29 PALMS 5550 E 26TH ST., TUCSON, AZ OFFERING MEMORANDUM

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1 29 PALMS 5550 E 26TH ST., TUCSON, AZ OFFERING MEMORANDUM

2 Presented by: NorthMarq Multifamily Daniel Leibsohn SENIOR ASSOCIATE T C dleibsohn@northmarq.com NorthMarq Capital Alex Quenzler VICE PRESIDENT-PRODUCER T C aquenzler@northmarq.com Visit us online at northmarq.com Phoenix Office 3200 E. CAMELBACK ROAD, SUITE 253 PHOENIX, AZ MULTIFAMILY & MANUFACTURED HOUSING INVESTMENT SALES THIS DOCUMENT/ HAS BEEN PREPARED BY NORTHMARQ MULTIFAMILY FOR ADVERTISING AND GENERAL INFORMATION ONLY. NORTHMARQ MULTIFAMILY MAKES NO GUARANTEES, REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESSED OR IMPLIED, REGARDING THE INFORMATION INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF CONTENT, ACCURACY AND RELIABILITY. ANY INTERESTED PARTY SHOULD UNDERTAKE THEIR OWN INQUIRIES AS TO THE ACCURACY OF THE INFORMATION. NORTHMARQ MULTIFAMILY EXCLUDES UNEQUIVOCALLY ALL INFERRED OR IMPLIED TERMS, CONDITIONS AND WARRANTIES ARISING OUT OF THIS DOCUMENT AND EXCLUDES ALL LIABILITY FOR LOSS AND DAMAGES ARISING THERE FROM. THIS PUBLICATION IS THE COPYRIGHTED PROPERTY OF NORTHMARQ MULTIFAMILY AND/ OR ITS LICENSOR(S) ALL RIGHTS RESERVED.

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4 OFFERING Price $2,200,000 Price Per Unit $41,509 Price Per Square Foot $94.34 Terms Cash - Fee Simple SITE DESCRIPTION Apartment Community 29 Palms Location 5550 E 26th St. Tucson, AZ Total Units 53 Year Built 1964 Net Rentable Square Feet 23,320 Number of Buildings 7 Number of Stories 1 Sub-market South Central Land Size 1.46 Acres Density Units Per Acre Parking 55 Uncovered Spaces Laundry On-Site Laundry Facility MECHANICAL Heating / Cooling Individual Wall Mounted Units Hot Water Individual Domestic Hot Water Heaters Electricity Paid by Tenant Water / Sewer Paid by Owner CONSTRUCTION Style Garden Style Foundation Concrete Framing Wood Exterior Painted Block Roof Flat Parking Surface Asphalt PROPERTY TAXES Number of Parcels 1 Tax Parcel Number Property Tax $18,437 4 NORTHMARQ MULTIFAMILY

5 PROPERTY SUMMARY UNIT TYPE # OF UNITS % OF COMPLEX SQUARE FEET VACANT OFFICE RENT RENT / SF AVERAGE IN-PLACE RENT AVERAGE RENT / SF TOTAL RENT TOTAL AVERAGE RENT Studio % $425 $1.12 $414 $1.09 $10,200 $9,939 1BD/1BA % $525 $1.17 $517 $1.15 $12,600 $12,409 2BD/1BA % $600 $1.14 $600 $1.14 $2,400 $2,400 3BD/1BA % 1, $825 $0.63 $825 $0.63 $825 $825 TOTAL / AVERAGE % $491 $1.12 $483 $1.10 $26,025 $25,573 INFORMATION AS OF: 8/31/2018 UNIT MIX BREAKDOWN 2BD/1BA 8% 3BD/1BA 2% Studio 45% 1BD/1BA 45% 29 PALMS APARTMENTS 5

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7 PROPERTY PHOTOS 29 PALMS APARTMENTS 7

