Sacramento City Council
November 19, 2024

Other key points from C.A.R.’s August 2024 resale housing report include:

 At the regional level, home sales in all major regions except for two were higher than their year-ago levels in August. Three out of the five regions in the state registered increases from a year ago, with the San Francisco Bay Area (4.8 percent) increasing the most. It was followed by the Central Coast (3.0 percent) and the Central Val ley (0.8 percent) regions.

The two regions in the state that fell behind last year’s sales level were the Far North (-

5.0 percent) and Southern California (-2.3 percent).

 Twenty-six of the 53 counties tracked by C.A.R. recorded sales increased from a year ago, with 10 of them jumping more than 10 percent year-over-year. Yu ba (37.1 percent) posted the largest yearly sales gain, followed by Mendocino (25 .6 percent) and Glenn (25.0 percent). Twenty-seven cou nties experienced sales decreas es from last year, with 18 of them falling more than 10 percent year-over-year. Eight counties had sales drops of more than 20 percent, and three counties experienced sales decl ines of more than 30 percent. Trinity (-50.0 percent) recorded the biggest annual sales decline in August, followed by Mariposa (-45.0 percent) and Plumas (-34.8 percent).

 At the regional level, all major regions except for one experie nced an increase in their median price from a year ago in August. The Central Coast posted the biggest price jump on a year-over-year basis, increasing 8.9 percent from last August. Far North (7.7 percent) was a close second, followed by Southern California (4.0 percent), and the Central Valley (3.1 percent). The San Francisco Bay Area (-1.6 percent) was the only region that recorded a price decline in August compared to a year ago, as six of the nine counties in that region experienced a price drop last month.

 Home prices continued to grow on a year-over-year basis through out the state, with median sales price in 36 counties registering price increase fr om a year ago in August.

Trinity (36.6 percent) posted the biggest increase in price last month, followed by Plumas (32.9 percent) and Imperial (22. 0 percent). Sixteen counties recorded annual median price declines, with Santa Barbara dropping the most at 18.0 pe rcent, followed by Mariposa (-14.6 percent), and Amador (-12.0 percent).

 The statewide unsold inventory index (UII), which measures the number of months needed to sell the supply of homes on the market at the current sales rate, increased both month-over-month and year-over-year. The index was 3.2 months in August, up from 2.9 months in July and up from 2.4 months in August 2023. Active li stings at the state level rose more than 39 percent from the year-ago level. It was the seventh straight month of annual gains in for-sale properties.

 At the county level, the availability of homes for sale increas ed from the same month of last year in all but four counties in August. Alameda (124.4 percent) posted the biggest year-over-year jump, followed by Contra-Costa (96.9 percent) an d Stanislaus (63.9 percent). The only counties that recorded a decline from last y ear were Glenn (-27.9 percent), Kings (-25.5 percent), Trinity (-7.7 percent) and San Francisco (-6.1 percent).

 New ac
tive listings at the state level improved from a year ago for the eighth consecutive month, with seven of them recording double-digit increases. Des p i t e a d e c e l e r a t i n g growth rate in August, the increase in new listings at the tail end of the buying season is

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an encouraging sign that supply conditions in California will c ontinue to improve in the coming months. Thirty-eight of the 52 counties tracked by C.A.R. recorded an increase in new active listings from a year a go. Calaveras recorded the lar gest year-over-year increase at 91.8 percent, followed by Kern (48.8 percent) and D el Norte (42.1percent).

Thirteen counties marked declines in new active listings from a year ago, with Lassen (-

37.5 percent) dropping the most, followed by Siskiyou (-33.8 percent) and Amador (-25.5 percent).

 The median number of days it took to sell a California single-f amily home was 22 days in August, up from a revised 17.5 days in August 2023.

 C.A.R.’s statewide sales-price-to-list-price ratio was 100.0 pe rcent in August 2024 and 100.0 percent in August 2023.

 The statewide median price per square foot for an existing single-family home was $427, up from $416 in August a year ago.

 The 30-year, fixed-mortgage interest rate averaged 6.50 percent in August, down from

7.07 percent in August 2023, according to C.A.R.’s calculations based on Freddie Mac’s weekly mortgage survey data.

Affordability is an issue for most of California. According to C.A.R., higher prices combined with elevated mortgage rates that pushed borrowing costs to all-time highs pulled California’s housing affordability down to the lowest levels in nearly 17 years during the second quarter of 2024. Fourteen percent of the state’s homebuyers could afford to purchase a median-priced, existing single-family home in California in second-quarter 2024, down from 17 percent in the first quarter of 2024 and down from 16 percent in the second quarter of 2023, according to C.A.R.’s Traditional Housing Affordability Index (HAI).

The second-quarter 2024 figure is less than a third of the affo rdability index peak of 56 percent in the second quarter of 2012. Despite elevated mortgage rates in the second quarter, recent signs of weakness in macroeconomic reports have pushed rates down in the past few weeks. As the likelihood of the Fed c u t t i n g r a t e s a t t h e S e p t e m b e r m e e t i n g i n c r e a s e s , h o u s i n g a f f o rdability in California is expected to improve in the next quarter.

C.A.R.’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California. C.A.R. also reports affordabi lity indices for regions and select counties within the state. The index is considered the most fundamental measure of housing well-being for home buyers in the state.

A minimum annual income of $236, 800 was needed to qualify for t he purchase of a $906,600 statewide median-priced, existing single-family home in the second quarte r of 2024. The monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $5,920, assuming a 20 percent down payment and an effective composite interest rate of 7.10 percent. The effective composite interest rate was 6.68 percent in first-quarter 2024 and 6.61 percent in second-quarter 2024.

In the second quarter of 2024, the minimum annual income requir ed exceeded $200,000 for the sixth time in seven quarters, setting a new record high. The monthly PITI for a typical single-family home in California also hit a record high, rising by double digits from both the previous quarter and the same quarter last year.

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On a year-over-year basis, statewide home prices jumped 9.0 percent from second-quarter 2023, as competition and low inventory applied upward pressure on home p rices. As the market moves past the spring home-buying season and transitions to the off season, home prices will likely decline as market competition cools and housing inventory continues to improve. A consistent drop in mortgage rates expected in the coming months will lower borrowing costs and im prove affordability for the rest of the year.

The share of California households that could afford a typical condo/townhome in second-quarter 2024 fell to 22 percent, down from 24 percent recorded in the previous quarter and down from the 25 percent recorded in the second quarter of 2023. An annual income of $180,000 was required to make the monthly payment of $4,500 on the $690,000 median-priced condo/townhome in the second quarter of 2024.

Compared with California, about one-third of the nation’s households could afford to purchase a $422,100 median-priced home, which required a minimum annual income of $110,000 to make monthly payments of $2,750. Nationwide affordability was down from 36 percent a year ago.

In the second quarter of 2024, the nationwide mi nimum required annual income was half that of California's for the fifth consecutive quarter.

Key points from the second-quarter 2024 Housing Affordability report include:

 When compared to Q124, housing affordability in Q224 declined i n 40 counties and remained unchanged in six. Seven counties showed quarter-to-qua rter improvement in affordability mainly due to price declines in those counties. W hen compared to a year ago, six counties registered an improvement in affordability, w hile 39 counties throughout the state posted a decline on a year-over-year basis , and eight remained unchanged.

 Lassen (52 percent) remained the most affordable county in California, followed by Glenn (35 percent), Del Norte (34 percent), and Tehama (34 percent). Of all counties in California, Lassen continued to have the lowest minimum qualifying income ($65,200) to purchase a median-priced home in in second-quarter 2024.

 Mono (5 percent), Monterey (8 percent), and Santa Barbara (9 pe rcent) were the least affordable counties in California, with each of the counties re quiring a minimum income of at least $267,600 to purchase a median-priced home in the re spective counties. San Mateo continued to require the highest minimum qualifying incom e ($574,800) to buy a median-priced home in the seco nd quarter of 2024 and, together with Santa Clara ($524,000), were the only two counties in California with a min imum qualifying income more than $500,000. Marin and San Francisco came in third and f ourth, requiring a minimum income of $469,200 and $444,000, respectively.

 Housing affordability declined the most on a year-over-year bas is in Plumas, falling nine points from the previous year. Siskiyou recorded the second largest drop in affordability, moving seven percentage points below the same quarter of last year. Merced and Sutter had the third worst drop in affordability, decreasing six perce ntage points each from a year ago. Despite higher household income, higher home prices a nd elevated mortgage rates continue to keep housing affordability near its all-time lows across most counties.

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As noted, affordability is an issue in California with the home buyers’ ability to pay. In order to isolate this element, the first step is to identify the required annual hous ehold income based on typical mortgage parameters. Home pricing identified for this project as provide d from John Burns Real Estate and Consulting (Updated July 23, 2024) ranges from $624,282 to $771,647, per product type. This is based on the average net base price for each project. The first step is to identify the required annual household i n c o m e b a s e d o n t y p i c a l m o r t g a g e p a r a m e t e r s . S p e c i f i c a l l y , t h i s includes a loan-to- value ratio at 80% (down payment of 20%), mortgage interest rate of 6.5%, 30-year amortization, and a 32% ratio for the house costs as a percent of monthly income (inclusive of princi pal, interest, taxes, and insurance).

Property taxes are based on the base tax rate of 1.1517%, direct levies from $671 to $805 per annum or $55.92 to $67.08 per month, and CFD charges from $1,851.81 to $ 2,300.70 per annum (based on MDR and LDR), or $154.32 to $191.73 per month. HOA dues are noted a t $190 per month. These calculations are shown in the Taxes and Special Assessments section of the Site Description of this report.

Based on these parameters, the following table shows the estimated annual household income required to afford homes for each specific project.

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According to these calculations, annual income between $146,200 and $178,200 is required to have the ability to afford homes in the subject neighborhood. Income da ta as developed from Claritas shows various profiles for a typical buyer. The subject property is located in a developing area and income cohorts for all of Sacramento County were selected. This is representative of typical buyers for the subject property. The following map depicts this area.

PROJECT MDR-1 LDR-1 LDR-2
MIN LOT SIZE 3,230 SF 5,700 SF 6,825 SF
Average Home Size (SF) 2,044 SF 2,241 SF 2,719 SF
Average Price* $624,282 $711,113 $771,647
Loan % of Price (LTV) 80% 80% 80%
Loan Amount $499,426 $568,890 $617,318
Interest Rate 6.50% 6.50% 6.50%
Monthly Mortgage Payment** $3,139.70 $3,576.40 $3,880.85 Base Taxes (1.1517%) - Monthly $599.15 $682.49 $740.59
Direct Levies - Monthly $55.92 $67.08 $67.08
CFD Charges - Monthly $154.32 $191.73 $191.73
HOA $190.00 $190.00 $190.00
Insurance*** $125.00 $125.00 $125.00
TOTAL PITI $4,264.09 $4,832.70 $5,195.25
PITI as % of Income 35% 35% 35%
Monthly Income $12,183.13 $13,807.72 $14,843.57
Annual Income $146,198 $165,693 $178,123
Rounded $146,200 $165,700 $178,200
*Average price derived from Absorption Analysis
**Based on 30-Year Amtz. At 6.5%
***Based on annual premi um of $1,500

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.

I n c o m e b r a c k e t s , a s w e l l a s t h e p e r c e n t a g e o f h o u s e h o l d s w i t h the ability to afford homes between $624,282 to $771,647 as delineated in the Absorption Analysis a s prepared by John Burns Real Estate Company (Updated July 23, 2024)is shown below. Income is prese nted in terms of 2024 estimates, as well as 2029 projections.

Subject

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$624,282 HOME
AT $146,200 INCOME PERCENT PERCENT HOUSEHOLDS PERCENT PERCENT HOUSEHO LDS

HOUSEHOLD INCOME OF HOUSEHOLDS ABLE TO PAY ABLE TO PAY OF HOUSEHOLD S ABLE TO PAY ABLE TO PAY <$15,000 7.8% 0% 0.0% 6.9% 0% 0.0%
$15,000 - $24,999 5.9% 0% 0.0% 5.4% 0% 0.0%
$25,000 - $34,999 5.9% 0% 0.0% 5.4% 0% 0.0%
$35,000 - $49,999 9.2% 0% 0.0% 8.1% 0% 0.0%
$50,000 - $74,999 15.3% 0% 0.0% 13.9% 0% 0.0%
$75,000 - $99,999 12.8% 0% 0.0% 12.2% 0% 0.0%
$100,000 - $124,999 11.1% 0% 0.0% 10.7% 0% 0.0%
$125,000 - $149,999 8.7% 100% 8.7% 9.0% 100% 9.0%
$150,000 - $199,999 10.0% 100% 10.0% 11.2% 100% 11.2%
$200,000 - $249,999 5.3% 100% 5.3% 6.6% 100% 6.6%
$250,000 - $499,999 5.4% 100% 5.4% 6.9% 100% 6.9%
>$500,000 2.7% 100% 2.7% 3.7% 100% 3.7%
TOTALS 100.0% 32.1% 100.0% 37.4%
Median Household Income
Average Household Income
2024 ESTIMATES
$86,123
$115,818
2029 PROJECTIONS
$95,702
$129,448
$711,113 HOME
AT $165,700 INCOME PERCENT PERCENT HOUSEHOLDS PERCENT PERCENT HOUSEHO LDS

HOUSEHOLD INCOME OF HOUSEHOLDS ABLE TO PAY ABLE TO PAY OF HOUSEHOLD S ABLE TO PAY ABLE TO PAY <$15,000 7.8% 0% 0.0% 6.9% 0% 0.0%
$15,000 - $24,999 5.9% 0% 0.0% 5.4% 0% 0.0%
$25,000 - $34,999 5.9% 0% 0.0% 5.4% 0% 0.0%
$35,000 - $49,999 9.2% 0% 0.0% 8.1% 0% 0.0%
$50,000 - $74,999 15.3% 0% 0.0% 13.9% 0% 0.0%
$75,000 - $99,999 12.8% 0% 0.0% 12.2% 0% 0.0%
$100,000 - $124,999 11.1% 0% 0.0% 10.7% 0% 0.0%
$125,000 - $149,999 8.7% 0% 0.0% 9.0% 0% 0.0%
$150,000 - $199,999 10.0% 100% 10.0% 11.2% 100% 11.2%
$200,000 - $249,999 5.3% 100% 5.3% 6.6% 100% 6.6%
$250,000 - $499,999 5.4% 100% 5.4% 6.9% 100% 6.9%
>$500,000 2.7% 100% 2.7% 3.7% 100% 3.7%
TOTALS 100.0% 23.4% 100.0% 28.4%
Median Household Income
Average Household Income
2024 ESTIMATES 2029 PROJECTIONS
$86,123 $95,702
$115,818 $129,448

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According to income schedules noted above, the affordability ra tio is between 18.4% and 32.1% for the individual projects based on 2024 estimates, and increasing to 22.8% to 37.4% based on 2029 projections.

The recent increase in interest rates in the past few years has lowered affordability ratios.

Currently, economic conditions are stable after being influence d by the inflationary environment.

Inflation was at a 40-year high in 2022, and rising interest rates are the main vehicle used to combat rising inflation in all sectors. This impacted the housing market wit h slower levels of sales and pricing starting to reverse course after two years of high levels of appreciation. While new home sales are showing higher levels of pricing, the rising interest rates will compress affo rdability ratios and pricing will have to adjust to levels to stimulate sales. Recently, rates were lowered in September 2024.

According to the most recent m eeting September 18, 2024 by the Federal Reserve, recent indicators suggest that economic activity ha s continued to expand at a sol id pace. Job gains have slowed, and the unemployment rate has moved up but remains low. Inflation has made further progress toward the Committee’s 2 percent objective but remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee has gained greater confidence that in flation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance.

The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.

In light of the progress on inflation and the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/2 percentage point to 4-3 /4 to 5 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

In assessing the appropriate stan c e o f m o n e t a r y p o l i c y , t h e C o m m i t t e e w i l l c o n t i n u e t o m o n i t o r t h e implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks em erge that could impede the attainment of $771,647 HOME
AT $178,200 INCOME PERCENT PERCENT HOUSEHOLDS PERCENT PERCENT HOUSEHO LDS

HOUSEHOLD INCOME OF HOUSEHOLDS ABLE TO PAY ABLE TO PAY OF HOUSEHOLD S ABLE TO PAY ABLE TO PAY <$15,000 7.8% 0% 0.0% 6.9% 0% 0.0%
$15,000 - $24,999 5.9% 0% 0.0% 5.4% 0% 0.0%
$25,000 - $34,999 5.9% 0% 0.0% 5.4% 0% 0.0%
$35,000 - $49,999 9.2% 0% 0.0% 8.1% 0% 0.0%
$50,000 - $74,999 15.3% 0% 0.0% 13.9% 0% 0.0%
$75,000 - $99,999 12.8% 0% 0.0% 12.2% 0% 0.0%
$100,000 - $124,999 11.1% 0% 0.0% 10.7% 0% 0.0%
$125,000 - $149,999 8.7% 0% 0.0% 9.0% 0% 0.0%
$150,000 - $199,999 10.0% 50% 5.0% 11.2% 50% 5.6%
$200,000 - $249,999 5.3% 100% 5.3% 6.6% 100% 6.6%
$250,000 - $499,999 5.4% 100% 5.4% 6.9% 100% 6.9%
>$500,000 2.7% 100% 2.7% 3.7% 100% 3.7%
TOTALS 100.0% 18.4% 100.0% 22.8%
Median Household Income
Average Household Income
2024 ESTIMATES 2029 PROJECTIONS
$86,123 $95,702
$115,818 $129,448

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the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

As relates to housing, higher interest rates increase the cost of housing by making the mortgage payment greater than at lower interest rates. The Federal Reserve has determined that it needs to act to stem the rise of inflation and has increased interest rates identified as follows.

Interest rates have remained stable in the past twelve months. . It is noted that the table depicted above is based on quarterly changes. As such, the most recent rate cut is not depicted in this table. In the recent September meeting, the Federal Funds Rate was lowered to reflect 4.75% to 5.00%. Currently, new homes are selling with builder incentives, in which the builder buys down the interest rate for the first few years, then the rate adjusts to market. Buyers are purchasing homes with these concessions in the anticipation of refinancing their mortgages when rates are lower. Still, recent reductions in the Federal Funds rate will likely flow to the housing market with lower interest rates and having positive impact on demand.

Overall affordability calculations were based on a pessimistic viewpoint with rates at current levels. There is potential for lower interest rates in the foreseeable future ( 6 t o 1 2 m o n t h s ) , w h i c h wo u l d e sc a l a t e affordability ratios. As rates s tabilize, the affordability rate i s e x p e c t e d t o r i s e a s i n c o m e l e v e l s a r e projected to increase in the next 5 years.

As noted in the Absorption Analysis prepared by John Burns Real Estate Company (Updated July 23, 2024), mortgage rates are projected to range from 5.9% to 6.9% upon delivery of the homes. The table is summarized as follows.

FEDERAL FUNDS

DATE EFFECTIVE RATE
January 1, 2022 0.08%
April 1, 2022 0.33%
July 1, 2022 1.68%
October 1, 2022 3.08%
January 1, 2023 4.33%
April 1, 2023 4.83%
July 1, 2023 5.12%
October 1, 2023 5.33%
January 1, 2024 5.33%
April 1, 2024 5.33%
July 1, 2024 5.33%

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Affordability calculations were based on a pessimistic viewpoint with rates at elevated levels. There is potential for lower interest rat es in the foreseeable future (6 t o 1 2 m o n t h s ) , w h i c h w o u l d e s c a l a t e affordability ratios. As rates s tabilize, the affordability rate i s e x p e c t e d t o r i s e a s i n c o m e l e v e l s a r e projected to increase in the next 5 years.

Looking forward, C.A.R. released their 2025 California Housing Market Forecast on September 25, 2024.

C a l i f o r n i a h o m e s a l e s a n d p r i c e a r e p r o j e c t e d t o i n c r e a s e a s b u y e r s a n d s e l l e r s r e t u r n t o t h e m a r k e t , enticed by lower interest rates and better housing supply conditions.

 Existing, single-family home sales are forecast to total 304,400 units in 2025, an increase of 10.5 percent from 2024’s projected pace of 275,400.

 California’s median home price is forecast to climb 4.6 percent to $909,400 in 2025, following a projected 6.8 percent increase to $869,500 in 2024 from 2023’s $814,000.

 Housing affordability is expected to remain stable at 16 percen t next year after slipping to a projected 16 percent in 2024 from 17 percent in 2023.

A more favorable interest rate environment that will loosen up the “lock-in” effect and improve housing inventory will encourage buyers and sellers to return to the ma rket to boost both home sales and prices next year, according to a housing and economic forecast released by C.A.R.

The baseline scenario of C.A.R.’s “2025 California Housing Market Forecast” sees an increase in existing single-family home sales of 10.5 percent next year to reach 304,400 units, up from the projected 2024 sales figure of 275,400. The projected 2024 figure is 6.8 percent higher compared with the pace of 257,900 homes sold in 2023.

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The California median home price is forecast to rise 4.6 percent to $909,400 in 2025, following a projected

6.8 percent increase to $869,500 in 2024 from $814,000 in 2023. A persistent housing shortage and a competitive housing market will continue to put upward pressure on home prices next year.

“An increase in homes for sale, along with lower borrowing cost s, is expected to entice more buyers and sellers to enter the market in 2025,” said C.A.R. President Melanie Barker. “Demand will grow as we start the year with the lowest interest rates in more than two years, particularly for first-time buyers.

Meanwhile, would-be home sellers, held back by the "lock-in eff ect," will have more flexibility to pursue a home that better suits their needs as mortgage rates continue to decline.”

C.A.R.’s 2025 forecast predicts the U.S. gross domestic product to slip to 1.1% in 2025, after a projected increase of 1.9% in 2024. With California’s 2025 nonfarm job growth rate at 1.1%, down from a projected

1.5% in 2024, the state’s unemplo yment rate will inch up to 5.6 % in 2025 from 2024’s projected rate of

5.4%.

Inflation will moderate further over the next 12 months, with t he CPI registering an annual average of

2.0% in 2025, down from 2.9% in 2024. As such, the average 30-y ear, fixed mortgage interest rate will decline from 6.6% in 2024 to 5.9% in 2025. While next year’s projected average for the 30-year fixed mortgage interest rate will be higher than the levels observed in the few years prior to the pandemic, it will still be lower than the long-run average of nearly 8% in the past 50 years.

Housing supply conditions will continue to improve next year, but a moderate increase rather than a surge in active listings should be expected in 2025. In the next 18 months, interest rates will decline, the lock-in effect will loosen up further, and more properties will be released onto the market. Homeowners who have delayed moving and investor s who have been waiting for a m arket bounce-back will put their properties up on the market as they see the rising trend in hom e prices as an opportunity to sell. While supply in 2025 will remain below the norm by historical standar ds, active listings will increase slightly above 10% as market conditions and lending environment continue to improve.

“Although inventory is expected to loosen as rates ease, demand will also increase with lower mortgage rates and limited housing supply, which will push home prices higher next year,” said C.A.R. Senior Vice President and Chief Economist Jo rdan Levine. “Price growth is e xpected to be slower, but the housing shortage will keep the market competitive outside of big econom ic shocks, so prices will still rise.

Assuming a healthy economy in 2025 that slows but does not shrink, home prices should rise modestly across California, with the state’s median price climbing 4.6 percent to reach $909,400 in 2025.”

Demographic Profile

The overall demographic profile for the subject plays an import ant role in demand generators. These elements are summarized below and include analysis of the subje ct neighborhood, City of Sacramento, Sacramento County, as well as the entire MSA.

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As noted, the current population within a 5-mile radius is identified at over 200,000 residents. Population has contracted since the 2020 census however this trend is proj ected to grow over the next five years.

The overall location of the subject property will likely draw f rom Sacramento County as a whole. Given the orientation near Interstate 5, as well as the abundance of retail uses across this freeway, a positive setting is identified for residential uses.

Regional Housing Trends

The Sacramento housing market is stabilizing after periods of a n inflationary environment and rising interest rates in the past two years. With interest rates rema ining flat in the past 9-12 months, home prices started to increase. With recent reductions in interest rates, pricing will likely increase. The table below shows the median home pricing for the four-county region according to the California Association of Realtors, including comparisons from the past two years.

AREA

ALL HOMES

MEDIAN PRICE
AUG 2022

MEDIAN PRICE
AUG 2023

MEDIAN PRICE
AUG 2024 %Δ 22-24

%Δ 23-24
Yolo $631,000 $622,500 $620,960 -1.6% -0.2%
El Dorado $627,000 $657,000 $650,000 3.7% -1.1%
Placer $649,000 $669,000 $675,000 4.0% 0.9%
Sacramento $535,000 $535,000 $559,000 4.5% 4.5%
CALIFORNIA $834,740 $859,670 $888,740 6.5% 3.4%

1-MILE 3-MILE 5-MILE CITY OF SACRAMENTO SACRAMENTO

DESCRIPTION TOTALS TOTALS TOTALS SACRAMENTO COUNTY MSA
Population
--2020 Census 6,198 82,796 261,058 524,943 1,585,055 2,397,382 --2024 Estimates 6,116 82,343 260,276 529,086 1,595,205 2,439,765 --2029 Estimates 6,144 83,156 263,638 542,447 1,631,949 2,521,702 2024 Median Age 35.5 37.7 37.5 36.8 38.2 39.2
Households
--2020 Census 1,725 27,726 87,650 192,531 564,445 868,460 --2024 Estimates 1,703 27,557 87,274 194,349 567,230 882,134 --2029 Estimates 1,711 27,808 88,299 199,459 579,582 911,788 2024 Households by Income (%)
--Income <$15,000 12.51% 8.71% 8.74% 9.40% 7.77% 7.41%
--Income <$15,000 - $24,999 3.76% 5.64% 6.55% 6.84% 5.93% 5.59% --Income <$25,000 - $34,999 5.52% 6.42% 6.83% 6.13% 5.88% 5.71% --Income <$35,000 - $49,999 6.81% 9.23% 9.82% 9.26% 9.15% 8.61% --Income <$50,000 - $74,999 9.87% 16.04% 16.68% 15.55% 15.32% 14.50% --Income <$75,000 - $99,999 16.97% 14.06% 13.40% 12.94% 12.78% 12.47% --Income <$100,000 - $124,999 13.10% 11.19% 10.87% 10.84% 11.06% 10.86% --Income <$125,000 - $149,999 6.87% 7.51% 8.09% 8.34% 8.71% 8.67% --Income <$150,000 - $199,999 12.45% 8.84% 8.65% 8.95% 10.00% 10.33% --Income <$200,000 - $249,999 4.82% 4.69% 4.19% 4.52% 5.33% 5.59% --Income <$250,000 - $499,999 5.23% 5.13% 4.18% 4.80% 5.35% 6.35% --Income $500,000+ 2.06% 2.52% 2.00% 2.42% 2.72% 3.91%
2024 Average Household Income $113,669 $110,808 $103,841 $108,551 $115,818 $125,655 2024 Median Household Income $91,984 $81,636 $77,317 $80,050 $86,123 $98,986

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Home prices in the Sacramento Region have mostly improved since August 2022. Changes over the past 12 months reflect changes in pricing from (1.1%) to 4.5%. This information is showing increasing pricing at higher overall interest rates than compared to 2022 and into 2023.

Monthly changes in pricing over the past year for these countie s, as well as California on an overall basis as derived from the California Association of Realtors are note d below. Home prices are shown in terms of median price.

Pricing characteristics are note d above since August 2023 Over all pricing dropped in the latter half of 2023, but indicators for 2024 show increasing pricing.

MON-YR. CA EL DORADO PLACER SACRAMENTO YOLO
July-23 $832,340 $650,000 $660,000 $547,000 $625,000
August-23 $859,800 $657,000 $669,000 $535,000 $622,500
September-23 $843,340 $685,000 $665,000 $545,000 $608,640 October-23 $840,360 $660,000 $685,000 $550,000 $629,900 November-23 $822,200 $650,000 $659,000 $522,290 $620,000 December-23 $819,740 $660,000 $633,020 $535,000 $630,000 January-24 $788,940 $650,000 $620,000 $515,000 $600,360 February-24 $806,490 $647,500 $650,000 $530,000 $918,940 March-24 $854,490 $677,000 $659,000 $530,000 $635,830
April-24 $904,910 $757,000 $671,740 $548,580 $615,000
May-24 $908,040 $699,000 $675,000 $555,000 $653,980
June-24 $900,720 $709,000 $685,000 $560,000 $649,500
July-24 $886,560 $695,000 $670,000 $560,000 $610,000
August-24 $888,740 $650,000 $675,000 $559,000 $620,960

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Current levels of inventory are stable. The following table shows the total number of homes sold in each county according to Metrolist since 2018. Home prices are shown in terms of median price.

COUNTY 2018 2019 2020 2021 2022 2023 2024 ACTIVE*
Sacramento 19,112 18,410 18,155 19,344 15,142 11,317 8,729 2,143 Placer 6,174 6,213 6,805 7,006 5,615 4,618 3,661 1,032 El Dorado 2,815 2,616 3,381 3,329 2,502 1,893 1,446 670 Yolo 1,757 1,783 1,799 2,076 1,589 1,298 1,039 278
Totals 29,858 29,022 30,140 31,755 24,848 19,126 14,875 4,123 COUNTY 2018 2019 2020 2021 2022 2023 2024 ACTIVE
Sacramento $354,500 $366,975 $410,000 $480,304 $520,000 $510,000 $530,000 $575,000 Placer $470,000 $489,500 $520,000 $625,000 $669,447 $642,375 $65 0,000 $721,450 El Dorado $497,500 $495,000 $525,000 $621,000 $650,000 $630,000 $659,000 $732,500 Yolo $429,000 $449,000 $475,000 $550,000 $600,000 $599,000 $614,1 73 $649,500 MEDIAN SF 2018 2019 2020 2021 2022 2023 2024 ACTIVE
Sacramento 1,523 1,542 1,561 1,539 1,532 1,557 1,575 1,683 Placer 2,000 2,004 2,021 2,020 2,010 2,040 1,996 2,244 El Dorado 2,048 2,085 2,088 2,096 2,034 2,050 2,022 2,200 Yolo 1,590 1,640 1,685 1,607 1,633 1,726 1,710 1,902
MEDIAN $/SF 2018 2019 2020 2021 2022 2023 2024 ACTIVE
Sacramento $232.76 $237.99 $262.65 $312.09 $334.67 $327.55 $333.6 0 $332.25 Placer $235.00 $244.26 $257.30 $309.41 $342.72 $314.89 $342.98 $ 342.66 El Dorado $242.92 $237.41 $251.44 $296.28 $324.71 $307.32 $326.70 $333.99 Yolo $269.81 $273.78 $281.90 $342.25 $364.49 $347.05 $356.61 $363 .20 Source: Metrolist, *Active & 2024 information processed as of September 25, 2024

According to this information, pricing is trending upward. The following table shows changes for each individual county, as well as total inventory of homes.

COUNTY

2023 PRICING 2024 PRICING % CHANGE
ACTIVE

INVENTORY

SALES RATE/

TOTAL INVENTORY
Sacramento $510,000 $530,000 3.9% 2,143 998/Mo. – 2.1 Months Placer $642,375 $650,000 1.2% 1,032 418/Mo. – 2.5 Months El Dorado $630,000 $659,000 4.6% 670 156/Mo. – 4.1 Months Yolo $596,050 $614,173 1.6% 278 119/Mo. – 2.3 Months
Totals 4,123 1,700/Mo. – 2.4 Months
Source: Metrolist,*Active information processed as of September 25, 2024

The median home price is trending upward in most counties. Sac ramento County is 3.9% above the annualized average for 2023. Inventory levels in the resale market are stable with 4, 123 homes on the market as of September 25, 2024, representing approximately 2.4 months of inventory.

New Home Characteristics

The average price of a new home ranges from $513,560 (Yuba County) to $930,555 (El Dorado County) in the Sacramento region. According to the Gregory Group (New Hous ing Trends), 2 nd Quarter 2024, the
historic average pricing for the Sacramento region is identifie d on the following table. It is clearly noted that this level of pricing is based on gross pricing, prior to incentives.

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COUNTY 2Q 2022 2Q 2023 2Q 2024 %Δ 22-24 %Δ 23-24
El Dorado County $925,316 $986,100 $930,555 0.6% -5.6%
Placer County $731,952 $755,823 $805,069 10.0% 6.5%
Sacramento County $734,765 $690,152 $686,964 -6.5% -0.5% Sutter County $462,262 $579,565 $606,209 31.1% 4.6%
Yolo County $671,035 $649,916 $675,377 0.6% 3.9%
Yuba County $516,926 $488,575 $513,560 -0.7% 5.1%
REGIONWIDE $725,889 $710,853 $724,717 -0.2% 2.0%

Pricing changes from 2022 to 2024 (2 nd Quarter), as well as changes over the past year are identified on the table above. This information shows that pricing has decreased in the entire region by 0.2% since the 2 nd Quarter of 2022. Year-over-year regionwide changes increased by 2.0%. This shows pricing is nearing levels experienced in 2nd quarter 2022, when interest rates were lower.

There were between 7,790 and 8,099 sales identified in the regi on from 2020 to 2021. The new home market escalated during COVID-19 and low interest rates. These levels dropped in 2022 with rising inflation and increases in interest rates to 5,568 sales. Home buyers adjusted to these interest rates and 2023 produced 7,019 total sales. Sales for 2024 are identified at 4,363 sales based on total sales through the first half of 2024. These elements are identified as follows.

COUNTY 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 El Dorado County 183 351 559 637 328 259 417 358 228 271 161 Placer County 1,048 1,503 1,643 1,866 1,676 1,592 2,300 2,958 2,170 2,571 1,336 Sacramento County 1,258 1,793 2,327 2,540 2,674 3,220 3,885 3,859 2, 557 3,351 2,219 Sutter County 8 13 27 92 109 92 452 102 53 33 36
Yolo County 169 199 409 464 278 505 312 432 196 434 342 Yuba County 73 127 122 54 169 328 424 390 364 359 269
REGIONWIDE 2,739 3,986 5,087 5,653 5,234 5,996 7,790 8,099 5,568 7,019 4,363 Source: The Gregory Group, 2nd Quarter 2024

The subject property is located in the Sacramento County market area. New home sales dropped 33.7% in 2022 as compared to levels identified in 2021. Total sales in 2023 were 31.1% above levels in 2022 and in 2024, 2,219 new homes were sold in Sacramento County. This is approximately 66.2% of the total sales noted in 2023, however, 2024 information is based on the first two quarters. By way of comparison, 1,690 new homes were sold in the first half of 2023, and year-to-date sales are 31.3% higher in 2024.

The subject property is located in the Laguna sub-market as ide ntified from the Gregory Group. Historic data for this sub-market as delineated on the following table. It is based on information from 2017 to the current period.

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Information delineated for the Laguna submarket is based on overall averages. While the subject property is identified in the City of Sacramento, it is located in the n orthern portion of the Laguna submarket. As of 2Q 2024, this submarket reflects an average net price of $686,955. Total sales in this region, measured relative to Sacramento County, as well as the entire region are noted on the following table. This is based on information provided by the Gregory Group.

Number of Average Average Average Price Per Quarterly Unsold Unoffered Abs. Rate Abs. Rate Quarter Projects Lot Size (SF) Home Size (SF) Net Price SF Sold Invent ory Inventory Quarterly 12-Month 1Q 2017 7 5,464 2,649 $453,570 $171.22 77 18 113 3.4/Mo. 3.1/Mo. 2Q 2017 6 5,413 2,668 $464,499 $174.10 60 5 66 3.1/Mo. 3.4/Mo. 3Q 2017 6 5,417 2,697 $475,418 $176.28 38 12 183 2.0/Mo. 4.2/Mo. 4Q 2017 5 5,555 2,715 $502,748 $185.17 50 26 119 3.1/Mo. 3.6/Mo. 1Q 2018 6 5,563 2,742 $509,278 $185.73 55 30 196 2.8/Mo. 3.4/Mo. 2Q 2018 9 4,708 2,338 $463,108 $198.08 96 44 338 3.3/Mo. 5.6/Mo. 3Q 2018 12 4,890 2,383 $480,569 $201.67 160 102 384 4.1/Mo. 4.6/Mo. 4Q 2018 15 4,078 2,360 $471,493 $199.79 76 113 559 1.6/Mo. 3.2/Mo. 1Q 2019 16 3,942 2,319 $464,237 $200.19 192 110 555 3.7/Mo. 3.8/Mo. 2Q 2019 17 4,710 2,352 $471,875 $200.63 224 86 440 4.0/Mo. 3.7/Mo. 3Q 2019 15 4,738 2,374 $483,917 $203.84 114 81 346 2.3/Mo. 3.6/Mo. 4Q 2019 19 5,164 2,473 $497,567 $201.20 109 90 667 1.8/Mo. 3.4/Mo. 1Q 2020 18 5,229 2,480 $504,509 $203.43 143 99 588 2.4/Mo. 3.1/Mo. 2Q 2020 14 4,939 2,376 $491,769 $206.97 90 98 545 2.0/Mo. 2.8/Mo. 3Q 2020 12 5,146 2,406 $515,157 $214.11 147 81 435 3.8/Mo. 3.0/Mo. 4Q 2020 13 5,103 2,343 $532,711 $227.36 179 22 434 4.2/Mo. 3.6/Mo. 1Q 2021 13 5,103 2,343 $568,230 $242.52 122 26 445 2.9/Mo. 3.3/Mo. 2Q 2021 12 4,935 2,336 $617,504 $264.34 102 20 422 2.6/Mo. 3.6/Mo. 3Q 2021 9 5,057 2,323 $638,420 $274.83 86 10 448 3.0/Mo. 4.0/Mo. 4Q 2021 8 5,464 2,464 $692,927 $281.22 90 6 366 3.5/Mo. 3.7/Mo. 1Q 2022 8 5,464 2,464 $718,581 $291.63 116 12 244 4.5/Mo. 3.7/Mo. 2Q 2022 12 5,147 2,423 $743,426 $306.82 87 52 430 2.5/Mo. 3.8/Mo. 3Q 2022 15 4,910 2,365 $668,552 $282.69 73 76 1,037 4.4/Mo. 1.5/Mo. 4Q 2022 17 4,809 2,351 $650,071 $276.51 92 109 1,073 3.3/Mo. 1.7/Mo. 1Q 2023 18 4,764 2,408 $664,057 $275.77 169 91 1,082 3.1/Mo. 3.4/Mo. 2Q 2023 16 4,841 2,429 $680,829 $280.29 174 81 918 3.6/Mo. 3.4/Mo. 3Q 2023 14 4,576 2,413 $670,476 $277.86 167 94 425 3.9/Mo. 3.6/Mo. 4Q 2023 21 4,522 2,313 $667,168 $288.44 177 109 946 2.8/Mo. 3.2/Mo. 1Q 2024 25 4,496 2,320 $677,684 $292.11 305 164 1,134 4.1/Mo. 4.7/Mo. 2Q 2024 24 4,550 2,330 $686,955 $294.83 191 196 1,001 3.5/Mo. 2.4/Mo.

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The Laguna sub-market has shown annualized sales between 225 to 687 sales per annum since 2017.

Sales for 2022 show 368 total sales, whereas 2023 sales are at 687 sales. The average sales from 2017 to 2023 equates to 466 sales per ann um. This region generally sup ports between 350 and 450 sales per annum.

Between 2017 and 2023, the total sales in the region reflect be tween 8.9% and 20.5% of all sales in Sacramento County, as well as 4.0% to 10.7% of all sales in the entire region. 2Q 2024 information shows

19.1% of all sales in Sacramento County and 9.5% of all sales regionwide for the Laguna sub-market.

Quarterly Quarterly Capture Quarterly Capture
Quarter Sold (Laguna) Sold (Sacramento County) % Sold (Sacramento R egion) % 1Q 2017 77 667 11.5% 1,541 5.0%
2Q 2017 60 896 6.7% 1,966 3.1%
3Q 2017 38 492 7.7% 1,053 3.6%
4Q 2017 50 485 10.3% 1,103 4.5%
TOTALS 225 2,540 8.9% 5,663 4.0%
1Q 2018 55 697 7.9% 1,448 3.8%
2Q 2018 96 693 13.9% 1,514 6.3%
3Q 2018 160 764 20.9% 1,290 12.4%
4Q 2018 76 520 14.6% 982 7.7%
TOTALS 387 2,674 14.5% 5,234 7.4%
1Q 2019 192 770 24.9% 1,457 13.2%
2Q 2019 224 960 23.3% 1,698 13.2%
3Q 2019 114 755 15.1% 1,428 8.0%
4Q 2019 109 735 14.8% 1,413 7.7%
TOTALS 639 3,220 19.8% 5,996 10.7%
1Q 2020 143 944 15.1% 1,846 7.7%
2Q 2020 90 634 14.2% 1,333 6.8%
3Q 2020 147 1,068 13.8% 2,243 6.6%
4Q 2020 179 1,239 14.4% 2,368 7.6%
TOTALS 559 3,885 14.4% 7,790 7.2%
1Q 2021 122 1,173 10.4% 2,676 4.6%
2Q 2021 102 1,015 10.0% 2,143 4.8%
3Q 2021 86 747 11.5% 1,473 5.8%
4Q 2021 90 924 9.7% 1,807 5.0%
TOTALS 400 3,859 10.4% 8,099 4.9%
1Q 2022 116 1,164 10.0% 2,356 4.9%
2Q 2022 87 744 11.7% 1,580 5.5%
3Q 2022 73 296 24.7% 792 9.2%
4Q 2022 92 353 26.1% 840 11.0%
TOTALS 368 2,557 14.4% 5,568 6.6%
1Q 2023 169 745 22.7% 1,782 9.5%
2Q 2023 174 945 18.4% 1,910 9.1%
3Q 2023 167 867 19.3% 1,929 8.7%
4Q 2023 177 794 22.3% 1,398 12.7%
TOTALS 687 3,351 20.5% 7,019 9.8%
1Q 2024 305 1,220 25.0% 2,355 13.0%
2Q 2024 191 999 19.1% 2,008 9.5%

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This ratio is used to show potential demand in the short term. The Absorption Study provided by John Burns Real Estate as of July 23, 2024, projects annual demand f or 8,600 units for the entire MSA, 4,475 units for Sacramento County, and 1,300 units for the City of Sa cramento. This is predicated on permit issuances and summarized as follows.

Accordingly, based on these calculations, and the overall capture rates identified at 12% for the Laguna Submarket (measured relative to total sales in Sacramento County) and 6% of sales in the entire MSA, an overall potential demand from 516 to 567 sales for the Laguna s ubmarket are identified. These calculations are noted below.

Overall, historic sales in Laguna shows a range from 225 to 687 sales per annum since 2017. Sales for 2022 show 368 total sales, whereas 2023 sales were 687. The average sales from 2017 to 2023 equates to 466 sales per annum, whereas year-to-date 2024 sales are noted at 496 sales (though 2Q 2024). This region generally supports 500 sales per annum. This is lower t han forecasted by future projections identified above reflective of 516 to 537 sales per annum.

SUPPLY CONSTRAINTS

The subject property is located in an area with abundant reside ntial projects proposed for future development. It is part of the Delta Shores development, a master planned community identified for the development of 5,222 residential units at buildout. The subject property with 411 lots (Including Potential Development of MDR site at average density of 11 du/ac) identif ied for immediate development, it is a smaller component of this project area. Residential projects have commenced in this project and most likely competition for this project comes from other areas of t he community. Improvement Area 2 is currently undergoing site development with 4 individual villages and a minimum lot size range from 1,612 to 4,250 square feet. A summary of these villages is as follows.

PROJECT LOT SIZE
(SF)
# Of LOTS UNITS
SOLD
UNSOLD

INVENTORY

UNOFFERED

INVENTORY
Coronado 4,250 SF 87 45 10 32
Avalon 1,612 SF 102 0 0 102
Balboa 1,750 SF 96 0 0 96
Catalina 3,116 SF 136 34 8 94
TOTALS 421 79 18 324

ANNUAL LAGUNA ESTIMATED

AREA SALES CAPTURE LAGUNA SALES
Sacramento County 4,475 12% 537
MSA 8,600 6% 516

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Initial development within this project area is identified at 421 lots. All of these villages are designated as MDR project with lots ranging in size from 1,612 to 4,250 square feet. The overall orientation relative to the subject property is identified as follows.

Signature Homes has 4 projects identified in Delta Shores. Co ronado and Catalina commenced selling homes in March 2023, whereas they recently acquired land holdings for development of the Balboa and Avalon projects. These future p rojects are attached projects d esigned for larger townhomes. Total inventory in these projects is noted at 342 units, which excludes the 79 units sold.

Including the 348 lots identified for the subject as part of De lta Shores West, as well as the 63 potential lot s for th e MDR p arce l (b ase d on averag e de n sit y of 11 un it s per acre), the total is identified at 411 residential lots. Combined with the residential lots located in Improvement Area 2 is identified at 753 lots in the immediate term. Subject represents 54.6 % of available inventory for Delta Shores.

As these projects are being developed with site improvements or to a finished lot condition as of the effective date of valuation, lots in existing supply portray supply elements for this project. As of 2Q 2024, the Laguna submarket noted the following elements.

# OF PROJECTS TOTAL LOTS UNITS SOLD UNSOLD INVENTORY UNOFFERED INVENTORY 24 Projects 2,515 1,318 196 1,001

Long-term, there are numerous lots identified for future development in the region. The Absorption Study prepared by John Burns Real Estate Company, identifies 5, 420 units in the City of Sacramento.

These units are mostly comprised of multi-family development projects. In addition, future projects in Elk

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Grove total 2,737 residential units, which reflect for-sale housing projects. Lastly, Stone Beetland includes approximately 1,159 units at build out, whereas Delta Shores IA- 3 includes 1,825 units at buildout.

However, with no development occurring on these properties, they are realistically long-term supply projects. They could start site development after the subject and come into play toward the back-half of the subject projects. Still, for purposes of this analysis, th e y a r e v i e w e d a s a l o n g - t e r m d e v e l o p m e n t projects not highly competitive with the subject property.

Total short-term supply is identified at 1,556 units. It is allocated as follows.

ITEM TOTAL
Subject Property 411
Delta Shores – IA2 (Unoffered Inventory) 324
Existing Unoffered Inventory 1,001
TOTALS 1,736

The total short-term supply of lots is identified at 1,736 lots including allocations for the subject. The 411 lots identified for the subject reflects approximately 23.7% of total supply. With the potential demand identified at 500 sales per annum for the Laguna submarket, thi s represents approximately 3.5 years of supply of residential lots.

Overall, supply elements show long term potential growth for th e Laguna sub-market. Supply elements appear in balance with demand generators as of the effective da t e o f v a l u a t i o n . W h i l e t h e r e a r e numerous lots in the immediate horizon, the subject has advantageous position based on the overall proximity of services and downtown Sacramento. Conversely, scho ol districting is inferior to other residential projects in the Laguna submarket, which are within the Elk Grove Unified School District.

EXISTING DEMAND

The competitive market area for the subject property is noted f rom current projects offering homes for sale in the Laguna sub-market. As noted earlier in this sectio n, The Gregory Group identified 24 projects in this sub-market. Some of these projects have sold-out and th e following table reflects the 22 most recent, active projects. These projects show the following characteristics as of 2Q 2024.

