Offering Memorandum & Edgewood on Madison Apartments INDIANAPOLIS, IN

Transcription

1 Offering Memorandum INDIANAPOLIS, IN

2 CONFIDENTIALITY AND DISCLAIMER The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. NON-ENDORSEMENT NOTICE Marcus & Millichap Real Estate Investment Services, Inc. ( M&M ) is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of M&M, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of M&M, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers. Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers. ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.

3 Offering Procedures Purchasers Wishing To Make An Offer On The Property Should Submit: Letter of Intent (template available upon request). Source and location of the equity monies necessary to close the proposed transaction: money market account, marketable securities, etc. Specific details of intended financing (ie. Fannie, Freddie, Credit Union, Local Bank etc.) List of other investment real estate owned now or in the past, including property type, address, size, approximate value and period of ownership. Description of the purchaser s experience with investment real estate or related industries. Transaction references. Banking references. At the time the Owners select a purchaser, they will consider a number of factors including, price, contingency timeframes, track record and the perceived ability of potential purchasers to complete the proposed transaction. Therefore, interested purchasers are encouraged to submit as much of the above as possible with the Letter of Intent. All communications, inquiries and requests, including property tours, should be addressed to your Marcus & Millichap agent. Do not directly contact the Owners or anyone at the Property. The Owners reserve the right at any time, for any reason, and in their sole and absolute discretion, to accept a pre-emptive offer, to reject any and all proposals, letters of intent, or expressions of interest in the Property, or to terminate discussions with any party at any time.

4 exclusively listed Exclusively listed by: OFFICES THROUGHOUT THE U.S. AND CANADA Scott D. Harris Senior Managing Director Investments Senior Director, National Multi Housing Group CHICAGO OAKBROOK Tel: (630) Fax: (630) License: IL: IN: AB IA: S WI: Nick Hillard Associate National Multi Housing Group CHICAGO OAKBROOK Tel: (630) Fax: (630) License: IL: IN: RB IA: B

5

6 5700 & 6000 Madison Apartments Table of Contents EXECUTIVE SUMMARY Investment Overview...2 Offering Highlights... 3 PROPERTY DESCRIPTION Regional Map....6 Local Map... 7 Aerial Photo... 8 Floor Plans Property Photos FINANCIAL ANALYSIS Rent Roll Summary Comparison of Operating History & Pro Forma Current Rent Roll & Adjusted 2016 Income & Expenses Underwriting Adjustments Year Executive Summary Cash Flow Analysis Cash Flow Analysis Growth Rates COMPETITIVE PROPERTY SET Recent Sales Map...25 Recent Sales Comparable Summary Recent Sales Rent Comparables Map Rent Comparables Summary Rent Comparables MARKET OVERVIEW Demographic Summary...38 Demographic Report... 39

7

8 summary EXECUTIVE SUMMARY

9 EXECUTIVE SUMMARY Investment Overview Marcus & Millichap is pleased to present the 5700 and Edgewood on Madison Avenue Apartments, a 176-unit apartment complex located in Indianapolis, Indiana. The property is newly constructed, built in two phases, 112 units and 64 units. The first phase was completed in October 2013, with the second phase being completed in August of The second phase was fully leased within one month of initial occupancy with no rent concessions. The property offers residents a variety of different floor plans, including 52 studio ( Square Foot) units, eight loft ( Square Foot) units, 56 one-bedroom / one-bathroom ( Square Foot) units, and 60 two-bedroom / two-bathroom ( Square Foot) units. Each unit includes a washer and dryer, nicely-appointed kitchens, stainless steel or black appliances, walk-in closets, and private entrances and Edgewood on Madison Apartments is located approximately 20 minutes southeast of downtown Indianapolis within the neighborhood of Homecroft/Southport. This historic, well-established area in the Perry township of Marion County. Marion County is the largest county in the state of Indiana (903,393 census 2010) and the 55th most populated county in the country. The average rental cost in this Homecroft/Southport neighborhood is higher than 87.7 percent of the neighborhoods in Indiana. Major area employers include St.Vincent Hospital, Eli Lily, Peyton Manning s Children s Hospital, Indiana University, Purdue University, IU Health Indianapolis, Roche Diagnostics Corp, Indiana University School of Medicine, IU Methodist Hospital, and Indiana University (Indianapolis). In the Southport / Homecroft neighborhood, 45.8 percent of the working population is employed in executive, management, and professional occupations. The second most important occupational group in this neighborhood is manufacturing and laborer occupations, with 25.8 percent of the residents employed. Other residents here are employed in sales and service jobs, from major sales accounts, to working in fast food restaurants (15.8 percent), and 12.5 percent in clerical, assistant, and tech support occupations. Geographically within the Indianapolis MSA, the property enjoys a strategic location near Interstate 465, and direct access to Interstate 65. A short drive from Community Hospital North and the Indianapolis Metropolitan Airport. Indianapolis is thriving with attractions including the Indianapolis Cultural Trail, Monument Circle, War Memorial Plaza, and numerous museums and festivals Madison residents can enjoy the convenience of being located immediately next to the Madison and Edgewood Shoppes. Which includes; Kroger, McDonald s. Edward Jones Financial Advisor, Arby s, Blimpie s, Great Clips and Old National Bank. The 5700 and Edgewood on Madison Apartments provide an investor the opportunity to acquire a newly constructed, stabilized asset with immediate cash flow and strong returns. The properties strong rental market provides additional upside remaining in rents. Investment Highlights Brand New Construction - Phase II 100 Percent Leased in under 30 Days Close Proximity to Interstates Interstate 65 and Interstate 465 Located in the Homecroft/Southport Neighborhood In-unit Washer and Dryer; Private Entrances for All One and Two-Bedroom Units Community Amenities Fitness Center Clubhouse Private Resident Entrance Gated Dog Run/Park 2

