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January 2014

SKY HOMES BUSINESS PLAN

1.1-EXECUTIVE SUMMARY Sky Homes is a Massachusetts-based real estate company that develops green, luxury penthouse units on the rooftops of existing buildings in urban communities across the United States. There are cities in the U.S., such as Boston and New York, where real estate development is constrained. The only way to develop new properties is to purchase and renovate entire buildings or to add new units to existing buildings that can still expand vertically. As a startup in the real estate industry, Sky Homes believes it can offer a unique value in a niche market. Its units balance cutting edge design features with green technologies and a positive atmosphere for all tenants. 1.2 - OBJECTIVES: The primary organization objectives are of our to: 2: Incorporate a model of real estate development that thrives on creative, cost-effective methods of developing and selling real estate through scalable platforms 3: Create new real estate inventory in desired locations within large, targeted cities 4: Develop green benefits for buildings that otherwise would not have access and help older cities become greener one building at a time 5: Develop a solid, corporate identity in our specified targeted market area 6: Realize a positive return on investment within first 12 months.

Sky homes strives to achieve the highest standard of green building

1: Establish a real estate firm that requires less upfront investment than purchasing an entire building which rarely comes onto market

1.3 - MISSION: The mission of Sky Homes is to be the most successful, niche real estate company in the United States. Sky Homes incorporates proven and professional techniques in developing, marketing, and selling new green, luxury penthouses in urban communities. The company is a creative, innovative, and people-oriented organization and maintains a full-time staff who continually strive to provide top quality service for its individual clients.

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SKY HOMES IS HEADQUARTERED IN THE DOWNTOWN AREA OF BOSTON, MASSACHUSETTS. THIS WILL BE THE HEART OF OUR COMPANY, WITH SATELLITE LOCATIONS IN NEW YORK IN YEAR AND SAN FRANCISCO, CALIFORNIA AND CHICAGO, ILLINOIS TO FOLLOW.
2.4 - EXIT STRATEGY Sky Homes will begin entertaining an exit strategy, giving investors an opportunity to retrieve their investment between the end of year five and the end of year seven. Because our path to profitability can be achieved after two completed Sky Homes units, we plan to continue to operate as a private entity, offering better returns to our investors as we continue to scale without the need for additional investment. The nature of our business model allows us to operate as a unique real estate development company that requires low capital investment to operate. With this, we can grow quickly and efficiently, providing high returns. Our goals for scaling the business will allow us to explore opportunities to merge with a strategic real estate development firm at the end of year 7 and at TABLE 1.1 1.3 : O PERAT IONS - 1 .1 INSUR ANC E PA YR OLL BENEF ITS UTILITIES AC C O UNT/ LEG AL PER MITS W EB& MAR KETING SUPP LIE S & MIS C O FFIC E AR C HITEC T FEES STAG ING $3,000 $75,000 $15,000 $15,000 $25,000 $60,000 $6,000 $9,000 $10,000 $60,000 $10,000 O PERAT IONS CO NT. - 1 .1 MA NAG EMENT TAX /W OR K CO MP R EPAIR & MAINT. B&G ELEVA TO R EX T. SPR INKLER S TO T AL $2,000 $4,000 $20,000 $10,000 $50,000 $40,000 $ 4 14 ,0 0 0 SU MM ARY - 1 .3 TO T AL $ 1, 31 4 ,00 0 that time investors will have the opportunity to retrieve their investment in Sky Homes. In the event that a strategic real estate development firm is not interested in acquiring Sky Homes, the founding members will provide the investors that wish to exit their investment with a liquidity event. This liquidity event will be structured with the investors to determine a lucrative return on their investment. 3 - SERVICES Sky Homes primary service is to facilitate the collaboration between building owners and architects and developers. The company partners with experienced real estate agents to search for eligible properties for development. It brings the building owners and architects together to collaborate on the design and execution of the development. At the same time, the company finds investors to completely fund the development at no cost to the building owners. The final, and possibly most

important, service is that Sky Homes gives to the building owner and each of its tenants a percentage of the revenue from the sale of the new unit. 3.1 - SALES LITERATURE Sky Homes has fliers and presentations for each of the stakeholders including investors and building owners and our network of realtors in each city. Through strategic alliances with its architects, the company will also be able to show prospective building owners past examples of penthouse developments from firms with a track record of excellence.

