Mid Month - August 2018

The last month has flown by with two property acquisitions and one refinance closing all in the matter of a week. We have taken a moment to celebrate and are back to work finding more opportunities.

See what we’ve been up to below.

 

In the Pipeline:

  • We plan to submit an LOI on an off market 144-unit apartment complex in Vicksburg, MS before the end of the week. This property is right on the river just 45 miles west of Jackson with a metro population of roughly 50K. We are excited about this opportunity as it has a fully assumable HUD loan with an interest rate below 4% and strong out of the gate cash flow.
  • An off-market opportunity in Tulsa, OK has been presented to us from a broker we have been wanting to work with for some time. This 78-unit, 1964 build is 2 miles from another property in our portfolio and could be an excellent complement for the management team. The initial site visit went well, we plan to submit an LOI this week.
  • You’ve heard us talking about QOZs over the past few weeks. The “Art House” a hospitality condo project in Santa Rosa (and QOZ opportunity), is gaining momentum. The marketing package will be available by the end of this week. If you are interested in receiving the marketing package or more information on the project, please reply to this email or call our office at 707.932.5887.
  • 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 leased to 56%, an 11% increase from last month.
    • We took 13 applications at the property during July, not nearly as busy as we would like but the onsite team is leasing up the units as quickly as possible.
    • Construction has completed 79 units to date, with 125 units scheduled to be complete by the end of August.
  • Other Complexes (180 units) –
    • Cherry Stone and Stratford have officially been put on the market for sale. Cherry Stone remains 100% occupied and we continue to work on getting the initial lease up on Stratford completed (currently leased to 55%).

Village on the Lake

(160 Units, Oklahoma City OK)

  • Currently occupied at 73% and leased to 77%. This is a 16% increase in occupancy and 20% increase in preleased units from last month. We took 33 applications here in July.
  • Construction is almost 100% complete with just 2 remaining units.

Normandy Place Apartments

(80 Units, Little Rock, AR)

  • Currently leased to 73%, a 7% increase in the last month.

Magnolia Apartments

(40 Units, Redding CA)

  • Occupied at 92.5% and leased to 97.5%. We have 1 unit that remains under renovation that will be complete by the end of this month. There are 2 units scheduled to move out at the end of August, both have only a small amount of work needed. We anticipate having no issues leasing them back up.
  • Even though we haven’t yet completed the renovations, the higher lease rates that are being obtained on the units already completed have improved the rent roll to the point where we can begin exploring financing options.

Items of Note at our Stabilized Properties:

AE Hollywood

(33,580 SF Commercial Space, Hollywood FL)

  • We closed on this property at the end of July. The previous owner was not diligent in maintaining or managing the property, so some clean up and minor repairs are in process.
  • One unit was vacant upon purchase, we were able to sign a tenant on at $16/SF a $0.50 increase over our projected proforma rate of $15.50/SF, an 18% increase over the average in place rents at the time of purchase.

McDonald Plaza

(95,300 SF Commercial Space, McKinney TX)

  • We closed on this property at the end of July. The tenants are testing the boundaries of a new landlord with a myriad of requests and maintenance items. The property remains 100% occupied.

CH Apartments

(124 Units, Del City OK)

  • After only three years of ownership we received an unsolicited offer for this property at a 30% increase over our purchase price. This works out to a 61% increase on invested capital. This property is a steady cash flow performer, so while we are accepting the offer as to good to pass up, we are doing so with a healthy degree of hesitation. Most likely the sales proceeds will be 1031’ed into a new investment.

AE Sunset

(98 Units, Edmond OK)

  • Occupied at 90%, a 1% decrease from last month.
  • After much deliberation we have decided to replace the property managers at five of our complexes, including this one. This transition will occur on September 1st. We are confident in our decision and believe this will have a positive impact at this property.

AE Rockwell

(304 Units, Oklahoma City OK)

  • 92% occupied, 94% preleased.
  • At the end of July, we received the release of the full remaining $1.4 M in loan proceeds that had been held back by HUD from the refinance completed in January of this year. This is one of the five properties at which we are replacing the existing property management company.

AE Commerce

(20,000 SF Commercial Space, Rohnert Park CA)

  • The front of the two buildings is in contract to sell. We should have more news on this process in the coming months.

Villaggio (Altus Multi Tenant Income Fund)

(33 Units, Sacramento CA)

  • This property fell out of contract after the potential buyers came back requesting a $175K price reduction but without offering documentation for the request. We chose to not reduce the contract price.
  • The end of summer is traditionally a slow time in the real estate markets so we are holding off on pushing any new marketing until the beginning of September.  

Woodcrest

(120 Units, Indianapolis IN)

  • Leasing continues to go well, the property was occupied at 66% at the end of June and is currently leased to 76%. Rents being obtained are in excess of pro forma.

Other:

  • We funded another asset backed loan this past month and have a couple more loans that look like they could go into the pipeline in the coming days. The effective interest rates on the funded loan was a little over 12%. If you are interested in joining our growing list of lenders please contact the office.

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