RenovationPROJECT_FINAL

CLUB FINANCING FOR PROPOSED PROJECTS

The Board Financing Committee comprised of Jonathan Nelson, Chair, Fred Stern, Herb Selzer and Diane Exter (the “Committee”), has recommended to the Board the selection of Truist Bank (created upon the merger Of BB&T and Sun Trust Bank) (the” Bank”) to assist the Club in the financing of either project: the New Clubhouse or the Renovation. The Committee worked extensively with four banks: Wells Fargo, Bank of America, Regions Bank and the Bank recommended. The Board approved the selection after the unanimous recommendation of the Committee and review by the Finance Committee. The financing terms are essentially the same for either project. The projected loans are hedged through the use of a swap and a cap. There is an insignificant difference in the pricing of the swap for each product because of market conditions. The all-in rate of the swap and interest for the New Clubhouse is 2.50% while the renovation is 2.45%. The cap is for $10 million for the New Clubhouse and for $7 million for the Renovation. The projected cost of each project ($56.292 Million for the New Clubhouse or $39.988 Million for the Renovation) will be paid from Member’s assessment, the sale of homes to new Members and initially the Club’s cash flow. The loan to the Club is in the form of a reducing revolver, which utilizes the Club’s overnight cash balance to reduce the loan and therefore the interest expense. However, upon full payment of the loan, the Club will have at least as much cash as it initially placed with the Bank. The price of the caps and the rate of the swaps were estimated on a given date by the bank. It is expected that The Club may close the loan agreement with the Bank during the latter part of March 2021 assuming a project is approved by the Community in February. At the request of the Committee and in consultation with the Bank, the pricing of the swaps was increased by 25 basis points to cover a potential increase in interest rates prior to closing. The premium for each cap was also increased accordingly. The actual rate for the swaps and premium for the caps will be determined on the closing date. It is important for the Community to understand that the projected costs for each project are based upon estimates provided to the Club by the owner’s rep, pre-construction contractor and the architect and are being used as guidance only. The actual costs will not be determined for whichever project is selected until the Club has obtained

biddable architectural plans and received contractor bids, which are not anticipated to occur until between 6-9 months following approval by the Membership. It is at that time only that the Club will have defined costs. We are hopeful the final costs will be approximately the same as the estimates.

The material terms of the projects are as follows:

1. The term of the assessment as approved by the Board will be for 15 years and will cost approximately $424 or $249 per month/per Member, totaling $76,320 or $44,820 per Member for the New Clubhouse or the Renovation, respectively. 2. 8homesales tonewMembers, nettingapproximately $115,000 per sale until May 1, 2021, where the amount will rise to approximately $140,000 per home and will be used for 15 years. The aggregate proceeds for each project will be $16,750,000 or $27,916 per Member. The Club will also commit to the Bank to pay these proceeds whether or not the requisite home sales are met. 3. The total estimated cost per Member for the 15-year loan repayment period, including interest, will be $104,034 for the New Clubhouse and $72,655 for the Renovation. 4. The bank’s interest rate is 120 basis points plus libor with 0% as the libor floor. The cost of each swap raises the rates as set forth above. 5. ACapof 2.25% is estimated to cost $794,580 for the New Club House and $467,365 for the Renovation. 6. Interest is estimated to be approximately $5.334 Million or $3.138 million, respectively. 7. Closing costs including origination fees and legal and filing fees are expected to be approximately $100,000 for each project. 8. The total amount expected to be paid in for each project during the six-month period while architectural plans are being drawn and the receipt of contractor bids will be approximately $3.25 million for the New Club House and $1.6 million for the Renovation.

53