RubinBrown Apartment Stats 2019

’19

APARTMENT STATS

A publication by RubinBrown LLP

Contents

RubinBrown is pleased to present the 2019 Apartment Statistical Analysis, an annual survey compiled by the Real Estate Services Group.

1 Executive Summary 3 Comparison of Operations 4 Government Assisted 8 Government Assisted by Region 10 Government Assisted by Project Size 12 Low Income Tax Credit Projects 14 Market Rate 16 RubinBrown 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 2018 and represents approximately 770 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).

@RubinBrownRE

@RubinBrownRealEstate

Disclaimer: Apartment Stats, a publication of RubinBrown LLP, is designed to provide general information regarding the subject matter covered. Although prepared by professionals, its content should not be construed as the rendering of advice regarding specific situations. If accounting, legal, or other expert assistance is needed, consult with your professional business advisor. Please call RubinBrown with any questions.

www.RubinBrown.com

RubinBrown Apartment Stats 2017

ii

EXECUTIVE SUMMARY

Multi-Family Industry Since 2010, the U.S. multi-family industry has

The Fannie Mae 2019 Multi-family Market Outlook expects vacancy rates to return to historical levels and remain stable, due to the ongoing favorable job growth and demographic projects. The Fannie Mae research team anticipates the U.S. multi-family vacancy rate will remain in the 5.5% to 6.0% range during 2019. At this rate, the national vacancy rate would return to its recent historical average of 6.0%. rent-restricted properties were at 2.3% in 2018. These properties include units that benefit from Low Income Housing Tax Credits (LIHTC) and Project-Based Section 8 programs. Vacancy rates at these properties are unlikely to rise in the near future. According to Reis, vacancies at rent restricted apartments should remain below 2.1% through 2020. Meanwhile, affordable rental units continue to experience low vacancy rates. Vacancies at Rent growth was positive and ended 2018 at approximately 2.75%, which outpaced the rate of inflation of 2.4%, according to Fannie Mae. Additionally, 2018 rent growth was greater than the 2.5% growth rate of 2017. The expectation for 2019 is positive but may be slightly lower at 2.3%. Rent growth for affordable units increased by approximately 2.9% for 2018. CoStar projects rent growth in 2019 for affordable housing will Under the Tax Cut and Jobs Act of 2017 (TCJA), the corporate tax rate declined from 35% to 21% leading to a decline in the value of tax credits. Investors in low-income housing tax credit deals receive tax benefits from the low-income housing tax credits, but also receive tax benefits from the taxable losses allocated to them. For example, with the drop in corporate tax rate from 35% to 21%, the tax benefits derived from the losses have less value to investors, and decrease the yield to an investor. On the other hand, the increase in the bonus depreciation percentage from 50% to 100% has allowed some deals to deliver losses to investors earlier, increasing the yield to the investor. The TCJA also introduced Opportunity Zones and a spending bill providing a four year, 12.5% annual increase in the 9% LIHTC allocation. Opportunity Zones allow investors to defer gains for an investment in primarily disadvantaged neighborhoods. be approximately 2.4%. Affordable Housing

experienced increased rent growth and low vacancies. Key fundamentals such as favorable demographic trends, positive job growth and continued renter household formations have propelled the multi-family

industry over the past several years, per the Fannie Mae 2019 Multi-family Market Outlook.

According to the Dodge Data & Analytics Supply Track data, approximately 394,000 and 381,000 apartment units were completed in 2017 and 2018, respectively. Another 453,000 units are expected to be completed in 2019. Despite the growth in number of multi-family units, the nation’s supply of low-cost rental housing significantly shrank after the Great Recession and has remained, for the most part, unchanged since 2015. A National Low Income Housing Coalition study found that for every 100 extremely low-income renters, only 35 rental units were affordable and available in 2016, which is a shortfall of more than 7.2 million units. Based on research from the Joint Center for Housing Studies of Harvard University, more than 2.5 million units priced below $800 were lost between 1990 and 2016. Additionally, job growth is expected to be at 1.0% in 2019, which would produce 1.5 million new jobs according to Fannie Mae’s forecast. According to the Fannie Mae 2019 Multi-family Market Outlook, based on that job growth, multi-family rental demand theoretically could increase in the range of between 250,000 units to as high as 370,000 units. Further straining the nation’s supply of low-cost rental housing. According to the Joint Center for Housing Studies of Harvard University, all three major Census Bureau surveys show that household growth has increased over the past three years, with ranges from 800,000 to 1.1 million annually which is greater than post-recession lows but less than the 1.35 million annual average from 2000 to 2006. The millennial generation is driving much of the rebound in household growth, forming an average of 2.1 million net new households annually between 2012 and 2017. Immigration is expected to become an even greater source of population growth. According to the Joint Center for Housing Studies of Harvard University, immigrants make up 20% of renter households. The Census Bureau projects an increase in growth of immigration from 42% in 2018 to 67% in 2040.

