Utah s population grew 515,876 in the last 10 years (2005 through 2015).

2015 At a Glance The Numbers WHY UTAH? Utah s population grew by more than 40,000 people from July 2013 to July 2014-1.4% growth, with a five-year growth rate that ranks fourth in the nation, according to the U.S. Census Bureau. As of July 2015 the Wasatch Front had gained 29,000 residents from 2013 to 2014, bringing the total in the Weber, Davis, Salt Lake and Utah counties to 2,200,000. Utah s population grew 515,876 in the last 10 years (2005 through 2015). Utah s population is projected to have increased by 1.1 million from 2010 to 2015. Over half (56.5%) of the state s entire population growth is expected to occur in Utah and Salt Lake Counties, adding 621,185 in just those two counties. source: utah.gov WHY UTAH MULTI-HOUSING? 5.80% AVG. CAP IN 2015 41 2.6% YOY to 11.90% YOY Depending on unit type & submarket INVESTMENT SALES VOLUME UP YOY 212% $663,116,581 2ND BEST YEAR EVER BY VOLUME 3.72% JOB GROWTH 40,530 JOBS ADDED IN WASATCH FRONT #1 STATE FOR ECONOMIC OUTLOOK INDEX 2015 by the Numbers POSITIVE 97% OCCUPANCY RENT GROWTH LEVELS 70 basis point improvement YOY 2,141UNITS DELIVERED 2,141UNITS ABSORBED DEALS OVER 300 UNITS 8COMPLETED IN 2015 PSF UP TO $121.30 ARA A Newmark Company 2016. All Rights Reserved ARA A Newmark Company Kickoff Report 2016 5

Job Growth UTAH LEADS THE NATION Salt Lake County vs. U.S. Estimated Household Incomes Jobs by County 2015 Income Range U.S. Average Salt Lake County Average $40K - $50K 8.95% 9.30% $50K - $60K 8.08% 8.98% $60K - $75K 10.09% 12.12% $75K - $100K 12.25% 14.20% $100K - $150K 12.82% 16.64% County December 2014 December 2015 Jobs Added Percent Change Year over Year Davis 116,370 120,202 3,832 3.3% Utah 217,652 230,580 12,928 5.9% Salt Lake 656,469 676,928 20,459 3.1% Weber 98,981 102,342 3,361 3.4% TOTALS 1,089,472 1,130,052 40,580 3.7% ARA A Newmark Company 2016. All Rights Reserved ARA A Newmark Company Kickoff Report 2016 6

Wasatch Front Trending Upward 2015 Was a Near-Record Year in Transactions; Doubling 2014 Transaction Volume Strong Market Fundamentals Market fundamentals along the Wasatch Front lured first-time institutional buyers here in 2015. Conceivably, more would have entered this market in 2015 if it weren t for a shortage in deliverable properties to meet overall demand. Occupancies averaged 97%, which equated to a 70 basis point increase over 2014; the highest levels we have experienced in 15 years. We experienced double-digit rent growth in select submarkets as a result of solid job growth and creation, as well as an increasing renter demographic. Occupancies averaged 97%, the highest levels in 15 years New Investors Entering the Wasatch Front We witnessed the emergence of new institutional investors in 2015. TruAmerica entered the Wasatch Front with the acquisition of four value-add opportunities totaling approximately $204,000,000 between May and October In June, Gelt added to their initial 2014 acquisition with two properties totaling $67,000,000 The Reliant Group entered the market in January with their acquisition of Emigration Court Starwood Property Trust acquired Mission Meadowbrook in May We expect to see this trend to continue in 2016 provided there is ample deliverable product to meet growing investor demand. Asset Reposition While 2015 was a banner year for significant multihousing transactions along the Wasatch Front, only 2 properties were considered Class-A. Sales of Class-B communities dominated the transaction landscape due to opportunities presented to qualified buyers loaded with capital to reposition, renovate and upgrade their communities and bridge the gap between rents charged by their Class-A competitors. Acquisition CAP Rates for value added properties were still very aggressive because opportunistic buyers confident in the Wasatch Front market fundamentals were willing to over pay for these properties with the belief in longterm rental growth. ARA A Newmark Company 2016. All Rights Reserved ARA A Newmark Company Kickoff Report 2016 9

