Detroit, Michigan 61 Construction and Development 71 the Opportunity 5 the Opportunity

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Detroit, Michigan 61 Construction and Development 71 the Opportunity 5 the Opportunity OFFERING MEMORANDUM a Berkshire Hathaway and Jefferies Financial Group company Surround Yourself in Luxury. Investment Advisors CHARLEY HENNEGHAN KEVIN P. DILLON Director Senior Managing Director 248.341.3303 248.341.3309 [email protected] [email protected] JASON KRUG RICK VIDRIO Managing Director Managing Director 248.341.3344 248.341.3325 [email protected] [email protected] RICK BRACE COREY KRUG Senior Director Director 248.341.3319 248.341.3338 [email protected] [email protected] Financial Advisors WILLIAM BRENNER AARON MOLL Managing Director Director 248.208.0537 248.208.0529 [email protected] [email protected] table of contents The Opportunity 5 663 Prentis The Property 11 665 Willis The Property 17 675 Willis The Property 21 The Location 27 Financials 35 Real Estate Tax Analysis 39 Market Positioning 43 Detroit, Michigan 61 Construction and Development 71 The Opportunity 5 The Opportunity In the heart of Detroit’s Midtown neighborhood is an opportunity to acquire three recently renovated apartment buildings consisting of 63 units, The Midtown Three Portfolio. The Midtown Three Portfolio boasts exceptional locations, and excellent condition due to the significant recent renovations to the façade, interior units, and mechanical systems, totaling over $2.3 Million in hard costs. Exceptional rent premiums have been realized following the rehabilitation and renovation, of the portfolio, while additional upside remains through the continuation of strategic unit upgrades and organic rent growth achievable as the 97.4% occupied Midtown neighborhood continues to thrive. Portfolio Highlights • Exceptional Growth Market • Detroit Demand Outpaces Supply • Detroit Investment Market • Fabulous Opportunity to Join the Detroit Renaissance • New Financing 6 Investment Highlights Exceptional Growth Market: Each property is situated in the heart of Midtown; Detroit’s hottest growth neighborhood. Anchored by Wayne State University, and positioned along the Cass Corridor, residents enjoy short walks to popular shopping destinations including Shinola, Filson, Hugh, City Bird, Nora, Little Ceasar’s Arena (District Detroit), and Whole Foods. Nightlife is booming with the best restaurants and bars Detroit has to offer including; Selden Standard, Shewolf, Willis Show Bar, Grey Ghost, Jolly Pumpkin, 3rd Street, Bronx Bar, Mario’s, and more. Detroit Demand Outpaces Supply: According the to U.S. Department of Housing and Urban Development; an estimated 3,875 units represents the production necessary to achieve a balanced Wayne County Submarket by October 1st, 2021. There are currently 453 units in the Lease Up phase of development, 1,283 units under construction, and 2,172 in the planning stage of development. Detroit Investment Market: The Detroit region has experienced significant economic growth and stability as the Global Automotive Capital of the world and as a leader in the High Technology industry. The Downtown Detroit employment market is led by Quicken Loans, Compuware, Detroit Medical Center, Henry Ford Medical Center, GM, Wayne State, Casinos (3), and the Detroit Lions, Tigers, Pistons, and Red Wings. The industry diversification and current development pipeline project a continuation of the strong employment base in the region. Fabulous Opportunity to Join the Detroit Renaissance: The recurring adage heard during the ULI 2018 Spring Conference in Detroit was that the “Detroit resurgence is here to stay”. The Detroit multifamily and office markets exceed 95% occupancy thanks to a diversified and growing employment market, which includes jobs in technology, automotive, healthcare, education and financial services. There was a 38% increase in downtown Detroit employees aged 29 and lower from 2010 to 2015, and approximately $13 billion has been invested into the area’s businesses, real estate and infrastructure since 2006. Approximately 50% of downtown’s residential population is age 18-39. Recent companies to move regional headquarters and innovation offices to downtown Detroit include Google, Amazon, Adient, Microsoft, Ally, Lear Corporation, WeWork, Twitter, Snapchat and LinkedIn. New Financing: The Midtown Three is being offered free and clear of existing debt providing the opportunity for a new investor to take advantage of the highly competitive financing markets, low interest rates, long term debt with interest only options with maximum leverage, supporting exceptional returns on your investment. The Opportunity 7 Value Add Opportunity The attractive location of the Midtown Three Portfolio, along with its strong occupancy, high quality tenant profile, and attractive floor plans, establish an opportunity