Towers On 19th 11850 N. 19TH AVE. PHOENIX, AZ 85029

Jesse Hudson | Senior Associate Bill Hahn | Executive Vice President Jeffrey Sherman | Executive Vice President Trevor Koskovich | Executive Vice President HSK DIRECT +1 602 222 5010 DIRECT +1 602 222 5105 DIRECT +1 602 222 5109 DIRECT +1 602 222 5145 MULTIFAMILY MOBILE +1 480 437 4953 MOBILE +1 602 418 9578 MOBILE +1 602 694 1127 MOBILE +1 480 227 7420 COLLIERS INTERNATIONAL EMAIL [email protected] EMAIL [email protected] EMAIL [email protected] EMAIL [email protected] TABLE OF CONTENTS 4 PROPERTY INFORMATION

19 RENT COMPS

26 FINANCIAL ANALYSIS

28 SALES COMPS

35 LOCATION MAPS PROPERTY HIGHLIGHTS

PROPERTY PHOTOS Property Information AREA DESCRIPTION MARKET OVERVIEW

FLOOR PLANS PROPERTY HIGHLIGHTS Towers On 19th OFFERING MEMORANDUM

OFFERING MECHANICAL Price $7,500,000 Heating / Cooling Individual Wall Mounted Units Price Per Unit $58,594 Hot Water Individual Hot Water Heaters Price Per Square Foot $130.05 Electricity Paid by Tenant Terms Cash - Fee Simple Water / Sewer Paid by Owner SITE DESCRIPTION CONSTRUCTION Apartment Community Towers on 19th Foundation Concrete 11850 N 19th Ave. Framing Wood Location Phoenix, AZ 85029 Exterior Painted Stucco Total Units 128 Roof Pitched / Built-Up Year Built; Renovated 1985; 2015-2017 Parking Surface Asphalt Net Rentable Square Feet 57,668 PROPERTY TAXES Number of Buildings 2 + Office/Community Center/Laundry Facility Number of Parcels 1 Number of Stories 3 / Common Building is One Story Tax Parcel Number 149-05-002 Sub-market Metrocenter 2016 Property Tax $31,521 Land Size 2.69 Acres UNIT TYPE # OF UNITS % OF COMPLEX SQUARE FEET Density 47.58 Units Per Acre Studio 19 14.84% 288 163 Covered Spaces Parking 1BD/1BA 74 57.81% 432 72 Uncovered Spaces 1BD/1BA 20 15.63% 576 Laundry On-Site Laundry Facility 2BD/1BA 11 8.59% 552 2BD/1BA 4 3.13% 659 Total/Average 128 100% 451 PROPERTY EXTERIOR PHOTOGRAPHS PROPERTY EXTERIOR PHOTOGRAPHS PROPERTY INFORMATION Towers On 19th OFFERING MEMORANDUM

AREA DESCRIPTION

owers On 19th is located at 11850 North 19th Avenue in Phoenix, . The property is situated south of Cactus Road, a major east-west thoroughfare running through Phoenix, Arizona. There are several Tschools within one mile of the property including Shaw Buttle School, John Jacobs Elementary, Mountain View School, and Thunderbird High School. Nearby grocery stores within two miles of Towers On 19th include Fry’s, Safeway, El Rancho Market and Albertson’s. Residents are close to public parks such as Cave Creek Park at Cactus, less than one mile northwest, and Winifred Green Park approximately one mile southeast of the property. Freeway access to the I-17 Highway is available via the Cactus Road on-ramp located less than one mile east of the property, provides a convenient commute to Downtown, Tempe and Mesa.

The immediate neighborhood surrounding Towers On 19th comprises a mixture of single-family homes, multifamily projects, and commercial/industrial developments. There are two nearby shopping malls including the Sears and Harkins Theatre anchored Metrocenter Mall located less than two miles southwest of the property, and Christown Spectrum Mall located four miles south of Towers On 19th. Healthcare facilities such as Banner Thunderbird Medical Center, HonorHealth John C. Lincoln Hospital and Deer Valley Medical Center are located within four miles of the property.

Nearby Community Colleges and Universities include Glendale Community College, located at Olive Avenue and 59th Avenue, and Arizona State University West located at 51st Avenue and Thunderbird Road. Towers On 19th is minutes from Arizona State University- West Campus and Midwestern University. Arizona State University has three campuses in the Phoenix Metropolitan Area that included an enrollment of over 80,000 undergraduates in 2016. Midwestern University includes an enrollment of over 6,000 students located six miles from Towers On 19th and is aggressively growing their presence as an educational institution.

HSK MULTIFAMILY WWW.HSKMULTIFAMILY.COM • JESSE HUDSON 602.222.5010 • BILL HAHN 602.222.5105 • JEFFREY SHERMAN 602.222.5109 • TREVOR KOSKOVICH 602.222.5145 P. 7 COLLIERS INTERNATIONAL TOWERS ON 19TH | AREA BREAKDOWN + +- 141,000 - 31,000 WORKFORCE TRAFFIC COUNT SOURCE: COSTAR, TOWERS ON 19TH 5 MILE RADIUS SOURCE: COSTAR, TOWERS ON 19TH | NORTH ON 19TH AVE. + - 15,000 8.26% | 2017-2022 BUSINESSES POPULATION GROWTH SOURCE: COSTAR, TOWERS ON 19TH 5 MILE RADIUS SOURCE: COSTAR, TOWERS ON 19TH 1 MILE RADIUS

+- $185,000 MEDIAN HOME SALE PRICE 35 ZIP CODE: 85029 SOURCE: TRULIA.COM AVERAGE AGE SOURCE: COSTAR, DUNLAP FALLS 1 MILE RADIUS

+- $48,153 94% MEDIAN HOUSEHOLD INCOME SUBMARKET OCCUPANCY SOURCE: COSTAR, TOWERS ON 19TH 5 MILE RADIUS SOURCE: COSTAR, TOWERS ON 19TH | CACTUS AVE & 19TH AVE

SUBMARKET ASKING RENT PER UNIT SUBMARKET ASKING RENT PER SF $1.03 $783

$0.23 INCREASE

$180 INCREASE

$0.80

$603

SUBMARKET ASKING RENTS INCREASED 30% SINCE 2012 PROPERTY INFORMATION Towers On 19th OFFERING MEMORANDUM METROCENTER SUBMARKET

The Metrocenter submarket is located in the northwest portion of the Greater Phoenix MSA. The submarket is served by the Interstate 17, which is the primary north-south artery in the metro area and connects the submarket to Downtown Phoenix and to the northwest suburbs. Metrocenter is bordered by Glendale to the west, Downtown/Midtown Phoenix to the south and Deer Valley to the north.

The Metrocenter submarket features about 8,400 multifamily units, marking it somewhat smaller than the average submarket in Greater Phoenix. The submarket has been largely insulated from competition from new supply, with minimal projects delivering over the past 15 years. More than 60 percent of the units in the submarket were delivered before 1984.

Rents in the Metrocenter submarket are somewhat lower than the metrowide average, but some of this is due to the age of the inventory and somewhat smaller units on average. Rents have been trending higher at a rapid pace, however, as metrowide vacancy has tightened considerably in recent quarters and affordable options are becoming increasingly difficult to find. Average asking rents in the Metrocenter submarket spiked by 14 percent in 2016, reaching $765 per month, or $1.02 per square foot, per month. This comes following a 6.5 percent rise in rents in 2015.

