Winter 2015Multi-Family Market Summary & Activity Update

Columbia, SC

2

COLUMBIAIntroduction

Companion at the Palms

CAPSTONE APARTMENT PARTNERS prides itself on the continual value contributions we are able to offer our industry; thus, we produce periodic Multi-Family Market Summaries to further inform the clients and industry we serve. Capstone believes this market snapshot will benefit current owners, operators, investors, and other industry professionals who are active in the Columbia MSA, as well as others who are looking to break into this market.

Charlotte Office — Capstone Headquarters1600 Camden Rd. Suite 100

Charlotte, NC 28203

Austin GreenInvestment Advisor

c 704.962.7454o 800.746.3175 ext. 701

austin@capstoneapts.com

Beau McIntoshManaging Partner

c 704.877.5681o 800.746.3175 ext. 703

beau@capstoneapts.com

Alex McDermottInvestment Advisor

c 704.533.4865o 800.746.3175 ext. 700alex@capstoneapts.com

Brian FordManaging Partner

c 704.962.9462o 800.746.3175 ext. 702

brian@capstoneapts.com

ContentsIntroduction 2

Market Commentary 3

Economic Overview 4

Sales Transactions 5

Development Pipeline 7

Why Choose Capstone? 8

3

COLUMBIAM

ARKET C

OM

MEN

TARY

Rolling to Success

The manufacturing of tires has become one of the most critical industries throughout Columbia and South Carolina as a whole. Tire manufacturers, Michelin, Bridgestone Corp. and Continental A.G., have recently invested billions in their 13 combined plants in South Carolina. Major tire makers also brought various suppliers and vendors with them who are investing millions and creating hundreds of jobs market-wide as well. Therefore, they have formed the Tire Manufacturer’s Council to push forward their common goals and initiatives. As a result, residents have a strong advocate on their side for the improvement of critical infrastructure and safer measures for tire disposal and reuse.

Having a strong educational system is an integral part of the infrastructure that brought the major tire companies to Columbia. Training future employees and developing prospective talent is critical to the economic success of the MSA. ReadySC was created by the state and consists of 16 technical colleges that customize training programs for companies interested in establishing or increasing their presence in South Carolina at no cost to the business. South Carolina’s secretary of commerce, Bobby Hitt, estimates that in the last six year the state has helped train about 5,000 tire employees through ReadySC programs.

Educated to Achieve

In addition to the ReadySC technical programs, Columbia is also home to the main campus of the University of South Carolina, the Carnegie

Foundation for the Advancement of Teaching, Allen University, Benedict College, Columbia College, and Remington College among others. Columbia recently scored a victory over its Southeastern rivals by being named the best mid-sized college town in the country. Among America’s oldest and most comprehensive public universities, USC Columbia is a major research institution that enrolls approximately 21,000 undergraduate and 8,000 graduate students. The large, educated talent pool in Columbia has certainly driven economic growth and increased business opportunities as the employment rate in the MSA is almost 1.0% lower than the state’s average.

Multi-Family Fundamentals

The Columbia MSA is experiencing its lowest vacancy rate in fifteen years at 7.3% despite the addition of 512 units during the last six months. In fact, the Central (Downtown) and Lexington submarkets actually reported vacancy rates of less than 4.0% during the last six months. Demand continues to remain high in the market with 730 units positively absorbed and the number of proposed units doubling over the past six months to 1,939. There are already 1,967 units under construction in the MSA. Rents increased by 1.6% over the past six months, and Capstone anticipates they will continue to grow at a rate of 2.75%-3.5% over the next year. Both demand and supply are expected to increase as new jobs bring renters into the market place and developers work to meet the increasing need for apartments.

Apartment Comparison by ClassClass Units Vacancy Rate Avg. Sq. Ft. Avg. Rent Avg. Rent/Sq. Ft.

Lease-up 973 17.5% 1,127 $1,345 $1.19A (1-5 Years in Age) 2,031 4.5% 1,017 $1,090 $1.07B (6-15 Years in Age) 9,942 4.8% 1,133 $1,058 $0.93C (16-30 Years in Age) 9,726 6.1% 933 $811 $0.87C- (30+ Years in Age) 11,492 10.9% 944 $635 $0.67Stabilized Averages 33,191 7.3% 1,002 $841 $0.84Totals/Averages 34,164 7.6% 1,005 $855 $0.85

4

COLUMBIAEC

ON

OM

IC O

VER

VIE

WEmployment

The Columbia MSA has continued to experience low unemployment throughout 2014 with November at a low 5.9%. Certainly a noteworthy accomplishment given the unemployment rate was 7.1% during the same month just two years ago. The Columbia average is on par with the national unemployment rate of 5.8%, but considerably lower than the state’s rate of 6.7%.

