Downtown Menlo Park Fourplex

Transcription

1 For more information contact: Apartment / Investment Broker michael@svmultifamily.com BRE Unique Downtown Menlo Park Residential Income Property Just 1.5 Miles From Stanford and Downtown Palo Alto Highly Desirable, High Demand Rental Location Strong High-Tech Employment and Stanford Student Rental Area (4) Two-Bed/One-Bath Units, Large Floorplan (1,080+ sf), Large Windows, Patios, Carports, On-Site Laundry, Storage. Well Maintained Property. Professionally Managed. Below Market Rents - Upside Rent Potential! Offering Price $2,595,000 Phone: Fax: Alberto Way, Suite 3 Los Gatos, CA

2 Table of Contents SECTION 1 - PROPERTY DESCRIPTION SECTION 2 - FINANCIAL INFORMATION SECTION 3 - COMPARABLES SECTION 4 - DEMOGRAPHICS

3 Property Description

4 Executive Summary ACQUISITION COSTS Purchase Price, Points and Closing Costs $2,612,975 Investment - Cash $1,315,475 First Loan $1,297,500 INVESTMENT INFORMATION Purchase Price $2,595,000 Price per Unit $648,750 Price per Sq. Ft. $ Income per Unit $22,365 Expenses per Unit ($11,018) INCOME, EXPENSES & CASH FLOW Gross Scheduled Income $89,460 Total Vacancy and Credits ($2,673) Operating Expenses ($44,071) Net Operating Income $42,716 Debt Service ($74,334) Cash Flow Before Taxes ($31,618) Total Interest (Debt Service) ($51,484) Depreciation and Amortization ($62,292) Taxable Income (Loss) ($71,061) Tax Savings (Costs) $30,840 Cash Flow After Taxes ($778) FINANCIAL INDICATORS Optimal Internal Rate of Return (yr 10) 4.27% Debt Coverage Ratio 0.57 Capitalization Rate 1.65% Gross Rent Multiplier Gross Income / Square Feet $20.61 Gross Expenses / Square Feet ($10.15) Operating Expense Ratio 50.78% page 4 of 27

5 Real Estate Investment Details ANALYSIS Analysis Date October 2014 PROPERTY Property Property Address Year Built 1956 PURCHASE INFORMATION Property Type MultiFamily Purchase Price $2,595,000 Fair Market Value $2,595,000 Units 4 Total Rentable Sq. Ft. 4,340 Resale Valuation 3.0% (annual appreciation) Resale Expenses 6% FINANCIAL INFORMATION Down Payment $1,297,500 Closing Costs $5,000 LT Capital Gain 20.00% Federal Tax Rate 34.0% State Tax Rate 9.4% Discount Rate 3.00% LOANS Debt Term Amortization Rate Payment LO Costs Adjustable $1,297, years 30 years 4.0% $6,194 $12,975 INCOME & EXPENSES Gross Operating Income $86,787 Monthly GOI $7,232 Total Annual Expenses ($44,071) Monthly Expenses ($3,673) CONTACT INFORMATION michael@svmultifamily.com BRE The calculations and data presented are deemed to be accurate, but not guaranteed. They are intended for the purpose of illustrative projections and analysis. The information provided is not intended to replace or serve as substitute for any legal, accounting, investment, real estate, tax or other professional advice, consultation or service. The user of this software should consult with a professional in the respective legal, accounting, tax or other professional area before making any decisions. page 5 of 27

6 Unit Mix Report UNIT MIXES Units Type Approx. SqFt Avg. Rents Monthly Mkt Rents Monthly 1 2 BR / 1 BA 1080 $2,592 $2,592 $3,400 $3, BR / 1 BA 1080 $2,484 $2,484 $3,400 $3, BR / 1 BA 1080 $2,350 $2,350 $3,400 $3, BR / 1 BA 1080 $0 $0 $3,400 $3, ,320 $7,426 $13,600 UNIT MIX UNIT MIX SQUARE FEET 2 BR / 1 BA 2 BR / 1 BA 2 BR / 1 BA 2 BR / 1 BA (vacant) 2 BR / 1 BA 2 BR / 1 BA 2 BR / 1 BA 2 BR / 1 BA (vacant) UNIT MIX INCOME UNIT MIX MARKET INCOME 2 BR / 1 BA 2 BR / 1 BA 2 BR / 1 BA 2 BR / 1 BA (vacant) 2 BR / 1 BA 2 BR / 1 BA 2 BR / 1 BA 2 BR / 1 BA (vacant) page 6 of 27

