RubinBrown Apartment Stats 2011

Each year, data is collected from our clients, as well as other contacts and referrals within the industry, to comprise averages in a variety of markets within the United States.

Apartment Stats

2011

A Publication of RubinBrown LLP

Executive Summary

Contents 1 Executive Summary 4 Comparison of Operations 5 Government-Assisted 9 Government-Assisted - By Region 13 Government-Assisted - By Project Size 15 Market Rate 17 Low Income Tax Credit Projects 19 RubinBrown Real Estate Services Group

RubinBrown is pleased to present the 2011 Apartment Statistical Analysis, an annual survey compiled by the Real Estate Services Group. Each year, data is collected from our clients, as well as other contacts and referrals within the industry, to comprise averages in a variety of markets within the United States. The accompanying statistical information has been much expanded from prior years and includes operational data for 2010 and represents 383 apartment projects in 27 states. While these averages are representative of a smaller pool of projects, the trends are usually consistent with those experienced at the national level. Industry Update At the close of 2009, the industry had indicated signs of a turnaround from the previous years of turbulence due to a weakened economy. Indeed, 2010 did not disappoint. Despite relatively minimal increases in job creation and the ever-present high unemployment rate, the apartment industry showed a healthy recovery in 2010. While employment conditions have not improved greatly from 2009, a shift in the view of the typical “rent vs. buy” scenario has begun to take hold across the country.

1 | Raise Your Expectations

Market Trends Compared with the past few years, the financial market has experienced a significant turnaround. While debt availability has drastically increased, it is still limited in many respects. Since the real estate bubble burst, lending institutions have been predisposed to low-risk, high-quality assets in top-tier markets with stable supporters, leaving a large portion of the market with fewer debt options and a more challenging qualification process. Similarly, a great number of property owners looking to refinance and extend or alter mortgage terms have been faced with struggles in doing so. Per a recent survey, an estimated $77 billion of multifamily mortgages are maturing in 2011, flooding the debt market and increasing the difficulties of refinancing. As was noted in 2009, life insurance companies continue to increase their presence in the lending market as well. Life insurance company lending rose by 150 percent in 2010, commanding about 6% of the industry’s outstanding mortgage debt. However, the majority of the outstanding debt remains with such governmental entities, such as Fannie Mae and Freddie Mac, who continue to provide apartments with a financial advantage that has been difficult for other lending entities to match. In fact, Fannie and Freddie’s mortgage portfolios have maintained delinquencies of less than 1 percent, resulting in their continued involvement in the market despite discussions surrounding their potential reform. Apartment owners can also expect a strong sales market with rising property values and intense market pricing. Average pricing per unit rose as cap rates trended downward in 2010, although both measures are still below from levels reached during the market’s peak. Sales volume was up nearly 65% in 2010 from 2009 activity and dollar volume is expected to rise into 2011. Institutional investors have comprised the majority of this increase. On a side note, 2010 marks a noteworthy year for the real estate industry -- the 25th anniversary of the low- income housing tax credit program. A true picture of the public-private partnership, the success of the program throughout the years of its existence has been unfounded. Improving communities and living environments across the country, it has given many individuals places to call home.

As permanent financing has become more cumbersome to obtain and certain incentives, such as the homebuyer tax credit, have expired, many young professionals are beginning to see renting as a viable option in today’s market. Slight interest rate increases and rises in downpayment requirements have also contributed to this trend. Likewise, those homeowners displaced by growing foreclosures have entered the rental arena, creating much more demand across the country. The 2010 homeownership rate dropped approximately 2.3 percent from 2009 levels. According to economists, every 1 percent drop in homeownership equates to more than 1 million in new renters. And, with 2010 showing a decline in apartment project completion, supply has been stagnant across the industry, leading to industry opportunities in the future. Given the rising interest in renting, pricing power has also returned. While the latter quarters of 2010 began to see this effect, the impact will be more notable in 2011. In fact, gross rents are anticipated to increase 3.5% next year. Coupled with the lowest vacancy rates expected in years, a significant boost in effective rents is anticipated through 2011. According to a Wall Street Journal article published earlier this year, first quarter 2011 vacancy rates stood at 6.2 percent, down from 8 percent the previous year, resulting in the strongest first quarter in the last ten years. As tightened credit markets delayed or, in some cases, halted development activity into 2010, apartment owners and developers are now beginning to ramp up construction in an effort to chase the rising demand. However, 2011 project completion is expected to fall 46 percent below 2010 numbers given the effects of the construction cycle and timing. In the meantime, apartment owners can expect to keep occupancy high and cash flow strong through superior property management, apartment upgrades and attractive amenities. For instance, many of the repairs and upgrades previously stalled due to weakened market conditions are now being completed to enhance property values and appeal. Also, promoting property location and access to surrounding communities has proven to give some apartment complexes a competitive edge.

