The Montleone OM

THE MONTLEONE

SUBMITTED BY: LEAD AGENTS

Tim VanWingerden

Associate Louisville D. 513.878.7750 tim.vanwingerden@marcusmillichap.com

Jordan Dickman

First Vice President Investments Cincinnati Office D. 513.878.7735 jordan.dickman@marcusmillichap.com

Nicholas Andrews

First Vice President Investments Cincinnati Office D. 513.878.7741 nicholas.andrews@marcusmillichap.com

Austin Sum

Senior Associate Cincinnati Office D. 513.878.7747 austin.sum@marcusmillichap.com

NON-ENDORSEMENT & DISCLAIMER NOTICE CONFIDENTIALITY 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.

NON-ENDORSEMENT NOTICE 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.

CONTENTS

B R O K E R C A PA B I L I T I E S

06 | THE INVESTMENT

01

&

22 | LOCAL COMP E TITORS

02

30 | THE FIN ANC I ALS

03

38 | LOCAL M ARKE T

04

O P I N I O N O F V A L U E

CALABASAS, CALIFORNIA | HQ

80+ | OFFICES

2,500 | EMPLOYEES

UNRIVALED SUCCESS IN THE MIDWEST Nick Andrews

First Vice President Investments Director, NMHG

Jordan Dickman

First Vice President Investments Director, NMHG

INVESTMENT ADVISORS

Austin Sum

JD Schmerge

Brian Johnston

Tim VanWingerden

Senior Investment Associate Investment Associate

Investment Associate

Investment Associate

DEBT & STRUCTURED FINANCE

Chris Litzler

Senior Director of Organization MMCC

VALUATION & RESEARCH

Sam Petrosino

Financial & Research Analyst

CLIENT RELATIONS

MARKETING

Alex Papa

Marketing Coordinator

Kristin Smith Marketing

Skyler Wilson

Client Relations Manager

OPERATIONS

Sidney Bills

Office Administrator

Josh Caruana

Vice President Regional Manager Indianapolis | Cincinnati | Louisville St Louis | Kansas City

Brittany Campbell-Koch Director of Operations

John Sebree

Senior Vice President National Director National Multi Housing Group

Liz Popp

Midwest Operations Manager

Michael Glass

Senior Vice President Midwest Division Manager National Director, Manufactured Home Communities Group

S E C T I O N

01

THE INV

VESTMENT

THE MONTELONE

THE OPPORTUNITY 29,150

41

REN TABLE S QUARE FEE T

TOTAL UNI T S

3 PR O PE RT IE S

#1 Bedrooms

16

#2 Bedrooms

25

% Leased

100%

Marcus & Millichap is pleased to present the Montleone, a 41-unit community in Louisville, KY. This property has been meticulously maintained with ownership providing a high level of care to the property and residents. An incoming investor can take advantage of the value-add opportunity given the growing rents in the submarket which provide strong support for interior renovations.

VALUE-ADD OPPORTUNITY | RENOVATION INITIATIVE OTHER INCOME POTENTIAL | WASHER / DRYER INSTALL LONG-TERM OWNERSHIP | OPERATIONAL UPSIDE IDEAL LOCATION SUPERIOR SUBMARKET RENT GROWTH TOP-NOTCH EMPLOYMENT

THE MONTLEONE

INTERIOR

THE MONTLEONE

EXTERIOR

PROPERTY DETAILS

THE MONTLEONE SUMMARY

4622-4626 SOUTHERN PARKWAY, LOUISVILLE, KY

1966

YEAR BUILT/RENO

41

NUMBER OF UNITS

941

AVERAGE UNIT SIZE

33,828

RENTABLE SQUARE FEET

1.26

LOT 2:01

LOT SIZE (ACRES)

3

PARCELS

4

# OF BUILDINGS PARKING PARKING RATIO

Building Mechanicals

Type

Utility Notes

Air Condition

Central Air

Electric

Heat

Furnace

Gas

Water Heater

In-Unit

19 replaced 2021

Plumbing

Original

Wiring

Copper

Laundry

Coin Laundry

Construction: Foundation:

Building 1: Basement with storage | Building 2: Slab

Framing:

Wood

Roof Type/Age:

Full Replacement 2013

Exterior of Building:

Brick

Windows:

Double Pane

Utilities: Electric:

Tenant Paid

Gas:

Tenant Paid

Water

Owner Paid

Sewer

Owner Paid

Trash:

Owner Paid

4 Washer / 3 Dryer

THE MONTLEONE

INVESTMENT HIGHLIGHTS VALUE-ADD OPPORTUNITY RENOVATION INITIATIVE An incoming investor can take advantage of the value-add opportunity given the growing rents in the submarket which provide strong support for interior renovations. A renovation initiative should include upgraded flooring, kitchen, bath, and paint.

