NATIONAL MULTI-HOUSING ADVISORS QUARTERLY REPORT Q2 2017 IN REVIEW TAMPA BAY ORLANDO JACKSONVILLE SOUTHWEST FLORIDA
New Supply (Units) New Supply (As % of Inventory) INTRODUCTION 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Q3 2014 - Q2 2015 Q3 2015 - Q2 2016 Q3 2016 - Q2 2017 Under Construction Inventory Growth Q3 2014 - Q2 2017 Tampa Orlando SW Florida Jacksonville % of Inventory 8% 7% 6% 5% 4% 3% 2% 1% Looking back over the past quarter and 12 month period ending Q2 2017, Florida markets continue to provide an active and favorable multifamily investment environment for both existing and new owners. All of the markets studied in this report outperformed the regional benchmark for occupancy and the Tampa Bay, Orlando and Jacksonville MSAs outperformed both regional and national averages for year-over-year rent growth. Furthermore, continuallyincreasing demand for multifamily assets throughout the state has fostered an efficient marketplace for acquisitions and dispositions alike. 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 2013 2014 2015 2016 May 2017 T12 Tampa Orlando SW Florida Jacksonville Historical Employment Additions (% Increase Year-Over-Year) Source: Bureau of Labor Statistics Highlights Orlando - #9 Nationally for Annual Rent Growth (5.5%) Tampa Bay - #11 Nationally for Annual Rent Growth (5.2%) Jacksonville - #25 Nationally for Annual Rent Growth (3.9%) Key Factors at Play New supply levels continue to hit high-water-marks during a period of continued rent growth. This combination and the markets ability to absorb and adapt to these changes has been and will continue to be a key talking point surrounding the Orlando and Tampa Bay markets specifically. However, new supply is being met with strong rental demand thanks to healthy support from improving economic conditions and continued employment growth.
Q2 MARKET SNAPSHOT OCCUPANCY TAMPA BAY ORLANDO JACKSONVILLE SOUTHWEST FLORIDA Overall 95.90% 97.20% 96.10% 95.83% 2000+ Vintage 94.60% 97.00% 96.40% 94.93% 1990s 96.30% 97.80% 95.30% 95.79% 1980s 96.60% 96.80% 96.20% 97.11% 1970s 96.90% 98.10% 96.20% 97.19% AVERAGE RENT TAMPA BAY ORLANDO JACKSONVILLE SOUTHWEST FLORIDA Per Unit Per SF Per Unit Per SF Per Unit Per SF Per Unit Per SF Overall $1,124 $1.19 $1,151 $1.18 $971 $1.00 $1,132 $1.17 2000+ Vintage $1,328 $1.25 $1,296 $1.22 $1,116 $1.11 $1,201 $1.15 1990s $1,154 $1.15 $1,126 $1.12 $1,055 $0.99 $1,132 $1.15 1980s $968 $1.18 $1,039 $1.20 $903 $1.04 $1,068 $1.24 1970s $944 $1.08 $941 $1.14 $792 $0.85 $980 $1.12 YEAR-OVER-YEAR (YOY) RENT GROWTH TAMPA BAY ORLANDO JACKSONVILLE SOUTHWEST FLORIDA Overall 5.20% 5.50% 3.90% 1.47% 2000+ Vintage 3.80% 4.10% 3.40% 0.17% 1990s 2.50% 6.40% 4.00% 1.35% 1980s 7.50% 6.10% 3.80% 2.66% 1970s 7.50% 9.20% 4.80% 3.33% SUPPLY ADDITIONS Number of Units Completed in Past 12 Months Annual Supply Growth (%) Number of Units Currently Under Construction Projected Supply Growth (%) TAMPA BAY ORLANDO JACKSONVILLE SOUTHWEST FLORIDA 6,336 4,542 1,649 3,137 2.57% 2.09% 1.53% 2.52% 6,701 14,587 5,383 4,017 2.72% 6.72% 5.00% 3.22% 3
