Capital Markets UpdateTM MULTIFAMILY EDITION SPECIAL FEATURE: SENIOR HOUSING OUTLOOK SECOND QUARTER 2014

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1 Capital Markets UpdateTM MULTIFAMILY EDITION SPECIAL FEATURE: SENIOR HOUSING OUTLOOK SECOND QUARTER 2014 a Berkshire Hathaway and Leucadia National Company

2 MARKET ACTIVITY SECOND QUARTER 2014 MULTIFAMILY EDITION A Sampling of Recently Closed Senior Housing Loans $91,223,500 North Carolina 1,270 Units $87,611,200 California, Texas 1,543 Units $172,125,000 Illinois, Missouri, New York, Ohio 873 Units HUD / FHA Financing HUD / FHA Financing $8,471,750 Georgia 64 Units $9,159,000 Arizona 135 Units $49,312,500 Oregon 292 Units Berkadia Proprietary Financing $11,850,000 Wisconsin 82 Units $8,563,800 Texas 60 Units $8,775,000 Virginia 121 Units HUD / FHA Financing Berkadia Proprietary Financing $23,377,900 Florida 159 Units $13,492,000 California, Indiana, Michigan 163 Units $23,752,000 Colorado, Texas, Washington 140 Units

3 Berkadia is jointly owned by Berkshire Hathaway and Leucadia National Corporation. Berkadia is a leading multifamily investment sales, advisory and research provider, as well as a principal and intermediary, providing debt and equity solutions for multifamily and commercial real estate nationwide and a highly rated master, primary and special servicer managing a portfolio of more than $230 billion. Berkadia is a Freddie Mac Program Plus lender, Fannie Mae DUS Multifamily Seller/Servicer and HUD, MAP and LEAN originator and servicer. We are a correspondent for 40 insurance companies for which we originate and service loans, providing non-recourse fixed rate, short, intermediate and long term debt. We have origination and servicing agreements with the major CMBS conduits. Berkadia is also a proprietary bridge lender, leveraging our balance sheet capabilities. In 2013, our investment sales and debt placement totaled $15 billion. As a nonbank-regulated, closely held corporation, Berkadia has the flexibility to quickly respond to ever-changing market dynamics and the ability to customize finance solutions to meet our customers needs. Berkadia s origination professionals provide acquisition, refinance or rehabilitation capital for: Multifamily Retail Office Industrial Medical Office Seniors Housing Health Care Self-Storage Student Housing Hospitality Land Manufactured Housing Berkadia has 75 offices in the U.S., in addition to a wholly owned operation in India, and over 1,300 employees worldwide. Berkadia offers clients the most dynamic multifamily and commercial debt market platforms. The company s Marketing and Research Center provides advisory, research and capital markets services powered by empirical research, realtime market data and specialized expertise. This full range of services from acquisition to disposition is a complete life-cycle solution spanning all commercial property types, and is delivered with quality, flexibility, customer focus and satisfaction. Our leadership position in the industry assures the development of initiatives that will grow existing relationships, build new ones and create opportunities for all our customers.

