SHARK TANK – 9% DEVELOPMENT PRESENTATION HARBOUR NORTH APARTMENTS – CHESAPEAKE, VA The Lawson Companies 373 Edwin Drive Virginia Beach, Virginia Strictly Private and Confidential
A GENDA Agenda The Lawson Companies’ Experience Site Location & Photos Property Summary Financing Pro Forma Issues – The Good, The Bad, & The Hairy
E XPERIENCE The Lawson Companies’ Experience Established in 1972 Full-service real estate firm Manages over 5,000 apartments from Virginia to South Carolina Developed one of the first LIHTC communities in the State of Virginia in 1988 Received allocation of tax credits for 18 communities In-house Tax Credit Compliance Department
SITE LOCATION & PHOTOGRAPHS
Arial Photograph
S ITE L OCATION & P HOTOGRAPHS Arial Photograph – Proposed Site
S ITE L OCATION & P HOTOGRAPHS Harbour North Apartments – Pre-rehab
S ITE L OCATION & P HOTOGRAPHS Harbour North Apartments – Pre-rehab
S ITE L OCATION & P HOTOGRAPHS Harbour North Apartments – Pre-rehab
PROPERTY SUMMARY
Harbour North Apartments Development Proposal Acquisition/rehab of two 120-unit existing Rural Development communities built in 1978 and 1979 in Chesapeake, Virginia. Utilize 9% Low-Income Housing Tax Credits Refinance and re-amortize existing RD debt Add new VHDA debt Physical Features Thirty buildings, two stories in height, eight units in each building BR apartments BR apartments Rental office, laundry room, maintenance shop Add new community center including a computer learning office ADA - convert 24 apartments to fully-accessible units with universal design features EarthCraft In a Revitalization Area, not a QCT
FINANCING PRO FORMA
Financial Information Rents 40% of AMI 24 – 1BR (553 SF) - $410 50% of AMI 24 – 1BR (600 SF) - $525 96 – 2BR (698 SF) - $645 96 – 2BR (745 SF) - $645 Operating Expenses $5,000 per unit per annum Security budget $115,000 (almost 10% of annual OPEX budget) Insurance – Excess and Surplus Mkt + Flood Insurance Loans – 25-year amortization Refinanced RD Debt - $1,985,744 (Rate – 1%) New SPARC/REACH Loan - $1,000,000 (Rate – 2.95%) New VHDA Taxable Bond - $3,100,000 (Rate – 6.92%) Cash Flow After Debt Service - $75,102
F INANCING P RO F ORMA Sources and Uses Total Per Unit SOURCES OF FUNDS First Mortgage $3,100,000$12,917 SPARC Mortgage $1,000,000 $4,167 Assume RD Mortgage $1,985,744 $8,274 Deferred Dev Note $909,410 $3,789 Return from Sale of Investor Tax Credits $9,091,419$37,881 TOTAL SOURCES OF FUNDS $16,086,573$67,027 USES OF FUNDS Total Purchase of Land or Building $5,400,000$22,500 Total New Construction / Rehabilitation $7,524,000$31,350 Total Professional Fees $128,350 $535 Total Interim Costs $94,050 $392 Total Financing Fees & Expenses $225,563 $940 RD Debt Service $153,286 $639 Total Soft Costs $240,616 $1,003 Total Developer Fees $1,500,000 $6,250 Total Reserves $820,708 $3,420 TOTAL USES OF FUNDS $16,086,573 $67,027 REMAINDER (SHORTAGE) OF FUNDS - -
ISSUES
The Good Occupancy averages above 98% Many long-term residents TC eligible Located on an existing bus line Adding resident requested computer learning center EarthCraft design will lower resident utility expenses Post-rehab rents not substantially higher than pre-rehab rents The Bad Aluminum wiring throughout apartments Located in a flood zone, has flooded to front steps several times Only 70% RA Some current residents exceed income limits – incentivize Adjacent to tough townhouse community Requesting to close side entrance on Channel Place The Hairy Timing of refinancing of two Rural Development loans to coincide with tax credit timelines Renting accessible units slow without subsidy Cannot afford 24-hour security Development deferral is large (over 12 years) City wants non-residents to be able to use computer learning center
T HE R EAL P ROJECT The Rivers Apartments – Post-rehab
T HE R EAL P ROJECT The Rivers Apartments – Post-rehab
T HE R EAL P ROJECT The Rivers Apartments – Post-rehab
T HE R EAL P ROJECT The Rivers Apartments – Post-rehab
T HE R EAL P ROJECT The Rivers Apartments – Post-rehab