3-Year Fixed Rate Loan for a Recently Rehabbed Apartment

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1 3-Year Fixed Rate Loan for a Recently Rehabbed Apartment Transaction Summary Date: November 2017 Property Description: A 74-unit apartment was purchased for $8.5 million in January At that time the property was in poor physical condition needing major upgrades to the exterior siding, roofs, landscaping, common area amenities, parking lots, signage and interior units. The property was originally financed with a two-year, interest-only bridge loan. Renovations totaled $1.5 million or $20,270 per unit. As a result of the renovations, rents have increased 29 percent or $280 per unit since the owner acquired the property. Owner: The owners of the property were financially strong with good commercial real estate experience. Estimated Value: $11,100,000 or $150,000 per unit. Requested Loan Amount: $8,000,000 (72.1% LTV) Financing Issues: The owner was requesting a loan that would pay off the existing loan, all financing costs and provide $400,000 in cash back. These excess funds would be used to finish the upgrades in 28 units that had yet to be renovated. The owner did not want the lender to monitor the use of these renovations through a holdback. They wanted to do the renovations upon turnover of the units without lender interference. They also requested a 3-year fixed rate loan as they are planning to sell the property within the next few years. Financing Solutions: Several lenders were contacted. The four best loan quotes are shown on the following pages.

2 NOV 2017 Lender #1 Lender #2 Lender #3 Lender #4 Loan Amount: $7,770,000 $8,000,000 $7,770,000 $8,000,000 Estimated Value: $11,100,000 $11,100,000 $11,100,000 $11,100,000 Loan To Value: 70.0% 72.1% 70.0% 72.1% Indicated Interest Rate 4.00% 3.82% 4.00% 4.15% Underwriting Criteria: Maximum LTV: 70% 75% 70% 75% Maximum LTC: 85% n/a n/a n/a Minimum DSCR: Fixed/Variable Term: 3 Yrs / 27 Years 3 Yrs / 27 Yrs 3 Yrs / 7 Yrs 5 Years / 25 Years Variable Rate: 6 Mo. LIBOR % 6 Mo LIBOR + 2.1% 1 Yr FHLB % 6 Mo. LIBOR % Variable Floor: 2.50% Start rate n/a Start rate Variable Ceiling: 9.50% 9.50% n/a 10.15% Adjustment Period: Every 6 months Every 6 months Every 12 months Every 6 months Loan Term: 30 Years 30 Years 10 Years 30 Years Amortization Method: 30/360 30/360 Actual/360 Actual/360 Amortization Period in Years: Rate Lock at time of Application? Yes Yes Yes No Rate Lock Deposit: 1% refundable at closing 1% refundable at closing 1% refundable at closing Monthly Loan Constant: % % % % Total Loan Fees (Lender/Mtg Broker): 0.386% 0.375% 0.386% 0.375% Application Deposit $10,000 $7,500 $5,000 $9,100 Third Party Reports Required Appraisal Yes Yes Yes Yes Environmental Yes Yes Yes Yes Engineering (Property Condition) No No No Yes Survey No No No No Other Costs Processing Fee/Site Visit $0 $10,000 $0 $7,500 Lender's Legal Cost Estimate $0 $0 $0 $2,075 Escrow Impounds Property Taxes No No No No Insurance No No No No Replacement Reserves No No No No Prepayment Penalty Loan Quote Comparison Method of Prepayment Open Period Last 27 Years Last 27 Years Last 7 Years Last 25 Years Recourse/Non-Recourse Recourse Recourse Recourse Recourse Doug Marshall, CCIM Marshall Commercial Funding, Inc Call today for a no obligation loan quote (503) doug@marshallcf.com

