4q15 national multihousing market overview (v6) (3)€¦ · 4q15 national multihousing market...

4Q15NATIONAL MULTIHOUSINGMARKET OVERVIEW

| 24Q15 NATIONAL MULTIHOUSING MARKET OVERVIEW 2

Table of Contents

2 National Multihousing Market Overview3 Executive Overview4 Historical United States Sales Volume5 Historical United States Supply and Demand 6 Historical United States Pricing Trends7 National Multihousing Outlook by Cantor Fitzgerald8 Homeownership Rate Trends9 Emerging Rental Markets

10 Historical Effective Rent vs. Inflation11 Top Markets by Sales Volume, Sales Volume Growth12 Investment Grade Cap Rates by Market13 Investment Grade Price Per Unit by Market14 Top 20 Buyers and Sellers of 201515 Buyer and Seller Distribution16 Top Regional Buyers17 Largest Landlords Nationally and Regionally 18 International Capital Distribution19 Transaction Analysis20 Price Per Unit by Age21 Select Market Fundamentals22 Renter Households by Age23 Investment Returns24 Mortgage Debt Outstanding25 Lender Composition26 Mortgage Maturities27 Significant Investment Sales by ARA Newmark

4Q15National Multihousing Market Overview



Executive Overview

►Sales volume surged to a historic high of $142.3 billion in 2015, up 23.5% from 2014.– Sales volume totaled $39.9 billion in the fourth quarter, the largest volume quarter in the past 15 years, with increased sums of

capital flowing into secondary and tertiary markets as investors seek higher yield.

► Increased capital flow demonstrated attractive underlying fundamentals, especially among portfolio and entity-level transactions.

► International capital represented 11.2% of purchases in 2015, an increase of 119.6% from 2014.– In December, President Obama signed into law a provision easing taxes on foreign investments in U.S. real estate, a potential

catalyst for further investment by overseas investors.

►National investment grade cap rates remained unchanged at 5.6%, while price per unit of new construction properties increased 20.1% year-over-year.

►New York, Austin and Seattle are expected to see large inventory growth in 2016, while Southern California will see below-average supply come to market.

►As the homeownership rate has fallen to near 50 year lows, renter households increased to nearly 34 million in 2015, surpassing growth during any previous 10-year period. – Several southeastern markets such as Atlanta, Charlotte, Nashville, Orlando and Tampa have experienced substantial renter

population growth.

►Debt capital remained plentiful as multihousing debt outstanding rose to record highs of $1.1 trillion, an increase of 9.6% from $996.4 billion in 2014.



Historical United States Sales VolumeQuarterly Totals by Property Type

Sales volume in 2015 reached

$142.3 billion, surging 23.5% from

the $115.2 billion in 2014.

Sales volume totaled $39.9 billion in

4Q15, an 11.5% increase from

4Q14 and the largest volume

quarter in the past 15 years.

Garden properties continued to be

favored by investors, accounting for

62.2% of total sales volume in 2015,

while mid/high-rise properties

comprised 34.5% and student

housing 3.3%.

From 2010 through 2015, sales

volume has averaged $23.1 billion

per quarter.

Source: Newmark Grubb Knight Frank Research, Real Capital Analytics

$0

$5

$10

$15

$20

$25

$30

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Bill

ions

Garden Mid/Highrise Student Housing



Historical United States Supply and Demand Annually Completed Units vs. Vacancy Rates

Source: Newmark Grubb Knight Frank Research, U.S. Census Bureau, Reis

138,775

100,804

43,016

79,654

134,971

167,754

192,033

217,142

160,180

99,197

74,890

8.0%

6.6%

5.3%

4.6% 4.6%4.3% 4.4%

4.8%5.1% 5.2% 5.3%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

0

50,000

100,000

150,000

200,000

250,000

2009 2010 2011 2012 2013 2014 2015 2016* 2017* 2018* 2019*

Annually Completed Units Vacancy Rate

With annually completed units

up 14.5% year-over-year and

vacancy steady at 4.4%, market

fundamentals show stability.