TAMPA BAY Rent Growth: Tampa Bay recorded 5.2% annual rent growth for the 12 months ending Q2 2017 which outpaced both the South Region (2.8%) and the Nation (3.6%) as well as topped Tampa Bay s five-year average of roughly 4%. More specifically, annual rent growth was led by the Peninsula (South Tampa, south of Morrison Avenue) and Egypt Lake/Lowry Park submarkets which posted massive annual rent growth of 9.5% and 9.4%, respectively. These two submarkets also increased overall occupancy by 2.4% and 1.4% respectively during Q2 2017 which makes the substantial rent growth all the more impressive. Amongst vintage classes, rent growth was most pronounced in the 1970s and 1980s segments which both increased rents by an average of 7.5% over the last 12 months ending Q2 2017. Class-A and B+ assets, which still recorded healthy growth, experienced more modest increases of 3.8% and 2.5% for 2000+ and 1990s vintage segments respectively. Tampa Bay s significant rent growth during a period of inventory expansion has been sustained due to the support of overall economic improvement. The Metro increased employment by 3.92% during the 12 months ending May 2017 which decreased unemployment to a ten year low of 3.8%. 55,000+ NEW JOBS YEAR-OVER-YEAR & 3.8% CURRENT UNEMPLOYMENT Occupancy: Average occupancy in Tampa Bay registered at 95.9% during Q2 2017 continuing a five-year average of 95.3% occupancy levels. This sustained occupancy is particularly healthy given the three-year stretch of 5%+ annual rent growth. Amongst asset classes, Class-C (97.9%) and Class-B (96.2%) assets recorded the strongest occupancy levels. Noteworthy, is that occupancy for the Class-A segment has shown a moderate reaction to supply additions in certain cases. Specifically, Central Tampa which leads the Metro in annual supply (2,140 units) and units under construction (3,214 units) saw Class-A occupancy dip to 88% at the end of Q2 2017. Although, this is expected to be a temporary dip, as newly added properties complete lease-up and move toward stabilization. Furthermore, recent economic growth combined with the future benefits of the $3 billion Water Street Tampa development support a positive multifamily investment forecast for this submarket going forward. Supply: In year ending Q2 2017, the Metro s inventory expanded 2.4% with the addition of 6,336 units, marking a 14-year high. In the last 12 months, 32% of completions took place in the Central Tampa submarket, causing Central Tampa to lead the Metro in annual supply. Central Tampa will continue to lead the Metro in annual supply as 48% of all units under construction in the Metro at the end of Q2 2017 are in this submarket. Downtown Tampa, the Westshore Business District and Downtown St. Petersburg remain development hotspots and account for 61% of units currently under construction in the Metro. In the next 12 months, it is expected that an additional 6,701 units will be delivered to the marketplace which will further test Tampa Bay s ability to absorb new product. ANNUAL RENT GROWTH Q2
Q2 2017 MARKET TRANSACTIONS PROPERTY CITY YEAR BUILT UNITS CLOSE DATE SALE PRICE SALE PRICE /UNIT SALE PRICE /SF CAP RATE Sunstone Palms (FKA Cordova) Tampa 1975 536 6/23/2017 $41,700,000 $77,799 $87.05 6.15% 6.62 Hamlin at Lake Brandon Brandon 2003 360 6/14/2017 $60,000,000 $166,667 $147.31 5.68% 11.62 Pearce at Pavilion Riverview 2016 250 6/5/2017 $51,066,750 $204,267 $205.40 5.50% 10.68 Aaran's Walk Tampa 1972 109 5/31/2017 $5,362,650 $49,199 $56.84 7.94% 5.87 Agora at Port Richey (FKA Lakes At Port Richey) Port Richey 1987 288 5/30/2017 $29,001,600 $100,700 $110.38 6.00% 9.78 St. Charles Row St. Petersburg 1972 368 5/25/2017 $37,465,000 $101,807 $120.62 5.95% 8.98 Enclave at Wesley Chapel (FKA Enclave at Wiregrass) Wesley Chapel 2005 312 5/24/2017 $52,500,000 $168,269 $166.86 5.13% 11.77 The Park at Aberdeen Tampa 1972 320 5/18/2017 $24,100,000 $75,313 $84.39 6.15% 7.22 Farrington Clearwater 1974 224 5/16/2017 $18,450,000 $82,366 $98.83 