Albemarle Plantation

ENHANCED MARKETING PROGRAM

2019

MEETING AGENDA

• Overview of the Enhanced Marketing Program

• Review of the Marketing Plan

• Questions

THE ENHANCED MARKETING PROGRAM

WHAT HAS HAPPENED SINCE OCT 2018

• Based on the feedback the Board received from the town hall meetings, the marketing plan as envisioned was not adopted

• Inland Capital Holdings acquired the partnership interests in APH II and Perquimans Development

• The Board initiated discussions with Bobby Masters, the new developer’s representative to Albemarle Plantation and the Board of Directors

• The proposed marketing budget was revised and the concept of an Enhanced Marketing Program was restructured

THE ENHANCED MARKETING PROGRAM

The program is made up of three components

• A financial contribution from Inland Capital (through APH II) to APPOA for maintenance and improvements

• A loan to finance an expanded marketing program

• A voluntary Lot Surrender Program to provide unimproved lot owners an exit path from their property ownership and financial responsibilities to Albemarle Plantation and Perquimans County

FINANCIAL CONTRIBUTION TO THE APPOA

APH II will contribute $150,000 to APPOA to be used on mutually agreed

upon maintenance projects and community improvements

• A preliminary list of potential projects has already be presented to APH

II for consideration

• The APPOA Board of Directors will obtain cost estimates for the

completion of each project on the list

• APH II and the Board will decide on the best use of the funds

THE MARKETING LOAN

Features of the loan:

• $400,000 principal @ 4% simple interest; loan is unsecured

• No payments until 2021; no interest accrued until 2021

• Payments: $80,000/year from 2021 to 2025

• Total estimated interest: $48,000

• Welwood LLC to be engaged to manage sales and marketing

• Welwood LLC is a partnership consisting of Woody Perry and Wilson Greene

THE LOT SURRENDER PROGRAM• Lot owners must be current in all assessments and lots free of any

encumbrances

• Lot owners pay a surrender fee of $3,240 to APPOA

• APH II acquires lots for $1; lot owners pay closing costs

• APH II pays 50% lot assessments when due; remaining 50% paid when the lot is sold

• APH II shares 20% of the “net profits” of the sale of lots acquired via the Program with the APPOA

• APH II waives the right to vote any lots acquired via the Program

• APH II will list the lots for sale with AP Realty

THE 2019 MARKETING PLAN

MISSION

• Re-establish the marketplace penetration of Albemarle Plantation in the traditional east coast retirement markets

• Cultivate a growing market moving southward from the Virginia Tidewater area

• Reach North Carolinian pre-retirees/retirees located in the Triangle, Triad, and Charlotte areas

SALES AND MARKETING PROCESS

• As is the case in any primary retirement or resort community, buyers are not going to come knocking on your door asking to buy something.

• To be successful, you have to go find the buyer, convince them to come visit, sell them on the community lifestyle and then create a sense of urgency that prompts them to make a purchase decision

• Desire for gain, fear of loss

• The process is a funnel – Lead Generation, Tours, Sales

THE FUNNEL

HOW DOES THE AP FUNNEL WORK

• Lead Generation

• Fulfillment / Tours

• Sales

• Throughout each of the steps, general and administrative support is necessary

LEAD GENERATION

• AP has the benefit of a history of where the buyers have come from and what marketing campaigns have been successful in the past

• However, real estate marketing has changed quite a bit in the past decade with the advent of social media and the internet

• We know the majority of our buyers come from the traditional Northeast feeder markets from Northern Virginia through Connecticut

• The lead generation program is designed to reach this target demographic

LEAD GENERATION

• Third party websites that are good producers are the Ideal Living / RPI site and Private Communities site

LEAD GENERATION PROGRAMS

• Over 90% of real estate buyers begin their search on the internet

• This is the cornerstone to any successful marketing program

• At Albemarle Plantation for 2018, the internet programs generated 52% of the leads, 56% of the tours and 68% of the sales

• It goes without saying that one way to increase sales is to increase spending on the internet programs

LEAD GENERATION PROGRAMS

• One of the big increases in the proposed 2019 budget is to ramp up our internet lead generation programs through increased internet advertising, improved search engine optimization and “digital lead generation”

• Digital lead generation is an algorithm based big data mining systems that can produce lead information out of website hits

• FOCUS 3 is the provider for these internet based programs. FOCUS 3 also does the same thing for St. James Plantation.

