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R2006-141 08-28-06 RESOLUTION NO. R2006-141 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, CONSENTING TO AN ASSIGNMENT AND ASSUMPTION AGREEMENT. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: Section 1. That certain Assignment and Assumption Agreement, attached hereto as Exhibit "A" and made a part hereof for all purposes, is hereby approved. PASSED, APPROVED, AND ADOPTED this 28th day of August, AD., 2006. ~)1 TOM REID MAYOR ATTEST: APPROVED AS TO FORM: ~ It,~ DARRIN M. COKER CITY ATTORNEY Exhibit "A" Resolution 2006-141 8/28/06 ASSIGNMENT AND ASSUMPTION AGREEMENT THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment and Assumption") dated August _, 2006, is entered into by and between The Maverick Group, LLP ("Assignor"), and Juliet Homes, LP ("Assignee"): RECITALS A. Reference is hereby made to that certain Development Agreement dated as of February 13, 2006 by and between Assignor and City of Pearland, Texas (the "Contract"), attached hereto as Exhibit "A". All initially capitalized terms not otherwise defined herein shall have the meanings set forth in the Contract unless the context clearly indicates otherwise. B. Assignor desires to assign to Assignee, all of Assignor's right, title and interest as buyer in, to and under the Contract, and Assignee desires to accept the assignment thereof and assume Assignor's obligations thereunder. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: AGREEMENT 1. Assignment and Assumption; Assumption. 1.1 Assignment. Assignor hereby transfers, assigns and conveys, without recourse, representation or warranty, express or implied, all of Assignor's rights, interests, liabilities and obligations in and to the Contract. 1.2 Assumption. Assignee hereby assumes all of the terms and provisions under the Contract, and all of Assignor's obligations under the Contract arising after the date hereof and agrees fully and faithfully to pay, perform and discharge, as and when payment, performance and discharge are due, all of Assignee's obligations under the Contract arising after the date hereof. 1.3. This Assignment and Assumption shall be binding on and inure to the benefit of Assignor and Assignee and their respective heirs, executors, administrators, successors in interest and permitted assigns. 1.4 This Assignment and Assumption is contingent upon its approval by the City of Pearl and, Texas. 2. Counterparts. This Assignment and Assumption may be executed in any number of counterparts, each of which shall be deemed an original, but all of which when taken together shall constitute one and the same instrument. Each counterpart may be delivered by facsimile transmISSIOn. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other counterpart identical thereto. IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment and Assumption as of the day and year first above written. "ASSIGNOR" The Maverick Group, LLP By: John 1. Kelly, Managing Partner "ASSIGNEE" Juliet Homes, LP By: Juliet GP, LLC, its general partner By: Douglas A. Brown, Manager APPROVED: City of Pearland, A Texas municipa By: Bill Eisen, City Manager By: \,""'....f",~ ,\\~~~ l~~"'f. ::~/c ~o-\ ~O. .%,g .. ~:y - - = ~ II '\ it ~ ...~ ". ~ ""Il ~,,,, ~I',...",,""\~ "- " shall constitute one and the same instrument. Each counterpart may be delivered by facsimile transmission. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other counterpart identical thereto. IN WITNESS WHEREOF. Assignor and Assignee have executed this Assignment and Assumption as of the day and year first above written. "ASSIGNOR" "ASSIGNEE" Juliet Homes, LP By: Juliet GP, LLc, its general partner By: ~ ________ Doug as A. Brown, Manager APPROVED: City of Pearl and. A Texas municipal corporation By: Bill Eisen, City Manager By: Y Dung Lorfing, City Secretary ladbOl 28455408.11119011743P 42006214 Exhibit "A" Resolution 2006-141 8128106 ASSIGNMENT AND ASSUMPTION AGREEMENT THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment and Assumption") dated August _, 2006, is entered into by and between The Maverick Group, LLP ("Assignor"), and Juliet Homes, LP ("Assignee"): RECITALS A. Reference is hereby made to that certain Development Agreement dated as of February 13, 2006 by and between Assignor and City of Pearland, Texas (the "Contract"), attached hereto as Exhibit "A". All initially capitalized terms not otherwise defined herein shall have the meanings set forth in the Contract unless the context clearly indicates otherwise. B. Assignor desires to assign to Assignee, all of Assignor's right, title and interest as buyer in, to and under the Contract, and Assignee desires to accept the assignment thereof and assume Assignor's obligations thereunder. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: ~/ /' AGREEMENT 1. Assignment and Assumption; Assumption. 1.1 Assignment. Assignor hereby transfers, assigns and conveys, without recourse, representation or warranty, express or implied, all of Assignor's rights, interests, liabilities and obligations in and to the Contract. 1.2 Assumption. Assignee hereby assumes all of the terms and provisions under the Contract, and all of Assignor's obligations under the Contract arising after the date hereof and agrees fully and faithfully to pay, perform and discharge, as and when payment, performance and discharge are due, all of Assignee's obligations under the Contract arising after the date hereof. 1.3. This Assignment and Assumption shall be binding on and inure to the benefit of Assignor and Assignee and their respective heirs, executors, administrators, successors in interest and permitted assigns. 1.4 This Assignment and Assumption is contingent upon its approval by the City of Pearl and, Texas. 2. Counterparts. This Assignment and Assumption may be executed in any number of counterparts, each of which shall be deemed an original, but all of which when taken together shall constitute one and the same instrument. Each counterpart may be delivered by facsimile transmission. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other counterpart identical thereto. IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment and Assumption as of the day and year first above written. "ASSIGNOR" The Maverick Group, LLP By: John J. Kelly, Managing Partner "ASSIGNEE" Juliet Homes, LP By: Juliet GP, LLC, its general partner By: Douglas A. Brown, Manager APPROVED: City of Pearland, A Texas municiQal corporation By: ~~ ~ Bl isen, City By: \\\\\""""'11. ,\\ Ctt.RL~A~:11, ",~.;..~~..1V ~ ~~~~ : ~ I ~.~ --"". ~- =V\e ou,'" :=. JO 'V' = - - ... - ~ ;: ~ ;:' ~ ....../;:: ~" ~ ~"I: ~...,.. 111'".m""'\: - ", shall constitute one and the same instrument. Each counterpart may be delivered by facsimile transmission. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other counterpart identical thereto. IN WITNESS WHEREOF. Assignor and Assignee have executed this Assignment and Assumption as of the day and year first above written. "ASSIGNOR" "ASSIGNEE" Juliet Homes. LP By: Juliet GP. LLC, its general partner By: ~_____ Doug as A. Brown, Manager APPROVED: City of Pearl and, A Texas municipal corporation By: Bill Eisen, City Manager By: Young Lorfing, City Secretary ladbOl 28455408.1111901 1143P 42006214 EXHIBIT I ':4 ,. DEVELOPMENT AGREEMENT (EXHIBIT "A" TO RESOLUTION R2006- 24) This Agreement is entered into this 30th day of December, 2005, by and between the CITY OF PEARLAND, TEXAS, (hereinafter "City"), and THE MAVERICK GROUP, LLP (hereinafter "Developer"). WHEREAS, Developer intends to develop 47.65 acres of land as planned unit development consisting of garden home, town home, office and professional, general business, and recreational uses to be known as Province Village (hereinafter "Subdivision); and WHEREAS, The City's Thoroughfare Plan depicts a minor collector street (hereinafter "the Collector") connecting Pearland Parkway with Country Club Drive within the boundaries of the Subdivision; and WHEREAS, Developer is responsible for constructing or funding a portion of the collector under provisions of the City's Subdivision Ordinance; and WHEREAS, City and Developer desire an agreement to set forth their respective responsibilities with regard to the construction of the Collector. WITNESSETH: NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, it is hereby agreed as follows: 1. The Collector will be designed with a fifty-foot right of way width and twenty eight- foot paving, subject to the following conditions: a. A segment at both ends of the Collector will be designed with sixty-foot right of way and adequate paving width to accommodate two through lanes and one left turn lane. The length of each widened segment shall be determined by the City. b. The Developer will provide appropriate signage and striping to prohibit on- street parking on the Collector. c. The Collector will otherwise meet all City standards. d. No parking will be permitted on either side of the Collector, for its full length. 