SOUTH FLORIDA MULTIFAMILY - Cushman & Wakefield

SOUTH FLORIDA MULTIFAMILY 2021 FORECAST

MULTIFAMILY MARKET UPDATESOUTH FLORIDA

In the space of less than 12 months, the South Florida multifamily market went from near record sale activity, to virtually no sale activity and back to near record sales. Miami-Dade and Broward experienced record average per unit sales in 2020 ($233,000 and $225,000 per unit respectively) and Palm Beach was the second highest average per unit sales ever recorded ($170,000 per unit). Positivity now reflects sentiment, whereas six months ago it reflected Covid cases. While the region still has not recovered all the jobs lost from Covid, the V shape recovery model does apply to the South Florida multifamily market. South Florida is awash with out-of-state private capital looking to invest in the multifamily market and it will further increase in 2021. Although bullish conditions prevail challenges remain. In this edition of the Weaver Report, we have highlighted key analysis which will shape the market going forward.

MULTIFAMILY SALES• In 2020 there were 254 multifamily sales totaling $3.1 billion.

Despite almost six months of no sale activity from April through September total sale volume was only down 15% from 2019. Miami-Dade and Broward witnessed record average per unit sales and Palm Beach was the second highest average per unit sales.

• Overall sales decreased for a fourth year in a row from the record of 2016. There are fewer deals available in the market which has slowed sale volume. The biggest challenge is finding viable acquisition opportunities with more buyers than sellers in the market.

• For the third year in a row Broward County witnessed the lion share of sale activity with a total of 46.7% or $1.44 billion in sales.

• We anticipate sales volume to increase in 2021. Out of state private capital buyers are the most active in the market.

• Approximately 75% of all sale activity occurs in product built 1980 or newer. Sale activity began shifting to newer product as many of the newly constructed multifamily buildings stabilized and sold to investors. With almost 25,000 units under construction, we expect this shift to continue with strong newly constructed apartment sales in 2021 and beyond.

• Value-add remains. One of the concerns from Covid-19 was value-add buyers would go into hibernation. Would buyers still underwrite rent upside through value add? The overwhelming answer is yes. There remains huge investor appetite for value-add properties, but there are limited acquisition opportunities.

THE SIXTH BOROUGH• At the beginning of 2020, the WeaveReport highlighted

the amount of New York investors seeking multifamily opportunities in South Florida. Covid-19 poured rocket fuel on this trend.

• Whether relocating or investing in South Florida, New York capital is here at unprecedented levels.

• The same principal applies to other out of state investors specifically California, Washington, New Jersey and Illinois.

• Out of State, private capital investors are the most active in the market. Deal activity in the sub $50 million range is seeing the highest level of activity. Investors are seeking 6% levered cash-on-cash returns. IRR’s are 12-14% but cash-on-cash is king.

CAP RATES AND UNDERWRITING ASSUMPTIONSCovid-19 caused a hard reset in underwriting and valuations. Several months of strong occupancies and collections coupled with readily available attractive agency debt provided the backbone for deals to occur and the new paradigm of valuations. Several key themes have emerged:

• At the time of writing, the 10-year treasury is around 1.4% which is in line with where it was in February 2020. In August 2020, it was as low as 55 bps. On agency small balance loans with a 70% LTV, overall interest rates ranged between 3.3% to 3.5%

• Record low interest rates in 2020 put downward pressure on cap rates, which was offset by more conservative income assumptions.

• Despite dipping to near record lows in Summer 2020, cap rates are in line with where they were pre Covid-19. Investors are bullish on a return to the “new normal” and are factoring in rent growth and lower bad debt write-offs.

• Cap rates today range between 3.7%-4.1% for Class A properties. Class B and C cap rates are ranging between 4.25% to 5.25%.

• Levered cash-on-cash returns is the preferred metric used by the most active private capital investors

RENTS• Broward and Palm Beach Counties witnessed the 12th

consecutive year of record rents. Rents decreased by 1.1% in Miami-Dade in 2020.

• Renewals levels remain high with tenants less likely to move. Due to Covid-19, most owners are keeping rents flat on renewals.

• Rents for 2021 will largely be driven by how quickly the job market improves or additional stimulus is provided.

VACANCY RATES• All three counties witnessed higher vacancies in 2020.

Vacancies in Miami-Dade are 7.1%, Broward 7.7% and Palm Beach 7.8%

• The higher vacancy was attributable to 12,605 new units being delivered to market in 2020. Net absorption for the same period was 7,049 units which resulted in the vacancy increase.

POSITIVITY REFLECTS MARKET SENTIMENT. SIX MONTHS AGO IT REFLECTED COVID CASES.