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has placed the pricing power back in the hands of apartment owners. However, the industry is not without its challenges as supply struggles to catch up with rising demand and owners still face difficulties in obtaining optimal financing. Furthermore, with possible tax reform on the horizon, a rather important piece and major cornerstone of the overall industry could be substantially impacted. RubinBrown invites you to utilize this study as a development and management tool to compare your financial operations to the operating results of your peers. This study also provides sound comparable data to utilize in formulating an acquisition model. Like all compilations of data, it will be most useful when carefully and properly interpreted. We sincerely thank everyone who took time to participate in RubinBrown’s survey.

Throughout its tenure, the program has paved the way for the development of more than 2.4 million homes. However, despite its history of success, the program and many other tax incentive measures like it are not without future challenges. As Congress looks to reduce the nation’s deficit, it has come under recent scrutiny. Yet, regardless of legislative efforts for tax reform, the program continues to be a strong presence within the industry. Conclusion 2009 left the industry facing challenges in the wake of rising vacancies, declining values and extremely suppressed financing availability. Yet, 2010 showed great improvement across the multifamily housing industry with the promise of even stronger performance into 2011. Hardships within the homebuilding arena as well as a nationwide change in the view of renting vs. buying have been the main drivers of the industry’s recovery. Likewise, rising demand for apartment living has contributed to the lowest vacancy levels in years and

3 | Raise Your Expectations

Comparison of Operations

Government Assisted

Market Rate

Total Number of Projects

363

20

Average Project Age In Years

9.6

15.3

Average Number of Units

115

238

Averages Per Unit: Monthly Rent

$673

$763

Square Feet

940

932

Rooms

4.34

4.30

Economic Occupancy

86.9%

82.8%

Net Operating Income Before Debt Service & Depreciation as a Percentage of Total Income

37.8%

45.5%

A

B

C

A

B

C

REVENUES

Gross Potential Rent

$8,078

$8.59 100.0%

$9,153 $9.82 100.0%

Less: Vacancy Loss

(826)

(0.88)

-10.2%

(942)

(1.01)

-10.3%

Collection Loss

(128)

(0.14)

-1.6%

(113)

(0.12)

-1.2%

Concession Loss

(105)

(0.11)

-1.3%

(520)

(0.56)

-5.7%

Rent Collected

7,019

7.46 86.9%

7,578

8.13 82.8%

Other Income

410

0.44

5.1%

692

0.74

7.6%

Total Income

$7,429

$7.90 92.0%

$8,270 $8.87 90.4%

EXPENSES

Salaries and Personnel

$801

$0.85

9.9%

$794 $0.85

8.7%

Administrative

422

0.45

5.2%

323

0.35

3.5%

Marketing

96

0.10

1.2%

141

0.15

1.5%

Management Fees

406

0.43

5.0%

330

0.35

3.6%

Utilities

717

0.76

8.9%

645

0.69

7.1%

Contract Services

711

0.76

8.8%

662

0.71

7.2%

Repair and Maintenance

613

0.65

7.6%

475

0.51

5.2%

Insurance

298

0.32

3.7%

319

0.34

3.5%

Real Estate Taxes

461

0.49

5.7%

673

0.72

7.3%

Other Taxes

95

0.10

1.2%

145

0.15

1.6%

Total Expenses

$4,620

$4.91 57.2%

$4,507 $4.82 49.2%

Net Operating Income Before Debt Service and Depreciation

$2,809

$2.99 34.8%

$3,763 $4.05 41.2%

Capital Expenditures

$139

$0.15 1.7%

$587 $0.63

7.3%

A = Dollars per unit, per year

B = Dollars per square foot, per year

C = Percent of gross potential rent

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Government Assisted

2010

2009

2008

Total Number of Projects

363

226

226

Average Number of Units

115

129

130

Averages Per Unit: Monthly Rent

$673

$662

$637

Square Feet

940

926

937

Rooms

4.34

4.19

4.20

Economic Occupancy

86.9%

86.9%

89.0%

Net Operating Income Before Debt Service & Depreciation as a Percentage of Total Income

