CONFIDENTIAL AMENDED AND RESTATED PRIVATE PLACEMENT MEMORANDUM This ...

145 Pages·2017·2.75 MB·English

CONFIDENTIAL AMENDED AND RESTATED PRIVATE PLACEMENT MEMORANDUM
This Memorandum supersedes and replaces the prior Memorandum date September 1, 2016, entirely
Name: Memorandum No.:

(a Texas limited liability company)
Austin, Texas
Telephone: [phone]
________________________________________________________________________
ONE HUNDRED MILLION DOLLARS ($100,000,000.00)
by issuance of
TWENTY THOUSAND (20,000) UNITS OF CLASS A MEMBERSHIP INTERESTS
PRICED $5,000 EACH (WITH A MINIMUM SUBSCRIPTION OF $50,000.00) (THE “OFFERING”)
________________________________________________________________________
Each Unit offered will consist of one (1) Class A limited liability company unit (“Unit”) in PSW Real Estate, LLC (the
“Company”). See “SUMMARY – THE OFFERING BASICS”. The Units are sometimes referred to as the “Securities”.
The Securities are being offered only to select qualified purchasers meeting certain suitability standards established by the
Company in a private offering. See “PLAN OF DISTRIBUTION - Purchaser Suitability Standards.”
To participate in the Offering, you must subscribe for at least $50,000 of Class A Units and complete and return the
Subscription Documents attached to this Memorandum together with a check in the full amount of your subscription. We
reserve the right to reject, in whole or in part, any subscription for Class A Units. There is no public market for any
securities of the Company, and no such market is expected to develop following this Offering. The Class A Units offered in
this Memorandum are being offered by the Company for sale to “accredited investors” in reliance upon Regulation D
promulgated under, and/or Section 4(2) of, the Securities Act of 1933, as amended, and as permitted in the jurisdictions in
which the Class A Units are to be offered.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE. THIS OFFERING IS MADE IN RELIANCE ON AN EXEMPTION FROM REGISTRATION WITH THE
SECURITIES AND EXCHANGE COMMISSION PROVIDED BY SECTION 4(2) OF THE SECURITIES EXCHANGE
ACT OF 1933, AS AMENDED (THE “ACT”), AND RULE 506 OF REGULATION D PROMULGATED
THEREUNDER.
THIS INVESTMENT INVOLVES A DEGREE OF RISK THAT MAY NOT BE SUITABLE FOR ALL PERSONS. ONLY
THOSE INVESTORS WHO CAN BEAR THE LOSS OF THEIR ENTIRE INVESTMENT SHOULD PARTICIPATE IN
THE INVESTMENT.

