Sullivan Communities Investment Criteria & History

Multifamily Real Estate with 13-15% yields and 25-30% IRR’s

Sullivan Communities (Sullivan) is a vertically integrated real estate
investment, management and community development firm. Sullivan
specializes in the acquisition and repositioning of 50 - 200 unit under-
performing B and C class multifamily / mixed-use buildings and
complexes.
• Target 14-16% repositioning cap rates and 30% IRR’s
• Focus on niche and difficult-to-source properties
• Experienced acquisition, repositioning, management and sale of
multifamily and mixed-use assets
• Niche acquisition strategy focused on submarkets where new
construction is limited
• Recession resistant properties
• 20-30% returns on capital improvements
• Tax efficient: opportunity zones
• Minority owned firm
Sullivan Communities LLC | @WeRevitalize | WeRevitalize.com
Executive Summary
Pipeline of $20 million
of properties
Willing to give our
partners an “off-market”
first look at deals
Sullivan is looking for
equity partners
First deal: $3 million
equity investment, 7%
ROI YR1

Michael Brown
Mr. Brown is Managing Member of Sullivan Communities, the real estate investment firm he
formed in 2016. The firm is focused on niche tertiary real estate markets and annuitized asset
management. Mr. Brown is responsible for acquisitions, securing financing and overseeing
management of the properties owned by the firm.
The firm currently manages approximately $2.4M of assets on behalf of its investors and
partners. The firm maintains an office in Jersey City, NJ with assets located in New Jersey
and New York. Leveraging his entrepreneurial leadership style, Mr. Brown has driven
consistent successful investor returns through strict process management and community re-
development initiatives.
• $2.4M AUM, portfolio return: 15% Cash-on-Cash returns
• Graduate of Oberlin College; MBA from Cornell University
• Former technology executive with 18 years of experience across healthcare, management
consulting, mobile and interactive disciplines
• Ten years experience in acquisitions, repositioning, sales and management of land, mixed-
use and multifamily properties in New Jersey and New York State
Managing Member

Gib Dunham
Mr. Dunham acts as an advisor to Sullivan Communities, providing the firm insight and
expertise in expanding investor relationships and management of debt financing. As a former
investment banker and a private equity portfolio manager, Mr. Dunham has assisted with
identifying and structuring the firm’s capital solutions and the establishment of its initial
investment fund. Mr. Dunham previously worked for Bear, Stearns & Co., Inc., Lipco Partners,
Emigrant Capital and served as Chief Investment Officer at Alternative Capital Advisors. Most
recently he was the head of allocations for a $20 billion Asian institution.
Mr. Dunham is a graduate of Dartmouth College and he has earned his CFA, CAIA, CMT,
QFA, and CIC designations and has a certificate in structured products.
Advisory Partner

Firm Strategy

Investment Strategy
• Location: edge neighborhoods near transit
& commercial hubs (~30Mi)
• Population: <100K, stabilized blue-collar,
moderate job growth approx. 3% y/y
• Housing Stock: lack of quality B&C class
50-200 unit affordable housing complexes
• Value-Add: weak management, deferred
maintenance issues, poor amenities
• Risk Mitigation: remove market rent gaps,
value upgrades, reduce variable cost
• Stabilized Results: > 10% CAP rates and/or
> 15% Cash-on-Cash
Location & Population
Housing Stock
Value Add
Opportunities
Risk
Mitigation
Stabilized
Results

• Edge neighborhoods close to
established transit and commercial
hubs
• Large stabilized blue-collar
population
• Historically steady economic
conditions
• Lack of quality affordable housing
• Entrepreneurial municipalities looking
to partner in rehabilitation
This Photo by Unknown Author is licensed under CC BY-SA-NC
Location Criteria

• Partnership vs. Purchase: lower
capital outlay by partnering with
existing property owners
• Local Political Support: alignment
of interest through significant capital
improvements and tax incentives
• Local 3rd Party Brokers: scale
acquisitions and promote community
development
asset procurement process
This Photo by Unknown Author is licensed under CC BY

• Professional Management: strict
oversight of community
• Tenant Repositioning: remove bad-
actors
• Capital Improvements: address all
deferred maintenance
• Force Appreciation: drive rent
growth through upgraded units
• Cost/Debt Reduction: address all
cost saving opportunities
Cost/Debt Reduction
Forced Appreciation
Capital Improvements
Tenant Repositioning
Professional Management
Repositioning Process

• ROI-Driven: 20 – 30% ROI within
year 1
• Exceed Expectations: revenue
driven amenities to increase length of
stay
• Meticulous Budgeting: unit-turns
cost 25% less vs. local competitors
• Hire Local: community development
through hiring of local companies
• Reduced Vacancies: unit turns take
1 – 2 weeks
Renovation Process
Before After (20% Rent Inc.)

