A 150-Unit Multifamily Investment Opportunity Value-Add Property Near the Booming Port of Corpus Christi

Confidential Offering Memorandum 10660 Leopard St, Corpus Christi, TX 78410 Offered All Cash or as a Loan Assumption OFFER PROCESS EXCLUSIVE REPRESENTATION Newmark Knight Frank (Newmark Knight Frank) has been exclusively retained to represent the Seller in the disposition of Yardarm Apartment Homes. All inquiries about the Offering or the Property should be directed to Newmark Knight Frank.

OFFERING PROCESS The Property is being offered on an All Cash or Loan Assumption basis to qualified purchasers. Prospective purchasers will have the opportunity to visit the Property through scheduled tours with Newmark Knight Frank. Please do not contact the on-site management directly.

OFFER REQUIREMENTS Offers should be presented in the form of a non-binding Letter of Intent, and must include at least:

ASSET PRICING • Due Diligence and Closing Time frame • Earnest Money Deposit • Description of Debt/Equity Structure • Qualifications to Close

Purchase terms shall require cash to be paid at closing. Offers should be delivered to the attention of Brad Shaffer or Brandon Miller via fax or email.

FINANCING For parties interested in receiving debt quotes, please contact our Debt and Structured Finance team, Adam Allen, Tip Strickland, David Schwarz or Purvesh Gosalia. Newmark Knight Frank facilitates agency, life company, bank, bridge, and mezzanine financing options.

UNDERWRITING For questions regarding the underwriting presented in this offering memorandum please contact Carter Mizell at 713-713-554-0133 or [email protected].

PROPERTY TOURS To accommodate the Property’s ongoing operations, Newmark Knight Frank requests 24-hour advance notice to schedule a tour. PRESENTED BY INVESTMENT SALES BRAD SHAFFER BRANDON MILLER TAYLOR GASPARD [email protected] [email protected] [email protected] T 713-337-5806 T 713-554-0132 T 713-337-5805 M 713-775-6888 M 956-533-4237 M 979-709-8554

DEBT AND STRUCTURED FINANCE ADAM ALLEN TIP STRICKLAND DAVID SCHWARZ PURVESH GOSALIA [email protected] [email protected] [email protected] [email protected] T 713-425-5433 T 713-337-5810 T 713-337-5811 T 713-300-7954 M 713-824-6066 M 832-724-4288 M 713-412-9055 M 313-570-5221 TABLE OF CONTENTS

04 | EXECUTIVE SUMMARY

06 | INVESTMENT HIGHLIGHTS

24 | PROPERTY INFORMATION

34 | FINANCIAL ANALYSIS

38 | RENT COMPARABLES

42 | APPENDIX

Newmark Knight Frank 1700 Post Oak Blvd | 2 BLVD Place, Suite 400 | Houston, TX 77056 T 713-599-1800 | F 713-599-1801 79 3512 ARANSAS PASS 893 Redﬁsh Bay 2985

1074 361 Rincon Bayou PORTLAND 128 RIVER HILLS COUNTRY CLUB HUNT AIRPORT

DEL MAR COLLEGE NORTHWEST CENTER Nueces Bay

73 1889 Yardarm Corpus Christi Ship Channel FIVE POINTS $360M expansion project underway 35 SHOPPING CENTER 37 FLINT HILLS PORT ARANSAS CORPUS CHRISTI RESOURCES MEDICAL CENTER NORTHWEST 407 Harbor Bridge

24 1634 New $803M Harbor Bridge VALERO MAIN Under Construction 2292 PLANT (WEST) La Quinta 44 CITGO PETROLEUM CORP Ship Channel ROBSTOWN TURNER INDUSTRIES VALERO BILL Deepened to 45’ in 2014 69E 3386 GREEHEY REFINERY 40 GROUP 544 CAMERON NORTHWEST CORPUS CHRISTI DEL MAR COLLEGE 361 WEST CAMPUS 44 BAKER HUGHES Corpus Christi Bay 286 THE OUTLETS AT US CUSTOMS AND DEL MAR COLLEGE CORPUS CHRISTI BAY BORDER PROTECTION LOZANO EAST CAMPUS CORPUS CHRISTI GOLF CENTER INTERNATIONAL AIRPORT

763

1694 CENTRAL CITY 358 DEL MAR CED PORT ROYAL BAY AREA OCEAN RESORT & CONFERENCE 892 OSO BEACH MUNICIPAL retail: GOLF COURSE CENTER THE SHOPS TEXAS A&M employers: AT LA PALMERA CORPUS CHRISTI SUNRISE MALL MUSTANG ISLAND MOORE PLAZA Oso Bay 357 medical: CABANISS FIELD NAVAL AIR STATION 665 43 CORPUS CHRISTI 17 13 358 CORPUS CHRISTI CHRISTUS SPOHN 57 MEDICAL CENTER HOSPITAL

