The Ridge Apartments $2,950, Units in the Chattanooga TN Market Area. Great Property Great Location. Asking Price:

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2 Great Property Great Location The Ridge Apartments 40 Units in the Chattanooga TN Market Area Asking Price: $2,950, Lisa Dr & 3400 Gail Dr East Ridge, TN Recently renovated property in the high demand rental market of East Ridge, Tennessee. Upside in rents available with many of the units. Net Operating Income of $207,049 Excellent unit mix: 3 Units with One Bedroom & One Bath 23 Units with Two Bedrooms & One Bath 14 Units with Three Bedrooms & Two Baths Very large apartments. 40 Residential Units & One Manager s Office Unit Ben Van Gaasbeek Broker & Principal (619) ben@realsmartcre.com

3 PROJECT: The Ridge General Assumptions Acquisition Costs Holding Period (Yrs) 5 Purchase Price $2,950,000 Annual Inflation Closing Fees Revenue Year % Appraisal $4,500 Year 3 8.0% PCR $0 Year 4 4.0% Legal $1,000 Year 5 4.0% Title/Escrow $3,000 Year 6 4.0% Loan/Underwriting Fee $22,125 Total Closing Fees $30,625 Operating Costs Years % Total Acqusition Costs $2,980,625 Project Summary Total Acq Costs PSF $73.61 Apartments 40 Cost Per Unit $74,516 Garage Spaces 0 Square Footage Totals Apartments 40,490 Total Costs Total Costs $2,980,625 Retail/Office 0 Total S.F. 40,490 Capital Sources Year 1 Operating Expenses Per Unit/Yr Per Unit/Mo Utility & Trash Expenses $43,349 $660 $55 Property Management $24,716 $618 $51 Repairs and Maintenance $29,369 $734 $61 Taxes $22,428 $561 $47 Insurance $15,236 $381 $32 Legal & Leasing $2,885 $72 $6 Cleaning & Landscaping $8,055 $ $17 Pest Control $2,946 $150 $13 Total $146,037 $3,227 $269 Ratio 41.4% Loan $2,212,500 Investor Cash Contribution $768,125 Total Sources $2,980,625 Return Metrics NOI $207,049 Year 1 Cap Rate 7.0% Stabilized Cap Rate 9.7% Cash On Cash Year 1 7.7% Stabilized Cash On Cash 16.4% Cash On Cash 7 Yr Avg 17.4% Permanent Loan Interest Rate 5.25% Amortization 30 Loan to Value 75% Loan Amount $2,212,500 Annual Debt Service $146,610 Debt Coverage Ratio 1.87 This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. RealSmart has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB's or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, RealSmart has not verified, and will not verify, any of the information contained herein, nor has RealSmart conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