Executive Summary

1

EXECUTIVE SUMMARY

worse given the threats to the supply. Unsubsidized low- income housing units are under constant threat of being lost to upgrading or removal, while subsidized contracts are at risk of converting to market rate units. Affordability restrictions on 533,000 LIHTC units, 425,000 project-based Section 8 units, and 142,000 other subsidized units are set to expire within the next 10 years. Conclusion Vacancy rates are showing signs of increase to historical rates, but according to a national real estate investor survey, market participants view the multi-family industry only slightly less positively than in previous years and expect lending and investment conditions to remain favorable. According to Fannie Mae, despite elevated levels of new supply over the next 12 to 18 months, investment in existing multi-family properties is expected to remain similar to 2018 levels. The multi-family cap rates are currently at 5.4%, which is down from 5.6% at the end of 2017; it is unlikely cap rates will compress further. It is expected that national multi-family cap rates will increase slightly but remain under 6.0%. The outlook for the multi-family industry remains positive based on tenant demand. RubinBrown’s 2019 Apartment Stats mirror many of the trends previously discussed. Overall, vacancy rates remain historically low, but experienced increases during the year. Additionally, the low-income vacancy rates remain lower than government-assisted projects, a consistent trend as the need for low-income housing far surpasses the supply. Lastly, monthly rents continue to increase, driven partially by the need for additional multi-family housing. 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.

Overall, tax reform has led to lower equity pricing for low- income housing tax credit deals. Also, more importance is being placed upon the upfront financial projections that are prepared prior to the closing on a low-income housing tax credit partnership. There are more issues than ever that need to be addressed prior to closing on this type of transaction due to the new tax law. According to Fannie Mae, almost half of single family renter households (20.2 million) are cost burdened. This means more than 30% of their income is spent on rent and utilities. Furthermore, over a quarter of all renters pay more than half of their household income for housing. The Joint Center for Housing Studies of Harvard University states the cost-burdened share of renters doubled from 23.8% in the 1960s to 47.5% in 2016 as housing costs and household incomes have steadily diverged. Adjusting for inflation, the median rent payment rose 61% between 1960 and 2016, while the median renter income grew only 5%. In 2017, approximately half of assisted households (2.2 million) received housing vouchers for use in the private rental market, a decline of 86,000 from 2016, according to the Joint Center for Housing Studies of Harvard University. Allocations for rental assistance have fallen well behind the need. Although the 2018 spending bill increased HUD funding, renewals of rental assistance contracts continue to use a larger percentage of the budget. According to the same study, households that qualify for assistance have several barriers that stand in the way of finding affordable housing such as wait times for HUD subsidies, averaging 18 months for public housing and 32 months for vouchers. Even once obtaining the voucher, recipients face the challenge of finding eligible housing within 60-120 days or surrendering the vouchers. Additionally, many cities have closed their waiting lists for both types of assistance. The National Low Income Housing Coalition reports that the gap between supply and demand for affordable and available rental units to very low-income households is 7.7 million. According to the Joint Center for Housing Studies, this shortfall could become much

Real Estate Services Blog The RubinBrown Real Estate Services Blog is a value-added approach keeping clients and contacts informed about current, relevant topics affecting the real estate industry. www.RubinBrown.com/RealEstateBlog

RubinBrown Apartment Stats 2019

2

COMPARISON OF OPERATIONS

Government Assisted

Market Rate

Total Number of Projects

736

33

Average Project Age In Years Average Number of Units

11.63

8.14

107

198

Averages Per Unit: Monthly Rent

$834

$1,383

Square Feet

908

835

Rooms

4.48

4.03

Economic Occupancy

92.0%

89.5%

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

34.9%

50.3%

A

B

C

A

B

C

Revenues Gross Potential Rent Less: Vacancy Loss

$10,010

$11.02 (0.88) (0.15) (0.07)

100.0%

$16,598

$19.88 (2.09) (0.24) (0.10)

100.0% -10.5% -1.2% -0.5% 87.8%

(801) (137)

-8.0% -1.4% -0.7% 89.9%

(1,746)

Collection Loss

(201)

(68)

(81)

