September 15, 2017 Chris Marshall Wesley Housing

September 15, 2017

Chris Marshall Wesley Housing Development Corp. 5515 Cherokee Avenue, Suite 200 Alexandria, VA 22312

RE: VHDA Market Changes Letter for Culpepper Gardens I in Arlington, VA

Dear Mr. Marshall:

At your request, Novogradac & Company LLP has completed our market study component research on the market for Culpepper Gardens I in Arlington, VA. We previously provided an application market study for the Subject property with an effective date of February 10, 2017, and prior to that completed another application market study with a February 5, 2016 effective date. Note that we are also currently preparing an appraisal of the Subject property for the same client. The purpose of this letter is to summarize rents and vacancy rates of the comparable properties now as compared to the rent levels and vacancy rates in February 2017, and to conclude to the current achievable rents.

Per Virginia Housing Development Authority (VHDA) 2017 market study guidelines: For VHDA purposes, the date of the site inspection is the Effective Date of the report. The Effective Date must be obviously stated on the cover page or in the Executive Summary section of the report. For a market study with an Effective Date that is 6 to 12 months old at the time of submission, if there are no material changes to the development and/or market, the analyst can provide a letter stating “No material changes since last report dated…” If there are material changes, the market study must be updated to include detailed discussion about those changes. Note our original market study is included as an addendum to this letter.

We re-surveyed the comparables utilized in our February 2017 report primarily to update information on specifics including rents, vacancy rates, rent growth, and concessions. We did not re-inspect the Subject site or the comparables. Based on our findings, there have been no material changes since our last report with an effective date of February 10, 2017. While there have been some limited changes in rents or vacancies at the comparables, these changes are considered reasonable and within normal market expectations.

Most re-surveyed properties reported limited rent growth, or even minor rent declines. Several of the market rate comparables use rent software that adjusts rents weekly or daily, and as such there were some properties with more significant rent changes for one unit type than perhaps other unit types. As such, we have concluded to the same achievable market rent for the Subject as reported in our previous appraisal report. These unchanged achievable market rents for the Subject following renovations are $1,305 for the studio units, $1,445 for the one-bedroom units, and $1,875 for the two-bedroom units.

VHDA Market Letter for Culpepper Gardens I in Arlington, VA September 15, 2017 Page 2

The LIHTC rents remain largely unchanged at the comparables, and are generally at maximum allowable levels, with the exception of The Carlin, which has rents below the maximum allowable level, but management would not provide comments on why the property is not achieving maximum allowable rents. In our prior report, we concluded that the 2016 maximum allowable rents were the achievable LIHTC rents. It is of note that the 2016 maximum allowable rents were slightly below the previous 2015 maximum allowable rents, as shown in the following table, while in 2017 maximum allowable rents increased above 2016 levels. We have presented the previous report’s maximum and achievable LIHTC rents based on 2016 maximum allowable figures and the current (2017) maximum allowable rents in the following table.

ACHIEVABLE LIHTC RENTS CONCLUSION Current Percent Change in 2015 Maximum 2016 Maximum 2017 Maximum Achievable Achievable LIHTC Unit Type Allowable Rent Allowable Rent Allowable Rent LIHTC Rent Rent 0BR/1BA $1,147 $1,141 $1,159 $1,159 1.6% 1BR/1BA $1,229 $1,222 $1,242 $1,242 1.6% 2BR/1BA $1,474 $1,467 $1,489 $1,489 1.5%

As illustrated in the table, the maximum allowable rents increased by 1.5 to 1.6 percentage points since our prior report. We have concluded to achievable LIHTC rents equal to the current maximum allowable LIHTC rents.

The vacancy rates for the surveyed comparables in early 2017 and current in September 2017 are illustrated in the following table.

COMPARABLE OVERALL VACANCY Vacant Vacant Vacancy Vacancy Rent Total Units Units Rate Rate Property Name Structure Units (2-2017) (9-2017) (2-2017) (9-2017) Gates Of Ballston Apartments LIHTC, Market 464 7 2 1.5% 0.4% Harvey Hall Apartments LIHTC, Market 116 1 1 0.9% 0.9% Hunters Park At Cherrydale* LIHTC 74 1 0 1.4% 0.0% Manchester Lakes* LIHTC 252 0 3 0.0% 1.2% Serrano Apartments LIHTC, Market 280 6 1 2.1% 0.4% The Carlin* LIHTC 162 0 0 0.0% 0.0% The Madison At Ballston Station LIHTC, Market 504 25 13 5.0% 2.6% Birchwood Apartments Market 97 3 1 3.1% 1.0% Glenayr Apartments Market 156 5 3 3.2% 1.9% Quinton Arms Apartments Market 45 0 0 0.0% 0.0% Seminary Towers Market 544 17 12 3.1% 2.2% Virginia Square Plaza Apartments Market 225 6 6 2.7% 2.7% Total 2,919 71 42 2.4% 1.4% Total Market 1,684 69 37 4.1% 2.2% Total LIHTC 1,235 2 5 0.2% 0.4% Total Senior LIHTC 488 1 3 0.2% 0.6% *Denotes senior properties VHDA Market Letter for Culpepper Gardens I in Arlington, VA September 15, 2017 Page 3

As presented in the preceding table, overall vacancy decreased from 2.9 percent in February 2017 to 1.4 percent in September 2017, a limited and positive change. Among the surveyed market rate units, the vacancy rate decreased from 4.1 to 2.2 percent, while among the LIHTC comparables, the vacancy rate increased from 0.2 percent to 0.4 percent, indicating minimal change in demand for LIHTC apartments. Based on the limited changes in the overall vacancy rates of comparables, our conclusions remain unchanged and we expect the Subject to maintain a vacancy rate of five percent or less annually.

It is of note that we also researched recent VHDA allocation listings, and no senior LIHTC properties have been allocated in the PMA since our prior report earlier this year. As such, there has been no change to demand calculations for the Subject, as demographic trends have been steady.

Please do not hesitate to contact us if there are any questions regarding our findings and conclusions or if Novogradac & Company LLP can be of further assistance. It has been our pleasure to provide you these updated findings regarding the Subject property.

As mentioned earlier, based on our findings, there have been no material changes since our last report with an effective date of February 10, 2017. The limited rent and vacancy changes that have occurred are considered reasonable and within normal market expectations. Updated property profiles for the comparable properties follow this letter.

Respectfully submitted,

H. Blair Kincer, MAI, CRE, LEED Green Associate Partner

David Boisture, LEED Green Associate Principal

Brian Gault Senior Real Estate Analyst [email protected] 740-618-6272

PROPERTY PROFILE REPORT Gates Of Ballston Apartments Effective Rent Date 9/08/2017

Location 4207 North Pershing Drive Arlington, VA 22203 Arlington County

Distance 0.2 miles Units 464 Vacant Units 2 Vacancy Rate 0.4% Type Garden (2 stories) Year Built/Renovated 1940s / 2007 Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors Ballston Park Apartments Tenant Characteristics Mixed tenancy, mostly families and singles from the immediate area Contact Name Dora Phone 703-875-8607

Market Information Utilities Program @50%, @60%, Market A/C not included -- central Annual Turnover Rate 5% Cooking not included -- electric Units/Month Absorbed N/A Water Heat not included -- electric HCV Tenants N/A Heat not included -- electric Leasing Pace Two weeks Other Electric not included Annual Chg. in Rent <1% increase Water included Concession None Sewer included Trash Collection included

Gates Of Ballston Apartments, continued

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Garden 8 423 $905 $0 @50% No 0 0.0% yes None (2 stories) 0 1 Garden 14 423 $1,098 $0 @60% No 0 0.0% yes None (2 stories) 0 1 Garden 7 423 $1,235 $0 Market No 0 0.0% N/A None (2 stories) 1 1 Garden 64 649 $954 $0 @50% No 0 0.0% yes None (2 stories) 1 1 Garden 95 649 $1,161 $0 @60% No 0 0.0% yes None (2 stories) 1 1 Garden 53 649 $1,461 $0 Market No 0 0.0% N/A None (2 stories) 2 1 Garden 35 789 $1,143 $0 @50% No 1 2.9% yes None (2 stories) 2 1 Garden 51 789 $1,391 $0 @60% No 0 0.0% yes None (2 stories) 2 1 Garden 27 829 $1,831 $0 Market No 0 0.0% N/A None (2 stories) 2 1.5 Garden 29 934 $1,391 $0 @60% No 0 0.0% yes None (2 stories) 2 1.5 Garden 9 934 $1,879 $0 Market No 0 0.0% N/A None (2 stories) 3 2 Garden 22 1,112 $1,317 $0 @50% No 0 0.0% yes None (2 stories) 3 2 Garden 33 1,112 $1,604 $0 @60% No 0 0.0% yes None (2 stories) 3 2 Garden 17 1,112 $2,325 $0 Market No 1 5.9% N/A None (2 stories)

Unit Mix

@50% Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent @60% Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent Studio / 1BA $905 $0 $905 $43 $948 Studio / 1BA $1,098 $0 $1,098 $43 $1,141 1BR / 1BA $954 $0 $954 $59 $1,013 1BR / 1BA $1,161 $0 $1,161 $59 $1,220 2BR / 1BA $1,143 $0 $1,143 $76 $1,219 2BR / 1BA $1,391 $0 $1,391 $76 $1,467 3BR / 2BA $1,317 $0 $1,317 $91 $1,408 2BR / 1.5BA $1,391 $0 $1,391 $76 $1,467 3BR / 2BA $1,604 $0 $1,604 $91 $1,695

Market Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent Studio / 1BA $1,235 $0 $1,235 $43 $1,278 1BR / 1BA $1,461 $0 $1,461 $59 $1,520 2BR / 1BA $1,831 $0 $1,831 $76 $1,907 2BR / 1.5BA $1,879 $0 $1,879 $76 $1,955 3BR / 2BA $2,325 $0 $2,325 $91 $2,416

Amenities In-Unit Security Services Blinds Carpeting Limited Access None Central A/C Dishwasher Microwave Oven Refrigerator Walk-In Closet Washer/Dryer Washer/Dryer hookup

Property Premium Other Business Center/Computer Lab Clubhouse/Meeting Room/Community None None Exercise Facility Central Laundry Off-Street Parking Playground

Gates Of Ballston Apartments, continued

Comments The property does accept housing choice vouchers, but the contact did not know how many names are on the current list. One parking space is included per unit with the possibility for up to three spaces for a three-bedroom. Studio, one and two-bedroom units have stayed at the maximum allowable levels with market rates increasing by one percent or less. The unit mix for tax credit units is estimated. The contact could not provide a specific breakdown by restriction level.

Gates Of Ballston Apartments, continued

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PROPERTY PROFILE REPORT Harvey Hall Apartments Effective Rent Date 9/11/2017

Location 860 South Greenbrier Street Arlington, VA 22204 Arlington County

Distance 1.1 miles Units 116 Vacant Units 1 Vacancy Rate 0.9% Type Midrise (5 stories) Year Built/Renovated 1963 / 2006 Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors Columbia Commons and Windsor Tower Tenant Characteristics Mostly families from the immediate area Contact Name Robin Phone 703-671-3900

Market Information Utilities Program @60%, Market A/C included -- central Annual Turnover Rate 20% Cooking included -- gas Units/Month Absorbed N/A Water Heat included -- gas HCV Tenants N/A Heat included -- gas Leasing Pace Within 2-3 weeks Other Electric included Annual Chg. in Rent Increased approximately 1% Water included Concession None Sewer included Trash Collection included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Midrise 11 400 $1,159 $0 @60% No 1 9.1% yes None (5 stories) 0 1 Midrise 2 400 $1,221 $0 Market No 0 0.0% N/A None (5 stories) 1 1 Midrise 46 760 $1,242 $0 @60% No 0 0.0% yes None (5 stories) 1 1 Midrise 6 760 $1,389 $0 Market No 0 0.0% N/A None (5 stories) 2 1 Midrise 35 1,010 $1,489 $0 @60% No 0 0.0% yes None (5 stories) 2 1 Midrise 6 1,010 $1,527 $0 Market No 0 0.0% N/A None (5 stories) 3 2 Midrise 8 1,250 $1,721 $0 @60% No 0 0.0% yes None (5 stories) 3 2 Midrise 2 1,250 $1,943 $0 Market No 0 0.0% N/A None (5 stories)

Unit Mix

@60% Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent Market Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent Studio / 1BA $1,159 $0 $1,159 $0 $1,159 Studio / 1BA $1,221 $0 $1,221 $0 $1,221 1BR / 1BA $1,242 $0 $1,242 $0 $1,242 1BR / 1BA $1,389 $0 $1,389 $0 $1,389 2BR / 1BA $1,489 $0 $1,489 $0 $1,489 2BR / 1BA $1,527 $0 $1,527 $0 $1,527 3BR / 2BA $1,721 $0 $1,721 $0 $1,721 3BR / 2BA $1,943 $0 $1,943 $0 $1,943

Harvey Hall Apartments, continued

Amenities In-Unit Security Services Blinds Carpet/Hardwood Limited Access None Central A/C Coat Closet Dishwasher Ceiling Fan Garbage Disposal Oven Refrigerator

Property Premium Other Clubhouse/Meeting Room/Community Elevators None 3brs have walk-in closets. Central Laundry Off-Street Parking On-Site Management Playground

Comments The contact did not provide additional information.

Harvey Hall Apartments, continued

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PROPERTY PROFILE REPORT Hunters Park At Cherrydale Effective Rent Date 9/07/2017

Location 2021 North Nelson Street Arlington, VA 22207 Arlington County

Distance 1.7 miles Units 74 Vacant Units 0 Vacancy Rate 0.0% Type Midrise (age-restricted) (4 stories) Year Built/Renovated 2005 / N/A Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors None indicated Tenant Characteristics Seniors 55+ Contact Name Cynthia Phone 703-892-4330

Market Information Utilities Program @30%, @50%, @60% A/C not included -- central Annual Turnover Rate 8% Cooking not included -- electric Units/Month Absorbed N/A Water Heat not included -- electric HCV Tenants 40% Heat not included -- electric Leasing Pace One week Other Electric not included Annual Chg. in Rent 1-2% increase Water included Concession None Sewer included Trash Collection included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 1 1 Midrise 14 545 $561 $0 @30% No 0 0.0% yes None (4 stories) 1 1 Midrise 28 545 $975 $0 @50% No 0 0.0% yes None (4 stories) 1 1 Midrise 32 545 $1,182 $0 @60% No 0 0.0% yes None (4 stories)

Unit Mix

@30% Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent @50% Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent 1BR / 1BA $561 $0 $561 $59 $620 1BR / 1BA $975 $0 $975 $59 $1,034

@60% Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent 1BR / 1BA $1,182 $0 $1,182 $59 $1,241

Hunters Park At Cherrydale, continued

Amenities In-Unit Security Services Blinds Carpeting Intercom (Buzzer) None Central A/C Coat Closet Limited Access Grab Bars Hand Rails Oven Pull Cords Refrigerator

Property Premium Other Clubhouse/Meeting Room/Community Commercial/Retail None None Elevators Garage Central Laundry Off-Street Parking On-Site Management

Comments The contact reported that there is no waiting list and the units are first come, first serve.

Hunters Park At Cherrydale, continued

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PROPERTY PROFILE REPORT Manchester Lakes Effective Rent Date 9/06/2017

Location 7131 Silver Lake Boulevard Alexandria, VA 22315 Fairfax County Intersection: Manchester Boulevard and Hayfield Road

Distance 7.7 miles Units 252 Vacant Units 3 Vacancy Rate 1.2% Type Midrise (age-restricted) (4 stories) Year Built/Renovated 2000-2002 / N/A Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors None Identified Tenant Characteristics Seniors age 62 and older, many of whom sold homes to move to this property. Contact Name Susan Phone 703-921-5500

Market Information Utilities Program @50%, @60% A/C not included -- central Annual Turnover Rate 10% Cooking not included -- electric Units/Month Absorbed N/A Water Heat included -- gas HCV Tenants 40% Heat included -- gas Leasing Pace Pre-leased Other Electric not included Annual Chg. in Rent Increased slightly (~1-2%) Water included Concession None Sewer included Trash Collection included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 1 1 Midrise 20 564 $1,005 $0 @50% No 0 0.0% no None (4 stories) 1 1 Midrise 83 564 $1,212 $0 @60% No 1 1.2% no None (4 stories) 2 1 Midrise 96 803 $1,200 $0 @50% No 2 2.1% no None (4 stories) 2 1 Midrise 53 803 $1,448 $0 @60% No 0 0.0% no None (4 stories)

Unit Mix

@50% Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent @60% Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent 1BR / 1BA $1,005 $0 $1,005 $29 $1,034 1BR / 1BA $1,212 $0 $1,212 $29 $1,241 2BR / 1BA $1,200 $0 $1,200 $37 $1,237 2BR / 1BA $1,448 $0 $1,448 $37 $1,485

Manchester Lakes, continued

Amenities In-Unit Security Services Balcony/Patio Blinds Intercom (Buzzer) None Carpeting Central A/C Limited Access Dishwasher Exterior Storage Garbage Disposal Hand Rails Oven Pull Cords Refrigerator

Property Premium Other Carport Clubhouse/Meeting Room/Community Hairdresser / Barber Country store, library Elevators Exercise Facility Garage Central Laundry Off-Street Parking On-Site Management Recreation Areas

Comments The contact said there is no current waiting list and said the property has tenants using Housing Choice Vouchers, but could not offer any information as to how many or what percentage of units are occupied by Voucher holders. The contact did not provide any insight as to why rents are slightly below maximum allowable levels.

Manchester Lakes, continued

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PROPERTY PROFILE REPORT Serrano Apartments Effective Rent Date 9/07/2017

Location 5535 Columbia Pike Arlington, VA 22204 Arlington County

Distance 1.2 miles Units 280 Vacant Units 1 Vacancy Rate 0.4% Type Highrise (8 stories) Year Built/Renovated 1960 / 2011 Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors Taylor Place and Wild Wood Park Tenant Characteristics Mix of professionals employed in Fed Govt., healthcare, and education Contact Name Kia Phone 703.671.3200

Market Information Utilities Program @60%, Market A/C included -- central Annual Turnover Rate 21% Cooking included -- gas Units/Month Absorbed N/A Water Heat included -- gas HCV Tenants 5% Heat included -- gas Leasing Pace See comments Other Electric included Annual Chg. in Rent No change reported Water included Concession None Sewer included Trash Collection included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Highrise 34 580 $1,159 $0 @60% Yes 0 0.0% yes None (8 stories) 0 1 Highrise 10 580 $1,546 $0 Market Yes 0 0.0% yes None (8 stories) 1 1 Highrise 60 785 $1,242 $0 @60% Yes 0 0.0% yes None (8 stories) 1 1 Highrise 35 785 $1,656 $0 Market Yes 1 2.9% yes None (8 stories) 2 1 Highrise 56 1,047 $1,489 $0 @60% Yes 0 0.0% yes None (8 stories) 2 1 Highrise 16 1,047 $1,986 $0 Market Yes 0 0.0% yes None (8 stories) 2 1.5 Highrise 32 1,138 $1,489 $0 @60% Yes 0 0.0% yes None (8 stories) 2 1.5 Highrise 17 1,138 $1,986 $0 Market Yes 0 0.0% yes None (8 stories) 3 2 Highrise 14 1,392 $1,721 $0 @60% Yes 0 0.0% yes None (8 stories) 3 2 Highrise 6 1,392 $2,295 $0 Market Yes 0 0.0% yes None (8 stories)

Serrano Apartments, continued

Unit Mix

@60% Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent Market Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent Studio / 1BA $1,159 $0 $1,159 $0 $1,159 Studio / 1BA $1,546 $0 $1,546 $0 $1,546 1BR / 1BA $1,242 $0 $1,242 $0 $1,242 1BR / 1BA $1,656 $0 $1,656 $0 $1,656 2BR / 1BA $1,489 $0 $1,489 $0 $1,489 2BR / 1BA $1,986 $0 $1,986 $0 $1,986 2BR / 1.5BA $1,489 $0 $1,489 $0 $1,489 2BR / 1.5BA $1,986 $0 $1,986 $0 $1,986 3BR / 2BA $1,721 $0 $1,721 $0 $1,721 3BR / 2BA $2,295 $0 $2,295 $0 $2,295

Amenities In-Unit Security Services Balcony/Patio Blinds Intercom (Buzzer) None Carpeting Central A/C Limited Access Dishwasher Ceiling Fan Garbage Disposal Oven Refrigerator

Property Premium Other Elevators Central Laundry None None Off-Street Parking On-Site Management Swimming Pool

Comments Market rate unit rents are restricted to 80 percent AMI through a local bond program and increased in 2017 due to reduced vacancies and a mark up to market survey conducted by management. The contact reported that there is a waiting list with 100 names for the one bedroom units, the most popular unit type. There is also a waiting list for other unit types, but the contact could not provide an estimate for the length of the waiting list.

PROPERTY PROFILE REPORT The Carlin Effective Rent Date 9/06/2017

Location 4300 North Carlin Springs Road Arlington, VA 22203 Arlington County

Distance 0.4 miles Units 162 Vacant Units 0 Vacancy Rate 0.0% Type Highrise (age-restricted) (10 stories) Year Built/Renovated 1997 / N/A Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors Culpepper Gardens Tenant Characteristics Seniors age 70+; Most from northeastern Virginia; Majority previously owned homes Contact Name Miss Clybourne Phone 703.243.4300

Market Information Utilities Program @60% A/C included -- wall Annual Turnover Rate 8% Cooking included -- electric Units/Month Absorbed N/A Water Heat included -- gas HCV Tenants 5% Heat included -- gas Leasing Pace One or two weeks Other Electric included Annual Chg. in Rent $45 increase in 2/1 units; no increase 1/1 Water included Concession None Sewer included Trash Collection included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 1 1 Highrise 122 560 $1,105 $0 @60% Yes 0 0.0% no None (10 stories) 2 1 Highrise 40 750 $1,395 $0 @60% Yes 0 0.0% no None (10 stories)

Unit Mix

@60% Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent 1BR / 1BA $1,105 $0 $1,105 $0 $1,105 2BR / 1BA $1,395 $0 $1,395 $0 $1,395

Amenities In-Unit Security Services Blinds Cable/Satellite/Internet Patrol Adult Education Carpeting Garbage Disposal Video Surveillance Oven Pull Cords Refrigerator Walk-In Closet Wall A/C

Property Premium Other Carport Elevators Hairdresser / Barber None Garage Central Laundry Off-Street Parking On-Site Management Picnic Area Service Coordination

The Carlin, continued

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PROPERTY PROFILE REPORT The Madison At Ballston Station Effective Rent Date 9/11/2017

Location 4400 North 4th Street Arlington, VA 22203 Arlington County

Distance 0.1 miles Units 504 Vacant Units 13 Vacancy Rate 2.6% Type Midrise (4 stories) Year Built/Renovated 2009, 2012 / N/A Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors Ballston Park, Henderson Park Tenant Characteristics Working professionals, Arlington locals, Local families Contact Name Nadine Phone 703-527-4040

Market Information Utilities Program @60%, Market A/C not included -- central Annual Turnover Rate 25% Cooking not included -- electric Units/Month Absorbed N/A Water Heat not included -- electric HCV Tenants 5% Heat not included -- electric Leasing Pace See comments Other Electric not included Annual Chg. in Rent Three percent Water not included Concession None Sewer not included Trash Collection included

The Madison At Ballston Station, continued

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Midrise 34 683 $1,800 $0 Market No N/A N/A N/A HIGH (4 stories) 0 1 Midrise 34 470 $1,475 $0 Market No N/A N/A N/A LOW (4 stories) 1 1 Midrise 58 784 $1,167 $0 @60% Yes 0 0.0% yes None (4 stories) 1 1 Midrise N/A 750 $1,780 $0 Market N/A N/A N/A N/A None (4 stories) 1 1 Midrise 41 889 $1,990 $0 Market No N/A N/A N/A HIGH (4 stories) 1 1 Midrise 41 547 $1,615 $0 Market No N/A N/A N/A LOW (4 stories) 2 1 Midrise 5 922 $1,392 $0 @60% Yes N/A N/A yes None (4 stories) 2 1 Midrise N/A 927 $2,295 $0 Market N/A N/A N/A N/A None (4 stories) 2 1 Midrise 41 966 $2,001 $0 Market No N/A N/A N/A HIGH (4 stories) 2 1 Midrise 41 861 $1,995 $0 Market No N/A N/A N/A LOW (4 stories) 2 2 Midrise 32 1,177 $1,392 $0 @60% Yes N/A N/A yes None (4 stories) 2 2 Midrise N/A 1,093 $2,450 $0 Market N/A N/A N/A N/A None (4 stories) 2 2 Midrise 54 1,237 $2,765 $0 Market No N/A N/A N/A HIGH (4 stories) 2 2 Midrise 54 922 $2,142 $0 Market No N/A N/A N/A LOW (4 stories) 3 2 Midrise 5 1,354 $1,602 $0 @60% Yes 0 0.0% yes None (4 stories) 3 2 Midrise 32 1,408 $3,670 $0 Market Yes 0 0.0% N/A HIGH (4 stories) 3 2 Midrise 32 1,354 $3,565 $0 Market Yes 0 0.0% N/A LOW (4 stories)

Unit Mix

@60% Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent Market Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent 1BR / 1BA $1,167 $0 $1,167 $105 $1,272 Studio / 1BA $1,475 - $1,800 $0 $1,475 - $1,800 $76 $1,551 - $1,876 2BR / 1BA $1,392 $0 $1,392 $135 $1,527 1BR / 1BA $1,615 - $1,990 $0 $1,615 - $1,990 $105 $1,720 - $2,095 2BR / 2BA $1,392 $0 $1,392 $135 $1,527 2BR / 1BA $1,995 - $2,295 $0 $1,995 - $2,295 $135 $2,130 - $2,430 3BR / 2BA $1,602 $0 $1,602 $164 $1,766 2BR / 2BA $2,142 - $2,765 $0 $2,142 - $2,765 $135 $2,277 - $2,900 3BR / 2BA $3,565 - $3,670 $0 $3,565 - $3,670 $164 $3,729 - $3,834

Amenities In-Unit Security Services Balcony/Patio Blinds Limited Access None Carpeting Central A/C Video Surveillance Coat Closet Dishwasher Exterior Storage Ceiling Fan Garbage Disposal Hand Rails Microwave Oven Refrigerator Walk-In Closet Washer/Dryer Washer/Dryer hookup

Property Premium Other Business Center/Computer Lab Clubhouse/Meeting Room/Community None Stainless Steel, Dog Park, Commercial/Retail Concierge Courtyard Elevators Exercise Facility Garage Off-Street Parking On-Site Management Picnic Area Playground Recreation Areas Swimming Pool

The Madison At Ballston Station, continued

Comments The contact could not provide the exact vacancies by unit type but did note that all 13 vacancies are in market rate units. There are no vacancies in tax credit units.

The Madison At Ballston Station, continued

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PROPERTY PROFILE REPORT Birchwood Apartments Effective Rent Date 9/05/2017

Location 525 N. Pollard Street Arlington, VA 22203 Arlington County

Distance 0.5 miles Units 97 Vacant Units 1 Vacancy Rate 1.0% Type Midrise (4 stories) Year Built/Renovated 2001 / N/A Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors None specified Tenant Characteristics Mostly professionals; 50% out of state Contact Name Lorna Phone 703-465-0050

Market Information Utilities Program Market A/C included -- central Annual Turnover Rate 25% Cooking included -- gas Units/Month Absorbed N/A Water Heat included -- gas HCV Tenants 0% Heat included -- electric Leasing Pace Within two weeks Other Electric included Annual Chg. in Rent Increased approximately five percent Water included Concession None Sewer included Trash Collection included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 1 1 Midrise 26 741 $1,825 $152 Market No 0 0.0% N/A None (4 stories) 1.5 2 Midrise 5 1,006 $2,395 $191 Market No 0 0.0% N/A None (4 stories) 2 2 Midrise 40 1,018 $2,495 $208 Market No 1 2.5% N/A None (4 stories) 2.5 2 Midrise 12 1,390 $3,195 $250 Market No 0 0.0% N/A None (4 stories) 3 3 Midrise 14 1,358 $3,695 $292 Market No 0 0.0% N/A None (4 stories)

Unit Mix

Market Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent 1BR / 1BA $1,825 $152 $1,673 $0 $1,673 1.5BR / 2BA $2,395 $191 $2,204 $0 $2,204 2BR / 2BA $2,495 $208 $2,287 $0 $2,287 2.5BR / 2BA $3,195 $250 $2,945 $0 $2,945 3BR / 3BA $3,695 $292 $3,403 $0 $3,403

Birchwood Apartments, continued

Amenities In-Unit Security Services Balcony/Patio Blinds Intercom (Buzzer) None Carpeting Central A/C Limited Access Dishwasher Microwave Oven Refrigerator Walk-In Closet Washer/Dryer

Property Premium Other Clubhouse/Meeting Room/Community Elevators None None Exercise Facility Garage On-Site Management

Comments The property is offering one month free rent for signing a 12 month lease for the one vacant unit. The Ballston Quarter Mall construction is still in progress. The contact noted that the project is expected to be completed in Summer of 2018.

PROPERTY PROFILE REPORT Glenayr Apartments Effective Rent Date 9/06/2017

Location 399 N Park Drive Arlington, VA 22203 Arlington County

Distance 0.3 miles Units 156 Vacant Units 3 Vacancy Rate 1.9% Type Lowrise (3 stories) Year Built/Renovated 1940s / N/A Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors Madison at Ballston Station, Thomas Place Tenant Characteristics Mixed tenancy; from Arlington, DC, out of state Contact Name Sheryl Phone 703-522-7354

Market Information Utilities Program Market A/C not included -- none Annual Turnover Rate N/A Cooking included -- gas Units/Month Absorbed N/A Water Heat included -- gas HCV Tenants 0% Heat included -- gas Leasing Pace One to two weeks Other Electric included Annual Chg. in Rent No change since 4Q, 2016 Water included Concession None Sewer included Trash Collection included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 1 1 Lowrise 96 700 $1,225 $0 Market No 2 2.1% N/A None (3 stories) 2 1 Lowrise 60 800 $1,600 $0 Market No 1 1.7% N/A None (3 stories)

Unit Mix

Market Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent 1BR / 1BA $1,225 $0 $1,225 $8 $1,233 2BR / 1BA $1,600 $0 $1,600 $10 $1,610

Amenities In-Unit Security Services Blinds Coat Closet None None Oven Refrigerator

Property Premium Other Courtyard Central Laundry None None Off-Street Parking On-Site Management

Comments The contact did not comment on annual turnover rate and mentioned the property does not accept housing vouchers.

Glenayr Apartments, continued

Photos

PROPERTY PROFILE REPORT Quinton Arms Apartments Effective Rent Date 9/05/2017

Location 1160 North Quincy Street Arlington, VA 22201 Arlington County

Distance 1 mile Units 45 Vacant Units 0 Vacancy Rate 0.0% Type Midrise (5 stories) Year Built/Renovated 1961 / Ongoing Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors Library Court, 1020 Quincy Tenant Characteristics young professionals, young families, some elderly from out of the area Contact Name Brittany Phone 703-807-0803

Market Information Utilities Program Market A/C included -- central Annual Turnover Rate 4% Cooking included -- electric Units/Month Absorbed N/A Water Heat included -- gas HCV Tenants 0% Heat included -- gas Leasing Pace 2 to 3 weeks Other Electric included Annual Chg. in Rent Stayed the same Water included Concession None Sewer included Trash Collection included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Midrise 9 542 $1,450 $0 Market No 0 0.0% N/A None (5 stories) 1 1 Midrise 18 695 $1,625 $0 Market No 0 0.0% N/A None (5 stories) 2 1 Midrise 18 935 $2,150 $0 Market No 0 0.0% N/A None (5 stories)

Unit Mix

Market Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent Studio / 1BA $1,450 $0 $1,450 $0 $1,450 1BR / 1BA $1,625 $0 $1,625 $0 $1,625 2BR / 1BA $2,150 $0 $2,150 $0 $2,150

Quinton Arms Apartments, continued

Amenities In-Unit Security Services Balcony/Patio Blinds Intercom (Phone) None Carpet/Hardwood Central A/C Limited Access Dishwasher Exterior Storage Garbage Disposal Microwave Oven Refrigerator Walk-In Closet Washer/Dryer Washer/Dryer hookup

Property Premium Other Elevators Exercise Facility None None Off-Street Parking On-Site Management Picnic Area

Comments The property does not have a wait list and does not accept vouchers.

