Multi-Family Market Summary: Spring 2015 Presented By:

Nashville, TN Multi-Family Market Summary: Spring 2015 Presented By:

NASHVILLE Contents Introduction Introduction 2 Market Commentary 3 Economic Overview 4 Sales Transactions 5 Proposed Development 8 Why Choose Capstone? 10 CAPSTONE APARTMENT PARTNERS prides itself on the valuable contributions we are able to continue to offer our industry; thus, we produce periodic Multi-Family Market Summaries to further inform the clients and industry we serve. Capstone believes this market snapshot will benefit current owners, operators, investors, and other industry professionals who are active in the Nashville MSA, as well as others who are looking to break into this market. Nashville Office 2720 Eugenia Ave. Nashville, TN 37211 2 Adam Klenk Eric Conklin Andrew Klenk Investment Advisor c 615.861.9906 o 800.746.3175 ext. 706 adam@capstoneapts.com Investment Advisor c 615.905.1895 o 800.746.3175 ext. 713 eric@capstoneapts.com Partner c 704.231.4882 o 800.746.3175 ext. 704 andrew@capstoneapts.com

Bridgestone: More than Tires Bridgestone Americas Inc. has broken ground on its new 30-story, $200 million headquarters located in the SoBro area of downtown Nashville. Upon completion in mid-to-late 2017, the new office building will house more than 1,700 employees. This will consist of the 1,100 currently in Nashville, plus 600 new jobs stemming from three out of state companies relocating to the city. The retail, roofing, and industrial products business units that Bridgestone is relocating to Nashville will generate $6 billion in annual revenue. The transition also encompasses the leadership of the retail group, which includes 2,200 companyowned stores. With the lease expiring on Bridgestone s current location in late 2017, the company launched a nationwide search for a new headquarters location to support future growth. The Nashville MSA will not only benefit from the jobs Bridgestone brings, but also from planned improvements to the surrounding community. Based on recommendations from a traffic study, restriping and other enhancements are planned for streets such as Fourth Avenue South and Molloy Street. Mayor Karl Dean also revealed that Bridgestone Americas has committed to donating $150,000 a year for five years, or $750,000 overall, to Metro School's Music Makes Us program. The Vanderbilt Effect Cornelius Vanderbilt gave $1 million to create a university in 1873. Since that time, Vanderbilt University has become an internationally recognized research university in Nashville, Tennessee, with strong partnerships among its 10 schools, neighboring institutions, and the community. Vanderbilt offers undergraduate programs in the liberal arts and sciences, engineering, music, education, and human development, as well as a full range of graduate and professional degrees. An independent, privately supported university, Vanderbilt is the largest private employer in Middle Tennessee and the second largest private employer based in the state. In fact, an Austin-based company was able to quantify the total annual economic and tax revenue generated by the university and medical center. The study included factors such as operations and construction, employment, student and visitor spending, and business spending generated by Vanderbilt-related activities. Combined, these factors amounted to a contribution of $8.9 billion to the state economy in the 2013-14 fiscal year. Multi-Family Fundamentals The region gained approximately 8,000 jobs in the past year, and unemployment has dropped to just 5.0%. Despite 7,500 units currently under construction and another 7,000 proposed, the market continues to experience a low vacancy rate of 4.1% and a rent growth rate of 4.3% in the past year. Capstone expects the vacancy rate to rise slightly as new supply is introduced; however, the Nashville MSA will likely continue to experience higher rent growth in the 3.5-4.0% range for the coming year. Several companies have announced major expansions in recent months, which will continue to drive demand for apartments. Apartment Comparison by Class Class Units Vacancy Rate Avg. Sq. Ft. Avg. Rent Avg. Rent/Sq. Ft. Lease-up 4,195 26.7% 944 $1,344 $1.42 A (1-5 Years in Age) 5,400 4.1% 990 $1,282 $1.30 B (6-15 Years in Age) 13,225 3.7% 1,039 $1,042 $1.00 C (16-30 Years in Age) 34,854 4.2% 950 $941 $0.99 C- (30+ Years in Age) 28,845 4.3% 909 $814 $0.90 Stabilized Averages 82,324 4.1% 952 $935 $0.98 Totals/Averages 86,519 5.2% 952 $955 $1.00 MARKET COMMENTARY 3

