---------------------- Forwarded by Phillip K Allen/HOU/ECT on 03/08/2001 
01:32 PM ---------------------------


Andrew_M_Ozuna@bankone.com on 03/07/2001 11:41:43 AM
To: Phillip.K.Allen@enron.com
cc:  
Subject: Sagewood Phase II





---------------------- Forwarded by Andrew M Ozuna/TX/BANCONE on 03/07/2001
01:41 PM ---------------------------


Andrew M Ozuna
03/06/2001 03:14 PM

To:   "George Richards" <cbpres@austin.rr.com>
cc:
Subject:  Sagewood Phase II


George,

Thank you for the opportunity to review your financing request for the 
Sagewood
Phase II project.  Upon receipt of all the requested information regarding the
project, we completed somewhat of a due diligence on the market.  There are a
number of concerns which need to be addressed prior to the Bank moving forward
on the transaction.  First, the pro-forma rental rates, when compared on a
Bedroom to Bedroom basis, are high relative to the market.   We adjusted
pro-forma downward to match the market rates and the rates per bedroom we are
acheiving on the existing Sagewood project.  Additionally, there are about 
500+
units coming on-line within the next 12 months in the City of San Marcos, 
this,
we believe will causes some downward rent pressures which can have a serious
effect on an over leveraged project.  We have therefore adjusted the requested
loan amount to $8,868,000.

I have summarized our issues as follows:

1.  Pro-forma rental rates were adjusted downward to market as follows:

     Pro-Forma                           Bank's Adjustment
     Unit           Unit Rent Rent/BR    Unit Rent      Rent/BR
     2 BR/2.5 BA         $1,150          $575           $950           $475
     3 BR/Unit      $1,530         $510       $1,250         $417

2.  Pro-forma expenses were increased to include a $350/unit reserve for unit
turn over.

3.  A market vacancy factor of 5% was applied to Potential Gross Income (PGI).

4.  Based on the Bank's revised N.O.I. of $1,075,000, the project can support
debt in the amount of $8,868,000, and maintain our loan parameters of 1.25x 
debt
coverage ratio, on a 25 year amo., and 8.60% phantom interest rate.

5.  The debt service will be approx. $874,000/year.

6.  Given the debt of $8,868,000, the Borrower will be required to provide
equity of $2,956,000, consisting of the following:

     Land -                   $1,121,670
     Deferred profit& Overhead     $    415,000
     Cash Equity              $1,419,268
     Total                    $2,955,938

7. Equity credit for deferred profit and overhead was limited to a percentage 
of
actual hard construction costs.

(See attached file: MAPTTRA.xls)




 - MAPTTRA.xls