by
Key Projection Metrics
15.6%
Projected Average
Annual Return
$0.05
Current Dividend Rate per Unit, Distributed Quarterly
$1.18
Current Unit Price
About Us
AlphaDiv Real Estate Fund pools private capital from accredited investors to acquire real estate assets and reposition them for long-term returns.
Our secret sauce is our deal sourcing software which gains us access to deals that are not available on the market and our unique deal structuring tools. The company has a proven history of unlocking the hidden potential in properties by fixing them up, filling them with great tenants, and managing them for increased financial performance.
Whether you are looking to invest with us, sell your property, or lease a space this website should get you started! If you aren't finding the information you are looking for, feel free to book a call with us and we will do our best to help you out!
Best regards,
Mike Sowers
Mike Sowers, Fund Manager
AlphaDiv Real Estate Fund
Our Investing Criteria
Asset Class
Our target allocation is 75% warehouse and flex, and 25% suburban office and retail and residential.
Size
Our target asset size is $5M to $30M with a preference for suburban multi-tenant industrial assets.
Geography
Our target allocation is 80% in Minneapolis Greater Metro and 20% in Other Markets.
Structure
Our portfolio contains a mix of bank financing, seller financing, retail equity, and institutional equity.
Frequently Asked Questions
What is the primary investment strategy of the fund?
Our fund targets high-quality commercial real estate assets in prime locations, focusing on value-add and core plus opportunities to maximize returns. In other words we look at assets where we can force appreciation through fixing up the building, improving the financials, filling it up with good tenants and executing the business plan. Details can be found in our Private Placement Memorandum (PPM).
What types of properties does the fund invest in?
We invest in a diversified portfolio of industrial, office, residential and multi-family properties. Our asset selection is driven by rigorous market analysis and due diligence. We focus on combining a value-add strategy along with acquiring core and core plus assets to maximize our diversification from market movements and economic factors. We are mostly targeting warehouse properties for their long-term appreciation and sustainable market value.
How is risk managed within the fund?
The biggest risk you take is default on debt, and over concentration in one asset class. We employ a comprehensive risk management strategy that includes diversified asset allocation, and maintaining very high debt service coverage ratios (DSCR). The debt coverage ratio is how much excess cash is generated from operations relative to the mortgage payments. So a DSCR of 1.3 means we are generating $1.30 for every dollar of mortgage payments. Lenders usually want to see a DSCR of 1.20 - 1.35. We like to run more conservative and target 1.75 - 2.0, meaning that literally half of our tenants could stop paying and we could still weather the storm and make our payments. Our conservative leverage, and active asset management approach is outlined in our fund documents.
How is investor capital protected?
Investor capital is safeguarded through careful asset selection, extensive due diligence, and active management. We also maintain appropriate insurance and reserve funds.
What is the minimum investment required?
Our recommended investment level is based on our current average and is $1M; however, we do accept starter investors. The minimum investment required is $250,000, as specified in our subscription documents. This ensures a committed and aligned investor base.
What is the fund's exit strategy?
Our portfolio exit strategy is to do a roll up using a tax-deferred exchange to a publicly traded REIT between 2030 and 2032. Our asset exit strategy includes property sales, refinancing, or recapitalization to maximize investor returns. Each strategy is tailored to market conditions and individual asset performance.
How often are distributions made to investors?
Distributions are made quarterly. We distribute based on a stated dividend rate, and that dividend rate is based on historic and projected distributable cash. Because we are targeting under-performing assets as part of our value-add strategy, the assets we acquire often have negative cash flow when we acquire them - that's why we get a great price. As we renovate the property and fill the vacancies, the market value and rental income increase relative to our cost basis and operating costs, so our overall returns and dividends are maximized once the property achieves stabilization. Stabilization is when the property achieves market occupancy at market rents.
How can I get more information?
Book a call with us here so we determine if you are a good fit, and answer additional questions for you.
What experience does the management team have?
Our management team has over 50 years of combined experience in commercial real estate investment, property management, leasing and asset management, with a proven track record of successful projects.
Are there any tax benefits to investing in the fund?
Yes, there are potential tax benefits, including depreciation and capital gains treatment. You get your proportionate share of all of the depreciation including any bonus depreciation received from all of the properties. The best part is that because it's a fund, you keep getting your proportionate share of any depreciation, including bonus depreciation, each year we acquire new assets. Please consult your tax advisor for specific advice related to your situation.
How is the fund's performance reported to investors?
We provide detailed operating reports and annual financial statements to ensure transparency and keep our investors informed about fund performance.