Employment ECONOMIC OVERVIEW Recent Employment Announcements Bridgestone America Inc. will bring 1,700 jobs to the downtown area. Under Armour announced plans to build a $100 million distribution facility in Mt. Juliet with over 1,500 new jobs. Nissan North America plans to bring 1,000 new jobs to Smyrna. Unipres USA expects to add 435 jobs over the next five years. FedEx is building a new facility in Mt. Juliet and adding 350 new jobs. M-TEK is locating its new North American headquarters to Murfreesboro bringing 250 jobs. Comprehensive Logistics is creating 200 new jobs. Healthstream plans to add 200 jobs over the next several years. Wages & Population In February 2015, the Nashville MSA s unemployment rate remained at a low 5.0%. Moreover, the unemployment rate is significantly below the state s average of 6.6% and slightly below the national average of 5.5%. Major Employers (non-government) Rank Company Industry Employment 1 Vanderbilt University Education 23,021 2 Nissan North America Automotive 8,500 3 HCA Holdings, Inc. Healthcare 7,000 4 Saint Thomas Health Healthcare 6,500 5 Randstad Recruitment 3,400 6 Shoney's Inc. Restaurant 3,000 7 Electrolux Home Products North America Appliances 2,900 8 The Kroger Co. Grocery 2,863 9 Community Health Systems Healthcare 2,800 10 Cracker Barrel Old Country Store Inc. Retail 2,750 There are 819,880 employees in the MSA who earn a mean hourly wage of $21.13 and an average annual income of $43,950. In comparison, the state and national annual income averages are $40,650 and $47,230, respectively. Historical Population 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Hendersonville 43,581 44,363 45,746 46,755 47,554 48,332 51,589 52,349 53,080 54,068 Franklin 51,929 53,795 56,055 58,005 59,234 60,629 62,798 64,317 66,280 68,886 Murfreesboro 82,713 87,999 93,845 98,354 101,749 105,209 109,240 111,327 114,038 117,044 Nashville-Davidson 570,068 579,748 586,327 592,503 598,465 605,473 602,537 609,644 624,496 634,464 Nashville MSA 1,416,452 1,450,538 1,450,538 1,524,920 1,556,368 1,582,264 1,675,886 1,698,348 1,726,693 1,757,912 Tennessee 5,910,800 5,991,100 6,088,800 6,175,700 6,247,400 6,306,000 6,356,900 6,403,400 6,456,243 6,495,978 Source: U.S. Census Bureau 4

