Aha roll up and prospectus

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Aha roll up and prospectus

  1. 1. A ffordableH ousingA cquisitions,LLCS p e c i a l i z i n g i ninAsset Backed Investments Specializing Asset Backed Investments
  2. 2. A ffordable H ousing A cquisitions,LLC S p e c ializing in A s s e t B a c k e d I n v e s t m e n t s AFFORDABLE Housing AcquisitionsA ffordableH ousing Specializing in Asset Backed InvestmentsA cquisitions,LLCSpecializing in Asse t B a c k e d I n v e s t m e n t s
  3. 3. Loan RequestAmount requested:$500,000Borrower:Affordable Housing Acquisitions LLCPurpose:To facilitate a “rollup” of six currently controlled properties into a new fund to ultimately be-come a publicly traded Mobile Home Park REITUse of Funds:To pay off mortgages and exercise options on properties operated under lease/option agreements.Specifically: Payoff mortgage on The Glen at Hickory MHP $80,000 Payoff Mortgage on Suburban MHP $150,000 Exercise option on 1/3 Travelers Rest MHP $75,000 Exercise option on The Glen at Forest City $55,000 Acquisitions $140,000 TOTAL $500,000Collateral: First Position on Suburban, value $450,000 First position on Hickory, value $125,000 First Position on Forest City, value $330,000 First position on 1 of 3 parks Traveler’s Rest, value $125,000 Second position on remaining ++ First or second position on acquisition ++ TOTAL $1,030,000+ LTV: 40% +/-Recourse:As many of our investors are qualified pension plans, we cannot do recourse beyond the entity,thus the low LTV
  4. 4. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLC S p e c i a l i z i n g i n Asset Backed InvestmentsTable of ContentsI. A.H.A Affordable Housing Acquisitions Why Invest with Affordable Housing Acquisitions . ......................................................1 Affordable Housing Acquisitions Officers . ....................................................................2II. Mobile Home Park Rollup / Proposed Publicly Traded Corporation Synopsis of Mobile Home Park Rollup and Proposed Publicly Traded Corporation . ....4 Pro Forma Financial Data.................................................................................................7III. Affordable Housing Acquisitions Currently Controlled Properties Location Map....................................................................................................................8 Blytheville Partners LLC..................................................................................................9 The Glen at Forest City . .................................................................................................15 Traveler’s Rest...................................................................................................................22 The Glen at Grover..........................................................................................................27 Cherry Mountain..............................................................................................................34 Glen at Hickory................................................................................................................39 IV. Mobile Home Park Investing The Basics of Mobile Home Park Investing ....................................................................46 Why Invest in Mobile Home Parks .................................................................................49 Why Inflation will be Great for Manufactured Home Community Owners ..................51V. America’s Housing Imbalance Special Focus - America’s Housing Imbalance . ..............................................................53 America’s Housing Imbalance: Out of Balance. ..............................................................54 .
  5. 5. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCS p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t s I.A.H.A.Affordable HousingAcquisitions
  6. 6. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCS p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t sWHY Affordable Housing Acquisitions, LLC? “Win” “Win” Scenario• A Capital starved economy has produced an increasing number of properties with advantageous prices, terms, and covenants. “Mom and Pop” mobile home park owners have few, if any, exit strate- gies• Owners of the parks cash needs are satisfied by capital from AHA, and the remaining cost is lever- aged by the property itself.• This creates an exit strategy for the park owner and opportunities for AHA to diversily and expand in the current “buyers market.”Strategic Partnerships & Infrastructure• Years of independent affordable housing fund and park management has forged strategic partnerships with trailer park brokers, servicers, and movers.• Management teams are centralized and duties, templates, and day to day operations are in place to handle future acquisitions. Asset Backed Investment/ Immediate Return• Typically real estate investments require large capital contributions, AHA allows investors to own an asset backed direct property interest• Our principal investment strategy optimizes value through multiples on cash flow and liquidation of assets while providing increased flexibility for shareholders.• Every investor enjoys the security of having their capital contribution backed by a tangible asset.• Most investments take years to come to fruition, AHA investment opportunities start yielding re- turns to investors immediately. 1
