Central Maryland Value-Add Portfolio Offering Memorandum.Indd

CENTRAL MARYLAND VALUE-ADD SENECA BAY • 461 UNITS PORTFOLIO QUAIL HOLLOW • 336 UNITS Middle River, Maryland Glen Burnie, Maryland

Ways to add value to the property 1,587 total units • 4 properties Ways to add value to the property Replace outdated kitchen cabinetry Being off ered together or separately Replace outdated kitchen cabinetry Upgrade to faux-granite countertops Install individual washer and dryers Install individual washer and dryers Add two-panel doors to unit interiors Four institutionally- maintained assets with revenue enhancement opportunities, strategically located throughout the Baltimore-Washington Corridor

CEDAR CREEK • 334 UNITS Together these communities WILLOW LAKE • 456 UNITS Glen Burnie, Maryland have received $16.84M of capital Laurel, Maryland improvements since 2003 Ways to add value to the property Ways to add value to the property Install new fi xtures and hardware Install new fi xtures and hardware Install individual washer and dryers Install individual washer and dryers CBRE Washington DC Multifamily Investment Properties Team Install a more modern lighting package Add two-panel doors to unit interiors Capital Markets • Institutional Group MICHAEL D. RUDOLPH Senior Vice President +1 410 244 3121 CENTRAL MARYLAND VALUE-ADD PORTFOLIO [email protected] OFFERING MEMORANDUM WILLIAM S. ROOHAN Vice Chairman +1 410 244 3122 Communication [email protected] CBRE, Inc. (“CBRE”) is exclusively representing the seller in the disposition of the Central Maryland Value-Add Portfolio. All communications, inquiries, and requests should be addressed to the CBRE team, as representatives of the seller. MICHAEL E. MULDOWNEY Management at the Property should not be directly contacted. Executive Vice President +1 410 244 3144 [email protected] Property Visits Interested investors are required to schedule a time to meet with the CBRE team to tour the asset and discuss the BRIAN H. MARGERUM merits of the off ering. Please contact Jen Bussey (+1 410 244 3134) to schedule a tour. Senior Vice President +1 410 244 3135 Document Center [email protected] Investors agreeing to the terms and conditions set forth in the Confi dentiality Agreement can expect an invitation to a password protected online document center containing electronic forms of the off ering memorandum and other MARTHA A. HASTINGS information that should be useful in your evaluation of the property. First Vice President +1 410 244 3162 [email protected] www.cbremarketplace.com/centralmarylandportfolio

ANDREW C. BOYER Off ers Executive Vice President Please submit all off ers to Bill Roohan via email: [email protected], or via fax: +1 410 244 3101. Your off er for the +1 703 734 4737 Central Maryland Value-Add Portfolio is requested by Tuesday, August 18 th, 2015. All off ers should include: [email protected] • Proposed purchase price • Timing for inspection period and closing JONATHAN M. GREENBERG Senior Vice President • Summary of closed transactions with references +1 703 734 4772 • Source of funds for the acquisition [email protected] • Letter of Intent • Amount of earnest money, amount non-refundable DAVID F. WEBB Vice Chairman, Financing Purchase and Sale Agreement +1 202 585 5721 Upon receipt of an acceptable Letter of Intent, the successful off eror will be supplied a Purchase and Sale Agreement. [email protected] Co-Broker Commission THOMAS B. LEACHMAN Sales Assistant No brokerage commission or ﬁ nder’s fee shall be payable to any broker, agent or person representing a purchaser. Any +1 703 905 0255 broker representing a purchaser must look to purchaser for such compensation. [email protected]

CBRE, INC. 100 E. Pratt Street, 17 ©2015, CBRE, Inc. This information has been obtained from sources believed reliable. We have not veriﬁ ed it and make no guarantee, warranty or representation th about it. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. You Floor and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. Baltimore, MD 21202 Photos herein are the property of their respective owners and use of these images without the express written consent of the owner is prohibited. +1 410 244 7100 TABLE OF CONTENTS

02 08 30 52 72 94 Executive Summary Seneca Bay Quail Hollow Cedar Creek Willow Lake Market Snapshot Portfolio Overview Investment Highlights Investment Highlights Investment Highlights Investment Highlights White Marsh/Baltimore County Market Highlights Property Details Property Details Property Details Property Details Glen Burnie/Anne Arundel County Unit Interiors Unit Interiors Unit Interiors Unit Interiors Laurel/Prince George’s County Community Amenities Community Amenities Community Amenities Community Amenities DC MSA Overview Floor Plans Floor Plans Floor Plans Floor Plans Baltimore MSA Overview Site Plan Site Plan Site Plan Site Plan Rent Comparables Rent Comparables Rent Comparables Rent Comparables Financial Analysis Financial Analysis Financial Analysis Financial Analysis Executive Summary

02 Central Maryland Value-Add Portfolio Executive Summary 03 WHITE MARSH EXPERIENCED 3.8+ MSF BALTIMORE CROSSROADS@95 OF BUSINESS 10,000 employees at completion DEVELOPMENT IN THE PAST DECADE DOWNTOWN BALTIMORE 1.5M jobs

Seneca Bay 461 Units

MARYLAND LIVE! BWI 3,000 employees 9,700 employees

Cedar Creek US COAST GUARD SHIPYARD 334 Units 3,000 employees

FORT MEADE 57,000+ employees Quail Hollow 336 Units Willow Lake UMD BALTIMORE WASHINGTON MEDICAL CENTER 456 Units 2,800 employees

04 Central Maryland Value-Add Portfolio Portfolio Overview

SENECA BAY Completed in 1969, Seneca Bay is a community of 461 garden apartments with value-add potential located in Middle River, just minutes from the Chesa- peake Bay. A competitive amenity package provides a swimming pool, clubhouse featuring a business center and ﬁ tness center (constructed in 2006), and playground. Seneca Bay is conveniently situated near White Marsh, one of two economic hubs in Bal- timore County, which off ers a tremendous amount of employment, entertainment, and retail opportunities.

PORTFOLIO SUMMARY AS OF 7/1/15

1,587 95% 821 SF $985 $1.20 total units avg. occupied avg. size avg. leased $/unit avg. leased $/SF

QUAIL HOLLOW Quail Hollow consists of 336 garden apartments in the highly-desirable Glen Burnie submarket. Community amenities include a swimming pool, ﬁ tness center, business center, and playground. The community is proximate to some of Anne Arundel Coun- ty’s largest employers, such as University of Maryland Baltimore Washington Medical Center, Baltimore-Washington International Thurgood Marshall Airport, and Fort Meade.

Executive Summary 05 Portfolio Overview

CEDAR CREEK Cedar Creek off ers 334 cross-ventilated apartments with an ideal northern Anne Arundel County location. The property is conveniently situated among several large regional employers including University of Maryland Baltimore Washington Medical Center, Baltimore-Washington International Thur- good Marshall Airport, and downtown Baltimore’s Central Business District. Additionally, Cedar Creek residents have easy access to I-97, MD-3, MD-2, and MD-100, which provide seamless transportation to Baltimore, Annapolis, and other destinations in the Baltimore-Washington Corridor.

PORTFOLIO SUMMARY AS OF 7/1/15

1,587 95% 821 SF $985 $1.20 total units avg. occupied avg. size avg. leased $/unit avg. leased $/SF

WILLOW LAKE Located in Laurel, Willow Lake is a 456-unit lakefront garden community with excellent visibility at the intersection of MD-197 and Old Stagecoach Road. An appealing amenity package features a swimming pool, clubhouse, playground, and a 2.5-acre lake. The property is situated only two miles from the area’s newest $130M, 400-KSF mixed-use development, Towne Centre at Laurel. Additionally, Willow Lake is only six miles from Fort Meade, Maryland’s largest employer with over 57,000 workers and the home of the headquarters of US Cyber Command and the National Security Agency.

06 Central Maryland Value-Add Portfolio Market Highlights

WHITE MARSH/BALTIMORE COUNTY White Marsh is one of the largest economic drivers in the region and one of the fastest-growing areas in Baltimore County with 3.8+ MSF of business development in the pastppaasst ddecade.ec With over 2,000 highly-visible acres just north of the I-695 and I-95 intersection,ttioonn, WhiteWhW Marsh has established itself as a prominent home for business headquarters SENECA BAY andaannd offio cec locations such as Johns Hopkins Health Care and Surgery Center and Balti- moremmooree [email protected] The new 1-MSF Amazon distribution center, located at the former site of the General Motors plant, opened in March and employs 1,000 people. Other major attractions include White Marsh Town Center, the ﬁ fth largest shopping mall in Maryland, and a 390-KSF outlet mall under construction by Paragon Outlet Partners.

GLEN BURNIE/ANNE ARUNDEL COUNTY Over 500,000 residents call Anne Arundel County home, due to the area’s numerouse ouss attractions, educational and employment opportunities, and strategic location withinwithhinn the Baltimore-Washington Corridor. It is currently home to over 14,800 businesseses ththathat employ nearly 252,000 people. Major employers include Fort Meade (57,000 employ-mplooy- QUAIL HOLLOW ees), Baltimore-Washington International Thurgood Marshall Airport (9,700 employees),yeees)), and University of Maryland Baltimore Washington Medical Center (2,800 employees).yeees)). The Arundel Mills Commercial District, the top tourist destination in Maryland, featuresaturress CEDAR CREEK Arundel Mills Mall and Maryland Live! Casino. The Casino has created 3,000 permanent jobs and now serves as one of Maryland’s largest employers and highest tax-payers.

LAUREL/PRINCE GEORGE’S COUNTY LaLLaurelauru el iiss home to contemporary shopping centers, offi ce and industrial parks, and a widewiw de range of dining choices. It has both a historic district of clapboard store- ffrfrontono t buildingsbu and 100-year-old homes, as well as several new developments with07 WILLOW LAKE mmomodernoded rn amenities. Laurel’s most exciting mixed-use development, Towne Centre atat LLaurel,aua re is a $130M project featuring 400 KSF of retail, dining, and entertainment. It openedopene in November 2014 with an impressive mix of tenants including a 47-KSF HHaHarrisarrr is TTeeter, and has welcomed seven new retailers and restaurants in 2015 so far.

Executive Summary 07 Seneca Bay (Middle River, MD)

Bowleys Quarters Road

Red Grove Road

White Pine Road

Carrollwood Road

Seneca Elementary N School

08 Central Maryland Value-Add Portfolio Investment Highlights-Seneca Bay

As of 7/1/15 PARAGON OUTLETS 3719 White Pine Road 83-acre site slated to open 2016 Address Middle River, MD 21220 6 miles away Year Built 1968-1969 Number of Units 461 Occupancy 94.14% AMAZON DISTRIBUTION CENTER WHITE MARSH MALL Avg. Size 753 SF Open as of March 2015 5th largest shopping mall in MD 1,000 employees • 6.5 miles away 8 miles away Avg. Leased $/Unit $852 Avg. Leased $/SF $1.13

Solid Community with No Deferred Maintenance Since 2003, Seneca Bay has received over $6.4M of ren- BALTIMORE CROSSROADS@95 ovations, including the construction of a state-of-the-art 10,000 employees • 2 miles away clubhouse in 2006, drastically improving the exterior of the Seneca Bay 461 Units buildings and property conditions. The opportunity exists to MARTIN AIRPORT STATION replace outdated kitchen cabinetry, upgrade to faux-granite 2 stops from Aberdeen Proving laminate countertops, and add individual washer and dry- Ground (21,000 employees) ers to complete a comprehensive facelift to the community. Seneca Bay is ideally located minutes from the Chesapeake Bay and from major employers and entertainment centers NEARBY RETAILERS • Walmart detailed to the right. • By the Docks • Rite Aid Two Miles from Baltimore Crossroads@95 • GameStop Seneca Bay Elementary School is adjacent to the commu- • By the Scoop nity. The property is also situated only two miles from Bal- timore Crossroads@95, one of the Mid-Atlantic’s largest mixed-use developments. The 1,000-acre site is currently under construction and will feature 1.2 MSF of offi ce, 680 SPARROWS POINT TERMINAL KSF of ﬂ ex, and 65 KSF of retail space. At completion, the 15 miles away • 3,100-acre site project will employ over 10,000 people. Predicted 2,000 employees by 2020

Seneca Bay 09 Property Details-Seneca Bay

Building Construction 14 three-story garden apartment buildings containing Building Style 461 units and constructed in two phases from 1968- 1969; one (1) clubhouse constructed in 2006 Construction Wood frame Exterior Materials Brick veneer and vinyl siding Roof Pitched with asphalt composition shingles Entryways/Hallways 79 separate entrances; open with carpeted metal risers There are 80 separate entrances Mechanical Systems Individual split-system with gas-fi red furnace and Heating and Cooling remotely-mounted condenser Capital Expenditures 14 central gas-fi red, 90-gallon heaters (one per Seneca Bay has undergone $6.4M of capital Hot Water building) improvements since 2003 detailed below. Aluminum branch wiring with retrofi t connections; 60- Electric • New playground installed (2015) amp service per unit • Concrete sidewalk repairs (2015) Plumbing Copper and CPVC supply; PVC waste • Asphalt paving repairs (2015) • 56/80 roofs replaced (2014-2015) Miscellaneous • Added dumpster enclosures (2014) Flood Zone 2400100435G; May 5, 2014; Flood Zone: X • New exterior entrance awnings (2014) Parcel 1=11.69 acres, Parcel 2=14.19 acres for a total of • Aluminum wiring retrofi t (2014) Site Area/Density 25.88 acres/17.81 units per acre • Installed GFCI outlets (2014) Zoning DR-16 Residential • Clubhouse with fi tness center, business center, and reconfi gured swimming pool (2006) Total of 724 uncovered off -street spaces/1.57 spaces Parking/Parking Ratio per unit • Replaced all furnaces (2005) • Replaced all condensers (2005) One Property Manager, one Assistant Property • Replaced all windows and sliders (2005) Employee Count Manager, three Leading Consultants, one Maintenance • Replaced all balconies and handrails (2005) (10.5 Full-Time Total) Supervisor, two Maintenance Technicians, two • Replaced all parking lot lighting (2005) Maintenance Porters, and one Maintenance Punch-out • Replaced all gutters and downspouts (2005)

Property Manager, Assistant Property Manager, Leasing Manager, 10 Central Maryland Value-Add Portfolio Part time Leasing Agent, Service Manager, Assistant Service Manager, Tech, Tech/Punch, Punch, Porter, Porter Property Details-Seneca Bay

Utilities Utility Provider Meter Type Paid By Electricity BGE Individual Resident Gas BGE Individual Mixed* Water/Sewer Baltimore City Master RUBS* Trash Baltimore County - Owner *Resident pays for in-unit gas usage (heat and cooking); owner pays gas to heat the domestic supply **A portion of the cost of water/sewer is distributed to each resident using Ratio Utility Billback System

Tax Detail Parcel 1 Parcel 2 Total Jurisdiction Baltimore County - District 15 - Unit Mix as of 7/1/15 Account Number 1503003820 1800011514 - Leased Rent Unit Type # of Units SF Previously Assessed Value (Base) $11,869,100 $15,825,400 $27,694,500 $/Unit $/SF Most Recent Assessment Date 1/1/15 1/1/15 - 1 BR / 1 BA JR 3 460 $728 $1.58 Assessed Value as of 1/1/15 $12,417,900 $16,596,200 $29,014,100 1 BR / 1 BA 5 587 $735 $1.25 1 BR / 1 BA 23 629 $746 $1.19 2015/2016 Assessed Value $12,052,033 $16,082,333 $28,134,366 1 BR / 1 BA 27 629 $771 $1.23 2016/2017 Assessed Value $12,234,966 $16,339,266 $28,574,232 1 BR / 1 BA 21 629 $795 $1.26 2017/2018 Assessed Value $12,417,900 $16,596,200 $29,014,100 1 BR / 1 BA 11 629 $901 $1.43 Next Reassessment Date 1/1/18 1/1/18 - 1 BR / 1 BA 27 690 $787 $1.14 1 BR / 1 BA 55 690 $777 $1.13 2014/2015 Tax Rates & Extra Charges 1 BR / 1 BA 38 690 $817 $1.18 Parcel 1 Parcel 2 Total 1 BR / 1 BA 1 717 $850 $1.19 State Tax Rate $0.112 per $100 of assessed value 2 BR / 1 BA 22 806 $860 $1.07 County Tax Rate $1.100 per $100 of assessed value 2 BR / 1 BA 41 806 $859 $1.07 2 BR / 1 BA 51 806 $917 $1.14 2014/2015 Total Tax Rate $1.212 per $100 of assessed value 2 BR / 1 BA 33 853 $923 $1.08 Bay Restoration Fee $4,980.00 $6,180.00 $11,160.00 2 BR / 1 BA 50 853 $897 $1.05 Sewer Service $39,957.71 $49,677.69 $89,635.40 2 BR / 1 BA 53 853 $948 $1.11 Stormwater Remediation Fee $6,692.91 $7,976.59 $14,669.50 Total 461 347,302 SF $392,850 - Water Distribution $1,079.42 $2,394.49 $3,473.91 Average - 753 SF $852 $1.13 2014/2015 Total Extra Charges $52,710.04 $66,228.77 $118,938.81

Seneca Bay 11 12 Central Maryland Value-Add Portfolio Unit Interiors-Seneca Bay

Seneca Bay contains 461 cross-ventilated ﬂ oor plans with the following features:

• Kitchens with: • White or black appliances • Wood cabinetry with nickel hardware • Laminate countertops • Laminate wood ﬂ ooring • Pantry • Bathrooms with: • Ceramic tile tub/shower surround • Laminate wood ﬂ ooring • Patio or balcony • Separate dining area • Wall-to-wall carpet in living areas • Six-panel doors • Walk-in closets • Ceiling fans

Community Amenities-Seneca Bay

• Swimming pool • Clubhouse featuring: • Fitness center • Business center • Playground (installed this year) • Car care center • Central laundry facilities

There is no playground. There are plans to add a playground before closing.

