FARLEY DUPLEXESC A P I T A L M A R K E T S | I N V E S T M E N T P R O P E R T I E S

5502 FARLEY DRIVE, HOUSTON, TEXAS 77032

VALUE-ADD OPPORTUNITY | 100% UNTOUCHED INTERIORS

EXCLUSIVE REPRESENTATION

CBRE, Inc. is exclusively representing the seller in the disposition of the Farley Duplexes.

OFFERING STRUCTURE

Farley Duplexes is being offered on an All-Cash basis, to allow for unrestricted financing options. Seller reserves the right to accept an offer at any time during the marketing period. To schedule a property inspection or receive answers to questions, please contact the representatives listed. Please do not contact on-site property management.

ALL OFFERS SHOULD INCLUDE

• Proposed purchase price • Letter of Intent

• Summary of closed transactions with references • Amount of earnest money - amount non-refundable

• Source of funds for the acquisition • Timing for inspection period and closing

COMMUNICATION

All communications, inquiries and requests should be addressed to the CBRE Team, as representatives of The Seller. Management at the property should not be directly contacted. Seller reserves the right to remove the property from the market. Seller expressly reserves the right, in its sole and absolute discretion, to reject any and all proposals or expressions of interest in the property, to terminate discussions with any party at any time or to extend the deadlines set forth in the time schedule.

PROPERTY TOURS

To schedule a property tour, please contact Michael Williams (see contact information below).

CBRE, Inc.Multifamily Investment Properties Team2800 Post Oak BoulevardSuite 500 Houston, TX 77056

CONTACT USMICHAEL WILLIAMSAssociate(O) +1 713 577 1652(C) +1 713 805 5400michael.williams9@cbre.com

MATT PHILLIPS Senior Vice President (O) +1 713 787 1977 (C) +1 832 338 8850 matt.phillips@cbre.com

FARLEY DUPLEXES - AFFILIATED BUSINESS DISCLOSURE AND CONFIDENTIALITY AGREEMENT

CBRE, Inc. operates within a global family of companies with many subsidiaries and/or related entities (each an “Affiliate”) engaging in a broad range of commercial real estate businesses including, but not limited to, brokerage services, property and facilities management, valuation, investment fund management and development. At times different Affiliates may represent various clients with competing interests in the same transaction. For example, this Memorandum may be received by our Affiliates, including CBRE Investors, Inc. or Trammell Crow Company. Those, or other, Affiliates may express an interest in the property described in this Memorandum (the “Property”) may submit an offer to purchase the Property and may be the successful bidder for the Property. You hereby acknowledge that possibility and agree that neither CBRE, Inc. nor any involved Affiliate will have any obligation to disclose to you the involvement of any Affiliate in the sale or purchase of the Property. In all instances, however, CBRE, Inc. will act in the best interest of the client(s) it represents in the transaction described in this Memorandum and will not act in concert with or otherwise conduct its business in a way that benefits any Affiliate to the detriment of any other offeror or prospective offeror, but rather will conduct its business in a manner consistent with the law and any fiduciary duties owed to the client(s) it represents in the transaction described in this Memorandum.

This is a confidential Memorandum intended solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property.

This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state of affairs of the Property or the owner of the Property (the “Owner”), to be all-inclusive or to contain all or part of the information which prospective investors may require to evaluate a purchase of real property. All financial projections and information are provided for general reference purposes only and are based on assumptions relating to the general economy, market conditions, competition and other factors beyond the control of the Owner and CBRE, Inc. Therefore, all projections, assumptions and other information provided and made herein are subject to material variation. All references to acreages, square footages, and other measurements are approximations. Additional information and an opportunity to inspect the Property will be made available to interested and qualified prospective purchasers. In this Memorandum, certain documents, including leases and other materials, are described in summary form. These summaries do not purport to be complete nor necessarily accurate descriptions of the full agreements referenced. Interested parties are expected to review all such summaries and other documents of whatever nature independently and not rely on the contents of this Memorandum in any manner.

Neither the Owner or CBRE, Inc, nor any of their respective directors, officers, Affiliates or representatives make any representation or warranty, expressed or implied, as to the accuracy or completeness of this Memorandum or any of its

contents, and no legal commitment or obligation shall arise by reason of your receipt of this Memorandum or use of its contents; and you are to rely solely on your investigations and inspections of the Property in evaluating a possible purchase of the real property.

The Owner expressly reserved the right, at its sole discretion, to reject any or all expressions of interest or offers to purchase the Property, and/or to terminate discussions with any entity at any time with or without notice which may arise as a result of review of this Memorandum. The Owner shall have no legal commitment or obligation to any entity reviewing this Memorandum or making an offer to purchase the Property unless and until written agreement(s) for the purchase of the Property have been fully executed, delivered and approved by the Owner and any conditions to the Owner’s obligations therein have been satisfied or waived.

By receipt of this Memorandum, you agree that this Memorandum and its contents are of a confidential nature, that you will hold and treat it in the strictest confidence and that you will not disclose this Memorandum or any of its contents to any other entity without the prior written authorization of the Owner or CBRE, Inc. You also agree that you will not use this Memorandum or any of its contents in any manner detrimental to the interest of the Owner or CBRE, Inc.

