EXECUTIVE - HFF

MORNINGSIDE

NORTH1 70 W. OA K ST, C H I C AG O, I L 6 0 6 1 0

E XE CUTIVE SUMMARY

2 5 6 - U N I T S E N I O R P R OJ E C T- B A S E D S E C T I O N 8 ( H A P ) CO M M U N I T Y I N C H I C AG O ’ S D E S I RA B L E O L D TOW N N E I G H B O R H O O D

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2 | EXECUTIVE SUMMARY

EXECUTIVESUMMARY

EXECUTIVE SUMMARY | 3

MORNINGSIDE NORTH

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P R O P E R T Y O V E R V I E WProperty Type: 100% HAP / Senior (62+)

Address: 170 W. Oak St

City, State: Chicago, IL

Year Built: 1981

Number of Units: 256 Units

Average Unit Size: 576 SF

Net Rentable SF: 147,354 SF

Buildings: 1 Residential

Number of Stories: 18 Stories

Acres: 1.02 Acres

Density: 250.98 Units/Acre

Avg. Contract Rent: $1,534

Proforma Contract Rent: $1,800

Proforma Annual Contract Rent: $5,532,000

HAP Contract Expiration: December 31, 2020

Income Restrictions: 100% HAP

QCT / DDA: No / Yes

T H E O F F E R I N GHolliday Fenoglio Fowler, L.P. (HFF) is pleased to exclusively offer the tremendous opportunity to acquire and preserve Morningside North, a best-in-class affordable senior community located in the heart of Downtown Chicago’s Old Town Neighborhood. The Property offers residents a walk-to-everything location, with immediate access to shopping and dining destinations, abundant community services and amenities, and every mode of public transportation afforded by the city of Chicago. The Property also benefits from a project-based Section 8 (HAP) contract that covers 100% of its units. Current contract rents significantly lag rents achieved at comparable properties and the guaranteed rental revenue provided by the HAP contract, coupled with an income qualified senior resident base, makes Morningside North an ideal candidate for preservation.


MORNINGSIDE NORTH

O F F E R I N G P R O C E D U R E S

Tour Schedule:

Please contact Michael Fox ([email protected]) or Doug Childers ([email protected]) to schedule a tour. Under no circumstances are Investors allowed to visit the Property without approval from HFF. Failure to adhere to this request will be taken into consideration by the Seller when offers are selected.

Offer Date:

All offers are due on or before Thursday, April 5th, 2018 at 5:00 PM (EST) and should be e-mailed to Michael Fox ([email protected]) or Doug Childers ([email protected]).

Best & Final:

Upon review of the initial offers submitted, if appropriate, a select group of Investors will be notified of their participation within the Best and Final Round.

Terms and Conditions:

The Property is offered on an “as is” basis, subject to the existing rent, income, and occupancy restrictions required by the existing HAP Contract.

Approvals:

Approval from HUD, including approval of the assignment and assumption of the HAP contract will be required of a prospective Purchaser.

Selection and Criteria:

The prospective Investor will be selected by the Owner, in its sole and absolute discretion, on the basis of a complement of factors, including, but not limited to purchase price; the Investor’s financial strength/balance sheet capacity; level of discretion to invest funds; ability to close in a timely fashion; experience in closing similar transactions; reputation within the industry and the extent to which due diligence is completed.

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C O M M U N I T Y• Controlled Access

• Courtesy Patrol

• On-Site Leasing Office

• Central Mail Kiosk

• Laundry Facility

• Community Room with Full Kitchen

• Community Library

• Community Lounge

• Outdoor Patio

• Community Picnic Area

• 2 Elevators

• 34 Tenant Storage Centers

I N T E R I O R S• Fully-Equipped Kitchens Include:

- Refrigerator

- Electric Range and Oven

- Open Breakfast Bar

• Tile Wrapped Shower

• Grab Rails in Bathroom

• Life Safety Pull Cords• Fully-Sprinklered

COMMUNITY KITCHEN

MEETING HALLCOMMUNITY LIBRARY


MORNINGSIDE NORTH

I N T E R I O R S• Fully-Equipped Kitchens Include:

- Refrigerator

- Electric Range and Oven

- Open Breakfast Bar

• Tile Wrapped Shower

• Grab Rails in Bathroom

• Life Safety Pull Cords• Fully-Sprinklered

Unit Description Units SF Total SFCurrent

Contract RentHFF Proforma Contract Rent

Proforma Rent Per SF

Proforma Annual Rent

1 Bed, 1 Bath, HAP 255 575 146,625 $1,533 $1,800 $3.13 $5,508,000

2 Bed, 2 Bath, HAP, Manager 1 729 729 $1,674 $2,000 $2.74 $24,000

Totals / Averages 256 576 147,354 $1,534 $1,800 $3.13 $5,532,000

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Morningside North benefits from a project-based Section 8 (HAP) contract that ensures consistently strong occupancy and limited turnover. The Property stands as an ideal investment opportunity for an affordable housing owner looking to deploy significant capital into an inflation protected vehicle that is sheltered from typical market volatility.

STABLE, CONSISTENT CASH FLOW

AFFORDABLE HOUSING PRESERVATION OPPORTUNITY

LIHTC Equity to Off-Set Acquisition and Renovation Costs

BENEFITS OF LIHTC PRESERVATION

A 30% Basis Boost To The Rehab Eligible Basis (DDA)

20-Year Section 8 HAP Contract Renewal

Increased LIHTC Pricing Due To Existing HAP Contract And CRA Demand

Ability To Break Chain Of Title But Still Receive Acquisition Credits

LIMITED TURNOVER

7% turnover at the Property over the last

twelve months.

INFLATION PROTECTED VEHICLE

HAP Contract allows for annual rent adjustments.

IMPLICIT GOVERNMENT GUARANTY

100% of the units at the Property benefit from a HAP contract, which

virtually guarantee future rental revenue.

MINIMAL VACANCY

Property occupancy has averaged 99% since

2015. Current waiting list exceeds 500 names.

The guaranteed rental revenue provided by the HAP contract, coupled with an income qualified senior resident base, makes Morningside North an ideal candidate for preservation using Low Income Housing Tax Credits (LIHTCs) and Tax Exempt Bond financing.


MORNINGSIDE NORTH

OPPORTUNITY TO SIGNIFICANTLY INCREASE CONTRACT RENTS

Based on a comprehensive survey of the surrounding rental market, average effective one bedroom rents at Morningside North lag comparable properties by an average of $272. A new investor will benefit from a significant increase in contract rents post-rehabilitation, as HFF’s Proforma assumes one bedroom contract rents will be increased to $1,800 per month, a gain of $267 (17.4%).

RENT COMPARABLE ANALYSIS1

(ONE BEDROOM UNITS)

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800

$1,900

$2,000

$2,100

$2,200

$2,300

$2,400

$2,500

MorningsideNorth

TheChicagoan

1000 NorthLaSalle

1133 NorthDearborn

1100 NorthDearborn

1120 NorthLaSalle

NewDeliveries

$1,899

1. Properties shown above are consistent with the comparables used in the 2014 RCS provided.2. Rents displayed take into account adjustments made in the 2014 RCS provided.3. New deliveries based on units delivered in the Gold Coast/River North submarket since 2016.

AV

ER

AG

E EF

FEC

TIV

E R

EN

T2

$1,800

$1,533

Average Effective Rent* HFF Proforma Contract Rent

Avg. = $1,805

$1,853$1,828 $1,803

$1,642

$2,470

Comparable Properties

3

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EXCEPTIONAL ACCESSIBILITY 97 WALK

