Hey team, thanks so much for prepared remarks. Cameron, appreciate you jumping in. Uh folks, you uh we so appreciate you jumping in from all over the country today. I know we have quite a few questions. I had just mentioned we were going to cut from Q&A. Um but we were able to move things around on our side. So feel free to drop any and all questions in chat. This time is yours. Um Cameron, maybe we do a brief intro for you uh before we jump into more details here. Yeah. Uh, thanks. So, uh, Cameron, I’m our VP of investments and I’ve been at Arrive since the very beginning from our very first offering. So, it’s been, uh, I great to see the platform evolve over the last couple years. I come from a family of real estate entrepreneurs. So, have been in residential real estate my entire life. And, uh, before arrived, I was with American Homes for Rent where I ran business intelligence, pricing, and asset management. Uh, so really cut my teeth on the institutional, single family, residential market. Back then we owned close to 60,000 homes. We’re one of the largest builders in the country with build for rent communities and uh it was a great experience learning the industry in and out and brought that to arrive to deploy the single family residential game plan. Fantastic. Well, Cameron, we’re so grateful to have you on board. U you’ve been one of the most incredible teammates I’ve had the honor to work with. So, uh appreciate you being here today. I know we have a lot of questions that come through the queue. Uh folks, if this is your first time joining, feel free to drop any and all questions. Sometimes I’ll group like kind um and then we’ll go from there. There was a one early on here from Pride. What is the loan to value like? I walked a little bit Cameron through how we’re not doing loans today on individual properties, but perhaps we walk through more details here. Yeah. So for the I can talk about this in in two different ways because we uh we deal with loans in as both the creditor and the debtor. So on single family residential properties, we have mortgages that we took out from 2021 to 2022 when rates were more favorable. Our typical loan to value ratio is about 50 to 65% with the majority of them being at 50%. So we’re strong believers in leverage and levered property appreciation. Uh but we’re also a little bit conservative in how we how much leverage we apply. A lot of real estate investments get into trouble when they’re overlevered. Uh so the great financial crisis is a great example of that. There were a lot of poorly written under uh poorly underwritten mortgages. There were a lot of uh LTVs that were way too high. So when the property markets crashed, then a lot of people had to get u they they were gotten forclosed on cuz their their mortgages were the properties were underwater, which means that the value is less than the mortgage. So we are very allergic to that and you know we uh risk manage quite well with our mortgages. So typically they’ve been at that lower LTV rate of 50 to 65%. Um, similarly on the credit side, so with our credit funds, we are purchaser of loans, but the but these are very different types of loans. So on the rental properties, we have 30-year mortgages. Uh, they are intereston. They’re kind of what you would imagine a landlord mortgage to have, similar to what’s on your uh your your own home or any type of residential property. But when we’re purchasers of credits uh for the real estate income fund, these are different. They are business purpose loans. They’re loans that are made to builders, fix and flippers, and really entrepreneurs who are in the business of value ad um and and groundup construction. So, these loans are really more like 6 to 24month loans. They support the construction, their their financing to really get the renovations and the project done. They pay a higher interest rate, high singledigit to low double digit percentages. So that’s the type of asset that is in the credit fund and those will usually be around 65 to 75% loan to value. Um their first position mortgages which means that uh that the credit fund is the uh first pos like they have the first claim to the economics of the asset in in the event that the borrower doesn’t pay back then you can forclose on the property. Um haven’t really had to do that yet. uh have had zero principal loss. So, you know, it’s been a great credit fund. It started off around 8.1% has climbed to around 8 1.5% as far as the yield goes. Um so, strong believers in both owning the credit assets in the funds as well as taking out um moderate leverage on the properties to get leverage appreciation. Fantastic. And Elvis had a followup here. That’s the way you recoup your principal. Is that correct? So foreclosure is more of a a a distressed event in the event that the borrower is not able to pay. So you have the right to foreclose on the note and then as as a creditor you have rights to collect all of your principal and your interest first. So it’s not just the principal but it’s also the acred interest that has not uh been paid since the borrower went delinquent. So yes, it it is a remedy more so, but usually the way of getting your principal back is that there’s some sort of successful exit. And that’s been the overwhelming majority of all loans. Like, you know, there there’s been times where we’ve had to do a workout plan with borrowers that usually involves extending time, reworking the loan. Um, but really we want to see them get to a successful exit more than we want to go through any sort of foreclosure process. Uh, usually you’re going to have to take a discount on the value of the property. you you want to really uh support them getting to the finish line and that is that is going to be the best