OFFERING MEMORANDUM · Lauren Conrad T 303-260-4253 [email protected] Newmark Knight Frank Multifamily 1800 Larimer Street Suite 1700 Denver, CO 80202 T 303-260-4400 ... backsplashes,

OFFERING MEMORANDUM

PRE-TCO QUALIFIED OPPORTUNITY ZONE INVESTMENT

1775 FEDERAL BOULEVARD DENVER, CO 80204

TABLE OF CONTENTS07 FLOOR PLANS

14 MARKET INFORMATION13 SLOAN’S LAKE MAP

05 INVESTMENT HIGHLIGHTS04 PROPERTY SUMMARY03 EXECUTIVE SUMMARY

11 AREA INFORMATION 12 NEIGHBORHOOD MAP

24 FINANCIAL ANALYSIS 32 SALE COMPARABLES 34 RENT COMPARABLES

PRESENTED BY

BROKERAGE TEAM Justin HuntT [email protected]

Andy HellmanT [email protected]

Katie HufnagelT [email protected]

DEBT TEAMCharlie WilliamsT [email protected]

David TreadwellT [email protected]

Tim WeldonT [email protected]

Lauren ConradT [email protected]

Newmark Knight Frank Multifamily1800 Larimer StreetSuite 1700Denver, CO 80202T 303-260-4400 ngkf.com

Licensed as Newmark Knight Frank Multifamily in Colorado

EXECUTIVE SUMMARY

PRE-TCO QUALIFIED OPPORTUNITY

ZONE INVESTMENT

GREEN BUILDINGMATERIALS

OVERSIZED UNITS

TRANSIT ORIENTED DEVELOPMENT

CONDO–QUALITYFINISHES

QUALIFIED CENSUS TRACTS

THE OPPORTUNITYNewmark Knight Frank Multifamily is pleased to present 1775 Federal, a 43-unit, Class A community nearing completion in Denver, Colorado. 1775 Federal is positioned to benefit from economic and population growth due to its location in a Qualified Opportunity Zone (QOZ). QOZs offer significant tax incentives to private investors and help promote economic and community development in underdeveloped areas. The community is offered as a pre-TCO acquisition to allow a prospective buyer to assume all tax benefits inherited from the QOZ and has an anticipated completion date in 2020. Furthermore, the project has not been placed into service for depreciation or amortization.

1775 Federal consists of oversized one and two-bedroom units with condominium quality finishes. Average unit sizes exceed 940 square feet and unit interiors include quartz countertops and backsplashes, stainless steel appliances, barn doors, wood-style flooring, 9+ foot ceilings, built in custom storage, keypad entry, and built-in fiber optic service. A rooftop deck offers 360-degree views of the Broncos Stadium at Mile High, downtown Denver, and the Rocky Mountains. Additional community amenities include a lobby with large windows, exposed concrete work, reclaimed wood, private package system area, and custom local murals.

Located in an up and coming neighborhood and adjacent to the Broncos Stadium at Mile High and the future Stadium Redevelopment, a 3.5 million SF mixed-use redevelopment, 1775 Federal is walking distance to many current and future amenities. 1775 Federal is centrally located and is ten minutes or less to the Decatur-Federal light rail station, Sloan’s Lake, Metropolitan State University and University of Colorado Denver at the Auraria Campus, the Pepsi Center, and downtown Denver (172,000 jobs).

OFFERING TERMSTotal Units 43Year Built 2020Price TBD by MarketRentable Sq. Ft. 40,421Average Sq. Ft. per Unit 940Average Market Rent per Unit $2,004Average Market Rent per Sq. Ft. $2.13

KEY VALUE DRIVERS

3

PROPERTY SUMMARYAddress 1775 Federal Boulevard, Denver, CO 80204County DenverYOC 2020Number of Units 43Rentable Area (Sq. Ft.) 40,421Average Unit Size (Sq. Ft.) 940Number of Buildings 1Number of Stories 5Land Area +/- 0.415Density 104 Units/Acre

PROPERTY SUMMARY

CONSTRUCTION DETAILStyle Mid-riseSiding Metal Panel + Porcelain PanelRoofing MembranePlumbing Supply Line PEXPlumbing Drain Line PEX

UTILITIES/METERINGElectrical Individually MeteredWater/Sewer Individually MeteredGas NoneTrash Dumpster

PARKING + STORAGECovered 31

UNIT MIXUNIT MIX UNIT

NAME# OF UNITS

UNIT SQ. FT.

MARKET RENT

MARKET RENT SQ. FT.

1 Bed / 1 Bath A1 8 665 $1,518 $2.281 Bed / 1 Bath A2 4 887 $1,794 $2.02One Bedroom Total/Avg 12 739 $1,610 $2.182 Bed / 2 Bath B1 28 998 $2,129 $2.132 Bed / 2 Bath B2 3 1,203 $2,410 $2.00Two Bedroom Total/Avg 31 1,018 $2,156 $2.12TOTAL 43 940 $2,004 $2.13

4

INVESTMENT HIGHLIGHTS LOCATED IN A QUALIFIED OPPORTUNITY ZONE – 1775 Federal is positioned to benefit from economic and population growth due to its location in a Qualified Opportunity Zone (QOZ). QOZs offer significant tax incentives to private investors and help promote economic and community development in underdeveloped areas.

