Page 1

Confidential Investment Offering

Latitude at Wescott 290 Units 9580 Old Glory Ln Summerville, SC 29485


All information provided in this Report is qualified in its entirety by the terms of any applicable information statement, operating agreement, subscription agreement, and related offering documents. Prospective investors must carefully read the information statement, operating agreement, subscription agreement, and/or other formal offering documents. Past performance may not be indicative of future results. Therefore, no current or prospective investor should assume that the future performance of any specific investment, investment strategy, or product will be profitable or correspond to past performance. This Report is being made available only to current investors or to prospective investors whom Millburn & Company believes are “accredited investors,� as that term is defined in Rule 501(a) of the Securities Act of 1933, as amended. Neither the U.S. Securities and Exchange Commission nor any foreign or state securities regulators have approved this Report, and any statement to the contrary is a criminal offense.


Table of Contents Investment Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Investment Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Financial and Investment Highlights . . . . . . . . . . . . . . . . . . . . . . . . 9 Maps & Aerials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Employment Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 National Multifamily Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Market & Submarket Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Why M&C and Partnership Structure . . . . . . . . . . . . . . . . . . . . . . . 18 Property Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Financial Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Sales Comparables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Why Invest in Apartments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 M&C Executive Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 M&C Portfolio Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35


Latitude at Wescott Investment Highlights

30%

Below Replacement Cost and Sales Comparables

10.55%

Projected Average Net Income (Cashon- Cash Plus Principal Paydown)*

8.40%

Projected Average Annual Cash-onCash Return*

2.98x

Projected Net Multiple*

95%

Submarket Occupancy

1.41x

Debt Coverage Ratio

11.65%

Projected Net IRR to Limited Members*

3 Miles

From Charleston‘s Strongest Job Growth Node, Palmetto Industrial Park

*Based on a 12-year hold 4


5


Charleston, South Carolina Highlights

#1

Best City in the United States (Travel & Leisure)

3x

Population Growth over National Average (Charleston Regional Development Alliance)

6

#1

#2

Best City in the World

Fastest Growing Mid-Sized Metro for Scientific R&D Job Growth

(Travel & Leisure)

40 Months

Rent equivalent to down payment on Summerville Homes (CBRE)

#1

Fastest Growing Mid-Sized Metro for IT Jobs (250+ Tech Companies)

(CBRE)

3.5%

Charleston Unemployment (Costar)

(CBRE)

$93k

Average HouseHold Income Within One Mile of Latitude


Investment Overview: Millburn & Company is under contract to purchase another excellent property, Latitude at Wescott Apartments (“Latitude”), a 290-unit class “A” garden-style community built in 2009 in Summerville, South Carolina, in an upward trending “A-” location in the Charleston metro. Property: Latitude at Wescott is a beautiful property featuring top-quality amenities and very spacious unit floor plans (1,171 SF average). The property appeals to young professionals, families and retirees alike. The amenities offered include an expansive resort-style pool with cabanas, a lanai with a summer kitchen, an on-site tanning salon, and a yoga studio. The property is a limited-access gated community with attached and detached garages available. The clubhouse is outfitted with business and media centers and features a state-of-the-art wellness center with cardio machines and free weights. Latitude at Westcott is an attractive option to employees of Charleston’s fastest growing industries. The location offers convenient proximity to jobs and retail and is adjacent to the highest rated elementary school in Summerville (9/10 rating, greatschools.org). Charleston Market: Charleston is a vibrant mid-sized metro on the Atlantic coast with a population of approximately 700,000. In addition to its historic southern charm and beautiful Atlantic Coast setting, Charleston is a fast-growing region with a diverse employment base. Numerous accolades in these areas attest to the excellence of the Charleston market: • • • • • •

#1 best city in the US last year by Travel & Leisure #2 best city in the world by Travel & Leisure #1 small US City by Conde Naste #4 most fun place to live by US News and World Report #4 best mid-size Metro in the US for jobs. #1 fastest growing mid-sized metro for IT jobs (Google, Lockheed Martin, SAIC, Blackbaud, blue acorn, BAE Systems, and 250+ other tech companies), • #1 mid-size metro for scientific R&D sector job growth (AGFA, ApertureCTC, Livi, and 75+ others), • #1 fastest growing U.S. mid-size metro for aircraft manufacturing (Boeing, Eaton, and 30 other aerospace companies), • #2 mid-size U.S. metro for highest employment concentration for transportation equipment (Mercedes, Volvo, Bosch, Cummins, and 60+ others), and is home to two of the only three new vehicle assembly plants announced in the U.S. since 2009.

Charleston is also a bustling port city and home to the #1 fastest growing and most productive port in North America with companies like UPS, FedEx, Gerber, Fruit of the Loom, and 20 other logistics and distribution companies. Much of this growth is in the Summerville submarket where the property resides. Home values surrounding the property range from $250k- $750k. The required down payment to purchase a new single-family home in this area can range from $50,000 - $100,000, which equates to a minimum of 40 months of rent. As interest rates continue to rise the cost of home ownership will rise as well, making renting a more affordable and attractive option. Economic growth in the charming southern city of Charleston is so strong that the rapid pace of new development in the last few years can hardly keep pace with the increasing demand for apartments. Demand in Charleston continues to increase as companies grow and expand in the area, and the Summerville submarket is poised to see robust rent growth due to limited supply in the area. Moody’s analytics is bullish on Charleston’s future. In 2017, citing economic, population, and wage growth, they forecasted that, “Charleston will remain an above average performer through the end of the decade thanks to rapid growth in manufacturing and consumer industries... Longer term, robust population growth and low business costs will allow Charleston to keep pace with the U.S.”

Summerville Submarket: Summerville is a fast growing submarket just west of Charleston’s downtown and approximately 30 miles from the Atlantic Coast. The property is in an area with high barriers to entry, robust economic growth, top-rated schools, and strong demographics. Latitude at Wescott benefits from Summerville’s high barriers to entry for new supply as an established neighborhood. The property sits in an infill location with only one property under lease up within five miles. These barriers to entry coupled with Charleston’s economic growth have created an increased demand for apartments. Industries seeing the highest growth include aerospace manufacturing and supplies, financial investments and securities, software sales and programming, research management consulting, and scientific research and development. 7


Strategy: We are purchasing Latitude at Wescott for $143,103 per unit, an excellent basis, and significant discount to replacement cost of approximately $180,000 to $195,000 per unit and comparable sales in the area which range from $160,000 to $213,000 per unit (see page 30 for detailed sales comparable information). The property is in good condition and will benefit from light updates to unit interiors and amenities to lift it to its full rent potential. We are assuming an in-place 15-year loan with 12 years of term remaining and plan to hold the asset for the full 12 years. We anticipate that healthy fundamentals will continue in Summerville and will contribute to rent growth throughout the hold period thanks to the excellent demographics in the submarket and the overall upward economic trend of the Charleston region. Value Add Opportunity: The property was built nine years ago with finishes that, while still attractive, can be upgraded to a more modern finish level. We plan to bring the clubhouse and other amenities up to date with new finishes and furnishings and renovate interior units with solid surface countertops, stainless steel appliances, new cabinet fronts, updated lighting and plumbing fixtures, faux wood flooring throughout the kitchens and living areas, and fresh paint. Our budgeted renovation scope is approximately $8,000 for each updated unit interior, with an anticipated rent increase of $160/month per renovated unit.

Latitude at Wescott Yield Projections Year 0 1 2 3 4 5 6 7 8 9 10 11 12

Projected Cash‐on‐Cash  Distributions

Projected Net Income*

$          (19,030,000) $             1,156,446 6.08% $             1,156,446 6.08% $             1,393,371 7.32% $             1,393,371 7.32% $             1,284,344 6.75% $             1,624,092 8.53% $             1,344,286 7.06% $             1,768,195 9.29% $             1,436,793 7.55% $             1,984,179 9.88% $             1,521,067 7.99% $             2,091,822 10.43% $             1,607,769 8.45% $             2,202,911 10.99% $             1,696,970 8.92% $             2,317,561 11.58% $             1,788,743 9.40% $             2,435,894 12.18% $             1,883,164 9.90% $             2,558,032 12.80% $             1,980,308 10.41% $             2,684,104 13.44% $           47,806,474 10.93% $           47,806,474 14.10% Projected Net IRR to the LP (12 year hold) 11.65% Projected Net Multiple to the LP 2.98x * Cash-on-cash distributed plus principal paydown of the loan

$1 Million Scenario: Assuming a 12-year hold, the forecasted equity multiple net to the Limited Members for Latitude at Wescott is 2.98x. For example, a $1,000,000 investment would return $2,980,000 (inclusive of payback of initial investment, monthly cash distributions, and profits realized from the disposition of the asset) over the 12-year hold period. Yield Compression: While the fundamentals of the multifamily sector remain strong, both cash-oncash returns and IRR’s on multifamily investments have compressed in the past nine months. The primary driver behind this yield compression is interest rate increases. The 10-yr treasury is the primary index we use to lock in our long term financing. On September 8th 2017, the 10-yr treasury was 2.05%. Since that time the 10-yr treasury has gone as high as 3.11% on May 17th, 2018, but has since retracted slightly. As of June 7th, 2018 the 10-yr treasury is sitting at 2.96%. This means the 10-yr has increased 91 bps in the past nine months. This increase in rates has cut into yields. Many multifamily investment opportunities that used to be 7-8% cash-on-cash returns and 11-12% IRR’s are now hovering in the 4-5% cash-on-cash range with 8-9% IRR’s for well-located multifamily properties. In light of interest rate increases, we are pleased to offer a 6% cash-on-cash return Yr-1 with an average 8+% cash-on-cash return during the projected 12 Yr. hold period for Latitude. We are also projecting an 11.6+% 12yr. net IRR to our LP’s, which is very strong in today’s market.

