MIDTOWN APARTMENTS OFFERING MEMORANDUM NATIONAL MULTI HOUSING GROUP. 700 Midtown Ln Harriman, TN Multifamily Units

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1 NATIONAL MULTI HOUSING GROUP MIDTOWN APARTMENTS OFFERING MEMORANDUM 700 Midtown Ln Harriman, TN Multifamily Units INVESTMENT ADVISOR PAT COSGROVE D C pat.cosgrove@marcusmillichap.com I NVESTMENT ADVI SOR DAVID STOLLENWERK D C David.Stollenwerk@marcusmillichap.com

2 E XC L U S I V E LY L I S T E D BY INVESTMENT ADVISOR PAT COSGR OV E D C pat.cosgrove@marcusmillichap.com I NV EST M ENT ADVI SOR DAVID STOL L ENWERK D C David.Stollenwerk@marcusmillichap.com The Marcus & Millichap Multifamily Advisory Group is pleased to present the exclusive investment offering of the 32-Unit Midtown Apartments in Harriman, TN. This investment will allow potential investors to purchase a stabilized, Value-Add apartment complex. A potential investor can add value by raising rents, and increasing occupancy. Midtown Apartments List Price Address County Site Size Year Built Residential Units Net Residential Area Electric Utility Water Utility $1,300, Midtown Ln Harriman, TN Roanne 3.07 Acres N/A Tenant Responsibility (Individually Metered) Tenant Responsible (Individually Metered) MIDTOWN APARTMENTS

3 Roane County, TN

4 Employment by Industy in Roane County, TN

5 Employment by Occupation in Roane County, TN

6 Knoxville, TN

7 Knoxville, TN Knoxville, TN has a large population of 183,921 people with a median age of 33. Between 2015 and 2016 the population grew 0.47%, while it s median household income grew 0.96%.

8 Economy of Knoxville, TN Income by Location in Knoxville The economy of Knoxville, TN employs 89,094 people. The economy of Knoxville, TN is specialized in Accommodation & Food Service; Admin., Support, Waste Management Services; and Management of Companies & Enterprises, which employ respectively 1.51; 1.28; and 1.28 times more people than what would be expected in a location of this size.

9 The University has a total of 28,052 enrolled students, 24,535 of which are enrolled fulltime. The University of Tennessee-Knoxville may be best known for their football team, which is reported to bring in Million annually. Out of the university s 20 sports, their football team accounts for 57.5% of their total economic impact.

10 Rent Statistics in Knoxville, TN In 2016, 45.9% of residents in Knoxville own the homes in which they reside The percentage of owner-occupancy in Knoxville is 17.7% lower than the national average of 63.6% Percentage of owner-occupancy in Knoxville

11 O M F I N A NCIAL A N ALY SIS

12 M I D TO W N R E N T R O L L S U M M A R Y RENT ROLL SUMMARY FINANCIAL ANALYSIS

13 M I D TO W N R E N T R O L L RENT ROLL DETAIL 13

14 M I D TO W N O P E R AT I N G S TAT E M E N T OPERATING STATEMENT FINANCIAL ANALYSIS [1] 14

15 M I D TO W N N O T E S NOTES TO OPERATING STATEMENT FINANCIAL ANALYSIS 15

16 M I D TO W N P R I C I N G D E TA I L PRICING DETAIL FINANCIAL ANALYSIS 16

17 O M S A L ES CO M P S

18 Sales Comps Price Per Unit SALE COMPS Sorted by Sale Price per Unit Highest to Lowest Property Year Built City Units Ave. Unit Size Close Date Sale Price Sale Price/Unit Sale Price/SF Note Old Jamestown Court 2008 Crossville /9/2018 $1,849,000 $ 57,781 $ Anzie 1998 Harriman 8 N/A 4/13/2017 $295,000 $ 36,875 N/A Orchard 1981 Kingston 10 N/A 10/27/2017 $360,000 $ 36,000 N/A Artisan Place 1992 Crossville /26/2017 $2,100,000 $ 35,593 $26.86 Lee Village Apartments 1980 Harriman 14 N/A 1/1/2017 $430,000 $ 30,714 N/A Hillview Terrace Apartments 1985 Harriman /27/2017 $556,968 $ 17,405 $22.84 Midtown Apartments 1982 Harriman TBD TBD TBD TBD Averages 1,006 $ 9 3 1,8 28 $ 3 5,728 $

