OFFERING MEMORANDUM 2721 N Madison St Denver, CO PDF Free Download

OFFERING MEMORANDUM 2721 N Madison St Denver, CO 80205

N O N - E N D O R S E M E N T A N D D I S C L A I M E R N O T I C E Non-Endorsements Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation's logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers. ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS. Disclaimer THIS IS A BROKER PRICE OPINION OR COMPARATIVE MARKET ANALYSIS OF VALUE AND SHOULD NOT BE CONSIDERED AN APPRAISAL. This information has been secured from sources we believe to be reliable, but we make no representations or warranties, express or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. Â 2017 Marcus & Millichap. All rights reserved. MADISON TOWNHOMES Denver, CO ACT ID Y0050369

E X C L U S I V E L Y L I S T E D B Y Greg Price First Vice President Investments Senior Director - National Multi Housing Group Denver Office Tel: (303) 328-2047 Fax: (303) 328-2010 greg.price@marcusmillichap.com License: CO FA40026598 Ramin Khan Associate Associate Member - National Multi Housing Group Denver Office Tel: (303) 328-2062 Fax: (303) 328-2010 ramin.khan@marcusmillichap.com License: CO FA100073944

TABLE OF CONTENTS SECTION INVESTMENT OVERVIEW 01 Offering Summary Regional Map Local Map Aerial Photo FINANCIAL ANALYSIS 02 Rent Roll Summary Rent Roll Detail Operating Statement Notes Pricing Detail Acquisition Financing Growth Rate Projections Cash Flow MARKET COMPARABLES 03 Comparables Rent Comparables MARKET OVERVIEW 04 Market Analysis Demographic Analysis

INVESTMENT OVERVIEW 5

EXECUTIVE SUMMARY NUMBER OF UNITS UNIT TYPE VITAL DATA Price $1,200,000 CURRENT YEAR 1 Loan Amount $900,000 CAP Rate 5.54% 5.99% Loan Type Proposed New GRM 13.84 12.94 Interest Rate / Amortization 4.50% / 30 Years Net Operating Income $66,523 $71,897 Price/Unit $240,000 Net Cash Flow After Debt Service 8.67% / $26,023 10.47% / $31,397 Price/SF $177.78 Total Return 8.67% / $26,023 10.47% / $31,397 Number of Units 5 Rentable Square Feet 6,750 Year Built 1964 Lot Size 0.28 acre(s) UNIT MIX 5 2 Bedroom/ 1 Bath 1,350 APPROX. SQUARE FEET OFFERING SUMMARY MAJOR EMPLOYERS EMPLOYER # OF EMPLOYEES Champva Centre 10,000 Colorado Department Human Svc 5,040 Regulation and ADM Trnsp 3,200 Hematology Oncology Dept 2,807 St Joseph Hospital Inc 2,389 Saint Joseph Hospital 2,000 Crowne Plaza Denver 1,936 US Post Office 1,766 Defense Accounting Center 1,600 Imagine Communications Corp 1,400 Colorado Dept Public Health 1,350 Denver Fire Department 1,282 DEMOGRAPHICS 5 Total 6,750 1-Miles 3-Miles 5-Miles 2016 Estimate Pop 19,111 182,425 420,583 2016 Census Pop 17,415 156,759 364,498 2016 Estimate HH 7,875 93,043 193,624 2016 Census HH 7,260 79,956 168,000 Median HH Income $59,457 $55,582 $52,587 Per Capita Income $36,369 $46,606 $39,543 Average HH Income $87,865 $90,386 $84,879 # 6