37.8%

38.2%

38.2%

A

B

C

A

B

C

A

B

C

REVENUES

Gross Potential Rent

$8,078 $8.59 100.0%

$7,948 $8.58 100.0%

$7,644 $8.16 100.0%

Less: Vacancies and Delinquencies

(826)

(0.88)

-10.2%

(825)

(0.89)

-10.4%

(630)

(0.67)

-8.2%

Collection Loss

(128)

(0.14)

-1.6%

(133)

(0.14)

-1.7%

(111)

(0.12)

-1.4%

Concession Loss

(105)

(0.11)

-1.3%

(82)

(0.09)

-1.0%

(107)

(0.11)

-1.4%

Rent Collected

7,019 7.46 86.9%

6,908

7.46 86.9%

6,796 7.26 89.0%

Other Income

410 0.44 5.1%

331

0.36 4.2%

324 0.35 4.2%

Total Income

$7,429 $7.90 92.0% $7,239 $7.82 91.1%

$7,120 $7.61 93.2%

EXPENSES

Salaries and Personnel

$801 $0.85 9.9%

$781 $0.84 9.8%

$770 $0.82 10.1%

Administrative

422 0.45 5.2%

367

0.40 4.6%

371 0.40 4.8%

Marketing

96 0.10 1.2%

89

0.10 1.1%

84 0.09 1.1%

Management Fees

406 0.43 5.0%

390

0.42 4.9%

388 0.42 5.1%

Utilities

717 0.76 8.9%

726

0.78 9.1%

691 0.74 9.0%

Contract Services

711 0.76 8.8%

744

0.80 9.4%

696 0.74 9.1%

Repair and Maintenance

613 0.65 7.6%

509

0.55 6.4%

492 0.52 6.4%

Insurance

298 0.32 3.7%

283

0.31 3.6%

305 0.33 4.0%

Real Estate Taxes

461 0.49 5.7%

471

0.51 5.9%

495 0.53 6.5%

Other Taxes

95 0.10 1.2%

107

0.12 1.4%

106 0.11 1.4%

Total Expenses

$4,620 $4.91 57.2%

$4,467 $4.83 56.2%

$4,398 $4.70 57.5%

Net Operating Income Before Debt Service and Depreciation

$2,809 $2.99 34.8%

$2,772 $2.99 34.9%

$2,722 $2.91 35.7%

A = Dollars per unit, per year

B = Dollars per square foot, per year

C = Percent of gross potential rent

5 | Raise Your Expectations

Gross Potential Rent vs. Net Operating Income Per Square Foot in St. Louis Metropolitan Area

2007

2006

194

150

$9

122

118

8.59

$7

8.58

8.16

$630

$625

8.09

8.30

934

904

$5

4.28

4.38

$2

89.8%

89.5%

3.16

2.99

2.91

2.99

2.83

$0

40.8%

36.1%

2010

2009

2008

2007

2006

Gross Potential Rent

Net Operating Income

A

B

C

A

B

C

Economic Occupancy

$7,553 $8.09 100.0%

$7,506 $8.30 100.0%

(551)

(0.59)

-7.3%

(596)

(0.66)

-7.9%

100%

(118)

(0.13)

-1.6%

(89)

(0.10)

-1.2%

89.8

86.9

(100)

(0.11)

-1.3%

(107)

(0.12)

