HOUSTON INCOME PROPERTIES, INC Houston Austin

Transcription

1 HOUSTON INCOME PROPERTIES, INC Houston Austin

2 TABLE OF CONTENTS EXECUTIVE SUMMARY 3 Offering Summary Location Map Property Photos PROPERTY INFORMATION 7 Property Detail Sheets (2 pages) Investment Highlights Property Photos (2 pages) Aerials Flood Map Galveston County Plat FINANCIAL INFORMATION 16 Actual and Pro forma Analysis Internal Rate of Return Analysis 5 Year Estimated Cash Flow Summary MARKET OVERVIEW 20 Loft Rental Comparables (2 pages) SALE INFORMATION 23 Brokerage Information Services

3 EXECUTIVE SUMMARY EXCUTIVE SUMMARY Offering Summary Location Map Property Photos

4 Listing Agent: Jim Young - (512) jyoung@houstonincomeproperties.com PROPERTY DESCRIPTION Name: Address: 2402 Mechanic St. City / State: Galveston, TX Offering Summary INVESTMENT PROFILE Type of Sale: Conventional Asking Price: $3,800,000 Current NOI: $268,358 $325,945 $368,246 Projected Year 1 NOI: Projected Year 5 NOI: Property Type: Lofts Current Occupancy: 95% As of August 2012 Style: Mid-Rise Loft Conversion RUBS: None Yr. of Construction: Yr. of Loft Conversion: Number or Units: Total Rentable SF: Avg. Unit Size: Market Area: Gross Potential Rent: Galveston $47,160 / Month as of July ,864 SF 1,158 SF Avg. Rent / Unit: Avg Rent / SF: $1,275 $1.10 SF Unit For Projected NOI see analysis page and in the financial section is a unique Loft conversion by the Randal Davis Company. While keeping the elegance and charm of its period architecture Davis has transformed the historic 1890's built, Clarke and Courts Printing Co. building into elegant contemporary lofts and what a better location could there be than the beautiful historic "Strand" District of Galveston, Texas. The rental lofts boost many amenities including: Private parking garage, Water views, Wood floors, Ceiling heights of 14', Glass block and brick walls, Kitchen with granite tops, Free laundry and fitness center, Whirlpool tubs and Huge bathrooms. Galveston is approximately 30 miles from the city limits of Houston, Texas the 4th largest city in the U.S.. It is home to 32 miles of beaches, top restaurants, hotels & resorts, and attractions like Moody Gardens and the National Historic Strand District. This property has a superior location on Mechanic St., in the historic "Strand" District. This diverse community is full of rich history and flavors as well as a vital part of the economic health of its Area.

5 Location Map 2402 Mechanic St. Galveston, TX 77550

6 Mechanic, Galveston, TX 77550

7 PROPERTY INFORMATION PROPERTY INFORMATION Property Detail Sheets (2 pages) Investment Highlights Property Photos (2pages) Aerials Flood Map Galveston County Plat