2. Developer will design, obtain all required permits, and construct the Collector including paving, drainage, detention, and related earthwork. 3. Developer will cause its engineer to prepare plans and specifications, in 4. City will reimburse developer for the actual construction, engineering design, and land costs for that portion of the Collector related to the crossing of the Clear Creek 1 oxbow channel, estimated to be $374,000 as shown in Exhibit 1. Actual reimbursement shall not exceed the total estimated reimbursement by more than 5% without prior approval of the City Council. Developer shall be responsible for acquiring the right-of-way contemplated by this provision; however, City agrees to, if necessary, acquire the right-of-way under the provisions of State law, including the City's power of eminent domain. 5. Upon approval of the plans and specifications by the City, Developer will obtain competitive line item bids in accordance with Local Government Code Chapter 252 for the construction of the Collector in accordance with the plans and specifications. The bid specifications will be prepared in a manner that clearly identifies and distinguishes those items and quantities for which the City is responsible. The bids will be reviewed by Developer and the City and a contract will be awarded to the successful bidder by Developer. Both City and Developer reserve the right to reject any and all bids for construction. 6. Upon approval of the bids by the Developer, the Developer shall cause the work to be completed in accordance with the plans and specifications. Developer's engineer shall monitor the progress and workmanship of the contractor, including construction administration and materials testing. City shall also provide inspection to monitor the workmanship of the contractor. Developer shall advance the funds necessary to pay the contractor for the work performed. 7. City shall reimburse Developer for City's portion, as described in paragragh 4 above, of engineering and construction costs within forty-five days (45) following the City's acceptance of the Collector. 8. City obligations under this Agreement will be paid from lawfully available funds that may be currently available in the budget year in which the obligation may be due. City agrees to use its best efforts to collect such revenues and appropriate such funds as may be required to finance its obligations. 9. The initial term of this Agreement shall be for a period of three (3) years,being retroactive to and commencing on the 30thday of December, 2005, and terminating on the 31st day of December, 2008, at which time, this Agreement may be automatically renewed in one (1) year increments contingent upon need and the necessary funds being appropriated for said project in accordance with the City's annual budgeting process. 10. This Agreement may only be amended, modified, or supplemented by written agreement and signed by both parties. 11. No assignment by a party hereto of any rights under or interests in this Agreement will be binding on another party hereto without the written consent of the party sought to be bound; and specifically but without limitation moneys that may become due and moneys that are due may not be assigned without such consent (exceptto 2 the extent that the effect of this restriction may be limited by law), and unless specifically stated to the contrary in any written consent to an assignment no assignment will release or discharge the assignor from any duty or responsibility under this Agreement. 12. Nothing herein is intended to supersede or waive any City ordinance or regulation pertaining to such construction. 13. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision ofthis Agreement is prohibitive or invalid under applicable law, such provision shall be ineffective to the extent of such provision or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 14. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Texas. 15. This Agreement and all obligations created hereunder shall be performable in Brazoria County , Texas. 16. Resolution No. R2006-24 is incorporated herein and made a part ofthis Agreement for all purposes. 17 . To accomplish execution of this Agreement, it may be executed in multiple counterparts. 18. DEVELOPER HEREBY RELEASES, ACQUITS, AND FOREVER DISCHARGES THE CITY, ITS OFFICERS, AGENTS, EMPLOYEES, SUCCESSORS, AND ASSIGNS FROM ANY AND ALL CLAIMS, DEMANDS, RIGHTS OR CAUSES OF ACTION OF WHATSOEVER CHARACTER OR NATURE, INCLUDING ATTORNEYS' FEES, ARISING FROM OR BY REASON OF ANY AND ALL BODILY OR PERSONAL INJURIES, INCLUDING DEATH AND MENTAL ANGUISH, DAMAGE TO PROPERTY AND THE CONSEQUENCES THEREOF WHICH MAY BE SUSTAINED BY DEVELOPER, ITS HEIRS, EXECUTORS, ADMINISTRATORS, SUCCESSORS, OR ASSIGNS AS A RESULT OF THE CONSTRUCTION BY DEVELOPER OF THE IMPROVEMENTS REFERENCED ABOVE, UNLESS CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OF THE CITY, ITS OFFICERS, AGENTS, EMPLOYEES, SUCCESSORS, OR ASSIGNS. DEVELOPER SHALL KEEP AND HOLD HARMLESS THE CITY, ITS OFFICERS, AGENTS, EMPLOYEES, SUCCESSORS, AND ASSIGNS FROM ANY AND ALL COST, LIABILITY, DAMAGE OR EXPENSE OF ANY NATURE AND HOWSOEVER CAUSED, INCLUDING ATTORNEYS' FEES, CLAIMED OR RECOVERED BY ANYONE BY REASON OF INJURY TO OR DEATH OF ANY PERSON OR PERSONS OR DAMAGE TO OR DESTRUCTION OF PROPERTY CAUSED BY OR RESULTING FROM THE NEGLIGENCE OF DEVELOPER, 3 THEIR AGENTS, EMPLOYEES, SUCCESSORS, OR ASSIGNS ARISING IN CONNECTION WITH SUCH CONSTRUCTION BY DEVELOPER. THE PROVISIONS OF THIS SECTION SHALL SURVIVE THE TERMINATION, EXPIRATION, OR CANCELLATION OF THIS AGREEMENT. 19. By execution of this Agreement, both parties agree that the Development Agreement (R2005-125), approved by the City Council on August 8,2005, is terminated, and the responsibilities ofthe Parties subjectto said Agreement are no longer applicable. In witness whereof, the parties have hereunto set their hands and signatures on the date first above mentioned. THE MAVERICK GROUP, LLP ~ rJuft;23 O~ ATTEST: CITY OF PEARLAND, a Texas municipal corporation ry IfJ€ ~ Bill Eisen, City Manager 4 STATE OF LOUISIANA PARISH OF BATON ROUGE J~ This instrument was acknowled9Jed ."., ~lOZ.~ 4,,/tiL- Notary Pu?li~, State .of LOUisia7 ~ II My CommIssIon ExpIres: fI. ., "- f). fIft/ c 1/,$1 .. tt ,I.., 1J1/4. If JI! Y me on this :2 rr~ day of on behalf of STATE OF TEXAS BRAZORIA COUNTY This instrument was acknowledged before me on this:)I~iday of 2006, by Bill Eisen, City Manager ofthe City of Pearland, a Texas home rule munic pality, on behalf of said municipality. My Commission Expires: 0 d.- Cl '1- do 10 .\\\\\1111111111111//1/ ~\\\\, A lill/ ff~9:~~"",'!!Y ~, ."$ <:> ,,' ,jl.R Y I> ", -? ~ ff .... <:0 ~(/<l""'-;:'\ { t. ~~~:\~J ~ ", '" OF 1'C.'f..'i>- ,: f$ ~ 0 "'1.. . ~ ~ ...,'-:'If:>/RES ,,' i'> ;.;.; ,." " ~ ~~/I~09~'20\ 6 \,\~~~ II////lillllllllll\\\\\\\\\\\ D~-,~ b~ Notary Public, State of Texas 5 COSTS FOR "CROSSING" AT PROVINCE VILLAGE OPINION OF PROBABLE COSTS Job No. 1938-0002 (8.4) July 26, 2005 b :i5 j EXHIBIT '11/"'- l ITEM DESCRIPTION UNIT QUAN. UNIT COST TOTAL COST 1. LAND COSTS FOR CROSSING ACQUISITION AC. 2.5 $20,000.00 $50,000.00 2. WETLANDS ASSESTMENT STUDY EA 1 $3,850.00 $3,850.00 3. NW14 (CROSSING) PERMITTING EA 1 $12,000.00 $12,000.00 4. WETLAND PLANTINGS AC 2.4 $2,000.00 $4,800.00 5. USACOE APPLICATION FEES EA 1 $100.00 $100.00 6. DETENTION POND WET BOTTOM EXCAVATION AND CY 3,090 $5.00 $15,450.00 7. SURVEYING (FIELD AND OFFICE) DAY 2 $2,250.00 $4,500.00 8. 7' X 5' REINFORCED CONCRETE BOXES IF 100 $400.00 $40,00000 9. HEADWALlS FOR DUAL 7' X 5' BOX CULVERTS EA 2 $15,000.00 $30,000.00 10. GUARDRAILS, PAVEMENT STRIPING AND BUTTONS LS 1 $1,000.00 $1,00000 11. EXCAVATION AND SPREADING FROM CROSSING CY 500 $4.00 $2,000.00 12. SELECT FILL CY 500 $8.00 $4,00000 13. STORM WATER POLLUTION PREVENTION PLAN LS 1 $3,000.00 $3,000.00 14. INSTALL AND MAINTAIN REINFORCED FILTER FABRIC LF 400 $1.50 $600.00 15. HYDROMULCH AC 1 $1,200.00 $1,200.00 16. MISCELLANEOUS ITEMS LS 1 $6,000.00 $6,000.00 17. 