-1.4%

89.0

86.9

75%

89.5

6,784 7.26 89.8%

6,714 7.42 89.5%

50%

449 0.48 5.9% 397 0.44 5.3% $7,233 $7.74 95.7% $7,111 $7.86 94.8%

25%

0

2010

2009

2008

2007

2006

$698 $0.75 9.3%

$903 $1.00 12.0%

397 0.42 5.3%

479 0.53 6.4%

88 0.09 1.2%

110 0.12 1.5%

381 0.41 5.0%

390 0.43 5.2%

668 0.72 8.8%

602 0.67 8.0%

Average Monthly Rent Per Unit

659 0.71 8.7%

525 0.58 7.0%

$700

468 0.50 6.2%

617 0.68 8.2%

673

322 0.34 4.3%

343 0.38 4.6%

662

637

625

630

$525

481 0.51 6.4%

475 0.53 6.3%

117 0.13 1.5%

100 0.11 1.3%

$350

$4,279 $4.58 56.7% $4,544 $5.03 60.5%

$175

$2,954 $3.16 39.0% $2,567 $2.83 34.3%

$0

2009

2008

2007

2006

2005

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Government Assisted

Expense Trends Per Unit

Salaries and Personnel

$1000

903

$750

801

781

770

698

$500

$250

0

2010

2009

2008

2007

2006

Administrative and Marketing

$600

589

$450

518

485

456

455

$300

$150

0

2010

2009

2008

2007

2006

Contract Services and Repairs & Maintenance

$1,400

1,324

1,253

$1050

1,188

1,142

1,127

$700

$350

0

2010

2009

2008

2007

2006

Taxes and Insurance

$1,000

918

920

906

861

854

$750

$500

$250

0

2010

2009

2008

2007

2006

7 | Raise Your Expectations

Government Assisted - By Region

North

East/Northeast

Midwest

Total Number of Projects

15

55

205

Average Project Age In Years

10.2

10.6

9.0

Average Number of Units

113

128

103

Averages Per Unit: Monthly Rent

$661

$800

$625

Square Feet

1,024

954

933

Rooms

4.51

4.59

4.33

Economic Occupancy

91.5%

88.2%

86.0%

Net Operating Income Before Debt Service & Depreciation as a Percentage of Total Income

30.4%

41.6%

39.0%

A

B

C

A

B

C

A B

C

REVENUES

Gross Potential Rent

$7,935 $7.75 100.0%

$9,600 $10.06 100.0%

$7,503 $8.05 100.0%

Less: Vacancies and Delinquencies

(470)

(0.46)

-5.9%

(926)

(0.97)

-9.6%

(832)

(0.89)

-11.1%

Collection Loss

(178)

(0.17)

-2.2%

(146)

(0.15)

-1.5%

(109)

(0.12)

-1.4%

Concession Loss

(31)

(0.03)

-0.4%

(68)

(0.07)

-0.7%

(113)

(0.12)

-1.5%

Rent Collected

7,256 7.09 91.5%

8,460 8.87 88.2%

6,449 6.92 86.0%

Other Income

603 0.59 7.6%

397 0.41 4.1%

427 0.46 5.7%

Total Income

$7,589 $7.68 99.1% $8,857 $9.28 92.3% $6,876 $7.38 91.7%

EXPENSES

Salaries and Personnel

$791 $0.77 10.0%

$877 $0.92 9.1%

$794 $0.85 10.6%

Administrative

449 0.44 5.7%

353 0.37 3.7%

413 0.44 5.5%

Marketing

90 0.09 1.1%

121 0.13 1.3%

83 0.09 1.1%

Management Fees

411 0.40 5.2%

461 0.48 4.8%

375 0.40 5.0%

Utilities

832 0.81 10.5%

871 0.91 9.1%

597 0.64 8.0%

Contract Services

777 0.76 9.8%

586 0.61 6.1%

714 0.77 9.5%

Repair and Maintenance

686 0.67 8.6%

796 0.83 8.3%

457 0.49 6.1%

Insurance

279 0.27 3.5%

258 0.27 2.7%

298 0.32 4.0%

Real Estate Taxes

967 0.94 12.2%

752 0.79 7.8%

386 0.41 5.1%

Other Taxes

185 0.18 2.3%

99 0.10 1.0%

74 0.08 1.0%

Total Expenses

$5,467 $5.33 68.9% $5,174 $5.41 53.9% $4,191 $4.49 55.9%

Net Operating Income Before Debt Service and Depreciation

$2,392 $2.35 30.2% $3,683 $3.87 38.4% $2,685 $2.89 35.8%

A = Dollars per unit, per year

B = Dollars per square foot, per year

C = Percent of gross potential rent

9 | Raise Your Expectations

South/Southeast

South/Southwest

West/Northwest

40

21

27

11.1

9.8

9.6

144

152

114

$673

$605

$790

1,071

946

806

4.87

4.57

3.24

82.2%

86.1%

95.2%

32.6%

34.9%

36.2%

A

B

C

A

B

C

A

B

C

$8,078 $7.54 100.0%

$7,260 $7.67 100.0%

$9,484 $11.77 100.0%

(1,094)

(1.02)

-13.5%

(771)

(0.81)

-10.6%

(303)

(0.38)

-3.2%

(172)

(0.16)

-2.1%

(110)

(0.12)