4 CAPITAL MARKETS UPDATE TM SECOND QUARTER 2014 MULTIFAMILY EDITION ECONOMIC & CAPITAL MARKET TRENDS The U.S. labor market showed resilience during the first two quarters of the year. Total employment expanded by 1.4 million workers year to date through June, the most significant six-month expansion since Businesses also finally recouped the jobs shed during the downturn, with second-quarter headcounts exceeding the prerecession peak by 430,000 jobs. Furthering positive expectations for the second half of 2014, the JOLTS report, a job-openings measure and one of the indicators on the Federal Reserve s economic dashboard, reached a postrecession high of 4.6 million positions, portending continued hiring stability. GDP performance tempered economic news, as GDP declined 2.1% in the first quarter. Transient factors such as the harsh winter impeded construction and home sales, leading to a 4.2% reduction in residential fixed investments. Despite the overall drop, the preliminary second-quarter GDP reading put growth at a sizable 4%. Additionally, GDP expansion is expected through the remainder of The Fed estimates full-year 2014 GDP growth in the low- 2% range. The Fed maintains a watchful eye on inflation, following the 30-basis-point annual rise in the consumer price index to 2.1% in June. Nevertheless, inflation hovers at acceptable levels. Tapering of quantitative easing persists, with the Fed cutting bond purchases by another $10 billion following their June meeting. Low interest rates are perpetuating the flow of capital which has facilitated business and investor confidence. SENIOR HOUSING DEMOGRAPHICS* Percentage Change in Population 25% 20% 15% 10% 5% 0% Percent Change: 75-Year Old + Percent Change: U.S. Absolute Change: 75-Year Old * Forecast Source: Berkadia Research, ESRI, Moody s Analytics Historically low interest rates and favorable demographic trends sustained senior housing investment. Compared to nationwide growth of 0.7% per year, the quickly growing 75-year old and older cohort is expected to increase by almost 685,000 people, or 2.9%, annually through Additionally, as home prices advance and negative equity dissipates, older homeowners will be able to sell and move into retirement communities. Not surprisingly, senior housingdeal flow remains elevated. In 2013, the number of senior housing properties sold surged 27.9% compared to the prior year according to NIC MAP. In the first two quarters of 2014, senior housing-asset trades were up 2% compared to the same period last year Absolute Change: 75-Year Old + (mil) INTEREST & TREASURY RATES ECONOMIC TRENDS * 2Q YTD Estimate Source: Berkadia Research, Federal Reserve, Real Capital Analytics * Forecast Source: Berkadia Research, BEA, BLS DEMOGRAPHICS & APARTMENT SUPPLY INVESTMENT SALES VELOCITY & RETURNS * * 2Q YTD Estimate Source: Berkadia Research, Axiometrics, BEA * All Multifamily Sales 100+ Units; ** 2Q YTD Estimate Source: Berkadia Research, Axiometrics, CoStar Inc.

5 MARKET ACTIVITY GSE lending ramped up 15.2% quarter over quarter, as the GSEs were more flexible with loan criteria following lower than anticipated lending earlier in the year. In particular, flexible-rate mortgages were offered with terms of Libor plus 1.7% to 2.5% on partial-interest payment loans or Libor plus up to 2% on interestonly loans. The GSEs maintained loan to values of 75% for most loans, but offered as high as 80% for top-tier assets. Debt service coverage was between 1.3 and 1.45, but some originations were as low as 1.0 for an adjustable-rate, seven- to 10-year term. Fannie Mae typically offered longer terms, yet both were flexible on loan length depending on the asset and sponsor. CMBS lending decreased 8% so far this year compared to the first half of A majority of the loans were offered with a fixedrate,10-year term; though, shorter terms were available with a higher DSCR. Lending was typically at the 75% LTV level or below, while DSCRs ranged from 1.25 to Meanwhile, life company originations were elevated, due to increasing life company allocations for multifamily loans. Life company issuance was up 1.8% in the first two quarters of this year, compared to the first half of Although LTV requirements of 60% to 70% precluded some borrowers, more flexible loan options and a willingness to lend for quality assets maintained velocity. Alternately, among bank lenders, LTVs were offered in the mid- to low-70% range for quality apartment product, while requiring DSCRs between 1.25 to 1.5 for five- to 10-year terms. MULTIFAMILY MORTGAGE ORIGINATIONS * 2Q YTD Estimate Source: Berkadia Research, BEA, Real Capital Analytics In the senior housing investment arena, HUD lending remained popular due to the longer 30- to 40-year terms, with a maximum LTV of 80% based on a 1.45 DSCR. Freddie Mac offered loans with a 10-year term, 75% LTV and minimum DSCR of 1.3 to 1.45 for assets with occupancies of at least 85%. Likewise, Fannie Mae offered similar loan criteria, but required 90% occupancy. According to NIC MAP, senior housing investment accelerated in secondary and tertiary metros, with the number of property sales rising 7.3% in this segment year to date compared to the same time in Deal flow, for example, accelerated significantly in Sacramento, Salt Lake City, central California and several tertiary Florida and Wisconsin markets. GSE QUARTERLY ISSUANCE * CMBS QUARTERLY ISSUANCE * * Single- and Multifamily Issuance; ** Forecast Source: Berkadia Research, Fannie Mae, Freddie Mac * Multifamily and Commercial Issuance; ** Forecast Source: Berkadia Research, Mortgage Bankers Assocation LIFE INSURANCE QUARTERLY ISSUANCE * MULTIFAMILY DELINQUENCIES * 10-Year Average: 6.5% Forecast * Multifamily and Commercial Issuance; ** Forecast Source: Berkadia Research, Mortgage Bankers Assocation * CMBS: 30+ days delinquent & REO; Life Companies & GSE: 60+ days delinquent; Banks & Thrifts: 90+ days delinquent; ** Forecast Source: Berkadia Research, Mortgage Bankers Assocation For a full list of sources please visit: ApartmentUpdate.com/Sources

