Feasibility Study Project: Tennis Club CSL: B 702366 April, 2010 www.tunneyland.com
Authorization Memorandum CSL: B 702366 Authorization Memorandum The following, pertains to the project, herein referred to as, (Tennis Club). The purpose of this study is to clarify the scope of the project, project potential profit from it s completion, and to define the necessary funding in order to facilitate the procurement and development of the subject property. It shall be noted that this document has been authorized for specific distribution and shall be considered CONFIDENTIAL. John Tunney Principal Project Leader Lorcan O Neill Principal Project Leader DATE DATE
FEASIBILITY STUDY TABLE OF CONTENTS Page # 1.0 GENERAL INFORMATION...1-0 1.1 Purpose...1-1 1.2 Scope...1-1 1.3 Project Overview...1-1 1.4 Project References...1-1 1.5 Terms...1-2 1.6 Points of Contact...1-2 1.6.1 Principals... 1-2 2.0 MANAGEMENT SUMMARY...2-0 2.1 Market Condition...2-1 2.1.1 Property Profile... 2-1 2.1.2 Sales Comparables... 2-1 2.1.3 Demographics... 2-2 2.1.4 Statistics... 2-3 2.2 Performance Objectives...2-4 2.3 Investors... 2-4 3.0 PROPOSED PROJECT...3-0 3.1 Description of Proposed Project...3-1 3.2 Construction and Other Costs...3-1 3.3 Time Requirements...3-2 3.3.1 Schedule...3-2 3.5 Terms and Request...3-2 4.0 ATTACHMENTS... 4-0 4.1 Attachment A: Receiver s Certificate and partial chain of title... 4-1 4.2 Attachment B: Ventura County Assessor s Map... 4-1 4.3 Attachment C: City of Thousand Oaks Requirements... 4-2 4.4 Attachment D: Current Photo s... 4-3 Page iii
1.0 General Information 1.0 GENERAL INFORMATION Page 1-0
2.0 Management Summary NOTE TO REVIEWER: The is used to provide an analysis of the project objectives, and requirements necessary for the completion of the objectives. It shall be understood that this feasibility is an informal document for the sole purpose, of understanding the proposed. During this analysis, the objectives of the project are defined based on the information obtained and the opportunities they will provide. Included in this feasibility are the high-level Management Summary, Proposed Project and their necessary subcategories, highlighting our objectives. Upon completion of this feasibility study a determination will be presented for your consideration. 1.0 GENERAL INFORMATION 1.1 Purpose The purpose of the is to convey a clear understanding of the proposed project objective. It shall convey our need for your assistance in order to facilitate the initiation and the success of the project. It should provide adequate data to invite a qualified financial commitment. If additional information is required, please see: Points of Contact below, 1.6.1. 1.2 Scope The scope of the shall clarify all pertinent information as it relates to the project. This information shall be presented in a cogent manner specific to the project. It will contain current data, market conditions, project conditions and financial considerations. Again, all of this information is confidential. 1.3 Project Overview The project overview, or description, is the completion of a partially developed project, within the limits the state of California, County of Ventura, City of Thousand Oaks. The project represented is a Townhouse Complex totaling 38 units situated on 4.18Ac.+, per Tract 5400 rev. 11/01/07. As understood, this project is the result of a Bank failure, Receiver Certificate and subsequent Trustee s Deed Upon Sale, which is now being offered for sale in an as is condition. The proposed course of action is to acquire, update agency documentation, mobilize, complete construction, and ultimately, sell the individual townhouse units, to the general public. 1.4 Project References The attachments highlight and expand on the information stated in 1.3 and shall be understood as the state of title and current condition of the project. This list of references, may be used as further clarification of the contemplated project: Attachment A: Receiver s Certificate and partial chain of title Attachment B: Ventura County Assessor s Map Attachment C: City of Thousand Oaks Requirements Attachment D: Current Photo s Page 1-1
2.0 Management Summary 1.5 Terms Real Estate: Land plus anything permanently fixed to it, including buildings, sheds, and other items attached to the structure. Title: Legal right to the possession of property, esp. real property. Receiver s Certificate: A Debt instrument issued by a Receiver and serving as a Lien on the property, which provides Funding to continue operations or to protect Assets in receivership. Trustee s Deed Upon Sale: A written document which is prepared and signed by the trustee when the secured property is sold at a trustee's sale. This document transfers ownership to the successful bidder at the sale 1.6 Points of Contact 1.6.1 Principals John Tunney, Owner Tunney Construction Company Email: john@tunneyland.com Cell: 805.300.8626 Lorcan O Neill, Owner Thousand Oaks Electric Email: noneill21@mac.com Cell: 818.429.4497 Page 1-2
