Return to flip book view

Project Analysis Summary The following charts summarize the project Veronica Gardens Property Location City State Zip Size Year Built Care Offerings Total Land Size acres Useable Land Size acres Eads Eads Tennesse 253 120 2023 Independent Living 16 50 16 50 The rents provided by the client are reasonable when considering Independent Living IL community The unit sizes are larger than typically found in IL but are deemed to be comparable to some high end properties in the market area As a comparison according to the State of Seniors Housing 2022 the lower quartile IL properties average 555 sq ft the median is 645 sq ft the upper quartile is 897 sq ft As shown below the weighted average rentable sq ft for the property is 1 003 sq ft This includes the Cottages Unit Mix Care Unit Type Market Rates IL Studio 3 750 IL One Bedroom One Bath 4 250 IL One Bedroom 1 Bath w Patio Balcony 4 450 IL Two Bedroom 1 Bath 5 050 IL Two Bedroom 1 Bath w Patio Balcony 5 250 IL Two Bedroom 2 Bth 5 450 IL Two Bedroom 2 Bath w Patio Balcony 5 650 IL Three Bedroom 2 Bath 5 950 IL Cottage 6 150 Total Rental Area Common Circulation Area Gross Building Area MRPSF 5 59 5 75 6 02 5 09 5 29 5 05 5 23 4 22 4 24 Unit Sq Ft 671 739 739 992 992 1 080 1 080 1 409 1 450 1 008 of Beds of Units Total Sq Ft 3 3 2 013 41 41 30 299 16 16 11 824 12 12 11 904 6 6 5 952 18 18 19 440 12 12 12 960 3 3 4 227 30 30 43 500 141 141 142 119 116 279 258 398 If the Cottages are excluded the average is in the upper quartile at 890 sq ft www tranquilium com Ryan Housekeeper ryanh tranquilium com Direct Cell 734 660 3831 343 S Main Street Suite 209C Ann Arbor MI 48103

The following are the summary sources and uses This includes the costs provided as well as adding additional soft cost expenses which are shown in the detailed source and uses on the following page Sources and Uses Summary Sources Debt Additional Construction Draws Subtotal Debt Equity LP Equity Sponsor Equity Subtotal Equity 28 941 600 28 941 600 18 994 400 300 000 19 294 400 Uses Purchase Price Reserves Direct Construction Cost Closing Cost Other Totals 1 230 000 3 575 000 41 185 000 2 246 000 48 236 000 48 236 000 The total project cost is 48 236 000 This does not include any cost change for changing the 3 3 bedroom units into 6 additional 1 bedroom units Additional soft costs not provided that were added by Tranquilium include a developer fee capital reserves and other closing costs such as legal title etc www tranquilium com Ryan Housekeeper ryanh tranquilium com Direct Cell 734 660 3831 343 S Main Street Suite 209C Ann Arbor MI 48103

Sources Uses Total Acquisition Expansion Construction Sources Debt Lender Financing Lender Total 28 941 600 28 941 600 28 941 600 Equity LP Equity Sponsor Equity 18 994 400 300 000 Equity Total 19 294 400 Uses Purchase Price 1 230 000 Total Direct Hard Const Costs 19 294 400 19 294 400 1 230 000 35 825 000 Total FF E 1 100 000 Other Cost Subtotal Construction Pre Development 4 260 000 41 185 000 Reserves Construction Debt 1 550 000 Operations Working Capital Operations Debt Subtotal Reserves 275 000 1 750 000 3 575 000 Closing Costs Senior Debt Origination Fee Limited Partner Equity Origination Consulting Fee Development Fee General Partner Subtotal Fees Legal Development Team Counsel Legal Investor Counsel Legal Lender s Counsel 380 000 260 000 1 433 000 2 073 000 100 000 20 000 20 000 Legal Licensing Local Counsel Phase I Reliance Letter 1 500 2 500 Appraisal Update Market Study 6 000 3 000 Title and Survey Subtotal Legal Third Party Previous Equity 20 000 173 000 48 236 000 Total at Closing 48 236 000 48 236 000 Operating projections are very favorable well above the upper quartile for operating margins compared to State of Seniors Housing 2022 figures However this can be justified based upon the number of cottages units now 30 Cottages operate at high operating margins lowest expense margins Details and comparisons on an expense line by line base are available in the Pro forma specifically Tab labeled Profit Loss Analysis www tranquilium com Ryan Housekeeper ryanh tranquilium com Direct Cell 734 660 3831 343 S Main Street Suite 209C Ann Arbor MI 48103

Sponsor Proforma Summary Year 1 Effective Gross Income Operating Expenses EBITDAR Expense Percentage Year 2 Effective Gross Income Operating Expenses EBITDAR Expense Percentage Year 3 Effective Gross Income Operating Expenses EBITDAR Expense Percentage Year 4 Effective Gross Income 3 436 532 3 037 463 399 069 88 7 888 419 3 543 387 4 345 032 45 8 506 536 3 703 277 4 803 258 44 8 846 797 Operating Expenses EBITDAR 3 851 408 4 995 389 Expense Percentage 44 Year 5 Effective Gross Income Operating Expenses EBITDAR Expense Percentage 9 200 669 4 000 994 5 199 675 43 This overall project IRR return of 22 with a 2 3 overall project multiple is a very good overall project return given current economic conditions and compared to other market opportunities www tranquilium com Ryan Housekeeper ryanh tranquilium com Direct Cell 734 660 3831 343 S Main Street Suite 209C Ann Arbor MI 48103

Return projects are based upon the following sale forecast Exit Projections XIRR Leveraged XIRR Un Leveraged Unleverage Reversion Cash Flow Sale Proceeds Per Bed Sale Proceeds Per Unit Net Proceeds after debt Return Multiplier Return to Cost 22 16 72 953 535 536 423 517 401 45 233 973 2 33 10 8 Returns above are after fees SALE FORECAST Sale Month 60 TOTAL Net Operating Income Capitalization Rate Gross Sales Price Less Cost of Sale at Less Disposition Fee at Net Sale Proceeds Recaptured Unused Reserves Sale Month EBITDA Total Unleverage Reversion Cash Flow 4 899 324 6 50 2 00 2 00 Less Mortgage Balance s Year Amortized Less Final Debt Payment Less Accrued Mezzanine Balance Net Proceeds www tranquilium com Ryan Housekeeper ryanh tranquilium com Direct Cell 734 660 3831 343 S Main Street Suite 209C Ann Arbor MI 48103 75 374 209 1 507 484 1 507 484 72 359 241 183 385 410 909 72 953 535 27 515 009 204 553 0 45 233 973

Conclusion The project was redesigned by the Developer and Architects which has resulted in an appealing investment opportunity The unit sizes are above the national averages but are within the upper quartile of State of Seniors Housing 2022 figures These large units should make a transition into senior living easier for target residents currently living in 2 500 single family homes in the market area Maximizing the cottages on the site is a great way to increase the feasibility of the project In addition the project also has the capacity of an additional 36 units that can be incorporated into the building later www tranquilium com Ryan Housekeeper ryanh tranquilium com Direct Cell 734 660 3831 343 S Main Street Suite 209C Ann Arbor MI 48103