EVERGREEN APARTMENTS ANYTOWN, USA

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1 EVERGREEN APARTMENTS ANYTOWN, USA OFFERING OVERVIEW JANUARY

2 OFFERING OVERVIEW TABLE OF CONTENTS About ArborCrowd 3 Project Overview 4 Investment Overview 5 Investment Details 6 Sponsor Overview 8 The Property 10 Loan Overview 11 Pro Forma 12 Timeline 13 Business Plan 14 Case Study 17 Unit Mix 18 Area Overview 20 Market Report 22 Rent Comparables 27 Sales Comparables 28 Key Executives 29

3 ABOUT ARBORCROWD ArborCrowd is the only online platform that enables individuals to make equity investments in institutionalquality commercial real estate opportunities that were previously only available to institutional investors. FOUNDERS ArborCrowd is backed by more than 30 years of leadership experience, as it is part of the Arbor family of companies, which includes Arbor Realty Trust (NYSE: ABR), a leading publicly traded commercial mortgage real estate investment trust. Proprietary Network: ArborCrowd leverages the Arbor family of companies expansive and proprietary network of successful real estate dealmakers to source its investment opportunities. Skin in the Game: ArborCrowd is so confident in the strength of its deals that it invests capital to acquire properties prior to syndicating equity investment opportunities to the crowd. Transparency: ArborCrowd s unique approach of offering one investment opportunity at a time provides individuals with transparency and the knowledge of where and how their capital is being deployed. ARBORCROWD TIMELINE IVAN KAUFMAN Co-Founder and Chief Executive Officer ADAM KAUFMAN Co-Founder and Managing Director 3

4 PROJECT OVERVIEW EVERGREEN APARTMENTS Evergreen Apartments ArborCrowd Manager ( ArborCrowd ) is pleased to present investors ( Investors ) with the opportunity to participate in the value-add repositioning of Evergreen Apartments in Anytown, USA (the Project or Property ). This is an opportunity to own equity interest in an asset that exhibits strong multifamily fundamentals and tremendous upside potential. The Property was acquired in January 2019 by affiliates of ArborCrowd and The Apartment Company, LLC (the Sponsor ). Investors now have the opportunity to be a part of this transaction. The Property Nestled in a suburb of Anytown just a few miles from downtown, the Property is a sprawling 300-unit apartment community that comprises 5 buildings and an onsite clubhouse. Neighboring the Property is the lush and vibrant Anytown Memorial Park, which provides entertainment and recreation for residents with a playground, baseball field, two full-length basketball courts and two pools. And there is a plethora of retail options thanks to the adjacent Anytown Shopping Plaza and a $150 million retail center, Family Square, minutes away. Furthermore, Evergreen Apartments has immediate access to Interstate 376, which links residents to major job centers. Sound Market Fundamentals Lack of Supply: Once renovations of Evergreen Apartments are completed, it will be one of only a few properties in the market that can offer a quality similar to new construction, but at a more attractive price. Currently, Anytown has a limited supply of reasonably priced, high-quality apartments. Newly constructed ( Class A ) units lease at an average monthly rent of more than $2,000, 1 while the economically priced Class B and C products lack the quality finishes and amenities that the area s working-class residents desire. Strong Demand: Nearly 500,000 residents, who have an average annual household income of $65,000, live within a 3-mile radius of the Property. 1 Since 2011, the Anytown metro area added roughly 50,000 jobs and another 25,000 are expected to be created in the next 5 years. 2 It is anticipated that the Property s new quality renovations and amenity package will appeal to a large audience of Anytown s working-class residents. Location: Anytown is widely considered the Business Capital of the World, as many major insurance companies are headquartered downtown. The Property is just 2.5 miles from Anytown s downtown and minutes away from excellent retail and entertainment options. Residents also have quick access to the interstate, providing efficient travel to all of Anytown s employers and areas of interest. 1: Source #1 2: Source #2 4

