Broker's Opinion of Value

BROKER'S OPINION OF VALUE

501 SUL ROSS STREET HOUSTON, TX 77006 A 80 Unit ● Class C ● Multi-Family Asset

4295 San Felipe ● Suite 355 ● Houston, TX 77027 www.ketent.com 501 SUL ROSS STREET HOUSTON, TX 77006

APARTMENTS FOR SALE Market

PRICE/UNIT: PRICE/SF: Units: 12 TERMS: ALL CASH Avg Size: 783 Date Built: 1958 Rentable Sq. Ft.: 9,396 Acreage: 0.23 Occupancy: 100% Class: C

SALIENT FACTS:

♦ Available on an All Cash or New Loan Basis ♦ Roof replaced in March of 2018 on one building of two buildings. ♦ Located in the heart of the Montrose submarket Previously repaired on the other ♦ Master leased for $10,850/month for one year ♦ Near museums and University of St. Thomas ♦ Potential covered land play ♦ Currently used as a residential mental health facility ♦ Excellent Location Near Downtown ♦ No units have stoves. Food service in a common area. ♦ The property taxes are under protest THE MATERIAL IN THIS REAL ESTATE OFFERING IS FOR USE ONLY BY KET ENTERPRISES INCORPORATED. USE BY ANOTHER PERSON OR COMPANY IS UNLAWFUL.

For More Information Please Contact:

Mark Kalil & Associates, Inc. KET Enterprises Incorporated

Physical Information Financial Information Proposed Loan Parameters Operating Information Number of Units 12 Asking Price Market New Loan @ 70% of Ask Price Est Mkt Rent (Oct-19) $10,850 Avg Unit Size 783 Price Per Unit Amortization (months) 360 Estimated Collections $10,850 Net Rentable Area 9,396 Price Per Sq. Ft. Debt Service Physical Occ (Oct-19) 100% Land Area (Acres) 0.23 Stabilized NOI $93,010 Monthly Payment Est Ins per Unit per Yr $504 Units per Acre 52.8 Interest Rate 4.50% Property Tax Information Date Built 1958 Date Due 10 Yrs Tax Rate (2019) 2.42158 Water Meter / Master Master Est Res for Repl/Unit/Yr $300 2019 Tax Assessment $981,864 Elec Meter Indiv Yield Maintenance Yes 2019 Taxes $23,777 Roof Style Flat Est Future Tax Assessment $981,864 A/C Type: HVAC-Indiv Should get Interest only 3 years Est Future Taxes $23,777

INCOME MODIFIED ACTUALS PRO-FORMA PRO-FORMA INCOME Current Street Rent with a 25% Increase 162,750 $13,563 / Mo Estimated Gross Scheduled Income 162,750 $13,563 / Mo Estimated Loss to Lease (2% of Total Street Rent) (3,255) 2% Estimated Vacancy (5% of Total Street Rent) (8,138) 5% Estimated Concessions and Other Rental Losses (4% of Total Street Rent) (6,510) 4% Estimated Utilities Income 10,000 $833 / Unit / Yr Estimated Other Income 5,000 $417 / Unit / Yr Estimated Total Rental Income 159,848 ESTIMATED TOTAL PRO-FORMA INCOME 159,848 $13,321 / Mo Estimated 2020 Income $130,200 EXPENSE Estimated 2019 Expenses Estimated Expenses Fixed Expenses Fixed Expenses Estimated Fixed Expenses Taxes $23,777 $1,981 per Unit 2019 Tax Rate & 2019 Assessment $23,777 $1,981 per Unit 2018 Tax Rate & Future Assessment Insurance $6,050 $504 per Unit Estimated $6,050 $504 per Unit Estimated Total Fixed Expense 29,827 $2,486 per Unit 29,827 $2,486 per Unit Utilities Utilities Estimated Utilities Electricity $ per Unit master lessor pays all utilities $1,500 $125 per Unit Water & Sewer $ per Unit $8,400 $700 per Unit Gas $ per Unit $2,400 $200 per Unit Trash $ per Unit $1,200 $100 per Unit Total Utilities 0 $ per Unit 13,500 $1,125 per Unit

Other Expenses Other Expenses Estimated Other Expenses General & Admin & Marketing $0 $ per Unit $3,120 $260 per Unit Repairs & Maintenance $0 $ per Unit $5,400 $450 per Unit Labor Costs $0 $ per Unit $600 $50 per Unit Contract Services $0 $ per Unit $1,200 $100 per Unit Management Fees $6,510 5.00% $543 per Unit $9,591 6.00% $799 per Unit Total Other Expense 6,510 $543 per Unit 19,911 $1,659 per Unit

