Jacob Brown | REAL 4200 | November 19, 2015

21 Forty Medical DistrictMARKET ANALYSIS

PAGE 1

ContentsGeneral Site Description.......................................................................................2Detailed Description of the Multi-Family Complex...............................................4

Neighborhood Analysis.........................................................................................9Market Analysis...................................................................................................14

Market Value.......................................................................................................23Bibliography........................................................................................................27

General Site Description

The property is located at the address of 2140 Medical District Dr, Dallas, TX 75235 which is approximately 1000 feet, heading north east on Medical District Drive, from the major street of Harry Hines Boulevard. The property is found on the corner of the intersection of Medical District Drive and Bengal Street and has one main ingress and egress point located on Bengal Street. If there is no parking within the prospective tenant parking lot there are multiple parallel parking spots lining Bengal Street.

The building was built in 2009 and is classified as a Class A, mid-rise, multi-family asset. It sits directly across Bengal Street from the Colonial Reserve Apartments and is visible from traffic coming through the Medical District Drive and Bengal Street intersection and is even visible from Parkland Hospital that is located approximately 1000 feet away heading 20 degrees north of west from the apartments in a straight line. In addition, the apartments have a sign on the corner of Medical District Drive and Bengal Street advertising their name and whereabouts.

PAGE 1

Negative Surrounding Aesthetics

Leasing office or the sign are not appealing to the eye Bengal Street is not well maintained with multiple cracks and some

potholes The apartments themselves look like they are a storm shelter or military

base of pure concrete from the exterior The immediate view of the north eastern apartments is the Colonial

Reserve Apartments, and what looks to be a small distribution warehouse of some kind

Positive Surrounding Aesthetics

Landscaping and paving around the perimeter of the property is well groomed, looks welcoming, and flows well with Medical District Dr.

Beautiful view from the north west apartments of the new Parkland Hospital

Dallas skyline view from the top of the parking garage Well-groomed and professional looking atmosphere when heading

towards the UTSW campus. The surroundings make the apartment seem more high dollar than it is

PAGE 2

Detailed Description of the Multi-Family ComplexLeasing OfficeOther than a sign that exclaims “LEASING” the rental office is hard to identify at first glance. There is no professional appearance in front of the doors or any visible markings from the street saying what this part of the building actually is. In addition, while the “LEASING” sign is positioned directly over the office, it blends with the color of the building and is very plain making it difficult to see. It is not something that would be noticed unless someone was really looking for it. In fact, according to the leasing agent of the aprtments that was interviewed, there have also been issues with prospects mixing up 21 Forty Medical District Apartments and the Colonial Reserve Apartments that are located directly across the street. The leasing agent explained that this is a direct result from the lack of signage and locational awareness for the leasing office.

Despite these flaws the office is reluctantly in an easy location to deduce. It is located just to the right of the ingress and egress location that contains 10 parking spaces, including 1 handicapped spot, for future or current tenants between the ingress/egress point and the gates of the parking garage. There is no access within the building unless a person goes through the leasing office or has access to the parking garage or any secured alternate entrances.

The rental office interior has a lot of room to deal with a heavy amount of traffic. The two leasing desk are right next to the doorways leading into the office. In addition, the manager and assistant managers’ offices are within eyesight of the leasing desks and contain windows to monitor traffic coming in and out of the rental office. These offices also provide supplemental areas for private conversations between current or prospective tenants, as well as comfortable environments for committing to a lease.

PAGE 3

Amenities21 Forty Medical District Apartments offer a wide range of amenities including:

24-Hour Fitness Center Club House with functional bar/kitchen area, dining, and entertainment

area Two Pools Game Lounge complete with Billiards and Shuffle Board WIFI-Lounge Business/Study Center Conference Room Outdoor Grill Area Allowance of pets (2 maximum with restriction to some breeds) Bark Park Reserved Parking Available Gated Parking Garage

Apartment Features and AmenitiesThe complex has a total of 17 floor plans ranging from 494-1,618 square feet. The majority of the floorplans seem to be 1 bedroom/1 bath which is interesting. 1 bedroom/1 bath allows for management to charge more per square foot, however, when comparing a ratio of price per square foot to actual square footage between 1 bed/1 bath and 2bed/2 bath one can understand that the up-charge does not compensate enough. At 100% occupancy this would lead to a deficit to annual income by comparison. In addition, eventual loss of rentable square feet at a break even quantity between the two floor plans plays a minor role. Furthermore, from a selling aspect 2 bed/2 bath have an advantage when it comes to resale value as compared to 1 bed/1 bath.

On the other hand having a majority of floorplans as 1 bed/1bath does have its’ upside. The subject of occupancy is the first to mention. The demand for 1 bed/1 bath is tremendous because most people would rather not live with a roommate or depend on them to make their share of rent. Furthermore, these apartments are not necessarily considered lowest of low income, nor are they student living. The prospects coming into the leasing office are assumed to make the necessary income to afford these floorplans with ease. These two factors make it easier to get these units filled with tenants that are to the stature that the leasing management wants. Second, a majority of 1 bed/1bath allow the apartment to provide a higher array of floorplan layouts accommodating to different individuals needs and resulting in the supply for an expected greater demand. It also increases the amount of units the community can contain which, can create an increase in the overall income on a property.

