1. What is this fund and how is this different from PPR’s Income Fund Offering?
This is a 3c1 equity fund (limited to 100 investors) in an operating company platform focusing on the development of Tommy’s Express Car Washes in high growth markets. Our strategy is to grow our portfolio of car washes within +/- 5 years, aggregating them up to sell to a large institution as there is high demand for such portfolios by private equity institutions. This is not intended as a long-term hold investment, but rather build and sell.
2. How does an investor get paid?
Investor returns are derived from both the net operating cash flow of the car washes in the Fund as well as the equity appreciation realizeInvestor returns are derived from both the net operating cash flow of the car washes in the Fund as well as the equity appreciation realized upon exit (which we anticipate being the majority of the overall return on investment). The projected total return is based on our latest market intelligence of similar assets, which have achieved a 16x-26x exit multiple.
See Projected Returns on Page 9 and 10 of the Investment Summary.
3. How many car washes will be in the Fund?
There will be 5-6 car washes in the fund, however, we are on track to build a portfolio of 100+ car washes in which investors will benefit from the exit multiple of the entire portfolio. (The scale of the entire portfolio historically drives up the sales price of all car washes vs. selling as single site or a small portfolio).
4. Why are private equity institutions interested in the Express Car Wash space?
In recent years, the car wash industry has changed significantly with the introduction of the subscription model, advancement and implementation of technology and improved operational efficiencies; all of which has led to operating margins that are difficult to match in other industries.
5. What experience does the team have in this space?
Olympus Pines, the operating partner, is one of the largest developers and operators of Tommy’s Express car washes. The team consists of operations professionals with decades of combined experience in the car wash space.
6. What are the risks?
As with all real estate, location is key. Olympus Pine works closely with the team at Tommy’s Headquarters to help select attractive, high growth markets to grow our portfolio. The team focuses on Class A locations within those markets. While Tommy’s Express business model has already proven to be successful, we maximize risk mitigation and focus on locations with the highest probability to succeed (see details on site evaluation process on page 7 of the investment summary).
7. Are there tax benefits?
Yes. The car washes in the fund are eligible for aggressive depreciation benefits. These benefits will be realized once the locations are operational and will be passed to investors. Note that this is a development fund, and we expect it to take 12-24 months for each site to become operational. Due to the constant changes in the tax code, we have not provided depreciation estimates, however, based on prior experience, we have realized passive losses of more than 75% of invested capital within the first year a site is operational. Note: Passive losses typically may be carried forward into future tax years and may be used to offset passive income. Please consult with a tax professional for any accounting advice.
8. What is the hold time for the investment and when would we likely see upside?
We expect an approximate hold time of 5 years until an exit, based on Olympus Pines’ previous experience. It is possible that the term could be even shorter than that given projection.
9. When is the first distribution to investors projected to be made? How often are distributions paid?
Typically the first distribution to be paid approximately 24 months after funding the investment (which is the time it usually takes a car wash site to be built and stabilized), however in this fund we will have the first 2 car washes up and running by the end of 2024. So we expect the first distributions within the first 12-24 months which are scheduled to be sent quarterly (30-45 days after quarter end).
10. How are distributions taxed?
Distributions from net cash flow are treated as passive income and proceeds from an exit are treated as capital gains.
11. Do you accept qualified funds (Self-Directed IRA, 401K) as investments?
Yes, we have many investors who participate in our offerings using qualified funds.
12. What is the minimum investment?
The minimum investment is $100,000.
13. Is the fund buying or leasing land?
All the sites in this fund will be owned.
14. Is market saturation a concern?
The car wash industry remains highly fragmented. Independent reports, including those from consulting firms and investment banks that vigilantly cover the space, suggest that saturation is still over a decade away. Olympus Pines also focuses on areas with less saturation and prioritizes market density to create economies of scale.
15. Are these car washes environmentally friendly?
Tommy’s Car Washes are the most environmentally friendly car wash franchises with all buildings built to be LEED certified. Tommy’s Car Washes also reclaim and filter the majority of the water used in each wash. All chemicals and detergents are also biodegradable.
16. How are these car washes recession resistant?
Industry data shows that historically car washes are very resilient to recessions. We feel in our target markets that due to the Tommy’s subscription model, customers maintain their car wash routines even in economic downturns.