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MULTIFAMILY INVESTMENT SALES ANALYSIS | SOUTH FLORIDAGRAPH 1 :: SOUTH FLORIDA HISTORICAL PRICE/UNIT VERSUS PRICE/SF

GRAPH 2 :: SOUTH FLORIDA HISTORICAL TRANSACTION VOLUME VERSUS NUMBER OF TRANSACTIONS

* $1MM+ multifamily sales Source: Cushman & Wakefield

* $1MM+ multifamily sales Source: Cushman & Wakefield

• There are another 14,758 units scheduled for delivery in 2021. Short-term new supply will outpace absorption and vacancies will likely increase. This will likely be confined to more urban markets and Class A product.

• Class B and C properties have the lowest vacancy levels but have lower collection amounts.

RECORD NUMBER OF UNITS UNDER CONSTRUCTION • There are 24,702 units under construction in South Florida.

This represents 7.9% of the current apartment inventory.

• In the past five-years, net absorption in South Florida averaged 7,200 units per year meaning upcoming completions will outpace absorption causing certain submarkets to experience slower lease-ups, higher concessions and downward rental pressures as several new buildings will be delivered in a short duration.

• In the short-term new supply will outpace net absorption. However, as explained in previous market reports we do not believe the multifamily faces an oversupply of units. Key reasons include:

1) New rental supply is quickly absorbed. In the last five years, there were 44,275 units built. During this time, we have experienced record rents and near record low vacancies. The new supply thus far has not adversely affected the market and most of the new supply has already been delivered.

2) The market is playing catch up. In the 90’s and 2000’s there was very little multifamily development. Developers focused on condo development during this period and the market was starved of new multifamily supply. New multifamily construction is needed to fill the void in the marketplace.

3) Condo conversions. Condo conversions in the mid 2000’s eliminated over 20,000 net rental units in South Florida.

4) Population growth. In the past four years South Florida’s population increased by 167,760. During the same period, 34,081 new apartment units were built. This means one unit has been built for every 4.9 net new people to the region. Over the next five years, South Florida is expected to see a positive net migration of 310,715 people. Using the same ratio, the region would need over 63,000 new rentals to keep pace with the population growth for the next five years.

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RENTAL DEMAND FUELED BY POPULATION GROWTH• We anticipate demand for multifamily rentals will increase

post Covid-19 as South Florida becomes a hotbed of population growth from people migrating from other states due to the business-friendly environment and workers who can operate remotely choosing South Florida as their new home.

• New household formations - the number of new households created each year. Household formations in South Florida are expected to increase to over 44,000 each year in the next five years. Assuming, this projection materializes, at 60% enter homeownership and 40% as renters (consistent with historic homeownership rates) that represents over 17,000 new renters per year in South Florida.

HOME PRICES CONTINUE TO INCREASE• The median home price in South Florida increased by 9.5%

in 2020 to $395,289.

• Covid-19 has contributed to a resurgence in the single-family market In South Florida. Some renters that could afford to move into ownership used Covid-19 as the impetus to make the move. In the past two years, the homeownership rate in South Florida increased from 57.9% to 60.4%. This is still significantly below the 2005 Homeownership rate of 69.2%.

• Average home values are increasing at greater rate than rents, making ownership for many even tougher.

• The median home price in South Florida in 2020 was almost $400,000. With 5% down, the mortgage would be around $2,300 at that price, which is ±$600 more than the average rent in the market.

JOBS. JOBS. JOBS.

• The South Florida unemployment rate is 6.7%. At the beginning of 2020 the unemployment rate was 2.3%. In the space of six months the South Florida unemployment rate soared from a 50-year low to a record high in April of 13.4%. The unemployment rate has decreased to half the record high from 2020 but still almost three times higher than pre Covid-19. Encouragingly, many of the job losses that occurred in 2020 were not permanent despite the virus continuing to impact consumer and business demand for almost a year.

• Median incomes modestly grew by 0.6% in Miami-Dade, 0.4% in Broward, and 7.3% in Palm Beach.

COLLECTIONS/EVICTIONS• Florida’s “open for business” mentality has significantly

contributed to businesses ability to reopen and provide employment.

• Collections on most properties are in the low to mid 90% range.

• Eviction moratoriums remain in effect for South Florida. Whenever the eviction moratorium is lifted a wave of nonpayment and/or evictions will likely back log the courts.

GRAPH 3 :: SOUTH FLORIDA ASKING RENT VS VACANCY RATE

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• Class C properties have the highest rent delinquency challenges. This is consistent with the theme that Covid has had a disproportionally negative effect on lower income households.

• Owners who took mortgage forbearance on GSE-backed multifamily assets are exempt from filing evictions for nonpayment of rent.

LOOKING AHEADVaccines are here. The job market has improved tremendously (but not equally). We are not out of the woods, but there is a clear path forward. General sentiment is the worst is in the rear-view mirror.

The good news is the market is ideally positioned for continued long-term growth. Multifamily and industrial are the two commercial real estate sectors that will come out as strong performers from Covid. Bubble territory in the stock market and other commercial real estate sectors facing challenges, South Florida multifamily will benefit.