The Date of This Memorandum is January 1, 2018
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INITIAL DISCLOSURES AND WARNINGS
(Read Carefully)
THIS MEMORANDUM HAS BEEN PREPARED SOLELY FOR THE BENEFIT OF AUTHORIZED
PERSONS INTERESTED IN THE OFFERING. IT CONTAINS CONFIDENTIAL INFORMATION
AND MAY NOT BE DISCLOSED TO ANYONE, OTHER THAN AUTHORIZED PERSONS SUCH AS
ACCOUNTANTS, FINANCIAL PLANNERS, OR ATTORNEYS RETAINED FOR THE PURPOSE OF
RENDERING PROFESSIONAL ADVICE RELATED TO THE PURCHASE OF SECURITIES
OFFERED HEREIN. IT MAY NOT BE REPRODUCED, DIVULGED, OR USED FOR ANY OTHER
PURPOSE UNLESS WRITTEN PERMISSION IS OBTAINED FROM THE COMPANY. THIS
MEMORANDUM DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO ANY PERSON
EXCEPT THOSE PARTICULAR PERSONS WHO SATISFY THE SUITABILITY STANDARDS
DESCRIBED HEREIN.
THE SALE OF UNITS COVERED BY THIS MEMORANDUM HAS NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), IN RELIANCE UPON THE EXEMPTIONS FROM SUCH
REGISTRATION REQUIREMENTS SET FORTH IN SECTION 4(2) OF THE ACT AND RULE 506
OF REGULATION D THEREUNDER. THESE SECURITIES HAVE NOT BEEN QUALIFIED OR
REGISTERED IN ANY STATE IN RELIANCE UPON THE EXEMPTIONS FROM SUCH
QUALIFICATION OR REGISTRATION UNDER STATE LAW. THESE SECURITIES ARE
“RESTRICTED SECURITIES” AND MAY NOT BE RESOLD OR OTHERWISE DISPOSED OF
UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
THERE IS NO PUBLIC MARKET FOR THE UNITS AND NONE IS EXPECTED TO DEVELOP IN
THE FUTURE. SUMS INVESTED ARE ALSO SUBJECT TO SUBSTANTIAL RESTRICTIONS UPON
WITHDRAWAL AND TRANSFER, AND THE UNITS OFFERED HEREBY SHOULD BE
PURCHASED ONLY BY INVESTORS WHO HAVE NO NEED FOR LIQUIDITY IN THEIR
INVESTMENT.
NON-U.S. INVESTORS HAVE CERTAIN RESTRICTIONS ON RESALE AND HEDGING UNDER
REGULATION S OF THE ACT. DISTRIBUTIONS UNDER THIS OFFERING MIGHT RESULT IN A
TAX LIABILITY FOR THE NON-U.S. INVESTORS. EACH PROSPECTIVE INVESTOR IS URGED
TO CONSULT HIS, HER OR ITS OWN TAX ADVISOR OR PENSION CONSULTANT TO
DETERMINE HIS, HER OR ITS TAX LIABILITY.
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THIS OFFERING TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS MEMORANDUM, AND ANY SUCH INFORMATION OR REPRESENTATIONS SHOULD NOT
BE RELIED UPON. ANY PROSPECTIVE PURCHASER OF THE UNITS WHO RECEIVES ANY SUCH
INFORMATION OR REPRESENTATIONS SHOULD CONTACT THE MANAGER IMMEDIATELY
TO DETERMINE THE ACCURACY OF SUCH INFORMATION. NEITHER THE DELIVERY OF THIS
MEMORANDUM NOR ANY SALES HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY OR IN THE INFORMATION SET FORTH HEREIN SINCE THE DATE HEREOF.
PROSPECTIVE INVESTORS SHOULD NOT REGARD THE CONTENTS OF THIS MEMORANDUM
OR ANY OTHER COMMUNICATION FROM THE COMPANY AS A SUBSTITUTE FOR CAREFUL
AND INDEPENDENT TAX AND FINANCIAL PLANNING. EACH PROSPECTIVE INVESTOR IS
ENCOURAGED TO CONSULT WITH HIS, HER, OR ITS OWN INDEPENDENT LEGAL COUNSEL,
ACCOUNTANT AND OTHER PROFESSIONALS WITH RESPECT TO THE LEGAL AND TAX
ASPECTS OF THIS INVESTMENT AND WITH SPECIFIC REFERENCE TO HIS, HER, OR ITS
OWN TAX SITUATION, PRIOR TO PURCHASING UNITS.
THE PURCHASE OF UNITS BY AN INDIVIDUAL RETIREMENT ACCOUNT (“IRA”), KEOGH
PLAN OR OTHER QUALIFIED RETIREMENT PLAN INVOLVES SPECIAL TAX RISKS AND
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OTHER CONSIDERATIONS THAT SHOULD BE CAREFULLY CONSIDERED. INCOME EARNED
BY QUALIFIED PLANS AS A RESULT OF AN INVESTMENT IN THE COMPANY MAY BE
SUBJECT TO FEDERAL INCOME TAXES, EVEN THOUGH SUCH PLANS ARE OTHERWISE TAX
EXEMPT.
THE UNITS ARE OFFERED SUBJECT TO PRIOR SALE, ACCEPTANCE OF AN OFFER TO
PURCHASE, AND TO WITHDRAWAL OR CANCELLATION OF THE OFFERING WITHOUT
NOTICE. THE MANAGER RESERVES THE RIGHT TO REJECT ANY INVESTMENT IN WHOLE
OR IN PART.
THE MANAGER WILL MAKE AVAILABLE TO ANY PROSPECTIVE INVESTOR AND HIS, HER,
OR ITS ADVISORS THE OPPORTUNITY TO ASK QUESTIONS AND RECEIVE ANSWERS
CONCERNING THE TERMS AND CONDITIONS OF THE OFFERING, THE COMPANY OR ANY
OTHER RELEVANT MATTERS, AND TO OBTAIN ANY ADDITIONAL INFORMATION TO THE
EXTENT THE MANAGER POSSESSES SUCH INFORMATION.
THE INFORMATION CONTAINED IN THIS MEMORANDUM HAS BEEN SUPPLIED BY THE
MANAGER. THIS MEMORANDUM CONTAINS SUMMARIES OF DOCUMENTS NOT
CONTAINED IN THIS MEMORANDUM, BUT ALL SUCH SUMMARIES ARE QUALIFIED IN
THEIR ENTIRETY BY REFERENCES TO THE ACTUAL DOCUMENTS. COPIES OF DOCUMENTS
REFERRED TO IN THIS MEMORANDUM, BUT NOT INCLUDED AS AN EXHIBIT, WILL BE
MADE AVAILABLE TO QUALIFIED PROSPECTIVE INVESTORS UPON REQUEST.
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CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM
TABLE OF CONTENTS
Page
I. SUMMARY ............................................................................................................................................................... 1
II. THE COMPANY AND ITS BUSINESS ................................................................................................................. 3
III. COMMON AND INCENTIVE MEMBERS ........................................................................................................... 8
IV. FINANCIAL PROJECTIONS ................................................................................................................................ 9
V. THE OFFERING AND DESCRIPTION OF SECURITIES .................................................................................. 10
VI. USE OF PROCEEDS ............................................................................................................................................ 15
VII. CERTAIN RISK FACTORS ............................................................................................................................... 16
VIII. CERTAIN INCOME TAX RISKS AND CONSEQUENCES ........................................................................... 24
IX. LEGAL COUNSEL .............................................................................................................................................. 31
X. PLAN OF DISTRIBUTION ................................................................................................................................... 31
XI. ADDITIONAL DOCUMENTATION AND INFORMATION ............................................................................ 34
Exhibits
EXHIBIT A – Company Agreement
EXHIBIT B – First Amendment to Company Agreement
EXHIBIT C – Second Amendment to Company Agreement
EXHIBIT D – Company Financials
EXHIBIT E – Summary of Financial Projections and Projects
EXHIBIT F – Certificate of Formation
EXHIBIT G – Certificate of Name Change
EXHIBIT H – Selected Class B Member Biographies
EXHIBIT I – Subscription Agreement

