BOSTON CREEK APARTMENTS

BOSTON CREEK APARTMENTS Offering Memorandum August 2017 Lubbock, Texas 1

Table of Contents For additional information please contact: Erik Carlson (408) 392-8822 x 126 erik.carlson@svn.com Todd Franks (972) 916-9397 todd.franks@svn.com Disclosure.3 Investment Summary. 4 Offering Terms 5 Executive Summary.6 Investment Opportunity.7 Loan Assumption Info.. 8 Property Information 9 Property Overview 10 Property Floor Plans Property Aerial/Maps 12.15 Property Site Plan.17 Property Photos Clubhouse.18..19 Exterior..21 Interior..23 Rental Competition.24 Competition Aerial..25 Competition Summary 26 Rent Comparables.28 Property Demographics.31 Lubbock Demo. Snapshot...32 Financials.35 Financial Summary.36 10 year Forecast.37 10 year Assumption.38 2

Disclosure The material contained in this Investment Offering Brochure is furnished solely for the purpose of considering the purchase of the property within and is not to be used for any other purpose. This information should not, under any circumstances, be photocopied or disclosed to any third party without the written consent of SVN or Owner, or used for any purpose whatsoever other than to evaluate the possible purchase of the Property. The only party authorized to represent the Property Owner ( Owner ) in connection with the sale of the Property is the SVN Advisor listed in this document, and no other person is authorized by the Owner to provide any information or to make any representations other than contained in this Investment Offering Brochure. If the person receiving these materials does not choose to pursue a purchase of the Property, this Offering Brochure must be returned to SVN. Neither the SVN Advisor nor the Owner make any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein, and nothing contained herein is or shall be relied upon as a promise or representation as to the future performance of the Property. This Offering Brochure may include certain statements and estimates by SVN Advisor with respect to the projected future performance of the Property. These Assumptions may or may not be proven to be correct, and there can be no assurance that such estimates will be achieved. Further, the SVN Advisor and the Owner disclaim any and all liability for representations or warranties, expressed or implied, contained in or omitted from this Investment Offering Brochure, or any other written or oral communication transmitted or made available to the recipient. The recipient shall be entitled to rely solely on those representations All SVN Offices are Independently Owned & Operated. The information listed above has been obtained from sources we believe to be reliable, however, we accept no responsibility for its correctness and warranties that may be made to it in any final, fully executed and delivered Real Estate Purchase Agreement between it and Owner. The information contained herein is subject to change without notice and the recipient of these materials shall not look to Owner or the SVN Advisor, or any of their officers, employees, representatives, independent contractors or affiliates, for the accuracy or completeness thereof. Recipients of this Investment Offering Brochure are advised and encouraged to conduct their own comprehensive review and analysis of the Property. This Investment Offering Brochure is a solicitation of interest only and is not an offer to sell the Property. The Owner expressly reserves the right, at its sole discretion, to reject any or all expressions of interest to purchase the Property and expressly reserves the right, at its sole discretion, to terminate negotiations with any entity, for any reason, at any time with or without notice. The Owner shall have no legal commitment or obligation to any entity reviewing the Investment Offering Brochure or making an offer to purchase the Property unless and until the Owner executes and delivers a signed Real Estate Purchase Agreement on terms acceptable to Owner, in Owner s sole discretion. By submitting an offer, a prospective purchaser will be deemed to have acknowledged the foregoing and agreed to release the Owner and the SVN Advisor from any liability with respect thereto. To the extent Owner or any agent of Owner corresponds with any prospective purchaser, any prospective purchaser should not rely on any such correspondence or statements as binding Owner. Only a fully executed Real Estate Purchase Agreement shall bind the property and each prospective purchaser proceeds at its own risk. 3

Investment Summary 4

Offering Terms OFFERING TERMS Boston Creek Apartments, located at 2701 44 th Street, Lubbock, Texas 79413, is being offered to qualified investors on an as-is basis. This asset is being marketed with prospective buyers assuming the current in-place CMBS loan. PROPERTY WEBSITE www.livebostoncreek.com PROPERTY TOURS Property tours will be held on August 24 th and September 7 th, please schedule times with the agents below. OFFER PROCESS Offers will be due September 14 th 2017 by 5pm CT. Offers shall be submitted to the listing agent listed below. Contact Information: Erik Carlson 408.392.8822 x 126 erik.carlson@svn.com SVN First Guardian Group 777 North First Street, #720 San Jose, CA 95112 Todd Franks 972.916.9397 todd.franks@svn.com SVN Investment Sales Group 6320 LBJ Frwy, Suite 228 Dallas, TX 75240 5

