UD+P News: September 2020

RESIDENTIAL COLLECTIONS aND LEASING UPDATE

RENT COLLECTIONS UPDATE
In September, we experienced a slight decline in residential rent collections relative to the first six months of the pandemic. As of September 28, an estimated 3.24% of residents are behind on their September rent whereas only 2.5% of residents across our residential portfolio have an unpaid rent balance for July and August. The end of the Federal Pandemic Unemployment Compensation program in July and subsequent loss of $600 in weekly supplemental unemployment benefits combined with the order issued by the Center For Disease Control and Prevention (CDC) to temporarily halt residential evictions are factors likely to have contributed to this small uptick in delinquencies. Overall, collections are attributed to nine resident households, seven of which have deferred rent for multiple consecutive months and two of which owe for September only. Our property management team will continue to work closely with residents who fall behind on their rent to establish payment plans. Oregon Governor Kate Brown may extend the Statewide COVID-19 eviction moratorium set to expire at the end of September. In the interim, the federal residential eviction moratorium in effect through the end of 2020 offers protections for most renter households impacted by COVID-19 job or income loss.

LEASING UPDATE
In September, the pace of leasing activity eased somewhat. This is due, in part, to the customary seasonal slowdown during the transition from summer to autumn. Multiple wildfires ignited over the Labor Day weekend in Western Oregon also impacted leasing in September. For nearly two weeks, Portland was cloaked in smoke and the air quality index was unhealthy or hazardous. Across our residential portfolio, an estimated 90% of units in stabilized residential properties — Álmr, Slate, The George and Fairmount Apartments — are leased. As observed in recent months, competition remains stiff. New deliveries in Northwest Portland and the Central City are offering generous concessions (e.g., up to 10 weeks free rent + free parking) to attract new tenants. Over the last quarter, average rents have declined 7.2% in Northwest Portland, 5.8% in Downtown Portland and 1.3% in Northeast Portland. Negative rent growth is anticipated through mid 2022 and luxury projects are particularly impacted.

We are currently offering 50% off rent for the first three months of tenancy for all new leases of 12 months or longer at Àlmr, Slate and Fairmount Apartments. (All residences units at The George are currently leased.) Our team continues to use digital and virtual tools to conduct tours, process applications and communicate with prospective residents. We recently resumed offering in-person tours to serious applicants and are following all CDC health and safety recommendations to keep our team members and prospective tenants safe.

Two of our residential properties, Lyra and K Street Commons, are currently in lease-up. We are pleased to announced that the City awarded Lyra its final certificate of occupancy on September 11. To date, we have leased four of the project’s market rate units. Three units are occupied and one move-in is scheduled for later this week. In the coming week, we anticipate Portland Housing Bureau (PHB) will complete its compliance review process so that we may begin screening applicants for Lyra’s eight income restricted units. PHB will provide us with leads on these affordable units, designated for households earning up to 60% of Portland’s median household income. We are currently offering four weeks of free rent on 12-month leases and six weeks of free rent on 16-month leases at Lyra. Thus far, all signed leases are for a 12-month tenancy. During October and November, we will put the finishing touches on interior common areas, including the installation of wall art and hallway carpeting. Recent photos of the Lyra model unit are shown below.

As detailed below, following the recent termination of our long-term lease with Concordia University, we are reabsorbing K Street Commons residential units into our multifamily portfolio. We are currently working to get all existing K Street residents on UD+P leases and will begin leasing vacant units shortly.

REMINDER: UD+P ANNUAL MEeting NExt WEEK

Urban Development + Partners 2020 Annual Member Meeting is scheduled for Wednesday, October 7, 2020, from 3 to 5 p.m. Our presentation will include a fund performance overview, market update, development update and investment strategy discussion, followed by a Q & A. Presenters will include UD+P Principal, Eric Cress, Operations Director, Megan Crosby, Development Director, Sarah Zahn and Investor Relations Director, Theresa Nute. Questions may be submitted using the “chat” feature during the meeting. Alternatively, you may email questions in advance to tina@udplp.com by 5 p.m. on October 5, 2020.

This year’s Annual Meeting will be a virtual event hosted on the Zoom meeting platform. If you have not yet registered and would like to attend, please RSVP to Tina McNerthney at tina@udplp.com on or before October 5, 2020. The meeting will be recorded and shared with investors who are unable to attend the “live” event.

K STREET COMMONS UPDATE

Earlier this year, Concordia University announced plans to cease operations at its Portland campus. Following the end of the Spring 2020 academic semester, Concordia permanently closed and has begun proceedings towards insolvency. 

We negotiated a lease termination with Concordia. We are reabsorbing the K Street Commons residential units and building, which had previously served as Concordia student housing under a long-term lease agreement, into our multifamily portfolio. Currently, we are renting eight units to past students of Concordia and taking the remaining 26 units to market for lease.