EXPOS AND SHOWS

• The RPI/Ideal Living Real Estate Shows have long been a staple of almost all retirement-focused community marketing

• The shows have a far-reaching impact beyond the hard numbers

• The exposure to the marketplace, whether you can track a direct lead or not, is critical

• The results of the shows thus far for 2019 are strong, with four shows producing 353 new leads

BILLBOARDS

• As crazy as it sounds in today’s digital world, strategically placed billboards can drive sales

• Proposed budget has a new billboard in Hampton Roads as a means to try and tap into the expanding Tidewater market that is moving southward into North Carolina

REFERRALS

• In an established community, referrals are a key to success

• We need to establish a consistent program to nurture referrals from existing property owners

• In 2018, there were only 17 tours from property owner referrals

• Imagine if each full-time, engaged resident produced just two leads –that would be 1,000 new leads

• Conversion rates from referrals are the highest of any lead and are the least expensive

REFERRALS

• Granted, there have been issues over the past few years that have hampered referrals, but we need to break through and convince residents that it benefits them when they give good referrals

• The proposed budget does not have anything in it to foster referrals. However, this needs to be addressed.

MEDIA

• Print advertising is not as important as it once was, however, it does have its part in a balanced campaign

• The Ideal Living magazine is a great way to tack onto the shows and reach a strong database of potential buyers

• The 2019 proposed budget has $10,000 for Tidewater publications in an effort to penetrate that market

• One additional magazine that should be considered is Where to Retire. It has consistently produced leads and good tours in other communities.

DIRECT MAIL

• Direct mail is not used as much now as in the past for initial lead generation

• It is very expensive to buy mailing lists that are any good and the results are sketchy

• However, mailings to specific groups in the existing database could be effective

• The proposed 2019 budget has a substantially smaller focus on direct mail lead generation

DATABASE MANAGEMENT

• FOCUS 3 provides the software and management of the database/customer service function.

• FOCUS 3 is a very experienced group that works for a number of top selling communities, including St. James Plantation.

• FOCUS 3 also provides the website and social media management.

FULFILLMENT/SUPPORT• Generating leads is very important but what you do with them is what really

makes the difference

• Fulfillment/Support is comprised of several factors:

• Hard copy collateral material such as site maps, brochures, etc.

• Postage for mailing material to the database

• Digital material contained in the website and on social media platforms

which requires constant updates and content development to encourage

engagement

• Marketing assistants to contact leads to bolster interest and book tours

• Mini-vacation tour packages to get prospects to visit

OPERATIONS AND GENERAL & ADMINISTRATIVE EXPENSES

• In addition to the lead generation and fulfillment/support, there are all of the operations and G&A expenses necessary to run the business

• The main categories are:

• Salaries, professional fees, taxes, licenses, and dues

• Rent, utilities, repairs and maintenance

• Equipment rental and leases, office supplies

ENHANCED 2019 MARKETING EXPENSE BUDGET

Lead Generation 270,650

Support 234,620

Operations 382,580

Total Cost $887,850

Revenue will be generated through net commissions and Discovery Package fees. For example, 20 sales will generate $100,000 in net commissions and each Discovery Tour will generate $179.

FINANCIAL PROJECTIONS

APPOA $400K Marketing Loan (4% int)MARKETING Projections 2019-2025

2019 2020 2021 2022 2023 2024 2025

Marketing Expenses per approved 2019 budget 487,600 487,600 487,600 487,600 487,600 487,600 487,600

APH II Marketing Loan Funding - One Time 400,000

Reinvested Marketing Funding (capped at $400K) 217,162 400,000 400,000 400,000 400,000 400,000

Total Marketing Expense Budget 887,600 704,762 887,600 887,600 887,600 887,600 887,600

Discovery Package Income 12,888 53,700 53,700 53,700 53,700 53,700 53,700

Inside sales Incremental Initial Membership 100,000 205,000 205,000 205,000 205,000 205,000 205,000

Outside sales initiation 40,000 50,000 50,000 50,000 50,000 50,000 50,000

APR Net Income 59,274 175,262 175,262 175,262 175,262 175,262 175,262

Marketing Fee Income 6,000 18,000 18,000 18,000 18,000 18,000

APPOA Model Home Income 5,000 20,000 30,000 40,000 50,000 50,000 50,000

Total Income 217,162 509,962 531,962 541,962 551,962 551,962 551,962

Funds available for loan repayment, interest, and future

marketing investment 217,162 509,962 531,962 541,962 551,962 551,962 551,962

Interest Charges @ 4% simple 0 0 16,000 12,800 9,600 6,400 3,200

Repayment of Marketing Loan 0 0 80,000 80,000 80,000 80,000 80,000

Funds Available for Reinvestment 217,162 509,962 435,962 449,162 462,362 465,562 468,762

Funds Available for Marketing investment 217,162 400,000 400,000 400,000 400,000 400,000 400,000

Funds Available for Operations / Reserves - 109,962 35,962 49,162 62,362 65,562 68,762

QUESTIONS?