Laurel Canyon Apartments Fresno, California

Property Summary Built 1984 8 buildings (2 story garden) 100 Apartment units Lot size: 166,835 Sf Building size: 75,000 Sf Wood frame Mix of stucco and wood panel exterior 210 covered parking spaces Controlled access Swimming pool Laundry facility Every unit has a balcony Density: 26.11 units per acre Individually metered utilities Individual unit A/C The Laurel Canyon Apartments, a Class C+ asset, located in the Central San Joaquin Valley area of Fresno California @ 1337 N o r t h 9th Street, Fresno, CA 93703 The Laurel Canyon Apartments consist of 36 one bedroom one bath, 700 SF units, and 64 two bedroom one bath units, 800 SF. Laurel Canyon offers central heating and air conditioning as well as ceiling fans and walk-in closets. Apartments come with large modern kitchens that include in addition to the standard appliances, dishwashers and garbage disposals. There is also a pool, playground and business center onsite. The property located across the street from a middle school giving the property an open feeling as it faces grass ballfields.

Reasons to buy Project IRR to capital partner of 29% to 33% Excellent loan commitment @ 3.341% Under market rents Proven rent increases with renovation Poorly marketed property Low purchase price Very favorable debt Strong market trends compared to the national average Rents are under market by approximately $100 per unit. The current owner has been able to prove an increased rent with renovations (upgraded kitchen, bathroom and addition of ceiling fans in every room and nicer lights). There are three levels of renovation on the property but this is the most saleable according to the current on-site manager. The other needed renovation is exterior painting to include the balconies of the units. The on-site manager says that most prospective tenants mention that the balconies look work out. The property has no web presence except a weebly.com page that does not even come up in a google search. Further, the property has never had a “rent special.” Purchase price is $6,500,000. Property is being sold as part of an estate ‘clean-up.’ Debt terms are $5,200,000 loan with 1 year I/o then 30 year amortization with a rate of 2.4% over LIBOR currently 3.341% A BIT ABOUT THE MARKET: One of the larger apartment markets in the Central Valley and home to California’s fifth-largest city (just over half a million people), Fresno continues to trend in a favorable direction. Vacancies tightened near the historical low in 2016 as demand outpaced a limited number of deliveries, a common theme in Fresno this cycle. Both population and job growth have outperformed the national average in recent years. However, employment here is heavily concentrated in government, education, and health services, sectors that typically don't offer robust income growth meaning that we are not going to see drastic rent increases across the market but also meaning that employment is stable and generally long term. New construction, while more active here than in neighboring secondary metros, has been measured, helping to avoid a supply-driven rise in vacancies. The current 12 month vacancy rate for this market is 4% with 12 month rent growth at 5.5%.

Centrally Located near downtown Fresno across from a middle school

Value Add Rents are under market by approximately $100 per unit. The current owner has been able to prove an increased rent with renovations (upgraded kitchen, bathroom and addition of ceiling fans in every room and nicer lights). There are three levels of renovation on the property but this is the most saleable according to the current on-site manager. The other needed renovation is exterior painting to include the balconies of the units. The on-site manager says that most prospective tenants mention that the balconies look work out. The property has no web presence except a weebly.com page that does not even come up in a google search. Further, the property has never had a “rent special.” Purchase price is $6,550,000. Property is being sold as part of an estate ‘clean-up.’ Debt terms are $5,200,000 loan with 1 year I/o then 30 year amortization with a rate of 2.4% over LIBOR currently 3.341% A BIT ABOUT THE MARKET: One of the larger apartment markets in the Central Valley and home to California’s fifth-largest city (just over half a million people), Fresno continues to trend in a favorable direction. Vacancies tightened near the historical low in 2016 as demand outpaced a limited number of deliveries, a common theme in Fresno this cycle. Both population and job growth have outperformed the national average in recent years. However, employment here is heavily concentrated in government, education, and health services, sectors that typically don't offer robust income growth meaning that we are not going to see drastic rent increases across the market but also meaning that employment is stable and generally long term. New construction, while more active here than in neighboring secondary metros, has been measured, helping to avoid a supply-driven rise in vacancies. The current 12 month vacancy rate for this market is 4% with 12 month rent growth at 5.5%. Value Add

Property Layout

Comparable Rents and Market Rent Growth

Sources and uses – Partnership Model

Investor Returns – Partnership Model

Sources and uses – SALE MODEL

Investor Returns – Sale Model