MECKLENBURG MANOR APARTMENTSs A 51 UNIT MULTI-FAMILY INVESTMENT OPPORTUNITY 719 EAST FERRELL STREET, SOUTH HILL, VIRGINIA 23970

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1 :: A CBRE RICHMOND MULTI-HOUSING OPPORTUNITY MECKLENBURG MANOR APARTMENTSs A 51 UNIT MULTI-FAMILY INVESTMENT OPPORTUNITY 719 EAST FERRELL STREET, SOUTH HILL, VIRGINIA Part of the CBRE affiliate network CHARLES WENTWORTH Vice President charles.wentworth@cbre.com

2 MECKLENBURG MANOR APARTMENTS CONFIDENTIALITY This is a confidential memorandum (the Memorandum ) intended solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Mecklenburg Manor Apartments (the Property ). This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state of affairs of the owner or the Property, to be all-inclusive or to contain all or part of the information which prospective investors may require to evaluate a purchase of real property. All financial projections and information are provided for general reference purposes only and are based on assumptions relating to the general economy, market conditions, competition, and other factors beyond the control of the owner and CBRE Richmond. Therefore, all projections, assumptions and other information provided and made herein are subject to material variation. All references to acreages, square footages, and other measurements are approximations. Additional information and an opportunity to inspect the Property will be made available to interested and qualified prospective purchasers. Neither the owner or CBRE Richmond, nor any of their respective directors, officers, affiliates or representatives make any representation or warranty, expressed or implied, as to the accuracy or completeness of this Memorandum or any of its contents, and no legal commitment or obligation shall arise by reason of your receipt of this Memorandum or use of its contents; and you are to rely solely on your investigations and inspections of the Property in evaluating a possible purchase of the real property. The owner expressly reserved the right, at its sole discretion, to reject any or all expressions of interest or offers to purchase the Property, and/or to terminate discussions with any entity at any time with or without notice which may arise as a result of review of this Memorandum. The owner shall have no legal commitment or obligation to any entity reviewing this Memorandum or making an offer to purchase the Property unless and until written agreement(s) for the purchase of the Property have been fully executed, delivered and approved by the owner and any conditions to the owner s obligations therein have been satisfied or waived. By receipt of this Memorandum, you agree that this Memorandum and its contents are of a confidential nature, that you will hold and treat it in the strictest confidence and that you will not disclose this Memorandum or any of its contents to any other entity without the prior written authorization of the owner or CBRE Richmond. You also agree that you will not use this Memorandum or any of its contents in any manner detrimental to the interest of the owner or CBRE Richmond. In this Memorandum, certain documents and other materials are described in summary form. These summaries do not purport to be complete nor necessarily accurate descriptions of the full agreements referenced. Interested parties are expected to review all such summaries and other documents of whatever nature independently and not rely on the contents of this Memorandum in any manner. All terms and conditions as expressed within this Memorandum are also applicable to associated materials and information gathered from the website dedicated to this offering located at If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return this Memorandum to CBRE Richmond. 2 :: A CBRE RICHMOND MULTI-HOUSING OPPORTUNITY

3 MECKLENBURG MANOR OFFERING MEMORANDUM APARTMENTS THE OFFERING Executive Summary...3 Property Description...4 Weatherization Assistance Program...5 Financial Analysis Month Income Statement Rent Roll

