MULTI-HOUSING PULSE SUR 512 AUSTIN, TX ON THE MARKET

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1 MULTI-HOUSING PULSE September 217 Each Multi-Housing Pulse highlights the equity and debt markets that support transaction volume within the multi-housing industry as well as various regions of the country. This edition, Atlanta, Austin, Boston, Charlotte, Chicago, Dallas-Fort Worth, Denver, Houston, Indianapolis, Inland Empire (Riverside), Los Angeles, Miami, Minneapolis, New Jersey, New York, Philadelphia, Phoenix, Portland, San Antonio, San Diego, San Francisco, Seattle, Tampa, and Washington, D.C. are featured. A contentious U.S. election and the threat of rising interest rates at the close of 216 raised concerns about the future of global financial markets. Many of these apprehensions diminished in the first half of 217 as global capital continued to flow into U.S. real estate, signaling consumers and investors confidence in markets. Real estate transactions throughout 216 increased, and multi-housing transactions remained positive, growing by 5% since 215. Multi-housing supply and demand have also simultaneously augmented. Moreover, concerns that the oldest millennials are beginning to outgrow apartments appear to be premature. Several population trends such as delayed marriages, increased age of first time parents, and downsizing Baby Boomers continue to bolster demand for apartments. Furthermore, the national homeownership rate appears to have bottomed out after dropping nearly 8 bps since 28 to 63%, coupled with a shortage of entry-level single family homes should continue to drive strong demand in the rental market. Overall, fundamentals in the multi-housing housing market have remained strong throughout the last twelve months. Transaction volume continued to grow year over year between That rate of growth, however, was slower than the previous year in 216, at a 5% growth rate, as opposed to a 35% growth rate in 215. Transaction volume in the first half of 217 has decreased by 17% since the previous year. Large portfolio sales have taken the most dramatic slowdown, although in the first half of 217 their sales volume reached 1.4 billion. The first half of 217 has seen decreased transaction volume across both garden and mid/highrise buildings by 13% and 25%, respectively, when compared to the same time period in 216. The first half of 217 year over year sales volume took SUR 512 AUSTIN, TX ON THE MARKET the greatest hits in Manhattan (-67%), Broward (-65%), and NYC Boroughs (-42%). Supply concerns in these markets have affected income growth. Markets with the greatest increase in year over year sales volume in the first two quarters of 217 were Baltimore (+8%), San Antonio (+68%), and Orlando (+37%). The top five markets in terms of sales volume in the first half of 217 were Dallas, Atlanta, Los Angeles, Denver, and Austin. Regardless of the overall decrease in transaction volume, multi-housing remains a desirable investment for institutional investors, large investment funds, REITs (public and private), and private operators. Performance in the markets have continued to soar with rents increasing annually at approximately 3%. There is no expected downturn in rental housing demand in the near future. Despite consistent increases in multi-housing supply, vacancy rates remain healthy across the national market, demonstrating a steadily high demand for rental housing. Rental markets are extremely tight in large metro areas. National vacancy rates have declined for the seventh year in a row, dipping to 6.9% in 216, the lowest level in more than three decades. Vacancy rates for institutionally managed apartments were even lower at 4.4%. Strong demand has kept up with the pace of increasing supply, raising rents even higher. The Consumer Price Index for rent on primary residences was up 3.8% in 216. National concerns about an oversupply of multi-housing stock are unfounded as an expected supply of 389, units in 217 has been offset by robust population and job growth. According to the Joint Center for Housing Studies of Harvard University, the growth in renters continues to outpace that of homeowners, with an increase of 6, renters from 215 to 216, the twelfth consecutive year of increasing renter population, totaling 37% of total U.S. households in 216. Interestingly, on average, 45% of renters in metropolitan areas can afford payments on median-priced homes in their market, yet they choose to continue to rent for a variety of reasons. Those in younger generations are getting married and having children at older ages, postponing that time when they would buy their first homes. Other factors, such as the overhang of the recession, high student debt levels, limited new construction of starter homes, and rising home prices also make it more difficult for younger people to become homeowners. Assuming the growth in renters stabilizes at its current level, the number of renter households could increase by 4.7 million by 225. However, if renter growth continues to grow at its annual pace, then the total increase would lead to 8.7 million new renter households by 225. Since multi-housing investments generate consistent cash on cash annual returns, demand for these investments should continue to be strong due to their attractive cash yields relative to other asset types. Meanwhile, healthy job growth provides a strong indication for continued health in the housing sector. As of July, the unemployment rate was a cyclical low 4.3%, relinquishing early anxieties at the start of 217 and fostering confidence in multi-housing.

2 MULTI-HOUSING OVERVIEW When apartment market performance ended 216 on a down note, many industry experts feared that further moderation would take place in 217. It turns out those fears were unfounded. While the 5% annual effective rent growth of 215 is now a distant memory, rent growth has been remarkably stable over the first half of 217. It has even started to trend upward by the end of the second quarter, which ended with rents rising at the long-term-average rate of 2.3%. In the face of moderating job growth and occupancy as well as a supply pipeline that has yet to reach its cyclical peak this upward tick is a testament to the underlying strength of the apartment market. National Occupancy & Effective Rent Occupancy Annual Effective Rent 6% 95.4% 5% 95.2% 95.% Rent 4% 3% 2% 94.8% 94.6% 94.4% 94.2% Occupancy 1% 94.% 93.8% % % The story behind the moderating job growth and occupancy can be placed in the down, but category. While the average of 187,9 jobs added per month in the 12 months ending in June was 15, shy of the average for the previous year, the headline unemployment rate has remained below 4.5% and wages have increased 2.5% in the past year. Occupancy was 95.% in the second quarter, down approximately 35 bps from its peak in mid-215. Many markets occupancy rates have dropped significantly more: Houston, Austin, Phoenix and San Francisco all experienced drops of more than 1 bps since their respective peaks. Nonetheless, the national occupancy rate is still at the point at which Axiometrics considers a market essentially full, though 217 occupancy is expected to average 94.7% for the entire year. Though quarter-over-quarter effective rent growth still trends lower than the corresponding quarter in the previous year, the difference has narrowed to 14 bps in the second quarter from 83 bps between the third quarters of 215 and 216. QUARTERLY EFFECTIVE RENT GROWTH Quarter First.5%.9%.5%.3% Second 2.7% 2.7% 2.3% 2.2% Third 1.7% 1.8%.9% Fourth -.3% -.8% -1.1% Supply Keeping Rent Down The down, but scenarios for job growth and occupancy can help explain why rent growth hasn t slipped so far this year. The reason it hasn t increased significantly is the amount of supply still under construction. Some 161,825 new units were delivered in the first half of 217, already 56.5% of the 216 total, but just 41.3% of the 39,795 identified for delivery this entire year, according to pipeline statistics as of July 3, 217. The peak supply is expected to come in the fourth quarter, with deliveries moderating each quarter of 218. Of course, the construction costs and labor shortages that have delayed several projects will likely push some supply into next year. 2 Source: Axiometrics, a RealPage Company

3 New York, Dallas, Houston, Atlanta, Denver and Washington, D.C., are expected to receive the most units this year, with the Atlanta/Fulton and Brooklyn submarkets leading that category, with Seattle s Downtown/Capitol Hill/ Queen Anne submarket becoming the leader in early 218. Except for Seattle, urban core submarkets will likely reach their construction peak this year. Though construction cranes will still be abundant next year, the Axiometrics/ RealPage forecast predicts approximately a 25% drop in new supply in 218, to around 3, new units with a further decline in 219. Recent permitting totals support the prediction, as close to 19, fewer multi-housing units were authorized in the twelve months ending in June 217 than in the previous twelve month period. The annual total of multi-housing permits increased from last year in top metros such as New York, Los Angeles, Denver and Chicago, but decreases in Dallas, Atlanta, Washington, D.C., Houston and Nashville. Energy Markets on Upswing Houston has been especially hard hit by surplus supply, with 47,521 units delivered from 215 through the first half of 216 in the wake of the oil-price drop that helped plummet the market into the negative rent growth it has experienced for the past five quarters. However oil prices and, job growth have increased along with rig counts in the energy industry which should result in rent growth inching up from its depths. Limited new supply should help Houston s apartment market recover. After a cyclical quarterly peak of 6,385 units delivered in the third quarter of 217, just 3,169 units have been identified to come to market in the fourth quarter, 13,235 forecast for all of 218 and less than 1, in 219. The slowdown in construction should help the market absorb much of the recent new supply. The energy industry has rebounded quite well. Annual job growth in the Mining and Logging employment sector was 7.% in June 217 as rig counts more than doubled from 463 at the end of July 216 to 958 as of July 28, 217. This increase has contributed to a meteoric rent-growth rise in oil-dominated markers such as Midland and Odessa, TX, where rent growth was 21.6% and 11.7%, respectively, in the second quarter of 217, compared to -27.2% and -25.% one year earlier. Bay Area Annual Effective Rent Bay Area Positive Again It wasn t that long ago that the industry was lamenting the plight of the San Francisco Bay area, which sank from double-digit rent growth in 215 to negative territory in late 216 and the first quarter of 217. Even though job growth and apartment demand, has moderated in the past year 4.3% to 2.5% from June 216-June 217 in San Francisco; 2.8% to 1.6% in San Jose; and 3.% to 2.3% in Oakland the rate is still above the national average and trended upward in the second quarter. With those jobgrowth rates, and the peaking supply delivery, double digits rent growth is not expected in the near term. ALEXAN MELROSE SAN DIEGO, CA PROPERTY SALE West, South Still Dominate Rent The parts of the country west of Interstate 25 and south of Interstate 4 have been the rent-growth powerhouses of the national apartment market, and the second quarter of 217 is no exception. Some 1 of the 25 major markets with the highest rent growth in the recent quarter are located in the West, while another 1 are in the South or Southwest. Of the 1 Western markets, five are in California, including three of the top four. Sacramento had the highest rent growth among the major markets for the sixth straight quarter, while Riverside (the Inland Empire) was No. 2 for the fourth straight quarter. The other three major Southern California markets San Diego, Anaheim and Los Angeles were Nos. 4, 11 and 16, respectively. Florida and the Mid-Atlantic region had the top performers in the South. Orlando, Jacksonville and Tampa-St. Petersburg represented Florida at Nos. 5, 13 and 24, respectively, while Richmond, Raleigh and Charlotte were Nos. 12, 19 and 21. Meanwhile, the Midwest is making headway with three markets among the top 25 No. 1 Warren, MI; No. 14 Minneapolis-St. Paul; and No. 18 Columbus, OH. The Twin Cities are also notable because of its 97.3% occupancy, the highest among major markets nationwide. Source: Axiometrics, a RealPage Company 3

4 MULTI-HOUSING OVERVIEW cont... Transaction Market Slows Down The number and dollar volume of multi-housing transactions increased rapidly from , with a record 58.4 billion worth of deals closed last year, according to Real Capital Analytics. That pace, however, has slowed considerably so far this year. Though demand for apartment investments is still strong, only $62.6 billion in transactions closed in the first half of 217, Real Capital Analytics reported, a 17.% decline from the first half of 216. Portfolio sales have seen the steepest decrease. REITs have been especially attractive purchases lately. After Mid-America Apartments.9 billion buyout of Post Properties closed last December, the Starwood Capital Group absorbed Milestone Apartments for.85 billion in a deal that closed in the second quarter. Another REIT transaction, Greystar s billion purchase of Monogram Residential, is expected to close later this year. Though Class A properties net the highest prices, the inventory of high-end properties for sale has decreased, Real Capital Analytics found. But Class B properties and those in smaller markets are becoming popular at higher prices than before. Cap rates are still very low at an average of 5.6%, with Class B cap rates falling at a greater rate. 4 2ND QUARTER REPORT Market Rent Sacramento 11.27% Riverside 6.73% Seattle 6.17% San Diego 5.72% Orlando 5.6% Salt Lake City 5.26% Las Vegas 5.26% Fort Worth 5.12% Phoenix 4.97% Warren, MI 4.77% Anaheim 4.64% Richmond 4.56% Jacksonville 4.46% Minneapolis-St. Paul 4.27% Atlanta 4.12% Los Angeles 4.8% Nassau County-Suffolk County 4.3% Columbus, OH 4.% Raleigh 3.98% Denver 3.78% Charlotte 3.62% Dallas 3.33% Memphis 3.3% Tampa-St. Petersburg 3.12% Indianapolis 3.4% 2ND QUARTER REPORT Market Occupancy Minneapolis-St. Paul 97.3% Nassau County-Suffolk County 97.1% New York 96.8% Riverside 96.4% Sacramento 96.4% Columbus, OH 96.4% Warren, MI 96.4% San Diego 96.3% Anaheim 96.3% San Jose 96.1% Los Angeles 96.1% Oakland 96.1% Seattle 96.% Orlando 96.% Boston 95.9% Salt Lake City 95.9% San Francisco 95.8% Philadelphia 95.7% Miami 95.7% Fort Worth 95.6% Richmond 95.5% Washington, D.C. 95.5% Hartford 95.5% Nashville 95.5% Charlotte 95.3% The Single-Family Market Sales and prices of both new and existing homes increased year-overyear, though the inventory of homes for sale and months of supply available remained low. Most people in the millennial generation still prefer renting over owning, and the number of renters among the babyboomer population continues to rise. Still, some 5.2 million existing homes and 61, new homes were sold in the twelve months ending in June, according to the National Association of Realtors (existing homes) and the U.S. Census Bureau (new homes). The average prices continue to increase, as existing homes sold for an average of 63,8 in June 217, a 6.5% increase from the year before. New homes, meanwhile, garnered an average of 79,5, some 4.2% higher than the previous year s rate. Those are large price hikes, considering wages have grown an average of 2.5% over the past year and annual apartment effective rent growth was 2.3% in the second quarter of this year. Though the millennial homeownership rate increased to 35.3% in the last quarter, the propensity of that group still trends toward renting. Source: Axiometrics, HFF Research

5 In Conclusion Average effective rent growth is expected to be exactly where it was at the end of the second quarter: 2.3%, which also happens to be the long-term average. Stability should continue to be the hallmark of apartment market performance for the rest of 217. Axiometrics expects the market to pick up starting in 218, when an average rent growth of 3.3% is forecast. But that prediction relies on a downturn in supply and steady job growth. Construction delays that could push some of the 217 supply into 218 and any unexpected economic or geopolitical factors could be potential headwinds. The underlying strength that has kept the national apartment market at the long-term average continues and should provide a solid foundation for the sector to trend upward again in the next few years. STONEGATE BROOMFIELD, CO PROPERTY SALES CAPITALIZATION RATE FORECAST City Class A Class B Class C Atlanta 4.5% % 4.75% % 6.% - 7.5% Austin 4.5% - 5.5% 4.75% % 5.5% + Bay Area - Suburban 4.% - 4.5% 4.25% % 5.25% + Bay Area - Urban 3.75% % 4.% - 5.% 4.25% Birmingham 5.% - 5.5% 5.25% % 6.5% - 7.5% + Boston 4.% - 4.5% 5.% % 6.% + Charleston, SC 4.5% - 5.% 5.% % 6.% - 7.% + Charlotte 4.5% - 5.% 4.75% % 6.% - 7.% + Chicago - Suburban 4.75% - 5.5% 5.25% % 6.75% - 7.5% Chicago - Urban 4.5% - 5.% 4.75% % 5.5% - 6.5% Columbus 5.5% % 6.% % 7.% + Dallas - Suburban 4.75% - 5.5% 4.75% % 6.% + Dallas - Urban 4.25% - 4.5% 4.75% % 5.%+ Denver 4.5% - 5.% 5.25% % 5.75% % Greenville 4.75% % 5.5% - 6.% 6.% - 7.% + Houston - Suburban 4.% % 5.25% % 6.% + Houston - Urban 3.75% - 4.5% 4.5% - 5.5% 6.% + Indianapolis 5.5% % 6.% % 7.%+ Jacksonville 5.% - 5.5% 5.5% - 6.% 6.5% + Kansas City 5.25% - 6.% 6.% - 6.5% 6.75% + Los Angeles - Suburban 4.25% - 5.% 4.5% % 5.25% - 6.% Los Angeles - Urban 3.75% - 4.5% 4.% % 4.5% - 5.% Louisville 5.5% % 6.% % 7.% + Minneapolis 4.75% - 5.5% 5.5% - 6.5% 6.5% % Nashville 4.5% % 5.% % 6.% - 7.5% New Jersey - Northern 4.25% % 4.75% % 6.% - 7.% Source: Axiometrics, HFF Research CAPITALIZATION RATE FORECAST City Class A Class B Class C New Jersey - Southern 5.% % 5.5% - 6.5% 7.% - 8.% New York - Long Island 4.75% % 5.% % 6.25% % New York - Outer Boroughs 4.% - 4.5% 5.% - 5.5% 6.% - 6.5% New York - Westchester 4.75% % 5.25% % 6.25% % New York City 3.5% - 4.% 4.5% - 5.% 5.5% - 6.% Orange County 4.25% % 4.% - 5.% 5.% % Orlando 4.75% % 5.25% % 6.25% + Philadelphia - Suburban 5.% % 5.5% - 6.% 6.25% - 7.% Philadelphia - Urban 4.75% % 5.25% % 6.% - 6.5% Phoenix 4.25% - 5.% 4.75% % 5.75% % Pittsburgh 5.75% % 6.5% - 7.% 7.25%+ Portland - Suburban 4.5% % 4.75% % 5.5% + Portland - Urban 4.% - 4.5% 4.5% - 5.% 5.25% + Raleigh 4.5% - 5.% 4.75% % 6.% - 7.% + San Antonio 4.5% - 5.5% 5.% - 6.5% 6.% + San Diego 4.% % 4.25% % 4.75% % Seattle - Suburban 4.25% - 4.5% 4.5% % 5.5% + Seattle - Urban 4.% % 4.5% - 5.% 5.25% + South Florida - Broward 4.% -5.25% 5.25% - 6.% 6.25% + South Florida - Miami 4.% - 5.% 5.% - 6.% 6.% + South Florida - Palm Beach 4.% % 5.25% % 6.5% + St. Louis 5.5% % 6.% % 7.% + Tallahassee 5.25% % 5.75% % 6.5% + Tampa 4.75% % 5.25% - 6.% 6.25% + Washington, D.C. - Suburban 4.75% - 5.5% 5.25% - 6.% 6.25% + Washington, D.C. - Urban 4.% - 4.5% 4.75% % 6.% + 5