Metrocenter Mall is one of the primary amenities and employment centers in the submarket. The mall was recently acquired by the Carlyle Group which is currently implementing a redevelopment strategy to make significant improvements to the property -- fully supported by the City of Phoenix. Early plans call for a transition from an indoor mall of the 1970 and 1980s to more of an urban infill, mixed use development that will include additional retail, restaurants, office buildings, senior housing, and health-care facilities. The first step in this process is the construction of a new 148,000-square foot Supercenter, slated to come online in the summer of 2017.

HSK MULTIFAMILY COLLIERS INTERNATIONAL PROPERTY INFORMATION Towers On 19th OFFERING MEMORANDUM

The Metrocenter submarket will also benefit from the expansion of the Phoenix Light Rail USAA Phoenix Campus - 3,500 Employees system. By 2023, the Light Rail is expected to extend all the way to the Metro Center Mall. The Light Rail system provides frequent and reliable rail service running 365 days per year. The system links the Phoenix suburbs to Downtown Phoenix, Tempe and Mesa, with a connection to the Phoenix Sky Harbor International Airport. The Phoenix Light Rail had an annual ridership of more than 15.5 million in 2016.

Retailers are large employers in the Metrocenter submarket. Merchants such as Harkins Theatres, Sears, Dillard’s and Best Buy combine to employ hundreds of workers in the area surrounding Metro Center Mall. The Walmart scheduled to open in summer 2017 will also be home to more than 100 employees.

The Metrocenter submarket’s central location and access to the I-17 also means that there are a number of employment centers within a fairly short drive. The Deer Valley Airport submarket is located to the north of the Metrocenter submarket and is home to several financial services firms, including USAA, Discover Card, and American Express, which collectively employ thousands of workers in the Valley of the Sun. The submarket also includes other noteworthy office tenants such as: Waste Management, AAA Arizona, CIGNA, Honeywell, Safeway and a Regional office of the FBI.

HSK MULTIFAMILY WWW.HSKMULTIFAMILY.COM • JESSE HUDSON 602.222.5010 • BILL HAHN 602.222.5105 • JEFFREY SHERMAN 602.222.5109 • TREVOR KOSKOVICH 602.222.5145 P. 10 COLLIERS INTERNATIONAL PROPERTY INFORMATION Towers On 19th OFFERING MEMORANDUM

The confluence of high-traffic arteries make the Northwest Phoenix/Metro Center area a logical choice for the growing educational institutions that are reaching out to the previously underserved Northwest Valley. Schools including ASU West, Thunderbird International, and Grand Canyon University are located in the submarket as are Western International University, Ottawa University and Carrington College, which all lease office space in the submarket. The current and future growth of Grand Canyon University (located between 31st and 35th Avenues on Camelback Road) will be a tremendous driver of future economic activity in the Northwest Valley submarket as well as the Phoenix metro area as a whole. The University is committed to investing tens of millions of dollars to nearly double its enrollment at the school’s main campus.

Because of Metrocenter’s and the subject property’s proximity to the Glendale border, a short discussion of Glendale based employment opportunities is appropriate.

The prestigious Thunderbird School of Global Management, which merged with Arizona State University in December 2014, has a full-time staff of 300 workers for its MBA program. Thunderbird’s 750 full-time graduate students now have access to ASU’s resources, while still attending classes at the Thunderbird Campus. In addition, Midwestern University has approximately 600 workers and an enrollment of approximately 2,500 students.

In addition to education, healthcare is one of the largest employment sectors in the city of Glendale. Banner Health system is the largest private employer in the city, with nearly 2,900 workers. In addition, Arrowhead Hospital, a 217-bed facility that routinely receives awards for top quality care, has approximately 1,000 workers. Humana Healthcare is also a prominent employer in Glendale, with more than 625 workers in the city. Life Care Center of North Glendale, a long-term care facility in the city, also has 300 workers.

Outside of healthcare and education, there are a number of large, national and international companies with a presence in Glendale. AAA has an administrative office in the city with more than 1,300 workers, Honeywell employs 800 in the city and Bechtel—one of the largest privately-owned companies in the United States—has a facility with 500 employees.

THUNDERBIRD MEDICAL CENTER

HSK MULTIFAMILY WWW.HSKMULTIFAMILY.COM • JESSE HUDSON 602.222.5010 • BILL HAHN 602.222.5105 • JEFFREY SHERMAN 602.222.5109 • TREVOR KOSKOVICH 602.222.5145 P. 11 COLLIERS INTERNATIONAL PROPERTY INFORMATION Towers On 19th OFFERING MEMORANDUM TOWERS ON 19TH IS WITHIN EASY ACCESS TO:

• Deer Valley Airport - serves to relieve air traffic from Sky Harbor; situated on 914 acres and is home to more than 1,277 aircrafts

• Sky Harbor International Airport – one of the top ten busiest airports in the nation with more than 100,000 passengers daily, over 31,000 employees & a daily economic impact of $90 million.

• Metrocenter Mall - 1.3 million square foot super-regional shopping mall in northwest Phoenix with over 100 retailers and restaurants. Currently being transformed by initiating a new Planned Urband Development (PUD) Zoning Overlay to accommodate a 2,700,000 square feet mixed-use environment, including office, medical and residential units. New 148,000 square feet Walmart Supercenter scheduled to open July 2017.

• Grand Canyon University - rapidly expanding educational institution with over 40,000 students enrolled.

• - premier shopping and entertainment destination with over 110 retailers and restaurants.

• - anchored by Macy’s, Sears, Dillard’s, JCPenney, and AMC Theatres and is home to 132 tenants.

• - anchored by Macy’s, Sears, Dillard’s, JCPenney, and and is home to 160 tenants.

• - over 600,000 square feet of luxury outdoor retail and dining.

• HonorHealth Deer Valley Medical Center - Magnet status 204-bed full service hospital.

• HonorHealth John C. Lincoln Medical Center - Magnet status 266-bed full service hospital.

• Banner Thunderbird Medical Center - 504-bed hospital ranked 6th best in Phoenix metro area.

• Abrazo Scottsdale Campus - 142-bed acute care hospital.

• Thunderbird School of Global Management - top ranked global business school with over 1,000 students enrolled (recently acquired by ASU).

• Midwestern University - top physician assistant program (#20) in the country with 3,000 students enrolled.

• Arizona State University Main Campus – largest in the nation with over 60,000 students enrolled.

