OutletsatSanClemente

PRO FORMA FINANCIAL ANALYSIS

10 Year Waterfall Projections

The analysis set forth herein is not a prediction or guarantee of the future financial
performance of the Company or an expected return from an investment in the
Company. This analysis is based on assumptions about future events and conditions
that the Managers believe are reasonable, but over which they have very little or no
control. If the assumptions on which this analysis was based do not prove to be correct,
the conclusions shown in this analysis will also not be correct. The past performance of
other properties owned by affiliated companies is not necessarily indicative of the future
performance of the Center. Investors should not rely on this pro forma analysis in
connection with a decision whether to invest in the Company. See Risk Factors in the
Private Placement Memorandum to which this document is an exhibit, for a discussion of
certain risks that may affect the future performance of the Company.

Pro Forma Financial Projections Are Not Guaranteed

Outlets at San Clemente
10 YEAR WATERFALL PROJECTIONS (HYPOTHETICAL)
May 14, 2014
Year 1
2015

Description
Net Operating Income - Phase 1 (1)
Net Operating Income - Phase 2 (2)
Net Operating Income

Construction Loan Interest - Phase 1 (3)

Construction Loan Interest - Phase 2 (3)
Permanent Loan - All Phases (4)
Capital Expense Reserve (5)
Owner's Expense
Net Cash Flow Available for Distribution

$4,366,000
0
4,366,000

Year 2
2016

Year 3
2017

Year 4
2018

Year 5
2019

Year 6
2020

Year 7
2021

Year 8
2022

Year 9
2023

Year 10
2024

$11,505,000
0
$ 11,505,000

$12,921,000
1,535,000
$ 14,456,000

$13,315,000
7,014,000
$ 20,329,000

$13,722,000
7,456,000
$ 21,178,000

$14,139,000
7,684,000
$ 21,823,000

$14,569,000
7,918,000
$ 22,487,000

$15,012,000
8,160,000
$ 23,172,000

$15,470,000
8,408,000
$ 23,878,000

$15,940,000
8,665,000
$ 24,605,000

(1,920,000)
0
0
(100,000)
(20,000)
$

2,326,000

(5,069,000)
0
0
(100,000)
(20,000)
$

6,316,000

(5,530,000)
(281,000)
0
(100,000)
(20,000)
$

8,525,000

(5,991,000)
(1,216,000)
0
(100,000)
(20,000)
$

13,002,000

(6,451,000)
(1,216,000)
0
(100,000)
(20,000)
$

13,391,000

0
0
(16,817,965)
(535,000)
(22,000)

(16,817,965)
(535,000)
(21,000)
$

4,449,035

5,112,035

0
0
(16,817,965)
(535,000)
(23,000)
$

5,796,035

0
0
(16,817,965)
(535,000)
(24,000)
$

6,501,035

0
0
(16,817,965)
(535,000)
(25,000)
$

7,227,035

Notes:
1. Assumes Phase 1 Opens in August 2015 and is stabilized in Year 3.
2. Assumes Phase 2 Opens in October 2017 and is stabilized in Year 5.
3. Assumes all phases are financed in a construction loan. Year 1 payments are interest only at a rate of 1 month LIBOR plus 2.25% for the outstanding loan amount. The interest rate increases 0.25% each year
beginning from year 2.
4. Assumes construction loans from all phases are refinanced into a permanent loan obtained at the beginning of year 6. The payments are amortized over 30 years at 6.50% interest rate.
Villa San Clemente, LLC currently has no commitment for this financing.
5. Assumes $0.25 per CRG Gross Buildable Area of Phase 1 in years 1 to 5, and $1.00 per CRG Gross Buildable Area of Phase 1 and 2 in years 6 to 10. These reserves are estimates for FF&E replacement,
as well as tenant leasing.
Summary Allocation of Aggregate Distributions

General Note: The allocations for Aggregate Distributions from Hypothetical Financial Returns listed below combine the aggregate operating cash and sale net cash flow based on the respective sensitivity analysis. For
example, based on the information on the next page, using the 6.75% Cap Rate Column, the allocated Aggregate Distribution for Class A Investors is $66,642,390. This figure is the sum of $1,455,033 from Class A
Remaining Priority Return, $23,000,000 from Class A Remaining Capital, $13,249,863 from Class A Excess Cash, along with $20,487,823 and $8,449,672 from the Aggregate Cash Flow Column for Class A Remaining
Priority Return and Excess Cash, respectively.

Class A - New Investors (18.62%)

Class C and D - Steven L. Craig (50.17%)
Class B and E - Employee Sweat (31.21%)
Net Projected Cash
IRR

Year 11 (2025) Sales Sensitivity Analysis

Aggregate
Cash Flows

5.75% Cap Rate 6.25% Cap Rate 6.75% Cap Rate 7.25% Cap Rate 7.75% Cap Rate

Years 1 - 10
Net Cash Flow

78,683,669
170,076,574
56,554,822

72,181,378
152,556,707
45,655,978

66,642,390
137,632,376
36,371,777

61,867,400
124,766,574
28,368,155

57,708,538
113,560,875
21,397,259

28,937,495
29,544,723
14,162,958

72,645,176

$ 305,315,065

$ 270,394,063

$ 240,646,543

$ 215,002,129

$ 192,666,672

16.79%

15.87%

15.02%

14.21%

13.45%

PLEASE SEE THE NEXT PAGE FOR THE DISTRIBUTIONS AND CAP RATE SENSITIVITY ANALYSIS
1of3

Pro Forma Financial Projections Are Not Guaranteed

Outlets at San Clemente
10 YEAR WATERFALL PROJECTIONS (HYPOTHETICAL)
May 14, 2014