6 217 MULTI-HOUSING DEBT OUTLOOK The Pulse 217 Update An abundance of capital continues as the theme for 217 although scarcer deals are causing buyers and lenders to stay aggressive to win assignments. Fixed and floating rate money has become more expensive due to a substantial rise of the 3-Day LIBOR and the 1-Year Treasury increase from last year s 1.37% rate to around 2.25% this year. These higher rates are offset by lower spreads keeping borrowing rates very attractive and the multi-housing lending market very competitive. The flattening of the yield curve and the delayed rate increases should continue to drive success in the apartment sector through the remainder of the year. Agencies Agencies enjoyed a record year in 216 and continue to dominate the multihousing lending field in 217. Uncapped business (i.e. affordability, green and other initiatives which carry as much as 15 to 3 basis points of spread savings) continues to dominate, shifting to a floating rate loan structure. This structure provides lower interest rates and a flexible prepayment of 1% starting in Year Two. However, with the supplemental feature allowing for future resizing of the initial loan, Borrower s interest may revert back to fixed rate deals locking at or below 4%. Agencies continue to be the best option for higher leverage deals constrained by lower debt yields with other lender types. Insurance Companies At this point in this year, most insurance companies are deep into their allocation and selective asset on the remainder of the year s deals. However, the majority of insurance companies still have a large appetite and remain highly competitive. With fewer deals in the market, insurance companies are focused on making construction loans early in the leaseup process to avoid competing with the masses once the property has reached stabilization. Due to changing loan terms such as the cost of prepayment flexibility on fixed rate loans, pricing remains aggressive in order for insurance companies to differentiate themselves from other lenders. As spreads continue to tighten and rates remain low, Borrowers are taking advantage of flexible financing options. Banks The regulatory environment s effect on bank lending continues to strain construction loan originations, thus banks are highly focused and aggressive on bridge or permamnent loans for cash flowing multi-housing deals. Banks are looking for new ways to offset dollars allocated for construction offering flexible floating rate loans and fixed rate deals (often swapped) with open prepayment. These programs generally offer terms in the 7-year or less range, with only a few banks offering 1-year terms. Leverage is restricted in the 6-7% range unless some form of guarantee is offered by the Borrower. We expect 217 s rise in bank lending to continue in the multi-housing sector as construction loans are being paid off creating the need to put the capital back to use. CMBS CMBS lenders need to fill more of their pools with multi-housing deals although they continue to face a competitive landscape making it difficult to win business. Debt yields have limited proceeds and the underwriting restrictions have caused CMBS lenders to be less flexible on structuring deals. However there is an abundant amount of deals in the market that flow to this securitized execution. Class B and C deals are receiving attractive options but the overall spreads are higher than what the agencies can offer. Overall, the CMBS market has worked through new risk retention rules and pricing volatility, leading to an eagerness to capture more multi-housing business. CMBS SPREADS TO SWAPS +19 AAA Swap UST 3.% % AAA Spread % 2.25% 2.% 1.75% 1-Year Interest Rate % % +5 1.% 1/16 2/16 3/16 5/16 7/16 9/16 1/16 11/16 12/16 1/17 3/17 5/17 6/17 7/17 6 Source: Commerical Real Estate Direct, Bloomberg

7 HFF OFFICE LOCATIONS ATLANTA (44) AUSTIN (512) BOSTON (617) CAROLINAS (74) CHICAGO (312) DALLAS (214) DENVER (33) FLORHAM PARK (973) HOUSTON (713) INDIANAPOLIS (317) LONDON (11) +44 () LOS ANGELES (31) MIAMI (35) NEW YORK CITY (212) ORANGE COUNTY (949) ORLANDO (47) PHILADELPHIA (484) PHOENIX (62) PITTSBURGH (412) PORTLAND (53) SAN DIEGO (858) SAN FRANCISCO (415) TAMPA (813) WASHINGTON, D.C. (22) Follow Us BRICKELL FLATIRON MIAMI, FL PROPERTY SALES 7

8 STUDENT HOUSING The student housing sector growth that has occurred over the last several years showed no signs of slowing through the first half of 217. Real estate investors continue to be drawn to the sector largely because of the attractive fundamentals. Higher education enrollment increased from 15.3 million students in 2 to 2.5 million in 216 and is projected to increase to 23. million by 225. Along with the growing demand, on-campus supply is expected to decline due to university budget constraints as well as the existing product continuing to become obsolete. These trends will generate the necessity for additional student housing options. Furthermore, university enrollment has historically been countercyclical to the general economy. As jobs become scarce young workers often go back to school in order to become more qualified for future careers. This has translated to improved property level economics with student housing assets during prior economic contractions, therefore acting as a recessionary hedge. The strong fundamentals and the relative insulation from the broader economy associated with student housing have caused investors to flood the space. Prior to 215, the industry saw approximately -4 billion in annual transaction volume but 215 set a new high watermark of nearly $6 billion which was then outdone in 216 with nearly billion in volume. The increase in transactions has been correlated with a dramatic inflow of new investors into the sector. Historically, student housing investment was heavily weighted towards local and regional private capital. However, in recent years the two student housing REITs, ACC & EdR, have flooded the space. The unprecedented liquidity chasing investment opportunities, as well as the lower cost of capital available to these new entrants, has created competitive bidding situations leading to cap rate compression. While student housing historically traded at approximately 75 to 125 basis points higher than conventional multi-housing assets, today the premium is closer to 15 to 25 basis points. According to RCA, through 2Q 217 average cap rates for student housing and conventional multi-housing were 5.84% and 5.6%, respectively. These new investors also demand scale creating apetite for large portfolio transactions over the last 18 months. This theme of portfolio aggregation has continued into 217, with the following transactions taking place: 1Q 217 NOTABLE PORTFOLIO TRADES Deal Deal Size ($) Seller Buyer Kayne Anderson Portfolio.6B Kayne Anderson Mapletree Investments Harrison Street Portfolio 65MM Harrison Street CPPIB/GIC/Scion Dovetail Portfolio 85MM Dovetail CPPIB/GIC/Scion Blue Vista Portfolio 2MM Blue Vista Waypoint Campus Housing LLC. 8 ATLANTIC POINT BELLPORT, NY PROPERTY SALES The nearly.5 billion of transaction activity in the first half of 217 is the second highest volume the student housing sector has seen, trailing only the record setting volume of $5.8 billion through Q2 of 216. Due to the cyclical nature of the industry, sales volume has historically been weighted to the second half of the year. This is driven by many sellers waiting to begin their marketing process until reaching occupancy stabilization for the following academic year. On average, the first half of the year accounts for only 36% of the total annual sales volume for the previous six years. Recently, the growing number of institutional investors in the student housing sector have shifted their preference from large, garden-style assets, often not walkable to campus, to mid- and high-rise construction adjacent to Tier I universities. This change has largely been driven by ACC s recent emphasized investment criteria to build and buy core assets walkable to schools with 25,+ students. As the largest REIT in the sector, ACC is often considered the voice of the industry and represents a significant source of liquidity for other student housing investors. As such, new institutional entrants into the space appear to follow their lead, translating to yield compression of these core assets. While private capital groups, with a higher cost of capital, may become priced out of core, pedestrian assets, they may be able to find opportunities at non-adjacent or secondary market assets as the cap rate spread continues to widen between these investment profiles. Overall, the increased investment activity from a diverse group of equity and debt capital sources has improved liquidity in the space and will continue to drive transaction volume. Furthermore, as the sector maturation continues, returns should keep pace with conventional multi-housing and we expect an active second half of 217. Source: HFF Research

9 Instant Apartment Analytics. Custom Portfolio Dashboards. Profitable Investment Decisions. Covering 497 markets with deep-dive narratives on 12 markets and 79 submarkets. INTRODUCING New AXIOMobile app for iphone and Android Data and mapping that drive your business decisions. Axiometrics sole goal is to monitor the apartment sector, pinpointing the market s true volatility and allowing you to make intelligent and profitable decisions

10 STUDENT HOUSING HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) 1 $9 $8 $7 $6 $5 '6 Rolling 12-mo. Total '7 '8 '9 '1 '11 '12 Quarterly Vol '13 '14 '15 '16 '17 1 $9 $8 $7 $6 $ J F M A M J J A S O N D Top Buyers MARKET PLAYERS (prior 24 months) Top Sellers Rank Buyer Location Acq # Props Global Acq # Props 1 Scion Group Chicago, IL,42. 4, GIC Singapore, $6, ,397 3 CPP Investment Board Toronto, ON, $51, ,438 4 Harrison Street RE Cap Chicago, IL, $5, Mapletree Investments Singapore $ , Campus Advantage Austin, TX $ , Saban Capital Group Los Angeles, CA $ $ EdR Memphis, TN $ , Coastal Ridge Columbus, OH $ Preiss Company Raleigh, NC $ Rank Seller Location Dsp # Props Global Dsp # Props 1 Campus Crest Charlotte, NC, , InvenTrust Oak Brook, IL, $8, Kayne Anderson Los Angeles, CA, , Harrison Street RE Cap Chicago, IL $ , American Campus Cmnties Austin, TX $ , Blue Vista Capital Chicago, IL $ , Landmark Properties Athens, GA $ Campus Advantage Austin, TX $ Dovetail Companies Athens, GA CA Ventures Chicago, IL , HISTORICAL TRANSACTION VOLUMES ($MIL), %,846.5, %, %, %, % $ % $547.7 $ % $ % $ % $ % $ %,749.8 $ %,132.1 $ %,5.8 $ %, %,781.9, %, %, %,365.1, %,116.8, % ,546.6 $ %, %,965.1 $ %,543.8, %,297.3 $ %, %,693.9, %,318.8, %,43.8, % $5,246.9, % $5,124.2, % $5,968., % $7,27.7, % $8,855.8, % $9,27.9, % $9,838.5, % $8,971.9, % $7,481.4, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol. $7,481,42, % Q2 '17,497,46, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 44, % Q2 '17 9, % $/unit T12 Vol. 84,2 4.8% Q2 '17 63, % Avg. Cap T12 Vol. 5.9% -8 Q2 '17 5.5% -42 Student Housing transaction volumes slowed in the first half of 217 coming in at.5 billion down 4% from the same time last year. Institutions and foreign investors have dominated the buyer pool accounting for 41% and 36% of acquisitions, respectively. Foreign investments have been from Singapore and Canada, who invested a total of.3 billion between 42 properties. Private investors remain active on the sell side accounting for 49% of dispositions in the first half of 217. The Student Housing industry is on track to receive 46, beds in Fall 217 and 41, beds in the Fall of 218. Enrollment growth remains positive for the 175 universities forecasted by Axiometrics, leaving little reason to fear supply will not be absorbed. Source: HFF Research, Real Capital Analytics

11 SENIORS HOUSING HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) Rolling 12-mo. Total Quarterly Vol $5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 $5 J F M A M J J A S O N D Top Buyers MARKET PLAYERS (prior 24 months) Top Sellers Rank Buyer Location Acq # Props Global Acq # Props 1 Welltower Toledo, OH, , ,62 2 Blackstone New York, NY, , ,86 3 Omega Healthcare Cockeysville, MD, $7, G-A Healthcare REIT III Irvine, CA, , Brookdale Senior Living Brentwood, TN, $6, Columbia Pacific Seattle, WA,15. 64, Northstar Healthcare Arapahoe, CO, , Lindsay Goldberg New York, NY, , Formation Capital Atlanta, GA $9.5 86, Union Life Insurance Beijing, CHN $ $ Rank Seller Location Dsp # Props Global Dsp # Props 1 Welltower Toledo, OH, $5, HCP Inc Irvine, CA, , Trilogy Healthcare Services Louisville, KY, , Vintage Senior Housing Newport Beach, CA $ $ GE Capital Norwalk, CT $ $63, ,249 6 Fortress New York, NY $ , ,146 7 Harrison Street RE Cap Chicago, IL $ , Discovery Mgmt Group Bonita Springs, FL $ , Kayne Anderson Los Angeles, CA $ , Regency Integrated Health Victoria, TX $ $ $5,438.7, %,965.5 $ %,786.8 $ %, %,51.3 $ %, %, %,51.2, %, %,884.4, % $6,16.9, % $6,253.4, % 1,117.6 $5, %,53.7, % 7,35.1 $9, % 7,681., % 3,733.4, % 4,579.6, % $8,175.8, % 1,946.2 $6, % HISTORICAL TRANSACTION VOLUMES ($MIL) ,17.2, % 2,62.1, % 4,22.7, % 2,621.9, % 3,843.3, % 5,75.8, % 9,223.9 $8, % 9,31.5, % 1,195.9, % 6,364.3 $8, % 1,623.4, % 2,9.7 $5, % 1,122.7, % 4,913., % 6,199.1, % 4,483.2, % 5,329., % 4,561.3, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol. 4,561,331, % Q2 '17,851,413, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 17, % Q2 '17 17, % $/unit T12 Vol. 3, % Q2 '17 15, % Avg. Cap T12 Vol. 7.% 62 Q2 '17 7.4% 117 Activity within the Seniors Housing sector picked up in the first half of 217 with transaction volume and price per unit increasing compared to the first two quarters of 216. Transaction volume through the first six months of the year reached $6.5 billion, up 1.2% from the same time last year. The buyer pool maintained a healthy composition of investors with private and institutional investors gaining the largest share. Foreign investors have bled capital into the U.S. seniors housing market this year, so far investing $712 million with China leading the pack at $67 million alone. The latest Census Bureau projects the 65 year and older population to double by 235 reaching 79 million. The aging population paired with housing preferences and needs are creating an attractive outlook for both domestic and international investors. Source: HFF Research, Real Capital Analytics 11

12 ATLANTA GA OCCUPANCY Occupancy 95.5% 95.% 94.5% 94.% 93.5% 93.% 92.5% 92.% 91.5% 91.% 9.5% 9.% Overview If there is one key theme to take away from the Atlanta market, it is exceptional job growth. Very few markets in the nation have been able to record the vigorous and sustained job growth that Atlanta has. Although new supply continues delivering at an increasing level, the metro s strong job growth has kept key performance metrics such as rent growth and occupancy high as well. ed job growth is expected to moderate in conjunction with increasing supply levels, so subsiding rent growth and occupancy are expected in the short-term. Even with these conditions, the market is still expected to remain above its historical level for both of these metrics. RENTAL RATES rent/units/months,4,2, $8 $6 Development Approximately 3,2 units were delivered in the second quarter of 217 in Atlanta, with over one-third of those units located in Atlanta s urban core. Some 13,2 units were delivered from the third quarter of 216 through 217 s second quarter, and the expectation is that 13,9 units will have come to market in all of 217. Deliveries in 218 are forecast to be slightly lower than 217. Occupancy & Atlanta s occupancy rate was 94.4% in the second quarter of 217, but additional new supply entering the market, along with seasonal trends, will likely reduce occupancy by the end of 217. The good news for the market is that the 217 annual average occupancy rate (94.3%) is solidly above its long-term average by more than 7 bps. The forecast is for occupancy in 218 to be lower than in preceding years. This is somewhat misleading out of context, however, as it may suggest forecast absorption is weak. While 218 absorption is not expected to be quite as high as previous years a byproduct of increasing new supply as well as moderating job growth net absorption in the Atlanta market is still expected to be strong. It is fairer to say demand for apartments in Atlanta will continue to be strong in the outlook period (end of 217 through 219). Rental Rates Rent growth in Atlanta has been strong since the recovery. rates have stayed well above the market s long-term average (1.4%) for six straight years, going on seven with forecasted 217 rent growth at 3.5%. Rent growth is expected to remain healthy during the outlook period. Rent growth expectations in 218 should be tempered from previous years, although the forecast rate of 2.8% is still 14 bps above its long-term average. From a renter s perspective, Atlanta will continue to remain one of the nation s most affordable major markets. ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () 8.% 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% 16, 14, 12, 1, 8, 6, 4, 2, Gain Gain 12 Source: Axiometrics

13 $9 $8 $7 $6 $5 '6 HISTORICAL MARKET TRENDS (Volume $B) Rolling 12-mo. Total '7 '8 '9 '1 '11 '12 Quarterly Vol '13 '14 '15 '16 '17 REAL-TIME SNAPSHOT (Volume $B) $9 $8 $7 $6 $5 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 MAA REIT Memphis, TN, $9, Carroll Organization Atlanta, GA 88. 7, Cortland Partners Atlanta, GA , Starwood Capital Greenwich, CT , ,672 5 Radco Cos Atlanta, GA 45. 1, Blackstone New York, NY , ,62 7 H&R Realty Lakewood, NJ FPA Multifamily San Francisco, CA $5, Cocke Finkelstein Atlanta, GA , Harbor Group Int'l Norfolk, VA $8, Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Post Properties Atlanta, GA $ $6, Cortland Partners Atlanta, GA $ Gables Res - Clarion Atlanta, GA $ Invesco Atlanta, GA , Greystar Charleston, SC $7, Centennial Holding Co Atlanta, GA , Milestone APTS REIT Toronto, CAN , TriBridge Residential Atlanta, GA , Fairfield Residential San Diego, CA , Vista Realty Partners Atlanta, GA $ , %,729.4 $ %, %, %, % $ % $ % $ % $ % $ % $ %,2.1 $ %, %,97.3 $ %,162.8 $ %,163.5 $ %,551.1 $ %,716.1 $ %,955.6 $ %,399.4 $ % HISTORICAL TRANSACTION VOLUMES ($MIL) ,613.5 $ %,596.3 $ %,752.4 $ %,897.1, %,244.7, %,274.3 $ %,599.5, % $5,887.2, % $6,831.5, % $6,9., % $7,764.5, % $6,916.2, % $6,264.8, % $6,956.2, % $7,231.6, % $9,1.5, % $8,619.6, % $8,971.5, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol. $8,971,52, % Q2 '17,73,432, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 8, % Q2 '17 2, % $/unit T12 Vol. 4, % Q2 '17 $99, % Avg. Cap T12 Vol. 6.% -3 Q2 '17 6.8% 74 Atlanta is one of the nation s fastest growing metro areas. Business expansions and relocations are driving above average job and income growth. Atlanta added more than 13, jobs over the past twelve months driven primarily by professional and business services. Private investors were responsible for over 5% of acquisition activity through the first two quarters of 217 and remain the most active investors in Atlanta s apartment market for the fifth straight year. So far this year, foreign firms have invested 6 million into the Atlanta apartment market, with a majority of the volume derived from Israel. Atlanta s central location in the Southwest coupled with its economic leader status make the area attractive to relocating and expanding businesses. Look for Atlanta s fundamentals to remain strong across the board resulting in growing investor interest in Atlanta s apartment market. Source: HFF Research, Real Capital Analytics 13