7 Property Description (4) 2 BR / 1 BA Units. 1.5 miles from Stanford. This is one of those rare, hard to find, quality fourplexes that rarely come to market. Held in a family trust for many years, it is now being offered for sale. This fourplex is located within a few blocks of downtown Menlo Park and only 1.5 miles to Stanford University. Rents in this area are very strong due to the desirability of the neighborhood, the local economy and the robust job market. The building contains four, large (~1,080+ sf) two bed/one bath units. The building is well maintained and located on a street of well kept properties. Market rent for two bed/one bath units in this area is $3,400. There is upside potential as current rents are $2,350 to $2,592. Occupancy in this area is very high due to its proximity to downtown Menlo Park, Palo Alto, Stanford University, & high-tech employment All the units are in good condition, are large (1080+ sf), offer covered & guest parking, storage lockers and an on-site laundry room. Each unit has forced air heating and individual hot water heaters. Unit 4 has been recently updated with fresh paint and refinished hardwood floors. Unit 3 has a large, partially covered wood deck. The two ground level units have large outdoor patios surrounded with brick wall. This two story property consists of stucco over wood frame, concrete foundation, concrete driveway and pitched composition shingle roof. Built in 1956, the building is 4,340 SF on a 7,452 SF lot. The landscaping is mature, well maintained, colorful and attractive. All units boast large picture windows, making each unit bright and airy. Tenants pay individual utilities including gas heating, electricity & phone. Owner pays taxes, insurance, maintenance, trash removal, water & sewer, common area lighting & laundry room utilities. page 7 of 27

8 nue Market: Submarket: County: Peninsula Menlo Park San Mateo APN: Location Highlights Peninsula / Menlo Park Close to Downtown, Stanford, Employment Significant Rent Growth in 2011, 2012, 2013, 2014 YTD Robust Job & Rent Growth Projected by economists Low Vacancy Rate due to Strong Rental Demand Location Overview CADILLAC APARTMENTS I. PROPERTY INFORMATION The property is located on the San Francisco Peninsula, in the City of Menlo Park, close to Downtown Menlo Park, Downtown Palo Alto, Stanford University, the Venture Capital Mecca on Sand Hill Road, and numerous high-tech employers including Google, Facebook, Yahoo, HP, Cisco and others. Recognized by many as the Heart of Silicon Valley." The Peninsula boasts one of the highest education and wellpaid workforces in the State of California, if not the world. The Peninsula is one of the largest employment areas and boasts a robust economy with employment growth that is among the strongest in the Country. It is in close proximity to Santa Clara County, the largest county within the Bay Area with more than 34% of the region's total employment. Over the coming years, population is expected to grow by 6.3%, and employment is expected to grow by 13.6% in a variety of fields including professional and business services (notably high technology), education services and health care services. Silicon Valley also has one of highest concentrations of hightechnology, engineering, computer and microprocessor companies in the world, resulting in strong employment in high paying fields with the highest average salary per worker ($98,430) in the state. Moreover, personal income in the county is also expected to grow by 22.7%. Silicon Valley also receives 50% - 60% of all Venture Capital funding nationwide. This is due in large part to a favorable business climate for start-ups, the availability of skilled labor, and an excellent secondary educational system. Area schools such as Stanford University, the University of California, Berkeley, San Jose State University, Santa Clara University, and San Francisco State University pump thousands of engineering and computer science graduates into the local labor market every year. Moreover, numerous institutions will be expanding with new development projects. Stanford will be embarking on an ambitious hospital development project and development projects are also slated for Facebook and Apple Computer just to the south. Expansion of these (and other) institutions will bring many construction and high-tech jobs to the area. The multifamily rental market on the Peninsula and in Silicon Valley is expected to experience significant growth over the coming years due to robust job growth, a young, mobile workforce, extraordinarily high single family housing prices, a chronic shortage of affordable housing, and chronically low development of multifamily housing due to cost, permitting and land availability. These factors have caused rents to rise dramatically in 2011, 2012 & 2013, with significant rent increases projected by local and national economists over the next five years. Moreover, institutional investors for large multifamily properties consisting of 100 or more units have re-entered the market in high numbers and are reinvesting at an extremely aggressive rate, paying on average of less than 5.4% cap rate one of the lowest rates for multifamily properties nationwide. page 8 of 27

