Offering Memorandum

OFFERING MEMORANDUM

WACO SHOPPING CENTER / Kelley Workman SHERMAN SHOPPING CENTER Vice President

David H. Luther Executive Vice President

Morgan Hansen Senior Associate INVESTMENT SALES INVESTMENT NON-ENDORSEMENT AND DISCLAIMER NOTICE

CONFIDENTIALITY AND DISCLAIMER The information contained in the following marketing brochure is proprietary and strictly confidential. It is intended to be reviewed only buy the party receiving it from NewQuest Properties and should not be made available to any other person or entity without the written consent of NewQuest Properties. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. NewQuest Properties has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size square footage of the property and improvements, presence or absence of contaminating substances, PCB‘s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenants plans or intentions to continue it’s occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, NewQuest Properties has not verified, and will not verify, any of the information contained herein, nor has NewQuest Properties conducted any investigation regarding these matters and makes no warrantee or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all the information set forth herein. NewQuest Properties is a service mark of NewQuest Properties Real Estate Investment Services, Inc. © 2018 NewQuest Properties. All rights reserved. THE TEXAS REAL ESTATE COMMISSION (TREC) REGULATES REAL ESTATE BROKERS AND SALES AGENTS, REAL ESTATE INSPECTORS,HOME WARRANTY COMPANIES, EASEMENT AND RIGHT-OF-WAY AGENTS AND TIMESHARE INTEREST PROVIDERS. YOU CAN FIND MORE INFORMATION AND CHECK THE STATUS OF A LICENSE HOLDER AT WWW.TREC.TEXAS.GOV. YOU CAN SEND A COMPLAINT AGAINST A LICENSE HOLDER TO TREC. A COMPLAINT FORM IS AVAILABLE ON THE TREC WEBSITE. TREC ADMINISTERS TWO RECOVERY FUNDS WHICH MAY BE USED TO SATISFY A CIVIL COURT JUDGMENT AGAINST A BROKER, SALES AGENT, REAL ESTATE INSPECTOR, OR EASEMENT OR RIGHT-OF-WAY AGENT, IF CERTAIN REQUIREMENTS ARE MET. IF YOU HAVE QUESTIONS OR ISSUES ABOUT THE ACTIVITIES OF A LICENSE HOLDER, THE COMPLAINT PROCESS OR THE RECOVERY FUNDS, PLEASE VISIT THE WEBSITE OR CONTACT TREC AT: TEXAS REAL ESTATE COMMISSION P.O. BOX 12188 AUSTIN, TEXAS 78711-2188 512.936.3000

NON-ENDORSEMENT NOTICE NewQuest Properties is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of NewQuest Properties, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of NewQuest Properties, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR NEWQUEST PROPERTIES AGENT FOR MORE DETAILS. MEET THE TEAM

KELLEY WORKMAN DAVID H. LUTHER MORGAN HANSEN Vice President Executive Vice President Senior Associate Investment Sales Investment Sales Investment Sales [email protected] [email protected] [email protected] 281.477.4355 281.477.4373 281.640.7904

3 EXECUTIVE SUMMARY

WACO SHOPPING CENTER SHERMAN SHOPPING CENTER 2725 N. Hwy 75, Sherman TX ADDRESS 200 N. New Rd., Waco TX 76710 ADDRESS 75090

OCCUPANCY 87.5% OCCUPANCY 100%

GLA 218,598 SF GLA 170,722 SF

LAND AREA 29.30 ACRES LAND AREA 23.84 ACRES

YEAR BUILT/RENOV 1994/2006 YEAR BUILT/RENOV 1994/2008

• Offered as a portfolio purchase* at $35,750,000 at 8.50% CAP $91/PSF (NOI: $3,039,291) well below replacement cost for high quality construction with attractive assumable debt of $24,000,000 at 4.92% until September 2022 with German America Capital Corporation parent to Deutsche Bank and serviced by Wells Fargo. The total portfolio is 389,320 square feet.

4 EXECUTIVE SUMMARY

WACO SHOPPING CENTER SHERMAN SHOPPING CENTER • Built in 1994 and renovated in 2006, Located in Waco, • Built in 1994 and renovated in 2008, Located in Sherman, Texas at 200 North New Road retail corridor anchored by Texas at 2725 N. Highway 75, the retail corridor anchored Academy Sports and Outdoors, Conn’s Home Plus and Boot by Orschein, Nautilus Family Fitness and Tuesdays Morning Barn Western Wear with Texas Roadhouse on a pad.

• In-line space of 218,598 Square Feet in four retail buildings • In-line space of 170,722 Square Feet in two retail buildings sitting on 29.3 Acres with Value being added by developing the 1.96-acre parcel with Highway 75 frontage with up to 7,000 square feet of • This center is served by a regional trade area of a 20+-mile GLA radius and a population of over 670,000 including Fort Hood, Killeen and Temple, Texas. • This center is served by a regional trade of 20 miles including in the Sherman-Denison Metropolitan area (MSA) • Excellent Service oriented tenant mix with average lease in which is a component of the Dallas-Ft. Worth combined place over 10 years statistical area, which estimated population of over 6.8 million • Over 1.9 Million visitors to Waco in 2017 • Excellent Service oriented tenant mix with average lease in place over 12+ years

