Investing with Atlas Real Estate Partners presents a significant opportunity, but it’s crucial for prospective investors to fully understand the inherent risks involved. This analysis outlines the critical risk factors associated with investing in the Fund (referred to as the “Fund”), emphasizing that it is designed for investors who can tolerate substantial financial risk, including the potential loss of their entire investment. Before making any investment decisions, it is imperative to thoroughly review the Private Placement Memorandum, Operating Agreement, and Subscription Agreement (collectively, the “Fund Documents”) for a comprehensive understanding. The information provided here is a summary and is qualified in its entirety by the details within the Fund Documents.
No Guarantee of Investment Returns and Potential for Complete Loss
Atlas Real Estate Partners cannot guarantee successful investment selection, execution, or realization within any specific asset or portfolio. Consequently, there is no assurance that the Fund will generate returns for its investors or that these returns will adequately compensate for the investment risks undertaken. Investors should be aware that receiving any distributions from the Fund is not guaranteed. Therefore, investment in this Fund is only appropriate for individuals and entities financially positioned to absorb a complete loss of their invested capital. Past performance of investment entities linked to Atlas or its affiliates should not be interpreted as indicative of future results or a guarantee of future success.
Returns May Diverge from Past Atlas Investment Performance
It is important to note that the Fund’s investment returns may not mirror the historical performance of previous investment vehicles managed by Atlas Real Estate Partners. Prior Atlas vehicles typically focused on single assets and were not discretionary funds like the current Fund. Significant distinctions exist between the risk and return profiles of single-asset vehicles and discretionary funds. Furthermore, the fee structures and sponsor compensation models can vary between these types of investment structures. Investors must recognize the potential for losing all or part of their investment across any of the Fund’s holdings.
Investments Are Currently Undefined
The Fund is a discretionary investment vehicle, meaning the specific assets targeted for investment may not yet be identified at the time of investment. Investors in the Fund will not have pre-approval rights over the investment decisions made by Atlas Real Estate Partners. Investment choices are at the discretion of the Fund managers.
Investment Illiquidity and Long-Term Commitment
An investment in the Fund is inherently illiquid, requiring a long-term financial commitment without any certainty of return. Atlas Real Estate Partners anticipates a considerable timeframe between the Fund’s initial capitalization and when investors might receive distributions, if any. Furthermore, the types of assets the Fund intends to invest in are themselves illiquid and are expected to remain so for an extended period. Market conditions, volatility, legal regulations, and other factors could impede the Fund’s ability to liquidate investments promptly or at favorable prices. Selling these investments might involve delays, additional costs, and potentially require substantial price discounts.
Reliance on Key Personnel at Atlas Real Estate Partners
The Fund’s success is heavily reliant on the expertise and experience of Atlas Real Estate Partners and its key personnel. There is no guarantee that the current team will remain with Atlas or its affiliates throughout the Fund’s duration. Similarly, the composition of the Fund’s investment committee may change over time. Disagreements among the management team could negatively impact investment outcomes, as could the loss of key personnel. Additionally, it’s important to note that Atlas personnel may be involved in other business activities beyond managing this Fund.
Risks Inherent in Real Estate Markets
All real estate investments carry inherent risks. Real estate assets are relatively illiquid, which can limit the Fund’s ability to quickly adjust its portfolio in response to evolving economic or market conditions. There is no assurance that the fair market value of the Fund’s real estate holdings will not decline, or that the Fund will realize full value if forced to sell assets for liquidity purposes. Additional risks include changes in zoning laws, building codes, environmental regulations, governmental policies, operating expenses, real estate tax rates, interest rates, mortgage availability and costs, energy prices, shifts in property popularity, ongoing capital improvement needs, cash flow fluctuations, construction risks, and unforeseen events such as natural disasters, war, terrorism, civil unrest, uninsurable losses, and other factors beyond the control of Atlas Real Estate Partners and its management team.
Tax Risks Associated with Opportunity Zone Provisions
The Fund is structured to potentially benefit from the Opportunity Zone program and intends to operate as a Qualified Opportunity Fund (“QOF”) under Subchapter Z of the U.S. Internal Revenue Code. However, there is no guarantee that the Fund will qualify as a QOF, or that investors will actually realize the anticipated tax benefits of the QOF program even if qualification is achieved. Furthermore, compliance with QOF regulations could negatively affect the Fund’s overall performance. Atlas Real Estate Partners reserves the right to modify its investment strategy and asset acquisition program to comply with any future legislative changes or administrative guidance related to Opportunity Zones.