4 MECKLENBURG MANOR APARTMENTS 2 :: A CBRE RICHMOND MULTI-HOUSING OPPORTUNITY

5 NUMBER OF UNITS 5 1BR/1BA Section BR/1BA Section 8 5 3BR/1BA Section 8 3 1BR/1BA Non Section 8 (Section 236 units) 14 2BR/1BA Non Section 8 (Section 236 units) 10 3BR/1BA Non Section 8 (Section 236 units) 51 Total Units NET RENTABLE AREA 39,819 SF YEAR BUILT 1974 AVG. UNIT SIZE 781 SF AVG. MONTHLY MARKET RENT (11/26/12) $484 OCCUPANCY (11/26/2012) 86% EXECUTIVE SUMMARY Mecklenburg Manor, a 51-unit community with an ideal mix of one, two, and three bedroom apartment homes, affords an advantageous location in the town of South Hill with close proximity to the highly-traveled interstate system and immediate access to the historic downtown district. Strategically located only minutes from Interstate 85, the property sits less than ten miles from the Virginia/North Carolina border, roughly half way between Richmond, Virginia and Raleigh, North Carolina. The community has benefitted from substantial improvements in the past twelve months. Through the Virginia Weatherization Assistance Program, Mecklenburg Manor received over $150,000 to install new hot water heaters, stoves, furnaces, and window treatment which has greatly enhanced the living experience at the property. Future ownership will undoubtedly benefit from the careful and detailed stewardship of the asset by the current owners as the property has historically provided a solid cash flow. Based upon current earnings and historic performance, the asking price of $1,030,000 provides an investor with an excellent cash-on-cash return from the outset. Solid cash flow at the property and a competitive lending environment for multi-family assets should result in a Year One cash return of nearly 15%. The average annual return over a ten year hold period should be approximately 18%. Please see the financial analysis on pages 9-13 for a complete summary of debt and annual cash flow projections. * Current Section 8 Housing Assistance Payments (HAP) were renewed on February 1st, 2010 and will expire on January 31, 2014 :: A CBRE RICHMOND MULTI-HOUSING OPPORTUNITY 3

6 MECKLENBURG MANOR APARTMENTS 4 PROPERTY DESCRIPTION: MECKLENBURG MANOR APARTMENT AMENITIES Central Air/Heat Ample Closet Space Laundry Facility on-site Spacious Floor plans New water heaters, stoves, and furnaces (select units) Unit Type 1BR/1BA (Section 8) 2BR/1BA (Section 8) 3BR/1BA (Section 8) 1BR/1BA (Non Section 8) 2BR/1BA (Non Section 8) 3BR/1BA (Non Section 8) Units UNIT BREAKDOWN Sq. Ft. Rent 11/26/2012 Estimated Rent Beg. 2/1/2013 * $489 $ $535 $ $576 $ $397 $ $431 $ $462 $462 Total 51 39,819 $24,660 $24,924 Average 781 $484 $489 * Section 8 and Non-Section 8 Rents are renewed on February 1 of every year. It is anticipated that HUD will adjust Section 8 rents by 2% for 2013; in all likelihood, non- Section 8 rents will not change. Current Annual Rent $295,920 Est. Market Rent $299,088 :: A CBRE RICHMOND MULTI-HOUSING OPPORTUNITY BUILDING DESCRIPTION Washer Dryer Laundry Facility on site Site Area Total 5.19 acres Number of Buildings 8 including Manager s Office Density 9.83 units/acre Zoning R2-16 Building Style Garden Roofing Flat Exterior Materials Metal, vertical Paneling with Brick Breezeways Construction Concrete Slab Stairs Metal Frame with Concrete Steps Parking 64 MECHANICAL/ ELECTRICAL/ PLUMBING HVAC Electric heat pump/gas Furnace Water Heater One Gas Water Heater per Unit Electrical Services Copper Plumbing Copper and Poly Supply Lines, PVC Waste CAPITAL IMPROVEMENTS Through the Virginia Weatherization Assistance Program, the property benefitted from over $150,000 in improvements to install new water heaters, furnaces, stoves, and window treatments in the last twelve months. ASSESSMENTS AND TAXES Parcel Land Value: $175,900 Building and other Structures: $949,800 Total: $1,125,700 Mecklenburg County: $.38/$100 of Assessed Value Town of South Hill: $.34/$100 of Assessed Value

