WE KNOW CHATTANOOGA. Specialized Real Estate Investment Services. Accelerating success. Multifamily Advisory Group East Region

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1 Multifamily Advisory Group East Region WE KNOW CHATTANOOGA Specialized Real Estate Investment Services Accelerating success. MULTIFAMILY ADVISORY GROUP P. 1

2 WE CAN HELP As an investor in multifamily properties, you need a firm that provides experience, broad reach and the ability to market an asset no matter how challenging the economic environment. You need a team that specializes in your market you need The East Region Multifamily Advisory Group. WE KNOW WHO YOU ARE Chattanooga is home to an impressive array of major employers, including Blue Cross Blue Shield, Unum, TVA, Erlanger Health System, Memorial Health Care System, McKee Foods Corporation, Pilgrim s Pride Corporation, Cigna Healthcare, Alstom, and most recently Volkswagen and Amazon.com. Named one of The 45 Places to Go in 2012 world wide (only 4 U.S. cities were chosen for the travel feature). - Wall Street Journal Tourism is a $893 million dollar industry in Chattanooga and Hamilton County, and Hotel/Motel Room Tax Collections for fiscal 2012 were $5,571,577 up from $5,250,752 in fiscal Tourism and hospitality account for 8,500 jobs with an annual payroll of over $197 million. Chattanooga is known as a regional leader in the medical field, with 11% of jobs and 12% of payroll generated by health care in Hamilton County. In the Chattanooga MSA, over 34,000 businesses employ over 309,000 people and generate over $54 billion in annual sales. Metropolitan Statistical Area (MSA) includes Hamilton, Marion and Sequatchie counties in Tennessee and Catoosa, Dade and Walker counties in Georgia A 5 Star distribution community, with one-third of the US consumer markets wihin a day s drive, Chattanooga is the headquarters for logistic giants like U.S. Xpress, Covenant Transport and Kenco Logistics. Home to over 15 institutions of higher learner, with the two biggest both having enrollment over 11,000 students. The University of Tennessee at Chattanooga (UTC) offers more than 40 undergraduate, 18 graduate and 3 doctorate degree programs. Chattanooga State Technical Community College offers over 50 majors of study towards degrees and certificates. Colliers International has one of the largest and most experienced teams in the industry, strategically located in key markets throughout North America. Our combination of market dominance, expertise, and singular focus, make us uniquely successful in helping our clients achieve their disposition objectives. How are we able to bring together the skills and tools necessary to complete challenging assignments? Our East Region Multifamily Advisory Group is connected by purpose and focus. Our team is dedicated to sharing information on market opportunities, capital sources and buyers/sellers to achieve the best results for our clients. P. 2 MULTIFAMILY ADVISORY GROUP MULTIFAMILY ADVISORY GROUP P. 3

3 WE KNOW YOUR MARKET Market Survey Results and Forecasts Sequential Month Annual 3Q15 4Q15 1Q16 2Q16 Jul F 2017F 2018F 2019F 2020F Effective Rent Per Unit $880 $876 $887 $908 $914 $840 $865 $906 $933 $956 $982 $1,017 Per Sq. Ft $0.89 $0.89 $0.90 $0.92 $0.94 $0.85 $0.87 $0.92 $0.94 $0.97 $0.99 $1.03 Effective Rent Growth - Annually 3.5% 4.0% 5.6% 5.1% 2.6% 1.1% 3.0% 4.7% 3.0% 2.5% 2.7% 3.6% Effective Rent Growth - Quarterly 1.7% -0.4% 1.2% 2.4% Occupancy Rate 95.4% 95.6% 95.4% 95.5% 95.7% 94.0% 95.2% 95.5% 94.9% 94.3% 94.5% 95.0% Occupancy Change - Annually 0.6% 1.0% 0.9% 0.1% 0.3% 0.5% 1.3% 0.2% -0.6% -0.7% 0.2% 0.6% Occupancy Change - Quarterly 0.0% 0.2% -0.3% 0.2% Economic Concessions Concession Value $-4.25 $ $-7.32 $-5.74 $-8.22 $ $ As a % of Asking Rent -0.5% -1.1% -0.8% -0.6% -0.9% -1.7% -1.2% SUPPLY AND DEMAND According to the Bureau of Labor Statistics, job growth in Chattanooga, TN-GA Metro Area was 1.2% in July 2016, reflecting 3,000 jobs added during a 12-month period. Axiometrics forecasts Chattanooga, TN-GA Metro Area s job growth to be 1.8% in 2017, with 4,586 jobs added. Job growth is expected to average 1.5% from 2018 to 2020, with an average of 3,925 jobs added each year. On the supply side, permits for 200 multifamily units were issued in the 12 months ending in July 2016, down -98 units from the prior year s sum. In terms of total residential housing, 1,570 units were permitted in the 12 months ending July 2016, a decrease of -30 units from the prior year s total. Market Employment and Permitting Annual June-16 Annual Forecast Market National 2016F 2017F 2018F 2019F 2020F Employment (000s) , Job Gain (000s) , Job Growth (%) 0.5% 0.5% 3.0% 1.2% 1.7% 1.9% 1.8% 1.1% 1.4% 2.1% Total Residential Permitting 1,239 2,173 1,600 1,451 1,058,258 1,899 2,084 2,584 2,032 1,818 Relative Change 5.5% 75.4% -26.4% -10.7% 3.9% 18.7% 9.7% 24.0% -21.4% -10.5% Single Family Units Permitted 1,094 1,073 1,289 1, ,769 Relative Change 4.8% -1.9% 20.1% 11.2% 10.9% Multifamily Units Permitted 123 1, ,060 Relative Change 6.0% 766.7% -72.0% -61.7% -6.6% Multifamily as a % of Total 9.9% 49.1% 18.6% 13.0% 35.0% Demand/Supply Ratio Job Gain / Total Residential Units Permitted Job Gain / Single Family Units Permitted Job Gain / Multifamily Units Permitted RECENT SALES Date Property Name Address City Units Year Built Price in $ $/Units Jul-16 Golden Gateway 1201 Grove St Chattanooga ,600,000 16,250 May-16 Silvertree Seniors 5465 TN-58 Chattanooga / 4,675,000 37,400 Chattanooga Apts 2007 Mar-16 Riverview Grande 700 Mansion Cir Chattanooga / ,750, ,065 Feb-16 Elements Of Chattanooga 7310 Standifer Gap Rd Chattanooga / 26,600,000 78, Jan-16 Bridgeway At Chattanooga 6839 McCutcheon Rd Chattanooga ,100, ,400 Sep-15 The Villas At Oak Crest 7255 Lee Hwy Chattanooga / ,500,000 88,517 Jul-15 Forest on Frazier 120 Forest Ave Chattanooga ,456, ,200 Jul-15 Southside Flats 1606 Williams St Chattanooga ,675, ,875 Jun-15 Robinson Apartments 622 Georgia Ave Chattanooga / ,151 48,558 Jun-15 Hardwick Hogshead 600 Georgia Ave Chattanooga ,798,671 92,651 Multifamily Absorption and Supply Total Units Absorbed Annual 2Q16 Annual Forecast (491) 440 1, , , , New Supply 0.3% 0.4% 2.9% 3.0% 1.4% 2.2% 2.0% 2.1% 1.5% 0.9% Inventory Growth 1.1% 1.8% 1.9% 1.9% 1.4% 1.6% 1.6% 1.2% 1.2% 1.0% Source: AXIOMetrics. RCA P. 4 MULTIFAMILY ADVISORY GROUP MULTIFAMILY ADVISORY GROUP P. 5