As demand for multihousing has

surged, several single-family

homebuilders such as Lennar and

Toll Brothers have aggressively

pursued expansion in the space.

2016 Inventory Growth

Rank Market % Change

1 New York 5.8%

2 Austin 4.8%

3 Greenville 4.0%

4 Palm Beach 3.9%

5 Seattle 3.8%



Historical United States Pricing TrendsPrice Per Unit vs. Cap Rates

National cap rates have remained

unchanged at 5.6% since 3Q14 and

have compressed only 10 basis

points in the past 36 months.

Price per unit has increased to

$177,070 nationally in 4Q15, an

8.9% year-over-year increase.

Since the market lows of 3Q09,

price per unit has surged 51.4%.

*Based on transactions $25 million and greaterSource: Newmark Grubb Knight Frank Research, Real Capital Analytics

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

$0

$25,000

$50,000

$75,000

$100,000

$125,000

$150,000

$175,000

$200,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Price Per Unit Cap Rates

Regional Statistics

Region Cap Rate PPU

Mid-Atlantic 5.5% $197,656

Midwest 6.4% $139,264

Northeast 4.6% $386,949

Southeast 6.5% $121,461

Southwest 5.3% $126,925

West 5.7% $220,340


National Multihousing OutlookCantor Fitzgerald Market Insight

Source: Newmark Grubb Knight Frank Research, Cantor Fitzgerald ResearchFor important disclosures on the companies mentioned, contact Cantor Fitzgerald Research Department at 110 East 59th Street, New York, NY 10022 or https://cantor2.bluematrix.com/sellside/Disclosures.action

Cantor Fitzgerald Proprietary Multihousing MetroView Model

Markets with above average growth prospects in 2016

1 Las Vegas

2 Jacksonville

3 Sacramento

4 Orlando

5 San Diego

6 Miami

7 Phoenix

8 San Bernardino/Riverside

9 Palm Beach

10 Fort Lauderdale

11 Tampa-St. Petersburg

12 Oakland-East Bay

13 Atlanta

14 Los Angeles

15 Fort Worth

16 Raleigh-Durham

17 Portland

18 Denver

19 Orange County

20 Seattle

SUPPLY1.9% growth in 2016 and

1.5% in 2017Below-average supply is expected

in Southern California

POPULATION1.1% growth in 2016 and

1.2% in 2017Above average growth is expected

in Austin, Las Vegas, Orlando, Palm Beach and Phoenix

HOME AFFORDABILITY

Los Angeles, New York, San Diego, San Francisco and San

Jose remain favorablefor renters

EMPLOYMENT2.5% growth in 2016 and

2.1% in 2017Standouts include Jacksonville,

Las Vegas, Orlando, Palm Beach and Phoenix

4Q15Capital Markets Analysis



Homeownership Rate TrendsUnited States

Source: Newmark Grubb Knight Frank Research, US Census Bureau

65.6%

69.0%

63.6%

60%

62%

64%

66%

68%

70%

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Homeownership Rate Long-Term Homeownership Rate Average

The national homeownership rate

has fallen to 63.6%, the lowest level

since 1967.

Homeownership peaked at 69.0%

in 2004, well before the Great

Recession and has trended

downward each year since.

Of the 75 largest metropolitan

statistical areas, Los Angeles, San

Jose, New York, San Diego and Las

Vegas have the lowest home-

ownership rates.

