NORTH FLORIDAMULTI-HOUSING NEWSLETTER

MULT I -HOUSING GROUPJACKSONVILLE , FLORIDA

FALL

2011

TATTERSALL AT TAPESTRY PARK

Jacksonville, Florida$24.6 million/$57,060May 2011

Jacksonville, Florida$24.1 million/$120,500May 2011

Pensacola, Florida$16.3 million/$65,911May 2011

Jacksonville, Florida$42.8 million/$153,405June 2011

Gainesville, Florida$18.7 million/$91,666May 2011

Jacksonville, Florida$17.1 million/$71,250May 2011

Jacksonville, Florida$3.8 million/$20,430April 2011

1

4 MARTA3

VINTAGE AT PLANTATION BAY

5

EAGLES POINTE7

ATLANTIC CROSSING2

MARCUS POINTE4

SILVER SPRINGS6

CBRE JACKSONVILLEMULTI-HOUSING GROUP EXPANDS:

• Brian Moulder joins the CBRE Multi-Housing Group as a Senior Vice President, partnering with Vice Chairman Dan Allen and Dhaval Patel

• Dhaval Patel has recently been promoted to Director of Operations

• Robyn Gallup joins the team as a Client Services Specialist

• Beth Johnson joins the team as a Client Services Coordinator

• David Moran has recently been promoted to Marketing Coordinator

• Elizabeth Pippin joins CBRE Research as a Research Coordinator

Jacksonville’s multi-housing group has brokered over 3.5 billion dollars in total transaction volume since 2003.

2011’s SIGNIFICANT TRANSACTIONSNORTH FLORIDA SOLD BY CBRE

Orange Park, Florida$20 million/$55,866April 2011

WELLINGTON PLACE8

PROPERTY NAME

DATE SOLD

YEAR BUILT

NUMBER OF UNITS

PRICE / UNIT

1 GARDENS AT BRIDGEHAMPTON (BULK CONDO)

Oct 2011 2006 107 $56,542

2 FALCON LAKE Oct 2011 2008 440 $75,909

3 OAKS AT MILL CREEK Sept 2011 1987 360 $47,759

4 HUNTINGTON AT HIDDEN HILLS Sept 2011 1987 224 $86,280

5 TATTERSALL AT TAPESTRY PARK June 2011 2009 279 $153,405

6 HUNTERS WAY May 2011 1975 200 $58,500

7 SILVER SPRINGS May 2011 1985 432 $57,060

8 WELLINGTON PLACE May 2011 1987 358 $55,866

9 ATLANTIC CROSSING May 2011 2008 200 $120,500

10 VINTAGE AT PLANTATION BAY April 2011 2001 240 $71,250

11 EAGLES POINTE April 2011 1972 186 $40,430

12 BELLA TERRAZA (BULK CONDO) March 2011 1971 197 $31,218

13 CLUB AT CHARTER POINT March 2011 1975 258 $17,054

14 CROSS CREEK March 2011 1972 292 $18,493

15 WOODS OF MANDARIN March 2011 1974 401 $19,077

16 CITY RIDGE March 2011 1972 288 $21,267

Source: Real Capital Analytics

CBRE TRansaCTions

$165,595,36763%

all oThER FiRms

$98,068,33337%

CBRE TRansaCTions

all oThER FiRms

$105 000

$115,000

$125,000

$65,000

$75,000

$85,000

$95,000

$105,000

$25,000

$35,000

$45,000

$55,000

$25,000

$116,829

$57,060

$72,121

$29,368

BuilT > 2000 BuilT < 1999

$125,000

$115,000

$105,000

$95,000

$85,000

$75,000

$65,000

$55,000

$45,000

$35,000

$25,000

JACKSONVILLE MSA - 2011 TRANSACTIONS - GREATER THAN $3 MILLION

Property: TATTERSALL AT TAPESTRY PARK

Location: Jacksonville, FL

Price/PPU/PSF: $42.8 M/$153,405/$139

Date Sold: June 2011

Year Built: 2009

Total Units: 279

Broker: CBRE Jacksonville

BROKER CONTACTS: : Brian Moulder P: 904.633.2609

E: brian.moulder@cbre.com

: : Dhaval Patel P: 904.630.6369 E: dhaval.patel@cbre.com

:: Dan Allen P: 904.630.6362

E: dan.allen@cbre.com

CBRE | Licensed Real Estate Broker

Name: ATLANTIC CROSSING

Location: Jacksonville, FL

Price/PPU/PSF: $24.1 M/$120,500/$97

Date Sold: April 2011

Year Built: 2008

Total Units: 200

Broker: CBRE Jacksonville

JACKSONVILLE OFFICE225 Water Street, Suite 110Jacksonville, FL 32202www.cbre.com/mhgjacksonville