• Downtown Phoenix - #1 employment center with over $3 billion in new development planned or underway. MAJOR EMPLOYERS MAP Towers On 19th OFFERING MEMORANDUM

Accounting Office Discover Financial Services Industrial / Warehouse Spaces

Deer Valley Medical Center Corporate Office

Towers On 19th

HSK MULTIFAMILY WWW.HSKMULTIFAMILY.COM • JESSE HUDSON 602.222.5010 • BILL HAHN 602.222.5105 • JEFFREY SHERMAN 602.222.5109 • TREVOR KOSKOVICH 602.222.5145 P. 13 COLLIERS INTERNATIONAL N NORTHWESTNORTHWEST PHASE PHASEII II TITLE TITLE

LIGHT RAILLIGHT EXTENSION RAIL EXTENSIONNORTHWEST PHASE II TYPE TYPE TITLE LIGHTPROJECT RAIL EXTENSION UPDATEPROJECT / MARCH UPDATE 2017 / MARCH 2017 valleymetro.org/northwest2 TYPE valleymetro.org/northwest2 PROJECT UPDATE / MARCH 2017 valleymetro.org/northwest2

BACKGROUNDBACKGROUND ROUTE MAPROUTEBACKGROUND MAP ROUTE MAP In 2004, the PhoenixIn 2004, City the CouncilPhoenix City Council In 2004, the Phoenix City Council approved the Northwest Light Rail Peoria Ave th approved the approvedNorthwest the Light Northwest Rail Light RailPeoria Ave PeoriaExtension, Ave extending service from Towers On 19 19th Ave./Montebello Ave. to 25th 2 Miles North of Dunlap Ave. Extension, extendingExtension, service extending from service from Ave./Mountain View Rd. In 2007, the Rose Mofford route was divided into two phases. Sports 19th Ave./Montebello19th Ave./Montebello Ave. to 25th Ave. to 25th Metrocenter The 3.2-mile Phase I on 19th Ave. Complex Mountain View Rd Ave./MountainAve./Mountain View Rd. In 2007, View the Rd. In 2007, the from Montebello to Dunlap Ave. Rose Rose TC Arizona Canal opened on March 19, 2016. Mofford Mofford route was dividedroute into was two divided phases. into two phases. Sports Sports Phase II Metrocenterof the project is 1.5 milesMetrocenter The 3.2-mile PhaseThe 3.2-mile I on 19th Phase Ave. I on 19th Ave. and will extend west on Dunlap Ave., Complex Complex17 Mountain View MountainRd View Rd Dunlap Ave from Montebellofrom to Montebello Dunlap Ave. to Dunlap Ave. north on 25th Ave. and across I-17 on Mountain ViewTC Rd. with a terminus TC Arizona Canal Arizona Canal opened on Marchopened 19, on2016. March 19, 2016. on the west side of the freeway near 31st Ave 35th Ave 27th Ave 25th Ave 19th Ave Metrocenter Mall. The Phoenix City 23rd Ave Council approved the I-17 crossing Phase II of thePhase project II of is the1.5 milesproject is 1.5 miles LEGEND in 2014. There are three stations: / TC Existing Transit Center 17 17 and will extendand west will on extend Dunlap west Ave., on Dunlap Ave., Dunlap/25th Ave., 25th Ave./Mountain Station Park-and-ride Dunlap Ave DunlapView Rd. Ave and near Metrocenter Mall. Northwest Phase II Light Future Transit Center and Parking north on 25thnorth Ave. andon 25th across Ave. I-17 and on across I-17 on Rail Extension / Station Options to be Studied PROJECT STATUS Mountain ViewMountain Rd. with Viewa terminus Rd. with a terminus In January 2016, the Phoenix City NEXT STEPS Council approved accelerating on the west sideon theof the west freeway side of near the freeway near Valley Metro is currently preparing the federally-required Environmental segments of the future high-capacity/ 31st Ave 31st Ave

35th Ave 27th Ave Assessment25th Ave (EA), with an anticipated completion date19th Ave of mid 2017. Community 35th Ave 27th Ave 25th Ave 19th Ave 23rd Ave light rail transit system. With the 23rd Ave Metrocenter Mall.Metrocenter The Phoenix Mall. CityThe Phoenix City outreach is ongoing, and the public will have an opportunity to provide acceleration, Northwest Phase II will comments on the EA before it is final. Valley MetroPhase is also conductingII of the Northwest preliminary Light Rail Extension is 1.5 Council approvedCouncil the approvedI-17 crossing the I-17 crossingLEGEND open in 2023, three years earlier than LEGEND engineering and preparing to begin final design workmiles in mid and 2017. will extend west on Dunlap Ave., north on previously planned. in 2014. Therein are 2014. three There stations: are three stations: Valley Metro RailValley / Metro Rail TC/ Existing TransitTC Existing Center Transit Center25th Ave. and across I-17 on Mountain View Rd. Station Station with a terminus on the west side of the freeway Dunlap/25th Ave.,Dunlap/25th 25th Ave./Mountain Ave., 25th Ave./Mountain SCHEDULE Park-and-ridePark-and-ride near Metrocenter Mall. The Phoenix City Council Northwest PhaseNorthwest II Light Phase II Light Project View Rd. and nearView MetrocenterRd. and near Mall. Metrocenter Mall. Planning Future TransitDesign FutureCenter Transit and Parking CenterConstruction andapproved Parking the I-17 Completioncrossing in 2014. There are three Rail ExtensionRail / Station Extension / StationOptions to beOptions Studied to be Studiedstations: Dunlap/25th Ave., 25th Ave./Mountain View Rd. and near Metrocenter Mall.

PROJECTPROJECT STATUS STATUS 1 1 In January 2016,In January the Phoenix 2016, City the Phoenix City NEXT STEPSNEXT2015 STEPS2016 2017 2018 2019 2020 2021 2022 2023 Council approvedCouncil accelerating approved accelerating Valley Metro isValley currently Metro preparing is currently the preparingfederally-required the federally-required Environmental Environmental segments of thesegments future high-capacity/of the future high-capacity/ FOR MORE INFORMATION STAY INFORMED Assessment (EA),AssessmentLisa Saldin, with Community an anticipated(EA), Outreach with Coordinator an completion anticipated date completion of mid 2017. date Communityof midWebsite: 2017. valleymetro.org/northwest2 Community light rail transitlight system. rail transit With thesystem. With the 602.495.8213 | [email protected] Facebook: facebook.com/valleymetro outreach is ongoing,outreachJoin the Northwest and is Phase ongoing,the II mailing public list byand willcontacting the have Lisa public Saldin. an opportunity will have an to opportunity provide Twitter: to @valleymetroprovide acceleration, Northwestacceleration, Phase Northwest II will Phase II will 3-10-17 comments oncomments the EA before on theit is EA final. before Valley it is Metro final. isValley also conductingMetro is also preliminary conducting preliminary open in 2023,open three in years 2023, earlier three than years earlier than engineering andengineering preparing and to begin preparing final todesign begin work final in design mid 2017. work in mid 2017. previously planned.previously planned.

