CENTRAL FLORIDA | GREATER ORLANDO METRO MARKET

MULTI-FAMILY MARKET OVERVIEW Central Florida

KEY INDICATORS SPELL “SELLER’S MARKET” Greg Wilson

Director, Multi-Family Services

407 362 6145 [email protected]





Vacancies Plunge, Rents Rise, Values Increase, as Orlando Greets 2013

EXECUTIVE SUMMARY “Market Fundamentals” • “Risk & Opportunities” - Buzz words from a recent national conference call on the multi-family housing market. George Pjevach

Director, Multi-Family Services

407 362 6135 [email protected]

Glory Sustache

Marketing Coordinator

407 362 6167 [email protected]

Final 4th Quarter numbers are not in, but we have enough data to project a very clear picture of where we start in 2013. Orlando’s Multi-family Fundamentals are very strong: • Vacancies are down to 5.8%, rents up and values are increasing • ±2,500 units are under construction • 2013 demand expected to be ±2,700 units / units absorbed Risk & Opportunities: • Orlando is NOT a place for bottom fishing • A “good deal” for a buyer, will be paying market price • With new construction costing $95,000 to $130,000 per unit, Orlando’s average sale price per unit, at $62,000 to $108,000, is still a very good deal for buyers / acquisitions

MARKET HIGHLIGHTS • The

Justin Frye

GIS & Research Administrator

407 362 6174 [email protected]

www.colliers.com/orlando

Orlando area added approximately 25,000 jobs in the past year • The area unemployment rate is currently ±7.8% (US Bureau of Labor Statistics; Oct. 2012) • University of Central Florida (UCF), Seminole State College, and Valencia College, continue to be centers of job growth, recruiting new residents, and magnets for construction projects • The UCF Medical Complex and the new VA Hospital will also promote growth • The new SunRail commuter train will spur growth along the line, especially near hub stations • Orlando Regional Medical Center and Florida Hospital have $500 Million in construction projects scheduled to kickoff within the next 12 months

CURRENT VACANCY BY SUBMARKET Overall, the Orlando Multi-Family market is very healthy, and currently has an overall vacancy rate of 5.8% There are several notable submarkets that are doing extremely well: • East-1

Market (Winter Park / Hwy 436 Corridor): 4.4% vacant

• East-2 • SE-2 • SW-2

Market (UCF & Winter Springs): 5.2% vacant

Market (Airport and Lake Nona/UCF Medical Complex): 4.8% vacant Market (The Attractions): 4.1% vacant

SUPPLY & VACANCY Total existing supply in units, for properties with 50+ units, stands at 133,043 units for the Central Florida/Orlando Metro Market. In the past 6 months, 929 new net renters (net absorption) have been added, bringing the overall vacancy down from 6.2% to 5.8% as shown on the graph below. This is in spite of adding 1,168 units to the overall supply.

1

Source: Colliers International & Real Data

NEW CONSTRUCTION As in other metro areas, job growth will determine demand and overall vacancy. If there is good news in the economy, Orlando will be one of the first areas to experience substantial unit absorption, and demand will cause vacancies to plummet before enough supply can be added to increase vacancy rates. In the table below, job growth projections by the UCF Institute for Economic Competitiveness 1, are used in conjunction with a new apartment demand/forecasting model was developed by faculty at the University of Houston - Downtown, and published in Real Estate Issues2 to project apartment demand and absorption through 2016. There are approximately ±2,500 multi-family units under construction, of which it is estimated half or slightly more will be delivered in the near future, others will not be delivered for approximately 12 months or more. In addition, there are over 5,000 units “planned” for the greater metro Orlando area. However, “planned” units sometimes do not get built for 2 or 3 years, if at all. It is reasonable to expect that approximately 2,500 units will be delivered and ready for occupancy over the next 12 months while approximately 2,700 units will be absorbed in Metro Orlando. Based on what is currently under construction, and what can be delivered within 12 months, we would expect that even with modest job growth, overall vacancy will improve from 5.8% to approximately 5.2% to 4.9% within the next 12 months.