10 Largest Employers in Richland CountyRank Company Industry Employment

1 State of South Carolina Government 24,791

2 Palmetto Health Healthcare 9,000

3 Blue Cross Blue Shield of SC Insurance 6,459

4 University of South Carolina Education 5,997

5 S.C. Department of Transportation Government 4,418

6 Richland County School District 1 Education 4,036

7 S.C. Department of Mental Health Healthcare 3,798

8 Richland County School District 2 Education 3,300

9 S.C. Department of Health & Environmental Control Government 3,096

10 AT&T Communications 2,400

Wages & Population

There are 346,140 employees in the MSA who earn a mean hourly wage of $19.41 and average annual income of $40,360. In comparison, the state income average is lower at $38,990 and the national annual salary mean is a tad higher at $46,440.

Historical Population

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Columbia 126,529 123,856 123,511 125,963 127,849 129,333 130,040 130,799 131,686 133,358

Richland County 343,136 345,398 351,707 360,159 366,432 372,023 385,737 389,377 393,830 399,256

Columbia MSA 685,098 691,990 705,320 719,622 732,558 744,730 769,819 776,793 784,745 793,779

South Carolina 4,201,306 4,256,199 4,339,399 4,424,232 4,503,280 4,561,242 4,635,835 4,673,348 4,723,723 4,774,839

Source: U.S. Census Bureau

Recent Employment Announcements

Joining the state’s tire manufacturing cluster this year were Singapore-based Giti Tire and European tire manufacturer Trelleborg. Together the companies plan to invest $610 million and add more than 1,800 jobs over the next few years.

Rythmlink International, a medical device manufacturing company, announced plans to expand its Richland County facility creating 50 new jobs.

Reinicke Athens Inc., is investing $4.5 million in a new manufacturing operation. The investment is expected to create 30 new jobs over the next three to five years.

5

COLUMBIASA

LES TRAN

SAC

TION

SSales Transactions: 2014 to Present

Community YOC City Sale Date Units Sale Price Price Per Unit

Wellspring 1986 Columbia 11/1/2014 232 $16,200,000 $69,612

Serenity Apartments at Three Rivers 1974 West Columbia 9/24/2014 419 $8,000,000 $19,093

Paces Run 1987 Columbia 8/1/2014 260 $12,190,000 $46,885

Creekside Place 1982 Columbia 7/31/2014 104 $3,775,000 $36,298

River Bluff of Lexington 1996 Lexington 7/22/2014 200 $12,000,000 $60,000

Pointe West 2001 Cayce 7/1/2014 144 $16,350,000 $113,542

34 Crestmont 2002 Columbia 5/30/2014 250 $16,803,316 $67,213

College Park Riverside Estates 1994 Cayce 5/29/2014 206 $23,250,000 $112,864

Polo Commons 2000 Columbia 5/24/2014 256 $17,100,000 $66,797

Legends at Lake Murray 1996 Columbia 4/30/2014 180 $8,250,000 $45,833

Chimneys at Brookfield I 1974 Columbia 2/18/2014 259 $5,300,000 $20,463

Meredith Square 1985 Columbia 1/30/2014 144 $8,900,000 $61,806

West Winds 1981 Columbia 1/6/2014 100 $6,330,909 $63,309

St. Andrews Commons 1987 Columbia 1/6/2014 336 $20,499,267 $61,010

Waterford 1985 Columbia 1/6/2014 268 $12,140,343 $45,300

Views on Longcreek II 1984 Columbia 1/6/2014 144 $3,290,909 $22,854

Views on Longcreek I 1975 Columbia 1/6/2014 323 $6,409,909 $19,845

Quail Hollow 1972 West Columbia 1/6/2014 215 $11,690,909 $54,376

Forestbrook 1974 West Columbia 1/6/2014 180 $8,908,197 $49,490

Gable Hill 1984 Columbia 1/6/2014 180 $10,050,612 $55,837

Landmark at Pine Court 1989 Columbia 1/6/2014 316 $19,404,644 $61,407

Hampton Greene 1990 Columbia 1/6/2014 304 $22,190,154 $72,994

Stone Ridge 1975 Columbia 1/1/2014 191 $12,100,000 $63,120

6

COLUMBIASA

LES

TRA

NSA

CTI

ON

S

$16,751,105$15,502,441

$7,585,645

$12,223,225

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

Class A Class B Class C AVERAGE

Average Transaction Sales Price

$82,517

$63,771

$40,469

$56,085

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

Class A Class B Class C AVERAGE

Average Price Per Unit

217

245

212

227

190

200

210

220

230

240

250

Class A Class B Class C AVERAGE

Average # of Units Per Transaction

2001

1990

1978

1986

1965

1970

1975

1980

1985

1990

1995

2000

2005

Class A Class B Class C AVERAGE

Average Year of Construction

Class A represents properties built from 2000-2015 and renovated assets, Class B includes properties constructed from 1985-1999, and Class C signifies properties constructed in 1984 or earlier.

