Mid Month - April 2018

April showers bring May flowers, or so the saying goes. We needed the showers here at Altus this April to overcome the property drought we had been experiencing but now the flowers are suddenly blooming. Since last month we have put two deals under contract, one of them with the potential of being the largest acquisition in our history! We are excited about both.

Without making you wait any longer, here are the details.

In the Pipeline:

• AE Shazam, as we like to call it, is the off market commercial/retail portfolio that was mentioned in last month’s mid-month. After a face to face negotiation between the seller and Forrest, an agreement was reached and the contract signed shortly thereafter. This is “The Big One” - with a purchase price floor of $45M.  While we are still very early in the due diligence process and determining how we can structure the offerings, if you are interested we would love to add you to our list of interested parties so that you can have first crack at what appears to be an amazing opportunity. Please call our office at 707-932-5887 or reply to this email so we can provide you more information once available. There may also be opportunities for the placement of 1031 funds within this portfolio. 

• Hollywood, FL – South Florida sees more thru freight than most places in the country so we have been looking for industrial warehousing there. After turning over a lot of rocks and some lengthy negotiations, we finally found a small opportunity we like. This is a stabilized cash flow opportunity for which we will be raising a small amount of investor funds.

• Our meetings with the well-respected Sonoma County builder regarding a joint venture as part of the fire rebuild efforts have continued to progress. While this would not be a cash flow investment like what we normally focus on, the underwriting is solid and the team is strong. We believe we will have details about this opportunity within the next month.

• The $4.5 Million of 1031 money for which we were searching for investment opportunities will be invested in the portfolio we placed in contract. Next up is a little over $3 Mil that is expected to be available for reinvestment sometime in May, this particular investor is highly focused on immediate cash flow so we will be identifying good stabilized opportunities for them. Using 1031s can be a great way to defer capital gains taxes and benefit from returns on a large capital base. In most cases Altus is able to fill investors’ 1031 needs while allowing the investor to take a passive role in the identification, purchase, financing, and asset management process.  Contact our office if you are considering a 1031. Whether or not you decide to partner with Altus for your 1031 reinvestment, we are happy to provide some guidance that can greatly increase your likelihood of reinvestment success.

Current Repositioning Projects:

Norman Portfolio
(340 units, Norman OK)
• Charleston (160 units) – Currently occupied at 42%, leased to 45%.

  •            Leasing season is here! Traffic to the property has picked up dramatically with 11 new leases since April 1st. The leasing team has a goal of 28 new leases at this property for April, with a goal of 40 for the entire portfolio.
  •            Construction is humming along with a total of 42 units 100% complete and another 60 units in process.

• Other Complexes (180 units) –

  •           Windows have been delivered! Window installation began April 12th and will continue through the end of May. The new windows will take the curb appeal of these properties to the next level.
  •           6 new leases have been taken on these properties since the beginning of April.

Village on the Lake
(160 units, Oklahoma City) 
• Occupancy remains at 46%. Leasing has not improved over the last month and we are working very closely with management to determine why. Since all the front-end marketing statistics were an improvement over the previous month we believe the drop off is due to a lack of training for the new onsite manager hired by our property management company. The onsite team has been receiving additional training and support to ensure we take the leasing season traffic and turn them into approved applications.
• Construction is over 65% complete for interior units and the crew continues to turn units over weekly and are scheduled to be 100% complete by the end of May.
• We are close to completing negotiation on an amazing refinance loan and hope to sign the commitment letter this coming week. The loan would have an interest rate of 4.33% fixed for fifteen years.

Magnolia Apartments
(40 units, Redding CA)
• Interior renovations are now complete on 3 units; one studio and two 1-bedroom units.

Items of Note at our Stabilized Properties:

AE Sunset
(98 units, Edmond OK)
• Occupied at 96%, leased at 98%. 
• The refinance at this property is scheduled to close April 28th.

AE Rockwell
(304 units, Oklahoma City)
• Currently 92% occupied and leased, no change from last month.
• We have given notice to the property management company at this site - they have a set of goals to achieve by the end of April or we will replace them.

Cedar Hills
(124 units, Del City OK)
• Currently 98% occupied and leased.

Woodcrest
(120 units, Indianapolis)
• Forrest visited this property at the end of March. He was very impressed with the unit turns, property’s exterior and amenities! Weather, as it has in many markets, has impacted leasing, but this property is well positioned to lease quickly when Spring finally arrives.

AE Commerce
(20,000 SF Commercial Space, Rohnert Park)
• This property remains on the market for sale.

AE Carousel
(98,000 SF Light Industrial, Redding CA)
• We are in the process of negotiating an extension with FedEx, one of the tenants in the building. 

Villaggio (Altus Multi Tenant Income Fund)
(33 Units, Sacramento CA)
• We are in contract to sell this property. The first offer we received and accepted did fall out due the seller not being able to sell the property they wanted to roll into this one. However, we have accepted one of the many back up offers that as written will net us an extra $100,000.

Other:
• We are starting to be approached by contractors regarding construction financing for the rebuilds of fire lots they have purchased here in Sonoma County. In response we have put together an outline of what our construction lending product will look like. We anticipate this will result in an increase of loans to offer to our investor base. 

If you have any interest in discussing any of the above opportunities in greater detail, please reply to this email or call our office at (707) 932-5887.  We will gladly add you to our distribution list and/or schedule an appointment to discuss your investing needs further.

Best,

Ali Negus