Mid Month - September 2018

As Forrest discussed in August’s Altus Insight (click here to read) we recently changed property management companies at 5 of our complexes in Oklahoma, totaling just over 700 units. This was not a hasty decision for us but after spending most of the last two weeks in Oklahoma I am confident it was the right decision.

We are still at the beginning of this new relationship, but I look forward to sharing the progress and improvements created from this change.

In the Pipeline:

  • You’ve heard us talking about QOZs over the past several weeks. The “Art House” a hospitality condo project in Santa Rosa (and QOZ opportunity), is gaining momentum. The marketing package is available, if you are interested in receiving a copy 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 50%, which is a 6% decrease from last month.
    • Leasing has been slow, very slow. We are working with management to brainstorm new marketing tactics and other ideas to drive traffic to the property. This is not one of the properties with the new management company. Our team has been on site three out of the last four weeks trying to see if we can figure out how to accelerate leasing. We are roughly 50% through the pro forma period so the being 50% leased isn’t completely out of expectation, but we like to outperform proformas and we also know leasing will slow down further as we go into winter.  
    • Construction has completed 125 interior unit renovations and anticipates turning 5 units per week until all 160 units are complete.
  • 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%). There are several parties reviewing the properties to see if they will work for their 1031 purchases.

Village on the Lake

(160 Units, Oklahoma City OK)

  • Currently occupied at 77% and leased to 79%, a 2% increase from last month.
  • Leasing has slowed down substantially from last month. School starting, and the long Labor Day weekend played a role in the slow down. We continue to mix up marketing ads and ideas on how to draw more residents to the complex.
  • Construction is 99% complete. Only minor repairs and clean up remains.

Normandy Place Apartments

(80 Units, Little Rock, AR)

  • Currently leased to 66%, a 7% decrease from last month due to original tenants moving out so we could continue construction and some evictions that occurred.
  • Due to the slow leasing over the last month we will be going out to the property for a week to spend time with the onsite manager to see how we can improve operations here.

Magnolia Apartments

(40 Units, Redding CA)

  • Occupied at 97.5% with only 1 unit vacant. Renovations will take place on this unit before we re-lease.  
  • We are currently exploring financing options for this property. We aren’t necessarily looking to sell but have been contacted by interested buyers.

Items of Note at our Stabilized Properties:

AE Hollywood

(33,580 SF Commercial Space, Hollywood FL)

  • The management/ownership transition of this property required more heavy lifting than we were expecting with several of the tenants having to be evicted.
  • However, this extra work has resulted in new leases higher than our pro forma lease rates. As we continue the management clean up our revenue and net operating income run rates continue to climb.

McDonald Plaza

(95,300 SF Commercial Space, McKinney TX)

  • The property remains 100% occupied.

AE Sunset

(98 Units, Edmond OK)

  • Occupancy remains stable around 92%.
  • The new management company took over September 1st. We were able to retain the previous community manager who cares about the property and knows the residents. We are hopeful that with more support from management she will continue to be successful.

AE Rockwell

(304 Units, Oklahoma City OK)

  • 92% occupied.
  • The new onsite team is getting their feet underneath them and learning about the property!

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)

  • The property remains at 100% occupancy.

Other:

  • We funded three more asset backed loan this past month and have two more loans in process and a couple more loans looking like they will be coming into the pipeline in the coming days. 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