Overview

Loudoun-Chantilly Center is a 66-acre mixed-use development located south and west of Dulles Airport in Loudoun County, Virginia. The first phase consists of land purchase and improvement, construction of a Medical Center integrated with an hotel,a sports and health facility, and one research building. Subsequent phases include two commercial research buildings and a luxury hotel expansion.

The project is located in the Dulles corridor, one of the fastest-growing commercial and residential areas in the country and the second-largest high tech area in the nation. The proposed hotel, a medium-price full-service airport type, is assured of occupancy by being next to Dulles airport and near the entrance to the new NASA Air & Space museum annex, which alone attracts four million visitors per year. The medical center will initially account for occupancy of 35 rooms, but within three years, could completely fill the hotel.

The medical center is a complete ambulatory facility, containing ambulatory, surgery, radiology, RT, PT, 24-hour ER and virtually all specialties within the rest of the building. The medical providers are both tenants and limited partners, and thus have an interest in hotel occupancy and success of the project. Patients can have medical services within an ambulatory setting instead of in hospital so they can save cost, yet have access to continual medical care. The hotel is situated and constructed so that the medical occupancy is transparent to the commercial guests and vice versa. The medical space is 80% pre-committed and expected to be 90% pre-leased at the start of construction.

The total cost of the first phase will require $104,000,000 -- of which $5,000,000 will be contributed as equity by the medical provider partners., in addition to the $23.5 MM of excess land value generated upon the start of construction. Chantilly Center, LP is the owner of the project and the borrower.

After two years, when construction has been completed and the Chantilly Center is operational, the project will be cash flow positive.

Project Cost Breakdown-Phase I

Medical Building Hotel, Research Bldg

Medical Building res Hotel blg Total Phase I Costs

(xs Land value) Land Price 10,000,000 4,300,000 8.5 $ 22,800,000

Site Improvements 2,000,000 1,000,000 3,000,000

Construction Cost 14,828,967 11,742,665 10 36,571,632

A&E Fees 1,000,000 1,000,000

Legal & Accounting 70,000 70,000

Insurance 150,000 150,000

Real Estate Taxes 95,000 52,276 147,273

Development Costs 1,144,000 1,144,000

Interest Reserve 1,445,413 765,782 2,211,195

Loan Origination Fees 700,000 300,040 1,000,040

Contingency 294,688 73,832 368,522

Total $ 31,728,068 18,225,595 18.5 $ 68,453,663

Equity 1,728,068 3,271,932 8.5 13,500,000

Loan Amount $ 30,000,000 14,953,663 10. $ 54,953,663

Within a 15-mile radius of the site is the fastest growing and most affluent population in Northern Virginia, well able to support the health care activity projected. The site is virtually in the middle of the nearest other major health care facilities. Because the medical facilities are owned by the doctor-tenant-partners in the venture, the medical building cash flow and operating profits are sufficient to support the proposed financing. Most importantly, the financial and liability structure is NOT that of a hospital or licensed health care facility- it is a (large) medical building, supported by rents paid by practitioners 90% of whom are coming in with established practices.

Medical Building

Stabilized Operating Statement and Debt Service Coverage

Base Rental Revenue $ 5,818,874

Expense Reimbursement Revenue NNN 1,625,340

Total Potential Gross Revenue 7,444,227

General Vacancy (352,486)

Collection Loss (70,497)

Effective Gross Revenue 7,016,677

Operating expenses NNN 1,736,992

Non Reimbursable 66,267

Total Operating Expenses 1,803,259

Net Operating Income $5,213,418

Tenant Improvements 455,985

Leasing Commissions 81,639

Total Leasing & Capital Costs 537,624

Cash Flow Before Debt Service $4,675,794

Proposed Debt Service $31 Million @ 6% for 15 years $3,088,883

Proposed Debt Service Coverage 1.51

The hotel is located near to the western entrance to Dulles Airport. The