Seneca Bay 13 14 Central Maryland Value-Add Portfolio Seneca Bay 15 16 Central Maryland Value-Add Portfolio Seneca Bay 17 Floor Plans-Seneca Bay

Seneca Bay has a variety of one- and two-bedroom ﬂ oor plans, a sample of which are shown on the next two pages.

# of Units 5 # of Units 82 # of Units 120 Avg. Size 587 SF Avg. Size 629 SF Avg. Size 690 SF Avg. Leased $/Unit $735 Avg. Leased $/Unit $788 Avg. Leased $/Unit $792 Avg. Leased $/SF $1.25 Avg. Leased $/SF $1.25 Avg. Leased $/SF $1.15 1 BR / 1 BA 1 BR / 1 BA 1 BR / 1 BA

18 Central Maryland Value-Add Portfolio Floor Plans-Seneca Bay

# of Units 114 # of Units 136 Avg. Size 806 SF Avg. Size 853 SF Avg. Leased $/Unit $885 Avg. Leased $/Unit $923 Avg. Leased $/SF $1.10 Avg. Leased $/SF $1.08 2 BR / 1 BA 2 BR / 1 BA

Seneca Bay 19 Site Plan-Seneca Bay

There is no playground. There are plans to add a playground before closing.

20 Central Maryland Value-Add Portfolio White Marsh Mall, The Avenue, and Nottingham Square together feature over 1.5 MSF of Retail Space

Paragon’s 390-KSF Outlet Mall Costco New Amazon Home Depot Distribution Center Lockheed Martin Airport PetSmart 1,000 employees Martin Station Baltimore Crossroads@95 1,000-acre project under construction 1.2 MSF of offi ce, 680 KSF of ﬂ ex, 65 KSF of retail, Martin State and 10,000 employees at completion Airport

Eastern Boulevard

Frog Mortar Creek Walmart Rite Aid GameStop

Seneca Bay Carroll Island Road 461 Units

Carrollwood Road N Bowleys Quarters Road

Seneca Bay 21 Rent Comparables-Seneca Bay

Commons at White Marsh Whispering Woods 04 564 units 524 units 03 Year Built: 1973 Year Built: 1972 $915 avg. $/unit/mo. $849 avg. $/unit/mo.

Carroll Park 157 units 02 Year Built: 1972 05 $996 avg. $/unit/mo.

Windsor House 300 units Year Built: 1978 $901 avg. $/unit/mo. Seneca Bay 461 units Year Built: 1968-1969 $852 avg. $/unit/mo.

22 Central Maryland Value-Add Portfolio Rent Comparables-Seneca Bay

The following rent comparable data is as of 7/1/15. 01. Seneca Bay 02. Carroll Park 3719 White Pine Road 227 Carroll Island Road Middle River, MD 21220 Middle River, MD 21220

Year Built: 1968-1969 Year Built: 1972 Occupancy: 94% Occupancy: 98% Concessions: None Concessions: None Rent Management System: Conventional Rent Management System: Conventional Utilities: Resident pays electricity, gas for heat/cooking, and water/ Utilities: Resident pays all sewer via RUBS; owner pays trash and gas to heat the domestic supply Amenities: Swimming pool, individual washer and dryer Amenities: Swimming pool, clubhouse, ﬁ tness center, business center, playground, car care center, central laundry facilities UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. 1 BR / 1 BA 108 711 $960 $1.35 UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. 2 BR / 1 BA 49 801 $1,075 $1.34 1 BR / 1 BA JR 3460 $728$1.58 TOTAL/AVG. 157 739 SF $996 $1.35 1 BR / 1 BA 5587 $735$1.25 Units are being renovated on turn. Approximately half of the community has received kitchen up- 1 BR / 1 BA 82 629 $788 $1.25 grades including new appliances and new countertops pictured above. The pricing above reﬂ ects the average monthly market-rate rents for renovated units. 1 BR / 1 BA 120 690 $792 $1.15 1 BR / 1 BA 1717 $850$1.19 1 BR / 1.5 BA 6 949 $1,868 $1.94 2 BR / 1 BA 114 806 $885 $1.10 2 BR / 1 BA 136 853 $923 $1.08 TOTAL/AVG. 461 753 SF $852 $1.13 N

Seneca Bay 23 Rent Comparables-Seneca Bay

03. Whispering Woods 04. Commons at White Marsh 37 Alberge Lane 9901 Langs Road Baltimore, MD 21220 Baltimore, MD 21220

Year Built: 1972 Year Built: 1973 Occupancy: 99% Occupancy: 98% Concessions: None Concessions: None Rent Management System: Conventional Rent Management System: Conventional Utilities: Resident pays electric, gas, and water/sewer; owner pays Utilities: Resident pays electric, gas, and water/sewer; owner pays trash trash Amenities: Business center, playground, central laundry facilities Amenities: Swimming pool, tennis court, playgrounds, picnic/BBQ area, individual washer and dryer UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. 1 BR / 1 BA 7644 $810 $1.26 UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. 1 BR / 1 BA 1644$810$1.26 1 BR / 1 BA 160 627 $881 $1.39 2 BR / 1 BA 15 760 $776 $1.08 1 BR / 1 BA D 32 703 $860 $1.21 2 BR / 1 BA 176 760 $776 $1.08 2 BR / 1 BA 312 789 $919 $1.14 2 BR / 1 BA 265 760 $776 $1.08 2 BR / 1 BA D 60 874 $1,015 $1.16 3 BR / 1 BA 8858$985$1.17 TOTAL/AVG. 564* 747 SF $915 $1.22 3 BR / 1 BA 26 958 $1,020 $1.08 *Analysis excludes 648 townhome units. 3 BR / 2 BA 26 1,097 $1,153 $1.05 TOTAL/AVG. 524 786 SF $849 $1.08

24 Central Maryland Value-Add Portfolio Rent Comparables-Seneca Bay

Seneca Bay has the lowest average monthly rent per unit for one-bedroom units and the second-lowest average monthly rent per unit for 05. Windsor House two-bedroom, one-bathroom units. 201 Middleway Rd $/Unit Comparison for 1 BR / 1 BA Units* Middle River, MD 21220 $171 Diff erence $1,000

$950

$900

$850

$800 Year Built: 1978 $750 Occupancy: 99% Concessions: None $700 SenecaBay Whispering WindsorHouse Commonsat CarrollPark Rent Management System: Conventional Woods WhiteMarsh Utilities: Resident pays electric and gas; owner pays water/sewer and *Analysis excludes one-bedroom units with dens, juniors, and one-and-a-half bathrooms. trash $/Unit Comparison for 2 BR / 1 BA Units* Amenities: Swimming pool, playground, central laundry facilities $169 Diff erence UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. 1 BR / 1 BA 92 650 $831 $1.27 $1,100 2 BR / 1 BA 208 850 $943 $1.10 $1,050

TOTAL/AVG. 300 789 SF $901 $1.14 $1,000

$950

$900

$850

$800

$750

$700 WhisperingWoods SenecaBay CommonsatWhite WindsorHouse CarrollPark Marsh *Analysis excludes two-bedroom units with dens or more than one bathroom.

Seneca Bay 25 Financial Analysis-Seneca Bay

Financial Notes Approach: Renovation Strategy Bad Debt The following analysis assumes all 461 units at Seneca Bay are fully ren- Analysis assumes Bad Debt is 0.5% annually. It is currently 0.87%. ovated over the fi rst three years of ownership at a rate of 12.8 units per month and at a cost of $8,000 per unit, for a total cost of $3,688,000. Total Other Income Renovations are assumed to generate a monthly rental premium of $100 Total Other Income is comprised of Other Income, Cable Income, and per unit over In-Place Leased Rents as of 7/1/15, to be phased in evenly Utility Reimbursements. over the renovation term and fully in place by the start of Year 4. Other Income Analysis Period Analysis assumes Other Income is $320 per unit in Year 1, increasing The Pro Forma commences at the start of Year 1 and runs for fi ve years. 3.0% annually. Other Income is based on the 5/31/15 Trailing 12 and in- The fi rst year of the analysis is Year 1. The fi scal year runs January 1 to cludes month to month premium, late & NSF fees, forfeitures & other December 31. rents, application fees, pet fee income, exempt renters insurance income, legal fee reimbursement, concession - laundry & other, invest- Leased Rents ment & misc interest income, and security deposit inexp. 12/31/13 and Leased Rents as of 7/1/15 are assumed to increase 2.0% prior to the start 12/31/14 Actual Other Income include Utility Reimbursements. of the analysis, 3.5% in Year 1, and 3.0% annually thereafter. This is in addition to the aforementioned renovation premium. Cable Income Analysis assumes Cable Income is $22,417 per year in Year 1, of which Loss-to-Lease a portion remains fl at. Other Income includes Cable Income for the Loss-to-Lease is assumed to be 0.0%, as the analysis is based on in- 12/31/13 and 12/31/14 Actual Statements. place Leased Rents. Utility Reimbursements Vacancy Loss Analysis assumes Utility Reimbursements are $220 per unit in Year 1. Analysis assumes Vacancy Loss is 5.0% annually throughout the analy- Reimbursements include RUBS charges for water/sewer. sis. Seneca Bay was 94.14% occupied as of 7/1/15. Expenses Non-Revenue Units Expenses are based on the 5/31/15 Trailing 12, and analysis assumes Analysis assumes no Non-Revenue Units. they increase 3.0% annually. Certain expenses have been adjusted for the Pro Forma to refl ect current industry standards. Rent Concessions Analysis assumes Rent Concessions are 1.5% annually. They are currently 2.0%.

26 Central Maryland Value-Add Portfolio Financial Analysis-Seneca Bay

Financial Notes Repairs and Maintenance Extra Charges Repairs & Maintenance includes Turnover and Contract Services for the Extra Charges include storm water fee, sewer charges, water distribu- 12/31/13 and 12/31/14 Actual Statements. tion charges and bay restoration charges, which are all usually included in the tax bill. Analysis assumes these charges remain ﬂ at. Real Estate Taxes The property was assessed 1/1/15 for a value of $29,014,100. This was Capital Reserves an increase from the previously assessed value of $27,694,500. The Analysis assumes Capital Reserves are $350 per unit in Year 1, increas- resulting increase will be phased in over three years from 7/1/15 to ing 3.0% annually thereafter. 6/30/18. Upon the next triennial assessment on 1/1/18, analysis assumes the property will increase 5.0% annually over three years from 7/1/18 to 6/30/21. Thereafter, taxes are assumed to increase 3.0% annually. Real Estate Taxes are calculated using the current millage rate of $1.212 per $100 of assessed value.

Unit Mix Leased Rent as of 7/1/15 Projected Rent Incl. Renovation Premium at the Start of Year 4 Unit Type # of Units SF $/Unit $/SF $/Unit $/SF 1 BR / 1 BA JR 3 460 $728 $1.58 $926 $2.01 1 BR / 1 BA 5 587 $735 $1.25 $933 $1.59 1 BR / 1 BA 23 629 $746 $1.19 $946 $1.50 1 BR / 1 BA 27 629 $771 $1.23 $973 $1.55 1 BR / 1 BA 21 629 $795 $1.26 $1,000 $1.59 1 BR / 1 BA 11 629 $901 $1.43 $1,119 $1.78 1 BR / 1 BA 27 690 $787 $1.14 $992 $1.44 1 BR / 1 BA 55 690 $777 $1.13 $980 $1.42 1 BR / 1 BA 38 690 $817 $1.18 $1,025 $1.49 1 BR / 1 BA 1 717 $850 $1.19 $1,062 $1.48 2 BR / 1 BA 22 806 $860 $1.07 $1,073 $1.33 2 BR / 1 BA 41 806 $859 $1.07 $1,072 $1.33 2 BR / 1 BA 51 806 $917 $1.14 $1,137 $1.41 2 BR / 1 BA 33 853 $923 $1.08 $1,144 $1.34 2 BR / 1 BA 50 853 $897 $1.05 $1,115 $1.31 2 BR / 1 BA 53 853 $948 $1.11 $1,172 $1.37 Total 461 347,302 SF $392,850 - $490,609 - Average - 753 SF $852 $1.13 $1,064 $1.41

Seneca Bay 27 Financial Analysis-Seneca Bay

Financial Assumptions

Analysis Period Deductions

Commencement Date Start of Year 1 LEASE RENTS BELOW MARKET RENTS

End Date End of Year 5 Current 0.0% Year 3 0.0%

Term 5 years Year 1 0.0% Year 4 0.0%

Area Measures Year 2 0.0% Year 5 0.0%

Building Square Feet 347,302 SF PHYSICAL VACANCY LOSS

Number of Units 461 Units Current 7.16% Year 3 5.0%

Physical Occupancy (7/1/15) 94.14% Year 1 5.0% Year 4 5.0%

Revenues Year 2 5.0% Year 5 5.0%

ANNUALIZED MARKET RENT GROWTH RENT CONCESSIONS

Current 2.0% Year 3 3.0% Current 2.0% Year 3 1.5%

Year 1 3.5% Year 4 3.0% Year 1 1.5% Year 4 1.5%

Year 2 3.0% Year 5 3.0% Year 2 1.5% Year 5 1.5%

BAD DEBT Total Other Income (Year 1) $271,358 Current 0.87% Year 3 0.5% Other Income Growth Rate 3.0% Year 1 0.5% Year 4 0.5% Expenses Year 2 0.5% Year 5 0.5% GROWTH RATES NON-REVENUE UNITS Operating Expenses 3.0% Model/Offi ce Units 0 Units Capital Reserves 3.0% Employee Units 0 Units Operating Expense Source 5/31/15 Trailing 12

Management Fee (Percent of EGI) 3.0%

Capital Reserves Per Unit (Year 1) $350

28 Central Maryland Value-Add Portfolio Financial Analysis-Seneca Bay

Historical-Cash Flow-Pro Forma

12/31/13 12/31/14 5/31/15 Year 1 Year 2 Year 3 Year 4* Year 5 Actual Actual YTD Annualized Pro Forma Gross Income Total Projected Market Rents $4,711,863 $4,694,757 $4,697,239 $4,885,147 $5,042,817 $5,194,102 $5,349,925 $5,510,423 Add. Rent Premium from Reno. 0 0 0 102,009 298,610 506,756 615,490 633,955

Total Minimum Rent 4,711,863 4,694,757 4,697,239 4,987,156 5,341,427 5,700,858 5,965,415 6,144,378 Vacancy Loss (855,950) (487,654) (431,518) (249,358) (267,071) (285,043) (298,271) (307,219) Rent Concessions (114,032) (109,697) (71,633) (74,807) (80,121) (85,513) (89,481) (92,166) Bad Debt (149,360) (34,352) (74,371) (24,936) (26,707) (28,504) (29,827) (30,722)

Eff ective Rental Income 3,592,521 4,063,054 4,119,717 4,638,055 4,967,527 5,301,798 5,547,836 5,714,271 Other Income 197,992 225,221 171,421 147,520 151,946 156,504 161,199 166,035 Cable Income 0 0 11,290 22,418 22,814 23,222 23,643 24,076 Utility Reimbursement 0 0 97,190 101,420 104,463 107,596 110,824 114,149

Eff ective Gross Income 3,790,513 4,288,275 4,399,618 4,909,413 5,246,750 5,589,120 5,843,502 6,018,531

Expenses Administrative (45,310) (37,551) (45,072) (46,100) (47,483) (48,907) (50,375) (51,886) Advertising (151,008) (132,645) (108,008) (115,250) (118,708) (122,269) (125,937) (129,715) Legal & Audit (21,527) (35,093) (49,201) (32,270) (33,238) (34,235) (35,262) (36,320) Payroll (538,312) (616,693) (606,671) (576,250) (593,538) (611,344) (629,684) (648,574) Turnover 0 0 (99,017) (101,420) (104,463) (107,596) (110,824) (114,149) Contract Services 0 0 (124,310) (138,300) (142,449) (146,722) (151,124) (155,658) Repairs & Maintenance (348,519) (369,147) (135,188) (147,520) (151,946) (156,504) (161,199) (166,035) Utilities (265,680) (250,252) (235,504) (239,720) (246,912) (254,319) (261,949) (269,807) Controllable Expenses Total (1,370,356) (1,441,381) (1,402,971) (1,396,830) (1,438,735) (1,481,897) (1,526,354) (1,572,144) Insurance (193,833) (175,948) (170,708) (161,350) (166,191) (171,176) (176,312) (181,601) State & County Taxes (403,648) (417,130) (387,537) (340,989) (346,320) (360,442) (378,464) (397,387) Extra Charges 0 0 0 (118,939) (118,939) (118,939) (118,939) (118,939) Management Fees (114,645) (128,984) (131,315) (147,282) (157,402) (167,674) (175,305) (180,556) Fixed Expenses Total (712,126) (722,062) (689,560) (768,560) (788,852) (818,231) (849,020) (878,483)

Total Expenses (2,082,482) (2,163,443) (2,092,531) (2,165,390) (2,227,586) (2,300,128) (2,375,373) (2,450,628)

Net Operating Income 1,708,031 2,124,832 2,307,087 2,744,023 3,019,163 3,288,993 3,468,129 3,567,903

Capital Expenditures Renovation Capital Improvements0 0 0 (1,229,333) (1,229,333) (1,229,333) 0 0 Capital Expenditures/Reserves 0 (18,460) (777,520) (161,350) (166,191) (171,176) (176,312) (181,601)

Operating Cash Flow 1,708,031 2,106,372 1,529,567 1,353,340 1,623,639 1,888,483 3,291,817 3,386,302 *Year 4 is the ﬁ rst year of stabilization after renovations.