5.68% 8.57 Cornerstone Pointe Largo 1973 111 5/8/2017 $10,550,000 $95,045 $93.28 6.63% 7.58 Palm Square Tampa 1975 112 4/28/2017 $8,176,300 $73,003 $90.40 6.25% 8.18 Waterside Village St. Petersburg 1972 102 4/26/2017 $5,700,000 $55,882 $78.15 5.95% 6.08 Autumn Chase Largo 1975 124 4/25/2017 $6,608,000 $53,290 $72.66 6.27% 5.61 Fernwood Grove Tampa 1976 128 4/10/2017 $7,850,000 $61,328 $87.08 6.50% 5.93 Flats at Seminole Heights (FKA Poplar Park Terrace) Tampa 1968 164 4/10/2017 $13,150,000 $80,183 $99.32 6.50% 6.87 Carlyle at Waters Tampa 1985 392 4/5/2017 $32,225,000 $82,207 $113.48 5.84% 8.51 2017 Q2 Average 1981 $25,244,081 $95,458 $107.00 6.13% 8.12 2017 Q1 Average 1995 $39,160,692 $134,616 $140.27 5.94% 9.01 2016 Year-End Average 1986 $29,802,468 $96,677 $109.51 6.23% 8.18 GRM Grand Total 2010+ Vintage Assets 2000s Vintage Assets 1990s Vintage Assets 1980s Vintage Assets 6.04% 6.09% 5.26% 5.40% 5.62% 5.66% 6.01% 5.87% 6.15% 6.15% Favorable acquisition financing and increasing demand for multifamily assets have driven cap rate compression throughout Tampa Bay Francesco P. Carriera Senior Managing Director Investments 1960s & 1970s Vintage Assets 6.55% 6.59% 0% 1% 2% 3% 4% 5% 6% 7% Q2 2017 Trailing 12 Months Q2 2016 Trailing 12 Months CAP RATES 5
ORLANDO Rent Growth: Once again, the Orlando MSA continues to lead the South Region (2.8%) and the Nation (3.6%) in annual rent growth, recording a 5.5% increase over the past four quarters. The top performing areas in the Orlando MSA for annual rent growth over the past four quarters were West Orlando (7.3%), University (7.1%), and Altamonte Springs/Apopka (6.6%). Annual rent growth has been between 5% and 7% in each of the past 11 quarters, which is a direct reflection of the Metro s strong economic performance and job growth. The highest rent growth occurred in older vintage properties with a combined average of 7.2% for 1970s, 1980s and 1990s properties. Aggressive pricing strategies in Class-A properties have presented the Class-B and C operators the opportunity to renovate unit interiors/exteriors and become the low-cost provider to Class-A renters. Occupancy: The Orlando MSA has hovered between 96% and 97% occupancy over the past 13 quarters, and was even higher in Q2 2017. Occupancy landed at 97.2% in Q2 2017, an 11- year high amid elevated levels of supply. Class-C properties have seen the highest occupancy rates, which is most likely a function of job growth within lower-paying industries. Amongst submarkets, the highest occupancy areas are North Lake County (99%) and University (98%), which has also demonstrated high levels of annual rent growth. Central Orlando and the Downtown submarket have seen the most negative impact on occupancy due to the high volume of new supply: 4,542 units. OCCUPANCY LANDED AT 97.2% IN Q2 2017, AN 11-YEAR HIGH AMID ELEVATED LEVELS OF SUPPLY Supply: In the year ending Q2 2017, the Orlando MSA expanded the inventory base by 2.0% by adding 4,542 units. Supply has increased at an annual rate of roughly 2% to 3.5% in each of the last 15 quarters, which totals about 3,500 to 7,000 units annually. Inventory is expected to expand by another 6.7% based on the remaining 14,587 units under construction at the end of Q2 2017. In recent years, construction has been concentrated in Central Orlando and upper-tier suburban submarkets. The Central Orlando submarket led the Metro with 1,265 units delivered in the past 12 months. 