PAGE 4

Floor Plans

494sf 524sf

704sf 816sf 848sf

901sf 906-967 SqFt 1170-1191sf

PAGE 5

1172sf 1213sf 1260sf

1344sf 1481sf 1681sf

Apartment Amenities

Nine to twelve-foot ceilings Hardwood-style flooring Stainless steel appliances, refrigerator with ice maker Granite-style countertops Ceramic tile backsplash Espresso-color kitchen cabinets Pendant and track lighting Kitchen Island Breakfast bar Pantry Built-in microwave Built-in work station Double sink vanity in bathroom Garden bathtub Full-size washer and dryer Walk-in closet Ceiling fans Ample storage Patio or balcony Pre-wired intrusion alarm

PAGE 6

Market PresenceCurrently the Fairfield Residential management team at the 21 Forty Medical District Apartments uses a couple of marketing tools for awareness and advertising throughout the market. These include:

Registration on all apartment search sites Facebook Real Estate referrals Past charity work (through the previous management company)

According to the sourced leasing agent for the apartments the majority of foot traffic and calls from prospects were in direct result of the apartment being registered on all apartment search sites and through Real Estate referrals (aka locators). Furthermore, he added that even the majority of out of state prospects got their information or lead from these two resources.

However, it can be assumed that some, if only a few, prospects or current tenants found their interest in the apartments through Facebook or the past charity work. The apartments Facebook page is interesting and informative making it a decently appealing market tool. Its’ Timeline is full of apartment news as well as non-related intriguing articles and subjects. Its’ About page contains general information about the community including hours of operation, contact information, as well as a short and long description of the property. The Photos tab includes different photos of residents, events, and photos of the apartments and their amenities. The page even includes a Review tab that currently has 16 reviews. After visiting the site it is clear the apartments have all the right tools on their Facebook, it seems the problem is managements marketing strategy for it.

On the subject of charity work the leasing agent explained that Associated Estates, the company managing the property before Fairfield Residential’s takeover on August 28, 2015, had performed charity work through Rainbow Days Kids volunteer summer school back in June, 2015. This information is still relevant as many prospects back then are now residents. How many prospects this event sponsorship actually brought in is unknown, but sponsoring the event did provide advertisement for the apartments through event signage, print media, and the attendance of Associated Estates management.

PAGE 7

Neighborhood AnalysisGeneral Area21 Forty Medical District Apartments are located north west of central Dallas. They are less than a mile heading approximately east from the UT Southwestern campus and the Southwestern Medical District. Approximately 2 miles south east of the property Dallas North Tollway intersects with 35E leading towards the American Airlines Center.

DemographicsThe surrounding demographics for the community have been summed into an easy to read map and corresponding tables below.

PAGE 8

The reference area has been highlighted. Medical District Drive creates the south east border of the highlighted area. According to the map, the property actually sits just outside of the highlighted area, however, this area was chosen as the reference area because of the consistency in the median rent price and household income when compared to the community being analyzed. According to the same source the latest population statistic for the highlighted area was 2,343 people. Also, the counted number of family households was a mere 922 which was only 11% of the market within that area meaning that the demand for apartment living is rampant.

One can only assume that the UTSW campus has something to do with the channel of lower income that streams through the middle of the northern and southern borders of the map. In addition, the Dart Rail is located within walking distance of the apartments creating a strong bond between income and the commuting and convenience for residents within the area.

Retail, Shopping and RestaurantsGrocery and convenience stores look to be very limited within a mile of the area. The only stores to mention are Kroger Grocery (Green), Eagle Liquor (Pink), and Valero Corner Store (Blue) within a mile of the apartments.

PAGE 9

Most of the retail businesses are on the east side of Dallas North Tollway. The majority of businesses south of 35E are industrial related, and the amount of businesses to the west are limited due to the location of the UTSW campus.

As for restaurants. Jimmy Johns and Starbucks are located in the same area as the Kroger. Other than these two, fast food is practically non-existent within the range of a mile. On the positive side there are many small name restaurants around the area, especially on Maple Avenue that has been highlighted in yellow just north of the marked businesses.

Neighborhood AmenitiesThe following amenities are within an approximate 5 mile driving distance from the community:

Brook Hollow Golf Club (Red) Trinity River (Blue) Dallas Country Club (Yellow) Reverchon Park (Pink)

PAGE 10

Weichsel Park (Green)

EntertainmentThere is abundant entertainment within the surrounding neighborhood of the community. The main points of entertainment focused here include:

The American Airlines Center This center is the home stadium for the Dallas Mavericks and

Dallas Stars The Magnolia

PAGE 11

Cinema and cocktails Uptown Dallas Night Life

The Magnolia The Gingerman Texas de Brazil

Bowlounge Retro bowling alley and craft drinks

Sonny Bryans Smokehouse Medieval Times Dinner and Tournament

Knights and jousting themed dinner and theatre

The combination of this entertainment covers a wide array of interest among persons and presents an advantageous opportunity for the 21 Forty Medical District Apartments not only due to the location of the community but also because most of its’ tenants are single and between the ages of 25 and 35.

