MULTI-FAMILY MARKET. Presented by COLIN CONWAY, BROKER KIEMLE & HAGOOD COMPANY

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1 Presented by COLIN CONWAY, BROKER KIEMLE & HAGOOD COMPANY

2 One out of three Americans rent; One out of three renters lives in an apartment. *Source: The Trillion Dollar Apartment Industry That s 35 million residents. KHCO.COM

3 Na:onal Apartment Associa:on and Na:onal Mul:- Family Housing Council partnered with Stephen Fuller and George Mason University s Center for Regional Analysis to determine the economic impact of the 35 million resident of apartment communi:es. MULTI-FAMILY MARKET

4 In 2011, apartments and their residents generated an esrmated $1.1 trillion contriburon to the naronal economy and supported 25.4 million jobs. *Source: The Trillion Dollar Apartment Industry

5 As many as 7 million new renter households could be created this decade about half of all new households likely to be formed. *Source: The Trillion Dollar Apartment Industry

6 NaRonal Homeownership 70% 68% 69.2% 66% 64% 65.5% 62% 4Q2004 3Q2012 *Source: US Census Bureau

7 Each percentage point decline in home ownership = approximately 1.1 million households to the rental market. *Source: US Census Bureau

8 Spokane Average Rental Rates All Units $720 $720 $710 $700 $690 $680 $670 $665 $683 $678 $660 $ *Source: Washington Center for Real Estate University of Washington

9 Spokane Market Rental Rates - Unit Type $1,000 $800 $600 $539 $622 $700 $812 $769 $912 $400 $200 $0 Studio *Source: Washington Center for Real Estate University of Washington 1bd/1ba 2bd/1ba 2bd/2ba 3bd/1ba 3bd/2ba

10 According to Apartment Guide, what market currently has the highest rent in the naron for a 700 square foot, 1 bedroom apartment? *Source: Apartment Guide and Spokesman Review

11 $2,500 $2,394 MULTI-FAMILY MARKET Average Monthly Rent 1 Bedroom $2,000 $1,500 $1,000 $500 $622 $0

12 NaRonal Overall CapitalizaRon Rate Trends Spokane Cap Rates are points higher (high 6 to low 7) OVERALL CAPITALIZATION RATE TRENDS National Apartment Market Change Quarter Average (Basis Points) 1Q % 4 2Q % - 4 3Q % 11 4Q % 27 1Q % 75 2Q % 61 3Q % 35 4Q % 19 1Q % Q % Q % Q % Q % Q % Q % Q % 3 1Q % 3 2Q % - 7 3Q % - 2 4Q % - 2 1Q % 1 2Q % - 3 3Q % - 9 4Q % 19 Source: PwC Real Estate Investor Survey *Source: PwC Real Estate Survey 2Q11 is averag e of 3 reg ions 3Q11 is averag e of 3 reg ions Q % Q % - 242

13 NaRonal Overall Cap Rate Trends 8% 7% 6% 5% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 *Source: PwC Real Estate Survey

14 AFFORDABILITY All Other Expenses 30% Rent ü 50% of U.S. Renters pay 1/3 or more of their income on rent ü Up 12% points from a decade ago *Source: Harvard University Joint Center for Housing Studies & Journal of Business

15 ü 27% of renters pay ½ of their income on rent. All Other Expenses 50% Rent ü A decade ago it was 19%. *Source: Harvard University Joint Center for Housing Studies & Journal of Business

16 The shornall in the number of units affordable to extremely low- income renters in the U.S. those earning no more that 30% of the area median more than doubled from 1.9 million in 2001 to 4.9 million in million 4.9 million *Source: Harvard University Joint Center for Housing Studies & Journal of Business

17 MICRO UNITS ü Trending in major metropolitan areas ü In response to limited supply and increasing costs. ü As small as 200 square feet ü Targets the millennial popularon and empty nester.

18 DEMAND ü NaRonally, mulr- family starts in 2009 hit a low of 97,300 new units ü The esrmated number of units needed annually is 300,000 to meet new demand.