10,441 units are scheduled to be delivered in the next 12 months which will make up the largest annual completion volume since 2001. For the foreseeable future, we can expect to see elevated supply levels based on current projects and permit volumes. 3,000 2,500 2,000 1,500 1,000 500 0 2,327 1,714 662 360 1,032 1,424 1,557 2,971 842 1,291 1,399 1,133 719 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 100.0% 98.0% 96.0% 94.0% 92.0% 90.0% 88.0% Aggressive rental pricing and supply expansion in the Class-A space has created significant opportunity for Value-Add Class-B/C Operators Ryan H. Wilson Senior Financial Analyst Supply Occupancy SUPPLY VS. OCCUPANCY Q2
Q2 2017 MARKET TRANSACTIONS PROPERTY CITY YEAR BUILT UNITS CLOSE DATE SALE PRICE Reserve at Lake Buchanan (FKA Royal Springs) SALE PRICE /UNIT SALE PRICE /SF CAP RATE Orlando 1970 151 6/30/2017 $10,678,640 $70,719 $77.09 6.49% 7.86 Park Place at Maguire Ocoee 2016 242 6/30/2017 $49,560,000 $204,793 $200.83 5.23% 10.41 GRM The Park at Collington (FKA Royal Oaks) The Adelaide (FKA Advenir at Broadwater) Orlando 1992 216 6/28/2017 $16,500,000 $76,389 $80.03 6.52% 7.29 Orlando 1987 408 6/26/2017 $47,000,000 $115,196 $141.08 5.75% 7.44 Altis Sand Lake Orlando 2016 315 6/26/2017 $63,000,000 $200,000 $202.65 4.92% 11.19 The Courtney at Lake Shadow Orlando 2016 244 6/9/2017 $44,350,000 $181,762 $185.49 5.50% 10.98 Savannah At Park Central Orlando 2007 288 6/5/2017 $50,400,000 $175,000 $141.80 5.17% 10.29 Avery Place Villas Orlando 1984 157 5/30/2017 $25,050,000 $159,554 $135.31 5.39% 10.02 Highpoint Club Orlando 1994 348 5/30/2017 $48,500,000 $139,368 $171.86 5.75% 9.64 MonteVista at Windermere Orlando 1990 360 5/30/2017 $49,500,000 $137,500 $178.43 5.75% 9.42 IMT Newport Colony 1 Casselberry 1990 476 5/24/2017 $59,400,000 $124,790 $140.16 6.07% 9.44 Mission Club Orlando 1996 356 5/18/2017 $50,650,000 $142,275 $151.78 5.20% 9.83 The Paramount on Lake Eola 2 Orlando 2008 264 5/10/2017 $65,250,000 $247,159 $230.10 5.25% 9.98 Aqua At Millenia Orlando 2009 329 5/9/2017 $56,500,000 $171,733 $171.38 5.12% 10.79 Sandpiper 3 Casselberry 1976 196 5/8/2017 $14,100,000 $71,939 $78.66 6.82% 6.49 Esplanade Orlando 2008 186 4/20/2017 $23,250,000 $125,000 $110.15 6.15% 8.70 Grand Reserve At Kirkman Parke 4 Orlando 1999 195 4/19/2017 $22,110,000 $113,385 $93.32 5.88% 7.95 East Pointe at Altamonte 5 Altamonte Springs 1974 354 4/17/2017 $32,000,000 $90,395 $107.55 5.86% 8.22 Palio (FKA Middlebrook Farms) Orlando 2001 320 4/13/2017 $43,600,000 $136,250 $143.82 5.30% 9.10 The Estates At Park Avenue Orlando 2003 432 4/11/2017 $70,250,000 $162,616 $141.09 5.63% 10.36 55 West Orlando 2008 461 4/11/2017 $105,000,000 $227,766 $201.49 5.25% 9.29 2017 Q2 Average 1997 $45,078,507 $146,361 $146.86 5.70% 9.27 2017 Q1 Average 1991 $39,722,000 $126,232 $128.25 5.70% 9.28 2016 Year-End Average 1989 $31,574,622 $107,693 $119.98 6.08% 8.58 1 This property was part of a 17-property portfolio transaction which included 4,095 units across TX, FL and CA 2 The sale of The Paramount at Lake Eola also included 43,484 SF of ground floor retail 3 Sandpiper included a LIHTC component consisting of 29 low income and 40 very low income units (35% affordable) 4 This property was a fractured-condo sale which included 195 of 380 total units (51% Ownership) 5 This property was a portfolio acquisition in which two assets (Altamonte Villas and Palms at Altamonte Springs) were combined into one property 7
