SPRING AIRE APARTMENTS
EXCEPTIONAL VALUE-ADD INVESTMENT OPPORTUNITY
HOOVER, ALABAMA | BIRMINGHAM MSA
70 UNITS | BUILT IN 1973
HISTORICAL CASH FLOW — THREE YEAR HOLD — BASE CASE
FINANCIAL FOOTNOTES
1 Growth rates in based on costar rent forecast for the Hoover submarket
2 Discounted rent for onsite leasing rep
3 Implement water charge of 90% occupancy
4 Includes pet fees, application fees, late fees, MTM, and other fees. Currently management is not charging for many of these items
5 Based on market level
6 Includes pest control, waste removal, AL power park lot lighting
7 Based on quotes received
8 Per mgt recommendation
9 Elise AI + other costs
10 1/4 month rent (avg 1,000) at 65 units / year
11 Per mgt recommendation 12 $650 per turn at 50% turnover rate 13 Y1 based on historical usage 14 Y1 based on historical usage 15 Y1 based on historical usage
16 Based on quote from insurance provider
17 The property is currently appraised for 5.78M; we will appeal taxes in 2025 based on the purchase price of 4.65M and see reduction in the tax amount
18 Hoover rental tax calculated at 1.0% of rental income
PROPERTY CASH FLOW PROJECTIONS —
Spring Aire Apartments
THREE YEAR HOLD — BASE
Cash Flow Projections
EXPENSES
Repair & Maintenance ($ 128,367)($ 45,500)($ 46,865)($ 48,271) Contract Services ($ 16,036)($ 23,400)($ 24,102)($ 24,825)
Turnover / Make-Ready ($ 8,679)($ 11,375)($
NET OPERATING INCOME
PROPERTY CASH FLOW PROJECTIONS (CONT.) — THREE YEAR HOLD — BASE
Net
Spring Aire Apartments
(bef.
Spring Aire Apartments
Property Cash Flow Projections
STRICTLY CONFIDENTIAL
Property Cash Flow Projections
OPERATING PERFORMANCE METRICS
MONTHLY RENT
718,461$ 854,149$ 890,878 Expense Reimbursements
Residential Income
$ 35,020$ 36,071$ 37,153
1,092$ 23,030$ 34,000$ 35,020
Income $ 1,092$ 58,050$ 70,071$ 72,173
EFFECTIVE GROSS REVENUE $ 701,904$ 776,511$ 924,220$ 963,051
OPERATING EXPENSES
Repair & Maintenance ($ 128,367)($ 45,500)($ 46,865)($ 48,271)
Contract Services
($ 16,036)($ 23,400)($ 24,102)($ 24,825)
Turnover / Make-Ready ($ 8,679)($ 11,375)($ 22,750)($ 23,433)
Landscaping / Grounds ($ 10,530)($ 12,000)($ 12,360)($ 12,731)
Personnel ($ 15,134)($ 41,250)($ 42,488)($ 43,762)
Marketing / Advertising ($ 6,463)($ 10,000)($ 10,300)($ 10,609)
Administrative ($ 10,693)($ 10,820)($ 11,145)($ 11,479)
Utilities ($ 53,194)($ 84,100)($ 86,623)($ 89,222)
Insurance ($ 60,908)($ 65,000)($ 66,950)($ 68,959)
Real Estate Taxes ($ 91,878)($ 75,075)($ 78,468)($ 80,933) Property Management Fee ($ 34,506)($ 38,826)($ 46,211)($ 48,153)
TOTAL OPERATING EXPENSES ($ 436,388)($ 417,345)($ 448,261)($ 462,375)
NET OPERATING INCOME
Net Operating Income (bef. Reserves) $ 265,516$ 359,166$ 475,959$ 500,675
Replacement Reserves ($ 17,500)($ 17,500)($ 18,025)($ 18,566) NET OPERATING INCOME (AFT. RESERVES) $ 248,016$ 341,666$ 457,934$ 482,109
INVESTMENT CASH FLOW — THREE YEAR HOLD — BASE
INVESTMENT
Spring Aire Apartments Investment Cash
CASH FLOW (CONT.) — THREE YEAR HOLD — BASE
CASH FLOW DURING HOLD PERIOD
HISTORICAL CASH FLOW — TWO YEAR HOLD
1 Growth rates in based on costar rent forecast for the Hoover submarket 2 Discounted rent for onsite leasing rep 3 Implement water charge of 90% occupancy
4 Includes pet fees, application fees, late fees, MTM, and other fees. Currently management is not charging for many of these items
5 Based on market level
6 Includes pest control, waste removal, AL power park lot lighting
7 Based on quotes received
8 Per mgt recommendation
9 Elise AI + other costs
