Welcome to your shot of all the best from Altea.
This week:
- An ask from me
- Deal updatex
- New opportunities
- In due diligence
- Funding Now
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Table of Contents
An ask from me
Over the last several months, I’ve built a proprietary AI agent to analyze deals.
Plug in a deal memo or deck and whatever other info you’ve got, and it’ll do a quick and dirty analysis of the opportunity.
It’s getting to the point where I need lots of deals to analyze and feedback on the output.
If you’ve got an opportunity you want some due diligence on and are happy to provide some feedback in return, please send through what you’ve got.
Deal update
Art I and Art II
Our art investments in 2024 have been unbelievably successful.
Art 1—our Ithell Colquhoun bundle—has sold another piece. Elemental, which we acquired for £25k in January, was sold for £51k last week. This is on top of Volcano (October) and Hyacinth & Cyclamen, and Amaryllis (both March).
This SPV has sold four of its seven pieces, generating an average return of nearly 100% in less than a year.
Art 2 – our Frank Auerbach self-portrait – is about to receive a tremendous boost from his passing this week.
But we’ve also missed out on several opportunities:
Leon Kossoff, “Hackney with Germany Hospital”
- Cost to acquire – £90,000
- Saleable value – £150,000
Three Phoebe Boswell original oils
- Cost to acquire – £222,750
- Saleable value – £500,000+
Frank Auerbach, “Mornington Crescent”
- Cost to acquire – £2.5 million
- Saleable value – £4.5 million, £8m+ today
We missed out for two reasons:
First, timelines.
Distressed and opportunistic sales come along frequently in the art world, but you need cash on hand to take advantage of them. Unfortunately, it takes time to fundraise and close an SPV, and by then the deal has gone.
Second, fees.
Typically both the broker and dealer take 10% on the purchase and the sale. So flipping art isn’t the always an obvious win.
Take the Kossoff above.
Why you buy it for £90,000, that ignores £18k of fees. The all-in price is £108,000.
Selling it for £150,000 generates another £30,000 in fees, £15,000 each to the broker and dealer.
A 67% gain evaporates, leaving investors with a less-impressive 11% tally.
So, I’ve created a vehicle that will solve both of these problems, and I’d like to invite you to participate.
New Opportunities
Art Opportunity I
Art Opportunity 1 solves – or at least mitigates – both these problems.
Here’s how it works.
First, we’re securing commitments for the $1 million fund, and the capital will be called when there’s an opportunity to invest in something special. Having cash on hand (or available quickly) means we can pounce on time-sensitive deals.
Second, I’ve made Nicho, our art broker, co-GP in Art Opportunity 3. He’ll get a relatively small retainer ($50k a year), but that flat fee doesn’t scale with transactions.
Cycling through $1 million would have cost investors $200k under a traditional model ($100k buying, $100k selling).
The retainer and carry model significantly reduces that, and the benefits will scale as profits are reinvested into new opportunities.
This is the strategy. This is a five-year fund focussed on obtaining and selling works of art at the highest possible IRR. As works are sold, funds will be returned to the dry powder keg for reinvestment at the next opportunity.
After five years, we’ll return all profits – minus carry and fees – to investors.
A real-life example of a work we’ll target:
We’ve got a deal teed up to kick off the fund, and it’s a good example of the sort of thing this SPV will target.
[Artist Redacted], Large Oil on Canvas
This is a distressed sale, so I can’t say much about the circumstances, but we have the opportunity to acquire an incredible piece of art by a former Turner Prize winner.
The price is £250,000 all-in, straight from the distressed seller. There are no acquisition fees.
The most recent comparable sale was earlier this year, for £381,000. We aim to flip this for £400,000+ in early 2025.
Why can’t the current owner sell for this amount? Because he’s a long-time collector, and the gallery will blackball him for flipping it. Also, he can’t wait until next year.
