PacX Diversified Opportunities Fund
Disclaimers
This Investment Summary has been prepared solely for, and is being delivered on a confidential basis to, persons considering an investment in the Company. This Investment Summary is for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any equity, debt or other financial instrument offered by the Company. No offer of securities shall be made except by means of a private placement memorandum meeting the requirements of the Securities Act of 1933, as amended, and applicable regulations of jurisdiction in which such an offer may be made. Any reproduction of this Investment Summary, in whole or in part, or the disclosure of its contents, without the prior written consent of the Company, is prohibited.
By accepting this Investment Summary, each participant agrees: (i) to maintain the confidentiality of all information that is contained in this Investment Summary and not already in the public domain and (ii) to use this Investment Summary for the sole purpose of evaluating an investment with the Company.
Forward-Looking Statements
This Investment Summary may include “forward looking statements” within the meaning of the “safe
harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “forecast”, “intend”, “seek”,
“target”, anticipate”, “believe”, “expect”, “estimate”, “plan”, “outlook” and “project” and other
similar expressions that predict or indicate future events or trends or that are not statements of
historical matters. Such forward-looking statements include estimated financial information. Although
example or information about past deals may be provided, past performance is no guaranty of future
results.
The financial and operating projections contained in this Investment Summary represent certain estimates as of the date hereof. The Company’s accountant has not examined, reviewed or compiled the projections and accordingly expresses no opinion or assurance that the projections contained herein will accurately reflect the Company’s results of operation or financial condition. The projections are presented in non-GAAP format. Assumptions and estimates underlying prospective financial information are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause the actual results to differ materially from those contained in prospective financial information. Accordingly, there can be no assurance the prospective results are indicative of the future performance of the Company or that actual results will not be materially different from the projections as presented. Inclusion of the prospective financial information in this Investment Summary should not be regarded as a representation by any person that the projections contained herein are indicative of future results or will be achieved. These variation variations could materially affect the ability to make payments with respect to any of its outstanding and or future debt and service obligations.
Industry and Market Data
Unless otherwise noted, the forecasted industry and market data contained in the assumptions for the
projections are based upon the Company manager’s estimates and industry and market publications
and surveys. The information from industry and market publications has been obtained from sources
believed to be reliable, but there can be no assurance as to the accuracy or completeness of the
included information. The Company has not independently verified any of the data from third-party
sources, nor has it ascertained the underlying economic assumptions relied upon therein. While such
information is believed to be reliable for purposes used herein, none of the Company, its manager,
their respective affiliates, not their respective directors, officers, employees, member, partners,
shareholder or agents many any representation or warranty with respect to such information.
PacX Diversified Opportunities Fund
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PacX Diversified Opportunities Fund
The Big Idea
As the S&P 500 reaches new highs, diversification is key. Savvy investors are now capitalizing on private real estate investments at decade-low discounts due to high interest rates and illiquidity.
Unfortunately, without the ability to source off-market opportunities, perform due diligence, and navigate capital markets, you might feel overwhelmed.
Why go it alone? Our fund focuses on
- Access Distressed Assets: Leverage our 22+ years of insider relationships in the capital markets.
- Ensure Sound Investments: Benefit from our rigorous due diligence, proven in $100MM+ institutional-grade projects.
- Maximize Returns: Using our data-driven management expertise.
PacX Diversified Opportunities Fund
Fund Summary
| Key Investment Metrics | |
|---|---|
| Targeted Yield over the hold | 15%+ |
| Fund Size | $5M-$20M |
| Management Fees | 2% |
| Asset Class | Real Estate / Notes |
| Preferred Return | 7% |
| Term | 7 Years |
| Investment Period | 6 Years |
| The projected yield over the hold period is based on assumption | |
The Manager, PacX Fund Management LLC, will manage the Fund portfolio on behalf of investors during the hold period.
Distributions from available cash flow will be made quarterly to the investors pursuant to terms of the PPM and the LLC agreement of the Fund
PacX Diversified Opportunities Fund
Fund Summary
| Key Investment Metrics | |
|---|---|
| Targeted Yield over the hold | 15%+ |
| Fund Size | $5M-$20M |
| Management Fees | 2% |
| Asset Class | Real Estate / Notes |
| Preferred Return | 7% |
| Term | 7 Years |
| Investment Period | 6 Years |
| The projected yield over the hold period is based on assumption | |
The Manager, PacX Fund Management LLC, will manage the Fund portfolio on behalf of investors during the hold period.
Distributions from available cash flow will be made quarterly to the investors pursuant to terms of the PPM and the LLC agreement of the Fund
PacX Diversified Opportunities Fund
Dramatic distress emerges
at loan maturity as rates rose
2022+
Rising Interest Rates
2023+
Real Estate Sales Volume Sales Down
2024+
Loan Maturities - Pretend and Extend
Borrowers do not accept the lower market valuation and lenders often agrees to extend.
2024+
Loan Balance Paydowns, modifications or Forced Sales
PacX Diversified Opportunities Fund
How big is the problem?
