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THE MERGER (PROPOSAL 1)

General

        If the merger and the other transactions contemplated by the merger agreement are approved by Monogram stockholders and all other conditions to the closing of the merger are either satisfied or waived, Monogram will be merged with and into Acquisition Sub, with Acquisition Sub surviving the merger as a wholly owned subsidiary of Parent. Upon the completion of the merger, each share of common stock issued and outstanding immediately prior to the effective time of the merger (other than shares owned by Parent, Acquisition Sub and certain of their affiliates, if any) will be converted into the right to receive the merger consideration, without interest and less any applicable withholding taxes.

        Our common stock is currently registered under the Exchange Act and is quoted on the NYSE under the symbol "MORE." As a result of the merger, the Company will cease to be a publicly-traded company and will be merged into a subsidiary of Parent. Following the completion of the merger, the registration of our common stock and our reporting obligations under the Exchange Act will be terminated. In addition, upon the completion of the merger, our common stock will no longer be listed on any stock exchange or quotation system, including the NYSE.

Background of the Merger

         The following chronology summarizes the key meetings and events that led to the signing of the merger agreement. The following chronology does not purport to catalogue every conversation among our board, the Evaluation Committee, members of our management or our representatives and other parties.

        Our senior management and board of directors periodically review, with the assistance of financial and legal advisors, and, when advisable, revise our long-term strategy and objectives in light of developments in real estate markets, capital market conditions and our business and capabilities. Since our transition to a self-managed company, we have considered various potential strategic alternatives with the goal of maximizing stockholder value, including potential acquisitions, dispositions, business combination transactions and transactions in our joint venture investments.

        In 2016, we took steps to reduce general and administrative expenses and completed certain value-creating transactions to strengthen our operating portfolio in connection with the board of directors' evaluation of the Company's long term business plan. Despite this growth, our board of directors recognized that we continued to face challenges as a public company. Our joint venture structure, large development pipeline and smaller scale relative to other public multifamily REITs caused our cost of capital to remain higher than that of our larger peers. Compared to larger public multifamily REITs, our common stock traded at a material discount to our net asset value, or NAV.

        From time to time, Mark T. Alfieri, our Chief Executive Officer, President, Chief Operating Officer and Director met with executives of other entities in the real estate industry, including Greystar, to discuss industry developments and possible opportunities for transactions with such entities.

        On February 19, 2016, Madison International Realty (together with certain affiliates) filed an amended Schedule 13D with the SEC disclosing that Madison International Realty intended, among other possible actions, to approach the Company in connection with the possible negotiated acquisition of a limited number of assets or interests in assets (or the economic rights associated with such assets).

        On March 3, 2016, Snow Park Capital issued a press release disclosing a letter that Snow Park sent to the Company's Board urging the Board to clarify Madison International Realty's role in the Company's asset disposition program, engage an investment bank to assist the Company in exploring strategic alternatives and form a special committee of the Board to oversee these processes.

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        In order to more effectively discuss and oversee different options for enhancing value for all stockholders between regularly scheduled meetings of the board of directors, and as a result of litigation brought against the Company by affiliates of Behringer Harvard, the Company's former external advisor, the Company had formed an executive committee of the board of directors (the "Executive Committee") in December 2015. On March 22, 2016, the Executive Committee, then consisting of E. Alan Patton (Chair of the board of directors), Mr. Alfieri, David D. Fitch, Jonathan L. Kempner, Roger D. Bowler, Sami S. Abbasi and Timothy J. Pire (all independent directors other than Mr. Alfieri), met telephonically with representatives of Goodwin Procter LLP ("Goodwin Procter") to discuss the potential engagement of Morgan Stanley & Co. LLC ("Morgan Stanley") as the Company's financial advisor, and the recent activity by Madison and Snow Park. Goodwin Procter led a discussion regarding the duties of directors in the context of their consideration of the Company's strategic alternatives, including a stand-alone strategy, and the potential sale of the Company to, or another strategic transaction with, a third party.

        On March 23, 2016, the board of directors met telephonically to discuss ongoing board refreshment efforts, governance matters and the exploration of strategic alternatives.

        On March 25, 2016, Tammy K. Jones was appointed to the board of directors as an independent director and member of the Executive Committee, effective April 1, 2016.

        On April 20, 2016, W. Benjamin Moreland was appointed to the board of directors as an independent director and member of the Executive Committee, effective May 1, 2016, and on April 26, 2016, the Company announced that Mr. Abbasi and Mr. Bowler would not be standing for re-election to the board of directors at the annual meeting of stockholders to be held on June 29, 2016.

        On May 20, 2016, the Executive Committee formed an evaluation committee (the "Evaluation Committee") consisting of independent directors in connection with the Company's exploration of strategic alternatives. The Evaluation Committee was authorized to consider and evaluate any proposals that might be received by the Company regarding a potential sale transaction, participate in and direct the negotiation of the material terms and conditions of any such transaction, and recommend to the board the advisability of entering into any such transaction or pursuing another strategic alternative. The Evaluation Committee consisted of Mr. Moreland (Chairman), Mr. Fitch, Ms. Jones and Mr. Pire. Throughout the Evaluation Committee's evaluation of a potential sale of the Company, the Evaluation Committee conducted formal meetings, but its members were also in regular informal communication with Goodwin Procter and with each other. In addition, the Evaluation Committee, as well as the board of directors, frequently met in executive session with only the independent directors and, on certain occasions, Goodwin Procter present.

        On June 2, 2016, following prior discussions by the board of directors and the Evaluation Committee, the Evaluation Committee appointed Morgan Stanley as the Company's financial advisor pursuant to a formal engagement letter for the purpose of advising the board of directors in connection with a potential transaction such as the merger and to evaluate whether the consideration to be received in a merger was fair, from a financial point of view, to the holders of the Company's common stock.

        On June 9, 2016, the Executive Committee met telephonically to discuss, together with Goodwin Procter, and representatives of Morgan Stanley, potential strategic opportunities.

        On June 20, 2016, the Company announced that in connection with a review and assessment of its corporate governance policies, on June 17, 2016, the board of directors adopted a resolution to opt out of Section 3-803 and Section 3-804(a) of the Maryland General Corporation Law and filed articles supplementary with the State Department of Assessments and Taxation of Maryland to effect the opt-out. The effect was to prohibit the Company, without the affirmative vote of a majority of the votes cast on the matter by stockholders entitled to vote generally in the election of directors, from

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classifying its board of directors or from raising the threshold for removal of a director from a majority to two-thirds of the votes entitled to be cast by stockholders generally in the election of directors.

        Between June 29 and July 29, 2016, the board of directors and the Executive Committee met several times with representatives of Goodwin Procter and Morgan Stanley to discuss the Company's on-going efforts to recruit new independent directors to join the board of directors and management's work on updating the Company's long-term outlook.

        During this time, the Executive Committee engaged in general discussions concerning whether and when it might be advisable to approach and explore a potential strategic transaction with third parties, including the scope of any such process, noting the potential disruptions to the Company's business, the risk of leaks that might arise from making contact with other parties, the potential impact on the Company's business of such leaks, including the loss of partners and employees, and the potential need to disclose sensitive, proprietary and confidential information to competitors and potential competitors. Representatives of Morgan Stanley also presented their views on the parties that it considered most likely to have an interest in a potential transaction with the Company, as well as their views on such parties' ability to fund a transaction. Based on the risks discussed, the Executive Committee concluded that the most prudent approach at this time would be to contact a limited number of parties that could make the financial commitment necessary to acquire the Company based on its size and consummate a transaction expeditiously, and the Executive Committee directed the representatives of Morgan Stanley to begin such outreach.

        During the week of August 15, 2016, representatives of Morgan Stanley contacted two potential financial sponsors (Party A and Party B).

        On August 24, 2016, the Company entered into a confidentiality agreement with Party A which included customary non-disclosure provisions and a standstill provision that allowed Party A to participate in any auction or other sale process of the Company.

        On August 25, 2016, the Company entered into a confidentiality agreement with Party B which included customary non-disclosure provisions and a standstill provision that allowed Party B to make confidential proposals to the Company at any time.

        Also on August 24 and August 25, 2016, the Company provided Party A and Party B and their respective advisors, respectively, with access to a virtual data room containing business and legal due diligence materials. Thereafter, the parties and their advisors had discussions, and the Company provided answers to questions posed by such parties and their respective advisors, regarding the due diligence materials.

