RubinBrown Apartment Stats 2017

’17

APARTMENT STATS

A publication by RubinBrown LLP

PAGE

i

Contents

RubinBrown is pleased to present the 2017 Apartment Statistical Analysis, an annual survey compiled by the Real Estate Services Group. Each year, data is collected from our clients, as well as other contacts and referrals within the industry, to comprise averages in a variety of markets within the United States. The accompanying statistical information includes operational data for 2016 and represents approximately 600 apartment projects in roughly 40 states. While these averages are representative of a smaller pool of projects, the trends are usually consistent with those experienced at the national level. If you have questions about the content of this publication, please contact us (see page 17 for contact information).

1 Executive Summary 3 Comparison of Operations 4 Government Assisted 8 Government Assisted by Region 10 Government Assisted by Project Size 12 Market Rate 14 Low Income Tax Credit Projects 16 RubinBrown Real Estate Services Group

@RubinBrownRE

@RubinBrownRealEstate

RubinBrown Apartment Stats 2017

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EXECUTIVE SUMMARY

Multi-Family Industry The multi-family industry continued to experience above-average performance in 2016. There were 321,000 multi-family units completed in 2016, up 5% from the averages seen in the 2000s and slightly higher than the 306,000 units completed in 2015. The new multi-family units added in 2016 is the greatest annual increase in new units entering the market in a single year since 1989. Over 90% of the units were intended to be rentals and over 80% were in properties consisting of more than 20 units. According to the Joint Center for Housing Studies of Harvard University, even though the construction of new multi-family units is at the highest level in 20 years, the additions to the rental supply have not been able to keep up with the huge demand. As a direct result of the supply versus demand, rent rates continued to increase. According to data from the Survey of Market Absorption, the recent additions to the rental supply have been focused on the upper end of the market. With the addition of new units at the upper end, there is potential for some existing units to filter down to lower rent levels. According to the Housing Vacancy Survey , the number of households that are renting has increased by 600,000 from 2015 to 2016. This was the twelfth consecutive year of growth to nearly 10 million households. Although this is an impressive figure, the growth rate in the rental sector in 2016 reflects a deceleration from 2014 and 2015. Even with the increase in multi-family construction, according to MPF Research the national rental vacancy rate was at a 30 year low in 2016 at 6.9%. The rental markets throughout the country remains tight. As expected when demand exceeds supply, rents were up in 2016 and continued to increase in the first half of 2017. However, there was a slowdown in the percentage increase in rent in 58 of the 100 markets that MPF Research tracks. Low vacancy rates along with increasing rents, means that multi-family rental properties continue to perform well. According to data from the National Council of Real Estate Investment Fiduciaries, the net operating income for investment grade properties rose in 2016 for the seventh consecutive year.

Capital spending per unit has increased 13% annually from 2010 to 2015 in real terms, according to the National Apartment Association. Improvements have focused in the following areas: fitness and business centers, clubhouses and common areas, installation of in unit washers and dryers and improved kitchen appliances. Market Trends Demand for housing is primarily driven by an increase in household growth, which is expected to remain strong based on aging millennials and the overall population, as well as immigration. The Housing Vacancy Survey shows on a three-year rolling average basis that household growth has gone from under 600,000 per year in 2009 to 2011 to more than 1 million in 2015 to 2016. Although millennials currently have a limited impact on housing demand, this is expected to change. According to the State of the Nation’s Housing 2016 , published by the Joint Center for Housing Studies of Harvard University, millennials headed only 16 million of the nation’s 124.5 million households in 2015. By 2035, millennials are estimated to head 49.8 million households which will have a huge impact on housing demand. While the number of young adults impacting the housing demand will be growing very rapidly, the older population is growing even faster. According to projections by the Census Bureau, the total U.S. population age 65 and over will be 79 million in 2035. This is an increase of 31 million over the same statistic in 2015. The largest increase in the housing demand of older adults is expected to come from single-person households. The share of adults age 75 and over that are living in nursing homes was 4.9% in 2015 compared to 10.2% in 1990. The decision of older households to age in place will require additional accessible housing that also offers supportive services. While the demand for units increases, it is coupled with an affordability crisis. According to the State of the Nations Housing 2016 , the demand has increased across all income levels, however approximately half of the growth consisted of households making less than $25,000 annually. In the report, the Joint Center for Housing Studies noted that the amount of renters with severe burdens (those who pay more than 50% of their income on rent) rose by 2.1 million to a record 11.4 million last year.

Executive Summary

1

EXECUTIVE SUMMARY

“A greater amount of new supply will be delivered to the market in 2017 but most of it will be absorbed, given continued economic growth and strong multi-family fundamentals. Vacancy rates will increase slightly, but still leave room for rent and gross-income growth.” With the millennial generation aging, the Joint Center projections point to solid growth in rental households over the next 20 years. The need for additional supply of rental units at the lower end of the rent market continues to be an issue, as affordable units are becoming harder to find.

