NMHC 25 Top General Contractors 2015

Amping Up the UpturnAs demand continued to outpace new supply, 2014 proved the bull marketstill had spring in its step. By Mark Obrinsky, Senior Vice President of Research and Chief Economist, National Multifamily Housing CouncilNow entering its seventh year, one might expect the apartmentindustry expansion to be looking a little long in the tooth. Indeed, earlyin 2014 it looked like a slowdown was arriving. Instead, all indicationspoint to renewed strength, and the key dynamic—rising demand isoutstripping even the more rapid delivery of new supply—remains verymuch in place.Renter growth remains at historical highs. For the fourth time inthe last five years, 2014 saw an increase of more than one million newrenters. Over the last decade, the number of renters increased by morethan eight million, the highest such figure on record (which goes backto the 1960s). Meanwhile, the homeownership rate dipped further,ending the year at 63.9% (the lowest in 20 years).Many of these new renters moved into small multifamily orsingle-family homes, in part because there weren’t more apartmentsavailable. New construction did increase to meet this demand. Startsof larger multifamily homes (those in buildings with at least five units)rose to 344,000, the highest level since 1988. This amount also fallsright in the middle of the range NMHC estimates is needed eachyear to keep up with new demand (and to replace units lost due todestruction and deterioration). Completions, which have recentlylagged starts by an average of 18 months, increased to 253,500 last year,just below their level in 2009.Evidence of tight markets was widespread. Absorptions ofinvestment-grade apartments rose by 51% to 251,745, the most since2010 (and the second highest level since 2000). It would surely havebeen higher if more apartments had been delivered in 2014. Thenational occupancy rate edged up even further to 95.4%, 330 basispoints higher than the low point in 2009. Even as new constructionNMHC 50 Profile 2015Portfolio SizeMinimum Entry Threshold2,787,669 2,941,939 22,445No. of Apartments OwnedNo. of Apartments ManagedNo. of Apartments Owned26,992No. of Apartments ManagedNumber of Apartments OwnedTop 502,787,6698Top 101,255,647SPECIAL SUPPLEMENT BROUGHT TO YOU BY NMHCSecond 10567,175Top 252,031,138Second 25756,531

NMHC 50 OwnersPortfolio Size Measures55,753Number of Apartments Owned43,452MeanTop 106.3%Median244,451 22,445No. 1 FirmNo. 50 FirmTop 2510.5%Top 5014.4%Note: Changes in ownership definition and company response make historical comparisons difficult.Many Top Owners Reduced Their Portfoliosramped up, same-store rents actually accelerated over the course ofthe year, finishing 2014 at an average 4.6% higher than in 4Q 2013.It’s hardly a surprise then that apartment transactions posted anew record level of 112 billion, 9% higher than in 2013. Over onethird of that volume, a record 41.5 billion, came from sales of midand high-rise buildings. With strong fundamentals and widespreadavailability of capital, it is likewise no surprise that prices for apartmentproperties also continued to rise. They are now 15-20% higherthan their pre-recession peaks. And cap rates edged down further,averaging 6.1% nationally last year—and only 5.1% on mid- and highrise properties.These strong fundamentals permeated the NMHC 50, with aparticular emphasis on the NMHC 50 managers. The number ofapartments in the portfolios of the NMHC 50 managers rose to anall-time high, just short of three million. The combined portfolios ofthe managers were 154,270 more than the combined portfolios ofthe NMHC 50 owners, the largest such difference since 1998. Thethreshold for making the managers list was higher than the owners list,as were the median and mean portfolios for apartment managers.For the first time since 1998, all four measures (top firm, minimumthreshold, mean and median) were larger for the managers than theowners. Two-thirds of the management firms had portfolios rangingbetween 30,000 and 60,000; just 54% of owners did. Finally, 12managers (one more than last year) and 11 owners (same as last year)had portfolios larger than 60,000.Many of the top NMHC 50 owners actually reduced their portfoliosin 2014. A total of 20 companies in the NMHC 50 owned fewerapartment homes than a year ago, and the combined decrease cameto 110,008 units.Hunt