• Bikran Sandhu, CPA

CFO Corner: May 2021 Release

Updated: Jun 1

Published by: Rise48 Equity CFO: Bikran Sandhu, CPA

Operations Update

April was another strong month for the Company. We pushed rents about 3.4% on average across the portfolio. Collections continue to stay strong with little to no bad debt. Our NOI was a bit lower in March as a result of the three payroll periods in the month but above our projected budget overall.

CapEx Update

We’ve seen little to no push back on the increases we’re charging for renovated units. We’re pushing rents to pro-forma (or even above pro-forma) at most of our properties and continue to have overwhelming demand for renovated units. Interior renovations, combined with the exterior facelifts and added amenities are helping us get premium rents for our newly acquired assets.

In the video below, our CEO, Zach Haptonstall, walks us through some of the upgrades we’ve made at Sunny Brook, one of the latest acquisitions in our portfolio. We’ll be rebranding this deal as Rise Downtown Mesa.

Deal Flow Update

The market is continuing to stay hot with plenty of marketed deals. We’ve gone through numerous best and finals but, alas, have lost out as either #2 or #3 in the final round. We’re staying conservative in our underwriting and continue to focus on good assets in good locations. Thankfully, our off-market deal flow is staying strong as well. We have passed on a few opportunities as the deal just didn’t work. However, we are pursuing a couple strong leads which might turn into deals in the near future!

Phoenix MSA Update

Strong rent growth followed by a decrease in unemployment

As Yardi reported, Phoenix Metro led the nation with more than 8% year over year rent growth as of April 2021. Month over month rents increased by more than 1.0%. Overall, Yardi expects rents in Phoenix to climb by 4.3% for the next 12 months. Meanwhile, unemployment in Phoenix recovered to just 6.1% as of March 31, 2021 with total non-farm employment increasing by about 0.5% as compared to February 2021.

Newmark Knight Frank recently released the US Mutlifamily Capital Markets Report detailing updates to the market for Q1 2021. Phoenix ranked 5th in the nation for collections at 96.6% and ranked first in total returns at 13.3% (as compared to the US Average of 2.6%). Finally, Phoenix was 2nd in the nation for effective rent growth at 3.9% with the US average trailing at -0.9%.

Demand for quality rental units continues to outstrip supply. According to costar, approximately 8,742 units were delivered in the past 12 months and approximately 14,421 new units were leased. Vacancy is continuing to stay at historic lows at 5.0% with asking rents growing to 13.8% year over year.

Rise48 Equity has completed $188,600,000 in total transactions since 2019, and currently has $148,600,000 of Assets Under Management, all in the Phoenix MSA.

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