Hanley Wood Multifamily Group: How to Sell to the Multifamily Market

DEVELOPER

Land and Communities

— Four brands that target vital real estate segments Four brands that target vital real estate segments

— Expanding into mixed-use and sustainable developmentExpanding into mixed-use and sustainable development

— Broad perspective adds value to each brandBroad perspective adds value to each brand

MULTIFAMILYEXECUTIVE

Operational Excellence

APARTMENTFINANCE TODAY

Access to Capital

AFFORDABLEHOUSING FINANCE

100% Affordable

Market

INTENSE DEMAND

— Third most populous country with high birth rate

— The percentage of our population who are defined as renters continues to increase

— Immigration rates are at all time highs and will add to household formations for years to come

• New arrivals to our country typically start as renters

— Half of built environment yet to be built

— Foreclosures – renters for life

— The myth that renting is not economically advantageous has been dismissed – renters by choice

Market

LONG-TERM DEMAND

The children of the baby boom (echo boomers) are currently entering the age where they are most likely to become renters

0

1

2

3

4

5

1930 1940 1950 1960 1970 1980 1990 2000

Births (millions)

Source: National Center for Health Statistics

Echo Boom

Baby Boom

Apartments and condos: Apartments and condos: single and roommate rentals; single and roommate rentals; entry-level and move-up condosentry-level and move-up condos

Apartments and condos: Apartments and condos: move-down / downsizing move-down / downsizing and lifestyle productand lifestyle product

Senior livingSenior living

1,300,000

170,000

1,500,000

4,100,000

5,400,000

5,000,000

3,500,000

1,000,000

2,600,000

1,600,000

-400,000

-1,900,000

-1,500,000

-200,000

DEMOGRAPHIC SHIFTS OVER THE NEXT 10 YEARS FAVOR MULTIFAMILY DEVELOPMENT

Multifamily Trends

Source: U.S. Census Bureau

Projected total population growth rate by age, 2008–2018

20 – 24

25 – 29

30 – 34

35 – 39

40 – 44

45 – 49

50 – 54

55 – 59

60 – 64

65 – 69

70 – 74

75 – 79

80 – 84

85+

Market

LIMITED SUPPLY— Over the past decade very little new construction has come online

relative to the past 40 years. 300,000 annually.

— On average, 200,000 units are taken out of the multifamily housing stock annually due to age.

• 2 units removed for every 3 built., mostly affordable.

— The condo conversion craze took additional rental units off the market during the housing boom

— Economic feasibility, lifestyle decisions, and demographic trends ALL contribute to the stability and prosperity we see over the long term

Market

DEMAND + LIMITED SUPPLY = OPTIMISM

0

10

20

30

40

50

Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08

Three-month Rolling AverageUnits (Thousands)

Source: PPR / Reed ConstructionTrak

Planning activity is up despite financing turmoil

— Bidding — Planning— Underway

THE OPPORTUNITY DECADE

Building Product Opportunity

— Tremendous demand for new units and big need to improve existing stock

The rental market represents The rental market represents ⅓⅓ of all housing… it is big, fragmented of all housing… it is big, fragmented and demands strategic thinkingand demands strategic thinking

Technology, Marketing and Amenity Opportunities

— There is an ongoing opportunity for owners and management firms to improve efficiencies and differentiate

Finance Opportunity

— In order to grow and meet the existing demand developers need access to capital now: build loyalty

“Green” Opportunity

— Due to ever increasing energy prices, sustainability and Green Living will become economic necessity

How are you going to cover this market?

OPPORTUNITY NOW

New Construction Market is a $40 billion industry

— 309,000 starts in 2007, very stable

— 400,000 under construction at any one time,

— Individual units and buildings both getting bigger, more luxurious

Renovation, Rehabs and Upgrades represent a $55 billion industry

— 17.5 million apartments

— Aging stock, average age of apartment is 35 years

— 30%, 5.25M, upgraded annually

• 34% replace kitchen, 26% renovate bathroom

— Big push in value-adds

Building product manufacturers are just beginning to understand the differences that exist in the market

— Wide open

COMPETITIVE PRESSURES FORCE MULTIFAMILY COMPETITIVE PRESSURES FORCE MULTIFAMILY EXECUTIVES TO BE MORE CREATIVE-AND MORE EXECUTIVES TO BE MORE CREATIVE-AND MORE SOPHISTICATED-THAN EVER BEFORESOPHISTICATED-THAN EVER BEFORE

Quality and design of building products is critical in order to attract and Quality and design of building products is critical in order to attract and retain new residentsretain new residents

— More demanding tenantsMore demanding tenants

— Marketing is important stakeholderMarketing is important stakeholder

— 81% of executives rate design as important81% of executives rate design as important

Money will be spent up front to reduce costs down the roadMoney will be spent up front to reduce costs down the road

— Lower maintenance costs deliver higher NOILower maintenance costs deliver higher NOI

— 92% of MFE readers rate quality / value as the leading 92% of MFE readers rate quality / value as the leading criteria in selecting building productscriteria in selecting building products

— The perception of quality can be influenced by advertisingThe perception of quality can be influenced by advertising

The “lowest price” is no longer the leading The “lowest price” is no longer the leading driver for decision-makingdriver for decision-making

— More professional buying organizations looking More professional buying organizations looking for “partners”for “partners”