The market supports an increase of over $200 in monthly rent

OTHER INCOME POTENTIAL | WASHER DRYER INSTALL Current ownership is not charging for late fees, application fees nor are they collecting additional revenue for the storage units. An incoming investor can begin charging for these items and also consider allowing pets to capture additional income. There is opportunity to install a washer/dryer hookups in the units which would further boost NOI.

LONG TERM OWNERSHIP | OPERATIONAL UPSIDE The Montleone has been under the same ownership for 15 years with owners focusing on a low maintenance model: Rents are never raised once a tenant moves in. An incoming investor can take advantage of this opportunity through an aggressive marketing strategy in a market that has experienced strong rent growth.

THE MONTLEONE

MARKET HIGHLIGHTS TOP-NOTCH EMPLOYMENT The top industries in Louisville’s employment sector are Trade & Transportation (23.3%), Education & Health (14.6%), Manufacturing (12.4%), and Professional Services (12.1%). Some of the largest employers in the area include Yum! Brands, Kindred Healthcare, Humana, and Ford. It is also home to UPS Worldport, the world’s largest package handling facility.

SUPERIOR MARKET DRIVERS Louisville has experienced record-breaking absorption with nearly 4,000 units and another year of continued decrease in vacancies. Rental growth has permeated the market in the past 12 month largely driven by strong economic fundamentals and pentup demand from Covid. The metro recorded a net gain of 22,400 jobs as the market recovers from Covid, expanding the employment base by 3.5%.

HIGHLIGHTS

5

Located off the Watterson Expressway, The Montleone is situated in an ideal location just minutes away from Churchill Downs, Louisville International Airport, the University of Louisville, and the

3

4

1

Louisville Zoo.

1

*

1.3 Miles from Churchhill Downs

2 1.7 Miles from Louisville International Airport 2 6

3 2.5 Miles from University of Louisville 4 4.9 Miles from Louisville Zoo 5 5.2 Miles from Downtown Louisville 6 5.6 Miles from UPS Worldport

7

7 5.9 Miles from Louisville Industrial Park

THE MONTLEONE

PROPOSED RENOVATIONS

SUBJECT

With the recently renovated apartments in the submarket achieving on average a $281 premium compared with The Montleone’s market rent, an incoming investor can renovate interior units and draft rent from the competition. There is strong market support for a $200 rental increase with a renovation initiative:

LEDGEWOOD THE MONTLEONE

* INDIGO LEDGEWOOD 2

INDIGO 1

LEDGEWOOD

RENT: 2x1 - $959

INDIGO

RENT: 2x1 - $1,002

S E C T I O N

02

LOCAL C

COMPETITORS

LOCATION

3 4

1

THE MONTLEONE

6

* 2

5

REN T C OMPAR ABLE S 1

CRAWFORD PLACE

2

COLONIAL OAKS

3

IROQUOIS GREEN

4

LEDGEWOOD APARTMENTS

5

7305 GARRISON

LOCAL COMPETITORS 1

2

3

CRAWFORD PLACE Address

COLONIAL OAKS

6800 Crawford Crossing Pl, Louisville, KY

Address

IROQUOIS GREEN

5011 Southside Drive, Louisville, KY

Address

136 Lawson Ln, Louisville, KY

Year Built

2011

Year Built

1964

Year Built

1973

Occupancy

94%

Occupancy

100%

Occupancy

98%

Units Rent (2x2) SF Rent/SF Unit Features: Air Conditioning, Washer/Dryer Hookup, Carpet Wheelchair Accessible (Rooms), Dishwasher

30

Units

192

$1,005

Rent

(1x1 ) $697 (2x1) $834

963 $1.04

SF Rent/SF

(1x1) 700 (2x1) 900 (1x1)$1.00 (2x1) $0.93

Unit Features Air Conditioning, Kitchen, Carpet, Range, Ceiling Fans, Refrigerator, Heating Tub/Shower

$1.00

Units Rent (1x1) SF Rent/SF

72 $665 600 $1.07

Unit Features: Air Conditioning, Oven, Balcony, Range, Carpet, Refrigerator Heating, Tub/Shower, Kitchen