PROPERTY PROFILE REPORT Seminary Towers Effective Rent Date 9/06/2017

Location 4701 Kenmore Ave Alexandria, VA 22304 County

Distance 3 miles Units 544 Vacant Units 12 Vacancy Rate 2.2% Type Highrise (13 stories) Year Built/Renovated 1962 / 2000 Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors None identified Tenant Characteristics Tenants are from Alexandria and out of state Contact Name Ashley Phone 703-751-0202

Market Information Utilities Program Market A/C included -- central Annual Turnover Rate 36% Cooking not included -- gas Units/Month Absorbed N/A Water Heat not included -- gas HCV Tenants 0% Heat not included -- gas Leasing Pace A few weeks Other Electric included Annual Chg. in Rent See comments Water not included Concession n/a Sewer not included Trash Collection not included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Highrise N/A 560 $1,250 $0 Market No N/A N/A N/A HIGH (13 stories) 0 1 Highrise 73 535 $1,225 $0 Market No 0 0.0% N/A LOW (13 stories) 1 1 Highrise N/A 835 $1,395 $0 Market No N/A N/A N/A HIGH (13 stories) 1 1 Highrise 226 685 $1,390 $0 Market No 9 4.0% N/A LOW (13 stories) 2 1 Highrise 116 1,000 $1,650 $0 Market No 0 0.0% N/A AVG (13 stories) 2 2 Highrise 116 1,050 $1,755 $0 Market No 2 1.7% N/A AVG (13 stories) 3 2 Highrise 57 1,270 $2,120 $0 Market No 1 1.8% N/A AVG (13 stories)

Unit Mix

Market Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent Studio / 1BA $1,225 - $1,250 $0 $1,225 - $1,250 $69 $1,294 - $1,319 1BR / 1BA $1,390 - $1,395 $0 $1,390 - $1,395 $91 $1,481 - $1,486 2BR / 1BA $1,650 $0 $1,650 $114 $1,764 2BR / 2BA $1,755 $0 $1,755 $114 $1,869 3BR / 2BA $2,120 $0 $2,120 $137 $2,257

Seminary Towers, continued

Amenities In-Unit Security Services Balcony/Patio Blinds Intercom (Buzzer) None Carpeting Central A/C Limited Access Coat Closet Dishwasher Patrol Exterior Storage Ceiling Fan Garbage Disposal Oven Refrigerator Walk-In Closet

Property Premium Other Business Center/Computer Lab Clubhouse/Meeting Room/Community None Dog Park Concierge Elevators Exercise Facility Central Laundry Off-Street Parking On-Site Management Sauna Swimming Pool

Comments The contact did not offer additional information about the property.

Seminary Towers, continued

Trend: Comments 1Q16 The contact stated the clubhouse and lobby were renovated in 2014. Average rents are reflected based on a variety of floor plans and factors that can affect pricing such as minor renovations, views, and slight variations in floor plans. The property operates with daily rent software, as rents change daily based on availability, etc. The contact was unable to specify the number of vacancies per unit; however, the listed vacancies are based on an approximate 96 percent total occupancy. Rents have generally declined two to three percent over the past year. Management could not provide a reason for the decrease in rents. Off-street surface parking is free of charge. The property does not have a parking garage.

3Q16 The contact stated the clubhouse and lobby were renovated in 2014. Average rents are reflected based on a variety of floor plans and factors that can affect pricing such as minor renovations, views, and slight variations in floor plans. The property operates with daily rent software, as rents change daily based on availability, etc. The manager could not determine why the rent of the 2BR/2BA declined. The concessions range from $250 for on-notice units and $500 for vacant units. Off-street surface parking is free of charge. There are two spots per unit, with exception of the 3BR units which include 3 spots. The property does not have a parking garage.

4Q16 The contact stated the clubhouse and lobby were renovated in 2014. Average rents are based on a variety of floor plans and factors that can affect pricing such as minor renovations, views, and slight variations in floor plans. Further rent detail was not available. The property operates with daily rent software, as rents change daily based on availability, etc. There is a current concession of $250 for a 12-month lease. Off-street surface parking is free of charge. There are two spots per unit, with exception of the three-BR units which include three spots. The property does not have a parking garage.

3Q17 The contact did not offer additional information about the property.

Seminary Towers, continued

Photos

PROPERTY PROFILE REPORT Virginia Square Plaza Apartments Effective Rent Date 9/05/2017

Location 801 N. Monroe Street Arlington, VA 22201 Arlington County

Distance 1 mile Units 225 Vacant Units 6 Vacancy Rate 2.7% Type Highrise (9 stories) Year Built/Renovated 2000 / N/A Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors Galleria, Balston Place, Lincoln Towers Tenant Characteristics Professionals working DC metro area. Some graduate students at GMU. Contact Name Wendy Phone 703-526-0800

Market Information Utilities Program Market A/C included -- central Annual Turnover Rate N/A Cooking included -- electric Units/Month Absorbed N/A Water Heat included -- gas HCV Tenants 0% Heat included -- gas Leasing Pace Within two weeks Other Electric not included Annual Chg. in Rent n/a Water included Concession None Sewer included Trash Collection included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Highrise 34 560 $1,840 $0 Market No 0 0.0% N/A AVG (9 stories) 0 1 Highrise N/A 560 $1,905 $0 Market No 0 N/A N/A HIGH (9 stories) 0 1 Highrise N/A 560 $1,775 $0 Market No 0 N/A N/A LOW (9 stories) 1 1 Highrise 128 660 $2,120 $0 Market No 0 0.0% N/A AVG (9 stories) 1 1 Highrise N/A 660 $2,245 $0 Market No 0 N/A N/A HIGH (9 stories) 1 1 Highrise N/A 660 $1,995 $0 Market No 0 N/A N/A LOW (9 stories) 2 2 Highrise 54 950 $2,910 $0 Market No 6 11.1% N/A AVG (9 stories) 2 2 Highrise N/A 950 $3,015 $0 Market No 0 N/A N/A HIGH (9 stories) 2 2 Highrise N/A 950 $2,805 $0 Market No 0 N/A N/A LOW (9 stories) 3.5 3 Highrise 9 1,315 $3,860 $0 Market No 0 0.0% N/A AVG (9 stories) 3.5 3 Highrise N/A 1,315 $3,925 $0 Market No 0 N/A N/A HIGH (9 stories) 3.5 3 Highrise N/A 1,315 $3,795 $0 Market No 0 N/A N/A LOW (9 stories)

Virginia Square Plaza Apartments, continued

Unit Mix

Market Face Rent Conc. Concd. Rent Util. Adj. Adj. Rent Studio / 1BA $1,775 - $1,905 $0 $1,775 - $1,905 $12 $1,787 - $1,917 1BR / 1BA $1,995 - $2,245 $0 $1,995 - $2,245 $17 $2,012 - $2,262 2BR / 2BA $2,805 - $3,015 $0 $2,805 - $3,015 $22 $2,827 - $3,037 3.5BR / 3BA $3,795 - $3,925 $0 $3,795 - $3,925 $26 $3,821 - $3,951

Amenities In-Unit Security Services Balcony/Patio Blinds Limited Access None Carpeting Central A/C Patrol Dishwasher Exterior Storage Perimeter Fencing Garbage Disposal Microwave Oven Refrigerator Walk-In Closet Washer/Dryer Washer/Dryer hookup

Property Premium Other Business Center/Computer Lab Clubhouse/Meeting Room/Community None None Concierge Elevators Exercise Facility Garage Off-Street Parking On-Site Management

Comments The average rents listed are the average of the low and high rents, as opposed to the most frequently charged rent within the range. The contact was unable to provide any information on the most frequently leased unit or annual turnover rates. This property does not accept Housing Choice Vouchers.

A MARKET FEASIBILITY STUDY OF

CULPEPPER GARDEN I 4435 NORTH PERSHING DRIVE ARLINGTON, VA 22203

Effective Date: February 10, 2017 Report Date: March 30, 2017

Prepared For

Chris Marshall Wesley Housing Development Corporation 5515 Cherokee Avenue, Suite 200 Alexandria, VA 22312

Prepared By

Novogradac & Company LLP 4520 East–West Highway, Suite 615 Bethesda, MD 20814 Telephone: 240-235-1701

March 30, 2017

Chris Marshall Wesley Housing Development Corporation 5515 Cherokee Avenue, Suite 200 Alexandria, VA 22312

Re: Market Study for Culpepper Garden I, located in Arlington, Virginia

Dear Mr. Marshall:

We are pleased to present our findings with respect to the value of the above-referenced property, Culpepper Garden I (“Subject”). We have been engaged to perform a tax credit application appraisal to be submitted to VHDA along with this application market study. We also performed a Rent Comparability Study of the Subject property in October 2015 and we previously provided an application appraisal and a market study for the Subject property with an effective date of February 5, 2016. Note that we are also currently preparing an appraisal of the Subject property.

The purpose of this market study is to assess the viability of Culpepper Garden I, an existing senior Section 8 and market rate property that has been previously de-coupled from the HUD 236 program. As part of proposed renovations process, the developer is seeking project-based Section 8 vouchers from HUD for the units not currently covered by the HAP contract. The sponsor has reported that the property will be renovated with tax credits. The Subject offers 204 total units to senior (age 62+) households. Following renovations under the LIHTC program, the Subject will target households earning 60 percent of the Area Median Income (AMI) or less. The following report provides support for the findings of the study, and outlines the sources of information and the methodologies used to arrive at these conclusions. The scope of this report meets the 2017 market study requirements of the Virginia Housing Development Authority (VHDA). This report conforms to VHDA guidelines and no others for simplicity. Furthermore, this document conforms to the prescribed format VHDA stipulates. Note that the Virginia Department of Housing and Community Development (VADHCD) is among the intended users of this report.

Novogradac & Company LLP adheres to the market study guidelines promulgated by the National Council of Housing Market Analysts (NCHMA).

The scope of the study is based on agreed upon procedures as outlined in the engagement letter and as summarized as follows:

4520 EAST-WEST HIGHWAY  SUITE 615  BETHESDA, MARYLAND 20814  (240) 235-1701 FAX (240) 235-1702  NOVOCO.COM

Culpepper Garden I March 30, 2017 Page 2

. Inspecting the site of the to-be-renovated Subject and its general location. . Analyzing the appropriateness of the proposed unit mix, rent levels, unit and complex amenities, and site. . Estimating the market rents, absorption rates and stabilized vacancy levels for the market area. . Investigating the general economic health and conditions of the senior rental market. . Complete a by-bedroom capture rate analysis that analyzes the level of potential income eligible tenants in the primary market area. . Reviewing relevant public records and contacting appropriate public agencies. . Brief analysis of the economic and social conditions in the market area, in relation to the proposed project. . Establishing the Subject’s Primary Market Area, if applicable. . Surveying competing projects, both LIHTC and market-rate.

This report contains, to the fullest extent possible and practical, explanations of the data, reasoning, and analyses that were used to develop the opinions contained herein. The depth of discussion contained in the report is specific to the needs of the client. Please do not hesitate to contact us if there are any questions regarding the report or if Novogradac & Company LLP can be of further assistance. It has been our pleasure to assist you with this project.

Respectfully submitted,

H. Blair Kincer, MAI, CRE David Boisture LEED Green Associate Novogradac & Company LLP Novogradac & Company LLP Principal Partner

Brian Gault Robert Edwards Novogradac & Company LLP Novogradac & Company LLP Senior Analyst Senior Analyst

4520 EAST-WEST HIGHWAY  SUITE 615  BETHESDA, MARYLAND 20814  (240) 235-1701 FAX (240) 235-1702  NOVOCO.COM

TABLE OF CONTENTS

A. EXECUTIVE SUMMARY AND CONCLUSIONS ...... 1

B. PROJECT DESCRIPTION ...... 5

C. LOCATION, MARKET AREA DEFINITION & PROPERTY CHARACTERISTICS ...... 14

D. EMPLOYMENT AND ECONOMY ...... 33

E. DEMOGRAPHIC CHARACTERISTICS ...... 40

F. COMPETITIVE ENVIRONMENT ...... 49

G. ANALYSIS / CONCLUSIONS ...... 113

H. LOCAL PERSPECTIVE OF RENTAL HOUSING AND HOUSING ALTERNATIVES ..... 124

I. OTHER REQUIREMENTS ...... 129

ADDENDA

A. EXECUTIVE SUMMARY

Culpepper Garden I – Arlington, VA – Market Study

EXECUTIVE SUMMARY AND CONCLUSIONS

Culpepper Garden I, the Subject, consists of 204 units restricted to senior households age 62 and older. The Subject is a former HUD Section 236 property that has been de-coupled, and currently operates with 42 project-based Section 8 units. Note the developer is seeking 151 additional project- based Section 8 vouchers from HUD, which would raise the total number of subsidized units to 193. Following proposed renovations that will utilize the Low-Income Housing Tax Credit (LIHTC) program, the Subject will target senior households earning 60 percent of the area median income (AMI) or less. For the subsidized units, residents will only pay 30 percent of their income toward rent. The property was originally constructed in 1975 and is currently in average overall condition. Following proposed renovations, we anticipate the Subject will be in good condition.

The proposed renovation scope for the Subject is detailed later in this report. The total estimated hard costs for the renovation are $23,256,360, or $110,745 per unit. The renovation is scheduled to begin in the third quarter 2017 with completion expected by fourth quarter 2019. Individual unit renovations will occur with tenants in place.

The Subject property is located in central Arlington County. The Subject is located in a primarily residential neighborhood, featuring a mix of single and multifamily developments, with some nearby mixed uses. South and west of the Subject are single-family homes in average to good condition. A bus stop is also located adjacent to the Subject site to the west. North of the Subject is Madison at Ballston Station, a LIHTC development that has been excluded from our analysis as it operates with rent and income restrictions, and K.W. Barrett Elementary School. East of the Subject is the Gates of Ballston, a LIHTC/Market rate development that has been utilized as a comparable in this report (we have illustrated market rate rents only). Further east is Knightsbridge and Whitefield Commons Apartments, both of which are family affordable housing developments that have been excluded from our analysis as they target a different tenancy than the Subject.

The Subject’s proposed rents are detailed in the following table.

PROPOSED RENTS 2016 Maximum Utility Allowable Gross Unit Type Size (SF) Number of Units Asking Rent* Allowance Gross Rent Rent 60% AMI 0BR/1BA 500 125 $1,141 $0 $1,141 $1,141 1BR/1BA 600 72 $1,222 $0 $1,222 $1,222 2BR/1BA 800 7 $1,467 $0 $1,467 $1,467 Total 204 *Note that for existing residents, rents will increase no more than five percent annually.

The Subject’s proposed 60 percent AMI rents are at the maximum allowable levels at the 2016 area median income (AMI) level.

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Culpepper Garden I – Arlington, VA – Market Study

Following is a table that compares the Subject’s proposed rents with the current asking rents and average achieved leased rents.

CURRENT ASKING, ACHIEVED, AND PROPOSED RENTS Current Asking Average Proposed Percentage Increase in Achieved Unit Type Size (SF) Rent Achieved Rent Rent Vs. Proposed Rents 0BR/1BA 500 $652 $652 $1,141 75.0% 1BR/1BA 600 $822 $822 $1,222 48.7% 2BR/1BA 800 $1,053 $1,053 $1,467 39.3% Note that 42 studio units operate with project-based voucher subsidy

Following the renovation, the Subject will remain an age-restricted property for senior tenants earning 60 percent of the AMI, or less. The projected studio rent is $489 above the current asking rent. The proposed one-bedroom rent at 60 percent AMI is $400 above the current rent. The proposed two-bedroom rent is $414 more than the current two-bedroom rent. The proposed 60 percent AMI rents are 39.3 to 75.0 percent above the average tenant-paid rents. The developer is also seeking 151 additional project-based Section 8 vouchers that would make rents very affordable to most residents of the Subject (tenants would pay just 30 percent of their income toward rent), which could greatly limit potential turnover. In addition, residents who remain through the renovations will not experience a rent increase of more than five percent annually, so as to limit turnover. These rent increases for existing tenants will be gradually phased in over a period of up to 10 years until rents reach LIHTC market levels.

The following table illustrates the Subject’s historical vacancy rates as obtained from the audited financial statements:

SUBJECT'S HISTORICAL VACANCY AND COLLECTION LOSS Year Vacancy and Collection Loss 2015 1.1% 2014 1.1% 2013 0.9%

The Subject’s vacancy and collection loss rate has ranged from 0.9 to 1.1 percent over the 2013 to 2015 period. The Subject is currently 100 percent occupied, reporting no vacant units. According to management, the Subject property typically maintains a vacancy rate of one percent or less and typically maintains a waiting list.

In general, we believe there is demand in the marketplace for the Subject as conceived. We recommend no changes to the development scheme.

Strengths  The Subject has an existing base of low-income senior renters and typically is fully occupied.  As a newly renovated property, the Subject will be in similar to superior condition compared to most of the comparable properties.  The LIHTC vacancy rate at the comparable properties is only 0.2 percent, which indicates very high demand for affordable rental housing.

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Culpepper Garden I – Arlington, VA – Market Study

 The Subject offers many senior-oriented property amenities and also includes a convenience store, health clinic, and beauty salon on-site and optional housekeeping services available. The Subject offers adult education programming, exercise classes, social activities and parties, current events discussions, a blood pressure and weight check clinic, weekly or monthly visits from numerous healthcare professionals, religious services, computer training, and assistance with arranging home health aides and physical therapy, home medical equipment, and accessing services provided by the county. Lastly, the Arlington County Senior Center is located on-site.  The Subject’s projected LIHTC rents represent a discount to the achievable post renovation market rents.

Weaknesses  The capture rate for the Subject’s 125 studio units without consideration of Section 8 assistance is elevated at 55.2 percent with consideration of leakage at 20 percent. This suggests that in this market with strong demand for senior LIHTC units that the Subject could be supported, but would likely encounter a somewhat lengthy lease-up period if all the studio units had to be re-tenanted. This is highly unlikely for the Subject since we anticipate the vast majority of current residents will remain at the Subject through the renovation process.  The Subject has a significant share of studio units, but studio units among the comparables have a vacancy rate lower than the overall 2.9 percent vacancy rate. As such, studio units are proven supportable in the Arlington market.  The units are comparatively small when evaluated against the area market rate competition, but are of comparable size with the senior LIHTC units we surveyed.

LIHTC Occupancy Rates:

AFFORDABLE COMPARABLES IN THE PMA Total LIHTC LIHTC Total LIHTC Vacant Vacant Occupancy Occupancy Map # Property Name Tenancy Rent Structure Units Units Units Units Rate Rate 1 Gates Of Ballston Apartments Family LIHTC, Market 464 351 7 0 98.5% 100.0% 2 Harvey Hall Apartments Family LIHTC, Market 116 100 1 1 99.1% 99.0% 3 Hunters Park At Cherrydale Senior LIHTC 74 74 1 1 98.6% 98.6% 4 Serrano Apartments Family LIHTC, Market 280 196 6 0 97.9% 100.0% 5 The Carlin Senior LIHTC 162 162 0 0 100.0% 100.0% 6 The Madison At Ballston Station Family LIHTC, Market 504 100 25 0 95.0% 100.0% Total 1,600 983 40 2 97.5% 99.8%

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Culpepper Garden I – Arlington, VA – Market Study

As illustrated, there are 983 surveyed comparable units of LIHTC competition in the PMA. The stabilized properties reported occupancy rates of 99.8 percent for the LIHTC units.

Capture Rates - Novoco: The Novoco demand analysis illustrates demand for the Subject based on capture rates of income-eligible renter households. When viewing total income-eligible renter households the calculation illustrates an overall capture rate of 6.08 percent at the 60 percent AMI level with consideration of the Section 8 subsidy and 26.34 percent without consideration of the subsidy at 60 percent AMI. The capture rate overall for the units without consideration of the subsidy is elevated, and suggests the property could experience a significant lease-up period if re-tenanting is required without a subsidy in place. The current HAP contract expires June 1, 2020.

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Culpepper Garden I – Arlington, VA – Market Study

To provide another level of analysis, we removed the households from the income-eligible renter demand pool that are currently suitably housed elsewhere in the PMA. We conducted an annual demand analysis, which is based on new income-eligible renter households moving into the area (in the Subject’s first year of operation only) and those income- eligible renter households that are rent-overburdened (paying over 35 percent of income to living costs). This is a subset of the income-eligible renter households used previously and yields a far more conservative annual capture rate. This annual Novoco capture rate is 13.2 percent for the first year of operation as a LIHTC property with consideration of the Subject’s subsidy. This suggests that the Subject will need to capture only a fraction of the available demand in its first year of operation in order to stabilize. This implies that no demand will be accommodated that is currently suitably housed elsewhere. Further, this assumes no existing support at the Subject from renters who would opt to remain at the Subject following renovations.

This calculation illustrates that there are approximately 1,463 units of demand in the first year of the Subject’s operation after renovation as a LIHTC property with a subsidy. The Subject’s units will need to accommodate 194 total units of demand in order to stabilize at 95 percent occupancy. Any unaccommodated households will most likely leave the PMA or remain severely rent-overburdened. The lack of available units will force many to look elsewhere.

Capture Rates - VHDA: The VHDA net demand and capture rate table illustrates demand for the Subject based on capture rates of income- eligible renter households. The following table illustrates the conclusions from this table.

VHDA CAPTURE RATE SUMMARY Project Wide Capture Rate - LIHTC Units 37.0% Project Wide Capture Rate - Market Units N/A Project Wide Capture Rate - Subsidized Units 12.5% Project Wide Capture Rate - All Units 12.5% Project Wide Absorption Period (Months) 7

The LIHTC only scenario without consideration of the Subject’s subsidy results in a VHDA capture rate of 37.0 percent, which is elevated. However, with consideration of the Section 8 assistance the Subject will receive, the VHDA capture rate is more moderate at 12.5 percent, and is considered achievable.

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Culpepper Garden I – Arlington, VA – Market Study

Market Study Conclusion: The Subject will be well positioned in the market. As a newly renovated property, the Subject will be similar in appearance or slightly superior to most of the comparables. The market exhibits strong demand for senior affordable housing, with low vacancy rates at the comparable LIHTC properties. In addition, most low-income or mixed-income properties maintain extensive waiting lists for their units. Vacancy at the Subject is expected to be no more than five percent over the long term. The proposed rental rates appear to be appropriate based on the comparable data. It is anticipated that a small share of existing tenants that will experience a rent increase may move, although rent increases will be phased in at a rate of no more than five percent annually for tenants who remain at the Subject and are not residing in a unit with a subsidy. Nonetheless, we believe the proposed rents levels are achievable as the number of senior households is expected to increase over the next five years. There are no known senior LIHTC properties in the planning stages in the Primary Market Area. The Subject will continue to be well accepted in the market as a senior LIHTC property. Our estimated achievable market rents for the Subject following renovations are $1,305 for the studio units, $1,445 for the one-bedroom units, and $1,875 for the two-bedroom units.

Recommendations: We recommend no changes in the Subject’s development scheme.

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B. PROJECT DESCRIPTION

Culpepper Garden I – Arlington, VA - Market Study

PROJECT DESCRIPTION

Location: The Subject site is located at 4335 North Pershing Drive, Arlington, Virginia 22203.

Site Description: The site is irregular in shape with an access point on both its east and west sides along North Pershing Drive and North Henderson Road respectively. The site is improved with one eight-story, elevator-serviced residential building containing 204 units. The Subject site consists of 2.66 acres. The Subject has frontage on North Henderson Road, North Upton Street, North Pershing Drive, and 2nd Street North. Off-street surface parking is located on the north and south sides of the property and it appears to be adequate.

Aerial Photo:

Source: Google Earth, retrieved 3/2017

Novogradac & Company LLP 6 Culpepper Garden I – Arlington, VA - Market Study

Proposed Rents and Unit Mix: The following table details the proposed rents and unit mix for the Subject.

The Subject’s proposed 60 percent rents are at the maximum allowable at the 2016 area median income (AMI) level.

Current Asking and Achieved Rents: The Subject’s current asking and achieved rents, as well as the projected rents, are detailed in the following table.

Following the renovation, the Subject will remain an age- restricted property for senior tenants earning 60 percent of the AMI, or less. The projected studio rent is $489 above the current asking rent. The proposed one-bedroom rent at 60 percent AMI is $400 above the current rent. The proposed two-bedroom rent is $414 more than the current two-bedroom rent. The developer will limit annual rent increases for persons not receiving rental assistance to no more than five percent annually for existing tenants. These rent increases will be gradually phased in over a period of approximately 10 years until rents reach the asking rent levels. The proposed 60 percent AMI rents are 39.3 to 75.0 percent above the average tenant-paid rents.

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The following table illustrates the Subject’s historical vacancy and collection loss rates as obtained from the audited financial statements:

SUBJECT'S HISTORICAL VACANCY AND COLLECTION LOSS Year Vacancy and Collection Loss 2015 1.10% 2014 1.10% 2013 0.90%

Target Population: Culpepper Garden I, the Subject, consists of 204 HUD Section 8 units restricted to senior households age 62 and older. Following proposed renovations that will utilize the Low-Income Housing Tax Credit (LIHTC) program, the Subject will target senior households earning 60 percent of the area median income (AMI) or less. Note that in addition, 42 studio units will continue to operate with project-based Section 8 rental assistance under a HAP contract that expires June 1, 2020. It is of note that the Subject’s owner has applied for an additional 151 project- based Section 8 vouchers. Tenants in units with rental assistance are able to pay 30 percent of their income toward rent.

Utility Structure: The owner at the Subject is responsible for all utilities, including electric-fueled cooking, gas-fueled heat and hot water, all other electric costs including central air conditioning, cold water, sewer, and trash removal. The comparable properties’ utility structures are illustrated in the respective property summaries and are adjusted appropriately to account for differences relative to the Subject, based on the utility allowance schedule provided by the Virginia Housing Development Authority, effective July 1, 2016. There will be no change to the Subject’s utility responsibilities as part of proposed renovations.

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Unit Mix: The following table illustrates the Subject’s unit mix and size:

UNIT MIX AND SQUARE FOOTAGE Number of Unit Size Net Rentable Uni t Type Uni ts (SF) Area 0BR/1BA 125 500 62,500 1BR/1BA 72 600 43,200 2BR/1BA 7 800 5,600 Total 204 111,300

Net Rentable Area: 111,300 square feet.

Unit Amenities: The Subject offers blinds, carpeting, central air conditioning, coat closets, stove/oven, refrigerator, garbage disposal, hand rails, and emergency pull cords. There are no additional unit amenities proposed with the renovations.

Common Area Amenities: The Subject offers community amenities that consist of a community room, computer center, concierge, courtyard, fish pond, elevators, library, lounges, laundry facilities, off- street parking, on-site management, picnic area, WiFi on the first floor, and service coordination. There are no additional common area amenities proposed with the renovations. Security features include perimeter fencing and video surveillance. There is also a convenience store, health clinic, and beauty salon on-site and optional housekeeping services available. The Subject offers adult education programming, exercise classes, social activities and parties, current events discussions, a blood pressure and weight check clinic, weekly or monthly visits from numerous healthcare professionals, religious services, computer training, and assistance with arranging home health aides and physical therapy, home medical equipment, and accessing services provided by the county. Lastly, the Arlington County Senior Center is located on- site. The property owner leases the spaces for the senior center, beauty salon, clinic, and home health office that are at the Subject.

The Subject also features a mandatory meal program. There are three meal plans available and residents are required to pay an additional $242 to $452 per month to participate in the meal program, depending on the number of meals per day. However, following renovations under the tax credit program, a meal plan and other optional services will no longer be required. Since there are fees for

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the meal services and other optional services and these fees are not included in the rents, we have not adjusted the rents for meals or other optional services. The following table details the additional fees to residents for these services.

OPTIONAL SERVICES Wash Windows Studio - $12, 1BR - $13, 2BR - $15 Clean Blinds Studio - $12, 1BR - $13, 2BR - $15 Housekeeping (hourly rate) $18.00 Clean Carpet (spot cleaning) $15.00 Clean Carpet (entire apartment) Studio - $40, 1BR - $50, 2BR - $60

Parking: The Subject features 111 off-street surface parking spaces offered to tenants at no additional cost. According to the Subject’s management, this amount of parking is adequate and parking is not an issue for residents. The parking ratio of 0.54 spaces per unit is similar to other senior properties in urban markets such as this one.

Number of Stories: The Subject is one, eight-story, elevator-served building. Note there are two additional buildings at the property that are not being evaluated as part of this report, as they were built in other phases. We have only considered Culpepper Garden I as the Subject for our analysis.

Date of Construction: The Subject building was constructed in 1975 and is proposed to be renovated. The renovation is scheduled to begin in the third quarter 2017 with completion expected by fourth quarter 2019.

Construction Details: Based on the scope of work provided by the developer, the estimated hard cost of the renovations, which includes overhead, builder’s profit and contingency, is $23,256,360, or $110,745 per unit. The renovations will be completed with tenants in place. The scope of the planned renovation work includes the following:

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SCOPE OF WORK Removing and replacing existing interior and exterior caulk Replacing windows Installing new dual glazed aluminum storefront on ground floor, including dining room and front entrance Commercial kitchen upgrade Replacing all public restrooms with low flow fixtures and devices Replace domestic water line stop valves Upgrade to the HVAC system with greater efficiency Replace existing domestic water system with all new CPVC lines serving each unit Addition of an exterior building skin to aid with insulation Upgrading the fire alarm system Upgrading existing building and pole mounted site lighting system Replacing all kitchen cabinets and countertops Replacing all kitchen and bathroom sinks Replacing all bathroom vanities Providing enhanced air sealing measures on all windows Replace all interior bi-fold closet doors with new bi-passing doors Removing and replacing all existing gypsum board assemblies affected by deterioration, moisture and mold Providing new mirror/medicine cabinet, soap dish, toothbrush holder, towel bars, grab bars, and toilet paper holders in units Replacing existing tubs with new roll in showers with ADA compliant shower fixtures and grab bars Repairing wood closet rods and shelving, as needed Replacing appliances with Energy STAR rated appliances Installing grease shields Replacing plugs, switches and cover plates Installing low flow toilets in units Replacing wood hand rails Repainting common areas and units Lobby/lounge, dining room, administrative office, and laundry room upgrades Senior center, board room, computer lab, and clinic refurbishing Adding new signage Upgrading existing barrier free units to comply with current codes Repairing damaged wood apartment unit entry door slabs, and unit entry door frames Adding new benches, tables, chairs, trash cans, and shade structures on site Installing new emergency overflow drains at roofs Replacing flooring and carpeting in units, as needed Providing new solar hot water heating system Replacing lighting and fixtures Removing and replacing existing deteriorated exterior concrete and site stairs Prune and mulch existing planting

Assisted Housing Program: Following the proposed renovations, units at the Subject will be restricted to households earning 60 percent of the area median income (AMI) or less under the LIHTC program. Note that in addition, 42 studio units will continue to operate with project-based Section 8 rental assistance. It is of note that the Subject’s owner has applied for an additional 151 project-based Section 8 vouchers, but no announcements have been made as of this report’s effective date. Tenants in units with rental assistance are able to pay 30 percent of their income toward rent.

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Target Population and Occupancy Type: The Subject will continue to be set-aside for low to moderate-income senior (age 62+) tenants earning 60 percent of the AMI or less. Based on the unit mix and proposed rent levels, the annual incomes under the LIHTC program requirements will range from $34,230 to $52,140. Note that since the Subject has 42 units with project-based Section 8 vouchers, and is applying for 151 more vouchers, many residents will have incomes, and some may be as low as $0.

Current Performance: The Subject is an existing apartment property that formerly operated under the HUD Section 236 program, but has since been de-coupled. A total of 42 studio units operate with project-based Section 8 assistance. The Subject is currently 100 percent occupied, reporting no vacant units. According to management, the Subject property typically maintains a vacancy rate of one percent or less. Current asking rents were reported earlier in this section.

Americans with Disabilities Act of 1990: As a senior property, we assume the property does not have any violations of the Americans with Disabilities Act of 1990.