ITEM TOTALS
# of Active Projects 22
Average Lot Size 4,551 SF
Average Asking Price (Published) $694,581
Average Incentives ($6,381)
Average Net Price $688,201
Average Unit Size (SF) 2,333 SF
Average $/SF (Net Price) $302.27
Total Units Planned (Existing Projects) 2,340
Total Units Sold 1,143
Remaining Inventory 1,197
Total Absorption (Total Sales Rate/Mo./Project) 3.6/Mo.

Total Sold (2Q 24) 188 Units
Total Absorption (2Q 24 Sales Rate/Mo./Project) 2.6/Mo.

The following is a summary of these projects followed by photographs.

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Photographs of these projects are noted on the following page.

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COMPETING PROJECT PHOTOGRAPHS

Carnelian Cornerstone Crossings

Estates at Esplanade Premiers at Esplanade

The Classics at Esplanade Fairfax

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COMPETING PROJECT PHOTOGRAPHS

Grange Hayworth

H i g h l a n d H o m e s t e a d

Laguna Ranch Lexington

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COMPETING PROJECT PHOTOGRAPHS

Marigold Orchard

P e r s i m m o n s P r a i r i e

Primrose Taramind

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COMPETING PROJECT PHOTOGRAPHS

The Meadows Westbourne

Conclusions – Absorption from Laguna Projects

Projects from the Laguna submarket demonstrate absorption rates from 1.1 to 7.2 sales per month, with the overall average near 3.6 sales per month. Trends were slightly lower than noted in 2Q 2024 from 0.6 to 4.9 sales per month, with an overall average at 2.6 per month. Pricing from these projects ranges from $522,990 to $969,990 with the average price noted at $694,581 or $688,201 net of the $6,381 in concessions.

Absorption indicators from Delta Shores Projects

In addition, as of the effective date of valuation, there were 4 e x i s t i n g p r o j e c t s i n D e lt a S h o r e s . T h i s includes information from the subject project by KB Home identi fied as Riva and Edgewater at Delta Shores. These projects show the following characteristics as of 2Q 2024.

ITEM TOTALS
# of Active Projects 4
Average Lot Size 3,800 SF
Average Asking Price (Published) $686,802
Average Incentives ($6,250)
Average Net Price $680,552
Average Unit Size (SF) 2,294 SF
Average $/SF (Net Price) $300.98
Total Units Planned (Existing Projects) 352
Total Units Sold 94
Remaining Inventory 258
Total Absorption (Total Sales Rate/Mo./Project) 4.0/Mo.

Total Sold (2Q 24) 29 Units
Total Absorption (2Q 24 Sales Rate/Mo./Project) 2.2/Mo.

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COMPETING PROJECT PHOTOGRAPHS

Catalina Coronado

E d g e w a t e r R i v a

The following is a summary of these projects.

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Conclusions – Absorption from Delta Shores Projects

Projects from the Delta Shores region demonstrate absorption rates from 2.3 to 6.5 sales per month, with the overall average near 4.0 sales per month. Trends were slightly lower than noted in 2Q 2024 from 0.6 to 4.0 sales per month, with an overall average at 2.2 per month. Pricing from these projects range from $600,990 to $755,990 with the average price noted at $666,802 or $680,502 net of the $6,250 in concessions.

In addition, two additional projects are proposed for immediate development in Delta Shores by Signature Homes. Avalon with 102 lots is identified for the development of attached townhomes with duet and tri- plex designs. These homes are on lots typically 1,612 square f eet with homes ranging in size from 1,622 to 1,991 square feet. Pricing was noted to start in the low $ 500s. Balboa with 96 lots is identified for the development of attached townhomes with duet and tri-plex designs. These homes are on lots typically 1,750 square feet with homes ranging in size from 1,626 to 2,259 square feet. It was identified that these homes include higher finishes than identified for Avalon with p ricing starting in the mid $500s. Both of these projects will likely commence home sales starting in late 2024 with models by mid-2025.

Subject Positioning

The overall positioning of the subject property is based on current pricing. Proposed price points for the subject property are based on pricing established in the Absorption Analysis prepared by John Burns Real Estate (As of July 23, 2024). The following table shows an ove rall summary of this pricing based on individual projects. This is allocated based on base pricing, premiums, and upgrades.

The concluded pricing from the Absorption Study shows base pric ing from $624,282 to $771,647 per project. This is identified in terms of net pricing and consi ders concessions. It reflects an average price per square foot ranging from $284 to $305 per square foot.

Interaction of Existing Supply and Demand

In deriving potential absorption for the subject, the following elements are considered:

 Regional absorption trends are favorable in showing average abs orption from 3.6 to 4.0 sales per month, per projects as derived from the Laguna submar ket, as well as existing projects in Delta Shores.

 A b s o r p t i o n r a t e s a r e s e t t l e d i n c o n j u n c t i o n w i t h c u r r e n t i n t e r est rates, with reduced concessions noted as of Q2 2024. Recent reductions in the Fed eral Funds rate likely to produce lower interest rates looking forward.

 Pricing for the competing projec ts is consistent with price per square foot indicators at $302.27 per square foot in Laguna and $300.98 per square foot from Delta Shores.

AVERAGE AVERAGE NET PRICE PER LOT TOTAL PRICE PER

TYPE LOT SIZE (SF) SIZE (SF) BASE PRICE INCENTIVES BASE PRICE SF (BASE) PREMIUMS UPGRADES PRICE SF (TOTAL) MDR-1 3,230 SF 2,044 $629,282 ($5,000) $624,282 $305.42 $2,000 $34,611 $660,893 $323.33 LDR-1 5,700 SF 2,241 $716,113 ($5,000) $711,113 $317.32 $3,000 $41,177 $755,290 $337.03 LDR-2 6,825 SF 2,719 $787,395 ($15,748) $771,647 $283.80 $15,748 $47,244 $834,639 $306.97

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Absorption trends noted from the competing projects are consistent with projections from the Absorption Study prepared by John Burns Real Estate, dated July 23, 2024, which identified sales rates from 3.5 to 4.0 sales per month, per project.

Conclusions

The overall absorption noted from the competing projects based on the subject’s positioning in the m a r k e t d e m o n s t r a t e t h e f o l l o w i n g c h a r a c t e r i s t i c s . T h e f o l l o w i ng conclusions were noted in the Absorption Study Prepared by John Burns Real Estate dated July 23, 2024.

YEAR 2024 2025 2026 2027 2028 TOTALS
MDR-1 (KB Home) 26 48 36 0 0 110
LDR-1 (KB Home) 28 48 5 0 0 81
LDR-2 (Meritage/M&H Realty) 5 42 42 42 26 157
TOTALS 59 138 83 42 26 348

This rate of absorption is predicated on home sales and includes only 6 months of 2024. The absorption rates for the subject projects as identified in the Absorption s t u d y a r e c o n s i s t e n t t o t h e a p p r a i s e r s projections and are used in this analysis. However, this is re allocated by the appraiser in 12 month increments with similar absorption of lots as of the effective date of valuation. It is identified as follows.

With an effective date of valuation as of September 25, 2024, the first month is rounded to October. The overall schedule of absorption is calculated as follows.

YEAR Oct-2024
to Sep-2025
Oct-2025
To Sep-2026
Oct-2026
To Sep-2027
Oct-2027
To Sep-2028
TOTALS
MDR-1 (KB Home) - 4.0/Mo. 48 48 14 0 110
LDR-1 (KB Home) – 4.0/Mo. 48 33 0 0 81
LDR-2 (Meritage/M&H Realty) – 3.5/Mo. 42 42 42 31 157
TOTALS 138 123 56 31 348

The overall salability of the subject lots in both the short and long term is favorable in the current market climate. The absorption for this project takes into consideration a pessimistic view with absorption of 138 lots in year 1, 123 lots in year 2, 56 Lots in year 3, and 31 l ots in year 4. It is likely absorption for LDR-2 could escalate upon completion of LDR-1.

Strengths and Weaknesses of this project are identified as follows.

Strengths

 Desired location relative to work centers including support retail services on opposite side of Interstate 5 and proximity to downtown Sacramento. It is pos itioned in the northern portion of the Laguna submarket, adjacent to Interstate 5, whic h is closest to downtown in terms of commute distance and ease of access. Project is positioned in close proximity to light rail for added convenience.

 Project designed with three product lines with lots ranging fro m 3,230 to 6,825 square feet. The segmentation will allow for all three projects offer ing homes at the same time as they are offered to different buyer profiles. With differen t ownerships, maximally productive uses are gained through sales of individual projects . W h i l e a l l o f t h e s e projects are part of Delta Shores West, the most likely purchaser reflect home builders for each product line, rather than the project in its entirety.

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 Orientation along the western side of the Interstate provides f urther buffer from Sacramento Wastewater Treatment Plant and the City of Sacramento F a c i l i t y / S p o r t s Park. It is noted that the city site is proposed as there are no funding sources identified for this facility as of the effective date of valuation.

 Limited competition in the immediate area other than other prop osed projects in Delta Shores.

 Planned Kaiser health facility northeast of the site that would be walkable for residents.

However, this is likely a long-term benefit as there are no plan s f o r d e v e l o p m e n t identified for this parcel as of the effective date of valuation.

Weaknesses

 Inferior school districting as compared to other projects in the Laguna submarket.

However, with proposed developme n t s o f s c h o o l s in D e lt a S h o r e s , this element could subside over time.

 The Meadowview neighborhood locat ed northeast of the subject ha s below average residential values. The substantial size and scope of Delta Sh ores in its entirety should allow it to differentiate itself from the nearby Meadowview area.

MARKET ANALYSIS – MULTI-FAMILY

Costar is the source for the following data. The data reflects conditions of 2024 Q1 (to date), the most recent data available. The initial discussion provides information on the overall Sacramento Multi-Family market, followed by the subject’s submarket. The subject is par t of the South Sacramento submarket, which will be discussed later in this report.

Costar rates multi-family properties using a star rating, in which 1 and 2-star properties generally equate to the more traditional Class C rating; 3-star properties generally equate to Class B; and 4 and 5-star properties generally equate to Class A.

SACRAMENTO (MSA) – MULTI-FAMILY MARKET

California has lost more than 750,000 people since the pandemic started, but that does not hold for Sacramento, which saw an increase in population during that time. Continued demand from outside the market, particularly from the Bay Area, combined with increased household formation levels, have pushed net absorption totals 3,100 units over the past year. Availability is concentrated in 4 & 5 Star units, leading to 2,500 units of net absorption in that segment.

Despite solid demand formation, net absorption has yet to match the pace of deliveries. The vacancy rate has been flat over the past year to 6.4%, below the national av erage of 7.8%. A total of 3,000 new units came to the market, while net absorption totaled 3,100 units, f ar ahead of the five-year pre-pandemic average of 725 units.

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Despite the strong figure, demand is not uniformly positive. Sa cramento's workforce housing recorded negative demand during that period as -56 units were vacated. Falling occupancy in this segment is linked t o p e r s i s t e n t r e n t g r o w t h o v e r t h e p a s t f i v e y e a r s a n d i n c r e a s ed competition from rent-controlled multifamily properties. More than 900 affordable units came to market in 2023, and another 250 have already been delivered in 2024.

Supply-side pressure has limited recent rent growth levels, increasing by only 1.7% over the past year. At the same time, concession rates and costs are increasing, reach ing the highest point since 2020, and the delta between asking and effective rents is rising. Rents in Sa cramento rest at $1,830/month, more expensive than the national average of $1,710/month. Submarkets without substantial construction, like Elk Grove and Roseville/Rocklin, lead the market in rent growth.

The elevated vacancy rate and weak rent growth have led to the fewest units under construction since 2020. Today, there are 3,200 units under construction, expanding the market by an additional 2.2%. This is down from the peak of 5,900 units under construction set in 2Q22, but still far above pre-pandemic norms. From 2015 to 2019, the market averaged only 1,900 units under construction. The rate of groundbreakings has been slowing as developers look to delay new projects until rent growth returns and the risk of oversupply abates, but it has not stopped entirely.

Construction starts in 2024 have already surpassed 400 units, b ut annual figures are unlikely to increase year-over-year.

The CoStar forecast calls for elevated vacancy for the balance of 2024 as construction deliveries are expected to offset the positive net absorption recorded. Sacramento is well positioned as the lowest-cost and largest city in California, as many residents are seeking t o relocate away from the country's most expensive locations.

Vacancy Trends

Net absorption remains strong totaling more than 1,700 units in the first half of the year. Strong demand metrics were just enough to offset the 1,440 units delivered du ring that time, a trend that is not likely to continue for the rest of 2024.

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Recent demand trends have created a bifurcated market as Sacram ento's high-end properties have posted some of the strongest demand in recent history. Over the past year, 4 & 5 Star properties have recorded net absorption of 2,000 units, as new construction del ivered plentiful options for residents looking to relocate to the region. According to data collected by Apartments.com, 50% of renters seeking space in Sacramento live outside the market, with most of those i n m o r e e x p e n s i v e m a r k e t s w i t h i n California, like San Francisco, Oakland, and Los Angeles.

Simultaneously, the market's workforce housing is struggling to maintain its tenant base. Over the past year, Sacramento's 1 & 2 Star housing has posted net absorption of -56 units. Renters in this segment have growing affordability concerns and are looking to a variety of ways to reduce their rent liability. One of the most popular is moving out of market-rate properties and into regulated affordable housing.

Deliveries of affordable units have increased yearly since 2020 , peaking in 2023 when 900 units entered the market. More are expected in 2024, as another 12 projects are underway, bringing an additional 2,200 units to market over the next two years.

Even with strong total absorption figures, the vacancy rate rests at 6.4%, with little change since the start of 2024. This is primarily tied to construction completions totaling 3,000 units over the past 12 months.

Net absorption has been robust during this period, reaching 3,1 00 units, resulting in upward pressure on market vacancy.

Generally speaking, demand totals are highest in the areas with new construction, which centers in and around the urban core. The submarkets of South Sacramento, Downtown, and West Sacramento are three of the four leading submarkets in demand and construction compl etions, all located in the heart of the Sacramento region. Conversely, more suburban areas like Davis, Elk Grove, and Folsom have some of the lowest vacancy rates in the market. Still, they are responsible for only 10% of completed construction over the past year.

The long-term outlook for the Sacramento multifamily market is promising. The region remains very cost effective by California standards, job growth persists, and housing remains undersupplied. Sacramento's position as an affordable location to live with a high quality of life, and growing employment opportunities gives it a unique value proposition to attract new residents for the near-term.

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Rent Trends

The influx of new supply continues to hamper Sacramento's rent growth. Rents have increased slightly year-over-year, up by 2.8%. Growth has accelerated through the first half of 2024 after remaining flat in 2023. Rent growth will likely accelerate in coming quarters as new inventory leases, returning to the historical average of 3% by the end of the year.

A higher market vacancy rate has caused property managers to pr ioritize maintaining occupancy levels, turning to increased concession levels in Sacramento. At the en d of 24Q1, more than 35% of properties were offering concessions of some sort. Recent deliveries have the highest packages, reaching six weeks of free rent. Capitol Towers also offers six weeks of free rent up to $6,200 for new residents. In 2021, when the vacancy rate fell to 3.6%, fewer than 3% of properties were advertising move-in specials.

Even with lower annual rent growth, some submarkets are consist ently outperforming. Davis, for example, with its captive demand from the University of Califor nia campus, has consistently increased rents by 4% or more over the past 18 months. Additionally, Elk Grove has achieved rental increases of more than 4.5% in early 2024, augmented by the lack of development in the area. Conversely, areas with excess new supply have struggled to keep rents flat. Downtown S acramento and West Sacramento have recorded virtually no rent change over the past year .Increases are expected to accelerate through the rest of 2024, with robust demand and slowing construction activ ity. The downward pressure on the vacancy will embolden landlords to increase rent growth throughout the year.

Construction

The risk of oversupply remains despite recent pullbacks in grou ndbreakings. The construction pipeline is robust with 3,200 units underway, expanding the market by an ad ditional 2.2%. This is down from the peak of 5,900 units under construction set in 22Q2 but still far above pre-pandemic norms. From 2015 to 2019, the market averaged only 1,900 units under construction. Developers are wary of potential supply- side risk in the market and have pulled back on groundbreakings , which, in 2023, fell to the lowest level since the start of the pandemic. Lower rent growth, rising operating expenses, and poor exit pricing put

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new projects under economic pressure. According to regional eco nomic development experts, if the decline in starts persists, Sacramento could face a greater hou sing shortage, putting additional pressure on local and county governments to allow for the low-cost development of new housing supply.

Construction has been centered in and adjacent to Downtown Sacr a m e n t o f o r t h e p a s t f i v e y e a r s .

Downtown Sacramento, N Sacramento/Natomas/N Highlands, and West Sacramento submarkets account for 60% of total construction. Bo th of the largest projects by t o t a l u n i t s a r e l o c a t e d i n D o w n t o w n Sacramento. The Hayley will brin g 372 units to market upon completion near the end of the year—The A.J. is situated in The Railyards development. The 345-unit pro perty is a part of the country's most significant urban infill development and is adjacent to the future site of Kaiser Permanente's new hospital.

The project broke ground in late 2020. Completion was recently delayed by vandalism at the construction site. The property comprises studio, 1- and 2-bedroom units with an estimated completion date of 24Q3.

Given Sacramento's size, lack of housing, continued interest fr om out-of-market residents, and rising household formation levels, it is unlikely that construction activity will fall to the low levels seen between 2013 and 2016 when activity stru ggled to reach 1,000 units unde r development. The region's economic growth, particularly in the healthcare, biotech, and semiconductor fields, indicates a quicker recovery compared to the previous economic cycle; the likely result is more consistent housing development in the short to medium term.

Sales Trends

A slowing national economy and increased interest rates have sl owed investment activity across all commercial sectors. The multifamily market saw just 85 transactions closed over the past year for a total of $417 million, down significant ly from the pre-pandemic average from 2015-2019 average of $1.3 million. Sales have remained slow to start 2024; quarter-to-date rests short of $31 million, the lowest quarterly total since 11Q1.

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Sacramento is dominated by private buyers, accounting for nearl y 75% of acquisitions and dispositions over the past five years. Over the past year, Sacramento's limi ted private equity investment gave way to more private transactions, which rose to nearly 90% of total tr ansactions. Slow rent growth, rising vacancy, and increased financing costs bring upward pressure on cap rates. Market participants indicate that owners want a 5.0-5.5% cap rate for their properties, but most buyers require 6% cap rates or higher to transact.

Large transactions have been rare since the start of 2023. That trend has carried over to 2024. Only two transactions have exceeded $50 million through the first half o f 2024. The largest was the $77 million ($292,000 per unit) for Artisan 8282 in Elk Grove. Transactions a r e r a r e i n t h a t s u b m a r k e t ; n o o t h e r properties have traded since 2021. The other deal was a single- family rental community in Roseville for $65 million ($427,000 per unit). The high price per unit is reflected by the large units available. It is one of the first single-family rental properties built in the Sacramento region and the first to sell.

Pricing is expected to fall throughout the year. Interest rates will remain high throughout 2024, and investors are not willing to purchase properties with negative leverage. Many investors are content to wait for pricing fall and are reluctant to risk owning during s tagnant rent growth and high concessions unless pricing is alluring. Current cap rates remain very close to BBB bond rates, yielding no pricing premium for the risk of owning real estate.

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Overall vacancy and rental trends for the region are summarized on the following table.

Conclusions – Sacramento MSA

The Sacramento apartment market has maintained consistently positive rental growth, low vacancy rates and healthy net absorption over the past decade and this trend is expected to continue. The average regional vacancy rate over the past decade is near 5% and the c urrent vacancy rate is slightly above this trend. Rent growth has remained strong, averaging near 5% ann ually over the past decade. Recently rent growth has slowed but was still positive as of the effecti ve date of valuation. Overall, market fundamental remain strong and pending/future additions to suppl y are not expected to outweigh demand. Future gains in rent growth are expected to moderate over the next few years and vacancy rates are projected to elevate between 7% and 8%. Overall, the outlook is positive of the regional apartment market.

South Sacramento Submarket

South Sacramento is one of the metro's largest submarkets by inventory and one of the more affordable.

Recently, more high-end inventory has been delivered, leveraging its location close to the entertainment and employment centers in Downtown.

Over the past 12 months, net absorption totaled 410 units. Demand primarily comes from 3 Star and 4 & 5 Star properties, offsetting negative net absorption in the ma rket's workforce housing. The submarket has a popular destination in 2021 and 2022 for investors to pur chase properties to renovate units and push rents. The result has been a filtering effect as the marke t's workforce housing was repriced, and residents sought other options.

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South Sacramento has never had much high-end inventory, but 380 units have completed construction over the past year. Construction has slowed significantly since peaking at 1,500 units during 21Q4. Today, there are only 100 units under construction, including one 70 unit project that broke ground during 24Q2.

Without new units entering the m arket, the vacancy rates have b een falling, down 80 basis points over the past year to 6.5%.

Despite falling vacancy, rents are stagnant, increasing by only 0.8%. Concessions, nearly ubiquitous a few months ago, play a lesser role in the market. A few new properties still in lease-up are offering incentives, but levels are down. The most aggressive properties on Apartments.com advertise six weeks of free rent, down from nearly three months at the end of 2023.

South Sacramento has undergone a significant transformation over the past five years, adding new inventory and drawing renters from outside the region. The sub market's value proposition remains, and the CoStar forecast anticipates sustained demand formation for the next 12 to 18 months.

Key indicators for this submarket are as follows.

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Vacancy Trends

Like most of the market, activity in South Sacramento slowed dr astically in 2022. With a sharp decline in demand combined with a wave of new construction, the vacancy ra te rose slightly over the past year, r e a c h i n g 6 . 5 % . H o w e v e r , S o u t h S a c r a m e n t o i s s t i l l a b l e t o c o m p e t e o n c o s t a s r e n t s a r e o n l y $1,658/month, one of the most affordable areas in the city.

Overall vacancy and rental trends for the South Sacramento submarket are identified as follows.

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Conclusions

South Sacramento is one of the metro's largest submarkets by units and one of the more affordable. While the region has had low vacancy for a number of years, the high proportion of low-end inventory focused inbound renters from the Bay Area on suburban submarkets farther away from the urban core. However, a lack of housing inventory throughout the Sacramento metro has refocused residents on South Sacramento, and fundamentals are improving accordingly.

Consistent with regional trends, the South Sacramento apartment market has maintained consistently positive rental growth and low vacancy rates over the past decade and this trend is expected to continue.

Lack of new development and increased demand have placed significant pressure on lease rates, which are up over the last year.

Overall, market fundamentals are solid and the limited pending and future additions to supply are not expected to outweigh demand. Future gains in rent growth are ex pected to remain well above average over the next few years, and then moderate to historic levels going forward. Overall, the outlook remains positive for the South Sacramento apartment market.

The multi-family component identified for the subject property is fairly small and includes a 3.378 AC site located at the northeast corner of Cosumnes River Boulevard and Freeport Boulevard. It is identified for high density uses with an overall density range identified from 15-27 units per acre. However, according to Marcus Adams, with the City of Sacramento Planning Departmen t, this property can be merged with the adjacent MDR site (5.473 AC) and developed as 1 project. T he total AC equates to 8.851 AC and the property can legally be developed to accommodate 95-167 units. Given the size of the HDR component, there are limitations on potential uses especially based on the design and accommodation of both parking requirements and amenities required for such a venture to be maximally productive.

Combining the HDR and MDR components, North of Cosumnes River Boulevard into one project with densities between 95-167 units is legally permissible and reflects maximally productive uses. At this level of densities between 10.7 and 18.9 units per acre, the land uses are maximized with for-sale housing.

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HIGHEST AND BEST USE

Highest and best use may be defined as that reasonable and prob able use that will support the highest present value as of the effective date of the report. It is al so defined as “the reasonable, probable, and legal use of vacant land or an i mproved property, which is phys ically possible, appropriately supported, financially feasible and that results in the highest value.” E lements integral in the highest and best use analysis include the following:

a. Physical characteristics of the subject property;
b. Location and the immediate environs;
c. Current zoning and municipality planning goals;
d. Neighborhood and area demographic trends;
e. Market supply and demand; and
f. Motivation of the most probable purchaser and/or user.

The highest and best use of a specific parcel of land is not determined through subjective analysis; rather highest and best use is shaped by the competitive forces within the market where the property is located.

Therefore, the analysis and interpretation of highest and best use is an economic study of market forces focused on the subject property. The use that maximizes value represents the highest and best use. In accordance with the definition of highest and best use, it is a ppropriate to analyze the subject site as though vacant, followed by analysis of the existing improvements.

Legally Permissible

The subject property is currently vested for development of the proposed uses identified in this report. It is part of a fully entitled and approved project. The major entitlements achieved include: 1) approval of D e l t a S h o r e s P U D , 2 ) c e r t i f i c a t i o n o f E n v i r o n m e n t a l I m p a c t R e p ort, 3) an approved Development Agreement, 4) adoption of the Delta Shores Financing Plan, 5) a pproval of the Mixed-Income Housing strategy, 6) final map approval as well as other miscellaneous approvals.

The subject project is conforming with all applicable environmental mitigation.

Currently, this project includes 348 nearly completed finished lots for land uses south of Cosumnes River Boulevard. The land uses identified north of Cosumnes River Boulevard are approved for their specific use, but tentative maps have not been prepared for these land holdings.

Zoning for this project is generally identified in the following classifications, R-1 (PUD), R-1A (PUD), R-3 (PUD) and A-OS (PUD) as they pertain to the subject properties. The General Plan identifies the residential components for Traditional Neighborhood Low Density Residential (3-8 du/ac), Traditional Neighborhood Medium Density (8-36 du/ac), and Traditional Neighborhood High Density (18-36 du/ac). Similar to the overall zoning, the General Plan also identifies additional lan d uses are beyond the boundaries of the district, and/or are exempt from the facilities.

The proposed development of this project is consistent with the overall zoning and General Plan. This project includes an affordable housing component identified as the Mixed-Income Housing Strategy. In May 2020, the City of Sacramento approved the project’s Mixed Income Housing Strategy. Under this plan a land dedication of 15.89 acres located in improvement Area No . 3 has been set aside to satisfy the affordable housing requirement. Because of this dedication, bui lders in the project will be exempt from paying the housing fee of $2.95 per square foot. This fee exemp tion has been reflected in the overall building and impact fees.

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The developer of the project recorded the Master Parcel Map for Delta Shores Phase 3 on July 31, 2024 (Document # 20240731/0501). The recordation of this map created 3.378 AC and 5.473 AC sites north of C o s u m n e s R i v e r B o u l e v a r d f o r d e v e l o p m e n t o f H D R a n d M D R l a n d u ses. Furthermore, according to Marcus Adams with the City of Sacramento Planning Department, t hese projects can be combined into one development project as long as the minimum density of 95 units is achieved. Overall, this land use can support 95-167 units for futur e development which reflect a conforming land use. Development of the proposed land uses described in this report reflect a legal , permissible use under the current zoning, and general plan.

Development of the proposed land uses described in this report reflect a legal, permissible use under the current zoning, and general plan.

Physically Possible

This criterion considers the physical features of the site such as street frontage, depth, topography, access, soil conditions, utilities, etc. At this point in the analysis the physical characteristics are examined to see if they are suited for the legally permissible uses. Based on physical inspection of the subject properties, there are no known reasons why the properties would not support any use other than those consistent with legally permissible land uses.

Financially Feasible/Maximally Productive

As noted in the prior section, the subject property is projecte d to have adequate demand in the current market environment. Financial feasibility depends upon supply and demand influences. With respect to financial feasibility of single-family residential development, in recent months merchant builders have acquired unimproved lots in the Sacramento region for near term construction, and there are multiple active projects in the subject’s immediate area that demonstrat e demand for new homes. Finished lots are transferring at prices that e xceed the sum on unimproved lo ts and site development costs, which indicate completion of site development is financially feasible.

Based on recorded final maps, as well as the allocation of land uses, maximally productive uses for land uses south of Consumnes River Boulevard reflect detached residential developments including MDR-1, LDR-1, and LDR-2. The lot sizing for these components and pro duct differentiation reflect production home builders as the most likely purchaser with respect to each individual project. This is consistent with the current ownership of this project. This includes LDR-2, with two individual owners as Meritage Homes is currently under an agreement to purchase the remaining 80 lots from M&H Realty.

Highest and Best Use (As Vacant) – Conclusion

Based on review of these elements, the highest and best use for the subject property is for completion of the remaining site improvements for the development of producti on homes. Lots are nearly completed, and a production home builder would bear these costs to facilitate the development of production homes.

Typical buyers for the properties north of Cosumnes River Boule vard include developers or investors seeking entrepreneurship for the development of these propertie s. While these projects are proposed for a merger and zoning change to MDR, legally permissible uses dictate current uses of these properties as of the effective date of valuation. As noted throughout this report, these two parcels can be merged into a single development site of 8.851 AC as long as minimum densities are attained. This would create a density range from 10.7 to 18.9 units per acre, which can accommodate for-sale housing. This criterion

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meets legally permissible and is the maximally productive land uses for this component. As such, the highest and best use for the two parcels north of Cosumnes River Boulevard is for development of a single project between 95-167 units to accommodate for-sale housing.

Highest and Best Use (As Improved) – Conclusion

The highest and best use as improved reflects the uses identifi ed in this report. All of the land uses are consistent with their highest and best use. The most probable buyer is production home builders for individual projects south of Cosumnes River Boulevard. An inves tor/developer seeking entrepreneurship for the land uses north of Cosumnes River Boulevard is the most likely buyer.

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PART 4 – METHODOLOGY AND VALUATION

METHODOLOGY

The valuation process is the orderly program in which the data used to derive an opinion of value for the subject property as it is acquired, classified, analyzed, and p resented. The first step in the process is to define the appraisal problem, i.e., identify the real estate, t he effective date of the value estimate, the property rights being appraised, and the type of value sought. Once this has been accomplished, the appraiser collects and analyzes the factors that affect the mar ket value of the subject property. These factors are addressed in the area and neighborhood analysis, th e site and improvement analysis, the highest and best use analysis, and in the application of the three approaches to value. Appraisers generally use three approaches to value; the Cost Approach, the Sales Com parison Approach, and the Income Approach. The final step in the valuation process is the reconc iliation or correlation of the value indications. In the reconciliation, the appraiser considers the relative applicability of each of the approaches used, examines the range of the value indications, a nd gives most weight to the approach or approaches that appear to produce the most reliable solution to the appraisal problem.

The first step in the appraisal of the subject property is to examine the different value scenarios required for this property under the purpose of this report. In order to derive an opinion of value for this property, all three approaches to value will be considered.

In the Cost Approach, the reproduction or replacement cost of the building and land improvements, as the date of the appraisal, is developed together with an estimate of the losses in value (depreciation) that have taken place due to wear and tear, design and plan, or neig hborhood influences. The depreciated building cost estimate is added to the value of the land. The t otal represents the value indicated by the cost approach. This approach assumes that the site is developed to its highest and best use. It is also a good test of project feasibility in the case of proposed projec t s. Th is app roac h t o valu e is b ase d on a comparison that a prudent investor would pay no more for a prop erty than the amount the investor can obtain a comparable site and construct a building of equal desi rability and utility without undue delay.

This approach is most applicable when a property is new or relatively new, and sufficient comparable land sales are available to support a reasonable conclusion of land value.

In the Sales Comparison Approach, the subject property is compared to similar properties that have been s o l d r e c e n t l y o r f o r w h i c h l i s t i n g p r i c e s o r o f f e r i n g f i g u r e s a r e k n o w n . D a t a f o r g e n e r a l l y c o m p a r a b l e properties are used and comparisons are made to demonstrate a p robable price at which the subject property would sell if offered in the open market. This is a go od indication of value assuming the market data considered is recent and reliable.

In the Income Capitalization Approach, value is based on the present value of the anticipated net income stream from the subject property. Two common techniques are typically utilized, direct capitalization and yield capitalization. In direct capitalization, the current or estimated rental income is projected with deductions for vacancy and collection loss and operating expens es. A conclusion about the prospective net operating income of the property is developed. In support o f this net operating income estimate, operating statements for previous years may be reviewed, togeth er with available operating cost estimates of similar properties. An applicable capitalization m ethod and appropriate capitalization rates are developed for use in computations that lead to an indication of value by the Income Approach. In yield capitalization (or discounted cash flow analysis), the net inco m e s t r e a m i s p r o j e c t e d o v e r a t y p i c a l investment holding period for the property type being appraised , w i t h a r e v e r s i o n a t t h e e n d o f t h e

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holding period. The income strea m and reversion are then discou nted to a present value utilizing a discount rate, typically derived from market analysis and inves tor surveys. In most cases, the Income Approach is considered to be the best method of estimating value for an income producing property.

After an indication of value is achieved in each of the approaches, the applicability and reliability of each approach is then evaluated and weighed by the appraiser. Throug h physical inspection of the property and the appraiser’s analysis, judgment, and experience, a final opinion of value is then made for the subject property.

Subject Property Valuation

The market value of the appraised properties, by ownership, subject to the existing liens will be estimated using the sales comparison approach to value. As noted throughout this report, this value is presented in conjunction with the Hypothetical Condition that all improved properties are available for development t o t h e i r h i g h e s t a n d b e s t u s e . I n a d d i t i o n , t h e e x t r a c t i o n / l and residual methodology will be utilized.

Under this methodology, land value is developed by deducting the construction costs from the proposed revenues in arriving at an estimated value of the finished lots . D i s c o u n t e d c a s h f l o w an a l y s i s f o r t h e determination of lot value was not necessary given the number of lots in each village and relatively short a b s o r p t i o n p e r i o d . T h e c o n c l u d e d l o t v a l u e s i d e n t i f i e d b y t h e S a l e s C o m p a r i s o n A p p r o a c h a n d t h e Extraction Method were reconciled in order to provide the finished lot value for each village.

Once the individual values are derived or identified as the agg regate retail value or retail sales proceeds, a discounted cash flow model will be performed. Under the disc ounted cash flow analysis, the expected revenue, absorption period, expenses and discount rate associat ed with the sell-off of the developable parcels will be utilized. A DCF analysis is a procedure in whi ch a discount rate is applied to a projected revenue stream generated from the sale of individual components o f a p r o j e c t . I n t h i s m e t h o d o f valuation, the appraiser specifies the quantity, variability, timing and duration of the revenue streams and discounts each to its present value at a specified yield rate. For the subject property, the overall value is presented using the Extraction Method.

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SALES COMPARISON APPROACH
REVENUE PROJECTIONS – FINISHED LOTS

The Sales Comparison Approach involves a comparison of the subj ect property with other properties which have been sold or have been offered for sale in the open, competitive market. These transactions serve the primary function of providing a unit comparison used to estimate an independent opinion of value by this approach. The reliability of the value estimate depends upon the degree of similarity between the property being appraised and the comparable sales. A d j u s t m e n t s a r e m a d e t o t h e comparable sales to reflect their differences from the subject.

The land sales used for comparat ive purposes are displayed on t he following page. A location map of these properties is noted as follows.

SUBJECT
SALES 1, 8
SALES 2, 3, 9
SALES 6, 7
SALES 4, 5

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TOTAL SALES PRICE BUYER STATUS LOADED
SALE PROPERTY ADDRESS SALES PRICE/LOT SELLER # OF LOTS ANNUAL LEVIES/ SITE COSTS/LOT PRICE PER LOCATION SALE DATE DOCUMENT NO. TYPICAL LOT SIZE (SF) SPECIAL ASSES SMENTS PERMITS/FEES FINISHED LOT LDR-2 (Por.) - Delta Shores West - SUBJECT $20,020,000 Meritage Homes Finished Lots $2,301 per annum $0 S. side of Cosumnes River Blvd., W. of I-5 $260,000 M&H Realty LLC 77 Lots $61,552 Sacramento, CA 95832 July 2, 2024 Closing Statement 6,825 SF MDR-7, Delta Shores Phase 2 $5,020,000 DS-7 LLC (Signature Homes) Paper Lots $1,892 per annum $85,436 S. side of Cosumnes River Blvd., N. of Delta Shores Cir. $52,292 M&H Realty LLC 96 Lots $60,258 Sacramento, CA 95832 March 22, 2024 20240322/0022 1,750 SF Parcel 8, Delta Shores Phase 2 $4,500,000 DS-6 LLC (Signature Homes) Paper Lots $1,892 per annum $85,436 S. side of Cosumnes River Blvd., N. of Delta Shores Cir. $44,554 M&H Realty LLC 101 Lots $59,546 Sacramento, CA 95832 March 21, 2024 20240321/0825 1,612 SF Broadstone Estates $14,400,000 Woodside 05N, LP Finished Lots $3,215 per annum $0 N/S side of Dewey Oak Dr., S. of Highway 50 $360,000 Elliott Homes, Inc. 40 Lots $110,000 Folsom, CA 95630 November 20, 2023 20231120/0343 10,200 SF Broadstone Estates $14,760,000 Shawood Communities LLC Finished Lots $3,215 per annum $0 N/S side of Dehone Circle $360,000 Elliott Homes, Inc. 41 Lots $110,000 Folsom, CA 95630 November 20, 2023 20231120/0345 10,200 SF Delta Shores CFD No. 2019-1, 1A #1 Finished Lots $2,301 per ann um Assumed Finished Single-Family Residential Component Benchmark Village 81 Lots $61,552 Sacramento, CA (LDR-1) 5,700 SF
3 $189,536Comments: This transaction represents the purchase of 101 lots within D elta Shores by Signature Homes. The property includes 101 propo sed lots, with a typical lot size at 1,612 square feet (26’ x 62’). It include s spe cial asse ssments ide ntified at $1,892 per annum and assumed with the finished lots. Site development cos ts, including profit identified at $85,436 per lot, whereas per mits and fees reported at $59,546 per unit. Developer is proposing atta ched construction (duet and 3-plex) with homes ranging in size from approximately 1,600 to 2,000 square feet with pricing star ting in the mid $500s.
4 $470,000
Comments: This transaction represents the purchase of 40 finished lots in Broadstone Estates by Woodside Homes. In addition to this transaction, an affiliated company with Woodside Homes, or Shawood Communities LLC, purchased the adjacent 41 lots as part of this transaction. However, separate deeds were recorded, a nd each project is identified for the development of different product lines. The property includes 40 finished lots with a typical si ze at 10,200 square feet, near project averages. It incl udes special assessments identified at $3,215 per annum and assumed with the finished lots. Permits and fees noted at $110,000 per unit. Proposed homes are identified between 2,616 and 3,952 square fee t. Pricing has yet to be determined, but will be in excess of $1.2 million. 5 $470,000
Comments: This transaction represents the purchase of 41 finished lots in Broadstone Estates by Shawood Communities. In addition to t his transaction, an affiliated company with the buyer, Woodside Homes purchased the adjacent 40 lots as part of this t ransaction. However, separate deeds were recorded, and each pr oject is identified for the development of different product li nes. The property includes 41 finished lots with a typical size at 10,20 0 square feet, near project averages. It includes special asse ssments identified at $3,215 per annum and assumed with the fin ished lots.

Permits and fees reported at $110,000 per unit. Proposed homes are identified between 2,996 and 4, 359 square feet. Pricing has yet to be determined, but will be in excess of $ 1.2 million.

SP
1 $321,552Comments: This transaction represents the purchase of portion of LDR-2 within Delta Shores West by Meritage Homes. It reflects the ta ke down of 77 finished lots as part of an agreement for 157 lot s.

The
next take down of 27 lots is identified as of November 7, 2 024, and the third and final take down of 52 lots is as of Apri l 7, 2025. This price is fixed throughout the contract at $260,000 per finished lot. The typical lot size is 6,825 square feet and sp ecial assessments are identified at $2,301 per annum. 2 $197,986Comments: This transaction represents the purchase of 96 lots within De lta Shores by Signature Homes. The property includes 96 propose d lots, with a typical lot size at 1,750 square feet (30’ x 57’ ).

It includes special assessments identified at $1,892 per annum and assumed with the finished lots. Site development costs, including profit identified at $85,436 per lot, whereas permits a nd fees reported at $60,258 per unit. Developer is proposing attached construction (duet and 3-plex) with homes ranging in size from approximately 1,600 to 2,000 square feet with pricing starting in the mid $500s

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TOTAL SALES PRICE BUYER STATUS LOADED
SALE PROPERTY ADDRESS SALES PRICE/LOT SELLER # OF LOTS ANNUAL LEVIES/ SITE COSTS/LOT PRICE PER LOCATION SALE DATE DOCUMENT NO. TYPICAL LOT SIZE (SF) SPECIAL ASSES SMENTS PERMITS/FEES FINISHED LOT Amoruso Ranch - Phase 1, Subphase A1 $28,980,000 Richmond America n Homes Finished Lots $3,150 per annum In Price S. Side of Amoruso Ranch Road $210,000 Brookfield Sacramento Holdings 138 Lots $93,000 Roseville, CA 95747 December 14, 2023 2023-0067641 6,000 SF Amoruso Ranch - Phase 1, Subphase A1 $33,798,500 DR Horton CA2, Inc. Finished Lots $3,150 per annum In Price S. Side of Amoruso Ranch Road $176,034 Brookfield Sacramento Holdings 192 Lots $93,000 Roseville, CA 95747 December 28, 2023 2023-0069641 4,500 SF MDR-1, LDR-1 (Delta Shores West) $12,484,436 KB Homes Paper Lots $1,963 per annum $132,229 S. side of Cosumnes River Blvd., W. of I-5 $65,364 M&H Realty LLC 191 Lots $48,640 Sacramento, CA 95832 April 29, 2022 20220429-0746 3,833 SF MDR-8A - Delta Shores $3,825,000 Signature Homes Paper Lots $1,780 per annum $84,036 S. side of Cosumnes River Blvd. $50,329 M&H Realty LLC 76 Lots $64,000 Sacramento, CA 95832 June 30, 2022 20220630/1103 3,116 SF Delta Shores CFD No. 2019-1, 1A #1 Finished Lots $2,301 per ann um Assumed Finished Single-Family Residential Component Benchmark Village 81 Lots $61,552 Sacramento, CA (LDR-1) 5,700 SF
6 $303,000
Comments: This transaction represents the purchase of 138 finished lots in Amoruso Ranch by Richmond American Homes. The property in cludes 138 finished lots with a typical size at 6,000 square feet. It i ncludes speci al assessments identi fi ed at $3,150 per annum and assumed with the finished lots. Permits and fees not ed at $93,000 per unit. 8 $246,233Comments: This transaction represents the purchase of MDR-1 and LDR-2 wi thin Delta Shores West by KB Homes. The property includes 191 p roposed lots, with minimum lot sizes of 2,975 and 5,000 square feet, respectively. The weighted average lot size is id e ntified at 3,833 square fee t. It include s spe cial asse ssments identified at $1,962.88 per annum (blended) and assumed with th e fi ni shed lots. Site de velopment costs, including profit ide ntified at $132,229 per lot, whereas permits and fees reported at $48,640 p er unit. 7 $269,034Comments: This transaction represents the purchase of 192 finished lots in Amoruso Ranch by DR Horton. The property includes 192 finish ed lots with a typical size at 4,500 square feet. This is based on a weighted average as it includes 2 villages with lots at 3, 200 square feet, and 5,000 square feet, respectively. It inclu des special assessments ide ntified at $3,150 per annum and assu med with the finished lots. Permits and fees noted at $93,000 per unit. 9 $198,365Comments: This transaction represents the June 2022 closing of MDR-8A w ithin Delta Shores by Signature Homes. The property includes 76 proposed lots, with a minimum lot size of 3,116 square feet.

The property went into contract in September, 2021. It includes special assessments identified at $1,779.90 per annum and assu med with the finished lots. Site development costs, including profit identified at $84,036 per lot, whereas permits and fees reported at $64,000 per unit.

SP

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APPLICATION OF ADJUSTMENTS

Prior to adjustments, the comparable sales ranged from $189,536 to $470,000 per fully loaded finished lot. The comparable sales are analyzed on this basis, and once the opinion of value is noted the permits and fees for this project are deducted from the opinion of valu e in order to develop a final opinion of value for the subject property. Once the value is identified, t he values for each individual area can be developed based on lot size. The analysis of the sales compari son approach is predicated on a “benchmark” village for the subject property. This has been id entified as the 5,700-square foot lot type (LDR-1) with 81 lots. The following is a discussion of the adjustments made to the comparable sales.

Property Rights Conveyed

The comparable sales represent conveyance of the fee simple estate. No adjustments are necessary.

Financing

The comparable sales represent all cash transactions or their equivalent. No adjustments are necessary.

Condition of Sale

All of the properties presented for comparison are arm’s length transactions. No adjustments are noted for the sales.

Market Conditions

If property values have appreciated or depreciated over time, t he appropriate adjustment is required.

The comparable sales range fro m April 2022 to current transacti o n s . T h e y r e f l e c t t h e m o s t r e c e n t transactions, and most were transacted subsequent to the increa se in interest rates starting in 2022. In order to isolate any adjustment for market conditions, trends in pricing are analyzed. This is examined using The Gregory Group for new home pricing changes. The table below summarizes home prices in the entire region, Sacramento County, as well as the Laguna Submarket since 2022. It is based on 2 nd quarter
comparisons for each year.

According to information identified by The Gregory Group, home pricing in the entire region has declined

1.8% since 2022 (Based on 2Q comparisons). This is higher on average for Sacramento County at 6.5%, with the Laguna submarket reflec ting an overall change at 3.8%. In the second quarter of 2022, interest rates were still at low levels with rising rates thereafter. Toward the end of 2023, there was some stability in rates and pricing began to climb. As of 2Q 2024, pricing is trending upward toward levels identified in 2Q 2022. This is identified in changes over the past year from 1.7% to 5.2%

# OF AVERAGE AVERAGE # OF AVERAGE AVERAGE # OF AVERAGE AVERAGE YEAR PROJECTS PRICE (NET) SIZE (SF) $/SF PROJECTS PRICE (NET) SIZE (SF) $/SF PROJECTS PRICE (NET) SIZE (SF) $/SF 2024 215 $734,952 2,418 $303.95 112 $678,964 2,330 $291.40 24 $686,955 2,330 $294.83 2021 206 $717,759 2,437 $294.53 103 $681,261 2,378 $286.48 16 $680,829 2,429 $280.29 2020 208 $733,911 2,372 $309.41 98 $725,423 2,328 $311.61 12 $743,426 2,426 $306.44 -1.8% -6.5% -3.8%
Compounded Annual Change (2022-2024) -0.6% -2.2% -1.3%

3.2% 1.7% 5.2%
SACRAMENTO REGION (4-County) SACRAMENTO COUNTY
Total Change 2022-2024 ($/SF)
Total Change 2023-2024 ($/SF)

LAGUNA SUB-MARKET

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Changes in pricing for these regions in the past year are identified as follows.

Information for the Sacramento region and Sacramento County sho ws level increases in pricing over the past year. Homes prices are trending in Laguna and are up 6.1% since Q3 2023 and 0.9% over the past quarter.