The problem, in many cases, is that higher-income households are occupying the affordable units, putting pressure on the government to find alternatives to help low-income renters. With all of the uncertainty in Washington, the role of immigration as it relates to household growth is uncertain. If the number of immigrants allowed into the country is decreased, this could translate into lower annual household growth. Over one-third of total household growth from 1995 to 2015 was contributed by immigrants. While immigration into the U.S. decreased from 2015 to 2016, it is still above the annual average immigration figures of 2009 to 2011 by 150,000 people. The number of households that are moving continued to decline in 2016. The percentage of people changing residences in 2016 was 11%, the lowest figure in the past 40 years according to the current population survey. According to the American Housing Survey there were 5 million fewer moves in the rental markets in 2015 compared to 1997. The largest decline in households moving was for adults under age 35. Tax Reform With the prospect of corporate tax reform looming over the affordable housing industry, some of its effects are already being felt. Bank financing for affordable housing projects are being delayed causing much needed projects from being started. Once there is more clarity from Washington, financing should begin to free up for much needed affordable units. Looking Forward According to the Freddie Mac Multi-family Outlook we can expect 2017 to be another good year for the multi- family housing market.

The following is from the State of the Nation’s Housing 2016 :

“Nearly 39 million U.S. households live in housing they cannot afford.

The shrinking supply of low-cost rentals, along with potential losses of subsidized units and declines in the value of tax credits, could widen the already substantial gap between the demand for and supply of affordable housing. Meanwhile, the retrenchment in federal funding has put increased pressure on state and local governments to address the housing needs of the most vulnerable individuals.” RubinBrown invites you to utilize this study as a development and management tool to compare your financial operations to the operating results of your peers. This study also provides sound comparable data to utilize in formulating an acquisition model. Like all compilations of data, it will be most useful when carefully and properly interpreted. We sincerely thank everyone who took time to participate in RubinBrown’s survey.

RubinBrown Apartment Stats 2017

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COMPARISON OF OPERATIONS

Government Assisted

Market Rate

Total Number of Projects

562

28

Average Project Age In Years Average Number of Units

12.78

10.41

106

288

Averages Per Unit: Monthly Rent

$802

$949

Square Feet

899

943

Rooms

4.5

4.24

Economic Occupancy

92.1%

90.7%

Net Operating Income Before Debt Service & Depreciation as a Percentage of Total Income

35.4%

50.0%

A

B

C

A

B

C

Revenues Gross Potential Rent Less: Vacancy Loss

$9,514

$10.58 (0.83) (0.15) (0.10)

100.0%

$11,383

$12.07 (1.12) (0.13) (0.22)

100.0% -9.3% -1.1% -1.8% 87.9% 11.4% 99.2%

(749) (134)

-7.9% -1.4% -0.9% 89.8%

(1,057)

Collection Loss

(121) (203)

(88)

Concession Loss

Rent Collected Other Income Total Income

8,543

9.50 0.73

10,002

10.60

661

6.9%

1,294

1.37

$9,204

$10.23

96.7%

$11,296

$11.97

Expenses Salaries and Personnel

$1,079

$1.20

11.3% 5.9% 0.7% 5.0% 9.2% 1.5% 0.7% 1.3% 0.6% 0.5% 0.6% 0.4% 3.9% 6.1% 3.0% 11.7% 62.4%

$649

$0.69

5.7% 5.1% 1.4% 4.0% 6.1% 1.3% 1.1% 1.4% 0.2% 0.7% 0.5% 0.4% 8.4% 2.0% 9.3% 2.0%

Administrative

560

0.62 0.08 0.53 0.98 0.16 0.07 0.13 0.07 0.06 0.06 0.04 1.24 0.41 0.64 0.32

580 164 459 695 143 127 155

0.62 0.17 0.49 0.74 0.15 0.13 0.16 0.03 0.08 0.06 0.04 1.02 0.24 1.12 0.24

Marketing

71

Management Fees

476 879 143

Utilities

Carpeting

Painting

65

Landscaping

120

HVAC

60 51 55 39

27 79 58 42

Appliances

Plumbing Electrical

Other Repairs and Services

1,112

960 224

Insurance

367 578 288

Real Estate Taxes

1,053

231

Other Taxes

Total Expenses

$5,943

$6.61

$5,646

$5.98

49.6%

Net Operating Income Before Debt Service and Depreciation

$3,261

$3.63

34.3%

$5,650

$5.99

49.6%

Capital Expenditures

$661

$0.74

6.9%

$389

$0.41

3.4%

A = Dollars per unit, per year

B = Dollars per square foot, per year

C = Percent of gross potential rent

Comparison of Operations

3

GOVERNMENT ASSISTED

2016

2015

2014

Total Number of Projects Average Number of Units

562 106

425 109

516 108

Averages Per Unit: Monthly Rent

$802

$750

$735

Square Feet

899

951

944

Rooms

4.50

4.41

4.46

Economic Occupancy

92.1%

90.0%

89.1%

Net Operating Income Before Debt Service & Depreciation as a Percentage of Total Income

