Northern Cross Update History – Founders Grove Capital

March 2022

At Northern Cross, occupancy was 95.2%, and collections were 98.9%.

Sale Update

We are selling Northern Cross. The anticipated closing date is May 5, 2022. We are grateful for your partnership in Northern Cross. If you elected to 1031, we look forward to continuing this success with the Halston 5 portfolio. If you elected to cash out, your proceeds are anticipated to be paid in accordance with the Redemption Agreement. A formal closing notice will be sent after the sale.

Operations

In March, occupancy was 95.2% (compared to 95.5% in February), and trending occupancy is at 93.7%. Collections on occupied units increased to 98.9% in March (compared to 97.7% in February).

No new renovations were completed in March, and 353 units have been renovated since acquisition. On new leases signed over the past two months, the average rent rate exceeded projections by $169.

Distributions and Financials

Due to the impending sale, we will include your final monthly distribution with the sale proceeds.

You can access the Q1, 2022 financial package here.

Portal Update

We continue to work through the transition to our new portal and we will continue to transfer over your existing holdings, past distributions and documents.

You may still view your current investment information and access historical documents in the IMS platform. Questions regarding access to your portal in Juniper Square and/or IMS should be sent to investors@ashcroftcapital.com

February 2022

At Northern Cross, occupancy was 95.5%, and collections were 97.7%.

2021 Tax Documents

Your 2021 K-1 is anticipated to be available by late this evening. You will receive an email when the form is available to download from the Juniper Square portal.

Sale Update

We plan on selling Northern Cross in mid-May. If you haven’t already read the sale announcement, you can access that email here. As a reminder, we are offering a 1031 into Halston 5. If you have not already expressed your interest in the 1031 or cash out options, please do so here. We expect formal election documents to be available by the end of April. However, we are asking that you please express your interest no later than April 10.

Operations

In February, occupancy increased to 95.5% (compared to 93.2% in January), and trending occupancy is at 92.9%. Collections on occupied units increased to 97.7% in February (compared to 97.3% in January).

Fifteen new renovations we completed in February, and 353 units have been renovated since acquisition. On new leases signed over the past two months, the average rent rate exceeded projections by $148.

Distributions

We will continue to send monthly distributions, which will be sent out by the end of this month.

We anticipate sending your February distribution through Juniper Square (JSQ), our new investor portal, by the end of March. The format of the notification email through JSQ will be different from previous notifications. To ensure that you are receiving notifications, please approve Juniper Square as an authorized contact or check your spam folder.

Portal Update

We mentioned in previous updates, that we are transitioning to JSQ from our previous platform, IMS. We are now in phase two of the data migration to JSQ. Once phase two is complete, you can expect to see all of your current holdings with Ashcroft, along with previous distributions, and have the ability to update your personal information like addresses and bank accounts. We anticipate that phase two will be completed by early June.

January 2022

Operations

In January, occupancy was 93.2% (compared to 95.2% in December), and trending occupancy is at 91.0%. Collections on occupied units increased to 97.3% in January (compared to 96.6% in December).

Seven new units were renovated in January, and 338 units have been renovated since acquisition. On new leases signed over the past two months, the average rent rate exceeded projections by $132.

Distributions

We will continue to send monthly distributions, which will be sent out by the end of the month.

Distributions will be processed in the same manner as in months prior. We anticipate sending your February distribution through Juniper Square (JSQ), our new investor portal, by the end of March. The format of the notification email through JSQ will be different than previous notifications. To ensure that you are receiving notifications please approve Juniper Square as an authorized contact or check your spam folder.

We will continue to send monthly distributions, which will be sent out by the end of this month.

Portal Update

We mentioned in December’s update, that we are transitioning to JSQ from our previous platform, IMS. We are now in phase two of the data migration to JSQ, which has been delayed due to the large amounts of data being transferred. We now expect the transition to be completed by the end of March. Once phase two is complete, you can expect to see all of your current holdings with Ashcroft, previous distributions, and have the ability to update your personal information like address or bank accounts.

We anticipate a complete migration of documents, including access to historical documents, to be completed by the end of May or early June at the latest. You may still view your current investment information and access historical documents in the IMS platform. Questions regarding access to your portal in Juniper Square and/or IMS should be sent to investors@ashcroftcapital.com

2021 Tax Documents

Your 2021 K-1 is anticipated to be available by March 31, 2022. You will receive an email when the form is available to download from the portal.

December 2021

At Northern Cross, occupancy was 95.2%, and collections were 96.6%.

Distributions

We will continue to send monthly distributions, which will be sent out by the end of the month.

The Q4 financials (rent roll and trailing 12-month profit and loss statement) are now available on the Investor Portal. Log in to your account to view by clicking here.

Portal Update

We have begun the transition from IMS to Juniper Square. Currently, Juniper Square is only being utilized for the Ashcroft Value-Add Fund II (AVAF2). However, we will be fully transitioning all investments to Juniper Square. This transition is anticipated to be completed by February 28. If you have not yet received your invite to Juniper Square for the AVAF2, please reply to this email to request a new invite.

Once the transition is complete, you will receive an email to set your password for Juniper Square if you have yet to do so prior to then.

Operations

In December, occupancy was 95.2% (compared to 96.7% in November), and trending occupancy is at 94.4%. Collections on occupied units increased to 96.6% in December (compared to 94.8% in November).

Eight new units were renovated in December, and a total of 331 units have been renovated since acquisition. On new leases signed over the past two months, the average rent rate exceeded projections by $127.

November 2021

At Northern Cross, occupancy was 95.7%, and collections were 94.8%.

Distributions

This month marks the 3^rd anniversary of our acquisition. We plan to keep the distribution the same this month which is a prorated 8% preferred return. For example, if you invested $100,000 you would receive $666.67. We will continue to send monthly distributions, which will be sent out by the end of the month.

