Country Club Apartments - DLP Capital Partners · The DLP family of companies owned and operated by Don Wenner. Don has over 12+ years of real estate experience and has closed more

Country Club Apartments | Investment Summary

dlpre.com | 610.488.2375 | DLP REAL ESTATE CAPITAL

INVESTMENT SUMMARY

Country Club Apartments4223 Lakeshore Drive| Shreveport, LA 71109

Country Club Apartments represents a unique and significant value creation opportunity for our investors. The investment consists of 248 Class “B” workforce housing apartments, situated in the heart of Shreveport, LA. DLP procured this Bank REO investment opportunity through Rialto Capital, the special servicer of the distressed note. Don Wenner negotiated a favorable acquisition price just shy of $19k per unit, which represents a significant discount to replacement cost, comparable assets in this submarket currently are trading north of $45k per unit, representing a 58% discount to market valuation. This opportunity exhibits many strong investment fundamentals, steep discount to replacement cost, well insulated against both macroeconomic / microeconomic market volatility, positive arbitrage, steady cash flow to Pref Fund investors, mark-to-market upside. The submarket and surrounding area itself, predominantly consists of middle working-class residents. Shreveport is part of an area known as “Ark-La-Tex”, a U.S. socio-economic region where Arkansas, Louisiana, Texas, and Oklahoma intersect. The Shreveport is also home to Barksdale Air Force Base, Cyber Innovation Center, the CenturyLink Event Center, and multiple colleges and universities, as well as several upscale riverboat casinos. Due to lack of recent or proposed construction, rents have been stable and occupancy rates have remained above 90% for decades, which makes Shreveport a very appealing market for multifamily investment.


INVESTMENT SUMMARY

Country Club Apartments4223 Lakeshore Drive| Shreveport, LA 71109

2M EQUITY

Investment

PRIVATE EQUITY OFFERING● $2 million equity investment.● Property was purchased by DLP Capital in Q2 May 2019.● DLP PREF fund will earn a 9% preferred return on this

investment day 1.

LENDER● DLP Direct Lending Partners.● Debt represents 73% of the total acquisition.● Term: 12 months● Interest Rate: 9.00% fixed● Interest Only: 12 months

IMMEDIATE FOCUS ON VALUE-ADDEDCAPITAL IMPROVEMENTS

● $2,323,070 capital improvement plan ($9,367 per unit) will focus on restoring the 110 down units online, repairing the roofs, enhancing the signage package, fixing the parking space, etc.

248 APARTMENTS IN SHREVEPORT, LA● Three-story, garden-style buildings situated in the stable market of

Shreveport, LA.● 1969 build with well-laid-out, diverse floorplans ranging from 1BR to 3 BR

that average 973 sq. ft.● In-place rents currently average $582.● Current three-story, garden-style apartments lag behind the general

market. The rents at the community are currently 10%-15% below the market rate.

TARGETED RETURNS● Cash-on-cash returns of -14.8%, 299.8%, and 50.6% (Including refinance

proceeds) or 14.8%, 12.9%, and 15.7% (not including refinance proceeds) on an asset level in the first three years of ownership.

● Modeling a 29.3% levered IRR and a 2.43x equity multiple on an asset level, based on a 5 year hold & an 9.00% cap -rate exit.

COMPELLING ACQUISITION STORY● Prime location in Shreveport, LA just a few miles away from I-20 and I-220.● Extremely low price per unit, traded for less than $20K per unit.● Less than 40% occupancy rate with 110 down units, leaving a huge improvement and value creation

opportunity for DLP.● The nearby multifamily properties with similar vintage and same level of finishes are being traded for $45K

per unit.


INVESTMENT SUMMARY

Property Overview


INVESTMENT SUMMARY

Demographics

POPULATION BY AGE GROUP IN 1 MILE RADIUS POPULATION BY EDUCATION IN 1 MILE RADIUS POPULATION BY RACE IN 1 MILE RADIUS


INVESTMENT SUMMARY

DemographicsPOPULATION BY RACE

MILITARY POPULATION

HISPANIC POPULATION BY RACE IN 1 MILE RADIUS


CURRENT CONDITIONS

INVESTMENT SUMMARY

Comparable Rent Analysis OVERALL SUMMARY

ASKING RENT PER UNIT PER MONTH


INVESTMENT SUMMARY

Comparable Rent AnalysisONE BEDROOM RENT COMPARABLES

TWO BEDROOM RENT COMPARABLES

THREE BEDROOM RENT COMPARABLES

TWO BEDROOM RENT COMPARABLES


INVESTMENT SUMMARY

Pro Forma Summary


INVESTMENT SUMMARY

Underwriting Notes

Forward-Looking Statement Disclaimer: Pro Forma Rents in Year 1 are based on rolling monthly rents during the initial year turnover of units to the market rate. Year 2 represents a full year of market rents as listed on the rent roll.

