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Mr. Jim Waters Quest Development. Inc. July 24 2013 North Central Suburban Market Conditions The North Central Suburban submarket has a total inventory of about 13,000 market rate apartment units. The graph below summarizes rental rate growth and vacancy for the submarket over the past five years. Through 2013 Ql, the submarket demonstrated 2.5% market rent growth over a trailing 12 -month period, from $850 to $871. We note that the overall average rent is held down significantly due to the age of the housing stock in this submarket, which has seen relatively few new apartment developments in recent years. Our forthcoming analysis includes a more detailed review of newer Class A apartments, both within and near the submarket. North Central Suburban vacancy declined dramatically coming out of the recession in 2009/2010 and has remained very low since that time with a modest number of new units added during this time, with those units coming online being quickly absorbed. Our 2013 Q1 survey showed a submarket vacancy rate of just 2.3 %. REVIEW OF CLASS "A" APARTMENT COMPARABLES We have reviewed a number of Class "A" apartments within and proximate to the subject St. Anthony market area. We note that the market area has very few modem, Class A apartment communities. Therefore, we have reviewed a group of north metro apartment properties both within and near the submarket, including the following properties: • The Landings at Silver Lake Village (209 mkt rate apts + 54 LIHTC units) — St. Anthony • The View at Long Lake (122 apartments) — New Brighton • Autumn Woods (201 units) — St. Anthony • The Lexington Apartments (150 units) -- Roseville • Parkshore Apartments (37 units) — Arden Hills The table on the following page summarizes current vacancy and market rents by unit type for this sub -group of Class "A" apartment comparables. A map is also provided which shows the location of the comparables in relationship to the proposed development site in St. Anthony. Marquette Advisors Page 17 h Central Suburban Submarket 9 st Qtr 2008 -2013 F 5838 $824 5829 5850 5871 10.0% 8.0% 6.0% 4.0% 8200 _ 2.0% $0 0.0% 2008 2009 2010 2011 2012 2013 � Avg Rem Avg. Vacancy REVIEW OF CLASS "A" APARTMENT COMPARABLES We have reviewed a number of Class "A" apartments within and proximate to the subject St. Anthony market area. We note that the market area has very few modem, Class A apartment communities. Therefore, we have reviewed a group of north metro apartment properties both within and near the submarket, including the following properties: • The Landings at Silver Lake Village (209 mkt rate apts + 54 LIHTC units) — St. Anthony • The View at Long Lake (122 apartments) — New Brighton • Autumn Woods (201 units) — St. Anthony • The Lexington Apartments (150 units) -- Roseville • Parkshore Apartments (37 units) — Arden Hills The table on the following page summarizes current vacancy and market rents by unit type for this sub -group of Class "A" apartment comparables. A map is also provided which shows the location of the comparables in relationship to the proposed development site in St. Anthony. Marquette Advisors Page 17