CORONA DEL SOL

Phoenix, AZ

MULTIFAMILY

An income-generating investment opportunity in a strong Sunbelt market.

An opportunity to invest in the growing employment hub of Phoenix, AZ. The business plan includes growing rents and selling at the end of the projected holding term, leveraging the strong market dynamics in Phoenix. Home prices in the city have increased 4.6% YoY.

Property Details

• Current occupancy is high, at 98.4%. The property is in good condition and was renovated in 2020. The seller has held the property since 2018 and has reached the end of their investment holding cycle.
• The 64-unit apartment complex is located at 27 East Corona Ave, Phoenix, AZ and was built in 1985. The property includes five 2-story buildings and a pool house, and is comprised of two-bedroom units, with an average unit size of 874 SQF.

Detail	Value
Asset Type	Multifamily
Investment Type	Income-generating
Financing Type	Equity
Estimated Holding Period	48 months

Deal Highlights

1. Attractive acquisition price

• The acquisition price of $12.6M is compelling given that on a per unit basis the acquisition price is $42K less than market comps. The going in cap rate is 7.24%, versus the current market cap rate of 5.4%.

Deal Highlights

2. Rent growth potential

• The sponsor expects to achieve a premium of $65 per unit after improvements, bringing the average rent from $1,450 to $1,515. From there, rents are expected to be grown 3% annually, per the business plan.

3. In-demand location

• The property is located in South Phoenix, a 15-minute drive from the city's downtown, with 140,000+ jobs in the area.
• A new light rail line is under construction within close walking distance of the property, due for completion in 2025, adding a direct link to Downtown Phoenix. The new line is expected to improve tenant quality and attract local business and development to the area.

4. A strong employment hub with a young, professional demographic

• Phoenix is notable for its job growth, with a 2.3% YoY increase as of Q1 2024. Wage growth of 4.4% YoY has made it an attractive market for jobseekers; the labor force has increased 3.1% YoY and the median household income grew 2.9% YoY.
• The city has seen a population boom in recent years, with a 4% increase in residents, easily outpacing the national average for growth among large metro areas. Phoenix is now the 5th most populous city in the US. The workforce has a median age of 34 years and 78% is white collar.
• Intel is investing $20B and constructing two semiconductor plants in the Phoenix metro area, expected to create 3,000 new high-tech positions upon completion in 2027/2028, alongside 3,000 construction jobs during the development process. The tech giant already has a substantial footprint in Phoenix, employing more than 13,000 workers.

Deal Highlights

5. Experienced sponsor

• With 28 years of experience in real estate development and investment, the sponsor has led the construction, acquisition, and rehabilitation of 6,000+ units in 50+ properties, primarily on the west coast.
• The sponsor has leveraged local relationships to source this off-market deal.

Property Details

Property type	Multifamily
Unit Count	64 2BR Units
Avg SQF/unit	874 SF
Year Built	1985
# of Buildings	5
Asset Class	C+
Property Address	27 East Corona Ave, Phoenix, AZ

Asset Location

Strategically located beside light rail station

Corona del Sol is situated in South Phoenix, a 15-minute drive from the city's Downtown. A new light rail line is under construction close to the property, due for completion in 2025, which will add a direct link to the city. The new line is expected to improve tenant quality and attract local business and development.

Intel is building two new facilities at its 13,000-employee Ocotillo campus, which is a 30-minute drive from the asset. The emerging tech hub of Tempe-Chandler, meanwhile, is a 20-minute drive.

Many of the mountains and parks that provide Phoenix residents with ample outdoor recreational activities are situated close by, including the 16,000-acre South Mountain Park and Preserve.

Phoenix Sky Harbor International airport sits 5 miles northeast of the property.

Market Details

Phoenix Metro Area, AZ

• Phoenix is notable for its job growth, with a 2.3% YoY increase as of Q1 2024.
• Wage growth of 4.4% YoY has made it an attractive market for jobseekers; the labor force has increased 3.1% YoY and the median household income grew 2.9% YoY.
• The city's workforce has a median age of 34 years and 78% is white collar.
• Intel is investing $20B and constructing two semiconductor plants in the Phoenix metro area, expected to create 3,000 new high-tech positions, alongside 3,000 construction jobs during the development process.
• Up to $8.5B in funding has been granted to Intel by the government, in a bid to boost chip production in the US, and the Phoenix MSA is one of four locations set to reap the benefits of this investment. The tech giant already has a substantial footprint in the Phoenix MSA, employing more than 13,000 workers.
• Dozens of other tech companies have a presence in Phoenix as part of a shift in dynamics that has meant that the area has become known as The Silicon Desert. Some of the notable names include Lyft, ZocDoc, and Freshly, while nearby Tempe is home to Microsoft, Amazon, and Carvana.
• The popular city has seen a population boom in recent years, with a 4% increase in residents, easily outpacing the national average for growth among large metro areas.
• Home prices in Phoenix remain close to the record highs recorded in 2022, and have increased 4.6% YoY, fueling demand for the rental market.