Using the UCF jobs forecast and the University of Houston Model, the chart above is summarized as follows: Year

Jobs Created

Apts. Absorbed

2013

23,400

2,662

2014

27,100

3,083

2015

29,100

3,311

2016

25,610

2,912

Source: UCF Institute of Economic Competitiveness, Dr. Sean Snaith, April 2012 Source: Using Historical Employment Date to Forecast Absorption Rates and Rents in the Apartment Market, Real Estate Issues, Published by the Counselors of Real Estate Vol. 37, Nos 253, 2012 Dr. Charles A. Smith, Dr. Rahul Verma and Dr. Justo Manrique at the University of Houston - Downtown 1

2

QUALITY (A, B, C) The Orlando Multi-Family Market, if segmented by “quality” or grade, would be separated as follows :

Class A

33,615 units

25.27 % of the total multi-family market

Class B

71,026 units

53.39 % of the total multi-family market

Class C Total

28,402 units 133,043 units

21.30 % of the total multi-family market 100.00%

We offer charts delineating Class, # of Bedrooms, & Square Feet, below, and on the following page. RENTAL RATES, PER MONTH

In the chart above, it is easy to see, in the 2 bedroom units, Class B, at $854 obtains 19.6% more rent than the Class C product at $714, and Class A, at $1,196 obtains 40.0% more rent than the Class B product.

RENTAL RATES PER SF PER MONTH

RENTAL RATES PER SF PER YEAR



(Per SF per year is a yardstick that is becoming used more and more by analysts for comparison to other product types)

Obviously, rents are vary by # of bedrooms, by quality (A, B, C) and by square feet. Often though, we find real estate professionals wanting simple “averages” to compare to other markets. For those we offer the following “averages”: Class A $ 1,151 per unit Class B $ 876 per unit Class C $ 695 per unit Overall $ 906 per unit

$ 1.06 per square foot per month $ 0.93 per square foot per month $ 0.78 per square foot per month $ 0.94 per square foot per month

MARKET TOTALS

ORLANDO MULTI-FAMILY UNITS, RENTS & VACANCY BY CLASS1

Bedrooms

Total Units

Avg SF

Avg. Rent % of Vacant Vacancy Per SF This Type Market Units % Mo.This Type Unit

Total Rents Per Mo This Type Unit

Avg. Avg. Avg. Rent Rent Rent Per SF Per Bed Per SF Per Per Mo. Per YR Mo.

CLASS A 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom

CLASS B

1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom

CLASS C

1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom

TOTALS

12,116 16,270 4,975 254 33,615

824 1,174 1,416 1,561 1,087

9,983,584 9.11% 19,100,980 12.23% 7,044,600 3.74% 396,494 0.19% 36,525,658 25.27%

665 859 317 19 1,860

5.49% 5.28% 6.37% 7.48% 5.53%

$981 $1,196 $1,407 $1,423 $1,151

$11,885,796 $19,458,920 $6,999,825 $361,442 $38,705,983

$981 $598 $469 $356

$1.19 $1.02 $0.99 $0.91 $1.06

$14.29 $12.22 $11.92 $10.94 $12.72

24,750 692 33,067 1,013 9,687 1,193 3,522 1,367 71,026 943

17,127,000 18.60% 33,496,871 24.85% 11,556,591 7.28% 4,814,574 2.65% 66,995,036 53.39%

