Latitudes - LoopNet...Latitudes Apartments is also well positioned to benefit from the significant...

A 448-UNIT APARTMENT COMMUNITY LOCATED IN VIRGINIA BEACH, VA

Latitudes

C O N F I D E N T I A L I T Y A G R E E M E N T2 .

ARA DC, LLC (“Listing Agent”) has been engaged to exclusively represent the Seller in the sale of Latitudes (the “Property”). The Owner has indicated that all inquiries and communications with respect to the contemplated sale of such Property be directed to Listing Agent. All fees due to Listing Agent in connection with the sale of the Property shall be paid by the Owner.

Listing Agent has available for study certain information concerning the Property which may include various papers, documents, data and other materials, portions of which may be included in a package or brochure (hereinafter referred to as the “Evaluation Material”). Listing Agent is prepared to furnish the Evaluation Material in connection with discussions and negotiations concerning a possible transaction involving the Property on the condition that Principal agrees to treat it in a confidential manner and make the representations and agreements herein provided. Therefore, Principal hereby represents and agrees as follows:

The Property is being offered to qualified investors only on an “AS IS/WHERE IS” basis, with all faults and without representations or warranties of any kind or nature (express or implied). The Owner expressly disclaims any warranty, not limited to any warranty of habitability, suitability, fitness for a particular purpose, merchantability or quality of workmanship, construction or repair. Principal should be aware that prior to and after contracting to purchase, reasonable opportunity to inspect and investigate the Property and all improvements thereon shall be given. All requests for additional information and property tours, however, are to be made through the Listing Agent. All site visits are to be made through Naoko Branker (Direct: (703) 918-4669 E-mail: [email protected]). Principal shall be responsible for all costs and expenses associated with its investigation. The Owner and Listing Agent respectfully request that Principal refrain from contacting any on-site personnel or residents. Principal shall not rely upon information provided by Owner or its agents as to:

1) the quality, nature, adequacy and physical condition of the Property, including but not limited to: structural elements, foundation, roof, appurtenances, access, landscaping, parking facilities, electrical, HVAC, plumbing, sewage and utility system, facilities, appliances;

2) the quality, nature, adequacy and physical condition of soils and geology and the existence of ground water or any other environmental matter;

3) the zoning or legal status of the Property;

4) the compliance with applicable codes, laws, regulations, statutes, ordinances, covenants, conditions and restrictions of any governmental, quasigovernmental entity or any other person or entity;

5) the size of the Property, improvements, apartment or condominium units (including any reference to square footage);and

6) except as expressly provided otherwise in the executed Purchase and Sale Agreement (as hereinafter defined), the condition of title and nature, status and extent of any right-of way, right of redemption, possession, lien, encumbrance, lease, reservation, covenants, conditions, restrictions, and any other matter affecting the title.

Neither the Principal nor the Owner shall be bound until execution of a formal Purchase and Sale Agreement, which shall then supersede prior discussions and constitute the sole agreement of the parties.

O F F E R S O L I C I TAT I O N P R O C E S S 3 .

M U L T I FA M I L Y I N V E S T M E N T S A L E S

WA S H I N G T O N , D . C .1899 Pennsylvania Ave NW

Suite 300Washington, D.C. 20006

T Y S O N S C O R N E R1410 Spring Hill Rd

Suite 600McLean, VA 22102

R I C H M O N D500 Libbie Ave

Suite 2BRichmond, VA 23226

N O R F O L K999 Waterside Dr

Suite 2525Norfolk, VA 23510

O F F I C E L O C AT I O N S

E D G A R N I C AF I N A N C I A L A N A L Y S T

[email protected]

N A O K O B R A N K E RT R A N S A C T I O N S E R V I C E S C O O R D I N AT O R

[email protected]

OFFER SUBMISSIONOffers should be presented in the form of a non-binding Letter of Intent, spelling out the significant terms and conditions of Purchasers’ offers including, but not limited to (1) asset pricing, (2) due diligence and closing time frame, (3) earnest money deposit, (4) a description of the debt/equity structure and (5) qualifications to close. Offers should be delivered to the attention of Mike Marshall at [email protected].

PROPERTY VISITATIONProspective purchasers will have the opportunity to visit the property via prescheduled property tours. These tours will include access to a representative sampling of units and access to maintenance and other similar facilities. In order to accommodate the property’s ongoing operations, property visits will require advance notice and scheduling.

AVAILABLE TOUR DATESTo schedule your tour of the property, please contact Naoko Branker at 703.918.4669 or [email protected].

M I K E M A R S H A L LE X E C U T I V E M A N A G I N G D I R E C T O R

[email protected]

D R E W W H I T EE X E C U T I V E M A N A G I N G D I R E C T O R

[email protected]

W I N K E W I N GS E N I O R M A N A G I N G D I R E C T O R

[email protected]

I N V E S T M E N T R AT I O N A L E 1 0

L O C AT I O N O V E R V I E W 3 8

C O M PA R A B L E A N A L Y S I S 5 8

A PA R T M E N T M A R K E T O V E R V I E W 5 4

F I N A N C I A L A N A L Y S I S 8 4

P R O P E R T Y O V E R V I E W 2 6

E X E C U T I V E S U M M A R Y 6

TABLE OFCONTENTS

EXECUTIVESUMMARY

ARA Newmark Mid-Atlantic is pleased to present for sale Latitudes Apartments, a 448-unit garden-style apartment community located in Virginia Beach, Virginia. Latitudes Apartments presents an excellent opportunity to acquire a well-located, high-performing apartment community located in the solidly performing Virginia Beach apartment market. The Property provides strong cash flow and high occupancy, providing investors with the unique opportunity to further enhance the property’s cash flows and asset value by continuing a highly successful renovation program.

To date, ownership has renovated 69 of the 448 units, or 15.4% of the total unit mix, and the property has achieved rent premiums that range from $101 to $190 per unit. Continuing the renovation program will further boost cash flows over the already strong levels, creating long-term value appreciation.

The Property is well-located being adjacent to Interstate-264 (also known as the Norfolk-Virginia Beach Expressway), the area’s primary east-west thoroughfare which provides convenient access to the Virginia Beach Oceanfront located less than 3 miles away to the east, as well as to downtown Norfolk and the greater Hampton Roads region. Latitudes Apartments is located within the desirable Hilltop shopping district, which is one of the most coveted high-end shopping and dining corridors in the region. The Property’s close proximity to various retail and employment centers, and its proximity to Interstate-264, provides easy access to top destinations throughout Virginia Beach and the greater Hampton Roads region.

The Property’s superb location, strong historical performance and the demonstrated value-add potential all combine to make this an exceptional multifamily investment sale offering. Latitudes Apartments is also well positioned to benefit from the significant economic growth that the Hampton Roads metro area is poised to experience, with recent passage of the $1.3 trillion defense-friendly spending bill that was signed into law in February 2018.

P R O P E R T Y C H A R A C T E R I S T I C S

ADDRESS 1701 Chase Pointe CircleVirginia Beach, VA

YEAR BUILT 1989

NUMBER OF UNITS 448

# OF BUILDINGS 20 3-Story Buildings

LAND AREA (ACRES) 24.86

DENSITY (UNITS PER ACRE) 18.02

AVG UNIT SIZE (SF) 881

NET RENTABLE AREA (SF) 394,546

MARKET RENT/UNIT $1,067

MARKET RENT/SF $1.21

OCCUPANCY (AS OF 4/30/18) 95.5%

TAX ID NUMBER 24076770590000

T H E O F F E R I N G

U N I T M I X

UNIT DESCRIPTION UNITS % TYPE UNIT SF MKT $/UNIT MKT $/SF

A1 1BD/1BA - Unrenovated 79 17.6% 633 $873 $1.38

A1 1BD/1BA - Renovated 5 1.1% 633 $1,021 $1.61


A2 1BD/1BA - Renovated 19 4.2% 815 $1,117 $1.37

A3 2BD/1BA - Unrenovated 50 11.2% 894 $1,054 $1.18

A3 2BD/1BA - Renovated 10 2.2% 894 $1,201 $1.34

B1 2BD/1BA - Unrenovated 45 10.0% 894 $1,059 $1.18

B1 2BD/1BA - Renovated 9 2.0% 894 $1,212 $1.36

B2 2BD/2BA - Unrenovated 79 17.6% 1,057 $1,175 $1.11

B2 2BD/2BA - Renovated 25 5.6% 1,057 $1,327 $1.26

C1 3BD/2BA - Unrenovated 19 4.2% 1,342 $1,476 $1.10

C1 3BD/2BA - Renovated 1 0.2% 1,342 $1,651 $1.23

TOTALS/AVERAGES 448 100.0% 881 $1,067 $1.21

I N V E S T M E N T R AT I O N A L E8 .

HILLTOP PLAZA

THE SHOPS AT HILLTOP

LatitudesApartments

HILLTOP SQUARE

VIRGINIA BEACH OCEANFRONT

I N V E S T M E N T R AT I O N A L E 9 .

HILLTOP PLAZA


LatitudesApartments

HILLTOP SQUARE


I N V E S T M E N T R AT I O N A L E1 0 . I N V E S T M E N T R AT I O N A L E1 0 .

RATIONALEINVESTMENT

I N V E S T M E N T R AT I O N A L E 1 1 .I N V E S T M E N T R AT I O N A L E 1 1 .

I N V E S T M E N T R AT I O N A L E1 2 .

S O L I D LY P E R F O R M I N GA S S E T• Strong Performance – Latitudes Apartments’

performance is trending up, with current occupancy at 95.5% as of April 30, 2018. Over the past two months, NOI has steadily increased by over $201,000 on an annualized basis over the previous 10-month annualized average, translating to a net increase in NOI of +5.3%.

• Solid Management – The Property has been exceptionally well-managed by current ownership. This has allowed Latitudes Apartments to achieve the level of success that it has experienced thus far with the renovation program as well as with the recent performance gains.

• Investment of Substantial Capital Improvements – Current ownership has invested substantial capital into the Property over the past year for upgrades and repairs focused on improving the building exteriors, landscaping, implementation of the Velocity Billing System, and unit upgrades in 69 of the 448 units.

In total, $1,107,000 was invested in various capital improvements. 69 units were upgraded with new wood plank flooring throughout the unit, new modern kitchen and bathroom cabinetry, granite countertops, modern black-on-black appliances, new lighting fixtures, and cabinetry hardware upgrades. The excellent condition of Latitudes Apartments alleviates any concerns of capital improvements needed in the foreseeable future.

RECENT CAPITAL IMPROVEMENTSCabinets/Countertops $275,000

Property Upgrades & Repairs $197,000

Renovation - Unit Interior $183,000

Appliance Upgrades $144,000

Carpet Replacement $141,000

Vinyl/Tile $91,000

HVAC/Furnace Replacement $66,000

Blinds $6,000

Water Saving Devices $4,000

Total $1,107,000

• Desirable Unit and Community Amenities – Latitudes Apartments features a myriad of modern unit and community amenities that are desirable. The unit floor plans feature open layout designs with ample modern amenities that renters seek, such as fully-applianced kitchens with Whirlpool Energy Star Appliances, and full-size washer and dryers, as well as hardwood plank flooring and granite countertops in renovated units. The community similarly features several highly desirable amenities that include a swimming pool, 24/7 fitness center and business center.

D E M O N S T R AT E D V A L U E - A D D P O T E N T I A L • Resetting of High Watermark for Rents – Newer

inventory has reset the high watermark for rents in the overall market, which will allow investors to push rents and position Latitudes Apartments as a high-quality asset at a price point that is attractive relative to the newer competition.

• Rent Differential between Class A Product and Latitudes Apartments – Potential investors are presented with the opportunity to further penetrate the market by completing the renovation program across the remaining 379 unrenovated units, closing the rent difference that currently exists between Latitudes Apartments and the top-of-the market properties in the submarket.

When comparing the rent differential between newer high-end product in the local marketplace, such as Saltmeadow Bay, Southern Pine, Indigo 19, and Cambria at Cornerstone, average market rents are approximately $163 to $476 more per month when compared to unrenovated units at Latitudes Apartments. These large premium differences provide significant room to increase rental revenue with focused upgrades, with the end goal of modernizing the unit amenities.

I N V E S T M E N T R AT I O N A L E 1 3 .

PROPERTY YEAR BUILT UNITS AVG SF MKT RENT MKT RENT PSF

Saltmeadow Bay 2003 229 1,228 $1,629 $1.33

Southern Pine 2016 240 1,290 $1,534 $1.19

Indigo 19 2013 196 943 $1,515 $1.61

Cambria at Cornerstone 2012 456 1,043 $1,402 $1.34

Greenwich Village 2012 224 922 $1,304 $1.41

Solace 2014 250 1,030 $1,285 $1.25

Columbus Station 1984 306 858 $1,272 $1.48

Latitudes - Renovated 1989 69 919 $1,219 $1.33

Latitudes - Unrenovated 1989 379 874 $1,040 $1.19

TOTALS/AVERAGES 261 1,010 $1,345 $1.33

• Past Renovation Success Demonstrates Viability for Further Renovations – To date, 69 of the units have been renovated and successfully leased, achieving rent premiums that range from $101 to $190 per unit. The unit renovations were completed at an average cost of $9,800 per unit. Continuing the renovation program across the remaining 379 units would enhance the already strong cash flows, creating additional value in a property that has already demonstrated its viability for such a renovation program.

• Solid Renovation Returns – Assuming a $9,800 per unit renovation cost, and a three year renovation period, the return on investment is 17.8% and investors can realize $660,000 of additional cash flow.

Unrenovated Kitchen

Renovated Kitchen

RENOVATION SNAPSHOT1BD/1BA Renovation Premium $125

2BD/1BA Renovation Premium $125



Average Renovation Premium $145

Renovation Cost per Unit $9,800

Return on Investment 17.8%

Units to be Renovated 379

Additional Annual Revenue $660,000

I N V E S T M E N T R AT I O N A L E1 4 .1 4 . I N V E S T M E N T R AT I O N A L E

Attractive Debt Terms - The Property has assumable debt that is accretive to the overall return of the investment to an investor. The loan behind Latitudes Apartments is interest only for the next 58 months, providing investors with the flexibility of lower payments for the next several years. Investors can also take advantage of increasing the loan via a Fannie Mae supplemental loan, which would permit a loan up to a 75.0% loan-to-value and 1.30x debt service coverage, further boosting the returns of the investment.