8 Mechanic St Construction ~ Randal Davis Galveston, TX Loft Conversion Key Map: 775J PRICING INFORMATION PROPERTY INFORMATION Asking Price: Price / Unit: Price / SF: $3,800,000 $102,703 $88.65 Units: Avg Size: Date of Construction: Seller's Equity $3,800,000 "E" Mtr/"W" Mtr: Indiv./Master Roof: Flat Possible Upside in the Rents and Land (Acres) Per HCAD: 0.47 Other Revenues Rentable Sq Ft: 42,864 TOTAL COLLECTIONS ( 95% Occupancy as of RR) Mth. Coll. Jan Jun 2012 Avg $42,173 Apr Jun 12 Avg $40,973 Jan Mar 12 Avg $43, Year Avg $41,381 Good Location in historic downtown Galveston in the Strand District. Seems to be good upside in the rents. There also seems to be some revenue that could be obtained by charging for utilities and other miscellaneous items. Property Highlights 1) is located approx. 30 miles south of the Houston, Tx. metroplex in Galveston, Tx. The property is surrounded by historic residences in the East End Historic District (covers 50 square blocks) and the Historic Strand District (the go to place for visitors to the area). 2) The outstanding location of this asset on Mechanic Row/Avenue "C" near IH 45, places it within easy access of an abundance of employment, entertainment, shopping, and convenient transportation opportunities in the area. 3) The owner has recently completed renovating the building into residential Lofts while preserving the historic architecture of its period. The property is renting at its current market rents on all units. 4) There seems to be upside in the rents as well as an additonal amount of income that could be generated by charging for laundry and a possible RUBS implementation for some or all utilities Mechanic Galveston, TX The is a unique opportunity to purchase the 1890's historic former Clarke & Courts Printing building in downtown Galveston, Texas. The building has been transformed into beautiful Lofts by the Randal Davis Company. Randall Davis known as a "Pioneer" and "Visionary" for enhancing the Texas skyline and coastline with creative, adaptive reuse of historic buildings, as well as with his construction of new Neoclassical hirise structures. This unique Grade "A" Apartment Loft property sits in the historic Strand/Downtown District of Galveston, Texas just 50 miles south of the Houston metroplex. The property shares the corner of Mechanic and 24th street with the historic Treemont Hotel. One side of the building faces the Strand (area of shopping and dining) and the cruise ship dock. The tenants can people watch and enjoy watching the cruise ships come in and out of dock. The neighborhood is in the epicenter of everything happening in downtown Galveston. Please do not visit the property without an appointment made through the broker. UNIT MIX #Units Type Notes Avg. Total SF Rent Total Rent Rent SF/Unit Per SF 4 OPEN 864 3,456 $995 $3,980 $ OPEN $950 $950 $ BD $1,250 $1,250 $ OPEN 1,024 3,072 $1,100 $3,300 $ BD 1,039 4,156 $1,275 $5,100 $ BD 1,050 1,050 $1,300 $1,300 $ BD 1,098 3,294 $1,300 $3,900 $ BD 1,105 1,105 $1,150 $1,150 $ BD 1,112 3,336 $1,250 $3,750 $ BD 1,124 1,124 $1,200 $1,200 $ BD 1,192 3,576 $1,275 $3,825 $ BD 1,158 1,158 $1,155 $1,155 $ BD 1,219 4,876 $1,300 $5,200 $ BD 1,385 4,155 $1,385 $4,155 $ BD 1,532 1,532 $2,000 $2,000 $ BD 1,573 1,573 $1,695 $1,695 $ BD 1,594 1,594 $1,750 $1,750 $ BD 1,900 1,900 $1,500 $1,500 $ total units 95% Est Occ 1,158 avg sf 42,864 $1,275 total/sf avg rent $47,160 total rent $1.100 avg$/sf Directions from Houston Hobby Airport: Take I-45 S. Travel 33.8 miles and take EXIT 1C toward TX- 275 / Harborside Dr / FM-188 / Teichman Rd. Travel 0.3 miles stay straight to go onto Broadway St. Travel 0.5 miles and take the 2st left onto Harborside Dr. Travel 4.6 miles and turn right onto 25th st/rosenburg St. Travel 0.1 miles and turn left onto Mechanic St. Travel Property is on the left. The boost many amenities including; private parking garage with ample parking space, water views, wood floors, ceiling heights of 14', glass block and brick walls, kitchen with granite tops, whirlpool tubs and extra large bathrooms,free laundry and fitness center.

