Research & Forecast Report | MULTIFAMILY 1H 2015

Ohio Apartment Markets Expected to Post Steady, Modest Growth Market Overview Market Indicators This report covers the multifamily markets in four Ohio cities, Relative to prior period 1H 2015 2H 2015* , Cleveland, Columbus and Dayton. As of the end of VACANCY the first quarter of 2015, the overall occupancy rate was 95.0 NET ABSORPTION percent, ranging from a high of 96.1 percent in Cleveland to Cincinnati and Dayton both posting occupancy levels at 94.3 CONSTRUCTION percent. Quarterly demand was weak at 209 units, while 1,952 RENTAL RATE units were added to the inventory. This created a 50 point drop in Historical* OccupancProjected, yrelative to prior period occupancy since the end of 2014, but is up from 94.5 percent at the end of 2013. Historical Occupancy 97.0% Historical Occupancy 96.0% Demand generators for multifamily have been growing steadily 97.0% in the state of Ohio. Since the low point for employment during 95.0% 96.0% the Great Recession in February, 2010, employment in Ohio has 94.0% increased by 10 percent, adding 420,100 private-sector jobs. 95.0% 93.0% The largest gains were in the mining/logging sector, which 94.0% Cincinnati Cleveland was up 34.2 percent due to the oil and gas boom in Northeast 92.0% 93.0% ColumbusCincinnati Ohio, and in professional and business services at 16.2 percent, Dayton 91.0% Cleveland 92.0% contributing to the steady improvement in the office markets 2013 2013 2013 2013 2014 2014 2014 2014Columbus2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 DaytonQ1 across the state. Demand for industrial space, along with limited 91.0% speculative construction, has reduced vacancies to historic levels 2013 2013 2013 2013 2014 2014 2014 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 due to a resurgence in manufacturing activity and growth in the Source: MPF Research logistics/supply chain sector. Unemployment (U3), which peaked Historical Average Monthly Rent at 11.0 percent in 2010, was 5.2 percent in May 2015, a 70 point Historical Average Monthly Rent decline from April 2014. Historical Average Monthly Rent $840 $820 $800$840 Population growth in these four markets increased by one-half $780$820 of one percent according Census Bureau data between 2012 $760$800 and 2013. The increase over five years was 1.8 percent, with $740$780 $760 Columbus leading the way adding over 100,000 residents, $720 $700$740 an increase of 5.7 percent over that time period. Household $720 Cincinnati $680 Cleveland formation outpaced population growth, increasing 2.2 percent $660$700 Columbus DaytonCincinnati $680 over the five year period. $640 Cleveland $660 Columbus 2013 2013 2013 2013 2014 2014 2014 2014 Dayton2015 $640 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Source: MPF2013 Research2013 2013 2013 2014 2014 2014 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Key Transactions

GARDENS AT EASTON Sale Date Feb 2015 Unit Type Units SF Asking Rent Rent/SF 3701 Governor’s Club Blvd Columbus, OH 43219 Year Built 2000 1B/1B 427 763 $750 $0.98 Sale Price $60,000,000 2B/1B 425 835 -- $0.00 RSF 1,171,048 2B/2B 212 980 $764 $0.88 $/SF $51.24 $/Unit $56,391 CAP Rate --

1 TOTAL/AVG 1064 859 $757 $0.64 > TAKE | The property was purchased by Champion Real Estate Services of Westerville, Ohio from Triangle Real Estate Services of Westerville, Ohio. Champion Real Estate Services financed the deal using an open-end note of $52,975,000 (88% LTV) from KeyBank National Association. The note was originated on February 18th, 2015. the buyer plans to invest $10M for renovations and rename the apartment as Gardens at Easton.

COLUMNS ON WETHERINGTON Sale Date Feb 2015 Unit Type Units SF Asking Rent Rent/SF 1620 Corinthian Dr Florence, KY 41042 Year Built 2002 2B/2B 70 1,034 $945 $0.91 Sale Price $25,000,000 2B/2B 85 1,379 $1,107 $0.80 RSF 239,640 3B/3B 32 1,362 $1,226 $0.90 $/SF $104.32 $/Unit $130,208 3B/3B 5 1,562 $1,236 $0.79 CAP Rate 5.64% TOTAL/AVG 192 1,334 $1,129 $0.85 2 > COLLIERS TAKE | The property was purchased by Steadfast Apartment REIT of Irvine, California from The Ackermann Group of Cincinnati, Ohio. Steadfast Apartment REIT financed the deal using a Fannie Mae CMBS (FREMF 2011-K16) note originated on March 1st, 2015 by Berkadia on their behalf. As of July 9th, 2015, the property held a note of $17,500,000, 70% loan-to-value, term of 120 months, debt service coverage ratio of 4.34x, and set to mature on March 1st, 2025. The single-parcel transfer occurred on February 26, 2015. The transaction is considered arm’s length.