Quality of Construction Condition and Deferred Maintenance: The Subject appears to have been constructed using good- quality materials and the structures are in average condition and exhibits some deferred maintenance. Post renovation, the Subject will be in good condition with no deferred maintenance.

Functional Utility: Based upon a site inspection of the Subject property, the units are considered somewhat small, but are competitive with the size of affordable senior apartments in the market. With high occupancy rates at all the area senior properties, small units have proven to be accepted in the Arlington market.

Conclusion: The Subject property is a 204-unit development in average condition. The Subject does not suffer from functional or physical obsolescence and provides good utility for its intended use. The proposed renovations will enable the Subject to maintain its competitive position in this market.

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Culpepper Garden I (As Renovated) Comp # Subject Effective Rent Date 2/10/2017

Location 4435 North Pershing Drive Arlington, VA 22203 Arlington County Uni ts 204 Type Midrise (8 stories) Year Built / Renovated 1975 / 2018 Major Competitors Hunters Park at Cherrydale Tenant Characteristics Seniors age 62 and older, average age over 70 Contact Name Chris Phone 703-528-0162

Market Program @60%

Utilities A/C included -- central Other Electric included Cooking included -- electric Water included Water Heat included -- gas Sewer included Heat included -- gas Trash Collection included

Unit Mix (face rent) Beds Baths Type Units Size Rent Concession Restrict Waiting Vacant Vacancy Max (SF) (monthly) ion List Rate rent? 0 1 Midrise (8 stories) 125 500 $1,141 $0 @60% N/A N/A N/A yes 1 1 Midrise (8 stories) 72 600 $1,222 $0 @60% N/A N/A N/A yes 2 1 Midrise (8 stories) 7 800 $1,467 $0 @60% N/A N/A N/A yes

Amenities In-Unit Blinds Security Perimeter Fencing Carpeting Video Surveillance Central A/C Coat Closet Garbage Disposal Hand Rails Oven Pull Cords Refrigerator

Property Parking spaces: 111 Premium Hairdresser / Barber Business Center/Computer Lab Housekeeping Clubhouse/Meeting Room/Community Room Concierge Courtyard Elevators Central Laundry Non-shelter Services Off-Street Parking On-Site Management Picnic Area Service Coordination

Services Adult Education Other none Computer Tutoring

Comments A total of 42 studio units operate with project-based Section 8 vouchers, and the owner is seeking 151 more vouchers for the property. Various services are available to residents, including a mandatory meal plan, as well as optional housekeeping, window cleaning, and cleaning blinds. The services are all available for additional fees. More services available at no charge to residents include exercise classes, special events and socials, current events discussions, performances, religious services, parties, weekly physician visits, monthly podiatrist and dermatologist visits, flu shots, and assistance with home health aides and physical therapy, and home medical equipment.

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C. LOCATION, MARKET AREA DEFINITION & PROPERTY CHARACTERISTICS

Culpepper Garden I – Arlington, VA - Market Study

LOCATION AND MARKET AREA DEFINITION

Primary Market Area For the purpose of this study, it is necessary to define the competitive primary market area (PMA), or the area from which potential tenants for the project are likely to be drawn. In some areas, residents are very much “neighborhood oriented” and are generally very reluctant to move from the area where they have grown up. In other areas, residents are more mobile and will relocate to a completely new area, especially if there is an attraction such as affordable housing at below market rents.

The Subject property is located in Arlington, Virginia. The boundaries of the PMA are defined as Lee Highway and Interstate 66 to the north, Arlington Boulevard and Washington Boulevard to the east, Interstate 395 to the south, and State Route 7 and Roosevelt Boulevard to the west. The PMA was devised based on input from area property managers, including management at the Subject.

The secondary market area (SMA) consists of the Washington-Arlington-Alexandria DC-VA- MD-WV MSA.

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Primary Market Area (PMA) Map

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Secondary Market Area (SMA) Map

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DESCRIPTION OF THE SITE

The location of a multifamily property can have a substantial negative or positive impact upon the performance, safety and appeal of the project. The site description discusses the physical features of the site, as well as the layout, access issues, and traffic flow.

Source: Google Earth, retrieved 3/2017

Size: The Subject lot space consists of approximately 2.66 acres, or 115,833 square feet.

Shape: The Subject parcel is irregular in shape.

Frontage: The Subject has frontage on North Henderson Road, North Upton Street, North Pershing Drive, and 2nd Street North.

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Topography: The site is generally level.

Utilities: All utilities are available to the site.

Visibility/Views: The eight-story Subject is easily visible from all four roads that surround the Subject property, and is also visible from US Highway 50 to the south. Views are of multifamily apartments (The Madison at Ballston Station) to the north, the Arlington Oaks Community Association community building and multifamily apartments and condominiums to the east, single-family homes and a house of worship to the south, and single-family homes to the west.

Surrounding Uses: Surrounding uses are a mixture of residential and commercial uses and include multifamily rental apartments and condominiums, single-family homes in average condition, a community building, and a house of worship. Residential single-family and multifamily uses surrounding the Subject range in condition from average to excellent. There appear to be no unusual amounts of vacancy in the surrounding owner-occupied housing or apartments.

Surrounding and nearby multifamily uses include The Madison at Ballston Station (a modern mixed-income community), Ballston Row Townhomes (a relatively new for-sale community), Chatham Condominium, a highrise built in 1964 with 249 units in average condition, Arlington Oaks (an older market rate development with two-story walk-up buildings), and Buckingham Commons (an owner- occupied property). The older apartments were excluded from our comparable analysis as they are not elevator- served and we observed more similar comparables within close proximity of the Subject. The Madison at Ballston Station was built in 2012 and is in excellent condition, superior to the Subject. Although it is in superior condition to the Subject, it has been included as a comparable due to its proximity to the Subject and similar unit types. Barrett Elementary School is 0.2 miles northwest of the Subject and is in good condition. There are commercial uses along North George Mason Drive, to the north of the Subject. Commercial occupancy is estimated at 95 percent. Prices for one-bedroom units at Chatham Condominium start at $219,900 and two-bedroom units start at approximately $249,900.

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Access and Traffic Flow: The Subject has good access from North Henderson Road to the west and North Pershing Drive to the east. Both are four-lane roadways with parking permitted on each side of these streets. These roadways have light to moderate traffic. US Highway 50 is located 0.2 miles south of the Subject. Interstate 66 is located approximately 1.0 mile north of the Subject. All of the local services including schools, grocery and medical facilities are located within a reasonable distance of the Subject. The Subject is adjacent to an ART bus stop and is less than 1.0 mile south of the nearest Metro station.

Layout and Curb Appeal: The following table outlines various characteristics.

SUMMARY OF SUBJECT SITE Visibility/Views Excellent/Good Access/Traffic Flow Good/Good Layout/Curb Appeal Good/Good

Drainage: Drainage at the Subject appears adequate; however, no specific tests were performed. Further, Novogradac is not an expert in this field and cannot opine on this issue.

Soil and Subsoil Conditions: Novogradac did not perform any soil and subsoil test upon inspection of the site, as this is beyond the scope of work. We have not been provided with a soil and subsoil report. We are not experts in this field and assume the soil is adequate for development.

Environmental Assessment: Novogradac did not perform an environmental report, as this is beyond the scope of work. During our inspection, we observed no obvious environment concerns. We have not been provided with an environmental report. We are not experts in this field and assume the site is adequate for development.

Flood Plain: Based on information provided by www.floodinsights.com, the Subject site is located within Zone X, outside of the area inundated by 100 year and 500 year flooding. The corresponding FEMA map is within an unincorporated area with panel number 0076C, revised August 18, 2013. Further analysis by Novogradac is beyond the scope of the report.

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Source: www.floodinsights.com, 2/2017

Proximity to Adverse Conditions: No adverse conditions were observed during the course of inspection.

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Proximity to Local Services The Subject is located in close proximity to services including area retail, medical facilities, and schools. The distances of various services from the Subject and a map of the locations are provided on the following page.

LOCATIONAL AMENITIES Map Number Service or Amenity Miles From Subject S Subject/Culpepper Garden Senior Center Onsite 1 Bus stop Adjacent 2 Arlington Assembly of God 0.1 3 SunTrust Bank 0.5 4CVS0.5 5 Post Office 0.5 6Bank of America0.8 7 Harris Teeter (grocery store) 0.8 8 Central Library 1.0 9 Johns Hopkins Community Physicians Ballston Medical Center 1.2 10 Metro - Ballston Station 1.2

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Public Transportation ART operates public transportation in the Subject neighborhood and throughout the Arlington area. The nearest ART bus stop to the Subject is at the western edge of the Subject property along North Henderson Road, within less than 100 yards of the main entryway. The nearest Metrorail station to the Subject is located 0.8 miles north of the Subject on Fairfax Drive near North Stuart Street. Regular cash fares for ART service are $1.75 per trip, and Metrorail fares are determined based on length of trip and differ from peak to off-peak hours. The minimum fare is $2.15 and the maximum fare is $5.90 for peak hours, and the minimum off-peak fare is $1.75 while the maximum is $3.60 for a single trip. Senior citizens (age 65+) may ride for half the peak fare on Metrorail, for $0.85 on regular Metrobus routes, and for discounted fare on other participating bus service providers.

Conclusion The Subject site is located in a predominately residential neighborhood. At the time of the site inspection, there were no detrimental influences that would adversely impact the Subject. Access to public transportation, groceries, pharmacy, and shopping are convenient. The Subject’s location is considered good. The neighborhood is well suited for this type of housing.

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PHOTOGRAPHS OF SUBJECT AND NEIGHBORHOOD

Subject from adjacent parking area Subject from North 2nd Street looking north

Subject looking north from site interior Subject looking east from site interior

Alternative view of Subject View of adjoining Culpepper Gardens II from parking area

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View of adjoining Culpepper Gardens III from parking Rear of Subject building area

Outdoor sitting area View of Subject from North Pershing and North 2nd Streets looking northwest

Subject from entrance area off of North Henderson Road Alternative view of Subject from parking area (Culpepper Gardens II on the left) (Culpepper Gardens II on the right)

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Dining room Convenience store

Upper floor lobby area Typical interior hallway

Interior stairwell Laundry room

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Beauty salon Computer room

Community room Community room

Senior Center space Library

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Management office Maintenance area

Typical living area (occupied unit) Typical living area (vacant unit)

Typical kitchen (occupied unit) Typical kitchen (vacant unit)

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Typical bedroom (occupied unit) Typical bedroom (vacant unit)

View of North Henderson Road looking north from View of North Henderson Road looking north from Subject entrance Subject entrance

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Typical single-family home across North Henderson Alternative view of typical single-family homes across Road from Subject North Henderson Road from Subject

View along North 2nd Street to the south of Subject View along North 2nd Street to the south of Subject looking west looking east

Single-family homes along North 2nd Street View along North Pershing Street looking northeast towards Arlington Oaks condominium community

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Madison at Ballston Station mixed-income apartments Alternative view of Madison at Ballston Station from immediately north of the Subject Subject parking area

Recently built townhomes along North Pershing Street to Commercial uses along North Pershing Street near its the northeast of Subject intersection with Glebe Road

Commerical uses along Glebe Road at North Pershing Commercial uses along Glebe Road Street

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Crime Statistics The following tables show crime statistics from 2015 for the PMA.

2016 CRIME RISK INDICES Washington-Arlington-Alexandria, PMA DC-VA-MD-WV MSA Total Crime* 94 100 Personal Crime* 49 110 Murder 39 141 Rape 73 74 Robbery 76 147 Assault 34 96 Property Crime* 100 99 Burglary 44 70 Larceny 120 104 Motor Vehicle Theft 97 140 Source: Esri Demographics 2016, Novogradac & Company LLP, February 2017 *Unweight ed aggregat ions

The table above illustrates crime indices in the PMA in comparison to that of the MSA. A crime index below 100 is below the national average and anything over 100 is above the nation’s crime index average. A crime index of 75 in a PMA would be 25 percent below the national average while a crime rate of 200 would be twice that of the national average. As indicated in the table above, the crime indices in the PMA are below that of the nation in all but one category, except larceny. Based on observations of the PMA and interviews with market participants, we do not believe crime to be a major issue in the Subject’s neighborhood. The Subject offers security features, such as a buzzer intercom system and limited access, which we believe are market oriented based upon the crime indices data presented in the table above. The surveyed senior LIHTC properties have similar security features.

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D. EMPLOYMENT AND ECONOMY

Culpepper Garden I – Arlington, VA - Market Study

ECONOMIC ANALYSIS The Washington-Arlington-Alexandria DC-VA-MD-WV metropolitan area has a strong and diverse economy that sees employment concentrated in professional/scientific services, government, public administration, and education. Arlington has a well-educated workforce with over 70 percent of residents possessing a bachelor’s degree or higher, hence the large concentration of professional and scientific services in the area. Additionally, Arlington prides itself on vibrant urban areas coupled with an intricate park system, and its close proximity to the nation’s capital, excellent public transportation, and historic core and roots. Arlington is the home of many large public and private institutions including The Department of Defense, Arlington Public Schools, Arlington County, United Airlines, Virginia Hospital Center, Deloitte Consulting, U.S. Airways, and National Science Foundation.

Employment and Unemployment Trends The table below illustrates the total employed and unemployment rates for the Washington- Arlington-Alexandria, DC-VA-MD-WV MSA and nation.

EMPLOYMENT & UNEMPLOYMENT TRENDS (NOT SEASONALLY ADJUSTED) Washington-Arlington-Alexandria, DC-VA-MD-WV MSA US A Total Unempl oyment Total Unempl oyment Year % Change Change % Change Change Employment Rate Employment Rate 2006 2,867,910 - 3.1% - 144,427,000 - 4.6% - 2007 2,905,565 1.3% 3.0% -0.2% 146,047,000 1.1% 4.6% 0.0% 2008 2,946,320 1.4% 3.7% 0.7% 145,363,000 -0.5% 5.8% 1.2% 2009 2,893,543 -1.8% 6.0% 2.3% 139,878,000 -3.8% 9.3% 3.5% 2010 2,950,673 2.0% 6.4% 0.4% 139,064,000 -0.6% 9.6% 0.3% 2011 3,002,204 1.7% 6.2% -0.2% 139,869,000 0.6% 9.0% -0.7% 2012 3,049,247 1.6% 5.8% -0.4% 142,469,000 1.9% 8.1% -0.9% 2013 3,077,803 0.9% 5.6% -0.2% 143,929,000 1.0% 7.4% -0.7% 2014 3,103,812 0.8% 5.1% -0.5% 146,305,000 1.7% 6.2% -1.2% 2015 3,141,537 1.2% 4.5% -0.6% 148,833,000 1.7% 5.3% -0.9% 2016 YTD Average* 3,183,321 1.3% 3.8% -0.6% 151,435,833 1.7% 4.9% -0.4% Dec-2015 3,157,148 - 3.9% - 149,703,000 - 4.8% - Dec-2016 3,232,145 2.4% 3.4% -0.5% 151,798,000 1.4% 4.5% -0.3% Source: U.S. Bureau of Labor Statistics February 2017 *2016 data is through Dec

Overall, total employment in the MSA has increased in nine out of the last 10 years. In 2009, the MSA experienced employment decline, but at a rate much lower than that of the nation in the same year. Quickly after, in 2010, the overall employment level in the MSA surpassed the pre- recessionary levels, and has increased each year since. Between December 2015 and December 2016 the MSA experienced a moderate increase in total employment, which was above the pace of the nation. The overall consistently increasing employment trends in the MSA indicate that the local economy was not drastically affected by the national recession, and continues to be in a growth cycle.

Historically, the MSA has experienced significantly lower unemployment rates than the nation. This trend is primarily due to the prominence of employment within a variety of stable industries, such as healthcare and public administration, as well as a well-educated workforce. The unemployment rate in the MSA has declined every year since 2011 and, as of December 2016, rests 110 basis points below the nation.

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As indicated in the graphs above, the MSA has been less affected by the latest recession than the nation as a whole.

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Employment by Industry The following table depicts employment by industry in the Primary Market Area (PMA) and the nation.

2016 EMPLOYMENT BY INDUSTRY PMA US A Number Percent Number Percent Indus try Employed Empl oye d Empl oye d Empl oye d Prof/Scientific/Tech Services 24,659 22.9% 10,269,978 6.8% Public Administration 16,727 15.5% 7,093,689 4.7% Educational Services 9,399 8.7% 14,359,370 9.5% Accommodation/Food Services 8,307 7.7% 11,574,403 7.6% Healthcare/Social Assistance 7,643 7.1% 21,304,508 14.1% Other Services (excl Publ Adm) 7,060 6.6% 7,463,834 4.9% Retail Trade 5,974 5.5% 17,169,304 11.3% Construction 5,301 4.9% 9,342,539 6.2% Finance/Insurance 4,655 4.3% 6,942,986 4.6% Admin/Support/Waste Mgmt Srvcs 4,395 4.1% 6,511,707 4.3% Real Estate/Rental/Leasing 3,092 2.9% 2,946,196 1.9% Information 2,478 2.3% 2,862,063 1.9% Transportation/Warehousing 2,282 2.1% 6,128,217 4.0% Arts/Entertainment/Recreation 2,274 2.1% 3,416,474 2.3% Manufacturing 1,966 1.8% 15,499,826 10.2% Wholesale Trade 912 0.8% 4,066,471 2.7% Utilities 292 0.3% 1,344,219 0.9% Agric/Forestry/Fishing/Hunting 171 0.2% 2,253,044 1.5% Mgmt of Companies/Enterprises 66 0.1% 89,612 0.1% Mining 14 0.0% 749,242 0.5% Total Employment 107,667 100.0% 151,387,682 100.0% Source: Esri Demographics 2016, Novogradac & Company LLP, February 2017

As seen in the previous table, employment within the PMA is most heavily concentrated in the professional/scientific and public administration sectors, accounting for 37.4 percent of total employment in the PMA. When compared to the nation, the PMA has higher concentrations of employment in the professional/scientific, public administration, and other services sectors. Conversely, PMA employment is underrepresented in the health care, retail trade, and manufacturing services when compared to the nation.

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Major Employers The following table details the top twenty largest employers in the Washington-Arlington- Alexandria MSA, as of July 2015, the most recent available data. Note, according to Forbes, the federal government is – by far – the largest employers in the area. This list accounts for the largest employers in the region excluding the federal government.

MAJOR EMPLOYERS Company Industry Number Employed MedStar Health Health Care 16,536 INOVA Health Health Care 16,000 Marriott International, Inc. Hospitality 15,300 University of Maryland Education 14,000 Booz Allen Hamilton Technological Services 11,000 Verizon Communications Technological Services 11,000 Giant Food Retail Trade 10,600 Safeway Retail Trade 9,000 Lockheed-Martin Corporation Aerospace/Defense 9,000 Deloitte Professional Services 8,000 *Washington Business Journal, 7/2015

As illustrated in the previous table, the largest employers within the MSA are concentrated in the health care and professional/technological sectors. The MSA has a significant reliance on the government sector. The public administration and health care industries are generally stable during economic downturns, which bodes well for the Subject.

Employment Contraction/Expansion We spoke with Cindy Yeh, Business Development, with Arlington Economic Development in order to gather information on recent business expansions in Arlington. However, Ms. Yeh was not able to provide much information on the topic. According to the Arlington County website, more than 4,200 jobs were added in FY 2016 across 53 individual business expansions or start- ups.

The following table is a list of Worker Adjustment and Retraining Notifications (WARN) or major layoffs in the MSA from 2015 to 2017 YTD.

WARN NOTICES 2015 to YTD 2017 Arlington, Virginia Date Company Employees Affected 11/11/2016 Airport Terminal Services 85 11/7/2016 Experience Works, Inc. 35 12/8/2015 Alion Science and Technology 114 7/21/2015 Hertz Transporting, Inc. 116 5/31/2015 Wyle-Aerospace Group 67 Total 417 Source: Elevate Virginia Rapid Response, 2/2017

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As the above table illustrates, 417 jobs have been eliminated in the area since the beginning of 2015. This indicates that the area is experiencing significant job growth compared to contraction, and that the area is in a growth cycle.

Wages by Occupation

WASHINGTON-ARLINGTON-ALEXANDRIA, DC-VA-MD-WV MSA - 2ND QTR 2014 AREA WAGE Number of Mean Hourly Mean Annual Occupation Employees Wage Wage Total all occupations 2,991,960 $31.69 $65,910 Management Occupations 223,980 $66.47 $138,250 Business and Financial Operations Occupations 291,810 $43.65 $90,800 Computer and Mathematical Occupations 220,390 $49.04 $102,010 Architecture and Engineering Occupations 61,070 $47.83 $99,490 Life, Physical, and Social Science Occupations 59,120 $47.30 $98,380 Community and Social Services Occupations 37,780 $27.38 $56,950 Legal Occupations 67,630 $65.28 $135,770 Education, Training, and Library Occupations 188,930 $29.63 $61,630 Arts, Design, Entertainment, Sports, and Media Occupations 67,740 $36.48 $75,880 Healthcare Practitioners and Technical Occupations 141,810 $43.49 $90,450 Healthcare Support Occupations 61,920 $15.70 $32,660 Protective Service Occupations 86,900 $26.19 $54,480 Food Preparation and Serving-Related Occupations 244,320 $12.24 $25,470 Building and Grounds Cleaning and Maintenance Occupations 107,060 $13.77 $28,630 Personal Care and Service Occupations 85,600 $14.48 $30,120 Sales and Related Occupations 260,280 $20.43 $42,490 Office and Administrative Support Occupations 407,290 $20.63 $42,920 Farming, Fishing, and Forestry Occupations 1,890 $18.13 $37,710 Construction and Extraction Occupations 111,320 $23.09 $48,020 Installation, Maintenance, and Repair Occupations 90,110 $25.21 $52,440 Production Occupations 49,290 $19.77 $41,120 Transportation and Material Moving Occupations 125,710 $19.30 $40,140 Source: Department Of Labor, Occupational Employment Statistics, 5/2014, retrieved 3/2017

The previous chart shows average hourly and annual wages by employment classification. The classification with the lowest average hourly wage is food preparation and serving related occupations, at $12.24 per hour. The highest average hourly wage of $66.47 per hour is for management occupations.

The qualifying incomes for the Subject’s LIHTC units will range from $34,230 to $52,140, which encompasses a moderate portion of the employment in the area. Note that since most residents of the Subject are retired or not working, local wages are a lesser concern for Subject residents. Assuming pay per hour of $16.45 at 2,080 annual hours equates to an annual wage of approximately $34,230. The upper end of the Subject’s qualifying income at $52,140 corresponds to an approximate hourly wage rate of $25.07. An element not reflected in the wage rate data is that many positions represent part-time employment, and the starting rates are typically lower than mean wage rates.

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Commuting Patterns The chart below shows the travel time to work for the PMA according to US Census data.

COMMUTING PATTERNS 2000 Commuting Time to Work Number of Commuters Percentage Travel Time < 5 min 932 1.13% Travel Time 5-9 min 4,319 5.24% Travel Time 10-14 min 8,432 10.23% Travel Time 15-19 min 11,134 13.51% Travel Time 20-24 min 12,268 14.88% Travel Time 25-29 min 6,585 7.99% Travel Time 30-34 min 17,114 20.76% Travel Time 35-39 min 3,555 4.31% Travel Time 40-44 min 4,859 5.89% Travel Time 45-59 min 8,493 10.30% Travel Time 60-89 min 3,335 4.05% Travel Time 90+ min 1,404 1.70% Average Travel Time 28 - Source: US Census 2000, Novogradac & Company, LLP, February 2017

As shown in the previous table, the average travel time for individuals in the PMA is 28 minutes. The largest group of commuters is the 30 to 34, followed by the 15 to 19 and 20 to 24 minute cohorts. Approximately 53.0 percent of households have a commute time of 30 minutes or less. This indicates that a large portion of workers in the area commute to jobs in the immediate Arlington and Alexandria areas, or within the metro Washington DC area.

Conclusion The local economy has demonstrated stability over the past decade compared to the nation overall, in large part to the concentration of employment in the public administration, professional/scientific services, health care/social assistance, and education, all of which provide considerable stability in recessionary times. Overall, total employment in the MSA has increased in nine out of the last 10 years. In 2009, the MSA experienced a total employment decline, but has increased each year since. In 2010, however, the total employment level surpassed pre- recession levels in the MSA. Between December 2015 and December 2016, the MSA experienced a moderate increase in total employment, which was above the pace of the nation. The 2016 average unemployment rate is significantly below that of the nation, which has historically been the case. The overall consistently increasing employment trends in the MSA indicate that the local economy is an area of stable employment.

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E. DEMOGRAPHIC CHARACTERISTICS

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General Population and Household Trends The tables below illustrate general population and households in the PMA, the SMA and the nation from 2000 through 2021.

POPULATION Washington-Arlington-Alexandria, Year PMA USA DC-VA-MD-WV MSA

Number Annual Change Number Annual Change Number Annual Change 2000 141,753 - 4,837,428 - 281,421,906 - 2010 152,807 0.8% 5,636,232 1.7% 308,745,538 1.0% 2016 168,888 1.7% 6,066,221 1.2% 323,580,626 0.8% 2021 182,589 1.6% 6,491,189 1.4% 337,326,118 0.8% Source: Esri Demographics 2016, Novogradac & Company LLP, February 2017

HOUSEHOLDS

Washington-Arlington-Alexandria, Year PMA US A DC-VA-MD-WV MSA

Number Annual Change Number Annual Change Number Annual Change 2000 62,957 - 1,815,192 - 105,480,101 - 2010 70,101 1.1% 2,094,033 1.5% 116,716,292 1.1% 2016 76,213 1.4% 2,235,094 1.1% 121,786,233 0.7% 2021 82,079 1.5% 2,384,415 1.3% 126,694,268 0.8% Source: Esri Demographics 2016, Novogradac & Company LLP, February 2017

Between 2000 and 2010, population and household growth in the PMA has lagged that of the MSA and nation from 2000 to 2010. From 2010 to 2016, however, annual population and household growth rates in the PMA were slightly above that of the MSA and nation. This trend is projected to continue through 2021.

Senior Population and Household Trends The tables below illustrate general population and households in the PMA, the SMA and the nation from 2000 through 2021.

SENIOR POPULATION, 62+ Washington-Arlington- Ye ar PMA Alexandria, DC-VA-MD-WV US A MS A Number Annual Change Number Annual Change Number Annual Change 2000 14,528 - 538,551 - 41,475,021 - 2010 16,427 1.3% 736,803 3.7% 50,358,738 2.1% 2016 21,411 4.9% 947,047 4.6% 60,304,482 3.2% 2021 25,854 4.1% 1,153,342 4.4% 70,321,565 3.3% Source: Esri Demographics 2016, Novogradac & Company LLP, February 2017

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HOUSEHOLDS WITH SENIOR HOUSEHOLDER, 62+ Washington-Arlington- Year PMA Alexandria, DC-VA-MD-WV US A MS A Number Annual Change Number Annual Change Number Annual Change 2000 9,533 - 333,929 - 26,202,060 - 2010 10,926 1.5% 431,497 2.9% 30,451,108 1.6% 2016 13,633 4.0% 563,169 4.9% 37,341,086 3.6% 2021 17,050 5.0% 682,879 4.3% 42,398,240 2.7% Source: Esri Demographics 2016, Novogradac & Company LLP, February 2017

Between 2000 and 2010, senior population growth in the PMA was significantly below that of the MSA and nation. Between 2010 and 2016, however, senior population growth in the PMA was similar to that of the MSA and significantly above that of the nation. Through 2021, senior population growth is projected to decelerate in the PMA, while still being similar to growth in the MSA and slightly above growth in the nation.

Average Household Size The following table is a summary of the average household size in the PMA, the MSA and the nation from 2000 through 2021. This table includes households of all ages.

AVERAGE HOUSEHOLD SIZE Washington-Arlington-Alexandria, Year PMA US A DC-VA-MD-WV MSA

Number Annual Change Number Annual Change Number Annual Change 2000 2.22 - 2.61 - 2.59 - 2010 2.16 -0.3% 2.64 0.1% 2.58 -0.1% 2016 2.19 0.3% 2.67 0.1% 2.59 0.1% 2021 2.20 0.1% 2.68 0.1% 2.60 0.1% Source: Esri Demographics 2016, Novogradac & Company LLP, February 2017

As shown in the previous table, the household size in the PMA decreased from 2000 to 2010, but it increased slightly between 2010 and 2016, similar to the MSA trend. The average household size in the PMA, MSA, and nation are all expected to increase just slightly between 2016 and 2021. Due to the tenancy of the Subject property, it is likely that tenants will continue to consist of one to two-person senior households.

Senior Household Tenure The table below shows the breakdown of senior households by tenure within the Subject’s PMA.

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PMA TENURE PATTERNS OF SENIORS 62+ Percentage Percentage Owner-Occupied Owner- Renter-Occupied Renter- Year Uni ts Occupied Uni ts Occupied 2000 5,637 59.1% 3,896 40.9% 2016 7,666 56.2% 5,967 43.8% 2021 9,560 56.1% 7,490 43.9% Source: Esri Demographics 2016, Novogradac & Company LLP, February 2017

As of 2016, the majority of senior households in the PMA reside in owner-occupied housing units. Through 2021, the share of owner-occupied households among seniors is projected to remain steady, while overall household figures increase. The share of senior owner-occupied households in the PMA is significantly below the national share of owner-occupied households, which, as of December 2016, was 62.9 percent, according to the US Census Bureau.

Senior Renter Household Size Distribution The table below shows the breakdown of senior renter households by number of persons in the household within the Subject’s PMA.

PMA HOUSEHOLD SIZE DISTRIBUTION OF SENIORS 62+ 2000 2016 2021 Household Total Households Percent Total Households Percent Total Households Percent 1 person 5,174 54.3% 7,215 52.9% 9,292 54.5% 2 persons 3,244 34.0% 4,156 30.5% 5,031 29.5% 3 persons 694 7.3% 1,093 8.0% 1,356 8.0% 4 persons 194 2.0% 552 4.1% 631 3.7% 5+ persons 228 2.4% 618 4.5% 739 4.3% Total 9,533 100.0% 13,633 100.0% 17,050 100.0% Source: Ribbon Demographics 2014, Novogradac & Company LLP, February 2017

Historically, the vast majority of senior renter households in the PMA have consisted of one and two-person households, accounting for approximately 83.4 percent of total senior renters in 2016. Through 2021, the share of one and two-person households is projected to remain relatively stable, increasing slightly to 84 percent. The projected household size composition of senior renter households in the PMA is a positive indicator for the Subject’s unit types.

Median Household Income Levels The table below illustrates the median household income for all households in the PMA, the SMA and the nation from 2000 through 2021.

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MEDIAN HOUSEHOLD INCOME Washington-Arlington-Alexandria, Year PMA US A DC-VA-MD-WV MSA

Amount Annual Change Amount Annual Change Amount Annual Change 2000 $58,246 - $62,816 - $42,164 - 2016 $96,870 4.1% $93,489 3.0% $54,149 1.7% 2021 $105,449 1.8% $103,124 2.1% $59,476 2.0% Source: Esri Demographics 2016, Novogradac & Company LLP, February 2017

Currently, median household income in the PMA is similar to that of the MSA and significantly greater than that of the nation. Median household income in the PMA grew significantly between 2000 and 2016, at a rate well above the MSA, which, in turn, was also well above growth in the nation. Through 2021, however, growth in median household income is projected to be generally similar in the PMA, MSA, and nation.

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Area Median Household Income Levels The following chart illustrates the AMI level for a four-person household in the Washington, DC-Arlington-Alexandria MSA.

Source: Novogradac & Company, LLP, 2/2017

Overall, the AMI has increased by an average of 1.9 percent annually between 1999 and 2016. As of 2016, the AMI in the district is $108,600. It should be noted that the area experienced four annual decreases in AMI over the past decade, in 2003, 2013, 2014, and 2016. The majority of locales across the United States experienced a decrease in the AMI in 2013, and the District of Columbia’s decrease was only a nominal 0.2 percent. Nationwide, approximately 84 percent of counties experienced a decrease between 2013 and 2014. The Subject’s proposed rents at 60 percent of AMI are set at the 2016 maximum allowable gross rents. Thus, rent increases will be limited by future increases in AMI.