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I. SUMMARY
This summary is qualified in its entirety by the more detailed information appearing elsewhere in
this Memorandum and the exhibits attached to this Memorandum. This Memorandum, the Company
Agreement (as amended to date, the “Company Agreement”), a copy of which is attached as Exhibit A,
and the other exhibits should be reviewed carefully for more complete information about the Company.
THE OFFERING BASICS
General
The Units offered to certain selected qualifying persons pursuant to this Memorandum are also
referred to as the “Securities.” The target capital financing to be raised through this Offering is One
Hundred Million and No/100 Dollars ($100,000,000) subject to adjustment as described below. There is a
“Minimum Unit Purchase” for a minimum aggregate purchase amount of Fifty Thousand and No/100
Dollars ($50,000.00) for the Units and the full purchase price will be due upon acceptance of a
purchaser’s subscription. However, the minimum aggregate investment for the Units may be waived by
the Board. All subscriptions are subject to acceptance by the Company which reserves the right, in its sole
discretion and for any reason, to reject any subscription in whole or in part or to allot to any prospective
purchaser less than the number of Securities subscribed for by such purchaser or to allow a subscriber to
purchase less than the minimum aggregate purchase amount of Securities. The Company is offering to
certain selected qualifying persons Twenty Thousand (20,000) Class A Unit membership interests in the
Company. The purchase price for each Unit is Five Thousand Dollars ($5,000). Class A Units will earn
concurrent “preferred returns” (the “Preferred Return”) accruing from the date Class A Units are
acquired. The Preferred Return will accrue at the following rates in the following periods: 1) Two
Hundred and Twenty-Five Dollars ($225) per Class A Unit for the six-month period beginning on January
1, 2018 and ending on June 30, 2018; 2) Two Hundred Dollars ($200) per Class A Unit for the six-month
period beginning on July 1, 2018 and ending on December 31, 2018; 3) One Hundred and Seventy-Five
Dollars ($175) per Class A Unit for the six-month period beginning on January 1, 2019 and ending on
June 30, 2019; and (vii) One Hundred and Fifty Dollars ($150) per Class A Unit for all six-month periods
thereafter.1 Class A Units owned for less than an entire six-month period indicated above will be entitled
to a pro rata share of Preferred Return for such period. In addition to the Preferred Return and after certain
priority payments are made, the Class A Units, as a whole, may receive distributions of up to forty two
percent (42%) of the Company’s profits for the 2018 calendar year; then up to thirty one percent (31%) of
the Company’s profits for the 2019 calendar year and thereafter, such percentage will decrease to twenty
five percent (25%), as described below.
EXECUTIVE SUMMARY OF THE BUSINESS
PSW Real Estate, LLC (formerly known as PSW Urban Solutions, LLC), a Texas limited liability
company (the “Company”), was formed on March 31, 2016. Each of J. Ryan Diepenbrock, Anthony V.
Siela, and James M. Bernard are managers of the Company and collectively serve as the “Board of
Managers” or “Board” (each a “Manager”). The Company will issue Class B Units to certain senior
management of the Company (the “Class B Members”). The Class B Members possess relationships,
knowledge and experience related to the homebuilding business and real estate investment. They are
expected to contribute their knowledge and services in the operation of the Company.

