STATE OF THE U.S. HOUSING MARKETIdentifying Investment Opportunities in Rental Housing

A broad demographic coalition – consisting of Millennials,

Generation Z, and aging seniors within the Baby Boomer

and Silent Generation cohorts – combined with inadequate

housing supply has given rise to enduring investment

opportunities across the rental housing spectrum (e.g.,

Multifamily, Senior, Workforce, Single-Family Rental, and

Student Housing) that should persist for years to come.1

This paper will evaluate investment conditions across the

previously mentioned rental housing sectors, focusing on the

long-term outlook, demand drivers, and developing trends that

will likely impact the broader housing market going forward. It

will conclude by identifying a prudent approach for capturing

the opportunity across U.S. rental housing sectors.

1. This list of opportunities also includes short-term rental housing, which is generally a subset of the multifamily segment. Additionally, workforce housing often includes both single-family and apartment rentals.

Investment Thesis

Market OverviewI. Demographics Drive Demand

The Millennial generation (approximately 73 million people) is the largest cohort in the U.S. labor force, and nearly 65% of them are renters today. This group consists primarily of young people in their late 20s to mid-30s who have delayed getting married and having children relative to previous generations, while overwhelmingly opting to rent versus own a home. Due, in part, to entering the workforce after the Global Financial Crisis (GFC), the Millennial

generation has faced financial struggles, including record levels of student loan debt, poor credit scores, and difficulty saving

for a down payment required to purchase a home. Therefore, many of them will likely rent for extended periods of their lifetime, in both apartments and single-family residences.

Over the next decade, we expect Millennial family formations to rise, as this group begins transitioning to single-family housing — prioritizing attributes such as school district quality, yard size, and privacy. At the same time, Generation Z (the post-Millennial cohort) should begin to backfill the apartment space vacated by Millennials. While it is widely accepted that Generation Z started in 1997, demographers have yet to agree on an official ending period for the post-Millennial generation. For the sake of this paper, however, we will reference 1997 – 2012 as the Generation Z age, as defined by Pew Research (a leader in demographic research).2 Nearly 65 million births occurred in the U.S. during Generation Z’s era, which is three million more than the comparable 16 year reign (1981 – 1996) of the Millennial cohort. Therefore, we expect Generation Z to backfill the space vacated by Millennials

and potentially require more rental housing given they are a larger cohort.

Meanwhile, an increasing number of Baby Boomers and members of the Silent Generation are aging into senior housing. Nearly 10,000 Baby Boomers reach retirement age every day, and this trend will continue until 2030. Furthermore,

the number of people over the age of 75 is forecasted to almost double from 21 million today to over 40 million by 2035.

Collectively, these favorable demographics will continue to spur rental demand across the housing spectrum.

Exhibit 1: Demographic Cohort Size Impacts Housing Demand

2. Defining Generations: Where Millennials end and Generation Z Begins, January 2019, Pew Research Center. pewresearch.org.

1925

1928

1931

1934

1937

1940

1943

1946

1949

1952

1955

1958

1961

1964

1967

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

2012

2015

2018

1,200

1,000

800

600

400

200

0

Generation Z ages 22 & under

Millennialsages 23 – 38

Generation Xages 39 – 54

Boomersages 55 – 73

Silentages 74 – 91

Generation Age in 2019# of Live Births (000s)

1 2 3 4 5

USAA REAL ESTATE – RESEARCH REPORT 1

II. Significant Supply Shortage

From a supply perspective, the fundamentals continue to favor investment opportunities in the housing sector. A recent study found that the U.S. housing market was undersupplied by approximately 7.3 million units between 2000 – 2015,

representing 5.4% of the nation’s housing stock.3 The current housing shortage is due primarily to the substantial job and household formation growth in the Millennial cohort at a time when housing construction has lagged.