5 PRICING DETAIL

WACO SHERMAN SHOPPING CENTER SHOPPING CENTER

RETURNS YEAR 1 YEAR 2 RETURNS YEAR 1 YEAR 2

CAP Rate 8.50% 9.12% CAP Rate 8.50% 9.15%

Cash-on-Cash 11.22% 13.72% Cash-on-Cash 11.22% 13.82%

Debt Coverage Ratio 1.49 1.60 Debt Coverage Ratio 1.49 1.61

INCOME YEAR 1 YEAR 2 INCOME YEAR 1 YEAR 2

Scheduled Base Rental Income $1,878,154 $2,013,564 Scheduled Base Rental Income $1,235,883 $1,327,083

Total Reimbursement Income 49.2% $923,326 45.9% $923,326 Total Reimbursement Income 40.1% $495,990 37.4% $495,991

Other Income $0 $0 Other Income $0 $0

Potential Gross Revenue $2,801,480 $2,936,890 Potential Gross Revenue $1,731,873 $1,823,074

General Vacancy $0 ($0) General Vacancy $0 ($0)

Effective Gross Revenue $2,801,480 $2,936,890 Effective Gross Revenue $1,731,873 $1,823,074

Less: Operating Expenses 34.2% ($958,806) 32.6% ($958,806) Less: Operating Expenses 30.9% ($535,257) 29.4% ($535,257)

Net Operating Income $1,842,674 $1,978,084 Net Operating Income $1,196,617 $1,287,818

Tenant Improvements $0 $0 Tenant Improvements $0 $0

Leasing Commissions $0 $0 Leasing Commissions $0 $0

Capital Expenditures $0 $0 Capital Expenditures $0 $0

Cash Flow $1,842,674 $1,978,084 Cash Flow $1,196,617 $1,287,818

Debt Service ($1,234,341) ($1,234,341) Debt Service ($801,571) ($801,571)

Net Cash Flow After Debt Service 11.22% $608,333 13.72% $743,743 Net Cash Flow After Debt Service 11.22% $395,046 13.82% $486,247

Principal Reduction $513,190 $536,766 Principal Reduction $333,261 $348,571

TOTAL RETURN 20.69% $1,121,523 23.63% $1,280,509 TOTAL RETURN 20.69% $728,307 23.72% $834,818

6 OFFERINGWACO MEMORANDUMSHOPPING CENTER

WACO200 NORTH SHOPPING NEW ROAD,CENTER Kelley Workman WACO,200 N NEW TX RD. |76710 WACO, TX 76710 Vice President

David H. Luther Executive Vice President

Morgan Hansen Senior Associate INVESTMENT SALES INVESTMENT

7 INVESTMENT HIGHLIGHTS WACO $21.67M price NewQuest Properties is pleased to exclusively represent the ownership group in the disposition of the Waco Centre which is a 218,598 square foot multi-tenant shopping experience sitting in the heart of the retail shopping corridor in Waco Texas on Highway 84 and 298 off Highway 6 and Highway 35. The shopping center has 218,598 square feet of inline space in four retail buildings which is currently 87.5% occupied while allowing an investor to see the upside in leasing 2nd generation space of 12.5%. It is a well-built tilt wall and block construction from 1994 and 8.50% renovated in 2006 keeping in the same format of quality construction with tinted window storefront retail spaces as well as office storefronts. cap rate Waco is located halfway between Dallas and Austin and in 2010 had a population of 235,000 but fast forward to 2018 and Waco has seen a big increase in population of 29% growth in 8 years. Waco is home to Baylor University with an enrollment count of 17,217 for Fall of 2018. Other university’s include McLennan Community College with enrollment of 9,000 students and 700 employees and Texas State Technical college, a 2-year school that provides technical education for people entering the workforce or a change of career, enrolls 4,000 students annually in the Waco location. 218,598 Major employers in Waco are Baylor University, Waco ISD, Providence Health Care, L3 Technologies, Baylor Scott & White Health System, Walmart, City of Waco, Midway ISD and RBA Sanderson Farms. One of Waco’s most famous employers is the TV Show “Fixer Upper” and their local stars, Chip & Joanna Gaines. Their renovation of the grain silos into Magnolia Market, a shopping complex with specialty stores, food trucks and event space has increased the visitors coming into Waco to over 1.9 Million visitors and in 2019 Magnolia has announced a $10.4 Million-dollar expansion. A new Master Planned entertainment district has just been announced in Waco located less than half a mile from the Waco Centre. The 143 Acre Master Planned mixed-use development, Cottonwood Creek Market, will have 285,000 square feet of entertainment retail including newly announced 14 screen Cinemark and Top Golf as well as 63 29.30 acres of Multifamily and office development. acres

2006 year renov

8 9 10 TENANT SUMMARY WACO

14 occupied tenants 87.5% occupied GLA 2 unoccupied tenants 12.5% unoccupied GLA

% LEASE BUILDING START LEASE ANNUAL TOTAL RENT NEXT RENT LEASE TENANT NAME SUITE AREA SHARE DATE END DATE SF PER YEAR INCREASE TYPE

