confidential offering memorandum · with over 23 years of experience in the mortgage and real...

CONFIDENTIAL OFFERING MEMORANDUM

Merced Station | EB-5 Contact: Bobby Laughlin | (301) 467 5958 | [email protected]

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Merced Station Summary

Designated Student Housing

University of California – Merced

Merced Station

225 Units, 975 Beds

EB-5 Investment Offering Summary

• 20 EB-5 Units (Limited Partnership)

• $500,000 Per Unit (TEA)

• $50,000 Administrative Fee Per Unit

• EB-5 Total Raise: $10 million o A-Class Equity o 5% Preferred Return o 25% Profit Share

• Estimated Total Return: 60% - 80%

• Investment Term: 5 Years

• Completion Guarantee (fully funded)

• I-526 Refund Guarantee

• Estimated Job Creation: 610

The information herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness, any projections, opinions, assumptions or estimates used are for the example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors, which should be evaluated by your tax, financial and legal advisors. You and

your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs and the needs of EB-5 investors.


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Table of Contents

TABLE OF CONTENT .................................................................................................................................................................................... 3

SECTION I – EXECUTIVE & LOCATION SUMMARY .................................................................................................................................................. 4

EXECUTIVE SUMMARY ........................................................................................................................................................................... 5

MANAGEMENT TEAM ............................................................................................................................................................................ 6

LOCATION SUMMARY – CITY OF MERCED .................................................................................................................................................. 9

DEMOGRAPHIC SUMMARY ..................................................................................................................................................................... 10

UNIVERSITY SUMMARY - UC MERCED ....................................................................................................................................................... 11

UNIVERSITY SUMMARY – 2020 PROJECT ..................................................................................................................................................... 12

CITY OF MERCED - ZONING ................................................................................................................................................................... 14

SECTION II – DEVELOPMENT & CONSTRUCTION SUMMARY .................................................................................................................................... 15

GENERAL SITE & BUILDING INFORMATION ................................................................................................................................................ 16

COMMUNITY SITE PLAN........................................................................................................................................................................ 17

BUILDING RENDERINGS ....................................................................................................................................................................... 19

FLOORPLANS .................................................................................................................................................................................... 21

SECTION III – FINANCIAL INFORMATION ......................................................................................................................................................... 25

PROJECTED VALUE AND EB-5 FUND RETURNS ............................................................................................................................................ 26

SECTION IV – MARKET COMPARABLES ............................................................................................................................................................ 27

RENT COMPARABLES ........................................................................................................................................................................... 28

RENT COMPARABLES – SUMMARY & ANALYSIS ............................................................................................................................................. 29

SALES COMPARABLES ........................................................................................................................................................................... 31


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SECTION I – EXECUTIVE & LOCATION SUMMARY


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Executive Summary

Biltmore Properties, Shamrock Acquisitions, and EB-5 Equity Development Partners is pleased to present the unique opportunity for EB-5 investors to invest

in the A-Class equity of Merced Station, a 225-unit, 975-bed student-housing development with 6,600 ft.2 of retail space serving the students of University of

California – Merced. This timely and well positioned development represents the first significant off-campus housing for UC Merced and will help to satisfy

both current and future housing needs of this rapidly expanding university. The University of California Regents have recently adopted and funded the UC

Merced 2020 Plan. This plan is supported by a fully funded $1.3 Billion capital deployment with a primary focus of pushing enrollment to 10,000 students by

September 2020 (a significant increase from the 2017 enrollment of 7,976, which is a 10% increase from 2016). These additional students will amplify an

already existing housing crisis in Merced. Currently, over 5,500 students live off campus, by 2020 that number will swell to over 6,100 students. Merced does

not have designated student housing facilities and Merced Station is currently the only project in development. Long term projections are for UC Merced to

follow a traditional UC system’s growth path toward 25,000 to 30,000 students. Additionally, 11,552 students are enrolled at nearby Merced College and it is

our expectation that they will account for roughly 20% of the tenant base at Merced Station.

This offering is for up to $10 million in A-class equity, which will grant the Merced Station EB-5 Limited Partnership a 5% preferred return as well as 25% of

the profits the venture generates. The compounded annualized growth rate of the equity is expected to be in excess of 15% over a 4-5-year period with total

returns in excess of 70%. At the time EB-5 investors begin to purchase units in the Partnership, the project will be fully capitalized and a majority of the EB-

5 jobs will have already been created. The EB-5 investors purchase of the A-class shares will be taking out an equity group who provided “last-mile” equity

capital which was used for hard costs and to secure the construction loan. Based on current estimates this project will be completed in time to obtain a

Certificate of Occupancy for the 2021/22 academic year and is expected to create over 600 jobs, or over 30 jobs per EB-5 investor.

