CFO CORNER: RISE48 EQUITY PORTFOLIO UPDATES

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UPDATES ON RISE48 EQUITY

OPERATIONS UPDATE

Rise48 Equity ended Q1 2022 with six new acquisitions totaling $223.1M in new acquisitions. Overall, we added a total of 943 more units added to the portfolio and currently had 3,822 units under management. At the end of the quarter, we had 23 assets under management. At the end of Q1 2022, we had six assets listed for sale, with three of them under contract and three of them under various stages of the sale process.

Rise48 Communities continues to do well. Our accounting and operations teams have been busy taking over the existing and new assets and have been doing a tremendous job of executing the business plans at the respective assets and keeping the properties running smoothly.

CAPEX UPDATE

Our asset management team continues to deliver great results on the operations front. At the end of March, we had renovated more than 450 units across our portfolio. We’re continuing to exceed our pro-forma rents by at least $50 per unit and have not missed our rental projections for any of our assets acquired in 2021.

Our business plan, which consists of exterior refresh, amenity additions, and interior unit renovations, continues to be successfully implemented and overseen by our asset management team and we continue to build out the infrastructure to support new acquisitions. We’re learning lessons along the way and making sure that we have ample support in the back office to support the overall goal of asset performance.

Our average rental premium for renovated units was just above $235 per unit (monthly increase). The current market cap rate for a fully stabilized asset is around 3.5% to 4.0% At a 4.0% cap rate, this means that we’re adding more than $70,500 in value for every unit that we renovate at each property.

 

PHOENIX MSA UPDATE

Realpage reported a year over year increase of more than 24.6% in rental growth in the market as of March 2022. Yardi reported a similar increase of about 23.2% year over year rental increase and anticipates rents increase 7.7% for the remaining of the year. Per Costar, the current market inventory of garden style apartments in the Phoenix MSA is approximately 178 thousand units with 668 units under construction.

Marcus and Millichap released their updated 2022 outlook for the Phoenix MSA. The firm expects approximately 87 thousand new jobs to be created, 19 thousand units to be completed, vacancy to tick up by about 20 basis points and effective rent to increase by about 9.1%.

ABI also released their Q1 2021 Phoenix MSA Snap Stats. Throughout the market average rent/unit increased $335 year over year and occupancy decreased by 0.4% year over year. Unemployment rate also increased to 3.1% while employment grew by 4.1%

Phoenix also ranked #1 in the nation for home price growth. According to the S&P CoreLogic Case-Shiller report, Phoenix home prices grew 32.6% year over year while national home prices grew about 19.2% as of January 2022.

From a macro perspective, BLS reported the month over month inflation increased by 0.5% which adds up to a 7.0% increase year over year, the highest since June 1982.

Rise48 Equity has completed $1,063.9M in total transactions since 2019, and currently has $840.1M of Assets Under Management, all in the Phoenix MSA.

To learn more about our investments, schedule a call: www.rise48equity.com/invest or visit our website: www.rise48equity.com