Dual City Capital Group Fund: Update Q1, 2020
Dear Dual City Extended Family,
As you are aware, concern about the spread of the novel coronavirus is increasing by the day. First, we pray for the safety and protection of family and friends. Financial matters seem less significant when life and health issues come into our lives. We are encouraged that significant action is being taken by everyone to reduce the possible impact of this virus.
We will continue to monitor events as they come. We thank you for your investment in our fund and we will continue to work diligently on the performance of the assets. Currently, we are not seeing any material effects to our properties operations or cash flows. As is common in all funds, some individual assets are distributing less than projected and some are distributing more than planned. We do not expect to reduce any of the distribution rates in any of our investments at this time. Overall, we are seeing the benefits of having a diversified fund in a volatile time.
As in previous months, the monthly preferred return of 8% has been sent to all investors for Q1. Returns continue to be scheduled on auto draft via ACH to the account that you supplied upon initial investment. If there are any banking or address information changes please let us know as soon as possible.
Haus Lake Placid - The hotel roof renovation has been completed and came in slightly over budget. The slightly higher renovation cost was due to the fact that the underlay and some supporting beams needed to be replaced and a portico was built over the rear fire escape door ensuring ice does not build up at the base of the door. The renovation time was also longer than anticipated due to constantly changing weather conditions. Although there have been mandatory shutdowns across all sectors, the hotel industry has been deemed essential allowing us to remain operational. We believe that the boutique nature of the hotel, being only 10 rooms with an apartment style having full kitchens and ample space, has attracted guests even through the quarantine period. We had planned to close for 2 weeks as the season changed from winter to spring when traditional traffic drops significantly, but have remained open and have had a steady stream of reservations.
Maple Self Storage - Occupancy levels have remained steady over the winter months but traffic and occupancy have increased as we are moving into spring.
Irmo Self Storage- Has experienced a string of break ins in the last month, which we worked with the police to catch the suspect, and the asset in general has under-performed. We plan to exchange this asset into improved home lots in a growing part of SC locking in a premium equity price with a built in return on the equity. The take down timeline will coordinate nicely with the wind down of the fund.
Montgomery Road Office - The office has had no turn over and with a NNN, newer product in a relatively steady market, we are experiencing steady returns. We have increased reserves as we maintain a conservative position.
Carolina Apartments - Unit upgrades are continuing and are increasing revenue in the short term, and overall market value as the fund matures. We have maintained oversight with in house Management. This property has seen some effects with people not receiving unemployment checks and we are working with them to get their rents paid.
Inman Lots - 3 remaining lots are available, 1 is currently under contract and all have homes built on them so the motivation to move them quickly is in our favor.
As always, we encourage you to reach out with any questions. I hope for a quick resolution of this virus and the safety and protection of all your loved ones.
On behalf of the Fund Management Team