Property Images

Images of the Corona del Sol property including pool area, exterior buildings, walkways, and an aerial view showing proximity to the Phoenix Valley Metro Light Rail South Central Extension and Central Avenue Park and Ride (Coming 2024).

Sponsor Details

KDF Communities

With 28 years of experience in real estate development and investment, the sponsor has led the construction, acquisition, and rehabilitation of 6,000+ units in 50+ properties, primarily on the west coast. The sponsor is carrying out an aggressive expansion strategy in primary and secondary markets with positive population and employment growth.

Sponsor Track Record – Active

Property	Address	City	State	Asset Type	Units	Purchase Date	Purchase Price
Five Points Seniors	18561 Florida St	Huntington Beach	CA	Multifamily	166	Sep-20	$49,000,000
Quail Village	321 Quail Rd	Longmont	CO	Multifamily	72	Jun-20	$13,700,000
Ventana	329 Ridgeview Dr	Kent	WA	Multifamily	171	Jun-20	$21,200,000
Wisteria Walk	3615 112th St SW	Lakewood	WA	Multifamily	120	Jun-20	$11,900,000
Summit Rose	460 E Washington Ave	Escondido	CA	Multifamily	91	Jul-15	$9,110,000
Palo Verde	44720 Palo Verde St	Indio	CA	Multifamily	80	May-13	$7,000,000
Seven Palms	12831 San Fernando Rd	Sylmar	CA	Multifamily	68	Dec-12	$6,700,000
Almaden 1930	1930 Almaden Rd	San Jose	CA	Multifamily	152	Dec-07	$26,000,000

Sponsor Track Record – Exits

Property	Address	City	State	Asset Type	Units	Purchase Date	Purchase Price	Exit Date	Exit Price
Park Terrace	1011 E Orange St	Tempe	AZ	Multifamily	40	Oct-22	$9,000,000	May-24	$13,000,000
Casa Real	2580 Fontaine Rd	San Jose	CA	Multifamily	180	Jan-06	$17,500,000	Dec-19	$41,450,000
Charter Court	1200 Ranchero Way	San Jose	CA	Multifamily	94	Mar-08	$17,100,000	Dec-19	$20,725,000
Villa Monterey	2898 Villa Monterey	San Jose	CA	Multifamily	120	Jun-02	$13,350,000	Dec-19	$30,000,000
Claremont Village	965 W Arrow Hwy	Claremont	CA	Multifamily	150	Apr-01	$10,583,000	May-18	$53,800,000
Pioneer Gardens	9039 Pioneer Blvd	Santa Fe Springs	CA	Multifamily	141	Apr-01	$10,125,000	May-18	$55,100,000

Estimated Cash Distributions

Ongoing Cash Distributions (Quarterly)

Ongoing cash distributions to iintoo and sponsor pro rata and pari passu. In years 3 and 4, iintoo to receive additional distributions equal to 7% of sponsor's pro rata share ("Distribution Sweep").

Distributions Upon Sale or Refinance

Distributions from sale or refinance, catch up to sponsor in the sum equal to the Distribution Sweep; to repay capital contributions of iintoo and sponsor pro rata and pari passu; to iintoo and sponsor until 8% return received pro rata and pari passu; to sponsor's member loan(s) and interest, if any; 20% to sponsor (promote) and 80% to iintoo and sponsor pro rata and pari passu until 17% IRR for iintoo reached. Remainder to be distributed: 60% to sponsor (promote), and 40% to iintoo and sponsor pro rata and pari passu.

Legal Structure

• Corona del Sol Phoenix AZ LP: 76.28%
• Sponsor & Other Investors: 23.72%
• JV LLC: 100% ownership of 27 East Corona Ave, Phoenix, AZ

Ownership

The iintoo investor entity is expected to hold a 76.28% stake in the special purpose entity that owns the asset. The principals of sponsor have provided a personal undertaking of the obligations of sponsor related to bad acts under the Formation Agreement. iintoo will oversee and monitor the project until its completion and provide investors with semi-annual progress reports.