9 Mechanic St. Galveston, TX Key Map: 775J Date Built: Elec Meter: HVAC: Water: Access Gates: Roof: Upside Potential with interior Upgrades PROPERTY TAX INFOR. GCAD# R Taxing Authority Rate/$100 Galveston County Galveston College GC Navigation District No GC Road and Flood Galveston ISD City of Galveston Rate / $100 of Value: Assessment $1,643,690 Estimated Property Tax $42,356 CONSTRUCTION FEATURES 1890 Individual Individual Paving: Materials: # of Stories: Concrete Paved Brick and Wood Siding 4 Master Parking: Parking Garage Y # Apt. Buildings: 1 Flat Units/Acre: PROPERTY AMENITIES Property Amenities ~ 24 Hour Fitness Room(s), 1 Laundry Room(s), Views:, Harbor/city, High Speed Internet, Controlled access to Parking Garage, Additional Storage Available AREA INFORMATION is an "A" grade, 37 unit, 4 story, Loft Conversion located in in the city of Galveston, Texas. Galveston is a tertiary market of Houston, Texas. The building was built in the 1890's as the Court and Clarke Printing Company building and has been designated an historical building of the area. This distinctive Historic Class "A" property is within walking distance of Galveston Bay and just a short drive to the beaches on the Gulf of Mexico side of the island. The property is conveniently positioned on the edge of two Historic districts in Galveston, the Historic Strand District and the Historic East End Residential District. Besides its lovely homes, the area offers other advantages for it's residents...a cultural and ethnic mix that enriches the quality of life, several fine schools to serve the young residents as well as close proximity to Galveston's business district, University of Texas Medical Branch, and the Historic Strand District. "The Strand," or Avenue B, is a street parallel to the bay, in the heart of downtown Galveston with then modern and incredible feats of Victorian architecture. While the avenue extends throughout Galveston, the Strand has usually referred to the five block business district situated between Twentieth and Twenty fifth streets. The Strand was known then as the "Wall Street of the Southwest. Today, Galveston has become a top attraction for shoppers, Houston day trippers, and vacationers from around the globe. Galveston has 32 miles of beaches, top restaurants, hotels & resorts, and attractions like Moody Gardens and the National Historic Strand District. In addition, the island has deep cultural and historical roots shown in its museums, opera house, historic homes, old Victorian architecture, and more. The "East End" Historical District is comprised of over 50 city blocks bounded on the south by Broadway, the east by 10th Street, the north by Mechanic Avenue and the west by 19th Street. The District has been placed on the National Register of Historic Places in 1976 and has been designated a National Historic Landmark. The architecture of the East End Historical District reflects a variety of styles and periods, the earliest being examples of Greek Revival style built during the 1850's. Early residents represented an economic and social cross section of the community, also expressed in the dwellings which range from small, simple cottages to large, elaborate houses. East End District 1892 Bishop's Palace Historical Strand District Historical Clarke and Courts Building