MAD RIVER APARTMENTS Sale Date Jan 2015 Unit Type Units SF Asking Rent Rent/SF 7477 Shady Water Ln Dayton, OH 45459 Year Built 1988 1B/1B 48 505 $595 $1.18 Sale Price $16,671,306 2B/2B 126 680 $635 $0.93 RSF 318,024 2B/2B 80 807 $670 $0.83 $/SF $54.42 $/Unit $55,203 3B/2B 48 944 $875 $0.91 CAP Rate -- TOTAL/AVG 302 734 $689 $0.94 3 > COLLIERS TAKE | The property was purchased by The Connor Group of Dayton, Ohio from JVM Realty Corporation of Oak Brook, Illinois. Mad River Apartments Dayton LLC conveyed Mad River Apartments to Mad River Apartments Dayton Orchard LLC (66.81 %) for $11,138,111. The multi-parcel transfer was done via Limited Warranty Deed and occurred on April 22, 2015. The transaction is considered not arm’s length because Chris Mullins is the vice president of The Connor Group (true buyer). Apartments Dayton Orchard LLC assumed the $14,712,000 loan of Mad River Apartments Dayton LLC through Wesbanco Bank Inc.

2 Ohio Research & Forecast Report | 1H 2015 | Multifamily Market Outlook | Colliers International Key Transactions

CENTURY LAKE APARTMENTS Sale Date April 2015 Unit Type Units SF Asking Rent Rent/SF 51 Bishopsgate Drive Cincinnati, OH 45246 Year Built 1989 1B/1B 40 618 $650 $1.05 Sale Price $15,550,000 1B/1B 64 730 $720 $0.99 RSF 183,456 1B/1B 32 818 $770 $0.94 $/SF $84.76 2B/2B 40 911 $870 $0.95 $/Unit $69,420 2B/2B 32 1,010 $870 $0.86 CAP Rate 6.10% 2B/2B 16 1,072 $925 $0.86 4 TOTAL/AVG 224 860 $753 $0.88 > COLLIERS TAKE | The property was purchased by Harbor Group International of Norfolk, Virginia from Brack Capital Real Estate Group of Amsterdam, Noord-Holland (Netherlands). Brack Capital financed the deal using a Fannie Mae CMBS (GS 2015-GC30) note originated on April 7th, 2015 by Citigroup on their behalf. As of July 9th, 2015 the property held a note of $11,200,000, 72% loan-to- value, term of 121 months, 60 interest-only periods, 4.07% fixed interest rate, debt service coverage ratio of 1.39x, debt yield of 8.5%, and set to mature on May 6th, 2025.

MARINER’S WATCH Sale Date April 2015 Unit Type Units SF Asking Rent Rent/SF 100 Mariner’s Circle Sheffield Lake, OH 44054 Year Built 2001 2B/1B 60 1,208 $768 $0.64 Sale Price $15,500,000 2B/1B 30 1,255 $780 $0.62 RSF 240,000 2B/1B 30 1,260 $797 $0.63 $/SF $64.58 $/Unit $66,810 2B/2B 56 1,235 $816 $0.66

CAP Rate 7.00% 2B/2B 56 1,287 $835 $0.65 5 TOTAL/AVG 232 1,246 $801 $0.64 > COLLIERS TAKE | The property was purchased by Banyan Capital Partners LLC of Garden City, from Oakmont Real Estate Management LLC of Pittsburgh, Pennsylvania. Banyan Capital Partners LLC purchased the property using funds allocated from a 1031 Exchange, resulting in the assumption of a 2011 note originated by Bellwether Real Estate Capital of Cleveland, Ohio. As of June 2nd, 2015, the assumed CMBS note (FREMF 2012-K18) held an 82% LTV, current balance of $9,604,448, fixed interest rate of 4.4%, 79 of 129 terms and 12 interest-only periods remaining. The current master servicer is KeyBank National Association and the loan special servicer is Wells Fargo.