Companies retained the top spot on the NMHC 50 ownerslist for the second straight year, even with an 8,884-unit decrease in itsportfolio. That decrease was a sharp change from the prior four years.In fact, between 2010 and 2014, Hunt increased its ownership portfolioby more than the entire portfolio owned by any other apartment firmin those years.Boston Capital stayed in the #2 slot despite cutting 13,581 unitsfrom its portfolio, while last year’s third-ranked firm, AIG AffordableHousing, slipped to #5 after dropping a net 14,417 units. As a result,PNC Real Estate and Boston Financial Investment Management, LPeach moved up one slot. There were no ranking changes among thenext five firms: Equity Residential; The Richman Affordable HousingCorporation; Enterprise Community Asset Management, Inc.; MAA;and AvalonBay Communities, Inc.Just outside the top 10 were some significant changes. Aimco shed8,217 units from its portfolio, bringing its total to 52,336, the fewest ithas owned since 1997 and a far cry from its high-water mark in 2004 of278,657, the most ever owned by an apartment company. Its rankingslipped to #17, also the lowest for Aimco since 1997. Other notableportfolio decreases were JRK Property Holdings, Inc. (-21,521) and BellPartners, Inc. (-20,895).Apartment Owners On the RiseLargest Portfolio Growth (Apartments)Moving Up in Rank (Slots)25 25 2520 20 2015 15 1510 10 10 Essex Property Trust, Inc. 23,060 BH Equities LLC 12,661 Cortland Partners, LLC 6,5732525202015151050105 Raymond James Tax CreditFunds, Inc. 6,240 0 Morgan Properties 4,012555000Essex PropertyTrust, Inc. 21BH Equities LLC 11MorganProperties 7Harbor GroupInternational 7MilestoneManagement,LLC 7APRIL 2015 NMHC 509

On the other side of the ledger, Essex’s purchase of BRE helped itadd 23,060 units and shot up 21 spots, making it the 15th largest owner.The other big gainer was BH Equities, whose ownership portfolio rose by12,661, putting the firm in the #18 slot. Three firms rose seven slots in therankings even though their portfolio increases were not generally large:Harbor Group International (1,511 units to #34), Morgan Properties (4,012units to #36), and Milestone Management (501 units to #42). In all, 29apartment firms added a combined 92,825 homes to their portfolios.Four firms appear on this year’s list that weren’t on last year’s list.Two companies are true newcomers: Steadfast Companies (#40) andCortland Partners, LLC (#43) have never been among the NMHC 50owners, while FPA Multifamily (#49) and GID (#50) are returningafter absences of 15 years and four years, respectively. Of the fourfirms that left the list, DRA Advisors LLC didn’t make the minimumthreshold and Pinnacle has refocused to concentrate on propertymanagement. Neither Landmark Apartment Trust nor Prudential RealEstate Investors responded to the survey.Notably, all of the five biggest owners specialize in subsidized andlow-income housing. That leaves Equity Residential as the largestmarket-rate apartment owner. MAA and AvalonBay Communitiesare the other large market-rate owners among the top 10 firms. Fourfirms own substantial portfolios of military housing: Balfour BeattyCommunities, Hunt Companies, Lincoln Property Company and ForestCity Residential Group, Inc. American Campus Communities is the onlyREITS IN THE RANKINGSThere were nine REITs among the top 50 owners, the same number (andthe same firms) as in 2014. The most noteworthy change was the EssexProperty Trust takeover of BRE Properties (an NMHC 50 owner as recentlyas 2013). That made it the fifth largest REIT measured by number of units(up from eighth largest last year). Equity Residential, MAA and AvalonBayCommunities once again had the most units among REITs, while CamdenProperty Trust moved into fourth place, as Aimco’s downsizing resultedin its moving down to sixth among REITs. Apart from Essex and Aimco,portfolio changes among REITs in the NMHC 50 were small.While the NMHC 50 ranks firms by number of units owned, it isalso useful to gauge their size by the value of those units. Capturingsuch data for most companies is impractical; however, public companiesreport enough information to measure total capitalization, whichoffers an alternative measure. Though this isn’t perfect—ownershipof non-apartment assets can substantially affect overall firm value—itnonetheless gives a useful perspective on relative size among