WP R O F E S S I O N A L C A M P U S ELLINGTO. A Joint Venture Proposal with Hayes 18 Partners, LLC A Ferlito/Geric Company

Transcription

1 WP R O F E S S I O N A L C A M P U S ELLINGTO N A Joint Venture Proposal with Hayes 18 Partners, LLC A Ferlito/Geric Company

2 TABLE OF CONTENTS SECTION 1... Investment Summary Salient Building Facts Investment Background SECTION 2... Renderings Building Plan Site Plan Aerial Location Map SECTION 3... Investment Opportunity SECTION 4... Capital Requirement (Sources and Uses Cash) Distribution and Return on Investment SECTION 5... County Overview Market Overview Macomb Township Demographics

3 WELLINGTON PROFESSIONAL CAMPUS INVESTMENT SUMMARY Proposed Investment Developer and Investor to invest $500K to be used to pay off existing land contract, satisfy taxes, and closing costs as well as provide approximately three (3) year operating expenses. This will leave the property free and clear from all current liabilities and gives the company reserves for future taxes, engineering, and yearly property maintenance and marketing. Project Overview Subject Property Subject Area Developer Marketing The property is site plan approved for approximately 120,000 sq. ft. of office and over 800 feet of Hayes Road frontage. The current plan consists of two (2) 18,124 sq. ft. buildings and one (1) 83,402 sq. ft. two-story building. The amount of square footage and visibility makes this site a great potential use for a medical campus complex. Located on the eastside of Hayes Road just south of 23 Mile Road, one of the busiest thoroughfares in North Macomb County. The proposed buildings will offer great flexibility in tenant mixes. Additionally, Hayes Road will be improved to five (5) lanes, with construction slated to begin in Macomb Township is one of the fastest growing communities in the State and offers some of the lowest tax rates in the entire Metro Detroit Area. The area has a need for office space and has not been overbuilt as is the case in some surrounding communities. Dominic Geric of Landtec Companies and Anthony Ferlito of Ferlito Construction are the current owners of the property. The objective is to sell building pads and/or lease or sell the three planned building sites. The marketing strategy will promote tenant and ownership opportunities targeted at office/medical users.

4 WELLINGTON PROFESSIONAL CAMPUS SALIENT FACTS 1. Hayes 18 Partners, LLC owns certain real estate, with details as follows: The site is comprised of 16.4 Gross Acres located in Macomb Township, Macomb County, Michigan. The site is rectangular in configuration with 800 feet of frontage on Hayes Road. The site can be improved and constructed containing three (3) buildings, of varying size and configurations, consisting of approximately 120,000 sq. ft. of office space. 2. Details related to the Hayes 18 Partners, LLC acquisition of the property are as follows: Hayes 18 Partners, LLC purchased the property in June 2013 for $375,900 from an entity in bankruptcy. The acquisition completed with a down payment of $60,000 and a short-term land contract to follow. 3. Site has access to the following utilities: Natural Gas Municipal Water Municipal Sewer Electricity Telephone Cable TV Soon to be new 5 lane paved road Offsite storm drainage 4. Taxes Due: March 2014 (Inclusive in the Purchase Price) : Summer & Winter payable to Macomb County Treasurer: $177, Payoff amount good through : Summer & Winter payable to Macomb County Treasurer: $16, Payoff amount good through : Summer payable to Macomb Intermediate School District: $12, Payoff amount good through Total Amount Due: $207, Tax Appeal Case: Hayes Partners recently entered into an agreement with Macomb Township lowering the yearly tax obligation from approximately $55,000 to $approximately $14,500 annually and will be capped moving forward. The Township had the property valued at $2.4M.

5 WELLINGTON PROFESSIONAL CAMPUS INVESTMENT BACKGROUND The site was brought to our attention by both a broker and several lawyers who were involved in the bankruptcy of the entity holding the property. The property had back tax issues as well as a very large tax burden from the township for being overvalued. The seller was in a considerable distressed position since they were being ordered by the bankruptcy trustee to liquidate their interest in the property Hayes Road Partners spent 9 months evaluating the site plan, negotiating a new tax value with assessor for the property, and doing the market feasibilities before it was finally evident that the market was changing quickly for land prices and the lack of quality sites for big and small office/medical users in the area. This made the property very appealing at the price negotiated almost a year earlier. The market has seen a reduction in quality office space in this area and rents have rebounded to levels where it is feasible to construct a new building again. Kroger has just started construction of a Super Center (120,000 sq. ft) a ½ mile away. This is one of the first of its kind for Kroger and brings tremendous traffic and visibility to the site. In addition, for Kroger to make this type of investment lends remarkable credibility to the demographics of this area. The project has a considerable upside due to the location and timing of the purchase, which enabled a considerable below market value purchase of the property. We believe with current changes in the "Affordable Care Act", which impacts will affect the need for new neighborhood outpatient centers, affords us the opportunity to begin marketing this site to the medical community as a very well-positioned medical campus. We will be marketing directly to some of the largest medical users who do not yet have a presence in this market. We will also introduce a concept that allows tenants to become owners in the building(s) if they decide to commit to long-term leases on the campus. This concept frees users from daily operations of the building component yet they will enjoy long-term equity appreciation in the building(s). By introducing an opportunity of ownership, we hope to seek out the highest quality of tenants with a low tenant turn over; thereby creating stability in market lease rates and, in turn, benefiting in the highest value for the land we are selling to the possible new users.