WESBURY PARK Sale Date Apr 2015 Unit Type Units SF Asking Rent Rent/SF 6667 Wesbury Park Ave Columbus, OH 43235 Year Built 2013 1B/1B 20 749 $964 $1.29 Sale Price $14,300,000 2B/2B 60 1,053 $1,159 $1.10 RSF 128,922 $/SF $110.92 $/Unit $113,492 CAP Rate 7.00% TOTAL/AVG 80 901 $1,062 $1.18 6 > COLLIERS TAKE | The property was purchased by a Joint-Venture comprised of Oakmont Real Estate Management and Coy Capital Management (Pittsburgh, Pennsylvania) from Preferred Living of Westerville, Ohio. The Buyer’s financed the acquisition using an assumed Fannie Mae CMBS (FREMF 2014-K41) note originated on August 8th, 2014 by KeyBank National Association of Overland Park, Kansas. As of July 10th, 2015, the property held a note of $11,400,000, fixed interest rate of 4.41%, 83% LTV, original term of 120 months, 48 interest only periods remaining, and set to mature on September 25th, 2024.

3 Ohio Research & Forecast Report | 1H 2015 | Multifamily Market Outlook | Colliers International Ohio Multifamily | 1H 2015 Notable Sales

NUMBER PRICE / PROPERTY NAME SALE DATE SALE PRICE BUYER SELLER MARKET OF UNITS UNIT

Orchard of Landen 2/9/2015 $30,900,000 312 $99,038 Orchard of Landen Apartments LLC Orchards Apartments LLC Cincinnati

Columns on Wetherington 2/26/2015 $25,000,000 192 $130,208 Steadfast Apartment REIT Inc Ackermann Group Cincinnati

Century Lake Apartments 4/7/2015 $15,650,000 224 $69,866 Brack Capital Real Estate Harbor Group Management Cincinnati

710-714 Greer St 2/2/2015 $2,728,000 33 $82,667 Main Strasse Holding LLC Dudley Properties LLC Cincinnati

Portside at Mariner's Watch 4/2/2015 $15,500,000 232 $66,810 Banyan Capital Partners LLC Oakmont Real Estate Management LLC Cleveland Apartments Brightstone Trenton LLC and BCG Veard Willoughby LP and Exchange Property Trenton Place 3/20/2015 $6,700,000 144 $46,528 Cleveland Sales LLC LLC

Holland Gardens Apartments 2/5/2015 $3,300,000 136 $24,265 GFG Capital Sheriff of Cuyahoga County Cleveland

5890 Woolman Rd 3/31/2015 $2,460,000 64 $38,438 PJK Parma Properties LLC Whitehall Associates Limited Partnership Cleveland

Denison Park Apartments 1/20/2015 $2,000,000 144 $13,889 Rose & Rose Realty Sheriff of Cuyahoga County Cleveland

14300 Lake Shore Blvd 4/9/2015 $1,800,000 120 $15,000 Central Property 2 LLC Robshir Properties LLC Cleveland

Hillside Gardens Apartments 3/31/2015 $1,450,000 110 $13,181 Michael Panzica Michael Ippolito Cleveland

Gardens at Easton 2/19/2015 $60,000,000 1064 $56,391 Champion Real Estate Services Triangle Real Estate Services Columbus

Lake Club at Polaris 5/7/2015 $30,000,000 315 $95,238 Champion Real Estate Services BS Majoris Inc Columbus

Oakmont Real Estate Management, Wesbury Park 4/30/2015 $14,300,000 80 $178,750 Preferred Real Estate Investments, Inc. Columbus LLC

Big Walnut Apartments 2/3/2015 $13,700,000 251 $54,582 First Pacific Group, Inc. JRK Property Holdings Columbus

Mayfair Village 5/1/2015 $9,000,000 348 $25,862 AMG Realty Group Mayfair Village Columbus Assoc Columbus

Strattford Lakes Apartments 3/11/2015 $5,780,000 124 $46,613 Primas Properties Ltd Stratford Lakes LLC Columbus

Colonial Village 1/26/2015 $4,200,000 508 $8,268 Colonial Property Holdings LLC EMH CVA LLC Columbus

Parkridge Apartments 4/2/2015 $4,200,000 141 $29,787 Primas Rentals LLC Buckeye Management Company Columbus

180 Sells Rd 2/6/2015 $4,050,000 92 $44,022 Lancaster Owner LLC New Club Housing Limited Partnership Columbus

Andrus Court Apartments 5/22/2015 $3,660,000 124 $29,516 Gardenia Properties LLC Nolan Real Estate Columbus

Avery Estates Condominium 3/19/2015 $3,275,600 94 $34,847 Dilhas Investments LLC Giuse A Pingue Columbus

Oak Run 3/24/2015 $3,070,000 86 $35,698 HM Oak Run LLC Citi Oak Run Partners Ltd Columbus

