1. 2014 REAL ESTATE ECONOMIC FORECAST January 30, 2014 Steve LaMotte Jr., Senior Vice President Dave Lockard, Senior Vice President Dane Wilson, Senior Associate

2. 2 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP AGENDA 1. Louisville Fundamentals 2. Transactions 3. New Supply 4. Capital Markets Overview 5. Strategies & Opportunities for 2014

3. CAPITAL MARKETS OVERVIEW

4. 4 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP HOLD-SELL DILEMMAS DOMINATE SELLER THINKING

5. 5 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP RISK PREMIUMS Louisville MSA Cap Rates to 10-Year UST at Time of Sale

6. 6 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP  Tracking $7 Billion / 135 Multi-Housing deals 88 Class A  20 out of 135 Requested Price Adjustment  9 out of 20: Price Adjustment Requested, Seller Declined; Still Transacted  8 out of 20: < 2% Price Adjustment  2 out of 20: 2% - 4% Price Adjustment  1 out of 20: > 4% Price Adjustment Class A MARKET RESPONSE TO RISE IN INTEREST RATES

7. 7 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP Move Down the Yield Curve  10 Year Rate: 5.33%  7 Year Rate: 4.78%  5 Year Rate: 4.21%  Floating Rate (Capped ARM): 3.52%  7 Year Float to Fixed: 4.20% DEBT STRATEGIES IN A RISING INTEREST MARKET

8. LOUISVILLE FUNDAMENTALS

9. 9 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP EMPLOYMENT Source: Bureau of Labor Statistics Total Number of JobsCurrent Unemployment Rate Kentucky 8.2% U.S. 6.7% Louisville 7.3% *November 2013(P) National & State Unemployment as of Dec. 2013 Local Unemployment as of Nov. 2013

10. 10 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP Louisville MSA POPULATION GROWTH Source: CBRE 10.5% 1.9% 2.9%

11. 11 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP Louisville MSA HOUSEHOLD GROWTH Source: CBRE 11.2% 2.1% 3.2%

12. 12 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP Louisville MSA OWNER-OCCUPIED HOUSING TRENDS Source: CBRE

13. 13 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP Louisville MSA MARKET-WIDE RENTS & OCCUPANCY

14. 14 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP Louisville MSA TOP-20 PROPERTIES RENTS & OCCUPANCY

15. TRANSACTIONS

16. 16 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP “A” GRADE YIELD EXPECTATIONS Rubric:20132014 Stabilized Cap Rate: 5.75% - 6.00%5.75%-6.25% Stabilized Cash-on- Cash Return: 6.00% - 8.50% 10-Year IRR:12.00% - 15.00% Investor Preferences: Core, Core+, Value-Add Investor Tolerances: Buyers absorbed 100-150 bps increase in cost of debt without adverse impact on pricing. Will they do it again??? Buyers and sellers are watching growing supply levels, interest rates and in general are watching the clock. 2014 should be an active year on all fronts.

17. 17 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP “A” GRADE TRANSACTIONS, 2013 Orchard Hills 373 Units Seller: Icon Properties Buyer: Bluestone Southgate 256 Units Seller: Inland Group Buyer: Paladin Realty Partners

18. 18 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP “B” GRADE TRANSACTIONS, 2013 Park Place 324 Units Seller: Jefferson Development Group Buyer: Pride Rock Capital Partners Shelby Crossing 90 Units Seller: Underhill Associates Buyer: Geffen Enterprises Heritage Hill 163 Units Seller: Underhill Associates Buyer: 37 th Parallel Properties Fountain Square 320 Units Seller: Martin L. Adams & Sons Buyer: Elmington Capital Group

19. 19 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP LOUISVILLE SALES VOLUME * * 2010 includes the partial interest sale of The Province

20. 20 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP “A” & “B” CAP RATES * No “A” grade sales in 2008 *

21. NEW SUPPLY

22. 22 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP NEW SUPPLY

23. 23 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP Louisville MSA NEW SUPPLY

24. 24 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP Louisville MSA BUILDING PERMITS

25. 25 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP NEW SUPPLY Idlewild -600 English Station Way -360 Units -Developer: Lifestyle Communities Management

26. 26 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP NEW SUPPLY Watermark on Hurstbourne -10405 Watermark Place -270 Units -Developer: Watermark Residential

27. 27 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP NEW SUPPLY Claiborne Crossing -14601 Pulpit Drive -242 Units -Developer: TDK Construction

28. 28 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP NEW SUPPLY Applegate Farms -5503 Fernfield Drive -192 Units -Developer: Buisson Investment Corporation

29. 29 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP NEW SUPPLY Overbrook -8901 Fairground Road -152 Units -Developer: AG Steier

30. 30 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP NEW SUPPLY Academy Park -718 Academy Drive -154 Units -Brown Capital LTD

31. 31 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP NEW SUPPLY Ellingsworth Lane Resort Apartments -11840/11950 Ellingsworth Lane -398 Units -Faulkner/Hollenbach-Oakely Westport Road Apartments -8211 Old Westport Road -224 Units -Faulkner/Hollenbach-Oakely

32. 32 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP NEW SUPPLY Dundee Place -2236-2242 Dundee Road -20 Units -REI/Poe Preston Gardens -48005 Mud Lane -96 Units -REI/Poe Woods at Lexington Road -2141 Lexington Road -72 Units -REI/Poe

33. STRATEGIES & OPPORTUNITIES FOR 2014

34. 34 INDIANAPOLIS-CINCINNATI MULTI-HOUSING GROUP  Loan assumptions en vogue  High demand for well-located value-add and best-of-class  Secondary/tertiary markets looking more attractive  Emergence of the pre-sale  Highly amenitized, high rent supply continues  We’ve hit maximum sustainable occupancies  The window is open but… STRATEGIES & OPPORTUNITIES

35. For more information regarding this presentation please contact: CBRE Indianapolis-Cincinnati Multi-Housing Group www.cbre.com/mhgindianapolis icmhg@cbre.com