286 CORPUS CHRISTI

DEL MAR COLLEGE 24 2444 (NEW CAMPUS) FLOUR BLUFF SOUTH SIDE

892 WALDRON EXECUTIVE SUMMARY FIELD NOLF 79 3512 ARANSAS PASS 893 Redﬁsh Bay 2985

1074 361 HIGHLIGHTS PROPERTY SUMMARY Rincon Bayou PORTLAND 128 RIVER HILLS 10660 Leopard Street COUNTRY CLUB HUNT EXCELLENT VALUE-ADD OPPORTUNITY ADDRESS AIRPORT Corpus Christi, TX 78410 »» 74 unit interiors have been upgraded with modern NUMBER OF UNITS 150 DEL MAR COLLEGE finishes NORTHWEST CENTER Nueces Bay YEAR COMPLETED 1984 73 »» Over half of units still have classic interiors 1889 Yardarm Corpus Christi Ship Channel NET RENTABLE SF 125,304 SF FIVE POINTS $360M expansion project underway 35 »» Additional opportunities to increase income SHOPPING CENTER 37 FLINT HILLS PORT ARANSAS AVERAGE UNIT SIZE 835 SF CORPUS CHRISTI RESOURCES include installing washer & dryer appliances, 407 MARKET RENT PER MEDICAL CENTER NORTHWEST Harbor Bridge renovating the clubhouse, and charging back for $805 24 New $803M Harbor Bridge 1634 UNIT VALERO MAIN Under Construction 2292 cable PLANT (WEST) La Quinta 44 CITGO PETROLEUM CORP Ship Channel MARKET RENT PER SF $0.96 ROBSTOWN TURNER INDUSTRIES VALERO BILL Deepened to 45’ in 2014 69E 3386 GREEHEY REFINERY 40 GROUP OCCUPANCY 93% 544 FAVORABLE MULTIFAMILY FUNDAMENTALS CAMERON NORTHWEST CORPUS CHRISTI DEL MAR COLLEGE 361 NUMBER OF 13 two-story residential buildings; 1 WEST CAMPUS »» Corpus Christi experienced strong rent growth 44 BUILDINGS leasing office throughout 2018 and this trend is expected to BAKER HUGHES Corpus Christi Bay ACREAGE & DENSITY 5.81 Acres | 25.83 Units/Acre 286 continue THE OUTLETS AT US CUSTOMS AND DEL MAR COLLEGE PARKING 239 total spaces CORPUS CHRISTI BAY BORDER PROTECTION LOZANO EAST CAMPUS »» Average occupancy for the market currently sits CORPUS CHRISTI GOLF CENTER Tuloso-Midway Primary School INTERNATIONAL AIRPORT above 93% TULOSO-MIDWAY 763 Tuloso-Midway Intermediate School 1694 PORT ROYAL INDEPENDENT CENTRAL CITY 358 DEL MAR CED »» There are only two conventional multifamily Tuloso-Midway Middle School BAY AREA OCEAN RESORT SCHOOL DISTRICT & CONFERENCE 892 OSO BEACH MUNICIPAL properties (204 units) under construction in the Tuloso-Midway High School retail: CENTER GOLF COURSE market, and the nearest is over 16 miles away THE SHOPS TEXAS A&M employers: AT LA PALMERA CORPUS CHRISTI SUNRISE MALL MUSTANG ISLAND MOORE PLAZA Oso Bay PROXIMITY TO EMPLOYMENT 357 medical: CABANISS FIELD NAVAL AIR STATION LOAN DETAILS 665 »» Yardarm is just off of Interstate-37, one of the 43 CORPUS CHRISTI 17 13 358 CORPUS CHRISTI city’s main thoroughfares ORIGINAL AMOUNT $7,085,000 CHRISTUS SPOHN 57 MEDICAL CENTER HOSPITAL »» Several of the area’s top employers are within a 1ST PAYMENT DATE 9/1/2017 CORPUS CHRISTI 286 15-minute drive, including Flint Hills, Valero, CITGO, MATURITY DATE 8/1/2027 DEL MAR COLLEGE Bay Ltd., Turner Industries, and Kane Beef 24 2444 (NEW CAMPUS) FLOUR BLUFF INTEREST RATE 4.67% SOUTH SIDE »» The nearby Port of Corpus Christi is currently AMORTIZATION PERIOD (MONTHS) 360 892 undergoing several major expansion projects, WALDRON INTEREST ONLY PERIODS 24 FIELD NOLF totaling over $1.163 billion INVESTMENT HIGHLIGHTS

EXCELLENT VALUE-ADD POTENTIAL

Classic Unit Upgraded Unit

Interior Value-Add Potential »» Current owner has implemented a value-add program across 74 units which includes vinyl plank flooring, updated light fixtures, cabinet fronts and hardware, resurfaced countertops, tile backsplash, black appliances, and updated paint »» A future owner has the opportunity to carry out upgrades on the remaining 76 units and potentially capture rent premiums of $75 to $100 »» Effective rents at the Property are $84 below rents at comparable properties, supporting the ability to increase rents through upgrading interiors »» All units are equipped with washer/dryer connections - a future owner has the opportunity to implement full washer/dryer units throughout all units in order raise rents

Additional Opportunities to Increase Income »» There are currently 20 rent-restricted (LURA details on next page) leases assigned to upgraded units; therefore, these units are not achieving their maximum rent potential • There are plenty of classic units available in the buildings restricted by the LURA - a future owner has the opportunity to transfer all rent-restricted leases into classic units and maximize rents in the upgraded units »» Clubhouse is currently used as storage - possibility to convert this space into an internet café/fitness center/business center »» Cable is currently included in the rent - a future owner has the opportunity to charge back for cable • Comparable properties in the area charge back for cable at approximately $20 per unit per month

8 NEWMARK KNIGHT FRANK AFFORDABLE HOUSING PROGRAM REQUIREMENTS

Yardarm has a Resolution Trust Corporation (RTC) LURA that applies affordability restrictions to 8 of the residential buildings (shown in the site plan below). It requires 32 units to be reserved for “lower-income families” with incomes that do not exceed 80% of the AMI (adjusted by size of household). Further, at least 18 of the 32 units must be reserved for “very low-income families” with incomes that do not exceed 50% of the AMI (adjusted by size of household). The maximum rents for these units is established by the RTC (or their agent) and current thresholds are shown in the tables below.

Income LimitsIncome Limits Size of HouseholdSize of Household 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 50% 50% $22,550 $22,550$25,800 $25,800$29,000 $29,000$32,200 $32,200$34,800 $34,800$37,400 $37,400$39,950 $39,950$42,550 $42,550 80% 80% $36,050 $36,050$41,200 $41,200$46,350 $46,350$51,500 $51,500$55,650 $55,650$59,750 $59,750$63,900 $63,900$68,000 $68,000

Rent LimitsRent Limits Number ofNumber Bedrooms of Bedrooms 0 0 1 1 2 2 3 3 4 4 5 5 50% 50% $544 $544$625 $625$703 $703$831 $831$960 $960$1,013 $1,013 80% 80% $713 $713$818 $818$921 $921$1,091 $1,091$1,259 $1,259$1,330 $1,330

Storage LURA Peachtree St LURA LURA LURA

LURA

Dumpster LURA LURA Ofﬁce

Pool

Hot Tub BBQ Grills

Pool

Dumpster

Leopard St

YARDARM APARTMENT HOMES 9 FAVORABLE MULTIFAMILY FUNDAMENTALS181

ODEM 1069 »» There are currently only 2 conventional properties under construction in the Corpus Christi market. The current state of supply in the submarket will have little to no impact on Yardarm and indicates