In addition, data compiled from the California Association of Realtors is identified. The following changes are identified in home pricing since July 2023.

Pricing characteristics are noted above since July 2023 Overall pricing has trended upward in 2024. Rising interest rates and inflation caught up to the housing market in the latter half of 2022 with some signs of recovery seen in 2023 and into 2024. With stability in interes t rates, coupled with lack of inventory for resale homes, new home sales have captured buyers and builders have been able to raise pricing.

The subject property is located in Sacramento County. It shows pricing is up 2.2% since June 2023.

The comparable sales transacted from November 2023 to current reflect recent transactions and no adjustments are necessary. Sales 8 and 9 are from 2022 and upward adjustments are noted for these sales. With recent sales in the same area, paired sales analy sis is most applicable. The following table shows the adjustments for all ot her physical characteristics wi th the exception of any adjustments for market conditions for sales 8 an d 9. These adjustments are bas ed on the fully loaded finished lot value and reflect comparisons of transactions in Delta Shores.

# OF AVERAGE AVERAGE # OF AVERAGE AVERAGE # OF AVERAGE AVERAGE QTR. PROJECTS PRICE (NET) SIZE (SF) $/SF PROJECTS PRICE (NET) SIZE (SF) $/SF PROJECTS PRICE (NET) SIZE (SF) $/SF 2Q 24 215 $734,952 2,418 $303.95 112 $678,964 2,330 $291.40 24 $686,955 2,330 $294.83 1Q 24 218 $727,824 2,440 $298.29 111 $675,135 2,365 $285.47 25 $677,864 2,320 $292.18 4Q 23 208 $716,182 2,417 $296.31 112 $677,919 2,370 $286.04 21 $667,168 2,313 $288.44 3Q 23 210 $722,077 2,450 $294.73 107 $680,855 2,392 $284.64 14 $670,476 2,413 $277.86

3.1% 2.4% 6.1%

1.9% 2.1% 0.9%
SACRAMENTO REGION (4-County) SACRAMENTO COUNTY LAGUNA SUB-MARKET Total Change 3Q23-2Q24 ($/SF)
Total Change 1Q24-2Q24 ($/SF)
MON-YR. CA EL DORADO PLACER SACRAMENTO YOLO
July-23 $832,340 $650,000 $660,000 $547,000 $625,000
August-23 $859,800 $657,000 $669,000 $535,000 $622,500
September-23 $843,340 $685,000 $665,000 $545,000 $608,640 October-23 $840,360 $660,000 $685,000 $550,000 $629,900 November-23 $822,200 $650,000 $659,000 $522,290 $620,000 December-23 $819,740 $660,000 $633,020 $535,000 $630,000 January-24 $788,940 $650,000 $620,000 $515,000 $600,360 February-24 $806,490 $647,500 $650,000 $530,000 $918,940 March-24 $854,490 $677,000 $659,000 $530,000 $635,830
April-24 $904,910 $757,000 $671,740 $548,580 $615,000
May-24 $908,040 $699,000 $675,000 $555,000 $653,980
June-24 $900,720 $709,000 $685,000 $560,000 $649,500
July-24 $886,560 $695,000 $670,000 $560,000 $610,000
August-24 $888,740 $650,000 $675,000 $559,000 $620,960

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SALE REFERENCE
2023-2024
SALES 2022 SALES
Sale 1 (7-24) $310,302
Sale 2 (3-24) $313,975
Sale 3 (3-24) $309,676
Sale 8 (4-22) $269,853
Sale 9 (6-22) $272,685
AVERAGES $311,318 $271,269
VARIANCE $40,049

The recent transactions in Delta Shores reflect higher pricing. The average variance when comparing the 2022 transactions to the recent 2024 transactions is $40,049. Recognizing these changes, sales 8 and 9 are adjusted upward $40,000 per lot.

Location

The location adjustment is oriented towards the concept that st ructures located in areas perceived as more desirable due to a number of factors, including accessibility, frontage, and land prices, may achieve a higher price. The subject property is deemed to have a good location in the Laguna sub-market in the City of Sacramento. The comparable sales are located throughout the region based on the built-up nature of the immediate area and the overall general characteristics of the new home market. Still, location adjustments are required to these sales and the best overall comparison is from analysis of projects in the immediate area to those from the sub-markets for the comparable sales. However, sales 1-3, 8, 9 are all from Delta Shores and the immediate environs of the subject pro perty. This aids in quantifying location adjustments to the comparable sales.

The comparable sales were derived from Roseville, Folsom, and t he Delta Shores community. The transactions from Delta Shores are viewed as comparable to the subject’s location. Information from The Gregory Group 2
nd Quarter 2024 for these various sub-markets are illustrated as follows.

SUBMARKET

AVERAGE NET

PRICE SIZE (SF) PRICE/SF
Laguna Submarket $686,955 2,330 SF $294.83
Delta Shores Community $680,552 2,294 SF $296.67
Roseville $700,662 2,372 SF $295.39
Folsom $786,134 2,418 SF $325.12

Pricing differences noted above show fairly consistent pricing. Properties in Roseville and those in Delta Shores do not require any adjustment for location. The project s in Folsom offer higher pricing with an overall variance of 8.8%. In addition, these projects offer views of the Sacramento Valley, which command higher premiums. Overall, downward adjustments of 25% are identified to sales 4 and 5. Adjustments for this analysis are predicated on the land component only (Excluding Fees) and are calculated as follows.

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ITEM COMP 5/6
Land Price $360,000
Site Costs $
Market Conditions Adj. $0
Finished Lot Indicator $360,000
Location Adjustment (25%)
TOTAL ADJUSTMENT ($90,000)

This adjustment is somewhat atypical. However, despite this ad justment these sales reflect the upper end of the range and are applied secondary emphasis.

Number of Lots

The adjustments applied to the comparable sales are based on the inclusion of 81 lots for the “benchmark” village. The comparable sales in clude transactions from 40 to 192 lots. For this analysis, upward adjustments are applied to sales 6-8 for the higher number of lots. One way of examining this difference is based on the holding costs required for the subject with add itional lots. This adjustment is predicated on the overall variance in the number of lots as compared to th e subject at a rate of ¼% per month for holding costs. This adjustment is calculated as follows.

ITEM COMP 6 COMP 7 COMP 8
Number of Lots 138 192 191
Subject Lots 81 81 81
Variance 57 111 110
Absorption 4/Mo. 8/Mo. 8/Mo.
# Additional Months to Sell 14.25 Mos. 13.9 Mos. 13.75 Mos.

Holding Costs ¼%/ Mo. ¼% / Mo. ¼% / Mo.

ADJUSTMENT

ROUNDED

3.5%

4.0%

3.5%

4.0%

3.4%

3.0%
Note: Comps 7 & 8 adjusted based on absorption of 8 sales per month as it included multiple product lines.

This adjustment is applied to the land component (excluding fees) only and is calculated as follows.

ITEM COMP 6 COMP 7 COMP 8
Land Price (Finished Lot) $210,000 $176,034 $197,593
Market Conditions Adjustments ($0) ($0) $40,000
Finished Lot Indicator $210,000 $176,034 $237,593
Number of Lots Adjustment 4.0% 4.0% 3.0%

ADJUSTMENT

ROUNDED
$8,400
$8,400
$7,041
$7,000
$7,128
$7,100

Typical Lot Size

The benchmark village includes a typical lot size at 5,700 square feet. The comparable sales range in size from 1,550 to 10,200 square feet. Adjustments for this analysis were based on $10.00 per square foot for lots ranging in size from 3,500 square feet and above. Smaller lots are adjusted at a factor of $30.00 per square foot.

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Annual CFDs

The subject property includes proposed CFDs at $2,301 per annum (LDR). The comparable sales noted in this report include slightly various CFDs and adjustments are noted for these transactions. Effectively, the higher level of special assessments lowers purchasing power for potential buyers and projects lacking special assessments can offer higher pricing. This adjustment is predicated on the actual payment over a 7-year holding period at 6.0%. Adjustments are noted as follows.

ITEM COMPS 2/3 COMPS 4/5 COMPS 6/7 COMP 8 COMP 9
Annual CFD’s $1,892 $3,215 $3,150 $1,963 $1,780
Subject CFD’s $2,301 $2,301 $2,301 $2,301 $2,301
Variance $409 $924 $849 $338 $521
PV Factor (1) 5.582 5.582 5.582 5.582 5.582

ADJUSTMENT

ROUNDED
($2,283)
($2,300)
$5,158
$5,200
$4,739
$4,700
($1,887)
($1,900)
($2,908)
($2,900)
(1) PV factor reflects the PV of $1 for 7 years at 6.0%

Please refer to the following adjustment grid for a summary of the adjustments.

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ELEMENTS OF COMPARISON SUBJECT 1 2 3 4 5 6 7 8 9
Indicated Price per Lot (Loaded) $321,552 $197,975 $189,536 $470,00 0 $470,000 $303,000 $269,034 $246,233 $198,365 Property Rights Conveyed Fee Simple Fee Simple Fee Simple Fee Simpl e Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple - A d j u s t m e n t $ 0 $ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0
-Adjus ted Ba s e $321,552 $197,975 $189,536 $470,000 $470,000 $303,000 $269,034 $246,233 $198,365 Financing Terms Cash Cash Equiv. Cash Equiv. Cash Equiv. Cash Equiv. Cash Equiv. Cash Equiv. Cash Equiv. Cash Equiv. Cash Equiv. - A d j u s t m e n t $ 0 $ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0
-Adjus ted Ba s e $321,552 $197,975 $189,536 $470,000 $470,000 $303,000 $269,034 $246,233 $198,365 C ondit ions of Sale Ar ms-L ength Similar Similar Similar Similar Simila r Similar Similar Similar Similar - A d j u s t m e n t $ 0 $ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0
-Adjus ted Ba s e $321,552 $197,975 $189,536 $470,000 $470,000 $303,000 $269,034 $246,233 $198,365 Market Conditions Sep-24 Jul-24 Mar-24 Mar-24 Nov-23 Nov-23 Dec-23 Dec-23 Apr-22 Jun-22 -Adjus tment $0 $0 $0 $0 $0 $0 $0 $40,000 $40,000
-Adjus ted Ba s e $321,552 $197,975 $189,536 $470,000 $470,000 $303,000 $269,034 $286,233 $238,365 Adjusted Price per Lot (Loaded) $321,552 $197,975 $189,536 $470,000 $470,000 $303,000 $269,034 $286,233 $238,365 Phys i ca l Cha ra cteri s ti cs
Location Good Similar Similar Similar Super ior Super ior Similar Similar Similar Similar -Adjustment -$ - $ -$ (90, 000)$ (90,000)$ - $ - $ - $ - $ Number of Lots 81 Lots 77 Lots 96 Lots 101 Lots 40 Lots 41 Lots 138 Lots 192 Lots 191 Lots 77 Lots -Adjustment "Benchmark" -$ - $ - $ - $ - $ 8,400 $ 7,000 $ 7,100 $ - $ Typi ca l Lot Si ze 5,700 SF 6,825 SF 1,750 SF 1,612 SF 10,200 SF 10,20 0 SF 6,000 SF 4,500 SF 3,833 SF 3,116 SG -Adjustment (11,250)$ 118,500$ 122,640$ (45,000)$ (45,000)$ - $ 12,000 $ 18,670 $ 77,520 $ Annua l Speci a l Ta xes $2,301/Yr. $2,301/Yr. $1,892/Yr. $1,892/Yr. $3, 215/Yr. $3,215/Yr. $3,150/Yr. $3,150/Yr. $1,963/Yr. $1,780/Yr. -Adjustment -$ (2, 300)$ (2,300)$ 5,200 $ 5,200 $ 4,700 $ 4,700$ (1,900)$ (2,900)$ Net Adjustment (11,250)$ 116,200$ 120,340$ (129,800)$ (129,800)$ 13,100$ 23,700 $ 23,870 $ 74,620 $ Ind
icated Price per Lot (Loaded) $310,302 $314,175 $309,876 $340,20 0 $340,200 $316,100 $292,734 $310,103 $312,985

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Conclusion – Sales Comparison Approach

The nine transactions demonstrate an adjusted price per finished lot range from $292,734 to $340,200 per lot, including fees. The two transactions in Folsom (Sales 4 and 5) are secondary given the degree of adjustments to these sales. All of the sales are recent indicators of value based on their transaction date.

They demonstrate a mean (Average) price per finished lot at $316,297 with an overall median price per finished lot at $312,985. Elements considered in deriving the overall “benchmark” value include the following:

 Overall location setting in a master planned community with numerous amenities. Sales 1 and 8 utilized for this analysis offers similar traits as they represent the subject sales.

 Premier development site for the Laguna submarket. While schoo l districting is below average, the overall access, western side of I-5, and proximity to services generally compensate for this element.

 Larger lots are desired in the entire region.

B a s e d o n r e v i e w o f t h e s e e l e m e n t s , a s w e l l a s t h e o v e r a l l n a t u re of the adjustments applied to the comparable sales, the “benchmark” lot value is identified at $310,000 per lot.

The next step is to isolate the various villages for the subject. Refinements for each specific project is applied for the lot size and adjustments are similar to that in the prior section. In addition, the permits and fees for each village are deducted from the overall totals in order to derive an opinion of value as finished lots. These calculations are noted on the following table.

MINIMUM BENCHMARK ADJUSTMENT LESS PERMITS FINISHED LOT

PRODUCT TYPE LOT SIZE (SF) VALUE FOR LOT SIZE AND FEES VALUE ROUNDED MDR-1 - 110 Lots 3,230 SF $310,000 ($74,100) ($49,874) $186,026 $186,000 LDR-1 - 81 Lots 5,700 SF $310,000 $0 ($61,552) $248,448 $250,000 LDR-2 - 77 Lots 6,825 SF $310,000 $11,250 ($61,552) $259,698 $260,000

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INCOME APPROACH

The income approach involves discounting the retail value of the finished production units and discounts them at an appropriate rate over time. Elements considered in this model include all costs of development of these homes including construction costs, taxes over the holding period, sales, and marketing costs, overhead, as well as an allowance for entrepre neurship. These net revenues are discounted to a present value in order to develop an overall va lue for the finished lots. This value is presented in conjunction with the hypothetical condition that s ite improvements are completed to this project as of the effective date of valuation. Furthermore, this methodology is applied to the total number of lots in each project. It is used to develop an overall value identification for MDR-1 and LDR-1 based on the total project size at 110 and 81 lots, respectively. Once the value for the finished lots is identified and reconciled with the sales comparison approach it is adjusted to the physical condition as of the effective date of valuation with 107 lots and 79 lots, respectively. Both projects have completed model homes and values for these homes are noted following this section.

Valuation for the finished lots was identified utilizing two me thods including extraction based on static methodology and discounted cash flow analysis.

EXTRACTION METHOD

The extraction method is also processed for this analysis. The subject project includes various lot sizes, and the extraction method is applicable for each product type. Under this methodology, land value is developed by deducting the construction costs and all costs for the construction of homes from the proposed revenues in arriving at an estimated value of the finished lots.

REVENUE

Revenue is generated from the sa le of completed homes, lot prem iums and model home recapture (if any). Project revenues are based on the typical product that meets the highest and best use criteria for the subject project relative to the market area. Proposed revenues for each product line were developed in the Absorption Study prepared by John Burns Real Estate, dat ed July 23, 2024. The appraiser also surveyed this market area and concurs with the findings in this report. The following table summarizes the price points for the individual product types identified for review.

Given the number of units for each component, the results of th e extraction method are based on static conditions.

The Absorption Study provided for review in preparation of this assignment identified lot premiums from $2,000 to $15,748 per product type. These are reasonable concl usions in the current market climate.

The premiums for LDR-2 are justified given that 19 lots in this product type (Lots 38..56) are adjacent to the Bartley Cavanaugh golf course at the southern end of the pr oject. Lot premiums are reasonable for MDR-1 ($2,000 per lot) and LDR-1 ($3,000 per lot) as the total premium is less than 1% of the base price.

AVERAGE AVERAGE NET PRICE PER LOT TOTAL PRICE PER

TYPE LOT SIZE (SF) SIZE (SF) BASE PRICE INCENTIVES BASE PRICE SF (BASE) PREMIUMS UPGRADES PRICE SF (TOTAL) MDR-1 3,230 SF 2,044 $629,282 ($5,000) $624,282 $305.42 $2,000 $34,611 $660,893 $323.33 LDR-1 5,700 SF 2,241 $716,113 ($5,000) $711,113 $317.32 $3,000 $41,177 $755,290 $337.03 LDR-2 6,825 SF 2,719 $787,395 ($15,748) $771,647 $283.80 $15,748 $47,244 $834,639 $306.97

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Model Home Recapture

Based on the number of lots, it is projected that each product line would require model homes. This is based on three model homes allocated for each product line. Mo del upgrade expenses can vary widely depending upon the construction quality, targeted market, and anticipated length of time on the market.

These upgrades, exterior and interior, including furniture, can range from $25,000 per model to over $250,000 per model. For purposes of calculations, model upgrades are identified at $150,000 per model.

This estimate includes $80,000 per model for upgrades, $10,000 per model for sales office construction/conversion costs, and $60,000 for landscaping, inc luding rear yards. Furniture is not included.

This element is allocated at 3 Models for MDR-1, 2 Models for LDR-1, and 3 models for LDR-2.

When the model homes are sold, the developer will recapture a p ortion of the expenses associated with the installation of premium upgrades in the model units. Model upgrades are based on all costs associated with model development – landscaping, upgrades, furniture, fixtures, and sales office set-up. Although not considered real estate, furniture is a real cost of tract development. To omit furniture would overstate land value. The model upgrades are a fixed expense, and the number of models provided is based on the typical project size and market conditions. Builders typically recapture around 30% to 50% of model expenses. The difference between model costs and recapture upgrades reflects furniture costs (not real estate), upgrade depreciation and obsolescence, and sales office conversion costs. For this analysis, model home recapture is identified at 40% of model costs for each product line.

Expenses

The holding and selling costs typically associated with a devel opment where home construction is completed are summarized as follows.

Sales Commissions, Closing Costs and Warranty expenses are typically non-financeable and paid at the time of closing. Sales commissions include both internal commi ssions and broker co-op. These are projected at 3% of gross revenue. Closing, title, and escrow f ees are at 0.25% of gross revenue, whereas warranty expenses are 1.0% of gross revenue.

Direct Construction Costs p e r t a i n t h e l a b o r a n d m a t e r i a l t o b u i l d t h e p r o j e c t . D i r e c t construction generally costs range from $80 to $120 per square foot. Cost comparables from other projects in the region over the past two years are summarized as follows.

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These projects show direct construction costs from $80.24 to $1 06.40 per square foot. The overall costs for the subject are applied at $90 to $100 per square foot. Allocations of these costs are noted as follows.

Changes in Expenses (Expen se Increases or Decreases) is not warranted given the absorption period projection for each hypothetical village.

Building Permits and Fees are based on actual projections provided for review. These costs are summarized as follows.

Permits and fees for the subject are projected between $49,874 (MDR) and $61,552 (LDR) per unit.

DEVELOPER # OF AVG. AVG. AVG. DIRECT

TYPE DATE UNITS HOME SIZE (SF) LOT SIZE (SF) COSTS/SF
Regional 2024 50+ 1,706 6,100 $106.40
Regional 2024 75+ 1,998 1,750 $104.38
Regional 2024 75+ 1,791 1,612 $106.20
Regional 2024 80+ 1,910 2,640 $105.20
Regional 2024 50+ 2,428 4,725 $103.37
Regional 2024 50+ 1,389 4,875 $100.00
Regional 2024 40+ 2,035 3,500 $102.00
Regional 2024 80+ 1,499 4,500 $93.66
Regional 2024 100+ 1,529 2,412 $94.58
Regional 2024 100+ 1,791 2,400 $102.90
Regional 2024 50+ 2,242 3,000 $101.67
Regional 2023 60+ 1,691 4,500 $95.53
Regional 2023 80+ 2,271 5,500 $91.79
Regional 2023 60+ 1,815 5,000 $89.61
Regional 2023 50+ 1,738 4,000 $88.39
Regional 2023 100+ 1,551 4,250 $95.50
Regional 2023 200+ 2,834 6,000 $84.64
Regional 2023 70+ 2,818 4,590 $80.24
AVERAGES 1,946 $97.00

MIN AVERAGE DIRECT TOTAL
TYPE # OF LOTS LOT SIZE (SF) SIZE (SF) COSTS/SF COSTS
MDR-1 110 3,230 SF 2,044 $100 $204,400
LDR-1 81 5,700 SF 2,241 $95 $212,895
LDR-2 157 6,825 SF 2,719 $90 $244,710

CATEGORY LDR MDR HDR
Unit Size (SF) 2,500 1,800 1,000
Total Fees - Table 7-1 Finance Plan $63,892 $52,214 $34,634 Less: Credit for Housing Impact Fees ($2,340) ($2,340) ($1,378) NET FEES $61,552 $49,874 $33,256

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General and Administrative costs include all salaries for internal professionals (construction supervisors, support staff, etc.) and office overhead and supplies. This estimate is identified at 3% of gross proceeds.

Marketing Costs are projected at 1.25% of gross proceeds.

Other Indirect Costs are the costs and fees incurred in developing the project and during the construction cycle, which may include architectural and engineering, insuran ce/bonds, common costs, field overhead and project coordinator fees. These costs are projected at 5% of gross proceeds.

Real Estate Taxes are estimated based on the cu rrent tax rate at 1.1517% and appl ied to the estimated v a l u e v i a e x t r a c t i o n . B a s e d o n t h e o v e r a l l c a l c u l a t i o n s o n v a lue identified for each product area, the allocation of taxes is calculated as follows.

Direct Levies include the charges applied to the vacant lots during construction. These direct levies show annual payments from $671.00 to $805.00 per annum. Calculations are illustrated as follows.

PROJECT MDR-1 LDR-1 LDR-2
LOT SIZE 3,230 SF 5,700 SF 6,825 SF
AVERAGE HOME SIZE 2,044 SF 2,241 SF 2,719 SF
Land Value Conclusion $189,200 $233,700 $252,400
Annual Base Taxes (1.1517%) $2,179.02 $2,691.52 $2,906.89 Per Month $181.58 $224.29 $242.24
Absorption Period - Months 22.5 20.25 22
Total Expenditure/Lot $4,085.66 $4,541.94 $5,329.30
# of Units 110 81 77
Overall Totals $449,422 $367,898 $410,356
50% basis due to Absorption $224,711 $183,949 $205,178
Per Unit $2,043 $2,271 $2,665
PROJECT MDR-1 LDR-1 LDR-2
LOT SIZE 3,230 SF 5,700 SF 6,825 SF
AVERAGE HOME SIZE 2,044 SF 2,241 SF 2,719 SF
Direct Levies Per Annum $671.00 $805.00 $805.00
Per Month $55.92 $67.08 $67.08
Absorption Period - Months 22.5 20.25 22
Total Expenditure/Lot $1,258.13 $1,358.44 $1,475.83
# of Units 110 81 77
Overall Totals $138,394 $110,033 $113,639
50% basis due to Absorption $69,197 $55,017 $56,820
Per Unit $629 $679 $738

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Special Taxes

The subject project is proposed for a special district (IA-1) a s described in the Taxes and Special Asse ssm e n t s se c t ion of t h is re p ort . T he y are id e nt ifie d from $1,851.81 to $2,300.70 per annum. This analysis includes 50% of the HOA fees paid by the developer and considers absorption of the project. The overall calculations are illustrated as follows.

HOA Dues

HOA is projected to be $190 per month, per unit. A prudent development would annex homes into a HOA i n p h a s e s , a f t e r h o m e s a r e b u i l t ( t y p i c a l l y o n i s s u a n c e o f c e r tificate of occupancy). As a result, the developer typically pays limited HOA fees. Primary exceptions include when homes fall out of contract after certificates of occupancy have been issued, or market conditions stall and the developer is left paying fees for a large group of homes. This analysis includes 50% of the HOA fees paid by the developer and considers absorption for the project. Overall calculations are illustrated as follows.

DEVELOPER’S INCENTIVE

Developers surveyed in this market climate noted that projects are being looked at based on profit requirements. Urban projects typically require much higher profits, as capital outlays for construction are nearly double that of suburban projects. The expectations noted below reflect bottom line profit for the project.

PROJECT MDR-1 LDR-1 LDR-2
LOT SIZE 3,230 SF 5,700 SF 6,825 SF
AVERAGE HOME SIZE 2,044 SF 2,241 SF 2,719 SF
Special District Per Annum $1,851.81 $2,300.70 $2,300.70 Per Month $154.32 $191.73 $191.73
Absorption Period - Months 22.5 20.25 22
Total Expenditure/Lot $3,472.14 $3,882.43 $4,217.95
# of Units 110 81 77
Overall Totals $381,936 $314,477 $324,782
50% basis due to Absorption $190,968 $157,238 $162,391
Per Unit $1,736 $1,941 $2,109PROJECT MDR-1 LDR-1 LDR-2
LOT SIZE 3,230 SF 5,700 SF 6,825 SF
AVERAGE HOME SIZE 2,044 SF 2,241 SF 2,719 SF
HOA Per Annum $2,280.00 $2,280.00 $2,280.00
Per Month $190.00 $190.00 $190.00
Absorption Period - Months 22.5 20.25 22
Total Expenditure/Lot $4,275.00 $3,847.50 $4,180.00
# of Units 110 81 77
Overall Totals $470,250 $311,648 $321,860
50% basis due to Absorption $235,125 $155,824 $160,930
Per Unit $2,138 $1,924 $2,090

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PRO-FORMA
Based on Market Acquisition AREA EXPECTATION
Regional Homebuilder
1,000+ Lots (2024 Pro-Forma)
Paper Lots
Sacramento MSA 19.0% total IRR based on finished lots
Regional Homebuilder
50+ Lots (2024 Pro-Forma)
Paper Lots
Sacramento MSA 13.1% profit from production homes priced From the low $400s to mid $500s
Regional Homebuilder
50+ Lots (2024 Pro-Forma)
Finished
East Bay Area 12.75% profit fr om production homes priced Above $1.0 million. BMR requirement with

15.0% of units.

Regional Homebuilder
100+Lots (2024 Pro-Forma)
Finished
East Bay Area 20.2% profit from production homes priced above $800,000. Developer acquired project
in early 2021. BMR requirement with

8.0% of units.

Regional Homebuilder
100+ Lots (2023 Pro-Forma)
Finished
Central Valley 15.6% profit from production homes priced above $650,000. Developer acquired project
in early 2020.

Regional Homebuilder
100+ Lots (2023 Pro-Forma)
Finished
Central Valley 12.97% profit fr om production homes priced above $600,000.

Regional Homebuilder
100+ Lots (2023 Pro-Forma)
Finished
Central Valley 13.5% profit from production homes priced Above $1,000,000.

Regional Homebuilder
50+ Lots (2023 Pro-Forma)
Finished
Central Valley 17.7% profit from production homes priced Above $600,000.

The net profit noted implies net profit, net of debt financing only. Some builders do not use or report equity financing. In addition to product segment and expected s ales rate, numerous other factors affect profit expectations, such as entitlements, location, lot condit ion, prior project history, as well as broader market conditions such as recessionary risks.

Developers incentive is applied at 10% of gross retail sales proceeds.

Cost of Funds

Cost of funds is the overall cost, or blended cost of debt and equity, i.e., the time value of money. Debt financing is typically less costly and is offered by convention al lenders, while equity financing carries higher risk and higher costs. Equity financing is typically pa id on a waterfall basis. Preferred returns typically range from 8% to 20% and come with minimum IRR expect ations. Private equity requirements vary based on project size and type. Smaller projects may rely on private equity financing based on a preferred return only (reflecting a minor premium on rates expected from “safe” commercial investments such as low-risk self-storage facilities), while larger projects—such as master planned communities—may r e q u i r e a p r e f e r r e d r e t u r n , a s w e l l a s m u l t i p l e s o f 2 X o r 3 X , in addition to project performance requirements such as sales rate (3+/month) and unleveraged IRR requirements (25+%).

Assuming typical loan costs, a discount rate (cost of funds) of 6.50% for the subject. The annual rate is applied to the calculated net income after profit figure for ea ch product type and applied to the overall holding period. These calculations are identified as follows.

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Interaction of Developer’s Incentive/Cost of Funds

The interaction of Developer’s Incentive and the Cost of Funds considers the overall profitability for each specific project. The total of these components measured agai nst gross retail sales proceeds for each project shows this overall relationship. Based on the calculat ions identified in this section, subject gross sale proceeds are noted as follows.

The overall profit expectation for each village ranges from 14.0% to 14.3% of gross sales proceeds. This is supportive of the project feasibility and is attractive to home builders. In addition, these parameters were tested in Discount Cash Flow models based on the overall conclusions noted in the prior sections.

The only variance is that revenues and costs were inflated over time at 2% per annum (0.5% per quarter), starting in period 5. These net revenues were factored at IRR’ s from 20% to 23%. Conclusions are noted below.

PRODUCT CONCLUSION/LOT IRR
MDR-1 $191,909 21.0%
LDR-1 $242,963 22.0%
LDR-2 $258,312 22.0%

This rate was generally reasonable as a “Stress-Test” was ident ified for each village utilizing an IRR range from 20% to 23%. This rate includes profit for the developer.

A c c o r d i n g t o t h e P w C R e a l E s t a t e I n v e s t o r S u r v e y ( 2 nd quarter 2024), free-and-clear discount rates
including developer’s profit ran from 14.00% to 30.00% and aver age 19.13% this quarter. This is slightly below the past two reporting periods (2Q 23 and 4Q 23) averaging 19.13%. Historic figures dating back to 2012 are noted on the following table.

PROJECT MDR-1 LDR-1 LDR-2
LOT SIZE 3,230 SF 5,700 SF 6,825 SF
AVERAGE HOME SIZE 2,044 SF 2,241 SF 2,719 SF
Net Income/Lot After Profit $215,447 $262,464 $286,504
Absorption Period - Months 22.5 20.25 22
Rate (6.5% applied Monthly) 0.54% 0.54% 0.54%
Overall Totals $26,258 $28,789 $34,142
PROJECT MDR-1 LDR-1 LDR-2
LOT SIZE 3,230 SF 5,700 SF 6,825 SF
AVERAGE HOME SIZE 2,044 SF 2,241 SF 2,719 SF
Developer's Incentive $62,792 $71,559 $78,854
Cost of Funds $26,258 $28,789 $34,142
TOTAL $89,049 $100,348 $112,996
Gross Sales Proceeds $627,918 $715,594 $788,541
% of GSP 14.2% 14.0% 14.3%

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For additional support, current rates were identified from Real tyRates for development models. These factors reflect applicable rates for California/Pacific Islands for First Quarter 2024 and are noted on the following table.

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The information from RealtyRates is applicable for Ground-up co nstruction through completed improvements. For site built residential, the IRR ranges fro m 17.91% to 39.06% based on average rates noted throughout. These rates are likely overstated as the subject revenues are based on finished lots.

As such, the IRR range from 20% to 23% is reasonable for comparison.

All other elements pertinent to the individual models remains t he same. However, property taxes are based on the value conclusion and the individual line items for property taxes change when changing the IRR conclusion. These individual models are retained in the appraiser’s work file.

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MDR-1: The concluded value based on a 21% IRR is identified at $192, 000 per lot. These conclusions based on the range in IRR’s note the following matrix.

LDR-1: The concluded value based on a 22% IRR is identified at $242, 963 per lot. These conclusions based on the range in IRR’s note the following matrix.

LDR-2: The concluded value based on a 22% IRR is identified at $258, 312 per lot. These conclusions based on the range in IRR’s note the following matrix.

The overall variance identified between 20% and 23% ranges from 4. 2% t o 5. 0%. G ive n th e I RR was concluded in the middle of this range, a 21% IRR is applied for the MDR components, whereas the IRR is 22% for the LDR components. Copies of the individual models us ed in this “Stress-Test” are included in the addenda of this report.

Copies of the extraction method, as well as the cash flow model s (based on 22% IRR) are identified as follows.

IRR 20% 21% 22% 23%
OVERALL VALUE $21,480,000 $21,110,000 $20,760,000 $20,400,000 PER LOT $195,273 $191,909 $188,727 $185,455
TOTAL VARIANCE (20% to 23%) 5.0%
IRR 20% 21% 22% 23%
OVERALL VALUE $20,250,000 $19,960,000 $19,680,000 $19,400,000 PER LOT $250,000 $246,420 $242,963 $239,506
TOTAL VARIANCE (20% to 23%) 4.2%
IRR 20% 21% 22% 23%
OVERALL VALUE $20,510,000 $20,190,000 $19,890,000 $19,580,000 PER LOT $266,364 $262,208 $258,312 $254,286
TOTAL VARIANCE (20% to 23%) 4.5%

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Calculations of the overall lot value based on each product type based on cash flow models are identified on the following tables.

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Quarterly - MDR-1 PERIOD PERIOD PERIOD PERIOD PERIOD PERIOD PERIOD PERI OD PERIOD PERIOD PERIOD ITEM 1 2 3456789 1 0 1 1 T OTALS

SINGLE-FAMILY RESIDENTIAL
Tota l Number Developed 110 110 98 86 74 62 50 38 26 14 2 Tota l Number Cons tructed 15 12 12 12 12 12 12 12 11 0 0 110 Number of Uni ts s ol d 0 12 12 12 12 12 12 12 12 12 2 110 Number of Uni ts Uns ol d 110 98 86 74 62 50 38 26 14 2 0 Average Sel li ng Pri ce (Wi th Lot Premi ums ) $626,282 $626,282 $626, 282 $626,282 $626,282 $626,282 $626,282 $626,282 $626,282 $626,282 $626 ,282 Tota l Revenues - Bas e Pla ns $0 $7,515,384 $7,515,384 $7,515,384 $7, 515,384 $7,515,384 $7,515,384 $7,515,384 $7,515,384 $7,515,384 $1,252,564 $68,891,020 Model Home Recapture $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $180,000 $180,000 TOTAL PROJECT REVENUES $0 $7,515,384 $7,515,384 $7,515,384 $7,515,384 $7,515,384 $7,515,384 $7,515,384 $7,515,384 $7,515,384 $1,432,564 $69,071,020 Market Apprecia ti on (Quarterl y, Starts Period 5) 0.50% $0 $0 $0 $0 $3 7,577 $75,342 $113,295 $151,439 $189,773 $228,299 $50,898 $846,622 TOTAL REVENUE $0 $7,515,384 $7,515,384 $7,515,384 $7,552,961 $7,590,7 26 $7,628,679 $7,666,823 $7,705,157 $7,743,683 $1,483,462 $69,917,642

FIXED EXPENSES
Construction Cos ts 204,400$ $3,066,000 $2,452,800 $2,452,800 $2,452,800 $2,452,800 $2,452,800 $2,452,800 $2,452,800 $2,248,400 $0 $0 $22,484,000 Model Upgrades $450,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $450,000 Permits & Fees 49,874$ $748,110 $598,488 $598,488 $598,488 $598,488 $598,488 $598,488 $598,488 $548,614 $0 $0 $5,486,140 Tota l Cons tructi on Costs $4,264,110 $3,051,288 $3,051,288 $3,051,28 8 $3,051,288 $3,051,288 $3,051,288 $3,051,288 $2,797,014 $0 $0 $28,420, 140 Infl ati on (Home Cons tructi on) 0.50% $0 $0 $0 $0 $15,256 $30,589 $45,999 $61,485 $70,628 $0 $0 $223,957 TOTAL CONSTRUCTION COSTS $4,264,110 $3,051,288 $3,051,288 $3,051,288 $3,066,544 $3,081,877 $3,097,287 $3,112,773 $2,867,642 $0 $0 $28,644, 097

VARIABLE EXPENSES
Property Taxes (1.1517%) $552.55 $60,781 $54,150 $47,519 $40,889 $34, 943 $28,180 $21,417 $14,654 $8,048 $1,150 $0 $311,730 Di rect Levi es (Per Quarter) $157.25 $17,298 $15,411 $13,524 $11,637 $9,944 $8,020 $6,095 $4,170 $2,290 $327 $0 $88,715 Speci al Taxes (Per Quarter) $434.00 $47,740 $42,532 $37,324 $32,116 $27,446 $22,134 $16,822 $11,510 $6,321 $903 $0 $244,848 HOA (Per Quarter) $570.00 $62,700 $62,700 $55,860 $49,020 $42,180 $35,340 $28,500 $21,660 $14,820 $7,980 $1,140 $381,900 Other Indi rect Costs 5.00% $317,807 $317,807 $317,807 $317,807 $317,8 07 $317,807 $317,807 $317,807 $317,807 $317,807 $317,807 $3,495,882 Marketi ng 1.25% $0 $93,942 $93,942 $93,942 $94,412 $94,884 $95,358 $95,835 $96,314 $96,796 $18,543 $873,971 Cl os i ng Cos ts , Warranty 1.25% $0 $93,942 $93,942 $93,942 $94,412 $94,884 $95,358 $95,835 $96,314 $96,796 $18,543 $873,971 Commi ss i ons 3.0% $0 $225,462 $225,462 $225,462 $226,589 $227,722 $228,860 $230,005 $231,155 $232,310 $44,504 $2,097,529 Admin. a nd Overhead 3.0% $190,684 $190,684 $190,684 $190,684 $190,684 $190,684 $190,684 $190,684 $190,684 $190,684 $190,684 $2,097,529 TOTAL VARIABLE EXPENSES $697,010 $1,096,630 $1,076,065 $1,055,499 $1,038,419 $1,019,656 $1,000,903 $982,161 $963,756 $944,755 $591,222 $10,466,075 TOTAL FIXED AND VARIABLE EXPENSES $4,961,120 $4,147,918 $4,127,353 $4,106,787 $4,104,963 $4,101,533 $4,098,190 $4,094,934 $3,831,398 $94 4,755 $591,222 $39,110,172 NET SALES REVENUE (BEFORE PROFIT) ($4,961,120) $3,367,466 $3,388,031 $3,408,597 $3,447,998 $3,489,193 $3,530,490 $3,571,889 $3,873,759 $6,798,928 $892,240 $30,807,470 Di s count Ra te 21% 0.95012 0.90273 0.85770 0.81491 0.77426 0.73564 0.69895 0.66408 0.63096 0.59949 0.56958 Net Cash Flow ($4,713,653) $3,039,898 $2,905,903 $2,777,712 $2,669,663 $2,566,802 $2,467,631 $2,372,035 $2,444,183 $4,075,861 $508,204 NET PRESENT VALUE $21,114,239
ROUNDED $21,110,000
PER LOT $191,909

IRR CALCULATIONS VALUE PERIOD 1 PERIOD 2 PERIOD 3 PERIOD 4 PERIOD 5 PE RIOD 6 PERIOD 7 PERIOD 8 PERIOD 9 PERIOD 10 PERIOD 11 NET INCOME (BEFORE PROFIT) ($21,114,239) ($4,961,120) $3,367,466 $3,388,031 $3,408,597 $3,447,998 $3,489,193 $3,530,490 $3,571,889 $3,873,759 $6,798,928 $892,240 IRR (quarterly) 5.25%
Annualized 21.0%

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Quarterly - LDR-1 PERIOD PERIOD PERIOD PERIOD PERIOD PERIOD PERIOD PERI OD ITEM 1 2345678 T O T A L S

SINGLE-FAMILY RESIDENTIAL
Total Number Dev eloped 81 81 69 57 45 33 21 9
Tota l Number Cons tructed 15 12 12 12 12 12 6 0 81
Number of Uni ts s ol d 0 12 12 12 12 12 12 9 81
Number of Units Unsold 81 69 57 45 33 21 9 0
Avera ge Sel l i ng Pri ce (Incl udi ng Lot Prel i ums ) $714,113 $714,113 $714,113 $714,113 $714,113 $714,113 $714,113 $714,113 Tota l Revenues - Ba s e Pl a ns $0 $8,569,356 $8,569,356 $8,569,356 $8, 569,356 $8,569,356 $8,569,356 $6,427,017 $57,843,153 Model Home Reca pture $0 $0 $0 $0 $0 $0 $0 $120,000 $120,000 TOTAL PROJECT REVENUES $0 $8,569,356 $8,569,356 $8,569,356 $8,569,356 $8,569,356 $8,569,356 $6,547,017 $57,963,153 Market Appreciation (Quarterly, Starts in Period 5) 0.50% $0 $0 $0 $ 0 $42,847 $85,908 $129,184 $131,926 $389,864 TOTAL REVENUE $0 $8,569,356 $8,569,356 $8,569,356 $8,612,203 $8,655,264 $8,698,540 $6,678,943 $58,353,017

FIXED EXPENSES
Construction Costs 212,895$ $3,193,425 $2,554,740 $2,554,740 $2,554,740 $2,554,740 $2,554 ,740 $1,277,370 $0 $17,244,495 Model Upgra des $300,000 $0 $0 $0 $0 $0 $0 $0 $300,000 Permits & Fees 61,552$ $923,280 $738,624 $738,624 $738,624 $738,624 $738,624 $369,3 12 $0 $4,985,712 Tota l Cons tructi on Cos ts $4,416,705 $3,293,364 $3,293,364 $3,293,36 4 $3,293,364 $3,293,364 $1,646,682 $0 $22,530,207 Infl a ti on (Home Cons tructi on) 0.50% $0 $0 $0 $0 $16,467 $33,016 $24,824 $0 $74,307 TOTAL CONSTRUCTION COSTS $4,416,705 $3,293,364 $3,293,364 $3,293,364 $3,309,831 $3,326,380 $1,671,506 $0 $22,604,514

VARIABLE EXPENSES
Property Ta xes (1.1517%) $699.55 $56,664 $48,269 $39,874 $31,480 $23,547 $14,984 $6,422 $0 $221,240 Di rect Levi es (Per Qua rter) $201.25 $16,301 $13,886 $11,471 $9,056 $6,774 $4,311 $1,847 $0 $63,647 Speci a l Ta xes (Per Qua rter) $575.18 $46,590 $39,687 $32,785 $25,883 $ 19,361 $12,320 $5,280 $0 $181,906 HOA (Per Qua rter) $570.00 $46,170 $39,330 $32,490 $25,650 $18,810 $11, 970 $5,130 $0 $179,550 Other Indi rect Cos ts 5.00% $364,706 $364,706 $364,706 $364,706 $364,706 $364,706 $364,706 $364,706 $2,917,651 Ma rketi ng 1.25% $0 $107,117 $107,117 $107,117 $107,653 $108,191 $108,73 2 $83,487 $729,413 Cl os i ng Cos ts , Wa rra nty 1.25% $0 $107,117 $107,117 $107,117 $107,653 $108,191 $108,732 $83,487 $729,413 Commi s s i ons 3.0% $0 $257,081 $257,081 $257,081 $258,366 $259,658 $260,9 56 $200,368 $1,750,591 Admi n. a nd Overhea d 3.0% $218,824 $218,824 $218,824 $218,824 $218,824 $218,824 $218,824 $218,824 $1,750,591 TOTAL VARIABLE EXPENSES $749,255 $1,196,017 $1,171,466 $1,146,914 $1,125,693 $1,103,155 $1,080,629 $950,872 $8,524,001 TOTAL FIXED AND VARIABLE EXPENSES $5,165,960 $4,489,381 $4,464,830 $4,440,278 $4,435,524 $4,429,535 $2,752,135 $950,872 $31,128,515 NET SALES REVENUE (BEFORE PROFIT) ($5,165,960) $4,079,975 $4,104,526 $4,129,078 $4,176,679 $4,225,729 $5,946,405 $5,728,071 $27,224,503

Di s count Ra te 22% 0.94787 0.89845 0.85161 0.80722 0.76513 0.72525 0.68744 0.65160 Net Cash Flow ($4,896,644) $3,665,663 $3,495,471 $3,333,061 $3,195,721 $3,064,692 $4,087,778 $3, 732,404 NET PRESENT VALUE $19,678,145
ROUNDED $19,680,000
PER LOT $242,963

IRR CALCULATIONS VALUE PERIOD 1 PERIOD 2 PERIOD 3 PERIOD 4 PERIOD 5 PE RIOD 6 PERIOD 7 PERIOD 8 NET INCOME (BEFORE PROFIT) ($19,678,145) ($5,165,960) $4,079,975 $4,104,526 $4,129,078 $4,176,679 $4,225,729 $5,946,405 $5, 728,071 IRR (quarterly) 5.50%
Annualized 22.0%

Smith & Associates, Inc.