7 WEATHERIZATION ASSISTANCE PROGRAM APT # Heating & Electrical Replacement/Repair Cost 701 A stove, furnace $1, B general repairs $ C stove $ D general repairs $ A general repairs $ B stove $ C stove, furnace $3, D water heater $ A tune furnace $ B stove $1, C stove $ A stove thermostat $1, B general repairs $ C tune furnace, tune thermostat $ D stove, tune furnace $1, A stove, furnace $3, B stove, tune furnace $ C general repairs $1, D furnace $2, A general repairs $ B stove, furnace $2, C stove $ D clean burner, tune furnace $ A tune furnace $ B clean burner, tune furnace $ C furnace $2, D water heater $ A stove, thermostat $1, ESTIMATED WORKSCOPE FOR MECKLENBURG MANOR APARTMENTS: APT # Heating & Electrical Replacement/Repair Cost 715 B clean burner, tune furnace $ C general repairs $ D general repairs $ A stove $1, B stove, furnace $2, C thermostat $3, D furnace $2, A tune & clean burner $ B tune & clean furnance $ C stove, thermostat $1, D stove, furnace $3, A stove tune, clean furnace $1, B furnace 11 $2, C stove $1, D water heater $ A general repairs $ B tune furnance $ C general repairs $ D general repairs $ A stove $1, B general repairs $ C stove, furnace $3, D furnace, thermostat $2, Subtotal Est. weatherization materials & subcontract (where applicable) $61, Estimate Labor: Crew and Office $92, Total Estimate for Materials & Labor $154, * Estimated Owner Contribution 33% $50, :: A CBRE RICHMOND MULTI-HOUSING OPPORTUNITY 5

8 MECKLENBURG MANOR APARTMENTS 6 :: A CB RICHARD ELLIS WASHINGTON DC MULTI-HOUSING OPPORTUNITY :: A CBRE RICHMOND MULTI-HOUSING OPPORTUNITY

9 FINANCIAL ANALYSIS Mecklenburg Manor EXECUTIVE SUMMARY Part of the CBRE affiliate network PROPERTY DESCRIPTION LOAN SUMMARY Loan Property Type Apartment Original Loan Principal $775,379 Property Owner Mecklenburg Manor Associates Loan Commencement Date Feb-13 Property Address 719 East Ferrell Street Loan Term 10 Years South Hill, VA Loan Maturity Date Jan-23 Size of Improvements 39,819 SF Interest Rate 4.00% Units 51 Units Amortization Period 30 Years Occupancy as of November 26, % Interest Only Period 0 Years Year Built 1974 Loan-to-Value Ratio 75.00% ACQUISITION AND RESIDUAL SUMMARY Origination Fee 1.00% Purchase Price $1,033,839 LEVERAGE SUMMARY Capitalization Rate on Pro Forma NOI after Reserves 8.00% DSCR (Amortizing) 1.86 Price Per Unit $20,271 Price Per Square Foot $25.96 Acquisition Cost $1,033,839 Loan Principal ($775,379) Net Residual Value as of January 31, 2023 $1,104,989 Origination Fee $7,754 Residual Capitalization ation Rate 8.0 0% Capital Expenditures $0 Residual Cost of Sale 1.50% Equity Requirement $266,213 Leveraged IRR 18.72% 10-Year Avg Cash-on-Cash 15.57% Year 1 Cash-on-Cash 14.38% :: A CBRE RICHMOND MULTI-HOUSING OPPORTUNITY 7

