Return Metrics

Levered Unlevered Year Ending

IRR 8.7% 6.3%
Net Gain (Loss) $26,955,944 $36,855,944 Purchase Price
Equity Multiple 2.0x 1.7x Loan Proceeds
Avg. CoC (10yrs) 7.2% 5.6% Revenues:
Cost-to-Exit CAGR 3.0% 1.6% Gross Potential Rent
GPR/Unit/Month
OPERATING ASSUMPTIONS Other Income
Asset Inputs: Vacancy/Collection Loss
Total Square Feet 117,452 Total Revenue
# of Units 166 Expenses:
Purchase Price $55,000,000 Operating Expenses
Closing Date 12/31/2017 Capital Reserves
Debt Inputs: Total Expenses
LTV 50% Expense Ratio
Interest Rate 4.00% Net Operating Income
Debt (interest only) $27,500,000 Y-o-Y %Growth
Equity $27,500,000 Interest Expense
Reversion Inputs: DSCR
Hold Period (10yr MAX) 10 Yrs Cash Flow After Debt Service
Going in Cap Rate 4.9%
Exit Cap Rate 5.50% Terminal Value
Gross Sale Price F-12 $65,810,555 Closing Costs
Selling Costs 2.0% Principal Repayment
Operating Inputs:
Y1 Avg Rent ($/SF/mo) $2.80 Un-Levered Cash Flow
Y1 Other Income ($/unit/mo) $100 Cash-on-Cash
Vacancy/Collection (% of Rev) 5.0% Levered Cash Flow
Y1 Expenses ($/unit/yr) $7,250 Cash-on-Cash
Y1 Capital Reserves ($/unit/yr) $250
Income Growth Rate (Y2+) 3.0%
Expense Growth Rate (Y2+) 3.0%

GOAL-SEEK INPUTS FOR QUESTION #4

Set Sale Price @ "D40" $70,000,000

then click "Solve"

Set ULIRR @ "D41" 6.50%

then click "Solve"
 CASH FLOWS
12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022
Closing Year 1 Year 2 Year 3 Year 4 Year 5
(55,000,000)
27,500,000

3,946,387 4,064,779 4,186,722 4,312,324 4,441,694

1,981 2,041 2,102 2,165 2,230
199,200 205,176 211,331 217,671 224,201
207,279 213,498 219,903 226,500 233,295
3,938,308 4,056,457 4,178,151 4,303,495 4,432,600

1,203,500 1,239,605 1,276,793 1,315,097 1,354,550

41,500 42,745 44,027 45,348 46,709
1,245,000 1,282,350 1,320,821 1,360,445 1,401,258
32% 32% 32% 32% 32%
2,693,308 2,774,107 2,857,330 2,943,050 3,031,342
3.00% 3.00% 3.00% 3.00%
1,100,000 1,100,000 1,100,000 1,100,000 1,100,000
2.45 2.52 2.60 2.68 2.76
Debt Service 1,593,308 1,674,107 1,757,330 1,843,050 1,931,342

- - - - -
- - - - -
- - - - -

(55,000,000) 2,693,308 2,774,107 2,857,330 2,943,050 3,031,342

4.90% 5.04% 5.20% 5.35% 5.51%
(27,500,000) 1,593,308 1,674,107 1,757,330 1,843,050 1,931,342
5.79% 6.09% 6.39% 6.70% 7.02%
WS
12/31/2023 12/31/2024 12/31/2025 12/31/2026 12/31/2027 12/31/2028
Year 6 Year 7 Year 8 Year 9 Year 10 Year 11

4,574,944 4,712,193 4,853,558 4,999,165 5,149,140 5,303,614

2,297 2,366 2,437 2,510 2,585 2,662
230,927 237,855 244,991 252,341 259,911 267,708
240,294 247,502 254,927 262,575 270,453 278,566
4,565,578 4,702,546 4,843,622 4,988,931 5,138,598 5,292,756