10 Real Estate Broker: Jim Hurd - (713) presents a new owner with a unique investment opportunity not seen in many investments in today's market. as the property is a loft conversion built in the historic former 1890 Clarkes and Courts printing building in the historic Strand area of Galveston Texas. Galveston is one of the largest tourist attractions in Texas. The area plays a crucial role in the economic health of the Houston Metropolitan Area. Besides the major employment area the property is surrounded by it is also under 2 miles from two major employers of the area, the University of Texas Medical Branch at Galveston (1.7 miles) and the Shriners Hospital for Children (1.5 miles). It is the broker's opinion that a new owner could possibly increase the rents on the 37 units by approximately 10% as well as implement a utility RUBS for water. Currently there is no additional charge to the tenants for Laundry room usage, parking garage usage, water or gas. Some or all of these could be another source of added revenue for a new owner. The possible addition of a roof top outdoor common area with decking, an outdoor kitchen and sitting areas to take in the views of the Harbor area and the Strand District could be a great addition to this property and adding to its appeal. Another Investment opportunity could be the sale of the lofts to individuals. This is evidenced by the Sealy Lofts located at 2214 Mechanic. These lofts were developed in the old 1876 Sealy warehouse building. The asking prices range from $321,000 for a $1,015 Sq ft Loft to near $800,00 0 for a 2,013 sq ft Loft. Unique Investment Opportunity HISTORY OF CLARKE AND COURTS PRINTING CO. Clarke and Courts Printing, with original headquarters in Galveston, was in business in Texas for over 100 years. Until the 1930s the company was the largest printing and lithography company in the region. Clarke and Courts developed from M. Strickland and Company, Printers, Lithographers and Blank Book Manufacturers, organized at Galveston by Miles Strickland in Strickland moved his printing press to Houston during the Civil War but subsequently returned to Galveston. After the war Samuel Burke, an expert printer, became a partner in the business, and a bindery was added to the plant. After Robert Clarke purchased Burke's interest in the firm in 1870, the business came to be known as Strickland and Clarke. George M. Courts, who had previously handled stationery for the Thompson Drug Company, purchased Strickland's interest, and in 1877 the two printers brought the first lithograph press in the state to Galveston, along with a crew to operate it. Clarke and Courts dates its origins to the partnership formed by the two men in 1879, in which Clarke managed the printing aspects of the business while Courts supervised the rest. Traveling salesmen for Clarke and Courts marketed its products throughout Texas, western Louisiana, New Mexico, and Mexico. In the 1880s the firm's employees numbered between seventy five and 100. In 1887, when the company won a blue ribbon at the State Fair of Texas, it incorporated as Clarke and Courts. By 1890 the firm had completed its office on the Strand in Galveston, designed by Nicholas J. Clayton, as well as a plant and warehouse. The office came to be known as the "Texas House." In 1907 the firm installed the first offset press west of the Mississippi; thus began the company policy of acquiring every innovation in printing machinery as soon as it appeared and limiting the competition by refusing to sell old equipment. Eventually, Clarke and Courts offered customers an array of services ranging from printing, electrotyping, stereotyping, and bookbinding to box manufacturing, lithographing, and zinc engraving. Among its numerous printing projects was the printing of San Antonio city directories. In 1936, when the company renewed its charter and moved its headquarters to Houston, its service extended to customers in Texas, Louisiana, Oklahoma, New Mexico, Arkansas, Mexico, and Cuba. By 1976 Clarke and Courts operated plants in Galveston, Harlingen, and Houston, but faced growing computerization in the industry. The business closed in 1989.