Portal Update

In 2022, Ashcroft will upgrade the investor portal to Juniper Square. You can expect to receive an email with sign-up instructions no later than January 11, 2022. Once you receive it, you will be able to sign up for access to the new investor portal. If needed, you will be able to update or change your personal or banking information once the new portal is launched. We appreciate your patience during the transition and look forward to offering a better overall experience with Juniper Square.

Operations

In November, occupancy was 95.7% (the same as in October), and trending occupancy is higher at 95.9%. Collections on occupied units were 94.8% in November (compared to 96.6% in October).

Twelve new units were renovated in November, and a total of 323 units have been renovated since acquisition. On new leases signed over the past two months, the average rent rate exceeded projections by $102.

Additionally, Texas Rent Relief has announced the exhaustion of its funding. No more approvals will be granted and we are directing residents to other charitable organizations that are still providing rent relief.

October 2021

Northern Cross

At Northern Cross, occupancy is at 95.7%, and collections are at 96.6%.

Distributions

We will continue to send monthly distributions, which will be sent out by the end of the month.

Operations

Occupancy increased to 95.7% (compared to 95.5% in September), and preleased occupancy is higher at 96.2%. Collections on occupied units increased to 96.6% in October (compared to 94.4% in September).

Three new units were renovated in October and a total of 311 units have been renovated since acquisition. On new leases signed over the past two months, the average rental rate exceeded projections by $77.

September 2021

Northern Cross

At Northern Cross, occupancy is at 95.5%, and collections are at 94.4%.

Distributions and Financials

We will continue to send monthly distributions, which will be sent out by the end of the month.

The Q3 Financials (rent roll and trailing 12-month profit and loss statement) are now available on the Investor Portal. Log in to your account to view by clicking here.

Operations

Occupancy increased to 95.5% (compared to 93.4% in August), and preleased occupancy is higher at 100%. Collections on occupied units were at 94.4% in September (compared to 94.9% in August).

No new units were renovated in September and a total of 308 units have been renovated since acquisition. In previous updates there were units reported that were contracted for upgrade, but the work had not yet commenced. Some units have been removed from the pipeline and therefore the count has decreased. Going forward, we will only be reporting units that have either been completed or are truly in progress.

On new leases signed over the past two months, the average rent rate exceeded projections by $70.

August 2021

Northern Cross

At Northern cross occupancy is 93.4%, and collections are 94.9%.

Distributions

Monthly distributions were sent out yesterday with the accompanying email notification.

Operations

Occupancy was 93.4% in August (compared to 93.9% in July), and preleased occupancy is higher 99.3%. Collections on occupied units was 94.9% in August (compared to 95.5% in July).

In the month of August, average rents over the past two months exceeded projections by $65.

July 2021

At Northern cross occupancy is 93.9%, and collections are 95.5%.

Distributions

We now feel confident to return to monthly distributions at the full 8% annualized rate, beginning with July’s distribution, to be sent by the end of the month.

Operations

Occupancy increased to 93.9% in July (compared to 93.4% in June), and preleased occupancy is 94.2%. Collections on occupied units increased to 95.5% in July (compared to 94.9% in June). In July, we renovated 26 units, bringing us to a total of 327 renovated units since acquisition. Rents in July exceeded projections by $76 after we implemented a new plan around a floor plan that was lagging numbers.

June 2021

Occupancy is 93.4% and collections increased to 94.9% at Northern Cross.

Distributions and Financials

The Q2 2021 distribution is set for 1% and will be sent out by the end of the month.

The Q2 Financials (rent roll and trailing 12-month profit and loss statement) are now available on the Investor Portal. Log in to your account to view by clicking here.

Operations

Occupancy is 93.4% (compared to 94.7% in May) and preleased occupancy increased to 97.9%. Collections on occupied units increased to 94.9% in June (compared to 93.3% in May).

In June, we renovated seven additional units, brining us to a total of 298 renovated units since acquisition. Although we are $8 below projections, the increase in renovated units has allowed us to increase rents and we are now trending closer to our projected rents at Northern Cross.

May 2021

Occupancy is at 94.7% and is trending at this level for next month while collections are at 93.3%.

Distributions

The next distribution is scheduled for the end of July. We will let you know in the June Recap email what that distribution amount will be.

Operations

Occupancy has increased to 94.7% (up from 94.5% last month) and preleased occupancy is at 93.7%. Collections on occupied units was at 93.3% in May. We have had four CDC declarations, which makes up most of the delinquency at Northern Cross. We are constantly working with tenants to get them signed up and fully applied for the various rental assistance programs in the area.

To date we have renovated 291 (73%) units at Northern Cross. Newly renovated units have come at a reduced scope which allows us to capture higher rents for the units, rather than sit vacant. We plan to increase scope once the market comes back to pre-COVID levels.

Resident Activities

We are continuing to be creative with the themes of the resident appreciation events we are hosting to follow the social distancing guidelines. This included hosting a Patio Decorating Contest among residents.

April 2021

Both occupancy (94.5%) and collections (96.3%) increased at Northern Cross.

Update on Impact of Inclement Weather

Work began last month on the agreed upon scope and is projected to wrap up on May 26^th.

Distributions

The next distribution is scheduled for the end of July. We will let you know in the June Recap email what that distribution amount will be.

Operations

Occupancy has increased to 94.5% (up from 91.9% last month) and preleased occupancy is even higher at 95.7%. Collections on occupied units also increased to 96.3% for April (up from 94.2% for March). We’ve had four CDC declarations, which makes up most of the delinquency at Northern Cross. We are constantly working with tenants to get them signed up and fully applied for the various rental assistance programs in the area.

No new renovated units have been added to the available pool. We simply did not get any units that we could renovate turned back to us this month. We are below our projections with our updated units, however we are closing the gap and trending in the right direction.

March 2021

Occupancy (91.9%) is trending in the mid-90s and collections (94.2%) remains strong.

Update on Impact of Inclement Weather

We have approved the scope here and insurance will cover the cost. Reconstruction work began on April 19th.