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Senior Renter Household Income Distribution The following tables illustrate the household income distribution for the PMA and SMA for 2016 and 2021.

RENTER HOUSEHOLD INCOME OF SENIORS 62+ Income Cohort 2016 2021 Number Percentage Number Percentage $0-9,999 668 11.2% 796 10.6% $10,000-19,999 838 14.0% 955 12.7% $20,000-29,999 651 10.9% 772 10.3% $30,000-39,999 472 7.9% 591 7.9% $40,000-49,999 348 5.8% 472 6.3% $50,000-59,999 405 6.8% 505 6.7% $60,000-74,999 501 8.4% 634 8.5% $75,000-99,999 550 9.2% 698 9.3% $100,000-124,999 406 6.8% 518 6.9% $125,000-149,999 308 5.2% 398 5.3% $150,000-199,999 378 6.3% 501 6.7% $200,000+ 443 7.4% 650 8.7% Total 5,967 100.0% 7,490 100.0% Source: Ribbon Demographics 2014, Novogradac & Company LLP, February 2017

As of 2016, approximately half of senior renter households within the PMA have annual incomes below $50,000. Through 2021, the share of senior households earning less than $50,000 annually is projected to decrease slightly.

Age of Housing Stock The age of the area housing stock is presented in the following table:

AGE OF HOUSING STOCK IN PMA Hous ing Uni ts by Year Built Percent of 2010 PMA (ACS Estimate) Housing Units Built 2005 or later 1,115 1% Built 2000 to 2004 10,788 14% Built 1990 to 1999 7,713 10% Built 1980 to 1989 8,114 11% Built 1970 to 1979 8,811 12% Built 1960 to 1969 8,633 11% Built 1950 to 1959 10,612 14% Built 1940 to 1949 12,529 17% Built 1939 or earlier 7,453 10% Total 75,768 100% Source: ESRI Demographics 2015, Novogradac & Company LLP, February 2016

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The data demonstrates a significant portion of the existing housing stock, 74.0 percent, was constructed prior to 1990. Additionally, approximately 37.0 percent of the housing stock was constructed between 1950 and 1980. The 1990s represent only 10.0 percent of the entire housing stock. Therefore, the PMA exhibits an aging housing stock. The data does not reflect condition, which often is well-maintained through regular maintenance and up-keep. The field inspection of the area reflects a varied housing stock, generally ranging in condition from average to excellent.

Building Permits Historical building permit information for Arlington County, obtained from the U.S. Census Bureau, is presented in the following chart.

BUILDING PERMITS: ARLINGTON COUNTY - 2004 to 2015 Single- Three and Five or family and Four- More Total Year Duplex Family Family Uni ts 2004 184 0 1,090 1,274 2005 166 12 1,109 1,287 2006 203 12 2,757 2,972 2007 151 0 1,970 2,121 2008 119 3 1,060 1,182 2009 156 3 458 617 2010 286 0 589 875 2011 193 0 1,752 1,945 2012 158 0 2,051 2,209 2013 204 0 730 934 2014 229 0 1,931 2,160 2015 245 0 407 652 Total 2,294 30 15,904 18,228 Average 186 3 1,325 1,519 Source: US Census Bureau Building Permits, February 2017

As illustrated, multifamily construction has significantly outpaced single-family permits in Arlington County. From 2004 to 2015, multifamily construction has accounted for more than 87 percent of building permits issued. Multifamily construction peaked in 2006, and has fluctuated since after the recession, when multifamily permits issued were at the lowest level (2009). Single-family construction permits have generally remained steady over the last decade, with a slight recent upward trend. Overall, construction remains strong throughout Arlington County. With a growing percentage of households and many seniors aging out of single-family homes or townhomes, the need for senior multifamily housing should continue to increase over the foreseeable future.

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Conclusion The PMA is an area of significant general as well as senior population and household growth. The PMA and MSA have shown moderate to strong population and household growth figures over the last decade, which are projected to continue through 2021. The PMA and MSA demonstrated significant annual senior population growth rates from 2010 to 2016, outpacing that of the nation. Over the same period of time, the senior household growth rates of the PMA and MSA also outpaced the nation. Almost half of the senior renter households within the PMA have annual incomes below $50,000 as of 2016. The income limitations for the Subject will range from $34,230 to $52,140 under the LIHTC program. As a result, a considerable amount of renter households will be income eligible to reside at the Subject. With a growing number of renters in the PMA and a large percentage of renters with low to moderate incomes, coupled with an aging housing stock, we project that there will be substantial demand for new or renovated affordable housing units.

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F. COMPETITIVE ENVIRONMENT

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SUPPLY ANALYSIS

REIS The following charts depict changes in the vacancy rates and asking rent growth rates in the Rosslyn/Ballston submarket, Suburban Virginia, the South Atlantic region, and the nation according to real estate data provider REIS.

Source: www.reis.com, 2/2017

As illustrated above, the vacancy rate in the Rosslyn/Ballston submarket was 6.4 percent for the fourth quarter of 2016, which is slightly higher than the prior quarter’s vacancy for the submarket. This is higher than the vacancy rate for Suburban Virginia (4.8 percent), the South Atlantic region (4.6 percent), and the nation overall (4.2 percent). Additionally, while vacancy rates are expected to increase across all geographies over the next five years, it is projected that the Rosslyn/Ballston submarket will experience the greatest increase likely due to the influx of new supply proposed or under construction the submarket.

Source: www.reis.com, 2/2017

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Source: www.reis.com, 2/2017

Average rents in the Rosslyn/Ballston submarket for the fourth quarter 2016 decreased 2.0 percent from the previous quarter, and the forecasted five year forecasted annual rent growth is 0.6 percent. To date, the asking rent growth in the submarket has been well below all other geographies; further, that trend is expected to continue over the next five years. Projected five year asking rent growth is expected to be significantly less than that in Suburban Virginia, the South Atlantic region, and that nation. While this prediction is likely due to the amount of new supply expected to be completed in the market over the next several years, we believe that the new supply will be quickly absorbed, given the high absorption rates presented elsewhere in this report.

SURVEY OF COMPARABLE PROJECTS

Comparable properties are examined on the basis of physical characteristics, i.e. building type, age/quality, level of common amenities, absorption, as well as similarity in rent. We attempted to compare the Subject to properties from the competing market to provide a picture of the health and available supply in the market.

Description of Property Types Surveyed To evaluate the competitive position of the Subject, we surveyed several market rate and LIHTC properties in depth. We also visited and surveyed other properties that were excluded from the market survey because they are not considered comparable to the Subject or would not participate in the survey. Property managers were interviewed for information on unit mix, size, absorption, unit features and project amenities; tenant profiles; and market trends in general. The following tables detail all affordable properties in the PMA, and note those used as comparables, and the second table notes those properties that have been excluded, and their reason for exclusion.

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AFFORDABLE HOUSING IN THE PMA LIHTC Total Property Name Type Tenancy Uni ts Units Reason for Exclusion Arlington Mill LIHTC Gen eral 121 122 Different Tenancy, Design Arlington View Terrace LIHTC/Section 8 Gen eral 77 77 Different Tenancy, Design Buchanan Gardens LIHTC Gen eral 111 111 Different Tenancy, Design Buckingham Village Parcel B LIHTC Gen eral 43 48 Different Tenancy, Design Buckingham Village III LIHTC Gen eral 92 92 Different Tenancy, Design Calvert Manor LIHTC/Market Gen eral 15 23 Different Tenancy, Design Carlin* LIHTC Elderly 161 161 N/A Clarendon Court LIHTC/Market Gen eral 97 103 Different Tenancy, Design Colonial Village LIHTC/Market Gen eral 129 162 Different Tenancy, Design Colonial Village West LIHTC/Section 8 Gen eral 70 70 Different Tenancy, Design Columbia Grove LIHTC/Market Gen eral 130 208 Different Tenancy, Design Courthouse Crossings LIHTC Gen eral 112 112 Different Tenancy, Design Fields of Arlington LIHTC/Market Gen eral 189 199 Different Tenancy, Design Fisher House LIHTC Gen eral 33 33 Different Tenancy, Design Fort Henry Gardens LIHTC Gen eral 82 82 Different Tenancy, Design Frederick at Courthouse LIHTC Gen eral 108 108 Different Tenancy, Design Gates of Ballston* LIHTC/Market Gen eral 357 464 N/A Harvey Hall* LIHTC Gen eral 100 116 Different Tenancy, Design Historic Ballston Park LIHTC/Market Gen eral 233 512 Different Tenancy, Design Hunters Park at Cherrydale* LIHTC Elderly 74 74 N/A Jordan LIHTC Gen eral 90 90 Different Tenancy, Design Knightsbridge LIHTC/Section 8 Gen eral 37 37 Different Tenancy, Design Larks pur LIHTC/Market Gen eral 69 76 Different Tenancy Lenox Club LIHTC/Market Gen eral 77 385 Different Tenancy, Design Macedonia LIHTC Gen eral 36 36 Different Tenancy, Design Madison at Ballston Station* LIHTC Gen eral 100 100 N/A Magnolia Commons LIHTC Gen eral 198 198 Different Tenancy, Design Monterey LIHTC Gen eral 109 109 Different Tenancy, Design Patrick Henry LIHTC Gen eral 110 110 Different Tenancy, Design Quebec LIHTC/Market Gen eral 129 172 Different Tenancy, Design Serrano Apartments* LIHTC/Market Gen eral 196 280 N/A Shell LIHTC Gen eral 83 83 Different Tenancy, Design Shelton LIHTC Gen eral 94 94 Different Tenancy, Design Tripod Housing LIHTC Gen eral 103 103 Different Tenancy, Design Virginia Gardens LIHTC/Market Gen eral 72 76 Different Tenancy, Design Westover LIHTC Gen eral 119 153 Different Tenancy, Design Whitefield Commons LIHTC Gen eral 63 63 Different Tenancy, Design Woodland Hill LIHTC/Section 8 Elderly 235 235 Subsidized Rents Claridge House Section 8 Gen eral 0 300 Different Tenancy, Subsidized Rents Elmwood House Section 8/202 Elderly 0 50 Subsidized Rents Lockwood House Section 8/202 Elderly 0 100 Subsidized Rents *Properties utilized as comparables Grey shading denotes age-restricted properties

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EXCLUDED PROEPRTIES LIST LIHTC Total Property Name Type Tenancy Uni ts Units Reason for Exclusion Arlington Mill LIHTC Gen eral 121 122 Different Tenancy, Design Arlington View Terrace LIHTC/Section 8 Gen eral 77 77 Different Tenancy, Design Buchanan Gardens LIHTC Gen eral 111 111 Different Tenancy, Design Buckingham Village Parcel B LIHTC Gen eral 43 48 Different Tenancy, Design Buckingham Village III LIHTC Gen eral 92 92 Different Tenancy, Design Calvert Manor LIHTC/Market Gen eral 15 23 Different Tenancy, Design Clarendon Court LIHTC/Market Gen eral 97 103 Different Tenancy, Design Colonial Village LIHTC/Market Gen eral 129 162 Different Tenancy, Design Colonial Village West LIHTC/Section 8 Gen eral 70 70 Different Tenancy, Design Columbia Grove LIHTC/Market Gen eral 130 208 Different Tenancy, Design Courthouse Crossings LIHTC Gen eral 112 112 Different Tenancy, Design Fields of Arlington LIHTC/Market Gen eral 189 199 Different Tenancy, Design Fisher House LIHTC Gen eral 33 33 Different Tenancy, Design Fort Henry Gardens LIHTC Gen eral 82 82 Different Tenancy, Design Frederick at Courthouse LIHTC Gen eral 108 108 Different Tenancy, Design Historic Ballston Park LIHTC/Market Gen eral 233 512 Different Tenancy, Design Jordan LIHTC Gen eral 90 90 Different Tenancy, Design Knightsbridge LIHTC/Section 8 Gen eral 37 37 Different Tenancy, Design Larks pur LIHTC/Market Gen eral 69 76 Different Tenancy Lenox Club LIHTC/Market Gen eral 77 385 Different Tenancy, Design Macedonia LIHTC Gen eral 36 36 Different Tenancy, Design Magnolia Commons LIHTC Gen eral 198 198 Different Tenancy, Design Monterey LIHTC Gen eral 109 109 Different Tenancy, Design Patrick Henry LIHTC Gen eral 110 110 Different Tenancy, Design Quebec LIHTC/Market Gen eral 129 172 Different Tenancy, Design Shell LIHTC Gen eral 83 83 Different Tenancy, Design Shelton LIHTC Gen eral 94 94 Different Tenancy, Design Tripod Housing LIHTC Gen eral 103 103 Different Tenancy, Design Virg in ia Gard en s LIHTC/Market Gen eral 72 76 Different Tenancy, Design Westover LIHTC Gen eral 119 153 Different Tenancy, Design Whitefield Commons LIHTC Gen eral 63 63 Different Tenancy, Design Woodland Hill LIHTC/Section 8 Elderly 235 235 Subsidized Rents Claridge House Section 8 Gen eral 0 300 Different Tenancy, Subsidized Rents Elmwood House Section 8/202 Elderly 0 50 Subsidized Rents Lockwood House Section 8/202 Elderly 0 100 Subsidized Rents

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RECENT LIHTC ALLOCATIONS IN ARLINGTON 2011 - 2016 Year Property Name Location Tenancy Total Units LIHTC Units 2016 Gilliam Place East Arlington Family 83 83 2015 Columbia Hills East Arlington Family 97 97 2014 The Springs Apartments Arlington Family 104 98 2013 Buckingham Village Arlington Family 48 43 2013 Woodland Hill Arlington Senior 235 235 2012 The Shell Arlington Family 83 83 2011 Arlington Mill Arlington Family 122 121 2011 Lankspur Arlington Family 76 69 2011 Magnolia Commons Arlington Family 198 198 1,046 1,027 Source: Virginia Housing Development Agency, February 2017

A summary of the most recent area LIHTC allocations (since 2014) are as follows:

 Gilliam Place East is being developed by Arlington Partnership for Affordable Housing (APAH) as a six-story, 83-unit building with approximately 8,950 square feet of ground floor retail and civic space. The property will target family households. The Subject is located approximately 1.1 miles to the northeast of Gilliam Place East. No timeline for this project was available at the time of this report. This development will have minimal competitive overlap with the Subject as it will target family tenancy.

 The Springs Apartments is being developed by APAH as a five-story, 104-unit building with 5,600 square-feet of ground floor office space for APAH. The property targets family households earning less than 60 percent AMI. The Subject is 0.4 miles south of the Springs Apartments in the same general neighborhood. This project was recently completed in fall 2016.

 Columbia Hills East is located approximately 1.2 miles south of the Subject site along the Columbia Pike corridor at South Frederick Street. The project was initially proposed with up to 229 affordable units, but was allocated as a 97 unit affordable property in 2015, on the site of an existing parking lot adjacent to The Carlyle House condominiums. The property will target general occupancy tenancy earning up to 60 percent AMI. This project broke ground in June 2016 with an anticipated completion date in spring 2018. This development will have minimal competitive overlap with the Subject as it targets family tenancy.

Rent vs. Buy Analysis Since seniors are typically looking to downsize and avoid the physical and financial responsibilities associated with home ownership, we do not believe that homeownership is competitive with the Subject as a senior property.

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Comparable Properties Map

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COMPARABLE PROPERTIES Distance from Map # Property Name Tenancy Property Type Subject (miles) Subject Culpepper Garden I (as Renovated) Senior LIHTC - 1 Gates Of Ballston Apartments Family LIHTC, Market 0.2 2 Harvey Hall Apartments Family LIHTC, Market 1.1 3 Hunters Park At Cherrydale Senior LIHTC 1.7 4 Manchester Lakes Senior LIHTC 7.7 5 Serrano Apartments Family LIHTC, Market 1.2 6 The Carlin Senior LIHTC 0.4 7 The Madison At Ballston Station Family LIHTC, Market 0.1 8 Birchwood Apartments Family Market 0.5 9 Glenayr Apartments Family Market 0.3 10 Quinton Arms Apartments Family Market 1.0 11 Seminary Towers Family Market 3.0 12 Virginia Square Plaza Apartments Family Market 1.0

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SUMMARY MATRIX Comp Project Distance Type / Built / Market / Units # % Restriction Rent Size Max Wait Units Vacancy # Renovated Subsidy (Adj.) (SF) Rent? List? Vacant Rate SubjectCulpepper Garden I (as n/aMidrise @60% Studio / 1BA 125 61.3% @60% $1,141 500 yes N/A N/A N/A Renovated) 4435 North Pershing Drive (8 stories) 1BR / 1BA 72 35.3% @60% $1,221 600 yes N/A N/A N/A Arlington, VA 22203 1975 / 2019 2BR / 1BA 7 3.4% @60% $1,467 800 yes N/A N/A N/A Arlington County

204 100.0% N/A N/A 1Gates Of Ballston 0.2 mileGarden @60%, Market Studio / 1BA 22 4.7% @60% $1,134 423 yes No 0 0.0% Apartments 4207 North Pershing Drive (2 stories) Studio / 1BA 7 1.5% Market $1,268 423 n/a No 0 0.0% Arlington, VA 22203 1940s / 2007 1BR / 1BA 159 34.3% @60% $1,213 649 yes No 0 0.0% Arlington County 1BR / 1BA 53 11.4% Market $1,522 649 n/a No 2 3.8% 2BR / 1BA 86 18.5% @60% $1,458 789 yes No 0 0.0% 2BR / 1BA 27 5.8% Market $1,825 829 n/a No 3 11.1% 2BR / 1.5BA 29 6.2% @60% $1,458 934 yes No 0 0.0% 2BR / 1.5BA 9 1.9% Market $1,926 934 n/a No 1 11.1% 3BR / 1.5BA 41 8.8% @60% $1,768 1,112 yes No 0 0.0% 3BR / 1.5BA 13 2.8% Market $2,451 1,112 n/a No 1 7.7% 3BR / 2BA 14 3.0% @60% $1,768 1,112 yes No 0 0.0% 3BR / 2BA 4 0.9% Market $2,506 1,112 n/a No 0 0.0%

464 100.0% 7 1.5% 2Harvey Hall Apartments 1.1 miles Midrise @60%, Market Studio / 1BA 11 9.5% @60% $1,147 400 yes No 1 9.1% 860 South Greenbrier Street (5 stories) Studio / 1BA 2 1.7% Market $1,221 400 n/a No 0 0.0% Arlington, VA 22204 1963 / 2006 1BR / 1BA 46 39.7% @60% $1,229 760 yes No 0 0.0% Arlington County 1BR / 1BA 6 5.2% Market $1,389 760 n/a No 0 0.0% 2BR / 1BA 35 30.2% @60% $1,474 1,010 yes No 0 0.0% 2BR / 1BA 6 5.2% Market $1,527 1,010 n/a No 0 0.0% 3BR / 2BA 8 6.9% @60% $1,704 1,250 yes No 0 0.0% 3BR / 2BA 2 1.7% Market $1,943 1,250 n/a No 0 0.0%

116 100.0% 1 0.9% 3Hunters Park At Cherrydale 1.7 miles Midrise (age- @30%, @50%, 1BR / 1BA 14 18.9% @30% $611 545 yes No 0 0.0% restricted) @60% 2021 North Nelson Street (4 stories) 1BR / 1BA 28 37.8% @50% $1,021 545 yes No 0 0.0% Arlington, VA 22207 2005 / n/a 1BR / 1BA 32 43.2% @60% $1,226 545 yes No 1 3.1% Arlington County

74 100.0% 1 1.4% 4Manchester Lakes 7.7 miles Midrise (age- @50%, @60% 1BR / 1BA 20 7.9% @50% $1,028 564 yes Yes 0 0.0% restricted) 7131 Silver Lake Boulevard (4 stories) 1BR / 1BA 83 32.9% @60% $1,233 564 yes Yes 0 0.0% Alexandria, VA 22315 2000-2002 / n/a 2BR / 1BA 96 38.1% @50% $1,233 803 yes Yes 0 0.0% Fairfax County 2BR / 1BA 53 21.0% @60% $1,479 803 yes Yes 0 0.0%

252 100.0% 0 0.0%

Novogradac & Company LLP 57 Culpepper Garden I – Arlington, VA - Market Study

SUMMARY MATRIX Comp Project Distance Type / Built / Market / Units # % Restriction Rent Size Max Wait Units Vacancy # Renovated Subsidy (Adj.) (SF) Rent? List? Vacant Rate SubjectCulpepper Garden I (as Renovated) n/a Midrise @60% Studio / 1BA 125 61.3% @60% $1,141 500 yes N/A N/A N/A 4435 North Pershing Drive (8 stories) 1BR / 1BA 72 35.3% @60% $1,221 600 yes N/A N/A N/A Arlington, VA 22203 1975 / 2019 2BR / 1BA 7 3.4% @60% $1,467 800 yes N/A N/A N/A Arlington County

204 100.0% N/A N/A 5Serrano Apartments 1.2 miles Highrise @60%, Market Studio / 1BA 34 12.1% @60% $1,147 580 n/a No 0 0.0% 5535 Columbia Pike (8 stories) Studio / 1BA 10 3.6% Market $1,258 580 n/a No 1 10.0% Arlington, VA 22204 1960 / 2011 1BR / 1BA 60 21.4% @60% $1,229 785 n/a No 0 0.0% Arlington County 1BR / 1BA 35 12.5% Market $1,379 785 n/a No 1 2.9% 2BR / 1BA 56 20.0% @60% $1,474 1,047 n/a No 0 0.0% 2BR / 1BA 16 5.7% Market $1,738 1,047 n/a No 2 12.5% 2BR / 1.5BA 32 11.4% @60% $1,474 1,138 n/a No 0 0.0% 2BR / 1.5BA 17 6.1% Market $1,753 1,138 n/a No 2 11.8% 3BR / 2BA 14 5.0% @60% $1,704 1,392 n/a No 0 0.0% 3BR / 2BA 6 2.1% Market $2,545 1,392 n/a No 0 0.0%

280 100.0% 6 2.1% 6The Carlin 0.4 miles Highrise (age- @60% 1BR / 1BA 122 75.3% @60% $1,105 560 no Yes 0 0.0% restricted) 4300 North Carlin Springs Road (10 stories) 2BR / 1BA 40 24.7% @60% $1,350 750 no Yes 0 0.0% Arlington, VA 22203 1997 / n/a Arlinton County 162 100.0% 0 0.0% 7The Madison At Ballston Station 0.1 miles Midrise @60%, Market Studio / 1BA 34 6.7% Market $1,876 683 n/a No 1 2.9% 4400 North 4th Street (4 stories) Studio / 1BA 34 6.7% Market $1,551 470 n/a No 1 2.9% Arlington, VA 22203 2009, 2012 / n/a 1BR / 1BA 58 11.5% @60% $1,272 784 yes Yes 0 0.0% Arlington County 1BR / 1BA 41 8.1% Market $2,095 889 n/a No 7 17.1% 1BR / 1BA 41 8.1% Market $1,720 547 n/a No 8 19.5% 2BR / 1BA 5 1.0% @60% $1,527 922 yes Yes 0 0.0% 2BR / 1BA 41 8.1% Market $2,136 966 n/a No 4 9.8% 2BR / 1BA 41 8.1% Market $2,130 861 n/a No 2 4.9% 2BR / 2BA 32 6.3% @60% $1,527 1,177 yes Yes 0 0.0% 2BR / 2BA 54 10.7% Market $2,900 1,237 n/a No 1 1.9% 2BR / 2BA 54 10.7% Market $2,277 922 n/a No 1 1.9% 3BR / 2BA 5 1.0% @60% $1,766 1,354 yes Yes 0 0.0% 3BR / 2BA 32 6.3% Market $3,834 1,408 n/a Yes 0 0.0% 3BR / 2BA 32 6.3% Market $3,729 1,354 n/a Yes 0 0.0%

504 100.0% 25 5.0% 8Birchwood Apartments 0.5 miles Midrise Market 1BR / 1BA 26 26.8% Market $1,673 741 n/a No 0 0.0% 525 N. Pollard Street (4 stories) 1.5BR / 2BA 5 5.2% Market $2,104 1,006 n/a No 0 0.0% Arlington, VA 22203 2001 / n/a 2BR / 2BA 40 41.2% Market $2,287 1,018 n/a No 2 5.0% Arlington County 2.5BR / 2BA 12 12.4% Market $2,745 1,390 n/a No 1 8.3% 3BR / 3BA 14 14.4% Market $3,208 1,358 n/a No 0 0.0%

97 100.0% 3 3.1%

Novogradac & Company LLP 58 Culpepper Garden I – Arlington, VA - Market Study

204 100.0% N/A N/A 9Glenayr Apartments 0.3 miles Lowrise Market 1BR / 1BA 96 61.5% Market $1,233 700 n/a No 3 3.1% 399 N Park Drive (3 stories) 2BR / 1BA 60 38.5% Market $1,610 800 n/a No 2 3.3% Arlington, VA 22203 1940s / n/a Arlington County 156 100.0% 5 3.2% 10Quinton Arms Apartments 1 miles Midrise Market Studio / 1BA 9 20.0% Market $1,450 542 n/a Yes 0 0.0% 1160 North Quincy Street (5 stories) 1BR / 1BA 18 40.0% Market $1,625 695 n/a Yes 0 0.0% Arlington, VA 22201 1961 / Ongoing 2BR / 1BA 18 40.0% Market $2,100 935 n/a Yes 0 0.0% Arlington County

45 100.0% 0 0.0% 11Seminary Towers 3 miles Highrise Market Studio / 1BA N/A N/A Market $1,338 560 n/a No N/A N/A 4701 Kenmore Ave (13 stories) Studio / 1BA 73 13.4% Market $1,313 535 n/a No 3 4.1% Alexandria, VA 22304 1962 / 2000 1BR / 1BA N/A N/A Market $1,510 835 n/a No N/A N/A 1BR / 1BA 226 41.5% Market $1,460 685 n/a No 1 0.4% 2BR / 1BA 116 21.3% Market $1,666 1,000 n/a No 1 0.9% 2BR / 2BA 116 21.3% Market $1,856 1,050 n/a No 12 10.3% 3BR / 2BA 57 10.5% Market $2,366 1,270 n/a No 0 0.0%

544 100.0% 17 3.1% 12Virginia Square Plaza 1 milesHighrise Market Studio / 1BA 34 15.1% Market $1,890 560 n/a No 0 0.0% Apartments 801 N. Monroe Street (9 stories) Studio / 1BA N/A N/A Market $1,987 560 n/a No 0 N/A Arlington, VA 22201 2000 / n/a Studio / 1BA N/A N/A Market $1,792 560 n/a No 0 N/A Arlington County 1BR / 1BA 128 56.9% Market $2,030 660 n/a No 2 1.6% 1BR / 1BA N/A N/A Market $2,162 660 n/a No 0 N/A 1BR / 1BA N/A N/A Market $1,897 660 n/a No 0 N/A 2BR / 2BA 54 24.0% Market $2,662 950 n/a No 4 7.4% 2BR / 2BA N/A N/A Market $2,907 950 n/a No 0 N/A 2BR / 2BA N/A N/A Market $2,417 950 n/a No 0 N/A 3.5BR / 3BA 9 4.0% Market $3,771 1,315 n/a No 0 0.0% 3.5BR / 3BA N/A N/A Market $3,821 1,315 n/a No 0 N/A 3.5BR / 3BA N/A N/A Market $3,721 1,315 n/a No 0 N/A

225 100.0% 6 2.7%

Novogradac & Company LLP 59 PROPERTY PROFILE REPORT Gates Of Ballston Apartments Effective Rent Date 12/29/2016

Location 4207 North Pershing Drive Arlington, VA 22203 Arlington County Distance 0.2 miles Units 464 Vacant Units 7 Vacancy Rate 1.5% Type Garden (2 stories) Year Built/Renovated 1940s / 2007 Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors Ballston Park Apartments Tenant Characteristics Mixed tenancy, mostly families and singles from the immediate area Contact Name Property Manager Phone 703-875-8607

Market Information Utilities Program @60%, Market A/C not included -- central Annual Turnover Rate 25% Cooking not included -- electric Units/Month Absorbed N/A Water Heat not included -- electric HCV Tenants 25% Heat not included -- electric Leasing Pace Two weeks Other Electric not included Annual Chg. in Rent Market rate units increased up to 8% Water included Concession None Sewer included Trash Collection included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Garden 22 423 $1,091 $0 @60% No 0 0.0% yes None (2 stories) 0 1 Garden 7 423 $1,225 $0 Market No 0 0.0% N/A None (2 stories) 1 1 Garden 159 649 $1,154 $0 @60% No 0 0.0% yes None (2 stories) 1 1 Garden 53 649 $1,463 $0 Market No 2 3.8% N/A None (2 stories) 2 1 Garden 86 789 $1,382 $0 @60% No 0 0.0% yes None (2 stories) 2 1 Garden 27 829 $1,749 $0 Market No 3 11.1% N/A None (2 stories) 2 1.5 Garden 29 934 $1,382 $0 @60% No 0 0.0% yes None (2 stories) 2 1.5 Garden 9 934 $1,850 $0 Market No 1 11.1% N/A None (2 stories) 3 1.5 Garden 41 1,112 $1,677 $0 @60% No 0 0.0% yes None (2 stories) 3 1.5 Garden 13 1,112 $2,360 $0 Market No 1 7.7% N/A None (2 stories) 3 2 Garden 14 1,112 $1,677 $0 @60% No 0 0.0% yes None (2 stories) 3 2 Garden 4 1,112 $2,415 $0 Market No 0 0.0% N/A None (2 stories)

Unit Mix

@60% Face Rent Conc. Concd. Rent Util. Adj. Rent Market Face Rent Conc. Concd. Rent Util. Adj. Rent Studio / 1BA $1,091 $0 $1,091 $43 $1,134 Studio / 1BA $1,225 $0 $1,225 $43 $1,268 1BR / 1BA $1,154 $0 $1,154 $59 $1,213 1BR / 1BA $1,463 $0 $1,463 $59 $1,522 2BR / 1BA $1,382 $0 $1,382 $76 $1,458 2BR / 1BA $1,749 $0 $1,749 $76 $1,825 2BR / 1.5BA $1,382 $0 $1,382 $76 $1,458 2BR / 1.5BA $1,850 $0 $1,850 $76 $1,926 3BR / 1.5BA $1,677 $0 $1,677 $91 $1,768 3BR / 1.5BA $2,360 $0 $2,360 $91 $2,451 3BR / 2BA $1,677 $0 $1,677 $91 $1,768 3BR / 2BA $2,415 $0 $2,415 $91 $2,506

Amenities In-Unit Security Services Blinds Carpeting Limited Access None Central A/C Dishwasher Microwave Oven Refrigerator Walk-In Closet Washer/Dryer Washer/Dryer hookup

Property Premium Other Business Center/Computer Lab Clubhouse/Meeting None None Exercise Facility Central Laundry Off-Street Parking Playground

Comments The manager reported that the property does not keep a waiting list as there is strong demand for housing in the market. Washer and dryer appliances are included in select units. LIHTC rents decreased 2.0 percent to an increase of 3.1 percent. Market rents decreased 0.8 percent to an increase of 8.6 percent.

