9:45 AM – Tipping Point: New Development on the Brink of Change

Surviving the Inevitable• Property Differentiation

• By Design or Theme• By Extended Services• By Location• By Amenities• By Activities

• Flexible Budgeting• Balancing Rents and Staffing Levels• Resident Retention vs New Leases• Cash Flow vs Valuation

• Plan from the Start• Zeroscape Landscaping• Energy Efficiency• Project Positioning

Author: Rick Williamson

Author:

New Development on the Brink of Change LYND

• 30,000+/- units in current portfolio• $2B transacted • 16 states/50 metros• Over 800 employees• New MF developments in Denver,

Austin, SA, Houston & Dallas

DALLAS MARKET

• Continual demand in both urban and suburban locations

• Next income bracket renters• Growth & Jobs – spread out employment

hubs across the metro• Hot Dallas Submarkets – Plano, Frisco,

McKinney, Downtown, Uptown, Farmers Market and Transformative Markets – Trinity Groves, Victory, Bishop Arts

• The Bowie, Austin, Texas• MFE Merit Award, High Rise of the Year,

2016• Certified LEED Silver & Austin Energy

Green Building Program Three Star Rating

• Joule, Denver, Colorado• LEED Certified

• Lynd at Industry, Denver, Colorado• Coming Soon - 4Q 2017

Recent FinancingsConstruction, 124 Unit Apartments in Vancouver, WATerm: 15 MonthsRate: 9.99% and 3.5 pointsConstruction, Mixed Use Project in Portland, ORTerm: 24 MonthsRate: 9.49% and 4.5 points Construction, 55 Unit Apartments in Sacramento, CA Term: 24 MonhtsRate: 10.99% and 3.50 points Author: Paul Rahimian, Parkview Financial

Twin Creeks Crossing-Phase 1Land Area: 14.26 acresDensity: 24.35 DU/AcreAvg. Unit sf.: 875 sfTotal Net leasing: 303,871 sfTotal Hard Costs: $30,205,000.00Cost/Net SF:$100.00 sf Phase 1Cost/Net SF:$109.00 sf Phase 2Author: Erik Earnshaw

11:00 AM – Track ARunaway

Train: Managing Costs of Construction

through Good Management &

Design

Case Study – Bridges of Cypress Creek

Property: Bridges of Cypress CreekLocation: Houston, TXVintage: 1980# Units: 314Purchase price: $9.0 million Rehab Budget: $2.5 millionInvestment Thesis: The Property was located in a Houston submarket we knew well and was deeply distressed. There were ~100 down units and significant deferred maintenance.

Renovation: Upgraded the 100 down units with modern finishes, Hardi siding replacement, exterior paint, amenity enhancements, new branding.

Outcome: Property is currently occupied at 93% with rents increased >40%; we refinanced the asset in month 18, returning ~40% of investment capital.

Before & After - Exteriors Before & After - Interiors Notes

Page is a 500 person architecture and engineering firm that offers the following services through multiple offices in the U.S. and abroad:

Architecture / Engineering / Interiors / Planning / Consulting / Commissioning / Programming / Sustainability

Page has designed more than 3,300 multi-family units for AMLI over the last 10 years.

Our award winning projects have received national recognition. One recent example:

AMLI Mueller - Multi-Housing News Gold Award for Low-rise Developments

Author: Talmadge Smith

11:00 AM – Track BChanging Faces: Raising Capital for Today’s Real Estate Deals

Author:

Rastegar Equity Partners is a Value-Add Commercial Real

Estate firm investing in income-producing recession-

resilient assets throughout the United States.

Headquartered in Dallas, Texas, the firm offers high quality

real estate portfolios designed to mitigate downside risk

while generating substantial annual cash-flow and

maximizing upside exposure.

Ari Rastegar

Pennybacker Capital, LLCDFW Case Study – Value Add Reposition – JV Equity• Complex, situational opportunity to acquired 482-unit, Class B multifamily property from distressed seller. •Acquired for $38k/unit (3.5% cap rate), $20k/unit in capex, and $58k/unit all-in (9.5% return on cost).

•Purchase price 25-35% discount to market value. Rents 25-40% below market.•Funded $19M to close all-cash in 17 days. Refinanced 34 days later with bridge debt at 73% LTC, L+590, 3+1+1, 36 mo I/O, then 25-yr am.•Cured extensive deferred maintenance, incentivized management, and rehabbed 77% of units. •Raised NOI by 354% over 24 months.•SPE recapped in month 25 at $81k/unit valuation (5.9% cap rate). Fund realized 46% IRR and 2.4x. •New SPE: 92% LP/8% GP, 79% LTPP agency financing.