LOCAL COMPETITORS

SUBJECT *

5

4

L E D G E W O O D A PA R T M E N T S Address

THE MONTLEONE

7305 GARRISON

6100 Ledgewood Pkwy, Louisville, KY

Address

7305 Garrsion Rd, Louisville, KY

Year Built

1974

Year Built

1972

Occupancy

95%

Occupancy

100%

Units

136

Units

39

Rent

$959

Rent

$900

SF Rent/SF

825 $1.08

Unit Features: Dishwasher, Refrigerator, Hardwood Floors, Vinyl Flooring, Heating, Washer/Dryer, Kitchen

SF Rent/SF Unit Features:

Address

Southern Parkway

Units

41

Avg. SF

711

Year Built

1966 & 1993 1x1

2x1

825

Market Price ($/mo)

$525

$685

$1.01

Market Rate ($/SF)

$0.81

$0.91

Effective Price ($/mo)

$488

$555

Effective Rate ($/SF)

$0.75

$0.74

n/a

RENT SORT One Bedroom Apartment Rents Sorted by Net Rent

Year Built

# of 1-Bed

SF

Market Rent

Utility Adjustment/Month

Net Rent

Net Rent/SF

Indigo at the Park

1971

84

750

$862.00

$0

$862

$1.15

Legacy Apartments

1970

27

733

$800.00

$0

$800

$1.09

Colonial Oaks

1964

80

700

$697.00

$0

$697

$1.00

1966/1993

16

750

$689.00

$45

$644

$0.86

Iroquois Green

1973

72

600

$665.00

$26

$639

$1.07

Gables at Stone Ridge Apartments

1969

6

639

$651.00

$15

$636

$1.00

Executive Arms

1967

55

578

$665.00

$55

$610

1966/1993

16

750

$488.00

$55

$433

$0.58

688

$690

$39

$665

$0.97

Property

Montleone Pro Forma

Montleone Average Effective Averages

1969

Two Bedroom Apartment Rents Sorted by Net Rent

Year Built

# of Units

SF

Market Rent

Utility Adjustment/Month

Net Rent

Net Rent/SF

Crawford Crossing

2011

30

963

$1,005.00

$0

$1,005

$1.04

Indigo at the park

1971

72

950

$1,002.00

$0

$1,002

$1.05

Legacy Apartments

1970

55

947

$900.00

$0

$900

$0.95

Ledgewood Apartments

1974

136

825

$959.00

$65

$894

$1.08

1966/1993

25

850

$950.00

$65

$885

$1.04

Gables at Stone Ridge Apartments

1969

39

865

$865.00

$15

$850

$0.98

Patriot Crossing Colonial Oaks

1972 1964

39 112

825 900

$900.00 $834.00

$65 $0

$835 $834

$1.01 $0.93

Venus Place

1970

150

850

$825.00

$65

$760

$0.89

Manor Hall Apartments

1991

30

911

$765.00

$65

$700

$0.77

1966/1993

25

850

$555.00

$65

$490

$0.58

885

$869

$58

$832

$0.94

Property

Montleone Pro Forma

Montleone Average Effective Averages

1977

S E C T I O N

03

THE FIN

NANCIALS

THE MONTLEONE - FINANCIALS

UNIX MIX SUMMARY AV E R A G E E F F E C T I V E

MARKET

P RO J E CT E D

NO. OF UNITS

T E N TA B L E S F

T O TA L S F

RENT/UNIT

RENT/SF

T O TA L R E N T POTENTIAL

SUMMARY One Bedroom Two Bedroom

16 Units 25 Units

650 SF 750 SF

10,400 SF 18,750 SF

$488.00 $555.00

$0.75 $0.74

$7,808 $13,875

$525.00 $685.00

$0.81 SF $0.91 SF

$8,400 $17,125

$689.00 $950.00

$1.06 SF $1.27 SF

$11,024 $23,750

Totals / Wtd. Averages

41 Units

711 SF

29,150 SF

$528.85

$0.74 SF

$21,683

$622.56

$0.88 SF

$25,525

$848.15

$1.19 SF

$34,774

UNIT TYPE

RENT/UNIT

UNIT DISTRIBUTION

RENT/SF

