PROPERTY CONDITION ASSESSMENT REAL ESTATE ADVISORY, LLC PROJECT

Transcription

1 Park Trace Apartments 1333 Whitehall Street Jackson, Madison County, Tennessee PROPERTY CONDITION ASSESSMENT FINAL REPORT REAL ESTATE ADVISORY, LLC PROJECT Prepared For: Walker & Dunlop Two Charles River Place 63 Kendrick Street Needham, Massachusetts Freddie Mac 8100 Jones Branch Drive McLean, Virginia Prepared By: Rob Rosengarten Real Estate Advisory, L.L.C. 121 Fairfield Way Suite 230 Bloomingdale, Illinois September 9, 2015 Real Estate Due Diligence Offices Nationwide (800) )

2 Park Trace Apartments 1333 Whitehall Street Jackson, Madison County, Tennessee TABLE OF CONTENTS AT A GLANCE SUMMARY OF FINDINGS... I EXECUTIVE SUMMARY... II REPLACEMENT RESERVE WORKSHEET... VIII CERTIFICATIONS... IX 1.0 GENERAL PROPERTY INFORMATION BUILDING OVERVIEW PROPERTY IMPROVEMENTS OVERVIEW AMERICANS WITH DISABILITIES ACT SCREEN COST ESTIMATES PROPERTY LOCATION MAP LIST OF FIGURES APPENDICES APPENDIX A APPENDIX B APPENDIX C APPENDIX D APPENDIX E APPENDIX F FREDDIE MAC FORMS LIST OF APARTMENTS INSPECTED PHOTOGRAPHS ROSTER OF INTERVIEWS SUPPORTING DOCUMENTATION PERSONNEL QUALIFICATIONS

3 Park Trace Apartments 1333 Whitehall Street Jackson, Madison County, Tennessee AT A GLANCE SUMMARY OF FINDINGS ISSUE CONDITION PAGE NO. BUILDING OVERVIEW STRUCTURAL GOOD 6 ELEVATORS, STAIRWAYS, GOOD to FAIR LANDINGS AND BALCONIES 6 INSULATION GOOD 8 ROOFING GOOD to FAIR 8 BUILDING EXTERIOR GOOD to FAIR (Priority Repair) 8 INTERIOR BUILDING FINISHES GOOD to FAIR 9 MOLD GOOD to FAIR 11 HEATING, VENTILATION AND AIR- CONDITIONING GOOD to FAIR 12 DOMESTIC HOT WATER GOOD to FAIR 13 PLUMBING GOOD 13 ELECTRICAL GOOD 14 FIRE AND LIFE SAFETY GOOD 14 IMPROVEMENTS OVERVIEW PROPERTY DRAINAGE GOOD to FAIR (Priority Repair) 16 RETAINING WALLS GOOD to FAIR (Priority Repair) 16 DRIVEWAYS, PARKING LOTS AND GOOD to FAIR SIDEWALKS (Priority Repair) 16 FENCING GOOD to FAIR (Priority Repair) 17 EXTERIOR LIGHTING GOOD 18 LANDSCAPING GOOD to FAIR (Priority Repair) 18 RECREATIONAL FACILITIES GOOD to FAIR (Operational Repair) 18 SITE AMENITIES GOOD 19 SIGNAGE GOOD to FAIR (Operational Repair) 20 ADA SCREEN FAIR (Priority Repair) 21 i

4 EXECUTIVE SUMMARY Real Estate Advisory, L.L.C. (REA) was retained to conduct a Property Condition Assessment of the following Property: PROPERTY NAME: PROPERTY ADDRESS: Park Trace Apartments 1333 Whitehall Street Jackson, Madison County, Tennessee On August 25, 2015, Rob Rosengarten, Project Engineer with REA, performed a Property Condition Assessment of the Property. SCOPE OF WORK The purpose of the assessment was to develop a general property description, identify existing building components, and develop estimates for repairs and for projected expenditures over a ten-year loan plus two years (12-years total). The assessment identifies the current condition of the Property, repairs needed, and maintenance items that should be accounted for in the Replacement Reserve Worksheet. Furthermore, the assessment was conducted in accordance with ASTM and Freddie Mac guidelines. GENERAL PROPERTY DESCRIPTION Setting: Multi-family residential development surrounded by mixed use development that includes single-family residential improvements, a mobile home community, a community college campus and vacant land Total Residential Units: 84 Property Improvements: Eleven 1- and 2-story apartment buildings One community building that houses the following: o Leasing offices o Community room with full kitchen o One coin-operated laundry o Maintenance shop Asphalt-paved parking surfaces featuring approximately 122 marked, open spaces One in-ground swimming pool One central mail kiosk One playground Landscaped grounds and street frontages Construction Date: 1998 (Source: Property/Municipal Records) Property Size: ± 8.2 Acres (City of Jackson Planning Department) Parcel ID #: ii

5 GENERAL PROPERTY DESCRIPTION (Continued) Net Rentable Area: ± 97,348 SF Occupancy Rate: 86.9% on Inspection Date Zoning: Zoned RG-2 (High Density Residential District) City of Jackson Planning Department Seismic Zone: Zone 2A Moderate Damage Anticipated Unit Mix: FLOOR PLAN (BED/BATH) AVERAGE SF PER UNIT NUMBER OF UNITS TOTAL SQUARE FOOTAGE 1 / ,328 2 / 2 1, ,200 3 / 2 1, ,820 Total 84 97,348 OBSERVATIONS The Property operates as an apartment complex and is improved with 11 apartment buildings with a total of 84 apartment units. The improvements were constructed in 1998 and are located to the west of US Highway 70 and south of the Jackson State Community College campus. The Property is in good to fair condition. The physical condition of the Property is conducive to an aggressive leasing program. Under normal maintenance conditions, the Property has an expected remaining useful life of 30 years or more. RECOMMENDATIONS REA noted the following areas in need of repair: CRITICAL REPAIRS: Critical Repairs include repairs and replacements that significantly impact habitability, value, income or marketability and that much be corrected before Freddie Mac will proceed with the transaction. No Critical Repairs were identified at the Property. PR-90 REPAIRS: PR-90 Repairs are corrective actions that must be completed in 90 days, and are limited to imminent life safety hazards and ongoing substantive damage to the Property. No PR-90 Repairs were identified at the Property. iii

6 PRIORITY REPAIRS: Priority Repairs include repairs and replacements that are significant and must be addressed as soon as possible. All life safety hazards, code violations, material deficiencies and significant deferred maintenance items are considered Priority Repairs. The following Priority repairs were identified at the Property: PRIORITY REPAIRS TABLE ITEM DESCRIPTION COST 1 Erosion/Damaged Retaining Wall Timbers: Eliminated source of ongoing erosion and make repairs to impacted landscaping and retaining $4,000 wall timbers at the northwest corner of Building 3 (NET) 2 Mechanical Entrance Gate: Complete repairs to mechanical gate system located at the Property driveway entrance (NET) $1,000 3 Parking Area Curbing and Delamination: Complete repairs to isolated damaged curbing and driveway surfaces discussed in Section 3.3 (4 $1,600 occurrences x $400/occurrence) 4 Driveway Settling: Eliminate source of erosion below driveway near the mail kiosk and repair the asphalt surface (NET) $2,500 5 Fencing Repairs: Complete repairs to damaged and impacted fencing discussed in Section 3.4 (5 occurrences x $300/occurrence) $1,500 6 Landscaping: Removal of tree branch impacting Building 12; trimming back of trees/shrubs impacting the exterior building finishes; removal of $3,000 isolated occurrences of dead bushes/shrubs (NET) 7 FHAA Protective Railings: Install protective railings under exterior stairs in the breezeways (10 breezeways x $500/breezeway) $5,000 8 FHAA Breezeway Entry Ramps: Renovate existing non-compliant ramps and/or install new ADA accessible ramps to allow for access into breezeways at Buildings 5, 9, 10 and 12 (4 breezeways x $8,000 $2,000/breezeway) 9 ADA / Leasing Office: Provide appropriate markings at ADA space located adjacent to the leasing office (NET) $ Exterior Siding: Complete repairs to approximately five locations of localized damage (holes in siding) $ Exterior Siding Cleaning: Pressure wash exterior siding throughout Property (localized areas of mildew/mold noted on siding) estimate 11 $2,200 $ Asphalt Seal / Stripe: Seal/stripe asphalt pavement (48,000 $0.10/sf) $4, Gutter Building 10: Replace missing gutter $500 PRIORITY REPAIRS TOTAL $34,850 iv

7 Erosion and Timber Damage at the Northwest Corner of Building 3 v

8 OPERATIONAL REPAIRS: Operational Repairs include repairs and replacements that consist of minor deficiencies and minor deferred maintenance that are expected to be completed by the Borrower as a part of repairs and maintenance budget and that cannot be reasonably resolved by routine maintenance. The following Operational repairs were identified at the Property: OPERATIONAL REPAIRS TABLE ITEM DESCRIPTION COST 1 Recreational Equipment: Complete repairs to damaged swing (NET) $100 2 Main ID Signage: Repair damage Main ID monuments located at the $1,500 entrance to the Property (NET OPERATIONAL REPAIRS TOTAL $1,600 vi

9 The total inflated 12-Year Replacement Reserve for the Property is $336,122 (see following page). The cost per unit over the term of the loan plus two years is $4,001 or an average annual cost of $333 per unit. The projections include maintenance of the exterior building envelope and exterior site improvements and major appliances, HVAC equipment, pool reconditioning and flooring. LIMITATIONS No physical assessment can completely eliminate the uncertainty regarding the presence of defects in building components or in the operation of building systems. A physical assessment contains subjective opinions regarding issues such as workmanship, quality, remaining useful life and remedies. These opinions are formed under time and budget constraints without the aid of testing, exploratory probing, demolition, removal of components, engineering calculations or design. The physical assessment is intended to provide only a general physical evaluation with budgetary estimates and is not intended to be a complete structural analysis or to be used as a maintenance schedule, life safety review or code compliance audit. The physical assessment was performed in support of an application for a mortgage and is intended to provide information concerning the suitability of the Property as security. REA s opinion is based on information provided by the client, representatives of the Property, third parties and governmental agencies and on a visual inspection that is not supported by intrusive testing or the operation of building systems. This PCA was performed to identify physical deficiencies associated with the Property s improvements. The term physical deficiencies means the presence of conspicuous defects or material deferred maintenance of a Property s material systems, components, or equipment as observed during a walk-through visual survey of representative areas of the Property. The term physical deficiencies excludes deficiencies that may be remedied with routine maintenance, miscellaneous repairs and normal operating maintenance and excludes de minimus conditions. During the assessment, weather conditions were clear and overcast with temperatures near 90. REA did not encounter limitations due to weather conditions during the site inspection. vii