[Long-Term Average = 65.3%]


2010-2015 Renter Population Growth


Emerging Rental Markets5-Year Change Rate in Rental Population

Source: Newmark Grubb Knight Frank Research, US Census Bureau, ESRI Business Analyst

9.7% 9.3%8.5%

7.9% 7.9% 7.8% 7.7% 7.3% 7.1% 7.0% 6.9% 6.5% 6.1% 6.1% 5.9% 5.9% 5.5% 5.5% 5.4% 5.0%

Wic

hita

Mia

mi

Las

Vega

s

Cha

rlotte

Littl

e R

ock

Cin

cinn

ati

Ral

eigh

-Dur

ham

Salt

Lake

City

Col

umbu

s

Cha

rlest

on

Ric

hmon

d

Phila

delp

hia

Por

tland

Day

ton

Nor

folk

Sea

ttle

San

Ant

onio

San

Jos

e

Kans

as C

ity

Hou

ston

Palm Beach+14.5%

Denver+11.5%

Nashville+12.3%

Tampa+12.5%

Jacksonville+11.7%

Phoenix+11.5%

Atlanta+10.9%

Orlando+10.9%



Source: Newmark Grubb Knight Frank Research, Federal Reserve Bank of St. Louis, Reis

Historical Effective Rent vs. InflationUnited States

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Effective Rent Growth U.S. Consumer Price Index 10 Year U.S. Consumer Price Index Average

Effective rent growth outperformed

inflation by 450 basis points in

2015, marking the largest

differential in a decade.

Since 2005, the 10-year U.S.

Consumer Price Index average has

hovered at 2.1%, while the 10-year

effective rent growth average was

2.9% during the same period.

Effective rent is projected to

increase 3.6% nationally in 2016,

whereas the West and Northeast

regions are expected to increase

4.1% and 4.0%, respectively.

[Long-Term Average = 2.1%]




Sales Volume Growth Percentage Change(Year-over-Year)

Suburban Virginia 271.2%

Richmond 150.7%

Baltimore 140.6%

Boston 127.4%

Salt Lake City 108.5%

Philadelphia 107.7%

Miami 105.7%

St. Louis 91.2%

Palm Beach 87.8%

Detroit 70.2%

Kansas City 63.7%

Northern New Jersey 60.7%

Suburban Maryland 53.1%

Manhattan 39.1%

San Diego 37.7%

Portland 36.0%

Tampa 34.9%

Chicago 31.7%

Charlotte 30.1%

Cleveland 27.8%

Top Markets by Volume 2015 Sales Volume(Billions)

Manhattan $13.6

Dallas $7.0

Los Angeles $7.0

Atlanta $5.8

New York City Boroughs $5.7

Suburban Virginia $5.1

Seattle $4.6

Houston $4.1

Denver $4.1

Chicago $3.7

Phoenix $3.7

Boston $3.5

Austin $2.9

Baltimore $2.8

Northern New Jersey $2.5

San Diego $2.4

Tampa $2.3

Orlando $2.1

Suburban Maryland $2.1

Raleigh/Durham $2.0



Investment Grade Cap Rates

*Based on transactions $25 million and greaterSource: Newmark Grubb Knight Frank Research, ARA Newmark, Real Capital Analytics