TOTA L R E N T P OT E N T I A L

RENT/UNIT

RENT/SF

TOTA L R E N T P OT E N T I A L

UNIT RENTS

39%

Two Bedroom

Avg. Effective

$950

One Bedroom One Bedroom

$555

$689

$488

61%

Two Bedroom Pro Forma Projection

THE MONTLEONE - FINANCIALS

UNIX MIX BREAKDOWN AV E R A G E E F F E C T I V E

MARKET

P RO J E CT E D

N O . O F U N I TS

T E N TA B L E S F

T O TA L S F

RENT/UNIT

RENT/SF

T O TA L R E N T POTENTIAL

ONE BEDROOM 1BR/1BA

16 Units

650 SF

10,400 SF

$488.00

$0.75 SF

$7,808

$525.00

$0.81 SF

$8,400

$689.00

$1.06 SF

$11,024

Totals / Wtd. Averages

16 Units

650 SF

10,400 SF

$488.00

$0.75 SF

$7,808

$525.00

$0.81 SF

$8,400

$689.00

$1.06 SF

$11,024

TWO BEDROOM 2BR/1BA

25 Units

750 SF

18,750 SF

$555.00

$0.74 SF

$13,875

$685.00

$0.91 SF

$17,125

$950.00

$1.27 SF

$23,750

Totals / Wtd. Averages

25 Units

750 SF

18,750 SF

$555.00

$0.74 SF

$13,875

$685.00

$0.91 SF

$17,125

$950.00

$1.27 SF

$23,750

UNIT TYPE

RENT/UNIT

RENT/SF

TOTA L R E N T P OT E N T I A L

RENT/UNIT

RENT/SF

TOTA L R E N T P OT E N T I A L

INCOME EXPENSE

THE MONTLEONE - FINANCIALS

INCOME & EXPENSES

CURRENT GROSS POTENTIAL RENT All Units at Market Rent Gain (Loss) to Lease GROSS SCHEDULED RENT OTHER INCOME Storage Units Total Other Income GROSS POTENTIAL INCOME Physical Vacancy Bad Debt EFFECTIVE GROSS INCOME NON-CONTROLLABLE Real Estate Taxes 2020 Taxes Paid Adjustment for Sale Total Real Estate Taxes Insurance Utilities Electric Water & Sewage Trash Removal Total Utilities Total Non-Controllable Total Non-Controllable CONTROLLABLE Contract Services Snow Removal Landscaping/Grounds Pest Control Total Contract Services Repairs & Maintenance Marketing & Promotion On-Site Payroll Payroll Taxes & Benefits General & Administrative Management Fee Telephone & Cable Replacement & Reserves Total Controllable TOTAL EXPENSES NET OPERATING INCOME

YEAR 1 $417,288 ($8,346) $408,942

5.20% 0.00% 79.75%

0 0 6,346 (330) 0 6,016

$4,860 $4,860 $413,802 ($20,447) ($8,179) $385,176

5.00% 2.00% 91.00%

119 119 10,093 (499) (199) 9,395

$30,594 Auditor $0 $30,594 $12,700 T12

% of EGI 12.40% 0.00% 12.40% 5.15%

Per Unit 746 0 746 310

$30,594 $13,913 $44,506 $12,300

% of EGI 7.94% 3.61% 11.55% 3.19%

Per Unit 746 339 1,086 300

$7,782 T12 $16,096 T12 $1,612 T12 $25,490 $68,784 $294,212

3.15% 6.53% 0.65% 10.33% 27.89% 28.93%

190 393 39 622 1,678 2,493

$7,938 $16,418 $1,644 $26,000 $82,806 $306,270

2.06% 4.26% 0.43% 6.75% 21.50% 26.43%

194 400 40 634 2,020 2,596

$0 $2,862 $0 $2,862 $20,500 $0 $0 $0 $825 $12,333 $1,486 $10,455 $48,461 $117,245 $129,413

0.00% 1.16% 0.00% 1.16% 8.31% 0.00% 0.00% 0.00% 0.33% 5.00% 0.60% 4.24% 19.65% 47.53% 52.47%

0 70 0 70 500 0 0 0 20 301 36 255 1,182 2,860 3,156

$1,435 $4,100 $1,435 $6,970 $20,500 $2,050 $32,800 $4,100 $3,075 $19,259 $1,476 $10,664 $100,894 $183,700 $201,476

0.37% 1.06% 0.37% 1.81% 5.32% 0.53% 8.52% 1.06% 0.80% 5.00% 0.38% 2.77% 26.19% 47.69% 52.31%