10 9-Sep-15 PHYSICAL NEEDS OVER THE TERM No. of Buildings 11 Park Trace Apartments No. of Units 84 Jackson, Tennessee Age (years) 17 REA Job: Beyond the Term Property's Age TOTAL Year COST Exterior & Site ITEM Term Units in Cost EUL Exteriors - Paint/Maintain $ ,600 12,600 25,200 Asphalt - Seal/Stripe 2 96,000 $ ,800 4,800 9,600 Roof Replacements 2 11 $4, ,500 23,750 52,250 Mechanical/Electrical Furnaces 36 $ ,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000 AC Condensers 48 $ ,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000 Water Heaters 60 $ ,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 15,000 Flooring & Interiors Carpet - Units 108 $ ,300 6,300 6,300 6,300 6,300 6,300 6,300 6,300 6,300 6,300 6,300 6,300 75,600 Vinyl - Units 48 $ ,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 16,800 Appliances Ovens/Ranges 36 $ ,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 12,600 Refrigerators 48 $ ,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 19,200 Dishwashers 60 $ ,125 1,125 1,125 1,125 1,125 1,125 1,125 1,125 1,125 1,125 1,125 1,125 13,500 Recreational Swimming Pool Net $ 10, ,000 10,000 TOTAL 21,025 57,325 39,975 16,225 16,225 16,225 21,025 38,825 16,225 16,225 16,225 16, ,750 Inflation Factor (3.0%) Total Inflated 21,025 59,045 42,409 17,729 18,261 18,809 25,105 47,750 20,553 21,170 21,805 22, ,122 Cost per Unit ,001 Average Cost per Unit/ Year 333 This summary does not include immediate repairs. EUL - Estimated Useful Life 1. Includes maintenance, painting of sealing deck components, fascia and common area finishes. Date of last exterior maintenance event is unknown 2. Roofing finishes reportedly original. Unit cost shown per building

11 CERTIFICATIONS To the best of our knowledge and belief, the statements of fact contained herein, on which our observations, opinions, and conclusions were based, are true and correct. The information in this report is from sources deemed to be reliable; however, no representation or warranty is made as to the accuracy of information obtained from third parties. The reported observations and conclusions are limited only by the reported assumptions and limiting conditions described in this report and represent our unbiased and professional analysis, opinions, and conclusions. Real Estate Advisory, L.L.C. ( REA ), its officers, and its employees have no present or future interest in the Property. Our employment and compensation for preparing this report are not contingent upon our observations or conclusions. REA warrants that this report was prepared in a manner consistent with the level of care, skill, practice and judgment exercised by other professional consultants in performing services of a similar nature under similar circumstances in the same or similar locality. This report is for the use and benefit of, and may be relied upon by (a) Walker & Dunlop, Freddie Mac and any successors and assigns ( Lender ); (b) Independent auditors, accountants, attorneys and other professionals acting on behalf of Lender; (c) governmental agencies having regulatory authority over Lender; (d) designated persons pursuant to an order or legal process of any court or governmental agency; (e) prospective purchasers of the Mortgage; and (f) with respect to any debt (or portion thereof) and/or securities secured, directly or indirectly, by the Property which is the subject of this report; the following parties and their respective successors and assigns: any placement agent or broker/dealer and ay of their respective affiliates, agents and advisors; any initial purchaser or subsequent holder of such debt and/or securities; any Servicer or other agent acting on behalf of the holders of such debt and/or securities; any indenture trustee; any rating agency; and any institutional provider from time to time of any liquidity facility or credit support for such financings. In addition, this report, or a reference to this report, may be included or quoted in any offering circular, information circular, offering memorandum, registration statement, private placement memorandum, prospectus or sales brochure (in either electronic or hard copy format) in connection with a securitization or transaction involving such debt (or portion thereof) and/or securities. REA's interim drafts, memoranda and reports may not be presented to any third parties by Client except in the form delivered. Any conclusions reported will not be used in any context other than that identified within the full report. The opinions in this report characterize the physical condition of the Property on date of the site inspection. To ensure continuing validity, this report must be updated with the passage of time and should not be relied upon after six months of its date. The Property was personally inspected by Rob Rosengarten of Real Estate Advisory, L.L.C. To ensure quality, the report was reviewed by Kevin A. Mueller. REAL ESTATE ADVISORY, L.L.C. Rob Rosengarten Project Manager Kevin A. Mueller, P.E. Vice President ix

12 1.0 GENERAL PROPERTY INFORMATION 1.1 BACKGROUND On August 25, 2015, Rob Rosengarten, Project Manager with REA, performed a Property Condition Assessment of the Property. REA conducted a visual inspection of the common grounds, buildings, amenities, driveways, parking lots and ten-percent of the apartment units to determine the existing condition of the Property and buildings. A cost estimate for maintenance, repairs, replacements, or major maintenance items that are anticipated was also prepared as part of this assessment. 1.2 GENERAL PROPERTY DESCRIPTION Setting: Multi-family residential development surrounded by mixed use development that includes single-family residential improvements, a mobile home community, a community college campus and vacant land Total Residential Units: 84 Property Improvements: Eleven 1- and 2-story apartment buildings One community building that houses the following: o Leasing offices o Community room with full kitchen o One coin-operated laundry o Maintenance shop Asphalt-paved parking surfaces featuring approximately 122 marked, open spaces One in-ground swimming pool One central mail kiosk One playground Landscaped grounds and street frontages Construction Date: 1998 (Source: Property/Municipal Records) Property Size: ± 8.2 Acres (City of Jackson Planning Department) Parcel ID #: Net Rentable Area: ± 97,348 SF Occupancy Rate: 86.9% on Inspection Date Zoning: Zoned RG-2 (High Density Residential District) City of Jackson Planning Department Seismic Zone: Zone 2A Moderate Damage Anticipated 1

13 Unit Mix: FLOOR PLAN (BED/BATH) 1.3 UTILITIES AVERAGE SF PER UNIT NUMBER OF UNITS TOTAL SQUARE FOOTAGE 1 / ,328 2 / 2 1, ,200 3 / 2 1, ,820 Total 84 97,348 The Property receives services from the following sources: Electricity: Jackson Energy Authority Natural Gas: N/A Domestic Water: Jackson Energy Authority (Review of published water quality reports confirmed that the potable water supplied to the Property is in compliance with water quality requirements) Sewer: Jackson Energy Authority Solid Waste: Waste Management (Vendor) Compactor / Dumpster Pest Control: Cooks Pest Control Routine Pest Control Landscaping: Turf Obsession Pool: Property Maintenance 1.4 CURRENT USE OF NEIGHBORING PROPERTIES Surrounding sites proximate to the Property included the following: North: Jackson State Community College East: US Highway 70 followed by single-family residential improvements and vacant land South: Mobile home community (Parkway Village) to the southwest and south and single-family residential improvements to the southeast West: Vacant vegetated land 2

14 1.5 AREA TOPOGRAPHY Topographic information was gathered upon review of a United States Department of Interior Geological Survey Map of the Jackson North, TN Quadrangle that was published in 2013 (see at right). The Property was located in an area of mildly sloping topography at an elevation of approximately +497 feet National Geodetic Vertical Datum (NGVD) at the northeast corner and +479 along the south edge. The Property and adjacent areas slope to the south. Surface water on the Property is directed to drop inlets located in the impervious pavement or percolates into the exposed soils. Water collected in the drop inlets is transferred to the municipal stormwater management system. REA observed no significant environmental concerns regarding drainage issues or distressed vegetation. Based on visual inspection, and a review of a map located on the National Wetlands Inventory (NWI) Mapper website (United States Fish and Wildlife Service), none of the developed areas on the Property appeared to be designated as wetlands. The surface soils on the Property were stabilized by established vegetation and landscaping. Visual inspection of the Property did not find evidence of any significant erosion concerns. REA reviewed the USDA Natural Resources Conservation Service (NRCS) on-line Web Soil Survey (WSS). The Web Soil Survey indicates that the soils in the area of the Property are classified primarily as: 3

15 It does not appear that a significant amount of filling/grading occurred on the Property to allow construction of the existing buildings. REA found no indication that significant amounts of fill were imported from off-site. According to the Federal Emergency Management Agency Flood Insurance Rate Map (Panels 47113C0168E and 47113C0169E, dated August 3, 2009), the balance of the Property, including the developed areas, appears to lie within Zone X. Such areas are not considered flood hazard areas No onsite groundwater recovery was reported or noted. No evidence of groundwater monitoring or remediation was found at the Property or proximate to the Property. 1.6 PROPERTY LOCATION MAP The following map depicts the Property and surrounding sites: 4

16 COMMUNITY COLLEGE COMMUNITY COLLEGE COMMUNITY COLLEGE VACANT LAND SINGLE-FAMILY RESIDENTIAL MOBILE HOME COMMUNITY SINGLE-FAMILY RESIDENTIAL MOBILE HOME COMMUNITY VACANT LAND VACANT LAND PROPERTY LOCATION MAP Park Trace Apartments 1333 Whitehall Street Jackson, Tennessee REA Project

