Six Peak IC Weekly Meeting

• The meeting focused on real estate financing, portfolio decisions, transaction execution, and the company’s future business strategy.
• Major discussions covered Reseda, the three-property portfolio, St.
• Nicholas and Evergreen, Uplifters fundraising, MRK’s handling of the Francis closing, and the balance between development and general contracting.
• For Reseda, two investors appeared receptive to a ground-lease structure, with efforts underway to improve tax-credit equity pricing toward $0.80.
• A 90-day extension could move the timeline into February, but debt and equity term sheets may be needed within approximately 45 days to support construction bidding around Thanksgiving and a March 1 groundbreaking.
• The team considered pacing bids to avoid stale pricing and had not yet approached Sydney’s group about taking the project.
• The three-property portfolio was estimated to be worth approximately the outstanding debt, with transaction taxes potentially producing a loss.
• The team did not want to contribute $6 million to right-size the debt.
• A formal hold-versus-sell analysis was expected before the debt maturity at the end of February, with a preference for proactively marketing the assets rather than waiting for lender action.
• St.
• Nicholas and Evergreen did not currently appear economically saleable because of Fulcrum’s substantial prepayment penalty.
• Cobble Hill expense controls remained a concern, including possible conflicts involving an on-site maintenance employee.
• Potoma was identified as a possible future manager and buyer.
• The Clump and Scott transactions had entered the bid process, although a January closing appeared more realistic than the buyers’ preferred timing.
• A potential 144-unit market-rate CityPads project in Culver City remained dependent on completing the capital stack and securing sufficient balance sheet support.
• Any construction role would require full investment committee review and could involve a credit-enhancement structure using Burns and C of O as general contractor without a competitive bid.
• Stifel proposed structuring Uplifters’ fundraising as a $30–40 million preferred or subordinated debt tranche for a tax-exempt municipal bond investor, plus a larger low-yield insurance-company tranche.
• Skylar viewed the raise as achievable, supported by Lee’s capital-markets relationships, potentially enabling lot purchases by year-end.
• Tri West’s single-family business remained strong in Hermosa and Manhattan Beach, where appreciation had exceeded 20% annually since COVID.
• The team noted that constrained supply, taxes, mobility, financing costs, and land basis would determine future economics, with single-family projects offering faster market delivery than multifamily projects.
• The 310 West 80th Street transaction was expected to close in mid-September, while Wilton had closed with Daniel taking the property and the team retaining limited LV exposure and a warranty through March.
• The Francis closing revealed that MRK failed to meet its expected funding obligation and poorly managed the closing statement and sources and uses.
• Because no capital call had been issued and the relevant agreement was unsigned, the team concluded that a proposed $30,000 cost-of-capital charge lacked sufficient support and could damage the relationship.
• The group favored moving away from an unhealthy 50-50 partnership toward construction deals or service arrangements while evaluating internally developed tax-credit equity capabilities.
• The team supported considering Walker & Dunlop to run equity and debt financing processes, recognizing that brokerage fees would increase project costs but could expand investor and lender access.
• Chris Aiello questioned the near-term upside of pursuing new deals and whether the company should shift toward general contracting.
• Steven Cooney said core and income real estate fundamentals had improved, but the opportunistic sectors aligned with the company’s track record remained unattractive.
• Development remains important for fee income, while general contracting could reduce that dependence; however, core investments would require substantial capital to generate meaningful owner distributions.
• Steven also retained interest in the LaTeX strategy, subject to greater confidence in guarantees, execution risk, tax-credit pricing, and third-party project performance.
• The company is considering offering money owed to Kruger as equity rather than repayment, allowing retained cash to reduce the facility, with a limited window to pursue the structure.
• The current operating model, including a 10% owner working excessive hours while supporting approximately 30 employees, was viewed as unsustainable.
• Finally, the New York office was considered too expensive at approximately $7,000 per month after Stain’s departure, and potentially excessive even at $5,000.
• Alternatives included a reduced Six Peak contribution, Daniel absorbing some or all of the difference, ending the lease, or using coworking memberships.

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