Distributions

You will receive a quarterly distribution by the end of the month. It will equal 1% of your initial investment. For example, if you invested $100,000, you would receive $1,000. This is less than a full quarter’s worth of preferred return, which is 2%. The difference between the 2% and the 1% you will receive will accrue and be paid out at a capital event. The next distribution is scheduled for the end of July. We will let you know in the June Recap email what the new the distribution amount will be.

Financials

The Q1 financials (rent roll and trailing 12-month profit and loss statement) are now available on the Investor Portal. Login to your account to view by clicking here.

Operations

Current occupancy is 91.9% and preleased occupancy is 93.7%. Collections on occupied units was 94.2% for March (down from 95.6% for February).

We held off on hosting resident activities this month so our in-house management team could focus on the operations at North Cross.

February 2021

Occupancy (92.0%) improved, and collections (95.6%) remained strong at Northern Cross.

Update on Impact of Inclement Weather

101 units in total were affected with the vast majority having water leaks in the bathroom or the utility closet. We are still estimating the total repair costs. All expenses incurred will be covered by our insurance.

Distributions

The next scheduled quarterly distribution is scheduled for the end of April. We will let you know in the March Recap email what the distribution amount will be.

2020 Schedule K-1 Tax Report

As a friendly reminder, please review your investment profile to make sure you have inputted the information required for your 2020 K-1. K-1s will be uploaded into the investor portal by the end of the month. You will receive an email notification when they become available. If you are not able to log into the investor portal, or your invitation has expired, please email InvestorRelations@AshcroftCapital.com.

Operations

Occupancy increased to 92.0% (91.7% last month), and preleased occupancy is 91.5%. Collections on occupied units was 95.6% for February.

Birchstone, Ashcroft’s in-house property management company, has taken over the management at Northern Cross, and a new site manager is in-place. The transition went smoothly, and we expect the new management team to continue the positive momentum.

Resident Activities

We are continuing to be creative with the themes of the resident appreciation events we are hosting to follow the social distancing guidelines. In March, this will include a Food Truck event.

January 2021

Occupancy (91.7%) remained in the 90s while collections (95.7%) are still strong at Northern Cross.

Update on Impact of Inclement Weather

A total of 91 units are without water due to burst pipes. There is no major damage to the unit interiors, and no one was displaced. Residents are able to use the clubhouse and nearby vacant units for water (i.e., shower, bathroom, drinking, etc.).

Our maintenance team is currently working to restore water to as many units as possible. A plumbing vendor is scheduled to repair the remaining property leaks this Saturday and Sunday, so all 91 units will have water by EOD Sunday. We are still estimating the total repair costs.

We will be filing a DFW portfolio wide insurance claim. Since the storm that caused the damages was one occurrence, our policy allows us to file on major claim which will help us hit our deductible and cover the repair costs.

Also, we are doing a surprise resident event this week. We are sending a food truck with 150 free meals and delivering 100 free cases of water for residents who had any issues as a result of the storm.

Distributions

The next scheduled quarterly distribution is scheduled for the end of April. We will let you know in the March Recap email what the distribution amount will be.

2020 Schedule K-1 Tax Report

As friendly reminder, please review your investment profile to make sure you have inputted the information required for your 2020 K-1. K-1s will be uploaded into the investor portal by the end of March. If you are not able to log into the investor portal, or your invitation has expired, please email InvestorRelations@AshcroftCapital.com.

Operations

Occupancy is 91.7%, which is the 9^th consecutive month in the 90s. Preleased occupancy is 93.0%. Collections is still strong at 95.7%.

To continue to improve occupancy, we have expanded our preferred employer program where we target employers who employ our resident demographic, as well increased our target marketing radius.

One new unit was renovated over the last month for a total of 266 unit since acquisition. We are still below our projections but expect to lease closer to our projections as occupancy improves.

Resident Activities

We are continuing to be creative with the themes of the resident appreciation events we are hosting to follow the social distancing guidelines. In February, these events included:

Valentine’s Day Chocolate Day
Breakfast at the Gate
Patio Contest

December 2020

Occupancy (92.7%) remained in the 90s while collections (96.5%) are strong at Northern Cross.

Distributions

You will receive a quarterly distribution by the end of the month. It will equal 1% of your initial investment. For example, if you invested $100,000, you would receive $1,000. This is less than a full quarter’s worth of preferred return, which is 2%. The difference between the 2% and the 1% you will receive will accrue and be paid out at a capital event.

The next distribution is scheduled for the end of April. We will let you know in the March Recap email what the new the distribution amount will be.

Financials

The Q4 financials (rent roll and trailing 12-month profit and loss statement) are now available on the Investor Portal. Login to your account to view by clicking here.

Friendly Reminder: Please review your investment profile to make sure that it is complete with the information required for your 2020 K1. K1s will be uploaded into the investor portal by the end of March 2021. If you are not able to log into the investor portal, or your invitation has expired, please email InvestorRelations@AshcroftCapital.com to have it resent.

Operations and Renovations

Occupancy is 92.7% (compared to 93.2% last month) and preleased occupancy is 93.0%. This is the 8th month in a row occupancy has been in the 90s after dipping into the 80s last spring. Collections on occupied units remained strong at 96.5%.

The new manager (the previous manager took on a new management role) started in December and is off to a great start.

One new unit was renovated last month for a total of 265 units since acquisition. Upgraded unit are being leases at an average of $29 below our projections but continue to improve each month.

Resident Activities

We are continuing to be creative with the themes of the resident appreciation events we are hosting to follow the social distancing guidelines. In January, these events included:
National Chocolate Day
Breakfast at the Gate
Gift Basket Raffle

November 2020

Occupancy (93.2%) is starting to improve and collections (96.5%) remain strong at Northern Cross.

Operations

Occupancy has increased to 93.2% (91.7% last month) and preleased occupancy is 93.0%. This is the 7th consecutive month of at least 90% occupancy.

