C O N F I D E N T I A L © 2 0 1 8 R E A L P A G E , I N C .
Multifamily Market Update & OutlookJay Parsons, VP of Asset Optimization & Deputy Chief Economist, RealPage Inc. July 8, 2020
C O N F I D E N T I A L © 2 0 1 9 R E A L P A G E , I N C .
FINANCIAL STABILITY FOR THE LONG HAUL
• Founded in 1998; built for real estate from the start
• Offices in 26 countries; over 7,000 team members
• GAAP total revenue of $988.1 million; 14% increase, year-over-year
• Publicly traded: Nasdaq Global Select: RP
INDUSTRY FIRSTS
• Invested nearly $700,000,000 in R&D since 2010
• First SaaS provider to the rental housing industry
• First to provide real-time data
• Highest level of focus on data science and artificial intelligence
• First comprehensive revenue management capabilities
GLOBAL SCALE, RESILIENT OPERATIONS
• Hardened data center
• 5th largest SaaS data center in the world
• 4 billion transactions per-peak-day; 850 billion+ annually
• 75 million+ calls a year
• 14.5 petabyte data storage capacity
• 4 redundant 40Gbps fiber link connections
OPEN PARTNERSHIP, OPEN PLATFORM
• Effortlessly open: end-to-end to existing core to point solutions
• Open API, hundreds of third-party integrations
• 95% NMHC Top 50
• $1 trillion worth of rental real estate assets run on RealPage
• Cadre of experts
ABOUT REALPAGE
RENT PAYMENTS & COLLECTIONS
• Renter sentiment surveys appear to divert from reality of payments
• Market-rate rent collections through June had shown surprisingly little impact
• 77.4% paid as of July 6 (market-rate only)
• Down 2.3 ppts year-over-year
• Down 3.4 ppts month-over-month (July 4 holiday has impact)
• Big coastal cities trailing Sun Belt and Midwest for rent collections
• Class A and B holding up well, while Class C having some challenges
• Smaller, mom-and-pop properties appear to be most challenged
• Payment plans widely offered, but not widely utilized
© 2 0 2 0 R E A L P A G E , I N C .
YoY Change in Traffic and Guest Cards
Rolling seven-day totals, same-store basis, sourced from RealPage systems
-40%
-30%
-20%
-10%
0%
10%
20%
30%
1/1
1/2
02
0
1/1
8/2
02
0
1/2
5/2
02
0
2/1
/20
20
2/8
/20
20
2/1
5/2
02
0
2/2
2/2
02
0
2/2
9/2
02
0
3/7
/20
20
3/1
4/2
02
0
3/2
1/2
02
0
3/2
8/2
02
0
4/4
/20
20
4/1
1/2
02
0
4/1
8/2
02
0
4/2
5/2
02
0
5/2
/20
20
5/9
/20
20
5/1
6/2
02
0
5/2
3/2
02
0
5/3
0/2
02
0
6/6
/20
20
6/1
3/2
02
0
6/2
0/2
02
0
6/2
7/2
02
0
7/4
/20
20
Website Traffic Guest Cards
© 2 0 2 0 R E A L P A G E , I N C .
YoY Change in Apartment Executed Lease Signings
Rolling seven-day totals, same-store basis, sourced from RealPage systems
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%1
/11
/20
20
1/1
8/2
02
0
1/2
5/2
02
0
2/1
/20
20
2/8
/20
20
2/1
5/2
02
0
2/2
2/2
02
0
2/2
9/2
02
0
3/7
/20
20
3/1
4/2
02
0
3/2
1/2
02
0
3/2
8/2
02
0
4/4
/20
20
4/1
1/2
02
0
4/1
8/2
02
0
4/2
5/2
02
0
5/2
/20
20
5/9
/20
20
5/1
6/2
02
0
5/2
3/2
02
0
5/3
0/2
02
0
6/6
/20
20
6/1
3/2
02
0
6/2
0/2
02
0
6/2
7/2
02
0
7/4
/20
20
Executed New Leases
Executed Renewal Leases
© 2 0 2 0 R E A L P A G E , I N C .