10 MECKLENBURG MANOR APARTMENTS FINANCIAL ANALYSIS Mecklenburg Manor GLOBAL SUMMARY OF FINANCIAL ASSUMPTIONS DEDUCTIONS Part of the CBRE affiliate network Analysis Period Loss to Lease Commencement Date February 1, 2013 (Applied against Projected Market Rent) End Date January 31, 2023 Pro Forma % FY % Term 10 Years FY % FY % FY % FY % Area Measures FY % FY % Building Square Feet 39,819 SF FY % FY % Number of Units 51 Units Vacant Units 7 Units Vacancy Loss Physical Occupancy as of November 26, % (Applied against Gross Potential Rent) Pro Forma % FY % REVENUES FY % FY % FY % FY % Annualized Contract Rent Growth FY % FY % Pro Forma % FY % FY % FY % FY % FY % FY % FY % Non-Revenue Units FY % FY % Admin/Down 0 Units FY % FY % Other Income $7,650 Rent Concessions/Employee Discount (Applied against Gross Potential Rent) Other Income Growth Rate 3.50% Pro Forma % FY % FY % FY % EXPENSES FY % FY % FY % FY % Growth Rates FY % FY % Operating Expenses 2.00% Property Taxes 2.00% Bad Debt Expense Capital Reserves 2.00% (Applied against Gross Potential Rent) Pro Forma % FY % Management Fee (Percent of EGI) 7.00% FY % FY % FY % FY % Capital Reserves Per Unit (2012) $300 FY % FY % FY % FY % 8 :: A CBRE RICHMOND MULTI-HOUSING OPPORTUNITY