INVESTMENT OVERVIEW OFFERING SUMMARY The Madison Street Townhomes is a beautiful property located in the heart of Denver at 2721 Madison St, Denver CO 80205. The building was built in 1964 and has gone through recent renovations, with a new roof and new parking lot. All units have had various degrees of upgrades over the last several years. Each spacious, 1350-square foot unit is two-bedroom, 1-bath, and includes a 450 square-foot basement and individual private patio. Each unit is individually metered for gas and electric, making the tenants responsible for the cost. The Madison Street Townhomes are walking distance to City Park, Denver Zoo and Denver Museum of Natural Sciences. The property is more than conveniently located, directly across the street from RTD, Madison St & 28th Ave location. Sprouts grocery store is less than half-a-mile away and King Soopers is less than 2.5 miles from the property's location. Popular restaurants such as Denver Biscuit, The Avenue Grill and Dos Santos are all under a 10-minute walk. This property is just minutes from downtown Denver and less than four miles from Pepsi Center, home of the Denver Nuggets, Colorado Mammoth and Colorado Avalanche. Over 200 sporting events and concerts are scheduled each year at Pepsi Center, taking over 1000 staff members to run each event 2721 Madison Street is located just 2 miles from Saint Joseph s Hospital. Saint Joseph s hospital is recognized as one of the top hospitals in the nation and employs more than 7000 people. Saint Joseph s is currently undergoing renovation and is currently equipped with 400 beds. INVESTMENT HIGHLIGHTS Townhome Style Two Bedroom Two Off-Street Parking Spaces Per Unit Refinished Hardwood Floors Some Upgraded Kitchens and Baths Double-Pane Windows Private Patios New Roof and Parking Lot Close Proximity to City Park and Denver Zoo Washer/ Dryer Hookups In Each Unit # 7

PROPERTY OVERVIEW OFFERING SUMMARY THE OFFERING Property Madison Townhomes Price $1,200,000 Property Address 2721 N Madison St,Denver,CO SITE DESCRIPTION Number of Units 5 Year Built/Renovated 1964 Rentable Square Feet 6,750 Lot Size 0.28 acre(s) Parking 10 Parking Ratio 2 Per Unit CONSTRUCTION Foundation Concrete Framing Wood Exterior All Brick Parking Surface Asphalt Roof Pitched Shingle PROPOSED FINANCING First Trust Deed Loan Amount $900,000 Loan Type Proposed New Interest Rate 4.50% Amortization 30 Years Loan Term 10 Years Loan to Value 75% Debt Coverage Ratio 1.64 # 8

REGIONAL MAP 9

LOCAL MAP 10

N MADISON TOWNHOMES Cole Arts and Science Academy AERIAL PHOTO New Development: Skyland Village Barrett Elementary School Manuel High School Columbine Elementary P.R.E.P St. Elizabeth s School SUBJECT PROPERTY East High School

PROPERTY PHOTO 12

FINANCIAL ANALYSIS 13

RENT ROLL SUMMARY FINANCIAL ANALYSIS 14

RENT ROLL DETAIL FINANCIAL ANALYSIS 15

OPERATING STATEMENT FINANCIAL ANALYSIS 16

PRICING DETAIL FINANCIAL ANALYSIS 17

GROWTH RATE PROJECTIONS FINANCIAL ANALYSIS 18

CASH FLOW FINANCIAL ANALYSIS 19

MARKET COMPARABLES 20

8 SALES COMPARABLES MAP MADISON TOWNHOMES (SUBJECT) 1 2 3 4 5 6 7 8 Monroe Street Apartments 2355 Lafayette St 2880 N Harrison St Sunnyside Apartments 1520 Steele St 1530 Gaylord St The Hanford House Apartments 3200 Ivy St SALES COMPARABLES 21

PROPERTY MADISON TOWNHOMES NAME SALES COMPARABLES SALES COMPS AVG SALES COMPARABLES Average Price Per Square Foot Average Price Per Unit $400.00 $360.00 $320.00 Avg. $303.28 $400,000 $360,000 $320,000 $280.00 $240.00 $280,000 $240,000 Avg. $235,539 $200.00 $200,000 $160.00 $160,000 $120.00 $120,000 $80.00 $80,000 $40.00 $40,000 $0.00 2721 N Madison St Monroe Street Apartments 2355 Lafayette St 2880 N Harrison St Sunnyside Apartments 1520 Steele St 1530 The Hanford 3200 Ivy St Gaylord St House Apartments $0 2721 N Monroe Madison St Street Apartments 2355 Lafayette St 2880 N Sunnyside Harrison St Apartments 1520 Steele St 1530 Gaylord St The Hanford House Apartments 3200 Ivy St 22

