123 PEARL STREET 123 Pearl St Santa Cruz, CA 95060

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1 123 Pearl St Santa Cruz, CA

2 NON- ENDORSEMENT AND DISCLAIMER NOTICE Non-Endorsements 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. 123 PEARL STREET Santa Cruz, CA ACT ID Y

3 PRESENTED BY Michael Henshaw First Vice President Investments Associate Member - National Multi Housing Group Palo Alto Office Tel: (650) Fax: (650) mike.henshaw@marcusmillichap.com License: CA

4 TABLE OF CONTENTS SECTION INVESTMENT OVERVIEW 01 Property Overview Regional Map Local Map Aerial Photo FINANCIAL ANALYSIS 02 Rent Roll Summary Rent Roll Detail Operating Statement Notes Pricing Detail Growth Rate Projections Cash Flow Proposal Price MARKET COMPARABLES 03 Sales Comparables Rent Comparables MARKET OVERVIEW 04 Demographic Analysis 4

5 INVESTMENT OVERVIEW 5

6 PROPERTY OVERVIEW PROPERTY OVERVIEW Marcus and Millichap, as the exclusive listing agent, is pleased to present the opportunity to acquire 123 Pearl Street Apartments, a 9-unit apartment community located in Santa Cruz, California. Located approximately 30 miles from the city of San Jose, Santa Cruz offers a serene and relaxing ocean-side setting within a short commute of Silicon Valleys thriving and busy environment. While city leaders are motivated to further develop the local economy, Santa Cruz has generally taken a controlled growth approach to housing. As a result, the newest market-rate rental apartments (50+ units) were built in 2004, over 13 years ago. 123 Pearl Street Apartments represents a rare opportunity to own a value-add community in one of the tightest rental markets in the nation. Built in 1959, 123 Pearl is comprised of one single story building residential buildings set among mature, beautifully landscaped walkways. Community amenities include laundry facilities, private yards and off street parking. Offering residents a diverse mix of three distinctive, well-designed, studio, one and two bedroom floor plans, including 2 large two bedrooms. The interiors feature fully-equipped kitchens including modern appliances and garbage disposals, ceiling fans, vaulted ceilings, upgraded windows, ample in unit storage, and gas wall heating. The property is perfect to be repositioned with the implementation of a unit by unit renovation program and the introduction of additional unit interior and amenity improvements, which in turn, should further enhance the assets marketability to current and prospective residents. The investment appeal of this asset is driven by the property s current loss-to-lease, the value-add upside through interior and community amenity upgrades, the micro-location, limited multifamily pipeline and existing supply, and continued strong momentum throughout the Santa Cruz rental market. PROPERTY OVERVIEW Copper Plumbing Upgraded windows Low Density single story construction Below Market Rents Value Add reposition opportunity Tremendous upside potential 6

7 REGIONAL MAP 7

8 LOCAL MAP 8

9 AERIAL PHOTO 9

10 FINANCIAL ANALYSIS 10

11 RENT ROLL SUMMARY FINANCIAL ANALYSIS 11

12 RENT ROLL DETAIL FINANCIAL ANALYSIS 12

13 OPERATING STATEMENT FINANCIAL ANALYSIS 13

14 NOTES FINANCIAL ANALYSIS 14

15 PRICING DETAIL FINANCIAL ANALYSIS 15

16 CASH FLOW FINANCIAL ANALYSIS 16

17 MARKET COMPARABLES 17

18 SALES COMPARABLES MAP 123 PEARL STREET (SUBJECT) Portola Dr 103 Grant St 815 Corcoran Ave 404 High Street SALES COMPARABLES ON MARKET COMPARABLES 18