14 AUSTIN TX OCCUPANCY Occupancy 95.5% 95.% 94.5% 94.% 93.5% 93.% 92.5% 92.% Overview With a growing population and a diversified economy, Austin is a strong secondary real estate market with promising trends for future growth. However, apartment market performance in the Texas capital has cooled off from its red-hot performance early in the cycle. The single biggest component for weaker performance in 216 and the first half of 217 was slowing job growth, albeit not poor job growth. The market has slowed fairly quickly, adding 33,5 jobs in 216 (3.4% job growth) compared to an anticipated 26,4 in 217 (2.6% job growth). Elevated new supply levels also have factored into the decelerating performance. Austin remains an attractive option for many businesses, however, and firmly established anchors in the government and education and health services sectors will continue to help provide a stable foundation for the apartment market. Development Nearly 2,5 units were delivered in the second quarter of 217 alone, and roughly 9,5 units are expected to deliver in Austin in all of 217. The annual inventory growth of 4.4% in 217 will represent the fifth straight year that inventory growth has been above the market s long-term average. Such a large amount of development is difficult to absorb without the substantial job growth that existed until the latter half of 216. Development has permeated almost all areas of Austin, with rapidly growing suburbs such as Cedar Park, Leander and Round Rock attracting thousands of new units in recent years. Meanwhile, construction in the urban core has ground to a halt with fewer than 1 units expected to deliver in 217. Occupancy & The market s occupancy rate in the second quarter of 217 was 94.2%, down 8 bps from the same time last year a trend reflective of the market s swell in new supply. Expect occupancy to continue to soften through the end of 217, before rebounding in 218 (particularly in the back half of the year). Completions outpaced absorption in 216 with the same result expected in 217, although less pronounced than the preceding year. While absorption may drop slightly in 218, the market s expected ease in new supply will help buoy occupancy rates to about 94.8% - still 9 bps above the market s long-term average. Rental Rates Annual effective rent growth in Austin was 1.3% in the second quarter of 217, raising the market s average rental rate to,223. The 1.3% annual growth rate was down from a lofty 5.% in the second quarter last year. The second quarter of 217 s annual growth rate was also the lowest for any second quarter dating back to the recession. The market s struggle to absorb the plethora of new supply in late 216 and throughout 217 will further dampen rent growth through the remainder of 217, with an annual average of.5% forecast by year s end. It is not all doom and gloom in Austin, however, as forecasted rent growth in 218 and 219 (2.9% and 3.7%, respectively) are solidly above the market s long-term average of 1.9%. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,4,2, $8 $6 1.% 9.% 8.% 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% 12, 1, 8, 6, 4, 2, Source: Axiometrics

15 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) $5 Rolling 12-mo. Total Quarterly Vol $5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Blackstone New York, NY , ,62 2 GIC Singapore $6, ,398 3 Scion Group Chicago, IL 4.1 2, CPP Investment Board Toronto, ON $51,84.4 1,437 5 CWS Capital Partners Newport Beach, CA , Starlight Investments Toronto, ON , F&B Capital Austin, TX $ Bell Partners Greensboro, NC $7, Starwood Capital Greenwich, CT , ,672 1 Griffis Residential Arapahoe, CO , Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Investors Management Los Angeles, CA , Cypress RE Advisors Austin, TX $ Berkshire Group Boston, MA 2.5 3, Greystar Charleston, SC $7, Post Properties Atlanta, GA $6, Hunt Companies El Paso, TX 44. 1, StreetLights Residential Dallas, TX Blackstone New York, NY , ,84 9 American Realty Advisors Glendale, CA , Landmark ATA Tampa, FL , , %, %,61.13 $ %, % $ % $ % % $64.5.% 3.36 $ % % $ % $ % $ % $ % $ % $ %, %, %,281.2, %, $ % HISTORICAL TRANSACTION VOLUMES ($MIL) , %, %,55.46 $ %, $ %, $ %,38.64 $ %, %, $ %,837.19, %, $ %, $ %, $ %,27.84 $ %,393.5, %, $ %,13.72, %, %,721.64, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol.,721,644, % Q2 '17,273,513, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 25, % Q2 '17 8, % $/unit T12 Vol. 61, % Q2 '17 59, % Avg. Cap T12 Vol. 5.7% -5 Q2 '17.% Austin s multi-housing investor liquidity continues into the first half of 217 with transaction volume reaching.7 billion, a 1% increase year over year. Austin continues to absorb apartment units, sustained by consistent development. So far this year, private investors account for 45% of all acquisitions and institutional investors claimed another 38%, closely mirroring national trends. Listed REITs have continued their trend from 215 and remain net sellers. Austin continues to experience generous employment gains of 2.7% for the year ended June 217, above the national average of 2.2%. The Texas capital s booming economy and job growth are centered around government, the University of Texas, and a maturing tech hub featuring headquarters for Dell and major offices belonging to Google, Amazon, Facebook, and IBM. Source: HFF Research, Real Capital Analytics 15

16 BOSTON MA OCCUPANCY Occupancy 96.2% 96.% 95.8% 95.6% 95.4% 95.2% 95.% 94.8% 94.6% 94.4% Overview Although job growth has slowed since its peak in 214, the types of jobs being created in Boston (particularly in health care and technology, which feature higher levels of wage and income growth) support healthy apartment market fundamentals. Even with some strong structural demand drivers, Boston is still subject to the ebbs and flows that affect other apartment markets across the nation. Like many other markets, 217 appears to be a peak-supply year. This combined with steady job growth will lead to a moderate performance in the second half of 217. Beyond, 217, Boston features a favorable forecast. Development More than 1,8 units were delivered to the Boston market in the second quarter of 217, with an expected annual total of 7,5 in 217. The spike in completions for 217 might not be as stark as many other markets across the nation, but the annual inventory growth of 1.6% is still the market s highest since pre-recession years. Ongoing construction is particularly concentrated near the Boston Logan International Airport and the greater Allston neighborhood area. New supply beyond 217 is expected to taper off and more closely mirror the market s long-term average. Occupancy & Boston s occupancy rate has remained stable over the past year at 95.9% in the second quarters of both 216 and 217. Occupancy is anticipated to slip slightly as more new construction is completed through 217 and into early 218. Even considering this slight drop, 217 s forecast annual average occupancy rate (95.3%) is roughly 3 bps above the market s long-term average. Although 217 is expected to be a down year for absorption relative to preceding years in the current cycle (i.e. post-21), the perceived low point in 217 is actually closer in line with the market s historic absorption rate. is expected to accelerate after 217, and Axiometrics expects rent growth and occupancy to also accelerate accordingly. Rental Rates Boston s annual average effective rent growth in 216 was 2.7%, roughly 4 bps below the market s long-term average. The lower growth rate is largely due to Boston s slower second half of 216. This momentum carried into 217, and while Boston s 217 annual average rent growth (2.3%) is expected to be within 1 bps of the national average, it might feel as if Boston s performance is noticeably sluggish. Rental rates as of the second quarter of 217 were,337. Beyond 217, expect rent growth to accelerate as new supply levels subside and job growth begins to accelerate slightly. The market s strong structural drivers will help pull rent growth closer to or even above the market s long-term average. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,,5,,5, $5 8.% 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% 9, 8, 7, 6, 5, 4, 3, 2, 1, Source: Axiometrics

17 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) $5 Rolling 12-mo. Total Quarterly Vol $5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Lone Star Dallas, TX $ , ,893 2 GID Boston, MA 2. 2 $5, Akelius Residential AB Stockholm, SWE , Blackstone New York, NY , ,62 5 Mesirow Financial Chicago, IL 25. 2, Bell Partners Greensboro, NC $7, Manulife Financial Toronto, ON 4. 2 $7, John M Corcoran and Co Norfolk, MA AllianceBernstein New York, NY 99. 1, PGIM Real Estate Madison, NJ $52, ,411 Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Home Properties Rochester, NY $ , Equity Residential Chicago, IL ,795. 1,168 3 Fairfield Residential San Diego, CA , Greystar Charleston, SC $7, The Hanover Co Houston, TX 82. 2, AEW Global Boston, MA ,69.3 1,24 7 Berkshire Group Boston, MA , UBS Zürich, CHE , Canyon Partners Los Angeles, CA 97. 1, Simpson Housing LLLP Denver, CO 87. 1, , %, %, % $ % % % 96. $ % % 42. $ % 16.6 $ % $ % $ % $ %, %, %,439. $ %, %,671.3 $ %,161.8 $ %, % HISTORICAL TRANSACTION VOLUMES ($MIL) ,815.4, %, %, %,363.3 $ %, %,79.6 $ %, %, %,367.3, %,454.6 $ %,862.7 $ %,28.7, %,966.8 $ %,973. $ %,748.2 $ %,66.3, %, %,635.5 $ % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol.,635,473, % Q2 '17 $746,563, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 12, % Q2 '17 2, % $/unit T12 Vol. 78, % Q2 '17 77,58 38.% Avg. Cap T12 Vol. 5.6% 16 Q2 '17.% Boston s investors have high concentration on value-add projects with the buyer pool dominated by institutional investors accounting for 5% of acquisitions and private investors claiming 48% in the first six months of the year. Foreign investors have shown a smaller appetite than the national average of 7%, representing only 1% of the buyer pool this year. Investor demand remains healthy in Boston even with rent growth subsiding after peaking in 215. With unemployment rates coming in around 3.8% at the end of May, Boston remains popular among young adults, who are often lured by its transit-oriented and pedestrian-oriented lifestyle. Healthcare, high tech and financial services are the main drivers of the economy and bring very educated, high-wage earners to the local multi-housing market. Source: HFF Research, Real Capital Analytics 17

18 CHARLOTTE NC OCCUPANCY Occupancy 96.% 95.% 94.% 93.% 92.% 91.% 9.% 89.% 88.% Overview The Charlotte apartment market has performed impressively during the recovery. For proof, look no farther than the metrics. The occupancy rate has increased a spectacular 41 bps from 91.2% in the second quarter of 21 to 95.3% during the same quarter in 217. Annual average effective rent growth has been 4.2% during that timeframe, compared to the market s long-term average of 1.4%. Job growth and population growth have been robust, and the area continues to gain traction as one of the key economic engines for the southeast United States. Continually increasing and elevated supply levels may cause a few short-term hiccups, but as the market continues to develop into a major regional attraction for businesses and employment expect healthy apartment market performance to continue in North Carolina s largest city. Development More than 29, new units were delivered to the Charlotte market from Inventory growth averaged 2.7%, reaching as high as 5.% in 216 the same rate expected in 217. Development near downtown Charlotte has been particularly heavy. As of July 217, almost 3, new units were under construction within a one-mile radius of Charlotte s Bank of America Stadium. Occupancy and Second-quarter occupancy in Charlotte strengthened each year from Only Phoenix has seen occupancy increase as substantially as Charlotte since 21. Occupancy has dipped so far in 217, although the decrease has been minimal, going from 95.5% in the second quarter of 216 to 95.3% in the second quarter of 217. Annual average occupancy in 217 is expected to run below the rate of the previous two years, but still will be well above its long-term average of 92.9%. Occupancy over the outlook period looks strong after 217. Increasing occupancy post-217 will be driven by steady absorption and falling supply levels. Although absorption is expected to remain nearly level from 217 to 218, new supply is expected to drop by nearly 2, units. As such, it is likely that occupancy (and other key metrics such as rent growth) will continue to strengthen beyond 217. Rental Rates Charlotte s long-term average effective rent growth of 1.4% pales in comparison to the market s average rent growth this cycle a true testament to the market s strength in recent years. Annual average rent growth from was 4.2%, 28 basis points above the long-term average. As with most major markets across the nation, rent growth in 217 is expected to underperform previous years. Charlotte does appear, however, to be poised for solid rent growth beyond 217. Rental rates are expected to average above, for each quarter in 217, making it the first full year in which average rent has been above, during each quarter. The average rental rate as of the second quarter of 217 was,41. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,2, $8 $6 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% 1, 9, 8, 7, 6, 5, 4, 3, 2, 1, Source: Axiometrics

19 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) Rolling 12-mo. Total Quarterly Vol '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Starwood Capital Greenwich, CT , ,672 2 MAA REIT Memphis, TN $9, Electra Ltd Ramat Aviv, ISR $6, Robbins Property Tampa, FL $ ELRH Investments Tampa, FL $ Eaton Vance RE Boston, MA $5, Milestone APTS REIT Toronto, ON , Centennial Holding Co Atlanta, GA , Cortland Partners Atlanta, GA , Bridge Investment Grp Salt Lake City, UT $5, Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Brookfield AM Toronto, ON 85. 9, Post Properties Atlanta, GA $6, Crescent Communities Charlotte, NC , Fairfield Residential San Diego, CA , Landmark ATA Tampa, FL , Milestone APTS REIT Toronto, ON , The Connor Group Dayton, OH 46. 3, Ram Realty Partners Palm Beach, FL , Starwood Capital Greenwich, CT , ,16 1 InvenTrust Oak Brook, IL $8, , % $ % $ % % % $81.5 $7.9.% 8.5..% $65.3 $55.1.% $63...% 38.3 $ % % % % % $ % $ % $ % $ % $ % $ % HISTORICAL TRANSACTION VOLUMES ($MIL) , %, %, %,43. $ %, %, %, %,297.3 $ %, %, %,944.9 $ %, %,76. $ %,417.4 $ %, %,633.1 $ %, %, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol.,259,36, % Q2 '17 99,189, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 18, % Q2 '17 4, % $/unit T12 Vol. 19, % Q2 '17 3, % Avg. Cap T12 Vol. 6.1% -49 Q2 '17 5.8% -2 Charlotte s multi-housing market remains robust as transaction volume year ended June 217 posted.3 billion, proving to maintain high transaction volumes since hitting a record high of billion in the first quarter of 216. The Queen City has become a major U.S. financial center within the Southeast region, posting almost a 2% job growth in the financial sector from this time last year. Industry diversification coupled with its low cost of doing business drives many companies to move and expand here. Private investors, institutions, and REITs dominated market share in the first half of 217. Private investors have the largest market share, carrying out 58% of Charlotte s apartment acquisitions year to date, while the REITs make up 6% of the buyer pool slowing down from 12% in 216. With Charlotte s favorable economy, demand for apartments remains healthy and the apartment boom shows no signs of slowing down. Source: HFF Research, Real Capital Analytics 19

20 CHICAGO IL OCCUPANCY 95.5% Occupancy 95.% 94.5% 94.% 93.5% 93.% Overview Chicago s rent growth has outperformed its long-term average in the current cycle, but has continued to fall below the national average. However, Chicago stands out for its stellar urban-core apartment performance, which has consistently outperformed suburban submarkets in terms of rent growth (unlike most major markets). Chicago also stands out for its stability it has the sixth smallest average rent growth range among the top 2 multi-housing markets. Axiometrics expects Chicago s stable apartment fundamentals to continue through at least 219. Development Almost 1,8 units were delivered in the second quarter of 217, with another 5,1 delivered in the preceding three quarters. Chicago is yet another market with peak supply expected in 217, as over 8,7 units are anticipated to deliver. ed inventory growth in 217 of 1.% is roughly 2 bps above its long-term average. Annual completions are expected to hover between 6,9 units and 7,7 units in 218 and 219. Occupancy & Chicago s occupancy rate of 95.% as of the second quarter of 217 suggests the market is effectively in equilibrium. Annual average occupancy in 217 is expected to fall 2 bps from 216, but the market s anticipated 94.7% average occupancy rate is still above its long-term average (93.9%). Market-level occupancy in Chicago is not expected to fluctuate significant during the outlook period, but instead hover around 95.%. and completions are expected to be in near-perfect balance in 217, but absorption is forecast to significantly surpass completions in 218, which will help drive occupancy and rent growth higher than in previous years. The stronger absorption is expected to be driven largely by improving job growth in 218 (up to 1.3% in 218, from.9% in 217). Rental Rates Annual average effective rent growth in Chicago will likely struggle to break the 2.% threshold in 217. If rent growth stays below 2.%, it will be the first year since 29 in which the market did not surpass 2.%. The Windy City like many other markets across the nation has strung together a few years of solid growth. So while the sub-2.% forecasted rent growth in 217 may seem meek, it is really the market experiencing short-term moderation in the midst of elevated supply and slowing job growth. Fortunately for those in the Chicago market, Axiometrics expects rent growth to improve in the short-term outlook, with rent growth hovering near the 3.5% to 3.6% range in 218 and 219. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,8,6,4,2, $8 $6 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% 16, 14, 12, 1, 8, 6, 4, 2, Source: Axiometrics

21 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) $5 Rolling 12-mo. Total Quarterly Vol $5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Lone Star Dallas, TX , ,893 2 Group Fox Chicago, IL Invesco Atlanta, GA , Crescent Heights Miami, FL $5, Morguard NA Res REIT Mississauga, ON , Strategic Props of NA Lakewood, NJ Resource America Philadelphia, PA 93. 3, TLC Mgmt Co Chicago, IL Golub & Co Chicago, IL , The Connor Group Dayton, OH , Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Home Properties Rochester, NY , DRW Trading Chicago, IL 4.3 1, Waterton Associates Chicago, IL , FL State Board of Admin Tallahassee, FL , JP Morgan New York, NY , LaSalle Chicago, IL , ,17 7 Friedkin Realty Group San Francisco, CA , Magellan Dev Group Chicago, IL $ American Realty Advisors Glendale, CA 7.8 3, Kensington Realty Chicago, IL $ ,342.3 $ %, %, %, % $ % $ % $54.5 $ % $ % 77.9 $ % 6.8 $ % $ % $ %, %,764.2 $ %, %,329.9 $ %, %, %, %,271.6, % HISTORICAL TRANSACTION VOLUMES ($MIL) ,293.5 $ %,377.9 $ %,628.7 $ %,385.8 $ %,486.3 $ %, %,531.5 $ %,764.1, %,19.3, %,55.5 $ %,666.9 $ %,929.7, %,826. $ %,153.6, %,232.3 $ %,599., %,314.3 $ %,183. $ % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol.,183,1,417.7% Q2 '17 $927,414, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 24,472-5.% Q2 '17 6, % $/unit T12 Vol. 83, % Q2 '17 64, % Avg. Cap T12 Vol. 6.2% -1 Q2 '17 6.3% 2 Chicago s large and diversified economy contributes to its status as an economic center of the Midwest attracting young professionals but at a much lower pricepoint than New York or San Francisco. The multi-housing market cooled in the first half of 217 and posted transaction volume of.6 billion, showing a 2% slowdown after record high volumes in 216. While the buyer pool remains dominated by private, institutional, and foreign investors, market share has shifted since 216. Private investors accounted for 55% of acquisitions in the first half of 217 slowing down from 65% last year, while foreign investors gained market share of 14% from 3% last year. Canada and Singapore combined have acquired 3 million in multi-housing assets so far this year. Despite a development boom of luxury apartments, rent growth and occupancy remain healthy working in the market s favor. Source: HFF Research, Real Capital Analytics 21