Seneca Bay 29 Quail Hollow (Glen Burnie, MD)

University of Maryland Baltimore Washington Medical Center Oakwood Road 2,800 employees

Hospital Drive

Hidden Brook Drive Elvaton Road N

30 Central Maryland Value-Add Portfolio Investment Highlights-Quail Hollow

As of 7/1/15 7930 Silverleaf Court Address Glen Burnie, MD 21061 Year Built 1972 ARUNDEL MILLS MALL 1.3-MSF shopping mecca • 8 miles away Number of Units 336 Occupancy 97.32% Avg. Size 865 SF MARYLAND LIVE! CASINO 3,000 employees • 8 miles away Avg. Leased $/Unit $1,008 Avg. Leased $/SF $1.17 BWI AIRPORT 9,700 employees • 4 miles away Well-Maintained Community with Upside Replacing outdated kitchen cabinetry, adding two-panel doors, and installing individual washer and dryers will en- able new ownership to achieve rental premiums in the Glen Burnie submarket. With over $4.5M of capital improvements performed since 2003 including big ticket items such as UMD BALTIMORE WASHINGTON new roofs, there is minimal deferred maintenance at the MEDICAL CENTER community. 2,800 employees • Adjacent to the property

Proximate to Major Employment Hubs The property is conveniently situated close to several large FORT MEADE Quail Hollow employers including University of Maryland Baltimore Wash- 57,000+ employees • 9 miles away ington Medical Center, Baltimore-Washington Internation- 336 Units al Thurgood Marshall Airport, and downtown Baltimore’s Central Business District. Additionally, residents have easy ODENTON TOWN CENTER access to I-97, MD-3, MD-2, and MD-100, which provide Under construction seamless transportation to Baltimore, Annapolis, and other 3.5 MSF of offi ce and 1 MSF of retail destinations in the Baltimore-Washington Corridor. 7.5 miles away

Quail Hollow 31 Property Details-Quail Hollow

Building Construction Capital Expenditures 12 three-story garden apartment buildings Since 2003, Quail Hollow underwent over $4.5M of Building Style containing 336 units and constructed in 1972 capital improvements detailed below. Construction Wood frame • Replaced all roofs (2014-2015) Exterior Materials Brick veneer and vinyl siding • Coil cleaning (2015) Roof Pitched with asphalt composition shingles • Parking lot striping (2015) 56 separate closed entrances with carpeted • Installed Aluminiconn Connectors and GFCI outlets (2014) Entryways/Hallways metal risers • Sidewalk repairs (2014) • New building address plates (2014) Mechanical Systems • Replaced all furnaces (2005) Individual split-systems with gas-fi red furnace and • Replaced all condensers (2005) Heating and Cooling remotely-mounted condenser • New pool (mechanicals, surfacing, pool deck, 2005) 12 central gas-fi red, 90-gallon heaters (one per • Replaced all windows and sliders (2005) Hot Water cluster) • Replaced all balcony railings (2005) Aluminum branch wiring with retrofi t connections; Electric 60-amps per unit Plumbing Copper and CPVC supply and PVC waste Unit Mix as of 7/1/15 Leased Rent Unit Type # of Units SF Part aluminum and part copper $/Unit $/SF Miscellaneous 1 BR / 1 BA 7 659 $895 $1.36 Flood Zone 24003C0063F; February 18, 2015; Flood Zone: X 1 BR / 1 BA 11 741 $910 $1.23 Site Area/Density 15.33 acres/21.92 units per acre 1 BR / 1 BA 162 770 $932 $1.21 Zoning R-15 Residential District 1 BR / 1 BA 11 829 $949 $1.14 480 uncovered off -street parking spaces/1.43 1 BR / 1 BA D 7 924 $1,036 $1.12 Parking spaces per unit 2 BR / 1 BA 123 985 $1,102 $1.12 2 BR / 2 BA 15 1,084 $1,219 $1.12 One Property Manager, one Assistant Property Total 336 290,506 SF $338,671 - Manager, two Leasing Consultants, one Employee Count Average - 865 SF $1,008 $1.17 Maintenance Supervisor, two Maintenance (7.5 Full-Time Total) Technicians, and one part-time Maintenance Porter shared with Cedar Creek

32 Central Maryland Value-Add Portfolio Property Details-Quail Hollow

Tax Detail Jurisdiction Anne Arundel County District/Subdivision 03/000 Account Number 90022696 Previously Assessed Value (Base) $25,081,100 Most Recent Assessment Date 1/1/13 Assessed Value as of 1/1/13 $26,472,800 2013/2014 Assessed Value $25,545,000 2014/2015 Assessed Value $26,008,900 2015/2016 Assessed Value $26,472,800 Next Reassessment Date 1/1/16

2014/2015 Tax Rates & Extra Charges State Tax Rate $0.112 per $100 of assessed value County Tax Rate $0.943 per $100 of assessed value 2014/2015 Total Tax Rate $1.055 per $100 of assessed value Stormwater/WPRF-Multifamily $3,104 2014/2015 Total Extra Charges $3,104

Quail Hollow 33 Original cabinetry

34 Central Maryland Value-Add Portfolio Unit Interiors-Quail Hollow

Quail Hollow contains 336 cross-ventilated ﬂ oor plans with the following features:

• Kitchens with: • White appliances • Wood cabinetry • Laminate countertops • Vinyl tile ﬂ ooring • Pantry • Bathrooms with: • Ceramic tile tub/shower surround • Vinyl tile ﬂ ooring • Patio or balcony • Separate dining area • Wall-to-wall carpet in living areas • Walk-in closets • Ceiling fans

Community Amenities-Quail Hollow

• Swimming pool • Fitness center • Business center • Playground • Central laundry facilities

Quail Hollow 35 36 Central Maryland Value-Add Portfolio Quail Hollow 37 38 Central Maryland Value-Add Portfolio N

Fort Meade Arundel Mills Mall 57,000+ employees 1.3-MSF shopping mecca & BWI Airport Maryland Live! 9,700 employees 3,000 employees

Walmart Shoppers Sam’s Club Exit 14 Lowe’s Kohl’s Archbishop Spalding High School Giant Food Target Ace Hardware Crain Highway S. Walgreens Dunkin’ Donuts

Old Mill Middle and High School Quail Hollow 336 Units University of Maryland Baltimore Washington Medical Center Elvaton Road 2,800 employees

Quail Hollow 39 Floor Plans-Quail Hollow

Quail Hollow off ers one- and two-bedroom ﬂ oor plans shown on the next three pages.

# of Units 7 # of Units 11 # of Units 162 Avg. Size 659 SF Avg. Size 741 SF Avg. Size 770 SF Avg. Leased $/Unit $895 Avg. Leased $/Unit $910 Avg. Leased $/Unit $932 Avg. Leased $/SF $1.36 Avg. Leased $/SF $1.23 Avg. Leased $/SF $1.21 1 BR / 1 BA 1 BR / 1 BA 1 BR / 1 BA

40 Central Maryland Value-Add Portfolio Floor Plans-Quail Hollow

# of Units 11 # of Units 7 # of Units 123 Avg. Size 829 SF Avg. Size 924 SF Avg. Size 985 SF Avg. Leased $/Unit $949 Avg. Leased $/Unit $1,036 Avg. Leased $/Unit $1,102 Avg. Leased $/SF $1.14 Avg. Leased $/SF $1.12 Avg. Leased $/SF $1.12 1 BR / 1 BA 1 BR / 1 BA D 2 BR / 1 BA

Quail Hollow 41 Floor Plans-Quail Hollow

# of Units 15 Avg. Size 1,084 SF Avg. Leased $/Unit $1,219 Avg. Leased $/SF $1.12 2 BR / 2 BA

42 Central Maryland Value-Add Portfolio Site Plan-Quail Hollow

Quail Hollow 43 Rent Comparables-Quail Hollow

The following rent comparable analysis is identical for Quail Hollow and Cedar Creek.

Colonial Square 05 253 units Year Built: 1965 $1,056 avg. $/unit/mo.

Hidden Woods 492 units 04 Year Built: 1975 $1,061 avg. $/unit/mo.

Chesapeake Glen 01 796 units 03 Year Built: 1974 $1,367 avg. $/unit/mo. Quail Hollow 336 units Year Built: 1972 $1,008 avg. $/unit/mo.

Mill Pond 240 units Year Built: 1968 $1,147 avg. $/unit/mo. 02

44 Central Maryland Value-Add Portfolio Rent Comparables-Quail Hollow

The following rent comparable data is as of 7/1/15. 01. Quail Hollow 02. Mill Pond 7930 Silverleaf Court 602 Milldam Court Glen Burnie, MD 21061 Millersville, MD 21108

Year Built: 1972 Year Built: 1968 Occupancy: 97% Occupancy: 97% Concessions: None Concessions: None Rent Management System: Conventional Rent Management System: Lease Rent Optimizer (LRO) Utilities: Resident pays electricity, gas for heat/cooking, and water/ Utilities: Resident pays all sewer via RUBS; owner pays trash and gas to heat the domestic supply Amenities: Swimming pool, playground, picnic/BBQ area, central Amenities: Swimming pool, ﬁ tness center, business center, play- laundry facilities ground, central laundry facilities UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. 1 BR / 1 BA 39 773 $1,065 $1.38 1 BR / 1 BA 7659 $895 $1.36 1 BR / 1 BA D 49 862 $1,070 $1.24 1 BR / 1 BA 11 741 $910 $1.23 2 BR / 1 BA 103 940 $1,090 $1.16 1 BR / 1 BA 162 770 $932 $1.21 2 BR / 1 BA D 25 1,030 $1,380 $1.34 1 BR / 1 BA 11 829 $949 $1.14 3 BR / 1.5 BA 24 1,113 $1,443 $1.30 1 BR / 1 BA D 7 924 $1,036 $1.12 TOTAL/AVG. 240 924 SF $1,147 $1.24 2 BR / 1 BA 123 985 $1,102 $1.12 2 BR / 2 BA 15 1,084 $1,219 $1.12 TOTAL/AVG. 336 865 SF $1,008 $1.17

Quail Hollow 45 Rent Comparables-Quail Hollow

03. Chesapeake Glen 04. Hidden Woods 8035 Greenleaf Terrace 401 Secluded Post Circle Glen Burnie, MD 21061 Glen Burnie, MD 21061

Year Built: 1974 Year Built: 1975 Occupancy: 94% Occupancy: Does not disclose Concessions: None Concessions: None Rent Management System: Lease Rent Optimizer (LRO) Rent Management System: Lease Rent Optimizer (LRO) Utilities: Resident pays all Utilities: Resident pays electric, gas, and water/sewer; owner pays Amenities: Swimming pool, clubhouse, ﬁ tness center, business cen- trash ter, tennis court, playground, picnic/BBQ area, individual washer and Amenities: Playground, central laundry facilities dryer (select units) UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. 1 BR / 1 BA 167 664 $987 $1.49 1 BR / 1 BA 171 709 $1,164 $1.64 1 BR / 1 BA D 110 664 $1,065 $1.60 1 BR / 1 BA D 126 797 $1,333 $1.58 2 BR / 1 BA 215 772 $1,117 $1.45 1 BR / 1 BA D 14 880 $1,373 $1.48 TOTAL/AVG. 492 711 SF $1,061 $1.49 2 BR / 1 BA 251 898 $1,498 $1.57 2 BR / 1.5 BA 65 927 $1,498 $1.52 2 BR / 1.5 BA D 50 1,002 $1,548 $1.54 2 BR / 1 BA D 51 964 $1,493 $1.47 3 BR / 1.5 BA 68 1,075 $1,898 $1.59 TOTAL/AVG. 796 869 SF $1,367 $1.57 Approximately half of the units were renovated to include stainless steel appliances, granite countertops, and tile backsplashes. Pricing above reﬂ ects the average monthly market-rate rents for renovated units.

46 Central Maryland Value-Add Portfolio Rent Comparables-Quail Hollow

Quail Hollow has the lowest average monthly rent per unit for one-bedroom units and the second lowest average monthly rent per unit for two-bedroom, one-bathroom units. 05. Colonial Square $/Unit Comparison for 1 BR / 1 BA Units* 7779 New York Lane $234 Diff erence Glen Burnie, MD 21061 $1,200

$1,150

$1,100

$1,050

$1,000

$950

Year Built: 1965 $900 Occupancy: 96% $850

Concessions: None $800 Rent Management System: Lease Rent Optimizer (LRO) QuailHollow ColonialSquare HiddenWoods MillPond ChesapeakeGlen Utilities: Resident pays electric, gas, and water/sewer; owner pays *Analysis excludes one-bedroom units with dens or one-and-a-half bathrooms. trash $/Unit Comparison for 2 BR / 1 BA Units* Amenities: Swimming pool, playground, picnic/BBQ area, dog park, $396 Diff erence central laundry facilities $1,550 UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. 1 BR / 1 BA 134 600 $946 $1.58 $1,450 2 BR / 1 BA 98 800 $1,135 $1.42 $1,350 2 BR / 1 BA D 18 846 $1,375 $1.63

3 BR / 1.5 BA 3 932 $1,452 $1.56 $1,250 TOTAL/AVG. 253 699 SF $1,056 $1.51 $1,150

$1,050

$950 MillPond QuailHollow HiddenWoods ColonialSquare ChesapeakeGlen *Analysis excludes two-bedroom units with dens or more than one bathroom.

Quail Hollow 47 Financial Analysis-Quail Hollow

Financial Notes Approach: Renovation Strategy Rent Concessions The following analysis assumes all 336 units at Quail Hollow are fully Analysis assumes Rent Concessions are 0.5% annually. They are cur- renovated over the fi rst two years of ownership at a rate of 14 units per rently 0.59%. month and at a cost of $8,000 per unit, for a total cost of $2,688,000. Renovations are assumed to generate a monthly rental premium of $125 Bad Debt per unit over In-Place Leased Rents as of 7/1/15, to be phased in evenly Analysis assumes Bad Debt is 0.25% annually. It is currently 0.36%. over the renovation term and fully in place by the start of Year 3. Total Other Income Analysis Period Total Other Income is comprised of Other Income, Cable Income, and The Pro Forma commences at the start of Year 1 and runs for fi ve years. Utility Reimbursements. The fi rst year of the analysis is Year 1. The fi scal year runs January 1 to December 31. Other Income Analysis assumes Other Income is $450 per unit in Year 1, increasing Leased Rents 3.0% annually. Other Income is based on the 5/31/15 Trailing 12 and in- Leased Rents as of 7/1/15 are assumed to increase 2.0% prior to the start cludes month to month premium, late & NSF fees, renters insurance, for- of the analysis, 3.5% in Year 1, and 3.0% annually thereafter (in addition feitures & other rents, application fees, pet fee income, exempt renters to the aforementioned renovation premium). insurance income, legal fee reimbursement, concession - laundry & other, misc rental income - offi ce, investment & misc interest income, swim- Loss-to-Lease ming pool - income, and security deposit int exp. 12/31/13 and 12/31/14 Loss-to-Lease is assumed to be 0.0%, as the analysis is based on in- Actual Other Income include Utility Reimbursements. place Leased Rents. Cable Income Vacancy Loss Analysis assumes Cable Income is $23,612 per year in Year 1, of which Analysis assumes Vacancy Loss is 5.0% annually throughout the analy- a portion remains fl at. Other Income includes Cable Income for the sis. Quail Hollow was 97.32% occupied as of 7/1/15. 12/31/13 and 12/31/14 Actual Statements.

Non-Revenue Units Utility Reimbursements Analysis assumes no Employee Units and one Model/Offi ce Unit. Analysis assumes Utility Reimbursements are $280 per unit in Year 1. Reimbursements include RUBS charges for water/sewer.

48 Central Maryland Value-Add Portfolio Financial Analysis-Quail Hollow

Financial Notes Expenses the property will increase 5.0% annually over three years from 7/1/16 to Expenses are based on the 5/31/15 Trailing 12, and analysis assumes 6/30/19. Thereafter, taxes are assumed to increase 3.0% annually. Real they increase 3.0% annually. Certain expenses have been adjusted for Estate Taxes are calculated using the current millage rate of $1.055 per the Pro Forma to reﬂ ect current industry standards. $100 of assessed value.