19 Midtown Apartments Subject Property Property Year Built City Units Ave. Unit Size Close Date Sale Price Sale Price/Unit Midtown Apartments 1982 Harriman TBD TBD TBD TBD Sale Price/SF Note

20 Midtown Apartments SALE COMP Property Year Built City Units Ave. Unit Size Close Date S ale Price Sale Price/Unit Sale Price/S F Old Jamestown Court 2008 Crossville 32 1,106 1/9/2018 $1,849,000 $ 57,781 $52.24 Note

21 Midtown Apartments SALE COMP Property Year Built City Units Ave. Unit Size Close Date Sale Price Sale Price/Unit Sale Price/SF Hillview Terrace Apartments 1985 Harriman /27/2017 $556,968 $ 17,405 $22.84 Note

22 Midtown Apartments SALE COMP Property Year Built City Units Ave. Unit Size Close Date S ale Price Sale Price/Unit Sale Price/S F Artisan Place 1992 Crossville 59 1,325 5/26/2017 $2,100,000 $ 35,593 $26.86 Note

23 Midtown Apartments SALE COMP Property Year Built City Units Ave. Unit Size Close Date Sale Price Sale Price/Unit Sale Price/SF Lee Village Apartments 1980 Harriman 14 N/A 1/1/2017 $430,000 $ 30,714 N/A 8.60% CAP Note

24 Midtown Apartments SALE COMP Property Year Built City Units Ave. Unit Size Close Date S ale Price Sale Price/Unit Sale Price/S F 135 Anzie 1998 Harriman 8 N/A 4/13/2017 $295,000 $ 36,875 N/A Note

25 Midtown Apartments SALE COMP Property Year Built City Units Ave. Unit Size Close Date S ale Price Sale Price/Unit Sale Price/S F Orchard 1981 Kingston 10 N/A 10/27/2017 $360,000 $ 36,000 N/A 8.25% CAP Note

26 K N OXROCA V I L LRENTAL E OVCOMMUNITY E R V I E W KNOXVILLE OVERVIEW The Knoxville metro area is centered in the eastern portion of Tennessee and is the third largest market after Nashville and Memphis. The metro consists of nine counties: Anderson, Blount, Campbell, Grainger, Knox, Loudon, Morgan, Roane and Union. The local economy centers primarily around economic hubs created by the University of Tennessee and Great Smokey Mountain tourism. The city of Knoxville is the county seat of Knox County and is home to 186,000 residents. METRO HIGHLIGHTS HIGHER EDUCATION The University of Tennessee has 28,000 students and 9,800 employees. It is estimated the school has a $1.6 billion impact on the state s economy. INLAND PORT The Port of Knoxville is connected to the nation s waterways and the Gulf of Mexico via channels on the Mississippi and Tennessee Rivers. GREAT SMOKEY MOUNTAIN CULTURE The Knoxville region has a strong arts community, contributing to bluegrass and country music with bands such as Flatt & Scruggs and the Everly Brothers. In nearby Pigeon Forge, the park Dollywood hosts 3 million tourists in a season. ECONOMY Technology and research activities are also growing in the metro, with multiple National Science Foundation-funded centers associated with the University of Tennessee. In addition, multiple research and development firms are located in the Tennessee Technology Corridor. Diversification has brought major employers a variety of industries such as media and healthcare with companies like Regal Entertainment Group, Scripps Networks Interaction and TeamHealth. While diversifying from its manufacturing roots into media and professional service jobs, the metro still houses big manufacturing operations, including a Coca-Cola bottling plant. DEMOGRAPHICS 2017 POPULATION: 870K Growth *: 4.7% 2017 HOUSEHOLDS: 354K Growth *: 5.5% 2017 MEDIAN AGE: 40.7 U.S. Median: MEDIAN HOUSEHOLD INCOME: $48,500 U.S. Median: $56,300 * Forecast Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody s Analytics; U.S. Census Bureau 1