Quarterly - LDR-2 PERIOD PERIOD PERIOD PERIOD PERIOD PERIOD PERIOD PERI OD PERIOD ITEM 1 23456 7 8 9 T OTALS

SINGLE-FAMILY RESIDENTIAL
Total Number Dev eloped 77 77 67 56 46 35 25 14 4
Tota l Number Cons tructed 14 11 10 11 10 11 10 0 0 77 Number of Uni ts s ol d 0 10 11 10 11 10 11 10 4 77
Number of Units Unsold 77 67 56 46 35 25 14 4 0
Avera ge Sel l i ng Pri ce $787,395 $787,395 $787,395 $787,395 $787,395 $ 787,395 $787,395 $787,395 $787,395 Tota l Revenues - Ba s e Pl a ns $0 $7,873,950 $8,661,345 $7,873,950 $8, 661,345 $7,873,950 $8,661,345 $7,873,950 $3,149,580 $60,629,415 Model Home Reca pture $0 $0 $0 $0 $0 $0 $0 $0 $180,000 $180,000 TOTAL PROJECT REVENUES $0 $7,873,950 $8,661,345 $7,873,950 $8,661,345 $7,873,950 $8,661,345 $7,873,950 $3,329,580 $60,809,415 Market Appreciation (Quarterly, Starts in Period 5) 0.50% $0 $0 $0 $ 0 $43,307 $78,936 $130,571 $158,664 $84,076 $495,554 TOTAL REVENUE $0 $7,873,950 $8,661, 345 $7,873,950 $8,704,652 $7,952,886 $8,791,916 $8,032,614 $3,413,656 $61,304,969

FIXED EXPENSES
Construction Costs 244,710$ $3,425,940 $2,691,810 $2,447,100 $2,691,810 $2,447,100 $2,691 ,810 $2,447,100 $0 $0 $18,842,670 Model Upgra des $450,000 $0 $0 $0 $0 $0 $0 $0 $0 $450,000 Permits & Fees 61,552$ $861,728 $677,072 $615,520 $677,072 $615,520 $677,072 $615,5 20 $0 $0 $4,739,504 Tota l Cons tructi on Cos ts $4,737,668 $3,368,882 $3,062,620 $3,368,88 2 $3,062,620 $3,368,882 $3,062,620 $0 $0 $24,032,174 Infl a ti on (Home Cons tructi on) 0.50% $0 $0 $0 $0 $15,313 $33,773 $46,169 $0 $0 $95,256 TOTAL CONSTRUCTION COSTS $4,737,668 $3,368,882 $3,062,620 $3,368,88 2 $3,077,933 $3,402,655 $3,108,789 $0 $0 $24,127,430

VARIABLE EXPENSES
Property Ta xes (1.1517%) $743.74 $57,268 $49,831 $41,649 $34,212 $26, 552 $18,965 $10,621 $3,034 $0 $242,132 Di rect Levi es (Per Qua rter) $201.25 $15,496 $13,484 $11,270 $9,258 $7 ,185 $5,132 $2,874 $821 $0 $65,519 Speci a l Ta xes (Per Qua rter) $575.18 $44,289 $38,537 $32,210 $26,458 $ 20,534 $14,667 $8,214 $2,347 $0 $187,256 HOA (Per Qua rter) $570.00 $43,890 $38,190 $31,920 $26,220 $19,950 $14, 250 $7,980 $2,280 $0 $184,680 Other Indi rect Cos ts 5.00% $340,583 $340,583 $340,583 $340,583 $340,5 83 $340,583 $340,583 $340,583 $340,583 $3,065,248 Ma rketi ng 1.25% $0 $98,424 $108,267 $98,424 $108,808 $99,411 $109,899 $1 00,408 $42,671 $766,312 Cl os i ng Cos ts , Wa rra nty 1.25% $0 $98,424 $108,267 $98,424 $108,808 $99 ,411 $109,899 $100,408 $42,671 $766,312 Commi s s i ons 3.0% $0 $236,219 $259,840 $236,219 $261,140 $238,587 $263,757 $240,978 $102,410 $1,839,149 Admi n. a nd Overhea d 3.0% $204,350 $204,350 $204,350 $204,350 $204,350 $204,350 $204,350 $204,350 $204,350 $1,839,149 TOTAL VARIABLE EXPENSES $705,876 $1,118,042 $1,138,357 $1,074,148 $1,097,909 $1,035,356 $1,058,176 $995,209 $732,684 $8,955,757 TOTAL FIXED AND VARIABLE EXPENSES $5,443,544 $4,486,924 $4,200,977 $4,443,030 $4,175,842 $4,438,011 $4,166,966 $995,209 $732,684 $33,083 ,187 NET SALES REVENUE (BEFORE PROFIT) ($5,443,544) $3,387,026 $4,460,368 $3,430,920 $4,528,810 $3,514,875 $4,624,950 $7,037,405 $2,680,972 $ 28,221,782

Di s count Ra te 22% 0.94787 0.89845 0.85161 0.80722 0.76513 0.72525 0.68744 0.65160 0.61763 Net Cash Flow ($5,159,757) $3,043,082 $3,798,511 $2,769,496 $3,465,148 $2,549,149 $3,179,361 $4, 585,565 $1,655,847 NET PRESENT VALUE $19,886,400
ROUNDED $19,890,000
PER LOT $258,312

IRR CALCULATIONS VALUE PERIOD 1 PERIOD 2 PERIOD 3 PERIOD 4 PERIOD 5 PE RIOD 6 PERIOD 7 PERIOD 8 PERIOD 9 NET INCOME (BEFORE PROFIT) ($19,886,400) ($5,443,544) $3,387,026 $4,460,368 $3,430,920 $4,528,810 $3,514,875 $4,624,950 $7,037,405 $2,680,972 IRR (quarterly) 5.50%
Annualized 22.0%

Smith & Associates, Inc.

RECONCILIATION – INCOME APPROACH

FINISHED LOT VALUES

The extraction approach and discounted cash flow analysis were utilized to develop an opinion of value as finished lots through the income approach. The following table shows this overall relationship.

RECONCILIATION

FINISHED LOT VALUES

The sales comparison approach and the Income Approach were util ized to develop opinions of value for the finished lots. The following table summarizes these overall conclusions.

MINIMUM DISCOUNTED CONCLUSION

PRODUCT TYPE LOT SIZE (SF) EXTRACTION CASH FLOW PER LOT MDR-1 - 110 Lots 3,230 SF $189,200 $191,909 $190,000
LDR-1 - 81 Lots 5,700 SF $233,700 $242,963 $235,000
LDR-2 - 77 Lots 6,825 SF $252,400 $258,312 $258,000

MINIMUM SALES COMPARISON INCOME CONCLUSION

PRODUCT TYPE LOT SIZE (SF) APPROACH APPROACH PER LOT
MDR-1 - 110 Lots 3,230 SF $186,000 $190,000 $188,000
LDR-1 - 81 Lots 5,700 SF $250,000 $235,000 $240,000
LDR-2 - 77 Lots 6,825 SF $260,000 $258,000 $260,000

Smith & Associates, Inc.

VALUATION OF EACH OWNERSHIP INTEREST

T h e n e x t s e c t i o n o f t h i s r e p o r t i d e n t i f i e s t h e o v e r a l l v a l u e s for each ownership. This includes the underlying land value, contributing value for the model homes, as well as permits and fees paid in the project.

KB Home

As of the effective date of valuation, KB Home owns all of the properties in MDR-1 and LDR-1. These projects are marketing homes as of the effective date of valuation and include two, individual and distinct p r o j e c t s . T h e h i g h e s t a n d b e s t u s e c o n c l u s i o n i s i d e n t i f i e d a s sale of the projects to individual home builders. As such, the values are based on this conclusion whi ch reflects individual values allocated for MDR-1 and LDR-1. No further discounting is required for the project in its entirety.

MDR-1

MDR-1 is comprised of 107 nearly completed finished lots, as well as 3 model homes. The first step in the reporting of value for MDR-1 is the land value. Values in the prior section noted the hypothetical value as finished lots at $188,000 per finished lot. Applied to the 107 finished lots, yields the following conclusion.

107 Finished Lots @ $188,000/Finished Lot $20,116,000

There are refinements to this value for remaining site developm ent costs, as well as for the permits and fees paid as of the effective date of valuation. As noted in t he Site Description of this report, there are remaining offsite costs for the entire project. The total costs allocated to LDR-1 is noted at $460,693. In addition, permits and fees totaling $1,017,069 were paid as of the effective date of valuation. As such, the overall value for 107 lots (MDR-1) is as follows.

ITEM TOTALS
Hypothetical Value – 107 Finished Lots $20,116,000
Less: Remaining Offsites allocated to MDR-1 ($460,693)
Plus: Permits and Fees Paid as of Effective Date of Valuation $1 ,017,069 VALUE

ROUNDED
$20,672,376
$20,670,000

The next step is to provide the overall value for the 3 model homes. The contributing value for the model homes is based on the underlying finished lot value, as well as the allocated valuation identified for the permit. This recognizes the value a purchaser of the property w o u l d i n c u r f o r t h e m o d e l h o m e s .

Calculations of the values identified for the model home lots are noted as follows.

ITEM LOT 323
1,795 SF
LOT 324
2,102 SF
LOT 325
2,236 SF
Land Value (Per Lot) $188,000 $188,000 $188,000
Valuation (Per Building Permit) $267,712 $316,113 $329,842 VALUE

ROUNDED
$455,712
$455,000
$504,113
$505,000
$517,842
$520,000

Smith & Associates, Inc.

CONCLUSIONS – MDR-1

The table below summarizes the overall values identified for MDR-1.

VALUE AGGREGATE MARKET VALUE
Hypothetical Market Value (KB HOME)
-MDR-1 – 107 Residential Lots
-Lot 323 – 1,795 SF Home**
-Lot 324 – 2,102 SF Home**
-Lot 325 – 2,236 SF Home**
$20,670,000
$455,000
$505,000
$520,000
AGGREGATE VALUE (MDR-1) $22,150,000
LDR-1

LDR-1 is comprised of 79 nearly completed finished lots, as wel l as 2 model homes. The first step in the reporting of value for MDR-1 is the land value. Values in the prior section noted the hypothetical value as finished lots at $240,000 per finished lot. Applied to the 79 finished lots, yields the following conclusion.

79 Finished Lots @ $240,000/Finished Lot $18,960,000

There are refinements to this value for remaining site developm ent costs, as well as for the permits and fees paid as of the effective date of valuation. As noted in t he Site Description of this report, there are remaining offsite costs for the entire project. The total cost s allocated to LDR-1 is noted at $339,238. In addition, permits and fees totaling $908,461 were paid as of the effective date of valuation. As such, the overall value for 79 lots (LDR-1) is as follows.

ITEM TOTALS
Hypothetical Value – 79 Finished Lots $18,960,000
Less: Remaining Offsites allocated to LDR-1 ($339,238)
Plus: Permits and Fees Paid as of Effective Date of Valuation $9 08,461 VALUE

ROUNDED
$19,529,223
$19,530,000

The next step is to provide the overall value for the 2 model homes. The contributing value for the model homes is based on the underlying finished lot value, as well as the allocated valuation identified for the permit. This recognizes the value a purchaser of the property w ould incur for the model homes.

Calculations of the values identified for the model home lots are noted as follows.

ITEM LOT 226
2,693 SF
LOT 227
1,652 SF
Land Value (Per Lot) $240,000 $240,000
Valuation (Per Building Permit) $381,428 $246,000
VALUE

ROUNDED
$621,428
$620,000
$486,000
$486,000

Smith & Associates, Inc.

CONCLUSIONS – LDR-1

The table below summarizes the overall values identified for MDR-1.

VALUE AGGREGATE MARKET VALUE
Hypothetical Market Value (KB HOME)
-LDR-1 – 79 Residential Lots
-Lot 226 – 2,693 SF Home**
-Lot 227 – 1,685 SF Home**
$19,530,000
$620,000
$486,000
AGGREGATE VALUE (LDR-1) $20,636,000

RECONCILIATION WITH RECENT CONTRACT PRICING

The combined value for the KB Home ownership (MDR-1 and LDR-1) is identified at $42,786,000. These values were identified for each village consistent with the highest and best use.

As noted in this report, KB Home acquired MDR-1 and LDR-1 in Ap ril 2022 for a total price identified at $12,484,436. This equates to $65,367 per lot. It is noted that the total purchase price identified for this property in January 2022 at $33,000,000 for the entire project (348 anticipated lots) never came to fruition as the first amendment modified this agreement to including only MDR-1 (110 Anticipated Lots) and LDR- 1 (81 Anticipated Lots).

Total site development costs for the project are identified at $44,155,817 or $126,884 per lot. Adding this element to the land purchase price at $65,367, results in a total finished lot basis at $192,252 per lot.

This equates to a total price of $36,720,000. The value noted above is higher than this conclusion since it reflects only the land component. Using the conclusions only for the land component (excluding allocated values for the model homes), the overall value is $39,085,000 based on 186 lots (191 total lots – 5 model home lots) or $210,134 per lot. These conclusions show that t he current value is 9.3% higher than the acquisition price in April 2022. This provides additional support to the conclusions of value.

Meritage Homes (77 Lots) & M&H Realty (80 Lots)
LDR-2

This component of the project is comprised of two ownerships. There are no vertical improvements noted for this portion of the project. The first step in the reporti ng of value for LDR-2 is the land value. Values in the prior section noted the hypothetical value as finished lots at $260,000 per finished lot.

There are refinements to this value for remaining site developm ent costs, as well as for the permits and fees paid as of the effective date of valuation. As noted in t he Site Description of this report, there are remaining offsite costs for the entire project, as well as some trailing intract costs. The total costs allocated to LDR-2 by ownership are summarized as follows.

OWNERSHIP LDR-2

MERITAGE
77 LOTS
LDR-2

M&H REALTY
80 LOTS
Offsite Costs ($4,188.12/Lot) $322,485.24 $335,049.60
Intract Costs $0 $849,569.42

TOTAL REMAINING COSTS

ROUNDED
$322,485.24
$322,485
$1,184,619.02
$1,184,619

Smith & Associates, Inc.

As such, the overall value for LDR-2 is allocated as follows.

ITEM MERITAGE HOMES
77 LOTS

M&H REALTY
80 LOTS
Hypothetical Value – ($260,000/Finished Lot) $20,020,000 $20,800,000 Less: Remaining Offsites allocated to LDR-2 ($322,485) ($335,050) Less Intract Costs $0 ($849,569)
VALUE

ROUNDED
$19,697,515
$19,700,000
$19,615,381
$19,615,000

CONCLUSIONS – LDR-2

The table below summarizes the overall values identified for LDR-2.

VALUE AGGREGATE MARKET VALUE
Hypothetical Market Value (MERITAGE HOMES)
-Portion of LDR-2 – 77 Lots
$19,700,000
Hypothetical Market Value (M&H REALTY)
-Portion of LDR-2 – 80 Lots
$19,615,000
AGGREGATE VALUE (LDR-2) $39,315,000

RECONCILIATION WITH RECENT CONTRACT PRICING

The concluded finished lot value identified for LDR-2 is consis tent with the recent price paid by Meritage Homes in July 2024. The conclusions are slightly lower than thi s price, due to remaining offsite improvements and intract improvements for this property. It is noted that all of the funds for the offsite improvements are held in an escr ow account which was part of th e transaction price. Still, these improvements were not completed as of the effective date of val uation and were deducted from the overall conclusions.

Opinion of Probable Exposure Time

A most likely purchaser of the property would be a production home builder. This is applicable for all of the components for the 348 lots in this project as all of the product types are different. Based on the location of the subject property, in conjunction with the curre nt market conditions, an exposure period of 6-9 months is identified to facilitate a sale based on the o pinions of value expressed in this section of the report.

Smith & Associates, Inc.

ANALYSIS OF HDR/MDR SITE

As noted, this project also includes two parcels north of Cosum nes River Boulevard including a 3.378 AC HDR Site as well as a 5,473 AC MDR Site. This highest and best use conclusion is for combination of these two parcels into an 8.851 net AC site for the development of 95-167 units on the property. Offsite improvements are completed to these sites and the development of a single project is legally permissible.

This site is identified for development at a density from 10.7- 18.9 units per acre. For purposes of this analysis, an average density of 14.8 units per acre is identified. This equates to 131 potential units for this site. The overall value for this site is based on the transaction is predicated on the sales derived from the Delta Shores Community identified in the prior section. These conclusions are summarized as follows.

Sale 2 – $5,020,000 Sales Price – 9.55 AC – 96 Lots or $525,655/AC or $52,291/Lot (10.1 du/ac)

Sale 3 - $4,500,000 Sales Price – 9.115 AC – 101 Lots or $493,692/AC or $44,555/Lot (11.1 du/ac)

Sale 9 - $3,825,000 Sales Price – 7.88 AC – 76 Lots or $485,406/AC or $50,329 per lot (9.6 du/ac)

These transactions show an overall value range from $44,555 to $52,291 per lot. The proposed development of the entire project is slightly higher in density but includes offsite improvements. Based on review of these transactions, as well as these elements, the overall value is identified at $50,000 per potential unit, which equates to $6,550,000 (131 Units * $50,000/Unit).

Based on the analysis described in the attached report, in conn ection with the Assumptions and Limiting Conditions, and the Hypothetical Conditions, as of September 25 , 2024, the effective date of valuation, my opinion of value is as follows.

VALUE INTEREST OPINION OF VALUE
Hypothetical Market Value

3.378 AC HDR Site &

5.473 AC MDR Site - M&H Realty Partners
Fee Simple $6,550,000

Opinion of Probable Exposure Time

A most likely purchaser of the property would be a developer seeking adequate return on their investment. Based on the location of the subject property, in conjunction with the current market conditions, an exposure period of 6-9 months is identified to facilitate a sale based on the opinion of value expressed above.

ADDENDA

Assumptions and Limiting Conditions

Certification of the Appraisers

Glossary

Qualifications of the Appraiser

Preliminary Title Report

Summary of Infrastructure Costs

Market Absorption Study (Prepared by John Burns)

Permits Issued as of Effective Date of Valuation

2024 ULOP Report

ASSUMPTIONS AND LIMITING CONDITIONS

The Certification of the appraiser(s) appearing in this report is subject to the following assumptions and limiting conditions.

1. The appraiser(s) assumes no responsibility for the legal description provided for matters pertaining to the legal or title considerations. Title is assumed to be good and marketable, and the property is appraised free and clear of any encumbrances, unless otherwise s t a t e d . I t i s a s s u m e d t h a t t h e property is under responsible ownership and management.

2. Information, estimates, and opinions furnished to the appraiser (s) and contained in this report were obtained from sources considered reliable and believed to be tr u e a n d c o r r e c t . H o w e v e r , t h e appraiser(s) give no warranty of the accuracy of such items furnished by others.

3. The appraiser(s) is not required to give testimony or appear in court in connection with this appraisal unless prior arrangements have been made.

4. The sketches, maps, plats, and exhibits in this report are incl uded to assist the reader in visualizing the property. The appraiser(s) has made no survey of the prope rty and assumes no responsibility in connection with such matters.

5. The appraiser(s) assumes that there are no hidden or unapparent conditions of the property, subsoil, or structures, which would render it more or less valuable. The appraiser(s) assumes no responsibility for such conditions or for engineering which might be required to discover such factors.

6. The appraiser(s) assumes the property in full compliance with a ll applicable federal, state, and local environmental regulations and laws unless non-compliance is stated, defined, and considered in the appraisal. The appraiser(s) assumes the property contains no hazardous materials or substances or for engineering which might be required to discover such factors.

7. The appraiser(s) assumes all required licenses, certificates of occupancy, consents, and other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value opinions contained in the report is based.

8. The appraiser(s) assumes that t he property complies with applicable zoning requirements, use regulations and other restrictions, unless a lack of conformity h a s b e e n s t a t e d , d e f i n e d , a n d considered in the appraisal report.

9. Any allocation of the total value opinion stated in this report between the site and improvements applies only under the stated program of use. The separate val ues allocated to the site and improvements may not be used in connection with any other appraisal and are invalid if so used. Any value opinions provided in the appraisal report apply to the en tire property and any proration or division of the total into fractional interests will invalidate the value opinion unless such proration or division of interests has been stated in the report.

10. Disclosure of the contents of th e appraisal report is governed by the Code of Professional Ethics of the Appraisal Institute and is subject to peer review.

ASSUMPTIONS AND LIMITING CONDITIONS (Continued)

11. The appraiser(s) assumes that the site and improvements are con tained within the boundaries or property lines of the property d escribed and that there are no encroachments unless noted in this report.

12. If only preliminary plans and specifications were available for use in the preparation of this a s s i g n m e n t , t h e n t h i s a p p r a i s a l i s s u b j e c t t o a r e v i e w o f t h e f i n a l p l a n s a n d s p e c i f i c a t i o n s w h e n available (at additional cost) and the appraiser(s) reserves th e right to amend this appraisal if substantial deviations exist.

13. The dates of value to which the opinions expressed in this repo rt apply are set forth in this report.

The appraiser(s) assume no responsibility for economic or physical factors occurring at some point at a later date, which may affect the opinions stated herein. The forecasts, projections, or operating estimates contained herein are based on current market conditions and anticipated short-term supply and demand factors and are subject to change with future conditions.

14. This appraisal was prepared for the sole and exclusive use of t he client for the intended use outlined i n t h i s r e p o r t . A n y p a r t y w h o i s n o t t h e c l i e n t o r i n t e n d e d u ser identified in the appraisal or the engagement letter is not entitled to rely upon the contents of this appraisal without the express written consent of Smith & Associates, Inc. The appraiser assu mes no obligation, liability, or accountability to any third party.

15. The Americans with Disabilities Act (ADA became effective Janua ry 26, 1992. The appraiser(s) have not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA . It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative impact upon the value of the property. S ince the appraiser(s) have no direct evidence relating to this issue, possible non-compliance was no t considered in estimating the value of the property.

16. No part of the appraisal report (nor any copy of it) shall be u sed for any purpose by any party except the client without the previous written consent of the appraiser(s). No portion of the appraisal report may be reproduced. The report shall not be used for advertisin g, public relations, news, or other media without the consent of the appraiser(s).

17. Acceptance and/or use of this appraisal report by the client or any third party constitutes acceptance of the previously stated assumptions and limiting conditions.

18. Any estimate of the Insurable Replacement Costs, if included within the scope of work and presented herein, is based on figures developed consistent with industry practices. However, actual local and regional construction costs may vary significantly from estimat es noted in this report and individual insurance policies and underwrit ers have varied specifications, exclusions, and non-insurable items.

It is highly recommended that the client obtains estimates from professionals experienced in providing insurance coverage. The appraiser(s) make no warrant ies regarding the accuracy of estimates for Insurable Replacement Costs noted in
this report.

CERTIFICATION

I certify that, to the best of my knowledge and belief:

1. The statements of fact contained in this report are true and correct.

2. The reported analyses, opinions and conclusions are limited onl y by the reported assumptions and limiting conditions and is my personal, impartial, and unbiased professional analyses, opinions, and conclusions.

3. I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved.

4. I have not performed services as an appraiser regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.

5. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

6. My engagement in this assignment was not contingent upon develo ping or reporting predetermined results.

7. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

8. My analyses, opinions and conclu sions were developed, and this report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice.

9. I have made a personal inspection of the property that is the subject of this report.

10. No one provided significant real property appraisal assistance to the person signing this certification.

11. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

12. As of the date of this report, I John E. Carrothers, MAI, have completed the continuing education program for Designated Members of the Appraisal Institute.

13. The reported analyses, opinions and conclusions were developed, and this report has been prepared in conformity with the Code of P rofessional Ethics and Standard s of Professional Practice of the Appraisal Institute.

John E. Carrothers, MAI
State Certified General Real Estate Appraiser
California AG014187, Exp. 04/11/2025

GLOSSARY

Definitions are taken from the Dictionary of Real Estate Apprai sal, 5 th Edition, the Uniform Standards of Professional Appraisal Practice (USPAP) and Building Owners and Managers Association International (BOMA)

ABSOLUTE NET LEASE
A lease in which the tenant pays all operating expenses including structural maintena nce, building reserves, and management, often a long-term lease to a credit tenant. (Dictionary)

AGGREGATE OF RETAIL VALUES (ARV)
The sum of the separate and distinct market value opinions for each of the units in a condominium, subdivision
development, or portfolio of properties, as of the date of valuation. The aggregate of retail values does not represent an opinion of value; it is simply the total of multiple market value conclusions. (Dictionary)

AS-IS MARKET VALUE
The estimate of the market value of real property in its current physical condition, use, and zoning as of the
appraisal date. (Dictionary)

ASSUMPTION
That which is taken to be true. (USPAP)

BUILDING RENTABLE AREA
The sum of all floor rentable areas. Floor rentable area is the result of subtracting from the gross measured area of the floor the major vertical penetrations on the same floor.

It is generally fixed for the life of the building and is rarel y a f f e c t e d b y c h a n g e s i n c o r r i d o r s i z e o r c o n f i g u r a t i o n . (BOMA)

CASH EQUIVALENCY
An analytical process in which the sale price of a transaction with nonmarket financing or financing with unusual
conditions or incentives is converted into a price expressed in terms of cash. (Dictionary)

CLIENT
The party or parties who engage, by employment or
contract, an appraiser in a spe cific assignment. The client may be an individual, group, or entity, and may engage and communicate with the appraiser directly or through an
agent. (USPAP)

CONDOMINIUM
A form of ownership in which each owner possesses the
exclusive right to use and occupy an allotted unit plus an undivided interest in common ar ea. A multi-unit structure or a unit within such a struct ure with a condominium form of ownership. (Dictionary)

COVERAGE
The proportion of the net or gross land area of a site that is occupied by a building or buildings. (Dictionary)

DEED RESTRICTION
A provision written into a deed that limits the use of land.

Deed restrictions usually remain in effect when title passes to subsequent owners. (Dictionary)

DEPRECIATION
1) In appraising, the loss is a property value from any cause; the difference between the cost of an improvement on an effective date of the appraisal and the market value of the improvement on the same date. (Dictionary)

DISPOSITION VALUE
The most probable price that a specified interest in real property is likely to bring under the following conditions:

 Consummation of a sale within an exposure time
specified by the client;
 The property is subjected to market conditions prevailing as of the date of valuation;
 Both the buyer and seller are acting prudently and
knowledgeably;
 The seller is under compulsion to sell;
 The buyer is typically motivated;
 Both parties are acting in what they consider to be their best interests;
 An adequate marketing effort will be made during the
exposure time specified by the client;
 Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
 The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with
the sale. (Dictionary)

EASEMENT
The right to use another’s land for a stated purpose.
(Dictionary)

EFFECTIVE AGE
T h e a g e o f p r o p e r t y t h a t i s b a s e d o n t h e a m o u n t o f observed deterioration and obsolescence it has sustained, which may be different from its chronological age.
(Dictionary)

EFFECTIVE DATE
1) The date at which the analy ses, opinions, and advice in an appraisal, review, or consulting service apply. 2) In a lease document, the date upon which the lease goes into effect. (Dictionary)

EFFECTIVE RENT
The rental
rate net of financial concessions such as periods
of no rent during the lease term and above- or below-
market tenant improvements (TIs). (Dictionary)

EXCESS LAND
Land that is not needed to serve or support the existing improvement. The highest and best use of the excess land may or may not be the same as the highest and best use of the improved parcel. Excess land may have the potential to be sold separately and is valued separately. (Dictionary)

EXPOSURE TIME
Estimated length of time that the property interest being appraised would have been on the market prior to the
hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective opinion based on an analysis of past events assuming a competitive and open market. (USPAP)

EXTRAORDINARY ASSUMPTION
An assumption, directly related to a specific assignment, as of the effective date of the assignment results, which if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary a ssumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of th e subject property; or about conditions external to the property, such as market
conditions or trends, or about the integrity of data used in an analysis. (USPAP)

EXTERNAL OBSOLESCENCE
An element of depreciation; a diminution in value caused by negative externalities and generally incurable on the part of the owner, landlord, or tenant. (Dictionary)

FEE SIMPLE ESTATE
Absolute ownership unencumbered by any other interest
or estate, subject only to the limitations imposed by the governmental powers of taxat ion, eminent domain, police power, and escheat. (Dictionary)

FLOOR AREA RATIO (FAR)
The relationship between the above-ground floor area of a building, as described by the building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area. (Dictionary)

FULL SERVICE GROSS LEASE
A lease in which the landlord receives stipulated rent and is obligated to pay all of the property’s operating and fixed expenses; also called a full service lease. (Dictionary)

FUNCTIONAL OBSOLESCENCE
T h e i m p a i r m e n t o f f u n c t i o n a l c a p a c i t y o f a p r o p e r t y according to market tastes and standards. (Dictionary)

GOING CONCERN VALUE
1 ) T h e m a r k e t v a l u e o f a l l o f the tangible and intangible assets of an established and operating business with an indefinite life, as if sold in aggregate; more accurately termed the market value of the going concern.
2) The value of an operating business enterprise. Goodwill may be measured separately but is an integral component of going-concern value when it exists and is recognizable. (Dictionary)

GROSS BUILDING AREA
The total constructed area of a building. It is generally not used for leasing purposes. (BOMA)

GROUND LEASE
A lease that grants the right to use and occupy land.

Improvements made by the ground lease typically revert to the ground lessor at the end of the lease term. (Dictionary)

HIGHEST & BEST USE
The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are 1) legal permissibility; 2) physical possibility; 3) financial feasibility; and 4) maximally profitability.

Alternatively, the probable use of land or improved
property-specific with respect to the user and timing of the use – that is adequately supported and results in its highest present value. (Dictionary)

HYPOTHETICAL CONDITION
A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of the analysis. Hy pothetical conditions are
contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions or trends; or about the integrity of data used in an analysis. (USPAP)

INTENDED USE
The use or uses of an appraiser’s reported appraisal or appraisal review assignment o pinions and conclusions, as identified by the appraiser based on communication with the client at the time of the assignment. (USPAP)

INTENDED USER
The client and any other party as identified, by name or type, as users of the appraisal or appraisal review report by the appraiser on the basis of communication with the client at the time of the assignment. (USPAP)

INDUSTRIAL GROSS LEASE
A lease of industrial property in which the landlord and tenant share expenses. The landlord receives stipulated rent and is obligated to pay operating expenses, often
structural maintenance, insurance, and real estate taxes as s p e c i f i e d i n t h e l e a s e . T h e r e a r e s i g n i f i c a n t r e g i o n a l a n d local differences in the use of this term. (Dictionary)

INSURABLE VALUE
A type of value used for insurance purposes. (Dictionary)

LEASED FEE INTEREST
A freehold (ownership-interest) where the possessory
interest has been granted to another party by creation of a contractual landlord-tenant relationship (i.e., a lease). (Dictionary)

LEASEHOLD INTEREST
The tenant’s possessory interest caused by a lease.
(Dictionary)

LESSEE (TENANT)
One who has the right to occupancy and use of the property f o r a p e r i o d o f t i m e a c c o r d i n g t o a l e a s e a g r e e m e n t . (Dictionary)

LESSOR (LANDLORD)
One who conveys the right of occupancy and use to others under a lease agreement. (Dictionary)

LIMITING CONDITIONS
Constraints which are imposed on valuations by clients, the Valuer, or local statutory law. (Dictionary)

LIQUIDATION VALUE
The most probable price that a specified interest in real property should bring under the following conditions:

 Consummation of a sale within a short period;
 The property is subjected to market conditions prevailing as of the date of valuation;
 Both the buyer and seller are acting prudently and
knowledgably;
 The seller is under extreme compulsion to sell;
 The buyer is typically motivated;
 Both parties are acting in what they consider to be their best interests;
 A normal marketing effort is not possible due to the brief exposure time;
 Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto;
 The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with
the sale. (Dictionary)

MARKET ANALYSIS
A process for estimating the p r o d u c t i v e a t t r i b u t e s o f a specific property, its demand and supply, and its geographic market area. Marketability analysis (often referred to erroneously as market analysis) is an essential part of the highest and best use for every valuation assignment.
(Dictionary)

MARKET RENT
The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the lease ag reement including permitted uses, use restrictions, expense obligations; term,
concessions, renewal and pur chase options and tenant
improvements (TIs). (Dictionary)

MARKET VALUE
The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the
c o n s u m m a t i o n o f a s a l e a s o f a s p e c i f i e d d a t e a n d t h e passing of title from seller to buyer under conditions
whereby:

a. Buyer and seller are typically motivated;
b. Both parties are well informed or well advised, and acting in what they consider their own best interests;
c. A reasonable time if allowed for exposure in the open market;
d. P a y m e n t i s m a d e i n t e r m s o f c a s h i n U . S . d o l l a r s o r i n financial arrangements comparable thereto;
e. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with
the sale. (Office of the Comptroller of the Currency)

MARKET VALUE “AS IF COMPLETE”
A hypothetical scenario representing the market value of the property with all proposed construction, conversion or rehabilitation completed under specified hypothetical
conditions as of the date of the appraisal.

MARKET VALUE “AS IF STABILIZED”
A hypothetical scenario
representing the market value of
the property at a current point in time when all
improvements have been physically constructed and the
property has been leased to its optimum level of long term occupancy under specified hypothetical conditions as of the date of the appraisal.

MARKETING TIME
An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level immediately after the effective date of the appraisal.

Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal. (Advisory Opinion 7 of the Appraisal Standards Board of the Appraisal Foundation and Statement on Appraisal
Standards No. 6, “Reasonable Exposure Time in Real
Property and Personal Property Market Value Opinions”
address the determination of reasonable exposure and
marketing time.) (Dictionary)

MODIFIED GROSS LEASE
A lease in which the landlord receives stipulated rent and is o b l i g a t e d t o p a y s o m e , b u t n o t a l l , o f t h e p r o p e r t y ’ s operating and fixed expenses. Since assignment of
expenses varies among modified gross leases, expense
responsibility must always be specified. In some markets, a modified gross lease may be called a double net lease, net net lease, partial net lease, or semi-gross lease.
(Dictionary)

PARTIAL INTEREST
Divided or undivided rights in real estate that represent less than the whole (a fractional interest). (Dictionary)

PHYSICAL DETERIORATION
The wear and tear that begins when a building is completed and placed into service. (Dictionary)

PROSPECTIVE OPINION OF VALUE
A value opinion effective as of a specified date in the future.

The term does not define a type of value. Instead, it
identifies a value opinion as being effective at some specific future date. An opinion of value as a prospective date is frequently sought in connect ion with projects that are proposed, under construction, or under conversion to a
new use, or those that have not yet achieved sellout or a stabilized level of long-term occupancy. (Dictionary)

REMAINING ECONOMIC LIFE (REL)
The estimated period during which improvements will
continue to represent the highest and best use of the
property; an estimate of the number of years remaining in the economic life of the structure of structural components as of the date of the appraisal; used in the economic age- life method of estimating depreciation. (Dictionary)

REPLACEMENT COSTS
The estimated cost to construct, at current prices as of the effective appraisal date, a subs titute for the building being appraised, using modern mate rials and current standards, design, and layout. (Dictionary)

REPRODUCTION COSTS
The estimated cost to construct, at current prices as of the effective date of the appraisal, an exact duplicate or replica of the building being appraise d, using the same materials, construction standards, design, layout, and quality of
workmanship and embodying all of the deficiencies, super- adequacies, and obsolescence of the subject building.
(Dictionary)

RETROSPECTIVE VALUE OPINION
A value opinion as of a specified historical date. The term does not define a type of value. Instead, it identifies a value as being effective at some specific prior date. Value as of a historic date is frequently sought in connection with
property tax appeals, damage models, lease renegotiation, deficiency judgments, estate tax, and condemnation.

Inclusion of the type of value with this term is appropriate, e.g., “retrospective market value opinion.” (Dictionary)

SANDWICH LEASEHOLD ESTATE
The interest held by the original lessee when the property is subleased to another party; a type of leasehold estate. (Dictionary)

SCOPE OF WORK
The type and extent of research and analyses in an appraisal or appraisal review assignment. (USPAP)

SURPLUS LAND
Land that is not currently needed to support the existing improvement but cannot be separated from the property
and sold off. Surplus land does not have an independent highest and best use and may or may not contribute value to the improved property. (Dictionary)

TRIPLE NET (NET NET NET) LEASE
A lease in which the tenant assumes all expenses (fixed and variable) of operating a property except that the landlord is responsible for structural maintenance, building reserves, and management. Also called NNN, triple net lease, or fully net lease. (Dictionary)

USABLE AREA
The measured area of an office area, store area, or building c o m m o n a r e a o n a f l o o r . T h e t o t a l o f a l l o f t h e u s e a b l e areas of a floor shall equal floor usable area of that same floor. The amount of floor usable area can vary over the life of a building as corridors expand and contract and as floors are remodeled. (Dictionary)

Certified General Real Estate Appraiser
California BREA Appraiser License No. AG014187
John E. Carrothers, MAI

SUMMARY

O v e r t h i r t y y e a r s o f a p p r a i s a l e x p e r i e n c e i n S a c r a m e n t o , P l a c e r, Solano, Sutter, Yolo, Stanislaus, Contra Costa and Alameda Counties. Extensive experience focusin g o n t h e a n a l y s i s o f r e s i d e n t i a l subdivisions over the past twenty years.

Property types valued and analyzed include the following:
 Single and Multi-Family Residential
 Vacant Land – Improved and Unimproved
 Commercial – Retail and Industrial
 Subdivision – Feasibility and Valuation

WORK HISTORY

1998 – Present Managing Partner Smith & Associates, Inc. 1991 – 1998 Staff Appraiser Smith Denton Associates, Inc. 1990 – 1991 Staff Appraiser Prof essional Appraisal Services, Inc.

EDUCATION

University of California, Davis, CA
Bachelor of Science

Appraisal Institute Courses
Real Estate Appraisal Principles • Valuation Procedures • Capit alization Theory and Techniques, A • Capitalization Theory and Techniques, B • Farm Valuation Seminar • Standards of Professional Practice, A and B • Real Estate Principles • Subdivision Analys is • Assessment Bond Mello Roos Seminar • Report Writing • Advan ced Sale Comparison and Cost Ap p r o a c h • N a t i o n a l U S P A P Equivalent Course

PROFESSIONAL AFFILIATIONS

 Appraisal Institute, MAI

Order Number: NCS-1053019-ONT1
Page Number: 1

First American Title Insurance Company
February 26, 2024 Amendment

First American Title Insurance Company
National Commercial Services
901 Via Piemonte, Suite 150
Ontario, CA 91764

Karen C. Ahearn
Glaser Weil Fink Howard Jordan & Shapiro, LLP
10250 Constellation Boulevard,, 19th Floor
Los Angeles, CA 90067

Phone: (310)556-7852
Fax: (310)843-2652

Customer Reference: CFD Improvement Area #1

Title Officer: Erin West
Phone: (909)510-6215
Email: [email protected]

Owner: M&H Realty Partnership VI LP

Property: 7949, 7931 and 8145 Freeport, Boulevard, Sacramento, CA

PRELIMINARY REPORT
In response to the above referenced application for a policy of title insurance, this company hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a Policy or Policies of Title Insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referred to as an Exception below or not excluded from coverage pursuant to the printed Schedules, Conditions and Stipulations of said Policy forms.

The printed Exceptions and Exclusions from the coverage and Limitations on Covered Risks of said policy or policies are set forth in Exhibit A attached. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than that set forth in the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. Limitations on Covered Risks applicable to the CLTA and ALTA Homeowner's Policies of Title Insurance which establish a Deductible Amount and a Maximum Dollar Limit of Liability for certain coverages are also set forth in Exhibit A. Copies of the policy forms should be read. They are available from the office which issued this report.

Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Exhibit A of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters which are not covered under the terms of the title insurance policy and should be carefully considered.

It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land.

Order Number: NCS-1053019-ONT1
Page Number: 2

First American Title Insurance Company

This report (and any supplements or amendments hereto) is issued solely for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance, a Binder or Commitment should be requested.

Order Number: NCS-1053019-ONT1
Page Number: 3

First American Title Insurance Company

Dated as of February 9, 2024 at 7:30 A.M.

The form of Policy of title insurance contemplated by this report is:

To Be Determined
A specific request should be made if another form or additional coverage is desired.

Title to said estate or interest at the date hereof is vested in:

M & H Realty Partners VI L.P., a California limited partnership, , as to Parcels One and Two and KB Home North Bay Inc., a California corporation, successor in interest by merger with KB Home Sacramento Inc., a California corporation, as to Parcel Three The estate or interest in the land hereinafter described or referred to covered by this Report is:

Fee Simple
The Land referred to herein is described as follows:

(See attached Legal Description)

At the date hereof exceptions to coverage in addition to the printed Exceptions and Exclusions in said policy form would be as follows:

1. General and special taxes and assessments for the fiscal year 2024-2025, a lien not yet due or payable.

2. General and special taxes and assessments for the fiscal year 2023-2024.

First Installment: $14,043.68, PAID
Penalty: $0.00
Second Installment: $14,043.68, OPEN
Penalty: $0.00
Tax Rate Area: 03-056
A. P. No.: 119-0010-060-0000

(Affects Parcel One)

3. General and special taxes and assessments for the fiscal year 2023-2024.

First Installment: $92.31, PAID
Penalty: $0.00
Second Installment: $92.31, OPEN
Penalty: $0.00
Tax Rate Area: 03-056
A. P. No.: 119-0010-026-0000

(Affects Parcel Two)
Order Number: NCS-1053019-ONT1
Page Number: 4

First American Title Insurance Company

4. This item has been intentionally deleted.

5. Assessment liens, if applicable, collected with the general and special taxes, including but not limited to those disclosed by the reflection of the following on the tax roll:
1915 Bond for SAFCA Consolidated Cap Asmt #2

6. The lien of special tax assessed pursuant to Chapter 2.5 commencing with Section 53311 of the California Government Code for Community Facilities District No. 2014-04, as disclosed by Notice of Special Tax Lien recorded April 08, 2016 in Book 20160408, Page 639 of Official Records.

7. The lien of special tax assessed pursuant to Chapter 2.5 commencing with Section 53311 of the California Government Code for Community Facilities District No. 2019-1, as disclosed by Notice of Special Tax Lien recorded November 4, 2019 as Instrument No. 201911040510 of Official Records.

Document(s) declaring modifications thereof recorded February 18, 2022 as Book 20220218, Page 0717 of Official Records.

8. The lien of supplemental taxes, if any, assessed pursuant to Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation Code.

9. Any unpaid amounts owing for utilities, of record or not, due to the County and/or any of the following entities:

Sacramento County Utility Billing office at (916) 875-5555.

City of Sacramento at Utility Billing Office at (916) 808-5454.

10. Rights of the public in and to that portion of the land lying within Stonecrest Avenue and Freeport Boulevard.

11. An easement for water drainage and incidental purposes, recorded October 5, 1915 in Book 362 of Deeds, Page 357.

In Favor of: F.L. Baumgariel
Affects: as described therein

(Affects All Parcels)

12. An easement for transmission and distribution of electricity and incidental purposes, recorded April 14, 1920 in Book 525 of Deeds, Page 374.

In Favor of: Great Western Power Company, a corporation Affects: as described therein

A document entitled "Consent to Common Use" recorded June 22, 1976 as Book 7606-22, Page 950 of Official Records.

The terms and provisions contained in the document entitled "Relocation Agreement and Grant of Easement" recorded August 19, 1992 as Book 9208-19, Page 491 of Official Records.

Order Number: NCS-1053019-ONT1
Page Number: 5

First American Title Insurance Company
The terms and provisions contained in the document entitled "Agreement" recorded February 17, 1993 as Book 9302-17, Page 1069 of Official Records.
(Affects Parcels One and Two)

13. An easement for transmission and distribution of electricity and for telephone purposes and incidental purposes, recorded December 23, 1922 in Book 626 of Deeds, Page 77.

In Favor of: Great Western Power Company of California
Affects: As described therein

The location of the easement cannot be determined from record information. (Affects All Parcels)

14. An easement for transmission and distribution of electricity and incidental purposes, recorded December 23, 1922 in Book 626 of Deeds, Page 78.

In Favor of: Great Western Power Company, a corporation Affects: A portion of the land

The location of the easement cannot be determined from record information. (Affects All Parcels)

15. An easement for transmission and distribution of electricity and incidental purposes, recorded December 23, 1922 in Book 626 of Deeds, Page 79.

In Favor of: Great Western Power Company, a California corporation Affects: A portion of the land

The location of the easement cannot be determined from record information. (Affects All Parcels)

16. An easement for transmission of electricity and incidental purposes, recorded June 13, 1927 in Book 127, Page 494 of Official Records.

In Favor of: Great Western Power Company, a California Corporation Affects: As described therein

The location of the easement cannot be determined from record information. (Affects All Parcels)

17. An easement for transmission and distribution of electricity and incidental purposes, recorded June 13, 1927 in Book 127, Page 498 of Official Records.

In Favor of: Great Western Power Company of California Affects: As described therein

The location of the easement cannot be determined from record information.

Order Number: NCS-1053019-ONT1
Page Number: 6

First American Title Insurance Company
(Affects All Parcels)

18. An easement for the transmission and distribution of electricity and wires and incidental purposes, recorded August 15, 1930 in Book 321, Page 49 of Official Records.

In Favor of: Great Western Power Company
Affects: As described therein

(Affects All Parcels)
The location of the easement cannot be determined from record information.

19. An easement for transmission and distribution of electricity and incidental purposes, recorded July 12, 1946 in Book 1257A, Page 40 of Official Records.

In Favor of: Pacific Gas and Electric Company
Affects: As described therein

The location of the easement cannot be determined from record information. (Affects All Parcels)

20. An easement for right of way to erect maintain, replace, remove and use such poles with all necessary and proper crossarms, braces, anchors, guys and other appliances and fixtures and incidental purposes, recorded October 10, 1956 in Book 3172, Page 499 of Official Records.

In Favor of: Sacramento Municipal Utility District
Affects: As described therein

(Affects Parcel Three)

21. An easement for sewer and drainage pipelines and incidental purposes, recorded February 23, 1962 as Book 4396, Page 907 of Official Records.

In Favor of: City of Sacramento
Affects: as described therein

(Affects Parcel One)

22. An easement for drainage and incidental purposes, recorded July 29, 1970 as Book 7007-29, Page 29 of Official Records.

In Favor of: State of California
Affects: as described therein

(Affects Parcel One)

23. Abutter's rights of ingress and egress to or from highway have been relinquished in the document recorded May 10, 1974 in Book 7405-10, Page 883 of Official Records. (Affects Parcel Three)
Order Number: NCS-1053019-ONT1
Page Number: 7

First American Title Insurance Company

24. An easement for frontage road and incidental purposes, recorded May 10, 1974 in Book 7405-10,

In Favor of: State of California
Affects: as described therein

A portion of said frontage road was relinquished to the City of Sacramento by document recorded September 06, 1983 in Book 830906, Page 795 of Official Records. (Affects Parcel Three)

25. An easement for irrigation pipe and incidental purposes, recorded May 10, 1974 in Book 7405-10,

In Favor of: Mark K. Sweeney, ETAL
Affects: as described therein

The location of the easement cannot be determined from record information. (Affects Parcel Three)

26. Abutter's rights of ingress and egress to or from Interstate 5 have been relinquished in the document recorded May 1, 1978 as Book 780501, Page 843 of Official Records.

The location of the above mentioned abutters rights cannot be determined from record information.

27. Abutter's rights of ingress and egress to or from abutting highway have been relinquished in the document recorded April 28, 1983 as Book 8304-28, Page 1088 of Official Records.

Document(s) declaring modifications thereof recorded July 8, 1983 as Book 8307-08, Page 1437 of Official Records.
(Affects Parcels One and Three)

28. Abutter's rights of ingress and egress to or from abutting highway have been relinquished in the document recorded April 28, 1983 as Book 8304-28, Page 1092 of Official Records.

Document(s) declaring modifications thereof recorded July 8, 1983 as Book 8307-08, Page 1437 of Official Records.
(Affects Parcel Three)

29. Abutter's rights of ingress and egress to or from abutting highway have been relinquished in the document recorded April 28, 1983 as Book 8304-28, Page 1097 of Official Records. (Affects Parcel One)

30. Any lease, grant, exception or reservation of minerals or mineral rights as described in the deed executed by Harry M. Tonkin and Dalton G. Feldstein, as trustees of the Freeport Liquidating Trust, recorded June 29, 1984, in Book 84 06 29, Page 1677, Official Records and also described in the Order Number: NCS-1053019-ONT1
Page Number: 8

First American Title Insurance Company
quitclaim deed dated January 19, 1960, recorded January 20, 1960, in Book 3980 of Official Records

Sacramento Division, a corporation, and modified by Deed dated February 15, 1960, recorded March 25, 1960, in Book 4024 of Official Records, Page 939, executed by said parties, and as conveyed by deed dated March 18, 1960, recorded March 25, 1960, in Book 4024 of Official Records, Page 940, executed by California Pacific Title Company, Sacramento Division, a corporation to Lester C. Hunt and Martha E. Hunt, his wife, as joint tenants.
(Affects All Parcels)

31. The terms and provisions contained in the document entitled "Contract for Exchange of Real Property" recorded January 17, 1986 in Book 8601-17, Page 1771 of Official Records. (Affects All Parcels)

32. The terms, provisions and easement(s) contained in the document entitled "Grant Deed" recorded June 18, 1990 as Book 9006-18, Page 1637 of Official Records. (Affects Parcel Two)

33. An easement for pipeline and incidental purposes, recorded July 24, 1995 as Book 199507-24, Page 1149 of Official Records.

In Favor of: Sacramento Municipal Utility District, a municipal utility district Affects: as described therein

A document entitled "Easement Quitclaim" recorded September 6, 2018 as Book 20180906, Page 0488 of Official Records.