Vacancy: The property is leasing up. We assume year 1 average vacancy rate to be 38%, year 2 average vacancy rate to be 6% and year 3-5 average vacancy rate to be 5%. The current vacancy rate of the property is 64%.

Concessions: Concessions are assumed to be 0.7% and 1% of potential gross rental revenue in year 1 and year 2.

Bad Debt: Bad debt is assumed to be 0.7% and 1 % of potential gross rental income in year 1 and year 2.

Non-revenue Units: There are no non-revenue units.

Other Income: Total other income is assumed to be 4.22% and 5.32% of potential gross rental income in year 1 and year 2.

Marketing & Advertising: Marketing & Advertising expenses are underwritten at $150/unit per year.

General & Administrative: General and Administrative expenses are underwritten at $150/unit per year.

Insurance: Insurance is underwritten to the principal’s standard insurance estimate of $370/unit per year based on the master insurance policy negotiated pricing.

Management Fee: Management is underwritten to the DLP’s standard Management Fee of 4% of rental income.

Repairs & Maintenance: Repairs and Maintenance are underwritten to DLP’s standard Repairs & Maintenance estimate of $250/unit per year.

Payroll: Payroll expenses are based on the expected on-site management staff salaries, which is in line with assets of this size. We assumed payroll expense to be $950/unit per year.

Real Estate Taxes: Based on our tax analysis, we assumed the property tax in year 1 will be $85,000 with a 2% increase every year from year 2.

Utilities (Elec/Gas/Water/Sewer/Trash): Based on most recent annual utilities expenses, total utility cost to be $950/unit per year.

Turnover: Turnover Expense is underwritten to $200 per unit.

Contract Service: Total contract service expense is underwritten to $175/unit per year.

Capital Reserve: Capital Reserves is underwritten to $250/unit per year.

INCOME EXPENSES


INVESTMENT SUMMARY

DLP Capital Partners Company Overview

DLP Capital Partners is a private investment group designed to produce consistent, high-yield returns while providing liquidity and security to its investors. We have leveraged the holistic resources of the DLP family of companies, many years of experience and hundreds of successful investments in the distressed residential; multi-family, and commercial real estate space and we offer some of the most attractive investment options, not only in the real estate industry but in the larger alternative investment spectrum. We focus on income producing real estate backed debt and equity investments.

DLP Capital Partners and Direct Lending Partners, LLC (the loan origination and servicing arm of DLP Capital Partners), divisions of the DLP family of companies, were created to address two distinct needs:

1. Provide a capital source for DLP Capital Partners and for seasoned real estate investors who have the knowledge, experience and resources to capitalize on residential, income producing, distressed real estate opportunities. These investment opportunities often demand quick, decisive action and typically are only available to cash buyers who do not need to rely on conventional bank financing. Today’s real estate market opportunities are substantial for both DLP Capital Partners’ investors and others who have access to capital and are able to execute.

2. Generate consistent high-yield investor returns while providing liquidity and security. Bank interest rates are at historically low levels, making it nearly impossible to obtain reasonable yields. Even bonds, which traditionally pay higher interest rates than banks, remain at low levels, fueling the demand for an alternative investment strategy.

With a focus on providing capital and generating highly competitive returns, the DLP Lending Fund, DLP Income & Growth Fund, and DLP Equity Fund II embody what DLP Capital Partners was built to provide, now and years into the future. Investors have the option to participate as either noteholders – receiving a fixed high-yield return – or, as members receiving preferred equity returns, in addition to consistent distributions and liquidity.

At DLP Capital Partners, we’re confident deal flow opportunities and demand for these high-yield alternative investment vehicles will continue to grow.


INVESTMENT SUMMARY

The DLP Family of Companies Overview

Dream Live Prosper (DLP) family of companies is one of the fastest growing real estate firms in the country and is currently ranked by The Wall Street Journal as one of the Top 10 Real Estate Teams and the #1 Team in PA/NJ. The focus of DLP is to provide clients with the highest level of service through our innovative and client-centered team approach.

