OpenPath Announces Milestone Portfolio Sale

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Dear OpenPath Investor,

I’m incredibly pleased to report that OpenPath (OPI) successfully closed on the sale of 7 properties to a single Buyer last week with an 8th property to follow in Q3. If you’re receiving this email it means you’re involved in one or more of these dispositions. OPI was approached nearly 18 months ago by a Beverly Hills-based investor group whose goal is to launch a private REIT platform beginning with the acquisition of 8 of our properties. This Buyer raised domestic and international equity capital alongside a single, large bridge/acquisition loan. This is no small event for OPI’s platform as well as for you, our investors! We aggressively priced each asset and nonetheless were able to realize the full asking price across the board. It should also be noted that, in each case, the Buyer assumed all prepayment costs associated with the early payoff of the underlying loans. Up until this point, OPI’s IRR track record, since inception of the firm in 2005, averaged 33% — yet with these recent sales we expect that average to climb into the 40%+ range. As you know, OPI is very mission-centric relative to the Urban Village program we’ve developed to asset manage and create a true Impact Investment vehicle which addresses social and environmental initiatives at each property. Through our negotiations with the Buyer, we retained the rights to continue to run Urban Village for the first 12 months to maintain continuity at each community in hopes of demonstrating the value to the investment thesis to the new owner. This is a testament to the strength of the Urban Village program and its importance as an underlying mainstay for community resiliency at the property level.

This disposition marks a significant milestone for OPI in providing incredible returns along with liquidity to your investments. This was a long, painful process — yet, we have great news to share as a result. At this time, we’re busy cleaning up the books with regard to getting final numbers reconciled along with returns calculated in an effort to report to you. Please stay tuned as we’ll be presenting your individual returns along with the historical cash flow from each investment, and we plan to have this ready within the next 15 days. Below is a list of properties sold:

  • Aspenwood — Salt Lake City, UT
  • Holladay on 9th — Salt Lake City, UT
  • Hidden Cove — Layton, UT
  • Stark Street Crossing — Gresham, OR
  • Cheyenne Crossing — Colorado Springs, CO
  • Waterstone — Mesa, AZ
  • Park Village — Mesa, AZ
  • Ventana Palms — Phoenix, AZ — closing to occur in 3 to 4 months

Hidden Cove, Holladay on 9th & Aspenwood will all pay out by returning investor capital within the next 15 days; the others will be held for reinvestment through the 1031 tax deferred investment process. If you’re invested in those deals that we’ll attempt to reinvest, you’ll be given the opportunity to review and approve the new investment “up-leg” or opt to take your cash instead of reinvesting. We have 45 days to identify new investments and 6 months to close in order to qualify for the 1031 tax deferred program. At this time, we have several new opportunities we’re beginning to negotiate in hopes of securing strong investments options for your consideration. As a Sponsor, we will have significant personal capital tied up in these “exchange” properties as well — which is to say that our interests remain well aligned in finding prudent investments going forward. Should we fail to procure sound reinvestment opportunities, we would then return capital after the 45 identification period ending July 23, 2017. It is my pleasure to share this milestone-worthy news with each of you, and please stay tuned for further updates.

Peter M. Slaugh
Managing Director
OpenPath Investments, LLC

Written by

Investor, Partner, Advisor. First Google Advertising Exec (2000–07), ex-Chicagoan. Now at OpenPath Investments & FullCycle Climate Partners

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