Negative Points to Address Demographics

The apartment community is located in a lower income area Hard to overcome low income within the area of a college and

transit Retail, Shopping, and Restaurants

Despite Kroger, not many branded grocery stores are nearby

PAGE 12

Fast food is virtually non-existent without having to travel more than a mile

Entertainment 2-3 mile drive to many of the entertainments that feature drinks Entertainment within the area is expensive, especially within

Uptown Dallas

Positive Points to Run With Demographics

Location next to a college and transit will always attract demand Most tenants are single going to school, working in the hospitals,

or working within north Dallas (positive considering the amount of entertainment for this group)

Retail, Shopping, and Restaurants Many small restaurants within 1 mile of the community Retail and high dollar restaurants require substantial income to

consistently shop them. I.E. the problem with retail and high dollar restaurants being minutes driving distance from the community is not a problem since this will probably be an occasional trip for most the communities tenants.

Neighborhood Amenities Multiple parks and golf clubs within 5 miles of the apartments.

Also, the Trinity is 2 miles south of the complex. Entertainment

The type of entertainment in the area appeals to the type and generation of tenants

Each entertainment is different from the others Never a shortage of things to do As the entertainment grows so will the demand for tenancy within

the area from the related demographic of people.

Summary of Effect from Neighborhood to the Subject PropertyThe surrounding neighborhood for the 21 Forty Medical District apartment community definitely adds value to the community. The majority of negatives pointed out deal with location. In this instance the locational issues of the entertainment and retail is overcome by the quality of these things, as well as by the lower income within the community’s area making these things more a privilege to do rather than a constant necessity. It is also trumped by the convenience of the nearby DART transit and the ability of the tenants to walk to their jobs at the hospitals or to school. All together the surrounding resources provide a constant demand boost for these type of apartment communities through the millennial generation.

PAGE 13

Market Analysis

Subject Property

2140 Medical District       NEW! County Tax page for this property 2140 Medical District Dr       Y-Map   G-Map   B-MapDallas TX 75235-8002(214) 905-3490MGT CO: LSETERM:

PARKING:

PETS:

Fairfield Residential3-12Covered/Assigned (+25)/Parking Garage< 80# (300 NR)/$15mo/2 Max/Breed Restrict

AREA:MAP: SCHOOL DIST: CENSUSTRACT: # UNITS: YR BLT/RENO: OCCUPANCY: COUNTY: ELECTRIC: APP FEE: LOC COMMISSION:

AI334-Y (Dallas)Dallas0004.013962009 94.2DallasRESIDENTIAL $75

100% 1Brs 12m/50% 6-12m/Name Must Be On Guest CardREG REQUIRED  www.aptreg.com

More Pictures & Plans

Historical ReportIncluding 5-YearHistorical Chart

AMENITIES: Pools (2)

Laundry

Tennis

Water V-ball

Volleyball

Basketball

Racquetball

Jacuzzi

Sauna

Clubhouse

Business Center

All Bills Paid

BBQ Grill

Playground

Fitness Center

24-Hour Fitness Room

Jogging Trail

Access Gates

On-Site Mgmt

Corporate Rates

Short Term Leases

Near Transit

Income Restricted

Accepts Section 8

Self-Clean Oven

Cont-Clean Oven

Double Oven

F.F. Refrig

Ice Maker

Dishwasher

Disposal

Microwave

Crown Molding

High Speed Internet

Commercial Electric

Pantry

Ceiling Fan

Patio/Balcony

Extra Storage

Garden Tubs

Mini-Blinds

Private Alarms

Monitored Alarms

Vaulted Ceil

Walk-In Closet

Wall-Wall CarpetViews: City/Downtown/Pool

NOTES:

UNIT INFORMATION MIX DESC W/D FP SQFT MKT. RENT $/SF EFF. RENT EFF $/SF DPST NR FEE MKT ANN INC

2 EFF FP    494 $920   $1.86 $920   $1.86  150  100 $22,08043 EFF FP    524 $1,005   $1.92 $1,005   $1.92  150  100 $518,58061 1/1 FP    704 $1,155   $1.64 $1,155   $1.64  150  100 $845,4602 EFF FP    729 $990   $1.36 $990   $1.36  150  100 $23,760

46 1/1 FP    816 $1,140   $1.40 $1,140   $1.40  150  100 $629,28051 1/1 FP    848 $1,180   $1.39 $1,180   $1.39  150  100 $722,16024 1/1 Study FP    901 $1,250   $1.39 $1,250   $1.39  150  100 $360,00021 1/1 FP    906 $1,230   $1.36 $1,230   $1.36  150  100 $309,9603 1/1 FP    967 $1,210   $1.25 $1,210   $1.25  150  100 $43,560