If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return this Memorandum to CBRE, Inc.

© 2017 CBRE, Inc. The information contained in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Inc. has not verified it and makes no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. Photos herein are the property of their respective owners and use of these images without the express written consent of the owner is prohibited. CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the property of their respective owners.

TABLE OF CONTENTS

01 EXECUTIVE SUMMARY

02 PROPERTY OVERVIEW

03 FINANCIAL ANALYSIS

04 MARKET OVERVIEW

05 APPENDIX

01EXECUTIVE SUMMARY

1EXECUTIVE SUMMARY

This opportunity provides an investor the ability to drastically raise rents after completing major interior and exterior renovations. Farley Duplexes consists of 13 duplexes concentrated along Farley Drive located in the FM 1960 East/IAH submarket of Houston, just minutes away from major transportation corridors, employment centers, shopping, and recreation throughout the northeast Houston area.

THE OFFERING

INVESTMENT SUMMARY

26TOTAL UNITS

$853AVERAGE UNIT RENT

1983YEAR BUILT

$0.85/SFAVERAGE UNIT RENT

26,000 SFNET RENTABLE AREA

1,000 SFAVERAGE UNIT SIZE

77%CURRENT OCCUPANCY

• Value-Add Opportunity with 100% Untouched Interiors

• Individually Metered for Electric & Water - Landlord Provides No Utilities

• All Units Have Full Size Washer/Dryer Connections & Individual Water Heaters

• Out-of-State Long-Term Owner/Operator

• All Units Consist of Spacious Two Bedroom Floorplans with Backyards

2 FARLEY DUPLEXES

INVESTMENT HIGHLIGHTS

The current owner has maintained the property throughout 10+ years of ownership with a strong and consistent occupancy history. New leases are being signed at $875 - $900 per month.

There is value-add opportunity for a new investor to renovate the unit interiors and address some deferred maintenance items, as well as enhancing the landscaping throughout. Kitchens could be updated to include new countertops, stainless appliances, ceramic tile backsplash, and brushed nickel fixtures and hardware. Wood flooring and updated fixtures could be added throughout, as well as updating the bathroom with new countertops, bathtubs and sinks, framed mirrors and brushed nickel fixtures and hardware. These renovations could lead to an additional rent increase of $150 - $200 per month.

The duplexes are being offered on an “All Cash” basis to allow for unrestricted financing options.

3EXECUTIVE SUMMARY

Unit Description # of Units Square Feet

Total Square Feet

Market Rent

MarketRent/SF

Renovated Market Rent/Unit

Renovated Market Rent/SF

2 Bed / 1 Bath 26 1,000 26,000 $900 $0.90 $1,050 $1.05

Totals/Averages 26 1,000 26,000 $900 $0.90 $1,050 $1.05

UNIT MIX

4 FARLEY DUPLEXES

LOCATION HIGHLIGHTS

ACCESSIBILITY TO MAJOR TRANSPORTATION CORRIDORS:

EMPLOYMENT DEMAND DRIVERS:

ThoroughfareDistance from

Farley Duplexes Comments

Beltway 8/Sam Houston Tollway

0.7 Miles It is the intermediate beltway that extends 83 miles around Houston.

I-69 0.9 Miles Major interstate going from the Mexico border northeast through the state of Texas. Over $900 million is currently dedicated to the development of I-69 Texas projects.

Hardy Toll Road 3.7 Miles Project adding a 3rd lane in each direction from FM 1960 to the Grand Parkway was recently completed. The Hardy Downtown Connector project will extend the toll road from the 610 N. Loop to downtown and will consist of 4 lanes (2 in each direction) for a distance of 3.6 miles. This project will link the toll road directly into downtown and should help alleviate congestion at the 610 N. Loop, I-45, and US 59. The project has a total estimated cost of $400 million and is expected to be complete in Spring 2018.

I-45 North 7.4 Miles Prominent north/south interstate connecting Houston to Dallas when traveling north and through Downtown Houston to Galveston when traveling south.

• Houston George Bush Intercontinental Airport (IAH) (5.3 miles) – With over 35,000 employees, it is the 28th busiest airport in the world with regards to passenger traffic and 12th busiest for total passengers in North America. There were over 55.2 million passengers traveling through Houston in 2015. In recent news, United, in partnership with the Houston Airport System, just completed building a new Terminal C North, which is scheduled to open next month. The new terminal is 265,000 square feet and cost $277 million. It will be equipped with iPads for public use, which will also allow passengers to order food and drinks, as well as purchase gifts. There will eventually be 8,000 iPads spread throughout all of the terminals. In addition, United Airlines recently broke ground on their new Technical Operations Center, which is a $162 million project expected to create 200 additional jobs once it’s completed in 2018.

