The Featherstone Process
Strategy
- Locate quality, under-performing assets
- Assets located in growth markets with strong workforce housing demand
- Identify strong economic drivers in the surrounding area
- Develop market rent profile to determine realistic, achievable rent increases while maintaining high occupancy percentage
Execution
- Develop a capital improvements plan and schedule to improve both unit interiors and property exteriors
- Utilize best-in-class property management to oversee improvements process, maintain occupancy, and enhance resident experience
- Incrementally adjust rental prices to meet surrounding market and increase operational cash flow
- Stabilize unit rents and operations
- Market condition evaluation for potential capital event
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