Q1 2013 apartment report rca by Dylan Simon

First quarter 2013

P u b l i s h e d Ap r i l 2 0 1 3

Apartment Quarter in Review • Sales of significant apartment properties totaled $31.7b in Q1, a new record high. Roughly half of that total can be attributed to the sale of the Archstone properties in two portfolios, to Equity Residential and AvalonBay. However, even excluding these two major portfolios, the apartment sector would have still posted a solid increase in volume from a year earlier. • Given the skew of these two portfolios, individual asset sales may be a better barometer. One-off sales totaled $10.9b in Q1, up 4% yoy. It is also worth noting that even without the two Archstone portfolios, portfolio transactions in Q1 were the highest in five years with 13 deals exceeding $100m in size and two exceeding $1.0b. • Cap rates continued to trend lower for both garden and mid/high-rise properties and the Moody’s/RCA CPPI continued upward, albeit at a slightly lower trajectory. In the Major Metros where prices are well above peak, evidence is mounting that buyers are unwilling to push levels higher. However, improvement in apartment prices is being recorded in a diverse group of other markets. • The GSEs originated multifamily loans in record volumes in 2012, but their share of all apartment originations declined. Most of that market share was lost to CMBS and the finance companies and national banks making loans that are destined for CMBS offerings (see page 5).

All Apartment Quarterly Volume & Pricing Trends

cap rate

7.5%

6.5% 6.1% 5.5%

'06

100

• Senior housing (not included in the above totals) is also off to a strong start for 2013 with transaction volumes doubling from a year ago.

$10

'06

'07

'10

'11

'12

'13

'08

'09

'11

'12

'13

Entity Portfolio Individual

$30 $20

'10

transaction volume

billions

'06

Quarter in Review Market Table: Distress ��6 Top Transactions ��7 Top Brokers ��8 Selected Transactions ��9 Notes & Methodology ��11

'09

150

$40

• • • • •

'08

Moody’s/RCA CPPI

200

• New instances of distress again fell sharply in Q1 and work outs continue to exceed these inflows. Lenders are now left with troubled apartment loans and REO that are increasingly smaller and located in less desirable locations (see page 4).

• Quarter in Review ��1 • Market Table: Q1’13 Summary ��3 • Lender Composition ��4 • Distress Update ��5

'07

'08

'09

'10

'11

year-over-year change

$31

'12

'13 135%

100%

-100%

'06

'07

'08

'09

'10

'11

'12

'13

ÂŽ First quarter 2013

Quarterly Volume & Pricing Trends

cap rate

7.5% 7.0% 6.5% 6.0% 5.5% 5.0%

Major Metro Avg. Cap Avg. Cap Rate

'06

'07

'08

'09

'10

'11

'12

'13

'06

'07

'08

'09

'10

'11

'12

'13

'08

'09

'10

'11

'12

'13

'08

'09

'10

'11

'12

'13

price per unit in thousands

$300 $250 $200 $150 $100 $50

$20

'06

'07

'08

'09

'10

'11

'12

'13

'06

'07

transaction volume

billions

$15 $10 $5 $0

'06

'07

'08

'09

'10

'11

'13

'06

'07

year-over-year change

300%

Summary Table

100% Apartment Total -100% Garden Mid/High-rise'06

'12

($B)

volume Q1'13 vs Q1'12 # props yoy

$31.7

'07

'08

1,279

135%

$18.5 125% '09 '10151%'11 $13.2

'12

yoy

average pricing Q1'13 vs Q1'12 bps % chng cap $/unit

33%

$111,265

$92,270 '08 '09 $183,153

20% '10 -13%

928 '13 351

37% 25%'06

'07

6.1%

'11

-15

-18 6.2% '125.5%'13 11

Major Metros Secondary Mkts Tertiary Mkts

$18.4 $9.5 $2.2

212% 58% 40%

521 508 175

32% 22% 19%

$203,890 $90,858 $66,010

-5% 21% 3%

5.5% 6.3% 7.7%

-4 -21 79

Student Housing Senior Housing*

$0.5 $2.4

65% 97%

25 242

-24% 199%

$105,524 $107,815

30% 2%

7.6% 9.3%

39 186

* not included in apartment volume or pricing statistics

® First quarter 2013

Market table: Q1’13 apartment Summary Transactions Reported Closed Through Q1’13

MidAtlantic

Midwest

Northeast

Southeast

Southwest

West

Baltimore DC DC MD burbs DC VA burbs Philadelphia Pittsburgh Richmond/Norfolk Tertiary Mid-Atlantic Total Chicago Cincinnati Cleveland Columbus Detroit Indianapolis Kansas City Minneapolis St Louis Tertiary Midwest Total Boston Hartford Long Island Manhattan No NJ NYC Boroughs Stamford Westchester Tertiary Northeast Total Atlanta Broward Charlotte Jacksonville Memphis Miami Nashville Orlando Palm Beach Raleigh/Durham Tampa Tertiary Southeast Total Austin Dallas Denver Houston Phoenix San Antonio Tertiary Southwest Total East Bay Inland Empire Las Vegas Los Angeles Orange Co Portland Sacramento Salt Lake City San Diego San Francisco San Jose Seattle Tertiary West Total US Other Total US

Garden Vol ($M)

# Props

$219.7 16.3 401.0 301.2 50.7 4.0 116.1 62.5 $1,171.5 220.2 49.6 7.8 17.0 20.7 20.2 137.8 155.5 24.2 335.8 $988.7 268.0 56.5 125.5