PRE-TCO ACQUISITION – Pre-TCO allows a prospective buyer to assume all tax benefits inherited from the QOZ and has an anticipated completion date in 2020. Furthermore, the project has not been placed into service for depreciation or amortization.

FULLY APPOINTED INTERIORS – Average unit sizes at 1775 Federal exceed 940 square feet and the condominium quality unit interiors include quartz countertops and backsplashes, stainless steel appliances, barn doors, wood-style flooring, 9+ foot ceilings, built in custom storage, keypad entry, and built-in fiber optic service.

THOUGHTFUL COMMUNITY AMENITIES – A rooftop deck offers 360-degree views of the Broncos Stadium at Mile High, downtown Denver, and the Rocky Mountains. Additional amenities include a lobby with large windows, exposed concrete work, reclaimed wood, private package system area, and custom local murals.

ENERGY EFFICIENT BUILDING MATERIALS – The community offers green amenities such a LED lighting throughout, efficient siding, and a rain screen that helps regulate interior temperature.

SOLAR PANELS – 1775 Federal’s house meters are supported by a series of rooftop solar panels, which benefit both the building’s efficiency as well as the operator’s bottom line.

NEARBY LIGHT RAIL ACCESS – 1775 Federal is ideally located near the Decatur-Federal light rail stop on the West Rail Line, stretching 12 miles with 15 stops connecting downtown Denver’s Union Station (172,000 jobs) to the JeffCo Government Center (62,000 jobs).

STADIUM REDEVELOPMENT – Adjacent to the Stadium Redevelopment, a 3.5 million SF mixed-use redevelopment.

MAJOR ATTRACTIONS NEARBY – A short light rail ride will bring residents to The Auraria Campus, home to CU Denver and Metropolitan State University, as well as The Pepsi Center, Denver’s premier indoor arena featuring headliner concerts, the Nuggets NBA team, and the Avalanche NHL team.

SLOAN’S LAKE REDEVELOPMENT – Located 5 minutes from the property, the Sloan’s Redevelopment is a 19 acre, seven-block area that has emerged as a vibrant mixed-use community offering office, retail, entertainment, and residential space.

CLOSE TO MAJOR THOROUGHFARES – The property benefits from quick access to some of Denver’s major thoroughfares including Federal Boulevard, 6th Avenue, I-70, and Colfax.

EXCELLENT VISIBILITY – Located directly on Federal Boulevard, where 34,000 cars pass by daily.

STRONG DEMOGRAPHICS - The average home price within a one-mile radius is $636,924. Population within the same radius has grown 44% since 2010 and is expected to grow another 17% by 2024. Furthermore, new, Class-A multifamily product in the immediate area command premium rents of $2.52 per square foot.

SUPERIOR SOUND TRANSITION – 1775 Federal is constructed to be virtually sound proof. Double walls and air gaps between floors lend to superior sound transition between units.

5

PROPERTY PHOTOS

View from Rooftop Deck

Stainless Steel Appliances

Architectural Rendering

Abundance of Natural Light Sliding Barn Doors

View from Rooftop Deck

6

FLOOR PLANS A1 – 1 BED | 1 BATH | 665 SQ. FT.

7

FLOOR PLANS A2 – 1 BED | 1 BATH | 887 SQ. FT.

8

FLOOR PLANS B1 – 2 BED | 2 BATH | 998 SQ. FT.

9

FLOOR PLANS B2 – 2 BED | 2 BATH | 1,203 SQ. FT.

10

AREA INFORMATION MAJOR EMPLOYERS + DEMOGRAPHICS

STRONG DEMOGRAPHICS within a One-Mile Radius*

SOURCE | *ESRI, RECOLORADO.COM

$97,3442024 PROJECTED AVERAGE

HOUSEHOLD INCOME

$80,729 2019 AVERAGE

HOUSEHOLD INCOME

31MEDIAN AGE

17%INCREASE IN

POPULATION BY 2024

$636,924AVERAGE SINGLE FAMILY HOME SALE PRICE

MAJOR EMPLOYERS NEARBY

1111

NEIGHBORHOOD MAP MARKET INFORMATION

W COLFAX AVEW COLFAX AVE

BIKE PATH

DOWNTOWN DOWNTOWN DENVERDENVER

(172,000 EMPLOYEES)(172,000 EMPLOYEES)

