Ashley Lakeside Village

North Woodmere Dr.

Charleston, SC 29407

Market Trend Study

Prepared for:
Acme Development
1110 Mar West Street, Suite A
Tiburon, CA 94920

Prepared by:

Charleston Market Report, LLC

Brad Rundbaken
4 Ponce De Leon Ave.
Charleston, SC 29407

June 9, 2008

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Ashley Lakeside Village is a proposed 68 unit condo development on approximately 9 acres off Ashley Hall
Road is located between Ashley Grove Apartments and Montclair subdivision. The floor plans consist of
two and three bedroom units with a square foot range of 1000 to 1200+ sq ft. There will be some units that
have drive under garages and views of the pond. The proposed pricing I was given before I started this
report was a target sales price of $170-$200k. The product mix is going to be 70-30 (2bds to 3bds) with a
few flats as well. The three bedrooms are going to be over 1200sf and the two bedrooms will be mid 1000-
1100 square feet. The proposed pricing places the approximate Price per Square Foot (PSF) at a range of
$165-$170 PSF. I have not received any information on the quality, options or costs for the interior and
exterior of the condominiums.

The focus of this market study is to give the developer, Acme Development, an understanding of the current
condominium and townhouse trends in the Tri-County, Charleston County and West Ashley area in order to
make sure Acme Development wants to move forward with the project based on current pricing, inventory
and demand in the Charleston market.

Whether it is real estate or securities I use a “Top Down” approach in order to identify trends. This means it
is important to not only understand the overall macro trends of the Tri County area but also the specific
micro data of similar comps and the geographical location as well. The critical part of doing a Market Trend
Study is using the proper market segmentation so that the trends and data reflect the proposed condominiums
that Acme wants to place on the market in the next 6-9 months. A critical mistake many builders, investors
and developers are currently making in this market is that they are not accurately measuring buyer demand in
the proper market segment to determine what the buyer desires or can afford. The current market conditions
are also changing rapidly and data from 6 months to a year ago can represent a different picture than what

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current market conditions actually represent. In addition to “scrubbing” large amounts of data from the MLS
for market segmentation purposes I also went to every major competitor in West Ashley and spoke to the on
site real estate agent in order to get important information that may not be found in the MLS.

What I found from the real estate agents, data, consistent monitoring of the local Charleston market and the
economy is that the West Ashley Condo Market is a very price driven market at this particular time. The
recent appreciation of real estate prices in the Charleston market has created many home affordability
problems in Charleston. The recent increase in inflation with regards to gas and food has also recently
changed the buyer’s mindset with regard to real estate purchases in Charleston and West Ashley in
particular. The location of Ashley Lakeside Village is a very important positive factor in the future
marketing and pricing. A trend to observe closely, which is supported by many of the graphs later in the
report show a declining Price per Sq Ft (PSF) particularly when I focused on West Ashley Condos. This is
obviously being caused by the current credit tightening for mortgages and increasing inventory being placed
on the market by developers and resellers.

The location of Ashley Lakeside Village in West Ashley is not necessarily known as a “higher end” market
in most cases for houses and/or condos. The proposed location of Ashley Lakeside Village does not support
a higher end PSF in my opinion. The location is very centrally located in the Tri-County area and close to
downtown. The land is very narrow with a small tree lined buffer zone between Ashley Lakeside Village and
Ashley Grove Apartments. There is also a large pond that buffers the other side of the development between
Ashley Lakeside Village and Montclair subdivision. A demographic study will support that the predominant
buyer in this market area is a first time homebuyer, retiree, graduate student or medical student who is price
conscience.

The comparable rentals in the West Ashley market show that Ashley Lakeside Village could generate
potential rental income of $1000-$1100 for the two bedrooms and $1200 per month for the three bedrooms.

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Competitive Location Map

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Broader View

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Up Close View

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Ashley Competitive Matrix

Pricing Matrix

* Please note pricing reflects market activity within the past 6 months.
** Portrait Homes is discounting the Regency floor plan by $25,000. They also represent one of the most
aggressive competitors from a pricing perspective.
*** Twelve Oaks is located on Johns Island, SC.