10 EXECUTIVE SUMMARY Offering Highlights 5757 Madison Avenue Indianapolis, IN PROPERTY DETAILS Price $14,200,000 Number of Units 176 Number of Buildings 9 Number of Stories 2 & 3 Year Built 2013 & 2015 Rentable Square Feet 121,852 SF Average Square Feet Per Unit 692 SF Average Monthly Rent Per Unit $750 Lot Size (SF) 8.79 Acres Type of Ownership Fee Simple Parking Surface Spaces Landscaping Grass, Trees, Bushes Asset/Location Class B+ / B+ HVAC Wiring Fire Protection MECHANICAL Central Air / Forced Air Furnace Copper Sprinkler & Hard Wired Smoke Detector Water / Sewer / Trash Phone / Internet Electric Gas Foundation Framing Exterior Parking Surface Roof UTILTIES Tenant Reimbursement Tenant Paid Tenant Paid N/A CONSTRUCTION Concrete Wood Brick and Vinyl Siding Asphalt Pitched Shingle Asphalt UNIT MIX NUMBER OF UNITS UNIT TYPE AVERAGE RENT 52 Studio $598 8 Loft $ Bdr 1 Bath $ Bdr 1 Bath $ Bdr 2 Bath $922 3

11

12 descriptionproperty DESCRIPTION

13 PROPERTY DESCRIPTION Regional Map 5700 & Edgewood on Madison 6

14 PROPERTY DESCRIPTION Local Map 5700 & Edgewood on Madison 7

15 PROPERTY DESCRIPTION Aerial Photo 8

16 PROPERTY DESCRIPTION Floor Plans Cypress Studio Down 419 SF Hawthorn Studio Up 496 SF 9

17 PROPERTY DESCRIPTION Floor Plans Hickory 1 Bedroom Up 716 SF Sycamore 1 Bedroom Down 645 SF 10

18 PROPERTY DESCRIPTION Floor Plans Redwood 2 Bedroom 2 Bath Down 914 SF Sequoia 2 Bedroom 1 Bath Up 998 SF 11

19 PROPERTY DESCRIPTION Property Photos 12

20 PROPERTY DESCRIPTION Interior Photos 13

21

22 analysis FINANCIAL ANALYSIS

23 FINANCIAL ANALYSIS Rent Roll Summary as of 1/31/2017 UNIT COUNT NUMBER VACANT UNIT TYPE SF SCHEDULED MARKET RENT SCHEDULED MONTHLY RENT MARKET RENT AVERAGE RENT LOWEST RENT HIGHEST RENT AVERAGE RENT/SF 12 0 Studio - Down 419 $7,140 $6,900 $595 $575 $555 $595 $1.37 $6, Studio - Up 496 $7,560 $7,490 $630 $624 $595 $630 $1.26 $7, Bed / 1 Bath - Up 716 $12,000 $11,790 $750 $737 $725 $750 $1.03 $11, Bed / 1 Bath - Down 647 $11,840 $11,660 $740 $729 $710 $740 $1.13 $11, Bed / 1 Bath - Up 998 $25,172 $25,113 $899 $897 $840 $899 $0.90 $23, Bed / 2 Bath - Down 914 $25,900 $25,750 $925 $920 $860 $925 $1.01 $24, Loft 296 $3,330 $3,310 $555 $552 $545 $555 $1.86 $3, Loft Large 338 $1,120 $1,110 $560 $555 $550 $560 $1.64 $1, Studio - Down $7,140 $7,030 $595 $586 $575 $595 $1.34 $7, Studio - Up $7,800 $7,740 $650 $645 $630 $650 $1.36 $7, Studio - Building $1,120 $1,120 $560 $560 $560 $560 $1.47 $1, Studio - Large Building $1,250 $1,200 $625 $600 $575 $625 $1.18 $1, Bed / 1 Bath - Up $9,220 $9,160 $768 $763 $750 $770 $1.08 $9, Bed / 1 Bath - Down $9,000 $8,910 $750 $743 $730 $750 $1.11 $8, Bed / 1 Bath - Up $1,850 $1,825 $925 $913 $900 $925 $0.92 $1, Bed / 2 Bath - Down $1,860 $1,850 $930 $925 $920 $930 $0.99 $1,850 COLLECTED MONTHLY RENT TOTALS 121,852 $133,302 $131,958 $545 $930 $129, % VACANT AVERAGES 692 $757 $750 $1.08 UNIT MIX UNIT RENT & RENT/SF 16