11 FINANCIAL ANALYSIS Mecklenburg Manor CASH FLOW PROJECTIONS Year Ending January 31 Part of the CBRE affiliate network Residual Acquisition GROSS INCOME Total Projected Market Rents $0 $299,088 $303,873 $308,735 $313,675 $318,694 $323,793 $328,974 $334,237 $339,585 $345,018 $350,539 Loss To Lease $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 GROSS POTENTIAL RENT $0 $299,088 $303,873 $308,735 $313,675 $318,694 $323,793 $328,974 $334,237 $339,585 $345,018 $350,539 Vacancy Loss $0 ($11,964) ($12,155) ($12,349) ($12,547) ($12,748) ($12,952) ($13,159) ($13,369) ($13,583) ($13,801) ($14,022) Management Office/Model $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Concessions $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Bad Debt $0 ($2,393) ($2,431) ($2,470) ($2,509) ($2,550) ($2,590) ($2,632) ($2,674) ($2,717) ($2,760) ($2,804) Delinquency/Prepaid Adjustments $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 RENTAL INCOME $0 $284,732 $289,287 $293,916 $298,619 $303,397 $308,251 $313,183 $318,194 $323,285 $328,458 $333,713 Miscellaneous Income $0 $7,650 $7,918 $8,195 $8,482 $8,779 $9,086 $9,404 $9,733 $10,074 $10,426 $10,791 EFFECTIVE GROSS INCOME $0 $292,382 $297,205 $302,111 $307,100 $312,175 $317,337 $322,587 $327,927 $333,359 $338,884 $344,504 EXPENSES Office Supplies $0 ($2,550) ($2,601) ($2,653) ($2,706) ($2,760) ($2,815) ($2,872) ($2,929) ($2,988) ($3,047) ($3,108) Advertising & Marketing $0 ($2,550) ($2,601) ($2,653) ($2,706) ($2,760) ($2,815) ($2,872) ($2,929) ($2,988) ($3,047) ($3,108) Personnel $0 ($51,000) ($52,020) ($53,060) ($54,122) ($55,204) ($56,308) ($57,434) ($58,583) ($59,755) ($60,950) ($62,169) Maintenance Supplies $0 ($19,125) ($19,508) ($19,898) ($20,296) ($20,702) ($21,116) ($21,538) ($21,969) ($22,408) ($22,856) ($23,313) Contract Services $0 ($10,200) ($10,404) ($10,612) ($10,824) ($11,041) ($11,262) ($11,487) ($11,717) ($11,951) ($12,190) ($12,434) Utilities $0 ($73,078) ($74,539) ($76,030) ($77,551) ($79,102) ($80,684) ($82,298) ($83,944) ($85,622) ($87,335) ($89,082) Real Estate Tax $0 ($7,755) ($7,910) ($8,068) ($8,230) ($8,394) ($8,562) ($8,733) ($8,908) ($9,086) ($9,268) ($9,453) Insurance $0 ($7,650) ($7,803) ($7,959) ($8,118) ($8,281) ($8,446) ($8,615) ($8,787) ($8,963) ($9,142) ($9,325) Management Fee $0 ($20,467) ($20,804) ($21,148) ($21,497) ($21,852) ($22,214) ($22,581) ($22,955) ($23,335) ($23,722) ($24,115) TOTAL EXPENSES $0 ($194,375) ($198,190) ($202,082) ($206,050) ($210,096) ($214,222) ($218,430) ($222,720) ($227,096) ($231,558) ($236,108) NET OPERATING INCOME $0 $98,007 $99,015 $100,029 $101,051 $102,079 $103,115 $104,157 $105,206 $106,263 $107,326 $108,396 CAPITAL EXPENDITURES Capital Reserves $0 ($15,300) ($15,606) ($15,918) ($16,236) ($16,561) ($16,892) ($17,230) ($17,575) ($17,926) ($18,285) ($18,651) OPERATING CASH FLOW $0 $82,707 $83,409 $84,111 $84,814 $85,518 $86,222 $86,927 $87,632 $88,336 $89,041 $89,745 ACQUISITION / RESIDUAL Acquisition Cost ($1,033,839) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 All Cash Net Residual Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,104,989 Yield CASH FLOW BEFORE DEBT ($1,033,839) $82,707 $83,409 $84,111 $84,814 $85,518 $86,222 $86,927 $87,632 $88,336 $1,194, % FINANCING Principal $775,379 $0 $0 $0 $0 $0 $0 $0 $0 $0 ($610,902) Leveraged Loan Fees & Debt Service ($7,754) ($44,421) ($44,421) ($44,421) ($44,421) ($44,421) ($44,421) ($44,421) ($44,421) ($44,421) ($44,421) Yield Capital Expenditures $0 CASH FLOW AFTER DEBT ($266,213) $38,286 $38,987 $39,690 $40,393 $41,097 $41,801 $42,506 $43,210 $43,915 $538, % Cash-on-Cash Return All Cash 8.00% 8.07% 8.14% 8.20% 8.27% 8.34% 8.41% 8.48% 8.54% 8.61% Leveraged 14.38% 14.65% 14.91% 15.17% 15.44% 15.70% 15.97% 16.23% 16.50% 16.76% Debt Coverage Ratio Capitalization Rate - Before Reserves 9.48% 9.58% 9.68% 9.77% 9.87% 9.97% 10.07% 10.18% 10.28% 10.38% Capitalization Rate - After Capital Reserves 8.00% 8.07% 8.14% 8.20% 8.27% 8.34% 8.41% 8.48% 8.54% 8.61% Leveraged (Amortizing) 14.38% 14.65% 14.91% 15.17% 15.44% 15.70% 15.97% 16.23% 16.50% 16.76% 9