T-Mobile West 100A 2,500 1.1% 2/13/09 2/29/20 $37.40 $93,500 N/A NNN

U-Swirl Frozen Yogurt 100B 3,000 1.4% 9/13/11 9/30/21 $27.00 $81,000 N/A NNN

Freebirds 120 2,550 1.2% 9/10/12 9/30/22 $36.00 $91,800 N/A NNN

Vietnamese Restaurant 130 3,490 1.6% 8/1/19 7/31/24 $25.00 $87,250 N/A NNN

Nails of America 140 2,240 1.0% 6/1/08 5/31/23 $26.00 $58,240 N/A NNN

Double Dave's Pizzaworks 160 3,010 1.4% 4/1/19 3/31/29 $20.00 $60,200 N/A NNN

Sportclips 170 1,260 0.6% 7/28/06 7/31/21 $25.00 $31,500 N/A NNN

Clear Eye Care 190 1,500 0.7% 8/1/08 7/31/24 $24.00 $36,000 N/A NNN

5 Star Nutrition 196 1,400 0.6% 11/3/11 2/28/22 $24.00 $33,600 N/A NNN

Receivables Management 200 9,400 4.3% 8/1/14 7/31/21 $9.00 $84,600 N/A NNN Partners

Academy 210 77,170 35.3% 5/12/06 7/31/21 $6.56 $506,000 N/A NNN

Conn Applicances 230 51,055 23.4% 6/15/12 6/14/22 $4.77 $243,532 N/A NNN

Boot Barn 240 15,030 6.9% 11/12/10 11/30/20 $6.05 $90,932 N/A NNN

Golds Gym 250 40,000 18.3% 12/18/06 12/31/21 $9.50 $380,000 N/A NNN

Vacant 180 1,050 0.5% N/A N/A $0.00 $0 N/A NNN

Vacant 200B 3,943 1.8% N/A N/A $0.00 $0 N/A NNN

TOTAL TENANTS 16 218,598 $8.59 $1,878,154 total rent 218,598 SF $1,878,154 per year 11 SITE PLAN WACO

12 OPERATING $2,801,480 $1,842,674 effective gross revenue net operating income STATEMENT YEAR 1 YEAR 1 WACO

PER PER INCOME YEAR 1 SQ FT YEAR 2 SQ FT

Scheduled Base Rental Income $1,878,154 $8.59 $2,013,564 $9.21

Reimbursement Income $905,326 $4.14 $923,326 $4.22

General Vacancy 0 0.00 0.00 0.00

Effective Gross Revenue $2,783,480 $12.73 $2,936,890 $13.44

OPERATING EXPENSES YEAR 1 PER SQ FT YEAR 2 PER SQ FT Utilities (CAM) $81,738 $0.37 $81,738 $0.37

Sweeping (CAM) $8,268 $0.04 $8,268 $0.04

Trash (CAM) $9,878 $0.05 $9,878 $0.05

Landscaping (CAM) $36,926 $0.17 $36,926 $0.17

Insurance $72,784 $0.33 $72,784 $0.33

Real Estate Taxes $578,450 $2.65 $578,450 $2.65

Management Fee $135,282 $0.62 $135,282 $0.62

Other Expenses - Non Reimbursable $35,480 $0.16 $35,480 $0.16

Total Expenses $958,806 $4.39 $958,806 $4.39

Expenses as % of EGR 34.4% - 32.6% -

Net Operating Income $1,824,674 $8.35 $1,978,084 $9.05

13 WACO LEASE COMPARABLES

ELM MOTT ROCKWACO CREEK

LACY LAKEVIEW

BELLMEAD

LAKE WACO WACO SHOPPING CENTER

WACO 1 WILLOW GROVE TYPICAL AVAIL. ASKING YEAR TYPE GLA FLOOR SF RENT BUILT LEASE 6 TEXAS West Bay 240 01 RETAIL 12,564 12,564 10,324 $30.00/NNN 2018 TEXAS 1011 South 10th St, Waco, TX 76706

4017 South I-35 2 02 RETAIL 2,911 2,911 2,911 $45.35/NNN 2010 3 4017 South I-35, Waco, TX 76706

Central Texas Marketplace RETAIL 5,000 5,000 3,700 $32.00/NNN 2016 6 03 TEXAS 2320 West Loop 340, Waco, TX 76711 WOODWAY

ROBINSON HEWITT

14 LEASE COMPARABLES WACO

01 02 03

WEST BAY 4017 SOUTH I-35 CENTRAL TEXAS MARKETPLACE 1011 SOUTH 10TH STREET, WACO, TX 4017 SOUTH I-35, WACO, TX, 76706 2320 WEST LOOP 340, WACO, TX 76711 76706

Type Retail Type Retail Type Retail

GLA 12,564 GLA 2,911 GLA 5,000

Typical Floor 12,564 Typical Floor 2,911 Typical Floor 5,000

Available SF 10,324 Available SF 2,911 Available SF 3,700

Asking Rent $30.00/NNN Asking Rent $45.35/NNN Asking Rent $32.00/NNN

Year Built 2018 Year Built 2010 Year Built 2016

15 ELM MOTT WACO ROCK CREEK REGIONAL MAP

WACO 35

LACY LAKEVIEW

BELLMEAD

LAKE WACO

WACO WILLOW GROVE 6 WACO SHOPPING CENTER TEXAS

240 TEXAS

6 TEXAS WOODWAY

ROBINSON HEWITT

16 ELM MOTT ROCK CREEK

LOCAL MAP HILLCREST DR. WACO 35

LACY LAKEVIEW

BELLMEAD

N. NEW RD.

LAKE WACO

WACO 84 FRANKLIN AVE. WILLOW GROVE 6 TEXAS

240 TEXAS WACO SHOPPING CENTER N. VALLEY MILLS DR. 6 TEXAS WOODWAY

35 84

ROBINSON 35 HEWITT

S. NEW RD.

6 TEXAS

IMPERIAL DR. 6 TEXAS

35 Mountainview Brookview

Brookview

Austin Ave.

