# Offering Memorandum Summary

## Northgate Commons
### 120 units | Built 1986 | Fairhaven, a mid-size US market (fabricated)

> **This is an illustrative teaching document.** Northgate Commons does not
> exist. The broker, the seller, the market, the comparables, and every figure
> below were written for a course exercise. Nothing here is a real offering, a
> real property, or a real transaction. It is styled after a broker offering
> memorandum on purpose, including the parts a buyer would want to test.

Prepared by the (fictional) listing team. Information is stated to have been
obtained from the seller and is offered without independent verification.
Buyers are directed to conduct their own diligence.

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## The offering

| | |
|---|---|
| Guidance price | **$17,400,000** |
| Price per unit | $145,000 |
| Units | 120 |
| Year built | 1986 |
| Buildings / stories | 4 garden buildings, 3 stories |
| Rentable area | 105,360 sq ft (878 sq ft average) |
| Current occupancy | 95% physical (114 of 120) |
| Cap rate on trailing twelve months as reported | 6.43% |
| Cap rate on trailing twelve adjusted for non-recurring items | 7.50% |
| **Cap rate on year one pro forma** | **8.45%** |

## The investment case

Northgate Commons is offered for the first time since 2009. The seller has owned
and self-managed the asset throughout and has run it as a hold rather than as a
merchant build, which in our view has left room on rents and on operating
practice for a new owner.

Three points stand out.

**Rents sit below what the plans support.** In-place rents on occupied units
average $1,339.74 against market rents of
$1,405.67. That is roughly $89,340 a year of
loss to lease sitting inside the rent roll, recoverable as leases roll.

**A renovation program is already proven at the property.** 18
units have been renovated and leased. The premiums achieved are
$150 on the one-bedroom plans and
$175 on the two-bedroom plans. The
remaining 102 classic units are the runway.

**Capital has been put in.** The seller completed a full roof replacement across
all four buildings in August 2026 at a cost of
$186,500. A buyer inherits the work.

## Unit mix and rents

| Plan | Description | Units | Sq Ft | Classic Market Rent | Renovated Market Rent |
|---|---|---|---|---|---|
| A1 | 1BR / 1BA | 48 | 720 | $1,225 | $1,375 |
| A2 | 1BR / 1BA Deluxe | 24 | 800 | $1,315 | $1,465 |
| B1 | 2BR / 2BA | 36 | 1050 | $1,545 | $1,720 |
| B2 | 2BR / 2BA Corner | 12 | 1150 | $1,650 | $1,825 |

## Year one pro forma

Our pro forma is built off the current rent roll, grown at
4.5%, which is in line with what we are seeing in the
submarket, and stabilized at a 4.0% vacancy factor.

| Revenue | Annual | Per Unit |
|---|---|---|
| Gross potential rent | $2,115,247 | $17,627 |
| Less loss to lease | ($89,340) | ($745) |
| Gross scheduled rent | $2,025,907 | $16,883 |
| Less vacancy at 4.0% | ($81,036) | ($675) |
| Less concessions and credit loss | ($34,535) | ($288) |
| Net rental income | $1,910,336 | $15,919 |
| Other income | $119,373 | $995 |
| **Effective gross income** | **$2,029,709** | **$16,914** |

| Operating Expense | Annual | Per Unit |
|---|---|---|
| Payroll and Benefits | $140,182 | $1,168 |
| Repairs and Maintenance | $62,338 | $519 |
| Turnover and Make Ready | $40,501 | $338 |
| Contract Services | $35,897 | $299 |
| Utilities - Water and Sewer | $60,852 | $507 |
| Utilities - Electric (Common Area) | $18,205 | $152 |
| Utilities - Gas | $10,485 | $87 |
| Marketing and Leasing | $16,218 | $135 |
| Administrative | $26,466 | $221 |
| Insurance | $55,800 | $465 |
| Property Taxes | $93,150 | $776 |
| Management Fee | $0 | $0 |
| **Total operating expenses** | **$560,094** | **$4,667** |

| | Annual | Per Unit |
|---|---|---|
| **Net operating income** | **$1,469,615** | **$12,247** |

Expense ratio: 27.6% of effective gross income.

### Pro forma footnotes

1. Revenue is built off the rent roll dated 2026-12-31 with
   4.5% applied to market rents. Loss to lease is
   carried at the amount shown on the rent roll.
2. Other income is trailing twelve months plus 5.0%.
3. Operating expenses are the trailing twelve months as reported by the seller,
   with the $186,500 roof replacement removed from
   repairs and maintenance as a non-recurring capital item.
4. Property taxes are the 2026 bill of
   $93,150 on an assessed value of
   $6,900,000.
5. The property is self-managed by the seller.

## Property notes

- Roofs: replaced across all four buildings in 2026 by the seller.
- HVAC: original systems on the classic units; replaced at renovation.
- Utilities: residents are billed for water and sewer through a ratio utility
  billing system. Common area electric, gas, and trash are owner paid.
- Parking: surface parking is included. Covered spaces rent separately.
- Management: the property has been self-managed by the seller since 2009. There
  is an on-site manager and a maintenance technician on payroll.
- Taxes: the county assessor's office reassesses on transfer. Recent practice in
  the county has been to reset assessed value to roughly
  92% of the recorded sale price effective
  the tax year following a transfer. The combined rate is currently
  1.350% of assessed value.

## What is included in the data room

The rent roll, the trailing twenty-four month operating statement, the
statement notes, the sale and rent comparables, and the market survey. A lender
term sheet has been circulated separately.

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*Illustrative teaching case. Northgate Commons, the market, the broker, the lender, the comparables, and every figure in this packet are fabricated for instruction. Nothing here is a real property, a real transaction, or a real financing quote.*