Baton Rouge Apartment Trends 2014

Presentedby: Craig A. Davenport Cook,Moore&Associates

Assistedby:
D. Wesley Moore, II, MAI, CCIM,SeanMcDonald,AbbyMcMasters,

EliseMoore&AlexisMartin withCook,Moore&AssociatesRealEstateAppraisers
April10,2014

WhatWillBePresented?
FactorsaffectingRentalHousingDemand TrendsinRents&Vacancies Recent&PendingConstructionofApartments WhatsAhead RecentSalesofApartmentComplexes

EconomicFactors
Jobgrowthdrivespopulationgrowthand,ultimately,thedemandfor apartments.Wehavereturnedtoaperiodofeconomicgrowth,thoughsome amountofcautioniswarranted.Recenttrendsandannouncementswarrant ahealthyamountofoptimism(particularlyonalocallevel). LorenScottinhis20142015LouisianaEconomicOutlookprojectedthatBaton Rougewilladd12,500newjobsin2014andanadditional9,200jobsin2015, foratotalprojectionof21,700newjobsoverthe2yearperiod. TheBatonRougeAreaChamber(BRAC)projectedthatBatonRougewilladd 8,700newjobsin2014andanadditional7,700newjobsin2015,foratotal projectionof16,400newjobsoverthe2yearperiod.

ExcitingEconomicFactors
Over$23.7Billion(withaB)ofindustrialandcommercialconstructionto becompletedoverthenext23yearshasbeenannouncedfortheBaton Rougearea(plusbillionsmoreinLakeCharlesandotherSouthLouisiana markets). Thiswillinitiallyproduceahugenumberofconstructionrelated(often involvingtemporaryresidents,forwhomapartmentsareneeded)and designrelated(engineering,etc.)jobs. Addtothisthe2015arrivaloftheIBMfacilityintheCBDthatwillbring another800+wellpayingjobs(theystartedhiringin2013),andtheBaton Rougeareacouldexperiencestrongeconomictimesoverthenextseveral years.

MoreEconomicFactors
January2014jobcounts(mostrecentavailable)fortheBatonRougemetro areawereup11,990(3.4%)fromJanuary2013. UnemploymentinBatonRougeis4.8%(downfrom7.1%ayearago).Thisis wellbelowthenationalunemploymentaverageof6.6%andthesouthern regionalaverageof6.2%. TheunemploymentratefortheStateofLouisianais4.9%.

PopulationTrends
CensusBureauestimatesindicatethatthepopulationofEastBaton RougeParishincreased1.0%(4,348people)from2010to2012(most recentestimateavailable). ThepopulationincreaseforEBRPfrom2000to2010(Censusfigures)was 27,319(6.6%). TheAscensionParishpopulationincreased4.8%(5,092people)from 2010to2012,whileLivingstonParishgrewby3.0%(3,902people).

HistoricalApartmentRentalTrends
Rentalshadhistoricallyincreased1%to3%annuallyfrom1995to2005 Rentalsincreasedroughly10%fromSpring2005toSpring2006, predominantlyattributabletotheKatrinaEffect Averagerentsforallunitswereflat(0%increase)fromFall2010toFall 2011 Averagerentsforallunitsincreasedanaverageof2.0%fromFall2011to Fall2012

ApartmentRental&VacancyTrends Snapshot
Rentalsforamatchedsampleof126localcomplexesincreased1.72% fromFall2012toFall2013.Thenormin200105was1%to2%increases annually. Vacanciesforthis126propertysamplewerereportedat5.6%inFall 2013,upslightlyfrom5.4%reportedinFall2012 Theseindicatorssuggestastrongapartmentmarket.