PROPERTY MADISON TOWNHOMES NAME SALES MARKETING COMPARABLES TEAM SALES COMPARABLES 2721 N MADISON ST 2721 N Madison St, Denver, CO, 80205 MONROE STREET APARTMENTS 2725 Monroe St, Denver, CO, 80205 1 2355 LAFAYETTE ST 2355 Lafayette St, Denver, CO, 80205 2 rentpropertyname1 rentpropertyname1 rentpropertyname1 Units Unit Type Offering Price: $1,200,000 5 2 Bdr 1 Bath Price/Unit: $240,000 Price/SF: $177.78 CAP Rate: 5.54% GRM: 13.84 Total No. of Units: 5 Year Built: 1964 Units Unit Type Close Of Escrow: 4/20/2017 15 1 Bdr 1 Bath Sales Price: $3,800,000 3 2 Bdr 1 Bath Price/Unit: $211,111 Price/SF: $342.34 CAP Rate: 6.34% GRM: 13.45 Total No. of Units: 18 Year Built: 1951 Units Unit Type Close Of Escrow: 5/1/2017 6 1 Bdr 1 Bath Sales Price: $1,000,000 Price/Unit: $166,667 Price/SF: $217.39 CAP Rate: 6.34% Total No. of Units: 6 Year Built: 1890 rentpropertyaddress1 Underwriting Criteria Income $87,538 Expenses $21,015 NOI $66,523 Vacancy ($2,601) rentpropertyaddress1 rentpropertyaddress1 23

PROPERTY MADISON TOWNHOMES NAME SALES MARKETING COMPARABLES TEAM SALES COMPARABLES 2880 N HARRISON ST 2880 N Harrison St, Denver, CO, 80205 3 SUNNYSIDE APARTMENTS 2405 Tremont Pl, Denver, CO, 80205 4 1520 STEELE ST 1520 Steele St, Denver, CO, 80206 5 rentpropertyname1 rentpropertyname1 rentpropertyname1 Units Unit Type Close Of Escrow: 4/14/2017 3 2 Bdr 1 Bath Sales Price: $636,000 Price/Unit: $212,000 Price/SF: $254.40 CAP Rate: 6.46% Total No. of Units: 3 Year Built: 1964 Units Unit Type Close Of Escrow: 4/7/2017 4 2 Bdr 1 Bath Sales Price: $1,156,000 Price/Unit: $289,000 Price/SF: $361.25 Total No. of Units: 4 Year Built: 1909 Units Unit Type Close Of Escrow: 5/1/2017 5 1 Bdr 1 Bath Sales Price: $1,250,000 1 2 Bdr 1 Bath Price/Unit: $208,333 Price/SF: $258.96 Total No. of Units: 6 Year Built: 1901 rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 24

PROPERTY MADISON TOWNHOMES NAME SALES MARKETING COMPARABLES TEAM SALES COMPARABLES 1530 GAYLORD ST 1530 Gaylord St, Denver, CO, 80206 6 THE HANFORD HOUSE APARTMENTS 809 Dexter St, Denver, CO, 80220 7 3200 IVY ST 3200 Ivy St, Denver, CO, 80207 8 rentpropertyname1 rentpropertyname1 rentpropertyname1 Units Unit Type Sales Price: $1,250,000 2 1 Bdr 1 Bath Price/Unit: $312,500 2 2 Bdr 1 Bath Price/SF: $375.94 Total No. of Units: 4 Year Built: 1902 Units Unit Type Sales Price: $7,400,000 34 1 Bdr 1 Bath Price/Unit: $194,737 4 2 Bdr 2 Bath Price/SF: $329.90 CAP Rate: 5.30% Total No. of Units: 38 Year Built: 1968 Units Unit Type Sales Price: $869,900 3 2 Bdr 1 Bath Price/Unit: $289,967 Price/SF: $286.06 Total No. of Units: 3 Year Built: 1958 rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 25

8 RENT COMPARABLES MAP MADISON TOWNHOMES (SUBJECT) 1 2 3 4 5 6 Park Court Vitruvius 2400 High St Monroe Street Apartments 1530 Gaylord St 3347 N Harrison St 7 8 9 10 11 12 13 14 15 16 17 18 20 26

PROPERTY MADISON TOWNHOMES NAME AVERAGE OCCUPANCY RENT COMPARABLES 100 Avg. 100.00% 90 80 70 60 50 40 30 20 10 0 2721 N Madison St Park Court Vitruvius 2400 High St Monroe Street Apartments 1530 Gaylord St 3347 N Harrison St 27