SCHEDULE SCHEDULE Project Project Planning Planning Design Design Construction ConstructionCompletion Completion

1 1 1 1

2015 20152016 20162017 20172018 20182019 20192020 20202021 20212022 20222023 2023

FOR MOREFOR INFORMATION MORE INFORMATION STAY INFORMEDSTAY INFORMED Lisa Saldin, CommunityLisa Saldin, Outreach Community Coordinator Outreach Coordinator Website: valleymetro.org/northwest2Website: valleymetro.org/northwest2 602.495.8213 602.495.8213 | [email protected] | [email protected] Facebook: facebook.com/valleymetroFacebook: facebook.com/valleymetro Join the NorthwestJoin Phase the Northwest II mailing Phase list by IIcontacting mailing list Lisa by contactingSaldin. Lisa Saldin. Twitter: @valleymetroTwitter: @valleymetro 3-10-17 3-10-17 FLOOR PLANS Towers On 19th OFFERING MEMORANDUM Closet Closet

Kitchen Kitchen

Living Room Living Room

The Daybreak 1 Bed 1 Bath 432 SF

The Sunrise Studio 288 SF

HSK MULTIFAMILY WWW.HSKMULTIFAMILY.COM • JESSE HUDSON 602.222.5010 • BILL HAHN 602.222.5105 • JEFFREY SHERMAN 602.222.5109 • TREVOR KOSKOVICH 602.222.5145 P. 15 COLLIERS INTERNATIONAL FLOOR PLANS Towers On 19th OFFERING MEMORANDUM Closet Closet

Bedroom Dinning Area

Kitchen

Bedroom

Living Room Closet

The Morningstar 2 Bed 1 Bath 552 SF

HSK MULTIFAMILY WWW.HSKMULTIFAMILY.COM • JESSE HUDSON 602.222.5010 • BILL HAHN 602.222.5105 • JEFFREY SHERMAN 602.222.5109 • TREVOR KOSKOVICH 602.222.5145 P. 16 COLLIERS INTERNATIONAL FLOOR PLANS Towers On 19th OFFERING MEMORANDUM

Kitchen

Living Room Bedroom

Closet

The Windsong 1 Bed 1 Bath 576 SF

HSK MULTIFAMILY WWW.HSKMULTIFAMILY.COM • JESSE HUDSON 602.222.5010 • BILL HAHN 602.222.5105 • JEFFREY SHERMAN 602.222.5109 • TREVOR KOSKOVICH 602.222.5145 P. 17 COLLIERS INTERNATIONAL FLOOR PLANS Towers On 19th OFFERING MEMORANDUM

Closet Bedroom

Living Room Kitchen Closet

The Sunset 2 Bed 1 Bath 659 SF

Bedroom

HSK MULTIFAMILY WWW.HSKMULTIFAMILY.COM • JESSE HUDSON 602.222.5010 • BILL HAHN 602.222.5105 • JEFFREY SHERMAN 602.222.5109 • TREVOR KOSKOVICH 602.222.5145 P. 18 COLLIERS INTERNATIONAL RENT COMPARABLES RENT COMPARABLES Towers On 19th OFFERING MEMORANDUM

PHYSICAL MARKET NO. PROPERTY YEAR BUILT UNITS UNIT SIZE AVG. SF MANAGED BY OCCUPANCY RENT/UNIT

Towers on 19th 1985 11850 N 19th Ave. 128 451 93% $644 Avant Garde 2015-17 Phoenix, AZ 85029 S

Latitude BH 1944 W. Thunderbird Rd. 1979 672 792 98% $909 Management Phoenix, AZ 85023 1

Spring Living Well 2015 W. Cactus Rd. 1984 186 830 93% $846 Homes Phoenix, AZ 85029 2

Copper Canyon 12440 N. 19th Ave. 1980 192 850 97% $822 Sunrise Phoenix, AZ 85029 3

Motif 2529 W. Cactus Rd. 1986 696 824 89% $898 Owner Phoenix, AZ 85029 4

Sterling on 28th VM 11821 N. 28th Dr. 1980 223 686 97% $705 Management Phoenix, AZ 85029 5

Average 1982 394 797 95% $836

HSK MULTIFAMILY WWW.HSKMULTIFAMILY.COM • JESSE HUDSON 602.222.5010 • BILL HAHN 602.222.5105 • JEFFREY SHERMAN 602.222.5109 • TREVOR KOSKOVICH 602.222.5145 P. 20 COLLIERS INTERNATIONAL APARTMENT COMPARISON Towers On 19th OFFERING MEMORANDUM

W/D IN PET GATED DOG SPORT COVERED KIDS # PROPERTY OCCUPANCY RUBS GAS ELECTRIC WATER CLUB GYM UNIT FEES ACCESS PARK COURT PARKING PLAYGROUND

Towers on 19th S 11850 N 19th Ave. 93% None None Individual Master $15/$30 • • Phoenix, AZ 85029

Latitude Select $42/$47 1 1944 W. Thunderbird Rd. 98% None Individual Master Additional $35 • • • • • • $52/$65 Phoenix, AZ 85023 $40

Spring $55/$65 2 2015 W. Cactus Rd. 93% None Individual Individual • $20 • • • $75 Phoenix, AZ 85029

Copper Canyon 3 12440 N. 19th Ave. 97% Included None Individual Master Hook-ups $25 • • • Phoenix, AZ 85029

Motif 4 2529 W. Cactus Rd. 89% Allocation None Individual Master • $30 • • • • Phoenix, AZ 85029

Sterling on 28th 5 11821 N. 28th Dr. 97% Included None Individual Master Select $20 • • • • • Phoenix, AZ 85029

HSK MULTIFAMILY WWW.HSKMULTIFAMILY.COM • JESSE HUDSON 602.222.5010 • BILL HAHN 602.222.5105 • JEFFREY SHERMAN 602.222.5109 • TREVOR KOSKOVICH 602.222.5145 P. 21 COLLIERS INTERNATIONAL RENT COMPARABLES Towers On 19th OFFERING MEMORANDUM

WALK WALK Towers on 19th SCORE Latitude SCORE 11850 N 19th Ave. 1944 W. Thunderbird Rd. 15 Phoenix, AZ 85029 40 Phoenix, AZ 85023 TRANSIT TRANSIT OWNER: Dynamics Capital Group SCORE OWNER: Domain Communities SCORE MANAGED BY: Avant Garde S 39 MANAGED BY: BH Management 1 39

MARKET MARKET UNIT TYPE UNITS SF UNIT TYPE UNITS SF RENT/UNIT RENT/UNIT Studio 19 288 $525 1BD/1BA 368 680 $796 1BD/1BA 74 432 $635 2BD/1BA 128 816 $849 1BD/1BA 20 576 $700 2BD/2BA 136 910 $1,150 2BD/1BA 11 552 $735 3BD/2BA 16 1194 $1,256 2BD/1BA 4 659 $850 3BD/2BA 24 1444 $1,361 TOTAL/AVG. 128 451 $644 TOTAL/AVG. 672 792 $909

WALK WALK Spring SCORE Copper Canyon SCORE 2015 W. Cactus Rd. 36 12440 N. 19th Ave. 23 Phoenix, AZ 85029 Phoenix, AZ 85029 TRANSIT TRANSIT OWNER: Sheiner Group SCORE OWNER: Fredrick Kleinbub SCORE MANAGED BY: Living Well Homes 2 39 MANAGED BY: Sunrise 3 39

MARKET MARKET UNIT TYPE UNITS SF UNIT TYPE UNITS SF RENT/UNIT RENT/UNIT 1BD/1BA 94 700 $785 1BD/1BA 96 750 $745 2BD/1BA 40 915 $895 2BD/2BA 96 950 $899 2BD/2BA 52 1000 $920 TOTAL/AVG. 192 850 $822 TOTAL/AVG. 186 830 $846

Note: $30-$50 Premium for upgraded units. Upgrades include new appliances, new paint, new counter tops, new cabinets, new light fixtures, and washer and dryer.

