ARC MULTIFAMILY FUND II
The focus of ARC Multifamily Fund II is on capital preservation and risk mitigation, while still having tax-advantaged and inflation-protected upside potential.
Private Webinar with ARC Priority List investors breaking down the details of ARC Multifamily Fund II
ARC Multifamily Fund II
The ARC Multifamily Fund II was created to identify and acquire multifamily assets in the southeastern US, to improve them through value-add strategies, and to restructure and exit properties while providing cashflow, tax-advantaged appreciation, and inflation-adjusted upside potential.
Frequently Asked Questions
1. Getting Started
For existing ARC investors, you will receive an email from our new investor portal, AppFolio, to create your new password, then can login to complete the investment. If you have not received an invite yet, please email [email protected]
For new investors, those with no prior ARC investments, Click Here to sign up.
Please note that new investors must be approved before the investment process can begin, which can take up to one business day.
The minimum investment in ARC Fund 2 is $100,000. (Exceptions maybe made on a case by case basis)
Yes. As long as your retirement funds are in an account that allows for your investment discretion, i.e. Self-directed IRA, we can accept these investments. If you would like further information on self-directed IRA custodians, please contact the ARC Multifamily Group team.
The process to invest in ARC Fund 2 is simple:
1. Create an investor portal account
2. Execute subscription documents
3. Complete third-party accredited investor verification process; and
4. Fund commitment
Please contact an ARC Partner with any questions.
We do not anticipate making capital calls.
When you are ready to commit to the ARC Fund 2, we will request that you commit and fund the agreed upon investment amounts.
However, should additional capital be needed, we retain the rights to do so in the subscription agreement. Please refer to these legal documents for more details.
Yes. The deposit will be 20% of the committed amount which will be held in escrow.
Yes, as long as the fund is still open to new investment.
You will simply sign another subscription agreement to formalize the investment, provide an update verification letter if needed, and fund the increased amount.
2. Returns & Distributions
1. Class A
– Coupon of 9% per annum
– First priority repayment of principal of the two classes
2. Class B
– Coupon of 6.5% – 8% per annum (based on investment amount)
– Investors first receive preferred return (coupon)
– GP then has catch-up to 35% of amounts distributed
– Investors receive profit participation via Equity Waterfall
Equity Waterfall Illustration
– To 11% IRR 65% (LP) and 35% (GP)
– To 14% IRR 50% (LP) and 50% (GP)
– Thereafter, 35% (LP) and 65% (GP)
Preferred return is the minimum percentage whereby the limited partner receives 100% of distributed cashflow and/or profits. Once the preferred return has been paid out in full, only then does the general partner, ARC Multifamily, receive a percentage of cashflow and profits as specified in the equity waterfall.
Distributions are made based on fund operations and cash flow from properties.
While there is no set schedule for the first distribution, we can project the following timeline:
– 3 months after your capital is deployed
– And then, quarterly distributions per the fund’s operations thereafter
Capital is called and taken on as ARC is able to deploy it into the fund’s next purchase.
Preferred return begins to accrue once your capital is used to buy the next asset that ARC Fund 2 closes on.
We will distribute the proceeds of sale of each asset in accordance with the waterfall outlined in the private placement memorandum. For practical purposes, investors are anticipated to receive their share of the proceeds from the sale of each asset, as they occur.
Your investment will be considered an illiquid investment, so anticipate that your capital will be committed throughout the life of ARC Fund 2. However, we will be distributing proceeds from sales and refinances according to the waterfall, and we anticipate achieving both throughout the life of ARC Fund 2, likely creating early capital events.
We cannot accept 1031 proceeds into the ARC Fund 2. Our goal is to offer investors the opportunity to 1031 their portion of proceeds out of the ARC Fund 2 into another Ashcroft investment, which may defer realization of gains. If ARC offers the Limited Partner’s the opportunity to participate in a 1031 or similar exchange, this election will take place at the time of disposition of any single asset within the ARC Fund 2.
However, from time to time, ARC may be open to 1031 opportunities as “joint venture” partners on acquisitions. If you are evaluating a large 1031 transaction and would like to discuss opportunities, please contact an ARC Partner.
3. Fund Operations
We anticipate divesting of all Fund assets within the first 7 years. However, we also anticipate several capital events happening much earlier, such as individual property refinances and dispositions in year 3 and beyond. We did not underwrite this in our projections because we always want to remain conservative. However, a capital event could return significant capital back to investors early in the life of the ARC Fund 2.
Just like our single-property investments, we want to make sure that we sell our properties during the best possible time of a real estate cycle. Therefore, we have a defined life of ARC Fund 2 of seven years plus two, one year extensions. This allows adequate time, nearly twice our anticipate hold, while also giving surety of a defined end date.
The Fees paid to the General Partner and the Sponsor are as follows:
– Acquisition Fee: 2.85% of purchase price
– Disposition Fee: 1% of sale price of asset
– Financing Fee: 0.50% of the principal amount, only payable if no other brokerage fee is paid to an outside loan broker
– Asset Management Fee: 1% of equity raised and outstanding
ARC Fund 2 will provide quarterly reporting. In addition, you can expect weekly/monthly ongoing communication regarding fund operations such as market activity, acquisitions, value-add projects, and dispositions of assets.
Preferred return begins to accrue once your capital is used to buy the next asset that ARC Fund 2 closes on after your capital is taken on.
12 months, with one 6 month extension as needed based on market opportunity and our acquisition pipeline. We anticipate achieving our goal well within the initial 12 month period, and can close the capital raise period at any point.
We anticipate deploying capital within 18 months of launching the fund
As a limited partner (LP) in ARC Fund 2, your liability is limited to the capital you have invested per the subscription agreements.
ARC Fund 2 is a closed-end fund
4. Tax Matters
ARC Multifamily Group and ARC Fund 2 is not a tax advisor and we recommend you reach out to your tax advisor to understand the effects for you. You will receive a single federal K-1 and a single state K-1 for each income tax state we own assets in. We will continue to operate the assets in the most tax advantageous way possible, including the use of Cost Segregation Studies.
ARC Fund 2 will file composite tax returns at the partnership level on behalf of any out-of- state investors, relative to those respective states. Composite filings apply to certain types of individuals and business structures. ARC cannot advise investors on the specific application of these filings. Therefore, we encourage you to consult with your own tax, legal and/or accounting advisor(s) on whether this applies to you.
B. We understand that our investors all have different financial situations. Therefore, investors have the option to opt out of composite filings by providing us with a written notification.