6" REINFORCED CONCRETE PAVEMENT SY 931 $30.00 $27,930.00 18. 6" REINFORCED CONCRETE CURB LF 598 $400 $2,39200 19. 8" LIME STABILIZED SUBGRADE (MANIPULATION) SY 1,000 $2.00 $2,000.00 20. HYDRATED LIME FOR SUBGRADE PREPARATION TON 26.5 $125.00 $3,312.50 21. SLOPE PAVING SF 15,000 $4.00 $60,000.00 TOTAL $275,000.00 CONTINGENCIES (15%) $41,250.00 ENGINEERING (15%) $47,437.50 SOILS ENGINEERING AND TESTING (3%) $9,487 50 TOTAL WITH CONTINGENCIES AND ENGINEERING $374,000.00 W:\LAND\ 1938\0002\R ESID _ CDS1_ 072805. xls\CROSSING _n_..._........__... 1.._.....-....1.1..._.,..,....,.. ...;......,IIII'iI.IIl&___.I~.:.~.,iI~fll~_II'.!.'. .~ C7/2G/2BB5 11:15 713953521<:1 PAGE B4/04 PARf\ '0. 67 - o.s .R. ~ N t S.OI~ ; r . fO(l .' ./ CPEE,~ , CLEAR HARRIS COUNTY ',,' ,Q. r,j- r,td?',> ""'<-,,, .......;;f ,'v ((,' <<- (J"-' r, f\ ",'r' 'b "'~""'~',"\ ,'v C-<' "r~ ,\^v <<-' Oq."'.s. r,; Q' ~j-_.... CCr~. v o cf" '''' , 4.~~;..$v<<.' <- ",.,P' ~v ,",' TJB ALEXANDER rAMILY. LTD. PAPTNERSHIP F . N , ue ~ .3 6 2 .3 H. C. O.~. ~) <>. ,<(- ~(J \: ~. <0 \:)~ & ~ ~ ciS ,.0 BRAZORIA COUNTY , ( Eit All elleu ~-~~ I' \...~... I' -"..-......''" I,', :~:::- '---. " :~ .~. '. -'. -"" . -.- " . \, ,.sURr-EY, A-1.98"", '-~....___ .', j'/'l/'/ i"l~... ---"'." .,~"'~ ,j / "/';~ i/.' '/ ,.,,) ;'I'-i--' "'-.1. I /J ~"lll' / .' I. ....,. '/ I I" I, ~ ' ...,:, . ~ I . ;-....."--.. '....... I /';" " , / ') . "".".I'-~/ . '/ ",,' "" ',' .."......']1 ,1 ""'" -<, ........10: "", , ',,"!I '-" '\ " " '-'111 ""\ OZ' '"', , ~ Ie Cl~ "v "- ~c~' 'b <( ")Ov <(v c,,; c, <<-. '!:.~ c'l' <o'b '0' -\ 'i ,)q:: ,0 V "; c-<'- (),,- ,,<<.-, v ~l -leY ~ W,D,C, HALL SURVEY, A-23 S', ~-\ ~ '" (,,; ,::."'1" ->! C '],,1.- .!::i'...... i:- '0 l) 'r-v ~i ~v ~Iy -\ o.()' ..... (l q-' Co) ~ 't("f- Y<J' o~ ~<<.-"'" "Io( . c,s:.... (('" ' 1...... . lb' <v "'rv;w cY ~_p .$.v T~B ALEXANDE~ FAMilY. LTD. PARTNERSH IP F .N. Ull13623 H. C. D, i=l. PROV I NeE VilLAGE OVERALL SITE PLAN IN 1HE THOMAS J. GREEN SURVEY A-198 BRAZORIA COUNTY, TEXAS & W. D. C. HALL SURVEY A-23 HARR I S COUNTY, TEXAS .lUIllE lOo.~ .Jot "'0. IH&-6QOI ,,~... \ ~r.OI O&'71-0~ SHt." I or . LolA ~nllin..rtn" & SU"'.lI1ftl. Ine. LA 1m I..... - ...... 1Il,tll.\ll>l ~"BW F. ~IJ,~,(aJQ Hlu-. t...... ntw2...J7tc WARREN G KING, PARTNER MABRY & KING, L.L.P. ATTORNEYS AT LAW 19 BRIAR HOLLOW LANE. SUITE 115 HOUSTON, TEXAS 77027 BOARD CERTWIFD RFSIDE""Al_ REA._ ESTATE LAW TELEPHONE (713) 621 -7766 FACSIMILE (7131621-0224 wking@pinnacletitleco.com LEGAL SPECIAL,lATIC',,"' TEXAS BOARD August 17, 2006 Darrin M. Coker City Attorney City of Pearland 3519 Liberty Drive Pearland, TX 77581 VIA FEDERAL EXPRESS Re: Juliet Homes, LP Dear Mr. Coker: Enclosed is the information you requested on Juliet Homes. Please let me know if you need any additional information. Sincerely, L-/~ Warren G. King L BUSINESS PLAN June 2006 JULIET HOMES, LP \ .. J , L TABLE OF CONTENTS 3 Confidentiality Statement Marketing and Sales 24 Value Summary Executive Summary 24 SWOT Analysis 4 The Opportunity 25 Marketing Approach 5 The Market 26 Pricing Model 6 The Team 26 Channel Revenues 7 The Portfolio 27 Sales Approach 9 1he Timeline 10 Financial Summary Operations 28 Leadership Team Company Description 11 Company Overview 33 Financial Summary 12 Company Profile 14 Business Model APPENDIX 16 Key Relationships The Market Analysis 17 Houston's Redevelopment Agenda 19 'Enget Market Trends 21 Market Potential 2 JULIET HOMES BUSINESS REPORT IliNI2""(O Confidentiality Statement This business plan (the "Plan") is the property of Ju- liet Homes, LP ("Juliet Homes" or the "Company") and contains certain information that is non-public, confidential or proprietary in nature. It contains in- formation intended only for the person to whom it is transmitted (the "Recipient"). With receipt of this plan, Recipient acknowledges and agrees that: . In the event the Recipient does not wish to pur- sue this matter, the Plan will be returned; . The Recipient will not reproduce or redistribute the Plan, in whole or in part, nor disclose its con- tents, without the expressed written consent of Juliet Homes; · All of the information herein will be treated as confidential material; . The Recipient will make every effort not to dis- close the confidential information, except as may be required by law, and as necessary to the Re- cipient's officers, directors, employees, agents and professional consultants; · The Company makes no representation as to the accuracy or completeness of any of the materi- als contained herein. It is expected that the Re- cipient of the Plan will conduct his or her own independent investigation of the Company. The Plan should be read in conjunction with the ap- pendices, exhibits and attachments provided, and the Recipient should not rely upon statements made. As used herein, "confidential information" means information about the Company furnished by the Company to the Recipient, and the fact that the Recipient is considering a transaction with the Company, it does not include information that, (1) was publicly known or otherwise known to the Recipient at the time of disclosure; (2) subsequently becomes publicly known through no act or omission by the Recipient; or (3) otherwise becomes known to the Recipient, other than through disclosure by the Company, its representatives or attorneys. Certain statements contained in this business plan, including, without limitation, statements containing the words, "anticipates," "believes," estimates, "expects," "intends," "projects" and similar words constitute forward-looking statements. Such forward- looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company and its subsidiaries, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Given these uncertainties, Recipients of this Plan are cautioned not to place undue reliance on such forward-looking statements. [liNE 21l1l" JULIET HOMES BUSINESS REPORT .) · EXECUTIVE SUMMARY · The growth of the urban popu- lation in Houston and the city's focus on redevelopment of the East End and Buffalo Bayou areas has created an extraordi- nary opportunity for developers that understand the Houston market. Juliet Homes is such a developer, and has established a portfolio of holdings and stra- tegic partnerships that positions them to realize the potential of these events. The Opportunity Houston is the 4th largest city in the United States, has grown twice as fast as any other top 5 city since 1990, and is projected to grow by an additional 1.8 mil- lion people by 2020. The city is currently in the midst of strategic redevelopment to accommodate its growth. With the completion of significant downtown com- mercial redevelopment and the opening of its light rail system, the city is now focused on redevelopment of the Buffalo Bayou and adjacent Midtown and East End areas of the city as centerpiece of new mixed-use communities. HOUJton is the 4th largest city in the United States, has grown twice asftst as any other top 5 city since 1990, and is projected to grow by an additional 1.8 million people bv 2020 Juliet Homes has developed a product concept that is laser fo- cused on this demand-gated communities of zero lot line homes with luxury finishes and amenities at affordable price points. Single-family home sales in the Houston market now exceed 30,000 units annually. Juliet Homes anticipates selling 7154 homes over the next five years at an average price of $254,000. lhis product offers a compel- ling value within the reach of virtually all segments of the tar- get market. Juliet Homes has established the necessary relationships to af- fect this plan. Juliet leadership has 20 years experience in and knowledge of the Houston real estate market as well as long-standing relationships with leading local real estate developers and investors. These relationships allow Juliet to repeatedly identify and exploit niche opportunities in a vibrant market. Juliet has proven the soundness of its model and its offering over the last two years via the sale of more than 175 homes and the acquisition of more than 500 acres of strategic development property with a fair market value of $180 million. ~L A decade of population growth driven by foreign immigration and strong job growth combined with urban renewal making in-town living more desirable has created a