2016 NMHC Annual MeetingJanuary 19, 2016

Eye on the Apartment Market: Multifamily Dashboard

PANELISTS

Melissa ReagenDirector, Head of Real Estate & Agriculture ResearchMetLife Real Estate Investors

John ChangFirst Vice President Research ServicesMarcus & Millichap Real Estate Investment Services

Jay ParsonsDirector, Analytics & ForecastsMPF Research, a division of RealPage, Inc.

THE LAST FED FUNDS RATE HIKE WAS 10 YEARS AGO

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Federal Funds Effective RatePercent

130

132

134

136

138

140

142

144

2005 2015

Millions

Employment

56

58

60

62

64

66

68

2004 2014

20-34 year olds*

Millions

* Latest data available

0

200

400

600

800

1000

2005 2015

Retail sales ex auto

$ Billions

ECONOMIC SNAPSHOT: THEN VS. NOW

WHAT ABOUT THE MULTIFAMILY MARKET 10 YEARS AGO?

28

30

32

34

36

38

2005 2007 2009 2011 2013 2015

Rentership Rate (Percent)

0.0

0.5

1.0

1.5

2.0

Urban Apartment Units(millions)

Series1Series220052015

INSTITUTIONAL INVESTORS ARE CHOOSING HIGH RISE OVER GARDEN APARTMENTS

70%

27%

3%

Apartments held in NCREIF Property Index in 2005

Garden High Rise Low Rise

32%

59%

9%

Apartments held in NCREIF Property Index in 2015

Garden High Rise Low Rise

0%

1%

2%

3%

4%

5%

6%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

CBDs Suburbs

Source: MPF Research

YoY Inventory Change, with 5-Year Forecast

Over the last 10 years, the number of apartment units

inside CBDs jumped by 19% -- more than double the

rate of the suburbs.

ONE BIG CHANGE: WHERE DEVELOPERS BUILD

APARTMENT SNAPSHOT: THEN VS. NOWMARKETS WITH THE LARGEST RENT GROWTH

Rank Market Avg. Monthly Rent, Q4 15 10-Year Change

1 San Francisco, CA $2,988 84%

2 San Jose, CA $2,474 81%

3 Denver/Boulder, CO $1,297 71%

4 Portland, OR-WA $1,164 64%

5 Oakland, CA $1,994 62%

6 Austin, TX $1,151 57%

7 Seattle, WA $1,356 57%

8 Houston, TX $1,015 48%

9 San Antonio, TX $899 43%

10 Dallas, TX $1,014 43%

-- U.S. Average $1,243 32%

* Through November

RENT GROWTH: 2005 TO 2015

0%

25%

50%

75%

100%

San Francisco San Jose Denver/Boulder Portland Oakland Austin Seattle Houston San Antonio Dallas

A

B/C

* Through November

JOB GAINS DRIVE RENT GROWTH

0

1

2

3

4

San Francisco San Jose Denver/Boulder Portland Oakland Austin Seattle Houston San Antonio Dallas

Total Employment (Millions)

2005 2015*

+238,600 jobs14%

+117,200 jobs12%

+207,100 jobs15%

+569,800 jobs20%

+246,900 jobs35%

+575,900 jobs24%

+191,500 jobs24%

+205,400 jobs24%

+188,400 jobs21%

+47,400 jobs5%

POPULATION GROWTH: 2005 TO 2015

0%

10%

20%

30%

40%

San Francisco San Jose Denver/Boulder Portland Oakland Austin Seattle Houston San Antonio Dallas

20-34 Year Olds

Total Population

+183,000 +246,000

+514,000

+316,000

+337,000

+538,000

+520,000

+1,323,000 +453,000

+857,000

APARTMENT SNAPSHOT: THEN VS. NOWMARKETS WITH THE LARGEST SUPPLY GROWTH

Rank Market Total Apartments, Q4 15 10-Year Change

1 Austin, TX 213,842 37.4%

2 San Antonio, TX 177,031 33.1%

3 Raleigh/Durham, NC 146,019 29.7%

4 Charlotte, NC-SC 155,767 28.4%

5 Houston, TX 630,706 21.1%

6 Salt Lake City, UT 117,945 18.2%

7 Dallas, TX 526,257 17.5%

8 Nashville, TN 126,022 17.4%

9 Denver/Boulder, CO 295,438 15.8%

10 Washington, DC-VA-MD 572,941 15.3%

-- U.S. Core 100 Markets 17,387,476 10.5%

10-Year GrowthHouseholds (Y axis), Apartment Supply (X axis) and Employment (Bubble size)

