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Tony Lenamon, MAI – National Multifamily Practice Leader
tony.lenamon@cbre.com
06-11-15 PRESENTATION
CONTI Investor Dinner
US Population Growth
Population, % change, mid-year 2014
Sources: Census Bureau, Moody’s Analytics
0.9% or greater
0.4% to 0.9%
0.4% or less
U.S. = 0.73%
1960 179,972,000
2014 319,906,652
NATIONAL MAP OF EFFECTIVE RENT GROWTH. THE STRONGEST
METROS AND SUBMARKETS ARE IN GA, FL, TX, AND WEST
Annual Effective
Rent Growth by
Submarket - 1Q15
Source: Axiometrics Inc.
Texas
CBRE Presentation June 2015
CBRE Presentation June 2015
Population of Largest U.S. Metropolitan Regions
1990
1. New York 16.8 million
2. Los Angeles 11.3 million
3. Chicago 8.2 million
4. Philadelphia 5.4 million
5. Detroit 4.2 million
6. Boston 4.1 million
7. Washington D.C. 4.1 million
8. Miami 4.1 million
9. Dallas-Fort Worth 3.9 million
10. Houston 3.8 million
Population of Largest U.S. Metropolitan Regions
2014
1. New York 20.0 million
2. Los Angeles 13.2 million
3. Chicago 9.5 million
4. Dallas-Fort Worth 6.9 million
5. Houston 6.4 million
6. Philadelphia 6.0 million
7. Washington D.C. 6.0 million
8. Miami 5.6 million
9. Atlanta 5.6 million
10. Boston 4.7 million
CBRE Presentation June 2015
Strength of DFW Economy
DFW
$440 billion
30% of Texas
Texas
$1.46 trillion
Gross Product in USD Top U.S. Metropolitan Areas
For Job Growth in 2014
1. DFW 136,900
2. New York 129,000
3. Houston 120,600
4. Los Angeles 104,100
5. Miami 72,800
• Spain
• Mexico
• Netherlands
• Saudi Arabia
• Argentina
• Poland
• Belgium
• Austria
• UAE
• South Africa
• Singapore
Dallas-Fort Worth
Is The Largest Region in Texas For
Manufacturing Jobs 29%
High Tech Jobs 32%
11 CBRE | TEXAS CHARTBOOK
December 2014, seasonally adjusted
TEXAS EMPLOYMENT TRENDS BY MARKET
2.4%
3.1%
2.8%
3.1%
4.3%
4.4% growth
0 20 40 60 80 100 120 140 160
El Paso
McAllen
Austin
San Antonio
Houston
Dallas/Ft. Worth
Year-over-Year Employment Change (000s)
Source: U.S. Bureau of Labor Statistics, CBRE Research, March 2015.
Texas:
457,900 jobs
4.0% growth
500,000
1,500,000
2,500,000
3,500,000
4,500,000
5,500,000
6,500,000
7,500,000
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Dallas MD Ft Worth MD
DFW MSA Population
1960 through 2015
1960 1,425,775
2014 7,097,813
or 26% of the State
Copyright 2015. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.
Headquarters Move to DFW
15 CBRE | TEXAS CHARTBOOK
Seasonally adjusted, ranked by Q4 2014
ANNUAL MEDIAN HOUSEHOLD INCOME TRENDS:
MAJOR TEXAS METROS
20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000
McAllen
El Paso
San Antonio
Houston
Dallas/Ft. Worth
Austin
Q4 2014 Q4 2012 Q4 2010
($)
Source: Moody’s Analytics, CBRE Research, March 2015.
DFW MSA
OFFICE CONSTRUCTION
Source: CBRE Inc.
(5)
0
5
10
15
20
25 1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Millions
ABSORBED DELIVERIES
DFW MSA
RETAIL CONSTRUCTION
Source: CBRE Inc.