During the design and entitlement process, UC Merced was very supportive of Merced Station by providing direct input on features that would appeal to UC

students. During this collaborative effort between UC Merced, Biltmore and Shamrock jointly held student focus groups to provide direct overview and

comments on the planned design and amenities. The UC community suggested a fitness center, green architecture, retailers geared to student needs, swimming

pool, study space, and state of the art internet and technology available to all residents. Current plans exceed the University’s vision and incorporate all these

amenities into the master plan along with other desirable features (volleyball, basketball, fire pits, etc.). The Merced Station ownership has employed industry

experts as consultants and has modeled the project by analyzing national and regionally successful student housing complexes. For this development, we are

estimating a 26-month construction timeframe with total costs of approximately $80,138,453. Based on a careful analysis of the student housing market we

believe that by year-end 2021 this project will achieve a market value in excess of $106,000,000. This estimate is supported by a recent appraisal completed by

CBRE in September of 2018. Applying the same capitalization rate used in 2021 valuation, 2022 and 2023 values are expected to be $111,643,511 and

$118,509,645, respectively. Upon completion, Merced Station will be poised for either a highly profitable disposition, or a long-term hold that provides

handsome and steady returns for EB-5 investors.


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Management Team

Shamrock Acquisitions LLC (www.Shamrock-Acq.com) is a real estate acquisitions firm formed in 2008. The company acquires physically and financially distressed properties in Michigan, Ohio, Indiana, Florida and California. The firm has two distinct strategies. First, is a long-term “buy and hold” strategy. This encompasses small office buildings, multifamily residential, long-term notes, single family rentals, and retail centers. The second strategy is to purchase, develop, and/or renovate and sell high quality assets at market value. As of April 2018, Shamrock owns approximately $62 million worth of real estate across the United States. Matthew Duffield – Founder & Principal With over 23 years of experience in the mortgage and real estate industry, Matthew is a proven prospector, marketer, client advocate and real estate investor. While at Quicken Loans, Matthew lead the country’s largest online lender in sales, closed volume, and revenue for over 12 consecutive years. In 2008, he left his day-to-day operations and started pursuing real estate acquisitions related to distressed properties. Matthew established a real estate brokerage and co- founded Shamrock Acquisitions. From Matthew’s leadership, Shamrock has acquired several hundred homes, notes and buildings throughout the loss mitigation process. Matthew has been the driving force of making the transition into ground-up development projects and strategic business acquisitions. This includes the acquisitions of a 100-year old development company, Biltmore Development. Ryan Houlihan - Co-Founder & Principal Ryan has over 21 years of business experience working in the lending, real estate and construction industries. His diverse background and over 25 years of entrepreneurship and executive leadership brought him to co-founding Shamrock Acquisitions in 2008. He is a proven prospector and has established various work flows regarding property preservation, management, redevelopment and new construction. Ryan is currently the CEO of Shamrock Acquisitions and manages the company’s day to day operations. John Heinz – Development Team Founder of JP Heinz & Company, which he has owned for over 20 years until it was sold in 2006, John managed his highly successful commercial construction company. As an accomplished developer and general contractor with over 90 commercial projects to his credit. John is a proven industry leader and has comprehensive understanding of how to control risk, reduce cost and efficiently complete projects. His leadership and experience were instrumental in the execution of projects ranging in size from $1 million to over $50 million. All types of construction projects were built including schools, hotels, retail, auto dealerships, office, medical and public sector projects. Some examples of John’s work in California real estate development include major construction pieces of the Stockton Event Center ($65 million),


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the Stockton Ball Park ($25 million), and the Stockton Sheraton Hotel ($48 million). John is responsible for project entitlements and will oversee the construction of Merced Station. Gregory Fish – Development Team Gregory Fish is the President of G&G Management Group, a real estate development, financing, and consulting firm. Previously, Greg owned G.D. Fish & Associates which was a registered investment advisory firm focused on real estate investing and securities. Greg has broad knowledge in financial analysis, securities, and 1031 exchange criteria. A graduate of Santa Clara University with an MBA in finance, Greg was previously licensed with the NASD and SEC from 1978 to 2005. Greg was an officer of several real estate public and private partnerships and developed apartment communities, commercial property, and senior living facilities. Recent projects include being part of the development and financing team of Ponte Palmero, a 239-unit senior care facility in Cameron Park, CA ($130 million). Prior to that, Greg brought equity investors and management skills to help develop Casa de Santé Fe, a 160-unit senior living community in Rocklin, CA. Casa de Santé Fe was built for $21 million and sold in 2007 for $36 million.

