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2019 NMHC Research ForumApril 2-3, 2019

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Apartment Markets

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APARTMENT MARKETS

Jeanette Rice,CBRE(Moderator)

Ryan Davis,Witten Advisors LLC

Carl Whitaker,RealPage, Inc

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MARKET SAYS THE FED IS NOW MORE LIKELY TO CUT RATES THAN RAISE THEM

Source: CME Group

0%

10%

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30%

40%

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70%

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100%

Jan'19 Feb'19 Mar'19

Market-Based Probabilities of Fed Rate Actions (Cut, Raise, or Hold Steady) in 2019

CutHold

Steady

Raise

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RENT GROWTH LEADERS AS OF 1Q19 (PRELIMINARY)

Source: RealPage

Market Annual Rent Growth (1Q19)

Phoenix 8.0%Las Vegas 7.9%

Atlanta 5.3%Greensboro 5.2%

Memphis 5.1%Sacramento 5.0%

Riverside 4.8%Austin 4.7%

Jacksonville 4.2%Tampa 4.2%

U.S. 3.2%

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MANY OF THE LEADING RENT GROWTH MARKETS ARE LATE RECOVERY

Source: RealPage. “Recovery” defined as the year in which the market’s total employment base reached pre-recession (2Q08) levels.

Market Annual Rent Growth (1Q19)

Time ofRecovery

Phoenix 8.0% 4Q14Las Vegas 7.9% 4Q15

Atlanta 5.3% 4Q13Greensboro 5.2% 4Q16

Memphis 5.1% 4Q15Sacramento 5.0% 2Q15

Riverside 4.8% 4Q13Austin 4.7% 4Q10

Jacksonville 4.2% 4Q14Tampa 4.2% 2Q14

U.S. 3.2% 4Q13

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Monthly Total 5+ Starts Annualized, SA

12-Month Total 5+ Starts

389.2

348.7

0

100

200

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400

500

2000

2001

2002

2003

2004

2005

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2019

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TOTAL 5+ STARTS OFF PEAK LEVELS, BUT ROSE 5% IN 2018; EBBED IN EARLY 2019

Source: U.S. Department of Commerce

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2018 STARTS DOWN IN MOST MAJOR MARKETS, BUT SURGING IN SOME

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December 2017 December 2018

Source: Witten Advisors

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IN 2018, CLASS A GROWTH TOPPED CLASS C FOR THE FIRST TIME IN THREE YEARS

Source: RealPage

0%

1%

2%

3%

4%

5%

6%

7%

4Q10

2Q11

4Q11

2Q12

4Q12

2Q13

4Q13

2Q14

4Q14

2Q15

4Q15

2Q16

4Q16

2Q17

4Q17

2Q18

4Q18

Annual Rent Growth by Asset Class

92%

93%

94%

95%

96%

97%

4Q10

2Q11

4Q11

2Q12

4Q12

2Q13

4Q13

2Q14

4Q14

2Q15

4Q15

2Q16

4Q16

2Q17

4Q17

2Q18

4Q18

Occupancy Rate by Asset ClassA: 3.2% B: 3.5% C: 2.9% A: 94.9% B: 95.4% C: 95.9%

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THE SPREAD BETWEEN A & B RENTS IS GROWING

Source: RealPage

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

4Q99

4Q00

4Q01

4Q02

4Q03

4Q04

4Q05

4Q06

4Q07

4Q08

4Q09

4Q10

4Q11

4Q12

4Q13

4Q14

4Q15

4Q16

4Q17

4Q18

Average Monthly Rent By Class

Spread from Class A to Class B Rental Rate

2000 25% + $200

2008 32% + $310

2013 40% + $415

2018 38% + $490