79 3512 favorable multifamily fundamentals moving forward ARANSAS PASS 893 Redﬁsh Bay • A. Northshore Phase II – 96 units to be completed early 2019 2985 a 1074 361 • B. Manhattan PhaseRincon II – Bayou108 units to be completed early 2019 PORTLAND 128

Nueces Bay

73 ardarm

35 PORT ARANSAS

1889 407 37 24 1634

2292 ROBSTOWN 3386 40 69E

544

44 361 NORTHWEST CORPUS CHRISTI 44 Corpus Christi Bay

763

286

358 1694 CENTRAL CITY BAY AREA

892

17 Oso Bay MUSTANG ISLAND Period 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4357Q19

665 43 Effective Rent Growth 2.90% 3.50% 2.80% 2.60% 2.50% 1.60% 2.70% 3.30% 13 358 Changes In Occupancy Rate 1.30% 1.40% 2.10% 0.30% 1.40% 1.70% 0.40% 0.20% 57 Current Period Occupancy 92.10% 92.80% 93.40% 93.50% 93.60% 94.30% 93.70% 93.70% *Data supported by Axiometrics* 286 B

24 Corpus Christi has experienced positive rent and2444 occupancy growth over the FLOUR BLUFF past year and is projected to continue this upward trend throughout 2019SOUTH SIDE Under Construction 892

10 NEWMARK KNIGHT FRANK 181 EAST AERIAL

ODEM 1069

Downtown Corpus Christi

79 3512 ARANSAS PASS 893 Redﬁsh Bay 2985 M & G Chemicals a Corpus Christi Ship Channel 1074 361 Rincon Bayou PORTLAND 128 Bay Ltd McJunkin Red Flint Hill Resources Turner Industries Kane Beef Man Corporation Tuloso-Midway Intermediate School Nueces Bay Tuloso-Midway

73 ardarm Middle School 37 35 558 PORT ARANSAS

1889 407 37 Home Values Up To 24 1634 287K Tuloso-Midway Primary School 2292 Hayden ROBSTOWN Home Values Up To 3386 & Co 40 69E 252K 544 Northside 44 361 NORTHWEST CORPUS CHRISTI MCKINSIE RD Family Medicine 44 Corpus Christi Bay

763

286 PEACHTREE ST Home Values Up To

358 239K 1694 CENTRAL CITY STONEWALL BLVD BAY AREA

892

LEOPARD ST

17 STARLIGHT LN Oso Bay MUSTANG ISLAND 357

665 43 13 358

286 B

24 2444 FLOUR BLUFF SOUTH SIDE Under Construction 892

YARDARM APARTMENT HOMES 11 PROXIMITY TO MAJOR EMPLOYERS

BAY LTD. VALERO BILL GREEHEY OIL REFINERY (6 miles SE) (8.2 miles SE)

FLINT HILLS RESOURCES KANE BEEF 893 (3.3 miles E) (2.6 miles SE)

TURNER INDUSTRIES 1074 CITGO (2.7 miles SE)Rincon Bayou (10.5 miles SE)

73 ardarm Flint Hills Resources Nueces Bay Corpus Christi Ship Channel orpus hristi Medical Valero Oil Reﬁnery M epansion proect underway enter Northwest Bay Ltd. ITGO 1889 407 Kane Beef 37 24 1634 Air Liquide Harbor Bridge M unkin Red Man orp. 2292 New M Harbor Bridge Under Construction 69E 3386 40 Turner Industries 544 Valero Bill Greehey Oil Reﬁnery 44 H S onstructors 44 Berry ontracting Baker Hughes L F Distributors

763

S ustoms and Border Protection 286 Major Employers

Other Employers1694 358

892 12 NEWMARK KNIGHT FRANK

17 PORT OF CORPUS CHRISTI

Contributions to the Texas Economy

79 »» $16.9 billion in total trade

893 »» $9 billion in gross state product »» 63,000 direct and indirect jobs

1074 Rincon Bayou Ship Channel Expansion

Port of Corpus Christi recently approved a project partnership agreement with the U.S. Army Corps of Engineers for deepening & widening of the Corpus Christi Ship Channel 35 »» Project Specs: »» $306 million estimated total cost 73 ardarm Flint Hills Resources Nueces Bay »» 36-miles from the Gulf of Mexico to the Viola Corpus Christi Ship Channel orpus hristi Medical Valero Oil Reﬁnery M epansion proect underway »» 54 feet MLLW (currently 47 feet) »» 530 feet wide (currently 400 feet) enter Northwest Bay Ltd. ITGO Port customers US Crude Oil 1889 407 »» 700-acres of beneficial use sites Kane Beef 37 and growing Exporter in the 24 1634 Air Liquide »» Adding barge shelves (8% YOY) Nation Harbor Bridge M unkin Red Man orp. 2292 New M Harbor Bridge The expansion project recently reached a new milestone - the Under Construction first phase, a $92 million dredging contract, was awarded to Great Billion Largest US Port 69E 3386 Lakes Dredge and Dock Company on January 3, 2019 Privately funded 40 Turner Industries PORT OF in total 544 industrial Valero Bill Greehey Oil Reﬁnery tonnage 44 projects CORPUS H S onstructors New Harbor Bridge CHRISTI 44 Berry ontracting M »» $803 million venture between the Port and TxDOT Billion Baker Hughes L F Distributors »» New six-lane, cable-stayed bridge estimated to last 170 years Economic Tons of cargo activity for the annually 763 »» Raising bridge clearance to 205 ft S ustoms and Border Protection US Port related 286 »» Estimated completion in 2020 jobs