HSK MULTIFAMILY WWW.HSKMULTIFAMILY.COM • JESSE HUDSON 602.222.5010 • BILL HAHN 602.222.5105 • JEFFREY SHERMAN 602.222.5109 • TREVOR KOSKOVICH 602.222.5145 P. 22 COLLIERS INTERNATIONAL RENT COMPARABLES Towers On 19th OFFERING MEMORANDUM

WALK WALK Motif SCORE Sterling on 28th SCORE 2529 W. Cactus Rd. 35 11821 N. 28th Dr. 43 Phoenix, AZ 85029 Phoenix, AZ 85029 TRANSIT TRANSIT OWNER: Weidner Investment SCORE OWNER: Dalan Management SCORE MANAGED BY: Owner 4 36 MANAGED BY: VM Management 5 36

MARKET MARKET UNIT TYPE UNITS SF UNIT TYPE UNITS SF RENT/UNIT RENT/UNIT 1BD/1BA 96 621 $795 Studio 23 423 $525 1BD/1BA 108 689 $830 1BD/1BA 48 550 $625 1BD/1BA 120 729 $840 1BD/1BA 72 650 $699 2BD/1BA 108 827 $910 2BD/2BA 72 855 $799 2BD/2BA 108 925 $930 2BD/2BA 8 1075 $899 2BD/2BA 96 1004 $945 TOTAL/AVG. 223 686 $705 2BD/2BA 36 1040 $1,039 3BD/2BA 24 1209 $1,310 TOTAL/AVG. 696 824 $898

HSK MULTIFAMILY WWW.HSKMULTIFAMILY.COM • JESSE HUDSON 602.222.5010 • BILL HAHN 602.222.5105 • JEFFREY SHERMAN 602.222.5109 • TREVOR KOSKOVICH 602.222.5145 P. 23 COLLIERS INTERNATIONAL RENT ANALYSIS Towers On 19th OFFERING MEMORANDUM

ONE BEDROOM RENTS Rent/Unit # PROPERTY UNIT TYPE UNITS SF RENT/UNIT $900 1 Towers on 19th 1BD/1BA 74 432 $635 2 Towers on 19th 1BD/1BA 20 576 $700 8 $850 7 3 Latitude 1BD/1BA 368 680 $796

3 6 4 Spring 1BD/1BA 94 700 $785 4 $800 11 5 Copper Canyon 1BD/1BA 96 750 $745

5 6 Motif 1BD/1BA 96 621 $795 $750 7 Motif 1BD/1BA 108 689 $830 2 10 8 Motif 1BD/1BA 120 729 $840 $700 9 Sterling on 28th 1BD/1BA 48 550 $625 10 Sterling on 28th 1BD/1BA 72 650 $699 1 $650 9 11 TOTAL/AVG. 1096 663 $772

$600

Rent/Unit TWO BEDROOM RENTS # PROPERTY UNIT TYPE UNITS SF RENT/UNIT $1,200 1 Towers on 19th 2BD/1BA 11 552 $735 4 $1,150 2 Towers on 19th 2BD/1BA 4 659 $850 3 Latitude 2BD/1BA 128 816 $849 $1,100 11 4 Latitude 2BD/2BA 136 910 $1,150 $1,050 5 Spring 2BD/1BA 40 915 $895 $1,000 10 6 Spring 2BD/2BA 52 1000 $920 9 14 $950 6 8 7 Copper Canyon 2BD/2BA 96 950 $899 5 7 13 $900 8 Motif 2BD/1BA 108 827 $910 2 3 $850 9 Motif 2BD/2BA 108 925 $930 12 10 Motif 2BD/2BA 96 1004 $945 $800 1 11 Motif 2BD/2BA 36 1040 $1,039 $750 12 Sterling on 28th 2BD/2BA 72 855 $799 $700 13 Sterling on 28th 2BD/2BA 8 1075 $899 14 TOTAL/AVG. 895 905 $936

HSK MULTIFAMILY WWW.HSKMULTIFAMILY.COM • JESSE HUDSON 602.222.5010 • BILL HAHN 602.222.5105 • JEFFREY SHERMAN 602.222.5109 • TREVOR KOSKOVICH 602.222.5145 P. 24 COLLIERS INTERNATIONAL RENT COMPARABLES MAP Towers On 19th OFFERING MEMORANDUM

Towers on 19th 11850 N 19th Ave. Phoenix, AZ 85029 S

Latitude 1944 W. Thunderbird Rd. Phoenix, AZ 85023 1

Spring 2015 W. Cactus Rd. 2 Phoenix, AZ 85029 1

Copper Canyon 12440 N. 19th Ave. 3 Phoenix, AZ 85029 3 2 Motif 5 4 2529 W. Cactus Rd. Phoenix, AZ 85029 4

Sterling on 28th 11821 N. 28th Dr. Phoenix, AZ 85029 N 5

HSK MULTIFAMILY WWW.HSKMULTIFAMILY.COM • JESSE HUDSON 602.222.5010 • BILL HAHN 602.222.5105 • JEFFREY SHERMAN 602.222.5109 • TREVOR KOSKOVICH 602.222.5145 P. 25 COLLIERS INTERNATIONAL FINANCIAL ANALYSIS FINANCIAL ANALYSIS Towers On 19th OFFERING MEMORANDUM

PRO FORMA OPERATING INCOME PRO FORMA OPERATIONS Monthly Scheduled Gross Rent $82,450 MARKET MONTHLY UNIT TYPE UNITS SF Annual Scheduled Gross Rent $989,400 RENT/UNIT RENT Physical Vacancy 3.00% -$29,682 Studio 19 288 $525 $9,975 Economic Vacancy 4.00% -$39,576 1BD/1BA 74 432 $635 $46,990 Net Rental Income $920,142 1BD/1BA 20 576 $700 $14,000 Other Income $46,577 2BD/1BA 11 552 $735 $8,085 Gross Operating Income $966,719 2BD/1BA 4 659 $850 $3,400 PRO FORMA OPERATING EXPENSES PER UNIT TOTAL/AVG. 128 451 $644 $82,450 Property Taxes $246 $31,521 Insurance $125 $16,000 Maintenance & Repairs $350 $44,800 NOTES Turnover $150 $19,200 RENTS Contract Services $100 $12,800 Current asking rates.