Biltmore Development (www.BiltmoreDevelopment.com) over the course of its 90-year corporate history, Biltmore’s primary focus was on the development of single-family residential land and home building. Biltmore and its partners were involved in the purchase, sale and development of more than $1 billion of real estate, which includes;

• 30,000+ residential lots

• 10,000+ single family homes

• 5,000+ rental apartments

• 711,000+ square feet of office space

• 620,000+ square feet of retail.

• Latest development (351 lots) was sold to Toll Brothers in the fall of 2016.

EB-5 Equity Development Partners is a commercial real estate development and asset management firm that specializes in structuring and managing institutional-quality, high-return, risk-adjusted equity investments, exclusively for EB-5 investors. EB5EDP serves as the General Partner of each EB-5 project’s EB-5 equity fund and also serves on each project’s development team. EB5EDP’s primary duty as a member of the development team is to ensure the project is executed according to the EB-5 Matter of Ho business plan in order to ensure the seamless delivery of all EB-5 investor visas and timely return of the original capital investment with attractive profits. Bobby Laughlin - Founder and CEO Bobby Laughlin started his professional career in the Washington, D.C. area at Morgan Stanley, where he managed the wealth of high net-worth individuals with an emphasis on risk mitigation, and was part of a team that managed over $500 million in assets. Mr. Laughlin founded Playa Vista Capital Management in 2015, a

http://(www.biltmoredevelopment.com)/


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Southern California based investment management company which serves as a general partner and portfolio manager for hedge and private equity investment funds. Mr. Laughlin also co-founded Playa Vista Regional Center in 2015, a USCIS-approved EB-5 Regional Center. Mr. Laughlin founded EB-5 Equity Development Partners after recognizing a significant lack of institutional-quality investment offerings for EB-5 investors. By focusing on reducing risk, maximizing returns, and delivering transparency to EB-5 investors at every stage of the process, EB-5 Equity Development Partners delivers a unique blend of competitive advantages that is revolutionizing the EB-5 investment landscape. Mr. Laughlin has been featured in a CNBC documentary for his investment success that was released in 90 countries and has been a speaker at various universities in Southern California as an expert in EB-5, finance and capital markets. Mr. Laughlin holds a Bachelor of Science in Business Management from Pepperdine University. Mr. Laughlin holds both a Series 7 and Series 66 license with the Financial Industry Regulatory Authority, Inc. He is married and lives in Playa Vista, California.

Service Providers

ProWest Constructors (www.ProWestConstructors.com) is a construction management company and general contracting form located in California. Innovators in California’s institutional construction market, ProWest delivers healthcare, higher education, and public works to a diverse client base. ProWest has constructed the on-campus dormitories on the following University of California campuses; Davis, Riverside, San Diego, San Francisco, Santa Barbara, Santa Cruz and Merced.

Peak Campus (www.PeakCampus.com) is a fully integrated student housing real estate management company providing best-in-class property management, development and consulting services. With over 52,000 student housing beds, 96 properties, and $3 Billion currently under management, in over 65 college markets, Peak is currently the country’s second largest privately-owned, student housing company.

Quad Knopft (www.QKInc.com) has been a leading provider of engineering design, planning, construction management and environmental permitting services in California for the last 40 years. QK has worked with public and private sector clients to develop California’s infrastructure. They have successfully managed projects across industries, including energy production, government, education, land development, as well as water and local services.

Hochhauser Blatter Architecture and Planning (www.HBArchitects.com) is a multi-disciplinary architecture and planning firm founded in 1990. HB has extensive experience in the areas of land-planning, pre- development analysis, land-use entitlement work, architectural design and project management. HB has expanded its expertise into the diverse and growing field of privately developed student housing. Completed and current planning and design opportunities include mixed use urban infill projects in communities adjacent to established University campuses. Projects include ICON at the University of California—Santa Barbara.


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Location Summary – City of Merced

Merced is a city in, and the county seat of Merced County in the San Joaquin Valley of Central California. As of 2017,

the city has a population of 84,464 and greater Merced County has a population of 272,673. Over the past ten years, the

annualized growth rate is about 3.4%. Merced’s population has grown faster than the state average since 1980.

Merced, known as the “Gateway to Yosemite,” is less than two hours by automobile from Yosemite National Park to the

east and Monterey Bay and the Pacific Ocean, to the west. The community is served by Amtrak, a major airline through

Merced Regional Airport, and three bus lines. It is approximately 110 miles from Sacramento, 130 miles from San

Francisco, 45 miles from Fresno, and 270 miles from Los Angeles.

The economy of Merced has traditionally relied upon the agriculture industry. Over the past twenty years, more diversified

industry has entered the area, including printing, fiberglass boat building, warehousing and distribution, and packaging.