PROPERTY MADISON TOWNHOMES NAME AVERAGE RENT - MULTIFAMILY RENT COMPARABLES Studios 1 Bedroom $2,000 $2,000 $1,800 $1,800 $1,600 $1,400 $1,200 Avg. $1,147 $1,600 $1,400 $1,200 Avg. $1,296 $1,000 $1,000 $800 $800 $600 $600 $400 $400 $200 $200 $0 2721 N Madison St Park Court Vitruvius 2400 High St Monroe Street Apartments 1530 Gaylord St 3347 N Harrison St $0 2721 N Madison St Park Court Vitruvius 2400 High St Monroe Street Apartments 1530 Gaylord St 3347 N Harrison St 2 Bedroom $2,000 $1,800 Avg. $1,701 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 2721 N Madison St Park Court Vitruvius 2400 High St Monroe Street Apartments 1530 Gaylord St 3347 N Harrison St 28

PROPERTY MADISON TOWNHOMES NAME RENT MARKETING COMPARABLES TEAM 2721 rentpropertyname1 N MADISON ST 2721 N Madison St, Denver, CO, 80205 rentpropertyaddress1 PARK COURT 1685 Saint Paul St, Denver, CO, 80206 1 VITRUVIUS 1674-1680 Steele Street, Denver, CO, 80206 2 rentpropertyname1 rentpropertyname1 rentpropertyname1 Unit Type Units SF Rent Rent/SF 2 Bdr 1 Bath 5 1,350 $1,430 $1.06 Total/Avg. 5 1,350 $1,430 $1.06 Unit Type Units SF Rent Rent/SF Studio 6 465 $1,141 $2.45 1 Bdr 10 442 $1,175 $2.66 2 Bdr 2 780 $1,827 $2.34 Total/Avg. 18 487 $1,236 $2.54 Unit Type Units SF Rent Rent/SF Studio 1 780 $1,152 $1.48 1 Bdr 18 866 $1,486 $1.72 2 Bdr 2 950 $1,653 $1.74 Total/Avg. 21 870 $1,486 $1.71 YEAR BUILT: 1964 NOTES Some units have kitchen and bath upgrades. Each unit has two parking spots, private-fenced patio, rentpropertyaddress1 basement and washer/ dryer hook-ups. Water/Sewer charge is $50 per unit, per month. Tenants pay gas and electricity directly to provider. OCCUPANCY: 100% YEAR BUILT: 1927 NOTES Unit amenities include: Cable Ready, Dishwasher, High Speed Internet, Refrigerator, Storage. rentpropertyaddress1 Community Amenities include: Self-Service Laundry, Courtyard, Gated. Tenant Paid Utilities: Unknown OCCUPANCY: 100% YEAR BUILT: 1911 NOTES Located across the street from Denver's City Park. rentpropertyaddress1 Unit amenities include: Cable Ready, Courtyard, Storage, Refrigerator, Heating, High Speed Internet, Balcony, Assigned Street Parking. Community Amenities include: Self-Service Laundry, Gated, Courtyard. Tenant Paid Utilities: Unknown 29

PROPERTY MADISON TOWNHOMES NAME RENT MARKETING COMPARABLES TEAM 2400 HIGH ST 2400 High St, Denver, CO, 80205 3 MONROE STREET APARTMENTS 2725 Monroe St, Denver, CO, 80205 4 1530 GAYLORD ST 1530 Gaylord St, Denver, CO, 80206 5 rentpropertyname1 rentpropertyname1 rentpropertyname1 Unit Type Units SF Rent Rent/SF 1 Bdr 16 550 $1,092 $1.99 Total/Avg. 16 550 $1,092 $1.99 Unit Type Units SF Rent Rent/SF 1 Bdr 16 612 $1,400 $2.29 2 Bdr 2 700 $1,550 $2.21 Total/Avg. 18 622 $1,417 $2.28 Unit Type Units SF Rent Rent/SF 1 Bdr 1 700 $1,295 $1.85 1 Bdr 1 800 $1,355 $1.69 2 Bdr 1 900 $1,950 $2.17 2 Bdr 1 925 $1,795 $1.94 Total/Avg. 4 858 $1,690 $1.97 OCCUPANCY: 100% YEAR BUILT: 1953 NOTES Unit Amenities include Air Conditioning, Dishwasher, Disposal, Double Pane Windows, Heating, rentpropertyaddress1 Microwave, Patio, Range, Refrigerator, Smoke Free, Storage Units, Tub/Shower. Site Amenities include Laundry Facilities, Community-Wide WiFi. Tenant Paid Utilities: Unknown OCCUPANCY: 100% YEAR BUILT: 1951 NOTES Located next to City Park and easy access into the City, Monroe Street Apartments residents rentpropertyaddress1 are responsible for Electric and Gas Utilities. Features and Amenities include: Located next to City Park, and easy access into the City, private backyard, cascade double paned windows, air conditioning, ceiling fans, fully remodeled units, parking, in-unit washers/ dryers, open floor plans, gas ranges, maple cabinets and more. Tenant Paid Utilities: Unknown OCCUPANCY: 100% YEAR BUILT: 1902 NOTES Three stories with partial basement located in the City Park West neighborhood. Property rentpropertyaddress1 had attached parking. Tenant Paid Utilities: Unknown 30

