The Blakely Investor Summary - ARC Multifamily

“Good process drives good results”

Executive Summary

542 Glen Gee Road, Pendergrass, GA 30567

$89,130,000

Purchase Price

$212,214

Price Per Unit

$840,000

Capital Improvement Budget

$92,488,514

Total Capitalization

Lease-Up Strategy Roadmap

PRE-ACQUISITION

During the lease-up for each phase, ARC Multifamily dictates new lease rents.

ACQUISITION

ARC Multifamily acquires the community in 4 different phases, each with CO and lease-up milestones achieved.

INCREASING VALUE

With each unit already top-of-market and designer levels, ARC will place on the community capture additional premiums.

PHASE ONE

PHASE TWO

PHASE THREE

VALUE

already offering designer finish place a large focus amenities to premiums.

REPOSITION

After circulating through the first-generation leases and reaching stabilization, we have the ability to leverage our occupancy and demand to capture higher rents and can command a higher overall asset value.

REFINANCE

As the rents and occupancy increase, the overall market value of the asset increases as well. This creates more options for financing and capital structuring, allowing us to evaluate new solutions based on market conditions.

1.

2. ACQUISITION

3. INCREASEING VALUE

4. REPOSITION

5. REFINANCE

Projected 5 Year

Cash-on-Cash Expectations

Lease-Up Strategy Business Plan

Development & Construction

The Blakely (“Property”) is a 420-unit, new-development garden-style apartment community. The Property began construction in 2021 and is made up of 1, 2 and 3-bedroom apartment homes and is located in Pendergrass, GA. The Blakely represents an excellent opportunity to acquire a new development community at an active basis. This business model was strategically set to have the community delivered in 4 different phases – Phase 1 (168 units) and Phase 2 – 4 (84 units each). Rather than awaiting the completion of the entire project to ensure a great customer experience and dedication to finished product, the community was staggered to bring on a new phase each quarter. Each deliverable – from units, common areas, buildings and amenities – enter a quality control program to ensure longevity and consistency. The quality control inspector is a representative of ARC Multifamily and is engaged prior to acquisition. Through this process, we are able to ensure a great experience, increasing retention post-stabilization, minimize labor and replacement costs and deliver a product under our operations that continue to build a brand and reputation..

Leasing + Operations

With the leasing center, amenities and units under development, the ARC management team is already on the site daily meeting with potential new neighbors for the community. Maintaining a bank of leads, infusing extra marketing costs to boost an online presence and marketing to the abundant businesses nearby, the team was able to increase the rents. Forward-thinking, we are deploying a revenue management software that will drive rents as well as manage the lease expirations. Lease expiration is often a key-component that is missed on a lease-up end and operators find themselves in a bind when their exposure becomes too high on year two in critical months. In terms of driving interest for the community, the management team is capitalizing on the inflation of Atlanta’s rental market and utilizing all avenues to drive the demand north towards The Blakely. Understanding that up-front concessions are utilized in virtually all lease-ups, our goal is to keep a heavy pulse on the activity and only deploying this tool when necessary to continually push effective rents to as high as the market allows, with no money left on the table.

Creating an Experience

Running parallel to the living options offered at The Blakely, the resident experience will be nothing short of extraordinary. It has been proven that service alone drives rents; and coupling this with high-end product finishes and amenities, The Blakely is projected to yield higher returns. Residents will be able to access most amenities 24/7, enjoy fitness classes, meet neighbors through elevated resident events and contact a member of our management team and feel heard. Through this increased retention, the online reputation of the community will be optimized, and the rents will continue to grow at a much more rapid pace.

Area Overview

Jackson County Economic Highlights

• Approximately 60 miles northeast of Atlanta

• Population of 76K (+26% growth from 2010 Census)

• Median Household Income is $63K, 12% greater than GA MHI

• Unemployment Rate of 2.2%

• Major Employers:

• Amazon Warehouse

• Home Goods Warehouse

• Bed Bath & Beyond Warehouse

• Kubota

• TD Automovive

• Rated #25 out of 151 Counties as “Best County to Buy a House”

• Rated #34 out of 151 Counties as “Best County for Families in GA”

• Future job growth is predicted to be 68.3% over the next 10 years.