outcome. Um and they either can sell the property or the existing loan can be take what’s called taken out uh by another loan. So let’s say that you’re doing groundup construction. They’re going to be rentals uh in the long run. So the construction loan is going to get taken out by a long-term financing loan from another lender. So that’s how you get paid back. Um, if the builder or the fix and flipper doesn’t sell, there’s some other refinancing event that takes out the existing loan. Fantastic, Elvis. Great question. And Cameron, appreciate walking through in great detail. Uh, especially when we’re thinking about the different investment products. I know another person on the line was curious, too. So, let us know if there’s any follow-ups there. Happy to. We have quite a few questions. I saw Prasad, Elvis, and other folks in the chat. How long do we have to leave the investment with arrived? What’s the holding period like for each investing vehicle? Cameron, as you know, Ryan walked through a little bit of liquidity during prepared remarks. Uh, but I feel like it’s always a good one to double down on, especially when folks are parking their hard-earned funds uh in a new platform, a new to them platform. Yep. Yeah. It’s been um over five years at this point. It’s crazy to think about that. So yeah there when you when when you make an investment arrive there’s there’s really two ways of investing. You can invest in our funds or you can invest in the individual offerings. Uh so with funds there’s a minimum hold period of 6 months and then on a quarterly basis you can redeem your shares and get liquidity meaning turn your asset which is shares into cash. So you know the strict answer is 6 months when it comes to funds. And then for individual offerings, uh we have the secondary market which allows you to connect buyers and sellers together to exchange shares of those individual offerings just like the public stock markets. Um now there’s a couple of differences. You know, there’s not these are not public companies like the word IPO indicates is initial public offering. These are not public securities. They’re still privately traded, but the mechanism is very similar in terms of connecting buyers and sellers directly. So in our fund products when you get liquidity through um redemption then you get redeemed at the net asset the most recent net asset value for for which you um you made your request. Um and that and that is that six-month hold period. And then on individual offerings when you are transacting in the secondary market those are on monthly cadences that we have. So liquidity is not guaranteed. even if you do put your shares up for sale, you still need to have a buyer, but that is available on that monthly cadence. So, that that’s at the individual investor level, having that option to turn your assets into cash um whenever you need to. And then for an investment hold period, as far as our assets go, with rental properties, we expect to hold them from 7 to 10 years, but really we are annualized return maximizers. So if it takes longer than that to realize a better outcome, we’re going to continue to hold. And if you need liquidity before that, there’s investor level liquidity. So there’s really two levels of how do you get your cash back. There’s asset level liquidity, which means if we sell the property, everybody gets their shares turned into the cash value of what’s left. uh at the investor level you have the option through the redemption or program for funds and then the in uh the secondary market for for individual offerings the credit assets underneath um in the real estate income fund those mature on anywhere from like a 6 to 18month window. So those assets are constantly turning over and what happens is the borrower they they pay back the loan the fund receives cash but instead of distributing that cash we reinvest them into loans. So we we intend to be fully deployed all the time in those credit funds but the asset turnover underneath it is much more frequent but we we constantly buy new loans keep reinvesting cash and then distribute the interest income as dividends. Fantastic Cameron. Thanks so much for walking through it. Uh, a couple notes here too. Secondary market for folks that are new to arrive. To access secondary market, investors must have made their first investment at least 60 days before the start of the trading window. A lot of folks get very excited about this because we’ve we’ve had properties that are fully funded. That essentially once they’re fully funded, they’re sold out. You’re no longer available to invest in them. So, it also unlocks a massive opportunity to get into markets or properties that you’re of interest. Uh, so be sure to check it out. We run the secondary month uh secondary market on a monthly cadence. So it opens once per month. Uh previously it was quarterly. So we’re very excited on the monthly cadence. Then for the redemption program, like Cameron mentioned, we uh the minimum hold period 6 months and then it’s a quarterly option to redeem from there. Uh and we have dates and cuto offs in place for that. So, one thing to check out if you’re interested in. And then again, the fees for the redemption program, that minimum hold period for zero fees would be 3 years or more after that. So, uh, something to keep in mind when you’re choosing where to park them. All right, moving back over here. Couple good ones. One from Elvis. When we invest, do we know how the funds are being deployed? Yep. So, you know, f the the construction of a fund can vary from time to time because you’re going to have a different mixture of assets. Uh, but you know, it really depends on the investment perspectives. Uh, so when there’s idol, let’s let’s take a couple of