35 100 35 170 500 50 800 100 75 470 36 260 2,461 4,480 4,914

$0 $0 $260,196 ($13,538) T12 Economic $0 $246,658

T12

T12 Note 2 T12 Note 1

% of GPR

15.05% 0.00% 0.00%

% of GPR

Per Unit 10,178 (204) 9,974

Per Unit 7,471 (1,124) 6,346

$306,300 RR ($46,104) $260,196 RR

2.00% 1.19% 1.19%

YEAR 2 $429,807 ($8,596) $421,211

YEAR 3

% of GPR

2.00% 1.19% 1.19%

Per Unit 10,483 (210) 10,273

$442,701 ($8,854) $433,847

% of GPR

$5,156 $5,156 $439,003 ($21,692) ($8,677) $408,634

5.00% 2.00% 91.00%

126 126 10,707 (529) (212) 9,967

2.00% 1.19% 1.19%

Per Unit 10,798 (216) 10,582

$5,006 $5,006 $426,216 ($21,061) ($8,424) $396,732

5.00% 2.00% 91.00%

122 122 10,396 (514) (205) 9,676

$30,594 $13,913 $44,506 $12,546

% of EGI 7.71% 3.51% 11.22% 3.16%

Per Unit 746 339 1,086 306

$30,594 $13,913 $44,506 $12,797

% of EGI 7.71% 3.51% 11.22% 3.23%

Per Unit 746 339 1,086 312

$8,096 $16,746 $1,677 $26,520 $83,572 $309,448

2.04% 4.22% 0.42% 6.68% 21.07% 25.07%

197 408 41 647 2,038 2,622

$8,258 $17,081 $1,711 $27,050 $84,353 $312,690

2.08% 4.31% 0.43% 6.82% 21.26% 25.34%

201 417 42 660 2,057 2,650

$1,464 $4,182 $1,464 $7,109 $20,910 $2,091 $33,456 $4,182 $3,137 $19,837 $1,506 $10,877 $103,104 $186,677 $210,055

0.37% 1.05% 0.37% 1.79% 5.27% 0.53% 8.43% 1.05% 0.79% 5.00% 0.38% 2.74% 25.99% 47.05% 52.95%

36 102 36 173 510 51 816 102 77 484 37 265 2,515 4,553 5,123

$1,493 $4,266 $1,493 $7,252 $21,328 $2,133 $34,125 $4,266 $3,199 $20,432 $1,536 $11,095 $105,365 $189,718 $218,915

0.38% 1.08% 0.38% 1.83% 5.38% 0.54% 8.60% 1.08% 0.81% 5.00% 0.39% 2.80% 26.41% 47.82% 55.18%

36 104 36 177 520 52 832 104 78 484 37 271 2,555 4,627 5,339

INCOME EXPENSE

THE MONTLEONE - FINANCIALS

CASH FLOW

CURRENT

YEAR 1 YE FEB-2023

YEAR 2 YE FEB-2024

YEAR 3 YE JAN-2025

YEAR 4 YE JAN-2026

YEAR 5 YE JAN-2027

YEAR 6 YE JAN-2028

YEAR 7 YE JAN-2029

YEAR 8 YE JAN-2030

YEAR 9 YE JAN-2031

YEAR 10 YE JAN-2032

INCOME GROSS POTENTIAL RENT All Units at Market Rent Gain (Loss) to Lease GROSS SCHEDULED RENT Total Other Income

$306,300 ($46,104) $260,196 $0

$417,288 ($8,346) $408,942 $4,860

$429,807 ($8,596) $421,211 $5,006

$442,701 ($8,854) $433,847 $5,156

$455,982 ($9,120) $446,862 $5,259

$469,661 ($9,393) $460,268 $5,364

$483,751 ($9,675) $474,076 $5,472

$498,264 ($9,965) $488,298 $5,581

$513,212 ($10,264) $502,947 $5,693

$528,608 ($10,572) $518,036 $5,806

$544,466 ($10,889) $533,577 $5,923

GROSS POTENTIAL INCOME Physical Vacancy Bad Debt EFFECTIVE GROSS INCOME

$260,196 ($13,538) $0 $246,658

$413,802 ($20,447) ($8,179) $385,176

$426,216 ($21,061) ($8,424) $396,732

$439,003 ($21,692) ($8,677) $408,634

$452,121 ($22,343) ($8,937) $420,841

$465,632 ($23,013) ($9,205) $433,414

$479,548 ($23,704) ($9,482) $446,362

$493,879 ($24,415) ($9,766) $459,699

$508,640 ($25,147) ($10,059) $473,434

$523,842 ($25,902) ($10,361) $487,580

$539,499 ($26,679) ($10,672) $502,149

EXPENSES Real Estate Taxes Insurance Utilities Contract Services Repairs & Maintenance Marketing & Promotion On-Site Payroll Payroll Taxes & Benefits General & Administrative Management Fee Telephone & Cable TOTAL EXPENSES

$30,594 $12,700 $25,490 $2,862 $20,500 $0 $0 $0 $825 $12,333 $1,486 $117,245

$44,506 $12,300 $26,000 $6,970 $20,500 $2,050 $32,800 $4,100 $3,075 $19,259 $1,476 $183,700

