The Canopy (Hybrid OM Sample)

| OFFERING MEMORANDUM

UNITS: 240

9201 Kanis Rd, Little

Rock, AR 72205

TheCanopy.berkadiaREA.com

BUILT: 1974 / 1984

INVESTMENT ADVISORS PATRICK JORDAN Senior Director 901.425.1828 patrick.jordan@berkadia.com ALEX BLAGOJEVICH Senior Managing Director 312.845.3088 alex.blagojevich@berkadia.com

MEMPHIS OFFICE 2320 South Germantown Road 2nd Floor Germantown, TN 38138 Phone: 901.425.1828 Fax: 901.425.1831

TABLE OF CONTENTS The Opportunity.......................................................4 The Property......................................................... .......8 The Location...............................................................12 Comparable Rental Properties............ ........28 Financial Analysis.......................................... ........36

THE OPPORTUNITY

HIGHLIGHTS

240

$800,000

PROXIMITY Location Near High-

Units Developed in 2

received in capital over the last

Demand Drivers

Phases Between 1974-1984

2 years, and offers rent growth potential of $100k+

Replacement on 4 Buildings

EXTERIOR Power Washing & Parking Lot Seal, and Stripe and Major Renovations

50%+

HVAC replacement

MINIMAL Deferred Maintenance Allowing Strategic Capital

to the Clubhouse, Gym, Laundry

Investment Targeting Rent

Room and Swimming Pool

Growth Opportunities

The Opportunity

ROOF

5

Berkadia is pleased to present the exclusive opportunity to acquire The Canopy, a 20-building apartment community comprising of 240 two-story units developed in two phases between 1974 and 1984 in Little Rock, Arkansas. This property offers exceptional upside due to its excellent location near demand drivers, significant capital investment over the past two years, multiple upgrades, and outstanding rent-growth potential.

The Canopy features a well-balanced unit mix of 50% one-bed / one-bath units measuring an average of 630 square feet and 50% two-bed / one-bath units averaging approximately 871 square feet.

This pet-friendly community features a resort-style swimming pool and sundeck, clubhouse, fitness center with nearby walking trails, business center, lounge, playground, patios / balconies with forest vistas, fully equipped kitchen with dishwasher, washer / dryer, ceiling fans, vinyl plank flooring, oversized closets with extra storage, wood-burning fireplace, central heat / AC, cable ready, and wireless internet, to name a few of its many desirable conveniences. This securely gated property features ample surface parking, community laundry facilities, and on-site maintenance and

The Opportunity

management.

6

240

UNIT COUNT

CAPITAL INVESTMENT AND UPGRADES Over the past two years, The Canopy has benefitted from $800,000 in capital investment, translating into an impressive list of major renovations and upgrades: roof replacement on four buildings; landscaping / drainage improvements, plus tree removal; parking lot sealing and striping; exterior power-washing; renovations to clubhouse, fitness room, laundry, and pool; and a 50% replacement of the HVAC system.

THE AREA AND PROXIMITY TO KEY DEMAND DRIVERS

With a minimum of deferred maintenance, new ownership

The economic backbone of the Little Rock – North Little Rock –

can focus on strategic capital investment to target rent-

Conway, Arkansas, MSA is supported by the defense, logistics, and

growth opportunities, such as cosmetic interior upgrades,

trade sectors. However, some of the greatest job growth is coming

water conservation measures, and installation of washer /

from the education, health care, and business services sectors, steadily

dryer hookups.

attracting investment activity throughout the metro.

In all, a new owner stands to benefit from more than

The Canopy’s central location places it near strong demand drivers,

$100,000 in potential rent growth.

including the Baptist Health System (1,330 licensed beds), the University of Arkansas at Little Rock (10,000 students and faculty), Infirmary (6,000+ jobs).

The presence of major corporations as well as two Fortune 500 headquarters will continue to drive demand in the area. A transformation is well underway in regions like North Little Rock and South Main Street, bringing a modernized culture that promotes

The Opportunity

Amazon’s new fulfillment center (1,000+ jobs), and the CHI St. Vincent

business, entertainment, and an exceptional quality of life, ensuring the continued performance and enduring value of The Canopy.