Hypothetical Financial Returns

NOI - Year 11 (2025)

Cap Rate
Sale Price (NOI - Year 11 divided by Cap Rate)
Less: Closing Costs (1% of Sale Price)
Less: Loan Pay-off Amount
Net Projected Cash

Year 11 (2025) Distribution Sensitivity Analysis

Aggregate
Cash Flows

5.75% Cap Rate 6.25% Cap Rate 6.75% Cap Rate 7.25% Cap Rate 7.75% Cap Rate

Years 1 - 10
Net Cash Flow

25,353,000 $ 25,353,000 $ 25,353,000 $ 25,353,000 $ 25,353,000

5.75%
6.25%
6.75%
7.25%
7.75%
$ 440,921,739 $ 405,648,000 $ 375,600,000 $ 349,696,552 $ 327,135,484
(4 409 217)
(4 056 480)
(3 756 000)
(3 496 966)
(3 271 355)
(4,409,217)
(4,056,480)
(3,756,000)
(3,496,966)
(3,271,355)
(203,842,633)
(203,842,633)
(203,842,633)
(203,842,633)
(203,842,633)

$ 232,669,889

$ 197,748,887

$ 168,001,367

$ 142,356,953

$ 120,021,496

72,645,176

Distribution Breakdown:
1. Remaining Priority Return (10%):
Class A
Class C
Less: Remaining Priority Return
Priority Return Balance

1,455,033
387,030
(1,842,062)
0

1,455,033
387,030
(1,842,062)
0

1,455,033
387,030
(1,842,062)
0

1,455,033
387,030
(1,842,062)
0

1,455,033
387,030
(1,842,062)
0

Remaining Cash after Priority Return

230,827,827

195,906,825

166,159,305

140,514,891

118,179,434

2. Return of Capital:
Class A - Remaining Capital
Class B - Remaining Capital
Class C - Remaining Capital
Class D - Remaining Capital
Class E - Remaining Capital
Less: Remaining Capital
Capital Account Balance

23,000,000
12,550,000
33,000,000
26,450,000
0
(95,000,000)
0

23,000,000
12,550,000
33,000,000
26,450,000
0
(95,000,000)
0

23,000,000
12,550,000
33,000,000
26,450,000
0
(95,000,000)
0

23,000,000
12,550,000
33,000,000
26,450,000
0
(95,000,000)
0

23,000,000
12,550,000
33,000,000
26,450,000
0
(95,000,000)
0

Remaining Cash after Return of Capital

3. Excess Cash:
Class A - New Investors (18.62%)
Class C and D - Steven L. Craig (50.17%)
Class B and E - Employee Sweat (31.21%)
Total Excess Cash

$ 135,827,827

$ 100,906,825

25,291,141
68,144,821
42,391,865

18,788,851
50,624,954
31,493,020

$ 135,827,827

$ 100,906,825

71,159,305

13,249,863
35,700,623
22,208,819
$

71,159,305

45,514,891

8,474,873
22,834,821
14,205,198
$

45,514,891

23,179,434

45,379,550
0
0
0
0
0
0
0
$

4,316,011
11,629,122
7,234,301
$

23,179,434

PLEASE SEE THE PREVIOUS PAGE FOR THE AGGREGATE DISTRIBUTIONS FROM THIS CAP RATE SENSITIVITY ANALYSIS

2of3

20,487,823
6,777,803
(27,265,626)
0

45,379,550
8,449,672
22,766,920
14,162,958

45,379,550

Pro Forma Financial Projections Are Not Guaranteed

Outlets at San Clemente

CLASS A INVESTOR CASH FLOW SCHEDULE
May 14, 2014

Year

Date

12/31/14

5.75% Cap Rate

6.25% Cap Rate

6.75% Cap Rate

7.25% Cap Rate

7.75% Cap Rate

Ownership Percentage

Ownership Percentage

Ownership Percentage

Ownership Percentage

Ownership Percentage

18.62%

(23,000,000)

18.62%

18.62%

(23,000,000)

(23,000,000)

18.62%

(23,000,000)

18.62%

(23,000,000)

12/31/15

1,731,327

1,731,327

1,731,327

1,731,327

1,731,327

12/31/16

4,034,148

4,034,148

4,034,148

4,034,148

4,034,148

12/31/17

3,299,618

3,299,618

3,299,618

3,299,618

3,299,618

12/31/18

4,059,525

4,059,525

4,059,525

4,059,525

4,059,525

12/31/19

3,995,782

3,995,782

3,995,782

3,995,782

3,995,782

12/31/20

2,185,618

2,185,618

2,185,618

2,185,618

2,185,618

12/31/21

2,280,618

2,280,618

2,280,618

2,280,618

2,280,618

12/31/22

2,369,795

2,369,795

2,369,795

2,369,795

2,369,795

12/31/23

2,452,599

2,452,599

2,452,599

2,452,599

2,452,599

10

12/31/24

2,528,464

2,528,464

2,528,464

2,528,464

2,528,464

Sale

12/31/25

49,746,174

43,243,884

37,704,895

32,929,906

28,771,043

Total Distributions:
Projected IRR:

78,683,669
16.79%

72,181,378
15.87%

3 of 3

66,642,390
15.02%

61,867,400
14.21%

57,708,538
13.45%