$44,506 $12,546 $26,520 $7,109 $20,910 $2,091 $33,456 $4,182 $3,137 $19,837 $1,506 $186,677

$44,506 $12,797 $27,050 $7,252 $21,328 $2,133 $34,125 $4,266 $3,199 $20,432 $1,536

$45,396 $13,053 $27,591 $7,397 $21,755 $2,175 $34,808 $4,351 $3,263 $21,042 $1,566

$46,304 $13,314 $28,143 $7,545 $22,190 $2,219 $35,504 $4,438 $3,328 $21,671 $1,598

$47,230 $13,580 $28,706 $7,695 $22,634 $2,263 $36,214 $4,527 $3,395 $22,318 $1,630

$48,175 $13,852 $29,280 $7,849 $23,086 $2,309 $36,938 $4,617 $3,463 $22,985 $1,662

$49,139 $14,129 $29,866 $8,006 $23,548 $2,355 $37,677 $4,710 $3,532 $23,672 $1,695

$50,121 $14,411 $30,463 $8,166 $24,019 $2,402 $38,430 $4,804 $3,603 $24,379 $1,729

$51,124 $14,700 $31,072 $8,330 $24,499 $2,450 $39,199 $4,900 $3,675 $25,107 $1,764

$189,718

$193,714

$197,796

$201,966

$206,226

$210,578

$215,023

$219,565

NET OPERATING INCOME

$129,413

$201,476

$210,055

$218,915

$227,127

$235,617

$244,396

$253,472

$262,856

$272,557

$282,585

DEBT SERVICE - Proposed New Loan Principal Payments Interest Payments TOTAL DS - Proposed New Loan

$42,407 $85,760 $128,167

$42,407 $85,760 $128,167

$44,025 $84,143 $128,167

$45,704 $82,463 $128,167

$47,448 $80,719 $128,167

$49,258 $78,909 $128,167

$51,137 $77,030 $128,167

$53,088 $75,079 $128,167

$55,114 $73,053 $128,167

$57,216 $70,951 $128,167

$59,399 $68,768 $128,167

DEBT SERVICE - Proposed New Loan Principal Payments Interest Payments TOTAL DS - Proposed New Loan CONSOLIDATED DEBT SERVICE

$5,089 $10,291 $15,380 $143,547

$5,089 $10,291 $15,380 $143,547

$5,283 $10,097 $15,380 $143,547

$5,485 $9,896 $15,380 $143,547

$5,694 $9,686 $15,380 $143,547

$5,911 $9,469 $15,380 $143,547

$6,136 $9,244 $15,380 $143,547

$6,371 $9,009 $15,380 $143,547

$6,614 $8,766 $15,380 $143,547

$6,866 $8,514 $15,380 $143,547

$7,128 $8,252 $15,380 $143,547

NET CASH FLOW AFTER DEBT SERVICE DEBT SERVICE COVERAGE RATIO

($14,134) 0.90

$57,929 1.40

$66,508 1.46

$75,368 1.53

$83,579 1.58

$92,070 1.64

$100,849 1.70

$109,925 1.77

$119,309 1.83

$129,009 1.90

$139,037 1.97

CASH FLOW PROJECTION GROWTH RATE ASSUMPTIONS

Income Gross Potential Rent (Loss) / Gain to Lease* Other Income Expenses Expenses Management Fee**

YR 1

YR 2

YR 3

YR 4

YR 5

YR 6

YR 7

YR 8

YR 9

YR 10

36.24% 2.00% 3.00%

3.00% 2.00% 3.00%

3.00% 2.00% 3.00%

3.00% 2.00% 3.00%

3.00% 2.00% 3.00%

3.00% 2.00% 3.00%

3.00% 2.00% 3.00%

3.00% 2.00% 3.00%

3.00% 2.00% 3.00%

3.00% 2.00% 3.00%

5.00%

2.00% 5.00%

2.00% 5.00%

2.00% 5.00%

2.00% 5.00%

2.00% 5.00%

2.00% 5.00%

2.00% 5.00%

2.00% 5.00%

2.00% 5.00%

CASH FLOW PROJECTION GROWTH RATE ASSUMPTIONS Physical Vacancy Non-Revenue Units Bad Debt Concessions Allowance Total Economic Loss