9 Property Photos Property Photos page 9 of 27

10 Maps and Aerials Location Maps Neighborhood View Regional View page 10 of 27

11 Maps and Aerials Aerial and Parcel Maps Aerial View Parcel Map page 11 of 27

12 Financial Information

13 Cash Flow Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 GROSS SCHEDULED INCOME $89,460 $92,133 $94,887 $97,723 $100,644 $103,653 $106,752 $109,945 $113,232 $116,619 General Vacancy ($2,673) ($2,754) ($2,836) ($2,921) ($3,009) ($3,099) ($3,192) ($3,288) ($3,387) ($3,488) Total Operating Expenses ($44,071) ($44,770) ($45,484) ($46,214) ($46,958) ($47,719) ($48,496) ($49,290) ($50,101) ($50,929) NET OPERATING INCOME $42,716 $44,609 $46,566 $48,588 $50,677 $52,835 $55,064 $57,367 $59,745 $62,201 Loan Payment ($74,334) ($74,334) ($74,334) ($74,334) ($74,334) ($74,723) ($75,101) ($75,467) ($75,820) ($76,161) NET CASH FLOW (b/t) ($31,618) ($29,724) ($27,767) ($25,745) ($23,656) ($21,888) ($20,036) ($18,100) ($16,075) ($13,960) Cash On Cash Return b/t -2.40% -2.26% -2.11% -1.96% -1.80% -1.66% -1.52% -1.38% -1.22% -1.06% NET OPERATING INCOME $42,716 $44,609 $46,566 $48,588 $50,677 $52,835 $55,064 $57,367 $59,745 $62,201 Depreciation ($61,860) ($64,559) ($64,559) ($64,559) ($64,559) ($64,559) ($64,559) ($64,559) ($64,559) ($61,865) Amortization ($433) ($433) ($433) ($433) ($433) ($433) ($433) ($433) ($433) ($433) Loan Interest ($51,484) ($50,553) ($49,584) ($48,576) ($47,527) ($47,019) ($46,445) ($45,804) ($45,089) ($44,298) TAXABLE INCOME (LOSS) ($71,061) ($70,935) ($68,009) ($64,979) ($61,841) ($59,175) ($56,372) ($53,428) ($50,335) ($44,394) Income Taxes $30,840 $30,786 $29,516 $28,201 $26,839 $25,682 $24,466 $23,188 $21,846 $19,267 CASH FLOW (a/t) ($778) $1,062 $1,749 $2,456 $3,182 $3,794 $4,429 $5,088 $5,770 $5,307 Cash On Cash Return a/t -0.06% 0.08% 0.13% 0.19% 0.24% 0.29% 0.34% 0.39% 0.44% 0.40% Footnotes: b/t = before taxes;a/t = after taxes page 13 of 27