(3.0)
0.0
3.0
6.0
9.0
12.0
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Millions of Square Feet
ABSORPTION DELIVERIES
DFW MSA
INDUSTRIAL CONSTRUCTION
Source: CBRE Inc.
(5)
0
5
10
15
20
25
30
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Millions
ABSORPTION DELIVERIES
DFW MSA
SINGLE FAMILY PERMITS
Source: Texas A&M RE Center
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Annual Number
of Permits
DFW MSA
MULTI-FAMILY CONSTRUCTION
Source: CBRE Inc.
(5,000)
5,000
15,000
25,000
35,000
45,000
55,000
65,000 1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
ABSORPTION DELIVERIES
Units
WHERE IS MULTI-FAMILY TODAY?
Continued Strong Performance Metrics
Buyer Demand is Strong – Lots of Equity
More Debt Options are Available
Cap Rates Have Compressed
New Construction is Significant
Value-Add Opportunities are Plenty
2%
3%
4%
5%
6%
7%
8%
9%
$0
$50
$100
$150
$200
$250
$300
$350
$400
1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014
CapitalizationRates
MarketValueandRescaledNOI
NCREIF Index: Market Values, Rescaled NOI and Capitalization Rates Based on a $100
Investment for the Period 1978 through 2014
Rescaled NOI
Market Values
Cap Rates
Average Capitalization Rate
5Greenspan’s Definition of a Bubble
“…I define a bubble as protracted period of falling risk aversion that translates into falling
capitalization rates that decline measurably below their long term trendless averages. Falling
capitalization rates propel one or more asset prices to unsustainable levels. All bubbles burst
when risk aversion reaches its irreducible minimum, i.e., credit spreads approaching zero,
though analysts’ ability to time the onset of deflation has proved illusive.” {emphasis added}
Alan Greenspan, “The Crisis,” Brooking Institute working paper, April 15, 2010.
Presently, a
difference of
~ 200 bps
2.5%
3.5%
4.5%
5.5%
6.5%
7.5%
8.5%
9.5%
$0
$50
$100
$150
$200
$250
$300
$350
$400
1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014
CapitalizationRate
MarketValueandRescaledNOI
Apartment - Market Values, Rescaled NOI and Capitalization Rates Based on a
$100 Investment for the Period 1980 through 2014
Average Capitalization Rate
Capitalization Rates
Rescaled NOI
Market Values
10What About Multifamily Prices?
Property values
fall by ~ 15%
over 3 years
Will property
values fall
precipitously
again?
Property values
fall by ~ 30%
over 2 years
Presently, a
difference of
~ 210 bps
8Asset Bubbles ← Who Cares?
• If you are a long-term, low-levered CRE investor, these deviations matter little.
• So, these asset bubbles matter more to:
Long-term, high-levered investors (particularly those with short-term debt
maturities (e.g., Macklowe & EOP) and/or poorly laddered maturities
(e.g., pre-crash GGP v. SPG)).
Short-term investors (e.g., value-add & opp funds, developers, etc.).
High-leverage, high-yield lenders (particularly those with levered balance
sheets (e.g., Blackstone mortgage REIT, Colony Capital debt funds, etc.)).
Government agencies (e.g., Fannie, Freddie, HUD, Fed, etc.):
o with exposure to high-leverage borrower, and
o who become the “lenders of last resort” in a downturn.
27 CBRE | VALUATION AND ADVISORY SERVICES
Aimee Morgan – Dallas Multi-housing Team Leader
Aimee.morgan@cbre.com
214.979.5687
• Eventual shift away from Agency (Fannie/Freddie) to:
Banks, Conduit/CMBS, Life Companies
• Current 10 year rates range from around 4.0% to 4.50% based on
75% to 80% LTV
• Conduits are still offering slightly higher rates than Fannie/Freddie,
but are able to compete with other benefits – such as quicker
closings, more cash-out and more flexibility.