1,395,186 1,437,042 1,480,153 1,524,558 1,570,295 1,617,403

48,110 49,553 51,040 52,571 54,148 55,773
1,443,296 1,486,595 1,531,193 1,577,129 1,624,443 1,673,176
32% 32% 32% 32% 32% 32%
3,122,282 3,215,950 3,312,429 3,411,802 3,514,156 3,619,581
3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
1,100,000 1,100,000 1,100,000 1,100,000 1,100,000 1,100,000
2.84 2.92 3.01 3.10 3.19
2,022,282 2,115,950 2,212,429 2,311,802 2,414,156 2,519,581

- - - - 65,810,555 -
- - - - 1,316,211 -
- - - - 27,500,000 -

3,122,282 3,215,950 3,312,429 3,411,802 64,494,344

5.68% 5.85% 6.02% 6.20% 6.39%
2,022,282 2,115,950 2,212,429 2,311,802 36,994,344
7.35% 7.69% 8.05% 8.41% 8.78%
 Model Inputs: LEVERED IRR|EM: Rent vs Exit Cap
Purchase Price: Y1 Avg Rent ($/SF/mo)
$55,000,000 $2.20 $2.40 $2.60 $2.80
4.75% 2.5% | 1.2x 5.7% | 1.6x 8.4% | 2.0x 10.8% | 2.4x
Y1 Avg Rent: 5.00% 1.6% | 1.1x 4.9% | 1.5x 7.7% | 1.9x 10.1% | 2.2x

Exit Cap Rate

$2.80 5.25% 0.7% | 1.1x 4.1% | 1.4x 6.9% | 1.7x 9.4% | 2.1x
5.50% -0.2% | 1.0x 3.3% | 1.3x 6.2% | 1.6x 8.7% | 2.0x
Income Growth 5.75% -1.1% | 0.9x 2.6% | 1.2x 5.6% | 1.6x 8.1% | 1.9x
3.0% 6.00% -2.0% | 0.8x 1.8% | 1.2x 4.9% | 1.5x 7.5% | 1.8x
6.25% -2.9% | 0.8x 1.1% | 1.1x 4.2% | 1.4x 6.9% | 1.7x
Exit Cap:
5.5% LEVERED IRR|EM: LTV vs Income Growth
Leverage Ratio
Hold Period: 35% 40% 45% 50%
10 Yrs 2.25% 6.1% | 1.6x 6.3% | 1.6x 6.5% | 1.7x 6.8% | 1.7x
2.50% 6.6% | 1.7x 6.8% | 1.7x 7.1% | 1.7x 7.4% | 1.8x
Income Growth

Leverage Ratio: 2.75% 7.1% | 1.8x 7.4% | 1.8x 7.7% | 1.8x 8.1% | 1.9x
50% 3.00% 7.7% | 1.8x 8.0% | 1.9x 8.3% | 1.9x 8.7% | 2.0x
3.25% 8.2% | 1.9x 8.5% | 2.0x 8.9% | 2.0x 9.3% | 2.1x
Interest Rate: 3.50% 8.7% | 2.0x 9.0% | 2.0x 9.4% | 2.1x 9.9% | 2.2x
4.0% 3.75% 9.1% | 2.1x 9.5% | 2.1x 10.0% | 2.2x 10.5% | 2.3x
 SENSITIVITY DATA TABLES

ent vs Exit Cap UNLEVERED IRR|EM: Rent vs Exi

Rent ($/SF/mo) Y1 Avg Rent ($/SF
$3.00 $3.20 $3.40 $2.20 $2.40 $2.60
12.8% | 2.7x 14.7% | 3.1x 16.5% | 3.5x 4.75% 3.1% | 1.3x 4.7% | 1.5x 6.2% | 1.7x
12.2% | 2.6x 14.1% | 2.9x 15.9% | 3.3x 5.00% 2.7% | 1.3x 4.3% | 1.4x 5.8% | 1.6x

