THE DAKOTA RALEIGH, NORTH CAROLINA 314-UNIT LUXURY APARTMENT

THE DAKOTA RALEIGH, NORTH CAROLINA 314-UNIT LUXURY APARTMENT

THE DAKOTA RALEIGH, NORTH CAROLINA Recently completed urban garden community generating outstanding rapid lease-up in one of the Triangle s fastest growing and wealthiest zip codes THE DAKOTA 2

Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp., a North Carolina licensed real estate broker ( HFF ), has been retained as the exclusive sales representative for The Dakota in Raleigh, North Carolina. The Dakota (or the Property ) is a newly-constructed 314-unit urban garden apartment community generating outstanding leasing velocity, with 41 net leases signed in May. Due to its wide array of high-quality amenities and features including Nest Thermostats in all units, Google Fiber, a swimming pool with aqua deck, and grand athletic club, the Property appeals to young professionals in the area with disposable income. Moreover, The Dakota is extremely well-located with great access to I-40 (176,000 VPD), connecting residents to maor employers in the area including the Research Triangle Park (50,000+ employees) and Downtown Raleigh (45,000+ employees). The Property s West Raleigh neighborhood is affluent, boasting average home values of $296,000+ and average household incomes near $100,000 within a one-mile radius of the Property. The Dakota presents an excellent opportunity for new ownership to expand its footprint in one of the fastest-growing, technologycentric metros in the United States. INVESTMENT SUMMARY Address 1201 Pine Haven Drive Raleigh, NC 27607 Wake County Pins 0774853398 Year Built 2018 Acreage 14.3 No. of Units 314 Denisty (units/acre) 21.90 Avg. Unit Size 971 Total Square Feet 304,894 CURRENT OPERATIONS (AS OF 6/11/2018) Current Leased % 80% In Place Market Rent $1,312 Effective Rent PSF $1.35 THE DAKOTA 3

OUTSTANDING LEASING VELOCITY DUE TO SUPERIOR DESIGN ELEMENTS FUTURE DRIVE SHACK GOLF $15-20M proect, 65 acres SAS HEADQUARTERS 5,500+ employees 176,000 VPD 40 40 SINGLE FAMILY HOMES $300k+ WADE AVENUE 98,000 VPD THE OFFICES AT WADE 200,000 sq.ft. Class A Office Space The Dakota is witnessing rapid leasing velocity during this Spring/Summer leasing season, with 41 net leases signed in May. The Property s amenities were not delivered until February/March 2018, posing a potential lease-up challenge prior to delivery; however, as a testament to product demand, the Property is already 76% leased, as of the end of May. Renters demand for this product is largely due to its strategic location near employment centers and its modern design elements, appealing to young professionals with disposable income. Amenities include a modern pool with an aqua tanning deck, shaded poolside bar with grilling stations, clubroom with a culinary-inspired kitchen and bar, a dog park, Google Fiber, and an oversized fitness center. High-quality unit features include Nest thermostats, stainless steel appliances, large walk-in closets, vinyl plank flooring, shaker style cabinets, granite countertops, and under mount single-basin kitchen sinks. THE DAKOTA WELLS FARGO OFFICES 450,000+ SF Class A Office Space 500+ employees TRINITY CORPORATE PARK 193,000 sq.ft. Class A Office Space 600+ employees CENTENNIAL OFFICE PLAZA 42,000 sq.ft. Class B Office Space NC STATE UNIVERSITY 8 minutes $6.5B+ economic impact 34,000+ students, 9,000 faculty THE DAKOTA 4 CARDINAL GIBBONS HIGH SCHOOL TRINITY PLACE 115,000 sq.ft. Class A Office Space FLOURISHING RALEIGH MARKET DRIVEN BY OUTSIZED JOB AND POPULATION GROWTH Raleigh is consistently ranked one of the fastest growing large metros in the United States, and since 2000, the population in Wake County has grown by nearly 72.0% adding more than 451,000 residents during that time. Impressively, 51.3% of the local workforce has obtained a college degree or better, a stat that bodes well for future employment growth. Moreover, The Milken Institute recently ranked Raleigh as the No. 2 Best Performing Large City in its January 2018 annual report on Where America s Jobs are Created and Sustained. Raleigh is noted for its business-friendly environment, high-tech GDP growth, and comparably low cost of living. These forces have created an economy that is twice as concentrated in high-tech industries as the US average. THE DAKOTA 4