ATLANTA

5.3%

MANHATTAN

3.8%

BOSTON

4.5%

PHILADELPHIA

5.1%CHICAGO

5.1%

LOS ANGELES

4.1%

SAN FRANCISCO

3.9%

AUSTIN

5.1%HOUSTON

5.5%

DALLAS

5.2%

CHARLOTTE

5.3%

DENVER

5.0%

DETROIT

6.4%

INDIANAPOLIS

6.0%

ORLANDO

5.6%

KANSAS CITY

5.6%LAS VEGAS

5.5%

MIAMI

4.5%

MINNEAPOLIS

5.5%

NASHVILLE

5.6%

TAMPA

5.5%

PHOENIX

5.5%

SEATTLE

4.3%

PORTLAND

4.8%

ST. LOUIS

6.0%

SAN DIEGO

4.6%

SAN JOSE

4.2% WASHINGTON, DC

4.8%

ADDITIONAL MARKETS

MSA Cap Rates

Baltimore 5.2%

Cincinnati 6.2%

Cleveland 6.8%

Columbus 5.9%

Dayton 6.1%

Jacksonville 5.5%

Long Island 5.0%

Louisville 5.6%

Memphis 5.8%

Norfolk 5.6%

Northern NJ 5.0%

NYC Boroughs 4.7%

Orange County 5.1%

Palm Beach 4.9%

Pittsburgh 5.9%

Raleigh-Durham 5.2%

Richmond 5.9%

San Antonio 5.4%

Stamford 5.1%

Tulsa 5.9%

Westchester 5.2%

OKLAHOMA CITY

5.8%

LITTLE ROCK

6.0%

WICHITA

6.0%

SALT LAKE CITY

5.5%

ALBUQUERQUE

5.8%

NEW ORLEANS

6.5%

BIRMINGHAM

6.2%

CHARLESTON

5.5%

SACRAMENTO

4.8%



Investment Grade Price Per Unit

*Based on transactions $25 million and greaterSource: Newmark Grubb Knight Frank Research, ARA Newmark, Real Capital Analytics

ATLANTA

$153,238

MANHATTAN

$654,115

BOSTON

$396,370

PHILADELPHIA

$262,152CHICAGO

$292,253

LOS ANGELES

$336,992

SAN FRANCISCO

$473,400

AUSTIN

$146,134

HOUSTON

$145,013

DALLAS

$146,922

CHARLOTTE

$165,572

DENVER

$204,402

DETROIT

$90,224

INDIANAPOLIS

$157,653

ORLANDO

$160,287

KANSAS CITY

$156,806

LAS VEGAS

$119,014

MIAMI

$298,571

MINNEAPOLIS

$214,535

NASHVILLE

$168,802

TAMPA

$141,974

PHOENIX

$176,466

SEATTLE

$358,657

PORTLAND

$193,775

ST. LOUIS

$225,513

SAN DIEGO

$262,980

SAN JOSE

$369,104 WASHINGTON, DC

$428,048

ADDITIONAL MARKETS

MSA PPU

Baltimore $180,913

Cincinnati $130,208

Cleveland $58,823

Columbus $84,705

Dayton $54,791

Jacksonville $130,000

Long Island $216,930

Louisville $78,780

Memphis $91,830

Norfolk $166,666

Northern NJ $294,425

NYC Boroughs $324,883

Orange County $293,453

Palm Beach $208,897

Pittsburgh $69,880

Raleigh-Durham $147,115

Richmond $98,088

San Antonio $133,674

Stamford $355,761

Tulsa $82,652

Westchester $225,687

OKLAHOMA CITY

$108,313LITTLE ROCK

$117,573

WICHITA

$88,585

SALT LAKE CITY

$177,777

ALBUQUERQUE

$130,374

NEW ORLEANS

$71,094

BIRMINGHAM

$97,500

CHARLESTON

$135,273

SACRAMENTO

$183,992



Top 20 BuyersPast 12 Months (Millions)


$706

$716

$770

$784

$809

$824

$841

$893

$933

$1,073

$1,165

$1,168

$1,322

$1,773

$1,813

$2,482

$2,668

$3,193

$7,307

$7,542

Carroll Organization

Independence Realty Trust

TIAA-CREF

CBRE Global Investors

Greystar RE Partners

Invesco Real Estate

Allstate

Steadfast Apartment REIT

Cortland Partners

Rockpoint Group

Heitman

UDR

Strata Equity Group

TruAmerica Multifamily

Guardian Life Insurance Co

Brookfield Asset Management

Ivanhoe Cambridge

Clarion Partners

Blackstone

Lone Star

$720

$743

$747

$761

$767

$827

$964

$1,007

$1,024

$1,028

$1,061

$1,106

$1,165

$1,433

$1,548

$1,916

$2,532

$2,915

$5,518

$8,403

JP Morgan

TGM Associates

Harbor Group International

Capri

Angelo Gordon

Principal Financial

Ares Management

Blackstone

Wood Partners

Brookfield Asset Management

Invesco Real Estate

Holland Partners

Fairfield Residential

GE Capital

Greystar RE Partners

Praedium Group

Associated Estates

Gables Residential

CWCapital

Home Properties

Top 20 SellersPast 12 Months (Millions)