5 INVESTMENT OVERVIEW ArborCrowd Raise: $3,530,000 Targeted Internal Rate of Return: 14% 16% Targeted Equity Multiple: 1.60x 2.00x Targeted Hold Period: 3 5 years Investment Type: Equity Property Type: Multifamily Minimum Investment: $25,000 Strategy to Create Value The business plan encompasses transforming the previously mismanaged and underperforming apartment complex into a desirable residential community in order to capitalize on the market demand for well-priced, quality apartments, of which there is a lack of supply. To execute on this strategy, the Sponsor has budgeted $5 million to gut renovate every apartment and transform the Property s common areas and multi-purpose clubhouse. The Sponsor anticipates that this capital expenditure will generate an average rental premium of over $330 per unit per month achieving a significant return on investment. The highlights of the investment opportunity include: Value-Add: Approximately $2.4 million ($8,000/unit) will be spent on gut renovating all 300 apartments. And over $2.6 million will be spent to improve the Property's common areas and clubhouse. The balance of the budget is comprised of soft costs and a contingency. The Sponsor anticipates this work will be completed in under 30 months. A Proven Plan: The Sponsor owns 12 properties with 2,400 units in the Anytown metro area. This includes The Plaza, a property located 1 mile away, where the Sponsor employed a similar value creation strategy and achieved average rent increases of over $600 per unit. Additionally, the prior owner of Evergreen completed only minor improvements of 4 units yet still obtained monthly rent increases of close to $120 per unit, showing that extensive renovations could yield even larger premiums. Off-Market Transaction: When properties are sold in a marketed transaction, the price is often driven up by the competitive bidding process. By acquiring the Property in an off market transaction as a result of the Sponsor s prior working relationship with the seller, the Property was acquired at a favorable price. 5

6 INVESTMENT DETAILS CAPITALIZATION BREAKDOWN Total Equity $12,004, % Total Debt $25,000, % Total Capitalization $37,004, % EQUITY INVESTMENT ArborCrowd $3,395, % Sponsor $8,609, % Total Equity $12,004, % ARBORCROWD INVESTORS RETURN OF CAPITAL SCHEDULE First: 100% to Investors until investment capital is paid back and an internal rate of return of 8% is achieved. Second: After an 8% internal rate of return is achieved and up to a 14% internal rate of return, 80% to Investors and 20% to an affiliate of the Sponsor. Third: After a 14% internal rate of return is achieved and up to a 20% internal rate of return, 65% to Investors and 35% to an affiliate of the Sponsor. Fourth: After a 20% internal rate of return is achieved, 55% to Investors and 45% to an affiliate of the Sponsor. FEES Acquisition Fee 1.25% Assets Under Management Fee 0.50% Disposition Fee 1.00% Refinance Fee 1.00% 6

7 INVESTMENT DETAILS SOURCES AND USES ARBORCROWD SOURCES AND USES ArborCrowd Capital Raise $3,530,000 Less: Acquisition Fee / Origination & Transaction Costs / Legal ( $135,000) Total ArborCrowd Investment in Evergreen Apartments $3,395,000 EVERGREEN SOURCES Loan $25,000,000 ArborCrowd Investors $3,395,000 Sponsor Equity $8,609,691 Total Sources $37,004,691 EVERGREEN USES Purchase Price $30,070,500 Capital Expenditure Reserve $5,000,000 Loan Costs / Fees / Escrows $627,219 Property Insurance for Year 1 $75,855 Title Expenses / Fees / Due Diligence $130,816 Legal Fees $118,200 Working Capital / Interest / Operating Reserves $567,858 Sponsor Acquisition Fee $300,705 Property Taxes $153,179 Prorations ($39,641) Total Uses $37,004,691 7

8 SPONSOR OVERVIEW THE APARTMENT COMPANY The Apartment Company (the Sponsor ), founded by Joe Smith and Mike Williams in 2004, acquires and turns around underperforming multifamily properties. To date, the Sponsor and its affiliates have purchased 40 apartment complexes and its portfolio is currently valued at over $400 million. The Sponsor currently owns and operates 12 properties with over 2,400 units in the Anytown metro area. With more than 20 years of combined experience in owning multifamily complexes and cultivating strong relationships with brokers and contractors, the Sponsor and its affiliates have demonstrated their capability to reposition properties and deliver returns to their investors. Proven Track Record Purchased 40 apartment complexes with a total acquisition value in excess of $300 million. Prior realized transactions in Anytown with similar strategies have achieved strong returns. The Sponsor and its affiliates are repeat borrowers of Arbor. Notable Statistics in Anytown Metro 1 Total Units Under Management: 2,400+ Total Portfolio Value: $200,000,000 Current Occupancy: 94% (See page 9 for further details) 1: As of January