Location 860 South Greenbrier Street Arlington, VA 22204 Arlington County Distance 1.1 miles Units 116 Vacant Units 1 Vacancy Rate 0.9% Type Midrise (5 stories) Year Built/Renovated 1963 / 2006 Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors Columbia Commons and Windsor Tower Tenant Characteristics Mostly families from the immediate area Contact Name Robin Phone 703-671-3900

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Midrise 11 400 $1,147 $0 @60% No 1 9.1% yes None (5 stories) 0 1 Midrise 2 400 $1,221 $0 Market No 0 0.0% N/A None (5 stories) 1 1 Midrise 46 760 $1,229 $0 @60% No 0 0.0% yes None (5 stories) 1 1 Midrise 6 760 $1,389 $0 Market No 0 0.0% N/A None (5 stories) 2 1 Midrise 35 1,010 $1,474 $0 @60% No 0 0.0% yes None (5 stories) 2 1 Midrise 6 1,010 $1,527 $0 Market No 0 0.0% N/A None (5 stories) 3 2 Midrise 8 1,250 $1,704 $0 @60% No 0 0.0% yes None (5 stories) 3 2 Midrise 2 1,250 $1,943 $0 Market No 0 0.0% N/A None (5 stories)

Unit Mix

@60% Face Rent Conc. Concd. Rent Util. Adj. Rent Market Face Rent Conc. Concd. Rent Util. Adj. Rent Studio / 1BA $1,147 $0 $1,147 $0 $1,147 Studio / 1BA $1,221 $0 $1,221 $0 $1,221 1BR / 1BA $1,229 $0 $1,229 $0 $1,229 1BR / 1BA $1,389 $0 $1,389 $0 $1,389 2BR / 1BA $1,474 $0 $1,474 $0 $1,474 2BR / 1BA $1,527 $0 $1,527 $0 $1,527 3BR / 2BA $1,704 $0 $1,704 $0 $1,704 3BR / 2BA $1,943 $0 $1,943 $0 $1,943

Amenities In-Unit Security Services Blinds Carpet/Hardwood Limited Access None Central A/C Coat Closet Dishwasher Ceiling Fan Garbage Disposal Oven Refrigerator

Property Premium Other Clubhouse/Meeting Elevators None 3brs have walk-in closets. Central Laundry Off-Street Parking On-Site Management Playground

Comments The contact stated the property does not maintain a waiting list and operates on a first-come, first-served basis when units become available. Rents increased one percent for market rate units, while rents for LIHTC units increased zero to one percent. The contact was unable to estimate the number of Housing Choice Vouchers in use at the property.

Photos

Location 2021 North Nelson Street Arlington, VA 22207 Arlington County Distance 1.7 miles Units 74 Vacant Units 1 Vacancy Rate 1.4% Type Midrise (age-restricted) (4 stories) Year Built/Renovated 2005 / N/A Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors None indicated Tenant Characteristics Seniors 55+ Contact Name Cynthia Phone 703-892-4330

Market Information Utilities Program @30%, @50%, @60% A/C not included -- central Annual Turnover Rate 15% Cooking not included -- electric Units/Month Absorbed N/A Water Heat not included -- electric HCV Tenants 15% Heat not included -- electric Leasing Pace One week Other Electric not included Annual Chg. in Rent Increased less than one percent Water included Concession None Sewer included Trash Collection included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 1 1 Midrise 14 545 $552 $0 @30% No 0 0.0% yes None (4 stories) 1 1 Midrise 28 545 $962 $0 @50% No 0 0.0% yes None (4 stories) 1 1 Midrise 32 545 $1,167 $0 @60% No 1 3.1% yes None (4 stories)

Unit Mix

@30% Face Rent Conc. Concd. Rent Util. Adj. Rent @50% Face Rent Conc. Concd. Rent Util. Adj. Rent 1BR / 1BA $552 $0 $552 $59 $611 1BR / 1BA $962 $0 $962 $59 $1,021

@60% Face Rent Conc. Concd. Rent Util. Adj. Rent 1BR / 1BA $1,167 $0 $1,167 $59 $1,226

Amenities In-Unit Security Services Blinds Carpeting Intercom (Buzzer) None Central A/C Coat Closet Limited Access Grab Bars Hand Rails Oven Pull Cords Refrigerator

Property Premium Other Clubhouse/Meeting Commercial/Retail None None Elevators Garage Central Laundry Off-Street Parking On-Site Management

Comments The contact reported that annual rent increases have been less than one percent over the past two years.

Photos

Location 7131 Silver Lake Boulevard Alexandria, VA 22315 Fairfax County Intersection: Manchester Boulevard and Hayfield Road

Distance 7.7 miles Units 252 Vacant Units 0 Vacancy Rate 0.0% Type Midrise (age-restricted) (4 stories) Year Built/Renovated 2000-2002 / N/A Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors None Identified Tenant Characteristics Seniors age 62 and older, many of whom sold homes to move to this property.

Contact Name Susan Phone 703-921-5500

Market Information Utilities Program @50%, @60% A/C not included -- central Annual Turnover Rate 10% Cooking not included -- electric Units/Month Absorbed N/A Water Heat included -- gas HCV Tenants 40% Heat included -- gas Leasing Pace Pre-leased Other Electric not included Annual Chg. in Rent Increased slightly (~2%) Water included Concession None Sewer included Trash Collection included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 1 1 Midrise 20 564 $999 $0 @50% Yes 0 0.0% yes None (4 stories) 1 1 Midrise 83 564 $1,204 $0 @60% Yes 0 0.0% yes None (4 stories) 2 1 Midrise 96 803 $1,196 $0 @50% Yes 0 0.0% yes None (4 stories) 2 1 Midrise 53 803 $1,442 $0 @60% Yes 0 0.0% yes None (4 stories)

Unit Mix

@50% Face Rent Conc. Concd. Rent Util. Adj. Rent @60% Face Rent Conc. Concd. Rent Util. Adj. Rent 1BR / 1BA $999 $0 $999 $29 $1,028 1BR / 1BA $1,204 $0 $1,204 $29 $1,233 2BR / 1BA $1,196 $0 $1,196 $37 $1,233 2BR / 1BA $1,442 $0 $1,442 $37 $1,479

Property Premium Other Carport Clubhouse/Meeting Hairdresser / Barber Country store, library Elevators Exercise Facility Garage Central Laundry Off-Street Parking On-Site Management Recreation Areas

Comments The contact stated that the wait list is currently 50 households for one-bedroom units and three households for two-bedroom units. Management indicated that demand in the area is strong for senior housing. The utility structure at the property is the same for both buildings. The units at 50 percent of AMI are located in Building Two and units at 60 percent of AMI are located in Building One. Rents have been at maximum allowable for multiple years.

Photos

Location 5535 Columbia Pike Arlington, VA 22204 Arlington County Distance 1.2 miles Units 280 Vacant Units 6 Vacancy Rate 2.1% Type Highrise (8 stories) Year Built/Renovated 1960 / 2011 Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors Taylor Place and Wild Wood Park Tenant Characteristics Mix of professionals employed in Fed Govt., healthcare, and education Contact Name Nicole Phone 703.671.3200

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Highrise 34 580 $1,147 $0 @60% No 0 0.0% N/A None (8 stories) 0 1 Highrise 10 580 $1,258 $0 Market No 1 10.0% N/A None (8 stories) 1 1 Highrise 60 785 $1,229 $0 @60% No 0 0.0% N/A None (8 stories) 1 1 Highrise 35 785 $1,379 $0 Market No 1 2.9% N/A None (8 stories) 2 1 Highrise 56 1,047 $1,474 $0 @60% No 0 0.0% N/A None (8 stories) 2 1 Highrise 16 1,047 $1,738 $0 Market No 2 12.5% N/A None (8 stories) 2 1.5 Highrise 32 1,138 $1,474 $0 @60% No 0 0.0% N/A None (8 stories) 2 1.5 Highrise 17 1,138 $1,753 $0 Market No 2 11.8% N/A None (8 stories) 3 2 Highrise 14 1,392 $1,704 $0 @60% No 0 0.0% N/A None (8 stories) 3 2 Highrise 6 1,392 $2,545 $0 Market No 0 0.0% N/A None (8 stories)

Unit Mix

@60% Face Rent Conc. Concd. Rent Util. Adj. Rent Market Face Rent Conc. Concd. Rent Util. Adj. Rent Studio / 1BA $1,147 $0 $1,147 $0 $1,147 Studio / 1BA $1,258 $0 $1,258 $0 $1,258 1BR / 1BA $1,229 $0 $1,229 $0 $1,229 1BR / 1BA $1,379 $0 $1,379 $0 $1,379 2BR / 1BA $1,474 $0 $1,474 $0 $1,474 2BR / 1BA $1,738 $0 $1,738 $0 $1,738 2BR / 1.5BA $1,474 $0 $1,474 $0 $1,474 2BR / 1.5BA $1,753 $0 $1,753 $0 $1,753 3BR / 2BA $1,704 $0 $1,704 $0 $1,704 3BR / 2BA $2,545 $0 $2,545 $0 $2,545

Amenities In-Unit Security Services Balcony/Patio Blinds Intercom (Buzzer) None Carpeting Central A/C Limited Access Dishwasher Ceiling Fan Garbage Disposal Oven Refrigerator

Property Premium Other Elevators Central Laundry None None Off-Street Parking On-Site Management Swimming Pool

Comments The contact noted there is a short waiting list for LIHTC units. There are usually a few market rate vacancies. The property does offer limited off-street surface parking free of charge.

Location 4300 North Carlin Springs Road Arlington, VA 22203 Arlinton County Distance 0.4 miles Units 162 Vacant Units 0 Vacancy Rate 0.0% Type Highrise (age-restricted) (10 stories) Year Built/Renovated 1997 / N/A Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors Culpepper Gardens Tenant Characteristics Seniors age 70+; Most from northeastern Virginia; Majority previously owned homes

Contact Name Miss Clybourne Phone 703.243.4300

Market Information Utilities Program @60% A/C included -- wall Annual Turnover Rate 8% Cooking included -- electric Units/Month Absorbed N/A Water Heat included -- gas HCV Tenants 5% Heat included -- gas Leasing Pace One or two weeks Other Electric included Annual Chg. in Rent None Water included Concession None Sewer included Trash Collection included

Unit Mix

@60% Face Rent Conc. Concd. Rent Util. Adj. Rent 1BR / 1BA $1,105 $0 $1,105 $0 $1,105 2BR / 1BA $1,350 $0 $1,350 $0 $1,350

Amenities In-Unit Security Services Blinds Cable/Satellite/Internet Patrol Adult Education Carpeting Garbage Disposal Video Surveillance Oven Pull Cords Refrigerator Walk-In Closet Wall A/C

Property Premium Other Carport Elevators Hairdresser / Barber None Garage Central Laundry Off-Street Parking On-Site Management Picnic Area Service Coordination

Comments Each unit comes with a first floor garage parking spot free of charge. The current waiting list is approximately three to six months. The contact stated that nearly all of the tenants at the property were from northeastern Virginia, with a large share from the immediate area in Arlington. The contact also stated that a significant portion of the residents at the property had transitioned from homeownership to live at the property prior to relocation.

Photos

Location 4400 North 4th Street Arlington, VA 22203 Arlington County Distance 0.1 miles Units 504 Vacant Units 25 Vacancy Rate 5.0% Type Midrise (4 stories) Year Built/Renovated 2009, 2012 / N/A Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors Ballston Park, Henderson Park Tenant Characteristics Working professionals, Arlington locals, Local families Contact Name Eric Phone 703-527-4040

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Midrise 34 683 $1,800 $0 Market No 1 2.9% N/A HIGH (4 stories) 0 1 Midrise 34 470 $1,475 $0 Market No 1 2.9% N/A LOW (4 stories) 1 1 Midrise 58 784 $1,167 $0 @60% Yes 0 0.0% yes None (4 stories) 1 1 Midrise 41 889 $1,990 $0 Market No 7 17.1% N/A HIGH (4 stories) 1 1 Midrise 41 547 $1,615 $0 Market No 8 19.5% N/A LOW (4 stories) 2 1 Midrise 5 922 $1,392 $0 @60% Yes 0 0.0% yes None (4 stories) 2 1 Midrise 41 966 $2,001 $0 Market No 4 9.8% N/A HIGH (4 stories) 2 1 Midrise 41 861 $1,995 $0 Market No 2 4.9% N/A LOW (4 stories) 2 2 Midrise 32 1,177 $1,392 $0 @60% Yes 0 0.0% yes None (4 stories) 2 2 Midrise 54 1,237 $2,765 $0 Market No 1 1.9% N/A HIGH (4 stories) 2 2 Midrise 54 922 $2,142 $0 Market No 1 1.9% N/A LOW (4 stories) 3 2 Midrise 5 1,354 $1,602 $0 @60% Yes 0 0.0% yes None (4 stories) 3 2 Midrise 32 1,408 $3,670 $0 Market Yes 0 0.0% N/A HIGH (4 stories) 3 2 Midrise 32 1,354 $3,565 $0 Market Yes 0 0.0% N/A LOW (4 stories)

Unit Mix

@60% Face Rent Conc. Concd. Rent Util. Adj. Rent Market Face Rent Conc. Concd. Rent Util. Adj. Rent 1BR / 1BA $1,167 $0 $1,167 $105 $1,272 Studio / 1BA $1,475 - $1,800 $0 $1,475 - $1,800 $76 $1,551 - $1,876 2BR / 1BA $1,392 $0 $1,392 $135 $1,527 1BR / 1BA $1,615 - $1,990 $0 $1,615 - $1,990 $105 $1,720 - $2,095 2BR / 2BA $1,392 $0 $1,392 $135 $1,527 2BR / 1BA $1,995 - $2,001 $0 $1,995 - $2,001 $135 $2,130 - $2,136 3BR / 2BA $1,602 $0 $1,602 $164 $1,766 2BR / 2BA $2,142 - $2,765 $0 $2,142 - $2,765 $135 $2,277 - $2,900 3BR / 2BA $3,565 - $3,670 $0 $3,565 - $3,670 $164 $3,729 - $3,834

Property Premium Other Business Center/Computer Lab Clubhouse/Meeting None Stainless Steel, Dog Park, Commercial/Retail Concierge Courtyard Elevators Exercise Facility Garage Off-Street Parking On-Site Management Picnic Area Playground Recreation Areas Swimming Pool

Comments The property consists of two phases. Phase I was constructed in 2009 and consists of 270 units. Phase II was constructed in 2012 and consists of 234 units. All 100 LIHTC units are a part of Phase II. Unit mix was estimated by the leasing agent. Vacancies are based on an overall occupancy of 97 percent. Water, sewer, and trash expenses are included in LIHTC unit rents, while only trash expenses are included in market rate rents. Each LIHTC unit comes with one underground parking garage space. Parking for market rate units is $50 for one car, and $75 for each additional car. The leasing agent could not indicate the total number of garage parking spaces, but indicated it is approximately one space per unit. The property has upwards of 30 floor plans. Select units have wood plank flooring and upgraded amenities. Property has two swimming pools and a public park adjacent. In the past year, market rate rents have increased approximately two percent, while LIHTC rents have increased minimally based on maximum allowable levels. Waiting lists for the affordable units range from six month to one year for the one-bedroom units, between two and four years for the two-bedroom units, and four years and more for the four bed-room units.

Photos

Location 525 N. Pollard Street Arlington, VA 22203 Arlington County Distance 0.5 miles Units 97 Vacant Units 3 Vacancy Rate 3.1% Type Midrise (4 stories) Year Built/Renovated 2001 / N/A Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors None specified Tenant Characteristics Mostly professionals; 50% out of state Contact Name Lorna Phone 703-465-0050

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 1 1 Midrise 26 741 $1,825 $152 Market No 0 0.0% N/A None (4 stories) 1.5 2 Midrise 5 1,006 $2,295 $191 Market No 0 0.0% N/A None (4 stories) 2 2 Midrise 40 1,018 $2,495 $208 Market No 2 5.0% N/A None (4 stories) 2.5 2 Midrise 12 1,390 $2,995 $250 Market No 1 8.3% N/A None (4 stories) 3 3 Midrise 14 1,358 $3,500 $292 Market No 0 0.0% N/A None (4 stories)

Unit Mix

Market Face Rent Conc. Concd. Rent Util. Adj. Rent 1BR / 1BA $1,825 $152 $1,673 $0 $1,673 1.5BR / 2BA $2,295 $191 $2,104 $0 $2,104 2BR / 2BA $2,495 $208 $2,287 $0 $2,287 2.5BR / 2BA $2,995 $250 $2,745 $0 $2,745 3BR / 3BA $3,500 $292 $3,208 $0 $3,208

Amenities In-Unit Security Services Balcony/Patio Blinds Intercom (Buzzer) None Carpeting Central A/C Limited Access Dishwasher Microwave Oven Refrigerator Walk-In Closet Washer/Dryer

Property Premium Other Clubhouse/Meeting Elevators None None Exercise Facility Garage On-Site Management

Comments The contact noted that walkability and nearby amenities were strong selling points for the property. Additionally, the Ballston Quarter Mall redevelopment is expected to bring additional appeal and interest into the area. The contact anticipates that rents will experience an upward bump upon completion of the redevelopment in 2018. The contact stated that there were several floor plans for each unit type, and provided square footage aggregates and rents for most recently available units for each unit type. The property is currently offering a concession of one-month's rent for 12 month leases.

Location 399 N Park Drive Arlington, VA 22203 Arlington County Distance 0.3 miles Units 156 Vacant Units 5 Vacancy Rate 3.2% Type Lowrise (3 stories) Year Built/Renovated 1940s / N/A Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors Madison at Ballston Station, Thomas Place

Tenant Characteristics Mixed tenancy; from Arlington, DC, out of state

Contact Name Sheryl Phone 703-522-7354

Market Information Utilities Program Market A/C not included -- none Annual Turnover Rate N/A Cooking included -- gas Units/Month Absorbed N/A Water Heat included -- gas HCV Tenants 0% Heat included -- gas Leasing Pace One to two weeks Other Electric included Annual Chg. in Rent Increased slightly (<2%) Water included Concession None Sewer included Trash Collection included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 1 1 Lowrise 96 700 $1,225 $0 Market No 3 3.1% N/A None (3 stories) 2 1 Lowrise 60 800 $1,600 $0 Market No 2 3.3% N/A None (3 stories)

Unit Mix

Market Face Rent Conc. Concd. Rent Util. Adj. Rent 1BR / 1BA $1,225 $0 $1,225 $8 $1,233 2BR / 1BA $1,600 $0 $1,600 $10 $1,610

Amenities In-Unit Security Services Blinds Coat Closet None None Oven Refrigerator

Property Premium Other Courtyard Central Laundry None None Off-Street Parking On-Site Management

Comments The contact was unable to comment on the annual turnover rate. The property does not accept Housing Choice Vouchers. The contact indicated that annual increases in rent varies from zero to $40.

Location 1160 North Quincy Street Arlington, VA 22201 Arlington County Distance 1 mile Units 45 Vacant Units 0 Vacancy Rate 0.0% Type Midrise (5 stories) Year Built/Renovated 1961 / Ongoing Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors Library Court, 1020 Quincy Tenant Characteristics young professionals, young families, some elderly from out of the area Contact Name Brittany Phone 703-807-0803

Market Information Utilities Program Market A/C included -- central Annual Turnover Rate 12% Cooking included -- electric Units/Month Absorbed N/A Water Heat included -- gas HCV Tenants 0% Heat included -- gas Leasing Pace 2 to 3 weeks Other Electric included Annual Chg. in Rent Increased three percent Water included Concession None Sewer included Trash Collection included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Midrise 9 542 $1,450 $0 Market Yes 0 0.0% N/A None (5 stories) 1 1 Midrise 18 695 $1,625 $0 Market Yes 0 0.0% N/A None (5 stories) 2 1 Midrise 18 935 $2,100 $0 Market Yes 0 0.0% N/A None (5 stories)

Unit Mix

Market Face Rent Conc. Concd. Rent Util. Adj. Rent Studio / 1BA $1,450 $0 $1,450 $0 $1,450 1BR / 1BA $1,625 $0 $1,625 $0 $1,625 2BR / 1BA $2,100 $0 $2,100 $0 $2,100

Property Premium Other Elevators Exercise Facility None None Off-Street Parking On-Site Management Picnic Area

Comments Housing Choice Vouchers are not accepted. Management stated that tenants move from out of the area for jobs. The property is currently maintaining a waiting list of three families but not for a specific unit type. Rent rangesvary by level of renovations and upgrades to units, as well as building location and floor. Contact indicated the garage parking is not for tenants.

Location 4701 Kenmore Ave Alexandria, VA 22304 County Distance 3 miles Units 544 Vacant Units 17 Vacancy Rate 3.1% Type Highrise (13 stories) Year Built/Renovated 1962 / 2000 Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors None identified Tenant Characteristics Tenants are from Alexandria and out of state

Contact Name Ashley Phone 703-751-0202

Market Information Utilities Program Market A/C included -- central Annual Turnover Rate 36% Cooking not included -- gas Units/Month Absorbed N/A Water Heat not included -- gas HCV Tenants 0% Heat not included -- gas Leasing Pace A few weeks Other Electric included Annual Chg. in Rent See comments Water not included Concession See comments Sewer not included Trash Collection not included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Highrise N/A 560 $1,290 $21 Market No N/A N/A N/A HIGH (13 stories) 0 1 Highrise 73 535 $1,265 $21 Market No 3 4.1% N/A LOW (13 stories) 1 1 Highrise N/A 835 $1,440 $21 Market No N/A N/A N/A HIGH (13 stories) 1 1 Highrise 226 685 $1,390 $21 Market No 1 0.4% N/A LOW (13 stories) 2 1 Highrise 116 1,000 $1,573 $21 Market No 1 0.9% N/A AVG (13 stories) 2 2 Highrise 116 1,050 $1,763 $21 Market No 12 10.3% N/A AVG (13 stories) 3 2 Highrise 57 1,270 $2,250 $21 Market No 0 0.0% N/A AVG (13 stories)

Unit Mix

Market Face Rent Conc. Concd. Rent Util. Adj. Rent Studio / 1BA $1,265 - $1,290 $21 $1,244 - $1,269 $69 $1,313 - $1,338 1BR / 1BA $1,390 - $1,440 $21 $1,369 - $1,419 $91 $1,460 - $1,510 2BR / 1BA $1,573 $21 $1,552 $114 $1,666 2BR / 2BA $1,763 $21 $1,742 $114 $1,856 3BR / 2BA $2,250 $21 $2,229 $137 $2,366

Property Premium Other Business Center/Computer Lab Clubhouse/Meeting None Dog Park Concierge Elevators Exercise Facility Central Laundry Off-Street Parking On-Site Management Sauna Swimming Pool

Comments The contact stated the clubhouse and lobby were renovated in 2014. Average rents are based on a variety of floor plans and factors that can affect pricing such as minor renovations, views, and slight variations in floor plans. Further rent detail was not available. The property operates with daily rent software, as rents change daily based on availability, etc. There is a current concession of $250 for a 12-month lease. Off-street surface parking is free of charge. There are two spots per unit, with exception of the three-BR units which include three spots. The property does not have a parking garage.

Photos

Location 801 N. Monroe Street Arlington, VA 22201 Arlington County Distance 1 mile Units 225 Vacant Units 6 Vacancy Rate 2.7% Type Highrise (9 stories) Year Built/Renovated 2000 / N/A Marketing Began N/A Leasing Began N/A Last Unit Leased N/A Major Competitors Galleria, Balston Place, Lincoln Towers Tenant Characteristics Professionals working DC metro area. Some graduate students at GMU. Contact Name Leasing Agent Phone 703-526-0800

Market Information Utilities Program Market A/C included -- central Annual Turnover Rate 30% Cooking included -- electric Units/Month Absorbed N/A Water Heat included -- gas HCV Tenants 0% Heat included -- gas Leasing Pace Within two weeks Other Electric not included Annual Chg. in Rent Changes frequently Water included Concession None Sewer included Trash Collection included

Unit Mix (face rent) Beds Baths Type Units Size (SF) Rent Concession Restriction Waiting Vacant Vacancy Max Rent? Range (monthly) List Rate 0 1 Highrise 34 560 $1,878 $0 Market No 0 0.0% N/A AVG (9 stories) 0 1 Highrise N/A 560 $1,975 $0 Market No 0 N/A N/A HIGH (9 stories) 0 1 Highrise N/A 560 $1,780 $0 Market No 0 N/A N/A LOW (9 stories) 1 1 Highrise 128 660 $2,013 $0 Market No 2 1.6% N/A AVG (9 stories) 1 1 Highrise N/A 660 $2,145 $0 Market No 0 N/A N/A HIGH (9 stories) 1 1 Highrise N/A 660 $1,880 $0 Market No 0 N/A N/A LOW (9 stories) 2 2 Highrise 54 950 $2,640 $0 Market No 4 7.4% N/A AVG (9 stories) 2 2 Highrise N/A 950 $2,885 $0 Market No 0 N/A N/A HIGH (9 stories) 2 2 Highrise N/A 950 $2,395 $0 Market No 0 N/A N/A LOW (9 stories) 3.5 3 Highrise 9 1,315 $3,745 $0 Market No 0 0.0% N/A AVG (9 stories) 3.5 3 Highrise N/A 1,315 $3,795 $0 Market No 0 N/A N/A HIGH (9 stories) 3.5 3 Highrise N/A 1,315 $3,695 $0 Market No 0 N/A N/A LOW (9 stories)

Unit Mix

Market Face Rent Conc. Concd. Rent Util. Adj. Rent Studio / 1BA $1,780 - $1,975 $0 $1,780 - $1,975 $12 $1,792 - $1,987 1BR / 1BA $1,880 - $2,145 $0 $1,880 - $2,145 $17 $1,897 - $2,162 2BR / 2BA $2,395 - $2,885 $0 $2,395 - $2,885 $22 $2,417 - $2,907 3.5BR / 3BA $3,695 - $3,795 $0 $3,695 - $3,795 $26 $3,721 - $3,821

Property Premium Other Business Center/Computer Lab Clubhouse/Meeting None None Concierge Elevators Exercise Facility Garage Off-Street Parking On-Site Management

Comments Prices range depending on the floor the unit is located; higher floors are higher rents. The property is currently offering a special of one month free with a 13-month lease or two months free with a 14-month lease for the vacant studio apartment.

AMENITY MATRIX REPORT Culpepper Gates Of Hunters The Madison Quinton Virginia Harvey Hall Manchester Serrano Birchwood Glenayr Seminary Garden I (as Ballston Park At The Carlin At Ballston Arms Square Plaza Apartments Lakes Apartments Apartments Apartments Towers Renovated) Apartments Cherrydale Station Apartments Apartments Comp # Subject 1 2 3 4 5 6 7 8 9 10 11 12 Property Information Property Type Midrise (8 Garden (2 Midrise (5 Midrise (age- Midrise (age- Highrise (8 Highrise (age- Midrise (4 Midrise (4 Lowris e (3 Midrise (5 Highrise (13 Highrise (9 stories) stories) stories) restricted) (4 restricted) (4 stories) restricted) (10 stories) stories) stories) stories) stories) stories) stories) stories) stories) Year Built / Renovated 1975 / 2018 1940s / 2007 1963 / 2006 2005 / n/a 2000-2002 / 1960 / 2011 1997 / n/a 2009, 2012 / 2001 / n/a 1940s / n/a 1961 / 1962 / 2000 2000 / n/a n/a n/a Ongoing Market (Conv.)/Subsidy Type LIHTC, LIHTC, LIHTC, LIHTC, LIHTC Market Market LIHTC LIHTC Market LIHTC Market Market Market Market Market Market Utility Adjusments Cooking yes no yes no no yes yes no yes yes yes no yes Water Heat yes no yes no yes yes yes no yes yes yes no yes Heat yes no yes no yes yes yes no yes yes yes no yes Other Electric yes no yes no no yes yes no yes yes yes yes no Water yes yes yes yes yes yes yes no yes yes yes no yes Sewer yes yes yes yes yes yes yes no yes yes yes no yes Trash Collection yes yes yes yes yes yes yes yes yes yes yes yes yes In-Unit Amenities Balcony/Patio no no no no yes yes no yes yes no yes yes yes Blinds yes yes yes yes yes yes yes yes yes yes yes yes yes Cable/Satellite/Internet no no yes no no no yes no no no no yes no Carpet/Hardwood no no yes no no no no no no no yes no no Carpeting yes yes no yes yes yes yes yes yes no no yes yes Central A/C yes yes yes yes yes yes no yes yes no yes yes yes Coat Closet yes no yes yes no no no yes no yes no no no Dishwasher no yes yes no yes yes no yes yes no yes yes yes Exterior Storage no no no no yes no no yes no no yes no yes Ceiling Fan no no yes no no yes no yes no no no yes no Garbage Disposal yes no yes no yes yes yes yes yes no yes yes yes Grab Bars no no no yes no no no no no no no no no Hand Rails yes no no yes yes no no yes no no no no no Microwave no yes no no no no no yes yes no yes no yes Oven yes yes yes yes yes yes yes yes yes yes yes yes yes Pull Cords yes no no yes yes no yes no no no no no no Refrigerator yes yes yes yes yes yes yes yes yes yes yes yes yes Walk-In Closet no yes no no no no yes yes yes no yes yes yes Wall A/C no no no no no no yes no no no no no no Washer/Dryer no yes no no no no no yes yes no yes no yes Washer/Dryer hookup no yes no no no no no yes yes no yes no yes Property Amenities Business Center/Computer Lab yes yes no no yes no no yes no no no yes yes Carport no no no no yes no yes no no no no no no Community Room yes yes yes yes yes no no yes yes no no yes yes Commercial/Retail no no no yes no no no yes no no no no no Concierge yes no no no no no no yes no no no yes yes Courtyard yes no no no no no no yes no yes no no yes El e vator s yes no yes yes yes yes no yes yes no yes yes yes Exercise Facility no yes no no yes no no yes yes no yes yes yes Garage no no no yes yes no yes yes yes no yes no yes Central Laundry yes yes yes yes yes yes yes no no yes no yes no Non-shelter Services yesnononononononononononono Off-Street Parking yes yes yes yes yes yes yes yes yes yes yes yes yes On-Site Management yes no yes yes yes yes yes yes yes yes yes yes yes Picnic Area yes no no no no no yes yes no no yes no no Playground no yes yes no no no no yes no no no no no Recreation Areas no no no no yes no no yes no no no no no Sauna no no no no no no no no no no no yes no Service Coordination yes no no no no no yes no no no no no no Swimming Pool no no no no no yes no yes no no no yes no Carport Fee N/A N/A N/A N/A $35.00 N/A N/A N/A N/A N/A N/A N/A N/A Garage Fee N/A N/A N/A $25.00 $60.00 N/A N/A $50.00 $70.00 N/A N/A N/A N/A Commercial/Retail First floor retail Services Adult Education yes no no no no no yes no no no no no no Computer Tutoring yesnononononononononononono Security Intercom (Buzzer) no no no yes yes yes no no yes no no yes no Intercom (Phone) no no no no no no no no no no yes no no Limited Access yes yes yes yes yes yes no yes yes no yes yes yes Patrol no no no no no no yes no no no no yes yes Perimeter Fencing yesnononononononononononoyes Video Surveillance yesnononononoyesyesnonononono Premium Amenities Hairdresser / Barber yesnononoyesnoyesnononononono Housekeeping yesnononononononononononono Other Amenities 3brs have Stainless walk-in Country Steel, Dog Other n/a n/a closets. n/a n/a n/a n/a n/a n/a Dog Park n/a store, library Park, balconies in Sundeck some units

Novogradac & Company LLP 91 Culpepper Garden I – Arlington, VA - Market Study

RENT AND SQUARE FOOTAGE RANKING -- All rents adjusted for utilities and concessions extracted from the market. Feb-17 Units Surveyed: 2,919 Weighted Occupancy: 97.6% Market Rate 1,067 Market Rate 97.1% Tax Credit 1,852 Tax Credit 97.8% Studio One Bath One Bedroom One Bath Two Bedrooms One Bath Property Average Property Average Property Average RENT Virginia Square Plaza Apartments $1,987 Virginia Square Plaza Apartments $2,162 Virginia Square Plaza Apartments (2BA) $2,907 Virginia Square Plaza Apartments $1,890 The Madison At Ballston Station * (M) $2,095 Virginia Square Plaza Apartments (2BA) $2,662 The Madison At Ballston Station * (M) $1,876 Virginia Square Plaza Apartments $2,030 Virginia Square Plaza Apartments (2BA) $2,417 Virginia Square Plaza Apartments $1,792 Virginia Square Plaza Apartments $1,897 Birchwood Apartments (2BA) $2,287 The Madison At Ballston Station * (M) $1,551 The Madison At Ballston Station * (M) $1,720 The Madison At Ballston Station * (M) $2,136 Quinton Arms Apartments $1,450 Birchwood Apartments $1,673 The Madison At Ballston Station * (M) $2,130 Seminary Towers $1,338 Quinton Arms Apartments $1,625 Quinton Arms Apartments $2,100 Seminary Towers $1,313 Gates Of Ballston Apartments * (M) $1,522 Gates Of Ballston Apartments * (M) $1,825 Gates Of Ballston Apartments * (M) $1,268 Seminary Towers $1,510 Serrano Apartments * (M) $1,738 Serrano Apartments * (M) $1,258 Seminary Towers $1,460 Seminary Towers $1,666 Harvey Hall Apartments * (M) $1,221 Harvey Hall Apartments * (M) $1,389 Glenayr Apartments $1,610 Harvey Hall Apartments * (60%) $1,147 Serrano Apartments * (M) $1,379 Harvey Hall Apartments * (M) $1,527 Serrano Apartments * (60%) $1,147 The Madison At Ballston Station * (60%) $1,272 The Madison At Ballston Station * (60%) $1,527 Culpepper Garden I (as Renovated) * (60%) $1,141 Manchester Lakes * (60%) $1,233 Manchester Lakes * (60%) $1,479 Gates Of Ballston Apartments * (60%) $1,134 Glenayr Apartments $1,233 Harvey Hall Apartments * (60%) $1,474 Harvey Hall Apartments * (60%) $1,229 Serrano Apartments * (60%) $1,474 Serrano Apartments * (60%) $1,229 Culpepper Garden I (as Renovated) * (60%) $1,467 Hunters Park At Cherrydale * (60%) $1,226 Gates Of Ballston Apartments * (60%) $1,458 Culpepper Garden I (as Renovated) * (60%) $1,221 The Carlin * (60%) $1,350 Gates Of Ballston Apartments * (60%) $1,213 Manchester Lakes * (50%) $1,233 The Carlin * (60%) $1,105 Manchester Lakes * (50%) $1,028 Hunters Park At Cherrydale * (50%) $1,021 Hunters Park At Cherrydale * (30%) $611

