ALEXANDRIA, VIRGINIA CONFIDENTIAL EXECUTIVE SUMMARY EXECUTIVE SUMMARY HFF is pleased to present EOS Twenty-One (the “Property”), a 1,180-unit multifamily community located in Alexandria, Virginia. Conveniently located inside the Capital Beltway (I-495) and just off of I-395, EOS Twenty-One is one mile north of the Van Dorn Metro Station and offers free shuttles daily to the station. The asset is directly across I-395 from the Department of Defense’s (“DOD”) recently built Washington Headquarters Service (“WHS”) Mark Center that centralized 8,000 jobs in 2013, eight miles south of the 14th Street Bridge (Downtown D.C.), and four miles west of historic Old Town Alexandria. The Property is an easy commute to many of the region’s thriving employment centers as well as countless dining, entertainment, and recreation attractions in Old Town/Alexandria, Shirlington, the Rosslyn-Ballston Corridor, Crystal City, Pentagon City, and Washington, D.C. Furthermore, EOS Twenty-One is poised for future growth due to the neighborhood’s planned renaissance with Howard Hughes Corporation’s ambitious redevelopment plans for the Landmark Mall, value add potential at the asset, and core location proximate to strong demand drivers in Washington, D.C. and Northern Virginia. EOS Twenty-One presents an extraordinary investment opportunity with reliable in place cash flow and strong historical occupancy (greater than 95% over the past three years); and presents an immediate value-add potential through continued interior unit upgrades that has demonstrated proven rent premiums. The current renovation package is achieving an impressive average return on investment of 16.2%. The common areas have been upgraded and revamped since 2004, including the clubhouse, fitness center, new hallway carpeting and lighting, landscaping, windows, patio doors, elevators, and more. Additionally, the high demand for workforce housing combined with a shrinking inventory, especially at amenity- rich locations inside the Beltway, makes EOS Twenty-One a highly sought after community at an advantageous price-point relative to replacement cost. With a critical mass of 1,180 apartment units, EOS Twenty-One also offers the potential for many operational efficiencies due to its scale. 2 THE PROPERTY EOS Twenty-One originally included 1,524 units in twenty residential Today, EOS Twenty-One consists of: buildings plus the clubhouse that were constructed in two phases (1968 • Total of 14 nearly identical residential buildings with 1,180 units and 1972). In 2004, an extensive renovation strategy was commenced to reposition the property, including substantial building and unit • 3 five-floor buildings (100 units each) upgrades as well as the condominium conversion of 344 residential • 11 four-floor buildings (80 units each) units in six buildings at the rear of the community, all of which were sold. • 1,496 surface parking spaces • An abundance of amenity spaces including: UNIT MIX • Large clubhouse with coffee center, game room, billiards, Type Units SF Classic Premier Elite business center, and free WiFi Studio 236 496 118 75 43 • Two resort-style pools • 24-hour fitness center offering a variety of classes 1BR 486 708 200 205 81 • On-site day care center 1BR (corner) 118 843 42 61 15 • Convenience store/deli 2 BR 222 1,048 62 105 55 • Four tennis courts 2 BR (corner) 118 1,182 48 66 4 • Expansive dog park (“Wiggly Field”) • Barbecue and picnic area Total 1,180 790 470 512 198 • Theater Room • Children’s Playground SITE PLAN 3 INVESTMENT HIGHLIGHTS WASHINGTON, D.C. INFILL LOCATION EOS Twenty-One’s prime location within close-in Alexandria provides quick Metro access via the community shuttle (Van Dorn Metro Station), excellent proximity to major transportation routes (I-395, the Capital Beltway, I-95, George Washington Parkway), and top employment and lifestyle amenity centers. Alexandria, Crystal City, Pentagon City, Shirlington, the Rosslyn-Ballston Corridor, Falls Church, Fairfax, Springfield, Tysons Corner, and Washington, D.C., with a combined total office space of over 260 million SF and over 70 million SF of retail are all within a 20-minute drive of the Property. The Washington, DC metro area has shown consistent growth and stability, having added 38,000 new jobs in the 12 month period ending April, 2017. Recent employment growth in the DC metro region has been led by expansion in the private sector with the backdrop of the federal government as a permanent economic driver. Additionally, northern Virginia has enjoyed a major presence in employment growth while Alexandria unemployment is at an impressive 3.4%. CLASS B EFFECTIVE RENT GROWTH STABILITY & UPSIDE $1,600 $1,550 EOS Twenty-One generates a reliable cash flow stream, demonstrating $1,500 strong historical performance in rent growth and occupancy. As a $1,450 discount to Class A properties, and with no future competing supply, $1,400 EOS Twenty-One will maintain its position as a stable income source for the foreseeable future with excellent upside prospects. $1,350 $1,300 • Positive year over year Class B absorption indicates a shortage of $1,250 workforce housing in the Greater Washington Metro Area. $1,200 • Class B stabilized vacancy in DC Metro area is very low at 2.2% 2006 2008 2010 2012 2014 2016 2018 • High construction costs have caused longer term supply pipelines to taper. Real estate fundamentals point toward a shortage in Class B inventory, suggesting sustained rent growth within the asset class. VALUE-ADD OPPORTUNITY EOS Twenty-One has demonstrated its ability to achieve rental premiums on upgraded units, benefitting from its strong amenity package to offer residents an attractive lifestyle experience at a price level between Class B comps and the newest communities within the submarket. With a blended return on cost of 16.2% and 470 remaining un-renovated units, the Property offers a significant value-add opportunity. Based on modest improvements such as upgraded counters, washer/ dryers, and kitchen appliances, rental upside of 15% - 20% is expected to be achieved, presenting any investor a unique opportunity to capitalize on a critical mass of apartment units at an infill location. 4 SHIRLINGTON PENTAGON CITY U.S. CAPITOL BAILEY’S CROSSROADS LANDMARK MALL OLD TOWN ALEXANDRIA 5 EXECUTIVE SUMMARY LANDMARK MALL SPRINGFIELD TOWN CENTER ADJACENT LANDMARK MALL RENOVATION INTO VIBRANT MIXED-USE TOWN CENTER Howard Hughes Corporation plans to revitalize the submarket with a walkable, mixed-used urban village which will bring approximately: SPRINGFIELD TOWN CENTER • 317,000 square feet of modern shops and restaurants Conveniently located just one Metro stop or a 10-minute drive away • Up to 400 new residential units at the Springfield/Franconia Metro Station (Blue and Yellow Lines), • Updated parking structure Springfield Town Center is a recently redeveloped amenity hub, with The immediate neighborhood will be transformed into an open-air over 1.3 million SF of shopping, dining, and entertainment. The community destination featuring: former mall underwent a massive upgrade and repositioning in 2014 and now offers many prime retail options as well as a 41,000 SF • Multiple plazas and green spaces LA Fitness gym and a 12-screen Regal Cinema with recliner seating. • Outdoor seating, seasonal entertainment and public art Popular stores include Macy’s, Nordstrom Rack, DICK’s Sporting • Numerous full-service and fast-casual dining options Goods, Target, TopShop, White House | Black Market, Sephora, • Luxury 10-screen cinema Michael Kors, Francesca’s, H&M, Charlotte Russe, Bath and Body The project is expected to break ground in the summer of 2018 with a Works, Payless, Victoria’s Secret, American Eagle Outfitters, Forever 24-month timeframe to delivery, which is ideal for those seeking value- 21, Zumiez, Foot Locker, and more. add returns through renovations and rent growth. 6 PROXIMITY TO MAJOR EMPLOYMENT CENTERS Among the many regional employment centers easily accessible Yellow Metro Lines. The Pentagon, with 17.5 miles of corridors and over from EOS Twenty-One, the National Science Foundation “NSF”, the 3.7 million square feet, is one of the world’s largest office buildings and Pentagon, Department of Defense “DOD”, Washington Headquarters approximately 25,000 employees work there every day. Service “WHS” at Mark Center, and Fort Belvoir are some of the major drivers surrounding the Property. The DOD’s Washington Headquarters Service at Mark Center opened in 2011 placing 1.7 million square feet of office space directly across The NSF will be relocating to Alexandria beginning in Fall 2017. The I-395 from EOS Twenty-One. The Mark Center employs over 8,000 NSF boasts an annual budget of $7.5 billion and are the funding people. source for approximately 24% of all federally supported basic research conducted by America’s colleges and universities. As a result of the Base Realignment and Closure “BRAC” Initiative, Fort Belvoir doubled its workforce to 51,000 employees. BRAC also The Pentagon, headquarters of the Defense Department, is located injected $1.03 billion into newly built Fort Belvoir Community Hospital about six miles from EOS Twenty-One or six stops on either the Blue or as well as a new 2.3 million square foot NGA headquarters nearby. 7 Holliday Fenoglio Fowler, L.P. (“HFF”) a Virginia licensed real estate broker. HFF has been engaged by the owner of the property [properties] to market it [them] for sale. Information concern- ing the property [properties] described herein has been obtained from sourc- FINANCING es other than HFF, and neither Owner nor HFF, nor their respective equity G. WALTER COKER BRIAN J. CRIVELLA NICOLE BRICKHOUSE holders, officers, employees and Holliday Fenoglio Fowler, L.P. Holliday Fenoglio Fowler, L.P. Holliday Fenoglio Fowler, L.P. agents makes any representations or Managing Director Senior Director Associate warranties, express or implied, as to 202.533.2537 202.533.2522 202.533.2507 the accuracy or completeness of such [email protected] [email protected] [email protected] information.