large market for single-family homes in- side the 610 loop. 4 JUI.IET HOMES BUSINESS REPORT II' I .'1111(, . EXECUTIVE SUMMARY. The Market Annual single-family home sales in Houston exceed 30,000 units. In Harris County alone, which con- tains the Houston city center, new single family home starts are on track to reach 6,700 this year - an 11 % gain over last year. Since 2000, large numbers of young professionals and empty nesters have been relocating from the suburbs seeking the convenience of in-town amenities and relief from extended commute times. Traditionally these buyers have been priced out of the single-family home market in these areas and have had to settle for either a town home or a house in the suburbs. Juliet Homes offers these buyers a compelling alternative- luxury in-town living at an affordable price. Juliet has established a reputation for capturing the most convenient location and building unique, qual- ity homes that deliver luxury appointments and liv- ability beyond square footage. Harris County 2005 Construction Spend (projected - dollars in millions) $912 . Single Family II Multi-Family Harris County alone is projected to reach $912 million in single-family home construction spending in 2005. Juliet generates revenue through both home sales and mortgage financing via its interest in its mortgage partner, First Texas Residential. Using a conservative market penetration rate of less than 4%, Juliet proj- ects attaining $1.8 billion in gross revenue and $380 million in net revenues through 2010. The compa- ny's current portfolio of projects and land holdings represent 54% of this target and are scheduled to be substantially delivered by Q4 2008. Gross Profit Contribution by Source ($ in Thousands) $9,353 $21,376 $349,798 Development Projects II Turnkey Projects Mortgage FinanCing Il' 'i F ."il)(. I L! L.lI; T H () lVl E S B U SI N F S S R E P () RT . EXECUTIVE SUMMARY' The Team Juliet's management team brings a combined 50 years of experience spanning the gamut of the Houston residential real estate market. Their areas of expertise include: · Mortgage banking · Residential and commercial real estate develop- ment · Public and private accounting and financial man- agement · Sales and sales management . Construction management 6 JULIET HUMES BUSINESS REPORT Il'-:E 2""" ~. -*lID J _, !it. " Equally important are the long-standing relationships with local investors, developers, builders, and bankers that this team leverages to create a solid and profitable delivery platform. L . EXECUTIVE SUMMARY. The Portfolio Juliet homes currently has a portfolio of 24 projects representing 3,854 residential units and $980 mil- lion of revenue over the next 55 months. Projected returns to Juliet on tbis existing portfolio are $193 million I. Conservative growth projections for future projects place tbe total revenue and Juliet returns at $1.8 billion and $380 million respectively througb 2012. Juliet Homes currently controls a strong portfolio of real estate in and adjacent to key redevelopment sites throughout the Houston metro area I Combined projected returns of this portfolio including finance revenues are S205 millioll II'!I' 21111(, JULIET HOMES BUSINF.SS REPORT 7 . EXECUTIVE SUMMARY. Portfolio Summary Project Start Finish Units Per Unit Gross Profit Midtown Village 06/01/04 06/30/07 120 $189,000 $22,680,000 $2,772,900 Memorial Village 03/30/05 12/31/06 54 $209,000 $11,286,000 $2,265,705 Yale Sr. - Heights 05/05/05 05/01106 18 $299,000 $5,382,000 $87Cl,520 Wescott #2 05/31/05 031.31/06 11 $325,000 $3,575,000 $768,750 Ball park 6 06/01/05 06/15/06 18 $219,000 $3,942,000 $452,175 Ballpark 5 & 7 09/15/05 12/15/06 12 $215,000 $2,580,000 $407,250 Silverwood Estates 03/24/06 03/31/08 80 $299,000 $23,920,000 $2,124,000 Fleur Garden Estates 03/31/06 03/31/07 40 $299,000 $11,%0,000 $1,735,700 Delano - Midtown 04/01106 03/31/07 18 $295,000 $5,310,000 $1,338,325 West 28th St. 01/25/06 12/31/06 12 $209,000 $2,508,000 $253,200 Tuscany Woods 05/1 5/06 12/30/08 350 $239,000 $83,650,000 $16,992,800 288 / Reed Road 05/31106 05/31108 150 $209,000 $31,350,000 $4,336,875 Veterans Memorial 07/31/06 07/31/08 132 $139,000 $18,318,000 $2,%0,480 Skyline 09/15/06 09/30/07 36 $239,000 $8,604,000 $907,040 1he Dominion 09/15/06 12/31/09 395 $169,000 $66,755,000 $11,312,850 Beverly Hills #1 09/30/06 06/30/07 15 $279,000 $4,185,000 $908,863 Atlanta #1 09/30/06 09/30/09 345 $400,000 $138,000,000 $25,893,159 Atascosita # 1 & 2 10/31/06 03/31/08 108 $299,000 $32,292,000 $7,493,920 Richmond #2 10/31106 03/31/08 30 $309,000 $9,270,000 $1,705,200 StafFordshi re 11/30/06 03/31/09 350 $159,000 $55,650,000 $9,391,770 Princess "Las Vegas " 12/01/06 06/30/12 200 $329,000 $65,800,000 $21,339,000 Dallas Market 12/31106 12/30/12 400 $275,000 $110,000,000 $21,330,000 Houston Market 12/31107 12/30/12 750 $259,000 $194,250,000 $39,521,250 TOTALS (24) 06/01/04 12/30/10 3,854 $254,164 $979,547,000 $193,481,532 8 JULIET HOMES BUSINESS REPORT II,,!, 211111, EXECUTIVE SUMMARY. The Timeline Juliet is actively working a rollout plan that delivers 3,854 homes over the next 78 months. lhis timeline, while aggressive, is consistent with past performance. Existing relationshi ps with leading real PROJECT Midtown Villa::?\':' i\.'krnnrial Village Yak Sl. - HeighL~ We~cott #2 Ballpark: () Ballparh; :'i & 7 Silvnw(l(Hl Estate.... Flt'ur Garden Estates Delano Midtown \Vest 2Xth SI fuse any Woods 2XX i Reed Road Veterans Memorial Skyline I'he Dominion Beverly Hills # I Atlanta #1 Atascosita II I & 2 Richmond #2 Staffordshire I Princess "Las Veg,.1s" DaJJas Market HUlIston :Vlarkd START f,il/n~ 3/30/05 :'i/5!O:'i '.)/31/05 ()/l/O:'i 9/1:'iiO:'\ 3/2-4/()() ~i31/()6 -1-/3/06 ..1J2:'iiUf, 5/15i06 5/31106 7/31/06 l)/I:'i/06 l)lI 5!()() 1)13(1/(){j l)/3(1/Uh JO/31/()h 10/31/06 1/30/06 12/1/06 [2/31/06 .111107 estate investors and developers in the Houston market provide Juliet with the opportunity to expand the current portfolio. "Ihis expansion is projected to be an additional 3300 homes through 2012. 2004 100S 2006 10117 200X "009 2010 2011 1012 FINISH UNITS lQI Q2 Q_' Q'IIQ! Q:, QJ Q4IQ] Q~ Q3 Q41 QJ Q2 Q_' Q41 QI Q2 Q.:; Q-l1 Qf Q2 Q,1 Q-l1 Ql Q2 Q' Q-l1 QJ Q2 Q1 Q-l1 QI Q2 Q_' Q.-II 6/19107 120 \2130/06 S4 -l-/2X/06 1 ~ - 3/30/06 11 - 6/1..J./()6 l' 12/1-l-/()(1 12 3/1RIOX RO ;1iJO/07 40 3i30/07 1R 11/JO/Uf) 12 12/19/0X 3)U S!3(l(()X l50 7/J(J/U.~ IJ2 YI1~/U7 36 11no/OtJ jt)S 6/2tJ/07 IS lJ/2tJ/UI) J..J.) J/28/UX lOX Ji2X/Ox 30 3/30/09 350 6/29/11 200 11/30/] 2 c100 I 1/19/] 2 750 - - Juliet Homes' current portfolio will deliver 3,854 homes across 24 projects in the next 55 months IU'H 21111(, JULIET HOMES BUSINESS REPORT l) . EXECUTIVE SUMMARY. Financial Summary ","'" .. ~, Operations Turn-Key Sales Price Total Units Total Sales Price Less: Sales Cost Net Sales Total Development Cost Distributable Profit Partner's Profit Juliet Homes Profit Current Portfolio 3854 $ 979,547,000 $ (48,977,350) $ 930,569,650 $(697,723,660) $ 232,845,990 $ 39,364,459 $ 193,481,532 P;::;<jIo. ~'\1 -~,', ~.. ~,.t ~\ \ New Projects New Projects (thru 2008 - projected)(thru 2012 - projected) 1500 $ 381,245,589 $ (19,062,279) $ 362,183,310 $(271,558,249) $ 90,625,061 $ 15,320,884 $ 75,304,177 1800 $ 457,494,707 $ (22,874,735) $ 434,619,971 $(325,869,898) $ 108,750,073 $ 18,385,061 $ 90,365,012 Total 7154 $1,818,287,296 $ (90,914,365) $ 1,727,372,931 $(1,295,151,807) $ 432,221,124 $ 73,070,404 $ 359,150,720 FINANCING I MORTGAGE Total Loan Volume (95% Total Sales) $ 930,569,650 $ 362,183,310 $ 434,619,971 $ 1,727,372,931 Total Loan Value (90% L TV) $ 837,512,685 $ 325,964,979 $ 391,157,974 $1,554,635,638 Fee Income (2.75% Average Yield) $ 23,031,599 $ 8,964,037 $ 10,756,844 $ 42,752,480 Partner Fee Income $ 11,515,799 $ 4,482,018 $ 5,378,422 $ 21,376,240 Juliet Homes Fee Income $ 11,515,799 $ 4,482,018 $ 5,378,422 $ 21,376,240 Total Juliet Homes Income $ 204,997,331 $ 79,786,195 $ 95,743,434 $ 380,526,960 10 JULIET HOMES BUSINESS REPORT II\iE illll" · COMPANY DESCRIPTION · Company Overview Juliet Homes is a privately held company, founded in 2003, that develops affordable luxury homes for Houston's burgeoning urban market. The company has acquired significant land holdings throughout Houston, which are all in strategic locations relative to current and fmure urban redevelopment zones. Ju- liet's current portfolio of projects encompasses more than 500 acres with a fair market value of over $180 