rca 2012 q3 multifamily trend report

APARTMENT

Apartment Quarter in Review• With$25.3boftransactionvolume,theapartmentsectorrecordedthehighestquarterlyvolumesinceQ4’07 when the Archstone privatization closed.Archstone was also responsible for this period’shighvolumeasLehmancompleted thebuyoutofits partners in the deal. Adding $9.4b of volumetoQ3results,thetransactionissignificantinthatLehmanwasable tofendoffrivalbidderssuchasEQR and symbolizes the dramatic rebound inapartmentpricesthatenabledthemtodoso.

• Exempting this entity-level transaction, sales ofsignificant apartmentproperties totaled$16.5b inQ3, slightly belowQ2 results and just above yearago levels. For the year through Q3, transactionvolume totals $47.0b, up 21%yoy (up 44% inclu-siveoftheArchstonetransaction).Priceapprecia-tionalsoslowedandashift inactivity tosmaller,higheryieldingmarketscausedcaprateaveragestoincrease.

• Trendsaremoredynamicbetweenthegardenandmid/high-rise sectors. Sales of garden propertiestotaled$10.9inQ3,up18%yoycomparedtoa9%yoydeclinerecordedformid/high-riseproperties.Year-to-date, the trend is reinforced with gardensales up 24% and mid/high-rise volume up only10%,(allexclusiveoftheArchstonedeal).

• Rapidpriceappreciationwhichhadbeensustainedthroughout 2010 and 2011 has slowed dramati-

Moody’s/RCA CPPI

transaction volume

cap rate

year-over-year change

$25.3

$0

$10

$20

$30

$40

'06 '07 '08 '09 '10 '11 '12

billions

EntityPortfolioIndividual

64%

-100%

100%

'06 '07 '08 '09 '10 '11 '12

100

150

200

'06 '07 '08 '09 '10 '11 '12

6.2%

5.5%

6.5%

7.5%

QuARteR in Review• QuarterinReview � � � � 1• MarketTable:Q3’12Summary ��3

• LenderComposition��4• DistressUpdate ��5

• MarketTable:Distress��6• TopTransactions ��7• TopBrokers��8• SelectedTransactions��9• Notes&Methodology��11

All ApartmentQuarterly Volume & Pricing Trends

1©2012 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; based on properties & portfolios $2.5m and greater.

third quarter 2012 P u b l i s h e d o c t o b e r 2 0 1 2

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APARTMENT

transaction volume

cap rate

price per unit in thousands

year-over-year change

Garden Mid/high-rise

$0

$5

$10

$15

$20

'08 '09 '10 '11 '12

billions

-100%

100%

300%

'08 '09 '10 '11 '12

$50

$100

$150

$200

$250

$300

'08 '09 '10 '11 '12

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

'08 '09 '10 '11 '12

Major Metro Avg. CapAvg. Cap Rate

'08 '09 '10 '11 '12

'08 '09 '10 '11 '12

'08 '09 '10 '11 '12

'08 '09 '10 '11 '12

Quarterly Volume & Pricing Trends

Summary Table

$ bil yoy # props yoy $/unit % chng cap bps

Apartment Total $55.8 44% 3,525 37% $104,418 4% 6.2% -25

Garden $35.0 44% 2,466 33% $82,121 12% 6.3% -29Mid/High-rise $20.8 43% 1,059 48% $190,311 -13% 5.8% -5

Major Metros $25.1 38% 1,493 39% $195,323 2% 5.6% -20Secondary Mkts $24.5 49% 1,455 33% $80,623 16% 6.4% -21Tertiary Mkts $5.9 45% 484 22% $68,398 13% 7.1% -46

Student Housing $1.8 26% 92 6% $113,531 -3% 7.0% -40Senior Housing* $5.2 -79% 423 -73% $107,140 -3% 8.7% -86

* not included in apartment volume or pricing statistics

volume YTD Through Q3'12 vs YOY average pricing YTD Through Q3'12 vs YOY

callyin2012.ManyREITandinstitutionalbuyersareoptingtodevelopratherthanbuyatpremiumprices.Otherinvestorsarebeingdrawntotherela-tivelyhighercap ratesavailable in secondaryandtertiarymarkets.Apartmentsalesinthesixmajormetrosfell23%yoyinQ3whilesecondarymarketactivityrose21%andtertiarysalessurged54%.Thetrendisapparentacrossboththegardenandmid/high-risesectors.

• With investors opting to build rather than buyprime properties combined with the significantshift in sales to higher-yieldingmarkets, cap rateaveragestookaturnupwardinQ3,risingroughly20bpsto6.3%.Whilethereareplentyofdealstrans-actedat4.0%orloweryields,farmoretransactionsare happening in secondary and tertiarymarketswherecaprateshaveaverage70to140bpshigherthaninmajormetros.Thus,theuptickinaveragecapratesdoesnotindicateare-pricingthroughouttheapartmentsector.Infact,duetorecentdeclinesinmortgageinterestratesandamorecompetitiveenvironmentamonglenders(seepage4),capratesremainunderdownwardpressure.

• Studenthousingpropertiesremaininhighdemandbyinvestorsandvolumeforthatnichetopped$1.8bthroughQ3,up23%yoy.Seniorhousingtransac-tions,not includedintheapartmentsectortotals,areoffsignificantlythisyearchieflyduetofewlargeentityorportfoliodeals.Salesofindividualseniorhousingpropertieswereactuallyuparobust43%inQ3andareup23%year-to-date.


third quarter 2012

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APARTMENT

Market table: Q3’12 Apartment SummaryVolume Pricing

Transactions ReportedClosed Through Q3’12 Vol ($M) YOY

Change # Props YOY Change Low PPU

Avg High Low Cap RateAvg High

Mid-Atlantic

Baltimore $726.7 74% 26 100% $40,313 $127,535 $253,725 5.4% 6.9% 9.0%DC 1,203.9 239% 35 169% 51,790 284,059 453,774 DC MD burbs 1,214.6 19% 24 -17% 62,366 142,899 418,650 4.6% 6.3% 7.2%DC VA burbs 2,478.6 22% 38 12% 98,780 199,936 395,928 5.7% 6.4% 7.0%Philadelphia 304.1 -26% 22 -27% 15,741 89,397 925,625 4.2% 5.9% 7.0%Pittsburgh 13.3 -72% 2 -60% 48,408 53,414 61,957 6.7% 7.0% 7.3%Richmond/Norfolk 313.8 -32% 18 -25% 31,776 104,560 154,167 5.2% 6.1% 7.0%Tertiary Mid-Atlantic 437.6 38% 25 -7% 38,580 82,410 140,899 6.0% 7.5% 9.0%Total $6,692.6 32% 190 9% $15,741 $137,121 $925,625 4.0% 6.5% 9.0%