apartmentfirms, as rankings by capitalization vary dramatically from unit ownershiprankings. In fact, the total capitalization of the top three firms ( 90.5billion) is almost 60% larger than that of the other six REITs ( 56.7billion). That is a much greater difference than one finds when looking atunits. Among these REITs, AvalonBay has the highest total capitalizationper apartment ( 405,489), while MAA has the lowest ( 119,577).The biggest trend among apartment propertymanagers is the opposite of the contraction trendin the owners list. Namely, the managers got bigger.Almost all size measures showed the managementNMHC 50 at record levels.student housing specialist in the NMHC 50, though Heitman LLC andBH Equities LLC also own a substantial number of student housing units.Manager Firms Increase to Record LevelsThe biggest trend among apartment property managers is the oppositeof the contraction trend in the owners list. Namely, the managersgot bigger. Almost all size measures showed the managementNMHC 50 at record levels. Overall, the combined portfolios offirms on this year’s list rose to 2,941,939 apartments, 3.0% morethan the total from last year, and an all-time high. This represented15.2% of the entire apartment stock (rental residences in buildingswith at least five units in them). The mean and median portfolios(58,839 and 44,714 units, respectively) were also new records, aswere the combined portfolios of the top 10 and top 25 firms.Apartment REIT Rankings (as of January 1, 2015)CompanyEquity AmongREITsCompany TotalCapitalization( millions)Cap nBayCommunities, Inc.73,182329,6752Camden PropertyTrust58,94849,7067Essex PropertyTrust, Inc.56,620520,2483Aimco52,336610,3565UDR, Inc.50,268712,2304HomeProperties, Inc.42,10787,3158American CampusCommunities33,49997,2269Note: Company total capitalization sums: (1) market value of shares outstanding, including operating partnership units; (2) the value of perpetual preferred stock; and (3) the book value of total debtoutstanding. Capitalization estimates for December 31, 2014, are provided by Stifel Nicolaus & Company, Inc.10SPECIAL SUPPLEMENT BROUGHT TO YOU BY NMHC

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Apartment ManagersLargest Portfolio Growth (Apartments)25252520202015151010 Greystar Real Estate Partners,5 LLC5 178,38300 Essex Property Trust, Inc. 23,060 BH Management Services, LLC 11,6020Moving Up in Rank (Slots)50000252520202015151010550015Essex PropertyTrust, Inc. 251050CFLane, LLC 10CapstoneReal EstateServices, Inc. 10Hunt/LEDIC MgmtAffiliates 8Harbor GroupInternational 81510 Lincoln Property Company 5 10,9710 Alliance Residential Company 10,151100000150000Apartments Managed by Tier (thousands)3,00025The BozzutoGroup 9200000 Top 50 Top 25 Top 102,5002,0001,5001,0005001990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015The top of the NMHC 50 management list looks quite familiar—there was only one new firm among the largest 15 managers—but thatmasks some big developments. The biggest by far was the acquisitionby Greystar Real Estate Partners, LLC (last year’s top managementfirm) of Riverstone Residential Group (last year’s #2 firm). Thathelped make Greystar the largest apartment management firm onrecord, with 393,079 apartment homes in its portfolio. Its portfolioincrease of 178,383 was also the largest increase ever. With Riverstonegone, Lincoln Property Company, Pinnacle, Equity Residential andWinnCompanies all moved up one slot to round out the top five firms.The second biggest wave was the Essex acquisition of BRE,increasing its portfolio by 23,060 units and making it the #16 manager.Essex was also the biggest mover in the rankings, jumping up 25 slots.Other firms with large increases in their management portfolios were12SPECIAL SUPPLEMENT BROUGHT TO YOU BY NMHCBH Management Services, LLC (11,602), Lincoln Property (10,971),Alliance Residential Company (10,151) and The Bozzuto Group(10,106). Besides Essex, the bigger gains in rankings were recorded byCFLane, LLC (up 10 slots to #24), Capstone Real Estate Services, LLC(up 10 slots to #34) and The Bozzuto Group (up 9 slots to #21).Overall, 31 firms increased the number of units undermanagement, by a combined 329,840 units, an average of 10,640 each.(Excluding Greystar’s big gain, the average pickup was 5,049.) For the19 firms that shed some management units, the total decrease was55,820, for an average drop of 2,938.Unlike the top 50 owners list where affordable housing firmsdominate the top rankings, they are more spread out in the managerslist. Among the top 50 managers, those that managed the mostsubsidized and low-income housing were No. 5 WinnCompanies

