MULTIFAMILY FLYER
The Multifamily Development Story:
As Simple As 1-2-3
A unique near-term opportunity may exist in multifamily development
where several trends are converging to create a supply and demand
imbalance. While there have been some improvements, financial
requirements that were enacted as a result of the recent financial crisis
have continued to make homeownership more difficult for many, resulting
in an increased demand for multifamily residential properties. CNL Growth
Properties believes that those with the capital, relationships and expertise
to develop and operate new units will see solid potential for growth.
WOODFIELD
LONG P OINT
Any forward looking statements contained in this flyer are based on the research and beliefs of
CNL Growth Properties; however, they are subject to substantial uncertainties and can change as
a result of unforeseeable events.
68%
40
66%
36
64%
32
62%
‘91
‘93
‘95
‘97
‘99
‘01
HOMEOWNERSHIP RATE
‘03
‘05
‘07
‘09
‘11 ‘13*
28
RENTER HOUSEHOLDS
Sources: Marcus & Millichap Research Services, U.S. Census Bureau
*Through 1Q
Unit Completions (000s)
44
COMPLETIONS
VS
VACANCY
Limited new construction and declining vacancy rates
200
10%
150
8%
100
6%
50
4%
0
‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13*
COMPLETIONS
Vacancy Rate
70%
3
2
Falling homeownership lifts rental households
Renter Households (millions)
Homeownership Rate
1
INCREASED DEMAND
2%
VACANCY RATE
Sources: Marcus & Millichap Research Services, MPF Research
*Forecast
FAVORABLE TRENDS IN DEVELOPMENT
1
Rental rates are rising*
2
Less expensive to build than buy*
3
Tenants prefer new development**
Sources: *“2013 National Apartment Report,” Marcus & Millichap, 2013. **”Echo Boomers Important Multifamily Driver,” GlobeSt.com, November 13, 2012.
FOR INVESTOR USE.
This is not an offer to sell, nor the solicitation of an offer to buy shares of CNL Growth Properties. Only the REIT’s prospectus makes such an offer. This information must be
read in conjunction with the prospectus in order to understand fully all of the implications and risks of an investment in the REIT’s shares, and must not be relied upon to
make an investment. To the extent that this information conflicts with information in the REIT’s prospectus, the information in the prospectus shall govern.
An investment in CNL Growth Properties’ shares is subject to significant risks, some of which are summarized on the back of this piece.
No offering is made to New York or Maryland residents except by a prospectus filed with the Department of Law of the State of New York or the Maryland Division of
Securities, respectively. Neither the U.S. Securities and Exchange Commission, the Attorney General of the State of New York, the Maryland Division of Securities, nor any
other state securities division has passed on or endorsed the merits of CNL Growth Properties’ public offering or the adequacy or accuracy of this flyer or the prospectus.
Any representation to the contrary is unlawful.
Strategy in Action: Woodfield Long Point
In May 2011, CNL Growth Properties entered into a joint venture with Woodfield Investments* to develop and lease a luxury,
multifamily residential community in one of the most prestigious submarkets in the Charleston area. Woodfield Long Point
is a 32-acre property with 258 Class A garden-style apartments offering 1-, 2- and 3-bedroom floorplans with marsh and
river views and outstanding community amenities. Development was completed in phases throughout 2012, with final
completion in November 2012.
1
VISION**
Capitalize on positive supply and demand fundamentals within the
Charleston/Mount Pleasant, South Carolina market.
High barriers to entry: Limited supply pipeline; Coastal areas
and wetlands
Low vacancy: 8.7% for the Mount Pleasant submarket †
Forecasted rental growth: 3% by 2013†
Employment growth: 9% unemployment rate, down from
10.4% the previous year †
2
RESULT††
Completed project within budget, accepted first residents ahead
of schedule and achieved higher than anticipated rental rates due
to strong demand.