7

THE PROPERTY

PROPERTY SUMMARY Property Name Address City, State County Parcel Number BUILDING Units Built Buildings Stories Density Site Size / Acreage Total Rentable SF Roofs Exterior Uncovered Parking

The Canopy 9201 Kanis Road Little Rock, AR 72205 Pulaski 44L0810007300, 44L0810100200

240 1974/1984 20 Two-Story, Garden-Style 17.87 Units per Acre 13.43 180,100 Asphalt Composite Horizontal, Compressed Wood Siding 363 Total Spaces

METERING Entergy (Tenant Paid) CenterPoint (RUBS) Central Arkansas Water (RUBS) City of Little Rock (RUBS) Republic Services (RUBS)

Unit Mix One Bedroom Two Bedroom

120 120

The Property

Electricity Gas Water Sewer Trash

9

UNIT AMENITIES Refridgerator Stove / Oven Dishwasher Microwave Ceiling Fans Vinyl Flooring Fireplace Washer / Dryer and Hookups* Walk-In Closets Patio / Balcony Storage Units

The Property

Upgraded Units*

*Select Units

10

COMMUNITY AMENITIES Swimming Pool with Sundeck Clubhouse with Fireplace and Full Kitchen Business Center Lounge and Recreation Room Fitness Center Nearby Fitness Trails Playground Laundry Facilities On-Site Maintenance

The Property 11

12

The Property

The Property 13

THE LOCATION

9201 Kanis Road Little Rock, AR 72205

The Location

The Canopy Apartments

15

The Location

Boundary Aerial

16

Points of Interest Aerial

The Location 17

The Location

Major Employer Map

18

DEMOGRAPHICS

147,540

- WITHIN A 5-MILE RADIUS

31%

By 2025, the number of

39%

of residents are age 18-35

of housing units are

residents is projected to

renter-occupied

increase 5.3% to 147,540

72%

of residents age 25+ work

bachelor’s degree or

in white-collar positions

higher

$52,890

Median household income

$173,760 Median housing value

The Location

43%

of residents hold a

19

The Location

MAJOR EMPLOYERS

20

- WITHIN A 15-MIN DRIVE

BAPTIST HEALTH LITTLE ROCK

UNIVERSITY OF ARKANSAS LITTLE ROCK

With over 840 beds, Baptist Health Medical Center – Little Rock is the largest private, non-prof it hospital in Arkansas.

The Little Rock campus serves as the anchor for the Baptist’s Arkansas health network which supports over 80 facilities statewide.

A member of the University of Arkansas system, the University of Arkansas Little Rock (UALR) helps provide the region with well educated workforce. A research university located in the heart of the metro area, UALR is a driving force and major component of the city’s prof ile as a regional leader in research, technology, and job creation.

7,340

EMPLOYEES

*by U.S. News & World Report

NO. 2

RANKED HOSPITAL IN ARKANSAS*

9,850

STUDENTS ENROLLED

160

GRADUATE & UNDERGRAD DEGREE PROGRAMS

75%

OF UALR STUDENTS LIVE OFF-CAMPUS

MAJOR EMPLOYERS

- WITHIN A 15-MIN DRIVE

$3.9B ECONOMIC IMPACT STATEWIDE

UNIVERSITY OF ARKANSAS FOR MEDICAL SCIENCES ARKANSAS CHILDREN’S HOSPITAL

9,700 JOBS

5.2m

SQUARE FOOT CAMPUS

3,000+ MEDICAL STUDENTS

800

RESIDENT PHYSICIANS

Among the largest children’s hospitals in the nation, Arkansas Children’s Hospital spans 36 blocks and boasts a 1.2 million square-foot campus just west of Downtown Little Rock.

The hospital is an affiliate of UAMS and serves as a teaching hospital for the schools Department of Pediatrics.

4,370

EMPLOYEES

336 BEDS

The Location

The only academic health center in Arkansas, the University of Arkansas for Medical Sciences (UAMS) serves as the primary teaching hospital for the University of Arkansas Medical School. The top-rated hospital in Arkansas, UAMS supports over 430 beds and provides support services for the Central Arkansas Veterans Affairs hospital.

21

MAJOR EMPLOYERS

The Location

LITTLE ROCK CAPITOL DISTRICT

22

Home of the Arkansas State Capitol and Arkansas General Assembly the Little Rock Capitol District also supports regional off ices of many state and federal agencies including the U.S. Social Security Administration, U.S. Bankruptcy Court, the Federal Bureau of Investigation, and U.S. Drug Enforcement Administration.

35,200 JOBS IN ARK. STATE GOV’T

26,500 JOBS IN LOCAL GOV’T

10,200 JOBS IN U.S. FE GOV’T

- WITHIN A 15-MIN DRIVE

CONSTRUCTION & DEVELOPMENT

AMAZON FULFILLMENT CENTER

Plans are underway for phase two of the Little Rock Tech Park in Downtown Little Rock. It will more than double the size of the first phase completed in 2017 and will be able to house both wet and dry laboratory space in addition to a café, and ground floor retail. The six-story tech-based building will also feature a corridor to connect to the first phase building.

