Southpark Apartments

2411-2417 E. Park Row, Arlington, Tx 76010

Prepared for

Prospective Buyer
Presented by

JP Lumbley & Associates, LLC

Joe Lumbley 214 941 3417 joe@lumbley.com Dallas, Tx 75208 819 N. Bishop

Joe Lumbley JP Lumbley & Associates, LLC 214 941 3417

Southpark Apartments
2411-2417 E. Park Row, Arlington, Tx 76010

Income, Expenses & Cash Flow

Potential Rental Income Other Income Total Vacancy and Credits Operating Expenses Annual Reserves: Net Operating Income (NOI) MIP Payments Annual Reserves: Debt Service: Cash Flow Before Taxes
Income Taxes: Benefit (Expense) @ 33%

Property Overview
Purchase/Asking Price Improvements Other Closing Costs Finance Points Total Acquisition Cost
$ 2,300,000 $ 2,300,000

430,200 11,830 (21,510) $ (244,961) $ $ 175,559 $ $ $ (114,306) $ 61,253 (9,539) $ 51,714

Property Type No. of Units Price Per Unit Total Sq Ft Price Per Sq Ft Income per Unit Expenses per Unit

$ $ $ $

Apartments 76 30,263 51,970 44.26 5,816 (3,223)

Mortgage (s)

$ 1,725,000

Down Payment / Investment

$ 575,000

Cash Flow After Taxes

Assumptions

Loan Information
% of Asking 25.00% 75.00% Term 30 30 30 % of Cost 25.00% 75.00% Payment $9,526 $0 $0

Rental Growth Rate: Expense Growth Rate: Appreciation Rate Marginal Tax Rate: Capital Gain Tax Rate:

5.00% 5.00% 5.00% 33.00% 15.00%

Down Payment: $ 575,000 Initial Loan Balance: $ 1,725,000 Loan Amount Interest Rate $ 1,725,000 5.25% $ 5.00% $ 4.00%

Financial Measurements

Year 1

Year 3

Year 7

Notes / Discussion

Debt Coverage Ratio (DCR) Loan-to-Value Ratio (LVR) Capitalization Rate Based on Cost Capitalization Rate Based on Resale Price Gross Rent Multiplier Net Present Value (NPV) - B/ Taxes Net Present Value (NPV) - A/Taxes Cash on Cash Return - Before Taxes Cash on Cash Return - After Taxes Internal Rate of Return - Before Taxes Internal Rate of Return - After Taxes Modified Internal Rate of Return - Before Taxes Modified Internal Rate of Return - After Taxes
4.00% 3.00%

1.54 70.4% 7.63% 7.27% 5.35 31,420 19,740 10.65% 8.99%

1.73 61.9% 8.58% 7.41% 5.61 383,972 305,522 14.43% 11.97% 25.01% 19.94% 23.26% 18.72%

2.17 47.1% 10.78% 7.66% 5.61 1,142,554 944,181 23.24% 17.51% 25.56% 21.45% 21.45% 18.34%

Disclaimer: All information presented is believed to be accurate.

The information, calculations and data presented in this report are believed to be accurate but are not guaranteed. The information contained in this report shall not be considered as a substitution for legal, accounting or other professional advice. Please seek proper legal and tax advice as appropriate before making investments.

South Park Apartments 76 Units

Regency Apartments 70 Units

Southpark Apartments 2411-2417 E. Park Row, Arlington, Tx 76010 Joe Lumbley 214 941 3417

Rental Activity Analysis

Potential Rental Income Other Income Less: Vacancy & Credit Losses Less: Operating Expenses Net Operating Income (NOI) Less: Annual Debt Service CASH FLOW Before Taxes Income Taxes: Benefit (Expense) @ 33% CASH FLOW After Taxes $ $ $

Year 1
430,200 $ 11,830 (21,510) (244,961) 175,559 (114,306) 61,253 (9,539) 51,714 $ $ $