22 DALLAS-FORT WORTH TX OCCUPANCY Occupancy 96.% 95.% 94.% 93.% 92.% 91.% 9.% 89.% Overview Dallas-Fort Worth weathered the housing crash and financial crisis better than the vast majority of the top 5 metro areas to emerge as a top apartment market, thanks to its low cost of living, ample room for development, strong job growth and a diversified economy. The DFW job growth has been strong in recent months adding 115, jobs in the twelve months ended in June 217. Sustaining such a high level of job growth is extremely difficult and it is widely understood the market will eventually experience moderation. As job growth continues to moderate simultaneously with new supply remaining elevated, expect rent growth and occupancy to adjust accordingly through the remainder of 217 and into 218. The DFW market is still anchored by strong demand drivers, and it is likely the market will continue to be one of the nation s strongest job-creation areas in the foreseeable future. Development Those wondering how much development has been ongoing in the market need not look further than completions in the second quarter of 217, when more than 7,5 units came to market. By the end of 217, nearly 3, units will be added to the market during the year. For comparison, 21,5 units were completed in 216 and a comparatively meager 2, units in 215. New supply has not been evenly distributed through the market. Inventory in Dallas urban core is expected to grow by nearly 1% in 217 (or a total of 3, units), while the submarket encompassing some of the nation s fastest-growing suburbs (defined by Axiometrics as the Plano/Allen/McKinney submarket) has a forecast inventory growth of 9.1% in 217 (4,8 units). Comparatively, new supply in the Fort Worth market has been relatively suppressed (217 forecast inventory growth of 2.5%, or 4,5 units). Fortunately, new supply is expected to ease up eventually, and while the market might still seem to have elevated supply the waning pace of deliveries will help key metrics including occupancy and rent growth return to more favorable levels beyond 217. Occupancy & DFW occupancy was 95.2% in the second quarter of 217, well above the market s long-term average of 93.1%. annual average occupancy in 217 is 94.9%. While still above the long-term average, the 35 bps drop might raise eyebrows. The decrease, though, is largely caused by the swell of new supply in recent years, in conjunction with slightly slowing forecast job growth. Completions slightly exceeded net absorption in 216, while completions are expected to comfortably surpass net absorption in 217. Beyond 217, the expectation is that net absorption will yet again surpass completions, helping the market return closer to equilibrium. Rental Rates The long-term annual average effective rent growth in Dallas-Fort Worth is 1.8%, which may seem low given how strong the market has performed in the current cycle. What goes up must eventually come down, and 217 is expected to be the year in which Dallas-Fort Worth rent growth is brought back down to earth. The market s average rental rate in the second quarter of 217 was,127. ed rent growth in 217 however can be viewed of through one of two lenses. Either that the market is expected to moderate from 5.3% in 216 to 2.9% in 217 (a 23-bps drop), or that the 2.9% perceived trough is still 11 bps above the market s long-term average. Given the fundamental strength of DFW s apartment market drivers particularly the area s ability to continue attracting jobs it is likely that 217 will be but a blip on the radar and rent growth in 218 and 219 will improve. 22 RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,4,2, $8 $6 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% -1.% -2.% 35, 3, 25, 2, 15, 1, 5, Source: Axiometrics

23 1 $9 $8 $7 $6 $5 '6 HISTORICAL MARKET TRENDS (Volume $B) Rolling 12-mo. Total '7 '8 '9 '1 '11 '12 Quarterly Vol '13 '14 '15 '16 '17 REAL-TIME SNAPSHOT (Volume $B) $9 $8 $7 $6 $5 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Starwood Capital Greenwich, CT, , ,672 2 MAA REIT Memphis, TN $ $9, Intercapital Chicago, IL $ Olympus Property Fort Worth, TX , Steadfast Apartment REIT Irvine, CA , Cortland Partners Atlanta, GA 8.2 8, Brookfield AM Toronto, ON $59, Blackstone New York, NY , ,62 9 Orion Residential Deerfield, IL , Carroll Organization Atlanta, GA , Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Post Properties Atlanta, GA $ $6, Milestone APTS REIT Toronto, ON $ , Blackstone New York, NY $ , ,84 4 Landmark ATA Tampa, FL $55.2 3, Wood Partners Atlanta, GA $5, Ares Management Los Angeles, CA ,325. 1,18 7 Greystar Charleston, SC $7, Western Rim Properties Irvine, CA 2.4 5, Associated Estates Cleveland, OH , GE Capital Norwalk, CT $63, , ,852.5 $ %,658.7 $ %, %, %, % $ % $ % $ % $ % $ %,33.4 $ %,797. $ %, %,39.2 $ %,682.1 $ %,834. $ %, %,985.4 $ %,452.1, %,73.9, % HISTORICAL TRANSACTION VOLUMES ($MIL) ,9.9 $ %,44.7, %,598.4, % $5,646.2, % $6,73.3, % $6,9.1, % $6,72.5, % $6,25.4, % $6,992.6, % $7,21.8, % $7,897.4, % $8,91.1, % $8,437.8, % $8,639., % $8,751.3, % $9,421.4, % $9,62.4, % $9,564.5, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol. $9,564,496, % Q2 '17,99,844, % # Trades T12 Vol. 4-5.% Q2 ' % Units T12 Vol. 9, % Q2 '17 19,68.9% $/unit T12 Vol. 21, % Q2 '17 19, % Avg. Cap T12 Vol. 6.% -37 Q2 '17 6.9% 67 Dallas Fort-Worth s multi-housing market is benefitting from unprecedented liquidity given the trailing twelve-month transaction volumes are registering alltime highs of $9.6 billion up 11% year over year. Private investors accounted for 7% of all acquisitions during the first two quarters of the year. At 24%, institutions represented less than a fourth of the buyer pool. Dallas foreign investments have remained relatively unchanged this year with 5% of the market share. DFW s economy continues to boom achieving one of the fastest growing job rates in the U.S. While apartment development continues to ramp up with more than 29, completions expected for 217, the metro is expected to absorb the substantial pipeline. The persistent tightness stands as a strong testament to the strength of the market. Source: HFF Research, Real Capital Analytics 23

24 DENVER CO OCCUPANCY Occupancy 96.% 95.5% 95.% 94.5% 94.% 93.5% 93.% 92.5% 92.% Overview Denver s apartment market performance in the first half of the current cycle was nothing short of superb, with rent growth above 6% each year from The market s early cycle success was largely the result of robust job growth, with as many as 54, jobs added in 214 (4.1% growth). The market s moderation since 215 can realistically be seen as a return to normalcy, as it was probably not sustainable for the market to post annual rent growth more than 3 bps above the market s longterm average. Denver is becoming an increasingly important economic hub for both the region and the nation. As such, Denver s performance over the outlook period looks favorable, with rent growth and occupancy comfortably above long-term averages. Development Like most other markets nationally, development in Denver has been and will continue to be elevated in 217. Fewer units were delivered in 216 than 215, which may help the market absorb the 11,-plus units delivering in 217 somewhat more easily than other markets across the nation. Urban-core Denver has been the hotspot for development in recent years, and roughly 4% of the market s new units are located in the urban core. Beyond 217, expect new supply to remain slightly above the market s long-term average. Occupancy & Denver s occupancy rate was 94.9% in the second quarter of 217, down 2 bps from the preceding year. Occupancy in 216 dropped considerably from years past (88 bps from 215) as the market s slowing job growth pulled down market performance. Even with the occupancy dip in 216, the market s occupancy rate was still 12 bps above the long-term average. Denver s absorption rate in 217 will be higher than previous years, and the market s outlook is favorable with absorption expected to outpace completions. Rental Rates Rent growth in Denver was stymied by a relatively poor second half of 216, which slowed momentum heading into 217. As the market continues to absorb the glut of new supply in 217, expect the market s annual average rent growth to end up around the 3.6% mark. While this is certainly down from the cycle average (6.5% from ), 3.6% is still a healthy 7 bps above the market s long-term average. In other words, the market was bound to eventually moderate to a more sustainable level of rent growth. This moderation should not be cause for concern, however, as the market s outlook is favorable. Expect rent growth to steady improve after 217 (4.1% and 4.2% in 218 and 219, respectively) although it may not be fair to expect the 6.%-plus seen early in the cycle. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,8,6,4,2, $8 $6 12.% 1.% 8.% 6.% 4.% 2.%.% 12, 1, 8, 6, 4, 2, Source: Axiometrics

25 $8 $7 $6 $5 '6 HISTORICAL MARKET TRENDS (Volume $B) Rolling 12-mo. Total '7 '8 '9 '1 '11 '12 Quarterly Vol '13 '14 '15 '16 '17 $8 $7 $6 $5 REAL-TIME SNAPSHOT (Volume $B) J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Starwood Capital Greenwich, CT, , ,672 2 Jackson Square San Francisco, CA $ , Braddock & Logan Danville, CA $ Griffis Residential Arapahoe, CO 55. 7, Heslin Holdings Laguna Hills, CA $ Pensam Capital Miami, FL , BH Management Svcs Des Moines, IA , Wafra Kuwait City, KWT , Advenir Inc Miami, FL , Gelt Inc Los Angeles, CA $ Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Equity Residential Chicago, IL, ,795. 1,168 2 Asher Investments Littleton, CO $ $ Bascom Group Irvine, CA $5, Morgan Stanley New York, NY $77,35.7 1,8 5 Goldman Sachs New York, NY $52,6.8 1,523 6 Greystar Charleston, SC $7, Fairfield Residential San Diego, CA , FPA Multifamily San Francisco, CA $5, Koelbel & Co Denver, CO Holland Partners Vancouver, WA , , %, % $ % $625.7 $ % 58.2 $ % 92.7 $ % 47.9 $ % % % 2. $ % $ % $ % $ %, %, %,817.5, %, %, %,682. $ %,632.6 $ % HISTORICAL TRANSACTION VOLUMES ($MIL) ,866.3 $ %, %,566.2 $ %,246.8 $ %,354.6 $ %,49.9 $ %,843.9 $ %,332.4, %,754.1, %,783.3 $ %,78.9 $ %,115.5, % $5,593., % $6,25.7, % $6,63.6, % $6,699.4, % $5,142.2, % $5,368.9, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol. $5,368,98, % Q2 '17,321,381, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 28, % Q2 '17 6, % $/unit T12 Vol. 98, % Q2 '17 8,57 2.7% Avg. Cap T12 Vol. 5.6% -38 Q2 '17 5.2% -55 Denver s multi-housing market remains highly liquid and investor interest continues to accelerate with the trailing twelve-month transaction coming in above $5.4 billion in the second quarter of 217. Buyer composition has remained relatively unchanged from prior years. Private investors continue to hold the largest market share in the Denver market, accounting for 59% of all acquisitions year-to-date. Canadian and Singapore firms continue to show interest in the Denver multi-housing market investing more than 28 million so far this year. Denver continues to display strong economic trends. The Mile High city s increasing population growth and strong employment gains have created a rampant demand for housing. Denver s employment growth has grown 2.56% year over year in June 217, sitting above the national average growth rate. Source: HFF Research, Real Capital Analytics 25

26 HOUSTON TX OCCUPANCY Occupancy 96.% 95.% 94.% 93.% 92.% 91.% 9.% 89.% 88.% 87.% Overview Houston s first half of 217 has followed suit from 216, and the market s performance has been negatively affected by stagnant job growth and an unrelenting amount of new supply. The story of stagnant job growth is easily linked to the energy sector slowdown in recent years, as the ebbs and flows of that particular sector swayed the local market substantially. New supply in the past three years has plateaued around the 2,-unit range, and the amount of new supply in the market has simply been too much for the market to adequately absorb in light of the metro s sluggish job growth. It looks like good news is in store for the market beyond 217. As the energy sector improves nationally, so will Houston s local economic performance. Improving economic performance and the coming easing of the supply funnel mean Houston could be in for a turnaround in 218 and 219. Development Houston led the nation in apartment development in 215 and 216, but will fall to third place in 217. While the number of units is still quite high (roughly 2, units in both 216 and 217), the expectation is that 218 will be the first year since 213 in which new supply has pulled back significantly. Houston s urban core has been hit especially hard with new supply, with approximately one-quarter of the market s 217 deliveries located in the area. Another area with a notable amount of new supply is the Far Northwest portion of Houston, encompassing bustling suburbs such as The Woodlands, Conroe, and Spring. Occupancy and Occupancy in Houston has dropped as supply has increased and job growth stalled. The market was 92.2% occupied in the second quarter of 217, but is anticipated to improve in the outlook period. It should inch above 95.% in bps above the market s long-term average. As job growth improves and supply eases, expect net absorption to outpace completions beyond 217. Rental Rates Rental rates in 217 are expected to be below that of 216 as the market has posted negative annual rent growth for 15 consecutive months as of June 217. Rental rates will eventually increase as the market improves. Annual average rent growth in 217 is expected to mirror the -1.7% of 216. The outlook period is far more favorable, with 218 and 219 both considerably above the market s long-term average of 1.9%. As of the second quarter of 217, the market s average rental rate was,52. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,2, $8 $6 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% -1.% -2.% -3.% 25, 2, 15, 1, 5, Source: Axiometrics

27 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) $7 Rolling 12-mo. Total Quarterly Vol $6 $6 $5 $5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Starwood Capital Greenwich, CT $ , ,672 2 Nitya Capital Houston, TX $ MAA REIT Memphis, TN $9, Blackstone New York, NY , ,62 5 GWR Equities Houston, TX $ Advenir Inc Miami, FL , Knightvest Capital Dallas, TX , F&B Capital Austin, TX $ JP Morgan New York, NY $53, Venterra Properties Richmond Hill, ON , Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Milestone APTS REIT Toronto, ON $ , Ares Management Los Angeles, CA ,325. 1,18 3 Post Properties Atlanta, GA $6, Arruth Associates Houston, TX Gaia RE Holdings New York, NY $ Trammell Crow Res Dallas, TX $7, JRK Asset Management Los Angeles, CA $ Greystar Charleston, SC $7, CBRE Global Investors Los Angeles, CA , Passco Companies Irvine, CA , ,39.6 $ %, %, %, %, % $ % $ % $ %, %, %, %,616.7 $ %, %,819. $ %,333.3 $ %,412.4 $ %,745.4 $ %,24.9 $ %,253.9, %,49.3, % HISTORICAL TRANSACTION VOLUMES ($MIL) ,652.3 $ %,117.2, %,64.1 $ %,899.4, % $5,181.4 $ % $5,344., % $5,979.5, % $5,671.7, % $6,16.6, % $5,897.5, % $5,32.6, %,66.5 $ %,346.2, %,5.6 $ %,411.7, %,858.5, %,262.6 $ %,65.4, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol.,65,442, % Q2 '17,351,919, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 49, % Q2 '17 12, % $/unit T12 Vol. $89, % Q2 '17 5, % Avg. Cap T12 Vol. 6.5% -1 Q2 '17 6.7% 42 Since the downturn in the energy sector, the Houston multi-housing market continues to show decreasing occupancy and post negative rent growth, but the metro is showing signs of perseverance. The trailing twelve-month transaction volume for year ended June 217 reached.6 billion, showing 15% growth compared to the same time period in 216. Private investors accounted for 61% of all acquisitions and institutional investors accounted for 37% during the first half of the year. Houston is leaning on its diverse base to hold the economy afloat, with increasing demand for jobs within healthcare and education. Houston is posting job growth of 56,1 new jobs in the twelve months ending June 217 and a growing population, ranking #2 among U.S. metros from July 215-July 216, according to the U.S. Census. Source: HFF Research, Real Capital Analytics 27

28 INDIANAPOLIS IN OCCUPANCY Occupancy 94.6% 94.4% 94.2% 94.% 93.8% 93.6% 93.4% 93.2% 93.% 92.8% 92.6% 92.4% Overview Indianapolis is a quintessential low-risk, low-reward market that experiences very marginal fluctuations. Indianapolis mirrors the same trend that many other Midwestern markets exhibit affordable rent, slow yet steady job growth, lower occupancy, and rent growth that is generally not susceptible to volatile swings. Indianapolis has been a strong market relative to its history since the recovery however. The market has outperformed its long-term average rent growth (1.3%) by at least 6 bps every year since 211. The market has been propelled by very solid job growth since the recovery. Not accounting for the recession years (28 and 29), the market has historically added roughly 15,8 annually. Since 211, the annual average has been 22,8 a 44% increase from the long-term average baseline. The short-term outlook shows favorable trends as well, with the annual job gain expected to average 21,2. Even with such solid job gain, the market s rent growth is still not expected to breach the 3.5% threshold. Occupancy is expected to steadily climb however, helping drive healthy revenue growth. Development Indianapolis is a market that does see new supply, although the past few years have seen an elevated amount by local standards. A total of 2,5 units are expected to deliver in 217, 89 of which delivered in the second quarter of 217. By comparison, the market s long-term average for annual new supply is 1,9 units. Occupancy & Indianapolis has historically been a low occupancy market with a long-term average of 93.3% occupancy. Occupancy has slowly yet steadily crept upwards since the recession, increasing roughly 75 bps between 21 and the end of 216. As of the second quarter of 217, the market was 93.9% occupied. Indianapolis has been able to adequately absorb the increasing number of units given its steady job growth. Job growth is forecast to remain above the market s long-term average over the course of the short-term outlook, and as annual completions are expected to wane closer to the market s long-term average it is acceptable to think absorption will remain healthy as well. Rental Rates Like the majority of Midwest markets, rental rates in Indianapolis are affordable relative to the national average, with rental rates in the second quarter of 217 averaging $836 market-wide. Rent growth in the market has been low historically averaging a tepid 1.3% annually. The market s steady job growth has certainly helped drive stronger rent growth in recent years, averaging 2.4% over the past five years. The outlook period also looks favorable for Indianapolis with rent growth expected to range between 2.8% and 3.5% from 217 to 219. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain, $9 $8 $7 $6 $5 4.% 3.5% 3.% 2.5% 2.% 1.5% 1.%.5%.% 6, 5, 4, 3, 2, 1, -1, Source: Axiometrics

