Download pdf - Boreas Drive...BOREAS DRIVE APARTMENTS 12302 BOREAS DRIVE HOUSTON, TX 77039 Apartments for Sale Units: 10 Avg Size: 528 Date Built: 1985 Rentable Sq. Ft.: 5,280 Acreage: 0.50 Occupancy:

A P A R T M E N T H O M E S

Boreas Drive

BOREAS DRIVE APARTMENTS 12302 BOREAS DRIVE HOUSTON, TX 77039

Apartments for Sale

Units: 10

Avg Size: 528

Date Built: 1985

Rentable Sq. Ft.: 5,280

Acreage: 0.50

Occupancy: 100%

Class: C

SALIENT FACTS:

♦ Available on a All Cash or New Loan Basis ♦ Close to work centers

♦ 10 unit duplex located in the Aldine submarket ♦ Maintains high occupancy

♦ Great upside potential ♦ Ideal starter property for the small investor

♦ Blue collar tenant profile ♦ NO TOURS ALLOWED WITHOUT AN ACCEPTED LOI

♦ Easy access to I-69, I-45, Beltway 8, Hardy Toll and Downtown Houston

Market

For More Information Please Contact:

Tom [email protected]

713-355-4646 ext 102

1770 St. James Place Suite 382Houston, TX 77056

www.ketent.com


Asking Price Est Mkt Rent (Jul-20)Price Per Unit Amortization (months) Current Avg Rent

Price Per Sq. Ft. Debt ServiceStabilized NOI Monthly P & I

Interest Rate

Date DueWater Meter / Master Master (1 meter) Est Res for Repl/Unit/Yr

Yield MaintenancePitched

PRO-FORMA INCOMECurrent Street Rent with a 5% Increase $7,665 / Mo

Estimated Gross Scheduled Income $7,665 / Mo

Estimated Loss to Lease (1% of Total Street Rent) 1%

Estimated Vacancy (4% of Total Street Rent)Estimated Concessions and Other Rental Losses (% of Total Street Rent) 0%

Estimated Utilities IncomeEstimated Other Income $175 / Unit / Yr

Estimated Total Rental IncomeESTIMATED TOTAL PRO-FORMA INCOME $7,428 / Mo

3 Mo Avg Income Annualized

Fixed Expenses2019 Tax Rate & Future Assessment

7/20 operating statement Estimated

$1,431 per Unit $1,582 per Unit

Gas

Total Utilities $658 per Unit $565 per Unit

Other ExpensesGeneral & Admin & MarketingRepairs & MaintenanceLabor CostsContract ServicesManagement Fees 0.00% $ per Unit 5.00% $446 per Unit

Total Other Expense $227 per Unit $996 per Unit

Total Operating Expense $2,315 per Unit $3,142 per Unit

Reserve for Replacement $300 per Unit $300 per Unit

Total Expense $2,615 per Unit $3,442 per Unit

Net Operating Income (Actual Underwriting)

Asking PriceCap Rate

Proposed DebtEquityEstimated Debt ServiceCash Flow

Cash on Cash

1,750

00 $ / Unit / Yr

Estimated Fixed Expenses

Estimated Expenses

(3,679)

$11,432

PRO-FORMA

91,980

89,131

Est Future Tax Assessment

Proposed Loan Parameters

A/C Type: HVAC-Indiv

Physical Information

Number of Units New Loan @ 65% of Value

20.000

Avg Unit Size

Financial Information

10528

Market

Physical Occ (Jul-20)5,2800.50Land Area (Acres) $54,708

1985

Indiv

Units per Acre

Elec MeterRoof Style

DISCLAIMER: The information contained herein has been obtained from sources that we deem reliable. We have no reason to doubt the accuracy of the information, but we have not verified it and make no guaranty, warranty or representation about it. It is your resonsibility to independently confirmits accuracy and completeness. We have not determined whether the property complies with deed restrictions or any city licensing or ordinances including life safety compliance or if the property lies within a flood plain. THE PROSPECTIVE BUYER SHOULD CAREFULLY VERIFY EACH ITEM OFINCOME OR EXPENSE AND PERFORM OR HAVE PERFORMED ANY INSPECTIONS TO VERIFY POSSIBLE CONTAMINATION BY ASBESTOS, LEAD PAINT, MOLD OR ANY OTHER HAZARDOUS SUBSTANCES. The owner reserves the right to withdraw this listing or change the price atanytime without notice during the marketing period.

$1,500

$0

$0

$85

$1,754

$426

$175 per Unit

MarketMarket

31,423

54,708

34,423

9,957

3,000

54,708

Operating Information

NOTES: ACTUALS: Income and Expenses calculated using owner's onwer's July, 2020 - 12 month trailing operating statement. Taxes are based on 2019 HCAD/Aldine ISD/MUD Tax Invoices. PRO FORMA: Income is Pro Forma as Noted. Taxes were calculated using 2019 Tax Rate & Future Assessment. Insurance is estimated. Management Fees calculated as 5.% of Gross Income, Other expenses are Estimated for the Pro Forma.