- Outstanding distressed loans: $85.8 Billion
- Potential distressed loans: $234.6 Billion
- Nearly $2 trillion (of the $4.7 trillion) in commercial real estate loans nationwide will mature over the next three years(, according to the Mortgage Bankers Association)
- California Banks Are Most Exposed to Commercial Property
- 31% Share of CA banks with CRE loans three times or more of their capital
- Foreclosure filings in CA for Q1 2024: 11,303
- San Francisco ranks the 4th Top distressed MSA - 19.2% (per CRED IQ).
- Goldman Sachs and Ballast Investments defaulted on $688M in loans (1,200 apartment units in San Francisco)
PacX Diversified Opportunities Fund
Bottom yet?
Green Street Commercial Property Price Index
Indexed to 100 in August 2007
- Fed expects one rate cut in 2024 and three more cuts in 2025.
- Blackstone acquires AIRC (Apartment Income REIT Corp) for $10B in April 2024
PacX Diversified Opportunities Fund
CA population grow - even in San Francisco
PacX Diversified Opportunities Fund
Solution: good real estate/market in distress
The Fund will acquire distressed real estate with long term demand disrupted by short term factors. Each asset is evaluated to have considerable upside potentials above the acquisition basis
In 2024, with markets mixed, distressed real estate is an opportunity to acquire cash flows with upside potentials. While acquisition of distressed assets require expertise in sourcing, underwriting, and asset management planning, we have extensive experience doing this.
We believe that the most favorable acquisition opportunities amid high interest rates are for less debt dependent investors. Our fund structure will give us the ability to rapidly raise additional capital quickly when needed, which may allow shorter closing times that are more appealing to sellers of properties.
We have previously originated, developed, and managed more than $300 million of real estate, equity and debts, resulting in unfair advantage for our investors.
PacX Diversified Opportunities Fund
Deals in Process or Reviewed
| Asset Type | Industrial | SFR | Retail | Apartment |
| Market | Berkeley | Peninsula | Silicon Valley | Northern CA |
| Est Acquisition Basis | $7M | $1.4M | $6M | $7M |
| Market Value | $12M | $1.85M | $12M | $8.5M | Units/GSF | 50,000 sf | N/A | N/A | 62 units | Holding Period | 2 years | 4 months | 18 months | 18 months |
| Investment Strategy | Convertible Debt | Flip | Residential Entitlement | Value-Added |
| Highlights | Significantly below replacement costs | Excellent location with low risk to sell | Great location with high potential upsides | Significantly below replacement cost |
PacX Diversified Opportunities Fund
Sample $200,000 Investment
Investors have a preferred return of 7% that will either accrue or distribute later in the Fund’s lifecycle. PacX will evaluate property financials on a quarterly basis to determine if there is distributable cash flow available to investors.
| Sample $200,000 | |||||||
|---|---|---|---|---|---|---|---|
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Total | |
| Equity Investment | $(200,000) | ||||||
| Preferred Return 7% | $14,000 | $14,000 | $28,000 | ||||
| Accrued Pref | $42,000 | $42,000 | |||||
| Return of Equity | $200,000 | $200,000 | |||||
| Return of Sale | $17,000 | $22,000 | $90,000 | $129,000 | |||
| Total Return | $(200,000) | $31,000 | $36,000 | $332,000 | $399,000 | ||
| RR | 17% | ||||||
| Equity Multiple | 2.00x | ||||||
The above example is to illustrate how a return of capital works based on hypothetical capital contribution of $200,000 and other hypothetical distributions and sales proceeds. Possibilities and examples do not represent or guarantee what actually results of any transaction may be, and the above examples are not an indication, promise or guarantee of future results of any particular return or of any return at all.
PacX Diversified Opportunities Fund
Why Us
There are many other investors that chase hot asset types. By contrast, the fund is focused on the strength of opportunities.
The Fund has a unique investment strategy - identifying market reward/risk dislocations to invest in distressed assets. Rely only on expert opinion to identify key metrics will inherently screen out many outside-the-box opportunities aka the great Black Swan potentials.
The team is data-driven, so we look at the story inside the numbers, rather than the hype of a particular asset type. We use the same methodology that the most experienced “institutional investors” use. We focus on long term fundamentals to minimize the forecasting risks.
Most importantly, the Fund evaluates such attributes systematically. That’s why research has shown investors who use a checklist consistently outperform than others that rely on “gut feel”.
The fund team is data driven. They look for ways to identify and mitigate risks in a repeatable and predictable way.
Operations
The Team has expertise in acquisition, development, disposition and investing in real estate and mortgage notes.
Risk Models
The Team has expertise in statistical and business-process modeling and in optimizing risk/reward.
Finance
The Team has over 22+ years of experience in the capital markets - including founding varies financing/mortgage banking firms.
Advisory
Board of directors including varies top-notch industry experts in different type of real estate types.