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Financial & Investment Highlights Strong Yield: The year-one cash-on-cash return is projected to be 6.08%, the twelve-year gross IRR projection is 13.21% with a net IRR projection of 11.65% to the limited members. Based on the projected cashflow and exit assumptions, the forecasted net equity multiple is 2.98x. For example, a $1,000,000 investment would return $2,980,000 (inclusive of payback of initial investment, monthly cash distributions, principal paydown of the loan, and profits realized from the disposition of the asset) over the twelve-year hold period. This is a very strong yield. Attractive Price: We are acquiring a 2009 vintage class “A” property for $143,103 per unit. This is an attractive price for a newer asset compared to transactions for similar product in the area, which range between $160,000-$213,000+/unit. The price is especially attractive when considering that the average unit size at the property is 1,171 square feet. For more detailed information on sales comparables, please refer to page 30. Purchased Below Replacement Cost: At $143,109/unit, we are purchasing the property approximately $40,000/unit below current replacement cost of $180,000-$195,000/unit. Considering the property was built in 2009 and is in great condition, this is an exceptional value. Equity Raise: The total cost to acquire Latitude at Wescott is $44,730,000. The total equity required is approximately $19,030,000. We will be assuming the existing loan from AIG Life Insurance Company for the remaining $25,700,000. Attractive and Durable Financing: We are assuming an existing loan with attractive terms from the seller. The loan assumption creates a lower than normal leverage of 62% loan to value, and current operations result in a 1.41x debt coverage ratio, providing a conservative debt service cushion from operational cashflow. The loan assumption provides these attractive terms:

Upside: Through value add and operational efficiencies, we project that we can increase NOI at the property by 16.38% in the first two years alone. Our value add plan is robust and includes over $1.5 million in capital set aside to improve the interior units and amenities throughout the property. As mentioned in the Value Add Opportunity section of page 8, we plan to update the property to a more modern and luxurious aesthetic that reflects the quality of the location and meets demand for the high standard of living desired by the excellent renter demographic in the area. Our aggressive focus on increasing NOI growth through pushing rents and hiring and managing the best talent will allow us to maximize investor return from our improvements to this incredible property. Durable Cash Flow: Based on the terms of the loan (interest only payments) and the in-place NOI at Latitude, the property hits break-even cash flow at 65% occupancy. We believe this is a very compelling metric considering the multifamily market in Charleston bottomed out at 10% vacancy (2008). In addition, the current occupancy at the property is 95% and the occupancy in the submarket is 95%. Please note: the break-even metric does not take into consideration a possible contraction in rents that could occur in a potential downturn. Depreciation Benefit: For the first 12 years of ownership, the projected income (including principal pay down) for the property is $24,096,476 and the projected depreciation expense is $15,600,000. Based on the foregoing projections, we expect 65% of the projected income for the first 12 years to be offset by depreciation write-off. We also plan to perform a cost segregation study at the property in year two which will increase the depreciation offset and lower income for tax purposes.

• Interest rate: 4.37% fixed through the full 12-year term remaining • Term: 12 years remaining upon acquisition • Interest Only Payments: two years remaining upon acquisition • Amortization: 30 years (after interest only period expires)

Closing Timeframe: We plan to close on July 31, 2018. All partnership documents should be executed as soon as possible, but no later than July 16th. All funds must be wired no later than July 23rd. 9


Historic Downtown Summerville

Palmetto Commerce Parkway 3.5 miles | 8 minutes

N 3.0 miles

YMCA Oakbrook Facility

Co os aw Cr ee k

Dorchester Road (VPD 37,000)

Fort Dorchester Elementary School

9 GreatSchools Rating

Joint Base Charleston 6.6 miles

Bosch Charleston Plant WABCO Compressor Manufacturing 3.8 miles

8.8 miles

TH FRANKIE’S FUN PARK

3.0 miles

Pet Supplies Plus

EC

OR

NE

RA

TW

ES

CO

TT Wescott

10


Downtown Charleston

17.5 miles | 70,000+ employees

526

Goose Creek Reservoir

Joint Base Charleston 8.8 miles

26

Fort Dorchester High School

7 MILES | 12 MINUTES

90,000 VPD 9 miles | 20 minutes

6.6 miles

Compressor Manufacturing Frankie’s Fun Park Plant

Coosaw Creek County Club

Ashley River Dorchester Road (VPD 37,000)

Wescott PArk

HOME VALUES $300k - $750k

Fort Dorchester Elementary School

9 GreatSchools Rating

THE CORNER AT WESCOT T Wescott Boulevard

N

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Charleston Employment Highlights: Palmetto Commerce Park (3.5 miles northeast of Latitude at Wescott): Job growth in the submarket is projected to by 1.4x that of the MSA thanks in large part to growth in the Palmetto Industrial Park, hailed as the most exciting landuse development in the Charleston market. The area is just 3.5 miles northeast of Latitude at Wescott. Development is occurring just north of Boeing’s airport development on a parcel known locally as Palmetto Commerce Park. The subsequent selection by the Boeing Interiors team to locate their new facility in Palmetto Commerce Park further cements the area as a key location for future manufacturing and supplier opportunities. Currently, large-scale manufacturers and other major corporations with operations in Palmetto Commerce Park include The Boeing Company, Daimler Vans Manufacturing, Foodhandler, Cummins Turbo Technologies, Shimano, and Venture Aerobearings.

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Information Technologies: #1 Fastest Growing Mid-Sized Metro for IT Jobs #11 US Metro for High Tech GDP Growth 250+ Tech Companies

Life Sciences: #4 Mid-Sized US Metros with Highest Concentration of Biotech Research #1 Mid-Sized Metro for Job Growth in Scientific R&D Sector 75+ Medical Manufactures and R&D Companies 250+ Tech Companies

Logistics: #1 Fast Growing and Most Productive Ports in North America 1/5 of the US Population Resides within 500 Miles of the Charleston Region 24 Logistics & Distribution Companies

Aerospace: Fastest Growing US Mid-Sized US Metro for Aircraft Manufacturing One of Three Places in the World Assembling and Delivering Wide-Body Jets 32 Aerospace Companies and Suppliers

Automotive: Home to Two of the Only Three New Vehicle Assembly Plants Announced in the US Since 2009 #2 Mid-Size US Metro for Highest Employment Concentration for Transportation Equipment Each Job an Auto Manufacturer Creates 7 Other Positions in Industries Across the Economy 60+ Automotive Manufacturers and Suppliers

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Submarket Job Growth Latitude at Wescott is perfectly positioned to take advantage of surrounding job growth as it comes online. In 2017, over 700 new jobs were announced in Summerville with investments of over $86 million. Additionally, the nearby Palmetto Commerce Parkway corridor, known as a hub for advanced manufacturing, continues to grow. MercedesBenz Vans’ expansion in the market, which will bring 1,300 jobs to the corridor by 2020, results in ancillary manufacturing companies like Knapheide Truck Equipment or Isringhausen entering the market to meet the demands created by the new Mercedes factory for aluminum, rubber, steel and vehicle interior components. The corridor is also experiencing investment from outside of the manufacturing sector and is now home to Roper St. Francis’ office park and data center. The Ingleside mixed-use development along the Parkway will also be expanding to include a medical office building. Highly Desirable Aerospace & Automotive Manufacturing Hub The aerospace and automotive industries have taken Charleston by storm. The city is one of the fastest-growing U.S. mid-size metros for aircraft manufacturing and is an emerging international hub for aerospace and aviation. Volvo and Mercedes-Benz Vans have recently announced major new operations in Charleston and were two of only three new vehicle assembly plants to be announced in the U.S. since 2009. MercedesBenz Vans started construction on their new factory in 2016, located 3.5 miles from Latitude at Wescott, and has already expanded the initial scope of their Charleston operations. The company plans to invest $500 million to create 1,300 jobs through 2020. Emerging Tech & Logistics Presence Nicknamed Silicon Harbor, Charleston has around 11,000 people employed in tech occupations and has a larger percentage of employment in IT-related businesses than Austin or Raleigh. Charleston is the fastest growing mid-sized metro for IT jobs and home to over 250 tech companies. Tech companies with a presence in Charleston include Google, Blackbaud (HQ), Benefitfocus (HQ) and BlueAcorn. With a long history of international commerce and logistics, the city is also home to one of the most productive and fastest growing ports in North America. Major logistics companies with a presence in Charleston include XPO Logistics, CSX, UPS, FedEx, DHL and Total Distribution Services. Prominent Medical and Education Presence Charleston is home to several prestigious education and medical campuses with over 20,000 combined employees. The Medical University of South Carolina (MUSC) is consistently ranked the #1 hospital in South Carolina and Roper St. Francis is in the top 4. The College of Charleston and The Citadel are both located on the Downtown Peninsula and are nationally recognized liberal arts and military schools, respectively. 14