FEDE

RAL

BLVD

FEDE

RAL

BLVD

SPEER BLVDSPEER BLVD

20TH ST20TH ST

MILE HIGH STADIUM

BRONCOS STADIUM REDEVELOPMENT

COMMONS PARK

RIVER MILE REDEVELOPMENT

PLATTE STREET OFFICE CORRIDOR

JEFFERSON PARK

ExistingLight Rail

ExistingPark-n-Ride

ExistingStation

Bike Path

SLOANSLAKE

1212

W Colfax Ave

W 32nd Ave

Sheridan BlvdSheridan Blvd

W 38th Ave

Federal BlvdFederal Blvd

CENTRAL BUSINESS DISTRICT172,000 EMPLOYEES

AURARIA CAMPUSCommunity College of Denver

Metropolitan State CollegeUniversity of Colorado Denver

Sloan’s LakeSloan’s Lake

HIGHLANDS SQUARE

LOWER HIGHLANDS

EDGEWATERHISTORIC 25TH AVEBUSINESS DISTRICT

HighlandNeighborhood

Sheridan BlvdRetail Corridor

ExistingLight Rail

ExistingPark-n-Ride

ExistingStation

DECATUR - FEDERAL STATION

KNOX STATION

PERRY STATION

DENVER BRONCOSSTADIUM

SLOAN’S LAKEREDEVELOPMENT

EDGEWATER PUBLIC MARKET76,000 SF FOOD & RETAIL HALL

BY LCP DEVELOPMENT

SLOAN’S LAKE NEIGHBORHOOD MAP AERIAL MAP

13

BRONCOS STADIUM DISTRICT MARKET INFORMATION

The Metropolitan Football Stadium District and the Denver Broncos Football Club have formed nonprofit venture to transform surface parking lots at the south end of the Denver Broncos Stadium property into a mixed-use neighborhood destination. The Broncos Stadium District will be a 52-acre place to live, eat, shop and enjoy with improved connections to the South Platte River, transit stations and downtown.

The current plans call for a centralized festival street running from the stadium to Lakewood Gulch Park, surrounded by upwards of 3.5 million square feet of office, retail, restaurant, hotel, mixed-income residential and other commercial spaces. Open spaces will be located throughout the district, including the addition of a large community park to be used as a neighborhood gathering space. The planning process is anticipated to conclude in February of 2019 with City Council adoption expected shortly after. The district will be built in phases, with delivery as early as 2022.

3.5 MILLION SQUARE FEET OF OFFICE, RETAIL, RESTAURANT, HOTEL, MIXED-INCOME RESIDENTIAL AND OTHER COMMERCIAL SPACES

52 ACRES

1414

SLOAN’S LAKE REDEVELOPMENT MARKET INFORMATION

Sloans is a new mixed-use community adjacent to Sloan’s Lake. Spread over 19-acres and seven blocks, the area was formerly the St. Anthony Hospital campus. Today, Sloans features expansive streetscapes, dedicated retail streets, restaurants, coffee shops, a movie theater, community gardens, and the public Chapel Plaza. The total redevelopment cost is approximately $350 million and the master developer is Colorado-based EnviroFinance Group.

Last summer, the Alamo Draft House Cinema opened its eight-screen theater as the anchor of Sloans. At the same time, Even Stevens, a sandwich shop with a charitable mission, and Starbucks opened. Sloans 1525 is a 50,000-square-foot office redevelopment that attracted Olsson Associates to relocate from Golden. Lakeview Residences on 17th and Perry Row offer for-sale residential options. Chapel Plaza incorporates a historic chapel along with fountains as a community gathering area. These projects are intended to create a hub for the surrounding neighborhoods. At full build-out, Sloans will have up to 150,000 square feet of commercial space.

$350 MILLIONREDEVELOPMENT COST

50,000 SQUARE FOOT OFFICE REDEVELOPMENT

15

TRAVEL DISTANCES MARKET INFORMATION

10 MINUTES1 MINUTES

WALK

MILE

HIGH STADIUM

BRON

COS S

TADIUM DISTRICT

SOUT

H PL

ATTE RIVER TRAIL

RIVER MILE

15 MINUTES5 MINUTES

BIKE AURARIA CAMPUS

OFFICE SPACE29.2 MILLION SF OFFICE1.8 MILLION SF UNDER CONSTRUCTION172,000 EMPLOYEES

CBD

PLAT

TE STREET CORRIDOR

CONVENTION CENTER

40 MINUTES5 MINUTES

RAIL6.3 SF OF COMMERCIAL DEVELOPMENT

STAPLETON

MEDICAL & RESEARCH CAMPUS 44,600 EMPLOYEES AT

BUILD-OUT

FITZSIMONS

41 MILLION SF OF OFFICE175,000 EMPLOYEES

DENV

ER TE

CH CENTER

DENV

ER IN

TE

RNATIONAL AIRPORT

DECA

TUR-

FE

DERAL LIGHT RAIL STATION

SLOAN’S LAKE

1616

Image Landsat / Copernicus



HIGHLANDS$793,258

LOHI$1,112,348

UNION STATION/LODO$899,158

JEFFERSON PARK$547,000

SLOAN LAKE$717,267

WEST HIGHLANDS$693,175

Speer Blvd

Zuni

St

W 33rd Ave

Fede

ral B

lvd

W 38th Ave

Blake S

t

Park Ave

NEWEST RESIDENTS TAPESTRY INFORMATION

NeWest Residents are highly mobile. They are hard workers and dedicated to climbing the ladders of their professional and social lives. They take pride in their appearance, spending money on what’s trendy to boost their social status.

RENT37.3%

62.7%OWN

HOME OWNERSHIP

US Percentage:16.6% Own83.4% Rent

1,678Households

3.2Average

Household size

97%Labor Force

Participation Rate

Participate in leisure activities such as yoga,

Pilates, and downhill skiing

enjoy going out to trendy restaurants and bars

Spend large portion of wages on rent, clothes, and the

latest technology

1717

THE CITY OF DENVER’SNOTABLE RANKINGS

#1 TOP METRO FOR SMALL BUSINESS EMPLOYMENT

[Paychex, 2018]

4TH MOST EXCITING FOOD CITY IN AMERICA

[Zagat, 2018]

5TH BEST ECONOMY AMONG LARGE U.S. CITIES

[Business Insider, 2018]

5TH MOST INNOVATIVE

STATE [WalletHub, 2019]

#4 BEST CITY FOR WORKING WOMEN

[MagnifyMoney, 2018]

#4 BEST PLACE FOR BUSINESSES AND CAREERS

[Forbes, 2017]

3RD BEST CITY FOR MILLENNIALS

[Forbes, 2017]

2ND BEST CITY FOR JOB SEEKERS

[NerdWallet, 2017]

2ND MOSTEDUCATED

STATE[US Census, 2019]

3RD FASTEST GROWING LARGE CITY

[WalletHub, 2018]

#2 BEST PLACE TO LIVE

IN THE U.S. [US News and World Report, 2019]

1818

“ “Growth in the area has been more intense than any other neighborhood in northwest Denver. - SUSAN SHEPHERD, DENVER CITY COUNCIL.

