Page 103 - Guardian Broker Questionnaire Summary Complete Package 2 2 22_Neat

• Impact and opportunity of expiring LITHC credits on both buildings-value added. How will
prospective investors view/value/price this and methods to capitalize on it.
The expiration of the affordable component at Guardian Place I in coming years allows a buyer to
begin implementing a value-add strategy that will ultimately result in more aggressive pricing for
ownership. Our execution strategy and underwriting notes for Guardian Place I show a timeline of
converting current affordable units to market rate over a four-year period. A buyer will invest
significant capital to upgrade interiors, add property amenities, and enhance the curb appeal of the
property, increasing rents and providing attractive returns for new ownership. Unlike most
traditional value-add, market-rate opportunities, this execution strategy will take extended time as a
new buyer will anticipate lower overall turnover rates at the property particularly in the early years.
The three year “lockout” period following the extended use period will also delay the renovation
schedule.

• Being a non-profit, the general scenario of price spread between a market buyer and non-
profit
Our anticipated pricing range factors in both market-rate buyers as well as non-profit. Our marketing
efforts will target all traditional, market-rate groups as well as the non-profits that are actively
targeting assets of this vintage in the greater Richmond area.
• Benefits or limitations in considering separating buildings from land—Long term ground
lease

We do not downplay the advantages of a ground lease scenario for current ownership and this will
be completely vetted out during the marketing period. We do see this potentially limiting the buyer
pool and believe a traditional execution will attract broader investor interest.

• Benefits or limitations in doing partial sale—GP I now, II later
The benefits of currently marketing both properties are significant. Buyers have a very desirable
and favorable lending environment with interest rates still at historically low levels. Financing is
also diverse as buyers may utilize many competitive debt instruments including fixed, floating rate,
and bridge lending that leads to higher yields for the buyer and more aggressive pricing for the
seller.
Combining GP I and GP II also provides scale which attracts a broader investor base which leads to
more competitive pricing.
Finally, demand for multifamily product has never been higher as groups are extremely well-
capitalized and eager to deploy capital.
The only apparent benefit that we see to a partial sale, selling GP I now and GP II at a later date,
would be the timing of the expiration of the tax credits on GP II. Waiting until later to market GP II,
closer to the expiration of the affordability component, would result in a similar execution as GP I
today. Investors could more aggressively underwrite rent growth and overall assumptions during
the conversion from affordable to market rate which leads to higher pricing. However, we feel the
benefits of marketing both properties today in a single sale will lead to a better outcome for
ownership. Several risk factors are removed including rising construction costs and interest rate
volatility as well as a potential increase in supply in future years.

• Please provide comparable sales data to support your thinking.
Please find attached a comprehensive list of relevant sale comps to support our underwriting and
execution strategy.