www.annandaleco.com

Villa Serena Apartments 2815 Peavy Road, Dallas, Texas 75228

OfferingMemorandum

Villa Serena ApartmentsTable of Contents

Executive Summary 1

Property Information 2

Property Photos 3

Location 4

Aerial Photos 5

Sales Comparables 6

Rent Comparables 7

Tax Valuation 8

Financial Projections 9

Area Overview 11

Information About Brokerage Services 13

1

Villa Serena ApartmentsExecutive SummaryAs exclusive agent for the owner, Annandale Real Estate is pleased to offer the opportunity to purchase Villa Serena Apartments located at 2815 Peavy Road, Dallas, Texas. Villa Serena is offered “As Is, Where Is” basis. Prospective purchasers should conduct an independent evaluation of the property before making an offer.

• REO investment opportunity with tremendous upside potential in terms of occupancy and rent growth.

• Conveniently located one mile North of IH-30 off of North Buckner Boulevard.

• Located only eight miles from Dallas CBD and minutes from Dallas’ Fair Park, the Dallas Arboretum, and White Rock Lake Park.

PRICE: TBD by market

YEAR BUILT: 1970

NUMBER OF UNITS: 102

NET LEASABLE AREA: 83,708 SF

AVERAGE UNIT SIZE: 821 SF

AVERAGE RENT PER UNIT: $528

AVERAGE RENT PER SF: $.64

OCCUPANCY: 57%

TERMS: All Cash

*Source: STDBonline

2

Villa Serena ApartmentsProperty InformationVilla Serena is a 102 unit apartment community built in 1970 on 4.02 acres. The property consists of four buildings with wood frame construction on slab, stucco exterior and mansard-style roofing system. Villa Serena has approximately 365 feet of frontage on the western side of Peavy Road, featuring limited access gates, asphalt driveways and parking. The property has mature trees and landscaping; as well as, a children’s playground and on-site laundry facility.

Property Address 2815 Peavy Road, Dallas, Texas 75228County Dallas Zoning Multifamily District 2Parcel Size 4.02 acresYear Built 1970Construction Type Wood Frame, Stucco ExteriorFoundation Concrete SlabNumber of Floors 2Number of Buildings 4Number of Units 102Density 25 units per acre

UNIT MIX

Villa Serena unit mix offers four 1 bedroom and efficiency floor plans that make up 53%, while three two bedroom floor plans make up the remaining 47% of the community and offer tenants the choice between traditional garden apartment units or townhomes.

Units % of Total Unit Description

Square Feet Square Feet Market Rent $/sf Total Rent

6 5.9% EFF 488 2,928 $375 $0.77 $ 27,000 32 31.4% 1 BR 690 22,080 $485 $0.70 $ 186,240

8 7.8% 1 BR Den 688 5,504 $515 $0.75 $ 49,440 24 23.5% 2 BR 960 23,040 $565 $0.59 $ 162,720

8 7.8% 1 BR TH 720 5,760 $495 $0.69 $ 47,520 15 14.7% 2 BR TH 970 14,550 $595 $0.61 $ 107,100

9 8.8% 2 BR TH + 1,094 9,846 $620 $0.57 $ 66,960 102 100.0% 821 83,708 $529/mo $0.64/sf $ 646,980

3

Villa Serena ApartmentsProperty Photos

4

Villa Serena ApartmentsLocation

Copyright © and (P) 1988–2010 Microsoft Corporation and/or its suppliers. All rights reserved. http://www.microsoft.com/mappoint/Certain mapping and direction data © 2010 NAVTEQ. All rights reserved. The Data for areas of Canada includes information taken with permission from Canadian authorities, including: © Her Majesty the Queen in Right of Canada, © Queen's Printer for Ontario. NAVTEQ and NAVTEQ ON BOARD are trademarks of NAVTEQ. © 2010 Tele Atlas North America, Inc. All rights reserved. Tele Atlas and Tele Atlas North America are trademarks of Tele Atlas, Inc. © 2010 by Applied Geographic Systems. All rights reserved.