The City of Merced is undergoing a wave of new development. Projects ranging from a boutique hotel (El Capitan Hotel

– 100 rooms, 2019 delivery), The Merced Gateway Development (77 acres, 10 restaurants, shopping center) and a high-

speed rail station. New projects total over $350 Million. Click here for more info on Development in Merced.

EMPLOYMENT

1,450

1,100

730

611

500

500

434

361

300

300

250

Top Employers in Merced, CA

COMPANY

UC Merced

Mercy Medical Center

Merced College

Merced North Campus

Project Development Corp

Quad Graphics Merced

Fuentes Farms AG Inc.

Merced County Human Services

City of Merced

County of Merced

Costco 142

-

50,000

100,000

150,000

200,000

250,000

300,000

1970 1980 1990 2000 2010 2015 2016 2017

POPULATION

https://www.cityofmerced.org/civicax/filebank/blobdload.aspx?BlobID=19021


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Demographic Summary

Source: US Census & Citydata.com (Click here for access the US Census overview of this market)

Population & Economics Merced County California

Population - 2017 Estimate 272,673 39,536,653

Population - 2010 255,798 37,254,518

Population, Percent Change 2010-2016 6.6% 6.1%

Persons under 5 years 7.9% 6.3%

Persons under 18 years 29.9% 23.2%

Retail Sales Per Capita (2007) $7,470 $12,665

Accommodation and Food Service Sales $232,910 $90,830,372

Geographic Facts Merced County California

Land Area in Square Miles 1934.97 155,779.22

Persons per Square Mile (2010) 132.2 239.1

Households Merced County California

Housing Units 84,406 14,060,525

Owner-Occupied 52.2% 54.1%

Renter Occupied 47.8% 45.9%

Median Household Income $44,397 $63,783

Median Gross Rent, 2012-2016 $882 $1,297

Percentage Below Poverty Level 20.30% 14.30%

Persons per Household 3.31 2.95

High School Graduate or Higher 68.6% 82.1%

2012-2016 Average Home Value Merced County California

$171,800 $409,300

https://www.census.gov/quickfacts/fact/table/mercedcountycalifornia,CA/PST045216


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University Summary - UC Merced

The University of California – Merced “UC Merced” is the 10th campus in the University of California system. Planning

began in 1998 with groundbreaking in 2002 and first classes commencing in 2005.

• Student enrollment has grown from 1,000 to 7,967 undergraduate and graduate students participating in 21

major, 21 minor and 11 graduate programs. Applications for the 2017/18 school year amounted to 26,964.

• The University’s long-range plan anticipates 10,000 students and 2,200 staff by 2020.

• UC Merced is ranked by the US News at 78th among U.S. public universities and 154th among all U.S.

universities.

• 25,000 students and 6,500 staff are expected by 2030 making the campus similar in size to UC Santa Barbara

(23,000 students) and UC Riverside (21,600 students).

• Consisting of 7,000 acres, the UCD Merced campus lies approximately seven miles from downtown Merced.

• The initial campus sits on 1,000 acres of former farmland and is bordered by Lake Yosemite and wetlands

• Long-term plans call for a southern expansion of the campus along Lake Boulevard and eventually

encompassing an additional 9000 acres.

-

2,000

4,000

6,000

8,000

10,000

12,000

2012 2013 2014 2015 2016 2017 2020

ENROLLMENT

-

5,000

10,000

15,000

20,000

25,000

30,000

2012 2013 2014 2015 2016 2017 2018

APPLICATIONS


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University Summary – 2020 Project

“The 2020 Project will provide a comprehensive set of new facilities to address existing student life

needs and accommodate long-term growth”

Construction of Merced 2020 began fall of 2016. Upon completion, the project will have delivered 1.2 million gross

square feet of classroom, research, student life, housing and faculty office space between fall 2018 and fall 2020.

Objectives of the UC Merced 2020 Project

• Support UC Merced’s sustainability goals. • Create built-in flexibility and adaptability to

accommodate future needs

• Implement a project plan that expands capacity necessary for enrollment growth

Project Timeline of the UC Merced 2020 Project First Delivery – Fall of 2018

• Dining Center (600-seat multipurpose)

• Undergraduate Housing (700 beds)

• Classrooms

• Parking (940 spaces) Second Delivery – Fall of 2019

• Wet & Computational Laboratory

• Competition Field

• Faculty Offices Third Delivery – Fall of 2020

• Research Greenhouse

• Enrollment Center

• Wellness Center

• Undergraduate Housing (980 beds)

• Conference Center

• Competition Swimming Pool

“UC Merced kicks off historic $1.3 billion

expansion”

October 2016 – Streetinsider.com

“UC Merced 2020 campus expansion project moves forward, some buildings

set to open as early as next summer”

November 2017 – ABC 30 News

“UC Merced moves forward with major campus expansion”

June 2016 – LA Times

“UC Merced to nearly

double its size by 2020”

October 2016 – Streetinsider.com

“Project 2020 officially

begins”

October 2016 – Merced Sun Star

“Board of Regents

approves UC Merced expansion”

November 2016 – UofC.edu


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Map of Merced

As of May 2018, construction is well underway and progressing as planned. Three of the thirteen buildings are on track to open by this coming summer.