Repairs and Maintenance Extra Charges Repairs & Maintenance includes Turnover and Contract Services for the Extra Charges include stormwater/WPRF - multi family charges, which 12/31/13 and 12/31/14 Actual Statements. are all usually included in the tax bill. Analysis assumes these charges remain ﬂ at. Real Estate Taxes The property was assessed 1/1/13 for a value of $26,472,800. This was Capital Reserves an increase from the previously assessed value of $25,081,100. The Analysis assumes Capital Reserves are $350 per unit in Year 1, increas- resulting increase is being phased in over three years from 7/1/13 to ing 3.0% annually thereafter. 6/30/16. Upon the next triennial assessment on 1/1/16, analysis assumes

Unit Mix Leased Rent as of 7/1/15 Projected Rent Incl. Renovation Premium at the start of Year 3 Unit Type # of Units SF $/Unit $/SF $/Unit $/SF 1 BR / 1 BA 7 659 $895 $1.36 $1,106 $1.68 1 BR / 1 BA 11 741 $910 $1.23 $1,123 $1.52 1 BR / 1 BA 162 770 $932 $1.21 $1,146 $1.49 1 BR / 1 BA 11 829 $949 $1.14 $1,165 $1.41 1 BR / 1 BA D 7 924 $1,036 $1.12 $1,260 $1.36 2 BR / 1 BA 123 985 $1,102 $1.12 $1,331 $1.35 2 BR / 2 BA 15 1,084 $1,219 $1.12 $1,458 $1.35 Total 336 290,506 SF $338,671 - $413,035 - Average - 865 SF $1,008 $1.17 $1,229 $1.42

Quail Hollow 49 Financial Analysis-Quail Hollow

Financial Assumptions

Analysis Period Deductions

Commencement Date Start of Year 1 LEASE RENTS BELOW MARKET RENTS

End Date End of Year 5 Current 0.0% Year 3 0.0%

Term 5 years Year 1 0.0% Year 4 0.0%

Area Measures Year 2 0.0% Year 5 0.0%

Building Square Feet 290,506 SF PHYSICAL VACANCY LOSS

Number of Units 336 Units Current 2.68% Year 3 5.0%

Physical Occupancy (7/1/15) 97.32% Year 1 5.0% Year 4 5.0%

Revenues Year 2 5.0% Year 5 5.0%

ANNUALIZED MARKET RENT GROWTH RENT CONCESSIONS

Current 2.0% Year 3 3.0% Current 0.59% Year 3 0.5%

Year 1 3.5% Year 4 3.0% Year 1 0.5% Year 4 0.5%

Year 2 3.0% Year 5 3.0% Year 2 0.5% Year 5 0.5%

BAD DEBT Total Other Income (Year 1) $268,892 Current 0.36% Year 3 0.25% Other Income Growth Rate 3.0% Year 1 0.25% Year 4 0.25% Expenses Year 2 0.25% Year 5 0.25% GROWTH RATES NON-REVENUE UNITS Operating Expenses 3.0% Model/Offi ce Units 1 Unit Capital Reserves 3.0% Employee Units 0 Units Operating Expense Source 5/31/15 Trailing 12

Management Fee (Percent of EGI) 3.0%

Capital Reserves Per Unit (Year 1) $350

50 Central Maryland Value-Add Portfolio Financial Analysis-Quail Hollow

Historical-Cash Flow-Pro Forma

12/31/13 12/31/14 5/31/15 Year 1 Year 2 Year 3* Year 4 Year 5 Actual Actual YTD Annualized Pro Forma Gross Income Total Projected Market Rents $3,942,671 $3,981,726 $4,034,258 $4,211,421 $4,347,346 $4,477,767 $4,612,099 $4,750,462 Add. Rent Premium from Reno. 0 0 0 139,405 408,079 544,418 560,750 577,573

Total Minimum Rent 3,942,671 3,981,726 4,034,258 4,350,826 4,755,425 5,022,184 5,172,850 5,328,035 Vacancy Loss (272,407) (141,316) (163,286) (217,541) (237,771) (251,109) (258,642) (266,402) Model/Offi ce Units 0 0 0 (12,534) (12,939) (13,327) (13,726) (14,138) Rent Concessions (122,482) (40,784) (12,175) (21,754) (23,777) (25,111) (25,864) (26,640) Bad Debt (55,071) (19,135) 1,001 (10,877) (11,889) (12,555) (12,932) (13,320)

Eff ective Rental Income 3,492,711 3,780,491 3,859,798 4,088,119 4,469,049 4,720,082 4,861,684 5,007,535 Other Income 228,625 201,509 127,335 151,200 155,736 160,408 165,220 170,177 Cable Income 0 0 10,438 23,612 24,119 24,641 25,179 25,733 Utility Reimbursement 0 0 80,131 94,080 96,902 99,809 102,804 105,888

Eff ective Gross Income 3,721,336 3,982,000 4,077,702 4,357,011 4,745,807 5,004,941 5,154,887 5,309,333

Expenses Administrative (39,290) (40,734) (52,846) (50,400) (51,912) (53,469) (55,073) (56,726) Advertising (82,316) (80,956) (74,900) (70,560) (72,677) (74,857) (77,103) (79,416) Legal & Audit (23,669) (18,793) (17,952) (16,800) (17,304) (17,823) (18,358) (18,909) Payroll (437,463) (518,672) (494,042) (436,800) (449,904) (463,401) (477,303) (491,622) Turnover 0 0 (66,993) (63,840) (65,755) (67,728) (69,760) (71,852) Contract Services 0 0 (127,109) (131,040) (134,971) (139,020) (143,191) (147,487) Repairs & Maintenance (416,818) (306,163) (120,513) (117,600) (121,128) (124,762) (128,505) (132,360) Utilities (268,992) (237,684) (217,860) (218,400) (224,952) (231,701) (238,652) (245,811) Controllable Expenses Total (1,268,548) (1,203,002) (1,172,215) (1,105,440) (1,138,603) (1,172,761) (1,207,944) (1,244,182) Insurance (152,426) (136,319) (150,072) (117,600) (121,128) (124,762) (128,505) (132,360) State & County Taxes (265,964) (279,650) (231,819) (286,270) (300,584) (315,613) (331,394) (347,963) Extra Charges 0 0 0 (3,104) (3,104) (3,104) (3,104) (3,104) Management Fees (111,967) (120,190) (121,612) (130,710) (142,374) (150,148) (154,647) (159,280) Fixed Expenses Total (530,357) (536,159) (503,503) (537,685) (567,190) (593,627) (617,649) (642,707)

Total Expenses (1,798,905) (1,739,161) (1,675,718) (1,643,125) (1,705,793) (1,766,388) (1,825,593) (1,886,890)

Net Operating Income 1,922,431 2,242,839 2,401,984 2,713,886 3,040,014 3,238,552 3,329,294 3,422,443

Capital Expenditures Renovation Capital Improvements0 0 0 (1,344,000) (1,344,000) 0 0 0 Capital Expenditures/Reserves (328,973) (373,754) (929,583) (117,600) (121,128) (124,762) (128,505) (132,360)

Operating Cash Flow 1,593,458 1,869,085 1,472,401 1,252,286 1,574,886 3,113,790 3,200,790 3,290,083 *Year 3 is the ﬁ rst year of stabilization after renovations.

Quail Hollow 51 Cedar Creek (Glen Burnie, MD)

Oakview Village Townhomes Under construction by Brookﬁ eld Residential Priced in the upper $200,000s to low $300,000s

Woodhill Drive

Oak Manor Drive

University of Maryland Baltimore Washington Medical Center 2,800 employees Oakwood Road Royal Farms

52 Central Maryland Value-Add Portfolio Investment Highlights-Cedar Creek

As of 7/1/15 215 Woodhill Drive Address Glen Burnie, MD 21061 Year Built 1968 ARUNDEL MILLS MALL 1.3-MSF shopping mecca • 8 miles away Number of Units 334 Occupancy 96.11% MAMARYLANDRYLAND LIVE!LIVE! CASINOCASINO Avg. Size 844 SF 3,000 employees • 8 miles away Avg. Leased $/Unit $952 Avg. Leased $/SF $1.13 BWI AIRPORT 9,700 employees • 4 miles away Stable Community with Little Deferred Maintenance Cedar Creek off ers 334 cross-ventilated apartments. The Cedar Creek opportunity exists to add new ﬁ xtures and hardware, install a more contemporary lighting package, and add individual 334 Units washer and dryers in order to further increase rental revenue. The property has undergone a massive $3.4M ren- UMD BALTIMORE WASHINGTON ovation since 2003, replacing high-cost capital items and MEDICAL CENTER performing community enhancements, leaving minimal de- 2,800 employees • Adjacent to the property ferred maintenance for new ownership.

Proximate to Major Employment Hubs FORT MEADE The property is situated convenient to several large employ- 57,000+ employees • 9 miles away ers including University of Maryland Baltimore Washington Medical Center, Baltimore-Washington International Thur- good Marshall Airport, and downtown Baltimore’s Central ODENTON TOWN CENTER Business District. Additionally, Cedar Creek residents have Under construction easy access to I-97, MD-3, MD-2, and MD-100, which provide 3.5 MSF of offi ce and 1 MSF of retail seamless transportation to Baltimore, Annapolis, and other 7.5 miles away destinations in the Baltimore-Washington Corridor.

Cedar Creek 53 Property Details-Cedar Creek

Building Construction Capital Expenditures 10 three-story garden apartment buildings Since 2003, Cedar Creek underwent $3.4M of capital Building Style containing 334 units and constructed in 1968 improvements detailed below. The last item is not included Construction Wood frame in the $3.4M total as they happened prior to 2003. Exterior Materials Brick veneer and vinyl siding • Asphalt seal and repair (2015) Roof Pitched with asphalt composition shingles • Installed Aluminiconn Connectors and GFCI outlets in all 58 separate entrances; some are closed and units (2014) Entryways/Hallways some are open • Unit interior coil cleaning (2014) • Exterior building lighting replaced (2014) • Exterior glass fronts replaced (2014) Mechanical Systems • Built condensing unit enclosures (2014) Individual split-systems with gas-fi red furnace and Heating and Cooling • Roof vent collars replaced (2014) remotely mounted condenser • New building address plates (2014) 10 central gas-fi red 90-gallon heaters (one per Hot Water • Entryway doors replaced (2014) cluster) • Hallway carpeting replaced (2014) Aluminum branch wiring with retrofi t connections; Electric • Exterior concrete repairs (2014) 60-amps per unit • Electrical work for emergency signs and lighting (2014) Plumbing Copper and CPVC supply and PVC waste • New windows and sliders (2004-2005) • Pool mechanics replaced and white coated (2004) Miscellaneous • New condensers and furnaces (1998 to 2000) Flood Zone 24003C0063F; February 18, 2015; Flood Zone: X • Roofs approximately 1988-1994 Site Area/Density 14.21 acres/23.5 units per acre Unit Mix as of 7/1/15 Leased Rent Zoning R-15 Residential District Unit Type # of Units SF $/Unit $/SF 493 uncovered off -street parking spaces/1.48 Parking 1 BR / 1 BA JR 17 659 $865 $1.31 spaces per unit 1 BR / 1 BA 79 686 $890 $1.30 One Property Manager, one Assistant Property 1 BR / 1 BA 55 763 $882 $1.16 Manager, two Leasing Consultants, one 2 BR / 1 BA 51 898 $990 $1.10 Employee Count Maintenance Supervisor, two Maintenance (7.5 Full-Time Total) 2 BR / 1 BA 132 975 $1,014 $1.04 Technicians, and one part-time Maintenance Total 334 281,860 SF $317,895 - Porter shared with Quail Hollow Average - 844 SF $952 $1.13

54 Central Maryland Value-Add Portfolio Property Details-Cedar Creek

Utilities Utility Provider Meter Type Paid By Electricity BGE Individual Resident Gas BGE Individual Mixed* Water/Sewer Anne Arundel County Master RUBS** Trash Integrated Waste - Owner *Resident pays for in-unit gas usage (heat and cooking); owner pays gas to heat the domestic supply **A portion of the cost of water/sewer is distributed to each resident using Ratio Utility Billback System Tax Detail Jurisdiction Anne Arundel County District/Subdivision 03/360 Account Number 31526000 Previously Assessed Value (Base) $28,348,000 Most Recent Assessment Date 1/1/14 Assessed Value as of 1/1/14 $25,297,500* 2014/2015 Assessed Value $25,297,500 2015/2016 Assessed Value $25,297,500 2016/2017 Assessed Value $25,297,500 Next Reassessment Date 1/1/17 *The assessment will remain ﬂ at for three years from FY 2014 to FY 2017 because it went down.

Cedar Creek 55 56 Central Maryland Value-Add Portfolio Unit Interiors-Cedar Creek

Cedar Creek off ers 334 cross-ventilated units with the following features:

• Kitchens with: • White appliances • Wood cabinetry • Laminate countertops • Vinyl tile ﬂ ooring • Bathrooms with: • Ceramic tile tub/shower surround • Vinyl tile ﬂ ooring • Patio or balcony • Separate dining room • Wall-to-wall carpet in living areas • Walk-in closets • Ceiling fans

Community Amenities-Cedar Creek

• Swimming pool • Playground • Central laundry facilities

There is no playground.

Cedar Creek 57 58 Central Maryland Value-Add Portfolio Cedar Creek 59 Floor Plans-Cedar Creek

Cedar Creek off ers ﬁ ve one- and two-bedroom ﬂ oor plans, shown on the following two pages.

# of Units 17 # of Units 79 # of Units 55 Avg. Size 659 SF Avg. Size 686 SF Avg. Size 763 SF Avg. Leased $/Unit $865 Avg. Leased $/Unit $890 Avg. Leased $/Unit $882 Avg. Leased $/SF $1.31 Avg. Leased $/SF $1.30 Avg. Leased $/SF $1.16 1 BR / 1 BA JR 1 BR / 1 BA 1 BR / 1 BA

60 Central Maryland Value-Add Portfolio Floor Plans-Cedar Creek

# of Units 51 # of Units 132 Avg. Size 898 SF Avg. Size 975 SF Avg. Leased $/Unit $990 Avg. Leased $/Unit $1,014 Avg. Leased $/SF $1.10 Avg. Leased $/SF $1.04 2 BR / 1 BA 2 BR / 1 BA

Cedar Creek 61 Site Plan-Cedar Creek

There is no playground.

E 100

62 Central Maryland Value-Add Portfolio Walmart N BWI Airport Dick’s Sporting Goods 9,700 employees Petco A.C. Moore Toys “R” Us hhgregg Lowe’s

Home Goods Burlington Coat Factory Regency Furniture Mission BBQ Outback Steakhouse

Oakview Village Townhomes Under construction by Brookﬁ eld Residential Macy’s Priced in the upper $200,000s Sears to low $300,000s Marshalls Michaels PetSmart Offi ce Depot Oakwood Road Starbucks Cedar Creek JCPenney 334 Units Value City Home Depot Gold’s Gym Chick-ﬁ l-A Crain HighwayUniversity S. of Maryland Baltimore Washington Medical Center 2,800 employees

Cedar Creek 63 Rent Comparables-Cedar Creek

The following rent comparable analysis is identical for Cedar Creek and Quail Hollow.

Colonial Square 02 253 units Year Built: 1965 Cedar Creek $1,056 avg. $/unit/mo. 334 units 01 Year Built: 1968 $952 avg. $/unit/mo. Hidden Woods 492 units 03 Year Built: 1975 $1,061 avg. $/unit/mo.

Chesapeake Glen 796 units 04 Year Built: 1974 $1,367 avg. $/unit/mo.

Mill Pond 240 units 05 Year Built: 1968 $1,147 avg. $/unit/mo.