4 PROJECT: The Ridge Base Revenue Assumptions Actual Proforma Proforma Total Total Unit Unit Type Number SF/Unit Total SF $/S.F. Rent/Mo/Unit Rent/Mo/Unit Water Billback Rent/Mo Rent/Yr 1 3/2 1 1,270 1,270 $0.70 $895 $895 $50 $895 $10, /2 1 1,270 1,270 $0.65 $825 $895 $50 $825 $9, / $0.00 $0 $675 $40 $0 $0 4 2/ $1.20 $900 $675 $40 $900 $10, /2 1 1,270 1,270 $0.58 $735 $895 $50 $735 $8, /2 1 1,270 1,270 $0.63 $795 $895 $50 $795 $9, /2 1 1,270 1,270 $0.63 $795 $895 $50 $795 $9, /2 1 1,270 1,270 $0.65 $825 $895 $50 $825 $9, /2 1 1,270 1,270 $0.67 $845 $895 $50 $845 $10, /2 1 1,270 1,270 $0.61 $770 $895 $50 $770 $9, / $0.95 $625 $675 $30 $625 $7, / $0.95 $625 $675 $30 $625 $7, /2 1 1,270 1,270 $0.65 $825 $895 $50 $825 $9, /2 1 1,270 1,270 $0.69 $875 $895 $50 $875 $10, /2 1 1,270 1,270 $0.65 $825 $895 $50 $825 $9, /2 1 1,270 1,270 $0.69 $875 $895 $50 $875 $10, /2 1 1,270 1,270 $0.69 $875 $895 $50 $875 $10, /2 1 1,270 1,270 $0.00 $0 $895 $50 $0 $0 19 1/ $0.86 $570 $675 $30 $570 $6, / $0.87 $650 $695 $40 $650 $7, / $0.75 $695 $695 $40 $695 $8, / $0.56 $516 $695 $40 $516 $6, / $0.74 $685 $695 $40 $685 $8, / $0.00 $0 $695 $40 $0 $0 25 2/ $0.64 $595 $695 $40 $595 $7, / $0.64 $590 $695 $40 $590 $7, / $0.75 $695 $695 $40 $695 $8, / $0.70 $650 $695 $40 $650 $7, / $0.60 $550 $695 $40 $550 $6, / $0.75 $695 $695 $40 $695 $8, / $0.77 $715 $695 $40 $715 $8, / $0.73 $675 $695 $40 $675 $8, / $0.60 $550 $695 $40 $550 $6, / $0.73 $675 $695 $40 $675 $8, / $0.76 $700 $695 $40 $700 $8, / $0.00 $0 $695 $40 $0 $0 37 2/ $0.73 $675 $695 $40 $675 $8, / $0.70 $650 $695 $40 $650 $7, / $0.75 $695 $695 $40 $695 $8, / $0.70 $650 $695 $40 $650 $7,800 Total 40 40,490 40,490 $25.91 $25,786 $30,500 $1,710 $25,786 $309,432 3b b 23 Average $ $ b 3 Water Billback 0 Laundry Income Avg Billback $42.75 Monthly $0 Monthly Billback $1,710 Annual $0 Annual Billback $20,520

