TRANSIT ORIENTED DEVELOPMENT Square Footage Summary # of Apartments Avg.

Rent/Unit/Month
SLC UT GSF NSF 50 $970
50 Condos 60,000 49,500 Avg. Unit Size (SF)
Development Costs 990.00

Type of Multi-Family Project New Development RESIDENTIAL REVENUE PARAMETERS

Acquisition Price $5,402,667 Unit Type % # Units SF Rent/Unit/Month
Purchase Price (Stabilized Only) $0 3 Bed 40% 20 1,150 $1,100
2 Bed 40% 20 950 $950
RESIDENTIAL TIMING 1 Bed 20% 10 750 $750
Pre-development period 3 months Commencement date 12/31/2013 0%
Construction period 12 months End of pre-development 3/31/2014 0%
Leasing Period 6 months End of construction 3/31/2015 0%
Total development period 21 months End of leasing/sale date 9/30/2015 Annual Potential Gross Income $582,000
Vacancy/Credit Loss Factor 5.00%
RESIDENTIAL CONSTRUCTION PARAMETERS Annual Rent Growth 3.00%
Residential GSF 60,000
Residential NSF 49,500 OTHER REVENUE # spaces $ Rent/Month
Residential parking spaces 60 $0
RESIDENTIAL PARKING PARAMETERS
Surface parking spaces 60 spaces Misc. revenue (vending, etc) $350 per month

RESIDENTIAL OPERATING EXPENSE PARAMETERS SALE PARAMETERS

Fixed expenses $65,000 total first year Terminal capitalization rate 7.50%
Variable expenses $650 per occupied unit first year Apartment selling costs 6.50%
Capital reserves $350 per unit per year
Real estate taxes 1.50% of assessed value PERMANENT FINANCING PARAMETERS
Annual fixed/variable expense growth 2.00% Permanent loan closes 9/30/2015
Annual RE taxes growth 3.00% Stabilized Appraised Value $5,845,769
Income Tax Rate 20.00% Permanent Loan LTV 75%
Discount Rate 15.00% Term in years 30
Contract Interest Rate 5.50%
Permanent loan financing fees 1.5%
Frequency of Payments Monthly
Mortgage Constant 0.57%

DEVELOPMENT/REHABILITATION COST PARAMETERS

ACQUISITION
TRANSIT ORIENTED DEVELOPMENT Square Footage Summary Number of Apartments
50 Condos GSF NSF 50
Development Costs 60,000 49,500

COST CATEGORY Cost $/NSF $/Unit

SITE ACQUISITION
Land purchase $600,000 $12.12 $12,000
Closing Costs $9,000 $0.18 $180
Total Site Acquisition Costs $609,000 $12.30 $12,180

HARD COSTS
Site Development $30,000 $0.61 $600.00
Parking Construction $150,000 $3.03 $3,000.00
Base Building Construction $3,300,000 $66.67 $66,000.00
General Conditions $104,400 $2.11 $2,088.00
Hard Cost Contingency $179,220 $3.62 $3,584.40
Total Hard Costs $3,763,620 $76.03 $75,272

SOFT COSTS
Architectural and engineering fees $150,545 $3.04 $3,011
Surveys, testing, and inspections $20,000 $0.40 $400
Permits, licenses, fees $50,000 $1.01 $1,000
Appraisals and inspections $12,000 $0.24 $240
Insurance and title $6,000 $0.12 $120
Property taxes during development $27,000 $0.55 $540
Legal and accounting $15,000 $0.30 $300
Marketing costs $12,500 $0.25 $250
Commercial brokerage fees $0 $0.00 $0
Construction management $75,000 $1.52 $1,500
Development fee $225,000 $4.55 $4,500
Soft cost contingency $36,804.48 $0.74 $736
Total Soft Costs $629,849 $12.72 $12,597

TOTAL DEVELOPMENT COSTS BEFORE FINANCING $5,002,469 $101.06 $100,049

FINANCING COSTS
Acquisition/Construction loan financing fees $0 $0.00 $0
Acquisition/Construction loan interest $400,198 $8.08 $8,004
Total Financing Costs $400,198 $8.08 $8,004

TOTAL DEVELOPMENT COSTS $5,402,667 $109.14 $108,053

TRANSIT ORIENTED DEVELOPMENT Square Footage Summary # of Apartments
50 Condos GSF NSF 50
Development Costs 60,000 49,500

FIRST YEAR SETUP DEVELOPMENT COSTS $ Amount $/NSF $/Unit

Rental Revenue 582,000.00 Site Acquisition Costs $609,000 $12.30 $12,180
Parking Revenue 0.00 Hard Costs $3,763,620 $76.03 $75,272
Misc. Revenue 4,200.00 Soft Costs $629,849 $12.72 $12,597
POTENTIAL GROSS INCOME 586,200.00 Financing Costs $400,198 $8.08 $8,004
Vacancy/Credit Loss (29,310.00) Total Costs $5,402,667 $109.14 $108,053
EFFECTIVE GROSS INCOME 556,890.00
CAPITALIZATION
Operating expenses (95,875.00) Permanent Loan $4,384,326.90
Real estate taxes (81,040.00) Required Equity $1,018,340
NET OPERATING INCOME 379,975.00 Total Capitalization $5,402,667