N VALLEY MILLS DR

Sandstone Apartments

Parkdale Viking Hills

Glen Oaks Apartments Avila Apartments HWY 289

Ashton Oaks Apartments N NEW RD Beverly Hills

W WACO DR

WACO SHOPPING CENTER

HWY 6

HWY 84 Providence Village

AERIAL VIEW WACO 18 LOCATION HIGHLIGHTS WACO

Waco has become a unique tourist destination with over 2 million visitors in 2018. Waco is 22nd most populated city in Texas and includes McLennan and Falls Counites. Interstate 35 is the major North-South highway for Waco. It directly connects Dallas, Fort Worth, Austin and San Antonio. Texas State Highway 6 runs northwest-southeast and connects Waco to Bryan/College Station and Houston. Waco is located in the Heart of Texas manufacturing and technology corridor in Interstate 35, just 90 miles south of Dallas and 100 miles north of Austin. Waco has three airports, Waco Regional Airport (ACT) and serves to Dallas/Ft Worth, TSTC Waco Airport (CNW) which was the primary fly-in point for President George W. Bush and is also the hub for L3 and several other aviation companies, and McGregor Executive Airport (PWG) a general aviation facility located west of Waco.

Waco Independent School District serves most of the City of Waco with three public High Schools plus 12 private and charter schools. The area is also served by Midway ISD, Bosqueville ISD, China Spring ISD, Connally ISD and La Vega ISD.

Waco has seen an increase in the job market in the last 12 month and the next 10-year job growth predictions a growth rate of 38.3%, which is higher than the US average of 33%. The average household income in the Waco Metro is $75,000 - $100,000 being the largest sector with 15.4% of the population. The primary industries in Waco Metro are Manufacturing, Retail Trades, Educational Services, Healthcare and Social Assistance. Waco also boast a co-working accelerator space, Hustle, helps by connecting innovators and entrepreneurs where Start Up Waco aims to transform the city to a place everyone can succeed. 19 LOCATION DEMOGRAPHICS WACO POPULATION 1 MILE 3 MILES 5 MILES

2024 Projected Population 8,257 80,825 154,900

2019 Estimated Population 7,696 74,810 143,636

2010 Census Population 7,214 67,728 131,255

POPULATION HOUSEHOLDS 2000 Census Population 7,450 67,955 125,472 154,900 59,918

HOUSEHOLDS 1 MILE 3 MILES 5 MILES

2024 Projected Households 3,603 31,421 59,999 MEDIAN AGE MEDIAN INCOME 2019 Estimated Households 3,428 29,828 56,918

32.5 $47,021 2010 Census Households 3,071 25,722 49,390

2000 Census Households 3,259 25,950 47,172

2019 Occupied Units 3,428 29,828 56,918 0-19 YEARS 20-64 YEARS 65+ YEARS

28.5% 57.3% 14.2% HOUSEHOLDS BY INCOME 1 MILE 3 MILES 5 MILES $150,000 or More 3.8% 5.5% 6.5% 2019 POPULATION BY AGE $100,000 to $149,000 6.7% 7.7% 8.8%

$75,000 to $99,999 9.5% 11.6% 11.7%

$50,000 to $74,999 17.9% 17.3% 15.3%

$35,000 to $49,999 16.9% 16.5% 15.1%

Under $35,000 62.1% 57.9% 57.6%

Average Household Income $49,603 $57,121 $58,409

Median Household Income $39,163 $45,935 $47,021

Per Capita Income $22,199 $22,864 $23,396

20 LOCATION DEMOGRAPHICS WACO 18.8% HISTORIC ANNUAL GROWTH FROM 2010 - 2019 *20 mile radius

HOUSEHOLDS BY EXPENDITURE 1 MILE 3 MILES 5 MILES POPULATION PROFILE 1 MILE 3 MILES 5 MILES

Total Monthly Retail Expenditures $1,682 $1,856 $1,882 2019 Estimate Total Population 7,696 74,810 143,636

Consumer Expenditure Top 10 Categories Under 20 2,004 21,042 40,921

Shelter $775 $840 $854 20 to 34 Years 6,526 18,491 38,590

Transportation $644 $714 $723 35 to 39 Years 499 4,566 8,133

Food and Beverages $537 $587 $595 40 to 49 813 7,786 13,938

Health Care $307 $339 $342 50-64 1,274 11,747 21,616

Utilities $280 $305 $306 Age 65+ 1,030 11,178 20,439

Entertainment $194 $216 $220 Median Age 32.1 33.3 32.5

Contributions $109 $122 $124 Population 25+ by Education 4,951 47,189 85,793

Education $99 $109 $113 Elementary (0 to 8) 298 3,918 5,984

Apparel $124 $137 $139 Some High School (9 to 11) 573 6,004 9,045

Furnishings and Equipment $121 $134 $137 High School Graduate (12) 1,692 13,677 23,873