6 CAPITAL MARKETS UPDATE TM SECOND QUARTER 2014 MULTIFAMILY EDITION SOUTHWEST REGION Regional Sampling of Berkadia Apartment Loan Closings # OF UNITS LOCATION LOAN AMOUNT PER UNIT FINANCE NOTE 362 Units Arizona $69,975,000 $193,301 Bank Financing: 36-Month Term, Adjustable, 65% LTV 300 Units Texas $21,937,500 $73,125 : 84-Month Term, Fixed, 75% LTV 224 Units Arizona $16,134,000 $72,027 Life Company Financing: 60-Month Term, Fixed, 65% LTV 144 Units Colorado $16,000,000 $111,111 : 120-Month Term, Fixed, 55% LTV MIDWEST REGION # OF UNITS LOCATION LOAN AMOUNT PER UNIT FINANCE NOTE 170 Units Illinois $33,300,000 $195,882 Conduit Financing: 120-Month Term, Fixed, 75% LTV 356 Units Indiana $16,837,500 $47,296 Life Company Financing: 120-Month Term, Fixed, 55% LTV 288 Units Michigan $15,577,100 $54,087 HUD Financing: 420-Month Term, Fixed, 83.3% LTV 100 Units Missouri $7,400,000 $74,000 : 120-Month Term, Fixed, 80% LTV WESTERN REGION # OF UNITS LOCATION LOAN AMOUNT PER UNIT FINANCE NOTE 309 Units California $40,442,000 $130,880 : 84-Month Term, Fixed, 65% LTV 163 Units Washington $11,717,600 $71,887 HUD Financing: 420-Month Term, Fixed, 80% LTV 88 Units California $7,250,000 $82,386 Conduit Financing: 120-Month Term, Fixed, 75% LTV 84 Units Oregon $5,915,000 $70,417 : 84-Month Term, Fixed, 65% LTV EASTERN REGION # OF UNITS LOCATION LOAN AMOUNT PER UNIT FINANCE NOTE 300 Units Florida $40,000,000 $133,333 Conduit Financing: 132-Month Term, Fixed, 75% LTV 645 Units Pennsylvania $26,500,000 $41,085 Life Company Financing: 240-Month Term, Fixed, 74% LTV 248 Units Georgia $15,450,000 $62,298 : 120-Month Term, Fixed, 80% LTV 106 Units New York $9,525,600 $89,864 HUD Financing: 420-Month Term, Fixed, 80% LTV

