WEST I STREET. Encinitas, CA CLARK RORBACH Multi-Family Investments

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1 330 WEST I STREET Encinitas, CA Offered By WILL CREAGAN Multi-Family Investments will.creagan@cushwake.com LIC # CLARK RORBACH Multi-Family Investments clark.rorbach@cushwake.com LIC # W I Street 1

2 EXECUTIVE SUMMARY Location location location! How many times have you heard it? If you are in real estate, you ve heard that term more times than you can count. Well it doesn t get any better than this. Encinitas is one of the strongest and most desirable locations in the county. Located along 6 miles of the Pacific coastline in North San Diego County, it has an approximate population of 65,000 and is characterized by the coastal beaches, cliffs, flat-topped coastal areas, steep mesa bluffs, and rolling hills. Encinitas city was incorporated in 1985 drawing together the communities of New and Old Encinitas, Cardiff by the Sea, Olivenhain and Leucadia. The Downtown Highway 101 area is a thriving coastal shopping district that is over 100 years old, featuring historic architecture, quaint shops, the La Paloma Theater, and many sidewalk cafes & restaurants. Golf enthusiasts enjoy the Encinitas Ranch Golf Course, which is a championship 18 hole par 72 course with panoramic ocean views. The beaches in Encinitas are outstanding, and play host to many surf contests throughout the year. The San Elijo Lagoon Reserve is the largest coastal wetland in San Diego County and is home to nearly 300 different bird species. The Pacific Crest Apartments are situated in a Single family / multi-family residential neighborhood just west of Interstate 5 and Coast Highway 101. Walk two short blocks down to the commercial district where you can find over 30 restaurants & pubs, banks, live music, yoga studios and many other interesting neighborhood amenities. Temperatures rarely dip below 40 or go above 85 degrees, which makes it an ideal place to live, work and play. LIST PRICE: $13,200,000 TOTAL UNITS: 21 PRICE/UNIT: $628,571 PRICE/SF: $714 CAP RATE: 4.0%-4.8% GRM: APPROX BLDG. SIZE: APPROX. LOT SIZE 18,500 SF 0.65 Acres Capital Improvements During Current 15 Year Ownership APN: Renovated kitchens and bathrooms ( ) Tile Flooring (Kitchen & Baths) Carpet (Living Room & Bedroom) Tile Tub Surrounds Granite countertops (2014) Refinished cabinetry in Kitchen and Bath (2014) Sliding glass doors downstairs (2004) Added cement patios (2004) Fencing for private yards (2004) Glass wall along western edge of pool area Re-plumbed with new copper pipes in 2004 Carpets, paint, appliances and window coverings replaced as needed over past 15 years Laundry room renovated in 2011 Pool and pool area renovation in 2010 and 2017 New deck coating 2018 Repainted exterior in units highly renovated in 2015 YEAR BUILT: 1960 PARKING 27 Total Spaces 10 Tandem 7 Single W I Street Cushman & Wakefield Copyright No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by the property owner(s). As applicable, we make no representation as to the condition of the property (or properties) in question.

3 INVESTMENT HIGHLIGHTS Irreplaceable California Coastal Asset All 2 Bedroom Units Highly Desirable Market Low Vacancy Market Well Maintained Significant Capital Improvements Sweeping Views of the Coast Pool Overlooks the Ocean Solar Heated Pool Transit Oriented Location Walk to 30+ Restaurants, Banks, Yoga I Street Overlook Park is Contiguous to Property - Great for Pets 330 W I Street 2

4 RENT ROLL Unit Mix # OF UNITS APPROX. SQ FT CURRENT RENT IMPROVED RENT 2 bed, 1 bath $2,845-$3,600 $3,600 2 bed, 2 bath 1 1,124 $3,900 $3,900 Laundry Income $500 $500 RUBS $375 $375 Monthly Gross Income $67,045 $76,775 Annual Gross Income $804,540 $921, W I Street Cushman & Wakefield Copyright No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by the property owner(s). As applicable, we make no representation as to the condition of the property (or properties) in question.