12 MECKLENBURG MANOR APARTMENTS FINANCIAL ANALYSIS Mecklenburg Manor YEAR ONE PRO FORMA Part of the CBRE affiliate network Average Percentage Monthly Annual Per Unit Per S.F. of EGI GROSS INCOME Total Projected Market Rents $24,924 $299,088 $5,864 $ % Loss to Lease $0 $0 $0 $ %. GROSS POTENTIAL RENT $24,924 $299,088 $5,864 $ % Vacancy Loss ($997) ($11,964) ($235) ($0.30) -4.1% Management Office/Model $0 $0 $0 $ % Concessions $0 $0 $0 $0.00 Bad Debt ($199) ($2,393) ($47) ($0.06) -0.8% Delinquency/Prepaid Adjustments $0 $0 $0 $ %. RENTAL INCOME $23,728 $284,732 $5,583 $ % Miscellaneous Income $638 $7,650 $150 $ %. EFFECTIVE GROSS INCOME $24,365 $292,382 $5,733 $ % EXPENSESENSES Office Supplies ($213) ($2,550) ($50) ($0.06) -0.9% Advertising & Marketing ($213) ($2,550) ($50) ($0.06) -0.9% Personnel ($4,250) ($51,000) ($1,000) ($1.28) -17.4% Maintenance Supplies ($1,594) ($19,125) ($375) ($0.48) -6.5% Contract Services ($850) ($10,200) ($200) ($0.26) -3.5% Utilities ($6,090) ($73,078) ($1,433) ($1.84) -25.0% Real Estate Tax ($646) ($7,755) ($152) ($0.19) -2.7% Insurance ($638) ($7,650) ($150) ($0.19) -2.6% Management Fee ($1,706) ($20,467) ($401) ($0.51) -7.0%. TOTAL EXPENSES ($16,198) ($194,375) ($3,811) ($4.88) -66.5% NET OPERATING INCOME $8,167 $98,007 $1,922 $ % 10 CAPITAL EXPENDITURES Capital Expenditures $0 $0 $0 $ % Capital Reserves ($1,275) ($15,300) ($300) ($0.38) -5.2%... OPERATING CASH FLOW $6,892 $82,707 $1,622 $ % Debt Service ($3,702) ($44,421) ($871) ($1.12) -15.2%... CASH FLOW AFTER DEBT $3,190 $38,286 $751 $ %

13 FINANCIAL ANALYSIS Mecklenburg Manor HISTORICAL OPERATING STATEMENT T5A Actual Part of the CBRE affiliate network 2013 Pro Forma GROSS INCOME Total Projected Market Rents $295,240 $299,088 Loss to Lease $0 $0 GROSS POTENTIAL RENT $295,240 $299,088 Vacancy Loss ($16,598) ($11,964) Management Office/Model $0 $0 Concessions $0 $0 Bad Debt ($1,313) ($2,393) Delinquency/Prepaid Adjustments $0 $0 RENTAL INCOME $277,329 $284,732 Miscellaneous Income $3,994 $7,650 EFFECTIVE GROSS INCOME $281,323 $292,382 EXPENSES ENSES Office Supplies ($10,150) ($2,550) Advertising & Marketing ($154) ($2,550) Personnel ($61,123) ($51,000) Maintenance Supplies ($28,217) ($19,125) Contract Services ($17,304) ($10,200) Utilities ($71,645) ($73,078) Real Estate Tax ($7,603) ($7,755) Insurance ($571) ($7,650) Management Fee ($32,542) ($20,467) TOTAL EXPENSES ($229,309) ($194,375) NET OPERATING INCOME $52,014 $98,007 CAPITAL EXPENDITURES Capital Expenditures $0 $0 Capital Reserves $0 ($15,300) OPERATING CASH FLOW $52,014 $82,707 :: A CBRE RICHMOND MULTI-HOUSING OPPORTUNITY 11

14 MECKLENBURG MANOR APARTMENTS INCOME STATEMENT 12 :: A CBRE RICHMOND MULTI-HOUSING OPPORTUNITY

15 INCOME STATEMENT :: A CBRE RICHMOND MULTI-HOUSING OPPORTUNITY 13

16 MECKLENBURG MANOR APARTMENTS RENT ROLL 14 :: A CBRE RICHMOND MULTI-HOUSING OPPORTUNITY

17 RENT ROLL :: A CBRE RICHMOND MULTI-HOUSING OPPORTUNITY 15

18 2012 CB Richard Ellis of Virginia, Inc. The information contained in this document has been obtained from sources believed reliable. While CB Richard Ellis of Virginia, Inc. does not doubt its accuracy, CB Richard Ellis of Virginia, Inc. has not verified it and makes no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs WEST BROAD STREET SUITE 101 RICHMOND, VA Part of the CBRE affiliate network