Trends 2015 set a national record for transactions and debt financing, and we anticipate the first half of 2016 to continue to deliver record transaction volume, but overall transaction volume will be down this year. Summary of Current Trends Multifamily is still considered the preferred sector in commercial real estate investments While it is a maturing cycle, demand is still outpacing supply - over 95% occupancy in top 100 markets (Salt Lake included) Older properties are seeing considerable rent bumps through renovation as new product is becoming too expensive, making remodeled Class-B a very attractive option Apart from quality of construction, rent growth opportunity is more likely to occur in suburban middle markets in 2016 The market is very liquid, making financing readily available AMENITIES - Beer gardens, rooftop patios, and fireplaces are what the West coast resident wants to see with their new apartment Baby boomers/empty nesters are proving to be big renters Sales volume surged to a historic high of $142.3 billion in 2015 - up 23.5% from 2014 Total dollar volume in Utah SURGED from $332,039,900 in 2014 to $664,261,889 in 2015, which represented a 94% increase Price PSF was also up 12.25%, which was unique given the lack of class-a transactions in 2015 Price per unit increased 16.41% up to $109,303.99 from $93,893.28 Home ownership is at its lowest rate since 1967 Over 8 million renters have been added since 2004 No influx of foreign capital into our market YET We are, however, benefiting from their entrance into coastal markets / gateway cities and those sellers coming to Salt Lake chasing safety and YIELD We will see more homeowners AND more renters Household formation favors the multifamily industry There has been an emergence of TOWNHOME and larger dual master or similar configurations Secondary and Tertiary markets have become more attractive for investors chasing yield Lack of labor pool has delayed, and even halted, construction projects Design Trends Smart electrical wiring, including USB ports, in most electrical outlets Suburbs mimicking downtown feel / Walkability Personalization of living spaces through resident selected color schemes and décor Pet Friendly environments On-Site pet grooming centers Pet Daycare Hybrid and Electric Car Charging Stations Bike Rentals / Available Electric Cars for Tenant Sharing Concierge Services Dry cleaning Tickets (Theatre/movie/ski/sporting events) Car Detailing Valet Trash services High Rise communities in suburban markets Oversized windows have popped up in most all new construction Smaller living spaces with access to MORE common areas and amenities Work / Live / Play environments are what tenants want Pricing Trends Year Avg. Price/SF 2012 $100.02 2013 $121.63 2014 $145.14 2015 $121.30 ARA A Newmark Company 2016. All Rights Reserved ARA A Newmark Company Kickoff Report 2016 10

Pipeline Overview Under Construction UTAH COUNTY Units Class A Market Rent 1,539 Seniors Class A Market Rent 252 LIHTC 179 Student 71 TOTAL 2,041 PLANNED 2016 Class A Market Rent 2,462 Class B+ Market Rent 372 Student 128 TOTAL 2,962 Utah County 2,278 units brought online in 2015 Development Hot Spots Geneva/Vineyard Orem University Place American Fork Under Construction 3 Transit Orientated Developments (TOD) totaling 491 units either constructed or planned. 4 Senior Projects added or being developed totaling 319 units N Bluf fd al e )" )" )" Saratoga Springs Lehi Highland )" Ut ah Lake Alpine American Fork Vineyard Pl easant Grove Lindon Orem )" Provo )" Springville Of the 2,962 units planned for 2016, it is likely that approximately 40% of the projects will reach fruition MULTIHOUSING Under Construction Likely Starts Next 6 Months 15 Spanish Fork Likely Starts More Than 6 Months 2010-2015 POPULATION GROWTH RATE (ANNUAL) -4% - 0% 0% - 1% 3% - 6% 6%+ Payson Salem 1% - 3% Genola ARA A Newmark Company 2016. All Rights Reserved ARA A Newmark Company Kickoff Report 2016 15

Ten Questions for Jeff Neese We refer to Jeff Neese of Western States Multifamily as the Guru of the Intermountain West. Jeff s analysis, feasibility studies, appraisals and market analytic fingerprints have influenced most multihousing projects since the mid-1980s. We rely on Jeff s market optics and we freely share all market information with him on a regular basis. Our 2014 Report featured a section called Ten Questions for Jeff Neese that was extremely popular with our industry friends and clients. It became a no-brainer that we would query Jeff again in this year s report. 1. What were some of the key factors in 2015 which influenced the Wasatch Front Industry? Continued rapid absorption of new supply, coupled with concerns over the potential for rising mortgage interest rates, has added urgency to development schedules. 2. With robust growth in the multihousing development pipelines, particularly in Salt Lake and Utah Counties, what percentage would you estimate of planned projects will reach completion? For projects in their initial concept stage probably about 1/3. For projects that have engaged architects and are pursuing financing options probably about 2/3. 3. Historically, this up cycle has lasted the previous 7 years. How long do you feel this market will last? This is an unusual cycle due to demographic shifts and the negativity with which homeownership is viewed by a large segment of the population. When the downturn comes, it will most likely be caused by rising costs (labor, materials, interest rates, etc.) or by a general economic downturn. 4. With the majority of projects under construction along the Wasatch Front being Class-A market rate, do you see affordability becoming a factor in the coming months? We have not yet seen affordability being a major issue in the lease-up of new projects. However, rents cannot move up at the rate that they have in the past three or four years without affordability becoming more of a concern. 5. What new amenities and design features are you seeing incorporated in the new construction projects? A concentration on the quality of the kitchens and master suites Internet café (business center) Yoga / fitness classrooms Outdoor terraces with barbecues, fire pits and picnic areas Off-leash dog park and dog wash Bicycle storage and bike repair shop Internet speed continues to be a major amenity that attracts tenants ARA A Newmark Company 2016. All Rights Reserved ARA A Newmark Company Kickoff Report 2016 17