5 INCOME & EXPENSE SUMMARY PROPOSED FINANCING % of Value Down Payment 50% $6,600,000 New First Loan 4.0% 30 year 50% $6,600,000 5 year fixed Total $13,200,000 CURRENT RENT IMPROVED RENT ANNUAL GROSS SCHEDULED INCOME $804,540 $921,300 Vacancy 3.0% ($24,136) ($27,639) TOTAL EFFECTIVE GROSS INCOME $780,404 $893,661 ESTIMATED EXPENSES Real Estate Taxes 1.06% $139,655 $139,655 Fixed Charged Assmts (Sewer, etc.) $1,510 $1,510 Insurance $9,034 $9,034 Water $2,555 $2,555 Gas & Electricity $8,969 $8,969 Landscaping $700 $700 Trash $2,234 $2,234 Pool & Spa $2,149 $2,149 Management 4.25% $33,167 $37,981 Res Manager $18,000 $18,000 Maintenance $1,250/unit $26,250 $26,250 Reserves $250/unit $5,250 $5,250 Pest Control $720 $720 Administrative $1,000 $1,000 Misc. $1,000 $1,000 Total Expenses 31% ($12,009 Total Exp/Unit) ($252,193) ($257,007) NET OPERATING INCOME $528,210 $636,654 CAPITALIZATION RATE 4.0% 4.8% PROPOSED FINANCING New First Loan 4.0% $6,600,000 ($378,113) ($378,113) CASH FLOW $150,097 $258,541 Cash On Cash Return 2.3% 3.9% 330 W I Street 4

6 UNIT MIX Unit Mix CURRENT RENT SECURITY DEPOSIT LEASE START LEASE END 1 2 Bedroom, 1 Bath $3,175 $3,000 10/10/18 10/31/ Bedroom, 1 Bath $3,245 $3,220 6/8/18 6/30/ Bedroom, 1 Bath $3,150 $3,150 1/6/19 1/31/ Bedroom, 1 Bath $3,220 $3,000 8/19/18 8/31/ Bedroom, 1 Bath $3,600 $3,000 10/27/18 10/31/ Bedroom, 1 Bath $3,100 $3,000 10/11/18 10/31/ Bedroom, 1 Bath $2,845 $2,845 12/27/17 2/28/ Bedroom, 1 Bath $2,995 $3,095 1/1/19 12/31/ Bedroom, 1 Bath $2,900 $2,900 10/24/16 10/31/ Bedroom, 1 Bath $3,525 $3,525 5/28/18 5/31/ Bedroom, 1 Bath $2,995 $2,995 4/27/18 4/30/ Bedroom, 1 Bath $3,175 $3,175 9/7/18 8/31/ Bedroom, 1 Bath $2,970 $2,970 5/14/17 5/30/ Bedroom, 1 Bath $3,120 $2,995 9/16/17 9/30/ Bedroom, 1 Bath $3,000 $2,900 4/21/18 4/30/ Bedroom, 1 Bath $2,895 $2,870 6/15/17 6/30/ Bedroom, 1 Bath $2,970 $2,970 11/7/18 11/30/ Bedroom, 1 Bath $2,870 $2,870 6/4/17 5/31/ Bedroom, 1 Bath $2,995 $2,995 11/1/18 10/31/ Bedroom, 1 Bath $3,525 $3,000 11/2/18 11/30/ Bedroom, 2 Bath $3,900 $3,500 9/7/17 9/30/18 Total $66,170 $63, W I Street Cushman & Wakefield Copyright No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by the property owner(s). As applicable, we make no representation as to the condition of the property (or properties) in question.