Year 2
451,710 $ 12,422 (22,586) (255,392) 186,154 (114,306) 71,848 (10,051) 61,796 $ $ $

Year 3
474,296 $ 13,043 (23,715) (266,327) 197,296 (114,306) 82,990 (14,181) 68,809 $ $ $

Year 4
498,010 $ 13,695 (24,901) (277,791) 209,014 (114,306) 94,708 (18,525) 76,182 $ $ $

Year 5
522,911 14,379 (26,146) (289,809) 221,336 (114,306) 107,030 (23,095) 83,935

Property Resale Analysis

Projected Sales Price Less: Selling Expenses Adjusted Projected Sales Price Less: Mortgage(s) Balance Payoff SALE PROCEEDS Before Taxes Income Taxes: ReSale: Benefit (Expense) @ 15% SALE PROCEEDS After Taxes $ $ $ 2,415,000 $ 2,535,750 $ 2,662,538 $ 2,795,664 $ 2,935,448 (144,900) (152,145) (159,752) (167,740) (176,127) $ 2,270,100 (1,700,677) 569,423 (8,555) 560,868 $ $ $ 2,383,605 (1,675,045) 708,560 (45,298) 663,262 $ $ $ 2,502,785 (1,648,035) 854,750 (79,903) 774,848 $ $ 2,627,925 (1,619,572) $ 1,008,352 (115,401) 892,951 $ 2,759,321 (1,589,579) $ 1,169,742 (151,838) $ 1,017,904

Cash Position
Cash Generated in Current Year Cash Generated in Previous Years Cash Generated from Property Sale Original Initial Investment Total Potential CASH Generated $ 51,714 $ n/a 560,868 (575,000) 37,583 $ 61,796 $ 51,714 663,262 (575,000) 201,772 $ 68,809 $ 113,511 774,848 (575,000) 382,167 $ 76,182 $ 83,935 182,319 258,502 892,951 1,017,904 (575,000) (575,000) 576,453 $ 785,341

Financial Measurements
Debt Coverage Ratio (DCR) Loan-to-Value Ratio (LVR) Capitalization Rate Based on Cost Capitalization Rate Based on Resale Price Gross Rent Monthly Multiplier (GRM) Gross Rent Yearly Multiplier (GRM) Value of Property Using this GRM Net Present Value (NPV) - After Taxes Cash-on-Cash Return with Equity Cash-on-Cash Return - Before Taxes Cash-on-Cash Return - After Taxes Internal Rate-of-Return (IRR) Internal Rate-of-Return (IRR)
- Before Taxes - After Taxes

1.54 70.4% 7.63% 7.27% 64.16 5.35 2,300,000 19,740 6.54% 10.65% 8.99% 9.68% 6.54% 9.68% 6.54%

1.63 66.1% 8.09% 7.34% 67.36 5.61 2,415,000 158,645 29.27% 12.50% 10.75% 21.95% 16.88% 21.12% 16.34%

1.73 61.9% 8.58% 7.41% 67.36 5.61 2,535,750 305,522 27.20% 14.43% 11.97% 25.01% 19.94% 23.26% 18.72%

1.83 57.9% 9.09% 7.48% 67.36 5.61 2,662,538 457,490 25.07% 16.47% 13.25% 25.87% 21.05% 23.36% 19.23%

1.94 54.2% 9.62% 7.54% 67.36 5.61 2,795,664 614,570 23.39% 18.61% 14.60% 26.00% 21.44% 22.86% 19.12%

5.35 3.00%

Modified Internal Rate-of-Return (MIRR) - Before Taxes Modified Internal Rate-of-Return (MIRR) - After Taxes

1/10/2013 12:51 PM

1993 - 2012 Cash Flow Analyzer

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Southpark Apartments
2411-2417 E. Park Row, Arlington, Tx 76010 Joe Lumbley 214 941 3417