5 PROJECT: The Ridge Year (Period) Present Day MONTHLY EOY Year 1 EOY Year 2 EOY Year 3 EOY Year 4 EOY Year 5 EOY Year 6 EOY Year 7 EOY Year 8 EOY Year 9 Revenue Inflation 0% % 8.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% Cost Inflation 0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Gross Scheduled Income /Unit $763 $839 $ $ $ $1, $1, $1, $1, $1, Apartments $366,000 $30,500 $402,600 $434,808 $452,200 $470,288 $489,100 $508,664 $529,010 $550,171 $572,178 Water Billback $20,520 $1,710 $22,572 $22,162 $21,341 $21,341 $21,341 $21,341 $21,341 $21,341 $21,341 Other Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total GSI $386,520 $32,210 $425,172 $456,970 $473,541 $491,629 $510,441 $530,005 $550,351 $571,512 $593,518 Vacancy & Credit Loss (%) 10.0% 8.0% 8.0% 8.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% Vacancy & Credit Loss ($) ($38,652) ($3,221) ($34,014) ($36,558) ($37,883) ($34,414) ($35,731) ($37,100) ($38,525) ($40,006) ($41,546) Late Fees $1,739 $145 $1,956 $2,102 $2,178 $2,286 $2,374 $2,465 $2,559 $2,658 $2,760 Deposits Forfeited $3,479 $290 $3,912 $4,204 $4,357 $4,572 $4,747 $4,929 $5,118 $5,315 $5,520 Effective Gross Income $353,086 $29,424 $397,026 $426,718 $442,193 $464,073 $481,830 $500,298 $519,504 $539,478 $560,252 Operating Expenses Utility & Trash Expenses ($43,349) ($3,612) ($44,216) ($45,100) ($46,002) ($46,922) ($47,861) ($48,818) ($49,794) ($50,790) ($51,806) Property Management ($24,716) ($2,060) ($25,210) ($25,715) ($26,229) ($26,753) ($27,288) ($27,834) ($28,391) ($28,959) ($29,538) Repairs and Maintenance ($29,369) ($2,447) ($29,956) ($30,555) ($31,167) ($31,790) ($32,426) ($33,074) ($33,736) ($34,410) ($35,099) Taxes ($22,428) ($1,869) ($22,876) ($23,334) ($23,801) ($24,277) ($24,762) ($25,257) ($25,762) ($26,278) ($26,803) Insurance ($15,236) ($1,270) ($15,540) ($15,851) ($16,168) ($16,492) ($16,821) ($17,158) ($17,501) ($17,851) ($18,208) Legal & Leasing ($2,885) ($240) ($2,943) ($3,002) ($3,062) ($3,123) ($3,185) ($3,249) ($3,314) ($3,380) ($3,448) Cleaning & Landscaping ($8,055) ($671) ($8,216) ($8,380) ($8,548) ($8,719) ($8,893) ($9,071) ($9,252) ($9,437) ($9,626) Pest Control ($2,946) ($245) ($3,005) ($3,065) ($3,126) ($3,189) ($3,252) ($3,317) ($3,384) ($3,451) ($3,520) Total Operating Expenses ($146,037) ($12,170) ($148,958) ($151,937) ($154,976) ($158,075) ($161,237) ($164,461) ($167,751) ($171,106) ($174,528) Net Operating Income $207,049 $17,254 $248,068 $274,781 $287,217 $305,998 $320,594 $335,837 $351,753 $368,373 $385,724 Annual Debt Service ($146,610) ($12,218) ($146,610) ($146,610) ($146,610) ($146,610) ($146,610) ($146,610) ($146,610) ($146,610) ($146,610) Cash Flow From Operations $60,439 $5,037 $101,458 $128,171 $140,607 $159,388 $173,984 $189,227 $205,143 $221,763 $239,114 Less: Capex (See Below) Asset Management ($1,209) ($101) ($2,029) ($2,563) ($2,812) ($3,188) ($3,480) ($3,785) ($4,103) ($4,435) ($4,782) Free Cash Flow $59,230 $4,936 $99,429 $125,608 $137,795 $156,200 $170,504 $185,442 $201,041 $217,328 $234,332 Sale Price / Valuation $3,925, $4,103,102 $4,371,403 $4,579,913 $4,797,665 $5,025,050 $5,262,469 $5,510,344 $5,492,400 Less: Cost of Sale ($255,154.14) ($266,702) ($284,141) ($297,694) ($311,848) ($326,628) ($342,061) ($358,172) ($357,006) Less: Loan Balance ($2,194,500) ($2,162,335) ($2,128,440) ($2,092,721) ($2,055,082) ($2,015,418) ($1,973,621) ($1,929,577) ($1,883,163) Net Sale Proceeds $1,475, $1,674,065 $1,958,823 $2,189,497 $2,430,735 $2,683,003 $2,946,788 $3,222,595 $3,252,231 Cash Flow After Taxes ($768,125) $59,230 $99,429 $125,608 $137,795 $156,200 $170,504 $185,442 $201,041 $217,328 $234,332 Equity From Potential Sale $1,475,794 $1,674,065 $1,958,823 $2,189,497 $2,430,735 $2,683,003 $2,946,788 $3,222,595 $3,252,231 Annual Cash on Cash Returns 7.7% 12.9% 16.4% 17.9% 20.3% 22.2% 24.1% 26.2% 28.3% 30.5% 10 Year Average CoC Return 17.4%

