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Altus Mid-Month Update

November 2020

We are in the final stages of closing on a multi-family opportunity in NW Arkansas. Meanwhile, our acquisitions team has been busy unearthing new investment opportunities that we will be sharing with our investment community in the coming months. We are finding that with creative deal structuring, there are some attractive deals to be obtained. We remain interested in properties with solid real estate fundamentals, so let us know if something comes across your desk that looks promising.

Activity Abuzz:

  • NW Arkansas Multi-Family: We are in the final stretch of closing on two multi-family properties in a booming NW Arkansas community. One of our investors was unable to fulfill his reservation, so we have a one hundred-thousand-dollar reservation newly available. The first property consists of 100% occupied, new construction duplexes and a couple groups of townhomes on individual parcels. The second property is a QOZ (Qualified Opportunity Zone) development from the same owner/developer as the other property. All the entitlements are in place and construction has started. With the available reservation being minimal, we expect to fill the reservation shortly.
  • Dallas Metro – Workforce Housing (Multi-Family): We have been working through an extremely complicated asset purchase tied to 208 units of workforce housing in the Dallas Metro. While the upside could be substantial, and we think we have strongly mitigated the downside risk, the complexity of the transaction may restrict us from offering this investment to our normal investor pool. We were originally anticipating closing the purchase before the end of November, but that has now been pushed back as we wait on the sellers to provide needed due diligence and verifications.
  • 130 Unit Multi-Family Development in Santa Rosa: This 130-unit apartment build out project is continuing forward, although more slowly than preferred due to the current impacts of the COVID virus on the working efficiencies of government employees. No material changes in the status as the project approval letter from Fish and Wildlife is anticipated to be received around late November. Pricing for the improvements are being obtained and negotiated. The long-term expectation is that the project will be refinanced to HUD 35-year fixed rate financing at completion, and we will offer investors a long-term equity investment opportunity. We will continue to share details as they become available.

Altus Asset Purchase and/or Refinance:

  • Construction loan: Taylor Industrial QOZ: Development and Construction of our QOZ cold storage project in Taylor Tx (Austin MSA) is underway. Construction is barreling forward with the expectation the tenant will be able to occupy the space around April/May 2021. Additionally, because of market demand, we are now planning to build out the second ten-acre lot sooner than we originally anticipated. We are in the process of starting a second QOF to fund some initial spec development so we have product ready to lease. A marketing package will be available in the coming weeks.
  • Multi-family for sale: We currently are in contract to sell an 18 unit multi-family property in the Norman, Oklahoma market. This property was originally purchased as part of an eleven property portfolio, rehabbed, stabilized, and now on the market. We also have offers in hand on four additional properties.
  • HUD Refinancing: We are taking advantage of the historically low interest rate environment to refinance two large multi-family properties through the HUD (Department of Housing and Urban Development) program. Although HUD financing takes longer to fund, there are many benefits including longer amortization, lower interest rates than otherwise available in the market, and the ability to fix the interest rate for the full length of the term.

ACG (Altus Capital Group): Private Money Lending:

Though the Asset Based Lending market slowed as a result of the shutdown, it is starting to come back to life with more loan pricing requests. We anticipate that there will be increasingly more opportunity in the coming months. With local banks and institutions tightening up their lending requirements, we feel it is an opportune time to launch a debt fund to step in and assist borrowers that will be searching for alternative financing. There will be ample opportunity for investors to invest in the Altus Debt Fund soon. Stay tuned for details. Loan currently being worked on:

  • San Rafael Land Approved for Senior Housing – This is a $6.5 Mil debt request at approximately 50% loan to value (LTV). While it is a possibility that a single lender will fund the entire loan amount, it is more likely that the loan is broken into a high-quality lower interest rate first (25% LTV) and higher interest rate second position loan. This loan continues to move forward but with no assurances of completion.
  • 160 acres of cattle land in the Sierra Foothills, California – While not the “standard” collateral, the borrower has been faithfully paying on their purchase debt for several years and have paid off over 50% of the original debt through that process. The balloon payment on the original financing is due, so we are providing a low leverage short amortization loan to allow the borrower to get the property to free and clear.
  • A commercial building for an owner user in Sacramento, California – Other free and clear properties will be used to improve the security of the subject property and allow the borrower to expand their business.
  • A commitment letter has been signed for takeout debt on a one hundred-unit low-income multifamily project in the North Bay, California. Due to complexities with the property and general COVID market changes it took over 6 months to secure committed financing at a rate acceptable to the borrower.

Ownership interests in Altus Equity: One of the benefits in being investor in the Altus Equity operating company is that you get to see all deals in advance of the rest of our investor pool. One of our investors has indicated that he would like to liquidate his position to invest in his own business, so there is an opportunity for someone to purchase his shares. Let us know if you would like to discuss in greater detail. Unfortunately, this opportunity is limited to accredited investors only.

Happy Investing,

The Altus Investment Team

 

This message is not an offer or solicitation of an offer to buy or sell any securities.  Offers are made only by prospectus or other offering materials.  The information contained herein has been obtained from a variety of sources which are believed to be reliable, but have not been independently verified, and may be subject to change without notice.  To obtain further information, you must complete our investor questionnaire and meet the suitability standards required by law.