Indiana Apartment Market. Overview. Multifamily Investment WALL ST. Multihousing Investment Advisors

Indiana Apartment Market Overview Multifamily Investment WALL ST

Economic Overview Multifamily Real Estate - Shining in a Year of Uncertainty Slowing job growth in the third quarter and continuing concern over European and US debt have caused economic pessimists to worry about a double dip recession - and even optimists generally predict no change until after the election year of 212. In the midst of this economic uncertainty, multifamily real estate has been a shining star. Major Issues - 211 121 Indiana Avenue Continuing Concern About Commercial Real Estate Defaults Since 29, the specter of massive commercial real estate defaults has been a drag on real estate values and the economy in general. In 21, 17.3% of all commercial property sales were distressed assets (up from 1.5% of total sales in 29). And the volume of delinquencies continues to rise. Most loan foreclosures have been of the CMBS variety. Trepp reports that 9.6% of all CMBS loans are now delinquent nationally and 9.% are seriously delinquent (over 6 days or in foreclosure). Multifamily loans have the highest delinquency percentage as a property class at 17.%. In Indiana, 6. of CMBS multifamily loans are in default and in the percentage is 13.8%. To date there has been no avalanche of foreclosures, but rather a steady stream which the market has been able to absorb in a somewhat orderly manner. Through October of 211, properties totaling 2,8 apartment units have passed through foreclosure in. It should be noted that lenders have increased the use of note sales to clear their backlog of nonperforming loans (particularly loans on smaller properties or in secondary markets), even though note sales have generally produced a lower percentage of debt recovery than sales of the real estate. Westhaven 16 Park Strong Apartment Fundamentals The Changing American Dream? Per MPF Research, average apartment occupancy nationally climbed to 94.8% in the third quarter of 211, up from 93.8% a year ago and 91.8% at the market s low point in late 29. Effective rents also climbed a full 1.6% in the third quarter and are now up 4.3% from one year ago. This impressive recovery has been driven by strong and growing demand in spite of a struggling economy and no sustained job growth (historically a key to a strong apartment market). What we are witnessing is the beginning of a new age in the balance between home ownership and apartment rentals, the result of two powerful and long term forces: changing demographics and changing living preferences. Changing Demographics - Three major demographic groups are boosting demand for rental housing. First, an estimated 8 million Echo Boomers (children of Baby Boomers) are coming of age and beginning to establish their own households. Traditionally, over 65% of householders under the age of thirty are renters. If tradition holds, the impact of this group on rental housing could be huge. Secondly, aging Baby Boomers (over 7 million in number and the second largest population group behind the Echo Boomers) are becoming empty nesters and approaching retirement. Undoubtedly many of this age group will choose to downsize to lower maintenance apartment living. Finally, America s Hispanic population is growing incredibly rapidly. Between 2 and 21 Hispanics accounted for over half of the total population increase in America. Almost half of Hispanic householders have historically rented compared with just 3 of the total population. Changing Lifestyle Preferences - Between 1965 and 25, home ownership The American Dream - grew steadily. At its peak in 25, 6 of American households owned their home. Since 25, however, home ownership has fallen for 6 consecutive years (to 66% in 211). Indiana mirrors the nation with a declining homeownership trend (6 in 211 compared to 7 in 2). In addition to the demographic factors discussed above, more people are now choosing to rent rather than buy. Reasons for this change in preference include (a) fear that home values will fall further as more foreclosed homes hit the market (b) uncertainty in their own financial future (c) tightened credit standards making home buying more difficult and (d) the desire for flexibility, mobility and freedom from the maintenance demands of home ownership. Broadstone Pointe Slow but Continued Improvement in Credit Markets With interest rates at historic lows, the primary challenge to buyers and developers is not the cost, but rather the availability, of financing (although credit markets continued to improve in 211). CMBS has not yet returned as an option for most borrowers. Insurance companies are becoming more active but at lower loan-to-values than Fannie Mae and Freddie Mac. Fannie and Freddie have both exceeded their 211 lending goals nationwide and done several deals in Indiana, but generally have not been overly aggressive here. HUD continues to be backed up due to the volume of loans it is currently processing, making it better suited for refinancing and less preferred as a source for acquisition financing. Looking Forward - We see the following in 212: (1) Strong rental demand will continue although in the demand will barely keep pace with new development, meaning overall occupancy will remain relatively flat; (2) With the Fed s promise to keep rates down until 213, and implementation of the Twist stimulus measure (buying longer-term US debt), interest rates will remain low, at similar levels to today, with credit availability improving only slightly; (3) the number of distressed assets hitting the market will continue, but still no flood.