29 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) Rolling 12-mo. Total Quarterly Vol '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Sterling Group Mishawaka, IN $ Virtus RE Capital Austin, TX $ $ Brookfield AM Toronto, ON $ $59, Pedcor Management Marion, IN $ Birge & Held Carmel, IN $ Covenant Capital Group Nashville, TN $52.9 2, Lighthouse Group Los Angeles, CA $ Cornerstone Holdings LLC Broomfield, CO $ Investcorp New York, NY 9.9 1, Preiss Company Raleigh, NC $ Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Harbor Group Int'l Norfolk, VA $6, Bluestone Holdings Newton, MA $ QVT Mount Auburn Cap Los Angeles, CA $ Associated Estates Cleveland, OH $89.2 3, Meridian Realty Quincy, MA $ Sinclair Broadcast Group Cockeysville, MD $ $ Sheehan Development Marion, IN $ $ Campus Advantage Austin, TX $ CalSTRS West Sacramento, CA , TWG Development LLC Marion, IN % % % 5.9 $ % % % % 23.8 $57.5.% % $8.9..% $ % 14.9 $ % 6.7 $ % % % % 59.3 $ % % 7.5 $ % 9.6 $ % HISTORICAL TRANSACTION VOLUMES ($MIL) $ % % % % % 12.7 $ % 36.9 $ % % 86.4 $ % 89.2 $ % $ % % $ % $ % $ % $ % $ % $ % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol. $643,351,963.% Q2 '17 6,61, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 9, % Q2 '17 3, % $/unit T12 Vol. $61,849.4% Q2 '17 $83, % Avg. Cap T12 Vol. 6.2% -34 Q2 '17.% As of June 217, Indianapolis ranked 12th in job growth rankings with a 3.5% growth. It ranked above popular metros like Austin (ranked 17th), Boston (22nd), San Francisco (23rd), and well above the national average. A surge in development activity has generated 5,8 new construction jobs, a trend that is likely to continue due to Indianapolis increase in migration resulting from strong economic growth. Transaction volumes increased by 13.17% compared to 1H16. Expanding opportunities, affordable housing stock, and a business friendly culture make this metro an attractive location for new residents. The tech industry is propelling growth and has expanded by 28% since 213. Demand for apartments continues to be strong thanks to relative affordability. We expect multi-housing demand to keep up with supply and generate a rent increase of 3.7%. Source: HFF Research, Real Capital Analytics 29

30 INLAND EMPIRE CA OCCUPANCY Occupancy 96.5% 96.% 95.5% 95.% 94.5% 94.% 93.5% 93.% Overview Inland Empire has been a case study over the past two to three years for what a market can achieve with steady job growth and relatively low supply. The answer, unsurprisingly, is success. Inland Empire recovered the 136, jobs lost during the recession, having added 275, since 29 (a net gain of 139,). While Inland Empire s job growth has been very strong, it can be difficult for a market the size of Inland Empire to have sustained job growth at 5%. If job growth does slow in the outlook period, the market s relative lack of supply will help buoy performance. A peak supply year in 218 will further dampen performance if job growth slows further. These factors will test the market s resilience in the shortterm outlook. Development Inland Empire s supply trend is slightly different from most U.S. markets in that it has not been under a supply siege over the past year. Less than 1,9 units were delivered in 216, and only 1,7 are expected to deliver in 217 both marks considerably below the market s long-term average of 2,7 units per year. Development is expected to pick up again by 218, with almost 4, units expected, followed by an additional 3,2 in 219. Occupancy & Inland Empire apartment were 96.4% occupied as of the second quarter of 217, which helps highlight the relative lack of new supply delivered in recent years. For reference, the market s long-term average is 94.5%. Occupancy is expected to remain above that long-term average during the outlook period, although it is likely occupancy will soften slightly as new supply is delivered to the market. Net absorption in Inland Empire is expected to stay well below completions through the remainder of 217 and into 218. This comes after absorption outpaced completions in five of the seven years since 21. Rental Rates Inland Empire s average rent as of the second quarter of 217 (,424) is considerably lower than neighboring Los Angeles (,242) and Anaheim (,). Inland Empire is in close enough proximity to the greater Los Angeles metro that potential renters might choose Inland Empire as a more affordable renting option, albeit at the cost of a longer commute. Rent growth has been strong in recent years (averaging 3.9% from ), but it is expected rent growth will moderate in the short-term outlook. The three-year average outlook estimates an annual average rent growth of 3.8%, effectively in line with the market s long-term average rent growth, 3.6%. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,6,4,2, $8 $6 8.% 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% 4,5 4, 3,5 3, 2,5 2, 1,5 1, Source: Axiometrics

31 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) Rolling 12-mo. Total Quarterly Vol '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Blackstone New York, NY , ,86 2 Bridge Investment Grp Salt Lake City, UT $5, Starwood Capital Greenwich, CT ,239. 1,672 4 Weidner Apt Homes Kirkland, WA 91. 2, Jackson Square San Francisco, CA , Mesirow Financial Chicago, IL 3. 1, Greystar Charleston, SC , MG Properties San Diego, CA , SARES-REGIS Group Irvine, CA $93.9 1, TA Realty Boston, MA $ , Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Equity Residential Chicago, IL ,795. 1,168 2 Phoenix Realty Group New York, NY $ Morgan Stanley New York, NY $77,36.8 1,8 4 MG Properties San Diego, CA 1.6 3, Hunt Companies El Paso, TX , Watermarke Props Inc Corona, CA Rockwood Capital New York, NY , Deutsche AWM - US Santa Ana, CA , ,44 9 FPA Multifamily San Francisco, CA 9. 4 $5, Davlyn Investments Inc San Diego, CA $ , % $ % $675.9 $ % 86.1 $ % % % 78.6 $ % % % % % $ % $ % $ % $ % $ % $839.1 $ % $ % $ %,37.6 $ % HISTORICAL TRANSACTION VOLUMES ($MIL) , %, %, %, %, %, %, %, %,463.7 $ %, %, %,878.1 $ %,163.8 $ %,244.1 $ %,462.5 $ %, %, %, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol.,86,265, % Q2 '17 8,854,5-31.5% # Trades T12 Vol % Q2 ' % Units T12 Vol. 11, % Q2 '17 1, % $/unit T12 Vol. 55, % Q2 '17 59, % Avg. Cap T12 Vol. 5.4% -28 Q2 '17 5.5% 36 Although employment growth is not booming the way it had been from , we still see that Inland Empire s growth in 217 is higher than that of the Pacific region, as well as the U.S. as a whole. The Inland Empire area added 4,8 jobs in the twelve months ending in January, a 2.4% increase and 3 bps above the national average. There exists a concentration of transport and warehousing employment that is 2x greater than that of the U.S., due to Inland Empire s important role in the global supply chain. It is also known for its affordable housing market, resulting in heavy in-migration compared to the housing markets of LA and Orange County. Although affordability is its biggest strength, Inland Empire is also a key logistics hub, with lower business and housing costs than its neighbors in Southern California, and draws a young workforce. This metro boasts high occupancy rates of 96.1% for stabilized properties as of 17. Source: HFF Research, Real Capital Analytics 31

32 LOS ANGELES CA OCCUPANCY Occupancy 96.5% 96.% 95.5% 95.% 94.5% 94.% 93.5% 93.% Overview As one of the Gateway 6 markets, Los Angeles will continue to be a popular destination for both renters and investors, even though job growth in the region has slowed since 215 when the market added nearly 12, jobs. As such, one might expect the market to be somewhat softer in 217 than in recent years. But Los Angeles continues to add a healthy number of jobs, and while new supply is elevated in 217, the market s diversified economy and its brand will help keep Los Angeles a stable performer for the foreseeable future. Development New supply has steadily increased each year since 21, although the market s relatively restrictive development environment has helped limit construction. Even with a restrictive development environment, Los Angeles is expected to see more units delivered in 217 than any year in the past two decades. Not only are the 13,4 units scheduled for 217 delivery a high point in the market s tracked history, but 217 will be the fourth straight year in which new supply will be above its long-term average of 7,6 units delivered annually. The sustained elevation of new supply in recent years means the 217 peak in Los Angeles is not as apparent as it is in many markets. As long as job growth holds at or above its long-term average of 1.2% (or.6% if the recession years are included), the uptick in new development should not be significant cause for concern. Central Los Angeles and the city s urban core continue to be popular areas for development, with almost 4% of the market s new supply located in this corridor. Occupancy & Los Angeles is a naturally high-occupancy market with a long-term average of 94.8%, with a rate of 95.7% in the second quarter of 217. By comparison the cycle average occupancy in Los Angeles is 95.5%. Annual average occupancy is expected to fluctuate very minimally over the outlook period, averaging approximately 96.1% from Completions will likely outpace absorption in 217, but that trend will oscillate in favor of absorption in 218 and 219. Rental Rates Los Angeles has one of the nation s highest average rents (,242 as of the second quarter of 217), but effective rent growth has remained steady since falling in 21. In fact, from , the market s annual average effective rent growth (3.8%) has been remarkably close to the market s long-term average of 3.6%. The stability is expected to continue in the outlook period, hovering right at the long-term average. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,,5,,5, $5 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% -1.% -2.% 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, Source: Axiometrics

33 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) 4 Rolling 12-mo. Total Quarterly Vol $8 $6 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 2 $8 $6 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Blackstone New York, NY $ , ,75 2 Brookfield AM Toronto, ON $59, Aimco Denver, CO $5, Fulcrum Group Sacramento, CA $ SPI Holdings San Francisco, CA 3.5 9, REP WRC SPE LP Sacramento, CA Greystar Charleston, SC , Decron Properties Corp Los Angeles, CA , Bridge Investment Grp Salt Lake City, UT $5, Invesco Atlanta, GA , Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Investors Management Los Angeles, CA $ , AEW Global Boston, MA $ ,69.3 1,24 3 JP Morgan New York, NY $ , Essex Property Trust San Mateo, CA , Phoenix Realty Group New York, NY $ FPA Multifamily San Francisco, CA $5, Pacific Urban Palo Alto, CA , Equity Residential Chicago, IL ,795. 1,168 9 Carmel Partners San Francisco, CA $5, MG Properties San Diego, CA , ,33.3 $ % $9,189.1 $ % $7,998.1 $ %, %, %,85.7 $ %,134. $ %,185.5 $ %, %,328.3 $ %,965.2, %,887.8, %,387.2 $ % $5,51.9, % $5,334.4, % $5,44.6, % $5,664.9, % $5,433.8, % $7,38.7, % $8,83.1, % HISTORICAL TRANSACTION VOLUMES ($MIL) ,291.8, % 2,887.9, % 1,151.6, %,163.4, % $7,113., % $8,746.1, %,31.6, % $9,869.2, %,951.5, %,257.8, % $9,846.7, % 1,234.1, % 1,67.7, % 1,262.4, % 1,88.3, % 1,938.8, % 1,644.1, % 1,47.7, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol. 1,47,693, % Q2 '17,678,713, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 47, % Q2 '17 1, % $/unit T12 Vol. 42, % Q2 '17 53, % Avg. Cap T12 Vol. 4.6% -17 Q2 '17 4.3% -4 Los Angeles continues to enjoy a growing economy and a deep pool of skilled professionals driving investor interest. Trailing twelve-month apartment transaction volume reached 1.4 billion up 1% year over year. Private investors continue to grow their market share, as they represented 73% of all acquisitions year-to-date. Los Angeles unemployment rate continues to fall and has remained below 5% since 216. LA continues to post employment gains with 12,6 jobs added in the twelve months ended June 217, slightly below the national average. Job growth was led by the education and the healthcare industry. Fundamentals remain strong across the board with a 3.9% vacancy rate highlighting just how tight this market is. Source: HFF Research, Real Capital Analytics 33

34 MIAMI FL OCCUPANCY Occupancy 97.5% 97.% 96.5% 96.% 95.5% 95.% 94.5% Overview The Miami market was one of the nation s hardest hit by the housing crisis, but has since recovered and continues to post healthy rent growth and occupancy rates. Job growth has been the primary driver for this performance, averaging 2.5% from The market s long-term average is 1.1%. Job growth is expected to further moderate during the outlook period after dropping slightly in 216, although the three year average job growth during the outlook period is still 9 bps above the market s long-term average. Unlike most markets, Miami supply peaked in 214, not 217. Completions in 217 will nearly mirror the previous year before supply eases slightly in 218 and beyond. Expect rent growth to remain steady in the low-2% range 217 and 218 before jumping to the upper-3% range in 219. Occupancy will remain around the market s long-term average. Development New development shied away from the Miami area in the early years of the cycle before sharply increasing in 214. The annual average new supply from was just over 6,1 units. The near-term forecast finds completions slightly above this long-term average, with most development concentrated in three particular clusters. The first cluster is the Edgewater neighborhood of Miami (loosely defined as the area north of MacArthur Causeway, south of Interstate 195, and east of N. Miami Avenue) with nearly 2,2 units under construction as of July 217. The development cluster is within a.6-mile radius of Miami s Bayfront Park, where approximately 2,1 units are under construction. The final cluster located within a.2 mile radius of Brickell Station includes just more than 1,9 units in development. Occupancy and Completions far exceeded absorption in 216, although the balance in 217 is almost in equilibrium. Completions and absorption are forecast to teeter between completion-heavy in 218 and absorption-heavy in 219. High occupancy is characteristic of the Miami market, which features a long-term average occupancy of 96.%. The market s occupancy rate in the second quarter of 217 was 95.7%, and the occupancy rate in the forecast period will remain in the 95.7%-95.9% range. Rental Rates Strong rent growth was standard in Miami from , although the market began to slow in the latter half of 216. That momentum has carried into 217 as the market s absorption was outpaced by completions largely a byproduct of slowing job growth. Rent growth in 217 and 218 is expected to remain in the low-2% range before rebounding to the upper-3% range in the back half of 218 and into 219. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,,8,6,4,2, $8 $6 8.% 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% 9, 8, 7, 6, 5, 4, 3, 2, 1, Source: Axiometrics

35 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) Rolling 12-mo. Total Quarterly Vol '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Starwood Capital Greenwich, CT $ ,239. 1,672 2 Blackstone New York, NY , ,86 3 Berkshire Group Boston, MA. 1, Greystar Charleston, SC $ , SMB Bradley Chicago, IL $82. 1 $ Wafra Kuwait City, KWT $78.2 1, Ares Management Los Angeles, CA $78. 1 $5, Angelo, Gordon New York, NY $ , Interwest Capital San Diego, CA $ $ Boardwalk Properties FL Miami Beach, FL $ Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Equity Residential Chicago, IL $ ,795. 1,168 2 Mattoni Group Miami, FL Fortune Cap Mgmt Servs Coral Gables, FL Estate Investments Miami, FL Stellar Management New York, NY 17. 1, Hines Houston, TX. 1 3, Astor Companies Miami, FL $ Bradley Associates Chicago, IL $82. 1 $ Altman Companies Boca Raton, FL $82. 1, JP Morgan New York, NY $ , $ % % % % % % 92.7 $ % % $ % $ % $ % $ % $663.8 $ % $616.3 $ % $553.9 $ % % 59.9 $ % $ % $ % $ % HISTORICAL TRANSACTION VOLUMES ($MIL) $ % $739.1 $ % $ % $ % $ % $ % $ % $ % $ % $ %, %, %,652.3 $ %, %, %, %, %,574.7 $ % MARKET PERFORMANCE actual Changes vs Prior Volume T12 Vol.,574,735,757.1% Q2 '17 $556,934, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 9, % Q2 '17 2, % $/unit T12 Vol. 68, % Q2 '17 95, % Avg. Cap T12 Vol. 5.6% 4 Q2 '17 5.4% -45 Miami s multi-housing market remains enviable with trailing twelve-month volumes holding steady above.6 billion. While the buyer pool remains dominated by private, institutional, and foreign investors, market share has shifted since 216. Private investors accounted for 53% of acquisitions in the first half of 217 ramping up from 46% last year and foreign investors gained market share sitting at 23% this year. Israel, Canada, Kuwait, and Singapore have invested in 5 properties totaling over 1 million. Miami s economy continues to experience substantial employment gains of 3.2% for the year ended June 217, above the national average of 2.2%. Source: HFF Research, Real Capital Analytics 35

36 MINNEAPOLIS MN OCCUPANCY Occupancy 97.5% 97.% 96.5% 96.% 95.5% 95.% 94.5% 94.% 93.5% Overview Minneapolis-St. Paul may not receive the same amount of attention as other major markets, but Minnesota s largest metro area has quietly strung together many years of solid apartment market performance characterized by rent growth well above the market s long-term average and one of the nation s highest sustained occupancy rates. The Twin Cities is a market fortunate to have a highly educated workforce, and anchoring industries in the area have continued to grow in recent years. These two drivers combined with favorable forecast numbers for several metrics such as net absorption will continue to buoy the Minneapolis-St. Paul apartment market well above its long-term average rent growth performance in 217 and beyond. Development Twin Cities development ramped up quickly after 212, jumping from 1,2 units in 212 to 5,1 units in 213 before easing up closer to the market s long-term average (roughly 3,3 units) in subsequent years. Just less than 5, units are expected to deliver in 217, closely matching the surge in development from 212. Completions beyond 217 are expected to remain close to the market s long-term average. Occupancy and Occupancy in the Twin Cities has increased since 21, and the market wrapped up the second quarter of 217 sitting pretty at 97.3% occupied. occupancy is anticipated to remain strong at more than 96.1% each year of the outlook period. Given the market s high occupancy, it probably does not come as a surprise that net absorption in the market also has been strong, effectively matching or outpacing completions for five straight years. While the trend will reverse in 217, net absorption still looks generally favorable in the coming years when compared to the market s history. Rental Rates As of the second quarter of 217, the market s average rental rate was,251. The market s long-term average rent growth of 1.8% may be somewhat surprising given the market s recent run of success (annual average rent growth of 3.% in the current cycle). rent growth for 217 is one of the nation s highest, approaching the 4.% mark. Rent growth in 218 and 219 is expected to average 3.%, which mirrors average rent growth in the current cycle. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,6,4,2, $8 $6 6.% 5.% 4.% 3.% 2.% 1.%.% 12, 1, 8, 6, 4, 2, Source: Axiometrics

37 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) Rolling 12-mo. Total Quarterly Vol '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 FPA Multifamily San Francisco, CA $5, TIAA New York, NY , Weidner Apt Homes Kirkland, WA , Investcorp New York, NY , Blackstone New York, NY , ,86 6 Mapletree Investments Singapore 5. 3, Laramar Group Chicago, IL $99.7 4, The Connor Group Dayton, OH $97.5 1, Goldman Sachs New York, NY $ $58,18.1 2,36 1 Abacus Capital Group New York, NY $82.3 2, Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 TIAA New York, NY , Blackstone New York, NY , ,135 3 Sentinel Management Co Minneapolis, MN Greystar Charleston, SC $7, Kayne Anderson Los Angeles, CA 5. 3, Told Development Co Minneapolis, MN $ CPM Development Minneapolis, MN $ Alecta Stockholm, SWE $ $5, TE Miller Development Minneapolis, MN $ Doran Companies Minneapolis, MN $ $ % 98.4 $ % % % 86.8 $ % % % 41.3 $ % $ % $ % % % 33.8 $ % 47.8 $ % 67.4 $ % % 58.3 $ % 9.1 $ % % % HISTORICAL TRANSACTION VOLUMES ($MIL) $ % $589.3 $ % $59.6 $ % $ % % $ % $594.4 $ % $959.9 $ %, %, %, % $ %,262.9 $ %, %, %, %, %, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol.,281,43, % Q2 '17 7,642,8 7.8% # Trades T12 Vol % Q2 ' % Units T12 Vol. 9,45-15.% Q2 '17 2, % $/unit T12 Vol. 41, % Q2 '17 45, % Avg. Cap T12 Vol. 5.7% 36 Q2 '17.% Minneapolis posted big job gains in the healthcare sector accounting for a third of all new jobs, exceeding the U.S. and Midwest average. The metros key ingredient to success is a diverse mix of head offices, which includes seventeen Fortune 5 firms. Through June, Minneapolis apartment transaction cooled off to $594 million, slowing down 37% year over year. Private and institutional investors represent the active players on both the acquisition and disposition side of Minneapolis apartment market. Private investors were net sellers, selling $62 million of apartments, while acquiring 14 million year to date. 217 marks the first year since 212 foreign capital showed interest in the Twin Cities apartment market with funds hailing from Singapore. Minneapolis has a rare combination of job growth and low living costs generating healthy demographic growth. Source: HFF Research, Real Capital Analytics 37

