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We’re pleased to announce the latest real estate update to the CalTier Fund I portfolio.

As part of our broader strategy, we continue to look for advantageous opportunities in multi-family properties that fit our value-added real estate strategy of adding value through strategic improvements in renovations, upgrades, amenities, property management, and lease-up solutions. Our portfolio is a combination of directly owned assets or participating investments with our real estate partners.

The following are asset updates that follow our overall strategy and why we believe it is sustainable in ever-evolving overall market conditions.

All returns are at the asset level, not indicating CalTier Fund 1 returns. If the NOI and revenues are not mentioned, they were not available at the time of writing.

Avenue Grove

AVENUE GROVE TEXAS REAL ESTATE CROWDFUNDING

As of the close of Q2 2023, Avenue Grove boasted an occupancy rate of 97%, all while increasing rents for renewals. This is most likely due primarily to the ease of access to Downtown Houston and the Texas Medical Center, both of which have multi-billion dollar development projects underway.

In Q3 and Q4, the focus will shift to select amenities upgrade and improvement projects, including landscaping, fitness center, courtyard, and pool, with a goal to ensure that both investors and residents receive the maximum value from these upgrades.

Overall, in Q2 2023, Avenue Grove produced a total quarterly income of $1.675M and a quarterly operating expense of $9.55K, achieving a positive quarterly net operating income (“NOI”) of $702K.

Sabine Lofts

SABINE LOFTS CROWDFUNDING HOUSTON AFFORDABLE HOUSING

As of the close of Q1 2023, Sabine Lofts boasted an occupancy rate of 89% and a pre-leasing rate of 93%. This is primarily due to a dedicated focus on expense management and rolling out the MPact Program, the compliance program for the affordable housing initiative backed by the Houston Housing Finance Corporation.

With a recent focus on select complete unit renovations and a roof replacement, construction drawings have been completed, and RFPs have been sent out. It is anticipated that renovations will start later this year.

Income and Expenses are slightly off projections due to higher advertising, utilities, and maintenance expenses than projected; however, management has also collected higher lease termination fees and other income than anticipated. Overall, Sabine Lofts produced a total annual income of $4.33M and a total annual operating expense of $1.35M, achieving a positive annual net operating income (“NOI”) of $2.98M.

 

Apple Lane Appartments

APPLE LANE HIGH OCCUPANCY ASSETS

As of the close of Q2 2023, Apple Lane had achieved an incredible 100% occupancy rate and 100% pre-leasing rate. Apple Lane continues to surpass expectations in occupancy and pre-leasing as well as expenses.

Currently, all targeted capital expenditure projects are complete, including the value-added renovations to the apartment interiors, strategic rehabilitation of the common areas, and overall improvements to the “curb appeal” of the property. Apple Lane has been able to steadily increase rents, helping the property achieve an operating income of $175,911 and operating expense of $79,544 in Q2 2023. This resulted in a net operating income (“NOI”) of $96,367.

 

Raintree Commons

Raintree Commons, cash flow producing assets

As of the close of Q2 2023, Raintree had achieved 98.7% occupancy rate and 87.7% pre-leasing rate. This lease-up rate is a bit down primarily due to the efforts in completing the capital expenditure projects and concrete repairs.

Currently, most targeted renovations, including the rehabilitation of the clubhouse and leasing office are complete. With a continued focus on improving the curb appeal, Raintree has been able to steadily increase rents, which helped the property achieve an operating income of $1,400,361 and operating expenses of $424,075 in Q2 2023. This resulted in a net operating income (“NOI”) of $976,287.

 

Lodges at Glenwood

GLENWOOD, CROWDFUNDING, REAL ESTATE CASH FLOWING ASSETS

As of the close of Q2 2023, Glenwood has achieved a remarkable lease-up velocity, boasting a current occupancy rate of 99.2% and a pre-leasing rate of 100%. This lease-up speed marks an exceptional achievement, setting a new record for the property.

All targeted renovations, including the rehabilitation of all common areas and interior unit renovations, have been completed. With a continued focus on improving the curb appeal, Glenwood has drastically improved its lease-up speed and rates, which helped the property achieve an operating income of $1,748,668 and operating expenses of $440,995 in Q2 2023. This resulted in a net operating income (“NOI”) of $1,307,673.

 

Lakewood Apartments

As of the close of Q2 2023, Lakewood is maintaining an occupancy rate of 89.77% with a pre-leasing rate of 90.91%.

Although occupancy has experienced a slight decline, it has remained stable at the current level. The broader market has similarly experienced a softening trend, with direct comparables operating within comparable occupancy ranges. Our dedicated partner and team have been vigilantly observing market dynamics, proactively adjusting concessions and market rates to stay competitive. Encouragingly, Lakewood’s renewal conversions have displayed a positive trajectory, including those encompassing the newly implemented utility billbacks.

With a continued focus on revitalizing leasing efforts at the property level to reinstate previous occupancy standards, Lakewood is showing positive signs of rental growth.

Expenses for the quarter slightly deviated from projections by 0.34%, primarily from an unavoidable surge in property insurance costs. As expenses and staffing are now stabilized, a modest uptick in occupancy is anticipated to yield a notably positive impact on the overall asset value and cash flow.