Merced College is a growing community college that is located 2 miles from Merced Station. Current enrollment at Merced College is 11,552 students. According to industry trends, we anticipate 20% of interested occupants to be enrolled at Merced College.


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City of Merced - Zoning

Zone 1:

• No current city services.

• No capacity for sewer.

• Currently owned by various home and

land owners.

• No development currently possible.

Zone 2:

• Rural residential zoning.

• Located in County of Merced.

• No city services.

• Master plan is to add sewer capacity

over the next 8 to 10 years

Zone 3:

• Area is zoned for rural and residential

parks.

• No city services.

• No zoning Change.

Summary:

When the Merced Station project was started,

the number one concern was distance to the

school and being “leap frogged.” We are no

longer concerned of this given the above

zoning descriptions and frequent

reassurances from the city of no activity.


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SECTION II – DEVELOPMENT & CONSTRUCTION SUMMARY


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General Site & Building Information

General Information Building Information

Address: 2980 E. Yosemite Ave., Merced, CA Total Units: 225

Cross Streets: SW Corner of E. Yosemite Ave. & Lake Rd. Total Beds: 975

County: Merced Building Size (Ft 2

): 431,440

Expected Occupancy: 95.0% Leasable Ft. 2 : 362,355

Tenant Base: Student Foundation: Trenched Poured Concrete Footings & Slab

Parcel Number: 008-010-071 Exterior: Cement Board Siding

Zoning: PD-76, Planned Development Style: Garden-Style, Low-Rise

Site Acreage: 17.25 Number of Buildings: 15

Parking: 148 Covered, 479 Open Number of Stories: 3.0

Parking Retail: 38 Standard, 2 Accessible, 1 EV Roof: Thermoplastic Single Ply Membrane

Laundry Facilities: In-Unit Patio/Balconies: Ground Floor Patios & Balconies (8ft. Deep)

Amenities Heating: Electric-Forced Air

Dishwashers: Yes Cooling: Central Air

On-Site Office: Yes Water / Sewer: Landlord-Paid with surcharge

Clubhouse: Yes Provider: City Water

Swimming Pool: Yes Electricity: Landlord-Paid with surcharge

Fitness Center Yes Provider: Merced Irrigation District

Included Cable & Internet: Yes Natural Gas: Landlord-Paid

Expected Completion Year: 2021 Provider: PG&E


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Site Status and EB-5 Timeline

Site Status and EB-5 Timeline

Land Purchased:

Yes

Entitlements Secured:

Yes

Construction Financing Secured:

Yes

Grading Permits Pulled:

May 2019

Horizontal Site Work Begins:

June 2019

EB-5 Equity Takeout Fund Begins:

June 2019

Vertical Site Work Begins:

August 2019

Construction Completed:

July 2021

Grand Opening:

September 2021

Asset Refinanced:

June 2023

Initial Investment Returned to EB-5 Fund

June 2023

Sale of Project:

December 2023

Cash from Sale Paid to EB-5 Fund:

