Q uarters Io wa C ity Investo r Up d ate | Q uarter 4 2020 Michael Sather, C FO Tailwind Group
Good News
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Current occupancy at 96%
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Pre-lease at 55%, just 2% behind last year.
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Beating all comps with exception of Latitude which is at 57% pre-lease
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Hired leasing specialist. Focused on sales and reporting to existing leasing manager.
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Resident satisfaction is good with a 4.2/5 google rating.
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Clubhouse now open 24/7 and seeing significant resident activity.
Challenges
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COVID-19 impacting collections; running between 4 and 5% delinquency.
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Slight delay in market leasing momentum due to uncertainty with fall classes
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Spring enrollment is down 7% from the fall semester
Prop erty Upd ates
96 Percent Current Occupancy Market Off Campus Occupancy: 91.4%
Pre- Lease 2020- 2021 55% Pre-Leased February 13th
Pre-leasing is off to an early start Tours: All tours have transitioned to virtual tours due to COVID-19
Chart includes prior year pre-leasing data
University of Iowa Enro llment Trend s
After seeing a decline in 2018 and forecasting a small decline in 2019 the University is projecting future growth.
Future pipeline shows 400 beds to be delivered in 2022 term and 2,500 beds for the 2023 term.
*F is Forecasted Information from AxioMetrics *September 2020
Metrics and KPIs
Executive Summary Q uarters at Io wa C ity
Current Occupancy 12/31/2020: 95% 09/30/2020: 97%
Operating Cash Flow Q4 2020: $284,000 Q3 2020: $15,000
NOI Growth Q4 2020: $950,000 Q3 2020: $797,000
Dollars in thousands Q4 2020 Q3 2020 Q2 2020 Q1 2020 YTD Avg 2019** OOP*** NOI
$ 950 $ 797 $ 863 $ 736 $ 836 $ 873 $ 964
Operating Cash Flow $ 284 $ Profit Margin
15 $
(7) $ (155) $
34 $
(87) $ 326
60%
53%
59%
51%
56%
56%
59%
6.22%
5.22%
5.65%
4.82%
5.47%
5.72%
6.31%
Occupancy
95%
97%
86%
85%
n/a
85%
95%
Pre-Leasing
56%
40%
93%
73%
n/a
n/a
n/a
YOC*
*Yield Over Cost Annualized **Quarterly Average ***Original Operating Plan for the 2020 Academic Year
Metrics and KPIs Recap Q4 Net Operating Income (NOI) 19% growth compared to 2020 YTD average Positives:
Vacancy, losses, and concessions reduced to 8% of market rent from prior 19%
Full Year 2020 NOI (13%) decline compared to Original Operating Plan Positives:
Expenses in line with plan
Negatives:
Market rent increases planned for have not been realized Vacancy has historically trended below the planned 4%
Metrics and KPIs Recap cont.. Operating Cash Flow is significantly higher than 2020 YTD average
Vacancy, losses and concessions fell to 8% of gross rents from 19% Minimal capital expenditures in Q4 2020 Reduced bus rental costs ($64K in Q1) Cash flow expected to continue to strengthen
Yield Over Cost (YOC) Increase from 2019 due to stronger NOI mainly due to occupancy Lower than the plan mainly due to lack of market rate adjustments and lower occupancy than planned (95% vs. 96%)
NOTE: Cost can be calculated in various ways. For the purpose of this calculation, Tailwind inputted 'Total Project Cost'
Balance Sheet Recap
1.27X Current Ratio
Current Assets: $1.4M • • • •
$441K cash $463K escrow $388K prepaids $74K AR
Current Liabilities: $1.1M • • • •
$143K accounts payable $213K accrued interest $229K accrued property tax $415K 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
D istrib ution O utlo o k Distributions have commenced for Quarters Iowa City effective December 10, 2020.
Effective payout rate is 2%, and will be maintained until further notice.
Significant factors that may impact future distributions • • • •
Property Tax - unknown exact timing in expense reduction Final Occupancy for 2021 COVID-19 Effects Mortgage converting to amortizing in December of 2021 (increasing payment by ~$60K per month)
Current Debt
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$50,849,000
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Fannie Mae Loan
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10 Year Term
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3 Years interest only payments
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30 Year Amortization
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4.88% Interest Rate
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Collect on Past Receivables
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Internet provider change; future cost savings
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Grow revenues / control promotions for long-term stability
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Monitor ability to maintain distributions
Whats Next
Michael Sather, CFO Tailwind Group msather@thetailwindgroup.com investors@thetailwindgroup.com