Exit Cap Rate

11.5% | 2.4x 13.5% | 2.8x 15.3% | 3.1x 5.25% 2.3% | 1.2x 3.9% | 1.4x 5.4% | 1.6x
10.9% | 2.3x 12.9% | 2.6x 14.7% | 3.0x 5.50% 1.9% | 1.2x 3.5% | 1.3x 5.0% | 1.5x
10.3% | 2.2x 12.3% | 2.5x 14.2% | 2.8x 5.75% 1.5% | 1.1x 3.1% | 1.3x 4.6% | 1.5x
9.7% | 2.1x 11.8% | 2.4x 13.6% | 2.7x 6.00% 1.2% | 1.1x 2.8% | 1.3x 4.3% | 1.4x
9.2% | 2.0x 11.3% | 2.3x 13.1% | 2.6x 6.25% 0.8% | 1.1x 2.5% | 1.2x 3.9% | 1.4x

s Income Growth LEVERED IRR: Hold Period vs Purcha

erage Ratio Reversion Yea
55% 60% 65% Year 4 Year 5 Year 6
7.1% | 1.7x 7.5% | 1.8x 8.0% | 1.8x 53.5 5.3% | 1.2x 6.8% | 1.3x 7.7% | 1.5x
Purchase Price (mm's)

7.8% | 1.8x 8.3% | 1.9x 8.9% | 2.0x 54.0 4.8% | 1.2x 6.3% | 1.3x 7.3% | 1.5x
8.5% | 1.9x 9.1% | 2.0x 9.8% | 2.1x 54.5 4.3% | 1.2x 5.9% | 1.3x 7.0% | 1.4x
9.2% | 2.0x 9.8% | 2.1x 10.6% | 2.2x 55.0 3.8% | 1.1x 5.5% | 1.3x 6.6% | 1.4x
9.9% | 2.2x 10.5% | 2.3x 11.4% | 2.4x 55.5 3.3% | 1.1x 5.1% | 1.3x 6.3% | 1.4x
10.5% | 2.3x 11.2% | 2.4x 12.1% | 2.5x 56.0 2.8% | 1.1x 4.7% | 1.2x 6.0% | 1.4x
11.1% | 2.4x 11.9% | 2.5x 12.8% | 2.7x 56.5 2.3% | 1.1x 4.3% | 1.2x 5.6% | 1.3x
 Expand
for
VERED IRR|EM: Rent vs Exit Cap Data
Y1 Avg Rent ($/SF/mo) Tables -->
$2.80 $3.00 $3.20 $3.40
7.6% | 1.9x 8.8% | 2.0x 10.0% | 2.2x 11.1% | 2.4x
7.1% | 1.8x 8.4% | 2.0x 9.6% | 2.1x 10.7% | 2.3x
6.7% | 1.7x 8.0% | 1.9x 9.2% | 2.1x 10.3% | 2.2x
6.3% | 1.7x 7.6% | 1.8x 8.8% | 2.0x 9.9% | 2.2x
6.0% | 1.6x 7.2% | 1.8x 8.4% | 1.9x 9.5% | 2.1x
5.6% | 1.6x 6.9% | 1.7x 8.1% | 1.9x 9.2% | 2.0x
5.3% | 1.5x 6.6% | 1.7x 7.7% | 1.8x 8.8% | 2.0x

IRR: Hold Period vs Purchase Price

Reversion Year
Year 7 Year 8 Year 9 Year 10
8.3% | 1.6x 8.8% | 1.8x 9.1% | 1.9x 9.4% | 2.1x
8.0% | 1.6x 8.5% | 1.7x 8.9% | 1.9x 9.1% | 2.0x
7.7% | 1.6x 8.2% | 1.7x 8.6% | 1.9x 8.9% | 2.0x
7.4% | 1.5x 8.0% | 1.7x 8.4% | 1.8x 8.7% | 2.0x
7.1% | 1.5x 7.7% | 1.7x 8.2% | 1.8x 8.5% | 2.0x
6.8% | 1.5x 7.5% | 1.6x 7.9% | 1.8x 8.3% | 1.9x
6.5% | 1.5x 7.2% | 1.6x 7.7% | 1.7x 8.1% | 1.9x
F-12
In-Place
T-12
Fair Market Value Calculation: % Weighting Disc. / Cap Rate Implied Sale $ $/Unit
Net Present Value 20% 7.00% 49,477,083 298,055
Sale Comparison 30% 4.60% 61,687,260 371,610
Direct Capitalization 50% 5.00% 50,724,176 305,567
Blended Approach 100% 4.58% 53,763,683 323,878