SUPPORT TEAM: : Robyn Gallup P: 904.633.2617

E: robyn.gallup@cbre.com

: : Beth Johnson P: 904.630.6360 E: beth.johnson@cbre.com

: : David Moran P: 904.630.6396 E: david.moran@cbre.com

: : Elizabeth Pippin P: 904.630.6382

E: elizabeth.pippin@cbre.com

NORTHFLORIDA’S CL

ASS A 2011‘S

OFHIGHEST

POPULATION AND EMPLOYMENT GROWTH RANKSAMONG 51 LARGEST METROS 2010 - 2015

POPULATION EMPLOYMENT

RANK METROANNUAL GROWTH

RANK METROANNUAL GROWTH

1 Phoenix, AZ 2.7% 1 Austin, TX 2.6%

2 Austin, TX 2.7% 2 Houston, TX 3.2%

3 Las Vegas, NV 2.6% 3 Dallas, TX 3.2%

4 West Palm Beach, FL 2.5% 4 Atlanta, GA 3.1%

5 Orlando, FL 2.3% 5 Fort Worth, TX 3.1%

6 Atlanta, GA 2.2% 6 San Antonio, TX 3.1%

7 Charlotte, NC 2.2% 7 Las Vegas, NV 3.0%

8 Dallas, TX 2.1% 8 Orlando, FL 2.8%

9 Fort Worth, TX 2.1% 9 Charlotte, NC 2.5%

10 San Antonio, TX 2.1% 10 Jacksonville, FL 2.4%

11 Houston, TX 2.0% 11 Phoenix, AZ 2.4%

12 Portland, OR 1.8% 12 Portland, OR 2.4%

13 Sacramento, CA 1.5% 13 West Palm Beach, FL 2.3%

14 Jacksonville, FL 1.4% 14 Minneapolis, MN 2.3%

15 Fort Lauderdale, FL 1.4% 15 Nashville, TN 2.3%

Source: Economy.com

* First transaction above $100,000 per unit since fourth quarter 2007.

* New market record for an income property in Jacksonville FL.

• Jacksonville has gone from the weakest large economy in Florida to the strongest earlier this year. As in most Florida metro areas, travel and tourism are creating the most jobs, followed not too distantly by healthcare. But a resurgence in construction payrolls has been instrumental to the metro area’s revival. Stronger hiring is chipping away at the unemployment rate, which has fallen by more than the state’s.

• Jacksonville’s housing market will stabilize sooner than in almost every other Florida metro area. In addition, the metro area’s foreclosure problem is not as severe as elsewhere in the state, mitigating a source of house price declines.

• Sales and new building will be boosted by the economic stability provided by the metro area’s military bases and an accelerating pace of job creation, enabling construction payrolls to expand robustly. Construction employment is expected to rise 9% next year, more than in any other industry.

• The metro area has comparative advantages that position it to gain from growth in international trade, which is expected to remain strong in the second half of the year. While military bases form the foundation of the economy, trade, transportation and logistics provide the avenues for growth. A new terminal at JAXPort will create 200 jobs, and Pittsburgh-based PLS Logistics announced it will relocate to Jacksonville, citing the area’s growing port operations and proximity to three major highways and three railroads.

• Jacksonville will recover faster than the nation, buoyed by goods-producing industries and trade. Service industry expansion will ensure that the metro area’s recovery is broad-based. In the long term, a strong presence of defense contractors, its growing prominence as an international port, and robust demographic trends ensure that Jacksonville will be an above-average performer.

MULTI-FAMILY OUTLOOK

NORTH FLORIDA ECONOMIC OUTLOOK

• 2011 year-to-date transaction volume for the North Florida market is over $260 million, with CBRE controlling over 60% of those deals. *

•Cap rates have varied greatly depending on location, but recent sales indicate:

• Class A properties have traded in the 5.5% – 5.75% range

• Class B properties from 6.25% – 7.0%

• Class C properties over 7.0%

• Similar to other markets, cap rates declined on a macro level this year, with major compression for value add deals and higher quality assets located in the Southern submarkets in Jacksonville.

