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Thank You!
Thank you for being a valued investor alongside Oak IQ Investments.
The purpose of this report is to provide an update along with quarterly financial reports for Villa Park Apartments (formerly known as Willowind Apartments).
If you have any questions, feel free to contact Caleb via email (caleb@oakiq.com).
Executive Summary
We are coming up on 1 year since taking ownership of Villa Park Apartments. The project is on track with our overall business and renovation plan. As explained in previous updates, we are slightly behind our projected renovation schedule. The reason for this is a strategic decision to delay forcing vacancies during the first few months of ownership due to the acquisition taking place during the lowest leasing season.
We have fully moved our expense accounting to an accrual basis, so moving forward, our OPEX numbers should have less dramatic fluctuation, with annual expenses such as property tax and insurance being accounted for on a monthly accruing basis.
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A few key highlights from this report:
- Overall project status: On Track
- Accounting has transitioned to the accrual method for more consistent reporting
- 53 Units have been renovated, with all renovated unit leases achieving or exceeding pro forma
- Higher than pro-forma OPEX due to security enhancements, increased marketing expenses, dumpster cleanups, and unit trash outs.
(Q3 2024)
Account Statement:
Accessing your most recent investment account statement is as easy as 1-2-3:
- Login to your portal account at: oakiqinvest.invportal.com
- Select “My Investments” from your dashboard
- Click “Account Statement” in the upper right hand corner to view and/or download
Financial Update:
In-place rents are now $929/mo blended across all units (classic and renovated), compared to $772/mo when we took ownership. This is still $24 lower than the forecast due to a strategically slowed renovation ramp, but we are achieving pro forma rents for all newly signed leases.
Total revenue and NOI are all exceeding the forecast due to a more conservative renovation schedule and higher occupancy than our forecast.
Levered cash flow is $1068 below forecast, primarily driven by higher marketing expenses to maintain occupancy during a heavy lease-up and renovation period.
Inception to date, our CapEx spend is $973,046 vs. a forecast of $1,283,929, driven by our more conservative renovation schedule.
We have renovated 53 units, compared to the forecast of 64 units. We should expect to have a levered cash flow burn of $10-$20k until we reach 90% occupancy, all else equal.
There are a few expense line items that are running higher than expected:
- Security: there have been some car break-ins, leading us to heighten some property security measures. We are considering camera services as a more cost-effective deterrent solution.
- Dumpster Cleanup: some residents leave their large items (i.e. couches) by the dumpster at move-out. Measures are being taken to establish a more cost-effective pickup cadence for these clean-ups, and as we move closer to stabilization, this expense should decrease.
- Unit trash outs: $300 each time. Again, this should also progressively decrease as we continue to stabilize.
Timeline & Progress
We have completed 53 units (56%). We are still tracking the exact budget for unit renovations. Nine more units are in progress; we expect to complete all units by May 2025. And we are on track with that timeline.
We expect to complete 6 units in November and 6 more in December based on upcoming non-renewals.
Risks & Issues
Occupancy has dipped lower than expected due to a backlog of non-renewals that we had to evict, which caused us to dip below our desired 85% occupancy rate at 79% at quarter end. Leasing is slowing down as we get closer to the Holidays, and we have slowed the pace of non-renewals until after the new year. We intend to offer discounts and incentives on new leases during the slower leasing season to ensure we maintain strong occupancy.
Sincerely,
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