January 2024

EB-5 Fund Closed and Capital Disbursed to EB-5 Limited Partners: February 2024


18

Community Site Plan


19

Building Renderings

Aerial View from North-East

Aerial View from South-West

Aerial View from North-West

Plaza View


20

Building Renderings - Continued


21

Floorplans

Two Bedroom Two Bath

1,370 - 1,400 ft.2

3 Beds / Unit

90 - Units

Three Bedroom Three Bath

1,355 ft.2

3 Beds / Unit

15 - Units


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Floorplans

Four Bedroom Four Bath

1,654 ft.2

4 Beds / Unit

30 - Units

Six Bedroom Four Bath

1,840 - 1,877 ft.2

6 Beds / Unit

90 - Units


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Proposed Unit Mix

Merced Station

Type Units Beds Ft² +/-Rent/Bed

2020/21

Rent/Unit

2020/2021

$ /FT.²

2020/21

Rent/Bed

2021/22

Rent/Bed

2022/23

2 Bed / 2 Bath 45 135 1,370 - $2,515 $1.84 - -

2 Bed / 2 Bath 45 135 1,411 - $2,515 $1.78 - -

2 Bed / 2 Bath - Room A - 90 546 $985 $985 $1.80 $1,034 $1,085

2 Bed / 2 Bath - Room B - 180 676 $765 $1,530 $2.26 $803 $843

3 Bed / 3 Bath 15 45 1,355 $930 $2,790 $2.06 $976 $1,025

4 Bed / 4 Bath 30 120 1,654 $875 $3,500 $2.12 $918 $964

6 Bed / 4 Bath 45 270 1,840 - $4,370 $2.38

6 Bed / 4 Bath 45 270 1,877 - $4,370 $2.33

6 Bed / 4 Bath - Rooms A-B - 180 388 $875 $1,750 $2.26 $918 $964

6 Bed / 4 Bath - Rooms C-F - 360 237 $655 $2,620 $2.76 $687 $722

Retail - NNN Storefront - - 4,000 - $7,000 $1.75 - -

Retail - NNN Drive-Through - - 2,600 - $9,100 $3.50 - -

Total/Weighted Average: 225 975 362,355 $786 $3,407 $2.08 $825 $866


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Consolidated Sources & Uses

BED COST/FT.2

HARD COSTS 71,222,796$ $73,049 $165.08

Student Housing Construction: 43,978,930$ $45,107 $121.37

Common Area Costs: 1,524,768$ $1,564 $32.59

Retail Construction: 759,000$ $778 $115.00

FF&E Student Housing: 2,284,804$ $2,343 $6.31

FF&E Clubhouse: 430,625$ $442 $29.70

Amenities: 2,586,725$ $2,653 $6.00

Site: 5,710,740$ $5,857 $13.24

Land (Includes Entitlements): 9,500,000$ $9,744 $22.02

Interest Reserves 3,340,800$

Hard Cost Contingency (2.0%): 1,106,404$ $1,135 $2.56

SOFT COSTS 6,193,482$ $6,352 $14.36

Civil & Soils A/E: 1,030,100$ $1,057 $2.39

Permits & Fees: 4,221,941$ $4,330 $9.79

Startup / Leasing Costs Prior to Opening: 820,000$ $841 $1.90

Soft Cost Contingency (2.0%): 121,441$ $125 $0.28

PROJECT COSTS 2,722,175$ $2,792 $6.31

Loan Costs (1%) 482,755$ $495 $1.12

Construction Loan Interest: 2,239,420$ $2,297 $5.19

TOTAL DEVELOPMENT COSTS: 80,138,453$ $82,193 $221.16


25

SECTION III – FINANCIAL INFORMATION


26

Projected Value and EB-5 Fund Returns

2021 2022 2023 2024 2025 2026 2027

INCOME 5% 5% 3% 3% 3% 3%

Gross Rent Potential: 9,579,900 10,046,055 10,548,358 10,864,808 11,190,753 11,526,475 11,872,270

Miscellaneous & Other Income: 579,353 596,980 626,829 645,634 665,003 684,953 705,502

Vacancy & Bad Debt: (507,963) (532,152) (558,759) (575,522) (592,788) (610,571) (628,889)

EFFECTIVE GROSS INC.: 9,651,290 10,110,883 10,616,427 10,934,920 11,262,968 11,600,857 11,948,883

EXPENSES: 3% 3% 3% 3% 3% 3%

Administrative/Operating: 1,356,786 1,405,039 1,447,191 1,490,606 1,535,325 1,581,384 1,628,826

Maintenance & Turnover: 244,618 258,980 266,749 274,752 282,994 291,484 300,229

Utilities: 809,222 829,633 854,522 880,158 906,562 933,759 961,772

Fixed: 1,176,556 1,197,729 1,233,661 1,270,671 1,308,791 1,348,054 1,388,496

Total Expense: 3,587,182 3,691,381 3,802,123 3,916,186 4,033,672 4,154,682 4,279,323

NET OPERATING INC. 6,064,108 6,419,502$ 6,814,305$ 7,018,734$ 7,229,296$ 7,446,175$ 7,669,560$

VALUATION @ 5.75% 105,462,751$ 111,643,511$ 118,509,645$ 122,064,935$ 125,726,883$ 129,498,689$ 133,383,650$

less Debt and Capital Contributions (80,138,453)$ (80,138,453)$ (80,138,453)$ (80,138,453)$ (80,138,453)$ (80,138,453)$ (80,138,453)$

PROFIT 25,324,298$ 31,505,058$ 38,371,192$ 41,926,482$ 45,588,430$ 49,360,236$ 53,245,197$

EB-5 EQUITY FUND

Year 2021 2022 2023 2024 2025 2026 2027

Period 2 3 4 5 6 7 8

Preferred Return 1,000,000$ 1,500,000$ 2,000,000$ 2,500,000$ 3,000,000$ 3,500,000$ 4,000,000$