Unit Description

Number of Units

Per unit Sq Ft 320 605 825 850 0

Total Sq Ft 2,560 19,360 18,150 11,900 0

Percent of Total 4.93% 37.25% 34.92% 22.90% 0.00%

Annual Rev/ Sq Ft 14.060 8.430 7.640 7.760 0.000

Rent Per Unit $ $ $ $ $ 375 425 525 550

Monthly Rent

Annual Rent

Efficiency 1 1-1 2-1 2-1.5 0

8 32 22 14 0

$ $ $ $ $

3,000 13,600 11,550 7,700

$ $ $ $ $

36,000 163,200 138,600 92,400

Totals

76

2,600

51,970

100.0%

8.278

1,875

35,850

430,200

Unit Mix

11% 18%
Efficiency 1

1-1

2-1

42% 29%

2-1.5

Southpark Apartments
2411-2417 E. Park Row, Arlington, Tx 76010 Joe Lumbley 214 941 3417

Description

Monthly Amount

Per Unit

Per Unit Sq. Ft. 0.38

Total Sq. Ft. 0.02

Laundry/Soda

986

13.0

Totals

986

13.0

0.38

0.02

Southpark Apartments
2411-2417 E. Park Row, Arlington, Tx 76010 Joe Lumbley 214 941 3417

Expense Description

Annual Amount

Annual Increase

Per Unit

Per Sq Ft

% of Expenses

% of Revenue

Accounting Advertising Association Fees Insurance Legal Maintenance Management Fee Office and General Payroll Property Taxes Trash Removal Electricity Telephone Water

400 1,296 300 16,331 500 45,413 26,522 10,493 62,186 37,337 9,436 6,004 1,424 27,319

5.0% 5.0% 5.0% 5.0% 5.0% 1.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%

5.26 17.05 3.95 214.88 6.58 597.54 348.97 138.07 818.24 491.28 124.16 79.00 18.74 359.46

0.01 0.02 0.01 0.31 0.01 0.87 0.51 0.20 1.20 0.72 0.18 0.12 0.03 0.53

0.2% 0.5% 0.1% 6.7% 0.2% 18.5% 10.8% 4.3% 25.4% 15.2% 3.9% 2.5% 0.6% 11.2%

0.1% 0.3% 0.1% 3.9% 0.1% 10.8% 6.3% 2.5% 14.8% 8.9% 2.2% 1.4% 0.3% 6.5%

Total Annual Operating Expenses

244,961

3,223

51,970

100.0%

58.3%

Southpark Apartments 2411-2417 E. Park Row, Arlington, Tx 76010

Annual Property Operating Data

Joe Lumbley 214 941 3417

Year 1
Potential Rental Income
Less: Vacancy & Credit Losses

Sq Ft
8.28 -0.41 7.86 8.09

Per Unit
471.71 -23.59 448.13 461.10

Year 2
$451,710 (22,586) $429,125 $441,546

Sq Ft
8.69 -0.43 8.26 8.50

Per Unit
495.30 -24.76 470.53 484.15

Year 3
$474,296 (23,715) $450,581 $463,623

Sq Ft
9.13 -0.46 8.67 8.92

Per Unit
520.06 -26.00 494.06 508.36

Year 4
$498,010 (24,901) $473,110 $486,804

Sq Ft
9.58 -0.48 9.10 9.37

Per Unit
546.06 -27.30 518.76 533.78

Year 5
$522,911 (26,146) $496,765 $511,145

Sq Ft
10.06 -0.50 9.56 9.84

Per Unit
573.37 -28.67 544.70 560.47

430,200 (21,510) 408,690 420,520

Effective Rental Income Gross Operating Income Operating Expenses

Accounting Advertising Association Fees Cleaning Insurance Landscaping Legal Maintenance Management Fee Office and General Payroll Pest Control Professional Fees Property Taxes Total Utilities