9 SPONSOR OVERVIEW ANYTOWN TRACK RECORD Currently Owned Purchase Large-Scale Occupancy at Current Property City State Year Acquired Units Year Built Purchase Price Price Per Renovations Acquisition Occupancy 1 Unit Property 1 West Anytown USA $8,500,000 $31,250-86% 94% Property 2 Anytown USA $5,500,000 $47,414-94% 100% Property 3 Anytown USA $7,300,000 $41,477-88% 97% Property 4 Anytown USA $17,500,000 $26,758-96% 96% Property 5 Anytown USA $17,400,000 $76,316 $2,500,000 68% 88% Property 6 Anytown USA $1,725,000 $35,938-96% 96% Property 7 Anytown USA $3,950,000 $29,924 $2,400,000 60% 95% Property 8 Anytown USA $2,250,000 $35,714-96% 96% Property 9 Anytown USA $6,900,000 $65,094 $1,500,000 69% 95% The Plaza Anytown USA $7,950,000 $107,432 $2,600,000 95% 85% Property 10 Anytown USA $36,500,000 $91,250-92% 96% Evergreen Apartments Anytown USA $30,070,500 $100,235 $5,000,000 85% 85% Total / Average 2,569 $145,545,500 $56,655 $14,000,000 85% 94% Realized Transactions Purchase Realized Deal Level Property City State Year Acquired Units Year Built Purchase Price Price Per Year Sold Sale Price Gain IRR Unit Property 11 Anytown USA $1,500,000 $41, $2,340,000 $840,000 61% Property 12 Anytown USA $7,662,000 $53, $9,652,500 $1,990,500 12% Property 13 Anytown USA $1,900,000 $33, $2,550,000 $650,000 32% Property 14 Anytown USA $4,500,000 $35, $7,040,000 $2,540,000 19% Total / Average 363 $15,562,000 $42,871 $21,582,500 $6,020,500 31% 1: As of January

10 PROPERTY DETAILS Evergreen Apartments Address City, State 150 Evergreen Street Anytown, USA Year Built 1971 No. of Buildings 6; 5 apartment buildings and 1 clubhouse Units 300 Avg. Unit Size Net Rentable Area Foundation Building Structure Exterior Walls Roof Heating/Cooling Amenities 1,040 square feet 312,000 square feet Basement and concrete slab-on-grade Masonry bearing walls and wood framing Unpainted masonry brick veneer Single-ply polyvinyl chloride (PVC), thermoplastic polyolefin (TPO) membrane and pitched asphalt composition shingle Electric baseboard heaters; split system condensers for central air cooling Multi-story clubhouse, elevators, and planned recreation rooms, office lounge and fitness center Parking Spaces 320 Occupancy 85% as of January

11 INVESTMENT DETAILS LOAN Anytown Bank has provided the loan for the acquisition of the Property. The loan closed on January 1 st, Loan Amount $25,000,000 Rate 30-day Libor % 1 Evergreen Apartments Loan Amortization Renovation Holdback Term None The renovation budget was held back in reserve by the lender at closing. 36 months Loan Maturity December 31, 2021 Extension Option Prepayment Penalty DSCR Rebalancing Two 12-month extensions with a 0.5% fee for each extension If prepayment is made prior to July 24 th, 2019, the interest that would otherwise be payable through this date would be due. If DSCR falls below 1.15x in the 30 th month, the loan must be paid down until the resulting DSCR is 1.15x or greater. Origination Fee 1% Recourse Non-recourse with standard bad boy carve-outs to guarantor in addition to completion guaranty, environmental indemnity, interest reserve replenishment guaranty and a rebalance guaranty. 1: Libor floor is 2.125% 11

