Q3 2019 REPORT

formerly

1600 S. 1ST STREET - AUSTIN, TX

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LETTER TO OUR PARTNERS 110819 AUSTIN

DEAR PARTNERS,

Our work in urban infill development makes it clear that each project has its own story. These varied stories and our collective experiences have fueled StoryBuilt’s expansive growth over the past decade. We’re deeply grateful for your support.

Our rebrand to StoryBuilt is more than skin deep. The name StoryBuilt reflects our dynamic growth as the company evolves. A renewed focus on commitment to our customers means understanding what they want and need as they make the most important purchase of their lives. Growing StoryBuilt will take more financial capital, experienced leadership, an expanding team, and willingness to make changes in more than name only - we are definitely up to the task.

CAPITAL

Real estate is a capital-intensive business and StoryBuilt has an exceptional track record of raising debt and equity capital. Of the $129MM invested with us, $82MM has been raised in the last two years: $35.7MM in 2019 (through 9 months) and $46.5MM in 2018. This equates to an average of $3.9MM/month which adequately funds the company’s acquisition and development activities within the 65% to 70% loan-to-cost ratio required by most lenders. Our capital acquisition has allowed us to maintain a relatively low debt-to-equity ratio of 1.3:1 (compare to the industry average of 2.5:1) and to keep the pipeline growing.

STORYBUILT CAPITAL RAISE SUMMARY

Total 2019 (9 Mo.'s)

2018 2017 2016 Pre-2016

Class A1, A2 70,055,000 10,730,886 19,851,614 24,402,500 5,070,000 10,000,000

Limited Partnerships 48,605,077 21,970,077 26,635,000 - - -

Joint Ventures 10,515,000 3,000,000 - 2,440,000 5,075,000 -

Total 129,175,077 35,700,963 46,486,614 26,842,500 10,145,000 10,000,000

Monthly Average 3,966,774 3,873,885 2,236,875 845,417

StoryBuilt’s growth continues to drive an accelerated need for capital. Funding the existing $1BN pipeline requires an additional $85MM over the next 12 to 18 months.

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CAPITAL NEEDS FOR 2023

Debt update

StoryBuilt has the internal resources and institutional relationships needed to achieve our goals. We added two large banking relationships this year: Amegy Bank and Regions Bank. We expect these institutions to provide greater access to debt capital, faster loan approvals, and lower overall capital costs.

Equity update

The majority of StoryBuilt’s capital raise to date has been non-institutional. We plan to use a larger percentage of institutional capital going forward. Bluerock Residential Growth REIT, Inc. invested $4.6MM in our Thornton Flats apartments as part of a larger investment program that may include up to $17MM for Thornton II and other apartment assets.

We’ve engaged Freeman & Co, an investment banking firm in New York, to introduce us to a wider range of private equity firms that specialize in entity-level financing. This will be accomplished either by co-investing with Class A investors or by monetizing some of the Class A shares. The process is expected to take six to nine months and may result in a significant recapitalization of the business.

Finally, StoryBuilt’s in-house equity team continues to sell Class A shares which increase in value as we execute our business plan and other parts of our capitalization strategy. These shares carry a minimum buyback of 1.25. New investment opportunities are offered to StoryBuilt’s existing Limited Partners first. Our Limited Partners are mostly individuals and family businesses. They’re looking for consistent returns, above market rates, and a well-defined exit strategy. We’re proud to deliver on these 3 key investment drivers.

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PEOPLE

StoryBuilt’s team is our most valuable resource. We have added or promoted some key players to our growing roster of 135+ employees. Several of them have only been with us a short time and have already racked up exciting accomplishments.

• Roka Music, SVP of Marketing and Branding: Roka built up our marketing team and navigated our rebranding process.

• Gaute Solaas, SVP of Corporate Strategy & Development: Gaute joined the team in March. He brings institutional capital raise and business development expertise to his first real estate industry role.

• Chad Shepler, Chief Operating Officer: Chad assumed responsibility for all strategic planning, information systems, and day-to-day operations of the company.

• Chris Auxier, Director of Acquisitions & Development: Chris joined StoryBuilt to lead/launch the Denver office and has built a substantial pipeline of prospective new deals.

• Lou Gambertoglio, National VP of Commercial Projects: Lou joined to drive quality assurance and process improvement in construction management across all StoryBuilt’s divisions.

