Sonata Townhomes 8101 Kelton Drive Gilroy, CA 95020 Offering

Home , Christmas Hill Park, Gilroy Gardens, Santa Cruz Mountains, Uvas Creek Preserve

Offering Memorandum

Sonata Townhomes 8101 Kelton Drive Gilroy, CA 95020 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 by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. 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. Marcus & Millichap 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 and square footage of the property and improvements, the 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 tenant's plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2018 Marcus & Millichap. All rights reserved.

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SONATA TOWNHOMES Gilroy, CA ACT ID ZAB0010145

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TABLE OF CONTENTS

SECTION

INVESTMENT OVERVIEW 01 Offering Summary Property Photos Aerial Photos, Regional and Local Maps Discover Gilroy

FINANCIAL ANALYSIS 02 Rent Roll Summary Operating Statement

Pricing Detail

MARKET COMPARABLES 03 Sales Comparables

MARKET OVERVIEW 04 Demographic Analysis

3 Investment Overview SONATA TOWNHOMES

OFFERING SUMMARY PROPERTY SUMMARY

THE OFFERING PROPOSED FINANCING Property Sonata Townhomes First Trust Deed Price $7,500,000 Loan Amount $5,625,000 Property Address 8101 Kelton Dr, Gilroy, CA Loan Type Proposed New Assessors Parcel Number 790-39-023 Interest Rate 3.6% Zoning R-3 Amortization 30 Years SITE DESCRIPTION Loan Term 5 Years Number of Units 18 Loan to Value 75% Number of Buildings 5 Debt Coverage Ratio 1.27 Number of Stories 2 Year Built/Renovated 1987 Rentable Square Feet 27,000 Lot Size 1.4 acre(s) Type of Ownership Fee Simple Parking 18 Garages / 18 Open / 7 Guest UTILITIES Water Master metered Electric Individual Gas Individual CONSTRUCTION Foundation Crawl Framing Wood Frame Exterior Wood Siding Parking Surface Concrete Driveways, Asphalt Open Parking Roof 30-year Composition

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OFFERING SUMMARY INVESTMENT OVERVIEW Sonata Townhomes, consisting of (18) 3 bedroom / 1 ½ bath townhomes in a family oriented residential neighborhood in northwest Gilroy, provides the benefits of a "single family home" lifestyle and historically securing long-term residents for owners. Townhome units are unique in Gilroy and its surrounding neighborhoods, and three bedroom units are even more rare in the local markets. Sonata brings a high demand rental option to this dynamic location in Santa Clara County.

The 18 townhomes in 5 buildings are dispersed on a generous 1.4 acre parcel and open green spaces. 11 of the units have been recently renovated with sophisticated upgrades including new quartz counter tops, interior LED lighting, new vinyl wood plank flooring, fixtures and hardware, window coverings, custom paint, and new appliances. Residents appreciate the added convenience of private fenced patios, the comfort of forced individual air conditioners, washer/dryer hookups, and individual garages with automatic garage door openers and direct in-unit access.

Sonata offers additional rent growth thru a combination of the generous California rent control ordinance (5% + annual CPI index = 7.8% in 2019), and continuation of the unit renovation program for the remaining 7 thus capturing $180 per unit/month income growth. The property has received a clean property inspection report and Section 1 termite clearance, based on the seller’s attention to remediation of maintenance items including, exterior siding and trim repairs, drainage repairs, new LED exterior lighting lends itself to owners pride of ownership.

INVESTMENT HIGHLIGHTS

▪ Townhouse complex - 3 BR/1.5 BA ▪ Private Yards / Private garage with opener and direct access ▪ Washer/Dryer Hook Ups ▪ Forced Heat And Air Conditioning ▪ 11 Renovated Units

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OFFERING SUMMARY EXECUTIVE SUMMARY

