Investment Highlight
The Borrower Payment Dependent Note is issued by Alphax Debt Fund, operating under Regulation D, Rule 506(C), with CIK number: 0001957103
The Note offers security through a loan collateralized by the underlying asset. LTC<43%. LTARV <34%.
The project has successfully obtained entitlements and is now ready for construction, thereby substantially mitigating pre-development risks.
AlphaX Debt Fund conducts comprehensive due diligence, including loan underwriting, borrower credit analysis, and implements recovery actions in the event of borrower default.
Ideally situated in downtown Buena Park, the project benefits from its proximity to the I-5 freeway and nearby retail hubs for optimal accessibility and convenience.
Investment Summary
Type | Borrower Payment Dependent Note |
Underlying Asset | 18 Townhomes |
Project Plan | Ground-up development |
Underlying Security | 1st Position |
Borrower | Resinova TH Inc |
Investment Offering | $4,440,000 |
Min. Investment | $50,000 |
Annual Return | 10%/per annum |
Term | 12 months |
LTARV | 33.5% |
LTC | 42.4% |
7682 & 7692 9th Street, Buena Park, CA 90621 is an 18-unit townhouse community development project, which includes 2 units of affordable housing currently not for sale. The developer (borrower) is undertaking the project in four phases. Phase 1 was commenced in November 2023, with major works including land acquisition, design, utilities, grading, and construction of the first four townhomes, which are expected to be sold out by September 2024. Each unit is priced between $820,000 and $830,000. The following phases—comprising 4 units in Phase 2, 4 in Phase 3, and 6 in Phase 4—are scheduled to be developed sequentially and anticipated to be completed and sold by December 2024, March 2025, and June 2025, respectively.
The project currently holds a loan of ~ $2.2 million, which is due in September 2024. AlphaX Debt Fund plans to raise the debt investment through Borrower Payment Dependent Note to replace the existing loan of $2.2 million and further fund $2.2 million construction works for Phase 1, 2,&3 (including but not limited to the road, foundation, framing, roofing, interior, landscaping, etc). The total loan amount is expected to be ~ $4.44 million. The AlphaX Debt Fund expects to make five construction draws.
April 2024 | ~ $3,000,000 |
May 2024 | ~ $357,000 |
June 2024 | ~ $357,000 |
July 2024 | ~ $357,000 |
August 2024 | ~ $357,000 |
This note carries an interest of 10% per annum, payable monthly, with a maturity date of March 2025 (12 months). The developer may repay the loan ahead of schedule based on the progress of the project, and AlphaX Debt Fund will not charge any prepayment penalties. Additionally, AlphaX Debt Investment Fund reserves the right to extend the term if necessary.
As a noteholder, you will become an investment partner of the AlphaX Debt Fund. In addition to regularly receiving interest payments from the developer, in the event of a default, AlphaX Debt Fund will engage directly with the developer to negotiate and devise solutions, including project foreclosure, to protect the investors' interests to the greatest extent possible, while saving investors the time and effort.
The latest cost to date,budget and capital stack
*The following chart may not represent the final usage of the funds for the project. The figures are provided for investors' reference.