Renovations provide “Modern Affordability”, +20% ROI & above average Length Of Stays
Renovation Results

$60K+
$40K-59K
$30K-39K
<30K
65+
45-64
31-45
<30
Medium Income Age Range
Income Source Length of Stay
100%
Assistance
<100%
Assistance
<5 Yrs
5-7 Yrs
7+ Yrs
Client Demographics

financing Parameters
• Debt Structure: 75% LTV, min. 5 /25
term. IO debt used on case by case
• Loan Type: non-recourse secured by
real property, Sullivan guarantees on
case-by-case
• Cap Stack: preferred equity w/
hurdle rate coupled with senior debt;
mezzanine only when required
• Underwriting: internal, 3rd party and
lending partner review
• Mitigate Risk: vet multiple financial
partners to secure investor returns
Debt
Structure
LoanType
Cap Stack
Underwriting
Mitigate Risk

Tax Management strategy
• Tax Driven Investments: investment
strategy is lead by ROI, tax benefits
and long-term value
• Cost Segregation: maximize asset’s
varying depreciation schedules
• CapEx vs Repairs: repositioning
plan & repair budgets in-line with tax
advantages
• Leverage Tax History: capitalize on
previous owner’s missed tax benefits
• 360° Solution: in-house accounting
partners provide accountability and
investor solutions
Cost
Segregation
Tax Driven
Investments

Opportunity Zones

About Opportunity Zones
• New investment vehicle created as part of
the Tax Cuts and Jobs Act of 2017
• Created to incentivize investment in
targeted low-income urban and rural
communities
• Designated by state and federal
governments to provide long-term
economic investment and development
Opportunity Zones Benefits
• Defer federal taxes on any recent capital
gains until December 31, 2026
• Reduce that tax payment by up to 15%
• Pay as little as zero taxes on profits from
an Opportunity Fund if the investment is
held for 10 years
Most of Sullivan’s investments are located in tax friendly Opportunity Zones.
An investor who has triggered a capital gain by selling an asset like stocks or real estate
can receive special tax benefits if they roll that gains into an Opportunity Fund within 180
days.
Location: Opportunity Zones

Opportunity Zone Example
-Tax on Appreciation (37%) $14,660
After Tax Funds Available
After Tax Net Return
$87,961
-1.3%
Sales Price After 10 Years
-Tax onAppreciation
$ 162,889
0
-Deferred Capital Gain Tax (37%) $ 31,450
After Tax Funds Available
After Tax Net Return
$ 131,439
2.8%
*This slideisa hypothetical illustrationofmathematicalprinciplesas itrelatestothenewtaxcodeand doesnot predictorprojecttheperformanceofan investmentorinvestmentstrategy
Source:VirtuaPartners(US),LLC-Copyright2018
10 year hold in a fully taxed portfolio:
5% annual investment appreciation;
37% combined tax rate;
Capital Gain $100,000
-Tax Payable (37%) $37,000
Total Capital to Invest: $63,000
Sales Price After 10 Years $102,620
10 year hold in an Opportunity Fund:
5% annual investment appreciation;
37% combined tax rate;
Capital Gain $100,000
-Tax Payable 0
Total Capital to Invest: $100,000
Result: 300-400 basis points per year increased return

Manager Track Record

Newburgh, NY | 15 units
Status: SOLD
Purchased: Q3 2015 | ROI: 28%
Newark, NJ | 12 units
Status: 100% Rented & Stabilized
Purchased: 2016 | ROI: 15%
Monticello, NY | 22 units
Status: 90% Occupied
Purchased: 2017 | ROI: Increased 31%
Swan Lake, NY | 16 units
Status: In Rehabilitation
Purchased: Q4 2017 | ROI: TBD
Currently Sullivan has $2.4M AUM through 50 units producing an average ROI of +15%
Managed Assets

Solutions implemented
Issues pre-acquisitionAcquisition
Cash
Addressed deferred maintenance
Rehabilitated 6 units
Engaged police and installed security
Deferred maintenance
Delinquent tenants & drug activity
50% non-operational units
Repositioning Results
Flipped 6-unit building for 100% ROI
100% operational units
All rents at market
C-Class location requiring quality affordable housing. Artist community
and community redevelopment opportunities growing along with NY
transplant population. Repositioned properties within 6 months, sold 6-
unit building for 100% ROI; sold remaining portfolio for 28% ROI.
15 Units:
• 2 BRs
28% ROI
Case Study – Newburgh, NY

SellerFinancing
Removed delinquent tenants
Renovated 9 of 12 units
Installed property management process
Significant interior deferred maintenance
Rents 30% below market
100% occupied within Yr. 1
Capitalized on Rutgers student rental market
Increased GOI by 20%
12 Unit building located across the street from Rutgers UMDNJ, a major
hospital system in NJ. Purchased for appreciation and cash flow. At
purchase, 60% non-operational units, currently 100% operational.
Stabilization within 9 months of purchase.
12 Units:
• 6 - 1 BRs
• 6 - Studio
15% ROI
Case Study – Newark, NJ
Solutions implemented Repositioning Results

SellerPartnership
Raised 50% of rents to above market
Removed all delinquent tenants
Renovated interior and exterior
Significant deferred maintenance
All rents <20% below market
90% operational > 1 Yr.
Direct marketing to casino and resort workers
Increased ROI by 31%
Four brick apartment buildings surrounding a courtyard. Unit composition
includes a good mix of 1 BRs, 2 BRs and townhomes. Located near
Resorts World Catskills casino and entertainment complex. Purchased at
70% operational, currently 90% operational.
22 Units:
• 4 - 1 BRs
• 8 – 2 BRs
• 10 - Townhomes
ROI Increase: 31%
Case Study – Monticello, NY
Solutions implemented Repositioning Results

werevitalize.com | @werevitalize
Sullivan Communities LLC
PO Box 4211 Jersey City NJ 07304
Michael Brown | 845-670-4647 | michael@werevitalize.com

Sullivan Communities Investment Criteria & History

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