pearl apartments - teaser

P E A R LA P A R T M E N T S

60Units

5Buildings

C o n f i d e n t i a l I n f o r m a t i o n

ST. LOUISMO

S T. LO U I S , M O

Summary

Property Address: 1131-1147 Hodiamont Ave.St. Louis, MO 63112

Property Type: Apartments/Multi-FamilyResidence

Year Built: 1970Unit Count: 60 UnitsBuildings: 5 (3 Stories)Unit Mix: 1 Bed: 12%

2 Beds: 28%3 Beds: 60%

Building Size: 43,500 SFLot Size: 2,02 AC.Construction Type: Brick with Flat Roof


A great mix of one, two and three bedroom apartment units. Located close to the U City Loop, entertainmentdistrict, Washington University and Forest Park. Value add opportunity to finish one vacant building, enhance boththe exterior of the buildings and the interior of the units, and increase rents across the board. All "in service" unitsare currently occupied.

Property Description

Property Photos



V a c a n t B u i l d i n g

Property DescriptionProperty Location – St. Louis, MO

PEARL APARTMENTS1135 Hodiamont Ave.


Easy access to major traffic arteries.Close to hospitals, schools, parks, and entertainment

Aerial Map



Project Costs

Acquisition 1,317,680$ Capex (Hard & Soft Costs) 1,300,173$ Total Project Cost 2,617,853$

Project Costs x SFTotal Area (43,500 SF)

Acquisition 30.29$ Capex (Hard & Soft Costs) 29.89$ Total Project x SF 60.18$

Project Costs x Unit

Acquisition 21,961$ Capex (Hard & Soft Costs) 21,670$ Total Project Costs x Unit 43,631$

Investment SummaryPEARL APARTAMENTS – St. Louis, MO

Investment Highlights:

- Strong cash flow asset: The property will immediately produce a strongnet operating income.

- Value-add opportunity: Immediate upside through strategic renovations.- Opportunity to purchase below replacement costs: Well-located Class-C

asset at a significant discount compared to the cost of reproduction.- Property type: Multifamily is the strongest performing real estate sector

during and following recent downturn - Structural shift in U.S. away fromsingle-family ownership, particularly among millennials - Does not sufferfrom “anchor tenant” risk - Highly Favorable Risk/Return Metrics.

- Location: St Louis ranked 1st on the Top 15 US cities to launch yourcareer, based on affordable rent, good starting salaries and availableopportunities. St. Louis is home to corporations such as Square,Anheuser-Busch, Emerson, Boeing Defense, and Panera Bread. With amedian salary for starter jobs of $60,400, and its low cost of living, St.louis is very attractive for recent graduates.


Sources of Funds

Master Loan 1,500,000$

Equity 1,142,853$

Total Sources 2,642,853$

Uses of Funds

Asset Acquisition 1,317,680$

Capex - Hard Costs 980,173$

Capex -Soft Costs 320,000$

Closing Costs - Est. 25,000$

Total Uses 2,642,853$

Investment Summary P E A R LA P A R T M E N T S

Master Loan Terms

Offering: Up to $1,500,000 in Promissory Notes.Note Terms: The Notes will bear interest at an annual rate of 10%, payablequarterly, with a maturity date of 540 days. The Notes are subject tooptional repayment in full or in part at the Company’s discretion followingthe twelfth monthly anniversary of the date of issuance of each Note.Extension Options: The Company shall have two 180-day options toextend the term of the loan.Master Loan Agreement: The Notes will be issued pursuant to a MasterLoan Agreement. Each investor will become a Note holder by purchasing aNote and executing a Joinder to the Master Loan Agreement.Collateral: The Notes will be secured by a mortgage placed on theproperty purchased with the proceeds from the Notes.Investor Eligibility: This offering is open only to (a) persons who areneither citizens nor residents of the U.S., and (b) citizens or residents ofthe U.S. that qualify as “accredited investors”

SOURCES & USES

Investment SummaryPROJECT TIMELINE


Feb2020

PurchaseAgreementExecution

Funding:06/26/20

Asset Closing06/30/20

StartRenovations

ProjectRefinancing

Pay-OffMaster

Loan

18 Months

Jun2020

Jul2020

Nov2021

Oct2021

DD Property Management & Construction Work

UNIT MIX

Units # of Units

Current Rent

Rent After Capex

1 Bed 7 400$ 600$ 2 Beds 17 500$ 750$ 3 Beds 36 600$ 850$

Financial AnalysisOVERVIEW


- Current rents are significantly under market due toproperty condition.

- By improving on-site management and enhancingthe property’s exterior, we can immediately bringrents to market.

