A Letter From C-STAR CEO
Dear Investors,
We are now at a special time. First and foremost, we hope that our investors are staying healthy and strong at home! Families and health are the first priority. Like many of you, most of our colleagues work from home, which is new, but we find it works very well for our business model. Our management team based in Metro New York works at home using Zoom to simulate what we do in the New York office. Our property management team in Atlanta drives across the city to inspect new acquisitions and puts on the digital locks for rental on the doors, which enables tenants for 24/7 self-tour without actual meeting with our property managers. House repair and maintenance have remained in working order, classified as essential. Our local repair folks have been keeping busy with all repair requests in a timely manner. Thanks to the technology and hard-working property management team allowing, our business remains as intact as possible. However, our acquisitions paces of Fund II have slowed down due to the lack of financing as most lenders temporarily suspended issuing new loans, including our long-lasting relationship lenders. We do believe the capital market will resume and pick up once a clearer economic view emerges from a better-contained situation of Covid-19.
C-Star SFR portfolios are well-positioned even facing a potential economic downturn. Our investment strategy focuses on mid-end single-family rental houses, which are designed for middle-class household income for tenants with stable jobs on payrolls. Out of the 47 properties within Fund I and Fund II, 95% of the current tenants work for government agencies, healthcare, education industries, and professional services at a lower risk of losing regular income. We have received full payments for each month of the first quarter. Until the time we sent out this letter, we have received all the full rent for April as well! One tenant who didn’t pay the rent on time had made it up on April 14. All the late fees are waived to correspond to the most difficult time we have ever had collaboratively. We have made the first quarterly distribution to Fund I investors today, representing a $0.5 annualized dividend per unit to the investors. We anticipate people moving from high-end to mid-end rentals due to the financial difficulties and moving from multifamily dwellings in the city to suburban areas as seeking less population density and infection risks. We are seeing these actually happening in the last two weeks. The average time between the renovation completed and the lease signed for the seven rental properties we listed during the last two weeks is eight days. The average time between the renovation completion and the tenant's move-in date is 20 days. The rental markets for Single-family houses are HOT!
2020 is a difficult year; it’s also a year for us to thrive from a reflection of our investment strategy and business model, pursuing growth during an appreciation period and sustainability in a difficult economy. We believe our investment strategies, market selection, investment targeting, and tenant screening have been well-positioned and benefited from our dedicated professional management. Atlanta's mid-end single-family rental sector is indeed one of the safest out there. We will continue to monitor the market, be cautious, and be fully prepared for any changes that might happen. At the same time, you can count on us to collect the rent and look for the best interest during this unprecedented time.
Please don’t hesitate to contact us if you have any questions.
Keep healthy and stay strong!
李雪莹, Sherry Li C-Star CEO 首席执行官
About C-STAR
C-STAR is a real estate investment management firm primarily in the Single Family Rental sector. It was founded in February 2018 and is headquartered in New York.
C-STAR successfully closed and fully deployed Fund I in June 2019 and aggregated a $5.7 million portfolio. It contains 36 assets located in 9 counties of Atlanta MSA.
In July 2019, C-Star launched Fund II, which targets raising $20 million USD of equity for investments in Atlanta and Triangle Charlotte MSA. C-Star SFR Fund II has made meaningful progress on fundraising, acquisition, financing, and asset management ever since its inception in October 2019. By the end of March, SFR Fund II had raised $7.12 million in equity and had closed eight acquisitions of single-family homes in the Atlanta metro area. 7 of 8 homes have been leased quickly after closing with an average lease-up period of 8 days. The average time between the renovation completion and the tenant's move-in date is 20 days.
Investment Strategy of Fund II:
Key Terms of Fund II:
Minimum Capital Commitment: $100,000
Investment Term: 3 years +1 year +1 year
Distribution: Initially, 5% – 6% increase annually, distributed quarterly
Target IRR: 18% – 20% gross
Acquisition Fee: 2% of Purchase Price
Asset Management Fee: 25bps on AUM annually
Note: C-STAR SFR Fund II has filed with the United States Securities and Exchange Commission (“SEC”) under Regulation D 506(c). www.sec.gov.