The South Florida multifamily fundamentals are, and will continue to be, the single biggest driver of performance in the market. Strong collection and occupancy performance through a pandemic, population/household growth, low homeownership rates, higher home prices, improving job market, higher wage growth, limited land and a wonderful lifestyle all contribute towards a sustainable long-term growth. Positive market fundamentals coupled with realistic underwriting and financing analysis will keep the market in equilibrium.

TRENDS TO FOLLOW IN 2021 INCLUDE:

• Private capital investors will continue to dominate the market. Their portfolios will have more multifamily and less office and retail

• Interest rates will remain low. Interest rates have increased from mid 2020 but there is no short-term concern of rates going much higher

• Population growth. Official figures have not been released but expect South Florida to be one of the biggest population gainers from Covid.

• More capital in short term rent growth markets with cash-on-cash focus and not IRR

• Urban apartments will underperform in 2021/2022 but outperform over 5-7 years. Any reader of the WeaveReport knows I have always pushed the suburb submarkets despite the trend in previous years being urban. Conversely, with everyone talking about the suburbs as the new hip location for renters, now is the time to pivot back to urban. Over a 10-year perspective, many urban deals have excellent entry points for buyers.

• Alternatives such as senior, affordable and single-family rentals see a continued surge of capital

• Multifamily transaction volume will increase by 30%

• Speed of due diligence timing will become differentiator for many buyers.

• 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.

• Conversion of Hotel/Retail Space to Multifamily.

GRAPH 4 ::SOUTH FLORIDA HISTORICAL & FUTURE DELIVERIES

*Forecasted construction deliveries are as of Jan-2020. Actual deliveries may vary

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MIAMI-DADE MULTIFAMILY MARKET SUMMARY

YEAR $ SALES VOLUME# OF SALES

TOTAL # OF UNITS

ASKING RENT

ASKING RENT PSF

ASKING RENT GROWTH

EFFECTIVE RENT

EFFECTIVE RENT PSF

EFFECTIVE RENT GROWTH

VACANCYNET ABSORP

NEW UNITS

2020 $991,516,276 104 131,157 $1,669 $1.91 -0.4% $1,640 $1.88 -1.1% 7.1% 3,252 5,392

2019 $978,537,978 166 125,765 $1,676 $1.92 2.1% $1,659 $1.90 3.1% 5.7% 2,132 3,494

2018 $928,079,661 154 122,279 $1,642 $1.88 2.3% $1,609 $1.84 2.2% 4.8% 3,491 1,933

2017 $1,523,494,218 159 120,346 $1,605 $1.84 2.2% $1,574 $1.80 2.1% 6.1% 2,485 3,223

2016 $1,411,028,489 174 117,123 $1,570 $1.80 2.5% $1,541 $1.77 1.6% 5.7% 4,414 5,939

2015 $841,890,975 163 111,184 $1,532 $1.76 3.3% $1,517 $1.74 3.2% 4.6% 3,310 3,200

2014 $483,194,053 178 107,984 $1,483 $1.70 2.6% $1,470 $1.68 2.6% 4.8% 1,932 2,399

2013 $436,103,760 114 105,585 $1,446 $1.66 3.2% $1,433 $1.64 3.1% 4.5% 2,215 2,177

2012 $429,347,926 82 103,408 $1,401 $1.60 3.0% $1,390 $1.59 2.8% 4.6% 462 805

2011 $138,046,282 56 102,603 $1,360 $1.56 1.1% $1,352 $1.55 1.1% 4.3% 795 712

Miami-Dade Apartments Under Construction

52 apartment buildings

totaling 13,790 units under construction in Miami-Dade

BUILDING CITY # OF UNITS

EXPECTED COMPLETION

Park Vista Hialeah 212 2021

Reflections Little Havana 142 2021

Luma Downtown 434 2021

AHS at Tamiami Kendall 264 2021

Plaza at Coral Gables Coral Gables 169 2021

Miami-Dade Deliveries Versus Absorption

$990M $9,550,000 $210 $233,408 2020 Sales 2020 Average Sale Price 2020 Average Sale PSF 2020 Average Sale Per Unit

$1,669 92.8% 3,252 131,157Average Rent Per Unit Occupancy Rate Annual Unit Net Absorption Inventory of Rentable Units

