Multifamily Offering

Multifamily Offering LUND POINTE APARTMENTS 3301 Valentine Lane SE - Port Orchard, WA 98366 25 Units Offered At: $2,750,000 Corey Crain I 425-442-7931-7931 I I

HIGHLIGHTS Located just down the street from the 209 Acre South Kitsap Regional Park Port Orchard is located 13 miles west of Seattle & 9 miles south of Bremerton- home to the Naval Base Kitsap Built & Placed into Service in 1995 Walmart, Starbucks, and Safeway are all located within a short walking distance of the property Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the

PROPERTY DESCRIPTION Lund Pointe Apartments is a 25-unit affordable housing community located in Port Orchard, WA. The property was built and placed into service in 1995 under the Section 42 Low-Income Housing Tax Credit (LIHTC) program. It is within walking distance to a number of shopping and dining venues, as well as public parks and provides easy access to Highway-16, Its convenient location allows tenants easy commutes to both Tacoma and Seattle, while also providing a quiet, peaceful setting. Lund Pointe Apartments has undergone many recent improvements from the past year including new flooring in 95% of the units (floors are all hard surface, no carpet), new cabinets in many of the units, new exterior paint, new gutter system, and new landscaping. Its convenient location allows tenants easy commutes to both Tacoma and Seattle, while also providing a quiet, peaceful setting that is easy to call home. There is an existing regulatory agreement in place which requires 24 units to be rented to income qualifying residents earning no more than 50% and 60% of Area Medium Income (AMI) limits, which are provided by the Washington State Housing Finance Commission. There is one unit rented at market rate and adjoined by 1,000 of office/maintenance space. The property is out of its initial tax credit compliance period. Please see the Property Summary page for further details. A qualified purchaser can be a non-profit or for-profit entity that agrees to maintain the affordability restrictions. Lund Pointe Apartment community offers two and three bedroom apartment homes featuring an open floor plan and full appliance package. Community amenities include well maintained grounds and a convenient location. COMMUNITY AMENITIES Convenient Location Well Maintained Grounds UNIT AMENITIES Open Floor Plan Full Appliance Package Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the

Port Orchard is a picturesque community with a relaxed pace on the natural side of Puget Sound. Compared to the more traveled Seattle-Tacoma side, the Kitsap Peninsula feels decidedly less hurried. Isolated by water on all sides, the Kitsap Peninsula developed its own relaxed and authentic charm. No matter how you get to Port Orchard, by driving the spectacular twin suspension bridges of the Tacoma Narrows, on a Washington State Ferry from Seattle through scenic Rich Passage, by historic passenger only ferry from Bremerton, the adventure begins the moment you set out to visit Port Orchard Washington. The destination offers many attractions. Waterfront parks abound, with attractive marine views: the impressive Puget Sound Naval Shipyard with imposing aircraft carriers, subs and destroyers. Manchester State Park offers camping and waterfront hikes along Rich Passage, with up-close sightings of lumbering jumbo ferries on their hourly route through the narrows of Rich Passage. The waterfront district downtown along Bay Street offers a pleasing selection of eateries, pubs, antique malls and collectible shops. A new feature is the Port Orchard Public Market, featuring a restaurant with locally crafted beer, an authentic Mexican taqueria, an ice cream and chocolatier artisan, a seafood and wine pairing shop, a butcher shop and fresh produce. The Sidney Museum tells an interesting story of Port Orchard, going back to the 1800 s when the town was first known as Sidney. The museum offers walk through historic exhibits, historic photo galleries and a quality collection of original works from local artists. The South Kitsap area has lots of family-friendly events throughout the year, like the annual Seagull Calling Contest, the Fathoms of Fun Festival and Parade, the Olalla Bluegrass Festival, and the Festival of Chimes and Lights. Port Orchard has a large, well-protected marina, should you choose to come by boat, with full services, and easy access by foot to downtown shops. Golfers take note: Port Orchard and South Kitsap are home to some of the finest golf courses in the region, including McCormick Woods, Gold Mountain and Horseshoe Lake. The larger community across the water, Bremerton, has a beautifully renovated waterfront, Naval Museum, fountain park and additional bigger city attractions within easy walking distance from the Port Orchard-Bremerton foot ferry which regularly crosses the bay. Port Orchard is also a great jumping off point to see world-class attractions in all directions: downtown Seattle, the Olympic Peninsula, Tacoma and Mt. Rainier. NEIGHBORHOOD AMENITIES LOCATION HIGHLIGHTS KITSAP COUNTY TOP EMPLOYERS (NO. EMPLOYEES) Walmart (0.3 miles) East Port Orchard Elementary School (0.5 miles) US Port Office (1.1 miles) South Kitsap High School (1.5 miles) Population: 13,607 Kitsap County is home to Naval Base Kitsap- Bremerton, WA Port Orchard is located 13 miles west of West Seattle Naval Base Kitsap- Non-Military Employees (16,392) Naval Base Kitsap- Military (14,953) Harrison Medical Center (2,442) Washington State Gov. (1,746) Central Kitsap School Dist. (1 Olympic College (1,206) Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the