Total Operating Expense 36,337 $3,028 per Unit 63,238 $5,270 per Unit

Reserve for Replacement 3,600 $300 per Unit 3,600 $300 per Unit

Total Expense 39,937 $3,328 per Unit 66,838 $5,570 per Unit Net Operating Income (Actual Underwriting) 90,263 93,010

Asking Price Market "As-Is" Price 0 "All In" Price Cap Rate Proposed Debt Equity Estimated Debt Service Cash Flow 90,263 93,010 Cash on Cash

NOTES: ACTUALS: Income and Expenses calculated using owner's 2019 Tax Rate & 2019 Assessment. PRO FORMA: Income is Pro Forma as Noted. Taxes were calculated using 2018 Tax Rate & Future Assessment. Insurance is estimated. Management Fees calculated as 6.% of Gross Income, Other expenses are Estimated for the Pro Forma.

DISCLAIMER: The information contained herein has been obtained from sources that we deem reliable. We have no reason to doubt the accuracy of the information, but we have not verified it and make no guaranty, warranty or representation about it. It is your resonsibility to independently confirm its accuracy and completeness. We have not determined whether the property complies with deed restrictions or any city licensing or ordinances including life safety compliance or if the property lies within a flood plain. THE PROSPECTIVE BUYER SHOULD CAREFULLY VERIFY EACH ITEM OF INCOME OR EXPENSE AND PERFORM OR HAVE PERFORMED ANY INSPECTIONS TO VERIFY POSSIBLE CONTAMINATION BY ASBESTOS, LEAD PAINT, MOLD OR ANY OTHER HAZARDOUS SUBSTANCES. The owner reserves the right to withdraw this listing or change the price at anytime without notice during the marketing period. THIS IS A BROKER PRICE OPINION OR COMPARATIVE MARKET ANALYSIS AND SHOULD NOT BE CONSIDERED AN APPRAISAL. This represents an estimated sales price for this property. It is not the same as an opinion of value in an appraisal11/25/2019 developed by a licensed appraiser under the Uniform Standards of Professional Appraisal Practice. In making any decision that relies upon my work, you should know that I have not followed the guidelines for development or an appraisal or501SulRoss analysis contained in the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation. PROPERTY OVERVIEW 501 SUL ROSS STREET HOUSTON, TX 77006 Keymap: 493S © Construction Quality: C PROPERTY INFORMATION AMENITIES EXISTING MORTGAGE TAXING AUTHORITY - HARRIS COUNTY Age: 1958 Access Gates Park & Ride Nearby Mortgage Balance ACCT NO: 008710000001 Elec Meter: Indiv Cable Ready Walk-In Closets Amortization Houston ISD $1.136700 A/C Type: HVAC-Indiv Laundry Rooms School Bus Pick-up P & I Harris County $0.407130 Water: Master Mini Blinds Shuttle Route Type Harris County Flood Control $0.027920 Wiring: Copper Ceiling Fans Patios/Balconies Assumable Port of Houston Authority $0.010740 Roof: Flat Monthly Escrow Harris County Hospital District $0.165910 Paving: Asphalt Origination Date Harris County Education Dept $0.005000 Materials: Brick/Wood Due Date Houston Community College $0.100263 # of Stories: 2 Interest Rate City of Houston $0.567920 Parking: 9* Buildings: 2 Yield Maintenance 2019 Tax Rate/$100 $2.421583 Units/Acre: 52.80 Transfer Fee 2019 Tax Assessment $981,864 *+ one space where dumpster is located HCAD Improvement Sq.Ft. 8,496

COLLECTIONS

Est Mo 2019 $ 10,850 $11 Jan 2019 12 Mo Avg #DIV/0! 0.9 $1 Feb 2019 0.8 0.7 Mar 2019 $1 Apr 2019 9 Mo Avg #DIV/0! 0.6 May 2019 0.5$1 June 2019 0.4 $0 July 2019 6 Mo Avg #DIV/0! 0.3 0.2 Aug 2019 $0 Sept 2019 0.1 $- 0 Oct 2019 3 Mo Avg #DIV/0! Nov 2019 Dec 2019

PLEASE DO NOT VISIT THE SITE WITHOUT AN APPOINTMENT MADE THROUGH THE BROKER.