SCORE

91 TRANSIT SCORE

CTA GREEN LINE

CTA BROWN LINE

CTA BLUE LIN

E

L A K E M I C H I G A N

MILLENNIUM PARK

38 MINUTE WALK

RIVERWALKStroll on the recently renovated/extended Chicago Riverwalk

25 MINUTE WALK

HOUSE OF BLUESCatch a show at the famous

House of Blues

22 MINUTE WALK

MERCHANDISE MART

Walk to Merchandise Mart, Chicago's tech and innovation hub

17 MINUTE WALK

CHICAGO CTA STATION

Access the CTA Brown/Purple Line

via the nearby Chicago and N Franklin Station

7 MINUTE WALK

HUBBARD STREET CORRIDOR

River North's hottest nightlife is a short

walk away

15 MINUTE WALK

MICHIGAN AVE(MAGNIFICENT MILE)Stroll along Chicago's famous world-class

Magnificent Mile

17 MINUTE WALK

APPLE STOREFuture Location

28 MINUTE WALK

20 MINUTE WALK

12 MINUTE WALK

17 MINUTE WALK

MAGNIFICENT MILE

HUBBARDSTREET

CORRIDOR

MORNINGS IDE NORTH

1 MINUTE WALK

MOODY BIBLE INSTITUTE

25-Acre, 2,100 student private

institution

4 MINUTE WALK

WALTER PAYTON COLLEGE PREPRanked #1 Best

Public High School In America for 2018

by Niche

1 MINUTE WALK

Located in the heart of Downtown Chicago’s Old Town Neighborhood, Morningside North offers residents a walk-to-everything location, with immediate access to shopping and dining destinations, abundant community services and amenities, and every mode of public transportation afforded by the city of Chicago.

600 W Chicago1.6M SF Tech Hub

13 MINUTE WALK


MORNINGSIDE NORTH

90 94

The Property is a short walk to two separate CTA stations, which provide access to three train lines (Clark/Division station accesses the Red line and the Chicago station accesses the Brown and Purple lines). All three lines provide direct access to the Loop financial district, and residents can access both the north and south side of Chicago via these lines.

Residents are less than one mile from the Ohio Street Feeder, which serves as the on-ramp for both Interstate 90 and 94 and includes access to express lanes.

Immediate proximity to two Divvy Stations (N Wells St. & W Walton St. + N Wells St & W Elm St.) Additionally, Wells St. is a major north/south artery with bike lanes in each direction.

All modes of transportation are within a short walk from Morningside North:

Within two blocks are numerous stops along CTA’s #70 – Division, #156 – LaSalle, and #22 – Clark bus lines, providing affordable access to nearby retailers and community amenities

CTA GREEN LINE

CTA BROWN LINE

CTA BLUE LIN

E

L A K E M I C H I G A N

THEATRE DISTRICTWalking distance

to world-renowned Theatre District

27 MINUTE WALK

151 N. FRANKLIN ST.Future home of CNA

25 MINUTE WALK

RIVER NORTH POINT

20 MINUTE WALK

444 W. LAKE ST. 150 N. RIVERSIDE PLAZA

Steps to Chicago's most anticipated new office towers

26 MINUTE WALK

UNION STATION

OGILVIE TRANSPORTATION

CENTERCatch a Metra train to the suburbs

via Union and Ogilvie Station

33 MINUTE WALK

1 NORTH WACKERWalk to work at

Chicago institutions along Wacker Drive

29 MINUTE WALK

FULTON MARKETWalk to the emerging

Fulton Market tech and entertainment

corridor

37 MINUTE WALK

RESTAURANT ROWWalk to the famed

dining on Restaurant Row

35 MINUTE WALK

CHICAGO FRENCH MARKET

Grab-&-go meals and fresh produce at the European-inspired

French Market 30 MINUTE WALK

SOHO HOUSE(HOT GREEN ST)Walk to the trendy new club on hot

Green Street 39 MINUTE WALK

MILWAUKEE AVETake Hipster

Highway to Wicker Park, Bucktown & Logan Square Neighborhoods27 MINUTE WALK

WILLIS TOWERWalking distance to one of the world's tallest buildings

34 MINUTE WALK

EAST BANK CLUBSteps to the city's

premier lifestyle and social club

21 MINUTE WALK

The Chicago Water Taxi stop along the Chicago River is located at Chicago Avenue, and provides access to Downtown Chicago, Michigan Ave. and other Chicago locations during the warmer months of the year.

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12 | EXECUTIVE SUMMARY12

Standing in Desirable Old Town, at the nexus of Chicago’s most prominent and affluent neighborhoods, Morningside North epitomizes the pinnacle of urban living. Old Town and surrounding neighborhoods that include River North (south), Michigan Avenue / Streeterville (southeast), Gold Coast (east), and Lincoln Park (north) comprise one of the densest urban environments in the country featuring world class high-end retail, luxurious residences, and renowned entertainment, restaurants and amenities.

Lincoln Park and Old Town are popular young professional and family-friendly neighborhoods that are rich with culture, nature, shopping, and residents who are drawn to its impressive institutions, memorable restaurants, and tree-lined streets.