26,153

5,651

$4,500

100%

4%

$438

$300

4.00%

2020 Tax Assessment$11,432

91,980

Est Ins per Unit per Yr

$7,300$7,290

10 Yrs

Yes

Property Tax Information

Net Rentable Area

3.31828Tax Rate (2019)

Est Future Taxes

89,131

$344,519

$344,519Est 2020 Taxes

$43 per Unit

23,153

$8 per Unit

Other Expenses

$300 per Unit

$150 per Unit

$3,000

$450 per Unit

$115 per Unit$1,151

Estimated Other Expenses

MODIFIED ACTUALS

$0$ per Unit

2,265

15,816

(920)

Trash

Water & Sewer

$115 per Unit

Date Built

$0 $ per Unit

Utilities

Total Fixed Expense

Utilities

Electricity $ per Unit$0

14,310

$5,427

INCOME

$993 per UnitTaxes

EXPENSE

$87,480

Fixed Expenses

Insurance

Aug '19 thru Jul '20 Expenses

61,327

61,327

3,000

Estimated Utilities

$0 $ per Unit

$0 $ per Unit

$100 per Unit$1,000

$ per Unit

$4,457

6,578

$4,384$438 per Unit$4,384

$9,926 2019 HCAD/Aldine ISD/MUD Tax Invoices

$543 per Unit

$1,151

$11,432 $1,143 per Unit

$438 per Unit

7/23/2020 BoreasDriveApartments

PROPERTY OVERVIEW

BOREAS DRIVE APARTMENTS 12302 BOREAS DRIVE HOUSTON, TX 77039 Keymap: 414G

Construction Quality: C

Age: 1985 Access Gates Park & Ride Nearby Mortgage BalanceElec Meter: Indiv Cable Ready Walk-In Closets Amortization Aldine ISD $1.347115A/C Type: HVAC-Indiv Laundry Rooms Near-by School Bus Pick-up P & I Harris County $0.407130Water: Master (1 meter) Mini Blinds Shuttle Route Type Harris County Flood Control $0.027920Wiring: Majority Copper Bookshelves Assumable Port of Houston Authority $0.107400Roof: Pitched Ceiling Fans Monthly Escrow Harris County Hospital District $0.165910Paving: Asphalt Origination Date Harris County Education Dept $0.005000

Due Date Lonestar College Sys $0.107800

# of Stories: 1 Interest Rate HC WCID 74 $0.950000Parking: 15-20 HC Emerg Serv Dist 25 & 1 $0.200000

Buildings: 5 Yield Maintenance 2019 Tax Rate/$100 $3.318275Units/Acre: 20.00 Transfer Fee 2020 Tax Assessment $344,519

*In Select Units HCAD Improvement Sq.Ft. 5,280

https://youtu.be/ISIJjBATY_g

Materials: Wooden frame with concrete panels and mortar

PLEASE DO NOT VISIT THE SITE WITHOUT AN APPOINTMENT MADE THROUGH THE BROKER.

PROPERTY HIGHLIGHTS

PROPERTY INFORMATION TAXING AUTHORITY - HARRIS COUNTYEXISTING MORTGAGE ACCT NO: 0471660000075

AMENITIES

360

02

The Boreas Drive Apartments is 5 one story duplex apartments located in the I-69 North submarket of Houston, Texas. The assets were built in 1985, per HCAD.

Residents enjoy a completely fenced and gated community with amenities that include mini-blinds, all electric appliances, kitchen pantries and ceiling fans. Water and trash

are included in the rent. The apartments are all electric with separate electric meters and residents pay their own electric bills. There is one water meter and currently the

owner pays for water and doesn't rebill the residents. The property does not have a laundry facility, however, there is one near-by. There are no washer/dryer connections in

any of the units. There are 15 to 20 parking spaces. 15 are on the sides of the buildings and residents park in front of their building as well. There is one large dumpster

located on the property, paid for by the owner, for the use of all residents.

There are many industrial and airport employees in the area but minimal new apartments. Ideal to upgrade. Blue collar profile. Per owner, the roofs were replaced in 2017

and the property did not flood during Hurricane Harvey and Imelda. The Broker feels that interior upgrades could result in a rent increase.

The owner reports that the property tends to stay 100% full. This suggests that there is rental upside. Unit #6 recently renewed with a $40/month increase (renewal begins

10/1/20).

The broker added a 5% management fee, as, in his experience, there are companies which specialize in remote management of high occupancy properties for a 5% fee.

And, any prospective lender will require a management fee in their underwriting.

NO TOURS ALLOWED WITHOUT ACCEPTED LETTER OF INTENT FROM QUALIFIED BUYER.

ALL TOURS BY APPOINTMENT ONLY AND MUST BE SCHEDULED THROUGH THE BROKER.

PLEASE CLICK ON THE LINK BELOW FOR A VIDEO TOUR OF THE PROPERTY.

Disclaimer: The information contained in this Memorandum reflects material from sources deemed to be reliable, including data such as operating statements, rent roll, etc. provided by the Owner. Notwithstanding, KETEnterprises Incorporated does not make any warranties about the information contained in this marketing package. Every prospective purchaser should verify the information and rely on his accountants or attorneys for legal andtax advice. This offer is “As-Is, Where-Is”. Answers to specific inquiries will have to be supplied by the Owner and are available upon request. Rates of return vary daily. No representations are made concerning environmentalissues, if any.


Property Address Yr Built Units Impr Sq.Ft. Impr Value Impr Value/Unit Impr Value/Sq.Ft.

1 Su Casita 4825 Aldine Mail Route 1974 143 129,077 $7,138,819 $49,922 $55.31

0420970000006

2 Las Palmas 12550 John F Kennedy Blvd 1980 190 166,569 $10,627,617 $55,935 $63.80

1021660000043

3 Las Palmas II 5601 Hamill 1979 112 111,892 $6,509,487 $58,120 $58.18

1139680000001

4 Capewood 4335 Aldine Mail Route 1977 174 149,510 $11,489,202 $66,030 $76.85

1021660000045

5 Mi Casita 5005 Aldine Mail Route 1974 326 210,869 $12,117,009 $37,169 $57.46

0420970000011

Boreas Drive 12303 Boreas Dr 1985 10 5,280 $344,519 $34,452 $65.25

2020 KET RENT COMPARABLE TAX ANALYSIS

$62.81

KET Enterprises Incorporated I 1770 St. James Place Suite 382 I Houston, TX 77056 I 713-355-4646 I www.ketent.com