Pendergrass & Market Highlights

(3 mile radius)

• Population of approximately 6,000.

• 20% renter occupied housing units.

• Median Housing Value - $294,400.

• Average Household Income - $90,400.

Property Overview

Property Overview: Key Details

PROPERTY DETAILS

Year Built 2022/2023

Number of Units 420

Total Square Feet 444,810

Average Unit Size 1,059 sq ft

Land Size 40.3 acres

Address 542 Glenn Gee Road

No. of Buildings 10 residential buildings + clubhouse

Roof Pitched roof with architectural asphalt shingles

W/D Connections Equipped with stackable washer/dryer in unit

Foundation Reinforced concrete slab on grade

Exterior Materials Wood-frame buildings, hardy plank, batten and board siding, brick and stone

Breezeways Undercover in breezeways with steel stringers and metal railings

WIndows High efficiency vinyl thermal pane insulated glass windows

Plumbing Pex/CPVC water supply, PVC waste lines

HVAC Electric, 14 SEER split system

Electric/Gas Total Electric

Life Safety Wet Sprinkler Systems - NFPA 13R System

Phase 1 | Phase 2: Acquired Q42022

Phase 3 – Estimated Early Q22023

Phase 4 – Estimated Late Q22023

Property Overview: Community Amenities

COMMUNITY AMENITIES

Two Resort-Style Swimming Pools with Sundeck

Outdoor Kitchens

Bark Park

Paw Spa (Doggy Spa)

Cornhole

Pavillions

Playground

Fire Pits

Outdoor Lounging

Outdoor TV’s

INTERIOR FEATURES

Walk-In Closets

Large Balconies & Patios

Nest Thermostats

Granite Countertops

Matte Black Accents

Shaker-Style Cabinetry

Washer/Dryer Included

Ceiling Fans

Stainless-Steel Appliances

Custom Design Finishes

Wood-Style Flooring

Tile Backsplash

Property Overview: Floor Plans and Unit Mix

2 BEDROOM, 2 BATH | 1,130 SF

2 BEDROOM, 2 BATH | 1,198 SF

3 BEDROOM, 2 BATH | 1,444 SF

1 BEDROOM, 1 BATH | 855 SF

Financial Analysis

Pro Forma (Unlevered) Cash Flow Projections

Projections

Pro Forma Financial Analysis Sources & Uses

PREFERRED EQUITY GROUP DETAILS

Current Pay 9%

Notes

Recieves priority payment but, in exchange, has limited upside potential

LOAN DETAILS

Type Bridge Loan

Term 3 years IO + two, 1-year IO extensions

Interest Rate 435 bps + 1mo LIBOR (50bp floor); LIBOR cap

Exit Fee

6.5% of the loan amount (waived if lender refinances the loan or provides financing to next buyer)

Key Real Estate Terms & Definitions

Capitalization Rate (cap Rate) - A rate of return on a real estate investment property based on the expected income that the property will generate. Capitalization rate is used to estimate the investor’s potential return on his or her investment. This is done by dividing the income the property will generate (after fixed costs and variable costs) by the total value of the property.

• When acquiring income property, the higher the capitalization rate (“Cap Rate”), the better.

• When selling income property, the lower the Cap Rate the better.

• A higher cap rate implies a lower price, a lower cap rate implies a higher price.

Cash Flow - Cash generated from the operations of a company, generally defined as revenues less all operating expenses.

Cash-on-Cash - A rate of return often used in real estate transactions. The calculation determines the cash income on the cash invested.

• Calculated: Annual Dollar Income Return/ Total Equity Invested= Cash-on-Cash

Investor Average Annual Return, excluding disposition - The average return per year during the investment hold. This calculation does not include the return of invested capital.

Investor Average Annual Return, including disposition - The average return per year including profits from disposition.

Internal Rate of Return (IRR)- The rate of return that would make the present value of future cash flows plus the final market value of an investment opportunity equal the current market price of the investment or opportunity. The higher a project’s internal rate of return, the more desirable it is to undertake the project.

