Crown Point Apartments — Q3 2026
Dear Partners,
This is our first report on Crown Point, covering the roughly nine weeks from our July 29 closing through September. The first job of any takeover is to stabilize the rent roll before trying to grow it, and on that front the opening quarter went better than planned. Every delinquent account we inherited has been resolved, both units that were vacant at closing were leased at about 10% above in-place rents for their type, and the building was 100% occupied on October 1. The abbreviated quarter produced $73,503 of NOI, and the partnership paid its first distribution of $35,000, a 12.2% annualized yield on invested equity.
I want to be just as direct about what we are managing. Takeover months are uneven, and these were no exception: some August rent arrived in September, and September's tax, insurance and utility costs are accrued here ahead of final books. Read together, August and September run at about $28.7K of NOI a month, in line with the Year-1 plan rather than ahead of it. Utility bill-backs dipped during our switch away from the outside billing company and are still climbing back. And about 27 of 33 residents were month-to-month at closing, which is a stability risk we are now addressing directly.
The tabs above lay out the detail: how the legacy delinquencies were resolved, where rents stand by unit type against our underwriting, the quarter's operating numbers with the timing effects explained, the three programs we started this fall, and a Valuation & Equity view that shows where your position stands today and how it moves with the assumptions that matter. Please spend a few minutes there; every assumption behind the mark is spelled out.
Q4 is about consolidation: converting month-to-month residents onto 12-month leases at deliberately modest increases, completing the first full cycles of in-house utility billing, finishing winterization before the heavy rains, and paying the full property tax bill in November. Thank you for your trust in this partnership. We are off to the start we wanted.
A Clean Takeover — The Building Is Current
This is the partnership's first report on Crown Point, covering the nine weeks from the July 29, 2026 closing through September 30. On the measure that matters most in a takeover, the opening quarter went better than planned: every legacy delinquency was resolved, both vacancies were leased at an average of about +10% over in-place rents for their unit types, and the building was 100% occupied as of October 1. In all, we have recovered $11,691 of legacy arrears, including a $7,000 check received at closing.
The abbreviated quarter produced $73,503 of NOI. After seller-carry interest and below-the-line items, it generated $56,407 of cash flow, from which the partnership paid its first distribution of $35,000, a 12.2% annualized yield on invested equity and above the 8% preferred return that accrued over the period. Management moved in-house to Lombard Management Group on day one.
What went right this quarter
We cleared the inherited arrears and leased both vacancies at premium rents within weeks of taking over. Management moved in-house to Lombard Management Group on day one, and we ended the outside utility-billing contract (Minol) so billing is now handled in-house. On rents, the two-bedroom flats, our largest unit type, are already running above their underwritten Day-1 rents.What we are managing
The monthly numbers are uneven, as takeover months always are. Some August rent arrived in September, and September's tax, insurance and utility costs are accrued ahead of final books. Normalized, August–September NOI averages about $28.7K a month, in line with the Year-1 plan. Utility bill-backs are still ramping after the switch from Minol, and about 27 of 33 residents were month-to-month at closing.Delinquency Cleared, Vacancies Leased at a Premium
An inherited rent roll usually comes with problem accounts, and Crown Point had three. A 1967 asset bought on a discounted basis is only worth as much as the rent it actually collects. We set out to resolve all three in the first 60 days without losing a single tenancy, and we did.
| Account | Situation at closing | Resolution | Recovered | Status |
|---|---|---|---|---|
| Resident A | Large delinquent balance | Paid in full by check at closing, to the partnership | $7,000 | Resolved |
| Resident B | Prior-period arrears | Structured payment plan, every installment on time | $4,691† | Current |
| Resident C (studio) | In eviction | Full balance paid by an assistance agency; tenancy preserved | incl. above† | Resolved |
| Total | — | Every inherited delinquent account resolved | $11,691 | Building current |
Why the recoveries matter
Resident A's payment arrived after closing, so the money flows to this partnership even though the arrears built up under prior ownership. It is found money the underwriting never counted on: the model carried a 1% credit-loss allowance and assumed nothing from legacy balances. Recoveries total $10,691 within Q3 and $1,000 more in early October, with further installments to come as Resident B pays down the plan. Resident C's resolution avoided an eviction: no turnover cost, no vacant unit, no legal fees.The lease-ups
Unit 8 signed a 12-month lease on August 28 at $1,595, +11.9% vs. the $1,425 average of the other 15 flats of its type and +18% vs. the $1,352 underwritten. Unit 18 signed a 12-month lease starting October 1 at $1,695, +9.6% vs. its type's $1,547 average, which put the building at 100%. Modest concessions ($692 in August) bought a fast lease-up, which on a new acquisition is worth more than the last dollar of rent.Where Rents Stand Against the Underwriting
As of October 1 the building is 100% occupied, and the 34 units carry $48,527 a month in contract rent, an average of $1,427. That is about 2.6% above the underwritten Day-1 rent of $47,289, and within 0.6% of the stabilized pro-forma of $48,830, a level the plan did not expect to reach until later in the hold. Rents are not uniform across the building, though, and the differences shape where we go next.