SUPPLY GROWTH,

HOUSEHOLD

FORMATION AND JOB GROWTH

HIGH SUPPLY LEVELS DID NOT SLOW CLASS A RENTS

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%Local Average

U.S. Average

10-Year, Average Annual Class A Rent Growth in Highest-Supply Submarkets*

*submarkets with inventory growth exceeding parent metro’s average

OLDER APARTMENTS ARE BUFFERED FROM NEW PRODUCT

Rank MarketQ4 15 Rent Gap, Pre-2006

Units vs. Newer Units10-Year Rent Change,

Pre-2006 Units (Same-Store)

1 Austin, TX -33.9% 44.5%

2 San Antonio, TX -41.1% 28.8%

3 Raleigh/Durham, NC -30.1% 27.3%

4 Charlotte, NC-SC -33.1% 30.5%

5 Houston, TX -52.4% 32.1%

6 Salt Lake City, UT -20.6% 34.1%

7 Dallas, TX -50.4% 31.3%

8 Nashville, TN -31.9% 37.5%

9 Denver/Boulder, CO -35.4% 63.4%

10 Washington, DC-VA-MD -39.1% 27.2%

-- U.S. Average -38.7% 29.9%

$0

$100

$200

$300

$400

2000 2005 2010 2015*

Median Single-Family Home Price (000s)

* Through 3Q

HARD-HIT MARKETS ON RECOVERY PATH: MIAMI

+55%

‐28%

$600

$800

$1,000

$1,200

$1,400

2000 2005 2010 2015*

Average Apartment Effective Rent

+20%+27%

$0

$100

$200

$300

$400

2000 2005 2010 2015*

Median Single-Family Home Price (000s)

* Through 3Q

HARD-HIT MARKETS ON RECOVERY PATH: SACRAMENTO

$600

$750

$900

$1,050

$1,200

2000 2005 2010 2015*

Average Apartment Effective Rent

+17%

+25%

+74%

‐25%

$0

$100

$200

$300

$400

2000 2005 2010 2015*

Median Single-Family Home Price (000s)

* Through 3Q

HARD-HIT MARKETS ON RECOVERY PATH: LAS VEGAS

+80%

‐31%

$500

$600

$700

$800

$900

2000 2005 2010 2015*

Average Apartment Effective Rent

+15%

‐2%

IDENTITY CHANGE MARKETS: ATLANTA

0%

5%

10%

15%

20%

25%

30%

35%

40%

Atlanta, GA Peer SE/TXMarkets

U.S. Top 50Average

Apartment Inventory Growth

1995-05 2005-15 2015-20 fc

0%

5%

10%

15%

20%

25%

30%

35%

Atlanta, GA Peer SE/TXMarkets

U.S. Top 50Average

Net Employment Change

1995-2005 2005-2015

-6% -4% -2% 0% 2%

Gross Metro Product

Population: Ages 20-34

Median Household Income

Unemployment Rate

Total Employment

Change in L.A. vs. U.S., 2005-2015

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

L.A. Rent Growth Relative to U.S.

IDENTITY CHANGE MARKETS: LOS ANGELES

-2% -1% 0% 1% 2%

Gross Metro Product

Population: Ages 20-34

Median Household Income

Unemployment Rate

Total Employment

Change in Boston vs. U.S., 2005-2015

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Boston Rent Growth Relative to U.S.

IDENTITY CHANGE MARKETS: BOSTON

WHAT IS NOT CHANGING TO THE DEGREE PERCEIVED

0%

5%

10%

15%

20%

25%

30%

AIMCO Camden EQR Home* MAA Post UDR MPF** Zillow

Reported Rent-to-Income Ratios

*prior to sale  **based on leases tracked by RealPage software