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Home My WebLink AboutTCF Funding11CFo C'OMMERCUL BANKING Suuunary of Terms and Conditions Loan Financing Proposal June 17, 2414 Pursuant to your request, TCF Bank (hereinafter referred to as the "Bank") is pleased to consider tenns and conditions on financing to a single asset entity managed by Wright- Gorman to construct Lions Ridge Apartment Homes, a l 14 -unit multifamily development located at 1280 N' Frontage Road in Vail, Colorado. The terms are summarized as follows. Please note the material provided is confidential and may not be provided to any other parry without the Bank's prior written consent. GENERAL TERMS Borrower: A single asset entity consisting of Gorman & Company, Inc as managing member and Town of Vail Housing Authority (TVIiA) as one of the minority partners. FACILITY Facility Amount: A secured, first mortgage loan not to exceed the Iesser of 80% of total project cost as outlined in attached construction costs or 75% of as complete and stabilized appraised value. Purpose: Construction of Lions Ridge Apartment Homes, a 114 -unit multifamily development located at 1280 N Frontage Road in Vail, Colorado. The project is situated on a 5.2 acre site currently owned by Town of Vail Housing Authority which will execute a long term (50 year) ground lease which will be subordinate to the bank debt. Maturity: The loan shall have a seven (7) year term Repayment: Interest payable monthly for the first 30 months. Months 31 through 84 will be based upon the then current interest rate utilizing a 30 year amortization schedule. Guarantors: Unlimited guaranty to be provided by Gorman & Company, Inc. Guaranty will be reduced to 25% limited guaranty upon completion and stabilization of property defined as occupancy which results in Net Operating Income, assuming fully stabilized operating expenses, which is sufficient to provide a 1.25x Debt Service Coverage ratio assuming a fully funded loan at greater of current rate or 5.0% and 30 year amortization for 40 day period. COLLATElt4,L Appraisal: Bank shall have received and approved a FIRREA compliant appraisal, from an appraiser engaged by the Bank or assigned to the Bank, with a loan -to -value ratio on an "as stabilized" basis not to exceed 75% based of the total loan amount. 1 1100 Wayzata Blvd., Suite 600 • Minnetonka C MN • 55305 MEMBER FDIC f2r "m man LEN6ER Collateral: A leasehold deed of trust on a to be built 114 -unit multi - family property As additional security for the loan, the Applicant will provide the Bank with a collateral assignment of ground lease as well as an assignement of all leases and rents from the property and a first lien on all personal property and fixtures owned by the Applicant and located or used at the property. INTEREST RATES AND FEES RATE: One Month LIBOR plus 250 bps. Pricing will be adjusted to 225 over LIBOR when property achieves stabilized occupancy which results in Net Operating Income assuming fully stabilized operating expenses which is sufficient to provide a 1.25x Debt Service Coverage ratio assuming a fully funded loan at greater of then current rate or 5.0% and 30 year amortization. FEES: Borrower may elect the either : (A) Construction loan — 0.65% of committed loan amount Extension Options — 0.15% fee will be payable at extension date. (B) (C) Total origination Fee (for 7 }year Term) — 0.75% paid at closing PREPAYMENT FEES: None DSCR COVENANT: The property must achieve a minimum DSCR of 1.20x by end of first 36 month period. DSCR will be calculated based upon trailing 90 days of operating income on an annualized basis assuming fully stabilized operating expenses and debt service based upon then current rate and 30 year amortization. From month 36 to maturity, DSC will be tested annually beginning with the period ending month 48 and each subsequent twelve month period during the term of the loan. ESCROW: If borrower does not achieve DSCR of at least 1.20x annually as outlined above, the borrower may dare the default by: (A) paying down the outstanding principal balance of the loan to the amount which required to meet the DSCR of 1.20x or (B) depositing with lender twice the amount of NOI shortfall required to achieve 1.20x DSCR. Escrow funds will be returned to borrower if prior to the next annual DSCR test, Borrower presents to Lender and Lender accepts evidence that a trailing 12 month DSCR of 1.20x or greater is achieved. After 12 months of failing to meet the 1.20 DSCR calculation, or after 24 month of failing to meet the 1.20x DSCR calculation if option is exercised for two consecutive years, if such funds have not been returned to Borrower, Lender will have the right to utilized the escrowed funds for the benefit of the Project in its reasonable commercial discretion including, but not limited to, using the funds to reduce the outstanding principal balance of the Loan and for cost directly related to maintaining the project. The cure provision for failing to comply with the annual DSCR covenant is only applicable for two consecutive testing periods. Upon the third calculation, the default is no longer curable by the escrow cure provision, but may still be cured by the re- margining cure provision outlined in (A) above. OTHER CONDITIONS OTHER Conditions: A phase 1 environmental report acceptable in form and content to Bank addressed to Bank and prepared by an environmental consultant approved by Bank in accordance to the Bank's minimum requirements which shall be provided. The report shall not indicate any adverse environmental conditions at the subject property, as determined by Bank in its sole discretion. Borrower shall at all times maintain insurance policies satisfactory to bank in all respects. Additional information related to the property will be provided to Bank upon request, including but not limited to: • Guarantors financial statements including schedule of real. estate holdings and tax returns, • Detailed construction budget reviewed and approved by TCF • Satisfactory review by TCF of proposed ground lease and agreements pertaining to property tax exemption Upon completion of construction, property operating statement and rent roll to be provided on a quarterly basis throughout loan term. Borrower and guarantor shall provide current financial statements on no less than an annual basis. DOCUMENTATION Bank will require that all documentation associated with this financing be in form and substance acceptable to Bank including a Ground lease estoppel certificate and agreement acceptable to TCF. All costs required to effect this transaction shall be borne by the Borrower. These costs include, but are not limited to legal costs, appraisal costs, environmental costs and closing costs. "ITIHS PROPOSAL OR TERM SHEET IS FOR DISCUSSION PURPOSES ONLY. IT IS NOT A COMMITMENT, AN OFFER, AN OBLIGATION OR AN AGREEMENT TO PROVIDE ANY FINANCING, AND IT IS NOT A CONTRACT OF ANY KIND. TCF NATIONAL 13ANK ONLY PROVIDES THIS TYPE OF FINANCING WITH THE PRIOR APPROVAL OF ITS LOAN COMMITTEE, FROM WHOM APPROVAL "AS NOT BEEN OBTAINED, AND UPON TILE COMPLETION AND EXECUTION OF FINANCING DOCUMENT'S IN FORM AND SUBSTANCE ACCEPTABLE TO TCF NATIONAL BANK. NEITHER YOU NOR ANYONE ELSE SHOULI) RELY ON THIS PROPOSAL Oil TERM SIIEET. Ste- C1 f arol Tmw 13o(.,),� Vice President Executive Vice President & A cepted t s ` Day of June, 2014 y- "tt C', T" G By: Its: Sources and Uses Sources Amount TCF Loan $ 20,000,000 77% Borrower Cash Equity $5,811852 23% Total Sources: 25,812,852 Uses Amount Building $20,736,144 Misc. Building $27569,773 Construction Supervision $160,000 Project Management $950,000 Development Staff /Overhe $818,271 Legal $75,000 Financing Fees $177,978 Rent Up /Marketing $12,955 Reserves $312,731 Total Uses $25,812,852