14 Annual Property Operating Data Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Rental Income $89,112 $91,785 $94,539 $97,375 $100,296 $103,305 $106,404 $109,597 $112,884 $116,271 Laundry $348 $348 $348 $348 $348 $348 $348 $348 $348 $348 GROSS SCHEDULED INCOME $89,460 $92,133 $94,887 $97,723 $100,644 $103,653 $106,752 $109,945 $113,232 $116,619 General Vacancy ($2,673) ($2,754) ($2,836) ($2,921) ($3,009) ($3,099) ($3,192) ($3,288) ($3,387) ($3,488) GROSS OPERATING INCOME $86,787 $89,380 $92,051 $94,802 $97,635 $100,554 $103,560 $106,657 $109,846 $113,131 Expenses Property Tax ($31,140) ($31,451) ($31,766) ($32,084) ($32,404) ($32,728) ($33,056) ($33,386) ($33,720) ($34,057) Insurance (est) ($1,400) ($1,442) ($1,485) ($1,530) ($1,576) ($1,623) ($1,672) ($1,722) ($1,773) ($1,827) Utilities (annualized) ($4,193) ($4,319) ($4,448) ($4,582) ($4,719) ($4,861) ($5,007) ($5,157) ($5,312) ($5,471) Repairs & Maintenance (anlzd) ($4,969) ($5,118) ($5,272) ($5,430) ($5,593) ($5,760) ($5,933) ($6,111) ($6,295) ($6,483) Cleaning (anlzd) ($505) ($520) ($536) ($552) ($568) ($585) ($603) ($621) ($640) ($659) Landscaping (anlzd) ($1,864) ($1,920) ($1,978) ($2,037) ($2,098) ($2,161) ($2,226) ($2,292) ($2,361) ($2,432) TOTAL OPERATING EXPENSES ($44,071) ($44,770) ($45,484) ($46,214) ($46,958) ($47,719) ($48,496) ($49,290) ($50,101) ($50,929) NET OPERATING INCOME $42,716 $44,609 $46,566 $48,588 $50,677 $52,835 $55,064 $57,367 $59,745 $62,201 page 14 of 27

15 Financial Indicators Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Gross Rent Multiplier Capitalization Rate 1.65% 1.72% 1.79% 1.87% 1.95% 2.04% 2.12% 2.21% 2.30% 2.40% Cash On Cash Return b/t -2.40% -2.26% -2.11% -1.96% -1.80% -1.66% -1.52% -1.38% -1.22% -1.06% Cash On Cash Return a/t -0.06% 0.08% 0.13% 0.19% 0.24% 0.29% 0.34% 0.39% 0.44% 0.40% Debt Coverage Ratio Gross Income per Sq. Ft. $20.61 $21.23 $21.86 $22.52 $23.19 $23.88 $24.60 $25.33 $26.09 $26.87 Expenses per Sq. Ft. ($10.15) ($10.32) ($10.48) ($10.65) ($10.82) ($11.00) ($11.17) ($11.36) ($11.54) ($11.73) Net Income Multiplier Operating Expense Ratio 50.78% 50.09% 49.41% 48.75% 48.10% 47.46% 46.83% 46.21% 45.61% 45.02% Loan To Value Ratio 47.69% 45.44% 43.24% 41.10% 39.01% 36.98% 35.01% 33.08% 31.21% 29.39% Footnotes: b/t = before taxes; a/t = after taxes page 15 of 27

16 Loan Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 LOAN 1 Debt Service Analysis Principal Payments $22,849 $23,780 $24,749 $25,758 $26,807 $27,704 $28,655 $29,663 $30,731 $31,863 Interest Payments $51,484 $50,553 $49,584 $48,576 $47,527 $47,019 $46,445 $45,804 $45,089 $44,298 Total Debt Service $74,334 $74,334 $74,334 $74,334 $74,334 $74,723 $75,101 $75,467 $75,820 $76,161 Principal Balance Analysis Beginning Principal Balance $1,297,500 $1,274,651 $1,250,870 $1,226,121 $1,200,363 $1,173,556 $1,145,852 $1,117,197 $1,087,534 $1,056,803 Principal Reductions $22,849 $23,780 $24,749 $25,758 $26,807 $27,704 $28,655 $29,663 $30,731 $31,863 Ending Principal Balance $1,274,651 $1,250,870 $1,226,121 $1,200,363 $1,173,556 $1,145,852 $1,117,197 $1,087,534 $1,056,803 $1,024,940 page 16 of 27