M E A S U R E S T O I N C R E A S E C A S H F L O W S• Implementation of Velocity Billing System –

Management implemented the Velocity Billing System in 2017 to directly bill tenants for utilities, which has allowed ownership to recapture approximately 93.2% of the Property’s water and sewer expense charges.

• New and More Profitable Cable Contract – In January 2018, ownership signed a new cable TV contract, which effectively increased cable revenue by approximately 69.3%, from $20,700 per year to $35,000 per year.

E X C E L L E N T D E M O G R A P H I C SLatitudes Apartments is located in an area that exhibits very favorable demographics, with a growing, educated, and affluent population. The Virginia Beach area offers its residents, and the millions of tourists who visit annually, a lifestyle unmatched by any other major U.S. city. The cost of living is below the national average, and housing continues to be in demand as people move to Virginia Beach for the plentiful employment opportunities.

• Growing Population Base with High Average Incomes – Between 2010 and 2017, within a 3-mile radius of the Property, the population grew by 4.1%, to 65,599 people. Average household incomes are $83,987, and 25.8% of the households have incomes of $100,000 or higher.

• Highly Educated Population – 73.6% of adults within a 3-mile radius of Latitudes Apartments have achieved some level of college education, and the average age of the population is 35.8 years.

• Fastest Growing Area for Millennials – The Virginia Beach MSA is currently rated the #1 MSA in the nation as the fastest-growing area for millennials, with a +16.4% change in the Millennial population from 2010 - 2015 (Source: Time Magazine, 2017).

• Highly Transient Population – 49.0% of the housing units within a 1-mile radius of the Property, and 66.2% of the housing units within a 3-mile radius of the Property, are renter-occupied units, illustrating that the area surrounding the Property is highly transient in nature with a demonstrable need for rental housing units.

• Rising Home Values – The average home value within a three-mile radius of the Property is $460,653. Average home values are expected to rise by 11.4%, to $513,086 in 2022. Zillow characterizes the Virginia Beach residential market as “Very Hot,” where values have increased by over 2.4% over the past year, and are anticipated to increase by 1.7% over the next year.

• Excellent School System – Students in the Virginia Beach region benefit from one of the nation’s best public school systems, and 11 institutions of higher learning contribute thousands of skilled laborers to the workforce. First Colonial High School, the high school located within the jurisdiction of the Property, is ranked the 37th best high school in the State of Virginia’s highly competitive Public School System (Source: U.S. News & World Report, 2018). The Advanced Placement participation rate at First Colonial High School is 49.0%.

PROPERTY ORIGINAL LOAN AMOUNT

TERM (MONTHS)

INTEREST RATE TYPE REMAINING I/O

(MONTHS)Latitudes Apartments $47,645,000 144 4.63% Fixed 58

FAV O R A B L E E X I S T I N G D E B T T E R M S

I N V E S T M E N T R AT I O N A L E 1 5 .I N V E S T M E N T R AT I O N A L E

$12.3

$15.3

$16.3

$6.0 $8.0 $10.0 $12.0 $14.0 $16.0

Defense Spending in 2017

Projected Defense Spending in2018

Projected Defense Spending in2019

Defense Spending in Hampton Roads (in Billions)

Source: Axiometrics

HAMPTON ROADS MARKET PERFORMANCE VALUES 2000 2001 2002 2003 2004 2005 2006 2007 AVG

Effective Rental Growth Rate 5.2% 3.9% 4.6% 5.9% 7.2% 5.0% 4.2% 2.7% 4.8%

Occupancy 96.7% 96.4% 97.6% 97.6% 97.5% 96.9% 96.5% 95.6% 96.9%

M I S S I O N - C R I T I C A L M I L I TA R Y P R E S E N C E• East Coast Epicenter of Military Activity – Hampton Roads is the east coast epicenter of military

activity, home to 15 military bases (159,000+ personnel) that represent mission-critical activities across all five branches of the military. The area includes the world’s largest naval base (Naval Station Norfolk, home of the U.S. Atlantic Fleet), which helps channel $12.3 billion in direct Department of Defense funding to the local economy for defense-related and other area projects annually.

• 1.3 Trillion Defense-Friendly Budget Set to Provide Boost to Local Economy – The Hampton Roads region is poised to significantly benefit from the $1.3 trillion defense-friendly spending bill that was signed into law in February 2018, authorizing a national defense budget of $700 billion for 2018 and $716 billion for 2019. This record-level defense spending is set to provide a boost to the Hampton Roads economy, where defense spending in the region totaled $12.3 billion in 2017. Defense spending in the Hampton Roads region is projected to increase by $3 billion in 2018 and $4 billion in 2019, setting conditions to stimulate economic activity to heightened levels via the creation of thousands of new jobs.

• Military Spending Propelling the Acceleration of Rent Growth – Increases in military spending in the Hampton Roads region can potentially propel rent growth to 5.0% annually, similar to the average rent growth levels experienced during the robust period from 2000 – 2007, where annual rent growth averaged 4.8% when defense spending in the region increased by 6.1% per year. The increases in defense spending for fiscal year 2018 and 2019 are projected to result in dollar-for-dollar increases of additional indirect impact, providing $3 billion of additional impact to the local Hampton Roads economy (via increases in shipbuilding, ship maintenance, operations and other activities that are not limited to direct defense spending).


• Increases in Defense Spending have Historically Stimulated the Rental Market – From 2000 through 2005, annual increases in defense spending in the Hampton Roads region led to rent growth that averaged 4.8% per year. With the $1.3 trillion defense-friendly bill having been recently signed into law this year, defense spending in the Hampton Roads region is projected to increase by $3 billion in 2018 and by $4 billion in 2019.

• Favorable Economic Outlook Similar to Period of Robust Growth from 2000 – 2006 - The expected impact of increases in defense spending in the Hampton Roads economy is projected to create very favorable conditions that are synonymous with the period of robust growth experienced from 2000 through 2006, where defense spending increased by an average of 6.1% per year. During this period, Hampton Road’s economy was growing at a much faster rate than the national economy, which was directly attributable to the rapid increases in defense spending.

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Historical Defense Spending and Effective Rental Rate Growth in Hampton Roads

Defense Spending in Hampton Roads (in Billions $) Annual Rent Growth (%)

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2017 2018F 2019F 2020F 2021F 2022F 2023F

Projected Defense Spending and Effective Rental Rate Growth in Hampton Roads, 2018-2023

Defense Spending in Hampton Roads (in Billions $) Annual Rent Growth (%)


• Newport News Shipbuilding Contracts – Newport News Shipbuilding received $2.8 billion from the Department of Defense in September 2017 to overhaul the USS George Washington; the work is expected to last through August 2021. In addition, studies are underway to potentially add two new aircraft carriers to the existing fleet. Huntington Ingalls, parent of Newport News Shipbuilding, is the sole provider and builder of nuclear powered aircraft carriers to the Navy.

• Electric Boat Contracts – The U.S. Navy has awarded Electric Boat a $5.1 billion contract to construct a new fleet of 12 ballistic missile submarines, and Newport News Shipbuilding will perform about 22 to 23% of the production work as a subcontractor.

• Defense Budget Appropriations – The 2018 defense budget includes appropriations for the following military construction projects in the Hampton Roads region:

• Navy ship repairs and overhauls – the measure would provide stable and steady work in 2018 for the area’s shipyards and subcontractors, which employ as many as 17,000 people.

• Submarine construction – the Navy is set to receive $3.3 billion to continue paying for the completion of two Virginia-class submarines a year.

• Aircraft carrier construction and refueling – Congress’ defense plan spends $4.4 billion for aircraft carrier construction. While the funds feed subcontractors in almost every state, the bulk of carrier work is at Newport News Shipbuilding, the state’s largest industrial employer. The new John F. Kennedy carrier, which has 65% of its exterior structure complete, is due to be delivered to the Navy in 2022. Work has also begun on the new Enterprise carrier.

• Shore construction projects – The defense bill includes about $430 million for military construction in Virginia, with about $273 million earmarked for projects in Hampton Roads.

• Indirect Impacts of Defense Spending – The increases in defense spending for fiscal year 2018 and 2019 are projected to result in dollar-for-dollar increases of additional indirect impact. This will provide $3 billion of additional impact to the local Hampton Roads economy via increases in shipbuilding, ship maintenance, operations and other activities that are not limited to direct defense spending.

• Private Industry Support for Defense Operations – Private industry support for the area’s defense operations also plays a major role in the regional economy. Seven of the world’s top 10 defense related firms have a major presence in this area, supporting the largest active-duty military population in the United States. The Federal government employs 66,000 civilian workers, while defense-oriented professional and business services, and transportation/warehousing, employ 99,200 and 25,000, respectively.

• 86,000 Active-Duty Military Personnel - There are approximately 86,000 active-duty military personnel stationed in Hampton Roads, adding to the strong and steady supply of renters. Every year approximately 6,416 exiting military personnel establish their homes in the region. This provides the area with a pool of highly skilled and dedicated workers that few other regions can offer.

S T R O N G E M P L O Y M E N TM A R K E T• Low Unemployment – The unemployment rate in

the Virginia Beach MSA is 3.7% as of February 2018, which is below the national average of 4.1%.

• MSA Poised for Strong Job Growth - The Virginia Beach MSA region is projected to add 30,000 jobs from 2015 to 2020, according to the 2017 Hampton Roads State of the Workforce and Gap Analysis Report. The region is seeing a rapid acceleration of health-care professionals, as health care and social assistance is leading the way by adding an expected 14,751 jobs. The professional, scientific and technical service sector is projected to grow by 4,345 jobs. However, it is important to note that this projection was completed prior to the passage of the defense spending bill, which is anticipated to create thousands more jobs in the region. This projected growth exhibits the strong state of the regional economy and its excellent potential to expand.


O U T S TA N D I N G A C C E S ST O E M P L O Y E R SVirginia Beach is recognized as a business-friendly city, home to a highly diverse collection of industries. Three Fortune 500 firms are located in the MSA; however, firms of all sizes benefit from its strategic location, low cost of doing business and access to a skilled workforce.

The following major employers are located within 13 miles of the Property:

• Naval Air Station Oceana (East Coast Master Jet Base)

Located just 5.6 miles south of the Property, Naval Air Station Oceana is the Navy’s East Coast Master Jet Base, home to 19 F/A-18 Hornet and Super Hornet squadrons. The base, including its Dam Neck Annex, employs 11,891 active-duty personnel, as well as 7,427 civilians, making NAS Oceana the second-largest employer in Virginia Beach after JEB Little Creek-Fort Story. Oceana and Dam Neck are vital for training naval personnel in both the Atlantic and Pacific fleets.

• Joint Expeditionary Base Little Creek-Fort Story Located 13.0 miles northwest of the Property,

Joint Expeditionary Bas (JEB) Little Creek-Fort Story is the nation’s premier installation for housing and training the nation’s Expeditionary Forces. Comprising the former Naval Amphibious Base Little Creek and the Army’s Fort Story, the combined base is the major East Coast operation for Overseas Contingency Operations and provides support and services to 18 home-ported ships and 155 shore-based resident commands. The base encompasses nearly 4,000 acres of land, with more than 7.5 miles of beachfront training area and 61 piers. JEB Little Creek-Fort Story employs 17,629 active-duty personnel and 4,688 civilians, making it one of the largest military bases on the East Coast as well as one of Virginia’s largest employers.

• Sentara Virginia Beach Hospital Located just 1.4 miles from the Property, Sentara

Virginia Beach Hospital employs 5,200 staff in its 276-bed hospital, representing the only Level III Trauma Center in the region.

• Gold Key/PHR Hotel and Resorts Located just 2.9 miles from the Property, Gold

Key/PHR Hotel and Resorts employs 2,365 people, controlling more than half of the rooms on

the Virginia Beach Oceanfront.

• STIHL Incorporated U.S. Headquarters Located just 4.0 miles from the Property,

STIHL Incorporated employs 2,113 people, manufacturing chainsaws and outdoor power equipment.

• GEICO – Virginia Beach Regional Office Located just 6.4 miles from the Property, GEICO’s

Virginia Beach regional office in the Corporate Landing Business Park employs more than 2,300 workers. The office is home to several company operations, including GEICO Auto Insurance, Military Service Center, GEICO Motorcycle and the GEICO Insurance Agency.

A B U N D A N T R E TA I L , D I N I N G , & E N T E R TA I N M E N T O P T I O N SLatitudes Apartments is centrally located within the confluence of several major retail and entertainment options, and is situated within the highly sought-after Hilltop area of Virginia Beach.

• The Shops at Hilltop – Located just 0.5 miles from the Property, The Shops at Hilltop is a 455,000 square foot shopping destination in Virginia Beach. The Shops at Hilltop features a mix of over 120 shops, boutiques, specialty stores, services and restaurants. The center was the winner of The Virginian Pilot Reader’s Choice Award for “Best Shopping Center in Virginia Beach” for 21 consecutive years.

The Shops at Hilltop features national anchors that include SteinMart, Athleta, Great Outdoor Provision Co., Ethan Allen and the YMCA. The center also features 22 food establishments, that include international cuisine, such as Newab Indian Cuisine, Otani Japanese steak and Seafood, and Baladi Mediterranean Café, while offering plenty of American specialties, such as The Melting Pot, Tapped Gastropub, Saladworks, Five Guys and many others.

• Grocers Within Walking Distance – Whole Foods, Kroger, The Fresh Market and a Walmart Supercenter are all within easy walking distance of the Property, offering residents a variety of quality grocery options.


A Top Ten Metro Area for Millennials by Forbes (2016)

Voted “The Best Place to Live in America” by USA Today Weekend (2016)

Named #5 of “Top Ten Cities for Outdoor Enthusiasts”

by SmartAsset.com (2015)

Named one of the “10 Best Cities to Live in America”

by WalletHub (2015)

Rated the #1 “Most Affordable City in America in Which to Start a Family”

by Wise Bread (2015)

One of the “Ten Best U.S. Cities for Millennial College Students” by USA Today (2015)

One of the “Ten Most Beautiful Cities in the USA” by The Culture Trip (2015)

A “Millennial Boomtown” by Forbes (2014)

• Hilltop Plaza Shopping Center – Located just 0.4 miles away from the Property, Hilltop Plaza provides residents with their everyday needs, with national retailers that include Trader Joe’s, PetSmart, Office Depot and Jo-Ann Fabric & Craft Store.