17 2.0 BUILDING OVERVIEW The Property features 11 One- or Two-Story Apartment Buildings 1 One-Story Community Building The improvements were constructed in The buildings are built atop concrete foundations. The apartment buildings extend to a height of ~25-30 feet above ground surface. REA submitted a FOIA request to the Madison County Code Enforcement Office requesting any information that would indicate open/active code violations associated with the Property; at the time of this report REA had not received a reply. In the event that negative information is discovered, REA will revise this report. The Property is reportedly zoned as Zoned RG-2 (High Density Residential District) by the City of Jackson Planning Department. 2.1 STRUCTURAL Foundations: Foundation systems for the apartment buildings at the Property consist of concrete slabs with undetermined subgrade support. Property management reported no significant foundation concerns. REA did not observe evidence of significant foundation movement, such as significant perimeter foundation cracking or significant facade deflection or cracking. Based on the scope of work performed, REA is of the opinion that the foundations appear to be properly designed for the soil conditions and the Property structures. During the term considered, REA does not anticipate substantial capital expenditures regarding foundations. Structural features were noted in good condition. Framing: REA noted no significant deficiencies with respect to structural systems at the Property and no significant expenditures are anticipated over the term. Framing above the foundations is wood. Building construction consists of concrete foundations, wood-framing (2x4 wood studs at various spacing) and pre-fabricated wood roof framing. Exterior walls are framed by wood and finished by vinyl siding. Fascia and soffits components were largely painted wood materials. Floor framing for upper levels consists of wood floor joists with plywood floor decking covered with lightweight concrete. Ground floors are concrete slab. 6

18 No indications of termite damage were noted during the assessment, and no termite concerns were reported by Property Management. Periodic termite prevention and treatments are provided by Cooks Pest Control. Cooks Pest Control provides routine pest control treatments at the Property and they would also identify any instances of termites discovered on routine service trips. No significant framing deficiencies were noted. 2.2 ELEVATORS, STAIRWAYS, LANDINGS and BALCONIES REA did not observe significant damage or deficiencies pertaining to stairways, landings, balconies, patios or breezeways at the Property. The buildings at the Property are equipped with exterior mounted stairways and landings located in closed breezeways. Apartment units are accessed from these breezeways. Breezeways feature poured-in-place walkways at the lower level and upper levels feature wood decking installed over wood framing. Stairways serving the second-floor landings consist of painted metal stringers with pre-cast concrete treads and open risers along with painted metal railings. The stairways were noted to be in good to fair condition. REA anticipates maintenance to these components over the term with estimated costs included in the Replacement Reserve Worksheet. The upper floor apartment balconies consist of wood decking over wood framing while ground floor units feature poured-in-place concrete slabs. All decks and patios feature a painted metal railing system. Patios and balconies are accessed by wood doors with glass inserts set in wood frames. The patios and balconies were noted to be in good to fair condition. Maintenance of the deck and patio finishes is anticipated over the term and costs have been included in the Replacement Reserve Worksheet. The Property does not feature elevators. 7

19 2.3 INSULATION REA noted no deficiencies regarding insulation. No significant capital expenditures are anticipated during the term regarding insulation. The attics feature blown-in insulation. Exterior walls feature batt insulation. 2.4 ROOFING The roofing system at the Property consists of asphalt shingles installed over OSB sheathing, which is supported by pre-fabricated, 2x4 wood trusses at 24 on center. The attic spaces are ventilated by gable vents and continuously perforated wood soffit vents. Aluminum gutters and downspouts are present. A gutter was missing on Building 10 and should be replaced. Repair is included in the Priority Repairs Table. Property Management did not report any current roof leaks or concerns with the roofs. REA did not observe any evidence of current roof leaks (i.e. staining, mold growth etc.). Property manage reported that all roofing finishes are original. Asphalt shingled pitched roofs typically have an Estimated Useful Life (EUL) of years. Based on the observed condition and EUL, roof replacement is anticipated over the term and costs have been included in the Replacement Reserve Worksheet. No evidence of fire retardant roof sheathing, a problematic material, was observed or reported at the Property. 2.5 BUILDING EXTERIOR Exterior surfaces are finished with a vinyl siding. Fascia is finished with painted wood and soffits are vinyl covered wood framing. Painted wood was observed at patio and balcony trim locations. Property management was not able to provide the date for the last exterior maintenance event. REA noted the exterior finishes to be in good to fair condition with no significant expenditures anticipated over the term. Localized damage (holes in siding) at approximately five locations should be repaired. In addition, localized areas of mildew/mold on exterior siding were noted throughout the Property. Repair of the damaged siding and pressure washing of the buildings siding is included in the Priority Repairs Table. 8

20 REA anticipates maintenance to the exterior components over the term with estimated costs included in the Replacement Reserve Worksheet. Of note: REA observed isolated occurrences of facades that were coated with what appears to be mildew and dust/dirt. As the number of occurrences are limited, REA anticipates that these exterior finishes can be cleaned as a normal maintenance cost. The apartment buildings have the following exterior components: Doors: Windows: Balcony/Patio Doors: Painted, Insulated Metal Doors in Wood Frames with Metal Hardware, Peepholes and Doorknockers Insulated Glass set in Aluminum Frames Wooden Doors with Glass Inserts Facade: Vinyl Siding (~95%) and Painted Wood Trim (~5%) Fascia and Soffits: Roofing: Skylights: Painted Wood Materials Pitched Asphalt/Fiberglass Shingles N/A 2.6 INTERIOR BUILDING FINISHES Interior finishes were noted to be in good to fair condition. No down (i.e. uninhabitable) units were reported or observed at the Property. Property Management reported that flooring and appliances are replaced on an as-needed basis. Routine replacement of appliances and flooring is anticipated over the term of the loan. Costs for such replacement are included in the Replacement Reserve Worksheet. REA also anticipates refinishing of countertops, sinks, bathtubs/showers and minor door/drawer replacement. Refinishing and door/drawer replacement costs are considered to be part of apartment turnover and have not been accounted for in the Replacement Reserve Worksheet. 9

21 Living areas at the Property have the following components: Framing: Ceilings: Walls: Doors: Flooring: Wet Bar: Fire Place: Window Treatments: Ceiling Fans: Wood Painted Gypsum Board - Textured Painted Gypsum Board - Textured Hollow Wood Doors (Two Panel) in Wood Frames Carpet with Vinyl Entryways NA Property Does Not Feature NA Property Does Not Feature Vinyl Blinds (Horizontal) NA Property Does Not Feature Kitchens at the Property have the following components: Appliances: Sink/Disposal: Cabinetry: Counter Tops: Ceilings: Walls: Refrigerator/Freezer Various Manufacturers Electric Oven/Range with Range hood Various Manufacturers Dishwasher Various Manufacturers Estimated Age: 80-90% Original to 1998 construction; ~10-20% 0-10 Years Old Double-Basin Stainless Steel Sink with Garbage Disposal Wood/Laminate Estimated Age: Cabinetry Original to 1998 Construction; No Recent Replacement Reported Laminate Estimated Age: Counter Tops Original to 1998 Construction; No Recent Replacement Reported; Some Counter Tops Refinished in Recent Years Painted Gypsum Board - Textured Painted Gypsum Board - Textured 10

22 Flooring: Vinyl Flooring Of note: Washer/dryers connections are provided. The Property does not provide washers or dryers within the units. Bathrooms at the Property have the following components: Fixtures: Cabinetry: Counter Tops: Ceilings: Walls: Wet Walls: Flooring: Vitreous China Toilets Fiberglass Tubs Enameled Steel Sinks Wood/Laminate Estimated Age: Cabinetry Original to 1998 Construction; No Recent Replacement Reported Laminate Estimated Age: Counter Tops Original to 1998 Construction; No Recent Replacement Reported; Some Counter Tops Refinished in Recent Years Painted Gypsum Board - Textured Painted Gypsum Board - Textured Fiberglass Surrounds Vinyl Flooring Mold: Mold was not observed from a visual or olfactory inspection of the Property in the balance of the units inspected. In addition, Property personnel reported no significant mold related issues or problems. Further, no tenant complaints were reported regarding mold. Limited potential mold infestation was observed in the drywall ceiling finishes within Unit 701. Property management reported that the source of moisture impacting the unit finishes has been eliminated and the balance of the impacted drywall has been removed. REA recommends that the remaining impacted drywall finishes be remediated/removed and a Moisture Management Plan (MMP) should be implemented at the Property. than the issues noted above in Unit 701, no evidence of current moisture intrusion issues was noted or reported. In addition, Property management reported no significant mold related issues or problems. REA did not see evidence of leaks at roofs, windows, pipes or drains which can be a potential moisture source for mold growth. 11

23 Imported Drywall: The potential for use of imported drywall from areas such as China was evaluated for the Property. Problematic drywall was manufactured in China and imported to the United States starting in Significant amounts of drywall were imported from 2004 to 2006, when the building boom and hurricane repairs created a domestic shortage, especially in the southeast United States. This drywall has concentrations of sulfur, strontium and other substances and poses a potential health and safety issue due the presence of these chemicals which may emit sulfurous gases under certain conditions. These gas emissions, which have the odor of rotten eggs, typically worsen as temperature and humidity rise and can cause copper surfaces (piping, wiring, AC components, etc.) to turn black and powdery. Property personnel reported, to the best of their knowledge, no use of Chinese drywall or evidence of related issues. REA did not observe evidence of conditions indicative of Chinese drywall in the areas inspected. 2.7 HEATING, VENTILATION AND AIR CONDITIONING HVAC equipment was noted to be in good to fair condition with no tenant complaints reported to Property Management or maintenance staff. Heating and cooling is provided to each individual apartment unit via a split system. Heating is provided to apartments by an interior forced-air electric heat pump with electric resistance heating backup located within either an interior closet. Cooling is provided by an exterior, padmounted condenser which provide ~2.0-tons of cooling capacity. Estimated equipment ages are shown below: Estimated HVAC Age (Furnace/Air Handler): 80-90% Original to 1998 construction; ~10-20% 0-9 years old based upon reports & observations Estimated HVAC Age (AC Condenser): 80-90% Original to 1998 construction; ~10-20% 0-9 years old based upon reports & observations Furnaces/air handlers and air conditioning condensers are replaced on an as-needed basis. Normal replacement of these units is anticipated over the term of the loan. Estimated costs are included in the Replacement Reserve Worksheet. 12