— Only 49% rate lowest price as importantOnly 49% rate lowest price as important

OWNERS AND DEVELOPERS INVEST UP FRONT TO REDUCE COSTS DOWN THE ROAD

CAMDEN (formerly Summit) PROPERTIES

Mike Underwood, Senior Vice President

15,343 Units

Source: READEX Research, MULTIFAMILY EXECUTIVE, Reader Profile Study, 2003

Bringing units to code

Standard procedure at property age

Product quality upgrade

General modernization

Property value increase

Ability to increase rents

Making property competitive in the market

Action and Intelligence

MULTIFAMILY BUYERS ARE MOTIVATED BY DIFFERENT FACTORS THAN THEIR SINGLE-FAMILY COUNTERPARTS

IT’S A PROFESSIONAL BUYING TEAM

TRAMMEL-CROW RESIDENTIAL

Chip Bay, Senior Managing Director

LINCOLN PROPERTY COMPANY

Richard Rose, Regional Vice President of Development

170K Units Developed, 101K Units Managed, 48K Units Owned

DECISION MAKING PROCESS FOR NEW CONSTRUCTION

51% of multifamily executives are making the decisions themselves

26% say that a General Contractor makes those decisions

60% of readers make the decisions with the help of someone else at their firm (team decision)

DECISION MAKING PROCESS FOR RENOVATION / REMODELING PROJECTS

13% say that a General Contractor makes those decisions

66% of readers are making the decision themselves

60% of readers make the decisions with the help of someone else at their firm (team decision)

DECISIONS ARE MADE EARLY IN THE PROCESS

ARCHSTONE

(formerly CHARLES E. SMITH RESIDENTIAL

Jack Train, Senior Vice President of Development

93,875 Units

DECISION-MAKERS AREN’T BEING CALLED ON

CAMDEN PROPERTIES

Mike Underwood, Senior Vice President

15,343 Units

HOW DO YOU BECOME NUMBER ONE IN THE MULTIFAMILY MARKET?

Recognize the tremendous opportunity for both new construction AND renovation

Understand the unique reasons why building products are specified by multifamily professionals

Develop a strategic sales and marketing approach to reach owners, developers, and general contractors

HANLEY WOOD COVERS THE MARKET

17.5 Million Apartments in 520,000 properties

— 11 million are in buildings of 50 or more units

— 5.7 million are in buildings of 5-49 units

The top 50 firms control 2.6 million units, 15%

— We deliver deep reach into these top prospects, 1200 unique readers among Top 50

• For example, 75 subscribers at Trammell Crow, 43 receive more than one publication, 118 total impressions

You still need to reach the other 85% of the market

— 75,700 subscribers

— 100,000 emedia prospects

— 1600 conference attendees

HANLEY WOOD COVERS THE MARKET

Each brand serves owners, operators and developers

— All segments of the market are covered

— Minimal overlap

— Advertising efficiency

We have access We have access to reach key to reach key decision makers decision makers in this market and in this market and a variety of ways a variety of ways to touch and to touch and surround themsurround them

Operational Best

Practices

Strategies for Accessing and Deploying

Capital

Production and Preservation of Affordable

Housing

Building Successful Sustainable

Communities

HOW ARE WE DIFFERENT?

— We produce compelling content specific to the needs of your customer or prospect

— Our broad industry perspective gives us insight on how to better serve each segment and engage the community and better leverage your brand

— We offer a wide variety of options to access our audience with high levels of frequency: print, online, in-person. The broader the mix, the greater the frequency, the deeper the reach.

The trusted media brand in the multifamily housing industry

— Provides coverage on all segments of multifamily housing – from construction to management to finance

— Reach 25,000 senior-level executives who own, manage, develop and invest in multifamily housing

— With the need to improve the quality of the existing stock, MFE delivers the decision makers who purchase your products and services

— Reach 17,000 average monthly unique visitors to Multifamily Executive Online and more than 47,000 subscribers to the MFE Newsletter

— Leading Events: MULTIFAMILY EXECUTIVE Conference and the MULTIFAMILY EXECUTIVE Leadership Summit

The authoritative media brand for financing and deal information

— Provides comprehensive coverage of the best finance strategies to develop, acquire, rehab and reposition apartment properties

— Reach 20,000 multifamily owners, developers, and asset managers .

— 93% of readers are personally involved in purchasing apartment-related products/services

— Media network also includes APARTMENT FINANCE TODAY Online, APARTMENT FINANCE TODAY Update e-newsletter and APARTMENT FINANCE TODAY Conference

The # 1 media brand serving the affordable housing industry

— Provides in-depth information on the latest advances in financing, building and operating affordable housing

— Reach 11,000 leading owners and developers of affordable housing

— Delivers decision makers who purchase legal and accounting services, building products, leasing and property management services, compliance expertise and technology

— Media network also includes AFFORDABLE HOUSING FINANCE Online, AFFORDABLE HOUSING FINANCE Update e-newsletter and AHF LIVE: The Tax Credit Developers’ Summit

The leading media brand serving developers of sustainable communities

— Editorial focused on the development lifecycle: planning, financing, sustainable initiatives and community creation

— Reach 19,000 single-family, multifamily and mixed-use developers, architects, builders and land planners

— Delivers decision makers early in the planning stages - before developments are built – who spec your products and services.

— Media network also includes DEVELOPER Online, DEVELOPER Business Update e-Newsletter and the DEVELOPER Conference