MULTIFAMILY INVESTMENT TrENdSGreater Columbus reGion

www.colliers.com/ohio

Slow Start to 2013, But Buyer Demand Acceleratingapartment sales marKet oVerVieWAfter nearly $300 million in multifamily sales volume transacted in Columbus in the fourth quarter of 2012, the investment sales market started off slowly in 2013. The fourth quarter of 2012 had huge sales volume due year end closings, the expiration of Bush tax cuts, and a concentration of large Class A deals. In the first quarter of 2013, two properties over 100 units sold; both of which properties transferred from the same seller and buyer. This does not mean there is a lack of momentum in the market, rather that there is currently a substantial imbalance in the supply and demand. A growing number of buyers are chasing a smaller pool of on-market deals. A higher number of transactions will occur in the second quarter of 2013 because a majority of the properties currently on the market, consisting mostly of stabilized A and B class product, are under contract. We do not predict an accelerated amount of new listings to come on the market, because owners are benefiting from the strength of the rental market. The flipside of this projects a positive scenario for owners looking to sell due to the constrictive supply and buyers having the benefit of an accretive rental market.

Q1 2013 | MULTIFAMILY

total multiFamily sales Volume

surVeyeD by Quarter

$38,789,000 $59,027,500 $66,681,750

$298,149,714

$30,079,000

0

500

1000

1500

2000

2500

3000

3500

4000

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

$350,000,000

Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13Sales Volume Units

tHe Colliers oHio multiFamily inVestment team

Matt Gockstetter+1 614 437 4496matt.gockstetter@colliers.com

J rosenbusch+1 614 437 4697j.rosenbusch@colliers.com

Matt Newcomer+1 614 437 4698matt.newcomer@colliers.com

marKet inDiCators

Q1

2013*

Q2

2013**

oCCupanCy

rental rates

ConstruCtion

unemployment — —

*Actual change from previous quarter** Projected change from previous quarter

We are seeing more owners and investors coming off the sidelines as potential buyers in the marketplace. This is a result of the strong rental market evidenced by high occupancy and rent increases. In addition, regional private investment firms and a few institutional investment firms have entered the Columbus market in search of yield through acquisition of stabilized Class A multifamily assets. Still, a majority of the total multifamily transactions (51%) over the last twelve months have been purchased by private investors based in the Columbus market.

apartment sales marKet oVerVieW (ContinueD)Buyers’ demand in the Columbus marketplace has been strongest for stabilized Class A and B properties. The handful of properties on the market during the first quarter in this property class garnered a large amount of interest and strong marketing activity from prospective buyers both locally and regionally. Buyers are expecting to find value in these properties by pushing revenue, which is achievable in the current rental environment, or through improved management efficiencies. This rush to Class A and B properties is also fueled by attainable non-recourse debt with historically low interest rates. This causes cap rate compression, and in turn

Capital marKets

siGniFiCant loan issuanCes

522 offices in 62 countries on 6 continentsUnited States: 147Canada: 37Latin America: 19Asia Pacific: 201EMEA: 118

• $1.8 billion in annual revenue

• 1.25 billion square feet under management

• Over 12,300 professionals

Accelerating success.

This document/email has been prepared by Colliers International for advertising purposes. Colliers International statistics and data are audited annually and may result in revisions to previously reported quarterly and final year-end figures. Sources include Columbus dispatch, Business First, Xceligent, CoStar, Bureau of Labor Statistics, Bureau of Economic Analysis, Gallup and the Cleveland Federal reserve.

in ContraCt

name Date units year built oCCupanCy type amount

Tall Oaks 1/17/13 160 1972 91% Fannie refinance $3,500,000

Lakeview Square 1/22/13 470 1986 91% Fannie refinance $19,500,000

The Elms 1/31/13 304 1976 97% Fannie refinance $11,000,000

Waterstone Landing 3/8/13 56 2012 95% Fannie refinance $4,800,000

buyer proFiles

trailinG 12 montHs

types Q1 2013

Local Private Investor 51%

regional Investment Firm 24%

National Private Investor 7%

National Investment Firm 9%

Institutional/rEIT 9%

improves pricing for owners looking to sell. For this reason, owners of well located, Class A and B multifamily product should reexamine the disposition value of their properties to capitalize on buyers’ increasingly aggressive pricing and the overall supply and demand imbalance in the Columbus market. The amount of distressed property acquisition opportunities in the marketplace has greatly diminished because banks have shaken out a majority of their bad assets by this point. We are seeing a fair amount of properties that were bought distressed between 2009 and 2012 returning to stabilized levels. A major-ity of those distressed properties had significant deferred maintenance that needed addressed for both exterior and interior items, and their respective new owner’s capital infusion for renovations has helped to attract new tenants and improve occupancy. As these value add projects stabilize, owners will be placing permanent financing to amplify cash flow or look to sell.

Source: US Census Bureau Data

196241

389

35

430

88 104

256

569

131

828

284

0

100

200

300

400

500

600

700

800

900

trailinG 12 montH builDinG permits: 5+ unit multiFamily

FranKlin County

Source: Fannie Mae Data

COLLIErS OHIO MULTIFAMILY 2012 PErFOrMANCE rESULTS:

• 1,171 Total Units Sold• 10 Multifamily Products

Sold In Columbus, Ohio

TrAILING 8 YEAr TEAM SALES HISTOrY:

• 12,284 Units Sold• A Total Sales Volume of $300,000,000+• 97 Transactions

Completed

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reseArch & ForecAsT reporT | Q1 2013 | MULTIFAMILY | GreATer COLUMbUs reGIOn