Some College (13-15) 1,141 9,997 18,696

Associate Degree Only 400 3,949 7,438

Bachelor Degree Only 566 6,305 13,148

Graduate Degree 281 3,338 7,609

21 LOCATION DEMOGRAPHICS

WACO RACE & ETHNICITY The current year racial makeup of your selected area is as follows: 59.7% White, 19.1% Black, 0.7% Native American and 2.4% Asian/Pacific Islander. Compare these to US averages which are: 70.20% White, 12.89% Black, 0.19% Native American and 5.59% Asian/Pacific Islander. People of Hispanic POPULATION origin are counted independently of race. People of Hispanic origin make up In 2019 the population in your selected geography is 143,636. 44.5% of the current year population in your selected area. Compare this to The population has changed by 1.5% since 2000. It is estimated that the US average of 18.01%. the population in your area will be 154,900 five years from now, which represents a change of 1.6% from the current year. The current INCOME population is 49.1% male and 50.9% female. The median age of the population in your area is 32.5 compare this to In 2019 the median household income for your selected geography is the US average which is 37.95. The population density in your area is $47,021; compare this to the US average which is currently $58,754. 1,830 people per square mile. The median household income for your area has changed by 2.3% since 2000. It is estimated that the median household income in your area will be $54,174 five years from now, which represents a change of 3.0% from the HOUSEHOLDS current year. The current year per capita income in your area is $23,396; There are currently 56,918 households in your selected geography. compare this to the US average, which is $32,356. The current year average The number of households has changed by 1.1% since 2000. It is estimated household income in your area is $58,409; compare this to the US average that the number of households in your area will be 59,999 five years from which is $84,609. now, which represents a change of 1.1% from the current year. The average household size in your area is 2.4 persons. EMPLOYMENT In 2019, there are 91,112 employees in your selected area, this is also HOUSING known as the daytime population. The 2000 Census revealed that The median housing value in your area was $128,847 in 2019, compare this 56.1% of employees are employed in white-collar occupations in this to the US average of $201,842. In 2000, there were 27,907 owner occupied geography, and 43.9% are employed in blue-collar occupations. In 2019, housing units in your area and there were 29,011 renter occupied housing unemployment in this area is 2.2%. In 2000, the average time traveled to units in your area. The median rent at the time was $702. work was 15 minutes.

22 SHERMAN SHOPPING CENTER

2725 NORTH HWY 75, Kelley Workman SHERMAN, TX 75090 Vice President

David H. Luther Executive Vice President

Morgan Hansen Senior Associate INVESTMENT SALES INVESTMENT

23 INVESTMENT HIGHLIGHTS SHERMAN $14.07M price NewQuest Properties is pleased to exclusively represent the ownership group in the disposition of the Sherman Shopping Center which is a 170,722 square foot multi-tenant shopping experience sitting in the heart of the retail corridor in the largest city within the tri- county area on Highway 75 and Highway 82. Sherman is located 40 miles north of Dallas CBD and 33 miles South of Durant, Oklahoma and in 2010 Sherman-Denison MSA had a population of 120,877. 8.50% cap rate The shopping center has 170,722 square feet of inline space in two retail buildings which is currently 100% occupied while allowing an investor to see the value added by developing the 1.96-acre pad site with a building of 7,000 square feet. It is a well-built tilt wall and block construction from 1994 and renovated in 2008 keeping in the same format of quality construction with tinted window storefront retail spaces as well as office storefronts. Some area retailers include but are not limited to Cinemark, Hobby Lobby, Ross Dress for Less, 170,722 Target, Walmart, Lowes Home Improvement, Home Depot, Sam’s Club, Starbucks, Chipotle, RBA Best Buy, Buffalo Wild Wings, La Qunita, Holiday Inn Express, Cracker Barrel, Chick-fli-A, Tractor Supply and Harbor Freight Tools.

Major employers in Sherman are Tyson Foods, Texoma Health Systems, Texas Instruments, Cigna Healthcare, Sherman ISD, Kaiser Aluminum, Sunny Delight Beverage Co, Walmart, Spectrum Brands, ACS Manufacturing and Wilson N Jones Heath Systems. 23.84 acres

2008 year renov

24 25 TENANT SUMMARY SHERMAN

5 occupied tenants 100.0% occupied GLA 0 unoccupied tenants 0.0% unoccupied GLA

% LEASE BUILDING START LEASE ANNUAL TOTAL RENT NEXT RENT LEASE TENANT NAME SUITE AREA SHARE DATE END DATE SF PER YEAR INCREASE TYPE

Alorica Inc. 2703 55,000 32.2% 5/10/05 6/30/21 $5.50 $302,500 3/1/2020 NNN

Tuesday Morning 2711 13,170 7.7% 10/5/11 1/31/22 $9.74 $128,276 10/1/2020 NNN

Nautilus Family Fitness 2719 37,151 21.8% 3/18/09 11/30/23 $8.25 $306,496 4/1/2020 NNN

Orscheln Farm and Home 2725 58,266 34.1% 4/27/18 6/30/28 $7.00 $407,862 7/1/2020 NNN

Texas Roadhouse 2773 7,135 4.2% 6/2/06 6/30/26 $12.72 $90,750 8/1/2020 NNN

1/1/20 Develop Vacant Pad PAD 7,000 0% 1/1/20 1/1/25 $13.03 $0 NNN $91,200

TOTAL TENANTS 5 170,722 $7.24 $1,235,883

total rent 170,722 SF $1,235,883 per year 26 SITE PLAN SHERMAN

PAD AVAILABLE CALL CENTER 7,000 S.F.