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8 SAN DIEGO COUNTY COMPARABLE APARTMENT SALES PRICE PRICE / UNIT PRICE / SQFT CAP RATE GRM BUILT PACIFIC CREST APARTMENTS $13,200,000 $628,571 $714 Current: 4.0% W I Street Improved: 4.8% 14.3 Encinitas, CA Comparable Property Sales LA JOLLA UNITS $7,800,000 $866,667 $1,114 NK NK Older Coast Blvd S La Jolla, CA Average Unit Size: 778 SF 9 One Bedrooms SOLD: 11/16/2018 VULCAN PORTFOLIO $10,300,000 $429,167 $ % 18.5 Mid 1970s 1237 & 1353 N Vulcan Ave 3.9% 17.0 Encinitas, CA Average Unit Size: 724 SF 16 One Bedrooms, 8 Two Bedrooms SOLD: 8/20/2018 Notes: Off Market Sale. Buyer paid commission on top of purchase price. 6 CARLSBAD UNITS $3,200,000 $533,333 $710 NK NK Lincoln St Carlsbad, CA Average Unit Size: 751 SF MIX Unknown Sold: 5/23/ UNITS IN PB $4,855,000 $606,875 $ % Hornblend St San Diego, CA Average Unit Size: 1,000 SF 8 Three Bedrooms SOLD: 12/10/2018 IN EDEN $11,050,000 $650,000 $ % Prospect St La Jolla, CA Average Unit Size: 732 SF 10 One Bedrooms, 7 Two Bedrooms SOLD: 1/12/ W I Street Cushman & Wakefield Copyright No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by the property owner(s). As applicable, we make no representation as to the condition of the property (or properties) in question.

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10 ORANGE COUNTY COMPARABLE APARTMENT SALES PRICE PRICE / UNIT PRICE / SQFT CAP RATE GRM BUILT PACIFIC CREST APARTMENTS $13,200,000 $628,571 $714 Current: 4.0% W I Street Improved: 4.8% 14.3 Encinitas, CA Comparable Property Sales UNITS IN LAGUNA $10,500,000 $807,692 $ % / Arch St Laguna Beach, CA bed, 2 bath Average Unit Size: 947 SF 12 two bedrooms, 1 three bedrooms SOLD: 8/1/ LAGUNA UNITS $4,725,000 $590,625 $ % NK N Coast Hwy Laguna Beach, CA bed, 2 bath Average Unit Size: 788 SF 6 One Bedrooms, 2 Two Bedrooms SOLD: 8/14/ LAGUNA UNITS $3,410,000 $568,333 $ % NK Glenneyre St Laguna Beach, CA Average Unit Size: 774 SF 3 One Bedrooms, 3 Two Bedrooms SOLD: 8/13/ W I Street Cushman & Wakefield Copyright No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by the property owner(s). As applicable, we make no representation as to the condition of the property (or properties) in question.

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12 NEIGHBORHOOD CONDO COMPARABLE SALES PACIFIC CREST APARTMENTS $13,200, W I Street Encinitas, CA UNIT MIX AVG SF SALE PRICE PRICE PER SF HOA YEAR BUILT 2 Bed, 1 Bath 881 $628,571 $714 NA 1960 (Avg. Price/Unit) Comparable Property Sales SANDPIPER POINT 2 bed, 2 bath 1,650 $1,650,000 $1,000 $ W I Street Encinitas, CA SOLD: 6/24/ SANDPIPER POINT 2 bed, 2 bath 1,668 $1,185,000 $710 $ W I Street Encinitas, CA SOLD: 3/8/ SANDPIPER POINT 2 bed, 2 bath 1,533 $1,699,000 $1,108 $ W I Street Encinitas, CA FOR SALE 4 5 PACIFIC PANORAMA 2 bed, 2 bath 970 $1,025,000 $1,057 $ Sealane Drive 5 Encinitas, CA SOLD: 6/29/2017 ENCINITAS BLUFFS 2 bed, 2.5 bath + Den 1,553 $1,029,250 $663 $ Sealane C Encinitas, CA SOLD: 8/18/ W I Street Cushman & Wakefield Copyright No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by the property owner(s). As applicable, we make no representation as to the condition of the property (or properties) in question.

