Market Feasibility Analysis Town Center Apartments Hampton, Virginia

Prepared for: Lake View Apartments, L.P. Project #18-5730

Site Inspection: February 14, 2018 Effective Date: February 14, 2018 Town Center Apartments | Table of Contents

TABLE OF CONTENTS EXECUTIVE SUMMARY...... VII 1. INTRODUCTION ...... 1 A. Overview of Subject...... 1 B. Purpose ...... 1 C. Format of Report ...... 2 D. Client, Intended User, and Intended Use ...... 2 E. Applicable Requirements ...... 2 F. Scope of Work ...... 2 G. Report Limitations ...... 2 2. PROJECT DESCRIPTION ...... 3 A. Project Overview...... 3 B. Project Type and Target Market...... 3 C. Building Types and Placement...... 3 D. Detailed Project Description...... 3 1. Project Description ...... 3 3. SITE AND NEIGHBORHOOD ANALYSIS ...... 5 A. Site Analysis...... 5 1. Site Location...... 5 2. Size, Shape, and Topography...... 5 3. Existing and Proposed Uses...... 5 4. General Description of Land Uses Surrounding the Subject Site...... 5 5. Specific Identification of Land Uses Surrounding the Subject Site...... 8 B. Neighborhood Analysis ...... 10 1. Neighborhood Investment and Planning Activities...... 10 2. Public Safety...... 10 C. Site Visibility and Accessibility...... 11 1. Visibility...... 11 2. Vehicular Access ...... 11 3. Availability of Public Transit ...... 12 4. Pedestrian Access ...... 12 5. Accessibility Improvements under Construction and Planned...... 12 D. Residential Support Network...... 12 1. Key Facilities and Services near the Subject Sites...... 12 1. Essential Services...... 14 2. Commercial Goods and Services...... 16 3. Other Facilities and Features...... 17 4. ECONOMIC CONTEXT...... 18 A. Introduction...... 18 B. Labor Force, Resident Employment, and Unemployment...... 18 C. Commutation Patterns...... 18 D. County At-Place Employment...... 19 1. Trends in Total At-Place Employment...... 19 2. At-Place Employment by Industry Sector...... 20 3. Major Employers...... 22 4. Wage Trends...... 22 5. HOUSING MARKET AREA ...... 24 A. Introduction...... 24

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B. Delineation of Market Area...... 24 6. DEMOGRAPHIC ANALYSIS...... 27 A. Introduction and Methodology ...... 27 B. Trends in Population and Households...... 27 1. Recent Past Trends ...... 27 2. Estimated and Projected Trends...... 27 3. Building Permit Trends...... 28 C. Demographic Characteristics...... 29 1. Age Distribution and Household Type...... 29 2. Renter Household Characteristics...... 30 3. Income Characteristics...... 32 4. Cost-Burdened Renter Households...... 33 7. COMPETITIVE HOUSING ANALYSIS ...... 35 A. Introduction and Sources of Information...... 35 B. Market Area Housing Stock...... 35 1. Overview of Housing Stock...... 35 C. Survey of General Occupancy Rental Communities...... 36 1. Introduction to the Rental Housing Survey...... 36 2. Location...... 37 3. Age of Communities...... 37 4. Structure Type ...... 37 5. Size of Communities...... 38 6. Vacancy Rates...... 38 7. Rent Concessions...... 38 8. Absorption History...... 39 D. Analysis of Rental Pricing and Product...... 39 1. Payment of Utility Costs...... 39 2. Unit Features...... 39 3. Parking ...... 39 4. Community Amenities...... 40 5. Distribution of Units by Bedroom Type...... 41 6. Effective Rents...... 42 E. Derivation of Market Rent...... 43 F. Achievable Restricted Rents...... 48 G. Proposed and Under Construction Rental Communities...... 48 8. FINDINGS AND CONCLUSIONS...... 51 A. Key Findings...... 51 1. Site and Neighborhood Analysis...... 51 2. Economic Context...... 51 3. Demographic Analysis...... 51 4. Competitive Housing Analysis ...... 52 B. Derivation of Demand...... 53 1. Methodology...... 53 2. Demand Analysis...... 55 3. Conclusions on Demand...... 57 C. Target Markets ...... 57 D. Product Evaluation...... 57 E. Price Position...... 58 F. Affordability – Capture and Penetration Analysis...... 60 1. Methodology...... 60 2. Affordability Analysis ...... 61

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3. Penetration Analysis ...... 64 4. Conclusions on Affordability and Penetration...... 65 G. VHDA Demand Analysis...... 65 H. Absorption Estimate ...... 71 I. Impact on Existing Market...... 71 9. APPENDIX 1 UNDERLYING ASSUMPTIONS AND LIMITING CONDITIONS...... 72 10. APPENDIX 2 NCHMA CHECKLIST...... 74 11. APPENDIX 3 VHDA CERTIFICATION ...... 77 12. APPENDIX 4 ANALYST RESUMES ...... 78 13. APPENDIX 5 MARKET AREA RENTAL COMMUNITY PROFILES...... 79

Page iv Town Center Apartments | Tables, Figures and Maps

TABLES, FIGURES AND MAPS

Table 1 LIHTC Income and Rent Limits, Virginia Beach-Norfolk-Newport News HUD Metro Area...... 1 Table 2 Unit Mix, Town Center Apartments...... 4 Table 3 Salient Project Information, Town Center Apartments ...... 4 Table 4 Key Facilities and Services...... 13 Table 5 Hampton City Public Schools, 2016-2017 ...... 16 Table 6 Labor Force and Unemployment Rates ...... 18 Table 7 Commutation Data...... 19 Table 8 Major Employers, 2017...... 22 Table 9 Average Annual Wage ...... 23 Table 10 Population and Household Projections...... 28 Table 11 Building Permits by Structure Type ...... 29 Table 12 2018 Age Distribution...... 30 Table 13 2010 Households by Household Type...... 30 Table 14 Renter Tenure Trends...... 31 Table 15 Renter Households by Age of Householder ...... 31 Table 16 Renter Households by Persons per Household...... 32 Table 17 2018 Household Income...... 32 Table 18 2018 Household Income by Tenure...... 33 Table 19 Rent Burden by Household Income, 2012-2016, Primary Market Area...... 34 Table 20 Rental Units by Structure Type...... 35 Table 21 Rental Units by Year Built...... 36 Table 22 Value of Owner Occupied Housing Stock...... 36 Table 23 Rental Communities Summary...... 38 Table 24 Recent Absorption History, Upper Tier Rental Communities...... 39 Table 25 Utility Arrangement and Unit Features - Town Center Market Area...... 40 Table 26 Rental Communities- Community Amenities, Town Center Market Area ...... 41 Table 27 Unit Distribution, Size and Pricing, Town Center Market Area ...... 42 Table 28 Market Rent Analysis – One-Bedroom Units...... 44 Table 29 Market Rent Analysis – Two-Bedroom Units...... 45 Table 30 Market Rent Analysis – Three-Bedroom Units ...... 46 Table 31 Market Rent Advantage - Summary...... 47 Table 32 Market Rent Advantage – Adjustment Table...... 47 Table 33 Achievable Tax Credit Rent ...... 48 Table 34 Derivation of Net Demand, Town Center Market Area ...... 56 Table 35 2020 Total and Renter Income Distribution...... 61 Table 36 Affordability Analysis...... 63 Table 37 Affordability Analysis without the Subsidy ...... 64 Table 38 Penetration Analysis...... 65 Table 39 VHDA Demand by Overall Income Targeting...... 66 Table 40 VHDA Demand from Larger Households for Large Units ...... 68 Table 41 VHDA Demand by Overall Income Targeting – No Subsidy...... 69 Table 42 VHDA Demand from Larger Households for Large Units – No Subsidy...... 70

Figure 1 Site Plan...... 7 Figure 2 Views of Subject Site ...... 8 Figure 3 Views of Surrounding Land Uses...... 9 Figure 4 At-Place Employment...... 20 Figure 5 Total Employment 2Q 2017...... 21 Figure 6 Total Employment and Employment Change by Sector 2011 to 2Q 2017...... 21 Figure 7 Annualized Wage Data by Sector...... 23

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Figure 8 Price Position of Town Center Apartments...... 59

Map 1 Site Location...... 6 Map 2 Town Center Market Area CrimeRisk Index ...... 11 Map 3 Neighborhood Features ...... 14 Map 4 Town Center Market Area...... 25 Map 5 City of Hampton Neighborhood Districts...... 26 Map 6 Competitive Rental Communities, Town Center Market Area ...... 37 Map 7 Pipeline Rental Communities...... 50

Page vi Town Center Apartments | Executive Summary

EXECUTIVE SUMMARY Real Property Research Group, Inc. (RPRG) has been retained by Lake View Apartments, L.P. to conduct a market assessment to evaluate the proposed Town Center Apartments Low Income Housing Tax Credit (LIHTC) general occupancy multifamily rental community to be located in Hampton, Virginia.

The development is broken out into two phases; this analysis addresses Phase I which will be financed using nine percent tax credits. The developer’s proposed unit distribution, square footages, and rents for both phases of the subject are as follows:

Phase I Income Level Rent Level # Heated Net Utility Gross # Bed Units Net Rent* (AMI) (AMI) Bath Sq Ft^ Rent/SF Allowance Rent 50%-PBRA 40% 1 1 3 727 $420 $0.58 $108 $528 50% 50% 1 1 5 727 $555 $0.76 $108 $663 60% 60% 1 1 4 727 $700 $0.96 $108 $808 12 50%-PBRA 40% 2 2 3 971 $500 $0.51 $142 $642 50% 50% 2 2 20 971 $660 $0.68 $142 $802 60% 60% 2 2 19 971 $825 $0.85 $142 $967 42 50% - PBRA 40% 3 2 2 1,142 $560 $0.49 $192 $752 50% 50% 3 2 3 1,142 $750 $0.66 $192 $942 60% 60% 3 2 13 1,142 $940 $0.82 $192 $1,132 18 Total 72 Phase II 60% 60% 2 2 24 971 $825 $0.85 $142 $967 60% 60% 3 2 24 1,142 $940 $0.82 $192 $1,132 Total 48 (*) Net rents include all utilities except trash removal. (^) Weighted average of multiple floorplans Source: Lake View Apartments, L.P. Based on our research, including a site visit February 14, 2018, we have arrived at the following findings:  Site Analysis: The subject site is a suitable location for rental housing with excellent access to goods and services. The site is conveniently located less than one mile from access to I- 64, the major interstate running through Hampton City. The site is within walking distance of both Hampton’s major commercial district, the Peninsula Town Center, as well as the Hampton Coliseum and Hampton Roads Convention Center. Hampton Roads Transit is the primary provider of public mass transit services in Hampton as well as Norfolk, Chesapeake, Virginia Beach, Portsmouth, Newport News and Suffolk. The nearest bus stop is directly in front of the subject site. Both a Walmart Supercenter and an Aldi grocery store are adjacent to the site. Access to additional grocery, pharmacy, and comparison shopping is less than one mile from the subject, as is entertainment and nightlife.

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 Economic Analysis: Led The Hampton economy is particularly reliant on the Government sector. While the unemployment rate has declined every year since peaking during the recession in 2010, the decline has been more slower than that of the state and national rates. During the first ten months of 2017, Hampton’s unemployment rate was 5.2 percent, higher than the national average of 4.6 percent and well above Virginia’s unemployment rate of 3.8 percent. The Government sector accounted for almost 29 percent of all at-place employment in Hampton City in second quarter 2017, reflecting the substantial presence of the federal government due to the presence of Joint Base Langley-Eustis; by comparison, federal, state, and local governments are responsible for just 15 percent of all employment nationwide. At-place employment in Hampton has generally trended downward since 2006, but with intervening years of modest growth. As of 2006, at-place employment within Hampton totaled 58,473 positions. As of mid-end 2017, at place employment totaled 54,317, a loss of over 4,000 jobs (7.1 percent) since 2006. Five of the last ten years have seen job increases, including the addition of 424 jobs in 2012 and 380 jobs during the first ten months of 2017.

 Demographic Analysis: The Town Center Market Area experienced modest household growth between 2000 and 2010. Since then household growth has been negligible and Esri projects a slight decline in households over the next five years. Based on Esri projections, RPRG projects that the market area will lose 52 households (0.2 percent) annually over the next five years. This is comparable to the projected citywide decrease in households of 0.2 percent annually. Between 2000 and 2010, four out of five (80 percent) net new households within the Saville Row Market Area were renter households. In 2018, renter- occupied housing units represent nearly one-half (49 percent) of all occupied housing in the market area. Over the next five years, renter households will comprise all of the net new household growth within the market area, bringing the average rentership rate to 50 percent in 2023. Households without children and single person households represent roughly two-thirds (69 percent) of all households in the market area. Married and other households with children account for nearly one-third (32 percent) of households in the market area. The City of Hampton as well as the subject’s market area both have a relatively youthful profile with a median age of 36 and 35, respectively. Most market area renter households are relatively small—69 percent of the renter-occupied households within the market consist of one- and two-person households. According to income distributions provided by Esri, households in the Town Center Market Area have a 2018 median household income of $55,633 per year, which is five percent more than the $53,257 median income in Hampton City. The median income among renters is $46,036. Almost one-quarter (24 percent) of renter households earn less than $25,000 and 31 percent earn between $25,000 and $50,000.

 Competitive Analysis: The vacancy rate among stabilized market area communities is 2.8 percent, indicative of a healthy market. Between the two LIHTC communities, there are 17 vacant units for an average vacancy rate of four percent. One- bedroom units average $889 for 752 square feet, which translates to an average one-bedroom net rent per square foot of $1.18.. Two-bedroom effective rents within surveyed communities average $1,009 for 1,016 square feet, amounting to an average rent per square foot of $0.99. Three-bedroom rents average $1,295 per month. The average three-bedroom square footage is 1,291 square feet for an average net rent per square foot of $1.00. RPRG has identified two multifamily rental developments likely to deliver units in the next three years.

Based on these findings, we have arrived at the following conclusions:  Net Demand for Rental Housing: Accounting for household trends, necessary unit replacement, and a stabilized structural vacancy rate of 5.0 percent, RPRG projects the

Page viii Town Center Apartments | Executive Summary

market will have an overall excess supply of approximately 398 rental housing units in the subject’s market area between 2018 and 2021. That said, all of the pipeline units will be market rate and presumably priced much higher than the subject.  Affordability: The subject would need to capture 1.2 percent of all income-qualified households in the market area and 1.9 percent of all income-qualified renter households to lease all 120 units in both phases of the subject. Given the demographic and competitive characteristics of the market, we believe these capture rates are achievable.  Penetration: The penetration rate suggests that the inventory of affordable units including the subject as well as the comparably priced market rate units, will address 55 percent of all income-qualified renters in the market.  Evaluation of Proposed Product: Considered in the context of the competitive environment, the relative position of the subject t is as follows.  Structure Type: Most of the market area properties, including both LIHTC properties, offer exclusively garden apartments and this is an appropriate design for the subject.  Unit Distribution: The developer’s total proposed unit distribution for both phases includes ten percent one-bedroom units, 55 percent two-bedroom units, and 35 three-bedroom units. The market wide average unit mix includes 29 percent are one-bedroom units, 58 percent are two-bedroom units, and 11 percent are three- bedroom units. While this unit mix is skewed towards three-bedroom units at the expense of one-bedroom units, families are a common target market for affordable communities and this distribution allows the subject to serve more of these households.

 Unit Size: The subject’s one-bedroom units will average 727 square feet, three percent less than the market average of 752 square feet. The subject’s two- bedroom units will average 971 square feet, which is four percent smaller than the average two-bedroom unit size of 1,016 square feet. The subject’s three-bedroom units will be 1,142 square feet, 12 percent smaller than the market average of 1,295 square feet. These unit sizes are somewhat small, particularly the three-bedroom units; however, as an affordable community it is unlikely to impair marketability to income qualified residents. It should also be noted that the market wide average is skewed somewhat by the newer Class A product; the more affordable communities, including the two LIHTC properties, tend to offer smaller units more comparable to the subject.  Unit Features: The proposed standard unit features will include a full slate of black kitchen appliances—range, refrigerator, dishwasher, microwave, and garbage disposal. Kitchens will have laminate countertops. Flooring will be vinyl plank in the kitchen and living areas with carpet in the bedrooms. Other features include patio/balcony and nine-foot ceilings. Less than one-half of the survey communities (12 out of 27) provide washer/dryers as a standard feature in all units. Like both LIHTC communities, the subject will offer hooks ups only which is appropriate for an affordable community in this market. These features are superior to that offered at the existing LIHTC communities and much of the more affordable market rate communities.  Community Amenities: Amenities provided include a clubhouse with a community room and leasing office. While most of the communities, including the existing LIHTC communities, offer an outdoor swimming pool, the subject’s lack of this amenity is unlikely to affect marketability.

Page ix Town Center Apartments | Executive Summary

 Parking: Surface parking such as that proposed at the subject is the standard in this market.  Rents: Given the location, proposed features, and amenities, the subject’s units are appropriately priced and would be attractive to potential tenants. When it comes online, the subject’s rents will allow it to offer lower income residents a new unit with modern features at a modest price point. It should be further noted, that only 70 percent of the total units at the subject will be reserved for households at 60 percent AMI and competing at the price point just discussed. The other units will be priced even less, well below any of the market rate or LIHTC units in this market area, creating an even greater value for lower income households.  Absorption Estimate: Recent absorption experience has included only market rate units; among the five communities that have completed lease up and the two currently leasing up, the average absorption has been approximately 15 units per month. While there are several vacant units at the LIHTC Derby Run, it is located in the northern part of the city at a considerable distance from the subject. Meanwhile Waterford Pointe is located much closer to the subject and it maintains an active waitlist from which subject residents may be drawn. Given these factors, in addition to the high quality product and location for the subject, we estimate that Town Center Apartments will lease units at an average pace of 10-12 units per month. The location of the subject site will offer residents excellent access to public transportation, retail, and services. Combining these conveniences with the subject’s affordable rents, will make it very competitive in this market. That said, we temper our absorption estimate to reflect the reality that the LIHTC subject will have to attract renters within a very specific income range. This absorption estimate accounts for the fact that affordable properties can be slower to lease up because applicants must fit into the appropriate income bands. Assuming this pace and a structural vacancy rate of five percent, the entire 120-unit Town Center Apartments would be 95 percent leased within approximately ten to eleven months of opening.  Final Conclusion: The present market indicators point to a healthy market – stabilized vacancy is well below five percent. Despite considerable construction of luxury rental communities in this area, it has been more than 20 years since an affordable community opened in the Town Center Market Area. The subject will provide a value-added, rental community that will assist in meeting the market’s demand for affordable high quality rental options. RPRG does not anticipate that the subject would have an adverse impact on the existing rental market.

Page x Town Center Apartments | Introduction

1. INTRODUCTION

A. Overview of Subject The subject of this report is a proposed Low Income Housing Tax Credit (LIHTC) general occupancy rental community to be located in the city of Hampton, Virginia. The complete community will consist of four garden style three-level buildings with 120 units with common area amenities and structured parking. All units will be restricted to households earning up to 50 or 60 percent of area wide median income. Phase I, the subject of this report, will contain 72 units in one-, two, and three-bedroom floorplans. The developer is applying for nine percent tax credits to finance this portion of the development. Phase II will be constructed simultaneously, and it will include 48 units target to households at 60 percent AMI. This portion of the development will be financed with four percent tax credits. Eight of the proposed 50 percent AMI units will have vouchers issued by the Hampton Redevelopment and Housing Authority. Table 1 presents applicable income and rent limits for the Virginia Beach-Norfolk-Newport News, VA-NC HUD Metro Area in which the subject is located.

B. Purpose The purpose of this market study is to perform a market feasibility analysis through a demographic analysis of the defined market area, a competitive housing analysis, a derivation of demand and an affordability analysis.

Table 1 LIHTC Income and Rent Limits, Virginia Beach-Norfolk-Newport News HUD Metro Area

HUD 2017 Median Household Income Virginia Beach-Norfolk-Newport News, VA-NC HUD Metro FMR Area $73,000 Very Low Income for 4 Person Household $36,500 2017 Computed Area Median Gross Income $73,000 Utility Allowance: Efficiency $0 1 Bedroom $108 2 Bedroom $142 3 Bedroom $192 Household Income Limits by Household Size: Household Size 30% 40% 50% 60% 80% 100% 120% 150% 200% 1 Person $15,330 $20,440 $25,550 $30,660 $40,880 $51,100 $61,320 $76,650 $102,200 2 Persons $17,520 $23,360 $29,200 $35,040 $46,720 $58,400 $70,080 $87,600 $116,800 3 Persons $19,710 $26,280 $32,850 $39,420 $52,560 $65,700 $78,840 $98,550 $131,400 4 Persons $21,900 $29,200 $36,500 $43,800 $58,400 $73,000 $87,600 $109,500 $146,000 5 Persons $23,670 $31,560 $39,450 $47,340 $63,120 $78,900 $94,680 $118,350 $157,800 6 Persons $25,410 $33,880 $42,350$0 $50,820$0 $67,760$0 $84,700$0 $101,640$0 $127,050$0 $169,400 87 Persons $0 $0 $0 $0 $0 $0 Imputed Income Limits by Number of Bedroom (Assuming 1.5 persons per bedroom): # Bed- Persons rooms 30% 40% 50% 60% 80% 100% 120% 150% 200% 1 0 $15,330 $20,440 $25,550 $30,660 $40,880 $51,100 $61,320 $76,650 $102,200 1.5 1 $16,425 $21,900 $27,375 $32,850 $43,800 $54,750 $65,700 $82,125 $109,500 3 2 $19,710 $26,280 $32,850 $39,420 $52,560 $65,700 $78,840 $98,550 $131,400 4.5 3 $22,785 $30,380 $37,975 $45,570 $60,760 $75,950 $91,140 $113,925 $151,900 6 4 $25,410 $33,880 $42,350 $50,820 $67,760 $84,700 $101,640 $127,050 $169,400 LIHTC Tenant Rent Limits by Number of Bedrooms (assumes 1.5 persons per bedroom): 30% 40% 50% 60% 80% # Persons Gross Net Gross Net Gross Net Gross Net Gross Net 1Bedroom $410 $302 $547 $439 $684 $576 $821 $713 $1,095 $987 2Bedroom $492 $350 $657 $515 $821 $679 $985 $843 $1,314 $1,172 3Bedroom $569 $377 $759 $567 $949 $757 $1,139 $947 $1,519 $1,327 Source: U.S. Department of Housing and Urban Development

Page 1 Town Center Apartments | Introduction

C. Format of Report The report format is Comprehensive. Accordingly, the market analyst has considered the National Council of Housing Market Analysts (NCHMA) model content standards. The market study also addresses all required items set forth in the 2018 Market Study Guidelines of the Virginia Housing Development Authority (VHDA).

D. Client, Intended User, and Intended Use The Client is Lake View Apartments, L.P. Along with the Client, the Intended Users are representatives of VHDA and potential investors. The subject report will be submitted to VHDA as part of an application for Low-Income Housing Tax Credits.

E. Applicable Requirements This market study is intended to conform to the requirements of the National Council of Housing Market Analyst’s (NCHMA) content standards and VHDA’s 2018 Market Study Guidelines.

F. Scope of Work To determine the appropriate scope of work for the assignment, we considered the intended use of the market study, the needs of the user, the complexity of the property, and other pertinent factors. Our concluded scope of work is described below:  Please refer to Appendix I for a detailed list of NCHMA requirements and the corresponding pages of requirements within the report.  Nicole Mathison conducted visits to the subject site, neighborhood, and market area on February 14, 2018.  Primary information gathered through field and phone interviews was used throughout the various sections of this report. The interviewees included rental community property managers and leasing agents. As part of our housing market research, RPRG contacted Donald Whipple, Chief Planner at the Hampton Planning and Zoning Administration, to identify any rental projects that are actively being planned or that are currently under construction within the market area.  All pertinent information obtained was incorporated in the appropriate section(s) of this report.

G. Report Limitations The conclusions reached in a market assessment are inherently subjective and should not be relied upon as a determinative predictor of results that will actually occur in the marketplace. There can be no assurance that the estimates made or assumptions employed in preparing this report will in fact be realized or that other methods or assumptions might not be appropriate. The conclusions expressed in this report are as of the date of this report, and an analysis conducted as of another date may require different conclusions. The actual results achieved will depend on a variety of factors, including the performance of management, the impact of changes in general and local economic conditions, and the absence of material changes in the regulatory or competitive environment. Reference is made to the statement of Underlying Assumptions and Limiting Conditions contained in Appendix I of this report.

Page 2 Town Center Apartments | Project Description

2. PROJECT DESCRIPTION

A. Project Overview The subject of this report is the proposed Town Center Apartments Low Income Housing Tax Credit (LIHTC) general occupancy rental community to be located in the city of Hampton, Virginia. The complete community will consist of four garden style three-level buildings with 120 units. All units will be restricted to households earning up to 50 or 60 percent of area wide median income. Phase I, the subject of this report, will contain 72 units in one-, two, and three-bedroom floorplans. The developer is applying for nine percent tax credits to finance this portion of the development. Phase II will be constructed simultaneously, and it will include 48 units restricted to households at 60 percent AMI. This portion of the development will be financed with four percent tax credits.

B. Project Type and Target Market Town Center Apartments will be an LIHTC community targeted to a general occupancy tenant base. All of the units are restricted to households earning up to 50 or 60 percent AMI. Eight of the 50 percent AMI units will have vouchers. With a unit mix of one-, and two-, and three-bedroom units, the community targets a range of renter households, including single-person households, couples, roommates, and small families.

C. Building Types and Placement The community will consist of four garden style buildings, two each in Phase I and Phase II. The buildings will surround a surface parking lot. The subject is located at the intersection of Saville Row and Pine Chapel Road. Primary access to the community will be from Saville Row.

D. Detailed Project Description

1. Project Description Table 2 summarizes the proposed unit types in each phase of Town Center Apartments, presenting unit distribution, unit sizes, and rents. The project sponsor proposes to develop one-, two-, and three-bedroom units. The proposed unit mix is weighted toward two-bedroom units, which account for 58 percent of the unit total (42 out of 72 units). One-bedroom units account for 17 percent of the proposed distribution (12 units) and three-bedroom units will comprise one-quarter of the project (18 units). One-bedroom units will average 727 square feet; two-bedroom units will average 971 square feet; and three-bedroom units will be 1,142 square feet. All one-bedroom units will contain one full bathroom. Two- and three-bedroom units will have two full bathrooms. Parking will be provided at no cost in the subject’s surface parking lot.