• Steve Prevost, Chief Financial Officer: With 30+ years of banking and real estate industry experience, Steve will expand the company’s capital raise activities and improve our forward-looking financial planning and investor reporting.

PERFORMANCE

We consider our performance using different metrics. We know we’re really succeeding when we receive a referral, especially when customers refer new buyers, or when our customers are repeat buyers. Two of our employees bought their first homes with us. Though they left StoryBuilt for new job opportunities, both recently returned as customers to buy their second StoryBuilt home. Employees understand our product better than anyone. The trust of a second purchase is one of the best metrics of success.

Other key measures of our performance include:

• doubling the new project pipeline year-over-year from 2018 to 2019 • starting 15 new communities and closing out 10

PIPELINE GROWTH

2018 Beginning 2019 Ending

Pipeline (future revenue) $500,000,000 $1,000,000,000

Active Communities 20 (15 new less 10 completed) 25

Completed Communities 22 32

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The metrics above, combined with solid profitability and our focused long-term customer strategy set the stage for a bright future indeed. Huge thanks to all our shareholders for being a part of it!

Regards,

Anthony Siela Managing Member

Ryan Diepenbrock Managing Member

Q3 HIGHLIGHTS:

• Total revenue of $36.9MM - $12.7MM from home building and $24.2MM from the rental portfolio

• Home building net margins remain healthy at 16%. Total net margins for 2019 forecasted at 15-17%

• Average sales price of $510,000, presenting a wide range from $325,000 to $1.2MM • Accurate forecasting of both future revenue and profit remain challenging. We have solutions

in process: obtaining greater access to equity capital and hiring staff dedicated to financial planning and analysis functions.

• StoryBuilt is executing its business strategy by building and owning commercial/apartment units that compliment and serve as a ballast to the “for sale” side of the business. Creating a healthy income producing portfolio allows the company to derisk to some degree and thrive even in cyclical/down markets.

• StoryBuilt executed its first institutional-level equity transaction with Bluerock Residential Growth REIT, Inc. We are making our platform more visible nationwide by working with Freeman investment banking team with outreach beginning this month.

In a real milestone, StoryBuilt moved into its new headquarters at 900 South 1st Street in October and the experience exceeded all expectations in terms of livability and productivity. This is especially gratifying since StoryBuilt’s in-house team of architects and project managers designed, constructed, and managed the entire project. The new HQ has all our employees under one roof for the first time since the days when it was just a few of us sharing a living room as our office. A grand opening and ribbon cutting ceremony is scheduled for November 20th and all will be invited to join and celebrate.

MARKET NOTES:

“No equity sector benefits more from the ‘Goldilocks’ economic conditions of low inflation, low interest rates, and moderate economic growth than residential and commercial real estate” according to Hoya Capital Real Estate. Real estate markets across the country, especially Austin, continue to look promising in terms of investment and returns.

• According to the Austin Board of Realtors (ABR), home sales in the Austin metro area rose 13.4% in September compared to the same month last year and hit an all-time high in terms of sales pace and median sales price. Of the 2,654 homes changing hands, half sold for less than

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$320,000 and half for more, making September’s median price the highest on record, a 6.7% increase year-over-year.

• Bankrate.com notes that Austin ranks as one of the best places in the country for first-time home buyers. In its analysis, Bankrate measured affordability, culture, job market, market tightness, and safety in the country’s 50 largest metros and ranked Austin 14th overall and 6th in the job market category.

• The Federal Reserve Bank of Dallas’ Business Cycle Index shows Austin expanding at a solid pace (7.8% annualized rate from July to August) with most job sectors experiencing payroll gains and housing construction permits continuing to increase.

Fueling these positive market conditions is a general under-supply of housing (a 1.6 month supply), but affordability concerns are growing. According to ABR, “home sales are continuing to outpace inventory, driving prices higher. This adverse effect has motivated the Austin Board of Realtors and other groups to petition City Council to adopt a more flexible code to allow for increased housing of various types across the city.” These proposed changes, such as greater height flexibility and product diversity, will enhance the value of StoryBuilt’s land positions.

On the cost side, the Producers Price Index (PPI) notched a price decrease for materials in June, marking the fifth time in two years. This is not yet a trend, but it does coincide with a broader leveling-off of price inflation this year – a welcome data-point after a long period of expansion in construction costs without a correction. Construction costs and availability of labor continue to be risks to margin and delivery timing.