6 Overview 12 Mo. Delivered Units Mo. Absorption Units 570 Vacancy Rate 6.3% 12 Mo. Asking Rent Growth 3.7% Chattanooga has received a sizeable amount of development this cycle. Solid job and population gains have supported the absorption of new stock, with new projects stabilizing in less than a year. Seven projects totaling around 900 units reached the market in 2017, and vacancies have increased over the last few quarters. And another wave of deliveries is set to hit the market in , accounting for a more than 5% increase in apartment inventory. After surpassing 4% in 2015, rent growth has slowed, mirroring a regional trend, but is still strong relative to the historical average. Sales activity is bustling, with annual sales volume nearly doubling the historical average. KEY INDICATORS Current Quarter Units Vacancy Rate Asking Rent Effective Rent Absorption Units Delivered Units Under Constr Units 4 & 5 Star 7, % $1,115 $1, ,134 3 Star 8, % $874 $ & 2 Star 5, % $718 $ Market 20, % $927 $ ,371 Historical Forecast Annual Trends 12 Month Peak When Trough When Average Average Vacancy Change (YOY) 0.2% 7.6% 7.2% 10.8% 2008 Q2 5.3% 2016 Q3 Absorption Units , Q4 (357) 2008 Q1 Delivered Units , Q Q1 Demolished Units Q Q1 Asking Rent Growth (YOY) 3.7% 1.4% 1.7% 7.0% 2007 Q1-3.3% 2009 Q4 Effective Rent Growth (YOY) 3.8% 1.3% 1.7% 6.9% 2007 Q1-3.1% 2009 Q4 Sales Volume $133 M $74.6 M N/A $275.7 M 2016 Q4 $ Q2

7 Vacancy Top employers in Chattanooga include BlueCross BlueShield (BCBS), Tennessee Valley Authority, Unum, and Volkswagen (VW). With around 3,500 local employees, VW is one of Chattanooga s fastest growing companies and has added almost 1,000 jobs over the last year, with plans to add another 1,000 employees over the next few years. Amazon, another large employer with over 3,000 employees locally, plans to hire hundreds of new workers in the area. The surge in education/healthcare jobs over the last few years reflects the presence of BCBS, the Erlanger Health System, and the University of Tennessee at Chattanooga (UTC). Although UTC does not rank in the top 10 of major employers, it has an outsized impact on multifamily housing demand. With a base of 11,500 students, UTC enrollment increased by more than 2,500 since 2006, and its target is a total of 13,000 by The presence of UTC directly east of downtown Chattanooga contributed to multifamily housing and retail demand in and around the CBD, the North Shore, and the Arts District, where many new apartment developments are located. Young talent from UTC is also being courted to stay in Chattanooga and contribute to its emerging tech sector. In 2015, Chattanooga became the first midsized city to introduce an Innovation District, 140 acres designed to create a technology hub for startups and young entrepreneurs. The Edney Innovation Center, a 90,000 SF office development within this district, opened in 2015 and houses tech startups leveraging the high-speed network. More than $700 million in projects including hotels, new office space, retail shops, apartments, and even a distillery are under construction downtown as a result. These projects are anticipated to create more jobs and attract more interest for multifamily housing to build on the revitalization that has been ongoing in the city core for more than three decades. Vacancies declined significantly after reaching almost 10% in 15Q1, despite the influx of supply 2015, and reached a cyclical low of almost 5% in 16Q3. Development started to pick up again in 2017, and vacancies have started to expand as a result. One of the largest projects in 2017, the 286-unit Hawthorne at the Summit, opened in January 2017 and delivered its final units in October. This project is less than five miles from both Amazon and Volkswagon and stabilized by the end of 17Q3. ABSORPTION, NET DELIVERIES & VACANCY

8 Vacancy VACANCY RATE VACANCY BY BEDROOM

9 Rent The median household income in Chattanooga stands at roughly $50,000, increasing by over 10% within the last five years, allowing landlords to push rents. In fact, rents have grown by around 15% since While rent growth fell to less than 1.5% at the end of 2016, it rebounded in New deliveries since the beginning of 2016 commanded an average asking rent of almost $1.20/SF. Despite this 30% premium, renters are willing to pay for the high-end finishes and amenities often found in these units, as demonstrated by the relatively stable lease-up at these properties. New infill properties within the Downtown Chattanooga Submarket in the city core achieved even higher premiums of $1.50/SF. Although smaller floor plans in town naturally increase the rent per square foot, the premiums are still present when factoring in unit size and are primarily contributed to the desirable location of these projects near employment, shopping, dining, and entertainment. Most of the new in-town projects offer fewer community amenities than do new deliveries in suburban submarkets, which feature car-care centers, swimming pools, dog parks, and elaborate clubhouses. New suburban properties in the Outlying Hamilton County Submarket charge rents near of $1/SF. DAILY ASKING RENT PER SF