Village Brook Apartments 2/17/2015 $2,240,000 32 $70,000 Windham Club LLC Village Brook Investments LLC Columbus

2450 Teakwood Dr 4/20/2015 $2,155,000 124 $17,379 Ivywood Preservation Associates LLC New Ivy Associates LLC Columbus

Woodman Park 3/10/2015 $15,500,000 520 $29,808 Woodman Park Apartments II LLC Woodman Park Apartments LLC Dayton

Mad River Apartments 4/22/2015 $11,138,111 302 $36,881 The Connor Group JVM Realty Corporation Dayton

Sunset Hills Apartments 5/29/2015 $3,720,000 128 $29,063 The Aspen Companies GHC | Housing Partners Dayton

Country Woods Apartments 2/6/2015 $2,660,000 351 $7,578 Direct Source Wealth Inc Riverhouse Management LLC Dayton

1804-1928 N James H McGee Blvd 3/23/2015 $2,200,000 60 $36,667 PF Western Manor LLC HVR LP Dayton

Total $302,386,711 6,455 $46,845

Source: Colliers Research, CoStar, Real Capital Analytics, Xceligent

4 Ohio Research & Forecast Report | 1H 2015 | Multifamily Market Outlook | Colliers International Ohio Apartment Market Data | 1H 2015

INVENTORY VACANT OCCUPANCY RATE QTRLY NEW SUPPLY UNITS UNDER ROW LABELS QRTLY DEMAND AVG MONTHLY RENT AVG RENT PER SF (# OF UNITS) UNITS (%) (UNITS) CONSTRUCTION

Cincinnati 153,708 7,532 -906 95.1% 0 3,265 $812.00 $0.88

Cleveland 159,914 6,237 221 96.1% 515 1,492 $816.00 $0.96

Columbus 155,693 7,006 -312 95.5% 270 4,640 $788.00 $0.84

Dayton 50,915 2,851 -69 94.4% 12 0 $717.00 $0.81

Grand Total 520,230 23,626 -1,066 95.3% 797 9,397 $783.25 $0.87

Source: MPF Research Investment Sales For the 12 month period ending in May, nearly 26,000 units have traded in the four Ohio markets covered in this report according to Real Capital Analytics. The average per unit price was $56,000 per unit and the total transaction volume was $1.44 billion. The Columbus market continues to lead the way, accounting for two-thirds of the total with $960 million in transactions and also recording the highest per unit average at $62,366. This per unit price represents a 53 percent increase over the prior year. Cincinnati follows with $221 million in sales volume and Cleveland reports $189 million. Price per unit rose in Cincinnati by six percent, but fell by five percent in Cleveland.

The average cap rate over the 12 month period ranged from 7.2 percent in Columbus and Cleveland to 8.5 percent in Cincinnati. During the year, the average cap rate increased by 71 basis points in the Cincinnati market, continuing an upward trend that began in Q2 2013 when the average was a full two percentage points lower than current. In Columbus the year over year change was a decrease of 25 basis points, while Cleveland reported a decrease of 42 basis points.

Market Takeaways

• Columbus, even with the large number of units under construction, is expected to perform well with demand outpacing supply. Job growth is forecast to remain above historical levels. With new supply, though, comes pressure on rental rate growth, which is predicted to remain moderate into early 2016.

• In Cincinnati, rising levels of new supply could further impact occupancy as the single-family market continues to recover. Rent growth is forecast to remain in the two to three percent annual range. One bright spot is the center city where occupancy stands at 97.2 percent and demand levels remain strong.

• Cleveland’s modest job growth is predicted to be adequate to maintain stable market conditions for multifamily assets. Occupancy levels in the center city are currently 97.8 percent, offering additional opportunities for conversion of existing structures and new construction in the downtown area.

• Dayton, with virtually no new supply in the pipeline, is expected to see a moderate increase in the occupancy rate from its current level of 94.3 percent. Modest rent growth of roughly two percent per year is forecast based on historical averages.

5,500

5,000

4,500

4,000

3,500

3,000

2,500

2,000

1,500 New Supply (Units) Absorpon (Units) 1,000 U/C (Units) 500

0 d d d d d d       nna nna nna nna nna nna elan elan elan elan elan elan Clev Clev Clev Clev Clev Clev Cinci Cinci Cinci Cinci Cinci Cinci Columbus Columbus Columbus Columbus Columbus Columbus 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q42015 Q1

Source: MPF Research

5 Ohio Research & Forecast Report | 1H 2015 | Multifamily Market Outlook | Colliers International MULTIFAMILY BROKERAGE SERVICES | contact

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