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MIAMI-DADE MULTIFAMILY MARKET SUMMARY* CONTINUED

SUBMARKET UNITS ASKING RENTASKING RENT PSF

ASKING RENT GROWTH

VACANCYNET ABSORPTION

DELIVERED UNITS

UNDER CONSTRUCTION

Aventura 2,157 $1,877 $1.81 -1.9% 4.8% 30 - 0

Bal Harbor/ Miami Beach 7,991 $1,324 $2.02 0.7% 6.3% -41 - 53

Brickell/Downtown 14,892 $1,472 $1.88 -1.5% 6.2% -209 - 6,112

Coconut Grove 2,173 $1,831 $2.16 -0.7% 11.1% 186 352 130

Coral Gables 8,073 $2,079 $2.40 -1.1% 9.5% 441 626 1,308

Hialeah/Miami Lakes 18,871 $1,431 $1.61 1.0% 3.3% 65 126 519

Homestead/ South Dade 7,816 $1,370 $1.55 2.2% 7.8% 1,069 1,128 1,652

Kendall 12,960 $1,655 $1.84 -1.3% 6.9% 318 175 914

Miami Gardens/ Opa Locka 17,129 $1,386 $1.67 1.5% 7.1% 590 838 910

Miami Springs/Doral 18,968 $1,824 $1.94 -1.6% 10.1% 926 1,654 1,195

North Miami/ North Miami Beach 16,596 $1,423 $1.73 2.1% 7.9% -207 248 961

Outlying Miami-Dade County 934 $1,761 $1.46 3.1% 11.5% 172 245 0

Westchester/Tamiami 2,597 $1,382 $1.83 1.5% 4.8% -88 - 36

TOTAL/AVERAGE 131,157 $1,669 $1.91 -0.4% 7.1% 3,252 5,392 13,790

• In 2020, there were 104 apartment sales totaling $992 million with an average price of $233,408 per unit or $210 per square foot. This is the highest average sale per unit year and the second highest average price per square foot in Miami-Dade.

• Despite Covid-19, sale activity increased from 2018 and 2019 and was the third highest dollar volume activity ever recorded in in Miami-Dade.

• For the first time in 12 years, rent growth decreased in Miami-Dade. Asking rents decreased by 0.4% to $1,669.

• Coral Gables has the highest average rent of $2,079.

• Suburban locations experienced rent growth and urban submarkets marginal rent decreases.

• In 2020 vacancies increased from 5.7% to 7.1%. This is the highest vacancy levels in over ten years. New supply outpacing absorption caused the vacancy increase.

• Highest vacancy rates are Doral, Coconut Grove and outlying Miami-Dade.

• Lowest vacancy rate is in Hialeah/Miami Lakes.

• There are 52 buildings totaling 13,790 units under construction. This represents 10.5% of the current inventory in the market.

• In the past five years, 19,981 units were delivered to the market.

• In 2020 net absorption was 3,252 units. Newly completed units totaled 5,392 units resulting in the vacancy increase.

• Homestead/South Dade had the highest net absorption with 1,069 units. Downtown/Brickell and North Miami/North Miami Beach had negative net absorption a little over 200 units each.

• 7.3% unemployment rate.

• In 2020 median salary income increased by 0.6%.

• $425,411 median house price.

• The population grew by 43,800 in the past four years, and 0.7% in 2020.

*Data as of Jan-2021, apartment sales of 10 units or more, in excess of $1MM in pricing, excluding all condo salesSource: CoStar

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BROWARD MULTIFAMILY MARKET SUMMARY


TOTAL # OF UNITS

ASKING RENT

ASKING RENT PSF

ASKING RENT GROWTH

EFFECTIVE RENT

EFFECTIVE RENT PSF


VACANCYNET ABSORP

NEW UNITS

2020 $1,441,032,584 111 119,778 $1,673 $1.70 1.5% $1,649 $1.68 0.9% 7.7% 2,493 5,164

2019 $1,821,119,282 112 114,614 $1,649 $1.68 2.2% $1,635 $1.66 3.2% 5.7% 2,318 1,529

2018 $1,505,868,467 104 113,085 $1,613 $1.64 2.2% $1,585 $1.61 2.3% 6.5% 3,301 2,464

2017 $1,612,225,723 84 110,621 $1,579 $1.61 3.4% $1,550 $1.58 3.0% 7.4% 2,653 3,166

2016 $2,601,933,982 110 107,455 $1,527 $1.55 1.7% $1,505 $1.53 1.1% 7.1% 1,665 3,324

2015 $1,629,649,563 104 104,131 $1,502 $1.53 6.0% $1,488 $1.52 6.4% 5.7% 2,595 2,493

2014 $728,783,406 83 101,638 $1,417 $1.44 4.0% $1,399 $1.42 3.6% 6.0% 3,294 3,623

2013 $666,927,765 60 98,015 $1,363 $1.39 2.8% $1,351 $1.37 2.9% 5.8% 2,408 1,832

2012 $792,333,904 58 96,183 $1,326 $1.35 2.9% $1,313 $1.34 2.5% 6.6% 1,371 994

2011 $431,972,203 31 95,189 $1,289 $1.31 1.7% $1,281 $1.30 1.7% 7.0% 276 44

$1.44B $13,000,000 $186 $224,600 2020 Sales 2020 Average Sale Price 2020 Average Sale PSF 2020 Average Sale Per Unit


