Paul Chung

Mar 08, 2019

They're getting worse and worse.

Vitae - Initially master-leased but Alpha claims the university elected to not renew. Given the sponsor was unable to make preferred return distributions and is severely underperforming cash-on-cash pro-forma, they likely had to change strategies in an effort to make up for their poor underwriting. They also missed deferred maintenance issues in underwriting and are looking to use refi proceeds to pay for the deferred maintenance rather than catch up on missed distributions/paying down investor capital. Negligent? Not sure. Incompetent? Absolutely.

Also invested in their 266 Loft project which was supposed to be a master-lease deal. They were unable to execute. They're close to 100% occupied and are still missing preferred return distributions during the I/O period of their loan. Investors are screwed once loan starts amortizing. Again, incompetent, awful underwriting.