National Multifamily Highlights

1 in 8

People in the US are Renters (39 Million)**

4.6M

Total New Apartments Needed by 2030 in the United States (325k per year)**

58.6%

Net Increase in Baby Boomer Renter Households from 2010-2016**

81k

Shortage of New Apartments based on current average development rate (244k of 325k per year)**

75M

18-34 Year Old Population (Largest Subset of Renters)**

1989

The Last Year that 325k apartments were built (current average 244k per year)**

**NAA, NMHC, Hoyt Advisory Services Joint Housing Study (WeAreApartments.org)

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Market and Submarket Highlights: Summerville Submarket: The Summerville submarket is experiencing incredible growth through company migration and growth and had the lowest vacancy rate in the market last year. The demographics within a one-mile radius are excellent: 75% of the population is college educated, the average annual household income is $93k, and the average home value is $258k. Residents also enjoy easy access to nearby jobs, shopping, and entertainment. In 2017, Summerville had the lowest vacancy of all Charleston submarkets. Population growth within one mile of Latitude at Wescott is projected to significantly outperform the metro area over the next five years (1.4x metro growth rate in the submarket). The immediate submarket is experiencing above market population growth that is being driven by the nearby world-class employers. Many of these major employers are located within 3.5 miles of Latitude at Wescott, including Mercedes-Benz (1.3k Jobs), Boeing (8k jobs), and Bosch (1.8k jobs). The largest employer in Charleston, Joint Base Charleston (22k jobs) is located just 6.7 miles from the property. The property is positioned 7 miles from Interstate 26, providing residents access to all major employers throughout the metro area. Nearby conveniences include the immediately adjacent Harris Teeter-anchored shopping center, The Corner at Wescott, which also features Starbucks, Moe’s Southwest Grill, Pet Supplies Plus, Five Guys, and medical offices. Latitude at Wescott is within minutes of the Charleston International Airport, centuries-old plantations and gardens, beautiful Atlantic beaches and, of course, all the beauty and charm of Charleston’s historic district. Wescott Park and Golf Club at Wescott Plantation (0.8 miles) is within walking distance and is among the top public courses on the East Coast. CVS Pharmacy and Walgreens are also located just three miles from the property. Charleston Market: Charleston is a vibrant city on the Atlantic Coast known for its rich history, architectural and natural beauty, and Southern charm. The city has recently received numerous accolades for its charm, including, “America’s Most Friendly [City]” by Travel + Leisure in 2011 and in 2013 and 2014 by Condé Nast Traveler. Charleston was also named “The Most Polite and Hospitable City in America” by Southern Living magazine. In 2016, Charleston was ranked the “World’s Best City” by Travel + Leisure. Charleston is home to several prestigious education and medical campuses with over 20,000 combined employees. The Medical University of South Carolina (MUSC) is consistently ranked the #1 hospital in South Carolina and Roper St. Francis is not far behind at #4. The College of Charleston and The Citadel are both located on the Downtown Peninsula and are nationally recognized liberal arts and military schools, respectively. Charleston has become a key target for a wide variety of industries and companies over the last few years. Several multinational Fortune 500 companies, 16


including Boeing, Mercedes Benz, Volvo, and Google, have a major presence in Charleston. Since 2013, the region has seen over $3.8 billion invested in the local economy and over 14,000 new job announcements from companies entering the market. Volvo and Mercedes-Benz Vans have recently announced major new operations in Charleston and were two of only three new vehicle assembly plants to be announced in the U.S. since 2009. Mercedes-Benz Vans started construction on their new factory in 2016, located 3.5 miles from Latitude at Wescott, and has already expanded the initial scope of their Charleston operations. The company plans to invest $500 million to create 1,300 jobs through 2020. Volvo estimates that their new factory will employ up to 2,000 people over the next decade and up to 4,000 people in the longer term. An economic impact analysis compiled by Dr. Frank Hefner at the College of Charleston estimates that, for an initial 2,000 direct jobs, more than 8,000 total jobs would be created as a result. The plant would contribute approximately $4.8 billion in total economic output on an annual basis. Nicknamed Silicon Harbor, Charleston has around 11,000 people employed in tech occupations and has a larger percentage of employment in IT-related businesses than even Austin or Raleigh, both of which are well-known tech growth markets. Charleston is the fastest growing mid-sized metro for IT jobs and home to over 250 tech companies. With a long history of international commerce and logistics, the city is also home to one of the most productive and fastest growing ports in North America. Major logistics companies with a presence in Charleston include XPO Logistics, CSX, UPS, FedEx, DHL and Total Distribution Services. Attractive Rent to Income Ratio: The Charleston market is not only a charming coastal region, it is also a very affordable area in comparison to nearby major markets. One of the most telling metrics is the “average-rent to average-income” ratio. This ratio demonstrates healthy room for continued rental increases.

• Philadelphia, PA 21% • Atlanta, GA 21% • Charleston, SC 22% • Wilmington, NC 22% • Myrtle Beach, SC 23% • New Orleans, LA 23% • Charlottesville, VA 24% • Tampa, FL 25% • Asheville, NC 25% • Orlando, FL 27% • Boston, MA 29% • Miami, FL 37% • New York, NY 46% 17


Reasons to Invest in Multifamily

M&C Investment Philosophy:

Tax Advantages: Unlike many other investment types (stocks, mutual funds, commodities, etc.), the multifamily real estate sector possesses several unique tax advantages, including: depreciation and 1031 tax-deferred exchanges.

Our Process: Our underwriting process is very thorough, and our acquisition criteria is very selective. In 2018, we have reviewed over 175 properties around the country, underwrote and toured over 100 and, through our careful selection process, acquired only three so far (inclusive of this acquisition). We believe Latitude at Wescott presents a unique opportunity to not only generate steady cash flow, but also to build equity and wealth.

Steady Yield: Multifamily housing that is well-managed, conveniently located, and offers the right balance of value and amenities, is always in demand. Interest Rate Hedge: Historically, when interest rates rise, so do apartment rental rates. A rise in interest rates increases the true cost of home ownership– driving many would-be homeowners back into rentals. Historically, this increase in demand for rental housing has contributed to subsequent increases in rental rates. Attractive Financing: Lending institutions, including government - sponsored entities such as HUD, Fannie Mae, and Freddie Mac, generally offer far more attractive financing terms (compared with other sectors). U.S. Homeownership Rates are Declining: For every 100 bps decline in the homeownership rate, the market sees approximately 1.1 million new renters. Inflation Hedge: Apartment rents generally rise with inflation.

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Our Criteria: A key source of M&C’s new investment opportunities is the leveraging of our deep connections in local markets, and throughout the national brokerage community. The result is a steady deal flow that allows M&C to select the very best investments in which to partner with our investors. We specifically focus on acquiring properties in markets that have the following key characteristics:

• Strong job growth • High replacement costs • Excellent transit systems • High home values • Excellent school systems

• Strong population growth • Meaningful barriers to entry • High median incomes • High education levels • Diverse employment base

Our Commitment: Every M&C acquisition is backed with a meaningful capital contribution by its principals. This approach ensures alignment of the firm’s interests with those of our equity partners. It should be noted, as evidence of our commitment to Latitude at Wescott, that Jed Millburn, Sage Sawyer, and other M&C team members (through their entities) plan to invest a minimum of $1 million into the partnership as limited members.


