THE RESERVE III AT SUGAR MOUNTAIN, NORTH CAROLINA

Information Memorandum AUGUST 2015

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THE RESERVE III

Contents

I. THE PROPERTY .............................................................................................................. 3

OVERVIEW ..................................................................................................................................... 3

READY TO BUILD ........................................................................................................................... 4

INEXPENSIVE CONSTRUCTION .................................................................................................... 5

ADDITIONAL DEVELOPMENT OPPORTUNITY ............................................................................. 5

II. SUGAR MOUNTAIN RESORT AND THE ENVIRONS ..................................................... 6

ADDITIONAL MATERIAL ................................................................................................................... 8

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THE RESERVE III

THE RESERVE III

AT SUGAR MOUNTAIN, NORTH CAROLINA

I. THE PROPERTY

OVERVIEW The subject property of this offering is The Reserve III at Sugar Mountain Resort. It is in Avery County in the beautiful High Country region of the Carolina Mountains. Due to many year-round outdoor recreational activities and climate, the High Country has long been a major tourist and vacation home destination. Besides Sugar Mountain Resort itself, well-known communities in the area include Banner Elk, Boone and Blowing Rock.

Highlights of The Reserve III include:

• 19.3 acres in a private gated development.

• Direct ski-in-ski-out access to perhaps the best ski mountain in the Southeast – SugarMountain Resort, with a summit elevation of 5,300 feet, a vertical drop of 1,200 feet,100 percent snowmaking coverage, 21 trails, 7 lifts, night-skiing and almost 700,000annual skier-visits.

• 21 platted lots, with each developable for a four-plex, resulting in 84 potentialresidential units.

• Contiguous 12-acre parcel which is adjacent to the Oma Meadows chairlift drop-off,and could contain another 40 to 50 units for an overall total of more than 125.

• Zoning allows for resort timeshare. Only remaining public regulatory requirements arean automatic recording of the Final Plat Map and pulling of the Building Permits.

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• 100 percent of infrastructure exists for 12 units; all approvals are in place for waterand sewer hookups which abut the site; paved public road exists to the site; clearinghas been performed for all roads and building pads.

• Very low building costs in the area relative to rest of the country, at an estimated $80to $100 per square foot.

• The first 12 units can be completed in 6 to 8 months, with next phases immediatelythereafter.

• Part of a largerdevelopment referred toas Reserve I and II withover 200 existingvacation homes.Reserve III is closer to topof the mountain, and isthe prime parcel in theoverall development.

• Outstanding four-seasonviews of the surroundingHigh Country.

• Few minutes from theSugar Mountain Golf Course, and close to 12 other golf courses. There are numerousother amenities in Sugar Mountain Village, including tennis, clubhouse, boutiqueshops and restaurants.

• A 12-month array of outdoor recreational activities abound in the surrounding HighCountry, e.g., Blue Ridge Scenic Parkway, Appalachian Trail, whitewater rafting, troutfishing, biking and hiking trails, horseback riding, and summer theater and outdoorconcerts in the nearby tourist communities of Banner Elk, Boone and Blowing Rock.

READY TO BUILD The 21 lots are properly zoned for 84 units of resort timeshare, fractional, vacation rentals or

private ownership. Approvals have been received from Carolina Water for water and sewer hookups, with such utilities abutting the property. A paved public road passes along the property.

Other approvals include the Preliminary Plat, Storm Drainage, Sanitary Sewer and Water Plan, Site Details, Landscaping Plan and North Carolina State Permit issued by NCDENR. The only remaining requirement is simply to sign and record the Final Plat and pull the Building Permits. Reportedly, the Town Manager, Zoning Administrator, Planning Board and Town Council are all supportive of completing the development as soon as possible.

A significant amount of infrastructure is already in place over much of the property. It is 100 percent completed for three of the 21 lots, containing the first 12 units. Detailed comments on the status of the infrastructure include:

• Lots 1-3 (for 12 units): ready for Building Permits, with paved road and all utilitiesalready installed.

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• Lots 4-7 (for 16 units): underground electrical completed; requires water and sewerpiping and road paving.

• Lots 8-21 (for 56 units): requires underground electrical, water and sewer piping androad paving.

Clearing is completed for all roads and the 21 building pads (with a total of 84 units). The first 12 units on Lots 1-3 could be turn-key ready for occupancy in 6 to 8 months.

Attractive building plans have been prepared for a typical four-plex unit, if the purchaser wishes to use them.

INEXPENSIVE CONSTRUCTION Construction costs in the High Country are very inexpensive relative to the rest of the country.

Such costs on the high-end would be approximately $100 per square foot. However, it is reported that costs of $80 per square foot are easily achievable. This means a unit with 1,200 square feet would only cost $90,000 to $120,000 to construct. Total turn-key costs, including land and infrastructure, should be well under $200,000 per unit. Property taxes are among the lowest in the country.

ADDITIONAL DEVELOPMENT OPPORTUNITY Contiguous to the highest part of The Reserve III is another 12-acre parcel. It is adjacent to

the Oma Meadows chairlift drop-off, thus also having direct ski-in-and-out access. Here, another 40 to 50 units could be built, thereby increasing the total to over 125.

The 12 acres also could contain an amenity package on part of the site. It could include an indoor/outdoor swimming pool, clubhouse, owners lounge, convenience restaurant and bar, changing rooms, sauna, Jacuzzi spas, socializing areas, view decks, and so on. It also could be an excellent location for a sales office, since several hundred thousand skiers annually get off the lifts just a few feet away.