12 PROJECTED PRO FORMA (DEAL LEVEL) Historical [1] Year 1 Year 2 Year 3 Year 4 Year 5 Gross Residential Revenue 3,000,000 $3,942,646 $4,412,465 $5,089,528 $5,366,146 $5,500,300 Vacancy & Credit Loss (200,000) (841,749) (424,509) (409,878) (396,237) (385,021) Other Income 44,012 39,096 40,073 41,075 42,102 43,155 Effective Gross Income 2,844,012 $3,139,994 $4,028,029 $4,720,726 $5,012,011 $5,158,433 Expenses Payroll (300,000) (355,642) (362,755) (370,010) (377,410) (384,959) Utilities (320,000) (343,016) (349,876) (356,873) (364,011) (371,291) Contract Services (103,485) (88,500) (90,270) (92,075) (93,917) (95,795) Maintenance (163,810) (150,000) (153,000) (156,060) (159,181) (162,365) Marketing (1,922) (7,500) (7,650) (7,803) (7,959) (8,118) General & Administrative (17,312) (42,000) (42,840) (43,697) (44,571) (45,462) Management Fee [2] - (125,600) (161,121) (188,829) (200,480) (206,337) Property Taxes [3] (347,571) (650,000) (676,000) (703,040) (731,162) (777,479) Insurance (41,883) (113,782) (116,058) (118,379) (120,747) (123,161) Replacement Reserves [4] (75,000) (75,000) (75,000) Net Operating Income 1,548,029 $1,263,954 $2,068,459 $2,608,959 $2,837,574 $2,908,466 Debt Service (1,531,250) (1,531,250) (1,772,100) (1,772,100) (1,772,100) Interest / Working Capital / Operating Reserve Distributions [5] 267, Cash Flow after Debt Service & Reserves $0 $537,209 $836,859 $1,065,474 $1,136,366 Net Sale Proceeds [6] ,493,592 Loan Refinance Proceeds [7] ,387, Loan Repayment - - (25,000,000) - (29,535,000) Net Cash Flow ($12,004,691) $0 $537,209 $5,224,184 $1,065,474 $21,094,957 Cash Flow Pro Forma - $25,000 ArborCrowd Investment Net Cash Flow ($25,000) $0 $0 $9,489 $1,797 $36,771 Cash-on-Cash Return 0.00% 0.00% 37.96% 7.19% % ArborCrowd $25,000 Projected Investor Returns ArborCrowd Investor Capital Returned $48,057 ArborCrowd Investor Net Profit $23,057 IRR 15.56% Equity Multiple 1.92x Notes [1] 2017 Income and Expenses [2] Management Fee of 4% of effective gross income [3] Property values are reassessed in 2021 and become effective in 2022 [4] Replacement Reserves of $250 per unit are not required by lender for 24 months [5] Reserve for loan interest, working capital, and operations funded at closing [6] Sale proceeds are net of selling costs [7] Refinance proceeds are net of origination fees 12

13 BUSINESS PLAN TIMELINE The expected hold period for Evergreen Apartments is between 3 and 5 years. 13

14 BUSINESS PLAN UNIT UPGRADES The core driver of the business plan is to reposition the Property from an underperforming Class B- complex to a thriving Class B+ community in a sub-market that exhibits high demand, but little supply, for such product. The Sponsor s renovation effort will deliver new bathrooms and kitchens for all 300 units. When renovations are completed, the Sponsor believes that this investment can result in an average rental premium of over $330 per month. This work is expected to capitalize on the lack of affordably priced, high-quality product in the Anytown marketplace. The Sponsor will likely retain some tenants during the renovation period in order to retain cash flow at the Property. Approximately $2.4 million ($8,000/unit) of the $5 million budget will be spent on unit renovations. The Sponsor anticipates renovating an average of 12 units per month. Best Construction will be the general contractor. Best Construction has extensive residential and commercial experience in Anytown and has previously performed work for the Sponsor, including at The Plaza Apartments. Renovations are anticipated to be completed within months. The Sponsor will look to replicate the renovation strategy it employed at The Plaza, a property it acquired and renovated less than 1 mile away from the Property. Like Evergreen Apartments, The Plaza was an outdated and mismanaged apartment complex that exhibited tremendous value-add potential. Over the past two years, the Sponsor s renovation strategy has resulted in an average rental premium of $600 per unit per month for renovated units. (For more information, see The Plaza case study on page 17.) UNIT RENOVATION HIGHLIGHTS Stainless steel appliances New kitchen cabinetry Granite countertops Vinyl plank flooring New bathrooms Upgraded LED lighting 2 faux wood blinds Modern closet shelving New interior doors 14

15 BUSINESS PLAN BEFORE & AFTER UNIT FINISHES Current Finishes Proposed Finishes* * Represents finishes installed by the Sponsor at The Plaza. The proposed finishes at the Property are anticipated to be comparable to those shown. 15

16 BUSINESS PLAN EXTERIOR AND COMMON AREA UPGRADES Approximately $2.6 million of the $5 million renovation budget will be spent to upgrade the Property s exterior and common areas. These improvements are expected to elevate the living quality for residents and enhance marketplace perception of the Property to achieve the projected rental premiums. The scope of the exterior and common area renovations includes: Improvements to common corridor and lobby appeal with new painting, flooring, LED lighting and keyless entry door systems Total overhaul of the clubhouse, which will feature a fitness center, office lounge, entertainment suite, and leasing office. This clubhouse has been closed for the past 4 years and is expected to generate enthusiasm from both current and prospective tenants Brand new thermoplastic polyolefin roofs on two buildings Pressure washing, painting and improvements to second and third floor porches Elevator cab repairs and upgrades Complete asphalt resurfacing of the parking lot 16