$ $

400 1,296 300 16,331 500 45,413 26,522 10,493 62,186 37,337 $ 244,961

0.01 0.02 0.01 0.00 0.31 0.00 0.01 0.87 0.51 0.20 1.20 0.00 0.00 0.72 0.00 4.71

0.44 1.42 0.33 0.00 17.91 0.00 0.55 49.79 29.08 11.51 68.19 0.00 0.00 40.94 0.00 268.60

420 1,361 315 17,148 525 45,867 27,848 11,018 65,295 39,204 $255,392

0.01 0.03 0.01 0.00 0.33 0.00 0.01 0.88 0.54 0.21 1.26 0.00 0.00 0.75 0.00 4.91

0.46 1.49 0.35 0.00 18.80 0.00 0.58 50.29 30.53 12.08 71.60 0.00 0.00 42.99 0.00 280.04

441 1,429 331 18,005 551 46,326 29,240 11,569 68,560 41,164 $266,327

0.01 0.03 0.01 0.00 0.35 0.00 0.01 0.89 0.56 0.22 1.32 0.00 0.00 0.79 0.00 5.12

0.48 1.57 0.36 0.00 19.74 0.00 0.60 50.80 32.06 12.68 75.18 0.00 0.00 45.14 0.00 292.03

463 1,500 347 18,905 579 46,789 30,702 12,147 71,988 43,222 $277,791

0.01 0.03 0.01 0.00 0.36 0.00 0.01 0.90 0.59 0.23 1.39 0.00 0.00 0.83 0.00 5.35

0.51 1.65 0.38 0.00 20.73 0.00 0.63 51.30 33.66 13.32 78.93 0.00 0.00 47.39 0.00 304.59

486 1,575 365 19,850 608 47,257 32,237 12,754 75,587 45,383 $289,809

0.01 0.03 0.01 0.00 0.38 0.00 0.01 0.91 0.62 0.25 1.45 0.00 0.00 0.87 0.00 5.58

0.53 1.73 0.40 0.00 21.77 0.00 0.67 51.82 35.35 13.98 82.88 0.00 0.00 49.76 0.00 317.77

Total Operating Expenses

Net Operating Income (NOI)

175,559

3.38

192.50

$186,154

3.58

204.12

$197,296

3.80

216.33

$209,014

4.02

229.18

$221,336

4.26

242.69

Less: Annual Debt Service

(114,306) $ 61,253

-2.20 1.18

-125.34 67.16

(114,306) $71,848

-2.20 1.38

-125.34 78.78

(114,306) $82,990

-2.20 1.60

-125.34 91.00

(114,306) $94,708

-2.20 1.82

-125.34 103.85

(114,306) $107,030

-2.20 2.06

-125.34 117.36

Cash Flow Before Taxes

1993 - 2012 Cash Flow Analyzer

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Southpark Apartments 2411-2417 E. Park Row, Arlington, Tx 76010 Joe Lumbley 214 941 3417

Cash Flow After Taxes Cash Flow Before Taxes

$120,000

$100,000

$80,000

$60,000

$40,000

$20,000

$ 1 2 3 4 5

Time Period Int Investment Year 1 Year 2 Year 3 Year 4 Year 5

Net Operating Income 175,559 186,154 197,296 209,014 221,336

Reserves & MIP Payments

Debt Service $ (114,306) (114,306) (114,306) (114,306) (114,306)

Cash Flow Before Tax (575,000) 61,253 71,848 82,990 94,708 107,030

Incomes Taxes $ (9,539) (10,051) (14,181) (18,525) (23,095)

Cash Flow After Tax (575,000) 51,714 61,796 68,809 76,182 83,935

1993 - 2011 Cash Flow Analyzer

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Southpark Apartments 2411-2417 E. Park Row, Arlington, Tx 76010 Joe Lumbley 214 941 3417

