Mock Investment Committee Session

Emerging Leaders Group Mock Investment Committee Session Panelists: Nickolay Bochilo Bell Partners Core Plus Graham Carpenter Pollack Shores Value Add Mark Bates Holland Residential Development Investment Committee: Bob Jeans Prudential Will Beam Heitman Bob Weston Alliance Residential

Investment Strategy Core Plus, Major Market Fair Oaks at Pender Creek Apartments (246 units, 1989) Washington, DC (Fairfax County) Presented by: Nickolay Bochilo, Bell Partners

Investment Rationale Fair Oaks at Pender Creek Macro themes: Primary Market, Light Renovation, Long Term Hold (7 yrs base case) Cycle strategy de risk, focus on in place cash flow, play in a less crowded space and position to withstand rise in interest rates in the near / mid term Focus on suburban urban locations with very low levels of new supply Investment Rationale: Core suburban location and demographics: Fairfax County 3 rd highest income in the nation ($110,000 HH median) 23 million SF of office space and 12 million SF of retail within 5 miles of property Nationally ranked and highly sought after schools; high cost of for sale housing Opportunity to increase NOI by modernizing product: 45% of units have been renovated and are achieving $140 rent premiums 55% of remaining units can be upgraded; projecting $150 rent premium for slightly higher finish level Basis below replacement cost and minimal new supply in the area: All in cost of $240,000/u is 10% below cost of new mid rise product (garden product land is not available) Only 150 units delivered in the area in past 12 months and only 180 units in the pipeline PAGE 3 1/21/2015

Maps / Aerials Distance to DC Tysons Reston Dulles Corridor 18 miles 9 miles 6 miles 7 miles Demographics / Employment Within 5 miles: Median HH Income - $111,000 23 million sq ft of office space 150,000 employees PAGE 4 1/21/2015

Maps / Aerials PAGE 5 1/21/2015

Maps / Aerials PAGE 6 1/21/2015

Photos Original Renovated PAGE 7 1/21/2015

Economics CAPITAL STACK per unit or % per SF Purchase Price $55,350,000 $225,000 $240 CapEx 3,650,000 14,837 16 Closing Costs 545,000 1.0% 2 Total Cost $59,545,000 $242,053 $259 Debt 38,704,250 65% Equity 20,840,750 35% UNIT MIX Units % of Total Size Market Rent per SF 1 Bedroom 94 38% 811 $1,294 $1.60 2 Bedroom 108 44% 979 1,603 $1.64 3 Bedroom 12 5% 1,047 1,830 $1.75 Loft 32 13% 1,316 1,940 $1.47 Total 246 100% 936 $1,540 $1.65 MAJOR ASSUMPTIONS Hold Period (years) Renovation Period Economic Vacancy Average Rent Growth Year 1 Expenses Expense Growth Rate Real Estate Taxes Exit Cap Rate CapEx Reserve (per unit, per year) 5 and 7 scenarios 12 months 11% Yrs 1 2; 6% steady state 5 yr 3.1%;, 7 yr 3.2% $6,700/u or 37% of revenue 3% per year 93% of PP, 3% inflation 5 yr 5.75%; 7 yr 6% 650 for 5 yrs; $800 for 7 yrs RETURN SUMMARY 5 yr Hold 7 yr Hold Cap Rate Stabilized Year 1 before rehab effect 5.3% 5.3% Cap Rate Stabilized Year 1 after rehab effect 5.6% 5.6% IRR Levered 13.8% 13.5% IRR Un levered 7.1% 7.1% Equity Multiple Levered 1.75x 2.1x Average Cash Yield 9.1% 9.3% Profit from Cash Flow 60% 65% Profit from Appreciation 40% 35% Investment Profit $15.6m $23m $20.8m investment 7 year hold 9.3% avg cash yield 13.5% IRR 2.1x EM PAGE 8 1/21/2015