All units will be equipped with a full slate of energy star black kitchen appliances—range, refrigerator with icemaker, microwave, dishwasher, and garbage disposal (Table 3). Other features include nine-foot ceilings, patio/balcony, and washer/dryer hookups. Kitchens will have laminate countertops. Flooring will be vinyl plank in the kitchen and living areas with carpet in the bedrooms. Monthly rents at Town Center Apartments will include trash removal. All other utility bills— hot/cold water, sewer, electric cooking, electric heating and cooling, and general electricity—will be the direct responsibility of future tenants.

Amenities provided include a clubhouse with community room and leasing office.

Page 3 Town Center Apartments | Project Description

Table 2 Unit Mix, Town Center Apartments

Phase I Income Level Rent Level # Heated Net Utility Gross # Bed Units Net Rent* (AMI) (AMI) Bath Sq Ft^ Rent/SF Allowance Rent 50% - PBRA 40% 1 1 3 727 $420 $0.58 $108 $528 50% 50% 1 1 5 727 $555 $0.76 $108 $663 60% 60% 1 1 4 727 $700 $0.96 $108 $808 12 50% - PBRA 40% 2 2 3 971 $500 $0.51 $142 $642 50% 50% 2 2 20 971 $660 $0.68 $142 $802 60% 60% 2 2 19 971 $825 $0.85 $142 $967 42 50% - PBRA 40% 3 2 2 1,142 $560 $0.49 $192 $752 50% 50% 3 2 3 1,142 $750 $0.66 $192 $942 60% 60% 3 2 13 1,142 $940 $0.82 $192 $1,132 18 Total 72 Phase II 60% 60% 2 2 24 971 $825 $0.85 $142 $967 60% 60% 3 2 24 1,142 $940 $0.82 $192 $1,132 Total 48 (*) Net rents include all utilities except trash removal. (^) Weighted average of multiple floorplans Source: Lake View Apartments, L.P.

Table 3 Salient Project Information, Town Center Apartments

Project Information Additional Information Building Type Garden Construction Start Date 4/1/2019 Number of Stories 3 Estimated Opening Date 1/5/2020 Construction Type New Construction Parking Type & Cost Surface ($0) Exterior Design Elements Brick & Fiber Cement Kitchen Amenities Dishwasher Yes Common Area Clubhouse with community room and leasing Disposal Yes Amenities office Microwave Yes Range Yes Refrigerator w/ Icemaker Yes Utilities Included Nine-foot ceilings; black Energy-Star rated Heat Tenant refrigerator with ice-maker, range, Hot Water Tenant microwave, and dishwasher; laminate Electricity Tenant Unit Features countertops; patio/balcony; washer/dryer Cooking Tenant hook-ups; luxury vinyl tile flooring in kitchen, Heat Source Electric bath and living areas; carpet in bedrooms Cold Water/Sewer Tenant Trash Removal Owner Source: Lake View Apartments, L.P.

Page 4 Town Center Apartments | Site and Neighborhood Analysis

3. SITE AND NEIGHBORHOOD ANALYSIS

A. Site Analysis

1. Site Location The subject property is located on the east side of Saville Row, south of West Mercury Boulevard (VA Route 258) in Hampton City, Virginia (Map 1). The tax parcel number is 7001201. The community will have frontage on Saville Row with a small portion of the parking lot also visible from Pine Chapel Road.

2. Size, Shape, and Topography The subject site is 3.70 acres and irregular in shape (Figure 1). The adjacent Phase II site is 2.90 acres. Topography of the site could not be fully ascertained due to tree coverage, but the site appears to be generally flat (Figure 2).

3. Existing and Proposed Uses The subject site is an undeveloped, wooded lot.

4. General Description of Land Uses Surrounding the Subject Site The subject’s general neighborhood is defined as the Coliseum Central area. The subject property is located in a primarily (although not exclusively) commercial corridor and within less than one mile of numerous retail, recreational, hospitality and entertainment venues.

Page 5 Town Center Apartments | Site and Neighborhood Analysis

Map 1 Site Location

Page 6 Town Center Apartments | Site and Neighborhood Analysis

Figure 1 Site Plan

Page 7 Town Center Apartments | Site and Neighborhood Analysis

Figure 2 Views of Subject Site

View of site from northwest corner facing southeast View of site facing north from Pine Chapel Road

View of site facing south from Walmart Parking lot View of site from northeast corner facing southwest

5. Specific Identification of Land Uses Surrounding the Subject Site The land uses directly bordering the subject sites, starting from the north and proceeding in a clockwise direction, are as follows (Figure 3):

 North: An Aldi grocery store is located on the north side of Walmart Drive. A branch of Langley Federal Credit Union is located at the intersection of West Mercury Boulevard and Saville Row.  East: Walmart.  South: On the south side of Pine Chapel Drive is the Hampton Roads Convention Center. Further south is the Coliseum Center. Along Pine Chapel Road, there are several small single family homes, not all of which appear to be occupied.  West: A modern Goodwill Retail Center and car dealership at the intersection of Saville Row and West Mercury Boulevard. Further west next to Goodwill is the 182-unit Coliseum Gardens multifamily rental community that was built in 1985.

Page 8 Town Center Apartments | Site and Neighborhood Analysis

Figure 3 Views of Surrounding Land Uses

Aldi grocery store Goodwill Retail Center across Saville Row

Vacant lot north of site Rear view of Hampton Roads Convention Center

Coliseum Gardens multifamily rental Vacant home between site & Walmart along Pine Chapel Rd

Page 9 Town Center Apartments | Site and Neighborhood Analysis

B. Neighborhood Analysis

1. Neighborhood Investment and Planning Activities Over the past decade or so, the Coliseum Central area has undergone a significant transformation with the development of several high profile projects. These include the redevelopment of the Coliseum Mall into the newly established and successful Peninsula Town Center; the construction of the Hampton Convention Center; the development of the Power Plant of Hampton Roads (Bass Pro Shop, Lowe’s, BJ’s Wholesale Club and numerous restaurants); and other investment including new hotels, commercial centers and upscale residential uses. Current construction at Peninsula Town Center includes a 97,000-square-foot retail building to be occupied by Floor & Décor, a leading flooring retailer, and Sky Zone Trampoline Park. Construction is also underway at the site of the former Macy’s building which will be the home of an Element Hotel by Marriot; this extended-stay hotel will offer approximately 120-rooms.

In addition to its function as the main commercial center for the city, the Coliseum Central area has also seen the creation of several major high profile residential developments, both single family and multifamily. More than 1,000 new residential rental units have been constructed in the Coliseum Central area since 2009.

2. Public Safety CrimeRisk data is an analysis tool for crime provided by Applied Geographic Solutions (AGS). CrimeRisk is a block-group level index that measures the relative risk of crime compared to a national average. AGS analyzes known socio-economic indicators for local jurisdictions that report crime statistics to the FBI under the Uniform Crime Reports (UCR) program. Based on detailed modeling of these relationships, CrimeRisk provides a detailed view of the risk of total crime as well as specific crime types at the block group level. An index of 100 reflects a total crime risk on par with the national average, with values below 100 reflecting below average risk and values above 100 reflecting above average risk. In accordance with the reporting procedures used in the UCR reports, aggregate indexes have been prepared for personal and property crimes separately as well as a total index. However, it must be recognized that these are unweighted indexes, in that a murder is weighted no more heavily than purse snatching in this computation. The analysis provides a useful measure of the relative overall crime risk in an area but should be used in conjunction with other measures.

Map 2 displays the 2017 CrimeRisk Index for the block groups in the general vicinity of the subject. The relative risk of crime is displayed in gradations from beige (least risk) to purple (most risk). The subject is located in the more densely developed portion of the city. As could be expected, given the density of use, crime risk is relatively high in the area surrounding the subject site. That said, much of the local rental stock, including the highest priced communities in the market area, are in this area and crime does not appear to be a marketing issue.

Page 10 Town Center Apartments | Site and Neighborhood Analysis

Map 2 Town Center Market Area CrimeRisk Index

C. Site Visibility and Accessibility

1. Visibility Future multifamily residential buildings on the subject site will have good visibility from Saville Row and Pine Chapel Road but not as likely to have visibility from West Mercury Boulevard. However, because of the subject site’s location adjacent to the entrance to Walmart, the subject will have good visibility to drive by traffic and will be in a readily recognizable location. Pine Chapel Road is a major thoroughfare with approximately 5,300 vehicles using it daily and there should be some visibility from it as well.

2. Vehicular Access The proposed site is located along Saville Row between Walmart Drive to the north and Pine Chapel Road to the south. The site is approximately 0.2 miles south of Saville Row’s intersection with West Mercury Boulevard (VA Route 258). West Mercury is an arterial with approximately 44,000 vehicles passing the intersection daily. The site is conveniently located within less than one mile from the on- and off-ramps of I-64, the major interstate running through Hampton City.

Page 11 Town Center Apartments | Site and Neighborhood Analysis

3. Availability of Public Transit Hampton Roads Transit (HRT) is the primary provider of public mass transit services to citizens of Hampton City as well as Norfolk, Chesapeake, Virginia Beach, Portsmouth, Newport News and Suffolk. The nearest bus stop is directly in front of the subject site. Route 114 (Weaver Road) serves the subject site along Saville Row while the frontage along Pine Chapel Road is served by both Route 114 and Route 118 (Magruder). Buses operate seven days a week and there are many connecting transfer points along all routes. The Hampton Transit Center, located at 2 West Pembroke Avenue, is approximately 2.4 miles to the southeast in downtown Hampton and is the city’s central transfer point. There are also commuter routes to other nearby Hampton Roads municipalities.

4. Pedestrian Access Sidewalks serve Saville Row and most other streets near the site.

5. Accessibility Improvements under Construction and Planned The Statewide Transportation Improvement Program (STIP) is Virginia’s federally required transportation improvement program that identifies those transit/highway construction and maintenance projects that will utilize federal funding, or for which federal approval will be required. The Six-Year Improvement Program Database currently lists several road improvements that are underway in Hampton, but none would directly affect the subject site.

D. Residential Support Network

1. Key Facilities and Services near the Subject Sites The appeal of any given community is often based in part to its proximity to those facilities and services required on a daily basis. Key facilities and services are listed in Table 4. The location of those facilities is plotted on Map 3.

Page 12 Town Center Apartments | Site and Neighborhood Analysis

Table 4 Key Facilities and Services

Distance Establishment Type Address (miles) Walmart Superstore Retail 1900 Cunningham Drive 0.1 Riverdale Plaza (U.S. Post Office, Joanne Fabrics, Planet Fitness, Chili's, Red Lobster, nail salon, Post Office/Retail/Dining 1062 West Mercury Blvd 0.3 dining, etc.) Peninsula Town Center (Target, JCPenney, PetSmart, Cinema Bistro, Barnes and Noble, Regional Retail/Entertainment 4410 E. Claiborne Sq 0.5 Outback, Sushi King, Buffalo Wild Wings, hair salon, dining, etc.) Hampton Coliseum Entertainment 1000 Coliseum Drive 0.5 Walgreens Pharmacy Pharmacy 919 West Mercury Blvd 0.6 Power Plant (Bass Pro Shop, Lowes, BJ's, dining, Retail & Entertainment 1972 Power Plant Pkwy 0.9 etc.) Coliseum Marketplace (Farm Fresh, Michaels, Grocery & Retail 2190 Coliseum Drive 1.0 Panera, bank, dining, etc.) Coliseum Crossing (Food Lion, Ross, Dollar Tree, Petco, Hallmark, nail salon, bank, hair salon, Grocery & Retail 85 Coliseum Crossing 1.0 dining, etc. ) Coliseum Central Fire Station Fire & Emergency Services 204 Marcella Road 1.5 Hampton YMCA Recreation 1322 Lasalle Avenue 1.7 Sentara CarePlex Hospital Hospital 3000 Coliseum Drive 1.7 Hampton High School Education 1491 West Queen Street 1.7 Aberdeen Elementary School Education 1424 Aberdeen Road 1.9 Boo Williams Sportsplex Recreation 5 Armistead Pointe Pkwy 2.0 C. Alton Lindsay Middle School Education 1636 Briarfield Road 2.0 Old Hampton Community Center Community Center 201 Lincoln Street 2.4 Hampton Transit Center Public Transportation 2 W. Pembroke Avenue 2.4 Hampton Sheriff Department Police 1928 W. Pembroke Ave 2.6 Hampton Police Department Police 40 Lincoln Street 2.7 Hamptons Golf Course Recreation 320 Butler Farm Road 2.9 Northampton Branch Library Library 936 Big Bethel Road 3.0 Thomas Nelson Community College Higher Education 99 Thomas Nelson Dr 3.8 Hampton University Higher Education 100 E. Queen Street 4.1 Hampton VA Medical Center Veterans Hospital 100 Emancipation Dr 4.3

Compiled by Real Property Research Group, Inc.

Page 13 Town Center Apartments | Site and Neighborhood Analysis

Map 3 Neighborhood Features

1. Essential Services

Health Care The proposed multifamily rental community is within roughly a five-minute drive of major medical facilities. The closest hospital is Sentara CarePlex Hospital, a 224-bed acute care facility located at 3000 Coliseum Drive, 1.7 mile north of the site. Along with an emergency department, the hospital provides specialized services in cardiac, vascular and cancer treatment and is home to the region’s only dedicated orthopedic hospital center. The Sentara Center for Health and Fitness is located immediately adjacent to the hospital and is open to both hospital’s employees as well as the general public.

The Hampton VA Medical Center, located at 100 Emancipation Drive, is 4.3 miles southeast of the site. This center services veterans throughout southeastern Virginia and northeastern North Carolina. The facility provides primary and specialty care in medicine, surgery and psychiatry. The hospital recently opened a state-of-the-art Women’s Clinic. Several private physicians, dentists and ancillary health providers practice in Hampton City, many of which are located near Sentara CarePlex Hospital.

Page 14 Town Center Apartments | Site and Neighborhood Analysis

Less than eight miles to the west in nearby Newport News is the Riverside Regional Medical Center. This 510-bed hospital offers an emergency department and Level II Trauma Center as well as specialized care centers in cardiology and cancer.

Education The State of Virginia administers Standards of Learning (SOL) Assessment Tests to monitor student performance and the quality of classroom instruction in public school systems throughout the state. Elementary and middle school students are tested in core areas including English, mathematics, science, and writing. High school tests are conducted upon students’ completion of relevant coursework and focus on more specific subject areas such as algebra II, biology, and geometry, in addition to English and writing. The results of SOL tests can be used to compare the performance of students in various schools and school districts, and by extension the quality of the schools themselves. To construct this comparison, we compiled and analyzed data on the percentage of students testing at the state-defined ‘proficient’ level or ‘advanced’ level in core subject areas. We compiled data for the 2016 to 2017 school year.

Although the subject site does not yet have an assigned address, the schools that serve the nearby homes include Aberdeen Elementary School (1424 Aberdeen Road – 1.9 miles west); C. Alton Lindsay Middle School (1636 Briarfield Road – 2.0 miles southwest); and Hampton High School (1491 W. Queen Street – 1.7 miles south). We would expect students residing at the subject to attend these same schools.

Composite test results placed Aberdeen Elementary 13 out of 20 elementary schools, scoring less than both the city and state composite average (Table 5). Residents would attend Lindsay Middle School, which ranks fifth of seven middle schools in the city, scoring less than the citywide composite average, but slightly higher than the state average. High school students would attend Hampton High School which is ranked third of four schools in the county and achieved a composite score of 69.0, less than the citywide composite average of 75.5 and the state average of 84.5

Page 15 Town Center Apartments | Site and Neighborhood Analysis

Table 5 Hampton City Public Schools, 2016-2017

Elementary Schools Grade 3 Middle Schools Grade 8 Rank School English Math Composite Rank School English Math Composite 1 Armstrong 93.0% 91.0% 92.0% 1 Francis W. Jones Magnet 91.0% 93.0% 92.0% 2 Hunter B. Andrews 87.0% 87.0% 87.0% 2 George P. Phenix Elem 89.0% 92.0% 90.5% 3 Samuel P. Langley 79.0% 94.0% 86.5% 3 Hunter B. Andrews 70.0% 84.0% 77.0% 4 Paul Burbank 85.0% 82.0% 83.5% 4 Thomas Eaton Middle 77.0% 77.0% 77.0% 5 George P. Phenix 78.0% 86.0% 82.0% 5 C. Alton Lindsay Middle 67.0% 84.0% 75.5% 6 Francis Asbury 81.0% 76.0% 78.5% 6 Jefferson Davis Middle 75.0% 73.0% 74.0% 7 William Mason Cooper 81.0% 74.0% 77.5% 7 Benjamin Syms Middle 69.0% 76.0% 72.5% 8 Barron 74.0% 79.0% 76.5% City of Hampton Average 76.9% 82.7% 79.8% 9 Booker 75.0% 76.0% 75.5% State Average 76.0% 74.0% 75.0% 10 Tucker-Capps 73.0% 72.0% 72.5% 11 Jane H. Bryan 75.0% 67.0% 71.0% High Schools 12 Luther W. Machen 64.0% 71.0% 67.5% High Schools 13 Aberdeen 59.0% 75.0% 67.0% Rank School English Math Composite 14 A.W.E. Bassette 66.0% 64.0% 65.0% 1 Kecoughtan High 88.0% 90.0% 89.0% 15 Alfred S. Forrest 65.0% 63.0% 64.0% 2 Bethel High 80.0% 72.0% 76.0% 16 John Tyler 56.0% 68.0% 62.0% 3 Hampton High 80.0% 58.0% 69.0% 17 Captain John Smith 62.0% 60.0% 61.0% 4 Phoebus High 81.0% 55.0% 68.0% 18 Phillips 60.0% 60.0% 60.0% City of Hampton Average 82.3% 68.8% 75.5% 19 John B. Cary 46.0% 62.0% 54.0% State Average 87.0% 82.0% 84.5% 20 Christopher C. Kraft 45.0% 50.0% 47.5% City of Hampton Average 70.2% 72.9% 71.5% State Average 75.0% 75.0% 75.0% Source: Virginia Department of Education

2. Commercial Goods and Services

Convenience Goods The term “convenience goods” refers to inexpensive, nondurable items that households purchase on a frequent basis and for which they generally do not comparison shop. Examples of convenience goods are groceries, fast food, health and beauty aids, household cleaning products, newspapers, and gasoline.

Subject residents will have immediate access to goods and services. As noted earlier, adjacent to the site is a Walmart supercenter which includes grocery items and a pharmacy. An Aldi grocery store is located immediately north of the subject. Target is located one-half mile to the north in the Peninsula Town Center. Other grocery stores located within in a mile of the site include a Farm Fresh and Food Lion. The closest traditional pharmacy to the site is a Walgreen’s located approximately one-half mile to the east on Mercury Boulevard.

Shoppers Goods The term “shoppers goods” refers to larger ticket merchandise that households purchase on an infrequent basis and for which they usually comparison shop. The category is sometimes called “comparison goods.” Examples of shoppers goods are apparel and accessories, furniture and home furnishings, appliances, jewelry, and sporting goods.

The Peninsula Town Center, located 4410 E. Claiborne Square (0.9 miles northwest), is a modern, mixed use development located in central Hampton at the intersection of West Mercury Boulevard

Page 16 Town Center Apartments | Site and Neighborhood Analysis

(north side) and Coliseum Drive (west side). Anchored by the aforementioned Target and J.C. Penney, the center also includes over 70 restaurants and retail stores. The outdoor shopping venue’s contemporary design accommodates pedestrian as well as vehicular traffic.

Numerous retail shopping centers surround the Peninsula Town Center, including Coliseum Crossing (Food Lion, Petco, Marshalls, Ross Dress-for-Less, Sun Trust Bank, Applebee’s, David’s Bridal, among others) as well as other retailers directly across Coliseum Drive in the Coliseum Marketplace, including Farm Fresh grocery and pharmacy, Panera Bread, Michaels, Starbucks and Virginia Commonwealth Bank, among others.

Directly across West Mercury Boulevard at its intersection with Saville Row is the Riverdale Plaza. The center has approximately 35 tenants, including Chili’s, Red Lobster, At Home, and Joann Fabrics, among others.

The Power Plant at Hampton Roads, located roughly 0.8 miles west of the site at 1972 Power Plant Parkway, is a retail development that includes Bass Pro Shops, Lowe’s, BJ Wholesale Club and a variety of restaurants that encircle an adjacent lake.

3. Other Facilities and Features The site is convenient to a variety of community services, including the Boo Williams Sportsplex, located 2.0 miles north of the site at 5 Armistead Pointe Parkway. This state-of-the-art sports center was constructed in 2008 and includes such features as eight full-size basketball courts, 12 volleyball courts, eight indoor hockey fields, facilities for track and field as well as gymnastics and seats as many as 4,000 spectators. The largest community center in Hampton City, Old Hampton Community Center, is located roughly 2.4 miles to the east. This center includes a 25-meter indoor swimming pool, fitness center with gymnasium, activity rooms as well as outdoor tennis and basketball courts. The Hampton YMCA, located at 1322 Lasalle Avenue (1.7 miles east), includes a wellness center, indoor pool, indoor and outdoor track, exercise room, computer lab, spinning room, among other facilities.

There are five branches of the Hampton Public Library, including the Northampton Branch library located at 936 Big Bethel Road, roughly 3.0 miles west of the site. The main library is located at 4207 Victoria Boulevard, approximately 3.0 miles southeast. Additionally, Hampton City is home to three museums, including the Virginia Air & Space Museum (600 Settlers Landing Road); the Hampton History Museum (120 Old Hampton Lane); and the Casemate Museum on the grounds of Fort Monroe. Hampton is also home to the American Theatre, located at 125 E. Mellen Street.

Page 17 Town Center Apartments | Economic Context

4. ECONOMIC CONTEXT A. Introduction This section of the report focuses primarily on economic trends and conditions in the city of Hampton, the jurisdiction in which the Town Center Apartments property is located. For purposes of comparison, certain economic trends in the State of Virginia and the nation are also discussed.

B. Labor Force, Resident Employment, and Unemployment Since 2006, the annualized unemployment rate in the City of Hampton has been consistently above Virginia’s statewide unemployment rate, and since 2011, comparable to or greater than the nation’s unemployment rate (Table 6). Hampton’s annual unemployment rate jumped from 4.7 percent in 2008 to 7.8 percent in 2009, as the effects of the recession were felt at a national level. The unemployment rate has declined every year since peaking at 9.0 percent in 2010, but the decline has been more moderate than that of the state and national rates. During the first ten months of 2017, Hampton’s unemployment rate was 5.2 percent, higher than the national average of 4.6 percent and well above Virginia’s unemployment rate of 3.8.

Table 6 Labor Force and Unemployment Rates

Annual Unemployment Rates - Not Seasonally Adjusted Annual 2017 Unemployment 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jan-Oct Labor Force 67,151 68,492 69,260 67,306 66,666 66,445 65,983 65,833 65,661 64,182 64,276 64,712 Employment 64,648 66,052 65,979 62,042 60,687 60,507 60,542 60,895 61,211 60,324 60,662 61,372 Unemployment 2,503 2,440 3,281 5,264 5,979 5,938 5,441 4,938 4,450 3,858 3,614 3,340 Unemployment Rate City of Hampton 3.7% 3.6% 4.7% 7.8% 9.0% 8.9% 8.2% 7.5% 6.8% 6.0% 5.6% 5.2% Virginia 3.1% 3.0% 3.9% 6.7% 7.1% 6.6% 6.1% 5.7% 5.2% 4.5% 4.0% 3.8% United States 4.6% 4.6% 5.8% 9.3% 9.6% 8.8% 8.3% 7.4% 6.2% 5.3% 4.9% 4.6% Source: U.S. Department of Labor, Bureau of Labor Statistics 11.0% City of Hampton 10.0% Virginia 9.0% United States 8.0% 7.0% e t

a 6.0% R

t n

e 5.0% m y o l 4.0% p m e

n 3.0% U 2.0% 1.0% 0.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Jan-Oct

C. Commutation Patterns According to 2012-2016 American Community Survey (ACS) data, 34 percent of workers residing in the primary market area spent less than 15 minutes commuting to work (Table 7). Thirty-nine percent of workers spent 15 to 30 minutes commuting, while 16 percent of workers commuted 30 to 45 minutes to work. About nine percent of workers residing in the PMA spent 45 or more minutes commuting to their respective place of employment. Less than one percent of workers residing in the primary market area worked outside the state of Virginia. Forty-five percent of local residents worked in the city of Hampton.

Page 18 Town Center Apartments | Economic Context

Table 7 Commutation Data

Travel Time to Work Place of Work Workers 16 years+ #% Workers 16 years and over #% Did not work at home: 29,884 98.4% Worked in state of residence: 30,127 99.2% Less than 5 minutes 314 1.0% Worked in county of residence 13,628 44.9% 5 to 9 minutes 3,257 10.7% Worked outside county of residence 16,499 54.3% 10 to 14 minutes 6,689 22.0% Worked outside state of residence 253 0.8% 15 to 19 minutes 6,867 22.6% Total 30,380 100% 20 to 24 minutes 3,861 12.7% Source: American Community Survey 2012-2016 25 to 29 minutes 1,238 4.1% 2012-2016 Commuting Patterns Outside 30 to 34 minutes 3,134 10.3% Town Center Market Area County 35 to 39 minutes 738 2.4% 54.3% 40 to 44 minutes 1,016 3.3% 45 to 59 minutes 1,584 5.2% 60 to 89 minutes 756 2.5% 90 or more minutes 430 1.4% Outside Worked at home 496 1.6% In County 44.9% State Total 30,380 0.8% Source: American Community Survey 2012-2016

D. County At-Place Employment

1. Trends in Total At-Place Employment At-place employment in Hampton has generally trended downward since 2006, but with intervening years of modest growth (Figure 4). As of 2006, at-place employment within Hampton (jobs located within the city boundaries) totaled 58,473 positions. As of mid-end 2017, at place employment totaled 54,317, a loss of over 4,000 jobs (7.1 percent) since 2006. Only five of the last ten years have seen job increases, including the addition of 424 jobs in 2012 and 380 jobs during the first ten months of 2017.

Page 19 Town Center Apartments | Economic Context

Figure 4 At-Place Employment

Total At Place Employment 70,000

60,000 2 3 3 7 5 7 7 2 9 0 8 7 4 4 1 7 8 , 4 7 8 , , 6 4 5 3 50,000 1 0 8 5 3 3 8 8 , , 9 9 5 3 5 , , 9 8 9 t 5 6 , 5 , 6 , , , n 4 4 5 4 4 5 3 3 e 3 5 5 5 5 5 5 5 m

y 40,000 o l p m E

e

c 30,000 a l P

t A 20,000

10,000

0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q2

Change in At Place Employment

1,000 10.0% 426 280 380 8.0% 500 219 99

e 6.0% c a l 0 P

t 4.0% A

-12 % n i

-116 A e -500 g 2.0% n n -435 n a u h a C l

l G

a 0.0% -1,000 r u o n w n t A -994 -2.0% h -1,500 -1,548 -4.0% -2,000 Annual Change in City of Hampton At Place Employment -6.0% -2,500 United States Annual Employment Growth Rate -8.0% -2,455 City of Hampton Annual Employment Growth Rate -3,000 -10.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q2

Source: U.S. Department of Labor, Bureau of Labor Statistics, Quarterly Census of Employment and Wages

2. At-Place Employment by Industry Sector The Government sector accounted for almost 29 percent of all at-place employment in Hampton City in second quarter 2017, reflecting the substantial presence of the federal government due to the presence of Joint Base Langley-Eustis (formerly Langley Air Force Base) (Figure 5). By comparison, federal, state, and local governments are responsible for just 15 percent of all employment nationwide. The Trade-Transportation-Utilities sector was the largest non- government economic sector in Hampton City, providing 17 percent of all jobs, slightly below the national proportion at 19 percent. Hampton’s Education-Health sector and Professional-Business sectors are on par with those nationally, representing 16 percent and 14 percent, respectively.