Can I reinvest my distributions?
Yes, we offer a distribution reinvestment plan (DRIP) that allows investors to reinvest their distributions into the fund, compounding their returns over time. You can turn these on or off at any time. When you utilize this option, your returns are projected to increase.
What is the lock-up period for my investment?
Two years. Investors can redeem their shares subject to certain conditions outlined in the fund documents after two years.
What is a fund?
A fund pools capital from multiple investors to invest in a diversified portfolio of assets, managed by professional fund managers to achieve specific investment objectives.
How does the fund work?
Our fund collects capital from investors, acquires commercial real estate assets, actively manages them to enhance value, and distributes profits to investors. Detailed operations are outlined in our PPM.
How long has the fund been around?
The fund was founded in 2022, but the fund's sponsor, Commercial Investors Group, has been around and investing in real estate since 2005.
How many total shares are there?
The total number of shares changes over time as we sell additional units. Your ownership percentage is calculated by taking the number of units you own divided by the total outstanding number of units. The dividends and allocations of profit and depreciation are based on your proportionate share of the units.
What’s the difference between share price and net asset value?
Share price is the cost to purchase a share, while net asset value represents the underlying value of the fund's assets per share. Normally they are very similar, as we use the net asset value to adjust the share price periodically.
What’s the difference between unreturned capital and net asset value per unit?
Unreturned capital is the initial investment amount less any return of capital. Net asset value (NAV) is the total value of the fund's assets, including cash, minus liabilities, divided by the number of units.
How is the net asset value determined?
(Market Value + Cash - Debt - Transaction Costs) / Units - NAV is calculated by appraising the current market value of the fund’s assets, subtracting the loans, adding in the cash balance, subtracting a theoretical cost of sale, and dividing by the total number of outstanding shares.
How long do you hold the real estate?
Everything is for sale at the right price, but the typical holding period is 3-5 years, depending on market conditions and asset performance, to optimize returns. We benefit from aggregating assets to build the portfolio size. This will give us the largest buyer pool when we shop the market for a publicly traded company to trade our ownership into as part of our exit strategy, and typically having more buyers at the table bidding would increase the multiple our portfolio sells for.
How do we redeem shares?
Shares may be redeemed according to the terms outlined in our fund documents. Most investors would hold their units until we execute our exit plan as outlined above - to do a 721 exchange of everyone's units into a public REIT.
What happens if you sell or refinance a property within the fund?
Proceeds from property sales or refinances are distributed to investors, reinvested in new opportunities, used to purchase back or redeem investor shares, or used to enhance existing assets, as per our strategy.
How does a 721 exchange work?
A 721 exchange allows investors to exchange their property interests for shares in a Real Estate Fund, deferring capital gains taxes and increasing liquidity. To learn more about investing with us by contributing property instead of cash, go here.
Can I invest with my IRA or 401K?
Yes! We have many people who invest with self-directed IRAs or solo-401ks. If you want to learn more about that option, we suggest booking a call with us.
Our Name
AlphaDiv Real Estate Fund
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Alpha - In finance, "alpha" refers to a measure of performance, indicating the excess return of an investment relative to the return of a benchmark index. We aim to generate superior returns compared to publicly traded REITs.
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Div - This is shorthand for "dividend" and "diversification." We focus on investments that yield regular income distributions to investors while also spreading investments across various property and tenant types to minimize risk.
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Real Estate - Our fund's investments are concentrated in the real estate sector. This includes residential, commercial, industrial, and other real estate assets.
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Fund - The entity is a collective investment vehicle, pooling money from multiple investors to invest in real estate assets which provides them better diversification and more reliable distributions.
In summary, our Fund is a real estate investment fund that aims to achieve superior dividends and overall returns while providing maximum diversification to preserve investment basis and minimize risk.
Our Edge
Technology
We have a proprietary deal sourcing technology platform that gives us access to off market deals.
Deal Structure
We offer tax-deferred exchanges which gives investors a way to participate in ownership and gives other owners access to properties they wouldn't otherwise get access to.
Risk Avoidance
We force appreciation with a value-add strategy which creates an equity cushion and high debt coverage ratios.
Construction Team
We have direct relationships with subcontractors and manage projects internally to shave significant costs off renovation projects.
Be An Owner
When your application to buy membership units in our fund gets accepted, you become part of an elite group of investors.
Since you will own part of the AlphaDiv Real Estate Fund company, you will get to participate in all the benefits that may come as a result as outlined in our private placement memorandum.
We distribute excess cash flow from rental income to the owners of the fund monthly.
