February 10, 2021

First and foremost, we hope you and your family remain safe and healthy as we continue to navigate the issues associated with the Covid- 19 pandemic.

The purpose of this letter is to 1) update you on our tax documents, 2) update the operations of Meadowview Apartments, and 3) thank you for your confidence and participation in the Meadowview Apartments project.

Tax season is upon us and we are in the process of generating the necessary documents for your tax preparation as related to your investment. Please do not file your 2020 tax return until you have received your documents from our LLC. If you have any questions or immediate needs, please contact Josh Galardi or Mark Devereaux.

March 17, 2020, is a date I will not soon forget. Coming from the beer business, St. Patrick’s Day has always been a day of celebration and camaraderie at the local bars and restaurants. I will never forget the fact that for the first time most of our lives, on March 17, St. Patrick’s Day, the bars and restaurants were shut down! I will admit, I was very scared of what was going to happen to our investment. We had made only one full mortgage payment with the second coming due as the immediate economic impact was just beginning to take effect.

Fast forward 11 months to February 10, 2021, and we are happy to report some outstanding results! These results, coupled with some industry opinions, solidify the worthiness of multifamily apartment investing.

Depending on where you were getting information, many industry “experts” were predicting the demise and fire-sale of a lot of the real estate sector. While it is unfortunate that some sectors of real estate have experienced significant declines, the multifamily apartment building segment is not one of them. Income Property Organization, based in Bloomfield Hills, MI who brokered over $225 million in multi-family sales volume in 2020 is quoted as saying: “… the market proved how dead-wrong all ‘opportunistic’ buyers seeking ‘Covid-discounts’ were, and they quickly learned that was a daydream. The real story of 2020 is that Cap Rates have drastically decreased in response to Covid-19… When your asset class is fundamental to survival and the cost of financing decreased by upwards of 25%, and the stock market looks overinflated, what you get is a stampede of equity seeking to acquire apartments.” Read the full article by visiting www.incomepo.com/2020-year-in-review/.

We feel this exact sentiment bore out itself with the Meadowview Apartments project.

Many businesses participated in PPP loans and other Covid-related economic stimulus programs. We did not. After much discussion, we felt that our tenant base and rent collection was on track to permit necessary operations without additional funding.

Due to the unknowns of eviction moratoriums and an ever-increasing unemployment rate, many partnerships suspended LP distributions. We did not. Again, we projected our rent collections to remain above 80% based on our knowledge of our tenant base and the work we were doing to improve it. We are have been extremely happy to report that we hit our first-year target distribution goals to you, our partners.

While there is no doubt government fiscal stimulus plans continue to prop parts of the economy, we also feel America will rebound so we continue to do the work necessary to position Meadowview Apartments as the “not-so-hidden-anymore” gem of the community.

We have turned over 25 apartment units in 13 months of operation. These turns have been a combination of necessity and choice. Some residents were evicted and denied a renewal term. Others left by choice, some combining households, and a few others made their first home purchases. This level of turnover, while expensive and time-consuming, has enabled us to improve our tenant base by strengthening approval standards. It has also enabled us to increase rents at a rate that is 11 months ahead of schedule. Our 2-year goal (January 2022) is an average rent of $675 per apartment. For February 2021 we’re at $671.94. We’re positioned strongly to hit our 5-year of $695.

Collections have remained strong, with just a few anomaly accounts. Our February delinquency as of today for current tenants is 2% or 98% collected. However, we do have some accounts that we have turned over to our attorney for collections, accounting for just 1.9% of revenue since inception. We have obtained money judgments on all of these accounts.

We are poised for a great 2021!

Our marketing efforts have produced steady, qualified traffic. The latest Google search analytics show a 37% increase in website visits and a 171% increase in phone calls. In our experience, walk-in traffic is not productive. Almost every single tenant of the 25 turns has been filled by placing a Facebook marketplace ad, then directing them to our website. Today, our legitimate wait-list with qualified prospects is five deep. Please visit our excellent website at www.themeadowviewapartments.com.

Technology investments continue to help us manage the business as necessary in the Covid-era. We are seeing more and more, the type of qualified, sophisticated prospect we are attracting demand online access and less face-to-face interaction. We continue to build our management in that direction: less face-to-face, more digital, and technology.

There are a few headwinds that remain on the horizon.

Eviction moratoriums, per se, have not been a huge factor. What is a consequence of government policies and Covid-19 is the fact that the courts remain behind in their caseload and extremely selective in scheduling makes it very difficult to mitigate rent payment issues the same month they occur. What is happening is when the tenant fails to pay, we send a notice, then we will get a court date if they fail to heed the notice. The problem is, pre-Covid we could get a court date within two weeks, now it may be two months. It is never our intention to evict anyone, we use the courts as a tool to remedy payment issues. So, as you can imagine, adding a month or two to an already problematic situation tends to make it more problematic. Until the courts can get caught up and until there is a lift on the “eviction moratorium” mandate, we foresee continued problematic issues with a select few tenant accounts.

Tenant screening will remain a critical component of investment success. While we are experiencing tremendous success in finding great prospects now, the business is cyclical. We need to remain vigilant and committed to a strong tenant base and be willing to trade some vacancy for the strength of the base.

Continued responsiveness to maintenance issues, our continuous improvement plan, and the ability to handle emergency situations will also contribute greatly to the success of our business plan.

People are important to our overall success. You should know we have two of the best-in-the-business maintenance technicians.

Sean Spaleny is employed full-time. Sean has 15 years of experience in multiple trades and is a certified HVAC technician. He literally knows everything about maintenance.

Dave Foesz helps us out in a part-time capacity. Dave has over 25 years of property maintenance experience. He also works for a regional property management company to fill up his schedule.

We have also launched Stelvio Equity Group LLC, changing from Capstack LLC. Stelvio Equity Group LLC is a company formed to help people invest in apartment buildings. We are a private real estate investment company focused on the acquisition and operation of multi-family apartment properties with passive investor partners. We partner with passive investor capital and institutional debt to create a capital stack that will provide strong financial returns to our investors. We’re doing what we’re doing with you, but now we’re ready to take it to a larger scale. Please check us out at www.stelvioequity.com. We are currently seeking investors for our next opportunity, so you can expect Josh to be in contact soon!

While there are still a lot of unknowns, if you read back over our previous letters, we are doing pretty darn good. Uncertainty remains but optimism is warranted.

Thank you for your confidence in Meadowview Apartments. Thank you for your investment in our management team. We appreciate the trust and confidence you have placed with us. There is much work to get done and we look forward to the road ahead, together.

Best regards,

Mark A. Devereaux

Founder & CEO

Stelvio Equity Group LLC