Lehigh University Student Housing

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Hubert Townsend
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1 Lehigh University Student Housing

2 Table of Contents Confidentiality & Disclaimer All materials and information received or derived from DLP, its directors, officers, agents, advisors, affiliates and/or any third party sources are provided without representation or warranty as to completeness, veracity, or accuracy, condition of the property, compliance or lack of compliance with applicable governmental requirements, developability or suitability, financial performance of the property, projected financial performance of the property for any party s intended use or any and all other matters. Neither DLP, its directors, officers, agents, advisors, or affiliates makes any representation or warranty, express or implied, as to accuracy or completeness of the any materials or information provided, derived, or received. Materials and information from any source, whether written or verbal, that may be furnished for review are not a substitute for a party s active conduct of its own due diligence to determine these and other matters of significance to such party. DLP will not investigate or verify any such matters or conduct due diligence for a party unless otherwise agreed in writing. EACH PARTY SHALL CONDUCT ITS OWN INDEPENDENT INVESTIGATION AND DUE DILIGENCE. Any party contemplating or under contract or in escrow for a transaction is urged to verify all information and to conduct their own inspections and investigations including through appropriate third party independent professionals selected by such party. All financial data should be verified by the party including by obtaining and reading applicable documents and reports and consulting appropriate independent professionals. DLP makes no warranties and/or representations regarding the veracity, completeness, or relevance of any financial data or assumptions. DLP does not serve as a financial advisor to any party regarding any proposed transaction. All data and assumptions regarding financial performance, including that used for financial modeling purposes, may differ from actual data or performance. Any estimates of market rents and/or projected rents that may be provided to a party do not necessarily mean that rents can be established at or increased to that level. Parties must evaluate any applicable contractual and governmental limitations as well as market conditions,vacancy factors and other issues in order to determine rents from or for the property. Legal questions should be discussed by the party with an attorney. Tax questions should be discussed by the party with a certified public accountant or tax attorney. Title questions should be discussed by the party with a title officer or attorney. Questions regarding the condition of the property and whether the property complies with applicable governmental requirements should be discussed by the party with appropriate engineers, architects, contractors, other consultants and governmental agencies. All properties and services are marketed by DLP in compliance with all applicable fair housing and equal opportunity laws.

Executive Summary PROPERTY SUMMARY Sale Price: $3,390,000 Properties: 11 Beds: 54 NOI: $216,461 Market: Lehigh Student Housing Lehigh Valley PA MSA Property Overview Rare opportunity to purchase a

3 Executive Summary PROPERTY SUMMARY Sale Price: $3,390,000 Properties: 11 Beds: 54 NOI: $216,461 Market: Lehigh Student Housing Lehigh Valley PA MSA Property Overview Rare opportunity to purchase a turn key, Lehigh University Student Housing Portfolio. Portfolio consists of 17 units, all located in the most desirable and safest neighborhood near campus. Each property is less than a one minute walk to campus, with stunning views of Bethlehem. In addition, there are 2 desirable building lots included in the package for additional revenue opportunities. This is not a typical student housing portfolio with abused properties and years of deferred maintenance. Each property is clean, modern and very well maintained, with updated kitchens, bathrooms, heating systems, flooring, windows, etc. Approximately half of the units are rented to graduate students each year. The portfolio also attracts medical students from St. Luke s and students from DeSales and Moravian. There is significant upside in increasing average per bed rent by $75-$100 per month. Current rents are below comparable student housing in lesser neighborhoods. Current owner has kept rents under market value in order to maintain 100% occupancy with carefully selected tenants.

Bathrooms Air Conditioning Washer and Dryer in Each Unit Private

4 Property Photos Apartments 514 1st Terrace Units: 2 Apartment Features: 1,045 sq ft 2 Bedroom/2 Bath Modern Kitchens with Dishwashers Modern Bathrooms Air Conditioning Washer and Dryer in Each Unit Private Off-Street Parking Both Units Renovated in 2015 New Roof in 2016 New Insulated Windows

Conditioning Washer and Dryer Facility Decks Overlooking Woods Private

5 Property Photos Apartments 432 Stoneman Units: 6 Apartment Features: 885 sq ft 2 Bedroom/1 Bath Modern Kitchens with Dishwasher Modern Bathrooms Air Conditioning Washer and Dryer Facility Decks Overlooking Woods Private Off-Street Parking New Roof in 2015 All Units Renovated Within the Past Few Years

Property Photos Houses 402 1st Terrace Bedrooms: 4 Bathrooms: 2 422 1st Terrace Bedrooms: 4

sqft Additional Features: Washer and Dryer Dish Washer Hardwood Floors and W/W Carpeting Gas Heat

Dryer Dish Washer Hardwood Floors and W/W Carpeting Gas Heat Air Conditioning Off Street Parking