Executive Summary SVN First Guardian Group and SVN Investment Sales Group, as exclusive advisor, are pleased to offer for sale Boston Creek Apartments which is a Class B+ garden-style apartment located in Lubbock, Texas. Boston Creek is a 349-unit apartment community built in 1972. It is comprised of 240,156 square feet and situated on approximately 21.83 acres with 102 buildings (97 residential, 1 leasing office, 1 clubhouse, 2 laundry, and 1 maintenance). All units are unfurnished and offer updated interiors with full appliance packages. Boston Creek offers its residents amenities that include a swimming pool (with lounge deck), new fitness center, BBQ grills, pet park, sand volleyball court, and resident clubhouse. Current ownership has invested over $8.7M in renovating the property which the new ownership can enjoy limited deferred maintenance going forward. The Property has benefited from exterior improvements including all new roofs, cement replacement, doors, paint, landscaping, irrigation, electric work including exterior lighting, stair repair, new HVAC units, new water heaters units, new windows, asphalt repair, and siding repair / replacement. All units received interior renovations of flooring, paint, fixtures, hardware, cabinets, countertops, and appliances. All units are individually metered for electricity with water, sewer, and trash paid by Landlord. Tenants reimburse Landlord for water and sewer as additional rent. Each unit contains an individual electric water heater, and individual electric HVAC unit. Unit flooring consists of the faux wood flooring throughout the common areas and carpet in the bedrooms. Boston Creek is located in Lubbock which is in northwest Texas just north of Midland/Odessa and a 1-hour (flight) from Dallas. Lubbock has a population of approximately 292,000 people and Boston Creek is ideally situated in the heart of the city. Lubbock s largest employers are Texas Tech University, Covenant Health, University Medical Center, Lubbock ISD, and United Supermarkets. Asking Price Market # of Units 349 Building Square Feet 240,156 Lot Size 21.83 AC Proforma NOI $1,661,000 Year Built 1972/2016 Zoning Market Submarket Cross-Streets Multifamily Lubbock Downtown 44 th St & Boston Ave 6

Investment Opportunity Strong Sub-Market The Lubbock market still boasts an average occupancy within the Class B+/A- space around 94% and an overall occupancy average of around 93%. Boston Creek has been above the average occupancy for the area for the past two years. The B+/A- properties have seen a steady 3% increase over the past two years which supports the fact that residents in Lubbock are attracted to well maintained assets that are priced below new construction rates. New owners will be able to push occupancy at the property to drive up net operating income. Operational Upside Currently the property provides for cable and internet to its residents amounting to an annual expense of approximately $200,000 which is not typical for conventional multifamily in the Lubbock marketplace. Significant Renovations Boston Creek recently received extensive renovations of more than $8.78 million. The exterior renovations included all new roofs, cement replacement, doors, paint, landscaping, irrigation, electric work including exterior lighting, stair repair, new HVAC units, new hot water heater units, new windows, asphalt repair, and siding repair/replacement. All units received interior renovations of flooring, paint, fixtures, hardware, cabinets, countertops, and appliances. 7

Loan Assumption Details LOAN OVERVIEW Lender: Natixis Real Estate Capital Servicer: Wells Fargo (checks are made payable to Wells Fargo) Original Loan Amount: $17,000,000.00 Original Date of Loan: 12/30/2016 Maturity Date: 1/5/2027 Loan Term: 10 Years Amortization: 30-Year Amortization Interest Rate: 4.9830% Monthly Debt Service: $91,083.13 Monthly Reserves: $15,570.92 Taxes, $7,122.15 Insurance, and $8,725.00 Replacement (as of 7/7/2017) Current Reserve Balances: $108,996.43 Taxes, $94,285.08 Insurance, and $57,979.91 Replacement (as of 7/7/2017) Current Loan Balance: $16,878,123.28 (as of 7/7/2017) Prepayment Penalty: Defeasance/Yield Maintenance Assumption Fee:.5% Mezzanine Loan: Current loan allows for a mezzanine to be put in place up to 80% LTV and a DCR of 1.2 : 1.0 (further details in the loan documents) 8