6 2 10 6 9 1 7 6 47 16 4 2 1 3 3 8 10 4 29 80 7 2 3

45.7 3.4 2.6 3.3 330.3 $835.2 713.9 170.6 356.2 295.7 53.8 117.8 259.0 514.4 317.7 230.5 187.6 748.7 $3,966.0 232.3 987.0 397.8 592.7 750.9 248.7 273.0 $3,482.3 515.9 302.6 100.5 2,783.3 237.4 138.8 61.9 67.7 368.7 473.7 727.2 321.7 336.8 $6,436.3 1,612.8 $18,492.8

5 1 1 1 15 35 30 9 20 13 2 17 10 19 7 10 11 53 201 12 61 21 34 34 13 29 204 20 15 11 108 14 10 7 4 21 18 12 16 30 286 75 928

Mid/high-rise PPU

Vol ($M)

# Props

All Apartment

PPU

$134,883 1,405.6 411.3 3,555.5 111.8 6.9

17 6 27 7 1

11.0 $5,502.1 246.5 3.5 12.7 4.4 30.0

1 59 11 1 2 1 2

12.8 48.8 3.3 39.2 $401.0 631.9

1 2 1 6 27 13

62,544 $91,611 75,728

2.5 2,993.8 490.0 332.3

1 110 13 35

280,663 304,107 124,569

24.5

$4,475.0 157.7

173 4

12.7

15.5 2.5 7.1 28.5

3 1 1 1

115,635

60.9 $284.8

7 19

55,149 $104,072

26.9 153.2 151.5 50.0 36.3 69.3 $487.2 314.6 4.5 6.7 681.2 40.0

2 5 3 1 1 4 16 5 1 1 21 1

171,578 246,475 138,380 121,500 96,748 $129,351

687.3 11.4 338.7 4.5 $2,088.9

12 1 14 1 57

$216,144

$92,270

$13,239.1

351

$183,153

175,049 106,507 60,000 45,229 $114,811 116,250 46,259 33,161

68,043 110,660 53,690 45,980 $71,084 168,710 68,651 215,455 167,941

76,926 $119,751 78,338 129,016 59,928 66,231 51,336 143,273 85,245 85,193 140,361 90,000 61,412 69,538 $79,118 96,491 58,422 112,458 52,128 102,210 129,475 53,724 $87,597 189,245 119,265 64,388 154,960 167,330 104,808 86,933

204,151 296,556 72,955

$260,049 198,144 26,576 20,353 163,693

$215,416 131,055

228,090

81,776 $149,264

181,764

368,091 193,250

Vol ($M)

YOY Chg

# Props

YOY Chg

$219.7 1,421.9 812.2 3,856.7 162.5 10.9 116.1 73.5 $6,673.6 466.6 53.1 20.5 21.4 50.7 20.2 150.6 204.3 27.4 374.9 $1,389.7 899.8 56.5 128.0 2,993.8 535.7 335.7 2.6 27.8 330.3 $5,310.2 871.5 170.6 368.9 295.7 53.8 133.3 261.5 521.5 346.2 230.5 187.6 809.5 $4,250.8 232.3 1,013.9 551.0 744.2 800.9 285.0 342.3 $3,969.6 830.6 307.1 107.2 3,464.5 277.4 138.8 61.9 67.7 368.7 1,161.1 738.6 660.4 341.3 $8,525.2 1,612.8 $31,731.9

38% 2550% 1904% 797% 174% 92%

6 19 16 33 16 2 7 7 106 27 5 4 2 5 3 9 12 5 35 107 20 2 4 110 18 36 1 2 15 208 34 9 22 13 2 20 11 20 8 10 11 60 220 12 63 26 37 35 14 33 220 25 16 12 129 15 10 7 4 21 30 13 30 31 343 75 1,279

-25% 217% 433% 371% 129% 100%

-62% 607% 7% 40% -69% 341% -73% -69% 148% 232% 12% 34% 14% 321% -13% 47% 106% -19% -96% 79% 242% 63% 42% 38% 66% 874% 9% 58% 842% 550% 140% -30% -26% 31% 65% -10% 170% 102% 33% 92% 117% -10% 66% 583% 449% 3% 290% 101% -48% -29% 118% 78% 401% 158% 44% 48% 174% 135%

-30% 152% 23% 25% 0% 100% -62% -57% 80% 100% 67% 25% 15% -17% 300% 26% 6% -49% -67% 0% 7% -5% -21% 13% 83% 160% -50% 43% 120% 400% 33% -41% -42% 25% 19% -37% 75% 53% 0% 67% 8% -8% 23% 108% 129% 50% 36% 275% -23% -13% 0% 31% 30% 30% 58% 35% 42% 33%

® First quarter 2013

apartment Lender Composition • Th e agencies originated multifamily loans in record volumes in 2012 and still maintain a majority share of the market, but increased lending from others caused their share of all apartment loans made last year to decline to 64% from 68% in 2011. Most of that market share was lost to CMBS and the fi nance companies and national banks making loans that are destined for CMBS off erings. • While mortgage interest rates for apartments remain at historic lows and are well below those available for other commercial properties, long-term fi xed rates have ticked slightly higher in recent months, following a similar rise in base Treasury rates. • With $30.0b of - private label CMBS issuance so far in 2013 compared to $48.0b in all 7.0% of 2012, it has started to make 6.5% a dent albeit a small one - in 6.0% the dominance of the GSEs. 5.5% 5.0% Just 6% of loan originations 4.5% for apartment properties were 4.0% made by the CMBS conduits 3.5% in 2012, but that is double the '09 '10 '11 '12 '13 market share of the prior year. Fixed rate loans with 7-10 year terms In addition, the rise in share of 3 month average the fi nance sector and national banks are primarily CMBS conduit loans yet to be securitized. Commercial Mortgage Rates Commercial Multifamily (Agency)

• While the average apartment loan made by CMBS conduits is comparable in size to the GSEs, the quality is not, with values averaging $82,000 per unit compared to an average of $112,000 per unit for the GSE’s. Insurance companies continue to lend on the largest and most expensive apartment properties and accounted for 6% of originations last year. • Regional and local banks upped total lending, which helped them maintain a 10% share of apartment loan originations in 2012. In the Northeast, several regional banks have become very active, holding a 25% share of apartment lending, well above other regions.