Online retail giant Amazon has recently purchased 80 acres in the Port of Little Rock with the intent of establishing the company’s first Arkansas-based fulfilment center. While Amazon has not announced a timeline for the development, they plan to hire 1,000 employees to staff the fulfilment center with wages starting at $15 per hour with full medical, dental, and vision insurance.

85,100

SQUARE FOOT BUILDING

$31m

INVESTMENT

The Location

LITTLE ROCK TECH PARK

23

The Location

CONSTRUCTION & DEVELOPMENT

24

PORT OF LITTLE ROCK

SCA PHARMA

Construction crews recently broke ground on $5 million of inf rastructure improvements at the Port of Little Rock.

The project, which will allow for increased vehicle traff ic at the port is part of more than $11 million of development underway to help support the rapid growth currently happening at the Port of Little Rock.

A leading producer of sterile admixtures and pre-f illed syringes, SCA Pharmaceuticals announced plans in July to invest more than $10 million to double its workforce at its location on the grounds of the Clinton National Airport.

40+

BUSINESSES

4,000

EMPLOYEES

LARGEST

INDUSTRIAL HUB IN ARKANSAS

180

NEW JOBS CREATED

42,000

SQ FT RENOVATION

20,000 SQ FT NEW FACILITY

LIFESTYLE AND ENTERTAINMENT RIVER MARKET Home to some of the premier venues in the Little Rock metro area, River Market spans ten blocks along the Arkansas riverf ront. Since opening in 1996, the $300 million development has become the hub for entertainment in Little Rock.

10,000 SQFT OTTENHEIMER MARKET HALL FEATURING YEAR-ROUND FARMERS MARKETS

OVER 40 BARS & RESTAURANTS

The Location

RIVERFRONT PARK LOCATED ALONG THE ARKANSAS RIVER

OVER A DOZEN ANNUAL EVENTS INCLUDING MOVIES IN THE PARK AND JAZZ IN THE PARK

25

LIFESTYLE AND ENTERTAINMENT CLINTON PRESIDENTIAL LIBRARY Located within the Clinton Presidential Center and Park, the Clinton Presidential Library showcases artifacts f rom the Clinton’s two terms as President of the United States. Since opening in 2004, over $1 billion has been invested in local real estate projects in the immediate area surrounding the library.

The Location

70,000 SQFT OF EXHIBITION SPACE

26

79,000 ARTIFACTS FROM THE CLINTON PRESIDENCY

LIFESTYLE AND ENTERTAINMENT PARK PLAZA MALL Located in Midtown Little Rock, Park Plaza Mall is the premier shopping center in Little Rock. Popular tenants in the mall include Dillard’s, H&M, Buckle, American Eagle Outf itters, and Talbots.

95 shops

562,400

square feet of retail area

The Location 27

The Location

TRANSPORTATION

28

CLINTON NATIONAL AIRPORT

ROCK REGION METRO

Located just east of Downtown Little Rock, LIT is the largest airport in Arkansas in terms of annual passengers and destinations. The airport provides service to 2.2 million passengers annually with nonstop services to a dozen destinations.

With 22 f ixed and four express / commuter routes, Rock Region Metro is the public transit provider for the Little Rock metro area. Roughly 2.5 million residents utilize Round Rock Metro services annually.

TRANSPORTATION METRO STREET CAR With 3.4 miles of track in Downtown and North Little Rock, Metro Streetcar is a fun and unique way to travel through the twin cities of Central Arkansas. Over 100,000 passengers ride the route annually which provides stops to some of the most popular venues in the area including River Market, the Creative Corridor, the Clinton Presidential Center, and North Little Rock’s historic Argenta District.

The Location 29

COMPARABLE RENTAL PROPERTIES

Comparable Rental Properties Map Subject: The Canopy 9201 Kanis Road Little Rock, AR 72205 1. Westbridge 2123 Labette Manor Drive Little Rock, AR 72205 2. Governor’s Park 7820 West Capitol Avenue Little Rock, AR 72205 3. Beacon Hill 1801 Reservoir Road Little Rock, AR 72227

5. Northwest Hills 11701 Mara Lynn Road Little Rock, AR 72211 6. Napa Valley 501 Napa Valley Drive Little Rock, AR 72211 7. Turtle Creek 601 Napa Valley Road Little Rock, AR 72211