Broward Apartments Under Construction

24 apartment buildings

totaling 5,928 units under construction in Broward


EXPECTED COMPLETION

Next Las Olas Fort Lauderdale 374 2022

Oasis Pointe Dania Beach 301 2022

The Remy Plantation 279 2021

Catalina at Miramar Miramar 300 2021

58 Oak Hollywood 47 2021

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BROWARD MULTIFAMILY MARKET SUMMARY* CONTINUED


ASKING RENT GROWTH


DELIVERED UNITS

UNDER CONSTRUCTION

Coral Springs 19,099 $1,633 $1.55 2.4% 5.2% 210 211 0

Fort Lauderdale 20,424 $2,131 $2.32 -0.3% 15.4% 1,243 3,251 1,553

Hollywood/ Dania Beach 13,180 $1,422 $1.67 1.9% 6.4% 45 264 711

Miramar/ Hallandale Beach 4,450 $1,464 $1.65 2.0% 3.1% 80 9 350

Oakland Park/Lauderhill 13,724 $1,326 $1.51 2.1% 6.6% 144 339 276

Pembroke Pines/ West Miramar 11,028 $1,870 $1.70 2.1% 8.0% 207 300 580

Plantation/Sunrise 17,029 $1,631 $1.58 1.4% 6.1% 213 330 2,113

Pompano Beach/Deerfield Beach 13,107 $1,493 $1.60 2.8% 5.0% 268 214 345

Weston/Davie 7,737 $1,801 $1.75 -0.3% 7.6% 83 246 0

TOTAL/AVERAGE 119,778 $1,673 $1.70 1.5% 7.7% 2,493 5,164 5,928

• Broward County witnessed 46.7% of all South Florida sale activity in 2020. There were 111 apartment sales totaling $1.44 billion with an average price of $224,600 per unit or $186 per square foot. This is the highest average sale per unit year and the third highest average price per square foot in Broward

• Despite Covid-19, sale volume activity only decreased by 21% from 2019.

• For the 12th year in a row, average asking and effective rents are at records levels.

• Asking rents increased by 1.5% to $1,673 per unit in 2020.

• Ft Lauderdale has the highest average rent of $2,131. The lowest rents is $1,326 in Oakland Park/Lauderhill

• In 2020 vacancies increased from 5.7% to 7.7%. This is the highest vacancy levels in over ten years. New supply outpacing absorption caused the vacancy increase.

• Highest vacancy rates is Ft Lauderdale 15.4%

• Lowest vacancy rate is Miramar/Hallandale 3.1%

• There are 24 buildings totaling 5,928 units under construction. This represents 4.9% of the current inventory in the market.



• Ft Lauderdale had the highest net absorption with 1,243 units, yet 3,251 units delivered – the highest in Broward.

• No submarket witnessed negative absorption

• 6.6% unemployment rate

• In 2020 median salary income increased by 0.4%

• $363,058 median house price


*Data as of Jan-2021, apartment sales of 10 units or more, in excess of $1MM in pricing, excluding all condo salesSource: CoStar

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PALM BEACH MULTIFAMILY MARKET SUMMARY


TOTAL # OF UNITS

ASKING RENT

ASKING RENT PSF

ASKING RENT GROWTH

EFFECTIVE RENT

EFFECTIVE RENT PSF


VACANCYNET ABSORP

NEW UNITS

2020 $650,286,111 39 61,480 $1,722 $1.67 1.9% $1,701 $1.65 1.1% 7.8% 1,304 2,049

2019 $835,682,945 54 59,431 $1,690 $1.64 3.9% $1,682 $1.63 5.5% 6.8% 851 1,135

2018 $1,461,767,272 69 58,296 $1,626 $1.57 2.9% $1,595 $1.54 3.4% 6.5% 2,849 1,984

2017 $1,159,087,820 46 56,312 $1,580 $1.53 2.4% $1,542 $1.49 1.3% 8.2% 1,661 2,548

2016 $1,432,657,195 50 53,764 $1,543 $1.49 2.5% $1,522 $1.47 2.3% 7.0% 1,075 931

2015 $774,870,336 44 52,833 $1,506 $1.46 5.9% $1,488 $1.44 5.7% 7.4% 949 1,633

2014 $578,421,800 40 51,200 $1,422 $1.38 4.3% $1,408 $1.36 4.3% 6.3% 1,440 1,534

2013 $401,630,872 24 49,666 $1,364 $1.32 2.9% $1,350 $1.31 2.9% 6.3% 2,566 2,311

2012 $377,015,860 20 47,355 $1,326 $1.28 3.4% $1,312 $1.27 3.0% 7.1% 923 720

2011 $272,925,706 14 46,635 $1,282 $1.24 1.7% $1,274 $1.23 1.8% 7.7% 104 0

$650M $2,250,000 $217 $170,000 2020 Sales 2020 Average Sale Price 2020 Average Sale PSF 2020 Average Sale Per Unit