PROPERTY MADISON TOWNHOMES NAME RENT MARKETING COMPARABLES TEAM 3347 N HARRISON ST 3347 N Harrison St, Denver, CO, 80205 6 rentpropertyname1 rentpropertyname1 rentpropertyname1 Unit Type Units SF Rent Rent/SF 2 Bdr 1 Bath 1 1,000 $1,600 $1.60 Total/Avg. 1 1,000 $1,600 $1.60 OCCUPANCY: 100% YEAR BUILT: 1947 NOTES Recently remodeled townhouse style home located minutes from RTD Lightrail, I-225 and I-70. Tenant Paid Utilities: Unknown Tenants pay gas, electric and water. rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 31

MARKET OVERVIEW 32

DENVER OVERVIEW MARKET OVERVIEW The Denver-Aurora-Lakewood metro consists of 10 counties: Broomfield, Arapahoe, Denver, Adams, Douglas, Jefferson, Clear Creek, Elbert, Gilpin and Park counties. Denver, which is both a county and a city, is the largest of each, with approximately 700,000 residents. The metro is at the center of Colorado s Front Range, nestled at the convergence of the Great Plains and the majestic Rocky Mountains. The eastern and northern reaches of the metro are expected to receive the majority of future development, as land in these areas is relatively flat and more affordable. Denver s elevation of 5,280 feet above sea level provides it with the nickname Mile-High City. METRO HIGHLIGHTS MAJOR TRANSPORTATION CENTER Denver serves as the vital transportation gateway to the West, with a well-developed infrastructure. The region is accessed by three interstates and two freight rail lines. EMPHASIS ON SKILLED JOBS Denver s highly educated labor force attracts tech employers. Roughly 40 percent of residents age 25 and older hold at least a bachelor s degree. GROWING ALTERNATIVE ENERGY SECTOR The National Renewable Energy Laboratory located in Golden helps lure energy-related businesses to the region. 33

MARKET OVERVIEW ECONOMY Key drivers of the region s economy include aerospace, bioscience, energy, financial services, healthcare, aviation, information technology and telecommunications. Denver s economy is expanding, with the annual change in gross metropolitan product (GMP) expected to reach 3.3 percent this year. Many of Denver s largest employers are in population-serving businesses such as retail and healthcare, and their expansion will track a rise in population and income growth. There are 10 Fortune 500 companies located in the metro, including Arrow Electronics, DISH Network and Liberty Interactive. MAJOR AREA EMPLOYERS HealthONE Corp. CenturyLink Centura Health Kaiser Permanente Lockheed Martin Corp. DISH Network Wells Fargo Bank University of Colorado System United Airlines Inc. SCL Health System * Forecast SHARE OF 2016 TOTAL EMPLOYMENT 5% MANUFACTURING 18% PROFESSIONAL AND BUSINESS SERVICES 14% 11% 7% GOVERNMENT LEISURE AND HOSPITALITY FINANCIAL ACTIVITIES 18% TRADE, TRANSPORTATION AND UTILITIES 7% CONSTRUCTION + 13% EDUCATION AND HEALTH SERVICES 3% INFORMATION 4% OTHER SERVICES 34

