RALEIGH-DURHAM MULTIFAMILY Q Unprecedented Investment Sales Crush All-Time Records in Research & Forecast Report.

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1 Research & Forecast Report RALEIGH-DURHAM MULTIFAMILY Q Unprecedented Investment Sales Crush All-Time Records in 2015 Market Indicators Relative to prior period - Q Q Emily Bostic Research Associate - S Key Takeaways > > The - market reported $720M in total sales volume at the end of Q This represents a 24% jump in investment sales from the fourth quarter of > > Average asking rents were reported at $1,008 per unit, providing an 8.0% growth rate per year. > > Multifamily demand remains resilient in the - region. There were 4,657 units that were absorbed at the close of Total occupancy rates were reported at 94.7%. Market Overview The Triangle market of North Carolina has persistently reported strong employment growth numbers in recent years, a trend that continued through the close of The - region has experienced some of the fastest post-economic recession recovery in the United States with recovery trending even faster in 2015 than was reported in the previous year. As of November 2015, the Triangle unemployment rate was reported at 4.7% after the region added 5,700 jobs since the month of October. The rise in average rents continues and is among the fastest growing in the country. Among the biggest contributing factors to the consistent surge in market rents is the region s solid demand for rental property and the slight downturn in the number of new construction projects being delivered. The increasing number of millennials that now wish to rent is also coupled with a large expanding pool of single family renters and retirees. The multifamily market in the - region remains very robust. As the Triangle market continues to flourish in all sectors and capture more residents, investors recognize that this region offers substantial long-term capital growth opportunities. TRANSACTION ACTIVITY Summary Statistics Year End 2015 Total Inventory Market 127,985 Current Vacancy Rate 5.3% Total Occupancy Rate 94.7% Absorption Under Construction Deliveries 4,657 5,249 4,306 Cap Rate 5.9% Asking Rents Per Month Average Per Unit $1,008 Concessions 1.4% Percent Growth per Year 8.0% Average Per SF $1.05

2 Absorption & Leasing Activity > > Net demand is quite strong with 4,657 units absorbed over the last year in the - market. There were 4,306 new units completed during the same time period and 5,249 units under construction. The Class A market reported the highest absorption during Q with 3,158 total units. > > The region s occupancy rate was reported at an impressive 94.7% at the close of Increases in occupancy and demand are expected to continue well into Absorption Historical Year-to-Date Vacancy & Absorption 6,000 5,000 4,000 3,000 2,000 1, % 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Vacancy & Availability > > Overall vacancy in the Triangle multifamily market was reported at 5.3%. The largest vacancies were among studio units. The fourth quarter vacancy rate for studio units was 17.5%. > > The submarkets reporting the lowest vacancy rates in the Triangle region included, Northwest and Cary/Apex. Two bedroom units continued to obtain the lowest vacancy rates into the fourth quarter and close of The vacancy rate for two bedroom units in the Triangle was 4.5%. > > The Chatham submarket reported the highest vacancy rate at 10.5% with only 41 units absorbed since October. Rental Rates > > In the Triangle, average asking rents have grown by 8.0% since January The average market rental rate is currently $1,008 per month or $1.05 per square foot. > > Berkshire Main Street in s popular Ninth Street District, posted the highest rents per unit in Downtown at $2,056 per month or $1.87 per square foot. > > The highest rents in the Central submarket were reported at Skyhouse and Berkshire Cameron Village. Skyhouse is a new 320-unit development with rents averaging $2.33 per square foot. The Berkshire Cameron Village property reported average asking rents at $1,760 per unit or $1.93 per square foot Absorption 1,271 2,744 3,674 5,286 4,657 Vacancy % 5.5% 4.4% 6.1% 5.7% 5.3% Source: CoStar Historical Rental Trends by Class Avg. Asking Rent/Unit Class A Class B Class C Source: CoStar TRIANGLE SUMMARY BY UNIT MIX % ASKING Studio 17.5% $944 $ % > > Average Class A rents were $1,232 per unit with the highest concessions percentage (2.4%) of any other class. Class A rents will to continue to rise, although, the Class B sector will not fall far behind as the demand for Class B apartments increases over the next several quarters. One Two Three 5.4% $927 $ % $1,048 $1, % $1,198 $1, Research Report Q Multifamily Colliers International