24 2.8 DOMESTIC HOT WATER Hot water equipment was noted to be in good to fair condition with no tenant complaints reported to Property Management or maintenance staff. Each apartment is served by a 40-gallon electric water heater. Water heaters were located within a storage closet located on a deck or patio. Estimated equipment ages are shown below: Estimated Water Heater Age: ~80-90% Original to 1998 construction; ~10-20% 0-9 years old based upon reports & observations Based upon Reports & Observations Property Management reported that the water heaters are replaced on an as-needed basis. REA anticipates periodic replacement of the water heaters over the term. Costs are included in the Replacement Reserve Worksheet. 2.9 PLUMBING REA noted no significant deficiencies regarding plumbing at the Property, and no significant capital expenditures are anticipated during the term. Plumbing systems were observed to be in good to fair condition. Water supply piping and drain piping to the tenant spaces is located in the walls and floors of each building. Water supply piping is copper or CPVC with flexible piping from the shutoff valves to the faucets and toilets. Drain piping is PVC from the wall to the drains. REA did not observe any indication of leaking pipes or fixtures at the Property, nor did Property Management express any concerns with plumbing issues. Sanitary waste is collected and directed by a gravity system to the municipal system. No polybutylene piping was observed, and none was reported to be present by Property Management. 13

25 2.10 ELECTRICAL No deficiencies were noted regarding electrical service at the Property, and REA does not anticipate significant capital expenditures during the term regarding the electrical service. REA observed that the electrical supply appears sufficient to handle the demand required. Electrical systems were observed to be in good condition. Electrical service enters the Property through pad-mounted electrical transformers located throughout the Property. Individual tenant meters and main service breakers (800- ampere, 120/240 volt, 1-phase and 3-wire) are located on the building exteriors and circuit breaker panels located within the respective units. Main breakers are typically rated at 100 amps per apartment (120/240 volt, 1-phase and 3-wire). Property Management reported and REA observed the electrical wiring to the outlets and switches within the apartments to be copper. Interior and exterior lighting is provided through incandescent and fluorescent fixtures. Ground-fault interrupter ("GFI") electrical outlets, designed to mitigate the potential for electric shock in wet areas, were observed in the kitchens and bathrooms of the apartments. No GFI deficiencies were identified FIRE AND LIFE SAFETY REA did not observe significant deficiencies regarding fire or life safety systems. No significant capital expenditures are anticipated regarding fire or life safety systems during the term considered. The Property has the following fire and life safety systems: Smoke Detectors: Hardwired Electric with Battery Backup Units Fire Extinguishers: Located in Unit Kitchens and Common Areas Inspected by A-1 Fire Protection, LLC in April, 2015 Sprinkler System: Standpipe: NA Property Does Not Feature NA Property Does Not Feature 14

26 Fire Hydrants: Fire Alarm System: Horns/Strobes: Horns/Buzzers: Fire Alarm Pullstations: Emergency Lighting: Lighted Fire Exit Signs: Fire Doors: Security System: Carbon Monoxide Detector: Building Property NA Property Does Not Feature NA Property Does Not Feature NA Property Does Not Feature NA Property Does Not Feature Located in Common Areas/Breezeways NA Property Does Not Feature NA Property Does Not Feature NA Property Does Not Feature NA Property Does Not Feature REA observed and Property Management reported the fire and life safety systems to be in good condition. REA submitted a FOIA request to the City of Jackson Fire Marshall s Office requesting any information that would indicate open/active code violations associated with the Property; at the time of this report REA had not received a reply. In the event that negative information is discovered, REA will revise this report. 15

27 3.0 PROPERTY IMPROVEMENTS OVERVIEW 3.1 PROPERTY DRAINAGE No significant deficiencies were noted regarding Property drainage. Property Management reported no flooding of apartments due to insufficient drainage. REA does not anticipate significant capital expenditures during the term regarding drainage. Surface water on the Property is directed to drop inlets located in the impervious pavement or percolates into the exposed soils. REA observed no significant environmental concerns regarding drainage issues or distressed vegetation. 3.2 RETAINING WALLS The Property features a limited number of landscape timber retaining walls. The balance of these are in overall good to fair condition with no significant concerns noted. REA observed minor damage to the wood retaining walls as well as some surface erosion at the northwest corner of Building 3 at the Property. REA recommends that the cause of the ongoing erosion be remedied and repairs be completed to the landscaping and impacted retaining walls. Costs have been included in the Priority Repairs Table. 3.3 DRIVEWAYS, PARKING LOTS AND SIDEWALKS The Property is accessible by automobile via one driveway entrance from US Highway 70 to the east. Access to this entrance is restricted by a mechanical gate system. The Property features parking lots and driveways consisting of asphalt installed over a stabilized base. REA noted the drives to be in relatively good to fair condition. Property management was unable to provide a date of the last parking area striping. Maintenance of the asphalt surfaces as well as periodic sealing / striping is anticipated in the near term and over the term. Costs have been included in the Priority Repairs Table and in the Replacement Reserve Worksheet. The Property features asphalt-paved parking surfaces featuring approximately 122 marked, open spaces. 16

28 REA noted the following concerns regarding the driveways and parking areas: The mechanical gate system at the entrance was damaged and not operational; Isolated occurrences of cracked and damaged curbing Delamination the driveway areas (near mail kiosk and to the north of Building 5) Settling of the driveway area near the mail kiosk due to erosion REA recommends that renovations/repairs to these items be completed and costs have been included in the Priority Repairs Table. Building access is provided via textured concrete sidewalks, stairways and ramps. Concrete features are poured-in-place. Flatwork surfaces were noted to be in good condition. Isolated areas of concrete deterioration or surficial cracking were noted. However, no conditions were noted which would require immediate repair. No substantial flatwork replacement is expected in the term. 3.4 FENCING REA noted no significant deficiencies regarding fencing, and REA does not anticipate significant capital expenditures regarding fencing during the term. The Property features the following fencing: Painted metal fencing surrounding the pool area and along the east edge and portions of the south edge of the Property Wood fencing surrounding the trash dumpster and roll-off storage area Wood privacy screening around portions of the north, west and south edges of the Property The Property is not fully enclosed by fence systems. Fencing systems were noted to be good to fair condition. REA observed the following: Damaged/missing sections of the wood perimeter fencing to the north of Building 3, to the south of Building 12 and to the south of Building 10 A tree from the adjacent mobile home community pushing out to sections of fencing to the south of the playground area; 17

29 Costs to complete repairs to this fencing have been included in the Priority Repairs Table. 3.5 EXTERIOR LIGHTING REA noted no deficiencies with respect to lighting at the Property. No significant capital expenditures are anticipated during the term regarding exterior lighting. Exterior pole- and building-mounted lighting was observed throughout the Property and was noted to be in good condition. The lighting appeared to be adequate, although the lights were not observed at night. 3.6 LANDSCAPING Landscaping at the Property was observed to be in fair condition with no significant deficiencies noted. The Property is landscaped with grass, trees, shrubs and flowering plants at building elevations and throughout the Property. REA noted the following issues regarding the Property landscaping: Multiple occurrences of trees/shrubs impacting the exterior building finishes Isolated occurrences of dead and dying shrubs and bushes (Building 4) Tree branch laying on the roof of Building 12 REA recommends that the dead and dying trees, bushes and shrubs be removed and that the landscaping impacting the exterior building finishes be trimmed back or removed. Costs to complete have been included in the Operational Repairs Table. than the issues noted above, no significant capital expenditures are anticipated during the term regarding landscaping. The Property does not feature and landscape irrigation system. 3.7 RECREATIONAL FACILITIES The Property features the following recreational facilities: One in-ground swimming pool One playground REA noted no significant deficiencies regarding recreational facilities. The swimming pool features gunite interior surfaces which are finished with ceramic tile coping. Interior finishes for the pool are in good condition. Decking surrounding the pool and spa consists of poured-in-place concrete and was observed to be in good condition. The pool is surrounded by painted metal fencing. Pool equipment (i.e., chlorination, pumping, filtration, heating) was noted. 18

30 The pool and pool equipment are maintained by Property maintenance personnel. REA believes that the pool surfaces, decking and pool equipment will require some maintenance in the term. Associated costs are included in the Replacement Reserve Worksheet. At the time of REA s inspection, the pool drain covers appeared to be compliant with the Virginia Graeme Baker (VGB) Pool and Spa Safety Act. In May of 2011, the U.S. Consumer Product Safety Commission, in cooperation with certain drain cover manufacturers, have announced a voluntary recall of a limited number of drain covers manufactured and installed for in ground pools and spas after December Property Management stated that their pools are compliant with the VGB Act and features compliant drain covers. The playground equipment includes one slide surrounded by a raised sand play area and two swings. The equipment was observed to be in fair condition with one broken swing noted. REA recommends that the damaged swing be repaired/replaced and costs have been included in the Operational Repairs Table. 3.8 SITE AMENITIES One community building that houses the following: o Leasing office suite o Community room featuring a full kitchen o Maintenance shop o One coin-operated laundry One central mail kiosk The laundry equipment is owned by CSC Service Works, a private vendor. As a result, costs for equipment replacement are not considered further in this report. 19

31 The remaining Property amenities were noted to be in good condition and no substantial repair/replacement is anticipated in the term 3.9 SIGNAGE Signage was clearly visible and observed in good to fair condition. No significant deficiencies were noted regarding Property signage. REA does not anticipate significant capital expenditures over the term regarding signage. Two singled-faced monuments located along the east edge of Property at the main entrance from Buildings and units are identified with acrylic panels decorated with vinyl graphics Of Note: Both of the monument signs are damaged with loose sign panels on the north sign and a damaged post and loose panels on the south sign. Cost to complete renovations on these signs has been included in the Operational Repairs Table. 20