Figure 6 details annualized employment change by economic sector within Hampton and the United States between 2011 and second quarter 2017. Over this period, the city’s substantial Government sector declined by five percent. Construction and Financial Activities declined by eight percent and 13 percent, respectively. Information and Natural Resources-Mining lost the most jobs, proportionally, but those are small parts of the local economy. The largest growth was in the

Page 20 Town Center Apartments | Economic Context

other sector at 20 percent. Education Health, Professional Business, Manufacturing and Trade- Transportation-Utilities grew between five and eight percent each.

Figure 5 Total Employment 2Q 2017

Total Employment by Sector 2017 Q2

3.1% Other 2.6%

10.8% Leisure-Hospitality 11.0%

15.5% Education Health 15.8%

14.0% United States Professional-Business 14.3%

5.6% City of Hampton Financial Activities 2.5%

2.0% Information 0.6%

19.0% Trade-Trans-Utilities 16.5%

8.7% Manufacturing 4.2%

4.6% Construction 3.6%

1.2% Nat Resources-Mining 0.0%

15.3% Government 28.6%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

Source: U.S. Department of Labor, Bureau of Labor Statistics, Quarterly Census of Employment and Wages

Figure 6 Total Employment and Employment Change by Sector 2011 to 2Q 2017

Employment Change by Sector, 2011-2017 Q2

United States -1.3% Other 20.4%

City of Hampton 14.5% Leisure-Hospitality -0.4%

15.3% Education Health 8.4%

14.9% Professional-Business 6.8%

7.6% Financial Activities -13.4%

4.6% Information -75.2%

8.1% Trade-Trans-Utilities 5.0%

5.0% Manufacturing 5.8%

18.6% Construction -7.5%

-10.0% Nat Resources-Mining -57.1%

2.3% Government -5.4%

-100.0% -80.0% -60.0% -40.0% -20.0% 0.0% 20.0% 40.0%

Source: U.S. Department of Labor, Bureau of Labor Statistics, Quarterly Census of Employment and Wages

Page 21 Town Center Apartments | Economic Context

3. Major Employers Table 8 outlines Hampton’s largest employers in terms of number of employees as reported by the Virginia Employment Commission, as of 2017. The list of major employers includes a variety of employers led by the Government, Education-Healthcare and Manufacturing sectors. The seven largest employers each have more than 1,000 employees. Three of the largest employers, NASA Langley Research Center, the Department of Defense, and the Department of Veterans Affairs, are part of the federal government.

Table 8 Major Employers, 2017

Rank Name Sector Employment 1 Hampton City School Board Education 1000+ 2 City of Hampton Government 1000+ 3 U.S. Department of Defense Government 1000+ 4 U.S. Department of Veterans Affairs Government 1000+ 5 Nat'l Aeronautics & Space Admin. Space Research & Tech 1000+ 6 Sentara Healthcare Health Care 1000+ 7 Hampton University Education 1000+ 8 Thomas Nelson Community College Education 500 to 999 9 Hampton Newport News Community Svcs Board Human Resources 500 to 999 10 Howmet Castings & Service Inc Manufacturing 500 to 999 11 Telespectrum Inc Administrative Services 500 to 999 12 Riverside Regional Medical Center Health Care 500 to 999 13 Wal Mart Retail 500 to 999 Source: VA Employment Comission

4. Wage Trends The average annual wage in 2016 for Hampton was $45,215. In 2016, the city’s average annual wage was 18 percent less than the $54,836 average for the State of Virginia and 16 percent less than the national average of $53,611 (Table 9).

The average wage in Hampton by sector is less than the national average in all sectors (Figure 7). Wages in the Manufacturing sector were the highest at $57,580 followed by the Professional- Business sector at $55,069. Wages in the dominant Government sector were also relatively high at $53,229.

Page 22 Town Center Apartments | Economic Context

Table 9 Average Annual Wage

Figure 7 Annualized Wage Data by Sector

Average Annual Pay by Sector 2016

Other $29,514 $35,923 City of Hampton Leisure-Hospitality $15,926 $22,431 United States Education-Health $46,158 $48,058

Professional-Business $55,069 $69,964

Financial Activities $42,979 $88,822

Information $47,445 $98,475

Trade-Trans-Utilities $30,189 $44,758

Manufacturing $57,850 $64,860

Construction $47,735 $58,643

Natural Resources-Mining $30,914 $56,110

Government $53,229 $61,331

$0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000

Source: U.S. Department of Labor, Bureau of Labor Statistics, Quarterly Census of Employment and Wages

Page 23 Town Center Apartments | Housing Market Area

5. HOUSING MARKET AREA

A. Introduction The primary market area for the proposed Town Center Apartments general occupancy rental community is defined as the geographic area from which future residents of the community would primarily be drawn and in which competitive rental housing alternatives are located. In defining the Town Center Market Area, RPRG sought to accommodate the joint interests of conservatively estimating housing demand and reflecting the realities of the local rental housing marketplace.

B. Delineation of Market Area The primary market area for the Town Center Apartments site consists of 12 census tracts in the central portion of the City of Hampton, Virginia (Map 4). The City of Hampton is one of the 16 jurisdictions (seven counties and nine independent cities) which comprise the Virginia Beach- Norfolk-Newport News, VA-NC MSA, commonly known as Hampton Roads. The subject site is located in the City of Hampton’s Mercury Central (District 3) Planning Area, one of the ten neighborhood districts defined by the City of Hampton’s Community Development Department. It is one of the designated growth areas for the City of Hampton and the focus of ongoing capital improvements. This area serves as the commercial heart of the city and is well known throughout the Hampton Roads region.

In defining the subject’s primary market area, RPRG included all or a portion of roughly six of Hampton’s districts (Districts 1, 2, 3, 4, 8 and 10), as defined by the City of Hampton (Map 5). These districts include the neighborhoods of Northampton, Briarfield, Coliseum Central, Aberdeen, Riverdale and portions of Downtown Hampton, among others. The market area encompasses much of central and western Hampton City and is adjacent to Joint Base Langley-Eustis (formerly Langley Air Force Base) and the NASA Langley Research Center. These neighborhoods have a large supply of multifamily rental housing.

The boundaries of the market area are: North: Joint Base Langley-Eustis (roughly 3.0 miles from the subject site); East: Hampton River (roughly 2.6 miles from the subject site); South: Pembroke Avenue (roughly 4.0 miles from the subject site); West: Newport News (roughly 3.0 miles from the subject site). The primary market area defined by RPRG is depicted in Map 4. For the purpose of this report, this geographic area is referred to as the Town Center Market Area. As appropriate for this analysis, the market area is compared and contrasted to Hampton City as a whole.

Page 24 Town Center Apartments | Housing Market Area

Map 4 Town Center Market Area

Page 25 Town Center Apartments | Housing Market Area

Map 5 City of Hampton Neighborhood Districts

Page 26 Town Center Apartments | Demographic Analysis

6. DEMOGRAPHIC ANALYSIS

A. Introduction and Methodology RPRG analyzed recent trends in population and households in the Town Center Market Area and the Hampton City secondary market area using several sources. For small area estimates, projections of population and households prepared by the Environmental Systems Research Institute (Esri), a national data vendor, were examined. We compared and evaluated data from Esri in the context of decennial U.S. Census data (from 2000 and 2010). Residential building permit data also were considered. RPRG elected to employ the ESRI estimated trends, as they are benchmarked to the 2010 census and are updated periodically to reflect a current illustration of market area population and households.

B. Trends in Population and Households

1. Recent Past Trends Between 2000 and 2010, the population of the Town Center Market Area increased by 3.3 percent, from 58,184 to 60,088 persons (Table 10). This equates to a relatively modest 0.3 percent average annual increase. During the same period, the number of households in the market area increased by 7.0 percent, from 23,632 to 25,281 households, or an average annual increase of 0.7 percent.

The market area’s population and household growth rates exceeded those of the City of Hampton during this period. The city’s population declined by 6.1 percent (9,001 persons) from 2000 to 2010, representing an average annual loss of 0.6 percent. The number of households increased slightly by 2.1 percent, or an average annual increase of 0.2 percent. As of 2010, there were 137,436 persons and 55,031 households in Hampton City. Nearly one-half (45.9 percent) of all households in Hampton City resided within the Saville Row Market Area in 2010.

2. Estimated and Projected Trends Esri estimates that the Town Center Market Area population remained essentially stable while the household base grew by 103 households between 2010 and 2018. Based on Esri estimates, RPRG projects that the market area’s population will decrease annually by 147 persons (an annual average decrease of 0.2 percent) between 2018 and 2023, bringing the total population to 59,342 by 2023. The number of households will decrease at a rate of 0.2 percent, or 52 households per year, resulting in a projected 25,123 households in the Saville Row Market Area as of 2023.

Similar to that of the market area, both the citywide population and household base are projected to decrease slightly over the next five years.

Page 27 Town Center Apartments | Demographic Analysis

Table 10 Population and Household Projections

Hampton City Town Center Market Area Total Change Annual Change Total Change Annual Change Population Count # % # % Count # % # % 2000 146,437 58,184 2010 137,436 -9,001 -6.1% -900 -0.6% 60,088 1,904 3.3% 190 0.3% 2018 137,171 -265 -0.2% -33 0.0% 60,078 -10 0.0% -1 0.0% 2023 135,452 -1,719 -1.3% -344 -0.3% 59,342 -736 -1.2% -147 -0.2% Total Change Annual Change Total Change Annual Change Households Count # % # % Count # % # % 2000 53,887 23,632 2010 55,031 1,144 2.1% 114 0.2% 25,281 1,649 7.0% 165 0.7% 2018 55,106 75 0.1% 9 0.0% 25,384 103 0.4% 13 0.1% 2023 54,501 -605 -1.1% -121 -0.2% 25,123 -261 -1.0% -52 -0.2% Source: 2000 Census; 2010 Census; Esri; and Real Property Research Group, Inc.

Annual Percentage HH Change, 2000 to 2023 Hampton City Town Center Market Area 0.8% 0.7% 0.7% 0.6% 0.5% 0.4% 0.3% 0.2% 0.2% 0.1% 0.0% 0.1% 0.0% -0.1% -0.2% -0.3% -0.2% -0.2% 2000-2010 2010-2018 2018-2023

3. Building Permit Trends Data on the number of building permits for new residential units is not available at a level that would allow us to approximate building permits in the Town Center Market Area specifically. Therefore, we explore building permit data for Hampton City as a whole. Over much of the last decade, residential building permit activity surpassed household growth in Hampton City (Table 11). Between 2000 and 2016, annual residential building permit totals averaged 350 units.

After reaching a low of 134 units permitted in 2010, annual permit activity averaged 281 units from 2011 through 2013 before declining again to an average of 157 permitted units over the last three years. Over the 15-year period, 60 percent of permits were for single-family homes and 40 percent were for units in multifamily buildings of five or more units. However, this data provided by the US Census Bureau and the City of Hampton does not include several multifamily communities known to have been permitted and constructed over the last three years.

Page 28 Town Center Apartments | Demographic Analysis

Table 11 Building Permits by Structure Type

Hampton City 2000- Annual 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016 Average Single Family 324 348 277 198 321 259 240 217 187 139 130 164 137 145 160 162 149 3,557 209 Two Family 0 0 0 0 0 0 0 4 0 0 0 0 0 0 0 0 0 4 0 3-4Family 0 0 0 0 0 0 0 000400 0 0 0 0 4 0 5+ Family 0 0 0 432 0 620 140 185 58 554 0 278 10 108 0 0 0 2,385 140 Total 324 348 277 630 321 879 380 406 245 693 134 442 147 253 160 162 149 5,950 350 Source: U.S. Census Bureau, C-40 Building Permit Reports.

Total Housing Units Permitted 2000 - 2016 1,000 879 900 800 693 700 630 d e t t

i 600 m r

e 500 442 P

406 s 380 t i 400 348 n 324 321 U 277 300 245 253 200 134 147 160 162 149 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

C. Demographic Characteristics

1. Age Distribution and Household Type The age of persons residing in the market area and Hampton City follow the same general (and youthful) distribution pattern. The median age in the Town Center Market Area is 35, while the median age in Hampton City is 36 (Table 12). The market area has a slightly larger proportion of young adults than the city in general; young adults comprise 25 percent of the Town Center Market Area and 24 percent of the population in Hampton City. Adults age 35 to 61 comprise the largest percentage of the population in both the market area and the city at 33 percent. Children and youth under the age of 20 account for 23 percent of the market area and 24 percent citywide. Seniors over the age of 62 account for 19 percent of both the market area and citywide population.

The predominant household types in the Town Center Market Area are married couples, with or without children (Table 13). This household type comprises 40 percent of all households in the market area, compared to 41 percent citywide. Children are present in nearly one-third (32 percent) of both market area and city households. Persons living alone represent roughly three out of ten of all households in both areas, although a slightly higher proportion in the market area (31 percent) than in the city (29 percent). Other households with children, which include a number of situations including single parent with or without an unrelated partner, represent 15 percent of households in both the market area and city. Non-family households without children, typically unmarried couples or roommate situations, account for nearly seven percent of local households.

Page 29 Town Center Apartments | Demographic Analysis

Table 12 2018 Age Distribution

Town Center 2018 Age Distribution 2018 Age Hampton City Town Center Market Area Market Area Distribution Hampton City #%#% 18.7% Children/Youth 33,357 24.3% 13,991 23.3% Seniors Under 5 years 8,160 5.9% 3,675 6.1% 19.2% 5-9 years 7,984 5.8% 3,517 5.9% 10-14 years 7,935 5.8% 3,436 5.7% 15-19 years 9,277 6.8% 3,363 5.6% 32.7% Adults Young Adults 32,279 23.5% 15,211 25.3% e p

y 33.0%

20-24 years 11,295 8.2% 4,591 7.6% T 25-34 years 20,983 15.3% 10,621 17.7% Adults 45,221 33.0% 19,658 32.7% 25.3% 35-44 years 16,236 11.8% 7,234 12.0% Young Adults 45-54 years 16,721 12.2% 7,286 12.1% 23.5% 55-61 years 12,264 8.9% 5,138 8.6% Seniors 26,315 19.2% 11,217 18.7% 62-64 years 5,256 3.8% 2,202 3.7% 23.3% Child/Youth 65-74 years 12,384 9.0% 5,185 8.6% 24.3% 75-84 years 6,247 4.6% 2,701 4.5% 85 and older 2,428 1.8% 1,130 1.9% 0% 10% 20% 30% 40% TOTAL 137,171 100% 60,078 100% % Pop Median Age 36 35 Source: Esri; RPRG, Inc.

Table 13 2010 Households by Household Type

Town Center 2010 Households by Hampton City 2010 Households by Household Type Market Area Town Center Market Area Hampton City Household Type # % # % Married w/Children 9,276 16.9% 4,278 16.9% HH w/ 31.5% Other w/ Children 8,350 15.2% 3,680 14.6% Children 32.0% Households w/ Children 17,626 32.0% 7,958 31.5% Married w/o Children 13,269 24.1% 5,903 23.3% HH w/o 37.3% Other Family w/o Children 4,387 8.0% 1,878 7.4% Children 38.8% Non-Family w/o Children 3,707 6.7% 1,649 6.5% e p

Households w/o Children 21,363 38.8% 9,430 37.3% y 31.2% T Singles d l

Singles 16,042 29.2% 7,893 31.2% o 29.2% h e Total 55,031 100% 25,281 100% s u o 0% 10% 20% 30% 40% 50% Source: 2010 Census; RPRG, Inc. H % Households

2. Renter Household Characteristics In 2000, 44.1 percent of households living in the Town Center Market Area were renters (Table 14). By 2010, the percentage of renter households in the market area had increased to 46.4 percent. Hampton City also experienced an increase in the rentership rate during this period, although a more modest increase than in the Town Center Market Area. From 2000 to 2010, renter household growth represented 79.7 percent of the net new households within the Town Center Market Area and 64.8 percent of net new households in Hampton City.

According to Esri projections, the proportion of renter households in the market area has continued to increase so that, by 2018, it is estimated that roughly one-half (49.3 percent) of all

Page 30 Town Center Apartments | Demographic Analysis

households residing in the market area are renters. The number of renter households increased in the market over the 7 year period which the number of homeowners declined.

Esri projects that the proportion of renters in the Town Center Market Area will continue to increase through 2023, as renters will account for all net new household growth bringing the rentership rate to 49.9 percent in 2023.

Table 14 Renter Tenure Trends

Change 2000- Change 2010- Change 2018- Hampton City 2000 2010 2010 2018 2018 2023 2023 Housing Units # % # % # % # % # % # % # % Owner Occupied 31,570 58.6% 31,974 58.1% 404 35.3% 30,402 55.2% -1,572 29,929 54.9% -473 Renter Occupied 22,317 41.4% 23,057 41.9% 740 64.7% 24,704 44.8% 1,647 24,572 45.1% -132 Total Occupied 53,887 100% 55,031 100% 1,144 100% 55,106 100% 75 100% 54,501 100% -605 100% Total Vacant 3,424 4,535 5,534 6,925 TOTAL UNITS 57,311 59,566 60,640 61,426

Town Center Change 2000- Change 2010- Change 2018- Market Area 2000 2010 2010 2018 2018 2023 2023 Housing Units #%#%#%#%#%#%#% OwnerOccupied 13,211 55.9% 13,545 53.6% 334 20.3% 12,866 50.7% -679 12,595 50.1% -270 RenterOccupied 10,421 44.1% 11,736 46.4% 1,315 79.7% 12,518 49.3% 782 12,528 49.9% 9 TotalOccupied 23,632 100% 25,281 100% 1,649 100% 25,384 100% 103 100% 25,123 100% -261 100% TotalVacant 1,073 1,769 2,087 2,681 TOTAL UNITS 24,705 27,050 27,471 27,804 Source: U.S. Census of Population and Housing, 2000, 2010; Esri, RPRG, Inc.

Younger renters under the age of 35 account for nearly one-half (48 percent) of market area’s renter households, compared to 42 percent citywide (Table 15). Older adult households between the ages of 35 and 64 account for roughly two out of five (39 percent) of renter households in the Town Center Market Area. These are the households that are more likely to be permanent renters, i.e., those renting more out of necessity rather than choice. Seniors age 65 and older represent only 13 percent of renters in both the market area and the city.

Table 15 Renter Households by Age of Householder

Renter Town Center 2018 Renter Households by Age of Town Center Market Hampton City Households Market Area Householder Area 6.4% Age of HHldr # % # % 75+ 5.8% Hampton City

15-24 years 3,186 12.9% 1,792 14.3% r 1 6.7% e 65-74 7.2% d 25-34 years 7,293 29.5% 4,249 33.9% l 1 o 55-64 10.7%

h 12.2%

35-44 years 4,418 17.9% 2,003 16.0% e 2 s 12.0% u 45-54 14.5%

45-54 years 3,591 14.5% 1,502 12.0% o 2 H 35-44 16.0% 55-64 years 3,003 12.2% 1,337 10.7% f 17.9% o

e 25-34 33.9%

65-74 years 1,778 7.2% 832 6.7% g 2 29.5% A 14.3% 75+ years 1,435 5.8% 802 6.4% 115-24 12.9% Total 24,704 100% 12,518 100% 0% 10% 20% 30% 40% Source: Esri, Real Property Research Group, Inc. % Households

One and two person renter households account for more than two-thirds (69 percent) of all renter households within the Town Center Market Area (Table 16). Larger family households, or those with three to four persons, account for 25 percent of the renter households in the Town Center Market Area. The largest families with five or more persons account for only six percent of all renter

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households. Larger households are slightly more common citywide with those containing three or four persons comprising 28 percent of households and five or more persons representing eight percent of renter households.

Table 16 Renter Households by Persons per Household

Town Center 2010 Persons per Household Renter Renter Hampton City Market Area Occupied Units Town Center Market Occupied 5+-person 6.0% Area #%#% 8.4% Hampton City 9.3% 1-person hhld 8,062 35.0% 4,625 39.4% 4-person 11.1% e

z 16.1% 2-person hhld 6,592 28.6% 3,427 29.2% i 3-person

S 16.9%

d 3-person hhld 3,905 16.9% 1,888 16.1% l 29.2%

o 2-person

4-person hhld 2,560 11.1% 1,091 9.3% h 28.6% e s 39.4% 5+-person hhld 1,938 8.4% 705 6.0% u 1-person

o 35.0%

TOTAL 23,057 100% 11,736 100% H 0% 20% 40% 60% Source: 2010 Census % hhlds

3. Income Characteristics According to income distributions provided by Esri, households in the Town Center Market Area have a 2018 median household income of $55,633 per year, which is five percent more than the $53,257 median income in Hampton City (Table 17). Eighteen percent of market area households earn less than $25,000, compared to 21 percent citywide. Nearly 27 percent of both market area and city households earn between $25,000 and $50,000.

Table 17 2018 Household Income

Town Center 2018 Household Income Town Center Market Area Estimated 2018 Hampton City Market Area 5.9% Household Income $150+k 5.9% Hampton City # % # % 13.6% $100-$149K 13.0% less than $15,000 5,786 10.5% 2,363 9.3% 2 13.5% $15,000 $24,999 5,811 10.5% 2,275 9.0%$75-$99K 3 13.2%

$25,000 $34,999 6,127 11.1% 2,818 11.1%e 4 22.0%

m $50-$74K

o 20.6%

$35,000 $49,999 8,351 15.2% 3,977 15.7%c 5 n I $35-$49K 15.7% $50,000 $74,999 11,341 20.6% 5,583 22.0%d 6 l 15.2% o

$75,000 $99,999 7,287 13.2% 3,430 13.5%h 7 e $25-$34K 11.1% s 11.1% $100,000 $149,999 7,175 13.0% 3,446 13.6%u 8 o

H 9.0% $150,000 Over 3,228 5.9% 1,492 5.9%$15-$24K 9 10.5% Total 55,106 100% 25,384 100% 10 9.3% <$15K 10.5%

Median Income $53,257 $55,633 0% 5% 10% 15% 20% 25% Source: Esri; Real Property Research Group, Inc. % Households

Based on the U.S. Census Bureau’s American Community Survey data, the breakdown of tenure, and household estimates, RPRG estimates that the median income of renter households in the market area as of 2018 is $46,036, 67 percent of the median of $68,609 for owner households (Table 18). Almost one-quarter (24 percent) of renter households earn less than $25,000 and 31 percent earn between $25,000 and $50,000. Thirty-four percent of renter households earn $50,000-$99,999 and 11 percent earns $100,000 or more.

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Table 18 2018 Household Income by Tenure

Estimated 2018 HH Renter Owner 2018 Household Income by Tenure Income Households Households $150k+ 1,314 Town Center Market 177 #%#% 2,208 Area $100-$150K 1,238 less than $15,000 1,533 12.2% 830 6.5% 2 $75-$99.9K 2,284 $15,000 $24,999 1,476 11.8% 799 6.2% 3 1,145 $50-$74.9K4 2,452 $25,000 $34,999 1,671 13.3% 1,148 8.9% 3,131 $35,000 $49,999 2,147 17.2% 1,831 14.2% 5 e $35-$49.9K 1,831

m 2,147

$50,000 $74,999 3,131 25.0% 2,452 19.1% o 6 c n

I 1,148 $75,000 $99,999 1,145 9.2% 2,284 17.8% $25-$34.9K7 Owner Households d 1,671 l

o 8 $100,000 $149,999 1,238 9.9% 2,208 17.2% h 799 e $15-$24.9K s 1,476 $150,000 over 177 1.4% 1,314 10.2% u 9 Renter Households o

H 830 Total 12,518 100% 12,866 100% <$15K10 1,533

Median Income $46,036 $68,609 0 1,000 2,000 3,000 4,000 # of Households Source: American Community Survey 2012-2016 Estimates, RPRG, Inc.

4. Cost-Burdened Renter Households ‘Rent Burden’ is defined as the ratio of a household’s gross monthly housing costs – rent paid to landlords plus utility costs – to that household’s monthly income. VHDA requires that household rent burdens under the LIHTC program be no higher than 35 percent.

Data regarding the concept of rent burden from the 2012-2016 ACS highlight that lower-income renter households in the Town Center Market Area tend to pay a very high percentage of their monthly income toward housing costs (Table 19). Households with rent burdens higher than 35 percent are considered ‘cost-burdened’. Forty-two percent of all renter households residing in the Town Center Market Area have rent burdens of 35 percent or higher and over one-third (35 percent) of renter households have rent burdens greater than 40 percent. The cost-burdened situation of many low- to moderate-income renter households is a primary indicator of a need for new affordable income- and rent-restricted rental housing in the primary market area. Additionally, 8.8 percent of the rental housing stock within the market area can be considered substandard, i.e., lacking complete plumbing facilities, or overcrowded with more than 1.0 occupants per room.

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Table 19 Rent Burden by Household Income, 2012-2016, Primary Market Area

Rent Cost Burden Substandardness

Total Households # % Total Households Less than 10.0 percent 299 2.4% Owner occupied: 10.0 to 14.9 percent 975 8.0% Complete plumbing facilities: 13,062 15.0 to 19.9 percent 1,066 8.7% 1.00 or less occupants per room 12,890 20.0 to 24.9 percent 1,417 11.6% 1.01 or more occupants per room 172 25.0 to 29.9 percent 1,631 13.4% Lacking complete plumbing facilities: 32 30.0 to 34.9 percent 1,495 12.2% Overcrowded or lacking plumbing 204 35.0 to 39.9 percent 778 6.4% 40.0 to 49.9 percent 1,038 8.5% Renter occupied: 50.0 percent or more 3,132 25.6% Complete plumbing facilities: 12,175 Not computed 386 3.2% 1.00 or less occupants per room 11,148 Total 12,217 100.0% 1.01 or more occupants per room 1,027 > 35% income on rent 4,948 41.8% Lacking complete plumbing facilities: 42 > 40% income on rent 4,170 35.2% Overcrowded or lacking plumbing 1,069 Source: American Community Survey 2012-2016 Substandard Housing 1,273 % Total Stock Substandard 5.0% % Rental Stock Substandard 8.8%

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7. COMPETITIVE HOUSING ANALYSIS

A. Introduction and Sources of Information This section presents data and analyses pertaining to the supply of housing in the Town Center Market Area. First, we highlight characteristics of the existing housing stock in the market using data from the American Community Survey. Next, we present the results of primary research in the form of surveys of competitive rental communities completed during February 2018. The competitive housing analysis concludes with information on the development pipeline in the Town Center Market Area for which RPRG communicated with Donald Whipple, Chief Planner at the Hampton Planning and Zoning Administration.