64 Central Maryland Value-Add Portfolio Rent Comparables-Cedar Creek

The following rent comparable data is as of 7/1/15. 01. Cedar Creek 02. Colonial Square 215 Woodhill Drive 7779 New York Lane Glen Burnie, MD 21061 Glen Burnie, MD 21061

Year Built: 1968 Year Built: 1965 Occupancy: 96% Occupancy: 96% Concessions: None Concessions: None Rent Management System: Conventional Rent Management System: Lease Rent Optimizer (LRO) Utilities: Resident pays electricity, gas for heat/cooking, and water/ Utilities: Resident pays electric, gas, and water/sewer; owner pays sewer via RUBS; owner pays trash and gas to heat the domestic supply trash Amenities: Swimming pool, playground, central laundry facilities Amenities: Swimming pool, playground, picnic/BBQ area, dog park, central laundry facilities UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. 1 BR / 1 BA JR 17 659 $865 $1.31 UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. 1 BR / 1 BA 79 686 $890 $1.30 1 BR / 1 BA 134 600 $946 $1.58 1 BR / 1 BA 55 763 $882 $1.16 2 BR / 1 BA 98 800 $1,135 $1.42 2 BR / 1 BA 51 898 $990 $1.10 2 BR / 1 BA D 18 846 $1,375 $1.63 2 BR / 1 BA 132 975 $1,014 $1.04 3 BR / 1.5 BA 3 932 $1,452 $1.56 TOTAL/AVG. 334 844 SF $952 $1.13 TOTAL/AVG. 253 699 SF $1,056 $1.51

Cedar Creek 65 Rent Comparables-Cedar Creek

03. Hidden Woods 04. Chesapeake Glen 401 Secluded Post Circle 8035 Greenleaf Terrace Glen Burnie, MD 21061 Glen Burnie, MD 21061

Year Built: 1975 Year Built: 1974 Occupancy: Does not disclose Occupancy: 94% Concessions: None Concessions: None Rent Management System: Lease Rent Optimizer (LRO) Rent Management System: Lease Rent Optimizer (LRO) Utilities: Resident pays electric, gas, and water/sewer; owner pays Utilities: Resident pays all trash Amenities: Swimming pool, clubhouse, ﬁ tness center, business cen- Amenities: Playground, central laundry facilities ter, tennis court, playground, picnic/BBQ area, individual washer and dryer (select units) UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. 1 BR / 1 BA 167 664 $987 $1.49 UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. 1 BR / 1 BA D 110 664 $1,065 $1.60 1 BR / 1 BA 171 709 $1,164 $1.64 2 BR / 1 BA 215 772 $1,117 $1.45 1 BR / 1 BA D 126 797 $1,333 $1.58 1 BR / 1 BA D 14 880 $1,373 $1.48 TOTAL/AVG. 492 711 SF $1,061 $1.49 2 BR / 1 BA 251 898 $1,498 $1.57 2 BR / 1.5 BA 65 927 $1,498 $1.52 2 BR / 1.5 BA D 50 1,002 $1,548 $1.54 2 BR / 1 BA D 51 964 $1,493 $1.47 3 BR / 1.5 BA 68 1,075 $1,898 $1.59 TOTAL/AVG. 796 869 SF $1,367 $1.57 Approximately half of the units were renovated to include stainless steel appliances, granite countertops, and tile backsplashes. Pricing above reﬂ ects the average monthly market-rate rents for renovated units.

66 Central Maryland Value-Add Portfolio Rent Comparables-Cedar Creek

Cedar Creek has the lowest average monthly rent per unit for one-bedroom units and average monthly rent per unit for two-bedroom, one-bathroom units. 05. Mill Pond $/Unit Comparison for 1 BR / 1 BA Units* 602 Milldam Court $277 Diff erence Millersville, MD 21108 $1,200

$1,150

$1,100

$1,050

$1,000

$950

Year Built: 1968 $900

Occupancy: 97% $850

Concessions: None $800 Rent Management System: Lease Rent Optimizer (LRO) CedarCreek ColonialSquare HiddenWoods MillPond ChesapeakeGlen Utilities: Resident pays all *Analysis excludes one-bedroom units with dens or one-and-a-half bathrooms. Amenities: Swimming pool, playground, picnic/BBQ area, central $/Unit Comparison for 2 BR / 1 BA Units* laundry facilities $491 Diff erence

UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. $1,500 1 BR / 1 BA 39 773 $1,065 $1.38 1 BR / 1 BA D 49 862 $1,070 $1.24 $1,400 2 BR / 1 BA 103 940 $1,090 $1.16 $1,300 2 BR / 1 BA D 25 1,030 $1,380 $1.34 3 BR / 1.5 BA 24 1,113 $1,443 $1.30 $1,200 TOTAL/AVG. 240 924 SF $1,147 $1.24 $1,100

$1,000

$900 CedarCreek MillPond HiddenWoods ColonialSquare ChesapeakeGlen

*Analysis excludes two-bedroom units with dens or more than one bathroom.

Cedar Creek 67 Financial Analysis-Cedar Creek

Financial Notes Approach: Renovation Strategy Rent Concessions The following analysis assumes all 334 units at Cedar Creek are fully Analysis assumes Rent Concessions are 0.5% annually. They are cur- renovated over the fi rst two years of ownership at a rate of 13.9 units per rently 0.09%. month and at a cost of $8,000 per unit, for a total cost of $2,672,000. Renovations are assumed to generate a monthly rental premium of $125 Bad Debt per unit over In-Place Leased Rents as of 7/1/15, to be phased in evenly Analysis assumes Bad Debt is 0.25% annually. It is currently 0.34%. over the renovation term and fully in place by the start of Year 3. Total Other Income Analysis Period Total Other Income is comprised of Other Income, Cable Income, and The Pro Forma commences at the start of Year 1 and runs for fi ve years. Utility Reimbursements. The fi rst year of the analysis is Year 1. The fi scal year runs January 1 to December 31. Other Income Analysis assumes Other Income is $350 per unit in Year 1, increasing Leased Rents 3.0% annually. Other Income is based on the 5/31/15 Trailing 12 and in- Leased Rents as of 7/1/15 are assumed to increase 2.0% prior to the start cludes month to month premiums, late & NSF fees, forfeitures & other of the analysis, 3.5% in Year 1, and 3.0% annually thereafter (in addition rents, application fees, pet fee income, exempt renters insurance in- to the aforementioned renovation premium). come, legal fee reimbursement, concession - laundry & other, investment & misc interest income, swimming pool - income, and security Loss-to-Lease deposit int exp. 12/31/13 and 12/31/14 Actual Other Income include Utility Loss-to-Lease is assumed to be 0.0%, as the analysis is based on in- Reimbursements. place Leased Rents. Cable Income Vacancy Loss Analysis assumes Cable Income is $19,611 per year in Year 1, of which Analysis assumes Vacancy Loss is 5.0% annually throughout the analy- a portion remains fl at. Other Income includes Cable Income for the sis. Cedar Creek was 96.11% occupied as of 7/1/15. 12/31/13 and 12/31/14 Actual Statements.

Non-Revenue Units Utility Reimbursements Analysis assumes no Employee Units and one Model/Offi ce Unit. Analysis assumes Utility Reimbursements are $460 per unit in Year 1. Reimbursements include RUBS charges for water/sewer.

68 Central Maryland Value-Add Portfolio Financial Analysis-Cedar Creek

Financial Notes Expenses ty will increase 5.0% annually over three years from 7/1/17 to 6/30/20. Expenses are based on the 5/31/15 Trailing 12, and analysis assumes Thereafter, taxes are assumed to increase 3.0% annually. Real Estate they increase 3.0% annually. Certain expenses have been adjusted for Taxes are calculated using the current millage rate of $1.055 per $100 the Pro Forma to reﬂ ect current industry standards. of assessed value.

Repairs and Maintenance Extra Charges Repairs & Maintenance includes Turnover and Contract Services for the Extra Charges include stormwater/WPRF - multi family charges, which 12/31/13 and 12/31/14 Actual Statements. are all usually included in the tax bill. Analysis assumes these charges remain ﬂ at. Real Estate Taxes The property was assessed 1/1/14 for a value of $25,297,500. This was Capital Reserves a decrease from the previously assessed value of $28,348,000. As a Analysis assumes Capital Reserves are $350 per unit in Year 1, increas- result, taxes will remain ﬂ at for three years from 7/1/14 to 6/30/17. Upon ing 3.0% annually thereafter. the next triennial assessment on 1/1/17, analysis assumes the proper-

Unit Mix Leased Rent as of 7/1/15 Projected Rent Incl. Renovation Premium at the start of Year 3 Unit Type # of Units SF $/Unit $/SF $/Unit $/SF 1 BR / 1 BA JR 17 659 $865 $1.31 $1,074 $1.63 1 BR / 1 BA 79 686 $890 $1.30 $1,101 $1.61 1 BR / 1 BA 55 763 $882 $1.16 $1,092 $1.43 2 BR / 1 BA 51 898 $990 $1.10 $1,210 $1.35 2 BR / 1 BA 132 975 $1,014 $1.04 $1,236 $1.27 Total 334 281,860 SF $317,895 - $390,177 - Average - 844 SF $952 $1.13 $1,168 $1.38

Cedar Creek 69 Financial Analysis-Cedar Creek

Financial Assumptions

Analysis Period Deductions

Commencement Date Start of Year 1 LEASE RENTS BELOW MARKET RENTS

End Date End of Year 5 Current 0.0% Year 3 0.0%

Term 5 years Year 1 0.0% Year 4 0.0%

Area Measures Year 2 0.0% Year 5 0.0%

Building Square Feet 281,860 SF PHYSICAL VACANCY LOSS

Number of Units 334 Units Current 3.89% Year 3 5.0%

Physical Occupancy (7/1/15) 96.11% Year 1 5.0% Year 4 5.0%

Revenues Year 2 5.0% Year 5 5.0%

ANNUALIZED MARKET RENT GROWTH RENT CONCESSIONS

Current 2.0% Year 3 3.0% Current 0.09% Year 3 0.5%

Year 1 3.5% Year 4 3.0% Year 1 0.5% Year 4 0.5%

Year 2 3.0% Year 5 3.0% Year 2 0.5% Year 5 0.5%

BAD DEBT Total Other Income (Year 1) $270,111 Current 0.34% Year 3 0.25% Other Income Growth Rate 3.0% Year 1 0.25% Year 4 0.25% Expenses Year 2 0.25% Year 5 0.25% GROWTH RATES NON-REVENUE UNITS Operating Expenses 3.0% Model/Offi ce Units 1 Unit Capital Reserves 3.0% Employee Units 0 Units Operating Expense Source 5/31/15 Trailing 12

Management Fee (Percent of EGI) 3.0%

Capital Reserves Per Unit (Year 1) $350

70 Central Maryland Value-Add Portfolio Financial Analysis-Cedar Creek

Historical-Cash Flow-Pro Forma

12/31/13 12/31/14 5/31/15 Year 1 Year 2 Year 3* Year 4 Year 5 Actual Actual YTD Annualized Pro Forma Gross Income Total Projected Market Rents $3,967,162 $3,909,166 $3,788,258 $3,953,062 $4,080,649 $4,203,069 $4,329,161 $4,459,036 Add. Rent Premium from Reno. 0 0 0 138,575 405,650 541,177 557,412 574,135

Total Minimum Rent 3,967,162 3,909,166 3,788,258 4,091,638 4,486,299 4,744,246 4,886,573 5,033,171 Vacancy Loss (672,633) (257,167) (157,906) (204,582) (224,315) (237,212) (244,329) (251,659) Model/Offi ce Units 0 0 0 (11,836) (12,218) (12,584) (12,962) (13,350) Rent Concessions (185,207) (19,481) (8,482) (20,458) (22,431) (23,721) (24,433) (25,166) Bad Debt (128,471) (37,332) (15,991) (10,229) (11,216) (11,861) (12,216) (12,583)

Eff ective Rental Income 2,980,851 3,595,186 3,605,880 3,844,533 4,216,119 4,458,868 4,592,634 4,730,413 Other Income 234,907 234,476 97,562 116,900 120,407 124,019 127,740 131,572 Cable Income 0 0 9,079 19,611 19,999 20,399 20,811 21,235 Utility Reimbursement 0 0 133,846 133,600 137,608 141,736 145,988 150,368

Eff ective Gross Income 3,215,758 3,829,662 3,846,367 4,114,644 4,494,134 4,745,022 4,887,173 5,033,588

Expenses Administrative (27,444) (23,206) (31,358) (33,400) (34,402) (35,434) (36,497) (37,592) Advertising (110,072) (93,113) (87,642) (90,180) (92,885) (95,672) (98,542) (101,498) Legal & Audit (34,283) (26,628) (24,300) (26,720) (27,522) (28,347) (29,198) (30,074) Payroll (452,180) (512,139) (435,488) (434,200) (447,226) (460,643) (474,462) (488,696) Turnover 0 0 (94,367) (100,200) (103,206) (106,302) (109,491) (112,776) Contract Services 0 0 (207,149) (213,760) (220,173) (226,778) (233,581) (240,589) Repairs & Maintenance (358,960) (385,553) (103,760) (116,900) (120,407) (124,019) (127,740) (131,572) Utilities (344,167) (326,204) (331,774) (340,680) (350,900) (361,427) (372,270) (383,438) Controllable Expenses Total (1,327,106) (1,366,843) (1,315,838) (1,356,040) (1,396,721) (1,438,623) (1,481,782) (1,526,235) Insurance (148,736) (123,499) (121,421) (116,900) (120,407) (124,019) (127,740) (131,572) State & County Taxes (248,315) (301,357) (298,557) (266,889) (273,561) (287,239) (301,601) (316,681) Extra Charges 0 0 0 (2,924) (2,924) (2,924) (2,924) (2,924) Management Fees (97,947) (112,147) (116,961) (123,439) (134,824) (142,351) (146,615) (151,008) Fixed Expenses Total (494,998) (537,003) (536,939) (510,152) (531,716) (556,533) (578,880) (602,184)

Total Expenses (1,822,104) (1,903,846) (1,852,777) (1,866,192) (1,928,437) (1,995,156) (2,060,661) (2,128,419)

Net Operating Income 1,393,654 1,925,816 1,993,590 2,248,452 2,565,697 2,749,867 2,826,512 2,905,169

Capital Expenditures Renovation Capital Improvements0 0 0 (1,336,000) (1,336,000) 0 0 0 Capital Expenditures/Reserves (312,171) (518,239) (590,990) (116,900) (120,407) (124,019) (127,740) (131,572)

Operating Cash Flow 1,081,483 1,407,577 1,402,600 795,552 1,109,290 2,625,848 2,698,772 2,773,597 *Year 3 is the ﬁ rst year of stabilization after renovations.

Cedar Creek 71 Willow Lake (Laurel, MD)

Old Stagecoach Road

Mistletoe Spring Road

Deerﬁ eld Run Elementary School N

72 Central Maryland Value-Add Portfolio Investment Highlights-Willow Lake

As of 7/1/15 13010 Old Stagecoach Road Address FORT MEADE Laurel, MD 20708 LAUREL STATION 57,000+ employees • 6 miles away Year Built 1962 2.5 miles away Number of Units 456 LAUREL REGIONAL HOSPITAL Occupancy 94.52% 630 employees • 3 miles away Avg. Size 841 SF Avg. Leased $/Unit $1,126 TOWNE CENTRE AT LAUREL Avg. Leased $/SF $1.34 Open as of November 2014 $130M project featuring 400 KSF Serene Community with No Deferred Maintenance of retail, dining, and entertainment Situated around a 2.5-acre lake, Willow Lake off ers an at- 2 miles away tractive mix of studios, one-, two-, and three-bedroom units. New ownership could add value to the property by adding two-panel doors, installing new ﬁ xtures and hardware, and PATUXENT RESEARCH adding an individual washer and dryer to each unit interior. REFUGE There is minimal deferred maintenance, as Willow Lake has received over $2.5M of capital improvements since 2003.

Ideal Location Proximate to Employers and Retail The area’s most exciting mixed-use development, Towne Centre at Laurel, is only two miles from the property. This MUIRKIRK STATION Willow Lake $130M project features big-box retailers such as Harris Tee- 3 miles away 456 Units ter and Regal Cinemas. Willow Lake is also located only six miles from Fort Meade, Maryland’s largest employer with over 57,000 workers and the home of the headquarters of US Cy- ber Command and the National Security Agency. The Laurel MARC Station is less than three miles away, which provides easy access to downtown Baltimore and Washington, DC.