35.4%

31.0%

35.3%

A

B

C

A

B

C

A

B

C

Revenues Gross Potential Rent Less: Vacancy Loss

9,514 (749) (134)

10.58

100.0%

$9,004

$9.47

100.0%

$8,816

$9.34

100.0%

(0.83) (0.15) (0.10)

-7.9% -1.4% -0.9% 89.8%

(617) (167) (104) 8,116

(0.65) (0.18) (0.11)

-6.9% -1.9% -1.2% 90.0%

(744) (123)

(0.79) (0.13) (0.10)

-8.4% -1.4% -1.1% 89.1%

Collection Loss

Concession Loss

(88)

(93)

Rent Collected

8,543

9.50 0.73

8.53 0.37

7,856

8.32 0.48

Other Income

661

6.9%

353

3.9%

456

5.2%

Total Income

$9,204

$10.23

96.7%

$8,469

$8.90

93.9%

$8,312

$8.80

94.3%

Expenses Salaries and Personnel

$1,079

$1.20

11.3%

$1,211

$1.27

13.5%

$1,068

$1.13

12.1%

Administrative

560

0.62 0.08 0.53 0.98

5.9% 0.7% 5.0% 9.2%

487

0.51 0.07 0.50 0.97

5.4% 0.7% 5.2%

496

0.53 0.06 0.49 0.88

5.6% 0.6% 5.3% 9.4%

Marketing

71

62

56

Management Fees

476 879

471 925

467 827

Utilities

10.3%

All Repair, Maintenance and Contract Services

1,645

1.83

17.3%

1,680

1.76

18.6%

1,386

1.48

15.7%

Insurance

367 578 288

0.41 0.64 0.32

3.9% 6.1% 3.0%

369 510 129

0.39 0.54 0.14

4.1% 5.7% 1.4%

348 511

0.37 0.54 0.09

4.0% 5.8% 1.0%

Real Estate Taxes

Other Taxes

84

Total Expenses

$5,943

$6.61

62.4%

$5,884

$6.15

64.9%

$5,243

$5.57

59.5%

Net Operating Income Before Debt Service and Depreciation

$3,261

$3.63

34.3%

$2,625

$2.75

29.0%

$3,069

$3.23

34.8%

A = Dollars per unit, per year

B = Dollars per square foot, per year

C = Percent of gross potential rent

RubinBrown Apartment Stats 2017

4

AVERAGE MONTHLY RENT PER UNIT

2013

2012

$1,000

371 108

386 107

$900

$802

$750

$735

$800

$702

$699

$702

$699

$700

952

932

$600

4.34

4.31

$500

90.8%

88.6%

2016

2015

2014

2013

2012

36.3%

35.4%

ECONOMIC OCCUPANCY

A

B

C

A

B

C

100%

90%

$8,421

$8.85

100.0%

$8,383

$8.99

100.0%

80%

(597) (111)

(0.63) (0.12) (0.07)

-7.1% -1.3% -0.8% 90.8%

(758) (127)

(0.81) (0.14) (0.08)

-9.0% -1.5% -0.9% 88.6%

70%

60%

(67)

(79)