PAGE 14

36 1/1 Study FP    1,170 $1,350   $1.15 $1,350   $1.15  150  100 $583,20013 2/2 FP    1,172 $1,730   $1.48 $1,730   $1.48  150  100 $269,8806 1/1 Study FP    1,191 $1,360   $1.14 $1,360   $1.14  150  100 $97,9208 2/2 FP    1,213 $1,725   $1.42 $1,725   $1.42  150  100 $165,600

17 2/2 FP    1,260 $1,775   $1.41 $1,775   $1.41  150  100 $362,10029 2/2 FP    1,344 $1,825   $1.36 $1,825   $1.36  150  100 $635,10031 2/2 FP    1,481 $1,965   $1.33 $1,965   $1.33  150  100 $730,9803 2/2 FP    1,618 $1,758   $1.09 $1,758   $1.09  150  100 $63,288

396 TOTALS     377,624 $531,909   $531,909       $6,382,908

  AVERAGES     954 $1,343 $1.41 $1,343 $1.41      

SPECIALS: Prices Change Daily-RMS/LRO; Deposit Can Be Up To 1m Rent Based on Credit

Information obtained from sources deemed reliable, but is not guaranteed.ALN Apartment Data. • 972/931-2553 or 800/643-6416 • www.alndata.com

Last Update: 2015/10/16

Competitors

PAGE 15

Colonial Reserve at Medical District NEW! County Tax page for this property 2222 Medical District Dr       Y-Map   G-Map   B-MapDallas TX 75235-8075(214) 634-2224MGT CO: LSE TERM:

PARKING: PETS:

MAA Communities3-14Att Gar./Parking GarageOPEN (400 NR)/$10mo/2 Max

AREA:MAP: SCHOOL DIST: CENSUSTRACT: # UNITS: YR BLT/RENO: OCCUPANCY: COUNTY: ELECTRIC: APP FEE: LOC COMMISSION:

AI334-X (Dallas)Dallas0004.012782007 94.6DallasRESIDENTIAL $50

100%/Name on App & Guest CardREG REQUIRED  www.aptreg.com

More Pictures & Plans

Historical ReportIncluding 5-YearHistorical Chart

AMENITIES: Pools (1)

Laundry

Tennis

Water V-ball

Volleyball

Basketball

Racquetball

Jacuzzi

Sauna

Clubhouse

Business Center

All Bills Paid

BBQ Grill

Playground

Fitness Center

24-Hour Fitness Room

Jogging Trail

Access Gates

On-Site Mgmt

Corporate Rates

Short Term Leases

Near Transit

Income Restricted

Accepts Section 8

Self-Clean Oven

Cont-Clean Oven

Double Oven

F.F. Refrig

Ice Maker

Dishwasher

Disposal

Microwave

Crown Molding

High Speed Internet

Commercial Electric

Pantry

Ceiling Fan

Patio/Balcony

Extra Storage

Garden Tubs

Mini-Blinds

Private Alarms

Monitored Alarms

Vaulted Ceil

Walk-In Closet

Wall-Wall CarpetViews: Downtown/Pool

NOTES: Extra Storage: Ask Office

UNIT INFORMATION MIX DESC W/D FP SQFT MKT. RENT $/SF EFF. RENT EFF $/SF DPST NR FEE MKT ANN INC

11 EFF FP    502 $863   $1.72 $863   $1.72  150  200 $113,91616 EFF FP    557 $843-$868   $1.54 $843-$868   $1.54  150  200 $164,25620 1/1 FP    658 $988   $1.50 $988   $1.50  150  200 $237,1209 1/1 FP    703 $1,140   $1.62 $1,140   $1.62  150  200 $123,1208 1/1 FP    709 $1,103   $1.56 $1,103   $1.56  150  200 $105,888

44 1/1 FP    710 $1,054   $1.48 $1,054   $1.48  150  200 $556,51242 1/1 FP    767 $1,113   $1.45 $1,113   $1.45  150  200 $560,95213 1/1 FP    864 $1,283   $1.48 $1,283   $1.48  150  200 $200,1488 1/1 Study FP    912 $1,178   $1.29 $1,178   $1.29  150  200 $113,088

12 1/1 FP    939 $1,118   $1.19 $1,118   $1.19  150  200 $160,9929 1/1 Townhome FP    1,017 $1,578   $1.55 $1,578   $1.55  150  200 $170,424

20 2/2 FP    1,062 $1,473   $1.39 $1,473   $1.39  200  200 $353,52012 2/2 FP    1,076 $1,558   $1.45 $1,558   $1.45  200  200 $224,3528 2/2 FP    1,119 $1,575   $1.41 $1,575   $1.41  200  200 $151,200

24 2/2 FP    1,121 $1,390   $1.24 $1,390   $1.24  200  200 $400,3209 2/2 FP    1,270 $1,696   $1.34 $1,696   $1.34  200  200 $183,1686 2/2.5 Townhome FP    1,434 $1,902   $1.33 $1,902   $1.33  200  200 $136,9447 3/3 FP    1,465 $2,288   $1.56 $2,288   $1.56  250  200 $192,192