Economic Overview Indiana continues to be the envy of much of the country for its diversified and stable economy. Although job growth slowed slightly in the summer of 211, a flurry of new job announcements were issued in the early fall, primarily by smaller businesses and in a variety of different industries. The state offers a decidedly pro-business environment and exceptional resources, including a very real public-private working relationship between business and the state s respected universities, i.e. Purdue, Indiana and Ball State. As evidence of the state s resolve to attract new business, legislation passed in May to actually cut corporate taxes. Success is reflected in recent rankings: Population Population % Annual Change Households Households % Annual Change Median Household Income Household Income % Annual Change Per Capita Income Per Capital Income % Annual Change Total Housing Units Housing Units % Annual Change Total Establishment Employment (note 2) Employment % Annual Change Source: Stats provided by ESRI Since January 21 Indiana has accounted for 1% of the nation s private sector job growth Indiana ranks 1st in the US in per capita income from foreign owned business Indiana ranks 1st in the US in per capita employment in manufacturing Indiana ranks 3rd in the US in per capita employment in life sciences Indiana ranks 9th in the US in per capita employment in logistics Indiana was named the best place in the Midwest to do business and 6th best nationally in a recent survey of 5 CEO s conducted by Chief Executive magazine. The state appears poised to be a national leader in capturing repatriated global manufacturing jobs as a result of our comparative low cost structure and pro-business policies. Most economic observers expect Indiana s economy to continue to significantly out perform other Midwestern states and lead much of the nation in future business growth as the economy improves. Demographic Statistics 199 Census State of Indiana MSA (note 1) 2 Census 5,544, 6,8, 1.% 2,65, 2,336,3 1.3% $ 28,854 $41,671 4.4% $13,134 $2,397 5.5% 2,246, 2,532, 1.3% 2,522, 3,, 1. 21 Census 6,479,8.7% 2,521,7.8% $53,65 2. $25,499 2.5% 2,841, 1.2% 2,793, -.7% 215 Projection 6,634,1.5% 2,591,1.6% $6,72 2.6% $29,111 2.8% 2,961,.8% n/a 199 Census 2 Census 1,294, 1,525, 1.8% 495, 594,9 2.% $31,567 $46,31 4.6% $15,11 $23,32 5.5% 536, 644,9 2.% 672, 853,4 2.7% 21 Census 1,755,8 1.5% 687,2 1.6% $61,781 3.4% $29,83 2.8% 773,6 2.% 87,.2% 215 Projection Unemployment Rate (21 as of Aug.) 5.% 2. 1.2% n/a 3.3% 2.4% 9.2% n/a Median Household Age (years) 32.8 35.2 37. 37.4 32.3 34.4 36. 35.9 Note 1: - Carmel MSA includes the following counties: Boone, Brown, Hamilton, Hancock, Hendricks, Johnson, Marion, Morgan, Putnam and Shelby. Note 2: Establishment Employment is the number of jobs based on place of employment. Labor Force is the number of employees based on county of residence. Change in Jobs 6, Job Growth & Unemployment State of Indiana 1,854,8 1. 726,7 1. $7,766 2. $34,174 2. 826,4 1.4% 4,,, 1,5 1 1 1 2, 1,1,, 1% (2,) 21 22 23 24 25 26 27 28 29 21 211 (5,) (8/11) 8% (4,) (,5) (9,1) 7% Trailing 12 (6,) 6% months thru (8,) (,) 5. 5 5 5 5 5.% 5% 8/11 (1,) 4% (12,) 3% (14,) (16,) (18,) Annual Change in Employment Source: Bureau of Labor Statistics (19,5) Unemployment Rate 12% 2% % n/a Unemployment Rate continues to be the engine of much of the state s economic growth. Unemployment in the city decreased in 211 and much of the recent positive job and economic news in the state is coming from and central Indiana. The metro area has become a national leader in a number of important industries, most prominently health care and life sciences, logistics, information technology, motorsports, and advanced manufacturing. As commercial development remains at a near standstill in many other cities, it is vibrant in central Indiana. Notable projects completed in the last twelve months include a major convention center expansion, the 1,5-room JW Marriott hotel (largest of its brand in the US), and the Carmel Center for the Performing Arts (the crown jewel of Carmel s $3M City Center development), to name just a few. In addition, CityWay, an ambitious $155M mixed use development near the Eli Lilly headquarters on downtown s near south side has recently broken ground and is just one of the numerous revitalization projects now underway as prepares to host the Super Bowl in February, 212. Due to their relative fiscal health the city and state have become national standouts, attracting the interest of investors of all stripes. Please visit www.tamultihousing.com for more information Change in Jobs 5, 4, 3, 2, 1, (1,) (2,) (3,) (4,) (5,) Job Growth & Unemployment MSA,9 1,5 1, 1,9 8% 1,,5 7% (,) (,) (,9) (1,) 6% 21 22 23 24 25 26 27 28 29 21 211 (8/11) 5% 5. Trailing 4%. 12 months thru 8/11 3% Annual Change in Employment Source: Bureau of Labor Statistics (1,5) 9 Unemployment Rate 12% 1 1% 2% % Unemployment Rate