6 RENDERINGS WELLINGTON PROFESSIONAL CAMPUS

7 RENDERINGS WELLINGTON PROFESSIONAL CAMPUS

8 BUILDING PLAN WELLINGTON PROFESSIONAL CAMPUS

9 SITE PLAN WELLINGTON PROFESSIONAL CAMPUS

10 PROJECT AERIAL WELLINGTON PROFESSIONAL CAMPUS

11 WELLINGTON PROFESSIONAL CAMPUS LOCATION Wellington Professional Campus is located within minutes of M-53 and M-59 and just 15 minutes from two major interstates, I-94 and I-696. WELLINGTON WELLINGTON Professional Campus

12 WELLINGTON PROFESSIONAL CAMPUS INVESTMENT OPPORTUNITY 1. Hayes 18 Partners, LLC was organized for the purpose to acquire, hold and eventually dispose of the Interest in Approximately 16.4 acres of property located on Hayes Road in Macomb Twp, Michigan. The company will promote, hold, market and/or Dispose of the Realty described herein and engage in all undertakings necessary or convenient to the accomplishment of the foregoing purposes. The Company s affairs shall be limited to the above Real Estate Holding. 2. Hayes 18 Partners, LLC will be owned by Investors (50% - Class A Members), and Ferlito/Geric Entities (50% - Class "B" Members). Class "A" Members will contribute the equity required for the Project of approximately ($500,000), in accordance to their ownership percentage as provided for below. Class "B" Membership interest will be distributed to the Ferlito/Geric Entities, the developer of the Project. The Class "A" Members may include private investors as well as the principals of Ferlito/Geric Entities. 3. The Total project will require approximately ($500,000), as noted above, those contributing the equity will be the Class "A" Members in proportion to their ownership percentage. Class "A" Memberships will be available for purchase by Investor(s) in $100,000 increments for a 10% Interest in the company. The Total Investment is due upon the acceptance and restatement of the current Operating Agreement of Hayes 18 Partners, LLC. The Developer Class B Member is not required to invest cash into the project. 4. Class A Member-Ferlito/Geric Entity has funded approximately $70,000 to date to Purchase the property, fund the feasibility studies and clean up the site. The Ferlito/Geric Entity will fund the balance of it s ($30,000) owed, for a Total of $100,000-(10% Class A Member) within the next 12 Months. 5. The Class "A" Members will not be required to financially guaranty the Project in anyway and the property is to remain debt free from any mortgage obligation unless all members approve otherwise through a full Member approved resolution. 6. It is estimated that the total Capital required for the project is approximately $500,000 and will be utilized as outlined in the Sources and Uses of Cash page. Should the project take longer than estimated and additional Capital be required for any reason, then each Class A Members will be required to contribute in their ownership percentage, i.e.: A 10% Ownership Share would be required to pay 20% of Capital needed. If a member is not is capable of any additional Capital (if required) then the other members may contribute as needed and the member(s) who didn t make the additional Capital Call, shall have their shares diluted based on the overall equity in the project.

13 WELLINGTON PROFESSIONAL CAMPUS 7. Class "A" Member will be entitled to a Five (5%) percent cumulative, non-compounded Preferred Return on his or her investment from the date of the Capital Investment. Thus, before Class "B" Members receive cash distributions from the Project, the Class "A" Members must first be paid to date on their cumulative Preferred Return. 8. Upon the sale or refinancing of the Project, the Class "A" Members will be paid any outstanding unpaid cumulative Preferred Return plus the remaining balance of their original Capital Investment before all Members participate in Distributions. 9. Once all Class A Members receive all of their Preferred Return owed and all of their Capital returned to them, then if Managers deem a Distribution appropriate Class A Members and Class B Members will each receive a distribution equal to their Ownership Percentage 10. Ferlito/Geric will be the Managers of the Project and Developer/Property Manager of the Project. Fees are limited to the following: Property Management: Development Fee: Brokerage Fee: Asset Management Fee: None None 5-6% of Gross Sell Out Price (Outside Firm) Signature None 11. Hayes 18 Partners, LLC, for tax purposes, will be allocated as a Land Holding Company. The goal will be to allocate this Investment as a Long Term Capital Gain, but the final outcome as to Long Term or Short Term Capital Gain, will be determined by the Sale Date of All or Part of the Property. As a Passive Investor, the Class A Members will have to seek tax advice from their CPA as to their Investment Tax Classification for their Ownership in the company. 12. All members of the company shall receive quarterly financial statements showing all transactions within the company, profit and loss statements, and a balance sheet of the company.