YoY Change in Executed New Lease Rents
Rolling seven-day averages, same-store basis, sourced from RealPage systems
-8%
-6%
-4%
-2%
0%
2%
4%
6%1
/11
/20
20
1/1
8/2
02
0
1/2
5/2
02
0
2/1
/20
20
2/8
/20
20
2/1
5/2
02
0
2/2
2/2
02
0
2/2
9/2
02
0
3/7
/20
20
3/1
4/2
02
0
3/2
1/2
02
0
3/2
8/2
02
0
4/4
/20
20
4/1
1/2
02
0
4/1
8/2
02
0
4/2
5/2
02
0
5/2
/20
20
5/9
/20
20
5/1
6/2
02
0
5/2
3/2
02
0
5/3
0/2
02
0
6/6
/20
20
6/1
3/2
02
0
6/2
0/2
02
0
6/2
7/2
02
0
7/4
/20
20
U.S. Apartment Monthly Retention Rates
*Share of renters renewing leases in the same unit, sourced from RealPage systems
46%
48%
50%
52%
54%
56%
58%
60%
© 2 0 2 0 R E A L P A G E , I N C .
YoY Change in Executed Renewal Lease Rents
*Rolling seven-day averages, same-store basis, sourced from RealPage systems
-4%
-2%
0%
2%
4%
6%
8%
10%1
/11
/20
20
1/1
8/2
02
0
1/2
5/2
02
0
2/1
/20
20
2/8
/20
20
2/1
5/2
02
0
2/2
2/2
02
0
2/2
9/2
02
0
3/7
/20
20
3/1
4/2
02
0
3/2
1/2
02
0
3/2
8/2
02
0
4/4
/20
20
4/1
1/2
02
0
4/1
8/2
02
0
4/2
5/2
02
0
5/2
/20
20
5/9
/20
20
5/1
6/2
02
0
5/2
3/2
02
0
5/3
0/2
02
0
6/6
/20
20
6/1
3/2
02
0
6/2
0/2
02
0
6/2
7/2
02
0
7/4
/20
20
YoY Rental Revenue Change: Urban vs. Suburban
*YoY change in Rev/ASF, sourced from RealPage systems
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Jun 2017 Dec 2017 Jun 2018 Dec 2018 Jun 2019 Dec 2019 Jun 2020
Urban Suburban
SEPARATING FACTS VERSUS NOISE
1. Housing demand is growing for all housing types
• For-sale and for-rent demand is generally in sync, and both currently trending up
2. Much of the population has seen minimal financial impact (in part due to CARES Act)
• BEA: Personal income jumped 10.5% between March and April, while spending dropped 13.6%
• Banks reporting sizable increase in small-account checking account balances
• Univ of Chicago study: 68% of jobless workers getting higher pay from unemployment than in job
3. Rent affordability & eviction conversations must be focused on the true problems
• Lack of designated affordable housing supply
• Lack of government support (local and federal) to increase affordable rental stock
• Focus on big coastal cities, particularly in older and non-institutional properties
• Few signs of challenges in institutional-grade apartments, particularly outside Top 5 cities
MULTIFAMILY CAPITAL MARKETS UPDATE
1. Loan forbearance requests remain small
• Freddie Mac June report: 5% of loans and 2.6% of unpaid principal balance
• 75% of forborne loans are Small Balance Loans. “Since these properties have fewer
units, each tenant experiencing stress has a larger impact on small property owners.”
• Fannie and Freddie recently announced expanded programs to protect both borrowers
and tenants
2. Multifamily deal flow has stalled, but pricing holding up
• Mismatch between owner and buyer expectations triggering market freeze
• Volume of properties sold plunged 85% in May year-over-year
• Lots of dry powder targeting apartments, but “wait and see” is prevailing
LOTS OF POSITIVES, BUT BIG QUESTIONS STILL LOOM
1. Second wave of COVID-19 and increased cases in Sun Belt
2. Unemployment benefits expiration looming; what happens next?
3. Shape of economic recovery… is a “V” now even less likely?
4. Extension of eviction moratoriums and other policy shifts; are they precise enough?
5. Undersupply of rental housing, particularly affordable
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