Dual City Capital Group Fund: Update Q2, 2020
Dear Dual City Investors,
Unfortunately the coronavirus is still present and still spreading. The first quarter was largely unaffected but as time has progressed and unemployment at record levels we are starting to see some pressure in our assets.
As always, preservation of capital is our priority and accordingly, we are making moves to reduce debt and move the most affected assets where practical and possible. We have an opportunity to move capital from non cash flowing assets into improved land with a reputable builder who fared well during the last recession. Single family housing has shown both resiliency and strong growth. The takedown schedule matches up with the dilution of the fund.
We do not expect to reduce any of the distributions at this time but will continue to monitor performance and will act accordingly. We thank you for your trust in Dual City, your investment in our fund, and we will continue to work diligently on the performance of the assets.
As in previous months, the monthly preferred return of 8% has been sent to all investors for Q2. 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.
The Haus Lake Placid: We expected this asset to be hit hard during the summer months as all major events have been canceled. However, being a small hotel, with in room kitchens and outdoor activities, we have seen strong reservations as travelers spend vacations closer to home. Our numbers are comparable to last years even with the pandemic and continued event bans.
Irmo Self Storage and Maple Self Storage: We have experienced a consistent increase in delinquencies and vacancies. These are the two assets we are looking to move. We plan to exchange this asset into improved home lots. The lots are in a growing part of SC and have an existing takedown schedule with a reputable builder in this region. We feel like this move during this particular time, with a lot of unknown in the future, will remove debt and have no effect on paying down principal since neither asset has a principal paydown component. With the hesitation many lenders have on most asset classes we are fortunate to be in a position to move assets without taking a loss while bettering our position.
Montgomery Road Office: Two of our tenants are delinquent with rental payments. We are working with our onsite management company to bring them back to current. We have communicated our position to our lender and, if needed, may be eligible for payment postponement for the upcoming quarter.
Carolina Commons Apartments: Unit upgrades are continuing and are increasing revenue in the short term. We have maintained oversight with in house Management. This property has been stable this quarter.
Inman Lots: We have 1 lot to close (closing date is July 30th), and the housing market and new home sales are currently strong in SC.
As always, we encourage you to reach out with any questions. We hope for a quick resolution of this virus.
On behalf of the Fund Management Team