4 PIPELINE Source: CoStar # Name Status Owner Address Market Units 1 Douglas Heights Lease Up E 10th Street RSD LLC 930 Douglas St Arts District Village at Apison Pike Lease Up Sterling Capital Management 8605 Tradewind Cir Collegedale Maclellan Apartments Under Construction Heritage Land & Development 721 Broad St Downtown Chattanooga 90 Co. LLC Market St Under Construction The Simpson Organization 728 Market St Downtown Chattanooga Grand Oaks at Riverside Proposed Southeastern Development 950 Riverside Dr Arts District 450 Associates 6 Integra Vistas Proposed Integra Land Company 6300 Highway 153 Hixson Standard Coosa Artist Lofts Proposed Watkins Street Project LLC 1800 Watkins St Ridgedale-Oak Grove-Clifton Summit Pointe Proposed Adamson Developers, LLC 8030 Old Lee Hwy Collegedale Wholelife Apartments Proposed WholeLife Companies Mountain Pineville/Moccasin Bend 104 Creek Rd Chestnut Proposed Kore Company 1400 Chestnut St Downtown Chattanooga Riverside Proposed Trade Finance International Inc 1428 Riverside Dr Amnicola-East Chattanooga 174 Total Units 2,346 OUR PROVEN TRACK RECORD WHO WE ARE One of the largest and most experienced teams of multifamily specialists in the industry MORE THAN 50 Dedicated Multifamily Professionals & Advisors Overlook at Allensville Square Phase I Knoxville, TN Units: 288 RENAISSANCE AT PEACHER S MILL Clarksville, TN 9 6 COVERING OVER 20 STATES Expansive geographic footprint MORE THAN 30,000 Units sold since 2011 Overlook at Allensville Square Phase II Knoxville, TN Units: 288 CLIENT: JA Murphy Group UNITS: 216 CHALLENGE: This was a difficult and cumbersome transaction as the debt execution consisted of an assumable HUD loan which dramatically narrows the pool of buyers and extends the process. Additionally, the East Region team reviewed the seller s proforma and found they were charging too high an administrative fee to each renter. STRATEGY & RESULTS: After reducing the fee, ownership was able to achieve an $80,000 annual NOI increase, which resulted in an increased sale price. To sell the property the team, broadly marketed to work with an active HUD buyer comfortable with the process. $2.0 B Renaissance at Peacher s Mill Clarksville, TN Units: 216 Selling this property resulted in the highest price per unit in the history of Clarksville Group gross transaction value in since 2011 P. 6 MULTIFAMILY ADVISORY GROUP 7 We were extremely pleased with the East Region team and its ability to attract an incredible amount of interest in our 3 assets. The number of offers received and the end results exceeded our expectations. They have a talented group who was a pleasure to work with. Their performance stands out against any of the groups we work with nationally. Nels Billsten, Vice President CORE Realty Holding Management

5 John Ashley Will Mathews PRINCIPAL EAST REGION Brooks Colquitt Craig Brown DIR INSTITUTIONAL CLIENT GROUP DIR DIR DIR AT YOUR SERVICE To learn more, scan this with a QR code reader or visit: P. 8 MULTIFAMILY ADVISORY GROUP