Concession Loss

Rent Collected Other Income Total Income

9,004

9.92 0.73

14,570

17.45

667

6.7%

1,123

1.34

6.8%

$9,671

$10.65

96.6%

$15,693

$18.79

94.5%

Expenses Salaries and Personnel

1,117

1.23 0.81 0.09 0.54 1.02 0.10 0.06 0.12 0.08 0.04 0.06 0.05 1.26 0.40 0.77 0.31

11.2% 7.3% 0.8% 4.9% 9.3% 0.9% 0.6% 1.0% 0.7% 0.4% 0.5% 0.4% 3.6% 7.0% 2.8% 11.4% 62.9%

$934

$1.12

5.6% 4.7% 1.8% 3.9% 5.3% 0.6% 0.9% 1.1% 0.3% 0.3% 0.5% 0.2% 7.0% 2.0%

Administrative

735

788 301 648 883

0.94 0.36 0.78 1.06 0.11 0.18 0.23 0.07 0.06 0.09 0.03 1.39 0.39 2.24 0.30

Marketing

82

Management Fees

494 928

Utilities

Carpeting

89 58

93

Painting

143 189

Landscaping

105

HVAC

70 36 50 41

55 33 76 25

Appliances

Plumbing Electrical

Other Repairs and Services

1,146

1,157

Insurance

360 703 283

325

Real Estate Taxes

1,871

11.3%

254

1.5%

Other Taxes

Total Expenses

$6,297

$6.93

$7,795

$9.34

47.0%

Net Operating Income Before Debt Service and Depreciation

$3,374

$3.72

33.7%

$7,898

$9.45

47.6%

Capital Expenditures

$982

$1.08

9.8%

$1,644

$1.97

9.9%

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

2018

2017

2016

Total Number of Projects

736

701

562

Average Number of Units

107

105

106

Averages Per Unit: Monthly Rent

$834

$ 767

$802

Square Feet

908

923

899

Rooms

4.48

4.50

4.50

Economic Occupancy

92.0%

92.3%

92.1%

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

34.9%

34.5%

35.4%

A

B

C

A

B

C

A

B

C

Revenues Gross Potential Rent Less: Vacancy Loss

$10,010

$11.02 (0.88) (0.15) (0.07)

100.0%

$9,208

$9.98

100.0%

$9,514

$10.58 (0.83) (0.15) (0.10)

100.0%

(801) (137)

-8.0% -1.4% -0.7% 89.9%

(708) (130)

(0.77) (0.14) (0.05)

-7.7% -1.4% -0.5% 90.4%

(749) (134)

-7.9% -1.4% -0.9% 89.8%

Collection Loss

Concession Loss

(68)

(46)

(88)

Rent Collected

9,004

9.92 0.73

8,324

9.02 0.80

8,543

9.50 0.73

Other Income

667

6.7%

742

8.1%

661

6.9%

Total Income

$9,671

$10.65

96.6%

$9,066

$9.82

98.5%

$9,204

$10.23

96.7%

Expenses Salaries and Personnel

$1,117

$1.23

11.2%

$1,087

$1.18

11.8%

$1,079

$1.20

11.3%

Administrative

735

0.81 0.09 0.54 1.02

7.3% 0.8% 4.9% 9.3%

735

0.80 0.08 0.50 0.96

8.0% 0.8% 5.0% 9.7%

560

0.62 0.08 0.53 0.98

5.9% 0.7% 5.0% 9.2%

Marketing

82

78

71

Management Fees

494 928

461 890

476 879

Utilities

All Repair, Maintenance and Contract Services

1,595

1.75

15.9%

1,477

1.61

16.1%

1,645

1.83

17.3%

Insurance

360 703 283

0.40 0.77 0.31

3.6% 7.0% 2.8%

333 577 302

0.36 0.63 0.33

3.6% 6.3% 3.3%

367 578 288

0.41 0.64 0.32

3.9% 6.1% 3.0%

Real Estate Taxes

Other Taxes

Total Expenses

$6,297

$6.93

62.9%

$5,940

$6.45

64.6%

$5,943

$6.61

62.4%

Net Operating Income Before Debt Service and Depreciation

$3,374

$3.72

33.7%

$3,126

$3.37

33.9%

$3,261

$3.63

34.3%

A = Dollars per unit, per year

B = Dollars per square foot, per year

C = Percent of gross potential rent

RubinBrown Apartment Stats 2019

4

AVERAGE MONTHLY RENT PER UNIT

2015

2014

$1,000

425

516

$900

$834

$802

$750

$735

$767

109

108

$800

$700

$750

$735

$600

951

944

4.41

4.46

$500

2018

2017

2016

2015

2014

90.0%

89.1%

31.0%

35.3%

ECONOMIC OCCUPANCY

100%

A

B

C

A

B

C

90%

80%

$9,004

$9.47

100.0%

$8,816

$9.34

100.0%

70%

(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%

60%

(93)