8 Tucson Medical Center Banner University Medical Center Tucson JW Marriot Starr Pass Resort Pima Community College Tucson Downtown Convention Tucson Center University of Arizona El Con Center Randolf Golf Course Park Place Mall Carondelet St. Joseph s Hospital Starr Pass Country Club Sentenial Peak Park Reid Park Zoo Saguaro National Park Santa Cruz River Park Southern Arizona VA Hospital Kino Sports Complex 29 PALMS APARTMENTS Davis-Monthan AFB Tucson Spectrum Mall Pima Air & Space Museum N 8 NORTHMARQ MULTIFAMILY Tucson International Airport

9 AREA HIGHLIGHTS 29 PALMS APARTMENTS IS WITHIN EASY ACCESS TO: > > University of Arizona - top ranked university with over 43,000 students enrolled, and a campus size of 392 acres. > > Downtown Tucson - ranks in the top 20 of Forbes Most Innovative Cities. There are 30 projects under construction or proposedincluding hotels, apartments, commercial space, parks, and roadway improvements. > > Banner University Medical Center Tucson bed acute-care hospital and Southern Arizona s only Level I Trauma Center. > > Tucson Medical Center bed locally governed nonprofit regional hospital. > > Carondelet St. Joseph s Hospital bed acute-care facility located on the east side of Tucson.. > > Park Place Mall - over one million square feet of fashion and entertainment featuring more than 125 stores. > > El Con Center - open-air shopping mall anchored by JCPenney, Target, The Home Depot, Burlington, and Walmart. > > Tucson Convention Center - 27-acre campus featuring 8,962-seat indoor arena, two performing arts venues, and 205,000 square feet of meeting space. > > Davis-Monthan Air Force Base - Part of the United States Air Force s Air Combat Command and is home to the 355th Fighter Wing, responsible for training and deploying A-10C Thunderbolt II pilots. Located five files southeast of downtown Tucson and employs 9,100. > > Tucson International Airport - over 10,000 passengers daily. > > Pima Air & Space Museum - one of the world s largest non-government funded aerospace museums featuring a display of over 350 aircraft spread out over 80 acres. > > Reid Park Zoo - 24-acre city-owned and operated non-profit zoo located within Reid Park. > > Randolph Golf Course - Longest golf course in the City of Tucson system with year round 18-hole, regulation length courses. > > Kino Sports Complex acres dedicated to soccer and long field activities with a lighted 2,000-seat North Grandstand field, four more soccer fields, and a 3,000-seat stadium (North Stadium), Kino is the largest professional sports and entertainment venue of its kind in Pima County. 29 PALMS APARTMENTS 9

10 NO. PROPERTY YEAR BUILT UNITS UNIT SIZE AVG. SF PHYSICAL OCCUPANCY RENT/ UNIT RENT/SF NET RENT/ UNIT NET RENT/SF MANAGED BY S Palms 5550 E 26th St. Tucson, AZ Croftwood 1005 S Craycroft Rd. Tucson, AZ Kachina Court 5255 E 29th St. Tucson, AZ Crown Villas 550 S Camino Seco Tucson, AZ % $491 $1.12 $491 $1.12 Owner % $515 $0.92 $515 $0.92 Owner % $475 $1.32 $475 $1.32 Owner % $664 $0.81 $609 $0.75 Owner 4 The Standard Raintree 6450 E Golf Links Rd. Tucson, AZ % $563 $1.41 $563 $1.41 Chamberlin Average % $554 $1.04 $541 $ NORTHMARQ MULTIFAMILY

11 RENT COMPARABLES # PROPERTY RUBS GAS ELECTRIC WATER W/D IN UNIT GATED ACCESS DOG PARK CLUB HOUSE GYM SPORT COURT COVERED PARKING KIDS PLAYGROUND S 29 Palms 5550 E 26th St. Tucson, AZ Included Individual Individual Master 1 Croftwood 1005 S Craycroft Rd. Tucson, AZ Included None Individual Master 2 Kachina Court 5255 E 29th St. Tucson, AZ Included None Individual Master 3 Crown Villas 550 S Camino Seco Tucson, AZ Included None Individual Master 4 The Standard Raintree 6450 E Golf Links Rd. Tucson, AZ Included None Individual Master 29 PALMS APARTMENTS 11