YR 1

YR 2

YR 3

YR 4

YR 5

YR 6

YR 7

YR 8

YR 9

YR 10

5.00% 0.00% 2.00% 0.00% 7.00%

5.00% 0.00% 2.00% 0.00% 7.00%

5.00% 0.00% 2.00% 0.00% 7.00%

5.00% 0.00% 2.00% 0.00% 7.00%

5.00% 0.00% 2.00% 0.00% 7.00%

5.00% 0.00% 2.00% 0.00% 7.00%

5.00% 0.00% 2.00% 0.00% 7.00%

5.00% 0.00% 2.00% 0.00% 7.00%

5.00% 0.00% 2.00% 0.00% 7.00%

5.00% 0.00% 2.00% 0.00% 7.00%

*Calculated as a percentage of Gross Potential Rent | **Calculated as a percentage of Effective Gross Income

S E C T I O N

04

LOCAL M

MARKET

THE MONTLEONE

LOUISVILLE, KY Situated on the banks of the Ohio River, Louisville is a progressive community of 1.3 million people. Louisville is one of the most uniquely authentic destinations in the world. It is Kentucky’s largest city and offers hundreds of one-of-a-kind attractions. Whether you are north, south, east, or west – Louisville offers a slew of attractions and historic architecture in every direction. Three of the state’s six Fortune 500 companies call Louisville home – Humana, Kindred Health, and Yum! Brands.

The area provides an attractive business environment for companies due to its location and low cost of doing business, while allowing employees to enjoy a relatively affordable place to live. The economy has transitioned from traditional manufacturing and shipping to health-

care, tourism, and technology. Tourism in the state of Kentucky has a $3.5 billion economic impact from Louisville alone. While the economic impact is very significant, the results are even more so, as they positively affect the quality of life in Louisville. Through maintaining its commitment to the tourism industry, Louisville can enrich and nurture its infrastructure, allowing it to consistently rank as one of the top cities in the nation for quality of life. Foodies and food trucks, brew masters and bourbon, sports, tradition, and transformation - it’s all happening in Louisville. With such a vibrant quality of life, Louisville is a great place to call home.

EMPLOYERS IN THE NEWS

A M A Z O N L A S T M I L E D E L I V E R Y S T A T I O N

Amazon officials told the Louisville metro planning commission during an early november meeting that it plans to establish the facility in a 142,000 -square-foot office and warehouse, with heavy truck loading and unloading areas, at 1231 durrett lane near preston highway. Last mile facilities refer to the final step of the delivery process from a distribution center or facility to a user and are becoming increasingly popular in the U.S. as the demand for faster delivery grows.

•

Amazon building new $5.5M Last-mile delivery station at prime Louisville property adding close to 2,000 new jobs (March 2021)

•

GE Appliances completes $60M expansion adding 245 new jobs (July 2021)

•

GE Appliances set to invest $450M at its appliance park in the next 2 years adding over 2,000 new jobs (Oct 2021)

•

QSR Automations opens new global headquarters in Louisville, KY (Nov 2021)

•

KCC Manufacturing break ground operation in Shelby County (Nov 2021)

•

Republic National Distributing Co. breaks ground on a relocation and expansion project that will create 30 full time jobs with a $50 million investment (Sep 2021)

•

Baptist Health to build $42M rehabilitation hospital in Jeffersontown (Nov 2021)

on

700-Job

ECONOMY • Prior to the pandemic, Louisville/Jefferson County’s real gross metropolitan product grew at an average annual rate of 2.0% from 2015 to 2019. During that same five-year period, job growth averaged 1.5% annually, with roughly 9,800 jobs added on average each year.

• In 2020, COVID-19 mitigation measures and limited business activity caused the local economy to contract as much as 10.5% year-over-year in 2nd quarter. In the year-ending 3rd quarter 2021, the metro’s inflation-adjusted economic output expanded 4.6%.

• The metro recorded a net gain of 22,400 jobs, expanding the employment base 3.5%. As such, Louisville/Jefferson County’s unemployment rate in August 2021 declined 2.2 points yearover-year to 3.4%, below the national

average of 5.3%.

• During the past year, job gains in Louisville/ Jefferson County were most pronounced in the Trade/Transportation/ Utilities sector followed by Leisure/ Hospitality Services. Despite job losses stemming from the pandemic, Louisville/Jefferson County’s current employment base now sits roughly 54,900 jobs, or about 9% above the 1st quarter 2008 level, prior to the Great Recession.

The relative resilience of the economy points to some insulation provided by recession-resistant economic anchors in the market, namely the University of Louisville.