3 Estimated Sources & Uses Statement SOURCES Lender #1 Lender #2 Lender #3 Lender #4 Loan Amount 7,770,000 8,000,000 7,770,000 8,000,000 Cash From Borrower Total Sources $7,770,000 $8,000,000 $7,770,000 $8,000,000 USES Cash To Borrower 219, , , ,275 Pay off existing mortgage 7,500,000 7,500,000 7,500,000 7,500,000 Repair Holdback Financing Charges Financing Fee 30,000 30,000 30,000 30,000 Appraisal 0 4,500 4,500 4,500 Environmental Report 2,000 2,000 2,000 2,000 Property Condition Report ,100 Processing Fee 0 10, ,500 Lender Legal Fee ,075 Miscellaneous Lender Fees Title Policy Insurance 15,750 15,750 15,750 15,750 Escrow 1,800 1,800 1,800 1,800 Miscellaneous Closing Costs Total Financing Charges 50,050 64,550 55,050 66,725 Total Uses $7,770,000 $8,000,000 $7,770,000 $8,000, % fee required for soft prepay, i.e, no prepayment if property is sold

4 Monthly Cash Flow After Debt Service No. of units: 74 Lender #1 Lender #2 Lender #3 Lender #4 INCOME 1. Rental Income $1,095,948 $1,095,948 $1,095,948 $1,095, Utility Reimbursements $25,619 $25,619 $25,619 $25, Laundry Income $9,871 $9,871 $9,871 $9, Other Income $19,128 $19,128 $19,128 $19, Vacancy & Credit Loss ($54,797) ($54,797) ($54,797) ($54,797) 5. EFFECTIVE GROSS INCOME $1,095,769 $1,095,769 $1,095,769 $1,095,769 EXPENSES 6. Advertising/Marketing 6,000 6,000 6,000 6, Property Taxes 59,838 59,838 59,838 59, Insurance 57,547 57,547 57,547 57, Repairs & Maintenance 37,000 37,000 37,000 37, Turnover Expenses 18,500 18,500 18,500 18, Grounds Maintenance 9,751 9,751 9,751 9, Payroll 94,756 94,756 94,756 94, Electricity & Gas 17,564 17,564 17,564 17, Water & Sewer 88,888 88,888 88,888 88, Trash Service 20,000 20,000 20,000 20, General & Administrative 14,485 14,485 14,485 14, Management Fee 40,374 40,374 40,374 40, Legal & Accounting 3,000 3,000 3,000 3, Replacement Reserves 18,500 18,500 18,500 18, TOTAL OPERATING EXPENSES $486,203 $486,203 $486,203 $486, % Expense/Effective Gross Income 44.4% 44.4% 44.4% 44.4% 22. Expense Per Unit or Square Feet $6, $6, $6, $6, CASH FLOW BEFORE DEBT SERVICE $609,566 $609,566 $609,566 $609, Monthly Net Income $50,797 $50,797 $50,797 $50, Loan Amount $7,770,000 $8,000,000 $7,770,000 $8,000, Interest Rate 4.00% 3.82% 4.00% 4.15% 27. Amortization Method 30/360 30/360 Actual/360 Actual/ Amortization in Years Less: Mortgage Payment $37,095 $37,368 $37,095 $38, CASH FLOW AFTER DEBT SERVICE $13,702 $13,429 $13,702 $11,909

5 Before & After Tax Return on Equity PROJECTED TAXABLE INCOME Lender #1 Lender #2 Lender #3 Lender #4 NET CASH FLOW BEFORE DEBT SERVICE $609,566 $609,566 $609,566 $609,566 Annual Interest Expense 308, , , ,998 Cost Recovery (Depreciation) 227, , , ,683 TAXABLE INCOME $73,573 $78,810 $69,280 $47,885 CASH FLOW BEFORE & AFTER TAXES Net Operating Income $609,566 $609,566 $609,566 $609,566 Annual Debt Debt Service 445, , , ,659 CASH FLOW BEFORE TAXES $164,424 $161,153 $164,424 $142,907 Tax 30% 22,072 23,643 20,784 14,366 CASH FLOW AFTER TAXES $142,352 $137,510 $143,640 $128,541 RETURN ON EQUITY BEFORE TAX 4.9% 5.2% 4.9% 4.6% AFTER TAX 4.3% 4.4% 4.3% 4.1% DEPRECIATION AND TAX ASSUMPTIONS Estimated Value $11,100,000 Building Value as % of Total Value 80% Depreciation Schedule Apartments 3.636% Commercial Buildings 2.564% Ordinary Income Tax Rate: 30%