A document entitled "Easement Quitclaim" recorded September 6, 2018 as Book 20180906, Page 0489 of Official Records.
(Affects Parcels One and Two)

34. The terms and provisions contained in the document entitled "Release Agreement and Covenant Not to Sue" recorded February 01, 2005 in Book 20050201, Page 1126 of Official Records. (Affects All Parcels)

35. The terms and provisions contained in the document entitled "Memorandum of Purchase Agreement" recorded October 19, 2005 in Book 20051019, Page 2302 of Official Records.

The terms and provisions contained in the document entitled "Memorandum of Assignment of and Amendment and Restatement of Purchase Agreement" recorded June 07, 2007 in Book 20070607,

(Affects All Parcels)

36. The effect of a map purporting to show the land and other property, filed November 21, 2005 in Book 69, Page 14 of Record of Surveys.

Order Number: NCS-1053019-ONT1
Page Number: 9

First American Title Insurance Company
Document(s) declaring modifications thereof recorded October 30, 2007 in Book 20071030, Page 1559 of Official Records.
(Affects All Parcels)

37. The terms and provisions contained in the document entitled "Memorandum of Assignment of Agreement of Purchase and Sale (and Joint Escrow Instructions)" recorded January 03, 2006 in Book 20060103, Page 1812 of Official Records.
(Affects All Parcels)

38. An easement for sewer and incidental purposes, recorded June 20, 2007 as Book 20070620, Page 1229 of Official Records.

In Favor of: Sacramento Regional County Sanitation District Affects: as described therein

A portion of said sewer easement was quitclaimed to the City of Sacramento by Quitclaim Deed recorded May 18, 2009 in Book 20090518, Page 887 of Official Records. (Affects Parcels One and Two)

39. The terms and provisions contained in the document entitled "Development Agreement" recorded February 27, 2009 as Book 20090227, Page 0082 of Official Records.

Document(s) declaring modifications thereof recorded October 18, 2010 as Book 20101018, Page 1169 of Official Records.

Document(s) declaring modifications thereof recorded November 26, 2019 as Book 20191126, Page 0667 of Official Records.

Document(s) declaring modifications thereof recorded June 26, 2020 as Book 20200626, Page 0043 of Official Records.
(Affects All Parcels)

40. The terms, provisions and easement(s) contained in the document entitled "Grant of Non-Exclusive Right of Way Easement and Temporary Construction Easement Agreement" recorded June 16, 2009 in Book 20090616, Page 1635 of Official Records.
(Affects All Parcels)
Document re-recorded November 05, 2009 in Book 20091105, Page 1120 of Official Records.

41. The terms, provisions and easement(s) contained in the document entitled "Grant of Non-Exclusive Right of Way Easement" recorded June 16, 2009 as Book 20090616, Page 1636 of Official Records.

The above document was re-recorded November 5, 2009 in/as Book 20091105, Page 1141 of Official Records.
(Affects Parcel One)
Order Number: NCS-1053019-ONT1
Page Number: 10

First American Title Insurance Company

42. An easement for overhead electrical facilities and incidental purposes, recorded September 6, 2012 as Book 20120906, Page 704 of Official Records.

In Favor of: Sacramento Municipal Utility District
Affects: as described therein

(Affects Parcel One)

43. The terms and provisions contained in the document entitled "Public Improvement Agreement - By and Between the City of Sacramento and M & H Realty Partners VI, LP" recorded March 29, 2013 in Book 20130329, Page 2469 of Official Records.

A document entitled "Partial Release of Public Improvement Agreement" recorded June 23, 2016 in Book 20160623, Page 1390 of Official Records.
(Affects All Parcels)

44. The terms and provisions contained in the document entitled "Drainage Easement Agreement - By and Between M&H Realty Partners VI, LP and the City of Sacramento" recorded May 21, 2013 in Book 20130521, Page 1216 of Official Records.
(Affects All Parcels)

45. An easement for electrical and communication facilities and incidental purposes, recorded December 09, 2014 as Book 20141209, Page 1181 of Official Records.

In Favor of: Sacramento Municipal Utility District
Affects: as described therein

(Affects Parcel One and Two)

46. Abutter's rights of ingress and egress to or from the road have been relinquished in the document recorded December 09, 2014 in Book 20141209, Page 1182 of Official Records.

Except at such points as described in the document above. (Affects Parcels One and Three)

47. An easement for public utilities and incidental purposes, recorded December 9, 2014 as Book 20141209, Page 1245 of Official Records.

In Favor of: City of Sacramento, a municipal corporation Affects: as described therein

(Affects Parcels One and Two)

48. A waiver of any claims for damages by reason of the location, construction, landscaping or maintenance of a contiguous freeway, highway, roadway or transit facility as contained in the document recorded December 9, 2014 as Book 20141209, Page 1245 of Official Records. (Affects Parcels One and Two)
Order Number: NCS-1053019-ONT1
Page Number: 11

First American Title Insurance Company

49. An easement for sewer pipeline and incidental purposes, recorded December 9, 2014 as Book 20141209, Page 1246 of Official Records.

In Favor of: City of Sacramento, a municipal corporation Affects: as described therein

(Affects Parcel One)

50. A waiver of any claims for damages by reason of the location, construction, landscaping or maintenance of a contiguous freeway, highway, roadway or transit facility as contained in the document recorded December 9, 2014 as Book 20141209, Page 1246 of Official Records. (Affects Parcel One)

51. An easement for a temporary easement for purposes of public use, construction, reconstruction, installation, improvements, repair, inspection, expansion, and maintenance of public rights-of way, highways, roadways, services, utilities, landscape improvements and incidental purposes, recorded December 9, 2014 as Book 20141209, Page 1248 of Official Records.

In Favor of: City of Sacramento, a municipal corporation Affects: as described therein

(Affects Parcels One and Two)

52. The terms, provisions and easement(s) contained in the document entitled "Memorandum of Agreement (Easement Use Agreement)" recorded October 30, 2015 as Book 20151030, Page 1624 of Official Records.
(Affects All Parcels )

53. We find no outstanding voluntary liens of record affecting subject property. An inquiry should be made concerning the existence of any unrecorded lien or other indebtedness which could give rise to any security interest in the subject property.

54. Water rights, claims or title to water, whether or not shown by the public records.

55. Rights of parties in possession.

56. The terms and provisions contained in the document entitled "Memorandum of Agreement" recorded April 29, 2022 as Book 20220429, Page 0745 of Official Records. (Affects Parcel Three)

57. Lien for delinquent utility service charges in favor of City of Sacramento Department of Utilities

Against: KB Home Sacramento, Inc
Amount: $14,947.65, and any other amounts due thereunder Recorded: October 12, 2022 as Book 20221012, Page 0687 of Official Records.

(Affects Parcel Three)
Order Number: NCS-1053019-ONT1
Page Number: 12

First American Title Insurance Company

58. The lien of special tax assessed pursuant to Chapter 2.5 commencing with Section 53311 of the California Government Code for Community Facilities District No. 2002-02, as disclosed by Notice of Special Tax Lien recorded December 13, 2022 as Book 20221213, Page 0139 of Official Records. (Affects Parcel Three)

59. An easement for electrical and communication facilities and incidental purposes, recorded January 20, 2023 as Book 20230120, Page 0545 of Official Records.

In Favor of: Sacramento Municipal Utility District, a municipal utility district Affects: Parcel Three, as described therein

60. An easement shown or dedicated on the map of FINAL MAP DELTA SHORES WEST SUBDIVISION NO. P06-197 recorded December 19, 2023 and on file in Book 452, Page(s) 2, of Tract Maps.

For: public utility and incidental purposes.
(Affects Parcel Three)

61. Covenants, conditions, restrictions and easements in the document recorded December 19, 2023 as Book 20231219, Page 0601 of Official Records, which provide that a violation thereof shall not defeat or render invalid the lien of any first mortgage or deed of trust made in good faith and for value, but deleting any covenant, condition or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, handicap, familial status, national origin, sexual orientation, marital status, ancestry, source of income or disability, to the extent such covenants, conditions or restrictions violate Title 42, Section 3604(c), of the United States Codes or Section 12955 of the California Government Code. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status.
(Affects Lots 239 through 250, and 313 through 317 of Parcel Three)

62. The terms and provisions contained in the document entitled "Master Dispute Resolution Declaration For Delta Shores West" recorded December 19, 2023 as Book 20231219, Page 0602 of Official Records.
(Affects Lots 239 through 250, and 313 through 317 of Parcel Three)

63. The terms and provisions contained in the document entitled "Subdivision Improvement Agreement Public Improvement Proceeding No. P06-197" recorded December 26, 2023 as Book 20231226, Page 0373 of Official Records.
(Affects Parcel Three)

Order Number: NCS-1053019-ONT1
Page Number: 13

First American Title Insurance Company

INFORMATIONAL NOTES

ALERT - CA Senate Bill 2 imposes an additional fee of $75 up to $225 at the time of recording on certain transactions effective January 1, 2018. Please contact your First American Title representative for more information on how this may affect your closing.

1. Taxes for proration purposes only for the fiscal year 2023-2024.

First Installment: $156,714.19, PAID
Second Installment: $156,714.19, PAID
Tax Rate Area: 03-056
APN: 053-0180-021-0000

(Affects Parcel Three and other property)

2. Supplemental taxes for the fiscal year 2022-2023 assessed pursuant to Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation Code.

First Installment: $27,396.04, PAID
Penalty: $0.00
Second Installment: $27,396.04, PAID
Penalty: $0.00
Tax Rate Area: 03-056
A. P. No.: 053-0180-021-0000

(Affects Parcel Three and other property)

3. The property covered by this report is vacant land.

4. According to the public records, there has been no conveyance of the land within a period of twenty four months prior to the date of this report, except as follows:

A document recorded April 29, 2022 as Book 20220429 Page 0746 of Official Records.

From: M & H Realty Partners VI L.P., a California limited partnership To: KB Home Sacramento Inc., a California corporation

(Affects Parcel Three)

5. If this preliminary report/commitment was prepared based upon an application for a policy of title insurance that identified land by street address or assessor's parcel number only, it is the responsibility of the applicant to determine whether the land referred to herein is in fact the land that is to be described in the policy or policies to be issued.

6. Should this report be used to facilitate your transaction, we must be provided with the following prior to the issuance of the policy:

A. WITH RESPECT TO A CORPORATION:

1. A certificate of good standing of recent date issued by the Secretary of State of the corporation's state of domicile.

2. A certificate copy of a resolution of the Board of Directors authorizing the contemplated Order Number: NCS-1053019-ONT1
Page Number: 14

First American Title Insurance Company
transaction and designating which corporate officers shall have the power to execute on behalf of the corporation.

3. A certificate of revivor and a certificate of relief from contract voidability issued by the Franchise Tax Board of the State of California.

4. Requirements which the Company may impose following its review of the above material and other information which the Company may require.

B. WITH RESPECT TO A CALIFORNIA LIMITED PARTNERSHIP:

1. A certified copy of the certificate of limited partnership (form LP-1) and any amendments thereto (form LP-2) to be recorded in the public records;

2. A full copy of the partnership agreement and any amendments;

3. Satisfactory evidence of the consent of a majority in interest of the limited partners to the contemplated transaction;

4. A certificate of revivor and a certificate of relief from contract voidability issued by the Franchise Tax Board of the State of California.

5. Requirements which the Company may impose following its review of the above material and other information which the Company may require.

C. WITH RESPECT TO A FOREIGN LIMITED PARTNERSHIP:

1. A certified copy of the application for registration, foreign limited partnership (form LP-5) and any amendments thereto (form LP-6) to be recorded in the public records;

2. A full copy of the partnership agreement and any amendment;

3. Satisfactory evidence of the consent of a majority in interest of the limited partners to the contemplated transaction;

4. A certificate of revivor and a certificate of relief from contract voidability issued by the Franchise Tax Board of the State of California.

5. Requirements which the Company may impose following its review of the above material and other information which the Company may require.

D. WITH RESPECT TO A GENERAL PARTNERSHIP:

1. A certified copy of a statement of partnership authority pursuant to Section 16303 of the California Corporation Code (form GP-I), executed by at least two partners, and a certified copy of any amendments to such statement (form GP-7), to be recorded in the public records;

2. A full copy of the partnership agreement and any amendments;

3. Requirements which the Company may impose following its review of the above material required herein and other information which the Company may require.

E. WITH RESPECT TO A LIMITED LIABILITY COMPANY:

1. A copy of its operating agreement and any amendments thereto;

2. If it is a California limited liability company, a certified copy of its articles of organization (LLC-1) and any certificate of correction (LLC-11), certificate of amendment (LLC-2), or restatement of articles of organization (LLC-10) to be recorded in the public records;

3. If it is a foreign limited liability company, a certified copy of its application for registration (LLC-5) to be recorded in the public records;

4. With respect to any deed, deed of trust, lease, subordination agreement or other document or instrument executed by such limited liability company and presented for recordation by the Company or upon which the Company is asked to rely, such document or instrument must be executed in accordance with one of the following, as appropriate:

(i) If the limited liability company properly operates through officers appointed or elected pursuant to the terms of a written operating agreement, such documents must be executed by at least two duly elected or appointed officers, as follows: the chairman of the board, the president or any vice president, and any secretary, assistant secretary, the chief financial officer or any assistant treasurer;
(ii) If the limited liability company properly operates through a manager or managers identified in the articles of organization and/or duly elected pursuant to the terms of a written operating agreement, such document must be executed by at least two such managers or by one manager if the limited liability company properly operates with the existence of only one Order Number: NCS-1053019-ONT1
Page Number: 15

First American Title Insurance Company
manager.

5. A certificate of revivor and a certificate of relief from contract voidability issued by the Franchise Tax Board of the State of California.

6. Requirements which the Company may impose following its review of the above material and other information which the Company may require.

F. WITH RESPECT TO A TRUST:

1. A certification pursuant to Section 18100.5 of the California Probate Code in a form satisfactory to the Company.

2. Copies of those excerpts from the original trust documents and amendments thereto which designate the trustee and confer upon the trustee the power to act in the pending transaction.

3. Other requirements which the Company may impose following its review of the material require herein and other information which the Company may require.

G. WITH RESPECT TO INDIVIDUALS:

1. A statement of information.

The map attached, if any, may or may not be a survey of the land depicted hereon. First American Title Insurance Company expressly disclaims any liability for loss or damage which may result from reliance on this map except to the extent coverage for such loss or damage is expressly provided by the terms and provisions of the title insurance policy, if any, to which this map is attached.

Order Number: NCS-1053019-ONT1
Page Number: 16

First American Title Insurance Company

LEGAL DESCRIPTION

Real property in the City of Sacramento, County of Sacramento, State of California, described as follows:

PARCEL ONE:

A PORTION OF SECTIONS 11 AND 12, TOWNSHIP 7 NORTH, RANGE 4 EAST, MOUNT DIABLO BASE AND MERIDIAN, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT ON THE EAST RIGHT OF WAY LINE OF FREEPORT BOULEVARD, AS SHOWN ON

THAT RECORD OF SURVEY FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF SACRAMENTO COUNTY IN BOOK 38 OF SURVEYS, PAGE 12, FROM WHICH POINT THE NORTHEAST CORNER OF SAID SECTION 11 BEARS NORTH 01° 45' 06" WEST 337.55 FEET AND NORTH 07° 07' 53" EAST 4270.93 FEET, SAID POINT OF BEGINNING BEING THE MOST NORTHERLY SOUTHWEST CORNER OF G.T.E.

DATA SERVICES, INC. PROPERTY AS DESCRIBED IN BOOK 80 04 07, PAGE 485, OFFICIAL RECORDS OF SAID COUNTY; THENCE FOLLOWING THE BOUNDARY OF SAID G.T.E. PROPERTY, NORTH 88° 15' 23" EAST 179.13 FEET; THENCE SOUTH 01° 44' 37" EAST, 85.21 FEET; THENCE NORTH 88° 15' 23" EAST 100.00 FEET; THENCE NORTH 86° 03' 03" EAST 42.03 FEET; THENCE NORTH 88° 15' 23" EAST 67.68 FEET; THENCE NORTH 63° 23' 23" EAST 4.85 FEET; THENCE LEAVING SAID PROPERTY LINE, SOUTH 19° 48' 46" EAST 258.18 FEET; THENCE ALONG THE SOUTHERLY LINE OF SAID G.T.E. PROPERTY AND ITS SOUTHWESTERLY PROLONGATION NORTH 72° 07' 45" EAST 911.39 FEET; THENCE LEAVING SAID PROPERTY LINE ALONG THE ARC OF A NON-TANGENT 6055.00 FOOT RADIUS CURVE TO THE RIGHT, SAID CURVE BEING SUBTENDED BY A CHORD WHICH BEARS SOUTH 20° 42' 31" EAST 612.50 FEET; THENCE SOUTH 62° 00' 07" WEST 667.24 FEET; THENCE SOUTH 70° 11' 14" WEST 58.76 FEET; THENCE ALONG THE ARC OF A TANGENT 1570.00 FOOT RADIUS CURVE TO THE RIGHT, SAID CURVE BEING SUBTENDED BY A CHORD WHICH BEARS SOUTH 74° 08' 45" WEST 216.77 FEET; THENCE SOUTH 78° 06' 16" WEST 567.71 FEET; THENCE ALONG THE ARC OF A TANGENT 25.00 FOOT RADIUS CURVE TO THE RIGHT, SAID CURVE BEING SUBTENDED BY A CHORD WHICH BEARS NORTH 59° 06' 50" WEST 33.96 FEET; THENCE NORTH 16° 19' 56" WEST 138.76 FEET; THENCE NORTH 11° 35' 20" WEST 252.38 FEET; THENCE NORTH 02° 46' 20" WEST 110.69 FEET; THENCE NORTH 72° 27' 54" EAST 380.65 FEET; THENCE NORTH 02° 46' 20" WEST 180.88 FEET; THENCE SOUTH 72° 27' 54" WEST, 380.65 FEET; THENCE NORTH 02° 46' 20" WEST 206.99 FEET; THENCE NORTH 01° 45' 06" WEST 221.24 FEET TO THE POINT OF BEGINNING.

ALSO DESCRIBED AS PARCEL B OF THE CERTIFICATE OF COMPLIANCE RECORDED JUNE 29, 1988, IN BOOK 88 06 29, PAGE 1668.

EXCEPTING THEREFROM THAT PORTION OF LAND DESCRIBED IN CERTAIN "FINAL ORDER OF CONDEMNATION" RECORDED NOVEMBER 07, 2005 IN BOOK 20051107, PAGE 1942 OF OFFICIAL RECORDS OF SAID COUNTY.

ALSO EXCEPTING THEREFROM SAID PARCEL ALL THAT PORTION CONVENED TO THE CITY OF SACRAMENTO, A MUNICIPAL CORPORATION, BY GRANT DEED RECORDED DECEMBER 09, 2014 IN BOOK 20141209, PAGE 1182 OF OFFICIAL RECORDS.

ALSO EXCEPTING THEREFROM SAID PARCEL ALL THAT PORTION CONVENED TO THE CITY OF SACRAMENTO, A MUNICIPAL CORPORATION, BY GRANT DEED RECORDED DECEMBER 09, 2014 IN BOOK 20141209, PAGE 1183 OF OFFICIAL RECORDS.

PARCEL TWO:

ALL THAT PORTION OF LOTS 9, 10 AND 11, AS SHOWN ON THE PLAT OF "FREEPORT ACRES", RECORDED IN BOOK 15 OF MAPS, MAP NO. 20, RECORDS OF SACRAMENTO COUNTY, DESCRIBED AS Order Number: NCS-1053019-ONT1
Page Number: 17

First American Title Insurance Company
FOLLOWS:

BEGINNING AT THE MOST NORTHERLY CORNER OF THE PARCEL OF LAND DESCRIBED AND DESIGNATED PARCEL 1, IN THE DEED FROM PACIFIC GAS AND ELECTRIC COMPANY TO LAWRENCE J.

DEE AND WIFE, DATED SEPTEMBER 24, 1957 AND RECORDED IN BOOK 3390 OF OFFICIAL RECORDS, PAGE 84, SACRAMENTO COUNTY RECORDS, AND RUNNING THENCE ALONG THE NORTHERLY BOUNDARY LINE OF SAID PARCEL OF LAND DESIGNATED PARCEL 1: (1) SOUTH 72° 49' WEST 380.57 FEET TO THE NORTHWESTERLY CORNER OF SAID PARCEL 1; THENCE RUNNING ALONG THE NORTHERLY PROLONGATION OF THE WESTERLY BOUNDARY LINE OF SAID PARCEL 1; (2) NORTH 2° 32' WEST 180.88 FEET TO THE MOST SOUTHERLY CORNER OF THE PARCEL OF LAND DESCRIBED AND DESIGNATED PARCEL 2 IN SAID DEED DATED SEPTEMBER 24, 1957, AND RUNNING ALONG THE SOUTHERLY BOUNDARY LINE OF SAID PARCEL OF LAND DESIGNATED PARCEL 2; (3) NORTH 72° 49' EAST 380.57 FEET OF THE SOUTHEASTERLY CORNER OF SAID PARCEL OF LAND DESIGNATED PARCEL 2; THENCE RUNNING ALONG THE NORTHERLY PROLONGATION OF THE EASTERLY BOUNDARY LINE OF SAID PARCEL OF LAND DESIGNATED PARCEL 1; (4) SOUTH 2° 32' EAST 180.88 FEET TO THE POINT OF BEGINNING.

EXCEPTING THEREFROM THAT PORTION OF LAND DESCRIBED IN CERTAIN "FINAL ORDER OF CONDEMNATION" RECORDED NOVEMBER 07, 2005 IN BOOK 20051107, PAGE 1942 OF OFFICIAL RECORDS OF SAID COUNTY.

ALSO EXCEPTING THEREFROM SAID PARCEL ALL THAT PORTION CONVENED TO THE CITY OF SACRAMENTO, A MUNICIPAL CORPORATION, BY GRANT DEED RECORDED DECEMBER 09, 2014 IN BOOK 20141209, PAGE 1182 OF OFFICIAL RECORDS.

PARCEL THREE:

ALL OF LOTS 1 THROUGH 348, AS SHOWN ON THE "FINAL MAP DELTA SHORES WEST SUBDIVISION NO. P06-197", RECORDED ON DECEMBER 19, 2023 IN BOOK 452 OF MAPS, PAGE 2, OF TRACT MAPS, RECORDS OF SACRAMENTO COUNTY.

APN: 119-0010-060-0000 (Affects Parcel One)
119-0010-026-0000 (Affects Parcel Two) and
053-0180-021-0000 (Affects Parcel Three and other property)

Order Number: NCS-1053019-ONT1
Page Number: 18

First American Title Insurance Company

NOTICE I

Section 12413.1 of the California Insurance Code, effective January 1, 1990, requires that any title insurance company, underwritten title company, or controlled escrow company handling funds in an escrow or sub-escrow capacity, wait a specified number of days after depositing funds, before recording any documents in connection with the transaction or disbursing funds. This statute allows for funds deposited by wire transfer to be disbursed the same day as deposit. In the case of cashier's checks or certified checks, funds may be disbursed the next day after deposit. In order to avoid unnecessary delays of three to seven days, or more, please use wire transfer, cashier's checks, or certified checks whenever possible.

If you have any questions about the effect of this new law, please contact your local First American Office for more details.

NOTICE II

As of January 1, 1991, if the transaction which is the subject of this report will be a sale, you as a party to the transaction, may have certain tax reporting and withholding obligations pursuant to the state law referred to below:

In accordance with Sections 18662 and 18668 of the Revenue and Taxation Code, a buyer may be required to withhold an amount equal to three and one-third percent of the sales price in the case of the disposition of California real property interest by either:

1. A seller who is an individual with a last known street address outside of California or when the disbursement instructions authorize the proceeds be sent to a financial intermediary of the seller, OR

2. A corporate seller which has no permanent place of business in California.

The buyer may become subject to penalty for failure to withhold an amount equal to the greater of 10 percent of the amount required to be withheld or five hundred dollars ($500).

However, notwithstanding any other provision included in the California statutes referenced above, no buyer will be required to withhold any amount or be subject to penalty for failure to withhold if:

1. The sales price of the California real property conveyed does not exceed one hundred thousand dollars ($100,000), OR

2. The seller executes a written certificate, under the penalty of perjury, certifying that the seller is a resident of California, or if a corporation, has a permanent place of business in California, OR

3. The seller, who is an individual, executes a written certificate, under the penalty of perjury, that the California real property being conveyed is the seller's principal residence (as defined in Section 1034 of the Internal Revenue Code).

The seller is subject to penalty for knowingly filing a fraudulent certificate for the purpose of avoiding the withholding requirement.

The California statutes referenced above include provisions which authorize the Franchise Tax Board to grant reduced withholding and waivers from withholding on a case-by-case basis.

The parties to this transaction should seek an attorney's, accountant's, or other tax specialist's opinion concerning the effect of this law on this transaction and should not act on any statements made or omitted by the escrow or closing officer.

The Seller May Request a Waiver by Contacting:

Franchise Tax Board
Withhold at Source Unit
P.O. Box 651
Sacramento, CA 95812-0651
(916) 845-4900

Order Number: NCS-1053019-ONT1
Page Number: 19

First American Title Insurance Company
Privacy Policy

We Are Committed to Safeguarding Customer Information
In order to better serve your needs now and in the future, we may ask you to provide us with certain information. We understand that you may be concerned about what we will do with such information - particularly any personal or financial information. We agree that you have a right to know how we will utilize the personal information you provide to us. Therefore, together with our parent company, The First American Corporation, we have adopted this Privacy Policy to govern the use and handling of your personal information.

Applicability
This Privacy Policy governs our use of the information which you provide to us. It does not govern the manner in which we may use information we have obtained from any other source, such as information obtained from a public record or from another person or entity. First American has also adopted broader guidelines that govern our use of personal information regardless of its source. First American calls these guidelines its Fair Information Values, a copy of which can be found on our website at www.firstam.com.

Types of Information
Depending upon which of our services you are utilizing, the types of nonpublic personal information that we may collect include:
 Information we receive from you on applications, forms and in other communications to us, whether in writing, in person, by telephone or any other means;  Information about your transactions with us, our affiliated companies, or others; and  Information we receive from a consumer reporting agency.

Use of Information
We request information from you for our own legitimate business purposes and not for the benefit of any nonaffiliated party. Therefore, we will not release your information to nonaffiliated parties except: (1) as necessary for us to provide the product or service you have requested of us; or (2) as permitted by law.

We may, however, store such information indefinitely, including the period after which any customer relationship has ceased. Such information may be used for any internal purpose, such as quality control efforts or customer analysis. We may also provide all of the types of nonpublic personal information listed above to one or more of our affiliated companies. Such affiliated companies include financial service providers, such as title insurers, property and casualty insurers, and trust and investment advisory companies, or companies involved in real estate services, such as appraisal companies, home warranty companies, and escrow companies. Furthermore, we may also provide all the information we collect, as described above, to companies that perform marketing services on our behalf, on behalf of our affiliated companies, or to other financial institutions with whom we or our affiliated companies have joint marketing agreements.

Former Customers
Even if you are no longer our customer, our Privacy Policy will continue to apply to you.

Confidentiality and Security
We will use our best efforts to ensure that no unauthorized parties have access to any of your information. We restrict access to nonpublic personal information about you to those individuals and entities who need to know that information to provide products or services to you. We will use our best efforts to train and oversee our employees and agents to ensure that your information will be handled responsibly and in accordance with this Privacy Policy and First American's Fair Information Values. We currently maintain physical, electronic, and procedural safeguards that comply with federal regulations to guard your nonpublic personal information.

Order Number: NCS-1053019-ONT1
Page Number: 20

First American Title Insurance Company

CLTA/ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE (02-03-10)

EXCLUSIONS

In addition to the Exceptions in Schedule B, You are not insured against loss, costs, attorneys' fees, and expenses resulting from:

1. Governmental police power, and the existence or violation of those portions of any law or government regulation concerning:
(a) building; (d) improvements on the Land; (b) zoning; (e) land division; and (c) land use; (f) environmental protection.

This Exclusion does not limit the coverage described in Covered Risk 8.a., 14, 15, 16, 18, 19, 20, 23 or 27.

2. The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion does not limit the coverage described in Covered Risk 14 or 15.

3. The right to take the Land by condemning it. This Exclusion does not limit the coverage described in Covered Risk 17.

4. Risks:
(a) that are created, allowed, or agreed to by You, whether or not they are recorded in the Public Records; (b) that are Known to You at the Policy Date, but not to Us, unless they are recorded in the Public Records at the Policy Date; (c) that result in no loss to You; or
(d) that first occur after the Policy Date - this does not limit the coverage described in Covered Risk 7, 8.e., 25, 26, 27 or 28.

5. Failure to pay value for Your Title.

6. Lack of a right:
(a) to any land outside the area specifically described and referred to in paragraph 3 of Schedule A; and (b) in streets, alleys, or waterways that touch the Land.

This Exclusion does not limit the coverage described in Covered Risk 11 or 21.

7. The transfer of the Title to You is invalid as a preferential transfer or as a fraudulent transfer or conveyance under federal bankruptcy, state insolvency, or similar creditors' rights laws.

LIMITATIONS ON COVERED RISKS

Your insurance for the following Covered Risks is limited on the Owner's Coverage Statement as follows: For Covered Risk 16, 18, 19, and 21 Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A.

Your Deductible Amount Our Maximum Dollar
Limit of Liability
Covered Risk 16: 1% of Policy Amount or $2,500.00 (whichever is less) $10,000.00 Covered Risk 18: 1% of Policy Amount or $5,000.00 (whichever is less) $25,000.00 Covered Risk 19: 1% of Policy Amount or $5,000.00 (whichever is less) $25,000.00 Covered Risk 21: 1% of Policy Amount or $2,500.00 (whichever is less) $5,000.00

ALTA RESIDENTIAL TITLE INSURANCE POLICY (6-1-87)

EXCLUSIONS

In addition to the Exceptions in Schedule B, you are not insured against loss, costs, attorneys' fees, and expenses resulting from:

1. Governmental police power, and the existence or violation of any law or government regulation. This includes building and zoning ordinances and also laws and regulations concerning:
(a) and use
(b) improvements on the land
(c) and division
(d) environmental protection
This exclusion does not apply to violations or the enforcement of these matters which appear in the public records at Policy Date.

This exclusion does not limit the zoning coverage described in Items 12 and 13 of Covered Title Risks.

2. The right to take the land by condemning it, unless:
(a) a notice of exercising the right appears in the public records on the Policy Date (b) the taking happened prior to the Policy Date and is binding on you if you bought the land without knowing of the taking

3. Title Risks:

Order Number: NCS-1053019-ONT1
Page Number: 21

First American Title Insurance Company
(a) that are created, allowed, or agreed to by you
(b) that are known to you, but not to us, on the Policy Date -- unless they appeared in the public records (c) that result in no loss to you
(d) that first affect your title after the Policy Date -- this does not limit the labor and material lien coverage in Item 8 of Covered Title Risks

4. Failure to pay value for your title.

5. Lack of a right:
(a) to any land outside the area specifically described and referred to in Item 3 of Schedule A OR (b) in streets, alleys, or waterways that touch your land This exclusion does not limit the access coverage in Item 5 of Covered Title Risks.

2006 ALTA LOAN POLICY (06-17-06)

EXCLUSIONS FROM COVERAGE

The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of:

1. a. Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to

i. the occupancy, use, or enjoyment of the Land;
ii. the character, dimensions, or location of any improvement erected on the Land; iii. the subdivision of land; or
iv. environmental protection;
or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5.
b. Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6.

2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8.

3. Defects, liens, encumbrances, adverse claims, or other matters a. created, suffered, assumed, or agreed to by the Insured Claimant; b. not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy;
c. resulting in no loss or damage to the Insured Claimant; d. attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 13, or 14); or
e. resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage.

4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing-business laws of the state where the Land is situated.

5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury or any consumer credit protection or truth-in-lending law.

6. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction creating the lien of the Insured Mortgage, is
a. a fraudulent conveyance or fraudulent transfer, or
b. a preferential transfer for any reason not stated in Covered Risk 13(b) of this policy.

7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the Insured Mortgage in the Public Records. This Exclusion does not modify or limit the coverage provided under Covered Risk 11(b).

The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage:

EXCEPTIONS FROM COVERAGE

This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) that arise by reason of:

1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records.

2. Any facts, rights, interests, or claims that are not shown by the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land.

3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records.

4. Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an Order Number: NCS-1053019-ONT1
Page Number: 22

First American Title Insurance Company
accurate and complete land survey of the Land and not shown by the Public Records.

5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records.

6. Any lien or right to a lien for services, labor or material not shown by the public records.

2006 ALTA OWNER'S POLICY (06-17-06)

EXCLUSIONS FROM COVERAGE

The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of:

1. a. Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to

i. the occupancy, use, or enjoyment of the Land;
ii. the character, dimensions, or location of any improvement erected on the Land; iii. the subdivision of land; or
iv. environmental protection;
or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5.
b.Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6.

2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8.

3. Defects, liens, encumbrances, adverse claims, or other matters a. created, suffered, assumed, or agreed to by the Insured Claimant; b. not Known to the Company, not recorded in the Public Records at Date of Policy, but known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy;
c. resulting in no loss or damage to the Insured Claimant; d. attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 9 and 10); or
e. resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Title.

4. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors’ rights laws, that the transaction vesting the Title as shown in Schedule A, is
a. a fraudulent conveyance or fraudulent transfer; or
b. a preferential transfer for any reason not stated in Covered Risk 9 of this policy.

5. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A.

The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage:

EXCEPTIONS FROM COVERAGE

This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) that arise by reason of:

1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records.

2. Any facts, rights, interests, or claims that are not shown by the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land.

3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records.

4. Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and not shown by the Public Records.

5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records.

6. Any lien or right to a lien for services, labor or material not shown by the public records.

ALTA EXPANDED COVERAGE RESIDENTIAL LOAN POLICY (07-26-10)

EXCLUSIONS FROM COVERAGE
Order Number: NCS-1053019-ONT1
Page Number: 23

First American Title Insurance Company

The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of:

1. a. Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to

i. the occupancy, use, or enjoyment of the Land;
ii. the character, dimensions, or location of any improvement erected on the Land; iii. the subdivision of land; or
iv. environmental protection;
or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16. b. Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16.

2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8.

3. Defects, liens, encumbrances, adverse claims, or other matters

a. created, suffered, assumed, or agreed to by the Insured Claimant; b. not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy;
c. resulting in no loss or damage to the Insured Claimant; d. attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 16, 17, 18, 19, 20, 21, 22, 23, 24, 27 or 28); or e. resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage.

4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing-business laws of the state where the Land is situated.

5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury or any consumer credit protection or truth-in-lending law. This Exclusion does not modify or limit the coverage provided in Covered Risk 26.

6. Any claim of invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage as to Advances or modifications made after the Insured has Knowledge that the vestee shown in Schedule A is no longer the owner of the estate or interest covered by this policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11.

7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching subsequent to Date of Policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11(b) or 25.

8. The failure of the residential structure, or any portion of it, to have been constructed before, on or after Date of Policy in accordance with applicable building codes. This Exclusion does not modify or limit the coverage provided in Covered Risk 5 or 6.

9. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction creating the lien of the Insured Mortgage, is
a. a fraudulent conveyance or fraudulent transfer, or
b. a preferential transfer for any reason not stated in Covered Risk 27(b) of this policy.

KB Home Sacramento, Inc. 3005 Douglas Blvd Suite 250 Roseville CA 95661 (916) 945-3880 Invoice No. 24 – Delta Shores West
July 16, 2024
M&H Realty Partners VI L.P. with a copy to: Westland Capitol Partners c/o Merlone Geier Partners 4370 Town Center Blvd., Ste. 100 4365 Executive Drive, Suite 1400 El Dorado Hills, California 95762 San Diego, California 92121 Attn: Bill Bunce
Attn: Bradley A. Geier, Jonathan Lischke and Barron Caronite Subject: Goodfellow Invoice No. 24
Current Payment Due to Goodfellow from MHRP $ 141,618.43 Original Contract Sum $ 36,625,600.90
Net Change by Change Order $ 967,835.18
Contract Sum to Date $ 37,593,436.08
Total Completed and Stored To Date $ 35,286,401.66
Retainage 10% of Completed Work $ 3,446,434.71
Total Earned Less Retention $ 31,839,966.95
Less Previous Pay Applications $ 31,529,127.56
Current Payment Due $ 310,839.39
Balance To Finish Plus Retention $ 5,753,469.13
JDA Current Payment Obligations:

KB Home 54.44% $ 169,220.96
MHRP 45.56% $ 141,618.43
$ 310,839.39
HBT DS
approved for Payment By:
x x xx
x___________________ __________________
x
x x
x
___________________ __________________
x
QB
x
x

P.O. Box 598
, Wenatchee, WA 98807
135 N. Wenatchee
Ave., Wenatchee, WA 98801
Phone 509.66

2.7111 | Fax 509.662.2621
CL# GOO
DFBL825PH | Equal Opportunity Employer

July 31, 2024

Important Security Alert: Protecting Your Payments with Goodfellow Bros. (GBI)

Dear Valued
Customer,

I hope this letter finds you well. In recent times, we have become aware of a concerning security issue that could potentially impact our valued customers like you.

This scheme involves hackers attempting to gain access to your communication channels, often followed by fraudulent payment and banking information change instructions sent directly to your accounting teams. These deceptive communications are designed to mimic official messages from trusted members of our GBI staff, making them appear genuine. Such messages may include requests to change payment details or banking information.

What is particularly concerning is the level of sophistication these fraudsters employ. They often use email domains that closely resemble our legitimate domain, creating a convincing illusion of authenticity. For instance, they may use an email domain such as @goodfellowbrosinc.com instead of our legitimate domain, @goodfellowbros.com. Additionally, these fraudulent messages m
ay incorporate manipulated email signature lines, logos, and other elements, making them appear highly convincing. Hackers even take the time to trade messages with your staff and build false customer relationships before sending a payment fraud request.

The severity of this threat cannot be overstated, as falling victim to this scam could result in substantial financial losses for your organization. It is critical this information is shared with your team and these key steps are taken to protect your financial interests:

1. Payment Information Security : Goodfellow Bros. will NEVER change our banking information without formal written advisemen
t directly from me, the CFO, followed by a phone call to verify the changes with a trusted contact.

2. Employee Awareness
: Take immediate steps to educate your staff on this emerging issue and what to watch out for. There are numerous valuable resources available on the web, and your information security teams can provide further guidance on the appropriate safeguards needed to secure your systems and educate your teams.

Furthermore, we strongly advise that if your staff receives any form of fraudulent request to modify our verified payment information, you immediately reach out to us directly to report the request and implement internal measures to ensure the security of your systems.

3. Payment Accountability: Finally, and most importantly, I must emphasize that if, inadvertently, you make payments intended for Goodfellow Bros. to fraudulent accounts, all associated amounts will be at your expense.

All amounts due to Goodfellow Bros. will remain unpaid until full remittance is made to GBI, in accordance with the payment terms outlined in all applicable contracts between us.

We value our relationship with you and take payment fraud very seriously. We ask that you also be vigilant to prevent fraud and help protect our common interests. If you have any questions, please do not hesitate to contact me.

Regards,

Simon Poole

Chief Financial Officer
[email protected]

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   

                                                              
                              
 

   
        
               
 


 
   

                             
                             
                         
 

   
        
               
 


 
   

                                                                       
                
 

   
        
               
 


 
   

                                         
                                              
 

   
        
               
 


 
   

                                                              
                         
 

   
        
               
 


 
   

                    
                                                     
          
 

   
        
               
 


 
   
        
              
              
                                                 
 

   
        
               
 


 
   

                                                                       
                
 

   
        
               
 


 
   

                     

KB portion $48,996.00

KB portion $10,671.33
GB-CA Job #
NOTICE TO CLAIMANT: THIS DOCUMENT WAIVES AND RELEASES LIEN, STOP PAYMENT

NOTICE, AND PAYMENT BOND RIGHTS UNCONDITIONALLY AND STATES THAT YOU HAVE BEEN PAID FOR GIVING UP THOSE RIGHTS. THIS DOCUMENT IS ENFORCEABLE AGAINST YOU IF YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN PAID. IF YOU HAVE NOT BEEN PAID, USE A CONDITIONAL WAIVER AND RELEASE FORM.

Name of Claimant:

Name of Customer:

Job Location:

Owner:

Through Date:

This document waives and releases lien, stop payment notice, and payment bond rights the claimant has for labor and service provided, and equipment and material delivered, to the customer on this job through the Through Date of this document. Rights based upon labor or service provided, or equipment or material delivered, pursuant to a written change order that has been fully executed by the parties prior to the date that this document is signed by the claimant, are waived and released by this document, unless listed as an Exception below. The claimant has received the following progress payment:
$
This document does not affect any of the following:
(1) Retentions.
(2) Extras for which the claimant has not received payment. (3) Contract rights, including (A) a right based on rescission, abandonment, or breach of contract, and (B) the right to recover compensation for work not compensated by the payment.

Claimant's Signature:

Claimant's Title:

Date of Signature:

FORM R102 rev 07-01-12
Identifying Information
Unconditional Waiver and Release
Exceptions
Signature

UNCONDITIONAL WAIVER AND RELEASE UPON PROGRESS PAYMENT
422221

WSA COMPLIANCE, LLC
Goodfellow Bros. California, LLC
Delta Shores West, Elk Grove, CA

KB HOME SACRAMENTO INC
04/30/2024
0 General Manager
6/24/24
CALIFORNIA LICENSE NO. 758610
NEVADA LICENSE NO. 0050713

CONDITIONAL WAIVER AND RELEASE ON PROGRESS PAYMENT
(CA CIVIL CODE §8132)
NOTICE: THIS DOCUMENT WAIVES THE CLAIMANT’S LIEN, STOP PAYMENT NOTICE, AND PAYMENT BOND RIGHTS EFFECTIVE ON RECEIPT OF PAYMENT. A PERSON SHOULD NOT RELY ON THIS DOCUMENT UNLESS SATISFIED THAT THE CLAIMANT HAS RECEIVED PAYMENT.

Identifying Information:

Name of Claimant: Syblon Reid
Name of Customer:

Job Location: Delta Shores West
Owner: KB Home Sacramento, Inc.

Through Date:

Conditional Waiver and Release
This document waives and releases lien, stop payment notice, and payment bond rights the claimant has for labor and service provided, and equipment and material delivered, to the customer on this job through the date of this document.

Rights based upon labor or service provided, or equipment or material delivered, pursuant to a written change order that has been fully executed by the parties prior to the date that this document is signed by the claimant, are waived and released by this document, unless listed as an Exception below. This document is effective only on the claimant’s receipt of payment from the financial institution on which the following check is drawn.

Maker of Check: KB Home Sacramento, Inc.

Amount of Check: $
Check Payable to: Syblon Reid
Exceptions:

This document does not affect any of the following:

Amount(s) of unpaid progress payment(s):
(4) Contract rights, including
(A) a right based on rescission, abandonment, or breach of contract, and (B) the right to recover compensation for work not compensated by the payment.

SIGNATURE
Claimant’s Signature:

Claimant’s Title Accounting Administrator
Date of Signature: 0 /2 /2024
Retentions
Extras for which the claimant has not received payment.

The following progress payments for which the claimant has previously given a conditional waiver and release but has not received payment:

Date(s) of waiver and release
$ remaining balance
2024, $ 2024
Feb bal is due from partner
KB pd portion of $8,835.15
ck #2740017 5/22/24
GTGC Job # 422221
NOTICE TO CLAIMANT: THIS DOCUMENT WAIVES AND RELEASES LIEN, STOP PAYMENT

NOTICE, AND PAYMENT BOND RIGHTS UNCONDITIONALLY AND STATES THAT YOU HAVE BEEN PAID FOR GIVING UP THOSE RIGHTS. THIS DOCUMENT IS ENFORCEABLE AGAINST YOU IF YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN PAID. IF YOU HAVE NOT BEEN PAID, USE A CONDITIONAL WAIVER AND RELEASE FORM.

Name of Claimant: Oliveira Fence Inc.

Name of Customer: Goodfellow Bros. California LLC
Job Location: Delta Shores West, Elk Grove, CA
Owner: KB HOME SACRAMENTO INC
Through Date: 4/30/2024
This document waives and releases lien, stop payment notice, and payment bond rights the claimant has for labor and service provided, and equipment and material delivered, to the customer on this job through the Through Date of this document. Rights based upon labor or service provided, or equipment or material delivered, pursuant to a written change order that has been fully executed by the parties prior to the date that this document is signed by the claimant, are waived and released by this document, unless listed as an Exception below. The claimant has received the following progress payment:
$
This document does not affect any of the following:
(1) Retentions.
(2) Extras for which the claimant has not received payment. (3) Contract rights, including (A) a right based on rescission, abandonment, or breach of contract, and (B) the right to recover compensation for work not compensated by the payment.

Claimant's Signature:

Claimant's Title: Vice President
Date of Signature: June 21, 2024
Identifying Information
Unconditional Waiver and Release
Exceptions
Signature

0.00 UNCONDITIONAL WAIVER AND RELEASE UPON PROGRESS PAYMENT

GBI-GC Job # 422221

CONDITIONAL WAIVER AND RELEASE UPON PROGRESS PAYMENT
NOTICE: THIS DOCUMENT WAIVES THE CLAIMANT'S LIEN, STOP PAYMENT NOTICE, AND PAYMENT BOND RIGHTS EFFECTIVE ON RECEIPT OF PAYMENT. A PERSON

SHOULD NOT RELY ON THIS DOCUMENT UNLESS SATISFIED THAT THE CLAIMANT HAS RECEIVED PAYMENT.

Identifying Information
Conditional Waiver and Release
This document waives and releases lien, stop payment notice, and payment bond rights the claimant has for labor and service provided, and equipment and material delivered, to the customer on this job through the Through Date of this document. Rights based upon labor or service provided, or equipment or material delivered, pursuant to a written change order that has been fully executed by the parties prior to the date that this document is signed by the claimant, are waived and released by this document, unless listed as an Exception below. This document is effective only on the claimant's receipt of payment from the financial institution on which the following check is drawn:

Maker of Check:

Amount of Check: $103,201.99
Check Payable to: Moreno Trenching, Ltd
Exceptions
This document does not affect any of the following:
(1) Retentions.
(2) Extras for which the claimant has not received payment. (3) The following progress payments for which the claimant has previously given a conditional waiver and release but has not received payment:

Date(s) of waiver and release:_______________________________________ Amount(s) of unpaid progress payments __________________________________ (4)Contract rights, including (A) a right based on rescission, abandonment, or breach of contract, and (B) the right to recover compensation for work not compensated by the payment.

Signature
Claimant's Signature:

Claimant's Title:

Date of Signature:

FORM R101 rev 07-01-12
Name of Claimant Moreno Trenching, Ltd.