Willow Lake 73 Property Details-Willow Lake

Building Construction Capital Expenditures 17 three-story garden apartment buildings Since 2003, Willow Lake has received over $2.5M of capital Building Style containing 456 units constructed in 1962 and one improvements detailed below. The last two items are not clubhouse and constructed in 1999 included in the $2.5M total as they happened prior to 2003. Construction Wood frame • Roofs replaced (9 left) There are 13 roofs left Exterior Materials Brick veneer and vinyl siding • Remodeled laundry facilities (2013) Roof Pitched with asphalt composition shingles • New signage (2013) 42 separate closed entrances with carpeted metal • Asphalt seal and repairs (2013) Entryways/Hallways risers and rubber treads • New hallways (carpet and paint-2013) • Replaced windows (2008 under Bethany) • Replaced horizontal domestic supply with PVC (2004-2007) Mechanical Systems • Replaced water heaters (2003) Individual split-systems with gas-ﬁ red furnace and Heating and Cooling • Replaced all furnaces and condensers (2001) remotely-mounted condenser • Replaced all balcony railings (2000) Gas-ﬁ red central, 90-gallon heaters (service 12 Hot Water units each) Unit Mix as of 7/1/15 Leased Rent Copper branch wiring; 50-amps per unit (80% fuse Unit Type # of Units SF Electric $/Unit $/SF boxes) Studio 12 632 $842 $1.33 Plumbing Copper supply and cast iron waste Studio 1 632 $928 $1.47 Horizontal supply is PVC, Studio 1 632 $959 $1.52 1 BR / 1 BA 153 732 $998 $1.36 Miscellaneous vertical suppply is copper 1 BR / 1 BA 3 732 $1,060 $1.45 Flood Zone 2452080010C; June 18, 1987; Flood Zone: X 1 BR / 1 BA 7 732 $1,101 $1.50 Site Area/Density 29.47 acres/15.47 units per acre 2 BR / 1 BA 197 899 $1,169 $1.30 2 BR / 1 BA 12 899 $1,188 $1.32 Zoning R-18 Multifamily Medium Density Residential 2 BR / 1 BA 13 899 $1,295 $1.44 612 uncovered off -street parking spaces/1.34 2 BR / 1 BA 14 899 $1,157 $1.29 Parking spaces per unit 2 BR / 1 BA 8 899 $1,223 $1.36 2 BR / 1 BA 4 899 $1,314 $1.46 One Property Manager, one Assistant Property 3 BR / 1.5 BA 21 1,046 $1,434 $1.37 Manager, three Leading Consultants, one Employee Count 3 BR / 1.5 BA 5 1,046 $1,495 $1.43 Maintenance Supervisor, two Maintenance (11 Full-Time Total) 3 BR / 1.5 BA 5 1,046 $1,555 $1.49 Technicians, two Maintenance Porters, and one Total 456 383,542 SF $513,518 - Maintenance Punch-out Average - 841 SF $1,126 $1.34

74 Central Maryland Value-Add Portfolio Property Details-Willow Lake

Utilities Utility Provider Meter Type Paid By Electricity BGE Individual Resident Gas BGE Individual Mixed* Water/Sewer WSSC Master RUBS** Trash Allied Waste - Owner *Resident pays for in-unit gas usage (heat and cooking); owner pays gas to heat the domestic supply **A portion of the cost of water/sewer is distributed to each resident using Ratio Utility Billback System Tax Detail Parcel 1 Parcel 2 Parcel 3 Parcel 4 Total Jurisdiction Prince George’s County - District 10 - Account Number 1126622 1126630 1126648 1126655 - Previously Assessed Value (Base) $13,789,700 $15,179,300 $23,200 $19,777,200 $48,769,400 Most Recent Assessment Date 1/1/14 1/1/14 1/1/14 1/1/14 - Assessed Value as of 1/1/14 $13,217,500 $14,550,700 $23,200 $18,955,000 $46,746,400* 2014/2015 Assessed Value $13,217,500 $14,550,700 $23,200 $18,955,000 $46,746,400 2015/2016 Assessed Value $13,217,500 $14,550,700 $23,200 $18,955,000 $46,746,400 2016/2017 Assessed Value $13,217,500 $14,550,700 $23,200 $18,955,000 $46,746,400 Next Reassessment Date 1/1/17 1/1/17 1/1/17 1/1/17 - *The assessment will remain ﬂ at for three years from FY 2014 to FY 2017 because it went down. 2014/2015 Tax Rates & Extra Charges Parcel 1 Parcel 2 Parcel 3 Parcel 4 Total State Tax Rate $0.112 per $100 of assessed value County Tax Rate $0.960 per $100 of assessed value Park and Planning Rate $0.279 per $100 of assessed value Stormwater/Chesapeake Bay Water Quality $0.054 per $100 of assessed value Washington Suburban Transit Commission $0.026 per $100 of assessed value 2014/2015 Total Tax Rate $1.431 per $100 of assessed value Solid Waste Service Charge $15,695.52 - - - $15,695.52 Clean Water Act Fee $1,069.76 $1,069.76 $1,069.76 $1,069.76 $4,279.04 Other Taxes/Fees $27,360.00 $60.00 - $60.00 $27,480.00 2014/2015 Total Extra Charges $44,125.28 $1,129.76 $1,069.76 $1,129.76 $47,454.56

Willow Lake 75 76 Central Maryland Value-Add Portfolio Unit Interiors-Willow Lake

Willow Lake contains 456 spacious fl oor plans with the following features: • Kitchens with: • White appliances • Wood cabinetry • Laminate countertops • Laminate wood fl ooring • Bathrooms with: • Ceramic tile tub/shower surround • Vinyl tile fl ooring • Patio or balcony • Separate dining area • Wall-to-wall carpet in living areas • Walk-in closets • Ceiling fans

Community Amenities-Willow Lake

• Swimming pool • Clubhouse • 2.5-acre lake with park setting • Central laundry facilities

Willow Lake 77 78 Central Maryland Value-Add Portfolio Willow Lake 79 80 Central Maryland Value-Add Portfolio Willow Lake 81 Floor Plans-Willow Lake

Willow Lake off ers four spacious ﬂ oor plans shown on the following two pages.

# of Units 14 # of Units 163 Avg. Size 632 SF Avg. Size 732 SF Avg. Leased $/Unit $857 Avg. Leased $/Unit $1,003 Avg. Leased $/SF $1.36 Avg. Leased $/SF $1.37 Studio 1 BR / 1 BA

82 Central Maryland Value-Add Portfolio Floor Plans-Willow Lake

# of Units 248 # of Units 31 Avg. Size 899 SF Avg. Size 1,046 SF Avg. Leased $/Unit $1,180 Avg. Leased $/Unit $1,464 Avg. Leased $/SF $1.31 Avg. Leased $/SF $1.40 2 BR / 1 BA 3 BR / 1.5 BA

Willow Lake 83 Site Plan-Willow Lake

84 Central Maryland Value-Add Portfolio Towne Centre at Laurel Open as of November 2014 $130M project featuring 400 KSF of retail including: Fort Meade Harris Teeter Giant Food 57,000+ employees Regal Cinemas Marshalls Sports Authority Starbucks Party City Dressbarn Burlington Coat Factory Laurel Race Track

Cherry Lane Home Depot Dutch Country Farmers Market Planet Fitness Safeway Best Buy DSW Michaels Lowe’s Ross Dress for Less Patuxent Research Refuge CVS Pharmacy Super Best Taco Bell McDonald’s

Contee Road

Willow Lake 456 Units

Deerﬁ eld Run Elementary School N

Willow Lake 85 Rent Comparables-Willow Lake

Spring House 05 220 units Year Built: 1986 $1,417 avg. $/unit/mo.

Briarwood Place 330 units 04 Year Built: 1966 $1,237 avg. $/unit/mo. Foxﬁ re 500 units Year Built: 1972 $1,326 avg. $/unit/mo.

Willow Lake 02 01 456 units Year Built: 1962 Parke Laurel $1,126 avg. $/unit/mo. 526 units 03 Year Built: 1966 $1,203 avg. $/unit/

86 Central Maryland Value-Add Portfolio Rent Comparables-Willow Lake

The following rent comparable data is as of 7/1/15. 01. Willow Lake 02. Foxﬁ re 13302 Old Stagecoach Road 8737 Contee Road Laurel, MD 20708 Laurel, MD 20708

Year Built: 1962 Year Built: 1972 Occupancy: 95% Occupancy: 96% Concessions: None Concessions: None Rent Management System: Conventional Rent Management System: Yieldstar Utilities: Resident pays electricity, gas for heat/cooking, and water/ Utilities: Resident pays electric and gas; owner pays water/sewer and sewer via RUBS; owner pays trash and gas to heat the domestic supply trash Amenities: Swimming pool, clubhouse, 2.5-acre lake with park set- Amenities: Swimming pool, tennis court, playgrounds, picnic/BBQ ting, central laundry facilities area, care car center, free membership to local gym, central laundry facilities UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. STUDIO 14 632 $857 $1.36 UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. 1 BR / 1 BA 163 732 $1,003 $1.37 1 BR / 1 BA 250 760 $1,230 $1.59 2 BR / 1 BA 248 899 $1,180 $1.31 2 BR / 1.5 BA 200 985 $1,405 $1.40 3 BR / 1.5 BA 31 1,046 $1,464 $1.40 3 BR / 2 BA 50 1,260 $1,748 $1.35 TOTAL/AVG. 456 841 SF $1,126 $1.34 TOTAL/AVG. 500 900 SF $1,326 $1.47 The entire community was renovated to include upgraded kitchens with stainless steel appliances, built-in microwaves, and designer lighting.

Willow Lake 87 Rent Comparables-Willow Lake

03. Parke Laurel 04. Briarwood Place 13178 Larchdale Road 8800 Hunting Lane Laurel, MD 20708 Laurel, MD 20708

Year Built: 1966 Year Built: 1966 Occupancy: 94% Occupancy: 94% Concessions: None Concessions: None Rent Management System: Yieldstar Rent Management System: Lease Rent Optimizer (LRO) Utilities: Resident pays all Utilities: Resident pays all Amenities: Swimming pool, playground, picnic/BBQ area, individual Amenities: Swimming pool, business center, individual washer and washer and dryer dryer (select units)

UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. 1 BR / 1 BA 372 736 $1,075 $1.46 1 BR / 1 BA 85 606 $1,095 $1.81 2 BR / 1 BA 112 983 $1,375 $1.40 1 BR / 1 BA 43 689 $1,170 $1.70 3 BR / 1.5 BA 42 1,289 $1,890 $1.47 1 BR / 1 BA 58 731 $1,205 $1.65 TOTAL/AVG. 526 833 SF $1,203 $1.44 2 BR / 1 BA 21 892 $1,270 $1.42

The majority of the community was renovated to include upgraded kitchens with black appliances, 2 BR / 1 BA 102 954 $1,285 $1.35 faux-granite countertops, and maple wood cabinets with chrome ﬁ xtures. Pricing above reﬂ ects 3 BR / 2 BA 21 1,168 $1,778 $1.52 the average monthly market-rate rents for renovated units. TOTAL/AVG. 330 800 SF $1,237 $1.55

The majority of the community was renovated to include upgraded kitchens with white appliances, tile backsplashes, and faux-granite countertops. Pricing above reﬂ ects the average monthly market-rate rents for renovated units.

88 Central Maryland Value-Add Portfolio Rent Comparables-Willow Lake

Willow Lake has the lowest average monthly rent per unit for one-bedroom units and average monthly rent per unit for two-bedroom, one-bathroom units. 05. Spring House $/Unit Comparison for 1 BR / 1 BA Units* 9401 Spring House Lane $272 Diff erence Laurel, MD 20708

$1,300

$1,250

$1,200

$1,150

$1,100

Year Built: 1986 $1,050 Occupancy: 95% $1,000

Concessions: None $950 Rent Management System: Conventional WillowLake ParkeLaurel BriarwoodPlace Foxfire SpringHouse *Analysis excludes one-bedroom units with dens. Utilities: Resident pays all Amenities: Clubhouse, discount at local health club, individual wash- $/Unit Comparison for 2 BR / 1 BA Units* er and dryer $233 Diff erence

UNIT TYPE # OF UNITS AVG. SIZE AVG. $/UNIT/MO. AVG. $/SF/MO. $1,450 1 BR / 1 BA 70 703 $1,275 $1.81 $1,400 1 BR / 1 BA D 48 844 $1,408 $1.67 $1,350 2 BR / 1 BA 24 837 $1,413 $1.69 2 BR / 2 BA 78 934 $1,550 $1.66 $1,300

TOTAL/AVG. 220 830 SF $1,417 $1.71 $1,250

$1,200

$1,150

$1,100

$1,050 WillowLake BriarwoodPlace ParkeLaurel SpringHouse *Analysis excludes two-bedroom units with dens or more than one bathroom.

Willow Lake 89 Financial Analysis-Willow Lake

Financial Notes Approach: Renovation Strategy Rent Concessions The following analysis assumes all 456 units at Willow Lake are fully ren- Analysis assumes Rent Concessions are 0.5% annually. They are cur- ovated over the fi rst three years of ownership at a rate of 12.7 units per rently 0.69%. month and at a cost of $8,000 per unit, for a total cost of $3,648,000. Renovations are assumed to generate a monthly rental premium of $125 Bad Debt per unit over In-Place Leased Rents as of 7/1/15, to be phased in evenly Analysis assumes Bad Debt is 0.25% annually. It is currently 0.37%. over the renovation term and fully in place by the start of Year 4. Total Other Income Analysis Period Total Other Income is comprised of Other Income, Cable Income, and The Pro Forma commences at the start of Year 1 and runs for fi ve years. Utility Reimbursements. The fi rst year of the analysis is Year 1. The fi scal year runs January 1 to December 31. Other Income Analysis assumes Other Income is $370 per unit in Year 1, increasing Leased Rents 3.0% annually. Other Income is based on the 5/31/15 Trailing 12 and in- Leased Rents as of 7/1/15 are assumed to increase 2.0% prior to the start cludes month to month premium, parking, offi ces, late & NSF fees, rent- of the analysis, 3.5% in Year 1, and 3.0% annually thereafter (in addition ers insurance, forfeitures & other rents, application fees, pet fee income, to the aforementioned renovation premium). exempt renters insurance income, legal fee reimbursement, concession - laundry & other, misc rental income - offi ce, investment & misc interest Loss-to-Lease income, and security deposit int exp. 12/31/13 and 12/31/14 Actual Other Loss-to-Lease is assumed to be 0.0%, as the analysis is based on in- Income include Utility Reimbursements. place Leased Rents. Cable Income Vacancy Loss Analysis assumes Cable Income is $21,712 per year in Year 1, of which Analysis assumes Vacancy Loss is 5.0% annually throughout the analy- a portion remains fl at. Other Income includes Cable Income for the sis. Willow Lake was 94.52% occupied as of 7/1/15. 12/31/13 and 12/31/14 Actual Statements.

Non-Revenue Units Utility Reimbursements Analysis assumes no Employee Units and one Model/Offi ce Unit. Analysis assumes Utility Reimbursements are $400 per unit in Year 1. Reimbursements include RUBS charges for water/sewer.

90 Central Maryland Value-Add Portfolio Financial Analysis-Willow Lake

Financial Notes Expenses ty will increase 5.0% annually over three years from 7/1/17 to 6/30/20. Expenses are based on the 5/31/15 Trailing 12, and analysis assumes Thereafter, taxes are assumed to increase 3.0% annually. Real Estate they increase 3.0% annually. Certain expenses have been adjusted for Taxes are calculated using the current millage rate of $1.431 per $100 of the Pro Forma to reﬂ ect current industry standards. assessed value.

Repairs and Maintenance Extra Charges Repairs & Maintenance includes Turnover and Contract Services for the Extra Charges include solid waste service charges, clean water act fees, 12/31/13 and 12/31/14 Actual Statements. and other taxes/fees, which are all usually included in the tax bill. Anal- ysis assumes these charges remain ﬂ at. Real Estate Taxes The property was assessed 1/1/14 for a value of $46,746,400. This was Capital Reserves a decrease from the previously assessed value of $48,769,400. As a Analysis assumes Capital Reserves are $350 per unit in Year 1, increas- result, taxes will remain ﬂ at for three years from 7/1/14 to 6/30/17. Upon ing 3.0% annually thereafter. the next triennial assessment on 1/1/17, analysis assumes the proper- Unit Mix Leased Rent as of 7/1/15 Projected Rent Including Renovation Premium at the start of Year 4 Unit Type # of Units SF $/Unit $/SF $/Unit $/SF Studio 12 632 $842 $1.33 $1,080 $1.71 Studio 1 632 $928 $1.47 $1,177 $1.86 Studio 1 632 $959 $1.52 $1,211 $1.92 1 BR / 1 BA 153 732 $998 $1.36 $1,255 $1.71 1 BR / 1 BA 3 732 $1,060 $1.45 $1,324 $1.81 1 BR / 1 BA 7 732 $1,101 $1.50 $1,371 $1.87 2 BR / 1 BA 197 899 $1,169 $1.30 $1,446 $1.61 2 BR / 1 BA 12 899 $1,188 $1.32 $1,468 $1.63 2 BR / 1 BA 13 899 $1,295 $1.44 $1,588 $1.77 2 BR / 1 BA 14 899 $1,157 $1.29 $1,433 $1.59 2 BR / 1 BA 8 899 $1,223 $1.36 $1,507 $1.68 2 BR / 1 BA 4 899 $1,314 $1.46 $1,609 $1.79 3 BR / 1.5 BA 21 1,046 $1,434 $1.37 $1,744 $1.67 3 BR / 1.5 BA 5 1,046 $1,495 $1.43 $1,812 $1.73 3 BR / 1.5 BA 5 1,046 $1,555 $1.49 $1,879 $1.80 Total 456 383,542 SF $513,518 - $637,724 - Average - 841 SF $1,126 $1.34 $1,399 $1.66

Willow Lake 91 Financial Analysis-Willow Lake

Financial Assumptions

Analysis Period Deductions

Commencement Date Start of Year 1 LEASE RENTS BELOW MARKET RENTS

End Date End of Year 5 Current 0.0% Year 3 0.0%

Term 5 years Year 1 0.0% Year 4 0.0%

Area Measures Year 2 0.0% Year 5 0.0%

Building Square Feet 383,542 SF PHYSICAL VACANCY LOSS

Number of Units 456 Units Current 5.48% Year 3 5.0%

Physical Occupancy (7/1/15) 94.52% Year 1 5.0% Year 4 5.0%

Revenues Year 2 5.0% Year 5 5.0%

ANNUALIZED MARKET RENT GROWTH RENT CONCESSIONS

Current 2.0% Year 3 3.0% Current 0.69% Year 3 0.5%

Year 1 3.5% Year 4 3.0% Year 1 0.5% Year 4 0.5%

Year 2 3.0% Year 5 3.0% Year 2 0.5% Year 5 0.5%

BAD DEBT Total Other Income (Year 1) $372,832 Current 0.37% Year 3 0.25% Other Income Growth Rate 3.0% Year 1 0.25% Year 4 0.25% Expenses Year 2 0.25% Year 5 0.25% GROWTH RATES NON-REVENUE UNITS Operating Expenses 3.0% Model/Offi ce Units 1 Unit Capital Reserves 3.0% Employee Units 0 Units Operating Expense Source 5/31/15 Trailing 12

