WeaveReport South Florida Multifamily Forecast

SOUTH FLORIDA HISTORICAL & FUTURE DELIVERIES

GRAPH 5 :: SOUTH FLORIDA HISTORICAL & FUTURE DELIVERIES

20,000

MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM

17,893

18,000

16,000

14,000

12,925

12,456

12,000

9,770 9,444

10,000

7,759 7,616

7,362

7,227 7,454

8,000

# of Units

5,896

5,596

6,000

4,000

3,015

2,000

0

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Source: CoStar & C&W Internal Database

*Forecasted construction deliveries are as of Jan-2022. Actual deliveries may vary.

LOOKING AHEAD Covid has changed the way people live, work and invest. South Florida multifamily has experienced this first-hand. A business- friendly environment, climate/lifestyle, existing and new infrastructure projects have more individuals, companies and investors looking to be part of the South Florida experience. I expect these trends to continue. Finding opportunities will remain a challenge. New construction deals will continue to be available around lease stabilization. Value-add deals are harder to find. Opportunities that have loss-to-lease upside will continue to be prevalent as many properties have not recognized the rent premiums that have occurred throughout the region. In the last two years we witnessed the multifamily sale market slam shut at the start of Covid and quickly rebound to record levels. Going forward the market is ideally positioned for continued long-term growth. Collections and occupancies are excellent. New supply is quickly absorbed. Population/ Household growth is on fire. The job market has largely rebounded. Wages are up. Home prices are at record levels meaning more people are renting. Limited land keeps construction in balance. Fundamentals are strong. Returns have compressed yet underwriting and financing remains realistic. We expect 2022 will be very similar to this year with continued strong sale activity fueled by positive market fundamentals.

• Despite higher inflation we anticipate interest rates will remain low. Interest rates have increased from mid-2020 but there is no short-term concern of rates going notably higher. • Covid is not going away anytime soon. Variants may come and go. Adjust to the new norm. • Although we believe any notable change is unlikely, it’s important to follow any potential changes in capital gains and 1031 tax laws. • Rents continue to increase albeit not at same levels witnessed in 2021. • Insurance costs have increased in the past 3 years. Looking for firmer footing on premiums. • South Florida will continue to benefit from a booming population. Covid exasperated the growth. Anticipate more international travel will likely see international capital and residents enter South Florida. • More capital in short term rent growth markets with cash- on-cash focus and not IRR. • Lose the loss-to-lease. Opportunities that have loss-to- lease with wide variations on rents for identical units will have more immediate upside by burning off loss-to- lease on underpriced units. • Affordability to remain an issue. Newmarket rate, workforce housing continues to be underserved within the market.

Projected Nominal Population Growth by MSA (2021-2025) GRAPH 6 :: PROJECTED NOMINAL POPULATION GROWTH BY MSA (2021-2025)

350,000

305,150

294,422

300,000

281,310

268,794

248,530

250,000

200,000

150,000

143,039

100,000

87,611

50,000

13,708

7,748

-4,255

0

South Florida

Phoenix

Los Angeles

Dallas

Houston

Atlanta

Washington DC

Chicago

Philadelphia

New York

Source: Moody’s

5

-50,000