Multi-Family Market Summary & Activity Update Summer 2015

Orlando, FL Multi-Family Market Summary & Activity Update Summer 2015

Contents Introduction 2 Market Commentary 3 Economic Overview 4 Sales Transactions 5 Proposed Communities 8 ORLANDO Introduction Under Construction 9 Why Choose Capstone? 10 Lake Eola CAPSTONE APARTMENT PARTNERS prides itself on the continual value contributions we are able 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 Orlando, FL MSA, as well as others who are looking to break into this market. Enon Winkler Partner 407.616.0250 enon@capstoneapts.com Jad Richa Investment Advisor 727.282.5547 jad@capstoneapts.com Deucie Bies Investment Advisor 407.470.9030 deucie@capstoneapts.com Brian Hunsicker Investment Advisor 727.631.5870 bhunsicker@capstoneapts.com Orlando Office 111 N. Orange Ave. Suite 1125 Orlando, FL 32801 Tampa Office 208 N. Armenia Ave. Suite B Tampa, FL 33609 2

Orlando is on the Rise Best in Business Declared a World Class City by the city of Orlando's mayor, Buddy Dyer, new developments continue to spring up throughout the Orlando MSA from a number of brand new venues to the upcoming Florida Advanced Manufacturing Research Center, Lake Nona Medical City, Health Village, and Creative Village. Recently, the University of Central Florida announced plans to add a downtown Orlando campus that will serve approximately 10,000 students and it is expected to bring over 4,000 jobs to the area. Due to these developments, the area is experiencing strong employment growth. Currently, the unemployment rate sits at 5.3%, which is lower than the national average of 5.5%. Robust Tourism Attracting 59 million visitors annually, Orlando is known as the world's most popular destination where expansion is the norm. New attractions added in the past six months include the Orlando Eye, a 450-passenger observation wheel, the famous Madame Tussaud's Wax museum, Sea Life Orlando Aquarium and, an array of retail shops and restaurants. These new additions added over 1,000 jobs to the area; thus increasing regional demand for multi-family accommodations. Apartment Comparison by Class With the large number of multi-family units being added in this market, entrepreneurs and companies are finding more reasons to call Orlando home. Known as Florida's friendliest metro for business, Orlando is quickly becoming the place to be for high-tech and is attracting a large number of high-wage tech jobs and technology startups. Additionally, Orlando s economic strength lies within the healthcare, tourism, hospitality, and manufacturing industries that are booming marketwide. Multi-Family Fundamentals Demand for apartments continues to remain healthy in the MSA as evidenced by the positive absorption of 2,111 units over the past six months. The vacancy rate has improved market-wide to 3.7%, compared to 5.8% a year ago. The development pipeline continues to flourish with 6,321 units under construction; development of 3,703 of these units began in the past six months, which represents the most recorded construction starts in the last nine years. The Central submarket leads the way in development progress and is currently the most desirable sector in the MSA. Most regional stakeholders anticipate the vacancy rate will hold steady over the next 12 months, and remain below the Southeast U.S. average. Despite the new supply, the region will continue to see strong rent growth of 2.5%-3.5% over the next 18 months. Class Units Vacancy Rate Avg. Sq. Ft. Avg. Rent Avg. Rent/Sq. Ft. Lease Up 7,399 21.4% 1,035 $1,448 $1.40 A (1-5 Years in Age) 6,452 4.1% 1,079 $1,418 $1.31 B (6-15 Years in Age) 39,014 3.1% 1,081 $1,085 $1.00 C (16-30 Years in Age) 60,659 3.6% 956 $967 $1.01 C- (30+ Years in Age) 31,724 4.3% 839 $821 $0.98 Stabilized Averages 137,849 3.7% 970 $988 $1.02 Totals/Averages 145,248 4.6% 974 $1,011 $1.04 MARKET COMMENTARY 3