After Taxes Before Taxes

20.00% 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 1 2 3 4 5

Time Period Year 1 Year 2 Year 3 Year 4 Year 5

Initial Investment Adj for Refinance $ 575,000 $ 575,000 575,000 575,000 575,000

Cash Flow Before Taxes 61,253 71,848 82,990 94,708 107,030

Cash on Cash Before Taxes 10.65% $ 12.50% 14.43% 16.47% 18.61%

Income Taxes (9,539) (10,051) (14,181) (18,525) (23,095) $

Cash Flow After Taxes 51,714 61,796 68,809 76,182 83,935

Cash on Cash After Taxes 8.99% 10.75% 11.97% 13.25% 14.60%

1993 - 2011 Cash Flow Analyzer

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Southpark Apartments 2411-2417 E. Park Row, Arlington, Tx 76010 Joe Lumbley 214 941 3417

10.00%

9.00%

8.00%

7.00%

6.00%

5.00%

4.00%

3.00%

2.00%

1.00%

0.00% 1 2 3 4 5

Time Period Year 1 Year 2 Year 3 Year 4 Year 5

Net Operating Income (NOI) $ 175,559 186,154 197,296 209,014 221,336

Cap Rate on Cost $ 2,300,000 7.63% 8.09% 8.58% 9.09% 9.62% $

Resale Value 2,415,000 2,535,750 2,662,538 2,795,664 2,935,448

1993 - 2011 Cash Flow Analyzer

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Southpark Apartments 2411-2417 E. Park Row, Arlington, Tx 76010 Joe Lumbley 214 941 3417

2.00

1.80

1.60

1.40

1.20

1.00

0.80

0.60

0.40

0.20

1 2 3 4 5

Time Period Year 1 Year 2 Year 3 Year 4 Year 5

Net Operating Income $ 175,559 $ 186,154 197,296 209,014 221,336

Mortgage Payments (114,306) (114,306) (114,306) (114,306) (114,306)

Debt Coverage Before Taxes 1.54 1.63 1.73 1.83 1.94

1993 - 2011 Cash Flow Analyzer

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Southpark Apartments 2411-2417 E. Park Row, Arlington, Tx 76010 Joe Lumbley 214 941 3417

IRR After Tax IRR Before Tax

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00% 1 2 3 4 5

Internal Rate of Return (IRR) Time Period Before Taxes

Year 1 Year 2 Year 3 Year 4 Year 5 9.68% 21.95% 25.01% 25.87% 26.00%

After Taxes
6.54% 16.88% 19.94% 21.05% 21.44%

1993 - 2011 Cash Flow Analyzer

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Southpark Apartments 2411-2417 E. Park Row, Arlington, Tx 76010 Joe Lumbley 214 941 3417

BreakEven Occupancy BreakEven Occupancy with Cash on Cash Requirment

90.00%

85.00%

80.00%

75.00%

70.00%

65.00% 1 2 3 4 5

Cash on Cash Requirement 6.00%

Time Period

Potential Rental Income

Operating, Debt,
Reserve Expenses

Occupancy Rate (Existing)

BreakEven

Max Vacancy

BreakEven

Max Vacancy

Occupancy Rate BreakEven Rate Occupancy Rate BreakEven Rate w/ Cash on Cash w/ Cash on Cash

Year 1 Year 2 Year 3 Year 4 Year 5

442,030 464,132 487,338 511,705 537,290

(359,267) (369,698) (380,633) (392,097) (404,115)

95.00% 95.00% 95.00% 95.00% 95.00%

81.28% 79.65% 78.10% 76.63% 75.21%

18.72% 20.35% 21.90% 23.37% 24.79%

89.08% 87.09% 85.18% 83.37% 81.63%

10.92% 12.91% 14.82% 16.63% 18.37%

1993 - 2011 Cash Flow Analyzer

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About Us
Joe Lumbley
JP Lumbley & Associates, LLC 819 N. Bishop 0 Dallas, Tx 75208 joe@lumbley.com 214 941 3417