1 Class A Units purchased prior to the date of this Memorandum accrued Preferred Returns at different rates during
previous periods, described in the Company Agreement and such rates are not available to current investors in Class
A Units.
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The Company was created to consolidate the homebuilding and real estate investment activities
historically operated by certain Class B Members and capitalized by investments and loans from third
party investors and lenders (the “PSW Affiliates”). The PSW Affiliates have been engaged in a variety of
real estate investment, development and home building businesses in Austin, Dallas, San Antonio and
Seattle. These activities have been supported by the general contracting, project management,
architectural, engineering, legal, financial, and other support services to the real estate development
projects performed by the PSW Affiliates. Certain of the PSW Affiliates raised capital from third party
investors for the above activities and some of such third-party investors converted their equity interests in
a PSW Affiliate for Class A Units in the Company as part of the consolidation. Not all entities that could
be classified as a PSW Affiliate have been consolidated under the Company and may remain related, but
unconsolidated affiliates to the Company. The Board shall undertake to ensure that any transactions
between the Company and these unconsolidated PSW Affiliates shall be on market terms and conditions.
A link to the audited financial information of the PSW Affiliates for the calendar years ending
December 31, 2014, and December 31, 2015, and the unaudited financial information of the PSW
Affiliates for the calendar year ending December 31, 2016 is provided on Exhibit D for all potential
investors to review.
The Company intends for the overall focus of its business to be homebuilding and sales, with
projects to include single-family homes, condominiums, townhomes, apartments, commercial space, or a
mix of such uses. Homebuilding should continue to represent a substantial portion of the revenues of the
Company. The Company’s business, however, includes property management services and additional
income-generating assets, and will include acquisitions of existing apartments and commercial space or
building such projects. If the Board determines it is appropriate then the Company may also expand its
business to include urban development and investment services and activities, including, but not limited
to, title insurance, brokerage, and other related services. A web link to the summary projections and
projects of the Company are attached as Exhibit E (the “Summary”).
THE OFFERING STATUS
Class A Units
The Company is offering to certain selected qualifying persons, all of which must be “accredited
investors,” twenty thousand (20,000) Class A Units in the Company (the “Offering”). The purchase price
for each Unit is Five Thousand Dollars ($5,000). There is a “Minimum Unit Purchase” for a minimum
aggregate purchase amount of Fifty Thousand and No/100 Dollars ($50,000.00) for the Units and the full
purchase price will be due upon acceptance of a purchaser’s subscription. However, the Minimum Unit
Purchase may be waived by the Board. Capital contributed to the Company upon purchase of the Units,
to the extent not returned to the purchaser, will earn the Preferred Return as described above. The Board
may, at the Board’s sole discretion, make bi-annual distributions of the Preferred Return on or around
April 1 and October 1. In addition to the Preferred Return, the Class A Members, as a whole, shall receive
distributions of a certain percentage (the “Class A Profits”) of the Company’s annual profit remaining
after the Company makes certain priority payments, including the Preferred Return. In 2018, the Class A
Profits shall equal forty-two percent (42%); in 2019, the Class A Profits shall equal thirty-one percent
(31%); and thereafter the Class A profits shall equal twenty-five percent (25%). The full amounts of the
Class A Profits, respectively, are based on all Twenty Thousand (20,000) Class A Units being issued and
outstanding to Class A Members. If the Company issues less than all Twenty Thousand (20,000) Class A
Units, then the Class A Profits, respectively, shall be proportionately reduced. Distributions of both the
Preferred Return and the Class A Profits, which may be based on anticipated profit, will occur only
if the Board determines in its sole discretion that the Company’s net operating cash allows the
Company to make such payments.
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A Class A Member’s capital must remain invested in the Company for a minimum of three years.
After three years, however, a Class A Member may request, subject to the availability of cash at the
Company, that such Class A Member’s Units be redeemed, and its capital be returned by the Company.
Similarly, three years after the formation of the Company, the Company may elect to redeem the interests
of Class A Members who have not already requested redemption of their Units.
Class A Members will receive a pro rata share of any change of control of the Company as