VITAL DATA Price $7,500,000 CURRENT YEAR 1 Down Payment 25% / $1,875,000 CAP Rate 5.19% 5.57% MAJOR EMPLOYERS Loan Amount $5,625,000 GRM 12.27 11.68 Net Operating Loan Type Proposed New $389,569 $417,957 EMPLOYER # OF EMPLOYEES Income Net Cash Flow Interest Rate / Advance Services Inc 2,167 3.6% / 30 Years After Debt 4.41% / $82,683 5.92% / $111,072 Amortization Service Saint Louise Hospital 500 Price/Unit $416,667 Total Return 10.09% / $189,127 11.81% / $221,411 Gavilan Jint Cmnty Cllege Dst 345 Price/SF $277.78 Footh-De Anza Commun Colleg Di 318 Number of Units 18 Giacalone Electrical Svcs Inc 275 Rentable Square Feet 27,000 Walmart 259 Number of Buildings 5 Cordevalle Golf Club LLC 250 Number of Stories 2 Year Built / Renovated 1987 / 2020 Soares Lumber Company 230 Lot Size 1.4 acre(s) Gilroy Gardens Family Theme Pk 204 Target 200

UNIT MIX Costco 196 NUMBER APPROX. Communty Slns For Chldrn Fmls 185 UNIT TYPE OF UNITS SQUARE FEET 18 3 BR/1.5 BA 1,500 DEMOGRAPHICS 18 Total 27,000

1-Miles 3-Miles 5-Miles 2018 Estimate Pop 22,407 61,088 69,865 2010 Census Pop 18,764 51,069 58,430 2018 Estimate HH 7,051 17,846 20,562 2010 Census HH 5,849 14,807 17,079 Median HH Income $93,159 $88,925 $91,520 Per Capita Income $39,933 $35,295 $37,049 Average HH Income $126,285 $119,981 $125,056

#7 8101 Kelton Drive OFFERING SUMMARY

DETAILED CAPITAL IMPROVEMENTS Since 2019, Sonata Townhomes has received the following upgrades:

Interior Full Unit Renovation (11 of 18 units) $189,408 Includes: Granite kitchen countertops, vinyl plank flooring, bedroom carpeting, full paint, lighting, hardware replacement - Units 2, 3, 4, 7, 8, 9, 10, 11, 14, 15, 18

Exterior Motorized Garage Doors (18) $8,640

Door and Trim Paint $7,000

Dry Rot Remediation – trim, fascia, parapet walls $12,975

TOTAL CAPITAL IMPROVEMENTS $218,023 Sonata Townhomes provides residents the best of both worlds ~

The look and feel of “single-home living”, and the community of shared open green spaces.

Sonata Townhomes 8101 Kelton Gilroy, CA

Located in a quiet residential pocket Renovated units feature updated modern bathrooms and kitchens SONATA TOWNHOMES

AERIAL PHOTO

Sonata Townhomes 8101 Kelton Gilroy, CA

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REGIONAL MAP

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LOCAL MAP

GILROY ~ Quality of Life

LOCATION HIGHLIGHTS ❖ Excellent Proximity to Top RegionalEmployers

❖ Anritsu, Morgan Hill, 500 Employees, 11.7 mi. ❖ IBM, San Jose, 1,500 Employees, 17.7mi. ❖ Hitachi Data Systems, San Jose, 3,000* Employees, 22.7 mi. ❖ Ernst & Young, San Jose, 650 Employees, 29.8 mi. ❖ Adobe Systems, San Jose, 1,000 Employees, 29.9 mi. ❖ PricewaterhouseCoopers, San Jose, 700 Employees, 29.9mi. ❖ Netflix, Los Gatos, 2,000* Employees, 32.6 mi. Gilroy Caltrain Station - Downtown Gilroy ❖ eBay, San Jose, 16,200* Employees, 33.5 mi. ❖ Intel, Santa Clara, 5,700* Employees, 35.9mi. ❖ Cisco Systems, San Jose, 8,000 Employees, 36.3mi. ❖ The Gilroy Caltrain Station, located Two miles from Sonata Townhomes, ❖ Saint Louise Regional Hospital, Gilroy, 500 Employees, 3.4 mi. offers residents convenient commutes to San Jose, Santa Clara, Sunnyvale, ❖ Monterey Gourmet Foods, Gilroy, 250 Employees, 4.0 mi. Mountain View, Palo Alto, the Peninsula and San Francisco. Just a short drive ❖ Gavilan College, Gilroy, 460 Employees, 4.2 mi. from the community is US Hwy 101 that provides access to the Bay Area’s key transportation arteries, including State Routes 85, 87 and 237, and *Total number of employees at multiple metro locations Interstates 280, 680 and 880.