Historically, new housing starts have outpaced household formation growth, but that has not been the case in recent years. From 1960 – 2016, there were 11 new housing units built for every 10 households formed. This dynamic allowed for vacancies, demolition due to obsolescence, and owners of second homes; thus, there was not an issue with oversupply.

In recent years, however, the ratio of new housing starts to household formations has declined significantly, dropping to 7.2 new units for every 10 households formed from 2010 – 2016 (per Exhibit 2 below).

Various factors contribute to this situation, such as rising construction costs driven by labor shortages, anti-development

sentiment, and communities limiting zoning for dense residential housing due to pressure on public facilities (e.g., schools,

hospitals, and transportation systems). Consequently, without innovative and collaborative solutions (which we will discuss in the Workforce Housing: Tackling the Cost Issue section), the current housing shortage will likely be exacerbated over the long run as the robust demographic tailwinds continue to take hold.

Exhibit 2: U.S. Household Formations have Outpaced Housing Starts in Recent Years

3. Housing Underproduction in the U.S., 2018, Up for Growth. www.upforgrowth.org.

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2.00

1.80

1.60

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.0

Housing Starts Household Formation

2 STATE OF THE U.S. HOUSING MARKET – AUGUST 2019

Sector InsightsI. Apartments: A Multi-Dimensional Story

Over 43 million U.S. households rent their homes today (an all-time high).4 The nation will add approximately 14 million new households between 2018 and 2030.5 If the current renter-to-household ratio holds steady at 36.6%, the

market would require nearly 5.1 million new units over that period, or 392,000 units per year on average, to maintain a healthy

supply/demand equilibrium. This estimate includes all major rental types (i.e., condos, duplexes, and multifamily). While the apartment sector delivered 350,000 units in 2017 (a record high) followed by another 300,000 units in 2018, these figures are well below the anticipated rental demand going forward.6

Given the cultural and demographic shift toward rental housing and the increasingly important role that apartments play in the housing supply mix, markets with substantial population and employment growth will likely outperform over the long term, even if supply levels rise above the long-run average in the near term. Furthermore, finding success in this sector will heavily depend on an investor’s ability to align the appropriate product at the right price point for a given market. For example, the following exhibit classifies renter households in the Denver metro based on various affordability price points.

We believe the most attractive opportunities over the next decade will occur primarily around the Middle Market pricing segment (per Exhibit 3), which allows investors to serve an expanding pool of price-sensitive renters while maintaining focus on quality, location, and other differential attributes.

Exhibit 3: Renter Household Classifications Relative to Affordable Monthly Rent Levels

4. More U.S. Households are Renting than at any Point in 50 Years, July 2017, Pew Research Center. pewresearch.org.

5. Updated Household Growth Projections: 2018 – 2028 and 2028 – 2038, December 2018, Joint Center for Housing Studies of Harvard University. Jchs.harvard.edu.

6. Data per CoStar.

This exhibit uses the Denver market as a proxy, and household rent assumptions are based on 30%

of Gross Household Income.

$3,750 – $5,000+

$2,500 – $3,750

$1,250 – $2,500

$0 – $1,250

Premium 102,000

Middle Market 125,000

Workforce194,000

Inclusionary235,000

A Premium: The highest rent range within a major market

and often accounts for 15 – 25% of renter households.

A Middle Market: The centerpiece of a critical price point

segment that we believe is an attractive investment

opportunity over the long run, generally accounting for

15 – 25% of renter households in major markets.

A Workforce: For the sake of this analysis, it is housing

that is affordable for those making 80 – 120% of an

area’s median income (AMI) and typically accounts for

15 – 35% of renter households in major markets.

A Inclusionary: For the sake of this analysis, it includes

renters making below 80% of AMI. It is associated with

affordable housing programs intended for lower-income

families, typically accounting for 35 – 50% of renter

households in major markets.

