Six Peak IC Weekly Meeting

• The meeting reviewed transaction closing readiness, portfolio capital options, potential GC/development strategy, and underwriting for an identified project.
• Participants confirmed most legal deliverables are in process (Six Peak leading, Hunton/Jane Hinton reviewing JV and guarantor documents), Bob circulated execution drafts and will confirm outstanding items with Anna, and the team agreed to finalize portal financials and establish a formal portal go-live with internal validation.
• On portfolio strategy, the group assessed refinance versus sale for three Northmark assets, noting refinancing would be expensive (roughly $5–6M) with market rates about 4.8–6% and current pricing making sales or refinances unattractive without accepting weak outcomes or lender concessions.
• Offers were discussed (highest reported $340K per door for Edgemont); debt balances (e.g., 519 Normandy ≈ $5.1M) and three-asset facility mechanics make partial dispositions likely infeasible and leave basis near current pricing.
• Participants debated sequencing around Melrose/MF1 resolution to avoid giving lenders leverage.
• Financial metrics and market constraints were examined: an NOI figure of 1.228 and a hypothetical buyer price near $340 per door implied a market cap near 6%; debt yield was ~6.11% on a $20.1M debt balance, constraining third‑party equity appetite and making sponsor return hurdles (~13% net) unlikely without materially lower purchase prices (~$275 per door).
• Appraisal and lender-driven sale friction were noted, and Steven flagged SixPeak’s scale limits (≈ $2.5M annual OpEx) and the need for substantially more capital to operate programmatically.
• On development/GC strategy, the team evaluated LITEC-style deals and roles (GC-only versus capital+GC with potential Marquette participation).
• SixPeak noted minimal near-term distributions from such deals until 2033–34, though recent rent increases reduced equity needs in a specific deal.
• The group favored pursuing contracting work first to generate near-term cash flow and build a GC pipeline, with careful risk assessment (parking ratios and local market familiarity highlighted as key mitigants).
• The Borden project underwriting was reviewed: Chris circulated a teaser, comp and underwriting, highlighting a parking ratio of ~0.8:1 as downside protection, covenant rent increases and higher AMI impacts on awards, and uncertainty about sponsor bonding capacity and balance sheet.
• Two engagement paths were proposed (act as bonded GC when shovel-ready or provide equity), with rent achievement and capitalization as primary risks.
• Participants discussed options for underperforming assets, often favoring selling for debt-parity to walk away rather than recapitalizing.
• The conversation closed with agreement to pursue near-term revenue opportunities tied to Borden and to set disciplined milestones for deal pursuit; Bob confirmed follow-up with Anna and will forward a list of remaining closing items.

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