According to the NAHB, regulations imposed by governments account for an average of 25% of the final price of a single-family home. StoryBuilt plans around this known factor. As the Austin city council and other constituencies undertake renewed efforts to redraft the zoning code to increase density to help tamp down affordability and traffic concerns, we will watch these developments carefully.

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LOOKING AHEAD

As part of our business plan, StoryBuilt’s target asset allocation includes a range of detached projects and has been adding larger mixed-use urban village communities. This strategy provides us with more control over zoning, contiguous land uses, diversity of product types, price points, and leads to improved livability within the community. Though we’ll be working with larger acreage, projects within these communities will be parceled down into product type and sizes consistent with previous StoryBuilt developments and will be delivered in phases. The time to market for each phase is critical, because land carry costs can accumulate quickly with large assemblages if development does not follow a strict, pre-set timeline. Consistent with our business plan, StoryBuilt plans to offer both “for sale” and “for rent” housing. This generates current income and cash flow to pay investor distributions while creating a stable recurring cash flow to derisk the business from future down-market cycles.

Larger scale projects need larger and more flexible capital sources, both debt and equity. Despite an impressive capital raise this year, the timing of StoryBuilt’s land takedowns has not always coincided with capital inflows, resulting in periodic strains on working capital. We’re confident in our plans to stay on top of this situation.

A key factor in improving StoryBuilt’s overall capitalization is achieving the Company’s targeted project leverage ratio. Today’s level sits near 57% versus a targeted rate of 60-65%. At the 65% level, the Company would have an additional $18MM in liquidity to fund operations and/or new project acquisitions. We’re managing this issue by adding new and larger banking relationships with less restrictive underwriting criteria, eliminating inefficient banks, and negotiating for better terms across the board.

StoryBuilt utilizes a portfolio approach to its “for sale” and “for rent” assets, choosing to sell or hold based on current market conditions and/or the Company’s need for liquidity. This opportunistic approach allows us to maintain strong profitability when the timing of home building production might otherwise be misaligned. The recapitalization of Thornton Flats is a good example of this strategy.

Home building net margins remain healthy at 15-16%, but downward pressure on margins may occur in the short run as StoryBuilt’s investment in people, processes, and the pipeline get absorbed across a lower production and delivery schedule. Stated simply, large projects take longer to develop but provide higher closing volumes and better margins in the long run. In the meantime, the company’s stabilized income-producing assets add valuable NOI to help bridge the gap, albeit at a small level today since the “for rent” business is still in the ramp-up phase.

Austin’s residential and commercial production volumes will remain oversized relative to Dallas, Denver, and Seattle in the short-term as these markets continue to mature and accelerate development activities. Austin’s market strength makes this current activity weighting a positive.

StoryBuilt places customer service among its highest obligations. Over the last decade, the Company has built a best-in-class Customer Happiness Team to monitor and manage each customer touchpoint, from presales to resales, working toward our goal of making buyers into customers for life. StoryBuilt continues to explore other add-on services targeted to the evolving needs of current and future urban dwellers.

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PERFORMANCE

For Rent (with Thornton Transaction)

For Sale

Revenue

$ 24,238,745 Revenue $ 12,751,962

Expenses $ (18,894,429) Cost of Sale $ (10,392,497)

Gross Profit $ 5,344,317 Gross Profit $ 2,359,465

Depr. & Amortization $ 197,267 Expenses $ 291,865

Interest $ 229,755

Net Income $ 4,917,294 Net Income $ 2,067,600

Total Revenue $ 36,990,707

Total Net Income $ 6,984,894

Class A pref + LP pref $ (1,447,050)

Total Profit Distribution $ 5,537,844

HOMEBUILDING

In a nod to rapid growth over the past three years, StoryBuilt was honored with the Austin Business Journal’s “Fast 50” award for the second year in a row. With a compound annual growth rate of 71% from 2016 to 2018, the Company earned the #7 spot among the Top 25 fastest growing businesses in Austin in the assets over $10MM category. StoryBuilt was only 1 of 3 on the list with total revenues in excess of $100M, and the only one focused on urban infill.