*Includes cash reserve for over run

CO NSTRU CTIO N - 1 .2 SQ . FO O TAG E C OS T P.S.F TO T AL 2,000 $350 $ 70 0 ,0 00

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Rooftop building reduces energy costs for the entire property up to 50% - Gallup Polls

Additionally, the company will have prototypical examples of potential penthouses to give prospective clients an idea of what their units could look like. To that point, upon the signing of a Letter of Intent from a building that wishes to add a Sky Home, MERGE Architects in Boston will complete a design specific to the space, incorporating all the possible green energy features, common space additions, and value-creating benefits available for the space. 3.2 - FUTURE SERVICES Sky Homes will become profitable after one completed unit. At this point, the company will scale its business through pre-selling and developing high-end, modular units. By building these units off-site, Sky Homes will achieve the following benefits: -Significantly reduced construction costs -Ability to construct for any city at any time of year as the construction permitting process will only require a week long permit when placing the unit on top of the existing structure -Ability for prospective buyers to see sample units, materials, and customize in greater detail -Ability to complete units in ! the time as traditional build through automated processes and synergies.

properties, they need to either renovate and enhance the existing units or expand their properties. Sky Homes is offering to do both for those building owners who dont have the means or the funds to accomplish this task themselves. Thus, it would be in their best interests to call on Sky Homes to develop the most unique and marketable penthouses to their properties and then to find homebuyers. There is great interest in Sky Homes among condo associations or co-ops who are due for a large assessment on their properties. Many owners cannot afford these assessments and placing a Sky Home on their building can subsidize these assessments allowing for current owners in the building to keep their properties, and increase their property values all at once. The next important segment is the homebuyer(s). Our units will be for sale in the multi-million dollar range so we will be marketing towards those that can afford such property. The markets in our initial two cities are ripe for these units, as comparable units stay on the market for an average of less than a month. 4.2 TARGET MARKET AND STRATEGY Sky Homes cannot simply wait for the phone to ring. We must actively search for properties that would benefit from such development and for building owners who are willing to undertake such an investment.

The company is working with several, high-end real estate brokers who are knowledgeable of our targeted geographical markets and have access to properties worthy of additional due diligence. Our brokers approach condo associations or single building owners in our target neighborhoods. In the case of a condo association, we negotiate between 10% and 20% of the final sale price of the penthouse as a fee for allowing us to build on their existing roof space and proceed to re-drawing the by-laws of the condo association documents with our legal team at a firm local to the development. In Boston, we work with Pierce Atwood. If the building is owned by a single entity, the process is streamlined, as the negotiation on the split of the final penthouse sale price is the only step towards reaching a final agreement. 4.3 MARKET TRENDS Bos ton - The city of Boston is in a transitional phase. The long-time mayor, Thomas Menino, has left office and Mayor Marty Walsh has taken control of the city. With this, there is excitement among those within the real estate development community as Boston has long been in need of more housing. Different studies have shown that Boston needs upwards of 400,000 new apartments just to serve the housing needs of its current population. In addition, the environmental agency and Boston Redevelopment Authority (BRA)

4 MARKET ANALYSIS
4.1 MARKET SEGMENTATION Our most important market segment is the building owner(s). For building owners to improve the value of their