Discounted Cash Flow Approach: Growth Rates: GPR: 3.00% Other Income:
T-12 Year 1 Year 2 Year 3
REVENUE:
Gross Potential Market Rent 3,601,783 3,709,836 3,821,132 3,935,766
Other Income 170,316 175,425 180,688 186,109
Vacancy Collection Loss 194,263 200,091 206,094
Total Revenue 3,772,099 3,690,999 3,801,729 3,915,781

EXPENSES:
Operating Expenses 1,173,454 1,208,658 1,244,917 1,282,265
Capital Reserves 19,420 20,003 20,603 21,221
Total Expenses 1,192,874 1,228,660 1,265,520 1,303,486

NET OPERATING INCOME 2,579,225 2,462,339 2,536,209 2,612,295

Sales Comparison Approach:

Sale Date Price $/Unit Cap Rate
Comp #1 Sep-14 74,000,000 294,821 3.90%
Comp #2 Sep-14 23,100,000 444,231 4.50%
Comp #3 May-14 61,000,000 406,667 5.25%
Comp #4 Nov-13 41,568,000 340,721 4.75%
Average 371,610 4.60%

Direct Capitalization Approach

Sale Method Exit Cap Sale Value $/unit
Montlake Crest Apartments F-12 5.00% 50,724,176 305,567.33
3.00% Vacancy 5.00% OpEx 3.00% Cap Reserves 3.00%
Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
4,053,838 4,175,454 4,300,717 4,429,739 4,562,631 4,699,510 4,840,495 4,985,710
191,692 197,443 203,366 209,467 215,751 222,224 228,890 235,757
212,277 218,645 225,204 231,960 238,919 246,087 253,469 261,073
4,033,254 4,154,252 4,278,879 4,407,246 4,539,463 4,675,647 4,815,916 4,960,394

1,320,733 1,360,355 1,401,165 1,443,200 1,486,496 1,531,091 1,577,024 1,624,335

21,857 22,513 23,188 23,884 24,601 25,339 26,099 26,882
1,342,590 1,382,868 1,424,354 1,467,085 1,511,097 1,556,430 1,603,123 1,651,217

2,690,664 2,771,384 2,854,525 2,940,161 3,028,366 3,119,217 3,212,793 3,309,177

 EFFECTIVE RENTS
Studios

Asking Base Rents Effective

Property Rent SF $ / SF Concession Rent $ / SF
s
Comp #2 $1,964 538 $3.65 $1,964 $1,800 $3.35
Montlake Crest $1,730 540 $3.20 $0 $1,730 $3.20
Comp #1 $1,505 500 $3.01 $0 $1,505 $3.01
Comp #4 $1,500 509 $2.95 $0 $1,500 $2.95
Comp #3 $1,295 547 $2.37 $0 $1,295 $2.37
Avg. Excluding Subject $1,566 524 $2.99 $491 $1,525 $2.91

1 Bedrooms

Asking Base Rents Effective

Property Rent SF $ / SF Concession Rent $ / SF
s
Comp #1 $2,020 741 $2.73 $0 $2,020 $2.73
Montlake Crest $2,010 743 $2.71 $0 $2,010 $2.71
Comp #2 $2,122 763 $2.78 $2,122 $1,945 $2.55
Comp #4 $1,800 758 $2.37 $0 $1,800 $2.37
Comp #3 $1,715 749 $2.29 $0 $1,715 $2.29
Avg. Excluding Subject $1,914 753 $2.54 $531 $1,870 $2.48

2 Bedrooms

Asking Base Rents Effective

Property Rent SF $ / SF Concession Rent $ / SF
s
Comp #1 $2,663 1,106 $2.41 $0 $2,663 $2.41
Montlake Crest $2,612 1,026 $2.55 $0 $2,612 $2.55
Comp #2 $2,836 1,020 $2.78 $2,836 $2,600 $2.55
Comp #3 $2,520 1,227 $2.05 $0 $2,520 $2.05
Comp #4 $2,147 963 $2.23 $0 $2,147 $2.23
Avg. Excluding Subject $2,542 1,079 $2.36 $709 $2,482 $2.30