Collections on the occupied units is still strong at 96.5%.

The current site manager notified us that she accepted an offer to manage another property. Alec, our Director of Asset Management, has already identified and met with a replacement. She has a lot of management experience in Texas and has a college degree, which is somewhat rare for a property manager.

We renovated another 5 units last month. Rents are improving but at still $31 below our projections.

Distributions

Our focus will be to continue this positive momentum through 2021. As mentioned in last month’s recap email, we do not expect to distribute a full distribution for Q4. We will let you know in next month’s recap email how much, if any, we will distribute.

Resident Activities

We are continuing to be creative with the themes of the resident appreciation events we are hosting to follow the social distancing guidelines. Click here for pictures from November’s events.

In December, these events will include:Cookie Decorating Contest
Christmas Tree Decorating Contest
Christmas Food Drive

October 2020

Occupancy (91.7%) remains in the 90s for the sixth month in a row, and collections (98.3%) is still nearly perfect.

Friendly Reminder: As we approach the new year, please review your investment profile to make sure that it is complete with the information required for your 2020 K1. K1s will be uploaded into the investor portal by the end of March 2021. If you are not able to log into the investor portal, or your invitation has expired, please email InvestorRelations@AshcroftCapital.com to have it resent.

Operations

Current occupancy is 91.7%, compared to 93.2% last month, which is the 6th month in a row occupancy has been in the 90s. Preleased occupancy is 92.5%.

The nearby property, which was offering a rent special that has been impacting Northern Cross, was just purchased by a very rent-driven operator. They are going to focus on pushing rents (vs. offering low rents to inflate occupancy like the previous owner) which will have a positive impact on both occupancy and rents at Northern Cross.

Collections on the occupied units is still strong at 98.3%.

We also renovated another six units over the last month. Overall, the upgraded units are rented $33 below our projections, However, we’ve increased the rents by 12% since acquisition.

Distributions

Due to the combination of the former manager withholding notice-to-vacates (pre-COVID-19), the affects from the onset of COVID-19, and the aggressive lease-up special offered by the competitor property mentioned above, we are not meeting our projected rents on renovated units. We have worked our way closer to the projected rents, going from $46 below projections in May to now being $33 below projections. However, the cash flow remains below our projections. We will determine next month, how much, if any, of a distribution will be sent out in Q4 of this year.

Frank continues to work onsite with the management team to further improve the rents. Combine these efforts with the new owner at the competitor property and we’re confident in our ability to achieve our projections but it will likely be in approximately 6 – 12 months to allow us time to recover and implement the aforementioned plan.

Resident Activities

We are continuing to be creative with the themes of the resident appreciation events we are hosting to follow the social distancing guidelines. Click here for a picture from October’s Breakfast Burritos at the Gate event.

In November, these events will include:Donuts at the Gate
Hot Cocoa Bar
Pick a Pie

September 2020

Occupancy (93.2%) has been in the 90s for five months in a row, and collections (99%) remain nearly perfect.

Distributions

We plan on continuing to do quarterly distributions for this property to remain conservative. You will receive a quarterly distribution by the end of the month. It will equal 1% of your initial investment. For example, if you invested $100,000, you will receive $1,000.

This is less than a full quarter’s worth of preferred return, which is 2% (8% preferred return divided by 4 quarters equals 2%). The difference between the preferred return and what is distributed will accrue and be paid out at a capital event. The reason for the 1% is because our business plan implementation was impacted by the prolonged lease-up of the new construction next door. We are doing all we can to grow revenue and while the long-term health of this opportunity remains strong, it will take some time to fully recover from the short-term impact of the development next door. They are continuing to offer excessive concessions in order to get fully occupied.

The next distribution is schedule for the end of January. It will cover October, November, and December.

Financials

The Q3 financials (rent roll and trailing 12-month profit and loss statement) are now available on the Investor Portal. Login to your account to view by clicking here.

Operations

Current occupancy is 93.2%, which is the same as last month but marks the 5th straight month occupancy has been in the 90s. Preleased occupancy is 91.5%.

We continue to focus on cancelling notice-to-vacates (NTVs) to increase our occupancy trends. Additionally, Frank continues to spend a lot of time at the property, working with the manager to improve operations.

Collections remained near perfect. We collected rent on 99% of the occupied units last month.

Renovations

Renovations restarted since we were not seeing a lot of demand for classic units. We renovated 10 new units since last month’s recap email.

Resident Activities

We are continuing to be creative with the themes of the resident appreciation events we are hosting to follow the social distancing guidelines. In October, these events will include:

Breakfast Burritos On The Go
Pumpkin Carving
Trick & Treat Goodies

August 2020

Operations are improving at Northern Cross. Occupancy (93.2%) remained strong and we achieved a near perfect collections rate 99.1% in August.

Monthly Recap Email Update

While the content of the monthly recap emails will remain the same, we have decided to update the timing. Starting next month and each month thereafter, we will send the recap email by the last Friday of the month.

Expect to receive the September Recap email by Friday October 30th.

Distributions

We will let you know in next month’s recap email if we will transition back to monthly distributions.

Operations

Operations have improved greatly at Northern Cross.

Occupancy is in the 90’s for the fourth straight month. Current occupancy has increased to 93.2% (up from 92.5% last month). Preleased occupancy is lower at 92.0% due to notice-to-vacate, home purchases, job relocations, and other financial considerations. However, the competitor property that was offering a leasing special has finally achieved a mid-90% occupancy rate. Therefore, we shouldn’t be affected by their concession any longer, which will help with our occupancy trend.

We achieved a near perfect collections rate of 99.1% on occupied units in August. However, earlier this month, the CDC issued an eviction moratorium effective from September 4th to December 31st. Click here for article with more details on the moratorium.

Due to the near perfect collections rate, we are uncertain if the renewed moratorium will affect our operations. Nonetheless, after the CDC’s announcement, we immediately began working with our property management company to establish strategies to work within the guidelines of the moratorium while mitigating operational impacts.