Averages 1978 159 128,866 $8,037,776 $50,271


2020 KET RENT COMPARABLE TAX ANALYSIS

KET Enterprises Incorporated I 1770 St. James Place Suite 382 I Houston, TX 77056 I 713-355-4646 I www.ketent.com

2

1

3

4 5

BOREAS DRIVE APARTMENTS 12302 BOREAS DRIVE HOUSTON, TX 77039 Unit Mix

Unit Floor Type No. Units Sq Ft Total SqFtMarket Rent

Total Rent Rent/SF

2 Bed/1 Bath 1 528 528 $735 $735 $1.39

2 Bed/1 Bath 1 528 528 $700 $700 $1.33

2 Bed/1 Bath 1 528 528 $750 $750 $1.42

2 Bed/1 Bath 1 528 528 $715 $715 $1.35

2 Bed/1 Bath 1 528 528 $750 $750 $1.42

2 Bed/1 Bath 1 528 528 $750 $750 $1.42

2 Bed/1 Bath 1 528 528 $775 $775 $1.47

2 Bed/1 Bath 1 528 528 $750 $750 $1.42

2 Bed/1 Bath 1 528 528 $775 $775 $1.47

2 Bed/1 Bath 1 528 528 $600 $600 $1.14

10 528 5,280 $730 $7,300 $1.38

Source: 7/20 RR

UNIT MIX

TOTALS AND AVERAGESTotal Units

Average Sq. Ft.

Total Sq. Feet

Average Rent/Unit

Total Rent Average Rent/ SF

Amenities

GatedCommunity

CableReady

StorageSpace

Carpet/Tile Floors

PetsWelcome

PROPERTY LOCATION




RENT COMPARABLES


1 Su Casita

4825 Aldine Mail Route

2 Las Palmas

12550 John F Kennedy Blvd

3 Las Palmas II

5601 Hamill

4 Capewood


5 Mi Casita


*Resident Pays E(Electric), W(Water), G(Gas)

Totals/Averages Comps 1977 94% 189 878 $813 $0.926Boreas Drive

12303 Boreas Dr

Sub-Market Averages(I-69 North) 89% 17,257 797 $716 $0.898

Houston Market Avgs 85% 656,042 882 $988 $1.125

P/SF

1974 95% 143 875 $766 E 0.875

Property Name Yr Blt Occ #Units Avg SF Avg Rent EWG

174 835 $827 EWG

0.918

1979 98% 112 856 $809 EW 0.945

1980 97% 190 864 $793 EW

1985 100% 10 528 $730 E

RENT COMPARABLES (2020 ADS) Sorted by Avg Rent/Unit

0.990

1974 90% 326 959 $865 E 0.902

1977

$1.383

91%

3

2

14 5

SALES COMPARABLES


1 Schroeder

5910 Schroeder

2 Monticello on Cranbrook

22720 Imperial Valley

3 Willowwood

7609 Fallbrook

4 The Thicket

13011 Northborough

5 Villa Nueva

5300 W Gulf Bank

Totals/Averages Comps $12,413,800 195,362 $50,394 $60.89 1978 239

Boreas Drive12303 Boreas Dr

Built

SALES COMPARABLES (Sorted by Price/Sq. Ft.)

Property Name Date Sold Price Sq. Ft. Price/Unit Price/SF Units

Market 5,280 1985 10

6/19 $4,100,000 78,600 $42,268 $52.16 1965 97

2/19 $11,753,000 203,800 $48,168 $57.67 1983 244

9/19 $30,000,000 443,148 $55,351 $67.70 1981 542

2/20 $2,384,000 38,520 $54,182 $61.89 1983 44

6'20 $13,832,000 212,741 $52,000 $65.02 1980 266

1

4

3

2

5

HOUSTON, TEXAS - 2020 DEALING WITH EFFECTS OF COVID-19

Greater Houston Partnership

Though a relatively young city compared with counterparts likeBoston, New York and Los Angeles, Houston is the one of thefastest growing big cities in the country. Ranked fourth in the U.S.by total population, Houston is luring more residents from aroundthe globe drawn by its mix of cultural amenities, world‐classrestaurants, diverse communities and a low cost of living. Aided bythe absence of city or state income tax and affordable housingprices, Houston's cost of living is far below the national average.

A thriving international city, Houston’s ties stretch to all corners ofthe world. The region’s geographic location makes it easy to moveboth goods and people around the globe.

The 11‐county Greater Houston area is one of the largest and mostdiverse business regions in the nation. Houston's strategic, centrallocation coupled with the infrastructure of four of the country'slargest ports, two international airports and major highway and railservice make this a dynamic hub for a large cross‐section ofindustries that connects companies to the world.

More than 1.6 million Houstonians, or roughly one in four, were born outside the U.S.

If Houston were a country, it would rank as the 26th largest economy in the world - exceeding Thailand and Iran's Gross Domestic Product.

Houston ranks 2nd in the U.S. for manufacturing GDP and has the highest industry GDP within the city

More than 500 institutions are devoted to the performing and visual arts,

REGION IN PERSPECTIVE

Houston Regional Market Profile

THE HOUSTON-WOODLANDS-SUGAR LAND MSA

THE HOUSTON‐WOODLANDS‐SUGAR LAND MSA IS THE 5thMOST POPULOUS IN THE

NATIONHOUSTON MSA

The Houston-Woodlands-Sugar Land

Metropolitan Statistical Area (MSA)

is the nation’s fifth-largest MSA with a total of 6.9 million

people. From ’10 to ’17, Houston added 972,000 new residents,

a 16.4 percent increase, the fastest rate of population growth

among the 10 most populous metros.

