Planned urban Development

PRESTON LAKE DEVELOPMENT

EXECUTIVE SUMMARY

Virginia One Development, LLC (VOD) seeks a total of $9 million to develop Preston Lake, a 125 acre master planned community in Virginia's beautiful Shenandoah Valley at Harrisonburg, Virginia.

The developer plans to sell all of the lots in the community over a seven year period, resulting in gross revenue of $32.9 million and producing a total return of 116% on the $9 million investment, an average return of 17% per year.

This property became available after the previous developer's lender discontinued funding for this and virtually all similar projects when the housing market and banking institutions came under immense pressure in 2008. The lender and the previous developer ultimately entered into a "friendly foreclosure" and the lender took possession of the property with a net outstanding debt of $4 million for which the lender is now willing to sell the property.

The $4 million price for this property places the cost far below that of comparable properties and substantially below any reasonable market value. The property is fully zoned and subdivided with all development improvements, including roads, water, sewer, phone and fiber optic cable fully installed and complete.

The Preston Lake community consists of 125 acres that will include 128 single-family detached homes and 345 row-houses (473 total units). VOD intends to sell the finished lots in Preston Lake to one or more builders at an average rate of 18 single family detached lots and 49 row-house lots per year. The entire residential development should be fully sold-out in seven years.

The property is strategically located on U.S. route 33, the major east-west thoroughfare in the region, approximately 1.75 miles from Interstate Highway 81 and an equal distance to James Madison University, the second largest institution in the Virginia state university system. This prime location, when combined with an unusually strong regional economic and demographic profile makes this a highly attractive development.

A commercial parcel adjacent to the community will be developed simultaneously by another developer in concert with the Preston Lake property. The two properties will support each other with the residential community of Preston Lake providing a reservoir of customers for the commercial property while the retaill property will provide shopping convenience to attract new residents to Preston Lake. The commercial property, consisting of 21 acres, is fully approved for a mixed-use Planned Commercial Development which will be known as Main Street at Preston Lake (Main Street). Main Street will include 120,000 square feet of retail space, 75,000 square feet of office space and 90 residential rental units. The commercial development will proceed simultaneously and be fully built and leased over the same seven years.

The principal factor that makes Preston Lake such an attractive property is the consistently strong economic conditions of this market. Since 2007, when most of the country began to feel the effects of the economic slow-down and the contraction of jobs and revenue, the Harrisonburg, Virginia area experienced a softer economic change. While unemployment rose, it peaked at 6.1%, substantially below the national average. This bodes well for a more robust recovery as the economy moves forward.

An important economic asset is the stability that Virginia's second largest state university brings to the community. James Madison University enrolls approximately 20,000 students supported by a full time faculty of 2,700 and an additional 5,500 jobs in the community. The university contributes approximately $448 million to the local economy each year. Bridgewater College, a private liberal arts institution located on a 300 acre campus in the county with 1,650 students also makes a substantial contribution to the stability and academic focus of the community. The result is an educated workforce that helps attract and retain businesses in the region.

Since 2007, when other regions were experiencing a contraction in their business community, several large companies have moved to the area and other existing businesses expanded facilities and added to their workforce.

For example, Merck & Company invested an additional $193 million to transform a plant from traditional pharmaceutical technology to a protein-based technology. MillerCoors completed a $300 million expansion of their facility which employs approximately 500 area residents. SRI International completed its 43,000 sq. ft. Center for Research and Technology and the Center for Advanced Drug Research. The average salary of their employees is $88,000. The RR Donnelly publishing firm completed an additional 32,400 sq. ft. addition to their campus in 2010 and now employs more than 1,000 people.

The confidence that these companies and many others have shown for this region bodes well for continued prosperity in this community. This blend of business and academic institutions produces a desirable balance that contributes to low levels of unemployment and higher than average income levels, and most importantly, a high level of economic stability.

The Preston Lake property is an outstanding investment opportunity because of the economic and demographic influences on the property and because it can be acquired at a price that is substantially below current market value. These factors will allow the finished lots to be marketed to builders at a comparatively lower price. The net benefit is that there should be a smooth and consistent sale of finished lots allowing the investors to recoup their investment and earn a significant return on that investment over the seven year marketing period.

Sincerely,