Price Positioning / Renovations Scope: Interiors (kitchens and baths): - Cabinet doors - Granite counter tops (reconfigure to differentiate vs comps) - Stainless appliances - Backsplash - Wood-like flooring - Light package - De-brass hardware - HVAC / Water Heater Exterior / Amenities: - Paint job - Upgrade clubhouse - New Resident Lounge - Enhance Fitness Area RENOVATION METRICS Renovation Cost (per unit) $13,000 Target Rent Premium $150 Return on Cost 14% Number of Units to Renovate 135 Incremental NOI Increase $243,540 RENT POSITIONING Rank by Rent PSF Rank Property Units Size Rent per SF 1 Avalon Fair Oaks 490 761 $1,479 $1.94 2 The Courts at Fair Oaks 364 798 $1,518 $1.90 3 Target After Renovations 246 936 $1,690 $1.81 4 Jefferson at Fair Oaks 181 925 $1,667 $1.80 5 The Lincoln at Fair Oaks 280 977 $1,746 $1.79 6 Ellipse at Government Center 406 972 $1,718 $1.77 7 Target Before Renovations 246 936 $1,540 $1.65 AVERAGE without Target 878 $1,614 $1.84 RENT POSITIONING Rank by Rent Per Unit Rank Property Units Size Rent per SF 1 The Lincoln at Fair Oaks 280 977 $1,746 $1.79 2 Ellipse at Government Center 406 972 $1,718 $1.77 3 Target After Renovations 246 936 $1,690 $1.81 4 Jefferson at Fair Oaks 181 925 $1,667 $1.80 5 Target Before Renovations 246 936 $1,540 $1.65 6 The Courts at Fair Oaks 364 798 $1,518 $1.90 7 Avalon Fair Oaks 490 761 $1,479 $1.94 AVERAGE without Target 887 $1,626 $1.84 PAGE 9 1/21/2015

Risks and Unique Issues Greater metro supply concerns Washington, DC and several suburbs (e.g. Tysons Corner) have elevated levels of supply, which could have rippling effects on class B segment and areas with no supply. Mitigating factor is rent spread between new product and post-rehab rents of $300+ per month. Renovation program not accepted by the market This is a common risk with rehabs and one that also affects capital allocation decisions. Risk is mitigated by history of renovations at the property and similar renovation programs at competing properties. Recent lease trends and ability to pin-point market rents Revenue management pricing makes it challenging to identify normalized rents. At the time of assessment (2Q14, shortly after the Polar Vortex), recent leases were highly volatile, causing uncertainty around rent growth forecasting. PB piping Property has partial polybutylene piping, which Seller has upgraded ($300k or $1,200/u) several years ago by replacing piping in the A/C loop. History of leaks has been minor / non-existent (~$20,000 per year). Mitigating risk by budgeting $30k extra R&M per year and deducting trended cost of full re-pipe at reversion. PAGE 10 1/21/2015

VALUE ADD ACQUISITION COVES OF BRIGHTON BAY Tampa, Florida PRESENTED BY GRAHAM CARPENTER, POLLACK SHORES

INVESTMENT STRATEGY INVESTMENT STRATEGY RATIONALE: HEAVY VALUE ADD Value Add Conversion to Core Plus: Identify properties that have the potential to be repositioned as core plus assets following the execution of a heavy value add strategy Located within the Gateway submarket, the Tampa MSA s 2 nd largest employment concentration and proximate to the Westshore business district, downtown Tampa, downtown St. Pete and area beaches Non obsolete properties in submarkets with upside potential: 2000 vintage and newer with 9ft ceilings and a comprehensive amenity package Submarket sales comps must support exit projections and rent comps must support significant growth potential Institutional ownership in the submarket (Prudential, Heitman, TIAA, Hines, Invesco, and Cornerstone) Submarket Employment Over 8.2MM sf of Class A office space Over 60K employees and 2.7K businesses Employment driven by Financial Services, IT, Health Care, and Defense industries 12

AERIAL 13

PROJECT CHARACTERISTICS PROJECT CHARACTERISTICS Location: St. Petersburg, FL 15min drive to downtown Tampa and downtown St. Pete 20min drive to St. Pete beaches Product Type: 382 units of 3 story wood frame walk up buildings built in 2000 Clubhouse and unit interiors had not been updated since original construction Major water infiltration issues existed with the original single coat stucco system Business Plan: Building Envelope: Replace all stucco siding with new Hardi and replace all windows Amenities: Install all new FF&E in the clubhouse, fitness center expansion and pool enhancements Unit Interiors: $6K/unit interior renovations in approximately 25% of the units for $135 rent premiums 14