HARRIS COUNTY



The Houston region, officially designated as the Houston ‐

Woodlands ‐ Sugar Land Metropolitan Statistical Area

(MSA), comprises Harris County and eight other counties:

Austin, Brazoria, Chambers, Fort Bend, Galveston, Liberty,

Montgomery, and Waller.

The nine county metropolitan area is the fifth‐largest

metropolitan area in the nation and covers 9,444

square miles.

The City of Houston lies in three counties: Harris, Fort Bend

and Montgomery. Harris County contains the bulk of the City

of Houston with small portions of the city lying in Fort Bend

and Montgomery counties. Houston is the county seat, or

administrative center, of Harris County. Harris County

contains all or part of 34 incorporated cities. The Houston

Harris County is the 3rd most populous county in

the nation

HOUSTON MSA9,444 square miles

HARRIS COUNTY1,778 square miles

HOUSTON665 square miles

HoustonHarris County


HARRIS COUNTYHarris County, Texas ‐ is the third largest county in the

United States by population ranking behind only Los Angeles

County (Los Angeles, CA and Cook County (Chicago, IL). Its

county seat is Houston, Texas, also the fourth largest city in the

nation.

Harris County is part of the Houston‐Woodlands‐Sugarland

MSA with a total population of approximately 7.0 million

Harris County ranks first among Texas counties with a current

population of approximately 4.7 million residents.

Harris County is the largest of the 11 counties in the Greater

Houston region (not to be confused with the Houston‐

Woodlands‐Sugarland MSA which consists of 9 counties).

Almost three‐quarters of the county are covered by the city of

Houston and thirty smaller communities; only about 27 percent

of the county is rural. The county comprises 1,778 square miles

and is the largest Texas county east of the Nueces River. Harris

County transportation systems serve intrastate and interstate

needs with six major railroads hauling freight to distribution

centers and to the port; Amtrak provides passenger rail service

while METRO provides light rail and passenger bus service.

Buses, trucks and passenger cars utilize a network of highways

including Interstate 10 east and west and Interstate 45 north

and south. U.S. Highway 59 crosses the county from northeast

to southwest and goes to the Rio Grande valley, and U.S. 290

leads to West Texas via Austin. Loop 610 encircles the heart of

Houston, and a second loop, Beltway 8, allows traffic to move

around the perimeter of the urban sector. Two major airports,

George Bush Intercontinental and William P. Hobby, are within

the city of Houston. Leading sectors include health care, trade,

The Houston–Woodlands–Sugar Land MetroArea will add 3.3 million residents between ’15and ’40. Perryman also forecasts that Houstonwill add an additional 1.6 million jobs duringthat time frame and account for one-fourth ofTexas job growth during that period.

Houston ranks 2nd in the U.S. for manufacturing GDP.

Houston is the nation’s sixth largest metro economy and

has grown by $100 billion (inflation‐adjusted) over the past

decade. The region’s largest industries are manufacturing,

accounting for a 16.8 percent share of Houston’s GDP,

followed by professional and business services (13.6

percent) and finance, insurance, real estate, rental and

leasing (12.9 percent).

HARRIS COUNTY STATS

4,698,619 116,146 2,308,089 $53,188 33.1

Population Businesses 2018 Per MedianEmployment capita Income age

*Source: April 2020 Economy at a Glance ©2020, Greater Houston Partnership



ENERGYHouston is the leading domestic and international center for virtually every segment of the energy industry—exploration andproduction, transmission, marketing, service, trading, supply, offshore drilling and technology. More than 4,600 energy‐relatedfirms are located within the Houston metro area, including over 500 exploration and production firms, nearly 800 oilfield servicecompanies, more than 90 pipeline transportation firms, and hundreds of manufacturers and wholesalers of energy‐sectorproducts.

After starting Monday 4/20/20 around $18 a barrel, West Texas Intermediate, the U.S. crude benchmark, closed 300 percentlower at negative $37 a barrel for delivery for May 2020. The crash of 4/20/20 was a one‐of event and not the beginning of adownturn unlike anything the oil industry has ever experienced. For now, however, oil futures contracts that deliver crude in Juneand beyond were holding steady, with contracts for December delivery trading at $32 a barrel.

The price collapse nevertheless threatens the economies of Houston and Texas. It is likely to worsen an already dismal outlook forthe region, with economists predicting that Houston’s unemployment rate would hit 10 percent by the end of the month.Adjusted for inflation, crude now sells for less than it did during the trough of the ’80s energy bust. The North American energyindustry can’t earn a profit at current prices. According to a Dallas Fed survey, companies require crude trade at $24 and $35 perbarrel just to cover the operating costs of existing wells. Source: MarcusMillichap Staff Writers James Osborne and Sergio Chapa

PETROCHEMICAL & REFININGThe Spaghetti Bowl is a complex of several thousand miles of product pipeline connecting hundreds of chemical plants, refineries,salt domes and fractionation plants along the Texas Gulf Coast. It gives the Houston area an economic advantage throughconvenient and low‐cost transfer of feedstocks, fuel and chemical products among plants, storage terminals and transportationfacilities. In 2019, refineries in the Houston region processed nearly 2.6 million barrels of crude oil per calendar day—approximately 45.1 percent of the state’s total production and 13.8 percent of total U.S. capacity with the logistics for movingmuch of the nation’s petroleum and natural gas across the country are controlled from Houston.

For the week ending April 4, 2020, chemical railcar loadings, the best real‐time indicator of U.S. chemical industry activity, fell 8 percent. “We haven’t seen sustained declines of that magnitude since the Great Recession,” notes John Gray, Senior Vice President at the Association of American Railroads. Metro Houston accounts for over 40 percent of the nation’s base petrochemical capacity. U.S. refineries typically run at 90 percent or more of their design capacity. Refinery utilization hit 94.5 percent the last week of December but dropped to 75.6 percent the first week of April. With travel plans cancelled, manufacturing output scaled back, and so many people working from home, the demand for gasoline, diesel and aviation fuels remains well below normal levels.

