Property Details
Below Market Rents  Below Market Occupancy  Repositioning Opportunity  NOI Growth 
Asset Profile
Value Add

Olive Tree Equity Fund I LLC

Nationwide

Multi-Family Fund
Olive Tree Property Holdings LLC New York, NY
Olive Tree Property Holdings LLC
  • IRR 18%
  • Equity Multiple 2x
  • Hold Period 7Y
  • Minimum Investment $50K
  • Year 1 Cash on Cash 4-5%
  • Stabilized Cash on Cash 6-8% in Y3-4
  • First Distribution Sep 2021
  • Distribution Frequency Quarterly
  • Co-Investment N/A
  • Preferred Return 10%
  • Investor Profit Share 50%
  • Asset Profile Value Add
  • Loan-to-Value 80%
  • Current Occupancy N/A

About this Fund

"$5 Million fund focused on the acquisition and repositioning of cash flowing, value-add multifamily assets in growth markets across the US. Through its proprietary, data-driven sourcing engine, Olive Tree Holdings identifies and acquires underperforming assets at a significant discount to replacement cost.”

-Andrew Schramm, Olive Tree Property Holdings LLC

Fund Type Multifamily
Investment Timing Equity called upon close
Market(s) Nationwide
Target Fund Size $5MM*
Date Opened for Investments April 14, 2021
Amount Raised $0MM
Amount Deployed $0MM
Est. Time to Next Investment 3 Months (July 2021)
Est. Time to Initial Distribution 6 Months (September 2021)
*$5,000,000 target with an ultimate cap of $7,000,000.

Top Questions

All answers are provided by the sponsor, Olive Tree Property Holdings LLC, or its representatives.

 

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

Andrew Schramm, Olive Tree Property Holdings LLC: "Olive Tree Holding's strategy is to identify underperforming multifamily properties in dynamically growing markets through a proprietary data-driven, algorithmic process. It repositions assets through an institutional caliber property management and construction management platform through The Life Properties, a first-party affiliate of Olive Tree Holdings which exclusively manages their portfolio properties."

 

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

Andrew Schramm, Olive Tree Property Holdings LLC: "The OT Fund will invest in underlying multifamily assets which meaningfully underperform their peers and have clearly demonstrated upside potential paired with an acquisition price that is significantly below replacement cost."

"The Fund offers investors the opportunity to invest across several assets selected through a high-touch data-driven approach across the US. The Life Properties, Olive Tree Holdings's affiliate in-house property manager, leverages its robust internally developed systems and procedures to optimize asset-level performance."

 

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

Andrew Schramm, Olive Tree Property Holdings LLC: "Operational underperformance is a headwind to an asset; however, Olive Tree Holdings approaches newly acquired assets head-on through installing an in-house property management team. Olive Tree Holdings' core competencies revolve around optimizing the performance of laggard multifamily properties."

In order to hedge against supply risk, Olive Tree Holdings acquires assets at a significant discount to replacement cost. Olive Tree Holdings excels in this as they are grounded in this element of their thesis and focus on identifying off-market value-add multifamily investments that trade at a discount to marketed assets."

"Olive Tree Holdings further mitigates risk by only pursuing acquisitions that are likely to stabilize at an above-market cap rate. For instance, if the prevailing market is currently trading at a 4.50% year 1 cap rate – they only pursue deals that they believe will stabilize at 6.25% yield on cost (Year 3 NOI / Total Capitalization). The delta between 6.25% and 4.50% creates a significant margin of safety. The spread between an asset that stabilizes at 6.25% in a market where the normal deal trades for 4.5% enables ~39% unlevered upside (6.25%/4.5% -1). For an asset acquired with leverage of 75%, this 39% upside enables equity value to grow by over 150% (39%/25%). This approach creates a significant margin of safety for the equity in the deal in the event that the asset takes longer to stabilize or other unbudgeted risk factors emerge. This defensive underwrite provides a substantial buffer to absorb negative externalities yet still achieve strong above-market equity appreciation outcomes."