JEFFERSON PARK NEIGHBORHOOD MARKET INFORMATION

Jefferson Park spans from Mile High Stadium north to Speer Boulevard between Interstate 25 and Federal Boulevard. The namesake for the neighborhood is the 6.7-acre park located in the heart of the area. The neighborhood is marked by a variety of architecture with a local retail hub clustered along Eliot Street. The neighborhood has seen increased popularity for the ease of access to both downtown and LoHi, along with being adjacent to the South Platte River Trail. The area is expected to see a 4% annual population growth through 2022, com-pared to the national annual average of 1%.

MILE HIGH STADIUM

7-ACRE JEFFERSON

PARK

Jefferson Jefferson Park pubPark pub

19

THE RIVER MILE MARKET INFORMATION

The River Mile is a planned urban district on 65-acres along a mile-long stretch of the South Platte river. The new neighborhood will replace Elitch Gardens and the city’s worst parking crater and build over 11 million square feet of new development. The conceptual master plans include the following:

Ʈ Over 5 million square feet of office and retail space with buildings allowed up to 59 stories, the tallest in Denver

Ʈ 1.2 million square feet of hotel and conference space

Ʈ Three riverfront parks

Ʈ 137,900 square feet of public spaces such as schools, recreation centers, and daycares

Ʈ Bike and pedestrian crossings over the South Platte River and connecting to the Auraria Campus

Ʈ Pedestrian tunnel under Speer Blvd

In addition, the arts and entertainment enterprise Meow Wolf will be opening their second location in 2020, con-necting the River Mile to the Broncos Stadium District. Meow Wolf is a wildly popular attraction based in Santa Fe that is one-part interactive gallery, one-part museum, one-part performance venue and one-part amusement park. Ground breaking will occur for the first phase of the River Mile on a 17-acre parking crater as early as 2020.

11 MILLION SQUARE FEET OF NEW DEVELOPMENT

20

DENVER HIGHLANDS MARKET INFORMATION

Denver Highlands is home to four diverse districts covering over 5 square miles- Lower Highland (LoHi), West Highland, Berkeley and Sunnyside.

LOWER HIGHLANDSAt the heart of the Denver Highlands, LoHi was named by Forbes as one of America’s Best Hipster Neighborhoods. The trendy area boasts happening restaurants, watering holes, tons of boutiques and highbrow coffee shops. The premier location is further amplified with the architecturally stunning bicycle-and-pedestrian bridge connecting LoHi to the Central Platte Valley. The area is bustling on the evenings and weekends but still relatively quiet and residential making the LoHi neighborhood ultra-desirable.

WEST HIGHLANDEstablished in the late 1800s, the West Highland neighborhood blends Victorian architecture with modern-day living. The well-established neighborhood is home to dozens of trendy salons, coffee shops, galleries, boutiques and restaurants, many housed in former bungalow homes. As one of the city’s most walkable neighborhoods, it is a desirable place for young professionals to hang their purses after a long night of bar-hopping.

BERKELEYLike LoHi and West Highland, Berkeley has grown and evolved into the perfect balance of casual cool with a distinctly Denver collection of boutiques, breweries, eateries, and galleries. Tennyson Street was formed with the intention of developing the arts and cultural scene in Denver and remains so today. Residents and visitors alike are drawn to the historically rich neighborhood that has unique character and bohemian charm.

SUNNYSIDESet apart from the rest of the Denver Highlands due to its rustic charm, Sunnyside has spent the last decade in a revival as the other areas of the Highlands expand. Run-down taverns and auto repair shops have been renovated or replaced with coffee shops and breweries. Sunnyside sits adjacent to the RTD 41st & Fox rail station, one of Denver’s newest rail line that allows connections to the metro region.

21

MARKET INFORMATIONUNION STATION NEIGHBORHOODUnion Station has been one of Downtown’s most visible landmarks and has served as the transportation hub for the Metro Denver region since 1881. In 2002, a team was recruited to create a Master Plan for the redevelopment and preservation of Denver’s historic Union Station to help eliminate traffic, parking and pollution by creating one, central, multimodal depot. By 2006, the Master Plan was approved and Denver voters had approved FasTracks: 122 miles of commuter and light rail lines and 18 miles of rapid bus transit all radiating out of Denver Union Station. The Master Plan assumed a 20-year period for project funding and planning and a 30 to 50-year time frame for total build-out. However, funding was secured in 2010 and the redevelopment of Denver Union Station was completed in 2014, just eight years after the Master Plan was approved.