SQUARE The Madison At Ballston Station * (M) 683 The Madison At Ballston Station * (M) 889 Serrano Apartments * (60%) 1,047 FOOTAGE Serrano Apartments * (60%) 580 Seminary Towers 835 Serrano Apartments * (M) 1,047 Serrano Apartments * (M) 580 Serrano Apartments * (60%) 785 Birchwood Apartments (2BA) 1,018 Seminary Towers 560 Serrano Apartments * (M) 785 Harvey Hall Apartments * (60%) 1,010 Virginia Square Plaza Apartments 560 The Madison At Ballston Station * (60%) 784 Harvey Hall Apartments * (M) 1,010 Virginia Square Plaza Apartments 560 Harvey Hall Apartments * (60%) 760 Seminary Towers 1,000 Virginia Square Plaza Apartments 560 Harvey Hall Apartments * (M) 760 The Madison At Ballston Station * (M) 966 Quinton Arms Apartments 542 Birchwood Apartments 741 Virginia Square Plaza Apartments (2BA) 950 Seminary Towers 535 Glenayr Apartments 700 Virginia Square Plaza Apartments (2BA) 950 Culpepper Garden I (as Renovated) * (60%) 500 Quinton Arms Apartments 695 Virginia Square Plaza Apartments (2BA) 950 The Madison At Ballston Station * (M) 470 Seminary Towers 685 Quinton Arms Apartments 935 Gates Of Ballston Apartments * (60%) 423 Virginia Square Plaza Apartments 660 The Madison At Ballston Station * (60%) 922 Gates Of Ballston Apartments * (M) 423 Virginia Square Plaza Apartments 660 The Madison At Ballston Station * (M) 861 Harvey Hall Apartments * (60%) 400 Virginia Square Plaza Apartments 660 Gates Of Ballston Apartments * (M) 829 Harvey Hall Apartments * (M) 400 Gates Of Ballston Apartments * (60%) 649 Manchester Lakes * (50%) 803 Gates Of Ballston Apartments * (M) 649 Manchester Lakes * (60%) 803 Culpepper Garden I (as Renovated) * (60%) 600 Culpepper Garden I (as Renovated) * (60%) 800 Manchester Lakes * (50%) 564 Glenayr Apartments 800 Manchester Lakes * (60%) 564 Gates Of Ballston Apartments * (60%) 789 The Carlin * (60%) 560 The Carlin * (60%) 750 The Madison At Ballston Station * (M) 547 Hunters Park At Cherrydale * (30%) 545 Hunters Park At Cherrydale * (50%) 545 Hunters Park At Cherrydale * (60%) 545

RENT PER Virginia Square Plaza Apartments $3.55 Virginia Square Plaza Apartments $3.28 Virginia Square Plaza Apartments (2BA) $3.06 SQUARE Virginia Square Plaza Apartments $3.38 The Madison At Ballston Station * (M) $3.14 Virginia Square Plaza Apartments (2BA) $2.80 FOOT The Madison At Ballston Station * (M) $3.30 Virginia Square Plaza Apartments $3.08 Virginia Square Plaza Apartments (2BA) $2.54 Virginia Square Plaza Apartments $3.20 Virginia Square Plaza Apartments $2.87 The Madison At Ballston Station * (M) $2.47 Harvey Hall Apartments * (M) $3.05 The Madison At Ballston Station * (M) $2.36 Birchwood Apartments (2BA) $2.25 Gates Of Ballston Apartments * (M) $3.00 Gates Of Ballston Apartments * (M) $2.35 Quinton Arms Apartments $2.25 Harvey Hall Apartments * (60%) $2.87 Quinton Arms Apartments $2.34 The Madison At Ballston Station * (M) $2.21 The Madison At Ballston Station * (M) $2.75 Birchwood Apartments $2.26 Gates Of Ballston Apartments * (M) $2.20 Gates Of Ballston Apartments * (60%) $2.68 Hunters Park At Cherrydale * (60%) $2.25 Glenayr Apartments $2.01 Quinton Arms Apartments $2.68 Manchester Lakes * (60%) $2.19 Gates Of Ballston Apartments * (60%) $1.85 Seminary Towers $2.45 Seminary Towers $2.13 Manchester Lakes * (60%) $1.84 Seminary Towers $2.39 Culpepper Garden I (as Renovated) * (60%) $2.04 Culpepper Garden I (as Renovated) * (60%) $1.83 Culpepper Garden I (as Renovated) * (60%) $2.28 The Carlin * (60%) $1.97 The Carlin * (60%) $1.80 Serrano Apartments * (M) $2.17 Hunters Park At Cherrydale * (50%) $1.87 Seminary Towers $1.67 Serrano Apartments * (60%) $1.98 Gates Of Ballston Apartments * (60%) $1.87 Serrano Apartments * (M) $1.66 Harvey Hall Apartments * (M) $1.83 The Madison At Ballston Station * (60%) $1.66 Manchester Lakes * (50%) $1.82 Manchester Lakes * (50%) $1.54 Seminary Towers $1.81 Harvey Hall Apartments * (M) $1.51 Glenayr Apartments $1.76 Harvey Hall Apartments * (60%) $1.46 Serrano Apartments * (M) $1.76 Serrano Apartments * (60%) $1.41 The Madison At Ballston Station * (60%) $1.62 Harvey Hall Apartments * (60%) $1.62 Serrano Apartments * (60%) $1.57 Hunters Park At Cherrydale * (30%) $1.12

Novogradac & Company LLP 92 Culpepper Garden I – Arlington, VA - Market Study

PROPERTY CHARACTERISTICS Following are relevant characteristics of comparable properties surveyed:

Location Ten of the 12 comparable properties are located within the PMA within 1.7 miles of the Subject, while the remaining two comparables, Seminary Towers, and Manchester Lakes, are located outside of the PMA, three and seven miles south of the Subject, respectively. All of the comparable properties have good interstate access including Interstate 66 or Interstate 395. The Subject’s location is considered good, as it is adjacent to a bus stop, is within a reasonable distance from retail and other locational amenities, and the surrounding residential uses are generally well maintained. The following tables provide various comparison factors for the Subject’s neighborhood and the neighborhoods immediately surrounding the selected comparables.

Novogradac & Company LLP 93 Culpepper Garden I – Arlington, VA - Market Study

LOCATIONAL COMPARISON

Radius 0.5 miles 0.5 miles 0.5 miles 0.5 miles 0.5 miles Culpepper Garden I Gates Of Ballston Harvey Hall Hunters Park At Name Manchester Lakes (as Renovated) Apartments Apartments Cherrydale Address 4435 North Pershing Drive 4207 North Pershing Drive 860 South Greenbrier Street 2021 North Nelson Street 7131 Silver Lake Boulevard City Arlington Arlington Arlington Arlington Alexandria StateVAVAVAVAVA ZIP Code 22203 22203 22204 22207 22315 Washington-Arlington- Washington-Arlington- Washington-Arlington- Washington-Arlington- Washington-Arlington- MSA Alexandria, DC-VA-MD-WV Alexandria, DC-VA-MD-WV Alexandria, DC-VA-MD-WV Alexandria, DC-VA-MD-WV Alexandria, DC-VA-MD-WV Metropolitan Statistical Area Metropolitan Statistical Area Metropolitan Statistical Area Metropolitan Statistical Area Metropolitan Statistical Area Locational qualities Population 2016 10,705 12,573 14,338 5,409 4,822 MSA 6,066,221 6,066,221 6,066,221 6,066,221 6,066,221 STATE 8,462,749 8,462,749 8,462,749 8,462,749 8,462,749 Population 65+ 2016 14.31% 12.85% 8.95% 15.10% 10.56% Median Household Income 2016 $68,440 $72,221 $55,511 $136,929 $95,512 MSA $93,489 $93,489 $93,489 $93,489 $93,489 STATE $64,929 $64,929 $64,929 $64,929 $64,929 Renter Household Percent 2016 62.06% 68.35% 60.49% 33.60% 45.86% MSA 35.27% 35.27% 35.27% 35.27% 35.27% STATE 31.02% 31.02% 31.02% 31.02% 31.02% Owner Household Percent 2016 31.00% 24.41% 29.75% 61.23% 49.65% MSA 58.29% 58.29% 58.29% 58.29% 58.29% STATE 59.37% 59.37% 59.37% 59.37% 59.37% Vacant Housing Unit Percent 2016 6.94% 7.24% 9.76% 5.17% 4.49% MSA 6.44% 6.44% 6.44% 6.44% 6.44% STATE 9.61% 9.61% 9.61% 9.61% 9.61% Total Crime 106 116 62 141 34 Personal Crime 52 50 39 56 10 Property Crime 113 125 65 153 38 Walk Score® 71 87 65 82 74 Walk Score® Name Very Walkable Very Walkable Somewhat Walkable Very Walkable Very Walkable

Novogradac & Company LLP 94 Culpepper Garden I – Arlington, VA - Market Study

LOCATIONAL COMPARISON

Radius 0.5 miles 0.5 miles 0.5 miles 0.5 miles 0.5 miles Culpepper Garden I The Madison At Name Serrano Apartments The Carlin Birchwood Apartments (as Renovated) Ballston Station Address 4435 North Pershing Drive 5535 Columbia Pike 4300 North Carlin Springs Road 4400 North 4th Street 525 North Pollard Street City Arlington Arlington Arlington Arlington Arlington StateVAVAVAVAVA ZIP Code 22203 22204 22203 22203 22203 Washington-Arlington- Washington-Arlington- Washington-Arlington- Washington-Arlington- Washington-Arlington- MSA Alexandria, DC-VA-MD-WV Alexandria, DC-VA-MD-WV Alexandria, DC-VA-MD-WV Alexandria, DC-VA-MD-WV Alexandria, DC-VA-MD-WV Metropolitan Statistical Area Metropolitan Statistical Area Metropolitan Statistical Area Metropolitan Statistical Area Metropolitan Statistical Area Locational qualities Population 2016 10,705 14,781 21,161 10,838 21,750 MSA 6,066,221 6,066,221 6,066,221 6,066,221 6,066,221 STATE 8,462,749 8,462,749 8,462,749 8,462,749 8,462,749 Population 65+ 2016 14.31% 10.21% 10.49% 13.90% 10.00% Median Household Income 2016 $68,440 $56,433 $100,359 $66,046 $100,721 MSA $93,489 $93,489 $93,489 $93,489 $93,489 STATE $64,929 $64,929 $64,929 $64,929 $64,929 Renter Household Percent 2016 62.06% 60.00% 65.64% 64.42% 66.68% MSA 35.27% 35.27% 35.27% 35.27% 35.27% STATE 31.02% 31.02% 31.02% 31.02% 31.02% Owner Household Percent 2016 31.00% 30.21% 27.17% 28.69% 26.21% MSA 58.29% 58.29% 58.29% 58.29% 58.29% STATE 59.37% 59.37% 59.37% 59.37% 59.37% Vacant Housing Unit Percent 2016 6.94% 9.80% 7.18% 6.90% 7.11% MSA 6.44% 6.44% 6.44% 6.44% 6.44% STATE 9.61% 9.61% 9.61% 9.61% 9.61% Total Crime 106 67 137 121 133 Personal Crime 52 34 49 50 48 Property Crime 113 71 150 131 145 Walk Score® 71 63 91 71 88 Walk Score® Name Very Walkable Somewhat Walkable Walker's Paradise Very Walkable Very Walkable

Novogradac & Company LLP 95 Culpepper Garden I – Arlington, VA - Market Study

LOCATIONAL COMPARISON

Radius 0.5 miles 0.5 miles 0.5 miles 0.5 miles 0.5 miles Culpepper Garden I Quinton Arms Virginia Square Plaza Name Glenayr Apartments Seminary Towers (as Renovated) Apartments Apartments Address 4435 North Pershing Drive 399 North Park Drive 1160 North Quincy Street 4701 Kenmore Avenue 801 North Monroe Street City Arlington Arlington Arlington Alexandria Arlington StateVAVAVAVAVA ZIP Code 22203 22203 22201 22304 22201 Washington-Arlington- Washington-Arlington- Washington-Arlington- Washington-Arlington- Washington-Arlington- MSA Alexandria, DC-VA-MD-WV Alexandria, DC-VA-MD-WV Alexandria, DC-VA-MD-WV Alexandria, DC-VA-MD-WV Alexandria, DC-VA-MD-WV Metropolitan Statistical Area Metropolitan Statistical Area Metropolitan Statistical Area Metropolitan Statistical Area Metropolitan Statistical Area Locational qualities Population 2016 10,705 11,444 17,357 10,875 17,174 MSA 6,066,221 6,066,221 6,066,221 6,066,221 6,066,221 STATE 8,462,749 8,462,749 8,462,749 8,462,749 8,462,749 Population 65+ 2016 14.31% 13.53% 9.56% 7.84% 8.76% Median Household Income 2016 $68,440 $75,545 $111,318 $61,906 $115,333 MSA $93,489 $93,489 $93,489 $93,489 $93,489 STATE $64,929 $64,929 $64,929 $64,929 $64,929 Renter Household Percent 2016 62.06% 61.80% 63.19% 81.93% 65.00% MSA 35.27% 35.27% 35.27% 35.27% 35.27% STATE 31.02% 31.02% 31.02% 31.02% 31.02% Owner Household Percent 2016 31.00% 31.23% 30.11% 12.81% 29.25% MSA 58.29% 58.29% 58.29% 58.29% 58.29% STATE 59.37% 59.37% 59.37% 59.37% 59.37% Vacant Housing Unit Percent 2016 6.94% 6.97% 6.70% 5.26% 5.74% MSA 6.44% 6.44% 6.44% 6.44% 6.44% STATE 9.61% 9.61% 9.61% 9.61% 9.61% Total Crime 106 130 144 55 123 Personal Crime 52 53 56 48 47 Property Crime 113 141 156 56 134 Walk Score® 71 80 93 49 93 Walk Score® Name Very Walkable Very Walkable Walker's Paradise Car-Dependent Walker's Paradise

Novogradac & Company LLP 96 Culpepper Garden I – Arlington, VA - Market Study

The Subject’s location is most similar to The Madison at Ballston Station among all comparables, and most similar to The Carlin among age-restricted comparables. The Madison is located adjacent to the Subject to the north. The Gates of Ballston, The Carlin, The Madison at Ballston Station, Birchwood, and Glenayr are all located within 0.5 miles of the Subject in the area surrounding downtown Arlington. Harvey Hall and Serrano Apartments are located south of the Subject along the Columbia Pike corridor, with similar access to public transportation and services. Seminary Towers is located farther south from the Subject in Alexandria and was utilized as a comparable due to its age and design. Two age-restricted LIHTC properties, Hunters Park at Cherrydale and Manchester Lake are located 1.7 and 7.7 miles from the Subject, respectively. These properties were utilized as they offer rent-restricted senior apartments similar to the proposed Subject. Comparable properties north of the Subject are located in areas of higher median incomes, but also higher crime. Comparables located south of the site are in areas of slightly lower median incomes and slightly lower crime rates. Among the three age-restricted LIHTC comparables, the Subject is in a slightly superior location to Hunters Park at Cherrydale and Manchester Lakes, and a slightly inferior location to The Carlin, which is slightly closer to downtown Arlington. The property is located within close proximity of several commercial uses along North Glebe Road, including the Ballston Station Mall and adjacent grocery and retail stores to the north.

Following is the WalkScore of the Subject and the surveyed properties. Like the Subject, most comparable properties have locations that are ‘walkable’ or ‘very walkable’. Therefore, there are no significant differences in the Subject versus most comparable properties with regards to a location that is within walking distance to support services such as retail.

WALKSCORE OF COMPARABLE PROPERTIES # Prope rty Name Addre s s Te nancy WalkScore Subject Culpepper Station 4435 North Pershing Drive Senior 71 1 Gates Of Ballston Apartments 4207 North Pershing Drive Family 91 2 Harvey Hall Apartments 860 South Greenbrier Street Family 63 3 Hunters Park At Cherrydale 2021 North Nelson Street Senior 80 4 Manchester Lakes 7131 Silver Lake Boulevard Senior 65 5 Serrano Apartments 5535 Clumbia Pike Family 63 6 The Carlin 4300 North Carlin Springs Road Senior 89 7 The Madison At Ballston Station 4400 North 4th Street Family 69 8 Birchwood Apartments 535 North Pollard Street Family 89 9 Glenayr Apartments 399 North Park Drive Family 77 10 Quinton Arms Apartments 1160 North Quincy Street Family 93 11 Seminary Towers 4701 Kenmore Avenue Family 44 12 Virginia Square Plaza Apartments 801 North Monroe Street Family 92

Size, Age and Condition The comparable properties surveyed were originally constructed between the 1940s and 2012. As much of the housing stock in the area is older, several of the older comparable properties have experienced significant renovations. The Subject was constructed in 1975 and is in average condition. Following renovations, the Subject will be considered to be in good condition.

Novogradac & Company LLP 97 Culpepper Garden I – Arlington, VA - Market Study

Hunters Park at Cherrydale, Manchester Lakes, Birchwood, and Virginia Square Plaza have all been constructed since 2000, and exhibit good condition, which is slightly superior to the Subject currently, and similar to the Subject post-renovation. The Madison at Ballston Station, which is located north of the Subject, opened units in 2009 and 2012, and is in excellent condition, superior to the Subject currently and following renovations. The remaining comparables are all in average condition, which will be slightly inferior to the Subject post-renovation. Of the age- restricted LIHTC comparables, the Subject will be similar to Hunters Park at Cherrydale and Manchester Lakes post-renovation, which were constructed in 2005 and 2002, respectively. The Carlin was constructed in 1997 and will be slightly inferior to the Subject post-renovation in terms of condition.

Unit Size The following table illustrates the unit sizes of the Subject and the comparable properties.

UNIT SIZE COMPARISON Surveyed Surveyed Surveyed Advantage/ Unit Type Subject Min Max Average Disadvantage Studio 500 400 683 522 -4% 1 BR 600 545 1,006 715 -16% 2 BR 800 750 1,390 985 -19%

As the table indicates, all of the Subject’s unit sizes fall within the range of comparables, but towards the minimum. The Subject has a slight disadvantage to market in studio units, and a moderate disadvantage to market in one and two-bedrooms. This includes age-restricted and non-age-restricted properties, which generally offer larger floorplans. Hunters Park at Cherrydale, Manchester Lakes, and The Carlin are the only senior comparable properties.

The following table compares the Subject’s unit size to those offered at the age-restricted comparable LIHTC properties surveyed:

UNIT SIZE COMPARISON - AGE-RESTRICTED LIHTC Hunters Manchester Advantage/ Unit Type Subject The Carlin Average Park Lakes Disadvantage Studio 500 N/A N/A N/A N/A N/A 1 BR 600 545 564 560 556 7% 2 BR 800 - 803 750 777 3%

While the Subject’s unit sizes are towards the minimum size of all surveyed properties, the Subject unit sizes provide a slight advantage over similar tenancy LIHTC comparables. The Subject’s studio unit sizes are only slightly smaller than the one-bedroom comparables, while the Subject’s one and two-bedroom unit sizes are slightly larger than the average of comparables. The Subject has performed well historically and is currently fully occupied. The Subject’s unit sizes have been considered in our market rent determinations.

Novogradac & Company LLP 98 Culpepper Garden I – Arlington, VA - Market Study

Unit Amenities The Subject’s units currently offer a refrigerator, oven, garbage disposal, central air conditioning, blinds, emergency pull cords, hand rails, and coat closets. The Subject will not offer any additional amenities post-renovation. For a detailed comparison between the Subject and the comparables, please refer to the amenity matrix earlier in this section of the report. Overall, the Subject will offer a competitive in-unit amenity package, similar to the senior LIHTC competition. Hunters Park at Cherrydale does not offer garbage disposals, Manchester Lakes offers dishwashers and patios/balconies, and The Carlin includes basic cable and walk-in closets, but lacks central air conditioning. Based on the minimal differences in in-unit amenities between the Subject and age-restricted LIHTC comparables, the Subject is generally considered similar.

Common Area Amenities The Subject features a clubhouse/meeting room, business center, picnic area, concierge, a courtyard, central laundry facilities, an elevator, exercise facility, a beauty salon, off-street parking, and on-site management. The Subject offers additional community and social activities, including meals, exercise classes, socials, performances, religious services, birthday parties, health check-ups, physical therapy, and home health aides. Additional services for a fee include housekeeping. The Subject is considered superior to all three age-restricted LIHTC comparables, as they lack a combination of business center, concierge, courtyards, picnic areas, and additional services and service coordination. The Subject is generally similar to or superior to the family comparables, as most offer exercise facilities, garage parking, and swimming pools, but lack the conveniences for seniors offered at the Subject.

Security Features The Subject offers limited access entry, video surveillance, and perimeter fencing to keep out unwanted visitors. The security features are generally similar to or slightly superior to the comparables, as most lack perimeter fencing and video surveillance, but include a combination of intercom systems and courtesy patrol.

Utility Structure Post-renovation, all utilities at the Subject will be included in rent and paid by the landlord, including general electric expenses, gas heat and hot water, water, sewer, and trash. The utility structure varies among the comparable properties; we have adjusted the comparables’ rents in accordance with the utility schedule obtained from the Virginia Housing Development Authority (one exposed wall), effective July 1, 2016.

Parking The Subject offers 111 off-street surface parking spaces free of charge. This equates to a parking ratio of 0.54 spaces per unit. The comparable properties offer a mix of off-street surface parking, garages for rent, and garage parking included. The table below outlines parking options at all LIHTC comparables. Parking details were not reported by the market rate comparable properties.

Novogradac & Company LLP 99 Culpepper Garden I – Arlington, VA - Market Study

PARKING Ratio Parking Comparable Prope rty Type Parking Type Cost (Spaces/ Utilization Unit) Estimate Gates Of Ballston Apartments LIHTC, Market Surface Free 0.9 85% Harvey Hall Apartments LIHTC, Market Surface Free 0.6 95% Hunters Park At Cherrydale LIHTC Garage $25 0.7 70% Garage/Carport/ Manchester Lakes LIHTC $60/$35/Free 1.2 65% Surface Serrano Apartments LIHTC, Market Surface Free 0.4 100% The Carlin LIHTC Garage Free 0.8 80% The Madison At Ballston Station LIHTC, Market Garage Free* 0.9 100% *Free for LIHTC units only (one space)

Only two of the comparables have parking at full utilization, and none of the senior properties have parking being utilized at more than 80 percent. Given the Subject’s historical high occupancy rate and senior design, we do not believe the Subject’s relatively low spaces per unit ratio will impact future performance in either the restricted or unrestricted scenarios.

Summary of Property Characteristics Ten of the 12 comparable properties are located within the PMA within 1.7 miles of the Subject, while the remaining two comparables, Seminary Towers, and Manchester Lakes, are located outside of the PMA, three and seven miles south of the Subject, respectively. All of the comparable properties have good interstate access including Interstate 66 or Interstate 395. The Subject’s location is considered good, as it is adjacent to a bus stop, is within a reasonable distance from retail and other locational amenities, and the surrounding residential uses are generally well maintained. While the Subject’s unit sizes are towards the minimum size of all surveyed properties, the Subject unit sizes provide a slight advantage over similar tenancy LIHTC comparables. The Subject’s studio unit sizes are only slightly smaller than the one- bedroom comparables, while the Subject’s one and two-bedroom unit sizes are slightly larger than the average of comparables. The Subject has performed well historically and is currently fully occupied. The Subject’s unit sizes have been considered in our market rent determinations. The Subject’s in-unit amenity package will be similar to the senior competition. The Subject community amenities are considered superior to all three age-restricted LIHTC comparables, as they lack a combination of business center, concierge, courtyards, picnic areas, and additional services and service coordination. The Subject is generally similar to or superior to the family comparables. As a newly renovated multifamily development, the Subject will exhibit good condition, similar to or superior to the vast majority of the comparable properties. We anticipate that the Subject will continue to be well-accepted in the market.

Novogradac & Company LLP 100 Culpepper Garden I – Arlington, VA - Market Study

MARKET CHARACTERISTICS Following are relevant market characteristics for comparable properties surveyed.

Vacancy Levels The following table details vacancy levels at comparable properties.

COMPARABLE OVERALL VACANCY Property Name Rent Structure Total Vacant Units Vacant Units Vacancy Rate Vacancy Rate Units (2016) (2017) (2016) (2017) Gates Of Ballston Apartments LIHTC, Market 464 4 7 0.9% 1.5% Harvey Hall Apartments LIHTC, Market 116 1 1 0.9% 0.9% Hunters Park At Cherrydale LIHTC 74 0 1 0.0% 1.4% Manchester Lakes LIHTC 252 0 0 0.0% 0.0% Serrano Apartments LIHTC, Market 280 6 6 2.1% 2.1% The Carlin LIHTC 162 0 0 0.0% 0.0% The Madison At Ballston Station LIHTC, Market 504 20 25 4.0% 5.0% Birchwood Apartments Market 97 5 3 5.2% 3.1% Glenayr Apartments Market 156 2 5 1.3% 3.2% Quinton Arms Apartments Market 45 0 0 0.0% 0.0% Seminary Towers Market 544 25 17 4.6% 3.1% Virginia Square Plaza Apartments Market 225 1 6 0.4% 2.7% Total 2,919 64 71 2.2% 2.4% Total Market 1,684 64 69 3.8% 4.1% Total LIHTC 1,235 0 2 0.0% 0.2% Total Senior LIHTC 488 0 1 0.0% 0.2%

Physical vacancy rates among the comparables range from zero to five percent, with an overall vacancy rate of 2.4 percent in the market, a slight increase from the same time period in 2016. Birchwood Apartments is currently offering a rent concession of one month’s rent on all units. The vast majority of managers in the local market indicated high demand for affordable housing in the area. All of the LIHTC comparables properties, including the three age-restricted LIHTC properties reported occupancy at or near 100 percent. Of note, several of the LIHTC comparables are mixed income properties. All of the mixed income properties reported that either all or a majority of vacancies were among market rate units. The Subject is fully occupied with a waiting list. This indicates a significant need for both affordable family and age-restricted units in the local market.

The following table details vacancy by bedroom type for the comparable properties surveyed:

Novogradac & Company LLP 101 Culpepper Garden I – Arlington, VA - Market Study

VACANCY BY BEDROOM TYPE One- Two- Three- Overall Studio Bedroom Bedroom Bedroom Vacancy Property Name Rent Structure Uni ts Uni ts Uni ts Uni ts Rate Gates Of Ballston Apartments LIHTC, Market 0.0% 0.9% 2.6% 1.4% 1.5% Harvey Hall Apartments LIHTC, Market 7.7% 0.0% 0.0% 0.0% 0.9% Hunters Park At Cherrydale LIHTC - 1.4% - - 1.4% Manchester Lakes LIHTC - 0.0% 0.0% - 0.0% Serrano Apartments LIHTC, Market 2.3% 1.1% 3.3% 0.0% 2.1% The Carlin LIHTC - 0.0% 0.0% - 0.0% The Madison At Ballston Station LIHTC, Market 2.9% 10.7% 3.5% 0.0% 5.0% Birchwood Apartments Market - 0.0% 5.8% 0.0% 3.1% Glenayr Apartments Market - 3.1% 3.3% - 3.2% Quinton Arms Apartments Market 0.0% 0.0% 0.0% - 0.0% Seminary Towers Market 4.1% 0.4% 5.6% 0.0% 3.1% Virginia Square Plaza Apartments Market 0.0% 1.6% 7.4% 0.0% 2.7% Total 2.6% 1.9% 3.3% 0.4% 2.4% Subject LIHTC 1.5% 0.2% 0.0% 0.0% 0.2%

The Subject consists of studio through two-bedroom units only. Vacancy rates in the market for studio units range from zero to 7.7 percent, averaging 2.6 percent. The overall one-bedroom vacancy is 1.9 percent, while the overall two-bedroom vacancy rate is 3.3 percent. Virginia Square Apartments reported the highest vacancy rates in two-bedroom units, while The Madison at Ballston Station reported the highest one-bedroom vacancy, at 10.7 percent. Of note, none of the vacant one-bedroom units at The Madison at Ballston Station are LIHTC units. Overall, the vacancy rates in the market are generally considered low.

The Subject’s vacancy rate is currently zero percent with no vacant units. The following table illustrates the Subject’s historical vacancy rates as obtained from the available audited financial statements:

SUBJECT'S HISTORICAL VACANCY AND COLLECTION LOSS Year Vacancy and Collection Loss 2015 1.1% 2014 1.1% 2013 0.9%

Based upon the historical and comparable data, we expect the Subject to maintain a vacancy rate of five percent or less annually.

Concessions Birchwood Apartments is currently offering one month free on all unit types. The overall vacancy rate at Birchwood Apartments is 3.1 percent, which is towards the high range of vacancy rates reported among the comparables. Additionally, Seminary Towers is offering a concession of $250 off the first month’s rent for all units. No other properties reported rent concessions. We do not believe that the Subject will need to offer rent concessions post- renovations under any scenarios.

Novogradac & Company LLP 102 Culpepper Garden I – Arlington, VA - Market Study

Turnover The following table details turnover rates at comparable properties.

TURNOVER Property Name Rent Structure Tenancy Turnover Gates Of Ballston Apartments LIHTC, Market Family 25% Harvey Hall Apartments LIHTC, Market Family 20% Hunters Park At Cherrydale LIHTC Senior 15% Manchester Lakes* LIHTC Senior 10% Serrano Apartments LIHTC, Market Family 21% The Carlin LIHTC Senior 8% The Madison At Ballston Station LIHTC, Market Family 25% Birchwood Apartments Market Family 25% Glenayr Apartments Market Family N/A Quinton Arms Apartments Market Family 12% Seminary Towers* Market Family 36% Virginia Square Plaza Apartments Market Family 30% Average Turnover 21% *Property located outside the PMA

Turnover rates in the market range from eight to 37 percent, with an average of 21 percent, which is considered close to the average for the Arlington area. Several local publications indicate that due to the limited supply of affordable housing in the Northern Virginia market, residents will often stay in apartment buildings for several years if they are able to find affordable rents. The senior properties surveyed reported the lowest turnover in the market, ranging from eight to 17 percent. Overall, we expect that the Subject will experience a turnover rate of 10 percent or less, similar to the senior properties surveyed, particularly with services in place that help allow residents to remain at the Subject longer than they might be able to reside at a traditional, low-income senior apartment property. The Subject’s reported turnover rate is less than 10 percent annually.

Waiting Lists The table below indicates waiting lists at comparable properties and the length of waiting list. Of note, the senior LIHTC comparables have the most substantial waiting lists among the comparables.