• After a long absence, REIT’s are once again the most active buyer for A products, with private capital groups being the most active buyers outside of the A market.

• Short sales, note sales, and foreclosure made up approximately 85% of the year’s transactions.

•Quality trophy A products are starting to trade again in our market, such as Tattersall at Tapestry Park and Atlantic Crossing. Even though there have been some distressed sales, it is important to note the quality of assets traded this year compared to the previous two years.

• Improving fundamentals, positive job growth, demographic shifts and a constricted pipeline for 2012 and 2013 should further increase investor interest level in both stabilized and distressed properties.

• Fundamentals are improving and the prognosis for the next 5 years is very strong, with increasing rents and vacancy rates steadily declining. By 2016, MPF is forecasting a vacancy rate below 6.5% with a combined positive rent growth close to 15%.

• The Jacksonville apartment market continues its strong positive trend. For the first time in the past three years, theaverage market vacancy factor is less than 10%, with 4 out of the 7 submarkets posting less than 8% vacancy.

•Concessions are burning off throughout the market, with a majority of the submarkets offering a minimal amount – mainly aginginventory.Thisisasignificantimprovementoverthistimelast year, during which a concession of 1-2 months was common.

• Rent growth that was present only in select submarkets is now more prevalent. Evidence of that trend has been clear in recent underwriting, as the most recent months generally demonstrate the best performance across the board.

• The vacancy rate in the Jacksonville apartment market continues to improve reaching 10.3% as of June, down from a high of 16% two-and-a-half years ago. There are still a number of communities in receivership and foreclosure, which is keeping the vacancy rate at a higher level.

• Same-storerentspostedtheirfirstsignificantimprovementin four years, rising 1.6%, or $12.36. This helped the average rent improve to $765. Nearly half of all communities are still offering some type of concession.

•Northern submarkets - where there is older product stock - continue to lag the market in occupancy, rent and concessions but are nonetheless seeing positive trends.

•CBRE is currently marketing a Class A property in the Southeast quadrant which achieved $1.15 / SF on their last 90 leases. This type of consistent rent growth has not been seen since 2007, when A properties were achieving $1.25 to $1.30 per sq. ft.

• Buyers are still on the hunt for Class A and well-located B properties with a value-add component, according to our recent marketing efforts.

*Sources: Real Data - AptIndex; Economy.com; Real Capital Analytics - Transactions greater than $3 million.

JACKSONVILLE MSA TOP EMPLOYERS

Company name

number of

employees

Company name

number of

employees

Naval Air Station Jacksonville 25,240 Clay County School Board 4,000Duval County Public Schools 14,480 St. Vincent’s Medical Center 4,000Naval Station Mayport 12,670 U.S. Postal Service 3,790City of Jacksonville 8,820 Shands Jacksonville Medical Center 3,500Baptist Health 8,270 St. Johns County School District 3.440Bank of America Merrill Lynch 6.400 Jacksonville Sheriff’s Office 3,300Blue Cross Blue Shield 6,000 CSX 3,300Citi 5,000 J P Morgan Chase 3,200Mayo Clinic 4,970 Fleet Readiness Center 3,200United Parcel Service 4,100 Wells Fargo 2,800

JACKSONVILLE FORECAST 2011 - 2016

yearToTal employmenT

(x 1000)VaCanCy raTe %

raTe Index per unIT

renT InflaTIon %

2011 588 9.8 $745.73 0.5

2012 603 8.8 $756.08 1.4

2013 620 7.8 $779.35 3.1

2014 633 7.1 $805.04 3.3

2015 644 6.7 $832.52 3.4

2016 655 6.5 $861.52 3.5Source: MPF Research, CBRE, Inc.

• Total employment is projected to increase by approx. 72,600 jobs during the 2011 - 2016 period in the Jacksonville MSA.

• Net absorption is expected to outpace new supply, with an expected average of 260 units and net absorption of 816 units.

• Vacancy rates are expected to improve to 6.5%, while rents are forecasted to rise to $861.52.

JACKSONVILLE HOT TOPICSJacksonville Will Recover Better than Most of Florida (Jacksonville Business Journal, Nov 2011)

• UCF Institute for Economic Competitiveness expects Jacksonville to fare better in its economic recovery than most of the rest of the state over the next three years.

Florida Economy Will Grow Faster than the Southeast (Miami Herald, Nov 2011)

• The Federal Reserve’s state-by-state economic index sees Florida continuing to grow at a quicker pace than the rest of the South-east.

