Mid Month November 2018

Please read through the following letter from our president, Forrest Jinks with the normal mid-month update to follow:

 

Just over a year ago California’s North Bay was struck by three of the top ten worst fires in the history of the country. My wife Melissa and I were directly impacted as were other members of the Altus team.  We were amazed and touched by the outpouring of support from the community and our larger Altus family.

Our neighbors to the Northeast, the residents of Butte County, are now facing the worst fire in the history of the country - the Camp Fire - which has essentially destroyed the towns of Paradise and Magnolia.  With combined populations of 230,000 and median household income nearly 25% below the national average of $59,000, the impacts of this fire are in many ways far more devastating than the fires from last year.  Butte County just does not have the resources to deal with this sort of disaster.  Early estimates show the homeless in Paradise alone is approaching 50,000 in a very poor community with a disproportionate percentage of retired and handicapped persons.  These people not only lost their homes, but they no longer have jobs to go to.  The scope of the devastation is almost beyond comprehension. 

Melissa and I, along with the rest of the Altus team have pledged to match up to $25,000 in donations from our readers to benefit the fire victims.  While $50,000 (or hopefully more) seems small in light of the magnitude of the destruction, it will make a meaningful impact to many who have been left with nothing.

If you can help, please email me at fjinks@altusequity.com with what we are calling a “commitment amount”.  We are currently working to identify 3 to 4 non-profits that we are comfortable recommending for donations.  Once those are known, we will share that list with those that make a commitment who can then do one of the following:

  • Make a donation directly to one or more of our identified non-profits and we will mail our match(es) separately
  • Send a donation (made out to your chosen non-profit(s)) to Altus and we will facilitate mailing your donation in conjunction with our match
  • Make a donation to an entity of your choice and Altus will match it

I want to thank our Executive Team who have made this matching program possible.  Special thanks to Michael Adler and Carrie Zsambok, Stacy and Mark Nelson, Peter Simon and Felicia Strankman, and others.

 

Please know that no amount is too small.  “No one has ever become poor by giving.”  Anne Frank

 

Thank you in advance for your generosity. 

Forrest

In the Pipeline:

  • We have an accepted LOI on a 117-unit property in the Little Rock, AR MSA. Historically the property has held stable occupancy, but the economic occupancy or collections have been below market standards. We are entering the agreement with the intention to close by the end of this year.
  • We remain in contract on a 133-unit townhome project in a community just north of Oklahoma City. We are excited about this deal for a variety of reasons. The existing cash flow is terrific, and we believe can be increased further through some minimal improvements to the property. The purchase also comes with an additional 20 acres of land with the potential of future development.  
  • We are in conversation with a seller of an industrial property north of Austin, TX that includes additional land for future development while still providing a decent in place cap rate.
  • 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 processes.  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 62%, an 8% increase from last month.
    • Leasing has picked up for the first two weeks of November with11 approved applications, a vast improvement over the 4 approved in October. 
  • Other Complexes (180 units) –
    • Cherry Stone and Stratford remain on the market for sale.  

Village on the Lake

(160 Units, Oklahoma City OK)

  • Currently occupied at 77.5% and leased to 81%, a 1% increase from last month.
  • While leasing has slowed, there have also been a few move outs from newer residents that did not comply with complex rules.

Normandy Place Apartments

(80 Units, Little Rock, AR)

  • Currently leased to 70%, a 2% increase from last month.  

Magnolia Apartments

(40 Units, Redding CA)

  • Still working on the refinance mentioned last month, awaiting the appraisal which will clarify our LTV on the 12-year fixed rate loan secured.

Items of Note at our Stabilized Properties:

AE Hollywood

(33,580 SF Commercial Space, Hollywood FL)

  • Continued efforts in improving the tenant base.
  • Our rents already well ahead of our pro forma projections.

McDonald Plaza

(95,300 SF Commercial Space, McKinney TX)

  • The property has 1 vacant unit. Marketing efforts are underway to fill the vacancy.  
  • Performance to date is well ahead of pro forma.

AE Sunset

(98 Units, Edmond OK)

  • Occupancy has dropped significantly since the new property managers have taken over, this is common as residents can look at these times as opportunities to challenge the management.

AE Rockwell

(304 Units, Oklahoma City OK)

  • Similar to other properties with the new management company, occupancy has dropped to 84%.
  • The management team knows our expectations and is working hard to get the property leased back up quickly.

CH Apartments

(124 Units, Oklahoma City OK)

  • We are in contract to sell this asset at a ~30% increase on our cost basis in less than three years.
  • We were not planning on selling but were approached by a buyer that gave us on offer we couldn’t turn down.
  • The funds from this sale are slated to be used as the purchase equity for the 133 units mentioned above through the use of a 1031 exchange.

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.  
  • The architect we had contracted to draw the plans for the exterior improvements that have been approved closed his company and took a job with a larger firm. It is extremely difficult to find architects for any new projects currently.

Other:

  • We are closing on two asset based loans before Thanksgiving and have have more loan in the pipeline. 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

Altus Equity Group, LP
Office:  707/932-5887
Fax:  707/544-2972