  7. 7. Our Due Diligence• AHA has decades of experience in buying properties. The due diligence we do on them prior to purchase is all important. Buying existing, income producing properties is a much easier evalua- tion task than most new construction projects, business acquisitions, or marketing plans. Unlike those ventures, we have existing data - often years of it - to determine revenues and costs. We have extensive due diligence checklists to assure that we are on the mark on our financial projections.• The more difficult part of our due diligence process involves the intangibles: what’s happening in the area, the strength of the rental market, and the political risk. It is in these areas that our experi- ence becomes all important• Regarding area analysis, we now have a surfeit of data available via the internet. We use that, of course, but we go beyond that and interview city planners, development authorities, and local busi- ness people.• Regarding the rental market, our task becomes easier. Because we are in the affordable housing sector, we know there is always excess demand. Nevertheless we digest the data, speak with local property managers and make our determination.• The political risk is perhaps the most difficult to assess. Mobile home parks are subject to a myriad of regulation that can sometimes make life difficult. Municipalities are constantly enacting new ordinances and rules. This is one of the reasons we prefer the American Southeast, where mobile home parks flourish and are a very accepted housing alternative. We judge the risk by speaking with the authorities who regulate us. We not only find what the current situation is, but we determine their attitudes toward mobile home parks and assess their future plans. The political risk is, in our case, the most difficult to assess, but it is also one of the major factors that make for our success. In the case of nearly all of our parks, it would be extremely difficult, if not impossible, for anyone to build a new one nearby. We are”grandfathered in” to an existing monopoly in most of our locations.• All of these factors are taken into account before we close on a purchase, during the inspection pe- riod. In this phenomenal “buyer’s market,” a property must shine on all factors to make it through our due diligence process.Valuation and Exit Strategy• Maturity of AHA and the inception of our principal investment strategy, the “reverse merger” will begin when the fund meets ten parks under controlled management (currently six parks in AHA control outlined below).• Our principal investment strategy optimizes value through multiples on cash flow and liquidation of assets while providing increased flexibility for shareholders.• Mobile Home REITs trade for 20x cash flow on public markets. Incrementally increasing the size of our fund compounds cash flows, value, and maximizes shareholders IRR through economies of scale. 2
  8. 8. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCS p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t sAffordable Housing Acquisitions Officers A Highly Motivated Team with Expertise in Affordable Housing, Real Estate Management and Operations, Investing, and Appraisals Dan Kiely, Chairman Real Property and Law • Affordable Housing Specialist• Extensive background in affordable housing and real property, public company formation and manage- ment with over 35 years’ experience• Stanford Law Graduate• Primary expertise in transaction negotiation and facilitation involving affordable housing• Co-founder of A.H.A Affordable Housing Acquisitions Jason May, President Real Property and Equity Investment • Capital Investment Relations• Extensive background in management of hedge funds involving real property and equities• Financial planning background• Primary expertise in investments in equities, REIT’s, and collateralized lending• Co-founder of A.H.A Affordable Housing Acquisitions Eric Tomko, Vice President Marketing • Investor Relations• Wide-ranging background in marketing • Primary expertise in marketing and investor relations• Experienced Marketing VP for BSN • Co-founder of A.H.A Affordable Housing Acquisitions Todd Neary, Vice President Real Property • Commercial Valuation• Financing and real estate background• Extensive background in providing consulting service for commercial, industrial and residential assets• Overseen individual and portfolio assignments throughout the United States, specializing in multi-family assets• Co-founder of A.H.A Affordable Housing Acquisitions Adam Shepherd, Vice President Real Property and Marketing • Business Developement• Comprehensive background in affordable housing and real property• Real Estate tactician and business development professional• Primary expertise in real estate implementation and investment strategies, and marketing• Co-founder of A.H.A Affordable Housing Acquisitions 3
  9. 9. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCS p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t s II.Mobile HomePark RollupProposed PubliclyTraded Corporation
  10. 10. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCS p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t sSynopsis of Mobile Home Park RollupProposed Publicly Traded CorporationAffordable Housing Acquisitions goal is the establishment of a fund created by a “rollups” of mobile homeparks into a public vehicle. The objective is to create a mobile home park real estate investment trust(“REIT”) taking advantage of the greater multiples and other benefits of the public vehicle as well aseconomies of scale.The Opportunity: The current economic environment makes this unusual opportunity possible and ourinfrastructure makes it work. The factors at work are: (1) the capital starved economy resulting in an ex-treme “buyer’s market,” (2) the lack of exit strategies for “mom and pop” mobile home park owners, (3) ourexisting management infrastructure, and (4) our knowledge and experience in the field. Objective:The goal is to create a publicly traded U.S. company, well funded, with liquid shares, owning several mo-bile home parks and postured to acquire many more parks. The plan takes advantage of two facts: (1) agreat number of “mom and pop” mobile home parks are currently available on great terms and excellentprices due to the economic downturn and the capital starved economy and (2) in a public REIT, the valueof the equity is much greater. The purpose is to allow for greater value (due to better multiples on cashflow), capital creation, liquidity and flexibility for the shareholders (the current MHP owners). The processshall be to complete a “reverse merger” with an existing but dormant public company. We currently havesix parks under management and control.Mobile Home REITs are trading in the markets at multiples of 20 time cash flow and are quite popularin today’s frightened investor market because they are hard assets with great yields. Value is created byachieving the greater multiples. “Rolling up” several mobile home parks with 12%+ capitalization rates(i.e. a multiple of 8 times cash flow) should result in a stock equity value much greater than the value ofthe equity as individual parks. Phase one: Convert AHA into a private “REIT” (90 days)• Finalize business plan (including determination of which properties are included)• Determine values of initial properties to be purchased or infused• Determine start-up costs and develop a budget• Build ProForma financials for the resulting company• Complete the private REIT phase 4