17 Pro Forma Summary UNIT MIX & ANNUAL SCHEDULED INCOME Type Units Actual Total Market Total 2 BR / 1 BA 1 $31,104 $31,104 $40,800 $40,800 2 BR / 1 BA 1 $29,808 $29,808 $40,800 $40,800 2 BR / 1 BA 1 $28,200 $28,200 $40,800 $40,800 2 BR / 1 BA (vacant) 1 $0 $0 $40,800 $40,800 TOTALS 4 $89,112 $163,200 INVESTMENT SUMMARY Price: $2,595,000 Year Built: 1956 Units: 4 Price/Unit: $648,750 RSF: 4,340 Price/RSF: $ Lot Size: 7,452 sf Floors: 2 Parking Spaces: 1.5/unit APN: ANNUALIZED INCOME Actual Market Gross Potential Rent $89,112 $163,200 Less: Vacancy ($2,673) ($4,896) Misc. Income $348 $348 Effective Gross Income $86,787 $158,652 Less: Expenses ($44,071) ($44,071) Net Operating Income $42,716 $114,581 Debt Service ($74,334) ($74,334) Net Cash Flow after Debt Service ($31,618) $40,247 Principal Reduction $22,849 $22,849 Total Return ($8,768) $63,097 Cap Rate: 1.65% Market Cap Rate: 4.42% GRM: Market GRM: FINANCING SUMMARY Loan Amount: $1,297,500 Down Payment: $1,297,500 Loan Type: Adjustable Interest Rate: 4% Term: 30 years Monthly Payment: $6,194 ANNUALIZED EXPENSES Actual Market Property Tax $31,140 $31,140 Insurance (est) $1,400 $1,400 Utilities (annualized) $4,193 $4,193 Repairs & Maintenance (anlzd) $4,969 $4,969 Cleaning (anlzd) $505 $505 Landscaping (anlzd) $1,864 $1,864 Total Expenses $44,071 $44,071 Expenses Per RSF $10.15 $10.15 Expenses Per Unit $11,018 $11,018 DCR:.57 page 17 of 27

18 Comparables

19 Sales Comparables 8% Cap Rate 32.0 Gross Rent Multiplier 7% % 5% Avg % % 2% 1% Avg Subject Subject $712,000 $623,000 Price per Unit Avg. $654,583 $600 $525 Price per Sq. Ft. Avg. $ $534,000 $450 $445,000 $375 $356,000 $300 $267,000 $225 $178,000 $150 $89,000 $75 Subject Subject page 19 of 27

20 Sales Comparables S NOTES (4) 2 BR / 1 BA units Large Floorplan (1050+sf) Patio, Windows, Carports Sale Price $2,595,000 Units 4 Price/Unit $648,750 Price/SqFt $ Cap Rate 1.65% Year Built 1956 GRM # Units Unit Type 1 2 BR / 1 BA 1 2 BR / 1 BA 1 2 BR / 1 BA 1 2 BR / 1 BA (vacant) 1 Sale Date 6/11/2014 NOTES (3) 2/1 units (1) 2/2 unit Carports, Patios Roble Fourplex 960 Roble Ave Sale Price $2,825,000 Units 4 Price/Unit $706,250 Price/SqFt $ Cap Rate 1.7% Year Built 1959 GRM 26.9 # Units Unit Type 2 Two Bedroom One Bath 2 Two Bedroom Two Bath Roble Avenue Sale Date 12/11/2013 Sale Price $2,530,000 Units 4 Price/Unit $632,500 Price/SqFt $ Cap Rate 2.19% Year Built 1956 GRM 23.0 NOTES (3) 2/1 units, (1) 2/2 unit, all approx 1090 sqft. Forced air heat, dishwashers, rent upside. # Units Unit Type 1 Two Bedroom Two Bath 3 Two Bedroom One Bath page 20 of 27

21 Sales Comparables Waverley Street Sale Date 7/3/2014 Sale Price $2,500,000 Units 4 Price/Unit $625,000 Price/SqFt $ Cap Rate 2.65% Year Built 1957 GRM 22.0 NOTES (3) 2/1 units, (1) 2/2 unit, all approx 1090 sqft. Forced air heat & on site laundry facility. # Units Unit Type 3 Two Bedroom One Bath 1 Two Bedroom Two Bath page 21 of 27

22 Sales Comparables 1, ($2,595,000) A 960 Roble Ave, ($2,825,000) B 729 Roble Avenue, ($2,530,000) C 225 Waverley Street, ($2,500,000) page 22 of 27