10 1/4 month rent (avg 1,000) at 65 units / year 11 Per mgt recommendation 12 $650 per turn at 50% turnover rate 13 Y1 based on historical usage 14 Y1 based on historical usage 15 Y1 based on historical usage 16 Based on quote from insurance provider
17 The property is currently appraised for 5.78M; we will appeal taxes in 2025 based on the purchase price of 4.65M and see reduction in the tax amount
18 Hoover rental tax calculated at 1.0% of rental income
PROPERTY CASH FLOW PROJECTIONS — TWO
Spring Aire Apartments Property Cash Flow
YEAR HOLD
10,693)($ 10,820)($ 11,145)
53,194)($ 84,100)($ 86,623)
60,908)($ 65,000)($ 66,950)
PROPERTY CASH FLOW PROJECTIONS (CONT.) — TWO YEAR HOLD
Spring Aire Apartments
STRICTLY CONFIDENTIAL
Spring Aire Apartments Property Cash
Repair & Maintenance ($ 128,367)($ 45,500)($ 46,865) Contract Services ($ 16,036)($ 23,400)($ 24,102) Turnover / Make-Ready ($ 8,679)($ 11,375)($ 22,750) Landscaping / Grounds ($ 10,530)($ 12,000)($ 12,360)
($ 15,134)($ 41,250)($ 42,488)
/ Advertising ($ 6,463)($ 10,000)($ 10,300) Administrative ($ 10,693)($ 10,820)($ 11,145) Utilities ($ 53,194)($ 84,100)($ 86,623) Insurance ($ 60,908)($ 65,000)($ 66,950) Real Estate Taxes ($ 91,878)($ 75,075)($ 78,468) Property Management Fee ($ 34,506)($ 38,826)($ 46,211)
TOTAL OPERATING EXPENSES ($ 436,388)($ 417,345)($ 448,261)
NET OPERATING INCOME
Net Operating Income (bef. Reserves) $ 265,516$ 359,166$ 475,959
Replacement Reserves ($ 17,500)($ 17,500)($ 18,025)
NET OPERATING INCOME (AFT. RESERVES) $ 248,016$ 341,666$ 457,934
INVESTMENT CASH FLOW — TWO YEAR HOLD
CASH FLOW DURING HOLD PERIOD
Expenses
Reserves
PROCEEDS
FINANCING CASH FLOW
Repayments
RESERVES
RESERVES
INVESTMENT CASH FLOW (CONT.) —
Reserves Funded And Replenished ($ 167,890) - - ($ 167,890)
Reserves
TWO YEAR HOLD
ANNUAL CASH FLOW DURING HOLD PERIOD
PARTNERSHIP CASH FLOW
ACQUISITION COST
Purchase Price ($ 4,650,000) ($ 4,650,000)
Partnership Costs and Fees ($ 93,000)($ 9,476)($ 79,731)($ 182,207)
Closing Costs (excl. Financing) ($ 72,205) ($ 72,205)
Promote
Upfront Funding of Capital Exp.
ACQUISITION COST ($ 4,722,205)
OPERATING CASH FLOW
4,722,205)
LEVERAGED
Effective Gross Revenue $ 776,511$ 924,220$ 1,700,731
Operating Expenses ($ 417,345)($ 448,261)($ 865,606)
Capital Reserves ($ 17,500)($ 18,025)($ 35,525)
NET OPERATING INCOME $ 341,666$ 457,934$ 799,599
Capital Expenditures ($ 1,127,000)($ 283,000)($ 1,410,000)
OPERATING CASH FLOW ($ 785,334)$ 174,934($ 610,401)
DISPOSITION PROCEEDS
Gross Sales Proceeds - $ 7,205,563$ 7,205,563
Selling Costs - ($ 180,139)($ 180,139)
NET SALES PROCEEDS - $ 7,025,424$ 7,025,424
UNLEVERAGED CASH FLOW 15.36%($ 4,722,205)($ 785,334)$ 7,200,358$ 1,692,819
FINANCING CASH FLOW
Loan Drawdowns $ 3,027,000$ 1,127,000$ 283,000$ 4,437,000
Loan Closing Costs and Fees ($ 32,185) - - ($ 32,185)
Debt Service - ($ 245,404)($ 299,860)($ 545,264)
Loan Repayments
($ 4,437,000)($ 4,437,000) CASH FLOW FROM LOAN PROCEEDS $ 2,994,815$ 881,596($ 4,453,860)($ 577,449)
RESERVES
Reserves
HISTORICAL CASH FLOW — FOUR YEAR HOLD
1 Growth rates in based on costar rent forecast for the Hoover submarket 2 Discounted rent for onsite leasing rep 3 Implement water charge of 90% occupancy
4 Includes pet fees, application fees, late fees, MTM, and other fees. Currently management is not charging for many of these items
5 Based on market level
6 Includes pest control, waste removal, AL power park lot lighting
7 Based on quotes received
8 Per mgt recommendation
9 Elise AI + other costs