  11. 11. Phase Two:Complete the reverse merger and become publicly trading (12 to 24 months)• Identify target public vehicle (one has been preliminarily selected)• Negotiate terms of the reverse merger• Audit preparation• Engage necessary professionals• Determine Board members, officers, and necessary personnel (minimal)• Complete the reverse merger• Work with market makers, do “road shows” and create the market for shares• In the 18 month to 36 month time frame thereafter, complete a PIPE (private investment – public equity) placement for $2,000,000, to “grow” the new REIT.Result:1. The former partners will, at the completion of phase two, own shares in the public company giving them (a) a better exit strategy at higher prices; (b) a higher multiple on income; and (c) more flex- ibility in ownership, exit strategy, estate planning and retirement;2. The investor will have a secured position and in phase two will reap the rewards of the higher multiple through conversion of preferred stock3. The resulting company has more credibility and more flexibility in raising capital;4. The cash needs for the near term are met;5. The infrastructure is in place for growth; and6. The company is poised to expand and create more valueInvestment Assets:1. Currently owned and targeted properties (see attached)2. We are currently in discussions with other mobile home park owners who are interested in rolling their parks into the REIT3. OtherInfrastructure:As these parks are already up, running, and producing cash flow, the infrastructure is in place to accom-modate many more parks without additional corporate structure.The return on additional mobile homes currently being placed in the parks is 35%+/-. It costs about$12,000 to $15,000 total to buy a mobile home (used), move it to the site, skirt it, hook it up to utilities,and renovate it. That home will generate $450 per month in revenue with few expenses. The annual re-turn per added home will be in the $5000 range.Time Table:We would like to complete phase one in the next 90 days and phase two in the 12 to 24 lowest month timeframe, and the PIPE offering 6 to 12 months after phase two. We are at the mercy of a number of profes-sionals and agencies so it is difficult to accurately project time lines. 5
  12. 12. ScalabilityIf, after a short “proof of concept” period we can perhaps get $2,000,000 from a PIPE fund or elsewhere, andwe should be able to buy, using low leverage (seller take-back), $4,000,000 in properties. If we can use stockas part of the purchases, capital can be stretched even further with no additional leverage. Sellers of suchparks are desperate for exit strategies and are forced to be creative. The equity within the entity of eachadditional property, purchased at 8 multiples, becomes worth much more at the higher multiple (20+/-).Thus, as we infuse more properties, we continue to move the value of the stock up with only modest lever-age (risk) and the next round of financing should be of a much greater magnitude.Investor Requirements / SecurityThis proposal presupposes a new corporation to which all of our existing investors (about 5) transfer theirinterests. We are in the process of getting valuations on the properties. I believe the total value of theequity will be $900,000 +/-. Whatever that valuation shows, each investor will be issued one share of com-mon stock at $10 per share for each $10 of value. Result:The objective is to end up with a structure that makes the whole greater than the sum of its parts. Thisshould be achievable due to the conditions existing in the current economy, and the premium placed onpublicly traded stock. 6
  13. 13. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments AHA Rollup Properties Proforma Financial Data Rollup 3 2012 ROI/value Value (1) Mtg/option(2) equity cash flow (3) % return Travelers Rest 400,000 250,000 150,000 35,000 Grover 215,000 149,000 66,000 11,500 Forest City 330,000 55,000 275,000 46,000 Cherry Mntn 175,000 125,000 50,000 12,000 Hickory 125,000 80,000 45,000 19,500 Blytheville 450,000 150,000 300,000 45,000 Total 1,695,000 785,000 886,000 134,000 15.1% (1) Either POV or anticipated POV valuation (2) Payoff amount of Mortgage or exercise price of option (3) Anticipated cash flow after investment, completion of current renovation, and option/mortgage payoffs 7
  14. 14. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCS p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t s III.Affordable HousingAcquisitionsCurrently Controlled Properties
  15. 15. Location Map 8
  16. 16. AFFORDABLE Housing Acquisitions A ffordable H ousing  A cquisitions,LLC  Specializing in Asset Backed Investments  Suburban Mobile Home Park   Blytheville, AR FOR FURTHER INFORMATION, PLEASE CONTACT Dan Kiely (561) 779 0175 120 S. OLIVE AVE, SUITE 400 45 SiteWEST PALM BEACH, FL 33401 USA Mobile Home Community Great Expansion Potential  9
  17. 17. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCS p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t s Suburban Mobile Home Park Blytheville, AR 45 Lot Mobile Home CommunityPark Particulars:• 45 sites, less than half full - huge upside 5.46 acres• Great cash flow• Partially Tax Deferred• Professional management with presence in the area• City utilities paid by tenants• Recession resistant• Value creation through curing deficiencies, upgrading property, cosmetic renovation• Multiple exit strategies 10