1,223 1,497 436 264 3,420

4.94% 4.53% 4.50% 7.50% 4.82%

$721 $854 $996 $1,835 $876

$17,844,750 $28,239,218 $9,648,252 $6,462,870 $62,195,090

$721 $427 $332 $459

$1.04 $0.84 $0.83 $1.34 $0.93

$12.50 $10.12 $10.02 $16.11 $11.14

10,607 643 13,031 962 4,340 1,195 424 1,405 28,402 885

6,820,301 12,535,822 5,186,300 595,720 25,138,143

7.97% 9.79% 3.26% 0.32% 21.3%

943 1,126 417 17 2,503

8.89% 8.64% 9.61% 4.01% 8.81%

$597 $714 $822 $1,243 $695

$6,332,379 $9,304,134 $3,567,480 $527,032 $19,731,025

$597 $357 $274 $311

$0.93 $11.14 $0.74 $8.91 $0.69 $8.25 $0.88 $10.62 $0.78 $9.42

128,658,837 100.0%

7,783

5.85%

133,043

Source : Colliers International & Real Data

1

Source: Colliers International & Real Data

$906 $120,632,098

$0.94 $11.25

RECENT SALES / INVESTMENT ACTIVITY 1 Few investment experts make their purchases or sales based on price per unit, or price per SF, but they are always interesting, secondary yardsticks to compare with different markets, and different regions. Data from approximately 30 recent sales in the Greater Orlando (Central Florida) Market, produce the story told in the charts below.

PRICE PER UNIT

PRICE PER SF

CAP RATE

PROPERTIES ON THE MARKET We have identified 60+ Central Florida multi-family properties of all “classes” and size, that are available for purchase. A few of them which are now, or were recently available are listed below. #

City

1 2 3 4 5 6 7 8

Orlando Orlando Orlando Orlando Lakeland Orlando Melbourne Orlando

Size Units 272 252 336 384 242 194 197 192

Class

Price

A A A A A- to B+ B to BB- to C C

Market Market Market Market $25,000,001 $12,500,000 $5,500,000 Market

Price Per Unit TBD TBD TBD TBD $103,306 $64,433 $27,919 TBD

Price Per SF TBD TBD TBD TBD $94.95 $62.50 $26.11 TBD

Est. Cap TBD TBD TBD TBD 5.7 6.6 10.6 TBD

For further information please contact:

Greg Wilson George Pjevach

+1 407 362 6145 +1 407 362 6135

[email protected] [email protected]

RECENT SALES IN CENTRAL FLORIDA

RECENT CENTRAL FLORIDA MULTI-FAMILY SALES CLASS A Submarket & City Orlando Submarket Winter Garden Orlando Clermont Orlando Lake Mary Orlando

Sale Date

Yr Bit

Units

SF

Sale Price

7/12/2012 5/12/2012 5/12/2012 2/12/2012 11/11/2012 8/11/2012

2008 1995 2007 2009 2000 1997

379 373 276 456 310 411

425,178 359,720 308,579 443,842 343,460 460,836

Sale Date

Yr Bit

Units

SF

6/12/2012 5/12/2012 3/12/2012 3/12/2012 12/11/2012

1988 1990 1987 1983 2000

210,812 423,808 166,360 165,600 181,888 158,720

$ $ $ $ $ $

15,900,000 35,500,000 10,250,000 12,050,000 7,500,000 15,850,000

$ $ $ $ $ $

63,095 74,580 49,279 54,773 49,342 76,202

$ $ $ $ $ $

75.42 83.76 61.61 72.77 41.23 99.86

6.11% 6.92% 7.14% 6.50% 6.62% 6.50%

$ $ $ $ $ $

42,920,000 35,000,000 28,000,000 61,550,000 34,125,000 39,300,000 Minimum Maximum Average Median

S/Unit

$ $ $ $ $ $ $ $ $ $

113,245 93,834 101,449 134,978 110,081 95,620 93,834 134,978 108,201 105,765

$/ SF

$ $ $ $ $ $ $ $ $ $

100.95 97.30 90.74 138.68 99.36 85.28 85.28 138.68 102.05 98.33

CAP

5.80% 5.90% 5.89% 5.15% 6.00% 6.25% 5.15% 6.25% 5.83% 5.90%

CLASS B Submarket & City Orlando Submarket Orlando Casselberry Melboume Orlando Lady Lake

