Allagash Opportunity Zone Partners LLC was founded in 2018 to offer investors a series of right-sized, cost-effective Qualified Opportunity Funds (“QOFs”) over the full 10-year investment window of the Opportunity Zone (“OZ”) Program. Each fund is designed with a focused strategy, cohesive investment process, and realistic exit plan so that investors may generate compelling outright and risk-adjusted returns. Allagash, which is a Registered Investment Adviser with the SEC and in the process of becoming a Community Development Entity with the CDFI Fund at the U.S. Treasury, was formed by five highly experienced commercial real estate, investment management, and financial markets professionals who each have over 30 years of experience and who have worked and/or transacted together for up to 20 years. Allagash’s Founders are drawing on their deep expertise investing into low- and moderate-income (“LMI”) communities to create funds whose returns are based upon a formula of identifying Opportunity Zone real estate value, buying properties opportunistically, renovating or developing intelligently, and managing stabilized properties efficiently. By providing a series of QOFs in this manner, Allagash expects to promote a win-win proposition resulting in both significant community development and consistent and repeatable opportunities for investors to accelerate the pace of their after-tax wealth generation.
Allagash seeks to utilize its expertise, experience, and diligence to provide a wide range of investors – alternative and traditional, institutional and HNW – with investments that serve both to preserve capital and to generate compelling returns by investing into and improving Commercial Real Estate in LMI communities in ways that maximize the benefit both for the investor and to the community being invested into.
Principles and Precepts
Allagash Opportunity Zone Partners was founded on two principles:
- Investing into commercial real estate in LMI communities provides investors with opportunities that can generate outsize returns without exposing investors to excessive risk.
- Working with residents to revitalize their communities serves the communities being invested into, enhances investment returns, and reduces investment risk.
We adhere to several precepts:
- Investment capital belongs to our clients.
- Investment reward is always associated with risk.
- Value creation starts with a compelling investment idea.
- Fund structure must be appropriate to each investment and each investor.
- Return realization depends on rigorously adhering to an explicit and precise investment process.
- Every investment needs an identifiable and realistic exit strategy.
- Clients must be informed and client feedback must be taken into account during each step of the investment management process.
Allagash’s founders believe that the Class B+ through Class A commercial real estate investment opportunities in the largest markets around the U.S. have generally become fully valued. As a result, these properties, which represent the core CRE investments for investors over the last decade, no longer offer compelling returns or risk-return profiles. In contrast, properties serving less affluent communities, especially those in mid-sized metropolitan areas, have seen dramatically less capital investment for decades and have not significantly appreciated in price during the current economic rally. These properties, with trillions in untapped value, present opportunities for investors to generate outsized returns without taking additional risk.
Fund Creation Process
Allagash believes that a CRE Investment Manager has specific avenues for alpha creation with respect to any individual property (in decreasing order of importance):
- Buy Well
- Intelligently Develop and/or Add Value
- Manage Efficiently
- Sell Fully-Priced
With respect to the first and most important of these, buying well, Allagash understands that focusing on the undervalued assets in LMI communities, properties which often have seen no capital investment in over 40 years, should give investors the highest probability of both preserving capital and creating outsized returns.
Possessing the expertise to manage both CRE development and value-add investments while being agnostic to location and CRE sector, Allagash plans to offer a series of Funds ranging throughout the CRE investment spectrum over the 10-year investment window of the Opportunity Zone Program. In the construction of these QOFs, Allagash plans to seek the investment opportunity at each point in time that in the partners’ opinion provides the best potential for the firm to preserve investor capital and generate compelling returns for investors while having a positive impact on the communities being invested into. In choosing each strategy, the partners will be considering (1) the ability to source assets and create the investment portfolio at a reasonably discounted price, (2) the capability of Allagash and the boots-on-the-ground construction and property management providers to intelligently renovate or develop and then efficiently manage every property, and (3) the exit strategy for the asset or portfolio being considered. As part of this process, Allagash will seek to engage the local communities into which each Fund will be investing capital in order to foster the most productive environment for both the communities and the investors.