-1.5%

(130)

(0.16)

-1.4%

(173)

(0.16)

-2.2%

(130)

(0.14)

-1.8%

(16)

(0.02)

-0.2%

6,639 6.20 82.2%

6,249 6.60 86.1%

9,035 11.21 95.2%

393 0.37 4.9%

437 0.46 6.0%

227 0.28 2.4%

$7,032 $6.57 87.1%

$6,686 $7.06 92.1%

$9,262 $11.49 97.6%

$769 $0.72 9.5%

$711 $0.75 9.8%

$828 $1.03 8.7%

479 0.45 5.9%

393 0.41 5.4%

552 0.69 5.8%

111 0.10 1.4%

110 0.12 1.5%

99 0.12 1.1%

396 0.37 4.9%

368 0.39 5.1%

551 0.68 5.8%

698 0.65 8.7%

874 0.92 12.0%

1,008 1.25 10.6%

624 0.58 7.7%

580 0.61 8.0%

1,239 1.54 13.1%

811 0.76 10.0%

521 0.55 7.2%

952 1.18 10.0%

320 0.30 4.0%

302 0.32 4.2%

356 0.44 3.8%

438 0.41 5.4%

371 0.39 5.1%

175 0.22 1.8%

150 0.19 1.6%

96 0.09 1.2%

120 0.13 1.6%

$4,742 $4.43 58.7%

$4,350 $4.59 59.9%

$5,910 $7.34 62.3%

$2,290 $2.14 28.4%

$2,336 $2.47 32.2%

$3,352 $4.15 35.3%

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Government Assisted - By Region

Monthly Rents Per Unit West/Northwest

$790

North

$661

Midwest

$625

South/Southwest

$605

South/Southeast

$673

East/Northeast

$800

Net Operating Income Per Square Foot West/Northwest

$4.15

North

$2.35

Midwest

$2.89

South/Southwest

$2.47

South/Southeast

$2.14

East/Northeast

$3.87

11 | Raise Your Expectations

Economic Occupancy West/Northwest

95.2%

North

91.5%

Midwest

86.0%

South/Southwest

86.1%

South/Southeast

82.2%

East/Northeast

88.2%

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Government Assisted - By Project Size

Averages By Units Per Project

0-50 Units

51-100 Units

101-150 Units

151-200 Units

Over 200 Units

Total Number of Projects

78

94

100

45

46

Average Project Age In Years

9.0

8.9

9.5

11.7

10.2

Average Number of Units

28

76

124

177

246

Averages Per Unit: Monthly Rent

$553

$660

$690

$723

$653

Square Feet

1,053

874

925

956

910

Rooms

4.97

3.97

4.22

4.39

4.26

Economic Occupancy

83.9%

89.1%

88.2%

88.1%

83.8%

Net Operating Income Before Debt Service & Depreciation as a Percentage of Total Income

24.3%

35.9%

36.5%

36.6%

43.3%

A

B

A

B

A

B

A

B

A

B

REVENUES

Gross Potential Rent

$6,633 $6.30

$7,922 $9.06

$8,281 $8.96

$8,678 $9.07

$7,831 $8.61

Less: Vacancy Loss

(817)

(0.78)

(674)

(0.77)

(802)

(0.87)

(777)

(0.81)

(973)

(1.07)

Collection Loss

(137)

(0.13)

(123)

(0.14)

(122)

(0.13)

(126)

(0.13)

(138)

(0.15)

Concession Loss

(118)

(0.11)

(67)

(0.07)

(57)

(0.06)

(127)

(0.13)

(161)

(0.18)

