Multifamily Stable and Expanding

Research & Forecast Report LAS VEGAS MULTIFAMILY Q3 2017 Multifamily Stable and Expanding > > Multifamily vacancy decreased to 3.0 percent in the second quarter of 2017 Economic Indicators > > No new projects were completed in the second quarter, though many were under construction ELECTRIC Meter Hookups NEW HOME Median Price THIRTY YEAR Mortgage Rate > > Rental rates continued to increase, reaching an average of $978 per unit According to statistics provided by REIS, multifamily vacancy in Southern Nevada decreased by 0.1 point in the second quarter of 2017 (the most recent quarter of available data) to 3.0 percent. Vacancy this quarter was 0.2 points higher than it was one year ago. Class A properties were 3.4 percent vacant in the second quarter, 0.2 points lower than one quarter ago. Class B/C properties were 2.5 percent vacant, 0.1 points lower than one quarter ago. Almost all of the Valley s submarkets had positive net absorption in the second quarter of 2017, with the Northeast submarket being the only submarket posting negative net absorption (negative 18 units) and the Downtown and North Las Vegas submarkets registering no net absorption. The Valley s highest net absorption +9.6% +1.7% Market Indicators +0.4 Points Relative to prior period Q2 2017 Q3 2017* VACANCY NET ABSORPTION COMPLETIONS RENTAL RATE *Projected Historical Vacancy Rates and Rental Rates 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% $1,000 $980 $960 $940 $920 $900 $880 Summary Statistics Las Vegas Market Q2-16 Q1-17 Q2-17 Vacancy Rate 2.8% 3.1% 3.0% Asking Rent (PSF, NNN) $936 $966 $978 Net Absorption YTD (SF) 743 688 254 New Completions YTD (SF) 471 943 0 0.0% 2 Q 2015 3 Q 2015 4 Q 2015 1 Q 2016 2 Q 2016 3 Q 2016 4 Q 2017 1 Q 2017 2 Q 2017 $860 Overall Asking Rents Vacancy Rate Average Rental Rate Per Unit Per Month The median price of condominium units in particular showed a large increase in the past two quarters, keeping demand for multifamily strong. Class A $1,098 $1,109 $1,121 Class B/C $821 $827 $834

was in the Northwest/Southwest submarket (160 units), followed by West Central (40 units) and University (29 units). No new multifamily projects were completed in the second quarter of 2017 according to REIS. A total of 5,789 units were under construction, most of them in the Northwest/Southwest and Henderson/Green Valley submarkets. We expect 3,440 units of multifamily will be completed through the remainder of 2017. Current multifamily development is concentrated along the I-215 Beltway, which runs from the Henderson/Green Valley submarket to the Northwest/Southwest submarket. Another 6,208 units of multifamily are planned to begin construction within the next twelve months. Historical Net Absorption vs. Completions Net Absorption vs. Completions 1,400 1,200 1,000 800 600 400 200 0 2 Q 2015 3 Q 2015 4 Q 2015 1 Q 2016 2 Q 2016 3 Q 2016 4 Q 2017 1 Q 2017 2 Q 2017 Net Absorption (Units) Completions (Units) The average asking rent for multifamily was $978 per unit in the second quarter of 2017, increasing by $12 psf from the first quarter of 2017, and by $42 per unit since the second quarter of 2016. Class A properties saw asking rates increase by 2.1 percent year-overyear to $1,121 per unit, while Class B/C properties saw a 1.6 percent increase to $834 per unit. Unemployment in the Las Vegas-Paradise MSA stood at 5.1 percent as of, down from 6.7 percent in July 2016. From July 2016 to, total employment in Southern Nevada increased by 34,600 jobs, a 3.9 percent increase.the majority of the Valley s new jobs were in professional and business services (+16,400 jobs), other services (+7,500 jobs) and construction (+6,600 jobs). Jobs were lost on a year-over-year basis in retail (-2,700 jobs), transportation and warehousing (-3,800 jobs) and wholesale (-900 jobs). Sales (Units) vs. Price Per Unit 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 Sales (Units) vs. Price Per Unit 0 2 Q 2015 3 Q 2015 4 Q 2015 1 Q 2016 2 Q 2016 3 Q 2016 4 Q 2017 1 Q 2017 2 Q 2017 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Complex Under Construction Submarket Units Castile Apartments & Senior Living Henderson/GV 499 Evolve Apartment Homes Henderson/GV 398 Silverado West Apartments Henderson/GV 362 Elysian @ Stone Lake Henderson/GV 360 The Gallery Phase II Northwest/Southwest 325 The Abode Red Rock Northwest/Southwest 308 Inspire Apartment Homes Northwest/Southwest 307 Loftus Apartments West Central 295 East Gibson Apartments Henderson/GV 288 Eden Nevada West Northwest/Southwest 276 Boulder Pines Family Apartments East Las Vegas 264 Vue at Centennial Phase II North Las Vegas 261 Picerne Oquendo Northwest/Southwest 244 Fremont9 Downtown 231 U District The Degree Henderson/GV 226 South Beach Resort Northwest/Southwest 220 Warmington Solana Apartments Northwest/Southwest 204 The Mercer Northwest/Southwest 177 Red Rock Pointe Senior Living Northwest/Southwest 128 Evo Apartments Phase III Northwest/Southwest 120 Donna Louise Apartments Northeast 96 Jardin Gardens Northeast 80 Cordero Pines Phase II Northeast 60 Thunderbird Stephanie Henderson/GV 57 TOTAL 5,786 Total Sales (Units) Average Price Per Unit 2 Las Vegas Research & Forecast Report Q3 2017 Multifamily Colliers International

