UD+P News: May 2021

COMMERCIAL RENT COLLECTIONS UPDATE

The table below summarizes office and retail collections from Q1 2020, when the Covid-19 was declared a global pandemic, through May 2021. In 2021, we discontinued the tabulation of quarterly rent collection data. Accordingly, monthly rent collection data is provided from January 2021 to present.

Office and retail collection rates have remained relatively steady since March, as Covid-19 vaccination rates have risen and restrictions on retail activity, social gatherings and other business operations have gradually eased. As of 5/28/2021, we have collected an estimated 92% of office charges (rent and pass through expenses) assessed in May. This represents a small decrease from April’s collection rate of 99%. The percent of charges collected from retail tenants in May was 82%.

Business Oregon is currently offering rent relief to commercial tenants that have suffered financial hardship during the pandemic through its Commercial Rent Relief Program. The program, which awards grants using a lottery system, targets landlords with tenant businesses with 100 or fewer employees who are behind on lease payments or any forgiven base rent amounts that have been negotiated due to COVID-19. Since February 2021, we have submitted two rounds of applications on behalf of our tenants. To date, several tenants at Àlmr and Slate have been awarded grants ranging from $6,000 to $100,000. We are awaiting final responses on two Round II applications currently under review and will keep you posted as we have more news to share. The table below summarizes commercial rent relief awarded by property as of May 28, 2021.

business ORegon COMMERCIAL RENT RELIEF AwardS

residential rent collections update

Since February, the number of renters who are more than one month behind on rent has increased. We believe this may be attributed in part to greater public awareness of eviction protections and generous federal funding that has been allocated to states for rent relief programs through Covid-19 stimulus packages. The table below summarizes residential delinquency (i.e., past due rent) attributed to current residents as well as rent relief awards that have been granted as of May 28, 2021. Current delinquency across all residential properties totals $147,588. The majority of the delinquency ($102,413) is over 90 days past due and largely attributed to a small number of residents at Slate and Fairmount with outstanding balances exceeding $10,000 who have not paid rent for 6 months or longer.

We are excited to share the news that UD+P properties Cassi, Fairmount Apartments and Slate have been awarded a combined $80,339 in rent relief through Round I of Oregon’s Landlord Compensation Fund. The fund offers landlords a payment for 80% of qualifying rent in arrears in exchange for forgiving the remaining 20% of past due rent. Round I targeted back rent owed by current renters from April 2020 though February 2021. When we receive our Round I award payment (anticipated in June), we will apply the funds to qualifying past due balances. This will significantly reduce delinquency attributed to rent that is over 90 days past due.

Our Operations team recently submitted an application for Round II, which targets rent in arrears from March through May 2021. Oregon Housing and Community Services, the agency that oversees the Landlord Compensation Fund, recently advised applicants that all valid charges will be approved for funding. Accordingly, we anticipate to receive a Round II award of approximately $43,000, the equivalent of 80% of back rent owed by current residents at Cassi, Fairmount and Slate for March through May. This summer, a third and final round of funding will be available. In contrast to Rounds I and II, which covered back rent owed by current renters, Round III will extend eligibility to back rent owed by past renters.

RESIDENTIAL DELINQUENCY AND RENT RELIEF BY PROPERTY: MAY 2021 (as of 5/28/21)

RESIDENTIAL LEASING UPDATE

The table below shows average residential lease rates for individual properties, as well as the portfolio-wide average lease rate across all stabilized properties.

The portfolio-wide average lease rate increased to 93% in May, up from 90% in April and Q1 2021. Average lease rates for individual properties rose at least 2 percent (at Àlmr and Slate) and as much as 6 percent (at The George) in May. With the exception of Àlmr, where a combination of lease breaks and challenges renting a handful of vacant studio and 2-bedroom units depressed lease rates for the past two months, average lease rates were higher in May relative to Q1 2021. Thanks to a combination of effective marketing and strategic concessions, Àlmr is 91% leased as of May 28th and trending upward.

The table below shows average residential occupancy rates for individual properties, as well as the portfolio-wide average occupancy rate across all stabilized properties.