Author: Tim Berry

ReadyCap CommercialReadyCap Commercial

• Non-bank lender • Offering small-balance commercial real estate financing • Nationwide

• Products include Commercial and Multifamily Freddie Mac SBL Seller / Servicer Bridge SBA 7(a)

• Subsidiary of Sutherland Asset Management, a publicly traded REIT

• Operation Centers in Dallas, Texas New Providence, New Jersey New York, New York

Author: Jim Going

Northwestern Mutual Apartment Portfolio• Portfolio size: $4.1 billion (46.1% of equity portfolio)• Total Apartment Units: 17,500• Property Count: 59

• Stable units: 13,900 (46 properties)• Average occupancy: 94.7%• Average age: 6.6 years

• Units under development or in lease-up: 3,600 (13 properties) • Assets located in 20 states

• Largest exposure: CA (25.6% of apt portfolio on MV basis)

• Examples of Dallas Regional Apartment Projects:• Dallas, TX: Knox Heights (Trammel Crow-Partner)• Denver, CO: To be Announced (Embrey-Partner)• Houston, TX: Gables West Ave (Gables-Partner)• Kansas City, MO: Summit Fair (Northpoint-Partner)• Dallas, TX: L2 (JLB-Partner)• Chicago Sinclair (Fifield-Partner)

Author: Roger Davis

11:00 AM – Track CThe Art of Underwriting a Value-Add Acquisition

The Bascom Group

2014 MFE 25 Renovators

Ranked #15,925 Units Renovated

Nevada 16 $45,184,856Arizona 3 $8,804,817California 4 $11,030,036Tennessee 2 $6,928,163Texas 3 $10,256,588

28 $82,204,461

Nevada 4 $8,210,024California 5 $20,216,040Texas 2 $9,160,000Colorado 2 $11,836,740

13 $49,422,804

Renovation dollarsNew Properties

Renovation dollars

2015 Bascom New Acquisitions

TX 2 NV 4 CA 5 CO 2

New Properties2016 Bascom New Acqui-

sitions

NV 16 AZ 2 CA 4 TN 2 TX 2

13 New Properties

28 New Properties

22

5

4

16

22

2

4

PROJECT SELECTION: Feasibility assessments, due diligence, creation of the "vision" for the property, and quick turnaround enable our clients to select and move quickly on the best projects for maximum ROI.

PROJECT ACCOUNTING: Progress draws, accounts payable and working capital management, contractor and vendor on boarding, direct purchasing, detailed budget tracking/reporting and project close out services keep projects on budget.

PROJECT MANAGEMENT: Our Construction Managers follow sound communication policies and hands-on construction management methodologies and processes that hold everyone accountable for project success with regard to SCOPE, BUDGET and SCHEDULE.

LandscapeArchitect- Design-

Engineering

AppliancesFlooringPrimaryGeneral Contract

or

Interiors Exteriors Amenities

Pass-through fee only

Pass-through fee only

Sponsor

11:50 AM – Track AUnder the Radar: Value-Add Redevelopment Strategies & Emerging

Markets across DFW

The Element, 5124 Live Oak, Dallas, TX

BEFORE AFTEREast Dallas Apartment Building: 23 unitsPurchase Price: $950,000Equity Invested: $500,000Renovation Cost: $650,000 / $28k per unitStabilized Basis: $1,600,000Sale Price: $2,300,000Total Profit: $700,000Rents: Before: $500/mo, all bills pd / After: $1,000/mo + electricRent Post Remodel: $1.50/sf

Author: Grant Guest, Perry Guest Companies

Richard Hoffmann Anterra Management

Clubhouse After

Interior After

Clubhouse Before

11:50 AM - Track BGrowing the Pie: Revenue Growing and Cost Saving Strategies for

Multifamily Owners and Operators

Appraisal Process

Texas Important Property Tax DatesIf a deadline falls on a weekend or legal holiday, the last day to file is automatically extended to the next business day:

May 1 Real Property Notices of Appraised Value typically mailed.May 31 Deadline for filing written protests to the Appraisal Review Board (or by the 30th day after a

notice of appraised value is mailed to the property owner, whichever is later.)July 25 Chief Appraiser certifies Appraisal Rolls.August The taxing districts hold public hearings on their budget.September The taxing districts adopt their budget and tax rates.October Property tax statements are usually mailed the first week in October.December 31 Mortgage companies generally pay by December 31.January 31 Last day to pay property taxes without penalty and interest of following year.January 1 Date that determines taxable and exemption status.January 31 Current year property taxes due by January 31.February 1 All unpaid property taxes become delinquent. The schedule for penalty and interest is as follows:

February 7%March 9%April 11%May 13%June 15%

April 30 Deadline to make application for many types of total exemptions, including Agricultural or “Ag” exemption.