Deal Basics
- Minimum Investment: $10,000
- Projected IRR (Internal Rate of Return): 25% to 40%
- Total Investment Size: $1 million ($350k left)
- Management Fees: 0% to Altea members | 2% otherwise
- Carry: 20%
- Investment Type: Equity in an art investment fund
- Investment Duration: 5 years
- Name of Deal Sponsor: Altea in partnership with Nicholas “Nicho” Marks
Of the $1m target, we’ve got around $650k committed.
I’ve run the opportunity through our Deal Analyzing Agent (need a better name for this), and you can see the results here.
The Jackson Apartments Acquisition
This is a member-submitted deal that’s been through the AI Analyser ringer as well.
Deal Basics
- Minimum Investment: $50,000
- Projected IRR (Internal Rate of Return): Targeting 19% IRR, with an equity multiple of 2.36x over a 5-7 year hold period.
- Total Investment Size: Acquisition cost of $2.7 million with a $725,000 CapEx budget.
- Investment Type: Equity investment in a value-add multifamily property.
- Investment Duration: 5 to 7 years
- Name of Deal Sponsor: Ocean Ridge Capital
Brief Overview: Ocean Ridge Capital proposes the acquisition of The Jackson Apartments, an 86-unit Class C multifamily property located near Texas Tech University in Lubbock, Texas. The asset presents a value-add opportunity through operational improvements and renovations, capitalizing on its prime location and significant discount to replacement cost.
Why this Deal is Worth a Look: The Jackson Apartments offer a rare chance to invest in a mismanaged property secured at approximately 73% below replacement value in a growing market. Proximity to a major university and planned value-add initiatives position the asset for strong rental growth and capital appreciation, appealing to high-net-worth investors seeking superior risk-adjusted returns.
California Carbon Credits
This is an opportunity to generate annual income via carbon credits in a supply-constrained market locked in by California law.
Deal Basics
- Investment Size: $15,000,000 (Founder Class)
- Minimum Investment: TBD
- Potential IRR: 15% – 30%
- Deal Type: Carbon Allowances (Physical Ownership)
- Deal Duration: Evergreen (1-year lock-up, with early redemption fees)
Deal Overview
Access Environmental Capital is offering investors the opportunity to gain direct exposure to California Carbon Allowances (CCAs), the second most liquid compliance carbon market globally. This investment combines strong upside potential, downside protection, portfolio diversification, and positive environmental impact. The fund aims to capitalize on the expected shift from oversupply to undersupply in the CCA market in 2024/2025, potentially yielding 2-3x returns by 2030.
In due diligence
The Car Crowd – Three Ferraris
The Deal Basics
- Investment Size: ~$500k to $550k depending on currency fluctuations
- Investment Minimum: $10k
- Deal Duration: 4 years
- Management fees:
- Altea members: 0%
- Non-members: 10%
- Carry: 10%
Review the deal memo, which includes a thorough interview with the sponsors.
This opportunity involves investing in Ferrari vehicles, including the Ferrari 328 GTS, Ferrari Testarossa, and Ferrari 355 Berlinetta.
The investment makes money in two ways:
- Asset appreciation
- Geographic arbitrage
These are highly coveted models in the collectible car market, recognized for their strong appreciation potential due to limited production, provenance, and iconic status in popular culture. The sales strategy hinges on purchasing in the UK, where high-spec left-hand drive (LHD) Ferraris are undervalued, holding them for four years, during which they are expected to appreciate, and then selling them at US-based auctions for a considerable premium.
Wrapping Up Now
Launch Film Bridge Fund
We’re closing the doors on this one next week. If you want to invest but haven’t yet, you can do that here.
Deal Basics
- Investment Size: $5,000,000
- Minimum Investment: $20,000
- Potential IRR: 20% to 40% (depending on performance and share class)
- Deal Type: Debt (Bridge Loans)
- Deal Duration: 5 years
- Recent Performance: View
- Deal Memo: Access
Coming soon…
🏇 Horse pin-hooking
🍷 Wine trade finance
That’s it for this week. Please let me know if you have any questions, comments, or suggestions.
Cheers,
Wyatt, Stefan, and John