to increase revenue through unit upgrades. The current ownership has upgraded 40 units among the three properties. There is tremendous upside for a new owner to enhance value through continuation and expansion of unit interior upgrades. Details follow: Ownership property improvements have been made in several areas including: • Front entrance, new doors, security cameras • Lobby • Hallways • New windows • Facade and structural repairs with new porches • Roof replacement • Unit upgrades • Electrical upgrades including lighting • Landscaping • Unit Renovations • Repaving, restriping of surface parking lots • New Laundry Machines • Architecture upgrades and repairs 8 $58,265 40Total Upgraded Units *Average Upgrade Cost by Current Ownership $176k Total Improvements 663 Prentis $2,330,584 $872k Current Ownership Total Total Improvements Capital Improvements 665 Willis $1.28m Total Improvements 675 Prentis The Opportunity 9 11 Property Description Villa Lante is an historic 29-unit, mid-rise, apartment community located in the desirable MIdtown district of Detroit, Michigan. Built in 1916, the property contains one, three-story masonry constructed building with brick siding and stone exterior and a flat roof. Situated on .218 acres of land, Villa Lante encompasses an optimal unit mix comprised of 16 studio units measuring 400 square feet, and 13 one-bedroom units measuring 550 square feet. Situated in a park-like setting, the property is well-maintained and lushly landscaped with manicured grass areas, mature trees, trimmed shrubs, a variety of plants, and colorful flowers. 12 Property Description LOCATION SYSTEMS Property Name Villa Lante Air Conditioning Individual Address 663 Prentis Street Heating Central-Gas City, State Detroit, MI Hot Water - Central - Gas County Wayne UTILITIES METERING Parcel Number 04000943 Gas Central BUILDING Electricity Individual Units 29 Water Central Built 1916 UTILITIES RESPONSIBILITY Buildings 1 Electricity Resident Pays Stories Three-Story Mid Rise Gas Property Pays Site Size/Acreage .218 Water / Sewer / Trash Property Pays Total SF 13,550 PARKING Average Unit SF 467 Parking Type Surface Level Average Rent/SF $2.14 Spaces 10 Roofs Flat Spaces per Unit 0.4 Exterior Masonry with Brick and Stone UNIT MIX Studio - #/% 16 / 55.0% One Bedroom - #/% 13 / 45.0% Total 100% The Property 13 14 The Property 15 17 Property Description 665 Willis is an historic 15-unit, mid-rise, apartment community located in the desirable MIdtown district of Detroit, Michigan. Built in 1910, the property contains one, three-story masonry constructed building with brick siding and stone exteriors and a flat roof. Situated on .176 acres of land, 665 Willis encompasses an optimal unit mix comprised of 4 studio units measuring between 470 and 500 square feet, and 11 one-bedroom units measuring between 486 and 532 square feet. The average unit square footage is 516 sqare feet. 18 Property Description LOCATION Property Name 665 Willis St Address 665 Willis Street City, State Detroit, MI County Wayne Parcel Number 400835 BUILDING Units 15 Built 1910 Buildings 1 Stories Three-Story Mid Rise Site Size/Acreage 0.176 Total SF 7,746 Average Unit SF 516 Average Rent/SF $2.02 Roofs Flat Exterior Masonry with Brick and Stone UNIT MIX Studio - #/% 4/ 27.0% One Bedroom - #/% 11 / 73.0% Total 100% The Property 19 21 Property Description 675 Willis Street is an historic 19-unit, mid-rise, apartment community located in the desirable MIdtown district of Detroit, Michigan. Built in 1908, the property contains one, three-story masonry constructed building with brick siding and stone exteriors and a flat roof . Situated on .176 acres of land, 675 Willis encompasses an optimal unit mix comprised of seven one-bedroom units measuring between 469 and 620 square feet, three two-bedroom units measuring 778 square feet each, and nine three-bedroom units measuring between 729 and 760 square feet. The average unit square footage is 662 square feet. 22 Property Description LOCATION Property Name 675 Willis Address 675 Willis Street City, State Detroit, MI County Wayne Parcel Number 400836 BUILDING Units 19 Built 1908 Buildings 1 Stories Three-Story Mid Rise Site Size/Acreage .176 Total SF 12,577 Average Unit SF 662 Average Rent/SF $2.48 Roofs Flat Exterior Masonry with Brick and Stone UNIT MIX One Bedroom- #/% 7 / 38.0% Two Bedroom - #/% 3 / 15.0% Three Bedroom - #/% 9 / 47% Total 100% The Property 23 24 The Property 24 25 The Location 27 Economic & Demographic Overview INTRODUCTION Detroit’s revival has become an unprecedented success story, thanks to a coalition of city leaders and some of Detroit’s largest employers. The “Live Downtown” initiative has drawn thousands of new residents to seek housing in the Detroit core, sending apartment rents soaring and vacancy rates to historic lows. Detroit’s
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