Renovations

Renovations have resumed as we are not seeing a strong demand for classic units now. We are in the process of receiving bids from new vendors on counter tops, cabinets, appliance, and flooring to reduce the rehab costs.

Resident Activities

We are continuing to be creative with the themes of the resident appreciation events we are hosting to follow the social distancing guidelines. In September, these events will include:
-Grab-N-Go Taco Night
-Donuts at the Gate
-Facebook Bingo

July 2020

The operations at Northern Cross have greatly improved over the past month. Occupancy remains above 90% and is trending mid-90s while collections remained strong in July.

Distributions

Last month, you received a quarterly distribution equal to 1% of your initial investment. Since this was less than a full quarter’s worth of preferred return, the difference will accrue and be paid at a capital event or when the property’s cash flow allows for it. We will let you know by October, which is the next scheduled quarterly distribution, if we will transition back to monthly distributions.

Operations

Collections have been and continue to be strong at Northern Cross. The main challenge since the outset of coronavirus has been occupancy. However, occupancy has increased to 92.5% and is above 90% for the third straight month. Current occupancy is 92.5%. Preleased occupancy is even higher at 94.7% through the end of the month.

We will now focus on increasing occupancy even more following the same strategies outlined in last month’s recap email, as well as beginning to brainstorm ways to create more expense efficiencies.

Renovations

Interior renovations have resumed at Northern Cross. Doug Palmer, our Director of Construction, will be working with the team to see if there is any way to reduce interior renovation costs. The current focus is on seeking new vendors for counter tops, cabinets, appliances, and flooring.

Resident Activities

We are continuing to be creative with the themes of the resident appreciation events we are hosting to follow the social distancing guidelines.

In August, these events will include:
Back To School Supply Event
Food Truck Night
Pet Photos

June 2020

The operations and business plan at Northern Cross continue to be affected by the coronavirus pandemic, as well as by a nearby property’s concessions. As a result, occupancy rates have been negatively impacted.

As always, we are continuing to focus on preserving your capital investment and are implementing solutions to quickly increase our lagging occupancy rate and collections. This includes Ashcroft Capital’s co-founder Frank Roessler relocating to DFW to work with our management team.

Here are updates on what we’ve done at Northern Cross over the previous 30 days to preserve your capital investment, increase occupancy, and increase collections.

Distributions

As a reminder, we decided to temporarily transition from monthly distributions to quarterly distributions at Northern Cross. We also decided to temporarily suspend collecting our asset management fees.

We will be sending out a distribution by the end of the month. It will equal 1.0% of your investment. For example, if you invested $100,000, you will receive $1,000.

This is less than a full quarter’s worth of preferred return, which is 2% (8% preferred return divided by 4 quarters equals 2%). Therefore, the difference between what is owed and what is distributed will accrue and be paid out at a capital event. The reasoning behind this lowered distribution is outlined in the “Operations” section below.

The next distribution is scheduled for the end of October. It will cover July, August, and September. We will let you know by then if we will continue quarterly distributions or transition back to monthly distributions.

Financials

As a reminder, we now upload the quarterly financials to the investor portal. If you already set up your account, you can immediately download the Q2 2020 financials (rent roll and 12-month profit and loss state) by logging into the portal by clicking here.

Operations

Current occupancy has increased to 91.0% (compared to 90.45% last month) and preleased occupancy is 91.5%.

Occupancy has continued to be a challenge for the same reasons outlined in last month’s recap. The new construction across the street has been offering the same 8-weeks free to new residents and has remained below 90% occupancy (they are currently at 87%) for the better part of two years now. And the non-payment-based eviction moratorium from the CARES Act is still in place until August.

To combat this, we’ve upgraded our marketing package at Apartments.com, as well as focused on sign spinners and direct mailers.

The biggest change we made is temporarily relocating Ashcroft’s co-founder Frank to DFW. He has and will continue to spend a significant amount of time at Northern Cross working hand-in-hand with the management team to increase occupancy.

Collections have remained strong. We’ve consistently maintained a 95% collections rate since April. The current demographic is solid, so our focus is on increasing occupancy.

Renovations

We had previously paused interior renovations to preserve cash but will slowly begin again as the demand for classic units has been low. Doug Palmer, our Director of Construction, will be working with the team to see if there is any way to reduce interior renovation costs in an effort to preserve capital. This will include exploring and bidding new fixtures and counter tops to other vendors, as well as looking for new contractors to reduce overall labor costs.

Due to the above-mentioned reasons, leases on previously upgraded units now average $43 below our projections. However, our rent has grown by 10% since we acquired Northern Cross. These rent reductions should be temporary and will reset once we’ve increased the occupancy rate and collections.

Resident Activities

We are continuing to be creative with the types of resident appreciation events we are hosting to follow the social distancing guidelines.

In July, these events will include:

Food Truck Night
Popsicle Pop In
Breakfast On The Go

May 2020

The operations and business plan at Northern Cross have been affected by the coronavirus pandemic, as well as by a nearby property’s concessions. As a result, collections and occupancy rates have been negatively impacted.

As always, we are continuing to focus on preserving your capital investment and are implementing solutions to quickly increase our lagging occupancy rate and collections.

Here are updates on what we’ve done at Northern Cross over the previous 30 days to preserve your capital investment, increase occupancy, and increase collections.

Distributions

The next distribution is still scheduled for the end of July. It will cover April, May, and June. In July, we should have a better understanding of how the pandemic has affected Northern Cross and will decide if we can transition back to monthly distributions or if that needs to be extended.

Friendly Reminder: We still have some investors who have not logged into the investor portal, and some who still need to add or update their information. If you have not done so already, we would like to remind you to please log in to the investor portal and complete your profile information, as well as review and/or update your payment information. It is very important to complete the appropriate steps in order to continue to receive your distributions to your preferred location. Please click here for the instructions. If you have not received your invitation or it recently expired, and you need it re-sent, please contact InvestorRelations@ashcroftcapital.com (DO NOT create a new profile, as it will not connect you to your investments already in the system). If you have already logged in and would like to be taken directly to the portal click here.