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Standard Finish Matrix

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Stats Matrix

There is a high amount of condominium inventory right now, which explains the weakness in PSF. Another
important element of the inventory to be aware of is the Under Construction and Proposed Construction
columns in the chart above. If the current absorption rate stays the same (2.5 Sales per Month) then there
would are an additional 672 units of proposed inventory coming on the market soon and 192 units of
inventory in the pipeline and under construction. If the real estate market were to weaken further this
inventory in the pipeline could place more downside pressure on condominium prices of developers and
owners who are not in a strong financial position.

Even with all the bad news in the real estate market the Absorption per Month column shows that certain
competitors are selling between 5-6 condos or townhouses per month. These developments which include
Carolina Bay (Tidewater), The Commons at Grand Oaks and Twelve Oaks are all below $130 PSF.

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Incentive Matrix

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Property Pictures and Amenities

Arboretum

Amenities
Beautifully landscaped grounds, walking trails, resort style clubhouse, business center, gym, spa and
swimming pool.

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Ashley Park

Amenities
No amenities available

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Carolina Bay (Tidewater)

Amenities
Clubhouse, community, greenbelt, jogging/walking trails, park, playground, sidewalks, woods.

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Carolina Bay (Essex)

Amenities
Pool and walking trails.

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Concord West Ashley

Amenities
Two swimming pools, movie theatre, summer kitchen, spa and tanning room, outdoor fireplaces and fire pit,
Xbox 360 wireless remote game room, indoor kitchen, business center outdoor pavilions with plasma TV's
and XM radio, hot tub in covered gazebo with waterfall, conference room, clubhouse with full kitchen,
tennis courts, car care facility, dog park, pocket parks and grilling stations throughout community, wetlands.

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Meeting Street Townhomes at Grand Oaks

Amenities
No amenities slated for now. States 1.15 acres for "future amenity area," backs wooded area

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Mepkin Place

Amenities
No amenities available.

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The Colony at Heron Reserve

Amenities
Backs to nature preserve, swimming pool, fitness center

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The Commons at Grand Oaks

Amenities
Community pool and pool house, common areas, sidewalks, ponds

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Twelve Oaks

Amenities
Business center, fitness center, swimming pool and walking trails.

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Willow Oaks

Amenities
No amenities available.

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 Sales Price/List Price and Months Inventory for Condos in the Tri-County

$250,000 40.0

35.0

$200,000
30.0
List Price/Sales Price (MLS)

25.0

Months Inventory
$150,000

Created by: Brad Rundbaken 20.0

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$100,000
15.0

10.0
$50,000

5.0

$0 0.0
Jun-04

Sep-04

Dec-04

Mar-05

Jun-05

Sep-05

Dec-05

Mar-06

Jun-06

Sep-06

Dec-06

Mar-07

Jun-07

Sep-07

Dec-07

Mar-08
Month (MLS)

Months Inventory Avg List $ Avg Sale $ Poly. (Avg Sale $)

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 Sales Price/List Price and Months Inventory for Condos in Chaleston County

$250,000 50.0

45.0

$200,000 40.0

35.0
List Price/Sales Price (MLS)

Months Inventory
$150,000 30.0

25.0

$100,000 20.0

15.0

$50,000 10.0

5.0

$0 0.0
Jun-04

Sep-04

Dec-04

Mar-05

Jun-05

Sep-05

Dec-05

Mar-06

Jun-06

Sep-06

Dec-06

Mar-07

Jun-07

Sep-07

Dec-07

Mar-08
Month (MLS)

Months Inventory Avg List $ Avg Sale $ Poly. (Avg Sale $)

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 Sales Price/List Price and Months Inventory for Condos in the West Ashley

$200,000 80.0

$180,000
70.0

$160,000
60.0
$140,000
List Price/Sales Price (MLS)

50.0

Months Inventory
$120,000

$100,000 40.0

$80,000
30.0

$60,000
20.0
$40,000

10.0
$20,000

$0 0.0
Jun-04

Sep-04

Dec-04

Mar-05

Jun-05

Sep-05

Dec-05

Mar-06

Jun-06

Sep-06

Dec-06

Mar-07

Jun-07

Sep-07

Dec-07

Mar-08
Month (MLS)