Property Information 9

Property Overview PROPERTY DESCRIPTION Property Address: City/County/State: Number of Units: Building Class: Year Built: Total Parking Spaces: Net Rentable Square Feet: Total Acres: Property ID Number: Number of Buildings: Number of Stories: BUILDING CHARACTERISTICS Roof Type: Foundation Type: Construction Type: HVAC: Ceiling Height: Gas Water Heaters: Electric Water Heaters: UTILITIES Internet/Cable: Electric: Gas: Water: Trash: 2701 44 th Street Lubbock/Lubbock/Texas 349 B+ 1972/2016 472 (all surface) Approximately 240,156 Approximately 21.83 acres R78434 102 One and Two Story Pitched Metal Roof Concrete Slab Wood Frame with Hardie Plank Siding Individual Electric HVAC Units 8 24 individual for gas/72 shared gas 277 Individual Paid by Landlord Paid by Tenant Paid by Landlord Paid by Landlord Paid by Landlord PERSONNEL 6 Employees: Property Manager, Assistant Manager, 2 Leasing Agents, Maintenance Supervisor, and Maintenance Tech 10

Property Information UNIT MIX # OF UNITS AVG UNIT SIZE % OF MIX UNIT CURRENT AVG MONTHLY RENT CURRENT ASKING MONTHLY RENT ASKING PER SQUARE FOOT Studio 16 409 5% Standard $560 $560 $1.37 1 BR / 1 BA 80 570 23% Standard $670 $670 $1.18 1 BR / 1 BA 24 570 7% DBY $700 $700 $1.23 1 BR / 1 BA 6 570 2% DBY $760 $760 $1.33 2 BR / 1 BA 13 750 4% D, WD $845 $845 $1.13 2 BR / 1 BA 62 750 18% DBY $805 $805 $1.07 2 BR / 1 BA 66 750 19% D $750 $750 $1.00 2 BR / 1.5 BA 64 770 18% Standard $775 $775 $1.01 2 BR / 1.5 BA 12 871 3% C $875 $875 $1.00 3 BR / 1 BA 2 905 1% Standard $925 $925 $1.02 3 BR / 1 BA 4 905 1% WD $965 $965 $1.07 Totals/Averages 349 688 100% $745 $745 $1.08 Key: D: Duplex, C: Condo, DBY: Duplex with Back Yard, WD: Washer Dryer Connections UNIT HIGHLIGHTS (All units received interior renovations of flooring, paint, fixtures, hardware, cabinets, countertops, and appliances.) Metal Door with Viewer Dead-bolt Lock Digital Thermostat Faux Wood Flooring in Entry, Kitchen, and Bathroom(s) * Miniblinds Ceiling Fan in Living Area * New Stainless Appliance Package (approximately 50% of units) New Black Appliance Package (approximately 50% of units) New Laminate Counter and Bar Top (approximately 50% of units) New Corian Counter and Bar Top (approximately 50% of units) Microwave Dishwasher Frost-free Refrigerator Stainless Steel Double Sink with Disposal Goose Neck Faucet Brushed Nickel Hardware Kitchen Pantry * Stove / Oven Carpeted Bedroom(s) Fenced Yard * * Select units 11

Select Floor Plans 12

Select Floor Plans 13

Select Floor Plans Apartment 3B-A 3 BR / 1 BA 900 SF 14

Property Aerial 15

Property Maps 16

Property Site Plan 17

Property Photos 18

Leasing and Clubhouse Photos 19

Leasing and Clubhouse Photos 20

Exterior Property Photos 21

Exterior Property Photos 22

Interior Property Photos 23

Rental Competition 24

Competition Aerial Boston Creek D A. Middleton Apts B. 060 Lofts C. St Francis Village Apts D. Raiders Walk Apts E. Windsor Creek Apts C B A E 25