19 PROPERTY 123 PEARL STREET NAME SALES COMPARABLES ON MARKET COMPARABLES SALES COMPS AVG ON MARKET COMPS AVG SALES COMPARABLES Average Cap Rate Average GRM Avg. 4.15% Avg. 3.73% Avg Avg Pearl Street 2303 Portola Dr Average Price Per Square Foot 103 Grant St 815 Corcoran Ave 404 High Street Pearl Street Average Price Per Unit 2303 Portola Dr 103 Grant St 815 Corcoran Ave 404 High Street $ $ $ Avg. $ $600,000 $540,000 $480,000 Avg. $541,667 $ Avg. $ $420,000 $ $360,000 Avg. $339,111 $ $300,000 $ $240,000 $ $180,000 $ $120,000 $80.00 $60,000 $ Pearl Street 2303 Portola Dr 103 Grant St 815 Corcoran Ave 404 High Street $0 123 Pearl Street 2303 Portola Dr 103 Grant St 815 Corcoran Ave 404 High Street 19

20 PROPERTY 123 PEARL STREET NAME SALES MARKETING COMPARABLES TEAM SALES COMPARABLES ON MARKET COMPARABLES 123 PEARL STREET 123 Pearl St, Santa Cruz, CA, PORTOLA DR 2303 Portola Dr, Santa Cruz, CA, GRANT ST 103 Grant St, Santa Cruz, CA, rentpropertyname1 rentpropertyname1 rentpropertyname1 Units Unit Type Offering Price: $2,500,000 2 Studio Price/Unit: $277, BR 1BA Price/SF: $ BR 1BA CAP Rate: 4.35% GRM: Total No. of Units: 9 Year Built: 1959 rentpropertyaddress1 Underwriting Criteria Income $157,603 Expenses $48,765 NOI $108,839 Vacancy ($3,131) Units Unit Type Close Of Escrow: 6/23/ Studio 1 Bath Days On Market: Bdr 1 Bath Sales Price: $1,900, Bdr 1 Bath Price/Unit: $316,667 Price/SF: $ CAP Rate: 4.12% GRM: Total No. of Units: 6 Year Built: 1934 rentpropertyaddress1 Underwriting Criteria Income $124,629 Expenses $46,349 NOI $78,280 Units Unit Type Close Of Escrow: 12/19/ Bdr 1 Bath Days On Market: 98 Sales Price: $1,845,000 Price/Unit: $369,000 Price/SF: $ CAP Rate: 2.98% GRM: Total No. of Units: 5 Year Built: 1938 rentpropertyaddress1 Underwriting Criteria Income $88,800 Expenses $31,900 NOI $55,124 20

21 PROPERTY 123 PEARL STREET NAME SALES MARKETING COMPARABLES TEAM SALES COMPARABLES ON MARKET COMPARABLES 815 CORCORAN AVE 815 Corcoran Ave, Santa Cruz, CA, HIGH STREET 404 High St, Santa Cruz, CA, rentpropertyname1 rentpropertyname1 rentpropertyname1 Units Unit Type Close Of Escrow: 5/12/ Bdr 1 Bath Days On Market: 8 Sales Price: $1,990,000 Price/Unit: $331,667 Price/SF: $ CAP Rate: 4.08% GRM: Total No. of Units: 6 Year Built: 1980 rentpropertyaddress1 Underwriting Criteria Income $128,000 Expenses $48,150 NOI $81,190 Units Unit Type On Market 1 Studio 1 Bath Days On Market: Bdr 1 Bath List Price: $3,250, Bdr 1 Bath Price/Unit: $541,667 Price/SF: $ CAP Rate: 4.15% GRM: Total No. of Units: 6 Year Built: 1947 rentpropertyaddress1 Underwriting Criteria Income $199,800 Expenses $63,414 NOI $134,742 rentpropertyaddress1 21

22 8 RENT COMPARABLES MAP 123 PEARL STREET (SUBJECT) Barson St 204 Logan St 124 Hiawatha Ave 124 1st Ave 213 Ocean St

23 PROPERTY 123 PEARL STREET NAME AVERAGE OCCUPANCY RENT COMPARABLES 99 Avg % Pearl Street 117 Barson St 204 Logan St 124 Hiawatha Ave 124 1st Ave 213 Ocean St 23