B. Market Area Housing Stock

1. Overview of Housing Stock Based on the 2012-2016 ACS survey, rental housing in larger buildings (10+ units) accounted for 34 percent of renter-occupied housing units in the market area, significantly more than the 24 percent share of rental units in the city (Table 20). Just one-fourth (26 percent) of the rental housing stock consists of single-family detached homes or single family attached homes with those unit types combining for 43 percent in the city. In the Town Center Market Area, mid-size multi-family structures with 5 to 9 units accounted for 24 percent of rental units and small buildings with three to four units accounted for 13 percent; meanwhile the city is less concentrated in each of these unit types.

Table 20 Rental Units by Structure Type

2012-2016 Renter Occupied Units By Structure Renter Town Center 1, detached 18.5% Occupied Hampton City Market Area 35.0% 7.7% # % # % 1, attached 8.0% Town Center Market Area 1.2% 1, detached 8,221 35.0% 2,260 18.5% 2 3.1% e

1, attached 1,869 8.0% 940 7.7% p 3-4 13.2% Hampton City y 11.7% T 2 724 3.1% 144 1.2% e 5-9 24.2% r 17.8% u

3-4 2,753 11.7% 1,615 13.2% t 19.3% c 10-19 12.9% u

5-9 4,191 17.8% 2,958 24.2% r t 20+ units 15.1% 10-19 3,044 12.9% 2,357 19.3% S 10.7% 0.8% 20+ units 2,519 10.7% 1,843 15.1% Mobile home 0.8% Mobile home 185 0.8% 100 0.8% 0% 10% 20% 30% 40% TOTAL 23,506 100% 12,217 100% % of Dwelling Units Source: American Community Survey 2012-2016

Much of the most recently constructed rental housing in Hampton has been built in the market area. The median age of a renter-occupied housing unit in the market area is 36 years (built in 1982), compared to 44 years citywide (Table 21). Approximately 18 percent of the market area rental stock was built since 2000, while 13 percent of the city’s rental stock was built since 2000.

The market area is a high priced home market in an even higher priced county. Based on the 2012- 2016 ACS survey, the median value among owner-occupied housing units in the Town Center Market Area was $196,693, five percent greater than the region’s median value of $187,781 (Table 22). ACS home value estimates are based upon respondent’s assessments of the values of their

Page 35 Town Center Apartments | Competitive Housing Analysis

homes. This data is traditionally a less accurate and reliable indicator of home prices than actual sales data, but is typically a strong gauge of relative home values across two or more areas.

Table 21 Rental Units by Year Built

Town Center 2012-2016 Dwelling Units by Year Built Hampton City Renter Occupied Market Area Renter Occupied Units Town Center Market # % # % 0.1% Area 2014 or later 0.1% 2014 or later 30 0.1% 12 0.1% 2010 to 2013 5.4% Hampton City 2010 to 2013 886 3.8% 663 5.4% 3.8% 12.4% 2000 to 2009 2,099 8.9% 1,515 12.4% 2000 to 2009 8.9% t

l 15.2% 1990 to 1999 2,688 11.4% 1,852 15.2% i 1990 to 1999 u 11.4% B

1980 to 1989 3,779 16.1% 2,535 20.7% r 1980 to 1989 20.7%

a 16.1% e

1970 to 1979 4,267 18.2% 2,570 21.0% Y 21.0% 1970 to 1979 18.2% 1960 to 1969 3,721 15.8% 1,852 15.2% 1960 to 1969 15.2% 1950 to 1959 3,366 14.3% 1,073 8.8% 15.8% 8.8% 1940 to 1949 1,323 5.6% 73 0.6% 1950 to 1959 14.3% 0.6% 1939 or earlier 1,347 5.7% 72 0.6% 1940 to 1949 5.6% TOTAL 23,506 100% 12,217 100% 0.6% 1939 or earlier 5.7% MEDIAN YEAR BUILT 1974 1982 0% 10% 20% 30% % of Dwelling Units Source: American Community Survey 2012-2016

Table 22 Value of Owner Occupied Housing Stock

Town Center Hampton City 2012-2016 Home Value Town Center Market Area 2012-2016 Home Value Market Area 0.5% $750> 0.9% Hampton City # % # % $500-$749K 0.7% less than $60,000 1,416 4.7% 534 4.1% 2.0% 1.3% $60,000 $99,999 1,825 6.1% 579 4.4% $400-$499K 1.9% $100,000 $149,999 6,036 20.0% 1,832 14.0% $300-$399K 10.3% ) 8.4% s

$150,000 $199,999 7,673 25.4% 3,857 29.5% 0

0 $200-$299K 35.3% $200,000 $299,999 9,229 30.6% 4,620 35.3% 0 30.6% $ ( 29.5% $300,000 $399,999 2,532 8.4% 1,346 10.3% e $150-$199K

u 25.4% l $400,000 $499,999 581 1.9% 173 1.3% a 14.0% V $100-149k 20.0% $500,000 $749,999 599 2.0% 92 0.7% e

m 4.4% $750,000 over 259 0.9% 61 0.5% o $60-$99K 6.1% H Total 30,150 100% 13,094 100% 4.1% < $60K 4.7%

Median Value $187,781 $196,693 0% 10% 20% 30% 40% Source: American Community Survey 2012-2016 % of Owner Occupied Dwellings

C. Survey of General Occupancy Rental Communities

1. Introduction to the Rental Housing Survey As part of this analysis, RPRG surveyed 27 general occupancy rental communities. The surveyed communities contain 7,168 rental units. Age-restricted rental communities and subsidized communities were excluded from the survey; this includes Century Plaza, a rental community with 120 LIHTC units, all of which are subsidized through other programs. Two communities offer LIHTC units while the rest are exclusively market rate. Profile sheets with detailed information on each surveyed community, including photographs, are attached as Appendix 5.

Page 36 Town Center Apartments | Competitive Housing Analysis

2. Location Map 6 shows the locations of the 27 surveyed competitive communities in relation to the subject site. Like the subject, most of the surveyed communities are located near the Peninsula Town Center. The remaining communities are located closer to Joint Base Langley-Eustis.

Map 6 Competitive Rental Communities, Town Center Market Area

3. Age of Communities The surveyed communities in the Town Center Market Area have an average placed in-service date of 1990 (Table 23). Seven communities reported undergoing a substantial renovation since being built. Both LIHTC communities were placed in service during the mid 1990s.

4. Structure Type Most of the surveyed properties, including both LIHTC properties, offer exclusively garden apartments. Another four communities offer both garden style and townhome units while five communities offer only townhome style units. Two communities offer only units in elevator serviced midrise buildings. Marcella at Town Center offers a mixture of midrise units, garden units, and townhome units.

Page 37 Town Center Apartments | Competitive Housing Analysis

5. Size of Communities The 21 surveyed communities range in size from the 48-unit Cunningham to the 580-unit Peninsula Grove at Town Center. The average community size at 265 units.

Table 23 Rental Communities Summary

Map Year Year Structure Total Vacant Vacancy Avg 1BR Avg 2BR # Community Built Rehab Type Units Units Rate Rent (1) Rent (1) Incentive 1 Chapman at Peninsula Town Ctr 2009 Mid Rise 158 10 6.3% $1,158 $1,611 Daily Pricing Phase I: 2 mo free w/18 mo 2 MarcellaatTownCenter 2014 Mix 327 35 10.7% $1,286 $1,569 lease; Phase II: 2 mo free w/12 mo lease 3 MonticelloatTownCenter 2011 Gar/TH 324 13 4.0% $1,171 $1,387 2mofree 4 Pinnacle 2016 Mid Rise 296 31 10.5% $1,135 $1,313 Daily Pricing 5 SignaturePlace 1991 2011 Gar 232 4 1.7% $1,018 $1,246 1mofree 6 Addison at Hampton 1988 2015 Gar 276 3 1.1% $945 $1,223 1BR: $300 off 1st mo 7 Bridgewater on the Lake 1998 Gar 498 24 4.8% $1,013 $1,201 3BR: 1 mo free 8 Briton Trace 2012 Gar 120 3 2.5% $1,187 Reduced Rent 9 TrailCreek 2007 TH 300 15 5.0% $1,065 $1,115 $500off1stmo 10 FalconCreek 2007 Gar 424 10 2.4% $930 $1,111 1.5mofree 11 TownshipinHamptonWoods 1987 Gar 296 1 0.3% $883 $1,051 None 12 Hampton Center 1987 2016 Gar 418 6 1.4% $875 $1,040 2 mo free w/15 mo lease 13 Abbington at Hampton Center 1965 2013 Gar/TH 377 6 1.6% $1,012 $1,009 2BR/2BA: $500 off 1st mo 14 Waypoint at Hampton 1986 Gar 210 0 0.0% $994 $500 off 1st mo 15 Cunningham 1985 Gar 48 4 8.3% $980 None 16 Sacramento 1978 TH 147 9 6.1% $950 2BR & 4BR: 2 mo free 17 HeatherLake 1986 Gar/TH 252 10 4.0% $810 $920 None 18 The Samuel 1987 Gar 284 10 3.5% $852 $918 None 19 Gateway 1974 TH 104 2 1.9% $910 1/2 off 1st mo 20 Armistead 1972 TH 93 2 2.2% $740 $880 None 21 PeninsulaGroveatTownCtr 1964 2015 Gar 580 4 0.7% $829 $877 Renov2BR:$400off1stmo 22 Coliseum Gar 1985 Gar 182 7 3.8% $800 $875 1BR: 1.5 mo free 23 WaterfordPointe** 1993 Gar 120 0 0.0% $731 $865 None 24 DerbyRun** 1996 Gar 304 17 5.6% $864 $500off1stmo 25 New Hampton Commons 1974 2005 Gar/TH 252 6 2.4% $718 $833 Reduced Rents 26 Tidemill Farms 1978 Gar 284 15 5.3% $730 $830 Up to 2 mo free 27 AsburyPlace 1972 2016 TH 262 0 0.0% $800 1/2off1stmo

Total/Average 1990 7,168 247 3.4% $935 $1,058 Stabilized Total/Average 6,545 181 2.8% LIHTC Total/Average 424 17 4.0% (**) Tax Credit Communities Communities in lease-up (1) Rent is contract rent, and not adjusted for utilities or incentives Source: Field Survey, Real Property Research Group, Inc. February 2018.

6. Vacancy Rates The stabilized average vacancy rate within the Town Center Market Area is 2.8 percent, indicative of a healthy market. The stabilized vacancy rate does not include Pinnacle or Marcella at Town Center as those properties are still undergoing initial lease-up. Between the two LIHTC communities, there are 17 vacant units for an average vacancy rate of four percent. All of the vacant units are at Derby Run; staff noted that the location resulted in a significant number of applicants being over-income.

7. Rent Concessions Of the 27 communities surveyed, 19 are offering some type of rental concession, ranging from reduced rent to two months free. Two communities reported using LRO or Yieldstar pricing

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software, which changes rents on a daily basis based on a variety of market trends, effectively incorporating incentives into the daily adjustments.

8. Absorption History The absorption history is available for several market rate rental communities within the Town Center Market Area; no LIHTC communities have opened in the past 20 years (Table 24). According to information provided by the leasing representatives at these communities, the properties absorbed units at an average pace ranging from 10 to 20 units per month. Several of these communities were in lease up simultaneously.

Table 24 Recent Absorption History, Upper Tier Rental Communities

Units Average First Move- Completion Total Community Leased To Absorption In of Lease Up Units Date Per Month Chapman at Peninsula Apr-09 Feb-10 158 15.5 Monticello at Town Center Feb-11 Jun-12 324 20.3 Trail Creek Phase II Mar-12 Sep-12 96 14.8 Briton Trace Nov-12 Jun-13 120 14.7 Marcella Town Center Apr-14 Dec-15 207 10.3 Communities Undergoing Initial Lease Up Marcella Town Center II Jul-17 120 96 16.0 Pinnacle Nov-16 296 265 17.7 Average 15.6 Source: Field Survey, Real Property Research Group, Inc. February 2018, Previous Research

D. Analysis of Rental Pricing and Product

1. Payment of Utility Costs Under the proposed rent structure, all utility expenses will be the responsibility of the tenant except for trash removal. This is also the arrangement at six of the surveyed communities (Table 25). Fourteen communities do not include any utilities in the rent. The six remaining communities include water/sewer and trash removal in the rent.

2. Unit Features All properties provide a basic set of kitchen appliances, including a dishwasher, except for Asbury Place. Eight properties provide microwaves in all units and one does so in select units. Three communities do not provide any type of in-unit laundry. Nine communities provide hook ups in each unit. Twelve communities provide the appliances as a standard feature in all units. Three communities provide washer/dryers for an additional fee.

3. Parking Free surface parking is the standard in this market. Only one community, Chapman at Peninsula Town Center offers structured parking. Seven communities offer detached garages that can be rented for a monthly fee of $75 to $160.

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Table 25 Utility Arrangement and Unit Features - Town Center Market Area

Utilities Included in Rent r e t g a c i n r i r W e h t t Heat k Dish- Micro-

t s c t a o a a e e o o r Community Type l washer wave Parking In-Unit Laundry H H C E W T

Abbington at Hampton Center Elec o o o o o o Std Surface Addison at Hampton Elec o o o o o o Std Std Surface Std Armistead Gas o o o o o o Std Std Surface Hook Ups Asbury Place Gas o o o o x x Surface Hook Ups Bridgewater on the Lake Gas o o o o o o Std Detached Gar/$125 Std Briton Trace Elec o o o o o o Std Std Surface Std Chapman at Peninsula Town Ctr Elec o o o o o x Std Std Structured Garage Std Coliseum Gar Gas o o o o x x Std Surface Std Cunningham Gas o o o o x x Std Surface Std Derby Run Elec o o o o o x Std Surface Hook Ups Falcon Creek Elec o o o o o o Std Std Detached Gar/$125 Hook Ups Gateway Elec o o o o o o Std Surface Hook Ups Hampton Center Elec o o o o o o Std Surface Hook Ups Heather Lake Gas o o o o o o Std Surface Std Marcella at Town Center Elec o o o o o o Std Std Surface Std Monticello at Town Center Elec o o o o o o Std Std Detached Gar/$160 Optional/Fee New Hampton Commons Elec o o o o x x Std Surface Peninsula Grove at Town Ctr Gas o o o o x x Std Surface Pinnacle Elec o o o o o o Std Std Detached Gar/$75 Std Sacremento Elec o o o o o x Std Surface Std Signature Place Elec o o o o o o Std Detached Gar/$125 Hook Ups The Samuel Gas o o o o o x Std Detached Gar/$75 Std Tidemill Farms Elec o o o o x x Std Surface Optional/Fee Township in Hampton Woods Elec o o o o o o Std Surface Std Trail Creek Elec o o o o o x Std Select Detached Gar/$125 Hook Ups Waterford Pointe Elec o o o o o x Std Surface Hook Ups Waypoint at Hampton Elec o o o o o x Std Surface Optional/Fee

Source: Field Survey, Real Property Research Group, Inc. February 2018.

4. Community Amenities This is a relatively high amenitied market (Table 26). Of the 27 communities surveyed, 22 offer a swimming pool, 17 offer a clubhouse, and 14 provide a fitness room. Thirteen communities have a playground. Tennis courts are relatively common (seven communities have them) and eight have a business center. Both LIHTC communities, Waterford Pointe and Derby Run, offer a swimming pool, clubhouse, and playground; Waterford has a fitness room as well.

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Table 26 Rental Communities- Community Amenities, Town Center Market Area r e t t n m r e o d u e C o n

s o s R u C u

b s

o s o s e u r s i a h T n g e l n n i b y t s n o n u u a t o u l o l e i a

Community C F P H S P T B

Abbington at Hampton Center o o x o o x o o Addison at Hampton x x x x o o x x Armistead o o x o o o o o Asbury Place o o x o o x o o Bridgewater on the Lake x x x x x x x x Briton Trace x x x o o x o o Chapman at Peninsula Town Ctr x x o o o o o x Coliseum Gar o o o o o o o o Cunningham o o o o o o o o Derby Run x o x o o x o o Falcon Creek x o x o o o o x Gateway o o x o o x o o Hampton Center x x x x o o x o Heather Lake o o x o o x o o Marcella at Town Center x x x o o o o x Monticello at Town Center x x x o o o o o New Hampton Commons x o x o o x o o Peninsula Grove at Town Ctr x x x x x x x x Pinnacle x x x o o x o x Sacremento o o o o o o o o Signature Place x x x x x o x o The Samuel x x x o o x x o Tidemill Farms o o o o o o o o Township in Hampton Woods x x x o o o x o Trail Creek x x x o o o o x Waterford Pointe x x x o o x o o Waypoint at Hampton o o x o o x o o Source: Field Survey, Real Property Research Group, Inc. February 2018.

5. Distribution of Units by Bedroom Type Two-bedroom units are the most common unit type offered in this market (Table 27). Based on available unit distribution information, 29 percent are one-bedroom units, 58 percent are two- bedroom units, and 11 percent are three-bedroom units. Two communities offer studio units and one offers four-bedroom units.

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Table 27 Unit Distribution, Size and Pricing, Town Center Market Area

Total One Bedroom Units Two Bedroom Units Three Bedroom Units Community Units Units Rent(1) SF Rent/SF Units Rent(1) SF Rent/SF Units Rent(1) SF Rent/SF

Chapman at Peninsula Town Ctr 158 88 $1,158 691 $1.68 68 $1,611 1,094 $1.47 2 $2,230 1,508 $1.48 Marcella at Town Center 327 120 $1,116 932 $1.20 174 $1,373 1,334 $1.03 33 $1,638 1,477 $1.11 Pinnacle 296 140 $1,145 799 $1.43 139 $1,323 1,063 $1.24 17 $1,544 1,382 $1.12 Addison at Hampton 276 $930 626 $1.49 $1,233 987 $1.25 Bridgewater on the Lake 498 72 $1,023 800 $1.28 306 $1,211 1,039 $1.17 120 $1,246 1,212 $1.03 Briton Trace 120 78 $1,197 1,060 $1.13 42 $1,360 1,250 $1.09 Monticello at Town Center 324 84 $986 959 $1.03 195 $1,166 1,202 $0.97 45 $1,459 1,539 $0.95 Signature Place 232 96 $943 741 $1.27 120 $1,152 1,058 $1.09 16 $1,382 1,270 $1.09 Trail Creek 300 84 $1,023 791 $1.29 176 $1,073 1,108 $0.97 40 $1,654 1,518 $1.09 Township in Hampton Woods^^ 272 152 $893 688 $1.30 120 $1,061 1,100 $0.96 Abbington at Hampton Center 377 $1,022 805 $1.27 $991 1,000 $0.99 $1,292 1,286 $1.01 Waypoint at Hampton^^ 162 162 $984 1,025 $0.96 Falcon Creek 424 244 $823 756 $1.09 180 $982 951 $1.03 Cunningham 48 96 $960 1,100 $0.87 Heather Lake 252 $820 868 $0.94 $930 1,133 $0.82 $1,075 1,302 $0.83 The Samuel 284 96 $852 788 $1.08 132 $918 1,011 $0.91 56 $1,069 1,264 $0.85 Hampton Center 418 178 $768 775 $0.99 186 $912 1,047 $0.87 54 $1,098 1,413 $0.78 Armistead 93 11 $750 700 $1.07 50 $890 850 $1.05 23 $1,015 950 $1.07 Gateway 104 104 $882 1,000 $0.88 Waterford Pointe-60%** 120 9 $731 624 $1.17 68 $865 818 $1.06 43 $990 1,006 $0.98 Coliseum Gar 182 78 $684 700 $0.98 104 $855 960 $0.89 Peninsula Grove at Town Ctr 580 211 $814 794 $1.03 317 $827 965 $0.86 52 $1,079 1,205 $0.90 Derby Run-60%** 304 200 $822 1,000 $0.82 104 $961 1,300 $0.74 New Hampton Commons 252 48 $703 620 $1.13 192 $813 845 $0.96 12 $1,075 1,100 $0.98 Sacramento# 128 78 $792 936 $0.85 50 $1,145 1,263 $0.91 Asbury Place 262 262 $747 880 $0.85 Tidemill Farms 284 139 $593 595 $1.00 145 $672 875 $0.77

Total/Average 7,077 $889 752 $1.18 $1,009 1016 $0.99 $1,295 1291 $1.00 Unit Distribution 6,283 1,850 3,652 709 % of Total 88.8% 29.4% 58.1% 11.3% (**) Tax Credit Communities (^^) Township has 24 studio units and Waypoint has 48 studio units not depicted. (#) Sacremento has 19 4BR units not depicted. (1) Rent is adjusted to include only Trash and incentives Source: Field Survey, Real Property Research Group, Inc. February 2018.

6. Effective Rents Unit rents presented in Table 27 are net or effective rents, as opposed to street or advertised rents and have been adjusted for rental incentives. The net rents reflect adjustments to street rents to equalize the impact of utility expenses across complexes. Specifically, the net rents represent the hypothetical situation where only trash collection is included in monthly rents at all communities, as will be the case at the subject property.

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 One-bedroom units average $889 and range from a low of $593 to a high of $1,158 per month. The average size is 752 square feet, which translates to an average one-bedroom net rent per square foot of $1.18.  Two-bedroom effective rents within surveyed communities average $1,009 for 1,016 square feet, amounting to an average rent per square foot of $0.99. Two-bedroom rents range from $672 to $1,611 per month.  Three-bedroom rents average $1,295 per month. The average three-bedroom square footage is 1,291 square feet. The average net rent per square foot is thus $1.00. The range for three-bedroom net rents is $961 to $2,230.

E. Derivation of Market Rent To understand how the proposed contract rents for Town Center Apartments compare with the surveyed rental market, the contract rents of comparable communities can be adjusted for differences in a variety of factors including curb appeal, structure age, square footage, the handling of utilities, and shared amenities. Market-rate communities are the most desirable comparables to be used in this type of analysis, as the use of market-rate communities allows RPRG to derive an estimate of market rent.

The purpose of this exercise is to determine whether the proposed LIHTC rents for the subject offer a value relative to market-rate rent levels within a given market area. The rent derived for bedroom type is not to be confused with an appraisal or rent comparability study (RCS) based approach, which is more specific as it compares specific models in comparable rental communities to specific floor plans at the subject and is used for income/expense analysis and valuation.

We elected to compare the subject to three market rate communities offering garden style units and located nearby: Bridgewater on the Lake, Signature Place, and Pinnacle. Once a particular floor plan’s market rent has been determined, it can be used to evaluate: a.) whether or not the subject project has a rent advantage or disadvantage versus competing communities, and b.) the extent of that rent advantage or disadvantage.

The derivation of achievable rent calculations for the 60 percent of AMI units are displayed in Table 28, Table 29 and Table 30. The results of the calculations are summarized in Table 31. The assumptions used in the calculations are shown in Table 32.

After adjustments, the market rent for a one-bedroom unit is $994, providing the subject’s one- bedroom units with a market advantage of 29.6 percent. The estimated market rent for two- bedroom unit is $1,187, resulting in the subject having a 30.5 percent rent advantage. The estimated market rent for three-bedroom unit is $1,333, resulting in the subject having a 29.5 percent rent advantage. Units priced below the 60 percent AMI level will obviously enjoy an even greater price advantage.