Partnership Terms and Structure:

Duties of Managing Member:

● 8% preferred return to the Limited Members with a 70%/30% split of cash flow and sale profits beyond the preferred return - 70% to the Limited Members and 30% to the Managing Member. The 8% preferred return is cumulative, but not compounded

● Find property and place property under contract

● 1.75% Acquisition/Financing Fee of the Purchase Price which will be payable to M&C Properties Utah JS, LLC upon closing ● 1.5% of EGI (Total Monthly Income) Monthly Asset Management Fee paid to the Managing Member for ongoing asset management during the ownership period ● Construction management fee of 5% of budgeted capital expenditures ● We expect to start distributions at a rate of 5.5% for the first few months and shortly thereafter increase to 6% for the remainder of Y1. The average cash-on-cash distribution for the hold period is projected to be 8.39% per annum ● M&C Principals (through their entities) will invest a minimum of $1,000,000 in cash alongside the other Limited Members ● The minimum investment requirement for Limited Members is $200,000

● Oversee due diligence process ● Front all lender application fees, third party report fees, and due diligence costs (These expenses total approximately $250,000 and will be reimbursed to the Managing Member at closing) ● Post nonrefundable earnest money of $1,000,000 ● Underwrite property and perform extensive due diligence on the property and the local market ● Secure debt and sign on loan with Jed Millburn as guarantor. Jed has provided his resume and balance sheet to the lender to secure the loan. The lender requires the guarantor to have significant experience in multifamily investments and operations. They also require the guarantor’s balance sheet and liquidity to be substantial. By definition, the loan is nonrecourse but the lender is specifically requiring Jed Millburn to be a guarantor on the loan for multiple carve-out provisions ● Organize partnership and operating documents ● Engage and oversee the onsite management company ● Provide ongoing oversight of the management company to maximize income and reduce expenses ● Provide distributions and ongoing updates to investors during the ownership period

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Property Information Property Characteristics: Latitude at Wescott is a 2009-vintage class “A” apartment community featuring apartment homes situated on approximately 17.75 acres and consists of 12 residential buildings and a clubhouse with a separate garage and storage buildings a maintenance shop. The property features wood frame construction with stucco and hardie plank siding. The community features units with eight and nine-foot ceilings and have very large and functional floor plans. The average unit size is a very spacious 1,124 square feet. There are 290 units including 24 one-bedroom/one-bath units at 833 square feet, 72 two-bedroom/one-bath units at 1,122 square feet, 146 two-bedroom/two-bath units at 1,164 square feet, and 48 three-bedroom/two-bath units at 1,433 square feet. On-Site Amenities: Residents enjoy quality amenities including: • 24-hour fitness center • Yoga Studio • Clubhouse with media & kitchen • Resident business center • Resort-style swimming pool • Sun deck with pool-side cabanas • Tanning bed room • Lanai with a summer kitchen • Attached and detached garages and storage units • Gated access • Valet trash service Unit Type

No. of Units

Size (SF)

% of Units

24 72 146 48 290

833 1,122 1,164 1,433 1,124

8% 25% 50% 17% 100%

1 Bedroom 1 Bathroom 2 Bedroom 1 Bathroom 2 Bedroom 2 Bathroom 3 Bedroom 2 Bathroom Total/Avg.

Average Rent/mo. $968 $1,080 $1,137 $1,307 $1,137

Average Rent/SF $1.16 $0.96 $0.98 $0.91 $0.97

Total Rent $23,230 $77.744 $166,058 $62,724 $329,756

Total Rentable SF 19,992 80,784 169,944 68,772 339,492

Site Information Year Built:

2009

No. of Units:

290

Land Size:

±17.75 Acres

Density:

16.34 Units / Acre

County:

Dorchester

HVAC:

Condensed AC & Forced Air Furnace

No. of Buildings:

18 total: 12 residential buildings, 4 garage buildings, 1 clubhouse and 1 maintenance shop building

Parking:

448 Total

Parking Ratio:

1.54 spaces/unit

21


Historical Financial Analysis Historical Financial Analysis T12 - April 2018

April Annual Income Market Rent Renovation Premium Less: Loss to Lease Net Potential Rent

Income $3,912,404

0.00%

22

Per Sq Ft $122

M&C Year 1 Forecast 7.00%

$512 $4 $63 $40 $12,960

3.2% 0.00%

$261,416 $241,761 $503,177

$901 $834 $1,735

115%

$261,416 $241,761 $503,177

$901 $834 $1,735

115%

$4,187,869

$14,441

$4,261,521

$14,695

$4,296,994

T12 Expenses $227,386 $97,540 $50,570 $70,208 $118,758 $66,364 $373,780 $1,004,606 2.99% $125,192

Per Unit $784 $336 $174 $242 $410 $229 $1,289 $3,464 $432

T12 Expenses $227,386 $97,540 $50,570 $70,208 $118,758 $66,364 $373,780 $1,004,606 2.99% $127,394

Per Unit $784 $336 $174 $242 $410 $229 $1,289 $3,464 $439

T12 Expenses $227,386 $97,540 $50,570 $70,208 $118,758 $66,364 $373,780 $1,004,606 2.99% $128,454

Per Unit $784 $336 $174 $242 $410 $229 $1,289 $3,464 $443

$91,327 $789,660 $2,010,785 $72,500 $2,083,285

$315 $2,723 $6,934 $250 $7,184

$91,327 790,103 $2,013,430 $72,500 $2,085,930

$315 $2,724 $6,943 $250 $7,193

$91,327 $790,103 $2,014,490 $72,500 $2,086,990

$315 $2,724 $6,947 $250 $7,197

Forecasted Yr 1 Expenses $231,934 $65,000 $51,582 $71,612 $75,000 $67,691 $381,256 $944,075 2.50% $109,761 1.50% $65,856 $84,000 $790,103 $1,993,795 $101,500 $2,095,295

$2,104,584

$7,257

$2,175,592

$7,502

$2,210,004

$7,621

5.49%

$13,491

$195,895 $1,865 $18,347 $11,605 $3,684,692

T12 - April 2018 5.07%

0.29%

T3 - April 2018 5.24%

0.29%

3.00% 5.62%

Proforma $4,213,540 $72,000 $126,406 $4,159,134

$148,355 $1,237 $18,347 $11,605 $3,758,344

$3,912,404

0.00%

Per Unit

3.8% 0.03%

115%

Per Unit $143,103

Income $3,951,696

$676 $6 $63 $40 $12,706

Plus:RUBS Income Plus:Other Income Total Other Income

Purchase Price $41,500,000

T1 - April 2018

Per Unit

$13,579

0.30%

NET OPERATING INCOME

Income $3,937,888 $0 $3,937,888

5.0% 0.05%

Expenses Utilities Contract Services Repair & Maintenance Turnover Administrative Marketing Payroll Total Variable Expenses Management Fees M&C Asset Management Fee Insurance Property Taxes Total Operating Expenses Capital Reserves * Total Expenses

T3 - April 2018

0.00%

Less: Vacancy Loss Less: Concessions Less: Non-Revenue Units Less: Bad Debt Net Rental Income

Total Operating Income

Per Unit

$3,951,696

$13,627

$127,928 $0 $18,347 $11,605 $3,793,817

$441 $0 $63 $40 $13,082

6.0% 0.00%

$261,416 $241,761 $503,177

$901 $834 $1,735 $14,817 $358,083

T1 - April 2018 5.33%

Per Unit

$14,342

$249,548 $0 $12,801 $10,398 $3,886,387

$861 $0 $44 $36 $13,401

111%

$257,447 $246,596 $504,042

$888 $850 $1,738

3.02%

$4,390,430

$15,139 $365,869

0.25%

$2,295,135 Yr 1 Forecast Cap Rate 5.53%

Per Unit $800 $224 $178 $247 $259 $233 $1,315 $3,255 $378 $227 $290 $2,724 $6,875 $350 $7,225 $7,914


23


M&C Forecast $ Income Market Rent Renovation Premium Less: Loss to Lease Net Potential Rent