NORTH HILLS 630,000 sq.ft. Class A office space MEREDITH COLLEGE 2,000+ students, 133 full-time teaching faculty members DOWNTOWN RALEIGH 17-minute drive, 45,000+ employees, 7M+ sq.ft. office space UNC REX HEALTHCARE 6,400 staff members NORTH CAROLINA MUSEUM OF ART & ANN AND JIM GOODNIGHT MUSEUM PARK 40 galleries and 164-acre park 440 NC STATE WEST CAMPUS & CENTENNIAL BIOMEDICAL CAMPUS NC STATE UNIVERSITY Main Campus 34,000+ students, 9,000+ faculty and staff NC STATE UNIVERSITY Centennial Campus WADE AVENUE 98,000 VPD PNC ARENA Home of NC State s men s basketball team CARTER-FINLEY STADIUM Home to NC State s football team TRINITY PLACE 115,000 sq.ft. Class A Office Space TRINITY CORPORATE PARK 193,000 sq.ft. Class A Office Space CENTENNIAL OFFICE PLAZA 42,000 sq.ft. Class B Office Space WELLS FARGO OFFICES 450,000+ SF Class A Office Space FUTURE DRIVE SHACK GOLF $15-20M proect, 65 acres IMPRESSIVE SUBMARKET FUNDAMENTALS FOR APARTMENT OWNERS The Dakota is in the North Cary/Morrisville submarket according to CoStar where similar vintage properties boast impressive occupancy levels and 4.5% annual rent growth since 2015. Moreover, according to Real Data, the greater Raleigh area s vacancy rates are expected to drop to below 6.0% signifying strong multifamily demand in a market with a limited supply pipeline. LIMITED DEVELOPMENT PIPELINE IN A HIGH BARRIERS TO ENTRY MARKET MEREDITH COLLEGE UNDEVELOPED LAND HOLDINGS UNDEVELOPED LAND HOLDINGS The Dakota is the only urban garden community within the area, and its true comparable property (Leigh House) is 3.5 miles away. Much of the land surrounding the Property is owned by NC State University, inhibiting competition and limiting the development pipeline. The Dakota is incredibly well-positioned as a great long-term investment with strong demand (48 net leases signed in April) and limited supply within the submarket. THE DAKOTA 5

RENT UPSIDE JUSTIFYING GREATER YIELDS UV 54 DURHAM CISCO 540 540 Rising rent profile in Downtown Raleigh and North Hills The average rent PSF throughout the Raleigh-Durham CSA has risen 24% since early 2014, from $0.93 to $1.15 in early 2018, according to Real Data. This is due largely to natural rent growth and the delivery of new luxury communities in the Downtown and North Hills areas, commanding rents at $2 PSF and above. These new luxury communities include Park Central ($2.55 PSF), SkyHouse Raleigh ($2.22 PSF), and Link Glenwood South ($2.10 PSF). These newly built luxury communities are signaling a higher-paying demographic in the Raleigh area, boosting the rent profile throughout the entire CSA. RESEARCH TRIANGLE PARK SAS UNC REX HEALTHCARE 440 Lack of development pipeline surrounding the Dakota In The Dakota s West Raleigh submarket, there are no scheduled unit deliveries through 2020. There are two proposed communities, but delivery would not occur until at least 2021, if they are capitalized. Downtown Durham and North Chapel Hill, in comparison, have 962 and 1,080 units delivering through the remainder of 2018 and 2019, respectively. UV 55 CARY W E LL S FARGO TIMMONS GROUP NC STATE UNIVERSITY RALEIGH REDHAT DUKE UNIVERSITY HEALTH SYSTEM PHREESIA CITY OF RALEIGH Rising Home Prices Create Barrier to Ownership Average home prices in Wake County have risen 7.5% since 2016 due to increased demand and a fairly stable supply. The number of households within Wake County has increased 72% since 2000, in comparison to 32% household growth in North Carolina. This influx of new home-seekers are driving prices up in the market, now more than $320,000 per home, on average. Renting provides a more costeffective alternative for many who are unable to purchase a home, where the total cost of home ownership on the average home value in Wake County equates to a total monthly cost of more than $2,000. Exceptional leasing velocity unhindered by amenities construction The Dakota is experiencing phenomenal leasing velocity, already more than 75% leased. The Property only recently had full amenities deliver in February/March 2018, a testament to the strong demand for the specific property type within the West Raleigh submarket. STRONG TENANT DEMOGRAPHICS WITH HIGH-QUALITY EMPLOYERS The median income amongst working residents at The Dakota is nearly $80,000, and the ob employment industries indicate a high level of education. The largest ob types are, from greatest to least, Professional, Technology, IT, Medical/Healthcare, and Finance. Given The Dakota s proximity to a number of ob clusters, the largest tenant employers are, Cisco, SAS, Wells Fargo, and UNC Rex Healthcare. Tenants proximity to their employers bodes well for tenant retention and leasing to other employees at the same companies. THE DAKOTA 6