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Boston redevelopment authority views sky homes favorably due to its green building initiative which aligns with the cities political direction
4.2 - CONTINUED have swiftly been approving new developments since the new Mayor took office. Sky Homes has met with the necessary government officials and departments, most notably the Boston Redevelopment Authority to approve the concept. The BRA is looking to capitalize on the green building trend and they view Sky Homes as a very favorable political concept. They have been instrumental in putting us in touch with various departments. In addition, after interviewing many architects and contractors to partner with, we chose Elizabeth Whitaker at MERGE architects not only for her design and green building expertise, but for her credibility in the space. She has completed many rooftop additions in Boston, and has long standing relationships with many in the BRA and the zoning committee. Ne w Yor k City - New York City has long been known for its high rise buildings, and its shortage on real estate. Capitalizing on the only available space is not necessarily a novel concept in this city, however our business model brings the ability to utilize the most underutilized asset of any NYC building - the roof - to any condo association or building owner. By fully funding the penthouse addition, Sky Homes is able to help New York city continue its long standing trend of high growth, especially in the top of the market where we have targeted. New York City has a unique ability to support the high-end of the market, as buyers are willing to live above stores, busy streets, or put up with strange entryways to find a unique, one of a kind penthouse. The city is proud to be known as one of the nations most energy efficient cities. Former Mayor Bloomberg pushed for green energy projects and began a process of phasing out certain processes such as utilizing low grade oil. Sky Homes is viewed as politically favorable in NYC under Bloomberg's policies and these market trends in the city. By uniquely funding these retrofitted upgrades to create a more energy efficient city, Sky Homes is able to aid this mission and help those who are not able to comply, or fund such upgrades on their own. 4.4 - MARKET GROWTH Sky Homes has chosen to operate in real estate constrained cities. Starting in Boston and New York City, the company is able to provide new inventory for two of the United States most stable markets. Boston real estate is nearly unparalleled in its ability to maintain high price per square foot sales, most notably on the high-end of the market. New York City is among the worlds best at providing high returns when building for the high-end of the market. Sky Homes aims to provide new inventory for exactly this segment of the market. With both cities becoming a hub for innovation, technology, and job creation, the high-end real estate market is booming. 4.5 MARKET NEEDS Commonly judged by the length of time real estate is spent on the market, high-end penthouse units are needed in both Boston and New York, as well as our future cities targeted for expansion such as San Francisco and Chicago. Each of these markets exhibits extremely low average listing times (45 days or less) for comparable units. 5 - STRATEGY SUMMARY 5.1 - COMPETITIVE EDGE Sky Homes has an edge over other developers in several respects. First, Sky Homes has an innovative business model that is first to market, high-end luxury development with green technology benefits to building owners who would not otherwise be able to afford such additions. In fact, Sky Homes will pay the building o wners to allow us to use the roof space. This cash infusion is fantastic for the economics of the building community and is great for the image of Sky Homes, as others wish to share in the benefits of rooftop development. Second, Sky Homes has strategic partners with architects, contractors, realtors, and advisors who have political connections and a history of success in rooftop real estate development. With partners who are associated with Harvard to relationships with supply companies here in the North East

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Comparable penthouse units in Boston, NYC, SF and Chicago stay on the market for less than 60 days and have sold for upwards of $2000 USD per Square Foot. Sky Homes can operate on less than half that sale price.

who are able to give us the best price per square foot to build, we are able to gain a significant advantage over our competitors in terms of cost, design, and notoriety. 5.2 - MARKETING STRATEGY Marketing efforts for Sky Homes is directed at current owners of buildings with appropriate and available roof space. Sky Homes has developed a low cost strategy utilizing partnerships with highend brokerages in each city. The win-win nature of our business model has created a large incentive for our partners to market our product to prospective buildings. Our network of realtors approach prospective buildings and set meetings with the associations or owners. We pitch our concept and negotiate the final split of the sale of the penthouse. By creating new inventory for sale, we are creating immediate and real value for our real estate partners. They receive market rate commission for both finding the building and the eventual sale of the penthouse. Once engaged with a potential property, Sky Homes is able to effectively sign a Letter of Intent with a building by showing the following ways Sky Homes adds value: -Immediate cash payment upon sale of the penthouse unit(s) -Green energy benefits to all residents depending on design of penthouse resulting in reduced energy costs for all residents

-Publicity, and visibility among residents and citizens who see construction, and sale of a high-end, designer unit -Lower condo association fees with the addition of a new unit paying into the building -Ability to upgrade common spaces with the influx of cash Sky Homes can negotiate with buildings on the following points to add further value funded by Sky Homes on a case by case basis: -Addition of a common roof deck for all residents provided there is appropriate access and square footage to work with -Upgrades to elevator during the extension of elevator to penthouse floor -Upgrades of entryway vestibule -Upgrades to fixtures, finishes, doors, etc on any element of building shared by penthouse and potentially necessary to the sale of the new unit 5.3 - POSITIONING STATEMENT For building ownership groups, Sky Homes is the only way to utilize your most underutilized asset (roof space) among all real estate developers because Sky Homes is the only developer to bring luxury, green penthouse unit additions for free and pay for using the available roof space. 5.4 - PRICING STRATEGY Sky Homes will sell completed units

