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Mr. Jim Waters Quest Development, Inc. July 24, 2013 CONCLUSIONS Silver Lake Village is a master planned, mixed -use development conveniently located in St. Anthony, anchored by Cub Foods and Walmart. The nearby Landings apartments, located within Silver Lake Village, maintain a 98 %+ occupancy rate, while the area's most recent Class A apartment development, The View at Long Lake, has also garnered a strong positive market response. We believe that the subject site is well positioned for a market rate apartment development, with approximately 90 units, phased between 2014 and 2015 to accommodate new construction and office conversion components to the project. The development should feature high - quality units with a high -end finish. Amenities need not be extensive, but must be tastefully designed and of a high quality level. Fitness and club room/lounge facilities should be included. A pool is not viable considering site constraints and the size of the project, although an outdoor courtyard with firepit and grilling areas should be considered. Considering our preliminary review of market conditions, relevant demographic information and growth projections, we believe that there is sufficient market demand to support 90 units at this location as proposed. We would expect that the initial phase, with 45 units opening in 2014, could expect a pre -lease rate of about 8 to 10 units and an absorption rate of around 13 to 16 units per month following the initial occupancy date. We would expect that the absorption rate for Phase 11 would be at least similar, if not superior to Phase 1. Based on this preliminary review, we estimate approximate market rental rates as follows for the project, by unit type (presented in July 2013 dollars): 1 BR — avg. 725 sf - $1,200 ($1.66 psf) 1BR +Den — avg. 900 sf - $1,350 ($1.50 psf) 2BR — avg. 1,170 sf -- $1,475 ($1.26 psf) Although demand for larger 2BR and 3BR rental units has improved throughout the metro area, the economics are still a challenge for new construction apartments, particularly for larger unit types in many suburban locations. Competition from a "shadow" market (privately owned SF homes, townhomes, etc) and home - ownership has an impact on overall demand and achievable rents for apartment operators. As such, on a psf basis, 2BR and 3BR rents lag those of smaller 1BR and Studio floorplans, for which demand remains high from single renters and young couples, who are less likely to consider homeownership, even in suburban locations offering good proximity to goods /services, restaurants, amenities and employment. That said, we would suggest that the development team could consider a revision to the unit mix to be inclusive of a larger number of 1BR plans, and fewer 2BR plans, which could be concentrated primarily in the upper levels of the building. Marquette Advisors Page 21