23 Demographics

24 Population Executive Summary, Menlo Park, California, Prepared by Michael Shields Rings: 0.5, 1, 2 mile radii Latitude: Longitude: miles 1 mile 2 miles 2000 Population 5,725 13,669 55, Population 5,951 15,149 56, Population 6,088 15,536 57, Population 6,394 16,315 59, Annual Rate 0.39% 1.03% 0.13% Annual Rate 0.70% 0.78% 0.51% Annual Rate 0.98% 0.98% 0.79% 2013 Male Population 45.7% 47.7% 49.7% 2013 Female Population 54.3% 52.3% 50.3% 2013 Median Age In the identified area, the current year population is 57,241. In 2010, the Census count in the area was 56,295. The rate of change since 2010 was 0.51% annually. The five-year projection for the population in the area is 59,543 representing a change of 0.79% annually from 2013 to Currently, the population is 49.7% male and 50.3% female. Median Age The median age in this area is 38.9, compared to U.S. median age of Race and Ethnicity 2013 White Alone 80.0% 78.5% 73.7% 2013 Black Alone 0.8% 1.2% 2.4% 2013 American Indian/Alaska Native Alone 0.2% 0.2% 0.3% 2013 Asian Alone 12.6% 13.7% 14.2% 2013 Pacific Islander Alone 0.3% 0.3% 0.5% 2013 Other Race 1.6% 1.7% 3.9% 2013 Two or More Races 4.5% 4.2% 4.9% 2013 Hispanic Origin (Any Race) 6.9% 6.5% 10.6% Persons of Hispanic origin represent 10.6% of the population in the identified area compared to 17.4% of the U.S. population. Persons of Hispanic Origin may be of any race. The Diversity Index, which measures the probability that two people from the same area will be from different race/ethnic groups, is 54.3 in the identified area, compared to 62.1 for the U.S. as a whole. Households 2000 Households 3,098 6,732 21, Households 3,041 7,093 22, Total Households 3,085 7,213 22, Total Households 3,225 7,548 23, Annual Rate -0.19% 0.52% 0.37% Annual Rate 0.44% 0.52% 0.39% Annual Rate 0.89% 0.91% 0.81% 2013 Average Household Size The household count in this area has changed from 22,501 in 2010 to 22,789 in the current year, a change of 0.39% annually. The five-year projection of households is 23,725, a change of 0.81% annually from the current year total. Average household size is currently 2.31, compared to 2.30 in the year The number of families in the current year is 12,855 in the specified area. Data Note: Income is expressed in current dollars Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2013 and Esri converted Census 2000 data into 2010 geography. October 08, Esri Page 1 of 2

25 Median Household Income Executive Summary, Menlo Park, California, Prepared by Michael Shields Rings: 0.5, 1, 2 mile radii Latitude: Longitude: miles 1 mile 2 miles 2013 Median Household Income $90,809 $102,422 $110, Median Household Income $100,587 $115,716 $126, Annual Rate 2.07% 2.47% 2.86% Average Household Income 2013 Average Household Income $122,830 $136,296 $148, Average Household Income $148,239 $164,694 $182, Annual Rate 3.83% 3.86% 4.15% Per Capita Income 2013 Per Capita Income $62,004 $64,128 $60, Per Capita Income $74,396 $77,103 $74, Annual Rate 3.71% 3.75% 4.03% Households by Income Current median household income is $110,096 in the area, compared to $51,314 for all U.S. households. Median household income is projected to be $126,742 in five years, compared to $59,580 for all U.S. households Current average household income is $148,751 in this area, compared to $71,842 for all U.S households. Average household income is projected to be $182,269 in five years, compared to $83,667 for all U.S. households Current per capita income is $60,873 in the area, compared to the U.S. per capita income of $27,567. The per capita income is projected to be $74,183 in five years, compared to $32,073 for all U.S. households Housing 2000 Total Housing Units 3,219 6,964 22, Owner Occupied Housing Units 1,002 2,673 11, Owner Occupied Housing Units 2,096 4,059 9, Vacant Housing Units Total Housing Units 3,286 7,608 24, Owner Occupied Housing Units 916 2,688 11, Renter Occupied Housing Units 2,125 4,405 10, Vacant Housing Units , Total Housing Units 3,308 7,677 24, Owner Occupied Housing Units 889 2,648 11, Renter Occupied Housing Units 2,196 4,565 11, Vacant Housing Units , Total Housing Units 3,394 7,892 25, Owner Occupied Housing Units 958 2,830 12, Renter Occupied Housing Units 2,267 4,718 11, Vacant Housing Units ,592 Currently, 47.9% of the 24,308 housing units in the area are owner occupied; 45.8%, renter occupied; and 6.2% are vacant. Currently, in the U.S., 56.4% of the housing units in the area are owner occupied; 32.3% are renter occupied; and 11.3% are vacant. In 2010, there were 24,109 housing units in the area % owner occupied, 44.3% renter occupied, and 6.7% vacant. The annual rate of change in housing units since 2010 is 0.37%. Median home value in the area is $1,000,001, compared to a median home value of $177,257 for the U.S. In five years, median value is projected to change by 0.00% annually to $1,000,001. Data Note: Income is expressed in current dollars Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2013 and Esri converted Census 2000 data into 2010 geography. October 08, Esri Page 2 of 2