EXTERIOR REHAB Before 15

EXTERIOR REHAB Under Construction 16

EXTERIOR REHAB After 17

INTERIOR REHAB Before 18

INTERIOR REHAB After 19

UNDERWRITING METRICS Project Costs Amount Per Unit Per SF Major Assumptions Detail Purchase Price $36,396,000 $95,277 $106 Timing: Renovation $576,000 $6,000 $7 Exterior 20 Months Amenity Upgrades $238,800 $625 $1 Interior 20 Months Deferred $3,500,000 $9,162 $10 Stab. Economic Occupancy 94.00% Closing Costs $986,970 $2,584 $3 Income & Expense: Total Costs $41,697,770 $109,156 $122 Aug 2013 T3 Apartment Rent $1.05 5 Yr Avg. Rent Growth 3.00% Project Capitalization Amount Total % Current Other Income Per Unit $1,537 Total Equity $12,997,770 31% OpEx & Reserves Per Unit $6,257 Total Debt $28,700,000 69% Current Effective Rents (Last 30 Leases) $1.29 Total Capitalization $41,697,770 100% Exit Valuation Yr. 5: Hold Period 5 years Type Units Size Dec 2014 T12 PSF Exit Cap Rate 6.25% 1 bedroom 196 730 sf $889 $1.22 Gross Sale Proceeds Per Unit $133,060 2 bedroom 144 1021 sf $1,107 $1.09 3 bedroom 42 1242 sf $1,368 $1.10 Totals 382 896 sf $1,024 $1.16 Projected Returns Summary % Project Summary Going in Return on Cost 5.71% Closing Date Aug 13 Stabilized Return on Cost 7.62% Rehab Completion Spring 2015 5 yr Cash on Cash 13.36% Units 382 Levered Project Level IRR 24.14% Rentable Square Feet 342,292 sf Unlevered 5 year IRR 7.81% Parking Ratio 1.5 Equity Multiple 2.x 20

RENT AND SALES COMPS Rent Comps Property Name Type Yr Built # Units SF Rent Rent/SF The Coves of Brighton Bay Garden 2000 382 896 sf $1,028 $1.16 Verandahs of Brighton Bay Garden 2002 381 948 sf $1,092 $1.15 Tortuga Pointe Garden 2010 295 989 sf $1,375 $1.39 The Reserve at Gateway Garden 1999 314 1,087 sf $1,514 $1.39 Villas at Gateway Garden 2004 300 994 sf $1,228 $1.24 Promenade at Carillon Garden 1994 334 969 sf $1,086 $1.12 Bay Isle Key Garden 1998 534 976 sf $1,199 $1.23 2001 990 sf $1,236 $1.25 Sales Comps Property Name Type Yr Built # Units Date Sold SF $/SF $/Unit Seller Buyer Citrus Falls Garden 2004 273 Sep 14 962 sf $135 $129,500 Cornerstone Centenial Verandahs of Brighton Bay Garden 2002 381 Sep 14 948 sf $139 $132,000 Cornerstone Praedium Promenade at Carillon Garden 1994 334 Jan 14 969 sf $139 $137,126 AREA Property TA Associates Totals 2000 959 sf $138 $133,042 21

Strengths: Submarket: Proximity to the 2 nd largest employment center in the Tampa MSA coupled with a high concentration of institutional ownership Refurbished Buildings: Brand new building envelope and upgraded amenities leaves only the proven interior renovations for the next buyer Yield: Produces returns comparable to ground up development without construction or lease up risk Risks / Unique Issues: Costs: Major stucco work can lead to the uncovering of hidden structural issues Operations During Re siding: Maintaining occupancy during such invasive work is very challenging Pipeline: 1,029 newly completed units in the submarket in 2014 22

GATEWAY MARKET NEW DEVELOPMENT Downtown Los Angeles, California PRESENTED BY MARK BATES, HOLLAND PARTNER GROUP