| Unit type | Units | In-place (Oct 1) | Day-1 plan | Stabilized plan | vs. Day-1 |
|---|---|---|---|---|---|
| 2BR / 1BA flat | 17 | $1,436 | $1,352 | $1,395 | +6.2% |
| 2BR / 1.5BA townhome | 7 | $1,566 | $1,541 | $1,595 | +1.6% |
| 3BR / 1.5BA | 2 | ~$1,940* | $1,845 | $1,895 | ~+5%* |
| 1BR / 1BA | 6 | $1,171 | $1,243 | $1,295 | −5.8% |
| Studio | 2 | $1,068 | $1,185 | $1,195 | −9.9% |
| Building | 34 | $48,527/mo | $47,289/mo | $48,830/mo | +2.6% |
Two-bedrooms: ahead of plan
The 2BR/1BA flats average $1,436 against a $1,352 Day-1 assumption, and the 2BR/1.5BA units average $1,566 against $1,541. Because these two types make up 70% of the units, they carry the rent roll. The townhome upside we described at acquisition (1,250 SF two-story units benchmarked against our nearby Tabor West leases) remains upside we have not modeled.Studios and one-beds: below plan
The one-beds average $1,171 against a $1,243 Day-1 assumption, and the studios average $1,068 against $1,185. Several are long-tenured residents on legacy rents, including one tenancy dating to 2002. We will close this gap gradually, through renewals and natural turnover rather than sharp increases, as described in the Initiatives tab.Q3 2026 — The Abbreviated First Quarter
From closing on July 29 through September 30, Crown Point produced $105,362 of operating income against $31,859 of operating expense, for $73,503 of NOI, with September tax, insurance and utilities accrued pending final books. After $15,625 of seller-carry interest and $1,471 of below-the-line items, the quarter generated $56,407 of cash flow. From that, the partnership paid its first distribution of $35,000 and retained the balance for obligations not yet due.
| Period | Operating income | Operating expense | NOI | Note |
|---|---|---|---|---|
| Jul 29–31 (stub) | $11,345 | –$974 | $12,320 | $7,000 recovery; seller tax credit |
| August | $41,889 | $18,004 | $23,884 | Some rent arrived in Sept |
| September | $52,128 | $14,829 | $37,300 | Tax, insurance, utilities accrued* |
| Q3 2026 total | $105,362 | $31,859 | $73,503 | incl. $10,691 recoveries |
| Less: interest & other | –$17,096 | $15,625 interest + $1,471 other | ||
| Q3 cash flow after interest | $56,407 | $35,000 distributed |
Reading through the timing
August looks light and September heavy because some August rent arrived in September. Combined, the two months produced $61,184 of NOI; less $3,691 of one-time recoveries, that is $28,747 a month, in line with the Year-1 plan's $28,776. We are not ahead of plan on operations yet. We are on it.Distribution: $35,000
About 12.2% annualized on $1.66M of equity over 63 days, above the ~$22,900 the 8% preferred return accrued over the same period. The excess reflects recovered legacy arrears passing straight through to investors, so it should not be read as the ongoing run-rate.Three Programs Under Way This Fall
With the rent roll stabilized, we have started three programs, each aimed at a specific line of the P&L: bringing utility billing in-house to increase net recovery, a renewal program to lock residents into 12-month leases, and winterization to protect the building envelope ahead of Portland's wet season. Below them, the expense lines that are running off plan, both directions, head-on.
Utility billing brought in-house — exit from Minol
The prior owner billed residents for water, sewer and garbage through Minol, an outside billing company that takes a cut of every dollar recovered through per-unit service and billing fees. We ended that arrangement and now bill in-house through our own management platform. Estimated savings: roughly $1,500–$3,000 a year* from the outside fees alone, before any improvement in recovery. Bill-backs dipped during the switchover ($472 in August) and are recovering ($850 in September); we expect them to reach the underwritten ~$2,500 a month as in-house billing runs its first full cycles. The quarter also brought $448 of laundry and $57 of parking income the underwriting did not include.
Renewal program — 12-month leases, deliberately modest increases
At closing, about 27 of 33 occupied units were on month-to-month tenancies. We are now offering 12-month renewals across the building, and by choice the increases will be smaller than is typical for the market. Moving a resident onto a one-year lease reduces turnover risk, firms up the income we can count on, and keeps the units full through the winter. We would rather own a fully leased building on dependable leases than push rents and absorb vacancy and turn costs.