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14 PHOTOS W I Street Cushman & Wakefield Copyright No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by the property owner(s). As applicable, we make no representation as to the condition of the property (or properties) in question.

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16 PHOTOS Moonlight State Beach W I Street Cushman & Wakefield Copyright No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by the property owner(s). As applicable, we make no representation as to the condition of the property (or properties) in question.

17 View not of the property 330 W I Street 16

18 W I Street View not of the property

19 ENCINITAS DEMOGRAPHICS RADIUS FROM SUBJECT PROPERTY City of Encinitas 1 Mile 3 Mile 5 Mile 63,054 6,713 48, , Population 2018 Population 2018 Population 2018 Population $106,576 $103,912 $103,345 $112,160 Median Household Income Median Household Income Median Household Income Median Household Income $909,200 $1,135,935 $886,584 $927,003 Median Home Value Median Home Value Median Home Value Median Home Value Median Age Median Age Median Age Median Age 330 W I Street 18

20 SAN DIEGO MARKET OVERVIEW SAN DIEGO MULTI-FAMILY Economic Indicators Sep-17 Sep-18 San Diego Employment 1.53M 1.55M San Diego Unemployment 3.7% 3.2% U.S. Unemployment 4.4% 3.9% 12-Month Forecast Economy The San Diego employment market continued to record job growth, adding 26,900 jobs (+1.9%) year-overyear through September During the same time period, the unemployment rate decreased 50 basis points (bps), dropping to 3.2%. Also worth noting, the current rate is 270 bps below the 28-year average of 5.9%. All employment sectors are expected to grow at a combined growth rate of 1.9% in 2018 and 1.4% in San Diego s economy of $231.8 billion2 as measured by gross regional product is forecasted to grow an additional 4.2% in 2018 and 2.9% in 2019, above its 10-year average of 2.6%.3 Market Indicators Asking Rent vs. Vacancy Net Absorption Sep-17 Sep-18 Vacancy 2.73% 3.72% Asking Rent $1,875 $1,960 Units Surveyed 131, ,530 Net Absorption 1,057 1,104 $2,200 $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 4,000 3,000 2,000 1, Sep-18 Asking Rent Vacancy 19-Yr. avg. is 1,865 units absorbed 12-Month Forecast 5% 4% 3% 2% 1% Market Overview Sales Activity: San Diego s multi-family investment market sales volume for properties $5 million and greater surpassed $1 billion by the end of third quarter 2018, with over 87% of year-to-date sales volume occurring in the second and third quarters. Total transaction activity has been above the 16-year long-term annual average of $1.6 billion for the last three consecutive years. Multi-family product continues to be in high demand, although a lack of offerings is hindering sales volume from a notable annual increase. Private high net worth investors have been the leading buyers of multi-family assets for the last five consecutive years, a trend that is expected to continue.4 Housing Affordability: The homeownership rate in the U.S. is at a multi-decade lows (64.3%), as renters stay renting longer and would-be buyers find it difficult to enter the market. Based on the 2018 survey published in the Zillow Housing Aspiration Report, 94% have a preference to own a home and a majority of American s prefer to live in suburbs. However, in San Diego only 23% of households could afford to purchase the median priced home compared to 26% in California and 53% nationwide as of mid The most expensive metros are located in the Bay Area with affordability index being the lowest in San Francisco at 14 due to a median home price of $1.6 million compared to $645,000 in San Diego.5 Rental Rates: The countywide multi-family average rental rate was $1,960 per month, 5.7% higher than a year ago and 12.4% higher than two years ago. The average rent for units built since the 2000 s was $2,359, compared to $1,787 for units built prior The average asking rent was the highest in North County Coastal ($2,376) followed by San Diego Central ($2,162), Interstate 15 Corridor ($2,056), Highway 78 Corridor ($1,723), South County ($1,712) and East County ($1,612).6 Vacancy: The San Diego County multi-family vacancy rate decreased to 3.72% from 4.08% six months ago. A vacancy rate below 5% is considered to be a landlord s market. Evaluating vacancy by submarket, the Highway 78 Corridor recorded the lowest vacancy rate at 2.46% as of September 2018, followed by South County at 2.56%. San Diego Central recorded the highest vacancy rate at 5.77% followed by North County Coastal at 4.21%, East County at 2.81% and the Interstate 15 Corridor at 2.70%. Net Absorption: The San Diego County multi-family market absorbed 1,104 units between March 2018 and September 2018, while only 802 new units were delivered of which 386 have been absorbed and 416 remain vacant. Of the 40,297 units released since mid-1998, around 92% have been absorbed. Not all of these units remain in the rental inventory as some have been converted to for-sale units. Despite the well above average rental rates among newer projects, new units continue to lease quickly Sep-18 Sources: 1www.bls.gov 2 bea.gov GDP as of Moody s Analytics economy.com 4RCA. 5C.A.R. as of Q MarketPointe Realty as of 9/ W I Street Cushman & Wakefield Copyright No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by the property owner(s). As applicable, we make no representation as to the condition of the property (or properties) in question.