19 SPOKANE What is under construcron right now?

20 Completed and Under ConstrucRon Projects in Spokane *Source: Valbridge Property Advisors Spokane County: New, Permitted and Proposed Apartment Construction Complete 2011 The Reserve at Shelley Lake Spokane Valley 256 Permitted 2010, C omplete 2011 Pine Valley Ranch Spokane Valley 256 Permitted 2010, C omplete 2011 East Nora Northeast Spokane 14 Permitted 2010, C omplete 2011 Ridge at Midway North Spokane 180 Permitted 2010, C omplete 2011 Alki Street C heney 16 Permitted 2011, C omplete 2011 North Sullivan Road Spokane Valley 12 Permitted 2011, C omplete Complete 2012 Montrose Townhouses South Spokane 8 Permitted 2011, C omplete 2012 Affinity at South Hill ( 55+ ) South Hill 150 Permitted 2011, Complete 2012 Affinity at Mill Road (62+ ) North Spokane 150 Permitted 2011, Complete 2012 Eagle Point II C heney 132 Permitted 2011, C omplete 2012 Copper Hill South Spokane 232 Permitted 2011, Complete th Avenue on the South H ill* South Spokane 120 Permitted 2012, C omplete 2012 Father Bach H aven* CBD Spokane 51 Permitted 2012, C omplete 2012 Sylvan Place* North Spokane 15 Permitted 2012, C omplete Complete 2013 Orchards Townhouses Spokane Valley 27 Permitted 2012, C omplete 2013, lease- up H omestead Apartments (Phase I) Spokane Valley 120 Permitted 2012, C omplete 2013, lease- up River H ouse Apartments (Phase I) Spokane Valley 216 Permitted 2012, C omplete 2013, lease- up C ourtyard at River District Liberty Lake 47 Permitted 2012, C omplete 2013, lease- up C anyon Bluff Apartments Southwest Spokane 48 Re- Permitted 2013, C omplete 2013, lease- up Sprague Union Terrace* C BD Periphery 37 Permitted 2012, C omplete 2013, lease- up Bridgeway Apartments C BD Periphery 84 Permitted 2012, C omplete 2013, lease- up Alki Street Townhouses C heney 16 Permitted 2010, C omplete 2013, lease- up BroadWing Apartments* Liberty Lake 51 Permitted 2013, C omplete 2013, lease- up C lare View Apartments* South Spokane 61 Permitted 2013, C omplete 2013, lease- up 707 Complete 2014 to- date North C incinatti Street North Spokane 24 Permitted 2012, C omplete 2014 Appleway C ourt (Phase II)* Spokane Valley 24 Permitted 2013, C omplete Permitted/Under Construction C edar C rossing North Spokane 36 Permitted 2012, nearing completion Mirabolante Spokane Valley 234 Permitted 2013, ground work started Cottages at River Run (Phases I & II) Spokane 130 Permitted 2013, ground work started Wandermere Glen North Spokane 48 Permitted 2013, under construction H ighline West Apartments C BD Periphery 56 Permitted 2013, inactive site work Broadway Villas Spokane Valley 42 Permitted 2013, ground work started (phased project) Homestead Apartments (Phase II) Spokane Valley 128 Permitted 2013, under construction Copper Landing Apartments* Airway Heights 216 Permitting NOT required (Tribal Land), under construction Granite Pointe (Phase II) Spokane Valley 236 Permitted 2013, inactive site work 1126 Proposed, Likely H omestead Apartments (Phase II) Spokane Valley 140 Proposed - status unknown (Likely) River House Apartments (Phases II & III) Spokane Valley 120 Proposed - status unknown (Likely) 260 Proposed, Other Vistas at Beacon Hill East Spokane 256 Proposed - status unknown Canyon Pointe West Spokane 144 Proposed - status unknown Naccarato Project Airway Heights 216 Proposed - project currently "shelved" Eagle Point Remainder Cheney 204 Proposed - status unknown 820 Total 4,553 * Subsidized/Low- Income Ridpath H otel CBD Spokane 200+ /- Envisioned

21 Completed and Under ConstrucRon Projects (by Units) *Source: Valbridge Property Advisors

22 Proposed and Under ConstrucRon Projects in Kootenai County PROPOSED PROPERTIES - KOOTENAI COUNTY, IDAHO Units Anticipated Name Total Market Restricted Completion Date Telerico Apartments 14 un 14 un Proposed Fall 2013 Proposed 20-Unit - Martin Lane 20 un 20 un Proposed Fall 2013 Riverview Apts, Phase 2, Seltice Way 94 un 94 un Under Construction Carrington at Waterford, Phase 1 60 un 60 un Rent-Up Carrington at Waterford, Phase 2 72 un 72 un Proposed Residence at Mill River 93 un 93 un Under Construction John O'Brien House 14 un 14 un Proposed Fall 2013 Fairway Meadows 80 un 80 un Under Construction Glacier Trail 30 un 30 un Proposed Riverstone Place 114 units Riverstone West III 38 un 8 un 30 un Under Construction Hudson Park Apartments 60 un 7 un 53 un Proposed Montrose Condos 18 un 18 un Proposed Affinity at CDA, Senior 102 un Proposed/Hold Totals 575 un 478 un 97 un

23 Sale Date Property Address # of Units TRANSACTIONS OF NOTE Sale Price Price/Unit 2/2013 Park Place 916 N Ella Rd 60 $3,365,000 $56,083 2/2013 Amberwood 3030 S Clinton Rd 51 $2,672,000 $52,392 4/2013 Park Place (CDA) 3825 Ramsey Rd 150 $8,600,000 $57,333 6/2013 Willow Brook E Maxwell 110 $6,850,000 $62,273 7/2013 Whispering Pines 3002 E 30 th Ave 55 $2,560,000 $46,545 10/ Pines 3010 S Pines Rd 72 $3,500,000 $48, /2013 Big Trout Lodge E Country Vista Rd 297 $29,819,000 $100,403

24 TRENDS ü Apartments remain a stable investment. ü It will remain a seller s market for the next year.

25 THANK YOU