7,646

8.03 0.42

7,419

7.96 0.40

50%

400

4.8%

375

4.5%

40%

$8,046

$8.45

95.6%

$7,794

$8.36

93.1%

30%

20%

10%

$1,079

$1.13

12.8%

$1,031

$1.11

12.3%

0%

92.1%

90.0%

89.1%

90.8%

88.6%

469

0.49 0.05 0.47 0.91

5.6% 0.6% 5.3%

453

0.49 0.06 0.47 0.84

5.4% 0.6% 5.2% 9.4%

52

52

2016

2015

2014

2013

2012

449 867

434 784

10.3%

GROSS POTENTIAL RENT V.S. NET OPERATING INCOME PER SQUARE FOOT

1,333

1.40

15.8%

1,428

1.54

17.0%

327 467

0.34 0.49 0.09

3.9% 5.5% 1.0%

284 464 103

0.30 0.50 0.11

3.4% 5.5% 1.2%

$3.63 $10.58

2016

82

$2.75 $9.47

2015

$5,125

$5.37

60.8%

$5,033

$5.42

60.0%

$3.23 $9.34

2014

$2,921

$3.08

34.8%

$2,761

$2.94

33.1%

$3.08 $8.85

2013

$2.94 $8.99

2012

GROSS POTENTIAL RENT

NET OPERATING INCOME

Government Assisted

5

GOVERNMENT ASSISTED

EXPENSE TRENDS PER UNIT

2016

$1,079

$1,211

2015

Salaries and Personnel

2014

$1,068

2013

$1,079

2012

$1,031

$630

$549

Administrative and Marketing

$552

$521

$505

$1,645

$1,680

Contract Services and Repairs & Maintenance

$1,386

$1,333

$1,428

$876

1,233

$876

1,008

Taxes and Insurance

$945

$876

$851

$0

$250

$500

$750

$1,000 $1,250 $1,500

$1,750

RubinBrown Apartment Stats 2017

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PAGE

7

GOVERNMENT ASSISTED BY REGION

North

East/Northeast

Midwest

South/Southeast

Total Number of Projects

31

74

281

98

Average Project Age In Years Average Number of Units

16.52

13.77

12.55

9.79

85

119

102

101

Averages Per Unit: Monthly Rent

$757

$899

$766

$791

Square Feet

873

947

875

1,005

Rooms

4.50

4.80

4.33

5.19

Economic Occupancy

94.0%

90.4%

92.4%

91.0%

Net Operating Income Before Debt Service & Depreciation as a Percentage of Total Income

34.1%

36.0%

36.2%

30.8%

A

B

C

A

B

C

A

B

C

A

B

C

Revenues Gross Potential Rent Less: Vacancy Loss

$9,080 $10.41 100.0% $10,791 $11.39 100.0%

$9,196 $10.51 100.0%

$9,493

$9.44 100.0%

(544) (0.62) (120) (0.14)

-6.0% -1.3% -0.1% 92.6%

(1,032) (1.09) (161) (0.17) (36) (0.04)

-9.6% -1.5% -0.3% 88.6%

(702) (0.80) (137) (0.16) (145) (0.17)

-7.6% -1.5% -1.6% 89.3%

(859) (0.85) (151) (0.15) (51) (0.05)

-9.0% -1.6% -0.5% 88.8%

Collection Loss

(9) (0.01)

Concession Loss

Rent Collected

8,407

9.64 0.62

9,562

10.09

8,212

9.38 0.70

8,432

8.39 0.54

541

6.0%

495

0.52

4.6%

610

6.6%

542

5.7%

Other Income

$8,948 $10.26

98.5%

$10,057 $10.61

93.2%

$8,822 $10.08

95.9%

$8,974

$8.93

94.5%

Total Income

Expenses Salaries and Personnel

$978

$1.12

10.8% 5.5% 0.5% 4.9% 2.4% 0.7% 1.0% 0.3% 0.6% 0.4% 0.6% 3.0% 8.6% 3.3% 10.1% 12.5%

$1,078

$1.14

10.0% 5.9% 0.5% 4.7% 9.5% 1.7% 0.5% 1.2% 0.7% 0.7% 1.0% 0.4% 2.9% 7.2% 2.3% 10.3% 59.6%

$1,018

$1.16

11.1% 5.6% 0.8% 4.8% 8.7% 1.3% 0.7% 0.9% 0.6% 0.4% 0.4% 0.4% 3.8% 5.9% 3.4% 12.4% 61.2%

$1,251

$1.24

13.2% 6.8% 0.7% 5.5% 9.2% 1.5% 1.2% 2.0% 0.8% 0.6% 0.6% 0.3% 5.4% 4.8% 2.4% 10.3% 65.4%