❖ Minutes to extensive retail options – including the Gilroy Premium Outlet Center (145 Designer and Name Brand Outlet Stores), Pacheco Pass Center (WalMart, Costco and Best Buy), Gilroy Crossings (Target, Kohl’s, Pier 1) and Gilroy’s Boutique Downtown District. The Gilroy Plaza Shopping Center and Town Center Shopping Center, Home to Safeway, CVS Pharmacy, Nob Hill Foods and Starbucks, are both within blocks from Sonata Townhomes.

❖ Gilroy demographics demonstrate the strength of the Multifamily market and the potential for continued rent growth: only 37 percent of the population can afford a median-priced home, and the Own-versus-Rent Affordability Gap is $833, a 51% cost premium.

❖ Abundant parks, open space, recreation centers, hiking and biking paths throughout the city and region, including the 87,000-acre Henry W. Coe State Park, Dowdy Ranch and Yamato Hot Springs, Eagle Ridge Golf Club, Gilroy Golf Course, Gilroy Sports Park, Gilroy Gardens, El Roble and Miller Parks, Downtown San Jose (Sixth Stop from Gilroy Caltrain Station) Christmas Hill Park and Ranch and the Debell Uvas Creek Preserve. GILROY ~ Quality of Life

Located just 20 miles south of San Jose, Gilroy provides residents with a serene and relaxing setting within a short commute of Silicon Valley’s thriving and busy environment. The city is nestled between the Santa Cruz Mountains to the west, the Diablo Range to the east and the Monterey Peninsula/Central Coast to the south. The area offers residents an abundance of exceptional local and regional recreation, retail, dining and entertainment options.

Exceptional Retail and Dining From its charming downtown historic district to the thriving Gilroy Premium Outlets, Gilroy provides an abundance of retail options for its residents and neighboring cities in the South Bay.

The Gilroy Premium Outlets, located just 2.4 miles northeast of The Vineyards Gilroy Premium Outlets along U.S. Highway 101, draws shoppers from all over the Bay Area and Central Coast regions. This impressive five-phase retail complex boasts over 150 name brand retail outlet stores including designer fashions and sportswear, fine At the intersection of U.S. Highway 101 and State Highway 152, the 15-acre leather and luggage, accessories and jewelry, housewares and home furnishings, Pacheco Pass Complex features national tenants such as Walmart, Old Navy, gifts and specialty items and a variety of dining options. Key outlet stores HomeGoods, Costco, Best Buy, Chili’s and a multitude of other retail, dining, include Coach, Hugo Boss, Ralph Lauren, Saks Fifth Avenue Off 5th, Tommy financial and personal service vendors. Across from the Pacheco Pass Center Hilfiger, Banana Republic, Gap, Ann Taylor, Calvin Klein, Samsonite, Michael Kors, along Highway 152 is Gilroy Crossings with approximately 420,000 square Sunglass Hut, Cole Haan, Calphalon Kitchen, and Sony. feet of retail space anchoredby prominenttenants such as Target,Kohl’s, Bed, Bath & Beyond, Pier 1 Imports, Michaels, Starbucks, Panera Bread and BevMo!.

Downtown Gilroy’s historic district, less than two miles from The Vineyards, offers an attractive blend of antique and boutique retail shopping experiences and an ever-growing selection of dining and entertainment opportunities. Farmer’s markets, live concerts, theater, comedy shows, dancing and historic walking tours all addto thecharmandvitality of this downtowndistrict.

Closer to home, residents of The Vineyards have convenient access to neighborhood retail centers just a few blocks away on 1st Street. The Gilroy Plaza Shopping Center includes anchor tenants Safeway and CVS Pharmacy, and the Town Plaza Shopping Center features Nob Hill Foods, Starbucks and variousdining and personalserviceretailers.

