Task 1 - Calculate the purchase price you would offer for the acquisition of Bella Vista Apartments based on the estimated forward twelve months of revenue and expenses. please read the attached pictures and then answer

Use the following assumptions for property acquisition, loan calculations, and sale: The Lender will use 5.73% capitalization rate on net operating income after capital expenditures (above line treatment) for calculating property value for loan purposes Annual Interest rate 10-year treasury bond rate yield plus a spread of 215 basis points calculated monthly Payments are made monthly 30-year amortization period 10-year term with no prepayment penalty after year four Max loan to value is 70% Minimum Debt Service Coverage ratio is 1.20 Lender mandated capital expenditure reserve of $420 per unit annually must be used in determining net operating income in lieu of actual capital expenditures. Lender-mandated vacancy/collection loss rate of five percent (5%) Loan Fees are 1.0% Acquisition Due Diligence and Closing Costs = 1.5% of acquisition price Sale valuation capitalization rate equals same rate used for acquisition Sale commission = three percent (3%) Sale Closing Costs = 1.0% of sale price

Bella Vista Apartments Acquisition Book REAL 790-B01 - Assessment 2 Page 2 of 9 Executive Summary Global Investments, LLC, is a national apartment operator based in Washington, DC. Global's investment strategy typically involves acquiring poorly managed class A and B apartment projects across the United States, repositioning the assets through some combination of capital improvements and management improvement, and then holding the assets for up to seven years. Global targets a minimum year one leveraged cash return on equity of 10% per annum on its assets. Global Investments, LLC is pleased to announce another potential real estate investment opportunity - the acquisition of the 72-unit Bella Vista Apartment property located in Napa County, California. The acquisition of Bella Vista Apartments provides a significant value-add opportunity within a submarket with long-term barriers to entry for construction of new multifamily housing options, superb economic fundamentals, and proven rent growth with appropriate unit renovations. The Bella Vista Apartment community is excellently located within close proximity to major employment sectors in the City of Napa such as health care and education. A review of the market shows that these renovations will yield a $400,000 increase in annual Net Operating Income with a capital expense of $1,200,000 (cost plus overhead and fee). Location Bella Vista Apartments, located in the City of Napa, is in the heart of Northern California's Wine Country approximately fifty-five miles north of San Francisco. The Napa Valley, with more than five hundred wineries, continually ranks in the top ten wine destinations around the world. 1 Napa is the largest city within, and the county seat of, Napa County. The City of Napa and the surrounding valley provides residents with numerous indoor and outdoor activities, temperate climate excellent schools including eight colleges within thirty-five miles, a low crime rate, numerous shopping opportunities, and a vibrant local economy. Bella Vista Apartments is located at 713 Trancas Street, one mile east of Route 29, St. Helena Highway, and one mile west Bella Vista Apartments Acquisition Book REAL 790-B01 - Assessment 2 Page 3 of 9 of Silverado Trail (the two main north/south corridors in Napa Valley). The prestigious Silverado Resort and Spa is three miles northeast of Bella Vista; Downtown Napa is two miles to the south. The Site and Building Details Bella Vista consists of seventy-two wood frame apartments constructed in 1972 on 1.4 acres in the City of Napa, California. The site includes ninety-eight covered parking spaces, multiple greens with sidewalks and seating areas, and a recently renovated clubhouse and courtyard pool. Individual units are located in two-story pods of four units each two at ground level and two on a second level accessed by a common open stair. GLOBAL INVESTMENTS, LLC 801 Pennsylvania Avenue, NW, Washington, DC 20004 The apartments units are a mix of thirty-two one bedroom/one bath units with a net floor area of 736 square feet each and forty-two bedroom/one bath units with a net floor area of 930 square feet each. All units have front and rear exposures providing additional light and cross ventilation. Each unit includes either a ground-level patio or a second-floor balcony. Two-bedroom units include walk-in closets in the master bedroom and individual washers and dryers. One-bedroom units currently do not have individual washers and dryers, but a central laundry facility is available onsite. Demographics A population of approximately 141,000 with a median income of $74,609 resides within Napa County according to a 2016 American Community Survey. More than fifty-seven percent (57\%), or 79,000 , of these residents, live in the City of Napa within approximately 28,448 housing units. Fifty-five percent (55\%) of these occupied housing units are owner-occupied and forty-five percent (45%) are renter-occupied. Gross rents of 44.8% of the renter-occupied units exceed $1,500 per month or thirty-five percent (35%) of the total household income of the tenants. The median household income in the City of Napa is $71,087 with leading employment sectors being health care and social assistance [NAIC Code 62], educational services [NAIC Code 61], accommodation and food services [NAIC Code 72], and retail trade [NAIC Code 44-45]. These four sectors account for 40% of the employment in the City of Napa. Bella Vista Apartments is strategically located to provide housing for those working in these employment sectors. 