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Trico Fund |||, LLC
Q1 2014 Investor Update

Fund Investment Thesis

Trico III is an actively managed investment vehicle providing investors with the unique opportunity to receive quarterly cash-on-cash distribu tions paired with long-term equity growth. The Fund was primarily formed to pursue investments within the Manufactured Home Community (MHC), Self-Storage, Parking, Multifamily (for-rent, senior & student) and Secured Debt Financing sectors, particularly within geographies that  align with a rigid set of demographic investment parameters that allow for maximum future returns. Our overarching strategy is to assemble a diversified portfolio of low-risk, high cash-flow assets with the goal of delivering capital preservation, consistent income and equity growth. Finally, to ensure full transparency and peace of mind, Trico Fund III will prepare audited financial statements on an annual basis.

 

1st Quarter of 2014 Update

Caddis Capital Investments launched Trico Fund III in September 2013 thanks to sustained support from our venerable investor base. As part of our fundraising strategy, we chose to activate funds upon their receipt, making the 1st Quarter of 2014 our second full quarter of operations. This plan paid immediate and handsome returns with our acquisition of assets in the following sectors: investment in an MHC Fund with multiple communities in the Western US; structured debt in an MHC Fund with the preference to convert to equity or remain as debt; structured debt in MHC related assets with an above benchmark, short-term payout; equity ownership of executive single-family rentals; all resulting in a 6% investor distribution on April 16, 2014.  The distributions are trending nicely with a respectable delta increase from $602/unit in Q4 2013 to $750/unit in Q1 2014.  We continue to execute this strategic approach to income investing and believe we will soon achieve quarterly distributions that equal or exceed those from our previous fund, Trico Fund II LLC, which is currently at a trailing twelve-month performance of 10% cash-on-cash.

With that in mind, our acquisition pipeline continues to flourish and we expect to close on multiple assets in the coming days.  Assets that are currently in the late stages of due diligence include: 600+ site MHC Community in Stillwater, OK;  600 Site MHC Community in Pueblo, CO; 150 Site MHC Community in Phoenix, AZ; 400+ MHC Site and Self-Storage facility in San Antonio, TX; Executive Single-Family Residence in Scottsdale, AZ.

 

2014 Outlook

Both the macro- and micro-economic trends continue to work in our favor. We’ve included new statistics below from the recent Harvard Affordable Housing Study. Nearly 30 years later, Harvard University published data that validates our affordable housing investment thesis that we’ve been executing since 1986. Even better, Harvard indicates that the current market dislocation between incomes and rents will provide a long-term opportunity for Trico III well into  the future.

Harvard states, “The cumulative increase in the incidence of housing cost burdens is astounding. In 1960, about one in four renters paid more than 30 percent of income for housing. Today, one in two are cost burdened.  In fact, the share of cost-burdened renters increased by a stunning 12 percentage points between 2000 and 2010, the largest jump in any decade dating back at least to 1960.”

Declining Incomes and Rising Rents Continue to Erode Affordability 2012 Dollars

Q1-Graph2In addition, on April 9, 2014, Bloomberg News published a story entitled “ Trailer Parks Lure Wall Street Investors Looking for Double-Wide Returns.”  The article identified some of the key drivers to the profitability of Mobile Home Communities which include: the endless demand for this affordable housing due to the continuing decline in wages for the majority of Americans; the fact that residents rarely move their homes out of communities due to the high cost of doing so; many communities can be purchased at good prices and, with small capital expenditures and good management, can be sold for excellent returns.

As you know, this has been our mantra and investment thesis for years!   However, it is exciting to see this validation in the market as it matches the vitality we are experiencing at Caddis Capital Investments regarding Trico Fund III LLC.

 

Invest in Trico Fund III

Based on our current momentum, we expect to be fully committed for Trico Fund III in Q3, 2014.

If you know of someone that might have interest in Trico Fund III LLC, please let us know or introduce us ASAP so they can join the Caddis Family before we close the Fund.  If you have questions or would like to participate, contact Tery Larrew at  tlarrew@caddiscapitalinvestments.com or (303)808-7331 or Rhett Trees at rtrees@caddiscapital investments.com or  (303) 888-2826. Thank You!