CONSTRUCTIONLocal construction began to slow prior to the COVID‐19 outbreak. Dodge Data & Analytics reports that Houston area starts slipped18.8 percent, or $4.0 billion, in the 12 months ending February ’20 compared to the same period in ’19. Projects now underwaywill be completed but anecdotal evidence suggests new projects are being put on‐hold until the pandemic passes.

[ECONOMIC FUNDAMENTALS]


THE HOUSTON-WOODLANDS-SUGAR LAND MSAFINANCIAL SERVICESMetro Houston's 97 Federal Deposit Insurance Corporation (FDIC)‐insured institutions had 1,450 offices and branches with$240.9 billion in local deposits, according to June ’17 FDIC data. Houston ranked 10th among U.S. metros in total deposits in’17. Houston’s 10 largest banks (ranked by local deposits) include JPMorgan Chase Bank, Wells Fargo Bank, Bank of America,BBVA Compass Bank, Amegy Bank, Prosperity Bank, Capital One, Frost Bank, Comerica Bank and Woodforest National Bank. Akey center for international finance, Houston leads the Southwest U.S. with 20 foreign banks from 10 nations. Five of thenation’s 10 largest FDIC‐insured banks, as measured by domestic deposits, operate full‐service branches or commercial loanoffices in the Houston region.

NASA & AEROSPACEHouston established itself as a global hub for aerospace in 1961 with the arrival of NASA’s human space program. Since then,the Johnson Space Center (JSC) has anchored a thriving aviation industry that includes the world’s leading aerospacecompanies. NASA’s presence provides a dense concentration of skilled talent that makes Houston a worldwide leader incommercial space flight. In ’15, the Federal Aviation Administration (FAA) designated Ellington Field as an official spaceport,clearing the way for commercial space flight in Houston.

JSC, along with support from dozens of Houston‐based businesses, manages the design, development and assembly of theInternational Space Station; serves as NASA’s lead center for life sciences research and application; selects and trainsastronauts; controls human space flights; directs industrial efforts to design, develop, build and upgrade piloted space craft; andoversees many medical, scientific and engineering experiments conducted aboard the space shuttle. JSC manages an annualbudget of approximately $4.4 billion in contracts, grants, civil service payroll and procurements. In ’17, NASA awarded servicecontracts and grants to 161 companies and research organizations in the Houston region. Space Center Houston, the officialvisitor center of JSC, attracts over one million visitors and generates $73.0 million in economic impact annually. Houston ishome to more than 250 companies involved in aircraft or space vehicle manufacturing, research and technology, or other airtransportation support activities. Of the 50 largest aerospace manufacturing companies in the U.S., 32 have a presence in theHouston region. Houston’s total trade in aircraft, spacecraft and parts totaled $2.1 billion in ’17, and aircraft, spacecraft, andrelated parts are Houston’s 17th largest internationally traded commodity.

EDUCATIONThe Houston MSA contains 60 independent school districts (ISDs) and 40 state‐approved charter management organizations.Charter schools and ISDs in the Houston metro area enrolled more than 1.3 million students, approximately one out of everyfour school‐aged children in the state, in Fall ’16. Houston Independent School District (HISD) is the seventh largest publicschool system in the nation and the largest in Texas. Encompassing 333 square miles within Greater Houston, HISD has morethan 280 campuses and enrolled more than 215,000 students during the ’16‐’17 academic year. More than 430,000 studentsenrolled in more than 30 two‐year community colleges and four‐year or above universities in the Houston region in the Fall ’17semester. Undergraduates make up 87.1 percent of enrolled students. The region also has 50 trade, vocational and businessschools specialized for acupuncture, art, law, health care, funeral, religious and various other disciples that enroll an additional20,000 students, according to the National Center for Education Statistics. Two institutions in Houston MSA are designated as“Tier I,” the highest ranking for research activity, according to the Carnegie Classification: Rice University and University ofHouston.




HEALTHCARETop Employers CHI St. Luke’s, HCA, Harris Health System, Houston Methodist, MD Anderson Cancer Center, Memorial HermannHealthcare System, Michael E. DeBakey Veterans Affairs Medical Center, Texas Children’s Hospital and UTMB Health. TexasMedical Center Houston’s Texas Medical Center is the world’s largest medical complex by multiple measures: number ofhospitals, number of physicians, square footage and patient volume. The Texas Medical Center’s 61 member institutions havebeen consistently recognized as some of the best hospitals and universities in the nation by U.S. News and World Report. TheUniversity of Texas M.D. Anderson Cancer Center, Texas A&M University Health Science Center, and The University of TexasHealth Science Center at Houston are developing a state‐of‐the‐art research translation collaborative campus called TMC3.TMC3 will help establish Texas Medical Center as the world’s leader in human health and life science.

Texas Medical Center 3 will provide:

TMC3 will provide an additional $5 Billion to the Texas economy and create 26,000 new jobsupon completion

An Additional 1.5 Million square feet of collaborative campus space

250,000 square feet of core labs and amenities

36 AcresSource: Newmark, Knight, Frank "State of the Houston Economy", May 2020

AVIATIONThe Houston area is served by two major airports: George Bush Intercontinental Airport (IAH) and William P. Hobby Airport(HOU). Houston’s largest airport, IAH, is located approximately 23 miles north of downtown Houston, and currently ranks 15thamong United States’ busiest airports with scheduled nonstop domestic and international flights. More than 650 departuresleave daily from IAH, which offers service to more Mexican destinations than any other U.S. airport, as well as 74 nonstopinternational cities, including Beijing. IAH was named the 8th best airport in the country in a 2017 ranking from aviation re‐viewer SkyTrax. Hobby Airport is located approximately seven miles south of downtown, and offers nonstop flights to more than50 destinations throughout the United States. It’s also a regional center for corporate and private aviation.