6 Property Photos Houses 402 1st Terrace Bedrooms: 4 Bathrooms: st Terrace Bedrooms: 4 Bathrooms: st Terrace Bedrooms: 4 Bathrooms: 2 Size: 1824 sqft Size: 1713 sqft Size: 1713 sqft Additional Features: Washer and Dryer Dish Washer Hardwood Floors and W/W Carpeting Gas Heat New Central Air Rear Trex Deck Large Detached Storage Building Additional Features: Washer and Dryer Dish Washer Hardwood Floors and W/W Carpeting Gas Heat Air Conditioning Off Street Parking Additional Features: Washer and Dryer Dish Washer W/W Carpeting Gas Heat Air Conditioning Off Street Parking

Property Photos Houses 496 1st Terrace Bedrooms: 5 Bathrooms: 2 508 1st Terrace Bedrooms: 3 Bathrooms: 1.

Washer and Dryer New Central Air Rec Room in Fully Finished Lower Level Off Street Parking Attached 1-car Garage New Insulated Windows Additional

7 Property Photos Houses 496 1st Terrace Bedrooms: 5 Bathrooms: st Terrace Bedrooms: 3 Bathrooms: Stoneman Bedrooms: 5 Bathrooms: 2 Size: 2052 sqft Size: 1570 sqft Size: 1933 sqft Additional Features: Hardwood Floors and W/W Carpeting New Washer and Dryer New Central Air Rec Room in Fully Finished Lower Level Off Street Parking Attached 1-car Garage New Insulated Windows Additional Features: Hardwood Floors and W/W Carpeting Detached 1-car Garage Washer and Dryer Air Conditioning Off Street Parking Covered Front Porch with Beautiful View of Campus & Covered Rear Deck New Insulated Windows Additional Features: Fully Furnished Brand New Granite and Stainless Kitchen Hardwood FloorsThroughout New Washer and Dryer New Gas Furnace & Gas Hot Water Air Conditioning Off Street Parking Covered Front Porch Walk-out Basement Large Back Yard Both Bathrooms Newly Remodeled

Property Photos Houses 407 Stoneman Bedrooms: 5 Bathrooms: 2 426 Stoneman Bedrooms: 5 Bathrooms: 2 416 Selfridge Bedrooms: 3 Bathrooms:

New Gas Furnace & Gas Hot Water Air Conditioning Off Street Parking Covered Front Porch Walk-out Basement Large Back Yard Two

Hot Water Heater New Insulated Windows Large Rear Deck Overlooking Large Private Back Yard Additional Features: New Wall to Wall

8 Property Photos Houses 407 Stoneman Bedrooms: 5 Bathrooms: Stoneman Bedrooms: 5 Bathrooms: Selfridge Bedrooms: 3 Bathrooms: 1 Size: 1933 sqft Size: 1840 sqft Size: 1425 sqft Additional Features: Fully Furnished Hardwood FloorsThroughout New Washer and Dryer New Gas Furnace & Gas Hot Water Air Conditioning Off Street Parking Covered Front Porch Walk-out Basement Large Back Yard Two Refrigerators Additional Features: Off Street Parking New Central Air Wall to Wall Carpeting Washer and Dryer New Gas Furnace and Gas Hot Water Heater New Insulated Windows Large Rear Deck Overlooking Large Private Back Yard Additional Features: New Wall to Wall Carpeting Washer and Dryer Gas Furnace and Gas Hot Water Heater Air Conditioning Newly Remodeled Bathroom Off Street Parking for 3 Cars New Insulated Windows

9 Properties Map

10 Financial Analysis Pro Forma Revenues: Total Gross Rents 326,280 Current Gross Rents Economic Loss Less: Vacancy 16,314 No Actual Vacancy Less: Bad Debt 1,631 Concessions Bad Debt Total Economic Loss 17,945 Other Income - Security Deposits 7,350 Effective Gross Income: 315,685 Pro Forma Assumptions Expenses: Cleaning & Maintenance - Advertising 1,200 Administrative 1,350 $25 per bed Insurance 8,903 Legal & Professional Fees 1,500 Payroll 10,800 Management Fees 16,314 Association Fees Repairs and Maintenance 19,950 $350 per bed Taxes 33,691 Utilities Water & Sewer 2,912 Electric 1,272 Trash Removal 1,332 Other Expenses Total Expenses $ 99,224 Valuation Analysis Pro Forma Cap Rate Price $ / Bed 6.00% $3,607,677 $66, % $3,463,370 $64, % $3,330,163 $61, % $3,206,824 $59,386 Cash On Cash Return (Based on Proposed 75% Financing) Pro Forma Cap Rate Price Return % 6.00% $3,607, % 6.25% $3,463, % 6.50% $3,330, % 6.75% $3,206, % Net Operating Income $ 216,461 Reserves 14,250 $250 per bed Net Operating Cash Flow $ 202,211