Ten Questions for Jeff Neese 6. Do you feel multihousing pricing reaching its peak or is demand still driving more aggressive pricing in 2016? Buyers have been aggressive with pricing due to perceived potential for rental rate increases. Increasing interest rates would have a significant impact on demand for apartment investments. 7. Do you project a resurrection of the condominium or For-Sale market in 2016-2017? A few new condominium projects are on the drawing board. It appears that some developers will test the waters soon. However, a strong resurgence is unlikely. 8. What is your estimate of overall occupancy rates along the Wasatch Front in 2016? It is currently averaging in the 93% to 97%, depending on the neighborhood near 95% overall. 9. What do you perceive as any black swan events which could adversely affect the Wasatch Front multihousing market? The biggest risk that I see is interest rate increases. 10. What is your advice to owners of multihousing properties considering a disposition in 2016? It remains a seller s market. However, there is risk that rising interest rates could have an effect on buyers ability to be aggressive. Refinancing with low-interest assumable financing at a high loan-to-value rate may allow potential sellers to offset that risk. ARA A Newmark Company 2016. All Rights Reserved ARA A Newmark Company Kickoff Report 2016 18

Data Analysis Utah At A Glance 8.00% 7.50% 7.00% Average Weighted CAP Rates 7.50% 7.00% 6.50% Income CAP Rates by Property Age INCOME CAP RATES BY PROPERTY AGE 6.50% 6.00% 5.50% 5.00% 6.48% 7.62% 6.62% 6.46% 6.49% 6.06% 5.73% 5.80% 6.00% 5.50% 5.00% 5.75% 6.86% 7.18% 6.46% 6.91% 5.43% 5.47% 5.39% Number of Investment Sales Total Dollar Volume 70 60 50 40 30 20 10 17 28 31 34 61 52 41 41 $700,000,000 $600,000,000 $500,000,000 $400,000,000 $300,000,000 $200,000,000 $100,000,000 $0 $70,378,000 $114,890,850 $109,642,500 $219,023,162 $273,675,847 $673,714,132 $332,039,900 $663,116,581 Sold SF Average Price Per Square Foot 6,000,000 $130.00 5,000,000 $120.00 $110.00 4,000,000 $100.00 3,000,000 2,000,000 1,000,000 0 883,590 1,281,137 1,362,260 2,168,838 2,870,638 5,672,329 2,415,013 4,925,060 $90.00 $80.00 $70.00 $60.00 $50.00 $103.70 $92.29 $83.80 $92.47 $87.07 $112.41 $109.46 $121.30 ARA A Newmark Company 2016. All Rights Reserved ARA A Newmark Company Kickoff Report 2016 19

Predictions Preserving & rehabbing the stock offers the greatest opportunity Capital is still flowing into multifamily commercial real estate We have seen push-back on class-a pricing, mostly driven by bearish position on rental growth in the A space Smaller infill developments will continue to be successful 95+% occupancy - new product coming online should cool overall occupancy slightly with the leasing environment growing more competitive at the top end market, especially in the urban core 2015 rent growth likely won t be sustainable Meaningful pricing power/opportunity appears to remain in the middle market niche Lack of labor pool has slowed construction - that will continue Continuation of Secondary and Tertiary markets being attractive to investors chasing yield We will see Class A rent growth begin to taper as AFFORDABILITY becomes a concern and INCOME GROWTH has become STAGNANT Municipalities will start to work towards increasing workforce housing and keeping housing affordable in their communities Construction costs will continue to rise, led primarily by the shallow labor pool Infill developments and redevelopments will continue to be HOT The majority of development will continue to be in and around downtown SLC, Sugarhouse, Sandy, and North Utah County. With the recent sale and ongoing reposition of the Gateway Mall, we will see improvement to the West of Gateway area. Baby Boomers and Empty Nesters will continue to surprise developers - they keep showing up Eclectic, functional design, offering larger units sizes, garages, open living spaces periphery to CORE 1 bed / 2 bed developments will continue to show up. We have seen larger units with garages outside of CORE areas achieve massive rents and success. Millennials don t cook according to our Downtown and Sugarhouse managers. The gourmet kitchen concept will go away in Millennial driven developments, especially in micro-units. Retail development and retail has become a key component to maximizing rents and minimizing unit turnover Our example of 2 bed 2 bath rents in Sugarhouse increasing 8% YOY shows the discerning high paying renter wants to be near amenities Keep an eye on Southtown Mall and their redevelopment, as well as Fashion Place Mall. Not to mention GATEWAY & UNIVERSITY MALLS Wow. We will continue to see niche new amenities These amenities will be more communal, exclusive, and geared towards targeting high paying renters. Work/Live/Play environments are where tenants want to be Prediction: As we see lease-up in class-a and interest rates rise, we will see upward pressure on CAP rates in multihousing, and we will see several groups sell, realizing the peak not wanting to hold long-term. It is time to harvest - the easy money has been made. - Mark Jensen ARA A Newmark Company 2016. All Rights Reserved ARA A Newmark Company Kickoff Report 2016 22