Market Survey Total Apartment Base (units) 133,4 Number of Communities (all) 713 Number of Communities (> 2 units) 291 Average Community Size (units) 187 Average Occupancy Rate (211) 91.4% Median Occupancy Rate (211) 94.% Rent Growth Rate (21 to 211) 1.3% Annual Rent Growth (26 to 211) 1.5% "Same Store" Annual Rent Growth (26 to 211) 1.2% "Same Store" Annual Rent Growth (21 to 211).3% Indpls Dwntwn North South East West Indy Indy Indy Metro Indpls Metro Metro Metro Metro Class Class Class Area Area Area Area Area Area "A" "B" "C" Total Properties 67 89 167 123 11 127 14 278 223 Total Units 121,456 6,945 43,272 24,362 14,71 32,167 27,355 59,82 34,89 Occupancy Rate 91.4% 94.4% 93.7% 92.3% 85.8% 89.5% 95.% 92.8% 86.2% Overall Rent Growth (21-211) 1.3% 2.2% 1.4%..5% 1.% 1.5%.6% 1. Average Rent $686 $855 $746 $66 $582 $634 $89 $664 $564 Average Rent / Sq. Ft. $.77 $1.9 $.79 $.75 $.67 $.73 $.91 $.73 $.69 Avg. Rent $466 $548 $452 $475 $48 $422 $49 $465 $438 Studio 1 Bedroom Bedroom/ 1 Bath Bedroom/ Bath Bedroom Bedroom Avg. $ / SF $1.9 $1.21 $1. $1.24 $1.9 $1. $1.49 $.99 $1.12 Avg. Sq. Ft. 426 451 452 383 373 422 529 468 39 Total Units 3,91 99 1,75 476 533 836 26 1,433 2,265 Avg. Rent $63 $764 $647 $578 $57 $547 $77 $573 $519 Avg. $ / SF $.86 $1.11 $.89 $.83 $.77 $.81 $1. $.83 $.79 Avg. Sq. Ft. 698 691 728 695 663 677 767 69 659 Total Units 45,313 3,753 16,311 8,54 4,596 12,149 1,541 21,399 13,329 Avg. Rent $616 $767 $683 $61 $547 $62 $821 $639 $552 Avg. $ / SF $.71 $.86 $.76 $.7 $.64 $.72 $.88 $.73 $.66 Avg. Sq. Ft. 866 887 9 867 857 842 937 878 842 Total Units 23,393 487 5,474 6,12 4,44 6,926 1,98 11,326 9,927 Avg. Rent $791 $1,25 $83 $753 $667 $726 $955 $74 $641 Avg. $ / SF $.74 $1.1 $.75 $.72 $.63 $.7 $.87 $.7 $.61 Avg. Sq. Ft. 1,72 1,98 1,18 1,38 1,54 1,35 1,13 1,58 1,55 Total Units 36,888 1,529 16,313 6,774 3,536 8,736 11,773 18,627 6,488 Avg. Rent $873 $1,34 $967 $849 $75 $82 $1,91 $835 $739 Avg. $ / SF $.67 $1.3 $.7 $.69 $.6 $.65 $.84 $.64 $.58 Avg. Sq. Ft. 1,294 1,298 1,376 1,229 1,254 1,257 1,33 1,34 1,263 Total Units 11,59 72 3,95 2,234 1,479 3,324 2,632 5,723 2,74 Avg. Rent $1,22 $1,943 $1,8 $85 $817 $833 $1,96 $834 $789 Avg. $ / SF $.7 $1.21 $.64 $.62 $.58 $.59 $1.2 $.59 $.55 Avg. Sq. Ft. 1,457 1,6 1,575 1,363 1,418 1,48 1,63 1,421 1,425 Total Units 89 114 149 188 162 196 139 574 96 Apartment occupancy in the Metro area improved for the second consecutive year, climbing to 91.4% in 2 from 9.8% in 21. Downtown leads all submarkets at 94.4%, up significantly from 91.6% a year ago. Only the west submarket saw an occupancy decline, dropping to 89.5% from 9.% last year. Class A properties experienced a significant gain in occupancy in 211, growing from 93.2% to 95%. Occupancies for Class B and C properties were nearly unchanged, with Class B occupancy gaining. and Class C properties losing.. The gap between Class A and Class C occupancies increased to almost in 211, the widest margin in several years. After declining slightly (by.4%) in 21, overall metro rents increased by an average of $18 per month or 1.3% (on a gross basis prior to concessions). This growth was experienced in all submarkets and among all property classes. Downtown, continuing to benefit from strong student and young adult demand, experienced the highest growth at 2.2%. Gross rents downtown climbed to $855 per month, over $1 per month above the North Submarket which ranked second in both gross rents and rent growth. Class A properties saw the highest rent growth in the city with a 1.5% increase over last year. It should be noted that one reason for the smaller increase in average rent within Class B properties is that our survey classifies all new Section 42 tax credit properties within the B Class, and many of those properties offer comparatively lower rents than properties without the resident income restrictions of tax credit properties. Cosmopolitan on the Canal Although most new development (other than tax credit) is occurring in Class A properties, rents continue to grow in spite of the increased supply. In 211 rents exceeded the $.9 per sq. ft. average for the first time. The newest downtown Class A properties are commanding rents between $1.3 and $1.5 per sq. ft. $1. $.95 $.9 $.85 $.8 $.75 $.7 $.65 $.6 Average Rent per Square Foot by Year Built & by Class Metro Area $.84 $.82 $.81 $.69 $.7 $.87 2's 199's 198's 197's 196's Prior to 196's Includes Year Built downtown rehabs $1. $.95 $.9 $.85 $.8 $.75 $.7 $.65 $.6 $.91 $.73 $.69 Class A Class B Class C Tax Credit Properties are B