PacX Diversified Opportunities Fund
Underwriting: Method
Despite the high yield potential, distressed assets require a specialized set of underwriting method and skills. Since distressed assets are often in the market signals are not clear, valuation can be difficult. This is where our experiences count.
- Below the replacement costs and market value. That’s a high bar, but will give us the security we require to move forward on any acquisition.
- Next, we look for if there is a long term structural demand for the asset that will provide a rent growth acceleration.
- Finally, we will look beyond the traditional asset management and seek ways to improve the Net Operating Income that will grow the value of the asset.
- Sourcing
- Underwriting
- Acquire
- Asset Management
- Disposition
PacX Diversified Opportunities Fund
Underwriting: Process
Verify Value
We will not only We will not only rely on the appraisal, or any single source to determine value of an asset.
Here’s how we will analyze an asset prior to acquisition:
FOCUS ON BASICS
We will always inquire the reasons why the seller needs to sell the asset. This helps us get a baseline understanding of the asset and negotiation.
MARKET
Next, we will find a broker or researched info that understand the nuances of the market we are in. Several hours of chats may take place between us and the local market
SITE VISIT
We will make a physical inspection of the property and build the evaluation of the asset, the tenant and the market.
3RD PARTY REVIEW
As part of due diligence, we will order an appraisal, property condition report and phase I environmental. If we find exceptions, we continue to work with our 3rd parties until all issues are resolved.
INVESTMENT PLAN
We will write up an investment proposal and present this with our investment committee. Often times, we will pass on the deal when certain key criteria are not met.
PacX Diversified Opportunities Fund
Our Team
Kyle Chuang, CCIM, CHIA
Kyle, principal at Chessboard Capital, oversees investment sales, capital market solutions, and advisory services in the San Francisco Bay Area. He holds a B.A. in Economics from UC Berkeley, with credentials from ULI, CCIM, and is a licensed California real estate broker.
Lee-Ling Lin
Ms. Lin is a seasoned professional in high-tech and real estate development. Her most recent construction projects are senior housing and student housing in Berkeley. In addition, she owns and operates a senior home care business. She holds a M.S in Computer Science from University of Dayton and B.S in CS from University of New Mexico.
Jeff Ko
Jeff, a seasoned software engineer who is now transitioning to real estate investment, brings extensive technical skills and experience. His analytical skills and educational background from UC Berkeley complements his professional journey, equipping him for success in this new field.
PacX Diversified Opportunities Fund
Traction and Milestones
$300MM+
Real-estate Transactions
$100MM+
New Developments
50
Years Combined Experience
PacX Diversified Opportunities Fund
A Few of Our Projects
- 2000 Dwight Way, Berkeley, CA - Senior Housing (Assisted Living/Memory Care Facility), 113 units (New Construction)
- 2747 San Pablo Ave, Berkeley, CA - Condo Entitlement, 41 Units
- 2701 Shattuck Ave, Berkeley, CA - Mixed Use Multifamily Apartment, 57 Units (New Construction)
- 14729 Martell Ave, San Leandro, CA - Apartment, 8 Units (Value-add)
- Various Condo Conversion projects in the Bay Area
PacX Diversified Opportunities Fund
Who We Work With
PacX Diversified Opportunities Fund
Interested in participating this once-in-a-decade opportunity?
Kyle Chuang, CCIM, CHIA
408 718 5158
kyle@pacx.fund
About PACX
Our Team
Kyle Chuang, CCIM, CHIA
Kyle, principal at Chessboard Capital, oversees investment sales, capital market solutions, and advisory services in the San Francisco Bay Area. He holds a B.A. in Economics from UC Berkeley, with credentials from ULI, CCIM, and is a licensed California real estate broker.
Lee-Ling Lin
Ms. Lin is a seasoned professional in high-tech and real estate development. Her most recent construction projects are senior housing and student housing in Berkeley. In addition, she owns and operates a senior home care business. She holds a M.S in Computer Science from University of Dayton and B.S in CS from University of New Mexico.
Jeff Ko
Jeff, a seasoned software engineer who is now transitioning to real estate investment, brings extensive technical skills and experience. His analytical skills and educational background from UC Berkeley complements his professional journey, equipping him for success in this new field.
Traction and Milestones
$300MM+
Real-estate Transactions
$100MM+
New Developments
50
Years Combined Experience
PacX Diversified Opportunities Fund
A Few of Our Projects
- 2000 Dwight Way, Berkeley, CA - Senior Housing (Assisted Living/Memory Care Facility), 113 units (New Construction)
- 2747 San Pablo Ave, Berkeley, CA - Condo Entitlement, 41 Units
- 2701 Shattuck Ave, Berkeley, CA - Mixed Use Multifamily Apartment, 57 Units (New Construction)
- 14729 Martell Ave, San Leandro, CA - Apartment, 8 Units (Value-add)
- Various Condo Conversion projects in the Bay Area
Why Choose PACX
The PacX Management Team brings over 50 years of experience in real estate development, finance, and tech to create groundbreaking, unique investment opportunities for fund investors.