Marina Hotel Business Plan

8/6/2019 Marina Hotel Business Plan

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Northern Riverfront Marina and Hotel LLLP

BUSINESS PLAN AND FINANCIAL PRO-FORMA Page 1

BUSIESS PLA AD FIACIAL PRO-FORMA

Business Plan

orthern Riverfront Marina and Hotel Limited Liability Limited

Partnership

Northern Riverfront Marina and Hotel Limited Liability Limited Partnership iscommencing a new Project on the Cape Fear River in downtown Wilmington, NorthCarolina. This Project represents the cornerstone of an overall master-plannedredevelopment. A summary of that overall development follows herein. The startingpoint of all good developments is the foundation. The portion of this overall riverfront

project being undertaken by this Limited Partnership is the Marina and Hotel component.

On October 8, 2009, the Partnership (Buyer) entered into a Purchase and Sale Agreementwith City Marina Wilmington, LLC and Riverfront Holdings II, LLC (Sellers) to acquirea total of 566,280 square feet (13+/- acres) of real property located at 1 Hanover Streetand 10 Harnett Street, Wilmington, NC.

The first component is the construction of a new full service Marina along the Cape FearRiver in historic downtown Wilmington. The site is 11.75 acres +/- and will have up to204 slips ranging in size from 40 to 100 feet. The Marina portion of the projectencompasses a 14 wide River Walk, several kiosk retail shops on the existing concrete

docking facility, as well as a diesel fuel depot and parking.

Marina construction is expected to take 7 months for excavation and an additional 4 to 6months to complete the first phase of slips. The engineering and construction drawingsare complete. Bids for construction are finalized. Permits for dredging, demolition andconstruction have all been secured with all local, state and federal agencies. Thedeveloper has been released for construction by required governmental agencies. Finalagreements have been executed and recorded between the Developer and the City ofWilmington to share the cost of the marinas bulkhead, as well as reimbursement ofconstruction costs for a River Walk connecting the property to the Citys new ConventionCenter and the historic downtown district to the south.

The marina will be operated by a full time professional staff. Initial operations of themarina will produce income from transient rental and short term leases. The marinaincome will be further enhanced by fuel and retail sales. The General Partner willdetermine, based on market conditions, to either commence slip sales, or maintain leasingprogram until initial investment period is complete. This determination will be made with priority placed on preservation of capital and maximizing profit to the LimitedPartnership. Return of investment capital shall be achieved through sales of marina slips,


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or by selling the entire marina asset once income stabilization and EB-5 programrequirements have been met. Current appraisals show a 39 Million ($39,000,000) Dollarvalue for the marina when completed.

The second component of this Project is the construction and operation of a hotel, locatedon a 1.26 acre site, adjacent to the Marina and the City of Wilmingtons new ConventionCenter. The 105,000 square foot Convention Center is fully funded and underconstruction, with opening scheduled for spring 2010. Our Projects hotel, the closest tothe Citys Convention Center, will be located diagonally across the intersection from theConvention Center, allowing it to capture a majority of convention business. The hotelwill include a minimum of 120 rooms, hotel amenities, and an additional 30,000 squarefeet of retail space, (to include dining and family entertainment components) and parking.The hotel will host a well-known and respected brand-name flag and provide qualityservice and hospitality at competitive rates.

Hotel construction is expected to take approximately 17-20 months. The anticipatedschedule is 5 months to complete final engineering, approval, and permitting. Actualconstruction is anticipated to take an additional 12-15 months.

The Project will be positioned to sell in 3-5 years when income stabilization is achieved& EB-5 program requirements have been met. Based on historic market valuationmodels, at full stabilization, anticipated hotel value should be between Sixteen Million($16,000,000) and Twenty Million ($20,000,000) Dollars.

The General Partner estimates the total cost of the Project to be Forty-two Million Dollars($42,000,000), consisting of Twenty-four Million Dollars ($24,000,000) from direct

developer investment, reimbursements from the City of Wilmington, and existing debt.The remaining Eighteen Million dollars ($18,000,000) is being raised in accordance withterms of the Offering Circular and Subscription Agreement.


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Marina and Hotel: The cornerstone of the overall master-planned redevelopment

The overall master plan is a 39+ acre site located in the central business district of

downtown Wilmington, North Carolina. The entire riverfront redevelopment project isestimated to be over 750 Million dollars. The project stretches nearly one mile along theCape Fear River and is the only remaining undeveloped river frontage in downtownWilmington. The property has historical significance dating back to the late 1700s as acentral shipping port for the region.