24 FINANCIAL ANALYSIS Comparison of Operating History and Pro Forma Effective Rental Income YEAR END 12/31/2015 ACTUALS** YEAR END 12/31/2016 ACTUALS CURRENT RENT ROLL & ADJUSTED 2016 EXPENSES YEAR 1 M&M PROJECTION PER UNIT Market Rents 1,562,912 1,561,632 1,599,624 1,663,609 9, Loss to Lease 3,706 (15,071) 16,128 24, % PER SF Scheduled Rental Income 1,559,206 1,576,703 1,583,496 1,638,918 9, Physical Vacancy (38,348) 2.5% (21,868) 1.4% (55,422) 3.0% (57,362) 3.5% (315) (0.45) Economic Loss Model Unit (11,947) 0.8% (11,100) 0.7% (11,100) 0.7% 0 0.0% (63) (0.09) Bad Debt (13,490) 0.9% (16,863) 1.1% (7,917) 0.5% (8,195) 0.5% (45) (0.06) Concessions (45,865) 2.9% (43,391) 2.8% (15,835) 2.0% (16,389) 1.0% (90) (0.13) Total Vacancy (109,650) 7.0% (93,222) 5.9% (90,275) 5.7% (81,946) 5.0% (513) (0.74) Economic Occupancy 92.97% 94.09% 94.30% 95.00% Total Effective Rental Income 1,449,556 1,483,481 1,493,221 1,556,972 8, Other Income Water, Sewer & Trash Income 60,222 60,906 60,906 62, Admin & Application Fees 44,654 25,430 25,430 26, Appliance Rentals 23,547 19,273 19,273 19, Cable TV Revenue 0 11,146 11,146 11, Late Charge Fees 10,439 7,606 7,606 7, Lease Termination Fees 20,160 15,296 15,296 15, Month to Month Premiums 5,283 5,099 5,099 5, Pet Fees 14,158 13,035 13,035 13, Miscellaneous Income 9,697 3,763 3,763 3, TOTAL OTHER INCOME 188, , , , EFFECTIVE GROSS INCOME 1,637,717 1,645,035 1,654,775 1,723,373 9,

25 FINANCIAL ANALYSIS Comparison of Operating History and Pro Forma Non-Controllable YEAR END 12/31/2015 ACTUALS YEAR END 12/31/2016 ACTUALS CURRENT RENT ROLL & ADJUSTED 2016 EXPENSES YEAR 1 M&M PROJECTION PER UNIT Real Estate Taxes 248, , , ,185 1, Insurance 39,631 45,721 39,600 40, Electric - Vacant 11,890 7,073 7,073 7, Electric - Common Areas 18,082 22,422 22,422 23, Water & Sewer 33,264 46,059 46,059 47, PER SF Total Non-Controllable 351, , , ,794 2, Controllable Maintenance & Repairs 51,690 36,645 36,645 37, Cleaning & Decorating 43,825 58,565 44,000 45, Refuse 7,927 6,757 6,757 6, Landscaping & Grounds 13,876 18,393 18,393 18, Snow Removal 5,889 6,941 6,941 7, Fire Protection 5,037 4,486 4,486 4, Payroll 188, , , , Employee Benefits 23,496 28,659 28,659 29, Legal & Accounting 6,677 3,272 3,272 3, Administrative 27,966 19,068 19,068 19, Management 78,462 81,682 58,306 68, Advertising / Promotion 24,591 11,849 11,849 12, Total Controllable 478, , , ,050 2, TOTAL EXPENSES 829, , , ,844 4, NET OPERATING INCOME 808, , , ,529 5, Reserve 35,200 * 35,200 * 35,200 * 35, NOI AFTER RESERVES 773, , , ,329 4, **2015 Year-end figures represent the full 2015 year end for Phase 1 (112 units) and October-December Annualized for Phase II (64 Units) *Imposed Expense 18

