Sheffer Capital 1st Annual Report

January 28, 2022

As we close out the year, I wanted to reflect on what has been accomplished since the beginning of 2020 until the end of 2021, and what the future holds for Sheffer Capital. We have been very fortunate to accomplish great things with many great investment partners. 

Some numbers from the last 18 months in a nutshell:
– Purchased 416 units, $43M total value
– Sold 212 units, $16M total value
– In early development 139 units, $22M total value
Current holdings at end of January 2022 are 204 units, 9 properties, ~$27M in total value.

All of this is due to what I believe to be the most important aspect of multifamily investing, treating it as a “team game”. Without our investors, none of this would be possible. Each deal ranges from 3-30 investors who have trusted us with their hard-earned capital. Words cannot express how appreciative I am of each investor placing their capital in our projects. 

Here’s a bit about what we see for the future
We have been scouring the earth for quality deals to purchase. We’ve built a network of what we call “deal-finders” who range from investors just starting out looking for their first deal, experienced investors looking to partner and share the work, and experienced brokers with $100M+ of transactions each year. All are bringing good deals to the table. The best deals always come off market and direct to seller, we will remain committed to cold calling and sending mailers directly to property owners. The deals we purchase are primarily properties off market, needing physical & operational improvements (value-add), for a price well below replacement cost, and something we’d feel comfortable owning at 10-25% higher than the price we purchasing at. We will continue this strategy as this has been the bread & butter of our business to date.

New Development
Lately we have seen other investment companies who target similar multifamily properties (1970+ built, 20+ units, value add component) buying at, or near, replacement cost on the open market. As we enter every investment with the plan to hold it forever, we would much rather buy newer vintage, or build brand new, as these properties will operate much more efficiently over the next 20 years. 

The new developments we have are in various stages and are targeted to break ground in Q3/Q4 of 2022. Due to the stages of these developments we can’t share too much about them but there are 2 projects in the suburbs of Metro Detroit & 1 in Scottsdale, AZ. Investors registered in our investor portal will have first access to these deals when they launch. We plan to build our new development team through 2022 and make this a large part of the business moving forward. 

Fund Model
To date we have raised capital for each deal individually. The Fund model is something we have in early stages to first launch in Texas with our Texas Storage Fund 1. Creating the Fund will allow us to act much faster on more opportunities. For example, we will raise $10million of investor capital for Texas Storage Fund 1. A typical equity raise per deal will be ~30% of the total project value. With our Fund of $10million we will be able to swiftly acquire ~$30million worth of real estate. The Fund will have a set criterion that each property must meet before being purchased by the Fund. Investors will invest into the Fund and the Fund will purchase the properties. This is a great way for investors to achieve diversification amongst several properties. 

The first fund is a joint venture project that is yet to launch. We already have ~$5m in commitments and the first 2 properties lined up to purchase. It will focus on Value-Add Self Storage properties in a ~200 mile radius of Austin, TX. 

Non-real estate
As we’ve navigated through the Real Estate Private Equity (REPE) world, we often come across different investment opportunities in the traditional Private Equity and Venture Capital worlds. Many of these investments can be structured similarly to a real estate deal and be purchased primarily through the Fund model. A long-term goal of mine is to begin to actively pursue these deals and once acquired build teams around each investment to support deal flow, operations, and investors. Blackstone is a company that I admire and would like to emulate in the expansion of Sheffer Capital. 

In closing, I want to thank all our investors for trusting us with their hard-earned capital. Without them, we could not operate. The future is bright, and I am excited to see what we can create. 

Thank you for reading and your interest in Sheffer Capital. We look forward to having you follow along on the journey.

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