at market price. We will price the unit to achieve the highest return on our investment, and use common real estate pricing practices such as comparable sales as a strategy. 5.5 - PROMOTION STRATEGY Sky Homes most successful promotion will come from word of mouth. As we develop more and more units, our efforts will be highly visible to the public and word will spread of our unique appeal. In addition, as Sky Homes completes units, the units will be advertisements themselves. Our architects have worked to develop concepts that will be distinctive, and noticeable while maintaining visually appealing design that compliments the building, neighborhood, and city. When you see a Sky Home, you should know it is a Sky Home and you will want to live in one yourself. Realtors who work with us will receive promotional materials, including signs with our logos indicating they are an authorized partner of Sky Homes. Materials to help them sell the units will be provided, including special booklets and website. A Sky Homes logo plaque will be visible on the building that receives a Sky Home for interested passersby to learn about the development. All materials, plaques, and promotions will be consistent with our luxury brand image. We target the high-end of the market, and will therefore associate with the highend establishments in the city. Creating partnerships with high-end local designers, furnishing

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New York City is the most energy efficient metropolis in the United States. Sky Homes is Politically favorable as it supports Mayor Bloombergs initiative to improve aging buildings in this area, and continue to uphold this ranking

retailers, and anyone who may have a part in outfitting the interior of a completed unit will be an ongoing strategy to cement our brand in the public eye. 5.6 SALES STRATEGY Sales in this business is divided into two distinct customers for Sky Homes: 1-Selling the Sky Homes model to the building ownership group 2-Selling the Sky Home unit to the homebuyer As described in 5.2, we will use the many differentiators of Sky Homes to effectively sell the units to building ownership groups. Once several Sky Homes are completed, more hands-on marketing materials, videos, pictures, and possible tours can be utilized for more effective marketing and sales. 5.7 - STRATEGIC ALLIANCES Sky Homes has formed strategic alliances with respected partners in Boston and New York, and will use these partnerships and connections to expand to new cities when appropriate.

which is a prime reason she was chosen to partner with Sky Homes after meeting with many architects. In addition, MERGE has experience and knowledge in green building projects, specifically regarding rooftops. MERGE has fostered relationships within the key government departments necessary to complete this type of development, and having MERGE as a strategic partner is

great for Sky Homes. The Building Center - The oldest building supply center in the North East. Sky Homes founding members are close friends with the family who owns this establishment. We are able to have access to the best contractors, prices, and supply through their network that is filled with experienced builders in the north east. 6 -MANAGEMENT SUMMARY 6.1 - ORGANIZATIONAL STRUCTURE Sky Homes depends on an organized division of responsibilities in order to run an efficient enterprise. Main decisions and responsibilities will be divided between the three partners. Each will focus on maintaining high quality and a cohesive business entity. Until additional employees are needed, they will also be responsible for the marketing, finance, and strategic management of the firm.

5.8SALES FORECAST

Year 1
Total Units Built Revenue from Pre Constructed Sales Revenue Net Income $ Need From Investors 0

Year 2
2

Year 3
5 (2 Pre Sold)

Year 4
8 ( 2 Pre Sold)

Year 5
10 (3 Pre Sold)

0 $2,200,000 $234,780 $1,314,000

$2,200,000 $6,600,00 $2,295,888 $1,678,220

$4,400,000 $13,200,00 $5,762,293 $1,689,112

$4,400,000 $17,600,00 $9,266,109 $423,707

$6,600,000 $24,200,00 $14,127,171 $0

MERGE Architects - Elizabeth Whittaker - Adjunct Harvard professor and owner of MERGE. She has worked with Frank Gehry & Associates, has an impressive portfolio of completed projects in the Boston area, including many rooftop additions,

Prior to Co-Founding Sky Homes, Justin fostered the development of his career through experiences in private equity, investment banking, and consulting. He most recently worked for Thomas H. Lee Partners portfolio company, inVentiv, which focuses on healthcare technology, clinical trials, and commercialization. During this opportunity, he concentrated on inorganic and organic growth while focusing on post-merger integration and strategic restructuring. Prior to this, Justin worked for ipCapital Group as an associate who focused on the firm's valuation, operational management and strategy consulting practices. He spent his early career as an investment banking associate at Renaissance Management and, prior to that, as an analyst at GE Capital. Throughout his career, Justin has worked closely with numerous companies of all sizes focusing on strategic planning, M&A and operational initiatives.

JUSTIN JAUNDOO

Justin received his B.S. in Business Administration from Colby-Sawyer College and was captain of the tennis team. He received his MBA from the F.W. Olin Graduate School of Business at Babson College where he served as the President of the Private Equity and Venture Capital Association.