different funds as working examples. So, the Seattle City Fund and the single family residential fund are two funds that are primarily based on property assets being in the fund. So, it’s generating rental income. But you know let’s say that you’ve got three homes and it’s fully deployed in homes. People are constantly investing every day. So the question is well what do we do with that cash? So this is where you know being in the credit game also really pays dividends for arrived in investors as far as the product offering that we have. So as money accumulates then we’re also purchasing loans. So let’s say that you know there’s $100,000 of cash in the fund. Well, that’s probably not enough to buy a a house that we want in that particular fund, but it is enough to contribute towards a loan that we can put into the into the residential fund or the single or the Seattle city fund. So, it’s earning higher yield uh with those loans. So you know the the perspect the investment offering it gives guidance on leverage amounts and where the assets are allocated but it’s not a precise um mandate of saying okay you always have to be 100% allocated into your rental funds and then you can never have credit assets. It doesn’t say anything like that. It says generally our goal is to generate returns and appreciation off of assets. And then we also have cash management components that look to get higher yield um subject to some constraints like we don’t want to turn it into a 100% credit fund. That’s what the real estate income fund is for is to hold those credit assets. Um so as far as where the funds are being deployed, you can see the assets that each single family residential fund or Seattle city fund owns like the the properties. Um but it with excess cash, we deploy them into those short-term loans to generate higher yield for the fund overall. So that’s a general description of of how it is. And the you know residential funds that hold the home assets, they are overwhelmingly predominantly um real estate assets and then when there’s excess cash, we’re putting them into loans. Fantastic. Awesome. Thanks for walking through it. Cameron, we did walk through returns in prepared remarks, but it’s always one always a great one to chat through live. What the what are the current rate of return offered on fund versus rentals? And we want to The only thing with rentals is clarifying long-term versus vacation rental as well. Sure. Yeah. So, I would say that there’s three different asset types that are um being offered on arrive. There’s long-term rentals, vacation rentals, which are both um you know, supported by physical assets, the homes themselves, and then there are credit assets. So on the real estate income fund, which is all credit assets, that rate of return, um, it started off at 1 8.1% and is, you know, steadily climbed throughout its 2-year history to be around 8 and a half. And certain months, uh, we’ve been able to distribute 8.7, but 8 12% is probably a good average number to to think about right now. And that’s all been paid out as dividends because it’s being supported by interest income. There’s no expectation of appreciation on that because there’s not really a um you know as a credit asset you’re only entitled to get back the principal. There’s not like an appreciation component on it. It’s all interest income that gets distributed out to investors. Uh so that’s you know 8 12%. On the long-term rental assets we have a much more balanced mix between expectation of appreciation and then the actual cash flow being paid out by rents. So we’ve seen about 3 and 12 to 4 1/2% depending on the uh market and price point and vintage and all that you know the assets but that’s on the the dividend yield. So the rental income is generating 3 and 1 half to 4 1.5% and then the appreciation you know it depends on any given year you know you look at any 20-year history um of different zip codes different assets it averages about 4%. Um, but the reality of appreciation that it looks like you have 1% one year, 2% another year, 0% minus 1%, and then you’ll get a large surge in property prices and then it’s like, whoa, 8% and then 10%. But then when you look at the average over that 20-year period, very consistently throughout American history, it’s been about 4%. Um, so you know, the expectation is that total return for those assets in the 6 to 10% range when you factor in both the dividends and the home price appreciation on those investments. Um, and then for vacation rentals, it’s going to be skewed a little bit more towards um the income side. Now, we’ve had a little bit of um operational transitions where we’ve fired property managers, brought a lot of it inhouse um but stabilized on our vacation rentals. they’ve been paying around 2%. But we expect that to um improve over time as we are now internally managing the majority of our assets. U so you know rental assets both bal balance of appreciation and income two to five 2 to 4 and a.5% on dividend yields and then appreciation kind of 20 year 4% average but you know it can vary in any time of year. And then for credit assets um you know north of 8% 8 and a half% for pure dividend returns. Fantastic. Awesome. Elvisa, thank you so much for answering all the questions. Thank you, Cameron, for your time here. Very much appreciated. Also, fantastic questions being asked today. So, very much appreciated. I saw a couple folks ask this. Will the presentation uh be available afterwards? Absolutely. For all registrants, we send it over via email as well for you to take a peek at. Uh we’ll give folks like 30 more seconds here. If there’s any questions I didn’t answer earlier in chat or you’d like further clarification on, definitely let us know. Um Cameron, maybe we