THE WOODLANDS 100 UNIT MULTIFAMILY RENTAL TOWNHOME DEVELOPMENT SNOQUALMIE RIDGE, WA A SEATTLE SUBURBAN COMMUNITY $3,200,000 PE/Mezz Debt Request April 2013 Funding, 3 Year Term, 14%, 2 points Evergreen Housing
REGIONAL DATA Seattle metro area is one of the 10 cities with the fastest growing wages in America Boeing, Microsoft, Amazon, Paccar, Costco, Starbucks, Nordstrom -30 min drive. Seattle-Tacoma-Bellevue Metro Area ranked #3 in job growth for 2012 Seattle MSA Unemployment below National Average (7.5% vs. 8.3%) Private Sector is driving Seattle MSA s growth I-90 corridor from Snoqualmie to Seattle is the path of prosperity Median Incomes along the I-90 corridor Seattle $60,665 Mercer Island $120,994 Bellevue $81,912 Issaquah $84,001 Snoqualmie $116,020 (our location)
LOCATION : URBAN GROWTH AREA CONSTRAINS AVAILABLE LAND
LOCATION 1,343 Acre Quadrant developed Master Planned Community Over 1,200 home sites already built with a town center and employment zone Future 1,100 single family yet to come with a regional hospital Significant Land Barriers to New Development Severe land availability constraints Strategic position to major employment and recreation centers Within a 5 minute walk of retail/services/groceries. 500 new jobs in Q1 2013 just ¼ mile away with the opening of Space Labs.
PROJECT DESCRIPTION 100 Best in Class Luxury Rental Townhomes 1,220 1,420 Sq Ft Proforma Rents $1,650 - $1,750 Avg rent/sqft $1.29 30 2 Bed 2.5 Bath 70-3 bed 2.5 Bath Attached Garage plus one covered parking space 9 ceilings, slab granite everywhere, etc Pedestrian friendly community design
TYPICAL FLOOR PLAN 3 Bed 2.5 Bath
TYPICAL FLOOR PLAN 2 Bed 2.5 Bath
MARKET DATA RENT COMPARABLES
MARKET DATA BEST RENT COMPARABLE Echo Ridge Apartments $1.60/sqft rents Name Echo Ridge Management Essex Address 34907 SE Kinsey St Snoqualmie, WA 98065 Year Built 2000 Total Units 120 Occupancy 95% TH or Flat Style # Units Sqft Low Sqft High Rent Low Rent High Rent Low/Sqft Rent High/Sqft Flat 1x1 676 775 $1,307 $1,349 $1.93 $1.74 Flat 2x1 914 1093 $1,544 $1,646 $1.69 $1.51 Flat 2x2 1005 1257 $1,627 $1,819 $1.62 $1.45 Flat 3x2 1284 1346 $1,763 $2,059 $1.37 $1.53 Average $1.60
MARKET DATA TOWNHOME RENT COMPARABLES Property Name The Woodlands Langara/Mclean Highlands at Wynhaven The Timbers Discovery Heights AVERAGE RENT/SQFT ON COMPS $1.29 $1.24 $1.16 $1.35 $1.44 Address 5105 Issaquah Pine Lake Rd. SE 1460 NE Hawthorne ST 23425 SE Black Nugget Rd 989 NE Discovery Drive City, State, Zip Issaquah, WA 98029 Issaquah, WA 98029 Issaquah, WA 98028 Issaquah, WA 98029 Total Number of Units 100 134 333 337 253 Year Built 2014 2002 2000 2001 2011 Occupancy 98.00% 99.00% 96.00% 98.00% Management Company Pinnacle Avalon Simpson HNN Two/Two Rent MARKET $1,625 $1,604-$2,092 $1,700 Square Feet 1293 1,187-2,322 1,257 Price/Sq Ft $1.26 $1.35-$0.90 $1.35 Two/2.5 Rent MARKET $1,650 Square Feet 1,221-1249 Price/Sq Ft $1.32 - $1.35 Three/2.5 Rent MARKET $1,750 $1,800-$2,295 $1,814-$2,014 $1,950 - $2,250 Square Feet 1349-1,421 1412-1864 1,604 1450-1506 Price/Sq Ft $1.23 - $1.30 $1.19-$1.29 $1.13-$1.26 $1.32-$1.55
FINANCIAL METRICS Land $3,000,000 Construction Hard Costs($100/nrsf) $13,475,000 Soft Costs $1,650,000 PE/Mezz Interest and Fees $525,000 Total Costs($139/nrsf) $18,650,000 Construction Loan at 75% of hard and soft cost PE/Mezz at 15% of hard and soft cost (Plus PE/Mezz 12 month Interest and Fees) Evergreen Equity at 10% of hard and soft cost $13,580,00 0 $3,200,000 $1,870,000 Total Sources $18,650,00 0 Untrended Income $2,037,000 Untrended Expenses $560,000 Untrended NOI $1,477,000 Construction Interest @4.5% $611,000 PE/Mezz Interest $453,000 Cash Flow $413,000 Underwritten Value (5.5 CAP) $26,850,000 Going In CAP 8.16% Going in Margin $8,750,000 3-Year IRR Unleveraged 21% Total Debt to Value 62% Construction Loan to Value 50% Margin as % of Cost 48%
FINANCIAL METRICS (cont.) The Preferred Equity/Mezz Debt will be repaid in Year 3 (2016) through a new permanent loan or a sale of the community. Year 3 Perm Loan Assumption (2016) LTV 70% DSRC 1.25 Underwriting Rate 6.00% Amortization 30 Years Perm Loan Amount $17,260,000 Repay Construction Debt -$13,475,000 Repay PE/Mezz -$3,200,000 Net Proceeds $585,000 Year 3 Sale Assumption (2016) NOI (Trended) $1,552,291 CAP 5.50% CAP Value 28,000,000 Cost of Sale -$1,130,000 Construction Loan Balance -$13,475,000 Repay PE/Mezz -$3,200,000 Net Proceeds $10,195,000
EVERGREEN HOUSING DEVELOPMENT GROUP, LLC Founded in 2005 Conservative firm seeking Preferred Equity/Mezz Debt Capital Partner to expand market rate apartment development and construction $90,000,000 Current Portfolio of Evergreen Developed Product: 228 units of market rate housing 532 units of LIHTC affordable housing Integrated 6 person team Development and Construction, CPA on Staff Experienced with Institutional Level of Due Diligence and Operations Steady, measured multifamily development growth Consistent best in class design and specification Best in market 3 rd party professional management Select suburban Pacific North West locations with land constraints. 1 st Tier City suburban neighborhoods 2 nd Tier Cities with strong performing markets
WOODLANDS PROJECT REQUEST $3,200,000 PE/Mezz Request April 2013 Funding 3 Year Term, 14%, 2 points FUTURE EVERGREEN OPPORTUNITY June 2013 $4,000,000 PE/Mezz on a new 228 unit Stabilized Luxury Apartment Community in Richland, WA June 2013 $3,000,000 Funding on suburban Portland Oregon Project Long term relationship sought to fund $10,000,000 to $20,000,000 a Year of Preferred Equity/Mezz Debt