        Also on August 25, 2016, the Company provided the interested parties with forecasts for the Company that had been prepared by management.

        On September 19, 2016, the Company received an oral indication of interest from Party A with respect to a potential sale transaction with the Company. The indication of interest included a proposed price of $10.00 per share of Company common stock in cash.

        On September 19, 2016, the Company received an oral indication of interest from Party B with respect to a potential sale transaction with the Company at a price per share of Company common stock in the range of $11.30 to $11.70 in cash.

        On September 21, 2016, the board of directors met with representatives of Goodwin Procter and Morgan Stanley to consider, among other things, the indications of interest from Party A and Party B and to discuss the Company's recent stock price performance and recent performance of the Company's real estate assets, particularly in light of deceleration in rent growth of certain key assets. Representatives of Morgan Stanley then discussed their view of the Company's market positioning and the recent mergers and acquisitions activity levels involving public multifamily REITs.

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        On September 23, 2016, the Evaluation Committee, together with the board of director's observer, Scot Sellers and representatives of Morgan Stanley met to discuss the indications of interest from Party A and Party B. Following discussion, the Evaluation Committee unanimously authorized Morgan Stanley to inform Party B that the Company was willing to move forward to negotiate a transaction at a $12.00 per share cash price. The Evaluation Committee also authorized Morgan Stanley to inform Party A that the Company was unwilling to move forward with Party A based on the $10.00 proposed price.

        On September 26, 2016, the Wall Street Journal published an article indicating that the Company was exploring a sale process. Subsequent to the Wall Street Journal article, representatives of Morgan Stanley and the Company received several verbal inquiries that valued the Company between $10.00 and the low $11.00 per share range.

        On September 30, 2016, the board of directors met telephonically to discuss the Company's updated long-term outlook plan, including growth deceleration in the multifamily REIT sector and the risks of diverting management's focus and resources from other strategic opportunities and from operational matters while working to explore a Company strategic transaction.

        Also on September 30, 2016, the Company entered into a confidentiality agreement with its joint venture partner, PGGM, with customary non-disclosure provisions for purposes of protecting discussions between the Company and PGGM regarding the Company's ongoing strategic process.

        On October 4, 2016, representatives of Morgan Stanley received an unsolicited written indication of interest from a private real estate developer and operator (Party C) citing recent speculation in the press that the Company was engaged in a sale process. The letter indicated a proposed transaction structure involving third party investors, an equity raise from unidentified new investors and a mix of cash and stock consideration, which Party C believed would be valued at $12.00 per share to the Company stockholders but no explanation for the estimated valuation was provided. Based on execution risk and proposed relative valuation of the combined company, among other factors, the Evaluation Committee determined not to pursue the non-binding proposal from Party C.

        On October 7, 2016, the board of directors met telephonically, together with members of management and representatives of Morgan Stanley and Goodwin Procter. The representatives from Morgan Stanley described their discussions with Party B, in particular Party B's response to the Company's counter proposal of $12.00 per share in cash. Party B indicated that it was likely at or below the lower end of the $11.30 to $11.70 per share range provided in its September 19, 2016 oral indication of interest based on its concerns regarding the decelerating income environment in the multifamily REIT sector. The members of the Executive Committee also discussed the possibility of terminating the process with respect to a near-term sale of the Company.

        On September 30, 2016 and October 12, 2016, Party A and Party B, respectively, were removed from data room access. Also during this time, representatives of Morgan Stanley, at the direction of the Executive Committee, informed the Parties that the Company would not be moving forward with a transaction and the Company terminated discussions with Party A and Party B.

        On October 19, 2016, because the board of directors had determined at that time to cease pursuing a strategic transaction, the board of directors authorized the termination of the Company's engagement with Morgan Stanley as financial advisor in connection with the Company's consideration of a strategic transaction, and delivered a termination letter to Morgan Stanley.

        From November 2016 through December 2016, the Company focused on a potential shift in its overall business strategy by reducing its presence in certain geographic submarkets to gain greater scale in select high barrier coastal regions, while simultaneously exiting certain submarkets experiencing oversupply from new development resulting in rental concessions and decelerating income growth.

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        Also during this time, Mr. Alfieri continued to meet with executives of other entities in the real estate industry to discuss industry developments and possible opportunities in the ordinary course for transactions with such entities.

        On December 21, 2016, Greystar's Founder, Chairman and CEO, Robert A. Faith, contacted Mr. Alfieri to express interest in an exploratory meeting between the parties particularly with respect to the potential acquisition of certain of the Company's real estate assets.

        On January 4, 2017, Mr. Alfieri contacted the members of the Executive Committee to discuss with them Greystar's interest in a potential transaction with the Company.

        On January 9, 2017, the Company entered into a confidentiality agreement with Greystar, which included customary non-disclosure provisions but which did not include a standstill provision since any contemplated transaction between the Company and Greystar at that time related to a real estate level transaction.

        On January 23, 2017, while in attendance at the 2017 National Multifamily Housing Council Annual Meeting, Mr. Alfieri received an unsolicited oral indication of interest from a real estate investment company (Party D). The indication of interest did not include a proposed price, price range or transaction structure. Mr. Alfieri indicated that the Company was primarily focused on executing its business strategy. He noted, however, that if Party D was prepared to make a compelling written offer, the board of directors and the Evaluation Committee would consider it.

        On January 24, 2017 during a meeting in person and over the course of the next month, Mr. Faith and Mr. Alfieri discussed the possibility of an acquisition of the Company by Greystar, but did not discuss valuation, a potential purchase price or any other specific terms. Mr. Alfieri indicated that the Company was primarily focused on executing its business strategy. He noted, however, that if Greystar was prepared to make a compelling written offer, the board of directors and the Evaluation Committee would consider it. Mr. Faith expressed interest in continuing discussions with the Company, but indicated that Greystar would have to discuss a potential transaction and other funding matters with equity financing sources over the course of the next month.

        On January 30, 2017, the Company entered into a confidentiality agreement with Party D, which included customary non-disclosure provisions and a standstill arrangement, including a provision that prohibits Party D from asking the Company to waive such standstill arrangement. In accordance with the merger agreement, the board of directors (or a committee thereof) may waive any standstill provision if the board of directors (or a committee thereof) determines in good faith, after consultation with outside legal counsel, that failure to provide such waiver would reasonably be expected to be inconsistent with its fiduciary duties under applicable law. Following execution of the confidentiality agreement with Party D, the Company provided Party D with due diligence materials relating to the structuring of the Company's joint ventures with NPS and PGGM.

        On March 17, 2017, the Evaluation Committee met with Goodwin Procter and members of management to discuss certain terms of a potential transaction that the Company might consider, including the amount of the termination fee payable by the Company in certain circumstances and whether the company would be permitted to solicit alternative acquisition proposals for a certain period of time after signing a merger agreement or the possibility of a reduced Company termination fee in the event that the Company were to terminate the merger agreement to accept a superior proposal within a specified period from signing the merger agreement. The Evaluation Committee also discussed conditions to completion of any potential transaction, including a lack of a financing condition, and structuring matters relating to the Company's joint venture partners, NPS and PGGM. Following the meeting, the Evaluation Committee informed Mr. Alfieri that he was authorized to inform Greystar that the Company was willing to move forward to negotiate a transaction at not less than a $12.00 per share cash price.

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        On March 31, 2017, Goodwin Procter sent J.P. Morgan Securities LLC ("J.P. Morgan"), financial advisor to Greystar, a revised confidentiality agreement based on the evolving possibility of a Company-level transaction with Greystar rather than a transaction regarding certain of the Company's real estate assets.

        Over the course of April 3 to April 20, 2017, Mr. Faith and Mr. Alfieri discussed the progress regarding potential funding sources for Greystar but did not discuss specific details including valuation, a potential purchase price or any other terms.

        On April 20, 2017, the Company and Greystar entered into the revised confidentiality agreement, which agreement included customary non-disclosure and standstill provisions that allow Greystar to make confidential proposals to the Company at any time.

        On May 17, 2017, Mr. Faith informed Mr. Alfieri that Greystar would be continuing to work on funding sources over the course of the next several weeks and remained interested in pursuing a transaction with the Company. Mr. Alfieri informed Mr. Faith that the Company would only be willing to move forward to negotiate a transaction at not less than a $12.00 per share cash price, and that the merger agreement would have to include a customary fiduciary out for the Company's board of directors in addition to a lower than customary Company termination fee in the event that the Company were to terminate the merger agreement to accept a superior proposal within a specified period from signing.