32 4.0 AMERICANS WITH DISABILITIES ACT SCREEN The Americans with Disabilities Act/Fair Housing Amendments Act Limited Compliance Survey included a visual survey of the Property to assess whether it is accessible and usable by individuals with disabilities, in accordance with the "Americans with Disabilities Act (ADA) of 1990, Title III, Public Accommodations and Commercial Facilities" and The Fair Housing Amendments Act (FHAA). The final rules implementing Title III were published in the Federal Register on July 26, 1991 and required compliance by January 26, The provisions of Title III provide that persons with disabilities should have accommodations and access to public facilities which are equal to, or similar to, those available to the general public. provisions of the ADA are not included in this scope of work. The FHAA requires multi-family dwellings (four or more units in a building) built for first occupancy after March 13, 1991 shall be designed and constructed in accordance with its requirements. The Property was reportedly constructed in 1998 and appears to be generally compliant with accessibility requirements including ADA and FHAA standards. In the event that a handicapped individual wishes to rent an apartment at the Property, property management cannot decline accommodations, and must provide the individual with barrier free accommodations to the extent that is readily achievable. 4.1 ACCESSIBLE PARKING Accessible parking spaces should be available as close to an accessible exterior route as possible. Standard accessible parking spaces should be a minimum of 96 inches wide and have an adjacent aisle with a clearance width of at least 60 inches. A minimum number standard of accessible parking spaces shall be made available as follows: TOTAL PARKING SPACES REQUIRED ACCESS In addition to standard accessible parking, at least one in every eight standard accessible spaces is required to be van accessible. Van accessible spaces are also 96 inches wide, but require wider aisles (96 inches) and higher vertical clearances (98 inches versus 80 inches) than standard accessible spaces. All accessible parking spaces are to be designated as reserved by appropriate signage. Less than 25 parking spaces are provided at the leasing office. The leasing office features one ADA accessible parking space. In addition, designated accessible parking spaces were also noted at the apartment buildings. Of note: There are no pavement markings at the ADA accessible parking space located adjacent to the leasing office. REA recommends that these markings be added and costs have been included in the Priority Repairs Table. 21

33 4.2 CURB RAMPS Wherever an accessible route crosses a curb, a curb ramp is required. The maximum slope for the curb ramp is 1:12 and its minimum clear width should be 36 inches. The surface of the curb ramp should be firm, stable, and slip resistant. REA noted appropriate curb ramps and cutouts at the leasing office and at several apartment buildings at the Property. Several buildings have restrictive curbing that limited access and are discussed in greater detail below. The FHAA requires all ground floor units to be accessible with some exceptions for excessive slope. Ground floor units appear to be accessible at the Property. 4.3 ACCESSIBLE EXTERIOR ROUTES At least one accessible exterior route per public building to an accessible entrance is required. This route should coincide with the route intended for the general public. The minimum clear width of this route should be 36 inches. The slope of the accessible route should not exceed 1:20. REA noted that Buildings 5, 9, 10 and 12 have breezeways with restricted access due to stairs and/or curbing that prevent barrier-free access to the ground floor apartment units from the adjacent parking areas. REA has accounted for this repair item with estimated costs included in the Priority Repairs Table. In addition, REA observed that ground floor breezeways at the 10 two-story apartment buildings are missing protective railings on the underside of the stairways. These railings are used to prevent residents from accidently walking into the underside of the stairs. REA recommends that these protective railings be installed in all breezeways and costs to complete have been included in the Priority Repairs Table. 4.4 BUILDING ENTRANCES/EXITS Public entrances are defined as any entrances that are not loading or service entrances. The doors at the entrance should be automatic doors or doors that open freely without requiring any twisting or turning. The doors should have a clear opening width of at least 32 inches if the doors can open 90 degrees. If the doors cannot open 90 degrees the clear opening should be at least 36 inches. If there are double doors at the entrance, then at least one door should be active (unlocked) and have a clearance of 32 inches if it can open 90 degrees. At least 50 percent of public entrances should be accessible to persons with disabilities. If all entrances are not accessible, the accessible entrances should be identified by appropriate signage. Where feasible, accessible entrances shall be the entrances used by the majority of people visiting or working in the building. Threshold steps must not have a vertical edge difference greater than ½-inch. Higher thresholds should be beveled or ramped. Door handles should not be located higher than 48 inches above the floor. 22

34 Buildings shall also have accessible means of egress in the same number as required for exits by local building regulations. Buildings over 1,500 square feet are required to have at least two exits and, therefore, two accessible exits. Detailed architectural drawings were not available for review. The Property features one public area, the reception area in the leasing office. Based on this cursory review, the leasing office is accessible from the exterior. Apartment building entrances and exits were also noted to be accessible. 4.5 ACCESSIBLE INTERIORS Persons with disabilities should have at least one interior accessible route to all accessible areas. The interior accessible route should be at least 36 inches wide or have passing lanes that are 60 inches wide at 200 foot intervals. The interior accessible route should not have any protruding objects. If carpets are used on the interior floors they shall be securely fastened and not have a pile longer than ½-inch. The leasing office at the Property is configured to accommodate persons with disabilities. Ground floor apartments appear to have appropriate door widths, accessible interior routes, accessible controls (switches, outlets, thermostats), and usable kitchens and bathrooms. 4.6 ELEVATORS The Property does not feature an elevator. 4.7 RESTROOMS Restroom(s) which are accessible to individuals with disabilities should have a door with a minimum clearance of 32 inches. There should be a minimum of one stall which complies with the ADA requirements. Dimensional requirements for a 'standard' accessible stall include a minimum stall width of 60 inches, a minimum depth of 56 inches, and toe clearances of 9 inches on the front and one side partition. The toilet seat height should be between 17 and 19 inches above the floor. Flush controls should be a maximum of 44 inches above the floor. The toilet paper dispenser should be 19 inches above the floor and 36 inches from the rear wall. Grab bars should be 36 inches above the floor and a minimum of 40 inches in length along the side walls. A clear space in front of the urinals should be 30 inches wide and a minimum of 48 inches deep. Urinals should be stall type or wall hung with an elongated rim at 17 inches above the floor. Flush controls should be a maximum of 44 inches above the floor. The counter tops for the sinks should be a maximum of 34 inches above the floor. They should extend a minimum of 17 inches from the wall. The counter tops should have a minimum clearance of 29 inches from the floor to the bottom of the apron. There should be clear floor space at least 30" x 48" in front of the counter. The bottom edge of the mirror should be a maximum of 40 inches above the floor. The sinks should have one-handed controls (i.e. levers, push or electronic controls) and have a maximum depth of 6.5 inches. The Property does not feature public restrooms. 23

35 4.8 POOL FACILITIES Although not considered a public area, the swimming pool is believed to accessible as a ramp is provided from the nearest parking area and the pool interior features steps with a railing. 4.9 OTHER REQUIREMENTS areas covered by the American Disabilities Act, Title III include drinking fountains, automatic teller machines and public telephones. No public drinking fountain, automatic teller machines or public telephones were observed at the Property. 24

36 5.0 COST ESTIMATES 5.1 REPAIRS REA noted the following areas in need of repair: CRITICAL REPAIRS: Critical Repairs include repairs and replacements that significantly impact habitability, value, income or marketability and that much be corrected before Freddie Mac will proceed with the transaction. No Critical Repairs were identified at the Property. PR-90 REPAIRS: PR-90 Repairs are corrective actions that must be completed in 90 days, and are limited to imminent life safety hazards and ongoing substantive damage to the Property. No PR-90 Repairs were identified at the Property. PRIORITY REPAIRS: Priority Repairs include repairs and replacements that are significant and must be addressed as soon as possible. All life safety hazards, code violations, material deficiencies and significant deferred maintenance items are considered Priority Repairs. The following Priority repairs were identified at the Property: 25

37 PRIORITY REPAIRS TABLE ITEM DESCRIPTION COST 1 Erosion/Damaged Retaining Wall Timbers: Eliminated source of ongoing erosion and make repairs to impacted landscaping and retaining wall timbers at the northwest corner of Building 3 (NET) 2 Mechanical Entrance Gate: Complete repairs to mechanical gate system located at the Property driveway entrance (NET) 3 Parking Area Curbing and Delamination: Complete repairs to isolated damaged curbing and driveway surfaces discussed in Section 3.3 (4 occurrences x $400/occurrence) 4 Driveway Settling: Eliminate source of erosion below driveway near the mail kiosk and repair the asphalt surface (NET) 5 Fencing Repairs: Complete repairs to damaged and impacted fencing discussed in Section 3.4 (5 occurrences x $300/occurrence) $4,000 $1,000 $1,600 $2,500 $1,500 6 Landscaping: Removal of tree branch impacting Building 12; trimming back of trees/shrubs impacting the exterior building finishes; removal of $3,000 isolated occurrences of dead bushes/shrubs (NET) 7 FHAA Protective Railings: Install protective railings under exterior stairs in the breezeways (10 breezeways x $500/breezeway) $5,000 8 FHAA Breezeway Entry Ramps: Renovate existing non-compliant ramps and/or install new ADA accessible ramps to allow for access into breezeways at Buildings 5, 9, 10 and 12 (4 breezeways x $8,000 $2,000/breezeway) 9 ADA / Leasing Office: Provide appropriate markings at ADA space located adjacent to the leasing office (NET) $ Exterior Siding: Complete repairs to approximately five locations of localized damage (holes in siding) $ Exterior Siding Cleaning: Pressure wash exterior siding throughout Property (localized areas of mildew/mold noted on siding) estimate 11 $2,200 $ Asphalt Seal / Stripe: Seal/stripe asphalt pavement (48,000 $0.10/sf) $4, Gutter Building 10: Replace missing gutter $500 PRIORITY REPAIRS TOTAL $34,850 26

38 Erosion and Timber Damage at the Northwest Corner of Building 3 27

39 OPERATIONAL REPAIRS: Operational Repairs include repairs and replacements that consist of minor deficiencies and minor deferred maintenance that are expected to be completed by the Borrower as a part of repairs and maintenance budget and that cannot be reasonably resolved by routine maintenance. OPERATIONAL REPAIRS TABLE ITEM DESCRIPTION COST 1 Recreational Equipment: Complete repairs to damaged swing (NET) $100 2 Main ID Signage: Repair damage Main ID monuments located at the $1,500 entrance to the Property (NET OPERATIONAL REPAIRS TOTAL $1,600 28