14 CAPITAL REQUIREMENT (APX. SOURCES & USES OF CASH) WELLINGTON PROFESSIONAL CAMPUS

15 WELLINGTON PROFESSIONAL CAMPUS DISTRIBUTION AND RETURN ON INVESTMENT Assumption This schedule assumes a property sell out price of approximately $3.00/sq. ft. for net site developable area or approximately $15.00/sq. ft. land cost into the per square foot total building cost. Based on the value, we assume an approximate gross sell out value of roughly $1,800,000 for the entire property. Gross Sell out Value: $1,800,000 Costs: Capital Investment $500,000 Broker 6% $108,000 Preferred Capital Fee 5%/3 Years $ 75,000 $683,000 Net for Distribution $1,117,000 Total Return to Investor Investors (A) (Secured) Investors (B) (Available) Investors (C) (Ferlito/Geric) Developer (Ferlito/Geric) Investment $300,000 $100,000 $100,000 Preferred $45,000 $15,000 $15,000 Profit $446,800 $111,700 $111,700 $558,000 Total Cash Out $906,800 $226,700 $226,700 $558,500 Total Return on Cash (Approximate uncompounded 3 year Return on Investment) 42.2 % 42.2 % 42.2 %

16 WELLINGTON PROFESSIONAL CAMPUS COUNTY OVERVIEW Macomb County is located in southeastern Michigan and comprises the northeastern portion of the Detroit Metropolitan Area (one of the top 10 metro areas in the US). The County, while the ninth smallest of Michigan's 83 counties (with 482 square miles), ranks third in population and State Equalized Value. Quick Facts: 482 Square Miles 825,000 Population 3 Interstate Highways 31 Miles of Shoreline & over 10,000 boat slips 130 Parks with nearly 40 golf courses $52,102 average household income (3 rd in the state) 139,200 average home value 95% of all business employ less than 50 people 3 regional shopping centers restaurants 21 school districts Manufacturing is one of Macomb County s leading industries, employing one-third of the workforce. The County s 94 industrial parks, 8 community hospitals, the Community College and it University Center, and skilled workforce make Macomb County the ideal location for many of the Nation s leading manufacturers. Major manufacturers have invested over $2 billion in the county since The service sector employs another one-third of the workforce with projected growth over the next decade. Macomb County offers a variety of cultural and social amenities including the Macomb Center for the Performing Arts, Freedom Hill Amphitheatre, upscale dining and national chain restaurants, and three regional shopping malls including Partridge Creek. Opening in Fall 2007, Partridge Creek is a 612,000 sq. ft. open-air regional mall anchored by Nordstrom, and Parisian with an upscale tenant mix that includes Calvin Klein, Brooks Brothers, and P.F. Chang s China Bistro. Area Macomb County consistently offers the lowest tax base in the region with only 11 cents of every property tax dollar going to support county services. Macomb County has the highest possible credit rating from Moody's (AAA) and Standard & Poor's (AAA) making it one of only 34 counties in the entire nation to achieve this status. In 2006, for the 25th consecutive year, Macomb County won more awards from the National Association of Counties than any other county in Michigan.

17 WELLINGTON PROFESSIONAL CAMPUS MACOMB TOWNSHIP OVERVIEW Macomb Township is one of the fastest growing municipalities in the state, and presents a tremendous opportunity for developing businesses, and for providing residents with a high quality of life. It features beautiful and expansive residential subdivisions surrounded by rural farmland and generous expanses of rolling countryside. Just 20 miles North of Detroit, Macomb Township is a mix of tranquil agricultural land with sprawling subdivisions. This has made Macomb Township one of the most desirable locations throughout the Detroit metropolitan area. Centrally located within the county, Macomb Township offers residents easy access to Detroit, Mount Clemens (the County Seat), and Lake St. Clair. The township boasts beautiful landscape, golf courses and residential growth in its boundaries. Macomb Township is in the highly-rated L Anse Creuse School District. With two high schools, four middle schools and ten elementary schools, Macomb Township offers immediate access to academic excellence. District Highlights: Five National Blue Ribbon Schools Nine State Blue Ribbon Exemplary Schools One National Service-Learning Leader School 96.58% graduation rate More than $3.65 million in scholarships offered to graduating seniors in Full-time kindergarten offered throughout the district In addition, in 2008, Macomb County opened The International Academy of Macomb (IAM). The IAM is a high school designed for highly motivated students who want to earn the prestigious Internal Baccalaureate diploma, an internationally recognized achievement of higher education. All Macomb County residents are eligible to apply. Macomb Township Current population is estimated at 75,000 with a projected increase of 15% within the next two decades. Average throughout the township for homestead is approximately 26.2 mills per thousand dollars of taxable value.

18 WELLINGTON PROFESSIONAL CAMPUS MACOMB TOWNSHIP DEMOGRAPHICS POPULATION

19 POPULATION (CONTINUED) WELLINGTON PROFESSIONAL CAMPUS

20 POPULATION (CONTINUED) WELLINGTON PROFESSIONAL CAMPUS

21 ECONOMY & JOBS WELLINGTON PROFESSIONAL CAMPUS

22 ECONOMY & JOBS (CONTINUED) WELLINGTON PROFESSIONAL CAMPUS