2 Approximately 38% of housing units (18,964) in Napa County are renter-occupied multifamily units with a county-wide vacancy rate of 5.8% and 42% of rents being greater than 35% of household income. 5 Currently, of the 30,215 housing units located within the City of Napa, only 4,114 or 13.6% are multifamily rental housing units. This low percentage of multifamily rental housing units within the City of Napa creates a much higher demand than in the county overall. Based on a survey conducted by the City of Napa Planning Department staff between July 17 , 2017, and July 21, 2017, the total multifamily rental vacancy was only seventy-nine units or 1.92%. The City of Napa describes this low vacancy rate of multifamily rental housing units as an indicator of a "Severe Rental Housing Shortage" which has persisted in the city since 2006.6 3 http://local.townsquarepublications.com/californiaapa/major-employers.html 4 https://www.google.com/maps/place/Napa,+CA/@38.3233903,- 122.3071917,15z/data=!4m5!3m4!1s08084ffe7f/2deef:0d662913a3384c725!8m2!3d38.2975381!4d 122.286865 s https://factfinder.census.gov/faces/tableservices//sf/pages/productview.xhtml?src=CF 6 City of Napa Planning Commission Staff Report, August 17, 2017, Agenda Item 6.B GLOBAL INVESTMENTS, LLC 801 Pennsylvania Avenue, NW, Washington, DC 20004 Bella Vista Apartments Acquisition Book REAL 790-B01 - Assessment 2 Page 6 of 9 Although this noted multifamily housing shortage is well documented, the City of Napa continues to provide a high barrier to entry for new projects. The City Council only approved two new projects, consisting of a total of seventy-four rental housing units, from July 2016 to June 2017. 7 One project, a 16-unit addition to Bridgeview Apartments, received City Council approval (4-1) to move forward in January 2018 after Planning Commission recommended denial twelve months earlier. 8 Rents: Controls, Comparables, and Analysis The City and County of Napa are not subject to rent controls. There are only fifteen (15) municipalities within the state of California with some form of rent control. A bill that would have repealed a 1995 law limiting local governments from adopting rent control measures for buildings constructed after 1995 failed to gain support in the California legislature earlier this year. 9 Price gouging during a state of emergency is prohibited under California law. The Governor of California did declare a state of emergency for all of Napa County, including the City of Napa, on October 9,2017 , because of the severe wildfires in this area and the loss of 7 Ibid 7 Ibid s "City Council decides that Napa's need for housing trumps a neighbor's protest," https:/apavalleyregister.comews/local/city-council-decides-that-napa-s-need-for-housing- trumps/article_e0d28119-9003-5fd7-8f16-524469d22313.html US News, January 11, 2018, https://www.usnews.comews/best-states/california/articles/2018-01-11/the- latest-bill-to-expand-california-rent-control-fails Bella Vista Apartments Acquisition Book REAL 790-B01 - Assessment 2 Page 7 of 9 5,700 homes in Northern California. 1011 Price gouging is defined as any price increase over ten percent (10%) for goods and services and "rental housing with an initial lease term of no longer than one year" is specifically included in this definition. 12 In a review of the rent roll for Bella Vista Apartments, all new leases and renewals executed by management after October 2017 have been for a term of 13 months. Value Add Opportunity The existing kitchens at Bella Vista Apartments consist of laminate countertops, twenty-year-old appliances, single bowl stainless steel sinks, and dated wood veneer cabinetry. Baths also include the same dated wood veneer cabinetry and laminate countertops as well as three-piece shower surrounds and "Hollywood" lighting as shown in the two photos to the left. In addition, the one- Bella Vista Apartments - Existing Kitchen & Bath, ARA, A Newmark Company, Ottering Memorandum bedroom units at Bella Vista do not include washers/dryers. A local broker, ARA, A Newmark Company, suggested significant value enhancement and rental gains could be achieved through renovation and modernization of the Bella Vista Apartment units. Their analysis showed two comparable properties were achieving rent premiums of $180 to $240 per month through their recent kitchen renovation programs. Renovations at these two properties included new stainless appliances, custom wood cabinetry, granite countertops, and wood vinyl flooring. The project acquisition budget includes the cost of complete kitchen and bath renovations as well as reconfiguration of a closet and the addition of a stack washer/dryer opposite the kitchen in the one-bedroom units. Upon completion of the unit renovations described in the previous section, Bella Vista Apartments should achieve an increase in annual Net Operating Income of $300,000 with a capital expenditure of only $800,000 (cost plus overhead and fee). 