1001 West Loop South, Suite 600 Houston, Texas 77027 Ph.713-952-0366

27 OPERATING $1,731,873 $1,196,617 effective gross revenue net operating income STATEMENT YEAR 1 YEAR 1 SHERMAN

PER PER INCOME YEAR 1 SQ FT YEAR 2 SQ FT

Scheduled Base Rental Income $1,235,883 $7.24 $1,327,083 $7.77

Reimbursement Income $495,990 $2.91 $495,991 $2.91

General Vacancy 0 0.00 0.00 0.00

Effective Gross Revenue $1,731,873 $10.14 $1,823,074 $10.68

OPERATING EXPENSES YEAR 1 PER SQ FT YEAR 2 PER SQ FT Utilities (CAM) $39,881 $0.23 $39,881 $0.23

Landscaping (CAM) $18,248 $0.11 $18,248 $0.11

Sweeping (CAM) $13,055 $0.08 $13,055 $0.08

Insurance $51,079 $0.30 $51,079 $0.30

Real Estate Taxes $290,227 $1.70 $290,227 $1.70

Management Fee $83,500 $0.49 $83,500 $0.49

Other Expenses - Non Reimbursable $39,266 $0.23 $39,266 $0.23

Total Expenses $535,257 $3.14 $535,257 $3.14

Expenses as % of EGR 30.9 % - 29.4 % -

Net Operating Income $1,196,617 $7.01 $1,287,818 $7.54

28 CADDO

43 TEXAS LEASE70 COMPARABLES

SHERMAN KINGSTON 77S TEXAS ENVILLE 32 35 TEXAS 70 DURANT

12 TEXAS MARIETTA

WILLIS

77 91 TEXAS

377 69 75 1417 TEXAS DENISON

503 TEXAS 2 91 1 TEXAS 3 69 SHERMAN SHOPPING CENTER

WHITESBORO 82 82 SHERMAN TYPICAL AVAIL. ASKING YEAR GAINESVILLE LEASE TYPE GLA FLOOR SF RENT BUILT 56 TEXAS Shafer Crossing RETAIL 45,950 45,950 9,713 $13.00/NNN 2002 11 0101 TEXAS 56 2916 Hwy 75, Sherman, TX 75090 75 TEXAS

35 1417 TEXAS Sherman Commons RETAIL 239,516 239,516 6,348 $16.50/NNN 2006 0202 3819 N US Hwy 75, Sherman, TX 75090

4001 N Hwy 75 0303 RETAIL 15,000 15,000 2,000 $12.00/NNN 1994 11 4001 N Hwy 75. Sherman, TX 75090 TEXAS

160 TEXAS TRENTON

289 TEXAS 121 TEXAS 78 ANNA TEXAS

377 CELINA

77 DENTON 29

380 LEASE COMPARABLES SHERMAN

01 02 03

SHAFER CROSSING SHERMAN COMMONS 4001 N HWY 75 2916 HWY 75, SHERMAN, TX 75090 3819 N HWY 75, SHERMAN, TX 75090 4001 N HWY 75, SHERMAN