50%

8.53 0.37

7,856

8.32 0.48

40%

353

3.9%

456

5.2%

30%

$8,469

$8.90

93.9%

$8,312

$8.80

94.3%

20%

10%

0%

92.0% 2018

92.3%

92.1%

90.0%

89.1%

$1,211

$1.27

13.5%

$1,068

$1.13

12.1%

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%

2017

2016

2015

2014

62

56

471 925

467 827

10.3%

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

1,680

1.76

18.6%

1,386

1.48

15.7%

$3.72 $11.02

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%

2018

$3.37 $9.98

2017

84

$3.63 $10.58

$5,884

$6.15

64.9%

$5,243

$5.57

59.5%

2016

$2.75 $9.47

2015

$2,625

$2.75

29.0%

$3,069

$3.23

34.8%

$3.23 $9.34

2014

GROSS POTENTIAL RENT

NET OPERATING INCOME

Government Assisted

5

GOVERNMENT ASSISTED

EXPENSE TRENDS PER UNIT

2018

$1,117

$1,087

2017

Salaries and Personnel

2016

$1,079

2015

$1,211

2014

$1,068

$817

$813

Administrative and Marketing

$631

$549

$552

$1,595

$1,477

Contract Services and Repairs & Maintenance

$1,645

$1,680

$1,386

$1,346

$876

1,212

Taxes and Insurance

$1,233

$1,008

$943

$0

$250

$500

$750

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

$1,750

RubinBrown Apartment Stats 2019

6

PAGE

7

GOVERNMENT ASSISTED BY REGION

North

East/Northeast

Midwest

South/Southeast

Total Number of Projects

28

79

446

123

Average Project Age In Years Average Number of Units

15.04

14.32

11.28

10.37

104

119

103

97

Averages Per Unit: Monthly Rent

$997

$977

$792

$797

Square Feet

984

949

839

964

Rooms

4.43

4.57

4.34

4.98

Economic Occupancy

94.3%

94.2%

91.3%

90.0%

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

37.3%

42.0%

33.8%

27.9%

A

B

C

A

B

C

A

B

C

A

B

C

Revenues Gross Potential Rent Less: Vacancy Loss

$11,969 $12.16 100.0% $11,728 $12.36 100.0%

$9,507 $11.33 100.0%

$9,567

$9.92 100.0%

(677) (0.69) (112) (0.11) (90) (0.09)

-5.7% -0.9% -0.8% 92.7%

(676) (0.71) (150) (0.16) (25) (0.03)

-5.8% -1.3% -0.2% 92.7%

(830) (0.99) (123) (0.15) (36) (0.04)

-8.7% -1.3% -0.4% 89.6%

(959) (1.00) -10.0%

Collection Loss

(192) (0.20) (190) (0.20)

-2.0% -2.0% 86.0%

Concession Loss

Rent Collected

11,090

11.27

10,877

11.46

8,518

10.15

8,226

8.53 0.50

1,054

1.07

8.8%

938

0.99

8.0%

648

0.77

6.8%

485

5.1%

Other Income

$9,166 $10.92

96.4%

$8,711

$9.03

91.1%

$12,144 $12.34 $101.5%

$11,815 $12.45 100.7%

Total Income

Expenses Salaries and Personnel

$1,205

$1.22

10.1% 4.9% 0.7% 4.8% 1.6% 0.5% 0.7% 0.7% 0.2% 0.5% 0.4% 2.8% 8.7% 3.2% 10.7% 13.2%

$1,111

$1.17

9.5% 6.7% 0.6% 4.7% 9.3% 1.2% 0.5% 1.0% 0.7% 0.4% 0.6% 0.4% 3.0% 7.5% 2.1%

$1,099

$1.31

11.6% 7.6% 0.9% 5.0% 9.0% 0.7% 0.6% 0.9% 0.7% 0.3% 0.4% 0.4% 3.5% 8.0% 3.0% 11.2% 63.8%

$1,149

$1.19

12.0% 7.7% 0.6% 5.1% 9.0% 1.2% 0.7% 1.5% 1.0% 0.4% 0.6% 0.3% 5.1% 4.3% 2.5% 13.6% 65.6%