Market Survey 3.% 2.% 1.%.% -1.% Same Store Rent Growth (annual) Metro Area 1.2% 1.2% 1 Year Annual Growth 5 Year Annual Growth.3% 1 Year Annual Growth 2. Year Annual Growth Same Store Rent Growth is the rent growth of properties that have been in existence during an entire respective survey period. Properties built during a respective study period are not included. -2.% 1-Year 5-Year 1-Year -Year In spite of economic uncertainty and continuing weak job growth, occupancy increased in 211. The market absorbed an additional 2,9 units in the trailing 12 months. Increasing occupancy was due to strong demand and only a small increase in rental inventory through new development. Number of Permits 14% 13% 12% 1 1% 8% 7% 6% 5% Overall Market Vacancy Rate Metro Area While we are estimating 3,4 new deliveries in 212, we assumed only 2,3 units will actually be delivered based on historical delta between developer s hopes and reality. 2 21 22 23 24 25 26 27 28 29 21 211 212 proj. * Approximately 2,9 units were absorbed in 211, net of demolition ** 211 vacancy rate forecast assumes 4, units absorbed (based on the assumption of continued high demand due demographics, a slowly improving economy and continued reduced level of single family home sales. *** Average annual absorption has been 1,85 units since 1984 Number of Units 1% 98% 96% 94% 92% 9% 88% Occupancy Rate by Class Metro Area The strength of Class A properties provides evidence that more individuals and families are choosing to rent and are willing to pay for higher end finishes and amenities. 86% 84% 82% 8% Class "A" Class "B" Class "C" 9 1 11 This chart shows the number of new apartment units completed in a given year as a percentage of the overall inventory. The total market vacancy rate is also shown to contrast unit additions against the overall market vacancy. 13% 12% 1 1% 8% 7% 6% 5% 4% 3% 2% % 9. 11 New Apartment Units % of Base vs. Market Vacancy Rate Metro Area 9.. 1.% 1 11.% 1. 9 1 1 9.. 9 9 9 9 New units as a % of base Vacancy Rate Please visit www.tamultihousing.com for more information 5

Indiana Market Survey City 211 Indiana Cities Market Performance Market Rent Growth Avg. Rent/ S.F. Avg. Rent/ Unit Market Occupancy Anderson. $. $559 9 Bloomington 5 $.9 $5 95.5% Columbus. $.5 $ 9.5% Evansville $.1 $ 9. Fort Wayne 1 $. $5 9 1 $. $ 91 Kokomo - $. $5 9. Lafayette & W. Lafayette - $. $1 9. Muncie $. $9 9 All major cities surveyed attained occupancies above 9% in 211. Columbus, driven by strong performance and hiring by Cummins, showed the strongest occupancy at 96.5% followed closely by Bloomington at 95.5%. Bloomington was also the leader in both gross rents ($856 per month) and rent growth (5.3%), reflecting the strong Indiana University student housing market. Sophia Square Total Properties Total Units Occupancy Rate Overall Rent Growth (21-211) Average Rent Average Rent / Sq. Ft. Studio 1 Bedroom Bedroom/ 1 Bath Bedroom/ Bath Bedroom Bedroom Anderson Bloomington Columbus Evansville Ft. Wayne 2 78 18 63 72 21 64 22 2,178 1,377 2,636 1,746 17,336 3,18 1,718 2,646 9.6% 95.5% 96.5% 93. 92.4% 92. 92. 94.8% -1. 5.3%. 2.6% 1.4% -.7% -.4% 2.2% $549 $856 $764 $62 $566 $538 $71 $696 $.62 $.94 $.85 $.71 $.68 $.64 $.82 $.76 Avg. Rent $344 $538 $48 $42 $433 $373 $544 $422 Avg. $ / SF $1.32 $1.49 $1.53 $.93 $.95 $.81 $1.3 $1.19 Avg. Sq. Ft. 26 362 314 45 456 459 419 355 Total Units 8 344 74 128 661 133 531 37 Avg. Rent $481 $679 $683 $51 $491 $47 $582 $522 Avg. $ / SF $.71 $1.1 $.99 $.75 $.74 $.73 $.89 $.82 Avg. Sq. Ft. 682 675 688 683 66 639 656 638 Total Units 549 3,18 752 4,74 7,445 829 3,68 653 Avg. Rent $54 $685 $671 $597 $552 $51 $649 $612 Avg. $ / SF $.62 $.85 $.78 $.68 $.63 $.58 $.75 $.69 Avg. Sq. Ft. 867 86 859 876 876 862 86 89 Total Units 873 2,131 435 3,99 3,172 1,19 3,27 791 Avg. Rent $625 $929 $843 $743 $656 $62 $82 $712 Avg. $ / SF $.63 $.92 $.84 $.68 $.64 $.65 $.82 $.74 Avg. Sq. Ft. 1, 1,1 1, 1,89 1,19 958 978 96 Total Units 396 2,888 1,9 2,161 4,799 712 2,16 424 Avg. Rent $656 $1,121 $891 $856 $785 $719 $978 $827 Avg. $ / SF $.54 $.87 $.75 $.69 $.62 $.6 $.77 $.72 Avg. Sq. Ft. 1,214 1,293 1,192 1,245 1,272 1,29 1,275 1,145 Total Units 334 1,42 343 612 1,182 319 1,31 515 Avg. Rent $78 $1,791 $772 $772 $589 $735 $1,242 $1,25 Avg. $ / SF $.46 $1.19 $.59 $.55 $.5 $.47 $.84 $.91 Avg. Sq. Ft. 1,539 1,57 1,314 1,414 1,171 1,553 1,473 1,318 Total Units 18 447 23 42 77 6 55 226 Kokomo Lafayette Muncie Average Occupancy by City 98% 96% 94% 92% 9% 88% 86% 84% 82% Anderson Bloomington Columbus Evansville Ft. Wayne Kokomo Lafayette /W Laf Muncie 28 29 21 211