Downtown Gilroy GILROY ~ Quality of Life

Eagle Ridge GolfClub Outdoor Recreation and Entertainment

The award-winning Eagle Ridge Golf Club and residential community are set along the Gilroy has 12 parks, and has won more park design awards from the California Park and base of the Gavilan Mountains less than two miles from The Vineyards. The premier, Recreation Society than any other city in California, including awards for Christmas Hill gated single-family residential community consists of approximately 900 homes spread Park (home of the Garlic Festival), Las Animas Park, San Ysidro Park, and El Roble Park. over 120 acres with an average price of $730,000 over the last 12 months. In addition to The Uvas Creek Park Preserve is a 125-acre natural corridor along the banks of the Uvas the Eagle Ridge golf course, the community includes social activities, a pool, tennis Creek and includes nature trails and an interpretive center. The Gilroy Gardens Family courts, basketball courts and two parks. The public golf course has been ranked as one of Theme Park, owned by the City of Gilroy, is California’s only horticultural theme park the top 10 courses in Silicon Valley. The Clubhouse, situated high up in the foothills above designed for families with young children and garden lovers featuring rides, attractions Gilroy, offers spectacular panoramicviews of theUvas Valley below. and majestic gardens and educational exhibits. Regional and State Parks in the Gilroy vicinity include Mt. Madonna County Park (3,039 acres) to the west, Uvas Canyon County Park (1,049 acres) to the north, Harvey Bear Ranch County Park (4,595 acres) and Henry Coe State Park (32,000 acres) to the east. In addition, Anderson, Calero, Chesbro, Uvas and Coyote reservoirs as well as Coyote Lake are all nearby, offering a myriad of water- relatedsports and recreational activityoptions.

Gilroy is homeof the annual Garlic Festival, one of the largest food festivals in the United States. What started as a small regional festival has become an international event that draws over 100,000 garlic lovers from around the world and generates total revenue in excess of $2 million. In addition to offering many diverse garlic based dishes, attendees also enjoy three stages full of musical entertainment, the Great Garlic Cook-off and celebrity cooking demonstrations.

Eagle Ridge Golf Club

The Gilroy Wine Trail

The Gilroy Wine Trail is comprised of 18 well-regarded local wineries. Boutique wine production is a large part of Gilroy’s western area, mostly consisting of older family estates around the Mount Madonna County Park mountain bases. The trail runs through Gilroy, San Martin and Morgan Hill and features local vintners such as Guglielmo Winery, Martin Ranch Winery, Thomas Kruse andSolis Winery to name a few. Daily wine tastings and tours are available at most wineries on the Trail with some also offering concerts, festivals, wine-maker dinners andspecial event venues. Gilroy Winery 8101 Kelton Drive GILROY ~

CONVENIENT ACCESS TO MAJOR TRANSPORTATION CORRIDORS AND PUBLIC TRANSIT STATIONS

Estimated Travel Times (by car, from subject property)

Highway 152 1 minute; 0.1 miles Gilroy Caltrain Station 5 minutes; 2.2 miles Highway 101 6 minutes; 2.0 miles 12 Highway 85 23 minutes; 21.6 miles

Highway 1 30 minutes; 18.1 miles 10 San Jose Diridon Intermodal Transit Station 37 minutes; 32.7 miles San Jose International Airport 39 minutes; 36.1 miles

Fremont BART Station 54 minutes; 48.7 miles 11 9

Distance to Local Points of Interest (from the Gilroy CaltrainStation) 8 Morgan Hill 15 minutes Downtown San Jose 50 minutes Santa Clara 55 minutes 5 4 Sunnyvale 64 minutes Mountain View 69 minutes 3

Palo Alto 76 minutes 2 Fremont * 80 minutes Redwood City 83 minutes Millbrae 98 minutes Dublin/Pleasanton * 108 minutes SONATA 1 San Francisco International Airport * 110 minutes TOWNHOMES 4th & King Street 115 minutes (San Francisco/Mission Bay/AT&T Park/Chase Center)

* Involves transfer to one or more of the ACE, Amtrak, BART or VTA bus lines. Note: These times listed are estimated times. Financial Analysis SONATA TOWNHOMES

FINANCIAL ANALYSIS RENT ROLL SUMMARY

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FINANCIAL ANALYSIS OPERATING STATEMENT

NOTES

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FINANCIAL ANALYSIS PRICING DETAIL

22 Market Overview SONATA TOWNHOMES

MARKET OVERVIEW SAN JOSE OVERVIEW

Known to the world as Silicon Valley, the San Jose metro is located at the southern end of the San Francisco Bay and encompasses Santa Clara and San Benito counties. A large portion of the area’s 1,315 square miles is unincorporated ranch and farmland.