Sales Transactions: 2014 to Present Community YOC City Sale Date Units Sale Price Price Per Unit Hickory Creek 1969 Nashville 3/3/15 200 - - Jackson Grove 1973 Hermitage 3/3/15 238 $18,800,000 $78,992 Lincoya Bay 1968 Nashville 3/3/15 186 - - Sheffield Heights 1977 Nashville 3/3/15 202 $16,100,000 $79,703 Green Meadow 1996 Murfreesboro 2/18/15 112 $4,554,666 $40,667 Greentree Pointe 1997 Lebanon 2/18/15 130 $5,286,667 $40,667 Rutherford Woodlands 1998 Murfreesboro 2/18/15 96 $3,904,000 $40,667 Brentwood Station 1989 Nashville 1/26/15 196 $18,000,000 $91,837 23Hundred at Berry Hill 2013 Nashville 1/14/15 266 $61,200,000 $230,075 Hawthorne South Oaks 1984 Nashville 1/12/15 341 $30,400,000 $89,150 Summerlake 1988 Murfreesboro 1/5/15 176 - - Aventura at Providence 2007 Mt. Juliet 12/31/14 334 $47,750,000 $142,964 Velocity in the Gulch 2011 Nashville 12/18/14 220 $54,278,060 $246,718 Dwell at McEwen 2009 Franklin 12/15/14 370 $81,100,000 $219,189 Village West 1969 Nashville 12/7/14 288 $5,350,000 $18,576 Hampton Chase 1976 Nashville 11/21/14 202 $14,000,000 $69,307 Blackstone 1993 Nashville 11/20/14 73 $8,150,000 $111,644 Lee 1920 Nashville 11/20/14 80 $9,150,000 $114,375 Riverwood 1983 Nashville 11/14/14 200 - - Hickory View 1981 Nashville 11/3/14 120 $8,000,000 $66,667 Rivergate 1984 Goodlettsville 10/16/14 200 - - Arbours of Hermitage 1974 Hermitage 9/29/14 350 $25,625,000 $73,214 Carrington Ridge 1975 Hendersonville 9/26/14 152 $11,550,000 $75,987 Stoneridge Farms at Hunt Club 2002 Gallatin 9/24/14 364 $42,368,905 $116,398 Creekstone 1985 Nashville 9/23/14 316 $22,800,000 $72,152 Gale Lofts 2007 Nashville 9/10/14 96 $15,400,000 $160,417 Estates at Brentwood 1994 Brentwood 9/1/14 254 $42,200,000 $166,142 Lenoxgate 1995 Goodlettsville 9/1/14 264 $19,900,000 $75,379 Abbington Heights 1996 Antioch 8/1/14 274 $17,900,000 $65,328 City Edge Flats 2000 Murfreesboro 7/23/14 83 $4,436,000 $53,446 Ridge at Green Haven 2005 Millersville 7/21/14 191 $9,650,000 $50,524 Beechwood Terrace 1984 Antioch 7/18/14 300 $21,400,000 $71,333 Willow Grove 1972 Nashville 7/18/14 244 $13,750,000 $56,352 SALES TRANSACTIONS 5

SALES TRANSACTIONS Sales Transactions: 2014 to Present Community YOC City Sale Date Units Sale Price Price Per Unit Woodbridge 1978 Nashville 7/18/14 220 $16,000,000 $72,727 Stoneridge Farms at Hunt Club 2002 Gallatin 7/15/14 364 - - Hillwood Pointe 1995 Nashville 6/20/14 180 $14,850,000 $82,500 Meridian at Hermitage (FORMERLY GREEN LEAF AT HERMITAGE) 1974 Hermitage 6/4/14 261 $13,800,000 $52,874 Villages at Spring Hill 1994 Spring Hill 5/22/14 176 $14,200,000 $80,682 Richland Falls 2012 Murfreesboro 5/15/14 190 $21,000,000 $110,526 Alta Loma 1971 Madison 5/1/14 132 $5,500,000 $41,667 Hermitage Garden 1962 Old Hickory 4/29/14 73 $2,850,000 $39,041 Elliston 23 2013 Nashville 4/28/14 331 $95,100,000 $287,311 Pine Brook 1973 Hermitage 4/28/14 134 $6,000,000 $44,776 Vista Germantown 2011 Nashville 4/3/14 242 $53,250,000 $220,041 Wyndchase Aspen Grove 1997 Franklin 3/15/14 560 $83,000,000 $148,214 Rutherford Pointe 1996 La Vergne 2/27/14 130 $6,450,000 $49,615 Roundtree 1971 Nashville 2/26/14 144 - - Spinnaker Cove 1986 Hermitage 2/20/14 278 $24,750,000 $89,029 River Chase 1999 Nashville 2/14/14 212 - - Canterchase 1984 Nashville 2/12/14 235 - - Jamestown 1986 Nashville 1/15/14 101 $7,300,000 $72,277 Elliston 23 Dwell at McEwen 6