211 Average Rent and Occupancy by City MERRILLVILLE $835 / $.9 / 92.4% CROWN POINT $831 / $.95 / 96.5% WEST LAFAYETTE $81 / $.88 / 94.2% 74 65 94 MICHIGAN CITY $559 / $.7 / 93.5% PORTAGE $69 / $.78 / 94. TERRE HAUTE $524 / $.67 / 96. LAFAYETTE $626 / $.77 / 91.8% INDIANAPOLIS $686 / $.77 / 91.4% 7 8 (Avg Rent / Avg Rent per sqft / Avg Occupancy) ELKHART $589 / $.71 / 85. MISHAWAKA $632 / $.77 / 87.4% SOUTH BEND $635 / $.77 / 89.4% 31 FT. WAYNE $566 / $.68 / 92.4% MARION $513 / $.62 / 92.3% KOKOMO $538 / $.64 / 92. ANDERSON $559 / $.62 / 9.6% 465 37 69 7 MUNCIE $696 / $.76 / 94.8% RICHMOND $536 / $.64 / 89.8% 74 469 Indiana is poised to be a national leader in capturing repatriated manufacturing jobs as a result of our comparatively low cost structure, highly skilled manufacturing workforce, low tax rates, strong fiscal position and pro-business policies. BLOOMINGTON $856 / $.94 / 95.5% COLUMBUS $764 / $.85 / 96.5% 37 65 31 CLARKSVILLE $57 / $.62 / 92. JEFFERSONVILLE $553 / $.61 / 95.% NEW ALBANY $614 / $.59 / 95. 64 164 EVANSVILLE $62 / $.71 / 93. Please visit www.tamultihousing.com for more information

New Construction The two charts below illustrate the percentage of multifamily building permits (by units) relative to the total residential building permits. Even though single family permits have fallen in the trailing 12 months, permits for new apartment units were also down in this period. Apartment units permitted were approximately 2% of total residential units permitted in 211, down from 23% in 21. Source: US Census Bureau Residential Construction Branch Number of Permits Number of Permits 45, 4, 35, 3, 25, 2, 15, 1, 5, 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, Total Residential Building Permits State of Indiana 2 21 22 23 24 25 26 27 28 29 21 211 Single Family (1 - units) Multi-family (5+ units, incl. Condos) Total Residential Building Permits Trailing 12 Months thru 8/11 Metro Area Source: US Census Bureau Residential Construction Branch 2 21 22 23 24 25 26 27 28 29 21 211 Single Family (1 - units) Multi-family (5+ units, incl. Condos) Trailing 12 Months thru 8/11 Total residential building permits for the state dropped once again in 211. For the trailing twelve months, total permits were under 11,8 units, a remarkably low number when compared to the single family residential building boom between 1999 and 25 (when permits for single family residences averaged over 33, annually). With an abundance of single family homes on the market and large numbers of new foreclosures, this trend is likely to continue. Source: US Census Bureau Residential Construction Branch New construction of single family homes in the metro area also remained very slow, with total permits dropping to just 3,84 units in the trailing 12 months, just above the permits issued in 29 during the recession. Between 1999 and 25 single family permits averaged in excess of 14, units each year. Source: US Census Bureau Residential Construction Branch 35% 3% 25% Multifamily Building Permits as a % of Total Housing Permits 2% 1 % 15% 15% 15% 1% 5% % 1 5% % % % % % 15% 22 23 24 25 26 27 28 29 21 211 Indy MSA Indiana National % Trailing 12 Months thru 8/11 Number of Permits 2,4 2,2 2, 1,8 1,6 1,4 1,2 1, 8 6 4 2 Monthly Residential Building Permits MSA 1-5 7-5 1-6 7-6 1-7 7-7 1-8 7-8 1-9 7-9 1-1 7-1 1-11 7-11 Total Residential Permits Multifamily completions are down significantly in 211, with completion of 1,752 units estimated to hit the market, 3% below the number of new units completed in 21. The decline in new units is clearly attributable to the severely constrained credit markets which prevented commencement of construction for most projects in 29. However, it appears that the trend will completely reverse in 212 when developers plan to complete over 3,4 new units. If all units are actually finished, it will represent the largest number (by far) of new units hitting the market in any single year in this millennium. This surge in development is further evidence of the optimism for continued strong rental fundamentals for multihousing. survey of developers and US Census Bureau Residential Construction Branch Number of Units 4, 3,5 3, 2,5 2, 1,5 1, 5 1, 1,9 New Apartment Development Metro Area,5,91,1,59 1,91, 1,99,, 1,9 21 22 23 24 25 26 27 28 29 21 211 est. 9 1,99,1,5 1,,5 Trailing 12 Mos. 8/11 1, 1,5 1,91, 212 proj. Placed in Service (Tikijian Associates) Building Permits (US Government)

211 Apartment Development DEVELOPMENT STAGE PLANNED UNDER CONSTRUCTION LEBANON DANVILLE STONEGATE MEADOWS (62 - TC) 65 267 BROWNSBURG AVON MOORE RD 136 32 LAFAYETTE RD 56TH ST COMMONS AT SPRINGMILL (72 - TC) ZIONSVILLE THE BLVD AT ANSON PH II (213 - MR) (182 - MR) DOMAIN AT BENNETT FARMS (219 - MR) CANYON CLUB (26 - MR) 74 BROADSTONE POINTE (76 - TC) DAN JONES RD 4 WESTHAVEN II 46TH ST WASHINGTON ST INDIANAPOLIS INT L AIRPORT 146TH ST HIGH POINT ON MERIDAN (245- MR) 131ST ST ALEXANDRIA OF CARMEL (324- MR) 116TH ST 16TH ST 86TH ST 79TH ST 71ST ST 62ND ST COMMONS AT WYNNE FARMS (72 - TC) LAFAYETTE LANDINGS AT KESSLER AVON SENIORS 1TH ST (94 - TC) (72 - TC) LINDEN SQUARE II THE STEEPLES (71 - MR) (144- TC) 36 EAST MAIN (8 - TC) 134 465 MICHIGAN RD 96TH ST MERIDIAN ST INDIANAPOLIS 31 WESTFIELD COLLEGE AVE CARMEL KEYSTONE