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DALLAS-FORT WORTH MULTIFAMILY REPORT FIRST QUARTER 2019

MARKET AT A GLANCE

OCCUPANCY RATE 94.3% Down 10 bps since 1Q18

EFFECTIVE $ RENT 1,119 Up 3.6% since 1Q18

TOTAL INVENTORY 796,536

OCCUPANCY AND RENT TRENDS

APARTMENT RENT GROWTH, ABSORPTION HEALTHY AMID BRISK DELIVERIES

Sustained in-migration of residents and companies in the -Fort Worth metro area kept apartment absorption and rent growth moving in a positive direction, both of which accelerated in the four quarters ending in March of this year. Renters newly occupied 22,553 apartments, a 20.3% year-over-year increase. Builders concurrently completed 24,467 apartments, 5.8% more than the prior four-quarter period. One in five new apartments emerged among the neighboring Frisco and Allen/McKinney submarkets, where robust corporate and resident in-migration occurred. Metrowide absorption trailed deliveries, contributing to a 10-basis-point annual dip in occupancy to 94.3% in March 2019. The metro’s tight housing market enabled accelerated rent growth, as effective rent advanced 3.6% annually to $1,119 per month in March, rising from 3.1% growth the prior year. The trend, however, did not extend to the areas with vigorous apartment development over the last few years: operators in the Intown Dallas, Oak Lawn/Park Cities, and Frisco submarkets offered incentives to attract renters, resulting in marginal rent growth, and in the case of Frisco, a reduction in rent.

96% $1,200 OCCUPANCY AND RENT TRENDS

95% $1,100

94% $1,000

93% $900

92% $800 2Q14 4Q14 2Q15 4Q15 2Q16 4Q16 2Q17 4Q17 2Q18 4Q18

Occupancy Rate Effective Rent

a Berkshire Hathaway and Jefferies Financial Group company DALLAS-FORT WORTH MULTIFAMILY REPORT

DELIVERIES AND DEMAND

24,000 DELIVERIES AND DEMAND

DELIVERIES 6,319 18,000 Units YTD

12,000

6,000 NET ABSORPTION 4,143 Units YTD 0 2014 2015 2016 2017 2018 2019* Deliveries Demand *Year to date

ECONOMIC TRENDS

Employment expansion in the Metroplex continued 2018 UNEMPLOYMENT* 2019 to eclipse national job growth in the last 12 months. 3.5% 0 BPS 3.5% Through January 2019, local employers added 96,800 CHANGE workers to payrolls, a 2.7% annual increase. The professional and business services sector led with 2018 EMPLOYMENT* 2019 18,200 new workers, a 3.0% gain. The sector will be 3.64m 2.7% 3.74 m supported by Infosys Limited, which plans to hire 500 CHANGE workers by year-end 2020. Approximately 6,300 new positions were filled in the financial activities segment, 2018 EXISTING SFH SALES** 2019 a 2.1% increase. The industry will be underpinned by the imminent completion of Charles Schwab Corporation’s 123.0k -13.4% 106.5k CHANGE regional office in Westlake, where 2,600 employees will work and additional expansion is planned. In the trade, transportation, and utilities sector, employment 2018 MEDIAN SFH PRICE** 2019 expanded 2.2% with 16,800 new hires. Over the next $ $ 256.5k 3.5% 265.4k few years, the sector will be boosted by 800 new jobs CHANGE at Home Depot’s planned distribution center in Dallas, Thirty-One Gifts LLC’s Flower Mound distribution 2018 10-YEAR TREASURY** 2019 center that will employ 650 workers, and hundreds of 2.84% -30 BPS 2.57% new jobs at the planned Amazon Air Regional Hub in CHANGE Fort Worth.