The area is also home to renowned entertainment venues such as The Second City and the Steppenwolf Theater, and is a prominent location for boutique shopping. Throughout its history it is always been a location for affluent north side residents to shop, dine and reside, particularly along the stretch of Wells Street from North Avenue to Division Street. Dozens of popular restaurants and bars are located along this half-mile stretch.

THE PINNACLE OF URBAN LIVING

12


MORNINGSIDE NORTH

PREMIER GLOBAL MSAChicago is recognized as one of the most important financial, cultural, and industrial centers in the United States. More

than 400 major corporations, including 34 Fortune 500 companies, are headquartered in Chicago. Anchored by its central

location, extensive talent pipeline and overall quality of life, Chicago represents one of the world’s largest and most

diversified economies. Chicago’s abundant art & culture, strong economy, and mid-continent location make it a central hub

of the U.S. and an incredibly desirable market.

NEARLY

3 MILLION CITY RESIDENTS

OVER

9 MILLION PEOPLE WITHIN MSA

3RD LARGEST CITY

IN THE U.S.

LARGEST & MOST DIVERSIFIED

ECONOMIES

One of the

MORE THAN 4 MILLION EMPLOYEES

GROSS REGIONAL

PRODUCT OF OVER

$500 BILLION

6 MAJOR LEAGUE SPORTS TEAMS

2ND LARGEST TRANSIT SYSTEM IN THE U.S..

BUSIEST AIRPORTS IN THE COUNTRY

Two of the

CHICAGO’S “LOOP” OFFERS OVER 130 MILLION FT.2 OF OFFICE SPACE AND APPROXIMATELY

600,000 JOBS

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No. 9 WaltoN

• 36-Story Condo Tower• Built: 2017• Listings Range From $1.75M - $6.3M

Querry Biomedical research ceNter

• Northwestern University’s $455M, 600,000 SF Research Center

• Estimated $4B Impact on Chicago’s Economy During Its First Ten Years

• Expected To Create Over 2,000 Full-Time Jobs Once Completed in May 2018

old toWN Park

• Multi-Phase Mixed-Use Development

• 405 New Residential Units And Ground Floor Retail Expected to Deliver Sept. ‘18

• 1BR Rents: $2,360 - $3,000

NeWBerry liBrary

• $30 Million Renovation Project Underway

4 east elm

• 26-Story Mixed-Use Condo Tower• Built: 2016• Median Sales Price: $3.3M

the siNclair

• New Mixed-Used Development Featuring A Multi-Story Jewel-Osco

• 1BR Avg. Rent: $2,199/$3.08 PSF

clark/divisioN cta suBWay statioN

• Recently Completed $50M Renovation and Improvement Project


MORNINGSIDE NORTH

Ideally positioned in the heart of Downtown Chicago, Morningside North is surrounded by numerous recently completed and to-be-built developments backed by significant capital investment. Within close proximity of the Property, several high-profile mixed-use developments have recently broken ground and newly constructed one-bedroom apartments in the surrounding neighborhood are achieving market-leading rents that exceed $2,300 ($828 higher than current contract rents at Morningside North) and $3.10 per square foot.

the Gallery oN Wells

• Market-Rate Apartments• Built: 2017• 1BR Avg. Rent: $2,277/$3.01 PSF

marloWe

• Market-Rate Apartments• Delivery Date: September 2018

exhiBit oN suPerior


aurelieN


home2 suites By hiltoN

• $67 Million, 206-Key Hotel• Delivery Date: October 2018

eiGht o Five


moody BiBle iNstitute

• 25-Acre Campus With Over 2,100 Students• New $24M, 50,000 SF Chapman Center Currently Under Construction

Walter PaytoN colleGe

PreParatory hiGh school

• Ranked #1 Best Public High School In America For 2018 By Niche

• Recently Completed $20M Expansion and Improvement Project

MORNINGS IDE NORTH

1BR Current Contract Rent: $1,533/$2.67 PSF

ABUNDANT CAPITAL INVESTMENT

N. LASALLE D

R

W. OAK ST

N. WELLS S

T

N. CLARK ST

N. O

RLE

AN

S S

T

oNe chicaGo sQuare

• $700M Mixed-Use Development• Construction Expected To Start In Fall 2018

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METICULOUSLY MAINTAINED SENIOR COMMUNITY...Morningside North offers exceptional senior-style living in one of the most desirable locations in Downtown Chicago. Constructed in 1981, the

Property features 256 one- and two-bedroom units that average 576 square feet. Each unit features a refrigerator, electric range and oven, open

breakfast bar, life safety pull cords, and a tile-wrapped shower. In addition to controlled access and courtesy patrol, Morningside North offers a

full suite of amenities tailored towards seniors including a community library, community room with full kitchen, outdoor patio with picnic area,

laundry facility, and 34 tenant storage centers.