Rent Collected

5,561 5.28

7,058 8.08

7,300 7.90

7,648 8.00

6,559 7.21

Other Income

398 0.37

338 0.39

452 0.49

357 0.37

448 0.50

Total Income

$5,959 $5.65

$7,396 $8.47

$7,752 $8.39

$8,005 $8.37

$7,007 $7.71

EXPENSES

Salaries and Personnel

$819 $0.78

$894 $1.02

$803 $0.87

$844 $0.88

$711 $0.78

Administrative

565 0.54

505 0.58

484 0.52

421 0.44

284 0.31

Marketing

40 0.04

93 0.11

90 0.10

120 0.13

99 0.11

Management Fees

389 0.37

423 0.48

427 0.46

429 0.45

363 0.40

Utilities

535 0.51

712 0.81

784 0.85

804 0.84

626 0.69

Contract Services

782 0.74

689 0.79

747 0.81

927 0.97

532 0.58

Repair and Maintenance

517 0.49

568 0.65

711 0.77

673 0.70

518 0.57

Insurance

427 0.40

348 0.40

301 0.33

289 0.30

249 0.27

Real Estate Taxes

355 0.34

394 0.45

462 0.50

462 0.48

520 0.57

Other Taxes

80 0.08

113 0.13

110 0.12

107 0.11

64 0.07

Total Expenses

$4,509 $4.29

$4,739 $5.42

$4,919 $5.33

$5,076 $5.30

$3,969 $4.35

Net Operating Income Before Debt Service and Depreciation

$1,450 $1.36

$2,657 $3.05

$2,833 $3.06

$2,929 $3.07

$3,038 $3.36

Capital Expenditures

$130 $0.12

$178 $0.20

$141 $0.15

$108 $.011

$134 $0.15

A = Dollars per unit, per year

B = Dollars per square foot, per year

13 | Raise Your Expectations

Market Rate

2010

2009

2008

Total Number of Projects

20

14

13

Average Number of Units

238

169

186

Averages Per Unit: Monthly Rent

$763

$809

$728

Square Feet

932

823

862

Rooms

4.30

4.37

4.40

Economic Occupancy

82.8%

87.7%

90.2%

Net Operating Income Before Debt Service & Depreciation as a Percentage of Total Income

45.5%

47.5%

49.3%

A

B

C

A

B

C

A

B

C

REVENUES

Gross Potential Rent

$ 9,153 $9.82 100.0% $ 9,707 $ 11.80 100.0% $ 8,738 $ 10.13 100.0%

Less: Vacancies and Delinquencies

(942)

(1.01)

-10.3%

(902)

(1.02)

-9.3%

(583)

(0.68)

-6.7%

Collection Loss

(113)

(0.12)

-1.2%

(52)

(0.06)

-0.5%

(93)

(0.11)

-1.1%

Concession Loss

(520)

(0.56)

-5.7%

(220)

(0.27)

-2.5%

(174)

(0.20)

-2.0%

Rent Collected

7,578

8.13 82.8%

8,533 10.45 87.7%

7,888 9.14 90.2%

Other Income

692

0.74 7.6%

502 0.61 5.2%

667 0.77 7.6%

Total Income

$8,270 $8.87 90.4% $9,035 $11.06 92.9% $8,555 $9.91 97.8%

EXPENSES

Salaries and Personnel

$794 $0.85 8.7%

$837 $1.02 8.6%

$861 $1.00 9.9%

Administrative

323

0.35 3.5%

465 0.57 4.8%

364 0.42 4.2%

Marketing

141

0.15 1.5%

126 0.15 1.3%

149 0.17 1.7%

Management Fees

330

0.35 3.6%

357 0.43 3.7%

379 0.44 4.3%

Utilities

645

0.69 7.1%

778 0.95 8.0%

616 0.72 7.1%

Contract Services

662

0.71 7.2%

619 0.75 6.4%

603 0.70 6.9%

Repair and Maintenance

475

0.51 5.2%

519 0.63 5.3%

489 0.57 5.6%

Insurance

319

0.34 3.5%

297 0.36 3.1%

334 0.39 3.8%

Real Estate Taxes

673

0.72 7.3%

602 0.73 6.2%

458 0.53 5.2%

Other Taxes

145

0.15 1.6%

139 0.17 1.4%

81 0.09 0.9%

Total Expenses

$4,507 $4.82 49.2% $4,739 $5.76 48.8% $4,334 $5.03 49.6%

Net Operating Income Before Debt Service and Depreciation

$3,763 $4.05 41.2% $4,296 $5.20 44.1% $4,221 $4.88 48.2%

A = Dollars per unit, per year

B = Dollars per square foot, per year

C = Percent of gross potential rent

15 | Raise Your Expectations

Gross Potential Rent vs. Net Operating Income Per Square Foot

2007

2006

30

32

$12

201

215

11.80

$9

10.13

10.13

9.82

9.45

$743

$698

$6

879

887

4.44

4.52

5.20

5.05

4.88

$3

4.46

4.05

88.0%

87.8%

$0

2010

2009

2008

2007

2006

52.3%

50.0%

Gross Potential Rent

Net Operating Income

A

B

C

A

B

C

Economic Occupancy

$ 8,911 $10.13 100.0%

$ 8,377 $ 9.45 100.0%

100%

(670)