7

COLUMBIAD

EVELO

PMEN

T PIPELINE

Communities Proposed (100 Units and Above)Developer Community Units Road/Intersection Submarket

1 Davis Property Group Kline City Center 280 Gervais St./Huger St. Central

2 Heritage Land and Development Land Bank 114 1401 Hampton St. Central

3 Ray Design and Development Main Street Flats 123 North Main St./Confederate Ave. Central

4 Capitol Places Thirteen 21 Lofts 130 1321 Lady St. Central

5 Park7 Group University SC Tower 318 1011 Assembly St. Central

6 Berry & Company Arbors at Sunset Village 234 4800 Block Sunset Blvd. Lexington

7 Middle Street Partners Atlantic at Parkridge 294 356 Lake Murray Blvd. Northwest

8 Inspired Communities Greenlawn Apartments 216 500 Greenlawn Dr. South

9 Easlan Capital 111 Knox Abbott 230 Knox Abbott Dr./Blossom Street Bridge West Columbia

Communities Under Construction (100 Units and Above)Developer Community Units Road/Intersection Submarket

10 PMC Property Group 612 Whaley 184 612 Whaley St. Central

11 Park7 Group Huger and Blossom 237 Huger/Blossom St. Central

12 Edwards Student Housing Flats at South Carolina 341 Huger/Blossom St. Central

13 McCall Capital Enclave Blythewood II 88 (68 COMPLETE) 2052 Blythewood Crossing Ln. Northeast

14 Edward Rose Development Killian Lakes 588 (6 COMPLETE) 9559 Farrow Rd. Northeast

15 Inspired Communities Town Center at Lake Carolina 180 (80 COMPLETE) 5 Lake Carolina Way Northeast

16 Estates Properties 5000 Forest 26 (100 COMPLETE) 5000 Forest Dr. Northeast

17 Rhodie Group Otarre Pointe 299 Forest Congaree Trl. West ColumbiaKillian LakesUniversity SC Tower Enclave Blythewood II

8

COLUMBIAW

HY

CH

OO

SE C

APS

TON

E?Carolinas Georgia Virginia Tennessee Kentucky Alabama Florida West Virginia

The People Sell the Deal

Capstone’s Southeast & Mid-Atlantic Investment Sales Team is among the market leaders within our industry sector and respective region. We place client service above all else, and can guarantee that no one else will work smarter and harder in achieving the highest level of results for our clients. We don’t rely on a logo to sell the deal, but rather utilize the industry expertise and investment acumen, tremendous drive and work ethic, and unbeatable salesmanship of the team members assigned to each project. At the end of the day, it’s the individuals that drive value and sell the deal, and we know the capabilities of our individual team members are second to none.

Market Expertise & Product Niche

Capstone sits atop the private capital sector of multi-family investment sales for multiple reasons. Our deliberate and concentrated focus and expertise in not just the primary markets of the Southeast & Mid-Atlantic, but also the secondary and tertiary markets within our region, identifies us as the ideal candidate for such assignments. Capstone’s investment sales team has completed a multitude of transactions across the primary, secondary, and tertiary markets of the Southeast & Mid-Atlantic, and our track record of success can be attributed to our comprehensive coverage and expertise among these markets, as well as our relationships with the owners and investors who remain active in this environment.

National Exposure via Cutting Edge Technology

Capstone has developed and maintains industry leading national databases, expansive information delivery methodologies, and various proprietary activity tracking systems. These tools are utilized daily by the investment sales team, analysts, and back-office support staff allowing for optimal operational efficiency. This enables Capstone’s investment brokerage team to spend nearly all of its time servicing clients, interacting with industry players and active asset traders, and promoting transactions.

Reputation and Results

Capstone prides itself on its impeccable industry reputation and the core values and behaviors of the firm that drive daily operations. The firm possesses an unblemished reputation and track record industry-wide, and, as such, the firm’s trusted relationships among the apartment investment community continue to facilitate seamless, fluid, and successful sales transactions.

** Information in this report has been provided by the following resources: The Columbia Data Report November 2014, REIS Report, Costar, Business Journals, Loopnet, Bureau of Labor Statistics, county tax records, and various multi-family industry contacts. Area images provided by Scott Oves (pg. 1) via https://creativecommons.org/licenses/by/2.0/ and David (pg. 2) via https://creativecommons.org/licenses/by-nd/2.0/.