While scanning the tv channels late night I ran into this commercial on America's Next Investment about investing in a Atari Hotel for gamers starting in Phoenix and other places.
What's your take on this?
Extremely suspect. Dare I say, a cash grab.
SEC disclosure is here:
https://www.sec.gov/Archives/edgar/data/1991899/000121390025123720/ea0269256-2
53g1_central.htm
Red flags:
-Who are the customers?
Atari is long dead and its name is out of the memory of all but a few retro enthusiasts. And they're doing this in Phoenix? They are trying to raise $125,000,000 and that's just to cover the building of it, and that's not to say anything about ongoing maintenance costs, utilities (mega power bill being in Phoenix)P, taxes, payroll, and so on. Also $125M will probably not be enough. "We will depend on substantial additional financing using leverage to fully develop and construct the Phoenix, Arizona-based Atari Hotel even if we raise the Maximum Offering Amount of Units, and the aggregate leverage we employ to finance the hotel" i.e. If we don't get enough money out of investors we're going to finance the rest. Good luck!
-No timeline on timetable for returns: Concerningly, the numbers they are projecting for return on investment on the website are not in the SEC filing, and they are very, very aggressive and assumes flawless execution in a roaring economy in a cryptobro's wet dream. 5.8x return and 57% IRR in 5 years. Ain't no effing way.
-From the disclosure: "As such, our Unitholders have zero to a significantly limited ability to remove our Manager as manager of the Company or Main & Main and may continue to have zero to limited ability to remove the Manager for the foreseeable future."
Translation: If we're incompetent custodians of your investment, too bad.
-Nothing to do with Atari: This is simply a license deal for the name
-Your money is illiquid: This opportunity is highly unfavorable to investors, and the Manager (the one you can't fire) is the sole arbiter of whether you can do anything with your shares.
"No Unitholder is permitted to assign, pledge, mortgage, hypothecate, give, sell, or otherwise dispose of or encumber all or a portion of its units, unless such transfer:
- Is approved by our Manager, which approval may be granted or withheld in its sole discretion and subject to such conditions as it may impose;
-Is evidenced by a written agreement, in form and substance satisfactory to our Manager, which is executed by the transferor, the transferee(s), and our Manager;
-Will not result in violation of the registration requirements of the Securities Act;
-Will not require the Company to register as an investment company under the Investment Company Act of 1940, as amended; and
-Will not result in any Unitholder holding more than 19.9% of our Units; and
- Will not result in the Company being classified for federal income tax purposes as an association taxable as a corporation."
So basically, you'd be fscked.
There's a bunch of other stuff I hate about this, but this post has gone on too long and those are the big red flags. Conclusion: If you have money burning a hole in your pocket, put it in high yield savings, T-bills or a total market index fund. If the guys running this investment don't have a plan from the get go to steal your money, they will almost certainly crash and burn and leave you holding the bag with absolutely no recourse.
--- Mystic BBS v1.12 A49 2024/05/29 (Linux/64)
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