        On May 18, 2017, Mr. Alfieri received a follow-up unsolicited indication of interest from Party D. The indication of interest did not include a proposed price, price range or transaction structure.

        On May 24, 2017, the Company received a written offer from Greystar, through a newly-formed fund backed by affiliates of APG, GIC and Ivanhoe Cambridge, to acquire the Company for $12.00 per share of the Company's common stock in cash, subject to confirmatory due diligence, satisfactory documentation and final board approval. In its letter, Greystar expressed its belief that the offer represented compelling and certain value for the Company's stockholders, considered its interest in the Company to be highly confidential and would be automatically withdrawn in the event that the Company or its joint venture partners made any disclosure of the offer, said that its offer was fully funded, and subject to a mutually agreeable exclusivity period to negotiate a merger agreement, and also that the merger agreement would contain a customary no-shop provision but that Greystar would agree to a reduced Company termination fee of 1.5% of transaction equity value in the event that the Company were to terminate the merger agreement to accept a superior proposal within 21 days of execution of the merger agreement. The offer letter also specified that after the execution of the merger agreement, the Company would not be permitted to pay or declare any dividend on its common stock other than as necessary to maintain REIT status.

        On May 25, 2017, the Executive Committee held a telephonic meeting with representatives of Goodwin Procter and members of management. At the meeting, management and the Executive Committee discussed the Company's long-term outlook, associated business plans, underlying assumptions and timelines and key risks that could affect the Company's ability to achieve the long-term plan. The Executive Committee also discussed with Mr. Alfieri the ongoing talks between the Company and Greystar, including the May 24, 2017 offer, and the recent overture made by Party D. The Executive Committee discussed this contact from Party D and determined to not solicit proposals from other third parties, including Party D, given concerns the Executive Committee had about leaks and the views of management that the price proposed by Greystar likely exceeded the price level that any third party would offer, including compared to the indications of interest previously received from Party A and Party B. The Executive Committee discussed the proposal received relative to the various alternatives available to the Company, the challenges in the industry and sector in which the Company operates and the risks associated with the Company's long term outlook. The Executive Committee also discussed the proposed no-shop provision of the merger agreement and the reduced Company

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termination fee in the event that the Company were to terminate the merger agreement to accept a superior proposal within 21 days of execution of the merger agreement and the request from Greystar that the parties enter into an exclusivity agreement and that given the risk of leaks that the proposed transaction should be announced as quickly as possible. With respect to the reduced Company termination fee period, the Executive Committee discussed with Goodwin Procter, increasing that period from 21 days following execution of the merger agreement and decreasing the proposed Company termination fee during the period from 1.5% of transaction equity value to 1.25% of transaction equity value. The Executive Committee also agreed to propose a 26-day exclusivity period pursuant to which the parties would negotiate exclusively until June 21, 2017. The Executive Committee further resolved to authorize the Company to contact and re-engage Morgan Stanley to act as the Company's financial advisor in connection with the proposed transaction based on their prior engagement with the Company and continued contact with the Company throughout 2017 regarding potential transaction terms and financing and negotiating strategies. Mr. Alfieri also informed the Executive Committee that management had not discussed the terms of any employment arrangements with Greystar, and the Executive Committee and Goodwin Procter instructed management to continue to avoid any such discussions.

        On May 26, 2017, Greystar and the Company executed an exclusivity agreement pursuant to which the parties agreed to negotiate exclusively until June 21, 2017.

        On May 29, 2017, the Company received a written due diligence request list from Greystar and representatives of Jones Day ("Jones Day"), Greystar's legal counsel, and on May 29, 2017, the Company began to make due diligence materials available to Greystar and Jones Day through a virtual data room. Beginning on May 26, 2017, the respective representatives of the Company and Greystar convened telephone calls to discuss initial due diligence requests.

        On May 29, 2017, representatives of Goodwin Procter had discussions with Jones Day during which such Jones Day confirmed that participation by the Company's management was not a condition to the proposal submitted by Greystar, and there was no intention to engage in discussions regarding management's future compensation or participation in the transaction at that time.

        On May 31, 2017, Goodwin Procter sent a draft merger agreement to representatives of Jones Day. Over the course of the next week and a half, the parties continued the initial due diligence investigation, and Goodwin Procter and Jones Day continued to negotiate the terms of the merger agreement.

        On June 12, 2017, the Evaluation Committee met telephonically with representatives of Goodwin Procter to discuss the status of negotiations with Greystar and the status of the draft merger agreement, including open issues relating to the amount and triggers for the Company and Greystar termination fees and the financing covenants, and the engagement of Morgan Stanley.

        On June 13, 2017, following prior discussions by the Evaluation Committee, the Evaluation Committee re-engaged Morgan Stanley as the Company's financial advisor.

        On June 14 and 15, 2017, Goodwin Procter and Jones Day continued to negotiate the terms of the merger agreement.

        On June 16, 2017, the Evaluation Committee met telephonically with representatives from Goodwin Procter and Morgan Stanley also in attendance. At this meeting, Goodwin Procter led a discussion concerning the duties of the Evaluation Committee and the board of directors in the context of their consideration of strategic alternatives, including a potential sale of the Company. Also at the meeting, representatives of Morgan Stanley reviewed with the board of directors certain financial analyses and valuation perspectives based upon projections prepared by the Company's management, and the Evaluation Committee discussed the proposal received relative to the various alternatives received by the Company previously, and the risks associated with the Company's long term outlook.

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The Evaluation Committee also discussed the perspective of the representatives of Morgan Stanley that the $12.00 price proposed by Greystar likely exceeded the price level that any competing financial buyer could reasonably be expected to pay while achieving customary expected returns from such an investment. After a discussion of potential responses to Greystar, the Evaluation Committee decided that making a counter proposal on the dividend cut-off proposal in the May 24, 2017 offer would be the most effective response and resolved and directed Mr. Alfieri to make a counter-proposal to Mr. Faith that in the event that the merger agreement was signed prior to payment of the second quarter cash dividend of $0.075 per share of Company common stock, that the Company would be permitted to pay this dividend as well as a pro rata dividend through the closing date of the proposed merger.

        Later that day, Mr. Alfieri communicated the counter proposal on the dividend to Mr. Faith. Mr. Faith expressed his disappointment and informed Mr. Alfieri that Greystar believed that it had made a very strong bid on valuation. Mr. Faith then said that Greystar was only willing to permit payment of the second quarter dividend but stressed several times that this was Greystar's best and final offer.

        Over the course of the next few days, the parties continued the due diligence investigation, Goodwin Procter and Jones Day continued to negotiate the terms of the merger agreement, and the Evaluation Committee met regularly with representatives of Goodwin Procter and Morgan Stanley to discuss the status of negotiations with Greystar and the status of the draft merger agreement.

        On June 20, 2017, Greystar and the Company executed an exclusivity agreement amendment pursuant to which the parties agreed to extend the exclusively period until June 23, 2017.

        On June 22, 2017, the Evaluation Committee met, together with representatives of Goodwin Procter and Morgan Stanley, to discuss negotiations with Greystar. Representatives from Morgan Stanley provided its updated valuation views and provided a letter to our board regarding any current and historical relationships with Greystar and its equity financing sources. The letter indicated that Morgan Stanley, as a full-service investment bank, has from time to time been engaged to provide financing services for affiliates of GIC and certain of their portfolio companies during the prior two years. See the section entitled " —Opinion of the Company's Financial Advisor — Other Information " for further information. Representatives from Goodwin Procter discussed the draft merger agreement, particularly the changes proposed by Greystar replacing the Company's right to seek specific performance with the Company's right to receive a higher reverse termination fee if the merger agreement is terminated under certain circumstances, the payment of which would be guaranteed by the Guarantors.

        On June 23, 2017, Mr. Alfieri received a telephone call from Mr. Faith, during which Mr. Faith reiterated Greystar's continued interest in a transaction. During the call, Mr. Faith proposed the Company would receive a substantial reverse termination fee payable if the merger agreement is terminated in certain circumstances in lieu of the Company's right to seek specific performance to require the acquiring entity to complete the merger. Mr. Faith explained that the Guarantors would guarantee the payment of the reverse termination fee.