million.2 Juliet Homes identifies and acquires attractive real es- tate, specifies and designs homes compelling to the market, ensures delivery via active project oversight, and markets the product via direct sales. Construc- tion is omsourced to established local builders who bear financial responsibility for construction financing. The company also realizes significant revenue through its interest in First Texas Residential that services the majority of the mortgage financing for Juliet Homes products. Juliet Homes has established relationships with sev- eralleading developers and real estate investors in the Houston market. On an annual basis, these investors put over $2 billion to work in local real estate devel- opment projects. The strength of these relationships developed by Juliet management over the past 20 years allows Juliet to control highly desirable tracts in and adjacent to active redevelopment zones on at- tractive terms. In most cases, the land is contributed in whole or in part as a Limited Partner interest in the development project. This structure provides multiple advantages including below market acquisition costs, reduced project cash requirements, and enhanced overall project economics. Juliet Homes developed t7 product concept that reJOllt7tes with the Houston mmliet. Juliet Homes has developed a product con- cept that resonates with the Houston marker. Geared specifically for the influx of professionals and empty nesters seeking the convenience of in-town living, Ju- liet delivers quality finishes and luxury amenities at affordable price points. 'The average price of a Juliet home is $254,000, placing it in reach of virtually all segments of the target market. 2 Fair market valuation of Juliet's land holdings based on recent sales of adjacent properties and insighr fi'()!Il loc:!1 RC'll Estate Brokers employed by Juliet rUNE 21l1l(' JLJLIET HOMF~ BLJ~INFSS REPORT 11 . COMPANY DESCRIPTION. Company Profile · founded in March 2003 ~ · Developer of in-town communities of affordable luxmy homes -.' The company has secmed more than 500 acres of development property primarily in Houston's redevelopment zones ( · Cmrent portfolio of projects projected to yield 3,854 unit sales and $980 million in gross rev- enue over the next 55 months - Established track record of delivering a difFer- entiated product in high demand in the current market - luxury living at an affordable price ,.7 JIf'" /i'<~~ Proven business model leverages strategic relationships with established real estate inves- tors and developers who, on an annual basis, put over $2 billion to work in local real estate development projects .,.A' 12 JULIET HOMES BUSINESS REPORT II'iF ,1111(, . COMPANY DESCRIPTION. Juliet's model and product concept are proven. As of January 2006, 175 units have been sold generating more than $3 million in profit to Juliet Homes. Homes project is 18 months. The table below sum- marizes completed Juliet Homes projects. lhe average sales cycle for a given phase of a Juliet PROJECT INVESTOR JULIET Equity Cash-on-Cash Equity Units Term Months Investment Profit % Return (APR) IRR I Profit % $/ Unit BPI 49 June 2002 17 1$ 250,000 $ 500,000 (. ) 141.2% 116.9%, $ 809,854 100% $ 16,528 Nov 2003 I i Memorial Square 10 Aug 2003 15 ' $ 544,211 $ 72,520 50% 10.7% 10.5% 1$ 72,520 50% $ 7,252 Nov 2004 BP II (b I 12 Jan 2002 15 250,000 63,884 15% 20.4% 20.0% I Apr 2003 BP II 12 April 2003 19 1$ 100,000 106,474 25% 67.2% 54.3% $ 255,537 75% $ 21,295 Dee 2004 Washington July 2003 I Square (e) 24 July 2005 23 '$ 1,500,000 $ 526,000 (c) 26.3% 16.2% $ 496,273 100% $ 20,678 Capital returned after 16 months BP III Sept 2003 (d) 22 June 2005 21 400,000 350,000 (d) 50.0% 43,2% i $ 838,079 100% $ 38,094 BPIV 14 2/28/04 I 12/1/05 21 107,000 84,619 20% 45.2% 39.3% i $ 338,475 80% 24,177 BPV 12 1/15/05 1/31/06 12 $ 325,000 $ 62,554 40% 19.2% 18.4% $ 93,831 60% 7,819 Briarhollow 20 9/30/04 1/31/06 16 275,000 $ 68,551 25% 18.7% 18.1%1 $ 205,652 75% $ 10,283 TOTALS 175 47 3,751,244 $ 1,834,635 37.1% 12.5% 10.5%, $ 3,110,221 62,9% $ 17,773 II';, ,11l1(, JUlIET HOMES llUSINFSS REPORT 15 Juliet's business model is simple in concept - re- develop conveniently lo- cated property into gated communities of zero lot line homes offering luxury appointments costing sig- nificantly less than compa- rable product available in the traditional resale mar- ket, This concept is born out of management's more than 20 years of sales and matketing and mortgage experience in the Houston single-family residence market, and is executed through a set of strong local relationships and attention to detail. ers, Juliet generally part- ners with land holders in and adjacent to key re- development zones. 'lhis arrangement yields attrac- tive acquisition costs and reduced cash requirements compared to competing projects in the region. 'The land holder's interest is held in a Limited Partner- ship specific to the project, which provides Juliet flexi- bility in deal structure, the ability to acquire control of key real estate holdings, and minimizes exposure via project compartmental- ization, Across it's current portfolio, Juliet's land ac- quisition cost basis is 17% below fair market value resulting in a strong balance sheet backed by land value. . COMPANY DESCRIPTION. Business Model Revenue Consumers ~ Revenue Delivery Real Estate Juliet Homes has assembled all the key elements to deliver superior results for its customers, partners, and shareholders Leveraging long-standing relationships with some of Houston's leading real estate investors and develop- e,! Fixed Fee: 1/49 of $500,000 Ih! Iiwcswr rolled [1rincipal and proht into next devdoPlllcnr project 2 Fair market valuation of' Juliet's land holdings based on reeem sales of adjacenr propenics and insight from loca] Real EsLltc Brokers employed by Juliet 14 JULIET HOMES BUSINESS REPORT IllNE 21111(, . COMPANY DESCRIPTION. Home designs are tailored to the rampant demand for superior luxury home finishes and amenities sought by professionals and empty nesters looking to relo- cate from the suburbs or move up from multi-fam- ily homes. This attention to detail and laser focus on the target market results in short sales cycles for Juliet projects, typically 12 to 18 months. Juliet relies on relationships with established local builders for construction. Generally, Juliet subordi- nates 30% to 50% of the value of the project's land to collateralize the builder's construction note, which is drawn and repaid pro rata during the project. This leverage of Juliet's land equity provides a compelling Juliet Homes Land Asset Value ($ in Thousands) $180,537 $150,353 FMV FMV win-win for the builder and superior cash flow man- agement for Juliet. In addition to full development projects, Juliet gen- erates a portion of its revenue via turnkey projects where the builder/developer delivers finished homes per specification at a fixed price, and Juliet's upside is limited to margin on unit home sales in the project. Turnkey projects currently represent 2.5% of Juliet's projected gross profits. The average sales cycle for a given phase of a Juliet Homes project is 18 months. The table below sum- marizes completed Juliet Homes projects. The final leg underpinning Juliet's model is its 50% interest in First Texas Residential, which services over 90% ofJuliet Homes' sales. This relationship adds 6% to Juliet's projected gross profits across the portfolio. Juliet's current portfolio of land holdings represents $30 million of equity value IlINE 21111(, JULIET HOMES RUSINFSS REPORT 15 . COMPANY DESCRIPTION' Key Relationships Juliet Homes has established significant relationships that provide the necessary foundation for success. Partner Capability Description First Texas Residential Mortgage Financing Through its esfablished network of Houston's leading real esfate investors and developers, Juliet controls key land holdings in the midst of current redevelopment activity. Model projects see land contributed in part or whole as an LP interest in the development, yielding improvements in acquisition costs, cash flow, and overall ro'ect economics. Juliet Homes is a partner in First Texas Residential, and generates an addifional revenue stream from ifs mortgage operations. First Texas Residential services over 90% of Juliet sales. LPs / GPs Real Esfafe Acquisition Juliet's key partnerships provide a solid and profitable delivery platform 16 JULIET HOMES