6 Lender #1 Amortization Methods - 3 Approaches Loan Amount: $7,770, /360 - interest calculated based on 30 day months Annual Interest Rate: 4.000% 2. Actual/360 - interest based on actual no. of days in the month Effective Interest Rate: 4.000% 3. Interest Only - no amortization of the loan Amortization Method: 30/360 Amort Period (in Yrs): 30 Closing Date: 02/01/18 Pmt Due Beginning No. of Mortgage Ending No. Date Balance Days Payment Interest Principal Balance 1 03/01/18 $7,770, $37, $25, $11, $7,758, /01/18 $7,758, $37, $25, $11, $7,747, /01/18 $7,747, $37, $25, $11, $7,736, /01/18 $7,736, $37, $25, $11, $7,724, /01/18 $7,724, $37, $25, $11, $7,713, /01/18 $7,713, $37, $25, $11, $7,702, /01/18 $7,702, $37, $25, $11, $7,690, /01/18 $7,690, $37, $25, $11, $7,679, /01/18 $7,679, $37, $25, $11, $7,667, /01/18 $7,667, $37, $25, $11, $7,656, /01/19 $7,656, $37, $25, $11, $7,644, /01/19 $7,644, $37, $25, $11, $7,633, $445, $308, $136, Lender #2 Loan Amount $8,000,000 Annual Interest Rate: 3.820% Effective Interest Rate: Amortization Method: 3.820% 30/360 Amort Period (in Yrs) 30 Closing Date: 02/01/18 Pmt Due Beginning No. of Mortgage Ending No. Date Balance Days Payment Interest Principal Balance 1 03/01/18 $8,000, $37, $25, $11, $7,988, /01/18 $7,988, $37, $25, $11, $7,976, /01/18 $7,976, $37, $25, $11, $7,964, /01/18 $7,964, $37, $25, $12, $7,952, /01/18 $7,952, $37, $25, $12, $7,940, /01/18 $7,940, $37, $25, $12, $7,928, /01/18 $7,928, $37, $25, $12, $7,915, /01/18 $7,915, $37, $25, $12, $7,903, /01/18 $7,903, $37, $25, $12, $7,891, /01/18 $7,891, $37, $25, $12, $7,879, /01/19 $7,879, $37, $25, $12, $7,866, /01/19 $7,866, $37, $25, $12, $7,854, $448, $303, $145,339.88

7 Lender #3 Loan Amount $7,770,000 Annual Interest Rate: 4.000% Effective Interest Rate: Amortization Method: 4.055% Actual/360 Amort Period (in Yrs) 30 Closing Date: 02/01/18 Pmt Due Beginning No. of Mortgage Ending No. Date Balance Days Payment Interest Principal Balance 1 03/01/18 $7,770, $37, $24, $12, $7,757, /01/18 $7,757, $37, $26, $10, $7,746, /01/18 $7,746, $37, $25, $11, $7,735, /01/18 $7,735, $37, $26, $10, $7,724, /01/18 $7,724, $37, $25, $11, $7,713, /01/18 $7,713, $37, $26, $10, $7,703, /01/18 $7,703, $37, $26, $10, $7,692, /01/18 $7,692, $37, $25, $11, $7,681, /01/18 $7,681, $37, $26, $10, $7,670, /01/18 $7,670, $37, $25, $11, $7,658, /01/19 $7,658, $37, $26, $10, $7,648, /01/19 $7,648, $37, $26, $10, $7,637, $445, $312, $132,539.57