The metro contains roughly 2 million inhabitants and more than half of the region’s residents reside in the city of San Jose. It is the metro’s largest city with more than 1 million residents, followed by Sunnyvale and Santa Clara. Venture capital funds received in the 1990s helped to turn the area into the world’s most prominent technology hub, a distinction that remains today.

METRO HIGHLIGHTS

PREMIER HIGH-TECH CENTER Silicon Valley’s dense concentration of high-tech jobs is world renowned, attracting a variety of large employers and startups.

HIGH INCOMES Well-paying jobs in the tech sector contribute to a median annual household income level that is almost double the U.S. median.

HIGHLY EDUCATED WORKFORCE Nearly half of all residents age 25 and older have obtained at least a bachelor’s degree, well above the U.S. average.

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MARKETINGDEMOGRAPHICS TEAM

ECONOMY ▪ The San Jose employment base contains more than 1.1 million workers, ranking the metro as one of the 30 largest job markets in the nation. ▪ There are 18 Fortune 500 companies headquartered in San Jose, including Intel, Cisco Systems, Apple Inc., eBay and Alphabet. ▪ The area’s many institutions of higher learning, including Stanford, San Jose State and Santa Clara University, support these companies by graduating thousands of engineering and computer science students each year.

MAJOR AREA EMPLOYERS

Cisco Systems County of Santa Clara Adobe Systems Inc. Hewlett-Packard Co. City of San Jose Intel Corp. eBay U.S. Veterans Medical Center San Jose State University

Apple * Forecast

SHARE OF 2019 TOTAL EMPLOYMENT

16% 21% 9% 9% 3% MANUFACTURING PROFESSIONAL AND GOVERNMENT LEISURE AND HOSPITALITY FINANCIAL ACTIVITIES BUSINESS SERVICES

12% 4% + 15% 9% 2% TRADE, TRANSPORTATION CONSTRUCTION EDUCATION AND INFORMATION OTHER SERVICES AND UTILITIES HEALTH SERVICES

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MARKETINGDEMOGRAPHICS TEAM

DEMOGRAPHICS

▪ The metro is expected to add approximately 107,300 people through 2024 and during this time more than 41,000 households will be formed. SPORTS ▪ High home prices contribute to a homeownership rate of 56 percent, which is below the national rate of 57 percent. ▪ Roughly 48 percent of residents age 25 and older hold a bachelor’s degree, including 22 percent who have also obtained a graduate or professional degree.

2019 Population by Age

6% 19% 6% 30% 26% 13% 0-4 YEARS 5-19 YEARS 20-24 YEARS 25-44 YEARS 45-64 YEARS 65+ YEARS EDUCATION

2019 2019 2019 2019 MEDIAN POPULATION: HOUSEHOLDS: MEDIAN AGE: HOUSEHOLD INCOME: 2M 694K 37.1 $121,300 Growth Growth U.S. Median: U.S. Median: 2019-2024*: 2019-2024*: 5.4% 5.9% 38.1 $60,800

QUALITY OF LIFE The San Jose metro has an enviable combination of major universities that produce a highly educated workforce, cutting-edge firms and exceptional affluence. Residents can visit a plethora of museums, including the San Jose Museum of Art and the Tech Museum ARTS & ENTERTAINMENT of Innovation. Santa Clara County is home to performing arts companies and hosts the San Jose Jazz Festival. The San Francisco 49ers play their home games at Levi’s Stadium and the San Jose Sharks hockey team plays at the SAP Center. Other sports venues include Excite Ballpark and Stevens Stadium. The metro is minutes away from San Francisco and some of the world’s finest wine-producing regions, notably the Napa, Sonoma and Alexander valleys.

* Forecast Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody’s Analytics; U.S. Census Bureau

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MARKETINGDEMOGRAPHICS TEAM

SAN JOSE METRO AREA

Transit Networks Increasingly Key for Development and Investment Strategies

Mountain View captivating builders, driving development to record high. Apartment construction will be abundant this year as 5,500 units are slated for delivery — the highest total this millennium. Northern sections of Sunnyvale will get much-needed supply amid sub-3 percent vacancy, while downtown San Jose will also witness significant development as builders focus on areas that align with public transit routes. Mountain View will post the strongest supply growth, adding more than 1,500 units, as developers seek to keep pace with the steady job creation of nearby tech firms. The influx of supply will outstrip the expected absorption of 4,600 apartments, putting short-term pressure on marketwide vacancy as it’s pushed to the low-4 percent range. Some areas such as East San Jose will retain limited apartment availability, keeping local rent growth among the strongest in the market. Over the past five years, the average effective rent in East San Jose has risen 29 percent, the most of any submarket within the metro.