24 PROPERTY 123 PEARL STREET NAME AVERAGE RENT - MULTIFAMILY RENT COMPARABLES 2 Bedroom Studios $3,000 $2,700 $2,400 $2,100 $1,800 $1,500 $1,200 $900 $600 Avg. $2,525 $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $300 $200 Avg. $ $0 123 Pearl Street 117 Barson St 204 Logan St 124 Hiawatha Ave 124 1st Ave 213 Ocean St $0 123 Pearl Street 117 Barson St 204 Logan St 124 Hiawatha Ave 124 1st Ave 213 Ocean St 1 Bedroom $3,000 $2,700 $2,400 $2,100 Avg. $2,100 $1,800 $1,500 $1,200 $900 $600 $300 $0 123 Pearl Street 117 Barson St 204 Logan St 124 Hiawatha Ave 124 1st Ave 213 Ocean St 24

25 PROPERTY 123 PEARL STREET NAME RENT MARKETING COMPARABLES TEAM 123 rentpropertyname1 PEARL STREET 123 Pearl St, Santa Cruz, CA, rentpropertyaddress1 117 BARSON ST 117 Barson St, Santa Cruz, CA, LOGAN ST 204 Logan St, Santa Cruz, CA, rentpropertyname1 rentpropertyname1 rentpropertyname1 Unit Type Units SF Rent Rent/SF Studio $1,065 $3.04 1BR 1BA $1,479 $2.69 2BR 1BA $1,760 $2.71 Total/Avg $1,449 $2.75 Unit Type Units SF Rent Rent/SF 2 Bdr 1 Bath $2,500-$2,500 $2.54 Total/Avg $2,500 $2.54 Unit Type Units SF Rent Rent/SF 2 Bdr 1 Bath $2,550-$2,550 $4.05 Total/Avg $2,550 $4.05 YEAR BUILT: 1959 OCCUPANCY: 95% YEAR BUILT: 1968 OCCUPANCY: 95% YEAR BUILT: 1922 rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 25

26 PROPERTY 123 PEARL STREET NAME RENT MARKETING COMPARABLES TEAM 124 HIAWATHA AVE 124 Hiawatha Ave, Santa Cruz, CA, ST AVE 124 1st Ave, Santa Cruz, CA, OCEAN ST 213 Ocean St, Santa Cruz, CA, rentpropertyname1 rentpropertyname1 rentpropertyname1 Unit Type Units SF Rent Rent/SF 1 Bdr 1 Bath $1,950-$2,150 $3.42 Total/Avg $2,050 $3.42 Unit Type Units SF Rent Rent/SF 1 Bdr 1 Bath $2,100-$2,200 $4.30 Total/Avg $2,150 $4.30 Unit Type Units SF Rent Rent/SF 1 Bdr 1.5 Bath $2,100-$2,100 $3.50 Total/Avg $2,100 $3.50 OCCUPANCY: 95% YEAR BUILT: 1947 OCCUPANCY: 95% YEAR BUILT: 1925 OCCUPANCY: 95% YEAR BUILT: 1975 rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 26