26 DISCLAIMER All materials and information received or derived from Silicon Valley Multifamily Group its directors, officers, agents, advisors, affiliates, and/or any third party sources are provided without representation or warranty as to completeness, veracity, or accuracy, condition of the property, compliance or lack of compliance with applicable governmental requirements, developability or suitability, financial performance of the property, projected financial performance of the property for any party s intended use or any and all other matters. Neither Silicon Valley Multifamily Group its directors, officers, agents, advisors, or affiliates makes any representation or warranty, express or implied, as to accuracy or completeness of the any materials or information provided, derived, or received. Materials and information from any source, whether written or verbal, that may be furnished for review are not a substitute for a party s active conduct of its own due diligence to determine these and other matters of significant chance to such party. Silicon Valley Multifamily Group will not investigate or verify any such matters or conduct due diligence for a party unless otherwise agreed in writing. Seller desires to sell the property in "its present as is condition" subject to inspection reports. EACH PARTY SHALL CONDUCT ITS OWN INDEPENDENT INVESTIGATION AND DUE DILIGENCE. Any party contemplating or under contract or in escrow for a transaction is urged to verify all information and to conduct their own inspections and investigations including through appropriate third party independent professionals selected by such party. All financial data should be verified by the party including by obtaining and reading applicable documents and reports and consulting appropriate independent professionals. Silicon Valley Multifamily Group makes no warranties and/or representations regarding the veracity, completeness, or relevance of any financial data or assumptions. Silicon Valley Multifamily Group does not serve as a financial advisor to any party regarding any proposed transaction. When analyzing this property buyer should use income, vacancy and expense levels that will accurately reflect the manner in which it plans to operate the property. Broker, Agent and Seller are making no representations or warranties as to the level of income or expenses Buyer will incur at the property. Building square footage, unit square footage and lot sizes are not guaranteed. Broker, Agent and Seller have not measured all units, lot or the building and are making NO representation as to the accuracy of square footage figures. Data source for building and lot size is FastWeb. Buyer should measure all units, lot and the building prior to purchase and should not rely on any square footage figures provided by Broker, Agent or Seller. All data and assumptions regarding financial performance, including that used for financial modeling purposes, may differ from actual data or performance. Any estimates of market rents and/or projected rents that may be provided to a party do not necessarily mean that rents can be established at or increased to that level. Parties must evaluate any applicable contractual and governmental limitations as well as market conditions, vacancy factors and other issues in order to determine rents from or for the property. Legal questions should be discussed by the party with an attorney. Tax questions should be discussed by the party with a certified public accountant or tax attorney. Title questions should be discussed by the party with a title officer or attorney. Questions regarding the condition of the property and whether the property complies with applicable governmental requirements should be discussed by the party with appropriate engineers, architects, contractors, other consultants and governmental agencies. Do Not Disturb -- Please respect the Seller's request that the tenants not be disturbed. All offers are to be written subject to inspection. The Seller will provide access for the Buyer to inspect the interiors of all units within a reasonable period following a fully executed purchase contract. Seller requests that all inspections be made on the same day. Representation -- This information is given with the understanding that all negotiations relating to the purchase of the property described herein shall be conducted through Silicon Valley Multifamily Group. All properties and services are marketed by Silicon Valley Multifamily Group in compliance with all applicable fair housing and equal opportunity laws. page 26 of 27