WITHIN BUDGET
Projected development budget: Approximately $29 million
Actual capitalized costs: Approximately $29 million
AHEAD OF SCHEDULE
Projected occupancy rate: 64%
Actual occupancy rate: 93% (reached stabilization 8 months
ahead of schedule)
RENTAL RATES 12.7% HIGHER THAN EXPECTED
Projected average monthly rent: $1,157
Actual average monthly rent: $1,304
*CNL Growth Properties owns a 95% interest through a joint venture with Woodfield Investments, LLC. **Vision information reflects market conditions at the
inception of the project in May 2011. †Source: “Apartment Index,” Carolinas Real Data Real Estate Information Services, March 2011. ††As of March 2013. Based on
anticipated rental revenues, CNL Growth Properties expects revenues from the Woodfield Long Point tenants will be less than 5% of revenues in 2013. The results at
Woodfield Long Point may not be indicative of the future performance of this project. You should not rely on the performance of this project to predict the results of
other properties in our portfolio or the portfolio’s overall performance. There is no guarantee that rental rates will be sustained at the current level.
To learn more, contact your Financial Advisor. Financial Advisors should contact the managing dealer, CNL Securities, Member FINRA/SIPC, at (866) 650-0650.
www.CNLGrowthProperties.com
Risk Factors
An investment in CNL Growth Properties’ shares
is subject to significant risks, some of which are
summarized below. See the “Risk Factors” section in
the prospectus for a more detailed description. You
should read and understand all of the risk factors
and the entire prospectus before making a decision
to invest in the REIT’s shares.
Investing in non-traded REITs is not suitable for
all investors. There is no guarantee of a return on
your investment, and you may lose your entire
investment. The shares are not FDIC-insured, nor
bank guaranteed.
Non-traded REITs are illiquid. There is no public
trading market for CNL Growth Properties’ shares
and the REIT does not expect to list its shares in the
near future. If you are able to sell your shares, you
would likely have to sell them at a substantial loss.
There are significant restrictions on your ability to
have your shares redeemed. The REIT can determine
not to redeem any shares, or to redeem only a
portion. The REIT may suspend, terminate, or modify
its Redemption Plan at any time.
CNL Growth Properties makes distributions in the
form of stock, which causes the interests of later
investors to be diluted. The REIT’s current distribution
rate is not guaranteed.
The distribution of solely new common stock
to stockholders is not currently included as a
component of gross income and is therefore
tax deferred and not taxable when received.
CNL Growth Properties makes cash distributions
from the proceeds of the offering, it would reduce
the cash available for investments, and lower
investors’ return on investment.
If CNL Growth Properties does not remain qualified
as a REIT, it will be subject to taxation at regular
corporate rates, resulting in a decrease in net
earnings for investment or distribution and lower
return on investment.
CNL Growth Properties has not identified all assets
to be acquired, and you will not have the opportunity
to evaluate future acquisitions. You must rely upon
the REIT’s advisor and Board of Directors, who have
limited operating histories on which you can evaluate
the REIT’s business or future prospects.
CNL Growth Properties has invested primarily
in multifamily development properties in the
Southeast and Sunbelt regions of the United
States. Your investment is at increased risk due to
the REIT’s portfolio’s limited geographic and sector
diversification.
CNL Growth Properties has had cumulative net losses
and may have similar losses in the future. Until the
REIT generates cash flow or funds from operations,
the REIT will have reduced net offering proceeds,
which will limit diversification and lower return on
investment.
CNL Growth Properties has used leverage to
acquire assets, which may hinder its ability to make
investments and/or pay distributions, and decrease
the value of your investment in the REIT’s shares.
CNL Growth Properties relies on its advisor and
its affiliates to select investments and conduct
operations. The REIT pays substantial fees to its
advisor and affiliates based upon agreements which
have not been negotiated at arm’s length. Fees may
be payable based upon factors other than the quality
of services. These fees could influence their advice
and judgment.
Officers and directors of CNL Growth Properties’
advisor serve as the REIT’s officers and directors, and
as officers and directors of competing programs,
resulting in conflicts of interest. They could take
actions more favorable to other entities than to
CNL Growth Properties.
Since 2009, CNL Growth Properties has raised a
limited amount of proceeds and has made a limited
number of investments. If the REIT raises substantially
less than the maximum offering amount, it will make
fewer investments, resulting in a less diversified
portfolio in terms of number, geographic location,
and type. Your investment will be subject to greater
risk to the extent the REIT has limited diversification
in its portfolio.
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used under license from CNL Intellectual Properties, Inc.
CGP-0913-13977-INV