  18. 18. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments Suburban Mobile Home Park Blytheville, AR 45 Lot Mobile Home Community Property Address: 1102 South Ruddle Road, Blytheville, AR Description: Suburban Mobile Home Park in Blytheville, Arkansas has 45 devel- oped pad sites on approximately 5.46 acres. Of the 45 sites, 7 are oc- cupied by tenant owned mobile homes and 14 of the sites are occu- pied by park owned mobile homes rented for $350 to $450 per month. Twenty of the pads are vacant; four pads have repairable mobile homes. Each space is supplied with city water as well as natural gas and city sewer. Garbage service is provided by the city. The property is located in a working class neighborhood and is conve- nient to the local downtown as well as the highway. A tree lined paved road and gutter system currently serves the residential homes. This project has been owned by us for a few years. This property fits History: our acquisition model as it was purchased at an excellent cost from an owner who over time had neglected the park. Rent collection was not enforced and few rules and regulations were in place. We have made significant improvements to the park and renovated some exist- ing homes. We have taken no distributions from the project, electing instead to use cash flow for rehabbing existing homes in the park. Due to its ease of operation, we have done little to take the park to the next level. The project is located in Blytheville, AR which is located in the NE Location: portion of the state and is the seat for county offices. The property is located in Mississippi county, the #1 county in the US for both cotton and steel production according to the Chamber of Commerce. Shade trees, city water, septic, natural gas, security lights, paved Amenities: road. 11
  19. 19. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments Suburban Mobile Home Park Blytheville, AR 45 Lot Mobile Home Community Market: There is a strong demand for rental units in Blytheville. The city and the county have created initiatives attracting new industry supporting a broad and stable economic base. In addition to Arkansas North East College, widespread agribusiness and two plants owned by steel man- ufacturer Nucor, a new aircraft maintenance operation has recently opened at the long ago vacated Air Force base located near Blytheville. The company is investing $20 million and will employ 440 new em- ployees. This is in addition to the existing 450 employees already em- ployed at the facility. Business Plan: The highest and best use for this property is as affordable housing rental units for young couples, families and retirees. As such, the plan is to develop the community by enhancing the landscaping, renovating the park owned units, supplying mobile homes for vacant sites, and curing remaining deficiencies. Exit Strategy: Multiple exit strategies exist regarding this property: 1. Exchange. We may find a tax-deferred exchange at some appropri- ate time to realize appreciated value of the homes. 3. Financing. We may finance the homes at an appropriate time to re- capture some or all of the equity and continue to receive cash flow. 4. Other. Other exit strategies, such as re-syndication, or inclusion in a later “roll-up” strategy also exist. 12
  20. 20. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments Itemized Expense Projections Property: Suburban Mobile Home Park 4/2/12 Anticipated POV $450,000.00 Rents (monthly) Mortgage $150,000 Pad sites $175 Equity $ 300,000.00 Mobile Homes $350-$450 ITEM Rents at 100% (of current occupancy) 66,000.00 Vacancy Rate 10% Less Vacancies: $6,100 Effective Gross Income: $59,400 Onsite Management Cost $6,100 Insurance $865 Property Taxes $1,650 Accounting & Legal $1,500 Landscaping $900 Repairs and Maintenance $1,000 Mobile Home tax $750 Utilities water/septic maint. $1,200 Trash $2,400 Miscellaneous $1,000 TOTAL OPERATING EXPENSES $17,265 Net Operating Income $42,135 $53,245 Mortgage Payments $11,500 Cash on Cash POV Return $30,632 10.2% 13
  21. 21. AFFORDABLE Housing Acquisitions A ffordable H ousing A cquisitions,LLC Specializing in Asset Backed InvestmentsSuburban Mobile Home Park45 Lot Mobile Home Community Park Suburban Mobile Home Blytheville,Blytheville, AR AR 45 Lot Mobile Home Community Property Location Property Location Park Map 14
  22. 22. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments The Glen at Forest City    Lancaster Drive  Forest City, NC                       24 Pad  Mobile Home Park  and 9 Existing   Mobile Homes     15 
  23. 23. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments Lancaster Drive Forest City, NC Park Particulars • 24 Mobile Home Sites • 10+ acres • 2 Private Wells – one operational and one dormant • Nearest sizable housing to the new ”clean” coal plant and Facebook Data Center. • Grandfathered in: There will be no new mobile home parks in Forest City 16
  24. 24. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments Lancaster Drive Forest City, NC Property Address: 140 Lancaster Drive, Forest City, NC Number of Lots: 24 sites, most infrastructure in place Currently 3 rented lots, 4 renovated MHs and 2 MHs under renovation. Utilities: 2 Wells and Electric. 2 Mobile Homes Per Septic Tank. Private Trash service. Tenants pay all utilities except water and trash. 1. Exercise option Business Plan 2. Continue to develop parks Ownership: Park is under a Lease/Option park $55,000 at option exercise Rent is $320 per mo. Management in Currently managed by our staff in the area with all Place mgt infrastructure in place Condition: These parks were neglected for many years by an owner who died four years ago and had Alzheimer’s prior to that. Phase one, now complete, landscaped the park, removed trailer hulks, provided new entryway, graded for new drainage, bought and renovated 9 mobile homes, insti- tuted rules and regulations, provided tight management . 17
  25. 25. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments Lancaster Drive Forest City, NC Property Forest City Commons is a 24 space mobile home park. The total park Description: sits on 10+ acres and is located in Forest City, North Carolina. The as- set manager has several properties in the area, is experienced there and has the necessary staff in place. Area Information: Forest City is located in Rutherford County. Forest City is centrally located between Ashville and Charlotte, North Carolina. We own and have owned multiple other successful apartment and mobile home projects in the area. There continues to be a strong demand for affordable housing in the area. Current holdings continuously run close to 95% occupancy. The local housing office reports that they receive three applications for each affordable housing unit. In the Carolinas, mobile homes are considered the mainstay of the affordable housing industry. Tenants are hard working blue-collar individuals and retirees. The local housing assistance office pays $400+/- per month on their assistance program for a two bedrooms home and $450+ for a three bedroom. Rentals for mobile home pad sites range from $125 to $200. Area Information: Rutherford County Chamber of Commerce http://www.rutherfordcoc.org/ Town of Forest City http://www.townofforestcity.com/ Rutherford Economic Development Commission http://www.rutherfordncedc.com/ Local Newspaper – The Digital Courier http://www.thedigitalcourier.com/ 18