• Town Center of Virginia Beach – The Town Center of Virginia Beach, one of the top destinations in the area, is located only 3.1 miles from Latitudes Apartments, and comprises over 4.3 million square feet of mixed-use office, retail, restaurant and hotel space. The Town Center of Virginia Beach is an on-going, multi-phase mixed-use development that spans 17 pedestrian-friendly blocks and features an eclectic mix of upscale retail, dining options, Class-A office space, luxury residences, entertainment and cultural venues. The Town Center of Virginia Beach represents the city’s emerging downtown core.

• Virginia Beach Oceanfront – Located just 3.0 miles away from the Property, the Virginia Beach Oceanfront includes an award-winning, park-like boardwalk and the Atlantic Wildfowl Heritage Museum, among other attractions. Stretching three miles, the Virginia Beach Boardwalk is a 28-foot wide concrete esplanade with an adjacent bike path to accommodate bicycles and skaters. Lining the Boardwalk are upscale shops, resturants, amusement areas, a traditional fishing pier and outdoor entertainment spaces and artwork.

V I R G I N I A B E A C H• Significant Tourism Industry – Virginia Beach is

the number one vacation destination in Virginia, with a $1.5 billion tourism industry, attracting approximately 15.2 million visitors each year. In 2016, tourism supported 47,315 total jobs.

• Virginia Beach Oceanfront – The Virginia Beach Oceanfront Area features approximately 1.9 million square feet of retail space for its numerous stores and popular restaurants such as TASTE @ The Oceanfront and Tautog’s Restaurant. The Virginia Beach Oceanfront is only 3.0 miles from Latitudes Apartments

• Virginia Beach Boardwalk – The three-mile Virginia Beach Boardwalk has been named one of America’s Best Beach Boardwalks by Travel + Leisure. The Boardwalk features four oceanfront stages for live musical acts and hosts year-round events, such as a spring arts festival, the annual Neptune Festival complete with its International Sandsculpting Competition, and a holiday lights display.

SUBMARKET POISED FOR GROWTH• Limited Supply Pipeline – Only 128 units

are expected to be delivered per year in the Lynnhaven/Oceana submarket through 2022 (Source: Axiometrics).

• Low Unemployment – The unemployment rate in the Virginia Beach MSA is 3.7% as of February 2018, which is below the national average of 4.1%.



Located just 0.5 miles from the Property, The Shops at Hilltop is a 455,000 square foot shopping destination in Virginia Beach. The Shops at Hilltop features a mix of over 120 shops, boutiques, specialty stores, services and restaurants. The center is winner of The Virginian Pilot Reader’s Choice Award for “Best Shopping Center in Virginia Beach” for 21 consecutive years. The Shoppes at Hilltop features national anchors that include SteinMart, Athleta, Great Outdoor Provision Co., Ethan Allen and the YMCA, to local favorites such as TASTE, Baker’s Crust and No Frill Grill. The center also features 22 food establishments, that includes international cuisine Newab Indian Cuisine, Otani Japanese steak and Seafood, and Baladi Mediterranean Café, while offering plenty of American specialties such as The Melting Pot, Tapped Gastropub, Saladworks, Five Guys and many others.

LatitudesApartments

HILLTOP PLAZA


NAVAL AIR STATION OCEANA

VIRGINIA BEACH CONVENTION CENTER

Laskin Rd264

VIRGINIA BEACH

Laskin Rd


TOWN CENTER OF VIRGINIA BEACH

The Town Center of Virginia Beach, one of the top destinations in the area, is only 3.1 miles from Latitudes Apartments and consists of 4.3 million square feet of mixed-use office, retail, restaurant and hotel space. The Town Center covers 17 city blocks, and features over 25 restaurants, including Ruth’s Chris Steakhouse and PF Chang’s, in addition to an abundance of retail shops, The Westin Hotel & Residences (the tallest building in Virginia) and The Sandler Center for the Performing Arts. Office tenants include some of the top law firms and financial groups in Hampton Roads, as well as several City of Virginia Beach departments.

Town Center Master Plan

7

I N V E S T M E N T R AT I O N A L E2 2 .22

.

2 2 .

TOWN CENTER OF VIRGINIA BEACH – PHASE VI

The next phase of development in the Town Center of Virginia Beach, referred to as Phase VI, is part of the ongoing, multi-decade public-private partnership between the City of Virginia Beach and Armada Hoffler Properties. The mixed-use development is to feature 39,000 square feet of retail space, a 17,000 square feet performing arts theater (The Zeiders Theater), approximately 130 luxury apartment homes, and an open-air public plaza on the second level with a pedestrian bridge that connects to the adjacent parking garage. Phase VI of Town Center is currently under construction, and is anticipated to be completed by 3Q2018.


VIRGINIA BEACH CONVENTION CENTER

2.9 miles from Latitudes Apartments, the $206 million, 515,000 square foot Virginia Beach Convention Center includes a 150,000 square foot exhibition hall, 31,000 square foot ballroom, 29,000 square feet of meeting space and 2,230 parking spaces. This award-winning facility is the first Virginian and American Green-certified convention center, as well as the first convention center in America to achieve LEED Gold certification for an existing commercial building. The center also includes four reconfigurable halls with 40-foot ceilings and a 240-foot clear span roof, as well as a soaring 147-foot glass and steel tower which pays homage to the city’s historic lighthouse.


I N V E S T M E N T R AT I O N A L E2 4 .2 4 .

OCEANFRONT RESORT AREA

Nearly 7 million visitors stay overnight at the Virginia Beach Oceanfront, one of the most popular destinations on the East Coast. The district is only 3.9 miles from Latitudes Apartments and home to the world-famous Virginia Beach Boardwalk, flanked by hundreds of hotels, restaurants, and shops – all in a pedestrian-oriented setting. Developments along 19th and 31st streets have also helped turn the Oceanfront into a desirable office destination. The Oceanfront is also home to the Virginia Beach Convention Center, a state-of-the-art 525,000-plus-square-foot exhibit and meeting hall.

District Real Estate (Square Footage) • Industrial & Flex: 98,994 • Retail: 1,902,935 • Hospitality: 6,734,002 • Multifamily: 5,612,321 • Office: 469,479

Source: Virginia Beach Economic Development

V IBE CREATIVE DISTRICT

At the heart of the Oceanfront resort lies a growing creative arts enclave: The ViBe district. The area, stretching from the Museum of Contemporary Art (MOCA) to 17th Street, is home to a number of restaurants, museums, creative businesses, artists and artisans. The district focuses on inspiring and growing a culture of creativity, including technology. Entertainment, exhibits and special events are ongoing. Seminars and incentives are available for qualifying startup businesses.

Source: Virginia Beach Economic Development

VIBE CREATIVE DISTRICT

VIRGINIA BEACH BOARDWALK


NAVAL AIR STATION OCEANA (EAST COAST MASTER JET BASE)

Located just 5.6 miles south of the Property, Naval Air Station Oceana spans over 1,100 acres. Naval Air Station (NAS) Oceana is the U.S. Navy’s East Coast Master Jet Base. Home to Commander, StrikeFighter Wing Atlantic, 17 Hornet and Super Hornet StrikeFighter squadrons, one Fleet Logistics Support squadron, and Fleet Readiness Center, Mid-Atlantic, NAS Oceana provides 24/7, 365 days shore-based training and support for 315 aircraft and over 19,000 uniform and civilian personnel. The station includes Dam Neck Annex, three miles to the east along the Atlantic coast, which serves as a training Center of Excellence for over 20,000 students annually in over 210 courses of instruction. After Joint Expeditionary Base Little Creek-Fort Story, NAS Oceana is the second largest employer in Virginia Beach, with a direct, total economic impact of $1.075 billion annually.


P R O P E R T Y O V E R V I E W2 6 . P R O P E R T Y O V E R V I E W2 6 .

OVERVIEWPROPERTY

P R O P E R T Y O V E R V I E W 2 7 .P R O P E R T Y O V E R V I E W 2 7 .

P R O P E R T Y O V E R V I E W2 8 .

P R O P E R T Y C H A R A C T E R I S T I C SBUILDING STYLE Garden

BUILDING BREEZE-WAYS/HALLWAYS Wood

BUILDING STAIRS Wood

EXTERIOR Vinyl Siding

STRUCTURE/FRAMING Wood

FOUNDATION Slab

ROOF Shingled

WINDOWS Double-Paned, Gridded

BALCONIES288 Balconies (Wood

Construction) 220 Patios (Concrete Floor)

BALCONY DOORS Sliding Glass Doors or Standard Doors

HVAC HVAC System (Heat Pump) for Each Unit

WATER HEATER Electric Water Heaters for Each Unit

ELECTRICAL Copper

PLUMBING Copper/PVC

FIRE AND SAFETY

In-Unit Smoke Detectors; Sprinkler Systems in 408

Canberry Court & 501 Rockport Lane

PARKING AREA760 Total Spaces; 10 Rentable Recreational (Boats/Trailers) Spaces for $35 per Month

LAUNDRY FACILITY 448 Washer/Dryer Sets

SCHOOLS

Linkhorn Bay Elementary School Lynnhaven Middle

SchoolFirst Colonial High School

U T I L I T I E S

UTILITY POWER SOURCE PAID BY SERVICER

Heating Electric Resident VA Dominion Power

A/C Electric Resident VA Dominion Power

Cooking Electric Resident VA Dominion Power

Hot Water Electric Resident VA Dominion Power

Water/Sewer* N/A Resident City of Virginia

Beach

Basic Cable N/A Resident Cox

Communications

Telephone N/A Resident N/A

TrashRemoval

Central Compactor

Landlord/Resident**

Waste Management

P E R S O N N E L O V E R V I E WPOSITION FULL-TIME/PART-TIME

Property Manager 1 Full-Time Employee

Assistant Property Manager 1 Full-Time Employee

Leasing Agents 2 Full-Time Employees1 Part-Time Employee

Service Manager 1 Full-Time Employee

Assistant Service Manager 1 Full-Time Employee

Service Technician 1 Full-Time Employee

Make Ready Technicians 2 Full-Time Employees

*Utilities are submetered but billing is controlled by Velocity.**Note: Resident pays $10 per month to offset costs associated with trash removal.

P R O P E R T Y O V E R V I E W 2 9 .

U N I T M I X

* Owner and Broker make no representation as to the actual square footage of any units. Prospective purchasers are encouraged to independently confirm the measurement of all units.

TOTALS/AVERAGES

Total # of Units 448 Average Unit Size 881 Net Rentable SF 394,546 Market Average Rent/Month $1,067 Gross Potential Month Rent $478,053 Gross Potential Yearly Rent $5,736,636

CURRENT OCCUPANCY

As of April 30, 2018 95.5%**Based on currently available units

n ALL 1 BEDROOM UNITS

n ALL 2 BEDROOM UNITS

n ALL 3 BEDROOM UNITS35.3%158 units

60.3%270 units

4.5%20 units

U N I T M I XUNIT DESCRIPTION UNITS % TYPE UNIT SF MKT $/UNIT MKT $/SF


A1 1BD/1BA - Renovated 5 1.1% 633 $1,021 $1.61


A2 1BD/1BA - Renovated 19 4.2% 815 $1,117 $1.37

A3 2BD/1BA - Unrenovated 50 11.2% 894 $1,054 $1.18

A3 2BD/1BA - Renovated 10 2.2% 894 $1,201 $1.34

B1 2BD/1BA - Unrenovated 45 10.0% 894 $1,059 $1.18

B1 2BD/1BA - Renovated 9 2.0% 894 $1,212 $1.36

B2 2BD/2BA - Unrenovated 79 17.6% 1,057 $1,175 $1.11

B2 2BD/2BA - Renovated 25 5.6% 1,057 $1,327 $1.26

C1 3BD/2BA - Unrenovated 19 4.2% 1,342 $1,476 $1.10

C1 3BD/2BA - Renovated 1 0.2% 1,342 $1,651 $1.23

TOTALS/AVERAGES 448 100.0% 881 $1,067 $1.21



Latitudes Apartments

264

Virginia Beach Blvd.Virginia Beach Blvd. Virginia Beach Blvd.Virginia Beach Blvd.

3 1 .P R O P E R T Y O V E R V I E W


6 3 3 S Q U A R E F E E T 8 1 5 S Q U A R E F E E T

8 9 4 S Q U A R E F E E T

A 1

A 3

S E L E C T F L O O R P L A N S

A 2


8 9 4 S Q U A R E F E E T 1 , 0 5 7 S Q U A R E F E E T

1 , 3 4 2 S Q U A R E F E E T

C 1

B 1 B 2


KITCHEN RENOVATION

Before

After


BATHROOM RENOVATION

Before

After

P R O P E R T Y O V E R V I E W3 6 .3 6 .

C O M M U N I T Y A M E N I T I E Sn Fully Furnished Clubhouse

n Lakeside Community

n Fully-Equipped Fitness Center

n Lakeside Swimming Pool with Sundeck and Pavilions

n Sauna

n Barbeque/Picnic Area

n Basketball Court

n Sand Volleyball Court

n Children’s Playground

n Bark Park

n On-Site Management

P R O P E R T Y O V E R V I E W

P R O P E R T Y O V E R V I E W 3 7 .3 7 .P R O P E R T Y O V E R V I E W

U N I T F E AT U R E Sn Spacious Floor Plans

n 8’ Ceilings

n Vaulted Ceilings

n Wall-to-Wall Carpeting

n Faux Wood Plank Flooring*

n Fully-Equipped Kitchens with Breakfast Bar and Pantry

n Black-on-Black Appliances

n Granite Countertops*

n Full-Size Washer/Dryer in Each Unit

n Wood-Burning Fireplaces*

n Upgraded Lighting*

n Upgraded Hardware*

n Ceiling Fans*

n Private Balconies or Patios with Storage*

n Lake Views*

n Dual Master Suites*

n Separate Dining Rooms*

n Separate Dressing Areas*

n Large Walk-In Closets

*In select units

L O C AT I O N O V E R V I E W3 8 . L O C AT I O N O V E R V I E W3 8 .

OVERVIEWLOCATION

L O C AT I O N O V E R V I E W 3 9 .L O C AT I O N O V E R V I E W 3 9 .

L O C AT I O N O V E R V I E W4 0 .