Novogradac & Company LLP 103 Culpepper Garden I – Arlington, VA - Market Study

WAITING LISTS Property Name Rent Structure Tenancy Wating List, Length Gates Of Ballston Apartments LIHTC, Market Family No Harvey Hall Apartments LIHTC, Market Family No Hunters Park At Cherrydale LIHTC Senior No Manchester Lakes* LIHTC Senior 50 HH for 1BR, 3HH for 2BR Serrano Apartments LIHTC, Market Family No The Carlin LIHTC Senior Approximately 3-6 Months The Madison At Ballston Station LIHTC, Market Family 6-12 Months for Affordable Units Birchwood Apartments Market Family No Glenayr Apartments Market Family No Quinton Arms Apartments Market Family Three Households Seminary Towers* Market Family No Virginia Square Plaza Apartments Market Family No *Property located outside the PMA

The Subject property can be expected to maintain a short waiting list following lease-up to stabilization in both the restricted and unrestricted scenarios. This would be consistent with the Subject’s historical operation.

Rental Rate Increases The following table illustrates the rent increases at the comparable properties.

RENT GROWTH Comparable Property Rent Structure Rent Growth Gates Of Ballston Apartments LIHTC, Market Market rate units increased up to 8% Harvey Hall Apartments LIHTC, Market Increased approximately 1% Hunters Park At Cherrydale LIHTC Increased less than 1% Manchester Lakes LIHTC Increased slightly (~2%) Serrano Apartments LIHTC, Market No change reported The Carlin LIHTC None The Madison At Ballston Station LIHTC, Market Increased 3% Birchwood Apartments Market Increased approximately 5% Glenayr Apartments Market Increased slightly (~2%) Quinton Arms Apartments Market Increased 3% Seminary Towers Market See comments Virginia Square Plaza Apartments Market Changes frequently

Novogradac & Company LLP 104 Culpepper Garden I – Arlington, VA - Market Study

Generally, there is rent growth occurring in the Arlington market. Eight of the comparable properties reported rent growth ranging from one to eight percent. Gates of Ballston Apartments, which is near the Subject location, indicated the highest rent increase of eight percent for the market rate units. Most LIHTC units experienced minimal rent increases, while the more significant rent increases have occurred at market rate properties over the last year. No properties have reduced rents in the last year. Overall, as a LIHTC property, we anticipate that the Subject will experience limited annual rent growth based on future increases in AMI, as proposed rents are set at maximum allowable levels.

Absorption Estimate No absorption data was available among comparables, as the majority of the comparables were constructed or renovated more than five years ago. Management at The Madison at Ballston Station was unable to provide absorption data for either phase. The following table illustrates absorption data for other LIHTC properties in Arlington County, some of which are in areas outside the PMA, which were excluded from this study.

ABSORPTION Number of Units Absorbed Property name Type Tenancy Year Built Units / Month The Shell Apartments LIHTC Family 2015 83 28 Arlington Mill Residences LIHTC Family 2014 122 61 Macedonia Apartments LIHTC Family 2012 36 36

The Shell Apartments opened in March 2015 and achieved 100 percent occupancy by June 2015 for an approximate absorption of 28 units per month. The Shell is located approximately 0.8 miles south of the Subject along the Columbia Pike corridor. Arlington Mill Residences was completed in February 2014. According to the property manager, the property began leasing on February 28, 2014 and was fully leased by April 30, 2014, which yields an absorption pace of approximately 61 units per month. Macedonia Apartments was completed in May 2012. According to management, all units were leased upon completion and occupied within one month, indicating an absorption pace of 36 units per month. Based on the performance of the LIHTC comparables, we anticipate the Subject will experience an absorption rate of approximately 30 units per month, for an absorption period of less than seven months.

The Subject is an existing property, and no tenant displacement is anticipated during renovations. Vacancy rates are low among other senior LIHTC properties in this market. Furthermore, gains in the number of senior households in the PMA are expected to continue. Therefore, while we have estimated an absorption rate of 30 units per month, the absorption period following renovations, assuming limited tenant displacement (no more than 20 percent of the units), is likely to be two months or less. All values presented herein, excluding the as is restricted value, are hypothetical and presume no preleasing would be necessary. As is, the Subject is full, but tenants will experience rent increases. However, rent increases will be capped that yields a loss to lease discussed later.

Novogradac & Company LLP 105 Culpepper Garden I – Arlington, VA - Market Study

Affordable Properties in the PMA As the Subject is an existing property, it will not adversely affect existing affordable housing projects in the PMA. A survey of comparable affordable LIHTC and Section 8 rental housing developments in the area demonstrate substantial excess demand for quality rental units.

AFFORDABLE HOUSING IN THE PMA LIHTC Total Property Name Type Tenancy Uni ts Units Reason for Exclusion Arlington Mill LIHTC Gen eral 121 122 Different Tenancy, Design Arlington View Terrace LIHTC/Section 8 Gen eral 77 77 Different Tenancy, Design Buchanan Gardens LIHTC Gen eral 111 111 Different Tenancy, Design Buckingham Village Parcel B LIHTC Gen eral 43 48 Different Tenancy, Design Buckingham Village III LIHTC Gen eral 92 92 Different Tenancy, Design Calvert Manor LIHTC/Market Gen eral 15 23 Different Tenancy, Design Carlin* LIHTC Elderly 161 161 N/A Clarendon Court LIHTC/Market Gen eral 97 103 Different Tenancy, Design Colonial Village LIHTC/Market Gen eral 129 162 Different Tenancy, Design Colonial Village West LIHTC/Section 8 Gen eral 70 70 Different Tenancy, Design Columbia Grove LIHTC/Market Gen eral 130 208 Different Tenancy, Design Courthouse Crossings LIHTC Gen eral 112 112 Different Tenancy, Design Fields of Arlington LIHTC/Market Gen eral 189 199 Different Tenancy, Design Fisher House LIHTC Gen eral 33 33 Different Tenancy, Design Fort Henry Gardens LIHTC Gen eral 82 82 Different Tenancy, Design Frederick at Courthouse LIHTC Gen eral 108 108 Different Tenancy, Design Gates of Ballston* LIHTC/Market Gen eral 357 464 N/A Harvey Hall* LIHTC Gen eral 100 116 Different Tenancy, Design Historic Ballston Park LIHTC/Market Gen eral 233 512 Different Tenancy, Design Hunters Park at Cherrydale* LIHTC Elderly 74 74 N/A Jordan LIHTC Gen eral 90 90 Different Tenancy, Design Knightsbridge LIHTC/Section 8 Gen eral 37 37 Different Tenancy, Design Larkspur LIHTC/Market Gen eral 69 76 Different Tenancy Lenox Club LIHTC/Market Gen eral 77 385 Different Tenancy, Design Macedonia LIHTC Gen eral 36 36 Different Tenancy, Design Madison at Ballston Station* LIHTC Gen eral 100 100 N/A Magnolia Commons LIHTC Gen eral 198 198 Different Tenancy, Design Monterey LIHTC Gen eral 109 109 Different Tenancy, Design Patrick Henry LIHTC Gen eral 110 110 Different Tenancy, Design Quebec LIHTC/Market Gen eral 129 172 Different Tenancy, Design Serrano Apartments* LIHTC/Market Gen eral 196 280 N/A Shell LIHTC Gen eral 83 83 Different Tenancy, Design Shelton LIHTC Gen eral 94 94 Different Tenancy, Design Tripod Housing LIHTC Gen eral 103 103 Different Tenancy, Design Virginia Gardens LIHTC/Market Gen eral 72 76 Different Tenancy, Design Westover LIHTC Gen eral 119 153 Different Tenancy, Design Whitefield Commons LIHTC Gen eral 63 63 Different Tenancy, Design Woodland Hill LIHTC/Section 8 Elderly 235 235 Subsidized Rents Claridge House Section 8 Gen eral 0 300 Different Tenancy, Subsidized Rents Elmwood House Section 8/202 Elderly 0 50 Subsidized Rents Lockwood House Section 8/202 Elderly 0 100 Subsidized Rents *Properties utilized as comparables Grey shading denotes age-restricted properties

Novogradac & Company LLP 106 Culpepper Garden I – Arlington, VA - Market Study

Reasonability of Rents The Subject’s proposed rents are detailed in the following table.

Comparable LIHTC Rents Post-renovation, the Subject will be income restricted to 60 percent of the AMI, or less. Additionally, 42 studio units currently operate with project-based Section 8 subsidy, as residents pay up to 30 percent of their income. The property owner is seeking an additional 151 project- based vouchers to apply to units post-renovation, which would yield a total of 193 subsidized units. Thus, only 11 units would operate without a subsidy. The following analysis indicates achievable LIHTC rents restricted at 60 percent AMI as proposed, absent subsidy. We have illustrated rents at properties with similar income restrictions to the Subject. The following tables illustrate the Subject’s proposed LIHTC rents compared to the LIHTC rents of the comparable properties surveyed. The rents have been adjusted for variances in utilities, as well as concessions, if applicable.

All of the surveyed LIHTC properties offer units restricted at 60 percent of AMI. Only three of the family tenancy LIHTC comparables offer studio units restricted at 60 percent of AMI, while six of the seven offer two-bedrooms restricted at 60 percent of AMI. All of the Subject’s proposed post-renovation LIHTC rents are set at the maximum allowable LIHTC levels.

LIHTC Rent Comparison - @60% Property Name 0BR 1BR 2BR Culpepper Garden I (as Renovated - Subject) $1,141 $1,221 $1,467 LIHTC Maximum (Net) $1,141 $1,221 $1,467 Gates Of Ballston Apartments $1,150 $1,232 $1,480 Harvey Hall Apartments $1,147 $1,229 $1,452 Hunters Park At Cherrydale - $1,217 - Manchester Lakes - $1,229 $1,464 Serrano Apartments $1,147 $1,229 $1,474 The Carlin - $1,229 $1,350 The Madison At Ballston Station - $1,262 $1,514 Average (excluding Subject) $1,148 $1,232 $1,456 NOVOCO Acheivable LIHTC Rent $1,141 $1,221 $1,467

Novogradac & Company LLP 107 Culpepper Garden I – Arlington, VA - Market Study

All of the LIHTC comparables reported rents set at maximum allowable levels. The Carlin, an age-restricted LIHTC comparable in Arlington, was the only property that indicated below maximum allowable rents in the case of two-bedroom units (one-bedroom rents are at the maximum allowable level). According to the preceding table, with adjusted rents relative to the Subject’s utility convention, almost all of the comparables have rents set within $10 to $15 of maximum allowable levels. Six of the Seven LIHTC comparables reported having rents above the maximum allowable limits, which can be attributed to these properties being held harmless to 2015 levels. Additionally, differing values from the exact maximum allowable level are likely due to property specific utility allowance figures that differ slightly from the utility allowance schedule utilized for the adjustments. The Madison at Ballston Station, which is located north of the Subject and is in excellent condition, has the highest adjusted rents at the LIHTC comparables.

The Subject’s proposed LIHTC rents for all units at the 60 percent AMI level will be appropriately priced when set at the maximum allowable level. All family tenancy properties are achieving maximum allowable rent levels, and the senior LIHTC properties are also achieving maximum allowable rents, with the exception of the two-bedroom units at The Carlin, which lacks the degree of services and amenities offered at the Subject. Given the Subject’s post- renovation condition, which will be similar or slightly superior to all three age-restricted LIHTC comparables, we believe the proposed rents are achievable. However, it is noted that the majority of the Subject’s existing tenants are currently paying rents that are well below the projected LIHTC rents. Existing tenants who remain on-site who do not receive rental assistance will experience rent increases of no more than five percent annually. Three of the Subject valuation scenarios are hypothetical and therefore presume that the properties are appropriately tenanted and no conversion is necessary. The fourth scenario is as-is and considering current tenants would have to go through the rent increase process, there will be a loss to lease that is accommodated in the valuation.

The Subject will be most similar to The Carlin and Hunters Park at Cherrydale.

The Carlin is a 162-unit senior LIHTC development with one and two-bedroom units restricted to households earning 50 and 60 percent of AMI, or less. The Carlin is located approximately 0.5 miles north of the Subject, slightly closer to downtown Arlington. The Carlin was constructed in 1997 and exhibits good condition, similar to the Subject post renovation and slightly superior to the Subject’s current condition. The Carlin is currently fully occupied with a waiting list approximately three to six months in length. The property has maintained full occupancy for an extended period of time according to management. This property offers smaller one and two- bedroom unit sizes when compared to the Subject. Overall, the in-unit and community amenities at The Carlin are similar to the Subject, while project amenities are inferior to the Subject. The Carlin does offer some supportive services including adult education and classes, medical check- ups, and an on-site salon, but still lacks the community amenities and services the Subject offers. Due to the slightly superior location of The Carlin, but the inferior unit sizes and community amenities, The Carlin is considered slightly inferior to the Subject.

Novogradac & Company LLP 108 Culpepper Garden I – Arlington, VA - Market Study

Hunters Park at Cherrydale is a 74-unit senior LIHTC development with units restricted to households earning 30, 50, and 60 percent of AMI, or less. Hunters Park at Cherrydale is located approximately 1.7 miles north of the Subject, and is considered to have a similar location to the Subject. This senior property was constructed in 2005 and exhibits good condition, similar to the Subject’s anticipated condition post-renovation. This comparable property is fully occupied with a waiting list of undisclosed length. Hunters Park at Cherrydale’s one-bedroom unit size is smaller than the Subject’s one-bedroom units. Hunters Park at Cherrydale does not offer the extensive property and service-related amenities as the Subject does, but does offer garage parking for a fee. Overall Hunters has similar in-unit amenities and inferior community amenities when compared to the Subject post-renovation. Given Hunters Park at Cherrydale is already achieving maximum allowable rents in a similar location to the Subject, but with inferior amenities, we believe the Subject can achieve maximum allowable rents for the market. We have estimated the Subject’s achievable rents to be equal to the maximum allowable rents for the area, similar to Hunters Park at Cherrydale. It is unclear as to why The Carlin is not achieving maximum allowable two-bedroom rents; however, we believe maximum allowable rents are achievable at the Subject post renovation in all unit types, particularly with the amenities and services offered on-site. Based on the following, we believe maximum allowable rents are achievable.

 The Subject will be similar in condition, offer larger one and two-bedroom units, and have similar in-unit amenities to The Carlin.

 The Subject will be similar in condition, offer larger unit sizes, and will have superior amenities to Hunters Park at Cherrydale.

 The Subject will offer a similar mid-rise design to all the comparables, except Gates of Ballston Apartments. Gates of Ballston is a garden-style property without elevators; however, it located in the same neighborhood as the Subject, and therefore is included as a comparable property.

 The Subject’s accessibility to downtown Arlington, as well as area amenities including Ballston Mall, grocery stores, and public transportation is considered good. Most comparables have similar or slightly superior accessibility.

 Along with the Subject’s senior oriented property amenities, it offers significant community amenities including service coordination, health check-ups, planned events, meals, as well as optional services for a fee including housekeeping.

 Therefore, based upon our analysis of the market, and particularly with respect to the most comparable properties, we have concluded to the LIHTC maximum rents for the units at 60 percent of the AMI. We believe that the proposed rents for the 60 percent units are achievable. Nearly all properties in this market are achieving maximum allowable rents.

Novogradac & Company LLP 109 Culpepper Garden I – Arlington, VA - Market Study

Market Rents Comparison The maximum achievable market rents were determined by comparing the aesthetic quality, amenities, unit sizes, etc. to that of the market rate projects in the area. Novogradac & Company concluded that the Subject will be competitive with the market rate competition and achievable rents are within the market rental range. Achievable rents represent net market rate rent levels that we believe a project of the Subject’s condition and quality could reasonably achieve following renovation.

Birchwood is located approximately 0.5 miles north of the Subject and offers one, two, and three-bedroom units in an elevator-served four-story building. Birchwood was built in 2001 and exhibits good condition, superior to the Subject as is and similar to the Subject as proposed following renovations. Additionally, Birchwood is located near downtown Arlington, just east of Ballston Common Mall, which is slightly superior to the Subject’s location. Birchwood offers slightly superior in-unit amenities, but inferior community amenities when compared to the Subject. Birchwood offers in-unit dishwashers, microwaves, walk-in closets, and in-unit washer and dryer, all of which the Subject lacks. Additionally, Birchwood offers garage parking, and an exercise facility which the Subject lacks; while the Subject offers a business center, concierge, and extensive senior services, which Birchwood lacks. Lastly, Birchwood offers significantly larger unit sizes than the Subject one and two-bedroom units. As such, we believe the Subject can achieve rents below Birchwood due to its superior in-unit amenities, larger unit sizes, and closer proximity to local services and amenities.

SUBJECT COMPARISON WITH BIRCHWOOD Subject Square Birchwood Birchwood Percent Rent Subject Rent Uni t Type Square Feet LIHTC Rent Feet (2016) (2017) Change Advantage Studio $1,141 500 - - - - - 1 BR $1,221 600 $1,795 $1,673 -7% 741 27% 2 BR $1,467 800 $2,118 $2,287 8% 1,018 36%

Quinton Arms is a 42-unit property located approximately one mile north of the Subject within similar proximity to downtown Arlington. Quinton Arms offers studio, one, and two-bedroom units in an elevator-served five-story building similar to the Subject. The property was built in 1961 and exhibits fair condition similar to the Subject in its current condition. Quinton Arms is fully occupied with a waiting list. Quinton Arms offers superior in-unit amenities and slightly inferior community amenities when compared with the Subject. Quinton Arms offers balconies/patios, dishwashers, free exterior storage, microwaves, walk-in closets, and in-unit washer/dryer, all of which the Subject lacks. Despite its superior in-unit amenities, Quinton Arms lacks a business center, community room, concierge, courtyard, and the extensive service coordination that the Subject offers, but does offer garage parking and an exercise facility, which the Subject lacks. Unit sizes at Quinton Arms are similar to or larger than the Subject’s. Overall, the Subject is similar to Quinton Arms in terms of condition, slightly superior in terms of community amenities, and inferior in terms of in-unit amenities. Overall, we believe the Subject can achieve similar market rents to Quinton Arms.

Novogradac & Company LLP 110 Culpepper Garden I – Arlington, VA - Market Study

SUBJECT COMPARISON WITH QUINTON ARMS Quinton Quinton Subject Rent Subject Square Percent Rent Uni t Type Arms Arms Square Feet Advantage LIHTC Rent Feet Change (2016) (2017) (2017) Studio $1,141 500 $1,300 $1,450 12% 542 21% 1 BR $1,221 600 $1,550 $1,625 5% 695 25% 2 BR $1,467 800 $1,875 $2,100 12% 935 30%

Virginia Square Plaza is a 224-unit property located one mile north of the Subject in downtown Arlington. Virginia Square was built in 2000 and offers studio, one, two, and three-bedroom with den units in a nine-story high-rise building. Virginia Square is superior to the Subject. It is located in downtown Arlington within walking distance to numerous services, as well as employment opportunities. Additionally, Virginia Square offers superior in-unit and community amenities when compared with the subject. Virginia Square offers balconies/patios, dishwashers, free exterior storage, dishwashers, microwaves, walk-in closets, and in-unit washer/dryer; all of which the Subject lacks. Additionally, Virginia Square offers on-site exercise facility, and garage parking for a $50 monthly fee. The Subject does offer a picnic area and senior oriented service amenities, which Virginia Square lacks. Virginia Square also offers larger unit sizes than the Subject. Virginia Square is superior in terms of in-unit amenities and slightly superior to similar in terms of community amenities. Factoring in all the above factors, we believe the Subject can achieve market rents below that of Virginia Square.

SUBJECT COMPARISON WITH VIRGINIA SQUARE PLAZA Subject Square Virginia Square Virginia Square Percent Rent Square Subject Rent Uni t Type LIHTC Rent Feet (2016) (2017) Change Feet Advantage Studio $1,141 500 $1,768 $1,985 12% 560 43% 1 BR $1,221 600 $2,134 $2,027 -5% 730 40% 2 BR $1,467 800 $2,928 $2,903 -1% 1,030 49%

We have placed the Subject achievable market rents slightly below the rents being achieved at Birchwood and Virginia Square Plaza and similar to the rents being achieved at Quinton Arms. The Subject will be of similar or superior condition to these comparable properties following renovations, but inferior in terms of unit size. In terms of amenities, these comparables have superior in-unit amenities, while the Subject has a superior property amenities package, as well as numerous optional services.

Achievable Market Rents Our estimated achievable market rents for the Subject following renovations are $1,305 for the studio units, $1,445 for the one-bedroom units, and $1,875 for the two-bedroom units.

The following table compares the Subject’s proposed rents to comparable market rate developments, and provides the achievable market rents as is. Rents have been adjusted for differences in utility structure and concessions if applicable.

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SUBJECT COMPARISON TO POST RENOVATION MARKET RENTS Subject Surveyed Surveyed Surveyed Achievable Unit Type S ubject Rent Mi n Max Average Market Rents Advantage Studio $1,141 $1,221 $1,985 $1,445 $1,305 13% 1 BR $1,221 $1,232 $2,159 $1,581 $1,445 16% 2 BR $1,467 $1,527 $2,903 $2,015 $1,875 22%

As shown in the previous table, all of the Subject’s proposed LIHTC rents are below the range of rents at comparable market properties. As indicated, the proposed LIHTC rents will have moderate to good advantages to achievable market rents, ranging from 13 to 22 percent.

Summary Evaluation of the Project The Subject will be well positioned in the market. As a newly renovated property, the Subject will be similar in appearance or slightly superior to most of the comparables. The market exhibits strong demand for senior affordable housing, with zero vacancy rates at the comparable LIHTC properties. In addition, most low-income or mixed-income properties maintain extensive waiting lists for their units. Vacancy at the Subject is expected to be no more than five percent over the long term. The proposed rental rates appear to be appropriate based on the comparable data, although they will be testing the upper limits of the market; however, other properties are proving maximum allowable 60 percent AMI rents are attainable. It is anticipated that a small share of existing tenants that will experience a rent increase may move, although rent increases will be phased in at a rate of no more than five percent annually for tenants who remain at the Subject and are not residing in a unit with a subsidy. Nonetheless, we believe the proposed rents levels are achievable as the number of senior households is expected to increase over the next five years. There are no known senior LIHTC properties in the planning stages in the Primary Market Area. The Subject will be well accepted in the market as a senior LIHTC property.

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G. DEMAND ANALYSIS / CONCLUSIONS

Culpepper Garden I – Arlington, VA - Market Study

DEMAND ANALYSIS

Introduction Culpepper Garden I will be a newly renovated 204-unit senior development. The Subject consists of 125 studio, 72 one-bedroom, and 7 two-bedroom units. Post-renovation, all units will be restricted to senior households earning 60 percent AMI or less. Additionally, the property currently has project-based subsidy for 42 of the 204 units. Ownership is also seeking project- based subsidy for an additional 151 units, which would bring the total number of units with a subsidy to 193, of the 204 total. We calculated the number of income-eligible residents in this section of the analysis. LIHTC rents are based upon a percentage of the AMI, adjusted for household size and utilities. HUD estimates the relevant income levels, with annual updates. Rents are calculated assuming that the maximum net rent a senior household will pay is 40 percent of its income at the appropriate AMI levels.

Household size for senior developments is assumed to be 1.5 persons per bedroom for LIHTC rent calculation purposes. Additionally HUD assumes that one-person households are accommodated in one-bedroom units. However, as this Subject is a senior property, we have assumed no more than two persons for the Subject’s studio, one, and two-bedroom senior units.

To assess the likely number of tenants in the market area eligible to live in the Subject, we used Census information as provided by ESRI Business Information Solutions.

Primary Market Area Defined For the purpose of this study, it is necessary to define the competitive primary market area (PMA), or the area from which potential tenants for the project are likely to be drawn. In some areas, residents are very much “neighborhood oriented” and are generally very reluctant to move from the area where they have grown up. In other areas, residents are much more mobile and will relocate to a completely new area, especially if there is an attraction such as affordable housing at below market rents.

The Subject site is located at 4335 North Pershing Drive, Arlington, Virginia. The boundaries of the PMA are defined as Lee Highway and Interstate 66 to the north, Arlington Boulevard and Washington Boulevard to the east, Interstate 395 to the south, and State Route 7 and Roosevelt Boulevard to the west. The PMA was devised based on input from area property managers, including the Subject’s management. We anticipate a 20 percent leakage from outside the Subject’s PMA.

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Income-eligible Calculations To establish the number of income-eligible potential tenants for the Subject, the calculations are as follows:

First, we estimate the Subject’s minimum and maximum income levels for the LIHTC project. HUD determines maximum income guidelines for tax credit properties, based on the AMI. For Arlington, the 2016 AMI is $108,600 for a four-person household. Maximum incomes are set at the maximum 60 percent of AMI levels. Minimum income levels were calculated based on the assumption that lower-income senior households should pay no more than 40 percent of their income towards rent. Often, lower-income households pay a higher percentage of gross income toward housing costs. Therefore, we used 40 percent for LIHTC calculations in the LIHTC scenario.

Secondly, we illustrate the household population segregated by income band in order to determine those who are income-qualified to reside in the Subject property.

Third, we combine the allowable income range with the income distribution analysis in order to determine the number of potential income-qualified households. In some cases, the LIHTC income-eligible band overlaps with more than one census income range. In those cases, the prorated share of more than one census range will be calculated. This provides an estimate of the total number of households that are income-eligible. This also derives an estimate of the percentage of the households that are income-eligible, illustrated by AMI threshold. The first income range assumes a subsidy for at least 42 of the units, and up to 193 if the owner receives additional vouchers from HUD as have been requested. The second income range presented in the table assumes that none of the Subject’s units have a project-based subsidy.

INCOME LIMITS Minimum Maximum Minimum Maximum Allowable Allowable Allowable Allowable Uni t Type Income Income Income Income 60% AMI with Subsidy 60% AMI Studio $0 $52,140 $34,230 $52,140 1BR $0 $52,140 $36,630 $52,140 2BR $0 $52,140 $44,010 $52,140

Novogradac & Company LLP 115 Culpepper Garden I – Arlington, VA - Market Study

INCOME DISTRIBUTION 2016 Total Age 62+ Income Cohort Renter Households 60% AMI with Subsidy 60% AMI cohort % in cohort % in overlap cohort # in cohort overlap cohort # in cohort $0-9,999 668 9,999 100.00% 668 $10,000-19,999 838 9,999 100.00% 838 $20,000-29,999 651 9,999 100.00% 651 $30,000-39,999 472 9,999 100.00% 472 5,769 57.70% 272 $40,000-49,999 348 9,999 100.00% 348 9,999 100.00% 348 $50,000-59,999 405 2,140 21.40% 87 2,140 21.40% 87 $60,000-74,999 501 $75,000-99,999 550 $100,000-124,999 406 $125,000-149,999 308 $150,000-199,999 378 $200,000+ 443 Total 5,967 51.34% 3,064 11.84% 707

Demand Analysis One - Capture Rate Analysis by Unit Type In order to determine demand for the proposed unit mix, we also analyzed the demand capture rates expected at the Subject by bedroom type. This analysis illustrates demand for the 60 percent of AMI level both with and without consideration of the Section 8 subsidy assistance.

The by-unit-type breakdown illustrates good to moderate demand at the 60 percent of AMI level with consideration of the Subject’s subsidy assistance, when considered on a by-bedroom-type basis. When we consider the capture rates by bedroom type for the units at 60 percent AMI without consideration of the subsidy, the capture rate for studio units is elevated and the capture rates for one and two-bedroom units are excellent to moderate. These capture rates suggest that without the subsidy in place for the Subject, the studio units might take considerably longer to lease than the one and two-bedroom units. Note that reducing the studio LIHTC proposed rents could reduce the studio units capture rate. However, with the project expecting Section 8 assistance for the units, this is not an issue. We added a 20 percent adjustment factor to compensate for a potential tenancy originating from outside the PMA.

The distribution of households by unit type is dependent on the following assumptions.

HOUSEHOLD DISTRIBUTION

40% Of one-person households in studio units 55% Of one-person households in 1BR units 60% Of two-person households in 1BR units 5% Of one-person households in 2BR units 40% Of two-person households in 2BR units

Novogradac & Company LLP 116 Culpepper Garden I – Arlington, VA - Market Study

60 Percent of AMI Demand

PROJECTED RENTER HOUSEHOLD DEMAND BY BEDROOM TYPE Renter Household Distribution 2016 Renter Household Size Total Number of Distribution Renter Households 1 person 64.1% 3,824 2 persons 20.2% 1,203 3 persons 5.7% 340 4 persons 4.6% 274 5+ persons 5.5% 326 Total 100.0% 5,967

Income-Qualified Renter Demand Total Number of % Income-Qualified Number Qualified Renter Households Renter Households Renter Households 1 person 3,824 x 11.8% 453 2 persons 1,203 x 11.8% 143 3 persons 340 x 11.8% 40 4 persons 274 x 11.8% 32 5+ persons 326 x 11.8% 39 Total 5,967 707

Projected Renter Household Demand by Bedroom Size Number of Qualified Renter Households Studio 181 1BR 335 2BR 104 Total 620

Capture Rate Analysis - 60% AMI Developer's Unit Mix Capture Rate Studio 125 69.00% 1BR 72 21.52% 2BR 7 6.74% Total/Overall 204 32.93%

Adjusted for Leakage from Outside of the PMA 20% Studio 125 55.20% 1BR 72 17.22% 2BR 7 5.39% Total/Overall 204 26.34%

Novogradac & Company LLP 117 Culpepper Garden I – Arlington, VA - Market Study

60 Percent of AMI Demand with Subsidy

Income-Qualified Renter Demand Total Number of % Income-Qualified Number Qualified Renter Households Renter Households Renter Households 1 person 3,824 x 51.3% 1,963 2 persons 1,203 x 51.3% 618 3 persons 340 x 51.3% 175 4 persons 274 x 51.3% 141 5+ persons 326 x 51.3% 167 Total 5,967 3,064

Projected Renter Household Demand by Bedroom Size Number of Qualified Renter Households Studio 785 1BR 1,450 2BR 450 Total 2,686

Capture Rate Analysis - 60% AMI with Subsidy Developer's Unit Mix Capture Rate Studio 125 15.92% 1BR 72 4.96% 2BR 7 1.56% Total/Overall 204 7.60%

Adjusted for Leakage from Outside of the PMA 20% Studio 125 12.74% 1BR 72 3.97% 2BR 7 1.24% Total/Overall 204 6.08%

Novogradac & Company LLP 118 Culpepper Garden I – Arlington, VA - Market Study

Annual Demand Table

ANNUAL DEMAND Calculation PMA Number of Senior Renter Households in 2016 5,967 Increase in Number of Senior Renter Households 1,523 Number of Senior Renter Households in 2021 7,490

Existing Demand Percentage of Total Households that are Renter 43.8% Percentage of Income-Qualified Renter Households 51.3% Number of Income-Qualified Renter Households 3,064 Percentage of Rent-Overburdened 33.1% Existing Income-Qualified Renter Household Turnover 1,014

New Income-Qualified Demand, Stated Annually Increase in Renter Households per Annum 305 Percentage of Income-Qualified Renter Households 51.3% New Rental Income Qualified Households 156

Capture Rate Analysis Number of Units in Subject 204 Occupied Units at Subject With Vacancy of: 5% 194 Units Pre-Leased 0 Total Demand (Turnover and Growth) from within PMA 1,170 Portion Originating within PMA 80% Total Demand (Turnover and Growth) from within PMA 1,463 Less: Existing LIHTC Projects in Absorption Process (Number of Units) 0

Total Demand after Competition (Turnover and Growth) 1,463 Yielded Annual Capture Rate of Available Demand in 2017 13.2%

It should be noted that this demand analysis assumes that the Subject were vacant. However, the Subject is a fully-occupied, existing property and will not likely require re-tenanting.

Novogradac & Company LLP 119 Culpepper Garden I – Arlington, VA - Market Study

VHDA Demand Table We have also included the required demand table from the VHDA market study guidelines. The following table illustrates the total demand, the net demand, and the absorption period for the Subject property. The supply illustrates any proposed or under construction senior LIHTC or affordable units in the PMA.

We have determined that there are no vacant senior LIHTC units in the PMA which are in direct competition with the Subject’s LIHTC units. There are also no known new LITHC senior units scheduled to come on line in the PMA.

Elderly households who are likely to convert to rental housing is estimated at 20 percent of total demand. This figure is 20 percent of the sum of new rental households, overburdened existing households, and substandard households.

It is also assumed that 90 percent of existing qualifying tenants will remain at the Subject property after renovation.

The table below illustrates the resulting capture rates for demand currently existing in PMA.