Administrative

586

0.60 0.08 0.58 1.30 0.19 0.06 0.09 0.08 0.03 0.06 0.05 1.60 0.34 1.06 0.39

781

0.82 0.08 0.58 1.15 0.15 0.06 0.13 0.09 0.05 0.08 0.05 1.26 0.37 0.93 0.26

720

0.86 0.10 0.56 1.02 0.07 0.07 0.10 0.08 0.03 0.05 0.05 1.27 0.40 0.90 0.34

732

0.76 0.06 0.51 0.89 0.12 0.07 0.14 0.09 0.04 0.06 0.03 1.35 0.51 0.42 0.25

Marketing

82

73

85

56

Management Fees

574

548

471 858

487 862 119

Utilities

1,280

1,093

Carpeting

188

143

62 59 85 66 29 42 39

Painting

60 87 78 29 56 51

57

71

Landscaping

120

139

HVAC

82 48 76 50

91 43 54 31

Appliances

Plumbing Electrical

Other Repairs and Services

1,577

1,195

10.2%

1,068

1,302

Insurance

334

349 878 248

337 756 288

492 407 243

Real Estate Taxes

1,046

379

Other Taxes

Total Expenses

$7,612

$7.74 63.6%

$6,852

$7.22 58.4%

$6,064

$7.23

$6,278

$6.51

Net Operating Income Before Debt Service & Depreciation

$4,532

$4.60 37.9%

$4,963

$5.23 42.3%

$3,102

$3.69

32.6%

$2,433

$2.52

25.5%

A = Dollars per unit, per year

B = Dollars per square foot, per year

C = Percent of gross potential rent

RubinBrown Apartment Stats 2019

8

MONTHLY RENT PER UNIT

South/Southwest

West/Northwest

25

36

$997

$977

11.92

11.78

143

121

$1,096

$792

$813

$813

$1,096

$797

864

993

3.67

3.10

89.7%

98.0%

23.6%

44.9%

A

B

C

A

B

C

NET OPERATING INCOME PER SQUARE FOOT

$9,751 $11.29 100.0% $13,158 $13.25 100.0% (1,003) (1.16) -10.3% (263) (0.26) -2.0% (192) (0.22) -2.0% (90) (0.09) -0.7% (216) (0.25) -2.2% (5) (0.01) 0.0% 8,340 9.66 85.5% 12,800 12.89 97.3% 588 0.68 6.0% 691 0.70 5.3% $8,928 $10.34 91.5% $13,491 $13.59 102.6%

$4.60

$5.23

$6.11

$3.69

$2.45

$2.52

$1,245

$1.44

12.8% 7.6% 2.1% 4.7% 1.0% 0.7% 1.6% 1.2% 0.4% 0.4% 0.8% 3.0% 7.1% 3.7% 11.2% 11.8% 70.0%

$1,278

$1.29

9.7% 6.2% 0.2% 5.5% 0.7% 0.2% 1.1% 0.2% 0.5% 0.7% 0.4% 3.1% 2.4% 3.2%

740 207 457

0.86 0.24 0.53 1.27 0.11 0.08 0.18 0.13 0.05 0.05 0.09 1.33 0.34 0.80 0.42

818

0.82 0.03 0.73 1.43 0.10 0.02 0.14 0.03 0.07 0.09 0.05 1.53 0.41 0.32 0.42

32

727

ECONOMIC OCCUPANCY

1,093

1,419

10.8%

94 70

95 20

94.3%

94.2%

152 113

140

98.0%

29 70 93 47

91.3%

42 42 74

89.7%

90.0%

1,152

1,524

11.6%

291 688 361

403 313 422

$6,821

$7.89

$7,430 $7.48 56.5%

North

West/Northwest

South/Southeast East/Northeast

$2,107

$2.45

21.5%

$6,061

$6.11 46.1%

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

124

168

136

42

52

Average Project Age In Years Average Number of Units

9.98

11.63

13.98

14.06

13.73

35

77

121

175

279

Averages Per Unit: Monthly Rent

$751

$811

$826

$792

$871

Square Feet

1,011

880

923

955

882

Rooms

5.14

4.18

4.27

4.26

4.64

Economic Occupancy

95.6%

93.8%

92.0%

93.3%

90.3%

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

25.5%

32.0%

31.3%

32.8%

38.9%

A

B

A

B

A

B

A

B

A

B

Revenues Gross Potential Rent Less: Vacancy Loss

$9,009

$8.91

$9,727 $11.05 (600) (0.68) (128) (0.15) (174) (0.20)

