BROKER OPINION OF VALUE FOR
Dear Reverend Tim Holeda,
Thank you for allowing us to review and evaluate Casa Calderon. We are pleased to provide you with an in-depth overview of the current transactional market and the market for affordable projects, as well as our thoughts on its strategy and value.
We have devised a proposed marketing campaign and timeline that we believe will help achieve the best results for the sale of Casa Calderon. Our valuation is based on a comprehensive analysis of the documents you provided, our research and market analysis, and our extensive transactional experience. Given the unique location of Casa Calderon, we are confident that The Affordable Housing Group can capitalize on this opportunity and achieve premium results in both price and terms.
We have meticulously scrutinized all facets of the project and identified any potential obstacles to selling Casa Calderon. As a result, we have outlined a customized marketing strategy that will enable us to successfully complete the sale at the maximum value. Our comprehensive approach ensures that no detail is overlooked, instilling confidence in our ability to deliver the best results.
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Casa Calderon presents an exceptional opportunity for an incoming buyer to maintain the project’s status as an affordable community. This unique opportunity, combined with our estimated project value of approximately $14,700,000 to $16,000,000, creates an exciting prospect for potential buyers. The ability to utilize Low-Income Housing Tax Credits (LIHTC) further enhances this opportunity, with Florida offering an open submission period typically starting in March through the end of the year with a requirement that the project complete credit underwriting by December 31st.
Optimistically, aiming for a sale by the end of 2025, typically a 60-day marketing process, with an additional 30-45 days required for due diligence (assuming timely third-party reports and a favorable environmental assessment), would be advisable. However, it is important to note that the projected value is subject to change due to potential tax reforms and shifts in interest rates.
Value Declaration
Upon a Tax Credit execution, an incoming buyer would invest an estimated $60,000/unit in renovations at the property which would result in expense reductions in Administrative and Repairs and Maintenance however, we expect expenses to rise slightly by approximately $20 per unit per month due to an increase in insurance and management fees. This renovation along with the execution of a new 20-year HAP contract would allow for an increase in subsidized rents of $737 per unit per month, highlighting the potential financial benefits of this investment. The property is currently subsidized by a twenty-year HAP contract which expires in 2031. It is anticipated that the project will be eligible to execute a new 20-year HAP contract and achieve a mark-up-to-market in rents, which we estimate may be considerable due to the embedded value of the current rents being significantly below market. The property provides an ideal LIHTC purchase that would utilize a Freddie Mac Tax Exempt Loan that would provide competitive loan terms while achieving a high speed of closing, thereby reducing risk.
Overall, we believe Casa Calderon presents an excellent investment opportunity and a great candidate for a LIHTC syndication that would ultimately uncover the highest price while preserving the project’s affordability for generations to come.
The Affordable Housing Group Marketing Platform
For the past 25+ years, our team has developed a highly effective and greatly enhanced state-of-the-art Artificial Intelligence marketing platform that instantly matches up the highest probability pool of buyers. This platform has proven to maximize seller proceeds, tighten timelines, and increase the probability of successful closing. Our general process is outlined below.
We have determined that the most optimistic time to move forward with a sale would be upon being awarded the exclusive assignment, which would include a six-month term with a commission that is either a fixed percentage or a performance-based fee structure. In our experience, a fixed percentage fee for this type of service is between two and a half to three percent. If a performance-based fee is preferred, we will set a bottom fee of two percent with escalators once a milestone is achieved, typically with each five hundred-thousand-dollar increment resulting in a 25 bps increase in compensation.
After being exclusively hired to facilitate the sale of Casa Calderon, we will engage a professional photographer to take high-quality aerial and property photos, showcasing its best features. Our marketing team will then spend a week creating and finalizing marketing materials and a property website, which will be launched with an email campaign to our nationwide pool of qualified buyers.
All prospective buyers who express interest in the property will be required to sign a Confidentiality Agreement prior to being granted access to financial information. Our team will then contact each group by phone to discuss the opportunity, regulatory issues, and ways to maximize their offer. Our firm will aggressively market the deal through various channels, including site tours for qualified buyers vetted by our team for 60 days.
Our senior team members will lead site tours scheduled for efficiency and minimal disruption for your staff and tenants. During tours, prospective buyers will have the chance to see the property, ask questions, and address any concerns. After the tours, we will announce a Call for Offers deadline and analyze the offers to present you with Letters of Intent and a summary of each offer.
To encourage competition and maximize value, we typically hold a Best & Final round of offers among the top bidders. We offer you the option to meet with your top potential buyers for a brief interview, which can increase trust and ensure that the buyer’s goals align with yours. Once we have selected a buyer, we will assist in facilitating PSA negotiations while keeping your best interests as our priority.
Finally, once under contract, our team will facilitate the distribution of all due diligence items, coordinate third-party site visits, communicate between buyer and seller, and manage the escrow process to ensure a smooth transaction and timely closing. Our team will provide regular updates and progress reports throughout the marketing and transaction process. If you prefer a limited marketing campaign, our team can reach a target pool of the most qualified and experienced buyers. We will always advise you of the transaction’s progress during the escrow process.
The Affordable Housing Group is a devoted team committed to expanding and protecting affordable housing opportunities for low-income families and individuals across the United States. Our group of seasoned industry experts possesses a deep understanding of the complexities and nuances of the affordable housing market, and we have the experience and skill to navigate this industry. We are well-connected with qualified investors and buyers throughout the country, and our national reach ensures that our listings gain exposure to the most qualified and capable buyers. By marketing Casa Calderon, we are confident that our extensive network will attract the ideal buyer to develop and enhance this affordable housing community. Our finger is on the pulse of the affordable housing industry, and we closely track all the latest trends, including active buyers, sellers, and investors. We can provide our clients with the most up-to-date and relevant market knowledge, which is crucial in this ever-changing market. Our team is excited about the prospect of listing and marketing the sale of Casa Calderon, and we are eager to begin our 60-day marketing campaign to generate multiple highly qualified offers.
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