AVE KESSLER BLVD RAYMOND ST HEARTHVIEW AT LAKE CLEARWATER (228- MR) 82ND ST 46TH ST PENNWOOD PLACE (35- TC) EAST VILLAGE AT AVONDALE 38TH ST (248 - TC) 3TH ST GREENFIELD EDGEWOOD AVE PLAINFIELD 121 INDIANA AVE ASPEN LAKES II (253 - MR) 11 CENTRAL (135 - MR) W 1th St 1TH ST (86 - TC) TRAILSIDE AT MASS AVE E 1th St SOUTHPORT RD THE AVENUE 1 Starts Units 11 Starts Units 11 Starts (69 - Units TC) W 9th St 1 Exp (146- MR) KIRKBRIDE (15- MR) E St Clair THE St BRAXTON Market Rate Market Rate 37 31 STOP 11 RD Tax-Credit (74 - TC) Market R 7 67 121 Indiana Ave - Trinitas Ventures 253 CityWay - Buckingham 32 East Village at Avondale - Sterling / SCP 7248 Addison La COSMOPOLITAN PH. I 267 CO. LINE RD COSMOPOLITAN PH. II The blvd at Anson II - Flaherty & Collins 213 The Fort Apartments - JC Hart 224 TROTTERS POINTE III The Steeples - Pedcor (16 - MR) (218 - MR) E 144 E Vermont St Michigan St Hearthview Sophia Square - Keystone Construction 22 Domain at Bennett Farms 135 - REI (96 - TC) 219 Avon Seniors - NRP Group 94 Union Stre W Ohio St OHIO ST GREENWOOD RESIDENCES AT MARKET Waverley II - JC Hart 48 Canyon Club - Sheehan 26 Broadstone Pointe - Herman & Kittle (264 - MR) 76 Penn Circl 65 4 Di Rimini MOORESVILLE 3 One One Six at College - JC Hart 191 The Enclave - Herman 4 & Kittle 75 Bella Vista BEACON POINTE Tax-Credit The Avenue - Buckingham (68 - TC) 142 Braxton at Lugar HARDING Towers STREET LOFTS - Insight Development THE WAVERLEY 74PH. II Monon 421 Pla COTTAGES AT SHEEK ROAD (124 - MR) (48 - MR) 16 Park - Insight Development 155 Aspen Lakes II - Hunt Pacific 144 (68 - TC) 135 Lafayette Landings at Kessler - Herman & Kittle 72 Stadium Lo CITYWAY Deloss St Trotters Pointe III - Pedcor 96 Residences CLARY at CROSSING Keystone Crossing - Flaherty & Collins 129 Cottage at Sheek Rd. - Herman &(32 Kittle - MR) MOZZO 72 Cosmopoli SENIOR VILLAS CLARY CROSSING (64 - MR) Meredith Meadows - NRP Group 84 Harding Street (72 - TC) Lofts - Core Redevelopment (12 - TC) 124 Commons at Wynne Farms - Herman & 31 Kittle THE HINGE 72 Linden Squ Preston Pointe - Herman & Kittle 76 Alexandria at Carmel - Edward WHITELAND Rose RD 76 E Mc Carty St Commons at Spring Mill - Herman & Kittle Lexington (56 - MR) 72 Ave Glendale S 7 Clary Crossing Senior Villas - RealAmerica 72 Westhaven II - Glick 66 Trailside at Mass Ave - Riley Area / Monument 7 69 Tax-Cred National Apts on the Monon - Development Concepts 62 The Hinge - Von Deylen 56 W Morris St Beacon Pointe - Herman & Kittle 68 Brownston ts 77 11 North Starts - Whitsett Group Units 4 11 Starts Units Reflections 1 Expected at Bluestone Starts- Paragus Units 62 11 Cent Stonehurst Market Rate Pointe - Milestone Ventures 37 Tax-Credit Stonegate Market Rate Meadows - NRP Group 62 1 Tota 3 1 CityWay Totals - Buckingham 1, 32 East Village at Avondale - Sterling / SCP 248 One Addison Penrose Landing Place - Carr - MV Homes Communities 45 294 3 The Fort Apartments - JC Hart 224 The Steeples - Pedcor 144 11 Hearthview Totalsat Lake Clearwater - Hearthview,19 228 s2 11 Domain Starts at Bennett Farms - REI Units 219 11 Avon Starts Seniors - NRP Group Units 94 1 Union Expected Street Flats Starts at Grand Junction - JC Hart Units 227 8 Market Canyon Rate Club - Sheehan 26 Tax-Credit Broadstone Pointe - Herman & Kittle 76 Market Penn Circle Rate- Millhaus 192 3 CityWay One One - Six Buckingham at College - JC Hart 32 191 East The Enclave Village at - Avondale Herman &- Kittle Sterling / SCP 248 75 Addison Bella Vista Landing - Edward - Carr Rose Homes 294 18 3 The Fort Avenue Apartments - Buckingham - JC Hart 224 142 The Braxton Steeples at Lugar - Pedcor Towers - Insight Development 144 74 Hearthview Monon Place at II Lake - Buckingham Clearwater - Hearthview 228 136 25 Domain Aspen Lakes at Bennett II - Hunt Farms Pacific - REI 219 135 Avon Lafayette Seniors Landings - NRP at Group Kessler - Herman & Kittle 94 72 Union Stadium Street Lofts Flats - Core at Grand Redevelopment Junction - JC Hart 227 131 86 Canyon Residences Club at - Keystone SheehanCrossing - Flaherty & Collins 26 129 Broadstone Cottage at Sheek Pointe Rd. - Herman - Herman & Kittle & Kittle 76 72 Penn Cosmopolitan Circle - Millhaus on the Canal II - Flaherty & Collins 192 12 4 One Harding One Street Six at Lofts College - Core - JC Redevelopment Hart 191 124 The Commons Enclave at - Wynne Herman Farms & Kittle - Herman & Kittle 75 72 Bella Linden Vista Square - Edward II - JC Rose Hart 18 71 6 The Alexandria Avenue at - Buckingham Carmel - Edward Rose 142 76 Braxton Commons at Lugar at Spring Towers Mill - Herman Insight Development & Kittle 74 72 Monon Glendale Place Site II -- Glick Buckingham 136 5 52 Aspen Westhaven Lakes II II - - Glick Hunt Pacific 135 66 Lafayette Trailside at Landings Mass Ave at Kessler - Riley Area - Herman / Monument & Kittle 72 69 Stadium Tax-Credit