Quarters at Mankato Investor Update | Q4 2020 Michael Sather, C FO Tailwind Group
Good News
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Strong pre-lease velocity for 2021-2022 lease term: 99.6%. One bed remaining for 21/22 term. This was done with a new leasing manager which speaks to the strong reputation of the property.
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Property has raised rents 5 times during the leasing season.
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NOI has maintained above average as the properties are navigating through COVID-19
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Clubhouse is now open 24/7. Maintaining mandated mask policy and social distance guidelines.
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New Property Manager starting 2/16/21. Comes with 5 year's experience at 2 biggest competitors in Mankato.
Challenges
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Limited amenity use during COVID has been disappointing for residents.
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Wifi speeds are not market competitive. This has frustrated residents during online classes. Solution in place for fall of 21.
Property Updates
Current Occupancy
Pre- Lease Velo city 2021- 2022
Forecasted Rent Growth 21-22
Purple Line = Current Pre-lease
Minneso ta State University - Mankato C o lleg e Enro llm ent
Minnesota State University, Mankato’ s 2020 fall semester enrollment is 2.1%. M ore information can be found by following the link below.
There are currently no student housing project in the pipeline.
M innesota State M ankato’ s Fall Enrollment Increases for Second Consecutive Year
Metrics and KPIs
Executive Sum m ary Quarters at Mankato
Total Income
Occupancy
NOI
Q4 2020: $736
100%
Q4 2020: $419
Q3 2020: $794
Dollars in thousands
Q3 2020: $416
Dollars in thousands Q4 2020 Q3 2020 Q2 2020 Q1 2020 YTD Avg 2019** OOP*** NOI
$ 419 $ 416 $ 438 $ 433 $ 427 $ 435 $ 561
Operating Cash Flow $ 164 $ 180 $ 169 $ 175 $ 172 $ 186 $ 212 Profit Margin
57%
52%
61%
59%
57%
58%
69%
YOC*
5.88%
5.84%
6.14%
6.07%
5.98%
6.11%
7.87%
Occupancy
100%
100%
99%
98%
99%
99%
95%
Pre-Leasing
100%
85%
72%
42%
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) (2%) decline compared to 2020 YTD average Negatives:
Leasing bonus for the next academic year was paid in Q4 ($27K) Higher maintenance costs
Full Year 2020 NOI (24%) decline compared to Original Operating Plan Positives:
Vacancy inline with plan
Negatives:
9% worth of expected market rent increases were not realized Higher payroll costs Higher utilities and maintenance costs
Metrics and KPIs Recap cont..
Operating Cash Flow (6%) decline from the 2020 YTD average Leasing bonuses paid in Q4 reduced cash flow Higher maintenance costs
Yield Over Cost (YOC) Main driver for decline from original plan is the unrealized market rent increases
NOTE: Cost can be calculated in various ways. For the purpose of this calculation, Tailwind inputted 'Total Project Cost'
Balance Sheet Recap Current Assets: $488K
0.98X Current Ratio
• $235K cash • $182K escrow • $56K prepaids
Current Liabilities: $497K • $131K accounts payable • $78K accrued interest • $243K security deposits & prepaid rent
Current Ratio is comparable to 2019, no significant changes
Current Ratio is calculated by dividing Current Assets over Current Liabilities. Our goal is to create a liquidity position of 1X.
Investment Performance
12% Effective cash on cash return Distribution Payout: Increased levels commenced January 2020 8.5% Preferred Return
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Capital Balance: $6,344,304
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Monthly Distribution: $63,500
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Total Investor Distributions: $2,551,000
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Distributions will be monitored on a month to month basis as we navigate through the effects of COVID-19
Bank Financing Lender: Freddie Mac Refinance Completed: December 19, 2019 Loan Amount: 21,917,000 Interest Rate: 4.12% Term: 10 Years Interest only: 36 Months 30 Year Amortization
Whats Next
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Steadily grow revenue (3% forecasted rent growth 21-22)
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Maintain Strong Occupancy (99.6% Pre-Leased as of December 14)
Michael Sather, CFO Tailwind Group msather@thetailwindgroup.co m investo rs@thetailwindgroup.com