Thank you for your questions, Director Becker. While I believe we answered most of your questions during the Board Meeting last week, I wanted to make sure to provide our responses here, as well:
$7.3 million at closing will come to SHFC. What is this based on? How much is the sales price, how much is the remaining mortgage, what else is paid out before SHFC is?
The closing proceeds estimate is based on the existing Purchase and Sale Agreement for Delphi’s interest and the current property account balances. The calculation has been carried out by Hilltop Securities, Strategic HFC’s financial advisor.
The total sales price of the partnership interests being sold by Delphi to OTH is $53,375,000. The remaining HUD mortgage balance is $30,302,000; this mortgage will be assumed.
As per the original agreement between Delphi and Strategic, in the case of Delphi selling its partnership interest, Strategic is slated to receive 40% of sales proceeds, 30% of Operating Reserves, 40% of Escrow Reserves and 40% of operating cash.
Net sales proceeds to Delphi at close are expected to be approximately $13,570,315, resulting in a $5,428,126 disposition fee to Strategic (40% of total). An additional ~$1.9M would be generated via Strategic’s share of reserves and operating cash, along with 2025 ground lease and seller’s note Year 1 interest/principal.
Details of the calculations can be found in the board meeting slide deck, here:
67d3403a60bf225cb2dd7817_Slide Deck BoD 20250313.pdf
Did Silver Springs pay all fees (developer fee, GC fee etc) from the initial partnership agreement? Yes. The Silver Springs partnership does not have any outstanding fees due to Strategic HFC.
$185,000 a year - if they do not have sufficient cash flow to pay, does SHFC collect interest for unpaid portion till they are paid up?
For the payments on the sellers note, the note has a 5% interest. For the first five years only interest payments are due on a semi-annual basis. Any interest payment amounts not made due to lack of cash flow will accrue but are not allowed to compound according to the HUD form seller note.