Villa Serena Location Map

0 mi 5 10 15

Villa Serena is located at 2815 Peavy Road just east of Loop 12/North Buckner Boulevard in East Dallas. This location provides convenient access to Interstate 30, a major east/west highway that provides quick access to Downtown Dallas and Central Expressway (SH 75) to the west and Interstate 635 (LBJ Freeway) to the east.

5

Villa Serena ApartmentsAerial Photos

6

Villa Serena ApartmentsSales ComparablesName Address City Year

BuiltUnits Avg SF Date of

SaleSale Price $/Unit $/SF

Barclay Square

8117 Barclay Street Dallas 1970 141 919 Oct-10 $3,125,000 $22,163 $24

Top Flight/ Star East

2700 Grand & 1628 Fitzhugh

Dallas 1965 59 546 Aug-10 $999,000 $16,932 $31

Aspen Chase 11760 Ferguson Rd Dallas 1983 300 785 Jul-10 $6,625,600 $22,085 $28

Holly Bend 7112 Holly Hill Drive

Dallas 1975 80 714 Jun-10 $937,500 $11,719 $16

Forest Estates

9655 Chimney Hill Dallas 1979 276 888 Feb-10 $5,200,000 $18,841 $21

Del Rey Village

9607 Wickhersham Dallas 1973 288 1,015 Dec-09 $5,350,000 $18,576 $18

Sienna Springs

9455 Skillman St Dallas 1981 336 793 Nov-09 $4,900,000 $14,583 $18

Copyright © and (P) 1988–2010 Microsoft Corporation and/or its suppliers. All rights reserved. http://www.microsoft.com/mappoint/Certain mapping and direction data © 2010 NAVTEQ. All rights reserved. The Data for areas of Canada includes information taken with permission from Canadian authorities, including: © Her Majesty the Queen in Right of Canada, © Queen's Printer for Ontario. NAVTEQ and NAVTEQ ON BOARD are trademarks of NAVTEQ. © 2010 Tele Atlas North America, Inc. All rights reserved. Tele Atlas and Tele Atlas North America are trademarks of Tele Atlas, Inc. © 2010 by Applied Geographic Systems. All rights reserved.

Villa Serena Sales Comp Map

0 mi 2 4 6 8 10

7

Villa Serena ApartmentsRent ComparablesName Address City Year

BuiltUnits Avg SF Average

Market Rent

Price/SF

Average Effective Rent

Price/SF

Villa Serena 2815 Peavy Rd Dallas 1970 102 821 $529 $0.64 $499 $0.61

Casa Bella 2970 Peavy Rd Dallas 1974 176 864 $540 $0.63 $510 $0.59

Shayona(all bills paid)

2880 Peavy Rd Dallas 1973 243 806 $613 $0.76 $592 $0.73

Casas Unicas 2718 N Buckner Blvd Dallas 1967 52 990 $651 $0.66 $620 $0.63

Spring Hollow 2703 N Buckner Blvd Dallas 1984 82 654 $455 $0.70 $425 $0.65

Timber Park 2700 N Buckner Blvd Dallas 1968 158 880 $574 $0.65 $526 $0.60

Comparable Averages 1973 136 836 $566 $0.68 $535 $0.64

Copyright © and (P) 1988–2010 Microsoft Corporation and/or its suppliers. All rights reserved. http://www.microsoft.com/mappoint/Certain mapping and direction data © 2010 NAVTEQ. All rights reserved. The Data for areas of Canada includes information taken with permission from Canadian authorities, including: © Her Majesty the Queen in Right of Canada, © Queen's Printer for Ontario. NAVTEQ and NAVTEQ ON BOARD are trademarks of NAVTEQ. © 2010 Tele Atlas North America, Inc. All rights reserved. Tele Atlas and Tele Atlas North America are trademarks of Tele Atlas, Inc. © 2010 by Applied Geographic Systems. All rights reserved.