THE FUTURE OF CAPITAL MARKETS M N
3 CBRE | VALUATION AND ADVISORY SERVICES
Aimee Morgan – Dallas Multi-housing Team Leader
Aimee.morgan@cbre.com
214.979.5687
Average Occupancy Rates
OCCUPANCY
Source: MPF
86.0%
87.0%
88.0%
89.0%
90.0%
91.0%
92.0%
93.0%
94.0%
95.0%
96.0%
2008Q2
2008Q3
2008Q4
2009Q1
2009Q2
2009Q3
2009Q4
2010Q1
2010Q2
2010Q3
2010Q4
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
Falls faster
Improves slower
5 CBRE | VALUATION AND ADVISORY SERVICES
Aimee Morgan – Dallas Multi-housing Team Leader
Aimee.morgan@cbre.com
214.979.5687
Rents Per Square Foot
RENTS
Source: MPF
$0.750
$0.800
$0.850
$0.900
$0.950
$1.000
$1.050
2008Q2
2008Q3
2008Q4
2009Q1
2009Q2
2009Q3
2009Q4
2010Q1
2010Q2
2010Q3
2010Q4
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
Note steady rent increases in face
of new construction
At low point: Rents down 10-15%
15 CBRE | VALUATION AND ADVISORY SERVICES
Aimee Morgan – Dallas Multi-housing Team Leader
Aimee.morgan@cbre.com
214.979.5687
Job Growth vs. Occupancy Rate
EMPLOYMENT M N N M N
Source: Texas Workforce Commission, CBRE EA/MPF
Note the lag, but still a powerful correlation
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
87.0%
88.0%
89.0%
90.0%
91.0%
92.0%
93.0%
94.0%
95.0%
96.0%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Occupancy YoY Job Growth
6 CBRE | VALUATION AND ADVISORY SERVICES
Aimee Morgan – Dallas Multi-housing Team Leader
Aimee.morgan@cbre.com
214.979.5687
Rents Per Square Foot Forecast through 2015
RENT FORECAST
Source: MPF
$0.750
$0.800
$0.850
$0.900
$0.950
$1.000
$1.050
2008Q2
2008Q3
2008Q4
2009Q1
2009Q2
2009Q3
2009Q4
2010Q1
2010Q2
2010Q3
2010Q4
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
Rent growth is 
projected to 
continue  over the 
next year, despite 
new construction.
4 CBRE | VALUATION AND ADVISORY SERVICES
Aimee Morgan – Dallas Multi-housing Team Leader
Aimee.morgan@cbre.com
214.979.5687
Forecast Average Occupancy through 2015
OCCUPANCY FORECAST
87
88
89
90
91
92
93
94
95
96
Occupancy is 
projected to dip 
slightly as new 
construction 
continues.  
CBRE Presentation June 2015
For more information regarding this presentation please contact:
TONY LENAMON
National Multifamily Practice Leader
T +1 214 979 5680
Tony.lenamon@cbre.com
QUESTIONS?
31 CBRE | VALUATION AND ADVISORY SERVICES
Aimee Morgan – Dallas Multi-housing Team Leader
Aimee.morgan@cbre.com
214.979.5687
• Penthouse level fitness centers.
• Concierge services.
• Dog wash stations.
• Private resident bars/coffee lounges.
• Rooftop terraces.
• Laundry pass-throughs.
• Variation of quartz and granite countertops.
THE LATEST AND GREATEST CLASS A AMENITIES
20 CBRE | VALUATION AND ADVISORY SERVICES
Aimee Morgan – Dallas Multi-housing Team Leader
Aimee.morgan@cbre.com
214.979.5687
Population Growth Forecast
POPULATION
4.0
5.0
6.0
7.0
8.0
9.0
10.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2015 2020 2025 2030 2035 2040
Millions
Population Forecast
May it be so!
29 CBRE | VALUATION AND ADVISORY SERVICES
Aimee Morgan – Dallas Multi-housing Team Leader
Aimee.morgan@cbre.com
214.979.5687
• Hard flooring throughout the unit (ceramic or faux-wood vinyl).