27 K N OXROCA V I L LRENTAL E OVCOMMUNITY E R V I E W TENNESSEE METROS Still-Low Unemployment Across Tennessee Metros Benefits Apartment Demand Surge in completions weighs on vacancy in Nashville. Elevated apartment construction since 2016 has placed upward pressure on vacancy throughout the Nashville metro. By year s end, more than 22,000 units will have been placed into service during the past three years. Of these deliveries, roughly 8,000 apartments are located in the Central Nashville submarket, which has weighed on vacancy in the market considerably. Moving into 2019, the pace of construction in Central Nashville begins to slow, allowing vacancy some room for recovery as units lease. Many owners will likely continue offering concessions to fill available space and possibly further softening rental increases. Healthy net absorption and slowing construction benefit apartment performance in Knoxville and Memphis. The unemployment rate in all three Tennessee metros rests at or below 4 percent, highlighting the tight labor market and driving household formation. The rising number of households in Knoxville and Memphis in particular will benefit vacancy this year. In Knoxville, few completions and steady demand have kept the rate below the 5 percent equilibrium the past three years and generated rent growth. Vacancy in Memphis has plummeted more than 350 basis points since the Great Recession. The rate remains the highest of the three markets, though a slowing construction pipeline and healthy net absorption signal room for additional improvement. Multifamily 2018 Outlook Metro Investment Trends Nashville Vacancy Y-O-Y BasisPoint Change Effective Rent Y-O-Y Change Nashville 5.9% 80 $1, % Memphis 6.0% -40 $ % Knoxville 3.5% -80 $ % Transaction velocity rose more than 30 percent in Nashville as trades increased among all property classes. First-year returns vary between the mid-5 to low-7 percent band based on class and location. Assets in the West End/CBD submarket remain popular. Here, properties trade with cap rates in the mid-5 percent band. Memphis Transaction velocity in Midtown Memphis picked up during the past 12 months, lifting property values in the area considerably. Cap rates in Midtown are roughly 50 basis points less than the metro average. The majority of trades involved Class C properties, though several newer assets also changed hands. Knoxville Demand picked up for assets in northern locales in Knoxville. Properties in this market changed hands with cap rates in the low-7 percent area. Several Class A properties changed hands, aiding in a significant increase in property values. * Cap rate trailing 12-month average through 1Q; Treasury rate as of March 29th Includes sales of $1 million and greater for Nashville and Memphis Sources: CoStar Group, Inc.; Real Capital Analytics 27

28 K N OXROCA V I L LRENTAL OVCOMMUNITY E R V I E W TENNESSEE METROS: KNOXVILLE * Forecast EMPLOYMENT CONSTRUCTION VACANCY RENTS 28

29 K N OXROCA V I L RENTAL L E OVCOMMUNITY E R V I E W TENNESSEE METROS: KNOXVILLE Submarket Trends Lowest Vacancy Rates 1Q18 Submarket Vacancy Rate Y-O-Y BasisPoint Change Effective Rent Y-O-Y % Change *Mortgage payments based on quarterly median home price with a 30-year fixed-rate conventional mortgage, 90% LTV, taxes, insurance and PMI. ** Annualized Rate Sales Trends Downtown-University- South Knoxville 2.7% -50 $1, % The number of trades in Knoxville held steady the past few months amid few listings. The limited availability of assets drove bidding, lifting the average price more than 20 percent to $88,800 per door. Few listings in Downtown and the Fort Sanders area fueled competition. Buyers were willing to pay a premium for properties in these areas. North Knoxville 3.1% -30 $ % Southwest Knoxville 3.8% -140 $ % West Knoxville 4.6% -120 $ % Overall Metro 3.8% -110 $ % * Trailing 12 months through 1Q18 Pricing trend sources: CoStar Group, Inc.; Real Capital Analytics 29

30 NATIONAL MULTI HOUSING GROUP MIDTOWN APARTMENTS OFFERING MEMORANDUM 700 Midtown Ln Harriman, TN Multifamily Units INVESTMENT ADVISOR PAT COSGROVE D C pat.cosgrove@marcusmillichap.com I NVESTMENT ADVI SOR DAVID STOLLENWERK D C David.Stollenwerk@marcusmillichap.com