Return on Equity (ROE)- The amount of net income returned as a percentage of shareholders equity.

• ROE is expressed as a percentage and calculated as: Return on Equity= Net Income/ Shareholder’s Equity

Management Team

Partner Highlights

• Goldman Sachs and Credit Suisse Wall Street Experience

• Decades of Real Estate Investing and Operating Experience

• Deep Construction and Project Management Expertise

• Capital Management and Syndication Experience

• Extensive Deal Structuring Experience

• 4x Inc. 500 Track Record

Investment Team

Robert Pereira – Managing Partner

Robert has overseen the acquisition and development of over 250 residential and multifamily projects since 2008. He has raised over $30,000,000 of private capital from his network and managed over $120,000,000 of construction loans for these projects. Since founding ARC, Robert has acquired 550 multifamily units in Georgia. He earned an undergraduate degree in Engineering (2002) at the University of Waterloo, and an MBA in Real Estate & Finance (2008) from the Paul Merage School of Business at the University of California, Irvine.

Sharran Srivatsaa – Partner

Sharran is a serial entrepreneur, sought after keynote speaker, and a respected thought-leadership resource for publications such as the Wall Street Journal, SUCCESS magazine, Huffington Post and Forbes. Most recently, Sharran led Teles Properties’ unprecedented 10x growth over 5 years and a 4-year consecutive streak on the Inc. 500 fastest growing companies list resulting in its acquisition by national real estate powerhouse Douglas Elliman. Prior to Teles, Sharran worked at both Goldman Sachs and Credit Suisse, where he collaborated with management teams of fast-growing businesses around the country on investment advisory and corporate strategy. Sharran is a Principal at Srilo Ventures, a multi-factor private investment fund that focuses investing in and advising technology companies and operating businesses in the consumer space. Having successfully completed many acquisitions, joint-ventures, management buyouts, mergers, and capital raises.

Property Management

Meridian Management Group (MMG) is the current operator of Hawks Nest at the Preserve. MMG will continue to operate the Property on a day-to-day basis and implement our business plan.

MMG was founded over 15 years ago to provide a more complete, personalized management solution to owners and investors in the Atlanta area. Over the years, we have become a leading provider of full-service, turn-key property management services – a company that clients trust with their most valuable investments.

MMG manages a variety of investment types, including multi-family residences, single- family homes, commercial and retail spaces. MMGs Managing Partners have over 20 years of experience in Commercial Real Estate covering the Southeast and Texas, totaling over 11,000 multi-family units, 700,000 square feet of commercial space and over 700 single-family homes.

This material does not constitute an offer to sell or a solicitation of an offer to purchase any securities in any jurisdiction. Any such offer shall be made only pursuant to a private placement memorandum which should be reviewed in its entirety, including the risk factors set forth therein, as the information in this summary is not complete. No investment in the Property will be accepted until a subscription agreement and other documentation in form acceptable to the Manager is completed. This information relates to scenarios of possible real estate opportunities for qualified accredited investors who have established an existing substantive relationship with us or our affiliates. Natural persons may qualify as accredited investors by virtue of such pre-existing relationships and by proof of business experience, income and net worth.

Information concerning the property described herein has been obtained from sources deemed reliable. However it is subject to errors and omissions. Any information contained herein may include forward-looking statements, estimates, and projections with respect to anticipated future performance. Such forward-looking statements, estimates, and projections reflect various assumptions of management that may or may not prove to be correct and may involve various risks and uncertainties. No representation is made, and no assurance can be given, that the projected results can or will be attained. Actual results may vary, perhaps materially, from the projections. This information is made available as of the date set forth below and the Manager has no obligation to update this summary.

Projections are subject to change due to loan terms, new discovery, occupancy, additional capital investment, owner decisions, and various factors involved in property management, and there is no guarantee of the projected financials, and further there is no guarantee that the property will close on a specific date. Potential investors are advised to do their own due diligence and seek appropriate professional advice if needed.