• Upgraded cabinetry and countertops.
• Upgraded or new appliances.
• Re-tiling showers/tubs.
• Upgrading retaining walls from wood ties to stone/brick.
• Adding or upgrading amenities – dog parks, clubrooms with wifi and
coffee bars, fitness centers, etc.
• Adding washer/dryer connections
• Adding enclosed yards
• Start charging for everything!
• Water, sewer, trash, electric (if not individually metered), pest control,
parking spots
VALUE-ADD TRENDS YOUR APPRAISER IS
NOTICING
33 CBRE | VALUATION AND ADVISORY SERVICES
Aimee Morgan – Dallas Multi-housing Team Leader
Aimee.morgan@cbre.com
214.979.5687
• Oklahoma City – excellent demographics and job growth coupled with
low new construction is driving demand. Keep an eye on this market
as the energy sector fluctuates, but overall it has good fundamentals
and potential for growth.
• Lubbock/Amarillo – solid slow-growth markets. Since inventory here
is older and new construction is slower, tenants respond very well to
renovations and upgrades.
SOME OTHER MARKETS TO THINK ABOUT
34 CBRE | VALUATION AND ADVISORY SERVICES
Aimee Morgan – Dallas Multi-housing Team Leader
Aimee.morgan@cbre.com
214.979.5687
• Part art, part science.
• Three approaches to value: Cost, Sales Comparison and Income
Capitalization. If developed properly all three should result in the
same conclusion.
• Governed by very specific USPAP, FIRREA and generally accepted
appraiser methodology. When developed correctly, should always
result in an accurate estimate of the defined value (usually as is
market value).
• Should simply hold up a mirror to the current market and reflect it in
the report (should not look back, should look forward).
What is an appraisal?
HOW TO GET ALONG WITH YOUR FRIENDLY
APPRAISER
36 CBRE | VALUATION AND ADVISORY SERVICES
Aimee Morgan – Dallas Multi-housing Team Leader
Aimee.morgan@cbre.com
214.979.5687
HELPFUL/NOT HELPFUL
You can get a good result if:
•Work with an appraisal specialist
•Provide all the data requested
•Provide data not requested but
helpful
•Stay factual and market-based
•Give insights on a project you’ve
probably been working on for
months-years and the appraiser
has not
•Share your thoughts on value and
why, if allowed by the
circumstances and client
You may have a bad result if:
•Lost Reality (not market-based),
e.g. cite only the outliers
•“Can’t we just say”
•Don’t give the data but still want
the appraisal
•The bull rush

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CBRE Presentation June 2015

  • 1. Tony Lenamon, MAI – National Multifamily Practice Leader tony.lenamon@cbre.com 06-11-15 PRESENTATION CONTI Investor Dinner
  • 2. US Population Growth Population, % change, mid-year 2014 Sources: Census Bureau, Moody’s Analytics 0.9% or greater 0.4% to 0.9% 0.4% or less U.S. = 0.73% 1960 179,972,000 2014 319,906,652
  • 3. NATIONAL MAP OF EFFECTIVE RENT GROWTH. THE STRONGEST METROS AND SUBMARKETS ARE IN GA, FL, TX, AND WEST Annual Effective Rent Growth by Submarket - 1Q15 Source: Axiometrics Inc.