*January; **March U.S. SHARE OF WALLET METRO SHARE OF WALLET

U.S. METRO ANNUAL RENT ANNUAL RENT 27.2 % 18.4% share of wallet share of wallet

FIRST QUARTER 2019 BERKADIA DALLAS-FORT WORTH MULTIFAMILY REPORT SUBMARKET BREAKDOWN

OCCUPANCY AVG RENT AVG RENT NET DELIVERED INCREASE ABSORPTION UNITS SUBMARKET NAME 1Q18 1Q19 1Q18 1Q19 1Q18 1Q19 1Q19 ANNUAL 1Q19 ANNUAL Addison/Bent Tree 95.0% 94.5% 1.0% 1.6% $1,173 $1,192 34 903 123 1,096 Allen/McKinney 92.9% 92.8% 1.6% 1.4% $1,149 $1,165 11 1,856 240 2,024 Burleson/Johnson County 97.7% 96.4% 4.4% 3.9% $942 $979 256 172 249 249 Carrollton/Farmers Branch 94.3% 94.8% 3.9% 3.1% $1,091 $1,125 476 1,261 552 1,250 Central Arlington 95.4% 95.3% 4.7% 4.7% $915 $958 -71 -24 0 0 Central/East Plano 93.6% 94.4% 1.6% 2.4% $1,176 $1,204 86 166 7 7 Denton 95.0% 95.0% 2.8% 4.1% $985 $1,025 -50 303 78 319 93.7% 94.5% 0.7% 3.3% $1,238 $1,279 -66 575 28 416 East Fort Worth 93.5% 92.3% 6.8% 5.1% $846 $889 -65 -157 0 0 Ellis County 97.5% 96.4% 3.6% 2.3% $976 $998 158 563 196 637 Far East Dallas 94.2% 94.7% 3.2% 5.1% $858 $902 -101 101 0 0 Far 94.3% 94.8% 3.6% 3.2% $985 $1,017 89 148 0 0 Frisco 92.7% 92.6% 2.6% -0.6% $1,262 $1,254 712 2,849 896 3,095 Garland 95.8% 95.2% 2.6% 6.8% $946 $1,010 19 499 0 640 Grand Prairie 94.9% 94.5% 4.0% 5.1% $1,014 $1,066 110 620 197 735 Grapevine/Southlake 94.7% 94.6% 3.3% 2.3% $1,276 $1,305 84 499 97 535 Haltom City/Meacham 94.6% 94.9% 4.9% 6.6% $858 $915 301 385 271 383 Hurst/Euless/Bedford 95.2% 94.7% 1.5% 4.2% $998 $1,040 182 505 260 700 Intown Dallas 93.7% 93.6% -0.1% 0.5% $1,676 $1,684 202 1,578 176 1,724 Intown Fort Worth/University 92.1% 92.0% 0.2% 4.1% $1,258 $1,310 756 1,704 989 1,870 /Coppell 94.3% 94.7% 1.0% 2.3% $1,273 $1,302 111 957 229 902 Lewisville/Flower Mound 94.6% 94.5% 2.9% 3.4% $1,099 $1,136 141 646 177 710 Love Field/Medical District 93.3% 94.0% 2.3% 1.5% $1,218 $1,236 23 479 34 446 Mesquite 95.4% 95.4% 4.5% 3.8% $937 $973 -51 0 0 0 North Arlington 93.7% 93.7% 4.7% 2.8% $933 $959 83 83 0 89 North Dallas 92.6% 93.9% 3.6% 1.3% $1,074 $1,088 92 320 0 130 North Fort Worth/Keller 94.8% 93.4% 3.4% 3.3% $1,200 $1,240 -43 408 60 577 North Irving 94.6% 94.7% 4.8% 4.3% $1,017 $1,061 -22 11 0 0 North / 92.6% 94.1% 9.4% 7.7% $1,051 $1,132 241 905 243 777 Northeast Dallas 93.6% 93.4% 7.0% 5.0% $913 $959 -185 586 0 705 Northeast Fort Worth/North Richland Hills 94.6% 95.1% 2.8% 4.2% $1,049 $1,093 20 185 84 116 97.0% 96.0% 5.7% 4.7% $889 $931 54 8 129 129 Oak Lawn/Park Cities 93.0% 92.9% 1.3% 0.6% $1,518 $1,527 103 913 111 1,001 Richardson 94.2% 94.1% 1.2% 3.4% $1,226 $1,268 339 1,139 433 1,228 Rockwall/Rowlett/Wylie 92.4% 92.3% -2.7% 0.7% $1,184 $1,192 372 1,043 422 1,135 South Arlington/Mansfield 95.2% 95.6% 3.2% 5.1% $1,039 $1,092 47 149 0 117 South Fort Worth 95.6% 94.4% 3.2% 4.4% $804 $839 -60 -120 0 0 South Irving 95.7% 95.8% 3.8% 4.0% $905 $941 -63 21 0 0 Southeast Dallas 94.0% 93.3% 4.1% 6.2% $785 $834 -113 -113 0 0 Southern Dallas County 95.3% 94.8% 5.2% 4.0% $986 $1,025 -52 -52 0 0 Southwest Dallas 96.0% 94.8% 5.9% 8.3% $828 $897 -92 -222 0 0 Southwest Fort Worth 94.7% 94.4% 2.3% 3.3% $897 $927 65 -65 0 0 The Colony/Far North Carrollton 94.0% 94.1% 2.8% 2.6% $1,292 $1,326 64 109 0 99 West Fort Worth/Parker County 95.3% 94.7% 6.1% 4.9% $941 $987 -46 -39 0 0 West Plano 94.3% 94.9% 0.2% 2.1% $1,241 $1,267 54 697 38 626 Zang Triangle/Cedars/ 94.2% 94.2% 1.0% 2.3% $1,061 $1,085 -61 0 0 0 TOTALS 94.4% 94.3% 3.1% 3.6% $1,081 $1,119 4,143 22,553 6,319 24,467

© 2019 Berkadia Real Estate Advisors LLC. Berkadia® is a registered trademark of Berkadia Proprietary Holding LLC. Document sources: Axiometrics; Berkadia Research; Federal Reserve Bank of St. Louis; Moody’s

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a Berkshire Hathaway and Jefferies Financial Group company

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