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13 Aerials University of Texas Medical Branch Hospital Historic East End Residential District Downtown Moody Mansion Museum Kemper Park

14 Flood Map DISCLAIMER: While the floodplain data that is shown on the map is the same, this map is not an official effective FEMA Flood Insurance Rate Map (FIRM). This map is for information purposes only. For an official flood zone determination please contact your insurance agent or floodplain administrator.

15 GCAD Map Galveston County Appraisal District Map

16 FINANCIAL INFORMATION Actual and Pro forma Analysis Internal Rate of Return Analysis 5 Year Estimated Cash Flow Summary FINANCIAL INFORMATION

17 2402 Mechanic Galveston, TX Good Value Add Potential Physical Information Financial Information Estimated New Loan Parameters Operating Information Number of Units 37 Asking Price $3,800,000 Lender To Be Determined Curr Mkt Rent {Aug 12} $47,160 Avg Unit Size (SF) 1158 Est. Per Unit Price $102,703 Est. Interest Rate: 4.75% Rents Used on Pro Forma $50,461 Net Rentable Area 42,864 Est. Per SF Price $88.65 Est. New Loan Amount: $2,660,000 Collec. Used Jan Jun 2012 Avg $42,173 Land Area {Acres} 0.47 Est. Upgrades / Unit $2,000 Est. Mthly. Pmt. : $13,876 Collections Annualized $506,074 Units per Acre 37.0 Total Est. Upgrades $74,000 Yearly Debt Service: $166,510 Phy. Occ. { } 95% Date Built 1890 Asking Price + Upgrades $3,874,000 Amortizing (months): 360 Est. Ins per Unit per Yr $647 e Meter Individual EST. BUYER'S EQUITY REQUIREMENTS Term: 10 Years Property Tax Information w Meter Master Est. Down Pmt. On Ask Price 30% $1,140,000 Est. Reserve/Unit: $ Rate / $100 of Value: Roof Style Flat Est. Down Pmt. With Upgrades 31% $1,214,000 Est. Loan Constant: 6.26% 2012 Assessment $1,643,690 HVAC System Individual Estimated Post sale Tax Assmt. is $3,040,000 Estimated Post Sale Tax Assmt. Is the 2012 Assmt. increased by {85%} MODIFIED ACTUALS STABILIZED PRO FORMA Jan-Jun 2012 Avg Revenue Annualized Income is estimated, Expenses are Actual Jun 2012 T-6 Annualized Expenses are pro forma, except where noted except where noted. REVENUE AND COLLECTIONS Current Market Rent with a {7%} Rent Increase which equates to an avg rent of {$1364}/U or {1.177}/SF 605,534 $50,461 / Mo Loss to Lease {1% } of Total Street Rent Estimated (6,055) 1.0% Estimated Gross Potential Income 599, % Vacancy Estimated at {5.0%} (30,277) 5.0% Credit/Concess/Admin/Other Rental Losses Estimated at {1.0%} (6,055) 1.0% Total Rental Income {Estimated} 502,184 {89%} of Current Rents Rents 563,147 {93%} of Pro Forma Rents Other Income ( Pro Forma Inc. Trash, Gas and Water Reimb.) 3,890 $105 / Unit / Yr 22,570 $610 / Unit / Yr Total Income 506,074 $42,173 / Mo 585,717 $48,810 / Mo EXPENSES AND RESERVES Fixed Expenses Modified Actuals Fixed Expenses Estimated Fixed Expenses Taxes $42,356 $1,145 per Unit 2012 Assmt and 2011 Rate $78,337 $2,117 per Unit Pro Forma Assmt. and 2011 Rate Insurance $23,949 $647 per Unit Jan Jun 12 annualized $23,949 $647 per Unit Estimated Total Fixed Expense 66,305 $1,792 / Unit 102,286 $2,764 / Unit Utilities Utilities Estimated Utilities All Utilities $31,087 $840 per Unit Jan-Dec 2011 $32,000 $865 per Unit Total Utilities 31,087 $840 / Unit 32,000 $865 / Unit Other Expenses Other Expenses Estimated Other Expenses General & Admin Advertising/Marketing Repairs & Maintenance Labor Costs Contract Services $5,598 $11,788 $15,307 $61,557 $9,670 $151 per Unit $319 per Unit $414 per Unit $1,664 per Unit $261 per Unit $5,550 $5,550 $18,500 $46,250 $9,250 $150 per Unit $150 per Unit $500 per Unit $1,250 per Unit $250 per Unit All Management Fees $25, % $684 per Unit Based on Total Income above $29, % $792 per U Total Other Expense 129,224 $3,493 / Unit 114,386 $3,092 / Unit Total Operating Expense 226,617 $6,125 / Unit 248,672 $6,721 / Unit Reserve for Replacement Estimated 11,100 $300 / Unit 11,100 $300 / Unit Total Expense 237,717 $6,425 / Unit 259,772 $7,021 / Unit Net Operating Income 268,358 $7,253 / Unit 325,945 $8,809 / Unit Asking Price / Asking Price + Rehab Cap Rate Debt Equity 3,800, % $2,660,000 1,140,000 30% (no upgrades) 3,874, % $2,660,000 1,214,000 31% (with upgrades) Debt Service (P & I) (166,510) (166,510) Cash Flow $101,848 $159,435 Cash on Cash 8.93% 13.13% Notes on Actuals: Retirement benefits to an ex employee in the amount of $2500/mth has been deducted from the Payroll expense line item above. Legal fees were removed from the operating data for an old legal matter that has been settled. Utilitiies are 2011 Year. Notes on Pro Forma: Rents have been increased by 7% post upgrades. A RUBS for Trash, Water and Pest Control has been added to the Other Income on the Pro Forma side. The Tax assessment has been increased by 95% of the 2012 assessment. All other expenses are based on the actuals or are market expenses.