V I R G I N I A B E A C HVirginia Beach is the most populous city in the Commonwealth of Virginia and the 41st largest city in the United States, with approximately 450,435 residents in 2016. This resort town is the easternmost city in the Norfolk-Virginia Beach-Newport News MSA, with miles of beaches and hundreds of hotels and restaurants along its oceanfront. The area is also home to several state parks, four military installations, a number of corporations, two institutions of higher education and several historic sites.

ECONOMYThe Virginia Beach economy is underpinned by 10 major industries: manufacturing, professional services, defense, retail, bio/life sciences, technology, maritime/logistics, small business, international focus, and tourism. These industries are spread throughout nine major business districts in and near the city.

TOURISMVirginia Beach is one of the most popular tourist destinations on the East Coast, hosting 15.2 million visitors annually. Representing the second largest industry in Virginia Beach, tourism in the city accounts for 40.5% of all Hampton Roads’ tourism business, based upon hotel revenues.

QUALITY OF LIFEVirginia Beach offers its residents and visitors a lifestyle unique among American cities. The cost of living is below the national average, and housing continues to be in demand as people move to the city for employment opportunities and residential amenities.

THE GREAT OUTDOORSComplete with a strolling area and separate bike path, the three-mile Virginia Beach Boardwalk has been named one of the Top 10 Public Spaces in America by National Geographic. The City of Virginia Beach owns five public golf courses, eight tournament-quality softball fields, seven multipurpose playing fields, and a municipal tennis center, as well as almost 200 tennis courts throughout the city. There are also eight community recreation centers that feature indoor swimming pools, fully equipped fitness areas and meeting rooms.

V I R G I N I A B E A C H T O P E M P L O Y E R SEMPLOYER EMPLOYEES

Naval Air Station Oceana - Dam Neck 5,850

Sentara Healthcare 5,200

Joint Expeditionary Base Little Creek/Ft. Story 3,600

GEICO General Insurance Company 2,700

General Growth Properties (Lynnhaven Mall) 2,600

Gold Key/PHR Hotels & Resorts 2,365

STIHL Incorporated 2,113

Amerigroup (Anthem) 1,850

Naval Exchange Service Command 1,550

Engility Corp. 800

LoanCare Servicing Center Inc. 800

The Christian Broadcasting Network, Inc. 721

LifeNet Health 700

Harmony Investments 656

NATIONAL AND STATE PARKSVirginia Beach has 210 parks encompassing over 4,000 acres. They include Mount Trashmore Park, Back Bay National Wildlife Refuge and First Landing State Park.

SPORTS COMPETITIONSEach year the City hosts the East Coast Surfing Championships and North American Sand Soccer Championships.




HAMPTON ROADS

Hampton Roads, also known as The Heart of the Mid-Atlantic, is located in Southeast Virginia and is formally recognized as the Norfolk-Virginia Beach-Newport News Metropolitan Statistical Area. It is the 37th largest MSA in the country with a population of 1.72 million people and the ninth largest MSA in the Southeastern United States, and includes Virginia’s largest city, Virginia Beach. The area’s economy has become increasingly diverse, with a combination of tourism, defense-related spending, healthcare, education and research and development (R&D). Its specific economic composition makes it an excellent defensive market during periods of slow economic growth.

Hampton Roads is a mission-critical Department of Defense (DoD) location due its geographic nature and port depth. Federal spending has a significant role in the area’s economy, with approximately 36.0% of employment attributable to the DoD, either in a direct or support capacity.

Located approximately 200 miles south of Washington, D.C., Hampton Roads shares many commonalities with the Washington, D.C. metropolitan area in terms of major employment drivers, federal spending, focus on technology and highly educated workforce. As with D.C. metro area, Hampton Roads is a top tourist and vacation destination, with major draws that includes the revitalized Virginia Beach Oceanfront, Colonial Williamsburg, Jamestown and Busch Gardens, among others. Recent analysis projects the area’s tourism industry at $4.3 billion.

Research and technology are key drivers of economic growth in the Hampton Roads area, with more than $988.0 million in annual funding flowing to R&D centers in the region. The Hampton Roads region has established itself as a leader in technology-based business and industrial activity.

HAMPTON ROADSPOPULATION DYMANICS

With the number of area residents increasing during the period between 2000 and 2017, population growth is expected to continue, reaching 1.8 million

C O M PA R A B L E M S A P O P U L AT I O N S

MSA 2016POPULATION

Charlotte-Concord-Gastonia, NC-SC Metro Area 2,474,314

Austin-Round Rock, TX Metro Area 2,056,405

Nashville-Davidson-Murfreesboro-Franklin, TN Metro Area 1,865,298

Virginia Beach-Norfolk-Newport News, VA-NC Metro Area 1,726,907

Raleigh-Cary, NC 1,270,000

Source: Bureau of Labor & Statistics

residents by 2022. The abundance of universities and colleges in the region and the area’s military presence have resulted in a well-educated population, with 65.8% of adults having at least some college education. The region has a younger population than Virginia as a whole, with approximately 47.9% of the population under the age of 35. This, combined with its transient population, makes it home to a large volume of renters, estimated at 36.8% of occupied units.

EMPLOYMENT

The Hampton Roads unemployment rate is 4.0% as of January 2018, which is below the national average of 4.1%. During 2017, total employment grew by 8,027 jobs (+1%) to nearly 800,000 jobs. Federal defense-related employment accounts for approximately 36% of total employment, which has served as a stabilizing force for the region’s economy. With its sizable military presence at 86,000 active-duty personnel, Hampton Roads is second only to San Diego in terms of total military personnel.

As part of an employment at will and right to work state, the Hampton Roads region offers unique advantages to employers. With only one local taxing authority in each community, the area boasts some of the lowest combined state and local tax rates in the nation. As a result, many companies have identified Hampton Roads as a strategic base for operations. Three Fortune 500 firms are headquartered in Hampton Roads, Huntington Ingalls Industries, Dollar Tree and Norfolk Southern. Sentara Healthcare, headquartered in Norfolk, is another major regional employer, with a workforce of approximately 22,000.


L O C AT I O N O V E R V I E W 4 3 .

H A M P T O N R O A D S T O P E M P L O Y E R S

COMPANY EMPLOYED

Huntington Ingalls Industries, Inc. (Newport News Shipbuilding) 24,000

Sentara Healthcare 22,000

Virginia Beach City Public Schools 10,576

Norfolk Naval Shipyard 8,500

Riverside Health System 8,000

City of Virginia Beach 7,000

Norfolk City Public Schools 6,527

Chesapeake City Public Schools 5,726

City of Newport News 5,600

Naval Medical Center Portsmouth 5,400

Newport News City Public Schools 4,600

Norfolk City Public Schools 575

NASA Langley Research Center 4,000

Old Dominion University 3,268

The Colonial Williamsburg Foundation 3,100

Dollar Tree 1,400

Norfolk Southern 1,050

HAMPTON ROADS MARKET HIGHLIGHTS

• Sizable and growing population -1.7 million residents (similar size to Raleigh,

Nashville and Austin MSAs) - Home to the three largest cities in Virginia,

by population - Virginia Beach, Norfolk and Chesapeake

- 37th largest MSA in the United States between Charlotte and Raleigh

-3rd largest MSA in Virginia

• Large and stable employment base -833,200 private sector jobs - 86,500 federal defense-related employees

(10.0%) - 30,000 new jobs are projected to be created

by 2020

• Diverse and growing employment base -Location of 15 mission-critical military

installations - Location of the third largest port on the East

Coast -$4.3 billion tourism industry -11 colleges and universities enrolling

113,000+ students -Significant healthcare industry, including

Newport News Shipbuilding (24,000 employees) and Sentara Healthcare (22,000 employees)

• Headquarters of three Fortune 500 firms -Huntington Ingalls Industries, revenue of $7.0

billion -Norfolk Southern, revenue of $9.9 billion -Dollar Tree, revenue of $20.7

H A M P T O N R O A D S C O L L E G E S A N D U N I V E R S I T I E S

NAME OF INSTITUTION LOCATION CITY TOTAL ENROLLMENT

Old Dominion University Norfolk 24,322

Tidewater Community College Norfolk 23,945

ECPI University Virginia Beach 12,068

Thomas Nelson Community College Hampton 8,897

College of William and Mary WIlliamsburg 8,617

Regent University Virginia Beach 8,389

Norfolk State University Norfolk 5,421

Christopher Newport University Newport News 5,042

Hampton University Hampton 4,676

Paul D. Camp Community College Franklin 1,480

Virginia Wesleyan College Norfolk 1,374

TOTAL ENROLLMENT 114,231

Note: Enrollment figures are for 2016-2017 school year



ECONOMIC DEVELOPMENTS

• Development of IKEA’s 2nd Location in Virginia - In November 2017, IKEA recently broke ground with the development of their second location in Virginia, located about 13 miles from the Property at the northwest corner of I-64 and Northampton Boulevard. The 331,000 sf store is scheduled to open in 2019, and it is estimated that it will create 500 construction jobs and 250 permanent jobs.

• Transportation Infrastructure Developments - In October 2017, the Virginia Department of Transportation (VDOT) awarded the largest-ever design build contract for a new high rise bridge over the Elizabeth River, as well as for widening Interstate 64 in Chesapeake. In November 2016, the two-phase $158 million I-64, I-264 interchange improvement project broke ground and is expected to be completed by 2019.

• Huntington Ingalls Industries Awarded $300 Million Contract - In September 2017, Huntington Ingalls Industries took more than $300 million in new contract awards, apart from a previously $2.8 billion contract for an aircraft carrier overhaul.

• Expansion of Newport News Shipbuilding - Newport News Shipbuilding hired 3,000 new employees in 2017 in response to the goal of expanding the Navy’s fleet from 275 to 350 vessels.

• The Port of Virginia - The Port of Virginia is poised to benefit significantly from recent authorization to dredge the waterway to 55 feet. Currently, it is the only 50-foot-deep ship channel on the East Coast.

KEY DOMESTIC AND INTERNATIONAL GATEWAY

One of only two East Coast ports equipped to handle the larger ships associated with the Panama Canal expansion, the Port of Virginia is one of the

cornerstones of the state’s economy, producing $60.3 billion in economic activity and 375,000 direct and indirect jobs in Virginia. Traffic and volume in the port are expected to grow significantly over the next several years, with the June 2016 completion of the Panama Canal expansion. This expansion doubles the canal’s capacity and allows larger container ships to pass through it. The Port of Virginia is the only East Coast port authorized to dredge to 55 feet, giving it a competitive advantage in servicing larger vessels.

Hampton Roads’ strategic, Mid-Atlantic location and superior transportation network link the region to all major domestic and international markets, making it a global focal point for warehousing and distribution. Highlights of this network include:

• Norfolk Southern, headquartered in Hampton Roads, and CSX provide cargo handling and transportation services linking the region with 23 states, including the entire eastern United States and Ontario, Canada.

• The Port of Virginia connects over 100 countries around the world and is an invaluable hub for international commerce. It is the third largest port on the East Coast, accounting for approximately 13.0% market share after New York/New Jersey (32.0%) and Savannah (18.0%).

• Building on a record year, The Port of Virginia has broken its record for container volume for the sixth year in a row in 2017, posting more than 2.84 million TEUs (twenty-foot equivalent units). 2017’s volume represents a 7.0% increase over the previous year. Over the next 10 years, the port intends to reinvest $2.0 billion to increase its capacity and competitiveness.

• With the U.S. economy becoming less dependent on coal, The Port of Virginia is uniquely positioned to serve as a gateway port for natural gas. Its proximity to shale plays in West Virginia, Pennsylvania, and Ohio, means less pipeline investment is necessary to transport these resources. Already, plans have been announced to connect West Virginia to the Hampton Roads region through the Atlantic Coast Pipeline.




LatitudesApartments

HILLTOP PLAZA

MARKETPLACE AT HILLTOP


PEMBROKE MALL

Laskin Rd

264

Laskin Rd



LatitudesApartments

HILLTOP PLAZA



PEMBROKE MALL

Laskin Rd

264

Laskin Rd



LANGLEY AIR FORCE BASE

NEWPORT NEWS SHIPBUILDING


HAMPTON

NEWPORT NEWS

WILLIAMSBURG

SMITHFIELD

CHESAPEAKE

VIRGINIA BEACH

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664

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564

64

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258

460

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DOWNTOWN NORFOLK

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3231

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26

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3634 28

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LATITUDESAPARTMENTS

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EMPLOYERS (EMPLOYEES)

Naval Station Norfolk - 57,379

Fort Eustis -23,090 (combined JBLE)

Langley Air Force Base - 23,090 (combined JBLE)

Newport News Shipbuilding - 23,000

Joint Base Little Creek-Fort Story - 19,841

Oceana Naval Air Station - 15,547

Riverside Regional Medical Center - 4,000

Canon Virginia - 1,500

Hampton VA Medical Center - 1,071

Ferguson Enterprises - 800

Jefferson Lab - 700

Smithfield Foods - 160

RETAIL (RETAIL SF)

Peninsula Town Center - 850,000

Patrick Henry Mall - 717,000

Town Center of Virginia Beach - 700,000

Jefferson Commons - 400,000

Tech Center at Oyster Point - 230,000

Hilltop Plaza

The Shops at Hilltop

Marketplace at Hilltop

Whole Foods

Lynnhaven Mall

Town Center of Virginia Beach

Pembroke Mall

COLLEGES/UNIVERSITIES (STUDENTS)

Old Dominion University - 24,932

Norfolk State University - 6,728

Christopher Newport University - 5,221

Hampton University - 4,397

AREA AMENITIES

Newport News/Williamsburg Airport

Virginia Living Museum

Ferguson Center for the Arts

Mariners’ Museum

Virginia War Museum

Virginia Air & Space Museum

Virginia Beach Oceanfront

Hampton Coliseum


E M P L O Y M E N TSENTARA VIRGINIA BEACH GENERAL HOSPITAL (1.4 MILES)Sentara is one of Virginia Beach’s largest employers, with approximately 5,189 employees. Its 276-bed Virginia Beach General Hospital location is the only Level III Trauma Center in the region.

GOLD KEY|PHR HOTELS AND RESORTS (2.9 MILES)Combining Gold Key’s vacation ownership sales and marketing with PHR’s hospitality management, Gold Key|PHR Hotels and Resorts controls half of the rooms on the Virginia Beach Oceanfront and employs nearly 2,400 associates. The company has an asset value of $500 million and annual revenues of $150 million.