Rent Comparables 26

Rent Comparables 27

Rent Comparables 28

Rent Comparables 29

Rent Comparables 30

Property Demographics 31

Lubbock Snapshot Lubbock, Texas is located in northwest Texas and is the county seat of Lubbock County. Lubbock is ideally located along Interstate 27 connecting Midland/Odessa to Amarillo. A substantial portion of Lubbock s employment is diversified between agriculture, education, retail service, and healthcare. The main economic driver is Texas Tech University and its affiliated medical centers. Population: Per the 2016 figures, Lubbock s total population was approximately 252,506 which was an increase from the prior census from 2010 of about 10%. Housing: Per the latest census, there were approximately 95,926 housing units. The median value of a home in Lubbock is $114,400. Households: There were 90,433 households with an average of 2.54 person per household. The average American household in 2015 consisted of 2.54 people. Employment: As of December 2016, Lubbock unemployment was approximately 3.2% vs the State of Texas of 4.6%. Income: The median household income (in 2015 dollars) was $44,648 Ethnicity: Per latest census, Caucasians represent approximately 55% of the population followed by Black or African American of 9%, Indian/Native American of 1%, Asian of 2%, Latino of 32%, and multiple other groups representing 3%. Major Employers (City of Lubbock) Texas Tech........ Education Covenant Health Healthcare University Medical Center.... Healthcare Lubbock ISD... Education United Grocery... Distribution Walmart...... Retail/Distribution USEFUL LINKS www.ci.lubbock.tx.us/ - City of Lubbock www.co.lubbock.tx.us/ - Lubbock County 32

Lubbock Highlights Located approximately 7 ½ miles south of Lubbock Preston Smith International Airport which offers daily flights to Austin, Dallas-Fort Worth, Denver, San Angelo, and Phoenix, providing convenient access to major metropolitan areas. Located less than 2-miles south of Texas Tech University which is the nation s 2 nd largest contiguous university campus in the nation and boasts a current enrollment of 36,551 students, and it is also the MSA s largest employer with 5,778 employees. Lubbock is home to numerous cultural focal points including the American Wind Power Center, Bayer Museum of Agriculture, Buddy Holly Center, Cactus Theater, National Ranching Heritage Center, Science Spectrum Museum, Silent Wings Museum, and more. High traffic count of 22,145 cars per day that drive through the intersection of University Avenue and 44 th Street, just 2 blocks east of the property, making it highly visible. Close proximity to schools Located within ½ mile from Wheelock Elementary School and Monterey High School and just over 1-mile to O.L. Slaton Middle School. Tied with the city of Amarillo, Lubbock boasts the lowest unemployment rate in Texas at a rate of 3.4% which is 1.4% lower than both the state and national unemployment rates (Texas Workforce Commission, January 2017). Expansive municipal park system with 75 parks totaling over 2,224 acres of developed and undeveloped parkland. Ranked the #1 Most Recession - Recovered City in the U.S. in 2015 according to WalletHub. Move.org ranks Lubbock as the 6 th Best City for 20- Somethings in the U.S. (2016). Strategically located less than 2-miles miles west of U.S. Route 84 and I-27, providing direct access to Amarillo, Abilene, and Dallas-Fort Worth (via Abilene). Lubbock s regional public transit system, Citibus, has a bus stop located at Boston Avenue and 46 th Street which provides service to the Downtown Transit Center, Texas Tech University, University Medical Center, and Lubbock International Airport. Within 1-mile of major retailers including 7-Eleven, CVS, Dollar Tree, Home Depot, Market Street, Office Depot, Ross, and more. 33

Texas Tech University Highlights Texas Tech Recent Acknowledgments Past 5 years, growth has been approximately 12.5% with expected growth to over 40,000 enrollments by 2020. Texas Tech University s Office of Communications and Marketing and College of Arts & Sciences each won a bronze award at the 38th Annual Telly Awards, marking the second straight year Texas Tech has been recognized in the widely known and highly respected national and international competition. Texas Tech University received top marks in the U.S. News & World Report (USNWR) 2014 college and graduate school rankings. Per the QS World University Rankings, Texas Tech University s worldwide reputation as one of the top universities in the world continues to grow, ranking among the top 750 colleges and universities in the world. Texas Tech University is listed among the top 20 percent of nearly 1,200 universities in the latest rankings from College Factual Best U.S. College and Universities for International Students. The university is ranked No. 77 among all public institutions. 34