• Generation Park (8.6 miles) – Generation Park, a 4,000-acre master planned development, 7.8 miles from the property, includes the new 173-acre corporate campus headquarters for TechnipFMC and its 2,000 employees, as well as Redemption Square, its 52-acre mixed-use district. Next to TechnipFMC’s campus, San Jacinto College purchased 57 acres for a state-of-the-art campus. In addition, Lone Star College is building a 40,000 square foot Process Technology Center focused on high tech training serving the petrochemical, plastics, food and beverage, and pharmaceuticals industries.

EXECUTIVE SUMMARY

5

PINTO BUSINESS PARK

Property Name Address Size Notable Tenants/Comments

Amazon Fulfillment Center

10550 Ella Blvd. 855,000 SF Will employ between 3,000-3,500 full-time, part-time and seasonal employees at peak times

Sysco 10710 Greens Crossing Blvd. 585,000 SF Currently expanding their facilities. Sysco is the Houston area’s 2nd largest public company with sales of more than $55.9 billion for fiscal year that ended July 2017.

Emser Tile Ella Blvd. 600,000 SF Opened in summer, 2018.

The Coca-Cola Co. 1 Million SF110 acres

Broke ground in September, 2018 on their new $250 million bottling and distribution center to open in early 2020

Greens Crossing I 10565 Greens Crossing Blvd. 600,000 SF HD Supply (497,867 SF), Sysco (63,117 SF) & GEA Heat Exchangers (38,506 SF)

Fallbrook I 600 Fallbrook Dr. 500,400 SF Available for Lease

Fallbrook II 252 Fallbrook Dr. 193,000 SF Builder’s Choice (164,184 SF) & Lone Star Holdings (28,816 SF)

Victory Packaging 302 West Rd. 191,365 SF Has more than 65 warehouses and distribution facilities in the U.S., Canada and Mexico

McLane Foodservice Distribution Center

330 Greens Landing Dr. 147,000 SF One of the largest supply chain services leaders, providing grocery and foodservice for convenience stores, mass merchants, drug stores and chain restaurants throughout the U.S.

The Reynolds Company 10502 Greens Crossing Blvd. 130,000 SF Industrial and Commercial electrical supplier throughout Texas and Louisiana

Plaza Verde I 545 Plaza Verde Dr. 120,159 SF Available for Lease

Plaza Verde II 433 Plaza Verde Dr. 120,159 SF ATC Industrial, Cambria, Red Bull North America, Argo International

Freedom CNG 303 Fallbrook Dr. Create large custom machinery for the largest manufacturers in the world

• Pinto Business Park (8.3 miles) has seen an explosion of growth over the past year with the opening of Amazon’s 855,000 fulfillment center, the 600,000 square foot build-to-suit for Emser Tile, and Coca Cola’s 110 acre site that broke ground in September, 2018 on their new $250 million, 1 million square foot bottling and distribution center that will open in early 2020. Also in July of last year, the park announced that roughly 31.25 additional acres have been platted for development. The 971-acre business park located at the southwest corner of Beltway 8/Sam Houston Tollway and I-45 North will consist of approximately 9 million square feet of light manufacturing, warehouse and distribution space when fully built-out. Tenants include the following:

6 FARLEY DUPLEXES

• Downtown (14.2 miles) – Has a workforce of over 150,000 and is home to 10 of Houston’s 26 Fortune 500 companies. Since 1996, over $5.85 billion of construction has been completed in more than 135 public and private projects including more than 23 million new square feet of Class A office space and 3,280 hotel rooms.

• Springwoods Village (19.1miles) – Home to ExxonMobil’s Houston Campus on 385-acres with 10,000 employees, Southwestern Energy’s new corporate headquarters with 1,500 employees located in two 10-story, 515,000 square foot buildings on 26 acres, and CHI St. Luke’s Health-Springwoods Village Hospital, a $110 million medical campus located on 23 acres that when complete will support a 300-bed healthcare facility, 400,000 square feet of MOB and two parking structures. In late April, construction began on CityPlace 2, a 10-story building to be occupied by American Bureau of Shipping. The 326,800-square-foot building will have 24,000 square feet of retail space on the ground floor. In addition, construction of HP’s 2- building campus (378,000 square feet) should be completed this year and will house approximately 2,400 employees. When completely built out, Springwoods Village is expected to have 5,000 homes, along with office buildings, retail, hotels and medical facilities on its 1,000 acres.

• North Houston District (7.4 miles) – Comprised of 4,000 companies and over 72,000 employees who work in 20 million square feet of office, industrial, and retail space within the District. Lincoln Property Company recently purchased the former Exxon campus, which they have renamed CityNorth. The campus consists of six buildings with two million square feet, and Lincoln plans to invest $100 million in redeveloping the exteriors, interiors, landscaping, and restaurant and retail offerings throughout the complex.