Use of Capital | Source of Capital | ||||
Total | Cost to Date | Remaining budget | loan | Borrower’s Equity | |
Land Purchase | $3,200,000 | $3,200,000 | $0 | $877,000 | $2,323,000 |
Soft Costs, property tax and insurance | $2,098,000 | $1,770,000 | $328,000 | $1,542,000 | $556,000 |
Construction Costs | $4,574,000 | $0 | $4,574,000 | $1,430,000 | $3,144,000 |
Financing Costs | $589,000 | $107,000 | $482,000 | $589,000 | $0 |
Total | $10,461,000 | $5,077,000 | $5,384,000 | $4,438,000 | $6,023,000 |
LTC=42.4%
LTARV=33.5% (based on the projected total sale revenue of $13.25 million for 16 townhomes)
Property Details
Project Address: 7682 & 7692 9th Street, Buena Park,CA 90621
Project Type: 18 Unit Townhome Community
Total Site Area: 30,039 Sq.ft
Average Gross Living Area/unit: ~2,247 Sq.ft to 2,257 Sq.ft
Average Bedrooms: 2-3
Average Bathrooms: 2-3
Average Garage Size: 508-516 Sq.ft
Project Address: 7682 & 7692 9th Street, Buena Park,CA 90621
Project Type: 18 Unit Townhome Community
Total Site Area: 30,039 Sq.ft
Average Gross Living Area/unit: ~2,247 Sq.ft to 2,257 Sq.ft
Average Bedrooms: 2-3
Average Bathrooms: 2-3
Average Garage Size: 508-516 Sq.ft
Property
Details
About the Developer (Borrower)
Resinova TH Inc is a boutique real estate development and investment company based in Irvine, California with currently over $100 million in assets under management. The seasoned management team boasts a track record of successfully completing more than 300 projects in recent years. Specializing in the Southern California region, Resinova TH Inc focuses its expertise on the flipping of residential properties, as well as both additions to existing structures and new ground-up construction projects.
AlphaX Debt Fund has verified the developer’s track record and liquid assets of $10 million+.
The borrower’s credit scores is 736
Risk
Prior to making any investment decisions, it is imperative to attain a comprehensive understanding of the inherent risks associated with each investment within the portfolio. We strongly encourage you to conduct thorough due diligence on each deal and seek guidance from your investment, tax, and legal advisors before proceeding with any investment.
Construction Risk:
Risk: Delays, cost overruns, or unforeseen issues during the construction phase
Mitigation: The sponsor has signed the development agreement with Anchor Builder (License: 714-592-5126), a national full-service construction and ADU builder. Since 2005, Anchor Builder has been creating stunning, functional spaces for clients around the world. The firm works closely with clients to understand their needs, preferences, and lifestyles, and to develop personalized design solutions that reflect their unique vision and style.
Credit Risk:
Risk: Potential default by the borrower on the loan
Mitigation: The sponsor''s track record is underscored by an absence of defaults in previous loans, reflecting a meticulous adherence to sound financial practices and stringent underwriting standards. The sponsor’s demonstrated capability in successfully managing loans and navigating the intricacies of real estate financing serves as a compelling assurance of its commitment to mitigating default risks.
Conflict of Interest
THIS OFFERING INVOLVES SIGNIFICANT RISKS WHICH ARE DESCRIBED IN DETAIL HEREIN. PROSPECTIVE PURCHASERS OF MEMBERSHIP INTERESTS AND NOTES SHOULD READ PRIVATE PLACEMENT MEMORANDUM CAREFULLY AND IN ITS ENTIRETY.
Fund Loans to Affiliates
The Fund intends to lend to its Affiliates. The concentration of loans that are to Affiliates may be more than a majority of the portfolio of loans. The Fund acknowledges these transactions are not arms-length and present a potential conflict of interest. For these reasons the Manager will use its best efforts to ensure that it acts in the best interest of the Fund in credit decisions, underwriting, default and foreclosure.
Other Companies, Partnerships, or Businesses
The Manager and its managers, principals, directors, officers, or affiliates may engage, for their own account or for the account of others, in other business ventures similar to that of the Fund or otherwise, and neither the Fund nor any Member or Noteholder shall be entitled to any interest therein. As such, there exists a conflict of interest on the part of the Manager because there may be a financial incentive for the Manager to arrange or originate transactions for private investors, other mortgage funds, and/or Affiliate funds. Further, the Manager may be involved in creating other mortgage or real estate funds that may compete with the Fund.
The Fund will not have independent management and it will rely on the Manager and its managers, principals, directors, officers, and/or affiliates for the operation of the Fund. The Manager and these individuals/entities will devote only so much time to the business of the Fund as is reasonably required. The Manager may have conflicts of interest in allocating management time, services, and functions between various existing companies, the Manager and any future companies, which it may organize as well as other business ventures in which it or its managers, principals, directors, officers, and/or affiliates may be or become involved. The Manager believes it has sufficient staff to be fully capable of discharging its responsibilities.
