Horizon Residential Income Fund I

The Horizon team is pleased to present an updated fund overview for mid-January.

Horizon Fund Capital Overview

In the past 90 days, the Fund has seen continued progress across all aspects of its portfolio. The Fund has raised new equity totaling $332K, bringing the Fund’s total equity commitment to $24.26M. The team has also reviewed and approved 77 new construction draws and disbursed ~$3.27M to developers for newly completed work. As of January 16th, the Fund holds a remaining construction draw liability of $3.94M, which will be funded through the combination of equity and levered capital from our senior partner. Additionally, the Fund has repaid $11.46M of levered capital over the same period, bringing its total levered capital to $1.90M. With limited new investment opportunities over the past couple of months, the Fund’s Manager and Investment Committee feel that it is still in the Fund’s best interest to continue to pay down its senior financing line. Based on recent loan payoffs, we are anticipating that this balance could be fully repaid in the next 30 days, if not sooner. Additionally, this reduction in levered capital has reduced the Fund’s interest expense by ~$58K from the end of October to the end of December. The Fund’s Manager, along with the Servicing team, remain focused on loan performance, and our Investment Committee continues to explore opportunities to purchase new loans.
Below is the monthly breakdown of the Fund’s total equity, loan balances, and levered capital.

Portfolio Composition & Risk Management

When looking at portfolio composition and risk management for Horizon, a few of the main portfolio metrics the Horizon team considers are geographic location, weighted average leverage metrics, and project type. We underwrite and monitor these different metrics to ensure we are maintaining a balanced portfolio that aligns with our overall investment strategies.
As of mid-January, the portfolio's top markets were North Carolina (25.40%), Florida (23.11%), and Ohio (9.97%). Below you will find visuals that display Horizon’s full state concentration by gross loan amount, as of 1/16/2025. As the Fund has not purchased any new loans since the end of September, recent geographic shifts in the portfolio are strictly due to loan repayments, with 17 loans fully repaid in the last 60 days. Currently, 32% of all projects in the Fund’s portfolio are 100% complete, and an additional 23% are 90%+ complete. While the Fund will be limited in its ability to purchase new loans over the next few months, we could still see concentration shifts as loans continue to repay.

Horizon State Exposure – % of Total Portfolio as of 1/16/2025

North Carolina. . . . . . . . . . 25.40%	Indiana . . . . . . . . . . . . . 5.02%
Florida. . . . . . . . . . . . . . . . . . 23.11%	Maryland. . . . . . . . . . . .2.87%
Ohio . . . . . . . . . . .. . . . . . . . . . . .9.97%	Pennsylvania . . . . . . . 2.47%
South Carolina. . . . . .. . . . . . 8.44%	Georgia . . . . . . . . . . . . . 2.46%
Texas . . . . . . . . . . . . . . . . . . . . 8.25%	Other . . . . . . . . . . . . . . . 5.26%
Alabama . . . . . . . . . . . . . . . . . 6.76%

Horizon’s loan leverage metrics are also a vital piece to the portfolio’s overall health. These leverage ratios are what protect each loan against any potential downside risk. Below is a breakdown of each metric:

Loan to As-Is Value (LTAIV): We have set a maximum LTAIV constraint per loan of 70%, and are targeting a portfolio below 65% LTAIV.
Loan to Cost (LTC): We have set a maximum LTC constraint for any loan within the portfolio at 90%, while targeting a weighted portfolio makeup below 85%.
Loan to After Repair Value (LTARV): The Horizon team has set a 70% maximum LTARV constraint for each loan and for the entire portfolio.

In the below table, Horizon’s month-over-month changes in WAVG loan leverage metrics are presented. All three portfolio metrics have remained at or below their target mark through mid-January.

Additional Horizon Portfolio Composition
Project Type – % of Total Book (1/16/2025)

Loan Performance & Delinquencies

Delinquency management is a core focus at Upright, beginning with rigorous underwriting practices and supported by our Servicing and Asset Management teams, who employ industry-leading strategies for effective recovery. These strategies include relationship-based borrower management, timely issuance of Notices of Default, and loss mitigation evaluations after 61 days of delinquency. Given the short-term nature of our asset class, understanding delinquency rates is crucial, as performing loans typically repay within 10 months on average, while delinquent loans may require longer resolution periods.

Below is a chart displaying the Fund's delinquency rates over the past 90 days, presenting both the total count and the percentage of the active book based on the Unpaid Principal Balance of delinquent loans. This detailed transparency reflects our commitment to rigorous reporting standards and aligns with the MBA’s approach, while also providing an expanded view of our delinquency performance.

As we have shifted into 2025, the Fund has not experienced any significant changes in its overall delinquency rate. As of 1/16, the Fund’s total DQ rate was 41%, which was a ~1% decrease from 30 days ago. In the past 90 days, the Fund’s loan portfolio has shrunk from 145 loans outstanding to a current portfolio size of 96, while the total count of delinquent loans, 39 total loans, remained the same over the same period.

Looking at the Fund’s current delinquencies, the team was managing 10 loans in the 31-90 bucket through mid-December, with Notices of Default issued promptly for loans exceeding 60 days delinquent. The team's continuous efforts resulted in an improvement in this DQ bucket over the past 30 days, as only 6 loans were between 31-90 days delinquent, as of 1/16. The team continues to communicate with these borrowers daily and we are hopeful that we could have all loans in the 31-90 bucket cured by the end of January.

Loans in the 91+ bucket also did not shift significantly throughout the past 60 days. Since 11/16, the Fund’s total loan count held in the 91+ DQ bucket has only increased by one and is currently at 33 total loans. At the end of December, nine loans were progressing through foreclosure, with one loan awaiting a deed transfer to be moved into REO. As of early January, the deed transfer has been finalized and our team is in the process of re-listing this property for sale. Additionally, our team is now pursuing foreclosure on three new loans, which brings our total foreclosure loan count to 12. Currently, we have payoff demands out to borrowers for three loans that are 91+ and are hopeful that these may repay before the end of January.