Buyer Distribution United States

11.3% 7.7%

19.5%

8.1% 4.8%

48.0%50.4%

49.2%

60.0%55.3%

32.2% 34.9%23.6% 23.6%

26.4%

1.6% 2.1% 2.5% 3.2%

2.3%

7.0% 4.9% 5.2% 5.1%11.2%

0%

20%

40%

60%

80%

100%

2011 2012 2013 2014 2015

Public/REITs Private Institutional User/Other International


8.2% 5.3% 9.7% 8.5% 11.5%

58.5%

51.2% 43.7%56.4%

57.1%

26.0%

27.7%38.5%

26.6%26.1%

3.2%

3.3%

3.8% 5.1% 2.2%4.1%12.5%

4.3% 3.4% 3.1%

0%

20%

40%

60%

80%

100%

2011 2012 2013 2014 2015

Public/REITs Private Institutional User/Other International

Seller Distribution United States



Top Regional BuyersPast 12 Months


West

Company Volume

Guardian Life Insurance Co $1.6 B

TruAmerica Multifamily $1.6 B

Blackstone $1.3 B

Allstate $841 M

Maximus RE Partners $655 M

Southwest Midwest Southeast Mid-Atlantic Northeast

Company Volume

Clarion Partners $569 M

Invesco Real Estate $523 M

SteadfastApartment REIT $442 M

Blackstone $342 M

Strata Equity Group $342 M

Company Volume

Lone Star Funds $522 M

Brookfield Asset Management $482 M

Heitman $382 M

Weidner Apt Homes $219 M

Solomon Organization $216 M

Company Volume

Cortland Partners $774 M


Clarion Partners $748 M

Blackstone $637 M

CarrollOrganization $607 M

Company Volume

Lone Star Funds $4.5 B

UDR $900 M


Dweck Properties Ltd $651 M

David Werner Real Estate $434 M

Company Volume

Blackstone $3.5 B

Ivanhoe Cambridge $2.7 B

Lone Star Funds $2.2 B

Fairstead Capital $692 M

Rockpoint Group $663 M


Company Total Units

Equity Residential 106,365MAA 79,341Blackstone 77,640Lone Star Funds 58,412Essex Property Trust 45,656Greystar Real Estate Partners 41,000Aimco 38,538Westdale 37,501UDR 37,126Fairfield Residential 36,572Gables Residential 35,195AvalonBay Communities 33,520Weidner Apartment Homes 32,946Starwood Capital Group 32,496Morgan Properties 32,433GE Capital 31,821Brookfield Asset Management 30,316GID 29,906TIAA-CREF 29,306Cammeby’s International 28,787Fowler Property Acquisitions 28,309Bridge Investment Group 28,026Cortland Partners 27,727JRK Asset Management 27,136DRA Advisors 27,128

Northeast Total Units

Cammeby’s International 22,006

RiverBay Corporation 15,372

Blackstone 13,665

Ivanhoe Cambridge 13,627

Morgan Management 13,543

Mid-Atlantic Total Units

Southern Management 24,468

Lone Star Funds 24,219

Morgan Properties 22,399

Equity Residential 15,773

Sawyer Realty Holdings 11,729

Southeast Total Units

MAA 50,012

Cortland Partners 18,681

Lindsey Management Co. 16,939


Carroll Organization 16,712

Midwest Total Units

Monarch 15,973

Princeton Enterprises 9,605

Mills Properties 9,539

K&D Group 9,451

Apollo Property Management 9,369

Southwest Total Units

MAA 22,998

Westdale 21,445

Weidner Apartment Homes 19,024

CWS Capital Partners 18,225

Ilan Holdings 15,513

West Total Units

Essex Property Trust 45,274


Irvine Company 23,142

Kennedy Wilson 20,365

AvalonBay Communities 17,326


Largest Landlords by UnitsUnited States and Regions


| 184Q15 NATIONAL MULTIHOUSING MARKET OVERVIEW 18Source: Newmark Grubb Knight Frank Research, Real Capital Analytics