(0.76)

-7.5%

(636)

(0.72)

-7.6%

(143)

(0.16)

-1.6%

(140)

(0.16)

-1.7%

90.2

88.0

75%

87.7

87.8

82.8

(260)

(0.30)

-2.9%

(239)

(0.27)

-2.9%

50%

7,838 8.91 88.0%

7,362 8.30 87.8%

651 0.74 7.3% 554 0.62 6.6% $8,489 $9.65 95.3% $7,916 $8.92 94.4%

25%

0

2010

2009

2008

2007

2006

$844 $0.96 9.5%

$812 $0.92 9.7%

274 0.31 3.1%

289 0.33 3.4%

155 0.18 1.7%

136 0.15 1.6%

299 0.34 3.4%

287 0.32 3.4%

492 0.56 5.5%

444 0.50 5.3%

Average Monthly Rent Per Unit

316 0.36 3.5%

368 0.41 4.4%

$900

690 0.78 7.7%

660 0.74 7.9%

335 0.38 3.8%

334 0.38 4.0%

809

$675

763

743

728

698

572 0.65 6.4%

556 0.63 6.7%

$450

72 0.08 0.8%

74 0.08 0.9%

$4,049 $4.60 45.4% $3,960 $4.46 47.3%

$225

$4,440 $5.05 49.9% $3,956 $4.46 47.1%

0

2010

2009

2008

2007

2006

www.rubinbrown.com | 16

Low Income - Tax Credit Projects

2010

2009

2008

Total Number of Projects

354

122

130

Average Number of Units

117

125

123

Averages Per Unit: Monthly Rent

$676

$680

$656

Square Feet

947

983

986

Rooms

4.38

4.63

4.62

Economic Occupancy

86.9%

87.1%

89.2%

Net Operating Income Before Debt Service & Depreciation as a Percentage of Total Income

37.8%

37.4%

38.2%

A

B

C

A

B

C

A

B

C

REVENUES

Gross Potential Rent

$8,110 $8.56 100.0% $8,159 $8.30 100.0%

$7,866 $7.98 100.0%

Less: Vacancies and Delinquencies

(828)

(0.87)

-10.2%

(838)

(0.85)

-10.3%

(652)

(0.66)

-8.3%

Collection Loss

(130)

(0.14)

-1.6%

(137)

(0.14)

-1.7%

(129)

(0.13)

-1.6%

Concession Loss

(106)

(0.11)

-1.3%

(77)

(0.08)

-0.9%

(67)

(0.07)

-0.9%

Rent Collected

7,046

7.44 86.9%

7,107

7.23 87.1%

7,018 7.12 89.2%

Other Income

413

0.44 5.1%

342

0.35 4.2%

329 0.33

4.2%

Total Income

$7,459 $7.88 92.0% $7,449 $7.58 91.3% $7,347 $7.45 93.4%

EXPENSES

Salaries and Personnel

$803 $0.85 9.9%

$764 $0.78 9.4%

$706 $0.72

9.0%

Administrative

423

0.45 5.2%

364

0.37 4.5%

380 0.39

4.8%

Marketing

96

0.10 1.2%

87

0.09 1.1%

79 0.08

1.0%

Management Fees

408

0.43 5.0%

390

0.40 4.8%

403 0.41

5.1%

Utilities

720

0.76 8.9%

799

0.81 9.8%

758 0.77

9.6%

Contract Services

714

0.75 8.8%

745

0.76 9.1%

661 0.67

8.4%

Repair and Maintenance

620

0.65 7.6%

606

0.62 7.4%

547 0.55

7.0%

Insurance

298

0.31 3.7%

276

0.28 3.4%

302 0.31

3.8%

Real Estate Taxes

463

0.49 5.7%

523

0.53 6.4%

600 0.61

7.6%

Other Taxes

95

0.10 1.2%

109

0.11 1.3%

107 0.11

1.4%

Total Expenses

$4,640 $4.89 57.2% $4,663 $4.75 57.2% $4,543 $4.62 57.8%

Net Operating Income Before Debt Service and Depreciation

$2,819 $2.99 34.8% $2,786 $2.83 34.1% $2,804 $2.83 35.6%

A = Dollars per unit, per year

B = Dollars per square foot, per year

C = Percent of gross potential rent

17 | Raise Your Expectations

2007

2006

138

113

123

115

$642

$632

966

908

4.64

4.42

89.5%

89.4%

40.7%

37.8%

A

B

C

A

B

C

$7,709 $7.98 100.0%

$7,583 $8.36 100.0%

(580)