        On June 23, 2017, Greystar and the Company executed an exclusivity agreement amendment pursuant to which the parties agreed to extend the exclusively period until June 27, 2017, subject to an agreement between the parties to complete due diligence within that period.

        On June 29, 2017, the Company held its annual meeting of stockholders following which Robert S. Aisner and Michael D. Cohen, the directors affiliated with Behringer Harvard, resigned from the board of directors in accordance with the expiration in February 2017 of contractual rights between the Company and Behringer entitling Behringer to designate two nominees to the board of directors.

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        On June 30, 2017, Goodwin Procter contacted Jones Day to review a list of open issues with respect to the merger agreement. These items included: (1) certain covenants, including those regarding pre-closing tax transactions and related conditions to closing; (2) the size of the termination fee payable by Parent; and (3) remedies available to the Company in the event of breach by Greystar under certain circumstances. Later that day, Goodwin Procter sent Jones Day a draft of the merger agreement and other transaction documents and engaged in various telephonic discussions to negotiate the unresolved issues in those documents, and the Company facilitated the final due diligence items of Greystar.

        Later on June 30, 2017, Mr. Alfieri received a telephone call from Mr. Faith, during which Mr. Faith agreed to increase the reverse termination fee payable to 10% of the equity value of the transaction, or $202,090,337.

        Also on June 30, 2017, the board of directors and the Evaluation Committee held a joint telephonic meeting, together with Goodwin Procter and Morgan Stanley. Goodwin Procter discussed its negotiations earlier in the day with Jones Day, including the remaining open issues on the merger agreement. Representatives of Morgan Stanley reviewed with the board of directors Morgan Stanley's financial analyses of the consideration proposed in the merger.

        On June 30, 2017, conversations also took place among Mr. Fitch, independent chair of the Compensation Committee of the board of directors, Mr. Pire and Goodwin Procter regarding certain employee benefits and compensation matters to be a part of the merger agreement.

        On July 3, 2017, after the closing of the U.S. stock markets, the Wall Street Journal published an article indicating that an investment group led by Greystar was nearing a deal to buy the Company for $12.00 per share in cash.

        On July 4, 2017, Greystar provided the Company with its executed debt financing commitment letter from J.P. Morgan.

        On July 4, 2017, the board of directors and the Evaluation Committee held a joint telephonic meeting together with members of management and representatives of Goodwin Procter and Morgan Stanley, to discuss and review the draft merger agreement and to consider the proposed transaction. Representatives of Goodwin Procter again reviewed the duties of the directors and the terms of the draft merger agreement. Representatives of Morgan Stanley reviewed with the board of directors Morgan Stanley's financial analyses of the consideration proposed in the merger. Morgan Stanley then rendered its oral opinion, subsequently confirmed in writing by delivery of a written opinion to our board of directors dated July 4, 2017, that as of that date and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in the written opinion, the merger consideration to be received by the holders of shares of our common stock pursuant to the merger agreement was fair from a financial point of view to such holders. Following extensive discussion, and upon recommendation of the Evaluation Committee, the board of directors unanimously adopted resolutions which, among other things, approved and declared advisable and in the best interests of the Company and the stockholders of the Company, the merger, the merger agreement and the other transactions contemplated by the merger agreement and resolved to recommend that the stockholders of the Company vote for the approval of the merger and the other transactions contemplated by the merger agreement.

        Following the board meeting, the parties completed the transaction documents. In the afternoon of July 4, 2017, the parties executed and delivered the merger agreement and other transaction documents and the Company issued a press release announcing the transaction.

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Reasons for the Merger

        In reaching its decision to approve the merger, the merger agreement and the other transactions contemplated by the merger agreement and to recommend approval of the merger and the transactions contemplated by the merger agreement to our common stockholders, our board of directors and the Evaluation Committee consulted with our senior management team, as well as our outside legal and financial advisors, and considered a number of factors, including the following material factors which our board of directors viewed as supporting its decision to approve the merger, the merger agreement and the other transactions contemplated by the merger agreement and to recommend approval of the merger and the transactions contemplated by the merger agreement to our common stockholders:

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the current and historical trading prices for our common stock, and the fact that the cash merger consideration of $12.00 per share represented a premium of approximately 16.7% to the $10.28 volume weighted average closing price over the 12-month period ended July 3, 2017, the last trading day prior to the execution of the merger agreement, a premium of approximately 21.6% to the $9.87 volume weighted average closing price over the 30-day period ended July 3, 2017 and a premium of approximately 22.4% to the closing price of $9.80 on July 3, 2017, the last trading day prior to the public announcement of the merger agreement;



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the course of negotiations between the Company and Greystar resulting in a price per share of our common stock that was higher than the all-cash offers the Company received from Party A and Party B as well as other verbal indications of interests received by the Company over the past year;



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our board of directors' knowledge of the business, operations, financial condition, earnings and prospects of the company, as well as its knowledge of the current and prospective environment in which the company operates, including economic and market conditions;



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the belief that the merger is more favorable to our stockholders than other strategic alternatives available to the company, including remaining an independent public company;



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the risks and uncertainty of remaining an independent public company, given the Company's joint venture structure and smaller scale relative to other public multifamily REITs, which caused our cost of capital to remain higher than that of our larger peers and greater NAV discount as compared to larger public multifamily REITs, which impeded our ability to raise new equity capital;



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the high multiples of funds from operations at which common stock of REITs, including our common stock, have been trading and the risk that those multiples might not be sustained, which could result in a decline in the trading price of our common stock regardless of our performance;



•

favorable conditions for sale transactions in the real estate markets generally and the multifamily sector specifically, including prices for real estate assets being at or near historical highs while capitalization rates are at or near historical lows, the low interest rate environment and the possibility that interest rates may rise in the near future;



•

the high probability that the merger would be completed based on, among other things, the lack of a financing condition, and the $202,090,337 reverse termination fee payable to the company if the merger agreement is terminated in certain circumstances, which payment is guaranteed by the Guarantors;



•

the terms and conditions of the merger agreement, which were reviewed by our board of directors with our financial and legal advisors, and the fact that such terms were the product of arm's-length negotiations between the parties;

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•

Morgan Stanley's oral opinion, subsequently confirmed by delivery of a written opinion to our board of directors, dated July 4, 2017 that, as of that date, and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in its written opinion, the merger consideration to be received by the holders of shares of our common stock pursuant to the merger agreement was fair from a financial point of view to such holders (see "— Opinion of the Company's Financial Advisor ");



•

our ability, under the merger agreement, (1) (a) to pay a lower termination fee of $25,261,292 in connection with a superior proposal if the merger agreement had been terminated in connection with the superior proposal within the first 30 days following the date of the merger agreement (subject to an extension for the completion of matching rights periods in accordance with the no-shop provision of the merger agreement, provided that the initial superior proposal notice had been provided to Greystar by the Company on or prior to the 30th day after the date of the merger agreement) or (b) to pay a termination fee of $65,679,359 in all other instances, and (2) at any time prior to receipt of the Company stockholder approval, to participate in discussions or negotiations with third parties, under certain circumstances, if our board of directors determines, after consultation with advisors, that failure to do so would be inconsistent with its legal duties and that such acquisition proposal constitutes, or could reasonably be expected to result in, a superior proposal;



•

our board of directors' ability, under the merger agreement, to withdraw, modify or amend its recommendation that our common stockholders vote to approve the merger agreement and the merger under certain circumstances, subject to payment of the applicable termination fee;



•

our ability to terminate the merger agreement, under certain circumstances, in order to enter into a definitive agreement providing for a superior proposal if our board of directors determines, after consultation with advisors and after taking into account any changes to the terms of the merger agreement proposed by Parent, that the superior proposal continues to be a superior proposal, upon payment of the applicable termination fee;



•

the fact that (1) the $25,261,292 termination fee payable by us in certain circumstances (representing approximately 1.25% of the company's equity value, based on the cash merger consideration) and (2) the $65,679,359 termination fee payable by us in other circumstances (representing approximately 3.25% of the company's equity value, based on the cash merger consideration), were each viewed by our board of directors, after consultation with our legal and financial advisors, as reasonable and not likely to preclude any other party from making a competing acquisition proposal;



•

the fact that the all cash merger consideration will provide our stockholders with immediate fair value, in cash, for all of their shares of common stock;



•

the limited number of potential purchasers with the financial ability to acquire us; and



•

the fact that the merger would be subject to the approval of our common stockholders, and our common stockholders would be free to reject the merger by voting against the merger for any reason, including if a higher offer were to be made prior to the stockholders meeting (although we may be required to pay a termination fee under certain circumstances if we subsequently were to enter into a definitive agreement relating to, or to consummate, an acquisition proposal).