Electricity $232 $29,653 PHYSICAL VACANCY Sewer and Water $500 $64,058 Consistent with submarket performance. Trash $117 $14,993 OTHER INCOME Increased 3% from annualized T-1 income operations. Payroll $1,000 $128,000 Management Fee 3.50%OF GOI $264 $33,835 PROPERTY TAXES 2016 Annual property taxes quoted from the Maricopa County Treasurer. Marketing $100 $12,800 UTILITIES Administrative Expenses $150 $19,200 Increased 5% from adjusted T-12 operations. Capital Reserve $300 $38,400 OPERATIONAL EXPENSES TOTAL OPERATING EXPENSES $465,260 Based on industry standards of similar properties. Operating Cost Per Unit $3,635 Operating Cost Per Sq Ft $8.07 PRO FORMA NET OPERATING INCOME $501,459

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NO. PROPERTY YEAR BUILT UNITS PRICE $/UNIT SALE DATE

Towers on 19th 1985 11850 N 19th Ave. 128 $7,500,000 $58,594 On Market 2015-17 S Phoenix, AZ 85029

Cambridge Square 6060 W. Royal Palm Rd. 1985 153 $9,100,000 $59,477 6/12/2017 1 Glendale, AZ 85302

Solano Park 5350 N. 17th Ave. 1987 48 $3,700,000 $77,083 3/22/2017 2 Phoenix, AZ 85015

Bella Solano 5656 N. 17th Ave. 1973 160 $11,550,000 $72,188 2/21/2017 3 Phoenix, AZ 85015

Orangewood Place 7328 N. 27th Ave. 1984 84 $4,950,000 $58,929 1/10/2017 4 Phoenix, AZ 85051

Average 1982 115 $65,254

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CAMBRIDGE SQUARE

Address: 6060 W Royal Palm Rd. Glendale, AZ 85302

Buyer Financing Lender Banner Bank Fast Flyers Cambridge LLC Loan Amount $6,825,000 Loan-to-Value 75% Seller

Property Management Specialist 5229 N 7th Ave. Phoenix, AZ 85013

Sale Price $9,100,000 UNIT TYPE UNITS SF RENT/UNIT RENT/SF STUDIO 24 450 $508 $1.13 Price / Unit $59,477 1 BD / 1 BA 67 636 $650 $1.03 Price / SF $82.61 2 BD / 1 BA 48 867 $715 $0.82 3 BD / 2 BA 14 1,086 $946 $0.87 Sale Date 6/12/2017 TOTAL/AVG. 153 720 $675 $0.94 Submarket Glendale Location/Property C+ / C+ Electric Metering Individual Year Built 1985 Building S.F. 110,160 Total Units 153

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SOLANO PARK

Address: 5350 N. 17th Ave. Phoenix, AZ 85015

Buyer Financing

Garay Interests, LLC Lender - One Embarcadero Center San Francisco, CA 94111 Loan Amount - Loan-to-Value - Seller

Westwood Management LLC 7301 E 3rd Ave Scottsdale, AZ 85251

Sale Price $3,700,000 UNIT TYPE UNITS SF RENT/UNIT RENT/SF 1BD / 1BA 20 450 $698 $1.55 Price / Unit $58,730 1BD / 1BA 13 680 $724 $1.06 Price / SF $125.25 1BD+DEN / 1BA 1 780 $762 $0.98 2BD / 2BA 14 780 $919 $1.18 Sale Date 3/22/2017 TOTAL/AVG. 48 615 $771 $1.25 Submarket Uptown Location/Property B / B Electric Metering Individual Year Built 1987 Building S.F. 29,540 Total Units 48

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BELLA SOLANO

Address: 5656 N 17th Ave. Phoenix, AZ 85015

Buyer Financing

Luna Bear Properties LLC Lender Walker & Dunlop 2545 Myrtle Ave. Hermosa Beach, CA 90254 Loan Amount $8,425,000 Loan-to-Value 72.94% Seller

Morrison Street Capital, LLC 121 SW Morrison St. Portland, OR 97204

Sale Price $11,550,000 UNIT TYPE UNITS SF RENT/UNIT RENT/SF STUDIO 48 420 $605 $1.44 Price / Unit $72,188 1 BD / 1 BA 90 625 $718 $1.15 Price / SF $120.31 2 BD / 1 BA 11 865 $800 $0.92 2 BD / 1 BA 11 910 $840 $0.92 Sale Date 2/21/2017 TOTAL/AVG. 160 600 $698 $1.16 Submarket Christown Location/Property C+ / C Electric Metering Partial Year Built 1973 Building S.F. 96,000 Total Units 160

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ORANGEWOOD PLACE

Address: 7328 N 27th Ave. Phoenix, AZ 85051

Buyer Financing

Auxon Orangewood Place LLC Lender Greystone Servicing Corp 73A Saint James Dr. Santa Rosa, CA 95403 Loan Amount $3,920,000 Loan-to-Value 79.19% Seller

CM Phoenix LLC 8094 W Expedition Way Peoria, AZ 85383

Sale Price $4,950,000 UNIT TYPE UNITS SF RENT/UNIT RENT/SF Price / Unit $58,929 1 BD / 1 BA 52 600 $592 $0.99 Price / SF $87.17 2 BD / 1 BA 32 800 $695 $0.87 TOTAL/AVG. 84 676 $631 $0.93 Sale Date 1/10/2017 Submarket Metrocenter Location/Property C+ / C Electric Metering Individual Year Built 1984 Building S.F. 56,784 Total Units 84

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Towers on 19th 11850 N 19th Ave. S Phoenix, AZ 85029

Cambridge Square 6060 W. Royal Palm Rd. 1 Glendale, AZ 85302

Solano Park 5350 N. 17th Ave. 1 2 Phoenix, AZ 85015

Bella Solano 4 5656 N. 17th Ave. 3 Phoenix, AZ 85015

Orangewood Place 7328 N. 27th Ave. 4 Phoenix, AZ 85051

3 2 N

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Location Maps BIRD’S EYE VIEW

PARCEL MAP AERIAL MAP Towers On 19th OFFERING MEMORANDUM

Del E Web HonorHealth Hospital Deer Valley Hospital Paradise Valley Scottsdale Community Sports Complex Arrowhead College Towne Center Paradise Valley Peoria Hospital Scottsdale Stadium Thunderbird Kierland Quarter School of Global Commons Scottsdale Management Airport Banner Towers On 19th Thunderbird ASU - West Paradise Medical Campus Valley Center Mall

Glendale MetroCenter Community Gainey Ranch College Mall HonorHealth John C. Lincoln Hospital McCormick Wildlife Ranch World Zoo Fields at Talking Stick Luke Air Glendale Westgate City Center Force Base Municipal Grand Canyon Christown Airport University of University Spectrum Mall Phoenix Stadium Biltmore Fashion Park Scottsdale Maryvale Wigwam Maryvale Fashion Golf Golf Course Hospital Square Course Maryvale Estrella Mountain Banner Baseball Community St. Joseph’s Estrella Park College Hospital Medical Center Desert Gateway Sky Mall Pavillions West Valley Retail Center Hospital Papago Cancer Avondale Canal Industrial Park Park / Zoo Treatment AutoMall Center Downtown of America Freeport Phoenix Industrial Phoenix Sky Harbor Airport Center Tempe Phoenix Marketplace N Goodyear Arizona State Airport University

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Towers On 19th

N HSK MULTIFAMILY WWW.HSKMULTIFAMILY.COM • JESSE HUDSON 602.222.5010 • BILL HAHN 602.222.5105 • JEFFREY SHERMAN 602.222.5109 • TREVOR KOSKOVICH 602.222.5145 P. 37 COLLIERS INTERNATIONAL PARCEL MAP Towers On 19th OFFERING MEMORANDUM

Towers On 19th 149-05-002

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KEY AREA EMPLOYERS 3 Mile Radius

