How the Catalyst Fund is Positioned for Durability


The Catalyst Strategic Credit Fund

 

In today’s market, lending to your own projects can understandably raise eyebrows—especially as some managers create debt vehicles to rescue distressed assets they can’t otherwise support. But at Alpha Equity Group, this alignment isn’t a red flag—it’s a feature of our strategy.


The recent rate hike cycle has left many borrowers scrambling to refinance short-term or maturing long-term debt in an elevated higher interest rate environment. In response, some sponsors are turning to investor-backed debt vehicles to bridge or recapitalize their own deals. The problem? In many of these cases, these new vehicles exist because traditional lenders can’t offer loan proceeds high enough to pay off the existing debt, forcing asset sales or large equity infusions. And many of the groups raising these funds have limited operating history or questionable track records. 


At AEG, we are operators and risk managers first. We don't find ourselves in forced-sale scenarios because we actively anticipate market shifts and manage our portfolio conservatively. We grow methodically, price risk continuously, and prioritize downside protection above all else.


The Catalyst Strategic Credit Fund was designed to provide investors with strong, yield-focused returns backed by real collateral and conservative underwriting. Simply put: we’d rather pay our investors than a bank. We could be raising a development equity fund right now—but in a volatile market, we’d rather shoulder the development risk ourselves and give our investors safe, predictable positions. That’s true alignment.


Our vertically integrated model ensures end-to-end accountability—we underwrite the loan, but we also design, build, and deliver the asset. That level of control reduces execution risk and keeps our interests fully aligned with our investors.


Unlike traditional debt funds chasing volume to earn fees on capital deployed, our compensation is tied to performance, not scale. We've intentionally built a structure that discourages over-lending. We’re not aiming to place as many loans as possible—we’re focused on making the right ones.


This fund isn’t about chasing growth. It’s about disciplined execution. We’d rather do one great deal with high certainty than ten mediocre ones. That’s how we protect capital, deliver strong risk-adjusted returns, and build lasting trust with our investors.


Because for us, it's not just about being involved—it's about being invested.

 

1. Alignment of Interests


As Managers and Borrowers of the Fund, we only make money if the projects succeed. Because our Fund charges no fees, our profits are tied to retaining healthy profit margins of our projects. This approach ensures we are extra risk conscious and selective in our pursuits. Taking unnecessary risk is impossible to justify, and we will liquidate or move positions if our margins are threatened. Our investors get paid first, always, before we make a dime. 


2. Enhanced Oversight and Control


Managing both the development and financing aspects allows for streamlined decision-making, direct oversight, and efficient problem-solving. This dual role facilitates proactive risk management, construction management, and swift responses to any challenges that may arise during the project lifecycle.


3. Ultra Selective Project Selection


Despite our involvement in the projects, we maintain stringent underwriting criteria equivalent to third-party lending standards. Each project undergoes thorough due diligence, including independent appraisals and feasibility studies, to ensure its viability and profitability. 


4. Transparent Disclosure Practices


We are committed to full transparency with our investors. All related-party transactions are clearly disclosed, and detailed information about each loan position is readily available. We provide monthly distribution statements, quarterly updates and financials, and annual audited financials. As Managers, we make ourselves readily available to speak to investors outside of our reporting. 


5. Proven Track Record


Our integrated construction model has consistently delivered strong returns for our investors. By controlling development, financing, and construction, we have successfully completed numerous projects on time and within budget, demonstrating the efficacy of our approach.

INSERT – tiny graphic or illustration / design highlighting $32M in capital raised and 40% median gross unlevered IRR.

Building to Hold vs Building to Sell

By Christian O'Neal • July 31, 2025
Why Building and Holding Real Estate for the Long- Term Delivers Superior, Tax-Efficient Yield 

Rent Control - Does it Work?