PRIME CONNECTIVITY WITH ACCESS TO SIGNIFICANT JOB CENTERS The Dakota has great access to a large number of employers, including the proximate West Parkway obs hub (15,000+ employees) with SAS and MetLife, UNC Rex Hospital (6,400 staff members), and other regional employers easily accesible via I-440 (176,000 VPD) and I-40 (110,000 VPD). Those other ob clusters include Downtown Raleigh with Red Hat, Citrix, Duke Energy Progress, and the NC Capitol (45,000 employees) and the Research Triangle Park, home to 300+ companies (50,000+ employees). Jobs at the RTP (a 16-minute drive from The Dakota) are in healthcare, technology and finance, and the combined annual salaries of RTP employees alone exceed $2.7 billion. PROXIMITY TO LEADING NORTH CAROLINA STATE UNIVERSITY () Residents at The Dakota can access the University s 20 colleges within a 10-minute drive. has more than 34,000 students and 9,000 faculty and staff members. Its estimated economic impact in the region tops $6.5 billion. Moreover, s Centennial Campus is a leading facility for public-private partnerships in research, education, and innovation, dubbed, the library of the future, by Time magazine. There are currently 76 industry, government and nonprofit partners on Campus, and that number will grow, as the site encompasses 32 acres. DURHAM UV 147 RESEARCH TRIANGLE UV 54 PARK 50,000+ full-time employees, 10,000 contract workers TRIANGLE EXPWY 29,000 VPD UV 55 64 APEX RALEIGH-DURHAM INTERNATIONAL AIRPORT 50 destinations, 400 average daily departures 540 1 I-40 176,000 VPD WESTON PARKWAY 15,000+ employees CARY 540 THE DAKOTA I-40 110,000 VPD CENTER OF INNOVATION BUSINESS. ACADEMIA. GOVERNMENT. 1,500+ INTERNATIONAL PATENTS 400+ CONSUMERS PRODUCTS 125+ STARTUPS LAUNCHED MAJOR INDUSTRIES STEM, healthcare, education, government, and professional services 5 MILES WADE AVENUE 81,000 VPD 1 MILE 440 UV 50 NC STATE UNIVERSITY 34,000+ students NATIONALLY RANKED I-540 102,000 VPD TOP 25 SCHOOLS AT NC STATE INCLUDE: Veterinary Medicine, Statistics, Computer Engineering, Biological / Agricultural Engineering, Chemical Engineering, Civil Engineering, Nuclear Engineering, Environmental / Environmental Health, Materials Engineering, Industrial / Manufacturing, Textiles, Agricultural Economics & Policy I-440 178,000 VPD DOWNTOWN RALEIGH 45,000+ employees 440 RALEIGH 1 40 POSITIONED FOR GROWTH 2025 ENROLLMENT PLAN Outlines strategies for fulfilling NC State s mission to serve the people of North Carolina and its special role within the UNC system as a researchextensive university. 1 THE DAKOTA 7