AVERAGE OCCUPANCY - STABILIZED RESIDENTIAL PROPERTIES

In May, as of 5/28/21, the portfolio-wide average occupancy rate was 87%, up from 85% in April and 86% in Q1 2021. Since the start of the second quarter, as described in the leasing discussion above, a combination of turnover and prolonged vacancies have led to lower occupancy rates at Àlmr. Fairmount’s average occupancy rate was slightly lower in May (88%) compared to Q1 2021 (89%). Average occupancy rates at The George and Slate increased significantly in Q2 2021.

Spring is in full swing, the sun is shining, and we are experiencing a seasonal uptick in leasing activity that typically begins in May and extends through early fall. With widespread availability of the Covid-19 vaccine and over 61% of Multnomah County adults ages 18 and over vaccinated, our leasing team is now conducting all property tours in person. Throughout the month of May, we averaged five tours a day and received approximately 25 applications for new leases each week. During the second half of May, our leasing team’s dedication and initiative has translated to a significant number of new leases. As we have discussed in prior newsletters and investor communications, following the closure of Concordia University in early 2020 and subsequent termination of our master lease agreement with Concordia, we reabsorbed Cassi into our managed portfolio in fall 2020. We are thrilled to report that Cassi is approaching stabilization, with nearly 100% of units leased. We continue to make steady progress on the lease-up of Cassi’s sister property, Lyra, currently 83% leased. Fairmount Apartments has also benefited from strategic adjustments to concessions, marketing, and staff schedules. As of May 28th, Fairmount is 98% leased, with applications pending for remaining vacancies.

To maintain our positive momentum and continue to push lease rates higher, we are offering rent concessions at all properties except The George and Cassi. The George is fully leased and Cassi is approaching 100% leased, pending the approval of applications in process. The table below summarizes current concessions for new leases, which range from 4 to 8 weeks free and require a minimum 12-month term. The rent concession can be taken upfront or amortized over the term of the lease, an option that has been well received by residents since we first introduced it in March. In addition to rent concessions, we continue to offer a “zero deposit” at move-in policy for all new leases, portfolio-wide. Resident retention is as fundamental to the health of properties as our ability to attract new tenants. Accordingly, we are currently offering a renewal concession of 1 month free rent to residents at Àlmr, Fairmount, Lyra and Slate who reinstate their lease for a 12- or 16-month term.

Hotel GRAND STARK - OPEN FOR BUSINESS

Hotel Grand Stark, our historic renovation project in Portland’s Central Eastside, opened for business in May. Below are some recent exterior and interior images of the hotel taken by photographer Caylon Hackwith. In the coming week, we will be reaching out to share a “Friends and Family” offer featuring a promotional room rate and complimentary gift for hotel stays in June. In the interim, reservations can be booked through the official Hotel Grand Stark website.

Introducing Takibi - new japanese restaurant at the george

On May 18th, Snow Peak and restaurant group Submarine Hospitality opened their new innovative restaurant concept, Takibi, in Snow Peak’s US headquarters at The George. Takibi - Japanese for bonfire – brings outdoor values into the dining room, giving friends a gathering place to reconnect and appreciate the changing nature of the seasons through a produce-driven menu by chef Alex Kim and a beverage program led by legendary mixologist Jim Meehan.

Takibi serves a Japanese-inspired cuisine by way of the Pacific Northwest, centered around seasonal cooking of local ingredients on a wood-burning hearth and a beverage program rooted in the bounty of Japan and Oregon. Executive Chef Alex Kim partners with farmers, fishers, and ranchers throughout the region to create a menu that follows the rhythms of nature. Jim Meehan’s bar program channels Japanese national pride alongside regional affection, featuring both local purveyors and singular Japanese ingredients to create wholly unique offerings.

We are excited to add Takibi to the expanding list of outstanding restaurants, bars and eateries located at UD+P properties and encourage you to stop in soon for a meal, a cocktail or both.

LOCATION
2275 NW Flanders St., Portland, OR 97210

HOURS
3 to 9 pm - Sun-Thurs
3 to 10 pm - Fri-Sat

WEBSITE / SOCIAL MEDIA
www.takibipdx.com
@takibi_pdx