MidwestChicago 1,005.8 -21% 59 -2% 25,417 148,858 497,738 5.8% 7.5% 8.5%Cincinnati 146.2 -3% 11 -35% 33,333 56,619 162,295 Cleveland 106.6 65% 12 71% 21,739 41,895 122,321 7.8% 8.6% 10.1%Columbus 136.0 9% 16 78% 8,125 35,126 152,174 Detroit 300.2 126% 23 53% 9,390 57,300 122,137 Indianapolis 110.6 -25% 10 -38% 32,474 51,842 70,330 6.7% 8.1% 9.5%Kansas City 237.5 44% 13 -19% 11,333 61,204 114,583 5.8% 7.1% 9.0%Minneapolis 273.2 37% 23 77% 22,404 93,843 358,333 St Louis 120.7 45% 13 160% 24,630 54,014 86,705 4.2% 6.5% 9.0%Tertiary Midwest 945.3 162% 82 39% 15,152 60,704 153,125 4.7% 7.3% 8.7%Total $3,382.1 25% 262 21% $8,125 $73,236 $497,738 4.2% 7.5% 10.1%

NortheastBoston 1,516.6 57% 76 130% 57,157 201,740 800,000 4.5% 5.5% 6.0%Hartford 52.6 190% 19 280% 23,435 44,570 122,500 Long Island 228.6 277% 7 0% 83,784 230,190 261,111 Manhattan 5,765.8 49% 299 99% 35,762 329,803 2,666,667 3.0% 5.1% 6.9%No NJ 582.8 -47% 59 -3% 33,333 111,764 325,153 5.0% 6.0% 8.0%NYC Boroughs 1,394.6 22% 215 39% 49,123 134,893 903,226 4.5% 7.0% 9.9%Stamford 303.3 237% 10 100% 47,656 164,525 1,058,824 4.0% 5.9% 7.8%Westchester 90.4 16% 9 0% 64,286 113,053 150,000 7.2% 7.2% 7.3%Tertiary Northeast 156.7 2% 28 75% 11,416 55,022 180,198 6.2% 7.4% 9.5%Total $10,091.5 35% 722 64% $11,416 $205,268 $2,666,667 3.0% 6.1% 9.9%

SoutheastAtlanta 2,361.3 51% 132 25% 5,627 66,171 276,483 4.8% 7.6% 9.9%Broward 667.7 88% 30 88% 22,159 97,338 454,688 4.5% 6.4% 7.5%Charlotte 486.9 8% 23 15% 14,527 89,838 208,333 5.0% 6.0% 7.8%Jacksonville 372.8 32% 26 30% 17,630 55,804 150,195 Memphis 271.6 30% 20 0% 6,641 49,083 102,586 6.3% 7.8% 9.2%Miami 310.9 86% 40 60% 25,000 92,936 436,042 4.1% 5.8% 7.3%Nashville 503.9 82% 30 150% 12,017 67,874 170,455 7.0% 7.5% 7.9%Orlando 701.3 54% 35 21% 15,076 71,726 245,833 5.8% 6.5% 7.5%Palm Beach 445.5 140% 19 46% 18,750 89,067 180,282 Raleigh/Durham 941.3 58% 41 37% 28,175 97,515 346,721 4.6% 6.0% 7.8%Tampa 790.8 0% 50 4% 14,946 69,411 156,896 3.7% 6.7% 9.5%Tertiary Southeast 2,451.8 12% 187 1% 9,368 59,989 210,301 5.0% 7.1% 10.8%Total $10,305.8 37% 633 21% $5,627 $69,754 $454,688 3.7% 6.7% 10.8%

SouthwestAustin 1,575.4 287% 64 121% 27,721 108,485 278,075 4.7% 6.1% 7.1%Dallas 2,119.1 16% 148 22% 11,407 54,991 269,266 6.0% 7.3% 9.1%Denver 1,569.2 88% 71 27% 30,303 100,951 251,563 5.3% 6.3% 7.6%Houston 1,642.7 17% 111 17% 11,656 76,361 159,033 5.4% 6.0% 6.6%Phoenix 2,076.9 57% 109 14% 16,185 74,197 366,667 3.6% 6.3% 8.6%San Antonio 481.4 16% 37 95% 44,401 75,889 115,702 4.4% 5.7% 7.0%Tertiary Southwest 1,268.6 101% 104 68% 16,129 74,398 143,049 4.7% 7.4% 10.3%Total $10,733.4 57% 644 35% $11,407 $79,470 $366,667 3.6% 6.7% 10.3%

WestEast Bay 786.7 -8% 50 22% 40,476 154,224 277,083 4.8% 5.8% 7.2%Inland Empire 572.8 2% 32 -6% 28,527 105,540 243,243 5.0% 5.8% 6.6%Las Vegas 328.7 -1% 29 32% 12,153 42,207 96,739 6.5% 7.7% 9.3%Los Angeles 4,286.0 60% 350 48% 31,600 169,469 802,857 3.0% 5.4% 9.5%Orange Co 1,024.0 170% 43 72% 105,269 242,745 487,106 4.5% 5.5% 6.6%Portland 489.3 10% 32 39% 38,362 117,123 240,718 4.5% 6.5% 8.9%Sacramento 424.0 100% 28 100% 24,600 89,792 310,714 5.3% 6.1% 8.5%Salt Lake City 52.6 5% 7 17% San Diego 1,147.4 171% 71 78% 65,789 139,795 466,667 4.1% 5.8% 7.7%San Francisco 1,236.7 10% 122 -22% 86,111 217,957 664,000 3.3% 5.2% 7.1%San Jose 1,109.7 227% 47 213% 113,571 251,029 553,991 3.7% 5.1% 9.0%Seattle 1,725.2 63% 93 58% 32,461 151,307 417,550 4.0% 5.2% 6.5%Tertiary West 1,046.6 92% 77 35% 23,810 133,952 540,323 3.3% 6.0% 9.3%Total $14,229.5 58% 981 34% $12,153 $146,413 $802,857 3.0% 5.6% 9.5%US Other 350.3 50% 93 675%Total US $55,785.1 44% 3,525 37% $5,627 $104,418 $2,666,667 3.0% 6.2% 10.8%


third quarter 2012

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APARTMENTAPARTMENT

Apartment Lender Composition• With interest rates on long term, fixed rate deals nowaveraging below 4.0% and better rates to be had forshortertermandfloaters,positiveleverageisachievableforallbutthelowestcapratedeals.Th eagenciescontinuetodominateoriginations,buttheirmarketshareisslowlydecliningasotherlendersrampupactivity.

