TUSCANY A MASTER PLANNED ACTIVE ADULT COMMUNITY Bayshore Realty Advisors, Inc. Facsimile 954-989-3803 Telephone 954-966-9036 - 1 -
JOINT VENTURE HIGHLIGHTS Joint Venture Structure: Entitled land contributed to venture. Land owner paid from closing proceeds. Builder’s share of Profit is $ 132 million. IRR (unleveraged with Community Development District) : 22% Number of Units: 4316 Stabilized Absorption: 275 Average House Price: $ 204,000 Estimated Annual Pre-Tax Profit: $ 7.3 million - 2 -
OPPORTUNITY Tuscany is a master plan approved adult community located in Central Florida, suitable for the development of at least 4,316 homes around an existing golf course and two additional proposed golf courses and other amenities. The Property has an approved D.R.I. and the availability of utilities to service the property. The Owner is prepared to contribute the Property to a JOINT VENTURE with an established builder/developer. His compensation for the land will be paid upon the closing of the housing units after an initial payment to consummate the joint venture agreement. By deferring these payments to closings and taking advantage of Community Development District (CDD) financing for certain amenities, the project demonstrates an unleveraged internal rate of return (IRR) in excess of 22%. Tuscany is located in Citrus County, Florida approximately 20 miles southwest of Ocala and approximately 60 miles from either Tampa or Orlando. The Property is on Highway 491 across the street from the Black Diamond golf course community, the Pine Ridge estate lot community and the nearby Citrus Hills adult community (see exhibits 1A-Location Map, 1B-Site Map and 1C- Proposed Master Plan). - 3 -
Exhibit 1A-Location Map - 4 -
Exhibit 1B-Site Map - 5 -
Exhibit 1C-Proposed Master Plan - 6 -
MARKETING PERSPECTIVE One of the major assumptions in the business plan is the number of residential units sold per year or absorption. Based upon visiting most of the master planned adult communities in the Central Florida market, we believe lifestyle amenities and marketing drive the absorption for each community. A traditional community with an amenity package that generally includes golf, tennis and a country club and utilizing local advertising will absorb about 150 units per year. Taking this as a base point and adding an offsite marketing program brings the absorption to about 200 units per year. Adding additional lifestyle amenities brings the absorption to the 250-300 unit level, which is the basis for this business plan 1 . Examples of this new type of community in Florida are Solivita and Lake Ashton 2 , which take advantage of extensive lifestyle amenities and strong marketing programs. Pro Forma absorptions in these communities are in the 300-500 units per year range. 1 The enclosed business plan assumes a gradual ramp up over three years to 275 sales per year that is then held constant through the life of the project. 2 The analysis excludes reference to the Villages, which utilizes the above concepts and has a huge existing customer base to yield over 2,000 sales per year. - 7 -
BUSINESS PLAN ASSUMPTIONS The major business assumptions in the preparation of the financial model are: - Amenities include two new 18-hole golf courses, two clubhouses, and a lifestyle community center all of which will be built in phases during the life of the project. - As a lifestyle community, the financial model assumes the amenities are controlled by the developer until the end of the project and are then sold. - Residents pay $100 per month for use of the amenities, $70 per month for the homeowner’s association and $58 per month for a Community Development District assessment (CDD). - Based on resident's payment of $58 per month($700 per year), the financial model assumes a CDD that will be funded over time with a total bond offering of $39 million with net proceeds of $29 million that occur in three stages from inception through the year 2010. - The revenue model consists of three sizes of single-family homes and a high density villa product, all of which range from a maximum of 2,500 SF to a minimum of 1,650 SF. Average sales price for the product is $95 per SF including all upgrades but before lot premiums. Construction costs average $55 per sq. ft. - 8 -
- Based on a joint venture the landowner receives from each house closing 8% of the gross sales price as his consideration for his contribution of the land to the venture. Upon the execution of the joint venture documents, it is anticipated that the builder/developer partner will make a payment to the landowner of $2 million. - The financial model and building plan is predicated on a marketing program that includes an off-site sales program in addition to traditional local marketing and advertising. The sales and marketing budget is approximately 8% of the gross sales price of the home and excludes real estate commissions and closing costs. - The project excludes any of the benefits that may result from the commercial development opportunity contained within this community. The Owner is contemplating the creation of a town center that will serve as the focal point and tie into the residential amenity package that will be developed over time as absorption is achieved. - Inflation and escalation are excluded from the plan assumptions. - Based on the above assumptions the project shows an unleveraged IRR of 22% at a stabilized absorption of 275 units per year (see exhibit 2-Sensitivity Analysis of IRR vs. Absorption). - 9 -
Exhibit 2-Sensitivity Analysis of IRR vs. Absorption UNLEVERAGED IRR ANALYSIS 70% 66% 62% 60% 56% 51% 50% 45% 41% 40% IRR 36% 31% 30% 27% 22% 20% 18% 14% 11% 10% 0% 200 225 250 275 300 325 350 375 400 425 450 475 500 Absorption (Units Per Year) - 10 -
COMPLIMENTARY STRATEGY It should be noted that the development plan assumes a single community that absorbs the 4,316 units over approximately 16 years. There is the possibility to increase absorption by having two different types of communities under development at the same time. Based on existing infrastructure and the existing golf course, it is possible to accelerate absorption by starting one of the communities through the immediate development of 300 lots along the existing golf course. Please refer to the attached appendix, which provides a detailed summary of the history of the community and the entitlements contained therein. - 11 -
APPENDIX - OVERVIEW The “Owner” has retained Bayshore Realty Advisors, Inc. (“Bayshore”) on an exclusive basis to arrange for a joint venture of Tuscany (the “Property”), an entitled proposed master-planned community site consisting of approximately +/- 1,511 acres, located in Beverly Hills, Citrus County, Florida. The Property consists of approximately 951 acres included in the 1981 Beverly Hills Development of Regional Impact (the “D.R.I.”) and approximately 560 adjacent acres zoned for low-density residential development. Tuscany is a proposed active adult lifestyle master planned residential golf course community located southeast of County Road (“CR”) 491 and east of Beverly Hills, Florida. The site is adjacent to Black Diamond Ranch (home of the renowned Tom Fazio designed Black Diamond golf courses) approximately 10 miles from the town of Crystal River and the West Central Florida Gulf Coast, in the northern portion of Citrus County. The Property’s central Florida location provides convenient access to the attractions and cultural amenities of Ocala (20 miles north), Gainesville (45 miles north), Tampa (60 miles south) and Orlando (65 miles east). Surrounded by the magnificent natural landscape found in the heart of Florida’s gulf coast hill country, Tuscany’s current development scenario envisions 4,316 single family homes (although approximately 5,396 residential units are approved), 400,000 square feet of retail and office space, 41,368 square feet of community and neighborhood service space (the “town center”) and two additional golf courses that would include a full service clubhouse, community center and other related amenities. - 12 -
APPENDIX – D.R.I. Development of Regional Impact (D.R.I.) Approved Site: The offering is unique in that a majority of the Property’s developable acreage is included in a D.R.I. The D.R.I. greatly facilitates the development process as it grants the Property approved and established building densities and as a result reduces the time it takes for development to commence. The D.R.I. further provides for substantial land use flexibility, allowing for the substitution of residential uses (with Citrus County approval) on the site provided the overall density of the Property is not increased. It is anticipated that Tuscany will contain two additional 18-hole golf courses and that 560-acres of adjacent owned land will be incorporated into the D.R.I. The Owner believes that to make the aforementioned changes, it would require a less cumbersome non-substantial deviation to the D.R.I., as density for the Property would not increase. - 13 -
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