Apartment Lender Composition 2012 CMBS Gov't Agency Int'l Bank Reg'l/Local Bank

2012

Avg Loan Size ($M)

CMBS Int'l Bank National Bank Reg'l/Local Bank Financial Insurance Gov't Agency Private

$14.5 $21.0 $9.0 $6.1 $15.3 $23.9 $12.7 $7.2

Avg LTV

Avg $k/unit

Avg Cap

Avg Occ

69% 66% 68% 69% 71% 66% 64% 74%

$82 $247 $128 $104 $110 $140 $112 $66

7.1% 6.1% 5.6% 6.1% 6.6% 6.5% 6.2% 6.4%

95% 83% 95% 92% 91% 90% 93% 88%

68%

2010

Student Hsg

10%

71% 8%

12%

62%

18%

53%

70%

Tertiary

13%

4% 6% 6%

49%

Secondary

17% 6%

77%

50%

25%

MidAtlantic

65%

Southeast

72% 10%

7% 67%

Southwest West

9% 7%

62%

Major Metro

Midwest

10%

87%

Garden Mid/highrise

75%

2009 2008

6% 6% 10%

64%

2011

Northeast

Mortgages & Collateral by Lender*

Financial Insurance Nat'l Bank Pvt/Other

73% 62%

5% 7%

15%

*Excludes portfolio financings ©2013 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; based on properties & portfolios $2.5m and greater.

® First quarter 2013

Distress update • Of the $85.0b of apartment mortgages that became troubled over the past cycle, 67% are now worked out and $28.0b remains distressed. New instances of distress continue to fall and dropped again in Q1, totaling just $500m. • Workouts of distressed apartment loans in Q1 totaled $2.1b, causing a net reduction in outstanding distress of $1.6b. Most workouts were accomplished via asset sales, as distressed sales accounted for just 4% of all volume in the apartment sector in Q1. % Chg

Distress ($M) vs Q1'12

CMBS Int'l Bank Domestic Bank Insurance Gov't Agency Other All Apartments

$12,837 $1,002 $8,051 $444 $1,198 $5,017 $28,549

-21% -20% -19% -16% -18% -2% -18%

$90 billions Troubled REO Restructured Resolved

$80 $70 $60 $50 $40 $30

Summary by Lender Type Outstanding

Cumulative Distress

Cumulative DistressProperties for Apartment for Apartment Properties

Worked

RR*

Out (%)

(%)

60% 80% 68% 79% 69% 72% 67%

73% 74% 69% 83% 65% 70% 71%

* recovery rate before costs and fees

• All lender groups are now working out distress much faster than infl ows and outstanding distress has declined by 18% over the past year. Th e vast majority of outstanding distress rests with banks and CMBS servicers. Th e GSEs and insurance companies have relatively small distress balances. CMBS is the furthest behind at resolving distress and has worked out 60% of the troubled apartment loans from the past cycle. • Only a few markets have yet to pass the halfway mark in resolving apartment distress: Las Vegas, Reno, Columbus, Milwaukee, and, surprisingly, Northern New Jersey and Philadelphia. Manhattan also refl ects a low 53% workout rate, but exempting the Stuytown deal, it is over 90% resolved. • At this point in the cycle, lenders are now left with troubled apartment loans and REOs that are increasingly smaller and located in less desirable locations. Overall, apartment distress in the six Major Metros is 80% worked out (excluding Stuytown), while all other markets are 65% resolved. Distressed sales of apartment properties are also getting smaller, averaging $8.0m in Q1, down from $10.0m a year earlier and $13.5m two years ago.

$20 $10 $0

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 '08 '09 '10 '11 '12 '13

Quarterly Additions and Quarterly Additions and Reductions to Reductions to Distress Distress

$15

billions

Newly Troubled Worked out Net Change

$10 $5 $0 -$5 -$10

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 '08 '09 '10 '11 '12 '13

% of Sales Associated with Distress

% of Sales Associated with Distress $4 $3

billions

Distress % of Total Sales

30% 25% 20%

15% 10%

$1 $0

35%

5% 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 '08 '09 '10 '11 '12 '13

ÂŽ First quarter 2013

Market table: apartment Distress and workouts Current Outstanding Distress

Current Known Distress Through April 22, 2013

MidAtlantic

Midwest

Northeast

Southeast

Southwest

West

Baltimore DC DC MD burbs DC VA burbs Philadelphia Pittsburgh So NJ All Others Mid-Atlantic Chicago Cincinnati Cleveland Columbus Detroit Indianapolis Kansas City Milwaukee Minneapolis St Louis All Others Midwest Boston Hartford Long Island Manhattan No NJ NYC Boroughs Stamford Westchester All Others Northeast Atlanta Broward Charlotte Jacksonville Miami Nashville Orlando Palm Beach SW Florida Tampa All Others Southeast Austin Dallas Denver Houston Phoenix San Antonio All Others Southwest Central CA East Bay Hawaii Inland Empire Las Vegas Los Angeles Orange Co Portland Reno Sacramento San Diego San Francisco

