Exhibit A -- Specifics of the Loan |
Non-California Residents |
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Loan Number: N2719
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PROPERTY Project: 2nd Street Commercial | TERMS
*Net of servicing
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EQUITY ANALYSIS
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OPERATING STATEMENT
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BORROWERS
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2ND STREET COMMERCIAL THE LOAN OFFERED HEREBY IS A CANNABIS LOAN THAT WILL BE SECURED BY A PROPERTY UTILIZED TO GROW, MANUFACTURE, PROCESS, DISTRIBUTE OR DISPENSE CANNABIS OR CANNABIS RELATED PRODUCTS. THIS LOAN INVOLVES SIGNIFICANT ADDITIONAL RISKS NOT ATTRIBUTABLE TO LOANS UNRELATED TO THE CANNABIS INDUSTRY AND SUCH LOANS ARE NOT SUITABLE FOR ALL INVESTORS. POTENTIAL PURCHASERS OF FRACTIONAL INTERESTS IN THIS LOAN MUST REVIEW AND UNDERSTAND THE INFORMATION SET FORTH IN THE OFFERING CIRCULAR ENTITLED "ADDITIONAL RISKS AND CONSIDERATIONS OF CANNABIS RELATED LOANS" PRIOR TO INVESTING. PURCHASERS OF INTERESTS IN THIS LOAN SHOULD ALSO CONSULT THEIR OWN LEGAL COUNSEL AND INVESTMENT ADVISORS WITH RESPECT TO THESE RISKS TO DETERMINE IF AN INVESTMENT IN THIS LOAN IS APPROPRIATE FOR THEIR PARTICULAR RISK TOLERANCE PROFILE AND FINANCIAL SITUATION. Blackburne & Sons is pleased to present this First Trust Deed secured by a newly constructed 9,600SF industrial warehouse on a 4.64-acre parcel located in Logan, Gallatin County, Montana. The borrowers purchased the land in 2020 for $395,000, and began construction of the building. To date the borrowers have spent roughly $700,000 out of pocket on construction costs. They will be using our loan to pay off the current note holder of $136,000, and the remaining funds will be used to complete construction of the building. We will be using a third party company to hold back $700,000 to ensure the improvements are completed. The subject property will be used as a cannabis grow facility for thier cannabis business. The borrowers currently own 3 cannabis dispensaries. Blackburne & Sons made a loan to these borrowers on a retail cannabis dispensary in 2021 on a property in Big Sky, Montana. This loan is still on our books. The borrowers have made 4 late payments but they have paid all of their late fees and are currently in good standing. COUNTY INFORMATION The economy of Gallatin County employs 64,300 people. The largest industries in the county are Retail Trade (8,149 people), Educational Services (7,387 people), and Construction (7,105 people). The highest paying industries are Management of Companies & Enterprises ($250,001), Mining, Quarrying, and Oil & Gas Extraction ($81,630), and Utilities ($60,903). The largest universities in Gallatin County are Montana State University (3,472 degrees awarded in 2020), Montana Bible College (14 degrees), and Academy of Cosmetology (13 degrees). The county’s prominent geographical features are the Bridger mountains in the north, the Gallatin mountains, and Gallatin River in the south. Named by Meriwether Lewis in 1805 for Albert Gallatin, the United States Treasury Secretary who formulated the Lewis and Clark Expedition. At the southern end of the county, West Yellowstone’s entrance into Yellowstone National Park accounts for around half of all park visitors. Big Sky Resort, one of the largest ski resorts in the United States, lies in Gallatin and neighboring Madison counties, midway between Bozeman and West Yellowstone. According to the United States Census Bureau, the county has a total area of 2,632 square miles, of which 2,603 square miles is land and 29 square miles in water. CITY INFORMATION In 2020, Logan had a population of 17 people with a median age of 64.1. Between 2019 and 2020 the population of Logan declined from 20 to 17, a -15% decrease. The economy of Logan, Montana employs 9 people. The largest industry is Construction (9 people). The city of Logan, is an unincorporated community in Gallatin County, Montana. Logan is situated on the Gallatin River and was established in 1889 as a railroad station on the Northern Pacific and Montana Railway. There is no post office, so the Logan properties have a Manhattan address. The city can be accessed via exit 283 on Interstate 90. Logan is approximately 26 miles west of Bozeman, 60 miles east of Butte, 167 miles west of Billings, and 178 miles east of Missoula. Bozeman is the county seat of Gallatin County and is a regional shopping center with a full range of businesses and professional services. Bozeman is not an industrial center but rather a conglomerate of small businesses and manufacturing firms. The area’s economy is strongly influenced by agriculture, tourism, the university, state and federal employment. In 2020, Bozeman had a population of 48.3k people. SUBJECT PROPERTY DETAILS At completion, the interior will have two bathrooms, offices, and a break room. As of the effective date of the appraisal, the warehouse is a shell with no interior finished. The subject is located at the end of 2nd Street, a dead-end road. 2nd Street is accessed via a paved Frontage Road. Per the borrower, this property is located six miles from the International Airport and the property has views of the Gallatin River. BORROWERS’ SUMMARY Title to the subject property is held by an LLC. This LLC is a real estate holding company, with each member owning 50%. This entity owns two properties and reports a net worth of $2,264,690. Our guarantors are two single men, and both will be personally guaranteeing this loan. The borrowers file a separate LLC tax return for their cannabis business. In 2021, this entity reported $530,120 in net income. In 2020, this entity reported $837,491 in net income. This entity will not be a part of our loan. Guarantor #1 is a single man, reports a net worth of $1,837,854 and has a mid-credit score of 756. In 2021 he reported $322,560 in adjusted gross income on his personal tax returns. In 2020 he reported $451,246 in adjusted gross personal income. Guarantor #2 is a single man, reports a net worth of $2,163,900 and has a mid-credit score of 802. In 2021 he reported $322,405 in adjusted gross income. In 2020, he reported $460,818 in adjusted gross income. VALUATION SUMMARY We hired a local MAI appraiser who valued this property (AS-IS) appraised value of $1,400,000 and (AS-Complete) appraised value of $1,900,000. A local broker was also engaged who performed a drive-by opinion of value (BPO) who values this property at $905,000. At a 11.0% yield to the investors and a 63.2% LTV (AS-IS) Appraised Value and 46.8% LTV (ARV) Appraised Value, this appears to be a reasonable investment. Investing in any first trust deed involves substantial risk, so be sure to read the Risk Factors Section of the Offering Circular carefully before investing. A large and prolonged decline in real estate values is possible. Foreclosed commercial properties almost always need to be renovated before they can be leased or sold, so be sure to maintain some liquidity. George’s Advice For Successful First Mortgage Investing
Blackburne & Sons Realty Capital Corporation--For more information, contact Tom Blackburne
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