RentalUnitsBuilt20062013
Total 2006-13 Conventional Upscale Student Affordable Housing (LIHTC) Total # of Units Built Post-Katrina Units per year 3,946 1,218 1,723 6,887 861

RentalUnitsUnderway/Planned20142015
Underway Conventional Upscale Student Affordable Housing Total 435 786 170 1,391 Planned 999 0 144 1,143 Total 1,434 786 314 2,534

ApartmentComplexesCompleted2013
6complexestotaling573unitswerecompletedin2013
HighGrove
192upscaleconventionalunitsonPicardyBoulevardbehindMallof Louisiana HUD221(d)4financing Developer:DomainCompanies

HighGrove
PicardyBoulevardbehindMallofLouisiana

HighGrove

HighGrove

HighGrove

HighGrove

HighGrove
PropertyHighlights
3Storycomplexwithinteriorcorridorsandelevators MixedUsedevelopmentwithcommercialspaceonthefirstfloorofthe frontbuilding Comprehensiveamenitypackage,includingresidentlounge,cybercaf, largefitnesscenter,gameroom,resortstylepoolwithgrills SilverStarLEEDCertified lowerenergycostsforresidents Solarpanelsforcomplexontopofcarports

UniversityEdge WestMcKinleyatIowaStreet

UniversityEdge
PropertyHighlights
Three4Storybuildingswithinteriorcorridorsandelevators Studentbasedproperty(bythebedrents) 2,3and4bedroomunits Extensivecommonareaamenitypackage,includingclubhousewithwifi, gatedcommunity,largefitnesscenter,gameroom,resortstylepoolwith grills,computerlabwithfreeprinter,tanningsalon Fullyfurnishedunits,fullappliancepackage,keyedbedrooms, washers/dryers InternetandCableTVincluded

Affordable (LIHTC)ComplexesCompleted 2013

LIHTCComplexesCompletedin2013
BeltLineTownhomes
32Affordableunitsat1833Gayosa Street Developer:GulfCoastHousingPartnersofNewOrleans

TheCorona(formerOlinde Building)
36Affordableunitsat1854NorthStreet Developer:GulfCoastHousingPartnersofNewOrleans

TheElysian
100MixedIncomeaffordableunitsonSpanishTownRoad Developer:GulfCoastHousingPartnersofNewOrleans

TheElysian
SpanishTownRoad

TheElysian

TheElysian

TheElysian

TheElysian

TheElysian

TheElysian
PropertyHighlights
Single4Storybuildingwithinteriorcorridorsandelevators MixedIncomedevelopmentwithmarketrateunitsandaffordableunits Extensivecommonareaamenitypackage,includingprivateconference rooms,largefitnesscenter,playground,movietheatreroom,business center,screenedporch,communitygardenarea Upscalefinisheswithwashers/dryers;Someunitshave10ceilings

BeltLineTownhomes
1833Gayosa Street

BeltLineTownhomes

BeltLineTownhomes

BeltLineTownhomes

BeltLineTownhomes

BeltLineTownhomes
PropertyHighlights
Traditional,gardenstyle,Townhouseunits Allareaffordable(LIHTC)2and3Bedroomunits ShareamenitieswithCoronaApartmentsacrossstreet

TheCorona(formerOlinde Building)
1854NorthStreet

TheCorona

TheCorona

TheCorona

TheCorona

TheCorona(formerOlinde Building)
PropertyHighlights
1&2storybuildingwithinteriorcorridors Allareaffordable(LIHTC)Efficiencyand1Bedroomunits Allunitshavewashersanddryers Commonareaamenitiesincludeacommunityroom,largelobbyarea, meetingroom,keycardaccesstobuilding

Affordable (LIHTC)ComplexesCompleted 2013

LIHTCComplexesCompletedin2013
TheGardensSeniorApartments
55AffordableunitsorientedtowardsSeniorsHouseholds 4949HooperRoad Developer:JayBernstein

TheGardensSeniorApartments 4949HooperRoad

TheGardens

TheGardens

TheGardens
PropertyHighlights
Single2Storybuildingwithinteriorcorridorsandelevators Affordable(TaxCredit)unitsorientedtowardsSeniors Extensivecommonareaamenitypackage,includingtenantlounge, computerroom,fitnesscenter,library

TrendsinNewBatonRougeConstruction
5outof6newlyconstructedcomplexeshadmainentryway withinteriorcorridorsandelevators Kitchensopentolivingareas(nowastedspace) Extensivecommonareaamenitypackages
LargeFitnessCenters LargeTenantLoungesandmeetingareas

Communityorienteddevelopments
Onlinecommunities

ConventionalComplexesUnderConstruction
UpscaleComplexesUnderConstructionin2014
TheOnyx
28upscaleunitsonThirdStreetatConventionStreet Developer:CommercialPropertiesDevelopmentCorporation