  • 7. Population of Largest U.S. Metropolitan Regions 1990 1. New York 16.8 million 2. Los Angeles 11.3 million 3. Chicago 8.2 million 4. Philadelphia 5.4 million 5. Detroit 4.2 million 6. Boston 4.1 million 7. Washington D.C. 4.1 million 8. Miami 4.1 million 9. Dallas-Fort Worth 3.9 million 10. Houston 3.8 million
  • 8. Population of Largest U.S. Metropolitan Regions 2014 1. New York 20.0 million 2. Los Angeles 13.2 million 3. Chicago 9.5 million 4. Dallas-Fort Worth 6.9 million 5. Houston 6.4 million 6. Philadelphia 6.0 million 7. Washington D.C. 6.0 million 8. Miami 5.6 million 9. Atlanta 5.6 million 10. Boston 4.7 million
  • 10. Strength of DFW Economy DFW $440 billion 30% of Texas Texas $1.46 trillion Gross Product in USD Top U.S. Metropolitan Areas For Job Growth in 2014 1. DFW 136,900 2. New York 129,000 3. Houston 120,600 4. Los Angeles 104,100 5. Miami 72,800 • Spain • Mexico • Netherlands • Saudi Arabia • Argentina • Poland • Belgium • Austria • UAE • South Africa • Singapore Dallas-Fort Worth Is The Largest Region in Texas For Manufacturing Jobs 29% High Tech Jobs 32%
  • 11. 11 CBRE | TEXAS CHARTBOOK December 2014, seasonally adjusted TEXAS EMPLOYMENT TRENDS BY MARKET 2.4% 3.1% 2.8% 3.1% 4.3% 4.4% growth 0 20 40 60 80 100 120 140 160 El Paso McAllen Austin San Antonio Houston Dallas/Ft. Worth Year-over-Year Employment Change (000s) Source: U.S. Bureau of Labor Statistics, CBRE Research, March 2015. Texas: 457,900 jobs 4.0% growth
  • 14. 15 CBRE | TEXAS CHARTBOOK Seasonally adjusted, ranked by Q4 2014 ANNUAL MEDIAN HOUSEHOLD INCOME TRENDS: MAJOR TEXAS METROS 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 McAllen El Paso San Antonio Houston Dallas/Ft. Worth Austin Q4 2014 Q4 2012 Q4 2010 ($) Source: Moody’s Analytics, CBRE Research, March 2015.
  • 15. DFW MSA OFFICE CONSTRUCTION Source: CBRE Inc. (5) 0 5 10 15 20 25 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Millions ABSORBED DELIVERIES
  • 16. DFW MSA RETAIL CONSTRUCTION Source: CBRE Inc. (3.0) 0.0 3.0 6.0 9.0 12.0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Millions of Square Feet ABSORPTION DELIVERIES
  • 17. DFW MSA INDUSTRIAL CONSTRUCTION Source: CBRE Inc. (5) 0 5 10 15 20 25 30 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Millions ABSORPTION DELIVERIES
  • 18. DFW MSA SINGLE FAMILY PERMITS Source: Texas A&M RE Center 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Annual Number of Permits
  • 19. DFW MSA MULTI-FAMILY CONSTRUCTION Source: CBRE Inc. (5,000) 5,000 15,000 25,000 35,000 45,000 55,000 65,000 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 ABSORPTION DELIVERIES Units
  • 20. WHERE IS MULTI-FAMILY TODAY? Continued Strong Performance Metrics Buyer Demand is Strong – Lots of Equity More Debt Options are Available Cap Rates Have Compressed New Construction is Significant Value-Add Opportunities are Plenty
  • 21. 2% 3% 4% 5% 6% 7% 8% 9% $0 $50 $100 $150 $200 $250 $300 $350 $400 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 CapitalizationRates MarketValueandRescaledNOI NCREIF Index: Market Values, Rescaled NOI and Capitalization Rates Based on a $100 Investment for the Period 1978 through 2014 Rescaled NOI Market Values Cap Rates Average Capitalization Rate 5Greenspan’s Definition of a Bubble “…I define a bubble as protracted period of falling risk aversion that translates into falling capitalization rates that decline measurably below their long term trendless averages. Falling capitalization rates propel one or more asset prices to unsustainable levels. All bubbles burst when risk aversion reaches its irreducible minimum, i.e., credit spreads approaching zero, though analysts’ ability to time the onset of deflation has proved illusive.” {emphasis added} Alan Greenspan, “The Crisis,” Brooking Institute working paper, April 15, 2010. Presently, a difference of ~ 200 bps