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        Our board of directors and the Evaluation Committee also considered the following potentially negative factors in its consideration of the merger agreement and the merger:

•

the merger would preclude our stockholders from having the opportunity to participate in the future performance of our assets, future potential earnings growth, future potential appreciation of the value of our common stock or future dividends that could be realized depending on our future performance;



•

the significant costs involved in connection with entering into and completing the merger and the substantial time and effort of management required to consummate the merger and related disruptions to the operation of our business;



•

the restrictions on the conduct of our business prior to the completion of the merger, which could delay or prevent us from undertaking business opportunities that may arise pending completion of the merger;



•

the pending merger or failure to complete the merger may cause harm to relationships with our employees, tenants and other business associates and may divert management and employee attention away from the day-to-day operation of our business;



•

our inability to solicit competing acquisition proposals and the possibility that the $25,261,292 or $65,679,359 termination fee payable by us upon the termination of the merger agreement could discourage other potential bidders from making a competing bid to acquire us;



•

the fact that an all cash merger would be taxable to our stockholders for U.S. federal income tax purposes;



•

the fact that, under Maryland law, our stockholders will not be entitled to appraisal rights, dissenters' rights or similar rights of an objecting stockholder in connection with the merger;



•

our inability to seek specific performance to require Parent, Merger Sub or Merger Partnership to complete the merger, and the fact that our exclusive remedy, available if the merger agreement is terminated in certain circumstances, would be limited to a reverse termination fee payable by Parent in the amount of $202,090,337, the payment of which is guaranteed by the Guarantors; and



•

the fact that some of our directors and executive officers have interests in the merger that may be different from, or in addition to, our stockholders generally (see "— Interests of Monogram's Directors and Executive Officers in the Merger ").

        The foregoing discussion of the factors considered by our board of directors is not intended to be exhaustive, but rather includes the material factors considered by our board of directors. In reaching its decision to approve the merger, the merger agreement and the other transactions contemplated by the merger agreement, our board of directors did not quantify or assign any relative weights to, and did not make specific assessments of, the factors considered, and individual directors may have given different weights to different factors. Our board of directors did not reach any specific conclusion with respect to any of the factors or reasons considered.

        The above factors are not presented in any order of priority. The explanation of the factors and reasoning set forth above contain forward-looking statements and should be read in conjunction with the section of this proxy statement entitled " Cautionary Statement Regarding Forward-Looking Statements ."

Recommendation of the Company's Board of Directors

         Our board of directors has unanimously approved the merger, the merger agreement and the other transactions contemplated by the merger agreement, and has declared the merger and the other

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transactions contemplated by the merger agreement advisable and in the best interests of Monogram Residential Trust, Inc. and our stockholders. Our board of directors recommends that you vote "FOR" the proposal to approve the merger and the merger agreement, "FOR" the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger and "FOR" the proposal to approve any adjournments of the special meeting for the purpose of soliciting additional proxies if there are not sufficient votes at the special meeting to approve the merger and the merger agreement.

Opinion of the Company's Financial Advisor

        We retained Morgan Stanley to provide us with financial advisory services in connection with the proposed merger. We selected Morgan Stanley to act as our financial advisor based on Morgan Stanley's qualifications, expertise and reputation, and its knowledge of the business and affairs of the Company. As part of this engagement, our board of directors requested that Morgan Stanley evaluate the fairness, from a financial point of view, of the merger consideration to be received by the holders of shares of our common stock pursuant to the merger agreement. On July 4, 2017, at a meeting of our board of directors, Morgan Stanley rendered its oral opinion, subsequently confirmed in writing by delivery of a written opinion to our board of directors dated July 4, 2017, that as of that date and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in the written opinion, the merger consideration to be received by the holders of shares of our common stock pursuant to the merger agreement was fair from a financial point of view to such holders of shares of our common stock.

         The full text of the written opinion of Morgan Stanley, dated as of July 4, 2017, is attached to this proxy statement as Annex B and is hereby incorporated into this proxy statement by reference in its entirety. You should read the opinion in its entirety for a discussion of the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion. We encourage you to read the entire opinion and the summary of Morgan Stanley's opinion below carefully and in their entirety. This summary of the opinion of Morgan Stanley set forth in this proxy statement is qualified in its entirety by reference to the full text of the opinion. Morgan Stanley's opinion was directed to our board of directors, in its capacity as such, and addresses only the fairness, from a financial point of view, to the holders of shares of our common stock, as of the date of the opinion, of the merger consideration to be received by such holders pursuant to the merger agreement, and does not address any other aspects or implications of the merger. Morgan Stanley's opinion was not intended to, and does not, constitute a recommendation to any holder of shares of our common stock as to how to vote at the special meeting to be held in connection with the merger or whether to take any other action with respect to the merger. Morgan Stanley was not requested to opine as to, and its opinion did not in any manner address the relative merits of the transactions contemplated by the merger agreement as compared to other business or financial strategies that might be available to us, nor did it address our underlying business decision to enter into the merger agreement or proceed with any other transaction contemplated by the merger agreement.

        In connection with rendering its opinion, Morgan Stanley, among other things:

•

reviewed certain publicly available financial statements and other business and financial information of the Company;



•

reviewed certain internal financial statements and other financial and operating data concerning the Company prepared by the management of the Company;



•

reviewed certain financial projections prepared by the management of the Company;

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•

discussed the past and current operations and financial condition and the prospects of the Company with senior executives of the Company;



•

reviewed the reported prices and trading activity for the Company's common stock;



•

compared the financial performance of the Company and the prices and trading activity of the Company's common stock with that of certain other publicly-traded companies comparable with the Company, and their securities;



•

reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;



•

participated in certain discussions and negotiations among representatives of the Company and Parent and certain parties and their financial and legal advisors;



•

reviewed the merger agreement, the draft equity financing and debt financing commitment letters, referred to as the commitment letters, substantially in the form of the drafts dated July 3, 2017, and certain related documents; and



•

performed such other analyses, reviewed such other information and considered such other factors as Morgan Stanley deemed appropriate.

        In arriving at its opinion, Morgan Stanley assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to it by the Company, and formed a substantial basis for its opinion. With respect to the financial projections, with the consent of our board of directors, Morgan Stanley assumed that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of the Company of the future financial performance of the Company, and Morgan Stanley expressed no opinion on such projections or the reasonableness of the assumptions, estimates or judgments on which they were based, and Morgan Stanley assumed that there had not occurred any material change in the assets, liabilities, financial condition, results of operations, business or prospects of the Company or any of its subsidiaries since the most recent dates on which the most recent financial statements and financial projections or other information, financial or otherwise, was made available to Morgan Stanley. In addition, Morgan Stanley assumed that the merger and the Additional Transactions (as defined in the merger agreement) will be consummated in accordance with the terms set forth in the merger agreement without any waiver, amendment or delay of any terms or conditions, including, among other things, that Parent will obtain equity and debt financing in accordance with the terms set forth in the commitment letters; however, Morgan Stanley expressed no opinion as to the terms of such equity and debt financing or the terms or conditions upon which it has been or will be obtained, and Morgan Stanley did not express any view on, and its opinion did not address, any other term or aspect of the merger agreement or the transactions contemplated thereby (including the Additional Transactions and any transactions related to joint ventures of the subsidiaries or affiliates of the Company, including any joint venture with PGGM or NPS) or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection therewith (including any agreement related to the Additional Transactions and joint ventures of the subsidiaries or affiliates of the Company, including any agreement related to any joint venture with PGGM or NPS). Morgan Stanley also assumed that the definitive merger agreement would not differ in any material respect from the draft thereof furnished to Morgan Stanley. Morgan Stanley assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents required for the proposed merger, no delays, limitations, conditions or restrictions would be imposed that would have a material adverse effect on the contemplated benefits expected to be derived in the proposed merger. Morgan Stanley is not a legal, tax or regulatory advisor. Morgan Stanley is a financial advisor only and relied upon, without independent verification, the assessment of the Company and its legal, tax or regulatory advisors with

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respect to legal, tax and regulatory matters. Morgan Stanley expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of the Company's officers, directors or employees, or any class of such persons, including with respect to any Company compensatory award, relative to the merger consideration to be received by the holders of shares of the Company's common stock in the merger. Morgan Stanley did not make any independent valuation or appraisal of the assets or liabilities of the Company, nor was Morgan Stanley furnished with any such valuations or appraisals. Morgan Stanley's opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Morgan Stanley as of, the date of its opinion. Events occurring after the date of Morgan Stanley's opinion may affect Morgan Stanley's opinion and the assumptions used in preparing it, and Morgan Stanley did not assume any obligation to update, revise or reaffirm its opinion.