Average Transaction Sales Price Average Price Per Unit $45,000,000 $40,000,000 $41.9M $180,000 $160,000 $158,532 $35,000,000 $140,000 $30,000,000 $25,000,000 $23.7M $20,000,000 $15,000,000 $13.3M $13.9M $10,000,000 $5,000,000 $0 Class A Class B Class C AVERAGE Average # of Units Per Transaction 300 254 250 217 208 205 200 150 100 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 2020 2010 2000 1990 1980 1970 $97,837 $66,733 $62,024 Class A Class B Class C AVERAGE Average Year of Construction 2008 1993 1988 1973 SALES TRANSACTIONS 50 1960 0 Class A Class B Class C AVERAGE 1950 Class A Class B Class C AVERAGE Class A represents renovate properties and properties built from 2000-2015, Class B includes properties constructed from 1985-1999, and Class C signifies properties constructed in 1984 or earlier. 7

Communities Proposed (100 Units and Above) Developer Community Units Road/Intersection Submarket Division Street Land Partners Crescendo 303 641 Division St. Downtown Proffitt Dixon Germantown Fountains 294 Taylors St. Downtown PROPOSED DEVELOPMENT Price Development PDG Germantown 256 Monroe St. Downtown LIV Development LIV West Eastland 310 1034 W. Eastland Ave. North St. Clair Holdings Stacks on Main 268 5th St./Main St. North Cambridge Holdings One City 300 Charlotte Ave. West End Lifestyle Communities LC Germantown 450 1226 2nd Ave. Downtown Giarrantana Development Paramount 300 5th Ave. Downtown Stonehenge Real Estate West 46th 171 4508 Charlotte Pk. Southwest Bristol Development Group Bristol 12 South 164 2214 12th Ave. West End Alliance Residential Broadstone Eighth South 154 2407 Franklin Pk. West End Crescent Resources Crescent Music Row 280 Division St. West End Grace Development Grace at Elliston Place 300 Elliston Pl. West End Forestar Grand Avenue 230 Music Square West End Worthing Companies Heights at Charlotte Avenue 259 2700 Charlotte Ave. West End Lennar Multifamily Lennar Berry Hill 320 2350 Franklin Pk. West End Lennar Multifamily M Residences 300 Chet Atkins Pl. West End Novare/Baston Cook Skyhouse 352 Broadway West End SWH Residential Partners Grove at Shadow Green 228 2000 Toll House Cir. Franklin North American Properties Nichol Mill Lofts 363 Nichol Mill Ln. Franklin Bristol Development Group Uptown at Ovation 392 Carother Pkwy. Franklin TDK Construction Foxland Crossing 68 (232 COMPLETE) 1391 Foxland Blvd. Hendersonville Hartmann Plantation Hartman Plantation 200 (123 COMPLETE) 2000 Hartmann Plantation Ct. Lebanon/Mt.Juliet Universal Builders Northtown Gardens 360 Nonaville Rd. Lebanon/Mt.Juliet Panthers Properties Integra Creek 84 (264 COMPLETE) 3625 Mansion Pk. Murfreesboro 8