International Capital DistributionPast 12 Months

Canada58.9%

UK6.0%

China5.1%

Switzerland4.8%

Mexico4.6%

Sweden4.4%

Bahrain4.1%

Kuwait2.8%

Qatar2.6%

Other6.6%

Percentage Based Upon Dollar Volume of Properties PurchaseINVESTED CAPITAL $100 + MILLION

Ivanhoe Cambridge (Canada), Brookfield Asset Management (Canada) $1 B+

Akelius Fastigheter AB (Sweden), Investcorp (Bahrain) $500 M - $999 M

Starlight Investments (Canada), UBS (Switzerland), Wafra(Kuwait), Qatar Investment Authority (Qatar), Grosvenor (UK), Ergas Group (Canada), Kuafu Properties (China), Venterra Properties (Canada), Shanghai Construction Corp (China), Balfour Beatty (UK)

$250 M - $499 M

H&R REIT (Canada), Zurich Financial (Switzerland), REM Finance (UK), Pure Multi-Family REIT (Canada), Nicola Crosby (Canada), Shanghai Municipal (China), JiyuanFinance (China), Romspen Investment Group (Canada), Amitim (Israel)

$100 M - $249 M



Transaction Analysis Portfolio and Entity-Level Commentary

Source: Newmark Grubb Knight Frank Research, Real Capital Analytics, Cantor Fitzgerald Research

Increased capital flow demonstrated

attractive underlying fundamentals,

especially among portfolio and

entity-level transactions.

Associated Estates was acquired by

Brookfield Asset Management in

August for $2.5 billion cash, for an

implied cap rate of 5.4%.

Home Properties was acquired by

Lone Stars Funds for $7.6 billion in

October for an implied cap rate

of 5.77%.

Equity Residential agreed to sell

23,262 units to Starwood Capital for

$5.4 billion for an implied cap rate of

5.5%. The transaction is expected to

close in early 2016.

4.4% 4.0% 20.7% 2.8% 1.3% 0.0% 0.5% 11.2% 1.0% 4.3% 9.8%

16.4%21.7%

22.1%

22.9%

11.2% 17.4% 19.3%

16.2% 36.6%20.2%

17.8%

79.2%74.3%

57.2%

74.3%

87.5%82.6%

80.2%

72.5%

62.4%

75.5%72.4%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Entity Portfolio Individual

For important disclosures on the companies mentioned, contact Cantor Fitzgerald Research Department at 110 East 59th Street, New York, NY 10022 or https://cantor2.bluematrix.com/sellside/Disclosures.action


1970-1979 1980-1989 1990-1999 2000-2009 2010-2015


Price Per Unit by AgeYear-over-Year Percentage Change


MidwestMid-Atlantic Southeast Southwest West

3.1%19.2% 9.6% 12.4% 28.2%1970-1979 -27.4%

6.8%7.2% 7.3% 10.6% 12.6%1980-1989 33.1%

3.2%-6.5% 4.4% 7.3% 0.7%1990-1999 -8.6%

18.8%32.3% 4.4% 1.5% - 0.4%2000-2009 4.0%

29.8%-10.7% 9.2% 13.8% 28.2%2010-2015 53.4%

Northeast

9.0% 9.5% 3.4% 3.6% 20.1%

UNITED STATES



Select Market FundamentalsInvestment Grade Matrix

*Based on transactions $25 million and greaterSource: Newmark Grubb Knight Frank Research, Real Capital Analytics

Manhattan

Boston Washington, DC

Chicago

San Francisco

Los Angeles

Philadelphia

CharlotteAtlanta

Miami

Dallas HoustonDenver

Portland

Seattle

Austin

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

3.5% 4.0% 4.5% 5.0% 5.5% 6.0%

Pric

e Pe

r Uni

t

Cap Rate

Six Major Markets

Secondary Markets



Renter Households by AgeHistorical Growth Trends (millions)

Source: Newmark Grubb Knight Frank Research, US Census Bureau, Harvard University Joint Center for Housing Studies