JACKSONVILLE Rent Growth: Jacksonville recorded year-over-year rent growth of 3.9% during the 12 months ending Q2 2017 which joined both the Orlando and Tampa Bay MSAs in outpacing the national (2.8%) and regional (3.6%) benchmarks. Although rent growth in Jacksonville has historically been more inconsistent than other Florida markets, annual rent growth has registered between 3% and 5% for each of the last 12 quarters. Within vintage classes, 1970s assets experienced the strongest performance with 4.8% year-over-year growth. Overall, the multifamily market has benefited from overall economic improvement. Job growth over the past 12 quarters was predominantly led by health services, trade/transport and education. Furthermore, Jacksonville was ranked as the #9 metro in the US for annualized growth in grossincome by Freddie Mac at 4.3% in 2017. Occupancy: Average occupancy in Jacksonville registered at 96.1% during the year ending Q2 2017 which marked the highest occupancy rate since pre-recession levels in 2006. Furthermore, occupancy has been 95% or higher in each of the last nine quarters as demand has continued to outweigh supply. The highest occupancy rates in the Metro have been in the St. Augustine (98.3%) and Orange Park/Clay County (97.8%) submarkets. As a by-product of the growing job market, vacancy rates are expected to trend downward throughout 2017 according to Freddie Mac s 2017 multifamily report. ECONOMIC IMPROVEMENT FUELS MULTIFAMILY RENT GROWTH AND INCREASING OCCUPANCY RATES Supply: During the year ending Q2 2017, the Metro added 1,649 units which grew the inventory base by 1.6%. This supply expansion was met with strong demand as rent growth and occupancy levels continued to trend positively thanks to the support of job growth and economic improvement. Currently, there are 5,383 units under construction in the Metro, 2,840 of which will be completed in the next 12 months. Approximately 40% of the units being delivered in the next 12 months will be in the Baymeadows submarket and the remainder of the units are spread evenly throughout the Metro. We expect to see healthy supply and demand levels for the foreseeable future as Jacksonville continues to arise from the Great Recession trough and expand its employment base. Economic Takeaways: Currently Under Construction: Amazon Fulfillment Center 2.3 Million Square Feet and 155-Acres 4,000 New Jobs 17 Recent Economic Development Projects Accounting for 2,800 Finance and Professional Service Jobs According to JAXUSA Partnership The District Development Slated to Break Ground in Q1 2018 ($450 Million Development) 200-Key Hotel 1,200 Residential Units 285,000 SF of Commercial and Retail Space 200,000 SF of Office Space 125-Slip Marina Q2
Q2 2017 MARKET TRANSACTIONS PROPERTY CITY YEAR BUILT UNITS CLOSE DATE SALE PRICE SALE PRICE/UNIT SALE PRICE/SF CAP RATE GRM Belle Rive Club 1 Jacksonville 1990 104 6/28/17 $7,600,000 $73,077 $89.83 6.49% 7.82 Pickwick Jacksonville 1985 152 4/27/17 $14,800,000 $97,368 $86.12 6.42% 7.96 Boat House (FKA Mathews Crossing) Jacksonville 1973 1103 6/28/17 $49,500,000 $44,878 $65.35 n/a 6.23 Mission Springs Jacksonville 1972 444 6/20/17 $26,300,000 $59,234 $58.92 6.34% 6.79 Eagle Pointe Jacksonville 1964/1973 186 6/30/17 $11,850,000 $63,710 $58.78 6.53% 6.88 2017 Q2 Average 1980 398 $22,010,000 $67,653 $71.80 6.45% 7.14 1 This sale included the assumption of the existing CMBS financing 40,000 4.50% 35,000 4.00% 30,000 3.50% Jobs Added 25,000 20,000 15,000 3.00% 2.50% 2.00% 1.50% % Change 10,000 5,000 1.00% 0.50% Post-Recession Economic Improvement Annual Employment Gains and Growth (%) Source: Bureau of Labor Statistics 2011 2012 2013 2014 2015 2016 May 2017 T12 0.00% Annual Employment Gain Employment Growth (%) Supply Additions vs Occupancy Rates Source: MPF Research; Real Page, Inc. Annual Supply Additions 3,000 2,750 2,500 2,250 2,000 1,750 1,500 1,250 1,000 750 500 250 0 305 1,337 1,532 2012 2013 2014 2015 2016 Q2 2017 (T12) 2,150 1,336 1,649 2,840 Next 12 Months Forecast 97.0% 96.0% 95.0% 94.0% 93.0% 92.0% 91.0% 90.0% Occupancy Supply Additions (Year-over-Year) Occupancy (%) 9