STIHL (4.1 MILES)Located less than four miles from Latitudes Apartments, the U.S. headquarters of STIHL employs 2,067 people in Virginia Beach. The company occupies more than one million square feet and manufactures gasoline-powered chainsaws and handheld outdoor power equipment and related products.

NAVAL AIR STATION OCEANA (4.3 MILES)Naval Air Station Oceana employs approximately 15,547 civilian and military personnel and serves as home to the Navy’s fighter attack jet fleet on the East Coast.

GEICO (6.4 MILES)GEICO’s regional office in Virginia Beach employs 2,300 people and houses several of the insurance company’s operational units, including GEICO Auto Insurance, Military Service Center, GEICO Motorcycle and the GEICO Insurance Agency.

VIRGINIA BEACH CITY PUBLIC SCHOOLSComprised of 86 schools and specialty centers, in 2015, Virginia Beach City Public Schools had student enrollment of 67,789. For the 2015-2016 fiscal year, it oversaw an operating budget of approximately $701.7 million and employed 14,746 people.

JOINT EXPEDITIONARY BASE LITTLE CREEK/FORT STORY (12.4 MILES)Employing 18,091 military and civilian personnel, Joint Expeditionary Base Little Creek-Fort Story is the largest employer in the City of Virginia Beach. Used to house and train the nation’s Expeditionary Forces, it has an estimated payroll of $900 million.



GEICO

GOLD KEY/PHR HOTELS & RESORTS

JOINT EXPEDITIONARY BASELITTLE CREEK/FORT STORY

LATITUDES APARTMENTS

SENTARA VIRGINIA BEACHGENERAL HOSPITAL

NAVAL AIR STATION OCEANA

STIHL



R E TA I L A N D E N T E R TA I N M E N T Residents of Latitudes Apartments are surrounded by an incredible variety of retail, with a Whole Foods just across Laskin Road and a Kroger also within walking distance. Options are continuing to grow with the 2017 addition of a Walmart Supercenter in the nearby Hilltop Square Shopping Center.

HILLTOP PLAZA (0.3 MILES)Less than a 10-minute walk away, Hilltop Plaza shopping center provides for residents’ everyday needs. Anchored by Trader Joe’sthe center includes Jo-Ann Fabric & Craft Store, PetSmart, Office Depot and Outback Steakhouse.

MARKETPLACE AT HILLTOP (0.7 MILES)Marketplace at Hilltop spans 121,000 square feet and contains an assortment of service, dining and retail establishments. Its directory includes restaurant favorites, such as Dairy Queen, Chick-fil-A and Panera Bread, as well as retailers Total Wine & More, Michael’s and FedEx.

THE SHOPS AT HILLTOP (0.5 MILES)Described as the “premier shopping destination in Virginia Beach,” The Shops at Hilltop features more than 120 shops, boutiques, specialty stores, services and restaurants, with both local and national brands represented.

VIRGINIA BEACH ARENA (2.8 MILES)The 18,000-seat, 500,000-square-foot venue will be a locally owned, privately financed entertainment and sports arena adjacent to the Virginia Beach Convention Center. In December 2015, the city agreed to use proceeds from hotel and discretionary taxes in the amount of $76.5 million to improve infrastructure in the area around the arena. According to the Vice President and Arena Program Director at the arena developer, United States Management, the company hopes to begin construction by the end of 2016.

THE VIRGINIA BEACH OCEANFRONT (3.5 MILES)Virginia Beach’s boardwalk stretches three miles from Croatan Beach in the south to the North End beaches and offers a vibrant, park-like atmosphere. Ranked as a top 10 location by both Travel and Leisure and Forbes Travel, the boardwalk is perfect for rollerblading, jogging or strolling and features spectacular views of the Atlantic Ocean. The walkway winds its way past the famous statue of King Neptune, the Atlantic Wildfowl Heritage Museum and the historic Old Coast Guard Station.

PEMBROKE MALL (7.5 MILES)Located across the street from the Town Center of Virginia Beach, the site of major recent development efforts, Pembroke Mall boasts three major department stores, more than 100 specialty shops, restaurants and free parking. In March 2016, The Fresh Market joined its directory, bringing with it 90 new jobs.

THE TOWN CENTER OF VIRGINIA BEACH (7.3 MILES)The Town Center of Virginia Beach, one of the top destinations in Virginia Beach, comprises 4.3 million square feet of mixed-use office, retail, restaurant and hotel space. It covers 17 city blocks and boasts more than 25 restaurants, including Ruth’s Chris Steakhouse, P.F. Chang’s and California Pizza Kitchen, as well as The Westin Hotel & Residences and the Sandler Center for the Performing Arts. Office tenants include some of the top law firms and financial groups in Hampton Roads, as well as several City of Virginia Beach departments. In May 2016, the Town Center’s developer announced plans for Phase VI of the development, adding 33,000 square feet of retail, 5,000 square feet of restaurant space, 120 multifamily units and a 17,000-square-foot performing arts theater. Construction is slated to begin during the second half of 2016.

LYNNHAVEN MALL (4.2 MILES)With more than 1.3 million square feet of retail space, Lynnhaven Mall is the largest shopping mall in southeastern Virginia. It offers visitors an enormous selection of shopping, dining and entertainment options, with more than 180 stores, 17 restaurants and eateries, free parking and a state-of-the-art AMC Theatre. In June 2016, L.L. Bean opened a new 16,700-square-foot store in the Lynnhaven Mall, its third Virginia location, staffed by approximately 100 people.

NORFOLK PREMIUM OUTLETS (13.0 MILES) The property is within 13 miles of the site of Simon Property Group’s 332,000-square-foot outlet mall, which is located on the site of the former Lake Wright golf course at the intersection of Interstate 64 and Northhampton Boulevard. The mall features 90 designer and name-brand outlet stores and will be a major destination in the region.






PEMBROKE MALL



VIRGINIA BEACH ARENA

NORFOLK PREMIUM OUTLETS

LYNNHAVEN MALL

HILLTOP PLAZA


A PA R T M E N T M A R K E T O V E R V I E W5 4 . A PA R T M E N T M A R K E T O V E R V I E W5 4 .

OVERVIEWMARKET

APARTMENT

A PA R T M E N T M A R K E T O V E R V I E W 5 5 .A PA R T M E N T M A R K E T O V E R V I E W 5 5 .

A PA R T M E N T M A R K E T O V E R V I E W5 6 .

H A M P T O N R O A D S A PA R T M E N T M A R K E TStrong Market Fundamental Projections – Over the next four years through 2022, the apartment market fundamentals in the Hampton Roads Apartment Market are projected to remain strong, with effective rent growth projected to average +2.6% per year, occupancies projected to average at 95.3%, and net absorption averaging at +1,640 units (Source: Axiometrics, 1Q2018).

Significant Upside Market Potential from Increased Military Spending – The increases in defense spending can potentially propel rent growth to levels in excess of 4.0%+ annually, similar to the rent growth levels that were achieved during the period from 2000 – 2007, where annual rent growth averaged at 4.8% when defense spending in the region increased by 6.1% per year.

Supply Pipeline – 1,595 units are expected to come online in 2018, which represents a decrease of 18.5% from the 2017 delivery total (Source: Axiometrics, 1Q2018). Most of this supply is expected in submarkets outside of the Lynnhaven/Oceana submarket, thereby limiting competition of new product in the immediate vicinity of the Property.

$1,013$1,032

$1,052$1,077

$1,111$1,140

$1,163

80.0%82.0%84.0%86.0%88.0%90.0%82.0%94.0%96.0%88.0%

$900

$950

$1,000

$1,050

$1,100

$1,150

$1,200

2015 2016 2017 2018F 2019F 2020F 2021F

HAMPTON ROADS APARTMENT MARKET EFFECTIVE RENTS AND OCCUPANCY

Effective Rent Occupancy

A PA R T M E N T M A R K E T O V E R V I E W 5 7 .5 7 .

L Y N N H AV E N / O C E A N A A PA R T M E N T S U B M A R K E T Strong Submarket Fundamental Projections – Over the next four years through 2022, the apartment market fundamentals in the Lynnhaven/Oceana Apartment Submarket are projected to remain strong, mirroring the projections for the overall market. Effective rent growth is projected to average +2.4% per year, occupancies projected to average at 94.8%, and net absorption averaging at +172 units per year (Source: Axiometrics, 1Q2018).

Significant Upside Market Potential from Increased Military Spending – The increases in defense spending can potentially propel rent growth to levels in excess of 5.0%+ annually, similar to the rent growth levels that were achieved during the period from 2000 – 2007, where annual rent growth averaged at 4.8% when defense spending in the region increased by 6.1% per year.

Supply Pipeline – The submarket is projected to experience deliveries of 128 units per year through 2022. When coupled with the projected demand of +172 new units per year, the submarket is in prime position to experience further rent growth where increased demand justifies higher rent costs in a supply market with limited new product (Source: Axiometrics, 1Q2018)

A PA R T M E N T M A R K E T O V E R V I E W

$1,061 $1,067$1,092

$1,114$1,130

$1,167$1,199

80.0%

82.0%

84.0%

86.0%

88.0%

90.0%

92.0%

94.0%

96.0%

$950

$1,000

$1,050

$1,100

$1,150

$1,200

$1,250

2014 2015 2016 2017 2018F 2019F 2020F

LYNNHAVEN/OCEANA APARTMENT SUBMARKET EFFECTIVE RENTS AND OCCUPANCY

Effective Rent Occupancy

C O M PA R A B L E A N A L Y S I S5 8 . C O M PA R A B L E A N A L Y S I S5 8 .

COMPARABLEANALYSIS

C O M PA R A B L E A N A L Y S I S 5 9 .C O M PA R A B L E A N A L Y S I S 5 9 .

C O M PA R A B L E A N A L Y S I S6 0 .

Latitudes

Legends at the Beach

South Beach

226 Oceana

Piper’s Landing

Shoreline

SummerStation

Maple Bay


C O M PA R A B L E A N A L Y S I S 6 1 .


South Beach Apartments400 Eden Roc CirVirginia Beach, VA

2001 212 1,142 $1,281 $1.12

Shoreline Apartments4133 Shoreline PlVirginia Beach, VA

1985 216 1,305 $1,251 $0.96

Latitudes - Renovated1701 Chase Pointe CirVirginia Beach, VA

1989 69 919 $1,219 $1.33

226 Oceana226 Birch Lake RdVirginia Beach, VA

1988 213 840 $1,192 $1.42

Maple Bay Townhomes356 Cheshire CtVirginia Beach, VA

1969 418 1,200 $1,145 $0.95

Summer Station3700 Snowdrift CirVirginia Beach, VA

1987 270 914 $1,091 $1.19

Legends at the Beach3100 Hunters Chase DrVirginia Beach, VA

1989 254 893 $1,087 $1.22

Latitudes - Unrenovated1701 Chase Pointe CirVirginia Beach, VA

1989 379 874 $1,040 $1.19

Piper’s Landing401 Rivers Post CtVirginia Beach, VA

1988 152 767 $894 $1.17

TOTALS/AVERAGES 243 1,003 $1,126 $1.12


226 Oceana 1988 21 795 $1,259 $1.58

Shoreline Apartments 1985 36 829 $1,145 $1.38

South Beach Apartments 2001 40 860 $1,137 $1.32


Maple Bay Townhomes 1969 52 1,000 $1,059 $1.06

Legends at the Beach 1989 90 693 $1,020 $1.47

Summer Station 1987 48 675 $979 $1.45

Latitudes - Unrenovated 1989 186 738 $929 $1.26

TOTALS/AVERAGES 62 772 $1,018 $1.32

6 1 .

Latitudes

Legends at the Beach

South Beach

226 Oceana

Piper’s Landing

Shoreline

SummerStation

Maple Bay

C L A S S B R E N T C O M PA R A B L E S

C L A S S B O N E B E D R O O M R E N T C O M PA R A B L E S

C O M PA R A B L E A N A L Y S I S



Latitudes - Renovated (2BD/2BA) 1989 25 1,057 $1,327 $1.26

South Beach Apartments 2001 140 1,171 $1,291 $1.10

Shoreline Apartments (2BD/1BA) 1985 80 1,038 $1,245 $1.20

Shoreline Apartments (2BD/2BA) 1985 84 1,098 $1,226 $1.12

Latitudes - Renovated (2BD/1BA) 1989 19 894 $1,206 $1.35

226 Oceana 1988 160 795 $1,180 $1.48

Latitudes - Unrenovated (2BD/2BA) 1989 79 1,057 $1,175 $1.11

Legends at the Beach (2BD/1BA) 1989 24 860 $1,159 $1.35

Maple Bay Townhomes 1969 313 1,200 $1,121 $0.93

Legends at the Beach (2BD/2BA) 1989 140 1,027 $1,117 $1.09

Summer Station (2BD/2BA) 1987 48 983 $1,099 $1.12

Latitudes - Unrenovated (2BD/1BA) 1989 95 894 $1,057 $1.18

Summer Station (2BD/1BA) 1987 108 875 $1,029 $1.18

Piper’s Landing (2BD/1.5BA) 1988 7 768 $975 $1.27

Piper’s Landing (2BD/1BA) 1988 105 729 $840 $1.15

TOTALS/AVERAGES 95 1,010 $1,132 $1.12

C L A S S B T W O B E D R O O M R E N T C O M PA R A B L E S




Shoreline Apartments 1985 16 1,305 $1,645 $1.26

Latitudes - Unenovated (3BD/2BA) 1989 19 1,342 $1,476 $1.10

South Beach Apartments 2001 32 1,368 $1,418 $1.04

Maple Bay Townhomes (3BD/2.5BA) 1969 31 1,400 $1,389 $0.99

Maple Bay Townhomes (3BD/1.5BA) 1969 22 1,400 $1,349 $0.96

Summer Station 1987 66 1,100 $1,269 $1.15

226 Oceana 1988 32 1,095 $1,210 $1.11

Piper’s Landing 1988 10 956 $1,145 $1.20

Piper’s Landing 1988 30 837 $977 $1.17

TOTALS/AVERAGES 26 1,189 $1,303 $1.10

C L A S S B T H R E E B E D R O O M R E N T C O M PA R A B L E S


U N I T M I X

UNIT TYPE # UNITS % TTL SF AVG ASKING RENT/UNIT

AVG ASKING RENT/UNIT OCCUPANCY

1BD/1BA 40 18.9% 860 $1,137 $1.32 97.5%

2BD/2BA 140 66.0% 1,171 $1,291 $1.10 98.6%

3BD/2BA 32 15.1% 1,386 $1,418 $1.04 96.9%

TOTAL/AVG 212 100.0% 1,142 $1,281 $1.12 98.1%

S O U T H B E A C H A P T S400 Eden Roc CirVirginia Beach, VA

Units: 212Year Bui l t : 2001

MANAGEMENT: Gumenick Properties

COMMUNITY AMENITIESGated Community, Clubhouse with Contemporary Amenities, Resort Style Swimming Pool, Cabana with Grill Area, Complementary Clubhouse & Pool Wi-Fi, Elevators in Select Buildings, Detached Garages, Fitness Center, 24-Hour Emergency Maintenance, Pet Friendly Community

