Under the Company’s LLC agreement, the Company will make distributions to its owners quarterly, starting at the end of the first quarter after this Offering closes. The source of the distribution is immaterial. Instead, all distributions will be made in the following order of priority:
- First, the Available Cash shall be distributed to the Investor Members until they have received their Preferred Return for the current year.
- Second, the balance of the Available Cash, if any, shall be distributed to the Investor Members until they have received any shortfall in the Preferred Return for any prior year.
- Third, the balance of the Available Cash, if any, shall be distributed to the Investor Members until they have received a full return of their Unreturned Investment.
- Fourth, the balance of the Available Cash, if any, shall be distributed to the Sponsor as a promoted interest.
Each Investor will receive an annual preferred return of 8% on their investment, which will accumulate but not be compounded starting on the date the investment is made. The Company plans to sell or refinance the property approximately 2 years after construction is completed and expects the sale price of the property at that time to be approximatetly $4,000,000.
If the Project does not move forward for any reason, the Company plans to sell the property and return the funds invested. The current value of the property is estimated to be $470,000 as compared to similar-sized lots sold near the Project property over the last 20 months.