finance

JV OFFERING EXECUTIVE SUMMARY

RIVERSbrook LLC wholly owns County Plaza LLC and has invested $6,072,598 into the project to date. In addition, to the investment by RIVERSbrook LLC, Seas Investment House, an International real estate fund has made a loan of $2,000,000 into County Plaza LLC and has committed to fund an additional $9,000,000 in equity into the LLC upon closing a construction loan for the project. Finally, there exists a land loan to American Bank in the amount of $8,782,000 collateralized by the 28 acres of land. The land has been appraised at a value of $18,000,000.

We have been working to syndicate a $41,600,000 construction loan with American Bank, Oak Springs Bank and State Commerce Bank. This loan value was based on a Phase I budget in the amount of $57,000,000 and represents 73% debt to equity ratio and was anticipated to have a rate of LIBOR plus 325. Currently, the credit committee at American Bank (the lead bank) approved the loan contingent upon receiving a net worth guarantee in the amount of $50 million and a liquidity guarantee in the amount of $5 million. There was previous consensus among the bankers that the balance sheet of RIVERSbrook LLC and its partners was sufficient to cover these guarantees. However, with the drastic shifts in the credit markets and with the balance sheet of RIVERSbrook LLC being heavily weighted towards residential assets, the banks have stipulated that an additional credit enhancement will be required.

In light of the need to find a new partner and that we have executed leases for 53.1% of the total space, we have made the decision create a new budget and proforma based on the total square footage to be resubmitted to the banks along with the balance sheets of the new partner. This budget now represents a $74.7 million total project cost and generates stabilized return on cost return of 9.3% with an expected IRR of 26.5%.

RIVERSbrook LLC is looking to secure a new JV partner that will provide both the loan guarantees as stipulated by the banks and the additional equity required. It is expected with a 73% debt to equity ratio, with the costs to date incurred by RIVERSbrook LLC at $6,072,598, and with the repayment of the Seas Investment House $2,000,000 loan, the required equity from a JV partner will be $14.1 million.

RIVERSbrook LLC fully anticipates that the JV partner will require Managing Member status and major decision making controls, however, RIVERSbrook LLC is looking to remain as the day to day development, construction and leasing manager. RIVERSbrook LLC will work in this capacity to develop and lease the project.

As time is of the essence given that leases have been executed and the project can begin site work, RIVERSbrook LLC would like to receive offers for JV by November 10th, 2021.