Comparable Rental Properties

4. Parham Pointe 1500 Parhma Pointe Drive Little Rock, AR 77204

31

Comparable Rental Properties

Comparable Rental Properties

ONE BEDROOM

32

Comparable Rental Properties

TWO BEDROOM

Comparable Rental Properties 33

Comparable Rental Properties S

THE CANOPY

0+50+27230H UNIT MIX

n 1 Bedroom / 1 Bath – 50% n 2 Bedroom / 1 Bath – 27% n 2 Bedroom / 1.5 Bath – 23%

9201 KANIS ROAD LITTLE ROCK, AR 72205

UNITS 49 47 16 8 28 26 2 64 240

TYPE 1 Bedroom / 1 Bath 1 Bedroom / 1 Bath 1 Bedroom / 1 Bath 1 Bedroom / 1 Bath 2 Bedroom / 1 Bath 2 Bedroom / 1 Bath 2 Bedroom / 1 Bath 2 Bedroom / 1.5 Bath Weighted Average

UNIT SF 600 640 650 715 900 1,000 1,050 800 750

MARKET RENT $644 $620 $665 $662 $690 $725 $785 $730 $680

RENT / SF $1.07 $0.97 $1.02 $0.93 $0.77 $0.72 $0.75 $0.91 $0.91

UNITS 48 116 16 180

TYPE 1 Bedroom / 1 Bath 2 Bedroom / 1 Bath 3 Bedroom / 2 Bath Weighted Average

UNIT SF 774 1,104 1,274 1,031

MARKET RENT $575 $725 $755 $688

RENT / SF $0.74 $0.66 $0.59 $0.67

Comparable Rental Properties

Units: ��������������������������������������������������������������������������������� 240 Built: ����������������������������������������������������������������������������������1985 Occupancy: ���������������������������������������������������������������������� NA

34

1

WESTBRIDGE

2123 LABETTE MANOR DRIVE LITTLE ROCK, AR 72205 Units: ���������������������������������������������������������������������������������� 180 Built: ����������������������������������������������������������������������������������1979 Occupancy: �������������������������������������������������������������������� 92%

0+27+6490H UNIT MIX

n 1 Bedroom / 1 Bath – 27% n 2 Bedroom / 1 Bath – 64% n 3 Bedroom / 2 Bath – 9%

Comparable Rental Properties 3

GOVERNOR’S PARK

0+47+053H UNIT MIX

n 1 Bedroom / 1 Bath – 47% n 2 Bedroom / 2 Bath – 53%

UNITS 48 24 48 34 154

TYPE 1 Bedroom / 1 Bath 1 Bedroom / 1 Bath 2 Bedroom / 2 Bath 2 Bedroom / 2 Bath Weighted Average

UNIT SF 561 645 1,010 1,042 820

MARKET RENT $675 $748 $980 $893 $830

RENT / SF $1.20 $1.16 $0.97 $0.86 $1.01

UNITS 36 36 36 36 60 60 24 288

TYPE 1 Bedroom / 1 Bath 1 Bedroom / 1 Bath 1 Bedroom / 1 Bath 1 Bedroom / 1 Bath 2 Bedroom / 2 Bath 2 Bedroom / 2 Bath 3 Bedroom / 2 Bath Weighted Average

UNIT SF 605 618 735 742 966 973 1,150 837

MARKET RENT $988 $1,013 $1,044 $1,045 $1,305 $1,305 $1,544 $1,184

RENT / SF $1.63 $1.64 $1.42 $1.41 $1.35 $1.34 $1.34 $1.41

7820 WEST CAPITOL LITTLE ROCK, AR 72205

Units: ���������������������������������������������������������������������������������� 154 Built/Renovated: ����������������������������������������������1985/2006 Occupancy: �������������������������������������������������������������������� 97%

BEACON HILL

1801 RESERVOIR ROAD LITTLE ROCK, AR 72227 Units: ���������������������������������������������������������������������������������� 168 Built: ����������������������������������������������������������������������������������1985 Occupancy: �������������������������������������������������������������������� 92%

0+65+350H UNIT MIX

n 1 Bedroom / 1 Bath – 65% n 2 Bedroom / 1 Bath – 35%

Comparable Rental Properties

4

35

Comparable Rental Properties 5

PARHAM POINTE

0+28+072H UNIT MIX

n 1 Bedroom / 1 Bath – 28% n 2 Bedroom / 2 Bath – 72%

UNITS 52 132 184

TYPE 1 Bedroom / 1 Bath 2 Bedroom / 2 Bath Weighted Average

UNIT SF 811 1,072 998

MARKET RENT $750 $873 $838

RENT / SF $0.92 $0.81 $0.84

UNITS 20 20 27 27 16 16 126

TYPE 1 Bedroom / 1 Bath 1 Bedroom / 1 Bath 2 Bedroom / 1 Bath 2 Bedroom / 1 Bath 2 Bedroom / 1 Bath 2 Bedroom / 1 Bath Weighted Average