17 CASE STUDY THE PLAZA In 2016, the Sponsor acquired The Plaza, a 74-unit Class C+ asset located in Anytown, less than 1 mile from the Property. At the time of acquisition, the Property s average monthly rent was $1,043 with an occupancy of 95%. The Sponsor recognized an opportunity to acquire an asset that, when renovated with modern finishes, would provide a high-quality product at a price point the existing competition could not meet. After completing a $2.6 million renovation, The Plaza is now pre-leased at 97% with an average monthly rent of $1,650 a $600 increase from the average in-place rent when the Property was acquired. The Sponsor s plan is to perform a similar overhaul of Evergreen. Before After Rent at Pro Forma Rent as of Unit Type Count Sq Ft Acquisition Rent Projection Jun-18 1 bed $830 $1,100 $1,250 1 bed $950 $1,350 $1,425 1 bed $919 $1,100 $1,395 2 bed 3 1,000 $1,050 $1,300 $1,595 2 bed 1 1,000 $1,100 $1,550 $1,695 3 bed 1 1,300 $1,500 $1,800 $1,800 3 bed 16 2,100 $1,438 $2,700 $2,550 Total/Avg. 74 1,049 $1,043 $1,534 $1,650 58% Post-Renovation Increase (See next page for proposed design and representative Buckhaven work.) 17

18 UNIT MIX AVERAGE RENT RATES Plan A 1-Bed / 1-Bath Plan B 2-Bed / 1.5-Bath Type Avg. SF Units 1-Bed / 1- Bath Current Avg. Effective Rent Avg. Effective Rent PSF Units Post-Renovation (Projected) Avg. Avg. Effective Effective Rent Rent PSF ~ $918 $ $1,275 $1.52 Type Avg. SF Units 2-Bed / 1.5- Bath Current Avg. Effective Rent Avg. Effective Rent PSF Units Post-Renovation (Projected) Avg. Avg. Effective Effective Rent Rent PSF ~1, $1,175 $ $1,475 $

19 UNIT MIX AVERAGE RENT RATES Plan C 2-Bed / 2-Bath Plan D 2-Bed / 2.5-Bath 1 Type Avg. SF Units 2-Bed / 2- Bath Current Avg. Effective Rent Avg. Effective Rent PSF Units Post-Renovation (Projected) Avg. Avg. Effective Effective Rent Rent PSF ~1, $1,180 $ $1,475 $1.23 Type Avg. SF Units 2-Bed / 2.5- Bath Current Avg. Effective Rent Avg. Effective Rent PSF Units Post-Renovation (Projected) Avg. Avg. Effective Effective Rent Rent PSF ~1,500 2 $1,225 $ $1,650 $1.10 1: Floor plan D is not a full replica of the 2-bed / 2.5-bath units. Not pictured is the living room and extra half bathroom. 19

20 ANYTOWN LOCAL AREA Anytown Shopping Center Prospect Pizza Hibachi Grill Shopping Spree The Shoe Sports ProCare Nails Sprint Dental Anytown Train Station Interstate Highways Health Center Development Airport Evergreen Apartments

21 ANYTOWN LOCAL AREA Anytown Downtown Elementary School Family Square $150 million Retail Hub Anytown Golf Course Evergreen Apartments

22 MARKET OVERVIEW ANYTOWN METRO AREA The Property attracts residents who are employed in downtown Anytown and throughout the Anytown metro area. Population: The Anytown metro area boasts a population of 1,500,000 making it the 40 th largest metro area in the United States. 1 Fast Facts 2 : Median Age: 40.9 Years Median Property Value: $250,000 Workforce Population: 700,000 Employment Major Industries: Insurance, Healthcare, Aerospace, Education, and Financial Services. 1 Unemployment Rate: Steady decline in unemployment from 8.7% in April 2011 to 4.4% in April Employment: While public sector employment has lagged due to a state operating deficit, the private sector has experienced strong growth. Professional services and manufacturing have been the largest sources of job growth in the metro area. The insurance industry is a large employer in the market and Anytown is often referred to as the Business Capital of the World. United Technologies and Pratt & Whitney are Anytown s largest manufacturing employers. 2 Commute: The average commute time for workers is 23.3 minutes, below the national average of 25.3 minutes. 2 Downtown Anytown Aerospace Company 1: Source #1 2: Source #2 22

