Page 10 — Multifamily Properties Quarterly — November 2022 Investors Choose the nation’s #1 multifamily lender 1 • Best-in-class turn times • Dedicated bankers • An array of lending options • Competitive rates nancing The market is uncertain. Finance with con dence. MULTIFAMILY LENDING Changes Interbank O ered Rates (IBORs) and other benchmark rates, such as the London Interbank O ered Rate (LIBOR) are, or may in the future become, subject to ongoing international, national and other regulatory guidance, reform and proposals for reform. For more information, please consul t © 2022 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Visi t f or disclosures and disclaimers related to this content. 1213687 1 #1 claim based on 2021 FDIC data. F ollowing a year of record- setting rent growth and heavy deal activity in 2021, multifamily investments in the second half of this year are ever more challenging with the continued tightening of Fed mon- etary policy. The gap between bid- ask spread widens with each rate increase, deals are taking longer to transact, and the strategies to navi- gate this fluid investment climate seem to change monthly. We’ve seen this before. Having weathered multiple cycles, we’re attuned to reinforce three tenets that drive investment performance, especially during difficult times: Buy right, take care of your property and take care of your residents. On the acquisitions front, we’re leaning in even more heavily with sound investment discipline as we assess and mitigate risk, analyze new and existing markets, and structure debt and equity at the asset level to appropriately counter future market turmoil. The fundamentals in the apart- ment sector aren’t broken. Far from it. But we know investment perfor- mance is made on the margin, and now more than ever that means acquiring projects at a reasonable basis and saying no to some deals that even six months ago penciled. For example, Avanti is closing this month on a $94 million acquisition in a vibrant downtown Kansas City location. We were able to lock in and hold on to financing that, while at the time seemed high, is now 125 basis points below current interest rates and looking better all the time. We know the local market well and were able to com- plete our due dili- gence quickly, and were a known enti- ty to the seller, a group with which we had previously transacted. However, the market most cer- tainly is adjusting to a new normal as higher interest rates impact leveraged equity returns and infla- tion impacts operating costs. This places a higher premium on ways to add or retain value, be it through renovation, new amenities, lifestyle- forward apartment upgrades, opera- tions and highly engaged on-site management, which we’ll elaborate on shortly. Over the past several years, we have reinvested heavily in our prop- erties to ensure the resident experi- ence is commensurate – and com- petitive – with the local market. Our philosophy is simple: Doing what’s right for the property is right for the residents and ultimately right for the investment. The first order of business when we acquire a property is to imple- ment a well-thought-out capital campaign. For example, we are closing on a unique opportunity in Phoenix, a $70 million purchase of an older property that we know very well, and one where we will invest $12,000 per unit in upgrades. We always want our properties to offer housing solutions that meet our residents’ needs for a qual- ity lifestyle. Having just completed capital improvements to many properties over the past three years, our portfolio is well positioned from a physical standpoint, and we feel better equipped to retain high occu- pancy. Doing what’s right for the prop- erty applies equally to our newer luxury, Class A apartment commu- nities. In these cases, we are acquir- ing an already successful com- munity with leading-edge design, functional floor plans and excel- lent amenities. In every instance, however, there are opportunities to enhance the resident experience. There always are. Our residents are job one, and they increasingly want an engaging, lifestyle-forward apartment com- munity to call home. This is a time in which the value of professional, friendly, experienced property man- agement shines. The occupancy lev- els across our entire portfolio bear this out. A cornerstone of our operations philosophy is a culture of account- ability, camaraderie and perfor- mance. We have invested heavily in our operations teams, our brand ambassadors across a portfolio of some 9,000 apartment house- holds. We receive constant positive feedback on the job they perform, and we have the data to bear out the influence this has on resident retention. We are always in tune to the fact that this is a people business. For us to succeed, our residents have to feel a sense of engagement with their community and our manage- ment, which is in turn fully aligned with both the resident experience and investment performance. A commitment to doing what’s right for the property and the residents, in our experience, always ladders up to better investment perfor- mance. Especially now. s Maintain investment performance in these times Christian Garner CEO, Avanti Residential A disciplined approach to investing and taking care of residents ladders up to better investment performance, regardless of where we are in the cycle.