BUSINESS REPORT IlNE 21111" · THE MARKET ANALYSIS. Houston's Redevelopment Agenda Already the 4th largest city in the U.S., Houston is growing more than twice as fast as any other city in the top 5 - and this growth is not projected to stop soon. The most recent numbers available bear this out. Between 2000 and mid-2003, the population of the Houston Micropolitan Statistical Area (MiSA) grew 7.6%, compared to overall national growth of only 3.3%.4 By 2020 Houston will be home to more than 6.5 million people. Harris County, which en- compasses Houston's downtown, is the country's 3rd most populace after only Los Angeles County, CA and Cook County, IL. According to the Center for Immigration Stud- ies, the primary accelerator of this growth is for- eign immigration. Houston is an international engineering and scientific center, and has been ex- periencing a measurable shift in its demographic makeup since the 1980s - a shift that the U.S. Cen- sus Bureau projects to continue over the next 30 years The latter half of the 1990s have seen significant in- frastructure and redevelopment plans gain momen- tum as the city attempts to accommodate its current and anticipated growth. In addition to the visible evi- dence such as downtown commercial redevelopment and the opening of the light rail system in 2004, there are massive transformations in the early stages for the Buffalo Bayou and the adjacent Midtown and East End areas of the city. These aggressive plans will drive development in the region for the next 20 years. The Buffalo Bayou redevelopment project alone is projecting $5.6 billion of private investment along- side $800 million of hard dollar public funding over that term. This project plans to revitalize old indus- 4 u.s. Census Bureau 5 Master Plan for Buffalo Bayou and Beyond - August 2002 Population Growth of Top 5 Largest U.S. Cities (PercerttChange 1990 -20(3) -6.7% l-New York 2-L06 Angleles 3~hicago 4.Houston S.Philadelphia Since 1990, Houston has grown more than twice as fast as any other top 5 U.S. city. Howton~'popu!ation continues to expand and be- come more diuer!e driven ky foreign inzmigration, primari{y froni Latin Amaim and Asia Components of Popullttlon Ch.nge Houston-Bay town-Sugar Land MSA 2000-2003 ANNUAL TOTALS 12 Months Ending Net Foreign Nutural July 1 ImmignlUon Increasfil'J 2000 43.935 54.187 2C<11 43.001 53.713 20002 43.006 55,570 2003 42.996 58.215 Totals 172.988 46.400 221.685 'in;-iu;i,.:i-- !,:,,"1, 'f'illli~t.'~'nl'l~t-~ 'H'~l'l'~lll>IJ!h'" l-",,-'i; ("SlIk!,1 ,J'"Hrl~_l~I''' llt':""!_I..'1 Source: US Bureau O1lhe Census; all 2M:'! components 9s'maled by Greati'lf Houstoo ~_~!~~~~"<e_~_~~_~__q~_I1_~_~_~_~~~~~""<!~~"_ " jl't\F 11111(, JULIET !-101vIFS BUSINFSS REPORT 17 . THE MARKET ANALYSIS Implementation Plan: Existing & Proposed TIRZs VI QId !iur" "'.I'd fiR! .....,,(Jt...1 ~M. t"Al~to'_ '- L'! -- l'II_v_Ot..u..... l_....... ro:..llllil __~_~ l " ----- (v;:;:;- ~... ~ ,,/.~ tilll\,t".ft t,?::','h~,d"'",''', f:ovrlhW...vTlRl At the end of 200], the dmv!1town area had $2.77 billion in construction prqjects and an addiriOlw! $447 million in pre-construction projects trial sectors of the city into a mixed-use centerpiece of Houston built around the reclaimed waterfront of the Bayou. Multiple Tax-Incremental Reinvest- ment Zones (TIRZ) have already been established and a single non-profit, the Buffalo Bayou Partner- ship, has raised and leveraged over $40 million in public and private funds for initial improvements. The development renaissance occurring in and near downtown Houston is also beginning to occur in ar- eas of the East End closest to downtown. At the end of200 1, the downtown area had $2.77 billion in con- struction projects and an additional $447 million in pre-construction projects('. Significant new residential development activity is occurring in the East End. 'The building of Astro's Field (formerly Enron Field) spurred the Lofts at the Ballpark residential project, the first downtown development to cross Highway 59. In December 2001 Trammel Crow Residential purchased the EI Mercado del Sol site to redevelop as the Alexan Lofts, and the vacant property on rhe site was sold to Perry Homes, which is planning a town home community. The older subdivisions in the Lock- wood area are experiencing renewed interest, a resur- gence of renovation of its pre-WWII bungalows. As ofJuly 2005, Juliet Homes has sold 129 single-family homes in its Washington Square, Ball Park Plaza, Ball Park Landing, and Memorial Square developments in this area_ Buffalo Bayou and Beyond "Mixed-Income and mixed-use development will be encouraged In every neighborhood. These diverse neighborhoods will expand to the Bayou in the East End and Downtown on underutlllzed industrial sites..." - rosl rneJ rconornic Development fieport ?OO? " East t:nd E,wlOmic Dellc!opment Report 2002 - Homeowner Vllcaney Rates JiJr the 75 [{lrgest Metropolitan Amls - Annua! Statistics 2004, US Census Bureau & Houston, Text!s Continues to !Juild, Reillry limes 18 JULIET HOMES BUSINESS REPORT JlINE 2""(, · TARGET MARKET TRENDS · The Growth of the Urban Population Nearly 60% of Houston's population is between the ages of 20 and 64. Since 2000, this group has in large numbers been relocating from the sub- urbs seeking the convenience of in-town amenities and relief from extended commute times. Homeowner occupancy rates in Houston are over 980/0, indicating constrained availability for current demand7. Annual home sales continue to exceed 30,000, a mark that was broken in 2002.8 In addition, Houston enjoys strong job growth -leading Texas in both to- tal employment and in annual job growth.9 This is evidence of a trend that is projected to continue. West Houston alone is projected to add more than 227,000 jobs from 2000 to 2025.10 Houston Residents 7% 1D/O t:l19&Under _20-64 065 & Gvef OS5&::her Nearly 60% of Houston's population is 20-64 years old and";::epresents Juliet Homes' target demographic "ll1ere is a lot a/new construction near or close to downtown, with lIlfllZ)! tOWI! homes, lofts and single fimzi0! homes. " - Jvlimi Kwan, Realry Tinzes Houston Metro Employment (Jobs In Thousands) 2312.2 Dec-04 Jan-05 Feb-05 Mar-05 Houston has the highest total employment and the sttogest job growth of all Texas metropolitan areas! 9 Texas Workforce Commission data, seasonally adjusted by the Federal Reserve Bank of Dallas - March, 2005 10 West Houston Association - Demographic and Development Trends - September, 2003 1J Housing Projections by u.s. County - u.s. Census Bureau. (Harris County encompasses Houstons downtown). liNE 21111(, JULIET HOiVIES BUSINESS REPORT ]lJ . TARGET MARKET TRENDS. The Transition of Urban Demand Harris County 2005 Construction Spend (projQct9d - dollars in millions) -, ,~ ".~ ClSmgle Family .Multl-Family Harris County alone is projected to reach $912 million in single-family home construction spending in 2005. The combination of these market factors has created an opportunity for Juliet Homes. Strong job and pop- ulation growth combined with urban renewal making in-town living more desirable has created a large mar- ket for single-family homes throughout the Houston metro area. Young professionals and empty nesters are in market for quality homes with upscale finishes and amenities. Traditionally, these buyers have been priced out of the single-family home market in these areas and have had to settle for either a town home or a house in the suburbs. Juliet offers these buyers what they're looking for-luxury in-town living at an affordable price. Strong job and population grmvth combined t\'ith urboll renewalmoking in-town living more desimble has creaf- edo large marketforsingle-family homes throughout the Houston metro area! Single-Family home starts in Harris County alone are on pace to exceed 6,700 in 2005. This is an 11 % in- crease over 2004. Juliet Homes' current and projected portfolio encompasses 7,154 homes and delivers $1.8 billion in gross sales over the next 5 years. This repre- sents a 3.9% market penetration of the overall Hous- ton new home market. ~u " Texas Workfnu Commission data, adjUJted by the hdeml Romle Bank lif Dilllas - March, 2005 II) West Howton Associmiml - Demogmphir lind Development 7i-em!; - September, 2003 11 Housing ProjeaiollS by us. - u.s. Census Bnrealt. (Hllrris Llntrlty encompasses Hot/stons downtown). 