2.0 Management Summary 2.0 MANAGEMENT SUMMARY Page 2-0
3.0 Proposed Project 2.0 MANAGEMENT SUMMARY 2.1 Market Condition Input Listings Here 2.1.1 Property Profile APN: 525-0-041-105 Census Tract: Type: Townhouse (Residential) Tract Number: 5400.00 Lot Number: 1 Legal Description: Lot: 1; Tract No: 5400.00; Abbreviated Description: LOT:1 TR#:5400.00 TRACT 540000, LOT 1, MAP NUM: MR, CNDO PLAN, CNDO UNIT #38 MAP REF158 2.1.2 Sales Comparables Active Properties Summary Address City Map Bd Bth Sqft LotSz Year Date $/Sqft DOM Orig Price List Price 31007 Minute Man Way Westlake Village 557, F6 2 3 1407 13804 1981 01/04/10 283.58 113 449,000 399,000 239 Hill Ranch Dr Thousand Oaks 556, H1 3 2.50 1500 835 1988 04/14/10 266.00 13 410,000 399,000 214 Heather Ridge Ave Newbury Park 556, A1 3 3 1859 3484 1979 03/15/10 196.34 43 365,000 365,000 1833 Aleppo Ct Thousand Oaks 526, J4 2 2.50 1188 3920 1979 04/18/10 273.57 9 325,000 325,000 4123 Hillpark Ct Moorpark 496, C3 2 2.50 1407 668 1994 04/19/10 233.83 8 329,000 329,000 5480 Spanish Oak Ln #D Oak Park 557, J1 2 2.50 1204 654 1989 04/20/10 228.41 7 275,000 275,000 510 Via Colinas Westlake Village 557, E3 2 2 1153 1212 1986 04/21/10 302.69 6 349,000 349,000 592 Via Novella Oak Park 557, J1 2 2 1048 2613 1981 04/22/10 352.10 6 369,000 369,000 915 Via Colinas Westlake Village 557, D3 3 3 1332 640 1987 04/23/10 281.46 4 374,900 374,900 3023 Mulberry Cir Thousand Oaks 526, H3 3 1.50 1301 7840 1974 04/24/10 260.57 3 339,000 339,000 3713 Summershore Ln Westlake Village 557, C7 2 1.50 1195 5423 1974 04/24/10 280.33 3 335,000 335,000 612 Valley Oak Ln Newbury Park 556, D2 3 2.50 1550 1710 1978 04/23/10 250.97 4 389,000 389,000 2850 Instone Ct Westlake Village 557, C5 2 1 920 3049 1972 04/27/10 325.98 0 299,900 299,900 Listing Count 14 Averages 1314 271.99 16.8 354,523 349,831 Sold Properties Summary Address City Map Bd Bth Sqft LotSz Year Date $/Sqft DOM Orig Price List Price Sold Price 6760 Chapman Pl Moorpark 476, H6 3 2 1521 4792 1987 03/30/10 249.84 258 375,000 385,000 380,000 2617 Los Arcos Cir #20 Thousand Oaks 526, G3 2 2.50 1373 1982 04/02/10 290.60 225 409,950 399,900 399,000 817 Warwick Ave Thousand Oaks 526, F7 2 2 1343 1988 01/12/10 242.00 76 335,000 334,700 325,000 1222 S Westlake Blvd #B Westlake Village 557, A5 3 2.50 1984 3920 1975 01/15/10 201.56 27 399,900 399,900 399,900 744 Blue Oak Ave Thousand Oaks 556, C2 3 2 1302 1925 1978 03/04/10 298.00 53 399,000 399,000 388,000 170 Via Colinas Westlake Village 557, E4 3 2.50 1435 1078 1985 04/09/10 271.78 62 399,900 399,900 390,000 4188 Lake Harbor Ln Westlake Village 557, C6 2 2 1131 5018 1971 04/23/10 340.41 72 399,000 399,000 385,000 1116 Amberton Ln Newbury Park 556, B1 3 3 1532 1283 1990 03/26/10 248.04 15 384,900 384,900 380,000 789 Via Colinas Westlake Village 557, E3 3 2.50 1332 640 1987 04/16/10 285.29 3 369,900 369,900 380,000 Listing Count 14 Averages 1439 269.72 87.9 385,839 385,800 380,767 High 399,900 Low 325,000 Median 362,450 Page 2-1
3.0 Proposed Project 2.1.3 Demographics Population in July 2008: 123,091. Population change since 2000: +5.2% Males: 60,427 (49.1%) Females: 62,664 (50.9%) Median resident age: 37.7 years California median age: 33.3 years Estimated median household income in 2008: $99,800 (it was $76,815 in 2000) Thousand Oaks: $99,800 California: $61,021 See. http://www.city-data.com/city/thousand-oaks-california.html#top Page 2-2
3.0 Proposed Project 2.1.3 Statistics Average household size: This city: 2.8 people California: 2.9 people Percentage of family households: This city: 74.6% Whole state: 68.9% Percentage of households with unmarried partners: This city: 4.0% Whole state: 5.9% See. http://www.city-data.com/city/thousand-oaks-california.html#top Page 2-3