Profit-Share 6,331,074$ 7,876,265$ 9,592,798$ 10,481,620$ 11,397,107$ 12,340,059$ 13,311,299$

Total EB-5 Gross Profit 7,331,074$ 9,376,265$ 11,592,798$ 12,981,620$ 14,397,107$ 15,840,059$ 17,311,299$

less Service Fees 100,000$ 150,000$ 200,000$ 250,000$ 300,000$ 350,000$ 400,000$

less GP expense reimbursements 200,000$ 200,000$ 200,000$ 200,000$ 200,000$ 200,000$ 200,000$

less GP Performance Fees 2,019,322$ 2,632,879$ 3,297,839$ 3,714,486$ 4,139,132$ 4,572,018$ 5,013,390$

Net Returns 5,011,752$ 6,393,385$ 7,894,959$ 8,817,134$ 9,757,975$ 10,718,041$ 11,697,909$

CAGR 22.52% 17.91% 15.66% 13.48% 12.02% 10.97% 10.17%


27

SECTION IV – MARKET COMPARABLES


28

Rent Comparables

With no student housing developments located in Merced, our Rental Comparison takes into account conventional properties located in Merced and student properties located adjacent to other California Universities deemed comparable. These other locations include

Cal State Fresno, Cal State Sacramento, Cal State Stanislaus and University of California, Davis.

Address Build Units Beds Type Size $/Unit $/Bed $ / Ft.²

1. Village Terrace 3827 San Jose Ave., Merced, CA 2003 184 368 2 Bed / 2 Bath 1,002 - 1,122 $950 - $985 $475 - $493 $0.88 - $0.95

3 Bed / 2 Bath 1,215 $1,195 $398 $0.98

2. The Villages 3342 M Street, Merced, CA 1984 288 569 2 Bed / 2 Bath 888 - 1,081 $1,075 - $1,195 $538 - $598 $1.11 - $1.21

3 Bed / 2 Bath 1,245 $1,385 $462 $1.11

3. Granville Apartments 2908 Willowbrook Ct., Merced, CA 2006 86 153 2 Bed / 2 Bath 1,069 - 1,091 $1,105 - $1,150 $553 - $575 $1.03 - $1.06

3 Bed / 2 Bath 1,263 $1,275 $425 $1.01

4. Village Landing 3601 San Jose Ave., Merced, CA 1988 211 370 2 Bed / 2 Bath 1,028 $1,293 - $1,416 $647 - $708 $1.26 - $1.38

5. Northwood Village 255 Snow Haven Ct., Merced, CA 1981 142 244 2 Bed / 2 Bath 1,074 $1,432 $716 $1.33

6. Palazzo @ Campus Pointe 5164 N. Primitivo, Fresno, CA 2010 244 928 2 Bed / 2 Bath 1,069 $1,105 $553 $1.03

4 Bed / 4 Bath 1,348 - 1,435 $2,420 - $2,680 $605 - $670 $1.78 - $1.87

7. The Crossings 2920 Ramona Ave., Sacramento, CA 2018 225 750 2 Bed / 2 Bath 856 - 941 $1,790 - $1,818 $895 - $909 $1.92 - $2.09

3 Bed / 3 Bath 1,211 $2,550 $850 $2.11

4 Bed / 4 Bath 1,395 - 1,513 $3,196 - $3,340 $799 - $835 $2.21 - $2.29

8. The Vista 900 Monte Vista Ave., Turlock, CA 2017 180 600 2 Bed / 2 Bath 855 - 940 $1,940 - $2,436 $970 - $1,218 $2.27 - $2.59

3 Bed / 3 Bath 1,200 $2,625 $875 $2.19

4 Bed / 4 Bath 1,390 - 1,510 $3,276 - $3,785 $819 - $946 $2.36 - $2.51

9. West Village - UC Davis 1580 Jade St., Davis, CA 2011 663 1,980 2 Bed / 2 Bath 898 $2,310 $1,155 $2.57

4 Bed / 4 Bath 1,467 $4,040 $1,010 $2.75

Property


29

Rent Comparables – Summary & Analysis

Two Bedrooms:

Two Bedrooms: Size $/Unit $/Bed $ / Ft.² Size $/Unit $/Bed $ / Ft.² Size $/Unit $/Bed $ / Ft.²

Low: 855 $950 $475 $0.88 1,370 $2,515 $838 $1.84 515 $1,565 $363 $0.96

Average: 997 $1,448 $724 $1.49 1,391 $2,515 $838 $1.81 394 $1,067 $114 $0.31

High: 1,122 $2,436 $1,218 $2.59 1,411 $2,515 $838 $1.78 289 $79 $380 $0.81

Three Bedrooms: Size $/Unit $/Bed $ / Ft.² Size $/Unit $/Bed $ / Ft.² Size $/Unit $/Bed $ / Ft.²