San Jose Seattle All Others

West

Cumulative Total

in Default/ Special Serv

1,029.2 715.7 1,604.2 1,450.3 1,016.6 159.9 269.6 802.7 $7,048.3 2,643.2 276.5 364.4 590.4 818.1 500.4 286.6 245.5 93.7 274.3 1,231.9 $7,325.0 616.8 202.8 50.7 10,621.7 872.5 1,175.9 606.2 121.4 313.3 $14,581.2 4,684.7 1,559.0 1,245.4 1,061.5 3,329.9 550.4 2,447.6 1,633.2 1,416.2 2,340.5 6,015.2 $26,283.6 968.5 2,930.9 717.8 3,145.2 4,854.0 543.5 1,819.4 $14,979.3 353.4 572.0 60.2 885.8 4,117.2 2,992.0 582.6 298.9 448.6 737.8 592.1 2,203.4 492.6 1,405.5 616.0 $16,358.1

68.4 51.4 167.4 429.1 7.2 81.0 122.2 $926.7 715.7 49.7 89.3 200.1 93.2 108.7 79.3 8.5 24.2 61.3 414.7 $1,844.7 75.7 42.8 4,729.8 165.1 358.5 39.1 55.9 90.3 $5,557.3 409.7 172.2 455.2 210.6 437.4 1.1 218.1 290.6 229.2 397.5 1,168.9 $3,990.5 242.7 577.0 235.8 646.9 1,005.5 164.9 514.7 $3,387.5 100.8 52.4 2.7 313.6 985.0 410.9 27.2 95.6 13.2 141.5 47.7 77.3 149.9 254.7 $2,672.4

Held as REO 8.0 95.9 32.8 244.0 1.9 112.0 $494.6 291.8 1.1 2.6 98.5 106.0 78.6 24.6 127.0 5.7 64.7 103.4 $903.9 117.9 284.2 337.5 89.7 132.1 27.8 $989.3 952.3 79.8 77.0 98.6 899.1 14.7 351.4 152.2 53.2 300.6 891.0 $3,869.9 12.0 291.7 383.0 601.6 12.0 104.1 $1,404.4 40.6 158.9 29.5 99.4 1,372.8 227.6 10.0 13.6 228.4 26.3 9.4 57.3 28.3 484.5 22.5 $2,809.1

Total Worked Out Outstanding Total 76.4 51.4 263.3 32.8 673.1 9.1 81.0 234.2 $1,421.3 1,007.5 50.8 91.9

298.6 199.1

187.3 104.0

135.5 29.8

126.0 518.1 $2,748.6 193.6 42.8

5,014.0 502.6 448.2 171.2 55.9 118.1

$6,546.5 1,362.0 252.1 532.2 309.2 1,336.5

15.8 569.5 442.8 282.3 698.1 2,059.9 $7,860.4 254.7

868.8 235.8 1,029.9 1,607.1 176.9 618.8 $4,791.9 141.4 211.3 32.2

413.0 2,357.8 638.5 37.2 109.2

241.6 167.8 57.1 134.5 28.3 634.4 277.2 $5,481.5

952.8 664.3 1,340.9 1,417.6 343.4 150.9 188.6 568.5 $5,626.9 1,635.7 225.7 272.5 291.8 619.0 313.1 182.7 110.0 63.9 148.3 713.8 $4,576.5 423.2 160.0 50.7 5,607.6 369.9 727.7 435.0 65.5 195.2 $8,034.7 3,322.7 1,306.9 713.1 752.3 1,993.4 534.6 1,878.2 1,190.5 1,133.9 1,642.4 3,955.3 $18,423.2 713.8 2,062.2 482.0 2,115.3 3,246.9 366.6 1,200.6 $10,187.4 212.0 360.7 28.0 472.8 1,759.4 2,353.5 545.4 189.6 207.0 570.0 535.0 2,068.9 464.3 771.1 338.8 $10,876.6

% Worked Out

Recovery Rate

93% 93% 84% 98% 34% 94% 70% 71% 80% 62% 82% 75% 49% 76% 63% 64% 45% 68% 54% 58% 62% 69% 79% 100% 53% 42% 62% 72% 54% 62% 55% 71% 84% 57% 71% 60% 97% 77% 73% 80% 70% 66% 70% 74% 70% 67% 67% 67% 67% 66% 68% 60% 63% 46% 53% 43% 79% 94% 63% 46% 77% 90% 94% 94% 55% 55% 66%

87% 83% 77% 88% 75% 96% 97% 87% 83% 68% 74% 60% 64% 43% 72% 78% 72% 70% 76% 65% 66% 77% 90% 91% 93% 56% 64% 66% 87% 65% 56% 81% 56% 63% 59% 64% 69% 54% 59% 72% 65% 68% 73% 80% 68% 66% 94% 70% 68% 67% 79% 100% 76% 58% 85% 85% 93% 64% 74% 85% 87% 80% 84% 84% 77%