        Morgan Stanley noted in its opinion that, in connection with the preparation of its opinion, it was not authorized to solicit, and did not solicit, interest from any party with respect to the acquisition, business combination or other extraordinary transaction, involving the Company, nor did Morgan Stanley negotiate with any of the parties, other than Parent, which expressed interest to Morgan Stanley in the possible acquisition of the Company or certain of its constituent businesses.

Summary of Financial Analyses of Morgan Stanley

        The following is a summary of the material financial analyses performed by Morgan Stanley in connection with its oral opinion and the preparation of its written opinion letter to our board of directors dated July 4, 2017. The following summary is not a complete description of the financial analyses performed and factors considered by Morgan Stanley in connection with its opinion, nor does the order of analyses described represent the relative importance or weight given to those analyses. Some of these summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses used by Morgan Stanley, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. The analyses listed in the tables and described below must be considered as a whole. Assessing any portion of such analyses and of the factors reviewed, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Morgan Stanley's opinion. Furthermore, mathematical analysis (such as determining an average or median) is not in itself a meaningful method of using the data referred to below.

Comparable Companies Analysis

        Morgan Stanley reviewed and compared certain publicly available and Company management-provided financial information, ratios and market multiples relating to the Company with equivalent publicly available data for companies that share similar business characteristics with the Company to derive an implied equity value reference range for the Company's common stock. Morgan Stanley reviewed the following publicly traded multifamily REITs:

•

Apartment Investment and Management Company



•

AvalonBay Communities, Inc.



•

Camden Property Trust



•

Equity Residential



•

Essex Property Trust, Inc.



•

Mid-America Apartment Communities, Inc.



•

UDR, Inc.

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        For purposes of this analysis, Morgan Stanley analyzed and compared certain statistics for each of these companies for comparison purposes, including the ratios of share price to Wall Street research analyst consensus (referred to as Street consensus) estimated funds from operations and estimated adjusted funds from operations, which are referred to as FFO and AFFO, respectively, for calendar year 2018. Morgan Stanley also analyzed the premium or discount represented by the ratio of share price to Street consensus estimated net asset value per share, which is referred to as NAV per share. The multiples and ratios for each of the comparable companies were calculated using their respective closing prices on July 3, 2017, and were based on the most recent publicly available information and Street consensus estimates. Morgan Stanley derived a range of multiples or discounts/premiums, as applicable, for each metric using the high and low multiples or discounts/premiums, as applicable, for the applicable comparable companies. Morgan Stanley selected these ranges based on its professional judgment after reviewing the selected companies' ranges for each metric and the historical ranges of the Company for each metric.

        The multiples observed for the selected companies are set forth below.

        Morgan Stanley then used these multiple ranges to derive separate implied per share equity value reference ranges for the Company using each of the metrics reviewed by applying the range derived from the comparable companies for each metric to the corresponding Company metrics.

        The following table reflects the results of this analysis:

        Based on this analysis, Morgan Stanley derived the following selected implied per share equity value reference range for the Company based on the low end and high end of the implied per share equity value reference range for each metric set forth above. This analysis indicated the following implied per-share value reference range for the Company's common stock, as compared to the per-share merger consideration of $12.00:

        Morgan Stanley observed that the Company's historical and projected levels of general and administrative, or G&A, expenses were higher than G&A expenses that would be implied for the Company based on a comparison with the comparable companies, Wall Street research, and other factors considered by Morgan Stanley. Morgan Stanley also observed that in calculating AFFO, the

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Company, like a number of other companies in the real estate industry, adjusted FFO to AFFO by, among other things, adding back non-cash compensation to FFO, but that the comparable companies generally did not add back non-cash compensation in calculating AFFO.

        Accordingly, Morgan Stanley calculated additional implied per share equity value reference ranges for the Company using the Price / 2018E FFO, Price / 2018E AFFO and Premium / (Discount) to NAV per share metrics, but adjusting the Company's 2018E AFFO downward by approximately $0.03 per share for non-cash compensation estimated for calendar year 2018, and adjusting the Street consensus estimated NAV for the Company downward, for the Wall Street research analysts that did not already account for the Company's higher G&A expense, by $2.12 per share, which was Morgan Stanley's mid-point estimate of the net present value, discounted at the midpoint of the Company's weighted average cost of capital of 5.17%, of the estimated capitalized value of the Company's excess G&A expense of $18 million, as of September 30, 2019, applying a nominal capitalization rate to such excess G&A expense of 4.66% based on the midpoint average capitalization rate utilized in the Net Asset Value Analysis for the stabilized operating properties.

        The following table reflects the results of this analysis:

        Based on this analysis, Morgan Stanley derived the following selected implied per share equity value reference range for the Company based on the low end and high end of the implied per share equity value reference range for each metric set forth above. This analysis indicated the following implied per-share value reference range for the Company's common stock, as compared to the per-share merger consideration of $12.00:

        No company utilized in the comparable company analysis is identical to the Company. In evaluating comparable companies, Morgan Stanley made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, which are beyond the Company's control, such as the impact of competition on the Company and the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of the Company or the industry, or in the financial markets in general.

Dividend Discount Analysis

        Morgan Stanley performed a dividend discount analysis of shares of the Company's common stock to derive an implied equity value reference range for the Company's common stock. This analysis, which is also known as the dividend discount model, is a method of estimating the value of the common stock of a company as the sum of the implied present values of distributable cash flow with respect to such common stock during a forecast period plus the present value of the terminal value of such common stock at the end of the forecast period.

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        Morgan Stanley calculated a range of implied present values (as of September 30, 2017) of the distributable cash flows that the Company was forecasted to generate as contained in projections prepared by Company management during the twelve months ending September 30, 2018 through the twelve months ending September 30, 2020. In addition, for the periods of the twelve months ending September 30, 2021 through the twelve months ending September 30, 2023, based upon the guidance and direction of Company management to assume an annual growth rate of 4.5% for the Company's Core FFO and 5.0% for the Company's AFFO, Morgan Stanley extrapolated distributable cash flows that the Company was forecasted to generate during such period and calculated a range of implied present values (as of September 30, 2017) of the distributable cash flows during such period. The distributable cash flows for such periods were discounted to present value using a range of discount rates from 5.63% to 7.13%, which was derived by taking a sensitized range of the Company's cost of equity determined utilizing the capital asset pricing model.

        Morgan Stanley then calculated a range of implied terminal values of the Company's common stock as of September 30, 2023 by applying a terminal Core FFO multiple range of 16.3x to 20.0x to the Company's forecasted Core FFO per share for the twelve months ending September 30, 2023 of approximately $0.58. The range of multiples was selected using the low end of the range of 10-year historical average next twelve months FFO multiples of peer multifamily REIT companies (excluding the top and bottom quartiles) as the low end of the range, and the average next twelve months FFO multiple of peer multifamily REIT companies as of July 3, 2017 as the high end of the range. This resulted in a range of estimated terminal values of approximately $9.45 to $11.60 per share. Morgan Stanley discounted the range of estimated terminal values derived from these calculations to present value as of September 30, 2017 using a range of discount rates from 5.63% to 7.13%, which was derived as described above, and then added the resultant implied present values to the implied present value of distributable cash flows as described above. This analysis indicated the following implied per share equity value reference range for the Company, as compared to the per-share merger consideration of $12.00:

Discounted Free Cash Flow Analysis

        Morgan Stanley performed a discounted cash flow, or DCF, analysis to derive an implied equity value reference range for the Company's common stock.

        A DCF analysis is designed to provide an implied value of a company by calculating the present value of estimated future unlevered free cash flows and terminal value of the company. The "unlevered free cash flows" or "free cash flows" refer to a calculation of the future cash flows of an asset without including, in such calculation, any debt-servicing costs. The present value of a terminal value, representing the value of unlevered free cash flows beyond the end of the forecast period, is added to arrive at a total aggregate value. Outstanding debt and preferred equity is subtracted and outstanding cash is added to arrive at an equity value. The equity value is then divided by the fully diluted share count, in order to arrive at an implied value per share of common stock.

