an opportunity for investors to buy into a cash-flowing, seasoned portfolio of improved assets at cost."
  • "Vertical integration of property management and maintenance allows Birgo to control all elements of the investment process and reduce overall risk for investors."
  • "Strong tax incentives allow investors to participate in pass-through depreciation."
  • "The fund has been paying dividends for the past 7 quarters, demonstrating stability throughout the COVID-19 pandemic."

 

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

Daniel Croce, Birgo: "The fund’s primary risks are CapEx risk, unit turnover, tax reassessment, and commercial exposure:"

  • "CapEx Risk: The fund is likely to acquire housing stock that is largely dated and will require some updates throughout the hold period; this risk is mitigated by an exhaustive physical inspection process, careful planning for capital expenditures during due diligence, and drawing on previous experience operating very similar assets in a predecessor fund."
  • "Unit Turnover Costs: Workforce housing tenants at times do not leave apartments in pristine condition upon move-out, leading to unforeseen costs. These costs are actively avoided through excellent in-house property management, including tenant screening, move-out inspections, and strict security deposit return enforcement."
  • "Tax Reassessment Risk: This target geography is susceptible to property tax increases; these must be accounted for in underwriting and appealed in court whenever possible to obtain the best possible outcome for the fund."
  • "Commercial Exposure: The fund does have modest exposure to office and retail properties. Less than 10% of the fund will ultimately be invested in these asset types. The sponsor intends to take a conservative posture in managing its existing commercial assets to optimize for high occupancy, and may pursue preemptive liquidity events for this segment of the portfolio."

 

How has COVID-19 impacted your business plan?

Daniel Croce, Birgo: "Birgo's existing portfolio has thrived despite the pandemic, the tenant base has a resilient income stream, and multifamily properties are increasingly viewed as a safe haven for investors. Some notable points include:"

  • "Existing Portfolio: With respect to the fund’s current holdings, multifamily collections have proven to be remarkably resilient in Q2 and Q3 of 2020, and residential occupancy has remained healthy since the onset of the pandemic. Birgo's commercial portfolio collections and occupancy have remained remarkably strong as well. No concerning trends with respect to collections or occupancy are observed on a backward-looking basis."
  • "Tenant Employment: Birgo has also performed rigorous analysis to determine that the fund’s tenants’ sources of income are likely to be largely resilient to the potential impacts of ongoing virus concerns. Additionally, governmental support for the workforce housing asset class has been phenomenal since the onset of the pandemic."
  • "Valuations: Demand for multifamily properties has soared in the fund’s target market as a result of investors seeking the income and safety that residential investments provide; this is very good for the valuation of existing fund assets, and requires that we exercise discipline in acquisitions moving forward."

Offered By

Birgo

Birgo

Pittsburgh, PA

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Assets Under
Management

Currently
$130MM 40+ assets
Exited
$2.8MM 10+ assets
Portfolio LTV
71%  
Historical
Realized Returns

Total IRR
29.5%  
Equity Multiple
3.6x  
Annual Cash
8%  
Years Of
Experience

As Principals
20+ years  
In Business
8 years  
Size
12 Staff  
* All information is reported by Birgo as of 9/11/2020.
Assets Under
Management

Currently
$130MM 40+ assets
Exited
$2.8MM 10+ assets
Portfolio LTV
71%  
Historical
Returns

Total IRR
29.5%  
Equity Multiple
3.6x  
Annual Cash
8%  
Years Of
Experience

As Principals
20+ years  
In Business
8 years  
Size
12 Staff  
* All information is reported by Birgo as of 9/11/2020.

Financials

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Offering Financial

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Location Details

Greater Pittsburgh Metropolitan Area and Surrounding Regions

Daniel Croce, Birgo: "Pittsburgh and its surrounding regions have a unique combination of significant appreciation potential from a bursting technology scene and favorable demographics coupled with downside protection arising from diverse regional economic stability. This slow-and-steady performance served Pittsburgh well in the Great Recession and is expected to prove its further resilience in the years to come. Cap rates are also notably higher in this market than in similarly sized metro areas around the country, providing an opportunity to produce attractive cash flow today, with the potential for outsized returns should cap rates normalize inland from the coasts over time. Lastly, additional downside protection arises from deep affordability, as Pittsburgh is consistently rated among the nation’s most affordable and livable cities. To dive deeper into our thesis, check out our recent blog article on the subject."

Documents

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Offering Agreement Documents

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