EMPLOYMENT DEMAND DRIVERS (Cont):

QUALITY OF LIFE:

Retail/Restaurants: There is a multitude of shopping and dining options available within a short walk or drive of Farley Duplexes including:

• Grocery options include Walmart Supercenter (4.2 miles), La Michoacana Meat Market (3.8 miles), ALDI (6.7 miles), Kroger (7.5 miles), H-E-B (7.6 miles) and Target (7.9 miles)

• Deerbrook Mall (6.5 miles) is a 1.2 million square foot mall anchored by Macy’s, Dillard’s, Sears and JCPenney, along with a two-level Forever 21 and a 24-screen AMC Theatres complex. Recently, Dick’s Sporting Goods constructed a new two-story, 80,000 square foot store across from Forever 21 on the mall’s last remaining anchor pad.

• Westlake Marketplace (7.5 miles) – Kroger Marketplace, Dick’s Sporting Goods, Burlington, Five Below, Michaels, Petsmart, Ross Dress for Less, Marshall’s, Old Navy, Ulta Beauty, Olive Garden, Chick-fil-A, Taco Bell, Wendy’s, Chipotle, MOD Pizza, Five Guys

EXECUTIVE SUMMARY

7

Hospitals: Memorial Hermann Northeast Hospital (6.1 miles) has been open for over 30 years and is a 255-bed facility. In addition, it serves as the official healthcare provider to passengers traveling through Houston’s George Bush Intercontinental Airport.

Schools: Farley Duplexes residents are zoned to schools within the Aldine ISD, which include:

Higher Education: Farley Duplexes is just 4.9 miles from Houston Community College - North Forest Campus, which offers courses that leads to certificates and associate degrees, continuing education and Adult Basic Education. It is also expanding to provide technical training for the automotive technology, welding, HVAC and plumbing trades. It is also 7.2 miles from Lone Star College-Greenspoint Center, which offers credit courses in 28 fields, and Lone Star College-North Harris campus (9.2 miles). In addition, Remington College is 8.6 miles from the property and offers courses in medical assisting, pharmacy technician, criminal justice and cosmetology.

Parks & Recreation: Farley Duplexes residents can enjoy the myriad of parks located nearby including:

SchoolDistance from

Farley Duplexes

Jones EC/PK/K Center 7.3 Miles

Francis Elementary (1st - 5th) 2.3 Miles

Aldine Middle (6th - 8th) 3.4 Miles

Nimitz Ninth Grade 10 Miles

Nimitz Senior High 10.3 Miles

Name Distance fromFarley Duplexes

Features

WE “Bill” Crowley Park 3.5 Miles 30-acre park with picnic facilities, covered exercise stations, basketball and tennis courts

Keith Wiess Park 5.7 Miles 499.46-acre park hike and bike trails, picnic tables, barbecue grills, soccer goals, pavilions, soccer fields, baseball fields, tennis and basketball courts

Lindsay/Lyons Park and Sports Complex

6.8 Miles 136-acre complex with lighted baseball, soccer, football and soccer fields, playground and picnic areas

Houston Motorsports Park

8.0 Miles The motorsports park features a NASCAR oval track and drag strip.

8 FARLEY DUPLEXES

AERIAL OVERVIEW - FACING NORTH (Zoomed In)

Aldine Bender Rd

Old

Hum

ble

Rd

George Bush International Airport (IAH)(35,000 Employees)

Industrial Park

United StatesPostal Service

FARLEY DUPLEXES

EXECUTIVE SUMMARY

9

FARLEY DUPLEXES

George Bush Intercontinental

Airport (IAH)35,000 Employees

Springwoods Village2,000-Acres

9M SF of Commercial Space(Exxon Mobil, Southwestern Energy, HP, American Bureau of Shipping

(ABS)

Pinto Business Park971-Acres

7M SF of Space(Amazon, Coca Cola, Sysco,

Emser Tile, HD Supply)

North Houston Business District>4,000 Companies>72,000 Employees

The Woodlands>7,541 Companies>92,950 Employees

AERIAL OVERVIEW - FACING NORTH (Zoomed Out)

10

02PROPERTY OVERVIEW

11

ADDRESSES: (HOUSTON, TX 77032)5502 Farley Dr5418 Farley Dr5410 Farley Dr5502 Farley Dr5506 Farley Dr5510 Farley Dr5530 Farley Dr5534 Farley Dr5527 Farley Dr5523 Farley Dr5519 Farley Dr5515 Farley Dr5511 Farley Dr5507 Farley Dr

NUMBER OF DUPLEXES26

YEAR BUILT1983

LOCATIONThe duplexes are conveniently located less than a mile away from both Beltway 8/Sam Houston Parkway and I-69, as well as 3.7 miles from the Hardy Toll Road and 7.4 miles from I-45 North providing residents easy access to the largest employment centers and amenities throughout north and northeast Houston.