By Christian O'Neal • July 31, 2025
Rent Control: A Well-Intentioned Policy That Misses the Mark In the debate over affordable housing, few policies stir as much emotion—or controversy—as rent control. Advocates see it as a way to shield tenants from rising rents. Critics argue it does more harm than good. When you examine the economic evidence and real- world outcomes, the conclusion becomes clear: rent control is a deeply flawed solution to a real problem. What Is Rent Control? Rent control is a policy that limits how much landlords can increase rent, either through caps tied to inflation or fixed annual percentages. On paper, it sounds compassionate: protect renters from displacement and make cities more affordable. But in practice, rent control reduces the supply of available housing, discourages new development, and often hurts the very people it's meant to help. Why Rent Control Backfires 1. It Discourages New Construction Developers are less likely to build in markets where future rent growth—and thus returns—are capped. Why take the risk of developing multifamily housing in a city where your upside is limited and your operating environment is politicized? 2. It Drives Property Owners Out of the Market Faced with strict rent regulations, landlords may convert rental units to condos or remove them from the market altogether. Fewer units mean more scarcity, which ultimately drives prices higher for everyone else. 3. It Distorts Housing Allocation Rent control encourages long-term tenants to stay in apartments they might otherwise outgrow or vacate. This locks up valuable housing stock and prevents more dynamic turnover, often freezing lower-cost units in place for higher-income tenants. 4. It Creates a Two-Tiered Market Markets with rent control often develop into two separate ecosystems: regulated apartments that are underpriced and hard to find, and unregulated units with inflated prices to compensate for suppressed supply. The California–New York Split: A Tale of Two Approaches Historically, California and New York have been peers in over-regulating rental housing. But recently, they’ve taken different paths: California's Recent Steps Forward:  Voters rejected rent control expansion (Prop 21 and earlier Prop 10)  Streamlined approvals and reduced CEQA abuse to promote new development New York's Recent Moves Backward:  Passed “Good Cause Eviction” law—effectively rent control in disguise  Political calls for rent freezes and demonization of landlords If you’re an open-minded apartment developer evaluating both markets today, California’s message is increasingly: We need you. New York’s? Not so much. To be fair, both are still difficult places to build housing, and cities like Los Angeles and Berkeley remain deeply anti-development. But California has shown progress by recognizing that you can’t claim to be pro-housing while simultaneously vilifying those who create and operate it. A Misalignment of Incentives A core problem with rent control is that it treats housing supply as fixed and ignores the private sector's role in expanding it. If developers and operators are stripped of potential upside—and burdened with unpredictable political risk—they simply stop building. Even well-intentioned pro-development plans (like NYC’s "City oare undermined when operators believe they’ll be punished after delivery through hostile regulation or public scorn. You can't be truly pro-development unless you're also pro-operator. Policies that foster collaboration, not scapegoating, create the conditions for long-term affordability. The Real Way Forward Instead of imposing artificial caps, cities should focus on increasing housing supply through zoning reform, expedited approvals, and public-private partnerships. The more units that come online, the more pricing power shifts away from landlords and toward tenants—naturally. Rent control is seductive in its simplicity but devastating in its consequences. It’s a policy that tries to solve a supply problem with demand-side restrictions—and in doing so, it often makes things worse. At Alpha Equity Group, we believe that smart, sustainable development is the key to housing affordability. And that requires sound economics, not political theater.

Into the Future – Making Sense of Rates in a World That Doesn’t

By Christian O'Neal • June 24, 2025
In the world of capital markets, clarity is often fleeting — and today, it feels downright elusive. The Federal Reserve’s latest June dot plot offered little in the way of certainty. While the median projection sees the Federal Funds Rate in the mid-3% range by the end of 2026 , the dispersion among voting members is striking. Seven members predict no rate cuts in 2024 , reflecting just how divided the committee remains in the face of conflicting data. This latest update marks a 25-50 basis point shift downward from May , but the overarching theme is one of caution, not conviction. That sentiment is mirrored in the economic projections. Core PCE inflation , the Fed’s preferred inflation measure, is now expected to end 2025 at 3.0% , 30 basis points higher than earlier forecasts. Meanwhile, real GDP is forecast to slow from 2.3% in Q4 2024 to just 1.7% in 2025 — another sign that the lagged effects of monetary policy are expected to begin to show. At the same time, the Fed’s balance sheet has shrunk dramatically, from a peak of $9 trillion in April 2022 to just $2.3 trillion today . That quantitative tightening, coupled with a lack of consistent inflation suppression, leaves both equity and bond markets vulnerable to further volatility. This all feeds into an uncomfortable truth: rates are likely to remain higher for longer , and the market is struggling to price that reality. The VIX index , a 30-day forward-looking gauge of volatility in equities, is trending higher. When volatility rises even as indices fall, credit spreads widen , liquidity tightens, and financing risk surges. For commercial real estate investors , this has enormous implications. As we explored in our recent article on CRE Price Discovery , the market remains in flux. The bid-ask spread in real estate is still somewhat wide, and most transaction activity today is being driven by maturing debt — not opportunistic investments banking on future growth. This means valuations are being forced downward, especially for assets that were purchased or refinanced at ultra-low rates in 2021–2022. Consumer behavior is also in transition. Household formation is slowing, and personal savings rates are slowly ticking up although they are significantly down from longer term averages – which could reflect folks bracing for economic turbulence. U.S. household formation currently stands at 1.058 million, down 7.68% from last month’s 1.146 million and down 47.73% from 2.024 million a year ago. Looking globally, demand for U.S. Treasuries remains a critical economic indicator that has trickling effects on the economy . A strong bid-to-cover ratio — like the 2.67x seen at the June 11th 10-Year Treasury auction , with nearly 88% of bids from foreign banks — is encouraging. It suggests continued faith in U.S. fiscal credibility and currency strength despite market apprehensions in our strength, such as the US credit rating being downgraded by Moody’s. This equilibrium is rather fragile. Should the U.S. continue to run massive budget deficits with a debt-to-GDP ratio north of 120% , investors may begin to demand higher yields — or worse, seek refuge in alternative stores of value. Gold is one such store. The World Gold Council recently reported that 76% of central banks expect to increase their gold holdings over the next five years , up from 69% in 2023. This flight to real assets reflects growing concern about the long-term value of fiat currencies — and a desire to hedge against systemic risk. The Bottom Line  Rates are likely to remain high through 2025 and into 2026 Inflation remains persistent but progress has been unclear Growth is slowing, and volatility is rising Real estate is repricing around debt maturity events Global capital is shifting cautiously, looking for safety At Alpha Equity Group, we believe this is a time for discipline, not risk-taking. We’re staying patient, watching the data, and investing defensively — focusing on secured debt positions and capital preservation. While others chase uncertain upside, we’re building long-term value through downside protection while we wait out the convergence of dozens of factors completely outside our control.
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