  • 22. 2.5% 3.5% 4.5% 5.5% 6.5% 7.5% 8.5% 9.5% $0 $50 $100 $150 $200 $250 $300 $350 $400 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 CapitalizationRate MarketValueandRescaledNOI Apartment - Market Values, Rescaled NOI and Capitalization Rates Based on a $100 Investment for the Period 1980 through 2014 Average Capitalization Rate Capitalization Rates Rescaled NOI Market Values 10What About Multifamily Prices? Property values fall by ~ 15% over 3 years Will property values fall precipitously again? Property values fall by ~ 30% over 2 years Presently, a difference of ~ 210 bps
  • 23. 8Asset Bubbles ← Who Cares? • If you are a long-term, low-levered CRE investor, these deviations matter little. • So, these asset bubbles matter more to: Long-term, high-levered investors (particularly those with short-term debt maturities (e.g., Macklowe & EOP) and/or poorly laddered maturities (e.g., pre-crash GGP v. SPG)). Short-term investors (e.g., value-add & opp funds, developers, etc.). High-leverage, high-yield lenders (particularly those with levered balance sheets (e.g., Blackstone mortgage REIT, Colony Capital debt funds, etc.)). Government agencies (e.g., Fannie, Freddie, HUD, Fed, etc.): o with exposure to high-leverage borrower, and o who become the “lenders of last resort” in a downturn.
  • 24. 27 CBRE | VALUATION AND ADVISORY SERVICES Aimee Morgan – Dallas Multi-housing Team Leader Aimee.morgan@cbre.com 214.979.5687 • Eventual shift away from Agency (Fannie/Freddie) to: Banks, Conduit/CMBS, Life Companies • Current 10 year rates range from around 4.0% to 4.50% based on 75% to 80% LTV • Conduits are still offering slightly higher rates than Fannie/Freddie, but are able to compete with other benefits – such as quicker closings, more cash-out and more flexibility. THE FUTURE OF CAPITAL MARKETS M N
  • 25. 3 CBRE | VALUATION AND ADVISORY SERVICES Aimee Morgan – Dallas Multi-housing Team Leader Aimee.morgan@cbre.com 214.979.5687 Average Occupancy Rates OCCUPANCY Source: MPF 86.0% 87.0% 88.0% 89.0% 90.0% 91.0% 92.0% 93.0% 94.0% 95.0% 96.0% 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 Falls faster Improves slower
  • 26. 5 CBRE | VALUATION AND ADVISORY SERVICES Aimee Morgan – Dallas Multi-housing Team Leader Aimee.morgan@cbre.com 214.979.5687 Rents Per Square Foot RENTS Source: MPF $0.750 $0.800 $0.850 $0.900 $0.950 $1.000 $1.050 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 Note steady rent increases in face of new construction At low point: Rents down 10-15%
  • 27. 15 CBRE | VALUATION AND ADVISORY SERVICES Aimee Morgan – Dallas Multi-housing Team Leader Aimee.morgan@cbre.com 214.979.5687 Job Growth vs. Occupancy Rate EMPLOYMENT M N N M N Source: Texas Workforce Commission, CBRE EA/MPF Note the lag, but still a powerful correlation -5.0% -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 87.0% 88.0% 89.0% 90.0% 91.0% 92.0% 93.0% 94.0% 95.0% 96.0% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Occupancy YoY Job Growth
  • 28. 6 CBRE | VALUATION AND ADVISORY SERVICES Aimee Morgan – Dallas Multi-housing Team Leader Aimee.morgan@cbre.com 214.979.5687 Rents Per Square Foot Forecast through 2015 RENT FORECAST Source: MPF $0.750 $0.800 $0.850 $0.900 $0.950 $1.000 $1.050 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 Rent growth is  projected to  continue  over the  next year, despite  new construction.