UNIT SF 662 662 789 789 841 841 762

MARKET RENT $675 $675 $733 $733 $733 $733 $715

RENT / SF $1.02 $1.02 $0.93 $0.93 $0.87 $0.87 $0.94

1500 PARHAM POINTE DRIVE LITTLE ROCK, AR 72204

Comparable Rental Properties

Units: ���������������������������������������������������������������������������������� 184 Built: �������������������������������������������������������������������������������� 2002 Occupancy: �������������������������������������������������������������������� 92%

36

6

NORTHWEST HILLS 11701 MARA LYNN ROAD LITTLE ROCK, AR 72211

Units: ���������������������������������������������������������������������������������� 126 Built: ����������������������������������������������������������������������������������1983 Occupancy: �������������������������������������������������������������������� 96%

0+32+680H UNIT MIX

n 1 Bedroom / 1 Bath – 32% n 2 Bedroom / 1 Bath – 68%

Comparable Rental Properties 7

NAPA VALLEY

0+65+035H UNIT MIX

n 1 Bedroom / 1 Bath – 65% n 2 Bedroom / 2 Bath – 35%

UNITS 156 84 240

TYPE 1 Bedroom / 1 Bath 2 Bedroom / 2 Bath Weighted Average

UNIT SF 640 993 764

MARKET RENT $693 $820 $737

RENT / SF $1.08 $0.83 $0.97

UNITS 108 61 47 216

TYPE 1 Bedroom / 1 Bath 2 Bedroom / 1.5 Bath 2 Bedroom / 2 Bath Weighted Average

UNIT SF $618 $900 $830 $744

MARKET RENT $0.88 $1.00 $0.88 $0.92

RENT / SF $0.88 $1.00 $0.88 $0.92

501 NAPA VALLEY DRIVE LITTLE ROCK, AR 72211 Units: ��������������������������������������������������������������������������������� 240 Built: ����������������������������������������������������������������������������������1986 Occupancy: �������������������������������������������������������������������� 97%

TURTLE CREEK

601 NAPA VALLEY DRIVE LITTLE ROCK, AR 72211 Units: ���������������������������������������������������������������������������������� 216 Built: ����������������������������������������������������������������������������������1998 Occupancy: ���������������������������������������������������������������������93%

0+50+28220H UNIT MIX

n 1 Bedroom / 1 Bath – 50% n 2 Bedroom / 1.5 Bath – 28% n 2 Bedroom / 2 Bath – 22%

Comparable Rental Properties

8

37

FINANCIAL ANALYSIS

Financial Analysis UNIT MIX

Units 49 47 16 8 64 28 26 2 240

Type 1 Bedroom / 1 Bathroom 1 Bedroom / 1 Bathroom 1 Bedroom / 1 Bathroom 1 Bedroom / 1 Bathroom w/ Study 2 Bedroom / 1.5 Bathroom 2 Bedroom / 1 Bathroom 2 Bedroom / 1 Bathroom 2 Bedroom / 1 Bathroom w/ Study

Unit SF 600 640 650 715 800 900 1,000 1,050 750

Total SF 29,400 30,080 10,400 5,720 51,200 25,200 26,000 2,100 180,100

Market Rent $644 $620 $665 $662 $730 $690 $725 $785 $680

VALUE ADD UNIT MIX Monthly Mkt. Rent $31,545 $29,150 $10,640 $5,295 $46,720 $19,320 $18,850 $1,570 $163,090

Annual Mkt. Rent $378,540 $349,800 $127,680 $63,540 $560,640 $231,840 $226,200 $18,840 $1,957,080

Rent/SF $1.07 $0.97 $1.02 $0.93 $0.91 $0.77 $0.73 $0.75 $0.91

Unit Mix % 20.42% 19.58% 6.67% 3.33% 26.67% 11.67% 10.83% 0.83% 100.00%

Upgraded Market Rent $655 $665 $675 $715 $755 $785 $805 $820 $720

Upgraded Rent/SF $1.09 $1.04 $1.04 $1.00 $0.94 $0.87 $0.81 $0.78 $0.96

Financial Analysis 39

Financial Analysis

Income Scheduled Market Rent Less: Loss to Lease Less: Vacancy Less: Concessions Less: Non-Rev/Bad Debt/Adjust Plus: Year-One Rent Growth Net Rental Income