JAXPort Could Bring 100,000 Jobs to Jacksonville (Jacksonville Business Journal, August 2011)

• Hanjin (Korea) signed a 30-year lease to build a $300 million container facility expected to open in 2016 which is projected to bring over $1 billion in economic impact.

JP Morgan Chase Expanding - Adding 250 New Jobs (Jacksonville Business Journal, September 2011)

• These full-time jobs will be in Chase’s home lending operations group with an average wage of $53,000 if it receives incentives.

Northeast Florida Businesses Planning for Growth (JAXUSA Partnership Newsletter, October 2011)

• 52% of surveyed businesses said that their company expects to increase jobs in Northeast Florida and 27% said that they will increase capital investment here.

• The JAXUSA Partnership has helped create 3,000 new jobs in the Jacksonville MSA.

Convergys Corp. Announces 900 New Jobs in Southside (Jacksonville Business Journal, August 2011)

• Convergys Corp. said it will hire 900 customer service and sales positions at its call center. The jobs are permanent positions, to support a client in the telecommunications industry.

SAFT Batteries Opens the “Factory of the Future” at Cecil Commerce Center (First Coast News, September 2011)

• SAFT Batteries, the world’s leading designer, developer and manufacturer of high-tech industrial and defense applications, opened the “Factory of the Future” in September. The opening of SAFT brings 300 new jobs to the Westside market.

Sources: JAXUSA Partnership, Jacksonville Regional Chamber of Commerce

WEST

CENTRAL

SOUTH

ARLINGTON

SOUTHEAST

BEACHES

BAYMEADOWS

NORTH

ST. AUGUSTINE

ORANGE PARK MANDARIN

JAXAIRPORT

95

95

295

295

10

1

295

1

90

10

9A

17

17

90

CecilField

Marine Terminals

MayportStation

JACKSONVILLE MSA

APARTMENT MARKET STATISTICS

Submarket

Inventory

(unItS)average

SFaSkIng

rent

avg. rent/SF

average

vacancy

Arlington 9,651 954 $662 $0.69 15.6%

Baymeadows 9,081 1,002 $851 $0.85 5.6%

Beaches 2,424 894 $771 $0.86 6.1%

Central 1,119 963 $888 $0.92 6.2%

Mandarin 6,847 926 $750 $0.81 9.7%

North 3,857 971 $721 $0.74 12.6%

Orange Park 4,846 1,019 $775 $0.76 6.1%

South 8,428 902 $722 $0.80 12.3%

Southeast 9,908 1,032 $921 $0.89 7.8%

St. Augustine 1,115 946 $770 $0.81 6.4%

West 8,941 956 $666 $0.69 14.2%

totalS/averageS 66,217 967 $765 $0.79 10.3%Source: Real Data - AptIndex, July 2011

2 0 1 1 CBRE NORTH FLORIDAMULTI-HOUSING GROUP

HARBORTOWN PENINSULA• Jacksonville, FL

• 12.75± Acres / Up to 520 units

• www.cbremarketplace.com/

harbortown

• Intracoastal Waterway land adjacent to marina

• The property’s high-visibility waterfront location presents an excellent opportunity for a unique multifamily development

FLORIDA CLUB• Jacksonville, FL

• 2008 / 180 units

• www.cbremarketplace.com/

floridaclub

• Boutique asset• Submarket has the highest rents in the MSA• Broad, high-end amenity package• Located in Jacksonville’s most desirable

submarket

SPRINGS AT EFFINGHAM• Savannah, GA

• 2008 / 352 units

• www.cbremarketplace.com/

springsateffingham

• Strongest growth area in the MSA• Stable, cash-flowing asset• “Concierge” units provide proven upside

potential• High-quality construction

ISLAND CLUB• Jacksonville, FL

• 2008 / 244 units

• www.cbremarketplace.com/

islandclub

• Lender-Owned• Significantly below replacement cost• Superior to submarket competition

MATHEWS CROSSING• Jacksonville, FL

• 1972 / 1,103 units

• www.cbremarketplace.com/

mathewscrossingapts

• Lender-driven sale• Distressed asset offered significantly below

current debt level• Offers easy access to the Jacksonville Inter-

national Airport, Jacksonville University, Bap-tist Hospital, University of North Florida, and over 170 upscale retailers and restaurants

SAMPLE OFFERINGS

© 2011 CBRE, Inc. The information above has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no

guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness.