Proposal Summary
Purchase of the Flats The University and the owners of the development known as the Flats at Kernan have from time to time discussed the University s acquisition of the Project. Approximately 4 months ago, the owner indicated a strong desire to sell and the University decided that due to the location and the need for additional housing that they should seriously entertain acquiring the property if the property could be acquired at a fair price. Both sides reached a tentative arrangement and negotiated a purchase and sale agreement of $30.5 million with one of seller s demands being the sale must take place prior to October 1 st due to a deadline the owner was facing with its investors. The property is located at 4850 First Coast Technology Parkway in Jacksonville, Duval County, Florida. The site measures approximately 12.82 acres and is improved with a 192 unit student housing apartment complex with 480 beds of eight (8) three (3) story buildings. The project was built in 2008 and is in good overall condition. Our building inspectors have only found a few small code issues mostly related to electrical. The seller s original purchase price was $30.9 million. The University obtained an appraisal with an amount of $30.5 million. BBVA Compass has offered the Financing Corporation a nonrecourse mortgage financing up to the lesser of $26.2 million or 85% of the purchase price plus closing costs. The interest rate is 2.87% with a 20 year maturity term and a five year mandatory put option at the sole discretion of the bank. The loan would be repaid in monthly P&I installments, with a make-whole provision for prepayment of the loan. This provision will be waived in the event of a refinance of the 2007 Housing bonds or additional bonds are issued to pay off the loan. As a part of the bank s due diligence, they are obtaining another appraisal. The University reviewed the economic metrics of the acquisition and believes the net revenues after the payment of debt service will provide the University a fair rate of return on the investment. Also, as the Series 2007 Housing Bonds come within the time to refinance in 2017, it is the University s intention to refinance this debt and make the facility apart of the University s housing system. The University will provide approximately $4.5 million as equity. In addition, at closing the University will fund six months of debt service payments in a Compass bank account as a debt service reserve. The Financing Corporation will then be required to place all additional surplus revenues generated into the debt service reserve fund until capped and maintained at one full year of debt service reserves. The University will enter into agreement with the Financing Corporation to manage the property.
Resolution
RESOLUTION OF BOARD OF TRUSTEES, THE UNIVERSITY OF NORTH FLORIDA (Purchase of Property by The University of North Florida Financing Corporation for Student Housing) WHEREAS, the Board of Trustees determines that the University is in need of additional residential housing to meet the current and future needs of the University s student population; and WHEREAS, the Board of Trustees determines that it is in the University s best interests for The University of North Florida Financing Corporation (the Financing Corporation ) to acquire the Property, hereinafter defined, and to lease the Property to the Board of Trustees under an operating lease with the Financing Corporation for the purpose of providing additional University student housing; and WHEREAS, the Financing Corporation solicited bids from financial institutions and received a proposal from BBVA Compass Bank (the Bank ) to provide commercial mortgage financing on terms acceptable to the Financing Corporation, and, subject to the approval of the Board of Trustees, the Financing Corporation has approved the acquisition of the Property, secured the Bank s mortgage on the Property. BE IT RESOLVED, that the Financing Corporation is directed to acquire from Kernan Partners, LTD for the sum of $30,500,000 fee simple title to a parcel of land, being part of Lots 10 and 11, FIRST COAST TECHNOLOGY PARK, Plat Book 60, pages 121-130, public records of Duval County, Florida, which is improved by a residential apartment complex commonly known as The Flats at Kernan, located at 4850 First Coast Technology Parkway, Jacksonville, Florida 32224, together with certain personal property thereon (collectively, Property ), all as more particularly provided in the Purchase and Sale Agreement dated as of July 17, 2014 between the Financing Corporation and Kernan Partners, LTD; and FURTHER RESOLVED, that the Financing Corporation is directed to borrow from the Bank a sum not to exceed $26,200,000 for the purpose of partially funding the acquisition of the Property in accordance with the terms of the Bank s commitment letter dated September 4, 2014, which terms are approved by the Board of Trustees, and a copy of which commitment letter was submitted to the Board of Trustees and is attached as Exhibit 1 to this Resolution; and FURTHER RESOLVED, that the Financing Corporation is authorized to fund the portion of the cost of acquiring the Property in excess of the sum loaned to the Financing Corporation by the Bank either from the substitution of the current cash on deposit in the University Housing reserves or from other cash of the University; and FURTHER RESOLVED, that the Financing Corporation is directed to enter into a lease agreement with the Board of Trustees (the Operating Lease ) providing for the Board of Trustees to operate and manage the Property; and FURTHER RESOLVED, that John A. Delaney, the President of the University and Executive Officer of the Board of Trustees, is authorized and directed in the name of the Board of Trustees and on its behalf: (a) to execute and deliver the Operating Lease; and
(b) to perform all acts, to execute and deliver all instruments, and to deliver all materials required to carry out the purposes of this Resolution, or desirable or consistent with the requirements hereof for the full, punctual, and complete performance of the acquisition, financing, and lease of the Property, provided that the Operating Lease and all instruments and materials delivered in connection with the acquisition and financing of the Property shall be in a form approved by the University s Office of the General Counsel, with execution constituting conclusive evidence of the General Counsel s approval and the Board s approval of the terms and provisions contained therein.. CERTIFICATE I, John A. Delaney, Corporate Secretary of THE UNIVERSITY OF NORTH FLORIDA BOARD OF TRUSTEES, a public body corporate of the State of Florida, do hereby certify that the foregoing is an authentic and complete copy of a Resolution of the University of North Florida Board of Trustees adopted at a meeting of the Board of Trustees that was duly noticed and that was held on, September, 2014, and at which a quorum, as provided by the Board s bylaws, was present and voting. I certify that the Resolution has not been amended and is in full force and effect. The Resolution is reflected in the minutes of the September, 2014 meeting of the Board of Trustees and is maintained with the minutes of the meetings of the Board. IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary, and affixed the seal of the Corporation this day of, 20.,. CORPORATE SEAL John A. Delaney
EXHIBIT 1 COMMITMENT LETTER OF BBVA COMPASS BANK
Loan Commitment