Administrative

496

0.57 0.05 0.51 1.05 0.25 0.07 0.10 0.03 0.06 0.04 0.06 1.30 0.31 0.90 0.34

633

0.67 0.06 0.54 1.08 0.20 0.05 0.14 0.08 0.08 0.11 0.05 1.18 0.33 0.82 0.26

516

0.59 0.08 0.50 0.91 0.14 0.07 0.10 0.06 0.05 0.04 0.04 1.30 0.40 0.62 0.36

643

0.64 0.07 0.52 0.87 0.14 0.11 0.19 0.07 0.06 0.06 0.03 0.97 0.51 0.45 0.23

Marketing

47

53

70

69

Management Fees

441 916 218

512

440 799 123

525 870 145 110 192

Utilities

1,022

Carpeting

187

Painting

59 91 26 53 33 54

50

61 86 53 40 36 39

Landscaping

133

HVAC

78 78

75 57 61 32

Appliances

Plumbing Electrical

104

43

Other Repairs and Services

1,131

1,116

1,140

980 516 452 228

Insurance

270 785 301

316 781 250

353 539 315

Real Estate Taxes

Other Taxes

Total Expenses

$5,899

$6.76 65.0%

$6,434

$6.79

$5,628

$6.42

$6,206

$6.16

Net Operating Income Before Debt Service & Depreciation

$3,049

$3.50 33.6%

$3,623

$3.82

33.6%

$3,194

$3.66

34.7%

$2,768

$2.77

29.2%

A = Dollars per unit, per year

B = Dollars per square foot, per year

C = Percent of gross potential rent

RubinBrown Apartment Stats 2017

8

MONTHLY RENT PER UNIT

South/Southwest

West/Northwest

19

28

$757

$899

12.00

12.92

125

130

$919

$766

$727

$727

$919

$791

900

890

4.52

3.36

88.8%

97.1%

40.2%

40.8%

A

B

C

A

B

C

NET OPERATING INCOME PER SQUARE FOOT

$8,723

$9.69 100.0%

$11,022 $12.38 100.0%

$3.50

$3.82

(979) (1.09) -11.2%

(322) (0.36) (94) (0.11) (19) (0.02)

-2.9% -0.9% -0.2% 96.1%

(72) (0.08) (51) (0.06)

-0.8% -0.6% 87.4%

$5.16

$3.66

7,621

8.46 0.73

10,587

11.89

$3.70

$2.77

661

7.6%

657

0.74

6.0%

$8,282

$9.19

94.9%

$11,244 $12.63 102.0%

$990

$1.10

11.4%

$1,084

$1.22

9.8% 5.6% 0.1% 5.1% 1.3% 0.4% 1.7% 0.4% 0.7% 0.8% 0.4% 3.3% 3.4% 3.0%

478

0.53 0.08 0.42 0.84 0.16 0.09 0.06 0.11 0.06 0.05 0.02 0.75 0.35 0.64 0.23

5.5% 0.9% 4.4% 8.7% 1.6% 0.9% 0.6% 1.2% 0.6% 0.5% 0.2% 7.7% 3.6% 6.6% 2.4%

612

0.69 0.02 0.63 1.38 0.16 0.05 0.20 0.05 0.09 0.09 0.05 1.64 0.41 0.42 0.37

76

15

382 758 144

562

ECONOMIC OCCUPANCY

1,226

11.1%

144

94.0%

78 54

48

90.4%

182

97.1%

102

45 78 83 48

92.4%

57 43 19

88.8%

91.0%

674 313 578 208

1,459

13.2%

364 370 333

$4,954

$5.49

56.8%

$6,653

$7.47

60.4%

North

West/Northwest

South/Southeast East/Northeast

$3,328

$3.70

38.1%

$4,591

$5.16

41.7%

South/Southwest

Midwest

Government Assisted

9

GOVERNMENT ASSISTED BY PROJECT SIZE

0-50 Units

51-100 Units

101-150 Units

151-200 Units

Over 200 Units

Total Number of Projects

118

156

117

47

55

Average Project Age In Years Average Number of Units

11.72

12.09

15.16

13.93

13.72

34

77

122

179

263

Averages Per Unit: Monthly Rent

$668

$861

$809

$782

$836

Square Feet

993

847

896

906

901

Rooms

5.02

4.17

4.40

4.35

4.63

Economic Occupancy

95.4%

94.4%

91.0%

92.5%

90.1%

Net Operating Income Before Debt Service & Depreciation as a Percentage of Total Income

28.8%

39.8%

34.7%

36.1%

42.0%

A

B

A

B

A

B

A

B

A

B

Revenues Gross Potential Rent Less: Vacancy Loss

$8,424

$8.48

$10,333 $12.20 (574) (0.68) (114) (0.13)

$9,707 $10.83 (871) (0.97) (128) (0.14)

$9,385 $10.36 (704) (0.78) (149) (0.16)

$10,034 $11.14 (989) (1.10) (150) (0.17) (196) (0.22)

(387) (0.39) (134) (0.13) (144) (0.14)

Collection Loss

Concession Loss

(50) (0.06)

(48) (0.05)

(39) (0.04)