18 Year 1 is post Upgrades Yr 1 includes a {7%} Rent Increase Internal Rate of Return Analysis UNITS 37 SQ FT 42,864 Avg Unit Size 1158 Original Sales Price (At Asking Price) $ 3,800,000 {$} a Unit $ 74,000 "All In" Cost $ 3,874,000 INCOME MONTHLY Year 1 Year 1 Year 2 Year 3 Year 4 Year 5 Annual Market Rent Growth Rates Used 3.00% 3.00% 3.00% 3.00% Potential Income $50,461 $605,534 $623,700 $642,411 $661,684 $681,534 Other Income $1,881 $22,570 $23,247 $23,945 $24,663 $25,403 GROSS INCOME $52,342 $628,104 $646,948 $666,356 $686,347 $706,937 VAC./OTHER LOSSES ($42,387) ($43,659) ($44,969) ($46,318) ($47,707) Rate Used for Vacancy/Other Losses 7% 7% 7% 7% 7% EFFECTIVE GROSS INCOME $585,717 $603,289 $621,387 $640,029 $659,230 EXPENSES Annual Operating Expense Growth Rates Used 15.74% 3.00% 3.00% 3.00% 3.00% Operating Expenses ($219,386) ($225,969) ($232,748) ($239,730) ($246,922) Expenses/Unit $5,929 $6,107 $6,290 $6,479 $6,674 Management Fee is calculated at {5.00% } of the (EGI) ($29,286) ($30,164) ($31,069) ($32,001) ($32,961) Reserve for {$300} per unit ($11,100) ($11,100) ($11,100) ($11,100) ($11,100) TOTAL EXPENSES ($259,772) ($267,233) ($274,917) ($282,831) ($290,983) Total Expenses/Unit $7,021 $7,223 $7,430 $7,644 $7,864 NET OPERATING INCOME $325,945 $336,056 $346,470 $357,197 $368,246 NOI Growth Rate 21.46% 3.10% 3.10% 3.10% 3.09% DEBT SERVICE (166,510) (166,510) (166,510) (166,510) (166,510) ANNUAL CASH FLOW $159,435 $169,546 $179,960 $190,687 $201,736 Debt Service Assumptions Used "All In" Cost $3,874,000 % Down of "All In" Cost 31% Est. New Loan Amt $2,660,000 CASH EQUITY $1,214,000 Est. Interest Rate 4.75% Annual Debt Service $166,510 CASH ON CASH RETURN 13.13% 13.97% 14.82% 15.71% 16.62% The assumptions taken for this analysis for income and expense projections are shown above. Debt service was calculated using the information shown in the debt service assumptions used box above. INVESTMENT AND INTERNAL RATE OF RETURN SUMMARY Future Sales Price Exit Cap 5th Year NOI Loan Balance 5th Yr $5,260, % $368,246 $2,530,788 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 LEVERAGED Cash Equity ($1,214,000) $0 $0 $0 $0 $0 Annual Cash Flow (Includes Amortization) $0 $159,435 $169,546 $179,960 $190,687 $201,736 Net Proceeds from Sale (96% of the Sales Proceed $ $2,519,446 Total Cash Flow ($1,214,000) $159,435 $169,546 $179,960 $190,687 $2,721,183 Total Discounted Cash In-flow {Rate Used is 9%} $146,271 $142,703 $138,962 $135,088 $1,768,582 5TH YEAR SALE ~ LEVERAGED INTERNAL RATE OF RETURN IS {27.04%} UNLEVERAGED Cash Equity ($3,874,000) $0 $0 $0 $0 $0 Annual Cash Flow (Without Debt Service) $0 $325,945 $336,056 $346,470 $357,197 $368,246 Net Proceeds from Sale (96% of the Sales Proceed $ $5,050,234 Total Cash Flow ($3,874,000) $325,945 $336,056 $346,470 $357,197 $5,418,480 Total Discounted Cash In-flow {Rate Used is 9%} $299,032 $282,851 $267,539 $253,048 $3,521,640 5TH YEAR SALE ~ UNLEVERAGED INTERNAL RATE OF RETURN IS {13.52%} Discount Rate Used is {9%} Yr. 5 Sales Summary Total Discounted Cash Flow (LEVERAGED) $2,331,606 Cash Equity Sales Proceeds 5th Yr Cash Flow Original Investment $1,214,000 Leveraged $1,214,000 $2,519,446 $201,736 IRR 27.04% Total Discounted Cash Flow (UNLEVERAGED) $4,624,110 Unleveraged $3,874,000 $5,050,234 $368, % Original Investment $3,874,000