1.02

$

Year 1

3.0%

$

1.16

$

Year 3

1.20

M&C 12 Year Forecast

$

Year 4

1.24

$

Year 5

1.28

$

Year 6

1.31

$

Year 7

1.35

$

Year 8

1.39

$

Year 9

1.44

$

Year 10

1.48

Year 11

Year 12

Year 13

$4,213,540 $72,000 $126,406 $4,159,134

$4,456,962 $144,000 $133,709 $4,467,253

$4,785,000 $72,000 $143,550 $4,713,450

$5,051,280 $0 $151,538 $4,899,742

$5,202,819 $0 $156,085 $5,046,734

$5,358,903

$5,519,670

$5,685,260

$5,855,818

$6,031,493

$6,212,438

$6,398,811

$6,542,784

$160,767 $5,198,136

$165,590 $5,354,080

$170,558 $5,514,703

$175,675 $5,680,144

$180,945 $5,850,548

$186,373 $6,026,064

$191,964 $6,206,846

$196,284 $6,346,500

$249,548

$268,035

$235,673

$244,987

$252,337

$259,907

$267,704

$275,735

$284,007

$292,527

$301,303

$310,342

$317,325

Less: Concessions Less: Non-Revenue Units Less: Bad Debt Net Rental Income

$0 $12,801 $10,398 3,886,387

$0 $13,057 $10,606 4,175,555

$0 $13,318 $10,818 4,453,642

$0 $13,585 $11,034 4,630,136

$0 $13,856 $11,255 4,769,286

$0 $14,133 $11,480 4,912,616

$0 $14,416 $11,710 5,060,250

$0 $14,704 $11,944 5,212,319

$0 $14,998 $12,183 5,368,955

$0 $15,298 $12,426 5,530,296

$0 $15,604 $12,675 5,696,482

$0 $15,916 $12,928 5,867,659

$0 $16,235 $13,187 5,999,754

Plus: RUBS Income Plus: Other Income Total Other Income

$257,447 $246,596 $504,042

$262,596 $251,528 $514,123

$267,847 $256,558 $524,406

$273,204 $261,690 $534,894

$278,668 $266,923 $545,592

$284,242 $272,262 $556,504

$289,927 $277,707 $567,634

$295,725 $283,261 $578,986

$301,640 $288,926 $590,566

$307,672 $294,705 $602,377

$313,826 $300,599 $614,425

$320,102 $306,611 $626,713

$326,505 $312,743 $639,248

$4,390,430

$4,689,678

$4,978,047

$5,165,030

$5,314,878

$5,469,119

$5,627,884

$5,791,306

$5,959,521

$6,132,673

$6,310,907

$6,494,373

$6,639,001

$236,573 $66,300 $52,613 $73,044 $76,500 $69,045 $388,881 $962,956 $117,242 $70,345 $85,680 $813,806 $2,050,029 $107,590 $2,157,619 10.32% $2,532,059

$241,304 $67,626 $53,666 $74,505 $78,030 $70,426 $396,658 $982,215 $124,451 $74,671 $87,394 $838,220 $2,106,951 $114,045 $2,220,996 8.89% $2,757,051

$246,130 $68,979 $54,739 $75,995 $79,591 $71,834 $404,591 $1,001,860 $129,126 $77,475 $89,141 $863,367 $2,160,969 $120,888 $2,281,857 4.57% $2,883,173

$251,053 $70,358 $55,834 $77,515 $81,182 $73,271 $412,683 $1,021,897 $132,872 $79,723 $90,924 $889,268 $2,214,684 $124,515 $2,339,199 3.21% $2,975,679

$258,584 $72,469 $57,509 $79,841 $83,618 $75,469 $425,064 $1,052,554 $136,728 $82,037 $93,652 $915,946 $2,280,916 $128,250 $2,409,166 2.83% $3,059,953

$266,342 $74,643 $59,234 $82,236 $86,126 $77,733 $437,816 $1,084,130 $140,697 $84,418 $96,462 $943,424 $2,349,131 $132,098 $2,481,229 2.83% $3,146,655

$274,332 $76,882 $61,011 $84,703 $88,710 $80,065 $450,950 $1,116,654 $144,783 $86,870 $99,355 $971,727 $2,419,389 $136,061 $2,555,449 2.83% $3,235,856

$282,562 $79,189 $62,841 $87,244 $91,372 $82,467 $464,479 $1,150,154 $148,988 $89,393 $102,336 $1,000,879 $2,491,749 $140,142 $2,631,892 2.84% $3,327,630

$291,039 $81,564 $64,727 $89,862 $94,113 $84,941 $478,413 $1,184,658 $153,317 $91,990 $105,406 $1,030,905 $2,566,276 $144,347 $2,710,623 2.84% $3,422,050

$299,770 $84,011 $66,668 $92,557 $96,936 $87,490 $492,765 $1,220,198 $157,773 $94,664 $108,568 $1,061,832 $2,643,035 $148,677 $2,791,712 2.84% $3,519,195

$308,763 $86,532 $68,669 $95,334 $99,844 $90,114 $507,548 $1,256,804 $162,359 $97,416 $111,825 $1,093,687 $2,722,092 $153,137 $2,875,229 2.84% $3,619,144

$318,026 $89,128 $70,729 $98,194 $102,839 $92,818 $522,775 $1,294,508 $165,975 $99,585 $115,180 $1,126,498 $2,801,746 $157,732 $2,959,478 1.67% $3,679,524

Less: Vacancy Loss

6.00%

1.10

Year 2

Total Operating Income Expenses Utilities Contract Services Repair & Maintenance Turnover Administrative Marketing Payroll Total Variable Expenses Management Fees Asset Management Fee Insurance Property Taxes Total Operating Expenses Capital Reserves Total Operating Expenses NOI Annual Growth NET OPERATING INCOME Cash Flow Analysis Net Operating Income Sale/Refinance Proceeds Purchase Price Cash Flow Before Debt Interior Renovations Mortgage Principal Acquisition Costs Debt Service Cash Flow After Debt Equity Requirement

2.50% 1.50%

$350

Proforma Expenses $231,934 $65,000 $51,582 $71,612 $75,000 $67,691 $381,256 $944,075 $109,761 $65,856 $84,000 $790,103 $1,993,795 $101,500 $2,095,295 5.49% $2,295,135

($41,500,000)

Year 1 $2,295,135

Year 2 $2,532,059

Year 3 $2,757,051

Year 4 $2,883,173

Year 5 $2,975,679

Year 6 $3,059,953

Year 7 $3,146,655

Year 8 $3,235,856

Year 9 $3,327,630

Year 10 $3,422,050

Year 11 $3,519,195

$2,295,135

$2,532,059

$2,757,051

$2,883,173

$2,975,679

$3,059,953

$3,146,655

$3,235,856

$3,327,630

$3,422,050

$3,519,195

Year 13

$70,019,573

$25,700,000

($20,674,213) $

($19,030,000)

(1,138,688) $1,156,446

Total IRR Net IRR to the Investor Cash-on-Cash* Net Income Including Principal Paydown

$

6.08% 6.08%

(1,138,688) $1,393,371

7.32% 7.32%

$

(1,472,707) $1,284,344

6.75% 8.53%

$

(1,538,886) $1,344,286

7.06% 9.29%

$

(1,538,886) $1,436,793

7.55% 9.88%

$

(1,538,886) $1,521,067

7.99% 10.43%

$

(1,538,886) $1,607,769

8.45% 10.99%

$

(1,538,886) $1,696,970

8.92% 11.58%

$

(1,538,886) $1,788,743

9.40% 12.18%

$

(1,538,886) $1,883,164

9.90% 12.80%

$

(1,538,886) $1,980,308

10.41% 13.44%

PROJECTION ASSUMPTIONS Year 1 7.00% 1.83% 3.0% 6.0% -

Rent Growth - Annual Increase Effective Rental Increase from renovations Loss to Lease Vacancy Op. Expenses - Annual Increase Capital Reserves - Annual Increase Concessions - Annual Increase Non-Rev Units - Annual Increase Property Tax - Annual Increase Other/RUBS - Annual Increase # Of Renovations Renovation bump -

Year 12 $3,619,144 $66,400,429

$

Year 2 4.00% 3.42% 3.0% 6.0% 2.0% 6.0% 2.0% 2.0% 3.0% 2.0% 75 160

$

THE YIELDS FORECASTED IN THIS SPREADSHEET ARE NOT GUARANTEED

Year 3 4.00% 1.62% 3.0% 5.0% 2.0% 6.0% 2.0% 2.0% 3.0% 2.0%

Year 4 4.00% 0.00% 3.0% 5.0% 2.0% 6.0% 2.0% 2.0% 3.0% 2.0%

Year 5 3.00% 0% 3.0% 5.0% 2.0% 3.0% 2.0% 2.0% 3.0% 2.0%

Year 6 3.00% 0% 3.0% 5.0% 3.0% 3.0% 2.0% 2.0% 3.0% 2.0%

$

(1,538,886) $47,806,474

13.21% 11.65% 10.93% 14.10% PROJECTION ASSUMPTIONS

Year 7 3.00% 0% 3.0% 5.0% 3.0% 3.0% 2.0% 2.0% 3.0% 2.0%

Year 8 3.00% 0% 3.0% 5.0% 3.0% 3.0% 2.0% 2.0% 3.0% 2.0%

Year 9 3.00% 0% 3.0% 5.0% 3.0% 3.0% 2.0% 2.0% 3.0% 2.0%

Year 10 3.00% 0% 3.0% 5.0% 3.0% 3.0% 2.0% 2.0% 3.0% 2.0%

Year 11 3.00% 0% 3.0% 5.0% 3.0% 3.0% 2.0% 2.0% 3.0% 2.0%

Year 12 3.00% 0.0% 3.0% 5.0% 3.0% 3.0% 2.0% 2.0% 3.0% 2.0%

Year 13 2.25% 0.0% 3.0% 5.0% 3.0% 3.0% 2.0% 2.0% 3.0% 2.0%

75 160

Durable Cash Flow: Based on the terms of the loan (interest only payments) and the in-place NOI at Latitude, the property hits break-even cash flow at 65% occupancy. We believe this is a very compelling metric considering the multifamily market in Charleston bottomed out at 10% vacancy (2008). In addition, the current occupancy at the property is 95% and the occupancy in the submarket is 95%. Please note: the break-even metric does not take into consideration a possible contraction in rents that could occur in a potential downturn. 24


25


Capital and Financing Details Latitude at Wescott Sources and Uses

Loan Assumptions

New Loan LTV Interest Only (months) Amortization (years) Term (years) Interest Rate MIP Annual Debt Service (Amortization) Debt Coverage Ratio (T3) Debt Yield

($1,538,886) 1.41 8.93%

Total Equity Required

$19,030,000

Exit Cap NOI Exit Price Per Unit Per SqFt Cost-Of-Sale Sale Proceeds Loan Balance Net Proceeds

26

$25,700,000 61.93% 24 30 12 4.37%

Reversion Assumptions 5 Year Hold 10 Year Hold 5.50% 5.50% $3,059,953 $3,519,195 $55,635,511 $63,985,360 $191,847 $220,639 $164 $188 $500,000 $500,000 $55,135,511 $63,485,360 $24,418,004 $21,864,548 $30,717,507 $41,620,812

12 year Hold 5.50% $3,679,524 $66,900,429 $230,691 $197 $500,000 $66,400,429 $20,674,213 $45,726,216

Sources Investor Capital Loan TOTAL

$         19,030,000 $         25,700,000 $        44,730,000

Uses Purchase Price Loan Origination & Processing Fee Due Diligence /3rd Party Reports Lender Attorney Fees Sponsor Attorney Fees Taxes and insurance Impounds Title Insurance/Endorsements Misc Sponsor Acquisition Fee Construction Management Fee Immediate Repairs Improvements Reserves TOTAL

$         41,500,000 1.00% $              257,000 $                20,000 $                15,000 $                40,000 $              145,684 $                50,000 $                   9,716 1.75% $              726,250 5.00% $                79,350 $              217,000 $           1,370,000 $              300,000 $        44,730,000

Improvements Budget Unit Interiors $1,250,000 Pool  & Amenities $80,000 Clubhouse $40,000 Sub Total $1,370,000 Immediate Repairs Budget $70,000 Exterior Gates $20,000 Drainage Repairs $30,000 Parking Lot $25,000 Paint $7,000 Signage $65,000 Miscellaneous $217,000


27


Depreciation Schedule Per Door Purchase Price Land Value Improvement Value

$ $ $

Depreciation Life Depreciation Method

41,500,000 $ 2,500,000 $ 39,000,000 $

143,103 8,621 134,483

30 Straight Line Hypothetical $1,000,000 Investment

Year

28

Cash Flow  Depreciation Expense After Debt 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

$ $ $ $ $ $ $ $ $ $ $ $

1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000

$ $ $ $ $ $ $ $ $ $ $ $

1,156,446 1,393,371 1,284,344 1,344,286 1,436,793 1,521,067 1,607,769 1,696,970 1,788,743 1,883,164 1,980,308 2,080,257

Total Income  Including  Principal  Paydown

Principal Paydown $ $ $ $ $ $ $ $ $ $ $ $

339,748 423,909 443,077 463,112 484,053 505,941 528,818 552,730 577,723 603,847

$ $ $ $ $ $ $ $ $ $ $ $

1,156,446 1,393,371 1,624,092 1,768,195 1,879,870 1,984,179 2,091,822 2,202,911 2,317,561 2,435,894 2,558,032 2,684,104

$       24,096,476

Net (Loss)  Gain $     (143,554) $         93,371 $      324,092 $      468,195 $      579,870 $      684,179 $      791,822 $      902,911 $   1,017,561 $   1,135,894 $   1,258,032 $   1,384,104 $   8,496,476

Annual Cashflow  $ $ $ $ $ $ $ $ $ $ $ $

60,770 73,220 67,491 70,640 75,501 79,930 84,486 89,173 93,996 98,958 104,062 109,315

Annual Income  Including Pricipal  Paydown $ $ $ $ $ $ $ $ $ $ $ $

60,770 73,220 85,344 92,916 98,785 104,266 109,922 115,760 121,785 128,003 134,421 141,046

Net (Loss) Gain $ $ $ $ $ $ $ $ $ $ $ $

(7,544) 4,906 17,031 24,603 30,471 35,953 41,609 47,447 53,471 59,690 66,108 72,733

$         446,477.97

Depreciation Benefit: For the first 12 years of ownership, the projected income (including principal pay down) for the property is $24,096,476 and the projected depreciation expense is $15,600,000. Based on the foregoing projections, we expect 65% of the projected income for the first 12 years to be offset by depreciation write-off. We also plan to perform a cost segregation study at the property in year two which will increase the depreciation offset and lower income for tax purposes.

Annual Tax Bill  Assuming 30% Tax  Bracket $                     (2,263) $                       1,472 $                       5,109 $                       7,381 $                       9,141 $                    10,786 $                    12,483 $                    14,234 $                    16,041 $                    17,907 $                    19,832 $                    21,820 $            133,943.39


29


Sales Comparables Property Name

Latitude at Wescott

Centre Pointe

The Ashley

The Sage at 1240

1000 West (formerly Woodfield South Point)

Summerville 2009 290 1,171 $41,500,000 $143,103 Pending

North Charleston 2016 172 964 $36,665,000 $213,169 March 2017

Charleston 2017 174 926 $33,715,000 $193,764 March 2018

Mount Pleasant 2012 240 912 $44,200,000 $184,167 November 2017

Charleston 2009 240 1,018 $38,500,000 $160,417 December 2016

City Year Built Number of Units Average Unit Sq. Ft. Purchase Price Purchase Price/Unit Date Closed

Latitude at Wescott

Centre Pointe

The Sage at 1240 30

The Ashley

1000 West


Why Invest in Apartments? Investment Philosophy: Every M&C acquisition is backed by a meaningful capital contribution by its principals. This approach ensures alignment of the firm’s interests with those of our equity partners. A key source of M&C’s new investment opportunities is the leveraging of our deep connections in local markets, and throughout the national brokerage community. The result is a steady deal flow that allows M&C to select the very best investments in which to partner with our investors. We specifically focus on acquiring properties in markets that have the following key characteristics: • Strong Local Job Growth • Strong Local Population Growth • High Construction (Replacement) Costs • Meaningful Barriers to Entry • Excellent Mass Transit Systems • High Median Incomes • High Home Values • High Education Levels • Diversified Local Employment Base • Excellent School Systems Inflation Hedge: Apartment rents have generally risen with inflation over the long term, thus providing built-in protection against inflationary pressure. Moreover, when financing is utilized to acquire a multifamily property, there is the added benefit of debt being repaid with inflated dollars in future periods. The combined effect provides investors with a time-proven ability to protect the purchasing power of capital, while also generating a solid rate of return. Tax Advantages: Unlike many other investment types (stocks, mutual funds, commodities, etc.), the multifamily real estate sector possesses several unique tax advantages, including: depreciation, accelerated depreciation, and 1031 taxdeferred exchanges. Depreciation Benefit: For the first 12 years of ownership, the projected income (including principal pay down) for the property is $22,969,770 and the projected depreciation expense is $15,600,000. Based on the foregoing projections, we expect 68% of the projected income for the first 12 years to be offset by depreciation write-off.

home-ownership– driving many would-be homeowners back into rentals. Historically, this increase in demand for rental housing has contributed to subsequent increases in rental rates. Steady Yield: Multifamily housing that is well-managed, conveniently located, and offers the right balance of value and amenities, is always in demand. Moreover, with a renter pool that is deeper than ever before (and an unprecedented renter focus on housing flexibility and mobility), the prospects for continued strong demand –and the resulting steady cash flow– are very solid in the multifamily sector. Finally, people need a place to live –in good economic times, and bad. During the mid-2000s downturn, the impact on multifamily real estate was not as acute as was experienced in other investment types. While many sectors suffered significant losses, high-quality multifamily properties, especially those in strong locations, weathered the storm and continued to generate steady cash flow. Attractive Financing: Given the historically strong cash flow and value preservation characteristics of the multifamily real estate sector, lending institutions generally offer far more attractive financing terms (compared with other sectors). Furthermore, due to the important role of housing to our society, the U.S. Federal Government also supports multifamily lenders (such as Fannie Mae and Freddie Mac). This government sponsorship allows Fannie and Freddie to provide superior financing terms for multifamily assets. U.S. Homeownership Rates are Declining: According to the U.S. Census Bureau, the national homeownership rate fell to 62.9% in the second quarter of 2016 – a considerable drop from the 2004 peak of 69.2%, and sits at 64.2% as of the first quarter of 2018. The result of this decline in homeownership rates has been dramatic for the rental market: For every 100 bps decline in the homeownership rate, the market sees approximately 1.1 million new renters. While The Great Recession, undoubtedly, played a significant role in this decline in homeownership, finances are not the only cause. In a recent Forbes article, it was noted that “Millennials are recognizing the many benefits of renting, including reasons that have nothing to do with their credit or the costs of owning a home. Many Millennials are choosing to rent out of preference and not necessity.”