26 FINANCIAL ANALYSIS Current Rent Roll and Adjusted 2016 Income & Expenses ACTUAL INCOME INCOME PER UNIT INCOME PER SQ. FT. INCOME % OF SGI Income Market Rent $1,599,624 1 $9,089 $ % Loss to Lease $16,128 $92 $ % Scheduled Rental Income $1,583,496 2 Water, Sewer & Trash Income $60,906 2 $346 $ % Admin & Application Fees $25,430 3 $144 $ % Appliance Rentals $19,273 3 $110 $ % Cable TV Revenue $11,146 3 $63 $ % Late Charge Fees $7,606 3 $43 $ % Lease Termination Fees $15,296 3 $87 $ % Month to Month Premiums $5,099 3 $29 $ % Pet Fees $13,035 3 $74 $ % Miscellaneous Income $3,763 3 $21 $ % Total Other Income $161,554 $918 $ % Scheduled Gross Income (SGI) $1,745,050 Physical Vacancy 3.50% $55,422 $315 $ % Concessions 1.00% $15,835 $90 $ % Bad Debt 0.50% $7,917 $45 $ % Total Vacancy 5.00% $79,175 4 $450 $ % EFFECTIVE GROSS INCOME (EGI) $1,665,875 $9,465 $ % Expenses Real Estate Taxes $267,795 5 $1,522 $ % Insurance $39,600 6 $225 $ % Electric - Vacant $7,073 3 $40 $ % Electric - Common Areas $22,422 3 $127 $ % Water & Sewer $46,059 3 $262 $ % Total Fixed Expenses $382,949 $2,176 $ % Maintenance & Repairs $36,645 3 $208 $ % Cleaning & Decorating $44,000 6 $250 $ % Refuse $6,757 3 $38 $ % Landscaping & Grounds $18,393 3 $105 $ % Snow Removal $6,941 3 $39 $ % Fire Protection $4,486 3 $25 $ % Model Unit $11,100 3 $63 $ % Payroll $142,000 7 $807 $ % Employee Benefits $28,659 3 $163 $ % Legal & Accounting $3,272 3 $19 $ % Administrative $19,068 3 $108 $ % Management $58,306 8 $331 $ % Advertising / Promotion $11,849 3 $67 $ % Total Controllable Expenses $391,476 $2,224 $ % TOTAL EXPENSES $809,625 $4,600 $ % NET OPERATING INCOME $891,450 $5,065 $ % Reserve $35,200 9 $200 $ % NOI AFTER RESERVES $856,250 $4,865 $ % 19

27 FINANCIAL ANALYSIS Underwriting Adjustments 1. Market Rent reflects current asking rents annualized as of the 1/31/2017 rent roll report. 2. Scheduled Rental Income reflects scheduled rents annualized as of the 1/31/2017 rent roll report. 3. Reflects Figure from 2016 Year End Actual Operating Statement. 4. Proforma Vacancy considers current occupancy of +98% and a historical market occupancy of over 95%. The 64 units were brought online August 7, These units were fully leased within one month, with no rental concessions. 5. Figure represents 2015 taxes payable in 2016 according to the Marion County Treasurer. The second phase was not fully assessed until this year, therefore current figure represents the newest assessed value at the 2015 payable 2016 millage rate. 6. Figure represents broker proforma based on typical market operations. 7. Payroll adjusted to $142,000 and employee benefits to $28,000 which is in line with owner s provided numbers. 8. Management Fee calculated at 3.5% of effective gross income (EGI). 9. Replacement and Reserve estimated at $200 per unit. 20

28 FINANCIAL ANALYSIS 10 Year Executive Summary PROPERTY DETAILS Total Number of Units 176 Total Square Feet 121,852 Average Square Feet Per Unit 692 Year of Construction 2013 & 2015 Current Occupancy 98.30% Average Monthly Rent Per Unit $750 Asset Type 2 & 3 Story Building PROPERTY DETAILS Interest Rate 4.35% Amortization Period Years of Interest Only 2 Years Annual Loan Constant 5.97% Loan Term 10 Years Loan Fee 1.00% Loan to Value 75% Loan Amount $10,650,000 PROPERTY DETAILS Year Capitalized Year 9 Capitilization Rate 6.75% Cost of Sale 1.50% PURCHASE PRICE PRICE PER UNIT PRICE PER SQ. FT. YEAR 0 CAP RATE ALL CASH IRR INITIAL CASH ON CASH RETURN LEVERAGED IRR $14,200,000 $80,682 $ % 8.35% 10.75% 16.29% 21