19 5 Year Cash Flow Summary Yr 1 includes a {7%} Rent Increase UNITS 37 SQ FT 42,864 Avg Unit Size 1158 REVENUE AND COLLECTIONS Year 1 Year 2 Year 3 Year 4 Year 5 Annual Market Rent Growth Rate 3.0% 3.0% 3.0% 3.0% Gross Potential Income (GPI) $605,534 $623,700 $642,411 $661,684 $681,534 Economic Loss ($42,387) ($43,659) ($44,969) ($46,318) ($47,707) Rate Used for Economic Loss as a percentage of GPI 7% 7% 7% 7% 7% Net Rental Income $563,147 $580,041 $597,443 $615,366 $633,827 Other Income Miscellaneous Income $22,570 $23,247 $23,945 $24,663 $25,403 Total Other Income $22,570 $23,247 $23,945 $24,663 $25,403 EFFECTIVE GROSS INCOME (EGI) $585,717 $603,289 $621,387 $640,029 $659,230 EGI Annual Growth Rate 3.0% 3.0% 3.0% 3.0% EXPENSES AND RESERVES Annual Operating Expense Growth Rate 3.0% 3.0% 3.0% 3.0% Operating Expenses Property Taxes $78,337 $80,687 $83,108 $85,601 $88,169 Insurance $23,949 $24,668 $25,408 $26,170 $26,955 Management Fee is calculated at {5.00% } of the (EGI) $29,286 $30,164 $31,069 $32,001 $32,961 Payroll plus Burden $46,250 $47,638 $49,067 $50,539 $52,055 Utilities (Includes the offset of the Water Rebill) $32,000 $32,960 $33,949 $34,967 $36,016 Contract Services $9,250 $9,528 $9,813 $10,108 $10,411 Repairs, Maintenance and Make Ready $18,500 $19,055 $19,627 $20,215 $20,822 Marketing $5,550 $5,717 $5,888 $6,065 $6,247 General and Administrative Costs $5,550 $5,717 $5,888 $6,065 $6,247 Total Operating Expenses (248,672) (256,133) (263,817) (271,731) (279,883) Expenses / Unit $6,721 $6,923 $7,130 $7,344 $7,564 Reserve for {$300} per unit ($11,100) ($11,100) ($11,100) ($11,100) ($11,100) TOTAL EXPENSES AND RESERVE ($259,772) ($267,233) ($274,917) ($282,831) ($290,983) Total Expenses and Reserve / Unit $7,021 $7,223 $7,430 $7,644 $7,864 NET OPERATING INCOME $325,945 $336,056 $346,470 $357,197 $368,246 NOI Growth Rate 21.46% 3.10% 3.10% 3.10% 3.09% Future Value Estimates Exit Cap Rate Year 1 Year 2 Year 3 Year 4 Year 5 Estimated Future Values based on Yrs. 1-5 NOI's 7.00% $4,656,360 $4,800,793 $4,949,575 $5,102,820 $5,260,662 $125,848 per Unit $129,751 per Unit $133,772 per Unit $137,914 per Unit $142,180 per Unit $109 per SF $112 per SF $115 per SF $119 per SF $123 per SF

20 MARKET OVERVIEW Loft Rent Comparables (2 pages) MARKET OVERVIEW

21 Occupancy and Rent Survey - {Rent Comps} Loft Rental Properties Project Address Yr. Built Units SF/Unit Rent/Unit Rent/SF Occ.. Tribeca Lofts 1210 W. Clay St, Houston, TX $3,385 $ % Dakota Lofts 711 William, Houston, TX $1,712 $ % Hogg Palace Lofts 401 Louisiana, Houston, TX $2,347 $ % Lofts at Ballpark 610 Saint Emanuel St, Houston, TX $1,329 $ % Marquis Lofts 2115 Runnels St, Houston, TX $1,352 $ % Sabine Street Lofts 150 Sabine St, Houston, TX $1,728 $ % Rent Comp Ttls / Averages $1,985 $ % $1,275 $ % Rent Comp Averages Lofts at Ballpark Marquis Lofts Broadstone Lofts Dakota Lofts Sabine Street Lofts Hogg Palace Lofts SUBJECT $1,275 $1,329 $1,352 $1,450 $1,712 $1,728 $1,985 $2,181 Rent Comparison Chart {Rent / Unit} $0 $500 $1,000 $1,500 $2,000 $2,500 Rent Comp Averages $1.43 SUBJECT $1.10 Hogg Palace Lofts Lofts at Ballpark Marquis Lofts Broadstone Lofts $1.23 $1.34 $1.34 $1.46 Rent Comparison Chart {Rent / SF} Dakota Lofts $1.54 Sabine Street Lofts $1.70 $0.50 $0.70 $0.90 $1.10 $1.30 $1.50 $1.70 $1.90