COMMERCIAL REAPPRAISAL

• Undertaken January 15th – April 15th • Insure accurate and equitable values• By law each property must be reappraised at least once

every three years.

REAPPRAISAL

• Mass appraisal is the systematic appraisal of groups of properties as of a given date using standardized procedures and statistical testing.

• Texas Property Tax Code requires appraisal districts assign a January 1 value to all property.

• Mass appraisal provides the ability to accomplish such a large task.

• Annual reappraisal effort is where the mass appraisal process occurs.

COMMERCIAL APPROACHES TO VALUE

• Three approaches to value Income Approach Cost Approach Sales Approach

The impact of these assumptions on the resulting value indication plays a crucial role in understanding the appraisal district’s value position. For this reason, Cantrell McCulloch obtains a digital version of the appraisal district’s commercial worksheets and exports the data to a proprietary software application for comparison to the subject’s actual operating history. The unique insight gained from this data provides a benchmark from which all negotiations begin. It not only identifies inaccuracies relative to the subject’s actual operating performance, but also allows us to seek common ground on any appraisal district assumptions deemed favorable to our client’s tax position.

Income Capitalization Approach – This is the most common valuation approach utilized by appraisal districts in a mass appraisal of multi-family properties. The basic elements of this approach include: estimating the potential gross income on a stabilized basis; estimating a proper allowance for vacancy and collection loss; estimating anticipated fixed and variable operating expenses (including a reserve for replacement of depreciable components); and capitalizing the income stream into an indication of value by using market-derived capitalization rates.

The data necessary to complete the preceding steps is delineated on the appraisal district’s commercial worksheet as follows: • Potential Gross Income (PGI)• Vacancy Allowance (%)• Operating Expense Ratio (%)• Net Operating Income (NOI)• Capitalization Rate (OAR)

Remedy forUnequalAppraisal

• Uniform and Equal Protest – Allows for value corrections to be made “if the appraised value of the property exceeds the median appraised value of a reasonable number of comparable properties appropriately adjusted.” When a recent sale has occurred, this often is the only line of defense in the appeal process. If a conflict exists between taxation at market value and equal and uniform taxation, equal and uniform taxation prevails. The uniform and equal protest puts taxpayers on equal footing regardless of market value or sale price.

3 Steps to theAppeal Process

3 Steps to the Appeal Process1. Informal Hearing. Where Consultants attempt to settle “informally”.

Most appraisal districts make a good faith effort to reduce many protests at the informal meeting. This step is successful the majority of the time. Approximate timeframe: May 1 – July 1.

2. Formally. Through the Appraisal Review Board (ARB). Typically the more respected consultants have hearing dates that are usually later in the process allowing them to compare “settled” values vs. comparing to “notice” vales. Results can vary depending on the board members at your hearing. Approximate timeframe: July 1 – July 15.

3(a) Judicially. With a lawsuit. You must file within 60 days of receipt of ARB value. Appraisal Districts are highly reluctant to take a market value or an equity case to court. Almost all cases that end up in court are a result of a law or a procedural situation. Success rate is high when settling a value during this process. Approximate timeframe: Typically October – January (but for Harris County, could take until the following tax year values are debated and/or a two year lawsuit becomes necessary).

3(b)Arbitration. Must file within 45 days of receipt of ARB value and overall value must be less than $3 million. Results are binding and if taxpayer is successful, minimal cost involved. This appeal process has not been used often but with recent changes to the law, will become more prevalent.

Property Tax Binding Arbitration for Property OwnersTax Code Chapter 41A gives property owners meeting certain criteria the option to request binding arbitration as an alternative to filing an appeal of an ARB decision to district court. In binding arbitration, an independent, neutral arbitrator hears and examines the facts of an appeal and makes a decision that is binding on all parties.

To qualify for binding arbitration, a property owner must file a Request for Binding Arbitration, together with the required deposit payable to the Comptroller’s office, with the appraisal district within 45 days of receiving an ARB order of determination.

The chart below indicates the amount of property owner deposit required and the amount of arbitrator fee allowed based on the type of property and the ARB’s determination of the property’s market or appraised value.