Operations

Current occupancy is 90.45% and preleased occupancy is 90.45%.

Prior to the coronavirus pandemic, the property experienced a dramatic dip in occupancy when the former regional manager withheld “notice-to-vacates” from us to boost her occupancy numbers. After this was identified, occupancy dropped into the low-80’s last summer. At the same time, the new-construction across the street, Grand on Beach, was half-way through its aggressive lease-up special.

Flash forward to today and we have a great manager and consistent, stable staff. Together, they’ve been able to re-stabilize the deal from the low-80% occupancy. However, with the outbreak of coronavirus and the resulting eviction moratorium, some residents cannot pay their rent in full and the CARES Act prohibits us from non-payment-based evictions until August. Additionally, the new-construction property across the street is still not leased at even 90% and is offering 8 weeks of free rent to new residents. The combination of these two factors makes leasing and collections difficult at Northern Cross.

Therefore, in addition to pausing asset management fees, renovations, and transitioning to quarterly distributions, we are investing in more internet advertising and professional sign-spinners to increase occupancy. Regarding collections, we expect an uptick in bad debt once the non-payment-based eviction moratorium expires in August.

Renovations

We have also temporarily paused interior renovations to preserve cash.

Due to the above-mentioned reasons, leases on previously upgraded units now averaging $46 below our projections.

However, our rent has grown by 10% since we acquired Northern Cross. These rent reductions should be temporary and will reset once we’ve increased the occupancy rate and collections.

Resident Activities

We are continuing to be creative with the types of resident appreciation events we are hosting to follow the social distancing guidelines. In June, these events will include:

Breakfast-On-The-Go
Taco Hut Truck
Donuts with Dad

April 2020

We have continued to focus on the preservation of your capital investment during the coronavirus pandemic. Here are some updates on Northern Cross over the previous 30 days:

Distributions

We have temporarily transitioned from monthly distributions to quarterly distributions. This proactive measure will give us time to assess how the pandemic has affected Northern Cross, allow us to remain conservative and help us better preserve your capital investment.

Therefore, the next distribution is scheduled for the end of July. It will cover April, May, and June. In July, we should have a better understanding of how the pandemic has affected Northern Cross and will decide if we can transition back to monthly distributions.

Friendly Reminder: We would like to remind all investors who have not yet logged in to the Investor Portal and completed their profile information, as well as reviewed and/or updated their payment information to do so. It is important to complete the appropriate steps in order to continue to receive your monthly distributions to your preferred location. Please click here for the instructions. If you have not received your invitation or it recently expired, and you need it re-sent, please contact InvestorRelations@ashcroftcapital.com. If you have already logged in and would like to be taken directly to the portal Click here.

Operations

Due to social distancing and stay-at-home orders, we are continuing to offer virtual tours and YouTube video unit walkthroughs for prospective residents.

We renovated 11 new units in April but – as I mentioned above – have temporarily paused future unit renovations to preserve cash.

Resident Activities

We are also continuing to be creative with the types of events we are hosting for the residents to promote engagement of residents, as well as social distancing. In May, these events include:

Breakfast On The Go
Taco Truck
Spring Patio Contest ($50 gift card to winner)

March 2020

Distributions

One major area of focus has been rent collections. We have made arrangements with some of the residents who are facing a coronavirus-related hardship at Northern Cross to pay their rent by the 25th. Therefore, I will send another email on the 27th with an update on the status of collections and if we feel we need to defer distributions based on how the resident base is impacted. However, our breakeven occupancy is 72.1%. This means we will be able to cover all expenses and conserve your investment, at an occupancy rate that is 72.1% or higher.

Operations

While our leasing traffic has slowed down, we are offering virtual tours and creating YouTube videos of unit walkthroughs. Click here for a sample virtual tour at Northern Cross.

We continue to move forward with numerous construction projects, making sure that job safety is the number one priority. In fact, it is a great time to move forward with these projects with minimal disruption to our residents. We renovated 9 new units in March.

We are instituting a “Hero of the Month” and “Hero of the Week” program that honors our portfolio’s essential workers whose dedication and hard work are nothing short of inspiring.

We applied and were approved for the Paycheck Protection Program, which should allow us to significantly reduce our payroll expense.

We are actively monitoring and complying with Texas guidance on eviction proceedings as well as complying with new standards from our lenders.

Everyone at Northern Cross is adapting quickly to this new reality.

Residents

Our operational goals are always to meet and exceed residents’ standards and their safety and happiness is our mission. During these challenging times, we’ve constantly provided local and national resources for our most impacted residents. These include local housing organizations, churches, and food banks.

Since our gym and common areas are closed, we are hosting resident events that promote social distancing. In April, these include:

Delivered sweets and treats to employees
Delivering April birthday cards
Spread the Love with sidewalk chalk available to residents

Financials

Since we have now successfully rolled out the Investor Portal, the quarterly financials will be available for download off of the Investor Portal. We will upload Q1 2020 financials (a current rent roll and trailing 12-month profit and loss statement) by the end of April.

If you have already logged in and would like to be taken directly to the portal Click here. If you have not received your invitation or it recently expired, and you need it re-sent, please contact chat@ashcroftcapital.com In order to expedite any future or previous distribution requests changes, you must log in to the portal and add your complete profile information in order to make any changes to your payment information. Without doing so, the system will not allow it. If you need help navigating through the portal you may contact IMS support at 855-866-0889. Please click here to view the investor portal FAQ document.

I am proud to be your investment partner and look forward to working through today’s challenges together. I hope that you and your family are well.

February 2020

As a reminder, we launched the new Ashcroft Capital Investor Portal. You should have received an invitation already. If you didn’t, please check your spam folder. If it isn’t in your spam folder, please let us know by emailing chat@ashcroftcapital.com.