38 NEW JERSEY NJ OCCUPANCY Occupancy 97.% 96.5% 96.% 95.5% 95.% 94.5% 94.% Overview The Northern New Jersey market (anchored by Newark) has managed favorable rent growth in recent years, despite non-substantial job growth numbers. This may be partially because of Northern New Jersey s proximity to New York, as Northern New Jersey residents can access New York in a relatively reasonable amount of time. Newark s,735 average effective rent as of the second quarter of 217 pales in comparison to New York s,796, making it a potentially attractive, more affordable option for those who don t mind a longer commute to New York City. Though absorption is anticipated to slow in Northern New Jersey, there has not been a glut of new supply in the area, as in many other metros (including New York). This will help keep rents above the market s long-term average. Development The Northern New Jersey apartment market has not experienced the same level of construction as many other markets nationwide. New supply in 217 (roughly 2, units) is more than the market s long-term average of 1,5 units, although the difference between 217 deliveries and the market s history is far less pronounced in Northern New Jersey than in other major metros. An average of 1,7 units per year is expected between 217 and 219. Occupancy and Occupancy rates continue to hold strong in Northern New Jersey, mirroring the market s long-term average of 96.4%. Occupancy is expected to remain at or above the long-term average during the outlook period. Occupancy was 97.2% in the second quarter of 217. The market s high occupancy is partially driven by the equilibrium between completions and net absorption in recent years. Even in 217 a year when completions are expected to far outpace absorption in most markets Northern New Jersey should remain effectively balanced. This sustained balance has kept occupancy rates on par with the metro s historical norm. Rental Rates Rental rates in Northern New Jersey,735 as of second quarter of 217 are significantly lower than the neighboring New York market. Though rent growth in Northern New Jersey (with its long-term average of 2.3%) is typically lower than New York s, that trend was reversed in 216. New York s.3% rent growth was comfortably exceeded by Northern New Jersey s 3.7%. Much like occupancy, rent growth will likely parallel its long-term average of 2.3% during the outlook period, with a slight uptick expected in 219. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,,8,6,4,2, $8 $6 6.% 5.% 4.% 3.% 2.% 1.%.% -1.% -2.% -3.% 6, 5, 4, 3, 2, 1, Source: Axiometrics

39 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) $5 Rolling 12-mo. Total Quarterly Vol '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Lone Star Dallas, TX $ ,42.5 1,894 2 Cammeby's New York, NY 88. 3, KRE Group Bridgewater, NJ $ Oxford Realty Group Highland Park, NJ AION Partners New York, NY 43. 4, Fieldstone Properties Parsippany, NJ $ Castle Lanterra Equity Suffern, NY $ Rockpoint Group Boston, MA , Hudson Valley Property Group New York, NY Red Stone Partners New York, NY Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Home Properties Rochester, NY $ , Lone Star Dallas, TX $ ,172. 1,45 3 Segal & Segal Morristown, NJ $ AIG New York, NY , Mack-Cali Edison, NJ , AvalonBay Arlington, VA $8, Kline Enterprises LLC East Windsor, NJ Trammell Crow Res Dallas, TX $7, DSF Group Waltham, MA $ PGIM Real Estate Madison, NJ $51,51.8 1, , %, % $ % $ % $539.1 $ % 31.4 $ % % 32.3 $ % % 95.7 $ % % $917.2 $ %, %, %,732.3 $ %, %, %, % $ %, % HISTORICAL TRANSACTION VOLUMES ($MIL) ,39.3 $ %, %, %, %, %, %,651.1 $ %,715.8 $ %, %, %, %,843.8, %,565.4, %, %,966.7 $ %, %,557.4, %, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol.,366,239, % Q2 '17 9,571, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 21, % Q2 '17 1, % $/unit T12 Vol. 59, % Q2 '17 4, % Avg. Cap T12 Vol. 5.6% 6 Q2 '17 6.% 4 Northern New Jersey s multi-housing market continues to keep momentum as occupancy is steady and rent growth remains positive. Private and institutional investors control the Northern New Jersey s apartment market so far this year, accounting for 68% and 31% of all acquisitions, respectively. Transaction volume through the first two quarters of 217 slowed to.3 million, down 12% compared to the same period in 216. New Jersey s economy continues on a long road to recovery following the Great Recession of 28. While job growth remains less than the U.S. national average, employment grew by 1,6 jobs in June 217 with the private sector leading growth at +1,2 jobs. The Garden State s unemployment rate remains at 4.1%, below the national average of 4.4%. Source: HFF Research, Real Capital Analytics 39

40 NEW YORK NY OCCUPANCY Occupancy 97.% 96.5% 96.% 95.5% 95.% 94.5% 94.% Overview The New York apartment market performance has been generally sluggish since 213, with 217 expected to be the market s trough. New York has been under a supply siege since 214, averaging 21,5 completions from The 3, completions expected in 217 will likely keep rent growth suppressed and occupancy increases at bay. ed job growth in 217 (1.3%) is expected to be above the market s long-term average (1.%). Unfortunately, completions have been substantially high for three straight years, making it difficult for the market to climb its way out of the supply deluge. The lingering effects of these completions will likely impact performance next year, with a more optimistic outlook possibly appearing toward the latter half of 218 and into 219. Development New York has garnered national attention due to the vast amount of new supply delivered to the market in recent years. A staggering 21,9 units were delivered in 214 before the pipeline dropped to approximately 19, new units in 215. Almost 24, units were delivered in 216, and an additional 3, are anticipated in 217 easily the highest total in the nation. Brooklyn and Queens are two areas expected to receive notable amounts of new supply in 217, with 7, and 4,6 units, respectively. Occupancy and New York has historically been a high-occupancy market, with a long-term average of 96.% from New York occupancy was 96.7% in the second quarter of approximately 7 bps above its long-term average. Given New York s status as a high-demand market, occupancy is forecast to remain above the long-term average, remaining steady between 96.3% and 96.7%. Rental Rates The average effective rent in New York was roughly,8 as of the second quarter of 217 one of the highest rates in the nation. Rent growth will struggle to reach positive territory in 217, with -.1% rent growth forecast for the full year. As the new-supply cloud remains over the market (barring any major increases in job growth), it is unlikely rent growth will drastically improve in 217, although a slight boost is to be expected from the -.5% recorded in 216. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,5,,5,,5, $5 6.% 5.% 4.% 3.% 2.% 1.%.% -1.% 4, 35, 3, 25, 2, 15, 1, 5, Source: Axiometrics

41 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) 5 Rolling 12-mo. Total Quarterly Vol $5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 $5 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Blackstone New York, NY $6, , ,86 2 Caisse de Depot Quebec City, QC $5, , Fairstead Capital New York, NY, , Lone Star Dallas, TX $ ,42.5 1,894 5 Emerald Equity Group Monroe, NY $ $ A&E Real Estate New York, NY $ , Madison Realty Capital New York, NY $ , GreenOak New York, NY $ $5, Slate Property Group New York, NY , SW Wasserman New Rochelle, NY 39. 7, Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Wachovia 27-C3 $5,44. 1 $5, COBALT 27-C2 $5,44. 1 $5, Wachovia 27-C31 $5,44. 1 $5, ML-CFC 27-6 $5,44. 1 $5, Home Properties Rochester, NY $ , Bettina Equities New York, NY $ $ Galil Management Brooklyn, NY $ , Phipps Houses New York, NY $62. 1 $ Savanna New York, NY $523. 2, Ares Management Los Angeles, CA ,32.3 1, ,311.6, %,354.1, % $9,122.6, % $5, %, %,985.5 $ %, %,786.8 $ %,542.5, %,94.4 $ %,423.1 $ %,96.9, %,322.1, %,544.3, % $6,25.5, % $6,68.1, % $7,943.9, % $8,781.6, % $9,566.8, % 2,862.1, % HISTORICAL TRANSACTION VOLUMES ($MIL) ,86.3, % 4,34.6, % 3,184.2, % 3,28.5 $5, % 2,393.1, % 2,652., % 5,44., % 4,513., % 6,71.2, % 7,16., % 5,957., % 1,482.6 $9, %,565.4, %, %,966.7 $ %, % 3,12.7, % 1,322.5, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol. 1,322,58, % Q2 '17,337,495, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 35, % Q2 '17 8, % $/unit T12 Vol. 36, % Q2 '17 88,39-7.6% Avg. Cap T12 Vol. 4.6% 9 Q2 '17 3.8% -73 New York City s apartment transaction volume softened in the trailing twelvemonth ending June 217 declining 48% compared to the same time last year. During the second quarter of 217 apartment rents decreased.9% compared to 216, marking a deceleration of rent growth for the fourth quarter in a row. Private investors comprised 82% of all acquisitions in the first six months of the year, while listed REITs have been net sellers in the same time period. Following national trends, foreign capital slowed in the first half of the year injecting nearly 6 million into multi-housing assets. New York City s newcomers undoubtedly contributed to demand for new housing spurring the city s economy. Despite modest job gains, NYC is experiencing robust development weighing on occupancy and rent growth. Source: HFF Research, Real Capital Analytics 41

42 PHILADELPHIA PA OCCUPANCY Occupancy 96.2% 96.% 95.8% 95.6% 95.4% 95.2% 95.% 94.8% 94.6% 94.4% Overview Philadelphia contains anchors capable of leveraging primarily derived from the prevalence of higher-education institutions in the metro that can help provide stability in the apartment market. The impact of these universities extends beyond their campus boundaries, as several of these institutions spin off into other key employment sectors, such as the education & health services sector. The abundance of local universities also makes it easier for local companies to retain their highly educated workforce. Philadelphia s affordability relative to other Northeast markets may also help attract some looking to move to the regional Megalopolis to which Philadelphia belongs. Philadelphia s short-term outlook suggests the market will generally lag national performance, but may not be quite as soft as some of the most sluggish markets. Philadelphia will likely continue to exhibit soft performance through the rest of 217, as with most other major markets, but some improvement can be expected in 218 and 219. Development Development was generally sparse in Philadelphia coming out of the economic downtown, averaging fewer than 1, new units from Development began to tick up in 214 and has steadily increased since. Some 845 units were delivered in the second quarter of 217 the most in any one quarter since the last recession. Philadelphia s urban core is the unquestioned leader for development activity in the metro. Almost 7% of forecasted completions in 217 (approximately 2,2 units) are expected to be located in the urban core. Another 2% (7-plus units) of the market s new deliveries are located near the University of Pennsylvania, east of the Schuylkill River. Occupancy and Occupancy continues to moderate in Philadelphia after reaching cycle-high 96.% in 212 and 215. It will likely further moderate and struggle to reach its long-term average occupancy of 95.2% during the outlook period. Occupancy may increase slightly in 218 as some of the units delivered in 217 are absorbed. Net absorption has struggled to keep pace with completions in Philadelphia, and 217 is expected to be the third straight year in which completions will outpace net absorption. Rental Rates Average effective rent was,396 in Philadelphia in the second quarter of 217, up from,384 during the same period last year. Effective rent growth in 216 (1.%) slowed 27 bps from the previous year. rent growth in 217 is expected to improve to 1.4%, although this is below the market s long-term average (2.2%). Rent growth beyond 217 is forecast to return above the long-term average. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,6,4,2, $8 $6 4.5% 4.% 3.5% 3.% 2.5% 2.% 1.5% 1.%.5%.% 4, 3,5 3, 2,5 2, 1,5 1, , -1, Source: Axiometrics

43 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) Rolling 12-mo. Total Quarterly Vol '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Lone Star Dallas, TX $ ,42.5 1,894 2 AION Partners New York, NY , Harbor Group Int'l Norfolk, VA $8, Morgan Properties King of Prussia, PA $5, Chelsea Management Lakewood, NJ Korman Res Props Bensalem, PA $ Carlyle Group Washington, D.C ,61.8 1,2 8 Pantzer Properties New York, NY , Northwood Investors New York, NY $ $7, Orbach Group Fort Lee, NJ $9. 1, Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Home Properties Rochester, NY $ , Ares Management Los Angeles, CA ,32.3 1,18 3 Equus Capital Partners Morrisville, PA $6, GE Capital Norwalk, CT $63, ,249 5 Resource Investments Pennsauken, NJ Berkshire Income Realty Boston, MA , GID Boston, MA , Radnor Property Group Wayne, PA Angelo, Gordon New York, NY , Brandywine Realty Trust Wayne, PA.5 1, , %, % $ % $ % % % % 81.7 $ % % % % $723.5 $ % $771.5 $ %, %, % $577.6 $ % $ % $ % $ %,128.4 $ % HISTORICAL TRANSACTION VOLUMES ($MIL) , %, %, %, %, %, %, %, %, %, %,743. $ %,716.2, %, %, %, %,222.9 $ %, %, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol.,373,656,433,373,656,433 Q2 '17 94,631,135 94,631,135 # Trades T12 Vol Q2 ' Units T12 Vol. 12,417 12,417 Q2 '17 2,637 2,637 $/unit T12 Vol. 15,271 15,271 Q2 '17 1,329 1,329 Avg. Cap T12 Vol. 6.% 22 Q2 '17 6.4% 46 Philadelphia s demand for apartments remains strong, as the City of Brotherly Love continues to be attractive to millennials who are lured by its transit and pedestrian oriented lifestyle and also popular among Baby Boomers looking to downsize. The volume for the first half of 217 reached $59 million, showing a robust 34% growth compared to the same time period in 216. Private and institutional investors dominated Philadelphia s apartment buyer pool, splitting market share 5/5. Listed REITs are looking to exit Philadelphia s apartment market, as they sold over billion with no acquisitions from 215 to year-to-date. Philadelphia continues to have a strong job market, with diverse job gains in business/professional services, education, and healthcare sector. Philadelphia s strong job market should begin contributing to increased demand for apartments. Source: HFF Research, Real Capital Analytics 43

44 PHOENIX AZ OCCUPANCY Occupancy 96.% 95.% 94.% 93.% 92.% 91.% 9.% 89.% 88.% Overview Phoenix has been a red-hot apartment market in recent years, posting rent growth rates among the nation s best and increasing occupancy to never-before-seen rates in the market. This success is partially because the market is in a different phase of the cycle than most markets. Phoenix was one of the last housing markets to recover after the Great Recession, so development lagged for many years, allowing the market to fully recover. RENTAL RATES rent/units/months,2, $8 $6 Some of Phoenix s success is also attributable to its strong job growth. Phoenix regained its 231, lost jobs in the economic downturn, and by the end of 217 will have added an estimated 352, jobs since 29 a net gain of 121, jobs. Development Phoenix s late recovery meant new supply was limited until 213. As such, total new supply in Phoenix was less than that of many other markets since the Great Recession ended. Completions in 215 and 216 returned closer to the long-term average of 5,8 units delivered per year. Supply is anticipated to peak in 217 at about 8,1 units, before settling back down to roughly 6, units in 218 and 5,3 units in 219. Occupancy and Phoenix s long-term average occupancy is comparatively low relative to other major markets at 92.2%, but it has soared in recent years as units continue to fill up. Occupancy is anticipated to have peaked in 216, but the 2-basis-point (bps) drop in 217 is barely noticeable. Occupancy is expected to peak yet again in 219, passing 95.% - the first time the market will breach that barrier. The occupancy increase is primarily the result of the relative balance between completions and net absorption in recent years. Although completions may overtake absorption in 217, that trend is expected to reverse in 218. Rental Rates Phoenix effective rents remain one of the nation s lowest among major markets, averaging $983 in the second quarter of 217. It seems difficult to say a still-robust forecast rent growth in 217 (4.2%) is a 2-plus bps drop from the previous two years, but that growth is envious relative to other markets. The outlook period also looks favorable, with a three-year average of 4.% from a 23-bps improvement from the market s long-term average (1.7%). ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () 8.% 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% -1.% 14, 12, 1, 8, 6, 4, 2, Gain Gain 44 Source: Axiometrics

45 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) $6 Rolling 12-mo. Total Quarterly Vol $6 $5 $5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Blackstone New York, NY , ,86 2 Security Properties Seattle, WA , BH Management Svcs Des Moines, IA , Western Wealth Capital Vancouver, BC Weidner Apt Homes Kirkland, WA 72. 7, Scion Group Chicago, IL , Capital RE (CO) Denver, CO Bridge Investment Grp Salt Lake City, UT $5, DiNapoli Cap Prtnrs Walnut Creek, CA , Investcorp New York, NY , Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Bascom Group Irvine, CA $5.4 1 $5, PB Bell & Associates Maricopa, AZ $ Greystar Charleston, SC $7, Goldman Sachs New York, NY $52,83.6 1,525 5 Alliance Residential Phoenix, AZ $5, Almon Investment Group Seattle, WA $ Acacia Capital Corp San Mateo, CA , Bridge Investment Grp Salt Lake City, UT , Wood Partners Atlanta, GA $5, Fortress New York, NY , , , %, %, % $68.6 $ % 92. $ % % % $ % $ % $ %, %, %, %,752.6 $ %,875.6 $ %, %, %,38.9, %,478.6 $ %,773.2 $ % HISTORICAL TRANSACTION VOLUMES ($MIL) ,92.5 $ %,619.4 $ %,739.2 $ %,844.1 $ %, %,467.9 $ %,88.8, %,882.7 $ %,371.1 $ %,379.2 $ %,13.3 $ %,86.1, %,723.7 $ % $5,146.8, % $5,415.2, % $5,25., % $5,377.2 $ %,625.4, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol.,625,388,13-1.1% Q2 '17,37,272, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 41, % Q2 '17 11, % $/unit T12 Vol. 11,448.5% Q2 '17 25, % Avg. Cap T12 Vol. 5.8% 3 Q2 '17 5.5% -5 Phoenix s economy has sustained strong momentum and continues riding a wave of healthy fundamentals. Phoenix added 58, jobs for the year ended June 217, posting a 3% increase, strongly outpacing national employment growth. Phoenix s transaction volume retreated to.6 billion through year ended June 217, showing a slowdown after record high volumes in 216. Private investors acquired.3 billion of apartments, making up 53% of all acquisitions during the first two quarters of the year. Institutional and foreign investors represent 36% and 9% of acquisition volume for the first half of the year. Foreign capital this year has reached 25 million, with Canada investing the most money into Phoenix s apartment market. With robust population growth and the attraction as a low-cost alternative to Southern California, the Phoenix real estate market is expected to continue accelerating at a record pace. Source: HFF Research, Real Capital Analytics 45