Type Retail Type Retail Type Retail

GLA 45,950 GLA 239,516 GLA 15,000

Typical Floor 45,950 Typical Floor 239,516 Typical Floor 15,000

Available SF 9,713 Available SF 6,348 Available SF 2,000

Asking Rent $13.00/NNN Asking Rent $16.50/NNN Asking Rent $13.00/NNN

Year Built 2002 Year Built 2006 Year Built 1994

30 CADDO

43 TEXAS

77S KINGSTON TEXAS ENVILLE 32 35 TEXAS 70 DURANT SHERMAN

12 TEXAS REGIONAL MARIETTAMAP SHERMAN WILLIS

77 91 TEXAS

377 69 75 1417 TEXAS DENISON

503 SHERMAN SHOPPING TEXAS

91 CENTER TEXAS 69

WHITESBORO 82 82 SHERMAN GAINESVILLE

56 TEXAS

11 TEXAS 56 75 TEXAS

35 1417 TEXAS

11 TEXAS

160 TEXAS TRENTON

289 TEXAS 121 TEXAS 78 ANNA TEXAS

377 CELINA 31

77 DENTON

380 CADDO

43 TEXAS

70 SHERMAN 77S KINGSTON TEXAS ENVILLE 32 35 TEXAS 70 DURANT

12 TEXAS MARIETTA LOCAL MAP SHERMAN WILLIS

77 91 TEXAS 91 TEXAS

75 377 69 75 1417 TEXAS DENISON GALLAGHER DR. 503 TEXAS

91 TEXAS 69

WHITESBORO 82 82 82 SHERMAN SHOPPING SHERMAN GAINESVILLE

56 TEXAS CENTER

N. TRAVIS ST. 11 TEXAS 56 82 75 TEXAS

35 1417 TEXAS

N. LOY LAKE RD.

11 TEXAS

160 TEXAS TRENTON

289 TEXAS 121 TEXAS 78 ANNA TEXAS

377 CELINA W. LAMBERTH RD 91 TEXAS

77 DENTON 75

380

W. TAYLOR ST.

32 AERIAL VIEW Pecan Grove Village SHERMAN Austin Landing

Town North HIGHWAY 85

SHERMAN SHOPPING CENTER SITE

Turtle Creek Starlight Meadows Windsor Place

TEXOMA PKWY Highland Park Windwood Place

Western Hills HIGHWAY 75 HIGHWAY

College Park

Birge Fairview 33 LOCATION HIGHLIGHTS SHERMAN

Sherman is in Grayson County in North Texas on Interstate 75 which is the major North-South highway for Sherman which directly connects to Dallas to the south and Interstate 40 to the North in Oklahoma. Highway 82 runs east-west and connects Sherman to Wichita Falls to the east and Louisiana to the west. General aviation is provided by Sherman Municipal Airport and North Texas Regional Airport/Perrin Field in Denison. Sherman-Denison MSA is home to Lake Texoma which is the 12th largest US Army Corps of Engineer’s lake. Lake Texoma is a diverse recreational lake including two wildlife refuges, two state parks, fifty-four USACE-managed parks, twelve marinas, twenty-six resorts, hundreds of campgrounds and a variety of excellent gold courses. Power boating, sailing, personal watercraft and wind surfing all very popular on Lake Texoma. The lake has become a major sailing center based on its size, depth and miles of shoreline. Sherman-Denison MSA has an award-winning education system consisting of Sherman ISD, Denison ISD and Howe ISD. There are three private schools in Sherman, Grayson Christian School, St. Mary’s Catholic School and the Texoma Christian School. With over 7,500+ students across 12 campus, Sherman ISD was named to the U.S. News and World Report’s Best High School list and one of the Washington Post’s Most Challenging High Schools in America, top 8% across the nation. Sherman is home to Austin College, a private Presbyterian liberal arts college with an enrollment count of 1,224 for Fall of 2018 and ranked by US News and World Report as one of the county’s best small colleges. Grayson College with enrollment of 5,000 students for 2018 offers two-year community college programs for transfer programs, career training, credit and non- credit certificate programs. Sherman is directly in the path of the rapid northward expansion of the Dallas-Ft Worth metroplex. In 2018 Sherman added 900 new jobs and the local retail economy grew by 16% and home building increased by more than 14%. In 2019, Business Facilities Ranked Sherman as one of the Top cities to live with the Lowest Cost of Living with residents experiencing a much higher quality of life than those in larger cities. Just 20 minutes away is the Choctaw Casino Resort in Durant, Oklahoma. It is a 218,844 square feet of gaming floors, over 4,200 slot machines and776 hotel rooms and is owned by the Choctaw Nation of Oklahoma. The $360 million resort is the flagship of the Choctaw Nation gaming industry.

34 LOCATION DEMOGRAPHICS SHERMAN POPULATION 1 MILE 3 MILES 5 MILES

2024 Projected Population 5,316 37,803 53,173

2019 Estimated Population 4,787 33,933 47,782

2010 Census Population 4,108 31,292 43,350

POPULATION HOUSEHOLDS 2000 Census Population 3,781 29,776 40,334 47,782 18,906

HOUSEHOLDS 1 MILE 3 MILES 5 MILES

2024 Projected Households 2,097 13,965 19,764 MEDIAN AGE MEDIAN INCOME 2019 Estimated Households 2,007 13,330 18,906

34.1 $64,465 2010 Census Households 5,873 30,912 73,828

2000 Census Households 1,676 12,001 16,722

2019 Occupied Units 1,562 11,574 15,678 0-19 YEARS 20-64 YEARS 65+ YEARS

28.1% 56.5% 15.5% HOUSEHOLDS BY INCOME 1 MILE 3 MILES 5 MILES $150,000 or More 1.9% 6.0% 7.2% 2019 POPULATION BY AGE $100,000 to $149,000 6.2% 9.6% 10.4%

$75,000 to $99,999 12.3% 15.7% 15.4%

$50,000 to $74,999 18.0% 19.7% 18.9%

$35,000 to $49,999 18.8% 15.3% 15.4%

Under $35,000 42.7% 33.8% 32.7%

Average Household Income $46,774 $60,143 $64,465

Median Household Income $43,529 $53,318 $54,856

Per Capita Income $19,787 $23,873 $25,700

35 LOCATION DEMOGRAPHICS SHERMAN 19.8% HISTORIC ANNUAL GROWTH FROM 2010 - 2019 *20 mile radius

HOUSEHOLDS BY EXPENDITURE 1 MILE 3 MILES 5 MILES POPULATION PROFILE 1 MILE 3 MILES 5 MILES

Total Monthly Retail Expenditures $1,640 $1,942 $2,037 2019 Estimate Total Population 4,787 33,933 47,782

Consumer Expenditure Top 10 Categories Under 20 1,344 9,734 13,423

Shelter $748 $875 $916 20 to 34 Years 1,174 8,037 10,928

Transportation $630 $750 $786 35 to 39 Years 272 1,999 2,861

Food and Beverages $523 $613 $642 40 to 49 430 3,478 5,076

Health Care $304 $355 $371 50-64 756 5,586 8,132

Utilities $275 $317 $330 Age 65+ 813 5,099 7,362

Entertainment $188 $227 $239 Median Age 32.3 33.1 34.1

Contributions $105 $128 $135 Population 25+ by Education 3,041 21,170 30,317

Education $91 $112 $120 Elementary (0 to 8) 120 1,368 1,707

Apparel $120 $143 $150 Some High School (9 to 11) 230 1,755 2,277

Furnishings and Equipment $117 $141 $149 High School Graduate (12) 782 6,496 9,340