27 MARKET OVERVIEW 27

28 PROPERTY 123 PEARL STREET NAME Created on October 2017 POPULATION 1 Miles 3 Miles 5 Miles 2021 Projection Total Population 24,054 93, , Estimate Total Population 23,479 91, , Census Total Population 22,147 86, , Census Total Population 21,370 83, ,149 Daytime Population 2016 Estimate 32, , ,746 HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2021 Projection Total Households 10,454 36,523 47, Estimate Total Households 10,092 35,520 46,263 Average (Mean) Household Size Census Total Households 9,537 33,867 44, Census Total Households 8,952 32,930 42,823 Growth % 2.82% 2.43% HOUSING UNITS 1 Miles 3 Miles 5 Miles Occupied Units 2021 Projection 10,454 36,523 47, Estimate 10,685 37,352 48,936 Owner Occupied 2,387 16,366 22,866 Renter Occupied 7,705 19,154 23,397 Vacant 593 1,831 2,674 Persons In Units 2016 Estimate Total Occupied Units 10,092 35,520 46,263 1 Person Units 39.70% 31.93% 31.78% 2 Person Units 31.81% 33.20% 33.61% 3 Person Units 13.06% 15.55% 15.55% 4 Person Units 8.63% 11.42% 11.49% 5 Person Units 3.71% 4.43% 4.33% 6+ Person Units 3.07% 3.47% 3.23% MARKETING DEMOGRAPHICS TEAM HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2016 Estimate $200,000 or More 4.96% 7.86% 8.50% $150,000 - $199, % 6.76% 6.80% $100,000 - $149, % 14.59% 14.90% $75,000 - $99, % 12.16% 12.37% $50,000 - $74, % 14.65% 14.78% $35,000 - $49, % 12.58% 12.24% $25,000 - $34, % 8.08% 8.28% $15,000 - $24, % 10.15% 9.82% Under $15, % 13.15% 12.31% Average Household Income $70,590 $91,502 $94,695 Median Household Income $43,905 $59,153 $61,228 Per Capita Income $31,448 $36,929 $38,127 POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age 2016 Estimate Total Population 23,479 91, ,084 Under % 20.66% 22.20% 20 to 34 Years 38.92% 28.92% 26.89% 35 to 39 Years 7.18% 6.37% 5.97% 40 to 49 Years 12.06% 12.20% 11.94% 50 to 64 Years 16.33% 19.48% 19.90% Age % 12.38% 13.08% Median Age Population 25+ by Education Level 2016 Estimate Population Age ,822 58,755 76,751 Elementary (0-8) 5.10% 4.05% 3.51% Some High School (9-11) 5.41% 4.70% 4.46% High School Graduate (12) 14.08% 15.61% 15.75% Some College (13-15) 24.01% 23.89% 24.61% Associate Degree Only 6.87% 7.85% 8.61% Bachelors Degree Only 26.10% 25.90% 25.50% Graduate Degree 18.08% 17.39% 16.97% Population by Gender 2016 Estimate Total Population 23,479 91, ,084 Male Population 51.33% 49.79% 49.26% Female Population 48.67% 50.21% 50.74% Source: 2016 Experian 28

29 PROPERTY 123 PEARL STREET NAME MARKETING DEMOGRAPHICS TEAM Population In 2016, the population in your selected geography is 23,479. The population has changed by 9.87% since It is estimated that the population in your area will be 24, five years from now, which represents a change of 2.45% from the current year. The current population is 51.33% male and 48.67% female. The median age of the population in your area is 31.97, compare this to the US average which is The population density in your area is 7, people per square mile. Race and Ethnicity The current year racial makeup of your selected area is as follows: 70.65% White, 2.29% Black, 0.14% Native American and 5.06% Asian/Pacific Islander. Compare these to US averages which are: 70.77% White, 12.80% Black, 0.19% Native American and 5.36% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. People of Hispanic origin make up 27.27% of the current year population in your selected area. Compare this to the US average of 17.65%. Households There are currently 10,092 households in your selected geography. The number of households has changed by 12.73% since It is estimated that the number of households in your area will be 10,454 five years from now, which represents a change of 3.59% from the current year. The average household size in your area is 2.17 persons. Housing The median housing value in your area was $630,481 in 2016, compare this to the US average of $187,181. In 2000, there were 2,468 owner occupied housing units in your area and there were 6,483 renter occupied housing units in your area. The median rent at the time was $820. Income In 2016, the median household income for your selected geography is $43,905, compare this to the US average which is currently $54,505. The median household income for your area has changed by 12.94% since It is estimated that the median household income in your area will be $47,800 five years from now, which represents a change of 8.87% from the current year. Employment In 2016, there are 16,336 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 61.73% of employees are employed in white-collar occupations in this geography, and 38.35% are employed in blue-collar occupations. In 2016, unemployment in this area is 5.19%. In 2000, the average time traveled to work was minutes. The current year per capita income in your area is $31,448, compare this to the US average, which is $29,962. The current year average household income in your area is $70,590, compare this to the US average which is $78,425. Source: 2016 Experian 29

30 8 DEMOGRAPHICS 30

31 PRESENTED BY Michael Henshaw First Vice President Investments Associate Member - National Multi Housing Group Palo Alto Office Tel: (650) Fax: (650) mike.henshaw@marcusmillichap.com License: CA