21 Average Cap Rate in Comparison 2017 SAN DIEGO CAP RATE BELOW THE 16-YR. AVERAGE OF 5.6% 9% 8% 7% 6% 5% 16-Yr. avg. is 5.6% Unemployment Rate in Comparison SAN DIEGO S UNEMPLOYMENT RATE BELOW 28-YR. AVERAGE 14% 12% 10% 8% 6% 4% 28-Yr. avg. in San Diego is 6.0% 4% San Diego U.S YTD 2% San Diego California 2018f 2020f 2022f Source: Real Capital Analytics (RCA), Multi-Family sales $5M+ as of 10/4/2018. Who is Buying Multi-Family Assets in San Diego? PRIVATE INVESTORS ARE THE LEADING BUYERS San Diego 1% 1% 2% 2% 1% User/Other 41% 40% 18% Source: RCA, Sales $5M+ as of 10/4/2018. Rounded figures may not add up to 100%. San Diego Multi-Family Annual Loan Maturity ($M) OVER $1B IN MULTI-FAMILY LOANS WILL BE DUE IN 2019 $1,200 $1,000 $800 $600 $400 54% 55% 4% 16% 25% 4% 39% 72% 66% 10% 10% 24% 8% 8% Private REIT/Listed Institutional Cross-Border U.S. 62% 3% 23% 12% YTD 2018YTD Source: BLS, (f) by CA Department of Finance as of 4/2018. Moody s Analytics as of 8/2018. Multi-Family Sales Transaction Volume ($M) 87% OF 2018 MULTI-FAMILY SALES VOLUME CAME IN Q2 AND Q3 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 16-Yr. avg. is $1.6B YTD Source: Real Capital Analytics, Sales $5M+ as of 10/4/2018. Interest Rates U.S. Economic Forecast RATES PROJECTED TO SLOWLY INCREASE OVER NEXT 2 YEARS 6% 5% 4% 3% 2% 1% $200 $0 $1,066 $382 $275 $714 $514 $848 $1, % 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 4Q19 4Q20 3 Mo. LIBOR Prime Rate 5 Yr. Note 10 Yr. Note 330 W I Street 20 Source: Trepp, LLC 10/2018 Source: Wells Fargo U.S. Economic Forecast 10/12/2018.

22 330 WEST I STREET Encinitas, CA Prepared By: Offered By WILL CREAGAN Multi-Family Investments will.creagan@cushwake.com LIC # CLARK RORBACH Multi-Family Investments clark.rorbach@cushwake.com LIC #