UD+P News: March 2021

2020 SCHEDULE K-1 TAX DOCUMENTS - NOW AVAILABLE

2020 Schedule K-1 Tax Documents for all UD+P funds are now available on the UD+P investor portal.

To log in to the portal to review and download your K-1, and to access other investment documents and information, please click Investor Login in the upper-right corner of the UD+P home page. If you would like to add your tax accountant or financial advisor as an authorized contact, please notify us.

Please contact Tina McNerthney at tina@udplp.com or 503-318-6588 for assistance with questions pertaining to K-1s or the investor portal.

RENT COLLECTIONS UPDATE

The table below summarizes rent charged versus rent collected by tenant type from Q1 2020 through March 2021 (as of 3/30/21). Quarterly rent collection data is provided for prior quarters, and monthly rent collection data is provided for the current quarter (Q1 2021).

We are excited to report positive news in the office realm. All charges (rent and pass through expenses) assessed in March have been collected—up from 85% in February. The percent of retail charges collected also increased modestly—88% in March compared to 85% in February. However, the percentage of retail tenants paying rent dipped to 78% in March. As warmer weather arrives, a greater percentage of the population receives the Covid-19 vaccine, and restrictions on retail and indoor dining capacity are relaxed, we are hopeful the outlook for retail and restaurant tenants that suffered financial hardship during the first year of the pandemic will begin to improve.

Following a relatively strong performance in Q4 2020 and January 2021, residential collections dropped below 90% in February (est. 86%) and March (87%). While the percentage of renters paying rent has remained consistent—an estimated 93% in February and 94% in March—the number of residents on payment plans and paying partial rent has increased. We have also experienced an uptick in the number of residents who are more than one month behind on rent. As of March 30, a total of 11 renter households owe more than one month of back rent. Four of these households are two months in arrears. Seven carry balances spanning more than two months, including three households owing three to five months of back rent and four households owing more than six months of back rent. Protections set forth in state, local and federal eviction moratoriums, currently in effect through at least June 30, 2021, strictly limit our capacity to inquire with residents about outstanding balances. As the pandemic draws on, more residents are taking advantage of provisions in the moratoriums that do not require renters to offer any explanation or proof of loss of income or economic hardship when they fall behind on rent.

In February, our Operations team submitted an application to Oregon’s Landlord Compensation Fund. Landlords may receive a payment for 80% of rent in arrears in exchange for forgiving the remaining 20% of past due rent. The first round of funding will allocate $50 million to landlords and will target back rent owed from April 2020 though the date of application. The program is not on a "first come, first serve" basis; applications are scored based on a weight of portfolio size and percentage of uncollected rent, with the goal of prioritizing smaller portfolios and portfolios with higher amounts of unpaid debt. This scoring is extracted from rent rolls and calculations of tenant arrearages. Round I applications are currently under review and we expect a response by mid-April.

RESIDENTIAL LEASING UPDATE

The table below shows average monthly residential occupancy and lease rates for individual properties, as well as portfolio-wide averages across all stabilized properties. In March, the portfolio-wide average occupancy rate dipped a percentage point to 87%. The average lease rate declined two percentage points to 89%.

With the transition to spring, residential leasing began to ramp up in March. Across our portfolio, we averaged 12 to 14 applications and 12 to 18 tours a week. While leasing activity is strong, we have experienced some unit turnover. Based on exit interviews conducted by our leasing team, some departing residents are taking advantage of historically low interest rates and purchasing homes. Others are relocating out of state or, in some cases, to nearby suburbs, where they can rent a larger unit for a lower monthly rent. The leasing environment in Portland’s Central City and close-in neighborhoods remains competitive, with many properties in the NW Portland and Central Eastside submarkets offering eight to 10 weeks free rent and additional incentives, such as free parking.

To attract new residents and retain existing residents, we continue to offer concessions at most of our properties. We are currently offering four weeks free rent for studios at Fairmount and all units at Slate. At Àlmr, we are offering four weeks free on all units. We are also offering eights weeks free—plus three months free parking for leases with a 16-month term—to promote 2-bedroom units that have been sitting vacant for longer. We continue to offer a “zero deposit” at move-in policy for all new leases, portfolio-wide. At Slate, Àlmr and Fairmount, we are offering renewal concessions of two to four weeks free rent to existing residents who reinstate their lease for a 12- or 16-month term.

We continue to make steady progress on the lease-up of sister properties Lyra and Cassi in Northeast Portland. As of March 28, Lyra is 64% leased and Cassi is 38% leased. At Lyra, we are offering four weeks free rent on all new leases. At Cassi, we are offering six weeks free rent for most new 12- or 16-month leases and we are continuing to bring additional units to market as our operations and maintenance team completes maintenance and repairs on units formerly leased by Concordia University students.

Hotel GRAND STARK UPDATE

Hotel Grand Stark, our historic renovation project in Portland’s Central Eastside, received its certificate of occupancy from the City of Portland in March. The hotel is on track to open this spring. As reported in the February newsletter, our hotel operating partner, Pali Group, launched the Hotel Grand Stark website last month and is currently accepting reservations. Below are some recent exterior images of the hotel, taken in late March.

DISTRICT OFFICE - EXTERIOR IMAGES

The photos below are recent exterior photos of District Office, our cross-laminated timber office project located at 525 SE MLK in Portland’s Central Eastside.

LYRA - EXTERIOR IMAGES

Below, are recent exterior photos of Lyra, our mixed-use residential project located at 5470 NE 16th Avenue in Northeast Portland. Lyra was completed in 2020 and is currently in lease-up.