1.50% 6.00% 1.00% 1.50% 5.92%

Plus: Fee Income Plus: Utility Reimbursements Plus: All Other Income Total Other Income

Financial Analysis

Effective Gross Income

40

Expenses Real Estate Taxes Insurance Utilities Contracted Services Repairs & Maintenance Unit Turnover Marketing & Promotion General & Administrative On-Site Payroll Management Fee Replacement Reserve Total Expenses

1.4000%

3.50%

Per Unit $506 $278 $466 $300 $500 $100 $125 $200 $1,100 $305 $300 $4,179

Real Estate Taxes, Insurance, & Utilities Per Unit: Total Controllable Expenses Per Unit: Total Expenses Per Unit: Total Expenses Per SF: Total Expenses as % of EGI Net Operating Income

T-3 T-12 Expenses [ Jun-Aug'20 ] $1,661,643 $0 $0 ($60,924) $0

T-12 Actuals [ Sep'19-Aug'20 ] $1,680,024 $0 $0 ($74,682) $0

$1,600,719

$1,605,343

$121,926 $101,676 $2,275 $225,877

$110,032 $104,887 $2 $214,921

$118,375 $98,714 $2,209 $219,298

$2,091,469

$1,815,640

$1,824,641

$121,380 $66,614 $111,804 $72,000 $120,000 $24,000 $30,000 $48,000 $264,000 $73,201 $72,000 $1,002,999

$119,186 $66,614 $111,804 $51,906 $104,088 $8,549 $33,365 $28,127 $184,666 $69,415 $72,000 $849,720

$119,186 $66,614 $111,804 $51,906 $104,088 $8,549 $33,365 $28,127 $184,666 $69,415 $72,000 $849,720

$1,249 $2,930 $4,179 $5.57 47.96%

$1,240 $2,300 $3,540 $4.72 46.80%

$1,240 $2,300 $3,540 $4.72 46.57%

$1,088,469

$965,920

$974,921

Berkadia Pro Forma $1,957,080 ($31,093) ($124,373) ($20,729) ($31,093) $115,800 $1,865,592

Financial Analysis INCOME ASSUMPTIONS • Scheduled Market Rent:

The market rents used in the Pro Forma analysis for The Canopy Apartments are per the 09/01/20 rent roll. Scheduled Market Rents totaled $1,957,080 annually or $0.91 per square foot.

• Loss to Lease:

Loss to Lease is set at 1.50%.

• Vacancy / Occupancy:

As of 09/01/20, the physical vacancy was 10.83%. Vacancy loss is set at 6.00%.

• Concessions:

Concessions is set at 1.00%.

• Non-Rev Units / Bad Debt / Adjustments: Non-Rev / Bad Debt / Adjust is set at 1.50%.

• Year 1 Rent Growth:

Proforma Rent Grownth is set at 5.92% of Scheduled Market Rent.

• Other Income:

Other Income is driven by the trailing 12 month operating statement and totaled $225,877.

EXPENSE ASSUMPTIONS The Canopy Apartments is located in Pulaski County, Arkansas and is subject to its taxing authority. Per the County, the value is $8,509,800 and the 2019 tax bill is $119,137, which yields an effective tax rate of 1.40000%. Proforma tax expense is $121,380. Pulaski County is on a 5 year reassessment system with the next assessment scheduled for 2022.

• Insurance:

Insurance totaled $278/unit/year, is based on the trailing 12 month operating statement.

• Utilities:

Utilities expense totaled $466/unit/year, based on the trailing 12 month operating statement.

• Contracted Services:

Contract Services was adjusted to $300/unit/year.

• Repairs & Maintenance:

R&M was adjusted to $500/unit/year.

• R&M: Turnover

R&M: turnover expense was adjusted to $100/unit/yeart.

• Marketing & Promotion:

Marketing expense was adjusted to $125/unit/year, based on the trailing 12 month operating statement.

• General & Administrative:

G&A expense was adjusted to $200/unit/year.

• On-Site Payroll:

Payroll expense was adjusted to $1,100/unit/year, to reflect market averages for similar properties of this age and quality.

• Management Fee:

Management Fee is set at 3.50% (% of EGI) and is consistent with similar properties of this size and bracket of revenue.

• Replacement Reserves:

$300/unit/year for Replacement Reserves.

