Gromax has identified and researched the following prospects that fit the strategy we are proposing for the real estate development fund.  These projects are representative; additional projects can be identified to achieve specific investor goals.

Residential:

Stone Creek, League City, TX: Proposed140-lot residential subdivision. Due to its location and proximity to existing master planned communities and recreational attractions, the property has potential as an upper end tract home or custom home site. Good school district and close to NASA/Clear Lake employment base. The current developer has exhausted equity and is unable to borrow.

Hidden Lakes, South Shore area of League City, TX:  This project has 270 nearly finished lots and excess land for another 250 lots.   The property is appraised at $14 million, but can probably be acquired in $7 million range.  The previous developer went into bankruptcy. Strong market, good schools, new school site nearby, and MUD already in place for reimbursements.

Unnamed residential project, Pearland, TX:   Approximately 50 acres, near schools in developing south SH 288 market.

Master planned community opportunity, Kyle, TX:   More than 2000 acres assembled in this community in the south Austin market; bulk of the land owned by octogenarian who needs to sell.  The main tract has proven aggregate and sand deposits, which could provide an initial cash stream from sale of materials.  Excavation areas can be blended into the future residential community in series of detention lakes and water features. Large scale water and sewer capacity is available at the tract.  Over one million square feet of retail and office has been built within one mile in past 2 years.

New Braunfels and Round Rock, TX:   Gromax has identified several potential properties in these desirable suburbs along Interstate 35.  New Braunfels is an established historic and tourism-oriented community in San Antonio SMSA, north of San Antonio; Round Rock, the home of Dell Computer, is in Austin SMSA, north of Austin.  If the fund developed several of these properties in tandem, Gromax and partner could replace D R Horton, Centex and Pulte Homes as the biggest developer in the I-35 corridor. All three of these companies are primarily home builders with national exposure and are experiencing financing issues.

Hotels:

Gromax has identified hotel opportunities in several major sub markets or mid level primary markets such as New Braunfels, Round Rock, Abilene, Denton, and the Rio Grande Valley which appear to have growth capacity.

Commercial:

Gromax has identified quality commercial sites that are not progressing due to lack of bank financing. Opportunities exist for RV Parks, targeted small non-anchored retail, and small office professional complexes.

Bank REO:

Many banks are close to making deals on foreclosed or pre-foreclosed properties. Holding these properties is less advantageous to lenders as they are forced to hold reserves out to match potential loss. By reducing prices and moving properties, the bank frees up its cash for lending and takes the write off against other profits.

Because Gromax and partners are not highly leveraged, the banks see us as a reasonable option to move REO properties. Gromax has the banking relationships and market knowledge to select those properties with the best up-side potential.

Conclusion:

Due to the national and world wide economic slow down, real estate opportunities exist for investors with patience and vision. Prominent analysts agree, most Texas markets will return to positive job creation by 2010 or, worst case, 2011. For every 1.8 new job created, a new home is needed. At current rates, demand will exceed supply by 2011.  By simple supply and demand, this emerging condition will create better pricing and good sales velocity on residential lots and homes.

As job growth and home sales recover, there will also be an under supply of quality commercial sites in the best locations. Enhancing the benefits of these real estate investments is the looming threat of inflation as the Federal government spends, by some estimates, more than $3 trillion it does not have.  Historically, real estate is a safe haven in periods of excessive government spending and inflation.

At Gromax, we see potential profits during these difficult economic times. The wise investor will sow now and reap reward over the next several years. We have the vision, expertise and relationships to make this a time of great reward. We are seeking the right financial partner.

Last modified on 1/14/2010 11:56:58 AM

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