Here are a few images of the completed renovations:

LAKEWOOD TEXAS, REALESTATE, CROWDFUNDING

 

506 South Apartments

As of the close of Q2 2023, 506 South boasted an impressive occupancy rate of 94.94% and a 98.88% pre-leasing rate. This is mostly due to a dedicated focus on expense management and fostering renewal rate growth, which has produced an impressive streak of 5 consecutive months of Net Rental Income growth. We anticipate that this positive trajectory will persist under robust market conditions and the guidance of our experienced partner and team.

Rental rates and occupancy continue to exhibit robust strength. With a recent primary focus on selectively renovating units, particularly the transition from classic units to full premium 2-bedroom offerings, this has been especially rewarding. This strategic move has resulted in a remarkable average rental increase of 32.5% ($277), with some units achieving an impressive maximum increase of 64% ($536) compared to previous rates. Overall, rents have demonstrated a commendable 21.2% increase since the property’s acquisition, and this upward trend remains a driving force.

Income slightly exceeded budget expectations by 1.6%. Expenses managed to exceed projections by 0.58% during the last quarter, a notable accomplishment given unforeseen challenges such as increased insurance costs. Our partner and team were able to negotiate and secure more favorable rates, saving an impressive $50,000 over the previous policy, which enabled expenses to stay maintained within 1% of the budget and achieve a positive NOI of 0.49%.

Here are a few images of the completed renovations:

 

Apex apartments

As of the close of Q2 2023, APEX is maintaining an occupancy rate of 93.4%, up to 9.45% since January. To date, a total of 63 units have been renovated, which is in line with the pro forma goals of the project.

Although both property taxes and insurance have increased, an uptick in occupancy is anticipated to yield a notably positive impact on the overall asset value and cash flow. At the end of Q1 2023, APEX had an operating income of $132,951 and a net operating income (“NOI”) of $35,684.

 

Hickory Point

As of the close of Q2 2023, Hickory Point boasts a 90% occupancy and 91% lease up rate. After just a few months, the business plan remains in tack with a continued increase in market rents, reduced expenses (specifically in repairs, maintenance, turnover, and vacancy), and stabilization of the tenant base.

With prior ownership lightly renovated 56 of the 175 units, Hickory Point’s value-add business plan calls for continued renovations and upgrades to the cabinets, appliances, countertops, backsplash and fixtures. Currently, four of the additional unit renovations are complete and three are in progress. Exterior renovations started in Q2 with the leasing office renovations being complete and a few others in progress, including the parking lot, roofing, and landscaping. Overall, the Newport News market has seen an average increase of 3.1% from last year and 25.5% over the past 3 years.

 

Marshall Park

As of the close of Q2 2023, Marshall Park, along with the other Richmond properties, have seen tremendous rent growth for new leases and renewals, averaging 6.2% growth from Q1 2023. This is more than double the underwritten assumptions. Average occupancy for the Richmond assets is at 95%.

Currently, most targeted renovations have not started, primarily due to the overachieving rent growth and the current status of the debt financing market for construction. Renovations are anticipated to begin during the 2024 summer leasing season depending on market conditions at that time. Overall, the Richmond market has continued to thrive primarily due to the business-friendly environment, presence of nearby universities, and affordable cost of living.

 

Grace & Monroe

As of the close of Q2 2023, Grace & Monroe, along with the other Richmond properties, have seen tremendous rent growth for new leases and renewals, averaging 6.2% growth from Q1 2023. This is more than double the underwritten assumptions. Average occupancy for the Richmond assets is at 95%. Grace & Monroe in particular has seen an impressive 11% increase in rent growth over the past quarter.

Currently, most targeted renovations have not started, primarily due to the overachieving rent growth and the current status of the debt financing market for construction. Renovations are anticipated to begin during the 2024 summer leasing season depending on market conditions at that time. Overall, the Richmond market has continued to thrive primarily due to the business-friendly environment, presence of nearby universities, and affordable cost of living.

 

Broadway Apartments

As of the close of Q2 2023, Broadway, along with the other Richmond properties, have seen tremendous rent growth for new leases and renewals, averaging 6.2% growth from Q1 2023. This is more than double the underwritten assumptions. Average occupancy for the Richmond assets is at 95%.

Currently, most targeted renovations have not started, primarily due to the overachieving rent growth and the current status of the debt financing market for construction. Renovations are anticipated to begin during the 2024 summer leasing season depending on market conditions at that time. Overall, the Richmond market has continued to thrive primarily due to the business-friendly environment, presence of nearby universities, and affordable cost of living.

 

District Square

As of the close of Q2 2023, District Square, along with the other Richmond properties, have seen tremendous rent growth for new leases and renewals, averaging 6.2% growth from Q1 2023. This is more than double the underwritten assumptions. Average occupancy for the Richmond assets is at 95%.

Currently, most targeted renovations have not started, primarily due to the overachieving rent growth and the current status of the debt financing market for construction. Renovations are anticipated to begin during the 2024 summer leasing season depending on market conditions at that time. Overall, the Richmond market has continued to thrive primarily due to the business-friendly environment, presence of nearby universities, and affordable cost of living.

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