Favorable yields bringing investors to urban San Jose. Local buyers remain a key component of investment activity as they home in on many of the area’s Class C assets, seeking properties with upside potential. Assets throughout Los Altos and Palo Alto in the five- to 10-unit range will remain highly targeted this year, fueled by the vigorous rental demand from nearby employment hubs, in addition to consistently robust rent growth. Downtown San Jose will also attract these investors as this part of market offers comparatively affordable entry costs and average returns in the mid-4 percent band, up to 50 basis points above the market average. While local interest should remain stable, out-of-state buyers will continue to arrive in San Jose, particularly institutional groups. In recent months, investors from the East Coast directed their focus to the area’s larger Class B complexes along the Caltrain line in southern sections of the market, purchasing units for roughly $420,000 per door.

* Estimate; ** Forecast Sources: Marcus & Millichap Research Services; BLS; CoStar Group, Inc.

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SAN JOSE METRO AREA

2020 Market Forecast

Employment Job creation will remain diverse this year, with organizations adding 20,000 up 1.7% new employees.

Construction Development will further accelerate following the completion of 2,700 units 5,500 units last year and 1,400 apartments in 2018.

Vacancy Elevated development will place pressure on market vacancy, driving it up to up 40 bps 4.3 percent. The rate decreased each of the previous three years by a total of 80 basis points.

Rent Coming off a 6.4 percent boost last year, the market’s rent growth will remain up 3.3% stable in 2020 as the average effective rent rises to $3,080 per month.

Investment Smaller Class C assets with value-add potential near major employers will remain sought after by investors, strengthening bidding climates and putting additional pressure on cap rates.

* Estimate; ** Forecast Sources: CoStar Group, Inc.; RealPage, Inc.; Real Capital Analytics

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MARKETINGDEMOGRAPHICS TEAM Created on February 2020

POPULATION 1 Miles 3 Miles 5 Miles HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles ▪ 2023 Projection ▪ 2018 Estimate Total Population 23,652 63,576 72,667 $200,000 or More 11.46% 10.85% 12.26% ▪ 2018 Estimate $150,000 - $199,000 13.52% 12.88% 12.41% Total Population 22,407 61,088 69,865 $100,000 - $149,000 21.94% 21.61% 21.72% ▪ 2010 Census $75,000 - $99,999 11.06% 10.55% 10.65% Total Population 18,764 51,069 58,430 $50,000 - $74,999 13.18% 12.95% 13.26% ▪ 2000 Census $35,000 - $49,999 9.89% 9.06% 8.71% Total Population 15,407 44,306 51,166 $25,000 - $34,999 6.42% 7.81% 7.21% ▪ Daytime Population $15,000 - $24,999 6.38% 6.77% 6.61% 2018 Estimate 15,024 48,568 63,955 Under $15,000 6.16% 7.52% 7.18% HOUSEHOLDS 1 Miles 3 Miles 5 Miles Average Household Income $126,285 $119,981 $125,056 ▪ 2023 Projection Median Household Income $93,159 $88,925 $91,520 Total Households 7,568 18,990 21,890 Per Capita Income $39,933 $35,295 $37,049 ▪ 2018 Estimate POPULATION PROFILE 1 Miles 3 Miles 5 Miles Total Households 7,051 17,846 20,562 ▪ Population By Age Average (Mean) Household Size 3.17 3.32 3.30 2018 Estimate Total Population 22,407 61,088 69,865 ▪ 2010 Census Under 20 30.54% 30.73% 29.90% Total Households 5,849 14,807 17,079 20 to 34 Years 21.11% 21.20% 20.89% ▪ 2000 Census 35 to 39 Years 6.69% 6.60% 6.40% Total Households 4,839 12,715 14,659 40 to 49 Years 13.99% 13.80% 13.70% Growth 2015-2020 7.33% 6.41% 6.46% 50 to 64 Years 17.76% 17.30% 18.12% HOUSING UNITS 1 Miles 3 Miles 5 Miles Age 65+ 9.91% 10.35% 10.97% ▪ Occupied Units Median Age 33.84 33.60 34.41 2023 Projection 7,568 18,990 21,890 ▪ Population 25+ by Education Level 2018 Estimate 7,107 18,011 20,776 2018 Estimate Population Age 25+ 14,038 38,068 44,180 Owner Occupied 4,203 10,628 12,388 Elementary (0-8) 8.98% 10.43% 10.25% Renter Occupied 2,848 7,217 8,174 Some High School (9-11) 7.89% 8.93% 9.06% Vacant 56 165 213 High School Graduate (12) 19.20% 21.14% 21.03% ▪ Persons In Units Some College (13-15) 23.12% 21.27% 21.37% 2018 Estimate Total Occupied Units 7,051 17,846 20,562 Associate Degree Only 9.87% 8.92% 8.73% 1 Person Units 17.78% 16.61% 16.73% Bachelors Degree Only 20.75% 18.30% 18.48% 2 Person Units 26.27% 25.28% 26.00% Graduate Degree 8.33% 8.36% 8.42% 3 Person Units 16.45% 16.07% 16.08% ▪ Population by Gender 4 Person Units 19.13% 18.95% 18.44% 2018 Estimate Total Population 22,407 61,088 69,865 5 Person Units 10.57% 10.94% 10.65% Male Population 49.79% 50.04% 50.21% 6+ Person Units 9.80% 12.15% 12.10% Female Population 50.21% 49.96% 49.79%