22 Mechanic St. Galveston, TX Key Map: 775J Tribeca Lofts 1210 W. Clay St, Houston, TX Year Built # Units Avg/SF ,335 Loft Comparables Rent / Unit $3, Rent / SF $1.45 Dakota Lofts 711 William, Houston, TX Year Built # Units Avg/SF ,197 Rent / Unit $1, Rent / SF $1.43 Hogg Palace Lofts 401 Louisiana, Houston, TX Year Built # Units Avg/SF ,771 Rent / Unit $2, Rent / SF $1.33 Lofts at Ballpark 610 Saint Emanuel St, Houston, TX Year Built # Units Avg/SF Rent / Unit $1, Rent / SF $1.34 Apartment Rent Comparables Marquis Lofts 2115 Runnels St, Houston, TX Nominal Year Rent / Year Built 2003 # Units Avg /SF Market Rent / Built SF Property Name Unit Occupancy # Units Avg/SF Rent / Unit Rent / SF 244 1,006 $1, $1.34 Tribeca Lofts Dakota Lofts Hogg Palace Lofts Lofts at Ballpark ,335 1,197 1, $3,385 $1,712 $2,347 $1,329 $1.45 $1.43 $1.33 $ % 94% 90% 96% (Subject) Year Built 1890 Marquis Lofts ,006 $1,352 $ % # Units Avg/SF Rent / Unit 37 1,158 $1, Ttl/Average Comps ,460 1,158 $2,025 $1,275 $1.38 $ % 95% Rent / SF $1.10

23 SALE INFORMATION BROKER S DISCLOSURE SALE INFORMATION

24 Information about Brokerage Services Disclaimer: The information contained in this offering memorandum has either been given to us by the owner of the property or obtained from sources that we deem reliable. We have no reason to doubt its accuracy but we do not guarantee it. Vacancy factors used herein are an arbitrary percentage used only as an example. It does not necessarily relate to actual vacancy, if any. The value of the investment is dependent upon these estimates and assumptions made herein, as well as the investment income, the tax bracket and other factors which your tax advisor and/or legal counsel should evaluate. THE PROSPECTIVE BUYER SHOULD CAREFULLY VERIFY EACH ITEM OF INCOME, EXPENSE, AND ALL OTHER INFORMATION CONTAINED HEREIN, and should also perform a detailed inspection of the property. We have not determined whether the property complies with city ordinances and recommend that you determine whether or not the property complies with deed restrictions and the City of Houston life safety ordinance, whether or not a certificate has been issued, and whether or not the property contains asbestos, lead paint and/or mold and whether or not the property lies within a flood plain.

25 Presented By: Houston Income Properties, Inc. Brokering Since 1988 Houston Income Properties, Inc. License# Jim Hurd Broker Listing Broker Austin and Houston Locations Houston Office Brokers / Agents: Jim Hurd President jhurd@houstonincomeproperties.com Bishale Patel Broker Bpatel@houstonincomeproperties.com Gwyn VonHeeder Agent hip@houstonincomeproperties.com HOUSTON OFFICE 6363 Woodway #370 Houston, Texas Shayan Hasnain Agent shayanh@houstonincomeproperties.com Zach Khan Agent zack@houstonincomeproperties.com AUSTIN OFFICE 912 S. Capital of Texas Hwy # 230 Austin, Texas Abraham Garza III Agent agarza@houstonincomeproperties.com Austin Office Brokers / Agents: Jim Young Agent jyoung@houstonincomeproperties.com