Winterization — roofs, gutters and siding
Lombard's maintenance team is clearing every gutter and downspout, inspecting and repairing roof sections, and sealing and patching siding so the building stays watertight through winter. This near-term work protects the envelope until the larger siding replacement identified in our acquisition due diligence is scheduled.
Expenses, Head-On
| Line | Plan (Yr 1) | Run-rate | Variance | Disposition |
|---|---|---|---|---|
| Property tax | $47.7K | ~$33.5K | −$14.3K | Actual assessment; confirm with Nov 15 bill |
| Insurance | $12.0K | ~$17.6K | +$5.6K | Re-market at renewal |
| Management fee | ~$3.8K/mo | $4,988 Aug · $3,793 Sep | Under review | Reconciling takeover items |
| Utility bill-backs (income) | ~$2,500/mo | $472 Aug · $850 Sep | Ramping | In-house billing cycles |
Your Position — A Moment-in-Time Mark
This view flows a building valuation down the capital stack to show what the equity is worth today. The default values the building on its normalized run-rate NOI at a 6.50% cap rate, in line with the Portland market average and at the low end of the range for comparable Class B/C sales, then adds back the capital reserve the partnership still holds. We bought at a 7.1% cap, so part of today's mark reflects a purchase below market value rather than anything we have done yet; it has not been tested by an appraisal or a sale. Adjust the assumptions below to see how your stake moves. All figures trace to the Crown Point underwriting model and the Q3 operating statements.
| Source | Amount | % of total |
|---|---|---|
| Seller-carry note (interest-only · 5.00% · 60 months) | $3,750,000 | 69.3% |
| Common equity invested (LP) | $1,660,945 | 30.7% |
| Preferred equity | $0 | — |
| Total capitalization | $5,410,945 | 100% |
| Use | Amount | % of total |
|---|---|---|
| Purchase price ($140,632/unit) | $4,781,500 | 88.4% |
| Capital budget — siding $218,500 + contingency $100,000 | $318,500 | 5.9% |
| Soft costs (acquisition & investor-loan fees) | $255,945 | 4.7% |
| Financing costs | $55,000 | 1.0% |
| Total uses | $5,410,945 | 100% |
| NOI basis | 5.50% cap (exit plan) | 6.50% cap (market) | 7.10% cap (purchase) |
|---|---|---|---|
| $345K — normalized run-rate / Year-1 plan | $2.84M | $1.88M | $1.43M |
| $368K — Year-3 plan NOI | $3.27M | $2.24M | $1.76M |
| $388K — exit-year plan NOI | $3.63M | $2.54M | $2.04M |
How the split works
Distributions go first to an 8% preferred return to LPs, then to a full return of capital, and only then is the remaining profit split 75% to LPs / 25% to the GP. Q3's $35,000 distribution exceeded the ~$22,900 of pref that accrued over the stub period. At today's mark the equity value is only modestly above invested capital and the pref has not been fully paid on a sale-today basis, so no promote is applied and the mark simply reflects your capital position. For reference, the underwriting projects an 18.2% LP IRR and 2.06× LP equity multiple over a five-year hold at a 5.5% exit cap; those are plan figures, not a forecast.The Path From Here
Q4 is about consolidation. We will convert the month-to-month base into 12-month leases, complete the first full in-house utility billing cycles, finish winterization before the heavy rains, and pay the full 2026–27 property tax bill on November 15. Below are the forward items and the risks we are watching, raised now rather than when they become problems.
100% occupancy and a current rent roll
Both vacancies are leased and the legacy arrears are resolved, so the building enters the winter 100% occupied and current as of October 1. Holding it there through renewals is the central Q4 objective.
Siding replacement program
Our due diligence identified siding replacement as the asset's primary capital need, budgeted at about $218,500 plus a $100,000 contingency. We will bring a scope, contractor bids and timing to investors before any work begins. This winter's repairs buy time to bid it properly.
Property-tax and insurance lines
Taxes are running roughly $14K a year below underwriting on actual assessments, which more than offsets insurance coming in about $5.6K a year above plan. We will re-market insurance at renewal.
Watch List
First clean quarter of results
Normalized, August–September NOI matches the Year-1 pace. Q4 is the first clean quarter, with no takeover timing effects and full expense accruals. We will report it against the same $28.8K-a-month benchmark.
Billing transition
Any changeover in utility billing risks a gap in recovery. We are tracking the first in-house cycles against the Minol run-rate and will show the comparison next quarter.
August management-fee line under review
August's management-fee charge ($4,988) ran above the 8% contract rate, while September's ($3,793) ran below it. We are reconciling the two months for one-time takeover items.
Building envelope (1967 vintage)
Aging siding and roofs are the asset's main physical risk. Winterization addresses it in the near term; the funded replacement program addresses it permanently.