Vertical CONFIDENTIAL DRAFT August 6…

Legends Edge, Verona, WI Project Returns Analysis

Sources and Uses of Funds

Total

Capital Stack

Amount

% of Project

Boutique Hotels Construction (all-in)

$67,500,000 $70,000,000

Debt

$103,375,000 $12,600,000 $7,407,750 $14,117,250

75.2%

Executive Residences Construction (all-in, incl. garage)

Developer Land Operator Equity

Closing Costs

$0 $0 $0 $0 $0

Rate Cap

Other Equity

Total Equity Total Sources

$34,125,000 $137,500,000

24.8% 100.00%

Mortgage Broker Fee Working Capital Interest Reserve Total Use of Funds

$0

b/c (should be $0)

$137,500,000

Equity $

Equity % Distr. Equity %

Number of Boutique Hotel Rooms Number of Executive Residences Total Structured Parking Spaces

300 272

Developer Land Operator Equity

$12,600,000 $7,407,750 $14,117,250 $34,125,000

36.9% 21.7% 41.4% 100.0%

36.9% 21.7% 41.4% 100.0%

1,118

Other Equity Total Equity

First Mortgage

Executive Residences

Boutique Hotels

Mortgage Amount

$43,875,000

$59,500,000

Interest Rate

4.50%

4.80%

Amortization Period Loan Start Date

25

40

1/1/20

1/1/20

2020 Year 1

2021 Year 2

2022 Year 3

2023 Year 4

2024 Year 5

Beginning Balance Annual Payment

$103,375,000 $6,275,306 $4,799,502 $1,475,804 $101,899,196

$101,899,196 $100,354,016

$98,736,197 $6,275,306 $4,581,429 $1,693,878 $97,042,319

$97,042,319 $6,275,306 $4,501,791 $1,773,515 $95,268,804

$6,275,306 $4,730,127 $1,545,180

$6,275,306 $4,657,487 $1,617,819 $98,736,197

Interest Principal

Ending Balance b/c (should be $0)

$100,354,016

$0

Year 1

Year 2

Year 3

Year 4

Year 5

Yearly Cash Flow Summary

Net Operating Income - Boutique Hotels Net Operating Income - Executive Residences

$4,917,786 $4,291,980 $6,275,306 $2,934,460 $1,475,804

$7,131,438 $4,477,196 $6,275,306 $5,333,327 $3,020,984

$8,756,027 $4,795,149 $6,275,306 $7,275,870 $4,638,803

$9,085,680 $4,917,941 $6,275,306 $7,728,315 $6,332,681

$9,305,651 $5,205,796 $6,275,306 $8,236,141 $8,106,196

First Mortgage Annual Payment

Operational Cash Flow Principal Reduction

Debt Coverage

1.47 8.9% 8.6%

1.85

2.16

2.23

2.31

Debt Yield

11.2% 15.6%

13.1% 21.3%

13.5% 22.6%

14.0% 24.1%

Cash on Cash Return

Executive Residences

Boutique Hotels

Total Project

Project Residual Calculation Fifth Year Net Operating Income Terminal Cap Rate

$9,305,651

$5,205,796

8.0% 7.0%

Gross Sales Price Selling Costs Net Sales Price

$116,320,640

$74,368,512

1.25%

1.25%

$114,866,632

$73,438,905

Plus: Interest Reserve Total Proceeds at Closing

$0

$0

$114,866,632 $38,547,655 $76,318,977

$73,438,905 $56,721,149 $16,717,756

Remaining First Mortgage Balance

Residual Cash Flow

$93,036,733

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8/6/186:11 PM

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