NO. OF RADIUS 1 MILE 3 MILE 5 MILE # EMPLOYER EMPLOYEES BUSINESS ACTIVITY Population: 1 FLOUR & BLUESHIELD 1,000 - 4,999 INSURANCE 2022 Projection 18,536 154,580 452,060 2 WASTE MANAGEMENT 1,000 - 4,999 GARBAGE COLLECTION 2017 Estimate 17,121 143,210 419,148

3 ALBERTSONS 500 - 999 GROCERS-RETAIL 2010 Census 15,325 130,778 384,742 Growth 2017-2022 8.26% 7.94% 7.85% 4 APS SERVICE 500 - 999 ELECTRIC COMPANIES Growth 2010-2017 11.72% 9.51% 8.94% 5 BLUE CROSS BLUE SHIELD OF AZ 500 - 999 INSURANCE 2017 Population Hispanic Origin 7,224 45,138 118,573 2017 Population by Race: 6 CHAS ROBERTS AIR CONDITIONING 500 - 999 AIR CONDITIONING CONTRACTORS & SYSTEMS White 14,321 117,680 351,473 7 HOTEL CLEANING SVC 500 - 999 CLEANERS Black 1,156 9,140 24,534

8 KARSTEN MANUFACTURING CORP 500 - 999 GOLF EQUIPMENT & SUPPLIES-MANUFACTURERS Am. Indian & Alaskan 809 5,800 13,582 Asian 340 5,786 15,936 9 SUNTEC CONCRETE 500 - 999 CONCRETE CONTRACTORS Hawaiian & Pacific Island 40 427 1,070 10 WELLS FARGO HOME MORTGAGE 500 - 999 REAL ESTATE LOANS Other 456 4,377 12,553 U.S. Armed Forces: 0 38 125 11 ADVANCED SECURITY 250 - 499 SECURITY GUARD & PATROL SERVICE Households: 12 AMERICAN REFRIGERATION SUPPLS 250 - 499 HEATING EQUIPMENT-MANUFACTURERS 2022 Projection 6,773 60,624 177,977

13 AMERICAN VALET 250 - 499 VALET SERVICE 2017 Estimate 6,257 56,152 165,064 2010 Census 5,603 51,094 151,462 14 BLACKSTONE SECURITY SVC 250 - 499 SECURITY GUARD & PATROL SERVICE Growth 2017 - 2022 8.25% 7.96% 7.82% 15 BURNS PEST CONTROL 250 - 499 WEED CONTROL SERVICE Growth 2010 - 2017 11.67% 9.90% 8.98% Owner Occupied 2,565 28,596 93,799 16 CLIMATEC INC 250 - 499 CONTROLS CONTROL SYSTEMS/REGULATORS-MFRS Renter Occupied 3,692 27,555 71,266 17 EC ROSS PLAZA LLC 250 - 499 GOVERNMENT-OPERATORS-NONRESIDENTIAL BLDG 2017 Avg Household Income $45,875 $61,121 $65,288

18 G D S PURCHASING 250 - 499 PAINTERS 2017 Med Household Income $32,684 $43,684 $48,153 2017 Households by Household Inc: 19 HARTFORD 250 - 499 INSURANCE <$25,000 2,267 16,003 41,830 20 IHC HEALTH SOLUTIONS 250 - 499 INSURANCE $25,000 - $50,000 1,970 15,404 43,339 $50,000 - $75,000 1,176 9,895 30,970 21 PULICE CONSTRUCTION INC 250 - 499 GENERAL CONTRACTORS $75,000 - $100,000 432 6,026 19,195 SUN VALLEY MASONRY INC 250 - 499 MASONRY CONTRACTORS 22 $100,000 - $125,000 209 3,548 11,719

23 TURF PARADISE 250 - 499 RACE TRACKS $125,000 - $150,000 33 1,830 6,130 $150,000 - $200,000 47 1,612 6,236 24 VALLEY LIFE 250 - 499 SOCIAL SERVICE & WELFARE ORGANIZATIONS $200,000+ 123 1,835 5,646 25 VANGUARD HEALTH MANAGEMENT INC 250 - 499 HEALTH CARE FACILITIES

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Strong Renter Demand Drives Vacancy Lower

Key Takeaways Market Indicators Market Market Relative to prior period Q1 2017 Q1 2016 >> The Greater Phoenix multifamily market posted a strong start to 2017. During the first quarter vacancy dipped, rents continued to push higher, and sales velocity remained relatively consistent. Vacancy

>> Vacancy ended the first quarter at 5.6 percent, down 40 basis points from the year-end 2016 figure. Despite the Rents improvement to start the year, the current vacancy rate is 40 basis points higher than one year ago. Transaction Activity >> Rental rates continued to push higher in the first quarter, reaching $949 per month, a 5.6 percent increase from one year ago. Across all property classes, rental rates experienced healthy gains. Price Per Unit Cap Rates >> Investment activity in the first quarter of 2017 slowed a bit from the fourth quarter. Despite the slight downturn in activity, transactions are still 30 percent higher than they were in the first quarter of last year. Median prices ticked down a bit, and cap rates remained virtually unchanged in the high-5 percent range. Greater Phoenix Multifamily Market

Conditions strengthened in the Greater Phoenix multifamily market during the first quarter. Vacancy dipped once again and rents rose in nearly every submarket. These market trends occurred even during a period of significant new development, particularly in areas such as North Tempe, Chandler and Gilbert. Summary Statistics Phoenix Market Construction activity will pick up in 2017. After developers delivered more than 5,800 units in 2016, nearly 1,500 apartments came online in the first quarter and more than 10,000 units are currently under construction. Development Vacancy Rate 5.6% will be concentrated in the East Valley and Central Phoenix over the next few years. These areas have also recorded Change from 1Q 2016 (bps) 40 some of the most dynamic employment growth in recent years. Asking Rents (per month) $949

Multifamily investment began 2017 at a strong level. More properties sold in the first three months of this year than in any Change from 1Q 2016 5.6% first quarter since 2007. Pricing trends will be closely monitored in the coming quarters. The median price has more than Median Sales Price (per unit YTD) $95,400 doubled since 2011, topping $100,000 per unit in 2016. The median price took a small step back during the first quarter, but that was largely in response to a dip in the number of newer properties changing hands. Average Cap Rate (YTD) 5.8%

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Employment: Construction: Vacancy: >> The Greater Phoenix employment market continued to >> Deliveries picked up in the beginning of 2017, with nearly >> Following a rise at the end of 2016, multifamily vacancy expand during the first quarter. Year over year, employers 1,500 units coming online in the first quarter, up from in Greater Phoenix dipped 40 basis points in the first have added 50,300 jobs, a 2.6 percent gain. The pace approximately 800 units in the fourth quarter. In the past quarter to 5.6 percent. The rate is up 40 basis points of expansion has slowed; one year ago at this time, year, more than 5,700 units were completed, a 2.2 percent from one year ago. employers were adding workers at an annual growth rate increase to inventory. >> Vacancy in the Goodyear/Avondale submarket is at 4 of 3.4 percent. >> Construction is forecast to gain momentum in the coming percent, down 10 basis points from one year ago and the >> White-collar segments in the local economy have continued quarters. Currently, there are approximately 10,500 lowest vacancy rate in all of Greater Phoenix. Vacancy in to add workers at a healthy pace. In the past year, financial multifamily units under construction in Greater Phoenix, the submarket has remained low even as construction has employment has expanded by 5.4 percent with the addition which is up nearly 30 percent from the total at the end been steady, delivering an average of 130 units per year of 9,200 jobs. The professional and business services of last year. . since 2015. sector added 10,100 jobs, a 3 percent gain. >> The vacancy rate ticked higher in the South Gilbert/ >> One large financial services company is poised to make Queen Creek submarket, where an average of 800 units a significant move from downtown to a more suburban have been delivered annually during the past three years. location. JP Morgan Chase recently announced a plan to Vacancy in this submarket is at 6.4 percent, 200 basis move from the company’s Downtown Phoenix office to points higher than one year ago. Tempe. The company will be developing a 67-acre campus in Tempe, which will be large enough to accommodate more than 4,000 workers.