Demographics Submarket Estimated Households (2017) Renter Occupied (2017) Median Household (2017) Average Household (2017) Proj. Annual Growth Rental Households (2017-2022) Downtown 50,800 59% $32,200 2.8 260 East 58,100 44% $42,900 2.7 320 Henderson/Green Valley 148,200 38% $63,800 2.6 790 North Las Vegas 107,600 32% $60,400 3.2 590 Northeast 50,300 49% $40,200 3.3 290 Northwest/Southwest 215,500 36% $66,000 2.6 1,270 University 36,600 77% $35,200 2.2 250 West Central 99,300 56% $45,800 2.4 610 TOTAL 743,000 43% $51,000 2.7 3,802 Source: Claritas According to data provided by the Nevada Department of Motor Vehicles, the number of out-of-state driver s licenses turned in to the DMV between June 2016 and June 2017 was 69,029. This is higher than during the same period in 2016 when they reported 65,410 licenses, and suggests that population growth in Southern Nevada is accelerating. Electric meter hookups were 811,401 meters in June 2017, up 1.7 percent from one year ago. Population growth has been a major driver of Southern Nevada s economic growth since Las Vegas birth in 1905, so improvements in population growth are particularly important for the region and the multifamily market in particular. Multifamily sales improved in the second quarter of 2017 compared to the first quarter, with 5,634 units selling at an average sales price per unit of $106,085. This is more units than sold in the first quarter of 2017, though less than sold one year ago in the second quarter of 2016. Sales were skewed heavily towards Class B/C properties constructed in the 1990 s. Initial estimates for third quarter 2017 sales show approximately 3,687 units sold at an average price per unit of $127,126. Among the institutional entities purchasing multifamily in Southern Nevada this year are Blackstone Group, Westland Real Estate Group, MG Properties Group, 3D Investments, Langdon Street Capital and Blackhawk Capital Group. Southern Nevada s multifamily market is stable and expanding, which suggests that values will continue to increase in the near term. Population growth in Southern Nevada appears to be improving, and while multifamily rents are on the rise, they remain more affordable than buying a home for many. The median price of condominium units in particular showed a large increase in the past two quarters, keeping demand for multifamily strong. Sales Data 2013 2014 2015 2016 2017 YTD Units Sold 17,808 14,019 15,408 22,074 9,196 Average Price Per Unit $75,600 $73,627 $71,836 $96,720 $109,084 Cap Rate 5.7% 6.0% 7.3% 5.5% 5.7% 3 Las Vegas Research & Forecast Report Q3 2017 Multifamily Colliers International

215 NORTH LAS VEGAS Significant Multifamily Sales Activity Elysian West 466 Units - $106,500,000 NORTHEAST $229,000/Unit 95 15 Year Built - 2016 DOWNTOWN Oasis Meadows Apartments 383 Units - $38,300,000 $100,000/Unit Septmeber 2017 Year Built - 1996 WEST CENTRAL 95 EAST Palms at Peccole Ranch 404 Units - $62,000,000 $153,000/Unit NORTHWEST/ SOUTHWEST UNIVERSITY Year Built - 1996 South Boulevard Apartments 215 320 Units - $53,600,000 $168,000/Unit HENDERSON/ GREEN VALLEY Year Built - 2012 Veritas Apartments 430 Units - $76,500,000 $178,000/Unit Year Built - 2010 Sales Activity Continued Property Name Sale Date Units Price Price/Unit Year Built 5280 W Hacienda Avenue Aug 2017 170 $24,000,000 $141,000 1998 Sterling Court Apartments Jul 2017 237 $24,000,000 $101,000 1991 Oasis Ridge Apartments Sep 2017 477 $19,800,000 $41,000 1984 Autumn Ridge Apartments Aug 2017 168 $18,200,000 $108,000 1999 Sunrise Springs Apartments Jul 2017 192 $15,600,000 $81,000 1989 Source: Real Capital Analytics 4 Las Vegas Research & Forecast Report Q3 2017 Multifamily Colliers International