Risk is further mitigated through a proprietary market selector model that spotlights opportunities in strong growth markets and submarkets less widely trafficked by current buyers and therefore provides a more favorable skew of reward-to-risk. Olive Tree Holdings accomplishes this by statistically tracking all 400 metro markets across the country in order to isolate the 40-50 markets that offer the best risk-adjusted returns. Those are the markets that they proactively prioritize for acquisitions and local relationship building. As inputs change, their prioritization of markets adjusts on a quarterly basis – allowing them to stay ahead of the crowd for acquisitions and dispositions."

"Interest rate risk is mitigated through acquiring interest rate caps on their floating rate mortgages which make up the majority of the capital stack on each underlying investment."

 

How has COVID-19 impacted your business plan?

Andrew Schramm, Olive Tree Property Holdings LLC: "The pandemic has impacted many aspects of life and the economy broadly. The Olive Tree Holdings team focuses their investment strategy behind markets with strong underlying fundamentals and metros that will be net-winners into the subsequent cycle. Operationally, they have adjusted operations to adapt to the changing conditions; however, the team was well prepared to enter the pandemic."

"Olive Tree Holdings has been making extensive preparations for remote work for years before the pandemic emerged. They always anticipated a collaborative digital work environment that would prove flexible and resilient as they pursued a national growth strategy. These preparations have proved effective as this mode of communication and work has become the status quo. They have adjusted their leasing, prospect engagement, and tenant interaction model to operate effectively in a web and app-based environment – limiting the need for face-to-face interaction. Finally, they have adopted a variety of delinquency mitigation strategies to maximize collections at a time of long-running eviction moratoria."

About this Fund

"$5 Million fund focused on the acquisition and repositioning of cash flowing, value-add multifamily assets in growth markets across the US. Through its proprietary, data-driven sourcing engine, Olive Tree Holdings identifies and acquires underperforming assets at a significant discount to replacement cost.”

-Andrew Schramm, Olive Tree Property Holdings LLC

Fund Type Multifamily
Investment Timing Equity called upon close
Market(s) Nationwide
Target Fund Size $5MM*
Date Opened for Investments April 14, 2021
Amount Raised $0MM
Amount Deployed $0MM
Est. Time to Next Investment 3 Months (July 2021)
Est. Time to Initial Distribution 6 Months (September 2021)
*$5,000,000 target with an ultimate cap of $7,000,000.

Top Questions

All answers are provided by the sponsor, Olive Tree Property Holdings LLC, or its representatives.

 

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

Andrew Schramm, Olive Tree Property Holdings LLC: "Olive Tree Holding's strategy is to identify underperforming multifamily properties in dynamically growing markets through a proprietary data-driven, algorithmic process. It repositions assets through an institutional caliber property management and construction management platform through The Life Properties, a first-party affiliate of Olive Tree Holdings which exclusively manages their portfolio properties."

 

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

Andrew Schramm, Olive Tree Property Holdings LLC: "The OT Fund will invest in underlying multifamily assets which meaningfully underperform their peers and have clearly demonstrated upside potential paired with an acquisition price that is significantly below replacement cost."

"The Fund offers investors the opportunity to invest across several assets selected through a high-touch data-driven approach across the US. The Life Properties, Olive Tree Holdings's affiliate in-house property manager, leverages its robust internally developed systems and procedures to optimize asset-level performance."

 

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

Andrew Schramm, Olive Tree Property Holdings LLC: "Operational underperformance is a headwind to an asset; however, Olive Tree Holdings approaches newly acquired assets head-on through installing an in-house property management team. Olive Tree Holdings' core competencies revolve around optimizing the performance of laggard multifamily properties."

In order to hedge against supply risk, Olive Tree Holdings acquires assets at a significant discount to replacement cost. Olive Tree Holdings excels in this as they are grounded in this element of their thesis and focus on identifying off-market value-add multifamily investments that trade at a discount to marketed assets."

