To the Limited Partners of Ziggy Capital Fund I, LLC:

Q3 and Q4 2023 have been a lucrative period of revenue growth and construction. We have completed the renovations of two units, and pending the timeline of city inspections will complete a third within the month. We are considering two more units for possible action in Q1 2024.

These events will close out the first phase of the fund and prepare us to return the initial capital to Limited Partners in Q1 2024. Our timeline is six months behind the forecasted distribution schedule and we deeply appreciate your patience in this complex economic environment.

Please reach out with any questions or concerns. 

Portfolio Revenue

Revenue has stabilized. We are profitable at the per property level. However, with limited operating properties, our top line revenue is limited. Our first goal is to get more units on the market. Following that, and given the strength of the long term rental market, we are planning to shift select units to long term rentals where it makes sense for maximum gross revenue and net margins.

Monthly Rental Revenue

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Portfolio Progress & Next Steps

As of our previous investor update, we had closed on six units and renovated three. 

As of today

• The fund has completed renovations on five units with a sixth to be completed in  December. 
• Two more units are under evaluation for possible action in January 2024.

Current Work

• 217 E Pine St. is complete after a full gut. The house has been split into two units. We have added two bedrooms and another bathroom. It is currently being furnished for rental. See photos
• 308 W Sycamore St. is nearly complete. This project is a full gut, increasing the home to include one extra bedroom and bathroom. See photos

Market Conditions

U.S. home sales have declined in monthly volume since a high in January 2021 of 6.65 million unit sales to 3.79 million in October of this year. Fewer people are willing to sell than any time in the past 13 years and the number of available properties is much lower than anticipated. 

Morgan Stanley expects U.S. home prices to soften in 2024 (down 3%) and that the economy will avoid a recession, incomes will continue to rise, mortgage rates have peaked and will decrease, and housing activity will begin to pick up. Prices in North Carolina have appreciated 4-5% year over year and we are confident in the continued popularity of the region and appreciation of the portfolio. 

In fact, if there is going to be a correction, we hope it happens sooner than later, so that we may ride the subsequent upswing to boost appreciation returns before we liquidate the portfolio.  If rates drop over the next 12-24 months we will then have the opportunity to refinance and increase cash flow. If rates hold, we are considering options to adapt the strategy of the fund to minimize macro risk and maximize shareholder returns via liquidation.

Over the next few months, we will focus on factors within our control. We are achieving above modeled appraisals. And we are improving demand and margins via our property management business to maximize short term cash flows for upcoming investor distributions. 

We cannot predict the dynamic economic environment. We will continue to bet on the growing community of larger Charlotte, mechanisms for shareholder value within our control like construction improvements, and operational efficiency to maximize revenue and margins. 

Conclusion

Ziggy Capital Fund I is wrapping up acquisition and construction operations and will finalize Phase I in Q1 2024. You can expect the first round of capital distributions then. 

Thank you all for your business and commitment to Ziggy Capital. 

Sincerely, 

Ziggy Capital General Partners