Sarah Burleigh, MBA ‘15 Elisa Konieczny, MBA ‘15 Webster Place Pankti Sanganee, MUD ‘15 Mengxuan Zhang, MArch ‘16 Key Ratios EXECUTIVE SUMMARY Gross Square Feet 83,637 Net Leasable Square Feet 45,019

Webster Place is a classic Cost/Ft $ 331.69 transit-oriented development, Expense/Foot $ 12.73 designed to appeal to community stakeholders, local Return on Cost 8.15% Upvalue $ 24,335,468 and national retail tenants, and Upvalue v. Total Costs $ 9,402,835 the core demographic of young professionals who commute daily to downtown Boston. Returns Unlevered IRR 13.3% Somerville is poised for rapid Levered Pre-Tax IRR 32.9% expansion, driven by the addition of a Green Line T-Stop, Levered After-Tax IRR 28.7% which is expected to open in 2017. Anticipating this future growth, the Somerville city government has developed a smart master plan that allows increasing density while maintaining all elements of a thriving neighborhood, including space for arts and parks. Webster Place fits in perfectly with this plan, while delivering excellent returns and long-term value. WHY INVEST IN SOMERVILLE? Capitalize on the appeal of Greater Boston Greater Boston is a thriving metro area with a highly educated, young population. The many universities in the area attract young people from all over the world, and many stay after graduation to work in the healthcare, biomedical, and high-tech industries among others. Strong public transportation, ample green space, and a thriving bar & restaurant scene make the Charles River & Boston Skyline Harvard University area an attractive place to live and play as well. Enjoy an engaged community Somerville boarders Boston to the northwest. Like many formerly industrial cities, Somerville is in an era of economic change and is now known for its arts community and hipster vibe. In addition to working-class families, artists and students, the city also attracts young professionals who work in Boston and Cambridge because of the city’s walk/bike friendly nature, vibrant nightlife, and cheaper housing. Somerville has many arts and civic groups that allows Somerville Art Installation residents and business to engage with the city’s plan for growth. Benefit from effective government Somerville has an effective city government, and has been named the best-run city in Massachusetts. It is forward thinking and eager to take advantage of the potential for Transit Oriented Development created by the Green Line Extension project, which will extend Boston’s subway (“T”) through the city. Somerville recently engaged in a planning process designed to ensure the city Somerville City Hall is “an exceptional place to live, work, play and raise a family.” Sources : Somerville.gov , google images, American Factfinder, Green Line Extension website, Union Square Revitalization Study (2012 KEY DEMOGRAPHICS & EMERGING TRENDS Young, Educated Population Need for Housing Greater Boston’s population is young and highly educated. The many universities, Boston’s housing desirable jobs for post-graduation, and livability of the city will sustain this trend moving market has largely forward. The average age is 31, with more than a third of the population in the 20-34 recovered from the age group. Almost 50% of the region has a Bachelor’s degree or higher. economic downturn, High-Skilled Jobs Multi-Modal Transportation but population growth Greater Boston has the ecosystem Cars are still the primary transit mode in and replacement necessary to attract and support all types Greater Boston, but increasingly there needs mean demand of employers, particularly in the high-tech, are alternatives available. Boston’s “T” is still high. It is biotech, and health fields. The area is is the 5th largest subway system in the estimated that a two home to a variety of MNCs, also has the country, and municipalities are or three-fold increase talent, VCs, and infrastructure that attracts increasingly adding bike lanes and in development will be startups as well. Kendall Square in ensuring pedestrian friendly design. required by 2020. Cambridge has long been a high-tech hub and Boston’s Seaport is now home to Boston Cambridge Somerville 2 2 2 Boston’s Innovation Economy. Land Area 48.28 mi 6.39 mi 4.12 mi Population 629,182 105,737 76,945 Civic Vitality Population density 12,793 / mi 16,469 / mi 18,404 / mi Greater Boston is an increasingly diverse, Median age 31.1 30.8 31.3 and Boston itself is now “majority % 20-34 year olds 34.7% 41.3% 42.7% minority.” While inequality is still an issue, % 25+ w/ Bachelor’s degree + 43.9% 73.5% 53.2% Boston has strong civic infrastructure to Median household income $53,601 $72,529 $67,118 provide support and find solutions. There % drive to work 45.3% 34.1% 50% are many neighborhood, social and % public transit to work 33.3% 26.9% 31.0% business associations devoted providing Median gross rent $1,281 $1,612 $1,419 citizens and local business with a voice. Note: Boston data includes all neighborhoods (Allston/Brighton, Roxbury, etc.) Sources American Fact finder (Census Population Summary 2010, American Community Survey 2013) Green Line Extension website, Boston Indicators Project OUR NEIGHBORHOOD: UNION SQUARE & INMAN SQUARE

