THE NATIONAL ECONOMY DISRUPTIVE EPIDEMICS AND THE U.S. ECONOMY U.S. Annual GDP Growth and Epidemic Deaths 1910 - 2020 20% Polio (1916) 7,000 deaths Polio (1946-52) London Flu (1972-73) 7,710 deaths 1,072 deaths 15% Swine SARS (2002-03) Flu Asian Flu (1957-58) 0 deaths (2009-10) 10% 116,000 deaths 7,000 deaths Hong Kong Flu (1968-69) 100,000 deaths 5% 0% Ebola (2014-15) -5% 2 deaths COVID-19 (2020-) -10% 220,000+ deaths Spanish Flu (1918-19) 675,000 deaths -15% 1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020* *estimated Source: Bureau of Economic Analysis, CDC, University of Groningen, Delta Associates; October 2020. QUARTERLY GDP PERCENT CHANGE United States 10% 20-Year Average = 2.0% 5% 0% -5% -10% -15% Q2 2020 = -31.4% -20% -25% -30% -35% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Note: Seasonally adjusted at annual rates; change in chained 2012 dollars. Source: Bureau of Economic Analysis, Delta Associates; October 2020. INITIAL UNEMPLOYMENT CLAIMS United States | Four-Week Moving Average in Millions Great Expansion Period COVID-19 Recession 6.0 Recession Peak (Week of 03/28/20) = 5,790,250 5.5 Millions 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 Peak (Week of 3/28/09) = 659,250 (Week of 10/10/20) = 866,250 0.5 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Note: Data are seasonally adjusted. Source: Federal Reserve Bank of St. Louis, Delta Associates; October 2020. PAYROLL JOB GROWTH United States | Monthly in Thousands Great Expansion Period COVID-19 Recession Recession 2,600 2,200 1,800 1,400 Monthly Avg. September 2020 1,000 = 168,000 = 661,000 600 200 -200 Mar. 2020 -600 = -701,000 Apr 2020 -1,000 Monthly Avg. = -20,537,000 = -383,000 -1,400 08 09 10 11 12 13 14 15 16 17 18 19 20 Note: Data is seasonally adjusted. Source: Bureau of Labor Statistics, Delta Associates; October 2020. THE WASHINGTON ECONOMY PAYROLL JOB GROWTH Selected Large Metro Areas | 12 Months Ending August 2020 0 -200 -201.4 -400 -600 -800 (THOUSANDS) -1,000 NET CHANGE IN EMPLOYMENT -1,200 -1,400 Denver Phx Atl DFW Hou Was South FL Bos Chi SF Bay LA Basin NY Source: Bureau of Labor Statistics, Delta Associates; October 2020. UNEMPLOYMENT RATE Selected Large Metro Areas | August 2019 vs. August 2020 National 16% Rate August 2019 August 2020 14% 12% 10% 8.5% 8% 6% 4% 3.8% 2% 0% Phx Atl DFW Was Den Hou S Fla SF Bay Bos Chi NY LA Basis Point +170 +280 +280 +370 +440 +390 +550 +620 +820 +790 +910 +1,070 Change Source: Bureau of Labor Statistics, Delta Associates; October 2020. PAYROLL JOB GROWTH Washington Metro Area 140 120 20-Year Annual Average = 37,600/Year 3-Year Projected Avg 100 = 12,000/Year 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 -20 -40 -60 (ANNUAL AVERAGE) (ANNUAL -80 -100 -120 -140 THOUSANDS OF NEW PAYROLL JOBS THOUSANDSNEW OF PAYROLL -160 District Sub. MD No. Virginia Source: Bureau of Labor Statistics, George Mason University Center for Regional Analysis, Delta Associates; October 2020. PAYROLL JOB GROWTH Washington Metro Area | 12 Months Ending August 2020 Federal Government 12,500 Wholesale Trade Construction/Mining Manufacturing Information Financial Activities Other Services -213,900 Transportation/Utilities State and Local Government Retail Trade Professional/Business Services Education/Health Leisure/Hospitality -120,000 -100,000 -80,000 -60,000 -40,000 -20,000 0 20,000 JOB CHANGE Source: Bureau of Labor Statistics, Delta Associates; October 2020. COVID-19 RELATIVE ECONOMIC IMPACT BY SECTOR Washington Metro Area Leisure/Hospitality Education/Health Services Retail Trade High Transportation/Utilities Manufacturing Other Services Construction/Mining Medium State/Local Govt. Wholesale Trade Information Professional/Business Services SEVERITY Low Federal Govt. Financial Activities Short Medium Long DURATION Note: Primary demand sources for Class A multifamily units, office, and for-sale housing highlighted in orange. Source: Delta Associates; October 2020. COVID-19 RELATIVE ECONOMIC IMPACT BY SECTOR Washington Metro Area Leisure/Hospitality Education/Health Services Retail Trade High Transportation/Utilities Manufacturing Other Services Construction/Mining Medium State/Local Govt. Wholesale Trade Information Professional/Business Services SEVERITY Low Federal Govt. Financial Activities Short Medium Long DURATION Note: Primary demand sources for multifamily units highlighted in blue. Source: Delta Associates; October 2020. Inland Empire LOW Detroit Las Vegas Sacramento Tampa Los Angeles Portland MEDIUM Philadelphia Atlanta Avg. = 50.0 = Avg. Charlotte San Francisco Miami/Ft. Laud. Chicago New York Phoenix Orlando Cincinatti HIGH Seattle Denver St. Louis San Diego Minneapolis Dallas/Fort