College Town Investor Update | Q4 2020 Michael Sather, CFO Tailwind Gro up
Good News
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Fall semester enrollment increase by 2.1%
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Effective rent growth of 3.3% for 20-21 Academic Year
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Fully pre-leased for 2021-2022 academic year
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Remains the most sought-after property in Mankato.
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Seasoned staff and well run
Challenges
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Aging property at 10 years old. Will need roofing and siding attention in next few years.
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Covid has limited use of amenities and greatly reduced resident events. Now opening back up.
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MNSU has not announced fall plans.
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Internet provider is not competitive in market. Making a change in the fall to upgrade service. This is especially critical if online classes continue.
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Clubhouse is dated and could use an upgrade in order to maintain top property status.
Property Updates
Current Occupancy
Pre- lease Velo city 2021- 2022
2021-22 Pre-Leasing complete!
COLLEGE TOWN: 100%
Projected Rent Growth for 2122 AY
Minneso ta State University - Mankato C o lleg e Enro llm ent
Minnesota State University, Mankato’s 2020 fall semester enrollment is 2.1%. More information can be found by following the link below.
There are currently no student housing projects in the pipeline.
Minnesota State Mankato’s Fall Enrollment Increases for Second Consecutive Year
Metrics and KPIs
Executive Sum m ary C o lleg e To wn
Dollars in thousands
NOI Growth
Rent Growth
Pre-Leasing: 100%
Q4 2020: $490
2021-2022: 2.74%
Q3 2020: $453
2020-2021: 3.32%
College Town is FULL for the 20212022 Academic Year
Dollars in thousands Q4 2020 Q3 2020 Q2 2020 Q1 2020 YTD Avg 2019** OOP*** NOI
$ 490 $ 453 $ 522 $ 426 $ 473 $ 436 $ 461
Operating Cash Flow $ 134 $ Profit Margin
76 $ 177 $
75 $ 116 $ 77 $
86
64%
58%
66%
59%
62%
59%
61%
YOC*
7.68%
7.11%
8.18%
6.68%
7.41%
6.84%
7.23%
Occupancy
100%
99%
99%
99%
99%
99%
95%
Pre-Leasing
100%
100%
100%
100%
n/a
n/a
n/a
*Yield Over Cost Annualized **Quarterly Average ***Original Operating Plan for the 2020 Academic Year
Metrics and KPIs Recap Q4 Net Operating Income (NOI) 5% growth compared to 2020 YTD average Positives:
3% Market Rent increase effective August 2020 Lower maintenance costs following Q3 turnover
Negatives:
Higher payroll due to preleasing bonuses Higher admin costs due to new tenant screenings and employee appreciation events
Full Year 2020 NOI 3% growth compared to Original Operating Plan Positives:
1% lower vacancy and concession losses Higher management income Lower utility costs
Successful property tax dispute was won resulting in $76K of refunds
Negatives:
Lower service-related income (utilities, application fees, pent rent, etc.) Higher payroll and administrative costs
Metrics and KPIs Recap Operating Cash Flow growth compared to 2020 YTD average Direct result of NOI growth, no other significant cash flow changes during Q4 No expected changes in occupancy or market rents that could impact cash flow
Yield Over Cost (YOC) 9.5% increase from 2019 mainly due to stronger NOI performance (2%) lower than Original Plan, mainly due to higher expenses
NOTE: Cost can be calculated in various ways. For the purpose of this calculation, Tailwind inputted 'Total Project Cost'
Balance Sheet Recap Current Assets: $490K • $212K cash • $219K escrow
0.80X Current Ratio
Current Liabilities: $615K • $315K accounts payable • $74K accrued interest • $185K security deposits & prepaid rent
14% increase from December 31st, 2019 mainly due to higher cash from operations
Current Ratio is calculated by dividing Current Assets over Current Liabilities. Our goal is to create a liquidity position of 1X.
Investm ent Perfo rm ance
Investor D istrib ution Sum m ary
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Capital Balance: $3,450,000
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Monthly Distribution: $28,750
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Total Investment Distribution: $2,685,000
Bank Financing Supplemental Second Mortgage:
Mortgage:
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Freddie Mac
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Freddie Mac
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2,900,000
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18,800,000
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7 Year Loan
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Maturity Date: June 1, 2025
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30 Year Amortization
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30 Year Amortization
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5.92% Interest Rate
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4.05% Interest Rate
What's Next
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Maintain Current Occupancy
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Annual Rent Growth Targets of 1.5% 3.0%
Michael Sather, CFO Tailwind Group msather@thetailwindgroup.com investors@thetailwindgroup.com