Employment ECONOMIC OVERVIEW Recent Employment Announcements Nautique Boat Company, a boat manufacturer, will add 200 new jobs as it expands its Central Florida facility. The United States Tennis Association has announced plans to add 119 high-paying jobs to its Lake Nona tennis center. The average salary is $100,000. AT&T has announced its plans to add 100 new jobs to its offices in Orlando. Prime Therapeutics, a pharmaceutical firm, has announced plans to add 100 new jobs as it expands its operations in the region. Wages & Population The unemployment rate in Orlando is 5.3%, which is lower than the state rate at 5.6% and the national rate at 5.5%. The market has experienced positive job growth of 48,000 jobs over the past twelve months. Orlando Major Employers Rank Company Industry Employment 1 Walt Disney World Tourism 53,500 2 Orange County Public Schools Education 53,500 3 State of Florida Government Government 17,200 4 Adventist Health System Healthcare 17,059 5 Florida Hospital Healthcare 14,225 6 Wal-Mart Stores Grocery/Retail 13,139 7 Orlando Regional Healthcare System Healthcare 12,754 8 Universal Studios Tourism 12,000 9 Federal Government Government 10,800 10 Publix Supermarkets Grocery 9,927 There are 1,079,670 employees in the Orlando-Kissimmee-Sanford MSA who earn a mean hourly wage of $19.33 and an average annual income of $40,200. In comparison, the state and national annual income averages are $41,820 and $47,230, respectively. Historical Population 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Orlando City 209,401 216,501 224,824 230,239 232,321 235,860 239,425 243,794 250,159 255,483 Orlando-Kissimmee-Sanford MSA 1,866,597 1,939,766 1,999,994 2,034,878 2,060,968 2,082,421 2,139,372 2,174,224 2,223,456 2,267,846 Florida 17,375,259 17,783,868 18,088,505 18,277,888 18,423,878 18,537,969 18,852,220 19,107,900 19,355,257 19,600,311 Source: U.S. Census Bureau 4

Community YOC City Sale Date Units Sale Price Price Per Unit Royal Summit 1972 Orlando 5/21/2015 188 $6,627,000 $35,250 Laguna Oaks 1973 Orlando 5/15/2015 360 $29,150,000 $80,972 Marbella Lake 1985 Orlando 5/15/2015 200 $12,750,000 $63,750 The Park at Laurel Oaks (aka Golf Terrace) 1986 Winter Springs 5/1/2015 552 $54,000,000 $97,826 Century at Waterford Lake 2000 Orlando 4/21/2015 400 $53,250,000 $133,125 The Gallery at Mills Park 2014 Orlando 4/15/2015 310 $66,495,000 $214,500 Tortuga Bay 2003 Orlando 4/10/2015 314 $49,612,000 $158,000 Heritage at Millenia 2006 Orlando 3/31/2015 303 $40,000,000 $132,013 The Summit at Metrowest 1991 Orlando 3/31/2015 280 $26,900,000 $96,071 Promenade Crossings 1998 Orlando 3/19/2015 212 $27,400,000 $129,245 Sun Club 1973 Kissimmee 3/18/2015 130 $4,500,000 $34,615 Hunter's Ridge 1985 Winter Park 3/12/2015 238 $22,500,000 $94,538 The Legends at Champions Gate 2001 Champions Gate 3/11/2015 252 $31,250,000 $12,401 Oakwood 1986 Orlando 3/9/2015 304 $29,900,000 $98,355 Stonebridge Landings 2000 Orlando 3/9/2015 272 $21,800,000 $80,147 Bella 2010 Kissimmee 2/12/2015 432 $60,000,000 $138,889 Westlake 2001 Orlando 2/1/2015 379 $35,900,000 $94,723 Cornerstone 1985 Orlando 1/14/2015 430 $31,550,000 $73,372 Oasis Club 1994 Orlando 1/7/2015 220 $12,550,000 $57,045 Citra at Windermere 2013 Orlando 1/7/2015 360 $61,499,880 $170,833 Art Avenue 2014 Orlando 1/5/2015 300 $47,050,000 $156,833 Terraces at Lake Mary 1997 Lake Mary 1/1/2015 284 $31,000,000 $109,155 Cypress Lake at Waterford 2001 Orlando 12/23/2014 316 $43,967,500 $139,138 Highland Oaks 1992 Orlando 12/19/2014 216 $9,600,000 $44,444 The Park at Vittoria 1991 Orlando 12/16/2014 208 $10,400,000 $50,000 Verano 2008 Kissimmee 12/4/2014 384 $48,750,000 $126,953 Elmhurst Village 2001 Oviedo 12/1/2014 312 $42,100,000 $134,936 Sun Lake 1988 Lake Mary 12/1/2014 600 $66,250,000 $110,417 Sabal Club 1986 Orlando 12/1/2014 436 $51,500,000 $118,119 Kensington Cottages 1984 Orlando 11/18/2014 169 $3,100,000 $18,343 Sabal Palm Lake Buena Vista 1988 Orlando 11/5/2014 400 $49,500,000 $123,750 Arium Grande Lakes 2005 Orlando 10/31/2014 306 $43,299,636 $141,502 SALES TRANSACTIONS 5