29 FINANCIAL ANALYSIS Cash Flow Analysis YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 Market Rents 1,599,624 1,663,609 1,721,835 1,773,490 1,826,695 1,881,496 1,937,941 1,996,079 2,055,961 2,117,640 2,181,169 Loss to Lease 16,128 24,691 33,749 34,762 35,805 36,879 37,985 39,125 40,299 41,507 42,753 Scheduled Rental Income 1,583,496 1,638,918 1,688,086 1,738,728 1,790,890 1,844,617 1,899,956 1,956,954 2,015,663 2,076,133 2,138,417 Total Vacancy (90,275) (81,946) (84,404) (86,936) (89,545) (92,231) (94,998) (97,848) (100,783) (103,807) (106,921) Total Effective Rental Income 1,493,221 1,556,972 1,603,682 1,651,792 1,701,346 1,752,386 1,804,958 1,859,107 1,914,880 1,972,326 2,031,496 Total Other Income 161, , , , , , , , , , ,115 Effective Gross Income 1,654,775 1,723,373 1,775,074 1,828,326 1,883,176 1,939,672 1,997,862 2,057,798 2,119,531 2,183,117 2,248,611 Maintenance & Repairs (36,645) (37,744) (38,877) (40,043) (41,244) (42,482) (43,756) (45,069) (46,421) (47,813) (49,248) Cleaning & Decorating (44,000) (45,320) (46,680) (48,080) (49,522) (51,008) (52,538) (54,114) (55,738) (57,410) (59,132) Refuse (6,757) (6,960) (7,169) (7,384) (7,605) (7,833) (8,068) (8,310) (8,560) (8,816) (9,081) Landscaping & Grounds (18,393) (18,945) (19,513) (20,099) (20,701) (21,323) (21,962) (22,621) (23,300) (23,999) (24,719) Snow Removal (6,941) (7,149) (7,364) (7,585) (7,812) (8,047) (8,288) (8,537) (8,793) (9,056) (9,328) Fire Protection (4,486) (4,621) (4,759) (4,902) (5,049) (5,201) (5,357) (5,517) (5,683) (5,853) (6,029) Payroll (142,000) (146,260) (150,648) (155,167) (159,822) (164,617) (169,555) (174,642) (179,881) (185,278) (190,836) Employee Benefits (28,659) (29,519) (30,404) (31,316) (32,256) (33,224) (34,220) (35,247) (36,304) (37,393) (38,515) Legal & Accounting (3,272) (3,370) (3,471) (3,575) (3,683) (3,793) (3,907) (4,024) (4,145) (4,269) (4,397) Administrative (19,068) (19,640) (20,229) (20,836) (21,461) (22,105) (22,768) (23,451) (24,155) (24,879) (25,626) Management (58,306) (60,318) (62,128) (63,991) (65,911) (67,889) (69,925) (72,023) (74,184) (76,409) (78,701) Advertising / Promotion (11,849) (12,204) (12,571) (12,948) (13,336) (13,736) (14,148) (14,573) (15,010) (15,460) (15,924) Reserve (35,200) (35,200) (35,200) (35,200) (35,200) (35,200) (35,200) (35,200) (35,200) (35,200) (35,200) Total Controllable Expenses (415,576) (427,250) (439,012) (451,126) (463,604) (476,456) (489,694) (503,328) (517,372) (531,837) (546,737) Real Estate Taxes (267,795) (281,185) (289,621) (298,309) (307,259) (316,476) (325,971) (335,750) (345,822) (356,197) (366,883) Insurance (39,600) (40,788) (42,012) (43,272) (44,570) (45,907) (47,284) (48,703) (50,164) (51,669) (53,219) Electric - Vacant (7,073) (7,285) (7,504) (7,729) (7,961) (8,200) (8,446) (8,699) (8,960) (9,229) (9,506) Electric - Common Areas (22,422) (23,095) (23,787) (24,501) (25,236) (25,993) (26,773) (27,576) (28,404) (29,256) (30,133) Water & Sewer (46,059) (47,441) (48,864) (50,330) (51,840) (53,395) (54,997) (56,647) (58,346) (60,097) (61,899) Total Non-Controllable Expenses (382,949) (399,794) (411,788) (424,141) (436,865) (449,971) (463,470) (477,375) (491,696) (506,447) (521,640) Total Expenses (798,525) (827,044) (850,799) (875,267) (900,469) (926,427) (953,164) (980,703) (1,009,068) (1,038,284) (1,068,377) Net Operating Income Before Reserves 891, , , ,259 1,017,907 1,048,444 1,079,898 1,112,295 1,145,663 1,180,033 1,215,434 Net Operating Income After Reserves $856, , , , ,707 1,013,244 1,044,698 1,077,095 1,110,463 1,144,833 1,180,234 Purchase Price/ Net Residual Value 14,200,000 17,222,679 Debt Service - Principal 0 0 (176,418) (184,247) (192,424) (200,963) (209,882) (219,196) (228,923) (9,237,947) Debt Service - Interest (463,275) (463,275) (459,785) (451,956) (443,780) (435,240) (426,322) (417,008) (407,280) (397,121) Total Debt Service (463,275) (463,275) (636,204) (636,204) (636,204) (636,204) (636,204) (636,204) (636,204) (9,635,069) Cash Flow After Debt Financing 392, , , , , , , , ,260 8,732,443 Non-Leveraged Return on Investment 6.03% 6.31% 6.51% 6.71% 6.92% 7.14% 7.36% 7.59% 7.82% 8.06% Leveraged Return on Investment 10.75% 11.84% 7.88% 8.67% 9.48% 10.31% 11.17% 12.06% 12.97% % Debt Coverage Ratio Capitalization Rate Before Reserves 6.28% 6.56% 6.76% 6.96% 7.17% 7.38% 7.60% 7.83% 8.07% 8.31% Capitalization Rate After Reserves 6.03% 6.31% 6.51% 6.71% 6.92% 7.14% 7.36% 7.59% 7.82% 8.06% All Cash IRR 8.35% Leveraged IRR 16.29% 22