The site is situated minutes from Interstate 40 and US Routes 17 & 421, and is within 5miles of the Wilmington International Airport to the north and within 10 miles of theAtlantic Ocean to the east. The project lies immediately south of US Route 133 andserves as the northern entrance to historic downtown Wilmington. The entire project iszoned Central Business District (CBD), allowing for high-density vertical development.The City of Wilmingtons new Convention Center borders the Marina property. The sitealso shares a boundary with Cape Fear Community College and the new 400,000-squarefoot corporate headquarters of global pharmaceutical research company PPD, with 1800employees.


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The entire master plan site is comprised of several components, as follows: The City Marina/Hotel (the Limited Partnership Investment Project)

o As described above Baseball Stadium (FUTURE DEVELOPMENT)

o Professional baseball team (A or AA level)o Concerts, eventso 5,000 seat capacity

Mixed use commercial space (FUTURE DEVELOPMENT)o office/retail/hotelso Over 450,000 Square Feet

Residential (FUTURE DEVELOPMENT)

o Waterfront and urban style condominiumso Over 600 units

This project assemblage and development plan completes a vision and a milestone for theCity of Wilmington and is a great opportunity for the developers to create a high-profile,marketable and profitable landmark mixed-use development. The development team hasworked closely with the City to achieve a plan that corresponds with the City ofWilmingtons Vision 2020: A Waterfront Downtown. The plan focuses on revitalizing the


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downtown historic center by reclaiming the Cape Fear waterfront. The team hasdiligently worked toward creating strategic alliances with various stakeholders, includingPPD, Cape Fear Community College, University of North Carolina-Wilmington, adjacentproperty owners, and regional builders/developers to create a compelling vision.

Photo of PPD global headquarters and project site


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Government Support and Incentives.

The developer has completed and executed a development agreement with the City ofWilmington focusing on the Marina/Hotel portion of the project. Elements of

agreement include (1) joint construction of the bulkhead connecting the marina with theCitys Convention Center; (2) a cost recovery mechanism for public river walk and parkimprovements; (3) zoning flexibility and expedited approvals processes. The property iswithin a qualified New Market Tax Credits area, which will allow for additionaldevelopment incentives and returns


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Environmental Summary

The developer has completed and recorded a Brownfields Agreement (BFA) with theState of North Carolina Department of Environment and Natural Resources (DENR). The

BFA allows for all proposed uses, and a five-year real estate property tax abatement.


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Development Team

Owner/Developer: Wilmington Riverfront Development, LLC

Land Planner/Architect: Cline Design In-house Planner: Jerry Haire Marine Consultant Design and Economic: Moffatt & Nichol Environmental Counsel: Kurt Olson, Esq. Environmental Engineer: Rick Catlin (Catlin Engineering) Project Manager: Zephyr Development General Contractor: Plantation Builders Parking Consultant: Steve McLaurin, McLaurin Parking

Experience

The individuals comprising the General Partnership have over 80 years combinedexperience in real estate development and management. This experience demonstrates a proven track record in acquisition, entitlement, development, managing and sales.Accomplishments span all segments of real estate development, including commercial,mixed-use, and residential master-planned communities. The general partners have raisedover 100 million dollars in equity for past projects. The members have developed over15,000 single family and multi-family lots, and substantial commercial square footage.Past projects have been located in Colorado, Florida, California, North Carolina,Oklahoma, and Texas.


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Market Overview

This Project is in a premier location in historic downtown Wilmington, NC, located in therapidly developing Northern portion of downtown, on the banks of the Cape Fear River.

In the past decade, a renaissance has occurred in theGreater Wilmington area, reaffirming the storiedhistory of the region when Wilmington was the largestcity in North Carolina. People of all ages and

backgrounds have beenand continue to bedrawn tothe mild climate, beautiful shoreline, historicattractions, inviting business atmosphere andhometown feel of the Cape Fear Coast. In 1998,accolades about Wilmington from national magazines,newspapers and surveys began in earnest. One of thefirst named our city one of the 100 Best Small ArtTowns in America. Since that time, Wilmington hasgarnered praise as one of Americas 100 BestRetirement Towns (Where to Retire magazine), the12th best place to set up a medical practice (Modern

Physician magazine), as number 36 on aForbesmagazine list of the 200 Best Places for Business andCareers, and in Oct 2006 Wilmington was listed as oneof the top ten cities in the US for projected real estate

appreciation in the next five years by CNN Money/Business.

One of Wilmington's greatest resources is its location nestled between the Cape FearRiver and the Atlantic Ocean. It has an enduring relationship with the water that isinterwoven through its history. Just as colonists relied on the water for transportation ofgoods to build the region, so does 21st-century Wilmington rely on it to attract visitorsand businesses, and to import and export materials from and to the world through theNorth Carolina State Ports.