UNIT AMENITIESSpacious Floor plans, 9’ Ceilings, Vaulted Ceilings*, Wall-to-Wall Carpeting, Fully Applianced Kitchens, White-on-White Appliances, Patios/Balconies, Security Alarm, Full-Size Washer and Dryers

*In Select Units


U N I T M I X



1BD/1BA 36 16.7% 829 $1,145 $1.38 97.2%

2BD/1BA 80 37.0% 1,038 $1,245 $1.20 96.2%

2BD/2BA 84 38.9% 1,098 $1,226 $1.12 95.2%

3BD/2BA 16 7.4% 1,305 $1,645 $1.26 93.7%

TOTAL/AVG 216 100.0% 1,046 $1,251 $1.20 95.8%

S H O R E L I N E A P T S4133 Shorel ine PlVirginia Beach, VA

Units: 216Year Bui l t/Renovated: 1985/2008-2017

MANAGEMENT: Clark Whitehill Enterprises

COMMUNITY AMENITIESClubhouse, 24-Hour Fitness Center with Free Weight and Resistance Training Options, 24-Hour Cardio Fitness Room, Dry Sauna, Swimming Pool with BBQ Station, Private Lake with Fountain and Scenic Trail, Reserved Parking and Abundant Guest Parking, 24-Hour Emergency Maintenance, Package Acceptance

UNIT AMENITIESSpacious Floor plans, 9’ Ceilings, Vaulted Ceiling & Ceiling Fans (Upstairs Locations), Wall-to-Wall Carpeting, Full-Size Washer and Dryers, Fully Applianced Kitchens, White-on-White Appliances, Woodburning or Electric Fireplace, Bay Windows and French Window Walls, Blinds, Attic or Attached Private Store Units, Double Patios with Gardening Area (Ground Floor Units), Lakeview Locations*

*In Select Units

RENOVATION STATUSAll units have been renovated


2 2 6 O C E A N A226 Birch Lake RdVirginia Beach, VA


MANAGEMENT: Pegasus Residential

COMMUNITY AMENITIESSwimming Pool, 24-Hour Cardio/Strength Training Center, Clothes Care Centers, Children’s Play Area, Pet Friendly, Bark Park, 24-Hour Emergency Maintenance

UNIT AMENITIESSpacious Floor plans, 9’ Ceilings, Vaulted Ceilings*, Wall-to-Wall Carpeting, Designer Accent Walls*, Fully Applianced Kitchens, Double Stainless Steel Sinks, Private Deck or Patio, Full-Size Washer and Dryers*, Ceiling Fans with Lights

*In Select Units

U N I T M I X



1BD/1BA 21 9.9% 795 $1,259 $1.58 85.7%

2BD/1BA 160 75.1% 795 $1,180 $1.48 93.7%

3BD/2BA 32 15.0% 1,095 $1,210 $1.11 71.9%

TOTAL/AVG 213 100.0% 840 $1,192 $1.42 89.6%


S U M M E R S TAT I O N3700 Snowdrif t CirVirginia Beach, VA


MANAGEMENT: Pegasus Residential

COMMUNITY AMENITIESClubhouse, Fitness Center, High Speed Internet Access, Swimming Pool, Hot Tub, Sauna, Children’s Playground, Pet Friendly Community, 24-Hour Emergency Maintenance

UNIT AMENITIES9’ Ceilings, Vaulted Ceilings/Skylights*, Wall-to-Wall Carpeting, Fully-Applianced Kitchens, White-on-White Whirlpool Kitchen Appliances, Bay Windows, Mini/Vertical Blinds, Washer and Dryer Connections, Washer and Dryers*, Patio/Balcony, Fireplace*, Breakfast Bar

*In Select Units

U N I T M I X



1BD/1BA 48 17.8% 675 $979 $1.45 95.8%

2BD/1BA 108 40.0% 875 $1,029 $1.18 97.2%

2BD/2BA 48 17.8% 983 $1099 $1.12 89.6%

3BD/2BA 66 24.4% 1,100 $1,269 $1.15 95.4%

TOTAL/AVG 270 100.0% 914 $1,091 $1.19 95.2%


L E G E N D S AT T H E B E A C H3100 Hunters Chase DrVirginia Beach, VA

Units: 254Year Bui l t/Renovated: 1989/2016-2017

MANAGEMENT: The Apartment Gallery

COMMUNITY AMENITIES:Clubhouse, Fitness Center, Swimming Pool, BBQ/Picnic Area, 24-Hour Emergency Maintenance, Pet Friendly Community

UNIT AMENITIES9’ Ceilings, Vaulted Ceilings*, Wall-to-Wall Carpeting in Living Areas and Bedroom, Hardwood Flooring in Kitchen and Dining Room*, Fully Equipped Kitchens with Breakfast Bars, White-on-White Appliances, Stackable Washer and Dryers, Ceramic Tile Bath Surrounds, Detached Garages Available, Light Fixture Upgrades*, Patio/Balcony, Patio/Balcony Storage*, Walk-In Closets*, Wood Burning Fireplaces*

*In Select Units

RENOVATION STATUS22 units have been renovated

U N I T M I X



1BD/1BA 90 35.4% 693 $1,020 $1.47 92.2%

2BD/1BA 24 9.4% 860 $1,159 $1.35 95.8%

2BD/2BA 140 55.1% 1,027 $1,117 $1.09 92.1%

TOTAL/AVG 254 100.0% 893 $1,087 $1.22 92.5%


M A P L E B AY T O W N H O M E S356 Cheshire CtVirginia Beach, VA

Units: 418Year Bui l t/Renovated: 1969/2008

MANAGEMENT: AIMCO

COMMUNITY AMENITIESClubhouse, 24-Hour Fitness Center, Business Center, Wi-Fi in Common Areas, Swimming Pool, On-Site Laundry Facility, Vehicle Vacuum Station, Storage Available, 24-Hour Package Acceptance, Garage Parking, Pet Friendly Community, 24-Hour Maintenance

UNIT AMENITIES9’ Ceilings, 2-Story Townhome Floorplan Layouts, Wall-to-Wall Carpeting in Living Areas and Bedrooms, Ceramic Tile Flooring in Kitchens and Bathrooms, Stainless Steel Appliances*, Lighting Upgrades, Fully-Equipped Kitchens, Black-on-Black Appliances, Ceiling Fans, Washer and Dryer Connection, Full-Size Washer and Dryer*, Private Patio

*In Select Units


U N I T M I X



1BD/1.5BA 52 12.4% 1,000 $1,059 $1.06 96.1%

2BD/1.5BA 313 74.9% 1,200 $1,121 $0.93 98.7%

3BD/1.5BA 22 5.3% 1,400 $1,349 $0.96 95.4%

3BD/2.5BA 31 7.4% 1,200 $1,389 $0.99 96.8%

TOTAL/AVG 418 100.0% 1,200 $1,145 $0.95 98.1%


P I P E R ’ S L A N D I N G401 Rivers Post CtVirginia Beach, VA


MANAGEMENT: Crestline Realty Corporation

COMMUNITY AMENITIESClubhouse, Laundry Facilities on Site, Picnic Area with Tables, Children’s Playground, 24-Hour Emergency Maintenance, Pet Friendly Community

UNIT AMENITIES9’ Ceilings, Wall-to-Wall Carpeting, Stackable Washer and Dryers*, Fully-Equipped Kitchens, White-On-White Appliances, Custom Cabinetry*

*In Select Units


U N I T M I X



2BD/1BA 105 69.1% 729 $840 $1.15 100.0%

2BD/1.5BA 7 4.6% 768 $975 $1.27 100.0%

3BD/1.5BA 30 19.7 837 $977 $1.17 80.3%

3BD/2BA 10 6.6% 956 $1,145 $1.20 100.0%

TOTAL/AVG 152 100.0% 767 $894 $1.16 96.1%

C O M PA R A B L E A N A L Y S I S 7 1 .C O M PA R A B L E A N A L Y S I S 7 1 .


LatitudesColumbus

Station

Greenwich Village

Cambria atCornerstone

Southern Pine

Saltmeadow Bay

Indigo 19

Solace



LatitudesColumbus

Station

Greenwich Village

Cambria atCornerstone

Southern Pine

Saltmeadow Bay

Indigo 19

Solace


Saltmeadow Bay757 Saltmeadow Bay DrVirginia Beach, VA

2003 229 1,228 $1,629 $1.33

Southern Pine2520 Allie Nicole CirVirginia Beach, VA

2016 240 1,290 $1,534 $1.19

Indigo 191940 Pavilion DrVirginia Beach, VA

2013 196 943 $1,515 $1.61

Cambria at Cornerstone4884 Travertine AveVirginia Beach, VA

2012 456 1,043 $1,402 $1.34

Greenwich Village5321 Greenwich RdVirginia Beach, VA

2012 224 922 $1,304 $1.41

Solace400 S Military HwyVirginia Beach, VA

2014 250 1,030 $1,285 $1.25

Columbus Station4516 Pinta LnVirginia Beach, VA

1984 306 858 $1,272 $1.48

Latitudes - Renovated1701 Chase Pointe CirVirginia Beach, VA

1989 69 919 $1,219 $1.33

Latitudes - Unrenovated1701 Chase Pointe CirVirginia Beach, VA

1989 379 874 $1,040 $1.19

TOTALS/AVERAGES 261 1,010 $1,345 $1.33


Southern Pine 2016 42 945 $1,353 $1.43

Saltmeadow Bay 2003 68 906 $1,343 $1.48

Indigo 19 2013 94 723 $1,283 $1.77

Cambria at Cornerstone 2012 120 899 $1,275 $1.42

Columbus Station 1984 32 665 $1,189 $1.79

Greenwich Village 2012 133 787 $1,180 $1.50

Solace 2014 130 847 $1,125 $1.33


Latitudes - Unrenovated 1989 186 738 $929 $1.26

TOTALS/AVERAGES 92 807 $1,161 $1.44

RENT DELTA $142

7 3 .

C L A S S A R E N T C O M PA R A B L E S

C L A S S A O N E B E D R O O M R E N T C O M PA R A B L E S

C O M PA R A B L E A N A L Y S I S



Indigo 19 2013 94 1,113 $1,714 $1.54

Saltmeadow Bay 2003 119 1,282 $1,603 $1.25

Southern Pine 2016 156 1,315 $1,530 $1.16

Greenwich Village 2012 91 1,121 $1,487 $1.33

Solace 2014 120 1,229 $1,459 $1.19


Latitudes - Renovated (2BR/2BA) 1989 25 1,057 $1,327 $1.26

Columbus Station (2BR/2BA) 1984 180 866 $1,255 $1.45

Columbus Station (2BR/1BA) 1984 74 866 $1,248 $1.44

Latitudes - Renovated (2BR/1BA) 1989 19 894 $1,206 $1.35

Latitudes - Unrenovated (2BR/2BA) 1989 79 1,057 $1,175 $1.11

Latitudes - Unrenovated (2BR/1BA) 1989 95 894 $1,057 $1.18

TOTALS/AVERAGES 108 1,076 $1,393 $1.29

RENT DELTA $261

C L A S S A T W O B E D R O O M R E N T C O M PA R A B L E S



Saltmeadow Bay (3BR/2BA) 2003 9 1,756 $2,207 $1.26

Saltmeadow Bay (3BR/2.5BA) 2003 33 1,551 $2,153 $1.39

Indigo 19 2013 8 1,537 $1,905 $1.24

Southern Pine 2016 42 1,540 $1,730 $1.12

Columbus Station 1984 20 1,073 $1,651 $1.54



Latitudes - Unrenovated (3BD/2BA) 1989 19 1,342 $1,476 $1.10

TOTALS/AVERAGES 29 1,371 $1,739 $1.27

RENT DELTA $436

C L A S S A T H R E E B E D R O O M R E N T C O M PA R A B L E S


S A LT M E A D O W B AY757 Sal tmeadow Bay DrVirginia Beach, VA


MANAGEMENT: The Runnymede Corp.