PROPERTY OVERVIEW

SITE DESCRIPTION

12 FARLEY DUPLEXES

SITE PLAN

FARLEY DRIVE

MCCRACKEN ROAD

INDIANOLA DRIVE

PIC

TON

DR

IVE

Farley Units

PROPERTY OVERVIEW

13

LOCAL AREA MAP

FARLEY DUPLEXES

14

03FINANCIAL ANALYSIS

15FINANCIAL ANALYSIS

PROFORMA

INCOME Proforma Average Monthly % of GPR Per Unit Per SF

Scheduled Market Rent (SMR) $327,609 $27,301 $12,600 $12.60 Loss to Lease ($3,276) ($273) 1.00% ($126) ($0.13)

GROSS POTENTIAL RENT (GPR) $324,333 $27,028 $12,474 $12.47 Vacancy ($16,217) ($1,351) 5.00% ($623.72) ($0.62)Concessions ($3,243) ($270) 1.00% ($124.74) ($0.12)Employee Units ($10,486) ($874) 3.23% ($403.33) ($0.40)

NET RENTAL INCOME $294,387 $24,532 90.77% $24,532 $24.53

Effective Rent/Unit (GPR - Concession Loss) $1,029Effective Rent/SF (GPR - Concession Loss) $1.03Economic Occupancy 90.77%

EFFECTIVE GROSS INCOME $294,387 $24,532 90.77% $24,532 $24.53

OPERATING EXPENSES Proforma Average Monthly % of GPR Per Unit Per SF

Apt Prep/Turnover $7,800 $650 2.40% $300 $0.30 Administrative $2,600 $217 0.80% $100 $0.10 Marketing & Promotions $351 $29 0.11% $13 $0.01 Repairs & Maintenance $7,800 $650 2.40% $300 $0.30 CONTROLLABLE SUBTOTAL $18,551 $1,546 5.72% $713 $0.71 Management Fee $14,719 $1,227 5.00% $566 $0.57 Insurance $14,006 $1,167 4.32% $539 $0.54 Property Taxes $31,902 $2,658 9.84% $1,227 $1.23 Gross Receipts Tax $804 $67 0.25% $31 $0.03

TOTAL OPERATING EXPENSES $79,982 $6,665 24.66% $3,076 $3.08

Expense Ratio (% of EGI) 0.00%

NOI BEFORE RESERVES $214,405 $17,867 66.11% $8,246 $8.25

Replacement Reserves $7,800 $650 2.40% $300 $0.30

NET OPERATING INCOME $206,605 $17,217 63.70% $7,946 $7.95

16 FARLEY DUPLEXES

GENERAL UNDERWRITING CONSIDERATIONS

INCOME ASSUMPTIONS

Scheduled Market RentBased on the 12.31.18 RR. Proforma SMR assumes an legacy units being brought up to current market rents as well as a $150 renovation premium. Proforma SMR reflects $327,600 annually or $12.60 SF.

Loss to LeaseThe difference between Scheduled Market Rent and Adjusted Gross Potential Rent is Loss to Lease. Loss to Lease is projected to be 1% of SMR.

VacancyOccupancy projected to be 95% in the Proforma.

ConcessionsConcessions are projected to be 1% of GPR in the Proforma.

EXPENSE ASSUMPTIONS

Apartment Prep/TurnoverThis category includes Turnkeys & Make Readies. Proforma Apt Prep/Turnover is projected to $7,800 annually or $300/unit.

AdministrativeThis category includes Bank Chg Accounts, Bank Chg - Rebates, Computer and Internet Expenses, Office Supplies, Postage and Delivery, Professional Fees, Other Rental Prop Mgmt Charges, an Rental Commissions. Proforma Admin is projected to be $2,600 annually or $100 unit.

Marketing & PromotionsThis category includes Rental Property Advertisement. Proforma M&P is projected to be $351 annually or $13 a unit.

Repairs & MaintenanceThis category includes Rental R&M. Proforma R&M is projected to be $7,800 annually or $300/unit.

Management FeeWe assume a management fee of 5% of EGI, consistent with other properties of this size and bracket of revenue.

InsuranceWe estimate Proforma Insurance to be $14,006 annually or $539/unit.

Real Estate Property Taxes Subject property is located within the Harris County Appraisal District. Taxing Districts include: Aldine ISD, Harris County, Harris Co Flood Cntrl, Port of Houston Authy, Harris Co Hosp Dist., Harris Co Educ Dept, Lone Star College Sys, HC Emerg Srv Dist 10, HC Emerg Srv DIst 1.

The 2018 appraised and assessed value is $1,302,000. The 2018 millage rate is 2.38%. Proforma Taxes are projected to be $31,902 and include a 3% inflation assumptions. Buyer should rely on a tax consultant to determine the potential for changes to assessed value upon acquisition of the property.

Gross Receipts TaxGross Receipts Tax was calculated as 0.331% of Effective Gross Income based on the tax legislation passed by the Texas House in June 2015.

Replacement ReservesProforma R&R is estimated to be $300/unit.

Net Operating Income (NOI)Proforma Net Operating Income, after replacements is $206,605.

The Proforma is delivered only as an accommodation an neither Seller, CBRE, nor any of their respective affiliates, agents, representatives, employees, subsidiaries, members, managers, partners, shareholders, directors, or officers, makes any representation or warranty regarding such proforma. Purchaser must make its own investigation of the Property and any existing or available financing, and must independently confirm the accuracy of the projections contained in the Proforma.