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MARKETINGDEMOGRAPHICS TEAM

Population Race and Ethnicity In 2019, the population in your selected geography is 427,435. The The current year racial makeup of your selected area is as follows: population has changed by 16.68% since 2000. It is estimated that the 58.60% White, 1.43% Black, 0.22% Native American and 9.93% population in your area will be 434,022.00 five years from now, which Asian/Pacific Islander. Compare these to US averages which are: represents a change of 1.54% from the current year. The current 70.20% White, 12.89% Black, 0.19% Native American and 5.59% population is 49.93% male and 50.07% female. The median age of the Asian/Pacific Islander. People of Hispanic origin are counted population in your area is 36.75, compare this to the US average independently of race. which is 37.95. The population density in your area is 339.87 people per square mile. People of Hispanic origin make up 47.86% of the current year population in your selected area. Compare this to the US average of 18.01%.

Households Housing There are currently 133,231 households in your selected geography. The median housing value in your area was $642,721 in 2019, The number of households has changed by 18.12% since 2000. It is compare this to the US average of $201,842. In 2000, there were estimated that the number of households in your area will be 138,381 77,782 owner occupied housing units in your area and there were five years from now, which represents a change of 3.87% from the 35,008 renter occupied housing units in your area. The median rent at current year. The average household size in your area is 3.11 the time was $815. persons.

Income Employment In 2019, the median household income for your selected geography is In 2019, there are 146,707 employees in your selected area, this is $90,765, compare this to the US average which is currently $58,754. also known as the daytime population. The 2000 Census revealed that The median household income for your area has changed by 39.34% 60.93% of employees are employed in white-collar occupations in this since 2000. It is estimated that the median household income in your geography, and 39.02% are employed in blue-collar occupations. In area will be $106,496 five years from now, which represents a change 2019, unemployment in this area is 6.28%. In 2000, the average time of 17.33% from the current year. traveled to work was 31.00 minutes.

The current year per capita income in your area is $39,668, compare this to the US average, which is $32,356. The current year average household income in your area is $126,750, compare this to the US average which is $84,609.