If you haven’t done so already, please login and confirm that your personal information is accurate. If not, please make sure that you update it by adding all your current information as well as updating payment information. If we need to make any changes to any of your deal information only, please let us know by emailing chat@ashcroftcapital.com. You can read and review the FAQ page by clicking here.

Starting on May 1st, you will be able to download a statement showing all the distributions that you’ve received to date.

Also. we will upload your 2019 K-1 tax document to the new investor portal by March 31st. You will be notified via email once it is available. We do not have a specific date other than to say that it will be available no later than March 31st.

We are continuing to achieve our projected rents on all newly-renovated unit leases

Our occupancy rate has increased for the sixth straight month to 93.5%

There were no vacant, nonrenovated units to renovate in February at Northern Cross

The following resident appreciation and retention events are being hosted in March:

- St. Patty Happy Hour – March 13th
- Food Truck Event – March 18th
- National Waffle Day – March 25th

In related news, Dallas-Fort Worth ranked 2nd out of all major US cities in the forecasted net migration in 2020 by Marcus and Millichap. Dallas-Fort Worth is expected to have a net migration of 69,600 people in 2020, which is 0.9% of its population. This is great news and reinforces our thoughts on the continued demand for multifamily housing in the market. Click here to learn more.

January 2020

Things are going well at MacArthur Place as we continue to implement our value-add business plan.

I am excited to announce that my partner, Ashcroft Capital, will be launching a new Investor Portal, which is designed to improve communication and engagement with you, our partner. When the portal is officially launched, I will send you an email with instructions on how to login, as well as an FAQ guide about how to use the portal.

Also, we will upload your 2019 K-1 tax document to the new investor portal by March 31st. You will be notified via email once it is available. We do not have a specific date other than to say that it will be available no later than March 31st. The IRS revised the 2019 K-1 to require additional information for all partners investing with a disregarded entity (i.e., a single-member LLC). If you are investing with us with a single-member LLC, please fill out this AdobeSign document by clicking here.

We are achieving our projected rental premiums for these newly renovated unit leases.

Capital expenditure updates:

- Fitness Center: additions are in progress
- All other exterior capital expenditure projects are in progress

The following resident appreciation and retention events are being/were hosted in February:

- Cupcake Party – February 7th
- Valentine Refreshments – February 14th
- Renewal Party – February 21st

In related news, according to the most recent Bureau of Labor Statistics economic data, Texas added more jobs in 2019 than any other state. Additionally, the Dallas-Fort Worth-Arlington MSA was the #2 ranked market in the number of new jobs added in 2019. In fact, the number of new jobs added in 2019 outpaced the total number of jobs added in 40 out of 50 states. Click here to learn more.

December 2019

You can download the quarterly financials (rent roll and profit and loss statement) by clicking here.

We are continuing to achieve our projected rents on all newly-renovated unit leases.

The following resident appreciation and retention events are being/were hosted in January:

- Taco Food Truck – January 10th
- Renewal Party – January 20th
- Donuts At The Gate – January 29tha

Lastly, click here for a news article that reinforces our thoughts on the continued strength of multifamily housing. According to data compiled by Deutsche Bank, the median age of US homebuyers is now 47. For comparison, the median age of US homebuyers in 1981 was 31. Much of this rise can be attributed to the extreme reduction in young, first-time homebuyers in the housing market. This means more and more people will be renting rather than buying.

November 2019

We are continuing to achieve our projected rents on all newly-renovated unit leases.

The following resident appreciation and retention events are being/were hosted in December:

- Hot Cocoa Bar – December 12th
- Gift Wrapping Station – December 17th
- Christmas Brunch – December 23rd

In related news, corporate relocation site selection expert explained why Fortune 500 companies are moving their headquarters from California, New York, New Jersey, and Connecticut to states like Florida and Texas. One of the main reasons is that the pro-business policies, low taxes, and fiscal restraint will enable Florida and Texas to “best weather the storm of an economic downturn.” Click here to read more.

October 2019

We are continuing to achieve our projected rents on all newly-renovated unit leases.

The following resident appreciation and retention events are being/were hosted in November:

- Donuts At The Gate – November 5th
- Taco Bar Night – November 14th
- Renewal Pizza Party – November 26th

In related news, Sally Beauty Supply is creating more than 300 new jobs at a new distribution center and headquarters in Fort Worth. In addition to hiring for 40 new positions at its headquarters, they are building a 500,000-square-foot automated distribution center that’s expected to open in March and create 270 new jobs. Click here to learn more.

September 2019

Please click here to download the quarterly financial statements (current rent roll and profit and loss statement).

We are continuing to achieve our projected rents on all newly-renovated unit leases

We are continuing the increased Facebook marketing, sign spinners, and rent specials to combat the lease-up special offered by the nearby property to increase our occupancy rate.

We have continued to ramp up our interior renovation program so that we have more renovated units to show.

We have also implemented a preferred employer program and sent direct mailers.

The following resident appreciation and retention events are being/were hosted in October:

- Taco Tuesday – 10/1
- Breakfast-at-the-Gate – 10/16
- Halloween Party – 10/31

August 2019

We are continuing the increased Facebook marketing, sign spinners, and rent specials to combat the lease-up special offered by the nearby property to increase our occupancy rate

We are achieving our projected rents on all newly-renovated unit leases

The following resident appreciation and retention events are being/were hosted in September:

- Breakfast at the Gate – 9/13
- Ice Cream Sundae Bar – 9/21
- Taco Tuesday – 9/24

June 2019

The current occupancy rate is 88.9% and preleased occupancy is 93.7%. Due to higher than normal amount of move-outs over the past 30 days, occupancy has temporarily dipped but we are projected to be above 90% by the end of July.