1694 358

892 YARDARM APARTMENT HOMES 13

17 MAJOR EMPLOYERS

BAY LTD FLINT HILL RESOURCES TURNER INDUSTRIES »» Employs over 1,700 in the area »» Employs over 1,200 in the area »» Employs over 1,100 in the area »» Bay Ltd. has offices and operations »» Flint Hills Resources is an independent »» Turner Industries has provided turnkey throughout the U.S., Latin America, Canada, company and wholly owned subsidiary of heavy industrial services which focus on and other International locations, and is a Koch Industries, one of the largest private reducing downtime, minimizing costs, full-service multi-discipline construction, companies in America with estimated annual increasing reliability and achieving fabrication, and maintenance contractor. revenues as high as $100 billion operational excellence »» An industry leader at reducing air emissions through Fuels and Aromatics, Olefins and Polymers, Biofuels and Ingredients, and Pipelines

14 NEWMARK KNIGHT FRANK MAJOR EMPLOYERS

VALERO BILL GREEHEY OIL REFINERY KANE BEEF CITGO »» Employs over 800 in the area »» Employs over 750 in the area »» Employs over 550 in the area »» Two plants, the East Plant and the West Plant »» Kane Beef has been involved in the Texas »» The CITGO Corpus Christi Refinery has matured into one of the most sophisticated »» The East Plant is capable of processing Beef industry for more than 60 years, serving and efficient fuel and petrochemical heavy, high-sulfur crude oil into light ranchers as the primary beef processor of refineries in the nation with a crude refining products, asphalt and petroleum coke South Texas capacity of approximately 157,000 barrels »» Kane Beef works closely at Texas A&M »» The West Plant is considered one of per day the most complex refineries in the world University as well as other universities »» The CITGO Corpus Christi Refinery has and specializes in the production of throughout the country been designed, engineered and built to environmentally clean fuels and products, refine heavy, sour crude oils supplied primarily RFG and ultra-low-sulfur diesel by PDVSA into high-quality, finished »» Combined, the East and West plant facilities petroleum products have a total feedstock throughput capacity of about 370,000 BPD

YARDARM APARTMENT HOMES 15 DIVERSE EMPLOYMENT

INDUSTRY COMPOSITION

Mining, logging, and construction, 14% Government , 18%

The Corpus Christi MSA benefits from a diversified employment base. Manufacturing, 4%

The five major industries are government (18%), trade, transportation, Other services, 3% and utilities (17%), education and health services (16%), mining, logging, and construction (14%), and Leisure and Hospitality (13%). Trade, transportation, and The local economy is anchored by the Port of Corpus Christi and its Leisure and hospitality, utilities, 17% two military bases, the Naval Air Station and Corpus Christi Army 13% Depot

Information, 1% Financial activities , 4% Education and health services, 16% Professional and business services, 9% Major Corpus Christi Employers 465K POPULATION (2017) Corpus Christi Independent School District 5,944 7th Largest MSA in Texas Naval Air Station Corpus Christi 4,500 8.7% increase from 2010

H.E.B. Stores & Bakery 3,840

CHRISTUS Spohn Hospital 3,400

Corpus Christi Army Depot 3,400

City of Corpus Christi 3,202 196K TOTAL EMPLOYEES (Nov’18)

Driscoll Children's Hospital 2,136 Up 4,000 since June ‘18

Corpus Christi Medical Center 1,885

Kiewit Oﬀshore Servivces 1,750

Bay Ltd. 1,700 Del Mar College 1,500 4.3% UNEMPLOYMENT RATE Nueces County 1,440 5.5% in 2017 – total decrease of 1.2% Flint Hills Resources 1,200

Texas A&M University - Corpus Christi 1,180

Turner Industries 1,100

Valero Bill Greehey Oil Reﬁnery 800 5.6 MONTHS SINGLE FAMILY INVENTORY (Oct’18) Kane Beef Processors LLC 750 Below 6 months indicates a tight market CITGO 550

0 1,000 2,000 3,000 4,000 5,000 6,000

16 NEWMARK KNIGHT FRANK NAVAL AIR STATION/ARMY DEPOT CORPUS CHRISTI

Corpus Christi is home to two large military installations, the Naval Air Station and the Corpus Christi Army Depot. Both installations have a significant impact to both the local and State-wide economy.

Impact to the local economy Impact to the Texas economy »» 8,000+ people employed »» 8,483 direct employment and 22,549 indirect »» Serves a population of 43K+ people employment »» $1.8 billion in annual disposable personal »» $4.6 billion total output income »» $2.9 billion gross domestic product »» Average military wage of $68K (31% higher than the State Average) »» 1 out of 10 people in Nueces County are associated with both installations

YARDARM APARTMENT HOMES 17 MEDICAL EMPLOYMENT

CHRISTUS Spohn Hospital Corpus Christi – South

CHRISTUS Spohn Hospital Corpus Christi CHRISTUS Spohn Hospital Corpus –Shoreline Christi – Memorial Corpus Christi Medical Center Northwest Christus Spohn Health System • Certified and accredited for its excellent stroke treatment and »» The largest hospital system in South Texas consisting of six cardiovascular care hospital campuses and six family health centers with over 5,000 • Developing a new 420,000 square foot space with a new employees inpatient tower and 200-beds »» CHRISTUS Spohn Hospital Corpus Christi – South • 158-bed medical campus Corpus Christi Medical Center • Provides a wide range of services focused on caring for women »» A 631-bed Health Care System offering a comprehensive scope and newborns of inpatient and outpatient medical, surgery, and specialty services • The facility includes a Level II Neonatal Intensive Care Unit, DaVinci robotic surgery, Intensive Care Units, and women’s »» More than 1,200 medical professionals and 600 medical staff services including obstetrics and gynecology members »» CHRISTUS Spohn Hospital Corpus Christi – Memorial Corpus Christi Medical Center Northwest • 397-bed medical campus »» Located less than 4 miles from the property, Northwest Regional • Provides a wide range of surgical and medical services has been providing quality health care to meet the needs of • Only Level II Trauma Center South of Austin that is staffed with Corpus Christi and surrounding communities since 1965 teams of specialists available 24/7 »» Offers a comprehensive scope of services which include a »» CHRISTUS Spohn Hospital Corpus Christi –Shoreline 24-hour Emergency Room, Behavioral Health, Geriatric Care, Outpatient Services, Radiology Services, and Laboratory • 557-bed medical campus Services • One of the top ten cardiovascular hospitals in the country

18 NEWMARK KNIGHT FRANK EDUCATION Texas A&M University - Corpus Christi

Texas A&M University-Corpus Christi or more commonly known as the “Island University” was founded in 1947 and offers more than 80 bachelor’s, master’s, and doctoral degree programs. The University has a student enrollment of 9,960 undergraduate and 2,242 graduate students.