Villa Serena Rental Comp Map

0 mi 0.1 0.2 0.3 0.4 0.5

8

Villa Serena ApartmentsTax ValuationDALLAS CENTRAL APPRAISAL DISTRICT – 2010 Real Estate Tax Valuation

Commercial Account #00000726325000000Address: 2815 PEAVY RD Market Area: 1DSJ15 Mapsco: 38-Y (Dallas)e0

2010 Certified ValuesImprovement:

Land: Market Value:

$1,099,780+ $350,220

=$1,450,000Tax Agent: CANTRELL MCCULLOCH INCRevaluation Year: 2010 Previous Revaluation Year: 2009

d(Certified 2010) #

State Code Zoning Frontage (ft)

Depth (ft) Area Pricing Method Unit

PriceMarket

Adjustment Adjusted

PriceAg

Land

1 MFR - APARTMENTS

MULTIFAMILY DISTRICT 2 0 0

175,111SQUARE

FEET Standard $2.00 0% $350,222 N

* City School County and

SchoolEqualization

College Hospital Special District

Taxing Jurisdiction DALLAS DALLAS ISD

DALLAS COUNTY

DALLAS CO COMMUNITY

COLLEGE PARKLAND HOSPITAL UNASSIGNED

Tax Rate per $100 $0.797 $1.237811 $0.2531 $0.09923 $0.271 N/ATaxable Value $1,450,000 $1,450,000 $1,450,000 $1,450,000 $1,450,000 $0

Estimated Taxes $11,556.50 $17,948.26 $3,669.95 $1,438.84 $3,929.50 N/ATax Ceiling N/A N/A

Total Estimated Taxes: $38,543.04

9

Villa Serena ApartmentsFinancial ProjectionsFINANCIAL PROJECTIONS 2010 Operational Performance

IncomeGross Potential Rent 2010 Ops Per Sq Ft Per Unit

Total Gross Potential Rent 360,213 $ 4.30 $ 3,532 Rent Loss 3.80% $ (13,703) $ (0.16) $ (134) Concessins 4.76% $ (17,159) $ (0.20) $ (168) Collection Loss -1.66% $ 5,987 $ 0.07 $ 59

Net Rental Income $ 335,338 $ 4.01 $ 3,288 Other Income 8.67% $ 31,216 $ 0.37 $ 306

Total Income $ 366,554 $ 4.38 $ 3,594

Expenses Payroll $ 47,533 $ 0.57 $ 466 R&M $ 72,022 $ 0.86 $ 706 Marketing $ 3,960 $ 0.05 $ 39 G&A $ 8,032 $ 0.10 $ 79 Management Fee $ 16,281 $ 0.19 $ 160 Utilities $ 112,703 $ 1.35 $ 1,105 Insurance $ 20,193 $ 0.24 $ 198 Real Estate Taxes $ 16,333 $ 0.20 $ 160

Total Operating Expense $ 297,057 $ 3.55 $ 2,912

Net Operating Income $ 69,497 $ 0.83 $ 681

10

Villa Serena ApartmentsFinancial ProjectionsProjected Stabilized Proforma

IncomeGross Potential Rent Proforma Per Sq Ft Per Unit

Total Gross Potential Rent 646,980 $ 7.73 $ 6,343 Vacancy Loss 15.00% $ (97,047) $ (1.16) $ (951) Concessins 6.00% $ (38,819) $ (0.46) $ (381) Collection Loss 5.00% $ (32,349) $ (0.39) $ (317)

Net Rental Income $ 478,765 $ 5.72 $ 4,694 Other Income 5.00% $ 32,349 $ 0.39 $ 317

Total Income $ 511,114 $ 6.11 $ 5,011

Expenses Payroll $ 83,628 $ 1.00 $ 820 R&M $ 73,200 $ 0.87 $ 718 Marketing $ 3,900 $ 0.05 $ 38 G&A $ 6,970 $ 0.08 $ 68 Management Fee $ 20,445 $ 0.24 $ 200 Utilities $ 133,300 $ 1.59 $ 1,307 Insurance $ 25,062 $ 0.30 $ 246 Real Estate Taxes $ 43,356 $ 0.52 $ 425

Total Operating Expenses $ 389,861 $ 4.66 $ 3,822

Net Operating Income $ 121,254 $ 1.45 $ 1,189

11

Villa Serena ApartmentsArea OverviewDALLAS OVERVIEW

Workforce. Dallas businesses access a three million strong workforce. With 30% of the region’s workforce having at least a college degree, Dallas offers you over 500,000 professionals in management, finance, computing, architecture, engineering and the sciences. These are joined by another 200,000 professionals in education and the arts.