$9,903 $10.73 (788) (0.85) (114) (0.12)

$9,601 $10.06 (647) (0.68) (197) (0.21)

$10,456 $11.85 (1,013) (1.15)

(393) (0.39) (169) (0.17)

Collection Loss

(168) (0.19)

Concession Loss

(98) (0.10)

(35) (0.04)

(25) (0.03)

(77) (0.09)

Rent Collected

8,349

8.25 0.50

8,825

10.02

8,966

9.72 0.71

8,732

9.14 0.50

9,198

10.42

Other Income

504

504

0.57

659

477

807

0.91

Total Income

$8,853

$8.75

$9,329 $10.59

$9,625 $10.43

$9,209

$9.64

$10,005 $11.33

Expenses Salaries and Personnel

$1,158

$1.15

$1,206

$1.37

$1,139

$1.23

$1,113

$1.17

$1,119

$1.27

Administrative

755

0.75 0.03 0.50 0.86 0.09 0.08 0.17 0.09 0.05 0.06 0.04 1.12 0.51 0.73 0.29

707

0.80 0.07 0.58 1.08 0.12 0.07 0.13 0.10 0.04 0.06 0.07 1.29 0.45 0.62 0.36

851

0.92 0.09 0.58 1.14 0.15 0.06 0.12 0.07 0.05 0.06 0.04 1.33 0.35 0.63 0.34

531

0.56 0.05 0.49 1.10 0.12 0.06 0.09 0.11 0.05 0.05 0.05 1.29 0.40 0.62 0.29

483 110 470 897 102

0.55 0.12 0.53 1.02 0.12 0.08 0.10 0.07 0.05 0.06 0.03 1.22 0.41 1.03 0.27

Marketing

34

60

79

44

Management Fees

507 873

506 952 107

532

470

Utilities

1,056

1,049

Carpeting

88 78

138

111

Painting

60

52

55 89

71 88 64 40 51 30

Landscaping

176

112

112

HVAC

94 53 57 45

85 39 55 61

60 47 52 38

104

Appliances

49 52 44

Plumbing Electrical

Other Repairs and Services

1,131

1,133

1,231

1,229

1,075

Insurance

518 742 290

397 549 315

322 582 317

385 588 273

363 908 241

Real Estate Taxes

Other Taxes

Total Expenses

$6,599

$6.53

$6,344

$7.21

$6,608

$7.16

$6,186

$6.48

$6,112

$6.93

Net Operating Income Before Debt Service and Depreciation

$2,254

$2.22

$2,985

$3.38

$3,017

$3.27

$3,023

$3.16

$3,893

$4.40

Capital Expenditures

$255

$0.25

$676

$0.77

$532

$0.58

$430

$0.45

$666

$0.76

A = Dollars per unit, per year

B = Dollars per square foot, per year

RubinBrown Apartment Stats 2019

10

PAGE

11

LOW INCOME TAX CREDIT PROJECTS

2018

2017

2016

Total Number of Projects Average Number of Units

595

597

466 111

109

107

Averages Per Unit: Monthly Rent

$833

$771

$812

Square Feet

913

929

885

Rooms

4.47

4.48

4.48

Economic Occupancy

92.7%

93.2%

92.6%

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

35.0%

34.8%

36.6%

A

B

C

A

B

C

A

B

C

Revenues Gross Potential Rent Less: Vacancy Loss

$9,996

$10.95 (0.80) (0.15) (0.08)

100.0%

$9,253

$9.96

100.0%

$9,748

$11.01 (0.81) (0.14) (0.10)

100.0%

(732) (134)

-7.3% -1.3% -0.7% 90.6%

(633) (117)

(0.68) (0.13) (0.04)

-6.8% -1.3% -0.4% 91.5%

(717) (128)

-7.4% -1.3% -0.9% 90.4%

Collection Loss

(74)

(41)

(87)