46 PORTLAND OR OCCUPANCY Occupancy 96.5% 96.% 95.5% 95.% 94.5% 94.% 93.5% 93.% Overview Almost 2, residents came to the Portland, OR area from (8.9% growth) according to the U.S. Census, and employment trends for the market look favorable. Job growth has been strong, especially in higher-paying sectors. Rent growth and occupancy are both moderating in 217, although the 12% rent growth rate that Portland posted in 215 was an outlier and not a sustainable growth rate. The immediate outlook period has rent growth and occupancy easing back toward historic norms, and Portland fundamentals look to have the metro poised for future success. Development Supply is expected to peak in 217, although the increase from 216 (5,3 units) to 217 (5,9 units) is not as stark as in many other markets. Supply eases up beyond 217, as roughly 4,5 and 3,7 units are expected in 218 and 219, respectively. Completions in urban core Portland particularly in and near the Pearl District are expected to be elevated from recent years with more than 1,3 units under construction in the area as of August 217. Occupancy & Given the average occupancy rate in Portland from (95.6%), the market s long-term average occupancy (94.4%) may seem low. While occupancy will likely moderate in the interim in light of 216 and 217 s supply increase, the market is expected to hover around 95.% occupancy for the foreseeable future. in 217 is actually expected to be the greater than any of the preceding seven years, but the market s occupancy will remain slightly lower than recent years due to the completions-heavy balance in 216. As Portland continues to be an attractive option for employers (job growth forecasts suggest this is the case), expect absorption in Oregon s largest city to remain strong. Rental Rates Effective rent in Portland eclipsed,4 for the first time in the second quarter of 217, registering an average rent of,411. effective rent growth of 2.8% in 217 may seem tough to accept after averaging 8.1% the previous three years, but it is just 1 basis points below the market s long-term average (2.9%). The market s forecast for the next three years indicates rent growth will be slightly above the longterm average, sitting near 3.%. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change (),6,4,2, $8 $6 14.% 12.% 1.% 8.% 6.% 4.% 2.%.% 7, 6, 5, 4, 3, 2, 1, Gain Gain Source: Axiometrics

47 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) Rolling 12-mo. Total Quarterly Vol '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Blackstone New York, NY , ,86 2 Jackson Square San Francisco, CA 47. 7, Invesco Atlanta, GA , Sequoia Equities Walnut Creek, CA , TruAmerica Multifamily Los Angeles, CA , Guardian Life Insurance New York, NY $5, Holland Partners Vancouver, WA , Greystar Charleston, SC , MG Properties San Diego, CA , Pacific Urban Palo Alto, CA , Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Holland Partners Vancouver, WA $ , Sortis Capital Portland, OR $ Security Properties Seattle, WA 9.5 5, Mill Creek Residential Dallas, TX , Alecta Stockholm, SWE $5, Waterton Associates Chicago, IL , Green Leaf Partners Danville, CA Key Development Corp Hood River, OR Jackson Square San Francisco, CA , Bridge Investment Grp Salt Lake City, UT $99.7 2, , %,267.3 $ %, % $ % % % 94.5 $ % % % 9.6 $ % 74.1 $ % % $55.8 $ % $ % $ % $ % $ % $779.7 $ % $ % $ % HISTORICAL TRANSACTION VOLUMES ($MIL) $ % $ % $ % $ % $ %, %,471.8 $ %, %, %,925.8 $ %,134.2 $ %, %, %, %, %,13.5, %, %, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol.,71,539,85 3.3% Q2 '17 34,58, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 14,54 9.1% Q2 '17 1, % $/unit T12 Vol. 93, % Q2 '17 46, % Avg. Cap T12 Vol. 5.4% -13 Q2 '17 5.4% 17 Portland s multi-housing market slowed during the first two quarters of 217, posting $582 million of transaction volume, which is down 35% from last year. Private and institutional investors controlled the buyer composition, accounting for 63% and 3%, respectively, of all acquisitions year-to-date. Portland continues to post employment gains around 2.5% as of year ended June 217 well above the national average of 2.2%. Strong job creation across a broad base of industries, including construction and financial activities and information, has placed Portland in an enviable position. Construction jobs are increasing with the 6-key Hyatt Regency Convention Center project and Nike headquarters expansion. Portland s population increased 6% over the last five years, more than doubling the national average. These favorable demographics help support a positive outlook for Portland s multi-housing market. Source: HFF Research, Real Capital Analytics 47

48 SAN ANTONIO TX OCCUPANCY Occupancy 95.% 94.5% 94.% 93.5% 93.% 92.5% 92.% 91.5% 91.% Overview As an affordable market, San Antonio is often overshadowed by Dallas, Houston and nearby Austin in discussions regarding Texas real estate markets. The corridor between San Antonio and Austin continues to be a bustling area, however, drawing the attention of more developers and investors. San Antonio is the nation s fifthfastest-growing city with greater than one million residents, having grown 13.4% from , according to the U.S. Census. That growth becomes even more eye-catching when considering Austin led the nation in this category with almost 2% growth. Needless to say, the I-35 corridor between Austin and San Antonio has experienced incredible growth. San Antonio s job growth and population growth provide stability for investors, but San Antonio should not be viewed as a potential national leader for revenue growth. San Antonio is more accurately viewed as neither an underperformer nor an over performer, a quintessential low-risk, low-reward market. Development The San Antonio market had roughly 1,75 units delivered in the second quarter of 217, up about 2% from the second quarter of 216. Over 7,2 units are expected to deliver in 217, which would be the highest recorded total in the market s history. Development is likely to remain well above the market s historic norm in 218. While development is ongoing throughout the metro, the Interstate 1 corridor between Loop 164 and State Highway 46 has attracted an enormous amount of development. Although not particularly dense, the 15-mile corridor has approximately 3, units under development. Occupancy & San Antonio s occupancy rate has held fairly steady over the past few years, with second quarter of 217 occupancy clocking in at 93.9%. Occupancy is expected to stay suppressed throughout 217 as the market attempts to absorb the wave of new supply entering the market over the past year, averaging 93.2% in 217 a 7 bps departure from the market s long-term average. Completions and absorption were relatively in balance from , but the supply surge in 217 has created a renter-friendly market, with subdued rent growth and slightly declining occupancy. is expected to overtake supply again in 218 and 219, which will help improve the market s occupancy rate over the outlook period. Rental Rates San Antonio s effective rent in the second quarter of 217 was $942 equating to one of the more affordable markets in the nation. Historically speaking, rent growth has never really boomed nor busted in San Antonio aside from the great recession. In 215, for instance, many markets across the nation were posting rent growth rates in the 5.% and up range, but San Antonio held steady around 3.6% growth. Such small peaks and valleys in the San Antonio market suggest it is a safe bet with low-risk, low-reward. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain 5.% 4.5% 4.% 3.5% 3.% 2.5% 2.% 1.5% 1.%.5%.% 5.% 4.5% 4.% 3.5% 3.% 2.5% 2.% 1.5% 1.%.5%.% 8, 7, 6, 5, 4, 3, 2, 1, Source: Axiometrics

49 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) Rolling 12-mo. Total Quarterly Vol '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Starwood Capital Greenwich, CT ,239. 1,672 2 Pure Multi-Family REIT Vancouver, BC $ CWS Capital Partners Newport Beach, CA , Milestone APTS REIT Toronto, ON , Bluerock Res REIT New York, NY , Draper and Kramer Chicago, IL $ $ Hamilton Zanze & Co San Francisco, CA $81.6 3, Castle Lanterra Equity Suffern, NY $75. 1 $ BRT Apartments Great Neck, NY $71.2 2, Harmony Housing Douglasville, GA $ Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Milestone APTS REIT Toronto, ON , Blackstone New York, NY , ,135 3 Blue Vista Capital Chicago, IL 24. 3, Western Rim Properties Irvine, CA , Greystar Charleston, SC $7, Embrey Development San Antonio, TX $86.3 2, Landmark ATA Tampa, FL $81.7 2, KKR New York, NY $76.9 3, Carlyle Group Washington, DC $ , F&B Capital Austin, TX $ $ % % % % 97.8 $5..% % 31.7 $57.6.% % % % % % 58.5 $ % $ % $ % $ % $ % $ % $ % $ % HISTORICAL TRANSACTION VOLUMES ($MIL) $ %, %, %, % $933.9 $ %, %, %, %, %, %, %, %, %, %, %,629. $ %, %,992.2 $ % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol.,992,167, % Q2 '17 $768,696, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 2, % Q2 '17 7, % $/unit T12 Vol. 2, % Q2 '17 2, % Avg. Cap T12 Vol. 5.9% -4 Q2 '17.% San Antonio s multi-housing market is benefitting from unmatched liquidity given the trailing twelve-month transaction volumes are registering all-time highs approaching billion. Private investors accounted for nearly 65% of all acquisitions year-to-date, while institutional investors and listed REITs increased their acquisition activity and were responsible for 22% and 11%, respectively. Institutions were net sellers during this time period. San Antonio s economy is diverse with most industries posting employment growth faster than the national average, which has fueled demand for apartments. Development has been robust in San Antonio and demand is expected to keep up with supply, moderating in 218. Source: HFF Research, Real Capital Analytics 49

50 SAN DIEGO CA OCCUPANCY Occupancy 96.5% 96.% 95.5% 95.% 94.5% 94.% 93.5% 93.% Overview San Diego is a less capricious market than other major California markets. These other markets particularly in the San Francisco Bay Area may see double-digit rent growth in a year, but are notoriously volatile and have flat to negative rent growth in other years. RENTAL RATES rent/units/months,5,,5, San Diego is a more stable market. Rent growth typically ranges from 3%-6%, occupancy remains above 95%, and the market s high barriers to entry keep supply relatively constrained. Job growth has been steady in the market, and employment gains in key industries (technology in particular) continue to create higher-paying jobs, making for a steady renter base. Development San Diego s new supply peak is anticipated to be 217, with approximately 6,8 units expected to deliver this year. An interesting trend in San Diego, however, is the fairly steep drop in new supply from 217 to 218, when only 4, units are expected. A huge portion of the market s 217 supply roughly 4% -- Is captured in the urban core. While the total number of units expected to deliver in 218 drops quite drastically, the urban core will still remain a hot spot for development, capturing onequarter of the market s deliveries in 218. ANNUAL RENTAL RATE GROWTH YoY change (%) $5 8.% 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% -1.% Occupancy & Occupancy in the second quarter of 217 was 96.3% -- one of the highest rates in the nation. The market s long-term occupancy rate (94.8%) has continued to be surpassed in recent years as the market s absorption has generally outpaced completions. Although occupancy is expected to drop 3 bps in 217 to 95.7%, it is worth noting that the 217 occupancy rate is well above the market s long-term rate. Furthermore, increasing occupancy rates are forecast through the outlook period, reaching 96.1% by 219. Rental Rates San Diego s long-term average rent growth (3.8%) is among the highest in the nation, and the forecast looks favorable in San Diego. As with many markets, the peak in 217 supply is anticipated to suppress rent growth to 4.4% this year, but that would be one of the best growth rates in the nation. Beyond 217, rent growth should remain above the long-term average and fluctuate very little, remaining right around 4.3%. COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () 8, 7, 6, 5, 4, 3, 2, 1, Gain Gain Source: Axiometrics

51 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) Rolling 12-mo. Total Quarterly Vol '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 R&V Management Corp San Diego, CA 81. 5, Pacific Urban Palo Alto, CA , FPA Multifamily San Francisco, CA $5, Investors Management Los Angeles, CA , American Assets Trust San Diego, CA $ TIAA New York, NY , Northwestern Mutual Milwaukee, W , MG Properties San Diego, CA , Blackstone New York, NY , ,86 1 Decron Properties Corp Los Angeles, CA 12. 1, Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Carmel Partners San Francisco, CA $5, Fairfield Residential San Diego, CA , AvalonBay Arlington, VA $8, Gables Res - Clarion Atlanta, GA $ Conrad Prebys San Diego, CA Dinerstein Cos Houston, TX , MG Properties San Diego, CA , Sobrato Development Cupertino, CA , Zephyr Partners San Diego, CA Trammell Crow Res Dallas, TX $7, , %, %, % $ % $ % $ % $ % % % 51.2 $ % $ % $ % $ % $ % $ %,85.2 $ %, %, %, %, % HISTORICAL TRANSACTION VOLUMES ($MIL) , %, %,688.6 $ %,9. $ %, %,531.3 $ %, %, %,413.5 $ %,45.8 $ %,278.6 $ %,632.4 $ %,328.5 $ %,533.8 $ %,529.7 $ %,641.3 $ %, %,521.9,8. 4.9% MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol.,521,856,67 -.5% Q2 '17,8,33, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 1, % Q2 '17 3, % $/unit T12 Vol. 52, % Q2 '17 61, % Avg. Cap T12 Vol. 4.9% 32 Q2 '17 5.% 36 San Diego s unique economy is anchored by international trade, biotechnology, military operations, and growing entrepreneurial companies. San Diego is undergoing a billion trolley expansion, which will continue to draw significant projects to the metro. Apartment transaction volume decelerated slightly to.2 billion for the first two quarters of the year, down 9% year over year. Private investors accounted for 73% of all acquisitions year to date, followed by REITs who made up 17% of the acquisition market. Foreign investors have left San Diego s multi-housing market after acquiring over $569 million in six properties in 215. With continuing job growth and population growth, San Diego should maintain a stable multi-housing market. Source: HFF Research, Real Capital Analytics 51

52 SAN FRANCISCO CA OCCUPANCY Occupancy 96.2% 96.% 95.8% 95.6% 95.4% 95.2% 95.% 94.8% 94.6% 94.4% Overview San Francisco has been one of the nation s strongest performing markets in the current cycle, averaging 7.2% rent growth from That number was pulled down significantly in 216. Although it may not feel like it for owners, operators and investors in the market, the annual average rent growth in 216 stayed positive (albeit nearly flat at.5%). The challenges that plagued 216 remain in 217, as the market s supply continues to stay elevated and job growth continues to slow. The 7%-plus rent growth may feel like eons ago rather than two years ago. San Francisco is a high-risk, high-reward market by nature, so there will be pain points along the way. The good news in San Francisco is that better times appear to be on the horizon. It is probably not fair to expect 7%-plus rent growth after all, rent growth that high is simply unsustainable. However, rent growth and occupancy are expected to approach their long-term average beyond 217. Development San Francisco s geographic restrictions, created by its hilly terrain and location on a peninsula, produce a constrictive development environment. Even with these geographic constrictions however, a relatively large amount of new supply has managed to infiltrate the market in recent years. Rather than suffering directly from a massive supply peak in 217, San Francisco s poor performance in 216 and 217 was caused by a sustained plateau of new supply. Just under 5, units are anticipated to deliver in 217, making it the fifth consecutive year in which new supply has been at or above the market s long-term annual average of 2,3. Occupancy and San Francisco s historic occupancy is typically right around the 95% sweet spot, showing a long-term average of 95.2%. Even with supply remaining elevated for several years, though, occupancy has managed to remain above the market s longterm average, recorded at 95.8% as of the second quarter of 217. Net absorption has struggled to match completions in recent years, although 218 is expected to exhibit a more favorable outcome. San Francisco remains one of the Gateway 6 markets, so it is fair to assume the San Francisco Bay Area will be an in-demand market for the foreseeable future. Rental Rates Rent growth in San Francisco is subject to massive swings often due to its notorious sensitivity to changes in job growth. When job growth ticks up, rent growth accelerates quite rapidly. Unfortunately, this means that when job growth slows then rent growth plummets. Cutting through the noisy peaks and valleys, San Francisco s long-term rent growth still averages 4.%, one of the best rates in the nation. Rent growth in 217 should improve minimally (roughly 3 bps) from last year s paltry.5% and while that may not be a fantastic improvement it is still an improvement nonetheless. Beyond 217 rent growth is expected to ramp up closer to and perhaps even above the market s long-term average. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,,5,,5,,5, $5 14.% 12.% 1.% 8.% 6.% 4.% 2.%.% 8, 7, 6, 5, 4, 3, 2, 1, -1, -2, -3, Source: Axiometrics

53 $9 $8 $7 $6 $5 '6 HISTORICAL MARKET TRENDS (Volume $B) Rolling 12-mo. Total '7 '8 '9 '1 '11 '12 Quarterly Vol '13 '14 '15 '16 '17 REAL-TIME SNAPSHOT (Volume $B) $8 $7 $6 $5 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Pacific Urban Palo Alto, CA 43. 1, ADIA Abu Dhabi, ARE , Sand Hill Prop Co Redwood City, CA , Essex Property Trust San Mateo, CA , TIAA New York, NY , Veritas Investments San Francisco, CA , Aimco Denver, CO $5, Deutsche AWM - US Santa Ana, CA , ,371 9 Greystar Charleston, SC , Maximus RE Partners San Francisco, CA 45. 1, Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Kennedy Wilson Beverly Hills, CA $ $6, Equity Residential Chicago, IL ,795. 1,168 3 Lennar Corporation Miami, FL , Greystar Charleston, SC $7, Essex Property Trust San Mateo, CA , Mount Kellett New York, NY , Pauls Corp Realty Denver, CO , Pacific Urban Palo Alto, CA , Resmark Companies San Diego, CA $ Klingbeil Capital Mgmt San Francisco, CA , $5,99.4 $ % $5,637. $ % $5,214. $ %, %,711.2 $ %, %, %, %, %, %,619.5 $ %, %,33.2 $ %,349.3, %,149.7 $ %,91.7, %,737.2 $ %,498., %,876.9, % $5,267.7, % HISTORICAL TRANSACTION VOLUMES ($MIL) $7,76.5, % $7,352. $ % $6,558.8, % $5,916.5 $ %,425. $ %,829.3, % $5,197.6, % $6,688.3, % $7,168.6, % $6,12.1, % $5,881.7, % $5,747.3, % $6,5.4, % $6,368.4, % $6,963.7, % $6,14.6, % $5,713.8, % $5,324.7, % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol. $5,324,664, % Q2 '17,53,513, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 17, % Q2 '17 3,55-14.% $/unit T12 Vol. 27, % Q2 '17 26, % Avg. Cap T12 Vol. 4.2% -17 Q2 '17 4.1% -43 With the tech center being the centerpiece of economic activity, San Francisco has remained in flavor despite mounting housing costs. During the first six months of 217, private investors were responsible for 66% of the total acquisition volume and 69% of the total disposition volume in the apartment market. Apartment transaction volume has slowed 27% in the first half of the year posting.1 billion in sales. San Francisco s unemployment rate sits at 3.4% remaining at the lowest level in 16 years. Job growth continues to grow above the national average, but has decelerated in recent months due to a slowdown in the technology industry. Source: HFF Research, Real Capital Analytics 53