IBMTower
95upscaleunitsonRiverRoadatMainStreet Developer:CommercialPropertiesDevelopmentCorporation

TheDistrict
312upscaleunitsonPerkinsRoadnearPollard Developer:Vintala Partners/Creekstone

DowntownComplexes

TheDistrict PerkinsRoad

TheDistrict PerkinsRoad

StudentOrientedComplexesUnderConstruction
StudentOrientedComplexesUnderConstructionin2014
FairfieldatBatonRouge
304studentorientedunitsat449BenHur RoadatBurbankDrive Developer:FairfieldDevelopmentCorporation

SterlingUniversity
235studentorientedunitsat4194BurbanknearWestParker BehindSouthgateTowers Developer:SterlingUniversityHousing/Dinerstein

TheStandard
247studentorientedunitsonWestChimesStreetatLSUNorthGates Developer:LandmarkCompanies

Fairfield BurbankatBenHur

Fairfield BurbankatBenHur

SterlingUniversity Burbank

TheStandard WestChimesatLSUNorthGates

Affordable(LIHTC)ComplexesUnderConstruction
LIHTCComplexesUnderConstructionin2014
WindsorCourtApartments
120affordable(LIHTC)unitsonLAHighway74inSt.Gabriel UsingCDBGfundsfromParishforDevelopment Developer:IbervillePartners

GardensofBatonRouge
50affordable(LIHTC)unitsonPlankRoadsouthofHooperRoad ScatteredSitecomplex Developer:GaryHinton

GardensofBatonRouge

ProposedConventionalComplexes
ConventionalComplexesproposedfor201415(Downtown)
CommerceBuilding
93upscalemarketrateunitsat333LaurelStreet Developer:T.J.Iarocci

440onThird(CapitalOnebuilding)
65upscalemarketrateunitsat440ThirdStreet Developer:DykeNelson

342Lafayette
16upscalemarketrateunitsat342Lafayette Developer:DykeNelson

Onlyatotalof174unitsinPlanningStages+123unitsatIBMandOnyx= Totalof297unitsdowntown

ProposedConventionalComplexes
ConventionalComplexesproposedfor201415
ParkRowe
334upscalemarketrateunitsinPerkinsRowe Developer:DavidAlexanderwithVintageRealty

EastBoydApartments
85upscalemarketrateunitsonEastBoydatDodsonRoad Developer:Dantin &Bruce

AudubonApartmentHomes
182upscalemarketrateunitsonLAHighway64westofLA964inZachary Developer:HeritageConstruction

RiverHouse
224upscalemarketrateunitsonNicholsonatIowaStreet Developer:MarkBlumberg

ProposedComplexes Planned(notunderway)
AffordableComplexesproposedfor201415
CypressSpringsElderly
144affordableunitsalongHooperRoad,eastofPlankRoad Developer CDI

AffordableRehabComplexes
AffordableRehabsproposedfor201415
RenaissanceGateway
formerlyArdenwood Park 208affordableunitsonNorthArdenwood Startedrenovationlastyearwithaplannedcompletiondateof August2014 Developer:CDI

JaguarPlaza
95studentorientedand/oraffordableunitsat750HardingBlvd Fencedoff,buthaventstartedrenovations Developer:VernonYoung

TrendsinNewNationalConstruction
Moreefficient(smaller)units Energyefficiency
LEEDCertified withenergysavingsfortenants SolarPowerforcomplex

Moreextensivecommonareaamenitypackages
SplashPads CoffeeBars ElectricalhookupsinParkingLotsforautomobiles Controllablefeatures(lights,tv,etc.)fromsmartphones

PetFriendly(Dog)units
Firstfloorunitsw/Ceramictilefloors FencedBackyards

MarketSummary
TheBatonRougemarkethasabsorbedthe6,300+apartmentsand 2,000+condosbuiltsinceKatrinahit(inAugust2005).Itisintheprocess ofabsorbingthe573unitscompletedin2013,with1,391+moreunits underconstructionand1,143+announced/plannedfor201415(though somewillpotentiallyremainonhold). Wedohaveasignificantamountofapartmentsinthepipeline,however, theBatonRougeareahasbeenabsorbingallofthenewunits. Ifalloftheannouncedjobsdonotarrive,wecouldseehighervacancy ratesandlowerrentincreases(withmorespecials)inthefuture.