• Th egovernmentagenciesaccountedfor64%ofallmul-tifamilymortgageoriginations in thefirsthalfof2012,downfrom68%in2011.Th eagenciesremainveryaggres-sive and are increasingly packaging their multifamilyloansintosecuritizations.Todatethisyear,FreddieandFanniehavesecuritized$23bofmulti-familyloans,wellaheadofthe$17bofissuanceforallof2011.Freddiehasbeenmost activeand recently completed its14th issuethisyear.

• Th ere are few areas where the agencies do not have amajoritymarket share such as formid/high-rise prop-erties,where insurancecompaniesandbanksaremore

active. Agen-cies are also lessdominant in theNortheast, whereregionalandlocalbankshavea27%share of multi-familylending.

• Private labelCMBS has notbeenveryimpact-

fulonthemultifamilylendinglandscape,sofaraccount-ing for just 3% of originations this year and last. Th eCMBS conduits have a greater penetration in lendingforstudenthousingpropertiesandalso in theMidwestregion.

• Manybankshavereturnedtocommercialpropertylend-ing again and their share of multifamily originationsincreasedto19%inthefirsthalfof2012comparedto16%in2011.Muchofthatactivityhasbeeninthemajormet-rosaswellasaconcentrationintheNortheastandWest.Banksarealsoactiveinconstructionfinancingwhichisnotincludedinthisanalysis.

• In tertiary markets, the agencies remain the primarylender and account for 80% of all apartment propertyloans.

All Apartment Past 5 Years

By Apartment Subtypes

By Major, Secondary and Tertiary Markets

By Region

13%

8%

8%

8%

5%

9%

64%

68%

76%

87%

61%

76%

48%

70%

59%

71%

80%

47%

81%

76%

70%

75%

67%

8%

8%

4%

7%

13%

5%

8%

11%

7%

6%

9%

6%

9%

12%

8%

10%

6%

8%

9%

7%

5%

11%

10%

10%

9%

6%

13%

5%

17%

16%

27%

6%

H1'12

2011

2010

2009

2008

Garden

Mid/high-rise

Student Hsg

Major Metro

Secondary

Tertiary

Northeast

Mid-Atlantic

Southeast

Midwest

Southwest

West

CMBS FinancialGov't Agency InsuranceInt'l Bank Nat'l BankReg'l/Local Bank Pvt/Other

Apartment Lender Composition H1’12

Commercial Mortgage Rates

Tixed rate loans with 7-10 year terms

3-month average

3.5%4.0%4.5%5.0%5.5%6.0%6.5%7.0%

2009 2010 2011 2012

CommercialMultifamily

Fixed rate loans with 7-10 year terms


third quarter 2012

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APARTMENTAPARTMENT

Distress update• Defaultsandtransferstospecialservicingofloansfor apartment properties totaled $660m inQ3’12,thelowestsince2007.Mostofthenewlydistressedsituations are resulting from maturity defaultsof CMBS loans.Workout activity fell to $2.4b inQ3’12,resultinginasignificantdeclineinoutstand-ing distress. Year-to-date outflows have exceededinflowsby$5.2b.

• AttheendofQ3’12,atotalof$30.9bofmortgageson apartment property remained distressed with$20.9bintheworkoutprocessand$10.0bconvertedtoREO.Th roughoutthecycle,atotalof$81.8bofapartment property has become distressed, andtodate,63%ofthattotalhasbeenresolved.Banksandotherlendersaremuchfartheralongatwork-ingoutdistressedsituationswhilejust51%ofdis-tressedCMBSloanshavebeenresolved.

•Th erecoveryrateonliquidationsofdefaultedapart-mentloanswas70%asofQ3,yetgreaterrecoverieshave been available for mid/high-rise properties(85%), especially in the gateway cities (see “Q3’12RecoveryRates”,publishedOctober10).

• Year-to-date, outstanding distress is down inalmost every US market. Several large marketshaveworkedoutmorethan80%of identifieddis-tress including Washington DC, DC/VA burbs,San Francisco, San Jose, Broward, andNashville.Marketsresolvingthemostdistressin2012includethosethathadbeenamongthemostilliquidsuchasAtlanta,Phoenix,LasVegas,Baltimoreandter-tiarymarketsintheSoutheast.

0%5%10%15%20%25%30%35%

$0

$1

$2

$3

$4

1'08

2 3 4 1'09

2 3 4 1'10

2 3 4 1'11

2 3 4 1'12

2 3

billions% of Sales Associated with Distress

Distress

% of Total Sales

-$10

-$5

$0

$5

$10

$15

1'08

2 3 4 1'09

2 3 4 1'10

2 3 4 1'11

2 3 4 1'12

2 3

billions

Quarterly Additions and Reductions to Distress

Newly TroubledWorked outNet Change

$0$10$20$30$40$50$60$70$80$90

1'08

2 3 4 1'09

2 3 4 1'10

2 3 4 1'11

2 3 4 1'12

2 3

billions

Cumulative Distress for Apartment Properties

TroubledREORestructuredResolved

Outstanding % Chg Worked RR*Distress ($M) vs Q1'11 Out (%) (%)

CMBS $14,820 -14% 51% 74%Int'l Bank $1,250 2% 75% 72%Domestic Bank $8,201 -19% 66% 68%Insurance $382 -33% 81% 83%Gov't Agency $1,120 -31% 67% 64%Other $5,116 -14% 72% 70%All Apartments $30,888 -16% 63% 70%* recovery rate before costs and fees