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This is also a region where the past is honored through painstaking preservation of NorthCarolina's largest collection of historic buildings and homes downtown. The historiccharacter of the National Historic Register District offers a lively streetscape of

restaurants, outdoor cafes, coffee shops, banks, and retail stores all framed against thebackdrop of the Cape Fear River. But Wilmington is also a place where the building of amodern art museum in the suburbsdesigned by the architect of the addition to theworld-famous Guggenheimelicits enthusiastic community support. Even the beachescontrast with each other, from quiet residential neighborhoods, to lively areas of play, toundeveloped barrier islands.

These unique characteristics helped draw the film industry to the city in 1983. Since thattime, Wilmington has grown into the third most active film location, behind only LosAngeles and New York. The NBC series Surface and the hit WB seriesDawson's Creekand One Tree Hillhave been filmed in Wilmington, among others, as well as hundreds of

films such asDivine Secrets of the Ya Ya Sisterhood,Domestic Disturbance, andI KnowWhat You Did Last Summer.

Waterfront Living

Wilmington is a city with a strong boating community, and one of the regions mostappealing aspects is the lifestyle of waterfront dining and recreation that this entails.Waterfront development is strictly regulated by local, state, and federal governments, sothere continues to be demand for boat slips, marinas, and related waterfront businesses,including restaurants and hotels.


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Additional facts and information as of August, 2009

The Cape Fear Community College received approval for a 164 million dollar

bond for campus expansion, adjacent to the project, and construction has begunon a variety of new buildings.

PPD now occupies its world headquarters building on a site adjacent to ourproject. The building is 400,000 square feet and houses 1800+ employees

Screen Gems Studios recently constructed a $120 million expansion to give it oneof the largest stages and special effects water tanks in North America. The studiosin Wilmington have completed over 350 film, television and commercial projects,earning Wilmington the nickname Hollywood East.

The Developer is in negotiations with league ownership to provide an A orAA baseball franchise on its site, at a new stadium to be built.


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Purchase Terms

Wilmington Riverfront Development LLC formed the Limited Liability LimitedPartnership to purchase the Property for Twelve Million Seven Hundred Thousand

Dollars ($12,700,000). Closing is projected to occur in October 2009. The Partnershipplans to be capitalized at Eighteen Million Dollars ($18,000,000) to purchase and developthe Property. The Partnership estimates construction and soft costs for the Project to beapproximately Forty-Two Million Dollars ($42,000,000).


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Financial Pro-Forma

Marina & Hotel Development Costs TotalMarina Site Purchase Price $9,700,000

Hotel Site Purchase Price $3,000,000Demolition $2,700,000

Engineering and Survey $470,000

Permits $125,000

Marina Docks and Piers $2,100,000

Excavation and Disposal of dredge material $2,000,000

Marina Accessories (fuel depot, parking) $1,500,000

Bulkhead $2,050,000

River Walk $4,200,000

Environmental oversight $125,000

Hotel/retail space Construction $8,600,000

General & Administrative $1,028,750

Contingency $617,250Project Management Fee $1,028,750

Debt Service $2,660,000

Total Projected Development Cost $41,904,750

Sales and Income Gross Profit

Marina Slip Sales $45,000,000

Marina Mgmt, transient & operations sale $7,000,000

Sales Commissions / Closing Costs -$2,700,000

Hotel Sale $16,750,000

Retail Lease Income $700,000

Hotel Income $2,300,000

Marina Income 500,000

City Reimbursements $5,050,000

Investor Interest Payment -$1,907,000

Total Projected Income $72,693,000

Total Projected Development $41,904,750

Projected Gross Profit $30,788,250


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Other Due Diligence

As part of the Partnerships due diligence, the following information has been reviewed:1. Title commitment2. Survey

3. Phase 1 Environmental Site Assessment and Brownfields Agreement (BFA)4. Soils Information5. Project site survey6. Appraisal7. Master Plan8. Marina Permits9. Marina Construction Plans10.City development agreement

Exit Strategy

Northern Riverfront Marina and Hotel LLLP focuses, first and foremost, on preservationand protection of investor capital. The General Partners in this Limited Partnership havepersonally invested over 9 million dollars in the overall master plan. This Project is theculmination of over 4 years of vision and perseverance.

In summary, the Partnerships goal is the construction and operation of the marina, hotel,and auxiliary businesses to generate revenues for the Partnership.

Once job creation requirements, as stipulated by the EB-5 Immigrant Investor program,have been met, the Partnership will attempt to effect a sale of the stabilized assets.Throughout the Project life cycle, the Partnership may conduct ongoing individual sales

of boat slips in the marina. The General Partner will maintain the following priorities, inorder of importance, throughout the Project:

1. Preservation of investment and compliance with EB-5 Immigrant InvestorProgram

2. Maximizing Return on Investment (ROI) for all investors

For additional information please contact:

Chuck Schoninger:[email protected]

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