27 OFFERING MEMORANDUM NOTES Gross Annual Scheduled Income & the Gross Rent Multiplier are based on current rents shown in the Rent Roll. These rent levels are current rent levels at the time this package was prepared and subject to change without notice. Buyer should review most recent rent roll prior to purchase. The laundry income was based on 2011 actual levels. Gross Annual Scheduled Income & Gross Income Multiplier (Market or Pro Forma) assumes the units are all rented at the rent levels shown in the Pro Form Summary. These rent levels are not guaranteed to be achievable by Seller, Broker or Agent. Buyer should use rent levels it thinks it can obtain for the subject property. The laundry income was based on the actual 2011 laundry income reported by the owner. Capitalization Rate is based on rents, expenses and vacancy figures shown in the Operating Statement. Pro Forma Capitalization Rate is based on rents, expenses and vacancy figures shown in the Pro-Forma Operating Statement Pro-Forma (Market) column. See Pro Forma Operating Statement Footnotes and Disclaimers in this section of the Offering Memorandum. Year Built: Data source is FastWeb. Seller, Broker and Agent are making no guarantee or representations as to when the improvements were built. Buyer should conduct its own investigation to determine age of improvements. UNIT MIX/SCHEDULED INCOME OVERVIEW FOOTNOTES Current Rent Column is based on current rents shown in the Rent Roll. These rent levels are current rent levels at the time this package was prepared and subject to change without notice. Buyer should review most recent rent roll prior to purchase. Pro Forma or Market Rents assumes the units are all rented at the estimated market rent levels shown in the rent roll. Please note that current rents are not at these levels. Pro Forma rent levels are not guaranteed to be achievable by Seller, Broker or Agent. Buyer should use rent levels it thinks it can obtain for the subject property. Purchase Information on page 4 including Fair Market Value, Resale Valuation and Resale Expenses are provided for illustrative purposes only and will vary depending on market conditions and other factors. Silicon Valley Multifamily Group, its Brokers and Agents can not be held accountable for these numbers. Buyer should use the numbers it thinks most appropriate. Financial Information on page 4 including Down Payment, Closing Costs, LT Capital Gain, Federal and State Tax Rates and the Discount Rate are provided for illustrative purposes only. Actual numbers may, and probably will, vary depending on the Buyer s individual situation. Loans on page 4. This information is provided for illustrative purposes only. Buyer should use the loan information it thinks attainable and realistic for the property. Annual Property Operating Data Notes and Disclaimers Rental Income is based on current rents shown in the Rent Roll Miscellaneous income is based upon information provided by the owner or manager. General Vacancy is estimated to be at current market levels or provided by owner. Taxes are estimated based on list price and based on 2011/2012 tax rate reported by Santa Clara County. Other Expenses All other expenses are as reported by owner or property manager. Loan Payment is based upon information provided in the LOANS section of page 4. Buyer should use the loan information it thinks attainable and realistic for the property. Income Taxes is based upon a 33% or greater tax rate and is provided for illustrative purposes only. Buyer should consult with a licensed tax professional in determining the most realistic and appropriate tax rate. NOTE: THE 10 YEAR PROJECTIONS ARE PROVIDED FOR ILLUSTRATIVE PURPOSES ONLY. BUYER SHOULD USE THE PROJECTIONS IT THINKS ARE REALISTIC AND ATTAINABLE. Rent Roll Notes General Notes: Rent levels, occupancy, deposit amounts and terms are subject to change without notice. Move-In dates are subject to change as units turnover. Buyer should obtain updated information and confirm all rent levels, lease terms, move-in dates, amount of last rental adjustment and deposit amounts prior to purchase. Market Rent column does not reflect current rent levels. These rent levels are not guaranteed to be achievable by Seller, Broker or Agents. Buyer should use rent levels it thinks it can obtain for the subject property. page 27 of 27