defined below. Any Class A Member redeemed by the Company at the election of the Board within 36
months of such change of control will be entitled to share in the profit as though still a Class A Member.
A committee consisting of the three (3) Class A Members (the “Advisory Board”) may exist to
exercise approval authority in very limited circumstances, including when the Board seeks approval to
exceed certain designated Company limitations stated in this Memorandum, as further defined in the
Company Agreement.
All proceeds of the Offering, net of offering and closing costs and expenses and capital
reserve for the Company, will be contributed to the capital of the Company as acquisition and
operating costs for the operation of the Company.
The specific economic rights of the Class A Units are more fully detailed below and in the
Company Agreement. Each prospective investor should review such section and the Company
Agreement carefully. The Company Agreement shall be the definitive and controlling document of
the Company and any summary of the Company Agreement or terms therein is qualified in its
entirety by the copy of the Company Agreement attached hereto
The Company may pay any transaction-based commission fees to any sales agents in connection
with the Offering.
PURCHASER QUALIFICATION
Securities are being offered only to “accredited investors”. See “PLAN OF DISTRIBUTION”.
RISK FACTORS
PURCHASING SECURITIES INVOLVES A HIGH DEGREE OF RISK. These risks cannot be
fully anticipated, described or quantified at this time. Certain risks associated with purchasing Securities,
however, are discussed generally below. See “CERTAIN RISK FACTORS”, which should be read
carefully by a purchaser prior to subscribing for Securities. Each offeree is advised to consult his or her
own advisors with respect to these risk factors.
II. THE COMPANY AND ITS BUSINESS
THE COMPANY
A copy of the Certificate of Formation for the Company (the “Certificate”) was filed with the
Texas Secretary of State and is attached as Exhibit F. A copy of the Certificate of Amendment for the
Company’s name change to PSW Real Estate, LLC was filed with the Texas Secretary of State and is
attached as Exhibit G.
As noted above in the Executive Summary, the primary focus of the Company’s business will be
homebuilding, but the Company’s business also includes income-producing real estate assets and related
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urban development and investment services and activities. The Company will also act as a parent entity,
acquiring and consolidating the PSW Affiliates, which are currently engaged in homebuilding and real
estate investment activities.
THE COMPANY’S HISTORY
PSW began in 2001 as a business partnership between J. Ryan Diepenbrock and Anthony V.
Siela (together the “Founding Members”) as a small portfolio of rental properties in college towns
(Arizona State University in Tempe, The University of Texas in Austin and Boise State University). In
the 15 years since, it has become a real estate investor, full-scale homebuilder and urban infill developer
with projects across Texas and Washington.
The Founding Members are summarized below and more detailed information can be found about
the Founding Members and other Class B Members in Exhibit F, attached hereto.
J. Ryan Diepenbrock – Class B Member, Manager
Ryan has expanded PSW’s business from a small rental property portfolio in Arizona to more
than 900 for sale or rent units at various stages of development in the Austin, Dallas, San Antonio and
Seattle markets.
Ryan oversees all land acquisition and upfront development efforts and guides complex rezoning,
subdivision and commercial site plans through multiple municipalities. He has led negotiations with
neighborhood groups, city staff, historic commissions and city council members. Ryan leads the
underwriting process for each development and strategically develops the capitalization structure of each
project.
Anthony V. Siela – Class B Member, Manager
Since moving to Austin in January of 2009, Anthony has been directly responsible for managing
and scaling all aspects of PSW operations and creating a multi-market developer and homebuilder in the
process. Anthony’s involvement in development begins with the land acquisition phase, and continues
throughout the life cycle of each project. He oversees community design through the firm’s in-house
engineering and architectural teams and supervises all related sales and construction strategies.
THE REAL ESTATE DEVELOPMENT BUSINESS
Building in urban neighborhoods has many challenges. A custom community is created on each
site, which involves a substantial investment of both financial resources and time to permit and build.
The 80+ multi-disciplinary professionals working for the Company are experienced in this difficult
process. The Company will provide most of the services necessary from site selection and planning,
through design and construction, to purchasing a home.
Each market in which the Company builds has unique characteristics. The Company does try to
focus on communities that have shown consistent population growth driven by migration, strong job
growth, low unemployment rates, constraints on the supply of supply of homes for sale and rising median
home prices.