23 MARKET OVERVIEW ANYTOWN METRO AREA DEMOGRAPHICS The Anytown metropolitan statistical area (MSA) is driven by insurance, healthcare, aerospace, education, and financial services. Household Income: Within a 5-mile radius of the Property, the annual area median and average incomes are $55,000 and $70,000, respectively. A rule of thumb is that approximately 30% of pre-tax income is considered reasonably affordable rent. 1 Taking this into consideration, on average, the post-renovation rents of the Property should be well received. Renting vs. Buying: Assuming a 20% down payment for the average singlefamily home in the area, renting may make more economic sense: An average down payment of approximately $50,000 creates a barrier of entry to homeownership when considering area incomes. 2 The Anytown metro area s median monthly home ownership costs are estimated at $1,890, 2 indicating that home ownership could be a prohibitive cost to the average resident in the marketplace. 2 Nearby Household Income Distribution Under $15,000 $15,000 - $24,999 $25,000 - $34,999 $35,000 - $49,999 $50,000 - $74,999 Demographics Surrounding Property 1-Mile Radius 3-Mile Radius 5-Mile Radius Population , , ,119 Population , , ,197 Population 2022 (projected) 22, , ,596 % Change from 2010 to % 1.63% 1.55% % Change from 2017 to 2021 (projected) 0.93% 1.29% 1.27% Households ,041 64, ,890 Households ,103 64, ,062 Households 2022 (projected) 9,170 65, ,122 % Change from 2010 to % 1.25% 1.16% % Change from 2017 to 2022 (projected) 0.74% 1.09% 1.04% $75,000 - $99,999 $100,000 - $149,999 $150,000 - $199,999 $200, Mile Radius 3-Mile Radius 1-Mile Radius Median Household Income 2017 $56,000 $52,250 $55,000 Average Household Income 2017 $72,000 $65,000 $70,000 Source: Data Company #2 0% 5% 10% 15% 20% 25% Source: Data Company #1 1: Source #1 2: Source #2 23

24 MARKET OVERVIEW EMPLOYMENT Anytown metro area s key employment factors: Stable employment base with approximately 1% year-over-year job growth from 2011 through Roughly 50,000 jobs were added between 2011 and 2017, and it is projected that another 25,000 jobs will be created in the next 5 years. 1 12% 10% 8% Unemployment Statistics January 2008 April Hartford Anytown CT ST U.S. In May 2018, Anytown Tech Industries, an industrial and technology conglomerate headquartered 5 miles from the Property, announced a $400 million investment and the addition of several thousand jobs in Anytown over the next 5 years. 2 After planning to relocate headquarters to Big Town, USA, business giant A-Town Industries was recently acquired by Health Corporation and has since decided to stay and invest further in Anytown. Health Corporation has publicly announced that the metro area s fundamentals will support the firm s growth of its operations. 2 Top Anytown Metro Area Employers 6% 4% 2% Source: Bureau of Labor Statistics 0% Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Government Employment by Sector Employer Industry # of Jobs Employer 1 Healthcare 18,107 Employer 2 Technology 16,500 Employer 3 Insurance 14,000 Employer 4 Financial Services 11,900 Employer 5 Manufacturing 10,000 Employer 6 Healthcare 9,545 Employer 7 Healthcare 8,053 Employer 8 Aerospace 8,000 Employer 9 Energy 5,000 Employer 10 Insurance 4,000 Employer 11 Insurance 4,000 Employer 12 Government 3,200 Employer 13 Insurance 3,100 Employer 14 Government 3,000 Employer 15 Broadcasting 3,000 Employer 16 Amusement Park 2,000 Employer 17 Healthcare 2,000 Employer 18 Healthcare 2,000 1: Source #1 2: Source #2 Source: Data Company #3 Other Services Leisure and Hospitality Education and Health Services Professional and Business Services Financial Activities Information Trade, Transportation, Utilities Manufacturing Mining, Logging, Construction Source: Bureau of Labor Statistics 0% 5% 10% 15% 20% 25% U.S. U.S. CT ST Hartford Anytown 24