Interest Rate Hedge: Over time, if interest rates go up, so too do residential rental rates. A rise in interest rates results in an increase in the true cost of 31


Executive Team: Jed B. Millburn, Principal and CEO

Jed founded Millburn & Company in 2010, and serves as a Principal and Chief Executive Officer. Jed has an extensive background in underwriting, acquiring, de-

veloping, financing and managing large multifamily properties. To date, Jed has underwritten more than 65,000 multifamily units, and has acquired over 5,700 multifamily units with an aggregate value exceeding $900 Million. Since founding Millburn & Company in 2010, Jed has successfully raised over $175 Million in capital from private investors, and secured more than $650 Million in debt from a variety of national lenders. In May of 2016, Jed received the prestigious CRE (Counselor of Real Estate) designation — a distinction that is limited to a select number of real estate professionals nationwide. In October 2016, Jed was also recognized by RE Forum Magazine as one of the top 50 real estate professionals in the nation under the age of 40. Prior to founding M&C, Jed was a multifamily real estate broker for 11 years. As a broker, he sold more than 13,000 units totaling more than $1.3 Billion in transaction value. During his time as a broker, Jed also served as the Managing Principal of both ARA-Utah and EquiMark Multifamily. Jed graduated from Brigham Young University – Idaho in 2003 with a degree in Business, and enjoys writing, outdoor recreation, snowmobiling, team sports, fly fishing and spending time with his wife and five children.

Sage R. Sawyer, Principal and CIO

Sage is a Principal and Chief Investment Officer for M&C. He oversees acquisitions, dispositions, property financing and asset management for the M&C port-

folio. During his time with M&C, Sage has played a key role in the acquisition of over 5,000 multifamily units, with an aggregate value exceeding $800 Million. Sage has underwritten more than 45,000 units during his career, and is an expert in multifamily operations. Prior to joining M&C, Sage was a multifamily residential broker for 8 years at ARA-Utah and Equimark Multifamily. As a broker, Sage was integral in transacting more than 7,000 units, worth a combined $700 Million. Sage graduated from the University of Utah with a degree in Business Finance, and enjoys playing basketball, golfing and spending time with his family.

Jake M. Millburn, Principal and CFO

Jake is a Principal and Chief Financial Officer of M&C. His primary duties include underwriting, securing new acquisitions, performing due diligence and assisting in asset management. Jake is an expert at underwriting multifamily properties, and has underwritten over 30,000 units since joining M&C in 2013. In the Fall of 2016, Jake was recognized by Utah Business Magazine as one of the top 20 executives in the State of Utah, under the age of 30. Prior to joining M&C in 2013, Jake worked as an analyst for Thompson Michie Equities, a Salt Lake City, Utah based multifamily investment firm. During his time at Thompson Michie, Jake assisted in the acquisition of over 2,000 units and the disposition of more than 2,500 units. Jake graduated from the University of Utah with a degree in Business Finance, and enjoys snowmobiling, mountain biking, BBQ and spending time with his family.

Shailendra “Shelly” Krishna, Principal and Senior Advisory Board Member

Shelly joined M&C as a Principal in 2017. He is also a member of M&C’s Advisory Board. After an adventurous career spanning more than three decades that

included the creation, building and sale of three companies in the data processing and online information spaces, Shelly transitioned to full time real estate investing in 2011. Since that time, he has built up holdings in numerous M&C properties. Shelly’s portfolio also includes over a dozen multifamily assets in his home state of Texas. Shelly is a seasoned entrepreneur and businessman who brings an amazing background of business acumen, analytical thinking and strategic planning. Shelly’s responsibilities at M&C include deal vetting, market research, and investor relations. Shelly has a degree in Computer Science from USC and an MBA in Finance and New Ventures from MIT’s Sloan School of Management. Shelly is married with two daughters and his passions include the love for independent cinema, indulging in eclectic reading and extensive foreign travel.


Chris Anderson, Principal and Senior Advisory Board Member

Chris joined M&C as a Principal in 2017. Prior to joining M&C, Chris was an active multifamily real estate investor, while serving as President and CEO of Hand-

Stands, a diversified global manufacturer of automotive and technology accessories. During his fifteen-year tenure with HandStands, Chris spearheaded the company’s entrance into the car air freshener market; and, under Chris’ leadership, HandStands attained the #1 U.S. market share position. In 2016, following more than a decade of double-digit average annual revenue growth, HandStands was acquired by Energizer Holdings, Inc. (NYSE: ENR) for $340 Million. Chris is a Summa Cum Laude Economics graduate of Westminster College, and enjoys flying, boating, snow skiing, snowmobiling and spending time with his three children.

Debra Spohn, SVP of Operations

Debra Spohn serves as Senior Vice President of Asset Management. With over twenty-five years in the multi-family business, Debra brings a wealth of experi-

ence to Millburn & Company. Early in her career, she was Vice President of WLA, Inc., a California based investment firm, where she oversaw their Salt Lake City multi-family properties and office buildings. During this time, she supervised extensive capital improvements and six property condo conversions. After WLA exited the Salt Lake City market, Debra owned and operated her own boutique property management company which she sold when she joined Cottonwood Capital in 2006. During her ten-year employment with Cottonwood as Senior Vice President of Property Management, she headed the development of their in-house property management platform while the company grew from 2,000 units to approximately 35,000 units. In 2016, she was recruited by Peak Capital Partners, where she expanded the in-house property management operations platform and transitioned 10,000 units from third party management. Debra is a licensed Utah Real Estate broker, earned her CPM designation, and has won several industry awards.

Aaron Grennon, SVP of Construction

Aaron is the Senior Vice President of Construction at M&C. Aaron has extensive experience working in the real estate industry. Prior to joining M&C, Aaron

served as the Director of Capital Improvements for AMC, where he helped the company grow from 20,000 units to 95,000 units over 9 years. At AMC, Aaron also oversaw $75-$100 million in capital projects consisting of interior unit renovations to ground up amenity projects, oversaw insurance work of up to a $12 million loss, trained the maintenance team on everything from risk management to curb appeal, and negotiated and created national vender discounts and programs saving ownerships hundreds of thousands of dollars per year. Prior to that, Aaron served Prometheus as a Renovations Manager, there he managed capital projects and high-end interior unit renovations. Aaron enjoys being in the wilderness, motocross, fishing, hiking, mountain biking, and spending time with his family.

Kellie Bossert, Asset Manager

Kellie Bossert joined Millburn & Company in 2018 as an Asset Manager, where she oversees properties in the Southeastern United States. She has 13 years

of experience in multifamily real estate, working her way up from a leasing agent to a regional manager for a top 50 property management company based in Atlanta, GA. As a regional manager, Kellie managed and was responsible for 13 properties and over 2,500+ units. Kellie has an extensive background in many facets of multifamily from multimillion-dollar renovation projects, to brand new ground-breaking lease-ups. She is an expert in onsite management, determination of market conditions, overall property assessments, due diligence, acquisitions, dispositions, budgets, forecasting, general finance, contract negotiation, maintaining and exceeding set budgeted goals, and implementation of policies and procedures. In her spare time, Kellie enjoys spending time with her husband, long-distance running, and caring for her numerous rescue animals which include cats, dogs, and horses.

33


Travis McQueen, Project Manager

Travis is a Project Manager on the M&C team. Prior to joining M&C, Travis worked as a Regional Maintenance Supervisor, Project Manager, and Capital Im-

provement Manager for over 20 years. Throughout his career, Travis has managed the renovation of several hundred units, performed due diligence and reporting, worked on Class A lease ups, trained site maintenance, and worked to mitigate damage and maximize NOI through his extensive experience in maintenance work. Travis is also a Certified Residential Home Inspector, Certified Mold Inspector, and has advanced skills in electrical, HVAC, Plumbing, and Pool/Spa Care. Travis enjoys scuba-diving, mountain biking, fishing, and spending time with his family.