PROPERTY SUMMARY NAME & LOCATION Property Name Lund Pointe Apartments Property Address 3301 Valentine Lane SE Port Orchard, WA 98366 SECTION 42 LIHTC RESTRICTIONS Placed in Service 1995 End of Initial Compliance Period 12/31/2009 End of Extended Use 12/31/2031 SITE INFORMATION Assessor s Parcel Number 012301-2-143-20-01 Number of Units 25 Number of Buildings 4 Number of Stories 2 Rentable Square Feet 23,738 Year Built 1995 Lot Size 1.54 Acres Type of Ownership Fee Simple Density 15.58 Units/Acre Landscaping Mature Trees, Shrubs & Grass Topography Relatively Flat UTILITIES Water City of Port Orchard Electric Puget Sound Energy Gas Cascade Natural Gas CONSTRUCTION Exterior Siding Roof Composite Shingle # OF UNITS RENTABLE SF YEAR BUILT LOT SIZE 25 23,738 1995 1.54 acres Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the

PROPERTY SUMMARY Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the

- LOCAL MAP Lund Pointe Apartments A Starbucks, Walgreens, Staples, Walmart, Big Lots, Safeway, Taco Time, Wendy s, The UPS Store (0.3 miles) B South Kitsap Regional Park (0.4 miles) C D East Port Orchard Elementary School (0.5 miles) US Post Office, High Point Shopping Center: Big 5 Sporting Goods, Dollar Tree, Family Pancake House (1.1 miles) D E F H I G L E South Kitsap High School (1.5 miles) J F G H Pizza Hut, A&W, Dickey s BBQ Pit (1.6 miles) Marcus Whitman Junior High School (1.6 miles) Albertson s, Payless Shoes, Papa John s, Burger King, Bank of America, Jack in the Box (1.6 miles) K A CC B I Regal Cinemas South Sound Cinema 10 (1.7 miles) J Orchard Heights Elementary School (1.9 miles) K Cedar Heights Middle School (1.9 miles) L Quality Food Center, McDonald s (2.4 miles) Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the

- LOCAL MAP East Port Or cha rd Elemen entar y S chool ol South Kit sap Regi ona l Park Casey s s Batt ing Rang e LUND POI OINT NTE APARTM TMEN TS Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the

- REGIONAL MAP Bremerton, WA (8.8 miles) Seattle, WA (21.3 miles) Tacoma, WA (28.1 miles) Olympia, WA (54 miles) PORT ORCHARD Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the

- FINANCIAL ANALYSIS LIST PRICE PRICE/UNIT PRICE/SF PROFORMA NOI PROFORMA NOI/UNIT PROFORMA CAP RATE $2,750,000 $110,000 $115.85 $177,285 $7,091 6.45% Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the

