REAL ESTATE APPRAISAL SERVICES - TDHCA

REAL ESTATE APPRAISAL SERVICES

NORTH KNOLL APARTMENTS 5711 NORTH KNOLL

SAN ANTONIO, BEXAR COUNTY, TX 78240 MARKET VALUE 'AS IS' OF THE LEASED FEE INTEREST IN REAL PROPERTY IN AN APPRAISAL REPORT AS OF THE EFFECTIVE DATE, NOVEMBER 30, 2015 PREPARED FOR: North Knoll Apartments, Ltd. 820 Gessner Rd. Suite 760 Houston, TX 77024 SUBMITTED BY: CohnReznick, L.L.P. Valuation Advisory Services 200 S Wacker Drive, Suite 400 Chicago, Illinois 60606 Patricia L. McGarr, MAI, CRE, FRICS patricia.mcgarr@ Direct: (312) 508-5802 January 14, 2016

SUBJECT PROPERTY

Figure 1: North Knoll Apartments 5711 North Knoll

San Antonio, TX 78240

January 14, 2016

Ms. Melissa Neelley North Knoll Apartments, Ltd. 820 Gessner Rd. Suite 760 Houston, TX 77024

SUBJECT:

Market Value 'As Is' Appraisal North Knoll Apartments 5711 North Knoll San Antonio, Bexar County, TX 78240

Dear Ms. Neelley:

CohnReznick, L.L.P. is pleased to submit the accompanying appraisal of the referenced property. The subject property consists of a 198-unit residential and partial affordable housing facility encumbered by a low-income housing land use agreement. The property is located on a parcel of land containing an approximate area of 9.20 acres and is zoned MF-33 (High Density Multi-Family) by the City of San Antonio Planning and Zoning Department, which provides for residential uses.

The purpose of the appraisal is to estimate the market value of the underlying land "as unrestricted," the market value of the underlying land "as is," the market value of the property "as restricted," and the market value of the property "as if unrestricted" of the North Knoll Apartments property (formerly the Saddle Ridge Apartments) located in San Antonio, TX (the "Property") as of November 30, 2015 (the effective date of value). The client for the assignment is the North Knoll Apartments, Ltd., and their Subsidiaries. The intended use of this report is to assist the client in determining the qualified contract price for the Texas Department of Housing and Community Affairs ("TDHCA"). The report may be used only for the aforementioned purpose and may not be distributed without the written consent of CohnReznick, L.L.P. ("CohnReznick").

The appraisal is intended to conform to the Uniform Standards of Professional Appraisal Practice (USPAP), the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute as well as applicable state appraisal regulations.

To report the assignments results, we used the appraisal report option of Standards Rule 2-2 of USPAP, where the content is consistent with the intended use of the appraisal and has no prominent use restriction. At a minimum, this report option summarizes the

analysis and provides sufficient information to enable the client and intended user to understand the rationale for the opinions and conclusions, including reconciliation of the data and approaches.

Based on the valuation analysis in the accompanying report, and subject to the definitions, assumptions, and limiting conditions expressed in the report, our opinion of value, as of the effective date, was as follows:

Appraisal Premise Market Value "As Is" Restricted Market Value "As Is" Unrestricted

VALUE CONCLUSION

Interest Appraised

Date of Value

Leased Fee

November 30, 2015

Leased Fee

November 30, 2015

Value Conclusion $15,300,000 $17,400,000

EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS

The Hypothetical Condition and Extraordinary Assumption that were made during the appraisal process to arrive at our opinion of value are fully discussed below. We advise the client to consider these issues carefully given the intended use of this appraisal, as the use might have affected the assignment results.

Hypothetical Conditions

The subject site is currently improved with 198 units in 9 buildings utilized as an affordable housing property. The hypothetical condition presented in this analysis is: we are valuing the subject site as if the existing LURA agreement remained in effect for the foreseeable future.

Extraordinary Assumptions

There are no extraordinary assumptions for this report.

If you have any questions or comments, please contact the undersigned. Thank you for the opportunity to be of service.

Very truly yours,

CohnReznick, L.L.P.

Patricia L. McGarr, MAI, CRE, FRICS Principal Certified General Real Estate Appraiser Texas License # TX 1380146

Andrew R. Lines, MAI Senior Manager

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