FINANCIAL ANALYSIS

17

18

04MARKET OVERVIEW

19M a r k e t Ov e rv i e w

MARKET OVERVIEW

WITH A POPULATION EXCEEDING 2.3 MILLION (2017 ESTIMATE), THE

CITY OF HOUSTON IS THE FOURTH LARGEST CITY IN THE UNITED

STATES, WHILE THE GREATER HOUSTON METROPOLITAN AREA RANKS

FIFTH IN THE NATION WITH A POPULATION OF 6.8 MILLION.

CITY OF HOUSTON OVERVIEWLocated on the coastal prairies of southeast Texas, Houston is home to a diverse set of industries and cultures. The Houston - The Woodlands - Sugar Land Metropolitan Statistical Area (MSA) has 6.8 million residents in the nine-county MSA, which is the nation’s 5th most populous metro area (larger than Missouri or Maryland).

The Houston MSA’s Gross Domestic Product (GDP) was $465.2 billion in 2015 and is expected to be $546.9 billion in 2020. The GDP is forecasted to more than double between 2015 and 2040. If Houston were an independent nation, it would rank as the world’s 24th largest economy, behind Sweden and ahead of Poland. The Houston MSA recorded more than 3.1 million payroll jobs in 2017, more than the job counts of thirty-five U.S. states.

With a population exceeding 2.3 million (2017 estimate), the City of Houston is the fourth largest city in the United States, This population base includes a wide variety of racial and ethnic groups that give Houston a rich diversity and cosmopolitan feel, as nearly one in four Houstonians are foreign born. The Houston Region is one of the youngest, fastest-growing and diverse populations anywhere.

Houston is home to a thriving business economy that has diversified from being predominantly energy based back in the 1980s. This economic diversification includes growth in high-technology industries, medical research, health care and professional services. $192.2 billion in trade was handled by the Houston-Galveston Customs Districts in 2017, with Houston having the largest export market in the U.S. Port Houston has ranked first in import tonnage for 26 straight years, 2nd in total tonnage for 24 straight years, and is the largest Gulf Coast container port in the U.S. Houston is home to 87,500 engineers and architects, more than any other U.S. metro area. The Texas Medical Center, comprised of 50 million square feet, is the world’s largest medical complex with $3 billion in construction projects underway. Houston is home to 40 of the 134 publicly-traded oil and gas exploration firms, 700 exploration and production firms, and 800 oil field service companies.

Source: Greater Houston Partnership

20 FARLEY DUPLEXES

OUR EMPLOYMENT

OVERALL EMPLOYMENT IN RECOVERYRecent job revisions show that Houston never posted negative job growth during the recession indicating a diversifying economy that is increasingly resilient to oil shocks.

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

3.5

3.0

2.5

2.0

1.5

160

140

120

100

80

60

40

20

0

RECESSIONS:

EMPLOYMENT:

OIL PRICE:

Sources: Bureau of Labor Statistics, EIA, June 2018.

JOBS (MILLIONS) WTI ($/bbl)ADDED

79,200 JOBS FROM MAY 17’ TO MAY 18’

20.8%

16%

12.5%

13.5%

10.3%

Sources: Bureau of Labor Statistics, EIA, March 2018

HOUSTON’S ECONOMY HAS INCREASINGLY DIVERSIFIED

TRADE, TRANSPORTATION & UTILITIES

PROFESSIONAL & BUSINESS SERVICES

GOVERNMENT

EDUCATION & HEALTH SERVICES

LEISURE & HOSPITALITY

MANUFACTURING

CONSTRUCTION

FINANCIAL ACTIVITIES

MINING & LOGGING

INFORMATION

OTHER

MARKET OVERVIEW 21

OUR ECONOMY

$1.5BIN RENEWABLE

ENERGY INVESTMENT SINCE 2014

26%OF THE NATIONSOIL & GAS JOBS

RANKED 1ST

IN FOREIGN TONNAGE, IMPORTS, EXPORT TONNAGE, & BREAKBULK AMONG US PORTS

PORT OF HOUSTON

LARGEST T E X A S P O R T

ENERGY SECTOR

FOUR HOUSTON REGION SEAPORTSHOUSTON, TEXAS CITY, FREEPORT, GALVESTON

194.3 MILLION METRIC TONS

IN TRADE

106,000+EMPLOYEES

54.5MPASSENGERS IN 2015

$4.5B LOCAL ECONOMICIMPACT

TEXAS MEDICAL CENTER

$3BIN CONSTRUCTION

PROJECTS UNDERWAY

THE LARGEST MEDICAL CENTER IN THE WORLD

10MPATIENT VISITS PER

YEAR

HOUSTON AIRPORT SYSTEM

8TH

LARGESTBUSINESS DISTRICT

IN THE US

Source: The Texas Medical Center, July 2018.

293TOTAL NON-STOP

DESTINATIONS

Sources: Greater Houston Partnership, HAS, May 2018.

AEROSPACE/AVIATION

MAJOR EMPLOYERS INCLUDE: BOEING, LOCKHEED MARTIN, BROWN & ROOT AND JOHNSON ENGINEERING

100+ COMPANIES

Source: Greater Houston Partnership, July 2017.