Financial Summary PRICING FIGURES List Price $2,750,000 Price per Unit $110,000 Price per SF $115.85 PROFORMA 10-Year Leveraged IRR%* 16.13% *NOTE: Leveraged IRR Analysis assumes a 6.5% Exit Cap and 5.0% Cost of Sale. PROFORMA- VITAL DATA CAP Rate 6.45% NOI $177,285 Debt Service $125,405 Net Cash Flow After Debt Service $51,880 Cash on Cash % 6.95% Financing PROPOSED NEW FINANCING Loan Amount $2,062,500 Down Payment $746,875* Interest Rate 4.50% Amortization Period 360 Loan Term 10 Years Annual Debt Service $125,405 Loan to Value % 75% PROFORMA Debt Coverage Ratio 1.41 Program CONVENTIONAL *Down Payment includes 1.0% Loan Origination Fee, 0.5% Acquisition Cost and $1,000 per unit up-front Capital Expense Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the

Income & Expenses OPERATIONAL ANALYSIS PROFORMA PER UNIT Gross Potential Rent $309,852 $12,394 (1) Loss to Lease 1.50% ($4,648) ($186) (2) POTENTIAL RENTAL INCOME $305,204 $12,208 OTHER RENTAL INCOME Misc. Other Income $5,294 $212 Total Other Rental Income $5,294 $212 GROSS POTENTIAL INCOME $310,498 $12,420 ECONOMIC LOSS Vacancy Loss 4.00% ($12,208) ($488) Bad Debt 0.00% $0 $0 Concessions 0.00% $0 $0 Total Economic Loss 4.00% ($12,208) ($488) EFFECTIVE GROSS INCOME $298,290 $11,932 EXPENSES FIXED OPERATIONAL EXPENSE Total Real Estate Property Taxes 8% $22,585 $903 (3) Total Property Insurance Expense 2% $7,032 $281 (4) Total Property Utility Expense 13% $38,708 $1,548 TOTAL FIXED OPERATIONAL EXP 23% $68,325 $2,733 VARIABLE OPERATIONAL EXPENSE Total Repairs & Maintenance 4% $11,385 $455 (5) Total Administrative Expenses 1% $1,850 $74 (6) Total Payroll and Salary Expenses 5% $14,048 $562 (7) Property Management Fee 6.00% $17,897 $716 (8) TOTAL VARIABLE OPERATIONAL EXP 15% $45,180 $1,807 TOTAL FIXED & VARIABLE EXPENSES 38% $113,505 $4,540 Reserves & Replacements $7,500 $300 TOTAL OPERATING EXPENSES 41% $121,005 $4,840 NET OPERATING INCOME $177,285 $7,091 Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the

Comments to Income & Expenses (1) Gross Potential Rent: Analysis assumes current Max Net Allowable Rents annualized. (2) Loss to Lease: Analysis assumes a 1.5% Loss to Lease in Year 1 and a 0% Loss to Lease thereafter. (3) Property Tax Expense: Analysis estimates Real Estate Property Taxes by reassessing to 75% of the List Price and then applying the same tax rate seen in 2017 to the new Value. Kitsap County will look at any Sales of this property or comparable properties as a part of their reassessment process. All information collected from Kitsap County. 2016 2017 Proforma Market Value $1,649,690 $1,906,550 $2,062,500 Taxable Value $1,649,690 $1,906,550 $2,062,500 Taxes $19,513.42 $20,877.26 $22,584.96 (4) Insurance Expense: Actual expense from owner s 2016 P&L. (5) Repairs & Maintenance Expense: Actual expense from owner s 2016 P&L and increased by 2.5%. (6) Administrative Expense: Owner s historical and 2016 P&L indicate no admin expenses. Analysis assumes a minimum of $50 per unit in admin expenses plus the $600 WSHFC annual compliance fee. (7) Payroll & Salary Expense: Actual expenses from owner s 2016 P&L and increased by 2.5%. (8) Property Management Fee: Owner s historical and 2016 P&L indicate no 3rd party property management fee. Analysis assumes a 6% fee. Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the