PROPERTY HIGHLIGHTS The 501 Sul Ross Apartments, is a two story, garden-style, apartment community located in the Montrose submarket of Houston, Texas. It contains approximately 8,496 square feet of rentable area and was built in 1958. It is located in the Neartown-Montrose neighborhood. The asset is nestled in a quiet, established, residential neighborhood with an abundance of old oak trees and yesteryear charm. Per owner, the roofs were replaced in March of 2018, and gutters were added and decks updated as needed.

The tenant profile is folks with mild mental disabilities. There is a common meal area next door, so there are no stoves in the units. Residents enjoy close proximity to the University of St. Thomas, the Museum of Fine Arts, the Houston Museum of Natural Science, Rothko Chapel, the Houston Zoo, the Texas Medical Center and Downtown Houston. Per owner, currently there are no leasing concessions and all units have appliance hook ups but no stoves. Financing will be a challenge, due to the master lease. Post rehab, the 1 Br could get $1,050, and 2 Br-1ba could get $1,150; 2 Br-2ba $1,195; 3 br-2ba: $1,295. 9 HVAC, 3 window units.

The asset is currently being master leased to Grover Shante for $10,850/month until February 28, 2021. The owner pays property taxes, insurance and major repairs. Tenants pay all utilities and most maintenance. The tenant has reportedly master leased the asset for 30 years for mental health patients. Rehab will be needed to maximize rents.

Disclaimer: The information contained in this Memorandum reflects material from sources deemed to be reliable, including data such as operating statements, rent roll, etc. provided by the Owner. Notwithstanding, KET Enterprises Incorporated does not make any warranties about the information contained in this marketing package. Every prospective purchaser should verify the information and rely on his accountants or attorneys for legal and tax advice. This offer is “As-Is, Where-Is”. Answers to specific inquiries will have to be supplied by the Owner and are available upon request. Rates of return vary daily. No representations are made concerning environmental issues, if any. 501 SUL ROSS STREET HOUSTON, TX 77006 © 2019 KET RENT COMPARABLE TAX ANALYSIS

Property Address Yr Built Units Impr Sq.Ft. Impr Value Impr Value/Unit Impr Value/Sq.Ft.

1 Campus 4207 Mt Vernon 1965 20 10,302 $931,612 $46,581 $90.43

2 Museum Place 1116 Banks St 1978 24 19,012 $1,712,802 $71,367 $90.09

3 Plazawood 820 W Alabama 1955 24 17,152 $1,890,000 $78,750 $110.19

4 Block at Montrose 1508 California St 1958 62 43,414 $4,971,300 $80,182 $114.51

5 230 W Alabama 230 W Alabama 1965 131 119,234 $12,881,442 $98,332 $108.03

501 Sul Ross 501 Sul Ross 1958 12 8,496 $981,864 $81,822 $115.57

Averages 1963 46 36,268 $3,894,837 $76,172 $104.80

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KET Enterprises Incorporated I 1770 St James Place, Suite 382 I Houston, TX 77056 I 713-355-4646 I www.ketent.com 501 SUL ROSS STREET HOUSTON, TX 77006 © UNIT MIX No. Market Unit Floor Type Sq Ft Total SqFt Total Rent Rent/SF Units Rent

1 Bed/1 Bath 4 600 2,400 $904 $3,617 $1.51

2 Bed/1 Bath 6 780 4,680 $904 $5,425 $1.16

2 Bed/2 Bath 1 1,158 1,158 $904 $904 $0.78

3 Bed/2 Bath 1 1,158 1,158 $904 $904 $0.78

12 783 9,396 $904 $10,850 $1.15 Total Average Total Sq. Average TOTALS AND AVERAGES Total Rent Average Rent/ SF Units Sq. Ft. Feet Rent/Unit Sq.Ft. is per owner

Prices estimated based on ADS Comps PROPERTY LOCATION 501 SUL ROSS STREET HOUSTON, TX 77006 © 501 SUL ROSS STREET HOUSTON, TX 77006 © RENT COMPARABLES 501 SUL ROSS STREET HOUSTON, TX 77006 ©

RENT COMPARABLES (2019 ADS )

Property Name Yr Blt Occ #Units Avg SF Avg Rent EWG P/SF

1 Campus 1965 95% 20 650 $795 EG 1.223 4207 Mt Vernon

2 Museum Place 1978 96% 24 655 $881 E 1.345 1116 Banks St

3 Plazawood 1955 99% 24 733 $891 E 1.216 820 W Alabama

4 Block at Montrose 1958 94% 62 674 $998 EG 1.481 1508 California St

5 230 W Alabama 1965 98% 131 633 $1,298 EW 2.051 230 W Alabama *Resident Pays E(Electric), W(Water), G(Gas) Totals/Averages Comps 1964 96% 52 669 $979 $1.463

