Alpha Investment Inc.

What they do

The company intends to originate commercial real estate loans (first mortgages, subordinate financings, and other CRE debt) but has not completed any transactions through its SPV as of December 31, 2022. It plans to coordinate with loan brokers and origination firms, and may also engage in opportunistic equity financing. Operations are not currently generating meaningful revenue.

Revenue drivers

• Commercial real estate lending (planned) — No loan receivables or interest income; loan receivable balance is $0 as of March 31, 2024. The SPV formed in 2019 has never completed a transaction.

Recent performance

For the three months ended March 31, 2024, the company recognized $1,650 in income (compared to $0 in 2023) and incurred $106,885 in operating expenses. Total assets were $297 (all cash), total liabilities were $5.0 million, and shareholders' equity was negative $5.5 million. Accumulated deficit was approximately $11.1 million. Annual net income for 2023 was -$512,978, and operating cash flow was -$32,526.

Strategy

The company plans to raise substantial capital through private/public equity, debt, or joint ventures to fund lending operations. It targets commercial mortgage loans secured by office, retail, industrial, multi-family, and hospitality properties. Underwriting focuses on stressed cash flows, debt yields, DSCR, LTV, and property quality. It also has a joint venture with Alameda Partners (10% interest) intended to support loan acquisitions, but the SPV has been inactive.

Risks

• No revenue operations — The company has generated minimal income and has zero loan receivables, indicating its intended lending business has not started.
• Negative equity and liquidity — Shareholders' equity is -$5.0 million and cash is only $297, which severely limits the ability to fund operations or meet obligations.
• Litigation exposure — The company is involved in several legal proceedings, including default judgments of $1.5 million and $1.0 million, and a claim for $144,147 plus interest.
• Dependence on related-party funding — The principal stockholder (Omega) paid $28,110 of company expenses in Q1 2024; without such support, the company may not continue.

Outlook

Management states the company expects to require substantial capital and cannot assure it will raise it on favorable terms. If capital raising fails, it may be unable to honor funding commitments or be forced to curtail operations or consider strategic alternatives. No forward-looking guidance is provided on when lending might commence.