Sunbelt Fund I Updates > NMHC vs Sunbelt Collections
Strong August Collections Despite Lack of Federal Stimulus Support
July was another month of solid return for Sunbelt Fund I, as detailed in our July Asset Management Report, with steadily climbing revenue, and collections consistent with prior months. However, with Federally enhanced unemployment benefits concluding on 7/31 and no clear timeline for a new Federal stimulus bill, we wanted to update investors on August fund collections as we near month end.
As of 8/27 Sunbelt Fund I’s August collections (expressed as a percentage of charged revenue) are higher than by the 27th of any of the past four months (and equal to April, though the charged revenue is now higher in August so total dollars collected is higher). We are cautiously optimistic that despite the lack of additional Federal support, the results over the months to come will be similar to what we have observed in August. Naturally we also hope that a robust stimulus bill will be passed in Congress soon to help those most affected by the pandemic.
As of 8/27 Sunbelt Fund I’s August collections (expressed as a percentage of charged revenue) are higher than by the 27th of any of the past four months (and equal to April, though the charged revenue is now higher in August so total dollars collected is higher). We are cautiously optimistic that despite the lack of additional Federal support, the results over the months to come will be similar to what we have observed in August. Naturally we also hope that a robust stimulus bill will be passed in Congress soon to help those most affected by the pandemic.
- The National Multifamily Housing Council (NMHC) collection data is sourced from 11.1-11.5 million “market-rate” (i.e. does not include “affordable” rent-capped subsidized housing) apartment units across the United States.
- The data includes assets from luxury to workforce and from every vintage.
- At Ballast Rock we exclusively invest in workforce multifamily housing in secondary markets in the Southeast, thus we expect our fund collections to trail slightly behind the national average.
- The Ballast Rock strategy is that the higher cap rates generally available in workforce multifamily housing (and in our markets of focus) met with a highly constrained demand/supply dynamic in the sector, more than offsets the marginally slower intra-month payment and higher bad debt when compared to the higher cost assets represented in the NMHC data.
- Sunbelt Fund I collections have been stable (no more than 3% differential between months), are only a few percentage points behind the national average for every month, and continue to yield the attractive premium that is associated with workforce housing in secondary cities.
- To help understand the fluctuations between collections on a month-to-month basis, it is important to note that the day of the week of the reporting day (6th/13th/20th/27th) changes monthly. As a result, the number of biweekly pay-cycles in each month fluctuates on a month-to-month basis. For example, July (which features one of the higher collections over the past few months) contained three pay cycles, while April (which had low collections by the 6th) did not feature a pay cycle until April 10th.