MARKET OVERVIEW DEMOGRAPHICS Rapid employment growth fuels in-migration. The metro is expected to gain more than 165,000 new residents during the next five years. Through 2021, the median household income is expected to rise 14 percent and well above the national median. Elevated incomes have allowed nearly 63 percent of households to own their homes, slightly below the national rate, maintaining rental demand. 2016 Population by Age 6% 0-4 YEARS 20% 5-19 YEARS 6% 20-24 YEARS 30% 25-44 YEARS 26% 45-64 YEARS 12% 65+ YEARS 2016 POPULATION: 2.8M Growth 2016-2021*: 5.9% 2016 HOUSEHOLDS: 1.1M Growth 2016-2021*: 6.5% 2016 MEDIAN AGE: 36.2 U.S. Median: 37.7 2016 MEDIAN HOUSEHOLD INCOME: $67,200 U.S. Median: $54,500 QUALITY OF LIFE The Denver metro area offers residents urban and rural surroundings, in addition to exciting nightlife and outdoor fun. Four professional sports teams play in venues within a short walk or drive of downtown Denver. The local arts community is vibrant and the city s large park system provides relaxing opportunities to enjoy the outdoors. The lure of the Rocky Mountains keeps residents active. Rocky Mountain National Park is less than two hours from the metro and offers numerous campsites and hiking trails. Avid skiers and snowboarders are close to world-class ski resorts, such as Vail, Beaver Creek and Copper Mountain. The Denver metro will continue to grow as the area s high quality of life attracts new residents. ARTS & ENTERTAINMENT * Forecast Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody s Analytics; U.S. Census Bureau 35

DENVER METRO AREA MARKET OVERVIEW New Denver Households Favor Renting Over Homeownership Historically strong employment growth encourages household formation. Denver employers added an average of 40,000 positions annually the last five years, helping attract thousands of new residents to fill these jobs. Positive net in-migration trends and the release of pent-up housing demand have resulted in the creation of approximately 19,500 households on average since 2012. As a large share of these new households have favored renting over homeownership, apartment vacancy has tightened well below historical norms. While developers are set to add a record number of units to stock this year, the bulk of new supply will come online in Central Denver. As a result, softening conditions will be isolated as new units enter a period of lease-up. Apartment demand rises due to limited options. While new home construction has doubled over the last five years, reaching an annual average of 10,700 homes in June, it remains only half of the prior peak. Strong demand for limited for-sale housing has placed significant upward pressure on home prices, and despite median household income rising to nearly $75,000 annually, many households are unable to meet income qualifications for a median-priced home, which topped $413,000 in the second quarter. These high barriers to homeownership keep apartment demand strong this year as absorption reaches its highest level since 2010. Multifamily 2017 Outlook 12,500 units will be completed 100 basis point increase in vacancy 7.2% increase in effective rents Construction: Development rises considerably during 2017, building on the addition of 8,750 apartments in the prior year. Vacancy: Additions to supply will outweigh demand this year and vacancy will rise to 5.8 percent. Last year, the vacancy rate increased 30 basis points. Rents: The average effective rent rises to $1,451 per month in 2017. The average advanced 3.4 percent last year. Investment Trends Private investors are targeting Class B/C properties in the Denver metro as vacancy remains tight and rent growth is stable. These assets typically change hands at first-year returns in the low-6 percent area. Sales activity declines as the number of listings becomes more limited this year. Some private investors are choosing to cash out of smaller apartments to leverage into larger complexes for higher cash-flow opportunities. Value-add opportunities in the metro are in high demand, but these options are becoming more limited as vacancy tightens in Class B/C space. * Trailing 12 months through 2Q17 Sources: CoStar Group, Inc.; Real Capital Analytics 36

DENVER METRO AREA MARKET OVERVIEW 2Q17 12-Month Period * Forecast EMPLOYMENT CONSTRUCTION VACANCY RENTS increase in total 2.3% employment Y-O-Y 9,280 units completed Y-O-Y 70 basis point increase in vacancy Y-O-Y increase in effective 5.3% rents Y-O-Y Denver employers created 33,600 jobs over the last 12 months, almost matching the 33,700 positions in the prior year. Job additions were led by the leisure and hospitality sector, which gained nearly 9,960 positions. The metro s unemployment rate plunged 100 basis points to 2.2 percent in June, one of the lowest rates in the nation. Completions over the last four quarters rose slightly when compared with the 12-month period ending one year ago, when 9,000 units were completed. Central Denver was heavily targeted by builders during the last year, and nearly 3,200 apartments were added to stock in the area. Apartment vacancy reached 5.2 percent in June after strong absorption in the second quarter pushed the rate down 70 basis points over the three-month period. Vacancy in Central Denver is above 8 percent, with the Downtown/Highlands and Five Points/Cherry Creek submarkets recording vacancy at 8.7 percent and 10.8 percent, respectively. Despite a rise in vacancy during the last year, the rate remains tight, and the average effective rent increased to $1,432 per month. Rent growth is strong across all classes, but gains are strongest in Class C assets with the average rising 6.8 percent over the last four quarters and topping $1,000 per month for the first time. 37