Property Rent Roll Lease Term Expiration (% of Beds) Property Rent Roll 2017 2018 2019 2020 Houses Beds Baths Lease Term SF Monthly Rent Annual Rent Lease Term 0% 18% 17% 65% 402 1st Terrace 4 2

11 Property Rent Roll Lease Term Expiration (% of Beds) Property Rent Roll Houses Beds Baths Lease Term SF Monthly Rent Annual Rent Lease Term 0% 18% 17% 65% 402 1st Terrace 4 2 5/31/ $ 2,150 $ 25,800 5/31/ st Terrace 4 2 5/31/ $ 2,050 $ 24,600 5/31/ st Terrace 4 2 5/31/ $ 2,050 $ 24,600 5/31/ st Terrace 5 2 5/31/ $ 2,350 $ 28,200 5/31/ st Terrace /31/ $ 1,675 $ 20,100 5/31/ Stoneman Street 5 2 5/31/ $ 1,950 $ 23,400 5/31/ Stoneman Street 5 2 5/31/ $ 2,300 $ 27,600 5/31/ Stoneman Street 5 2 5/31/ $ 2,250 $ 27,000 5/31/ Selfridge Street 3 1 5/31/ $ 1,625 $ 19,500 5/31/2018 $ 18,400 $ 220,800 Apartments Stoneman Street Unit /31/ $ 1,100 $ 13,200 5/31/2018 Unit /31/ $ 1,050 $ 12,600 5/31/2018 Unit /31/ $ 995 $ 11,940 5/31/2018 Unit /31/ $ 1,100 $ 13,200 5/31/2018 Unit /31/ $ 945 $ 11,340 5/31/2018 Unit /31/ $ 1,100 $ 13,200 5/31/2018 $ 6,290 $ 75,480 Totals Apartments st Terrace Unit A 2 2 5/31/ $ 1,200 $ 14,400 5/31/2018 Unit B 2 2 5/31/ $ 1,300 $ 15,600 5/31/2018 $ 2,500 $ 30,000 Totals Grand Totals $ 27,190 $ 326,280

12 Bethlehem, PA POPULATION 75,050 MEDIAN HOUSEHOLD INCOME $46,902 MEDIAN AGE 34.9

13 Regional Map

14 Demographics

About Lehigh University Founded: 1865 by Asa Packer, an industrial pioneer, entrepreneur and philanthropist Accreditation: Regionally Accredited, Middle States Association of Colleges and Schools

15 About Lehigh University Founded: 1865 by Asa Packer, an industrial pioneer, entrepreneur and philanthropist Accreditation: Regionally Accredited, Middle States Association of Colleges and Schools Student Body: 5,080 undergraduates (56% men, 44% women) 1,979 graduate students (55% men, 45% women) 4 Colleges: College of Arts and Sciences, College of Business and Economics, P.C. Rossin College of Engineering and Applied Science and College of Education Lehigh Endowment: $1.2 billion Athletics Program: 25 NCAA Division I intercollegiate sports for men and women, 43 intramural and club sports

Student Housing Forecast Current: # of full time students 7,059 % living off campus 40% # living off campus 2,471 Future: # new full time students added 1,500 to 1,800 Total # of full time students

16 Student Housing Forecast Current: # of full time students 7,059 % living off campus 40% # living off campus 2,471 Future: # new full time students added 1,500 to 1,800 Total # of full time students 8,559 Lehigh s % target for off campus students 35% Lehigh s # target for off campus students 2,568 Lehigh s # target for on campus students 5,991 Conclusion: Based on the above projections, Lehigh will have a demand for 97+ additional off campus beds if Lehigh is able to build 1,300-1,400 additional on campus units over the next few years, which would be very optimistic. It is likely that additional off campus beds will be needed to meet Lehigh s growth plans.

17 First Year On Campus Housing

18 Second Year On Campus Housing

19 Third, Fourth and Fifth Year Year On Campus Housing

20 Other Off Campus Housing

MLS #: Beds: 1 Tax ID #: Baths: 1 / 0 County: Chester, PA Approx Interior SQFT: 1,630 / Assessor Spring City Boro - Chester

MLS #: Beds: 1 Tax ID #: Baths: 1 / 0 County: Chester, PA Approx Interior SQFT: 1,630 / Assessor Spring City Boro - Chester 226 Yost Ave Unit #APT 1, Spring City, PA 19475 Residential Rentals Active $890 MLS #: 7174698 Beds: 1 Tax ID #: 14-04 -0176 Baths: 1 / 0 County: Chester, PA Approx Interior SQFT: 1,630 / Assessor MLS