Views from inside one of Betula’s furnished 1BR apartments!
MONTHLY UPDATE
Dear Investors and Valued Partners,
This a consolidated update for all our business, with a brief update on our pipeline and what we are seeing in the market. We send this each month to keep all of our investors, partners and friends up to date.
Highlights from the past month for us include:
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Betula House open for business and fully leased
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Continued progress on Cornus, despite some challenging soil conditions
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Market conditions overall strong, but high volatility in leads
Please read below for some market musings and more detailed updates on each of our projects.
Investors — please note that Q1 financial and operations summary is now available in your investor portal
Betula House
50-Unit Opportunity Zone project in Seattle, WA
Ok… you knew we would do it. We cruised through our pre-leasing target of 75%… right up to 100% pre-leased by the time we opened on April 17th!
The building is now active and full of life. It’s such a joy to see after all the various delays and challenges.
It was a sprint to the finish line. On the Tuesday before we opened the Fire Marshall came to inspect the building but couldn’t do it because air pressurization testing was going on. After much pleading, she agreed to come back on an overtime shift at 5am on Thursday. We opened that Saturday.
Betula House had to endure an unprecedented concrete truck driver strike, a string of icy winter weather, and labor shortages. In the end our schedule slipped about two months, but we are proud of the final product.
In terms of construction related activities, there are only minor “punch list” items remaining from our contractor. We will be focusing our attention to “fit out” of the retail space for the new potential tenant. We are now in lease negotiations with a great potential retail tenant at this time.
Cornus House
199-Unit Opportunity Zone project in Tacoma, WA
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CFG material going in to backfull unsuitable soils on the south property line |
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The activities on Cornus through the month of April were a mix of structural concrete placement and soils excavations. Concrete shear walls and columns have been placed, and can now be seen from all elevations. The tricky footings and walls have also been placed along the north property line. The production sequence is a counterclockwise rotation around the site, with soils now stockpiled in the SW corner. Primary power conduits were also placed at grade, along the Pacific AVE elevation
We also encountered “unsuitable soils” midway along the Commerce street (West) elevation. Typically on Cornus, the geotechnical engineer uses a “t probe” to understand how dense the soils are, then confirms compacted structural fill can be placed, then concrete footings/foundation can be installed atop. We discovered in (2) different zones perched water and soils that would not properly compact. The remedy is to “over excavate” and back fill with CDF (self-compacting cementitious material). This adds cost and time. Together these items have taken us from “too good to be true” to “pretty much what we expected working on a site with known fill”. We are still working through the details but don’t expect a material schedule impact or costs in excess of our budgeted contingencies. We are very much looking forward to completing all the subsurface work in May and moving on to the more predictable foundation and vertical work. |
View from inside the site. They won’t let me use it as a paintball arena.
Acer House
114-Unit Equitable Opportunity Zone development in Seattle, WA
Another month, and another frustrating setback for the permits for Acer. The most recent, 5th, round of corrections had just two items: a request for us to duplicated a set of shoring drawings from the building permit application to the master use permit, and the request for us submit a plan to remove an oil tank.
Neither of these things are normally required for a permit, and there is absolutely no reason they couldn’t have been requested on the very first round. We are extremely displeased with this latest delay, and have escalated to the Seattle Mayor’s office.
Regardless, we are fulfilling the request and hope to have the decision by the end of May.
Portland Apartments Portfolio
213 Eco-Housing portfolio in Portland, OR
Starting this month we will be aggregating our apartment updates across all of our stable properties in each city. This is consistent with how we are managing our apartments. Any specific variations will be called out.
For Portland, we now have three buildings with 213 apartments. Our team has grown to 6 people (four part time) and operations are going quite well. As you can see below we are eager to test the summer leasing market, but as of now only have one apartment to rent.
Picea Apartments Portfolio
567 Eco-Housing portfolio in Seattle, WA
April marks the start of the summer leasing season when many residents in our market start to move. This year we have noticed a rather different pattern than last year, with more people staying in their current housing. This means our vacancy is lower than this time last year, but so are our incoming leads.
It’s too early to call the trend for the peak summer season, but we are making adjustments to adjust to a more competitive market. The critical thing will be to execute well on the leads we do have, so as to avoid prolonged vacancy and maintain cash flow.
We are confident we can keep the buildings full, but with fewer lease trade-outs. This may mean that we see our rent growth less than expected through the summer.
Thank you!
As always, thank you for your support and please do not hesitate to reach out with any questions!
Ben and the GE/Arboreal team.
Investment Pipeline
We continue to actively explore new acquisition opportunities. We are particularly keen on unique buildings such as older SRO (studios with shared bath). We think we have a particular advantage in this asset class. We currently have one such property in contract and are completing environmental review. Stay tuned for more!
Thank you!
As always, thank you for your support and please do not hesitate to reach out with any questions!
Ben and the GE/Arboreal team.
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