Union Square was Somerville's first commercial district dating from the early 1800s, and it has been home to Boston commuters for over a century. As manufacturing declined and suburbs Old Union Square grew, Union Square faded until the area was marked for renewal in the 1980s. Today the area is active, eclectic, and T home to young professionals, students, Fluff Festival and working families. With an arts scene, hidden bars, and an annual Fluff festival, Union is a hipster paradise. Somerville is in the midst of revitalizing the area based Bronwyn Beer Hall on a 2012 planning process.

Inman Square is a culturally diverse neighborhood over the Cambridge, MA border with a strong Brazilian community. The area is also home to professionals, students and professors from neighboring MIT and Harvard. Inman’s restaurants, bars and cafes are a popular destination for young professionals. Key Webster Place Site T Union Square T Stop Site Main Business Districts Christina’s Ice Cream Summer Concert East Coast Grill Sources: Somerville website, Cambridge website, Union Square Main St website, Union Square Revitalization Study (2012), google images KEY NEIGHBORHOOD STAKEHOLDERS Our key stakeholders include transportation agencies, city government, neighborhood & arts organizations, and current residents. All are invested in creating a diverse, creative, friendly, and sustainable community that attracts young professionals & others who will bring energy and economic development to the area. Transit Stakeholders City Stakeholders Neighborhood Stakeholders Buy-in of Somerville City Union Square Main Government will ensure Streets and Union Square that we receive the Neighbors are both approvals necessary for neighborhood associations timely construction. We designed to ensure have incorporated items community collaboration identified as priorities through Somerville’s in neighborhood development. USMN focuses on recent master planning process into our economic development and USN is dedicated to The MBTA and MassDOT are design to ensure that we meet the helping residents and stakeholders have a say in jointly responsible for the identified community needs and economic the community development. Both groups will be Green Line Extension and development goals. an excellent interface to ensure we meet the therefore are critical to the The Somerville Arts needs of current residents and businesses. success of Webster Place. Council (SAC) is the local The Famers Engaging during the planning cultural council for Markets in Union phase is key to ensuring that Somerville, and sponsors Square provides our retail tenants are programs and events residents with complementarity to services designed to support local artists and arts access to fresh food. We hope to collaborate to planned for the T station. organizations, bring artists and Somerville provide a permanent space for vendors to sell Additionally, the MBTA is residents together for community their goods throughout the year. responsible for station celebrations, and advocate for the arts. The Inman Square Business operations and maintenance SAC will be critical to ensuring our multi- Association promotes Inman as that may interfere with our purpose arts space has excellent vibrant, safe, diverse, and unique, residents and customers once programming and meets the needs of the and provides a way for us to build both projects are complete. arts community. relationships across in Cambridge. Sources : Stakeholder websites, GLX website, http://somervillebeat.com/ PATH OF GROWTH: TRANSIT ORIENTED DEVELOPMENT (TOD)

The Green Line Station Rendering Extension is a $1.3B Union Square Station is federally-funded project of due for completion in 2017. the Mass. Bay Transit It is on a separate branch Authority (MBTA) and from the rest of GLX, and will Mass. Department of serve not only the T, but the Transportation (MassDOT) commuter rail and busses as to expand the T. It is well. From the new station, designed to: downtown Boston will only • Address regional be three stops away. The transport inequity station will have 198 bike • Provide better travel parking spots, reconfigured options to residents pedestrian pathways, and an & visitors area for drop-off/pick-up. • Allow fewer cars on the road & less TOD is the Path of Growth in Union Square. Increased accessibility resulting from emissions the new station creates demand for walkable, mixed-use real estate. Greater Boston is • Support municipal a good market for TOD in general because the region is highly connected: 25% of growth plans homes and 40% of business are within half a mile of the T or commuter rail. Union Seven stations are planned Square is particularly well suited for TOD because the area already has cache with key for completion by 2020. demographic groups and it is proximate to downtown Boston and Cambridge. Sources: GLX website, Center for TOD website, Metro Boston Data Common website WEBSTER PLACE LOCATION TODAY Our lot consist of three separate parcels spanning an entire block of Webster Ave. While the location is perfectly positioned across from the new T stop, the existing auto-body shops require complete demolition. However, we will preserve the community garden on the corner of Prospect St. As is visible below, Webster Place will have the advantage of being the last retail location on the edge of a highly residential neighborhood. 47