® First quarter 2013

top apartment transactions of Q1’13 Top 25 Property Sales Transaction

Location

Inv Vol ($M)*

Units

PPU

Buyer

1 Archstone Crystal Towers

Arlington, VA

$322.3

914

$352,571 Dweck Properties Ltd

2 Crystal House I & II

Arlington, VA

$262.4

828

$316,948 Mack-Cali JV UBS

3 Onterie Center

Chicago, IL

$188.0

615

$305,691 LaSalle

4 Mercedes House Phase 3 (22F-32F)

New York, NY

$170.0

162 $1,049,383 Invesco RE

5 Avalon at Decoverly

Rockville, MD

$135.2

564

$239,657 Stellar Advisors JV Wafra

6 Archstone Fox Plaza (Bulk Condo)

San Francisco, CA

$135.0

446

$302,691 Essex Property Trust

7 Archstone Monument Park

Fairfax, VA

$124.0

460

$269,565 Crow Holdings

8 Northbridge Park Cooperative

Fort Lee, NJ

$110.7

280

$395,357 Northbridge Park Coop Inc

9 Chesapeake Glen

Glen Burnie, MD

n/a

796

10 Avalon Yerba Buena

San Francisco, CA

$103.0

160

$643,750 LaSalle

11 Commons Park West

Denver, CO

$98.1

337

$291,098 Heitman

12 Falkland Chase

Silver Spring, MD

$98.0

450

$217,778 JBG Cos

13 Woodway Square

Houston, TX

$91.7

595

$154,118 Fairﬁeld Residential

14 Missions at Sunbow

Chula Vista, CA

$90.0

336

$267,857 R&V Management Corp

15 Northcreek

Bothell, WA

$88.0

524

$167,939 Grosvenor

16 Plaza at Sherman Oaks

Sherman Oaks, CA

$77.0

392

$196,429 Raintree Partners LLC

17 District Condos

Washington, DC

$76.0

125

$608,000 JP Morgan

18 Jefferson at Pelican Point

Ventura, CA

$72.8

400

$182,000 NorthStar Realty Finance Corp

19 210-230 West 107th Street

New York, NY

$70.0

178

$393,258 Orbach Group

20 Spring Harbor at the Landings

Delray Beach, FL

$69.1

488

$141,650 Fairﬁeld Residential

21 Juliana

Hoboken, NJ

$67.0

128

$523,438 AEW Capital Mgmt

22 Idlewylde I & II

Duluth, GA

$63.6

843

$75,407 Cortland Partners

23 Camden Live Oaks

Tampa, FL

$63.4

770

$82,338 Providence Management

24 Fulton Mall (3F-5F)

Brooklyn, NY

$60.9

$922,727 Harrison Street RE Capital

25 Savannah at Park Place

Atlanta, GA

$56.5

416

n/a Morgan Properties JV Dune Capital Mgmt

$135,817 TriBridge Residential

Top 10 Portfolio Sales Transaction

Location

Inv Vol ($M)*

Units

PPU

1 EQR Archstone Portfolio

Multiple

$8,925.1†

46,981

$190,737 Equity Residential

2 Avalon Archstone Portfolio

Multiple

$5,824.0†

22,135

$293,653 AvalonBay Communities

3 Equity Residential Apt Portfolio 13

Multiple

$1,500.0

7,788

4 Milestone Apt REIT Portfolio 2013

Multiple

$1,100.0

16,944

5 BSREP Babcock Portfolio 2012

Multiple

$414.0

4,892

6 EQR Florida Apartments Portfolio

Orlando, FL

$254.0

2,294 $110,723.6 Starwood Capital Group

7 Max & Marian Farash Foundation Portfolio

Rochester, NY

$167.0

1,105

8 Babcock & Brown Apt Portfolio 12

Multiple

$136.9

3,712

$125.2

1,047

n/a

1,026

9 Bascom Phoenix Area Apartment Portfolio 2013 Phoenix, AZ 10 Equity Residential GA Apt Portfolio 2013

Atlanta, GA

Buyer

$192,604 Goldman Sachs JV Greystar RE Partners $64,920 Milestone APTS REIT $84,628 Brookﬁeld Asset Mgmt JV Fairﬁeld Residential $151,131 Dawn Homes Management $38,254 Conix $119,609 Bascom Group JV Fortress n/a Cortland Partners

* When prices are not known, estimated prices are used in the ranking but are not shown. In the case of partial interest deals, the pro-rated share of the property was used for the transaction price and the PPU/PPSF was based on the full 100% price. † Partial Interest

® First quarter 2013

top apartment Brokers of Q1’13 top 25 By investment volume By Region* Mid-Atlantic CBRE HFF Jones Lang LaSalle Robert W Baird & Co Transwestern

Midwest HFF Moran & Co CBRE Colliers International Marcus & Millichap

Northeast CBRE HFF Rosewood Realty Group Brookfield Asset Mgmt Massey Knakal

Southeast CBRE Jones Lang LaSalle ARA HFF Robert W Baird & Co

Southwest CBRE HFF Marcus & Millichap Moran & Co

Garden CBRE HFF Marcus & Millichap Cushman & Wakefield ARA Jones Lang LaSalle Robert W Baird & Co Hendricks-Berkadia Colliers International Transwestern Multi Housing Advisors Engler Financial Group Moran & Co Eastdil Secured First Capital Realty Sperry Van Ness Cassidy Turley Coldwell Banker Pinnacle Keller Williams RM Watson Co Triad Real Estate Partners, LLC Thornton Oliver Keller Kidder Mathews Kislak

1,655,519,210

909,649,600 662,989,708 618,475,734 593,859,938 413,999,997 336,921,250 218,718,304 119,711,724 115,216,000 103,548,333

84,170,000 56,661,784 39,600,000 28,798,976 22,838,208 21,602,500 19,661,400 18,113,500 18,050,000 17,300,000 16,500,000 14,438,000 13,840,593

$0.0 $2.5 Billions

HFF Marcus & Millichap Colliers International

*ranked by investment volume

Methodology  Full credit assigned to sellers’ representative. When two brokers represent same seller, both sellers’ representatives assigned full credit. For partial-interest, rankings are based on the pro-rated share of the total property or portfolio value. For more information on rankings please visit www. rcanalytics.com/Misc/Brokers_ Ranking_Methodology.pdf

$5.0

all apartment CBRE HFF Jones Lang LaSalle Marcus & Millichap Cushman & Wakefield ARA Moran & Co Robert W Baird & Co Colliers International Hendricks-Berkadia Rosewood Realty Group Cassidy Turley Transwestern Multi Housing Advisors Engler Financial Group Eastdil Secured Brookfield Asset Mgmt Massey Knakal Besen & Associates Gebroe-Hammer First Capital Realty GVA Sperry Van Ness Ariel Property Advisors Essex Realty Group

917,741,716 902,904,964 644,816,667 389,100,000 178,228,894 162,000,000 140,300,000