12 29 Palms 5550 E 26th St. Tucson, AZ WALK SCORE 61 Croftwood 1005 S Craycroft Rd. Tucson, AZ WALK SCORE 69 OWNER: Creative Commercial Investments MANAGED BY: Owner DATE SURVEYED: 9/7/2018 UNIT TYPE UNITS SF TRANSIT SCORE 36 RENT/UNIT RENT/SF NET RENT/UNIT NET RENT/SF Studio $425 $1.12 $425 $1.12 1BD/1BA $525 $1.17 $525 $1.17 2BD/1BA $600 $1.14 $600 $1.14 3BD/1BA $825 $0.63 $825 $0.63 TOTAL/AVG $491 $1.12 $491 $1.12 S OWNER: Richard N Mills MANAGED BY: Owner DATE SURVEYED: 9/7/2018 UNIT TYPE UNITS SF TRANSIT SCORE 36 RENT/UNIT RENT/SF NET RENT/UNIT NET RENT/SF Studio $450 $1.09 $450 $1.09 1BD/1BA $525 $0.87 $525 $0.87 2BD/1BA $650 $0.83 $650 $0.83 TOTAL/AVG $515 $0.92 $515 $ Kachina Court 5255 E 29th St. Tucson, AZ WALK SCORE 45 OWNER: Bakke Living Trust MANAGED BY: Owner DATE SURVEYED: 9/7/2018 UNIT TYPE UNITS SF TRANSIT SCORE 36 RENT/UNIT RENT/SF NET RENT/UNIT NET RENT/SF Studio $475 $1.32 $475 $1.32 TOTAL/AVG $475 $1.32 $475 $ NORTHMARQ MULTIFAMILY

13 RENT COMPARABLES DETAILS Crown Villas 550 S Camino Seco Tucson, AZ WALK SCORE 56 The Standard Raintree 6450 E Golf Links Rd. Tucson, AZ WALK SCORE 46 OWNER: Crown Acquistions Inc. MANAGED BY: Owner DATE SURVEYED: 9/7/2018 UNIT TYPE UNITS SF TRANSIT SCORE 36 RENT/UNIT RENT/SF NET RENT/UNIT NET RENT/SF Studio $512 $1.14 $469 $1.04 1BD/1BA $685 $0.91 $628 $0.84 2BD/2BA $795 $0.64 $729 $0.58 TOTAL/AVG $664 $0.81 $609 $ OWNER: SPL Real Estate MANAGED BY: Chamberlin DATE SURVEYED: 9/7/2018 UNIT TYPE UNITS SF TRANSIT SCORE 34 RENT/UNIT RENT/SF NET RENT/UNIT NET RENT/SF Studio $506 $1.55 $506 $1.55 1BD/1BA $580 $1.39 $580 $1.39 2BD/1BA $830 $0.90 $830 $0.90 2BD/1BA $850 $0.92 $850 $0.92 TOTAL/AVG $563 $1.41 $563 $ PALMS APARTMENTS 13

14 Rent/Unit STUDIO RENTS $515 5 $505 $495 $ $475 4 $465 $455 2 $445 $435 1 $425 $1.00 $1.10 $1.20 $1.30 $1.40 $1.50 $1.60 Rent/SF # PROPERTY UNIT TYPE UNITS SF RENT/UNIT RENT/SF 1 29 Palms Studio $425 $ Croftwood Studio $450 $ Kachina Court Studio $475 $ Crown Villas Studio $469 $ The Standard Raintree Studio $506 $ TOTAL/AVG $479 $1.29 Rent/Unit ONE BEDROOM RENTS $645 $625 3 $605 $ $565 $ $525 $0.80 $0.90 $1.00 $1.10 $1.20 $1.30 $1.40 # PROPERTY UNIT TYPE UNITS SF RENT/UNIT RENT/SF 1 29 Palms 1BD/1BA $525 $ Croftwood 1BD/1BA $525 $ Crown Villas 1BD/1BA $628 $ The Standard Raintree 1BD/1BA $580 $ TOTAL/AVG $579 $ NORTHMARQ MULTIFAMILY