INVESTMENT STRATEGY RATIONALE: GATEWAY MARKET NEW DEVELOPMENT The best real estate always wins As cycle matures this becomes even more critical Select markets, sub markets and product types that will outperform during all parts of cycle, not just booms Replacement cost will continue to rise Decision filters for market and site selection Located in high barrier to entry markets Must have rapidly expanding new economy jobs Walkable to urban core or transit facilities that serve market employment centers Sought after location by expanding gen y population Site configuration allows for efficient design Metrics to consider during market and site selection Job growth Population growth Walk/ transit score Median household income Cost to rent vs. cost to buy 24

AERIAL JW Marriott Wilshire Grand Staples Center LA Live Metropolis 7 th Fig BLOC 8 th +Hope Whole Foods Trader Joes 25

PROJECT CHARACTERISTICS Downtown LA as submarket selected: 500,000+ jobs; +/ 50,000 residents and +/ 30,000 housing units Over $15 billion invested in Downtown LA since 2000, with over $5 billion more in the development pipeline creating 24/7 city Median income $98,700 Median age 34 Submarket has Walk Score of 93 and Transit Score of 99 Location: Heart of Downtown LA: One block from LA Live, two blocks from Staples Center, walkable to South Park and Financial District Site has Walk Score of 93 and Transit Score of 100 Product Type: 28 story high rise Efficient units sized to provide renters affordable absolute dollar rent while maximizing returns on investment Freestanding retail building Iconic structure designed by well know, innovative design firm Corner is one of, if not most visible corner locations in Downtown LA 26

UNDERWRITING INFORMATION Project Costs Amount Per Unit Per SF Major Assumptions Detail Land $33,125,123 $97,141 $110 Timing / Lease up: Construction Costs 108,889,290 319,323 361 First Unit Delivery Month 27 Soft Costs 27,844,110 81,654 92 Stabilization Month 38 Interest Expense 17,007,436 49,875 56 Leasing Pace (units / month) 30 units Operating Deficit 496,746 1,457 2 Lease up Concessions 1 Month Total Costs $187,362,705 $549,450 $621 Stab. Economic Occupancy 95.00% Income & Expense: Project Capitalization Amount % Total Apartment Rent PSF $3.69 Total Equity $955,599 1% 5 Yr Avg. Rent Growth 3.00% Total Debt $186,407,106 99% Other Income Per Unit $2,140 Total Capitalization $187,362,705 100% Commercial Rent PSF (annual) $48.00 Signage Income (annual) $524,700 Type Units Size Rent PSF Operating Expenses Per Unit $11,836 Studios (Incl 8 PH Studios) 96 591 $2,142 $3.62 1 BD / 1 BA (Incl 8 PH 1 BD) 111 794 2,984 3.76 Exit Valuation: 2 BD / 2 BA 110 1,108 3,965 3.58 Hold Period 5 years Penthouse 2 and 3 BDs 24 1,449 5,800 4.00 Exit Cap Rate 5.00% Totals 341 884 $3,262 $3.69 Gross Sale Proceeds Per Unit $742,000 Project Summary Construction Commencement Date Construction Completion 15 Aug 18 Jan Projected Returns Summary Untrended Leveraged Yield on Cost Trended Leveraged Yield on Cost % 5.66% 6.46% Units 341 Untrended Unleveraged Yield on Cost 6.23% Rentable Square Feet Apartment 301,552 Trended Unleveraged Yield on Cost 7.10% Rentable Square Feet Retail 11,895 Unleveraged Deal IRR 13.40% 27

RISK AND MITIGATIONS Pipeline Like all gateway markets, pipeline appears large Mitigated by severe job/ housing imbalance Typical West Coast market at 3:1 jobs/ residents An additional 50,000 residents would be needed to get to 5:1, which would still be under housed comparatively Those additional residents would need +/ 30,000 housing units to be in balance Further mitigated by in migration from within MSA As Downtown LA becomes more amenitized, it becomes more attractive to residents who previously lived in other parts of Los Angeles Includes grocery, expanding high end retail and fine dining New Charter Elementary School opened for 2013 4 school year, allowing younger families to stay in urban setting Construction Costs Rising in all markets across product types Cost escalations built into proforma High rise cost escalations smoother and more predictable than wood frame 28

SUMMARY The best real estate always wins Core, urban locations are where new economy jobs are being created and residents want to live While costs are rising, the impact can be minimized with sponsor selection, efficient design, and choice of market and product type 29