The DLP family of companies owned and operated by Don Wenner. Don has over 12+ years of real estate experience and has closed more than 6,000 real estate transactions totaling more than $1 billion. He currently owns a portfolio of more than 7,000 apartments and homes. He has built a track record of being able to generate profits via residential and commercial real estate in all market conditions and cycles. DLP’s mission is to prosper as the leader in the real estate industry sectors of brokerage; fund management; asset management; construction; and lending by striving to achieve greatness in all aspects of our business and the services we provide in order to assist our clients and our employees in achieving the lives of their dreams.

The DLP Family of CompaniesDLP Real Estate Capital provides investment funds that deliver consistent high-yield returns to investors.

Direct Lending Partners provides short-term acquisition and renovation financing for real estate investors to improve distressed assets and who subsequently secure permanent financing.

DLP Real Estate Capital acquires value-add real estate and drives returns and increases the value through capital improvements, driving up rents, and driving down expenses in order to generate revenue to meet and exceed targeted returns.

DLP Builders leads the redevelopment projects of DLP owned properties focusing on efficiently driving up value while maximizing every dollar spent.

DLP Realty has a significant referral network for all DLP Companies and leverages programs including the Guaranteed Sale Program and the Immediate Buyout Program to generate considerable acquisition volume. DLP Realty’s ability to sell Real Estate more efficiently than any other real estate brokerage creates an increased level of liquidity to DLP’s assets. Lastly, the vast volume of sales and access to real estate market data gives DLP a strong sense of the pulse and direction of the market.

DLP Property Management maximizes the rental portfolio through strong management and leasing, driving up revenue and controlling expenses. DLP Property Management provides an alignment of interest between investors and manages and generates significantly higher performance than leading management companies throughout the US. DLP Property Management utilizes some of the most advanced forward-thinking practices in the industry to produce these results.

DLP Snapshot● $700M in AUM

● Over 9,000 units owned in portfolio

● Over 250+ loans in portfolio

● 6 private investment funds

● 500+ total current investors

● Zero principal losses to any investors

● Zero months of missing fixed or preferred return targets

● 300+ employees

● $100M of total annual revenue of all DLP Companies


INVESTMENT SUMMARY

Confidentiality & DisclaimerTHIS INVESTMENT MEMORANDUM IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES NOR A SOLICITATION OF AN OFFER TO PURCHASE SECURITIES. SECURITIES WILL ONLY BE OFFERED TO DESIGNATED OFFEREES PURSUANT TO A DEFINITIVE OFFERING MEMORANDUM AND RELATED MATERIALS, WHEN AVAILABLE. THE TERMS SET FORTH HEREIN ARE PRELIMINARY AND SUBJECT TO CHANGE.

Certain information contained in this Investment Memorandum has been obtained from published or other sources prepared by other parties. Neither DLP Capital Partners, LLC or its affiliates(collectively the “Company”), assume any responsibility for the accuracy or completeness of such information.

The information contained herein is believed to be current only as of the date hereof and you should not, under any circumstances, assume that there has not been any change in the matters discussed herein since the date hereof.

The information contained herein regarding the proposed offering is strictly confidential and is intended for review by the intended recipient only. By accepting such information, the recipient agrees that the recipient will not divulge any such information to any third party. Any reproduction or distribution of such information, in whole or in part, is prohibited without the express written consent of the Company.

If the Company elects to move forward with an offering of securities, then such offer will be made only pursuant to a definitive private offering memorandum (the “Memorandum”) prepared by or on behalf of the Company, which shall contain material information not contained herein, including a discussion of the risk factors associated with an investment. Any investment decision should be made only after reviewing the Memorandum, the Subscription Agreement, and related investment offering document in their entirety, conducting such investigations as the investor deems necessary and consulting the investor’s own legal, accounting and tax advisors in order to make an independent determination of the suitability and consequences of an investment

Forward-Looking Statement Disclaimer:

CAUTION CONCERNING RELIANCE ON FORWARD LOOKING STATEMENTS. The information contained in this memorandum and all financial data set forth herein are forward-looking statements and are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by the forward-looking statements. Risks could occur that affect the Company’s business, financial condition or results of operations. In that case, the results may not be as indicated in the forward-looking statements and you may lose all or part of your investment. You should carefully consider the risks which will be described in the forthcoming Memorandum, definitive agreements and related materials. These forward-looking statements are preliminary and are subject to change.

Documents

Country Club Apartments - DLP Capital Partners · The DLP family of companies owned and operated by Don Wenner. Don has over 12+ years of real estate experience and has closed more