Lofts - Core Redevelopment 131 62 Residences The Hinge - at Von Keystone DeylenCrossing - Flaherty & Collins 129 56 Cottage Beacon at Pointe Sheek - Herman Rd. - Herman & Kittle& Kittle 72 68 Cosmopolitan Brownstone - on Whitsett the Canal Group II - Flaherty & Collins 12 95 4 Harding Street Lofts - Core Redevelopment 124 Commons Reflections at at Wynne Bluestone Farms - Paragus - Herman & Kittle 72 62 Linden 11 Central Square - II Whitsett - JC Hart Group 71 86 67 Alexandria at Carmel - Edward Rose 76 Commons Stonegate at Meadows Spring Mill - NRP - Herman Group& Kittle 72 62 Glendale 1 Totals Site - Glick 1,1 5 2 Westhaven II - Glick 66 Trailside One Penrose at Mass Place Ave - MV - Riley Communities Area / Monument 69 45 Tax-Credit 2 The Hinge - Von Deylen 56 Beacon 11 Totals Pointe - Herman & Kittle,19 68 Brownstone - Whitsett Group 95 Reflections at Bluestone - Paragus 62 11 Central - Whitsett Group 86 7 Please visit www.tamultihousing.com for more information Stonegate Meadows - NRP Group 62 1 Totals 1,1 9 One Penrose Place - MV Communities 45 MOORESVILLE RD MANN RD 421 ZIONSVILLE RD 7 SPRING MILL RD ONE ONE SIX AT COLLEGE (191 - MR) MONON PLACE PH II (136 - MR) ENCLAVE AT MERIDIAN (75 - TC) HAZEL DEL THE PROMENADE (32 - MR) LEGACY TOWNS & FLATS (287 - MR) SOPHIA SQUARE (22 - MR) PENN CIRCLE (192- MR) RESIDENCES AT KEYSTONE CROSSING (129 - MR) GLICK GLENDALE (5 - MR) 431 ALLISONVILLE RD 79TH ST BINFORD BLVD EMERSON AVE THOMPSON AVE NOBLESVILLE PRESTON POINTE (76 - TC) ARLINGTON AVE 38 UNION STREET FLATS AT GRAND JUNCTION GRAY RD(32 - MR) SHELBYVILLE RD HAGUE RD ONE PENROSE PLACE (45 - TC) 16TH ST 52 FRANKLIN RD POST RD 4 37 MEREDITH MEADOWS (84 - TC) ADDISON LANDING (294 - MR) CUMBERLAND RD 79TH ST (TC) TAX CREDIT 32 (MR) MARKET RATE 69 126TH ST BELLA VISTA PH. I (18- MR) FISHERS N Belmont Ave 74 (123) THE FORT APARTMENTS (224 - MR) GERMAN CHURCH RD BODEN RD 86TH ST RECENTLY COMPLETED SUBSTANTIAL REHAB NUMBER OF UNITS 238 56TH ST 21ST ST THE DISTRICT AT SAXONY (266 - MR) 7 OLIO RD 36 38 13 PRAIRIE MEADOWS (1 - TC) W 2 S Downtown W STADIUM 16th St FLATS (32 - MR) Waterway Blvd Porto Alegre St S Harding St STADIUM LOFTS (131 - MR) Barnhill Dr Indiana Ave W Michigan St W New York St Dr Martin Luther King St INDIANA AVE W Washington St 132 REFLECTIONS AT BLUESTONE E 3th St (37 - TC) STONEHURST POINTE (37 - TC) 65 W Fall Creek Pkwy N Dr N S nate Ave W North St W Maryland St W Merrill St S Missouri St SENATE AVE WASHINGTON ST N Senate Ave S Capitol Ave N Illinois St MERIDIAN ST N Meridian St NEW YORK ST CAPITOL AVE S Meridian St 31 DELAWARE ST E 25th St E 22nd St E 19th St n Virginia Ave S East St Central Ave E 9th St 9 16 PARK E 16th 16TH St ST (155 - TC) E 13th St Madi N New Jersey St VIRGINIA AVE Massachusetts Ave N Park Ave MASSACHUSETTS AVE EAST ST 22ND ST N College Ave N College Ave COLLEGE AVE NATIONAL APTS ON THE MONON (62 - TC) E St Clair St Shelby St N Highland Ave N Oriental St N Arsenal Ave

Sales Activity Apartment sales nationally increased to an estimated $2.7 billion during the first half of 211, more than doubling the sales volume for the same period in 21 (but still well below the record $12 billion in sales closed in all of 26). After falling for four consecutive years, area sales have increased in 211. Thirty-nine transactions totaling 5,7 units and approximately $25 million have closed in the first 1 months of 211 (up from 4,4 units and $2 million in all of 21. An additional ten transactions totaling 3,2 units are currently pending with a number of these sales scheduled to close before year-end. When these year-end closings are added to the existing volume, the increase over 21 will be significant. Cap rates increased in 211 due more to the mix of properties that sold than to higher required yields. There were more Class B sales in 211 than prior years. Forecast cap rates declined due in part to lower capital costs, therefore lower stabilized cap rates were acceptable to buyers. Average price per unit declined due to the mix of properties that sold, more than a decline in prices. 1 The increase in sales is due to an alignment of stars decidedly in favor of multifamily investment, including: (1) anticipated growing demand for rental housing for at least the next several years; (2) the view of multifamily as the safest haven in commercial Number of Units Number of Units Price per Unit 18, 16, 14, 12, 1, 8, 6, 4, 2, 1 1% 9, Apartment Sales Transactions All Metro Properties,5,,,,, 1, 1, 9,,9,1, 5,,9 1998 1999 2 21 22 23 24 25 26 27 28 29 21 2112 211 1 SS Months Units Sold Total Consideration (millions) Red bar includes Sheriff sales Average Sale Cap Rates Metro Area - Class B or better 1.2% 9.2% 8. 8.4% 8.5% 8.6% 8.4% 8.% 8% 7.7% 7.6% 7% 6% 5% $75, $7, $65, $6, $55, $5, $45, $4, $35, $3, $25, 6.7% 6.5% 7.% 6. 6.6% 6.% 5. 