Income Restrictions Up to 60% Up to 60% with subsidy New Renter Households 36 156 + Existing Renter Households - Overburdened 234 1,014 + Existing Renter Households - Substandard Housing 36 36 + Elderly Households Likely to Convert to Rental Housing 61 241 + Existing Qualifying Tenants - to Remain After Renovation 184 184 = Total Demand 551 1,631 - Supply (Includes directly comparable vacant units completed or in pipeline in the PMA) 0 0 Net Demand 551 1,631 Proposed Units 204 204 Capture Rate 37.0% 12.5% Absorption Period 10 Months 7 Months

We believe there is adequate demand for the Subject as proposed. Our concluded capture rates and absorption are shown in the table below.

Novogradac & Company LLP 120 Culpepper Garden I – Arlington, VA - Market Study

Conclusion The Novoco demand analysis illustrates demand for the Subject based on capture rates of income-eligible renter households. When viewing total income-eligible renter households the calculation illustrates an overall capture rate of 6.08 percent at the 60 percent AMI level with consideration of the Section 8 subsidy and 26.34 percent without consideration of the subsidy at 60 percent AMI. The capture rate overall for the units without consideration of the subsidy is elevated, and suggests the property could experience a significant lease-up period if re-tenanting is required without a subsidy in place.

To provide another level of analysis, we removed the households from the income-eligible renter demand pool that are currently suitably housed elsewhere in the PMA. We conducted an annual demand analysis, which is based on new income-eligible renter households moving into the area (in the Subject’s first year of operation only) and those income-eligible renter households that are rent-overburdened (paying over 35 percent of income to living costs). This is a subset of the income-eligible renter households used previously and yields a far more conservative annual capture rate. This annual Novoco capture rate is 13.2 percent for the first year of operation as a LIHTC property with consideration of the Subject’s subsidy. This suggests that the Subject will need to capture only a fraction of the available demand in its first year of operation in order to stabilize. This implies that no demand will be accommodated that is currently suitably housed elsewhere. Further, this assumes no existing support at the Subject from renters who would opt to remain at the Subject following renovations.

The VHDA net demand and capture rate table illustrates demand for the Subject based on capture rates of age and income-eligible renter households. The following table illustrates the conclusions from this table.

Novogradac & Company LLP 121 Culpepper Garden I – Arlington, VA - Market Study

PENETRATION RATE ANALYSIS Per VHDA guidelines, we also performed a penetration rate analysis for the Subject’s units, as seen in the following table.

PENETRATION RATE - SENIOR TAX CREDIT UNITS Number of Proposed Competitive Senior LIHTC Units in the PMA 0 + Number of Existing Competitive Senior LIHTC Units in the PMA 235 + Number of Proposed Senior LIHTC Units at the Subject 204 = Total 439 / Age & Income Eligible Renter Households - All AMI Levels 1,655 = Overall Penetration Rate 26.5%

The overall penetration rate is derived by taking the number of senior LIHTC units proposed or under construction within the PMA, combined with the number of existing senior LIHTC units, and the number of the Subject’s units divided by the number of age and income eligible renter households. To determine income-eligible renter households, we considered the lowest LIHTC gross rent at the comparables within the PMA and the maximum allowable rent at 60 percent AMI for a two-person household.

The following table illustrates the LIHTC properties within the PMA that offer similar unit types that are set-aside for seniors. The LIHTC properties in the PMA that are fully subsidized or target a different tenancy are excluded from this table since we are only considering non- subsidized LIHTC properties in this analysis.

Senior LIHTC Properties in the PMA Carlin 161 Hunters Park at Cherrydale 74 Total Senior LIHTC Units 235

The overall penetration rate for the market is 26.5 percent. The penetration rate analysis we have presented is conservative because it does not account for leakage (i.e. tenants originating outside of the PMA) or existing senior homeowners who desire to rent. This penetration rate is considered good and achievable.

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Rent conclusions were provided in Section F.

We do not anticipate any future changes in the housing stock or risks in the market area that would adversely affect the Subject. The proposed rents appear to be achievable.

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H. LOCAL PERSPECTIVE OF RENTAL HOUSING AND HOUSING ALTERNATIVES

Culpepper Garden I – Arlington, VA - Market Study

INTERVIEWS/DISCUSSION In order to ascertain the need for housing in the Subject’s area, interviews were conducted with various local officials.

Arlington County Housing Authority According to Arlington, VA Section 8 and Housing Choice Voucher program, there are approximately 1,900 vouchers allotted to the Arlington area. The waiting list has been closed for several years and is approximately five years in length, or over 5,000 households. There is high demand for affordable housing in Arlington, increasingly as market rents continue to increase. There are no plans to reopen the waiting list in the near future. The current payment standards are as follows:

VOUCHER PAYMENT STANDARDS Unit Type Payment Standards Studio $1,283 1BR $1,353 2BR $1,603

The Subject’s proposed gross rents are slightly below the current payment standards, indicating residents will not need to pay additional rent out of pocket to reside in the Subject’s units that operate without project-based rental assistance.

Arlington Planning Department We referenced the Arlington Department of Community Planning, Housing and Development online resources in order to obtain information about planned, proposed, and under construction multifamily projects in the Subject PMA. Online resources are extensive, including up to date planning proposals, approvals, board minutes, and mapping software. The following table and map outline the proposed, approved, or under construction multifamily projects in the Subject PMA according to the Arlington Planning Department and online resources.

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SUMMARY OF PROPOSED OR UNDER CONSTRUCTION DEVELOPMENTS IN PMA Rent Total LIHTC Distance from Property Name Tenancy Status Map # Structure Uni ts Uni ts Subject (miles) 1 George Washington Carver Homes Market Family Under Construction 73 0 2.0 miles 2 The Wellington - Expansion Market Family Planned 402 0 1.8 miles 3 11th & Vermont Market Family Proposed 86 0 1.0 miles 4 4000 Fairfax Drive Market Family Planned 330 0 1.0 miles 5 4040 Fairfax Drive Market Family Proposed 362 0 1.0 miles 6 Columbia Pike Village Center Market Family Planned 365 0 0.8 miles 7 Columbia Hills Apartments LIHTC Family Under Construction 229 229 1.1 miles 8 Central UM Church Redevelopment LIHTC Family Proposed 132 132 1.0 miles 9 Axumite Village Market Family Proposed 36 0 1.3 miles 10 Gilliam Place LIHTC Family Proposed 173 173 1.1 miles 11 Blue Goose Redevelopment Market Family Under Construction 267 0 1.0 miles 12 10th Street Flats Market Family Planned 136 0 0.8 miles 13 Ballston Quarter Redevelopment Market Family Proposed 405 0 0.6 miles 14 672 Flats Market Family Planned 178 0 0.6 miles 15 650 N Glebe road Market Family Planned 163 0 0.5 miles 16 Ballston Oak Townhomes Market Family Planned 12 0 1.0 miles 17 Clarendon West Market Family Planned 584 0 1.3 miles Total Units 3,933 - Total LIHTC Units - 534 Total Senior LIHTC Units 0 Source: Arlington Department of Community Planning, Housing and Development

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Of note, there are currently no age-restricted multifamily developments in the pipeline in the Subject PMA, despite the 534 LIHTC units that are in the development pipeline. According to sources, no additional properties are under construction, as most listed projects have been approved and are seeking construction permitting, unless otherwise noted.

LIHTC Competition / Recent and Proposed Construction After reviewing projects recently allocated with LIHTC from the Virginia Housing and Development Authority between 2011 and 2016, several developments have recently been awarded LIHTC Arlington County. Note that the only senior allocation in recent years, Woodland Hill, has project-based Section 8 on all the units, and is therefore not a LIHTC comparable in our comparable analysis.

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RECENT LIHTC ALLOCATIONS IN ARLINGTON 2011 - 2016 Year Property Name Location Tenancy Total Units LIHTC Units 2016 Gilliam Place East Arlington Family 83 83 2015 Columbia Hills East Arlington Family 97 97 2014 The Springs Apartments Arlington Family 104 98 2013 Buckingham Village Arlington Family 48 43 2013 Woodland Hill Arlington Senior 235 235 2012 The Shell Arlington Family 83 83 2011 Arlington Mill Arlington Family 122 121 2011 Larkspur Arlington Family 76 69 2011 Magnolia Commons Arlington Family 198 198 1,046 1,027 Source: Virginia Housing Development Authority, February 2017

A summary of the most recent family allocations (since 2014) are as follows:

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I. OTHER REQUIREMENTS

Culpepper Garden I – Arlington, VA - Market Study

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.

This report was written according to the 2017 VHDA market study guidelines. The recommendations and conclusions are based solely on professional opinion and best efforts.

Respectfully submitted,

Robert Edwards Novogradac & Company LLP Senior Analyst

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ASSUMPTIONS AND LIMITING CONDITIONS

1. In the event that the client provided a legal description, building plans, title policy and/or survey, etc., the appraiser has relied extensively upon such data in the formulation of all analyses.

2. The legal description as supplied by the client is assumed to be correct and the author assumes no responsibility for legal matters, and renders no opinion of property title, which is assumed to be good and merchantable.

3. All encumbrances, including mortgages, liens, leases, and servitudes, were disregarded in this valuation unless specified in the report. It was recognized, however, that the typical purchaser would likely take advantage of the best available financing, and the effects of such financing on property value were considered.

4. All information contained in the report, which others furnished, was assumed to be true, correct, and reliable. A reasonable effort was made to verify such information, but the author assumes no responsibility for its accuracy.

5. The report was made assuming responsible ownership and capable management of the property.

6. The sketches, photographs, and other exhibits in this report are solely for the purpose of assisting the reader in visualizing the property. The author made no property survey, and assumes no liability in connection with such matters. It was also assumed there is no property encroachment or trespass unless noted in the report.

7. The author of this report assumes no responsibility for hidden or unapparent conditions of the property, subsoil, or structures, or the correction of any defects now existing or that may develop in the future. Equipment components were assumed in good working condition unless otherwise stated in this report.

8. It is assumed that there are no hidden or unapparent conditions for the property, subsoil, or structures, which would render it more or less valuable. No responsibility is assumed for such conditions or for engineering, which may be required to discover such factors.

9. The investigation made it reasonable to assume, for report purposes, that no insulation or other product banned by the Consumer Product Safety Commission has been introduced into the Subject premises. Visual inspection by the appraiser did not indicate the presence of any hazardous waste. It is suggested the client obtain a professional environmental hazard survey to further define the condition of the Subject soil if they deem necessary.

10. Any distribution of total property value between land and improvements applies only under the existing or specified program of property utilization. Separate valuations for land and buildings must not be used in conjunction with any other study or appraisal and are invalid if so used.

11. Possession of the report, or a copy thereof, does not carry with it the right of publication, nor may it be reproduced in whole or in part, in any manner, by any person, without the prior written consent of the author particularly as to value conclusions, the identity of the author or the firm with which he or she is connected. Neither all nor any part of the report, or copy thereof shall be disseminated to the general public by the use of advertising, public relations, news, sales, or other media for public communication without the prior written consent and approval of the appraiser. Nor shall the appraiser, firm, or professional organizations of which the appraiser is a member be identified without written consent of the appraiser.

12. Disclosure of the contents of this report is governed by the Bylaws and Regulations of the professional appraisal organization with which the appraiser is affiliated: specifically, the Appraisal Institute.

13. The author of this report is not required to give testimony or attendance in legal or other proceedings relative to this report or to the Subject property unless satisfactory additional arrangements are made prior to the need for such services.

14. The opinions contained in this report are those of the author and no responsibility is accepted by the author for the results of actions taken by others based on information contained herein.

15. Opinions of value contained herein are estimates. There is no guarantee, written or implied, that the Subject property will sell or lease for the indicated amounts.

16. All applicable zoning and use regulations and restrictions are assumed to have been complied with, unless nonconformity has been stated, defined, and considered in the appraisal report.

17. It is assumed that all required licenses, permits, covenants or other legislative or administrative authority from any local, state, or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based.

18. On all studies, Subject to satisfactory completion, repairs, or alterations, the report and conclusions are contingent upon completion of the improvements in a workmanlike manner and in a reasonable period of time.

19. All general codes, ordinances, regulations or statutes affecting the property have been and will be enforced and the property is not Subject to flood plain or utility restrictions or moratoriums, except as reported to the appraiser and contained in this report.

20. The party for whom this report is prepared has reported to the appraiser there are no original existing condition or development plans that would Subject this property to the regulations of the Securities and Exchange Commission or similar agencies on the state or local level.

21. Unless stated otherwise, no percolation tests have been performed on this property. In making the appraisal, it has been assumed the property is capable of passing such tests so as to be developable to its highest and best use, as detailed in this report.

22. No in-depth inspection was made of existing plumbing (including well and septic), electrical, or heating systems. The appraiser does not warrant the condition or adequacy of such systems.

23. No in-depth inspection of existing insulation was made. It is specifically assumed no Urea Formaldehyde Foam Insulation (UFFI), or any other product banned or discouraged by the Consumer Product Safety Commission has been introduced into the appraised property. The appraiser reserves the right to review and/or modify this appraisal if said insulation exists on the Subject property.

24. Estimates presented in this report are assignable to parties to the development’s financial structure.

ADDENDUM A Statement of Qualifications STATEMENT OF PROFESSIONAL QUALIFICATIONS H. BLAIR KINCER, MAI, CRE

I. Education

Duquesne University, Pittsburgh, Pennsylvania Masters in Business Administration Graduated Summa Cum Laude

West Virginia University, Morgantown, West Virginia Bachelor of Science in Business Administration Graduated Magna Cum Laude

II. Licensing and Professional Affiliation

Member of the Appraisal Institute (MAI) Member, The Counselors of Real Estate (CRE) LEED Green Associate Member, National Council of Housing Market Analysts (NCHMA) Past Member Frostburg Housing Authority

Certified General Real Estate Appraiser, No. RCG1046 – State of Connecticut Certified General Real Estate Appraiser, No 4206 – State of Kentucky Certified General Real Estate Appraiser, No CG1694 – State of Maine Certified General Real Estate Appraiser, No. 1326 – State of Maryland Certified General Real Estate Appraiser, No. 103789 – State of Massachusetts Certified General Real Estate Appraiser, No. GA-805 – State of Mississippi Certified General Real Estate Appraiser, No. 46000039124 – State of New York Certified General Real Estate Appraiser, No. A6765 – State of North Carolina Certified General Real Estate Appraiser, No. GA001407L – Commonwealth of Pennsylvania Certified General Real Estate Appraiser, No. 5930 – State of South Carolina Certified General Real Estate Appraiser, No. 3918 – State of Tennessee Certified General Real Estate Appraiser, No. 4001004822 – Commonwealth of Virginia Certified General Real Estate Appraiser, No. 1101008 – State of Washington Certified General Real Estate Appraiser, No. 1081 – State of Wyoming

III. Professional Experience

Partner, Novogradac & Company LLP Vice President, Capital Realty Advisors, Inc. Vice President - Acquisitions, The Community Partners Development Group, LLC Commercial Loan Officer/Work-Out Specialist, First Federal Savings Bank of Western MD Manager - Real Estate Valuation Services, Ernst & Young LLP Senior Associate, Joseph J. Blake and Associates, Inc. Senior Appraiser, Chevy Chase, F.S.B. Senior Consultant, Pannell Kerr Forster H. Blair Kincer Qualifications Page 2

IV. Professional Training

Have presented at and attended various IPED and Novogradac conferences regarding the affordable housing industry. Have done presentations on the appraisal and market analysis of Section 8 and 42 properties. Have spoken regarding general market analysis topics.

Obtained the MAI designation in 1998 and maintained continuing education requirements since. Completed additional professional development programs administered by the Appraisal Institute in the following topic areas:

1) Valuation of the Components of a Business Enterprise 2) Valuation of Sustainable Buildings

V. Real Estate Assignments – Examples

In general, have managed and conducted numerous market analyses and appraisals for all types of commercial real estate since 1988.

x Performed numerous appraisals for the US Army Corps of Engineers US Geological Survey and the GSA. Property types included Office, Hotel, Residential, Land, Gymnasium, warehouse space, border patrol office. Properties located in varied locations such as the Washington, DC area, Yuma, AZ, Moscow, ID, Blaine, WA, Lakewood, CO, Seattle, WA

x Performed appraisals of commercial properties such as hotels, retail strip centers, grocery stores, shopping centers etc for properties in various locations throughout Pennsylvania, New Jersey, Maryland, New York for Holiday, Fenoglio, Fowler, LP and Three Rivers Bank.

x Have managed and conducted numerous market and feasibility studies for affordable housing. Properties are generally Section 42 Low Income Housing Tax Credit Properties. Local housing authorities, developers, syndicators and lenders have used these studies to assist in the financial underwriting and design of LIHTC properties. Analysis typically includes; unit mix determination, demand projections, rental rate analysis, competitive property surveying and overall market analysis. An area of special concentration has been the category of Senior Independent living properties. Work has been national in scope.

x Provided appraisal and market studies for a large portfolio of properties located throughout the United States. The reports provided included a variety of property types including vacant land, office buildings, multifamily rental properties, gas stations, hotels, retail buildings, industrial and warehouse space, country clubs and golf courses, etc. The portfolio included more than 150 assets and the work was performed for the SBA through Metec Asset Management LLP.

x Have managed and conducted numerous appraisals of affordable housing (primarily LIHTC developments). Appraisal assignments typically involved determining the as is, as if complete and the as if complete and stabilized values. Additionally, encumbered (LIHTC) and unencumbered values were typically derived. The three traditional approaches to value H. Blair Kincer Qualifications Page 3 are developed with special methodologies included to value tax credit equity, below market financing and Pilot agreements.

x Performed numerous appraisals in 17 states of proposed new construction and existing properties under the HUD Multifamily Accelerated Processing program. These appraisals meet the requirements outlined in HUD Handbook 4465.1 and Chapter 7 of the HUD MAP Guide.

x Performed numerous market study/appraisals assignments for USDA RD properties in several states in conjunction with acquisition rehabilitation redevelopments. Documents are used by states, FannieMae, USDA and the developer in the underwriting process. Market studies are compliant to State, FannieMae and USDA requirements. Appraisals are compliant to FannieMae and USDA HB-1-3560 Chapter 7 and Attachments.

x Completed numerous FannieMae appraisals of affordable and market rate multi-family properties for Fannie DUS Lenders. Currently have ongoing assignment relationships with several DUS Lenders.

x In accordance with HUD’s Section 8 Renewal Policy and Chapter 9, Mr. Kincer has completed numerous Rent Comparability Studies for various property owners and local housing authorities. The properties were typically undergoing recertification under HUD’s Mark to Market Program.

x Completed Fair Market Value analyses for solar panel installations, wind turbine installations, and other renewable energy assets in connection with financing and structuring analyses performed by various clients. The clients include lenders, investors, and developers. The reports are used by clients and their advisors to evaluate certain tax consequences applicable to ownership. Additionally, the reports have been used in the ITC funding process and in connection with the application for the federal grant identified as Section 1603 American Recovery & Reinvestment Act of 2009. STATEMENT OF PROFESSIONAL QUALIFICATIONS DAVID BOISTURE

I. Education

Ohio University, Athens, Ohio Masters of Public Administration

Frostburg State University, Frostburg, Maryland Bachelor of Science in Political Science and Justice Studies

II. Professional Experience

Principal, Novogradac & Company LLP Graduate Assistant, Institute for Local Government and Rural Development

III. Professional Affiliation

LEED Green Associate

IV. Professional Training

IRS Valuation Summit, October 2014 Basic Appraisal Procedures, March 2014 15-hour National USPAP Equivalent, March 2014 Valuation of Solar Photovoltaic, February 2014 Residential Solar Photovoltaic Leases: Market Value Dilemma, February 2014 Basic Appraisal Principles, February 2014 Wind Projects and Land Value, October 2012

V. Real Estate Assignments

A representative sample of Due Diligence, Consulting, or Valuation Engagements includes: x Completed Fair Market Value analyses for solar panel installations, wind turbine installations, and other renewable energy assets in connection with financing and structuring analyses performed by various clients. The clients include lenders, investors, and developers. The reports are used by clients and their advisors to evaluate certain tax consequences applicable to ownership. Additionally, the reports have been used in the ITC funding process and in connection with the application for the federal grant identified as Section 1603 American Recovery & Reinvestment Act of 2009. x Have managed and prepared market studies for proposed Low-Income Housing Tax Credit, market rate, HOME financed, USDA Rural Development, and HUD subsidized properties, on a national basis. Analysis includes property screenings, market analysis, comparable rent surveys, demand analysis based on the number of income qualified renters in each market, supply analysis, and operating expenses analysis. Property types include proposed multifamily, senior independent living, large family, and acquisition with rehabilitation. David Boisture Qualifications Page 2 x Have managed and assisted in appraisals of proposed new construction, rehabilitation, and existing Low- Income Housing Tax Credit properties, USDA Rural Development, HUD subsidized properties, and market rate multifamily developments. Analysis includes property screenings, valuation analysis, rent comparability studies, expense comparability analysis, determination of market rents, and general market analysis. x Assisted in preparing a comprehensive senior housing study in Seattle, Washington for the Seattle Housing Authority. This study evaluated the Seattle Housing Authority’s affordable senior housing project for their position within the entire city’s senior housing market. The research involved analysis of the senior population by neighborhood, income, household size, racial composition, and tenure. x Have managed and assisted in the preparation of Rent Comparability Studies according the HUD Section 8 Renewal Policy in the Chapter 9 guidelines. x Assisted in the review of Rent Comparability Studies for HUD Contract Administrators. x Assisted in the HUD MAP Quality Control market study and appraisal reviews. x Managed and assisted in the preparation of market studies for projects under the HUD Multifamily Accelerated Processing program. The market studies meet the requirements outlined in Chapter 7 of the HUD MAP Guide. x Managed and assisted in appraisals of proposed new construction and existing properties under the HUD Multifamily Accelerated Processing program. The appraisals meet the requirements outlined in Chapter 7 of the HUD MAP Guide. x Assisted in preparing an approved HUD Consolidated Plan for the City of Gainesville, GA; which included a housing and homeless needs assessment, market analysis, non- housing needs analysis, and a strategic plan, which conformed to 24CFR Part 91, Consolidated Plan Regulations for the ensuing five-year period (2004-2009). x Assisted in various appraisals for the US Army Corps of Engineers including Walter Reed Army Medical Center, proposed office site on the Enhanced Use Lease sites Y and Z at Fort Meade, proposed automobile testing facility at the Yuma Proving Grounds, proposed industrial park at Camp Navajo, and the National Geospatial-Intelligence Agency. x Managed the preparation of Site Inspection Reports and Appraisals as the subcontractor to the Transaction Team Specialist hired by the Department of Housing and Urban Development to facilitate the design and sale of HUD’s nonperforming Multifamily and Healthcare notes. x Completed analyses of overall reasonableness with regard to Revenue Procedure 2014- 12. Transactions analyzed include renewable energy projects involving the use of Investment Tax Credits. Fees and arrangements tested for reasonableness include developer fees, construction management fees, asset management fees, various leasing- related payments, and overall master lease terms. STATEMENT OF PROFESSIONAL QUALIFICATIONS BRIAN GAULT

I. Education

Ohio University, Athens, Ohio Bachelor of Science in Journalism, Certification in Environmental Studies

II. Professional Experience

Real Estate Analyst, Novogradac & Company LLP, August 2014 – Present Vice President/Project Director, Vogt Santer Insights, July 2010 – June 2014 Project Director/Director of Southeast Operations, VWB Research, October 2002 – June 2010 Field Analyst/Project Director, Danter Company, February 2000 – October 2002

III. Research Assignments

A representative sample of Due Diligence, Consulting, or Valuation Engagements includes:

ƒ Authored more than 1,600 market feasibility studies or letters for affordable, market rate and student rental housing. These reports have been utilized by developers, syndicators, state housing finance agencies, and lenders to assist in the financial underwriting, planning and design of rental properties. Analysis typically includes: unit mix determination, demand estimation, rental rate analysis, competitive property evaluation and overall market feasibility analysis.

ƒ Assisted in the completion of numerous appraisals.

ƒ Completed field research for more than 250 projects in more than 40 states while employed in the industry.

ƒ Interviewed, trained, and coordinated staff of seven to nine field analysts working nationwide while with previous employers.

ƒ Experienced in data collection for commercial space used in retail, office or overall commercial space analyses.

STATEMENT OF PROFESSIONAL QUALIFICATIONS Robert C. Edwards

I. Education

George Washington University Master of Business Administration, Finance and Investments

St. Bonaventure University Bachelor of Science, Economics

II. Licensure

Virginia Certified General Appraiser, License Number 4001017477

III. Professional Experience

Senior Real Estate Analyst, Novogradac & Company LLP, Bethesda, MD Senior Associate, Associated Real Estate Advisors, Bethesda, MD Review Appraiser, PNC Bank, Pittsburgh, PA Project Director, Delta Associates, Alexandria, VA

IV. Real Estate Assignments x Provided appraisal assistance on a wide variety of properties including multifamily developments, office, industrial, retail, vacant land, special-use, and proposed new construction. Performed site inspections, and conducted in-depth property, economic and market data research, expense analyses, and revenue projections. Have also reviewed appraisals by others for compliance. x Performed market studies on over 300 multifamily properties in over 45 states, specializing with the Low-Income Housing Tax Credit program. Have also performed analyses on multifamily properties that are HUD subsidized or operated under the USDA Rural Development program. Specialized housing types such as single-room- occupancy, disabled, veterans, and Native American housing, have also been analyzed. Also have provided assistance on nearly 150 appraisals and over 25 rent comparability studies of multifamily properties.

V. Professional Training

15-Hour National USPAP Equivalent, 2015 Basic Appraisal Procedures, 2015 Basic Appraisal Principals, 2015 General Appraiser Market Analysis Highest and Best Use, 2016 Real Estate Statistics and Valuation Modeling, 2016 General Appraiser Report Writing and Case Studies, 2016 General Appraiser Sales Comparison Approach, 2016 General Appraiser Site Valuation and Cost Approach, 2016 General Appraiser Income Approach, 2016 Commercial Appraisal Review, 2016 ADDENDUM B Data Sources DATA SOURCES

Sources used in this study include data that is both written and oral, published and unpublished, and proprietary and non-proprietary. Real estate developers, housing officials, local housing, and planning authority employees, property managers and other housing industry participants were interviewed. In addition, we conducted a survey of existing, comparable properties.

This report incorporates published data supplied by various agencies and organizations including: x U.S. Census Bureau x Arlington Planning Department x Arlington Economic Development x Virginia Employment Commission x Virginia Workforce Network x ESRI, Business Information Solutions x Ribbon Demographics x US Department of Commerce, Bureau of Labor Statistics x Department of Housing and Urban Development (HUD) x VHDA Regional Utility Allowances x VHDA Market Study Requirements, 2017 ADDENDUM C NCAHMA Certification and Market Study Checklist NCAHMA MEMBER CERTIFICATION

This market study has been prepared by Novogradac & Company LLP, a member in good standing of the National Council of Housing Market Analysts (NCHMA). This study has been prepared in conformance with the standards adopted by NCHMA for the market analysts’ industry. These standards include the Standard Definitions of Key Terms Used in Market Studies, and Model Content Standards for the Content of Market Studies. These Standards are designed to enhance the quality of market studies and to make them easier to prepare, understand, and use by market analysts and by the end users. These Standards are voluntary only, and no legal responsibility regarding their use is assumed by the National Council of Housing Market Analysts.

Novogradac & Company LLP is duly qualified and experienced in providing market analysis for Affordable Housing. The company’s principals participate in the National Council of Housing Market Analysts (NCHMA) educational and information sharing programs to maintain the highest professional standards and state-of-the-art knowledge. Novogradac & Company LLP is an independent market analyst. No principal or employee of Novogradac & Company LLP has any financial interest whatsoever in the development for which this analysis has been undertaken.

Brian Gault Novogradac & Company LLP Senior Analyst ADDENDUM D Utility Allowance Schedule

Virginia Housing Development Authority Housing Choice Voucher Program

Allowances for Family Name: ______Tenant-Furnished Utilities and Other Services Unit Address: ______Voucher Size*: ______Unit Bedroom Size*: ______*Use smaller size to calculate tenant-supplied utilities and appliances.

Unit Type: 1 Exposed Wall Effective Date: 07/01/2016 Monthly Dollar Amount Utility Usage 0 BR 1 BR 2BR 3BR 4BR 5 BR 6 BR 7BR

Appliance Range/Microwave $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 Refrigerator $3.00 $3.00 $3.00 $3.00 $3.00 $3.00 $3.00 $3.00 Bottled Gas Cooking $8.00 $11.00 $14.00 $17.00 $21.00 $24.00 $27.00 $30.00 Home Heating $41.00 $57.00 $73.00 $89.00 $113.00 $130.00 $146.00 $162.00 Water Heating $18.00 $25.00 $32.00 $39.00 $49.00 $56.00 $63.00 $70.00 Electricity Cooking $3.00 $4.00 $5.00 $7.00 $8.00 $10.00 $11.00 $12.00 Cooling (A/C) $6.00 $8.00 $10.00 $12.00 $15.00 $18.00 $20.00 $22.00 Home Heating $21.00 $29.00 $37.00 $45.00 $57.00 $66.00 $74.00 $82.00 Other Electric $12.00 $17.00 $22.00 $26.00 $34.00 $38.00 $43.00 $48.00 Water Heating $11.00 $15.00 $19.00 $23.00 $29.00 $34.00 $38.00 $42.00 Natural Gas Cooking $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 $10.00 Home Heating $15.00 $21.00 $27.00 $33.00 $42.00 $48.00 $54.00 $60.00 Water Heating $7.00 $9.00 $12.00 $14.00 $18.00 $21.00 $23.00 $26.00 Oil Home Heating $30.00 $41.00 $53.00 $65.00 $83.00 $94.00 $106.00 $118.00 Water Heating $13.00 $18.00 $23.00 $29.00 $36.00 $42.00 $47.00 $52.00 Sewer Other $18.00 $25.00 $32.00 $40.00 $50.00 $58.00 $65.00 $72.00 Trash Collection Other $11.00 $11.00 $11.00 $11.00 $11.00 $11.00 $11.00 $11.00 Water Other $15.00 $21.00 $27.00 $33.00 $42.00 $48.00 $54.00 $60.00 UTILITY ALLOWANCE $ $ $ $ $ $ $ $ TOTAL:

VHDA/Utility Allowance Schedule – Revised 12/2013 Page 1 of 1 ADDENDUM E Subject and Neighborhood Photographs PHOTOGRAPHS OF SUBJECT AND NEIGHBORHOOD

Subject from adjacent parking area Subject from North 2nd Street looking north

Subject looking north from site interior Subject looking east from site interior

Alternative view of Subject View of adjoining Culpepper Gardens II from parking area View of adjoining Culpepper Gardens III from parking Rear of Subject building area

Outdoor sitting area View of Subject from North Pershing and North 2nd Streets looking northwest

Subject from entrance area off of North Henderson Road Alternative view of Subject from parking area (Culpepper Gardens II on the left) (Culpepper Gardens II on the right) Dining room Convenience store

Upper floor lobby area Typical interior hallway

Interior stairwell Laundry room Beauty salon Computer room

Community room Community room

Senior Center space Library Management office Maintenance area

Typical living area (occupied unit) Typical living area (vacant unit)

Typical kitchen (occupied unit) Typical kitchen (vacant unit) Typical bedroom (occupied unit) Typical bedroom (vacant unit)

Typical bedroom (occupied unit) Typical bedroom (vacant unit)

View of North Henderson Road looking north from View of North Henderson Road looking north from Subject entrance Subject entrance Typical single-family home across North Henderson Alternative view of typical single-family homes across Road from Subject North Henderson Road from Subject

View along North 2nd Street to the south of Subject View along North 2nd Street to the south of Subject looking west looking east

Single-family homes along North 2nd Street View along North Pershing Street looking northeast towards Arlington Oaks condominium community Madison at Ballston Station mixed-income apartments Alternative view of Madison at Ballston Station from immediately north of the Subject Subject parking area

Recently built townhomes along North Pershing Street to Commercial uses along North Pershing Street near its the northeast of Subject intersection with Glebe Road

Commerical uses along Glebe Road at North Pershing Commercial uses along Glebe Road Street