INTRODUCTION LONG BEACH 3

This portfolio consists of 50units, within threebuildings, all within the Wrigleysubmarketof the City of Long Beach.

Golden Bee Properties has been active in this submarket for fiveyears and recently rehabbed and sold three assets within a few blocks of these assets.

BUSINESS PLAN

The plan for this portfolio is to gut and rehab all three assets within nine months or so, then re-rent the 50 units at market rent and bring the buildings back to the market to sell within two years of purchase.

To accomplish this we intend to use a $1 million capital improvement budget, spending on average $20,000 per unit to upgrade kitchens, baths, floors, and paint.  On the exterior we intend to clean up landscaping, add lighting and paint, as necessary.

INVESTMENT SUMMARY FAST FACTS

Limited partners will receive a guaranteed 8% preferred return with a 60% (pari pasu) share of the distributable cash after all fees are paid.

Investor level internal rate of return (IRR) is projected to be approximately 27% over the two year term.

  • Investor Capital Contribution – 85%
  • Hold Period ~2 years
  • Investor Preferred Return – 8.0%
  • Property Level Internal Rate of Return – 25%
  • Investor Level Internal Rate of Return – 27%
  • Investor Equity Multiple – 1.34

SOURCES AND USES OF EQUITY

The sponsor is placing approximately $450,000 of its own funds into the investment.

Approximately $6.8 million will come in the form of debt from a local lender (~71 LTC).  The remaining $2.6 million will come from a limited partner equity position.

Limited partners will receive a guaranteed and accrued 8% preferred return with a 60% (paripasu) share of the distributable cash after all fees are paid.

PURCHASE SUMMARY & RENT ROLL

Total portfolio purchase price is approximately $8.375 million with an additional $1 million intended as a reserve for capital improvements.

Current in-place average rent across the entire portfolio is approximately $1,026 per month, with market rent at approximately $1,395 per month.

PORTFOLIO CASH FLOW

The portfolio will produce investor level distributions that will be at minimum an annualized 8%.  Note though that the preferred return is accrued and paid down as assets are sold. No quarterly returns are expected to be distributed until the end of Q4.

Distributions will occur during the quarters in which sales occur (4th, 5thand 6th).  During these quarters, a return of capital is expected to occur in addition to the minimum annualized return.