Rent Collected

7,759

7.82 0.57

9,595

11.33

8,660

9.67 0.52

8,493

9.38 0.67

8,699

9.65 0.78

Other Income

567

549

0.65

467

603

702

Total Income

$8,326

$8.39

$10,144 $11.98

$9,127 $10.19

$9,096 $10.05

$9,401 $10.43

Expenses Salaries and Personnel

$1,001

$1.01

$1,199

$1.42

$1,071

$1.20

$1,035

$1.14

$911

$1.01

Administrative

629

0.63 0.04 0.46 0.79 0.10 0.09 0.17 0.07 0.04 0.03 0.03 1.22 0.51 0.55 0.23

666

0.79 0.11 0.59 0.99 0.16 0.08 0.12 0.08 0.06 0.05 0.06 1.19 0.46 0.63 0.43

547

0.61 0.06 0.54 1.09 0.21 0.07 0.16 0.06 0.07 0.08 0.05 1.25 0.35 0.54 0.29

478

0.53 0.06 0.51 1.04 0.14 0.05 0.12 0.07 0.04 0.06 0.04 1.38 0.38 0.60 0.25

462

0.51 0.08 0.46 0.84 0.16 0.07 0.11 0.06 0.07 0.06 0.04 1.17 0.41 0.76 0.23

Marketing

39

94

52

57

76

Management Fees

462 782

504 839 134

488 978 191

466 943 129

412 761 141

Utilities

Carpeting

95 86

Painting

68 99 69 48 46 48

63

43

65

Landscaping

170

143

112

102

HVAC

69 38 29 30

57 64 75 49

64 37 55 33

55 60 52 35

Appliances

Plumbing Electrical

Other Repairs and Services

1,215

1,005

1,124

1,247

1,054

Insurance

506 550 224

389 532 367

310 481 263

345 540 224

371 682 211

Real Estate Taxes

Other Taxes

Total Expenses

$5,925

$5.94

$6,107

$7.22

$5,956

$6.63

$5,808

$6.41

$5,450

$6.04

Net Operating Income Before Debt Service and Depreciation

$2,401

$2.45

$4,037

$4.76

$3,171

$3.56

$3,288

$3.64

$3,951

$4.39

Capital Expenditures

$222

$0.22

$341

$0.34

$224

$0.23

$685

$0.69

$374

$0.38

A = Dollars per unit, per year

B = Dollars per square foot, per year

RubinBrown Apartment Stats 2017

10

PAGE

11

MARKET RATE

2016

2015

2014

Total Number of Projects Average Number of Units

28

31

38

288

266

279

Averages Per Unit: Monthly Rent

$949

$897

$806

Square Feet

943

926

942

Rooms

4.24

3.60

4.00

Economic Occupancy

90.7%

87.3%

86.2%

Net Operating Income Before Debt Service & Depreciation as a Percentage of Total Income

50.0%

50.3%

47.8%

A

B

C

A

B

C

A

B

C

Revenues Gross Potential Rent Less: Vacancy Loss

$11,383

$12.07 (1.12) (0.13) (0.22)

100.0%

$10,763 $11.62 100.0%

$9,666

$10.26 (0.94) (0.10) (0.37)

100.0%

(1,057)

-9.3% -1.1% -1.8% 87.9% 11.4%

(929) (101) (334)

(1.00) (0.11) (0.36)

-8.6% -0.9% -3.1% 87.4%

(887)

-9.2% -1.0% -3.6% 86.2% 10.7%

Collection Loss

(121) (203)

(90)

(349)

Concession Loss

Rent Collected

10,002

10.61

9,399 $10.15

8,340 1,039

$8.85

1,294

1.37

945

1.02

8.8%

1.10

Other Income

$11,296

$11.97

99.2%

$10,345 $11.17

96.2%

$9,379

$9.95

96.9%

Total Income

Expenses Salaries and Personnel

$649

$0.69

5.7% 5.1% 1.4% 4.0% 6.1%

$1,044

$1.13

9.7% 4.5% 1.6% 4.4% 6.0%

$981

$1.04

10.1%

Administrative

580 164 459 695

0.62 0.17 0.49 0.74

480 168 476 648

.52 .18 .51 .70

427 139 395 665

0.45 0.15 0.42 0.71

4.4% 1.4% 4.1% 6.9%

Marketing

Management Fees

Utilities

All Repairs and Maintenance and Contract Services

1,591

1.69

14.0%

939

1.01

8.7%

1,035

1.10

10.7%

Insurance

224

0.24 1.12 0.24

2.0% 9.3% 2.0%

279

.30

2.6% 9.3% 0.9%

267 900

0.28 0.95 0.09

2.8% 9.3% 0.8%

Real Estate Taxes

1,053

1,005

1.09 0.10

231

96

82

Other Taxes

Total Expenses

$5,646

$5.98

49.6%

$5,135

$5.54

47.7%

$4,891

$5.19

50.5%

Net Operating Income Before Debt Service and Depreciation

$5,650

$5.99

49.6%

$5,208

$5.62

48.4%

$4,488

$4.76

46.4%

A = Dollars per unit, per year

B = Dollars per square foot, per year

C = Percent of gross potential rent

RubinBrown Apartment Stats 2017

12

AVERAGE MONTHLY RENT PER UNIT $949

2013

2012

$1,000

45

34

$897

263

248

$900

$806

$780

$766

$800

$780

$766

$700

909

926

4.00

4.14

$600

$500

85.8%

85.0%

2016

2015

2014

2013

2012

45.9%

49.0%

ECONOMIC OCCUPANCY

A

B

C

A

B

C

100%

90%

$9,358

$10.30 (1.00) (0.13) (0.33)