"Olive Tree Holdings further mitigates risk by only pursuing acquisitions that are likely to stabilize at an above-market cap rate. For instance, if the prevailing market is currently trading at a 4.50% year 1 cap rate – they only pursue deals that they believe will stabilize at 6.25% yield on cost (Year 3 NOI / Total Capitalization). The delta between 6.25% and 4.50% creates a significant margin of safety. The spread between an asset that stabilizes at 6.25% in a market where the normal deal trades for 4.5% enables ~39% unlevered upside (6.25%/4.5% -1). For an asset acquired with leverage of 75%, this 39% upside enables equity value to grow by over 150% (39%/25%). This approach creates a significant margin of safety for the equity in the deal in the event that the asset takes longer to stabilize or other unbudgeted risk factors emerge. This defensive underwrite provides a substantial buffer to absorb negative externalities yet still achieve strong above-market equity appreciation outcomes."

Risk is further mitigated through a proprietary market selector model that spotlights opportunities in strong growth markets and submarkets less widely trafficked by current buyers and therefore provides a more favorable skew of reward-to-risk. Olive Tree Holdings accomplishes this by statistically tracking all 400 metro markets across the country in order to isolate the 40-50 markets that offer the best risk-adjusted returns. Those are the markets that they proactively prioritize for acquisitions and local relationship building. As inputs change, their prioritization of markets adjusts on a quarterly basis – allowing them to stay ahead of the crowd for acquisitions and dispositions."

"Interest rate risk is mitigated through acquiring interest rate caps on their floating rate mortgages which make up the majority of the capital stack on each underlying investment."

 

How has COVID-19 impacted your business plan?

Andrew Schramm, Olive Tree Property Holdings LLC: "The pandemic has impacted many aspects of life and the economy broadly. The Olive Tree Holdings team focuses their investment strategy behind markets with strong underlying fundamentals and metros that will be net-winners into the subsequent cycle. Operationally, they have adjusted operations to adapt to the changing conditions; however, the team was well prepared to enter the pandemic."

"Olive Tree Holdings has been making extensive preparations for remote work for years before the pandemic emerged. They always anticipated a collaborative digital work environment that would prove flexible and resilient as they pursued a national growth strategy. These preparations have proved effective as this mode of communication and work has become the status quo. They have adjusted their leasing, prospect engagement, and tenant interaction model to operate effectively in a web and app-based environment – limiting the need for face-to-face interaction. Finally, they have adopted a variety of delinquency mitigation strategies to maximize collections at a time of long-running eviction moratoria."

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Assets Under
Management

Currently
$600MM 20+ assets
Exited
$50MM less than 10 assets
Portfolio LTV
70%  
Historical
Realized Returns

Total IRR
41%  
Equity Multiple
2x  
Annual Cash
6%  
Years Of
Experience

As Principals
30+ years  
In Business
5 years  
Size
25 Staff * Dedicated investor relations
* All information is reported by Olive Tree Property Holdings LLC as of 4/11/2021.
Assets Under
Management

Currently
$600MM 20+ assets
Exited
$50MM less than 10 assets
Portfolio LTV
70%  
Historical
Returns

Total IRR
41%  
Equity Multiple
2x  
Annual Cash
6%  
Years Of
Experience

As Principals
30+ years  
In Business
5 years  
Size
25 Staff * Dedicated investor relations
* All information is reported by Olive Tree Property Holdings LLC as of 4/11/2021.

Financials

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Offering Financial

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Location Details

Nationwide

Andrew Schramm, Olive Tree Property Holdings LLC: "Olive Tree Holdings has demonstrated a track record of compelling investment identification and market selection of multifamily markets down to select assets. Olive Tree selects and prioritizes markets on a variety of data-driven criteria which includes but is not limited to; population and job growth, market size of population and apartment inventory, diverse economic drivers, favorable supply dynamics, relative asset value, and a variety of intrinsic asset level and renter base characteristics."

Documents

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Offering Agreement Documents

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