Buyout

Starting at 18 months until 30 months from the closing date, sponsor is entitled to buy out iintoo for an amount that represents a return of capital contribution plus an expected IRR of 17.18% plus 7% of iintoo's capital contribution. In addition, after the 48-month anniversary of the property closing date, iintoo has the right to require the sponsor to buy out iintoo's interests in the special purpose entity for fair market value.

Deal Structure

Component	Amount
iintoo Debt*	$1,056,000
iintoo Equity	$2,144,000
Sponsor & Other Equity Investors	$994,803
Deal Initiation Costs	$92,000
Deal Initiation Costs (incl. reserves)	$334,000
Total Targeted Capital Raise (Debt)	$1,148,000
Total Targeted Capital Raise (Equity)	$2,478,000
Total Capital	$3,626,000

Capital Stack

Component	Amount
Bank Loan	$9,943,000
iintoo Debt Investors*	$1,056,000
iintoo Equity Investors	$2,144,000
Sponsor & Other Investors	$994,803

Financial Snapshot

Sources ($)

Source	Amount
Bank Loan	9,943,000
iintoo Debt Investors	1,056,000
iintoo Equity Investors	2,144,000
Sponsor and Other Equity Investors	994,803
Total Sources	14,137,803

Uses ($)

Use	Amount
Acquisition Price	12,600,000
Capital Improvements	440,000
Purchase Costs	808,803
Working Capital & Other Reserves	289,000
Total Uses	14,137,803

Estimated Cashflow ($)

Item	Year 1	Year 2	Year 3	Year 4
Rental Income	1,069,418	1,129,285	1,172,935	1,208,123
Other Income	165,000	169,950	175,049	180,300
Total Income	1,234,418	1,299,235	1,347,983	1,388,423
Payroll	(64,622)	(66,561)	(68,558)	(70,614)
Property Taxes	(28,500)	(29,925)	(31,421)	(32,992)
Insurance	(39,360)	(40,541)	(41,757)	(43,010)
Repairs, Maintenance & Turnover	(54,400)	(56,032)	(57,713)	(59,444)
Utilities	(86,391)	(88,983)	(91,652)	(94,402)
Marketing & Administration	(52,480)	(54,054)	(55,676)	(57,346)
Management Fee	(40,983)	(42,927)	(44,390)	(45,603)
Total Expenses	(366,736)	(379,023)	(391,167)	(403,412)
Net Operating Income (NOI)	867,682	920,212	956,817	985,011
Debt Service	(582,687)	(582,687)	(698,571)	(698,571)
Asset Management Fee	(18,516)	(19,489)	(20,220)	(20,826)
Replacement Reserves	(32,000)	(32,000)	(32,000)	(32,000)
Application of Working Capital and Other Reserves	111,000	60,000	54,500	29,500
Net Cash Flow Before Tax	345,478	346,036	260,526	263,114
Estimated Cash Flow to iintoo Investors*	263,548	263,973	216,978	219,134
Capital Reserve	(41,000)	(36,000)	30,000	47,000
Estimated Cash Flow to iintoo - Debt Investors (9% Interest)	(103,320)	(103,320)	(103,320)	(103,320)
Partnership Costs	(10,000)	(10,000)	(10,000)	(10,000)
Estimated Cash Flow to iintoo Equity Partnership	109,228	114,653	133,658	152,814
Estimated Cash Flow to iintoo GP (2% Ownership Rate)	(2,185)	(2,293)	(2,673)	(3,056)
Estimated Cash Flow to iintoo Equity Investors (98% Ownership Rate)	107,043	112,360	130,985	149,758

*In Y3 and Y4, iintoo investors will be entitled to 83.28% of the net cash flow before tax

Disclaimer

The indicative performance notifications herein above were determined based on the following stipulations: An investment's Estimated Operational Net Operating Income (NOI) amount that is generated to Equity Investors amount is determined by deducting fees and expenses from the current rent roll and other cashflows. We confirm these numbers by comparison with comps received from appraisers. The performance notifications are hypothetical based on the methodology herein above indicated and the actual performance of an investment as stated will vary over time and might not be attained.

The above may contain forward-looking statements. Actual results and trends in the future may differ materially from those suggested or implied by any forward-looking statements in the above depending on a variety of factors. All written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the previous statements. Except for any obligations to disclose information as required by applicable laws, we undertake no obligation to update any information contained above or to publicly release the results of any revisions to any statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of the publishing of the above.

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