End of 2022 JB2 Market Update

We will use this update to review how our portfolio is faring through the current market conditions. Additionally, what we are looking at when it comes to new acquisitions.

 Our Portfolio and The Market

In general, we don't see a drastic pullback of any kind across our portfolio. We are seeing a slight dip in occupancy. That is also partially affected by the winter/holiday seasonality. So that has caused us to offer some specials to increase leasing. However, we are not doing this on every property. We are making sure that managers are not leaving any lead unturned. We are also expanding our marketing efforts to other sites. A big thing that continues to work in our favor is in Oklahoma; they are not building new workforce housing. It doesn't financially make sense to build today. Oklahoma's affordability continues to attract people from other places like Dallas. Dallas is about 3 hours away. Additionally, the rise in rates is keeping people renters. We continue to put our hand on the pulse, tighten operations, and ensure we are ready for anything.

New Acquisitions

There is still some disconnect between buyers and sellers regarding new acquisitions. Sellers still want inflated prices that buyers cannot pay, given the current rates. Brokers are contacting us more than ever in the last few years. There are a lot of buyers with their pencils down at this time. Brokers are trying to spur business wherever they can. We are still looking but very cautiously. It needs a be a good solid deal for us to move forward. We currently do have a deal under contract that primarily works because we are assuming the current debt at 3.99% and have a clear business plan that is very realistic to obtain even with today's uncertainty. If a seller will play ball, right now is the time to make deals happen with many people on the sidelines hoarding cash (less competition). When people decide to jump back in, it has the potential to drive prices up. In the meantime, we will continue to underwrite deals conservatively and only pull the trigger when all the boxes are checked. We do not have to do another deal and will grow responsibly.

Even with the uncertainty in the market, we continue to feel confident with our portfolio. When people were underwriting optimistically, we continued to underwrite conservatively. We look forward to 2023 to continue to grow our presence in the Midwest strategically.