Financials 35

Financial Summary INCOME June 2017 T-6 Proforma Proforma per Unit Notes Gross Scheduled Rent 2,988,204 2,988,204 8,562 T-6 Gain/(Loss) to Lease (191,460) 0 0 Gross Potential Income 2,796,744 2,988,204 8,562 Less: Economic Vacancy (151,793) (151,793) (435) 5% Plus: Other Income 125,043 125,043 358 T-6 EFFECTIVE GROSS INCOME 2,769,994 2,961,454 8,486 OPERATING EXPENSES June 2017 T-12 General Administrative 79,302 70,000 201 T-12 Payroll 290,882 290,000 831 T-12 Repairs & Maintenance 98,441 98,000 281 T-12 Contract Services 278,439 68,026 195 T-12 less cable/internet contract Marketing 67,690 67,690 194 T-12 Utilities 155,177 155,177 445 T-12 TOTAL CONTROLLABLE EXPENSES 969,931 748,893 2,146 Management Fees 80,768 88,844 255 T-12 Property Taxes 77,340 295,467 847 Insurance 86,511 80,000 229 T-12 TOTAL OPERATING EXPENSES 1,214,550 1,213,204 3,476 CAPITAL RESERVE 87,250 87,250 250 TOTAL EXPENSES 1,301,800 1,300,454 3,726 NET OPERATING INCOME 1,468,194 1,661,000 4,759 36

Financial Notes PROFORMA FINANCIAL ASSUMPTIONS Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Base Rent Growth 0.00% 1.00% 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Vacancy Factor 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Expense Growth 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Property Taxes 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Management Fee 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 37

10 Year Forecast INCOME Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Gross Potential Income 2,988,204 2,988,204 3,018,086 3,078,448 3,170,801 3,265,925 3,363,903 3,464,820 3,568,765 3,675,828 Less: Economic Vacancy (151,793) (149,410) (150,904) (153,922) (158,540) (163,296) (168,195) (173,241) (178,438) (183,791) Plus: Other Income 125,043 128,794 132,658 136,638 140,737 144,959 149,308 153,787 158,401 163,153 EFFECTIVE GROSS INCOME 2,961,454 2,967,588 2,999,840 3,061,163 3,152,998 3,247,588 3,345,016 3,445,366 3,548,727 3,655,189 OPERATING EXPENSES General Administrative 70,000 72,100 74,263 76,491 78,786 81,149 83,584 86,091 88,674 91,334 Payroll 290,000 298,700 307,661 316,891 326,398 336,189 346,275 356,663 367,363 378,384 Repairs & Maintenance 98,000 100,940 103,968 107,087 110,300 113,609 117,017 120,528 124,143 127,868 Marketing 67,690 69,721 71,812 73,967 76,186 78,471 80,825 83,250 85,748 88,320 Utilities 155,177 159,832 164,627 169,566 174,653 179,893 185,289 190,848 196,574 202,471 TOTAL CONTROLLABLE EXPENSES 748,893 771,360 794,501 818,336 842,886 868,172 894,217 921,044 948,675 977,136 Management Fees 88,844 89,028 89,995 91,835 94,590 97,428 100,350 103,361 106,462 109,656 Property Taxes 295,467 304,331 313,461 322,865 332,551 342,527 352,803 363,387 374,289 385,517 Insurance 80,000 81,600 83,232 84,897 86,595 88,326 90,093 91,895 93,733 95,607 TOTAL OPERATING EXPENSES 1,213,204 1,246,318 1,281,189 1,317,932 1,356,621 1,396,454 1,437,464 1,479,687 1,523,159 1,567,916 CAPITAL RESERVE 87,250 87,250 87,250 87,250 87,250 87,250 87,250 87,250 87,250 87,250 TOTAL EXPENSES 1,300,454 1,333,568 1,368,439 1,405,182 1,443,871 1,483,704 1,524,714 1,566,937 1,610,409 1,655,166 NET OPERATING INCOME 1,661,000 1,634,020 1,631,401 1,655,981 1,709,127 1,763,884 1,820,302 1,878,429 1,938,319 2,000,023 38

B O S T O N C R E E K A PA R T M E N T S 2 7 0 1 4 4 th S t r e e t, L u b b o c k, T e x a s 7 9 4 1 3 F o r M o r e I n f o r m a t i o n a n d t o S c h e d u l e a T o u r C o n t a c t : E r i k C a r l s o n ( 4 0 8 ) 3 9 2-8 8 2 2 x 1 2 6 e r i k. c a r l s o n @ s v n. c o m T o d d F r a n k s ( 9 7 2 ) 9 1 6-9397 t o d d. f r a n k s @ s v n. c o m