COMMUNITY AMENITIESClubhouse with Free Wi-Fi, Swimming Pool, 24-Hour Fitness Center, BBQ/Picnic Area, Bike Racks, Elevator, Five Blocks from Oceanfront, On-Site Maintenance, Pet Friendly Community

UNIT AMENITIESSpacious Floor plans, 9’ Ceilings, Crown Molding, Hardwood Flooring in Living Areas, Wall-to-Wall Carpeting in Bedrooms, Full-Size Washer and Dryers, Fully-Equipped Kitchens, Stainless Steel Appliances, Ceiling Fans, Granite Countertops, Patio/Balcony, Walk-In Closets, Window Coverings, Cable Ready

U N I T M I X



1BD/1BA 68 29.7% 906 $1,343 $1.48 92.6%

2BD/2BA 119 52.0% 1,282 $1,603 $1.25 90.8%

3BD/2BA 9 3.9% 1,756 $2,207 $1.26 77.8%

3BD/2.5BA 33 14.4% 1,551 $2,153 $1.39 66.7%

TOTAL/AVG 229 100.0% 1,228 $1,629 $1.33 87.3%


S O U T H E R N P I N E2520 Al l ie Nicole CirVirginia Beach, VA


MANAGEMENT: Franklin Johnston Group

COMMUNITY AMENITIESClubhouse with Infinity Pool, State-of-the-Art Fitness Center, 2-Lane Bowling Alley, Waterfront Pavilions, Outdoor Kitchens featuring Gas Grills, Pet Friendly

UNIT AMENITIESSpacious Floor plans, 9’ Ceilings, Crown Molding and Trim, Wall-to-Wall Carpeting, Fully-Equipped Kitchens, Stainless Steel Appliances, Black Granite Countertops, Breakfast Bar/Kitchen Island, Custom Kitchen and Bath Cabinetry, Brushed Nickel Hardware and Lighting Fixtures, Full-Size Washer and Dryers, Ceiling Fans, French Doors leading out to Private Patio/Balcony, Modern Lighting Package, Walk-In Closets, Custom Window Treatments, Cable Ready

U N I T M I X



1BD/1BA 42 17.5% 945 $1,353 $1.43 95.2%

2BD/2BA 156 65.0% 1,315 $1,530 $1.16 98.7%

3BD/2BA 42 17.5% 1,540 $1,730 $1.12 95.2%

TOTAL/AVG 240 100.0% 1,290 $1,534 $1.19 97.5%


I N D I G O 1 91940 Pavi l ion DrVirginia Beach, VA


MANAGEMENT: Steelhead Management

COMMUNITY AMENITIESClubhouse with Billiards, Desirable Location Near the Beach, Controlled Access, Elevators, Multiple Elevated Courtyards, Private Resort-Style Swimming Pool, 24-Hour Two Story Clubhouse, State-of-the-Art Fitness Center, On-Site Business Center, Fire Pit, Poolside Grilling Stations, Professional On-Site Management, 24-Hour Emergency Maintenance, Pet Friendly Community, Free Bicycle Rentals, Valet Dry Cleaning, Monthly Resident Events

UNIT AMENITIESOpen Concept Designs, 9’ Ceilings, Wall-to-Wall Carpeting in Living Areas and Bedrooms, Hardwood Flooring in Kitchen and Entry Foyer, Fully-Equipped Gourmet Kitchens, Granite Countertops, Stainless Steel Appliances, Designer-Selected Fixtures, Overhead Directional Lighting in Kitchen, Full-Size Washer and Dryer, Tile Bathroom Flooring, Expansive Closets in Master Suites, Patio/Balconies

U N I T M I X



1BD/1BA 94 48.0% 723 $1,283 $1.78 86.2%

2BD/2BA 94 48.0% 1,113 $1,714 $1.54 91.5%

3BD/2BA 8 4.1% 1,537 $1,905 $1.24 100.0%

TOTAL/AVG 196 100.0% 943 $1,515 $1.61 89.3%


C A M B R I A ATC O R N E R S T O N E4884 Traver t ine AveVirginia Beach, VA


MANAGEMENT: Breeden Companies

COMMUNITY AMENITIESClubhouse with Lounge, Game Room with Billiards, Media Center, Coffee Bar, Business Center, Community Garden, Bocce Ball Court, Landscaped Grounds with Courtyard and Pond, Two Resort-Style Swimming Pools, Splash Pad, Enriched Lifestyle Events, Dive-In Movies, Outdoor Grilling Stations, Outdoor Lounge Areas, Two Modern Fitness Centers, On-Site Dog Park, On-Site Management and Maintenance

UNIT AMENITIESOpen Concept Designs, Vaulted Ceilings, Ceiling Fans, Wall-to-Wall Carpeting in Living Areas and Bedrooms, Hardwood Flooring in Kitchen and Entry Foyer, Fully-Equipped Kitchens with Breakfast Bar, Black-On-Black Appliances, Granite Countertops, European Cabinetry, Pantry, Built-In Bookshelves and Computer Niche, Linen Closet, Foyer with Coat Closet, Full-Size Washer and Dryer, Tile Bathroom Flooring, Garden Tubs, Expansive Closets in Master Suites, Patio/Balconies, Trash Valet Service

U N I T M I X



1BD/1BA 120 26.3% 899 $1,275 $1.42 97.5%

2BD/2BA 240 52.6% 1,030 $1,380 $1.34 96.2%

3BD/2BA 96 21.1% 1,254 $1,614 $1.29 96.9%

TOTAL/AVG 456 100.0% 1,043 $1,402 $1.34 96.7%


G R E E N W I C H V I L L A G E5321 Greenwich RdVirginia Beach, VA


MANAGEMENT: Franklin Johnston Group

COMMUNITY AMENITIESModern and Hi-Tech Clubhouse, Brand New State-of-the-Art Fitness Center, Resort-Style Swimming Pool, Water Features, Business Center, Wi-Fi Hotspots, covered Outdoor Grilling and Picnic Areas, Outdoor Shaded Lounge Areas, Ambient Community Exterior Lighting, On-Site Dog Park, On-Site Management and Maintenance

UNIT AMENITIES9’ Ceilings, Wall-to-Wall Carpeting in Living Areas and Bedrooms, Wood-Grain Flooring in Kitchen and Entry Foyer, Fully-Equipped Kitchens, Black Granite Countertops, Stainless Steel Appliances, Custom Kitchen and Bath Cabinetry, Breakfast Bar/Kitchen Island, Full-Size Washer and Dryer, Crown Molding, Modern Lighting Package Throughout, Expansive Walk-In Closets, Wood-Grain Flooring, Brushed Nickel Hardware and Lighting Fixtures, Custom Window Treatments, French Doors leading out to Private Patio/Balcony

U N I T M I X



1BD/1BA 133 59.4% 787 $1,180 $1.50 96.2%

2BD/2BA 91 40.6% 1,121 $1,487 $1.33 95.6%

TOTAL/AVG 224 100.0% 922 $1,304 $1.41 96.0%


S O L A C E400 S Mil i tar y HwyVirginia Beach, VA


MANAGEMENT: Drucker & Falk

COMMUNITY AMENITIESClubhouse, Resort Style Swimming Pool with Lap Lanes, Sundeck with Poolside Wi-Fi, 24-Hour Business Center, 24-Hour Cardio and Strength Training Fitness Center, Clubroom Café & Wi-Fi Lounge, Concierge Package Service, Covered Garage, Electric Car Charging Stations, Bark Park, Health Beat Outdoor Fitness, Interior Mail Room, Meditation/Yoga Studio, On-Site Storage, Playground, Poolside Kitchen and Grilling Area, Resident Socials, Pet Friendly Community, On-Site Management and Maintenance

UNIT AMENITIES9’ and 10’ Ceilings, Wall-to-Wall Carpeting, Fully Equipped Kitchens, Quartz Kitchen Countertops and Breakfast Bar, Stainless Steel Appliances, Sunrooms*, USB Outlets, Walk-In Closets*, Ceiling Fans, Ceramic Tile Kitchens and Baths, Designer Kitchens and Baths with Espresso Cabinetry, Double Door Refrigerators, Kitchen Pantry, Large Garden Tubs, Lofts*, Walk-In Showers*, Marble Top Bathroom Vanities, Patio/Balcony, Full-Size Washer and Dryer

*In Select Units

U N I T M I X



1BD/1BA 130 52.0% 847 $1,125 $1.33 97.7%

2BD/2BA 120 48.0% 1,229 $1,459 $1.19 94.2%

TOTAL/AVG 250 100.0% 1,030 $1,285 $1.25 96.0%


C O L U M B U S S TAT I O N4516 Pinta LnVirginia Beach, VA


MANAGEMENT: The Dragas Companies

COMMUNITY AMENITIESClubhouse, 24-Hour Fitness Center, Meditation Garden, Resort Style Saltwater Swimming Pool with Cabana Furniture, Poolside Wi-Fi, Fire Pit, Poolside Grilling Area with Gas BBQ Grill and Wet Bar, Concierge Package Service, Bark Park, Sundeck, Monthly Community Events, 2014 Award of Excellent Gold Winner, Located in Town Center of Virginia Beach

UNIT AMENITIES9’ Ceilings, Wall-to-Wall Carpeting in Living Areas and Bedrooms, Hardwood Flooring in Kitchen and Entry Foyer, Fully-Equipped Kitchens, White-On-White Appliances, Granite Countertops*, Stainless Steel Appliances*, Window Coverings, High-Speed Internet Access, Full-Size Washer and Dryer, Ceiling Fans, Cable Ready, Alarm System, Storage Units, Framed Mirrors, Patio/Balcony

*In Select Units


U N I T M I X



1BD/1BA 32 10.5% 665 $1,189 $1.79 96.9%

2BD/1BA 74 24.2% 866 $1,248 $1.44 93.2%

2BD/2BA 180 58.8% 866 $1,255 $1.45 97.8%

3BD/2BA 20 6.5% 1,073 $1,651 $1.54 100.0%

TOTAL/AVG 306 100.0% 858 $1,272 $1.48 96.7%

C O M PA R A B L E A N A L Y S I S 8 3 .C O M PA R A B L E A N A L Y S I S 8 3 .C O M PA R A B L E A N A L Y S I S 8 3 .

F I N A N C I A L A N A L Y S I S8 4 .

FINANCIALANALYSIS


F I N A N C I A L A N A L Y S I S 8 5 .F I N A N C I A L A N A L Y S I S 8 5 .

F I N A N C I A L A N A L Y S I S8 6 . F I N A N C I A L A N A L Y S I S8 6 .

F I N A N C I A L A N A L Y S I S 8 7 .

R E N O VAT I O N S U M M A R Y

D E B T A S S U M P T I O N S

STRICTLY CONFIDENTIAL

Latitudes 2018 Renovation Summary Virginia Beach, VA

EXISTING RENOVATED UNITS PROJECTED UNIT RENOVATIONStratS snoitavoneR detavoneR eb ot stinU stinU detavoneR

dnE snoitavoneR ytreporP fo % ytreporP fo %

Average Renov. Rent doireP noitavoneR tnemtsevnI no nruteR yticoleV ylhtnoM .gvA muimerP egarevA muimerP egarevA emitnwoD noitavoneR tsoC egarevA muimerP %

EXISTING RENOVATED UNIT SUMMARYRent Roll as of 4/30/18

Current In-Place In-PlaceRenovation Status Rent Per Unit Renovation Premium

Renovated Unrenovated Renovated Unrenovated per unit per sf 1 Bedroom 24 units 186 units $ 1,037 $ 933 $ 105 $ 0.07 2 Bedroom 44 units 174 units $ 1,211 $ 1,110 $ 101 $ 0.08 3 Bedroom 1 units 19 units $ 1,608 $ 1,418 $ 190 $ 0.14

Total / Average 69 units 379 units $ 1,156 $ 1,039 $ 104 $ 0.10

PROJECTED UNIT RENOVATION SUMMARYProjected Post-Renovation

Renovation Costs¹ Renov. Premium Market Rent Units To Be Renovated

per unit per sf per unit per sf per unit per sf Year 1 Year 2 Year 3 Year 4 1 Bedroom $ 9,800 $ 13.28 $ 125 $ 0.17 $ 1,054 $ 1.43 62 units 62 units 62 units - 2 Bedroom $ 9,800 $ 10.12 $ 161 $ 0.17 $ 1,271 $ 1.31 59 units 58 units 57 units - 3 Bedroom $ 9,800 $ 7.30 $ 200 $ 0.15 $ 1,676 $ 1.25 6 units 6 units 6 units -

Total / Average $ 9,800 $ 11.22 $ 145 $ 0.17 $ 1,185 $ 1.36 127 units 126 units 125 units -

¹ Renovation costs ($ 3,714,200) are funded at closing

$ 1,156 / unit$ 104 / unit

11.2%

69 units15.4%

11 units30 days$ 9,800 / unit

85%379 units

$ 145 / unit17.8%

Jul-18 Jun-21

36 months

MP 15:2 8102/1/51 fo 1 egaPmslx.81.03.4 ledoM WU sedutitaL


Lender PGIM/Fannie Mae

Loan Type 1st Mortgage

Origination Date 1/5/2017

Original Loan Amount $47,645,000

Current Loan Balance as of May 1, 2018 $47,645,000

Term (Months) 144

I/O Period (Months) 72

Maturity Date 2/1/2029

Type Fixed

Interest Rate 4.63%

Amortization Period (Years) 30

Average Monthly Payment $186,383

Loan Assumption Fee 1.00%

Note: The loan can be increased via a Fannie Mae Supplemental Loan up to a 75.0% LTV and 1.30x debt service coverage.


F I N A N C I A L A S S U M P T I O N SGROSS SCHEDULED RENTGross Scheduled Rent is assumed to be $5,908,970 in Year 1, based on markets rents per the 4/30/2018 rent roll, grown by 3.00% in Year 1, equating to an average monthly market rent of $1,099 or $1.25 per SF. The projected market rent is assumed to grow annually by a factor of 3.00%.

RENOVATION PREMIUM379 of the total units are available for immediate upgrade. Analysis assumes renovation of the entire property within a 36-month period, at an average cost of $9,800 per month.

RENOVATION SNAPSHOT

Units to be Renovated 379

Renovation Cost per Unit $9,800

1 Bedroom Renovation Premium/Month $125



Blended Avg Renovation Premium $145

Renovation Timeline 36 Months

Additional Annual Revenue $660,000

LOSS-TO-LEASELoss-to-Lease is currently 0.97% of Gross Scheduled Rent and is assumed to be 1.00% in Years 1 through 8.

VACANCY LOSSVacancy Loss is projected on a stabilized basis to be 5.00% in Years 2 through 8. The Property is currently 95.5% occupied as of April 30, 2018.

CONCESSIONSConcessions are assumed to be 0.25% of Gross Scheduled Rent to account for periodic one-time concessions.

NON-REVENUE UNITS There is one 2 Bedroom / 2 Bath model unit with a market rent valued at $1,313 per month.

COLLECTION LOSS/BAD DEBTCollection loss is assumed to be 0.10% of Gross Scheduled Rent in Years 1 through 8.

PARKING INCOMEParking income is based on current T’12 levels. Analysis assumed Parking Income of $27 per unit, totaling $12,079 in Year 1, and growth by a factor of 3.00% annually.

EXPENSE REIMBURSEMENTSExpense Reimbursements total to $372,565 or $832 per unit/year. Other Income includes, but is not limited to various line items including: Application Fees, Move-in fees, Pet Fees, Cable Fees and Lease Termination Income. The analysis assumes that 90.0% of the water and sewer expenses are recaptured, which falls in-line with the recent collections. The Velocity billing system is currently in-place, and normally recaptures between 90.0% - 95.0% of the water and sewer expenses.

