Horizon Residential Income Fund I

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

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 $216K, bringing the Fund’s total equity commitment to $24.15M. The team has also reviewed and approved 54 new construction draws and disbursed ~$1.90M to developers for newly completed work. As of March 16th, the Fund holds a remaining construction draw liability of $3.2M, which will be funded through the combination of equity and levered capital from our senior partner. Additionally, as of February 4th, the Fund was able to repay its senior facility in full, with all proceeds from payoffs now being directed back to the Fund. With this increased cash flow, the Fund has been able to start purchasing new loans and has already purchased four new loans in the past 45 days. 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, with the hope of expanding Horizon's portfolio over the next 30 days.

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-March, the portfolio's top markets were North Carolina (26.39%), Florida (25.05%), and Ohio (10.51%). Below you will find visuals that display Horizon’s full state concentration by gross loan amount, as of 3/16/2025. As the Fund has only purchased four new loans in the past five months, recent geographic shifts in the portfolio are mainly due to loan repayments, with 19 loans fully repaid in the last 60 days. Currently, 30% of all projects in the Fund’s portfolio are 100% complete and an additional 31% are 90-99% complete.

As the Fund continues to buy new loans over the next 30 days, we will be selective in certain geographies to ensure the portfolio’s state exposures begin to balance back towards our targeted exposure. However, it may be a few months before we see exposures in North Carolina and Florida reduced back to the 20% target.

Horizon State Exposure – % of Total Portfolio as of 3/16/2025

North Carolina . . . . . . . . . . . 26.39%	South Carolina . . . . . 5.09%
Florida. . . . . . . . . . . . . . . . . . . . 25.05%	Indiana. . . . . . . . . . . . . . 5.08%
Ohio . . . . . . . . . .. . . . . . . . . . . .10.51%	Maryland . . . . . . . . . . . 3.01%
Alabama . . . . . . . . .. . . . . . . . . . 7.18%	Georgia . . . . . . . . . . . . . 2.38%
New Jersey . . . . . . . . . . . . . . . . 6.14%	Other . . . . . . . . . . . . . . . 3.24%
Texas . . . . . . . . . . . . . . . . . . . . . . . 5.90%

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-March.

Additional Horizon Portfolio Composition
Project Type – % of Total Book (3/16/2025)

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, which 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.

Over the past 60 days, the Fund has experienced a slight decrease in its overall delinquency rate. As of 3/16, the Fund’s total DQ rate was 37%, which was a 3% decrease from 12/16. In the past 90 days, the Fund’s loan portfolio has shrunk from 113 loans outstanding to a current portfolio size of 81, while the total count of delinquent loans has also decreased from 43 to 34 loans. Looking at the Fund’s current delinquencies, the team is currently managing two loans in the 31-60 bucket and has no loans in the 61-90 bucket. The team continues to communicate with these borrowers daily and we are hopeful that we could have all loans in the 31-60 bucket cured by the end of March.

Loans in the 91+ bucket have also improved slightly over the past 90 days. As of 12/16, the Fund held 33 loans that were 91+ days delinquent and has since had five loans in this bucket either brought current or fully repaid. However, two new loans entered the 91+ bucket for the first time in March, which brings the Fund’s total count of 91+ delinquent loans to 30. Additionally, of the 30 loans in the 91+ bucket, 27 are actively working through foreclosure. The Fund still holds one property in REO and continues to receive offers, but a final sale has not been reached. We are also anticipating that a few additional loans could complete the foreclosure process and move to REO in April. The team continues to work with all delinquent developers daily in hopes that a resolution can be reached to bring these loans current.

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.