        Morgan Stanley calculated a range of implied present values (as of September 30, 2017) of the net free cash flows that the Company was forecasted to generate as contained in projections prepared by Company management during the twelve months ending September 30, 2018 through the twelve months ending September 30, 2020. In addition, for the periods of the twelve months ending September 30, 2021 through the twelve months ending September 30, 2023, based upon the guidance and direction of Company management to assume an annual growth rate of 3.0% for the Company's NOI, G&A and management fees, Morgan Stanley extrapolated net free cash flows that the Company was forecasted to generate during such period and calculated a range of implied present values (as of

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September 30, 2017) of the net free cash flows during such period. The net free cash flows for such periods were discounted to present value using a range of discount rates from 4.70% to 5.63%, which was derived by taking a sensitized range of the Company's weighted average cost of capital determined utilizing the capital asset pricing model to calculate the Company's cost of equity and utilizing the Company's current weighted average interest rate on its current indebtedness to calculate the Company's cost of debt.

        Morgan Stanley then calculated a range of implied terminal enterprise values of the Company as of September 30, 2023 by applying a range of implied exit capitalization rates of 5.06% to 6.08% to the forecasted net operating income of the Company (excluding the Company's third party asset management and property management fee businesses) for the twelve months ending September 30, 2023, adding the estimated terminal values of the Company's third party asset and property management fee businesses as of September 30, 2023 based on Morgan Stanley's professional judgment, Wall Street research analysts range of multiples, and experience with respect to valuations of these types of businesses. The range of capitalization rates was selected using the low end of the range of 10-year historical average implied capitalization rates of peer multifamily REIT companies (excluding the top and bottom quartiles) and the current average implied exit capitalization rate of peer multifamily REIT companies based on share prices as of July 3, 2017 for the high end of the range). The ranges of EBITDA multiples selected for the Company's third party fee and property management businesses were based on Morgan Stanley's professional judgment, Wall Street research analysts range of multiples, and experience with respect to valuations of these types of businesses. These analyses resulted in a range of implied terminal values of the Company as of September 30, 2023 of approximately $2.7 billion to $3.2 billion.

        Morgan Stanley discounted the range of estimated terminal values derived from these calculations to forecasted present value as of September 30, 2017 using a range of discount rates of 4.70% to 5.63%, which was derived by taking a sensitized range of the Company's weighted average cost of capital determined utilizing the capital asset pricing model, and then added the resultant implied present values to the implied present value of net free cash flows as described above, subtracting forecasted outstanding debt and adding forecasted outstanding cash as of September 30, 2017, and dividing by the number of fully diluted shares, all as provided by the Company's management.

        This analysis indicated the following implied per share equity value reference range for the Company, as compared to the per-share merger consideration of $12.00:

        In addition, Morgan Stanley further calculated an implied per share equity value reference range by subtracting the net present value, utilizing the range of the Company's weighted average cost of capital as the discount rate, of the estimated capitalized value of the Company's excess G&A expenses, estimated at $19 million, as of September 30, 2023, applying an implied capitalization rate ranging from 5.06% to 6.08%. The range of implied capitalization rates was selected using the low end of the range of 10-year historical average implied capitalization rates of peer multifamily REIT companies (excluding the top and bottom quartiles) as the low end of the range, and the average implied capitalization rate of peer multifamily REIT companies as of July 3, 2017 as the high end of the range. This resulted in an implied amount of excess G&A expense in an approximate range of $1.43 to $1.79 per share. This analysis indicated the following implied per-share value reference range for the Company's common stock, as compared to the per-share merger consideration of $12.00:

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Net Asset Value Analysis

        Morgan Stanley analyzed the value of the Company's common stock as a function of the net value of its assets per share, or NAV per share. Morgan Stanley based its NAV analysis on a combination of market data, estimates of net operating income or asset value provided by Company management, and values negotiated for certain assets with third parties as provided by Company management.

        Morgan Stanley calculated the estimated aggregate value of the Company's operating properties by combining the estimated value of each of the Company's operating properties, which consist of stabilized operating properties, properties under development and recently acquired properties, on an asset-by-asset basis. The value of each stabilized operating property was estimated by applying property-specific capitalization rates to the Company's proportionate share of net operating income forecasted by the Company's management for each property for the twelve months ending September 30, 2018. The value of each development property was estimated by applying the cost of development to date and the expected cost of completion and applying property-specific capitalization rates to those costs and discounting these cash flows to present. The capitalization rates for the operating properties, recently acquired assets, and development assets were selected based on, among other factors, Wall Street research, asset quality, location, current occupancy levels, sales productivity, market positioning and supply/demand dynamics. This approach resulted in a range of average capitalization rates from 4.40% to 4.91% for the stabilized operating property. The value of each property under development was estimated using a DCF approach based on financial forecasts for such properties provided by Company management and reversion capitalization rates and discount rates selected by Morgan Stanley based on, among other factors, Wall Street research, asset quality, location, current occupancy levels, sales productivity, market positioning, supply/demand dynamics, and Morgan Stanley's professional judgment. Based upon these estimated values, Morgan Stanley calculated development value creation at the low end, mid-point and high end was $0, $81 million and $109 million, respectively, or approximately $0.00, $0.48 and $0.65 per share at the low end, mid-point and high end, respectively. The value of each recently acquired operating property was estimated in a range based upon the property's acquisition cost and estimated upward and downward adjustments to account for implied changes in value that would be expected to be observed from small decreases or increases in the market capitalization rate subsequent to each acquisition. To this estimated aggregate value, Morgan Stanley made various upward and downward adjustments for various factors including, without limitation, tax credits, the Company's property and asset management cash flow, loans receivable, promotes in certain partnerships, cash and cash equivalents, like kind exchange escrow accounts, certain other tangible assets, outstanding debt and preferred equity securities, mark-to-market debt balances, other tangible liabilities and developer put options. All of these assets and liabilities were included in the NAV analysis utilizing the Company's proportionate ownership interest. Morgan Stanley divided the resultant estimates of NAV by the number of fully diluted shares to derive the following implied per-share value reference range for the Company's common stock, as compared to the per-share merger consideration of $12.00:

        In addition, Morgan Stanley further calculated an adjusted NAV per share of the Company's common stock by subtracting from the per-share NAV calculated above the estimated capitalized per-share value of the Company's excess G&A expense of approximately $2.02-$2.24 per share. This range was derived utilizing a range of nominal capitalization rates of 4.40% to 4.91%, consistent with the range utilized for the full Company's stabilized operating properties, and a range of discount rates of 4.70% to 5.63% which was consistent with the Company's weighted average cost of capital. This

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analysis indicated the following implied per share equity value reference range for each share of our common stock, as compared to the per-share merger consideration of $12.00:

Analysis of Selected Precedent Transactions

        Morgan Stanley also performed an analysis of selected precedent transactions involving publicly-traded multifamily REIT companies in precedent transactions that shared certain characteristics with the merger. Based on publicly available information, Morgan Stanley identified the following fifteen publicly announced and completed transactions involving companies that own and operate primarily multifamily properties with a value of greater than $100 million and that have occurred since January 1, 2000:

        Morgan Stanley reviewed the premiums paid to the target companies' unaffected stock prices (defined as the average stock price for the ten trading days ending five trading days prior to the announcement (or public news article or leak was made available to the public) of the transaction for such selected precedent transaction). Based on publicly available information, the overall low and high unaffected stock price premiums paid in all transactions reviewed (excluding the top and bottom quartiles) were 9.2% and 17.4%, respectively, with a midpoint of 13.3%. An implied per share equity value reference range for the Company's common stock was then calculated based on applying those premiums to the closing price of $9.80 per share of the Company's common stock on July 3, 2017, which represents the last unaffected closing price of the Company's common stock. This analysis indicated the following implied per-share value reference range for the Company's common stock, as compared to the per-share merger consideration of $12.00:

        No company or transaction utilized as a comparison in the analysis of selected precedent transactions is identical to the Company or directly comparable to the merger in business mix, timing and size. Accordingly, an analysis of the results of the foregoing necessarily involves complex

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considerations and judgments concerning differences in the financial and operating characteristics of the Company and other factors that would affect the value of the companies to which the Company is being compared. In evaluating the precedent transactions, Morgan Stanley made judgments and assumptions with regard to industry performance, global business, economic, market and financial conditions and other matters, many of which are beyond the Company's control, such as the impact of competition on the Company and the industry generally, industry growth and the absence of any adverse material change in the financial conditions and prospects of the Company or the industry or the financial markets in general.