97,345,500 76,499,994 55,123,000 51,379,500 47,525,000 36,316,219 35,500,000 32,520,000 32,000,000 31,300,000 31,125,000 20,125,000 16,187,500 16,000,000 12,191,500 11,350,000 11,000,000 9,400,000

$0.0 $2.5 Billions

4,395,941,485 2,558,424,174 1,238,676,605 1,006,995,100

714,369,208 649,600,734 473,270,000 413,999,997 380,718,304 341,446,250 178,228,894 163,138,208 151,011,724 115,216,000 103,548,333

92,978,004 76,499,994 55,123,000 47,525,000 45,350,000 39,600,000 35,500,000 34,448,976 32,520,000 31,335,000

$0.0 $2.5 Billions

$5.0

top 15 By number of Properties

West CBRE

CBRE HFF Jones Lang LaSalle Moran & Co Rosewood Realty Group Colliers International Cassidy Turley Marcus & Millichap Brookfield Asset Mgmt Massey Knakal Cushman & Wakefield Besen & Associates Eastdil Secured GVA Ariel Property Advisors Gebroe-Hammer Transwestern ARA Essex Realty Group Rockwood RE Advisors ERG Property Advisors Westlake Associates, Inc Asset Solutions Group Starkman Realty Group Weissman Realty

3,478,199,769

ARA

Cushman & Wakefield

Mid/high-rise

Garden CBRE Marcus & Millichap HFF ARA Cushman & Wakefield Hendricks-Berkadia Jones Lang LaSalle Robert W Baird & Co Colliers International Transwestern Multi Housing Advisors Sperry Van Ness Keller Williams Cassidy Turley Coldwell Banker

Mid/high-rise 137 91 40 37 24 22 20 19 11 10 7 7 5 4 4

Rosewood Realty Group CBRE HFF Marcus & Millichap Brookfield Asset Mgmt Massey Knakal Jones Lang LaSalle Besen & Associates Cushman & Wakefield Ariel Property Advisors Moran & Co ARA Cassidy Turley Colliers International Keller Williams

21 15 14 13 10 8 6 4 4 3 3 2 2 2 2

all apartment CBRE Marcus & Millichap HFF ARA Cushman & Wakefield Jones Lang LaSalle Hendricks-Berkadia Rosewood Realty Group Robert W Baird & Co Colliers International Transwestern Brookfield Asset Mgmt Sperry Van Ness Massey Knakal Keller Williams

152 104 54 39 28 26 23 21 19 13 11 10 9 8 7

0 greater. 100 0 be accurate 100 but200not guaranteed; subject to future0 revision; 100based200 ©2013 Real Capital Analytics, Inc. All rights reserved. Data believed to on properties & portfolios $2.5m and

200

® First quarter 2013

Selected investment Sales transactions

reported in the Past 45 Days

Property Name Address Location

Units Year Built Notes

Price PPU Qualifier

Owner Seller Broker

Mid-Atlantic Archstone Crystal Towers 1600 S Eads St Arlington, VA

914 1966 Mid/Highrise

$322,250,000 $352,571 conﬁrmed

Dweck Properties Ltd from Equity Residential by Jones Lang LaSalle

Crystal House I & II 2000 S Eads St Arlington, VA

828 1965 Mid/Highrise

$262,433,333 $316,948 conﬁrmed

Mack-Cali JV UBS from Communities by CBRE

Avalon at Decoverly 9901 Gable Ridge Ter Rockville, MD

564 1991 Mid/Highrise

$135,125,000 $239,583 conﬁrmed

Stellar Advisors from AvalonBay Communities by Jones Lang LaSalle

450 1937 Garden

$98,000,000 $217,777 conﬁrmed

JBG Cos from Jones Lang LaSalle

330 1985 Mid/Highrise

$57,750,000 $175,000 conﬁrmed

Atlas Real Estate Partners (NY) JV Angelo Gordon JV Marc Realty from GMH Associates JV Equus Capital Partners by Apartment Realty Advisors

AMLI at Oakhurst North 2800 Amli Ln Aurora, IL

464 1999 Garden

$55,860,000 $120,387 approximate

Abacus Capital Group from Prime Property Fund AKA AMLI Residential by HFF

Town & Country 1032 Kerr Ave Urbana, IL

662 1966 Garden

$34,500,000 $52,114 conﬁrmed

Monarch by Marcus & Millichap from Axiom Properties by Marcus & Millichap

Falkland Chase 8305 16th St Silver Spring, MD

AvalonBay

Home Properties by

Midwest Two East Eighth 2 E 8th St Chicago, IL

Northeast Alterra at Overlook Ridge Phase 2 412 11 Overlook Ridge Dr 2008 Revere, MA Mid/Highrise

$87,950,000 $213,470 conﬁrmed

Mack-Cali from Prudential RE Investors CBRE | New England

210-230 West 107th Street 210-230 W 107th St New York, NY

178 $70,000,000.00 1925 $393,258.43 Mid/Highrise approximate

Orbach Group from Henderson Global Investors JV Dermot Co by HFF

Fulton Mall (3F-5F) 490-496 Fulton St Brooklyn, NY

66 1920 Mid/Highrise

$60,900,000 $922,727 approximate

Harrison Street RE Capital from Acquisitions JV Gindi Capital

214 1969 Garden

$48,150,000 $225,000 conﬁrmed

JRK Asset Management from Funds by CBRE

173 1907 Mid/Highrise

$34,250,000 $197,976 approximate

Greystar RE Partners from Management

597 1924 Garden

$29,500,000 $49,413 approximate

Eagle Rock Advisors from AIMCO by Institutional Property Advisors Marcus & Millichap Company