Companies. The Dallas area is home to 46 Fortune 1000 companies. Dallas itself is home to 113 headquarters operations that each employs more than 1,000 globally. Of Forbes largest privately held companies, 19 are located in Dallas.

Lifestyle. With a cost of living 92% of the national average and no personal income tax, Dallas offers a wonderful quality of life. The transit system is growing, with 43 rail stations complete or under construction. Area colleges and universities enroll 275,000 students and Dallas has the largest arts district in the U.S. Thousands of restaurants, 24 libraries, 70 million square feet of shopping, 21,000 park acres, nearly 100 miles of trails, plus franchises for all the major professional sports leagues provide endless entertainment.

Future. Dallas is a growing city with a local market of 6.3 million residents. Since 2003, Dallas employment growth has exceeded the nations. The Brookings Institute rates Dallas in the top tier of best performing metro areas over the recession.

12

Villa Serena ApartmentsArea OverviewGovernment. Dallas government is pro-development, maintaining a comprehensive plan and economic development strategy to encourage growth. The City is investing over $1.35 billion through its most recent bond program to upgrade the infrastructure to keep businesses competitive.

DALLAS APARTMENT MARKET

Overall the Dallas apartment market increased from 91.5% to 92.2% ending 3rd Qtr 2010. As of December 2010 Dallas added 3,625 new units to supply; while absorbing 17,873 units as occupancy improves in the DFW area. The market currently has time to re-capture lost occupancy and rental rates before the apartment development engine restarts in earnest in the Metroplex.

Combined with the fact that the DFW area is consistently ranked as one of the top places to live, work and do business; if properly managed, Villa Serena has an ideal location that will aid in the ability to attract residents, maintain occupancy, while providing investors with a stable and long term cash flow.

SOUTH WHITE ROCK LAKE/EAST DALLAS APARTMENT MARKET

Villa Serena’s Peavy Road address just east of North Buckner Boulevard places the property in the Far East Dallas rental submarket, an area of the DFW Metroplex known for its proximity to White Rock Lake and the Dallas Arboretum to the west, and larger renter population. The submarket is bounded by White Rock Lake, Interstate 635 and Interstate 30. The South White Rock/I-30 sub-market increased from 86% to 87.3% ending 3rd Qtr 2010. Market Rents are flat but Effective Rents have increased over 2.1% annually as concessions drop with increasing occupancy.

13

EQUAL HOUSINGOPPO RTU N ITY

Approved by the Texas Real Estate Commission for Voluntary Use

efore working with a real estate broker, you shouldBknow that the duties of a broker depend on whomthe broker represents. If you are a prospectiveseller or landlord (owner) or a prospective buyer or

tenant (buyer), you should know that the broker who liststhe property for sale or lease is the owner’s agent. Abroker who acts as a subagent represents the owner incooperation with the listing broker. A broker who acts asa buyer’s agent represents the buyer. A broker may act asan intermediary between the parties if the partiesconsent in writing. A broker can assist you in locating aproperty, preparing a contract or lease, or obtainingfinancing without representing you. A broker is obligatedby law to treat you honestly.

IF THE BROKER REPRESENTS THE OWNER:The broker becomes the owner’s agent by entering into anagreement with the owner, usually through a written -listing agreement, or by agreeing to act as a subagent byaccepting an offer of subagency from the listing broker. Asubagent may work in a different real estate office. Alisting broker or subagent can assist the buyer but doesnot represent the buyer and must place the interests ofthe owner first. The buyer should not tell the owner’sagent anything the buyer would not want the owner toknow because an owner’s agent must disclose to theowner any material information known to the agent.

IF THE BROKER REPRESENTS THE BUYER:The broker becomes the buyer’s agent by entering into anagreement to represent the buyer, usually through awritten buyer representation agreement. A buyer’s agentcan assist the owner but does not represent the ownerand must place the interests of the buyer first. The ownershould not tell a buyer’s agent anything the owner wouldnot want the buyer to know because a buyer’s agent mustdisclose to the buyer any material information known to theagent.