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US Austin Dallas San Antonio Seattle

Migration % Migration % Migration % Migration %
% change in % change in of Pop. % change in of Pop. % change in of Pop. % change in of Pop.
Pop. Pop. change Pop. change Pop. change Pop. change
20 11 1.0% 3.7% 54.1% 2.3% 41.8% 2.4% 47.1% 1.7% 48.4%
2012 0.8% 2.9% 68.1% 2.0% 57.0% 2.0% 62.4% 1.6% 59.4%
2013 0.7% 2.6% 66.6% 1.7% 51.1% 2.0% 62.7% 1.6% 61.6%
2014 0.8% 3.0% 69.0% 2.0% 57.4% 2.1% 65.3% 1.6% 64.3%
2015 0.8% 2.9% 70.9% 2.0% 59.9% 2.2% 64.7% 1.6% 61.8%
2011-
4.1% 16.6% 65.4% 10.5% 53.4% 11.3% 60.3% 8.5% 59.1%
2015

Source: U.S. Bureau of Census and Real Estate Center at Texas A&M University

The four markets in which the Company will initially work had 5-year population growth rates
between two and four times greater than the national average, and more than 53% of that population
growth came from migration (i.e. people are moving to these cities). Concurrently, each of these markets
grew jobs between 1.44 and 2.37 times the national average. In fact, Austin, Dallas, San Antonio and
Seattle combined accounted for nearly 9% of the jobs created in the country despite comprising less than
5% of the population.
US Austin Dallas San Antonio Seattle

% change in Unemployment % change in Unemployment % change in Unemployment % change in Unemployment % change in Unemployment
Employment Rate Employment Rate Employment Rate Employment Rate Employment Rate