Arbitration Deposit and Arbitrator Fee Schedule(Effective Sept. 1, 2015)

If the property owner wins the dispute (the arbitrator sets a value for the property nearer to the owner’s opinion of value than the ARB’s determination as shown on the request form), the property owner will be refunded his or her deposit less the Comptroller’s $50 fee for administrative costs. The appraisal district is then required to pay the arbitrator’s fees. If the arbitrator’s assigned value is not nearer to the owner’s opinion of value than the appraisal district’s value, the arbitrator is paid from the property owner’s deposit. If the arbitrator charges less than the full deposit, any remainder will be refunded to the property owner.

Regardless of the outcome, including withdrawal of your request or denial of your request, the Comptroller’s office retains $50 of the deposit for administrative costs.

Property Type Appraised or Market Value Deposit Arbitrator Fee

Not residence homestead $1 million or less $500 $450

Not residence homestead More than $1 million but not more than $2 million $800 $750

Not residence homestead More than $2 million but not more than $3 million $1,050 $1,000

Why Use A Tax Consultant?

Reasons To Thoroughly Evaluate Your Property Tax Assessments

Everyone in the industry has a basic understanding of the traditional

approaches to market value. However, it’s the nuances of these techniques

and how they are utilized to formulate the most effective property tax appeal

strategy

Benefits of Using a Consultant

• Timing of presentation to Appraisal District.• Comparing Final values versus Notice values.• Understanding of how the process works and knowing

the Appraisers on more of a personal level.• Working with Senior Appraisers that have more decision

making authority versus less experienced Appraisers.

Aggregate Tax Rates forSelect Texas Cities

All but Harris County tax rates for 2016 have been finalized with all other owners having received their tax bills with taxes due January 31, 2017. Tax rates for the DFW area and across Texas have generally remained stable the past two years.

Although most rates remain flat, property tax assessments continue to rise as cap rates and interest rates both remain at or near historic lows coupled with stronger NOI’s across all classes. Sales for 2016 continue at high levels pushing appraisal districts to try and keep pace with values. For Dallas County same store multifamily, overall 2016 notice values increased 25.4% and after protests, certified final values settled in at 13.9% above 2015 values. This same increase in assessment values is typical for 2016 across most all Texas’ counties.

Cantrell McCulloch, Inc. (CMI) specializes in the representation of multifamily properties across Texas and nationally. Currently, CMI represents multifamily properties consisting

of 200,000 +/- units at a value in excess of $11 billion. CMI also represents property owners on all types of real estate and business personal property taxes across 35 states.

Select Texas City Aggregate Rates

CITY2007RATE

2008RATE

2009RATE

2010RATE

2011RATE

2012RATE

2013RATE

2014RATE

2015RATE

2016RATE

Arlington 2.562277 2.549857 2.549567 2.612537 2.594367 2.589867 2.581567 2.637507 2.702349 2.661507

Austin 2.153100 2.178700 2.206400 2.316900 2.382300 2.419046 2.463200 2.379800 2.296081 2.230141

Corpus Christi 2.462445 2.482138 2.552628 2.595309 2.583598 2.583597 2.566544 2.543272 2.538328 2.524600

Dallas 2.514757 2.507730 2.621455 2.658141 2.711117 2.730759 2.7325885 2.742960 2.741835 2.719289

Frisco 2.131984 2.148993 2.183800 2.181300 2.208210 2.248209 2.243053 2.236960 2.226960 2.199617

Ft Worth 2.710277 2.761857 2.826567 2.826567 2.837867 2.837867 2.838397 2.838397 2.868397 2.833027

Houston 2.528716 2.523700 2.523700 2.524231 2.529233 2.529220 2.558961 2.570649 2.535164 2.528563

Lubbock 2.120748 2.136210 2.139638 2.149288 2.166938 2.200317 2.211260 2.223584 2.254214 2.250733

Plano 2.073884 2.105893 2.145800 2.168300 2.188300 2.188299 2.262743 2.253560 2.234560 2.207217

San Antonio 2.536775 2.556534 2.560295 2.606766 2.635384 2.692911 2.693339 2.705675 2.698045 2.822495

Tyler 1.830109 1.830109 2.004890 2.080731 2.089981 2.106198 2.118490 2.124926 2.124926 2.134926

Waco 2.566484 2.761215 2.773614 2.771546 2.764311 2.777200 2.817855 2.814295 2.781249 2.850423

Cantrell McCulloch, Inc. (CMI) represents property owners on all types of real estate and business personal property taxes across Texas with total value under representation for 2016 in excess of $18 billion.