54 SEATTLE WA OCCUPANCY Occupancy 96.% 95.8% 95.6% 95.4% 95.2% 95.% 94.8% 94.6% 94.4% 94.2% Overview Seattle continues to be a national leader in terms of market performance. Fantastic rent growth and occupancy have held steady at rates well above historic norms, even in the midst of a barrage of new supply. Job growth has fueled Seattle s market performance, with the information sector leading the way. The structural drivers for the Seattle apartment market (i.e. strong job growth in higher-wage industries, favorable renter demographics) are sound. As long as job creation continues to be strong in Seattle, it is fair to believe the market will continue to be one of the nation s strongest performers. It should be noted that if job growth does taper off in Seattle performance may be somewhat dampened due to the sustained level of elevated supply in the market. Development Over 3,1 units were delivered in the second quarter of 217 alone, and more than 12, units are expected to be completed through the entirety of 217. Of the units delivered in the second quarter, almost one-third are located in Seattle s urban core. Development activity in North Seattle across from the Lake Washington Ship Canal continues to be elevated as well, with roughly 1,6 units anticipated to deliver in 217. A slight drop in new supply should occur in 218, although the total number of units will remain well above the market s long-term annual average of 6,3 units. The urban core will still be the busiest area for deliveries in 218, with yet another onethird of all deliveries in the market located in the area. Occupancy & Seattle s occupancy was 96.% in the second quarter of 217, down 3 bps from the same period in 216. Seattle is not unique in that occupancy has declined (almost every major market in the nation saw peak occupancy anywhere from 12 to 48 months ago), but the 3 bps decline is relatively meager in comparison to most markets. occupancy is expected to remain solid, never dipping below the market s long-term average of 94.8%. The balance between completions and absorptions has been remarkably steady in recent years. Net absorption has generally trailed completions, but the spread has been fairly small, especially relative to other major markets. This has helped occupancy remain reasonably steady and still above the market s long-term average. Rental Rates Seattle s rent growth continues to outperform most major U.S. markets a testament to the market s strength in recent years. Annual rent growth was 5.3% in the second quarter of 217, essentially matching the rate of one year earlier. Rent growth in 217 is forecast to slow somewhat from previous years, but the 5.6% forecast rate is near the top compared to the rest of the nation. Remarkably, rent growth is forecasted to be fairly strong in the outlook period as well, averaging 3.5% in 218 and 219, compared to the market s long-term average of 3.3%. One particularly interesting area for rent growth is urban core Seattle. Almost every other market has seen a severe slowdown in urban core rent growth over the past two years, but Seattle s urban core continues to defy expectations, averaging 5.4% rent growth over the past six years. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,5,,5, $5 8.% 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% -1.% 14, 12, 1, 8, 6, 4, 2, Source: Axiometrics

55 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) $6 Rolling 12-mo. Total Quarterly Vol $6 $5 $5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Blackstone New York, NY $ , ,86 2 Kennedy Wilson Beverly Hills, CA $ , Starwood Capital Greenwich, CT ,239. 1,672 4 Security Properties Seattle, WA 5.2 7, Prime Group San Francisco, CA , Greystar Charleston, SC , Griffis Residential Arapahoe, CO , FPA Multifamily San Francisco, CA $5, Lefrak Organization New York, NY , BCE Properties Los Angeles, CA , Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Equity Residential Chicago, IL ,795. 1,168 2 Goodman Real Estate Inc Seattle, WA , Greystar Charleston, SC $7, Holland Partners Vancouver, WA , Security Properties Seattle, WA , FPA Multifamily San Francisco, CA $5, Bridge Investment Grp Salt Lake City, UT 2.4 7, Carlyle Group Washington, D.C , Grosvenor London, GBR , AvalonBay Arlington, VA $8, ,915.3 $ %, %, %, %,15.6 $ % $ % $57.9 $ % % 38.3 $ % % $ % $ %, %, %, %, %,739.7 $ %, %,81. $ %,892.7, % HISTORICAL TRANSACTION VOLUMES ($MIL) ,194.5 $ %,285.4 $ %,68.7 $ %,846.6 $ %, %,445.5, %,45.3, %,214.4, %,551.3 $ %,239.7, %,593.4, %,919.7, % $5,383.6, %,981.6 $ %,764.5, % $5,649.7, % $5,299.6 $ % $5,456.2 $ % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol. $5,456,197,69 9.5% Q2 '17 $923,845, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 25, % Q2 '17 4,24-6.9% $/unit T12 Vol. 14, % Q2 '17 23, % Avg. Cap T12 Vol. 5.% -12 Q2 '17 4.8% -39 Seattle s multi-housing market remains highly liquid, with trailing twelve-month volumes of approximately $5.4 billion. During the first two quarters of the year, private investors were net sellers while accounting for 72% all acquisitions in this time frame. The institutions followed next in line accounting for 18% of all acquisitions. Seattle has become a global hub for cloud technology that sparked an economic boom and continues to add jobs at one of the fastest paces for western metro areas. Seattle recently increased its wage floor to 5 per hour creating debate, but so far it does not appear to be taxing growth. Seattle s increasing demand for employment will continue to bring higher than average wage earners to the local multi-housing market. Source: HFF Research, Real Capital Analytics 55

56 TAMPA FL OCCUPANCY Occupancy 96.% 95.5% 95.% 94.5% 94.% 93.5% 93.% 92.5% 92.% 91.5% Overview Robust job growth has largely driven the Tampa-St. Petersburg apartment market in recent years, with as many as 49,5 jobs added in 215 (4.% growth). Though growth of that magnitude probably should not be expected, Tampa has increased its job base in two sectors (the construction, professional and business services sector, and leisure and hospitality sector) quite substantially since 21 as those industries increased their employment base by more than 2% from 21-June 217. Because Florida has typically been a builder-friendly environment, it may come as little to no surprise that new supply also has picked up in recent years. The market is anticipated to add approximately 5,5 new units in 217, the highest total in more than 2 years. Job growth is expected to moderate (although remain above its longterm average of 1.4%) in the outlook period. In the face of elevated supply, Tampa will likely exhibit rent growth and occupancy rates closer to the market s long-term average rather than greatly exceed those benchmarks. Development An average of 4,2 units have been delivered annually in Tampa since Supply totals in 214, 215 and 216 were all fairly similar to the long-term average (4,3 units delivered annually), but roughly 5, units are expected to deliver in 217. Supply is expected to remain above the long-term average in 218 (approximately 4,8 units), and 219 (4,1 units). Occupancy and The long-term average occupancy in Tampa (94.2%) is about 8 bps lower than the occupancy rate in the second quarter of 217. occupancy during the outlook period (217 through 219) looks healthy at an average of 94.8%. Even with more completions coming to market in 217 than years prior, completions and absorption look to be in equilibrium in 217. Completions will outpace supply in 218 before that misalignment is recaptured in 219. Rental Rates The average rent in Tampa as of the second quarter of 217 was,131, up from,14 in the second quarter of 216. The forecast annual average rent growth for 217 (2.6%) is expected to fall below rent growth in previous years, but is essentially in line with the market s long-term average of 2.6%. Furthermore, the market s cycle average (3.9%) is 14 bps above its long-term average, so it is plausible that the market is experiencing some moderation due to lack of sustainability for such elevated rent growth rates. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,4,2, $8 $6 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% 8, 7, 6, 5, 4, 3, 2, 1, Source: Axiometrics

57 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) Rolling 12-mo. Total Quarterly Vol '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 MAA REIT Memphis, TN $9, General Services Corp Richmond, VA Starwood Property Trust Greenwich, CT 9.1 1, Starwood Capital Greenwich, CT ,239. 1,672 5 TGM Associates New York, NY , Radco Cos Atlanta, GA 54. 4, ESG Kullen New York, NY Cottonwood Residential Salt Lake City, UT , Harbor Group Int'l Norfolk, VA $8, Blue Rock Partners Tampa, FL 2.3 3, Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Post Properties Atlanta, GA $6, Pollack Shores RE Group Sandy Springs, GA , Camden Property Trust Houston, TX 1.9 4, The Wilson Company Tampa, FL 8. 9 $ Crescent Heights Miami, FL , Mill Creek Residential Dallas, TX , PGIM Real Estate Madison, NJ $51,51.8 1,2 8 Blue Rock Partners Tampa, FL Crescent Communities Charlotte, NC , Fieldstone Properties Parsippany, NJ $ % $ % $ % $561.5 $ % 47.7 $ % % % % % $ % $ % $ % $ % $ %, %, %, %, %, %, % HISTORICAL TRANSACTION VOLUMES ($MIL) , %, %, %, %, %, %, %, %,969.3 $ %,94.9 $ %,192.5 $ %,715. $ %,658.3 $ %,873.1 $ %,25.4 $ %,872.4 $ %,952.8 $ %,687.2 $ % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol.,687,18, % Q2 '17 $532,765, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 23, % Q2 '17 5, % $/unit T12 Vol. 16, % Q2 '17 $99, % Avg. Cap T12 Vol. 6.3% -5 Q2 '17 7.3% 11 Tampa s economy continues to burst with annual job growth accelerating faster than the national average and posting an unemployment rate of 4.3%, the lowest level since 27. Through June 217, Tampa s apartment transaction volume cooled to.2 billion, marking a 14% decrease compared to the same time in 216. Private investors made up 81% of all acquisitions during the first two quarters of the year and were responsible for 51% of disposition volume. Tampa has robust multi-family investor interest due to strong fundamentals, solid rent growth, and rapid job growth. The health care industry is booming with an abundance of job opportunities in science, technology, engineering, and mathematics (STEM) drawing younger professionals to the market, causing population in the Tampa area to triple the national average. Source: HFF Research, Real Capital Analytics 57

58 WASHINGTON D.C. OCCUPANCY Occupancy 96.2% 96.% 95.8% 95.6% 95.4% 95.2% 95.% 94.8% 94.6% 94.4% 94.2% 94.% Overview Washington, D.C., looked as though it would come out of the starting gate postrecession as a national leader in terms of rent growth and increasing occupancy. But a sustained inundation of new supply from , along with the federal government s sequestration policy, kept the market from soaring to its full potential. The market began to work its way out of the trough in 215 and improved yet again in 216. The market has not capitalized off the momentum built in 216 through the first half of 217, but it is maintaining, with rent growth and occupancy hovering around last year s rates. The forecast 217 rent growth of 2.% is 1 bps lower than last year s average, and the expected 95.6% occupancy this year is 2 bps higher than the 216 rate. The nation s capital has solid employment anchors, a wealth of higher-education institutions churning out a talented and educated workforce and is still a Gateway 6 market, so investment opportunity will certainly not shy away from the area. Development Washington, D.C., was one of the first markets to which developers flocked early in the recovery period, leaving the metro with a large amount of new supply, while construction in many other markets didn t start until a year or two later. Washington, D.C., supply is expected to peak in 217, with over 12,6 units anticipated to deliver to the market -- 3,7 delivering in the second quarter alone. Supply will remain quite substantial during the outlook period as well, averaging 1, new units for the next three years, 3,7 units annually above its long-term average. Occupancy and Washington, D.C. s long-term average occupancy (95.2%) is slightly lower than its second quarter of 217 occupancy (95.5%). Even faced with the escalation of new supply in the outlook period, Washington, D.C. s occupancy rate looks to remain around its long-term average, bouncing between 95.5% and 96.%. Net absorption is expected to slightly outpace completions in 217 and 218, similar to the past three years. The net absorption is barely outpacing completions however, which has kept rent growth from excelling. Rental Rates As long as absorption is able to keep up with new supply, expect the market s rent growth to perform near its long-term average of 3.2%. Although 217 is expected to finish the year below the long-term average at 2.%, 218 and 219 are forecasted to fare better. If forecast rent growth in 218 (3.7%) holds, it would be the first year since 211 in which rent growth has outperformed the market s long-term average. The average D.C. rent was,741 in the second quarter of 217. RENTAL RATES rent/units/months ANNUAL RENTAL RATE GROWTH YoY change (%) COMPLETIONS & NET ABSORPTION units Completions Completion EMPLOYMENT & POPULATION TOTALS YoY change () Gain Gain,,8,6,4,2, $8 $6 6.% 5.% 4.% 3.% 2.% 1.%.% -1.% 16, 14, 12, 1, 8, 6, 4, 2, -2, -4, Source: Axiometrics

59 HISTORICAL MARKET TRENDS (Volume $B) REAL-TIME SNAPSHOT (Volume $B) 4 Rolling 12-mo. Total Quarterly Vol $8 $8 $6 $6 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 J F M A M J J A S O N D MARKET PLAYERS (prior 24 months) Top Buyers Rank Buyer Location Acq # Props Global Acq # Props 1 Lone Star Dallas, TX, , ,893 2 UDR Littleton, CO $9. 6 $9, MAA REIT Memphis, TN $ $9, Starwood Capital Greenwich, CT $ , ,672 5 BDMG Inc Baltimore, MD $ $ Brookfield AM Toronto, ON $ $59, Pantzer Properties New York, NY , Invesco Atlanta, GA , Quest Management Group Pikesville, MD $ CBRE Global Investors Los Angeles, CA 32. 2, ,327 Top Sellers Rank Seller Location Dsp # Props Global Dsp # Props 1 Home Properties Rochester, NY, , Post Properties Atlanta, GA $ $6, Federal Capital Bethesda, MD $ , Equity Residential Chicago, IL $ ,795. 1,168 5 Associated Estates Cleveland, OH $55.9 5, Berkshire Group Boston, MA , Ross Dev & Investment Bethesda, MD , Greystar Charleston, SC $7, Angelo, Gordon New York, NY , CRC Partners Arlington, VA , $9,328. $ % $9,242.8 $ % $8,588.9 $ %,139.6 $ %,545.6 $ %, % %,173.2 $ %,129.5 $ %, %,255.2, %,352.8 $ %,351.2 $ %,155.5, %,389.3, % $5,51.4, %, %,732.2, % $6,393.6, % $5,867.9, % HISTORICAL TRANSACTION VOLUMES ($MIL) ,723.2 $6, % 1,37.2 $ % $9,83.9 $ % $8,74.4 $ %,367.7, %,421.3 $ %,716.4, %,147.8, %,553.2, % $5,42., % $5,625.3, % $8,72., % $8,657., % $7,917.9, % $8,93.3, % $5,956.9, % $5,539.6 $ % $5,119.3 $ % MARKET PERFORMANCE Actual Changes vs Prior Volume T12 Vol. $5,119,31, % Q2 '17 $687,753, % # Trades T12 Vol % Q2 ' % Units T12 Vol. 27, % Q2 '17 3, % $/unit T12 Vol. 84, % Q2 '17 18,43 3.5% Avg. Cap T12 Vol. 5.3% -32 Q2 '17 5.% -48 Transaction activity in Washington, D.C. s apartment market continues to slow into 217 with trailing twelve-month volume coming in at $5.1 billion, a slowdown of 35% year over year, however this time last year D.C. experienced a cyclical high. Private and foreign investors have increased market share for all acquisitions year-to-date, coming in at 57% and 14%, respectively. Canada and Sweden invested 93 million in the first half of 217, resulting in a 7% gain in 216 s total foreign capital investments. The nation s capital is enjoying strong fundamentals, including robust employment and healthy population gains, as the metro remains a hot spot for young professionals due to the diverse job sectors offered in D.C. Federal government employment is expected to decrease in 217 as the Trump administration seeks budget cuts. Source: HFF Research, Real Capital Analytics 59

60 CURRENT ASSIGNMENTS RECENTLY CLOSED TRANSACTIONS THE WILSHIRE COLLECTION HARLEM 125 FAIRFIELD RANCH WOLF POINT EAST 154 Units Two Class A Multi-housing Communities Los Angeles, CA 75 Units Class A Multi-housing Property New York, NY 294 Units Property Sale Class A Garden-style Multi-housing Houston, TX 698 Units Construction Loan Class A Multi-housing Property Chicago, IL On The Market On The Market Closed July 217 Closed June 217 HIGHLANDS32 SUR512 ATLANTIC POINT APARTMENTS KENT PLACE 148 Units 8,873 SF Retail Class A Multi-housing Property Denver, CO 352 Units Class A Multi-housing Property Austin, TX 795 Units Property Sale Class A Multi-housing Property Bellport, NY 3 Units Property Sale Class A Multi-housing Property Englewood, CO On The Market On The Market Closed February 217 Closed July 217 CAMPUS HILL PORTFOLIO ECHO LAKE ALEXAN MELROSE BRICKELL FLATIRON Syracuse University 255 Units/695 Beds Lehigh University 17 Units/383 Beds Syracuse, NY & Bethlehem, PA 36 Units Class A Garden-style Multi-housing Lakewood Ranch, FL 41 Units Property Sale Class A Garden-style Low Rise Vista, CA 549 Units Construction Loan Class A Multi-housing Property Miami, FL On The Market On The Market Closed June 217 Closed March 217 Visit hfflp.com to view the HFF Multi-housing Flyer and the most current Multi-housing Financing Update. ATLANTA (44) AUSTIN (512) BOSTON (617) CAROLINAS (74) CHICAGO (312) DALLAS (214) DENVER (33) FLORHAM PARK (973) HOUSTON (713) INDIANAPOLIS (317) LOS ANGELES (31) MIAMI (35) NEW YORK CITY (212) ORANGE COUNTY (949) ORLANDO (47) PHILADELPHIA (484) PHOENIX (62) PITTSBURGH (412) PORTLAND (53) SAN DIEGO (858) SAN FRANCISCO (415) TAMPA (813) WASHINGTON, D.C. (22) LONDON Market data cited in this publication was derived from sources including Axiometrics, CommericalReal Estate Direct, Bloomberg, Real Capital Analytics, and HFF Research. 217 Holliday Fenoglio Fowler, L.P., HFF Real Estate Limited (collectively, HFF ), HFF Securities L.P. and HFF Securities Limited (collectively, HFFS ) are owned by HFF, Inc. (NYSE: HF). HFF and its affiliates operate out of 24 offices and are a leading provider of commercial real estate and capital markets services to the global commercial real estate industry. HFF, together with its affiliates, offers clients a fully integrated capital markets platform including debt placement, investment sales, equity placement, funds marketing, M&A and corporate advisory, loan sales and loan servicing. For more information please visit hfflp.com or follow HFF on Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp a California licensed real estate broker, California License # ( HFF ). Holliday Fenoglio Fowler, L.P. ( HFF ) a licensed Colorado, Florida, Illinois, New York and Pennsylvania real estate broker. Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp a Texas licensed real estate broker ( HFF ).