41 45 47 45 47

45

Addresses 41-47 Webster Ave. Current Uses Auto-body shops, vacant lot & community garden Current Owner Stephen Wyner (41-45), Branko Family (47) Age of buildings Mostly 1980s, one building from 1924 Zoning Mixed Use, 5 Stories Lot Size 29,397 sf Note: No Bike score available. Sources: walkscore.com, google maps & images, MBTA, Loopnet.com website THE POWER OF TEN Public Transport Power of Ten The highlighted places are only a sampling T CT2, 85, 86, 87, Restaurants Bars of what this neighborhood has to offer. The 88, and 91 busses 1 Journeyman 6 Back Bar map also shows the gap between Inman and T Future T Stop Union which Webster Place will address.

T 2 Oleana 7 Bukouski Tavern T T T T T T T Cafes Arts T 3 T 3 Bloc 11 Cafe 8 Wash. St. Art T T T T 1 6 T T T T T 8 T T 9 Taza Chocolate T T 4 1369 Coffee T T T T T T T T 0 Lorem Ipsum 5 Christina’s 9 T T T T T T 4 0 T 5 7 T T Additional Amenities T • Groceries • Green • Fitness T T T T • Necessities Space • Cafes T T 2 T • Healthcare • Restaurants • Arts & Fun T Inman Square T T Webster Place • Bars • Markets T Sources : Somerville.gov , google maps & images, MBTA website, boston.com TARGET MARKET: LOCAL RETAIL & MELENNEIALS Retail Residential Our Target Our Target Establishments that provide convenience to Young professionals who work in downtown commuters & residents as well as spaces for Boston or Cambridge but prefer to live in an socializing & creativity, with preference for area with a “neighborhoody” feel that still has local ownership. the comfort, convenience & amenities of urban living at a more affordable price point.

Their Needs Their Needs • An easy commute to work • Significant foot traffic throughout the • Shopping, entertainment and social day and night activities within walking distance • Space customizable to their needs • Pet friendly neighborhoods • Energy efficiency and low operating • Socially and environmentally conscious costs businesses/causes

Sources : Somerville.gov, Google images, Boston Indicators Project OUR CONCEPT: TOD & PLACEMAKING FOR MILLENNIALS Webster Place is a Transit Oriented Development focused on the new Union Square Green Line T Station, which is expected to open in 2017. Station Rendering

We will fill the retail void between Inman Square and Union Square, providing convenience to residents and commuters looking to pick up groceries or go to

Somerville Residential Area the gym on the way home.

Webster Place will also be a destination outside of commuting hours. A locally-owned restaurant & bar, coffee shop, space for the arts, and a neighborhood

park will create a third place for Millennials. Flour Bakery in Cambridge

By providing space for the arts, preserving and maintain green space, and engaging in place making, we are meeting major needs identified through Community Park Somerville’s recent master planning process.

Sources : Somerville.gov , Google images WEBSTER PLACE DESIGN OVERVIEW

Addresses 41-47 Webster Ave. Webster Place is designed as an open and inviting space for residents and the broader community. The courtyard between the two buildings Zoning Mixed Use, 5 Stories invites in commuters as they get off the T. While the buildings are Lot Size SF 29,397 significantly larger than their neighbors, we have used design Total SF 54,240 elements, including bay windows and a brick and clapboard exterior Net Rentable SF 45,000 (83%) to ensure the development blends in. Retail SF 9,000 Residential SF 36,000 OUR DESIGN MEETS COMMUNITY NEEDS Dining & retail Multipurpose spaces between for the arts and other Union & community purposes Inman Squares

Pedestrian and Cycling Paths

Open & Green Space

Providing convenience (and Preserving the coffee) to Community Garden commuters RETAIL SPACE CREATES A THIRD PLACE Our retail spaces are designed to meet the needs of residents & commuters looking for convenience and millennial looking for a place Building A to hang out after work and on the weekends. Street facing units are given to retail rather than building lobbies and storefronts are designed to excite the sidewalk.