Joe has been selling income properties in the DFW area for over 33 years. Over the past few years, he and his firm have been responsible for the sale of almost 100 multifamily properties in the Dallas/Fort Worth area. Many of the firm's sales have been in close-in, redeveloping areas such as North Oak Cliff. We have lots of experience in C and D level properties as well as experience in rehabbing and upgrading these properties. The firm has also managed multifamily properties all over the DFW area. We seek similar experience in our sales agents. Our last two new hires have both owned multifamily properties in the 50-100 unit range. We feel that there's no substitute for on-the-ground experience in the industry. Joe's overall approach to multifamily investing can best be described as "data driven". He is a database guru, having written the best-selling Informix DBA Survival Guide. It's the "Bible" of IBM database administration and has been used as a college textbook for administration of large IBM database systems. His book has been referenced in many IT doctoral dissertations as well as being the best-selling book ever written on the subject. With that kind of background, it's no surprise that the JP Lumbley & Associates, LLC corporate database contains features no other real estate firm in the area can match. We have all multifamily properties in North Texas on our servers, and we can search and analyze investment opportunities using a myriad of parameters. We also have a corporate buyer database that enables us to remain in contact with the top buying principals who are active in the area. Joe's often said "We're not in the real estate business. We're in the information business. We sell information and we sell streams of money." With that kind of philosophy you can expect more than the typical sales pitch from a JPLA agent. You can expect actionable, usable information about all of our listings. WE DON'T USE PROFORMA NUMBERS unless specifically noted. All of our numbers come right off of the seller's financial statements. Life's too short to deal with bogus numbers.

10-10-11 Approved by the Texas Real Estate Commission for Voluntary Use Texas law requires all real estate licensees to give the following information about brokerage services to prospective buyers, tenants, sellers and landlords.

Information About Brokerage Services

efore working with a real estate broker, you should know that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owners agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker. A broker who acts as a buyers agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly. IF THE BROKER REPRESENTS THE OWNER: The broker becomes the owners agent by entering into an agreement with the owner, usually through a written - listing agreement, or by agreeing to act as a subagent by accepting an offer of subagency from the listing broker. A subagent may work in a different real estate office. A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first. The buyer should not tell the owners agent anything the buyer would not want the owner to know because an owners agent must disclose to the owner any material information known to the agent. IF THE BROKER REPRESENTS THE BUYER: The broker becomes the buyers agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyers agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell a buyers agent anything the owner would not want the buyer to know because a buyers agent must disclose to the buyer any material information known to the agent. IF THE BROKER ACTS AS AN INTERMEDIARY: A broker may act as an intermediary between the parties if the broker complies with The Texas Real Estate License Act. The broker must obtain the written consent of each party to the transaction to act as an

intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the brokers obligations as an intermediary. The broker is required to treat each party honestly and fairly and to comply with The Texas Real Estate License Act. A broker who acts as an intermediary in a transaction: (1) shall treat all parties honestly; (2) may not disclose that the owner will accept a price less that the asking price unless authorized in writing to do so by the owner; (3) may not disclose that the buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and (4) may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by The Texas Real Estate License Act or a court order or if the information materially relates to the condition of the property. With the parties consent, a broker acting as an intermediary between the parties may appoint a person who is licensed under The Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under that Act and associated with the broker to communicate with and carry out instructions of the other party. If you choose to have a broker represent you, you should enter into a written agreement with the broker that clearly establishes the brokers obligations and your obligations. The agreement should state how and by whom the broker will be paid. You have the right to choose the type of representation, if any, you wish to receive. Your payment of a fee to a broker does not necessarily establish that the broker represents you. If you have any questions regarding the duties and responsibilities of the broker, you should resolve those questions before proceeding.

Real estate licensee asks that you acknowledge receipt of this information about brokerage services for the licensees records.

Buyer, Seller, Landlord or Tenant

Date

Texas Real Estate Brokers and Salespersons are licensed and regulated by the Texas Real Estate Commission (TREC). If you have a question or complaint regarding a real estate licensee, you should contact TREC at P.O. Box 12188, Austin, Texas 78711-2188 , 512-936-3000 (http://www.trec.texas.gov)

TREC No. OP-K