January Newsletter
Welcome to Priority Funds
Priority Funds has seen continued success in the New Year. In an impressive performance, the to-date ‘actual cash flow’ of the Fund’s seed investment, has exceeded our previous targets by more than 2 times!
The secret to this success? We have completed an in-depth analysis of more than 40 investment deals. With a rigorous expert review conducted, we narrowed it down and invested to only a select handful of the best risk-adjusted return opportunities. You can read more about our evaluation process below.
With several new investments, the Team at Priority Funds is excited about what the rest of 2022 has in store.
To dive even deeper into Priority Fund’s process, check out our new video podcast on YouTube. Stay tuned for new content added monthly!
“From Hundreds to Handfuls.”
Priority Funds utilizes multiple marketplaces to source deals, along with our national network of sponsors. The more deals we have access to, the greater the chances of finding a good deal are. We use two main sources of deal flow, multiple marketplaces and our national network of vetted sponsors. To give you an idea of how rigorous even the initial screens are, according to CrowdStreet, only 5% of the best deals make it to their platform. Other platforms also have a similarly rigorous screening process. We then combine these opportunities, along with exciting deals sourced from off-market platforms sponsored by leading developers.
This is where we really dig in. We review every deal to make sure it is in accordance with our portfolio thesis, “investing in places people love.” Our screening criteria emphasize projects in highly rated, walkable neighborhoods. We then examine the sponsors’ track record, demographics, valuations, and stress tests and critically analyze the assumptions.
But we don’t stop there. We then draw upon the expertise of leading institutional real-estate consultants to conduct a critical review of the deal.
This means if it doesn’t corroborate our in-house analysis, criteria, and metrics; the deal is ultimately rejected.
We also analyze how potentially adding a property affects the overall portfolio. Similar to how you would not put all your eggs in one basket when diversifying your own stock or bond portfolio; the Priority Funds portfolio is diversified by city, sponsor, strategy, and asset class, including multifamily, hotel, office, and industrial.
The COVID-19 pandemic has caused significant real-estate market disruptions but it has also created new opportunities for creative investments. Along with shifts in regional population growth and a changing interest rate environment, we have factored these and other key decisions into our acquisition strategy. For example, we invested in apartment buildings, hotels, and offices that were acquired at a significant discount due to these disruptions. This has allowed our fund to generate investments that are less risky and deliver higher dividends than our initial goals.
The building is located at 265 S 2nd St in Brooklyn with a Walk Score of 100 and includes 419 restaurants within a 5-minute walk. The building is within walkable distance to Manhattan.
New York rents were hit hard during the pandemic and this investment takes advantage of a rare opportunity to invest in New York as the market improves. Rents in Williamsburg have increased by 27% over the past year. Both Green Street rates the neighborhood an A and Evra rates the neighborhood an A+ for rentals based on existing and future projections. Priority Funds is excited to announce a $200,000 investment into the District Lofts, a 35-unit apartment building originally built in 1914 and renovated in 2016.
This value-add project will take place over 5 years and is expected to generate a 21.66% IRR to the fund. Williamsburg is Brooklyn’s booming epicenter with a well-deserved and worldwide reputation for being an influential hub thanks to a thriving cultural scene.