U.S. News & World Report recognized for online graduate nursing program Top 25 in Texas for most affordable four-year online programs

Del Mar College

Del Mar College was founded in 1935 and sees over 25,000 credit and continuing education non-credit students each year and had an enrollment of 12,034 in Fall 2016. The College also has a faculty and staff of 1,500 full-time employees. It offers over 50 Associate in Arts and Associate in Science degrees. In addition to Associates Degrees the College also provides Enhanced Skills Certificates, Certificates of Achievement and Marketable Skills Achievement awards in more than 200 occupational fields. »» Voters recently approved a $139 million bond package to fund the first of three construction phases for Del Mar’s new campus on the Southside of Corpus Christi »» The first phase of the project can accommodate up to 6,000 students and if enrollment reaches specific milestones, the campus could ultimately serve up to 20,000 students

Over 86% pass rate for required licensing or certification for employment 88% of graduates were either employed and/or attending college within the one year of graduation, compared to 86% statewide

YARDARM APARTMENT HOMES 19 NEW DEVELOPMENTS

EXXONMOBIL-SABIC PETROCHEMICAL CHENIERE ENERGY TIANJIN PIPE COMPANY PROJECT »» On April 19, ExxonMobil and Saudi Basic »» Officially opened phase I of its $15 billion »» Investing over $1 billion to build a Industries Corp chose a site in San Patricio Corpus Christi LNG export facility in seamless steel pipe manufacturing facility County, near Corpus Christi November of 2018 on a 253-acre site »» The $10 billion proposed plant will provide »» The company expects phase II to enter »» The manufacturing facility will total 11,000 construction jobs over a five-year commercial service in the second half of 1.6 million square feet and will provide period, 600 direct jobs with $90,000 average 2019 with phase III following in the second approximately 2,000 construction related salaries, and 3,500 indirect jobs after half of 2021 jobs completion »» The facility is estimated to create 1,800 »» ExxonMobil is projecting to generate construction jobs, 225 direct permanent jobs, $22 billion in economic output during and 8,000 indirect permanent jobs construction and another $50 billion during the first six years of operation

20 NEWMARK KNIGHT FRANK NEW DEVELOPMENTS

OCCIDENTAL CHEMICAL CORP. CHEMOURS VOESTALPINE NUECES RIVER RAIL YARD (OXYCHEM) »» Recently opened a $1.5 billion »» Broke ground in Feb’17 on the »» The world’s largest »» Phase I was built for $17.8 ethylene plant in Ingleside world’s largest manufacturing manufacturer of specialty steel million and features a 9,920 which will produce 1.2 billion facility of refrigerant chemical »» Construction on their $740M foot long unit train siding pounds of ethylene a year »» The $300 million facility began direct reduction plant was capable of storing a full 160- »» The new plant will support 150 operations last year and provides completed in October 2016 car unit train and will improve permanent jobs over 50 permanent jobs efficiency of existing cargo »» The plant employs 150 movement permanent jobs »» Recently completed Phase II includes 55,000 track feet of new railroad and cost $24.2 million

YARDARM APARTMENT HOMES 21 SOUTH EAST AERIAL

Corpus Christi L&F International Airport US Customs and Baker Texas A & M University Research Distributors Border Protection Hughes 44 Enterprise Products N CLARKWOOD RD Shoup Plant Tuloso-Midway Intermediate School

Oxychem Ballpark Tuloso-Midway High School Home Values Up To 252K

Home Values Up To Northside Family Medicine Home Values Up To 287K 239K

MCKINSIE RD

PEACHTREE ST STARLITE LN

LEOPARD ST

STONEWALL BLVD

22 NEWMARK KNIGHT FRANK WEST AERIAL

Area Retail

Corpus Christi Medical Five Points Center - Northwest Shopping Center 69E Five Points Station 37

Home Values Up To 232K Jackie Eden Field Oil Belt Park

Rabalais 37 Electric

STARLIGHT LN

PEACHTREE ST STONEWALL BLVD Home Values Up To 239K

LEOPARD ST

MCKINSIE RD

Northside Family Medicine

YARDARM APARTMENT HOMES 23 PROPERTY INFORMATION

Yardarm Apartments 10660 Leopard Street Corpus Christi, TX 78410 Survey Date Dec-18 # of Units 150 NRA 125,304 Year Completed 1984 Occupancy 94% Rent/Unit $805 Rent PSF $0.96 Management Place 10 Residential UNIT MIX UNIT MIX MONTHLY ANNUAL UNIT % MKT RENT/ MKT RENT/ UNITS UNIT SF TOTAL SF MARKET MARKET DESCRIPTION TYPE UNIT/MO SF/MO TOTAL TOTAL 1 BEDROOM / 1 BATHROOM A1 15 10.00% 690 $703 $1.02 10,350 $10,545 $126,540 1 BEDROOM / 1 BATHROOM A1 R 17 11.33% 690 $716 $1.04 11,730 $12,176 $146,112 1 BEDROOM / 1 BATHROOM A2 19 12.67% 690 $709 $1.03 13,110 $13,475 $161,700 1 BEDROOM / 1 BATHROOM A2 R 13 8.67% 690 $743 $1.08 8,970 $9,655 $115,860 2 BEDROOMS / 1 BATHROOM B1 13 8.67% 913 $763 $0.84 11,869 $9,920 $119,040 2 BEDROOMS / 1 BATHROOM B1 R 11 7.33% 913 $807 $0.88 10,043 $8,880 $106,560 2 BEDROOMS / 1.5 BATHROOMS B2 2 1.33% 1,116 $1,025 $0.92 2,232 $2,050 $24,600 2 BEDROOMS / 2 BATHROOMS B3 27 18.00% 950 $908 $0.96 25,650 $24,520 $294,240 2 BEDROOMS / 2 BATHROOMS B3 R 33 22.00% 950 $897 $0.94 31,350 $29,585 $355,020 TOTALS/AVERAGES 150 100% 835 $805 $0.96 125,304 $120,806 $1,449,672 CONCESSIONS/SPECIALS None