Management Fee (Percent of EGI) 3.0%

Capital Reserves Per Unit (Year 1) $350

92 Central Maryland Value-Add Portfolio Financial Analysis-Willow Lake

Historical-Cash Flow-Pro Forma

12/31/13 12/31/14 5/31/15 Year 1 Year 2 Year 3 Year 4* Year 5 Actual Actual YTD Annualized Pro Forma Gross Income Total Projected Market Rents $5,858,056 $6,017,527 $6,114,338 $6,385,662 $6,591,762 $6,789,515 $6,993,200 $7,202,996 Add. Rent Premium from Reno. 0 0 0 126,128 369,214 626,575 761,018 783,849

Total Minimum Rent 5,858,056 6,017,527 6,114,338 6,511,790 6,960,976 7,416,090 7,754,219 7,986,845 Vacancy Loss (553,736) (276,715) (296,374) (325,590) (348,049) (370,804) (387,711) (399,342) Model/Offi ce Units 0 0 0 (14,004) (14,456) (14,889) (15,336) (15,796) Rent Concessions (86,202) (48,274) (40,289) (32,559) (34,805) (37,080) (38,771) (39,934) Bad Debt (188,526) (65,537) (18,134) (16,279) (17,402) (18,540) (19,386) (19,967)

Eff ective Rental Income 5,029,592 5,627,001 5,759,542 6,123,359 6,546,264 6,974,775 7,293,015 7,511,805 Other Income 331,021 289,005 167,297 168,720 173,782 178,995 184,365 189,896 Cable Income 0 0 10,522 21,712 22,090 22,480 22,881 23,294 Utility Reimbursement 0 0 168,413 182,400 187,872 193,508 199,313 205,293

Eff ective Gross Income 5,360,613 5,916,006 6,105,773 6,496,191 6,930,008 7,369,758 7,699,574 7,930,288

Expenses Administrative (56,523) (59,811) (66,822) (77,520) (79,846) (82,241) (84,708) (87,249) Advertising (95,893) (81,022) (84,506) (82,080) (84,542) (87,079) (89,691) (92,382) Legal & Audit (38,542) (13,306) (31,655) (27,360) (28,181) (29,026) (29,897) (30,794) Payroll (589,578) (637,123) (618,168) (570,000) (587,100) (604,713) (622,854) (641,540) Turnover 0 0 (106,060) (109,440) (112,723) (116,105) (119,588) (123,176) Contract Services 0 0 (145,275) (136,800) (140,904) (145,131) (149,485) (153,970) Repairs & Maintenance (436,371) (353,515) (127,342) (127,680) (131,510) (135,456) (139,519) (143,705) Utilities (417,548) (450,799) (435,123) (456,000) (469,680) (483,770) (498,284) (513,232) Controllable Expenses Total (1,634,455) (1,595,576) (1,614,951) (1,586,880) (1,634,486) (1,683,521) (1,734,027) (1,786,047) Insurance (242,052) (187,973) (190,404) (159,600) (164,388) (169,320) (174,399) (179,631) State & County Taxes (676,389) (737,871) (637,236) (668,941) (685,665) (719,948) (755,945) (793,742) Extra Charges 0 0 0 (47,455) (47,455) (47,455) (47,455) (47,455) Management Fees (162,763) (178,338) (180,993) (194,886) (207,900) (221,093) (230,987) (237,909) Fixed Expenses Total (1,081,204) (1,104,182) (1,008,633) (1,070,881) (1,105,407) (1,157,815) (1,208,786) (1,258,737)

Total Expenses (2,715,659) (2,699,758) (2,623,584) (2,657,761) (2,739,894) (2,841,336) (2,942,813) (3,044,784)

Net Operating Income 2,644,954 3,216,248 3,482,189 3,838,429 4,190,114 4,528,422 4,756,761 4,885,504

Capital Expenditures Renovation Capital Improvements0 0 0 (1,216,000) (1,216,000) (1,216,000) 0 0 Capital Expenditures/Reserves (779,342) (687,100) (507,482) (159,600) (164,388) (169,320) (174,399) (179,631)

Operating Cash Flow 1,865,612 2,529,148 2,974,707 2,462,829 2,809,726 3,143,103 4,582,362 4,705,873 *Year 4 is the ﬁ rst year of stabilization after renovations.

Willow Lake 93 Market Snapshot

94 Central Maryland Value-Add Portfolio Maryland added 13,500 jobs in May Four out of ﬁ ve months posted job gains in 2015 -Department of Labor, Licensing, and Regulation

Market Snapshot 95 Location Highlights

White Marsh/Baltimore County

Seneca Bay Enjoys Excellent Connectivity: • Walking distance from MTA Bus Route 24 • Two miles from the Martin Airport MARC Train Station • Eight miles from White Marsh Town Center, northeast Baltimore County’s largest retail hub • 20-minute drive from downtown Baltimore, Aberdeen Proving Ground, and Towson • 25-minute drive from Baltimore-Washington International Thurgood Marshall Airport (BWI)

Area Attractions WHITE MARSH TOWN CENTER • White Marsh Mall—5th largest shopping mall in Maryland with nearly 150 stores and eateries • The Avenue at White Marsh—300-KSF mixed-use development with retailers and restaurants lining a plaza-style “Main Street” White Marsh is one of the • Nottingham Square—massive shopping complex of big-box retailers and free-standing eateries region’s most successful planned communities PLANNED 500-KSF OUTLET MALL • Paragon Outlet Partners is building a 390-KSF outlet shopping center near the intersection of I-95 and MD-43, where over 205,000 cars pass by daily • The 83-acre site will contain more than 100 retailers, in addition to 250 KSF of offi ce space and a 130-room hotel at completion • The project is slated to open to shoppers in 2016

New Development Within a 15-Minute Drive of Seneca Bay Sparrows Point Terminal will redevelop a 3,100-acre industrial site in Southeast Baltimore, formerly a Bethlehem Steel manufacturing plant, into a world-class transportation, manufacturing, and logistics hub. The space features a deep-water port, including a 1,150-foot pier to accommodate heavy commodities and a short-line railroad, which incorporates 100 miles of track connecting CSX and Norfolk Southern railroads. City offi cials have predicted at least 2,000 people working at the site by 2020. This facility will be one of the only two on the East Coast that can handle the huge “post-Panamax” ships. Sparrows Point 3,100-acre site

96 Central Maryland Value-Add Portfolio Location Highlights

Employment Overview-White Marsh White Marsh is one of the largest economic drivers in the region, with strengths in ﬁ nancial, insurance, healthcare, manufacturing, technology, and distribution. It is one of two economic hubs that, three decades ago, was designated by the County government (the other being Owings Mills). The area is one of the fastest-growing in Baltimore County, with 3.8+ MSF of business development in the past decade. Home to over 2,000 highly-visible acres just north of the I-695 and I-95 intersection, White Marsh has established itself as a prevalent home for business headquarters and office locations including:

MEDSTAR FRANKLIN SQUARE MEDICAL CENTER COMCAST • 3rd largest hospital in Maryland with 347 licensed beds • Largest cable company and home Internet provider in the US has • Emergency department treats over 113,000 patients annually nearby regional headquarters with over 1,100 employees • One of Baltimore County’s largest employers with over 3,000 employees, including 1,000 nurses and 400 staff physicians RELIABLE CHURCHILL • US News and World Report’s #3 Best Hospital in Maryland (2013) • Maryland’s premiere distributor of wine and spirits, and a member • Recipient of Delmarva Foundation’s Excellence Award for Quality of The Charmer Sunbelt Group (CSG), one of the nation’s leading for Hospitals in 2012, 2011, and 2009 distributors of fi ne wines, spirits, beer, and other beverages • Completed a $3.6M renovation to the NICU this spring, which • Chose Baltimore Crossroads@95 for their new headquarters after features a new 23-bed unit and 15 single rooms searching for fi ve years • Facility will consolidate their offi ces and warehouses and bring 500 JOHNS HOPKINS HEALTH CARE & SURGERY CENTER jobs from Anne Arundel County to Baltimore County AT WHITE MARSH • Construction and fi t-out for the 449-KSF building is estimated at • Comprehensive healthcare facility provides full range of medical $50M and should be completed by Q2 2014 services, including routine check-ups, outpatient surgery, physical therapy, radiology, and a Patient First walk-in urgent care center GENERAL MOTORS POWERTRAIN • 65-acre site in White Marsh hosts about 450 employees BALTIMORE CROSSROADS@95 • Amazon opened a 1-MSF distribution center in March 2015 that • 1,000-acre mixed-use site with total capacity of over 6 MSF— employs 1,000 people including 1.2 MSF of offi ce, 680 KSF of fl ex, and 65 KSF of retail • At completion, 10,000 employees are expected to work on-site PROMETRIC • Greenleigh at Crossroads—$100M, 200-acre planned mixed-use • Built a new $12M global operations hub in White Marsh in 2013; development that is expected to break ground by 2016 hosts 250 employees • It will include 500 KSF of offi ce space, 100 KSF of retail space, and • 60-KSF building will be used for oversight of their global test center 1,700 residential units including a mix of townhomes, condos, single- network, a global help desk, and other support services family homes, and 500 apartments

Market Snapshot 97 PParagon’saragon’s 390-KSF390-KSF OutletOutlet MMallall

AMAZON OVER 1.5 MSF 1,000 employees • 6.5 miles away OF RETAIL SPACE GM POWERTRAIN PROMETRIC 450 employees • 6.5 miles away 250 employees 8.3 miles away COMCAST 1,100 employees 7.8 miles away JOHNS HOPKINS HEALTH CARE & SURGERY CENTER AT WHITE MARSH 8 miles away

MEDSTAR FRANKLIN SQUARE MEDICAL CENTER 3,000+ employees • 7 miles away

BALTIMORE CROSSROADS@95 10,000 employees • 2 miles away

Seneca Bay 460 Units

98 Central Maryland Value-Add Portfolio Location Highlights

TOP EMPLOYERS IN ANNE ARUNDEL COUNTY Glen Burnie/Anne Arundel County Company Employees Industry Fort George G. Meade 57,000 Federal Government Over 500,000 residents call Anne Arundel County home, due to the BWI Thurgood Marshall Airport 9,700 Transportation area’s numerous attractions, educational and employment opportuni- Northrup Grumman 6,900 Electronic Systems ties, and strategic location within the Baltimore-Washington Corridor. Anne Arundel Health System 4,000 Health Care Major employment centers surround Quail Hollow and Cedar Creek including University of Maryland Baltimore Washington Medical Center, Southwest Airlines 3,200 Transportation BWI and its surrounding business district, downtown Baltimore, and Maryland Live! Casino 3,000 Casino Fort Meade. UMD Baltimore Washington Medical Center 2,800 Hospital US Naval Academy 2,340 Education Major Roadways Surrounding Quail Hollow and Cedar Creek: Booz Allen Hamilton 2,300 Professional Services • MD-10 (Arundel Expressway) Walmart 2,100 Retail Trade • MD-2 (Governor Ritchie Highway) business.maryland.gov (November 2014) • I-695 • I-97 • MD-100

Other Location Highlights: • Four miles from BWI • Nine miles from Fort Meade • 14 miles from downtown Baltimore • 19 miles from Annapolis

Nearby Attractions Governor Ritchie Highway is peppered with a multitude of shopping complexes, off ering the following: Walmart, Giant Food, ShopRite, Tar- get, Weis, BJ’s, Dick’s Sporting Goods, Home Depot, Lowe’s, Burlington Coat Factory, Home Goods, Marshalls, PetSmart, Macy’s, Sears, Best Buy, AMF Ritchie Bowling Center, Sakura Japanese Steakhouse, Pane- ra Bread, Cici’s Pizza, Glory Days Grill, Boneﬁ sh Grill, Bill Bateman’s Bistro, Outback Steakhouse, Coldstone Creamery, Chick-ﬁ l-A, Taco Bell, Burger King, Pizza Hut, McDonald’s, and Starbucks.

Market Snapshot 99 The top tourist destination in Maryland is only eight miles away

Arundel Mills Commercial District ARUNDEL MILLS MALL • 1.3-MSF shopping mecca with 17 anchors including OFF 5th Saks Fifth Avenue Outlet, Neiman Mar- cus Last Call!, Medieval Times Dinner and Tour- nament, Dave and Buster’s, Bed Bath & Beyond, Bass Pro Shops, and Cinemark Theatres • Over 225 specialty outlets, stores, and eateries include Banana Republic Factory, J. Crew Factory, Coach Factory, Duclaw Brewing Co., Buff alo Wild Wings, and Chevy’s Fresh Mex

Maryland Live! Casino has created 3,000 permanent jobs MARYLAND LIVE! CASINO • This $500M, 2-MSF complex is open 24 hours a day, seven days a week, hosts 4,750 slots and electronic table games, and 177 live table games like blackjack, roulette, craps, and poker • Other amenities include Rams Head Center Stage, The Cheesecake Factory, Bobby’s Burger Palace, The Prime Rib, and Phillips Seafood • With 3,000 permanent jobs, the casino serves as one of Maryland’s largest employers and highest tax-payers

SURROUNDING RETAILERS AND EATERIES • Safeway, Walmart, Staples, Costco, Michael’s, hhgregg, PetSmart, Chick-ﬁ l-A, Panera Bread, TGI Friday’s, Chipotle, and Potbelly

100 Central Maryland Value-Add Portfolio DOWNTOWN BALTIMORE & CENTRAL BUSINESS DISTRICT 1.35M employees • 14 miles away

US COAST GUARD SHIPYARD Active workforce in Maryland—3,000 9 miles away

BALTIMORE-WASHINGTON INTERNATIONAL AIRPORT 9,700 employees • 4 miles away

Cedar Creek 334 Units

MARYLAND LIVE! CASINO UNIVERSITY OF MD BALTIMORE 3,000 employees • 8 miles away WASHINGTON MEDICAL CENTER 2,800 employees • next door

Quail Hollow US ARMY BASE FORT GEORGE 336 Units G. MEADE 57,000 employees • 9 miles away

Market Snapshot 101 Employment Overview-Anne Arundel County Anne Arundel County’s economy is founded on government jobs and operating budgets due to its proximity to Fort Meade, the state capital of Annapolis, and Washington, DC. It is currently home to over 14,800 businesses that employ nearly 252,000 people.

UMD BALTIMORE WASHINGTON MEDICAL CENTER FORT MEADE • 316 beds, over 2,800 employees, and 600 physicians • 5,400-acre campus is home to the third largest army installation in • Ranked in the top 5% of America’s hospitals by HealthGrades the US and Maryland’s top employer with over 57,000 employees • $117M expansion project added an emergency department in 2008, • Epicenter of the greatest economic expansion in the state since an 111-bed patient care building in 2009, and a new women’s health World War II, sparked by Base Realignment and Closure’s re-loca- center with obstetrics in 2009 tion of Defense Information Systems Agency, the new headquarters • Completed a $31M surgical suite expansion in 2011, which expand- of US Cyber Command, and a $5.2B expansion of the National Se- ed the number of operating rooms to 17 curity Agency • Over the past ten years, the employment base has grown from BWI THURGOOD MARSHALL AIRPORT 34,000 to 57,000, and is expected to top 60,000 by 2020 • BWI ﬂ ew 22.3M commercial passengers (61,100 per day) in 2014, • US Cyber Command has brought approximately 1,800 jobs to Fort earning it the #22 ranking on Airports Council International’s list of Meade since inception and announced plans to add 3,000 jobs at the top 25 busiest airports in North America, as well as the 69th rank- Fort Meade by year end, doubling its resources by 2016 ing in the world • 100+ defense contractors or related ﬁ rms have opened new offi ces • One of Maryland’s largest employers with over 9,700 workers or expanded their presence around Fort Meade, and eight out of • Economic impact of nearly 94,000 direct, induced, and indirect jobs the top ten private contractors for the Department of Defense have and $5.6B in revenues offi ces nearby • For every direct defense employee at Fort Meade, an estimated BWI BUSINESS DISTRICT, CONCENTRATED AROUND THE AIRPORT two additional private sector jobs are created to support them when • Anchored by the Electronic Systems headquarters of Northrop considering defense contractors, supply chain, and supporting retail Grumman with 6,900 workers and consumer businesses • Other major employers with a presence in the area include Booz Allen Hamilton (2,300 employees), Alegis Group (1,500 employees), US COAST GUARD SHIPYARD and Lockheed Martin (925 employees) • Repairs and renovates ships in Baltimore for the US Coast Guard with almost 3,000 active workforce in Maryland • Employer Support of Guard & Reserve “Above and Beyond” Award (2011)

102 Central Maryland Value-Add Portfolio Fort Meade is expected to gain 3,000 US Cyber Command jobs by year end -business.maryland.gov

Market Snapshot 103 Location Highlights

Laurel/Prince George’s County

Laurel is home to contemporary shopping centers, offi ce and industrial parks, and a wide range of dining choices. It has both a historic district of clapboard storefront buildings and 100-year-old homes, as well as several new developments with modern amenities.