7 RECENT MULTIFAMILY SALES 1,022 UNITS BUILT 1975/87 $84,000, UNITS BUILT 2000 $44,500, UNITS BUILT 1969/79 $44,500, UNITS BUILT 2013 $43,000,000 Ypsilanti, Michigan Dallas, Texas Cleveland, Ohio Las Vegas, Nevada Institutional Owner Institutional Owner Private Investor Apartment Developer 280 UNITS BUILT 2011 $40,800, UNITS BUILT 2012 $37,500, UNITS BUILT 2003 $35,500, UNITS BUILT 1972 $33,300,000 Lafayette, Louisiana San Antonio, Texas Columbus, Ohio Pullman, Washington Apartment Developer Private Investor Private Investment Company Private Investment Company 118 UNITS BUILT 2012 $33,000, UNITS BUILT 2003 $28,000, UNITS BUILT 1909 $25,000, UNITS BUILT 1990 $23,000,000 Seattle, Washington Canton, Georgia Salt Lake City, Utah Plant City, Florida Apartment Developer Institutional Owner Private Investor Institutional Investor NEW 2014 MULTIFAMILY LISTINGS 1,187 Units Built 1970 Atlanta, GA 300 Units Built 2009 Albuquerque, NM 240 Units $42,650,000 Built 2013 Tulsa, OK 600 Units Built 1986 Dallas, TX 260 Units Built 2008 Little Rock, AR 204 Units $31,000,000 Built 2011 Riverside, CA 510 Units Built 1968 Indianapolis, IN 68 Units $20,000,000 Built 2012 Corvallis, OR 140 Units $20,000,000 Built 2005 Bermuda Dunes, CA 230 Units $18,500,000 Built 1974 Fresno, CA 430 Units Built 1986 Orlando, FL 426 Units Built 2007 Las Vegas, NV 317 Units $16,500,000 Built 1981 Las Vegas, NV 412 Units Built 1964 St. Louis, MO 378 Units Built 1960 El Paso, TX 351 Units Built 1949 Seattle, WA 296 Units $11,800,000 Built 1973 Columbia, SC 304 Units Built 2005 Moreno Valley, CA 184 Units $11,000,000 Built 1984 Corning, CA 306 Units Built 1987 Tempe, AZ For More Information Please Call

8 ALBUQUERQUE, NM ATLANTA, GA AUSTIN, TX BAKERSFIELD, CA BATON ROUGE, LA BETHESDA, MD BIRMINGHAM, AL BOCA RATON, FL BOSTON, MA CAMAS, WA CHICAGO, IL CHARLESTON, SC COLORADO SPRINGS, CO DALLAS, TX DENVER, CO DETROIT, MI FRESNO, CA HORSHAM, PA HOUSTON, TX INLAND EMPIRE, CA IRVINE, CA JACKSON, MS JACKSONVILLE, FL KANSAS CITY, MO LAS VEGAS, NV LENOX, MA LITTLE ROCK, AR LOS ANGELES, CA LOS ANGELES-NORTH, CA LOS ANGELES-SOUTH BAY, CA LOS ANGELES-WEST, CA MIAMI, FL NEWPORT BEACH, CA NEWPORT NEWS, VA NEW YORK, NY OAKLAND, CA OKLAHOMA CITY, OK ONTARIO, CA ORANGE COUNTY, CA ORLANDO, FL PASADENA, CA PHOENIX, AZ PHILADELPHIA, PA PLANO, TX PORTLAND, OR RALEIGH, NC RICHMOND, VA SACRAMENTO, CA SALT LAKE CITY, UT SAN ANTONIO, TX SAN DIEGO, CA SAN FRANCISCO, CA SCOTTSDALE, AZ SEATTLE, WA SHREWSBURY, NJ ST. LOUIS, MO TACOMA, WA TAMPA, FL TEMPE, AZ TROY, MI TUCSON, AZ TULSA, OK HYDERABAD - INDIA Some locations do not currently provide both investment sales and mortgage banking services a Berkshire Hathaway and Leucadia National Company