SALES TRANSACTIONS Community YOC City Sale Date Units Sale Price Price Per Unit Winter Park Commons 1972 Winter Park 10/27/2014 432 $38,635,700 $89,434 Vista Verde 1989 Orlando 10/23/2014 200 $22,200,000 $111,000 Altamonte at Spring Valley 1974 Altamonte Springs 10/22/2014 260 $18,300,000 $70,385 Orion on Orpington 2007 Orlando 10/21/2014 156 $29,200,000 $187,179 Millennium Pointe 1975 Orlando 10/3/2014 200 $7,000,000 $35,000 Belleza 1973 Kissimmee 9/30/2014 176 $13,250,000 $75,284 Crowntree Lakes 2008 Orlando 9/30/2014 350 $56,288,964 $160,826 Heron Lakes 1988 Kissimmee 9/26/2014 264 $25,266,700 $95,707 Fisherman s Village 1986 Orlando 9/26/2014 280 $26,847,200 $95,883 Andover Place 1987 Orlando 9/26/2014 400 $30,373,600 $75,934 Vinyards 1986 Kissimmee 9/26/2014 400 $36,883,100 $92,208 Alexandria at Lake Beuna Vista 2001 Orlando 9/24/2014 336 $93,710,900 $278,901 Harper Grand 1994 Orlando 9/24/2014 232 $10,742,000 $46,302 Solis at Winter Park 1986 Winter Park 9/24/2014 596 $57,700,000 $96,812 Mission Club 1995 Orlando 9/23/2014 282 $31,595,000 $112,039 Tzadik Rolling Hills 1995 Orlando 9/22/2014 240 $10,900,000 $45,417 Colonial Ridge 1989 Orlando 9/8/2014 194 $14,200,000 $73,196 Sea Isle Resort 2014 Orlando 9/3/2014 356 $58,100,000 $163,202 Landmark at West Place 2002 Orlando 9/3/2014 342 $38,500,000 $112,573 Aqua Links 1989 Sanford 9/1/2014 140 $4,900,000 $35,000 Auvers Village 1990 Orlando 8/28/2014 480 $50,700,000 $105,625 Beacon Hill 1999 Orlando 8/20/2014 192 $9,500,000 $49,479 Enders Place 2003 Orlando 8/15/2014 220 $37,000,000 $168,182 Parke East 1984 Orlando 8/14/2014 272 $19,500,000 $71,691 Signal Pointe 1969 Winter Park 8/14/2014 368 $40,800,000 $110,870 Retreat at Windermere 2013 Windermere 7/30/2014 332 $54,000,000 $162,651 Park at Salerno 1972 Orlando 7/10/2014 200 $11,400,000 $57,000 Place at Alafaya 1973 Orlando 7/10/2014 400 $21,300,000 $53,250 Silver Oaks 1989 Orlando 7/2/2014 320 $14,250,000 $44,531 Place on Millenia 2007 Orlando 6/26/2014 372 $50,085,000 $134,637 Commander Place 1995 Orlando 6/24/2014 216 $14,800,000 $68,519 Arden Villas 1998 Orlando 6/11/2014 336 $42,050,000 $125,149 6

Average # of Units Per Transaction Average Year of Construction 350 323 312 306 300 263 250 200 150 100 50 0 Class A Class B Class C AVERAGE Average Transaction Sales Price $50,000,000 $46,089,184 $45,000,000 $40,000,000 $35,000,000 $33,033,268 $30,000,000 $25,000,000 $22,214,886 2010 2005 2000 1995 1990 1985 1980 1975 1970 1965 1960 1955 $160,000 $140,000 $120,000 $100,000 $80,000 2006 1993 1990 1975 Class A Class B Class C AVERAGE Average Price Per Unit $136,172 $101,143 $71,161 SALES TRANSACTIONS $20,000,000 $15,000,000 $10,000,000 $15,705,700 $60,000 $40,000 $56,475 $5,000,000 $20,000 $0 Class A Class B Class C AVERAGE $0 Class A Class B Class C AVERAGE Class A represents properties built from 2000-2015, Class B includes properties constructed from 1985-1999, and Class C signifies properties constructed in 1984 or earlier. 7