Capital Reserve (17,500.00) RISK METRICS

Debt Service (298,724.71) Anticipated Occupancy 95.00%
BEFORE TAX CASH FLOW 63,750.29 Net Margin (BTCF ÷ PGI) 10.95%
Break-even Occupancy 84.05%
Amortization Principal 59,060.81 Loan to Value 75%
Reserve 17,500.00 Debt Coverage Ratio 1.27
Depreciation (147,345.46)
TAXABLE INCOME (7,034.37) BREAKDOWN OF FUTURES
Income Taxes 1,406.87 Net Cash Flows $3,770,457 Non-discounted
AFTER TAX CASH FLOW 65,157.16 Principal Recapture $765.46
Anticipated Appreciation $1,347,957
FINANCIAL ANALYSIS Tax on Depreciation $294,691
Free and Clear Return 7.03% Tax on Capital Gains $175,944
Cash-on-Cash Return (Year 1) 6.26% Net Cash from Sale $2,669,430
Increase in Capital Value 24.95%
Levered Internal Rate of Return 17.84% % OF TOTAL BENEFITS @ IRR
Levered NPV at 15.00% 175,524 Before Tax Cash Flow 50.33%
NPV ÷ Equity (Profit. Index) 17.24% Tax Benefits -4.51%
Appreciation (Cap Gain) 54.18%
TRANSIT ORIENTED DEVELOPMENT
Projected Cash Flow ($000) Assumptions 0 1 2 3 4 5 6 7 8 9 10
Potential Gross Income 586.2 603.79 621.90 640.56 659.77 679.57 699.95 720.95 742.58 764.86
- Vacancy/Credit Loss (29.31) (30.19) (31.09) (32.03) (32.99) (33.98) (35.00) (36.05) (37.13) (38.24)
Effective Gross Income 556.89 573.60 590.80 608.53 626.78 645.59 664.96 684.90 705.45 726.62
- Operating Expenses (95.88) (97.79) (99.75) (101.74) (103.78) (105.85) (107.97) (110.13) (112.33) (114.58)
- Real Estate Taxes (81.04) (83.47) (85.98) (88.55) (91.21) (93.95) (96.77) (99.67) (102.66) (105.74)
Net Operating Income 379.97 392.33 405.08 418.23 431.80 445.79 460.22 475.11 490.46 506.30
- Capital Reserve (17.50) (17.50) (17.50) (17.50) (17.50) (17.50) (17.50) (17.50) (17.50) (17.50)
- Debt Service (298.72) (298.72) (298.72) (298.72) (298.72) (298.72) (298.72) (298.72) (298.72) (298.72)
Before Tax Cash Flow 63.75 76.11 88.86 102.01 115.57 129.56 143.99 158.88 174.23 190.07

+ Amortization Principal 59.06 62.39 65.91 69.63 73.56 77.71 82.09 86.72 91.61 96.78
+ Capital Reserve 17.50 17.50 17.50 17.50 17.50 17.50 17.50 17.50 17.50 17.50
- Depreciation (147.35) (147.35) (147.35) (147.35) (147.35) (147.35) (147.35) (147.35) (147.35) (147.35)
Taxable Income (7.03) 8.66 24.92 41.79 59.28 77.42 96.24 115.76 136.00 157.01

- Tax Payable @ 20.00% 1.41 (1.73) (4.98) (8.36) (11.86) (15.48) (19.25) (23.15) (27.20) (31.40)
After Tax Cash Flow 65.16 74.38 83.87 93.65 103.71 114.08 124.75 135.73 147.03 158.67
- Equity In (1,018.34)
+ Net Cash from Constr. & Sale 75.43 2,669.43
Total Return (1,018.34) 140.59 74.38 83.87 93.65 103.71 114.08 124.75 135.73 147.03 2,828.10

Purchase Price 5,402.67 Sales Price 6,750.62 Sales Price 6,750.62

+ Capital Expense 175.00 - Net Book Value (4,104.21) - Income Tax (470.63)
- Depreciation (1,473.45) Gain on Sale 2,646.41 - Mortgage Balance (3,610.56)
Net Book Value 4,104.21 Net Cash from Sale 2,669.43
Depreciation Taken 1,473.45
Land Value 1,350.67 Taxes @ 20.00% 294.69
Depreciable Base 4,052.00 Remaining Gain 1,172.96
Taxes @ 15.00% 175.94 NPV at 12% 175.52
Total Taxes 470.63 IRR 17.84%

Breakdown of 17.84% Internal Rate of Return $000s (Exhibit 8)

BTCF Income Tax Futures Total
Year Actual Discount Actual Discount Actual Discount Actual Discount
1 63.75 54.10 1.41 1.19 0.00 0.00 65.16 55.29
2 76.11 54.81 (1.73) (1.25) 0.00 0.00 74.38 53.56
3 88.86 54.30 (4.98) (3.05) 0.00 0.00 83.87 51.26
4 102.01 52.90 (8.36) (4.33) 0.00 0.00 93.65 48.57
5 115.57 50.86 (11.86) (5.22) 0.00 0.00 103.71 45.65
6 129.56 48.39 (15.48) (5.78) 0.00 0.00 114.08 42.61
7 143.99 45.64 (19.25) (6.10) 0.00 0.00 124.75 39.54
8 158.88 42.73 (23.15) (6.23) 0.00 0.00 135.73 36.51
9 174.23 39.77 (27.20) (6.21) 0.00 0.00 147.03 33.56
10 190.07 36.82 (31.40) (6.08) 2,669.43 517.06 2,828.10 547.79
Total 1,243.04 480.32 (142.01) (43.05) 2,669.43 517.06 3,770.46 954.33
Percent 50.33% -4.51% 54.18% 100.00%