9.6% 8.6% 8.2% 6.7% 8.8% $8 $7 $6 $5 $4 $3 $2 $1 $ 7.5% 2 21 22 23 24 25 26 27 28 29 21 211 Actual Cap Rate Forecast Cap Rate Average Price per Unit B Grade or better, Over 1 Units Metro Area $5, $5, $,9 $5 $51 $5 $5,5 $5,5 $ $ $5 $5, $, $1 8.2% 1 Months Millions of Dollars $8 $75 $7 $65 $55, $6 $5 $55 $5 $, $5 23 24 25 26 27 28 29 21 211 1 Months Price per Unit Price per Sq. Ft. $45 $4 $35 $3 $25 Price per Square Foot real estate; (3) a lack of investment alternatives which can provide higher returns, more control and less volatility in today s economic environment; (4) a lack of new inventory (although this dynamic is changing); (5) an improving, albeit slowly, credit market which offers more financing sources than other property types; (6) historically low interest rates; (7) an abundance of equity capital; and (8) a steady stream of available properties, both distressed and stabilized. Virtually all property classes are popular with investors, from Class C (which are sought after due to cheap per unit pricing) to more easily financeable high-end Class A properties. The strong demand has caused cap rates to compress in the last twelve months, particularly on sales of higher end properties. (Note - the increase in cap rates noted in the chart is due to the mix of properties sold in 211, not due to higher required yields.) It should be noted that the cap rate a buyer may be willing to accept can vary based upon loan sizing that is to say, a buyer can pay a higher price for an asset and still attain desired yields if the property can be highly leveraged at today s low interest rates. As equity requirements increase for a prospective purchase, the cap rate will likely increase. Because of increasing transaction volume and the attractiveness of multifamily investment (due to the aligning stars): (a) the 131 exchange requirement is returning as a factor influencing prices; (b) buyers have been willing to buy distressed assets at prices based on as stabilized proformas; and (c) acquisitions are being closed with cash, lines of credit or bridge loans in order to satisfy the desired time frames of sellers (with permanent financing placed after closing).

Selected 211 Indiana Apartment Sales Coppertree Kushner/Apollo Property Mgmt 772 Units Scandia Thiemann Real Estate 444 Units Keeneland Crest Thiemann Real Estate 424 Units Knobs Pointe Bluestone Management 384 Units New Albany Lighthouse Landings Goldoller Real Estate Investments 336 Units Fishermans Village White Eagle Property Group 328 Units Washington Quarters Thiemann Real Estate 256 Units Thompson Village Gene B Glick Company 24 Units Regency Park White Oak Partners 226 Units Fort Wayne Waterstone Place Zidan Management Group 192 Units Quail Run McCann Realty Partners 166 Units Zionsville Maxwell Gene B Glick Company 15 Units Please visit www.tamultihousing.com for more information 11

About Tikijian Associates Tikijian Associates was founded with the specific goal of offering the highest achievable level of client service in the evaluation, marketing and sale of multihousing properties. The Principles that guide us in this mission are simply stated: Focus and Work Ethic. Tikijian Associates is a boutique brokerage firm specializing exclusively in the sale of multihousing properties in Indiana and Kentucky. The experience and accomplishments of its professionals are second to none among multihousing brokers in Indiana and include: By narrowing our focus to this specific segment of the real estate industry, we offer: (1) In-depth knowledge of local markets, specific properties and investors and owners active in these markets; (2) credibility among sellers and prospective buyers based on experience; and (3) an unparalleled expertise in capital markets, financial underwriting and property operations. Over 6 years of combined experience in the multihousing brokerage industry $1.8 Billion in multihousing sales 55, units sold throughout Indiana and Kentucky for clients including local, regional and national private equity investors; public pension funds; and public and private REITs Our Associates We believe that there is no substitute for hard work in the valuation and marketing of a property. We perform our own extensive due diligence on all aspects of a property including: (1) location, (2) physical condition, (3) operations (current financial performance and marketing) and (4) existing financing. Based upon this advance due diligence, we provide owners with fair property valuations and strategic advice on value-enhancement to assure a successful closing. George Tikijian, CCIM Senior Managing Director Hannah Ott, CCIM Senior Managing Director Duke Hardy Managing Director Kimberly Wise Managing Director Christine Nealis Marketing Specialist 3755 E. 82nd St., Suite 265, IN 4624 (317) 578-88 ph (317) 57-3677 fax www.tamultihousing.com