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MLG Capital Coronavirus watch: Our latest assessment

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To Our Extended MLG Family,

As you are no doubt aware, concern about the spread of the novel coronavirus, COVID-19, is increasing by the day.  First, we pray for the safety and protection of family and friends. Financial matters seem less significant when life and health issues come into our lives. We are encouraged that significant action is being taken by everyone to reduce the possible impact of this virus. At MLG, we are taking proactive steps to protect our 450+ employees across the country, and the thousands of residents or tenants in our properties. We remain diligent and steady in our investment objectives for our funds, objectives that have been tested and proven for over 3 decades.

The leadership team at MLG takes this situation very serious and has been monitoring numerous trusted resources as information comes out, while continuing to communicate amongst our team and clients. Given this we have taken the following steps:

Delaying all deals that are not yet committed for 30 days. We have opportunities in Phoenix and Chicago. Both deals are off market with good fundamentals and are nice opportunities. We are simply asking the sellers to proceed with the legal paperwork but delay any firm commitment to let the dust settle on all the information flowing on COVID-19. We need to minimize any employee travel which, impacts our ability to do due diligence on these investments.

We are moving forward with all investments with commitments in place and due diligence completed (All air travel for onsite due diligence has previously been completed on these investments.). All these investments have seen material improvements in our borrowing costs, which helps to ease concerns of the effects of a possible recession.

Again, we will continue to monitor events as they come. We thank you for your investment in our funds and we will work diligently on the performance of the assets. Currently, we are not seeing any material effects to our properties operations or cash flows, but there have been material reductions in our interest expense for assets with floating rate debt which will help our cash flows. As is common in all funds, some individual assets are distributing less than planned and some are distributing more than planned. We do not expect to reduce any of the quarterly distribution rates in any of our funds at this time. We are in the process of refinancing some assets to capture the low interests, which will be beneficial to the overall cash flow of our funds. Overall, we are seeing the benefits of having a diversified fund in a volatile time.

As always, we encourage you to reach out with any questions. I hope and pray for a quick resolution of this virus and the safety and protection of all your loved ones.

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Timothy Wallen
Principal & CEO
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