10 Rent MARKET RENT PER UNIT & RENT GROWTH MARKET RENT PER UNIT BY BEDROOM

11 Economy Chattanooga, now known as Gig City, has transformed its economy this cycle. In 2009, Chattanooga and the Electric Power Board installed a $330 million fiber optic network that produced some of the fastest Internet speeds in the world at that time. A study conducted by the University of Tennessee at Chattanooga estimated the fiber optic network has more than returned dividends, contributing $1 billion (above the cost of installation) to the local economy and generating 2,800 5,200 jobs from Six years later, Chattanooga became the first midsized city to introduce an Innovation District, 140 acres designed to create a technology hub for startups and young entrepreneurs. These advances have only added to the educated pool of workers and attracted tech companies to set up shop here. Strong employment gains over the past few years have pushed Chattanooga s unemployment rate to its lowest level in the last decade. Chattanooga was definitely a later-recovery metro than neighbors Knoxville and Nashville, but annual job growth has picked up and has significantly surpassed the national average since the end of Close to 11,000 jobs were created over the last year (April ), one of the strongest gains this cycle. Leisure and hospitality, education and health services, and professional and business services have mostly contributed to this. Chattanooga has historically been a manufacturing town. The industry is 50% more concentrated here than in the U.S. as a whole. And while manufacturing jobs have slipped here overall, as they have almost everywhere in the country, this sector has been one of the metro s leaders for annual employment growth, at 3% in 18Q2. In 2011, Volkswagen opened its Chattanooga assembly plant the first VW plant in the U.S. since the company closed its facility in Pennsylvania in The car manufacturer is one of the largest employers in the market, employing around 3,500 locally, and plans to continue to grow. CHATTANOOGA EMPLOYMENT BY INDUSTRY IN THOUSANDS NAICS Industry Jobs LQ Market US Market Manufacturing Trade, Transportation and Utilities Retail Trade Financial Activities Government Natural Resources, Mining and Construction Education and Health Services Professional and Business Services Information Leisure and Hospitality Other Services Current Jobs Current Growth 10 Yr Historical 5 Yr Forecast % -0.14% -2.22% 1.59% 1.68% 4.98% 1.67% 5.19% 0.92% -0.41% 1.32% 0.65% 0.61% 0.04% 4.07% 1.53% 2.45% 0.65% 0.04% -0.43% 0.30% -1.07% 0.70% -0.18% 1.28% 2.08% -1.17% US -1.05% 0.46% 0.36% 0.27% -0.07% -0.23% 2.03% 1.56% -0.94% Market -0.48% 0.53% 0.46% 0.65% 0.22% 1.80% 1.52% 1.55% 0.42% US -1.24% Total Employment % 1.28% 0.62% 0.71% 0.78% 0.76% 5.00% 2.00% 1.73% 0.71% 2.64% 0.87% 1.81% 0.44% 1.49% 0.37% 0.27% 0.28% 0.76% 0.50% 1.59% 1.22% 1.43% 0.29% 1.28% 0.41% Source: Moody's Analytics LQ = Location Quotient

12 Economy YEAR OVER YEAR JOB GROWTH Source: Moody s Analytics DEMOGRAPHIC TRENDS Current Level Current Change 10-Year Change Forecast Change Demographic Category Metro U.S. Metro U.S. Metro U.S. Metro U.S. Population 560, ,923, % 0.7% 0.8% 0.8% 0.5% 0.7% Households 228, ,086, % 1.0% 0.8% 0.8% 1.0% 1.1% Median Household Income $49,499 $60, % 3.5% 1.4% 1.6% 2.5% 2.9% Labor Force 272, ,540, % 0.9% 0.2% 0.5% 0.7% 0.8% Unemployment 3.6% 4.1% -0.4% -0.3% -0.2% -0.1% - - Source: Moody s Analytics POPULATION GROWTH LABOR FORCE GROWTH INCOME GROWTH Source: Moody's Analytics