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Altus Mid-Month Update

July 2022

While we have been working behind the scenes on several existing projects, our hard work is paying off in the form of new investment opportunities for our investor community.  We just announced that we are taking reservations from accredited investors for our most recent project; phase 1 of a 294-unit duplex development in NW Arkansas. We are also in the midst of putting together an investment fund that will mirror the returns on the aforementioned project. For those of you that were involved in the Chico development project a few years ago, this will be a similar preferred investment structure.

Activity Abuzz:

294-Unit Duplex Development- Highfill, AR: As mentioned above, we just opened up reservations for this opportunity. The investment structure provides investors with a 13.5% annualized preferred return. As added security, Altus is subordinating the value of the fully entitled land and earned fees, so investors will get paid their return of equity and accrued preferred return before Altus receives a distribution. Investors will have the choice to invest solely in this property; or diversify their investment in a new fund structure that we should be launching shortly. Last fall we purchased land just outside of Bentonville, AR to build 147 duplexes (294 units). This will be our third multifamily property in this MSA, with the other two performing ahead of expectations. The entitlements are complete and the horizonal construction has commenced. The project is expected to start going vertical this summer.

Greenville Industrial, Greenville SC (CLOSED): We just closed on the purchase of a vacant, new construction light industrial building in Greenville, SC. We love the Greenville market and are optimistic about the leasing prospects of this project. Though we don’t generally buy empty buildings, with 1031 funds from the sale of the Magnolia Terrace Apartments in Redding CA and the Windsor Wyndham Apartments in Norman, OK needing to be invested, we felt this was a great opportunity on a risk adjusted return basis. We successfully raised for a private money 2nd position loan for this project in the form of shorter-term debt.

Oxford QOZ: We have partnered on the ownership of QOZ land with experienced developers that live in Oxford, MS (Forrest’s favorite small town, and the home of Ole Miss). The project consists of a fully entitled master plan QOZ development. The development is slated for up to thirteen individual construction projects that will be offered to investors as they come to fruition. Proformas continue to be sharpened for the first two of the thirteen individual projects with all pre-construction approvals obtained this week. The projects are expected to be structured for QOZ eligibility, and we have QOZ investors lined up and waiting for final details so their investment can be placed.  Additional projects and the associated investment opportunities are expected to continue throughout the next year.

Murrieta Mixed-Use Development: Located in Old Town Murrieta, the project consists of bottom floor restaurants and retail with three floors of apartments above the street level. Our direct involvement in the project won’t commence until late summer, at which time we will determine the best route for debt and equity options. There is a chance that this development will also be absorbed into our new fund.

New Industrial (Charleston, SC) and New Multi-Family (KC MSA) Construction and Lease-up: We originally closed out the equity raise in July of 2021 for the investment in the pre-construction of a new 1.4m sq ft. industrial development in the Charleston, SC MSA, and the construction of a 375-unit (estimated) luxury apartment complex located in a 200-acre master planned development in a high-end Kansas City, MO suburb.

Due to a rising hard cost environment, we have been navigating our way through several variables for both projects. Regarding the Camp Hall industrial property, a term sheet is close to finalized with a lender, the land has been purchased, the construction contract signed, and construction has commenced. Our original LP investor backed out after the last Fed rate increase, so we are actively talking to LP prospects for investment in the deal. We closed on the purchase of the land at the end of May.

We have separately received interest in the equity and debt for the Kansas City apartments. We are nailing down construction costs to ensure they are in line with the project. The rapidly changing economic inputs have brought about some challenges, but we are working through every angle possible to make the deal work.

Debt Liquidity Fund: The Debt Liquidity Fund continues to be a popular investment for investors that want to park cash into a safe, liquid investment vehicle. The fund provides investors with a solid monthly yield (4% per annum) on funds that may otherwise be sitting around in a CD or a bank account not earning much interest. The fund is comprised of a portfolio of real estate loans that are in 1st lien position and are all below 50% LTV. This is an open-ended fund that allows investors to redeem their position (or a portion of their position) with 30-days-notice. We are in the midst of adding to the fund portfolio, so reservations have opened up to the largest amount of investment since we launched the fund last July.

Arrow’s Edge Apartments, Sherwood AR: This property remains in contract to sell. The buyer had some issues with their lender and has had to bring in a different financing source. We are working through other obstacles in putting together a closing timeline. We anticipate completing a 1031 exchange with the sales proceeds into a new, yet to be identified investment.

Miscellaneous: We are close to finalizing a deal for a fully entitled apartment opportunity in the north part of the Dallas metro. Assuming we are able to proceed, this deal structure will also be part of our new fund opportunity. More details will be available in the coming weeks.

ACG (Altus Capital Group): Private Money Lending:

Demand for private money lending investments continue to be strong. With increases in government bond rates, we have seen some minimal upward movement in private money lending rates. We raised $1.45 mil for the purchase of a spec industrial building in Greenville, SC (mentioned above), and we raised $1.1m for a mixed use land purchase in Austin, TX. We are currently working on the funding of a $4 Mil 50% LTV loan for vineyard land north of San Francisco. Additionally, there are small loans that we have closed on throughout each month.

As always, opportunities are first offered to our active investor interest list. Please reach out to us if you have funds for lending and would like to be added to the list. If you are trying to figure out the capital stack for your own project, feel free to reach out and we are happy to brainstorm possibilities with you.

If you have interest in discussing equity or lending 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.

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.