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Table 28 Market Rent Analysis – One-Bedroom Units

One-Bedroom Units Comparable Property Comparable Property Subject Property Comparable Property #3 #1 #2 Town Center Apartments Bridgewater on the Lake Signature Place Pinnacle Saville Row and Pine Chapel Rd 507 Marcella Rd 101 Signature Way 600 Freeman Dr Hampton, VA Hampton VA Hampton VA Hampton VA A. Rents Charged Subject Data $ Adj. Data $ Adj. Data $ Adj. Effective Rent $700 $1,023 $943 $1,145 In parts B thru D, adjustments were made only for differences B. Design, Location, Condition Data $ Adj. Data $ Adj. Data $ Adj. Structure Garden Garden $0 Garden $0 Midrise ($25) Year Built / Renovated 2020 1998 $17 1991 $22 2016 $3 Quality/Street Appeal Above Average Average $10 Average $10 Excellent ($10) Location Above AverageAbove Average $0 Above Average $0 Average $10 C. Unit Equipment / Amenities Data $ Adj. Data $ Adj. Data $ Adj. Number of Bedrooms 1 1 $0 1 $0 1 $0 Number of Bathrooms 1 1 $0 1 $0 1 $0 Unit Interior Square Feet 727 800 ($18) 741 ($4) 799 ($18) Balcony / Patio / Porch Yes Yes $0 Yes $0 Yes $0 AC Type: Central Central $0 Central $0 Central $0 Range / Refrigerator Yes / Yes Yes / Yes $0 Yes / Yes $0 Yes / Yes $0 Microwave / Dishwasher Yes / Yes Yes / Yes $0 No / Yes $5 Yes / Yes $0 Washer / Dryer: In Unit No Yes ($25) No $0 Yes ($25) Washer / Dryer: Hook-ups Yes No $5 Yes $0 No $5 D. Site Equipment / Amenities Data $ Adj. Data $ Adj. Data $ Adj. Playground No Yes ($10) No $0 Yes ($10) Community Room Yes Yes $0 Yes $0 Yes $0 Pool No Yes ($10) Yes ($10) Yes ($10) Business Center No Yes ($5) Yes ($5) No $0 Fitness Center No Yes ($10) Yes ($10) Yes ($10) E. Adjustments Recap Positive Negative Positive Negative Positive Negative Total Number of Adjustments 3 6 3 4 3 7 Sum of Adjustments B to D $32 ($78) $37 ($29) $18 ($108) F. Total Summary Gross Total Adjustment $110 $66 $126 Net Total Adjustment ($46) $8 ($90) G. Adjusted And Achievable Rents Adj. Rent Adj. Rent Adj. Rent Adjusted Rent $977 $951 $1,055 % of Effective Rent 95.5% 100.8% 92.1% Estimated Market Rent $994 Rent Advantage $ $294 Rent Advantage % 29.6%

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Table 29 Market Rent Analysis – Two-Bedroom Units

Two-Bedroom Units Comparable Property Comparable Property Comparable Property Subject Property #1 #2 #3 Town Center Apartments Bridgewater on the Lake Signature Place Pinnacle Saville Row and Pine Chapel Rd 507 Marcella Rd 101 Signature Way 600 Freeman Dr Hampton, VA Hampton VA Hampton VA Hampton VA A. Rents Charged Subject Data $ Adj. Data $ Adj. Data $ Adj. Effective Rent $825 $1,211 $1,152 $1,323 In parts B thru D, adjustments were made only for differences B. Design, Location, Condition Data $ Adj. Data $ Adj. Data $ Adj. Structure / Stories Garden Garden $0 Garden $0 Midrise $0 Year Built / Condition 2020 1998 $17 1991 $22 2016 $3 Quality/Street Appeal Above Average Average $10 Average $10 Excellent ($10) Location Above AverageAbove Average $0 Above Average $0 Average $10 C. Unit Equipment / Amenities Data $ Adj. Data $ Adj. Data $ Adj. Number of Bedrooms 2 2 $0 2 $0 2 $0 Number of Bathrooms 2 2 $0 2 $0 2 $0 Unit Interior Square Feet 971 1,039 ($17) 1,058 ($22) 1,063 ($23) Balcony / Patio / Porch Yes Yes $0 Yes $0 Yes $0 AC: (C)entral / (W)all / (N)one Central Central $0 Central $0 Central $0 Range / Refrigerator Yes / Yes Yes / Yes $0 Yes / Yes $0 Yes / Yes $0 Microwave / Dishwasher Yes / Yes Yes / Yes $0 No / Yes $5 Yes / Yes $0 Washer / Dryer: In Unit No Yes ($25) No $0 Yes ($25) Washer / Dryer: Hook-ups Yes No $5 Yes $0 No $5 D. Site Equipment / Amenities Data $ Adj. Data $ Adj. Data $ Adj. Playground No Yes ($10) No $0 Yes ($10) Community Room Yes Yes $0 Yes $0 Yes $0 Pool No Yes ($10) Yes ($10) Yes ($10) Business Center No Yes ($5) Yes ($5) No $0 Fitness Center No Yes ($10) Yes ($10) Yes ($10) E. Adjustments Recap Positive Negative Positive Negative Positive Negative Total Number of Adjustments 3 6 3 4 3 6 Sum of Adjustments B to D $32 ($77) $37 ($47) $18 ($88) F. Total Summary Gross Total Adjustment $109 $84 $106 Net Total Adjustment ($45) ($10) ($70) G. Adjusted And Achievable Rents Rent Adj. Rent Adj. RentAdj. $1,142 Rent $1,253Adjusted $1,166 % of Effective Rent 99.1% 94.7%96.3% Estimated Market Rent $1,187 Rent Advantage $ $362 Rent Advantage % 30.5%

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Table 30 Market Rent Analysis – Three-Bedroom Units

Three-Bedroom Units Comparable Property Comparable Property Subject Property Comparable Property #1 #2 #3 Town Center Apartments Bridgewater on the Lake Signature Place Pinnacle Saville Row and Pine Chapel Rd 507 Marcella Rd 101 Signature Way 600 Freeman Dr Hampton, VA Hampton VA Hampton VA Hampton VA A. Rents Charged Subject Data $ Adj. Data $ Adj. Data $ Adj. Effective Rent $940 $1,246 $1,382 $1,544 In parts B thru D, adjustments were made only for differences B. Design, Location, Condition Data $ Adj. Data $ Adj. Data $ Adj. Structure / Stories Garden Garden $0 Garden $0 Midrise $0 Year Built / Condition 2020 1998 $17 1991 $22 2016 $3 Quality/Street Appeal Above Average Average $10 Average $10 Excellent ($10) Location Above Average Above Average $0 Above Average $0 Average $10 C. Unit Equipment / Amenities Data $ Adj. Data $ Adj. Data $ Adj. Number of Bedrooms 3 3 $0 3 $0 3 $0 Number of Bathrooms 2 2 $0 2 $0 2 $0 Unit Interior Square Feet 1,142 1,212 ($18) 1,270 ($32) 1,382 ($60) Balcony / Patio / Porch Yes Yes $0 Yes $0 Yes $0 AC: (C)entral / (W)all / (N)one Central Central $0 Central $0 Central $0 Range / Refrigerator Yes / Yes Yes / Yes $0 Yes / Yes $0 Yes / Yes $0 Microwave / Dishwasher Yes / Yes Yes / Yes $0 No / Yes $5 Yes / Yes $0 Washer / Dryer: In Unit No Yes ($25) No $0 Yes ($25) Washer / Dryer: Hook-ups Yes No $5 Yes $0 No $5 D. Site Equipment / Amenities Data $ Adj. Data $ Adj. Data $ Adj. Playground No Yes ($10) No $0 Yes ($10) Community Room Yes Yes $0 Yes $0 Yes $0 Pool No Yes ($10) Yes ($10) Yes ($10) Business Center No Yes ($5) Yes ($5) No $0 Fitness Center No Yes ($10) Yes ($10) Yes ($10) E. Adjustments Recap Positive Negative Positive Negative Positive Negative Total Number of Adjustments 3 6 3 4 3 6 Sum of Adjustments B to D $32 ($78) $37 ($57) $18 ($125) F. Total Summary Gross Total Adjustment $110 $94 $143 Net Total Adjustment ($46) ($20) ($107) G. Adjusted And Achievable Rents Adj. Rent Adj. Rent Adj. Rent AdjustedRent $1,200 $1,362 $1,437 % of Effective Rent 96.3% 98.6% 93.1% Estimated Market Rent $1,333 Rent Advantage $ $393 Rent Advantage % 29.5%

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Table 31 Market Rent Advantage - Summary One Three Bedroom Two Bedroom Bedroom 60% AMI Units Units Units Units Subject Rent $700 $825 $940 Estimated Market Rent $994 $1,187 $1,333 Rent Advantage ($) $294 $362 $393 Rent Advantage (%) 29.6% 30.5% 29.5% Bedroom Two Bedroom Bedroom 50% AMI Units Units Units Units Subject Rent $555 $660 $750 Estimated Market Rent $994 $1,187 $1,333 Rent Advantage ($) $439 $527 $583 Rent Advantage (%) 44.2% 44.4% 43.7% Bedroom Two Bedroom Bedroom 50% AMI PBRA Units^ Units Units Units Subject Rent $420 $500 $560 Estimated Market Rent $994 $1,187 $1,333 Rent Advantage ($) $574 $687 $773 Rent Advantage (%) 57.8% 57.9% 58.0% (^) Units will be subsidized; if subsidy is removed, residents will pay rents restricted to 40% AMI

Table 32 Market Rent Advantage – Adjustment Table

Rent Adjustments Summary B. Design, Location, Condition Structure Year Built / Renovated $0.75 Quality/Street Appeal $10.00 Location $10.00 C. Unit Equipment / Amenities Number of Bedrooms $25.00 Number of Bathrooms $30.00 Unit Interior Square Feet $0.25 Balcony / Patio / Porch $5.00 AC Type: $5.00 Range / Refrigerator $25.00 Microwave / Dishwasher $5.00 Washer / Dryer: In Unit $25.00 Washer / Dryer: Hook-ups $5.00 D. Site Equipment / Amenities Playground $10.00 Community Room $10.00 Pool $10.00 Business Center $5.00 Fitness Center $10.00

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F. Achievable Restricted Rents

The market rent derived above is an estimate of what a willing landlord might reasonably expect to receive, and a willing tenant might reasonably expect to pay for a unit at the subject. However, the maximum rent a project can charge for a low-income unit is a gross rent based on bedroom size and applicable HUD’s median household income for the subject area. If these LIHTC maximum gross/net rents are below the market rent, then the maximum rents also function as the achievable rents for each unit type and income band. Conversely, if the market rents are below the LIHTC maximum rents, then the market rents act as the achievable rents. Additionally, tax credit rents should have a 10 percent advantage over market rents. Therefore, achievable rents are the lower of the (reduced) market rent or LIHTC rent.

As shown in Table 33, the maximum LIHTC rents are less than the adjusted estimated market rents. Therefore, the maximum LIHTC rents are the achievable rents for all LIHTC units. All proposed rents for the subject are less than or equal to the achievable rents.

Table 33 Achievable Tax Credit Rent

One Bedroom Two Bedroom Three Bedroom 60% AMI Units Units Units Units Estimated Market Rent $994 $1,187 $1,333 Less 10% $895 $1,068 $1,200 Maximum LIHTC Rent* $713 $843 $947 Achievable Rent $713 $843 $947 SUBJECT RENT $700 $825 $940 One Bedroom Two Bedroom Three Bedroom 50% AMI Units Units Units Units Estimated Market Rent $994 $1,187 $1,333 Less 10% $895 $1,068 $1,200 Maximum LIHTC Rent* $576 $679 $757 Achievable Rent $576 $679 $757 SUBJECT RENT $555 $660 $750 One Bedroom Two Bedroom Three Bedroom 50% AMI PBRA Units^ Units Units Units Estimated Market Rent $994 $1,187 $1,333 Less 10% $895 $1,068 $1,200 Maximum LIHTC Rent* $439 $515 $567 Achievable Rent $439 $515 $567 SUBJECT RENT $420 $500 $560 (*) Assumes the following utility allowances: 1BR: $108; 2BR: $142; 3BR: $192 (^) Units will be subsidized; if subsidy is removed, residents will pay rents restricted to 40% AMI

G. Proposed and Under Construction Rental Communities RPRG perused on-line documents from the City of Hampton planning department to identify any multi-family rental projects that are actively being planned or that are currently under construction

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in the market area. We also corresponded with Donald Whipple, Chief Planner at the Hampton Planning and Zoning Administration.

We divide the pipeline communities into two categories; near term and long term. Near term projects include those that are under construction, and those that we believe have the greatest likelihood of delivering in the next three years. Near term projects are considered in our derivation of three-year rental demand in the market. Long term projects do not have financing secured, are on hold for the present, and/or have estimated delivery dates beyond the next three years. Long term projects also include those for which rezoning or site plan approval is still required. While it is RPRG’s best estimate that such projects are long term, it is entirely possible that such projects could deliver in a three-year period. Conversely, it is also possible that near term projects could become stalled, tabled, or abandoned all together

Based on our research, RPRG has identified two rental communities in the near term pipeline for the Town Center Market Area (Map 7). RPRG also identified projects that are less likely to be completed during the next three years due to financing and procedural issues. The following is a brief description of all projects.

Near Term:

 Lumen: The site of this proposed community is at the intersection of Exploration Way and North Campus Pkwy. A site plan for 300 units has been approved by the city. According to developer Craig Davis Properties, construction will get underway as soon as weather permits.  Peninsula Town Center Expansion: According to Planner Donald Whipple, the Peninsula Town Center has plans to expand with an additional 169 units, although these units would not be part of the existing Chapman community. Plans are currently under review.

Long Term:  Mercury Central: RPRG is aware of a confidential project in the Mercury Central neighborhood that is currently on hold.  Downtown: Richmond-based development firm WVS Cos. presented an unsolicited proposal to potentially redevelop several city-owned parcels for a mixed-use project. However, no site or plans have been determined at this time.

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Map 7 Pipeline Rental Communities

Page 50 Town Center Apartments | Findings and Conclusions

8. FINDINGS AND CONCLUSIONS

A. Key Findings Based on the preceding review of the subject project and demographic and competitive housing trends in the Town Center Market Area, RPRG offers the following key findings:

1. Site and Neighborhood Analysis The subject site is a suitable location for rental housing with excellent access to goods and services.  The site is conveniently located less than one mile from access to I-64, the major interstate running through Hampton City. The site is within walking distance of both Hampton’s major commercial district, the Peninsula Town Center, as well as the Hampton Coliseum and Hampton Roads Convention Center.  Hampton Roads Transit is the primary provider of public mass transit services in Hampton as well as Norfolk, Chesapeake, Virginia Beach, Portsmouth, Newport News and Suffolk. The nearest bus stop is directly in front of the subject site. Route 114 serves the subject along Saville Row and Route 118 can be accessed from Pine Chapel Road.  Both a Walmart Supercenter and an Aldi grocery store are adjacent to the site. Access to additional grocery, pharmacy, and comparison shopping is less than one mile from the subject, as is entertainment and nightlife.

2. Economic Context The Hampton economy is particularly reliant on the Government sector. While the unemployment rate has declined every year since peaking during the recession in 2010, the decline has been slower than that of the state and national rates.  Since 2006, Hampton’s unemployment rate has been consistently above Virginia’s statewide rate, and since 2011, comparable to or greater than the nation’s unemployment rate. During the first ten months of 2017, Hampton’s unemployment rate was 5.2 percent, higher than the national average of 4.6 percent and well above Virginia’s unemployment rate of 3.8 percent.  The Government sector accounted for almost 29 percent of all at-place employment in Hampton City in second quarter 2017, reflecting the substantial presence of the federal government due to the presence of Joint Base Langley-Eustis (formerly Langley Air Force Base); by comparison, federal, state, and local governments are responsible for just 15 percent of all employment nationwide.  At-place employment in Hampton has generally trended downward since 2006, but with intervening years of modest growth. As of 2006, at-place employment within Hampton totaled 58,473 positions. As of mid-end 2017, at place employment totaled 54,317, a loss of over 4,000 jobs (7.1 percent) since 2006. Five of the last ten years have seen job increases, including the addition of 424 jobs in 2012 and 380 jobs during the first ten months of 2017.

3. Demographic Analysis The Town Center Market Area experienced modest household growth between 2000 and 2010. Since then household growth has been negligible and Esri projects a slight decline in households over the next five years.

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 Between 2000 and 2010, Hampton City lost 9,000 persons and gained only 1,150 households. At the same time, the Town Center Market Area grew by 1,904 persons and 1,649 households, or an average annual growth rate of 0.7 percent  Based on Esri projections, RPRG projects that the market area will lose 52 households (0.2 percent) annually over the next five years. This is comparable to the projected citywide decrease in households of 0.2 percent annually.  Between 2000 and 2010, four out of five (79.7 percent) net new households within the Saville Row Market Area were renter households. In 2018, renter-occupied housing units represent nearly one-half (49.3 percent) of all occupied housing in the market area. Over the next five years, renter households will comprise all net new household growth within the market area, bringing the average rentership rate to 49.9 percent in 2023.  Households without children and single person households represent roughly two-thirds (69 percent) of all households in the market area. Married and other households with children account for nearly one-third (32 percent) of households in the market area. The City of Hampton as well as the subject’s market area both have a relatively youthful profile with a median age of 36 and 35, respectively.  Most market area renter households are relatively small—69 percent of the renter- occupied households within the market consist of one- and two-person households.  According to income distributions provided by Esri, households in the Town Center Market Area have a 2018 median household income of $55,633 per year, which is five percent more than the $53,257 median income in Hampton City. The median income among renters is $46,036. Almost one-quarter (24 percent) of renter households earn less than $25,000 and 31 percent earn between $25,000 and $50,000.

4. Competitive Housing Analysis Reported vacancy rates are currently low across the various rental community types surveyed in the Town Center Market Area, indicative of a strong demand for rental housing in general.  The vacancy rate among stabilized market area communities is 2.8 percent, indicative of a healthy market. Between the two LIHTC communities, there are 17 vacant units for an average vacancy rate of four percent.  One-bedroom units average $889 for 752 square feet, which translates to an average one- bedroom net rent per square foot of $1.18. Two-bedroom effective rents within surveyed communities average $1,009 for 1,016 square feet, amounting to an average rent per square foot of $0.99. Three-bedroom rents average $1,295 per month. The average three- bedroom square footage is 1,291 square feet for an average net rent per square foot of $1.00.

 RPRG has identified two multifamily rental developments likely to deliver units in the next three years.

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B. Derivation of Demand

1. Methodology In this section, RPRG presents a Derivation of Demand calculation which is intended to gauge whether sufficient demand from renter households would be available in the primary market area to absorb the number of units proposed for the subject project plus those units proposed at other pipeline rental communities that are expected to be brought on-line over a coming three-year period. The end result of this analysis can be either a positive number (which shows the extent to which available demand for rental units would exceed available supply), a negative number (which shows the extent to which available supply would exceed the number of units needed/demanded over the period in question), or very rarely zero (in which case rental supply and rental demand would be perfectly in balance in terms of number of units demanded versus number of units supplied). The three-year period in question for this analysis is the period spanning February 2018 through February 2021. We restrict the analysis to a three-year period in part to avoid artificially inflating demand by incorporating demand that would not be created until well after the subject project was introduced to the market and in part due to the difficulty in accurately predicting the likely supply of competing rental units beyond the three-year period.

RPRG’s Derivation of Demand calculation is a gross analysis, meaning that the calculation balances the demand for new rental housing units of all types (i.e. luxury market-rate, more affordable market-rate, tax credit, rent-subsidized, and age-restricted) versus the upcoming supply of rental housing units of all types. Considerations such as household incomes and the floor plan types and proposed rents for the subject and other pipeline projects are not factored into the Derivation of Demand; rather, we address the interplay of these factors within the Affordability Analysis and Penetration Analysis sections later in this report.

RPRG sums demand generated from three broad sources in order to arrive at ‘Total Demand for New Rental Units’ over the February 2018 to February 2021 period:

 Projected Change in the Household Base. Recall that in the Growth Trends section of this report, we presented projections of household change within the primary market area over the 2010 to 2023 period. We factor in three years’ worth of the household change suggested by the annual rate of household growth or decline (2018 to 2019, 2019 to 2020, and 2020 to 2021). Note that net household change incorporates growth or decline stemming from both organic changes within existing households (i.e. new household formation as children move out of their parents’ homes, divorces, roommates electing to begin renting separately) and household migration into and out of the market area.

 Need for Housing Stock Upgrades. Demand for new housing units within a primary market area is generated when the stock of available housing units ceases to meet the housing needs of households that wish to remain residents of that primary market. In such instances, the housing stock needs to be upgraded – either through the renovation of existing units or the construction of new units. That a particular housing unit has ceased to meet the housing needs of a market area’s households becomes evident in any number of ways, including: o Physical Removal or Demolition. Clearly, if a unit is demolished or otherwise physically removed from a market, it is no longer available to serve local households. A number of factors contribute to the removal of housing units. Housing units are occasionally removed from any given market through disasters such as fires and various types of weather phenomenon. While such disasters occur somewhat randomly, the decision whether to repair or demolish a unit is based on the economic value of the property.

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Thus, a unit being permanently lost in a disaster should be correlated with factors such as its age, structure type, and physical condition. Demolitions can also be instigated through the loss of economic value or in response to a situation where vacant land has become more valuable than the land plus its existing structure. Based on American Housing Survey data, researchers have analyzed Components of Inventory Change (CINCH). CINCH data indicated that renter-occupied or vacant units were far more likely to be demolished than owner-occupied units; among renter-occupied and vacant units, single-family detached units were more likely to be demolished than multifamily units. o Permanent Abandonment. Housing units can be technically removed from the stock available to serve households without being physically removed. This happens when a housing unit’s owner elects to permanently abandon the unit – due to obsolescence, overwhelming repair costs, or other factors – without going through the steps (and costs) of demolishing it. If a dilapidated unit was occupied up until the time of permanent abandonment, the former occupant represents a source of demand for other units in the area. o Overcrowding. As defined by the U.S. Census Bureau, a housing unit is classified as overcrowded if the household occupying the unit has more people than the housing unit has rooms. Particularly in markets with high housing costs, lower-income individuals and families are often driven into an overcrowded housing situation. Overcrowded households constitute pent-up demand for new housing units not typically captured in household growth projections; were two affordable units to become available, an overcrowded household would very likely split into two households and generate an additional net unit of housing demand. o Mismatch between Household Incomes and Housing Stock Quality. While permanent abandonment and overcrowding are two factors likely to lead to net new demand for affordable housing units, limited recent housing construction in a stable, long- established neighborhood can be an indicator of pent-up demand for new housing units serving middle- to upper-income households. Areas that exhibit this phenomenon are often downtown, inner city, or inner ring suburban locations that currently have – and have had for years – limited to no undeveloped land available for new housing construction/growth. When a neighborhood is stable in terms of overall household numbers but near the point of build-out for many years, many resident households develop a desire for a modern housing unit and the wherewithal to rent or purchase one, but have no stock of modern units from which to choose. Such households are ‘under-housed’ in that the quality of the housing stock in the area where they live (and wish to remain) does not match the type of housing they demand and could afford. Such pent-up demand is rarely captured in public projections of household growth and is difficult to translate to specific calculations. However, this pent-up demand is a very real factor driving demand for new housing units in stable, established residential neighborhoods.  Competitive Multifamily Vacancy Rates. The final source of demand that factors into RPRG’s calculation of demand for rental units is the observed vacancy rate in the primary market area’s competitive rental market. RPRG assumes that a 5.0 percent vacancy rate is required to keep a rental market relatively elastic. Elasticity in this context means that an adequate number of quality housing units are vacant and available at any given time so that households seeking rental units can be accommodated and can have some choice among units. When the market vacancy rate is below 5.0 percent, additional units are needed to ensure an adequate number of available units from which to choose. When the market vacancy rate is above 5.0 percent, the market has the capacity to absorb some

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additional demand (whereby that amount of demand would not need to be met through the development of new units).

In considering competitive vacancy rates, we focus on multifamily units for a number of reasons. One of the primary reasons is that the scattered market in single-family homes, condominiums, and other properties is extremely fluid and cannot be relied upon to consistently serve renter households, since the inventory can convert to homeownership very quickly.

2. Demand Analysis The steps in the derivation of demand for rental housing are detailed below (Table 34):  Per the household trend information discussed previously, RPRG estimates that there are 25,384 households in the Town Center Market Area as of 2018, and we project that this number will decrease to 25,123 by 2023. This growth rate is based on Esri projections. Based on this estimate and projection, RPRG derived the number of households in the market area in February 2018 and February 2021 via interpolation.  Based on this estimate and projection, RPRG computed 25,384 households in the market in 2018 and 25,227 households in February 2021. The Town Center Market Area would thus lose 157 net new households during the three-year study period.  The second broad source of demand in our analysis is labeled ‘Units Removed from the Rental Stock’. A number of factors contribute to the removal of housing units1. These factors include planned demolitions, disasters such as fires and various types of weather phenomenon, units being taken out of service due to being badly damaged or condemned, units lost to conversions or mergers of units, units converted to non-residential use, the moving of mobile homes, and a variety of other factors. Planned demolitions can also be instigated through the loss of economic value, unit obsolescence, or in response to a situation where vacant land has become more valuable than the land plus its existing structure. Based on American Housing Survey data, researchers have analyzed Components of Inventory Change (CINCH). CINCH data indicated that renter-occupied or vacant units were far more likely to be demolished than owner-occupied units. Based on two recent years of statistical observations (2011-2013), the average loss was computed at 0.27 percent of the total occupied housing stock per year. Applying the removal rate of 0.27 percent over the three years in question, RPRG estimates that approximately 223 housing units are likely to be lost.  Combining this figure with household changes, there will be a total demand for 66 new housing units in the market between February 2018 and February 2021.  The proportion of renter-occupied housing units in the Town Center Market Area increased from 44.1 percent to 46.4 percent over the last decade. Based on Esri estimates and projections, we estimate that number has risen to 49.3 percent since 2010; over the last eight years 100 percent of net new households were renters. This trend is projected to continue with 100 percent of net new households over the next five years projected to be renters; the projected rentership rate in 2023 is 49.9 percent. We conservatively

1 American Housing Survey, Components of Inventory Change 2011-2013; Prepared by Econometrica, Inc. for the U.S. Department of Housing & Urban Development’s Office of Policy Development & Research; April 2016.

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averaged the 100 percent of net new households projected to be renters with the total rentership rate of 49.9 percent to get 75.0 percent, creating a net new demand for rental housing of 50 units.

Table 34 Derivation of Net Demand, Town Center Market Area Demand Projected Change in Household Base Units February 2018 Households 25,379 February 2021 Households 25,222 Net Change in Households -157 Housing Removal Units Add: Units Removed from Housing Stock Stock Rate Removed 2018 Housing Stock 27,471 0.27% 74 2019 Housing Stock 27,536 0.27% 74 2020 Housing Stock 27,602 0.27% 75 Total Units Removed from Housing Stock 223

New Housing Demand 66 Average Percent Renter Households over Analysis Period 75.0% New Rental Housing Demand 50

Add: Multifamily Competitive Vacancy Inventory Vacant

Stabilized Multifamily Communities 6,545 181

Communities Under Lease Up 623 66 Total Competitive Inventory 7,168 247

Market Vacancy at 5% 358 Less: Current Vacant Units -247 Vacant Units Required to Reach 5% Market Vacancy 111

Total Demand for New Rental Units 161

Planned Additions to the Supply Total Units 95% Occupancy Peninsula Town Center Expansion 169 161 Lumen Apartments 300 285

Subject (Phase I and Phase II) 120 114 Total New Rental Supply 589 560

Excess Demand for Rental Housing -399 Source: RPRG, Inc.

 Typically, it is assumed that a 5.0 percent vacancy rate is required to keep a rental market relatively fluid. There must be some number of quality units vacant and available at any given time so that households seeking rental units can be accommodated and can have some choice among units. The aggregate vacancy rate for stabilized communities in this market area is 2.8 percent or 181 vacant units. There are currently 66 vacant units at the

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two communities undergoing initial lease up. The total 247 vacant units were subtracted from the 358 units required for five percent vacancy and the additional 111 units needed were added to demand.

 Combining the effects of household trends, necessary unit replacement, and the preferred structural vacancy rate, there will be a total demand for 161 additional rental units in the market area over the three-year period.  Total rental demand must be balanced against new rental stock likely to be added between February 2021 and February 2021. In addition to the subject’s 120 total new rental units, we include the other pipeline projects we believe are reasonably likely to deliver over the three-year period. The near term pipeline projects (including the subject) combine for a total of 589 rental units, or 560 units assuming a structural vacancy rate of five percent.  In subtracting the planned supply of 560 units from the net demand for 161 units over the next three years, we determine that the market area will have an overall excess supply of approximately 398 rental housing units.

3. Conclusions on Demand The results of this derivation of rental demand indicate that the market will have excess supply of approximately 398 units over the three-year period. It should be noted that all of the pipeline units, aside from those at the subject, would be located in market rate communities, where they will presumably be priced considerably higher than the subject and targeting a different market.

C. Target Markets As a modern affordable community with an amenity package, we anticipate that the subject will attract many household types. Single person households will be attracted to the community’s one- bedroom affordable units. Couples, both married and unmarried, would also be attracted to the subject property. RPRG expects the subject to be desirable for families, including two parent, single parent and grandparent households.

D. Product Evaluation Considered in the context of the competitive environment and the proposed product, information on the relative position of the subject follows.

