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Altus Mid-Month Update

January 2021

2021 has kicked off in grand fashion, as we closed on the second of two multifamily properties in NW Arkansas just before the new year. We also just filled reservations for an industrial debt opportunity, and are in the midst of raising equity for a QOZ spec development in the Austin, TX MSA. We entered into contract on a very exciting industrial opportunity with a MAJOR national tenant, and we are ironing out details on several other investment opportunities that we will be sharing with our investment community in the coming weeks/months. 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:

  • QOZ Industrial Spec Development in Taylor, TX (Austin MSA): We are rolling out “Phase 2” of our long-term development plan consisting of a 10 acre industrial spec development as a part of larger development we own just outside of Austin (82 acres in total). We plan to build 211,621 sq. ft., consisting of a total of 6 light industrial buildings. The buildings will be constructed over 3 phases, with the first phase starting in the coming weeks, and the 2nd and 3rd phases constructed as the market demands. Investors will obtain 100% of all cash flow up to an annual average 14% cash on cash return, plus a true up to a 14% ten-year IRR at investment termination (either redemption or property liquidation). This transfers the risk away from the investors and onto the sponsors. We have agreed to terms for a first lease and are negotiating two additional leases, though anticipated difficulty in obtaining materials makes it hard to commit to a particular delivery date of the space Given the property’s QOZ status, this presents a great opportunity for investors with expected gains in 2021.
  • NW Arkansas Multi-Family: We closed on the second of two multifamily properties in a booming NW Arkansas community. The 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 is well under way. The first certificates of occupancy have been granted and leasing is under way for the completed buildings.
  • 346,062 Square Foot Distribution Warehouse: This is a class A distribution center in the mid-West with a AAA rated corporate guarantee. We are in contract and are in the process of identifying institutional debt and equity partners for the deal.
  • 63,000+/- light industrial portfolio in Tulsa, OK: We are in contract on an off-market opportunity with a short fuse, we are currently waiting on information from the seller to finish up due diligence with an expected close in late January. The investment opportunity for this short-term debt is fully reserved.

Altus Asset Sale and/or Refinance:

  • Multi-family for sale: We currently are in contract to sell two small multifamily properties in the Norman, Oklahoma market; an 18 unit and an 8 unit. Both properties were originally purchased as part of an eleven property portfolio, rehabbed, stabilized, and now on the market. All contingencies have been removed and the close date is anticipated at the end of January.
  • Multi-Tenant Industrial for sale: We are in contract to sell a multi-tenant industrial property located in Florida. The buyer is currently in their due diligence period. In the event of a successful transaction, we anticipate doing a 1031 exchange with the current investors that elect to participate.
  • More Multifamily for sale: Our investment partner in a two-property package (194 units) we purchase several years ago has decided to sell. An offer for one of the two properties has been accepted with an expected close date in March. We are still working on the sale of the second property.
  • And still MORE Multifamily for sale: Our newly constructed apartment complex in Chico, CA is scheduled to be sold at the end of January. The builder purchased an option to buy the property upon completion and is now exercising that option per plan.
  • HUD Refinancing: We just finished the refinance of one HUD (Department of Housing and Urban Development) loan, and in late December we received HUD approval for the refinance of a second property with the expected close in late February. We are doing so to take advantage of the historically low interest rate environment and lock in the low rates for the coming 35 years. Although HUD financing takes longer to fund and can be quite painful, 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. As an illustration of the power of these loans, the loan amortization alone, without taking into account cash flow or appreciation, provides the project with an average 27% return on remaining invested equity over the life of the loan.

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. Additionally, we have developed a new relationship with a national player that will allow us to offer a diverse suit of lending products to potential borrowers. Loans currently being worked on are as follows:

  • 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. This loan is expected to close before the end of January.
  • A $250k low leverage second on an apartment complex- The first lender is requiring the buyer to provide an interest reserve on this cash flowing property. The $250,000 will provide the interest reserve and then be paid back from the cash that had been being used to pay the payment. This is a 10% interest rate loan fully amortized over 24 months and is expected to close by the end of the month. – FUNDED
  • A $1 Million purchase money loan to buy a property in Occidental. A second residential property will be used for additional 1st position collateral with the total collateral providing less than a 50% LTV debt position. We will be looking for lenders to fund this loan once the buyer clears their inspection contingencies on the property to be purchased.

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.