LICENSED COMMERCIAL SPACEPORTS

ONE OF THE NATION’S

6 DOMESTIC & 20 INTERNATIONAL CARRIERS

GEORGE BUSH INTERCONTINENTAL (IAH) AIRPORT

5 DOMESTIC & 1 INTERNATIONAL CARRIERS

WILLIAM P. HOBBY AIRPORT

CONSTRUCTION

FINANCIAL ACTIVITIES

MINING & LOGGING

INFORMATION

OTHER

4,800+ENERGY RELATED

ESTABLISHMENTS LOCATED WITHIN THE GREATER HOUSTON AREA

25% OF THE NATIONS REFINING CAPACITY IS ALONG THE TEXAS GULF COAST WTH A REFINING CAPACITY OF 4.8 MILLION BARRELS/DAY

Source: Greater Houston Partnership, April 2018.

103K M I L E S

HOUSTON COMPANIES OVER CONTROL OF U.S. PIPELINES

HANDLING 68% OF US GULF COAST CONTAINER TRAFFIC & 96% OF TEXAS CONTAINER TRAFFIC

LARGEST GULF COAST CONTAINER PORT

Source: Greater Houston Partnership, May 2018.

22 FARLEY DUPLEXES

OUR PEOPLECOST OF LIVING INDEX

NEW YORK

SAN FRANCISCO

BOSTON

SEATTLE

SAN DIEGO

LOS ANGELES

PHILADELPHIA

CHICAGO

DALLAS

HOUSTON

ATLANTA

TAMPA

PHOENIX

ST. LOUIS

-20 -0 20 40 60 80 100 120

Sources: Greater Houston Partnership, Council for Community and Economic Research (C2ER), ESRI, July 2017.

AVG. HOUSEHOLD INCOME% ABOVE/BELOW US AVG COST OF LIVING %/BELOW US AVG

HOUSEHOLD INCOME AND COST OF LIVING % BELOW/ABOVE U.S. AVERAGE

HOUSTONCOST OF LIVING

WHILE THE AVERAGE INCOME IS ABOVE

IS BELOW THENATIONAL

AVERAGE

HOUSTON COL IS BELOW NATIONAL AVERAGE, WHILE AVERAGE INCOME IS

ABOVE NATIONAL AVERAGE

37.2% Anglo

36% Hispanic

17.3% Black

8% Asian

1.5% Other

DIVERSITYHOUSTON LEADS THE NATIONAL ETHNIC MAKE UP 6.9M

RESIDENTS

94,417

HOUSTON HAD THE SECOND LARGEST POPULATION GAIN OF ANY US METRO AREA

IN 2017.

RESIDENTS ADDED FROM 2016 - 2017

Source: U.S. Census Bureau, March 2018.

ONE IN FOURHOUSTONIANS ARE FOREIGN BORN

ETH

NIC

ITY

THE HOUSTON REGION HAS NO RACIAL OR ETHNIC MAJORITY.

Source: ESRI, July 2018.

POPULATION TRENDS & DEMOGRAPHICS

MARKET OVERVIEW 23

OUR QUALITY OF LIFE

53,000 ACRESOF PARKLAND 128 MILES

OF BIKE TRAIL

#1 IN THE PARK ACREAGE AMONG LARGE U.S. CITIES

PARKS & RECREATION SPORTS

TEXANS • DYNAMO • ASTROS • ROCKE TS

ARTS & CULTURE

FOUR MAJOR PERFORMING ARTS

COMPANIES IN ALL

-DRAMA, BALLET, OPERA AND ORCHESTRA

500+ INSTITUTIONSFOR ART, SCIENCE AND HISTORY

EDUCATION

COLLEGES, UNIVERSITIES & TECHNICAL SCHOOLS

Source: Greater Houston Partnership, July 2017.

50

437,000STUDENTS

35% OF HOUSTON POPULATION HAS BACHELOR’S

DEGREE OR HIGHER

HOUSTON LIVESTOCK SHOW AND RODEO

$480MANNUAL AGGREGATE GROSS

SALES ARE INCREASED BY

ATTRACTING OVER

2.4 MILLION VISITORS IN 2018.

IT IS ONE OF THE BIGGEST IN THE COUNTRY

Source: Greater Houston Parnetership, May 2017

THE CITIES FOUR STADIUMS CAN HOLD OVER150,000 FANS COLLECTIVELY

Source: Greater Houston Partnership, May 2017.

10,000+RESTAURANTS

643BARS

70C U I S I N E S

Sources: Greater Houston Partnership, May 2017.

CULINARY CAPITAL OF TEXAS

Source: Houston Livestock Show and Rodeo, March 2018.

26.7 MILLION RAISED FOR

SCHOLARSHIPS AND EDUCATION

24 FARLEY DUPLEXES

All of these favorable characteristics continue to support

Houston’s strong reputation as one of the best places to live

and work in the United States. The list following demonstrates

Houston’s popularity as a place to conduct business, find

employment, and live.