Kelly Kimber, Director of Human Resources

Kelly joined M&C as the Director of Human Resources. He has over 20 years of experience in human resource management and is certified as a SPHR by the

Human Resources Certification Institute and a SCP by the Society for Human Resource Management. He has a bachelor’s degree in business administration from Southern Utah University and a master’s degree in public administration from Brigham Young University. He is also certified in the Predictive Index and the Arbinger Institute; tools for talent acquisition and development and corporate culture design. Kelly also has 25 years of experience in IT management. One of Kelly’s hobbies is learning. He loves taking online classes and is currently studying data analytics to become a data scientist. He and his wife, Denise, love to travel, hike and spend time with their four children and 13 grandchildren.

Ben Neff, Associate

Ben joined M&C as an associate. His primary duties include underwriting, securing acquisitions, and performing due diligence. Prior to joining M&C Ben was a

manager on the finance team at a privately-held world class ski resort. Earlier in his career, Ben worked for Deloitte & Touche in San Francisco where he served clients in the investment management, energy, retail, and nonprofit industries. Ben is a Magna Cum Laude Accounting graduate from Brigham Young University – Hawaii, and enjoys spending time with his family, cooking, snow skiing, waterskiing, hiking and surfing.

Anna Kallas, Office Manager

Anna joined M&C as Office Manager. She is responsible for assisting the company executives in a wide array of support services including publications, meeting coordination, accounting support, and back office management. Anna has a BS in Marketing and Finance from the University of Denver. Prior to joining M&C Anna was executive assistant and office manager for Bask Technology, a technical support company in Lehi. Previous experience includes foundation director for a hospital, real estate appraiser, and environmental consulting. Anna enjoys hiking, traveling and spending time with her husband and three children.

“Deedee” Dierdre Creed, Executive Assistant

Deedee joined M&C as an Executive Assistant. She is currently working on a degree in Accounting. Outside of school, Deedee has a diverse background of

experience including wrestling in college, interning in Washington, D.C. with Alaskan Senator, Lisa Murkowski, working as a deckhand and bookkeeper at a premier Alaskan fishing lodge, and managing an AirBnB on a historic World War II tugboat. In her free time, Deedee enjoys snow skiing, biking, writing, fishing and chess.


Millburn & Company Dispositions Property

Location

Total Acquisition Cost

Purchase Date

Sales Price

Sales Date

Capital Invested

Total Cash Returned to Limited Members

Original Forecasted Net IRR

Realized Gross IRR

Realized Net IRR

Gross Equity Multiple

Net Equity Multiple

North Temple Land

Salt Lake City, UT

$

918,165

Aug-10 $

1,870,000

May-11 $

918,165 $

1,820,000

16.00%

149.63%

149.63%

1.98

1.98

Hills at Sandy Station Land

Sandy, UT

$

3,640,000

Jun-10 $

12,500,000

Mar-15 $

3,050,000 $

4,051,976

14.00%

9.83%

6.55%

1.57

1.33

Legends at River Oaks

Sandy, UT

$

47,640,000

Dec-11 $

62,000,000

Feb-14 $

10,600,000 $

23,921,598

16.50%

61.08%

49.29%

2.71

2.26

Huntington Arista Uptown

Bountiful, UT Broomfield, CO

$ $

10,154,624 54,475,000

Oct-13 $ Sep-14 $

11,690,000 65,000,000

Sep-16 $ Nov-16 $

4,084,624 $ 14,800,000 $

6,248,559 25,050,842

13.42% 13.32%

19.79% 37.45%

17.72% 29.90%

1.64 1.91

1.53 1.69

Jory Trail

Wilsonville, OR

$

61,250,000

Jan-15 $

74,750,000

Jul-17 $

17,000,000 $

30,228,937

13.23%

35.58%

28.56%

2.02

1.78

$

178,077,789

$

227,810,000

$

50,452,789 $

91,321,912 14.06%

40.73%

33.30%

2.07

1.81

Total Weighted Average

Past performance does not guarantee or imply future results

Jory Trail Wilsonville, OR

35


Millburn & Company Active Portfolio Yields

Property

Location

Unit Count

Purchase Date

Total Cash Returned to LP's

Capital Invested

PTD Annual Cash-on-Cash Yield to LP's

PTD Annual Net Income Yield (Including Principal Paydown to LP's)

Telegraph Hill Place on Millenia

Albuquerque, NM Orlando, FL

200 371

21,019,000 61,300,000

Mar-18 $ Dec-17 $

8,500,000 $ 21,300,000 $

42,500 598,726

6.00% 7.00%

6.00% 7.00%

Millennium

Greenville, SC

305

38,736,000

Oct-17 $

12,007,000 $

420,245

7.00%

7.00%

Eastmar Commons Crest at Brier Creek

Orlando, FL

312

58,750,000

Oct-17 $

16,320,000 $

617,323

7.00%

7.00%

Raleigh, NC

291

50,750,000

Aug-17 $

14,950,000 $

Avenue 25 Portofino Argenta Verona Park

Phoenix, AZ Las Vegas, NV Mesa, AZ Mesa, AZ

254 280 396 304

42,135,000 27,900,000 41,439,000 36,140,000

May-17 Jan-17 Jan-17 Jan-17

12,430,000 9,700,000 11,139,000 10,040,451

La Ventana Harmony

Albuquerque, NM Surprise, AZ

232 312

37,080,000 44,063,995

San Valiente Windgate

Phoenix, AZ Bountiful, UT

604 100

Retreat Peaks at Woodmen

Colorado Springs, CO Colorado Springs, CO

644 City Station Elevation

770,195

7.00%

7.00%

$ $ $ $

725,084 1,703,838 1,242,436 990,915

7.00% 17.88% 9.29% 8.75%

7.00% 17.88% 9.29% 8.75%

Dec-16 $ Oct-16 $

11,920,000 $ 10,063,995 $

2,377,055 829,644

20.37% 6.10%

21.86% 9.82%

76,200,000 12,675,000

Jul-16 $ May-16 $

18,680,000 $ 3,655,000 $

2,615,200 508,585

6.16% 7.32%

6.16% 7.32%

276 230

52,200,000 34,934,267

Feb-16 $ May-14 $

14,238,000 $ 5,712,847 9,782,385 $ 14,021,598

18.70% 35.47%

18.70% 35.47%

Salt Lake City, UT

132

22,517,293

Mar-14 $

7,017,293 $

2,046,702

6.98%

8.65%

Flagstaff, AZ

288

42,229,178

Feb-14 $

9,018,178 $ 10,300,406

27.76%

28.12%

Wilshire

West Jordan, UT

278

36,074,517

Jul-13 $

6,587,741 $

9,188,697

29.57%

29.57%

Preserve at City Center

Aurora, CO

296

23,508,967

Apr-13 $

5,508,967 $ 14,109,126

52.19%

54.64%

Preston Hollow Woodgate

Murray, UT West Jordan, UT

204 288

18,282,554 28,959,866

Sep-11 $ Dec-10 $

4,222,554 $ 7,795,233 6,734,866 $ 14,261,482

28.79% 28.80%

30.49% 28.80%

6,163

806,894,637

$

223,815,430 $ 90,877,837 13.90%

14.08%

Total Weighted Average

Past performance does not guarantee or imply future results

36

Total Acquisition Cost

$ $ $ $


Millburn & Company Portfolio Snapshot

13.90%

6,163

33.30%

Weighted Average Net Cash-on-Cash Return

Total Units

Average Realized Net IRR to LP’s

$273+ Million

$1+ Billion

1.81x

Capital Invested

Portfolio Value

Realized Net Multiple to LP’s

37


Peaks at Woodmen Apartments Colorado Springs, Colorado • 230 Units Built in 2012 • Closed 5/14

Harmony at Surprise Apartments Surprise, Arizona • 312 Units Built in 2008 • Closed 10/16

Crest at Brier Creek Apartments Raleigh, North Carolina • 291 Units Built in 2013 • Closed 8/17

38

Retreat at Cheyenne Mountain Colorado Springs, Colorado • 276 Units Built in 1997 • Closed 2/16

Argenta Apartments Mesa, Arizona • 396 Units Built in 1986 • Closed 1/17

San Valiente Apartments Phoenix, Arizona • 604 Units Built in 1997 • Closed 7/16

644 City Station Salt Lake City, Utah • 132 Units Built in 2013 • Closed 3/14

Elevation Apartments Flagstaff, Arizona • 288 Units Built in 2013 • Closed 2/14

Avenue 25 Apartments Phoenix, Arizona • 254 Units Built in 2013 • Closed 6/17

Place on Millenia Apartments Orlando, Florida • 371 Units Built in 2007 • Closed 12/17


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