Employment Overview Construction Trends: Major Submarkets Quarterly Vacancy Trends

75 5%

Completions 2015-2017 Under Construction 10.0% 3,000 9.5% 60 4% 2,500 9.0% Year 8.5% - over 2,000 - 45 3% Year EmploymentChange 8.0%

1,500 7.5% Units 7.0% 30 2% 1,000 Vacancy Rate Vacancy 6.5% Year over Year Jobs Added (000s) Added Jobs Year over Year

6.0% 500 15 1% 5.5%

0 5.0%

0 0% 4.5% Q1 13 Q3 13 Q1 14 Q3 14 Q1 15 Q3 15 Q1 16 Q3 16 Q1 17 4.0% Number of Jobs Annual Change Q1 13 Q3 13 Q1 14 Q3 14 Q1 15 Q3 15 Q1 16 Q3 16 Q1 17

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Rents: Quarterly Rent Trends Per Month Per SF >> Asking rents continue to push higher, reaching $949 per month, or $1.12 per square foot, per $975 $1.25 month. Rental rates increased 5.6 percent over the course of the past year. $950 $1.20

>> Rents rose for the fourteenth consecutive quarter, at a quicker pace than what was recorded in $925 $1.15 previous periods. Rental rates rose 1.9 percent in the first quarter, the fastest pace of growth in $900 nearly a year. $1.10 $875 RentAsking SF per $1.05 >> While rents are on the rise across all property types, the strongest growth is being recorded $850 in the lower tiers. Asking rents in Class C buildings have advanced 6.7 percent in the past year, $1.00 $825 Asking Rent per Month Asking Rent reaching $684 per month. Annual gains in Class A and Class B buildings have averaged in the $0.95 $800 mid-4 percent range. $0.90 $775 Investment Trends: $750 $0.85 $725 $0.80 >> Sales velocity in the first quarter of 2017 remained essentially flat, slowing just 2 percent from Q1 13 Q3 13 Q1 14 Q3 14 Q1 15 Q3 15 Q1 16 Q3 16 Q1 17 the fourth quarter of last year. Despite the slight downturn in activity, transactions are 30 $120 10% Investment Trends percent higher in the first three months of 2017 than they were in the first quarter of 2016. $120 10% $100 9% >> The median price during the first quarter dipped to about $95,400 per unit, 8 percent lower $100 9% than the 2016 median price. Some of the decline in pricing during the first quarter was due to $80 8% Average RateCap a drop-off in the sale of newer complexes. In the first quarter, newer complexes accounted for $80 8% just 7 percent of activity, compared to 13 percent in 2016. $60 7% Average RateCap

>> Cap rates remained flat at the start of 2017. The average cap rate for the first quarter was 5.8 $60 7% $40 6% percent, nearly identical to the rate during the fourth quarter of 2016. Cap rates inched higher Median Price per Unit (000s) $40 6%

in 2016 and another modest increase could take shape this year. Median Price per Unit (000s) $20 5%

$20 5% $0 4% 06 07 08 09 10 11 12 13 14 15 16

$0 4% 06 07 08 09 10 11 12 13 14 15 16 17

Price per Unit Cap Rate

Price per Unit Cap Rate

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Outlook:

The Greater Phoenix multifamily market is poised for another strong year of The investment market should record healthy activity in 2017. Sales velocity performance in 2017. Healthy population growth and ongoing successes in in the first quarter was well ahead of the 2016 pace, and the strong property attracting new businesses to the market are sparking the local economy. These fundamentals will fuel additional transaction activity going forward. Interest trends are keeping renter demand elevated and driving vacancy well below the rates have trended higher over the past nine months, and while this added some market’s long-term average even as development of new units continues at a volatility to the transaction process, the overall impact on the market has been rapid pace. The strong renter demand and tight vacancy conditions are being reflected in rental rates, which are forecast to surge by more than 5 percent in modest to this point. Cap rates have only inched higher, and gains in property 2017. cash flows should largely offset increased borrowing costs.

Employment Forecast Rent Forecast

70,000 4.0% $1,000 10%

3.5% 60,000 $950 8%

3.0% 50,000 Year

Year $900 6% - 2.5% over - over

40,000 - Year RentChange - Year Change 2.0% $850 4%

30,000

1.5% Average Asking Rent

Net Employment Change Employment Net $800 2% 20,000 1.0%

$750 0% 10,000 0.5%

0 0.0% $700 -2% 2010 2011 2012 2013 2014 2015 2016 2017* 2010 2011 2012 2013 2014 2015 2016 2017*

Jobs Gained/Lost Annual Change Asking Rents Annual Change

* Year End Forecast * Year End Forecast

Construction and Permitting Forecast Vacancy Forecast

12% 10,000

9,000 10%

8,000

7,000 8%

6,000

5,000 6% Vacancy Rate Vacancy Permits/Units 4,000

4% 3,000

2,000 2% 1,000

0 2010 2011 2012 2013 2014 2015 2016 2017* 0% 2010 2011 2012 2013 2014 2015 2016 2017*

MF Permits Completions * Year End Forecast * Year End Forecast

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Bill Hahn | Executive Vice President Jesse Hudson | Senior Associate - Tucson DIRECT +1 602 222 5105 DIRECT +1 520 261 2269 MOBILE +1 602 418 9578 MOBILE +1 480 437 4953 EMAIL [email protected] EMAIL [email protected]

Jeffrey Sherman | Executive Vice President Cynthia Meister | Associate Broker - Albuquerque DIRECT +1 602 222 5109 DIRECT +1 505 880 7082 MOBILE +1 602 694 1127 MOBILE +1 505 803 6232 EMAIL [email protected] EMAIL [email protected]

Trevor Koskovich | Executive Vice President Thomas Olivetti | Associate Vice President - Las Vegas DIRECT +1 602 222 5145 DIRECT +1 702 836 3740 MOBILE +1 480 227 7420 MOBILE +1 602 320 5487 EMAIL [email protected] EMAIL [email protected]

Southwest Office - Phoenix Tucson Office 2390 E. Camelback Rd, Suite 100 One South Church Ave, Suite 1200 Phoenix, AZ 85016 Tucson, AZ 85701 602.222.5000 520.448.5100

Albuquerque Office Las Vegas Office 5051 Journal Center NE, Suite 200 3960 Howard Hughes Pkwy, Suite 150 Albuquerque, NM 87109 Las Vegas, NV 89169 505.880.7082 702.735.5700

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