PROPOSED COMMUNITIES Communities Proposed (100 Units and Above) Developer Community Units Road/Intersection Submarket Jefferson Apartment Group 520 510 Mariposa St./Church St. Central Summa Development Group Citi Tower 233 101 Lake Ave. Central Orlando Central LLC Orlando Central 450 100 Jefferson St. Central The Tribute Company Orlando Sentinel Apartments 318 501 North Orange Ave. Central Pollack Shores The Princeton at College Park 226 646 West Smith St. Central Real Estate Inverlad Development Yard at Ivanhoe 630 1427 Alden Rd. Central American Land Ventures Ravaudage 296 Morgan Ln. Central ZOM Real Estate Services Baldwin Harbour 483 1771 Jake St. East-1 UP Development Fashion Square 250 Herdon Ave. East-1 Greystar Elan at Audubon Park 449 980 Warehouse Rd. East-1 PAC Land Development Park Place 100 (PHASE 2) 940 City Plaza Way East-2 Pollack Shores Michael Blake Blvd. 300 Michael Blake Blvd. Northeast MMI Development Marden Ridge 272 Maitland Blvd. Northwest Lennar Multifamily Eclipse 252 Millenia Blvd./Hwy.4 South-1 Contravest Adison on Millenia 292 5151 Millenia Blvd. South-1 Lake Nona Development Company Lake Nona Town Center 280 7026 Lake Nona Blvd. Southeast-2 Unicorp Zen 266 10463 Perrihouse Acres Ln. Southwest-2 Skorman Construction Park Place at Maguire 242 1650 Maguire Rd. West Park Place at Maguire Eclipse The Yard at Ivanhoe 8

Communities Under Construction (100 Units and Above) Developer Community Units Road/Intersection Submarket Crescent Communities Crescent Central Station 280 434 North Orange Central Jefferson Apartment Group Artisan 420 299 420 East Church St. Central Contravest Courtney at Lake Shadow 244 545 Keller Rd. Central Atlantic Housing Partners Lexington Court 108 315 West Concord St. Central Contravest Courtney at Lake Shadow 244 545 Keller Rd. Central Epoch Paseo at Winter Park Village 113 (127 COMPLETE) 940 Canton Ave. Central Panther Properties Investment Integra Village at Lake Forest 209 101 Integra Village Trl. Central Pizzuti Sevens 325 777 North Orange Ave. Central Catalyst Development Eos 296 1221 East Colonial Dr. East-2 Epoch Station House 156 (44 COMPLETE) 188 East Crystal Lake Dr. North Inland Atlantic Exchange at Savannah Park 138 5724 Byron Anthony Pl. North Lecessee Development Rize at Winter Springs 224 150 Doran Dr. Northeast Weston Housing Partners Weston Park 201 Longwood St./East Church St. Northeast Crescent Communities Crescent Gateway 249 680 Carriage House Ln. Northwest Lennar Multi-family Eclipse 252 5151 Millenia Boulevard Dr. South-1 Pollack Shores Millenia North 288 4550 Millenia Blvd. South-1 Contravest Courtney at Universal 355 9703 Avellino Rd. South-1 Flournoy Development Citi Lakes 105 (241 COMPLETE) 12024 Meadow Blend Loop South-2 Rock Harbor Residential Emerson at Celebration 140 (198 COMPLETE) 1831 Emerson Ridge Rd. South-2 Faison Evander Square 24 (165 COMPLETE) 1415 Latta Dr. South-2 Panther Properties Investment Integra Cove 338 6800 Westwood Blvd. South-2 Atlantic Housing Partners Fountains at Lingo Cove 110 6508 Pershing Rd. Southeast-1 Lecessee Development Grandville at Jubilee Park 252 (78 COMPLETE) 6580 Meryvale Ln. Southeast-1 Klien Companies Dwell at Lake Nona 274 12701 Narcoosee Rd. Southeast-2 Picerne Development Oasis at Moss Park 320 Moss Park Rd. Southeast-2 Emerson International Inc. Sanctuary at Eagle Creek 282 9000 Sanctuary Approach Rd. Southeast-2 Altman Companies Altis at Sand Lake 315 7001 Palm Pkwy. Southwest-2 NRP Group Lake Vue 196 10298 Turkey Lake Rd. Southwest-2 MMI Development Windermere Cay 108 8200 Jayme Dr. Southwest-2 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 resources: The Orlando Real Data Report April 2015, Direct Company Contact, OBJ Book of Lists 2013, REIS Report, Costar, Business Journals, Harris InfoSource, Lexis Nexis, LoopNet, Bureau of Labor Statistics, county tax records, and various multi-family industry contacts. Source images provided by Jared (p. 1) and Rusty Clark (p. 2, right) via https:// creativecommons.org/licenses/by/2.0/, and Bob B. Brown (p. 2, left) via https://creativecommons.org/licenses/by-nd/2.0/. 10