25 MARKET REPORT ANYTOWN METRO AREA MULTIFAMILY Average asking rents have risen consistently since 2011 and are expected to continue trending upward. 1 Vacancy in the market has been steady: between 5 and 6 percent on average. 1 There are approximately 2,000 units currently under construction or being planned in the Anytown metro area. This is a positive indicator for the multifamily market as new capital will continue to flow into the area. Additionally, new construction is typically expected to rent at top of the market price points, which could further increase the appeal for Evergreen Apartment s value proposition. 2 The Evergreen Apartments business plan is to deliver high-quality renovations at a price point that Class A properties cannot compete with. The Property s projected post-renovation rents are anticipated to be priced at nearly $200 less per month than the Class A average rent. Evergreen Apartment Rent vs. Anytown Metro Area Multifamily Rents Anytown Metro Area Multifamily Completion & Absorption Analysis $1,800 $1,600 $1,400 $1,200 *Projected 7% 6% 5% 1,400 1,200 1,000 Absorption Absorption Forecast Completions Completions Forecast *Projected $1,000 4% 800 $800 3% 600 $600 $400 $200 2% 1% $0 $- 0% Class-B Rent Cove Evergreen West Hartford Rent Rent Class-A Rent Hartford Anytown Vacancy Source: Source #1 0 Source: Source # : Source #1 2: Source #2 25

26 MARKET REPORT ANYTOWN MULTIFAMILY Evergreen Apartments Rent vs. Anytown Multifamily Rents Like the general Anytown metro area, Anytown s multifamily market has experienced growth across its Class B and Class A inventories. 1 Anytown s average vacancy rate of 6.5% tracks slightly higher than the Anytown metro area s average vacancy rate of 5.5%, due to West Anytown s larger amount of Class A inventory, which traditionally has higher vacancies due to higher rents. 1 When renovations are fully completed at the Property, the post-renovation rents are anticipated to be considered a good value to prospective tenants as they will be able to live in quality apartments at rents well below the city s Class A rents. There are no large scale construction projects in Anytown s immediate supply pipeline. 2 In light of this, The Property Experts Inc., expects several smaller projects to be delivered in the near future and anticipates absorption to track closely with the completions. 1 $2,500 $2,000 $1,500 $1,000 $500 $0 $ Class B Rent Cove Evergreen West Hartford Rent Rent Class A Rent Hartford Vacancy Vacancy Source: The Property Experts, Inc. Anytown Multifamily Completion & Absorption Analysis *Projected Absorption Absorption Forecast Completions Completions Forecast *Projected 8% 7% 6% 5% 4% 3% 2% 1% 0% 1: Source #1 2: Source # Source: The Property Experts, Inc. 26

27 PROPERTY RENT COMPARABLES Rent comparables are used to compare the underwritten income potential of the Property with local market competition. The list below contains a mix of both renovated and non-renovated properties that compete with Evergreen Apartments. There is a considerable delta between the rents at properties that have been recently renovated and those that have not. 1 mi. 2 mi. Based on the Sponsor s local expertise, their recent success at The Plaza, and taking market data into consideration, the Sponsor believes that the market can support the projected post-renovation underwritten rents. Property Year Built/ Renovated Occupancy Units Class 1: Projected post-renovation rents do not include the townhouse units at the Property. 2: These properties were recently renovated with similar fixtures and finishes that will be installed at the Property. 3: Comparable rates and occupancies were provided by Data Company 1 & Data Company 2, and subsequently verified by ArborCrowd through market surveys. Average 1-Bedroom Average 2-Bedroom Size Rent PSF Rent Size Rent PSF Rent Evergreen Apartments (Current) % 300 B- 841 $1.09 $918 1,200 $0.98 $1,176 Evergreen Apartments (Projected Post Renovation) B+ 841 $1.52 $1,275 1,200 $1.23 $1,475 Property Year Built/ Occupancy Renovated Average 1-Bedroom 3 Average 2-Bedroom 3 Units Class Size Rent PSF Rent Size Rent PSF Rent Property /-- 95% 64 A 755 $2.44 $1,845 1,090 $2.15 $2,347 Property /-- 98% 160 A 863 $2.30 $1,986 1,260 $2.00 $2,530 Property / % 74 B+ 731 $1.89 $1,378 1,000 $1.62 $1,620 Property / % 185 B+ 850 $2.00 $1,700 1,300 $1.43 $1,858 Property / % 123 B+ 600 $1.98 $1, $1.69 $1,687 Property / % 640 B 525 $1.55 $ $1.58 $1,185 Property /-- 98% 40 B 900 $1.25 $1,128 1,225 $1.17 $1,428 Property /-- 100% 21 B 750 $1.33 $ $1.32 $1,250 Competitive Set Weighted Averages 648 $1.89 $1, $1.64 $1,609 Class B Weighted Average 618 $1.79 $1, $1.48 $1,356 Class B Recently Renovated Only Weighted Averages 747 $1.96 $1,464 1,119 $1.51 $1,691 27