SOUTHWEST FLORIDA SARASOTA, BRADENTON, FORT MYERS, NAPLES Rent Growth: Consistent with Q1 2017, annual rent growth throughout Southwest Florida has tapered to a more modest level as overall rent expansion was recorded at 1.47% year-over-year. This is largely attributed by most to the combination of recent supply additions (2.52% supply growth over the past 12 months) and cooling effects following the substantial growth of over 7.5% annually during the past four years. Within the Region, the Fort Myers/Naples market experienced the strongest performance with 2.3% annual growth. Also, within vintage classes, 1970s and 1980s segments recorded the strongest annual increases at 3.33% and 2.66% respectively. Looking ahead over the next few years, supply additions will continue to be a talking point as the inventory base is expected to increase by an additional 3.22% over the next 12 months alone. However, the rental market has had a few quarters to recover from recent aggressive rent increases. This, combined with overall economic improvement, signals positive signs for more organic rent growth in upcoming periods. Supply: New apartment supply in Southwest Florida has increased substantially with annual completions between 1,000 units and 1,800 units in each of the past six quarters. In Q2 2017, 3,137 units were added to the metro, growing inventory by 4.8%. The Metro has another 2,687 units scheduled for completion in the next 12 months which is approximately 67% of the total units under construction. Ft. Myers/Naples is leading Southwest Florida in terms of supply expansion with 1,753 units delivered during the 12 months ending Q2 2017. Southwest Florida absorbed 845 units during Q2 2017 alone with 71% of the absorption in Sarasota/Bradenton. Southwest Florida, as a secondary market in terms of development compared to Tampa and Orlando, has seen supply ramp-up at a slightly slower pace than that of other Florida markets. Nevertheless, more and more developers are realizing the opportunity throughout the Southwest Florida markets which is currently fueling the construction pipeline. Occupancy: Consistent with the past five years, occupancy in Southwest Florida has remained strong (95.83% as of Q2 2017). This post-recession resurgence has been supported by strong market fundamentals and improving overall economic conditions including annual job growth of 2.3% to 4.1% since 2013. Within the region, the strongest submarkets for occupancy rates were Port Charlotte/Punta Gorda (98.9%) and Sarasota (97%). Furthermore, consistent with rent growth, the strongest vintage classes for occupancy were 1970s (97.2%) and 1980s (97.1%) assets. # of Units Delivered 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 616 890 750 1,581 118 957 852 321 68 144 2012 2013 2014 2015 2016 Fort Myers/Naples Sarasota/Bradenton 1,384 1,753 Q2 2017 (T12) 2,022 1,995 Next 12 Months Forecast SUPPLY PIPELINE Q2