This parcel is serviced by roads, and utilities abut the site. The owner of The Reserve III has a right-of-first-refusal, and the reported price is very reasonable.

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II. SUGAR MOUNTAIN RESORT AND THE ENVIRONS

Sugar Mountain Resort is the largest ski area in North Carolina and reputed to be the best in the Southeast. It annually generates almost 700,000 skier-visits. It has:

• a base elevation of 4,100 feet• a summit elevation of 5,300 feet• a vertical drop of 1,200 feet• 120 skiable acres, including 100 that are lighted for night skiing• 21 trails, including 15 for night skiing• a longest run of 1 1/2 miles• 7 lifts

A multi-million dollar new ski run (Gunther’s Way) was added in 2014. A new 6-pack lift is being added to the summit for the 2015 ski season. This new lift will reduce travel time to the summit from 20 minutes to 5 minutes. All new snow blowing equipment was recently installed to cover 100% of the slopes. Total investment/ improvements to Sugar Mountain Resort exceed $8 million in the last 2 years.

Owners in the 84 units at The Reserve III will have direct ski-in-ski-out access, by skiing down the slopes to chairlifts at the base. The drop-off for the Oma Meadows lift is just a short distance from the development. The available additional 12-acre parcel is contiguous to the drop-off facility.

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At the base of the slopes is Sugar Mountain Village. This small incorporated community contains a variety of boutique shops, restaurants and year-round activities. It also contains the clubhouse (with tennis courts) for Sugar Mountain Golf Course. The course is challenging and fun, although only playing to a par 64.

Ski tickets range from $25 to $60, depending on day of the week and age of skier. Discounted season tickets and group rates are available. Green fees are $25, including cart. Annual memberships are $495 (individual) or $640 (couple), including free golf and cart fee of $16. Other nearby ski facilities include Ski Beech Mountain and Appalachian Ski Mountain. Some 12 other golf courses are within a several mile radius.

The High Country of the Carolina Mountains has long been a tourist and vacation home destination for families from throughout the Southeast. Besides the best skiing in the region, the area’s high elevation creates an attractive year-round climate. With temperatures in the mid-70’s throughout the summer, vacationers can escape the hot and humid climates of the surrounding low lands. The market area is wide, basically including the 10 adjacent states, and reaching out to Florida, Washington, D.C. and Chicago.

The immediate area east of Sugar Mountain Resort is the center of the High Country. Popular tourist communities include Banner Elk (1 1/2 miles), Boone (13 miles) and Blowing Rock (13 miles). Well-known landmarks include Appalachian State University, Appalachian Trail, Blue Ridge Scenic Parkway, Grandfather Mountain and Tweetsie Railroad.

Besides excellent skiing in the winter, the area abounds in outdoor recreational activities throughout the

remainder of the year. Examples include hiking and biking trails, whitewater rafting, rock climbing, trout fishing, boating and horseback riding.

The nearby communities of Banner Elk, Boone and Blowing Rock provide live theater, outdoor concerts, and a wide variety of shopping and restaurants. A large outdoor water park between Boone and Blowing Rock is in the financing stage.

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High Country Area Map

ADDITIONAL MATERIAL Contained on the following pages are materials further describing The Reserve III, Sugar

Mountain Resort, and the surrounding environs. Included are:

1. A regional map locating Sugar Mountain Resort, and outlining the High Country in red.2. An aerial photograph, showing The Reserve III in solid outlining and the contiguous 12-

acre parcel in dotted outlining. The slopes are adjacent to the property, and SugarMountain Village and Golf Course are to the upper-right.

3. A plat map of the 21 lots in The Reserve III, to contain 84 units.4. A Trail System map of Sugar Mountain Resort. The Reserve III is on the upper left-hand side

of the slopes, as shown with the directional arrow.5. 4 pages of articles describing Sugar Mountain Resort and its recent improvements.6. 6 pages of articles describing the High Country.

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Lifestyle

Local flavor and neighborly attitudes are two things that make the High

Country such a tight knit community of small mountain towns. Historic

West Jefferson is quite the bustling town tucked within the Blue Ridge

Mountains offering a great selection of art galleries and even a cheese

factory. Boone boasts an eclectic college-town atmosphere with a

picturesque mountain surround that leaves you yearning for the

outdoors, no matter how wet or cold it may get. Just up the mountain a

ways is Blowing Rock, where you will find a pet friendly main street

serving up boutique shops and hosting events in support of local arts

and culture. Even as you venture out of the bustling parts of town, the

welcoming vibe follows you. We can't forget one of the ski capitols of

the South, Banner Elk, which, like most High Country towns, carries

you through four distinct seasons for a wonderful year-round climate.

Whether it is a rocking chair on your deck or a cozy spot by the fire,

the High Country offers a place for you to call home year round.

Recreation & Attractions

One thing is for sure, there is no shortage of outdoor fun and recreation in the High Country. Not only can you

slide down a mountain of snow on a tube in the winter, but come summer, you can take that tube over to the

river and float on down with a group of friends -you can even do some white water rafting at High Mountain

Expeditions if you dare. If you are more of a recreation on wheels type of person, Rocky Knob Parkoffers six to

eight miles of mountain bike trails for all skill levels and even a natural playground for kids. There is access to

four state parks, including Grandfather Mountain, home of the mile high swinging bridge. Also, you might want to

invest in good winter gear for hitting the slopes of Sugar Mountain Ski Resort.

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Contact

Inquiries relating to The Reserve III should be addressed to:

Gregory Hardee

Charlotte Commercail PropertiesC: 704.491.7563 gbhardee@charlottecommercial.com