Name of Customer Goodfellow Bros. California, LLC
Job Location Delta Shores West
Delta Shores West
Owner KB HOME SACRAMENTO INC
Through Date 04/30/24
KB portion $56,183.16

cc

Absorption Analysis
Delta Shores Improvement Area 1
Sacramento, CA
for the City of Sacramento

May 24, 2024
Revised June 27, 2024
Revised July 23. 2024

John Burns Real Estate Consulting 2

3 Introduction

5 Executive Summary

Subject Development &
Planned Product
49 Rental Competitive Market

62 Apartment Market Trends

70 Potential Future Supply

Absorption & Capture
Analysis

30 For-Sale Market Analysis

40 For-Sale Market Trends
76 84
92 100
Location & Property
Analysis
Sacramento MSA Economic
& Housing Market Trends

Demographic Trends

Appendix: Limiting
Conditions
Table of Contents
1 1

John Burns Real Estate Consulting 3
Methodology
Project Details
Authors

Provide relevant market data to support sales / lease rates and resulting build-out (absorption) schedules for for-sale, apartment, and build-to-rent product components.

Review Subject information and visit the site. Collect and analyze information on actively selling new home and rental projects in the Competitive Market Area (“CMA”). The CMA is defined as Sacramento south of approximately Highway 50 and west of Highway 99, as well as the northern portion of western Elk Grove (roughly west of Highway 99). Compile and analyze macroeconomic, housing market, and demographic data and trends.

Dean Wehrli
Principal
[email protected]

Ed DiCambio
Consultant
[email protected]
Introduction
Objective
Client The City of Sacramento
Subject The Subject is the Improvement Area 1 portion of the Delta Shores master- planned community (“MPC”). It encompasses the portion of Delta Shores west of Interstate 5. The Subject includes for-rent and for-sale product types.

Location Mainly south of Cosumnes River Blvd. and west of Interstate 5 in southwestern Sacramento, Sacramento County, Sacramento MSA, CA
Study
Period
May 2024

John Burns Real Estate Consulting 4
Introduction

Assumptions
We assume the Subject will have:
• home sizes and types as described for the Subject in this report;
• property taxes and HOA fees as stated in this report; • homes of the same general quality and appeal as described in this report;
• “market-appropriate” community entrance, monumentation, and landscaping of the same general appeal as nearby new home and rental projects;
• community amenities as described in this report, with substantial completion of amenities coinciding with first units’ completion;
• advertising and marketing generating qualified shopper traffic commensurate with communities achieving absorption similar to that projected for the Subject;
• a community website with floorplans, accurate pricing, and an Internet sales / leasing consultant;
• fully decorated and furnished model homes / rental units available and amenities at least under construction at
market entry; and
• experienced sales and leasing agent(s) familiar with the local market.

Failure to meet these conditions could adversely impact achievable prices and/or sales rates.

Level of Competition
Our pricing and absorption recommendations assume competition during the Subject’s sales period will be similar to today’s competition. Limiting Conditions

Executive Summary

John Burns Real Estate Consulting 6

Objectives
• The primary task of this analysis was to assess the residential absorption potential for Improvement Area 1 of the Delta Shores master plan (“Subject” or “Subject Development”) in Sacramento, CA. Though there are no formal approvals for the two Subject parcels north of Cosumnes River Blvd., in keeping with past analyses and Developer input we have assumed these parcels would be developed either as Build-to-Rent (BTR) homes or as garden-style apartments. The Subject will include either 435 total residential units if those parcels are developed as a Build-to-Rent (BTR) community or 609 residential units if those parcels are developed as a garden-style apartment complex. These two parcels could also be eventually developed as for-sale housing as well. The three parcels south of Cosumnes River Blvd. will be developed as 348 for-sale units in the form of single-family homes across three distinct neighborhoods/product types.
• To accomplish this objective, we:
 Assessed the Subject in terms of planned product, location, orientation, place in the market, etc.  Estimated market size relevant to the Subject’s residential uses  Examined relevant for-sale comparables in the CMA and examined historical for-sale pricing and sales trends to discern market appropriateness of the Subject product and pricing and estimate achievable absorption rates  Developed market-appropriate product and pricing for Subject housing product. However, note that the three for-sale neighborhoods all have planned products currently in the market or soon to open by the two builders (KB Home and Meritage Homes) that will be building and selling those homes. One neighborhood (LDR – 1 – South) also has pricing in place by its builder, KB Home. We developed product and pricing for all uses to assess potential absorption rates for each proposed product type.  Estimated logical build-out schedules of Subject units, both for-sale and for-rent, based on estimated rational absorption rates  Assessed these build-out schedules against our estimates of market size to discern if they are achievable  Examined historical rental market trends in the Subject Area and the surrounding region. We surveyed apartment comparables and stand-alone single-family rentals in the CMA, and also regional BTR communities to assess the validity of the Subject rental product, pricing, and absorption potential.
 Gathered informat ion on relevant potential future residential supply in the Subject Area  Examined relevant regional and local economic, housing market, and demographic trends that could impact the absorption potential of the Subject
Executive Summary

Executive Summary

Subject Development
• The Subject is part of Delta Shores, a cohesive mixed-use master plan of over 780 acres, 5,200+ planned new residential units, 1.3+ million square feet of retail, two new elementary schools, parks, extensive open space, and wetlands. The Subject is near a planned rail commuter station. A major bike trail that passes through Delta Shores will go all the way to the Old Town area of Sacramento near major employment centers. Delta Shores is situated along Interstate 5, which has immediate access to this key north- south transportation corridor throughout the region.
• The Subject is Improvement Area 1 of Delta Shores, sometimes called Delta Shores West. This portion of Delta Shores was planned to have 348 for-sale units south of Cosumnes River Blvd. The two parcels to the north can accommodate 106 apartment units and 52 units leased as build-to-rent (BTR) small-lot detached homes. In consultation with the Client, however, for this analysis, we have assumed that both parcels would be merged and developed as either a BTR community or an apartment complex. This alters the potential unit counts for the north part of the Subject, and those unit counts are reflected in this analysis. The for-sale homes include alley- and front-loaded product.

We assume the apartment complex would be a conventional three-story, multi-building community with surface parking and Class A amenities. We assume a BTR development would offer small lot detached homes and some modest amenity package. • KB Home will build and market the alley-loaded (minimum lots 2,975 SF) and front-loaded (minimum lots 5,000 SF) product on MDR-1- South and LDR-1-South, while Meritage Homes will build the larger lot neighborhood (LDR-2-South). We have product and pricing for LDR-1-South, product and starting pricing for MDR-1-South (both KB Home), and product for LDR-2-South. We have assumed pricing for the latter neighborhood. We assessed absorption potential on a per-project basis (i.e., each for-sale neighborhood and each rental community scenario) and on a cumulative basis (annual community-wide absorption levels). • The map to the right shows the Subject outlined, consisting of all residential parcels west of Interstate 5. The commercial uses immediately east of the freeway have mostly been
completed and are active (though note that they are not within the Delta Shores Community Facilities District [CFD]). • The Subject will include extensive park and open space both south of and north of Cosumnes River Blvd. (called
Stonecrest Ave. in this map). There will be a bike lane along the soundwall on the site's eastern edge. The park space north of the two northern parcels will buffer the Subject from a low-impact Verizon office center to its immediate north.

Some residential and light office uses are also west of the southern parcels along Freeport Blvd.

John Burns Research and Consulting 7
John Burns Real Estate Consulting 8

• Regional and Competitive Market Area For-Sale Housing Market. For-sale housing market conditions weakened considerably in 2022 when mortgage rates shot up, putting downward pressure on pricing, heightening builder incentives, and depressing sales – albeit from enhanced sales during the Covid pandemic. The market stabilized last year as mortgage rates eased and have held steady even as rates again pushed modestly upward in recent months. The economy has performed solidly, new home builders face far more limited resale competition, and buyers have acclimated to higher mortgage rates. We expect slower price growth this year than 2023 but forecast positive year-over-year housing market price change through at least 2027. Note that our Subject pricing is given current market conditions, but we assume these prices would shift with regional price movement between now and the absorption of the Subject. • Apartment Market. Apartment market conditions have remained strong for the better part of a decade before beginning to flatten in the spring of 2022. Effective rent rates regionally and in Sacramento County dipped slightly in the latter part of 2022 and the first part of 2023, but since then have remained reasonably stable to modestly increasing and at a historically high level. Occupancies followed the same pattern as pricing and as of April 2024 have shifted slightly upward from recent months to a regional average of 94.7% (per Real Page, a national rental market data aggregator and property management software firm). Concessions are not unheard of but are relatively modest when offered (e.g., one month of free rent with a 12-month lease). We project continued solid annual appreciation for both apartments and single-family rentals (a useful proxy for BTR developments) through 2027. • Future Supply. The potential future residential supply most relevant to the Subject appears manageable. Though continuing development in southern Elk Grove could be partially competitive with the Subject’s for-sale homes, this will build-out at a reasonable rate over the next several years. Elk Grove has long been a very active submarket, often with more activity than at present. South Sacramento has limited new home developments on the horizon other than the Subject due to a lack of developable land. There will be occasional infill projects. More proximate to the Subject, the Stone Beetland master plan may enter the market during the Subject’s marketing period, but this development is still in its early stages. The same developer has also purchased future phases of Delta Shores north of Cosumnes River Blvd. and east of Interstate 5, so is likely to limit supply so as not to compete with the Subject. We expect new apartment projects to open in 2023-24 regionally. However, the most likely direct potential competition to the Subject apartments would be any apartment activity in the Delta Shores master plan on the multifamily pads east of Interstate 5. • Economic Trends. The regi on rebounded strongly following the first weeks of the COVID-19 pandemic with above-average job growth and income growth. Generally, we project continued solid growth in the region's jobs, incomes, and population for the next few years.

Multifamily permits have ticked up over the last five years but from muted levels. Critically, the employment growth to permit ratio (E/P Ratio) that measures demand and supply has been extraordinarily positive for several years, indicating pent-up demand. We expect this metric to soften in the coming years, but to remain positive.

Executive Summary
Market Factors
John Burns Real Estate Consulting 9

Market Factors cont’d
• Mortgage Rates: We project mortgage rates to finish 2024 at an average rate of 6.9% (entire calendar-year average). This is roughly in line with where rates are at present, but slightly higher than they were earlier in the year. Though this diminishes affordability, it also “locks in” many would-be sellers, a dynamic that limits resale supply and directly benefits new home sales. Most economists do not envisage interest rate easing from the Federal Reserve until at least late this year due to continued inflation above 3% annualized. Still, builder incentives, households acclimating to higher rates, and limited resale supply have all bolstered the new home market. JBREC projects mortgage rates to ease modestly through 2027, coming in at full-year averages of 6.5%, 5.9%, and 6.0%, respectively (2025, 2026, and 2027).
• Demographic Trends. We project modest population and household growth in the region that is slower than the long-term norm. The remote work migration to more affordable markets has dissipated since earlier in the Covid period. Still, Sacramento’s relative affordability has long attracted those employed in the Bay Area who can work remotely all or some of the time. Countering this are households moving out of California altogether for employment or, far more likely, more affordable housing.

Key Conclusions
• The immediate area around the Subject and the city of Sacramento more generally (outside of the Natomas area to the north) has long been constrained, by a lack of available land, in terms of new residential development. For this reason, we have assessed market size mainly on a county-wide level and at the Metropolitan Statistical Area (MSA) level. The Sacramento MSA includes Sacramento, Placer, El Dorado, and Yolo Counties.
• Single-family permit data relevant to the for-sale market shows market size estimates ranging from about 1,300 to over 8,600 new units annually based on city-wide, county-wide, and MSA-wide data. Multifamily permit data relevant to the rental market shows market-size estimates of about 925 to 2,500 annually across the same areas. • Given market size estimates and corresponding capture rates, as well as long -term market norms and the more recent performance of comparable new home projects, we believe absorption levels of 3.5 to 4.0 per month for for -sale neighborhoods, 18.0 leases per month for an apartment complex, and 6.0 leases per month for a BTR community at the Subject are realistic and achievable.
• These absorption rates lead to a build-out by 2028 for the for-sale component. A BTR community would reach equilibrium in 2026, while an apartment complex would reach equilibrium in 2027. Equilibrium is defined as achieving 95% occupancy. Given our market size estimates, these build-out scenarios' necessary market capture rates are reasonable for both the for-sale and for-rent components. Market conditions for either use are projected to remain stable through 2027, the latest year JBREC currently forecasts trends.

Executive Summary

Subject Development and
Planned Product

John Burns Real Estate Consulting 11

Subject Development Overview
• Delta Shores is a 782-acre master-planned community in southwest Sacramento, immediately south of the Pocket and Meadowview areas of the City and north of the western portion of the City of Elk Grove. It has already opened much of its total planned +/- 1.3 million square feet of commercial space situated on the eastern side of Interstate 5 south of the new Cosumnes River Blvd. interchange. (Note that this retail space is not part of the Delta Shores CFD.) At build-out per current planning, Delta Shores will encompass over 5,200 residential units, about 144 acres of open space, and a +/- 20-acre mixed-use town center. There will be school uses, parks, interconnecting trails, and thematic landscaping to provide a sense of community cohesion. • Improvement Area 1 is the subject of this analysis. It is shown in the map below as an inset to illustrate its location within the overall master plan and is also shown on the next page.

Subject Development
John Burns Real Estate Consulting 12

There are two additional Subject parcels located north of Cosumnes River Blvd. (previously named Stonecrest Avenue.).

Subject (Improvement Area 1) Site Plan
John Burns Real Estate Consulting 13
Subject Development

Subject Product Array Summary
• The planned product array for the Subject is summarized below with two options. The top table displays the total product array (609 units) if the north parcels were developed as an apartment complex, and the bottom table (435 units) assumes those parcels will be developed as a BTR community. For-sale parcels are the same in both scenarios. • The “% Mix” reflects the percent of all residential units, rental and for-sale. “North” in planning area names indicate the parcel’s location is north of Cosumnes River Blvd., and “South” refers to parcels south of Cosumnes River Blvd. Both scenarios combined the north parcels into a single developable parcel. The apartment scenario on the top table assumes maximum density to arrive at 261 units. The BTR scenario assumes small lot detached homes at about nine units to the acre to translate into 87 units. All South parcels are actual unit counts per Landowner.

Delta Shores Improvement Area 1 Product Array - North Parcels Apartment Scenario

Planning Area Acreage Dens. Rng Density Units % Mix Product Market Entry HDR -1 + MDR -2 - North 9.66 15-27 du/ac. 27.0 261 43% 3-Story Garden Apts 2Q 2026 MDR-1 - South 17.87 8-14 du/ac. 6.2 110 18% Alley SFD 35' x 85' Q2 2024 LDR-1 - South 17.38 4-7 du/ac. 4.7 81 13% SFD 50' x 100' Q2 2024 LDR-2 - South 42.21 4-7 du/ac. 3.7 157 26% SFD 65' x 100' Q4 2024 Totals 87.12 609 100%
Notes: LDR = Low Density Residential. MDR = Medium Density Residential. HDR = High Density Residential. Densities are ranges and expressed as dwelling units per acre (du/ac).

Delta Shores Improvement Area 1 Product Array - North Parcels Build-to-Rent Scenario

Planning Area Acreage Dens. Rng Density Units % Mix Product Market Entry HDR -1 + MDR -2 - North 9.66 8-14 du/ac. 9.0 87 20% Small Lot Det. BTR 4Q 2025 MDR-1 - South 17.87 8-14 du/ac. 6.2 110 25% Alley SFD 35' x 85' Q2 2024 LDR-1 - South 17.38 4-7 du/ac. 4.7 81 19% SFD 50' x 100' Q2 2024 LDR-2 - South 42.21 4-7 du/ac. 3.7 157 36% SFD 65' x 100' Q4 2024 Totals 87.12 435 100%
Notes: LDR = Low Density Residential. MDR = Medium Density Residential. HDR = High Density Residential. Densities are ranges and expressed as dwelling units per acre (du/ac).

John Burns Real Estate Consulting 14

For-Sale Product and Pricing Summary – Detail
• Note that lot sizes, total unit counts, and home sizes are per Landowner and their Builder partners (KB Home for the MDR-1 – South and LDR-1 South and Meritage for LDR-2 – South). LDR-1 – South is active and marketed as “Edgewater.” Product (sizes, bed/bath, floors/parking) and pricing reflect actuals. The MDR-1 – South product will soon open as “Riva.” Product is per KB Home as is their approximate starting base price. Overall pricing is per JBREC and in view of Edgewater pricing. Meritage Homes will build LDR-2 – South and reflects product and JBREC pricing to position them rationally in the market. Note that lot sizes are minimums. In actuality, the vast bulk of lot sizes are larger than each minimum. Incentives for the two KB Home neighborhoods are per KB Home. We have assumed slightly higher incentives for Meritage given absolute price points and their history.

Delta Shores Sacramento
Unit Base Net Net Total 90% 35%
Size Tax Add'l Base Closing Base Ttl Bldr Average Total Price/ 7.15% Income Mix (SqFt) Bed Other Bath Levels Pkg Rate Taxes HOA Price Costs Price & Buyer Premium Price SqFt Total Price to Qualify Delta Shores IA-1 MDR-1 - South KB Home
Product Alley SFD Sales Start Jun-24 37 1,795 4 3.0 2 2 1.15% $5,220 $190 $605,000 ($5,000) $600,000 $33,275 $2,000 $635,275 $354 $5,405 $185,000 Total Uni
ts 110 36 2,102 4 Loft 2.5 2 2 1.15% $5,220 $190 $635,000 ($5,000) $630,000 $34,925 $2,000 $666,925 $317 $5,643 $193,000 Min Lot/Density 2,975 Target Sales Rate 4.0 37 2,236 5 Loft 3.0 2 2 1.15% $5,220 $190 $648,000 ($5,000) $643,000 $35,640 $2,000 $680,640 $304 $5,746 $197,000 Dimens/Config 35' x 85' Sell-Out (months) 28
Units Remaining 110
Total/Avg 110 2,044 1.15% $5,220 $190 $629,282 ($5,000) $624,282 $34,611 $2,000 $660,892 $323 $5,598 $191,655 Delta Shores IA-1 LDR-1 - South KB Home
Product SFD Sales Started May-24 20 1,685 3 Den 2.0 1 2 1.15% $5, 220 $190 $665,990 ($5,000) $660,990 $38,294 $3,000 $702,284 $417 $5,909 $203,000 Total Units 81 20 2,188 3 Den 2.0 1 2 1.15% $5,220 $190 $715,990 ($5,000) $710,990 $41,169 $3,000 $755,159 $345 $6,307 $216,000 Configuration 5,000 Target Sales Rate 4.0 21 2,391 4 Loft 3.0 2 2 1.15% $5,220 $190 $725,990 ($5,000) $720,990 $41,744 $3,000 $765,734 $320 $6,387 $219,000 Dimens/Config 50' x 100' Sell-Out (months) 20 20 2,693 5 Flex 3.0 2 2 1.15% $5,220 $190 $755,990 ($5,000) $750,990 $43,469 $3,000 $797,459 $296 $6,625 $227,000 Units Remaining 81
Total/Avg 81 2,241 1.15% $5,220 $190 $716,113 ($5,000) $711,113 $41,177 $3,000 $755,290 $337 $6,308 $216,284 Delta Shores IA-1 LDR-2 - South Meritage
Product SFD Sales Start Nov-24 31 2,339 4 Flex 2.0 1 2 1. 15% $5,220 $190 $750,000 ($15,000) $735,000 $45,000 $15,000 $795,000 $340 $6,607 $227,000 Total Units 157 32 2,515 4 Flex 3.0 2 2 1.15% $5,220 $190 $767,000 ($15,340) $751,660 $46,020 $15,340 $813,020 $323 $6,743 $231,000 Min Lot/Density 6,500 Target Sales Rate 3.50 31 2,698 4 Flex 3.0 2 3T 1.15% $5,220 $190 $785,000 ($15,700) $769,300 $47,100 $15,700 $832,100 $308 $6,886 $236,000 Dimens/Config 65' x 100' Sell-Out (months) 45 32 2,916 4 Flx/Lft 3.0 2 3T 1.15% $5,220 $190 $807,000 ($16,140) $790,860 $48,420 $16,140 $855,420 $293 $7,062 $242,000 31 3,127 5 Flx/Lft 3.5 2 3T 1.15% $5,220 $190 $828,000 ($16,560) $811,440 $49,680 $16,560 $877,680 $281 $7,229 $248,000 Units Remaining 157
Total/Avg 157 2,719 1.15% $5,220 $190 $787,395 ($15,748) $771,647 $47,244 $15,748 $834,639 $307 $6,905 $236,796 Incentives Options
Cost To OwnJBREC Price RecommendationsTax & HOAFloor Plan 348 2,394 1.15% $5,220 $190 $720,825 ($9,849) $710,976 $41, 838 $8,435 $761,250 $318 $6,353 $217,753Overall Totals /Averages :

For-Sale Product and Pricing
John Burns Real Estate Consulting 15

For-Sale Product and Pricing Summary

For-Sale Product and Pricing Summary – Discussion
Regarding the for-sale product outlined above, note the following:
• We assessed product characteristics for the Subject for-sale neighborhoods as well as the Subject location, master plan setting, schools, etc., to determine how these factors might impact sales rates at the Subject. • Lot sizes are all market-appropriate and result in a well-segmented product array. Smaller lot detached for-sale options in the region have not been the norm but have been increasingly more common and can provide relative affordability and a lower maintenance living environment. The alley-loaded condition of the smallest lot type is also not common, but not unheard of and that neighborhood’s comparative affordability will widen its potential buyer pool. Minimum 6,500 SF lots such as the largest lot type will offer have become increasingly uncommon in the wider market. This parcel also abuts a golf course to its south and should be considered the best location among the three villages.
• We expect key buyer segments to include younger couples and families with some older couples or single-parent families for the small lot alley-loaded product type. These buyers will be motivated by comparative affordability as well as a lower-maintenance opportunity. We expect a broad combination of professional couples, empty nesters, and mature families for the two more conventional product types.

Buyers will generally originate from the Sacramento area, mainly working Downtown but also in Elk Grove, augmented by some buyers working remotely with jobs for employers based in the Bay Area. • Tax rate and HOA fees are per Landowner / Builder. Note that there is some leeway in the ultimate tax rate for the for-sale parcels. The tax rate and HOA we used are per KB Home. We assume Meritage would use this same approximate tax rate when they enter the market, scheduled for late this year. HOAS may differ for Riva and / or Meritage.

Delta Shores
Product Type
Min Lot/
Density
Dimens/
Config Units
% of
Total
Unit Size
Avg (SqFt)
Eff. Tax
Rate HOA
Average
Base Price
PS
Incentive
Net Base
Price
TTl Bldr &
Buyer Options
Average
Premium
Avg Net
Total Price
Total Price
Per Sq. Ft
Sales/
Month
Delta Shores IA-1 MDR-1 - South Alley SFD 2,975 SqFt 35' x 85' 110 32% 1,795 - 2,236 2,044 1.15% $190 $629,282 ($5,000) $624,282 $34,611 $2,000 $660,892 $323 4.00 Delta Shores IA-1 LDR-1 - South SFD 5,000 SqFt 50' x 100' 81 23% 1,685 - 2,693 2,241 1.15% $190 $716,113 ($5,000) $711,113 $41,177 $3,000 $755,290 $337 4.00 Delta Shores IA-1 LDR-2 - South SFD 6,500 SqFt 65' x 100' 157 45% 2,339 - 3,127 2,719 1.15% $190 $787,395 ($15,748) $771,647 $47,244 $15,748 $834,639 $307 3.50 Total/Weighted Average: 348 100% 1,685 - 3,127 2,394 1.15% $190 $720,825 ($9,849) $710,976 $41,838 $8,435 $761,250 $318 11.50 Unit Size
Range (SqFt)
For-Sale Product and Pricing
John Burns Real Estate Consulting 16

• Both potential rental uses in the Subject parcels north of Cosumnes River Blvd. are theoretical. JBREC provided rational product and pricing for an apartment use and a BTR use based on the assumption that either use would merge the two north parcels into a single development. Unit counts seen below reflect that.
• We assume a Class A garden-style three-story apartment complex for the apartment scenario. This complex would feature a normal amenity package for such an offering (e.g., pool, clubhouse, fitness room, lounge). • The BTR community assumes very small lots and a modest amenity package (e.g., small clubhouse and pool, common area landscaping).

Price point assumptions are based on our market analysis.

Delta Shores
Size Pkg A vg Total Concessions Total Total Eff. Mand. Total Eff. Rent Base + Stabl'zd 33% Inc.

Plan (SqFt) Bed Bath Level Sp Base $/SF Prem Stabilized Direct Indirect Concess. Rent $/SF Fees + M. Fees $/SF M. Fees + Fees $/SF to Qualify Delta Shores IA-1 Apartments
Product Type Stacked Flats Leasing Starts Jul-25 30% 78 750 1 1.0 1 1 $2,080 $2.77 $0 $2,080 $0 $0 $0 $2,080 $2.77 $0 $2,080 $2.77 $2,080 $2,080 $2.77 $75,636 Total Units 261 54% 141 1,000 2 2.0 1 2 $2,400 $2.40 $0 $2,400 $0 $0 $0 $2,400 $2.40 $0 $2,400 $2.40 $2,400 $2,400 $2.40 $87,273 Floors 3-Story Target Abs. Rate 18.0/mo 16% 42 1,200 3 2.0 1 2 $2,640 $2.20 $0 $2,640 $0 $0 $0 $2,640 $2.20 $0 $2,640 $2.20 $2,640 $2,640 $2.20 $96,000 Parking UC/CP Stabilization 95%
Elevator No Projected Aug-26
Total/Avg 261 957 $2,343 $2.45 $0 $2,343 $0 $0 $0 $2,343 $2.45 $0 $2,343 $2.45 $2,343 $2,343 $2.45 $85,200 Delta Shores IA-1 BTR
Product Type Small Lot SFD Leasing Starts Jul-24 31% 27 1,250 3 2.0 2 2 $2,750 $2.20 $0 $2,750 $0 $0 $0 $2,750 $2.20 $0 $2,750 $2.20 $2,750 $2,750 $2.20 $100,000 Min Lot/Density 2,500 SqFt Total Units 87 37% 32 1,450 3 2.0 2 2 $2,950 $2.03 $0 $2,950 $0 $0 $0 $2,950 $2.03 $0 $2,950 $2.03 $2,950 $2,950 $2.03 $107,273 Floors 2-Story Target Abs. Rate 6.0/mo 32% 28 1,650 3 2.5 2 2 $3,150 $1.91 $0 $3,150 $0 $0 $0 $3,150 $1.91 $0 $3,150 $1.91 $3,150 $3,150 $1.91 $114,545 Parking DAG Stabilization 95%
Elevator No Projected Aug-25
Total/Avg 87 1,452 $2,952 $2.03 $0 $2,952 $0 $0 $0 $2,952 $2.03 $0 $2,952 $2.03 $2,952 $2,952 $2.03 $107,356 Floor Plan Rental Recommendations (Monthly)
Mix
Variations
For-Rent Product and Pricing
For-Rent Product and Pricing Summary – Detail
John Burns Real Estate Consulting 17

For-Rent Absorption Conclusions
Depending on the scenario chosen for the north parcels of the Subject our recommendations are as follows:
• As noted at the beginning of this report, the uses of the two north of Cosumnes parcels are uncertain. We have presented two potential rental uses in this analysis per past analyses on this Subject and given the current zoning / density of these parcels. The latter factor makes rental uses more likely than for-sale, but these parcels could ultimately be for-sale. • We estimate a monthly lease-up (absorption) rate of 18.0 units per month during the initial lease-up phase of an apartment complex is reasonable and achievable. This is informed by our experience in this and other markets, rates at apartment complexes currently or recently in their initial lease-up phase, and the specific characteristics of the Subject (location, accessibility, master plan setting, schools, etc.). Critically, Solasta, not far north of the Subject, has leased up at 19 units per month during its leasing phase, but even these rates mask higher velocities. Effectively, Solasta has leased in phases, and the leasing manager indicated that leases were signed closer to 30 per month when phases were released. Solasta features superior product than the Subject with its mid-rise elevator-serviced offering, but we believe its experience strongly supports our absorption estimate for a Subject apartment complex. • We estimate a monthly lease-up rate of 6.0 homes for a BTR community. This is slightly below national norms in the BTR space but in line with lease-up rates at BTR communities within the region and is roughly in line with that achieved by the two BTR communities in the CMA. See further discussion on page 20.
• We assume the Subject apartments will be introduced in mid-2026 and the BTR in late 2025. There is no clear buyer for these parcels at present, so this schedule should be considered highly approximate but achievable given the rapid development of other parts of Delta Shores and the expectation that multifamily capital access will gradually improve. We assume land sales will be in 2Q 2025 for both scenarios. We assume 12-18 months to complete apartment construction (midpoint 15 months), yielding an absorption start date of 2Q 2026. The BTR community would have a shorter construction period for detached homes of 4-6 months, which implies a leasing start date of late 2025.
• Renters will include young couples, professional couples, single professionals, and some families for the apartment product. BTR units will attract younger couples (often pre-families), as well as young and mature families. • Overall, Delta Shores IA-1 would have 348 for-sale units in the neighborhoods with readily acceptable and reasonably segmented product types. This would represent 57% of all residential units in the apartment scenario and 80% of all units in the BTR scenario. All rental units would be separated from the for-sale neighborhoods to the south by Cosumnes River Blvd. All developments would have freeway visibility, helpful for marketing any development, but particularly for an apartment complex. This seems to be a reasonable overall product offering appropriate for this location and market.

For-Rent Absorption
John Burns Real Estate Consulting 18
 Master plan community setting with a variety of product lines and attractive amenities.
 Immediately south of the highly-regarded Pocket area to the north and desirable Elk Grove to the south.
 Clarksburg area wineries a few miles southwest of the site are a major regional draw.
 The subject's substantial size and scope should allow it to differentiate itself from the Meadowview and South Sacramento areas to the northeast.
 Product will appeal to couples, younger families, empty nesters, and professional couples.
 Excellent accessibility to Interstate 5 and very near commuter rail station.  Near huge Downtown Sacramento employment hub and proximate to Downtown / Midtown amenities.
 Walkable to major retail center (across Interstate 5) with a wide variety of venues to the immediate west.
 There is a potential Kaiser health facility northeast of the site that would be walkable for residents (this will only impact marketing if there is certainty during the marketing period, which seems unlikely at present).  Minimal new home competition in the immediate area.
 More affordable than Elk Grove and competitive with Natomas.  Potential youth sports complex northeast of the Subject.  Adjacency to Interstate 5 on the east side of the site will concern some buyers (rental communities more buffered by off-ramp).
 Subject schools are generally inferior, which will deter some family buyers or renters. However, buyers at nearby active new home communities have experienced limited impact from schools. Parents are either keeping children in current schools, choosing charter or private options, or registering children in Elk Grove schools. In addition, two new schools will be built in Delta Shores.
 Although access to retail is only via a bridge over the freeway, the proximity to retail is still a major net positive.
 Though proximity to the Pocket area will be a plus, the Meadowview neighborhood northeast of the site has a poor residential reputation.

However, this is similar to Pocket's condition, and the freeway buffering has helped Pocket maintain a strong residential reputation.  Similarly there are some less desirable uses in Freeport along the western edge of the site (e.g., RV park). However, we expect most residents (and buyer traffic) to access the site from Cosumnes Parkway and not through Freeport.
 Mortgage rates have risen since earlier in the year and continue fluctuating, leaving buyers uncertain about this critical factor.  The Stone Beetland development northeast of the Subject may eventually add residential supply to the immediate area (see fuller discussion later in this report).
 The area northeast of the Subject that could include a youth sports park may also eventually include affordable housing, commercial, and homeless services components. This would likely have a minimal impact on the Subject, and, regardless, any development on this 102-acre site is highly uncertain.

Opportunities & Challenges

Challenges

Opportunities

Absorption and Capture
Analysis

John Burns Real Estate Consulting 20

Absorption Rate Estimates
• We believe the Subject’s for-sale offerings would absorb approximately 3.5 to 4.0 units per month per product given their characteristics, market timing expectations per developer and market conditions. These absorption estimates are based on Subject product, pricing, location and master plan setting, regional supply, the performance of new home comparables we surveyed, our experience in the CMA and the wider market, and longer-term new home per project norms in the region. We assume decorated models will be open at (or very near) the inception of sales, that there will be a strong marketing effort with a cohesive MPC brand, and that experienced on-site sales staff will sell Subject homes. The alley homes and minimum 5,000 SF lot SFD neighborhoods will be built and sold by KB Home, a major national builder with proven experience and expertise in the market. Meritage Homes will build the minimum 6,500 SF lot SFD neighborhood, another major public builder with a significant regional presence and the ability to conduct a substantial marketing campaign. There is upside potential for the alley-loaded neighborhood absorption rate given its relative affordability, but the product’s density may offset this. • Though absolute sales levels have decreased over the last two years given an increase in mortgage rates, the resulting minimal resale inventory has increased new home market share. Consequently, new home communities are generally absorbing reasonably well throughout the region and pricing remains stable to rising modestly over the last year or so. We forecast modest slowing over the next year, but we project that home prices will remain positive through 2027 in the nation and the Sacramento region. • KB Home has only recently begun pre-sales at Edgewater, the minimum 5,000 SF lot SFD product (LDR-1-South). The initial reaction has been positive with eight sales before the official grand opening (though models are open and viewable). Signature has experienced solid sales at Delta Shores on the east side of Interstate 5 with its Coronado and Catalina projects. Both KB Home and Meritage Homes are larger public builders (Signature is a regional private builder) with access to public capital that enables them to be more aggressive in incentivizing when market conditions demand this to maintain sales rates. This factor further supports our estimated for-sales absorption levels.
• We estimate that the Subject apartment complex on both parcels north of Cosumnes River Blvd. could absorb 18.0 leases per month during their lease-up phase. A lease-up phase is usually defined as the start of leasing until the point at which equilibrium is reached (about 90-95% of units are leased). This absorption estimate is based on our experience in this and other markets, the characteristics of the Subject, and the performance of currently or very recently leasing apartment developments in the wider Sacramento market. Critically, we have also looked to Solasta, a new complex north of the Subject, which has absorbed very strongly. • We estimate the BTR component could absorb 6.0 units per month given our wide experience with this sector across the nation and the performance of recently active and still actively leasing BTR communities in the region. Though existing BTR communities are located in South Placer County and Rancho Cordova, they provide a rational indicator of absorption at a Subject BTR community. Our estimate is very similar to absorptions at these comparables.
• We assume the Subject r ental communities would be amenitized as noted in this report, and that concessions during the lease-up phase for each Subject rental scenario would be appropriate. New apartment developments often offer concessions during lease-up to achieve stabilized occupancy of +/- 95% more quickly.

Absorption Rates
John Burns Real Estate Consulting 21

Market Size Estimates
• To test the validity of our absorption assumptions and build-outs seen later in this report, we must estimate market size for the for-sale and for-rent markets. This is necessary so we can apply our absorption assumptions and test them for validity in terms of the market capture rates our annual absorption figures imply.
• To estimate market size for the for-sale market, we gathered data on single-family residential (SFR) permits and new home sales. It would be unfair to use data from only the local area around the Subject since this area, and the City of Sacramento more generally (except the Natomas area) has been supply-constrained for many years. Also, buyers will come from throughout the region (and beyond), so it is fair to test Subject for-sale absorption against market size and capture rate estimates based on data from a wider area. In this case, we will focus on data from the Sacramento MSA (Sacramento, Placer, El Dorado, and Yolo Counties) and the Sacramento County levels. • For the rental sector we have focused on multifamily residential (MFR) permit activity at the regional, county, and city level. As with for-sale activity, MFR activity has been somewhat constrained in the City of Sacramento and so we emphasize MSA and county-level data, though include city-level data. MFR permit data is most reliable as a test of market size. Note that though MFR permit data include both apartments and attached for-sale units, the latter category is uncommon enough in the Sacramento market to render the MFR permit figures usable for assessing the size of the rental market.
• The SFR permit data for the three relevant geographies – Sacramento MSA, Sacramento County, and City of Sacramento – are displayed visually on the next two pages. See further discussion below, but the results for the for-sale market size show almost 4,500 county-wide and about 8,600 MSA-wide annual units of demand as a rational permit-based measure of the market size for the for-sale sector. Even the city- level data show +/- 1,300 units annually.
• We show data from new home sales later in this report. The City has averaged 1,067 annual sales from 2012 through 2023, Sacramento County has averaged 2,617, and Sacramento MSA (including Sacramento, Placer, El Dorado, and Yolo Counties) has averaged 5,158.

The area immediately surrounding the Subject has experienced relatively modest annual new home sales levels over the last decade (data not shown), but this reflects limited supply. Permit data are typically more complete than third-party sales data, but we will use both permit and sales data to judge the achievability of expected Subject absorption when we examine market capture rates later in this report. • In terms of the Subject rental co mponent, from the analysis on the next two pages, we estimate a relevant market size based on MFR permits of about 925 annually for the City of Sacramento, +/- 1,650 at the county level, and +/- 2,500 at the MSA level. We use these permit figures as our market size measure when we assess a logical capture rate for the Subject’s annual rental absorption.

Market Size
John Burns Real Estate Consulting 22

• The table below summarizes single- family and multifamily permit averages from a longer -term (1980-2023) and more recent time period (2000-2023) spans for the Sacramento MSA, Sacramento County, and Sacramento City. The data are displayed in charts at the bottom of this page and on the succeeding page.
• These figures are reasonably similar and both have drawbacks. The longer period includes the 1980s with permit figures that a re unachievable today. The shorter period includes some extraordinary lows during the Great Recession that are also unlikely to be repeated.

For these reasons, we have used the “approximate norms” seen in the table below as our permit-based measures of market size.

Area

1980-2023
Averages SFR
2000-2023 Approx. Norm

1980-2023
Averages MFR
2000-2023 Approx. Norm
Sacramento MSA 8,888 8,317 8,600 2,759 2,268 2,500
Sacramento County 4,766 4,177 4,475 1,825 1,452 1,650
Sacramento City 1,283 1,309 1,300 869 994 925

Sacramento MSA, County and City Historic Permit Activity Source: Bureau of Labor Statistics John Burns Real Estate Consulting 23

Sacramento MSA, County and City Historic Permit Activity John Burns Real Estate Consulting 24

• Per the discussion earlier in this report, LDR-1 – South just began sales, MDR-1 – South will soon, and LDR-2 – South will start sales in the fourth quarter of this year (we assumed 1.5 months of sales in 4Q 2024 and is per a discussion with Meritage personnel). • The absorption schedule shown below assumes continuous development of all neighborhoods until units are exhausted. We believe this build-out scenario is prudent and achievable given the market conditions and expectations outlined in this report and the Subject being consistently price positioned as seen in this report.
• The resulting build-out does leave a “tail” of solely SFD 6,500 SF lots selling from 2027 into 2028. This is due to the relatively high unit count of this parcel and the slightly slower estimated monthly absorption rate due to higher price points . We assume Meritage Homes will price and market this neighborhood adequately to maintain sales throughout the marketing life of this community.

ANNUAL PROJECTED ABSORPTION - FOR-SALE

PRODUCT Product Min. Lot Size (SF) Sales/Mo Total 2024 2025 2026 2027 2028 MDR-1 - South Alley SFD 35' x 85' 2,975 4.00 110 26 48 36 LDR-1 - South SFD 50' x 100' 5,000 4.00 81 28 48 5
LDR-2 - South SFD 65' x 100' 6,500 3.50 157 5 42 42 42 26 TOTALS 348 59 138 83 42 26

Subject Build-Out
Build-Out – For-Sale
John Burns Real Estate Consulting 25

Build-Out – For-Rent
• As outlined earlier in this report, we assume the two parcels at the northern end of the Subject will be merged and developed as either an apartment complex or a BTR community. Below, we illustrate the lease-up period for both uses. We assume an apartment complex would begin leasing approximately 15 months after the purchase of the land, that is, in the second quarter of 2026 (we assume 1.5 months of leasing activity in that initial quarter). A BTR community would come onto the market more rapidly. For that use we assume leasing would start at the beginning of the fourth quarter of 2025.
• We estimate 18.0 leases per month as an achievable absorption rate during the initial lease-up period for the apartments and 6.0/mo. for the BTR. Note that since +/-95% occupancy is considered stable we absorb only 95% of the units for each rental community. Thus, the number of absorbed rental units in the following charts and tables equals 95% of total rental units for either scenario. Given market entry timing, unit counts, and estimated absorption rates, an apartment complex would reach equilibrium in very early 3Q 2027 while a BTR community would do so in Q4 2026.
• The build-outs seen on the next page lead to reasonable capture levels for either Subject rental scenario (see capture analysis later in this report). The subsequent page details sales of multifamily lots to an apartment or BTR developer and displays absorptions on a quarterly basis.

Subject Build-Out
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Rental Build-Out Annually – Apartments

Rental Build-Out Annually – BTR

Subject Build-Outs
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Quarterly Apartment Lot Sales and Absorption – Apartments

ANNUAL PROJECTED ABSORPTION - FOR-RENT - APARTMENT SCENARIO

PRODUCT Leases /
Mo. Total Q1 '24 Q2 '24 Q3 '24 Q4 '24 Q1 '25 Q2 '25 Q3 '25 Q4 '25 Q1 '26 Q2 '26 Q3 '26 Q4 '26 Q1 '27 Q2 '27 Q3 '27 Q4 '27 HDR-1 / MDR - 2 - North Lot Sale 261 261
HDR-1 / MDR - 2 - North Market Abs. 18.0 261 27 54 54 54 54 5

Quarterly Apartment Lot Sales and Absorption – BTR

ANNUAL PROJECTED ABSORPTION - FOR-RENT - BTR SCENARIO

PRODUCT Leases /
Mo. Total Q1 '24 Q2 '24 Q3 '24 Q4 '24 Q1 '25 Q2 '25 Q3 '25 Q4 '25 Q1 '26 Q2 '26 Q3 '26 Q4 '26 HDR-1 / MDR - 2 - North Lot Sale 87 87
HDR-1 / MDR - 2 - North Market Abs. 6.0 87 18 18 18 18 11 Subject Build-Out
John Burns Real Estate Consulting 28

Capture Analysis – For-Sale
• The table below shows the percentage of the relevant market the Subject would capture assuming the sales numbers shown previously.

Even at the level of city-wide SFR permit activity, the Subject would require capture rates of at most 11% at peak. Other measures yield lower necessary capture rates. These capture rates appear achievable, particularly considering typically limited city-wide new for-sale residential activity (e.g., only Natomas has been a consistent major supply node and even that has become relatively constricted in recent years). Note that the two new home sales measures reflect annual averages for 2012-23 while the permit figures are from the “approximate norms” figures discussed in the historical permit discussion earlier in this report.

Subject Build Out and Capture - For-Sale
Total 2024 2025 2026 2027 2028
SUBJECT TOTALS 348 59 138 83 42 26
Annual Market Capture Rate
% Capture of:

Annual New Home Sales - County 2% 5% 3% 2% 1%
Annual New Home Sales - MSA 1% 3% 2% 1% 1%
Annual SFR Permits - Sacramento City 5% 11% 6% 3% 2%
Annual SFR Permits - Sacramento County 1% 3% 2% 1% 1%

Subject Build Out and Capture - For-Sale
Total 2023 2024 2025 2026 2027 2028
SUBJECT TOTALS 348 37 110 106 38 38 19
Annual Market Capture Rate
% Capture of:

Annual New Home Sales - County 1% 4% 4% 1% 1% 1%
Annual New Home Sales - MSA 1% 2% 2% 1% 1% 0%
Annual SFR Permits - Sacramento City 3% 8% 8% 3% 3% 1%
Annual SFR Permits - Sacramento County 1% 2% 2% 1% 1% 0% Market Capture
John Burns Real Estate Consulting 29

Capture Analysis – For-Rent
• The tables below show the absorption schedule for the Subject’s two rental scenarios. Annual absorption levels are measured against the total estimated rental market size. We provide three estimates of rental market size at the city, county, and MSA-level. At the city-level, the apartments would need to capture about 12%-15% of the market in 2026-2027. At the more appropriate county level (since historical city- wide rental development has been somewhat supply-constrained), the apartments would need to capture about 7%-8% of the market. This would equate to it being one of about 13 actively leasing apartment complexes county-wide during its initial leasing period, while the MSA figure would equal about one of 20 leasing apartment complexes across the entire MSA. We believe this is an achievable market capture rate assuming even approximate normal market conditions. The necessary capture rates for a BTR scenario would be far less. • Note that Delta Shores Improvement Area 2 (IA-2) on the east side of Interstate 5 is likely to have an apartment complex developed by Jackson Square that could coincide with the Subject apartment timing. Since our assessment of supply, absorption, and capture rate is based on data from large geographies (mainly the county and MSA level) this would not alter our conclusions. The differing locations will also act to differentiate the renter profiles to some degree, and we assume different operators, marketing efforts, etc. In sum, then, we believe the absorption levels for the Subject rental communities are reasonable and the resulting market capture levels are achievable given approximately normal market conditions in the region during the initial lease-up period.

Subject Build Out and Capture - Apartment Scenario
Total 2025 2026 2027
SUBJECT TOTAL ANNUAL ABSORPTION 261 0 135 113
Annual Market Capture Rate
% Capture of:

Annual MFR Permits - Sacramento City 0% 15% 12%
Annual MFR Permits - Sacramento County 0% 8% 7%
Annual MFR Permits - Sacramento MSA 0% 5% 5%
Subject Build Out and Capture - BTR Scenario
Total 2025 2026
SUBJECT TOTAL ANNUAL ABSORPTION 87 18 65
Annual Market Capture Rate
% Capture of:

Annual MFR Permits - Sacramento City 2% 7%
Annual MFR Permits - Sacramento County 1% 4%
Annual MFR Permits - Sacramento MSA 1% 3%
Market Capture

For-Sale Market Analysis
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Location of Subject & Surveyed Comparables
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The table below displays summary details of the Subject for -sale product types and the key new home comparables we used to gauge relevant market dynamics. Comparables are located in Delta Shores, augmented by comparables from the nearer portions of Elk G rove.

The latter is included for context since there are few active comparables near the Subject and some Subject buyers would likely also shop nearby Elk Grove.