Today, Union Station is still the hub of metro Denver’s bustling transportation network, connecting to 140,471 weekday regular fixed-route scheduled miles. The recently completed Commuter A Line connects Union Station to Denver International Airport in 37 minutes, providing business and resident ease of access to the 5th busiest airport in the nation. The Union Station terminal also serves as an attraction in its own right for guests staying overnight at The Crawford Hotel, stopping in for a drink at The Terminal Bar or Cooper Lounge, or grabbing a bite to eat at eateries including Snooze, Stoic & Genuine, and Mercantile.

12.6 MILLION SQUARE FEET OF EXISTING DEVELOPMENT

703 THOUSAND SQUARE FEET OF UNDER CONSTRUCTION DEVELOPMENT

828 THOUSAND SQUARE FEET OF PROPOSED DEVELOPMENT

6,364 RESIDENTS

8,942 RESIDENTS BY 2023

610 BUSINESSES

30,000 EMPLOYEES

UNION STATION NEIGHBORHOOD STATISTICS

COMPANIES THAT HAVE SELECTED UNION STATION

22

Largest Concentration of Students in the State:With three separate higher education institutions set on one 155 acre campus and enrolling approx-imately 44,000 students, Auraria is the largest college campus in Colorado. Community College of Denver, Metropolitan State University of Denver and the University of Colorado Denver share classroom space and general services on the commuter campus, which is located in the heart of Downtown.

Significant Investment in Infrastructure and Programs.In the past decade, 7 projects have been completed on the Campus including a library, science building, performing arts center, a student union, a Wellness Center and an Aerospace and Engineering Services building. While traditionally considered a commuter campus, its reputation is shifting as student’s de-sire to live near campus has brought on a $68M proposed residence hall for CU students.

INSTITUTIONS

METROPOLITAN STATE UNIVERSITY OF DENVER

Ʈ 21,000+ students

Ʈ 86 Bachelor’s Degrees and 5 Master’s Degrees

Ʈ AACSB accredited- only given to 5 percent of business schools worldwide

THE UNIVERSITY OF COLORADO DENVER

Ʈ 15,232 students

Ʈ 100+ Bachelor’s, Master’s, Doctoral and professional degree programs

Ʈ Home of the J.P. Morgan Center for Commodities, the only center of its kind in the nation

COMMUNITY COLLEGE OF DENVER

Ʈ 9,114 students

Ʈ 100+ Degrees and Certificates

Ʈ Member of the American Association of Community Colleges

MARKET INFORMATIONAURARIA CAMPUS

23

FINANCIAL ANALYSISFINANCIAL ANALYSIS EXECUTIVE SUMMARY

The information used herein has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty, or representation about it.

Financial Analysis Executive Summary1775 FederalDenver, Colorado

Number of Units 43 Per Unit DollarsYear Built 2020 Effective Gross Income $26,057 $1,120,434Rentable Square Feet 40,421 Less: Operating Expenses 5,682 244,328Average Square Feet per Unit 940 Less: Capital Reserves 250 10,750Average Market Rent per Unit $2,004 Net Operating Income $20,125 $865,356Average Market Rent per Sq. Ft. $2.13

Disclaimer

This information has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You

and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction and the suitability of the property for your needs.

April-2020

Property Overview Year One Operating Summary


24

FINANCIAL ANALYSISFINANCIAL ANALYSIS HISTORICAL ANALYSISHistorical Analysis 1775 FederalDenver, Colorado

INCOME Assumptions

Gross Scheduled Rent $1,098,603 0.0% $1,098,603

Less: Gain/(Loss)-to-Lease (3.9%) (42,819) 0.0% 0

Gross Potential Income $1,055,784 $1,098,603

Less: Vacancy (4.8%) ($52,471) (5.0%) ($54,930)

Total Rental Income 91.3% $1,003,313 95.0% $1,043,673

Plus: Other Income ¹ $641 $27,570 $654 $28,140

Plus: Utility Income 274 11,769 282 12,122Plus: Parking Income 824 35,436 849 36,499

Effective Gross Income $1,078,088 $1,120,434

EXPENSES per unit Actual per unit Proforma Exp.

Repairs & Maintenance $977 $42,018 $650 $27,950

Contract Services 169 7,270 250 10,750

Turnover Costs 107 4,598 120 5,160

Administrative 66 2,848 50 2,150

Marketing 89 3,840 250 10,750

Utilities 426 18,308 426 18,308

Total Variable Expenses $1,834 $78,882 $1,746 $75,068

Taxes ² 1,943 83,532 1,943 83,532

Insurance 300 12,900 300 12,900

Management Fee 7.7% 82,666 6.5% 72,828

Total Operating Expenses $6,000 $257,980 $5,682 $244,328

Plus: Capital Reserves ³ 250 10,750 250 10,750

Total Expenses $6,250 $268,730 $5,932 $255,078

NET OPERATING INCOME $809,358 $865,356

1.Reference Service & Other Income Section for detailed assumptions.

2.Taxes assume full construction completion run at 90% of strike price.

3.Historical and Forecast Capital Reserves set to equal $250/unit to facilitate comparison.

April-2020

StabilizedProforma

Budget



25

FINANCIAL ANALYSISFINANCIAL ANALYSIS UNIT MIX + CURRENT MARKET RENTSUnit Mix and Current Market Rents 1775 FederalDenver, Colorado

Current Current AnnualMonthly Market Market Monthly Effective

Unit Unit No. of % Unit Market Rent Rent Effective Rent TotalDescription Name Units Type Sq. Ft. Rents /Sq. Ft. Total Rent /Sq. Ft. Sq. Ft.