Major Roadways Proximate to Willow Lake: • Baltimore-Washington Parkway • MD-198 • MD-32 • US Route-1 • Muirkirk and Laurel MARC Train Stations • I-95 • MD-200 • I-495 TOWNE CENTRE AT LAUREL RENDING AS OF 4/8/15

Retail Centers in a Two-Mile Radius • MARYLAND CITY PLAZA SHOPPING CENTER: Walmart, Target, Shoppers, Pier 1 One of Laurel’s most exciting Imports, Kohl’s, T.J. Maxx, Panera Bread, Chick-ﬁ l-A, Cakes Plus, and Rita’s mixed-use developments has • CENTRE AT LAUREL: Shoppers, Starbucks, PetSmart, Chick-ﬁ l-A, LongHorn Steakhouse welcomed seven new retailers and • LAUREL LAKES SHOPPING CENTER: Safeway, Lowe’s, Best Buy, DSW, Michaels, restaurants this year so far GameStop, Potbelly, Einstein Bagels, Chipotle, and Red Lobster • TOWNE CENTRE AT LAUREL: $130M project featuring 400 KSF of retail, dining, and Towne Centre at Laurel 2015 Openings entertainment. The vibrant mixed-use development opened in November 2014 with an Hard Bean Café impressive mix of tenants including a 47-KSF Harris Teeter, 16-screen Regal Cinemas, Ulta Pivot Physical Therapy Burlington Coat Factory, Old Navy, Sports Authority, Mission BBQ, Panera Bread, Laurel Thai Noodles & Co., and Massage Envy. According to the developer Greenberg Gibbons, Pet Valu Towne Centre at Laurel has welcomed seven new retailers and restaurants in 2015 so N’Style far, with an expected eight more tenants to open by year end. At completion, the project United States Post Offi ce will create 1,000 permanent jobs in Laurel.

104 Central Maryland Value-Add Portfolio ARUNDEL MILLS MALL

8 MILES

Walmart

Starbucks

Willow Lake 456 Units

Starbucks

Market Snapshot 105 Location Highlights

Employment Overview-Prince George’s County Due to its location adjacent to Washington DC, Prince George’s County (PGC) enjoys a ﬂ ourishing economy based on the presence and spending power of the federal government and its supporting contractors. Proximity to the nation’s capital has attracted federal contractors along with private, high technology, and research and development ﬁ rms to PGC. Approximately 15,400 businesses employ over 213,000 people in the county, 400 of which have over 100 employees (business.maryland.gov). Willow Lake is surrounded by some of the top employers in the region including:

LAUREL REGIONAL HOSPITAL (3 MILES AWAY): • 48-acre hospital campus that hosts over 100 beds and 630 employees

NASA’S GODDARD SPACE FLIGHT CENTER (8 MILES AWAY): • The nation’s largest space research laboratory with approximately 3,400 employees

JOHNS HOPKINS APPLIED PHYSICS LABORATORY (9 MILES AWAY): • 400-acre campus hosts 5.3K employees • Nation’s largest University-affi liated research center and has over 600 programs including the Department of Defense, Department of Homeland Security, and NASA

UNIVERSITY OF MARYLAND-COLLEGE PARK (12 MILES AWAY): • Supreme catalyst for the region as the largest university in the MSA • Hosts 40,000 students and 10,000 staff members • As enrollment continues to steeply increase year after year, the Route One Corridor is undergoing extensive development that will beneﬁ t the northern Prince George’s County submarket Downtown Columbia Master Plan Site Map HOWARD COUNTY (12.5 MILES AWAY): • Hosts 70+ MSF of commercial space, most of which is concentrated in Columbia • A wealth of corporate campuses include Columbia Corporate Park, Meadowridge 95, and Columbia Gateway Business Park, a 630-acre master-planned community which hosts Micros, Motorola, CareFirst BlueCross BlueShield, Honeywell, SAIC, Merkle, and Kaiser Permanente • Ranked the “Ninth Most Digital County in the Nation” by the Center for Digital Government and National Association of Counties in 2013 • Howard Hughes Corp. has begun its master plan to transform downtown Columbia into 1.2 MSF of retail space, 4.3 MSF of commercial space, 640 hotel rooms, and open spaces over the next ﬁ ve years

106 Central Maryland Value-Add Portfolio DC MSA Overview

The Washington, DC metro area hosts the headquarters of 15 2015 Fortune 500 companies, including Fannie Mae, Freddie Mac, Lockheed Martin, Northrop Grumman, General Dynamics, Capital One Financial, and Booz Allen Hamilton. DC has the third-largest downtown area in the nation in terms of commercial offi ce space, behind only New York City and Chicago.

The DC area’s GRP is expected to grow 5.5% in 2015, as the federal government and its spending are the largest economic components in the metro area. The nation’s 5th largest job market (3.1M payroll workers) enjoys a low unemployment rate of 4.9%, one of lowest rates among major metros down 40 basis points from 5.3% one year ago (Delta Associates, Q1 2015). In the twelve months ending January 2015, payroll employment increased by 46,300 positions.

Multifamily investors are attracted to the region’s historically strong job growth, affl uence, and increasing renter pool due to favorable population trends. DC’s urban population is expanding faster than any other major metro area in the Northeast, fueled by job creation and young professionals moving to the area. Since April 2010, DC has consistently added over 1,100 new residents every month, 70% of which are under the age of 35 (US Census Bureau).

Also known as Millennials, or Gen Y, this segment of the population is bound # BEST CITY FOR WOMEN ENTREPRENEURS to continue to release an unprecedented amount of pent-up rental demand. 1 NerdWallet, 2014 As America’s largest generation with an astounding 77M members, Millennials # MOST LITERATE CITY continue to enter the workforce and control an increasing share of the econ- 1 Central Connecticut State University, 2014 omy. They are the driving force behind the transition from suburban home # STRONGEST ECONOMY ownership to urban rentership. According to Zillow, the “breakeven” point, 1 Policom, 2013 where the start-up expenses related to buying a house make renting a net # BEST CITY FOR JOB SEEKERS loss, will only continue to increase. It now takes over four years for buying to 2 NerdWallet, 2013 make more sense than renting, making DC’s metro area “breakeven horizon” the second-longest in the country. The Central Maryland Value-Add Portfolio # BEST CITY FOR BUSINESS 2 MarketWatch, 2013 will beneﬁ t from the continuous rental demand in the metro area, as Millenni- als make the conscious decision to postpone homeownership.

Market Snapshot 107 Baltimore MSA Overview LARGEST EMPLOYMENT SECTORS SHARE OF TOTAL EMPLOYMENT (%)

Strong fundamentals, a high quality of life, and a specialized economy make Other 10% Baltimore an ideal choice for businesses and residents. Baltimore has trans- 16% Construction formed into a modern, highly-diversiﬁ ed service economy with strengths in core 16% Education&Health sectors including health and medical services, cybersecurity, biotechnology, 6% government, education and professional, ﬁ nance, and business services. FinancialActivities Government Hosp. & Leisure Baltimore ranks as the largest job market amongst comparable metro areas with 10% 19% 1.5M payroll jobs. The Baltimore MSA added 21,100 jobs in the 12 months ending Prof.&Business January 2015, continuing a strong period of job growth. Delta Associates projects Retail Trade 17% 6% a three-year annual employment growth average of 20,200, largely exceeding the 20-year average of 11,500 (Q1 2015).

108 Central Maryland Value-Add Portfolio Baltimore MSA Overview

COMPANY EMPLOYEES INDUSTRY Johns Hopkins University 22,000 Educational Services Johns Hopkins Hospital & Health System 18,250 Health Care University of Maryland Medical System 10,000 Health Care University System of Maryland 9,500 Educational Services MedStar Health 6,200 Health Care LifeBridge Health 5,000 Health Care Mercy Health Services 4,000 Health Care

Baltimore City’s Top Employers Top Baltimore City’s St. Agnes Health Care 3,300 Health Care baltimoredevelopment.com

Energy Constellation Energy completed its $7.9B merger with Exelon Corporation in 2013, creating more than 2,400 new jobs across the state. According to the Economic Alliance of Greater Baltimore Foundation, Baltimore Gas and Elec- tric’s (BGE) economic contributions to the region totaled $3.81B in 2013. The combined Constellation Energy/Exelon Corporation’s headquarters are set to open in Harbor Point in 2016 detailed on the next page.

Tourism Visit Baltimore’s annual report #9 World’s Best Waterfront City found that the convention cen- ...rivaling legendary global city sensations such as Venice, ter booked a record 29 conven- Amsterdam, Sydney, Hong Kong, Rio de Janeiro, and Vancouver tions in 2015, which will draw an -Huffi ngton Post, 2014 estimated 206,000 people and generate an economic impact # of $138M. Offi cials conﬁ rm 26 20 Best City on the Planet conventions have already been ...researchers studied 135 cities across 55 countries on over 50 booked for 2016, four more than indicators such as urban planning, human capital, and technology the city ‘s annual average of 22 -Business Insider, 2014 over the past several years.

Market Snapshot 109 Rendering of Harbor Point An Ongoing Urban Renaissance Baltimore is poised for continued gentrifi cation and sizable job growth for years to come. The newly-opened Horseshoe Casino already employs 1,700 local workers. The two-story casino is the second-largest in Maryland with a 122- KSF gaming fl oor and 20 KSF of authentic Baltimore City food outlets including three restaurants and several bars and lounges. Since opening in August 2014, the casino has earned nearly $1M a day in revenues, allowing Maryland casino revenue to top $80M for the fi rst time ever.

Harbor Point, one of the last waterfront parcels yet to be developed along the picturesque Inner Harbor, will transform into a 27-acre, 3-MSF mixed-use development over the next decade. Project highlights include 9.5 acres of public open space, 1.6 MSF of offi ce space, 220 KSF of hotel space, 200 KSF of retail space, and 3,300 parking spaces. The site’s chief tenant, the aforementioned Exelon Corporation, is relocating its regional headquarters to the Exelon Build- ing set to open in 2016. Harbor Point is a $1B investment that will result in 7,100 construction jobs and 6,600 permanent jobs in downtown Baltimore. RealtyTrac named Baltimore the #1 Market in the Country for Renting to Millennials—a demographic Millennials are the Catalyst of a Shifting Demographic that’s grown 92% over the last decade in the city Generation Y, also known as Millennials, is America’s largest generation with an astounding 77M members (Nielson). As they continue to enter the workforce and control an increasing share of the economy, they are the driving to 25,000-in college-educated Millennials living in Baltimore City # force behind the transition from suburban home ownership to urban rentership. over the last decade. RealtyTrac named Baltimore the 1 “Market in Millennials currently living in urban areas outnumber all other generations, as the Country for Renting to Millennials.” The 2014 annual gross rental two-thirds are renters more likely to live with roommates or family members. A yield was an astounding 21.3%, more than twice the national aver- study conducted by the Baltimore Sun reported a 92% increase-from 13,000 age of 10%.

110 Central Maryland Value-Add Portfolio Baltimore is Positioned for Upside Emerging Trends According to CBRE Econometric Advisors, from 2015 to 2020 in the Balti- The Baltimore metro area has established itself as a main hub for cyber- more metro area: security jobs. Various levels of government have increased investments • Net absorption is expected to average 1,322 units in cybersecurity programs that will help further Baltimore’s position in • Total employment is predicted to grow by an astounding 91,700 jobs the professional/business services sector. This includes recently ap- As of Jan. 2015, the Baltimore area unemployment rate was 6.2%, a de- proved legislation for a $120M Center for Cybersecurity Studies for the crease from last year at 6.5% and is predicted to edge down to the mid- US Naval Academy in Annapolis that will host 206 KSF of classrooms, ﬁ ve range during 2015. research labs, and lecture halls. Such initiatives are important in order to sustain the signiﬁ cant growth occurring within this industry (Delta As- sociates Q1, 2015).

BALTIMORE ANNUAL HISTORY AND FORECAST 2006 TO 2020 TOTAL REAL PERS RENTABLE RENTABLE VACANCY NET RENT YEAR EMPLOYMENT INCOME INVENTORY COMPLETIONS RATE ABSORPTION INDEX (X 1000) ($ BILLIONS) (UNITS) (UNITS) (%) (UNITS) ($/UNIT) 2006 1,313 145.1 183,858 1,981 3.8 1,241 1,011.54 2007 1,319 145.8 185,277 1,419 4.7 -1,348 1,050.37 2008 1,303 146.6 186,603 1,326 5.5 640 1,061.69 2009 1,266 144.7 187,912 1,309 6.0 1,614 1,057.39 2010 1,280 148.9 188,773 861 5.2 2,254 1,115.58 2011 1,302 151.0 190,236 1,463 4.9 1,289 1,152.25 2012 1,323 155.6 191,476 1,240 4.9 1,379 1,186.90 2013 1,342 153.8 193,767 2,291 5.2 985 1,202.53 2014 1,356 156.1 195,740 1,973 5.1 2,844 1,225.47 2015 1,386 162.9 197,583 1,843 5.0 1,528 1,240.50 2016 1,412 167.2 199,327 1,744 4.9 1,756 1267.04 2017 1,423 170.7 201,078 1,751 5.1 1,135 1,297.30 2018 1,430 173.1 202,761 1,684 5.3 1,216 1,327.18 2019 1,433 174.2 204,375 1,614 5.5 1,102 1,355.92 2020 1,437 175.9 205,935 1,560 5.7 1,198 1,383.72

Market Snapshot 111 Conﬁ dentiality Agreement

DISCLOSURES, NOTICES AND CONFIDENTIALITY or the owner of the Property (the “Owner”), to be all- or without notice which may arise as a result of review CBRE, Inc. operates within a global family of inclusive or to contain all or part of the information of this Memorandum. The Owner shall have no legal companies with many subsidiaries and/or related which prospective investors may require to evaluate commitment or obligation to any entity reviewing this entities (each an “Affi liate”) engaging in a broad a purchase of real property. All fi nancial projections Memorandum or making an off er to purchase the range of commercial real estate businesses including, and information are provided for general reference Property unless and until written agreement(s) for the but not limited to, brokerage services, property purposes only and are based on assumptions purchase of the Property have been fully executed, and facilities management, valuation, investment relating to the general economy, market conditions, delivered and approved by the Owner and any fund management and development. At times competition and other factors beyond the control of conditions to the Owner’s obligations therein have diff erent Affi liates may represent various clients the Owner and CBRE, Inc. Therefore, all projections, been satisfi ed or waived. with competing interests in the same transaction. assumptions and other information provided and For example, this Memorandum may be received made herein are subject to material variation. All By receipt of this Memorandum, you agree that this by our Affi liates, including CBRE Global Investors, references to acreages, square footages, and other Memorandum and its contents are of a confi dential Inc. or Trammell Crow Company. Those, or other, measurements are approximations. Additional nature, that you will hold and treat it in the strictest Affi liates may express an interest in the property information and an opportunity to inspect the Property confi dence and that you will not disclose this described in this Memorandum (the “Property”) may will be made available to interested and qualifi ed Memorandum or any of its contents to any other submit an off er to purchase the Property and may be prospective purchasers. In this Memorandum, certain entity without the prior written authorization of the the successful bidder for the Property. You hereby documents, including leases and other materials, are Owner or CBRE, Inc. You also agree that you will not acknowledge that possibility and agree that neither described in summary form. These summaries do use this Memorandum or any of its contents in any CBRE, Inc. nor any involved Affi liate will have any not purport to be complete nor necessarily accurate manner detrimental to the interest of the Owner or obligation to disclose to you the involvement of any descriptions of the full agreements referenced. CBRE, Inc. Affi liate in the sale or purchase of the Property. In all Interested parties are expected to review all such instances, however, CBRE, Inc. will act in the best summaries and other documents of whatever nature If after reviewing this Memorandum, you have no interest of the client(s) it represents in the transaction independently and not rely on the contents of this further interest in purchasing the Property, kindly described in this Memorandum and will not act in Memorandum in any manner. return this Memorandum to CBRE, Inc. concert with or otherwise conduct its business in a way that benefi ts any Affi liate to the detriment of Neither the Owner or CBRE, Inc, nor any of DISCLAIMER any other off eror or prospective off eror, but rather their respective directors, offi cers, Affi liates or ©2015, CBRE, Inc. This information has been obtained will conduct its business in a manner consistent with representatives make any representation or from sources believed reliable. We have not verifi ed it the law and any fi duciary duties owed to the client(s) warranty, expressed or implied, as to the accuracy and make no guarantee, warranty or representation it represents in the transaction described in this or completeness of this Memorandum or any of its about it. Any projections, opinions, assumptions Memorandum. contents, and no legal commitment or obligation shall or estimates used are for example only and do not arise by reason of your receipt of this Memorandum represent the current or future performance of the This is a confi dential Memorandum intended solely or use of its contents; and you are to rely solely on property. You and your advisors should conduct a for your limited use and benefi t in determining your investigations and inspections of the Property in careful, independent investigation of the property whether you desire to express further interest in the evaluating a possible purchase of the real property. to determine to your satisfaction the suitability of acquisition of the Property. the property for your needs. Photos herein are the The Owner expressly reserved the right, at its property of their respective owners and use of these This Memorandum contains selected information sole discretion, to reject any or all expressions of images without the express written consent of the pertaining to the Property and does not purport to be interest or off ers to purchase the Property, and/or to owner is prohibited. a representation of the state of aff airs of the Property terminate discussions with any entity at any time with

112 Central Maryland Value-Add Portfolio BALTIMORE MCLEAN WASHINGTON, DC 100 E. Pratt Street, 17th Floor 1861 International Drive, Suite 300 750 9th Street, NW, Suite 900 Baltimore, MD 21202 McLean, VA 22102 Washington, DC 20001 +1 410 244 7100 +1 703 821 6900 +1 202 783 8200

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