New Home Comparables Summary
Project Summary
Community Builder Location Product
Type
Min Lot /
Density
Unit Size
(SqFt)
Overall
Abs
3-Mo
Abs
Avg Base
Price
Avg Net
Total Price
Total
/SqFt
Delta Shores IA-1 MDR-1 - South KB Home Sacramento Alley SFD 2,975 2,044 4.0 n/ap $629,282 ($5,000) -0.8% $34,611 5.5% $2,000 0.3% $660,892 $323 Delta Shores IA-1 LDR-1 - South KB Home Sacramento SFD 5,000 2,241 4.0 n/ap $716,113 ($5,000) -0.7% $41,177 5.8% $3,000 0.4% $755,290 $337 Delta Shores IA-1 LDR-2 - South Meritage Sacramento SFD 6,500 2,719 3.5 n/ap $787,395 ($15,748) -2.0% $47,244 6.0% $15,748 2.0% $834,639 $307 1 Edgewater at Delta Shores KB Home Sacramento SFD 5,000 2,239 New New $715,990 ($5,000) -0.7% $40,000 5.6% $3,000 0.4% $753,990 $337 2 Catalina at Delta Shores Signature Homes Sacramento SFD 3,198 2,243 2.7 3.0 $670,136 ($25,000) -3.7% $0 0.0% $2,000 0.3% $647,136 $289 3 Coronado at Delta Shores Signature Homes Sacramento SFD 4,000 2,685 3.8 4.0 $735,973 ($20,000) -2.7% $0 0.0% $2,000 0.3% $717,973 $267 4 Persimmon at Sheldon Farms DR Horton E lk Grove SFD 3,200 1,710 6.0 5.7 $535,157 ($7,500) -1.4% $0 0.0% $0 0.0% $527,657 $309 5 Tamarind at Sheldon Farms D.R. Horton E lk Grove SFD 3,600 1,988 5.5 6.7 $578,157 ($7,500) -1.3% $0 0.0% $0 0.0% $570,657 $287 6 Carnelian at Sheldon Farms D.R. Horton E lk Grove SFD 5,000 1,975 5.2 6.7 $618,823 ($7,500) -1.2% $0 0.0% $0 0.0% $611,323 $310 7 Long Meadow New Home Co. E lk Grove SFD 4,725 2,355 4.3 3.7 $708,696 ($4,000) -0.6% $0 0.0% $0 0.0% $704,696 $299 Median Competitor Median 2,239 4.8 4.8 $670,136 ($7,500) -1.3% $0 0.0% $0 0.0% $647,136 $299 Average Competitor Average 2,171 4.6 4.9 $651,847 ($10,929) -1.7% $5,714 0.8% $1,000 0.1% $647,633 $298 Ttl Bldr & Buyer
Options PremiumsTotal Incentives
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The chart below displays the Subject’s proposed pricing against all new home comparables on a net base price basis. The Subject’s Alley SFD is positioned toward the middle of the market, with the 5,000 and 6,500 lot SFD products toward the upper portion. However, builders commonly embed some or all options and premiums in advertised base pricing. This means net total price positioning on the following page provides a more accurate comparison.

Net Base Price Comparison

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On a total price comparison (base price + options + premiums - incentives) Subject price positioning is generally similar to its net base price positioning, though minimal upgrade spending at Sheldon Farms pushes those comparables downward. The Subject alley-loaded product is positioned competitively with similar lot size options by Signature in Delta Shores east of Interstate 5, while the Subject 5,000 lot SFD is actively selling (Edgewater) and we have mirrored that pricing. We have positioned the 6,500 lot SFD Subject lots rationally above Edgewater.

Total Price Comparison

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Applying tax rates and HOA fees of the comparables and Subject translates total pricing into net monthly payments. The Subjec t has a somewhat higher Tax/HOA profile than most surveyed new home projects, so Subject positioning on a monthly payment basis is elevated compared to total price positioning on the previous page. We have factored this into our pricing conclusions but note that the Subject location west of Interstate 5 and immediately south of the Pocket area is superior to Delta Shores east of Interstate 5.

Total Monthly Payment Comparison

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Total/Avg 2,685 1.15% $2,976 $125 $735,973 ($20,000) $715,973 $0 $2,000 $717,973 $267 $5,775 $198,000

Community Builder Floor Plan Tax & HOA Market Price Cost to Own Surveyed May-24 Unit

Bd

Other

Ba

Levels

Pkg
Base
Add'l
Taxes
HOA
Base
Price
Incentives Net Ttl Bldr
Average
Premium
Net Total 90% 35%
Size
(SqFt)
Tax
Rate
Fees
($/Mo.)
Closing
Costs
Base
Price
& Buyer
Options
Total
Price
Price/
SqFt

7.15%
Total Price
Income
to Qualify*
1 Edgewater at Delta Shores KB Home

Product SFD Sales Started May-24 1,685 3 Den 2.0 1 2 1.15% $5,220 $190 $665,990 ($5,000) $660,990 $40,000 $3,000 $703,990 $418 $5,920 $203,000 Total Units 80 2,188 3 Den 2.0 1 2 1.15% $5,220 $190 $715,990 ($5,000) $710,990 $40,000 $3,000 $753,990 $345 $6,297 $216,000 Min Lot/Density 5,775 Units Sold 8 2,391 4 Loft 3.0 2 2 1.15% $5,220 $190 $725,990 ($5,000) $720,990 $40,000 $3,000 $763,990 $320 $6,372 $218,000 Dimens/Config 55' x 105' 3 Mon. Sold 8 2,693 5 Flex 3.0 2 2 1.15% $5,220 $190 $755,990 ($5,000) $750,990 $40,000 $3,000 $793,990 $295 $6,597 $226,000 Units Remaining 72
Location Sacramento % Remaining 90%
Overall Sales Rate New
3-Mo. Sales Rate New
Total/Avg 2,239 1.15% $5,220 $190 $715,990 ($5,000) $710,990 $40,000 $3,000 $753,990 $337 $6,297 $215,750 2 Catalina at Delta Shores Signature Homes
Product SFD Sales Started Jun-23 1,940 3 Loft 2.5 2 2 1.15% $2,976 $125 $639,748 ($25,000) $614,748 $0 $2,000 $616,748 $318 $5,014 $172,000 Total Units 125 2,143 4 3.0 2 2 1.15% $2,976 $125 $666,227 ($25,000) $641,227 $0 $2,000 $643,227 $300 $5,213 $179,000 Min Lot/Density 3,198 SqFt Units Sold 31 2,367 4 Tech 2.5 2 2 1.15% $2,976 $125 $685,062 ($25,000) $660,062 $0 $2,000 $662,062 $280 $5,355 $184,000 Dimens/Config 41' x 78' 3 Mon. Sold 9 2,521 4 Loft 2.5 2 2 1.15% $2,976 $125 $689,507 ($25,000) $664,507 $0 $2,000 $666,507 $264 $5,388 $185,000 Units Remaining 94
Location Sacramento % Remaining 75%
Overall Sales Rate 2.7
3-Mo. Sales Rate 3.0

Product SFD Sales Started Jun-23 2,500 5 Loft 3.0 2 2 1.15% $2,976 $125 $733,034 ($20,000) $713,034 $0 $2,000 $715,034 $286 $5,753 $197,000 Total Units 87 2,685 4 Loft 3.5 2 2 1.15% $2,976 $125 $732,308 ($20,000) $712,308 $0 $2,000 $714,308 $266 $5,748 $197,000 Min Lot/Density 4,000 SqFt Units Sold 43 2,871 4 Loft, Flex 3.5 2 2 1.15% $2,976 $125 $742,578 ($20,000) $722,578 $0 $2,000 $724,578 $252 $5,825 $200,000 Dimens/Config 50' x 80' 3 Mon. Sold 12
Units Remaining 44
Location Sacramento % Remaining 51%
Overall Sales Rate 3.8
3-Mo. Sales Rate 4.0

4 Persimmon at Sheldon Farms DR Horton
Product SFD Sales Started Sep-22 1,567 3 2.5 2 2 1.05% $3,960 $0 $508,990 ($7,500) $501,490 $0 $0 $501,490 $320 $4,063 $139,000 Total Units 148 1,631 4 2.5 2 2 1.05% $3,960 $0 $518,490 ($7,500) $510,990 $0 $0 $510,990 $313 $4,134 $142,000 Min Lot/Density 3,200 Units Sold 123 1,932 4 Loft 3.0 2 2 1.05% $3,960 $0 $577,990 ($7,500) $570,490 $0 $0 $570,490 $295 $4,577 $157,000 Dimens/Config 40' x 80' 3 Mon. Sold 17
Units Remaining 25
Location Elk Grove % Remaining 17%
Overall Sales Rate 6.0
3-Mo. Sales Rate 5.7
Total/Avg 1,710 1.05% $3,960 $0 $535,157 ($7,500) $527,657 $0 $0 $527,657 $309 $4,258 $146,000 New Home Comparables Detail
John Burns Real Estate Consulting 37

Community Builder Floor Plan Tax & HOA Market Price Cost to Own Surveyed May-24 Unit

Bd

Other

Ba

Levels

Pkg
Base
Add'l
Taxes
HOA
Base
Price
Incentives Net Ttl Bldr
Average
Premium
Net Total 90% 35%
Size
(SqFt)
Tax
Rate
Fees
($/Mo.)
Closing
Costs
Base
Price
& Buyer
Options
Total
Price
Price/
SqFt

7.15%
Total Price
Income
to Qualify*
5 Tamarind at Sheldon Farms D.R. Horton

Product SFD Sales Started Sep-22 1,678 4 2.5 2 2 1.05% $4,140 $0 $546,990 ($7,500) $539,490 $0 $0 $539,490 $322 $4,361 $150,000 Total Units 121 1,969 4 2.5 2 2 1.05% $4,140 $0 $573,990 ($7,500) $566,490 $0 $0 $566,490 $288 $4,562 $156,000 Min Lot/Density 3,600 Units Sold 113 2,318 4 Den 3.0 2 2 1.05% $4,140 $0 $613,490 ($7,500) $605,990 $0 $0 $605,990 $261 $4,856 $166,000 Dimens/Config 45' x 80' 3 Mon. Sold 20
Units Remaining 8
Location Elk Grove % Remaining 7%
Overall Sales Rate 5.5
3-Mo. Sales Rate 6.7
Total/Avg 1,988 1.05% $4,140 $0 $578,157 ($7,500) $570,657 $0 $0 $570,657 $287 $4,593 $157,333 6 Carnelian at Sheldon Farms D.R. Horton
Product SFD Sales Started Sep-22 1,501 3 2.0 1 2 1.05% $4,320 $0 $585,490 ($7,500) $577,990 $0 $0 $577,990 $385 $4,662 $160,000 Total Units 122 1,895 4 2.0 1 2 1.05% $4,320 $0 $612,990 ($7,500) $605,490 $0 $0 $605,490 $320 $4,867 $167,000 Min Lot/Density 5,000 Units Sold 108 2,529 5 3.0 2 2 1.05% $4,320 $0 $657,990 ($7,500) $650,490 $0 $0 $650,490 $257 $5,202 $178,000 Dimens/Config 50' x 100' 3 Mon. Sold 20
Units Remaining 14
Location Elk Grove % Remaining 11%
Overall Sales Rate 5.2
3-Mo. Sales Rate 6.7
Total/Avg 1,975 1.05% $4,320 $0 $618,823 ($7,500) $611,323 $0 $0 $611,323 $310 $4,910 $168,333 7 Long Meadow New Home Co.

Product SFD Sales Started Aug-23 1,927 3 2.5 2 2 1.05% $3,852 $28 $651,494 ($4,000) $647,494 $0 $0 $647,494 $336 $5,169 $177,000 Total Units 122 2,238 3 Loft 2.5 2 2 1.05% $3,852 $28 $690,757 ($4,000) $686,757 $0 $0 $686,757 $307 $5,461 $187,000 Min Lot/Density 4,725 Units Sold 39 2,486 4 3.0 2 2+ 1.05% $3,852 $28 $727,383 ($4,000) $723,383 $0 $0 $723,383 $291 $5,734 $197,000 Dimens/Config 45 x 105' 3 Mon. Sold 11 2,769 4 Workshop 3.0 2 2+ 1.05% $3,852 $28 $765,150 ($4,000) $761,150 $0 $0 $761,150 $275 $6,015 $206,000 Units Remaining 83
Location Elk Grove % Remaining 68%
Overall Sales Rate 4.3
3-Mo. Sales Rate 3.7
Total/Avg 2,355 1.05% $28 $708,696 ($4,000) $704,696 $0 $0 $704,696 $299 $5,594 $191,750 New Home Comparables Detail
John Burns Real Estate Consulting 38

An elasticity analysis measures the relationship between sales pace and pricing at comparable neighborhoods. Lower prices typically generate higher sales. Our estimated sales rates and pricing for the Subject position the Subject offerings roughly in-line with to above the overall and recent sales rate trend lines. Given the limited number of observations, the trendlines are skewed by Catalina at Delta Shores.

Excluding this project, the Subject would be well in line with the trendline and other surveyed comparables. Overall, we believe Subject absorptions are achievable for the reasons stated earlier in this report.

Elasticity Analysis

John Burns Real Estate Consulting 39

Given the limited number of new home competitors in the immediate area, the Subject will also compete against resales. The Subject’s for- sale product types can be positioned above resale transactions from the last six months from the surrounding areas due to new construction and a superior planned community setting. The Subject should be positioned more competitively with resales from the Pocket area to the immediate north despite these same advantages due to the well-established Pocket address and the larger lot sizes of those homes. Note that resale trendlines are typically skewed more steeply due to outlier transactions.

Subject v. Area Resales

For-Sale Market Trends

John Burns Real Estate Consulting 41

In this section, we examine regional and local housing data for the Sacramento MSA, Sacramento County, and the City of Sacramento. All 2024 data is through April 2024. New home sales (which include both attached and detached) generally increased from 2012 to 2018. The COVID-19 pandemic unleashed huge demand but regional new home production is generally concentrated outside of the city of Sacramento.

The dip in sales since 2018 is primarily due to a more limited supply than a lack of demand.

New Home 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* Sacramento City
YOY % ▲
312 257 378 527 547 436 941 1,626 1,898 1,685 1,427 1,314 1,214 758 360 -45% -18% 47% 39% 4% -20% 116% 73% 17% -11% -15% -8% -8% -38% - *2024 YTD is through April 2024
New Home Sales – City of Sacramento
John Burns Real Estate Consulting 42

Similar to the city, Sacramento County’s new home sales bottomed out in 2011, then increased in the following years. New home sales hit a recent peak at 3,694 homes sold in 2022 then decreased last year but still at a solid sales level.

New Home 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* Sacramento County
YOY % ▲
1,096 953 1,296 1,626 1,596 1,900 2,347 2,880 2,915 3,376 3,308 3,468 3,694 2,999 1,181 -32% -13% 36% 25% -2% 19% 24% 23% 1% 16% -2% 5% 7% -19% - *2024 YTD is through April 2024
New Home Sales – Sacramento County
John Burns Real Estate Consulting 43

Sacramento MSA new home sales gradually increased from 2011 to 2022, peaking at nearly 7,500. Following the same trends as the city and county, MSA new home sales decreased nearly 20% in 2023.

New Home 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* Sacramento MSA
YOY % ▲
2,448 1,932 2,565 3,222 3,139 3,890 4,999 5,811 5,503 5,650 6,242 7,151 7,426 6,297 2,236 -30% -21% 33% 26% -3% 24% 29% 16% -5% 3% 10% 15% 4% -15% - *2024 YTD is through April 2024
New Home Sales – Sacramento MSA
John Burns Real Estate Consulting 44

Existing home sales offer a reliable barometer of residential activity. Annual sales have fluctuated since 2012, peaked in 2021, and have since pulled back. Mortgage rate increases have dampened existing homeowners’ willingness to sell due to their historically low mortgage rates.

Existing 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* Sacramento City
YOY % ▲
10,703 10,793 11,454 11,213 10,189 11,376 11,663 11,831 11,518 10,833 10,318 12,460 9,362 6,706 2,146 -16% 1% 6% -2% -9% 12% 3% 1% -3% -6% -5% 21% -25% -28% - *2024 YTD is through April 2024
Existing Home Sales – City of Sacramento
John Burns Real Estate Consulting 45

Sacramento County's existing home sales have followed the same trends as the city, significantly decreasing over the last two years.

Existing 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* Sacramento County
YOY % ▲
20,448 21,646 22,521 21,828 19,857 22,231 22,998 22,818 21,892 21,165 20,718 24,489 18,417 12,933 4,235 -12% 1% 6% -2% -9% 12% 3% 1% -3% -6% -5% 21% -25% -28% - *2024 YTD is through April 2024
Existing Home Sales – Sacramento County
John Burns Real Estate Consulting 46

Existing home sales in the MSA have also decreased at a rapid rate over the past two years. 2023 existing home sales are down nearly 50% from 2021 levels. This trend has bolstered new home sales throughout the region and the nation as new homebuilders have captured enhanced market share.

Existing 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* Sacramento MSA
YOY % ▲
30,420 32,696 34,644 34,555 31,760 35,252 36,550 36,430 34,753 33,798 35,599 40,424 29,968 21,743 7,088 -5% 7% 6% 0% -8% 11% 4% 0% -5% -3% 5% 14% -26% -27% -
*2024 YTD is through April 2024
Existing Home Sales – Sacramento MSA
John Burns Real Estate Consulting 47

From 2012 to 2022, new home prices increased in all three areas along similar trends. New home prices increased 22% YOY from 2021 to 2022 in Sacramento. However, incentives increased, and price cuts ensued in 2023 due to weakening market conditions. 2024 has seen a more stabilized market in terms of price, and at a level near historical highs.

New Home 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* Sacramento City
YOY % ▲
$230,000 $215,000 $206,000 $250,000 $277,500 $345,000 $366,500 $380,100 $411,000 $415,000 $422,000 $485,000 $619,000 $607,500 $619,000 -5% -7% -4% 21% 11% 24% 6% 4% 8% 1% 2% 15% 28% -2% 2%
Sacramento County
YOY % ▲
$263,000 $246,500 $262,500 $319,500 $372,000 $402,000 $402,500 $415,500 $433,100 $454,500 $476,000 $551,000 $667,500 $637,000 $659,500 2% -6% 6% 22% 16% 8% 0% 3% 4% 5% 5% 16% 21% -5% 4%
Sacramento MSA
YOY % ▲
$291,500 $276,000 $298,500 $350,500 $401,000 $436,500 $451,000 $465,100 $486,000 $500,000 $518,000 $584,500 $677,000 $634,000 $656,000 -1% -5% 8% 17% 14% 9% 3% 3% 4% 3% 4% 13% 16% -6% 3%
*2024 YTD is through April 2024
New Home Price
John Burns Real Estate Consulting 48

Existing SFD prices increased dramatically in all geographies from 2012 to 2022 and all geographies experienced double-digit price growth from 2020 to 2021. Following the same trends as new home prices, existing home prices decreased in 2023, and stabilized in 2024.

Existing 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* Sacramento City
YOY % ▲
$146,500 $130,000 $140,000 $185,000 $214,000 $235,000 $260,000 $285,000 $310,000 $325,000 $365,500 $438,000 $470,000 $450,000 $458,000 8% -11% 8% 32% 16% 10% 11% 10% 9% 5% 12% 20% 7% -4% 2%
Sacramento County
YOY % ▲
$173,000 $159,000 $166,000 $220,000 $246,600 $265,000 $294,500 $318,500 $345,000 $357,500 $400,000 $470,000 $510,000 $490,000 $500,000 2% -8% 4% 33% 12% 7% 11% 8% 8% 4% 12% 18% 9% -4% 2%
Sacramento MSA
YOY % ▲
$201,000 $180,500 $195,000 $250,000 $280,000 $300,100 $327,000 $355,000 $380,000 $395,000 $439,000 $516,000 $550,000 $535,000 $541,500 1% -10% 8% 28% 12% 7% 9% 9% 7% 4% 11% 18% 7% -3% 1%
*2024 YTD is through April 2024
Existing Home Price

Rental Competitive Market

John Burns Real Estate Consulting 50

Location of Subject & Rental Comparables
John Burns Real Estate Consulting 51

The table below summarizes rents at the Subject rental communities as well as apartment and BTR comparables. Note that there are no BTR comparables within the Subject CMA, so we surveyed six BTR communities in the wider Sacramento region. They are the only six open purpose-built BTR communities in the MSA and thus are useful given the far greater product similarities to the potential Subject BTR community. Stabilized (no longer in initial lease-up period) rental projects have a median occupancy of 95%.

Project Summary

Community Product Type Location
Year
Built

Units
Unit Size
(SqFt)
Leased
/Mo

Leased

Occ.

Base

$/SF
Avg
Prem
Total
Concess.
% of
Base
Total Eff.

Rent

$/SF
Mand.

Fees
Rent
+ M. Fees

$/SF
Delta Shores IA-1 Apartments Stacked Flats Sacramento 261 957 18.0 $2,343 $2.45 $0 $0 0.0% $2,343 $2.45 $0 $2,343 $2.45 Delta Shores IA-1 BTR Small Lot SFD Sacramento 87 1,452 6.0 $2,952 $2.03 $0 $0 0.0% $2,952 $2.03 $0 $2,952 $2.03

Solasta Mid-Rise Sacramento 2023 266 782 19.1 60% 44% $2,378 $3.04 $56 ($182) (7.7% ) $2,251 $2.88 $0 $2,251 $2.88 The Mesa at Laguna Ridge Garden Elk Grove 2021 55 951 98% 98% $2,281 $2.40 $0 $0 0.0% $2,281 $2.40 $0 $2,281 $2.40 Vasari Garden Elk Grove 2018 324 1,004 98% 95% $2,467 $2.46 $25 ($42) (1.7% ) $2,450 $2.44 $0 $2,450 $2.44 Landing at College Square Garden Sacramento 2017 270 932 95% 94% $2,041 $2.19 $30 $0 0.0% $2,071 $2.22 $0 $2,071 $2.22 Broadleaf Garden Sacramento 2007 244 1,041 95% 95% $2,273 $2.18 $0 ($174) (7.7% ) $2,099 $2.02 $0 $2,099 $2.02 Park side Garden Sacramento 1993 88 999 100% 98% $2,211 $2.21 $0 $0 0.0% $2,211 $2.21 $0 $2,211 $2.21 Wolf Ranch Garden / THs Sacramento 2008 136 1,225 96% 96% $2,577 $2.10 $13 $0 0.0% $2,589 $2.11 $0 $2,589 $2.11 Cyrene at Fiddyment SFD Roseville 2021 152 1,496 93% 93% $3,108 $2.08 $75 $0 0.0% $3,183 $2.13 $0 $3,183 $2.13 Solstice at Fiddyment SFD Roseville 2023 189 1,437 6.1 47% 43% $2,989 $2.08 $0 ($287) (9.6% ) $2,703 $1.88 $0 $2,703 $1.88 Isles SFD Roseville 2022 135 1,738 7.5 91% 91% $3,290 $1.89 $13 $0 0.0% $3,303 $1.90 $0 $3,303 $1.90 Tricon Sunridge SFD Rancho Cordova 2023 114 1,631 4.2 5% 5% $3,206 $1.97 $19 ($246) (7.7% ) $2,979 $1.83 $0 $2,979 $1.83 Tricon at Twelve Bridges Duets/SFD Lincoln 2023 161 1,562 4.6 42% 40% $3,170 $2.03 $38 ($304) (9.6% ) $2,903 $1.86 $0 $2,903 $1.86 Cyrene at Meadowlands SFD Lincoln 2023 81 1,318 5.8 89% 89% $2,917 $2.21 $63 $0 0.0% $2,979 $2.26 $0 $2,979 $2.26 Competitor Median 1,225 6 93% 93% $2,577 $2.18 $19 $0 0.0% $2,589 $2.13 $0 $2,589 $2.13 Competitor Average 1,240 7.9 78% 75% $2,685 $2.22 $25 ($95) (3.4%) $2,616 $2.16 $0 $2,616 $2.16 M edian (Stabilized*) 96% 95% $2,374 $2.19 $13 $0 0.0% $2,366 $2.17 $0 $2,366 $2.17 Average (Stabilized*) 96% 95% $2,531 $2.19 $19 ($27) (1.2%) $2,523 $2.18 $0 $2,523 $2.18 Rental Comparables Summary
1 2
3 4
5 6
7 8
9 10
11 12
13 John Burns Real Estate Consulting 52

Base rents usually provide the most accurate sense of positioning among comparables since average rents can fluctuate markedly. Subject rents represent market-appropriate rents assuming stabilized occupancy. The Subject apartment product is appropriately positioned toward the top of the relevant market, given its MPC setting and new construction.

Base Rental Positioning Comparison – Apartments
John Burns Real Estate Consulting 53

The graph shows the Subjects’ positioning against rental communities on a total effective rent basis (Base Rent + Average Premiums – Concessions). Subject apartments are positioned below Solasta, a newly built elevator-serviced mid-rise apartment community, given its superior Greenhaven location closer to downtown Sacramento jobs and entertainment.

Total Effective Rent – Apartments
John Burns Real Estate Consulting 54

The graph shows Subject BTR base rent positioning against regional BTR communities. The Subject is positioned toward the bottom of the market given its slightly less desirable address compared to Roseville and Lincoln (and note that Tricon in Lincoln is in the highly appealing Twelve Bridges master plan). These factors are slightly offset at Cyrene and Isles due to a poor location within Roseville and minimal amenities.

Base Rental Positioning Comparison – BTR
John Burns Real Estate Consulting 55

The graph shows Subject BTR positioning against regional BTR communities on a total effective rent basis (Base Rent + Average Premiums – Concessions). Given its location disadvantage, this comparison shows the Subject BTR community positioned below Cyrene at Fiddyment and Isles. Note that Tricon at Twelve Bridges and Solstice comparables also hold a location advantage over the Subject but offer considerable concessions while in lease-up; thus, their positioning is lower.

Total Effective Rent Positioning Comparison – BTR
John Burns Real Estate Consulting 56

Community Floor Plan Market Rents and Fees (Monthly)
Surveyed May-24 Size Pkg
Mix (SqFt) Bed Bath Level Sp

Base $/SF
Avg. Total
Prem. Concess.

Total Eff.

Rent $/SF
Total 33% Inc.

Stabl'zd* to Qualify
1 Solasta AG Spanos

Type Mid-Rise Began Lease-Up Sep-23 18 510 1 1.0 1 1CP $2,010 $3.94 $48 ($154) $1,903 $3.73 $2,058 $74,820 Finished Lease-Up Leasing 36 555 1 1.0 1 1CP $1,885 $3.40 $45 ($145) $1,785 $3.22 $1,930 $70,167 Floors 4-Story Total Units 266 26 624 1 1.0 1 1CP $2,285 $3.66 $54 ($175) $2,164 $3.47 $2,339 $85,057 Parking CP/DG Leased 160 60% 48 679 1 1.0 1 1CP $2,135 $3.14 $51 ($164) $2,022 $2.98 $2,186 $79,473 Elevator Yes Occupied 117 44% 6 754 2 1.0 1 1CP $2,345 $3.11 $55 ($180) $2,221 $2.95 $2,400 $87,290 Year Built 2023 Available 106 66 847 2 2.0 1 1CP $2,555 $3.02 $60 ($196) $2,419 $2.86 $2,615 $95,107 Location Sacramento 48 979 2 2.0 1 1CP $2,605 $2.66 $62 ($200) $2,467 $2.52 $2,667 $96,968 Leased/Mo. 19.1 18 1,258 3 2.0 1 1CP $3,265 $2.60 $77 ($250) $3,092 $2.46 $3,342 $121,536 Typical Premium $75
Utilities in Rent None % w/ Premiums 75%
Services in Rent Trash Avg. Premium 2.4%
Appliances in Rent R/W/D
Ttl/Avg 266 782 $2,378 $3.04 $56 ($182) $2,251 $2.88 $2,434 $88,503 2 The Mesa at Laguna Ridge
Type Garden Began Lease-Up N/Av 9 675 1 1.0 1 2UC $2,080 $3.08 $0 $0 $2,080 $3.08 $2,080 $75,636 Finished Lease-Up Leased 10 765 1 1.0 1 2UC $1,980 $2.59 $0 $0 $1,980 $2.59 $1,980 $72,000 Floors 2-Story Total Units 55 9 951 2 2.0 1 2UC $2,300 $2.42 $0 $0 $2,300 $2.42 $2,300 $83,636 Parking UC/AG Leased 54 98% 9 1,018 2 2.0 1 2UC $2,380 $2.34 $0 $0 $2,380 $2.34 $2,380 $86,545 Elevator No Occupied 54 98% 9 1,152 2 2.5 2 2UC $2,500 $2.17 $0 $0 $2,500 $2.17 $2,500 $90,909 Year Built 2021 Available 1 9 1,165 2 1.5 2 2UC $2,480 $2.13 $0 $0 $2,480 $2.13 $2,480 $90,182 Location Elk Grove
Leased/Mo.
1,248 2 2.5 2 2UC $2,680 $2.15 $0 $0 $2,680 $2.15 $2,680 $97,455 Typical Premium $0
Utilities in Rent
Services in Rent
Appliances in Rent
None
Trash
R/W/D
% w/ Premiums
Avg. Premium

0.0%
0%
Phase 2 is under construction Ttl/Avg 55 951 $2,281 $2.40 $0 $0 $2,281 $2.40 $2,281 $82,949 3 Vasari Guardian Capital
Type Garden Began Lease-Up N/Av 64 719 1 1.0 1 1CP $2,263 $3.15 $23 ($42) $2,244 $3.12 $2,286 $83,125 Finished Lease-Up Leased 42 736 1 1.0 1 1CP $2,283 $3.10 $23 ($42) $2,264 $3.08 $2,306 $83,860 Floors 2-Story Total Units 324 42 978 2 2.0 1 1CP $2,367 $2.42 $24 ($42) $2,349 $2.40 $2,391 $86,945 Parking CP/UC/DAG Leased 318 98% 56 1,096 2 2.0 1 1CP $2,485 $2.27 $25 ($42) $2,469 $2.25 $2,510 $91,279 Elevator No Occupied 307 95% 64 1,142 2 2.0 1 1CP $2,575 $2.25 $26 ($42) $2,559 $2.24 $2,601 $94,585 Year Built
Location
2018
Elk Grove
Available

Leased/Mo.
6 56 1,303 3 2.0 1 1CP $2,771 $2.13 $28 ($42) $2,757 $2.12 $2,799 $101,785 Typical Premium $50
Utilities in Rent
Services in Rent
None
None
% w/ Premiums
Avg. Premium

1.0%
50%
Appliances in Rent R/W/D
Ttl/Avg 324 1,004 $2,467 $2.46 $25 ($42) $2,450 $2.44 $2,492 $90,614 Apartment Comparables Detail
John Burns Real Estate Consulting 57

Community Floor Plan Market Rents and Fees (Monthly)
Surveyed May-24 Size Pkg
Mix (SqFt) Bed Bath Level Sp

Base $/SF
Avg. Total
Prem. Concess.

Total Eff.

Rent $/SF
Total 33% Inc.

Stabl'zd* to Qualify
4 Landing at College Square MG Properties

Type Garden Began Lease-Up Leased 126 758 1 1.0 1 1CP $1,698 $2.24 $25 $0 $1,723 $2.27 $1,723 $62,653 Finished Lease-Up N/Av 42 1032 2 2.0 1 1CP $2,289 $2.22 $34 $0 $2,323 $2.25 $2,323 $84,460 Floors 3-Story Total Units 270 42 1058 2 2.0 1 1CP $2,267 $2.14 $33 $0 $2,300 $2.17 $2,300 $83,648 Parking CP/UC/DG Leased 256 95% 36 1091 2 2.0 1 1CP $2,320 $2.13 $34 $0 $2,354 $2.16 $2,354 $85,604 Elevator No Occupied 253 94% 12 1,199 3 2.0 1 1CP $2,552 $2.13 $38 $0 $2,590 $2.16 $2,590 $94,164 Year Built 2017 Available 14 12 1,228 3 2.0 1 1CP $2,641 $2.15 $39 $0 $2,680 $2.18 $2,680 $97,448 Location Sacramento
Leased/Mo.

Typical Premium $100
Utilities in Rent None % w/ Premiums 30%
Services in Rent Trash Avg. Premium 1.5%
Appliances in Rent R/W/D
Ttl/Avg 270 932 $2,041 $2.19 $30 $0 $2,071 $2.22 $2,071 $75,318 5 Broadleaf Security Properties
Type Garden Began Lease-Up N/Av 64 790 1 1.0 1 1CP $2,020 $2.56 ($155) $1,865 $2.36 $2,020 $73,455 Finished Lease-Up Leased 48 932 2 1.0 1 1CP $2,215 $2.38 ($170) $2,045 $2.19 $2,215 $80,545 Floors 3-Story Total Units 244 48 1,136 2 2.0 1 1CP $2,325 $2.05 ($178) $2,147 $1.89 $2,325 $84,545 Parking CP/O/UC Leased 232 95% 84
Elevator None Occupied 232 95%
Year Built 2007 Available 12
Location Sacramento
Leased/Mo.

Typical Premium $100
Utilities in Rent None % w/ Premiums 50%
Services in Rent None Avg. Premium NAv
Appliances in Rent R/W/D
1,240 2 2.0 1 1CP $2,470 $1.99 ($189) $2,281 $1.84 $2,470 $89,818 Ttl/Avg 244 1,041 $2,273 $2.18 $0 ($174) $2,099 $2.02 $2,273 $82,665 6 Parkside Entrata
Type Garden Began Lease-Up N/Av 11

726

1 1.0

1 1CP

$1,875

$2.58

$0

$0

$1,875

$2.58

$1,875

$68,182
Finished Lease-Up Leased 24 986 2 2.0 1 1CP $2,070 $2.10 $0 $0 $2,070 $2.10 $2,070 $75,273 Floors 2-Story Total Units 88 23 995 2 2.0 1 1CP $2,175 $2.19 $0 $0 $2,175 $2.19 $2,175 $79,091 Parking CP/UC Leased 88 100% 30 1,114 3 2.0 1 1CP $2,475 $2.22 $0 $0 $2,475 $2.22 $2,475 $90,000 98%

$0
0%
Services in Rent None Avg. Premium 0.0%
Appliances in Rent R/W/D

Apartment Comparables Detail
Ttl/Avg 88 999 $2,211 $2.21 $0 $0 $2,211 $2.21 $2,211 $80,405

Elevator None Occupied 86
Year Built 1993 Available 0
Location Sacramento
Leased/Mo.

Typical Premium
Utilities in Rent None % w/ Premiums

John Burns Real Estate Consulting 58

8 Cyrene at Fiddyment
Sares-Re
9 Solstice at Fiddyment
Van Dael

Community Floor Plan Market Rents and Fees (Monthly)
Surveyed May-24 Size Pkg
Mix (SqFt) Bed Bath Level Sp

Base $/SF
Avg. Total
Prem. Concess.

Total Eff.

Rent $/SF
Total 33% Inc.

Stabl'zd* to Qualify
7 Wolf Ranch Sequoia Equities

Type Garden / THs Began Lease-Up N/Av 8 867 1 1.0 1 1CP $2,058 $2.37 $10 $0 $2,068 $2.39 $2,068 $75,199 Finished Lease-Up Leased 16 1012 2 2.0 1 1CP $2,389 $2.36 $12 $0 $2,401 $2.37 $2,401 $87,294 Floors 2 & 3-Story Total Units 136 16 1152 2 2.0 1 1CP $2,344 $2.03 $11 $0 $2,355 $2.04 $2,355 $85,650 Parking CP/UC/DAG Leased 131 96% 8 1,170 2 2.0 1 1CP $2,398 $2.05 $12 $0 $2,410 $2.06 $2,410 $87,623 Elevator None Occupied 130 96% 20 1,221 2 2.0 1 1DAG $2,562 $2.10 $12 $0 $2,574 $2.11 $2,574 $93,616 Year Built 2008 Available 5 24 1,228 2 2.0 1 1CP $2,571 $2.09 $12 $0 $2,583 $2.10 $2,583 $93,944 Location Sacramento 20 1,233 3 2.0 1 1CP $2,716 $2.20 $13 $0 $2,729 $2.21 $2,729 $99,243 Leased/Mo. 12 1,503 3 3.0 2 1DAG+1UC $2,850 $1.90 $14 $0 $2,864 $1.91 $2,864 $104,139 Typical Premium $50 12 1,586 3 3.0 2 1DAG+1UC $3,132 $1.97 $15 $0 $3,147 $1.98 $3,147 $114,443 Utilities in Rent None % w/ Premiums 25%
Services in Rent Trash Avg. Premium 0.5%
Appliances in Rent R/W/D
24 BMR units not included in unit mix

Type SFD Began Lease-Up
Finished Lease-Up
Floors 2-Story Total Units
Parking Direct Acc. Gar. Leased 141
Elevator None Occupied 141 93%
Year Built 2021 Available 11
Location Roseville
Leased/Mo.

Typical Premium $150
Utilities in Rent None % w/ Premiums 50%
Services in Rent Landscaping Avg. Premium 2.4%
Appliances in Rent R/W/D

Type SFD Began Lease-Up
Finished Lease-Up
Floors 1 & 2-Story Total Units
Parking Surface/Garage Leased 88
Elevator None Occupied 82 43%
Year Built 2023 Available 101
Location Roseville
Leased/Mo. 6.1
Typical Premium $0
Utilities in Rent None % w/ Premiums 0%
Services in Rent None Avg. Premium 0.0%
Appliances in Rent R/W/D

Apartment Comparables Detail
Ttl/Avg 189 1,437 $2,989 $2.08 $0 ($287) $2,703 $1.88 $2,989 $108,707 Ttl/Avg 136 1,225 $2,577 $2.10 $13 $0 $2,589 $2.11 $2,589 $94,151 gis Group
Leased 15

1,367

3 2.5

2 2DAG

$2,999

$2.19

$72

$0

$3,071

$2.25

$3,071

$111,686
Leased 29 1,406 3 2.5 2 2DAG $3,099 $2.20 $75 $0 $3,174 $2.26 $3,174 $115,410 152 52 1,482 3 2.5 2 2DAG $3,100 $2.09 $75 $0 $3,175 $2.14 $3,175 $115,447 93% 56 1,589 4 2.5 2 2DAG $3,150 $1.98 $76 $0 $3,226 $2.03 $3,226 $117,309

Ttl/Avg 152 1,496 $3,108 $2.08 $75 $0 $3,183 $2.13 $3,183 $115,755 e Homes
Mar-23 48

945

2 2.0

1 1CP

$2,395

$2.53

$0

($230)

$2,165

$2.29

$2,395

$87,091
Leasing 48 1,426 3 2.5 2 2DAG $2,995 $2.10 $0 ($287) $2,708 $1.90 $2,995 $108,909 189 48 1,558 4 3.0 2 2DG $3,245 $2.08 $0 ($311) $2,934 $1.88 $3,245 $118,000 47% 45 1,845 4 3.0 2 2DG $3,345 $1.81 $0 ($321) $3,024 $1.64 $3,345 $121,636

John Burns Real Estate Consulting 59

Community Floor Plan Market Rents and Fees (Monthly)
Surveyed May-24 Size Pkg
Mix (SqFt) Bed Bath Level Sp

Base $/SF
Avg. Total
Prem. Concess.

Total Eff.

Rent $/SF
Total 33% Inc.

Stabl'zd* to Qualify
10 Isles Progress Residential

Type SFD Began Lease-Up Oct-22 45 1,621 3 2.5 2 2DAG $3,180 $1.96 $12 $0 $3,192 $1.97 $3,192 $116,076 Finished Lease-Up Mar-24 46 1,762 4 2.5 2 2DAG $3,259 $1.85 $12 $0 $3,271 $1.86 $3,271 $118,959 Floors 2-Story Total Units 135 44 1,832 4 2.5 2 2DAG $3,435 $1.88 $13 $0 $3,448 $1.88 $3,448 $125,384 Parking Direct Acc. Gar. Leased 123 91%
Elevator None Occupied 123 91%
Year Built 2022 Available 12
Location Roseville
Leased/Mo. 7.5
Typical Premium $50
Utilities in Rent None % w/ Premiums 25%
Services in Rent None Avg. Premium 0.4%
Appliances in Rent R/W/D
Ttl/Avg 135 1,738 $3,290 $1.89 $13 $0 $3,303 $1.90 $3,303 $120,092 11 Tricon Sunridge Tricon R esidential
Type SFD Began Lease-Up Apr-24 38 1,529 3 2.5 2 2DAG $3,119 $2.04 $18 ($239) $2,898 $1.90 $3,137 $114,082 Finished Lease-Up Leasing 38 1,600 3 2.5 2 2DAG $3,199 $2.00 $19 ($245) $2,972 $1.86 $3,218 $117,008 Floors 2-Story Total Units 114 38 1,765 4 2.5 2 2DAG $3,299 $1.87 $19 ($253) $3,065 $1.74 $3,318 $120,665 Parking Direct Acc. Gar. Leased 6 5%
Elevator None Occupied 6 5%
Year Built 2023 Available 108
Location Rancho Cordova
Leased/Mo. 4.2
Typical Premium $75
Utilities in Rent None % w/ Premiums 25%
Services in Rent Landscaping Avg. Premium 0.6%
Appliances in Rent R/W/D

Type Duets/SFD Began Lease-Up Feb-23 22 1,287 2 2.5 2 2DAG $2,759 $2.14 $33 ($265) $2,527 $1.96 $2,792 $101,514 Finished Lease-Up Leasing 18 1,316 3 2.5 2 2DAG $2,849 $2.16 $34 ($273) $2,610 $1.98 $2,883 $104,826 Floors 2-Story Total Units 161 20 1,529 3 2.5 2 2DAG $3,209 $2.10 $38 ($308) $2,939 $1.92 $3,247 $118,071 Parking Direct Acc. Gar. Leased 68 42% 57 1,600 3 2.5 2 2DAG $3,239 $2.02 $38 ($311) $2,967 $1.85 $3,277 $119,175 Elevator None Occupied 65 40% 44 1,765 4 2.5 2 2DAG $3,399 $1.93 $40 ($326) $3,113 $1.76 $3,439 $125,062 Year Built 2023 Available 93
Location Lincoln
Leased/Mo. 4.6
Typical Premium $75
Utilities in Rent None % w/ Premiums 50%
Services in Rent Landscaping Avg. Premium 1.2%
Appliances in Rent R/W/D
Note: Base rent includes $50 solar and smart home fee. Ttl/Avg 161 1,562 $3,170 $2.03 $38 ($304) $2,903 $1.86 $3,207 $116,629 Apartment Comparables Detail
Tricon Residential
Tricon at Twelve Bridges
12 $3,206 $1.97 $19 ($246) $2,979 $1.83 $3,224 $117,252 Ttl/Avg 114 1,631
John Burns Real Estate Consulting 60

Community Floor Plan Market Rents and Fees (Monthly)
Surveyed May-24 Size Pkg
Mix (SqFt) Bed Bath Level Sp

Base $/SF
Avg. Total
Prem. Concess.

Total Eff.

Rent $/SF
Total 33% Inc.

Stabl'zd* to Qualify
13 Cyrene at Meadowlands Sares-Regis Group

Type SFD Began Lease-Up May-23 27 1,227 2 2.5 2 2DAG $2,825 $2.30 $61 $0 $2,886 $2.35 $2,886 $104,929 Finished Lease-Up Leasing 27 1,345 3 2.5 2 2DAG $2,950 $2.19 $63 $0 $3,013 $2.24 $3,013 $109,571 Floors 2-Story Total Units 81 27 1,381 3 2.5 2 2DAG $2,975 $2.15 $64 $0 $3,039 $2.20 $3,039 $110,500 Parking Direct Acc. Gar. Leased 72 89%
Elevator No Occupied 72 89%
Year Built 2023 Available 9
Location Lincoln
Leased/Mo. 5.8
Typical Premium $125
Utilities in Rent None % w/ Premiums 50%
Services in Rent None Avg. Premium 2.1%
Appliances in Rent R/W/D
Ttl/Avg 81 1,318 $2,917 $2.21 $63 $0 $2,979 $2.26 $2,979 $108,333 Apartment Comparables Detail
John Burns Real Estate Consulting 61

The graph below shows the positioning of the Subject BTR community against detached Single-Family Rental (“SFR”) listings in the Subject Area. The Subject BTR is appropriately positioned above these trendlines given its premium for new construction, its master plan environment, and its assumed modest amenity package. These factors are somewhat offset by its smaller lot size. It is worth noting that SFR homes were built as for-sale homes and are often larger than is optimal for BTR. BTR communities generally enjoy a significant premium over local “Mom and Pop” single-family rentals.

Subject Positioning vs. Stand-Alone Single-Family Detached Rentals

Apartment Market Trends

John Burns Real Estate Consulting 63 Source: Yardi Matrix

We analyzed apartment trends
at the following levels:
• Sacramento MSA
• South Sacramento/Elk
Grove submarket
Apartment trend data in this
section are per RealPage,
which also defines these
submarkets. The full
Sacramento MSA includes the
counties of Sacramento, Yolo,
El Dorado, and Placer, while
south Sacramento is defined
by the purple area, where the
Subject is located.

Note also that the data on the
tables and chart that follow
reflect all apartment unit types.

Apartments Trends – Geographic Areas
Sacramento MSA
South Sac / Elk Grove
John Burns Real Estate Consulting 64

Effective rents have been increasing over the past decade, with the largest increase occurring from 2020 to 2022. Rents have vacillated over the last two years and sit just below $2,000/month as of April 2024.

Effective Rent Apr 2014 Apr 2015 Apr 2016 Apr 2017 Apr 2018 Apr 2019 Apr 2020 Apr 2021 Apr 2022 Apr 2023 Apr 2024 Sacramento MSA $1,025 $1,105 $1,226 $1,336 $1,408 $1,475 $1,523 $1,691 $1,935 $1,942 $1,972 South Sacramento $992 $1,061 $1,194 $1,319 $1,385 $1,448 $1,509 $1,684 $1,892 $1,889 $1,947 Effective Rents
John Burns Real Estate Consulting 65

Effective rent change increased drastically from January 2021 through June 2022, where the MSA and submarket experienced over 8% YOY growth in asking rents, reaching over 16% in late 2021. Asking rent growth slowed drastically in the last quarter of 2022 and turned negative in the summer of 2023 with the market softening. Rent change returned to positive territory in late 2023 and is now at 3.1% YOY for the South Sacramento submarket.

YOY Effective Rent Apr 2014 Apr 2015 Apr 2016 Apr 2017 Apr 2018 Apr 2019 Apr 2020 Apr 2021 Apr 2022 Apr 2023 Apr 2024 Sacramento MSA 4.6% 7.8% 10.9% 9.0% 5.4% 4.7% 3.3% 11.0% 14.5% 0.4% 1.5% South Sacramento 3.8% 7.0% 12.5% 10.5% 5.0% 4.6% 4.2% 11.6% 12.3% -0.2% 3.1% YOY Effective Rent Change
John Burns Real Estate Consulting 66

Similar to effective rents, the price per square foot of multifamily units has increased, particularly since 2020. The MSA has a slight premium over the South Sacramento submarket.

Effective RPSF Apr 2014 Apr 2015 Apr 2016 Apr 2017 Apr 2018 Apr 2019 Apr 2020 Apr 2021 Apr 2022 Apr 2023 Apr 2024 Sacramento MSA $1.19 $1.28 $1.42 $1.56 $1.63 $1.71 $1.76 $1.95 $2.23 $2.22 $2.25 South Sacramento $1.12 $1.21 $1.36 $1.49 $1.55 $1.63 $1.70 $1.89 $2.13 $2.10 $2.16 Effective Rent Per Square Foot
John Burns Real Estate Consulting 67

Occupancy has remained strong over the last ten years, though it dipped below 95% in early 2023. There have been fluctuations over the last decade from quarter to quarter, but both geographies have generally maintained high occupancies, though they are currently slightly below recent years.

Occupancy Apr 2014 Apr 2015 Apr 2016 Apr 2017 Apr 2018 Apr 2019 Apr 2020 Apr 2021 Apr 2022 Apr 2023 Apr 2024 Sacramento MSA 95.9% 96.6% 96.4% 96.5% 96.2% 96.4% 96.3% 97.4% 97.2% 94.5% 94.7% South Sacramento 95.8% 96.5% 97.0% 96.2% 95.4% 96.5% 95.9% 98.3% 98.2% 93.9% 95.6% Occupancy
John Burns Real Estate Consulting 68

For much of the last decade, year-over-year occupancy change has hovered between negative and positive 2%. As shown on the previous page, early 2023 saw outsized decreases in occupancy, resulting in a larger negative change than the norm. However, both the MSA and submarket are currently positive.