- Additionally, an interior upgrade program will allowus to charge rental premiums.

- Through our property management team, we willdecrease operating expenses to the appropriate level.

5 YEAR PRO FORMAPartial

RenovationsFull

RenovationsFull

RenovationsFull

Renovations

Income Year 1 Year 2 Year 3 Year 4 Year 5Gross Potential Income $277,020 $396,000 $543,600 $559,908 $576,705

Vacancy -$27,702 -$39,600 -$38,052 -$39,194 -$40,369Effective Gross Income $249,318 $356,400 $505,548 $520,714 $536,336

Total Expenses $137,926 $145,789 $155,806 $159,175 $162,619

NOI Before Debt Service $111,392 $210,611 $349,742 $361,540 $373,717

Loan - Principal Reduction $0 $48,400 $50,372 $52,424 $54,560Interest $0 $102,891 $100,919 $98,867 $96,731Loan (Principal Reduction + Interest) $0 $151,291 $151,291 $151,291 $151,291Net Income after Loan $111,392 $59,320 $198,451 $210,249 $222,426Debt Service Coverage Ratio 1.39 2.31 2.39 2.47

ST. LOUIS, MO


The St. Louis metropolitan area is the 19th largest in the United States with a population of 2,8 million. The bi-state metropolitan area includes seven counties in Missouri and eight in Illinois, for a total of 15 counties. The St. Louis area spans both sides of the Missouri and Mississippi rivers, with a footprint that extends into both Missouri and Illinois.

Market Overview – St. Louis

POPULATION

2.8MMEDIAN AGE

39.6NUMBER OF EMPLOYEES

1.41M

MEDIAN HOUSHOLD INCOME

$62,790MEDIAN PROPERTY VALUE

$180,700

MULTIFAMILY SECTOR


Diverse job creation and recovering home values bolster St. Louis rentals. Spanning thepast two years, nearly 8,000 apartments were absorbed in the metro, lowering vacancy bymore than 200 basis points. Heightened demand was registered in St. Louis’ suburban andcore areas, with all submarkets recording declines in vacancy amid the delivery of 4,800units metrowide. Widespread vacancy compression coupled with well-received supplyadditions elevated St. Louis’ average effective rent 10 percent during the 24-month span,matching the pace of home price appreciation. In 2020, continued job creation will raisethe metro’s median household income at a pace that exceeds the national rate of increase,bolstering demand for mid- to higher-tier apartments as construction activity moderates.With demand drivers in place, further reduction in vacancy is anticipated for 2020,supporting a rate of rent growth that notably outpaces the historical average.

Span of robust leasing and strong rent gains attract private value-add investors. Tightvacancy in the low- and mid-tier sectors is fueling buyer competition in suburbs andneighborhoods adjacent to the core, where cap rates above 8 percent and sub-$50,000 perunit pricing is prevalent. Older properties in these locales possess notable upside potential,with assets potentially delivering NOI growth following operations and facility upgrades.Suburban neighborhoods near St. Louis International Airport garner notable out-of-statebuyer attention, as this area features the largest inventory of mid- to larger- Class B and Clistings. Local investors focus on smaller Class C buildings in neighborhoods south ofInterstate 44, including Dutchtown, and cities east of the core in Illinois, where sub-$5million trades dictate overall deal flow. In core St. Louis, select opportunities to acquirenewly built properties for more than $20 million will continue to drive overall sales volumein the metro moving forward.


MULTIFAMILY SECTOR



Market Overview – St. LouisMAJOR EMPLOYERS


Greater St. Louis has long proved itself an

advantageous partner, which is why it has such an

impressive corporate resume today. 17 Fortune

1000 companies call St. Louis home, along with

some of the nation’s largest privately held firms

such as Enterprise Rent-a-Car and World Wide

Technology.

Some of its advantages are inherent in the size of

the market, the 19th largest metropolitan area in

the U.S. Some are actually juxtaposed to that

“bigness,” as the costs associated with living and

working in St. Louis are actually reflective of a

much smaller community. The bottom line is that

St. Louis has all the advantages that can only be

found in a major market, but in a more balanced

environment than one might likely expect.

Driven by a diverse and well-educated work force, Greater St. Louis is a major national business center. With an excellent quality of life

and affordable cost of living, Greater St. Louis is a great base for companies and people alike.

Neighborhood Properties “NHP” is a privately held fullyintegrated real estate company that focuses on thedevelopment, construction, and management of multifamilybuildings. Comprised of a team with over 25 year ofexperience. Entering the St Louis market in 2016 we haverapid grown our portfolio and built a reputation ofexcellence in our market.