PAGE 16

278 TOTALS     242,293 $345,676   $345,676       $4,148,112

  AVERAGES     872 $1,243 $1.43 $1,243 $1.43      

SPECIALS: Prices Change Daily-RMS/LRO; Deposit Can Be To 1m Rent Based On Credit; 1/2 Off App & Admin

Information obtained from sources deemed reliable, but is not guaranteed.ALN Apartment Data. • 972/931-2553 or 800/643-6416 • www.alndata.com

Last Update: 2015/11/04

Southwestern       NEW! County Tax page for this property 5959 Maple Ave       Y-Map   G-Map   B-MapDallas TX 75235-6505(214) 352-5959MGT CO: LSETERM:

PARKING: PETS:

Greystar Management1-13Covered/Parking Garage< 100# (350-500 NR)/$10mo/2 Max/Breed Restrict

AREA:MAP: SCHOOL DIST: CENSUSTRACT: # UNITS: YR BLT/RENO: OCCUPANCY: COUNTY: ELECTRIC: APP FEE: LOC COMMISSION:

AI3(Dallas)Dallas0004.063592013 92DallasRESIDENTIAL $59.59

100% 12-13m/50% 6-11mBill us the day your client moves-in Paid 30 Days After Move InREG REQUIRED  www.aptreg.com

More Pictures & Plans

Historical ReportIncluding 5-YearHistorical Chart

AMENITIES: Pools (1)

Laundry

Tennis

Water V-ball

Volleyball

Basketball

Racquetball

Jacuzzi

Sauna

Clubhouse

Business Center

All Bills Paid

BBQ Grill

Playground

Fitness Center

24-Hour Fitness Room

Jogging Trail

Access Gates

On-Site Mgmt

Corporate Rates

Short Term Leases

Near Transit

Income Restricted

Accepts Section 8

Self-Clean Oven

Cont-Clean Oven

Double Oven

F.F. Refrig

Ice Maker

Dishwasher

Disposal

Microwave

Crown Molding

High Speed Internet

Commercial Electric

Pantry

Ceiling Fan

Patio/Balcony

Extra Storage

Garden Tubs

Mini-Blinds

Private Alarms

Monitored Alarms

Vaulted Ceil

Walk-In Closet

Wall-Wall CarpetViews: Dwntwn/Pool/Crtyd

NOTES: Tanning Facility. Gaming Area. Study/Meeting Suites. Conference. Dry Cleaning, Housekeeping, Full Concierge Services, On Site Trainers. Courtesy Officer. 24hr Maintenance

UNIT INFORMATION MIX DESC W/D FP SQFT MKT. RENT $/SF EFF. RENT EFF $/SF DPST NR FEE MKT ANN INC

18 EFF FP    482 $904-$954   $1.93 $904-$954   $1.93    125 $200,66418 EFF FP    528 $977-$1,338   $2.19 $977-$1,338   $2.19    125 $250,02057 1/1 FP    557 $1,018-$1,386   $2.16 $1,018-$1,386   $2.16    125 $822,16845 1/1 FP    606 $1,145-$1,383   $2.09 $1,145-$1,383   $2.09    125 $682,560

PAGE 17

15 1/1 FP    608 $1,013-$1,268   $1.88 $1,013-$1,268   $1.88    125 $205,29042 1/1 FP    646 $1,048-$1,341   $1.85 $1,048-$1,341   $1.85    125 $602,0287 1/1 FP    672 $1,021-$1,121   $1.59 $1,021-$1,121   $1.59    125 $89,964

45 1/1 FP    705 $1,117-$1,468   $1.83 $1,117-$1,468   $1.83    125 $697,95012 1/1 FP    762 $1,226-$1,326   $1.67 $1,226-$1,326   $1.67    125 $183,74415 1/1 FP    762 $1,248-$1,578   $1.85 $1,248-$1,578   $1.85    125 $254,34034 2/2 FP    1,046 $1,522-$1,569   $1.48 $1,522-$1,569   $1.48    125 $630,56415 2/2 FP    1,133 $1,633-$1,656   $1.45 $1,633-$1,656   $1.45    125 $296,01024 2/2 FP    1,154 $1,653-$1,743   $1.47 $1,653-$1,743   $1.47    125 $489,02412 2/2 FP    1,158 $1,688-$1,743   $1.48 $1,688-$1,743   $1.48    125 $247,032

359 TOTALS     264,605 $470,946   $470,946       $5,651,358

  AVERAGES     737 $1,312 $1.78 $1,312 $1.78      

SPECIALS: Prices Change Daily-RMS/Yieldstar; Starting Prices Reflected Above

Information obtained from sources deemed reliable, but is not guaranteed.ALN Apartment Data. • 972/931-2553 or 800/643-6416 • www.alndata.com

Last Update: 2015/11/07

Inwood on the Park       NEW! County Tax page for this property 5720 Forest Park Rd       Y-Map   G-Map   B-MapDallas TX 75235-6420(214) 353-9100MGT CO: LSETERM:

PARKING: PETS:

Sunchase American6+$300/11-15Parking Garage (+100)< 65#/$450 (250 NR)/$10mo/2 Max/Breed Restrict

AREA:MAP: SCHOOL DIST: CENSUSTRACT: # UNITS: YR BLT/RENO: OCCUPANCY: COUNTY: ELECTRIC: APP FEE: LOC COMMISSION:

AI334-T (Dallas)Dallas0004.063122003 96DallasRESIDENTIAL $99/149

$250 Flat Fee 6-15m/Name On App & Guest CardPaid After 60 Days

More Pictures & Plans

Historical ReportIncluding 5-YearHistorical Chart

AMENITIES: Pools (1)

Laundry (2)

Tennis

Water V-ball

Volleyball

Basketball

Racquetball

Jacuzzi

Sauna

Clubhouse

Business Center

All Bills Paid

BBQ Grill

Playground

Fitness Center

24-Hour Fitness Room

Jogging Trail

Access Gates

On-Site Mgmt

Corporate Rates

Short Term Leases

Near Transit

Income Restricted

Accepts Section 8

Self-Clean Oven

Cont-Clean Oven

Double Oven

F.F. Refrig

Ice Maker

Dishwasher

Disposal

Microwave

Crown Molding

High Speed Internet

Commercial Electric

Pantry

Ceiling Fan

Patio/Balcony

Extra Storage

Garden Tubs

Mini-Blinds

Private Alarms

Monitored Alarms

Vaulted Ceil

Walk-In Closet

Wall-Wall CarpetViews: Pool/Woods

NOTES: Uptown Location In The Heart Of The Medical District

PAGE 18

UNIT INFORMATION MIX DESC W/D FP SQFT MKT. RENT $/SF EFF. RENT EFF $/SF DPST NR FEE MKT ANN INC

84 EFF FC    558 $890   $1.59 $865   $1.55  150  150 $897,12032 1/1 FC    698 $975   $1.40 $950   $1.36  200  200 $374,40032 1/1 FC    834 $1,075   $1.29 $1,050   $1.26  200  200 $412,80020 1/1 Study FC    884 $1,145   $1.30 $1,120   $1.27  200  200 $274,80032 1/1 Study Sunroom FC    884 $1,145   $1.30 $1,120   $1.27  200  200 $439,68024 2/2 FC    944 $1,115-$1,150   $1.20 $1,090-$1,125   $1.17  250  200 $326,16016 2/2 FC    944 $1,115-$1,150   $1.20 $1,090-$1,125   $1.17  250  200 $217,44032 2/2 Study Sunroom FC    1,126 $1,310   $1.16 $1,285   $1.14  250  200 $503,04040 2/2 FC    1,198 $1,395   $1.16 $1,370   $1.14  250  200 $669,600

312 TOTALS     263,576 $342,920   $335,120       $4,115,040

  AVERAGES     845 $1,099 $1.30 $1,074 $1.27      

SPECIALS: Deposit Can Be Up To 1mo Rent Based On Credit; $300 Off 1st Mo Rent Vacant 12moLs

Information obtained from sources deemed reliable, but is not guaranteed.ALN Apartment Data. • 972/931-2553 or 800/643-6416 • www.alndata.com

Last Update: 2015/10/09

Comp ComparisonThe following table comparing the subject property and competitors was developed from the information above. All properties and their corresponding information used in the comparison were derived from ALN Apartment Data. Comps were chosen with three variables in mind: Location, Class coordination of the assets, and average $/square foot.

Location Year Built Vacancy Avg. Rents RSF Avg. $/SqFt # of Units Eff. Ann. Inc.2140 Medical 75235 2009 5.8% 1,343$ 377,624 1.41$ 396 6,382,908$ Colonial 75235 2007 5.4% 1,243$ 242,293 1.43$ 278 4,148,112$ Southwestern 75235 2013 8% 1,312$ 264,605 1.78$ 359 5,651,358$ Inwood 75235 2003 4% 1,099$ 263,576 1.30$ 312 4,115,040$

Tot Eff. Inc. 20,297,418$

Comparable Statistics

LocationTo ensure consistency with the relative demographics of the area surrounding the subject property each comparable chosen was within the 75235 zip code and no more than 1.5 miles from the subject property. In addition, the UTSW campus consumes a large amount of tenants between all four properties. With that said it felt appropriate to keep the comps within that general area,

PAGE 19

therefore, all properties used are within walking distance of the UTSW campus. A map of the surrounding apartment communities, including some that were not comped, has been provided with the comparable marked as follows: 21 Forty (Red), Colonial (Blue), Inwood (Yellow), and Southwestern (Green)

VacancyAt first glance the vacancy rate for 21 Forty Medical District Apartments seemed high, however, after research on the median rate for the DFW Metroplex, which averages to about 5.5%, the subject’ rate parallels the norm. As shown, vacancy rates between the comps vary, this could be due to a number of different reasons including rental price, location, lack or abundance of amenities, lack of demand for floorplans, etc. The Southwestern and Inwood properties were chosen for vacancy research as they are the extent of the range for this comparable.