Palm Beach Apartments Under Construction

19 apartment buildings totaling

4,984units under construction in Palm Beach


EXPECTED COMPLETION

Paradise River Walk West Palm Beach 276 2021

Boca Dues Boca Raton 354 2021

Town Lantana II Lantana 340 2021

MID Apartments Boynton Beach 230 2021

The Strands Delray Beach 198 2022

Palm Beach Deliveries Versus Absorption

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PALM BEACH MULTIFAMILY MARKET SUMMARY* CONTINUED


ASKING RENT GROWTH


DELIVERED UNITS

UNDER CONSTRUCTION

Belle Glade 1,318 $650 $0.81 1.3% 33.3% -281 - 0

Boca Raton 11,320 $1,969 $1.88 -1.0% 9.0% -39 456 1,009

Boynton Beach 12,527 $1,621 $1.54 2.8% 9.5% 835 1,023 948

Delray Beach 4,513 $1,858 $1.61 0.6% 4.5% 16 - 459

Greenacres 4,806 $1,268 $1.40 3.7% 4.8% 50 - 0

Outlying Palm Beach County 78 $568 - 0.8% - - - 0

Palm Beach Gardens/ Jupiter 7,047 $1,803 $1.60 2.8% 4.2% 45 - 136

Royal Palm Beach/Wellington 6,729 $1,686 $1.55 2.7% 5.3% 325 - 370

West Palm Beach 13,142 $1,525 $1.58 4.2% 8.1% 353 570 2,062

TOTAL/AVERAGE 61,480 $1,722 $1.67 1.9% 7.8% 1,304 2,049 4,984

• In 2020, there were 39 apartment sales totaling $650 million with an average price of $170,000 per unit or $217 per square foot. This is the second highest average sale per unit in Palm Beach.

• Sale activity decreased by 22% from 2019.

• For the 12th year in a row, average asking and effective rents are at records levels.

• Asking rents increased by 1.9% to $1,722 per unit in 2020. Average rents are now higher in Palm Beach than Broward

• Boca Raton has the highest average rent of $1,969. The lowest rents is $650 in Belle Glade

• In 2020 vacancies increased from 6.8% to 7.8%. This is the highest vacancy levels since 2017. New supply outpacing absorption caused the vacancy increase.

• Highest vacancy rates are Belle Glade and Boynton Beach

• Lowest vacancy rate is in Palm Beach Gardens/Jupiter

• There are 4,984 units under construction This represents 8.1% of the current inventory in the market.



• Boynton Beach had the highest net absorption with 835 units. It also had the highest completions with 1,023 new units. Only Belle Glade had negative net absorption.

• 5.5% unemployment rate

• In 2020 median salary income increased by 7.3%

• $385,060 median house price


*Data as of Jan-2021, apartment sales of 10 units or more, in excess of $1MM in pricing, excluding all condo sales

Source: CoStar

12

Miami-Dade

YEAR POPULATION12 MONTH

POPULATION GROWTH

UNEMPLOYMENT RATE

MEDIAN INCOME

12 MONTH MEDIAN SALARY

INCREASE

MEDIAN HOME VALUE

12-MONTH MEDIAN HOME GROWTH

RATE

2021(F) 2,753,356 0.6% 8.46% $55,189 -0.5% $444,937 4.6%

2020 2,736,017 0.7% 8.27% $55,478 0.6% $425,411 9.8%

2019 2,716,940 0.1% 2.38% $55,171 3.0% $387,362 4.1%

2018 2,714,854 0.1% 3.47% $53,539 7.8% $372,264 7.0%

2017 2,713,295 0.8% 4.51% $49,669 5.4% $348,037 10.4%

2016 2,692,213 1.2% 5.25% $47,130 7.9% $315,341 5.8%

Broward

Palm Beach

SOUTH FLORIDA: POPULATION | HOUSEHOLDS

Growth in 2020. 0.8% 1.5% Growth in past 5 years. 219,681 80,347Increase over next 5 yrs. 310,715 230,902SOUTH FLORIDA EMPLOYMENT

-30,024 New jobs added in past 5 years.

8.5% Miami-Dade unemployment.

7.4% Broward unemployment.

6.5% Palm Beach unemployment.

9.1 Jobs for every apartment unit in SoFla.

SOUTH FLORIDA INCOMES -0.4% Median salary income increase in 2020.

0.8% Rent growth in 2020.

MARKET FUNDAMENTALS SNAPSHOT

SOUTH FLORIDA CONSTRUCTION

24,702 apartment units are currently under construction in SoFla. This is 7.9% of the current apartment inventory.

SOUTH FLORIDA HOUSING

69.2% | 60.4% home ownership rate in 2005 and 2020 respectively.

41.1% | 30.9% | 31.0% median single-family home price increase in Miami-Dade, Broward, and Palm Beach Counties respectively since 2016.

$413,120 median home value in So Fla.

+/-$650 difference in average monthly rent and a mortgage on the median home value in South Florida.

