DCM is focused on providing loans to experienced Sponsors for the acquisition of “Value-Add” Multi-Family properties typically with 100 – 500 dwelling units. The “Value-Add” business model is attractive due to the potential for large short-term gains it can deliver in terms of increased cash flow and valuation of the acquired properties. Target properties are located in high growth markets and are typically aging and suffering from years of neglect, resulting in high vacancy rates and below-market rents. These target properties can be acquired signifificantly below market value potential. Experienced Sponsors realize a property’s full potential through renovations and bringing the property to full occupancy at current market rents, typically within 1-2 years of acquisition.

DCM U.S. Multi-Family Homes Plc is a vehicle specififically set up to issue debt and is bankruptcy remote, to divorce the risk of the sponsor from the risk of the bond issuer by isolating fifinancial risk, minimizing bankruptcy risk, ringfencing assets, and therefore mitigating noteholder exposure to the Borrower.

The bonds are issued under an established institutional wholesale bond program and are eligible assets under the Eligible Assets Directive as well as transferable securities under UCITS rules.

There is a 3% cash reserve at the issuer level, based on the nominal amount raised. Further, there is an additional 5% fifirst loss/equity component at the SPV level, usually provided by the local sponsor. The bonds are listed on a recognized stock exchange with an independent third-party security trustee to whom assets are pledged. The issuer of the bonds, DCM U.S. Multi-Family PLC, is an asset-backed bankruptcy-remote issuer and has senior security over a segregated pool of loans originated and managed by DCM Real Estate 3, Inc.

The Issuer Deed of Charge is governed by English Law and contains customary representations and warranties in favor of the Security Trustee. The Issuer cannot grant any security or assignment in respect of any of its assets without the prior written consent of the Security Trustee.

The bond proceeds are loaned by the Issuer, DCM U.S. Multi-Family Homes PLC to DCM Real Estate 3, Inc (the “Borrower”, as defifined in the LPs).which, in turn, secures it on the property with a full guarantee, in addition to sponsor personal guarantees. As the “Value-Add” process is being realized, this will in turn result in a natural deleveraging of the transaction

The price of the notes is expected to be constant. The securities are listed on the Cayman Islands Stock Exchange (CSX), and Frankfurt Stock Exchange (FWB). In addition, the structure of the notes allows them to be transferred/traded, and they are NOT subject to any early cancellation or call; Series Notes 2022-DCM3 have a Put Option or can be redeemed:

 At 90.00 percent of its nominal amount, with an Optional

    Redemption Date (Put) between 6th May 2024 and 5th May 2025

    (inclusive).

 At 93.00 percent of its nominal amount, between 6th May 2025 and

     5th May 2026 (inclusive).

 And, at 100.00 percent of their nominal amount, on the Maturity

     Date.

As a sponsor, Sureste typically evaluates over 100 potential acquisitions per year with approximately 10% meeting their criteria for investment. Sureste brings deep market knowledge and experience to every project they underwrite. Projects selected must be in strong local markets, with a growing demand for rental units and show strong performance potential. Additionally, target properties are generally run-down and significantly under-performing market equivalents (from a financial point of view), making them excellent candidates for the “Value-Add” strategy.

After identifying target properties, a rigorous financial and operational due diligence process is conducted to determine the property condition, the true verifified economic status of the property and the amount of capital needed to turn around the property within 1 to 2 years and bring it to its potential full market value. Armed with this time-tested knowledge and approach, Sureste confifidently pursues and executes quality real estate transactions in the MFH space.

Sponsors must put up equity/initial risk capital for every transaction--typically 5% of the acquisition cost--and absorb fifirst losses, should they occur. In essence, Sponsors have “skin in the game”. Additionally, Sponsors must fulfifill all debt obligations and comply with loan covenants prior to receiving any distributions or investment returns. Moreover, Sureste typically acts as lead Sponsor and assumes operational responsibility for properties in the portfolio—providing an extra layer of comfort to investors and ensuring business plans are executed efficiently.

As these bonds are not registered in the U.S. and are issued under a Regulation S exemption, they can only be offered to offshore investors and cannot be offered to citizens of the United States. Moreover, the securities cannot be sold to any national, citizen or resident of CANADA, AUSTRALIA, NEW ZEALAND, JAPAN, or the REPUBLIC of SOUTH AFRICA.