843 2000 Garden

$63,568,000 $75,406 conﬁrmed

Cortland Partners from Associated Estates Realty by Multi Housing Advisors

Southpoint at Massapequa 25 Weaver Dr Massapequa, NY Clock Tower 300 Adams St Hoboken, NJ Clemens Place 16 Owen St Hartford, CT

Crown

RREEF

Stellar

Southeast Idlewylde I & II 1435 Boggs Rd Duluth, GA

® First quarter 2013

Selected investment Sales transactions

reported in the Past 45 Days

Property Name Address Location Savannah at Park Place 31 Perimeter Center E Atlanta, GA

Units Year Built Notes

Price PPU Qualifier

Owner Seller Broker

416 2001 Mid/Highrise

$56,500,000 $135,817 approximate

TriBridge Residential from Equity Residential by Jones Lang LaSalle

480 1998 Garden

$55,075,000 $114,739 approximate

Olympus Property from Equity Residential by Walchle Lear Multifamily Advisors

406 2001 Mid/Highrise

$50,200,000 $123,645 conﬁrmed

Cortland Partners from Equity Residential by Jones Lang LaSalle; CBRE

972 1985 Garden

$49,200,000 $50,617 conﬁrmed

CLK Properties from Management Group by

Colonial Grand at Windermere 280 11598 Lachlan Ln 2009 Windermere, FL Garden

$43,000,000 $153,571 conﬁrmed

Colonial Properties Trust from Companies by CBRE

Canyon Ridge 3868 Central Pike Hermitage, TN

350 2005 Garden

$38,200,000 $109,142 approximate

Grayco Management from Landmark ATA by Jones Lang LaSalle

Fairways 777 W Chandler Blvd Chandler, AZ

352 1986 Garden

$35,215,500 $100,044 conﬁrmed

Bascom Group JV Fortress by George Smith Partners from LNR Partners OBO Wachovia 2006-C29 by Marcus & Millichap

Trails at Buda Ranch 1250 Robert S Light Blvd Buda, TX

264 2009 Garden

$23,000,000 $87,121 conﬁrmed

Cos

Coronado Crossing 7050 Pecos St Denver, CO

194 1970 Garden

$22,330,000 $115,103 conﬁrmed

Investors Mgmt Group from Group JV Bascom Group

Carlyle

Morningside-AZ 10455 E Via Linda Scottsdale, AZ

160 1989 Garden

$21,600,000 $135,000 conﬁrmed

FSC Realty by CBRE from Residential by CBRE

Equity

Ridgestone 39415 Ardenwood Way Lake Elsinore, CA

352 2007 Garden

$47,250,000 $134,232 conﬁrmed

R&V Management Corp from Northwestern Mutual by CBRE

Montelena 655 Tennyson Rd Hayward, CA

188 1988 Garden

$34,000,000 $180,851 approximate

Kennedy Wilson by ARA from Residential by ARA

Fairﬁeld

Chandlers Bay 1020 Central Ave N Kent, WA

293 1990 Garden

$32,800,000 $111,945 approximate

Bridge Investment Group from Residential by Moran & Co

Equity

Panther Ridge 190 S 334th St Federal Way, WA

260 1979 Garden

$23,350,000 $89,807 conﬁrmed

Fowler Property Acquisitions from Equity Residential by Moran & Co

Presidents Park 1128 E Leland Rd Pittsburg, CA

208 1986 Garden

$21,250,000 $102,163 conﬁrmed

Fowler Property Acquisitions from Friedkin Realty Group by Institutional Property Advisors Marcus & Millichap Company

Cape House 4460 Hodges Blvd Jacksonville, FL Promenade at Peachtree 2432 Johnson Ferry Rd Atlanta, GA Country Squire 8056 Country Squire Ln Cordova, TN

Fogelman CBRE Altman

Southwest

Steadfast Income REIT from

Vantage

West

® First quarter 2013

Notes & Deﬁnitions REAL CAPITAL ANALYTICS

ABOUT REAL CAPITAL ANALYTICS

TROUBLED ASSETS METHODOLOGY

www.rcanalytics.com

Real Capital Analytics, Inc (RCA) is an independent research firm focused exclusively on the capital investment markets for commercial real estate. RCA offers the most in-depth, comprehensive and current information of activity in the industry. Formed in 2000, RCA has offices in New York City, San Jose, and London. In addition to collecting transactional information for property sales and financing, RCA interprets the data including capitalization rates, market trends, pricing and sales volume. The firm publishes a series of Capital Trends reports and offers an online service that provides real-time, global transactional market information. For more information, visit: www.rcanalytics.com.

RCA has taken the step of expanding their research program to track corporate level and property level economic distress that could affect global property markets.

ABOUT US CAPITAL TRENDS

DISTRESSED STATUS Troubled: Includes foreclosure, bankruptcy, restructured/modified statuses.

US Headquarters 139 Fifth Avenue New York, NY 10010 Toll-Free: 1.866.REAL.DATA Phone: 212.387.7103 US West Coast Office Pruneyard Towers 1901 South Bascom Avenue Campbell, CA 95008 Phone: 408.371.8880 Europe Office 58 Grosvenor Street London, United Kingdom W1K 3JB Phone: +44.207.297.6860 Robert M White, Jr Founder & President Dan Fasulo Managing Director Nina Turner Director, Marketing Communications Christina Wu Graphic Designer Doug Murphy Director, Analytics Andrew Pisanelli Senior Manager, Analytics Yiqun Wang Senior Manager, Global Indices Hermann Lademann Senior Analyst Ryan McGrath Analyst Michael Gilligan Senior Web Developer

US Capital Trends is published by Real Capital Analytics, Inc. Copyright ©2013 Real Capital Analytics, Inc. All rights reserved. It is a violation of Federal law to photocopy or reproduce any part of this publication, or forward it electronically, without first obtaining permission from Real Capital Analytics, Inc. To subscribe as an individual or to purchase a corporate license for your office, please call 1.866.REAL.DATA. Information presented by RCA has been compiled from sources believed to be reliable. While we have no reason to doubt its accuracy, RCA makes no representation or warranty regarding the information. The information is provided as is without warranties of any kind, express or implied, and may be subject to material revisions.