Summary by Lender Type

Cumulative Distress for Apartment Properties

Quarterly Additions and Reductions to Distress

% of Sales Associated with Distress


third quarter 2012

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APARTMENT

Market table: Distress and workoutsCurrent Known Distress Through October 24, 2012

Current Outstanding Distress Recent TrendsYTD Through Q3’12

Cumulative Total

in Default/ Special Serv Held as REO

Total Outstanding

Worked Out Total

% Worked Out

Recovery Rate Inflows Workouts

Mid-Atlantic

Baltimore 1,045.1 169.3 15.8 185.1 859.9 82% 87% 386.1 416.0 DC 718.2 51.4 4.0 55.4 662.8 92% 83% - 8.8 DC MD burbs 1,615.4 339.8 - 339.8 1,275.5 79% 77% 20.3 250.7 DC VA burbs 1,353.8 - 32.8 32.8 1,321.0 98% 88% 56.0 226.0 Philadelphia 981.8 498.3 34.0 532.3 449.5 46% 74% - 21.6 Pittsburgh 156.4 20.2 1.9 22.1 134.4 86% 96% - 7.8 So NJ 250.2 84.2 - 84.2 166.0 66% 97% - 82.9 All Others 689.1 204.3 72.7 277.1 412.0 60% 84% 104.6 162.0 Mid-Atlantic $6,809.9 $1,367.5 $161.2 $1,528.8 $5,281.2 78% 83% $567.0 $1,175.9

MidwestChicago 2,447.7 734.9 217.3 952.3 1,495.5 61% 68% 56.0 148.5 Cincinnati 248.3 62.8 14.4 77.3 171.1 69% 74% - 52.5 Cleveland 312.7 56.1 2.6 58.6 254.1 81% 56% 4.1 66.3 Columbus 577.6 222.6 101.8 324.4 253.2 44% 65% 49.4 55.5 Detroit 792.3 97.1 214.2 311.3 481.0 61% 43% 5.3 82.1 Indianapolis 470.7 143.7 83.6 227.3 243.5 52% 65% 14.9 33.3 Kansas City 263.8 78.4 17.3 95.7 168.1 64% 78% 48.3 43.7 Milwaukee 228.7 8.5 121.1 129.6 99.1 43% 68% 5.8 3.5 Minneapolis 91.8 24.2 5.7 29.8 62.0 68% 70% 7.1 2.3 St Louis 255.1 112.4 64.7 177.1 78.0 31% 72% 28.1 18.6 All Others 1,089.6 394.2 100.7 494.9 594.7 55% 63% 53.1 107.6 Midwest $6,778.6 $1,934.8 $943.5 $2,878.3 $3,900.3 58% 64% $272.1 $613.7

NortheastBoston 604.4 70.4 155.9 226.3 378.0 63% 77% 11.0 31.7 Hartford 174.6 39.8 18.1 57.8 116.8 67% 6.0 17.4 Long Island 59.1 - - - 59.1 100% 22.5 22.5 Manhattan 10,005.0 5,198.0 284.3 5,482.4 4,522.7 45% 89% 116.6 1,412.6 No NJ 865.9 160.5 343.6 504.1 361.8 42% 90% 3.9 24.4 NYC Boroughs 1,092.5 387.0 82.5 469.5 623.0 57% 93% 14.4 118.3 Stamford 254.2 24.1 9.3 33.3 220.9 87% 0.4 50.0 Westchester 71.4 5.9 - 5.9 65.5 92% 64% - - All Others 303.7 100.3 38.2 138.5 165.2 54% 76% 7.4 12.2 Northeast $13,430.9 $5,986.1 $931.9 $6,917.9 $6,513.0 48% 89% $182.2 $1,689.2

SoutheastAtlanta 4,505.2 589.8 929.7 1,519.6 2,985.6 66% 65% 248.4 615.6 Broward 1,568.9 197.7 73.4 271.1 1,297.8 83% 57% 2.0 199.2 Charlotte 1,206.0 506.0 88.8 594.8 611.2 51% 78% 462.4 322.4 Jacksonville 1,047.7 303.6 138.9 442.5 605.2 58% 55% 47.6 106.2 Miami 3,329.5 550.5 946.3 1,496.8 1,832.7 55% 62% 85.3 218.5 Nashville 547.7 54.3 13.1 67.4 480.3 88% 59% - 173.5 Orlando 2,415.0 294.3 366.5 660.8 1,754.1 73% 62% 41.2 122.8 Palm Beach 1,660.4 451.6 177.2 628.7 1,031.7 62% 64% 198.2 79.5 SW Florida 1,414.1 256.3 61.9 318.2 1,095.9 77% 52% 33.6 100.9 Tampa 2,116.9 380.1 217.8 597.8 1,519.1 72% 60% 58.4 155.8 All Others 5,839.6 1,465.4 811.0 2,276.4 3,563.2 61% 73% 551.5 608.0 Southeast $25,651.1 $5,049.6 $3,824.6 $8,874.1 $16,776.9 65% 65% $1,728.8 $2,702.6

SouthwestAustin 967.1 286.7 12.0 298.7 668.3 69% 68% 70.6 95.7 Dallas 2,816.4 688.2 326.0 1,014.3 1,802.1 64% 74% 369.7 362.7 Denver 722.5 235.8 12.8 248.6 473.9 66% 80% - 58.8 Houston 3,061.2 813.1 625.0 1,438.1 1,623.1 53% 71% 201.1 354.4 Phoenix 4,820.8 1,081.7 586.2 1,668.0 3,152.8 65% 65% 178.5 477.0 San Antonio 578.6 176.8 15.0 191.8 386.9 67% 94% 38.8 89.5 All Others 1,701.3 508.8 109.9 618.7 1,082.7 64% 69% 173.0 263.1 Southwest $14,667.9 $3,791.2 $1,686.9 $5,478.0 $9,189.9 63% 68% $1,031.6 $1,701.2

