Accelerating success.

Research & Forecast Report

LOUISVILLEQ4 2016 | Multifamily

RECENT SALES

Source: AXIOMetrics. RCA, CoStar

Market Survey Results and ForecastsSequential Month Annual

1Q16 2Q16 3Q16 4Q16 Dec-16 2014 2015 2016 2017F 2018F 2019F 2020F

Effective Rent Per Unit $827 $843 $851 $846 $844 $799 $818 $842 $865 $885 $911 $947

Per Sq. Ft $0.86 $0.88 $0.89 $0.88 $0.87 $0.84 $0.85 $0.88 $0.90 $0.92 $0.95 $0.99

Effective Rent Growth - Annually 2.7% 2.5% 3.1% 3.4% 2.8% 1.1% 2.3% 2.9% 2.8% 2.3% 3.0% 3.9%

Effective Rent Growth - Quarterly 1.1% 1.9% 1.0% -0.6%

Occupancy Rate 95.1% 96.0% 96.1% 95.1% 94.6% 94.6% 94.8% 95.6% 95.1% 94.5% 94.9% 95.1%

Occupancy Change - Annually 0.8% 0.8% 1.0% 0.5% 0.2% -0.2% 0.3% 0.8% -0.4% -0.7% 0.4% 0.2%

Occupancy Change - Quarterly 0.5% 1.0% 0.1% -1.1%

Economic Concessions Concession Value $-10.82 $-6.70 $-5.30 $-9.06 $-11.03 $-4.75 $-3.98

As a % of Asking Rent -1.3% -0.8% -0.6% -1.1% -1.3% -0.6% -0.5%

Date Property Name Address City Units Year Built Price in $ $/Units

Jan-17 Enclave at Breckenridge 7204 Churchill Park Dr Louisville 384 1970 34,000,000 88,542

Jan-17 Willowbrook Apartments 2106 Buechel Bank Rd Louisville 111 1973 6,175,000 55,631

Nov-16 Stonewater Park 11353 N Tazwell Dr Louisville 236 1972 20,250,000 85,805

Oct-16 Clifton Ridge Apartments 2025 Brownsboro Rd Louisville 80 1967 3,450,000 43,125

Oct-16 Avana Southgate 10960 Southgate Manor Dr Louisville 256 2001 26,750,000 104,492

Oct-16 Iroquois Gardens 518 Iroquois Gardens Dr Louisville 156 1972 5,950,000 38,141

Jul-16 Veranda at Norton Commons 9506 Civic Way Prospect 236 2015 51,042,313 216,281

Jun-16 Retreat at Louisville 1000 Manor Park Dr Louisville 157 2016 Confidential Confidential

Jun-16 Oldham Oaks Apartments 1000 Cassandra Ln La Grange 216 2015 22,948,898 106,245

Apr-16 Barrington Place 537 S 3rd St Louisville 218 1962 / 2015

12,750,000 58,486

Apr-16 Watterson Lakeview 3703 W Wheatmore Dr Louisville 184 1976 4,350,000 23,641

Apr-16 Twin Oaks & Bella Portfolio 3100 Chinquapin Ln Louisville 224 1969 2,500,000 11,161

Apr-16 Apex on Preston 11750 Interchange Dr Louisville 312 2015 44,500,000 142,628

COLLIERS INTERNATIONAL MULTIFAMILY ADVISORY GROUP P. 2www.ColliersMultifamilyEast.com

Multifamily Absorption and Supply

Annual 4Q16 Annual Forecast

2013 2014 2015 Market National 2016 2017F 2018F 2019F 2020F

Total Units Absorbed 206 1,740 1,973 2,232 336,518 2,232 1,003 1,323 1,336 853

New Supply 1,091 1,629 1,877 1,075 365,032 1,075 2,070 1,598 1,009 797

Inventory Growth 1.1% 1.8% 1.9% 1.5% 1.5% 1.5% 1.8% 2.1% 1.2% 1.0%

Market Employment and Permitting

Annual November-16 Annual Forecast

2013 2014 2015 Market National 2016 2017F 2018F 2019F 2020F

Employment (000s) 614.0 626.8 643.4 669.7 146,399.0 657.8 670.4 680.3 691.2 703.9

Job Gain (000s) 14.4 12.8 16.6 10.9 2,277.0 14.4 12.6 9.8 10.9 12.7

Job Growth (%) 2.4% 2.1% 2.6% 1.7% 1.6% 2.2% 1.9% 1.5% 1.6% 1.8%

Total Residential Permitting 3,811 4,511 3,828 4,439 1,087,532 4,774 5,275 6,391 5,731 5,293