Q2 2017 MARKET TRANSACTIONS PROPERTY CITY YEAR BUILT UNITS CLOSE DATE SALE PRICE SALE PRICE/UNIT SALE PRICE/SF CAP RATE GRM Courtyards at Estero Estero 2016 136 6/1/17 $26,180,000 $192,500 $177.97 5.25% 10.82 Lost Creek at Lakewood Ranch Bradenton 2012 272 5/31/17 $50,500,000 $185,662 $168.76 5.19% 11.51 Avalon Square Bradenton 1975 154 5/25/17 $11,988,000 $77,844 $82.02 6.44% 7.35 Oakridge Apartments Palmetto 1967 142 5/16/17 $7,000,000 $49,296 $61.62 8.31% 5.52 Berkshire Reserve Townhomes Longitude 81 (FKA Springs at Estero) Naples 2000 146 5/16/17 $28,200,000 $193,151 $148.58 5.56% 10.40 Estero 2015 260 4/28/17 $54,971,300 $211,428 $219.61 5.23% 11.35 Bradenton Reserve Bradenton 1986 166 4/17/17 $19,100,000 $115,060 $147.61 5.85% 9.23 2017 Q2 Average 1996 182 $28,277,043 $146,420 $143.74 5.98% 9.45 2016 Year-End Average 1991 301 $39,646,988 $129,007 $137.93 5.96% 9.58 Class-B and C assets have experienced the strongest rent and occupancy performance within the Southwest Florida Region in recent periods due to higher pressure on Class-A performance caused by new supply additions Michael P. Regan Senior Managing Director Investments Grand Total 2010+ Vintage Assets 2000s Vintage Assets 1990s Vintage Assets 1980s Vintage Assets 1970s Vintage Assets Q2 2017 Trailing 12 Months Q2 2016 Trailing 12 Months 5.00% 5.15% 5.60% 5.86% 6.05% 5.61% 5.77% 6.09% 6.13% 6.04% 0% 1% 2% 3% 4% 5% 6% 7% 6.55% 695%. CAP RATES 11
OUTLYING MARKETS PROPERTY NAME PROPERTY CITY YEAR BUILT UNITS CLOSE DATE SALE PRICE SALE PRICE/UNIT SALE PRICE/SF CAP RATE GRM Governors Square 1 Tallahassee 1974 168 6/30/17 $8,915,000 $53,065 $62.61 6.91% 6.19 The Pavilions at Monterey Palm Bay 1985 271 6/29/17 $20,600,000 $76,015 $126.69 6.12% 8.08 Marcus Pointe Pensacola 2004 248 6/8/17 $26,300,000 $106,048 $84.94 6.20% 8.71 Carmendy Square Townhomes Lady Lake 1999 152 6/8/17 $16,450,000 $108,224 $90.45 6.09% 8.84 Camaron At Woodcrest Tallahassee 1971 222 6/6/17 $13,850,000 $62,387 $66.70 6.15% 7.35 Majestic Oaks Pensacola 2008 184 5/22/17 $21,000,000 $114,130 $107.26 5.64% 9.36 The Haven at West Melbourne Melbourne 2010 336 5/18/17 $53,250,000 $158,482 $135.20 5.50% 9.73 The Park at Countryside Port Orange 1983 120 5/11/17 $9,300,000 $77,500 $103.33 6.36% 7.95 Pine Lake Palm Coast 2005 184 5/2/17 $25,525,100 $138,723 $134.13 5.84% 9.95 Meridian Place Tallahassee 1970 232 4/20/17 $11,450,000 $49,353 $43.81 6.71% 5.31 The Flats At Ninth Avenue 1 Pensacola 1971 168 4/11/17 $10,200,000 $60,714 $71.18 6.78% 6.64 Alexan Southwood Tallahassee 2010 272 4/10/17 $34,600,000 $127,206 $128.31 5.53% 9.6 Della Vita (FKA Cypress Gardens) 2 Winter Haven 1985 278 4/6/17 $24,000,000 $86,331 $95.20 6.51% 7.88 The Monroe (FKA Aqua Park) 3 Tallahassee 1999 288 4/3/17 $16,100,000 $55,903 $37.36 n/a n/a Averages 1991 223 $20,824,293 $91,006 $91.94 6.18% 8.12 1 This sale included the assumption existing financing 2 This Property was 85% occupied at the time of sale and the cap rate is based on a stabilized projection with market occupancy and normalized expenses. 3 This asset is in the process of converting from a student housing community to a traditional market rate asset therefore no relevant in-place cap rate or GRM are available With demand for existing multifamily assets continuing to increase in the major Florida markets, more investors are pursuing opportunities in outlying secondary and tertiary Florida markets in an effort to avoid competition and secure higher yield Francesco P. Carriera Senior Managing Director Investments Q2