Cash Flow PROPERTY CASH FLOW ANALYSIS Utilize YE, YTD or PROFORMA OPERATIONS Proforma Vac %: 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% Assumed Annual Income Growth Rate % 3.00% Bad Debt: 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Assumed Annual Expense Growth Rate % 2.50% Concess: 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% CASH FLOW SUMMARY Year #: 1 2 3 4 5 6 7 8 9 1 0 INCOM E POTENTIAL RENTAL INCOME $305,204 $319,148 $328,722 $338,584 $348,741 $359,203 $369,979 $381,079 $392,511 $404,287 Total Other Rental Income $5,294 $5,453 $5,616 $5,785 $5,958 $6,137 $6,321 $6,511 $6,706 $6,907 GROSS POTENTIAL INCOME $310,498 $324,600 $334,338 $344,369 $354,700 $365,341 $376,301 $387,590 $399,218 $411,194 Economic Operational Loss Vacancy Loss 4.00% ($12,208) ($12,766) ($13,149) ($13,543) ($13,950) ($14,368) ($14,799) ($15,243) ($15,700) ($16,171) Bad Debt 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Concessions 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Operational Loss 4.00% ($12,208) ($12,766) ($13,149) ($13,543) ($13,950) ($14,368) ($14,799) ($15,243) ($15,700) ($16,171) EFFECTIVE GROSS INCOME $298,290 $311,834 $321,190 $330,825 $340,750 $350,972 $361,502 $372,347 $383,517 $395,023 OPERATIONAL EXPENSE S FIXED OPERATIONAL EXPENSE Total Real Estate Property Taxes $22,585 $23,714 $24,900 $26,145 $27,452 $28,825 $30,266 $31,779 $33,368 $35,037 Total Property Insurance Expense $7,032 $7,208 $7,388 $7,573 $7,762 $7,956 $8,155 $8,359 $8,568 $8,782 Total Property Utility Expense $38,708 $39,676 $40,668 $41,684 $42,726 $43,795 $44,890 $46,012 $47,162 $48,341 TOTAL FIXED OPERATIONAL EX P $68,325 $70,598 $72,956 $75,402 $77,941 $80,575 $83,310 $86,150 $89,098 $92,160 VARIABLE OPERATIONAL EXPENS E Total Repairs & Maintenance $11,385 $11,669 $11,961 $12,260 $12,567 $12,881 $13,203 $13,533 $13,871 $14,218 Total Administrative Expenses $1,850 $1,896 $1,944 $1,992 $2,042 $2,093 $2,145 $2,199 $2,254 $2,310 Total Payroll and Salary Expenses $14,048 $14,399 $14,759 $15,128 $15,506 $15,894 $16,291 $16,699 $17,116 $17,544 Property Management Fee 6.00% $17,897 $18,710 $19,271 $19,850 $20,445 $21,058 $21,690 $22,341 $23,011 $23,701 TOTAL VARIABLE OPERATIONAL EX P $45,180 $46,675 $47,935 $49,230 $50,560 $51,926 $53,330 $54,771 $56,252 $57,774 TOTAL FIXED & VARIABLE EXPENSE $113,505 $117,273 $120,891 $124,632 $128,501 $132,502 $136,640 $140,921 $145,350 $149,933 Replacement & Reserve Deposits $300/Unit $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 TOTAL OPERATING EXPENSES $121,005 $124,773 $128,391 $132,132 $136,001 $140,002 $144,140 $148,421 $152,850 $157,433 PROPERTY NET OPERATING INCOME $177,285 $187,062 $192,799 $198,693 $204,749 $210,971 $217,361 $223,925 $230,667 $237,589 TOTAL 1ST MTG DEBT SERVICE $125,405 $125,405 $125,405 $125,405 $125,405 $125,405 $125,405 $125,405 $125,405 $125,405 DEBT SERVICE COVERAGE RATIO 1.41 1.49 1.54 1.58 1.63 1.68 1.73 1.79 1.84 1.89 INDICATED CAPITALIZATION RATE 6.45% 6.80% 7.01% 7.23% 7.45% 7.67% 7.90% 8.14% 8.39% 8.64% CASH FLOW AFTER DEBT SERVICE $51,880 $61,657 $67,394 $73,289 $79,345 $85,566 $91,957 $98,521 $105,262 $112,184 Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the

