Atlanta Market Overview Introduction

July 2018

ATLANTA MARKET OVERVIEW INTRODUCTION

The apartment transaction market appears to be cooling slightly across the country. The US major metros are currently at a 12-month volume of $39.8B, down 24.6% from $52.8B in the third quarter of 2016. Similarly, the NCREIF South has dropped 9.6% in just one quarter, moving from $49.7B to just $44.9B. The Atlanta market has also dropped nearly 19% and is transacting at $6.9B as opposed to the $8.5B seen in the third quarter of 2017. While the overall volumes still reflect a very healthy market, this change in direction is important to note at this late stage of the cycle. The multifamily fundamentals in Atlanta have remained strong. Occupancies hold steady between 94-94.5% while effective rents continue to grow in the 3% range. Deliveries of new apartments in 2018 is anticipated to be 9,704 units, which is down from 11,711 units in 2017; however, absorption of new supply has been strong, meeting the new supply numbers. In 2017, thirty-three new projects achieved stabilization, and on average it only took them 19 months.

TheseTrendTracker strong fundamentals have led many investors to put Atlanta high on theirPrinted on 7/18/2018 target list, which has led to several notable transactions already in 2018.

Atlanta Apartment Volume ($) Charlotte Apartment Volume ($) Nashville Apartment Volume ($) Orlando Apartment Volume ($)

$8B

$6B D S U n i e m u l o V $4B

$2B

$0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Price floor selections do not apply to Indices or Fundamentals data. Volume displayed as 12 Month Totals. Cap rates and PPU displayed as a 12 Month Average. Includes property or portfolio sales $2.5 million or greater. Q2 2018 preliminary data..

SOURCE: REAL CAPITAL ANALYTICS ATLANTA MARKET UPDATE 2

This is page 1 of 1 pages RENT GROWTH Y-O-Y EFFECTIVE RENT 3.1% GROWTH

OCCUPANCY RATE AS OF 94.3% SECOND QUARTER

NEW MULTIFAMILY PERMITS 8,331 (DOWN 19.67%)

INVENTORY (TOTAL RENTAL 484,554 UNITS) POPULATION GROWTH

POPULATION GROWTH 7.8%+ 2010-2016

ATLANTA, GA MSA 5.75M POPULATION JOB GROWTH

WEEKLY SALARY INCREASE 5.8% (THROUGH MAY) ANNUAL JOB GROWTH, ROLLING 12 MONTHS 46,000 THROUGH MAY INVESTED IN VENUTRE CAPITAL ENDEAVORS IN $480M ATLANTA UP SINCE 2016 HOSPITAL AND MEDICAL OFFICE EXPANSION $2B UNDERWAY SOURCE: AXIOMETRICS AND YARDI MATRIX ATLANTA MARKET UPDATE 3 NOTABLE TRANSACTIONS

Anthem on Ashley Juncture I & II

Sale Price $74, 963, 000 Sale Price $141, 700, 000 Price Per Unit $307, 225 Price Per Unit $253, 036 Price/SF $369 Price/SF $207 Sale Date June 2018 Sale Date March 2018 Number of Units 244 Number of Units 560 Address 720 Ralph McGill Blvd NE Address 910 Deerfield Crossing Atlanta, GA 30308 Alpharetta, GA 30004 Year Built 2018 Year Built 2017 Total SF 203, 008 Total SF 685, 440 Owner/Buyer Invesco Owner/Buyer Carter Haston JV KKR Seller North American Properties Seller JLB Partners Lender N/A Lender Mesa West Capital Avg Rent/Unit $1, 837 Avg Rent/Unit $1, 699 Avg Rent/SF $2.21 Avg Rent/SF $1.39

ATLANTA MARKET UPDATE 4 Modera Morningside Jefferson at Perimeter

Sale Price $110, 000, 000 Sale Price $102, 800, 000 Price Per Unit $366, 666 Price Per Unit $203, 968 Price/SF $368.72 Price/SF $192 Sale Date February 2018 Sale Date June 2018 Number of Units 300 Number of Units 504 Address 1845 Piedmont Ave NE Address 4867 Ashford Dunwoody Road Atlanta, GA 30324 Dunwoody, GA 30338 Year Built 2016 Year Built 1996 Total SF 282, 000 Total SF 536, 256 Owner/Buyer GID Owner/Buyer Steadfast Apartment REIT Seller Mill Creek Residential JV Fuqua Seller LivCor Development Lender Fannie Mae Lender N/A Avg Rent/Unit $1, 368 Avg Rent/Unit $1, 845 Avg Rent/SF $1.23 Avg Rent/SF $1.97 *Prices include retail space

SOURCE: REAL CAPITAL ANALYTICS ATLANTA MARKET UPDATE 5 DEALS TO WATCH

AMLI Northwinds Azure on the Park

Address 32000 Gardner Drive Address 1020 Piedmont Avenue NE Alpharetta, GA 30009 Atlanta, GA 30309 Number of Units 800 Number of Units 329 Year Built 1997 (I)/ 1999 (II) Year Built 2017 Total SF 827, 940 Total SF 310, 247 Owner AMLI Residential Owner Atlantic Realty Partners Comments AMLI Northwinds is a large value-add Comments Azure on the Park is the first luxury play in the wonderful submarket of core project to sell arms-length in Alpharetta. The interiors are mostly midtown in the past two years. It is untouched, and it should trade at a estimated to trade for over $400,000 very aggressive cap rate for a large per unit. deal. It is estimated to be over $160M.

SOURCE: AXIOMETRICS ATLANTA MARKET UPDATE 6 WHAT DO BUYERS AND SELLERS WANT?

