Hi Reader,

It’s undeniable...

The commercial real estate market has softened in some ways.

I’m not saying we’re immune to this market softening.

But I am saying that many of the deals the Wellings Real Estate Income Fund (the "Fund") invested in and continues to invest in are the type that often do well in any economy.*

And some of our investments are poised to do best in an environment with higher interest rates and tightened lending.

Like this multifamily preferred equity investment in the Atlanta MSA.

Here are a few details on the investment, which closed in December 2023:

• Approximately 30% common equity in first-loss position shielding our preferred equity investment
• 9% current pay/cash flow*
• 8% upside accruing and compounding monthly (17% coupon/total annual return)*
• Fannie Mae senior loan fixed at 6.61% for five years with three years IO
• The Fund held back $355,122 in current pay reserves plus $2.55 million for capital improvements
• IRR projection of 19.4%*
• MOIC is projected to be 1.62x in 36 months*
• Our investment receives the same depreciation allocations as common equity
• Wellings has forced-sale rights to protect the Fund's capital and returns if the operator is not performing

When our operating partner took over the 200-unit property in December, they discovered more bad tenants than they had uncovered in due diligence.

Since takeover in mid-December 2023 through early March 2024, they successfully evicted 28 non-paying tenants. The vacancies allowed them to upgrade these units faster than planned and rent them to new tenants.

The original underwriting model for the investment showed rent increasing by approximately $200 for the upgraded units.

Due to market demand, they successfully leased the first few upgraded units approximately $450 higher than the previous in-place rent, beating pro forma by ~$250.

There is no guarantee this leasing momentum will continue, but it is encouraging. A few other units were rented at the pro forma level, or approximately $200 higher than the previous in-place rent.

More good news on a manufactured housing community in our Fund:

One of our operating partners acquired a Michigan manufactured housing community in December for $36.5k per lot—far below replacement cost (if construction were to get approved, which is quite unlikely).

The business plan calls for improvements to the roads, improving general curb appeal, trimming trees around the park for enhanced aesthetics, and upgrading playground equipment.

Many tenants have been there for over 20 years and will likely continue to rent there for a long time.

In addition to improving the park, they made three quick moves to increase NOI and value:

• Lot rents were far below market at acquisition and were raised by approximately 16% (from $365 to $425), adding ~$100k annually to NOI.
• Acquisition price was based on 127 lots, but four were filled prior to closing and our operating partner is in the process of filling four more. This adds $40,800 annually to NOI.
• Utility costs are being passed back to residents, adding $104,000 annually to NOI.

Assuming a sale at a 6% cap rate, the cumulative impact of these three changes adds over $4 million to the asset’s value. In the first year of ownership.*

Prospective investors can access the Fund's previous quarterly reports detailing all holdings after doing a call with us and signing an NDA.

Deadline

We’re closing the doors for this round this Friday, March 29th, at 5:00 PM ET.

You can review documents and get started here: https://wellingscapital.investnext.com/portal/offerings/1589/​

The investment process can be completed quickly online.

Here is a list of frequently asked questions: https://www.wellingscapital.com/faq​

Here is the link to watch this month's webinar recording and the timestamps: https://www.wellingscapital.com/march-2024-wreif-webinar

There will be other opportunities to get into the Fund this year as the Fund is not yet closing permanently; however, keep in mind that depreciation is allocated based on time in the Fund and that we expect distributions to begin approximately one month after investing.*

Feel free to reply to this email if you have any other questions or if you would like to chat with us briefly.

Best,

Paul Moore

Managing Partner | Wellings Capital | www.wellingscapital.com​

P.S. I will be at the Best Ever Conference in Salt Lake City April 8-12. Let me know if you'll be there by replying to this email!

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* DISCLAIMER: Past performance is no guarantee of future results. There is no guarantee that any projected results will be achieved. Investors should consider the investment objectives, risks, charges, and expenses of the Wellings Real Estate Income Fund (the "Fund") before investing. For a Private Placement Memorandum (“PPM”) with this and other information about the Fund, please call 800-844-2188 or email invest@wellingscapital.com. Please read the PPM carefully before investing.

The information contained in this email communication is for information purposes, does not constitute a recommendation, and should not be regarded as an offer to sell or a solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be in violation of any local laws. All investing involves the risk of loss, including a loss of principal. We do not provide tax, accounting, or legal advice, and all investors are advised to consult with their tax, accounting, or legal advisers before investing. Information and any opinions contained in this email communication have been obtained from sources that we consider reliable, but we do not represent that such information and opinions are accurate or complete and thus should not be relied upon as such.