Relative Change 8.8% 18.4% -15.1% 30.9% 1.9% 24.7% 10.5% 21.2% -10.3% -7.6%

Single Family Units Permitted 2,351 2,376 2,578 2,734 686,576

Relative Change 6.5% 1.1% 8.5% 16.1% 8.7%

Multifamily Units Permitted 1,387 1,951 1,108 1,665 371,009

Relative Change 14.3% 40.7% -43.2% 83.8% -8.6%

Multifamily as a % of Total 36.4% 43.2% 28.9% 37.5% 34.1%

Demand/Supply Ratio Job Gain / Total Residential Units Permitted 4.1 3.4 3.7 3.2 2.1 3.8 2.6 1.9 1.7 2.2

Job Gain / Single Family Units Permitted 6.5 5.5 7.0 4.6 3.6

Job Gain / Multifamily Units Permitted 11.9 9.2 8.5 12.0 5.6

SUPPLY AND DEMANDAccording to the Bureau of Labor Statistics, job growth in Louisville/Jefferson County, KY-IN Metro Area was 1.7% in November 2016, reflecting 10,900 jobs added during a 12-month period. The metro job growth figure was above the national number of 1.6%.

Axiometrics forecasts Louisville/Jefferson County, KY-IN Metro Area’s job growth to be 1.9% in 2017, with 12,631 jobs added. Job growth is expected to average 1.6% from 2018 to 2020, with an average of 11,143 jobs added each year.

On the supply side, permits for 1,996 multifamily units were issued in the 12 months ending in November 2016, up 888 units from the prior year’s sum. In terms of total residential housing, 5,008 units were permitted in the 12 months ending November 2016, an increase of 1,180 units from the prior year’s total.

COLLIERS INTERNATIONAL MULTIFAMILY ADVISORY GROUP P. 3www.ColliersMultifamilyEast.com

IDENTIFIED SUPPLYAs of January 9, 2017, Axiometrics has identified 1,013 apartment units scheduled for delivery in 2016, which all units have been delivered. As a comparison, there were 1,598 apartment units delivered in 2015. Properties delivered to the market in the last 12 months have achieved an average asking rent of $1,138 per unit, or $1.18 per square foot. Effective rent has averaged $1,112, or $1.15 per square foot, resulting in an average concession value of $-25.64. As a comparison, existing properties in the market had an average asking rent of $855 per unit ($0.89 per square foot) and an average effective rent of $846 per unit, or $0.88 per square foot, in 4Q16. Concessions for existing properties averaged $-9.06.

Submarket Delivery Schedule

Pipeline Delivery Schedule Pipeline Lease Up Trend

Units Absorbed Asking Rent Effective Rent

Top Submarkets 2014 2015 2016 Total Totals PPM Per Unit PSF Per Unit PSF Chenoweth/Taylorsville 31 147 334 512 239 19 $1,137 $1.02 $1,119 $1.00

Floyd County 24 65 60 149 43 3 $958 $0.79 $948 $0.79

Northeast Jefferson County 786 388 353 1,527 144 10 $1,333 $1.24 $1,290 $1.20

South Central 288 312 104 704 52 7 $1,057 $1.08 $1,057 $1.08

West Central 357 162 519 103 4 $1,195 $1.51 $1,149 $1.45

Other 479 329 808 100 8 $1,149 $1.34 $1,142 $1.33

Louisville/Jefferson County, KY-IN 1,608 1,598 1,013 4,219 681 7 $1,150 $1.20 $1,125 $1.17*Based on 2016 deliveries *Trend based on a trailing 12 month period

“We were extremely pleased with the East Region team and its ability to attract an incredible amount of interest in our 3 assets. The number of offers received and the end results exceeded our expectations. They have a talented group who was a pleasure to work with. Their performance stands out against any of the groups we work with nationally.”

Nels Billsten, Vice President | CORE Realty Holding Management

COLLIERS INTERNATIONAL MULTIFAMILY ADVISORY GROUP P. 4www.ColliersMultifamilyEast.com

PIPELINE DETAIL# Name Status Owner Address Market Units1 The Nine @ Louisville Lease Up 908 Development Group 1900 S Floyd St Old Louisville 1052 Spring House Apartments

Phase ILease Up Arlington Properties 8400 Tapestry Cir Bancroft 224

3 400 S 2nd St Under Construction Omni Hotels & Resorts 400 S 2nd St Central Business District 2004 Starks Building Under Construction Hudson Holdings 455 S 4th St Central Business District 1005 Academy Park Apartments -

Phase IIUnder Construction Brown Capital, LLLP 718 Academy Dr New Albany 76

6 Echelon at Middletown Under Construction The Garrett Companies 12202-12208 Aiken Rd Outer East End 2107 Axis on Lexington Under Construction Cityscape Residential 303 Axis Dr Irish Hill 3008 Springs at Hurstbourne Under Construction Continental Properties Company,