2 Bedrooms MARKET POSITION o

Effective Monthly Rent

3100

2900

2700
 Effective Monthl
2900

2700

2500

2300

2100

1900

1700

1500

1300
500 600 700 800

RENT COMP INPUTS…

Studios ($ effective rent)

Asking Base Rents Up-front Effective
Property Rent SF $ / SF Concession Rent $ / SF
s

Montlake Crest $1,730 540 $3.20 $0 $1,730 $3.20

Comp #1 $1,505 500 $3.01 $0 $1,505 $3.01
Comp #2 $1,964 538 $3.65 $1,964 $1,800 $3.35
Comp #3 $1,295 547 $2.37 $0 $1,295 $2.37
Comp #4 $1,500 509 $2.95 $0 $1,500 $2.95

1 Bedrooms ($ effective rent)

Asking Base Rents Up-front Effective
 Property Rent SF $ / SF Concession Rent $ / SF
s

Montlake Crest $2,010 743 $2.71 $0 $2,010 $2.71

Comp #1 $2,020 741 $2.73 $0 $2,020 $2.73
Comp #2 $2,122 763 $2.78 $2,122 $1,945 $2.55
Comp #3 $1,715 749 $2.29 $0 $1,715 $2.29
Comp #4 $1,800 758 $2.37 $0 $1,800 $2.37

2 Bedrooms ($ effective rent)

Asking Base Rents Up-front Effective
Property Rent SF $ / SF Concession Rent $ / SF
s

Montlake Crest $2,612 1,026 $2.55 $0 $2,612 $2.55

Comp #1 $2,663 1,106 $2.41 $0 $2,663 $2.41
Comp #2 $2,836 1,020 $2.78 $2,836 $2,600 $2.55
Comp #3 $2,520 1,227 $2.05 $0 $2,520 $2.05
Comp #4 $2,147 963 $2.23 $0 $2,147 $2.23

Comp Rank
Montlake Crest 3
Comp #1 1
List each property from #1-MAX…1 = the best property, OVERALL
Comp #2 2
Comp #3 5
Comp #4 4

Selection SF $ Rent $ / SF Trendline Rent $ Variance % Variance

Montlake Crest 708 $1,980 $2.80 $2,132 -$152 -7.7%

Comp #1 784 $2,072 $2.64 $2,012 $60 2.9%

Comp #2 773 $2,064 $2.67 $2,030 $34 1.7%
Comp #3 869 $1,901 $2.19 $1,879 $22 1.2%
Comp #4 797 $1,876 $2.35 $1,992 -$116 -6.2%

Studios SF $ Rent $ / SF Trendline Rent $ Variance % Variance

Montlake Crest 540 $1,730 $3.20 $1,585 $144.60 8.4%
Comp #1 500 $1,505 $3.01 $1,538 ($33.37) (2.2%)
Comp #2 538 $1,964 $3.65 $1,583 $380.95 19.4%
Comp #3 547 $1,295 $2.37 $1,594 ($298.63) (23.1%)
Comp #4 509 $1,500 $2.95 $1,549 ($48.95) (3.3%)

1 Bedrooms SF $ Rent $ / SF Trendline Rent $ Variance % Variance

Montlake Crest 743 $2,010 $2.71 $1,879 $131.16 6.5%
Comp #1 741 $2,020 $2.73 $1,872 $148.43 7.3%
Comp #2 763 $2,122 $2.78 $1,951 $170.52 8.0%
Comp #3 749 $1,715 $2.29 $1,901 ($185.63) (10.8%)
Comp #4 758 $1,800 $2.37 $1,933 ($133.32) (7.4%)

2 Bedrooms SF $ Rent $ / SF Trendline Rent $ Variance % Variance

Montlake Crest 1,026 $2,612 $2.55 $2,503 $108.65 4.2%
Comp #1 1,106 $2,663 $2.41 $2,561 $102.06 3.8%
Comp #2 1,020 $2,836 $2.78 $2,499 $336.97 11.9%
Comp #3 1,227 $2,520 $2.05 $2,648 ($128.04) (5.1%)
Comp #4 963 $2,147 $2.23 $2,458 ($311.00) (14.5%)