*Data reported by BLS, Moodys and Alteryx Demographics


POPULATION GROWTH

UNEMPLOYMENT RATE

MEDIAN INCOME


INCREASE

MEDIAN HOME VALUE


RATE

2021(F) 1,986,081 0.8% 7.40% $61,225 -0.9% $377,082 3.9%

2020 1,970,209 0.9% 8.72% $61,758 0.4% $363,058 9.1%

2019 1,952,778 0.3% 3.04% $61,502 2.5% $332,735 2.7%

2018 1,946,107 0.6% 3.43% $60,030 6.9% $323,890 4.1%

2017 1,934,516 1.1% 3.98% $56,158 2.0% $311,112 8.0%

2016 1,912,583 1.5% 4.48% $55,055 3.1% $288,030 10.5%


POPULATION GROWTH

UNEMPLOYMENT RATE

MEDIAN INCOME


INCREASE

MEDIAN HOME VALUE


RATE

2021(F) 1,535,931 1.2% 6.46% $71,522 0.1% $403,652 4.8%

2020 1,517,221 1.4% 7.75% $71,471 7.3% $385,060 9.1%

2019 1,496,770 0.9% 3.28% $66,623 3.1% $352,885 2.9%

2018 1,482,876 0.9% 3.64% $64,602 7.5% $343,009 4.3%

2017 1,470,344 1.3% 4.19% $60,074 2.4% $328,843 6.8%

2016 1,450,890 1.9% 4.67% $58,675 4.2% $308,034 9.9%

| ||

13

Financing markets remain robust, with lenders favoring multifamily over most other asset classes and interest rates currently rising slightly from historic lows hit in mid-late 2020. The current macro backdrop of Fed accommodation, fiscal stimulus, and an overall low yield environment is constructive to commercial real estate fundamentals and fuel to the CRE debt markets. Agency interest rates remain competitive but have increased from the lows of 2020 due to Treasury yields trending up and Fannie / Freddie’s attempt to manage multifamily origination volume through pricing in order to comply with FHFA’s 2021 mandate that reduced purchase caps and increased percentage of mission driven affordable housing. The higher affordability requirement will shift the emphasis away from the more expensive markets and help life companies, banks, and CMBS to take back multifamily market share lost to the agencies in 2020. Fannie Mae, Freddie Mac, and HUD remain the de-facto lenders for stable Class B and C properties as well as those located in secondary and tertiary markets, WITH FULL LEVERAGE RATES IN THE HIGH 2% TO LOW 3% RANGE. Agencies offer FINANCING UP TO 75% OF PURCHASE PRICE where they were not cash flow constrained. As transaction cap rates on core properties declined meaningfully in 2020, Life Companies have remained moderate in their outlook, using debt yield minimums to effectively reduce maximum proceeds in some cases to 50-60% of purchase price from the 60-70% maximum Loan-to-Value (LTV) under program guidelines. As credit spreads grind tighter, LifeCo loan rates in the very low 2% range for 50-55% LTC financing are common.

Transitional bridge financing continues to be a highly competitive space with pricing noticeably tighter in 2021 fueled by fresh allocations, competition for a limited number of quality loans and a healthier market for lenders seeking to lever their positions. Bridge pricing for Class A transitional multifamily assets seeking 65-75% LTC is currently 2.75-3.75%, and 3.75-4.75% for less stabilized / riskier profile assets in weaker markets. Such transitional deals are structured with two-to-five year terms plus extension options and were generally interest only with limited to no prepayment penalties.

Interest Rate Outlook. The floating rate outlook remains unchanged: LIBOR / SOFR should remain low for years until the Fed starts hiking the target rate (current estimate year-end 2023). While the Fed has not announced plans for a rate increase, it is expected that fixed base rates (U.S. Treasury yields and Swaps) will continue to rise steadily this year as the outlook improves for economic recovery and Treasury bond supply increases to fund ongoing stimulus and the new “blue” Congress’s spending initiatives. As a result, a number of Wall Street research departments and rates desks raised their 10Y UST yield forecasts to 1.50-1.75% by year-end. So long as the rise is steady it should not have a material impact on the financing market or asset values given the risk premium between cap rates and Treasury yields is already at record wide levels. The spread between the 2-year and 10-year treasury yields is 132 BASIS POINTS, reflecting a steep yield curve, and offering borrowers a meaningful incentive to prefer 5 and 7 year financing durations.

DEBT OPTIONS IN TODAY’S MARKET

General Notes:

Life Company, GSE, and bank loans are generally strongly preferred over CMBS by most borrowers.