100.0%

$9,193

$9.93

100.0%

80%

(908) (121) (303) 8,026 1,088

-9.7% -1.3% -3.2% 85.8% 11.6%

(824) (116) (435) 7,818

(0.89) (0.13) (0.47)

-9.0% -1.3% -4.7% 85.0%

70%

60%

8.84 1.20

8.44 0.89

50%

821

8.9%

40%

$9,114

$10.04

97.4%

$8,639

$9.33

93.9%

30%

20%

10%

$939

$1.03

10.0%

$976

$1.05

10.6%

0%

92.1% 90.7%

90.0% 87.3%

89.1% 86.2%

90.8% 85.8%

88.6% 2011 85.0%

438 153 419 664

0.48 0.17 0.46 0.73

4.7% 1.6% 4.5% 7.1%

305 127 350 596

0.33 0.14 0.38 0.64

3.3% 1.4% 3.8% 6.5%

2015

2014

2013

2012

GROSS POTENTIAL RENT V.S. NET OPERATING INCOME PER SQUARE FOOT

1,050

1.16

11.2%

1,054

1.14

11.6%

311 841 120

0.34 0.93 0.13

3.3% 9.0% 1.3%

264 690

0.28 0.75 0.05

2.9% 7.5% 0.5%

$5.99 $12.07

2016

48

$5.62 $11.62

2015

$4,935

$5.43

52.7%

$4,410

$4.76

48.1%

$4.76 $10.26

2014

$4,179

$4.61

44.7%

$4,229

$4.57

45.8%

$4.61 $10.30

2013

$4.57 $9.93

2012

NET OPERATING INCOME

GROSS POTENTIAL RENT

Market Rate

13

LOW INCOME TAX CREDIT PROJECTS

2016

2015

2014

Total Number of Projects Average Number of Units

466 111

386

508 108

99

Averages Per Unit: Monthly Rent

$812

$709

$735

Square Feet

885

952

952

Rooms

4.48

4.42

4.51

Economic Occupancy

92.6%

90.6%

88.9%

Net Operating Income Before Debt Service & Depreciation as a Percentage of Total Income

36.6%

30.6%

35.3%

A

B

C

A

B

C

A

B

C

Revenues Gross Potential Rent Less: Vacancy Loss

$9,748

$11.01 (0.81) (0.14) (0.10)

100.0%

$8,513

$8.94

100.0%

$8,824

$9.27

100.0%

(717) (128)

-7.4% -1.3% -0.9% 90.4%

(580) (160)

(0.61) (0.17) (0.07)

-6.8% -1.9% -0.7% 90.6%

(757) (123)

(0.79) (0.13) (0.10)

-8.6% -1.4% -1.1% 88.9%

Collection Loss

(87)

(63)

(94)

Concession Loss

Rent Collected

8,816

9.96 0.80

7,710

8.09 0.29

7,850

8.25 0.47

707

7.2%

275

3.2%

450

5.1%

Other Income

$9,523

$10.76

97.7%

$7,985

$8.38

93.8%

$8,300

$8.72

94.0%

Total Income

Expenses Salaries and Personnel

$1,086

$1.23

11.1%

$1,172

$1.23

13.8%

$1,071

$1.12

12.1%

Administrative

570

0.64 0.09 0.55 1.01

5.9% 0.8% 5.0% 9.1%

452

0.47 0.06 0.47 0.91

5.3% 0.7% 5.3%

489

0.51 0.06 0.49 0.86

5.5% 0.6% 5.3% 9.3%

Marketing

77

57

57

Management Fees

490 892

448 862

467 818

Utilities

10.1%

All Repair, Maintenance and Contract Services

1,637

1.85

16.8%

1,631

1.71

19.2%

1,531

1.61

17.3%

Insurance

362 624 296

0.41 0.71 0.33

3.7% 6.4% 3.0%

352 451

0.37 0.47 0.13

4.1% 5.3% 1.4%

349 509

0.37 0.53 0.09

4.0% 5.8% 0.9%

Real Estate Taxes

96

82

Other Taxes

Total Expenses

$6,034

$6.82

61.9%

$5,546

$5.82

65.2%

$5,373

$5.64

60.8%

Net Operating Income Before Debt Service and Depreciation

$3,489

$3.94

35.8%

$2,439

$2.56

28.6%

$2,927

$3.08

33.2%

A = Dollars per unit, per year

B = Dollars per square foot, per year

C = Percent of gross potential rent

RubinBrown Apartment Stats 2017

14

AVERAGE MONTHLY RENT PER UNIT

2013

2012

$1,000

362 107

367 109

$900

$812

$798

$800

$735

$709

$798

$697

$697

$700

955

947

4.36

4.38

$600

$500

90.6%

88.8%

2016

2015

2014

2013

2012

36.5%

35.4%

ECONOMIC OCCUPANCY

A

B

C

A

B

C

100%

90%

$8,429

$8.83

100.0%

$8,370

$8.84

100.0%

80%

(617) (111)