(0.60)

-7.5%

(607)

(0.67)

-8.0%

(133)

(0.14)

-1.7%

(85)

(0.09)

-1.1%

(95)

(0.10)

-1.2%

(109)

(0.12)

-1.4%

6,901 7.14 89.5%

6,782 7.48 89.5%

393 0.41 5.1% 374 0.41 4.9% $7,294 $7.55 94.6% $7,156 $7.89 94.4%

$676 $0.70 8.8%

$809 $0.89 10.7%

379 0.39 4.9%

467 0.51 6.2%

84 0.09 1.1%

118 0.13 1.6%

374 0.39 4.9%

393 0.43 5.2%

701 0.73 9.1%

608 0.67 8.0%

602 0.62 7.8%

536 0.59 7.1%

535 0.55 6.9%

635 0.70 8.4%

299 0.31 3.9%

328 0.36 4.3%

559 0.58 7.3%

459 0.51 6.1%

114 0.12 1.5%

100 0.11 1.3%

$4,323 $4.48 56.1% $4,453 $4.90 58.9%

$2,971 $3.07 38.5% $2,703 $2.99 35.5%

www.rubinbrown.com | 18

RubinBrown Real Estate Services Group

Affordable Housing: This complex and highly regulated industry has been one that RubinBrown has focused on since the early days of HUD and the advent of the federal low-income housing tax credit program. Historic Tax Credit Services: RubinBrown has extensive experience with consulting on historic rehabilitation projects across the country. New Markets Tax Credit Services : In addition to initial program guidance and consulting, RubinBrown experts can help you with NMTC application assistance. Renewable Energy: There are many new financial incentives for companies in the renewable energy sector. We can help you sort through the opportunities and provide financial guidance to move your businesses forward. In addition, the RubinBrown Real Estate Services Group regularly sponsors seminars and roundtables dealing with current topics affecting the real estate industry.

For more than 30 years, RubinBrown’s Real Estate Services Group has developed a strong reputation nationally as a leader in accounting and advisory services. Today, the group provides specialized services to real estate entities from coast to coast. The RubinBrown Real Estate Services Group provides a full range of assurance, tax, business planning, and consulting services to: • Investment funds • Real estate partnerships • Developers

• Management companies • Governmental agencies • Syndicators and investors • Financial institutions • Construction-related companies RubinBrown Real Estate Services Group’s services include:

• Financial forecasts and projections • Cash flow and operational analyses • Specialized and complex tax planning • Troubled project workouts • HOPE VI consulting • Senior housing consulting • Business valuations • Low-income housing tax credit consulting and compliance • Affordable housing consulting and compliance • Historic rehabilitation tax credit consulting • Sales and Use Tax consulting • Governmental cost certifications (FHA & state housing agency) • NMTC consulting and compliance • Renewable energy consulting and compliance • Design and evaluation of financial reporting systems and internal control systems • Capital asset segregation analysis • Construction draw accounting and processing • Structured and complex deal structuring • Assistance in obtaining debt/equity financing • Like-kind exchange consulting

Contact

Bryan Keller, CPA Partner-In-Charge Real Estate Services Group bryan.keller@rubinbrown.com 314-290-3341

Glenn Henderson, CPA Partner Real Estate Services Group glenn.henderson@rubinbrown.com 913-499-4429

Jim Massaro, CPA Partner Real Estate Services Group jim.massaro@rubinbrown.com 303-698-1883

• Strategic planning • Feasibility studies

Through the years, our clients have grown to depend on our expertise in four key areas of the real estate sector:

19 | Raise Your Expectations

Notes

21 | Raise Your Expectations

www.rubinbrown.com | 22

Denver Office 1900 16th Street Suite 300 Denver, Colorado 80202

Kansas City Office 10975 Grandview Dr., Building 27 Suite 600 Overland Park, Kansas 66210

Saint Louis Office One North Brentwood Blvd. Saint Louis, Missouri 63105

ph: 314.290.3300 fax: 314.290.3400

ph: 303.698.1883 fax: 303.777.4458

ph: 913.491.4144 fax: 913.491.6821

For more information, visit www.rubinbrown.com

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