Worth Baltimore Pittsburgh Houston Boston San Antonio VERY HIGH VERY Washington Austin Source: Delta Associates; October 2020. October Delta Associates; Source: 30 Largest Metropolitan Statistical Areas Statistical Metropolitan Largest 30 MARKET RESILIENCE INDEX RESILIENCE MARKET 0 10 20 30 40 50 60 70 80 90 100 THE WASHINGTON METRO AREA APARTMENT MARKET LARGET APARTMENT MARKETS Selected Metro Areas | 2018 3,000 2,500 2,000 1,500 1,000 561 UNITS (THOUSANDS) UNITS 500 0 NY LA Basin Chi SF Bay DFW Hou Wash So FL Bos Atl Source: U.S. Census Bureau, Delta Associates; October 2020. ANNUAL CLASS A APARTMENT ABSORPTION AND DELIVERIES Washington Metro Area Expansion Period 16,000 Average = 8,001 Expansion Period 14,000 Average = 9,054 12,000 10,000 8,000 6,000 4,000 2,000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Absorption Deliveries Average Absorption Average Deliveries Note: Shaded bars represent recession periods. Source: Delta Associates; October 2020. CLASS A APARTMENT ABSORPTION Top 10 Submarkets in Washington Metro Area | 12 Mo. Ending September 2020 1,200 1,000 800 600 UNITS 400 200 0 Source: Delta Associates; October 2020. ABSORPTION PACE Class A Projects in Initial Lease-Up | Washington Metro Area 20 85 Absorption Pace Number of Projects 18 75 16 14 65 12 55 10 45 8 6 35 4 IN ACTIVE LEASE UP NUMBER OF PROJECTS 25 2 UNITS PER PROJECT PER MONTH 0 15 9/13 9/14 9/15 9/16 9/17 9/18 9/19 9/20 Source: Delta Associates; October 2020. STABILIZED APARTMENT VACANCY RATES Major Apartment Markets | Third Quarter 2020 National Vacancy Rate = 4.9% 6% 5% 4.5% 4% 3% 2% 1% VACANCY RATE CLASSES)(ALL RATE VACANCY 0% LA Phi NY Wash Phx Balt Atl Chi DFW Hou Source: Axiometrics, Delta Associates; October 2020. ANNUAL EFFECTIVE RENT GROWTH Class A Apartments | Washington Metro Area | 2007 - 2020 10% Long-Term Average Rent 8% Growth = 3.5% 6% 4% 2% 0% -2% -4% -6% -8% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* Source: Delta Associates; October 2020. *12 months ending September 2020. PROJECTS CURRENTLY UNDER CONSTRUCTION District of Columbia In Lease-up Not Yet Leasing Source: Delta Associates; October 2020. 36-MONTH APARTMENT DEVELOPMENT PIPELINE* Washington Metro Area | 2007 - 2020 45,000 40,000 35,000 30,000 25,000 RATE UNITS RATE - 20,000 15,000 10,000 MARKET 5,000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020** Source: Delta Associates; October 2020. *Market-Rate Units Planned and Under Construction After Attrition. **As of Third Quarter. PROJECTED DELIVERIES Washington Metro Area | 2020 - 2022 6,000 District Sub MD No VA 5,000 Projected Class A Quarterly 4,000 Absorption = 2,229 3,000 RATE UNITS RATE - CLASS A 2,000 1,000 MARKET 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2020 2021 2022 Source: Delta Associates; October 2020. 36-MONTH APARTMENT DEVELOPMENT PIPELINE* Top 10 Submarkets in Washington Metro Area | Third Quarter 2020 7,000 6,000 5,000 4,000 RATE UNITS RATE - 3,000 CLASS A 2,000 MARKET 1,000 0 Source: Delta Associates; October 2020. *Market-Rate Units Planned and Under Construction After Attrition. DEMAND AND SUPPLY PROJECTIONS Washington Metro Area Class A Apartments | 36 Mo. Ending September 2023 20 DEMAND 18 16 Net Absorption: 8,917/Year = 26,750 14 12 SUPPLY 10 Planned and may 8 deliver by 9/23: 2,681 units1 RATE UNITS (THOUSANDS) RATE 6 - 4 Under construction: 38,961 units2 2 MARKET 0 Total = 41,642 units No VA Sub MD The District 1 Probable supply after projected attrition. 2 Includes unleased units at projects in 3.9% 4.1% 5.5% lease-up. Projected Stabilized Vacancy % at September 2023 4.4% Metro-Wide Source: Delta Associates; October 2020. ANNUAL CLASS A APARTMENT EFFECTIVE RENT GROWTH Washington Metro Area | 2007 - 2023 10% Long-Term Average = 3.5% 8% 6% 4% 2% 0% -2% -4% -6% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021 2022 2023 Source: Delta Associates; October 2020. * Annual rent growth at Third Quarter 2020 is -7.0%. THE BALTIMORE METRO AREA APARTMENT MARKET CLASS A APARTMENT ABSORPTION Baltimore Metro Area | 2011 - 2023 4,000 3,500 Annual Average 10-Year Average = 2,241 ~ 1,808 3,000 2,500 2,332 RATE UNITS RATE 2,000 - 1,500 1,000 MARKET 500 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021 - 2023 Source: Delta Associates; October 2020. *12 months ending September 2020. EFFECTIVE RENT AND VACANCY RATE Class A Apartments | Baltimore Metro Area | 2002 - 2020 6% Average Effective Base Rent $1,800 Stabilized Vacancy $1,700 5% $1,600 $1,500 4% $1,400 3% $1,300 $1,200 2% $1,100 $1,000 STABILIZED VACANCY RATE VACANCY STABILIZED 1% $900 AVERAGE EFFECTIVE BASE RENT BASE EFFECTIVE AVERAGE 0% $800 3.6% / YEAR LONG- TERM RENT GROWTH Source: Delta Associates; October 2020.