Some College (13-15) 852 5,225 7,586

Associate Degree Only 450 2,049 3,131

Bachelor Degree Only 388 2,836 4,065

Graduate Degree 219 1,442 2,212

36 LOCATION DEMOGRAPHICS SHERMAN

RACE & ETHNICITY The current year racial makeup of your selected area is as follows: 69.7% White, 11% Black, 1.5% Native American and 2.5% Asian/Pacific Islander. Compare these to US averages which are: 70.20% White, 12.89% Black, 0.19% Native American and 5.59% Asian/Pacific Islander. People of Hispanic POPULATION origin are counted independently of race. People of Hispanic origin make up In 2019 the population in your selected geography is 47,782. 33.6% of the current year population in your selected area. Compare this to The population has changed by 1.7% since 2000. It is estimated that the US average of 18.01%. the population in your area will be 53,173 five years from now, which represents a change of 2.3% from the current year. The current INCOME population is 45.6% male and 54.4% female. The median age of the population in your area is 35.5 compare this to In 2019 the median household income for your selected geography is the US average which is 37.95. The population density in your area is 609 $54,856; compare this to the US average which is currently $58,754. people per square mile. The median household income for your area has changed by 2.8% since 2000. It is estimated that the median household income in your area will be $63,696 five years from now, which represents a change of 1.4% from the HOUSEHOLDS current year. The current year per capita income in your area is $25,700; There are currently 18,906 households in your selected geography. compare this to the US average, which is $32,356. The current year average The number of households has changed by 1.1% since 2000. It is estimated household income in your area is $64,465; compare this to the US average that the number of households in your area will be 19,764 five years from which is $84,609. now, which represents a change of 0.9% from the current year. The average household size in your area is 2.4 persons. EMPLOYMENT In 2019, there are 37,366 employees in your selected area, this is also HOUSING known as the daytime population. The 2000 Census revealed that The median housing value in your area was $139,282 in 2019, compare this 55.8% of employees are employed in white-collar occupations in this to the US average of $201,842. In 2000, there were 10,404 owner occupied geography, and 44.2% are employed in blue-collar occupations. In 2019, housing units in your area and there were 8,502 renter occupied housing unemployment in this area is 1.9%. In 2000, the average time traveled to units in your area. The median rent at the time was $738. work was 14.9 minutes.

37 3 SALES COMPARABLES

2 6

5 WACO & SHERMAN PORTFOLIO

PRICE CLOSE OF SALES PER SF YEAR LEASE ESCROW PRICE (BUILDING) CAP RATE GLA BUILT

Hamilton Crossing 01 11/21/18 $27.75M $158.15 8.50% 175,464 2007 111-234 Hamilton Crossing Dr,, Alcoa TN 37701

University Town Center 6/24/19 $20.13M $173.03 8.19% 116,379 2007 02 1500-1680 NW 24th Ave, Norman, OK 73069

Chesterfield Village Square 03 27895-27953 23 Mile Rd, Chesterfield, MI 12/28/18 $14.71M $138.91 8.55% 105,934 1995 48051

East Washington Place 8/2/18 $31.33M $244.80 8.00% 128,012 2013 04 401 Kenilworth Dr, Petaluma, CA 94952

Lake Walden Square 7/10/18 $18.7M $107.96 8.50% 173,225 1992 05 105-209 W Alexander St, Plant City, FL 33566

Laguna Village 8/15/18 $14.7M $144.07 8.23% 102,033 1988 06 5835-5965 W Ray Rd, Chandler, AZ 85226

38 SALES COMPARABLES

01 02 03

HAMILTON CROSSING UNIVERSITY TOWN CENTER CHESTERFIELD VILLAGE SQUARE 111-234 HAMILTON CROSSING DR, ALCOA 1500-1680 NW 24TH AVE, NORMAN, 27895-27953 23 MILE RD, CHESTERFIELD, TN 37701 OK 73069 MI 48051

Close of Escrow 11/21/18 Close of Escrow 6/24/19 Close of Escrow 12/28/18

Sale Price $27,750,000 Sale Price $20,136,768 Sale Price $14,715,000

Price/SF Price/SF Price/SF $158.15 $173.03 $138.91 Building Building Building

Cap Rate 8.50% Cap Rate 8.19% Cap Rate 8.55%

GLA 175,464 GLA 116,379 GLA 105,934

Year Built 2007 Year Built 2007 Year Built 1995

39 SALES COMPARABLES

04 05 06

EAST WASHINGTON PLACE LAKE WALDEN SQUARE LAGUNA VILLAGE 401 KENILWORTH DR, PETALUMA, CA 105-209 W ALEXANDER ST, PLANT CITY, 5835-5965 W RAY RD, CHANDLER, AZ 94952 FL 33566 85226

Close of Escrow 8/2/18 Close of Escrow 7/10/18 Close of Escrow 8/15/18

Sale Price $31,337,772 Sale Price $18,701,464 Sale Price $14,700,000

Price/SF Price/SF Price/SF $244.80 $107.96 $144.07 Building Building Building

Cap Rate 8.00% Cap Rate 8.50% Cap Rate 8.23%

GLA 128,012 GLA 173,225 GLA 102,033

Year Built 2013 Year Built 1992 Year Built 1988