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8 DEMOGRAPHICS

31 Market Comparables SONATA TOWNHOMES

SALES COMPARABLES MAP

SONATA TOWNHOMES (SUBJECT)

1 100 San Augustine Way

2 Skyline Terrace

3 101 Douglas Drive

4 8205 Wren Avenue

5 Madison Terrace

SALES COMPARABLES ON MARKET COMPARABLES

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SALES COMPARABLES SALES COMPS AVG SALES COMPARABLES

ON MARKET COMPARABLES ON MARKET COMPS AVG

Average Cap Rate Average GRM

6.0 14.00 Avg. 12.18 5.4 12.60

4.8 11.20 Avg. 4.03% 4.2 9.80

3.6 8.40

3.0 7.00

2.4 5.60

1.8 4.20

1.2 2.80

0.6 1.40 Avg. 0.00% Avg. .00 0.0 0.00 Sonata 100 San Skyline 101 Douglas 8205 Wren Madison Sonata 100 San Skyline 101 Douglas 8205 Wren Madison Townhomes Augustine Terrace Drive Avenue Terrace Townhomes Augustine Terrace Drive Avenue Terrace Way Way Average Price Per Square Foot Average Price Per Unit

$500.00 Avg. $457.67 $500,000

$450.00 $450,000 Avg. $400,000 $400.00 $400,000 Avg. $366,094 Avg. $339.51 $350.00 $350,000

$300.00 $300,000

$250.00 $250,000

$200.00 $200,000

$150.00 $150,000

$100.00 $100,000

$50.00 $50,000

$0.00 $0 Sonata 100 San Skyline 101 Douglas 8205 Wren Madison Sonata 100 San Skyline 101 Douglas 8205 Wren Madison Townhomes Augustine Terrace Drive Avenue Terrace Townhomes Augustine Terrace Drive Avenue Terrace Way Way

34 PROPERTYSONATA TOWNHOMESNAME

SALESMARKETING COMPARABLES TEAM

SALES COMPARABLES ON MARKET COMPARABLES

100 SAN AUGUSTINE WAY SKYLINE TERRACE SONATA TOWNHOMES 100 San Augustine Way, Scotts Valley, CA, 95066 1330 Skyline Drive, Monterey, CA, 93940 8101 Kelton Dr, Gilroy, CA, 95020 1 2

rentpropertyname1 rentpropertyname1 rentpropertyname1

Units Unit Type Units Unit Type Units Unit Type Offering Price: $7,500,000 18 3 BR 1.5 BA Close Of Escrow: 8/23/2019 3 2 Bdr 1 Bath Close Of Escrow: 12/21/2018 40 2 Bdr 2 Bath Price/Unit: $416,667 Sales Price: $1,413,500 1 3 Bdr 2 Bath Sales Price: $19,600,000 Price/SF: $277.78 Price/Unit: $353,375 Price/Unit: $490,000 CAP Rate: 5.31% Price/SF: $362.34 Price/SF: $373.48 GRM: 12.38 CAP Rate: 3.20% Total No. of Units: 40 Total No. of Units: 18 Total No. of Units: 4 Year Built: 1974 Year Built: 1987 Year Built: 1979

rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 Underwriting Criteria Income $586,175 Expenses $187,595 NOI $398,580 Vacancy ($21,205)

35 PROPERTYSONATA TOWNHOMESNAME

SALESMARKETING COMPARABLES TEAM

SALES COMPARABLES ON MARKET COMPARABLES

101 DOUGLAS DRIVE 8205 WREN AVENUE MADISON TERRACE 101 Douglas Drive, Soquel, CA, 95073 8205 Wren Avenue, Gilroy, CA, 95020 7191 Eigleberry Street, Gillroy, CA, 95020

3 4 5

rentpropertyname1 rentpropertyname1 rentpropertyname1

Units Unit Type Units Unit Type Close Of Escrow: 5/17/2019 4 Bdr Bath Close Of Escrow: 4/23/2018 5 2 Bdr 2 Bath On Market Sales Price: $2,280,000 6 2 Bdr 1 Bath Sales Price: $1,965,000 List Price: $3,200,000 Price/Unit: $228,000 Price/Unit: $393,000 Price/Unit: $400,000 Price/SF: $250.11 Price/SF: $372.09 Price/SF: $457.67 Total No. of Units: 10 CAP Rate: 4.86% Total No. of Units: 8 Year Built: 1980 GRM: 12.18 Year Built: 1980 Total No. of Units: 5 Year Built: 1971

rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1

36 Sonata Townhomes 8101 Kelton Drive Gilroy, CA 95020

Exclusively Listed by

Eduardo Cerna Senior Managing Director Investments Senior Director, national Multi Housing Group [email protected]