10 1/4 month rent (avg 1,000) at 65 units / year 11 Per mgt recommendation 12 $650 per turn at 50% turnover rate 13 Y1 based on historical usage 14 Y1 based on historical usage 15 Y1 based on historical usage
16 Based on quote from insurance provider
17 The property is currently appraised for 5.78M; we will appeal taxes in 2025 based on the purchase price of 4.65M and see reduction in the tax amount
18 Hoover rental tax calculated at 1.0% of rental income
PROPERTY CASH FLOW PROJECTIONS — FOUR
Spring Aire Apartments
Property Cash Flow Projections
YEAR HOLD
15,134)($ 41,250)($ 42,488)($ 43,762)($ 45,075)
($ 10,693)($ 10,820)($ 11,145)($ 11,479)($ 11,823)
PROPERTY CASH FLOW PROJECTIONS (CONT.) — FOUR YEAR HOLD
Spring Aire Apartments
Cash Flow Projections
STRICTLY CONFIDENTIAL
Aire Apartments
Repair & Maintenance ($ 128,367)($ 45,500)($ 46,865)($ 48,271)($ 49,719)
Contract Services ($ 16,036)($ 23,400)($ 24,102)($ 24,825)($ 25,570)
Turnover / Make-Ready ($ 8,679)($ 11,375)($ 22,750)($ 23,433)($ 24,135)
Landscaping / Grounds ($ 10,530)($ 12,000)($ 12,360)($ 12,731)($ 13,113)
Personnel ($ 15,134)($ 41,250)($ 42,488)($ 43,762)($ 45,075)
Marketing / Advertising ($ 6,463)($ 10,000)($ 10,300)($ 10,609)($ 10,927)
Administrative ($ 10,693)($ 10,820)($ 11,145)($ 11,479)($ 11,823)
Utilities ($ 53,194)($ 84,100)($ 86,623)($ 89,222)($ 91,898)
Insurance ($ 60,908)($ 65,000)($ 66,950)($ 68,959)($ 71,027)
Real Estate Taxes ($ 91,878)($ 75,075)($ 78,468)($ 80,933)($ 83,361)
Property Management Fee ($ 34,506)($ 38,826)($ 46,211)($ 48,153)($ 49,731)
OPERATING
NET OPERATING INCOME
Net Operating Income (bef. Reserves) $ 265,516$ 359,166$ 475,959$ 500,675$ 518,234 Replacement Reserves
CAPITAL EXPENDITURES Unit Renovations
INVESTMENT CASH FLOW — FOUR YEAR HOLD
INVESTMENT CASH FLOW (CONT.) — FOUR YEAR HOLD
LEVERAGED METRICS
UNIT MIX SUMMARY
PROPOSED RENOVATIONS
• New granite kitchen / bath counters
• Undermount sinks
• Cabinets - new faces and hardware
• New plumbing fixtures in kichens and bathrooms
• Modern LED lighting throughout units
• New door hardware
• Replace smoke detectors
• Framed bathroom mirrors
• Stainless appliance package: fridge, oven, vent hood, dishwasher
• Paint Unit Interior - at turnover
• Vinyl plank floors install and carpet replacementat turnover
DEAL STRUCTURE AND RETURNS
NRG Equity Contribution: NRG will invest 10% of the total required equity
LP Investment: will invest 90% of the total required Equity
Financing: Commerce One Bank will provide loan in amount of $4,436,112 for the transaction. NRG principals will arrange and provide guarantees for the loan.
Preferred Return: An 8% accrued preferred return will be paid on all invested equity
Profit Distribution:
Preferred Return: 8.00%
Above 8.0% to 12% Split: 80% Investor/20% Sponsor
Above 12% Split: 70% Investor/30% Sponsor
Net Returns: Projected returns are net cash returns, calculated after fees and promote, but pre-tax
Tax Considerations: Investors are advised to consult with their tax advisor regarding tax implications
SPONSOR FEES:
Acquisition Fee: 2.00% — Charged for sourcing opportunities, arranging financing, facilitating transactions, and developing the investment and operational strategy
Asset Management Fee: 50bps — Covers execution of the business plan, overseeing daily property operations, managing the property team, and analyzing KPIs to maximize performance
Capital Event Fee (Sale/Refinance): 1.00% — Assessed upon the sale or refinance of the property, calculated as 1% of the sale price or outstanding loan balance in the case of a refinance