15 RENT ANALYSIS Rent/Unit TWO BEDROOM RENTS $ $800 # PROPERTY UNIT TYPE UNITS SF RENT/UNIT RENT/SF $750 $ Palms 2BD/1BA $600 $ Croftwood 2BD/1BA $650 $ Crown Villas 2BD/2BA $729 $ The Standard Rain Tree 2BD/1BA $830 $0.90 $ The Standard Rain Tree 2BD/1BA $850 $ TOTAL/AVG $718 $ $600 $0.55 $0.65 $0.75 $0.85 $0.95 $1.05 $1.15 Rent/SF 29 PALMS APARTMENTS 15

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17 RENT COMPARABLES MAP S 29 Palms 5550 E 26th St. Tucson, AZ Croftwood 1005 S Craycroft Rd. Tucson, AZ SITE 2 Kachina Court 5255 E 29th St. Tucson, AZ Crown Villas 550 S Camino Seco Tucson, AZ The Standard Raintree 6450 E Golf Links Rd. Tucson, AZ N 29 PALMS APARTMENTS 17

18 T-12 OPERATIONS OPERATING INCOME Monthly Scheduled Gross Rent $26,025 Annual Scheduled Gross Rent $312,300 Current Physical Vacancy 3.77% -$982 Economic Vacancy 15.04% -$46,956 Net Rental Income $264,362 Other Income (Late Fees, Pet Fees, Application Fees, Etc.) $14,322 Gross Operating Income $278,683 OPERATING EXPENSES PER UNIT Property Taxes $348 $18,437 Insurance $142 $7,539 Maintenance & Repairs $911 $48,309 Turnover $46 $2,441 Contract Services $26 $1,400 Electricity $15 $780 Gas $19 $1,005 Sewer and Water $432 $22,900 Trash $127 $6,744 Utilities $31 $1,655 Payroll & Management Fee $581 $30,770 Marketing $68 $3,585 Administrative Expenses $114 $6,028 TOTAL OPERATING EXPENSES $151,593 Operating Cost Per Unit $2,860 Operating Cost Per Sq Ft $6.50 NET OPERATING INCOME $127,091 Capital Reserve $300 $15,900 ADJUSTED NET OPERATING INCOME $111,191 UNIT TYPE UNITS SF T-12 INCOME / T-12 EXPENSES WITH ADJUSTMENTS NOTES TRAILING FINANCIALS AS OF AUGUST 2018 RENTS Current asking rents. PHYSICAL VACANCY Rent Roll dated August 31, 2018 ECONOMIC VACANCY Includes historical physical vacancy and bad debt RENT/UNIT PROPERTY TAXES 2018 annual property taxes quoted from the Pima County Treasurer. EXPENSES Trailing 12 month P&L statement through August Removed $12,125 Plumbing Expense from R&M (CapEx). MONTHLY RENT Studio $425 $10,200 1BD/1BA $525 $12,600 2BD/1BA $600 $2,400 3BD/1BA $825 $825 TOTAL/AVG $491 $26, NORTHMARQ MULTIFAMILY

