OVERVIEW

The development of a 610-unit parking structure coupled with 550 hotel units, 190 condominium units and ground level commercial/retail space upon a two-acre parcel located at 1405 N. Ocean Boulevard in Myrtle Beach, South Carolina. This property will be marketed as the World Grand Strand development which is ideally suited for mixed-use development that includes for-sale condominiums, hotel units, retail/commercial space and parking which serves the general public. A mixed-use development of this type which is properly designed, marketed, and operated development will meet with strong levels of consumer acceptance.

SALIENT FACTORS

• Since being impacted by the COVID pandemic in 2020, the Myrtle Beach area has rebounded significantly, and is presently considered to be the highest ranked vacation destination in the United States by upon Revenue per Available Room or Rev Par, according to STR, a firm which closely monitors the hospitality industry. Barring a major catalytic event, we see no reason why this trend will not continue for the next three to five years, at minimum.

• The World Grand Strand property is well located, just one block west of the Atlantic Ocean, and future residents and/or hotel guests will benefit from its proximity to several ancillary support facilities.

• Job growth, which typically serves as an impetus for new real estate development, within the Myrtle Beach Metropolitan Statistical Area or MSA has been quite strong, with 10,400 jobs added in 2021, and 8,500 new employment positions added over the past 12 months. Mirroring the general tourism industry, we expect that this solid employment performance will continue over the next several years.

• Recent residential construction activity with the Myrtle Beach MSA has been robust, with 12,219 new housing units authorized in 2021, of which 1,165 were found within the multifamily (including both townhome/condominium and rental apartment) sector. Both totals reflect the highest level of activity within the MSA over the past ten years. In some instances, higher levels of residential development can lead to oversupply conditions, however, we believe that continued solid employment gains will continue to foster the need for new housing units in the area.

• As would be expected, the strong recent economic performance of the Myrtle Beach MSA will lead to continued gains in both population and households over the next five years in both Myrtle Beach itself, as well as Horry County of which Myrtle Beach is a primary component. Specifically, we estimate that household additions in Horry County will average nearly 2,200 per year over the next five years.

• Based upon the above factors, we estimate that demand for new housing within the Myrtle Beach MSA will remain strong, with an average of over 11,000 new units expected annually over the 2022-2026 timeframe. Of this total, for-sale condominium alternatives are expected to account for an average of 712 new units yearly over that same time period. While this figure significantly exceeds expected household growth, it is believed to be reasonable given that the bulk of new condominium offerings will be purchased by consumers from outside of the Myrtle Beach area seeking a second home/vacation residence.

• Looking at sales of waterfront-oriented condominium units within the immediate vicinity of the World Grand Strand property, we see that prices have remained relatively high. Specifically, over the past several months, the average condominium in the immediate area generated a sales price of $291,850 and included 869 square feet of living space. This equates to a value ratio of $335.85 per square foot. Given that most of these sales occurred in buildings which are generally older, we are confident that new condominium product at the World Grand Strand development can be priced at or near the high end of the market.