BUYERS WANT A DEAL WITH A LITTLE MORE YIELD. SELLERS WANT THEIR PRICE AND TERMS MET.

The majority of deliveries in the Atlanta market off market offer was able to meet the seller’s are Inside the Perimeter (ITP); however, both goals while the deal represents a new pricing buyers and developers are actively seeking level for a project with non-structured parking. properties Outside the Perimeter (OTP) in Another example of OTP activity can be order to achieve better rent growth in the highlighted by the fact that a local developer short term. Despite increased OTP interest, has decided to build one of their first frame there does appear to be more interest in the construction deals in Gwinnett County after ITP submarkets Buckhead and Midtown than a number of high-rise projects. This reflects there was at this time last year. Since supply the increased construction costs for high rise is slowing in late 2018, there have been an projects ITP as opposed to suburban product. increased number of off market offers made to sellers. That being said, many sellers remain on the sidelines waiting to fully stabilize to achieve maximum value. The recent sale of The Juncture in Alpharetta is an example of an OTP off market deal. The

ATLANTA MARKET UPDATE 7 ATLANTA SUBMARKET PIPELINE PLANNED, PROSPECTIVE, UNDER CONSTRUCTION

Perimeter Property Count: 12 Unit Count: 5,005 Cumberland Property Count: 11 Buckhead Unit Count: Property Count: 2,943 35 Unit Count: 9,739

Midtown Property Count: DeKalb 51 Property Count: Unit Count: 25 14,930 Unit Count: 5,165

Downtown Property Count: 27 Unit Count: 5,974

SOURCE: YARDI MATRIX ATLANTA MARKET UPDATE 8 BUCKHEAD DELIVERIES

MIDTOWN DELIVERIES

SOURCE: AXIOMETRICS AND YARDI MATRIX ATLANTA MARKET UPDATE 9 SINGLE FAMILY PIPELINE

The Atlanta multifamily market is a subset of the overall Atlanta housing market; therefore, the single- family market and the multifamily markets can be tracked collectively to understand overall market supply and demand.

There is an overall trend of increasing housing permits, as illustrated in the graph below. While the number of multifamily permits has been on an uptrend in 2017, reaching 7,884, it is still only roughly half of the number of permits that were issued in 2004, when it reached 16,232. On the single-family side, it is clear that 2017 was also on the upswing at 24,849 permits, but this is still well below the 61,231 permits in 2005. While there has been a clear trend of increased permit activity over the last ten years, it is still significantly below the previous cycle levels. Demand for multifamily can be summarized by the physical occupancy rate, which, according to Axiometrics, has remained in the 94% range since the beginning of 2014. As for single-family, the best indicator of demand is monthly inventory, which is the total active listings divided by the total sales. Both FMLS and Case-Shiller are reporting inventory in Atlanta to be between 2 and 3 months. Since a six-month supply inventory is considered normal, the Atlanta inventory is very tight suggesting that single family demand is very high as well. The Atlanta housing market as a whole is very healthy in 2018, and the demand demonstrates that neither the single family or multifamily markets are close to overbuilding. Future job growth and net migration will continue to drive single family pricing and multifamily rental rates up.

SOURCE: REAL CAPITAL ANALYTICS ATLANTA MARKET UPDATE 10 CIVIC PROJECTS

MERCEDES-BENZ STADIUM

Mercedes-Benz stadium opened in the Fall of Hotel, over 500 residential units, and extensive 2017 and not only serves as the home of the shopping and dining. In addition, The Battery Atlanta Falcons and Atlanta United FC, but it is includes an office tower that houses Comcast’s also the current home of the SEC Championship Southeast regional headquarters. Football Game. After hosting the 2018 National Philips Arena, home to the Atlanta Hawks, is Championship Football Game, Mercedes-Benz currently undergoing a $192M renovation. All will host Super Bowl LIII in 2019 and the Men’s office space is being removed from the venue and College Basketball Final Four in 2020. Soccer is the new renovation will repurpose the now empty increasingly popular in Atlanta, and in a recent space so that it can be used for social experiences home game at Mercedes-Benz Atlanta United, in for fans. In addition to sporting events, Philips only their second season in the league, broke the Arena is a popular concert destination for Atlanta. MLS single-game attendance record. The renovation project has entered its final phase SunTrust Park, located 10 miles north of and is expected to be completed by Fall 2018. downtown Atlanta, opened in the Spring of 2017 and is home to the Atlanta Braves. The park is surrounded by The Battery Atlanta, a mixed-use entertainment district that features an Omni

ATLANTA MARKET UPDATE 11 ECONOMIC GROWTH

SOURCE: BUREAU OF LABOR STATISTICS ATLANTA MARKET UPDATE 12 FORTUNE COMPANIES IN ATLANTA FORTUNE 500 FORTUNE 1000 NATIONAL NATIONAL RANK RANK

23 565

44 605

75 665

87 679

126 681

177 685

194 687

303 871

341 896

346 983

347 996

430

432

434

477 SOURCE: METRO ATLANTA CHAMBER OF COMMERCE ATLANTA MARKET UPDATE 13 EAST PARTNERS

NATIONAL PARTNERS

ATLANTA MARKET UPDATE 14 EAST TEAM

Amory Lenahan Robert Yates ASSOCIATE ASSOCIATE

Bill Edwards Jjana Valentiner SENIOR ASSOCIATE MARKETING AND DUE DILLIGENCE COORDINATOR SOUTHEAST

3414 Peachtree Rd NE Suite 475 Atlanta, Georgia 30326

404.841.4844 www.moranandco.com ATLANTA MARKET UPDATE 15