40 5.2 REPLACEMENT RESERVE WORKSHEET The total inflated 12-Year Replacement Reserve for the Property is $336,122 (see following page). The cost per unit over the term of the loan plus two years is $4,001 or an average annual cost of $333 per unit. The projections include maintenance of the exterior building envelope and exterior site improvements and major appliances, HVAC equipment, pool reconditioning and flooring. 29

41 9-Sep-15 PHYSICAL NEEDS OVER THE TERM No. of Buildings 11 Park Trace Apartments No. of Units 84 Jackson, Tennessee Age (years) 17 REA Job: Beyond the Term Property's Age TOTAL Year COST Exterior & Site ITEM Term Units in Cost EUL Exteriors - Paint/Maintain $ ,600 12,600 25,200 Asphalt - Seal/Stripe 2 96,000 $ ,800 4,800 9,600 Roof Replacements 2 11 $4, ,500 23,750 52,250 Mechanical/Electrical Furnaces 36 $ ,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000 AC Condensers 48 $ ,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000 Water Heaters 60 $ ,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 15,000 Flooring & Interiors Carpet - Units 108 $ ,300 6,300 6,300 6,300 6,300 6,300 6,300 6,300 6,300 6,300 6,300 6,300 75,600 Vinyl - Units 48 $ ,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 16,800 Appliances Ovens/Ranges 36 $ ,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 12,600 Refrigerators 48 $ ,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 19,200 Dishwashers 60 $ ,125 1,125 1,125 1,125 1,125 1,125 1,125 1,125 1,125 1,125 1,125 1,125 13,500 Recreational Swimming Pool Net $ 10, ,000 10,000 TOTAL 21,025 57,325 39,975 16,225 16,225 16,225 21,025 38,825 16,225 16,225 16,225 16, ,750 Inflation Factor (3.0%) Total Inflated 21,025 59,045 42,409 17,729 18,261 18,809 25,105 47,750 20,553 21,170 21,805 22, ,122 Cost per Unit ,001 Average Cost per Unit/ Year 333 This summary does not include immediate repairs. EUL - Estimated Useful Life 1. Includes maintenance, painting of sealing deck components, fascia and common area finishes. Date of last exterior maintenance event is unknown 2. Roofing finishes reportedly original. Unit cost shown per building

42 APPENDIX A FREDDIE MAC FORMS 31

43 Property Condition Assessment Mortgage, Consultant and Property Information Freddie Mac loan number Report date Property name Seller/Servicer name Walker & Dunlop Address Seller/Servicer number Inspection date City, State, Zip August 25, 2015 Number of apartment buildings Number of other buildings On-site contact name On-site contact telephone number 11 1 Number of stories Age of buildings (in years) Weather at time of inspection (clear, rain, snow cover, etc.) 1 and 2 Property condition consultant (firm name) Real Estate Advisory, LLC Address 121 Fairfield Way, Suite 230 City, State, Zip Bloomingdale, IL Building and Material Characteristics September 9, 2015 Put an "x" in the appropriate boxes below and furnish additional information when requested 17 Inspector's name Title Park Trace Apartments 1333 Whitehall Street Jackson, Tennessee Wanda Rudd Rob Rosengarten Telephone number Section I: Summary 04/2015 Building type Envelope Mechanicals (HVAC) Amenities (site) X Garden Stucco Central boiler steam heat X Club building/room Walk-up Wood siding Hydronic system X Swimming pool Elevator T-111 Gas FAU, central Spa and/or sauna Lowrise Masonite X Electric FAU, central Fitness center Midrise Planking Electric baseboard heat Barbecue High rise X Vinyl siding Wall-mounted AC unit Tennis courts Townhouse Brick veneer X AC condenser units X Playground equipment X Metal doors Evaporative cooler unit Storage Wood doors (heat) Construction type Wood sash windows (AC) X Wood frame X Aluminum windows Mold Metal frame Electrical Mold evidence observed Structural steel Unit capacity 100 amps Areas impacted by water Masonry Elevators Aluminum branch wiring intrusions observed Structural concrete Number of cabs Edison base/t-type fuses Defective building conditions Flat roof Last inspection date Tamper proof fuses likely to lead to future water X Pitched roof X Breakers intrusions observed Flat roof with mansards Mechanicals (plumbing) X GFI outlets Past/current water intrusions Fire-treated plywood Galvanized water piping or leaks reported X Copper water piping Tenant complaints reported Polybutylene water piping Interior Foundation type Cast iron waste X Drywall walls Problem materials/equipment X Slab on grade X ABS/PVC waste Plaster walls Imported drywall Concrete pier (drilled) Central water heater Wood paneling Spread, raised foundation Gas X Carpeting Underground parking structure Electric Wood flooring Life/Safety devices X Individual water heaters Ceramic floor tile X Smoke detectors Gas X Vinyl flooring Carbon monoxide detectors Parking X Electric X Wood doors X Fire extinguishers X Surface (uncovered) Circulating hot water Metal doors X Emergency lighting Structured X Spray-tex ceiling Emergency escapes Carports Smooth ceiling Pull stations/cords Garages Orange peel/textured Fire alarm Underground Sprinklers Clear Project Engineer Freddie Mac Multifamily Form 1105 (04/2015) Section I, Page 1 of 13

44 Building and Material Characteristics (continued) Project unit mix Give number of units 1 Bedroom/1 bath 16 3 Bedroom/2 bath 1 Bedroom/1.5 bath 3 Bedroom/3 bath 2 Bedroom/1 bath 4 Bedroom/2 bath 2 Bedroom/1.5 bath 4 Bedroom/3 bath 2 Bedroom/2 bath 48 3 Bedroom/1 bath 3 Bedroom/1.5 bath TOTAL Unit Inspection Information Indicate the type of unit, using the following abbreviations: 0BR, 1BR, 2BR, 3BR, 4BR, 5BR. Give the unit number and status, using the following status codes: V = vacant, D = down, O = occupied and M = model. (For example, an occupied one-bedroom unit numbered 101 should be listed as 1BR/101/O.) BR 2BR / 307 / V 2 2BR / 303 / V 3 2BR / 302 / O 4 2BR / / / / O 6 2BR / 207 / V 7 / / O 8 2BR / / / / O 10 1BR / 701 / O 11 1BR / 806 / O 12 2BR / 901 / / 1101 / O 14 2BR / 1206 / O 15 3BR / 1001 / O 16 3BR / 1018 / / / 18 / / 19 / / 20 / / / / 22 / / 23 / / 24 / / / / 26 / / 27 / / 28 / / / / 30 / / 31 / / 32 / / / / 34 / / 35 / / 36 / / / / 38 / / 39 / / 40 / / / / 42 / / 43 / / 44 / / / / 46 / / 47 / / 48 / / / / 50 / / 51 / / 52 / / / / 54 / / 55 / / 56 / / / / 58 / / 59 / / 60 / / / / 62 / / 63 / / 64 / / / / 66 / / 67 / / 68 / / / / 70 / / 71 / / 72 / / / / 74 / / 75 / / 76 / / / / 78 / / 79 / / 80 / / / / 82 / / 83 / / 84 / / / / 86 / / 87 / / 88 / / / / 90 / / 91 / / 92 / / / / 94 / / 95 / / 96 / / / / 98 / / 99 / / 100 / / 2BR 204 1BR M 3BR V O O Total number of units inspected Indicate the total number of units inspected by type and status Type of unit Occupied Vacant Down Model Studio 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom 5 Bedroom Freddie Mac Multifamily Form 1105 (04/2015) Section I, Page 2 of 13

45 Seismic Checklist For properties located in Seismic Zones 3 or 4 as defined in the 1997 Uniform Building Code, indicate if any of the following are applicable by placing an "x" in the appropriate box. Buildings with a weak or soft story (as defined by the International Building Code) at any floor level Buildings constructed with direct contact to adjacent buildings, including buildings that are part of the same Property, as well as those in contact with buildings on a separate property (this does not include buildings that are a continuous structure with fire separation walls) Buildings that have sustained previous structural earthquake damage with documented evidence of damage and repairs High-rise buildings (8-stories or greater above grade) Reinforced concrete buildings constructed prior to 1994, including cast-in-place and precast structures Reinforced concrete masonry bearing wall buildings constructed prior to 1994 Retrofitted unreinforced masonry (URM) buildings with retrofit work performed prior to 1995 (non-retrofitted URM buildings will not be considered) Wood-framed buildings that exhibit conspicuous physical deterioration (e.g., water damage, dry rot, corrosion, physical distress) to the primary lateral load resisting elements Wood-framed buildings constructed prior to 1950 Non-retrofitted wood-framed structures, constructed prior to 2000, with ground-level parking under dwelling units (tuck- under parking) Buildings with light-frame construction over a concrete podium structure constructed prior to 1994 For Seismic Zone 4 ONLY: There are buildings located within 50 feet of a known fault or, if located in California, within an Alquist-Priolo Special Study Zone Scope of Work The consultant must attach a narrative describing the scope of work, including the following information: Number of buildings inspected (including addresses) Description of major building components and the condition of each Inspections and certifications by local authorities for any building component (e.g., elevator, boiler, fire extinguisher, etc.) Planned capital improvements and work in progress, including an analysis of costs Life/safety issues, deferred maintenance, and all repairs and replacements recommended, including costs Readily identifiable issues related to non-compliance with applicable codes Open violations as issued by local authorities, including a cost to cure Problematic materials, equipment and systems Water intrusion or mold issues Description of records researched and information obtained to determine the condition of all systems (boiler, pool, elevator inspections, certificates, safety items and other information obtained and used as part of the property condition assessment) Replacement reserves, and the methodology used to estimate replacement reserves Photographs adequate to convey the property condition Site plan A list of all parties present during the inspection Resume of the on-site inspector The consultant should provide additional information that is useful in describing the property to give a better understanding of repairs or replacement reserves necessary. SEE SECTION V FOR DESCRIPTIONS OF REPAIR CATEGORIES TO BE USED IN THE CONSULTANT'S DESCRIPTION OF THE SCOPE OF WORK. Consultant's Certification On behalf of the property condition consultant, the undersigned hereby certifies that: The attached property condition report was prepared by the consultant in accordance with all applicable requirements in the Freddie Mac Multifamily Seller/Servicer Guide The report was prepared in a manner consistent with generally accepted industry practices and standards All information is true and correct, to the best of the undersigned's knowledge, and reflects the consultant's best professional opinion and judgment No changes or additions have been made to the standard provisions of this form other than those expressly approved in writing by Freddie Mac Consulting firm name Real Estate Advisory, LLC Signature of authorized representative Name (typed or printed) Rob Rosengarten / Kevin A. Mueller, PE Date Title September 9, 2015 Project Engineer / Vice President Freddie Mac Multifamily Form 1105 (04/2015) Section I, Page 3 of 13