3 2015 YEAR END TRIANGLE COMPARISON TOTAL INVENTORY ASKING CONCESSIONS UNDER DELIVERIES AVG. SALES PRICE WAKE COUNTY Central 17,142 $990 $ % 8.3% 909 1,674 1,302 $147,656 East 3,152 $946 $ % 3.6% ,678 $1,102 $1, % 3.7% $128,384 Northeast 17,562 $970 $ % 6.7% $157,749 Wake Forest/Rolesville 2,803 $1,060 $1, % 4.4% Northwest 12,046 $1,014 $1, % 7.0% $125,000 Cary/Apex 6,458 $1,134 $1, % 3.7% $150,514 3,710 $843 $ % 4.7% (4) 0 0 $51,563 DURHAM COUNTY Downtown 16,542 $1,002 $ % 4.3% 1, $262,7 East 4,171 $1,022 $1, % 3.6% ,197 $978 $ % 4.6% $78,470 ORANGE COUNTY Chapel Hill 2,296 $934 $ % 5.5% $163,750 JOHNSTON COUNTY Johnston 1,129 $973 $ % 3.2% CHATHAM COUNTY Chatham 390 $923 $ % 10.5% TRIANGLE MAP BURLINGTON Graham 85 Downtown 85 GRANVILLE CO. Orange CHAPEL HILL Carrboro ORANGE CO. DURHAM CO. 501 DURHAM 147 RESEARCH TRIANGLE PARK East RDU International Airport DURHAM CO. Northwest Northeast 5 FRANKLIN CO. Wake Forest Wake Forest/ Rolesville Chatham 64 CHATHAM CO. 5 Apex 1 64 CARY 4 Central RALEIGH East 264 Garner 1 Holly Springs Cary/Apex 70 Clayton Johnson Fuquay-Varina. JOHNSON CO. 3 - Research Report Q Multifamily Colliers International

4 Construction & Investment Activity > > Currently, the - region remains a very active market for new developments. Year-to-date units under construction total 5,249 in 24 buildings. While this does represent a 0.6% decrease from 2014, the market by no means is lacking in future or proposed developments. The number of units delivered in the fourth quarter totaled 289 and year-to-date deliveries for 2015 were reported at 4,306 units. > > For the third consecutive quarter, the Central submarket, which includes Downtown and the NC State University area, leads the market in construction activity. In the fourth quarter, there were 1,674 units under construction in Central and 213 units delievered. Year-to-date deliveries in the Central submarket totaled 1,302 units. > > One of the most anticipated developments in the Triangle market will be The Dillon, located in the Warehouse District of Downtown. The future seventeen story mixed-use project will consist of office, ground floor retail and a proposed total of 262 apartment units. The main entrance to the building will also face the future Union Station, a $80M city landmark. > > Multifamily investment activity in the Triangle region remains incredibly strong, reporting a 24% increase in sales since the close of The most notable transaction of the fourth quarter was the sale of Allister North Hills, a 434 unit mid-highrise project along the Six Forks North Hills corridor. The property sold for a near-record breaking $93,500,000 or $215,438 per unit. This per unit price is among the highest ever paid in the Triangle market. > > The - market has produced $720M in total volume of 17 multifamily property sales. There were 4,969 total units sold at an average price per unit of $158,379. Forecast > > The - market has continued to deliver nothing short of impressive statistics on all fronts. As 2016 approaches, investors will continue to have a strong interest in the entire Triangle region. While Class A sales and rents will continue to peak, the Class B and C sectors will prove they deserve part of the spotlight as many investors will pursue older, more suburban projects. NOTABLE SALES TRANSACTIONS Q PROPERTY Allister North Hills * Wolf Creek Parkside Place The Pointe at Chapel Hill PROPERTY TYPE SALES DATE SALES PRICE (MIL.) # UNITS PRICE PER UNIT ($) AVERAGE ASKING CAP RATE BUYER North Hills Mid-Rise December 2015 $93,500, $215,438 $1, % Heitman west Garden; Student Housing December 2015 $56,700, $147,656 $483 (per bed) - Vie at, LLC Garden November 2015 $52,500, $178,571 $1, % WJFS Inc. Chapel Hill Garden December 2015 $39,300,000 2 $163,750 $1, % The Connor Group Exchange at Brier Creek Mid-Rise October 2015 $37,390, $136,459 $ % Grayco Management Millbrook Green Northeast Garden November 2015 $29,700, $107,609 $9 5.64% Irinda Capital Source: CoStar *Colliers - Transaction. NOTE: Wolf Creek is a Student Housing property, therefore, the average asking rent of $483 is per bed not per unit. TRIANGLE SUMMARY BY CLASS TOTAL INVENTORY ASKING CONCESSIONS UNDER DELIVERIES AVG. SALES PRICE CLASS A 29,135 $1,232 $1, % 9.2% 3,158 4,048 3,538 $185,305 CLASS B 65,393 $990 $ % 4.3% 994 1, $119,589 CLASS C 33,467 $826 $ % 3.6% $99, Research Report Q Multifamily Colliers International

5 502 offices in 67 countries on 6 continents United States: 1 Canada: 31 Latin America: 24 Asia Pacific: 199 EMEA: 108 MULTIFAMILY SERVICES CONTACT: Steven Peden Senior Vice President Steven.Peden@colliers.com Brenna Campbell, CPRC, CPMC Financial Analyst/Senior Markeing Coordinator Brenna.M.Campbell@colliers.com REGIONAL AUTHOR: Emily W. Bostic Research Associate, CPRC Emily.Bostic@colliers.com $2.3 billion in annual revenue 1.7 billion square feet under management 16,300 professionals and staff About Colliers International Colliers International is a global leader in commercial real estate services, with more than 16,300 professionals operating out of 502 offices in 67 countries. A subsidiary of FirstService Corporation, Colliers International delivers a full range of services to real estate occupiers, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. Colliers International has been recognized and ranked by the International Association of Outsourcing Professionals Global Outsourcing 100 for 10 consecutive years, more than any other real estate services firm. colliers.com Copyright 2015 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.