30 FINANCIAL ANALYSIS Cash Flow Analysis Growth Rates M&M YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 Income Effective Rental Income Market Rents 4.00% 3.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Scheduled Rents 3.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Total Vacancy 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Total Other Income 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Expenses Controllable Maintenance & Repairs 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Cleaning & Decorating 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Refuse 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Landscaping & Grounds 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Snow Removal 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Fire Protection 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Payroll 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Employee Benefits 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Legal & Accounting 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Administrative 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Management 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% Advertising / Promotion 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Non-Controllable Real Estate Taxes 5.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Insurance 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Electric - Vacant 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Electric - Common Areas 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Water & Sewer 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Reserve 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 23

31 comparables COMPARABLES

32 COMPARABLES Recent Sales Map S Recent Sales Subject Property Maple Knoll Apartments Cumberland Pointe 82 Flats 5 4 The Bristol 5 Canyon Club at Perry Crossing 6 Riverchase Apartments 7 Reveal on Cumberland & Edgewood on Madison 25

33 COMPARABLES Recent Sales Comparables Summary Average Cap Rate Avg 6.03% Riverchase Apartments Reveal on Cumberland Cumberland Pointe 82 Flats The Bristol Canyon Club at Perry Crossing 26

34 COMPARABLES Recent Sales Comparables Summary Average Price per Square Foot Avg $ Riverchase Apartments Reveal on Cumberland Cumberland Pointe 82 Flats The Bristol Canyon Club at Perry Crossing Maple Knoll Apartments Average Price per Unit Avg $112, Riverchase Apartments Reveal on Cumberland Cumberland Pointe 82 Flats The Bristol Canyon Club at Perry Crossing Maple Knoll Apartments 27

35 COMPARABLES Recent Sales (Subject Property) 5757 Madison Avenue, Indianapolis, IN List Price $14,200,000 Units 176 Price/Unit $80,682 Price/SF $ Cap Rate 6.28% Year Built 2013/2015 No. of Units Unit Type 52 Studio 8 Loft 56 1 Bdr 1 Bath 30 2 Bdr 1 Bath 30 2 Bdr 2 Bath 1 Maple Knoll Apartments 500 Bigleaf Maple Way, Westfield, IN Close of Escrow 2/18/2016 Sales Price $32,900,000 Units 300 Price/Unit $109,667 Price/SF $84.13 Cap Rate N/A Year Built 2007 Units Unit Type Bdr 1 Bath 48 2 Bdr 1 Bath Bdr 2 Bath 16 3 Bdr 2 Bath 2 Cumberland Pointe Navigation Way, Noblesville, IN Close of Escrow 3/14/2016 Sales Price $39,625,000 Units 336 Price/Unit Price/SF $82.24 Cap Rate 6.57% Year Built 2013 Units Unit Type Bdr 1 Bath 36 2 Bdr 1 Bath Bdr 1 Bath 36 3 Bdr 2 Bath 28

36 COMPARABLES Recent Sales 3 82 Flats 8515 Lake Clearwater Lane, Indianapolis, IN Close of Escrow 3/31/2016 Sales Price $33,750,000 Units 232 Price/Unit $145,474 Price/SF $ Cap Rate 5.50% Year Built 2013 Units Unit Type Bdr 1 Bath 24 2 Bdr 1 Bath Bdr 2 Bath 4 The Bristol 7705 Harborside Drive, Camby, IN Close of Escrow 7/20/2016 Sales Price $19,450,000 Units 211 Price/Unit $92,180 Price/SF $88.68 Cap Rate 6.00% Year Built 2005 Units Unit Type 62 1 Bdr 1 Bath Bdr 2 Bath 40 3 Bdr 2 Bath 5 Canyn Club at Perry Crossing 2720 Canyon Club Drive, Plainfield, IN Close of Escrow 6/21/2016 Sales Price $24,000,000 Units 206 Price/Unit $116,505 Price/SF $ Cap Rate 5.83% Year Built 2012 Units Unit Type 74 1 Bdr 1 Bath 24 2 Bdr 1 Bath 96 2 Bdr 2 Bath 12 3 Bdr 2 Bath 29

37 COMPARABLES Recent Sales 6 Riverchase Apartments 7300 Crawfordsville Road, Indianapolis, IN Close of Escrow 5/1/2015 Sales Price $16,150,000 Units 216 Price/Unit $74,769 Price/SF $87.01 Cap Rate 6.33% Year Built 2000 Units Unit Type 72 1 Bdr 1 Bath 73 2 Bdr 1 Bath 71 2 Bdr 2 Bath 7 Reveal on Cumberland Watermark Way, Fishers, IN Close of Escrow 4/6/2015 Sales Price $29,500,000 Units 220 Price/Unit $134,091 Price/SF $85.40 Cap Rate 6.05% Year Built 2014 Units Unit Type 88 1 Bdr 1 Bath Bdr 2 Bath 16 3 Bdr 2 Bath 30