19 PRO FORMA PRO FORMA OPERATING INCOME Monthly Scheduled Gross Rent $27,350 Annual Scheduled Gross Rent $328,200 Physical Vacancy 3.00% -$9,846 Model/Employee Unit 2.01% -$6,600 Economic Vacancy 4.00% -$13,128 Net Rental Income $298,626 Other Income $14,751 Gross Operating Income $313,377 PRO FORMA OPERATING EXPENSES PER UNIT Property Taxes $348 $18,437 Insurance $150 $7,950 Maintenance & Repairs $350 $18,550 Turnover $200 $10,600 Contract Services $100 $5,300 Electricity $15 $803 Gas $20 $1,035 Sewer and Water $445 $23,587 Trash $131 $6,946 Utilities $32 $1,704 Payroll $750 $39,750 Management Fee 3.00%OF GOI $177 $9,401 Marketing $50 $2,650 Administrative Expenses $150 $7,950 Capital Reserve $300 $15,900 TOTAL OPERATING EXPENSES $170,564 Operating Cost Per Unit $3,218 Operating Cost Per Sq Ft $7.31 PRO FORMA NET OPERATING INCOME $142,813 UNIT TYPE UNITS SF NOTES RENTS Increased asking rents $25. PHYSICAL VACANCY Consistent with submarket performance. OTHER INCOME Increased 3% from T-12 income operations. PROPERTY TAXES 2018 Annual property taxes quoted from the Pima County Treasurer. UTILITIES Increased 3% from adjusted T-12 operations. OPERATIONAL EXPENSES Based on industry standards of similar properties. RENT/UNIT MONTHLY RENT Studio $450 $10,800 1BD/1BA $550 $13,200 2BD/1BA $625 $2,500 3BD/1BA $850 $850 TOTAL/AVG $516 $27,350 URBAN 188 APARTMENTS 19

20 NO. PROPERTY YEAR BUILT UNITS PRICE $/UNIT $/SF SALE DATE S 29 Palms 5550 E 26th St. Tucson, AZ $2,200,000 $41,509 $94.34 On Market 1 Casa Marin 438 E Prince Rd. Tucson, AZ $3,480,000 $48,333 $ /30/ Eucalyptus Gardens 414 E Prince Rd. Tucson, AZ $2,220,000 $46,250 $ /30/ Miramonte 770 N Dodge Blvd. Tucson, AZ $1,685,000 $51,061 $ /15/ Bellevue Winstel 3737 E Bellevue St. Tucson, AZ $2,110,000 $52,750 $ /17/ Santuario 1201 N Alvernon Way Tucson, AZ $3,485,000 $49,786 $ /12/ Latitude N Country Club Rd. Tucson, AZ $3,400,000 $44,737 $ /23/2018 Average $47,775 $ NORTHMARQ MULTIFAMILY

21 SALES COMPARABLES N N SITE 29 PALMS APARTMENTS 21

22 Buyer Seller ZFI LLC 8070 La Jolla Shores Dr. La Jolla, CA Chris Ioannakis 4340 Tuscany Cir. Reno, NV Sale Price $3,480,000 Price / Unit $48,333 Price / SF $92.45 Sale Date 8/30/2018 Submarket Flowing Wells CASA MARIN 438 E PRINCE RD., TUCSON, AZ Location/Property C / C Electric Metering Individual Year Built 1982 Building S.F. 37,640 Total Units 72 UNIT TYPE UNITS SF RENT/UNIT RENT/SF STUDIO $460 $ BD / 1 BA $545 $ BD / 1 BA $660 $ BD / 1 BA $850 $1.04 TOTAL/AVG $529 $1.01 FINANCING Lender - Loan Amount - Loan-to-Value - 22 NORTHMARQ MULTIFAMILY

23 SALES COMPARABLES Buyer Seller ZFI LLC 8070 La Jolla Shores Dr. La Jolla, CA Andrew Pongratz 6641 N Skyway Rd. Tucson, AZ Sale Price $2,220,000 Price / Unit $46,250 Price / SF $85.17 Sale Date 8/30/2018 Submarket Flowing Wells EUCALYPTUS GARDENS 414 E PRINCE RD., TUCSON, AZ Location/Property C / C Electric Metering Individual Year Built 1982 Building S.F. 26,064 Total Units 48 UNIT TYPE UNITS SF RENT/UNIT RENT/SF 1 BD / 1 BA $445 $ BD / 1 BA $518 $ BD / 1 BA $622 $0.83 TOTAL/AVG $508 $0.94 FINANCING Lender - Loan Amount - Loan-to-Value - 29 PALMS APARTMENTS 23