DENVER METRO AREA MARKET OVERVIEW Submarket Trends Lowest Vacancy Rates 2Q17 Submarket Vacancy Rate Y-O-Y BasisPoint Change Effective Rent Y-O-Y% Change Arvada/Golden 2.6% -50 $1,318 4.3% *Mortgage payments based on quarterly median home price with a 30-year fixed-rate conventional mortgage, 90% LTV, taxes, insurance and PMI. **2017-2022 Annualized Rate Sales Trends Sales Activity Moderating Amid Reduced Listings Overall transaction velocity remains elevated and healthy buyer competition over the last four quarters facilitated a 13 percent bump in average prices to $164,400 per door. Initial yields held firm during the period to the mid-5 percent to high-5 percent band. Sales in West Denver increased nearly 70 percent during the last year. The average price per unit rose to $186,300 and first-year returns compressed to the high-5 percent area. Outlook: Fewer listings will hinder transaction velocity this year, forcing buyers to broaden search criteria. Westminster 2.8% -20 $1,245 4.3% North Lakewood/Wheat Ridge 3.0% -160 $1,276 7.5% South Lakewood 3.2% -90 $1,368 3.9% North Aurora 3.3% -80 $1,149 2.9% Southeast Denver 3.5% -10 $1,250 7.7% Thornton/Northglenn 3.7% -40 $1,319 2.6% Southwest Aurora 3.8% -40 $1,168 2.5% Tech Center 3.8% -160 $1,555 5.3% Glendale 3.90% -40 $1,294 9.30% Overall Metro 5.20% 70 $1,432 5.30% ** Trailing 12 months through 2Q17 Pricing trend sources: CoStar Group, Inc.; Real Capital Analytics 38

DENVER METRO AREA MARKET OVERVIEW Capital Markets Monetary policy in transition. Despite the Fed raising its benchmark short-term rate three times in seven months and signaling another rise before the end of the year, long-term rates have remained stable. The yield on the 10-year U.S. Treasury bond remained in the low- to mid-2 percent range throughout the second quarter of 2017. The Federal Reserve wants to normalize monetary policy and, in addition to rate hikes, will likely start paring its balance sheet. Sound economy a balancing act for Fed. With unemployment hovering in the low-4 percent range, the lowest level since 2007, the Federal Reserve will remain vigilant regarding the possible rapid increase in inflation if wage growth takes off. Additionally, business confidence and job openings are near all-time highs. Businesses finally have the assurance to expand their footprints after years of tepid growth following the Great Recession. These conditions are allowing pent-up households to form, creating new apartment demand. The Fed, however, must now balance economic growth and job creation against wage growth and inflationary pressures. Underwriting discipline persists; ample debt capital remains. Overall, leverage on acquisition loans has continued to reflect disciplined underwriting, with LTVs typically ranging from 65 percent to 75 percent for most apartment properties. At the end of 2016, the combination of higher rates, conservative lender underwriting and fiscal policy uncertainty encouraged some investor caution that slowed deal flow, a trend that has extended into 2017. A potential easing of regulations on financial institutions, though, could liberate additional lending capacity and higher interest rates may also encourage additional lenders to participate. * Trailing 12 months through 2Q17 Sources: CoStar Group, Inc.; Real Capital Analytics 39