Private Buyer Analysis

        Morgan Stanley performed a hypothetical take-private analysis to determine the prices at which a financial sponsor might effect a leveraged buyout of the Company under current market conditions assuming two different hypothetical buyers: a highly leveraged buyer and a core-plus buyer. A highly leveraged buyer would typically utilize higher leverage but require a higher return, while a core-plus buyer would require lower returns but utilize less leverage. In preparing this analysis, Morgan Stanley utilized the projected unlevered free cash flows included in projections by Company management during the twelve months ending September 30, 2018 through September 30, 2020 and for the periods of the twelve months ending September 30, 2021 through the twelve months ending September 30, 2023, based upon the guidance and direction of Company management, Morgan Stanley assumed an annual growth rate of 3.0% for the Company's NOI, G&A and management fees, in each case adjusted for hypothetical private company G&A savings and certain projected increases in real estate taxes that would expected to be incurred in an acquisition and assumed a range of market capitalization rates at a September 30, 2022 (five-year) exit of 4.91% to 5.41%, adding the estimated terminal values of the Company's third party asset and property management fee businesses as of September 30, 2023 based on Morgan Stanley's professional judgment, Wall Street research analysts range of multiples, and experience with respect to valuations of these types of businesses. In addition, Morgan Stanley assumed: (a) for its analysis of the hypothetical highly leveraged buyer, that (i) the buyer incurs new CMBS debt in connection with the transaction in an aggregate principal amount resulting in a loan-to-value ratio of 75% for the Company, and (ii) that the buyer incurs approximately $71 million in transaction costs and the highly levered buyer targeting a gross internal rate of return of 16.0% to 20.0%; and (b) for its analysis of the hypothetical core-plus buyer, (i) the buyer adjusts its leverage to a loan-to-value ratio of approximately 50% in line with core-plus buyers and (ii) that the buyer incurs transaction costs of $54 million and is targeting a gross internal rate of return of 10.0% to 13.0%. Based upon these assumptions, Morgan Stanley calculated the following implied per-share value reference range for the Company's common stock, as compared to the per-share merger consideration of $12.00:

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Additional Reference Points

        Morgan Stanley also presented to the board of directors a number of reference points with respect the Company and the merger consideration, including the following:

        Historical Stock Price.     Morgan Stanley reviewed the stock price performance of the Company's common stock during the 52 weeks ended on July 3, 2017, reflecting the unaffected price for our common stock. Based on this review, Morgan Stanley noted that the Company common stock had traded in the range, and had a mean trading price and volume weighted average trading price (VWAP), set forth below over the applicable 52-week period, as compared to the merger consideration of $12.00 per share:

        Research Analyst Price Targets and NAV Per Share Estimates.     Morgan Stanley reviewed the most recently available public market trading price targets for shares of the Company's common stock by the eight equity research analysts that provided recent price targets for the Company prior to July 3, 2017. Morgan Stanley reviewed the most recent price target published by the analysts on or prior to such date. These targets reflect each analyst's estimate of the future public market trading price of the Company's common stock at the time the price target was published. Morgan Stanley compared these price targets to the per-share merger consideration of $12.00 per share:

Morgan Stanley also reviewed equity research analyst estimates of net asset value per share of our common stock. Morgan Stanley reviewed the most recent estimates of net asset value per share published by the same eight analysts prior to July 3, 2017. Morgan Stanley compared these NAV per share estimates to the per-share merger consideration of $12.00 per share:

        The public market trading price targets and estimates of net asset value per share published by securities research analysts do not necessarily reflect current market trading prices for shares of the Company's common stock and these targets and estimates are subject to uncertainties, including the future financial performance of the Company and future financial market conditions. In addition, the consensus means utilized by Morgan Stanley were derived from publicly available research data providers.

General

        Morgan Stanley performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. In arriving at its opinion, Morgan Stanley considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Morgan Stanley believes that selecting any portion of these analyses, without considering all analyses as a whole, would create an incomplete view of the process underlying

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its analyses and opinion. In addition, Morgan Stanley may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be Morgan Stanley's view of the actual value of the Company.

        In performing its analyses, Morgan Stanley made numerous assumptions with respect to industry performance, general business, regulatory, economic, market and financial conditions and other matters. These include, among other things, the impact of competition on the businesses of the Company and the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of the Company, or the industry, or in the financial markets in general. Many of these assumptions are beyond the control of the Company. Any estimates contained in Morgan Stanley's analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.

        Morgan Stanley conducted the analyses described above solely as part of its analysis of the fairness from a financial point of view of the merger consideration to be paid to the holders of shares of our common stock pursuant to the merger agreement, and in connection with the delivery of its opinion as of July 4, 2017 to our board of directors. These analyses do not purport to be appraisals or to reflect the prices at which our common stock might actually trade.

        The merger consideration was determined through arm's-length negotiations between the Company and Parent and was unanimously approved by our board of directors. Morgan Stanley did not recommend any specific form or amount of merger consideration to us or our board of directors, or that any specific merger consideration constituted the only consideration for the merger. Morgan Stanley was not requested to opine as to, and its opinion does not in any manner address, the underlying business decision of the Company to proceed with or effect the merger or the likelihood of consummation of the merger, nor does it address the relative merits of the merger as compared to any other alternative business transaction, or other alternatives, or whether or not such alternatives could be achieved or are available. Morgan Stanley's opinion was not intended to, and does not, express an opinion or a recommendation as to how any holder of shares of the Company's common stock should vote at the special meeting to be held in connection with the merger, or as to any other action that a holder of shares of the Company's common stock should take relating to the merger.

        Morgan Stanley's opinion and presentation to our board of directors was one of many factors taken into consideration by our board of directors in deciding to approve the merger and the other transactions contemplated by the merger agreement. Consequently, the analyses as described above should not be viewed as determinative of the opinion of our board of directors with respect to the merger consideration or of whether our board of directors would have been willing to agree to a different merger consideration.

        Morgan Stanley's opinion was approved by a committee of Morgan Stanley investment banking and other professionals in accordance with its customary practice. Morgan Stanley is a global financial services firm engaged in the securities, investment management and individual wealth management businesses. Its securities business is engaged in securities underwriting, trading and brokerage activities, foreign exchange, commodities and derivatives trading, prime brokerage, as well as providing investment banking, financing and financial advisory services. Morgan Stanley, its affiliates, directors and officers may at any time invest on a principal basis or manage funds that invest, hold long or short positions, finance positions, and may trade or otherwise structure and effect transactions, for its own account or the accounts of its customers, in debt or equity securities or loans of Parent or any of its affiliates, the Company or any other company, or any currency or commodity, that may be involved in the merger, or any related derivative instrument.

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        Under the terms of its engagement letter, Morgan Stanley provided our board of directors with financial advisory services and a financial opinion, and we have agreed to pay Morgan Stanley an aggregate fee of approximately $25.5 million, of which $2.0 million became payable upon the execution of the merger agreement and the remainder of which will be due upon the consummation of the merger, and to reimburse Morgan Stanley for its reasonable and documented out-of-pocket expenses. In addition, we have agreed to indemnify Morgan Stanley and its affiliates, their respective officers, directors, employees and agents, and each person, if any, controlling Morgan Stanley or any of its affiliates against certain liabilities and expenses, including certain liabilities under the federal securities laws, relating to, arising out of or in connection with Morgan Stanley's engagement.

        In the two years prior to the date of Morgan Stanley's opinion, Morgan Stanley did not receive any financial advisory or financing fees from the Company. During the same period, Morgan Stanley received an aggregate of approximately $2.0 million to $3.0 million in fees for financing services from affiliates of GIC (which are affiliated with one of the providers of Parent's equity financing pursuant to the equity commitment letter and one of the guarantors providing a limited guarantee in favor of the Company), and certain of their portfolio companies. Morgan Stanley has advised us that it may also seek to provide financial advisory and financing services to Parent, the Company, the various providers of Parent's equity financing and their respective affiliates in the future and would expect to receive fees for the rendering of those services. The information disclosed in this paragraph is based upon information provided to us by Morgan Stanley.