Financial Analysis

• Real Estate Taxes:

41

Financial Analysis Discounted Cash Flow Variables

Financial Analysis

Rent Bumps / Escalation Loss to Lease After EOY 1: Vacancy Rate: Concessions After EOY 1: Non-Rev/Bad Debt/Adjust Plus: Commercial Income Less: Commercial Vacancy Plus: Fee Income Plus: Utility Reimbursements Plus: All Other Income Taxes on Property (Increases) Insurance Utilities Contracted Services Repairs & Maintenance Unit Turnover Marketing & Promotion General & Administrative On-Site Payroll Management Fee

42

Acquisition

Y1

Y2

Y3

Y4

Y5

Y6

Y7

Y8

Y9

Y10

Y11

1.50% 6.00% 1.00% 1.50% -

3.00% 1.00% 6.00% 1.00% 1.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%

3.00% 1.00% 6.00% 1.00% 1.50% 3.00% 3.00% 3.00% 3.00% 3.00% 63.00% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%

3.00% 1.00% 6.00% 1.00% 1.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%

3.00% 1.00% 6.00% 1.00% 1.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%

3.00% 1.00% 6.00% 1.00% 1.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%

3.00% 1.00% 6.00% 1.00% 1.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%

3.00% 1.00% 6.00% 1.00% 1.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%

3.00% 1.00% 6.00% 1.00% 1.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%

3.00% 1.00% 6.00% 1.00% 1.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%

3.00% 1.00% 6.00% 1.00% 1.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%

Financial Analysis Income Scheduled Market Rent Less: Loss to Lease Less: Vacancy Less: Concessions Less: Non-Rev/Bad Debt/Adjust Plus: Year-One Rent Growth Net Rental Income

Acquisition

Plus: Fee Income Plus: Utility Reimbursements Plus: All Other Income Total Other Income Effective Gross Income Expenses Real Estate Taxes Insurance Utilities Contracted Services Repairs & Maintenance Unit Turnover Marketing & Promotion General & Administrative On-Site Payroll Management Fee Replacement Reserve Total Expenses Net Operating Income

1.400%

4%

EOY 1 $1,957,080 ($31,093) ($124,373) ($20,729) ($31,093) $115,800 $1,865,592

EOY 2 $2,135,066 ($21,351) ($128,104) ($21,351) ($32,026)

EOY 3 $2,199,118 ($21,991) ($131,947) ($21,991) ($32,987)

EOY 4 $2,265,092 ($22,651) ($135,906) ($22,651) ($33,976)

EOY 5 $2,333,045 ($23,330) ($139,983) ($23,330) ($34,996)

EOY 6 $2,403,036 ($24,030) ($144,182) ($24,030) ($36,046)

EOY 7 $2,475,127 ($24,751) ($148,508) ($24,751) ($37,127)

EOY 8 $2,549,381 ($25,494) ($152,963) ($25,494) ($38,241)

EOY 9 $2,625,862 ($26,259) ($157,552) ($26,259) ($39,388)

EOY 10 $2,704,638 ($27,046) ($162,278) ($27,046) ($40,570)

EOY 11 $2,785,777 ($27,858) ($167,147) ($27,858) ($41,787)

$1,932,235

$1,990,202

$2,049,908

$2,111,405

$2,174,748

$2,239,990

$2,307,190

$2,376,405

$2,447,698

$2,521,129

$121,926 $101,676 $2,275 $225,877

$125,584 $104,726 $2,343 $232,653

$129,351 $107,868 $2,414 $239,633

$133,232 $111,104 $2,486 $246,822

$137,229 $114,437 $2,561 $254,226

$141,345 $117,870 $2,638 $261,853

$145,586 $121,406 $2,717 $269,709

$149,953 $125,048 $2,798 $277,800

$154,452 $128,800 $2,882 $286,134

$159,086 $132,664 $2,969 $294,718

$163,858 $136,644 $3,058 $303,560

$2,091,469

$2,164,888

$2,229,835

$2,296,730

$2,365,632

$2,436,601

$2,509,699

$2,584,990

$2,662,539

$2,742,416

$2,824,688

$121,380 $66,614 $111,804 $72,000 $120,000 $24,000 $30,000 $48,000 $264,000 $73,201 $72,000 $1,002,999

$125,021 $68,280 $114,599 $73,800 $123,000 $24,600 $30,750 $49,200 $270,600 $75,771 $72,000 $1,027,621

$203,785 $69,987 $117,464 $75,645 $126,075 $25,215 $31,519 $50,430 $277,365 $78,044 $72,000 $1,127,528

$209,898 $71,736 $120,400 $77,536 $129,227 $25,845 $32,307 $51,691 $284,299 $80,386 $72,000 $1,155,326