  • 29. 4 CBRE | VALUATION AND ADVISORY SERVICES Aimee Morgan – Dallas Multi-housing Team Leader Aimee.morgan@cbre.com 214.979.5687 Forecast Average Occupancy through 2015 OCCUPANCY FORECAST 87 88 89 90 91 92 93 94 95 96 Occupancy is  projected to dip  slightly as new  construction  continues.  
  • 31. For more information regarding this presentation please contact: TONY LENAMON National Multifamily Practice Leader T +1 214 979 5680 Tony.lenamon@cbre.com QUESTIONS?
  • 32. 31 CBRE | VALUATION AND ADVISORY SERVICES Aimee Morgan – Dallas Multi-housing Team Leader Aimee.morgan@cbre.com 214.979.5687 • Penthouse level fitness centers. • Concierge services. • Dog wash stations. • Private resident bars/coffee lounges. • Rooftop terraces. • Laundry pass-throughs. • Variation of quartz and granite countertops. THE LATEST AND GREATEST CLASS A AMENITIES
  • 33. 20 CBRE | VALUATION AND ADVISORY SERVICES Aimee Morgan – Dallas Multi-housing Team Leader Aimee.morgan@cbre.com 214.979.5687 Population Growth Forecast POPULATION 4.0 5.0 6.0 7.0 8.0 9.0 10.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2015 2020 2025 2030 2035 2040 Millions Population Forecast May it be so!
  • 34. 29 CBRE | VALUATION AND ADVISORY SERVICES Aimee Morgan – Dallas Multi-housing Team Leader Aimee.morgan@cbre.com 214.979.5687 • Hard flooring throughout the unit (ceramic or faux-wood vinyl). • Upgraded cabinetry and countertops. • Upgraded or new appliances. • Re-tiling showers/tubs. • Upgrading retaining walls from wood ties to stone/brick. • Adding or upgrading amenities – dog parks, clubrooms with wifi and coffee bars, fitness centers, etc. • Adding washer/dryer connections • Adding enclosed yards • Start charging for everything! • Water, sewer, trash, electric (if not individually metered), pest control, parking spots VALUE-ADD TRENDS YOUR APPRAISER IS NOTICING
  • 35. 33 CBRE | VALUATION AND ADVISORY SERVICES Aimee Morgan – Dallas Multi-housing Team Leader Aimee.morgan@cbre.com 214.979.5687 • Oklahoma City – excellent demographics and job growth coupled with low new construction is driving demand. Keep an eye on this market as the energy sector fluctuates, but overall it has good fundamentals and potential for growth. • Lubbock/Amarillo – solid slow-growth markets. Since inventory here is older and new construction is slower, tenants respond very well to renovations and upgrades. SOME OTHER MARKETS TO THINK ABOUT
  • 36. 34 CBRE | VALUATION AND ADVISORY SERVICES Aimee Morgan – Dallas Multi-housing Team Leader Aimee.morgan@cbre.com 214.979.5687 • Part art, part science. • Three approaches to value: Cost, Sales Comparison and Income Capitalization. If developed properly all three should result in the same conclusion. • Governed by very specific USPAP, FIRREA and generally accepted appraiser methodology. When developed correctly, should always result in an accurate estimate of the defined value (usually as is market value). • Should simply hold up a mirror to the current market and reflect it in the report (should not look back, should look forward). What is an appraisal? HOW TO GET ALONG WITH YOUR FRIENDLY APPRAISER
  • 37. 36 CBRE | VALUATION AND ADVISORY SERVICES Aimee Morgan – Dallas Multi-housing Team Leader Aimee.morgan@cbre.com 214.979.5687 HELPFUL/NOT HELPFUL You can get a good result if: •Work with an appraisal specialist •Provide all the data requested •Provide data not requested but helpful •Stay factual and market-based •Give insights on a project you’ve probably been working on for months-years and the appraiser has not •Share your thoughts on value and why, if allowed by the circumstances and client You may have a bad result if: •Lost Reality (not market-based), e.g. cite only the outliers •“Can’t we just say” •Don’t give the data but still want the appraisal •The bull rush