10 Year Growth (2005-2015)

Age % Change Rate

Under 30 9.3%

30-39 24.4%

40-49 16.4%

50-59 55.3%

60-69 86.5%

70 and Over 17.8%

20 Year Growth (1995-2015)

Age % Change Rate

Under 30 12.3%

30-39 4.7%

40-49 29.6%

50-59 113.3%

60-69 84.9%

70 and Over 14.5%

1995 2005 2015

UNDER 30 YEARS OLD

10.1 10.3 11.3

30 – 39 YEARS OLD9.8 8.3 10.3

40 – 49 YEARS OLD5.8 6.5 7.5

50 – 59 YEARS OLD

3.1 4.2 6.5

60 – 69 YEARS OLD2.4 2.3 4.4

70 YEARS OLD AND OVER3.5 3.4 4.0



Investment ReturnsYields vs. 10-Year Treasury Bill

Source: Newmark Grubb Knight Frank Research, Real Capital Analytics, Federal Reserve Bank of St. Louis

In December, the Federal Open

Market Committee (FOMC) raised

rates for the first time since 2006,

although this is not expected to

significantly affect the market.

Since 2010, cap rates of garden

properties have compressed by

13.1% and mid/highrise properties

by 20.3%. The decline is minimal

compared to the 10-Year Treasury

Bill yield, which has declined by

38.2% over the same time span.

Current yields of garden and

mid/highrise properties exceed the

10-Year Treasury Bill by 380 and

280 basis points, respectively.

6.1%

5.1%

2.3%

0%

2%

4%

6%

8%

10%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Garden Mid/Highrise 10-Year Treasury Bill



Source: Newmark Grubb Knight Frank Research, Federal Reserve Bank of St. Louis, Mortgage Bankers Association, Real Capital Analytics

Multihousing debt outstanding rose

9.6% year-over-year to $1.1 trillion

from $996.4 billion in 2014.

Mortgage debt outstanding

increased 1.9% or $19.3 billion

quarter-over-quarter.

Mortgage Debt OutstandingUnited States

$632.5

$846.8

$1,059.2

$0

$200

$400

$600

$800

$1,000

$1,200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Bill

ions

43%

32%

8%

7%6%

4%

Current Multihousing Debt Holders

GSE Banks & ThriftsState & Local Gov't CMBSLife Insurance Other

Top Multihousing Lenders in 2015($ Billions)

1. Fannie Mae $38.6 2. Freddie Mac $12.63. JP Morgan $4.94. New York Community Bank $4.15. Signature Bank $2.66. Wells Fargo $2.57. US Dept. of Housing & Urban Development $1.88. Prudential $1.79. PNC Financial Services $1.510. Berkadia $1.2

| 254Q15 NATIONAL MULTIHOUSING MARKET OVERVIEW 25Source: Newmark Grubb Knight Frank Research, Real Capital Analytics

Lender Composition2015 Originated Loans

6.1% 3.2% 6.4%12.9%

3.8% 5.9% 8.1%13.0%

7.7%2.9%

9.1%8.4%

10.1%

7.9%

7.8% 5.8%

12.1%9.4%

10.4%

8.5%

47.7%

39.5%

52.6%

55.7%

32.3%

59.9%51.1% 46.7% 56.2%

47.3%

6.8%

5.4%

8.8%

4.8%

3.8%

5.4% 7.5%6.7%

8.3%

8.6%

2.8%

4.6%

1.9%0.8%

5.1%

2.9% 2.8%3.3%

1.2%

2.0%

11.0%

13.6%

9.4% 7.3%

9.7%

4.7%

10.3%9.2%

7.1%

18.7%

14.6%

22.3%

9.2% 9.4%

33.6%

12.9%6.9%

10.3% 7.6% 10.9%

2.0% 2.8% 1.5% 1.2% 3.8% 2.5% 1.3% 1.4% 1.6% 1.1%

0%

20%

40%

60%

80%

100%

United States Six Major Metros Secondary Markets Tertiary Markets Northeast Mid-Atlantic Southeast Midwest Southwest West

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




Source: Newmark Grubb Knight Frank Research, Federal Reserve Flow of Funds, Trepp

Mortgage MaturitiesUnited States

2015 Breakdown Bank: $26.6 B (26.3%)CMBS: $15.8 B (15.6%)Insurance: $3.9 B (3.8%)Other: $54.8 B (54.3%)Total: $101.0 B * Other includes Fannie Mae, Freddie Mac, bridge loans and hard money loans.