WestCentral CA 338.2 106.8 36.4 143.2 195.0 58% 65% 6.3 34.6 East Bay 548.4 52.4 161.0 213.3 335.1 61% 79% - 7.8 Hawaii 57.5 - 29.5 29.5 28.0 49% 100% - - Inland Empire 835.0 292.3 115.7 408.0 427.0 51% 78% 7.4 26.5 Las Vegas 3,870.8 1,043.2 1,082.5 2,125.7 1,745.1 45% 59% 133.3 514.6 Los Angeles 2,927.2 431.1 275.1 706.3 2,221.0 76% 85% 82.1 331.1 Orange Co 533.1 108.0 - 108.0 425.2 80% 83% 22.9 0.8 Portland 296.8 95.6 13.6 109.2 187.6 63% 93% 1.6 43.7 Reno 440.5 46.1 198.9 245.1 195.4 44% 64% 31.2 112.0 Sacramento 726.0 173.5 28.2 201.7 524.3 72% 73% 47.9 119.8 San Diego 571.3 46.9 14.5 61.4 509.9 89% 86% 1.7 11.3 San Francisco 2,154.6 98.6 67.3 165.9 1,988.7 92% 87% 4.0 230.2 San Jose 453.0 2.2 2.0 4.2 448.7 99% 78% - 3.1 Seattle 1,273.1 150.9 515.7 666.6 606.4 48% 82% 8.3 59.1 All Others 497.8 243.6 26.6 270.2 227.6 46% 76% 27.7 60.9 West $15,523.4 $2,891.2 $2,567.2 $5,458.4 $10,065.0 65% 77% $374.2 $1,555.4


third quarter 2012

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APARTMENT

top Apartment transactions of Q3’12

Top 25 Property Sales by Investment VolumeTransaction Location Inv Vol ($M)* Units PPU Buyer

1 Waterfront at Pu'uloa Ewa Beach, HI $311.0 1,461 212,868 Carmel Partners

2 Apthorp (Bulk Condo) New York, NY 215.1† 110 2,606,773 AREA Property Partners

3 The Beatrice New York, NY 280.0 301 930,233 Equity Residential

4 Savoy Park New York, NY 216.0 1,802 119,867 L&M Development Partners JV Citigroup

5 Howard Crossing Ellicott City, MD 186.0 1,350 137,778 Home Properties

6 Oak Grove Village Melrose, MA 175.0 550 318,182 GID

7 Mass Court Washington, DC 168.4 371 453,774 TIAA-CREF

8 Georgian Towers Silver Spring, MD 168.0 890 188,764 Pantzer Properties

9 The Block Austin, TX 165.0 669 246,637 American Campus Communities

10 Sussex at Kingstowne Alexandria, VA 125.5 556 225,719 Praedium Group JV Milestone Group

11 Club Laguna Laguna Beach, CA 120.8 421 286,936 Invesco RE

12 The Brewster New York, NY 98.0 144 680,556 Cornerstone RE Advisers JV Adelco

13 The Electra New York, NY 95.0 163 582,822 Carmel Partners

14 Archstone Legacy Place Dedham, MA 94.3 285 330,702 Archstone

15 Legacy Apartment Homes San Diego, CA 91.0 412 220,874 R&V Management Corp

16 Canyon Creek Bothell, WA 90.7 558 162,616 Greystar RE Partners

17 Landmark at Ontario Towne Center Ontario, CA 90.5 469 192,964 Camden Property Trust

18 Hamptons at Town Center Germantown, MD 90.3 768 117,513 AHC

19 Highpoint Apartments Quincy, MA 88.0 394 223,350 Berkshire Property Advisors

20 Avalon Arlington Heights Arlington Heights, IL 87.3 409 213,325 John Hancock

21 Waterford Hayward, CA 86.5 544 159,007 Kennedy Wilson JV

22 Mantena New York, NY 84.0 98 857,143 Equity Residential

23 Circa Green Lake Seattle, WA 83.1 199 417,550 TIAA-CREF

24 88 Lexington Avenue New York, NY 82.0 180 455,556 Westbrook Partners

25 Preserve at Travis Creek Austin, TX 79.5 608 130,757 Heitman

* When prices are not known, estimated prices are used in the ranking but are not shown. In the case of partial interest deals, the pro-rated share of the property was used for the transaction price and the PPU/PPSF was based on the full 100% price. † Partial Interest

Top 10 Portfolio SalesTransaction Location Inv Vol ($M)* Units PPU Buyer

1 Archstone Multiple $8,765.6† 67,962 242,783 Lehman Brothers Holdings Inc

2 Campus Acquisitions Merger Multiple 627.0 2,210 283,710 American Campus Communities

3 Kushner MD APT Portfolio '12 Multiple, MD 125.0† 5,517 90,629 Kushner Companies

4 UDR/DRA Advisors Apt Portfolio 2012 Multiple 431.0 4,454 106,870 DRA Advisors JV Milestone Group

5 Landmark Apt Portfolio 12 Multiple n/a 5,353 n/a Apartment Trust of America

6 35 Building Pinnacle Note Sale New York, NY 139.2 1,029 140,914 Heritage Realty JV Dune Capital Mgmt

7 Lynd JV Florida Value Partners CVI Portfolio Multiple 141.0 2,990 47,157 Lynd JV Florida Value Partners

8 State Street Development Apt Portfolio 2012 Multiple, MA 115.9 849 136,523 Preservation of Affordable Housing

9 Aires Portfolio New York, NY 51.0† 328 310,976 Vornado Realty Trust

10 Laurel Square I & II Laurel, MD 102.0 982 103,870 Hampshire Properties


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APARTMENT

top Apartment Brokers through Q3’12

top 25 By investment volume

Garden Mid/high-rise All Apartment

Garden Mid/high-rise All Apartment

By RegionMid-Atlantic

CBREApartment Realty Advisors

First Capital RealtyMoran & Co

Marcus & Millichap

MidwestCBRE

Marcus & MillichapHFF

Moran & CoHendricks & Ptnrs

NortheastEastdil Secured

CBREMassey Knakal

HFFRosewood Realty Group

SoutheastCBRE

Apartment Realty AdvisorsCushman & Wakefield

Jones Lang LaSalle

Engler Financial Group

SouthwestCBRE

Apartment Realty AdvisorsHFF

Marcus & MillichapMoran & Co

WestMarcus & Millichap

CBRECushman & Wakefield

Moran & CoHendricks & Ptnrs

top 15 By number of Properties

*

*ranked by investment volume

Methodology Full credit assigned to sellers’ representative. When two brokers represent same seller, both sellers’ representatives assigned full credit. For partial-interest, rankings are based on the pro-rated share of the total property or portfolio value. For more information on rankings please visit www.rcanalytics.com/Misc/Brokers_Ranking_Methodology.pdf