Building on this success, StoryBuilt is scheduled to deliver a record number of close-out communities in 2019 with 5 YTD, including Clear Creek in Seattle in Q3. Based on the current sales pace and forecasts, the Company anticipates closing out an additional 4 to 6 communities in the last quarter of year. Among these are North Bluff 1 and 2 in Austin (66 homes, 95% closed out) and Dallas’s Glencoe Park community with 68 units, 90% closed out. Four smaller communities in Dallas and San Antonio are 83% sold out and expected to make the list.

Construction continued in earnest on StoryBuilt’s most ambitious mixed-use communities to date along the burgeoning South 1st Street corridor. Both 900 South 1st & 1600 South 1st are large-scale condo projects with ground floor commercial/retail. These projects, along with the attached townhomes under construction at Luma, Emerald, Bouldin Court, Northline and Ravenna, now represent a substantial portion of the company’s overall development portfolio.

With the addition of condos and commercial projects to our traditional single-family detached dwellings, the Company has struggled, at times, to provide accurate production and closing forecasts due to longer lead times and lower closing volumes in general (<200 units). As production volumes scale toward 500+ closings per year, we anticipate that forecast will improve. Lou Gambertoglio, National VP of Commerical Projects, will lead the way toward a more disciplined and uniform commercial construction process across all markets and steer us toward higher volumes.

StoryBuilt missed an opportunity earlier this year to update investors on changes to its 2019 closings forecast, specifically regarding impact assessment of construction delays on deliveries. An

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accumulation of small construction delays often has a negative compounding effect on condo and attached product delivery times. The company now expects overall closings to be down 30% from the original target of 229 units for the year – half related to schedule delays and half to lagging sales in the Dallas and San Antonio markets.

The recapitalization of the multi-family asset of Thornton Flats means full-year profitability remains in line with the original forecast (-+5%), as does the total profit share distribution expectation. Top-line home building revenue will be lower, but again offset by asset sales. StoryBuilt reported 25 closings in Q3 2019 and combined revenue of $12.7MM. Financial performance on closed units remains strong with net margins around 16% and an average sales price of $510,264.

Looking to Q4, the company forecasts 60 closings with more than 85% of those coming from currently sold units. Additionally, 50% of the sold units have a scheduled closing date with the title company and homeowners.

Work in process (WIP) remains in the 280+ units range with forecasted starts for 2019 being adjusted down to 130. Strategic changes to the company’s community launch schedule saw projects in San Antonio, Dallas and Seattle shift out of 2019. In Seattle, the delay resulted in a substantial benefit to the Columbia City project when the City approved a 10’ height increase and declined the “historical landmark” designation for the adjacent Crescent property, opening the way for a broader and more cohesive development. The pace of starts is slated to pick up in 2020/21 with each year expecting 400+ units.

The sales pace on active communities in Q3 and 2019 YTD remains mixed. Austin outperformed expectations while Dallas and San Antonio faced headwinds on close-out communities at higher price points. On active communities, Meridian in Dallas (60% sold out) and Luma in San Antonio (42% sold out), sales fell behind pace but both communities remain well-positioned from a product and price point perspective. Overall, spec inventory and designer units remain low with just 17 completed units or 10% of forecasted annual deliveries in inventory.

After reviewing the results of prior pre-sales campaigns with its marketing team, StoryBuilt altered its presales strategy in 2019 with excellent results. Our marketing team noted that preselling too many units resulted in lower overall margins by leaving price increases on the table, and less customer satisfaction as customers waited for delivery. Marketing’s findings led to the development of a new, integrated, VIP presales playbook that kicked off with the launch of the 1600 South 1st Street project. The results speak for themselves as 15 units were sold in eight weeks and carried a 4% price increase from first sale to last based on dynamic pricing. StoryBuilt pushed back all other presales in 2019 to better align with the construction delivery schedule.

INCOME GENERATING PORTFOLIO

New income-producing assets under development will increase by $14MM in 2019 with the completion of 900 South 1st Street in Austin. An additional $15MM is slated for completion in 2020 at the neighboring mixed-use project at 1600 South 1st Street. Beyond these assets, acquisitions continue in earnest across all markets and the Company fully expects to acquire several more covered land plays in the coming quarters. Starting in 2023, rental properties currently in the design and development phase will begin lease-up at a pace that is 3 to 8 times greater compared to 2019/2020.