Fresh Grocery Drug Store

Restaurant & Bar Boutique Coffee shop Gym & Bakery Open space for outdoor Gallery / seating Flex space

Lobby

Salon Community Garden Building B Building A Lobby RESIDENTIAL UNITS CATER TO MILLENIALS Residential Floor Rendering Residential Unit Floor Plans

Residential units are mostly one bedrooms, with a few two bedroom units for people starting families or who want a roommate. Some of the apartments have private balconies for people willing to pay more. Materials used will allow for soundproofing to block out the noise of the trains and outdoor dining. LEED SILVER CERTIFICATION

Design, equipment choice, and method of Small steps taken in this building will help it gain construction all contribute in making our the LEED Silver Certificate. Not only will this mixed-use development a sustainable building be a unique place-maker in the area building. The upfront cost is more than but will also set sustainability expectations for outweighed by the cost-saving benefits from other developments in the neighborhood. energy efficiency. MARKET COMPARABLES Sources : REIS, LoopNet, CBRE, JLL Capital Markets

PROPERTY DETAILS ACQUISITION COSTS ($) Total SF Cost/SF Cost ($) 41 Webster Avenue, Lot Size (SF) 6,534 41 Webster Avenue 6,534 $77.94 $509,250 45 Webster Avenue, Lot Size (SF) 15,458 45 Webster Avenue 15,458 $75.41 $1,165,650 47 Webster Avenue, Lot Size (SF) 7405 47 Webster Avenue 7,405 $143.17 $1,060,200

TOTAL Lot Size (SF) 29,397 Appraised Tax Value Due to a lack of recent TOTAL Developed Area (SF) 83,637 41 Webster Avenue $339,500 comparable sales, we estimated acquisition Floor-Area Ratio (FAR) 3 45 Webster Avenue $777,100 47 Webster Avenue $706,800 price by inflating the Gross Rentable Area 54,240 appraised tax value by Rentable Area Ratio 83% Market Value Adjustment 50% 50%.

Net Rentable Area 45,019 Sub-Total of Acquisition Costs $2,735,100.00 REIS Comparable Group Summary Stats - Residential Cap rates for Low Mean Median High multifamily housing in Current Asking Rent/Unit ($) 1,223 2,794 2,545 4,189 Current Vacancy Rate (%) 0 1.7 1.2 5 Boston are between Property Size (units) 40 163 117 710 4% and 6% and Year Built 1974 1982 1983 1989 expected to remain Studio 1BR 2BR 3BR flat. Vacancy rates in Current Asking Rent/Unit ($) 2,064 2,381 2,931 4,869 Boston have dipped to Unit Size (SF) 536 777 1,099 1,444 Units 3 67 84 9 4% while rent Current Asking Rent/SF 4.19 3.12 2.73 3.37 increases have steadily climbed to 7% per year REIS Comparable Group Summary Stats - Retail Low Mean Median High (as of 2013). We have Current Asking Rent/SF (Anchor)($) 4.93 15.38 15.85 32.28 taken a slightly more Current Asking Rent/SF (Nonanchor)($) 12.44 28.59 27.14 87.09 conservative approach Current Vacancy Rate (%) 0 2.3 0 25 and assumed a 5% Operating Expenses/SF ($) 3.5 8.77 7.43 30.19 vacancy rate and a 5% Property Size (SF) 11,450 119,089 76,499 496,600 Year Built 1920 1973 1975 2013 annual rent increase. FINANCIAL SUMMARY

Cost and Revenue Assumptions $/ Sq Ft Key Ratios Financing Assumptions Purchase Price $ 2,735,100 $60.75 Gross Square Feet 83,637 Equity 20.00% $ 2,986,527 Hard Construction Costs $ 9,179,722 $203.91 Net Leasable Square Feet 45,019 Const Loan (7%) 80.00% $ 11,946,106 Soft Costs $ 1,908,944 $42.40 Total 100.00% $ 14,932,633 Contingency $ 1,108,867 $24.63 $ - Cost/Ft $ 331.69 Perm Loan $ 12,373,462 Total $ 14,932,633 $331.69 Expense/Foot $ 12.73 Annual Monthly Gross Residential Revenues $ 1,282,147 Return on Cost 8.15% Interest Rate 4.00% 0.33% Gross Commercial Revenues $ 243,104 Upvalue $ 24,335,468 Amort Period 30 360 Gross Other Revenues $ - Upvalue v. Total Costs $ 9,402,835 Payment 708,874 59,073