46 Property Condition Assessment Section II: Property Inspection and Evaluation Freddie Mac loan number Report date Property name Seller/Servicer name Address Seller/Servicer number Inspection date City, State, Zip Site Walker & Dunlop September 9, 2015 Park Trace Apartments 1333 Whitehall Street August 25, 2015 Jackson, Tennessee Complete the estimated useful life, condition, remaining useful life, action and comments for the applicable items listed below. Indicate the condition using the following abbreviations: E = excellent, G = good, F = fair and P = poor. Indicate the action required using the following abbreviations: CR = Critical Repairs; PR = Priority Repairs; PR90 = 90 day Priority Repairs; OR = Operational Repairs and RR = reserve for future repair/replacement. See Section V for a complete description of each repair category. The consultant should attach additional information as needed. The consultant must also note any Mold observations on any component in the comment sections. Estimated Condition Remaining Action (CR, PR, Item Useful Life (E, G, F, P) Useful Life PR-90, OR, RR) Comments/Mold Observations Carports 20 Garages 20 Maintain as needed Maintenance structures 20 G 15 Maintain as needed Trash enclosures 20 G 15 Maintain as needed Roadways/Parking lots Asphaltic concrete 25 G/F 15 PR, RR Repair/Maintain as needed Seal coat 5 G 2 PR, RR Seal / stripe in term Concrete paving paving: Striping 5 G/F 5 PR, RR Repair/Maintain as needed Curb and gutter 25 G 15 Maintain as needed Interior gutter (swale) Pedestrian paving/hardscape 40 G 15 Signage 15 G 10 Maintain as needed Site utilities Site water lines 50 G 35 Maintain as needed Site sanitary lines 50 G 35 Maintain as needed Site lighting 20 G 15 Maintain as needed Site drainage (storm drainage) 50 G 40 Maintain as needed Landscaping PR, RR Repair/Maintain as needed Irrigation 20 G 15 Maintain as needed Site fences 30 G/F 15 PR, RR Repair/Maintain as needed Tennis courts 25 Swimming pool and/or spa Pool and/or spa plaster/lining 10 G 5 RR Maintain as needed Pool and/or spa heating equipment 10 G 5 RR Maintain as needed Pool and/or spa filtration equipment 10 G 5 RR Maintain as needed Pool and/or spa deck surface Sauna Recreation/Play area and equipment 15 G/F 5 OR, RR Repair/Maintain as needed 25 Freddie Mac Multifamily Form 1105 (04/2015) Section II, Page 4 of 13

47 Freddie Mac loan number Report date Property name Seller/Servicer name Walker & Dunlop September 9, 2015 Park Trace Apartments Address Seller/Servicer number Inspection date City, State, Zip 1333 Whitehall Street August 25, 2015 Jackson, Tennessee Structural, building envelope and common area furniture, fixtures and equipment Complete the estimated useful life, condition, remaining useful life, action and comments for the applicable items listed below. Indicate the condition using the following abbreviations: E = excellent, G = good, F = fair and P = poor. Indicate the action required using the following abbreviations: CR = Critical Repairs; PR = Priority Repairs; PR90 = 90 day Priority Repairs; OR = Operational Repairs and RR = reserve for future repair/replacement. See Section V for a complete description of each repair category. The consultant should attach additional information as needed. The consultant must also note any Mold observations on any component in the comment sections. Estimated Condition Remaining Action (CR, PR, Item Useful Life (E, G, F, P) Useful Life PR-90, OR, RR) Comments/Mold Observations Foundation (structural) 50 G 35 Maintain as needed Foundation (waterproofing) Building slab (structural) 50 G 35 Maintain as needed Exterior walls/roof (structural) 40 G 25 Maintain as needed Exterior walls (paint/finish) 7 G 1 PR, RR Maintenance anticipated Doors and frames 30 G 15 Maintain as needed Windows and frames 30 G 15 Maintain as needed Stairs 25 G 15 Maintain as needed Fire escapes Balconies/Handrails/Guardrails 20 G 10 Maintain as needed Decks 20 Patio slabs 20 G 10 Maintain as needed Unit fencing (patio fencing) Roof coverings 20 G/F 2 RR Replace as needed Roof drainage (gutters, drains, etc.) G 15 PR Maintain as needed Building mounted lighting 15 G 10 Maintain as needed Common area improvements Common area floors Community facilities kitchen Community facilities appliances Community washing machines Community clothes dryers Freddie Mac Multifamily Form 1105 (04/2015) Section II, Page 5 of 13

48 Freddie Mac loan number Report date Property name Seller/Servicer name Walker & Dunlop September 9, 2015 Park Trace Apartments Address Seller/Servicer number Inspection date City, State, Zip 1333 Whitehall Street August 25, 2015 Jackson, Tennessee Mechanical and electrical Complete the estimated useful life, condition, remaining useful life, action and comments for the applicable items listed below. Indicate the condition using the following abbreviations: E = excellent, G = good, F = fair and P = poor. Indicate the action required using the following abbreviations: CR = Critical Repairs; PR = Priority Repairs; PR90 = 90 day Priority Repairs; OR = Operational Repairs and RR = reserve for future repair/replacement. See Section V for a complete description of each repair category. The consultant should attach additional information as needed. The consultant must also note any Mold observations on any component in the comment sections. Estimated Condition Remaining Action (CR, PR, Item Useful Life (E, G, F, P) Useful Life PR-90, OR, RR) Comments/Mold Observations Mechanical/Plumbing Hot and cold water distribution 40 G 25 Maintain as needed Domestic water boilers Domestic water boiler peripherals Domestic water heaters 10 G,F 0-10 RR Replace as needed Domestic water pumps Sanitary waste and vent (sewer) 40 G/F 30 Monitor as needed Mechanical HVAC Heating system (describe) 20 G,F 0-20 RR Replace as needed Cooling system (describe) 15 G,F 0-15 RR Replace as needed Electrical Building power/wiring 50 G 35 Maintain as needed Switchgear/metering 50 G 35 Maintain as needed Emergency lighting/generator Smoke and fire detection 10 G 10 Maintain as needed Buzzer/intercom (security) Fire suppression Elevators Security Freddie Mac Multifamily Form 1105 (04/2015) Section II, Page 6 of 13

49 Freddie Mac loan number Report date Property name Seller/Servicer name Walker & Dunlop September 9, 2015 Park Trace Apartments Address Seller/Servicer number Inspection date City, State, Zip 1333 Whitehall Street August 25, 2015 Jackson, Tennessee Dwelling units Complete the estimated useful life, condition, remaining useful life, action and comments for the applicable items listed below. Indicate the condition using the following abbreviations: E = excellent, G = good, F = fair and P = poor. Indicate the action required using the following abbreviations: CR = Critical Repairs; PR = Priority Repairs; PR90 = 90 day Priority Repairs; OR = Operational Repairs and RR = reserve for future repair/replacement. See Section V for a complete description of each repair category. The consultant should attach additional information as needed. The consultant must also note any Mold observations on any component in the comment sections. Estimated Condition Remaining Action (CR, PR, Item Useful Life (E, G, F, P) Useful Life PR-90, OR, RR) Comments/Mold Observations Unit entry door(s) and frame(s) 30 G 20 Maintain as needed Patio doors 30 Smoke/fire detection 10 G 10 Maintain as needed Buzzer/intercom (security) Window coverings 10 G 10 Maintain as needed Flooring Carpet 7 G,F 0-7 RR Replace as needed Resilient flooring (vinyl) 15 G,F 0-15 RR Replace as needed Cabinetry Kitchen 25 G 15 Maintain as needed Bathrooms 25 G 15 Maintain as needed Countertops and sinks Kitchen 25 G 15 Maintain as needed Bathrooms 25 G 15 Maintain as needed Appliances Refrigerator 15 G,F 0-15 RR Replace as needed Range/stove 20 G,F 0-20 RR Replace as needed Range vent 20 G 15 Replace as needed Dishwasher 10 G,F 0-10 RR Replace as needed Disposal 10 G 15 Maintain as needed Microwave 10 Replace as needed Clothes washer 10 Clothes dryer 10 Bathroom fixtures Toilet 30 G 20 Maintain as needed Tub/shower and enclosures 30 G 20 Maintain as needed Accessories Freddie Mac Multifamily Form 1105 (04/2015) Section II, Page 7 of 13