 Structure Type: Most of the market area properties, including both LIHTC properties, offer exclusively garden apartments and this is an appropriate design for the subject.  Unit Distribution: The developer’s total proposed unit distribution for both phases includes ten percent one-bedroom units, 55 percent two-bedroom units, and 35 three- bedroom units. The market wide average unit mix includes 29 percent are one-bedroom units, 58 percent are two-bedroom units, and 11 percent are three-bedroom units. While this unit mix is skewed towards three-bedroom units at the expense of one-bedroom units, families are a common target market for affordable communities and this distribution allows the subject to serve more of these households.

 Unit Size: The subject’s one-bedroom units will average 727 square feet, three percent less than the market average of 752 square feet. The subject’s two-bedroom units will average 971 square feet, which is four percent smaller than the average two-bedroom unit size of 1,016 square feet. The subject’s three-bedroom units will be 1,142 square feet, 12 percent smaller than the market average of 1,295 square feet. These unit sizes are somewhat small,

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particularly the three-bedroom units; however, as an affordable community it is unlikely to impair marketability to income qualified residents. It should also be noted that the market wide average is skewed somewhat by the newer Class A product; the more affordable communities, including the two LIHTC properties, tend to offer smaller units more comparable to the subject.  Unit Features: The proposed standard unit features will include a full slate of black kitchen appliances—range, refrigerator, dishwasher, microwave, and garbage disposal. Kitchens will have laminate countertops. Flooring will be vinyl plank in the kitchen and living areas with carpet in the bedrooms. Other features include patio/balcony and nine-foot ceilings. Less than one-half of the survey communities (12 out of 27) provide washer/dryers as a standard feature in all units. Like both LIHTC communities, the subject will offer hooks ups only which is appropriate for an affordable community in this market. These features are superior to that offered at the existing LIHTC communities and much of the more affordable market rate communities.  Community Amenities: Amenities provided include a clubhouse with a community room and leasing office. While most of the communities, including the existing LIHTC communities, offer an outdoor swimming pool, the subject’s lack of this amenity is unlikely to affect marketability.  Parking: Surface parking such as that proposed at the subject is the standard in this market.

E. Price Position Figure 8 illustrates the relative positions of the proposed rent structure in the current marketplace, including the client’s proposed unit sizes.  The subject’s proposed 60 percent AMI one-bedroom rent of $700 is four percent less than the average one-bedroom at 60 percent AMI offered at Waterford Pointe ($731). The subject’s units will also be 17 percent larger than those at Waterford, creating additional value for subject residents. While Waterford does offer a larger amenity package, including an outdoor pool and a fitness center, the subject will be 27 years newer offering more contemporary features such as a built-in microwave and luxury vinyl tile flooring in kitchen, bath and living areas.

 The subject’s proposed 60 percent two-bedroom rent of $825 is five percent less than the two-bedroom rent at Waterford Pointe ($865). The subject’s units will also be 19 percent larger than those at Waterford, creating additional value for subject residents. Also noteworthy is the fact that two-bedroom units at Waterford include one bathroom while two-bedroom units at the subject will offer two bathrooms. Two-bedroom 60 percent units at Derby Run are priced comparable to the subject at $822 for a unit that is comparable in size.  The subject’s proposed 60 percent three-bedroom rent of $940 is five percent less than the two-bedroom rent at Waterford Pointe ($990). The subject’s units will also be 14 percent larger than those at Waterford, creating additional value for subject residents. Three-bedroom 60 percent units at Derby Run are priced comparable to the subject at $961; however, the subject units are 12 percent smaller. That said, the subject will be 24 years newer offering more contemporary features such as a built-in microwave and luxury vinyl tile flooring in kitchen, bath and living areas.

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Figure 8 Price Position of Town Center Apartments

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When it comes online, the subject’s rents will allow it to offer lower income residents a new unit with modern features at a modest price point. It should be further noted, that only 70 percent of the total units in both phases at the subject will be reserved for households at the 60 percent AMI level and competing at the price point just discussed. The other half of the units will be priced even less, well below any of the market rate or LIHTC units in this market area, creating an even greater value for lower income households.

F. Affordability – Capture and Penetration Analysis

1. Methodology Following our estimate of the depth of demand for net new rental units in the market area, we next test whether sufficient income-qualified households would be available to support the specific units at the subject property and properties in the same broad segment of the rental market in terms of pricing. This analysis is conducted independently of the Derivation of Demand as units at the subject property are likely to be filled by a combination of new households (either moving to or created within the market area) and existing households moving within the market area. The total demand—comprised of the net or incremental demand and the demand from existing households—is the relevant frame of reference for the analysis. The affordability analysis tests the percent of income-qualified households in the market area that the subject community must capture in order to achieve full occupancy. The penetration analysis tests the percent of

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income-qualified households in the market area that the subject community and comparable competitive communities combined must capture to achieve full occupancy. The combination of the Derivation of Demand, Affordability and Penetration Analyses determines if the primary market area can support additional rental units and if sufficient households exist in the target income range to support the proposed units.

Using 2020 as our target year for this analysis, RPRG calculated the income distribution for both total households and renter households based on the relationship between owner and renter household incomes by income cohort from the 2012-2016 American Community Survey with estimates and projected income growth since the Census (Table 35). This is when most of the subject’s units are likely to be leased.

Table 35 2020 Total and Renter Income Distribution Town Center Market Renter Total Households Area Households 2020 Income # % # % less than $15,000 2,406 9.5% 1,582 12.6% $15,000 $24,999 2,249 8.9% 1,479 11.8% $25,000 $34,999 2,734 10.8% 1,642 13.1% $35,000 $49,999 3,825 15.1% 2,093 16.7% $50,000 $74,999 5,354 21.2% 3,043 24.3% $75,000 $99,999 3,442 13.6% 1,165 9.3% $100,000 $149,999 3,622 14.3% 1,319 10.5% $150,000 Over 1,647 6.5% 198 1.6% Total 25,279 100% 12,522 100%

Median Income $56,655 $46,163 Source: American Community Survey 2012-2016 Projections, RPRG, Inc.

A particular housing unit is typically said to be affordable to households that would be expending a certain percentage of their annual income or less on the expenses related to living in that unit. In the case of rental units, these expenses are generally of two types—monthly contract rents paid to landlords and payment of utility bills for which the tenant is responsible. The sum of the contract rent and utility bills is referred to as a household’s ‘gross rent burden’. For the Affordability and Penetration Analyses, RPRG employs a 35 percent gross rent burden. The 35 percent rent burden is the rent burden mandated by VHDA for use in evaluating proposed general occupancy LIHTC communities. Rent burdens of 35 percent are also typically used in underwriting multifamily rental communities in the Mid-Atlantic region, particularly communities with rents targeting low- and moderate-income households in areas with high housing costs.

2. Affordability Analysis The affordability analysis is presented in Table 36 analyses both phases of the community. The steps of the analysis are demonstrated for the subject’s one-bedroom units at 50 percent AMI. This analysis can be similarly applied to the other floorplans and income targets. The steps are as follows:  The 50 percent AMI one-bedroom units have a gross rent burden of $663 ($555 contract rent plus $108 utility allowance for tenant-paid utilities). By applying a 35 percent rent

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burden to this gross rent, we determined that these units would be affordable to households earning at least $22,731 per year. The projected number of market area households earning at least this amount in 2020 is 21,134.  On the assumption of 1.5 persons per bedroom and an income ceiling of 50 percent AMI, the maximum income for households renting a one-bedroom unit at the subject is $27,375. According to the interpolated income distribution for 2020, there will be 19,974 households in the market area with incomes exceeding this upper income limit.  Subtracting the 19,974 households with incomes above the maximum income limit from the 21,134 households who have the minimum income necessary to rent this unit, RPRG calculates that 1,160 households in the market area would be income-qualified for the subject’s 50 percent AMI one-bedroom units. The subject would have to capture 0.4 percent of these households to fill these five units.  Using the same methodology on the interpolated income distribution for renter households in 2020, RPRG estimates there would be 726 renter households in the market area in 2020 that would be income-qualified for these one-bedroom units. The subject would need to capture 0.7 percent of these renter households in order to fill all five units. The same methodology was applied to test the affordability of the subject’s subsidized units where households with incomes as little as $0 will qualify for units as well as each floorplan at the other income targets and for the project as a whole. Overall, the subject would need to capture 1.2 percent of all income-qualified households in the market area and 1.9 percent of all income qualified renter households in order to lease all 120 units.

As noted, eight of the 50 percent AMI units will have Section 8 rental subsidies. Should those subsidies be removed, those units will have to be filled with households that can afford the 40 percent AMI rents assigned to those units. Table 37 depicts the affordability calculation in the hypothetical situation where the subsidy is removed. Should that happen, the overall capture rate for the entire community increases to 1.9 percent of income qualified households and 3.2 percent of income qualified renter households.

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Table 36 Affordability Analysis

PBRA One Bedroom Units Two Bedroom Units Three Bedroom Units No Data Min. Max. Min. Max. Min. Max. Min. Max. Number of Units 3 3 2 0 Net Rent $420 $500 $560 -- Gross Rent $528 $642 $752 -- % Income for Shelter 35% 35% 35% 35% Income Range (Min, Max) no min$ $27,375 no min$ $32,850 no min$ $37,975 na na Total Households Range of Qualified Hhlds 25,279 19,974 25,279 18,478 25,279 17,131 0 0 # Qualified Households 5,305 6,802 8,148 0 Total HH Capture Rate 0.1% 0.0% 0.0% 0

Renter Households Range of Qualified Hhlds 12,522 9,071 12,522 8,172 12,522 7,404 0 0 # Qualified Hhlds 3,451 4,351 5,119 0 Renter HH Capture Rate 0.1% 0.1% 0.0% na

50% Units One Bedroom Units Two Bedroom Units Three Bedroom Units No Data Number of Units 5 20 3 0 Net Rent $555 $660 $750 -- Gross Rent $663 $802 $942 -- % Income for Shelter 35% 35% 35% 35% Income Range (Min, Max) $22,731 $27,375 $27,497 $32,850 $32,297 $37,975 na 0 Total Households Range of Qualified Hhlds 21,134 19,974 19,941 18,478 18,629 17,131 0 0 # Qualified Households 1,160 1,463 1,497 0 Unit Total HH Capture Rate 0.4% 1.4% 0.2% na Renter Households Range of Qualified Hhlds 9,797 9,071 9,051 8,172 8,262 7,404 0 0 # Qualified Hhlds 726 879 859 0 Renter HH Capture Rate 0.7% 2.3% 0.3% na

60% Units One Bedroom Units Two Bedroom Units Three Bedroom Units No Data Number of Units 4 43 37 0 Net Rent $700 $825 $940 -- Gross Rent $808 $967 $1,132 -- % Income for Shelter 35% 35% 35% 35% Income Range (Min, Max) $27,703 $32,850 $33,154 $39,420 $38,811 $45,570 na 0 Total Households Range of Qualified Hhlds 19,885 18,478 18,394 16,763 16,918 15,195 0 0 # Qualified Households 1,407 1,632 1,723 0 Unit Total HH Capture Rate 0.3% 2.6% 2.1% na Renter Households Range of Qualified Hhlds 9,017 8,172 8,122 7,202 7,287 6,344 0 0 # Qualified Households 845 920 943 0 Renter HH Capture Rate 0.5% 4.7% 3.9% na

All Households = 25,279 Renter Households = 12,522 Income # Units # Qualified # Qualified Capture Target Band of Qualified Hhlds Capture Rate Band of Qualified Hhlds HHs HHs Rate Income nomin$$37,975 nomin$ $37,975 PBRA 8 Households 25,27917,131 8,1480.1% 12,5227,404 5,119 0.2% Income $22,731$37,975 $22,731 $37,975 50% Units 28 Households 21,13417,131 4,0020.7% 9,797 7,404 2,393 1.2% Income $27,703$45,570 $27,703 $45,570 60% Units 84 Households 19,88515,195 4,6901.8% 9,017 6,344 2,673 3.1% Income no min$ $45,570 no min$ $45,570 Total Units 120 Households 25,279 15,195 10,085 1.2% 12,522 6,344 6,178 1.9% Source: Income Projections, RPRG, Inc.

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Table 37 Affordability Analysis without the Subsidy

50% Units One Bedroom Units Two Bedroom Units Three Bedroom Units No Data

Min. Max. Min. Max. Min. Max. Min. Max. Number of Units 8 23 5 0 Net Rent $504 $639 $674 -- Gross Rent $612 $781 $866 -- % Income for Shelter 35% 35% 35% 35% Income Range (Min, Max) $20,996 $27,375 $26,782 $32,850 $29,691 $37,975 na na Total Households Range of Qualified Hhlds 21,524 19,974 20,136 18,478 19,341 17,131 0 0 # Qualified Households 1,550 1,659 2,210 0 Total HH Capture Rate 0.5% 1.4% 0.2% 0

Renter Households Range of Qualified Hhlds 10,053 9,071 9,168 8,172 8,690 7,404 0 0 # Qualified Hhlds 982 997 1,287 0 Renter HH Capture Rate 0.8% 2.3% 0.4% na

60% Units One Bedroom Units Two Bedroom Units Three Bedroom Units No Data Number of Units 4 43 37 0 Net Rent $700 $825 $940 -- Gross Rent $808 $967 $1,132 -- % Income for Shelter 35% 35% 35% 35% Income Range (Min, Max) $27,703 $32,850 $33,154 $39,420 $38,811 $45,570 na 0 Total Households Range of Qualified Hhlds 19,885 18,478 18,394 16,763 16,918 15,195 0 0 # Qualified Households 1,407 1,632 1,723 0 Unit Total HH Capture Rate 0.3% 2.6% 2.1% na Renter Households Range of Qualified Hhlds 9,017 8,172 8,122 7,202 7,287 6,344 0 0 # Qualified Hhlds 845 920 943 0 Renter HH Capture Rate 0.5% 4.7% 3.9% na

All Households = 25,279 Renter Households = 12,522 Income # Units # Qualified # Qualified Capture Target Band of Qualified Hhlds Capture Rate Band of Qualified Hhlds HHs HHs Rate Income $20,996$37,975 $20,996 $37,975 50% Units 36 Households 21,52417,131 4,3930.8% 10,0537,404 2,650 1.4% Income $27,703$45,570 $27,703 $45,570 60% Units 84 Households 19,88515,195 4,6901.8% 9,0176,344 2,673 3.1% Income $20,996 $45,570 $20,996 $45,570 Total Units 120 Households 21,524 15,195 6,329 1.9% 10,053 6,344 3,709 3.2% Source: Income Projections, RPRG, Inc.

3. Penetration Analysis In order to evaluate the capacity for the Town Center Market Area to serve the inventory of all of the existing and pipeline units comparable to the subject, we conducted a 2020 penetration analysis, also assuming a 35 percent rent burden (Table 38).

RPRG included all of the existing LIHTC units as well as those market rate units priced less than the subject. This is a conservative approach since the rent can be raised at the market rate communities at any time, pricing it too high for subject residents to qualify.

There are no pipeline projects likely to deliver LIHTC units in the next three years; all near term pipeline units will be market rate and presumably priced well above the subject. In conducting this analysis, we made the more conservative assumption and assumed the subsidy was removed,

Page 64 Town Center Apartments | Findings and Conclusions

thereby requiring the subject to fill those units with residents that can pay the 40 percent AMI rents designated for those eight units. The waiting lists are extensive and currently closed for both the general occupancy public housing communities in the market area and the citywide Housing Choice Voucher Program. As such, filling those units assuming the subsidy stays in place will not be challenging.

This analysis indicates that all of the directly competitive properties would need to capture 55.2 percent of income-qualified renters in order to fill all comparable units in the market area in 2020.

Table 38 Penetration Analysis 50% Units 60% Units No Data Competitive Units Units Competitive Units Units Competitive Units Units Waterford Pointe-60% 120 Tidemill Farms 284 Peninsula Grove at Town Ctr 580 Derby Run-60% 304 New Hampton Commons 252 Sacramento 128 Asbury Place 262

subtotal 0 subtotal 1,930 subtotal 0 Pipeline Units Units Pipeline Units Units Pipeline Units Units 0 0 0

subtotal 0 subtotal 0 subtotal 0 Subject Property Units Subject Property Units Subject Property Units 34 86 Total 34 Total 2,016 Total 0

Total Renter Households = 12,522 Income Target Competitive Penetration Band of Qualified Hhlds # Qualified HHs Units Rate One-Bedroom Three-Bedroom $20,983 $37,975 50% Units 34 10,055 7,404 2,652 1.3% One-Bedroom Three-Bedroom $27,703 $45,570 60% Units 2,016 9,017 6,344 2,673 75.4% One-Bedroom Three-Bedroom $20,983 $45,570 Total Units 2,050 10,055 6,344 3,711 55.2%

4. Conclusions on Affordability and Penetration RPRG judges that there are sufficient numbers of income-qualified renter households in the market area who could afford the subject at the proposed rents. RPRG considers the calculated penetration rates to be reasonable in the context of the Town Center Market Area. The penetration rates suggest that the subject project and the existing comparable units meet the needs of approximately one-half of the income qualified households in this market area.

G. VHDA Demand Analysis The Virginia Housing Development Authority (VHDA) mandates a particular demand methodology in evaluating applications for Low-Income Housing Tax Credits. VHDA opts for a need-driven

Page 65 Town Center Apartments | Findings and Conclusions

demand methodology that factors the topics of cost-burdened renters and substandard rental housing into the demand equation. In this section, RPRG calculates demand according to the VHDA methodology for Town Center Apartments. VHDA’s demand methodology for general occupancy LIHTC projects such as the subject accounts for the following components of potential need/demand:  Household Growth or Decline. The household trend required by VHDA is the net increase or decrease in the number of income-qualified renter households in the primary market area between a base year of 2017 and a target year of 2020.  Cost Burdened Renters. VHDA’s second component of demand is cost burdened renters, a designation which is defined as those renter households paying more than 35 percent of household income for housing costs. We have conservatively elected to include in VHDA demand only those households paying more than 40 percent of their income on rent. RPRG uses the 2012-2016 ACS data on cost-burdened renter households presented earlier in Table 19 to estimate the percentage and number of income-qualified renters for the subject project that will be cost-burdened as of 2018, namely 35.2 percent.  Renter Households in Substandard Housing. VHDA’s third component of demand accounts for income-qualified renter households living in substandard units, defined as overcrowded units (having 1.01 or more persons per room) and/or units lacking complete plumbing facilities. According to the 2012-2016 ACS, the percentage of renter households in the primary market area that lived in substandard conditions was 8.8 percent. Table 39 outlines the detailed VHDA demand calculations for the subject that stem from the relevant demand components. Total demand available for the entire 120-unit project is expected to include 2,177 cost-burdened households and 540 households currently residing in substandard housing. After adjusting for a population loss of 25 households, the calculation yields a total demand for 2,692 additional units of rental housing serving the targeted income ranges. Table 39 VHDA Demand by Overall Income Targeting

Income Target PBRA 50% Units 60% Units Project Total Minimum Income Limit no min$ $22,731 $27,703 no min$ Maximum Income Limit $37,975 $37,975 $45,570 $45,570 (A) Renter Income Qualification Percentage 40.9% 19.1% 21.3% 49.3% Demand from New Renter Households - Calculation (C-B)*F*A -21 -10 -11 -25 + Demand from Rent Overburdened HHs - Calculation: B*E*F*A 1,804 843 942 2,177 + Demand from Substandard Housing - Calculation B*D*F*A 448 209 234 540 Total Income Qualified Renter Demand 2,230 1,043 1,165 2,692 Less: Comparable Vacant Units 0 0 17 17 Less: Comparable Pipeline Units 0 0 0 0 Net Demand 2,230 1,043 1,148 2,675 Subject Proposed Units 8 28 84 120 Capture Rate 0.4% 2.7% 7.3% 4.5%

Estimated Absorption Period 1 month 3 months 8 months 11 months

Project Wide Capture Rate - LIHTC Units 4.5% Project Wide Capture Rate - Market Units N/A Project Wide Capture Rate - All Units 4.5% Project Wide Absorption Period (Months) 11 months

Demand Calculation Inputs A). % of Renter Hhlds with Qualifying Income see above B). 2017 Households 25,384 C). 2020 Households 25,279 D). Substandard Housing (% of Rental Stock) 8.8% E). Rent Overburdened (% of Renter Hhlds at >40%) 35.2%

Page 66 Town Center Apartments | Findings and Conclusions

Comparable units that are presently available or that would likely be available when the subject is placed in service constitute supply that must be subtracted from total VHDA demand to arrive at VHDA net demand. Based on the vacancy rates for the rental communities in our survey, there are 17 vacancies, all of which are 60 percent units at Derby Run. All potential subsidized units are unavailable; as noted earlier, the waiting lists are extensive and currently closed for both the general occupancy public housing communities in the market area and the citywide Housing Choice Voucher Program. All of the units at the 120-unit Century Plaza are subsidized beyond their 50 percent AMI LIHTC designation and those units are also occupied. The near term pipeline consists of market rate communities.

Given the net demand of 2,675 units, the 120-unit subject would need to capture 4.5 percent of income-qualified renter households per VHDA’s demand methodology. The capture rate by income band ranges from 0.4 percent to 7.3 percent. RPRG considers the captures rates to be within a reasonable range for all unit types.

The subject will include 42 three-bedroom units or 35 percent of the total units onsite. Per VHDA guidelines, we evaluated the demand for those 42 units. As depicted in Table 16 on page 32, 31.4 percent of renter households contain three or more persons. After applying this percentage to the number of renter households that would be income qualified for a three-bedroom unit at the subject overall, there is a demand of 845 households for those units. The subject would need to capture 5.0 percent of those households to fill all 42 units.

Page 67 Town Center Apartments | Findings and Conclusions

Table 40 VHDA Demand from Larger Households for Large Units

PBRA Three Bedroom Units Minimum Income Limit no min$ Maximum Income Limit $37,975 Renter Income Qualification Percentage 40.9% Total Income Qualified Renter Demand 2,230 Vacant and Comparable Units 0 Net Demand 2230 Proposed Units 2 Capture Rate 0.1% Large Renter HH% 31.4% Large HH Demand 700 Capture: 3+ persons 0.3%

50% Units Three Bedroom Units Minimum Income Limit $32,297 Maximum Income Limit $37,975 Renter Income Qualification Percentage 6.9% Total Income Qualified Renter Demand 374 Vacant and Comparable Units 0 Net Demand 374 Proposed Units 3 Capture Rate 0.8% Large Renter HH% 31.4% Large HH Demand 118 Capture: 3+ persons 2.6%

60% Units Three Bedroom Units Minimum Income Limit $38,811 Maximum Income Limit $45,570 Renter Income Qualification Percentage 7.5% Total Income Qualified Renter Demand 411 Vacant and Comparable Units 1 Net Demand 410 Proposed Units 37 Capture Rate 9.0% Large Renter HH% 31.4% Large HH Demand 129 Capture: 3+ persons 28.8%

Project Total Three Bedroom Units Minimum Income Limit no min$ Maximum Income Limit $45,570 Renter Income Qualification Percentage 49.3% Total Income Qualified Renter Demand 2,692 Vacant and Comparable Units 1 Net Demand 2691 Proposed Units 42 Capture Rate 1.6% Large Renter HH% 31.4% Large HH Demand 845 Capture: 3+ persons 5.0%

As in the affordability analysis, we repeated the VHDA Demand Analysis to conservatively reflect the scenario of the project without associated subsidies (Table 41 and Table 42). With the exclusion of rent subsidies, the subject’s overall capture rate increases to 7.5 percent. The three-bedroom capture rate for larger households increased to 13.1 percent which is reasonable given the application of the large renter household factor.

Page 68 Town Center Apartments | Findings and Conclusions

Table 41 VHDA Demand by Overall Income Targeting – No Subsidy

Income Target 50% Units 60% Units Project Total Minimum Income Limit $20,996 $27,703 $20,996 Maximum Income Limit $37,975 $45,570 $45,570 (A) Renter Income Qualification Percentage 21.2% 21.3% 29.6% Demand from New Renter Households - Calculation (C-B)*F*A -11 -11 -15 + Demand from Rent Overburdened HHs - Calculation: B*E*F*A 934 942 1,307 + Demand from Substandard Housing - Calculation B*D*F*A 232 234 324 Total Income Qualified Renter Demand 1,155 1,165 1,616 Less: Comparable Vacant Units 0 17 17 Less: Comparable Pipeline Units 0 0 0 Net Demand 1,155 1,148 1,599 Subject Proposed Units 36 84 120 Capture Rate 3.1% 7.3% 7.5%

Estimated Absorption Period 4 months 8 months 11 months

Project Wide Capture Rate - LIHTC Units 7.5% Project Wide Capture Rate - Market Units N/A Project Wide Capture Rate - All Units 7.5% Project Wide Absorption Period (Months) 11 months

Demand Calculation Inputs A). % of Renter Hhlds with Qualifying Income see above B). 2017 Households 25,384 C). 2020 Households 25,279 D). Substandard Housing (% of Rental Stock) 8.8% E). Rent Overburdened (% of Renter Hhlds at >40%) 35.2% F). Renter Percentage (% of all 2018 HHlds) 49.3%

Page 69 Town Center Apartments | Findings and Conclusions

Table 42 VHDA Demand from Larger Households for Large Units – No Subsidy 50% Units Three Bedroom Units Minimum Income Limit $29,691 Maximum Income Limit $37,975 Renter Income Qualification Percentage 10.3% Total Income Qualified Renter Demand 561 Vacant and Comparable Units 0 Net Demand 561 Proposed Units 5 Capture Rate 0.9% Large Renter HH% 31.4% Large HH Demand 176 Capture: 3+ persons 2.8%

60% Units Three Bedroom Units Minimum Income Limit $38,811 Maximum Income Limit $45,570 Renter Income Qualification Percentage 7.5% Total Income Qualified Renter Demand 411 Vacant and Comparable Units 1 Net Demand 410 Proposed Units 37 Capture Rate 9.0% Large Renter HH% 31.4% Large HH Demand 129 Capture: 3+ persons 28.8%

Project Total Three Bedroom Units Minimum Income Limit $29,691 Maximum Income Limit $45,570 Renter Income Qualification Percentage 18.7% Total Income Qualified Renter Demand 1,022 Vacant and Comparable Units 1 Net Demand 1021 Proposed Units 42 Capture Rate 4.1% Large Renter HH% 31.4% Large HH Demand 321 Capture: 3+ persons 13.1%

Page 70 Town Center Apartments | Findings and Conclusions

H. Absorption Estimate Recent absorption experience has included only market rate units in this market. Among the five communities that have completed lease up and the two currently leasing up, the average absorption has been approximately 15 units per month. While there are several vacant units at the LIHTC Derby Run, it is located in the northern part of the city at a considerable distance from the subject. Meanwhile Waterford Pointe is located much closer to the subject and it maintains an active waitlist from which subject residents may be drawn. Given these factors, in addition to the high quality product and location for the subject, we conservatively estimate that Town Center Apartments, even without the PBRA vouchers, will lease units at an average pace of:

10-12 units per month. The location of the subject site will offer residents excellent access to public transportation, retail, and services. Combining these conveniences with the subject’s affordable rents, will make it very competitive in this market. That said, we temper our absorption estimate to reflect the reality that the LIHTC subject will have to attract renters within a very specific income range. This absorption estimate accounts for the fact that affordable properties can be slower to lease up because applicants must fit into the appropriate income bands. Assuming this pace and a structural vacancy rate of five percent, the entire 120-unit Town Center Apartments would be 95 percent leased within approximately ten to eleven months of opening. Assuming eight units have PBRA vouchers, we would expect those units to be leased within approximately one month.

