2021 CWS Annual Investor Meeting
CWS would like to thank all of our investors and guests who took the time to participate in our 2021 Annual Partners Meeting which was held virtually on April 21, 2021 via Zoom.
The meeting began with Partner Gary Carmell speaking about the “Power of our Platform,” which is our theme for this year. In addition to the significant challenges brought about by the global pandemic, another disaster hit the state of Texas from the Great Freeze when it experienced a drop in temperatures to record-breaking freezing levels and damaged approximately 3,000 of our units. With the help of a strong platform, which we have been building over the past 52 years CWS has been in business, we believe we will not only make it through these difficult times, but also thrive as we come out of it.
Partner Mike Engels began his presentation with an operational overview of how CWS’ same-store properties performed over the past 12 months ending March 31, 2021. Mike noted that while Net Operating Income was down year-over-year due in part to increased concessions and bad debt affecting revenues and higher expenses stemming from increased taxes and insurance costs, there were also some positives including that our properties overall collected approximately 98% of our billings, our physical occupancy increased, and our overall interest expense fell significantly with our variable-rate loans as 30-day LIBOR dropped to record lows. He also spoke of key hallmarks that helped CWS manage through the pandemic that included a Covid committee comprising of senior leadership. The committee was focused on the health and safety of our employees and residents and adopted the approach of hoping for the best and expecting/planning for the worst and, when in doubt, over-communicate. Lastly, Mike gave a sincere thank you to the CWS team members for their sacrifice and perseverance and to our investors for their unyielding support and encouragement during what were very challenging times.
The next presentation followed with Gary, who compared our business to a plant which requires plenty of water, nurturing, and nutrients to grow. The nutrients to our business include being in the right business (essential need, multifamily assets), in the right locations (where renters are moving to), with the right investors (long-term orientation, staying power, aligned expectations), with the right financing (variable-rate loans, optionality, lower cost of funds). Gary supported the decision to have over 80% of CWS’ loans in variable rate structures by highlighting the starting rate advantage versus fixed-rate loans, the ability to pay off loans without exorbitant penalties, and that CWS has saved over $50 million in interest when compared to their fixed rate equivalent at the time the loans were made, exclusive of pre-payment penalty savings.
Following Gary was Co-founder and Chairman Steve Sherwood who expressed how important every single person is on the team and how they are responsible for the success of CWS. Steve discussed the position of CWS in the multifamily industry, market conditions (pre- and post-Covid), and what to expect over the next 18 months. Being in 11 major markets and having strong relationships with many of the best brokers in the business has benefited CWS by having access to off-market opportunities. We apply our knowledge base from our own properties within the same regions and expertise from our teams to assess prospective acquisitions. In addition, we have a reputation of being able to raise capital and are also designated as a “preferred borrower” by both Fannie Mae and Freddie Mac, which is a testament to CWS being a reliable buyer and closer in the marketplace. Among real estate as an asset class, CWS is benefiting from being in multifamily, one of the most favored classes (along with industrial) compared to others that have struggled during the pandemic such as hotels, office, and retail. Steve concluded his presentation by expressing the benefits of the fund structure and how CWS keeps preservation of capital as a top priority.
The final presentation was given by Co-founder and Board Member Bill Williams who shared his life lessons with regard to apartment investing. Having been an investor with CWS for over 52 years, Bill expressed his confidence in the management team. He communicated the many benefits of real estate investing, which include long-term appreciation, depreciation that can offset income, and the value of a tax deferred 1031 exchange.
We thank you for your trust over the past 52 years in allowing CWS to represent you in owning, managing, and building apartments. We feel a great sense of honor and responsibility to preserve your hard-earned capital, to provide timely and relevant communication, and to deliver exceptional returns.