20 JULIET HOMES BUSINESS REPORT [21111f, . TARGET MARKET TRENDS. Market Potential Single-Family home starts in Harris County alone are on pace to exceed 6,700 in 2005. This is an 11% increase over 2004. Juliet Homes' current and projected portfolio encompasses 7,154 homes and delivers $1.8 billion in gross sales over the next 5 years. "Ihis repre- sents a 3.9% market penetration of the overall Houston new home market. Harris County 2005 Construction Spend (projected - dollars in millions) [0 Single Family. Multi-Family I Harris County alone is projected to reach $912 million in single-family home construction spending in 2005. jlC;F 2(1111, JUI.IFT HCJ,\IFS BCSINESS REPORT 21 . TARGET MARKET TRENDS. Competitive Position and Advantage Juliet Homes' enjoys a strong competltlve posltIon III the Houston market, based primarily on management's compre- hensive knowledge of the local market, relationships that al- low control of strategically located tracts of real estate at a sig- nincant discount to market, and a highly-developed product concept that is easily consumed by current demand. Juliet Homes Controls Strategically Locared Tracts of Developable Real Estate Through established relationships with leading real estate in- vestors and developers in the Houston market, Juliet Homes controls over 500 acres of land in and adjacent to key redevel- opment sites throughout the Houston area. Projects currently in process encompass 3,854 units with 767 of those scheduled for completion within 24 months. In most cases, these land holdings are secured via a Limited Partner interest in the indi- vidual development project, which serves to align the interests of the landholder with those of Juliet Homes. The strength of these relationships and Juliet Homes' performance to date provide a platform for continued access to desirable real estate on preferential terms. Project Cost Basis FMV Yale Sr. - Heighrs S l,l 00,000 51,100,000 WCSCO(( #2 5935,000 51,100,000 Ball park 6 5500,000 S800,00O Hall park 5 & 7 5] 50,000 S3J7,OOO Silverwood Estates 55,200,000 55,800,000 Fleur Garden Estates 53,300,000 53,700,000 Delano - Midrown S 1,100,000 $1,900,000 Wesr 28rh Sr. 53] 5,000 5395,000 Tu.scany \Xloods 54,851,500 $7,(,00,000 288 I Reed Road 52,500,000 510,000,000 Veterans i'v[emorial 51,900,000 S 1 0, 1 0),000 Skyline 52,100,000 52,400,000 'lhe Dominion 51,600,000 52,200,000 Heverly Hills # 1 5774,000 5 1,100,000 Adama # 1 545,000,000 S48,OOOOOO Atascosit3 # I & 2 $4,300,000 5'5,000,000 Richmond #2 $2,250,000 $2,250,000 Staffordshire 55,227,200 $(,,000,000 Princess "Las Vegas" 59,000,000 $12,)00,000 Dallas Market 519,000,000 $22,000,000 HOllston 1v'[arker $2(),250,OOO S29,750,OOO TOTAlS (24) $161,682,000 $180,537,000 At the portfolio level, Juliet's cost basis for development property is 17% below market Juliet Homes currently controls a strong portfolio of real estate in and adjacent to key redevelopment sites throughollt the Houston metro area 22 JULIET HOMES BUSINESS REPORT Il'''f.211116 . TARGET MARKET TRENDS. Juliet Homes Delivers Quality Homes With Luxury Finishes That Are In High Demand In Houston's Market Juliet Homes offers a variety of 3 bedroom floor plans from 1,300 to 1,SOO square feet with price points in the $130 to $175 per foot range. 1he portfolio average home is 1,450 square feet and sells for $254,165. Ju- liet's attention to detail in finishes and ame- nities make its homes an unparalleled value in the Houston market. All homes include an impressive array luxury appointments highly valued by buyers in the target demographic. The end result is short sales cycles for Juliet Homes communities. ~L Luxury Interior Amenities Gourmet Kitchen Appointmenh .:. 42" Plasma TV .:. Hardwood Floors in Entry, living. Kitchen and Stairs .:. Ceiling Fans in Master, Family Room, Second Bedroom and Game Room/Study .:. Alarm System .;. Sculplured Rounded Sheetrock Corners .:. Raised Panel Interior Doors .:. Rocker Electrical SWItches throughout .:. Crown Moldmg .> Designer Paint .> Granite Counlertops and Backsplash .:. Hardwood Floors .:. Black Gas RangelOven. Dlshwasher and space save Micro'.vave .:. Wine Chiller .:. 42" cabinets .:. Double Bov.1 Stainless Steel Sink with Vegetable Sprayer .:. Under~counter lIghling Quality Exterior Finishes Master Suite and 80th .:. Double Pane Windows .:. Sod Backyard and Landscaped Front Yard .:. Solid Wood Garage Doors .:. Garage Door Openers .:.. 6 foot Privacy Fence fOf Backyard .:. 30 year Architectural Shingle Warranty .;. Granite Counter Top wHh Double Bowt Sinks .:. Under-mount Sinks .> Oil Rubbed Faucet .> Whirlpool tub .:. Separate Shower .;. Ceiling Fan ":0. Large vValk+in Closet Juliet Homes offers more home for less money than is typically available in the adjacent neighborhoods. 11'NI cill!(. JULIET HUi\IES BUSiNESS REPORT 23 · MARKETING AND SALES · Value Summary The following chart summarizes the clear value proposition Juliet Homes provides to each of its constituents: Home Buyer land Holder Municipality (MMD) lender . Superior finishes and amenities . No-cost development . Strong alignment with redevelopment priorities . Baseline of Loan Volume . In-town convenience . Appreciated returns on assets by incorporating land into projects as equity . Zero sales cost . Reduction in current in- town housing shortages . Affordable pricing . Enhanced tax base . One-stop shopping · Reduced risk (proven development and sales partner) SWOT Analysis The following list presents a summary of the identified strengths, weaknesses, opportunities, and threats of the Juliet Homes plan. STRENGTHS Location of existing land holdings · Alignment of partner interests Strength of proven product concept Superior management of delivery risk and project financials via ResCon Group Mortgage finance partnership . Juliet believes that its superior platform and offering, proven team, and sound marketing and sales plan provide a strong posi- tion from which to capitalize on its strengths and mitigate its threats. The company has taken considered steps to address key weaknesses and threats. Specifically; . . . WEAKNESSES Low barrier to entry for established builders . economic downturn In Houston mark.et AlIgnment of landhold or tnt.r~ts In completed project!. minimizes exposure 10 delay~ and mcrkel downturns. OPPORTUNITY Ju!~t', ~hong land .quity bolane. provld., prot@cll-onin thai a mOfk@'pllc:lng downturn of os much as 35% would still allow a br~akeven exit. . Expansion into broader Houston market Expansion into multi-family market Intere'it rete escalation fir'it TeJ(01 R:esidenfiol PQrtnenhfp 5upports cu~tQm plogrom tjevelopment r nece'S5cry . THREATS · Economic downturn in Houston market · Interest rate escalation 24 JULIET HOMES BUSfNESS REPORT Ili'll,rrOr, . TARGET MARKET TRENDS. Marketing Approach Juliet Homes has an established marketing program that has already delivered 175 sales and defined a brand positioning that is resonating in the Houston market- that of the in novatorofa new di mens ion in luxury living These messages are the foundation of a set of profes- sionally developed collateral that encompasses prim, on-line, and multi-media mediums. To date, the company has significantly leveraged its marketing spend by focusing on promotional event marketing in conjunction with local businesses within the local service area. Juliet's total marketing costs including advertising, public relations, and promotions are less than 3% of sales. Il"l2i1i1i1 JULIET HOivlES BUSINESS REPORT 25 , ,D' / - ,.. FROM THE; PO'S J\"::~ ~-~~~~" n Ilt.S'\l'At1O:Nit . TARGET MARKET TRENDS. Pricing Model , II' . '!I FROM fHE lao's Mf"CUTlO .rIp,';'I;;1H'-J "''J', \'1. :: ~-< +. /",1'1 fROM THE; MID Zoo's Juliet Homes delivers unmatched value in the Houston urban market fl.lN"'T}()."$ Juliet Homes has established compelling price points for its product in the range of $139,000 to $400,000, following a disruptive pricing strategy. The average price across the current portfolio is $254,165. 1he superior locations and finishes of the homes make these prices extremely attractive and competitive in the marketplace. Channel Revenues The following charts present the net revenue expected from each source as well as each source's Gross Profit Contribution by Source ($ in Thousands) $21,376 $9,353 t Grass Profit Contribution by Source (% of Gross Profit) 6% 2% $349,798 ED Development Projects .Turnkey Projects 0 Mortgage Financin9j 92% 10 Development Projects. Turnkey Projects 0 Mortgage Financing 26 JULIET HOMES BUSINESS REPORT JUM 21111(, MARKETING AND SALES . . Direct Sales Juliet Homes leverages a direct sales force for all de- velopments. The sales force is trained on Juliet prod- uct, assigned to specific communities, and managed internally by Juliet. This team manages the sales side of all transactions driven by Juliet's marketing efforts. Rollout Strategy Juliet has established a rollout plan that delivers 3,854 homes over the next 78 months. 