CBRE 7,176,568,723 CBRE 2,055,429,604 CBRE 9,231,998,327

Apartment Realty Advisors 3,083,401,450 HFF 1,220,595,193 Apartment Realty Advisors 3,763,506,862

Marcus & Millichap 2,941,390,658 Eastdil Secured 987,086,801 Marcus & Millichap 3,710,873,661

Cushman & Wakefield 1,690,450,425 Marcus & Millichap 769,483,003 HFF 2,649,720,198

HFF 1,429,125,005 Apartment Realty Advisors 680,105,412 Cushman & Wakefield 2,254,441,767

Hendricks & Ptnrs 1,194,421,846 Cushman & Wakefield 563,991,342 Moran & Co 1,524,728,841

Moran & Co 1,077,826,506 Jones Lang LaSalle 497,975,000 Eastdil Secured 1,522,644,801

Jones Lang LaSalle 672,705,771 Massey Knakal 495,161,244 Hendricks & Ptnrs 1,286,897,343

Eastdil Secured 535,558,000 Moran & Co 446,902,335 Jones Lang LaSalle 1,170,680,771

Colliers International 387,710,497 Rosewood Realty Group 444,573,500 Colliers International 584,576,497 Transwestern 348,887,285 Prince Realty Advisors 280,000,000 Massey Knakal 519,661,244

Engler Financial Group 289,425,000 Besen & Associates 222,320,000 Engler Financial Group 454,275,000 First Capital Realty 279,550,500 Colliers International 196,866,000 Rosewood Realty Group 449,573,500

Grubb & Ellis 183,749,968 Eastern Consolidated 177,706,876 Transwestern 348,887,285 Newmark Grubb Knight Frank 177,241,875 Engler Financial Group 164,850,000 First Capital Realty 341,420,500

Lee & Associates 121,600,000 Ariel Property Advisors 95,082,545 Prince Realty Advisors 280,000,000 Friedman Integrated #REF! Portman Realty 95,000,000 Grubb & Ellis 227,150,968

NAI Global 113,448,979 Hendricks & Ptnrs 92,475,497 Besen & Associates 222,320,000 Southeast Apartment Partners 101,181,000 Multi Investment Group 79,150,000 Newmark Grubb Knight Frank 194,291,875

Cassidy Turley 90,383,883 Arroyo & Coates 75,801,750 Eastern Consolidated 177,706,876 Kidder Mathews 87,145,743 GFI Capital Resources 70,244,774 NAI Global 137,283,979

Houston Income Properties 85,170,396 Alain Pinel 67,838,304 Rockwood RE Advisors 130,161,688 Kislak 83,520,420 First Capital Realty 61,870,000 Kidder Mathews 122,900,743

Sperry Van Ness 80,708,000 Studley 56,000,000 Lee & Associates 121,600,000 Rockwood RE Advisors 76,850,000 Rockwood RE Advisors 53,311,688 Friedman Integrated #REF!

$0.0 $4.0 $8.0Billions

$0.0 $1.0 $2.0Billions

$0.0 $5.0 $10.0Billions

CBRE 350 Marcus & Millichap 71 CBRE 397 Marcus & Millichap 260 Massey Knakal 65 Marcus & Millichap 331

Apartment Realty Advisors 129 HFF 59 Apartment Realty Advisors 151 Hendricks & Ptnrs 108 CBRE 47 Hendricks & Ptnrs 113

Cushman & Wakefield 81 Rosewood Realty Group 47 HFF 109 HFF 50 Besen & Associates 28 Cushman & Wakefield 101

Colliers International 33 Apartment Realty Advisors 22 Massey Knakal 66 Moran & Co 33 Cushman & Wakefield 20 Rosewood Realty Group 48

Transwestern 30 Eastdil Secured 19 Jones Lang LaSalle 42 Jones Lang LaSalle 29 Eastern Consolidated 19 Colliers International 40

NAI Global 26 Jones Lang LaSalle 13 Moran & Co 40 Grubb & Ellis 24 HPNY 11 NAI Global 30

Newmark Grubb Knight Frank 18 Alain Pinel 10 Transwestern 30 Keller Williams 14 GFI Capital Resources 9 Eastdil Secured 29

Brown Realty Advisors 10 Ariel Property Advisors 8 Besen & Associates 28

0 200 400 0 50 100 0 250 500


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APARTMENT

Property Name Units Price OwnerAddress Year Built PPU SellerLocation Notes Qualifi er Broker

Mid-Atlantic

Mass Court 371 $168,383,333 300 Massachusetts Ave Nw 2004 $453,863 Washington, DC Mid/high-rise approximate

Hamptons at Town Center 768 $90,250,000 19775 Crystal Rock 1982 $117,513 Germantown, MD Garden confi rmed

Chase Heritage 236 $42,500,000 1212 Chase Heritage Cir 1986 $180,085 Sterling, VA Garden approximate

Curren Terrace 318 $29,800,000 1011 New Hope St 1970 $93,711 Norristown, PA Mid/high-rise approximate

Midwest

1401 South State 278 $70,500,000 1401 S State St 2008 $253,597 Chicago, IL Mid/high-rise confi rmed

The Crossing at Barry Road 624 $54,775,000 7831 Nw Roanridge Rd 1997 $87,780 Kansas City, MO Garden confi rmed

Stadium Village Flats 120 $43,000,000 818 Washington Ave Se 2012 $358,333 Minneapolis, MN Mid/high-rise approximate

Northeast

Mantena 98 $84,000,000 433-439 W 37th St 2011 $857,143 New York, NY Mid/high-rise confi rmed

425 Third Avenue 102 $44,000,000 425 3rd Ave 1967 $431,373 New York, NY Mid/high-rise approximate

Wellington Place 137 $40,058,750 34 Brainard Ave 2005 $292,400 Medford, MA Mid/high-rise confi rmed