I. Impact on Existing Market RPRG does not anticipate that the subject would have an adverse impact on the existing rental market. The present market indicators point to a healthy market – stabilized vacancy is well below five percent. Despite considerable construction of luxury rental communities in this area, it has been more than 20 years since an affordable community opened in the Town Center Market Area. The subject will provide a value-added, rental community that will assist in meeting the market’s demand for affordable high quality rental options.

We hope you find this analysis helpful in your decision making process.

______Nicole D. Mathison Robert M. Lefenfeld Senior Analyst Founding Principal

Page 71 Town Center Apartments | Appendix 1 Underlying Assumptions and Limiting Conditions

9. APPENDIX 1 UNDERLYING ASSUMPTIONS AND LIMITING CONDITIONS

In conducting the analysis, we will make the following assumptions, except as otherwise noted in our report:

1. There are no zoning, building, safety, environmental or other federal, state or local laws, regulations or codes which would prohibit or impair the development, marketing or operation of the subject project in the manner contemplated in our report, and the subject project will be developed, marketed and operated in compliance with all applicable laws, regulations and codes.

2. No material changes will occur in (a) any federal, state or local law, regulation or code (including, without limitation, the Internal Revenue Code) affecting the subject project, or (b) any federal, state or local grant, financing or other program which is to be utilized in connection with the subject project.

3. The local, national and international economies will not deteriorate, and there will be no significant changes in interest rates or in rates of inflation or deflation.

4. The subject project will be served by adequate transportation, utilities and governmental facilities.

5. The subject project will not be subjected to any war, energy crisis, embargo, strike, earthquake, flood, fire or other casualty or act of God.

6. The subject project will be on the market at the time and with the product anticipated in our report, and at the price position specified in our report.

7. The subject project will be developed, marketed and operated in a highly professional manner.

8. No projects will be developed which will be in competition with the subject project, except as set forth in our report.

9. There are no existing judgments nor any pending or threatened litigation, which could hinder the development, marketing or operation of the subject project.

Page 72 Town Center Apartments | Appendix 1 Underlying Assumptions and Limiting Conditions

The analysis will be subject to the following limiting conditions, except as otherwise noted in our report:

1. The analysis contained in this report necessarily incorporates numerous estimates and assumptions with respect to property performance, general and local business and economic conditions, the absence of material changes in the competitive environment and other matters. Some estimates or assumptions, however, inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual results achieved during the period covered by our analysis will vary from our estimates and the variations may be material.

2. Our absorption estimates are based on the assumption that the product recommendations set forth in our report will be followed without material deviation.

3. All estimates of future dollar amounts are based on the current value of the dollar, without any allowance for inflation or deflation.

4. We have no responsibility for considerations requiring expertise in other fields. Such considerations include, but are not limited to, legal matters, environmental matters, architectural matters, geologic considerations, such as soils and seismic stability, and civil, mechanical, electrical, structural and other engineering matters.

5. Information, estimates and opinions contained in or referred to in our report, which we have obtained from sources outside of this office, are assumed to be reliable and have not been independently verified.

6. The conclusions and recommendations in our report are subject to these Underlying Assumptions and Limiting Conditions and to any additional assumptions or conditions set forth in the body of our report.

Page 73 Town Center Apartments | Appendix 2 NCHMA Checklist

10. APPENDIX 2 NCHMA CHECKLIST

Introduction: Members of the National Council of Housing Market Analysts provides a checklist referencing all components of their market study. This checklist is intended to assist readers on the location and content of issues relevant to the evaluation and analysis of market studies. The page number of each component referenced is noted in the right column. In cases where the item is not relevant, the author has indicated "N/A" or not applicable. Where a conflict with or variation from client standards or client requirements exists, the author has indicated a "V" (variation) with a comment explaining the conflict. More detailed notations or explanations are also acceptable.

Component (*First occurring page is noted) *Page(s)

Executive Summary 1. Executive Summary 1 Project Summary 2. Project description with exact number of bedrooms and baths 1, 3 proposed, income limitation, proposed rents, and utility allowances 3. Utilities (and utility sources) included in rent 3 4. Project design description 3 5. Unit and project amenities; parking 3 6. Public programs included 3 7. Target population description 57 8. Date of construction/preliminary completion 4 9. If rehabilitation, existing unit breakdown and rents N/A 10. Reference to review/status of project plans 3 Location and Market Area 11. Market area/secondary market area description 24 12. Concise description of the site and adjacent parcels 8 13. Description of site characteristics 5 14. Site photos/maps 8 15. Map of community services 14 16. Visibility and accessibility evaluation 11 17. Crime information 10 Employment and Economy 18. Employment by industry 19 19. Historical unemployment rate 18

Page 74 Town Center Apartments | Appendix 2 NCHMA Checklist

20. Area major employers 22 21. Five-year employment growth 18 22. Typical wages by occupation 22 23. Discussion of commuting patterns of area workers 18 Demographic Characteristics 24. Population and household estimates and projections 27 25. Area building permits 28 26. Distribution of income 32 27. Households by tenure 31 Competitive Environment 28. Comparable property profiles 79 29. Map of comparable properties 37 30. Comparable property photos 79 31. Existing rental housing evaluation 36 32. Comparable property discussion 36 33. Area vacancy rates, including rates for tax credit and government- 38 subsidized communities 34. Comparison of subject property to comparable properties 57 35. Availability of Housing Choice Vouchers N/A 36. Identification of waiting lists Profiles 37. Description of overall rental market including share of market-rate 39 and affordable properties 38. List of existing LIHTC properties 38 39. Discussion of future changes in housing stock 48 40. Discussion of availability and cost of other affordable housing options, N/A including homeownership 41. Tax credit and other planned or under construction rental 48 communities in market area Analysis/Conclusions 42. Calculation and analysis of Capture Rate 63 43. Calculation and analysis of Penetration Rate 65 44. Evaluation of proposed rent levels 58 45. Derivation of Achievable Market Rent and Market Advantage 43 46. Derivation of Achievable Restricted Rent 48 47. Precise statement of key conclusions 71

Page 75 Town Center Apartments | Appendix 2 NCHMA Checklist

48. Market strengths and weaknesses impacting project 57 49. Recommendation and/or modification to project description 57, if applicable 50. Discussion of subject property’s impact on existing housing 71 51. Absorption projection with issues impacting performance 71 52. Discussion of risks or other mitigating circumstances impacting 57, if project applicable 53. Interviews with area housing stakeholders 48 Certifications 54. Preparation date of report Cover 55. Date of field work 1 56. Certifications 77 57. Statement of qualifications 78 58. Sources of data not otherwise identified N/A 59. Utility allowance schedule 4

Page 76 Town Center Apartments | Appendix 3 VHDA Certification

11. APPENDIX 3 VHDA CERTIFICATION

I affirm the following:

1. I have made a physical inspection of the site and market area.

2. The appropriate information has been used in the comprehensive evaluation of the need and demand for the proposed rental units.

3. To the best of my knowledge the market can support the demand shown in this study. I understand that any misrepresentation in this statement may result in the denial of participation in the Low Income Housing Tax Credit Program in Virginia as administered by VHDA.

4. Neither I nor anyone at my firm has any interest in the proposed development or a relationship with the ownership entity.

5. Neither I nor anyone at my firm nor anyone acting on behalf of my firm in connection with the preparation of this report has communicated to others that my firm is representing VHDA or in any way acting for, at the request of, or on behalf of VHDA.

6. Compensation for my services is not contingent upon this development receiving a LIHTC reservation or allocation.

______2/15/2018____

Market Analyst Date

Page 77 Town Center Apartments | Appendix 4 Analyst Resumes

12. APPENDIX 4 ANALYST RESUMES

Page 78 ROBERT M. LEFENFELD Founding Principal

Mr. Lefenfeld, Founding Principal of the firm, has over 30 years of experience in the field of residential market research. Before founding Real Property Research Group in 2001, Bob served as an officer of research subsidiaries of Reznick Fedder & Silverman and Legg Mason. Between 1998 and 2001, Bob was Managing Director of RF&S Realty Advisors, conducting residential market studies throughout the United States. From 1987 to 1995, Bob served as Senior Vice President of Legg Mason Realty Group, managing the firm’s consulting practice and serving as publisher of a Mid-Atlantic residential data service, Housing Market Profiles. Prior to joining Legg Mason, Bob spent ten years with the Baltimore Metropolitan Council as a housing economist. Bob also served as Research Director for Regency Homes between 1995 and 1998, analyzing markets throughout the Eastern United States and evaluating the company’s active building operation.

Bob provides input and guidance for the completion of the firm’s research and analysis products. He combines extensive experience in the real estate industry with capabilities in database development and information management. Over the years, he has developed a series of information products and proprietary databases serving real estate professionals. Bob has lectured and written extensively about residential real estate market analysis. Bob has created and teaches the market study module for the MBA HUD Underwriting course and has served as an adjunct professor for the Graduate Programs in Real Estate Development, School of Architecture, Planning and Preservation, University of Maryland College Park. He is the past National Chair of the National Council of Housing Market Analysts (NCHMA) and currently chairs its FHA Committee.

Areas of Concentration:  Strategic Assessments: Mr. Lefenfeld has conducted numerous corridor analyses throughout the United States to assist building and real estate companies in evaluating development opportunities. Such analyses document demographic, economic, competitive, and proposed development activity by submarket and discuss opportunities for development.  Feasibility Analysis: Mr. Lefenfeld has conducted feasibility studies for various types of residential developments for builders and developers. Subjects for these analyses have included for-sale single-family and townhouse developments, age-restricted rental and for- sale developments, large multi-product PUDs, urban renovations and continuing care facilities for the elderly.  Information Products: Bob has developed a series of proprietary databases to assist clients in monitoring growth trends. Subjects of these databases have included for sale housing, pipeline information, and rental communities.

Education: Master of Urban and Regional Planning; The George Washington University. Bachelor of Arts - Political Science; Northeastern University. NICOLE D. MATHISON Senior Analyst

Nicole Mathison joined RPRG in 2013 where she focuses on rental market studies and community and economic analyses for development projects. She has also completed countywide rental assessments in Maryland for the Maryland Department of Housing and Community Development. Nicole’s background is in research and nonprofit administration in the fields of public health and higher education. Nicole earned a Master of Urban and Regional Planning degree at Virginia Tech. She obtained a specialization in Land Use Planning and completed coursework in Geographic Information Systems (GIS). As a student she conducted research on downtown revitalization, adaptive reuse of vacant big box stores, and the value of public art.

Areas of Concentration:

 Low Income Housing Tax Credits: Nicole prepares rental market studies for submission to lenders and state agencies for nine percent and four percent Low Income Housing Tax Credit allocations. Studies include analysis of new construction as well as the feasibility of renovating existing family rental communities.

 FHA Section 221(d)(4): Nicole prepares comprehensive feasibility studies for submission to HUD regional offices as part of a lender’s application for Section 221(d)(4) mortgage insurance. These reports strictly adhere to HUD’s Multifamily Accelerated Processing (MAP) guidelines for market studies.

 Mixed-Use and Mixed-Income Development: Nicole has studied mixed-use projects with integrated uses such as market-rate and affordable rental housing, for-sale housing, and retail space.

Education:

Master of Urban & Regional Planning – Virginia Tech, Blacksburg, VA Bachelor of Science, Food Science – North Carolina State University, Raleigh, NC

Town Center Apartments | Appendix 5 Market Area Rental Community Profiles

13. APPENDIX 5 MARKET AREA RENTAL COMMUNITY PROFILES

Page 79 RealPropertyResearch Group Abbington at Hampton Center Multifamily Community Profile 19 Lakeshore Dr. CommunityType: Market Rate - General Hampton,VA Structure Type: Garden/TH 377 Units 1.6% Vacant (6 units vacant) as of 2/8/2018 Last Major Rehab in 2013 Opened in 1965

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One -- $1,037 805 $1.29 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two -- $1,011 1,000 $1.01 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three -- $1,317 1,286 $1.02 Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Disposal; Ice Maker; Ceiling Fan; Central A/C; Patio/Balcony

Select Units: --

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: -- Owner: Weinstein Properties

Comments Surry has 1.5 ba.

Trash Fee $2.99 W/S $4.15

Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ PnnuaPay/ Garden-- 1 1Peninsula/Peary $924 703 Market$1.31-- 1.6%2/8/18 $1,037 $1,011 $1,317 .Nwot/ Townhouse-- 1 1.5Newport $1,099 906 Market$1.21-- 0.3%6/30/16 $931 $1,046 $1,311 MntrCriuk/ Garde-- 2 2Monitor/Currituck $899 1,000 Market$.90-- 0.5%5/4/16 $969 $1,107 $1,284 .Tdwtr/ Townhouse-- 2 2.5Tidewater $1,229 1,126 Market$1.09-- 1.3%4/8/15 $955 $1,050 $1,248 -- 2 2Surery/Mariner/Chesapea $899 875 Market$1.03-- .Lnhvn/ Garden-- 3 1.5Lynnhaven $1,090 1,250 Market$.87-- .Hmtn/ Townhouse-- 3 2.5Hampton $1,474 1,321 Market$1.12--

Adjustments to Rent Incentives: 2br/2ba $500 off 1 mo

Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013085Abbington at Hampton Center © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Addison at Hampton Multifamily Community Profile 2 Wyndham Dr. CommunityType: Market Rate - General Hampton,VA Structure Type: 2-Story Garden 276 Units 1.1% Vacant (3 units vacant) as of 2/8/2018 Last Major Rehab in 2015 Opened in 1988

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One -- $945 626 $1.51 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two -- $1,253 987 $1.27 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three ------Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Disposal; Microwave; Ice Maker; Ceiling Fan; In Unit Laundry (Full Size); Central A/C; Patio/Balcony; Storage (In Unit)

Select Units: Fireplace; HighCeilings

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: Weinstein Properties Owner: --

Comments 2- & 3-story bldgs. Units have been upgraded w/ SS appliances, granite-look countertops, fauxwood floors. Dog park. Trash fee-$10. Amenity Fee: $ 200 Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- 1 1Garden $829 489 Market$1.70-- 1.1%2/8/18 $945 $1,253 -- -- 1 1Garden $900 590 Market$1.53-- 0.4%6/30/16 $948 $1,295 -- -- 1 1Garden $1,024 677 Market$1.51-- 0.0%5/5/16 $937 $1,294 -- -- 1 1Garden $1,027 748 Market$1.37-- 0.7%4/8/15 $938 $1,293 -- -- 2 2Garden $1,314 1,016 Market$1.29-- -- 2 2Garden $1,132 957 Market$1.18--

Adjustments to Rent Incentives: 1BR: $300 off 1st mo

Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013095Addison at Hampton © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Armistead Multifamily Community Profile 2013 N Armistead Ave. CommunityType: Market Rate - General Hampton,VA Structure Type: Townhouse 93 Units 2.2% Vacant (2 units vacant) as of 2/8/2018 Opened in 1972

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One 11.8% $765 700 $1.09 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 53.8% $910 850 $1.07 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three 24.7% $1,040 950 $1.09 Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Disposal; Microwave; Ice Maker; Ceiling Fan; In Unit Laundry (Hook-ups); Central A/C; Patio/Balcony

Select Units: --

Optional($): --

Security: Keyed Bldg Entry

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: Abbitt Mgmt Owner: --

Comments Vacancies: 1-2BR; 1-3BR Mgmt wouldn’t disclose vacancy.

Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- 1 1.5Townhouse $740 700 Market$1.0611 2.2%2/8/18 $765 $910 $1,040 -- 2 1.5Townhouse $880 850 Market$1.0450 --9/6/17 $732 $877 $997 -- 3 2.5Townhouse $1,005 950 Market$1.0623 0.0%6/30/16 $733 $883 $988 0.0%5/5/16 $733 $883 $988

Adjustments to Rent Incentives: None

Utilities in Rent: Heat Fuel: Gas Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013119Armistead © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Asbury Place Multifamily Community Profile 98 Michigan Dr. CommunityType: Market Rate - General Hampton,VA Structure Type: 2-Story Townhouse 262 Units 0.0% Vacant (0 units vacant) as of 2/8/2018 Last Major Rehab in 2018 Opened in 1972

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One ------Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 100.0% $767 880 $0.87 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three ------Sauna: ComputerCtr: Four+ ------Playground: Features Standard: In Unit Laundry (Hook-ups); Central A/C; Patio/Balcony

Select Units: --

Optional($): --

Security: Patrol

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: Hampton Redevelop Owner: --

Comments Formerly Queens Terrace. $3 trash fee. Units are being renovated with new flooring, cabinets, black or ss appliances, bathrooms, ceiling fans, etc. Behind former Linoln Park Public Housing (property has been demolished and is awaiting redevelopment). $40 for W/D rental. Some units offline due to renovations.

Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- 2 1Townhouse $800 880 Market$.91262 0.0%2/8/18 -- $767 -- 1.5%9/5/17 -- $839 -- 17.6%6/30/16 -- $700 -- 24.8%5/5/16 -- $700 --

Adjustments to Rent Incentives: 1/2 off 1st mo

Utilities in Rent: Heat Fuel: Gas Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013109Asbury Place © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Bridgewater on the Lake Multifamily Community Profile 507 Marcella Rd. CommunityType: Market Rate - General Hampton,VA Structure Type: 3-Story Garden 498 Units 4.8% Vacant (24 units vacant) as of 2/8/2018 Opened in 1998

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One 14.5% $1,038 800 $1.30 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 61.4% $1,231 1,039 $1.19 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three 24.1% $1,271 1,212 $1.05 Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Disposal; In Unit Laundry (Full Size); Central A/C; Patio/Balcony

Select Units: --

Optional($): --

Security: Gated Entry

Parking 1: Free Surface Parking Parking 2: Detached Garage Fee: -- Fee: $125

Property Manager: Ginkgo Residential Owner: --

Comments Property was purchased summer 2015 & merged with sister property, Lake Ridge (282 units, built in 2005). Bridgewater (originial property-opened 1998, 216 units). Gated entry only at Lake Ridge.Dog park, walking trails Some units upgraded w/ vinyl wood floors; faux granite countertop; white cabinets & appliances.

Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ VlaCatmn/ Garden-- 1 1Villa/Craftsman $1,013 800 Market$1.2772 4.8%2/8/18 $1,038 $1,231 $1,271 Cl/as / Garden-- 2 2Cole/Marsh $1,168 1,015 Market$1.15186 2.8%9/5/17 $1,033 $1,385 $1,548 Bno/otwo / Gar-- 2 2Benson/Northwood $1,253 1,075 Market$1.17120 7.8%6/30/16 $876 $1,003 $1,270 Ett/xctv / Garde-- 3 2Estate/Executive $1,333 1,200 Market$1.1124 3.8%5/16/16 $1,045 $1,305 $1,353 Cv/apo / Garden-- 3 2Cove/Hampton $1,353 1,215 Market$1.1196

Adjustments to Rent Incentives: 3BR-1 mo free

Utilities in Rent: Heat Fuel: Gas Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013132Bridgewater on the Lake © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Briton Trace Multifamily Community Profile 130 Semple Farm Road CommunityType: Market Rate - General Hampton,VA 23666 Structure Type: 3-Story Garden 120 Units 2.5% Vacant (3 units vacant) as of 2/9/2018 Opened in 2012

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One ------Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 65.0% $1,217 1,060 $1.15 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three 35.0% $1,385 1,250 $1.11 Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Disposal; Microwave; Ceiling Fan; In Unit Laundry (Full Size); Central A/C; Patio/Balcony; HighCeilings; Carpet / Hardwood

Select Units: --

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: Breeden Owner: --

Comments Opened end of Nov 2012 - Final building released March 2013. Lease up pace of 15 units/mo. Picnic area & dog park. Granite CT & black appl. $150 admin fee. HUD insured. Trash fee: $7

Floorplans (Published Rents as of 2/9/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- 2 2Garden $1,187 1,060 Market$1.1278 2.5%2/9/18 -- $1,217 $1,385 -- 3 2Garden $1,350 1,250 Market$1.0842 5.8%2/1/17 -- $1,237 $1,362 1.7%6/30/16 -- $1,255 $1,402 1.7%5/9/16 -- $1,279 $1,366 * Indicates initial lease-up.

Adjustments to Rent Incentives: Reduced Rent

Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-018852Briton Trace © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Chapman at Peninsula Town Center Multifamily Community Profile 670 Downey Green St. CommunityType: Market Rate - General Hampton,VA Structure Type: 4-Story Mid Rise 158 Units 6.3% Vacant (10 units vacant) as of 2/9/2018 Opened in 2009

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One 55.7% $1,173 691 $1.70 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 43.0% $1,631 1,094 $1.49 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three 1.3% $2,255 1,508 $1.50 Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Disposal; Microwave; Ice Maker; In Unit Laundry (Full Size); Central A/C; Carpet / Hardwood/Ceramic Tile

Select Units: Patio/Balcony; HighCeilings

Optional($): --

Security: Keyed Bldg Entry

Parking 1: Structured Garage Parking 2: -- Fee: $0 Fee: --

Property Manager: Drucker & Falk Owner: --

Comments Internet café. Fully leased 10 months after opening. Free garage parking-connected by bridge to town center. Granite CT, SS appl. Competitors/referrals: sister property in Virginia Beach-Cosmopolitan, Falcon Creek in Hampton and Heritage at Settlers Landing in Hampton. 88 1BRs, 68 2BRs, 2 3BRs. Guest Suite ($99). $150 admin fee. Amenity Fee: $ 150 Floorplans (Published Rents as of 2/9/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ Clpo Cameo / Mid Ris-- 1 1Calypso, $1,057 660 Market$1.6042 6.3%2/9/18 $1,173 $1,631 $2,255 Mnt/ Mid Rise - Elevat-- 1 1Monet $1,170 690 Market$1.706 4.4%9/5/17 $1,204 $1,662 $2,425 Mtse/ Mid Rise - Elev-- 1 1Matisse $1,292 716 Market$1.802 3.2%6/28/16 $1,169 $1,648 $2,236 Msi,Tempo, Degas, B-- 1 1Mosaic, $1,259 720 Market$1.7535 1.3%5/19/16 $1,169 $1,648 $2,236 Rma/ Mid Rise - Eleva-- 1 1Rumba $1,265 751 Market$1.682 * Indicates initial lease-up. Wlz/ Mid Rise - Elevato-- 1 1Waltz $1,295 782 Market$1.661 Tnr/ Mid Rise - Elevat-- 2 2Tenor $1,568 1,061 Market$1.4815 Sne,Harmony / Mid Ri-- 2 2Sonnet, $1,548 1,080 Market$1.4318 Ecr / Mid Rise - Eleva-- 2 2Encore $1,642 1,100 Market$1.4923 Adjustments to Rent Ou / Mid Rise - Elevato-- 2 2Opus $1,628 1,139 Market$1.436 Incentives: Daily Pricing Ocr/ Mid Rise - Elevat-- 2 2Oscar $1,768 1,153 Market$1.536 Qatt Symphony / Mid-- 3 2Quartet, $2,230 1,508 Market$1.482 Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013083Chapman at Peninsula Town Center © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Coliseum Garden Multifamily Community Profile 135 Pine Chapel Rd. CommunityType: Market Rate - General Hampton,VA Structure Type: 2-Story Garden 182 Units 3.8% Vacant (7 units vacant) as of 2/9/2018 Opened in 1985

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One 42.9% $699 700 $1.00 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 57.1% $875 960 $0.91 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three ------Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; In Unit Laundry (Full Size); Central A/C; Patio/Balcony

Select Units: --

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: Riverdale Mgmt Owner: --

Comments Vacancies: 5-1BRs; 2-2BRs.

Floorplans (Published Rents as of 2/9/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- 1 1Garden $800 700 Market$1.1478 3.8%2/9/18 ------2 1.5Garden $875 960 Market$.91104 3.8%2/8/18 $699 $875 -- 1.6%9/5/17 $699 $765 -- 3.8%6/30/16 $765 $895 --

Adjustments to Rent Incentives: 1BR: 1.5 mo free

Utilities in Rent: Heat Fuel: Gas Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013097Coliseum Garden © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Cunningham Multifamily Community Profile 135 Pine Chapel Rd. CommunityType: Market Rate - General Hampton,VA Structure Type: 2-Story Garden 48 Units 8.3% Vacant (4 units vacant) as of 2/8/2018 Opened in 1985

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One ------Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 200.0% $980 1,100 $0.89 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three ------Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; In Unit Laundry (Full Size); Central A/C; Patio/Balcony

Select Units: --

Optional($): --

Security: Keyed Bldg Entry

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: Riverdale Mgmt Owner: --

Comments

Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- 2 2Garden $980 1,100 Market$.8948 8.3%2/8/18 -- $980 -- -- 2 2Garden $980 1,100 Market$.8948 0.0%9/5/17 -- $980 -- 0.0%6/30/16 -- $983 -- 6.3%5/4/16 -- $935 --

Adjustments to Rent Incentives: None

Utilities in Rent: Heat Fuel: Gas Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013098Cunningham © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Derby Run Multifamily Community Profile 6 Derby Dr. CommunityType: LIHTC - General Hampton,VA Structure Type: 3-Story Garden 304 Units 5.6% Vacant (17 units vacant) as of 2/8/2018 Opened in 1996

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One ------Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 52.6% $842 1,000 $0.84 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three 47.4% $986 1,300 $0.76 Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; In Unit Laundry (Hook-ups); Central A/C; Patio/Balcony; Cable TV

Select Units: --

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: Ripley Heatwole Owner: --

Comments Phase I: 160 units; 104 2BRs, 56 3BRs. Ph II: 144 units; 96 2BRs, 48 3BRs Vacant: 16 2BR units and 1 3BR unit

Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- 2 2Garden $864 1,000 LIHTC/ 60%$.86160 5.6%2/8/18 -- $842 $986 -- 3 2Garden $1,003 1,300 LIHTC/ 60%$.77144 9.9%6/30/16 -- $792 $923 5.9%5/4/16 -- $852 $1,015 0.0%4/8/15 -- $845 $990

Adjustments to Rent Incentives: $500 off first mo

Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013102Derby Run © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Falcon Creek Multifamily Community Profile 4900 Falcon Creek Way CommunityType: Market Rate - General Hampton,VA Structure Type: 2-Story Garden 424 Units 2.4% Vacant (10 units vacant) as of 2/8/2018 Opened in 2007

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One 57.5% $838 756 $1.11 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 42.5% $1,002 951 $1.05 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three ------Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Disposal; Microwave; Ice Maker; In Unit Laundry (Hook- ups); Central A/C; Patio/Balcony; Storage (In Unit)

Select Units: HighCeilings

Optional($): Cable TV ( $40.00)

Security: Gated Entry

Parking 1: Free Surface Parking Parking 2: Detached Garage Fee: -- Fee: $125

Property Manager: Beco Asset Owner: --

Comments Walking trail, dog park. Standard finishes. Utility package: $190-1BR, $230-2BR.