  26. 26. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments Itemized Expense Projections Property: The Glen at Forest City 10 5 11 POV Value $330,000.00 Rents (monthly) Option Exercise $55,000 Pad sites $450 Equity $ 275,000.00 Doublewide $550 Singlewide $425-$450 ITEM Rents at 100% (of current occupancy) 63,000.00 Vacancy Rate 10% Less Vacancies: $6,300 Effective Gross Income: $56,700 Onsite Management Cost $3,000 Insurance $865 Property Taxes $1,650 Accounting & Legal $500 Landscaping $900 Repairs and Maintenance $1000 Mobile Home tax $750 Utilities water/septic maint. $1200 Trash (tenant responsible for own) $0 Miscellaneous $1000 TOTAL OPERATING EXPENSES $10,865 Net Operating Income $45,835 Cash on Cash Return 13.6% 19
  27. 27. AFFORDABLE Housing Acquisitions A ffordable H ousing A cquisitions,LLC Specializing in Asset Backed Investments Lancaster Drive    Forest City, NC      20 
  28. 28. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments Lancaster Drive Forest City, NC   21    
  29. 29. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed InvestmentsTraveler’s Rest Mobile Home ParksTraveler’s Rest, South Carolina AFFORDABLE Housing Acquisitions A ffordable H ousing A cquisitions,LLC Specializing in Asset Backed Investments Three Mobile Home Parks 20 Total Pads and Homes 22
  30. 30. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments Traveler’s Rest Mobile Home Parks Traveler’s Rest, South CarolinaProperty Highlights• 20 Mobile Home sites in three parks• 20 1999 Fleetwood Mobile homes• Upscale suburb of Greenville, SC, one of the country’s most vibrant markets• City water, sewer• Grandfathered in: There will be no new mobile home parks in Traveler’s Rest 23
  31. 31. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments Traveler’s Rest Mobile Home Parks Traveler’s Rest, South Carolina Property Addresses: 612 Main Street, 116 Tubbs Mountain road, 110 ½ Tubbs Mountain Road, Traveler’s Rest, South Carolina Number of Lots: 20, All infrastructure in place 16 Homes renovated and rented, 4 remaining and under renovation Utilities: City water and sewer Private Trash service. Business Plan: 1. Park is under a Lease/Option park for $2,000 per month with an option to purchase for $250,000 2. Complete all renovation and fill park 3. Exercise option 4. Keep for passive income or sell for capital gains Price Per Space: $7,000 Price Per Mobile $7,000 Home: Management in Currently managed by our staff in the area with all mgt infrastructure Place in place Condition These parks were neglected and had only 12 rented when we took possession. We have filled units as soon as renovated and have com- pleted 5. Revenues have increased from $3000 +/- to $6000 + 24
  32. 32. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCS p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t s Traveler’s Rest Mobile Home Parks Traveler’s Rest, South Carolina Property White Pines Park sits on Main Street and fronts on the famous Swamp Description: Rabbit Trail, a biking and hiking trail currently being renovated with government funds. It is 6 pad sites and 6 mobile homes and is very near the city center. Tubbs Mountain 1 and 2 are a total of 14 pad sites and 14 mobile homes in a nice location near the city center. Area Information: Traveler’s Rest is an upscale suburb adjoining Greenville, South Caro- lina centrally located on I-85 between Atlanta Georgia and Charlotte, North Carolina. Greenville is home to BMW North America, Michelin Tire, and other manufacturers. The Spartanburg / Greenville corridor is one of the most exciting in the country. We own and have owned multiple other successful apartment and mo- bile home projects in the area. There continues to be a strong demand for affordable housing in the area. Current holdings continuously run close to 95% occupancy. The local housing office reports that they receive three applications for each affordable housing unit. In the Carolinas, mobile homes are considered the mainstay of the affordable housing industry. Tenants are hard working blue-collar individuals and retirees. 25
  33. 33. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments Itemized Expense Projections Property: Traveler’s Rest Anticipated POV $400,000 Rent (monthly) Option Exercise $250,000 $375 Equity $150,000 ITEM After Option Exercise Rents as is 67,500.00 $90,000 Vacancy Rate 10% 10% Less Vacancies: $6,750 $9,000 Effective Gross Income: $60,750 $81,000 Mortgage Passthrough (lease) $24,000 -------- Management Fee $6,075 $8,100 Insurance $4,303 $4,500 Business License $305 $305 Corporate Filings $125 $125 Property Taxes $1,912 $1,912 Accounting & Legal $500 $1,500 Landscaping $1,980 $2,500 Repairs and Maintenance $1,350 $2,500 150 Mobile Home tax $3,126 $3,126 Utilities water/sewer $3,900 $5,000 Trash $1,500 $1,500 Miscellaneous $2,000 $2,000 TOTAL OPERATING EXPENSES $27,076 $33,068 Net Operating Income $22,172 $47,932 Cash on Cash Return 36.95% 15.46% 26
  34. 34.  The Glen at Grover  Grover, North Carolina Mobile Home Community R D A B L E AFFO Housing Acquisitions  A ffordable H ousing A cquisitions,LLC S p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t s         Friends and Family The Glen at Grover Investment   Grover,  North Carolina The Glen at Grover Mobile   Home Park Grover, North Carolina  FOR FURTHER INFORMATION,   PLEASE CONTACT    Dan kiely  (561) 779 0175    325 Clematis Street, Suite 333  WEST PALM BEACH, FL 33401    10 Potential Pad sites, 7 Existing Pads and Mobile Homes and a Brick house  10 Potential 7 Existing Pads and   Mobile Homes and a Brick House   27