YOY Occupancy Apr 2014 Apr 2015 Apr 2016 Apr 2017 Apr 2018 Apr 2019 Apr 2020 Apr 2021 Apr 2022 Apr 2023 Apr 2024 Sacramento MSA 1.7% 0.7% -0.2% 0.1% -0.3% 0.1% -0.1% 1.1% -0.2% -2.7% 0.3% South Sacramento 1.8% 0.7% 0.5% -0.8% -0.8% 1.2% -0.6% 2.4% -0.1% -4.2% 1.7% YOY Occupancy Change
John Burns Real Estate Consulting 69

The tables below show apartment and SFR rent trends and JBREC projections for the Sacramento MSA. BTR rents are not forecasted, but SFR represents a reasonable proxy. JBREC forecasts positive annual rent change through 2027 for both apartment and SFR rentals in the MSA.

Rental Rate Trends & Projections

Potential Future Supply

John Burns Real Estate Consulting 71

The table below summarizes all rental residential projects in the city of Sacramento development pipeline per RealPage. In terms of competitive rental projects, the Russell Square Developments in Improvement Area 2 of Delta Shores east of the Subject are expected to add 576 apartments to the market over three parcels. Per the Russell Square website, construction is slated to begin in the fall of 2024 and will be completed in late 2026. The only substantially sized for-sale residential project planned in the south Sacramento planning area (where the Subject is located) is Stone Beetland (see following pages). There will also occasionally be infill projects throughout the South Sacramento planning area, like Wickford Square by Next Generation (sold out in 2022).

SACRAMENTO FUTURE RENTAL SUPPLY

Project Name

Location

City

Status

Build Year

Applicant/Developer/Builder Product
Type
Total Number of
Units
1600 Broadway 1600 Broadway Sacramento Under Construction 2025 CORE Commercial Real Estate Garden 67 ANOVA Aggie Square Stockton Blvd & 2nd Ave Sacramento Under Construction 2025 GMH Communities Wrap 141 Cypress 1330 N St Sacramento Under Construction 2024 Capitol Area Development Authority Tower 75 Former Beers Books 905-915 S St Sacramento Under Construction 2025 Anthem Properties Group Ltd Tower 225 Leisure Lane 500 Leisure Ln Sacramento Under Construction 2024 AG Spanos Companies Podium 121 Luella 1208 Q St Sacramento Under Construction 2024 Urban Development + Partners Garden 49 Natomas Fountains 3801 Gateway Park Blvd Sacramento Under Construction 2026 Hines/TriCap Development Garden 303 Studio30 500 16th St Sacramento Under Construction 2024 SKK Developments Garden 30 Sutter Green 2.0 2450 Natomas Park Dr Sacramento Under Construction 2025 Demmon Partners Podium 190 The Eames 1542 Bartlett Ln Sacramento Under Construction 2025 DeBartolo Development Garden 331 The Hayley 571 Cannery Ave Sacramento Under Construction 2025 29th Street Capital Garden 372 The Richmond 1629 S St Sacramento Under Construction 2024 Sutter Capital Group Podium 47 Trinity House 2701 Capitol Ave Sacramento Under Construction 2025 HK3 Development LLC Podium 62 1023 J Street 1023 J St Sacramento Planned 2027 Privately Owned Tower 256 1121 I Street 1121 I St Sacramento Planned 2026 TA Group Tower 206 200 North 16th Street 200 N 16th St Sacramento Planned 2026 Bauen Capital Podium 355 201 N Street 201 N St Sacramento Planned 2026 Southern Land Company Midrise/THs 438 211 North 16th Street 211 N 16th St Sacramento Planned 2026 Bauen Capital Garden 111 215 North 16th Street 215 N 16th St Sacramento Planned 2025 Bauen Capital Garden 70 2730 Stockton Boulevard 2730 Stockton Blvd Sacramento Planned 2026 Sutter Capital Group Podium 34 Edgewater in Woodlake 1891 Royal Oaks Dr Sacramento Planned 2026 Privately Owned Garden 269 Homecoming at Creekside III 2631 Del Paso Rd Sacramento Planned 2026 Lewis Group of Companies Duets/THs 184 Independence at Natomas Kankakee Dr & N Park Dr Sacramento Planned 2026 Lewis Group of Companies Duets/THs 170 Jefferson Block 1619 N St Sacramento Planned 2026 Cresleigh Homes Tower 108 Maven on 5th 2629 5th St Sacramento Planned 2026 29th Street Capital Garden 252 The Grace 620 & 628 15th St Sacramento Planned 2025 Urban Capital LLC Garden 41 The Telegrapher 5th St & Railyards Blvd Sacramento Planned 2026 LDK Ventures Podium 337 Russell Square Development I 8105 Delta Shores Cir. Sacramento Planned 2026 Merlone Geier/Russell Square Garden 232 Russell Square Development II 8105 Delta Shores Cir. Sacramento Planned 2026 Merlone Geier/Russell Square Garden 344 Total 5,420
Source: RealPage
Sacramento Residential Pipeline
John Burns Real Estate Consulting 72

One major development not included in the table on the previous page (as it is still conceptual) is Stone Beetland, a 111.2-acre property just east of Delta Shores Improvement Area 2. The developer, Taylor Builders, submitted a land-use map that indicates they plan about 1,160 residential units with densities that translate primarily into relatively dense detached product. This project is immediately west of the Morrison Creek light rail station and will have a transit-oriented village as part of the overall development. Stone Beetland will likely start development after the Subject, but it is possible that the marketing of both properties will coincide.

Source: City of Sacramento Planning Department
Future Supply – Stone Beetland
John Burns Real Estate Consulting 73
Location of potential future affordable
housing site and youth sports
complex

The graphic below displays the various land use densities at Stone Beetland.

Source: City of Sacramento Community Development Department Future Supply – Stone Beetland
John Burns Real Estate Consulting 74

The table below summarizes all residential projects in the pipeline for Elk Grove per the City of Elk Grove Planning Department. The following page contains a map showing the locations of these projects (note that all items on the map not included in this ta ble are non - residential). Note that color coding on the map on the next page indicates approval status.

ELK GROVE FUTURE RESIDENTIAL SUPPLY
Map # Project Name Location Approval
Status
Product
Type
For
Sale
For
Rent
Number of
Units
3 Poppy Keys Southeast South of Poppy Ridge Road, and East of Big Horn Blvd Under Constr. SFD x 326 17 Long Meadow NE corner of Sheldon Rd and Power Inn Rd Approved SFD x 83 23 Sheldon Farms MHP S of Sheldon Rd, between Bruceville Rd and Lewis Stein Under Constr. SFD x 47 28 Telos Greens TSM and Rezone S of Bilby Rd, just east of Montaria Way Under Constr. SFD x 85 34 Elliot Springs Bond Rd. and Waterman Rd. Under Constr. SFD x 660 35 Tuscan Ridge West South of Poppy Ridge Road and East of Bruceville Rd Under Constr. SFD x 100 36 McGeary Ranch Village 2 East side of Bruceville Rd at Machado Ranch Dr Under Constr. SFD x 241 39 Elk Grove Landing Florin Rd and Sheldon Rd Under Constr. SFD x 85 44 Poppy Keys Southwest South of Poppy Ridge Road, and East of Big Horn Blvd Approved SFD x 286 46 Hearthstone Master Homes Plans 8965 Brown Rd. Under Constr. SFD x 22 60 Sage Glen Map 8694 Calvine Rd. Approved SFD x 49
66 Souza Dairy Villages (Madeira Ranch) East of Big Horn Blvd, South of Poppy Ridge Rd. Under Constr. SFD x 66 73 Dunisch Site 9826 Bond Rd. In Plan Review SFD x 111 76 Hamilton Park at Elk Grove Landing 8773 J Sheehan St Under Constr. SFD x 85 85 Summer Villas at Sheldon Road 9350 Sheldon Road In Plan Review SFD x 406 89 Madeira Greens MHP Bilby Rd and Angsley Dr. In Plan Review SFD x 85 Total 2,737
Map # Project Name Location Approval
Status
Product
Type
For
Sale
For
Rent
Number of
Units
8 Toscano Apartments Laguna Court Approved APT x 206
9 Laguna Main Street Apartments Laguna Main Street (and south of Vaux) Approved APT x 150 26 Mountain Elk Villas S of Poppy Ridge Rd In Plan Review APT x 174 27 Bow Stockton Apartments 8676 Bow Street and 8717 E Stockton Boulevard Approved APT x 120 32 The Lyla South Side of Quali Run Ln Bruceville Intersection Under Constr. APT x 294 40 Elk Grove Railroad Courtyards 9686 Railroad St Under Constr. APT x 34 42 Wellington Crossing 2804 Elk Grove Blvd. Approved TH x 188 45 Bruceville Meadows Townhomes Southeast corner of Bruceville Rd and Bilby Rd Under Constr. TH x 157 47 Poppy Grove Apartments Southeast corner of Bruceville Rd and Poppy Ridge Rd Under Constr. APT x 387 49 Cornerstone Village South of Laguna Blvd, West of Bruceville Rd, North of Seasons Dr Approved APT x 84 57 Mesa at Laguna Ridge Phase 2 10371 Bruceville Rd. Approved APT x 136 59 Big Horn Apartments SE Corner of Big Horn Rd and Whitelock Blvd Approved APT x 246 72 Pardes Apartments Dunisch Rd. and West Stockton Blvd. Under Constr. APT x 236 79 Guardian Madeira Apartments Poppy Ridge and Big Horn Blvd. Approved APT x 324 Total 2,736
Source: City of Elk Grove Planning Department, The Ryness Report Elk Grove Residential Pipeline
Source: Elk Grove City Planning Department 75 John Burns Real Estate Consulting

See table on previous page to identify each numbered item in the map below.

Elk Grove Residential Pipeline

Location and Property
Analysis

John Burns Real Estate Consulting 77

The Subject is in the City of Sacramento, in the far southwest of the city, historically considered the Freeport area. This location is about five miles north of West Elk Grove along Interstate 5 and immediately south of the Pocket area on the west side of Interstate 5.

Subject
Regional Location
John Burns Real Estate Consulting 78

The Subject Area is displayed below. This area was used to gather Subject Area demographic data examined later in the report.

Subject
Subject Area

John Burns Real Estate Consulting 79
Pocket Area
Meadow View Area
Valley Hi
/ North
Laguna A
rea

The Immediate Subject Areas displayed below were used to gather the most relevant resales for the Subject’s for-sale product.

Subject

Immediate Subject Areas
John Burns Real Estate Consulting 80

The Subject is 10 miles south of Downtown Sacramento and just west of Interstate 5. Daily retail and services in the Delta Shores Shopping Plaza are directly across Interstate 5 from the Subject. With Interstate 5 alongside the Subject, the area provides easy access to Sacramento for work and leisure.

Surrounding Area

John Burns Real Estate Consulting 81
IA-1

Subject outlined in blue below.

Source: Client
Site Map
John Burns Real Estate Consulting 82
Aerial of the Subject facing North
Aerial of the Subject facing South
Edgewater at Delta Shores Model
Riva at Delta Shores Models

Site Photography
John Burns Real Estate Consulting 83
Subject Sac City Unified John H. Still

Subject Sac City Unified John H. Still

Subject Sac City Unified Luther Burbank

Community Name District Schoo

Rating
Schools

The Sacramento City Unified School
District will serve the Subject. The
Subject’s schools, displayed to the
right, are rated below average per
GreatSchools and well below the Elk
Grove comparable new home
communities.

Discussions with active new home
builders in Delta Shores indicate a
combination of school strategies.

Families from nearby (e.g., Pocket)
keep their kids in those schools, while
some opt for charter or private
schools. Some families with
connections to nearby Elk Grove are
able to register their children in schools
there. These strategies have
significantly mitigated the relatively low
ratings of the public schools that
service the Subject.

Grading Scales: GreatSchools.org rates schools on a
1–10 scale.

School assignment notes: We used the assigned
schools provided by builders and school districts where available. For communities where this info is not
available, we used the assigned schools provided by
GreatSchools.org. Residents can often select from more
than one elementary school. School assignments
subject to change.

Elementary Schools

Edgewater at Delta Shores Sac City Unified John H. Still Catalina at Delta Shores Sac City Unified John H. Still Coronado at Delta Shores Sac City Unified John H. Still Persimmons at Sheldon Farms Elk Grove Unified Irene B. West Tamarind at Sheldon Farms Elk Grove Unified Irene B. West Carnelian at Sheldon Farms Elk Grove Unified Irene B. West Long Meadow Elk Grove Unified Roy Herberger

Elementary Schools Average 5

Middle Schools

Edgewater at Delta Shores Sac City Unified John H. Still Catalina at Delta Shores Sac City Unified John H. Still Coronado at Delta Shores Sac City Unified John H. Still Persimmons at Sheldon Farms Elk Grove Unified Harriet G. Eddy Tamarind at Sheldon Farms Elk Grove Unified Harriet G. Eddy Carnelian at Sheldon Farms Elk Grove Unified Harriet G. Eddy Long Meadow Elk Grove Unified Edward Harris Jr.

Middle Schools Average 4

High Schools

Edgewater at Delta Shores Sac City Unified Luther Burbank Catalina at Delta Shores Sac City Unified Luther Burbank Coronado at Delta Shores Sac City Unified Luther Burbank Persimmons at Sheldon Farms Elk Grove Unified Laguna Creek Tamarind at Sheldon Farms Elk Grove Unified Laguna Creek Carnelian at Sheldon Farms Elk Grove Unified Laguna Creek Long Meadow Elk Grove Unified Monterey Trail

High Schools Average 3

Source: School district websites and Great Schools
Ratings by GreatSchools.org Scale: 1 to 10

Economic and Housing
Trends

John Burns Real Estate Consulting 85

The Sacramento MSA’s population growth slid to a 20-year low in 2021 but has since begun to rebound. Net population growth increased year over year in 2023 and is forecasted to grow 1.0% per year through 2025, but growth rates slowing through 2027.

Post-Covid employment growth has been strong but moderated in 2023 as pandemic spending impacts eased. The current
unemployment rate is 4.9%, up from recent lows but still at a historically good level. We project modest job gains from 2025 to 2027.

Population Change Employment Change

2024P 2025P 2026P 2027P 2024P 2025P 2026P 2027P
27,900 25,800 19,000 13,000 26,700 7,900 8,500 6,800

1.1% 1.0% 0.8% 0.5% 2.5% 0.7% 0.8% 0.6%

50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0 Average Annual Population Growth:

Sacramento (2003 to 2027P)

60,000

40,000

20,000

0 -20,000

-40,000

-60,000
Annual Job Growth (left axis)

14%
12%
10%
8%
6%
4%
2%
0%

Sources: U.S. Census Bureau, U.S. Bureau of Labor Statistics (BLS) with JBREC forecasts (Data as of March 2024, projections as of May 2024) Sacramento Population and Employment Change

4.9%
26,700
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Current
2024P
2025P
2026P
2027P
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Current
2024P 2025P
2026P
2027P
John Burns Real Estate Consulting 86

The Education & Health Services (EHS) sector had the most job gains over the last year. Some of the high-income job sectors in the Sacramento MSA had YOY net job losses, impacted by tech layoffs throughout the region. The education and health sector, though, remains robust.

Market Health: Employment Growth by Sector
John Burns Real Estate Consulting 87

Permit levels (new construction) have been increasing for over a decade and are currently close to levels last seen in 2006. About 75% of current permits are single-family residential permits. We project the number of permits to dip in 2024, then slowly increase through 2027.

The E/P Ratio (new jobs divided by permitted dwelling units) can be a leading indicator, as permits respond to job creation.

A ratio of +/ -1.2:1 generally means healthy housing demand. The MSA ratio is currently 2.7:1. Though projected to decrease from 2024 to 2027, the ratios of the last several years indicate significant pent-up demand.

Total Permits Employment Growth: Permits Ratio

2024P 2025P 2026P 2027P 2024P 2025P 2026P 2027P
11,100 10,750 10,800 11,300 2.4 0.7 0.8 0.6

25,000

20,000

15,000

10,000
Single-Family Permits
Multifamily Permits

10 5

0 -5

-10
Employment Growth : Permits Ratio

5,000 -15

0 -20

Sources: U.S. Census Bureau with JBREC forecasts (Data as of March 2024, projections as of May 2024) Sacramento Residential Permits and Employment Relationship
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Current
2024P
2025P
2026P
2027P
2003
2004
2005
2006
2007
2008
2009-18.0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Current
2024P
2025P
2026P
2027P

0.7 0.7

1.1 1.7

0.7 -3.4
-8.2
-0.9

5.3 5.4

4.8 4.6

4.5 2.3

3.4 2.2

3.3 4.1

1.4 2.7

2.4 0.7
-4.5

0.8 0.6
John Burns Real Estate Consulting 88

Mortgage Rates
ARM rates assume 5/1 terms.

Source: Freddie Mac with JBREC forecasts (Data as of March 2024, projections as of May 2024) John Burns Real Estate Consulting 89
2003
2004
2005 2006 2007
2008 2009 2010 2011
2012 2013 2014 2015
2016 2017 2018 2019
2020 2021 2022 2023
Current
2024P 2025P 2026P
2027P

Months of supply (ratio of homes listed for sale to average monthly sales) depict housing surpluses or shortages.

The Sacramento MSA has averaged 1.4 months of supply since January 2014. The current supply is 1.6 months, above May 2023's

1.2. Due to the sharp uptick in mortgage rates, existing home sales volumes have declined rapidly since 2022. We project sales volume to increase from 2024 to 2027. The median existing home price is $561K, down from 2022.

Resale Volume & Price

Current Year-Ago Current Year-Ago 2024P 2025P 2026P 2027P 2,778 2,072 1.6 1.2 22,700 24,000 24,300 25,900

6.4% 5.7% 1.3% 6.6%

8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0 Listings (left axis)
Months of Supply (right axis)

3.0 2.5

2.0 1.5

1.0 0.5

0.0 60,000
50,000
40,000
30,000
20,000
10,000
0 Sales (left axis)
Median Price (right axis)

$700K
$600K
$500K
$400K
$300K
$200K
$100K
$0K

Sources: John Burns Research and Consulting, LLC MOS Estimate; (Data as of April 2024, projections as of May 2024)
Sources: Public Records; John Burns Research and Consulting, LLC (Data as of March 2024, projections as of May 2024)
Sacramento
Resale Market
Current = 1.6
$561K
Resale Listings Months of Supply
Dec-13
Jun-14
Dec-14
Jun-15
Dec-15
Jun-16
Dec-16
Jun-17
Dec-17
Jun-18
Dec-18
Jun-19
Dec-19
Jun-20
Dec-20
Jun-21
Dec-21
Jun-22
Dec-22
Jun-23
Dec 23
John Burns Real Estate Consulting 90

3.5%

2.6%

2.0%

The volume of new home sales steadily increased for over a decade, though it dipped in 2023 in part due to limited supply and rising mortgage rates. We project that the volume will slowly increase through 2027.

New home prices reached their highest point in 2022, as there was a shortage of resale supply and a growing demand for new housing.

The current median price of a new home is $671K, down from 2022.

We forecast a 2.0% increase in 2024 and continued increases in 2025-2027 as mortgage rates ease somewhat.

New Home Volume and Price
2024P 2025P 2026P 2027P
6,400 6,500 6,800 7,000
New Home Prices
Historical Prices Forecasted Price

1.6% 1.6% 4.6% 2.9%
Sales (left axis) Median Price (right axis)
Year Med. Price YOY%
2004 $391,000 17.5%
2005 $471,100 20.5%
December year-end
values

4.5%
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0 $671K
$800K
$700K
$600K
$500K
$400K
$300K
$200K
$100K
$0K
2006 $442,200 -6.1%
2007 $388,000 -12.3%
2008 $319,600 -17.6%
2009 $296,900 -7.1%
2010 $293,700 -1.1%
2011 $278,700 -5.1%
2012 $300,000 7.6%
2013 $354,100 18.0%
2014 $404,700 14.3%
2015 $439,400 8.6%
2016 $454,500 3.4%
2017 $471,000 3.6%
2018 $493,600 4.8%
2019 $493,700 0.0%
2020 $511,000 3.5%
2021 $580,400 13.6%
2022 $679,400 17.1%
2023 $639,400 -5.9%

4.0%

3.5%

3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

0.0%

3.9%

Sources: Public Records; John Burns Research and Consulting, LLC (Data as of March 2024, projections as of May 2024) Sacramento New Home Market
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Current
2024P
2025P
2026P
2027P
Dec-24P
Dec-25P
Dec-26P
Dec-27P
John Burns Real Estate Consulting 91
Affordability and Value

JBREC’s Burns Affordability Index shows affordability in the Sacramento MSA at nearly 48%, above the new normal of 37%. We expect affordability to marginally improve in the coming year (lower percentages = increased affordability).

The Burns Home Value Index (BHVI) measures home value
trends for existing homes. We project positive price change from 2024 to 2027.

Burns Affordability Index™ Burns Home Value Index™

2024P 2025P 2026P 2027P 2024P 2025P 2026P 2027P
47% 45% 45% 45% 3.0% 3.3% 4.2% 4.4%

New Normal (Intrinsic Value), 37.6%
60%
50%

40%

30%

20%

10%

0%
350.0
300.0
250.0
200.0
150.0
100.0

50.0 0.0
Index Forecasts Index History

Sources: John Burns Research and Consulting, LLC (Data as of April 2024, projections as of May 2024) Sacramento * HC/I ratio = median monthly housing costs (median priced home, 90% LTV, 30-yr fixed rate, PITI plus mortgage insurance) divided by 125% of median income. The “New Normal” reflects fundamental shifts in markets that we believe are now permanently more/less expensive due to increased/decreased demand or limited supply.

The Burns Home Value Index (BHVI) provides our view of home value trends in existing single- family homes. Each month’s BHVI is based on an “electronic appraisal” of every home in the market, rather than just actual transactions, removing the influence of shifts in mix of home sales. BHVI Methodology Historical Median, 33.6%
Current = 47.9%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024P
2025P
2026P
2027P
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024P
2025P
2026P
2027P

Demographic Trends

John Burns Real Estate Consulting 93 Sources: John Burns Real Estate Consulting, ESRI

To analyze demographics, the table below highlights key metrics for the Sacramento MSA, Sacramento County, the City of Sacramento, and the Subject Area. (The source is ESRI, a major national demographic forecasting firm.) The Subject Area has a higher median income and net worth than the city and county.

Sacramento
MSA
Sacramento
County
City of
Sacramento Subject Area
2023 Population 2,448,813 1,614,771 537,063 282,078
Proj. Annual % Increase (2023 to 2028) 0.36% 0.30% 0.59% 0.18% 2023 Households 890,070 576,145 197,512 92,523
Proj. Annual % Increase (2023 to 2028) 0.42% 0.29% 0.67% 0.12% 2023 Median Age 37.9 36.7 35.1 35.5
2023 Median HH Income $88,209 $83,284 $78,218 $87,328
2023 Median Net Worth $182,755 $145,027 $93,210 $164,025 2023 Median Home Value $574,783 $514,900 $501,834 $508,041 2023 Avg. Household Size 2.70 2.74 2.63 3.03
Demographic Snapshots
John Burns Real Estate Consulting 94 SOURCES: https://onthemap.ces.census.gov/ (2018 Census Data), ESRI

About 61% of employed Sacramento workers commute beyond the city. Most commuters travel into nearby areas such as unincorporated eastern Sacramento, Rancho Cordova, West Sacramento, and Elk Grove. Note that this data is lagged about two years and so is somewhat dated.

Employment

John Burns Real Estate Consulting 95 Sources: John Burns Real Estate Consulting, ESRI

Population growth among the four areas is relatively similar from 2023 to 2028 with slightly higher rates slated for the city than the subject area. Note that projections are per ESRI.

Population and Household Trends
John Burns Real Estate Consulting 96 Sources: John Burns Real Estate Consulting, ESRI

The Subject Area is outlined in yellow on the map below. The red pinpoint represents the location of the Subject. The Subject Area is a slightly more affluent area than the city of Sacramento and incomes are on par with the MSA as a whole.

Median Income & Income Distribution
John Burns Real Estate Consulting 97 Sources: John Burns Real Estate Consulting, ESRI

The Subject Area has a slightly younger skew than the MSA and the county. It has the highest concentration of people 15 years old or younger, indicative of family households.

Median Age & Age Distribution
John Burns Real Estate Consulting 98 Sources: John Burns Real Estate Consulting, ESRI

Also indicative of a family-oriented profile, about 44% of households in the Subject Area are households with children compared to about 33% of family households in the city of Sacramento.

Presence of Family

John Burns Real Estate Consulting 99 Sources: John Burns Real Estate Consulting, ESRI

ESRI Tapestry Segmentation classifies neighborhoods into 67 unique segments based on demographics and socioeconomic characteristics.

The top 3 segments for the Subject Area represent 32% of households.

Sprouting Explorers: Urban Edge Families

Located throughout the South and West, most Urban Edge Families residents own their own homes, primarily single-family housing—out of the city, where housing is more affordable. Median household income is slightly below average (Index 91). The majority of households include younger married-couple families with children and, frequently, grandparents. Many residents are foreign-born. Spending is focused more on the members of the household than the home. Entertainment includes multiple televisions, movie rentals, and video games at home or visits to theme parks and zoos. This market is connected and adept at accessing what they want from the Internet.

Sprouting Explorers: Up and Coming Families

Up and Coming Families is a market in transition—residents are younger and more mobile than the previous generation. They are ambitious, working hard to get ahead, and willing to take some risks to achieve their goals. The recession has impacted their financial well-being, but they are optimistic. Their homes are new; their families are young. This is one of the fastest-growing markets in the country.

Affluent Estates: Boomburbs

This is the new growth market, with a profile similar to the original: young professionals with families that have opted to trade up to the newest housing in the suburbs. The original Boomburbs neighborhoods began growing in the 1990s and continued through the peak of the housing boom. Most of those neighborhoods are fully developed now. This is an affluent market but with a higher proportion of mortgages. Rapid growth still distinguishes the Boomburbs neighborhoods, although the boom is more subdued now than it was 10 years ago. So is the housing market. Residents are well-educated professionals with a running start on prosperity.

Top 3 Demographic Segments

Appendix

John Burns Real Estate Consulting 101

This report’s conclusions and recommendations are based on our analysis of the information available to us from our research and from the client as of the date of this report. We assume that the information is correct and reliable and that we have been informed about any issues that would affect project marketability or success potential.

Our conclusions and recommendations are based on current and expected performance of the national, and/or local economy and real estate market. Given that economic conditions can change and real estate markets are cyclical, it is critical to monitor the economy and real -estate market continuously and to revisit key project assumptions periodically to ensure that they are still justified.

Due to changes in market conditions, as well as changes in consumer psychology, projected and actual results will likely differ. Events and circumstances frequently do not occur as expected, and the differences may be material. We do not express any form of assurance on the achievability of any pricing or absorption estimates or reasonableness of the underlying assumptions.

In general, for projects out in the future, we are assuming “normal” real estate market conditions and not a condition of either prolonged “boom” or “bust” market conditions. We do assume that economic, employment, and household growth will occur more or less in accordance with current expectations. We are not taking into account major shifts in the level of consumer confidence; in the ability of developers to secure needed project entitlements; in the cost of development or construction; in tax laws that favor or disfavor real estate markets; or in the availability and/or cost of capital and mortgage financing for real estate developers, owners and buyers. Should there be such major shifts affecting real estate markets, this analysis should be updated, with the conclusions and recommendations summarized herein reviewed and reevaluated under a potential range of build- out scenarios reflecting changed market conditions.

We have no responsibility to update our analysis for events and circumstances occurring after the date of our report.

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103

LOT # APN LOT SIZE (SF) STATUS PERMIT LOT # APN LOT SIZE (SF) STATUS PERMIT LOT # APN LOT SIZE (SF) STATUS PERMIT 239 053-0220-019 4,573 F-Lot $51,443.76 276 053-0220-056 3,431 F-Lot No 313 053-0220-093 5,495 F-Lot $47,690.04 240 053-0220-020 3,705 F-Lot $49,137.18 277 053-0220-057 3,431 F-Lot No 314 053-0220-094 4,452 F-Lot $48,316.84 241 053-0220-021 3,967 F-Lot $52,079.53 278 053-0220-058 3,431 F-Lot No 315 053-0220-095 4,421 F-Lot $51,451.66 242 053-0220-022 4,075 F-Lot $47,682.14 279 053-0220-059 3,431 F-Lot No 316 053-0220-096 3,588 F-Lot $52,089.63 243 053-0220-023 4,168 F-Lot $45,965.72 280 053-0220-060 3,677 F-Lot No 317 053-0220-097 4,009 F-Lot $49,027.69 244 053-0220-024 3,705 F-Lot $45,375.56 281 053-0220-061 5,488 F-Lot No 318 053-0220-098 3,230 F-Lot No 245 053-0220-025 2,975 F-Lot $47,690.04 282 053-0220-062 2,975 F-Lot No 319 053-0220-099 3,230 F-Lot No 246 053-0220-026 3,161 F-Lot $48,050.14 283 053-0220-063 2,975 F-Lot No 320 053-0220-100 3,230 F-Lot No 247 053-0220-027 3,258 F-Lot $47,646.81 284 053-0220-064 3,644 F-Lot No 321 053-0220-101 4,081 F-Lot No 248 053-0220-028 3,258 F-Lot $48,707.69 285 053-0220-065 3,294 F-Lot No 322 053-0220-102 3,826 Parking Lot No 249 053-0220-029 3,090 F-Lot $48,071.92 286 053-0220-066 3,294 F-Lot No 323 053-0220-103 3,305 1,795 SF M Yes 250 053-0220-030 3,561 F-Lot $45,655.75 287 053-0220-067 3,931 F-Lot No 324 053-0220-104 3,305 2,102 SF M Yes 251 053-0220-031 4,297 F-Lot $48,468.25 288 053-0220-068 3,697 F-Lot No 325 053-0220-105 3,305 2,236 SF M Yes 252 053-0220-032 3,314 F-Lot $48,280.30 289 053-0220-069 3,111 F-Lot No 326 053-0220-106 3,305 F-Lot No 253 053-0220-033 3,314 F-Lot $45,965.72 290 053-0220-070 3,111 F-Lot No 327 053-0220-107 3,305 F-Lot No 254 053-0220-034 3,314 F-Lot $48,272.40 291 053-0220-071 3,111 F-Lot No 328 053-0220-108 3,305 F-Lot No 255 053-0220-035 3,314 F-Lot No 292 053-0220-072 3,697 F-Lot No 329 053-0220-109 3,305 F-Lot No 256 053-0220-036 3,314 F-Lot No 293 053-0220-073 3,880 F-Lot No 330 053-0220-110 3,781 F-Lot No 257 053-0220-037 3,270 F-Lot No 294 053-0220-074 3,294 F-Lot No 331 053-0220-111 3,731 F-Lot No 258 053-0220-038 3,896 F-Lot No 295 053-0220-075 3,294 F-Lot No 332 053-0220-112 3,215 F-Lot No 259 053-0220-039 4,506 F-Lot No 296 053-0220-076 4,476 F-Lot No 333 053-0220-113 3,215 F-Lot No 260 053-0220-040 3,357 F-Lot No 297 053-0220-077 7,760 F-Lot No 334 053-0220-114 3,215 F-Lot No 261 053-0220-041 3,364 F-Lot No 298 053-0220-078 4,573 F-Lot No 335 053-0220-115 3,679 F-Lot No 262 053-0220-042 3,364 F-Lot No 299 053-0220-079 4,165 F-Lot No 336 053-0220-116 3,634 F-Lot No 263 053-0220-043 3,586 F-Lot No 300 053-0220-080 3,778 F-Lot No 337 053-0220-117 3,427 F-Lot No 264 053-0220-044 4,465 F-Lot No 301 053-0220-081 4,317 F-Lot No 338 053-0220-118 3,427 F-Lot No 265 053-0220-045 3,812 F-Lot No 302 053-0220-082 3,816 F-Lot No 339 053-0220-119 3,427 F-Lot No 266 053-0220-046 3,103 F-Lot No 303 053-0220-083 3,230 F-Lot No 340 053-0220-120 3,427 F-Lot No 267 053-0220-047 3,103 F-Lot No 304 053-0220-084 3,230 F-Lot No 341 053-0220-121 3,427 F-Lot No 268 053-0220-048 3,103 F-Lot No 305 053-0220-085 3,230 F-Lot No 342 053-0220-122 3,427 F-Lot No 269 053-0220-049 3,103 F-Lot No 306 053-0220-086 3,230 F-Lot No 343 053-0220-123 3,427 F-Lot No 270 053-0220-050 4,402 F-Lot No 307 053-0220-087 3,230 F-Lot No 344 053-0220-124 3,427 F-Lot No 271 053-0220-051 4,714 F-Lot No 308 053-0220-088 5,450 F-Lot No 345 053-0220-125 3,097 F-Lot No 272 053-0220-052 3,204 F-Lot No 309 053-0220-089 4,603 F-Lot No 346 053-0220-126 3,074 F-Lot No 273 053-0220-053 3,021 F-Lot No 310 053-0220-090 4,681 F-Lot No 347 053-0220-127 3,077 F-Lot No 274 053-0220-054 3,334 F-Lot No 311 053-0220-091 5,070 F-Lot No 348 053-0220-128 3,288 F-Lot No 275 053-0220-055 3,431 F-Lot No 312 053-0220-092 6,437 F-Lot No Total Permits Paid (As of 9-25-24) $1,017,069
TYPICAL SIZE 3230
LOT # APN LOT SIZE (SF) STATUS PERMIT LOT # APN LOT SIZE (SF) STATUS PERMIT LOT # APN LOT SIZE (SF) STATUS 158 053-0230-015 5,775 F-Lot No 185 053-0230-042 5,426 F-Lot No 212 053-0220-013 5,000 F-Lot 159 053-0230-016 5,775 F-Lot No 186 053-0230-043 7,043 F-Lot No 213 053-0220-014 5,000 F-Lot 160 053-0230-017 5,775 F-Lot No 187 053-0230-044 6,544 F-Lot No 214 053-0230-057 5,000 F-Lot 161 053-0230-018 5,775 F-Lot No 188 053-0230-045 5,700 F-Lot No 215 053-0230-058 5,698 F-Lot 162 053-0230-019 5,775 F-Lot No 189 053-0230-046 5,700 F-Lot No 216 053-0220-015 7,717 F-Lot 163 053-0230-020 5,775 F-Lot No 190 053-0230-047 5,700 F-Lot No 217 053-0220-016 6,505 F-Lot 164 053-0230-021 6,809 F-Lot No 191 053-0230-048 5,700 F-Lot No 218 053-0220-017 6,956 F-Lot 165 053-0230-022 5,959 F-Lot No 192 053-0230-049 5,700 F-Lot No 219 053-0220-018 5,000 F-Lot 166 053-0230-023 5,408 F-Lot No 193 053-0230-050 7,633 F-Lot No 220 053-0230-059 5,000 F-Lot 167 053-0230-024 5,716 F-Lot $54,450.81 194 053-0230-051 5,354 F-Lot No 221 053-0230-060 5,698 F-Lot 168 053-0230-025 5,872 F-Lot $48,747.15 195 053-0230-052 5,508 F-Lot No 222 053-0230-061 6,595 F-Lot 169 053-0230-026 5,596 F-Lot $52,319.90 196 053-0230-053 5,508 F-Lot No 223 053-0230-062 5,700 F-Lot 170 053-0230-027 5,238 F-Lot $48,549.67 197 053-0230-054 5,506 F-Lot No 224 053-0230-063 5,700 F-Lot 171 053-0230-028 5,201 F-Lot $57,912.91 198 053-0230-055 5,505 F-Lot No 225 053-0230-064 5,700 F-Lot 172 053-0230-029 5,426 F-Lot $56,406.00 199 053-0230-056 5,504 F-Lot No 226 053-0230-065 5,700 2,683 SF M 173 053-0230-030 6,080 F-Lot $51,305.14 200 053-0220-001 5,503 F-Lot No 227 053-0230-066 5,775 1,685 SF M 174 053-0230-031 5,000 F-Lot $55,076.82 201 053-0220-002 5,502 F-Lot No 228 053-0230-067 7,044 F-Lot 175 053-0230-032 5,000 F-Lot $56,405.57 202 053-0220-003 5,601 F-Lot No 229 053-0230-068 7,092 F-Lot 176 053-0230-033 6,620 F-Lot $51,654.82 203 053-0220-004 6,557 F-Lot No 230 053-0230-069 5,509 F-Lot 177 053-0230-034 5,811 F-Lot $58,307.82 204 053-0220-005 7,755 F-Lot No 231 053-0230-070 5,602 F-Lot 178 053-0230-035 5,246 F-Lot No 205 053-0220-006 9,970 F-Lot No 232 053-0230-071 5,291 F-Lot 179 053-0230-036 5,375 F-Lot $54,814.37 206 053-0220-007 6,577 F-Lot No 233 053-0230-072 5,375 F-Lot 180 053-0230-037 5,375 F-Lot $51,041.29 207 053-0220-008 7,432 F-Lot No 234 053-0230-073 5,375 F-Lot 181 053-0230-038 5,375 F-Lot $53,168.90 208 053-0220-009 5,950 F-Lot No 235 053-0230-074 5,375 F-Lot 182 053-0230-039 5,423 F-Lot $52,154.67 209 053-0220-010 6,578 F-Lot No 236 053-0230-075 5,375 F-Lot 183 053-0230-040 5,660 F-Lot $53,748.09 210 053-0220-011 6,873 F-Lot No 237 053-0230-076 5,059 F-Lot 184 053-0230-041 5,417 F-Lot $52,397.07 211 053-0220-012 5,000 F-Lot No 238 053-0230-077 5,937 F-Lot Total Permits Paid (As of 9-25-24) $908,461.00
TYPICAL LOT SIZE 5,700
LOT # APN LOT SIZE (SF) STATUS LOT # APN LOT SIZE (SF) STATUS LOT # APN LOT SIZE (SF) STATUS 1 053-0250-001 8,644 F-Lot 54 053-0250-054 7,800 F-Lot 107 053-0240-015 10,046 F-Lot 2 053-0250-002 8,641 F-Lot 55 053-0250-055 7,800 F-Lot 108 053-0240-016 7,599 F-Lot 3 053-0250-003 8,638 F-Lot 56 053-0250-056 7,746 F-Lot 109 053-0240-017 7,498 F-Lot 4 053-0250-004 9,580 F-Lot 57 053-0250-057 8,223 F-Lot 110 053-0240-018 6,958 F-Lot 5 053-0250-005 7,559 F-Lot 58 053-0250-058 7,233 F-Lot 111 053-0240-019 6,500 F-Lot 6 053-0250-006 6,825 F-Lot 59 053-0250-059 6,825 F-Lot 112 053-0240-020 7,702 F-Lot 7 053-0250-007 9,359 F-Lot 60 053-0250-060 6,825 F-Lot 113 053-0240-021 7,922 F-Lot 8 053-0250-008 8,334 F-Lot 61 053-0250-061 6,825 F-Lot 114 053-0240-022 9,420 F-Lot 9 053-0250-009 7,200 F-Lot 62 053-0250-062 6,825 F-Lot 115 053-0240-023 10,327 F-Lot 10 053-0250-010 6,858 F-Lot 63 053-0250-063 6,825 F-Lot 116 053-0240-024 7,542 F-Lot 11 053-0250-011 6,825 F-Lot 64 053-0250-064 6,825 F-Lot 117 053-0240-025 7,542 F-Lot 12 053-0250-012 7,473 F-Lot 65 053-0250-065 7,836 F-Lot 118 053-0240-026 8,361 F-Lot 13 053-0250-013 6,825 F-Lot 66 053-0250-066 7,150 F-Lot 119 053-0240-027 9,645 F-Lot 14 053-0250-014 7,473 F-Lot 67 053-0250-067 7,836 F-Lot 120 053-0240-028 8,128 F-Lot 15 053-0250-015 6,825 F-Lot 68 053-0250-068 6,825 F-Lot 121 053-0240-029 7,547 F-Lot 16 053-0250-016 6,825 F-Lot 69 053-0250-069 6,825 F-Lot 122 053-0240-030 9,973 F-Lot 17 053-0250-017 7,090 F-Lot 70 053-0250-070 6,825 F-Lot 123 053-0240-031 7,405 F-Lot 18 053-0250-018 7,620 F-Lot 71 053-0250-071 6,825 F-Lot 124 053-0240-032 8,035 F-Lot 19 053-0250-019 8,150 F-Lot 72 053-0250-072 6,825 F-Lot 125 053-0240-033 7,855 F-Lot 20 053-0250-020 6,825 F-Lot 73 053-0250-073 6,825 F-Lot 126 053-0240-034 7,564 F-Lot 21 053-0250-021 7,561 F-Lot 74 053-0250-074 7,807 F-Lot 127 053-0240-035 7,033 F-Lot 22 053-0250-022 7,561 F-Lot 75 053-0250-075 8,132 F-Lot 128 053-0240-036 6,944 F-Lot 23 053-0250-023 6,825 F-Lot 76 053-0250-076 7,151 F-Lot 129 053-0240-037 7,954 F-Lot 24 053-0250-024 6,825 F-Lot 77 053-0250-077 6,825 F-Lot 130 053-0240-038 6,833 F-Lot 25 053-0250-025 6,825 F-Lot 78 053-0250-078 6,825 F-Lot 131 053-0240-039 8,813 F-Lot 26 053-0250-026 6,825 F-Lot 79 053-0250-079 6,825 F-Lot 132 053-0240-040 7,150 F-Lot 27 053-0250-027 6,825 F-Lot 80 053-0250-080 6,825 F-Lot 133 053-0240-041 7,150 F-Lot 28 053-0250-028 6,825 F-Lot 81 053-0250-081 6,825 F-Lot 134 053-0240-042 7,150 F-Lot 29 053-0250-029 7,473 F-Lot 82 053-0250-082 6,825 F-Lot 135 053-0240-043 7,150 F-Lot 30 053-0250-030 6,825 F-Lot 83 053-0250-083 7,111 F-Lot 136 053-0240-044 8,035 F-Lot 31 053-0250-031 7,473 F-Lot 84 053-0250-084 6,500 F-Lot 137 053-0240-045 10,114 F-Lot 32 053-0250-032 6,825 F-Lot 85 053-0250-085 7,111 F-Lot 138 053-0240-046 8,260 F-Lot 33 053-0250-033 6,825 F-Lot 86 053-0250-086 6,825 F-Lot 139 053-0240-047 8,616 F-Lot 34 053-0250-034 6,825 F-Lot 87 053-0250-087 6,825 F-Lot 140 053-0240-048 10,279 F-Lot 35 053-0250-035 6,825 F-Lot 88 053-0250-088 6,825 F-Lot 141 053-0240-049 9,023 F-Lot 36 053-0250-036 6,825 F-Lot 89 053-0250-089 6,825 F-Lot 142 053-0240-050 8,239 F-Lot 37 053-0250-037 7,561 F-Lot 90 053-0250-090 6,825 F-Lot 143 053-0240-051 8,029 F-Lot 38 053-0250-038 7,686 F-Lot 91 053-0250-091 6,825 F-Lot 144 053-0230-001 7,827 F-Lot 39 053-0250-039 7,800 F-Lot 92 053-0250-092 7,717 F-Lot 145 053-0230-002 7,862 F-Lot 40 053-0250-040 7,800 F-Lot 93 053-0240-001 7,327 F-Lot 146 053-0230-003 7,919 F-Lot 41 053-0250-041 7,800 F-Lot 94 053-0240-002 7,475 F-Lot 147 053-0230-004 7,728 F-Lot 42 053-0250-042 7,800 F-Lot 95 053-0240-003 7,475 F-Lot 148 053-0230-005 7,610 F-Lot 43 053-0250-043 7,800 F-Lot 96 053-0240-004 8,286 F-Lot 149 053-0230-006 8,811 F-Lot 44 053-0250-044 7,800 F-Lot 97 053-0240-005 8,286 F-Lot 150 053-0230-007 9,162 F-Lot 45 053-0250-045 7,800 F-Lot 98 053-0240-006 7,475 F-Lot 151 053-0230-008 8,085 F-Lot 46 053-0250-046 7,800 F-Lot 99 053-0240-007 7,475 F-Lot 152 053-0230-009 8,085 F-Lot 47 053-0250-047 7,800 F-Lot 100 053-0240-008 10,341 F-Lot 153 053-0230-010 8,085 F-Lot 48 053-0250-048 7,800 F-Lot 101 053-0240-009 8,619 F-Lot 154 053-0230-011 8,085 F-Lot 49 053-0250-049 7,800 F-Lot 102 053-0240-010 9,325 F-Lot 155 053-0230-012 9,302 F-Lot 50 053-0250-050 7,800 F-Lot 103 053-0240-011 9,061 F-Lot 156 053-0230-013 8,316 F-Lot 51 053-0250-051 7,800 F-Lot 104 053-0240-012 8,409 F-Lot 157 053-0230-014 10,831 F-Lot 52 053-0250-052 7,800 F-Lot 105 053-0240-013 7,678 F-Lot 53 053-0250-053 7,800 F-Lot 106 053-0240-014 7,886 F-Lot Total Permits Paid (As of 7-15-24) $0
City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-01776 10/22/2024 Consent Item 5.

Accepting Sacramento Area Flood Control Agency’s 2024 Urban Level of Flood Protection (ULOP) Adequate Progress Annual Report
File ID: 2024-01776
Location: Citywide
Recommendation: Adopt a Resolution accepting Sacramento Area Flood Control Agency’s 2024 Urban Level of Flood Protection Adequate Progress Annual Report.

Contact: Remi Mendoza, Acting Long Range Planning Manager, (916) 808-5003, [email protected], Community Development Department; Rosa Millino, Senior Engineer, (916) 808-1451, [email protected]; Neal Joyce, Supervising Engineer, (916) 808-1461, [email protected]; Department of Utilities.

Presenter: None
Attachments:
1-Description/Analysis
2-Resolution
3-Exhibit A-SAFCA 2024 ULOP Adequate Progress Annual Report 4-Transmittal Cover Letter from SAFCA’s Board
Description/Analysis
Issue Detail: On June 21, 2016, the City Council passed a resolution accepting the Sacramento Area Flood Control Agency’s (SAFCA) Urban Level of Flood Protection (ULOP) Plan, prepared pursuant to Senate Bill 5 (SB 5) and related legislation. The ULOP Plan identifies flood improvement projects, cost estimates, anticipated funding sources, and a schedule to complete them by 2025, which would result in 200-year flood protection for the city.

When considering development within a flood hazard zone, the City has relied on the 2016 ULOP Plan and the subsequent 2017 through 2023 ULOP annual reports as substantial pieces of evidence that SAFCA has made adequate progress on the construction of a 200-year flood protection system.

The purpose of the ULOP annual report is to provide an additional piece of the substantial evidence