28 PROPERTY SALE COMPARABLES Sale comparables contrast the Property s acquisition basis and projected exit price against recent transactions involving similar properties. The approach validates if a buyer is getting a good bargain in the marketplace and indicates if the business plan s exit strategy is feasible. Evergreen Apartments acquisition price was $100,235 per unit. When compared to the comparable set below, the acquisition exhibits a favorable purchase price for considering the vintage, proximity to downtown Anytown, and potential opportunity to unlock value. The Sponsor believes the renovated Property will be a desirable Class B+ asset that could ultimately achieve an exit price in excess to some recent transactions in the marketplace. Property 1 Date of Sale Distance Units Year Built Sales Price (Miles) Sales Price Per Unit Evergreen Apartments Jan $30,070,500 $100, Property 1 Apr $21,250,000 $70, Property 2 Dec $44,500,000 $119, Property 3 Oct $6,584,425 $30, Property 4 Aug $27,325,000 $146, Property 5 Apr $52,000,000 $211, Property 6 Apr $70,000,000 $184, Property 7 Feb $5,300,000 $39, Property 8 Jan $30,490,476 $164, Property 9 Dec $11,550,000 $69, Property 10 Sep $6,900,000 $50, Property 11 Jun $18,750,000 $120, Property 12 May $7,500,000 $66, Property 13 Apr $12,800,000 $80, Property 14 Mar $49,940,000 $164, Property 15 Nov $8,150,000 $79, Property 16 Oct $27,300,000 $146, Property 17 Jul $8,455,281 $81, Property 18 Jul $10,162,598 $81, Property 19 Jul $11,382,110 $81, Property 20 Dec $19,000,000 $63, Property 21 Oct $56,400,000 $103,676 Weighted Average Sale/Unit $110,791 1: Transactions listed are properties with over 100 units within a 10 mile radius of the Property that have traded in the last 5 years : Sources: The Property Experts Inc., and Data Company #

29 KEY EXECUTIVES JOE SMITH & MIKE WILLIAMS Co-Founders, The Apartment Company IVAN KAUFMAN Co-Founder & CEO, ArborCrowd ADAM KAUFMAN Co-Founder & Managing Director, ArborCrowd Joe Smith and Michael Williams co-founded The Apartment Company, LLC ( TAC ) in TAC is a residential real estate investment and operations firm with a focus in Anytown, USA. TAC has acquired in excess of 5,000 multifamily units since the turn of the century and the firm s current portfolio is valued at over $400 million. Smith specializes in financial management and the day-to-day operations of TAC s holdings. Williams focuses on TAC s acquisition and disposition efforts across the country. Together, Smith and Williams have been able to acquire, reposition, sell and ultimately create value through real estate on behalf of their investors. TAC Management Group, LLC, is the firm s property management arm. The company currently manages 12 properties throughout the Anytown metro area. Ivan Kaufman is the Co-Founder and CEO of ArborCrowd. He is also the Chairman and CEO of Arbor Management Acquisition Company (AMAC). Kaufman has extensive experience operating a diverse array of real estate finance companies that spans four decades and numerous real estate cycles. He is currently the Founder, Chairman, President and CEO of Arbor Realty Trust, Inc. (NYSE:ABR), a leading multifamily and commercial real estate lender and real estate investment trust that became publicly traded in April In addition, Kaufman is the Founder and CEO of Arbor Commercial Mortgage, LLC, a multifamily finance company he established in In 2016, Arbor Realty Trust formally acquired the agency lending platform of Arbor Commercial Mortgage. Adam Kaufman is Co-founder and Managing Director of ArborCrowd. In this role, he oversees ArborCrowd s corporate growth strategy. Adam is an authority on commercial real estate and crowdfunding. He s been named one of New York Real Estate Journal s Ones to Watch and received Connect Media s Next Generation Award. He is also a member of the Forbes Real Estate Council and has spoken on a number of industry panels and presented at prestigious institutions. Adam s business philosophies stem from his family s long and successful track record in all aspects of commercial real estate. Marrying technology and real estate investing, Adam developed ArborCrowd to provide investors with an unprecedented opportunity to co-invest with leaders in the industry. Adam is a graduate of the University of Pennsylvania. 29