24 Buyer Seller DLP Miramonte Investments LLC 1745 Trilogy Pky. Nipomo, CA Jason & Janie Yamada 29 Quarterhorse Ln. Rolling Hills Estates, CA Sale Price $1,685,000 Price / Unit $51,061 Price / SF $ Sale Date 8/15/2018 Submarket South Central Location/Property C+ / C- MIRAMONTE 770 N DODGE BLVD., TUCSON, AZ Electric Metering Master Year Built 1966 Building S.F. 16,500 Total Units 33 FINANCING UNIT TYPE UNITS SF RENT/UNIT RENT/SF 1 BD / 1 BA $533 $1.07 TOTAL/AVG $533 $1.07 Lender Hunt Mortgage Partners, LLC Loan Amount $881,000 Loan-to-Value 52.28% 24 NORTHMARQ MULTIFAMILY

25 SALES COMPARABLES Buyer Seller Scott Brittenham 1642 Sahuaro Blossom Tucson, AZ Gould Family Properties VII, LLC 176 Ocean Way Vero Beach, FL Sale Price $2,110,000 Price / Unit $52,750 Price / SF $71.19 Sale Date 4/17/2018 Submarket North Central Location/Property C / C- BELLEVUE WINSTEL 3737 E BELLEVUE ST., TUCSON, AZ Electric Metering Individual Year Built 1975 Building S.F. 29,640 Total Units 40 UNIT TYPE UNITS SF RENT/UNIT RENT/SF 1 BD / 1 BA $520 $ BD / 1 BA $538 $ BD / 1 BA $603 $ BD / 1 BA $725 $0.88 TOTAL/AVG $610 $0.82 FINANCING Lender NuVision Federal Credit Union Loan Amount $1,477,500 Loan-to-Value 70.02% 29 PALMS APARTMENTS 25

26 Buyer Josefa Solomon 2013 Trust E Fort Bowie Dr. Walnut, CA Seller Luz Andraux Sale Price $3,485,000 Price / Unit $49,786 Price / SF $82.16 Sale Date 4/12/2018 Submarket North Central Location/Property C / C+ SANTUARIO 1201 N ALVERNON WAY, TUCSON, AZ Electric Metering Master Year Built 1976 Building S.F. 42,416 Total Units 70 UNIT TYPE UNITS SF RENT/UNIT RENT/SF 1 BD / 1 BA $645 $ BD / 1 BA $665 $ BD / 2 BA $850 $0.98 TOTAL/AVG $678 $1.12 FINANCING Lender ReadyCap Commercial LLC Loan Amount $1,465,000 Loan-to-Value 42.04% 26 NORTHMARQ MULTIFAMILY

27 SALES COMPARABLES Buyer Seller Greenlite Holdings 2415 E Camelback Rd. Phoenix, AZ Stephen C Clark 220 Lombard St. San Francisco, CA Sale Price $3,400,000 Price / Unit $44,737 Price / SF $75.95 Sale Date 1/23/2018 Submarket North Central LATITUDE N COUNTRY CLUB RD., TUCSON, AZ Location/Property B / C Electric Metering Individual Year Built 1979 Building S.F. 44,764 Total Units 76 UNIT TYPE UNITS SF RENT/UNIT RENT/SF STUDIO $500 $ BD / 1 BA $626 $ BD / 1 BA $726 $0.80 TOTAL/AVG $602 $1.02 FINANCING Lender Bank of Tucson Loan Amount $3,555,000 Loan-to-Value % 29 PALMS APARTMENTS 27

28 MULTIFAMILY & MANUFACTURED HOUSING INVESTMENT SALES NorthMarq Multifamily Daniel Leibsohn SENIOR ASSOCIATE T C dleibsohn@northmarq.com NorthMarq Capital Alex Quenzler VICE PRESIDENT-PRODUCER T C aquenzler@northmarq.com James DuMars MANAGING DIRECTOR T C jdumars@northmarq.com Visit us online at northmarq.com Phoenix Office 3200 E. CAMELBACK ROAD, SUITE 253 PHOENIX, AZ