Concession Loss

Rent Collected

9,056

9.92 0.72

8,462

9.11 0.78

8,816

9.96 0.80

655

6.6%

723

7.8%

707

7.2%

Other Income

$9,711

$10.64

97.2%

$9,185

$9.89

99.3%

$9,523

$10.76

97.7%

Total Income

Expenses Salaries and Personnel

$1,104

$1.21

11.0%

$1,084

$1.17

11.7%

$1,086

$1.23

11.1%

Administrative

700

0.77 0.10 0.55 1.01

7.0% 0.9% 5.0% 9.2%

750

0.81 0.09 0.50 0.95

8.1% 0.9% 5.0% 9.6%

570

0.64 0.09 0.55 1.01

5.9% 0.8% 5.0% 9.1%

Marketing

89

80

77

Management Fees

499 924

466 885

490 892

Utilities

All Repair, Maintenance and Contract Services

1,591

1.74

15.9%

1,467

1.58

15.9%

1,637

1.85

16.8%

Insurance

364 756 286

0.40 0.83 0.31

3.6% 7.6% 2.9%

329 621 311

0.35 0.67 0.33

3.6% 6.7% 3.4%

362 624 296

0.41 0.71 0.33

3.7% 6.4% 3.0%

Real Estate Taxes

Other Taxes

Total Expenses

$6,313

$6.91

63.2%

$5,993

$6.45

64.9%

$6,034

$6.82

61.9%

Net Operating Income Before Debt Service and Depreciation

$3,398

$3.73

34.0%

$3,192

$3.44

34.4%

$3,489

$3.94

35.8%

A = Dollars per unit, per year

B = Dollars per square foot, per year

C = Percent of gross potential rent

RubinBrown Apartment Stats 2019

12

AVERAGE MONTHLY RENT PER UNIT

2015

2014

$1,000

386

508 108

99

$900

$833

$812

$771

$800

$735

$709

$709

$735

$700

952

952

4.42

4.51

$600

$500

90.6%

88.9%

2018

2017

2016

2015

2014

30.6%

35.3%

ECONOMIC OCCUPANCY

A

B

C

A

B

C

100%

90%

$8,513

$8.94

100.0%

$8,824

$9.27

100.0%

80%

(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%

70%

(63)

(94)

60%

7,710

8.09 0.29

7,850

8.25 0.47

50%

275

3.2%

450

5.1%

40%

$7,985

$8.38

93.8%

$8,300

$8.72

94.0%

30%

20%

10%

$1,172

$1.23

13.8%

$1,071

$1.12

12.1%

0%

88.9%

92.6%

90.6%

92.7%

93.2%

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%

2018

2017

2016

2015

2014

57

57

448 862

467 818

10.1%

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

1,631

1.71

19.2%

1,531

1.61

17.3%

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%

$3.73 $10.95

2018

96

82

$3.44 $9.96

2017

$5,546

$5.82

65.2%

$5,373

$5.64

60.8%

$3.94 $11.01

2016

$2,439

$2.56

28.6%

$2,927

$3.08

33.2%

$2.56 $8.94

2015

$3.08 $9.27

2014

NET OPERATING INCOME

GROSS POTENTIAL RENT

Low Income Tax Credit Projects

13

MARKET RATE

2018

2017

2016

Total Number of Projects Average Number of Units

33

18

28

198

296

288

Averages Per Unit: Monthly Rent

$1,383

$1,246

$949

Square Feet

835

929

943

Rooms

4.03

4.38

4.24

Economic Occupancy

89.5%

93.7%

90.7%

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

50.3%

53.3%

50.0%

A

B

C

A

B

C

A

B

C

Revenues Gross Potential Rent Less: Vacancy Loss

$16,598

$19.88 (2.09) (0.24) (0.10)

100.0% -10.5% -1.2% -0.5% 87.8%

$14,946

$16.09 (1.01) (0.15) (0.04)

100.0%

$11,383

$12.07 (1.12) (0.13) (0.22)

100.0%

(1,746)

(938) (138)

-6.3% -0.9% -0.2% 92.6%

(1,057)

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

Collection Loss

(201)

(121) (203)

(81)

(35)