Southwesterns’ vacancy rate sits at a high 8%. This can be confusing when comparing the rate to the location of the community as it sits just one block from the UTSW campus. However, it makes up for its’ lack of occupancy through the price the community charges per square foot. The price per square foot this community charges is an entire $0.37 more than the subject property and $0.35-$.048 when compared to the group. What this does is it compensates for lack of occupancy through increasing the effective annual income, which in turn will compensate for market share.

PAGE 20

The Inwood community seems to be just the opposite. With the vacancy rate sitting at a low 4% and the building being built in 2003 one can only assume that the rate is a direct result of low rental prices. A quick glance at the previous chart provided and it is seen that average rent for this community is $200-$300 less than any others. In addition, the community is located on the border of the UTSW campus. Average $/square foot on this property is $1.30. Even with 312 units to lease, the age of the building limits its ability to raise prices and in return create a greater effective annual income resulting in a lost market share.

Market ShareThe table below was derived from Table blah. Using the effective annual income as a sales price for each individual community and then dividing that sales price by the total of all of the comps effective annual incomes aloud the result of individual market shares while treating the comps as the market.

The indicated value of each community was estimated using the effective annual income as a sales price once more, using an operational expense ratio of 40% with each community, and using a market cap rate for Class A apartments of 5.5%. The formula is as follows:

Value=NOI/Cap rate

Market Share Indicated Value2140 Medical 31.4% 42,552,720$ Colonial 20.4% 27,654,080$ Southwestern 27.8% 37,675,720$ Inwood 20.3% 27,433,600$

21 Forty dominates almost a third of the market share between these comps. This can be attributed to the substantial advantage the community has over the others on the subject of the number of units which leads to an advantage in the amount of rentable square feet. To continue to dominate the market share within this competitive group all 21 Forty Medical Districts Apartments will need to do is maintain a moderate vacancy rate and keep their price per square foot reasonable. They already have the up-side in the battle.

It is interesting to look at the ratio of Southwestern’s rentable square feet to its’ number of units. The comp is only short plus or minus 40 units as compared to 21 Forty, yet, its rentable square feet is much smaller. This suggest a number of things. First, 21 Forty Medical District’s floorplans are much larger than Southwesterns and even the other two comparables. Furthermore, with the number of amenities 21 Forty Medical District has the suggestion also implies that the entire property is a very large one. Second, without even looking at the ALN data, one can predict that Southwestern has very small floorplans. Finally, the previous assumption and the combination of high prices per square foot suggest that most of the apartments for Southwestern are one bedroom, and if

PAGE 21

they are not the apartments realize they can up-charge rent because of a tremendous demand for whatever is available at that location.

Lastly, there was a mention about lack of signage at 21 Forty’s leasing office towards the beginning of this report. As a result of that, it was also exclaimed that many potential prospects for 21 Forty Medical District would get mixed up between 21 Forty Medical District Apartments and the competing Colonial Apartments right across the street. This note begs the question of how much market share have these competitors taken away from the market share of 21 Forty Medical District Apartments? More reasonably, how much could have potentially been taken? Even when calculating a mere .5% using the previous data provided the amount in potential lost income is equal to $101,487 or if broken down to a tenant level it would be a loss of 6.3 potential tenants.

Market Value Suggestions for Improving Market Value/Share

Offer incentives to current tenants to refer a friend to Like the community Facebook page or even refer them to the leasing office

Flat amount off of their monthly rent Tickets to a sporting event Gift Cards

Leasing Office Exterior Update New and noticeable sign

PAGE 22

Wayfinding signs around the building directing prospects to the leasing office

Decoration on the Leasing office doors to draw attention Seasonal Decorations Advertising so simply as “Lease Today!” Lots of color. No color that blends in

Act on Bad Reviews Almost every site, including the apartments Facebook page has bad

reviews (almost half of the reviews) Appoint teams weekly to address the tenants issue Rotate teams out regularly (every week) to avoid employee frustration Figure out if the problem can be fixed and if it is worth fixing With the previous, some people are impossible to please so know

when to move to the next issue

New Ideas Sponsor events on the UTSW campus

Job Fairs School sporting events Involve the current tenants and make it a social event

Virtual tours for out of state prospects A picture is worth a thousand words

Bus Shuttle from the apartments to Uptown Dallas Weekends only since a majority of the tenants work during the week Cover charge, make it reasonable compared to Uber A lot of liability, might need an agreement signed before proceeding If every weekend is too often and too costly it can be an occasional

apartment funded trip. Bowlounge Medieval Times Texas de Brazil

Proposals Deemed to Have a Worthy Impact1. Leasing Exterior Update2. Addressing Bad Reviews3. Sponsorship of UTSW events4. Virtual Tours

Estimated Cost of Primary Projects Leasing Exterior Update

Prices were estimated off of products observed on Google Shop.

