Cottage Gardens Greensboro, NC

‣ EM is offering investors a net 15% annualized interest rate, consisting of a net 8% paid monthly from operating cash flow and preferred reserves, and a 7% accrued and compounded return paid from the proceeds of a refinance or sale of the Property.

‣ A one-year current preferred payment interest reserve totaling $270K will be reserved up front.

‣ The Investment’s current return and principal repayment will have priority to any third-party equity investors and the Sponsor in the event of a payout.

‣ The Property is currently 97% occupied with years 1, 2, and 3 NOI projected to reach $1.04M, $1.08M, and $1.13M respectively. The healthy NOI translates to a Senior Loan Debt Service Coverage Ratio (“DSCR”) avg of 3.53x with a minimum of 3.40x and a preferred equity average coverage of 1.88x with a minimum of 1.81x throughout the 3-year hold.

‣ The prior owner was focused primarily on maintaining a high level of occupancy and thus has left significant opportunity to drive rents to market rates. The sponsor sees the opportunity for operational efficiencies such as creating a community website and an online resident portal to instantly increase revenue collection and resident communication, re-cues resident turnover and increase overall site performance along with adding some high-end finishes to each unit.

‣ Average rents at the Property are currently $725 per unit, which is $110 below the average rental rates at comparable properties.

‣ The Senior Loan combined with the Investment represents a 65% LTC based on a total project cost of $15.7M.

‣ The Investment has a last dollar basis of $10.3M or $58K per unit, a 36% discount to comparable sales.

‣ The Sponsor will assume a HUD loan (inheriting from prior operator) to facilitate the acquisition with a loan amount of ~$7.3M or ~50% LTC. The Senior Loan has a remaining 33-year term at a very attractive fixed interest rate of 2.4% with a 35-year amortization schedule.