Wintergreen of Westville 294 $39,500,000 400 Blake St 2008 $134,354 New Haven, CT Mid/high-rise confi rmed

The 163 Washington Condominiums 49 $31,500,000 163-171 Washington Ave 2010 $642,857 Brooklyn, NY Mid/high-rise confi rmed

Southeast

Windsor at Tryon Village 393 $54,000,000 2000 Crossroads Manor Ct 2007 $137,405 Cary, NC Garden confi rmed

The Province 235 $49,420,750 504 Boxelder Way 2010 $210,301 Greenville, NC Garden confi rmed

TIAA-CREF from CBRE Global Investors by CBRE

AHC from Harbor Group Int'l by CBRE

Continental Realty by Cushman & Wakefi eld from Henderson Global Investors by Cushman & Wakefi eld

BET Investments from Home Properties by CBRE

Marquette Cos JV American Realty Advisors JV Hunt from Lincoln Property Co JV Equity Residential by HFF

GoldOller RE Invts from Creekstone Partners JV Wafra Investment Advisory Group by CBRE

Harrison Street Real Estate Capital from Opus

Equity Residential from Joy Construction Corp by HFF

Benchmark RE Group JV Western Heritable Investment from Midas Management

McMorgan & Co by CBRE from Northwestern Mutual by CBRE

Eagle Rock Advisors by Institutional Property Advisors - Marcus & Millichap Company from US Bank NA by Institutional Property Advisors - Marcus & Millichap Company

ARC NYRR from A&E Real Estate Holdings

Guardian Life Insurance Co from JP Morgan Asset Management by Engler Financial Group

EdR from Edwards Companies

Reported in the Past 45 DaysSelected investment Sales transactions


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APARTMENT

Property Name Units Price OwnerAddress Year Built PPU SellerLocation Notes Qualifi er Broker

Lost Creek Resort at Lakewood Ranch 272 $39,250,700 11140 Lost Creek Ter 2011 $144,304 Bradenton, FL Garden confi rmed

Colonial Grand@Research Park 370 $38,000,000 400 Stone Lion Dr 2002 $102,703 Durham, NC Garden approximate

Links at Windsor Park 280 $33,600,000 13700 Sutton Park Dr N 1994 $120,000 Jacksonville, FL Garden approximate

Stoneridge Farms at the Hunt Club 364 $28,969,600 2325 Nashville Pike 2002 $79,587 Gallatin, TN Garden approximate

Southwest

District on 5th 208 $67,000,000 550 N 5th Ave 2012 $322,115 Tucson, AZ Mid/high-rise approximate

Prairie Creek 464 $52,500,000 3560 Alma Rd 1996 $113,147 Richardson, TX Garden confi rmed

Calvera Point 276 $37,750,000 9100 Vance St 1994 $136,775 Broomfi eld, CO Garden approximate

Alexan Star Ranch 396 $36,630,000 150 Klattenhoff Ln 2009 $92,500 Hutto, TX Garden confi rmed

Brookstone 528 $35,570,000 4424 E Baseline Rd 1988 $67,367 Phoenix, AZ Garden approximate

West

Waterfront at Pu'uloa 1,461 $311,000,000 5105 Iroquois Ave 1965 $212,868 Ewa Beach, HI Garden confi rmed

Club Laguna 421 $120,800,000 350 The Club Dr 1988 $286,936 Laguna Beach, CA Garden approximate

Circa Green Lake 199 $83,013,776 6900 E Green Lake Way N 2009 $417,155 Seattle, WA Mid/high-rise confi rmed

Waterford Place 360 $58,410,000 13305 NE 171st St 1989 $162,250 Woodinville, WA Garden confi rmed

Archstone Venice on Rose 70 $56,200,000 512 Rose Avenue 2011 $802,857 Venice, CA Garden confi rmed

Granite Point 384 $45,500,000 4500 Truxel Rd 2003 $118,490 Sacramento, CA Garden confi rmed

Inland Real Estate Corp from PAC Land Development Corp by HFF

Colonial Properties Trust from Tuckerman Group

Catalyst Dev Ptnrs from TA Realty by CBRE

CRES Management from Flournoy Companies by Apartment Realty Advisors

EdR from Campus Apartments

Pure Multi-Family REIT from M&A Real Estate

Waterton Associates from BRE Properties by Cushman & Wakefi eld

Lincoln Property Co from Trammell Crow Residential (TCR) by CBRE

Bascom Group from Variable Annuity Life Insurance Co. by Cushman & Wakefi eld

Carmel Partners from Cirrus Asset Managment Inc OBO Hunt by Eastdil Secured

Invesco RE from Shea Homes by HFF

TIAA-CREF from Prudential RE Investors (PREI) JV Trammell Crow by Cushman & Wakefi eld

Grosvenor from Archstone by Cushman & Wakefi eld

Archstone by Institutional Property Advisors - Marcus & Millichap Company from

Gerding Edlen by Marcus & Millichap

Matteson Cos from Northwestern Mutual by Colliers International

Reported in the Past 45 DaysSelected investment Sales transactions


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APARTMENT

ABOUT REAL CAPITAL ANALYTICSReal Capital Analytics, Inc (RCA) is an independent research firm focused exclusively on the capital investment markets for commercial real estate. RCA offers the most in-depth, comprehensive and current information of activity in the industry. Formed in 2000, RCA has offices in New York City, San Jose, and London. In addition to collecting trans-actional information for property sales and financing, RCA interprets the data including capitalization rates, market trends, pricing and sales volume. The firm publishes a series of Capital Trends reports and offers an online service that provides real-time, global transactional market information. For more information, visit: www.rcanalytics.com.

ABOUT US CAPITAL TRENDSUS Capital Trends is published by Real Capital Analytics, Inc. Copy-right ©2012 Real Capital Analytics, Inc. All rights reserved.

It is a violation of Federal law to photocopy or reproduce any part of this publication, or forward it electronically, without first obtaining permission from Real Capital Analytics, Inc. To subscribe as an indi-vidual or to purchase a corporate license for your office, please call 1.866.REAL.DATA.

Information presented by RCA has been compiled from sources believed to be reliable. While we have no reason to doubt its accuracy, RCA makes no representation or warranty regarding the information. The information is provided as is without warranties of any kind, express or implied, and may be subject to material revisions.