'I his timeline, while aggressive, is consistent with past performance. PROJECl l'vlidhl\vn Memorial Yale SL- \Vc\cntl #2 Ballpark (, Ballpark:'1 & 7 Silvt'rW(l{lll Estalcs Fleur Ganlell E"latt's Delano-Midtowll West 2~th Sf. Tll~cany Woncl~ 18~ Reee! RO<tcl Veterans Memonal Skyline Tho: DOlllininn Beverly Hills #] /\tbnta # I Alascosit,j # ] & 1. Richmond #1 Slatfordshire ] PrlllCeSS "Las Vegas" Dallas ,'I..\arkd Hllll'oIOI1 tv'larkC! STARI 6/1/04 ~/J()IO.'i :'1/5/05 5/31/05 6illO.') 9/15/05 ~/2_Li()() ii31/06 .:J-/Ji()(l .:J-il:'i/06 5/]5/(16 513]/06 7,iJliOh 9/ J:'i/06 9/J5i06 9iJO/(16 ()<~()i()6 1 ()r~ [/Or) ]O/J [/(16 1/30/0" 12/I/D6 ] 2..'y \/06 3/1/07 2004 200S 2006 201J7 21JO~ 20llY 2010 2011 2012 FINISH t1I\lTS IQr Q::' Q1 Q..dQ! Q~ (U QdD! Q~ Q' QII Qr 12..' Ql 1)...11 QJ Q~ QJ Q-d QI Q~ (l'. Q-11 Ql {J2 Q_' Q..d QJ Q~ Q_' Q...1I QJ Q2 Q' (:Ill 6/29/07 12/.10/06 -I-.l2X/06 ,/30/06 6/1-1-/06 12/1-1-/06 Y2X/OX J/30/07 i/.,Oin7 12/JO/0(1 J 2.129/0X 5lJO/(lX 7/JD/OX lJ/2XI(l7 12;/3(1/()9 hi2l)/07 ()/2(J/()l) 1/2X/()X 3/2X/(JX 3/30/09 6/29/12 12/30/12 12/29/12 120 5-1- I R II I X 12 SO 40 I X 12 J50 150 132 36 Jl)5 15 _lt5 IllX -~() 3:'\0 2()() 100 7S() - - - - Existing relationships with leading real estate investors and developers in the Houston market provide Juliet with the opportunity to expand the current portfolio. This expansion is projected at an additional 3,300 homes through 2012. [ll'lE 211111, JULIET HOMES BUSINFSS RFPORT 27 · OPERATIONS · Leadership Team DOUG BROWN, CEO Mr. Brown is an established Entrepreneur and inves- tor in the Houston market. With more than 23 years mortgage banking experience in the residential home market, he leads Juliet Homes with keen insight into the financial, product, and sales elements to win in the Houston market. Over the last 4 years, he has success- fully negotiated $80 million ofland acquisitions for res- idential and commetcial development, and raised $15 million in equity financing for development of single- family homes in the Houston market. As a founder and principal with the Midtown Medical Group, LLC, Mr. Brown successfully negotiated the $117 million con- struction of a 300,000 square foot hospital in the Mid- town area of Houston. Other commercial projects in process include the acquisition and renovation of a six story Medical Office Condo Building, the acquisition and development of a 84,000 square foot office building in Down-Town Houston, and the redevelopment of a 40,000 square foot office building in downtown Hous- ton into a restaurant/lounge/night club for a nationally known entertainer. Prior to founding Juliet, Mr. Brown was a founder and principal of First Texas Residential, which produces over $500 million in residential loan volume per year. Prior to founding First Texas Residen- tial, Mr. Brown established a ten-year track record in senior management positions with Home Trust and Gi- braltar Savings and Loan were he was responsible for originating, packaging, and placing home mortgages. 28 .fULl ET HOMES BUSINESS REPORT IlNE 211111, . OPERATIONS. BERNIE KANE, coo Mr. Kane heads all operational functions of Juliet Homes, including sales, project management, and personnel. With over 15 years of experience in the Home Building industry, Mr. Kane has successfully mastered the various aspects of home building which include sales, construction management, design con- trol, operations, and land development. As co-founder of Juliet Homes, Mr. Kane is recognized as a pioneer in Houston's Eastside Resurgence Development that was heavily promoted by the City of Houston. He has since used his insight, together with Mr. Brown, to effectively guide Juliet Homes into a variety of new markets such as Las Vegas, Atlanta, and Dallas. RAYMOND LINDGREN, CFO M r. Lindgren brings to Juliet more than 20 years of broad experience in public and private accounting and financial management. As a financial consultant focused on commercial and residential real estate for 12 years, he has led planning, startup, wind-down, and turnaround projects for a variety of clients including U.S. Home, Global Marine, and Grace Management. Il;-a ,'11111, lULIEI' 1I0\olES BUSINESS REPORT 29 . OPERATIONS. RYAN ROGERS VP CONSTRUCTION Mr. Rogers is responsible for all day-to-day over- sight of Juliet projects. Most recently, Mr. Rogers was the General Manager of Craftstar Homes de- livering profitable projects in the Virginia, Mary- land, and Washington D.C. area. Prior to Craftstar Homes, he held increasing positions of responsibil- ity over a 9-year career with David Powers Homes in Houston where he was Vice President of Production. 3D fULIFT HOI\IFS BUSINESS REPORT IENE 211111, ROBERT aD OM DIRECTOR OF INVESTMENTS Mr. adorn directs the execution of Juliet Homes' growth strategy. He identifies potential parcels of land for future development, evaluates and negotiates part- nerships with landowners, and continually evaluates the financial growth of Juliet Homes. Prior to joining Juliet, Mr. adorn held VP of Investments positions at Merrill Lynch and Smith Barney where he developed strategies and services focused on tort settlement ser- vices and risk management of capital accounts. . OPERATIONS. ANNE ECHOLS, VI' SALES Ms. Echols brings to Juliet a strong track record of success and the requisite team building skills and at- tention to detail to lead all sales activities. Prior to joining Juliet she was a Senior Sales Consultant with David Weekly Homes where she consistently exceed- ed objectives and established strong realtor relation- ships and a deep understanding of the Houston market. IGNACIO BERNAL VI' LAND DEVELOPMENT Mr. Bernal manages the execution of Juliet Homes projects from consummation of land acquisition through design, entitlement and permitting, vendor management, construction specification and schedul- ing. He brings 10 years of experience and relation- ships in the Houston market. Prior to joining Juliet. he owned and operated his own architectural design and construction management company in Houston. Mr. Bernal holds a Bachelor of Architecture from the University of Houston's Honors Design Program. JtiNE'IIIII, IULIFT HOMES BUSINESS I{FI'ORT 31 . OPERATIONS. Juliet Homes has an Established Team with Proven Leadership! DIRECTOR OF INVESTMENTS ROBERT ODOM 32 JULIET HOMES BUSINESS REPORT IlNE 21111(, · FINANCIAL SUMMARY · 7his table below summarizes.fuliet Home/projected financial perftrmance based on the assumptions in this plan. Current New Projects New Projects Operations Portfolio (thru 2008 - projected)(thru 2012 - projected) Total Turn-Key Sales Price Total Units 3854 1500 1800 7154 Total Sales Pnce S 979.547,000 $ 381.245,589 S 457,494,707 $ 1,818,287.296 Less: Sales Cost $ (48.977,350) S (19.062.279) S (22,874.735) S (90,914,36S) Net Sales S 930.569.650 $ 362,183,310 $ 434,619,971 $ 1,727,372,931 Total Development Cost $(697,723,660) $(271.558.249) 5(325,869,898} $(1,295,151,807) Distributable Profit $ 232.845,990 S 90,625.061 $ 108,750,073 S 432,221 .124 Partner's Profit S 39364,459 $ 15320.884 S 18,385,061 $ 73,070.404 Juliet Homes Profit $ 193,481,532 $ 75,304,177 $ 90,365,012 $ 359,150,720 FINANCING I MORTGAGE Total Loan Volume (95% Total Sales) $ 930,569,650 $ 362,183,310 $ 434,619,971 $1,727,372,931 Total Loan Value (90% L TV) $ 837.512,685 $ 325,964,979 $ 391,157,974 $ 1,554,635.638 Fee Income (2.75% Average Yield) S 23.031,599 $ 8,964,037 S 10.756,844 $ 42.752.480 Partner Fee Income S 11515,799 $ 4,482,018 S 5,378422 $ 21,376,240 Juliet Homes Fee Income $ 11,515,799 $ 4,482,018 $ 5,378,422 $ 21,376,240 Total Juliet Homes Income $ 204,997,331 $ 79,786,195 $ 95,743,434 $ 380,526,960 ~Ia Ili'\lE 2'")(, JULIET HOMES BUSINESS REPORT 55 . APPENDIX. Appendix A - Due Diligence Documents The following documents, in a separate binder, are available upon request for qualified investors and partners. · Juliet Homes Limited Partnership Agreements · Juliet Homes r;inancial Statements 34 JULIET IIOMES BUSINESS REPORT IlN121111(;