park station, la mesa hotel, senior living and residential/retail

PARK STATION LA MESA, CALIFORNIA

Predevelopment Investment Memorandum: Oct. 2015

DISCLOSURE:

The following Information has been assembled for the purpose of informing and providing assistance to a prospective Investor of the Park Station La Mesa real estate development project. The information contained in herein is believed to be reliable, but no representation or warranty, express or implied, is being made by the Owner/Developer or any of their representatives or affiliates, as to the accuracy or completeness of the information contained herein. This information is subject to omissions, corrections of errors, change of terms, prior sale or withdrawal from the market without notice. The prospective Investor is fully and solely responsible for any due diligence or investigation that needs to be done in order to make a fully informed decision to invest in this project. Prospective Investors are expected to establish their own opinion as to the feasibility of this development opportunity and the risks associated with it. The Owner/Developer reserves the right, at its sole discretion, to reject any and all offers to invest in the Project and/or to terminate discussions with any party at any time with or without notice. Owner/Developer shall have no legal commitment or obligation to any entity reviewing the enclosed materials, performing additional investigation and/or making an offer to purchase the Property unless and until a binding written agreement for the joint venture in the Property has been fully executed, delivered, and approved by Owner/Developer, and any conditions to Owner/Developer’s obligations there under have been satisfied or waived.

Park Station, La Mesa

Dear Friend: Urban Housing Partners Inc. and the Kitzman Family have come together to present the opportunity to invest with us as an “early investor” in the newly revised Park Station project in La Mesa, CA. The 4.6 site location is in the very heart of the City of La Mesa at the intersection of Baltimore Dr. and University Ave. This location is arguably the most desirable urban, mixed-use site in the entire zip code! The newest design will be designed “by right”. In other words, we will be designing within what the existing mixed-use zone already allows. There will be no environmental review process. Your investment capital will be used to advance the project through the entire design process, which will take an estimated 12-16 months. At that point, construction will begin which will take 16-18 months. Therefore, the total estimated time from today to project completion is: 28-34 months. The investment strategy of Urban Housing Partners and the Kitzman Family is to hold the newly developed property for the long run and hand it down to future generations. Therefore, we are seeking investors that have the same philosophical investment strategy. Your investment capital will be used to pay for pre-development related costs such as: architects, engineers, third party consultants, market studies, marketing and public relations. We will be the Development Manager keeping you the investor apprised on the progress of the project on a monthly basis. All accounting and financial reporting will be provided on a monthly basis as well. Our total predevelopment funding request is $3.0M. We hope that you will consider this investment with us so we can advance the project and built another great mixed-use community in San Diego County! In Highest Regards, Urban Housing Partners, Inc. Sherm, Mike, Jake Lenette, and Stephan.



REGIONAL MAP:


PROJECT LOCATION:


EXECUTIVE SUMMARY:

RESIDENTIAL/RETAIL SENIOR HOUSING HOTEL

SITE SUMMARY:

Land Area (SF) 108,900 50,000 50,000

Maximum SF Allowed No Max – Dependent on density (40 du/acre) No Max No Max

Zone / Use Type Mixed-Use Mixed-Use Mixed-Use

Height Limit 46’ 46’ 46’

PROJECT SUMMARY:

# Units (Rooms) 180 120 150

Retail Space (SF) 29,084 - 600

Parking Spaces 476 - Subterranean 40 - Subterranean 188 - Subterranean

Project Size (SF) 214,084 90,000 84,023

Avg. Unit Size (SF) 874 514 350

Avg. Rent /Unit (ADR) $2,603 $6,917 $170 (ADR)

Stabilized Occupancy 95% 90% 72%

FINANCIAL SUMMARY:

Total Project Cost $67,300,000 $42,000,000 $37,600,000

Value Yr. 2 Stabilized $86,600,000 $47,800,000 $43,900,000

Project Profit $34,300,000 $29,000,000 $23,200,000

INVESTMENT STRUCTURE:


DEVELOPMENT TEAM:

Developer: Urban Housing Partners, Inc. • Land Owner: Kitzman Family • Development Manager: Urban Housing Partners, Inc. • Length of Partnership: 10 Years

Designer/Builder: • Project Architect: AVRP / Skyport; or Competitive Bidding Process • Project Civil Engineer: Fuscoe Engineering; or Competitive Bidding Process • Structural Engineer: Patterson; or Competitive Bidding Process • Soil Engineering: Leighton; or Competitive Bidding Process • General Contractor: TB Pennick; or Competitive Bidding Process

Marketing/Public Communications: • Marketing Management: Hewitt Marketing


Combined Experience: 50+ Years of urban development Professional Team: Sherm Harmer, Michael Dunham, Jake Schwartz, Lenette Hewitt Past Projects: VILLAGE WALK (Olson Co.) Little Italy 72 Unit Mid-Rise CITY WALK (Olson Co.) Downtown 109 Unit Mid-Rise UNION SQUARE East Village 263 Unit Mid-Rise PARK BOULEVARD EAST/WEST East Village 221 Units Mid-Rise NORTH PARK CONDOMINIUMS North Park 224 Units Mid-Rise SANTALUZ Carmel Valley 120 Affordable for Sale BRESSI RANCH Carlsbad 100 Affordable for Sale LAFAYETTE RESIDENCES North Park 255 Unit Mid-Rise SAPPHIRE TOWER Downtown 96 Unit High Rise SMART CORNER East Village 299 Unit High-Rise Current Projects: PALATINE (McMillin) Little Italy 99 Unit Mid-Rise Rental

