All is well with VHE Fund 1. The Q2 2025 distribution will be hitting your account in a few days. Quarterly cash flow distributions to Fund investors will continue at a 6% annualized rate of return.

​

Village Apartments | 252 Units | Forest Lake, MN

Our first fund asset has been outperforming since it closed in December 2024. Occupancy has remained above 90% even during heavy renovations in the first half of the year. Renewal rent increases are averaging near 7%, and Net Operating Income continues its steady climb as the renovations have been very well received in the market. Perhaps more importantly, the property is already cash flowing well above what it needs to meet its quarterly obligations to Fund 1.

 

The Elwood | 114 Units | Kokomo, IN

We are pleased to announce the closing of our preferred equity position in the development of The Elwood, a luxury 114-unit residential mixed-use building in Kokomo, IN, a suburb of Indianapolis. The city provided $6.2 million in public funding to The Elwood as part of Kokomo’s ongoing effort to prepare for thousands of new jobs, including those at their new $3.2B Samsung battery plant.

 

We will raise $2mm in August to fund this new investment. As always, we are offering our current investors the right of first refusal on new shares.

 

Why Preferred Equity?

When we launched the fund, we wanted to offer "Hybrid Equity" which allows creative structuring of investments with our JV partners. Preferred equity is often more onerous for the investment sponsors (easier for us!), but as it turned out, the first two investments in the fund have been well suited for a traditional preferred equity structure.

 

In both investments, VHE Fund 1 investors' principal and profits have priority over other investors, who would have to lose all of their equity before VHE Fund 1 investors' principal and return are impaired. Furthermore, we have legal mechanisms to assume control in the event of contract breach or missed performance targets.

 

Multifamily Market & The Midwest

The multifamily market continues to showcase its resilience, and show improvement, in the face of these turbulent times. According to RealPage, the national apartment market saw annual rent growth of 1.1% in Q1 2025. While positive, this is modest based on historical norms due to heightened supply. That said, new apartment construction has slowed considerably, rent growth momentum is increasing, and the outlook for the next few years looks bright.

 

Meanwhile, the Midwest leads the charge in annual rent growth of 3.6%, more than 3X the national average, due to relatively limited new apartment supply. While the sunbelt markets have greater ebbs and flows, Midwest investments represent stability, consistency, and a stabilizing force to an investment portfolio. VHE Fund 1 is concentrating in this region of the country as it aligns well with the Fund's goal of being "Uniquely More Secure & Predictable."

 

Thank you for your continued trust and partnership.

 

All the best,

Steeve