3.0 Proposed Project 2.2 Performance Objectives The performance objectives are two fold, Funding and Completion: First, we must raise the necessary capital for acquisition and construction, in a lump-sum pledged manner, thereby facilitating the first performance objective; Funding. Second, we must acquire the subject property, at a rate equitable to the current condition. This will be through a sealed bid process, an (e) portal, password based site that allows access by approved bidders exclusively. Upon acquisition of the subject property, dialog shall commence with architects, engineers and city officials of record, for the sole purpose of Completing Development of the subject property. Once completed, the property shall be sold, unit by unit phasing, or refinanced, as a package, to pay back the pledged monies from the investor(s) at an agreed rate of return. (to be determined) 2.3 Investor Relations The Investor should have a basic understanding of real estate and townhouse/condominium projects. The assumptions herewith shall be constrained to the subject property and performance of the development of the subject property, a townhouse complex. The execution of these assumptions shall be understood, as is normal, with the acquisition of a failed project. The extent of this execution is dependent upon the potential investor(s), and their, understanding of an acquired failed project. These types of projects require additional effort, communication, cooperation and trust during and through the completion of the project. There will always be a concern with problems arising from seen and unforeseen conditions/events that potentially impact the project, these discoveries within the project should be an understood consideration. As such, funds availability and unilateral decision making is a necessary must, on site, thereby facilitating a smooth running project with no outside interference causing delays. This is not a negotiable aspect of the contemplated project. The assumptions with a project of this type typically focus on money. This is the case here as well. The potential investor must remain an investor and not an active Principal in the decision making process. Once a commitment of pledge has occurred the investor now becomes a silent partner/owner of the contemplated project. Their respective exposure, protection and return on investment will be clearly de fined prior to execution of their pledge. Page 2-4
3.0 Proposed Project 3.0 PROPOSED PROJECT Page 3-0
3.0 Proposed Project 3.0 PROPOSED PROJECT 3.1 Description of Proposed Project As represented herewith, the proposed project is a townhouse complex with 38 units on a site of 4.18Ac +. The current condition is Fair, with some material concerns. The Building Pads have been exposed for a prolonged period and will require a scarify and re-compact; additional grading may be required. It shall be noted that the subject property is within the area of the 100 year flood plane. Consequently the site, and future construction has addressed this concern. The civil engineers have placed the building pads +2 to +4.5 above the new drive (see Attachment D) for a general appearance of the project. As a result of these findings the structures will require Pile Foundations, some to a depth of 36 +. The infrastructure is in and appears to be of standard to good construction with no foreseen concerns at this time. The site, in general, has suffered somewhat and may require an update, possibly grading and compaction recertification as stated. The City of Thousand Oaks has additional concerns related to the Permit Fees, Connection Fees, Traffic Fees, Utilities Fees and etc. 3.2 Construction and Other Costs The cost of construction, for the purposes of this feasibility study, are projected numbers. This should be understood as a qualified proposal anticipating the potential costs. This type of proposal is, a valid number based upon information gathered through Title, City and Construction Costing, as of this date. We have formulated a unit pricing, based upon square footage, applied with an average to good appointment, representing the quality of finishes. The pricing could have a spread of 8 to 14 percent up or down and should be noted/understood as such. The project has specifications, architect based, on the approved plans which have been a consideration for this basis. If accepted by the principles and upon market conditions certain aspects of the finishes may change to the advantage of the investor(s). We are projecting a per cost basis of $81.00/sq. ft./unit, totaling $5,700.000.00. This number is tight, however, there has been substantial work performed to the benefit of the project, on site. The infrastructure is in and the first layer (AC Paving) has been placed. The overall site development, those items not pertaining to the structure which include landscaping, drainage, hardscape, is projected to cost an additional $481,000.00. Additional projected costs are Legal, City, Architectural and Marketing (R.E. Listings). Legal costs projected to be $75,000.00 for Partnerships/LLC and potentially for HOA establishments. The City fees are an approximate amount, due to adjustments scheduled to occur, on or about July 30, 2010. These adjustments will impact past due amounts of approximately $163,800.00 +. Additionally, the architectural/engineering is projected at $75,000.00. Finally, the marketing of the completed project, could be as high as $350,000.00, for the entire package. This number is a percentage and is a cost of doing business and therefore should not be considered part of the basis, rather applied to the overhead aspects of the project. Understanding all considerations presented, the grand total required for completion and readiness for Spring Market, 2012, is $6,494,800.00 Page 3-1