URBAN HOUSING PARTNERS, Inc.:


MARKET SUMMARY:

La Mesa: • Population: 58,150 • Housing Units: 25,614 • Located directly east of San Diego with El Cajon bordering the west • 12 miles to the Pacific Ocean • 9 miles to Downtown San Diego • 55% Rental Housing • Apartment Vacancy: 6-7% • Median Household Income: $53,000 • 4 Competing Projects Neighborhood: • La Mesa Blvd. – Downtown La Mesa’s “Main Street” • La Mesa Springs Shopping Center • City Hall, Fire Station, Police Station, Library, Post Office • Traffic on: I-8: 188,000/day; Baltimore Dr.: 24,000/day; Spring St.: 23,000/day


COMPARABLES MAP:


APARTMENT COMPARABLE:

1) Alterra at Grossmont Trolley • # Units: 297 • % Occupied: 99% • Unit Sizes: 616-1,275 s.f. • Rents: $1,691-3,279 • Ave. Unit Size: 914 s.f. • Proximity: 1.6 miles • Design: Type 5; 4 over 2 partially subterranean parking

• Amenities: Pool, Spa, Fitness, Clubhouse, A/C, W/D in Unit

• Comments: Built in 2010 Class A Apartments 79 Du/Acre Located directly adjacent to the Grossmont Transit Center


2) Pravada at Grossmont Trolley • # Units: 230 • % Occupied: 99% • Unit Sizes: 646-1,265 s.f. • Rents: $1,655-3,315 • Ave. Unit Size: 926 s.f. • Proximity: 1.6 miles • Design: Type 5; 4 over 2 partially subterranean parking

• Amenities: Pool, Spa, Fitness, Clubhouse, Theatre Room, A/C, W/D in Unit • Comments: Built in 2009 Class A Apartments 75 Du/Acre Located directly adjacent to the Grossmont Transit Center



3) The Quarry Apartments • # Units: 60 • % Occupied: 98% • Unit Sizes: 629-1,276 s.f. • Rents: $1,411-2,494 • Ave. Unit Size: 879 s.f. • Proximity: 1.0 miles • Design: Type 5; 3 over tuck under and surface parking • Amenities: Courtyard, BBQ Grill Area, A/C, W/D in unit

• Comments: Built in 2015 Class B Apartments 38 Du/Acre Located close to the Spring Street Trolley Station



4) Seta Apartments • # Units: 198 • % Occupied: 15% - Currently U.C. • Unit Sizes: 756-1,369 s.f. • Rents: $1,821-2,795 • Ave. Unit Size: 992 s.f. • Proximity: 1.2 miles • Design: Type 5; 3 story garden style w/ covered surface parking

• Amenities: Pool, Spa, Cabanas, Fitness, Grill, A/C, W/D in unit • Comments: Built in 2015 (Roughly 25% complete as of 10/28/15) Class A Apartments 22 Du/Acre In the process of leasing up; some of the site is still under construction



PROJECT BUDGET SUMMARY:


RESIDENTIAL/ RETAIL

SENIOR HOUSING HOTEL TOTAL

LAND COST $8,000,000 11.9% $7,000,000 16.7% $5,000,000 13.3% $20,000,000

SOFT COST $13,000,000 19.3% $13,000,000 31.0% $12,800,000 34.0% $38,800,000

HARD COST $46,300,000 68.8% $22,000,000 52.3% $19,800,000 52.7% $88,100,000

TOTAL COST $67,300,000 $42,000,000 $37,600,000 $146,900,000

TOTAL COST (/unit) $373,900 $350,000 $250,700 -

STABALIZED VALUE (Year 2) $86,600,000 $47,800,000 $43,900,000 $178,300,000

STABALIZED VALUE (/unit) $481,100 $398,300 $292,700 -

PROJECT PROFIT $34,300,000 $29,000,000 $23,200,000 $86,500,000

PROJECT PROFIT (/unit) $190,500 $241,600 $154,700 -

PREDEVELOPMENT / DESIGN COST: This budget amount is required prior to start of construction.

PREDEVELOPMENT / DESIGN COST:


Land Contract / Legal $ 110,000

Indirect / Design Costs $ 2,467,500

Marketing / Public Relations $ 53,500

Market Reports / Economist $ 40,000

Financing Fees / Deposits $ 175,000

Fees & Permits Deposits $ 105,000

General & Administrative $ 267,500

Total Predevelopment / Design Costs $ 3,218,500

PROJECT SCHEDULE:

PREDEVELOPMENT / DESIGN: 17 Months (1.4 years) CONSTRUCTION: 18 Months (1.5 years) FULLY RENTED: 12 Months (1.0 years) TOTAL SCHEDULE: 47 Months (3.9 Years)


PROJECTED FINANCIAL PERFORMANCE:

Residential/ Retail Senior Housing Hotel

IRR% (Project Level) 19.71% 25.95% 20.81 %

Investor IRR% 17.91% - 19.45%

Developer IRR% 24.33% 28.00% 25.59%

Land Owner IRR% 19.92% 23.70% 20.86%

Multiple (Project Level) 2.72 2.97 2.35

Return on Cost (ROC) 6.05% 8.76% 8.97%

Profit (Project Level) $34,300,000 $29,000,000 $23,200,000


park station, la mesa hotel, senior living and residential/retail

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