NOTES & METHODOLOGYThe information maintained by RCA and presented in this report encom-passes markets nationally and includes only properties or portfolios $2.5m or greater. Readers should note that there is substantial investment activ-ity, largely local in nature, that falls below this threshold and is not cap-tured in this report.

Records are maintained for transactions that represent the transfer of a controlling interest in a property or portfolio of properties that are $2.5m or greater. Transactions are assumed to be fee simple; lease-hold and commercial condominium interests are noted, if known. Transactions include both real estate asset sales as well as transac-tions involving real estate operating and investment entities. Thus, for example, merger and acquisition activity among entire REITs or other real estate entities is included in this report unless noted oth-erwise. Sales of partial interest transactions will receive credit and be valued at the pro-rated share.

For this report, market classifications are defined as followed:

Major Metros: Boston, Chicago, DC Metro, LA Metro, NYC Metro and SF Metro

Secondary: Atlanta, Austin, Charlotte, Cincinnati, Cleveland, Colum-bus, Dallas, Baltimore, Denver, Detroit, Houston, Indianapolis, Jack-sonville, Kansas City, Las Vegas, Memphis, Milwaukee, Minneapolis, Nashville, Norfolk, Orlando, Philly Metro, Phoenix, Pittsburg, Portland, Raleigh/Durham, Sacramento, Salt Lake City, San Antonio, San Diego, Seattle, South Florida, St Louis and Tampa.

Tertiary: All other US markets.

Ranking Methodology: Based on transactions $2.5m and greater. Full dollar value is assigned to each buyer, seller, or broker in joint venture transactions. Partial interest sales are included at the pro-rated share of the total property or portfolio value.Trend analysis may exclude certain transactions that exceed 5% of the data sample or that may otherwise skew results. A complete glossary and methodology can be found at www.rcanalytics.com.

Abbreviations:

TROUBLED ASSETS METHODOLOGYRCA has taken the step of expanding their research program to track corporate level and property level economic distress that could affect global property markets.

We have integrated the tracking of Troubled Assets (TA) into our system in order to observe distressed situations across the lifecycle

of a property and the different owners of distressed assets. This would contain all classes of property owners and developers who find them-selves overextended or otherwise unable to meet their obligations, as opposed to banks, mortgage REITs and other lender groups or debt owners who find themselves in possession of real estate they have taken control of via foreclosure or similar methods.

DISTRESSED STATUSTroubled: Includes foreclosure, bankruptcy, restructured/modified statuses.

Foreclosure, Bankruptcy, etc: For properties where there is a direct knowledge of property level distress. Known through announcements of bankruptcy, default and court administration as well as significant publicly reported issues—like significant tenant distress or liquida-tion—that would exemplify property level distress.

Lender REO: To signify properties lenders have taken back through foreclosure. The transaction side of the RCA data set sees this as a Foreclosure sale with the defaulted mortgagee as Seller and the recovering lender as Buyer to show the property changing hands. The property is now Real Estate Owned by a Lender.

Restructured/Extention: To classify deals where ownership or debt terms have changed but a long-term solution to the cause of distress may not have been reached. Types of ownership restructur-ing include a mezzanine lender stepping into the equity position or a debt-for-equity swap. On the debt side, the most common types of restructuring include modifications to the interest rate, loan balance, interest-only period and/or other terms. In almost all cases, at least two of the three stakeholder groups (borrower, first mortgage lender, mezzanine lender) most often involved in real estate transactions will retain either an equity or debt stake in the property or portfolio at the completion of the restructuring.

Resolved: Represents properties that have moved out of distress via refinancing or through a sale to a financially stable third party.

Troubled Subtypes: To further clarify the trouble we are tracking proper-ties that fall within the Troubled Status levels will be marked with a Trou-bled Subtype at the loan, property and/or ownership level as appropriate:

LOANDelinquent/Default: Troubled deals known to be delinquent, in default or in special servicing but not yet foreclosed upon or otherwise resolved.

In Foreclosure/Administration: Troubled deals with loan known to be in the foreclosure process, while the lender has not taken the property back they have gone to court and have pressed their claim to the property. These properties are in the process of moving to the Lender REO stage.

Funding Stop: Troubled deal in which lender has cut off financing for reasons including but not limited to the lender’s own liquidity problems or lack of confidence in the project.

Maturity Default/Past Due: Troubled deals with loan known to be past maturity but new financing arrangement is unknown.

PROPERTYChallenged Development: Development has been delayed, halted, scaled back or cancelled due to reasons including but not limited to the failure to sell or lease initial units or a funding cut-off from a lender.

Tenant Bankrupt: Troubled deal in which the bankruptcy of a tenant represents a large enough percent of occupancy to imperil the borrow-er’s ability to service debt. Bankrupt tenants need to be in liquidation of single-tenant properties to be classified as Troubled.

Underperforming Conversion or Redevelopment: Troubled deal in which the buyer had planned to convert the property into condos and sell off individually or otherwise redevelop but for whatever reason it did not happen.

OWNERFraud Alleged: Troubled deal in which the owner is alleged to have engaged in fraud and those allegations have led to the property becom-ing distressed.

Owner Financially Challenged: Troubled deal in which the owner of the property is under financial pressure generally and not neces-sarily relating to this specific property.

Owner/GP Bankrupt: Troubled deal in which the owner or General Partner of the property has declared bankruptcy.

REAL CAPITAL ANALYTICSwww.rcanalytics.com

US Headquarters139 Fifth AvenueNew York, NY 10010Toll-Free: 1.866.REAL.DATAPhone: 212.387.7103

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Europe Office58 Grosvenor StreetLondon, United Kingdom W1K 3JBPhone: +44.207.297.6860

Robert M White, Jr Founder & PresidentDan Fasulo Managing DirectorNina Turner Director, Marketing CommunicationsDoug Murphy Director, AnalyticsAndrew Pisanelli Senior Quantitative AnalystYiqun Wang Quantitative Analyst Hermann Lademann Research AnalystMichael Gilligan Web Architect

Notes & Defi nitions

An excellent tool for your next site inspections

PPSF = Price Per-Square-FootBPS = Basis PointsYOY = Year-Over-Year

YTD = Year-to-DateQ1 = First Quarter of YearH1 = First Half of Year


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