One Bedroom1 Bed / 1 Bath A1 8 18.6% 665 $1,518 $2.28 $145,680 $1,518 $2.28 5,3201 Bed / 1 Bath A2 4 9.3% 887 1,794 2.02 86,100 1,794 2.02 3,548One Bedroom Total/Avg. 12 27.9% 739 1,610 2.18 231,780 1,610 2.18 8,868

1Two Bedroom2 Bed / 2 Bath B1 28 65.1% 998 $2,129 $2.13 $715,440 $2,129 $2.13 27,9442 Bed / 2 Bath B2 3 7.0% 1,203 2,410 2.00 86,760 2410 2.00 3,609Two Bedroom Total/Avg. 31 72.1% 1,018 2,156 2.12 802,200 2,156 2.12 31,553

1Total / Avg. 43 100% 940 $2,004 $2.13 $1,033,980 $2,004 $2.13 40,421

April-2020

MonthlyMarket

RentTotal

$12,1407,175

19,315

$59,6207,230

66,850

$86,165

One Bedroom

28%

Two Bedroom

72%

By Bedroom Type

665 19%887

9%

998 65%

1,203 7%

By Square Feet



26

FINANCIAL ANALYSISFINANCIAL ANALYSIS SERVICE + OTHER INCOME


Service and Other Income 1775 Federal 0Denver, Colorado

Application Fees 43u x 40% relets x 175% x $40 46 $1,980 $45 $1,935NSF & Late Fees 47 2,040 49 2,101Lease Termination Fees 197 8,450 202 8,704Damages/Cleaning Fees 51 2,200 53 2,266Month-to-Month Fees 73 3,150 75 3,245Non-Refundable Pet Fee 43u x 40% relets x 25% pets x $250 38 1,650 25 1,075Monthly Pet Rent 43u x 25% pets x $44 x 12 mo. 137 5,900 130 5,590Non-Refundable Administrative Fees 43u x 40% relets x $150 51 2,200 75 3,225

$641 $27,570 $654 $28,140

Utility Billback Income 274 11,769 282 12,122$274 $11,769 $282 $12,122

Parking Income $824 $35,436 $849 $36,499$824 $35,436 $849 $36,499

PARKING INCOME

Total Parking Income

Total Service and Other Income

UTILITY INCOME

Total Utility Income

SERVICE AND OTHER INCOME Budget

% OverTrailing 12

Months

April-2020

StabilizedProforma


27

FINANCIAL ANALYSISFINANCIAL ANALYSIS CASH FLOW ASSUMPTIONSCash Flow Assumptions 1775 FederalDenver, Colorado TRUE TRUE

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Market Rent $2.26 $2.33 $2.40 $2.47 $2.55 $2.63 $2.70 $2.79 $2.87 $2.96Market Rent - Annual Increases 0.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%Concessions 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Loss (Gain) to Lease 0.0% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%Effective Rent $2.26 $2.30 $2.37 $2.44 $2.51 $2.59 $2.66 $2.74 $2.83 $2.91Vacancy 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%Bad Debt 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Non-Revenue Units 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Other Income - Annual Increases 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%Utility Income - Annual Increases 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%Operating Expenses - Annual Increases 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%Management Fee 6.5% 6.5% 6.5% 6.5% 6.5% 6.5% 6.5% 6.5% 6.5% 6.5%

April-2020

Proforma Assumptions



28

FINANCIAL ANALYSISFINANCIAL ANALYSIS TAX ANALYSISTax Analysis 1775 FederalDenver, Colorado

Mill Full Cash AssessmentParcel Levy Value Ratio Tax

2019 Taxes Payable 2020 & 2020 Taxes Payable 2021*

02323-13-019-000 VACANT LAND 0.072116 $1,447,200 29.00% $30,266$1,447,200 $30,266

$33,656 $704

2021 Taxes Payable 2022 & 2022 Taxes Payable 2023**

02323-13-019-000 0.072116 $16,200,000 7.15% $1,158,300 $83,532$16,200,000 $1,158,300 $83,532

$376,744 $1,943

April-2020

Denver County

Valuation Per Unit:

**2021 Taxes Payable 2022 & 2022 Taxes Payable 2023 are based on a discounted percentage of sales price and the assumption that the Mill Levy and Assessment Ratio will remain the same as in 2019.

Valuation Per Unit: Taxes Per Unit:

*2019 Taxes Payable 2020 & 2020 Taxes Payable 2021 are based on the Assessor's Appraised Value of $33,656 per unit. It is also assumed that the Mill Levy will remain the same as in 2019.