ABC Capital Miami Is part of an strategic partnership todevelop and drive more investor to Saint Louis using thecombination of the two sister companies whiledeveloping properties with Neighborhood Properties“NHP” and using the management services of CompassProperty Managements to maintain a sustainableperformance of the properties in a opportunity filledmarket for investors, ABC Capital Miami brings 15 yearsof rental experience and a network of 40 agents in 14countries.

THE TEAM

x

Pavel Ivanchuk, has over 12 years of experience in architecture as practitioner.After years of working in other architectural firms, he opened his own office inOakland, Missouri in 2016. Since then, he has completed multiple residential andsmall commercial projects. Before establishing his own firm, Pavel worked forvarious firms in Saint Louis. In that capacity, he was project architect forWashington University School of Medicine Couch Biomedical Research Building,project designer for Kennedy Space Center Shuttle Atlantis Home, project designerfor Mount Walrus in Chimelong Ocean Kingdom park. Besides these projects hedeveloped interior spaces for corporate clients including Thomas Coburn Law andLockton Companies.

The Team

A fully integrated real estate investment and development company, focused on acquiring anddeveloping quality real estate assets for long-term ownership. The company has achieved attractiverisk-adjusted returns by investing in real estate, non-performing loans, distressed assets, and selectcommercial and residential development opportunities.

The company’s fundamental strategy is to assemble a diversified portfolio of low-risk, high cash-flowassets with the goal of delivering capital preservation and consistent monthly cash-on-cash incomepaired with equity growth. The company achieves this goal by acquiring and repositioning under-valued, mismanaged, sub-performing, or improperly capitalized income producing assets.

DEVELOPERS

PROPERTY MANAGER

ARCHITECT

Compass Property Managements sister company of NHP was formed out of thevoid we found in the market lacking the hands-on management required for thetype of markets we served. Currently managing NHP portfolio and other investorsalike. With currently over 250 doors under management and growing steadilymonthly. Having found success in our hands on model we have a achieved highoccupancy and minimized turnover.

DisclamerNo person is authorized to give any information or make any representation not contained in the Memorandum and any information or representation notcontained herein must not be relied upon. Nothing in this Memorandum should be construed as legal or tax advice.

The Management of the Company has provided all the information stated herein. The Company makes no express or implied representation or warranty as to thecompleteness of this information or, in the case of projections, estimates, future plans, or forward looking assumptions or statements, as to their attainability or theaccuracy and completeness of the assumptions from which they are derived, and it is expected that each prospective investor will pursue his, her, or its ownindependent investigation. It must be recognized that estimates of the Company’s performance are necessarily subject to a high degree of uncertainty and may varymaterially from actual results.

No general solicitation or advertising in whatever form will or may be employed in the offering of the securities, except for this Memorandum (including anyamendments and supplements hereto), the exhibits hereto and documents summarized herein, or as provided for under Regulation D of the Securities Act of1933. Other than the Company’s Management, no one has been authorized to give any information or to make any representation with respect to the Company orthe Units that is not contained in this Memorandum. Prospective investors should not rely on any information not contained in this Memorandum.

This Memorandum does not constitute an offer to sell or a solicitation of an offer to buy to anyone in any jurisdiction in which such offer or solicitation would beunlawful or is not authorized or in which the person making such offer or solicitation is not qualified to do so. This Memorandum does not constitute an offer if theprospective investor is not qualified under applicable securities laws. This offering is made subject to withdrawal, cancellation, or modification by the Companywithout notice and solely at the Company’s discretion. The Company reserves the right to reject any subscription or to allot to any prospective investor less than thenumber of units subscribed for by such prospective investor.

This Memorandum has been prepared solely for the information of the person to whom it has been delivered by or on behalf of the Company. Distribution of thisMemorandum to any person other than the prospective investor to whom this Memorandum is delivered by the Company and those persons retained to advisethem with respect thereto is unauthorized. Any reproduction of this Memorandum, in whole or in part, or the divulgence of any of the contents without the priorwritten consent of the Company is strictly prohibited. Each prospective investor, by accepting delivery of this Memorandum, agrees to return it and all otherdocuments received by them to the Company if the prospective investor’s subscription is not accepted or if the Offering is terminated.

By acceptance of this Memorandum, prospective investors recognize and accept the need to conduct their own thorough investigation and due diligence beforeconsidering a purchase of the Units. The contents of this Memorandum should not be considered to be investment, tax, or legal advice and each prospectiveinvestor should consult with their own counsel and advisors as to all matters concerning an investment in this Offering.

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