MarketSummary
Rentsarestillincreasingandvacancyratesarestilllow(currently5.7%, whichislowerthanhistoricalnormsof6%to7%).Economicvacancies arelikelyhigher,butstillstrong. Rentswilllikelycontinuetorisein2014,whilevacanciesshouldcontinue tostabilizeat6.0%to7.0%.

TyGose,CCIM
NAILATTER&BLUM

PropertySales201314
# of Units Jeffersonian Condos (7950 Jefferson Hwy) Live Oak Trace (7615 Magnolia Beach, Denham Springs) Newport Villas (1737 La Annie Dr) Elm Street Senior Apts (4250 Elm Street) 33 $/SF $61 $/Unit $65,450

264

$58

$60,227

94 60

$14 $33

$12,766 $21,000

PropertySales201314
# of Units Place Du Plantier (550 Lee Drive) Juban Court Condos (8429 Florida Blvd, Denham Springs) Bluebonnet Ridge (10624 Glenstone Ct) Siegen Village (6630 Siegen Lane) Mansions at Ivy Lake (14086 Airline Hwy) 268 83 112 312 240 $/SF $61 $55 $69 $60 $111 $/Unit $47,015 $85,542 $61,508 $67,244 $129,512

WhyApartments?
Consistentlymoststableassetclassofallthepropertytypes apartmentshavetheleastvolatileswings Multiplesourcesoffinancing Overhalfoforiginationsin2013were governmentbacked,mostofwhichhavea30 40yearamortization Shorttermcontractswithrenterstrackinflationandincomegrowth Expensesareeasytoforecastandbudget Everyoneneedsaplacetolive Verygoodbarometerofnationaleconomichealth

NationalMetrics
DespiteDC,2.5millionjobsaddedin2013and88%ofalllostjobshave beenregainedsincetherecession.Nethouseholdwealthisatanalltime highof$77Trillion GDPisforecastat3%growthandexpectedtoadd2.7Millionjobsin2014 Thisgoodnewsmeansthefed,whichisalreadytaperingitspurchaseof treasurieswillcontinue,however,thisisanindicationofreturningnormal creditmarkets Forecastedinterestrateincreaseswillbecoupledwithsignsofahealthy economy,whichwillalsopairwithNOIgrowth

HousingMetrics
Householdformationsexceeded1Millionin2012doublingtheprior5 yearaverage Individuals1834livingwiththeirparentsisstillclosetoalltimehighs TheUSabsorbedallofthenewunitsconstructedin2013showingapent updemandforhousingunitsestimatedat33.5millionnationwide Strongerjobandwagegrowthaswellasconfidenceintheresilienceof theeconomyhavebegunandwillcontinuetodebundlethose households

WhatThisMeansforBatonRouge
Lowernewconstructionnumbersthelast4yearswillallowroomfor growththenextseveralyearssolongasthenationalandlocaleconomy remainstable Ofthe1,391unitsunderconstruction,only435aremarketrate ofthe 1,143proposed,144areaffordableand999aremarketrate(ofwhich 174aredowntown) SupplyimbalancesmayemergeincertainpocketsoftheMSAhowever theywillbeshorttermgiventheunbundlingandpentupdemand

LocalApartmentOpportunities
TheremaybepressureonexistingclassAapartmentownersasnewer unitshitthemarketwithadditionalamenities RentgrowthwillbehighestinBandCunitsasdemandgrowswithlittle newinventoryavailable OwnersconsideringsellingwillreceivenumerousoffersasCAPratesare approachingalltimelowswithlimitedinventory DeveloporacquireassetsthatfitintheClassBcategoryasalargerpool ofrenterswillfallinthatpricerange

Thanksto.
WesleyMoore,SeanMcDonald,AbbyMcMasters,AlexisMartinandElise MoorewithCook,Moore&Associates LauraWhitewithLatter&BlumPropertyManagement DavidTreppendahl &DeaneBrysonwithLatter&BlumRealtors JohnWrenwithWrensAerialPhotography TheLSURealEstateResearchInstitute