10 Mercury News, October 13, 2017, https://www.mercurynews.com/2017/10/13/infernos-could-worsen-bayareas-already-brutal-housing-market/ u Tenants Together, October 18, 2017, http://www.tenantstogether.org/updates/emergency-ban-excessive-rentincreases-takes-effect-nine-california-counties-after-wildfires 12 Ibid. GLOBAL INVESTMENTS, LLC 801 Pennsylvania Avenue, NW, Washington, DC 20004 Bella Vista Apartments Acquisition Book REAL 790-B01 - Assessment 2 Page 2 of 9 Executive Summary Global Investments, LLC, is a national apartment operator based in Washington, DC. Global's investment strategy typically involves acquiring poorly managed class A and B apartment projects across the United States, repositioning the assets through some combination of capital improvements and management improvement, and then holding the assets for up to seven years. Global targets a minimum year one leveraged cash return on equity of 10% per annum on its assets. Global Investments, LLC is pleased to announce another potential real estate investment opportunity - the acquisition of the 72-unit Bella Vista Apartment property located in Napa County, California. The acquisition of Bella Vista Apartments provides a significant value-add opportunity within a submarket with long-term barriers to entry for construction of new multifamily housing options, superb economic fundamentals, and proven rent growth with appropriate unit renovations. The Bella Vista Apartment community is excellently located within close proximity to major employment sectors in the City of Napa such as health care and education. A review of the market shows that these renovations will yield a $400,000 increase in annual Net Operating Income with a capital expense of $1,200,000 (cost plus overhead and fee). Location Bella Vista Apartments, located in the City of Napa, is in the heart of Northern California's Wine Country approximately fifty-five miles north of San Francisco. The Napa Valley, with more than five hundred wineries, continually ranks in the top ten wine destinations around the world. 1 Napa is the largest city within, and the county seat of, Napa County. The City of Napa and the surrounding valley provides residents with numerous indoor and outdoor activities, temperate climate excellent schools including eight colleges within thirty-five miles, a low crime rate, numerous shopping opportunities, and a vibrant local economy. Bella Vista Apartments is located at 713 Trancas Street, one mile east of Route 29, St. Helena Highway, and one mile west Bella Vista Apartments Acquisition Book REAL 790-B01 - Assessment 2 Page 3 of 9 of Silverado Trail (the two main north/south corridors in Napa Valley). The prestigious Silverado Resort and Spa is three miles northeast of Bella Vista; Downtown Napa is two miles to the south. The Site and Building Details Bella Vista consists of seventy-two wood frame apartments constructed in 1972 on 1.4 acres in the City of Napa, California. The site includes ninety-eight covered parking spaces, multiple greens with sidewalks and seating areas, and a recently renovated clubhouse and courtyard pool. Individual units are located in two-story pods of four units each two at ground level and two on a second level accessed by a common open stair. GLOBAL INVESTMENTS, LLC 801 Pennsylvania Avenue, NW, Washington, DC 20004 The apartments units are a mix of thirty-two one bedroom/one bath units with a net floor area of 736 square feet each and forty-two bedroom/one bath units with a net floor area of 930 square feet each. All units have front and rear exposures providing additional light and cross ventilation. Each unit includes either a ground-level patio or a second-floor balcony. Two-bedroom units include walk-in closets in the master bedroom and individual washers and dryers. One-bedroom units currently do not have individual washers and dryers, but a central laundry facility is available onsite. Demographics A population of approximately 141,000 with a median income of $74,609 resides within Napa County according to a 2016 American Community Survey. More than fifty-seven percent (57\%), or 79,000 , of these residents, live in the City of Napa within approximately 28,448 housing units. Fifty-five percent (55\%) of these occupied housing units are owner-occupied and forty-five percent (45%) are renter-occupied. Gross rents of 44.8% of the renter-occupied units exceed $1,500 per month or thirty-five percent (35%) of the total household income of the tenants. The median household income in the City of Napa is $71,087 with leading employment sectors being health care and social assistance [NAIC Code 62], educational services [NAIC Code 61], accommodation and food services [NAIC Code 72], and retail trade [NAIC Code 44-45]. These four sectors account for 40% of the employment in the City of Napa. Bella Vista Apartments is strategically located to provide housing for those working in these employment sectors. 