A third site, Ellington Airport (EFD), is a joint‐use civil and military airport serving the needs of the U.S. military, NASA, andgeneral aviation. Check individual airlines to see which airports serve a particular carrier.

FOREIGN TRADEThe Houston‐Galveston Customs District handled 289.2 million metric tons of goods and commodities in ’18, a 9.0 percentincrease over ’17. Those shipments were valued at $233.3 billion, up 21.5 percent from ’17, which was the largest increaseamong the nation’s 20 busiest districts. Houston ranked first in tonnage and seventh in value among U.S. customs districts in ’18.Houston and New Orleans have been the busiest two districts in tonnage for decades. Houston has held the top spot in seven ofthe past 10 years. houston exported to 215 countries and imported from 195 in ’18. Mexico remains the region’s top tradingpartner, followed by China, Brazil, the Netherlands and South Korea. The district handled goods and commodities from 97 tradecategories in ’18―everything from gasoline to live animals to cork. The top five exports, accounting for 81.8 percent of allexports by value, were crude and refined products, chemicals, industrial machinery, plastics and motor vehicles. The top fiveimports, accounting for 63.2 percent of all imports by value, were crude and refined products, industrial machinery, iron andsteel, motor vehicles and chemicals.


Accoding to The Greater Houston Partnership's April

2020 issue of "The Economy at a Glance", the number

of confirmed COVID‐19 cases in the U.S. hasskyrocketed. On March 15, there were fewer than

4,000 cases in a handful of states. As of April 16, there

were early 671,000 cases with outbreaks in every state

in the nation.

Worldwide, there were more than 2.1 million cases by

mid‐April, with 70,000 to 90,000 new cases confirmed

each day. The pandemic has wreaked havoc on theglobal, U.S. and local economies.

2020 Economic Drivers

2020[COVID-19][The Economic Impact]

GLOBAL OUTLOOKThe International Monetary Fund (IMF) expects the "GreatLockdown Recession" to be the worst downturn since theGreat Depression. The global economy will contract 3% ormore in 2020, with severe declines in the advancedeconomies (e.g., Germany, 7.0%, United Kingdom, ‐6.5%,United States, ‐5.9%) and nominal growth in a fewdeveloping economies (e.g. India, +1.9%, China, +1.0%).

The World Trade Organization (WTO) forecastsmerchandise trade to plummet 13 to 32 percent in 2020.Nearly all regions will suffer double‐digit declines, withexports from North America and Asia hit hardest.


National Market Economic Drivers

2020 ECONOMIC DRIVERSTexas Manufacturing Outlook Survey

March vs. FebruaryGLOBAL OUTLOOK (cont)

IHS Market's Purchasing Managers' Indices shows economies

were already contracting in March in eight of top 10 market for

U.S. exports. Recent reports suggest that China is struggling as

well.

U.S. OUTLOOK

There's a 96.4% probability that the U.S. is already in a

recession, according to a recent poll of prominent economists

by The Wall Street Journal. The group forecasts U.S. gross

domestic product (GDP) to shrink between 7.5 and 50% in the

2nd quarter, with 25.3% being the average. The panel sees U.S.

unemployment reaching 12.6% by June 2020.

Recent economic data underscore that pessimistic outlook. U.S.

retail sales fell 8.7% in March. Housing starts plunged 22.3%.

Industrial production, a measure of factory, utility and mining

output, fell 5.4%, and more than 33 million workers have filed

initial claims for unemployment insurance since the outbreak

began. That's nearly three times the 8.8 million jobs lost in the

Great Recession.

The good news is it's the fifth straight week inwhich claims have declined, signaling the worst

Percent of Resondents Reporting

New Orders 10.0 38.7 51.3

Capacity Utilization 9.9 47.0 43.2

Production 8.7 47.3 44.0

Shipments 10.0 45.7 44.0

Employment 2.6 71.8 25.6

Source: Federal Reserve Bank of DallasTexas' service sector saw a similar decline, according to acampanion survey. The revenue index, a key measure ofservice sector conditions, fell from 14.0 in Februry to 67.0 inMarch, an all‐time low for the survey.

Revenue 2.4 28.2 69.4

Employment 3.4 69.4 27.2

Hours Worked 4.2 48.6 47.2

Selling Prices 0.0 55.5 44.5

Capital Spending 8.6 60.2 31.1

Source: Federal Reserve Bank of Dallas

Percent of Resondents ReportingIncreases No Change Decreases

Texas Services Sector Outlook SurveyMarch vs. February

THE TEXAS OUTLOOK

Activity at Texas factories fell in March, according to a survey by

Federal Reserve Bank of Dallas. The production index, a key

measure of state manufacturing conditions, plummeted from

16.4 to ‐35.3, suggesting a significant contraction is underway.

New orders, capacity utilization, production, shipments and

employment have all declined.

More than 740,000 Texans filed initial claims for

unemployment insurance (UI) between March 15 and April

11. That under estimates the extent of the losses. Those

applying for benefits have found the Texas Workforce

Commission’s phone lines jammed and website servers

overloaded. As the backlog is processed and firms shed

employees, the number of claims, a surrogate for job losses,

will climb.


Houston Regional Economic Drivers

HOUSTON OUTLOOK

Houston Unemployment Claims

Bill Gilmer, Director of the Institute for RegionalForecasting (IRF) at the University of Houston'sBauer College of Business, estimates that255,000 Houstonians are TEMPORARILY out ofwork. Furthermore, he anticipates only 58,000jobs will be lost due to the coronavirus. Hispredictions also assert that the demand for oilwill improve in September 2020.