OUTSTANDING DEMOGRAPHICS SURROUNDING PROPERTY DEMOGRAPHIC SNAPSHOT POPULATION 1 MILE 3 MILE 5 MILE 2017 Estimate 5,703 68,417 204,250 2000 Census 2,768 51,372 146,137 CAGR 2000-2017 4.3% 1.7% 2.0% INCOME Average Household Income $96,461 $79,065 $89,649 Median Household Income $71,611 $62,288 $72,236 EDUCATIONAL ATTAINMENT, AGE 25+ College Graduate or Better 60.9% 50.9% 57.2% HOUSING MIX Renter-Occupied 65.6% 58.7% 54.3% Median Home Value $276,836 $241,654 $287,933 West Raleigh is an established residential area with comparably high costs of single family housing. Moreover, the median home value within a five-mile radius of the property is $287,933 meaning the monthly cost of ownership is substantially higher than the average monthly rent ($1,824 average cost of ownership vs. $1,312 market rent at The Dakota). The property s appeal is bolstered substantially by an affluent residential base and comparably high cost of ownership. Impressively, more than 60.9% of residents within a one mile radius of the property have a bachelor s degree or better and incomes are correspondingly high with average household income exceeding $96,000 per year and a median income of nearly $72,000. THE DAKOTA 8

Schenck Forest REEDY CREEK RD LAKE BOONE TR Lake Boone Trail TRENTON RD EDWARDS MILL RD BLUE RIDGE RD NC Museum of Art Ridge Road Park & School E CHATHAM ST 40 THE DAKOTA CSX RR NC Admin Office of the Courts CHAPEL HILL RD PNC Arena Carter-Finley Stadium Horse Complex 54 TRINITY RD NC State Fairgrounds Highways NC Division College of Veterinary Medicine WADE AVE University 440 Club JC Raulston Arboretum Meredith College HILLSBOROUGH ST Method Park PUBLIC IMPROVEMENTS IN THE AREA DEMONSTRATE GOVERNMENT SUPPORT OF ECONOMIC AND POPULATION GROWTH DHHS CARY TOWNE BLVD Buck Jones Open Space JONES FRANKLIN RD Powell Drive Park MELBOURNE RD Kaplan Park ATHENS DR Kentwood Park WESTERN BLVD AVENT FERRY R D More than 120,000 vehicles use the I-440 loop every day, causing congestion and traffic delays. As a result, the North Carolina Department of Transportation (NCDOT) is investing $475 million into widening I-440 from four to six lanes. These infrastructure investments demonstrate the government s support of the area s growth and willingness to continue to foster it. Residents at The Dakota will benefit from the traffic easing as they need to move about the Raleigh metro. Construction will begin in 2018. U-2719_CIW_ProectLimits_8x11.mxd AKB 10.05.2012 WALNUT ST 64 1 MACEDONIA RD Lake Johnson Park TRYON RD Lake Johnson 40 GORMAN ST STIP PROJECT NO. U-2719 Wake County, North Carolina LEGEND U-2719 Proect Area State Owned Land Conservation Open Space Rail Lakes Cary Municipality Raleigh Municipality Source: NCDOT, Wake County, NC OneMap 0 1,500 3,000 Feet THE DAKOTA 9

investment advisors JUSTIN GOOD Managing Director 919.573.4642 good@hfflp.com JEFF GLENN Managing Director 919.573.4646 glenn@hfflp.com ALLAN LYNCH Senior Director 704.526.2819 alynch@hfflp.com CAYLOR MARK Director 704.526.2865 cmark@hfflp.com analysts GEORGE SCHUBERT Analyst 704.526.2822 gschubert@hfflp.com SARA CARTA WAGMAN Analyst 704.526.2834 swagman@hfflp.com MICHELLE ASHLIN Analyst 704.526.2858 mashlin@hfflp.com debt + structured finance ROGER EDWARDS Senior Director 919.573.4647 redwards@hfflp.com THE DAKOTA 2018 HFF has been engaged by the owner of the properties to market them for sale. Information concerning the properties described herein has been obtained from sources other than HFF, and neither Owner nor HFF, nor their respective equity holders, officers, employees and agents makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all reference to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are proections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a purchaser, and HFF, its partners, officers, employees and agents disclaim any liability that may be based upon or related to the information contained herein. Prospective purchasers should conduct their own independent investigation and rely on those results. The information contained herein is subect to change. 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 25 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 advisory, 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 Twitter @HFF.