Prior to Co-Founding Sky Homes, Davey worked in sales and marketing at leading Boston-based technology startups. He has worked in multiple industries, including healthcare technology, consumer products, and mobile technology. He has worked alongside famed CEO Seth Priebatsch at LevelUp, a Google Ventures company, growing the business to 20 new cities and developing a successful new method of customer acquisition. Prior to that, Davey was at BuyWithMe where he managed an internal consulting team responsible for implementing sales and cost effective organizational changes that led to a successful exit.

DAVEY RANDA

Early in his career, he worked for Enterprise Ireland, an Irish government agency, performing due diligence and investment analysis on Irish medical device companies looking for investments from large American corporations such as Medtronic. Davey holds a B.A. in Biology from Boston University and received his MBA from the F.W. Olin Graduate School of Business at Babson College. While achieving his MBA, Davey consulted abroad in Singapore, Hong Kong, and most notably in Italy for the former Mayor of Milan, Letitzia Moratti, developing a successful turnaround strategy for a failing investment losing thirty million Euros per year.

Prior to joining Sky Homes, Jad worked at a global asset management firm based in New York City for almost five years. While his experiences covered a wide range of functions, most of his work was focused on strategic planning and marketing. He spent his career analyzing the global hedge fund industry, which led to his firm reducing its management fees and expanding to a new European office and 3-person team. His most recent assignment was the creation, management, and supervision of a new marketing product for the firm and the industry.

JAD KARAM

Jad earned a B.A. in Economics from Colorado College and was the Co-Chair of the International Student Group. He received his MBA from the F.W. Olin Graduate School of Business at Babson College. While working towards his MBA, Jad consulted with a leading brewery in Singapore and a leading tractor company based in Houston, TX.

Appendix A Assumptions

As sum ptions R evenue P SF Sq Ft 2000 Price PSF $1,100

The minimum of our square footage per unit will be 2,200. Based on our research and discussions with a great number of realtors our price per square foot will be $1,100.

Pre-C onst ructed Sales % for followi ng year

20%

Through our efforts to scale as fast as possible, the green prefab penthouses are going to be the biggest trends. Therefore, we can market these penthouses and pre-sell at least 33% of target units in the next year. This will provide additional revenue for Sky Homes earlier in the cycle.

R eal tor Fees

Years 1-3

6%

Year 4-8

3%

We are planning on a 6% realtor fee. The fee breakdown incorporates a 1% finders fee for the property and a 5% selling fee for the unit. While we believe realtors are of great importance in finding roof space and selling the unit, we are taking measures through ourselves and our network

Property Sale

Porti on

of

15%

While most construction companies buy land, our competitive advantage lies within our ability to further stabilize existing buildings and develop our green units on top of existing buildings. Therefore, our selling point comes from providing the existing owners a 20% profit from the revenue of the unit after we supply the realtors their fees. We have enhanced the property value to building, provided them the closet possible way of obtaining NetZero benefits from our green penthouse and contributed to an updated common space.

C onst ructi on (Tradit ional)

C ost

Sq Ft

2000

Cost PSF

$350

Upon performing research and utilizing our own construction experience, a unit of 2,200 sqft will cost approximately $250 per sqft. However, we believe that a worst case scenario will lead us to use $350 for our model. In addition, we believe that we will only have to use this traditional cost structure for the first year and on special scenarios from clients.

C onst ructi on 2)

C ost

Sq Ft

2000

Cost PSF

$200

(Pre-Fab, St art ing Yr

After the first project, we will look to provide the prefab green penthouse option going forward at a cost of $150 per sqft. This will clearly reduce our construction costs and provide a given advantage to scaling the business

Op eratin g Co st s T axes

See Listed Expenses 35%

Appendix B Operating Expenses

Expens e Property Ins urance O ff Si te M anag em ent Payroll (Based on # of Em ployees ) Expens es / Benefit s Taxes/ Workers C om pensat ion R epairs & M ai ntenance Uti lit ies Ac count ing & Leg al Lic ens es & Perm it ting Ad verti si ng & W eb Suppli es Lawn & G rounds Keepi ng Mi sc el laneous (offi ce, c el l phone, et c) Arc hit ec t St ag ing Elevator Ext ension Sprinkl er Sys tem Total For year 1 $3,000 $2,000 $75,000 $15,000 $4,000 $20,000 $15,000 $25,000 $60,000 $6,000 $4,000 $10,000 $15,000 $60,000 $10,000 $50,000 $40,000 $414,000