  35. 35. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments The Glen at Grover - Mobile Home Community Grover, North CarolinaProperty Highlights• Located in the strong market between our existing base in Rutherford County, NC and our expanding presence in the economically exciting Greenville/Spartanburg Corridor of SC.• 4.67 acres (low density: over ½ acre per dwelling)• Mature, occupied park in nice town, pretty setting, long term tenants – not a turn- around or value enhancement project – simply bought right.• Professional management with presence in the area• Recession resistant affordable housing and postured to take advantage of inflation• Grandfathered in and expandable, but no current plan to do so given the excellent current return• Great cash flow 28
  36. 36. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments The Glen at Grover - Mobile Home Community Grover, North Carolina Property Address: 113 McGinnis Drive, Grover, Cleveland County, North Carolina Description: The Glen at Grover is a small mobile home park in Grover, NC lo- cated on the North Carolina / South Carolina border. The park in- cludes a brick home and 7 existing pads each with a good quality mo- bile home owned by the park. It sits on approximately 4.67 acres. The tenants are long term. Rents are $350 per month and $400 per month for the house. The rents are probably 15% below market. The county informs us that there could be three additional pads sites, but given the current high projected income, expansion would not significantly improve the cash on cash return. Each tenant pays his or her own utili- ties including water. The tenants are responsible for their own trash and mowing. The owner has little expense beyond insurance, taxes, and R&M. A curved paved road currently serves the residential homes. History: This project was never listed, was ”off-grid,” and came to us through one of our managers. It is owned by his father-in-law who is in failing health. This property is different from our normal “value-creation” model, but fits our acquisition criteria due to its unusually high return and the excellent purchase terms negotiated with the seller. The park is well run and extremely well maintained. There is expansion potential as noted above, but it is not in our immediate plans. Some value can be created by raising rents. The property is located in a working class neighborhood and is conve- Location: nient to the local downtown. Grover is actually a feeder community for several larger towns nearby and is in some respects a “high rent district” with nicer homes and four very, very nice mobile home parks – all full. Mature border vegetation, shade trees, city water and sewer, nice Amenities: expansive lawns, security lights, paved road. 29
  37. 37. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments The Glen at Grover - Mobile Home Community Grover, North Carolina Market: Nearby Rutherford County is our base in the Carolinas and has for several years proved to be an excellent rental market. Affordable hous- ing is in short supply in Grover as it is nearly everywhere. Cleveland County (where this park is) adjoins Rutherford County. Shelby, NC, (10 miles away) is the County Seat and in addition to its own eco- nomic base, is a bedroom community for Charlotte. On the Rutherford County line, perhaps 15 miles from the property, sits the NC data cen- ter and the new Facebook data center. To the South, the Greenville/ Spartanburg Corridor hosts a great variety of manufacturing including BMW and Michelin. Spartanburg is also the international headquar- ters for Denny’s Restaurants. Business Plan: The highest and best use for this property is already in place. It is affordable housing rental units for young couples, families and retirees. In contrast to our usual project, we need to do very little. Exit Strategy: Multiple exit strategies exist regarding this property and we have five years to contemplate them: 1. Sale of the Property. I believe that in four to five years we can sell the property for a multiple of our equity. If we get strong inflation, as many predict, it may be a high multiple. If we get runaway infla- tion, it is probably our best hedge. 2. Exchange. We may find a tax-deferred exchange at some appropri- ate time to realize appreciated value of the property. 3. Financing. If lenders re-enter the marketplace, that will in itself increase the value. We may refinance the property at an appropriate time to recapture some or all of the equity and continue to receive cash flow. 4. On the downside, even if we walk away from the project (highly unlikely) we will get our investment back and will have made an annual return in excess of 10% per year, if it continues to perform as is. 5. Other exit strategies, such as re-syndication, also exist. 30
  38. 38. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments Itemized Expense Projections Property: The Glen at Grover 6 16 11 Value $215,000.00 Mortgage $149,000 Equity $66,000 ITEM Current 15% Increase 2013 Rents at 100% 34,800.00 40,000.00 Vacancy Rate 10% 10% Less Vacancies: $3,480 $4,000 Effective Gross Income: $31,320 $36,000 Onsite Management Fee $3,132 $3,600 Insurance $900 $900 Property Taxes $800 $800 Accounting & Legal $500 $500 Landscaping $500 $500 Repairs and Maintenance $2,400 $2,400 Mobile Home tax $525 $525 Utilities water/sewer $0 $0 Overhead Contribution $1,200 $1,200 Travel/Miscellaneous $2,000 $2,000 TOTAL OPERATING EXPENSES $11,957 $12,425 Net Operating Income $19,363 $23,575 Debt Service $12,720 $12,270 Cash on Cash Return $6,643 $11,305 Cash on Value Return 10.1% 17% 31
  39. 39. AFFORDABLE Housing Acquisitions A ffordable H ousing A cquisitions,LLC S p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t s The Glen at Grover - Mobile Home Community Grover, North Carolina Grover, NorthThe Glen at GroverMobile Home Community Carolina 32
  40. 40. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCS p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t sThe Glen at Grover - Mobile Home CommunityThe Glen at Grover Grover, NorthGrover, North CarolinaMobile Home Community Carolina 33
  41. 41. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCS p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t s Cherry Mountain Townhomes Forest City, North Carolina Five Townhouse Apartments 34