2011 0.6% 9.6% 3.7% 6.6% 2.8% 7.6% 2.3% 7.1% 0.6% 8.7%
2012 1.8% 8.9% 3.9% 5.7% 2.5% 6.6% 2.4% 6.3% 2.5% 7.2%
2013 1.0% 8.1% 4.0% 5.1% 2.3% 6.1% 2.6% 5.7% 2.3% 5.8%
2014 1.6% 7.4% 3.5% 4.2% 2.6% 5.0% 2.4% 4.6% 2.2% 5.3%
2015 1.7% 6.2% 3.0% 3.4% 2.4% 4.1% 1.8% 3.8% 1.9% 4.9%
2011-
6.4% 15.2% 10.2% 9.6% 9.2%
2015
Source: U.S. Bureau of Labor Statistics and Real Estate Center at Texas A&M University

Concurrent with the increase in population and jobs over the last five years, the inventory of
homes has continued to fall and in 2015 was as between -38% (San Antonio) and -76% (Seattle) below
their 10-year averages.
Months of Inventory

Seattle (King
Austin Dallas San Antonio County)*
2006 2.9 5.4 4.1 n/a
2007 4.0 5.7 5.8 5.5
2008 5.1 5.9 7.5 8.2
2009 5.1 5.7 7.1 4.4
2010 5.3 6.7 7.5 5.6
2011 3.9 5.1 6.5 3.6
2012 2.4 3.5 5.1 2.1
2013 1.8 2.5 3.9 1.7
2014 2.0 2.2 3.5 1.4
2015 2.0 1.9 3.4 0.9
2006 - 2015 average 3.5 4.5 5.4 3.7

source: Real Estate Center at Texas A&M University. * Washington Center for Real Estate Research.
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While at the same time, median home prices have grown between 14.4% (Seattle) and 51.8%
(Austin) over the last ten years, and now are significantly higher than their pre-recession peaks.
Median Home Price

Seattle (King
Austin Dallas San Antonio County)*
2006 $171,272 $149,386 $140,361 $425,000
2007 $183,292 $151,657 $147,829 $455,000
2008 $187,319 $148,944 $148,231 $430,000
2009 $185,150 $147,584 $147,776 $380,000
2010 $189,356 $151,144 $149,951 $379,100
2011 $189,900 $149,900 $151,000 $344,900
2012 $203,000 $161,000 $159,000 $367,700
2013 $220,000 $177,500 $169,000 $420,500
2014 $240,000 $190,000 $179,000 $449,600
2015 $260,000 $212,000 $191,000 $486,100
10-year price change 51.8% 41.9% 36.1% 14.4%

source: Real Estate Center at Texas A&M University, * Washington Center for Real Estate Research, and Bureau of Labor Statistics Consumer Price Index - All
Urban Consumers, Item: Housing
CAPITAL PLAN
Currently there are three sources of efficient capital that the Company anticipates utilizing to fund
its activities.
i. Security Offering: The Company is offering to certain selected qualifying persons this Offering of
Twenty Thousand (20,000) Class A Units to achieve the target capital financing of One Hundred
Million and No/100 Dollars ($100,000,000).
ii. Debt: The Company expects that it will require debt financing for the development and
management of future projects. Not all debt financing will be required at the same time and each
project will have its own debt financing needs at different points in its life cycle. Debt financing
will be applied to the maximum extent without creating the potential for financial stress for the
Company down the road. The Company’s debt-to-equity target range is 2:1 to 2.33:1 (65-70%).
The Company expects to have a lower debt-to-equity ratio when land comprises a larger
proportion of its assets and when a larger proportion of its projects in progress consists of higher-
priced units. The Company expects to have a higher debt-to-equity ratio when rental assets
comprise a larger proportion of its assets and when a larger proportion of its projects in progress
consists of lower-priced units.
The Company will generally obtain two categories of loans to finance different stages of the
development and construction process. The first is commonly referred to as an acquisition and
development loan (A&D), and the second as a vertical construction loan, vertical line-of-credit
(VLOC) or global line-of-credit (GLOC). Each is subject to terms mutually acceptable to the
Company and lender, as well as to current financial and housing market conditions and the
financial performance of the Company and any other loan guarantor.
The payment terms are generally comprised exclusively of interest due on the outstanding loan
balance and do not include amortization of principal. Most loans will require personal guaranties
of the Founding Members.
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