Months Inventory Avg List $ Avg Sale $ Poly. (Avg Sale $)

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 27
Days on Market
600

500

400

300

200

100

Mar-08 Average
Dec-07 Average
Sep-07 Average
Jun-07 Average
Poly. (Price Per Sqft)
Mar-07 Average
www.charlestonmarketreport.com
PSF and DOM for Condos in West Ashley

Dec-06 Average
Created by: Brad Rundbaken

Charleston Market Report, LLC

Sep-06 Average

Ashley Lakeside Village

Jun-06 Average

DOM
Avg Sold Date (MLS)
Mar-06 Average
Dec-05 Average
Sep-05 Average
Jun-05 Average
Mar-05 Average
Dec-04 Average
Sep-04 Average
Jun-04 Average
Mar-04 Average
Dec-03 Average
Sep-03 Average
Jun-03 Average

$200

$180

$160

$140

$120

$100

$80

$60

$40

$20

$-
PSF
 Sales Price/List Price and Months Inventory for Townhouses in the Tri-County

$200,000 30.0

$180,000

25.0
$160,000

$140,000
List Price/Sales Price (MLS)

20.0

Months Inventory
$120,000

Created by: Brad Rundbaken

$100,000 www.charlestonmarketreport.com 15.0

$80,000

10.0
$60,000

$40,000
5.0

$20,000

$0 0.0
Jun-04

Sep-04

Dec-04

Mar-05

Jun-05

Sep-05

Dec-05

Mar-06

Jun-06

Sep-06

Dec-06

Mar-07

Jun-07

Sep-07

Dec-07

Mar-08
Month (MLS)

Months Inventory Avg List $ Avg Sale $ Poly. (Avg Sale $)

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 Sales Price/List Price and Months Inventory for Townhouses in the Chas. County

$250,000 30.0

25.0
$200,000
List Price/Sales Price (MLS)

20.0

Months Inventory
$150,000

15.0

$100,000

10.0

$50,000
5.0

$0 0.0
Jun-04

Sep-04

Dec-04

Mar-05

Jun-05

Sep-05

Dec-05

Mar-06

Jun-06

Sep-06

Dec-06

Mar-07

Jun-07

Sep-07

Dec-07

Mar-08
Month (MLS)

Months Inventory Avg List $ Avg Sale $ Poly. (Avg Sale $)

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 Sales Price/List Price and Months Inventory for Townhouses in West Ashley

$250,000 80

70

$200,000
60
List Price/Sales Price (MLS)

50

Months Inventory
$150,000

40

$100,000
30

20
$50,000

10

$0 0
Jun-04

Sep-04

Dec-04

Mar-05

Jun-05

Sep-05

Dec-05

Mar-06

Jun-06

Sep-06

Dec-06

Mar-07

Jun-07

Sep-07

Dec-07

Mar-08
Month (MLS)

Months Inventory Avg List $ Avg Sale $ Poly. (Avg Sale $)

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 PSF and DOM for Townhouses in West Ashley

$180 350

$160
300

$140
250
$120

Days on Market
PSF (MLS)

$100 200

Created by:Brad Rundbaken

$80 www.charlestonmarketreport.com 150

$60
100
$40

50
$20

$0 0
Sep-03 Average

Apr-04 Average

Oct-04 Average

Feb-05 Average

Jul-05 Average

Oct-05 Average

Jan-06 Average

Apr-06 Average

Jul-06 Average

Oct-06 Average

Feb-07 Average

May-07 Average

Aug-07 Average

Nov-07 Average

Feb-08 Average

May-08 Average
Avg Sold Date (MLS)

DOM LPSF SPSF Poly. (LPSF)

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Conclusion

If the decision is made to move forward with this project then pricing these units will be very
important. In a declining market some amenities and add-ons may not add value to the PSF and needs to be
pulled from the market using specific market analysis techniques. Other variables that will have an impact
on pricing are future interest rate trends, the economy and the health of the credit markets. It is important to
understand that pricing and marketing can be done perfect but if there is no demand due to a further
deterioration of the credit markets, a spike in interest rates or a severe recession then the entire Charleston
real estate market will weaken and experience further price declines and higher inventory.

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