PROPERTY MADISON TOWNHOMES NAME Created on July 2017 POPULATION 1 Miles 3 Miles 5 Miles 2021 Projection Total Population 19,192 188,777 433,753 2016 Estimate Total Population 19,111 182,425 420,583 2010 Census Total Population 17,415 156,759 364,498 2000 Census Total Population 18,578 147,134 348,485 Daytime Population 2016 Estimate 15,668 340,618 646,326 HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2021 Projection Total Households 8,053 97,872 202,389 2016 Estimate Total Households 7,875 93,043 193,624 Average (Mean) Household Size 2.38 1.88 2.08 2010 Census Total Households 7,260 79,956 168,000 2000 Census Total Households 7,064 70,740 153,031 Growth 2015-2020 2.26% 5.19% 4.53% HOUSING UNITS 1 Miles 3 Miles 5 Miles Occupied Units 2021 Projection 8,053 97,872 202,389 2016 Estimate 8,066 96,333 199,204 Owner Occupied 4,792 38,635 84,477 Renter Occupied 3,083 54,408 109,147 Vacant 191 3,290 5,580 Persons In Units 2016 Estimate Total Occupied Units 7,875 93,043 193,624 1 Person Units 33.84% 50.19% 44.26% 2 Person Units 31.87% 30.56% 30.48% 3 Person Units 14.60% 8.91% 10.82% 4 Person Units 10.88% 5.88% 7.76% 5 Person Units 4.24% 2.41% 3.55% 6+ Person Units 4.55% 2.06% 3.13% MARKETING DEMOGRAPHICS TEAM HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2016 Estimate $200,000 or More 7.24% 8.16% 7.17% $150,000 - $199,000 6.24% 6.32% 5.49% $100,000 - $149,000 13.47% 12.66% 12.09% $75,000 - $99,999 12.28% 10.73% 10.89% $50,000 - $74,999 15.93% 15.88% 16.29% $35,000 - $49,999 11.06% 11.04% 12.07% $25,000 - $34,999 9.31% 9.24% 9.75% $15,000 - $24,999 10.31% 9.80% 10.32% Under $15,000 14.16% 16.17% 15.91% Average Household Income $87,865 $90,386 $84,879 Median Household Income $59,457 $55,582 $52,587 Per Capita Income $36,369 $46,606 $39,543 POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age 2016 Estimate Total Population 19,111 182,425 420,583 Under 20 23.51% 17.32% 20.87% 20 to 34 Years 25.05% 33.24% 30.77% 35 to 39 Years 8.73% 8.66% 8.85% 40 to 49 Years 14.09% 13.51% 13.50% 50 to 64 Years 16.89% 16.79% 15.93% Age 65+ 11.71% 10.47% 10.08% Median Age 35.76 34.74 34.24 Population 25+ by Education Level 2016 Estimate Population Age 25+ 13,602 137,807 304,333 Elementary (0-8) 6.56% 4.25% 5.90% Some High School (9-11) 8.45% 6.00% 7.56% High School Graduate (12) 17.72% 13.55% 17.30% Some College (13-15) 17.82% 17.25% 16.64% Associate Degree Only 4.09% 4.77% 4.50% Bachelors Degree Only 27.10% 31.42% 27.84% Graduate Degree 16.31% 21.75% 18.67% Population by Gender 2016 Estimate Total Population 19,111 182,425 420,583 Male Population 48.20% 51.25% 50.75% Female Population 51.80% 48.75% 49.25% Source: 2016 Experian 40

PROPERTY MADISON TOWNHOMES NAME MARKETING DEMOGRAPHICS TEAM Population In 2016, the population in your selected geography is 19,111. The population has changed by 2.87% since 2000. It is estimated that the population in your area will be 19,192.00 five years from now, which represents a change of 0.42% from the current year. The current population is 48.20% male and 51.80% female. The median age of the population in your area is 35.76, compare this to the US average which is 37.68. The population density in your area is 6,074.62 people per square mile. Race and Ethnicity The current year racial makeup of your selected area is as follows: 54.97% White, 29.33% Black, 0.05% Native American and 1.25% Asian/Pacific Islander. Compare these to US averages which are: 70.77% White, 12.80% Black, 0.19% Native American and 5.36% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. People of Hispanic origin make up 21.32% of the current year population in your selected area. Compare this to the US average of 17.65%. Households There are currently 7,875 households in your selected geography. The number of households has changed by 11.48% since 2000. It is estimated that the number of households in your area will be 8,053 five years from now, which represents a change of 2.26% from the current year. The average household size in your area is 2.38 persons. Housing The median housing value in your area was $331,528 in 2016, compare this to the US average of $187,181. In 2000, there were 4,478 owner occupied housing units in your area and there were 2,586 renter occupied housing units in your area. The median rent at the time was $526. Income In 2016, the median household income for your selected geography is $59,457, compare this to the US average which is currently $54,505. The median household income for your area has changed by 64.43% since 2000. It is estimated that the median household income in your area will be $67,893 five years from now, which represents a change of 14.19% from the current year. Employment In 2016, there are 4,778 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 61.73% of employees are employed in white-collar occupations in this geography, and 37.24% are employed in blue-collar occupations. In 2016, unemployment in this area is 6.26%. In 2000, the average time traveled to work was 26.00 minutes. The current year per capita income in your area is $36,369, compare this to the US average, which is $29,962. The current year average household income in your area is $87,865, compare this to the US average which is $78,425. Source: 2016 Experian 41

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