FOR MORE INFORMATION PLEASE CONTACT:

CONTACT THE SOUTH FLORIDA MULTIFAMILY TEAM

PRIVATE CAPITAL GROUP

CALUM WEAVER (LEAD) EXECUTIVE MANAGING DIRECTOR

+1 954 377 [email protected]

PERRY SYNANIDISSENIOR FINANCIAL ANALYST+1 954 377 [email protected]

ROBERT KAPLANEXECUTIVE MANAGING DIRECTOR+1 305 533 [email protected]

CHRIS LENTZSENIOR DIRECTOR+1 305 533 [email protected]

DEBT, EQUITY & STRUCTURED FINANCE

ROBERT GIVENVICE CHAIRMAN+1 954 377 [email protected]

±0.65 ACRES

Surfside, FL 8800 COLLINS AVENUE, 33154

±28,369 TOTAL LAND SF

88 HUNDRED COLLINS

PROPERTY DETAIL

APPROVED PROJECT

28 Units

65 Res. Units | 75 Hotel Rooms

ALLOWED DENSITY

28 Units Fully Approved & Shovel Ready in Surfside

Multifamily, Townhouse, Hotel

ALLOWABLE USES

ACTIVE LISTINGS

SAME SELLER - OFFERED INDIVIDUALLY OR AS A PORTFOLIO

33 UNITS

A Fully Renovated Community in Bay Harbor Islands

BAY HARBOR COLLECTION

1950 YEAR BUILT

843 AVG UNIT SF

27,830 RENTABLE SF

$1.94 AVG MKT RENT/SF

$1,638 AVG MKT RENT

Bay Harbor Islands, FL 9770-9800 E BAY HARBOR DR | 1050 98TH ST, 33154

$10,000,000 LISTING PRICE

43 UNITS

1956 BUILT 2007 RENOVATED

449 AVG UNIT SF

19,320 RENTABLE SF


$1,100 AVG MKT RENT

Miami, FL 8000 NE BAYSHORE COURT, 33138


A Fully Renovated Apartment or Short Term Rental Opportunity

THE BOUTIQUE

30 UNITS


630 AVG UNIT SF

18,890 RENTABLE SF


$1,290 AVG MKT RENT

Miami Beach, FL 6905-6921 RUE VENDOME, 33141


Fully Renovated Miami Beach Units Steps Away From North Beach Town Center

6905-6921 RUE VENDOME

27 UNITS


647 AVG UNIT SF

17,478 RENTABLE SF


$1,300 AVG MKT RENT

Miami Beach, FL 925-965 MARSEILLE DRIVE, 33141


A Fully Renovated Miami Beach Waterfront Community

925-965 MARSEILLE DRIVE

11 UNITS

A Renovated Community in Miami Beach

7130 RUE VERSAILLES

1940 YEAR BUILT

550 AVG UNIT SF

6,052 RENTABLE SF


$1,150 AVG MKT RENT

Miami Beach, FL 7130 RUE VERSAILLES, 33141


INSTITUTIONAL GROUP

ZACHARY SACKLEYEXECUTIVE MANAGING DIRECTOR+1 954 332 [email protected]

TROY BALLARDMANAGING DIRECTOR+1 954 377 [email protected]

LENDER TYPE LIFE COMPANY GSE (FANNIE/FREDDIE) BANK

Recourse Non-Recourse Non-Recourse Non-Recourse

Leverage Up to 70% LTV Up to 75% LTV (DSCR loan constraint currently limits to 62%- 65%)

Up to 65% LTV (recourse above 65%)

Loan Type Fixed or Floating rate Fixed or Floating rate Fixed or Floating rate

Term 5, 7, 10 or more years 5, 7, 10 or more years 5, 7 or 10 years

Prepayment Yield Maintenance Yield maintenance / Defeasance Flexible

Lender Fees Par Par 0.50% origination, no exit

Interest OnlyHalf to full term, depending on leverage

Half to Full term, depending on leverage

1-2 years

Amortization 30 Years 30 years 25 to 30 years

Index Treasuries or Libor Treasuries or Libor Swaps

Spread1.15% to 1.50%, depending on leverage

1.70% to 2.30%, depending on leverage

1.50% to 2.00%

Rate 2.15% to 3.25% 2.65% to 3.40% 2.75% to 3.40%

Comments(i) Can rate lock at application. Generally lowest cost of capital for new construction assets.

(i) Supplemental loan available after 12 months with improvement in NOI. (ii) Floating rate available, but generally not preferred due to increasing interest rates.

(i) May consider additional loan proceeds after improvement in operations. (ii) Floating rate available, but generally not preferred due to increasing interest rates.

©2021 Cushman & Wakefield, Inc. NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IS MADE TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED HEREIN, AND SAME IS SUBMITTED SUBJECT TO ERRORS, OMISSIONS, CHANGE OF PRICE, RENTAL OR OTHER CONDITIONS, WITHDRAWAL WITHOUT NOTICE, AND TO ANY SPECIAL LISTING CONDITIONS IMPOSED BY THE PROPERTY OWNER(S). AS APPLICABLE, WE MAKE NO REPRESENTATION AS TO THE CONDITION OF THE PROPERTY (OR PROPERTIES) IN QUESTION.

CONTACT INFORMATION

CALUM WEAVERExecutive Managing Director

T 954 377 0517M 786 443 [email protected]

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SOUTH FLORIDA MULTIFAMILY - Cushman & Wakefield