Source: Houston Chronicle

Houston Top Employers

Memorial Hermann Health System 24,108

H-E-B 23,732

University of Texas MD Anderson Cancer Center

21,086

McDonald’s Corp 20,918

Houston Methodist 20,000

Kroger 16,000

United Airlines 14,941

Schlumberger 12,069

Shell Oil Company 11,507

Exxon Mobil Corporation 11,000

Texas Children’s Hospital 10,992

HCA 10,830

Landry’s 10,800

UTMB Health 9,928

HOUStON tOP eMPLOYerS

• BEST BIG CITY FOR NEW GRADSOnlinedegree.com (as reported by PaperCity) – December 21,

2017

• INDUSTRIAL CONSTRUCTION IN THE PAST DECADECommercialCafe (as reported by Houston Chronicle) October 9,

2017

• GREENEST METROBusiness Facilities Magazine - July 20, 2017

• TOP CITIES FOR MINORITY ENTRE-PRENEURSEntrepreneur Magazine – June 2017

• TOP DESTINATION CITY EIGHTH CONSECUTIVE YEARU-HAUL International – May 2017

• FASTEST GROWING CITY IN AMERICA - CONROEU.S. Census Bureau - May 2017

• SECOND HIGHEST POPULATION GROWTH 2015-2016U.S. Census Bureau - May 2017

MARKET OVERVIEW 25

• BEST BIG CITY FOR NEW GRADSOnlinedegree.com (as reported by PaperCity) – December 21,

2017

• INDUSTRIAL CONSTRUCTION IN THE PAST DECADECommercialCafe (as reported by Houston Chronicle) October 9,

2017

• GREENEST METROBusiness Facilities Magazine - July 20, 2017

• TOP CITIES FOR MINORITY ENTRE-PRENEURSEntrepreneur Magazine – June 2017

• TOP DESTINATION CITY EIGHTH CONSECUTIVE YEARU-HAUL International – May 2017

• FASTEST GROWING CITY IN AMERICA - CONROEU.S. Census Bureau - May 2017

• SECOND HIGHEST POPULATION GROWTH 2015-2016U.S. Census Bureau - May 2017

• BEST CITY FOR COLLEGE GRADSMoney - May 2017

• TOP TEN GLOBAL CITY FOR THE FUTURE - #8AT Kearney - June 2017

• CHEAPEST CITY TO LIVE UNDER THE RADAR - #3Thrillist - February 2017

• AMERICA’S BEST LARGE CITIES - #7Resonance Consultancy - June 2017

• CITY FOR STARTUP ACTIVITY - #9Kauffman Index of Startup Activity - May 2017

• BEST CITIES IN THE US FOR PEOPLE UNDER THE AGE OF 35 - #10CNBC Money - May 2017

CITY OF HOUSTON

26 FARLEY DUPLEXES

aPPeNDiX

Date:

05TREC DISCLOSURE – iNFOrMatiON aBOUt BrOkeraGe reLatiONSHiPS

Texas law requires that all real estate licensee’s present this information to prospective sellers, landlords, buyers or tenants.

Before 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 owner’s agent. A broker who acts as a subagent represents the owner in cooperation with

the listing broker. A broker who acts as a buyer’s 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 owner’s 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

owner’s agent anything the buyer would not want the owner to know because an owner’s agent

must disclose to the owner any material information known to the agent.

If the Broker Represents the Buyer: The broker becomes the buyer’s agent by entering into an

agreement to represent the buyer, usually through a written buyer representation agreement. A

buyer’s 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 buyer’s agent anything the owner would not want

the buyer to know, because a buyer’s 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 broker’s

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 than 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 clearly establishes the broker’s 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.

Acknowledgment Please acknowledge your receipt of this information, for Broker’s records:

CBRE, Inc.Brokerage and Management Licensed Real Estate Broker

Date:

27

CBRE © 2019 All Rights Reserved. All information included in this letter/proposal pertaining to CBRE—including but not limited to its operations, employees, technology and clients—is proprietary and confidential, and supplied with the understanding that such information will be held in confidence and not disclosed to any third party without CBRE’s prior written consent. This letter/proposal is intended solely as a preliminary expression of general intentions, is for discussion purposes only and does not create any agreement or obligation by CBRE to negotiate or continue negotiations. CBRE shall have no contractual obligations with respect to the matters referred to herein unless and until a definitive, fully executed agreement has been delivered by the parties. Prior to delivery of a definitive executed agreement, and without any liability to the other party, either party may (1) propose different terms from those summarized herein, (2) enter into negotiations with other parties and/or (3) unilaterally terminate all negotiations with the other party hereto.

This information has been obtained from sources believed reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs.

CONTACT US

CAPITAL MARKETS | MULTIFAMILY

MICHAEL WILLIAMSAssociate(O) +1 713 577 1652(C) +1 713 805 5400michael.williams9@cbre.com

MATT PHILLIPS Senior Vice President (O) +1 713 787 1977 (C) +1 832 338 8850 matt.phillips@cbre.com