The Heritage at Boca Raton

• The project stalled during the economic downturn. The loan was in default and the building permits were terminated by the City of Boca Raton. The previous owner was in litigation with the City of Boca Raton and the Florida attorney general’s office.
• The strategic plan is to complete the construction and reposition the project to a class AAA, multifamily rental community and to take advantage of downtown Boca Raton's limited apartment supply.
• Value-add Program:
  • Establish a temporary leasing office and began leasing in building 1 (53 units).
  • Terminate the condominium and repurchase all units owned by third-party owners (25 of the 27 acquired at closing by seller).
  • Complete the build-out of the clubhouse and common area amenities.
  • Complete the remaining interior and site work for building 2 and then open the building to leasing (53 units).
  • Complete the re-development of buildings 3 and 4 and then open the buildings to leasing (142 units).

• Repurchased all third party owned units and successfully terminated the condominium.
• The build-out of the clubhouse, leasing office and common area amenities are completed.
• Two of the four apartment buildings are completed. As of Oct, 7 2010 we have 52 occupants in 106 available units.
• We expect to complete the renovation/redevelopment program by the end of Jan 2011.

A comprehensive due diligence program that spanned an 8-month period was conducted to identify and mitigate a significant portion of the deal risk associated with the Project

Deal Risk	Risk Mitigation
Fractured Condo Project	Of the 27 third party owned units, 25 were bought back concurrently with closing as required by the purchase agreement. Priderock negotiated a reduction in the offer price of $864,000 to buyback the remaining two units. Acquired the remaining two units shortly after closing. One of the units was acquired via a foreclosure auction at a substantial discount to the credit amount resulting in a surplus of approximately $391,000.
Renovation Cost Overrun	Conducted extensive due diligence with in-house resources, third party consultants and contractors. Highly detailed and broad based guaranteed maximum price contract executed with high quality, national general contractor.
Pro-Forma Operating Projections	Extensive local market knowledge (asset is located in our backyard, Priderock Capital Partners is based in West Palm Beach, 30 minutes from the property. In addition, a few of Priderock Principals live in Boca Raton, FL). Extensive use of third-party research (REIS, Axiometrics, local and national brokers). Detailed internal and third party conducted market surveys (updated periodically during transaction execution).
Political	High profile deal in which the sellers were involved in litigation with the City of Boca Raton and the Florida attorney general’s office regarding the development of the project. Priderock resolved the issues between the seller, the City of Boca Raton and the Florida attorney general upon closing on the asset. Negotiated to have seller buyback 25 of the 27 units at closing. Worked closely with the City Manager and City Staff to reinstate the building permits concurrently with closing.
Immediate Cash Flow	Atypical construction project with in-place income. Closed on the property with 21 tenants providing in-place cash flow. Ability to rent through the construction period.