26 NEWMARK KNIGHT FRANK PROPERTY DETAILS CONSTRUCTION DETAILS PARKING INFORMATION STYLE Garden OPEN SAPCES 237 13 two-story residential buildings; HANDICAP SPACES 2 BUILDINGS 1 leasing office FOUNDATION Concrete post tension slabs TOTAL SPACES/RATIO 239 spaces | 1.59 spaces/unit EXTERIOR WALLS Brick and vinyl siding PERSONNEL OVERVIEW ROOF SYSTEM Pitched, composition shingles MANAGER 1 Full-time FLOOR COVERINGS Ceramic/wood laminate ASSISTANT MANAGER 1 Full-time PAVING Concrete paved with curbs MAINTENANCE 1 Full-time WIRING Copper TECHNICIAN PORTER 1 Full-time MECHANICAL SYSTEMS HOUSEKEEPER 1 Full-time ELECTRICITY Individually-metered TOTAL 5 Full-time WATER/SEWER Master-metered Individually climate-controlled HVAC units FEES & DEPOSITS TRASH 57% billed to tenants APPLICATION FEE $50/adult HOT WATER Individual hot water heaters ADMINISTRATIVE FEE $50 DEPOSIT $300 Street fee $5/month OTHER FEE Pest Control $3/month PET RENT $10/month PET DEPOSIT $200 PET FEE $200 40 lbs. maximum, breed/species PET RESTRICTIONS restricted

YARDARM APARTMENT HOMES 27 SITE PLAN

Storage LURA Peachtree St LURA LURA LURA

LURA

Dumpster LURA LURA Ofﬁce

Pool

Hot Tub BBQ Grills

Pool

Dumpster

Leopard St

28 NEWMARK KNIGHT FRANK CLOSE UP AERIAL

MCKINSIE RD

STONEWALL BLVD

PEACHTREE ST

LEOPARD ST

YARDARM APARTMENT HOMES 29 FLOOR PLANS

BRIGANTINE 1 Bedroom 1 Bath 690 SF

HARBOR 2 Bedroom 1 Bath 913 SF

30 NEWMARK KNIGHT FRANK FLOOR PLANS

VESSEL 2 Bedroom 2 Bath 950 SF

GALLEON 2 Bedroom 1.5 Bath 1,116 SF

YARDARM APARTMENT HOMES 31 COMMUNITY AMENITIES »» Swimming Pool »» Resident Clubhouse »» Clothes Care Facilities »» Picnic Area

32 NEWMARK KNIGHT FRANK INTERIOR FEATURES

»» Private Patio/Balcony »» Washer and Dryer Hookup »» Vaulted Ceilings* »» Ceiling Fans »» Cable/Satellite

* Select Units

YARDARM APARTMENT HOMES 33 FINANCIAL ANALYSIS

PROFORMA PRO FORMA FINANCIAL ANALYSIS INCOME % of GSR Totals Per Unit Per SF Gross Scheduled Rent 100.00% $1,493,162 $9,954 $11.92 Less: (Gain)/Loss-to-Lease 1.50% 22,397 149 0.18 Gross Potential Income 98.50% $1,470,765 $9,805 $11.74 Less: Vacancy 5.00% 74,658 498 0.60 Less: Non-Revenue Units 0.75% 11,199 75 0.09 Less: Collection Loss 0.75% 11,199 75 0.09 Total Rental Income 92.00% $1,373,709 $9,158 $10.96 Plus: Utility Reimbursements 5.99% 89,496 597 0.71 Plus: Cable 2.29% 34,200 228 0.27 Plus: Other 4.47% 66,789 445 0.53 Total Other Income 12.76% 190,484 1,270 1.52 Effective Gross Income 104.76% $1,564,193 $10,428 $12.48 EXPENSES % of EGI Totals Per Unit Per SF Repairs and Maintenance 4.32% 67,500 450 0.54 Payroll 11.51% 180,000 1,200 1.44 Administrative 1.44% 22,500 150 0.18 Marketing 0.72% 11,250 75 0.09 Cable 1.92% 30,000 200 0.24 Contract Services 1.92% 30,000 200 0.24 Utilities 8.50% 132,925 886 1.06 Total Variable Expenses 30.31% $474,175 $3,161 $3.78 Taxes 16.01% 250,364 1,669 2.00 Insurance 3.84% 60,000 400 0.48 Management Fee 3.25% 50,836 339 0.41 Total Operating Expenses 53.41% $835,375 $5,569 $6.67 Capital Reserves 2.95% 46,200 308 0.37 Total Expenses 56.36% $881,575 $5,877 $7.04 Net Operating Income $682,618 $4,551 $5.45

