SHARK TANK – 9% DEVELOPMENT Presentation harbour north Apartments – Chesapeake, VA

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SHARK TANK – 9% DEVELOPMENT PRESENTATIONHARBOUR NORTH APARTMENTS – CHESAPEAKE, VAThe Lawson Companies373 Edwin DriveVirginia Beach, Virginia 23462

Strictly Private and Confidential

DAAgenda

The Lawson Companies’ Experience

Site Location & Photos

Property Summary

Financing Pro Forma

Issues – The Good, The Bad, & The Hairy

EXPERIENCE

The Lawson Companies’ Experience

Established in 1972

Full-service real estate firm

Manages over 5,000 apartments from Virginia to South Carolina

Developed one of the first LIHTC communities in the State of Virginia in 1988

Received allocation of tax credits for 18 communities

In-house Tax Credit Compliance Department

SITE LOCATION & PHOTOGRAPHS

SITE LOCATIO

Arial Photograph

SITE LOCATIO

Arial Photograph – Proposed Site

SITE LOCATIO

Harbour North Apartments – Pre-rehab

SITE LOCATIO

PROPERTY SUMMARY

PROPERTY SU

ARYHarbour North Apartments Development Proposal

Acquisition/rehab of two 120-unit existing Rural Development communities built in 1978 and 1979 in Chesapeake, Virginia.

Utilize 9% Low-Income Housing Tax Credits Refinance and re-amortize existing RD debt Add new VHDA debt

Physical Features Thirty buildings, two stories in height, eight units in each building

192 - 1BR apartments 48 - 2BR apartments Rental office, laundry room, maintenance shop

Add new community center including a computer learning office ADA - convert 24 apartments to fully-accessible units with universal design features EarthCraft

In a Revitalization Area, not a QCT

FINANCING PRO FORMA

PRO FO

Financial Information

Rents 40% of AMI

24 – 1BR (553 SF) - $410 50% of AMI

24 – 1BR (600 SF) - $525 96 – 2BR (698 SF) - $645 96 – 2BR (745 SF) - $645

Operating Expenses $5,000 per unit per annum

Security budget $115,000 (almost 10% of annual OPEX budget) Insurance – Excess and Surplus Mkt + Flood Insurance

Loans – 25-year amortization Refinanced RD Debt - $1,985,744 (Rate – 1%) New SPARC/REACH Loan - $1,000,000 (Rate – 2.95%) New VHDA Taxable Bond - $3,100,000 (Rate – 6.92%)

Cash Flow After Debt Service - $75,102

PRO FO

Sources and Uses

Total Per Unit SOURCES OF FUNDS

First Mortgage $3,100,000 $12,917 SPARC Mortgage $1,000,000 $4,167 Assume RD Mortgage $1,985,744 $8,274 Deferred Dev Note $909,410 $3,789 Return from Sale of Investor Tax Credits $9,091,419 $37,881

TOTAL SOURCES OF FUNDS $16,086,573 $67,027

USES OF FUNDS Total Purchase of Land or Building $5,400,000 $22,500 Total New Construction / Rehabilitation $7,524,000 $31,350 Total Professional Fees $128,350 $535 Total Interim Costs $94,050 $392 Total Financing Fees & Expenses $225,563 $940 RD Debt Service $153,286 $639 Total Soft Costs $240,616 $1,003 Total Developer Fees $1,500,000 $6,250 Total Reserves $820,708 $3,420

TOTAL USES OF FUNDS $16,086,573 $67,027REMAINDER (SHORTAGE) OF FUNDS - -

ISSUES

The Good

Occupancy averages above 98% Many long-term residents TC eligible Located on an existing bus line Adding resident requested computer learning

center EarthCraft design will lower resident utility

expenses Post-rehab rents not substantially higher than

pre-rehab rents

The Bad

Aluminum wiring throughout apartments Located in a flood zone, has flooded to front steps several times Only 70% RA Some current residents exceed income limits – incentivize Adjacent to tough townhouse community Requesting to close side entrance on Channel Place

The Hairy

Timing of refinancing of two Rural Development loans to coincide with tax credit timelines

Renting accessible units slow without subsidy Cannot afford 24-hour security Development deferral is large (over 12 years) City wants non-residents to be able to use computer

learning center

THE REAL PRO

JECTThe Rivers Apartments – Post-rehab

THE REAL PRO

SHARK TANK – 9% DEVELOPMENT Presentation harbour north Apartments – Chesapeake, VA

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