Tax on Property Sale Sensitivity Analysis Sale Price (Capped Year 6 NOI) $ 24,335,468 Levered Pre- Levered After- Remaining Mortgage at end of year 5 (11,191,488) Cap Rate Sale Price Upvalue Tax IRR Tax IRR Before Tax Cash Flow at Sale 13,143,980 4.00% 30,419,335 15,486,702 40.7% 36.4% 4.25% 28,629,962 13,697,329 38.6% 34.4% Appreciation 9,402,835 4.50% 27,039,409 12,106,776 36.7% 32.4% Accumulated Depreciation 1,540,222 4.75% 25,616,282 10,683,649 34.7% 30.6%

Tax on Appreciation 15.0% 1,410,425 5.00% 24,335,468 9,402,835 32.9% 28.7% Tax on Depreciation 25.0% 385,055 5.25% 23,176,636 8,244,003 31.1% 27.0% Tax Bill at Sale 1,795,481 5.50% 22,123,153 7,190,519 29.3% 25.3% 5.75% 21,161,276 6,228,643 27.6% 23.6% After Tax Cash Flow at Sale $ 11,348,499 6.00% 20,279,556 5,346,923 25.9% 21.9%

Returns Our development is a solid investment, with expected return on cost of 8.15% Unlevered IRR 13.3% and unlevered IRR of 13.3%, assuming a 5% cap rate. These returns are driven by 1) our relatively low acquisition cost (first-mover advantage), 2) our Levered Pre-Tax IRR 32.9% savings on parking (not necessary due to transit strength), and 3) the overall Levered After-Tax IRR 28.7% positive demographics of the area (educated young professionals). CONSTRUCTION DRAWDOWN

CONSTRUCTION DRAW (MONTHLY) % Closing Month Paid at 0 1 2 3 4 5 6 7 8 9 10 11 12 Budget Close 1/1/2015 2/1/2015 3/1/2015 4/1/2015 5/1/2015 6/1/2015 7/1/2015 8/1/2015 9/1/2015 10/1/2015 11/1/2015 12/1/2015 1/1/2016 Land Cost Land/Property Acquisition $2,735,100 100% $2,735,100 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Hard Costs Demolition / Environmental Abatement $116,272 10% $11,627 $8,720 $8,720 $8,720 $8,720 $8,720 $8,720 $8,720 $8,720 $8,720 $8,720 $8,720 $8,720 Building Construction $8,321,490 10% $832,149 $624,112 $624,112 $624,112 $624,112 $624,112 $624,112 $624,112 $624,112 $624,112 $624,112 $624,112 $624,112 Green Space/Landscaping $741,960 10% $74,196 $55,647 $55,647 $55,647 $55,647 $55,647 $55,647 $55,647 $55,647 $55,647 $55,647 $55,647 $55,647

Soft Costs Construction Management Fee $367,189 10% $36,719 $27,539 $27,539 $27,539 $27,539 $27,539 $27,539 $27,539 $27,539 $27,539 $27,539 $27,539 $27,539 Initial Site Survey $10,000 100% $10,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Foundation Analysis $40,000 100% $40,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Architecture and Engineering Fees $642,581 10% $64,258 $48,194 $48,194 $48,194 $48,194 $48,194 $48,194 $48,194 $48,194 $48,194 $48,194 $48,194 $48,194 Developer Fees $458,986 10% $45,899 $34,424 $34,424 $34,424 $34,424 $34,424 $34,424 $34,424 $34,424 $34,424 $34,424 $34,424 $34,424 LEED Construction Premium $275,392 10% $27,539 $20,654 $20,654 $20,654 $20,654 $20,654 $20,654 $20,654 $20,654 $20,654 $20,654 $20,654 $20,654 Legal Fees $91,797 10% $9,180 $6,885 $6,885 $6,885 $6,885 $6,885 $6,885 $6,885 $6,885 $6,885 $6,885 $6,885 $6,885 Permit Fees (City of Boston) $15,000 100% $15,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Plan Review Fees (City of Boston) $8,000 100% $8,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Contingency $1,108,867 0% $0 $92,406 $92,406 $92,406 $92,406 $92,406 $92,406 $92,406 $92,406 $92,406 $92,406 $92,406 $92,406