1 2 3 4 5

USAA REAL ESTATE – RESEARCH REPORT 3

The rise in single-person households reflects a shift in the nation’s family structure, and its renter profile. As of 1995, this group accounted for 25% of the population and has since risen steadily, approaching 35% today. This change in household structures is due to various factors such as older adults living alone and younger adults delaying marriage and having kids. Nevertheless, this trend bodes well for rental housing demand.7

Exhibit 4: Single Person Households on the Rise

7. U.S. Census Data.

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

50,0000

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

One Person

Two Person

Three Person

Four Person

Five Person

Six Person

Seven or More People

# of Households

Household size

4 STATE OF THE U.S. HOUSING MARKET – AUGUST 2019

In the U.S., immigration will become a significant driver of population growth in the coming years, delivering a steady stream of potential renters. By 2030, immigrants will account for 15.8% of the population, the highest level since the

U.S. Census began tracking this data in the 1850s. The year 2030 also marks a turning point as net immigration is projected

to overtake natural increases (the excess of births over deaths) as the primary driver of population growth for the country.8 This phenomenon is mostly due to a decline in natural increases (resulting from falling fertility rates and an aging population), while the immigration rate is expected to remain near its long-run average.

Consequently, the apartment sector should be less impacted by the overall decline in population growth, given the steady flow of immigrants into the U.S.

Ultimately, the multifamily sector’s demand drivers (e.g., favorable demographics, evolving family structures, and a stable immigration growth) should support the sector’s momentum over the next decade and beyond.

Exhibit 5: Immigration is a Key Driver of Population Growth

8. Projections of the Size and Composition of the U.S. Population: 2014 to 2060, March 2015, U.S. Census. www.census.gov.

1.6

1.4

1.2

1.0

0.8

0.6

0.4

0.2

0.0

80.0

70.0

60.0

50.0

40.0

30.0

20.0

10.0

0.0

Natural Increase Net International Immigration Immigrant Share of Population Growth

2011 2012 2013 2014 2015 2016 2017 2025 2030 2035 2040

Population Growth (millions) % Immigrant

LONG TERM FORECAST

USAA REAL ESTATE – RESEARCH REPORT 5

II. Senior Housing: A Demographic Phenomenon

The expected growth in senior housing over the next decade is almost exclusively a demographic phenomenon, supported by the Baby Boomers and the Silent Generation cohorts. The oldest Baby Boomers turn 73 years old in

2019, and the bulk of them are in their 60s. Thus, senior housing options such as age-restricted communities and independent living have become increasingly popular among this group. Similarly, the number of people between the ages of 82 – 86 is expected to rise from 5.1 million to 6.6 million (a 29% increase) between 2017 – 2025, sparking demand for other parts of the senior housing spectrum (e.g., skilled nursing, assisted living, and memory care).

Furthermore, two interwoven factors will play a critical role in spurring senior housing demand — extended life expectancy and a shortage of caregivers. Seniors are living longer today relative to the previous cohorts due to healthier lifestyles and advancements in medical technology. A study from the National Center of Health Statistics

found that a person at retirement age in 2017 would be expected to live 18 (men) to 21 (women) years after the age of 65 versus

13(men) to 15 (women) years, respectively, for a person reaching retirement age in 1950. With seniors having longer life spans, it raises an important question — who will care for this older cohort as they age into retirement and beyond?

Exhibit 6: Remaining Life Expectancy at Age 65 Continues to Increase Over Time

Given the imbalance between the large Baby Boomer generation and the subsequent cohort (Generation X, which is

substantially smaller), there will be a shortage of caregivers available to support aging seniors. A recent study highlighted the declining “caregiver support ratio,” which is the number of potential caregivers age 45 – 64 for each person age 80 and older. In 2010, the caregiver support ratio was just over 7-to-1, meaning there were seven caregivers for every person over the age of 80. As the oldest Baby Boomers reach 80 in 2026, the ratio will begin to drop substantially, falling to 4-to-1 in 2030 and 3-to-1 in 2050.9

Thus, a combination of longer life expectancy and a significant shortage in the ratio of caregivers could result in an exponential increase in demand for senior housing solutions that can provide long-term services and support (i.e., congregate care facilities).