PAGE 23

Quantity $/Qnty Est. CostWayfinding Signs 6 10$ 60$ Main Entry Signs 2 750$ 1,500$ Decorations 10 10$ 100$ Installment 2 250$ 500$

Tot. Est. Cost 2,160$

Addressing Bad Reviews The average salary of a full time leasing agent in the DFW

Metroplex is $37,358 annually which breaks down to approximately $20/hr.

It would not be ok to assume that when management removes a leasing consultant team (2-3 people) for the week that management would compensate these employees for potential commission they could have had because there is no way to determine that.

Instead there could be a system of bonus pay set up, possibly depending on the amount of positive feedback that agent gets from the customers they resolve an issue for (negative feedback won’t count).

I have set up a model that could help with this:Hours $/Hr Salary

40 20$ 800$

$/Pos Review Positive Negative Bonus20$ 8 2 160$

Total Weekly $ 960$

Leasing Agent Weekly Pay

So really the proposed plan would only incur additional cost if the agent actually had positive review.

Sponsorship of UTSW Events The cost on this is unknown Advertising the apartments brand on campus would require some

kind of fee paid to the university. That fee is unknown unless management was to go through with the sponsorship.

The cost of this however would allow direct marketing to some of the apartment’s key prospects. It would also produce a great al of brand awareness after a couple of times sponsoring events.

Virtual Tours According to the Wall Street Journal and its research into the

company Matterport who produces the type of camera used to

PAGE 24

indulge these tours, the cameras cost around $4500. In addition, brokers are charged a $19 fee for each tour they do.

Now those statistics are for residential, but the equipment for using such a technique in multi-family real estate is assumed to be the same if not similar.

The only unknown would be the fees for the tours since it would only be necessary to perform 1 every year if that.

Safe to say estimated cost on this proposal would be at least $4500

Timing and Payback of Proposals Leasing Exterior Update

Correct timing would be January when the flow of prospectors begins to pick up again

Payback would happen as soon as the break-even point is met with new tenants signing

Addressing Bad Reviews The plan could be implemented instantaneously, or withheld until

the bulk of new tenants move into the complex (August-October) This plans payback is tricky. Almost impossible to judge, however,

the payback can be measured by the amount of current tenants that decide to release as compared to previous years without the plan in affect.

Also, there needs to be a correct calculation for the amount of bonus provided off of positive review and the amount the apartments benefit from the lessened amount of move-outs. Directly speaking to NOI. Again hard to judge.

Sponsoring UTSW Events With the lack of knowledge to even estimate a cost on this plan the

payback is a toss-up, however, timing is not Timing should be during athletic events, early spring season

through summer, and at all casual or business casual university events.

Virtual Touring As soon as the tour of the apartment community has been

successfully videoed it needs to be uploaded to an easy to find link on the apartment’s website.

Videoing the property only once should be sufficient for a considerable amount of time until it is determined that another video be taken (for upgrades, new amenities, renovations, new floorplans, etc.)

Only having to video the property once allows for tremendous potential for pay back just from one prospect!

If the apartment is able to sign a prospect using this technology as the main source of information then the cost of a $4500 camera, assuming that’s all that’s needed, can be made up in approximately 4 months (using the average rent of $1343)

PAGE 25

Conclusion and JustificationAfter reviewing the primary proposals for implementation updating the exterior of the leasing office and implementing a virtual tour seem to be the most viable. While the other two are good ideas, the lack of information pertaining to expenses poses too large a risk to take the next step on. Updating the exterior of the leasing office is a must and should be the number one priority for the sake of increasing curb appeal, and professional stature. Also, it was referenced earlier that 21 Forty Medical District Apartments could have potentially lost market share to its across the street competitor because of this matter. In addition, the virtual tour seems to be a cost effective way to attract out of state prospects, or even prospects who do not want to have to take an actual tour, but all together its’ payback time is the real catch.

PAGE 26

Bibliography"21 Forty Medical District Apt. Behind the Scene Information." Telephone interview. 19 Nov. 2015.

"ALN Apartment Data." ALN Apartment Data. N.p., n.d. Web. 19 Nov. 2015.

"Corporate Sponsorships." Rainbow Days. N.p., n.d. Web. 19 Nov. 2015.

"Dallas, Texas." (TX) Profile: Population, Maps, Real Estate, Averages, Homes, Statistics, Relocation, Travel, Jobs, Hospitals, Schools, Crime, Moving, Houses, News, Sex Offenders. N.p., n.d. Web. 19 Nov. 2015.

" Earth." Google Earth. N.p., n.d. Web. 19 Nov. 2015.

"Facebook Logo." Facebook. N.p., n.d. Web. 19 Nov. 2015.

"Google Maps." Google Maps. N.p., n.d. Web. 19 Nov. 2015.

"Next in Housing Market: Digital 3-D." WSJ. N.p., n.d. Web. 19 Nov. 2015.

"Salary: Leasing Consultant." Glassdoor. N.p., n.d. Web. 19 Nov. 2015.

PAGE 27