501 Sul Ross 1958 100% 12 783 $904 EWG $1.155

Sub-Market Averages (Montrose) 90% 14,300 920 $1,714 $1.863 Houston Market Avgs 85% 656,042 882 $988 $1.125

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SALES COMPARABLES (Sorted by Price/Sq. Ft.) Property Name Date Sold Price Sq. Ft. Price/Unit Price/SF Built Units

1 2423 Woodhead R 4/17 $675,000 3,996 $168,750 $168.92 1970 4 2423 Woodhead

2 4115 Drake R 7/19 $2,320,000 10,201 $145,000 $227.43 1962 16 4115 Drake

3 2300 Park R SALES7/19 $2,800,000 COMPS12,533 AVAILABLE$140,000 $223.41 1966 UPON20 2300 Park

4 239 Emerson R 6/17 $3,780,000 19,244REQUEST$135,000 $196.42 1965 28 239 Emerson

5 2301 Commonwealth R 6/17 $3,000,000 12,540 $125,000 $239.23 1959 24 2301 Commonwealth R - heavily rehabbed! Totals/Averages Comps $2,515,000 11,703 $142,750 $211.08 1964 18

501 Sul Ross Market 9,396 1958 12

Note: The sales comnps above are all in far better condition than the subject property, with granite counter tops, new cabinets, faux wood flooring, new thermal pane glass, new wiring, plumbing, etc. These updates can cost up to $35,000 per unit!

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1 Mile 3 Mile Radius 5 Mile Radius

2019 Estimated Population 26,431 92,402 192,259 2024 Projected Population 27,741 97,027 201,096 34% 2010 Census Population 22,849 78,374 159,968 41% 2000 Census Population 21,102 69,216 138,665

Projected Annual Growth 2019 to 2024 1.0% 1.0% 0.9%

POPULATION Historical Annual Growth 2000 to 2019 1.3% 1.8% 2.0% 9% 11% 2019 Median Age 33.8 33.7 33.4 5% White Black Asian Other Hispanic

2019 Estimated Households 15,835 51,920 94,272 2024 Projected Households 17,103 56,010 101,503 2010 Census Households 12,911 41,157 73,341 2000 Census Households 11,218 34,146 59,785

HOUSEHOLDS Projected Annual Growth 2019 to 2024 1.6% 1.6% 1.5% Historical Annual Growth 2000 to 2019 2.2% 2.7% 3.0%

33.8% Non-Hispanic 2019 Estimated White 61.5% 56.9% 55.1% Hispanic 2019 Estimated Black or African American 16.1% 23.2% 25.3% 66.2% 2019 Estimated Asian or Pacific Islander 7.4% 7.1% 7.3% 2019 Estimated American Indian or Native Alaskan 0.7% 0.5% 0.5% 2019 Estimated Other Races 14.3% 12.3% 11.8%

2019 Estimated Hispanic 33.8% 32.7% 31.9% RACE AND ETHNICITY AND ETHNICITY RACE

2019 Estimated Average Household Income $111,895 $122,243 $131,343 2019 Estimated Median Household Income $75,628 $81,497 $85,128

INCOME 2019 Estimated Per Capita Income $67,670 $69,219 $65,948

2019 Estimated Elementary (Grade Level 0 to 8) 2.9% 3.0% 3.5% $120,000 $111,895 2019 Estimated Some High School (Grade Level 9 to 11) 2.2% 3.3% 4.7% 2019 Estimated High School Graduate 8.2% 9.8% 12.3% $100,000 2019 Estimated Some College 16.1% 14.8% 14.3% 2019 Estimated Associates Degree Only 3.9% 4.3% 4.6% $80,000 $72,073 (AGE 25+) EDUCATION 2019 Estimated Bachelors Degree Only 34.0% 33.7% 31.1% 2019 Estimated Graduate Degree 32.6% 31.1% 29.5% $60,000

$40,000 2019 Estimated Total Businesses 2,808 12,972 25,082 2019 Estimated Total Employees 22,027 254,521 491,100 $20,000 2019 Estimated Employee Population per Business 7.8 19.6 19.6 BUSINESS 2019 Estimated Residential Population per Business 9.4 7.1 7.7 $0 Subject Houston 501 SUL ROSS STREET HOUSTON, TX 77006 © 501 SUL ROSS STREET HOUSTON, TX 77006 © A 268 UNIT CLASS "B-/C+" GARDEN APARTMENT COMMUNITY