IF THE BROKER ACTS AS AN INTERMEDIARY:A broker may act as an intermediary between the partiesif the broker complies with The Texas Real Estate License

Act. The broker must obtain the written consent of eachparty to the transaction to act as an intermediary. Thewritten consent must state who will pay the broker and, inconspicuous bold or underlined print, set forth the broker’sobligations as an intermediary. The broker is required totreat each party honestly and fairly and to comply withThe Texas Real Estate License Act. A broker who actsas an intermediary in a transaction:

(1) shall treat all parties honestly; (2) may not disclose that the owner will accept aprice less than the asking price unless authorized inwriting to do so by the owner; (3) may not disclose that the buyer will pay a pricegreater than the price submitted in a written offerunless authorized in writing to do so by the buyer; and(4) may not disclose any confidential information orany information that a party specifically instructs thebroker in writing not to disclose unless authorized inwriting to disclose the information or required to do soby The Texas Real Estate License Act or a courtorder or if the information materially relates to thecondition of the property.

With the parties’ consent, a broker acting as anintermediary between the parties may appoint a person whois licensed under The Texas Real Estate License Actand associated with the broker to communicate with andcarry out instructions of one party and another person whois licensed under that Act and associated with the brokerto communicate with and carry out instructions of theother party.

If you choose to have a broker represent you, you should enter into a written agreement with the brokerthat clearly establishes the broker’s obligations and yourobligations. The agreement should state how and bywhom the broker will be paid. You have the right tochoose the type of representation, if any, you wish toreceive. Your payment of a fee to a broker does notnecessarily establish that the broker represents you. If youhave any questions regarding the duties andresponsibilities of the broker, you should resolve thosequestions before proceeding.

Texas Real Estate Brokers and Salespersons are licensed and regulated by the Texas Real Estate Commission (TREC). If you have a questionor complaint regarding a real estate licensee, you should contact TREC at P.O. Box 12188, Austin, Texas 78711-2188 or 512-465-3960.

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

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

Buyer, Seller, Landlord or Tenant Date

01A TREC No. OP-K

Exclusive Listing Advisors:

Jay AnnandPresident214.207.9016 Cell214.358.3975 Officejay@annandaleco.com

Hugh WallManaging Director469.879.3730 Cell214.358.3975 Officehugh@annandaleco.com

ANNANDALE REAL ESTATE17776 Preston RoadSuite 250Dallas, TX 75252www.annandaleco.com

The information contained in this Offering Memorandum is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Annandale Real Estate (“Broker”) and should not be made available to any other person or entity without the written consent of Broker. This Offering Memorandum has been prepared to provide summary information to prospective purchasers, and to only establish a preliminary level of interest in Villa Serena Apartments (“Property”). The information contained herein is based in part upon information supplied by Owner and in part upon information obtained by Broker from sources it deems reasonably reliable but is not a substitute for a thorough due diligence investigation conducted by a prospective purchaser. This Offering Memorandum contains select information pertaining to the Property and does not purport to be all-inclusive or to contain all of the information, which a prospective purchaser may desire. Broker has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the Property, the future projected financial performance of the Property, the size and square footage of the Property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the Property. The information contained in this Offering Memorandum has been obtained from sources we believe to be reliable; however, Broker has not verified, and will not verify, any of the information contained herein, nor has Broker conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

Owner and Broker expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers to purchase the Property and/or to terminate discussions with any party at any time with or without notice. Owner shall have no legal commitment or obligation to any interested party reviewing this Offering Memorandum or making an offer to purchase the Property unless a written agreement for the purchase of the Property has been fully executed and delivered by the Owner and such party and any conditions to Owner’s obligations thereunder have been satisfied or waived and then only to the extent expressly provided for therein. Broker is not authorized to make any representations or agreements on behalf of Owner.

www.annandaleco.com

Villa Serena Apartments 2815 Peavy Road, Dallas, Texas 75228