OTHER RESIDENTIAL INCOMEOther Income in Year 1 totals to $329,009, or $734 per unit/year. Other Income includes, but is not limited to various line items including: Application Fees, Move-in fees, Pet Fees, Cable Fees and Lease Termination Income. Other income is based on current T’12 income levels, grown by a factor of 3.00%.

VARIABLE EXPENSESVariable Expenses are based on T’12 Expense levels grown 2.00% annually.

REAL ESTATE TAXESThe Property assessment has already been determined for the next buyer for the 2019 tax cycle (Year 1 of ownership) as shown below. Real estate taxes in the Year 1 of the Proforma are based on the FY 2019 assessment levels. Thereafter, real estate taxes are assumed to grow by 2.00% on an annual basis.

INSURANCEInsurance is based on current T’12 levels. Analysis assumes Insurance of $76,527 per year, or $171 per unit, which is based on current T’12 levels grown by a factor of 2.00% on an annual basis.

MANAGEMENT FEESManagement Fees are assumed to be 3.00% of Effective Gross Income in Year 1 and each subsequent year.

CAPITAL RESERVESAnalysis assumes Capital Reserves at $200 per unit, totaling $89,600, and grown annually 2.00% thereafter.

YEAR FY 2017 FY2018 FY2019

Land Value $8,064,000 $10,080,000 $10,800,000

Building Value $37,905,000 $36,162,100 $45,433,000

Total Assessed $45,969,300 $46,242,100 $55,513,000

Tax Rate $0.9900 $1.0025 $1.0025

Real Estate Taxes $455,096 $463,577 $556,518

Parcel 24076770590000


H I S T O R I C A L SSTRICTLY CONFIDENTIAL

Latitudes 2018

HISTORICAL CASH FLOW

T12 Annualized T3 Annualized Pro Forma Yr 1 Mar-18 Per Unit % Mar-18 Per Unit % Jun-19 Per Unit %

OPERATING REVENUE Mkt Mkt Mkt Potential Market Rent $ 5,525,454 $ 12,334 100.00% $ 5,659,564 $ 12,633 100.00% $ 5,908,970 $ 13,190 100.00%

%01.2672$208,321 $muimerP noitavoneR (Loss to Lease) / Gain to Lease $ 38,279 $ 85 0.69% ($ 17,111) ($ 38) (0.30%) ($ 60,328) ($ 135) (1.02%)

Gross Potential Revenue $ 5,563,733 $ 12,419 100.69% $ 5,642,453 $ 12,595 99.70% $ 5,972,444 $13,331 101.07%

Vacancy (incl. Renovation Downtime) ($ 255,393) ($ 570) (4.62%) ($ 305,687) ($ 682) (5.40%) ($ 301,639) ($ 673) (5.10%))%42.0()23 $()631,41 $()%06.0()57 $()277,33 $()%04.0()94 $()711,22 $(snoissecnoC

Non-Revenue Units ($ 60,397) ($ 135) (1.09%) ($ 47,048) ($ 105) (0.83%) ($ 16,569) ($ 37) (0.28%) Collection Loss / Bad Debt ($ 31,230) ($ 70) (0.57%) ($ 698) ($ 2) (0.01%) ($ 5,640) ($ 13) (0.10%)

Base Rental Revenue $ 5,194,595 $ 11,595 94.01% $ 5,255,247 $ 11,730 92.86% $ 5,634,461 $ 12,577 95.35%

%02.072 $970,21 $%22.082 $473,21 $%12.062 $727,11 $gnikraP / egaraG Expense Reimbursements $ 363,452 $ 811 6.58% $ 351,571 $ 785 6.21% $ 372,565 $ 832 6.31% Other Residential Income $ 319,426 $ 713 5.78% $ 368,522 $ 823 6.51% $ 329,009 $ 734 5.57%

%80.21395,1 $256,317 $%49.21536,1 $764,237 $%75.21055,1 $506,496 $emocnI rehtO

EFFECTIVE GROSS REVENUE $ 5,889,200 $ 13,146 106.58% $ 5,987,715 $ 13,365 105.80% $ 6,348,113 $ 14,170 107.43%

amroF orP 1 raeY21 gniliarT21 gniliarT OPERATING EXPENSES EGR EGR EGR Repair & Maintenance $ 95,867 $ 214 1.63% $ 95,867 $ 214 1.60% $ 97,784 $ 218 1.54%

%91.1861 $014,57 $%32.1561 $139,37 $%62.1561 $139,37 $secivreS tcartnoC %14.7050,1 $725,074 $%07.7030,1 $103,164 $%38.7030,1 $103,164 $lennosreP

Marketing / Advertising $ 42,459 $ 95 0.72% $ 42,459 $ 95 0.71% $ 43,309 $ 97 0.68% Administrative Expenses $ 88,606 $ 198 1.50% $ 88,606 $ 198 1.48% $ 90,379 $ 202 1.42% Turnover / Make-Ready $ 118,185 $ 264 2.01% $ 118,185 $ 264 1.97% $ 120,549 $ 269 1.90%

%18.0511 $743,15 $%48.0211 $143,05 $%58.0211 $143,05 $yticirtcelE %63.5957 $680,043 $%75.5447 $814,333 $%66.5447 $814,333 $reweS & retaW %61.1561 $578,37 $%12.1261 $624,27 $%32.1261 $624,27 $seitilitU rehtO %12.1171 $725,67 $%52.1761 $720,57 $%72.1761 $720,57 $ecnarusnI %77.8242,1 $815,655 $%17.7030,1 $754,164 $%48.7030,1 $754,164 $sexaT etatsE laeR

Property Management Fee $ 176,707 $ 394 3.00% $ 176,707 $ 394 2.95% $ 190,443 $ 425 3.00%

TOTAL OPERATING EXPENSES $ 2,049,725 $ 4,575 34.80% $ 2,049,725 $ 4,575 34.23% $ 2,186,754 $ 4,881 34.45%

NET OPERATING INCOME Net Operating Income (bef. Reserves)

$ 3,839,475 $ 8,570 65.20% $ 3,937,989 $ 8,790 65.77% $ 4,161,359 $ 9,289 65.55%

Replacement Reserves $ 89,600 $ 200 1.52% $ 89,600 $ 200 1.50% $ 89,600 $ 200 1.41%$ 3,749,875 $ 8,370 63.67% $ 3,848,389 $ 8,590 64.27% $ 4,071,759 $ 9,089 64.14% NET OPERATING INCOME (AFT.

RESERVES)

PROJECTED CASH FLOW



P R O J E C T I O N S Y E A R S 1 - 2


Latitudes 2018 Property Cash Flow Projections

Mar-18 Jun-19 Jun-20 T3 Ann'd Year 1 Year 2

ANNUAL OPERATING CASH FLOW

OPERATING REVENUE Potential Market Rent $ 5,659,564 $ 5,908,970 $ 6,086,239

327,163 $208,321 $muimerP noitavoneR (Loss to Lease) / Gain to Lease ($ 17,111) ($ 60,328) ($ 64,480)

Gross Potential Revenue $ 5,642,453 $ 5,972,444 $ 6,383,482

)478,071 $()947,851 $()786,503 $(ycnacaV )425,151 $()988,241 $(-emitnwoD noitavoneR )801,51 $()631,41 $()277,33 $(snoissecnoC

Non-Revenue Units ($ 47,048) ($ 16,569) ($ 17,709) Collection Loss / Bad Debt ($ 698) ($ 5,640) ($ 6,028)

Base Rental Revenue $ 5,255,247 $ 5,634,461 $ 6,022,238

Expense Reimbursements $ 351,571 $ 372,565 $ 380,016 Other Residential Income $ 380,896 $ 341,087 $ 351,320

Other Income $ 732,467 $ 713,652 $ 731,336

EFFECTIVE GROSS REVENUE $ 5,987,715 $ 6,348,113 $ 6,753,575

OPERATING EXPENSES Repair & Maintenance ($ 95,867) ($ 97,784) ($ 99,740) Contract Services ($ 73,931) ($ 75,410) ($ 76,918) Turnover / Make-Ready ($ 118,185) ($ 120,549) ($ 122,960)

)839,974 $()725,074 $()103,164 $(lennosreP Marketing / Advertising ($ 42,459) ($ 43,309) ($ 44,175)

)681,29 $()973,09 $()606,88 $(evitartsinimdA )516,474 $()803,564 $()581,654 $(seitilitU )850,87 $()725,67 $()720,57 $(ecnarusnI

Real Estate Taxes ($ 461,457) ($ 556,518) ($ 567,648) Property Management Fee ($ 176,707) ($ 190,443) ($ 202,607)

TOTAL OPERATING EXPENSES ($ 2,049,725) ($ 2,186,754) ($ 2,238,844)


$ 3,937,989 $ 4,161,359 $ 4,514,731

Replacement Reserves ($ 89,600) ($ 89,600) ($ 91,392) NET OPERATING INCOME (AFT. RESERVES)

$ 3,848,389 $ 4,071,759 $ 4,423,339



P R O J E C T I O N S Y E A R S 3 - 8


Latitudes 2018 Virginia Beach, VA

Jun-21 Jun-22 Jun-23 Jun-24 Jun-25 Jun-26Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

ANNUAL OPERATING CASH FLOW

OPERATING REVENUE Potential Market Rent $ 6,268,826 $ 6,456,891 $ 6,650,598 $ 6,850,116 $ 7,055,619 $ 7,267,288 Renovation Premium $ 611,868 $ 742,836 $ 765,121 $ 788,075 $ 811,717 $ 836,068 (Loss to Lease) / Gain to Lease ($ 68,807) ($ 71,997) ($ 74,157) ($ 76,382) ($ 78,673) ($ 81,034)

Gross Potential Revenue $ 6,811,887 $ 7,127,730 $ 7,341,561 $ 7,561,808 $ 7,788,662 $ 8,022,322

)861,504 $()763,393 $()019,183 $()687,073 $()689,953 $()226,381 $(ycnacaV Renovation Downtime ($ 160,413) - - - - -

)789,81 $()434,81 $()798,71 $()673,71 $()078,61 $()221,61 $(snoissecnoC Non-Revenue Units ($ 18,897) ($ 19,774) ($ 20,367) ($ 20,978) ($ 21,607) ($ 22,255) Collection Loss / Bad Debt ($ 6,433) ($ 6,731) ($ 6,933) ($ 7,141) ($ 7,355) ($ 7,576)

Base Rental Revenue $ 6,426,400 $ 6,724,368 $ 6,926,100 $ 7,133,883 $ 7,347,899 $ 7,568,336

Expense Reimbursements $ 387,617 $ 395,369 $ 403,276 $ 411,342 $ 419,569 $ 427,960 Other Residential Income $ 361,860 $ 372,715 $ 383,897 $ 395,414 $ 407,276 $ 419,494

Other Income $ 749,476 $ 768,084 $ 787,173 $ 806,756 $ 826,845 $ 847,454

EFFECTIVE GROSS REVENUE $ 7,175,876 $ 7,492,453 $ 7,713,273 $ 7,940,638 $ 8,174,744 $ 8,415,790

OPERATING EXPENSES Repair & Maintenance ($ 101,735) ($ 103,769) ($ 105,845) ($ 107,962) ($ 110,121) ($ 112,323) Contract Services ($ 78,457) ($ 80,026) ($ 81,626) ($ 83,259) ($ 84,924) ($ 86,622) Turnover / Make-Ready ($ 125,419) ($ 127,927) ($ 130,486) ($ 133,095) ($ 135,757) ($ 138,473)

)884,045 $()098,925 $()005,915 $()413,905 $()723,994 $()635,984 $(lennosreP Marketing / Advertising ($ 45,058) ($ 45,959) ($ 46,879) ($ 47,816) ($ 48,773) ($ 49,748)

)618,301 $()187,101 $()587,99 $()928,79 $()019,59 $()030,49 $(evitartsinimdA )394,435 $()310,425 $()837,315 $()566,305 $()987,394 $()701,484 $(seitilitU )609,78 $()281,68 $()294,48 $()538,28 $()112,18 $()916,97 $(ecnarusnI

Real Estate Taxes ($ 579,001) ($ 590,581) ($ 602,393) ($ 614,441) ($ 626,729) ($ 639,264) Property Management Fee ($ 215,276) ($ 224,774) ($ 231,398) ($ 238,219) ($ 245,242) ($ 252,474)

TOTAL OPERATING EXPENSES ($ 2,292,238) ($ 2,343,274) ($ 2,392,269) ($ 2,442,307) ($ 2,493,412) ($ 2,545,607)


$ 4,883,638 $ 5,149,179 $ 5,321,004 $ 5,498,331 $ 5,681,332 $ 5,870,184

Replacement Reserves ($ 93,220) ($ 95,084) ($ 96,986) ($ 98,926) ($ 100,904) ($ 102,922) NET OPERATING INCOME (AFT. RESERVES)

$ 4,790,418 $ 5,054,094 $ 5,224,018 $ 5,399,405 $ 5,580,428 $ 5,767,261


aranewmark.com

D R E W W H I T EEXECUTIVE MANAGING

DIRECTOR202.664.5890

[email protected]

M I K E M A R S H A L LEXECUTIVE MANAGING


[email protected]

WINK EWINGSENIOR MANAGING


[email protected]

AL C ISSELEXECUTIVE MANAGING


[email protected]

N A O K O B R A N K E RT R A N S A C T I O N S E R V I C E S C O O R D I N AT O R

[email protected]

K A R E N R A N D A L LO F F I C E A D M I N I S T R AT O R

[email protected]

A D A M R A N D A L LM A N A G I N G D I R E C T O R , P R O D U C T I O N

[email protected]

WASHINGTON, D.C .1899 Pennsylvania NW, Suite 300

Washington, D.C. 20006

T Y S O N S C O R N E R1410 Spring Hill Rd, Suite 600

McLean, VA 22102

R I C H M O N D500 Libbie Ave, Suite 2B

Richmond, VA 23226

N O R F O L K999 Waterside Dr, Suite 2525

Norfolk, VA 23510

O F F I C E L O C AT I O N S

M U L T I F A M I L Y I N V E S T M E N T S A L E S

B E R K E L E Y P O I N T C A P I TA L , L L C

R YA N O G D E NSENIOR MANAGING DIRECTOR

[email protected]

E D G A R N I C AF I N A N C I A L A N A LY S T

[email protected]

K AT I E G I L L E T TM A R K E T I N G M A N A G E R

[email protected]

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