Unit Mix UNIT TYPE # OF UNITS UNIT SIZE ASKING RENT RENT PER SF MAX TC RENT CURRENT UA MAX NET RENT 2 BD 1 BTH- 50% 2 840 $798 $0.95 $878 $80 $798 2 BD 1 BTH- 60% 10 840 $974 $1.16 $1,054 $80 $974 2 BD UNIT TOTAL 12 10,080 $11,336 $12,296 $11,336 2 BD UNIT AVG 840 $945 $1.12 $1,025 $945 3 BD 2 BTH- 50% 1 1,050 $921 $0.88 $1,015 $94 $921 3 BD 2 BTH- 60% 9 1,050 $1,124 $1.07 $1,218 $94 $1,124 3 BD 2 BTH- 60% 2 1,054 $1,124 $1.07 $1,218 $94 $1,124 3 BD 2 BTH- COMMON AREA 1 1,050 $1,200 $1.14 N/A N/A N/A 3 BD UNIT TOTAL 13 13,658 $14,485 $14,413 $13,285 3 BD UNIT AVG 1,051 $1,114 $1.06 $1,201 $1,107 TOTAL POTENTIAL 25 23,738 $25,821 $26,709 $24,621 AVERAGE 950 $1,033 $1.09 $1,113 $1,026 * The unit mix above was based on 4/18/2017 Rent Roll. Unit Breakdown By Unit Type 48% $1,150 $1,100 $1,050 Asking Rents to Net Max Tax Credit Rents $1,107 $1,107 52% $1,000 $950 $945 $945 $900 2 BR 3 BR $850 2 BR 3 BR Asking Rent Net Max Rent Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the

Tax Credit Property Income & Rent Limits- 2016 INCOME 50% 60% 1 Person $27,350 $32,820 2 Person $31,250 $37,500 3 Person $35,150 $42,180 4 Person $39,050 $46,860 5 Person $42,200 $50,640 6 Person $45,300 $54,360 7 Person $48,450 $58,140 Kitsap County Effective Year: 2017 Area Median Income: $77,100 Lund Pointe Apartments is a Section 42 LIHTC property which means that federal tax credits were given to help finance the property. The property currently is required to hold the maximum rent charged at or below a level considered appropriate for the households that have incomes at or below 50% & 60% of the local Area Median Income (AMI) for the county. Tax Credit Maximum Allowable Rents- 2016 Set Aside Unit Type # of Units Max Rent UA Max Net Rent 50% 2 BD 2 $878 $80 $798 60% 2 BD 10 $1,054 $80 $974 50% 3 BD 1 $1,015 $94 $921 60% 3 BD 11 $1,218 $94 $1,124 Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the

AMI Growth Rate Year AMI % Change 2012 $75,600-2013 $73,100 (3.31%) 2014 $74,000 1.23% 2015 $74,600 0.81% 2016* $78,100 4.69% 2017 $77,100 (1.28%) 3 Yr Avg 1.41% 5 Yr Avg 0.43% $79,000 $78,000 $77,000 $76,000 $75,000 $74,000 $73,000 $72,000 $71,000 $70,000 2012 2013 2014 2015 2016 2017 *The high watermark year was 2016 at $78,100 Max Allowable LIHTC Rent Growth- 2BD/ 60% Year Rent % Change 2011 $1,006-2012 $1,021 1.49% 2013 $1,021 0.00% 2014 $1,021 0.00% 2015 $1,021 0.00% 2016 $1,054 3.23% 3 Yr Avg 1.08% 5 Yr Avg 0.94% $1,060 $1,050 $1,040 $1,030 $1,020 $1,010 $1,000 $990 $980 2011 2012 2013 2014 2015 2016 Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the

FMR Averages Year FMR Avg. % Change 2011 $1,120-2012 $1,138 1.61% 2013 $1,138 0.00% 2014 $1,159 1.85% 2015 $1,243 7.25% 2016 $1,235 (0.64%) $1,300 $1,250 $1,200 $1,150 $1,100 3 Yr Avg 2.82% 5 Yr Avg 2.01% $1,050 2011 2012 2013 2014 2015 2016 Fair Market Rents Year 2 BD 3 BD 2011 $921 $1,318 2012 $936 $1,339 2013 $934 $1,341 2014 $951 $1,366 2015 $1,020 $1,465 2016 $1,015 $1,454 Information contained herein is deemed reliable, but is not guaranteed. makes no representations or warranties, expressed or implied, as to the