Chemicals and Refining

Chemical railcar loading, the best real‐time indicator of U.S.

chemical industry activity, fell 8% the week ending April 4,

2020. Per the Association of American Railroads, we haven't

seen sustained declines of that magnitude since the Great

Recession. Metro Houston accounts for over 40% of the

nation's base petrochemical capacity. Source: April 2020 Economy

ON A MORE POSITIVE NOTE........

ExxonMobil is investing $2 Billion to expand production in

Baytown, TX. The specialty elastomer Vistamaxx will add

900 Million pounds of capacity. Operations expect to begin

in 2022.

LyondellBasell Industries is developing a new propane plan

that will increase capacity by 35,000 barrels per day and

produce up to 1.65 Billion pounds per year of polymer grade

propylene. Operations to begin in 2023 with up to 2,000

jobs created.

LyondellBasell Industries NV has surpassed 20% completion

of the world's largest propylene oxide and tertiary butyl

alcohol plant at the Houston‐area complex in Channelview,

TX. Expected to be up and running in 2021.

Source: Newmark, Knight, Frank "State of the Houston Economy", May

2020 HOUSTON OUTLOOK

Houston Regional Economic Drivers

HOUSTON OUTLOOK

TransportationWith the slump in global trade, container traffic at the Port of

Houston slipped 11.5% in March, 2020 compared to March,

2019. Data from the Transportation Safety Administration

(TSA) shows that U.S. air passenger volumes have fallen 95%

since the middle of March.

ConstructionDodge Data & Analytics reports that Houston area starts

slipped 18.8% in the 12 months ending February, 2020

compared to the same period in 2019. Projects now underway

will be completed but anecdotal evidence suggests new

projects are being put on‐hold until the pandemic passes.

Commercial Real EstateHouston's commercial real estate sector faced significant

challenges before the outbreak of COVID‐19. One‐fourth of

all local office space was vacant at the end of Q1/20.

Absorption of new space has been negative nine out of the last

16 quarters. The vacancy rate for warehouse/industrial space

has risen for eight consecutive quarters.

For most of Q1, leasing and sales activity continued at the

normal, although slow, pace of recent years. Brokerages now

report a near halting of activity since mid‐March. Tenants are

Commercial Real Estate (continued)A few hotels in Houston have closed. Those still open have

only a handful of occupants. CBRE forecasts revenue per

available room (RevPAR), a performance metric in the hotel

industry, to decline 95% for upper‐priced hotels, 58% for lower

priced hotels in Q2. (RevPAR, or revenue per available room, is

calculated by dividing a hotel's total guestroom revenue by the

room count and the number of days in the period being

measured.)

Residential Real EstateThe Houston resale housing market was relatively un‐scathed

from the COVID‐19 crisis in March. Houston area realtors sold

7,566 single‐family homes, up 8.2% from March, 2019. Those

deals entered the pipeline early in the year, however. Now

that those deals have closed, sales will plummet. Spring is

typically the peak for homebuying season in Houston. Single

family sales of 87,632 in the 12 months ending February '20

set a record for a 12 month period.

The single family home median price (the figure at which half

of the homes sold for more and half sold for less) rose 5.2% to

$245,000 and the average price climbed 5.9% to $302,648.

New listings in the Houston Association of Realtors Multiple

Listing Service are down 4.8% and active listings down 3.2%

compared to this time (May 2019). Those trends are expected

to continue.

Anecdotal reports suggest Houston homebuilders now operate

at 50% to 70% of their pre‐COVID‐19 capacity. Home showings

continue, but by appointment only. Some builders won't allow

parents to bring their kids along. Children like to touch thing

as they run through the house.

As with the resale market, most transactions entered the

pipeline before concerns about the virus changed consumer

behavior. Once stay‐at‐home orders are lifted, months may

pass before the pipeline refills. Some developers are moving

forward with projects already underway (water, sewage,

drainage, paving) while others have halted all work to preserve*Source: April 2020 Economy at a Glance ©2020, Greater Houston Partnership

There are three other major expansions taking place in

Southeast Houston and surrounding areas that will bring jobs

and benefit many manufactures and service related firms in

the Houston area.

Tenaris Halliburton are the only two companies who have

announced lay offs or employees switching to a one week on

one week off schedule in the Houston area. Other Houston

based companies have announced there will be lay offs but the

headlines in media outlets are deceptive to the exact location

where the employees will be let go.

Of the 1,575 employees that have announced to be laid off,

only 223 are in the Houston area. Halliburton has announced

plans to furlough 3,500 employees. Employees will alternate

weeks worked and will be compensated for the time worked.

Houston Multifamily

MULTIFAMILY FORECAST

Uncertainty and volatility characterize the current economic and capital markets environment.Multifamily values are stressed and rental income at risk. The uncertainty creates great challengesin pricing assets and debt options. Forecasting property revenues has become far less clear, and no

asset class is immune from the current environment. However, the capital markets havenot shut down. Sales and debt financing deals are getting done. The marketcontinues to function, albeit at a significantly reduced level.

As a direct result of theCARES Act stimuluscheck, as of April 19,2020, 89% of Americanrental households madea full or partial paymenttoward their monthly rent.

2020ECONOMIC DRIVERS[Houston Multifamily]

Uncertainty and VolatilityBroad Optimism Toward a Quick Rebound

What Local Owner/Operator's are Saying

While some justices of the peace are suspended evictions through April, 2020, apartment owners have begun outlining their

own initiatives to assist tenants who may have lost jobs or gotten sick. Houston‐based Karya Property Management, which

operates some 20,000 apartment units across the country, more than half of which are in the Houston area, is delaying eviction

notices. "Typically, we file evictions on the 10th of the month. This month we made the conscious decision of not doing so,

"founder Swapnil Agarwal said. Karya's properties cater to public school teachers, fire fighters, police officers and those paid by

the hour in service jobs or retail. The average rent across all of its properties is $850 a month. “I think we’ll see higher

delinquency unless we see federal, state or city support of hourly wage earners,” Agarwal

said.