$419,688

AssessedValue

$419,688

Taxes Per Unit:



29

FINANCIAL ANALYSISFINANCIAL ANALYSIS FIVE YEAR PROJECTED CASH FLOWSFive Year Projected Cash Flows 1775 FederalDenver, Colorado

Year 1 Year 2 Year 3 Year 4 Year 5

$1,098,603 $1,131,561 $1,165,508 $1,200,473 $1,236,4870 (16,973) (17,483) (18,007) (18,547)

$1,098,603 $1,114,588 $1,148,025 $1,182,466 $1,217,940

($54,930) ($56,578) ($58,275) ($60,024) ($61,824)$1,043,673 $1,058,010 $1,089,750 $1,122,442 $1,156,116

1.4% 3.0% 3.0% 3.0%$28,140 $28,984 $29,854 $30,750 $31,672

12,122 12,486 12,860 13,246 13,64336,499 37,594 38,722 39,884 41,080

$1,120,434 $1,137,074 $1,171,186 $1,206,322 $1,242,511

Buyer Expenses$27,950 $28,789 $29,652 $30,542 $31,458

10,750 11,073 11,405 11,747 12,0995,160 5,315 5,474 5,638 5,8082,150 2,215 2,281 2,349 2,420

10,750 11,073 11,405 11,747 12,09918,308 18,857 19,423 20,006 20,606

$75,068 $77,320 $79,640 $82,029 $84,49083,532 86,038 88,619 91,278 94,01612,900 13,287 13,686 14,096 14,51972,828 73,910 76,127 78,411 80,763

$244,328 $250,555 $258,071 $265,814 $273,78810,750 11,073 11,405 11,747 12,099

$255,078 $261,627 $269,476 $277,560 $285,887

$865,356 $875,447 $901,710 $928,761 $956,624

1.790 1.811 1.866 1.921 1.979 Debt Service Coverage Ratio

Insurance

Plus: Capital Reserves

Management FeeTotal Operating Expenses

NET OPERATING INCOME

Total Expenses

AdministrativeMarketingUtilitiesTotal Variable ExpensesTaxes

EXPENSESRepairs & MaintenanceContract ServicesTurnover Costs

Plus: Utility IncomePlus: Parking IncomeEffective Gross Income

Total Rental Income Rental Income Growth %Plus: Other Income

Less: Gain/(Loss)-to-LeaseGross Potential Income

Less: Vacancy

April-2020

INCOMEGross Scheduled Rent



30

FINANCIAL ANALYSISFINANCIAL ANALYSIS TEN YEAR PROJECTED CASH FLOWSTen Year Projected Cash Flows 1775 FederalDenver, Colorado

Year 6 Year 7 Year 8 Year 9 Year 10

$1,273,582 $1,311,789 $1,351,143 $1,391,677 $1,433,428(19,104) (19,677) (20,267) (20,875) (21,501)

$1,254,478 $1,292,113 $1,330,876 $1,370,802 $1,411,926

($63,679) ($65,589) ($67,557) ($69,584) ($71,671)$1,190,799 $1,226,523 $1,263,319 $1,301,218 $1,340,255

3.0% 3.0% 3.0% 3.0% 3.0%$32,622 $33,601 $34,609 $35,647 $36,717

14,053 14,474 14,909 15,356 15,81742,312 43,582 44,889 46,236 47,623

$1,279,787 $1,318,180 $1,357,726 $1,398,457 $1,440,411

$32,402 $33,374 $34,375 $35,406 $36,46812,462 12,836 13,221 13,618 14,026

5,982 6,161 6,346 6,537 6,7332,492 2,567 2,644 2,724 2,805

12,462 12,836 13,221 13,618 14,02621,224 21,861 22,517 23,192 23,888

$87,024 $89,635 $92,324 $95,094 $97,94796,836 99,742 102,734 105,816 108,99014,955 15,403 15,865 16,341 16,83283,186 85,682 88,252 90,900 93,627

$282,002 $290,462 $299,175 $308,151 $317,39512,462 12,836 13,221 13,618 14,026

$294,464 $303,298 $312,397 $321,769 $331,422

$985,323 $1,014,882 $1,045,329 $1,076,689 $1,108,989

Debt Service Coverage Ratio 1.423 1.466 1.510 1.555 1.602

Total Operating ExpensesPlus: Capital ReservesTotal Expenses

NET OPERATING INCOME

Total Variable ExpensesTaxesInsuranceManagement Fee

Turnover CostsAdministrativeMarketingUtilities

Effective Gross Income

EXPENSESRepairs & MaintenanceContract Services

Rental Income Growth %Plus: Other IncomePlus: Utility IncomePlus: Parking Income

April-2020

Less: Vacancy

INCOMEGross Scheduled RentLess: Gain/(Loss)-to-LeaseGross Potential Income

Total Rental Income



31

SALE COMPARABLES# PROPERTY NAME STREET (OR 1ST CROSS STREET) SALE PRICE $/UNIT # UNITS $/SF YOC SALE DATE

S 1775 Federal 1775 Federal Blvd. TBD TBD 43 TBD 2020 TBD1 RedPeak Platt Park Townhomes (FKA Platt Park North) 110 E. Mississippi Ave. $29,500,000 $491,667 60 $345.03 2015 Mar-182 Centric LoHi by Windsor* 2525 18th St. $130,750,000 $432,947 302 $526.97 2018 Dec-183 Infinity LoHi 2298 W. 28th Ave. $111,750,000 $409,341 273 $533.83 2018 Dec-184 Tennyson 44 4390 Tennyson St. $19,150,000 $407,447 47 $589.81 2018 Jun-195 Jux 821 Corona St. $12,000,000 $400,000 30 $502.13 2017 May-186 The Colewood 3860 Tennyson St. $19,350,000 $394,898 49 $501.54 2017 Jan-197 Ascent Uptown*# 1551 E. 17th Ave. $8,550,000 $388,636 22 $462.51 2013 Mar-19