36 NEWMARK KNIGHT FRANK UNDERWRITING ASSUMPTIONS »» Gross Scheduled Rent (GSR) – Proforma Year 1 GSR is projected at »» Cable Expense – In Proforma Year 1, Cable expenses are projected at $1,493,162 annually, or $124,430 per month. This is based on current $30,000 annually, or $200 per unit, which is consistent with historical market rents in the 1/7/19 rent roll and grown 3% actuals. »» Loss-to-Lease (LTL) – Proforma Year 1 LTL is projected at 1.5% of GSR »» Contract Services – In Proforma Year 1, Contract Services expenses based on trends in the Nov’18 T12 actuals. are projected at $30,000 annually, or $200 per unit, which is based on »» Vacancy Loss – In Proforma Year 1, the Property is expected to historical actuals and adjusted for market norms. maintain at least a 95% occupancy rate. »» Utilities – The property has an average Utilities cost for apartment »» Non-Revenue Units – In Proforma Year 1, Non-Revenue Units are communities of this quality and area. For consistency with our RUBS assumed at 0.75% of GSR, which is consistent with historical actuals. assumption, Utilities are based on T3 actuals and grown 3.00%. They are projected at $132,925 annually, or $886 per unit. »» Collection Loss – In Proforma Year 1, Collection Loss is assumed at 0.75% of GSR, which is consistent with the trend in the Nov’18 T12. »» Real Estate Taxes – Yardarm is located in Nueces County and has tax IDs 248-695 and 248-693. The 2017 property assessment was »» Utility Reimbursements – Utility Reimbursements for Proforma Year 1 $8,856,250 and the assessment for 2018 remained the same at are projected at $89,496 annually, or $597 per unit. Due to the strong $8,856,250. The Proforma Year 1 Tax assessment is assumed at trend in the financials, this value is based on the Nov’18 T3 annualized a percentage of the estimated purchase price and the expense is actuals and grown 3.0%. calculated by multiplying by the 2018 tax rate (2.8111 per $100). The »» Cable Income – Cable income for Proforma Year 1 is projected at projected Proforma Year 1 taxes are $250,364 or $1,669 per unit. $34,200 annually, or $20 per occupied unit per month. This value is »» Insurance – In Proforma Year 1, Insurance expenses are projected at based off market assumptions when looking at comparable properties $60,000, or $400 per unit. Insurance expenses vary depending on the in the area coverage and deductible selected by the investor, and whether the »» Other Income – Other income for Proforma Year 1 is projected at Property is included on a single-asset or a blanket policy. $66,789 annually, or $445 per unit. This value is based off Nov’18 T »» Management Fee – Management Fee is projected to be 3.25% of 12actuals and grown 3.0%. Effective Gross Income, which equals $50,836 annually. This is in line »» Repairs and Maintenance – In Proforma Year 1, Repairs and with properties in this submarket of this size and quality. Maintenance expenses are projected at $67,500 annually, or $450 »» Capital Reserves – The Property was built in 1984. Proforma Year 1 per unit, which is based on historical actuals and adjusted for market Capital Reserves are projected at $46,200 annually, or $308 per unit, norms. based on the requirements of the in-place loan. »» Payroll – In Proforma Year 1, Payroll expenses are projected at $180,000 annually, or $1,200 per unit, which is in line with surrounding LOAN DETAILS comparable properties. ORIGINAL AMOUNT $7,085,000 »» Administrative – In Proforma Year 1, Administrative expenses are projected at $22,500 or $150 per unit, which is based on historical 1ST PAYMENT DATE 9/1/2017 actuals and adjusted for market norms. MATURITY DATE 8/1/2027 »» Marketing – In Proforma Year 1, Marketing expenses are projected at INTEREST RATE 4.67% $11,250 annually, or $75 per unit, which are consistent with historical AMORTIZATION PERIOD (MONTHS) 360 Marketing expenses and properties of this size. INTEREST ONLY PERIODS 24

YARDARM APARTMENT HOMES 37 MARKET OVERVIEW

RENT COMPARABLES

# OF AVG. MARKET MARKET EFFECTIVE EFFECTIVE # PROPERTY YOC OCC. UNIT TYPE UNITS SQ FT RENT RENT PSF RENT RENT PSF

1-Bed 74 695 $798 $1.15 $798 $1.15 Lost Creek 2-Bed 132 905 $944 $1.04 $944 $1.04 1 1984 89% Ranch 3-Bed 44 1,038 $1,135 $1.09 $1,135 $1.09 Total/Avg. 250 866 $934 $1.08 $934 $1.08

1-Bed 64 565 $700 $1.24 $700 $1.24 2-Bed 112 1,021 $928 $0.91 $928 $0.91 2 Peachtree 1982 94% 3-Bed 12 1,059 $1,030 $0.97 $1,030 $0.97 Total/Avg. 188 868 $857 $0.99 $857 $0.99

1-Bed 55 677 $755 $1.12 $755 $1.12 Churchill 3 1985 97% 2-Bed 52 931 $907 $0.97 $907 $0.97 Square Total/Avg. 107 800 $829 $1.04 $829 $1.04

1-Bed 28 635 $775 $1.22 $775 $1.22 2-Bed 74 811 $855 $1.05 $742 $0.91 4 The Estates 1983 94% 3-Bed 8 1,035 $1,150 $1.11 $1,150 $1.11 Total/Avg. 110 782 $856 $1.09 $780 $1.00

1-Bed 55 645 $756 $1.17 $756 $1.17 TOTALS/ 2-Bed 93 925 $916 $0.99 $894 $0.97 92% AVERAGES 3-Bed 21 1,042 $1,117 $1.07 $1,117 $1.07 Total/Avg. 169 842 $882 $1.05 $869 $1.03

1-Bed 64 690 $716 $1.04 $706 $1.02 Yardarm 1984 93% 2-Bed 86 944 $872 $0.92 $848 $0.90 Apartments

SUBJECT Total/Avg. 150 835 $805 $0.96 $785 $0.94

40 NEWMARK KNIGHT FRANK RENT COMPARABLES MAP

UP RIVR RD

c 37

d OPARD ST a

FM RD UP RIVR RD 69E ardarm b

VIOT RD

MCINI RD

a lost creek ranch b peachtree c churchill square d the estates

YARDARM APARTMENT HOMES 41 APPENDIX

INFORMATION ON BROKERAGE RELATIONSHIPS

TEXAS LAW REQUIRES ALL REAL ESTATE LICENSE HOLDERS TO GIVE THE FOLLOWING INFORMATION ABOUT BROKERAGE SERVICES TO PROSPECTIVE BUYERS, TENANTS, SELLERS AND LANDLORDS

TYPES OF REAL ESTATE LICENSE HOLDERS: AS AGENT FOR BOTH - INTERMEDIARY: To act as an intermediary between the parties the broker must first obtain the written agreement of each party to the transaction. The written agreement must state who will pay the • A BROKER is responsible for all brokerage activities, including acts performed by sales agents sponsored by broker and, in conspicuous bold or underlined print, set forth the broker’s obligations as an intermediary. A broker the broker. who acts as an intermediary: • A SALES AGENT must be sponsored by a broker and works with clients on behalf of the broker. • Must treat all parties to the transaction impartially and fairly; • May, with the parties’ written consent, appoint a different license holder associated with the broker to each A BROKER’S MINIMUM DUTIES REQUIRED BY LAW (A client is the person or party that the broker party (owner and buyer) to communicate with, provide opinions and advice to, and carry out the instructions of represents): each party to the transaction. • Put the interests of the client above all others, including the broker’s own interests; • Must not, unless specifically authorized in writing to do so by the party, disclose: • Inform the client of any material information about the property or transaction received by the broker; ЄЄ that the owner will accept a price less than the written asking price; • Answer the client’s questions and present any offer to or counter-offer from the client; and ЄЄ that the buyer/tenant will pay a price greater than the price submitted in a written offer; • Treat all parties to a real estate transaction honestly and fairly. ЄЄ andᴑ any confidential information or any other information that a party specifically instructs the broker in writing not to disclose, unless required to do so by law.