$31.9 $29.0 $26.6 $23.6 $25.9$31.5

$36.9 $36.8$29.9

$21.8$14.8

$10.6$10.7 $15.8

$15.5$21.0

$4.2

$5.0 $3.6

$3.7

$2.9

$2.9

$4.0$3.8

$3.9$4.3

$4.4

$4.2

$4.0 $4.0

$3.9

$3.7

$3.5

$53.2$54.6

$54.8 $57.6

$59.0

$60.4$56.5

$50.4

$42.8

$35.7

$30.2

$0

$20

$40

$60

$80

$100

$120

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Bill

ions

Bank CMBS Insurance Companies Other



Significant Investment SalesRecently Completed Transactions by ARA Newmark

Ashford GreenCharlotte, NC

Crescent CrosstownTampa, FL

Willow Creek ApartmentsKansas City, MO

Retreat at FlatironsBroomfield, CO

EnsoSan Jose, CA

The BridgeHayward, CA

Buyer:

Bainbridge Companies

Seller/Client:

The Connor Group

Price:

$41.5 million

Cap Rate:

5.59%

Price Per Unit:

$138,333

Units:

300

Year Built:

1995

Buyer:

Centennial

Seller/Client:

Crescent Communities

Price:

$58.3 million

Cap Rate:

5.25%

Price Per Unit:

$169,477

Units:

344

Year Built:

2013

Buyer:

Landmark Realty

Seller/Client:

Price Brothers

Price:

Confidential

Cap Rate:

Confidential

Price Per Unit:

Confidential

Units:

986

Year Built:

1970-1987

Buyer:

Invesco Real Estate

Seller/Client:

Etkin Johnson Group

Price:

$94.5 million

Cap Rate:

5.00%

Price Per Unit:

$252,674

Units:

374

Year Built:

2014

Buyer:

Essex Property Trust

Seller/Client:

Fairfield Residential

Price:

$93.0 million

Cap Rate:

4.08%

Price Per Unit:

$508,197

Units:

183

Year Built:

2014

Buyer:

Phoenix Realty Group

Seller/Client:

Kennedy Wilson

Price:

$158.0 million

Cap Rate:

5.25%

Price Per Unit:

$290,441

Units:

544

Year Built:

1986

Source: Newmark Grubb Knight Frank Research

www.aranewmark.com

New York CityHEADQUARTERS125 Park AvenueNew York, NY 10017212.372.2000

James [email protected]

Blake OklandVice Chairman, Head of US [email protected]

Jonathan MazurManaging Director, [email protected]

Michael WolfsonCapital Markets Research [email protected]

All information contained in this publication is derived from sources that are deemed to be reliable. However, Newmark Grubb Knight Frank (NGKF) has not verified any such information, and the same constitutes the statements and representations only of the source thereof, and not of NGKF. Any recipient of this publication should independently verify such information and all other information that may be material to any decision that recipient may make in response to this publication, and should consult with professionals of the recipient’s choice with regard to all aspects of that decision, including its legal, financial, and tax aspects and implications.

Any recipient of this publication may not, without the prior written approval of NGKF, distribute, disseminate, publish, transmit, copy, broadcast, upload, download, or in any other way reproduce this publication or any of the information it contains.

Newmark Grubb Knight Frank has implemented a proprietary database and our tracking methodology has been revised. With this expansion and refinement in our data, there may be adjustments in historical statistics including availability, asking rents, absorption and effective rents.

Newmark Grubb Knight Frank Research Reports are also available at www.ngkf.com/research

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