Camaron at Woodcrest Investment Summary and Purchase Methodology
Camaron at Woodcrest is a 222-unit apartment complex located in Tallahassee, Florida. The Property was purchased on May 21, 2009, by Camaron at Woodcrest, LLC, a single-purpose Florida limited liability company. This is described in detail in the Offering Summary, Offering Memorandum and Due Diligence Report for Camaron. A total of $10,240,000 of capital was raised for the acquisition and renovation of the Property. Of this, $2.8 million was equity contributed by investors and $7.44 million was Seller financing on very favorable terms. LN’s Principals personally guaranteed the $7.44 million initial mortgage. Click here to see the Camaron Offering Summary
Camaron was initially marketed to us at $12 million and we negotiated the price to $9.3 million. Bob Nass, one of LN’s principals and the owner of Landmasters, Inc. a licensed general contractor, performed an extensive due diligence of the Property including an inspection of every unit at Cameron. This inspection indicated that a total of $515,000 of renovations were immediately required and $412,000 of roof replacements would be needed in approximately four to five years. Click here to see the Camaron Due Diligence Report During the Due Diligence Period, LN negotiated a $215,000 cash renovation credit from Seller which lowered the effective purchase price to $9,085,000.
In addition, LN was able to negotiate with the Seller to provide acquisition financing of $7.44 million with the first two years payable interest only at 4% per annum and the remaining three years at the then current prime rate amortized over 25 years. The loan is pre-payable at any time without penalty which allows us to refinance in 2-3 years after the Property is stabilized at over 90% occupancy for 6 months. LN was also able to negotiate with Seller to waive all up-front fees on the loan including points, third-party reports and its attorney fees. This loan was personally guaranteed by LN’s Principals. Click here to see the Camaron Offering Summary
The Property was 58% occupied when it was purchased. Camaron is now a fully stabilized property with a constant occupancy ranging from 90% to 97%. This is due to sound management at the property along with the upgrades we have completed at the Property to make it the nicest Property out of the competition.
Cash flow from operations, refinancing and the sale of the Property will first be paid to the investors to give them an 8% annual cumulative preferred return on their Capital Contributions. Additional cash flow will then be distributed to the investors until they have been repaid all of their Capital Contributions. Thereafter, investors will receive 60% of cash flow.
When we bought Camaron in 2009, it was financed by the current holder of the note, Compass Bank. We refinanced the Property in 2012 through Freddie Mac, a government-backed mortgage program. We received an $8,175,000 loan on the property for a 10 year term with a 30 year amortization at a rate of 3.94%. Click here to see Camaron Offering Memorandum
It should be noted that the prior mortgage on the Property was $15,500,000 which, at a 75% loan-to-value, indicates a prior valuation of $20,600,000. Thus, the $9,085,000 net purchase price represents a 41.4% discount from the prior mortgage and a 55.9% discount from the estimated prior valuation of the Property. In addition, the cost to replace this Property as new is approximately $128,600 per unit. Alternatively, with the consent of the investors, the Property could be converted to, and sold as, condominiums which would generate an estimated total net sales price of $125,600 per unit.
The above materials and attached Offering Summary, Offering Memorandum and Due Diligence Report contain projections based on assumptions LN believed to be reasonable at the time of Camaron’s purchase. These projections do not assure similar results for other properties and are shown only to give a background of how LN approaches the acquisition of a project. Any investor should carefully review the Offering Memorandum and ask all relevant questions before investing in any future project.