Amenity Fee: $ 150 Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ Ksrl/ Garden-- 1 1Kestrel $930 756 Market$1.23244 2.4%2/8/18 $838 $1,002 -- Prgie/ Garden-- 2 2Peregrine $1,141 1,001 Market$1.1490 0.0%6/30/16 $960 $1,156 -- Mri / Garden-- 2 2Merlin $1,081 900 Market$1.2090 0.0%5/4/16 $960 $1,156 -- 4.0%4/8/15 $893 $1,114 --

Adjustments to Rent Incentives: 1.5 mo free

Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013090Falcon Creek © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Gateway Multifamily Community Profile 132 Tide Mill Ln. CommunityType: Market Rate - General Hampton,VA Structure Type: Townhouse 104 Units 1.9% Vacant (2 units vacant) as of 2/9/2018 Opened in 1974

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One ------Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 100.0% $902 1,000 $0.90 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three ------Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Disposal; Ceiling Fan; In Unit Laundry (Hook-ups); Central A/C; Patio/Balcony

Select Units: --

Optional($): --

Security: Keyed Bldg Entry

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: Harrison & Lear Owner: --

Comments Trash fee: $5.75

Floorplans (Published Rents as of 2/9/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- 2 1.5Townhouse $910 1,000 Market$.91104 1.9%2/9/18 -- $902 -- 1.0%9/12/17 -- $940 -- 1.9%6/30/16 -- $895 -- 0.0%5/5/16 -- $940 --

Adjustments to Rent Incentives: 1/2 off 1 mo

Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013124Gateway © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Hampton Center Multifamily Community Profile 6001 Terrell Ln. CommunityType: Market Rate - General Hampton,VA Structure Type: 3-Story Garden 418 Units 1.4% Vacant (6 units vacant) as of 2/8/2018 Last Major Rehab in 2016 Opened in 1987

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One 42.6% $783 775 $1.01 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 44.5% $932 1,047 $0.89 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three 12.9% $1,123 1,413 $0.80 Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Disposal; Ice Maker; Ceiling Fan; In Unit Laundry (Hook- ups); Central A/C; Patio/Balcony

Select Units: Fireplace; HighCeilings

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: Drucker & Falk Owner: --

Comments Renovations are reason for vacancy rate. New management company took over. MGR not sure of number of down units. Vacancies: 1-2br/2ba

Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- 1 1Garden $875 775 Market$1.13178 1.4%2/8/18 $783 $932 $1,123 -- 2 2Garden $1,075 1,100 Market$.98120 0.2%9/5/17 $928 $1,108 $1,430 -- 2 1Garden $978 950 Market$1.0366 10.0%6/30/16* $903 $1,154 $1,395 -- 3 2Garden $1,255 1,413 Market$.8954 0.7%5/4/16 $806 $983 $1,218 * Indicates initial lease-up.

Adjustments to Rent Incentives: 2 mo free w/15 mo lease

Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013087Hampton Center © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Heather Lake Multifamily Community Profile 99 Tide Mill Ln. CommunityType: Market Rate - General Hampton,VA Structure Type: 2-Story Garden/TH 252 Units 4.0% Vacant (10 units vacant) as of 2/8/2018 Opened in 1986

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One -- $835 868 $0.96 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two -- $890 1,066 $0.83 Fitness: CarWash: Two/Den -- $1,010 1,200 $0.84 Hot Tub: BusinessCtr: Three -- $1,100 1,302 $0.84 Sauna: ComputerCtr: Four+ -- $1,290 1,520 $0.85 Playground: Features Standard: Dishwasher; Disposal; Ice Maker; Ceiling Fan; In Unit Laundry (Full Size); Central A/C; Patio/Balcony

Select Units: --

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: Home Properties Owner: --

Comments 4 Garden Apts & 4-TH units vacant.

Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- 1 1Garden $810 868 Market$.93-- 4.0%2/8/18 $835 $950 $1,100 -- 2 1.5Garden $860 1,066 Market$.81-- 3.2%4/12/17 $858 $993 $1,103 Den 2 2Garden $980 1,200 Market$.82-- 2.0%6/30/16 $865 $965 $1,155 -- 3 2Garden $985 1,188 Market$.83-- 1.6%5/5/16 $835 $950 $1,041 -- 3 2Townhouse $1,145 1,416 Market$.81-- -- 4 2Townhouse $1,250 1,520 Market$.82--

Adjustments to Rent Incentives: None

Utilities in Rent: Heat Fuel: Gas Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013125Heather Lake © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Marcella at Town Center Multifamily Community Profile 101 Benevita Place CommunityType: Market Rate - General Hampton,VA 23666 Structure Type: 4-Story Mix 327 Units 10.7% Vacant (35 units vacant) as of 2/8/2018 Opened in 2014

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One 30.6% $1,133 940 $1.21 Centrl Lndry: Tennis: One/Den 6.1% $1,124 896 $1.25 Elevator: Volleyball: Two 49.5% $1,397 1,338 $1.04 Fitness: CarWash: Two/Den 3.7% $1,344 1,276 $1.05 Hot Tub: BusinessCtr: Three 10.1% $1,663 1,477 $1.13 Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Disposal; Microwave; Ceiling Fan; In Unit Laundry (Full Size); Central A/C; Patio/Balcony; Vinyl Wood

Select Units: --

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: Boyd Homes Owner: --

Comments Billiards/game rm. Saltwtr pool. Dark cab, granite ct, SS appli, W/I closet. Trash fee: $15. Ph I: 261 total units; 6 bldgs have elevator. Opened 4/14; finished 12/15 for avg 10 units/mo. Ph II: 120 total units; garden buildings. Started preleasing 7/17 and 96 have been leased (16/mo). Amenity Fee: $ 199 Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ A/3/ Mid Rise - Elevat-- 1 1A1/A3 $1,242 865 Market$1.4440 10.7%2/8/18* $1,131 $1,393 $1,663 A/4Lf / GardenDen 1 1A2/A4/Loft $1,236 896 Market$1.3820 21.4%9/11/17* $1,181 $1,475 $1,925 PaeII / Garden-- 1 1Phase $1,332 990 Market$1.3560 4.6%2/2/17 $1,210 $1,457 $1,576 B/2B / Mid Rise - Ele-- 2 2B1/B2/B3 $1,511 1,190 Market$1.2718 0.9%6/30/16 $1,122 $1,439 $1,664 B/ot/ GardenDen 2 2B4/Loft $1,478 1,276 Market$1.1612 * Indicates initial lease-up. PaeII / Garden-- 2 2Phase $1,631 1,333 Market$1.2260 B/6/ Mid Rise - Elevat-- 2 2B5/B6 $1,550 1,375 Market$1.1384 Garage 3 2.5Townhouse $1,832 1,477 Market$1.2433 Adjustments to Rent Incentives: PhaseI-2 mo free w/18 mo lease; PhaseII-2 mo free w/12 mo lease Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-020495Marcella at Town Center © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Monticello at Town Center Multifamily Community Profile 100 Monticello Mews CommunityType: Market Rate - General Hampton,VA 23666 Structure Type: 3-Story Garden/TH 324 Units 4.0% Vacant (13 units vacant) as of 2/8/2018 Opened in 2011

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One 16.7% $942 904 $1.04 Centrl Lndry: Tennis: One/Den 9.3% $1,108 1,059 $1.05 Elevator: Volleyball: Two 60.2% $1,186 1,202 $0.99 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three 13.9% $1,484 1,539 $0.96 Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Disposal; Microwave; Ice Maker; Central A/C; Patio/Balcony; HighCeilings; Carpet / Fauxwood

Select Units: --

Optional($): In Unit Laundry ( $50.00); Fireplace ( $20.00)

Security: --

Parking 1: Free Surface Parking Parking 2: Detached Garage Fee: -- Fee: $160

Property Manager: Signature Mgmt Corp Owner: --

Comments Sweetbay has upstairs (1500 sf) & downstairs (1525sf). Plum has upstairs (1210 sf) & downstairs (1275 sf). Sweetbay up & down and Plum up & down have 4 units each. Waterview units-$25. Opened Feb 2011 - Reached stabilized occ June 2012. Dog park&theater. Concierge. Guest suite. Blk appl, maple cabinets. 2&3-story garden. Open stairwell bldgs. Amenity Fee: $ 150 Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ Mpe/ GardenDen 1 1Maple $1,300 1,059 Market$1.2330 4.0%2/8/18 $1,001 $1,186 $1,484 Cdr/ Garden-- 1 1Cedar $1,100 904 Market$1.2254 1.9%9/13/17 $1,012 $1,191 $1,526 Aae / Garden-- 2 2Azalea $1,250 1,116 Market$1.1248 1.5%1/24/17 $1,130 $1,329 $1,754 Beh/ Garden-- 2 2Beech $1,322 1,116 Market$1.1824 2.5%6/30/16 $1,032 $1,276 $1,636 Ppa Patio / GardenPatio/Balcony 2 2Poplar $1,400 1,190 Market$1.1883 Ppa SR / GardenSunroom 2 2Poplar $1,470 1,215 Market$1.2124 Pu / GardenGarage 2 2Plum $1,695 1,630 Market$1.048 Mrgl / GardenGarage 2 2Marigold $1,700 1,641 Market$1.048 Cabry/ Garden-- 3 2Cranberry $1,650 1,416 Market$1.1732 Adjustments to Rent .Bxod/ TownhouseGarage 3 2.5Boxwood $1,895 1,640 Market$1.165 Incentives: 2 mo free Seta / GardenGarage 3 2Sweetbay $1,995 1,969 Market$1.018

Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-018853Monticello at Town Center © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group New Hampton Commons Multifamily Community Profile 1482 W Queen St. CommunityType: Market Rate - General Hampton,VA Structure Type: 2-Story Garden/TH 252 Units 2.4% Vacant (6 units vacant) as of 2/9/2018 Last Major Rehab in 2005 Opened in 1974

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One 19.0% $718 620 $1.16 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 76.2% $833 845 $0.99 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three 4.8% $1,100 1,100 $1.00 Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Disposal; Central A/C; Patio/Balcony

Select Units: --

Optional($): --

Security: Unit Alarms

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: Geller Properties Owner: --

Comments

Floorplans (Published Rents as of 2/9/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- 1 1Garden $718 620 Market$1.1648 2.4%2/9/18 $718 $833 $1,100 -- 2 1.5Garden $813 825 Market$.9880 1.6%9/5/17 $700 $779 $1,100 -- 2 1.5Townhouse $848 860 Market$.99112 4.0%4/12/17 $750 $887 $1,100 -- 3 2Townhouse $1,100 1,100 Market$1.0012 7.1%12/15/16 $700 $832 $1,100

Adjustments to Rent Incentives: Reduced Rents

Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013122New Hampton Commons © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Peninsula Grove at Town Center Multifamily Community Profile 2018 Cunningham Dr. CommunityType: Market Rate - General Hampton,VA Structure Type: Garden 580 Units 0.7% Vacant (4 units vacant) as of 2/8/2018 Last Major Rehab in 2015 Opened in 1964

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One -- $786 760 $1.03 Centrl Lndry: Tennis: One/Den -- $959 895 $1.07 Elevator: Volleyball: Two -- $828 960 $0.86 Fitness: CarWash: Two/Den -- $866 970 $0.89 Hot Tub: BusinessCtr: Three -- $1,104 1,205 $0.92 Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Disposal; Ice Maker; Ceiling Fan; Central A/C; Patio/Balcony; Storage (In Unit); Carpet

Select Units: --

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: Tryko Properties Owner: --

Comments Renovated units include SS appliances, granite ctops, espresso cabinets, new flooring, new windows. Renovation under- way in units and common areas. Formerly Liberty Estates. 1BR-211 units, 2BR-317 units, 3BR-52 units.

Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ Urnvtd/ Garden-- 1 1Unrenovated $719 740 Market$.97-- 0.7%2/8/18 $829 $847 $1,104 Urnvtd/ Garden-- 1 1Unrenovated $749 770 Market$.97-- 2.4%9/12/17 $828 $910 $1,104 Rnvtd/ Garden-- 1 1Renovated $889 770 Market$1.15-- 7.9%6/30/16* $920 $970 $1,245 Rnvtd/ GardenDen 1 1Renovated $959 895 Market$1.07-- 12.9%5/16/16* $870 $920 $1,195 Urnvtd/ Garden-- 2 1Unrenovated $789 960 Market$.82-- * Indicates initial lease-up. Rnvtd/ Garden-- 2 1Renovated $899 960 Market$.94-- Urnvtd/ GardenDen 2 1Unrenovated $865 970 Market$.89-- Rnvtd/ GardenDen 2 1Renovated $954 970 Market$.98-- .Urnvtd/ Garden-- 3 1.5Unrenovated $1,049 1,155 Market$.91-- Adjustments to Rent .Rnvtd/ Garden-- 3 1.5Renovated $1,139 1,155 Market$.99-- Incentives: Renov 2BR: $400 off 1st mo .Urnvtd/ Garden-- 3 1.5Unrenovated $1,069 1,255 Market$.85-- .Rnvtd/ Garden-- 3 1.5Renovated $1,159 1,255 Market$.92-- Utilities in Rent: Heat Fuel: Natural Gas Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013123Peninsula Grove at Town Center © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Pinnacle Multifamily Community Profile 600 Freeman Dr CommunityType: Market Rate - General Hampton,VA 23666 Structure Type: 4-Story Mid Rise 296 Units 10.5% Vacant (31 units vacant) as of 2/9/2018 Opened in 2016

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One 47.3% $1,160 799 $1.45 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 47.0% $1,343 1,063 $1.26 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three 5.7% $1,569 1,382 $1.13 Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Microwave; In Unit Laundry (Stacked); Patio/Balcony; Vinyl/Linoleum / Carpet

Select Units: --

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: Detached Garage Fee: -- Fee: $150

Property Manager: Bonaventure realty G Owner: --

Comments Opened 11/17. Granite CT, SS appliances, garden tubs, double vanity sinks in master baths, kitchen tile backsplash. Cabana w/firepit, & grill, dog park, yoga, conference room, bocce ball court, gameroom w/billiards. Valet trash $15/mo. Amenity Fee: $ 150 Floorplans (Published Rents as of 2/9/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- 1 1Everest $1,050 679 --$1.5536 10.5%2/9/18* $1,160 $1,343 $1,569 -- 1 1Appalchn/Kilj/Himalaya/T $1,153 813 --$1.4223 19.6%9/6/17* $1,210 $1,579 $1,836 -- 1 1Rocky $1,120 832 --$1.3523 * Indicates initial lease-up. -- 1 1McKinley/Pyren/Oly/Fuji $1,155 834 --$1.3838 -- 1 1SugarLoaf $1,250 894 --$1.4020 -- 2 2Hawksbill $1,300 1,019 --$1.283 -- 2 2Holston/Vancouver $1,355 1,067 --$1.2722 -- 2 2Whitop/Hogbk/Wldcat/Mc $1,313 1,107 --$1.1934 -- 2 2Signal $1,385 1,192 --$1.1620 Adjustments to Rent -- 2 2Waters $1,545 1,400 --$1.104 Incentives: Daily Pricing -- 2 2Shenandoah/BlueRidge $1,255 968 --$1.3056 -- 3 2Cedar/Canon/Sherona $1,430 1,272 --$1.129 Utilities in Rent: Heat Fuel: Electric -- 3 2K2 $1,650 1,506 --$1.108 Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-025937Pinnacle © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Sacramento Multifamily Community Profile 21 Sacramento Dr. CommunityType: Market Rate - General Hampton,VA Structure Type: Townhouse 147 Units 6.1% Vacant (9 units vacant) as of 2/8/2018 Opened in 1978

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One ------Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 53.1% $812 936 $0.87 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three 34.0% $1,170 1,263 $0.93 Sauna: ComputerCtr: Four+ 12.9% $1,159 1,655 $0.70 Playground: Features Standard: Dishwasher; In Unit Laundry (Full Size); Central A/C; Patio/Balcony

Select Units: --

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: Riverdale Mgmt Owner: --

Comments

Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- 2 1.5Townhouse $950 936 Market$1.0178 6.1%2/8/18 -- $812 $1,170 -- 3 2Townhouse $1,145 1,263 Market$.9150 1.4%6/30/16 -- $945 $1,120 -- 4 2.5Townhouse $1,355 1,655 Market$.8219 1.4%5/4/16 -- $945 $1,060 4.1%4/8/15 -- $920 $1,095

Adjustments to Rent Incentives: 2BR & 4BR-2 mo free

Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013131Sacramento © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Signature Place Multifamily Community Profile 101 Signature Way CommunityType: Market Rate - General Hampton,VA Structure Type: Garden 232 Units 1.7% Vacant (4 units vacant) as of 2/9/2018 Last Major Rehab in 2011 Opened in 1991

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One 41.4% $958 741 $1.29 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 51.7% $1,172 1,058 $1.11 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three 6.9% $1,407 1,270 $1.11 Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Disposal; Ice Maker; Ceiling Fan; In Unit Laundry (Hook- ups); Central A/C; Patio/Balcony; Storage (In Unit)

Select Units: Fireplace; HighCeilings

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: Detached Garage Fee: -- Fee: $99

Property Manager: Signature Mgmt Owner: --

Comments Concierge Service

Floorplans (Published Rents as of 2/9/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- 1 1Bainbridge/Kenmore/Mel $1,018 741 Market$1.3796 1.7%2/9/18 $958 $1,172 $1,407 TlrTce / Garden-- 2 2Tyler/Tucker $1,265 1,091 Market$1.1696 1.3%6/30/16 $996 $1,223 $1,475 Rlih/ Garden-- 2 1Raleigh $1,170 927 Market$1.2624 2.2%5/5/16 $996 $1,073 $1,325 Rln / Garden-- 3 2Ryland $1,497 1,270 Market$1.1816 4.7%4/8/15 $915 $1,096 $1,464

Adjustments to Rent Incentives: 1 mo free

Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013094Signature Place © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group The Samuel Multifamily Community Profile 2 Tradewinds Quay CommunityType: Market Rate - General Hampton,VA Structure Type: 3-Story Garden 284 Units 3.5% Vacant (10 units vacant) as of 2/9/2018 Opened in 1987

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One 33.8% $867 788 $1.10 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 46.5% $938 1,011 $0.93 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three 19.7% $1,094 1,264 $0.87 Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Ice Maker; Ceiling Fan; In Unit Laundry (Full Size); Central A/C; Patio/Balcony

Select Units: HighCeilings

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: Detached Garage Fee: -- Fee: $75

Property Manager: Colonial Properties Owner: --

Comments Previously called "Colonial Village at Tradewinds" Storage garage $30

Floorplans (Published Rents as of 2/9/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ Brua/ Garden-- 1 1Bermuda $852 788 Market$1.0896 3.5%2/9/18 $867 $938 $1,094 Troa/ Garden-- 2 2Tortola $918 1,011 Market$.91132 1.4%6/30/16 $743 $831 $1,093 GadCayman / Garden-- 3 2Grand $1,069 1,264 Market$.8556 1.1%5/4/16 $705 $878 $1,070 3.2%4/8/15 $810 $900 $1,015

Adjustments to Rent Incentives: None

Utilities in Rent: Heat Fuel: Gas Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013089The Samuel © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Tidemill Farms Multifamily Community Profile 21 Sacremento Dr. CommunityType: Market Rate - General Hampton,VA Structure Type: Garden 284 Units 6.7% Vacant (19 units vacant) as of 2/8/2018 Opened in 1978

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One 48.9% $608 595 $1.02 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 51.1% $692 875 $0.79 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three ------Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Central A/C

Select Units: --

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: Riverdale Mgmt Owner: --

Comments W/D are included in 1 BR, $90 extra for 2 BR.

Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- 1 1Garden $730 595 Market$1.23139 6.7%2/8/18 $608 $692 -- -- 2 1.5Garden $830 875 Market$.95145 8.5%6/30/16 $699 $795 -- 0.7%5/4/16 $740 $850 -- 5.3%4/8/15 $685 $783 --

Adjustments to Rent Incentives: Up to 2 mo free

Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013130Tidemill Farms © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Township in Hampton Woods Multifamily Community Profile 260 Marcella Rd. CommunityType: Market Rate - General Hampton,VA Structure Type: 3-Story Garden 296 Units 0.3% Vacant (1 units vacant) as of 2/8/2018 Opened in 1987

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff 8.1% $776 500 $1.55 Comm Rm: Basketball: One 51.4% $908 688 $1.32 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 40.5% $1,081 1,100 $0.98 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three ------Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Disposal; Ice Maker; Ceiling Fan; In Unit Laundry (Full Size); Central A/C; Patio/Balcony

Select Units: Fireplace; HighCeilings

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: MAA Owner: --

Comments Vacant:2-1BR. 99.66% Leased Trash fee $7.99

Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- Eff 1Garden $753 500 Market$1.5124 0.3%2/8/18 $908 $1,081 -- -- 1 1Garden $883 688 Market$1.28152 0.7%9/5/17 $901 $1,181 -- -- 2 2Garden $1,051 1,100 Market$.96120 1.4%6/30/16 $865 $1,065 -- 0.0%5/5/16 $931 $972 --

Adjustments to Rent Incentives: None

Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013129Township in Hampton Woods © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Trail Creek Multifamily Community Profile 2 Abbott Drive CommunityType: Market Rate - General Hampton,VA 23666 Structure Type: 2-Story Townhouse 300 Units 5.0% Vacant (15 units vacant) as of 2/8/2018 Opened in 2007

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One 28.0% $1,038 791 $1.31 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 58.7% $1,093 1,108 $0.99 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three 13.3% $1,679 1,518 $1.11 Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Disposal; Ice Maker; In Unit Laundry (Hook-ups); Central A/C; HighCeilings; Carpet

Select Units: Microwave; Patio/Balcony

Optional($): --

Security: Gated Entry

Parking 1: Free Surface Parking Parking 2: Detached Garage Fee: -- Fee: $125

Property Manager: Drucker & Falk Owner: --

Comments Phase II leased up at pace of 9 units/mo. Year Built avg of Phase I & II Phase I-2007-Black Appliances, White Cabinets. Phase II-Mar 2012 - Cherry Cabinets, SS appliances, wood-like vinyl. Two outdoor pools. Mgmt said high vacancy due to several military notices.

Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ PaeI / Townhouse-- 1 1Phase $1,040 768 Market$1.3564 5.0%2/8/18 $1,038 $1,093 $1,679 .PaeI / Townhouse-- 1 1.5Phase $1,144 864 Market$1.3220 1.7%9/5/17 $1,145 $1,469 $1,825 PaeI / Townhouse-- 2 2Phase $1,065 1,093 Market$.97100 4.0%6/30/16 $975 $1,248 $1,574 .PaeI / Townhouse-- 2 2.5Phase $1,105 1,124 Market$.9820 3.3%5/19/16 $988 $1,257 $1,393 .PaeII / Townhouse-- 2 2.5Phase $1,209 1,128 Market$1.0756 .PaeII / TownhouseGarage 3 2.5Phase $1,696 1,518 Market$1.1240

Adjustments to Rent Incentives: $500 off 1 mo

Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-018898Trail Creek © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Waterford Pointe Multifamily Community Profile 105 Lakeshore Dr. E CommunityType: LIHTC - General Hampton,VA Structure Type: 3-Story Garden 120 Units 0.0% Vacant (0 units vacant) as of 2/8/2018 Opened in 1993

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff ------Comm Rm: Basketball: One 7.5% $746 624 $1.20 Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 56.7% $885 818 $1.08 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three 35.8% $1,015 1,006 $1.01 Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Ice Maker; In Unit Laundry (Hook-ups); Central A/C; Patio/Balcony; Storage (In Unit)

Select Units: --

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: SL Nausbaum Owner: --

Comments Call list-2 pages long.

Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- 1 1Garden $731 624 LIHTC/ 60%$1.179 0.0%2/8/18 $746 $885 $1,015 -- 2 1Garden $865 818 LIHTC/ 60%$1.0668 0.0%6/30/16 $746 $885 $985 -- 3 2Garden $990 1,006 LIHTC/ 60%$.9843 1.7%5/5/16 $746 $885 $985 3.3%4/8/15 $720 $855 $955

Adjustments to Rent Incentives: None

Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-013092Waterford Pointe © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management. RealPropertyResearch Group Waypoint at Hampton Multifamily Community Profile 102 Sunrise Cove CommunityType: Market Rate - General Hampton,VA 23666 Structure Type: Garden 210 Units 0.0% Vacant (0 units vacant) as of 2/8/2018 Opened in 1986

Unit Mix & Effective Rent (1) Community Amenities Bedroom Avg Rent SqFt%Total Avg $/SqFtAvg Clubhouse: Pool-Outdr: Eff 22.9% $796 600 $1.33 Comm Rm: Basketball: One ------Centrl Lndry: Tennis: One/Den ------Elevator: Volleyball: Two 77.1% $1,004 1,025 $0.98 Fitness: CarWash: Two/Den ------Hot Tub: BusinessCtr: Three ------Sauna: ComputerCtr: Four+ ------Playground: Features Standard: Dishwasher; Central A/C; Patio/Balcony

Select Units: HighCeilings

Optional($): --

Security: --

Parking 1: Free Surface Parking Parking 2: -- Fee: -- Fee: --

Property Manager: The Franklin Johnso Owner: --

Comments Previously Spinnaker Cove. W/D $20.

Floorplans (Published Rents as of 2/8/2018) (2) Historic Vacancy & Eff. Rent (1) DescriptionFeature BRsBath#Units Rent SqFtRent/SF Program Date %Vac 1BR$ 2BR$ 3BR$ -- Eff 1Garden $825 600 Market$1.3848 0.0%2/8/18 -- $1,004 -- -- 2 2Garden $978 1,000 Market$.98122 1.4%6/30/16 -- $950 -- Dlx / Garden-- 2 2Deluxe $1,045 1,100 Market$.9540 1.4%5/5/16 -- $1,016 -- 6.7%4/8/15 -- $957 --

Adjustments to Rent Incentives: $500 off 1 mo

Utilities in Rent: Heat Fuel: Electric Heat: Cooking: Wtr/Swr: Hot Water: Electricity: Trash:

VA650-018859Waypoint at Hampton © 2018 Real Property Research Group, Inc. (1) Effective Rent is Published Rent, net of concessions and assumes that water, sewer and trash is included in rent (2) Published Rent is rent as quoted by management.