Communities Under Construction (100 Units and Above) Developer Community Units Road/Intersection Submarket Lincoln Property 909 Flats 232 909 Rosa L. Parks Blvd. Downtown Alliance Residential Broadstone Germantown 276 1100 3rd Ave. Downtown Embrey Partners Carillon 306 5th Ave./Jackson St. Downtown SWH Residential Partners Terra House 194 Middleton St. Downtown Giarrantana Development Sobro 313 3rd Ave. Downtown Spectrum Properties The Cameron 328 Carothers Pkwy. Franklin Bristol Development Tapestry Brentwood 393 300 Centerview Dr. Franklin Carroll Companies Glass Creek Village 216 (144 COMPLETE) 401 Old Pleasant Grove Rd. Lebanon/Mt. Juliet Lifestyle Communities LC Providence 451 LC Providence Lebanon/Mt. Juliet The Dobbins Group Providence Central 209 Providence Pkwy. Lebanon/Mt. Juliet TDK Construction 3343 Memorial 196 (46 COMPLETE) 3343 Memorial Blvd. Murfreesboro Gross Builders Belden Reserve 264 425 Swanholme Dr. Murfreesboro Carroll Companies Everwood at the Avenue 336 Robert Rose Dr. Murfreesboro Lifestyle Communities Hensley Station 162 (241 COMPLETE) 1206 Robert Rose Dr. Murfreesboro Smyrna Commons Dev. Partners Copperfield Lodge 288 Nissan Dr. Smyrna/ La Vergne Carroll Companies Heron Point 324 100 Heron Point Dr. Southeast TDK Construction The Summit 190 (95 COMPLETE) 7201 Charlotte Pke. Southwest HG Hill Realty Sylvan Heights 262 Charlotte Ave. Southwest Faison 1505 Demonbreun 209 (178 COMPLETE) 1515 Demonbreun St. West End Stonehenge Real Estate Artisan on 18th 63 (90 COMPLETE) 819 S 18th Ave. West End The Forestar Group Acklen 320 111 Acklen Park Dr. West End Giarrantana Development 22 State 146 22nd Ave. N./State St. West End Giarrantana Development 1818 Church Street 142 1818 Church St. West End Buckingham Companies Aertson Midtown 350 Division St./Broadway St. West End Lincoln Property Aspire Midtown 279 2400 Charlotte Ave. West End Phoenix Property Cadence 193 16th Ave./McGavock St. West End Childress Klein Element Music Row 431 Element Music Row West End Residential Group Metrocenter 320 45 Vantage Way West End Stonehenge Real Estate Opus 29 139 29th Ave./Burch Ave. West End COMMUNITIES UNDER CONSTRUCTION 9

Carolinas Georgia Virginia Tennessee Kentucky Alabama Florida West Virginia The People Sell the Deal WHY CHOOSE CAPSTONE? Market Expertise & Product Niche Capstone s Southeast & Mid-Atlantic Investment Sales Team is among the market leaders within our industry sector and respective region. We place client service above all else, and can guarantee that no one else will work smarter and harder in achieving the highest level of results for our clients. We don t rely on a logo to sell the deal, but rather utilize the industry expertise and investment acumen, tremendous drive and work ethic, and unbeatable salesmanship of the team members assigned to each project. At the end of the day, it s the individuals that drive value and sell the deal, and we know the capabilities of our individual team members are second to none. Capstone sits atop the private capital sector of multi-family investment sales for multiple reasons. Our deliberate and concentrated focus and expertise in not just the primary markets of the Southeast & Mid-Atlantic, but also the secondary and tertiary markets within our region, identifies us as the ideal candidate for such assignments. Capstone s investment sales team has completed a multitude of transactions across the primary, secondary, and tertiary markets of the Southeast & Mid-Atlantic, and our track record of success can be attributed to our comprehensive coverage and expertise among these markets, as well as our relationships with the owners and investors who remain active in this environment. National Exposure via Cutting Edge Technology Capstone has developed and maintains industry leading national databases, expansive information delivery methodologies, and various proprietary activity tracking systems. These tools are utilized daily by the investment sales team, analysts, and back-office support staff allowing for optimal operational efficiency. This enables Capstone s investment brokerage team to spend nearly all of its time servicing clients, interacting with industry players and active asset traders, and promoting transactions. Reputation and Results Capstone prides itself on its impeccable industry reputation and the core values and behaviors of the firm that drive daily operations. The firm possesses an unblemished reputation and track record industry-wide, and, as such, the firm s trusted relationships among the apartment investment community continue to facilitate seamless, fluid, and successful sales transactions. * Information in this report has been provided by the following: Nashville Real Data Report March 2015, U.S. Census Bureau, Costar, Business Journals, LoopNet, Bureau of Labor Statistics, county tax records, and various multi-family industry contacts. Area images provided by Ron Cogswell (pg. 1) and Robert Claypool (pg. 2 [left]) via https://creativecommons.org/licenses/by/2.0/, as well as Rain0975 (pg. 2 [top]) via https://creativecommons.org/licenses/by-nd/2.0/. 10