talk a little bit about uh I’ll get back to you one second, Elvis. Um adding multifamily into Seattle City Fund, clarifying like what that means, why we did it, why now? Yeah. So, we’re pretty excited to have our first multif family offering on arrived and it is in the Seattle city fund and that city fund is really focused on all sorts of different asset types but oriented around the the greater Seattle metropolitan area. So, we had an opportunity to make an investment into a um really excellent operator uh in the Seattle area that focuses on repositioning and um rehabilitating multif family assets. So, the opportunity here is that there’s a lot of um under optimized uh multif family assets that have been held by families 30 years, 40 years, and you know, they got in at a good basis. They’ve been holding on to it for a long time. a lot of them don’t have the cash to put the appropriate renovations into it and thus they kind of go um under underachieve on what the rent potential is for that particular area. So um we got wind of a really great opportunity to enter into a position in one of their funds that has a really great asset. It’s in actually the Edmonds area which is like 10 minutes from where I live. So, it’s a really great um asset where there’s a 37 unit multif family building. Their rents were under by like 18%. Um you know, they’re they this is a market that supports $2,500 rents for a two-bedroom apartment. Um and they were only getting like 2,000 or 21,100 for their largest units and 1,700,800 for their smaller units. So, what this uh what this operator is doing is they they bought the property, they got a really great mortgage on it. um it’s constantly at 36 out of 37 or 37 out of 37 fully unit uh fully occupied units. So as soon as somebody moves out then they rehabil they they rehab it to a much more modern clean standard. They made improvements across all the common areas um and they’re achieving rents now that is you know like $300 uh higher than their $2,000 base. So, it’s been a really great project and you know they have a exit plan of around 5 years 7 years uh to basically get all those units renovated as they move out get the rent roll higher and then sell for appreciation because instead of um you know getting $2,000 per unit and now they’re getting 2,300 so 15% increase on the rents minimal expenses and like very clean rehabs that they’re doing. So, it’s just a really great project that is a great addition. We’re looking for more of these uh whether they are going to be individual offerings or within the different fund. You know, we’re adding that as a tool uh as an investment option at arrive to find those opportunities that really leverage kind of a flipping opportunity uh more so than a buy hold appreciation because you know we have plenty of those and those uh you know are real steady climbers. But you know in a higher interest rate environment it can also be really great to participate in those flips because you’re a little bit less interest rate sensitive because you’re you’re you’re creating your own value. So you’re not kind of depending on the market appreciation which can be a little bit slow when interest rates are higher. So we we liked this as an investment because we could try to manufacture um stronger gains in a shorter period of time despite a more challenging environment of higher interest rates. So that’s been the idea behind investing into it. So, we’re going to look all over the country for more of these operators, more of these opportunities, really empower some of the third party operators that are really specialists in their local markets because you have to have boots on the ground for this and you have to really have to know your market, live, breathe it, um, and find those opportunities, which, you know, it’ be impossible for a company of our size to have all of the boots on the ground looking for all of these individual investments and have it make sense. So operate like what we really do well is um raise the capital have a great platform for investors um to be in and then have really disciplined underwriting and saying like what are the greatest investments and then support those operators by providing capital and then they’re providing the labor to you know do all of the renovations. So that’s uh that’s the game plan of how we’re looking for multif family assets but there’s probably also some good uh buy and hold assets as well. um duplexes, forplexes, some of that is the de facto residential um SFR for east coast and west coast and higher density living areas where you don’t have quite as many single family homes that are affordable. So looking at both options there, but really liking the value ad thesis where a really good operator is creating their own value instead of waiting for the appreciation by the market. Absolutely. Yeah, very much appreciate you walking through it, Cameron. And a cool part too is if you go directly to our Seattle City Fund offering page, you can go over to properties, scroll down, and then you’ll be able to take a look at uh the different properties for like multif family fund that we have in there. Uh so this is the Olympic West apartments that Cameron was just walking through. Um, another thing I’ll share too, I know I had just shared in chat about like expected first dividend for Seattle city fund, real estate income fund, and single family residential fund. Uh, Elvis, to your point, if you invest by the end of this month, so what is that? That’s today, June 30th. Uh, then you will expect your first dividend around September 25th. So that is outlined on each of these offering pages. I was just correcting myself because I mentioned uh REF and SFR fund in chat and I left out Seattle City Fund when we were