20

18

16

14

12

10

8

Male Female

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2017

Years

Source: National Center for Health Statistics

15 Years

21 Years

18 Years

13 Years

9. The Aging of the Baby Boom and the Growing Care Gap, August 2013, AARP. www.aarp.org.6 STATE OF THE U.S. HOUSING MARKET – AUGUST 2019

III. Workforce Housing: Tackling the Cost Issue

What is workforce housing? The criteria surrounding workforce housing tends to vary by region, but most definitions are based on housing affordability for those making near the median household income of a particular area. For the sake of this paper, we will define workforce housing as rental units that are affordable to households earning 80 to 120 percent of the area’s median income, assuming tenants spend 30% of their income on housing. Workforce

housing is often associated with the ability of essential public employees — such as emergency

personnel, healthcare professionals, and teachers — to find reasonably-priced accommodations in

their respective communities. Today, the description encompasses an even larger group (e.g. young professionals, retail sales personnel, some office workers and service workers), all of whom have found it increasingly difficult to afford housing in both urban and rural areas. According to the Joint Center for Housing Studies, 38.1 million homes in 2016 (20% more than in 2001) were “cost-burdened,” meaning they spent more than the recommended industry standard of 30% on housing. Ultimately, an increasing percentage of the workforce cannot afford to live in areas where they are needed, causing housing affordability to become a primary issue within the real estate industry.

Several factors have contributed to the affordable housing issue. To start, the increased demand for rental housing has led to rising rental prices that have outpaced wage increases across the country. Additionally, apartment construction has been near record levels in recent years with most of the new deliveries focused on Class A product that typically have rents which fall outside what would be considered practical for the average U.S. household. Affordability issues have even begun to limit rental growth in high-end Class A product in some

submarkets and urban centers as well. While demand for Class A product in major markets remains relatively stable, prudent investors should look for complementary alternatives in other investments, either within those markets or by pursuing investment in submarkets and other cities with more favorable affordability metrics.

Market participants have struggled to provide a comprehensive and viable solution that also meets commercial return requirements, but investors are beginning to take a more innovative approach to this issue, particularly regarding new development. Aside from delivering inclusionary housing as part of established local zoning requirements on new ground-up developments in certain cities, possible solutions could include:

A Technology-driven construction methods that could potentially lower construction cost and reduce

delivery schedules

A Creation of mixed-use, ex-urban nodes to ease pressure on urban centers while offering an

affordable solution

A Public-private cooperation to encourage and facilitate more housing that helps offset high land prices

Over the next decade, housing affordability could become a defining issue for the real estate industry. This challenge is potentially a threat to cities in the U.S., especially if young people, working-class professionals, and service providers critical for supporting rapid urban growth are unable to attain affordable housing. Therefore, the ramifications associated with affordable housing will impact the real estate industry as well as the nation’s socioeconomic structure.

USAA REAL ESTATE – RESEARCH REPORT 7

IV. Single Family Rental: Reshaping the American Dream

Today, single-family detached homes account for more than 62% of the housing stock in the U.S. While most of these houses are owner-occupied, single-family rentals have long played a critical role in the housing market. Approximately 20% of single-family homes were rentals during the 1970s. The number of renters declined during the 1990s as easing credit standards and falling interest rates made buying a home more accessible. In the wake of the GFC, single-family rentals expanded rapidly. In the 10 years between 2006 and 2016, nearly four million additional households became renters of single-family homes. Approximately 17% of single-family homes were occupied

by a renter in 2015, up from around 13% ten years earlier, making the single-family rentals sector one of the fastest-growing

segments of the housing market.10

While the GFC may have reignited today’s rental housing revolution, this trend will rely heavily on demographic tailwinds going forward, mainly from Millennials. This generation represents the largest cohort in the workforce today

and will likely follow in the footsteps of previous generations and eventually marry, have kids, and gravitate toward single-

family homes, but not necessarily as buyers. As noted earlier, this group has generally faced financial difficulties (e.g., record levels of student loan debt, poor credit scores, and struggled with saving for a down payment). These conditions could limit their ability to purchase a home as they transition into the next phase of life. Thus, many Millennials will likely look to rent a single-family home over the next decade.