Concession Loss

Rent Collected

14,570

17.45

13,835

14.89

10,002

10.61

1,123

1.34

6.8%

245

0.26

1.6%

1,294

1.37

Other Income

$15,693

$18.79

94.5%

$14,080

$15.15

94.2%

$11,296

$11.97

99.2%

Total Income

Expenses Salaries and Personnel

$934

$1.12

5.6% 4.7% 1.8% 3.9% 5.3%

$763

$0.82

5.1% 5.8% 1.0% 3.0% 5.0%

$649

$0.69

5.7% 5.1% 1.4% 4.0% 6.1%

Administrative

788 301 648 883

0.94 0.36 0.78 1.06

870 151 452 745

0.94 0.16 0.49 0.80

580 164 459 695

0.62 0.17 0.49 0.74

Marketing

Management Fees

Utilities

All Repairs and Maintenance and Contract Services

1,791

2.15

10.8%

1,813

1.95

12.1%

1,591

1.69

14.0%

Insurance

325

0.39 2.24 0.30

2.0%

232 996 547

0.25 1.07 0.59

1.6% 6.7% 3.7%

224

0.24 1.12 0.24

2.0% 9.3% 2.0%

Real Estate Taxes

1,871

11.3%

1,053

254

1.5%

231

Other Taxes

Total Expenses

$7,795

$9.34

47.0%

$6,569

$7.07

44.0%

$5,646

$5.98

49.6%

Net Operating Income Before Debt Service and Depreciation

$7,898

$9.45

47.6%

$7,511

$8.08

50.2%

$5,650

$5.99

49.6%

A = Dollars per unit, per year

B = Dollars per square foot, per year

C = Percent of gross potential rent

RubinBrown Apartment Stats 2019

14

AVERAGE MONTHLY RENT PER UNIT

2015

2014

$2,000

31

38

266

279

$1,383, ,

$1,600

$1,246

$949

$1,200

$897

$806

$897

$806

$800

926

942

3.60

4.00

$400

$0

87.3%

86.2%

2018

2017

2016

2015

2014

50.3%

47.8%

ECONOMIC OCCUPANCY

A

B

C

A

B

C

100%

90%

$10,763 $11.62 100.0%

$9,666

$10.26 (0.94) (0.10) (0.37)

100.0%

80%

(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%

70%

(90)

60%

(349)

9,399 $10.15

8,340 1,039

$8.85

50%

945

1.02

8.8%

1.10

40%

$10,345 $11.17

96.2%

$9,379

$9.95

96.9%

30%

20%

10%

$1,044

$1.13

9.7% 4.5% 1.6% 4.4% 6.0%

$981

$1.04

10.1%

0%

92.1% 89.5%

90.0% 93.7%

89.1% 90.7%

90.8% 87.3%

88.6% 2014 86.2%

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%

2018

2017

2016

2015

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

939

1.01

8.7%

1,035

1.10

10.7%

279

.30

2.6% 9.3% 0.9%

267 900

0.28 0.95 0.09

2.8% 9.3% 0.8%

1,005

1.09 0.10

$9.45 $19.88

2018

96

82

$8.08 $16.09

2017

$5,135

$5.54

47.7%

$4,891

$5.19

50.5%

$5.99 $12.07

2016

$5,208

$5.62

48.4%

$4,488

$4.76

46.4%

$5.62 $11.62

2015

$4.76 $10.26

2014

NET OPERATING INCOME

GROSS POTENTIAL RENT

Market Rate

15

RUBINBROWN REAL ESTATE SERVICES GROUP

Affordable Housing This complex and highly regulated industry has been one that we have focused on since the early days of HUD and the advent of the federal low-income housing tax credit program. Historic Tax Credit Services Our team 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, our experts can help you with NMTC application assistance. Opportunity Zones This incentive program was created by the Tax Cuts & Jobs Act of 2017 and is designed to bring growth to communities across the country. Our team of opportunity zone experts can help guide you through the complexities of the program by helping with transaction structuring, compliance, tax and accounting. 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.

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. RubinBrown’s 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

Through the years, our clients have grown to depend on our expertise in five key areas of the real estate sector including affordable housing, historic tax credit services, new markets tax credit services, opportunity zones and renewable energy.

RubinBrown Apartment Stats 2019

16

RubinBrown Real Estate Services Group’s services include:

Tim Anderson, CPA Partner | St. Louis 314.678.3545 tim.anderson@rubinbrown.com Dave Herdlick, CPA Partner & Vice Chair | St. Louis 314.290.3383 dave.herdlick@rubinbrown.com Bryan Keller, CPA, CGMA Partner-In Charge |St. Louis 314.290.3341 bryan.keller@rubinbrown.com Amy Broadwater, CPA Partner | Nashville 615.480.2871 amy.broadwater@rubinbrown.com Jeff Cunningham, CPA Partner | Denver 303.952.1257 jeffrey.cunningham@rubinbrown.com Chris Langley, CPA Partner | Chicago 847.972.5964 chris.langley@rubinbrown.com

· Transaction and tax consulting services · Assurance and accounting services · Financial projections · Complex deal structuring · Capital adjuster calculations · Cost certifications

· Affordable Housing consulting and compliance · Historic Tax Credit consulting and compliance · New Markets Tax Credit consulting and compliance · Renewable Energy consulting and compliance · Opportunity Zone consulting and compliance · HUD audit and consulting services · Deal exit consulting and troubled project workouts · Nonprofit consulting and compliance · Capital asset segregation analysis · Sales and Use tax consulting · Business valuations and appraisals · Design and evaluation of financial reporting and internal control systems

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.