*Property contains retail component#Property sold as part of portfolio

THE COLEWOOD

6

ASCENT UPTOWN

7

INFINITY LOHI

3

TENNYSON 44

4

CENTRIC LOHI BY WINDSOR

2

JUX

5

REDPEAK PLATT PARK

1

3232

S

6

4

5

7Fe

dera

l Blv

d

38th Ave

44th Ave

Colfax Ave

Dow

ning

St

8th Ave

17th Ave

28th Ave 32

1Mississippi Ave

SALE COMPARABLES SALE COMPARABLES MAP

33

RENT COMPARABLES# PROPERTY NAME YEAR BUILT # OF UNITS OCCUPANCY AVG SF RENT $/SF RENT TYPE SPECIALS

1 Eliot Center 2017 20 95% 973 $2,210 $2.27 New Build No Specials

2 Colewood 2018 49 93% 787 $2,146 $2.73 New Build 1 Month Free on Select Units

3 Luxe at Mile High 2019 382 0%* 851 $2,145 $2.52 New Build Up to 2 Months Free4 Tejon Heights 2014 29 97% 905 $2,117 $2.34 New Build No Specials5 Lumina 2015 61 95% 750 $1,888 $2.52 New Build No Specials6 B Street LoHi 2013 73 97% 715 $1,867 $2.61 New Build No Specials7 Barrel Lofts 2018 32 94% 782 $1,748 $2.24 New Build No Specials8 2525 Eliot 2017 72 98% 644 $1,669 $2.59 New Build No Specials9 Highland Place 2014 68 97% 640 $1,649 $2.57 New Build No Specials

Comp Average 786 96% 792 $1,997 $2.52S 1775 Federal 2020 43 0%* 940 $2,004 $2.13 New Build No Specials

*Properties in lease up excluded from occupancy average ^Rents shown for 1775 Federal are reflective of in-place rents per preliminary property financials

$2.24 $2.27 $2.30 $2.34$2.52 $2.52 $2.52 $2.57 $2.59 $2.61 $2.73

PROPERTY AVERAGE RENT PER

SQ. FT.

3434

S

2

3

4

56

7

81

9

Fede

ral B

lvd

Colfax Ave

38th Ave

32nd Ave

Nav

ajo

St

25th Ave

RENT COMPARABLESONE BEDROOM ANALYSIS

# Property # of Units Unit Mix Av. SF Rent Rent PSF

1 Colewood 28 57% 781 $2,086 $2.67

2 Luxe at Mile High 181 47% 730 $1,934 $2.65

3 B Street LoHi 65 89% 685 $1,824 $2.66

4 Lumina 29 48% 737 $1,747 $2.37

5 Tejon Heights 13 45% 757 $1,725 $2.28

6 Highland Place 31 46% 659 $1,639 $2.49

7 Barrel Lofts 13 41% 712 $1,622 $2.28

8 Eliot Center 4 20% 511 $1,475 $2.89

9 2525 Eliot 36 50% 507 $1,275 $2.52

TOTALS/AVERAGES 400 51% 699 $1,810 $2.59

S 1775 Federal 12 28% 739 $1,610 $2.18

350 1 BEDROOM$350 DIFFERENCE

COMPARED TO TOP COMPARABLE$74 DIFFERENCE

COMPARED TO COMP AVERAGE

TWO BEDROOM ANALYSIS

# Property # of Units Unit Mix Av. SF Rent Rent PSF

1 Colewood 6 12% 1,092 $3,148 $2.88

2 Luxe at Mile High 109 29% 1,139 $2,619 $2.30

3 Tejon Heights 16 55% 1,026 $2,436 $2.37

4 Lumina 15 25% 931 $2,398 $2.58

5 Barrel Lofts 7 22% 1,056 $2,378 $2.25

6 Eliot Center 14 70% 1,069 $2,321 $2.17

7 Highland Place 12 18% 949 $2,236 $2.36

8 B Street LoHi 8 11% 963 $2,220 $2.30

9 2525 Eliot 36 50% 782 $2,063 $2.64

TOTALS/AVERAGES 223 28% 1,035 $2,454 $2.37

S 1775 Federal 31 72% 1,018 $2,156 $2.12

825 2 BEDROOM$825 DIFFERENCE

COMPARED TO TOP COMPARABLE$131 DIFFERENCE

COMPARED TO COMP AVERAGE

^Rents shown for 1775 Federal are reflective of in-place rents per preliminary property financials

Newmark Knight Frank1800 Larimer St. Suite 1700Denver, CO 80202

RENT COMPARABLES MAP + BEDROOM ANALYSIS

3535

PRESENTED BY

BROKERAGE TEAM Justin Hunt

T [email protected]

Andy HellmanT 303-260-4474

[email protected]

Katie HufnagelT 303-260-4416

[email protected]

DEBT TEAMCharlie WilliamsT 303-260-4390

[email protected]

David TreadwellT 303-260-4489

[email protected]

Tim WeldonT 303-260-4466

[email protected]

Lauren ConradT 303-260-4253

[email protected]

Newmark Knight Frank Multifamily1800 Larimer StreetSuite 1700Denver, CO 80202T 303-260-4400 ngkf.com


MORE INFORMATION IS AVAILABLE ON OUR WEBSITE AT: http://arausa.listinglab.com/1775Federal

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OFFERING MEMORANDUM · Lauren Conrad T 303-260-4253 [email protected] Newmark Knight Frank Multifamily 1800 Larimer Street Suite 1700 Denver, CO 80202 T 303-260-4400 ... backsplashes,