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The strength of the Austin’s commercial real estate market was recognized recently by the Urban Land Institute and PwC as the top spot among 80 markets surveyed in their Emerging Trends in Real Estate 2020 Forecast. The continued relocation of top employers to Austin including Apple, Facebook, Google, U.S. Army, PIMCO is a key driver of this bullish trend. In August, Apple announced it would build a $1B corporate campus in Austin to facilitate 15,000 employees. Due to lagging supply, average rental rates for Class A commercial space are currently up to $47.0 per square foot. Go to https://urbanland.uli.org/development-business/large-projects-driving-optimism-for-austins-prospects/ to view the article.

StoryBuilt’s Property Management division continues its steady growth as new commercial spaces move into management phase. Property Management’s gross revenue is currently 3.00% of overall gross revenue for 2019 but is expected to grow substantially in the future as the Company’s income producing portfolio increases and matures. The terminal value of units delivered is forecasted to remain below 15% of total revenue through 2022. This trend is expected to shift north of 30% in 2023 as the Property Management division matures with existing and new deliveries. Our Community Management division currently oversees 1250+ doors. Despite this growth, StoryBuilt’s necessary heavy front-end investment in people and processes is expected to keep related EBITDA negative to flat in 2020.

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APPENDIX

PIPELINE

Pipeline 2022* 2023* # of Communities

StoryBuilt $ 701,000,000 $ 300,729,000 $ 400,271,000 14

Austin $ 304,000,000 $ 130,416,000 $ 173,584,000 7

Dallas $ 146,000,000 $ 62,634,000 $ 83,366,000 3

Seattle $ 186,000,000 $ 79,794,000 $ 106,206,000 3

Denver $ 65,000,000 $ 27,885,000 $ 37,115,000 1

* Estimated time-frame to finish current pipeline.

HOME BUILDING PRODUCTION

Original Current

2016 2017 2018 2019 2019 2020/21

Sales 89 175 196 256 125 250+

Starts 159 269 202 209 126 225+

Closings 94 139 208 229 161 225+

PERFORMANCE

Original Current

2016 2017 2018 2019 2019 2020/21

SB Revenue $ 38,701,251 $ 72,786,245 $ 113,717,241 $ 118,000,000 $ 106,380,932 $ 130,000,000

SB Profit $ 6,067,250 $ 10,454,107 $ 17,351,352 $ 17,700,000 $ 18,988,975 $ 19,250,000

SB Shareholder Profits (Class A/B/E)

$ 2,918,587 $ 6,915,721 $ 13,107,916 $ 13,275,000 $ 13,151,115 $ 14,250,000

Sold Backlog 82 113 107

Revenue Backlog $ 32,219,404 $ 50,796,610 $ 50,466,415

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STORY BUILT, LLC - CONSOLIDATED STATEMENT OF INCOME Period Ending September 30, 2019 Company Prepared – Unaudited

Unaudited 9/30/2019

REVENUE

Net sales of real estate 51,966,014

Thornton Recapitalization 23,400,000

Rental revenue 2,103,077

HOA revenue 411,841

Total revenue 77,880,932

COST OF SALES 58,877,493

Gross margin 19,003,439 (24%)

OPERATING EXPENSES

SG&A 3,629,498

Advertising and Marketing 544,820

Total operating expenses 4,174,318

INCOME FROM OPERATIONS 14,829,121

OTHER INCOME (EXPENSE)

Interest expense (777,836)

Other expense (780,643)

Other expense, net 1,558,479

INCOME BEFORE TAXES 13,270,642

State income tax expense 41,667

NET INCOME 13,228,975 (17%)

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WE THANK YOU

For your contributions toward making us successful, profitable and sustainable. We look forward to many more years of working together to build internal and external communities that enrich the lives of everyone with whom we work and live.

AUSTIN

900 SOUTH 1ST ST., STE. 110

AUSTIN, TX 78704

DENVER

4045 N PECOS ST., STE. 210

DENVER, CO 80211

STORYBUILT OFFICE LOCATIONS:

900 S. 1ST STREET - AUSTIN, TX 5300 GLENCOE PARK - DALLAS, TX

NORTH BLUFF - AUSTIN, TX SPRINGDALE FARM - AUSTIN, TX

DALLAS

512 W. DAVIS ST.

DALLAS, TX 75208

SEATTLE

5506 6TH AVE. S, STE. 206

SEATTLE, WA 98108