38 COMPARABLES Rent Comparables Map & Edgewood on Madison 7 6 Rent Comparables 1 Subject Property Dakota Ridge Apartments Keeneland Crest Apartments 3 Madison Village Apartments 4 Murphy s Landing Apartments 5 Stonebridge Apartments 6 Westminster Apartments 7 Martinique Terrace Apartments 31

39 COMPARABLES Rent Comparables Summary Average Occupancy Avg 94% Subject Dakota Ridge Apartments Keeneland Crest Apartments Madison Village Apartments Murhpy s Landing Apartments Stonebridge Apartments Westminster Apartments Martinique Terrace Apartments Average Rents - Studio and 1 Bedroom 1, Avg $ Subject Dakota Ridge Apartments Keeneland Crest Apartments Madison Village Apartments Murhpy s Landing Apartments Stonebridge Apartments Westminster Apartments Martinique Terrace Apartments 1 Bdr Studio 32

40 COMPARABLES Rent Comparables Summary Average Rents - 2 and 3 Bedrooms 1,400 1,200 1, Avg $1,080 Avg $ Subject Dakota Ridge Apartments Keeneland Crest Apartments Madison Village Apartments Murhpy s Landing Apartments Stonebridge Apartments Westminster Apartments Martinique Terrace Apartments 2 Bdr 3 Bdr 33

41 COMPARABLES Rent Comparables (Subject Property) 5757 Madison Avenue, Indianapolis, IN No. of Units: 176 Occupancy: 98% Year Built/Renovated: 2013/2015 Units Unit Type SF Rent Rent/SF 52 Studio $555-$630 $ Loft $545-$550 $ Bdr 1 Bath $699-$750 $ Bdr 1 Bath $899-$900 $ Bdr 2 Bath $920-$925 $ Dakota Ridge Apartments 1510 Dakota Ridge Drive, Indianapolis, IN No. of Units: 272 Occupancy: 97% Year Built: 2004 Units Unit Type SF Rent Rent/SF N/A 1 Bdr 1 Bath $720-$804 $0.93 N/A 2 Bdr 2 Bath 997-1,209 $850-$956 $0.82 N/A 3 Bdr 2 Bath 1,188-1,222 $982 $ Keeneland Crest Apartments 5540 Ashview Drive, Indianapolis, IN No. of Units: 424 Occupancy: 99% Year Built: 1997 Units Unit Type SF Rent Rent/SF N/A 1 Bdr 1 Bath Classic $659 $0.77 N/A 1 Bdr 1 Bath Upgrade $769 $0.89 N/A 2 Bdr 1 Bath Classic $749-$769 $0.79 N/A 2 Bdr 1 Bath Upgrade $849-$869 $0.90 N/A 2 Bdr 2 Bath Classic 1,040-1,100 $779-$829 $0.75 N/A 2 Bdr 2 Bath Upgrade 1,040-1,100 $889-$929 $

42 COMPARABLES Rent Comparables 3 Madison Village Apartments 1819 Madison Village Drive, Indianaplis, IN No. of Units: 192 Occupancy: 90% Year Built/Renovated: 1965/2017 Units Unit Type SF Rent Rent/SF 72 1 Bdr 1 Bath $629-$649 $ Bdr 1.5 Bath 765 $709 $ Bdr 1 Bath $709 $ Bdr 1.5 Bath 975 $799 $ Bdr 1.5 Bath 1,075-1,300 $799-$999 $ Murphy s Landing Apartments 6909 Murphys Landing Lane, Indianapolis, IN No. of Units: 200 Occupancy: 94% Year Built: 2000 Units Unit Type SF Rent Rent/SF 72 1 Bdr 1 Bath 700 $685-$780 $ Bdr 1 Bath 935 $854-$959 $ Bdr 2 Bath 1,000 $891-$1,022 $ Bdr 2 Bath 1,200 $1,045-$1,268 $ Stonebridge Apartments 6512 Bridge Crossing Drive, Indianapolis, IN No. of Units: 322 Occupancy: 93% Year Built/Renovated: 2006/2009 Units Unit Type SF Rent Rent/SF 75 1 Bdr 1 Bath $870-$1,110 $ Bdr 1 Bath 890 $975-$1,295 $ Bdr 2 Bath 1,010-1,250 $1,050-$1,370 $ Bdr 2 Bath 1,280-1,300 $1,299-$1,664 $