Market Comparisons - Las Vegas Multifamily Market CLASS TOTAL INVENTORY CURRENT VACANCY RATE PRIOR QTR VACANCY RATE NET ABSORPTION NET ABSORPTION YTD CURRENT QTR COMPLETIONS YTD UNIT COMPLETIONS UNDER CONSTRUCTION PLANNED CONSTRUCTION TOTAL SALES AVERAGE PRICE PER UNIT AVERAGE RENTAL RATE DOWNTOWN A 2,773 1.6% 1.5% (4) (11) - - 231 434 - n/a $939 B/C 13,394 1.3% 1.4% 4 23 - - - - 1,393 $73,232 $774 Total 16,167 1.4% 1.4% - 12 - - 231 434 1,393 $73,232 $802 EAST LAS VEGAS A 6,381 2.2% 2.1% (6) 51 - - 264 50 - n/a $965 B/C 9,346 2.4% 2.6% 21 12 - - - - 340 $84,559 $800 Total 15,727 2.3% 2.4% 15 63 - - 264 50 340 $84,559 $866 HENDERSON/GREEN VALLEY A 20,337 3.1% 3.2% 25 28 - - 1,964 2,453 480 $149,792 $1,202 B/C 8,068 3.5% 3.5% 3 29 - - - - 932 $80,526 $1,039 Total 28,405 3.2% 3.3% 28 57 - - 1,964 2,453 1,412 $104,072 $1,157 NORTH LAS VEGAS A 13,021 2.6% 2.5% (22) 63-111 437 619 - n/a $992 B/C 9,552 1.8% 2.0% 22 7 - - - - - n/a $790 Total 22,573 2.3% 2.3% - 70-111 437 619 - n/a $906 NORTHEAST A 2,172 4.5% 3.1% (30) (40) - - 60 - - n/a $843 B/C 6,643 3.9% 4.0% 12 22 - - - - 321 $108,000 $786 Total 8,815 4.0% 3.8% (18) (18) - - 60-321 $108,000 $800 NORTHWEST/SOUTHWEST A 18,782 4.7% 5.5% 147 752-832 2,004 359 578 $200,000 $1,281 B/C 5,452 1.6% 1.8% 13 (10) - - - - 1,590 $106,730 $1,135 Total 24,234 4.0% 4.7% 160 742-832 2,004 359 2,168 $131,596 $1,248 UNIVERSITY A 2,180 1.8% 1.9% 2 5 - - 226 1,597 - n/a $1,009 B/C 12,321 4.0% 4.3% 27 (28) - - - - - n/a $749 Total 14,501 3.7% 3.9% 29 (23) - - 226 1,597 - n/a $789 WEST CENTRAL A 6,143 4.6% 5.2% 39 32 - - 600 696 - n/a $1,016 B/C 6,860 1.4% 1.4% 1 7 - - - - - n/a $780 Total 13,003 2.9% 3.2% 40 39 - - 600 696 - n/a $891 MARKET TOTAL A 71,789 3.4% 3.6% 151 880-943 5,786 6,208 1,058 $177,221 $1,121 B/C 71,636 2.5% 2.6% 103 62 - - n/a n/a 4,576 $89,637 $834 Total 143,425 3.0% 3.1% 254 942-943 5,786 6,208 5,634 $106,085 $978 QUARTERLY COMPARISON AND TOTALS Q2-17 143,425 3.0% 3.1% 254 942-943 5,786 6,208 5,634 $106,085 $978 Q1-17 143,425 3.1% 3.0% 688 688 943 943 6,047 7,175 3,562 $113,829 $966 Q4-16 143,425 3.0% 2.9% 139 2,923 288 1,670 3,042 7,525 8,373 $94,773 $959 Q3-16 143,137 2.9% 2.8% 814 2,784 911 1,382 2,908 406 2,161 $77,603 $950 Q2-16 142,226 2.8% 3.1% 743 1,970 471 471 2,470 390 7,170 $113,859 $936 Q1-16 141,755 3.1% 3.9% 1,227 1,227 - - 2,239 621 4,343 $86,112 $925 * Most recent quarter of data Source: REIS Sales Data provided by Colliers International 5 Las Vegas Research & Forecast Report Q3 2017 Multifamily Colliers International

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