All SF $ Rent $ / SF Trendline Rent $ Variance % Variance

Montlake Crest 708 $1,980 $2.80 $2,132 ($151.91) (7.7%)
Comp #1 784 $2,072 $2.64 $2,012 $59.56 2.9%
Comp #2 773 $2,064 $2.67 $2,030 $34.27 1.7%
Comp #3 869 $1,901 $2.19 $1,879 $22.18 1.2%
Comp #4 797 $1,876 $2.35 $1,992 ($116.00) (6.2%)
 RENT COMPARISON REPORT
Montlake Crest

EFFECTIVE RENT / SF
Studios

Asking Base Rents

Occupancy Ranking Property Rent SF $ / SF

80.0% 2 Comp #2 $1,964 538 $3.65

95.0% 3 Montlake Crest $1,730 540 $3.20
93.0% 1 Comp #1 $1,505 500 $3.01
95.0% 4 Comp #4 $1,500 509 $2.95
99.0% 5 Comp #3 $1,295 547 $2.37
Avg. Excluding Subject $1,566 524 $2.99

1 Bedrooms

Asking Base Rents

Occupancy Ranking Property Rent SF $ / SF

93.0% 1 Comp #1 $2,020 741 $2.73

95.0% 3 Montlake Crest $2,010 743 $2.71
80.0% 2 Comp #2 $2,122 763 $2.78
95.0% 4 Comp #4 $1,800 758 $2.37
99.0% 5 Comp #3 $1,715 749 $2.29
Avg. Excluding Subject $1,914 753 $2.54

2 Bedrooms

Asking Base Rents

Occupancy Ranking Property Rent SF $ / SF

93.0% 1 Comp #2 $2,836 1,020 $2.78

95.0% 3 Montlake Crest $2,612 1,026 $2.55
80.0% 2 Comp #1 $2,663 1,106 $2.41
99.0% 5 Comp #4 $2,147 963 $2.23
95.0% 4 Comp #3 $2,520 1,227 $2.05
Avg. Excluding Subject $2,542 1,079 $2.36

MARKET POSITION of EFFECTIVE MONTHLY BASE RENTS

1
1
 2

1
1

800 900 1000 1100 1

Square Footage

Property
Occupancy

95.0%
93.0%
80.0%
99.0%
95.0%

Property
 Occupancy

95.0%
93.0%
80.0%
99.0%
95.0%

Property
Occupancy

95.0%
93.0%
80.0%
99.0%
95.0%

est property, OVERALL

Chart Scaling
Axe
708 $1,980 X Y
s
784 $2,072 Max 900 $2,100
773 $2,064 Min 700 $1,800
 869 $1,901 Tick 0 $100
797 $1,876

950.50 1.18
500 $1,505
538 $1,964
547 $1,295
509 $1,500

-819.84 3.63
741 $2,020
763 $2,122
749 $1,715
758 $1,800

1,764.77 0.72
1,106 $2,663
1,020 $2,836
1,227 $2,520
963 $2,147

3,244.86 -1.57
784 $2,072
773 $2,064
869 $1,901
797 $1,876
EFFECTIVE RENT / SF

Effective
Concessions Rent $ / SF Occupancy Ranking

$1,964 $1,800 $3.35 80.0% 2

$0 $1,730 $3.20 95.0% 3
$0 $1,505 $3.01 93.0% 1
$0 $1,500 $2.95 95.0% 4
$0 $1,295 $2.37 99.0% 5
$491 $1,525 $2.91

Effective
Concessions Rent $ / SF Occupancy Ranking

$0 $2,020 $2.73 93.0% 1

$0 $2,010 $2.71 95.0% 3
$2,122 $1,945 $2.55 80.0% 2
$0 $1,800 $2.37 95.0% 4
$0 $1,715 $2.29 99.0% 5
$531 $1,870 $2.48

Effective
Concessions Rent $ / SF Occupancy Ranking

$2,836 $2,600 $2.55 80.0% 2

$0 $2,612 $2.55 95.0% 3
$0 $2,663 $2.41 93.0% 1
$0 $2,147 $2.23 95.0% 4
$0 $2,520 $2.05 99.0% 5
$709 $2,482 $2.30

3
 1

1100 1200 1300

1
2
3
4
5
 All
Studios
1 Bedrooms
2 Bedrooms