(0.65) (0.12) (0.07)

-7.3% -1.3% -0.8% 90.6%

(748) (129)

(0.79) (0.14) (0.07)

-8.9% -1.5% -0.8% 88.8%

70%

(69)

(67)

60%

7,632

7.99 0.42

7,426

7.84 0.39

50%

404

4.8%

373

4.4%

40%

$8,036

$8.41

95.4%

$7,799

$8.23

93.2%

30%

20%

10%

$1,076

$1.13

12.8%

$1,031

$1.09

12.3%

0%

88.9%

92.6%

90.6%

90.6%

88.8%

457

0.48 0.05 0.47 0.89

5.4% 0.6% 5.3%

450

0.48 0.05 0.46 0.84

5.4% 0.6% 5.2% 9.5%

2015

2014

2013

2012

2011

51

51

447 852

434 792

10.1%

GROSS POTENTIAL RENT V.S. NET OPERATING INCOME PER SQUARE FOOT

1,353

1.42

16.1%

1,435

1.52

17.1%

327 463

0.34 0.49 0.08

3.9% 5.5% 0.9%

282 459 103

0.30 0.48 0.11

3.4% 5.5% 1.2%

$3.94 $11.01

2016

74

$2.56 $8.94

2015

$5,100

$5.35

60.6%

$5,037

$5.33

60.2%

$3.08 $9.27

2014

$2,936

$3.06

34.8%

$2,762

$2.90

33.0%

$3.06 $8.83

2013

$2.90 $8.84

2012

NET OPERATING INCOME

GROSS POTENTIAL RENT

Low Income Tax Credit Projects

15

RUBINBROWN REAL ESTATE SERVICES GROUP

· Senior housing consulting · Business valuations · Low-income housing tax credit consulting and compliance · Affordable housing consulting and compliance · Historic rehabilitation tax credit consulting · Sales and Use Tax consulting · Governmental cost certifications (FHA & state housing agency) · NMTC consulting and compliance · Renewable energy consulting and compliance · Design and evaluation of financial reporting systems and internal control systems · Capital asset segregation analysis · Construction draw accounting and processing · Structured and complex deal structuring · Assistance in obtaining debt/equity financing · Like-kind exchange consulting

For more than 30 years, RubinBrown’s Real Estate Services Group has developed a strong reputation nationally as a leader in accounting and advisory services. Today, the group provides specialized services to real estate entities from coast to coast. The RubinBrown Real Estate Services Group provides a full range of assurance, tax, business planning, and consulting services to: · Investment funds · Real estate partnerships · Developers

· Management companies · Governmental agencies · Syndicators and investors · Financial institutions · Construction-related companies

RubinBrown Real Estate Services Group’s services include: · Financial forecasts and projections · Cash flow and operational analyses · Specialized and complex tax planning · Troubled project workouts · HOPE VI consulting

· Strategic planning · Feasibility studies

RubinBrown Apartment Stats 2017

16

Through the years, our clients have grown to depend on our expertise in four key areas of the real estate sector: Affordable Housing: This complex and highly regulated industry has been one that RubinBrown has focused on since the early days of HUD and the advent of the federal low-income housing tax credit program. Historic Tax Credit Services: RubinBrown has extensive experience with consulting on historic rehabilitation projects across the country. New Markets Tax Credit Services: In addition to initial program guidance and consulting, RubinBrown experts can help you with NMTC application assistance. Renewable Energy: There are many new financial incentives for companies in the renewable energy sector. We can help you sort through the opportunities and provide financial guidance to move your businesses forward. In addition, the RubinBrown Real Estate Services Group regularly sponsors seminars and roundtables dealing with current topics affecting the real estate industry.

Bryan Keller, CPA, CGMA Partner-In Charge 314.290.3341 bryan.keller@rubinbrown.com

Dave Herdlick, CPA Partner & Vice Chair 314.290.3383 dave.herdlick@rubinbrown.com

Amy Broadwater, CPA Partner 615.480.2871 amy.broadwater@rubinbrown.com

Jeff Cunningham, CPA Partner 303.952.1257 jeffrey.cunningham@rubinbrown.com

RubinBrown Real Estate Services Group

17

1.800.678.3134 www.RubinBrown.com

@RubinBrown RubinBrown LLP

Founded in 1952, RubinBrown’s team members establish best practices within specific industry segments and work to serve the community both inside and outside the workplace. RubinBrown’s mission is to help clients build and protect value, while at all times honoring the responsibility to serve the public interest.

RubinBrown is also an independent member of Baker Tilly International, a high-quality, dedicated network of 126 independent firms in 147 countries.