  42. 42. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCS p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t s Cherry Mountain Townhomes Forest City, North CarolinaProperty Highlights• Located in our existing base in Rutherford County, NC, in Forest City, home to the new Facebook data center.• Clever purchase arrangement resulting from the current market conditions. It is a lease /option leaving the present financing in place with a RECORDED purchase option for five years at the loan balance at the time of exercise.• “Purchased” from a cash poor seller who couldn’t refurbish 3 of the 5 units and was running a monthly cash deficit.• All units renovated, in service and rented as of 3/2012. Project completed.• Professional management with presence in the area• Recession resistant affordable housing and postured to take advantage of inflation.• Purchased at less than $40 per square foot; reproduction cost $120+ per foot plus land cost. 35
  43. 43. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments Cherry Mountain Townhomes Forest City, North Carolina Property Address: 239 Cherry Mountain Street, Forest City, North Carolina Description: Cherry Mountain Apartments consist of five sizable townhouse units located in Forest City, NC, where we have management and staff in place for several other properties. Each unit is 1200 square feet consist- ing of two bedrooms and one and one half baths. All units are rent- ed at $450 per month. Tenants pay utilities including water. There is more than ample paved parking on the site. The construction is brick on a concrete slab. The roof is in good condition. Tax assessment is $213,800. The project was “purchased” using a lease – option wherein the lessee (us) net leases the property paying all related expenses. We have a five year option to purchase at the mortgage balance at the time of exercise. The Seller gets 15% of the profit. For our protection, the option is re- corded. This structure allows the present financing to remain in place in this market where such financing is virtually impossible to find. We will make “pass – through” payments for the mortgage, insurance and property tax on a monthly basis. The current mortgage balance is $134,820 equating to about $26,960 per unit. At the end of 5 years the balance will be $106,000 +/-, equat- ing to about $21,200 per unit. In post – crash 2010, we sold four apart- ment properties within 12 miles of this one for per unit sales prices between $31,000 and $32,500. They were of less size and quality than the subject. We are getting an excellent return on investment, some tax shelter, the benefit of the amortization of the mortgage during the holding period, cheap leverage, and a 5 year “free look” at the appreci- ated value. To double our investment we will have to sell the property for $163,000 or $32,600 per unit ($106,000 mortgage balance + 2 times $27,000 investment less seller’s 15%). 36
  44. 44. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments Cherry Mountain Townhomes Forest City, North Carolina History: This project was not listed, was ”off-grid,” and came to us through one of our realtor contacts who manages the property. This property is creatively structured, but still fits our normal “valuecreation” model in that by curing the minor deficiencies we have restored the economic value to the property. The property is of solid masonry construction and is built to last. Some value can be created by raising rents, but we won’t do that precipitously. Location: The property is located on a very pleasant street, in a nice neighborhood and is convenient to the local downtown. Amenities: Mature vegetation, shade trees, city water and sewer, expansive lawn, security lights, paved street. Market: Rutherford County is our base in the Carolinas and has for several years proved to be an excellent rental market. Affordable housing is in short supply as it is nearly everywhere. Nearby sits the NC data center and the new Facebook data center under construction. Business Plan: The highest and best use for this property is already in place. It is af- fordable housing rental units for young couples, families and retirees. We have refurbished and rented the units. We will also list the property early, but I believe a sale is unlikely in the first two years. Exit Strategy: Multiple exit strategies exist regarding this property and we have five years to contemplate them: 1. Sale of the Property. I believe that in four to five years we can sell the property for a multiple of our equity. If we get strong inflation, as many predict, it may be a high multiple. If we get runaway infla- tion, it is probably our best hedge. 2. Exchange. We may find a tax-deferred exchange at some appropri- ate time to realize appreciated value of the property. 3. Financing. If lenders re-enter the marketplace, that will in itself increase the value of this property. We may refinance the property at an appropriate time to recapture some or all of the equity and continue to receive cash flow. 4. Other exit strategies, such as re-syndication, also exist. 37
  45. 45. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCS p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t s Itemized Expense Projections Property: Cherry Mountain Townhomes 6 16 11 Anticipated Valuation $175,000.00 Option Cost $125,000 Equity $50,000 ITEM Current 15% Increase 2013 Rents at 100% 27,000.00 31,000.00 Vacancy Rate 10% 10% Less Vacancies: $2,700 $3,100 Effective Gross Income: $24,300 $27,900 Onsite Management Fee $2,430 Lease Payments 5,028 Insurance $1,327 Property Taxes $1,572 Accounting & Legal $500 Landscaping $500 Repairs and Maintenance $2,400 Utilities water/sewer $0 Overhead Contribution $1,200 Travel/Miscellaneous $750 TOTAL OPERATING EXPENSES $13,807 $14,000 Net Operating Income $10,493 $13,900 Cash on Equity Return 21% 27.8% 38
  46. 46.   AFFORDABLE Housing Acquisitions A ffordable H ousing A cquisitions,LLC S p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t s Presents an A.H.A. Opportunity: The Glen at Hickory Hickory/Morganton, North Carolina The Glen at Hickory Hickory/ Morganton, North Carolina For Further Information Please Contact: DAN KIELY (561) 779-0175 301 Clematis Street, Suite 3000 West Palm Beach, Florida 33401    39