chatting about it. So very much appreciate you asking. Uh Cameron, we have another followup on Seattle City Fund in particular. Uh what are the rate of return are you anticipating for Seattle Multifamily? Yeah. Um, so you know, as you can see on the page right there, the overall dividend yield for the fund itself is 5.7% and the the city or the the multif family investment is a small part of that total $4 million of net assets that you see there. Um, you know, with uh securities rules, uh, we’re not allowed to make forwardlooking statements about what do we anticipate, you know, all all in at the end, you know, to uh, return. But I can I can just say generalize. You’d expect um a significantly higher return in a shorter period of time when the thesis is value ad because you’re creating the value where you’re increasing the rent roll and you’re trying to sell for that higher appreciation. Um because you’re you’re creating the opportunity to get a higher income stream off of that. Um so with that said, you know, 57 for the dividend yield on the fund itself. And with the multif family fund, what they’re doing with the rents is that they’re using that as the rehab money for the next unit. So they’re collecting rents and instead of making capital calls saying, “Hey, we need money for the next rehab unit and the next one and the next one,” they’re taking all of the rents and they’re reinvesting it back into the property. So in that 5 to sevenyear um exit window, that is when the returns are going to be realized. So, you know, we shall see on, you know, when when that point comes, but I got the actually the most recent operational report this morning and they are at 97% occupancy. So, basically there’s and the reason why there’s one unoccupied unit out of the 37 is because it’s currently going through renovation. So, you know, all that to say very strong operational performance on that multif family unit. has consistently stayed at, from what I’ve seen, 100% occupancy when there’s full units, but as soon as one is um vacated, they go through the renovation and they you’re they’re usually pre-leasasing that property as well. Um so, super strong performance on it, but it it just behaves very differently than our traditional um asset because all of the returns are expected to be um on the sale because they’re reinvesting the rents into the property itself.
Nope, you’re muted. Thanks, Cameron. It’s been a minute. We still got to start our podcast. Oops, you’re on mute. You’re on. Awesome. Well, I think we cruise through all the questions. We’ll give folks 30 more seconds here. Camera, we’re jumping right into Q3 starting tomorrow. What would you say you’re most excited about? Yeah. Um it’s it’s along the lines of uh finding those value ad investment opportunities. Um that’s one and then the other is 1031 exchanges. I think that that is a um really great tool for a lot of people that have owned real estate for a long time. And 1031 exchange is basically a tax deferred exchange where you can sell a property that you have that has a lot of gains in it and then roll it into the next investment property. So that way um you there’s ways of not having to pay that tax in the moment. So um it’s a service that you know a lot of our investor base they’ve they’re you know existing real estate holders they’ve been writing in to us saying like hey do you offer these exchanges and um you know we have created a product that you know speaks directly to them in the sense that it’s it allows you to go from active to passive. It’s probably the easiest real estate investing experience that I’ve seen at least. um and they’re just kind of tired of being an active landlord and they want the benefits that Arrived has offered with the fractional product but for a whole home of theirs while getting to um defer a lot of the taxes. Um so those two products where I’m really interested in and I’m getting more of the 1031 program off the ground. So if you have any interest in it uh yourself or you think you might be a candidate then go ahead and write in um and then you know we’ll we’ll get back to you um very immediately as it’s a high priority for us. Uh and but otherwise, you know, we’re looking for a lot of good value ad opportunities um in addition to some more buy and hold of uh multif family. Absolutely. Yeah, I just dropped a link. This is our 1031 landing page if you’re curious on learning more. Uh if you click in to get started, like Cameron’s mentioning, writing in, we’ll ask a few questions there, but you can always email supportive.com too if you just like to get on a call. Um Jake, who you heard from earlier today, u would be thrilled to. So feel free to jump in here. It’s definitely one we’re very excited about and Cameron’s been an integral part of building the foundation of this uh this product. So, very excited. All right, cruising back over here. Uh Joseph, very much appreciate the kind words in chat. We’re very uh thrilled to hear that you’re excited. So, um Cameron, thanks so much for your time today through walking all through all the questions in great uh detail. We so appreciate you and for all the folks that spent 53 minutes uh in prepared remarks and then asking incredible questions. Thank you. The engagement was fantastic today. As mentioned, if you have any other questions, feel free to reach out to support do supportive.com. You can use our chat function in the bottom righthand corner of our platform. We’re also live on all social channels, so feel free to jump in. The one that is most community based would be our subreddit. Uh so we always have a lively group there, which is absolutely fantastic. Other than that, I hope you have a great rest of your day and happy investing. Thank you all. Take care. Bye all.