The following resident appreciation and retention events are being hosted in July:

- Breakfast-on-the-Go: 7/11
- Popsicles by the Pool: 7/19
- National Hot Fudge Sundae Day: 7/25

In related news, the State of Texas topped WalletHub’s annual report on the best and worst states to start a business in 2019. The states were compared across 26 key indicators and were ranked based on business environment, access to resources, and business costs. This reinforces our thoughts on the continued strength of our submarkets within the state of Texas. Click here to learn more.

May 2019

The following resident appreciation and retention events are being hosted in June:

- Breakfast-on-the-Go: 6/7
- Father’s Day Brunch: 6/14
- Popsicles by the Pool: 6/21

In related news, Fort Worth passed both San Francisco and Columbus, OH, in population. Fort Worth grew by 19,500 people, or 2.2%, for 2017 to 2018, overtaking Columbus and San Francisco as the 13th most populous US city. This reinforces our thoughts on the continued strength of the Fort Worth market. Click here to learn more.

Additionally, the state of Texas added more jobs year-over-year than any other state (283,000 jobs, which is a 2.7% job growth). Also, Texas added 26,900 new jobs in April, marking the 108th consecutive month of job growth. Click here to learn more.

April 2019

We are achieving our projected rents for all newly-renovated unit leases.

The following resident appreciation and retention events are being hosted in May

- Treats in the Office: 5/14
- Grand Re-Opening: 5/23
- Breakfast-on-the-Go: 5/31

In related news, in HFF’s monthly MSA employment report, Dallas-Fort Worth ranked 2nd in the nation in total new jobs and percent job growth, and was one of only two MSAs to add more than 100,000 jobs. Click here to learn more.

March 2019

We are achieving our projected rents for all newly-renovated unit leases.

The following resident appreciation and retention events are being hosted in April:

- Breakfast-on-the-Go: 4/12
- Easter Treats in the Office: 4/19
- After School/Work Treats in the Office: 4/25

February 2019

Our occupancy rate has increased to 93.7% (up from 92.4% last month) and preleased occupancy is 92.5%
We have renovated a total of 19 of 398 units since acquiring Northern Cross
We are achieving our projected rents for all new renovated unit leases
We are hosting the following resident appreciation and retention events in March:
- Breakfast-on-the-Go 3/14
- Sweet treats in our office 3/21

In related news, AllianceTexas development, the 26,000-acre commercial, industrial, and residential community in Fort Worth, has recently hit the halfway mark. To date, it has generated more than $76 billion in economic growth, including more than $7 billion last year. Currently, more than 61,000 Texans work for nearly 500 companies within the AllianceTexas development, which will only increase in the coming years. Click here to learn more.

You should have already received your 2018 Schedule K-1 (Form 1065) in the mail and via email. If you have not, please let us know by emailing info@ashcroftcapital.com

January 2019

The current occupancy rate is 92.4% and preleased occupancy is also 92.4%
We are in the process of renovating 11 of 398 units.
The clubhouse renovation and other exterior renovation projects are in progress
We hosted our first resident appreciation party 2/6, which was an after school drinks and treats event.

Stanley Black & Decker is putting its new 1.2-million-square-foot- regional distribution hub north of Fort Worth, TX, which is expected to create 300 new jobs. The facility will be a 17 minute drive from Northern Cross and reinforces our thoughts on the strength of the Fort Worth market. Click here to learn more.

December 2018

Current occupancy is 93.2% and preleased occupancy is 93.7%

Marketing Update: As a part of a marketing outreach project to attract new residents, we targeted local Realtors and storage facilities with marketing materials

Capital Improvement Projects:

- Clubhouse: Renovations and designs have been approved and we are scheduling a start date
- Pool: The bid has been approved and we are scheduling a start date
- Fire sprinklers: Bid has been approved and work is in progress
- Smart Apartments: 175 residents have enrolled for this service and the work began 1/7
- GFCI outlet replacements: Completed
- Green program: In progress, 30 units pending

A record number of companies left California for states with a better business climate, and a new report shows that Texas remains the number one destination. According to the study, 1,800 companies left California in 2016 (the most recent year data is available for), which is a 9-year high, and 299 of those companies moved to Texas. Click here to read more.

Additionally, the Arlington-based Texas Health recently announced plans for a $74.2 million expansion called The Alliance Project. The project, which is expected to be completed in late 2021, will add three stories (65,000-square-foot addition) to a hospital that is a 15-minute drive from Northern Cross. Click here to learn more.

November 2018

Current occupancy is 91.7%
Staffing: All positions have been filled
Interior Renovations: We are in the process of finalizing the contract in order to begin the interior renovations
Clubhouse Renovations: The bid for new furniture has been received from Charter Furniture
Exterior Renovations: One bid has been received and we are waiting on bids from two other vendors
Pool: We are revising the bid for pool renovations
Doors: The bid for new door hardware has been approved and we are in the process of scheduling a start date
Fire Sprinklers: We are waiting on bids
Smart Apartments: Start date is 12/17
GFCI Outlets: Installation began 12/10
Green Program: Implementation began 12/10

August 2018

We are purchasing Northern Cross, a 398-unit apartment community in Haltom City, TX, which is a northern submarket of Fort Worth.

Value-add opportunities:

We will implement our value-add renovation program on 100% of the units
We are projecting a conservative rental premium of $150, which is nearly 115% below the market leader who is achieving a $320 rental premium
We are acquiring Northern Cross 10% below the average sales price per unit of similar assets in the area
In the past nine quarters, the submarket has seen an average annual rent growth of 5.3% and an average occupancy of 95%

We are securing a fixed rate, low-interest rate, low-leveraged 10-year Fannie Mae loan on the property to mitigate risk. The LTV will be 68%.

Additional information:

Projected to exit in 7 years with the following returns:
- 8.6% investor cash-on-cash return (excluding proceeds from sale)
- 21.1% investor cash-on-cash return (including proceeds from sale)
- 16.1% IRR
Max investment: $3,000,000
Min investment: $50,000
Closing date: 11/17/18
Funding date: 8/31 thru 10/17 (first-come, first-serve basis)

Click here to view the detailed Investment Package