  47. 47. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments The Glen at Hickory Hickory/Morganton, North CarolinaProperty Highlights• The Glen at Hickory is a mature, occupied park in pleasant town, with an attractive setting, and boasts long term tenants – some nearly 30 years in the park.• AHA sees this as a value enhancement project, but the park is operating at a good return as it is.• AHA has a professional management presence established in the area.• Great cash flow, value creation and potential appreciation.• Seller financing enhances the cash flow.• The park is “grandfathered in,” to less stringent zoning and building regulations than now exist, making it difficult for anyone to build new parks to compete.• The park is expandable.• The Glen at Hickory is a recession resistant affordable housing park and is poised to take advantage of inflation should it materialize. 40
  48. 48. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCSpecializing in Asset Backed Investments The Glen at Hickory Hickory/Morganton, North Carolina Property Address: 3925 Martin Fishpond Road, Hickory, North Carolina. The park is located in Burke County Description: The Glen at Hickory is a quaint mobile home park near Hickory and Morganton, North Carolina. The park has 17 existing pads. Nine of the pads are rented and two mobile homes are in the process of being moved in, set up, and renovated for rental. The park sits on approxi- mately 3.37 acres. The tenants are long term. Rents for mobile homes are projected at $425 per month – commensurate with our ex- perienced rental rates in the area. Pad rents are $120 per month and are being raised to $150 per month. In January 2013 they will be raised to market rates of $180 per month. Each tenant pays his or her own utilities except for water. The owner has little expense beyond insurance, taxes, and R&M. A curved road currently serves the residential homes. History: This project was ”off-grid” and was purchased out of one of the owners personal bankruptcy (caused by other businesses). AHA’s strategic partnerships allowed our managers to seize this opportunity. This property fits our acquisition criteria due to its high return and the excellent purchase terms negotiated with the seller. Understanding the potential investment opportunity in this park AHA management took over management four months ago, and through AHA’s proven systems has since turned around a once run-down park into a producing park. What makes the property so appealing is the expansion potential as noted above, and the value that can be created by raising rents and adding mobile homes. AHA recognizes the sensitive rent situation and will not raise them precipitously. Initially AHA will make a few minor improvements –plantings, instituting stringent park rules, cosmetic improvements, removing “eyesores” and adding three mobile homes to be owned by the park. 41
  49. 49. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCS p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t s The Glen at Hickory Hickory/Morganton, North Carolina Location: The property is located in a working class neighborhood and is con- venient to both Morganton and Hickory downtowns. Located in the strong affordable housing market in the next county north of AHA’s existing presence in Rutherford County, North Carolina, the Glen at Hickory is located far enough off I-40 to be rustic and charming; yet close enough to highway 40 to allow for ease of access to bigger cities such as Asheville and Charlotte, located just 60 minutes away. The park is within minutes’ drive to either Hickory or Morganton job mar- kets, shopping, and city amenities. Area: Hickory is located in the North Carolina foothills and is the 162nd largest urban area in the U.S. The city is growing steadily and the last census data placed the Hickory Metropolitan area as the 4th largest in North Carolina with 342,000 people. Several new businesses are coming to the area, including a Google processing center and a Tar- get Corp. distribution center. Hickory is home to many manufactur- ers of lumber, furniture, fiber optic cable and pressure sensitive tape. Forty percent of the fiber optic cable in the WORLD is made in the Hickory area. Each year only ten cities in the US are designated “All- America City.” Hickory has won the designation three times. Hickory also boasts a minor league baseball stadium, Hickory Crawdads, and Lenoir-Rhyne College. 42
  50. 50. AFFORDABLE Housing AcquisitionsA ffordableH ousingA cquisitions,LLCS p e c i a l i z i n g i n A s s e t B a c k ed I n v e s t m e n t s The Glen at Hickory Hickory/Morganton, North Carolina Amenities: Mature border vegetation, shade trees, city water, nice expansive lawns, security lights, curved road. Market: Nearby Rutherford County is our base in the Carolinas, and has for several years proved to be an excellent rental market. Affordable housing is in short supply. Because of the close proximity to Interstate 40 Hickory has become a focal point for large corporations to set up shop; such as Google and Target, ultimately creating hundreds and thousands of jobs for local residents. Business Plan: The highest and best use for this property is already in place. It is affordable housing rental units for young couples, families and retirees Value enhancement is possible through expansion of the park and the addition of more mobile homes. Exit Strategy: Multiple exit strategies exist regarding this property and we have five years to contemplate them: 1. Sale of the Property. AHA believes that in four to five years we can sell the property for a multiple of our equity. If we get strong infla- tion, as many predict, it may be a high multiple. If we get runaway inflation, it is probably our best hedge. 2. Exchange. We may find a tax-deferred exchange at some appropri- ate time to realize appreciated value of the property. 3. Financing. If lenders re-enter the marketplace, that will in itself increase the value. We may refinance the property at an appropriate time to recapture some or all of the equity and continue to receive cash flow. 4. Rolling the property up into a larger fund. Other exit strategies, such as re-syndication, also exist. 43

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