$216,195 $73,530 $123,410 $79,475 $132,458 $26,492 $33,114 $52,983 $291,407 $82,797 $72,000 $1,183,860

$222,681 $75,368 $126,496 $81,461 $135,769 $27,154 $33,942 $54,308 $298,692 $85,281 $72,000 $1,213,152

$229,362 $77,252 $129,658 $83,498 $139,163 $27,833 $34,791 $55,665 $306,159 $87,839 $72,000 $1,243,220

$236,243 $79,183 $132,899 $85,585 $142,642 $28,528 $35,661 $57,057 $313,813 $90,475 $72,000 $1,274,087

$243,330 $81,163 $136,222 $87,725 $146,208 $29,242 $36,552 $58,483 $321,658 $93,189 $72,000 $1,305,772

$250,630 $83,192 $139,627 $89,918 $149,864 $29,973 $37,466 $59,945 $329,700 $95,985 $72,000 $1,338,299

$258,149 $85,272 $143,118 $92,166 $153,610 $30,722 $38,403 $61,444 $337,942 $98,864 $72,000 $1,371,690

$1,088,469

$1,137,267

$1,102,307

$1,141,404

$1,181,772

$1,223,449

$1,266,479

$1,310,903

$1,356,767

$1,404,116

$1,452,998

Financial Analysis 43

DISCLAIMER AND CONFIDENTIALITY AGREEMENT The material contained in this document is confidential, furnished solely for the purpose of considering investment in the property described therein and is not to be copied and/or used for any purpose or made available to any other person without the express written consent of Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. In accepting this, the recipient agrees to keep all material contained herein confidential.

This information package has been prepared to provide summary information to prospective purchasers and to establish a preliminary level of interest in the property described herein. It does not, however, purport to present all material information regarding the subject property, and it is not a substitute for a thorough due diligence investigation. In particular, Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. and seller have not made any investigation of the actual property, the tenants, the operating history, financial reports, leases, square footage, age or any other aspect of the property, including but not limited to any potential environmental problems that may exist and make no warranty or representation whatsoever concerning these issues. The information contained in this information package has been obtained from sources we believe to be reliable; however, Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. and Seller have not conducted any investigation regarding these matters and make no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. Any pro formas, projections, opinions, assumptions or estimates used are for example only and do not necessarily represent the current or future performance of the property.

Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. and Seller strongly recommend that prospective purchasers conduct an in-depth investigation of every physical and financial aspect of the property to determine if the property meets their needs and expectations. We also recommend that prospective purchasers consult with their tax, financial and legal advisors on any matter that may affect their decision to purchase the property and the subsequent consequences of ownership.

All parties are advised that in any property the presence of certain kinds of molds, funguses, or other organisms may adversely affect the property and the health of some individuals. Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. recommend, if prospective buyers have questions or concerns regarding this issue, that prospective buyers conduct further inspections by a qualified professional.

The Seller retains the right to withdraw, modify or cancel this offer to sell at any time and without any notice or obligation.

Any sale is subject to the sole and unrestricted approval of Seller, and Seller shall be under no obligation to any party until such time as Seller and any other necessary parties have executed a contract of sale containing terms and conditions acceptable to Seller and such obligations of Seller shall only be those in such contract of sale.

For more information on these and other Berkadia® exclusive listings, please visit our website at www.Berkadia.com Berkadia®, a joint venture of Berkshire Hathaway and Jefferies Financial Group, is an industry leading commercial real estate company providing comprehensive capital solutions and investment sales advisory and research services for multifamily and commercial properties. Berkadia® is amongst the largest, highest rated and most respected primary, master and special servicers in the industry. © 2020 Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. Berkadia® and Berkadia Commercial Mortgage® are trademarks of Berkadia Commercial Mortgage LLC. Investment sales and real estate brokerage businesses are conducted exclusively by Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. Commercial mortgage loan origination and servicing businesses are conducted exclusively by Berkadia Commercial Mortgage LLC and Berkadia Commercial Mortgage Inc. For state licensing details for the above entities, visit: www.berkadia.com/legal/licensing.aspx

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INVESTMENT ADVISORS PATRICK JORDAN Senior Director 901.425.1828 patrick.jordan@berkadia.com ALEX BLAGOJEVICH Senior Managing Director 312.845.3088 alex.blagojevich@berkadia.com

MEMPHIS OFFICE 2320 South Germantown Road 2nd Floor Germantown, TN 38138 Phone: 901.425.1828 Fax: 901.425.1831

MEMPHIS OFFICE 2320 South Germantown Road 2nd Floor Germantown, TN 38138 Phone: 901.425.1828 Fax: 901.425.1831