Inc.9202 Bunsen Park Dr Southeast Jefferson

County284

9 LC Idlewild 2 - Phase II Under Construction Lifestyle Property Management, Ltd

700 Landis Ridge Dr Southeast Jefferson County

232

10 Main & Clay Apartments Under Construction Bristol Development Group 633 E Main St Phoenix Hill 26211 Spring House Apartments

Phase IIUnder Construction Arlington Properties 8211 Old Westport Rd Bancroft 56

12 The Willard at Preston Crossing Under Construction KLC Property Management Solutions

4901 Oldshire Rd South Side 164

13 Austin Park Verde- Phase II Under Construction SCH Realty 201 Pheasant Ave Fairdale 16214 Bradford Mills Lofts Under Construction Marian Development Group, LLC 1100 Reutlinger Ave Germantown 14715 9910 Sawyer Apartments Under Construction Hagan Properties 9910 Shining Willow Dr Outer East End 35616 The Breakwater- Phase II Under Construction Flaherty & Collins Properties 411 E Spring St Downtown New Albany 13117 Vinings of Hurstborne Phase II Under Construction Jefferson Development Group 9500 Williamsburg Plz Hurstbourne 14118 535-539 S 4th St Proposed Jewish Hospital & St Marys

Healthcare Inc535-539 S 4th St Central Business District 237

19 12201 Avoca Rd Proposed Fetter Properties LLC 12201 Avoca Rd Outer East End 40820 1203-1211 E Broadway Proposed Edwards Communities 1203-1211 E Broadway Irish Hill 26021 11840 Ellingsworth Ln Proposed Hagan Properties 11840 Ellingsworth Ln Outer East End 46822 13508 Factory Ln Proposed Jefferson Development Group 13508 Factory Ln Outer East End 180023 Bristol Bluffs Proposed LDG Development 6203 Gellhaus Ln Southeast Jefferson

County216

24 Hurstbourne Heights Proposed Sunshine Property Dev Llc 6409 Hollow Tree Rd Highview 7625 Jefferson Green Proposed Faulkner Real Estate 1253 McCawley Rd Okolona 55226 Edgewater East Apartments Proposed Poe Company 1500 River Rd Butchertown 11027 Prospect Cove Proposed Prospect Development Llc 7301 River Rd Prospect 19828 Unity Place Apartments Proposed Barrister Commercial Group 8016 Shepherdsville Rd Okolona 26829 Simcoe Lane Apartments Proposed Cityscape Residential 4113 Simcoe Ln Outer East End 26130 11312-11404 Taylorsville Rd Proposed Del Investments, Inc. 11312-11404 Taylorsville

RdSoutheast Jefferson Count 347

Total Units 8,351

COLLIERS INTERNATIONAL MULTIFAMILY ADVISORY GROUP P. 5www.ColliersMultifamilyEast.com

PIPELINE MAP

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COLLIERS INTERNATIONAL MULTIFAMILY ADVISORY GROUP P. 6www.ColliersMultifamilyEast.com

WHO WE AREOne of the largest and most

experienced teams of multifamily

specialists in the industry

Units sold since 2011

33,500MORE THAN

Group gross transaction value in since 2011

$2.3B

Dedicated Multifamily Professionals & Advisors

50MORE THAN

Expansive geographic footprint

20COVERING OVER

STATES

WE CAN HELPAs an investor in multifamily properties, you need a firm that provides experience, broad reach and the ability to market an asset no matter how challenging the economic environment. You need a team that specializes in your market you need The East Region Multifamily Advisory Group.

Colliers International has one of the largest and most experienced teams in the industry, strategically located in key markets throughout North America. Our combination of market dominance, expertise, and singular focus, make us uniquely successful in helping our clients achieve their disposition objectives.

How are we able to bring together the skills and tools necessary to complete challenging assignments? Our East Region Multifamily Advisory Group is connected by purpose and focus. Our team is dedicated to sharing information on market opportunities, capital sources and buyers/sellers to achieve the best results for our clients.

John AshleyASSOCIATE | EAST REGION

john.ashley@colliers.comDIR +1 615 850 2715

www.ColliersMultifamilyEast.com

To learn more, scan this with a QR code reader or visit:

Will MathewsPRINCIPAL | EAST REGION

INSTITUTIONAL CLIENT GROUP

will.mathews@colliers.comDIR +1 404 877 9285

Craig BrownASSOCIATE | EAST REGION

craig.brown@colliers.comDIR +1 404 978 2336

AT YOUR SERVICE