D E M O G R A P H I C S : STAT I ST I C S Population: 1,300,000

Msa median hhi: $57,405

Msa median home value: $173,500

Average occupany: 96.4%

Median age: 39.2

1 - Year growth: 1.77%

1 - Year growth: 4.83%

Rent growth:6%

S U P P LY & D E M A N D S U P P LY • The level of new apartment completions in Louisville/ Jefferson County were elevated, as 2,415 units delivered in the year-ending 3rd quarter 2021, the highest level in the mid1990s.

• That annual completion volume compares to a low of 945 units and the current high of 2,415 units over the past five years. Annual new supply averaged 1,734 units, and annual inventory growth averaged 2.0% over the past five years. Completions over the past year expanded the local inventory base 2.7%.

• Over the next year, inventory growth is set to remain around the current level with the scheduled addition of 2,241 units.

At the end of 3rd quarter 2021, there were 2,634 units under construction.

• New supply over the past five years has been concentrated in Northeast Louisville, Southwest Louisville, and Northwest Louisville, which received 68% of the market’s total completions collectively. Scheduled new deliveries in the coming year are expected to be concentrated in Northwest Louisville and Northeast Louisville.

MARKET DRIVERS 7

9

8 5 6

1

Yum! Brands

2

UPS Worldport

3

Ford Motor Company

4

GE Appliances

5

Humana Inc

6

Norton Healthcare

7

Anthem

8

LG&E and KU Energy

9

Brown-Forman

10

Papa John's International

11

Amazon Fulfillment Center

10 1 11 4

2

3

O C C U PA N CY • Over the past year, occupancy gained 1.2 points, with the 3rd quarter 2021 rate landing at 96.4%.

• That occupancy rate ranked #52 among the 65 key South region markets and #130 among the top 150 markets nationally and was only the third time the market has topped 96% in more than 20 years.

• Looking at product classes in Louisville/Jefferson County, 3rd quarter 2021 occupancy was at 96.1 % in Class A units, 96.5% in Class B units and 96.6% in Class C units.

• Among submarkets, 3rd quarter 2021 occupancy was strongest in Northwest Louisville and South Central Louisville. The weakest readings were seen in Central Louisville and Southwest Louisville.

ATTRACTIONS LO U I SV I L L E S LU G G E R M U S E U M Batter up! It takes a special place to craft the #1 Bat in Major League Baseball. At Louisville Slugger Museum & Factory, experience history-in-the-making as you stroll through the actual factory where world-famous Louisville Slugger bats are created. The award-winning factory tour is a highlight of the visit here, but there’s plenty more to enjoy along with it.

Admire the World’s Biggest Bat - stretching 120 feet into the sky. Hold bats actually used by baseball superstars like Mickey Mantle, Johnny Bench, Cal Ripken Jr. And Derek Jeter. Be sure to swing by!

E VA N W I L L I A M S B O U R B O N Located on Louisville’s historic “Whiskey Row”, the Evan Williams Bourbon Experience features an artisanal distillery, tours, educational tastings, and more!

In 1783, our namesake opened Kentucky’s First Distillery on the banks of the Ohio River. Many years and barrels later, we still produce Bourbon the right way, using the same time-honored methods.

F O U R ST R E E T L I V E Fourth Street Live! is Louisville’s premier dining and entertainment destination, located in the heart of downtown Louisville, Kentucky. A short walk from historic downtown hotels, the Kentucky International Convention Center, Waterfront Park, the KFC YUM Center, Slugger Field, and much more, Fourth Street Live!

THE BOURBON BUSINESS The Banks is a gathering place for people all across the region. It provides a lively atmosphere full of attractions that promote public enjoyment and appreciation for city’s riverfront. Spanning the full width of the Central Business District, The Banks brings the waterfront to downtown’s front door. Thriving off of the energy generated by the adjacent professional sports venues, Paul Brown Stadium to the west and Great American Ballpark to the east, The Banks provides life and energy as a premier live, work, and play district.

K E N T U C K Y D E R BY Located in South Louisville, Churchill Downs is a Thoroughbred racetrack known for hosting the annual Kentucky Derby. It is the world’s most legendary racetrack.

The first Kentucky Derby and Kentucky Oaks were both held in 1875, which was the year that the racetrack opened. The racetrack at Churchill Downs is 147 acres and features a seven-furlong turf racecourse and a one-mile dirt, oval racetrack. The racetrack can accommodate over 165,000 guests on Derby Day.

I N T E R E ST I N G STAT I ST I C S 165,000 FACILITY CAPACITY 147 ACRES OCCUPIED BY RACETRACK $373M DIRECT ECONOMIC IMPACT 146 YEARS RUNNING

visit adgmultifamily.com to learn more.