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Altus Mid-Month Update

July 2020

As we continue to try to make sense of the many uncertainties both social and economic, we at Altus have been proactively pivoting to adapt to the ever-changing environment. Much of our focus has been engaged in long-term asset preservation and downside risk mitigation, but we are also aggressively increasing our efforts in pursuing future opportunities.

While we haven’t seen a lot of fallout due to the recent pandemic, we are excited to see some of our recent efforts start to come to fruition. We are very interested in deals with solid real estate fundamentals, so let us know if something comes across your desk that looks interesting….

Activity Abuzz:

  • Purchase: Brixton Apartments (Beech Grove, IN): We are working with our partners on a buyout and HUD refinance in which Altus and our investors will take full ownership of the property. This is a great stabilized property that we have wanted to own outright for quite some time. The long-term equity ownership opportunity has been fully funded by the existing lenders/investors. There is a limited opportunity left for investors to invest in short term mezzanine debt (6-9 months) with the cumulative loan to value being less than 65%.
  • NW Arkansas Multi-Family: We are negotiating the purchase of two multi-family properties in a booming NW Arkansas community. The first property consists of 100% occupied, new construction duplexes 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 they are ready to start construction. Look for additional details in the coming weeks.
  • QOZ- Santa Rosa Hotel Extension: We are working in partnership with a local builder for a QOZ eligible hotel expansion in Santa Rosa. Altus and affiliates are raising a little over $16m of new equity for this project. The marketing package and financials have been updated based on COVID related impacts and an agreement has been signed with a group out of New York that we have worked with in the past to help compile the funds.
  • 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. Pricing for the improvements is being obtained and negotiated. With the expectation that the project will be refinanced to HUD 35-year fixed rate financing at completion, this will likely be offered as a long-term equity investment opportunity to our investor community. We will continue to share details as they become available, but we are hopeful we will still be able to break ground on the site improvements later this summer or in the fall.

Altus Asset Purchase and/or Refinance:

  • Refinance: Charleston Apartments (Norman, OK): We have agreed to terms on a refinance of the property and are going through the refinance process. We locked in a ten-year rate this morning at 3.29% and expect the refinance to be complete by the end of this week.
  • Construction loan: Taylor Industrial QOZ: Development and Construction of our QOZ cold storage project in Taylor Tx (Austin MSA) is underway with initial improvements being paid out of cash on hand. A term sheet has been signed for the construction loan with a local lender and we are working through the loan process, which has been made considerably more difficult due to the current COVID and economic situation. Additionally, we are now planning to build out the second ten-acre lot sooner than we originally anticipated. We are in talks with a second built to suit tenant. Even if this tenant doesn’t come to fruition, we are likely to start 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.

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 in the past week than over the previous three months combined. 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:

  • Mill Valley SFD – This is a $3 Mil second loan behind a low interest rate first, with a combined loan to value of 65%. The expected interest rate is a little over 10%. We are working with our attorneys to get our arms around a complex title situation, but if we are able to do that, we will be raising the funds for this loan in early August.
  • Redding Retail – A $4 Million senior loan request for bridge financing on a $6 Mil purchase to provide funding while the buyer gets their SBA take out loan completed. We visited the property Friday and have told the borrower we either need to reduce loan proceeds or they need to provide a substantial amount of additional collateral. Because of our increased requirements this loan may not come to fruition.

If you have interest in discussing 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.