43 COMPARABLES Rent Comparables 6 Westminster Apartments 921 Parliament Place, Indianapolis, IN No. of Units: 438 Occupancy: 85% Year Built/Renovated: 1975/2013 Units Unit Type SF Rent Rent/SF N/A 1 Bdr 1 Bath $595-$680 $0.96 N/A 2 Bdr 1 Bath 868 $715 $0.82 N/A 2 Bdr 1.5 Bath 884 $760 $0.86 N/A 2 Bdr 2 Bath 1,092 $800 $0.73 N/A 3 Bdr 2 Bath 1,368 $1,020 $ Martinique Terrace Apartments 6789 South East Street, Indianapolis, IN No. of Units: 215 Occupancy: 98% Year Built: 1967/2008 Units Unit Type SF Rent Rent/SF N/A 1 Bdr 1 Bath 850 $649-$669 $0.78 N/A 2 Bdr 1 Bath 900-1,000 $679-$739 $0.75 N/A 3 Bdr 1.5 Bath 1,300 $939 $

44 demographics DEMOGRAPHIC REPORT

45 MARKET OVERVIEW Demographic Summary POPULATION 1-MILE 3-MILES 5-MILES 2000 Population 7,115 76, , Population 7,025 84, , Population 7,198 86, , Population 7,173 89, ,334 HOUSEHOLDS 1-MILE 3-MILES 5-MILES 2000 Households 2,937 31,363 69, Households 2,862 34,182 78, Households 2,941 35,170 80, Households 2,939 36,230 84,409 Average HH Size Daytime Population 2,765 25,625 64, Owner Occupied Housing Units 69.47% 55.76% 59.14% 2000 Renter Occupied Housing Units 24.74% 37.20% 33.38% 2000 Vacant 5.79% 7.03% 7.48% 2014 Owner Occupied Housing Units 69.21% 54.00% 60.04% 2014 Renter Occupied Housing Units 30.79% 46.00% 39.96% 2014 Vacant 4.76% 6.02% 7.11% 2019 Owner Occupied Housing Units 68.75% 53.61% 60.06% 2019 Renter Occupied Housing Units 31.25% 46.39% 39.94% 2019 Vacant 4.66% 5.93% 6.99% INCOME 1-MILE 3-MILES 5-MILES $0 - $ 14, % 13.8% 13.3% $15,000 - $24, % 14.0% 13.3% $25,000 - $34, % 14.2% 13.0% $35,000 - $49, % 16.9% 15.9% $50,000 - $74, % 18.8% 19.3% $75,000 - $99, % 10.6% 11.8% $100,000 - $124, % 5.8% 6.7% $125,000 - $149, % 2.8% 3.4% $150,000-$199, % 1.8% 2.0% $200,000-$249, % 0.5% 0.7% $250, % 0.7% 0.8% Median HH Income $44,769 $41,575 $44,410 Per Capita Income $22,227 $22,426 $22,928 Average HH Income $54,256 $54,742 $57,543 38

46 MARKET OVERVIEW Demographic Summary Geography: 5 Miles Population In 2014, the population in your selected geography is 203,102. The population has changed by 15.55% since It is estimated that the population in your area will be 212,333 five years from now, which represents a change of 4.54% from the current year. The current population is 48.55% male and 51.44% female. The median age of the population in your area is 34.3, compare this to the Entire US average which is The population density in your area is 2, people per square mile. Households There are currently 80,254 households in your selected geography. The number of households has changed by 14.93% since It is estimated that the number of households in your area will be 84,408 five years from now, which represents a change of 5.17% from the current year. The average household size in your area is 2.48 persons. Income In 2014, the median household income for your selected geography is $44,410, compare this to the Entire US average which is currently $51,972. The median household income for your area has changed by 4.57% since It is estimated that the median household income in your area will be $50,438 five years from now, which represents a change of 13.57% from the current year. Race and Ethnicity The current year racial makeup of your selected area is as follows: 84.24% White, 5.24% Black, 0.05% Native American and 3.58% Asian/Pacific Islander. Compare these to Entire US averages which are: 71.60% White, 12.70% Black, 0.18% Native American and 5.02% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. People of Hispanic origin make up 7.43% of the current year population in your selected area. Compare this to the Entire US average of 17.13%. Housing In 2000, there were 44,633 owner occupied housing units in your area and there were 25,190 renter occupied housing units in your area. The median rent at the time was $477. Employment In 2014, there are 64,786 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 58.65% of employees are employed in white-collar occupations in this geography, and 41.50% are employed in blue-collar occupations. In 2014, unemployment in this area is 6.41%. In 2000, the average time traveled to work was 24.7 minutes. The current year per capita income in your area is $22,927, compare this to the Entire US average, which is $28,599. The current year average household income in your area is $57,543, compare this to the Entire US average which is $74,533. Demographic data 2015 by Experian/Applied Geographic Solutions. 39

47

48 exclusively listed Exclusively listed by: OFFICES THROUGHOUT THE U.S. AND CANADA Scott D. Harris Senior Managing Director Investments Senior Director, National Multi Housing Group CHICAGO OAKBROOK Tel: (630) Fax: (630) License: IL: IN: AB IA: S WI: Nick Hillard Associate National Multi Housing Group CHICAGO OAKBROOK Tel: (630) Fax: (630) License: IL: IN: RB IA: B