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In all, there were 23 firms that made the NMHC 50management list but not the ownership list. Of those,12 indicated they were not owners; the other 11 hadownership portfolios too small to rank among the top50 owners.(31,141), No. 8 FPI Management, Inc. (29,000), No. 17 Hunt/LEDICManagement Affiliates (28,182) and No. 3 Pinnacle (22,500). BalfourBeatty Communities managed the most military housing units (43,081),followed by WinnCompanies (40,779) and Lincoln Property (31,729).This year’s NMHC 50 management list features five firms thatwere not on the list last year. Bridge Investment Group Partners, with32,155 apartment homes, debuts at #39. Morgan Properties, with31,500 units, returns to the list after a one-year absence at #41. RAMPartners, LLC (#45) and Edgewood Management Corporation (#47)are both back among the top 50 managers after an absence of fiveyears. LivCor LLC is making its first appearance at #46.Besides Riverstone Residential Group, four other firms exitedthe NMHC 50 management list. Both McKinley, Inc. and BerkshireProperty Advisors pared their portfolios enough to miss the minimumthreshold level. Neither Lindsey Management Co., Inc. nor LandmarkApartment Trust responded to the survey.In all, there were 23 firms that made the NMHC 50 managementlist but not the ownership list. Of those, 12 indicated they were notowners; the other 11 had ownership portfolios too small to rank amongthe top 50 owners. Similarly, 14 firms on the NMHC 50 ownership listindicated they do not undertake any property management, meaningthat there are nine firms on the list with management portfolios, butnot enough units under management to make the cutoff. METHODOLOGYThe National Multifamily Housing Council (NMHC) partnered withKingsley Associates to handle the NMHC 50 survey process, althoughNMHC remains solely responsible for any errors. To compile the NMHC50 lists, both organizations gather names of owners, managers, developersand general contractors from as wide a range of sources as possible andcontact staff from each firm that completes the survey online. Over theyears, improved outreach and increased publicity associated with therankings have resulted in more firms responding to the survey.For the purposes of this survey, investment fund managers are treatedas owners only if they retain substantial equity in the apartment propertyor if they maintain effective responsibility and decision-making over theinvestment property. Similarly, tax credit syndicators and franchisers areregarded as owners only if they retain a fiduciary responsibility. Whenfirms function strictly as advisers rather than investors, they are notregarded as owners.The rankings are unable to distinguish between partial and fullownership. Some firms own sizable apartment properties through jointventures in which their share could range anywhere from 1% to 99%.Others are primarily the sole owners of their apartments. In principle,it would be desirable to account for partial ownership—treating 50%ownership of 100 apartments as equivalent to full ownership of 50 units,for example. In practice, it is not feasible to make such distinctions.The survey excludes condominiums, cooperatives, hotel rooms,nursing homes, hospital rooms, mobile homes and houses with rentalunits. Rental housing for seniors (age-restricted apartments) is included,although assisted living and congregate care facilities are not. Bothstudent housing and military housing are included (measured by units, notbeds). Finally, since industry concentration is measured by comparing thetop 50 owners and managers against the nation’s entire apartment stock,only U.S. apartments are included.At times, a firm may debut on the NMHC 50 at a high level. Generally,this means the firm is respondi

Bruce Ward and V. Jay Hiemenz Phoenix AZ 47 26 Bell Partners Inc. 23,071 43,966 Steven D. Bell and Jonathan D. Bell Greensboro NC 48 48 Highridge Costa Investors, LLC 23,056 24,891 Michael A. Costa Gardena CA 49 FPA Multifamily 22,800 20,982 Gregory A Fowler San Francisco CA 50 GID 22,445