3.0 Proposed Project 3.3 Time Requirements Time requirements are approximate. Due to the limited time available prior to the actual bid, a firm schedule could not be developed. However, we have established a post acquisition timeline of 20 months. This includes time required for agency approvals, construction, site work and marketing for sale, on or about Spring 2012. There are several factors which could potentially delay this timeline. As a potential investor, you should consider your commitment to be a duration of approximately three (3) years. This feasibility study should be considered to an actual, not theoretical, assessment of the complete proposal. I trust that you have gained a greater understanding of the proposed opportunity, We thank you for your attention and hope that you share our excitement over the potential benefits of this project. 3.3.1 Schedule TBD 3.4 Terms and Request The terms are as follows: Due to the nature of the bid process for this project, we will need your commitment no later than May 14 th, 2010. This is a milestone which must be met, in order to establish the necessary legal aspects of protecting and ensuring your investments. Additionally, funds must be transferred to the future account of the future Partnership/LLC no later than May 31, 2010. These dates are intended to promote a secure environment for all parties involved and to allow time for valued dialog prior to bid date, scheduled for mid June. There will be a funds availability policy enacted prior to bid date, this must also be understood. Additionally, upon submission of the bid we will be required to present a five (5%) percent earnest money deposit. This money will be returned if our bid is not accepted as with all invested monies. This opportunity is singular and should be understood as such, if the bid is not accepted, the dissolution of the Partnership/LLC or group shall occur, unless all parties involved choose to remain associated and to move on to another project. Our request is for complete cooperation in order to ensure a successful project. The single most important aspect of any project is prompt and frequent communication. We require clear clean channels of dialog. All monies referred herein, shall be in U.S Dollars. That being said, here we go We are recommending a property bid amount of $2,500,000.00. Add to this, the Construction and Other Costs (3.2) totaling $6,494,800.00, for a total commitment of $8,994,800.00. All funds must be available, in order to ensure a completed project by the dates stated. All monies shall be secured by a Note and Deed of Trust, recorded against the subject property, in favor of the Partnership/LLC TBD. The terms of the Note shall be determined and shall include a Lump Sum payment after completion of stated objectives. There will not be monthly payments of the pledged monies in any manner, liquidity is an essential aspect of this project. For this feasibility pledged monies are repaid in lump sum amounts upon completion of future sales contracts to new individual buyers. Page 3-2
In review: Construction Cost: $6,494,800.00 Acquisition Cost: 2,500,000.00 Sub Total: $8,994,800.00 Acquisition Fee: + (Purchase) 60,000.00 Marketing Fee: + (Sale) 350.000.00 Grand Total: $9,404,800.00 Potential Sales (Based upon data in 2.1.2) $14,630,000.00 Potential Profit: $5,225,200.00 3.0 Proposed Project Understand that all numbers are in today s dollars and not projected in the future, therefore, as the markets improve, so too does our bottom line. Page 3-3
Attachments 4.0 Attachments Page 4-0
Receiver s Certificate and partial chain of title TBD Page 4-1
Ventura County Assessor s Map Page 4-2
City of Thousand Oaks Requirements Summary of TR5400 1. Cal-Am Water (purveyor) may have additional fees, unknown at this time. 2. Traffic fees have been paid in full. 3. Buildings 1-4 have permits issued. 4. Wastewater system is installed. 5. Stormdrain system installed in all paved areas (approx. 75% complete). 6. Road AB and first lift of AC installed. 7. Outstanding map check fee balance = $136.13 8. Encroachment plan check fee balance = $3,314.00 Page 4-3
Current Photo s Page 4-4