Total Cost $14,932,633

Monthly Draw $3,909,667 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581

Equity $2,986,527 Available $2,986,527 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Draw $3,909,667 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Ending Balance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Remaining to Fund $923,140 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581

Loan $11,946,106 Available Draw $923,140 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 $918,581 Accrued Interest 7.00% $0 $5,385 $10,775 $16,196 $21,649 $27,134 $32,650 $38,199 $43,780 $49,394 $55,041 $60,720 $66,433 Ending Balance $923,140 $1,847,106 $2,776,461 $3,711,237 $4,651,467 $5,597,181 $6,548,412 $7,505,191 $8,467,552 $9,435,527 $10,409,148 $11,388,448 $12,373,462

We anticipate a 12 month construction timeline. The first $3MM of construction costs will be covered by our contributed equity and the remainder will be covered by a construction loan. The construction loan will be funded monthly and accrue interest at 7%. Once the construction is complete, we will roll over to permanent financing, at an interest rate of 4% and a 30 year term. PRO FORMA

Rental Increase Projections 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Operating Expense Projections 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%

Year 1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Operating Revenues $/ Sq Ft Monthly Annual Annual Annual Annual Annual Annual Gross Scheduled Income $33.88 $ 127,104 $ 1,525,250 $ 1,601,513 $ 1,681,589 $ 1,765,668 $ 1,853,952 $ 1,946,649 Vacancy Rate 5.0% 6,355 76,263 80,076 84,079 88,283 92,698 97,332 Gross Rental Income $32.19 120,749 1,448,988 1,521,437 1,597,509 1,677,385 1,761,254 1,849,317 Utility Reimbursement 2.0% 2,463 29,559 30,151 30,754 31,369 31,996 32,636 Gross Income 123,212 1,478,547 1,551,588 1,628,263 1,708,753 1,793,250 1,881,953

Operating Expenses % of Gross Inc Repairs and Maintenance 5.0% $1.64 6,161 73,927 75,406 76,914 78,452 80,021 81,622 Property Management Fees 4.0% $1.31 4,928 59,142 60,325 61,531 62,762 64,017 65,297 Admin 2.0% $0.66 2,464 29,571 30,162 30,766 31,381 32,009 32,649

Property Taxes 20.0% $6.57 24,642 295,709 301,624 307,656 313,809 320,085 326,487 Insurance 0.8% $0.25 924 11,089 11,311 11,537 11,768 12,003 12,243 Salaries and Wages 3.0% $0.99 3,696 44,356 45,244 46,148 47,071 48,013 48,973 Utilities 4.0% $1.31 4,927 59,119 60,301 61,507 62,737 63,992 65,272 Total Op. Exp. 38.7% $12.73 46,788 572,914 584,372 596,060 607,981 620,140 632,543

Net Operating Income 61.3% $19.46 73,961 876,074 937,065 1,001,450 1,069,404 1,141,113 1,216,773 Note: NOI/ft $1.64 $19.46 $20.81 $22.24 $23.75 $25.35 $27.03 Less Debt Service $15.75 59,073 708,874 708,874 708,874 708,874 708,874

Before Tax Cash Flow $3.71 14,888 167,200 228,192 292,576 360,530 432,240 Note: Before Tax ROI 5.60% 7.64% 9.80% 12.07% 14.47% Plus Principal Reduction $4.84 18,158 217,901 226,779 236,018 245,634 255,641 Note: Interest on Loan $10.91 490,972 482,095 472,855 463,240 453,232 Less Dep. Exp. - Building (Yrs) 29.80 -$6.84 (25,670) (308,044) (308,044) (308,044) (308,044) (308,044) Taxable income $1.71 6,421 77,057 146,926 220,550 298,120 379,837 Taxes 35.0% $0.60 2,248 26,970 51,424 77,192 104,342 132,943 After Tax Cash Flow $3.11 $ 11,686 $ 140,230 $ 176,767 $ 215,384 $ 256,188 $ 299,297 Note: After Tax ROI 4.70% 5.92% 7.21% 8.58% 10.02%

Capitalized value at: 5.00% $389.20 $ 17,521,481 $ 18,741,304 $ 20,028,992 $ 21,388,078 $ 22,822,270 $ 24,335,468 Remaining Mortgage $ 12,155,560 $ 11,928,782 $ 11,692,763 $ 11,447,130 $ 11,191,488