A LICENSE HOLDER CAN REPRESENT A PARTY IN A REAL ESTATE TRANSACTION: AS SUBAGENT: A license holder acts as a subagent when aiding a buyer in a transaction without an agreement to AS AGENT FOR OWNER (SELLER/LANDLORD): The broker becomes the property owner’s agent through an represent the buyer. A subagent can assist the buyer but does not represent the buyer and must place the interests agreement with the owner, usually in a written listing to sell or property management agreement. An owner’s agent of the owner first. must perform the broker’s minimum duties above and must inform the owner of any material information about the property or transaction known by the agent, including information disclosed to the agent or subagent by the buyer TO AVOID DISPUTES, ALL AGREEMENTS BETWEEN YOU AND A BROKER SHOULD BE IN WRITING or buyer’s agent. AND CLEARLY ESTABLISH: • The broker’s duties and responsibilities to you, and your obligations under the representation agreement. AS AGENT FOR BUYER/TENANT: The broker becomes the buyer/tenant’s agent by agreeing to represent the • Who will pay the broker for services provided to you, when payment will be made and how the payment will be buyer, usually through a written representation agreement. A buyer’s agent must perform the broker’s minimum calculated. duties above and must inform the buyer of any material information about the property or transaction known by the agent, including information disclosed to the agent by the seller or seller’s agent. LICENSE HOLDER CONTACT INFORMATION: This notice is being provided for information purposes. It does not create an obligation for you to use the broker’s services. Please acknowledge receipt of this notice below and retain a copy for your records.

Southwest Residential Partners, Inc. 345433 [email protected] 713-425-5430 Broker’s Licensed Name or Primary Assumed Business Name License No. Email Phone

David Oelfke 456477 [email protected] 713-425-5405 Designated Broker or Firm License No. Email Phone

Licensed Supervisor of Sales Agent/Associate License No. Email Phone

Sales Agent/Associate’s Name License No. Email Phone

44 NEWMARK KNIGHT FRANK DISCLAIMER Prospective purchasers are hereby advised the Owner (“Owner”) of Yardarm Apartment Homes (“Property”) is soliciting offers through Newmark Knight Frank (“Newmark Knight Frank”), which may be accepted or rejected by the Owner at the Owner’s sole discretion.

Any solicitation of an offer for the Property offered hereunder will be governed by this Offering, as it may be modified or supplemented. Prospective purchasers are advised that as part of the offer process, the Owner will be evaluating several factors including the experience and financial qualifications of the purchasing entity.

The Owner shall have no obligation to accept any offer from any prospective purchaser. The Owner reserves the right to withdraw the Property from consideration at any time prior to final execution of a Purchase Agreement.

This Offering document is furnished to prospective purchasers for the purpose of determining whether to invest in the Property offered hereby. The information contained herein, or any other related information provided by the Owner, may not be reproduced, redistributed or used in whole or in part without the prior written consent of the Owner.

No person has been authorized to give any information or make any representation or warranty, either expressed or implied and, if given or made, such information or representation must not be relied upon.

While the Owner and Newmark Knight Frank have no reason to believe that the information provided herein or in subsequent information updates delivered to potential purchasers hereunder contains any material inaccuracies, neither the Owner nor Newmark Knight Frank nor any of the Owner’s or Newmark Knight Frank’s respective subsidiaries, affiliates, companies, or the officers, directors, employees, agents and representatives of any such entities, etc., make any representations or warranties, expressed or implied, as to the validity, accuracy or completeness of the information provided or to be provided, and nothing herein shall be deemed to constitute a representation, warranty or promise by any such parties as to the future performance of the Property or any other matters set forth herein.

Any obligations to prospective purchasers that the Owner may have with respect to the Property are limited to those expressly set forth in a fully executed Purchase Agreement between the parties. Prospective purchaser’s sole and exclusive rights against the Owner, with respect to this prospective transaction, the Property, or information provided herein or subsequently, shall be limited to those remedies expressly provided in an executed Purchase Agreement, which shall not survive the closing. Further, in no event shall prospective purchasers have any claims against the Owner, Newmark Knight Frank, or any of their respective affiliates for any damages, liability, or causes of action relating to the Purchase Agreement.

Prospective purchasers are not to construe the contents of this Offering or any prior or subsequent information communications from the Owner or any of their respective officers, employees or agents as legal, tax or other advice. Prior to purchasing, prospective purchasers should consult with their own legal counsel and personal and tax advisors to determine the consequences of an investment in the Property and arrive at an independent evaluation of such investment.

No commission or finder’s fee shall be payable to any party by the Owner nor any affiliate or agent thereof in connection with the sale of the Property unless otherwise agreed to by the Owner in writing.

Acquisition of properties such as this offered hereunder involves a high degree of risk and are suitable only for persons and entities of substantial financial means.

BRAD SHAFFER BRANDON MILLER [email protected] [email protected] T 713-337-5806 | M 713-775-6888 T 713-554-0132 | M 956-533-4237

Newmark Knight Frank This information has been derived from sources deemed reliable. However, it is subject to errors, omissions, price change and/or withdrawal, and no warranty is made as to the accuracy. Further, no warranties or representation shall be made by Newmark Knight Frank and/or its agents, representatives or affiliates regarding oral statements which have been made in the 1700 Post Oak Boulevard, 2 BLVD Place, Suite 400, discussion of the above property. This presentation, prepared by Newmark Knight Frank, was sent to the recipient under the assumption that s/ he is a buying principal. Any potential Houston, TX77056 purchaser is advised that s/ he should either have the abstract covering the real estate which is the subject of the contract examined by an attorney of his/her selection, or be furnished 713.599.1800 | 713.599.5801 Fax a policy of title insurance.