NOTES & METHODOLOGY The information maintained by RCA and presented in this report encompasses markets nationally and includes only properties or portfolios $2.5m or greater. Readers should note that there is substantial investment activity, largely local in nature, that falls below this threshold and is not captured in this report. Records are maintained for transactions that represent the transfer of a controlling interest in a property or portfolio of properties that are $2.5m or greater. Transactions are assumed to be fee simple; leasehold and commercial condominium interests are noted, if known. Transactions include both real estate asset sales as well as transactions involving real estate operating and investment entities. Thus, for example, merger and acquisition activity among entire REITs or other real estate entities is included in this report unless noted otherwise. Sales of partial interest transactions will receive credit and be valued at the pro-rated share. For this report, market classifications are defined as followed: Major Metros: Boston, Chicago, DC Metro, LA Metro, NYC Metro and SF Metro Secondary: Atlanta, Austin, Charlotte, Cincinnati, Cleveland, Columbus, Dallas, Baltimore, Denver, Detroit, Houston, Indianapolis, Jacksonville, Kansas City, Las Vegas, Memphis, Milwaukee, Minneapolis, Nashville, Norfolk, Orlando, Philly Metro, Phoenix, Pittsburg, Portland, Raleigh/Durham, Sacramento, Salt Lake City, San Antonio, San Diego, Seattle, South Florida, St Louis and Tampa. Tertiary: All other US markets. RCA Commercial Property Price Indices (RCA CPPI): A suite of 200+ transaction-based indices developed and published by Real Capital Analytics. The indices use repeat-sales methodology to objectively measure the change in price of commercial real estate over time and cover all major commercial property types and include national, regional, state, metro/market, property subtype and specialty level indices. Ranking Methodology: Based on transactions $2.5m and greater. Full dollar value is assigned to each buyer, seller, or broker in joint venture transactions. Partial interest sales are included at the pro-rated share of the total property or portfolio value. Trend analysis may exclude certain transactions that exceed 5% of the data sample or that may otherwise skew results. A complete glossary and methodology can be found at www.rcanalytics.com. Abbreviations: PPSF=

Price Per-Square-Foot Basis Points YOY= Year-Over-Year BPS=

YTD= Year-to-Date Q1= First Quarter of Year H1= First Half of Year

We have integrated the tracking of Troubled Assets (TA) into our system in order to observe distressed situations across the lifecycle of a property and the different owners of distressed assets. This would contain all classes of property owners and developers who find themselves overextended or otherwise unable to meet their obligations, as opposed to banks, mortgage REITs and other lender groups or debt owners who find themselves in possession of real estate they have taken control of via foreclosure or similar methods.

Foreclosure, Bankruptcy, etc: For properties where there is a direct knowledge of property level distress. Known through announcements of bankruptcy, default and court administration as well as significant publicly reported issues—like significant tenant distress or liquidation—that would exemplify property level distress. Lender REO: To signify properties lenders have taken back through foreclosure. The transaction side of the RCA data set sees this as a Foreclosure sale with the defaulted mortgagee as Seller and the recovering lender as Buyer to show the property changing hands. The property is now Real Estate Owned by a Lender. Restructured/Extention: To classify deals where ownership or debt terms have changed but a long-term solution to the cause of distress may not have been reached. Types of ownership restructuring include a mezzanine lender stepping into the equity position or a debt-for-equity swap. On the debt side, the most common types of restructuring include modifications to the interest rate, loan balance, interest-only period and/or other terms. In almost all cases, at least two of the three stakeholder groups (borrower, first mortgage lender, mezzanine lender) most often involved in real estate transactions will retain either an equity or debt stake in the property or portfolio at the completion of the restructuring. Resolved: Represents properties that have moved out of distress via refinancing or through a sale to a financially stable third party. Troubled Subtypes: To further clarify the trouble we are tracking properties that fall within the Troubled Status levels will be marked with a Troubled Subtype at the loan, property and/or ownership level as appropriate: LOAN Delinquent/Default: Troubled deals known to be delinquent, in default or in special servicing but not yet foreclosed upon or otherwise resolved. In Foreclosure/Administration: Troubled deals with loan known to be in the foreclosure process, while the lender has not taken the property back they have gone to court and have pressed their claim to the property. These properties are in the process of moving to the Lender REO stage. Funding Stop: Troubled deal in which lender has cut off financing for reasons including but not limited to the lender’s own liquidity problems or lack of confidence in the project. Maturity Default/Past Due: Troubled deals with loan known to be past maturity but new financing arrangement is unknown. PROPERTY Challenged Development: Development has been delayed, halted, scaled back or cancelled due to reasons including but not limited to the failure to sell or lease initial units or a funding cut-off from a lender. Tenant Bankrupt: Troubled deal in which the bankruptcy of a tenant represents a large enough percent of occupancy to imperil the borrower’s ability to service debt. Bankrupt tenants need to be in liquidation of single-tenant properties to be classified as Troubled. Underperforming Conversion or Redevelopment: Troubled deal in which the buyer had planned to convert the property into condos and sell off individually or otherwise redevelop but for whatever reason it did not happen. OWNER Fraud Alleged: Troubled deal in which the owner is alleged to have engaged in fraud and those allegations have led to the property becoming distressed. Owner Financially Challenged: Troubled deal in which the owner of the property is under financial pressure generally and not necessarily relating to this specific property. Owner/GP Bankrupt: Troubled deal in which the owner or General Partner of the property has declared bankruptcy.