Low: 1,200 $1,195 $398 $0.98 1,355 $2,790 $930 $2.06 155 $1,595 $532 $1.08

Average: 1,227 $1,806 $602 $1.48 1,355 $2,790 $930 $2.06 128 $984 $328 $0.58

High: 1,263 $2,625 $875 $2.19 1,355 $2,790 $930 $2.06 92 $165 $55 $0.13

Four Bedrooms: Size $/Unit $/Bed $ / Ft.² Size $/Unit $/Bed $ / Ft.² Size $/Unit $/Bed $ / Ft.²

Low: 1,348 $2,420 $605 $1.78 1,654 $3,500 $875 $2.12 306 $1,080 $270 $0.34

Average: 1,436 $3,062 $766 $2.13 1,654 $3,500 $875 $2.12 218 $438 $109 $0.01

High: 1,513 $3,785 $946 $2.51 1,654 $3,500 $875 $2.12 141 $285 $71 $0.39

Six Bedrooms: Size $/Unit $/Bed $ / Ft.² Size $/Unit $/Bed $ / Ft.² Size $/Unit $/Bed $ / Ft.²

Low: 1,348 $2,420 $605 $1.78 1,840 $4,370 $728 $2.38 n/a n/a $123 $0.60

Average: 1,436 $3,062 $766 $2.13 1,859 $4,370 $728 $2.35 n/a n/a $37 $0.23

High: 1,513 $3,785 $946 $2.51 1,877 $4,370 $728 $2.33 n/a n/a $218 $0.18

Comparables Subject Subject vs. Market - Above/Below

Please note due to a lack of 6-bedroom comparables we have utilized the 4-bedroom price per bed and

price per square foot to compare against the 6-bedroom units at Merced Station.


30

Rent Comparables – Map

Our rental survey takes into account conventional properties located within Merced and comparable

properties located adjacent to California Universities. Please note, all of the conventional Merced

properties utilized in this comparison are nearly 7 miles from UC Merced.


31

Sales Comparables

The sales comparables utilized were taken from the February Appraisal and also include the Appraisers recommended adjustments. Please Click Here for the details of these comparables.

Units Beds Purchase Price Per Bed Adjustment Adjusted $/Bed Cap Rate Date Closed

1949 E. University Dr., 225 640 $53,325,000 $83,320 21.68% $101,384 5.8% Mar-17

Tempe, AZ

Map Reference: 1

Units Beds Purchase Price Per Bed Adjustment Adjusted $/Bed Cap Rate Date Closed

6345 El Cajon Blvd., 332 1,379 $156,000,000 $113,125 -6.72% $105,523 4.12% Nov-16

San Diego, CA

Map Reference: 2

University House Units Beds Purchase Price Per Bed Adjustment Adjusted $/Bed Cap Rate Date Closed

555 N. Commonwealth Ave., 350 1,189 $165,000,000 $138,772 -19.00% $112,405 5.50% Jun-16

Fullerton, CA

Map Reference: 3

University Village Units Beds Purchase Price Per Bed Adjustment Adjusted $/Bed Cap Rate Date Closed

625 Cantrill Dr. 132 504 $40,500,000 $80,357 22.72% $98,614 5.52% Sep-14

Davis, CA

Map Reference: 4

The Element Units Beds Purchase Price Per Bed Adjustment Adjusted $/Bed Cap Rate Date Closed

6600 4th Avenue 288 792 $59,000,000 $74,495 21.00% $90,139 6.17% Dec-15

Sacramento, CA

Map Reference: 5

Sold Low: 132 504 $40,500,000 $74,495 -19% $90,139 4.12% Sep-14

Sold High: 350 1379 $165,000,000 $138,772 23% $112,405 6.17% Mar-17

Sold Average: 265 901 $94,765,000 $98,014 8% $101,613 5.42% Mar-16

BLVD63

Regents on University

https://incomepropertyorganiza-my.sharepoint.com/:b:/g/personal/jj_incomepo_com/EScXeSuXOthKq2iBdKF2X48Bnr6P8AKCTQk61Bo-10HH_Q?e=vMnWaw


32

Sales Comparables – Map

As previously indicated the Sales Comparables provided were taken from the CBRE 2018 Appraisal and include the

Appraisers adjustments.

https://incomepropertyorganiza-my.sharepoint.com/:x:/g/personal/jj_incomepo_com/EZPZjygZkUFHgIlga5G0lV8BQdYdYoQ2zLm2GM1A8UDgWg?e=OMp7Zg


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