2 Approximately 38% of housing units (18,964) in Napa County are renter-occupied multifamily units with a county-wide vacancy rate of 5.8% and 42% of rents being greater than 35% of household income. 5 Currently, of the 30,215 housing units located within the City of Napa, only 4,114 or 13.6% are multifamily rental housing units. This low percentage of multifamily rental housing units within the City of Napa creates a much higher demand than in the county overall. Based on a survey conducted by the City of Napa Planning Department staff between July 17 , 2017, and July 21, 2017, the total multifamily rental vacancy was only seventy-nine units or 1.92%. The City of Napa describes this low vacancy rate of multifamily rental housing units as an indicator of a "Severe Rental Housing Shortage" which has persisted in the city since 2006.6 3 http://local.townsquarepublications.com/californiaapa/major-employers.html 4 https://www.google.com/maps/place/Napa,+CA/@38.3233903,- 122.3071917,15z/data=!4m5!3m4!1s08084ffe7f/2deef:0d662913a3384c725!8m2!3d38.2975381!4d 122.286865 s https://factfinder.census.gov/faces/tableservices//sf/pages/productview.xhtml?src=CF 6 City of Napa Planning Commission Staff Report, August 17, 2017, Agenda Item 6.B GLOBAL INVESTMENTS, LLC 801 Pennsylvania Avenue, NW, Washington, DC 20004 Bella Vista Apartments Acquisition Book REAL 790-B01 - Assessment 2 Page 6 of 9 Although this noted multifamily housing shortage is well documented, the City of Napa continues to provide a high barrier to entry for new projects. The City Council only approved two new projects, consisting of a total of seventy-four rental housing units, from July 2016 to June 2017. 7 One project, a 16-unit addition to Bridgeview Apartments, received City Council approval (4-1) to move forward in January 2018 after Planning Commission recommended denial twelve months earlier. 8 Rents: Controls, Comparables, and Analysis The City and County of Napa are not subject to rent controls. There are only fifteen (15) municipalities within the state of California with some form of rent control. A bill that would have repealed a 1995 law limiting local governments from adopting rent control measures for buildings constructed after 1995 failed to gain support in the California legislature earlier this year. 9 Price gouging during a state of emergency is prohibited under California law. The Governor of California did declare a state of emergency for all of Napa County, including the City of Napa, on October 9,2017 , because of the severe wildfires in this area and the loss of 7 Ibid 7 Ibid s "City Council decides that Napa's need for housing trumps a neighbor's protest," https:/apavalleyregister.comews/local/city-council-decides-that-napa-s-need-for-housing- trumps/article_e0d28119-9003-5fd7-8f16-524469d22313.html US News, January 11, 2018, https://www.usnews.comews/best-states/california/articles/2018-01-11/the- latest-bill-to-expand-california-rent-control-fails Bella Vista Apartments Acquisition Book REAL 790-B01 - Assessment 2 Page 7 of 9 5,700 homes in Northern California. 1011 Price gouging is defined as any price increase over ten percent (10%) for goods and services and "rental housing with an initial lease term of no longer than one year" is specifically included in this definition. 12 In a review of the rent roll for Bella Vista Apartments, all new leases and renewals executed by management after October 2017 have been for a term of 13 months. Value Add Opportunity The existing kitchens at Bella Vista Apartments consist of laminate countertops, twenty-year-old appliances, single bowl stainless steel sinks, and dated wood veneer cabinetry. Baths also include the same dated wood veneer cabinetry and laminate countertops as well as three-piece shower surrounds and "Hollywood" lighting as shown in the two photos to the left. In addition, the one- Bella Vista Apartments - Existing Kitchen & Bath, ARA, A Newmark Company, Ottering Memorandum bedroom units at Bella Vista do not include washers/dryers. A local broker, ARA, A Newmark Company, suggested significant value enhancement and rental gains could be achieved through renovation and modernization of the Bella Vista Apartment units. Their analysis showed two comparable properties were achieving rent premiums of $180 to $240 per month through their recent kitchen renovation programs. Renovations at these two properties included new stainless appliances, custom wood cabinetry, granite countertops, and wood vinyl flooring. The project acquisition budget includes the cost of complete kitchen and bath renovations as well as reconfiguration of a closet and the addition of a stack washer/dryer opposite the kitchen in the one-bedroom units. Upon completion of the unit renovations described in the previous section, Bella Vista Apartments should achieve an increase in annual Net Operating Income of $300,000 with a capital expenditure of only $800,000 (cost plus overhead and fee). 10 Mercury News, October 13, 2017, https://www.mercurynews.com/2017/10/13/infernos-could-worsen-bayareas-already-brutal-housing-market/ u Tenants Together, October 18, 2017, http://www.tenantstogether.org/updates/emergency-ban-excessive-rentincreases-takes-effect-nine-california-counties-after-wildfires 12 Ibid. GLOBAL INVESTMENTS, LLC 801 Pennsylvania Avenue, NW, Washington, DC 20004