The Featherstone Process

Strategy

Execution

Execution -
repositioning the assets

Featherstone 4-step process

1. Deal Funding

• Agency (public) or bridge (private) debt
• 60%-80% leverage on average
• Potential for co-investment alongside select private equity partners

2. Asset Management

• Leasing and occupancy improvement
• Construction oversight
• Budget management and adherence
• Marketing
• Resident profile improvement

3. Asset Improvement

• Address deferred maintenance
• Common areas and amenities
• Landscaping
• Unit interior updates

4. Cash Flow Management

• Expense mitigation (vendor contract negotiation)
• Sustainable rent level increases
• Strategic allocation and deployment of capex dollars

Strategy -
behind the numbers

Projected Growth of Workforce Jobs vs. Workforce Housing (2017-2026)

0K
Avg Workforce Job Growth
0K
Expected Annual Workforce Multifamily Unit Growth

Occupied Multifamily Units Paying Rent

Monthly Rent

Rent levels and occupancy

The majority of occupied housing units’ rents fall within the $500 to $999 range (41%), with the $1,000 to $1,499 being the second largest rent range (29%)(3) – balancing rent level increases and occupancy is key to producing optimized cash flows.

0%
Percentage in the $500 to $999 range
0%
Percentage in the $1,000 to $1,499 range

Market-specific rents

Using the median household income as a benchmark, we can identify ideal scale of rents achievable based on any given demographics, providing a unique analysis for each market’s metrics and data.

Using the data to make intelligent investments

  • Using demographic and economic data, identify markets with workforce housing demand as well as the economic means to support achievable rent increases while maintaining occupancy levels
  • By taking a more data-driven approach, each property is analyzed using assumptions derived from the surrounding market and its demographics, helping to reduce risk
  • The region, state, city, and neighborhood are all examined in order to determine if rents and income are growing at a similar pace, and at what rate rents can be increased in order to maximize the operating cash flow on a realistic schedule

Target regions with sustainable rent growth

  • Many multifamily investors only consider trending rent growths when considering a market – however, any given market’s population can only withstand rent increases up to the threshold their income allows
  • Markets such as the Pacific West (Washington, Oregon, California) have exponentially raised rents while income lags, making these rents unsustainable
  • Markets such as the Southeast, Mid-West, and Mid-Atlantic have rent to income growth ratios that are either in line or see income growth exceeding rent growth, giving these regions a better ability to withstand rent increases

(1) US Bureau of Labor Statistics, NMHC/NAAVision 2030
(2) ApartmentList.com Rentonomics, June 2018
(3) US Census Bureau American Community Survey, 2017
(4) US Census Bureau American Community Survey, December 19, 2019 release of partial 2018 data

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