Charleston, S.C. based Greystar, the nation’s largest apartment manager with 150

properties in Houston, will, in some cases, freeze rental rates or slow the speed at which it

processes evictions.

Houston‐based Camden Property Trust is waiving late fees and taking bolder steps in some

cases. “If somebody can’t pay and they visit with us, we’ll hold the eviction proceeding,”

said Camden Chief Executive Ric Campo said. source: HoustonChronicle.com 3/18/20

Houston Multifamily

MULTIFAMILY FORECASTStrong Houston Historic Multifamily Fundamentals

Houston Multifamily Historic Rent & Occupancy

In the 2015‐16 Oil Crisis, the submarkets that experienced the highest rent growth also had the least amount of supply

The multifamily market has seen strong rental rate growth in the last decade, even in time of market turmoil

Houston Submarket Performance and Supply During the 2015‐16 Oil Crisis

Source: Newmark, Knight, Frank "State of the Houston Economy", May 2020


Houston Multifamily

MULTIFAMILY FORECASTCurrent Houston Market Supply

Houston Submarket 2020 Delivery and Under Construction

Houston submarket deliveries for 2020 and current deals under construction total nearly 27,000units with Alief, Northline, and Hwy 288 South/Pearland West leading the way in fewest total units

Of the total supply, infill makes up 42% and urban makes up 56%

In 2019, construction levels remained well below the average from 2014 ‐ 2017 of over 16,500units delivered per year

In 2019, demand outpaced supply by nearly 4,000 units

Houston's 2019 absorption figures showed 62% growth over 2019 absorption figures


Houston Multifamily

IN SUMMARY

Houston economy is at its all time high in levels of employment, consistently growing the pastdecade

The Houston MSA has experienced consistent employment gains over the past decade evenduring volatile times in the oil market

Houston remains a nationwide power house city ranking in the top 10 for its level of GDP

Houston's energy sector makes up less of the total economy now than it did years ago, a result ofthe diversification the city has seen

Houston ranks 2nd in the U.S. for manufacturing GDP and has the highest industry GDP within thecity

Houston's health care sector continues to dominate globally, employing the second most inHouston (behind the government sector) with an industry share of 10.7%

Single‐family sales (87,632) in the 12 months ending February '20 also set a record for a 12 monthperiod

The multifamily market has seen strong rental rate growth in the last decade, even in time ofmarket turmoil

Houston metro non‐farm employment is at an all time high

In economic downturns, the job loss in the Houston metro area has been minimal

Following every recession is a steady increase in job creation, showing the resiliency of Houston'sjob market

Following the oil related recession in 2015 ‐ 2016, the south east side of Houston saw majorpetrochemical companies announce new expansions that will be online within the next 2 ‐ 4 years

Less employees being let go in the Houston area than the media outlets have depicted in newsarticle headlines

We Must Read Past Media Headlines



DEMOGRAPHICS

1 Mile Radius 2 Mile Radius 3 Mile Radius

2019 Estimated Population 16,629 43,570 82,651

2024 Projected Population 17,467 45,625 86,254

2010 Census Population 14,456 38,348 74,267

2000 Census Population 14,914 38,409 71,856

Projected Annual Growth 2019 to 2024 1.0% 0.9% 0.9%

Historical Annual Growth 2000 to 2019 0.6% 0.7% 0.8%

2019 Median Age 30.6 31.7 31.6

2019 Estimated Households 4,513 12,151 24,151

2024 Projected Households 4,895 13,127 25,948

2010 Census Households 3,751 10,226 20,780

2000 Census Households 3,981 10,583 20,389

Projected Annual Growth 2019 to 2024 1.7% 1.6% 1.5%

Historical Annual Growth 2000 to 2019 0.7% 0.8% 1.0%

2019 Estimated White 53.7% 51.8% 47.7%

2019 Estimated Black or African American 13.5% 14.8% 21.5%

2019 Estimated Asian or Pacific Islander 1.1% 1.1% 1.2%

2019 Estimated American Indian or Native Alaskan 1.0% 0.9% 0.9%

2019 Estimated Other Races 30.7% 31.4% 28.7%

2019 Estimated Hispanic 77.3% 75.0% 67.7%

2019 Estimated Average Household Income $41,108 $46,825 $47,577

2019 Estimated Median Household Income $39,436 $42,693 $41,996

2019 Estimated Per Capita Income $11,191 $13,087 $13,984

2019 Estimated Elementary (Grade Level 0 to 8) 27.7% 27.4% 24.2%

2019 Estimated Some High School (Grade Level 9 to 11) 20.6% 17.7% 16.7%

2019 Estimated High School Graduate 30.1% 30.4% 31.3%

2019 Estimated Some College 11.0% 13.1% 14.7%

2019 Estimated Associates Degree Only 4.6% 4.5% 4.3%

2019 Estimated Bachelors Degree Only 4.3% 5.0% 5.9%

2019 Estimated Graduate Degree 1.7% 2.0% 3.0%

2019 Estimated Total Businesses 392 1,033 2,808

2019 Estimated Total Employees 4,323 10,943 34,482

2019 Estimated Employee Population per Business 11.0 10.6 12.3

2019 Estimated Residential Population per Business 42.4 42.2 29.4

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$41,108

$91,524

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$20,000

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Subject Houston

22.7%

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A 268 UNIT CLASS "B-/C+" GARDEN APARTMENT COMMUNITY