2012 Statewide Conference Indiana Multifamily Housing Market and It’s Future September 18, 2012

The Apartment Market Total Apartment Base - Indianapolis134,000 units Total Apartment Base – Indiana Estimated - (we track 293,000 units) 300,000 – 325,000 Units Number of Communities – Indianapolis Number of Communities - Indiana 713 1, Average Occupancy Rate (2012 prelim) – Indy91.4% Rent Growth Rate (2011 to 2012 Prelim.) - Indy2.6% Average Rent - Indianapolis$700 Average Rent Per Square Foot – Indianapolis$0.78 Average Property Age – Indianapolis38 Years

Overall Market Vacancy Rate Indianapolis Metro Area Source: Tikijian Associates

Annual Revenue Growth (2011) 30 Property Sample – Class A & B - Well Managed Source: Tikijian Associates and Property Owners

Total Residential Building Permits Indianapolis Metro Area Source: US Census Bureau Residential Construction Branch 7 Months annualized

Total Residential Building Permits State of Indiana 7 Months annualized Source: US Census Bureau Residential Construction Branch

Monthly Residential Building Permits Indianapolis MSA Source: US Census Bureau Residential Construction Branch Valley 1/ Units

New Apartment Development Indianapolis Metro Area Source: Tikijian Associates Trailing 12 Mos. 7/12

New Market Rate Projects in the Pipeline ProjectDeveloper# Units The HamiltonJC Hart245 units Union Street Flats at Grand JunctionJC Hart237 units Stadium FlatsCore Redevelopment132 units Axis at Block 400Flaherty & Collins332 units Arden WoodsGlick50 units 82 Flats at the CrossingHearthview Residential232 units Solana Apartments at the CrossingMilhaus404 units MozzoMilhaus64 units Residences at Market IMilhaus258 units Many More….. Source: Tikijian Associates

Total Tax Credit Development State of Indiana Source: IHCDA

Average Sale Cap Rates Indianapolis Metro Area - Class “B” or better Prelim. Source: Tikijian Associates Why? How? 3.5% rate, 30 year amortization = 5.4% Constant

2011 National Lender Composition

GSE (Government Sponsored Enterprises) – in 2011 represented 65% of new loans Freddie Mac: o up to 80% LTV, mostly likely 70% to 75% LTV in Indiana o 3.50% to 4.00% interest rates (7 & 10 Year Term) o Some Flexibility on Terms: fixed or floating rate, potential interest only period o Capped ARM is comparable to a Bank Term Loan Fannie Mae: o up to 80% LTV, most likely 65% to 70% LTV in Indiana o Indiana is a Pre-Review State o 3.50% to 4.00% interest rates (7 & 10 Year Term) FHA/HUD 223(f): o up to 83.3% LTV acquisition, 80% LTV refinance o 35 Year Fully Amortizing, Non-Recourse Loan o 2.75% -3.75% All-in Rate (incl..45% MIP increasing to.60%) o 6 Month +/- Time Frame o Downside: Higher fees, potentially higher reserves, required audit and bi-annual limit on owner distributions (surplus cash calculations)

Bank Loans - in 2011 represented 20% of new loans o Development Loans (up to 90% loan to cost) o Bridge Loans o Offers more flexibility (prepayment) but almost always recourse o More variation on rates and terms, typically a floor rate around 4% o Decisions based on global financial analysis of borrower CMBS o Still not active in our market o Potential loan for lower quality product and borrower credit quality Life Companies o Up to 75% LTV (won’t go higher – prefer 60% – 65% LTV) o Rates 4.25 – 4.00 o Advantages: no required replacement reserves, Loan sizes range from$2M and can do very large deals

Questions & Discussion