STRATEGIC ANALYSIS PROGRAM HOW ARE YOU PROACTIVELY GROWING YOUR EQUITY POSITION? Carriera Regan is pleased to announce the expansion of our Strategic Advisory Services. Our three-step process is a valuable contribution to your investment strategy. This program allows you to keep up to date with the market, review an approximate indication of value for your asset, and strategize with local experts on the best way to proceed. STEP STEP STEP Strategic Market Analysis 1 Strategic Value Analysis 2 Quarterly Updates 3 Rent and Sales Comparables Proprietary Submarket Information Financial Analysis Overall Factors Currently Impacting Your Asset Your Options and Our Recommended Course of Action Opportunity to Review the Most Current Market Data Build Upon Your Investment Strategy We invite you to begin the process. We will provide you with a clear picture of where your assets stand in the current investment environment and what factors to expect in the near future. Our promise to you is to position ourselves as your primary advisors. We will assist you in effectively achieving your investment goals. If a capital need arises, we will be ready to step in and facilitate any action that will serve your best interest. To learn more about our Strategic Analysis Program, contact us at carrieraregan@marcusmillichap.com or 813-387-4800. 13
CARRIERA REGAN SALES ASSOCIATES Cameron S. Barbas Senior Investment Associate Joshua D. Teplitzky Senior Investment Associate Benjamin N. Skinner Investment Associate RESEARCH & VALUATION Francesco P. Carriera Senior Managing Director Investments E. Francesco.Carriera@marcusmillichap.com O. 813-387-4769 Michael P. Regan Senior Managing Director Investments E. Michael.Regan@marcusmillichap.com O.813-387-4775 Ryan H. Wilson Senior Financial Analyst Steven P. Garitty Financial Analyst Matthew W. Prozzillo Licensed Research Analyst Carriera Regan, formed in 2009 by Francesco P. Carriera and Michael P. Regan, is a highly focused multifamily asset disposition group that offers an all-encompassing delivery system that meets the disposition needs and equity placement requirements of virtually every client. Since the partnership was formed, Carriera Regan has closed a total of $1.5 billion dollars in sales, representing 31,000 multifamily units and 257 transactions. With over 25 years combined of brokerage experience in the Southeastern United States multifamily marketplace, Carriera Regan holds an extensive track record of major multifamily property sales and advises approximately $1.8 billion dollars in value. Carriera Regan, with its staff of professionals, strive to produce the highest quality of transaction services and market expertise. Matthew S. Valeri Licensed Research Analyst OPERATIONS & MARKETING Victoria C. McDougal Director of Operations and Escrow Management Christina H. Kee Marketing Coordinator Bridgette D. Elias Agent Assistant James J. Buscarino Asset Specialist Q2
O. 813-387-4800 CARRIERAREGAN.COM The information contained in this report was obtained from sources deemed to be reliable. Every effort was made to obtain accurate and complete information; however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. Past performance is not indicative of future results. Note: Sales data includes transactions for properties of 100 units and greater unless otherwise noted. Sources: Carriera Regan Internal Research; Marcus & Millichap Research Services; Bureau of Labor Statistics; Yardi Systems, Inc.; CoStar Group, Inc.; Moody s Analytics; Real Capital Analytics; MPF Research; Real Page, Inc.; Freddie Mac Multifamily Research; AXIOMetrics, U.S. Census Bureau. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services of Florida, Inc. 2017 Marcus & Millichap.