Sale Price

S/Unit

$/ SF

CAP

Winter Springs

12/11/2012

1990

252 476 208 220 152 208

Casselberry

11/11/2012

1988

384

326,316

$

20,372,000

$

53,052

$

62.43

6.96%

Sanford

10/11/2012

1985

256

207,612

$

12,450,000

$

48,633

$

59.97

6.48%

Altamonte Springs

10/11/2012

1986

876

695,804

$

63,150,000

$

72,089

$

90.76

5.40%

Altamonte Springs

9/11/2012

1972

185

153,995

$

8,950,000

$

48,378

$

58.12

7.99%

Orlando

8/11/2012

1986

278

225,346

$

23,350,000

$

83,993

$

103.62

6.82%

Orlando

8/11/2012

1998

356

350,800

$

20,750,000 Minimum Maximum Average Median

$ $ $ $ $

58,287 48,378 87,987 67,548 60,691

$ $ $ $ $

59.15 41.23 103.62 76.36 74.09

6.55% 5.40% 7.99% 6.55% 6.53%

Sale Date

Yr Bit

Units

SF

8/12/2012 7/12/2012 7/12/2012 5/12/2012 4/12/2012 10/11/2012 10/11/2012 10/11/2012 8/11/2012 6/11/2012

1976 1973 1972 1973 1988 1974 1975 1976 1963 1974

143 278 160 184 68 196 192 196 93 88

83,600 225,346 268,444 166,952 40,396 127,932 185,072 127,932 85,451 69,200

CLASS C Submarket & City Orlando Submarket Melbourne Winter Park Orlando Orlando Mount Dora Winter Park Orlando Winter Park Rockledge Sanford

Sale Price $ $ $ $ $ $ $ $ $ $

3,120,000 12,500,000 5,000,000 7,400,000 1,500,000 7,250,000 5,942,000 7,275,000 2,480,000 3,075,000 Minimum Maximum Average Median

S/Unit $ $ $ $ $ $ $ $ $ $ $ $ $ $

21,818 44,964 31,250 40,217 22,059 36,990 32,293 37,117 26,667 34,943 21,818 44,964 32,832 33,618

$/ SF $ $ $ $ $ $ $ $ $ $ $ $ $ $

37.32 55.47 18.63 44.32 37.13 56.67 32.11 56.87 29.02 44.44 18.63 56.87 41.20 40.82

CAP 9.41% 7.94% 8.99% 7.56% N/A 6.73% 8.39% 6.73% 10.00% N/A 6.73% 10.00% 8.22% 8.17%

Source: Colliers International, Valuation & Advisory Services, Southeast Multi-Family Team. For more information contact Amanda Cooper +1 727 417 4550

SUMMARY

It is a great time for Sellers to sell in Orlando. From a cap rate perspective, one class A developer said: “It just doesn’t get any better that this. Everything we have is for sale.” From a buyer’s perspective, to be able to buy at prices that are 17%, to over 35% below construction costs, Orlando is also a good deal for buyers as well. Market Fundamentals say Orlando’s Multi-family Market is very healthy. With even modest job growth, Orlando should be one of the strongest multi-family markets in the nation. A cautious eye should be cast on job growth and new construction. As long as the Orlando metro area creates ±28,000 jobs per year, it should absorb at least 2,500 new units per year. If we can assist you with a market survey, a property valuation (BOV), the sale of a property, or an acquisition of a multi-family property or land, please feel free to get in touch with us.

Highest Regards & Best of Luck in 2013!

Florida Multi-Family Investment Team

FLORIDA MULTI-FAMILY INVESTMENT TEAM

Greg Wilson

George Pjevach

John Stone, CCIM

Nat Bargainer

Central Florida

Central Florida

Tampa Bay Florida

Clearwater Florida

+1 407 362 6145

+1 407 362 6135

+1 727 442 2635

+1 727 298 5309

[email protected]

[email protected]

[email protected]

[email protected]

Jim Garinger, CCIM, SIOR

John Crotty, CCIM

Robert Selton, III

Douglas Blair

Southwest Florida

South Florida

Northeast Florida

Northeast Florida

+1 239 985 8072

+1 305 447 7865

+1 904 861 1111

+1 904 861 1101

[email protected]

[email protected]

[email protected]

[email protected]

Dorothy Jackman

Sean Baird

Travis Prince

Student Housing

Student Housing

Student Housing

+1 727 298 5337

+1 727 450 6158

+1 727 298 5324

[email protected]

[email protected]

[email protected]

FLORIDA OFFICE LOCATIONS

KEN CARRIERO, CCIM

DAMIEN CARRIERO

SENIORS HOUSING

SENIORS HOUSING

+1 727 804 5390

+1 727 298 5304

[email protected]

[email protected]