...REPLETE WITH RENOVATIONS

2015THREE NEW ATLAS GAS

BOILERS

2017COMPLETE

ROOF REPLACEMENT

2016TWO NEW

ROOFTOP AIR CHILLERS

COMMUNITY LIBRARY

SENIOR LOUNGE

Total Cost - $392,000 Total Cost - $220,000 Total Cost - $312,000


MORNINGSIDE NORTH

AFFLUENTDEMOGRAPHICS

The average household income is an impressive $126,889, nearly double the average for the city of Chicago population. 42+% of households earn over

$100,000.

$126,889 AFFLUENT RESIDENTS

Median home values of $524,744 makes renting a sensible option for many.

$524,744 PRICEY HOMES

76% of people are college educated and 34% hold a master's degree or higher.

76% HIGHLY-EDUCATED POPULATION

The area surrounding Morningside North includes several of the nation’s most prestigious colleges and is home to world-class

dining, shopping, and entertainment. Within a half-mile radius, median home values are 105% higher compared to the rest of

the City, and average household incomes are nearly 50% higher than the city average.

HALF-MILE RADIUS DEMOGRAPHICS HIGHLIGHTS

2 0 1 8 E S T I M A T E D P O P U L A T I O N

M E D I A N H O M E V A L U E

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

% W I T H B A C H E L O R S D E G R E E O R H I G H E R

34,678 $524,744 $126,889 75.8%0.5-MILE RADIUS 0.5-MILE RADIUS 0.5-MILE RADIUS 0.5-MILE RADIUS

92,054 $487,082 $149,860 79.9%1.0-MILE RADIUS 1.0-MILE RADIUS 1.0-MILE RADIUS 1.0-MILE RADIUS

9,504,650 $242,814 $98,638 35.9%CHICAGO MSA CHICAGO MSA CHICAGO MSA CHICAGO MSA

Source: Claritas Pop-Facts Feb 2018

DOUG CHILDERSManaging [email protected]

WICK KIRBYSenior [email protected]

TRANSACTION GUIDELINESThe Property is being offered all-cash on an “As-Is, Where-Is” basis, subject to any existing rent and income restrictions required by the HAP Contract.

HFF has been engaged by the Owner of the Property to market it for sale. Information concerning the Property described herein has been obtained from sources other than HFF, and neither Owner nor HFF, nor their respective equity holders, officers, employees and agents makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all reference to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a purchaser, and HFF, its partners, officers, employees and agents disclaim any liability that may be based upon or related to the information contained herein. Prospective purchasers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change.

DEREK [email protected]

MICHAEL [email protected]

Please Direct All Inquiries To:

Holliday Fenoglio Fowler, L.P. ("HFF") an Illinois licensed real estate broker.

HFF has been engaged by the owner of the property to market it for sale. Information concerning the properties described herein has been obtained from sources other than HFF, and neither Owner nor HFF, nor their respective equity holders, officers, employees and agents makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all reference to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a purchaser, and HFF, its partners, officers, employees and agents disclaim any liability that may be based upon or related to the information contained herein. Prospective purchasers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change.

© 2018 Holliday Fenoglio Fowler, L.P., HFF Real Estate Limited (collectively, “HFF”), HFF Securities L.P. and HFF Securities Limited (collectively, “HFFS”) are owned by HFF, Inc. (NYSE: HF). HFF and its affiliates operate out of 26 offices and are a leading provider of commercial real estate and capital markets services to the global commercial real estate industry. HFF, together with its affiliates, offers clients a fully integrated capital markets platform including debt placement, investment advisory, equity placement, funds marketing, M&A and corporate advisory, loan sales and loan servicing. For more information please visit hfflp.com or follow HFF on Twitter @HFF.

hfflp.com

3424 Peachtree Road NESuite 1750Atlanta, Georgia 30326tel (404) 832-8460fax (404) 942-2181www.hfflp.com

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EXECUTIVE - HFF