148 Units in Midland, Texas

6.75 acres for 148 apartment homes. $39 million in direct investment in Midland, which will be financed by a permanent first mortgage and a Multifamily Direct Loan from the Texas Department of Housing and Community Affairs. Site design capitalizes on proximity to several retail and eateries located within walking distance by providing a pedestrian-friendly environment, encouraging multi-modal transportation by providing bicycle racks throughout the site. It will be the first LEED Certified Apartment Project in Midland that could set the standards for future developments. The development will involve a large number of commercial general contractors who will sign a GC completion letter. We are working with the government for various tax incentives. Involves the local Chamber of Commerce for construction bidding with local vendors. High-quality housing is affordable for employees of local businesses and major employers. High-quality, affordable housing will attract future employees and their employers. New rooftops will spark commercial demand. 

Garden Style product:

• Pedestrian-friendly environment with walking distance to retail amenities.
• Exterior finishes will have a combination of stone/brick/stucco.
• LEED Certified – Energy / Environmentally conscious.
• Sparkling Swimming Pool.
• BBQ and Picnic seating areas, along with extensive landscaping.
• Bicycle Racks.
• Spacious designer Clubhouse that accommodates an abundance of amenities such as a fitness
  center, computer center, etc., along with an oversized swimming pool to allow for group activities
  and community enrichment

Amenities:

• Designer Clubhouse with a combination of amenities:
• Granite countertops in all public areas.
• Leasing Center.
• Coffee Bar.

• 24-hour fitness center.

   

Financial Breakdown:

We deem to divest our shareholding at $1/per share having launched 5 millions of shares (as per the market value of the land at $1.323 millions and the rest as cash)

The mortgage rate (6.00%) exceeds the exit cap rate (5.00%), meaning we are in negative leverage territory. This means leverage mathematically dilutes the unlevered return, yet the levered IRR remains 28.35%, indicating that the project's capital appreciation and NOI growth compensate for the negative leverage effect. Secondly, the hurdle rate sits very low, even lower than the mortgage rate. Conventionally equity should demand at least 300 to 500 basis points above the mortgage rate, which would put our hurdle at 9.00% to 11.00%.

Thirdly, the levered IRR comfortably exceeds the hurdle rate by a positive Alpha (α) of 23.96%. On the other hand, the unlevered IRR of 11.15% exceeds the 6.00% of mortgage, thus creating a debt yield spread of 515 bps. These are the numbers our financing bank will focus on, and these are very impressive.