50 Property Condition Assessment Section III: Critical and Priority Repairs and Cost Estimates Freddie Mac loan number Report date Property name Seller/Servicer name Walker & Dunlop September 9, 2015 Park Trace Apartments Address Seller/Servicer number Inspection date City, State, Zip 1333 Whitehall Street August 25, 2015 Jackson, Tennessee List each item that can be categorized as a Critical or Priority Repair. Complete the unit of measure, quantity to be repaired or replaced, per item costs, total costs and comments for each item. Complete the total of the "Per item costs" column and of the "Total costs" column. Item Repair Type C = Critical P = Priority PR-90 = 90 day Unit of Measure Quantity Per item costs Total costs Comments SITE Erosion/Damaged Landscape Timbers P NET 1.00 $4, $4, Eliminate erosion and make repairs Asphalt Pavement - Seal / Stripe P SF $0.10 $4, Seal / stripe Delaminated Pavement/Damage Curbin P EACH 4.00 $ $1, Repair isolated occurrences Driveway Settling / Erosion P NET 1.00 $2, $2, Eliminate erosion and make repairs Damaged Fencing P EACH 5.00 $ $1, Repair as needed Trees/Bushes/Dead Shrubs P NET 1.00 $3, $3, Make repairs as needed ADA Striping / Leasing Office Space P NET 1.00 $ $ Install Subtotal $17, STRUCTURAL, BUILDING ENVELOPE AND COMMON AREA FURNITURE, FIXTURES AND EQUIPMENT FHAA - Protective Railings P EACH $ $5, Install as needed FHAA - Breezeway Access P EACH 4.00 $2, $8, Install where needed Exterior Siding-Localized Damage P EACH 5.00 $ $ Exterior Siding-Pressure Wash P BLDG $ $2, Bldg 10 - Missing Gutter P EACH 1.00 $ $ Subtotal MECHANICAL AND ELECTRICAL Mechanical Entry Gate P NET $16, $1, $1, Repair damage gate DWELLING UNITS Subtotal $1, TOTAL Subtotal $34, Freddie Mac Multifamily Form 1105 (04/2015) Section III, Page 8 of 13

51 Property Condition Assessment Section IV: Capital Needs Over the Loan Term Freddie Mac loan number Report date Property name Building age September 9, 2015 Park Trace Apartments 17 Seller/Servicer name Address Mortgage term 10 Walker & Dunlop 1333 Whitehall Street Seller/Servicer number Inspection date City, State, Zip Number of units August 25, 2015 Jackson, Tennessee Complete the quantity, unit and per item costs for the applicable items listed below. Indicate the projected expenditures for those items in each year of the loan term plus two years up to a maximum of 12 years. SITE Item Quantity Unit of Measure Per Item Cost Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Carports Garages Maintenance structures Trash enclosures Roadways/Parking lots Asphaltic concrete Seal coat 96,000 SF $0.10 $4, $4, Concrete paving paving: Striping see seal coat Curb and gutter Interior gutter (swale) Pedestrian paving/hardscape Signage Site utilities Site water lines Site sanitary lines Site lighting Site drainage (storm drainage) Landscaping Irrigation Site fences Tennis courts Swimming pool and/or spa Pool and/or spa plaster/liner Net Net $5, $5, Pool and/or spa heating equipment Net Net $2, $2, Pool and/or spa filtration equipment Net Net $2, $2, Pool and/or spa deck surface Sauna Recreation/Play area and equipment Year 9 Year 10 Year 11 Year 12 Total $9, $5, $2, $2, Freddie Mac Multifamily Form 1105 (04/2015) Section IV, Page 9 of 13

52 Freddie Mac loan number Report date Property name Building age September 9, 2015 Park Trace Apartments 17 Seller/Servicer name Address Mortgage term 10 Walker & Dunlop 1333 Whitehall Street Seller/Servicer number Inspection date City, State, Zip Number of units August 25, 2015 Jackson, Tennessee STRUCTURAL, BUILDING ENVELOPE AND COMMON AREA FURNITURE, FIXTURES AND EQUIPMENT Item Quantity Unit of Measure Per Item Cost Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Foundation (structural) Foundation (waterproofing) Building slab (structural) Exterior walls/roof (structural) Exterior walls (paint/finish) 168 Unit $ $12, $12, Doors and frames Windows and frames Stairs (structural/finish) Fire escapes Balconies/handrails/guardrails Decks Patio slabs Unit fencing (patio fencing) Roof coverings 11 Bldg. $4, $28, $23, Roof drainage (gutters, drains, etc.) Building mounted lighting Common area improvements Common area floors Community facilities kitchen Community facilities appliances Community washing machines Community clothes dryers Year 10 Year 11 Year 12 Total $25, $52, Freddie Mac Multifamily Form 1105 (04/2015) Section IV, Page 10 of 13

53 Freddie Mac loan number Report date Property name Building age September 9, 2015 Park Trace Apartments 17 Seller/Servicer name Address Mortgage term 10 Walker & Dunlop 1333 Whitehall Street Seller/Servicer number Inspection date City, State, Zip Number of units August 25, 2015 Jackson, Tennessee MECHANICAL AND ELECTRICAL Item Quantity Unit of Measure Per Item Cost Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Total Mechanical/Plumbing Hot and cold water distribution Domestic water boilers Domestic water boiler peripherals Domestic water heaters 60 Each $ $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $15, Domestic water pumps Sanitary waste and vent (sewer) Mechanical/HVAC Heating system (describe) 36 Each $ $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $18, Cooling system (describe) 48 Each $ $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $24, Electrical Building power/wiring Switchgear/metering Emergency lighting/generator Smoke and fire detection Buzzer/intercom (security) Fire suppression Elevators Security Freddie Mac Multifamily Form 1105 (04/2015) Section IV, Page 11 of 13

54 Freddie Mac loan number Report date Property name Building age September 9, 2015 Park Trace Apartments 17 Seller/Servicer name Address Mortgage term 10 Walker & Dunlop 1333 Whitehall Street Seller/Servicer number Inspection date City, State, Zip Number of units August 25, 2015 Jackson, Tennessee DWELLING UNITS Item Quantity Unit of Measure Per Item Cost Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Unity entry door(s) and frame(s) Patio doors Smoke/fire detector Buzzer/intercom (security) Window covering Flooring Carpet 108 Each $ $6, $6, $6, $6, $6, $6, $6, $6, $6, Resilient flooring (vinyl) 48 Each $ $1, $1, $1, $1, $1, $1, $1, $1, $1, Cabinetry Kitchen Bathrooms Countertops and sinks Kitchen Bathrooms Appliances Refrigerator 48 Each $ $1, $1, $1, $1, $1, $1, $1, $1, $1, Range/stove 36 Each $ $1, $1, $1, $1, $1, $1, $1, $1, $1, Range vent Dishwasher 60 Each $ $1, $1, $1, $1, $1, $1, $1, $1, $1, Disposal Microwave Clothes washer Clothes dryer Bathroom improvements Toilet Tub/shower and enclosures Accessories Year 10 $6, $1, $1, $1, $1, Year 11 $6, $1, $1, $1, $1, Year 12 $6, $1, $1, $1, $1, Total $75, $16, $19, $12, $13, TOTALS Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Total (uninflated) $21, $57, $39, $16, $16, $16, $21, $38, $16, $16, $16, $16, Inflation 3% % % % % % % % % % % % % Total inflated $21, $59, $42, $17, $18, $18, $25, $47, $20, $21, $21, $22, Total expenditures (uninflated) Total expenditures (inflated) $291, $336, Total expenditures per unit per year (uninflated) Total expenditures per unit per year (inflated) $ $ Freddie Mac Multifamily Form 1105 (04/2015) Section IV, Page 12 of 13

55 Property Condition Assessment Section V: Repair Categories Repair Categories Only Critical Repairs, PR-90 Repairs, Priority Repairs and Operational Repairs should be noted on Form No other repair items should be listed. Critical Repairs These are repairs and replacements that significantly impact habitability, value, income or marketability and that must be corrected before Freddie Mac will proceed with the transaction. PR-90 Repairs These are corrective actions that must be completed within 90 days, and are limited to: Imminent life safety hazards Ongoing substantive damage to the property Priority Repairs These are repairs and replacements that are significant and must be addressed as soon as possible. Priority Repairs consist of: All non-imminent life safety hazards Violations of any federal, State or local law, ordinance or code relating to zoning, subdivision and use, building and housing accessibility (including the Americans with Disabilities and Fair Housing Acts), health matters or fire safety Material deficiencies * Significant deferred maintenance * * Additional guidance can be found in Section 14.3(b) of the Freddie Mac Multifamily Seller/Servicer Guide Operational Repairs These are repairs and replacements that consist of Minor Deficiencies, Minor Deferred Maintenance and Handicap Accessibility Enhancements that are expected to be completed by the Borrower as part of a repairs and maintenance budget and that cannot be reasonably resolved by Routine Maintenance. Operational Repairs consist of: Minor deficiencies * Minor deferred maintenance * Handicap Accessibility Enhancements * * Additional guidance can be found in Section 14.3(b) of the Freddie Mac Multifamily Seller/Servicer Guide Freddie Mac Multifamily Form 1105 (04/2015) Page 13 of 13

56 APPENDIX B LIST OF APARTMENTS INSPECTED OCCUPIED UNITS UNIT BR/BATH STATUS COMMENTS BR / 2 BA Occupied Good BR / 2 BA Occupied Good BR / 2 BA Occupied Good BR / 1 BA Occupied Good BR / 2 BA Occupied Fair Water Leak in Bedroom Ceiling BR / 1 BA Occupied Good BR / 2 BA Occupied Good BR / 2 BA Occupied Good BR / 2 BA Occupied Good BR / 2 BA Occupied Good BR / 2 BA Occupied Good VACANT UNITS UNIT BR/BATH STATUS COMMENTS BR / 2 BA Vacant Good BR / 2 BA Vacant Fair New Move Out BR / 2 BA Vacant Model BR / 2 BA Vacant Fair BR / 2 BA Vacant Good Prior to the site inspection, REA requested that all down and vacant units be available for inspection. In addition, REA requested that one random occupied ground floor unit in each building be available for inspection to allow radon kit placement and that one of each unit type be included in units inspected. Based on these requests, property management selected the units and notified the respective tenants of the pending inspection. 32

57 APPENDIX C PHOTOGRAPHS The following photographs were taken during the assessment of the Property to document the status of the Property. All photographs were taken on August 25,

58 1. Property sign 2. Building elevation 3. Building elevation (Building 4) 4. Bedroom finishes 5. Kitchen finishes 6. Kitchen finishes

59 7. Kitchen finishes 8. Bathroom finishes 9. Bathroom finishes 10. In-unit washer and dryer connections