Our historic quarterly dividends have been very consistent. You can see our current dividend rate in the orange section above.
The IRR is calculated based on distributions, dividends reinvested, and the current number of units issued at the current unit price. Disclosures: The information contained herein is provided for informational and discussion purposes only and is not, and may not, be relied on in any manner as legal, business, financial, tax or investment advice or as an offer to sell or a solicitation of an offer to buy an interest in the investment described herein (the “Investment”), or to participate in any trading strategy. A private offering of interests in the Investment will only be made pursuant to the Investment’s offering materials, including the Investment’s subscription documents (the “Offering Package”), which will be furnished to qualified investors on a confidential basis at their request for their consideration in connection with such offering. The information contained herein will be superseded by, and is qualified in its entirety by reference to, the Offering Package. To the extent that there is any inconsistency between this document and the Offering Package, the provisions of the Offering Package shall prevail. No person has been authorized to make any statement concerning the Investment other than as set forth in the Offering Package and any such statements, if made, may not be relied upon. The information contained herein must be kept strictly confidential and may not be reproduced or redistributed in any format without the approval of Commercial Investors Group, LLC, a Minnesota limited liability company or any of its affiliates including CIG Holdings LLC or CIG Value Add Fund I LLC both Minnesota limited liability companies. By accepting our private placement memorandum, the recipient agrees that it will, and it will cause its shareholders, partners, members, directors, officers, employees and representatives, to use the information only to evaluate its potential interest in the securities described herein and for no other purpose and will not divulge any such information to any other party except for its advisors under duties of confidentiality. By accepting this private placement memorandum, each recipient agrees to return it promptly upon request. The Sponsor is the sole sponsor of the offering of interests in the Investment. The interests in the Investment are subject to restrictions on transferability contained in the Offering Package. Neither the Sponsor nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein and nothing contained herein shall be relied upon as a promise or representation whether as to the past or future performance. No representations are made as to the accuracy of any targets, estimates, approximates or projections or that such targets, estimates, approximates or projections will be realized. Forward-looking statements are based upon certain assumptions and information available on the date hereof. Actual events are difficult to predict and may be beyond the Sponsor’s control. The information contained herein does not purport to contain all of the information that may be required to evaluate an investment in the Investment and any recipient of this document is encouraged to read the Offering Package and should conduct its own independent analysis of the data referred to herein prior to making an investment in the Investment. Prior to the sale of interests in the Investment, the Sponsor will give investors the opportunity to ask questions and receive answers concerning the terms and conditions of an investment in the Investment and other relevant matters and to obtain any additional information (to the extent that the Sponsor possesses such information or can obtain it without unreasonable effort or expense) necessary to verify the accuracy of the information in this document. Each prospective investor should consult its own attorney, business adviser and tax adviser as to legal, business, tax and related matters concerning the information contained herein including the merits and risks involved with an investment in the Investment. The Investment involves a high degree of risk. Participation in the is suitable only for sophisticated investors and requires the financial ability and willingness to accept the high risks and lack of liquidity inherent in an investment in the Investment. Investors in the Investment must be prepared to bear such risks for an indefinite period of time. No assurance can be given that the Investment’s objectives will be achieved or that investors will receive a return of their capital. There will be no public market for interests in the Investment, and interests in the Investment will be subject to strict limitations on transfer. Investors should regard their interests as illiquid, and investors should not invest in the Investment unless they are prepared to lose all or a substantial portion of their investment. All track record and prior investment performance is subject to and qualified by the following: Any reference to a targeted or projected NOI, cash flow, annual return, IRR, or multiple of invested capital contained in is merely an estimated “target” and inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those predicted or anticipated. While the targeted performance is based on assumptions that the managing member believes are reasonable, the actual returns will depend on a very broad range of factors applicable to individual investments. There are risk factors that could cause certain assumptions to prove to be incorrect, which may include, without limitation: (i) changes in government policies and government activities in the debt markets; (ii) changes in interest rates; and (iii) economic and market conditions. No assurance, representation or warranty is made by any person that any targeted returns will be achieved, and no recipient of this document should rely on such targets. Unless otherwise stated, all financial information provided herein is unaudited. All references, if any, to net investment returns reflect returns on an investment-by-investment basis. There can be no assurance that unrealized investments will be realized at the valuations used to calculate the net investment returns contained herein and transaction costs connected with such realizations remain unknown and, therefore, are not factored into the calculations. Past performance of investments made by persons affiliated with the Fund is not indicative of future results and there can be no assurance that the Fund will achieve results that are comparable to any prior investment described herein.