The construction of purpose-built, single-family neighborhood rentals offers a compelling opportunity to capitalize on the previously described conditions. Unlike the assemblage of disparate homes, purpose-built, single-family rentals

provide a viable solution for consumers who cannot afford to purchase a home, while also providing investors/owners with

operational efficiencies, a consistent renter experience, and opportunities for amenitization. This type of emerging housing opportunity suggests that the single-family rental market has significant investment potential going forward.

Exhibit 7: The Percent of Single-Family Households Occupied by Renters has Risen Steadily

10. The Rise of Single-Family Rentals after the Foreclosure Crisis, April 2018. berkeley.edu.

18.0%

17.0%

16.0%

15.0%

14.0%

13.0%

12.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

13.1%

17.0%

8 STATE OF THE U.S. HOUSING MARKET – AUGUST 2019

11. Digest of Education Statistics, 2017, National Center for Education Statistics. nces.ed.gov.

V. Student Housing: Higher Education Meets Higher-Quality Housing

Higher education institutions must compete to attract students, and modernized student housing has become a crucial weapon in this battle for higher enrollment. Many colleges and universities built a slew of traditional dorms

for the Baby Boomer generation, and a lot of those buildings have not been improved in decades. Moreover, light-scale redevelopment is generally not feasible for these properties given they tend to have inferior architectural designs and antiquated building systems — full replacement is often necessary to create modern housing features.

Furthermore, student housing projects can be capital intensive. Many state and local governments have budget constraints, which creates an opportunity for private capital to fund new developments. Even some schools with

large endowments have opted to outsource projects, choosing instead to focus on their core educational competencies.

With higher education enrollment expected to increase by 12% between 2015 and 2026, adding roughly 2.7 million students, the long-term outlook for the student housing sector remains attractive.11

Exhibit 8: Student Housing Supply/Demand Equilibrium is Healthy

30,000

25,000

20,000

15,000

10,000

5,000

0

10.0%

9.0%

8.0%

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

Units Vacancy

Vacancy

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Completions Net Absorption

USAA REAL ESTATE – RESEARCH REPORT 9

Macro FactorsLooking Ahead: Key Issues in the Next Decade and Beyond

The following factors have historically influenced U.S. housing conditions and investors should be mindful of these issues when considering a long-term housing investment program:

Population Growth: The pace of population growth is arguably one of the most critical demand drivers across all major

segments of the housing market. An increase in a market’s population tends to be associated with an uptick in job growth, which

ultimately impacts the demand for housing across all sectors. The U.S. population growth rate has gradually declined over the

last several decades; however, the long-term forecast ranks near the top among advanced economies (see Exhibit 9). In absolute

terms, the U.S. population will top 355 million by 2030, 20 million more than in 2016.12 Furthermore, steady immigration growth

will help buffer multifamily and other rental housing sectors against slower population growth. From a global perspective, the

U.S. housing market offers investors other attributes as well — a resilient economy, highly-developed legal system, strong

corporate governance, and healthy liquidity. Therefore, the U.S. housing market remains an attractive investment opportunity

on both a relative and absolute basis.

Exhibit 9: U.S. Population Growth Forecast Outpaces Other Advanced Economies

8.0%

6.0%

4.0%

2.0%

0.0%

-2.0%

-4.0%

-6.0%

Population Growth

5-Year 10-Year

12. U.S. Census Data.

Japan Euro Zone China United Kingdom United States

1 2 3 4 5

10 STATE OF THE U.S. HOUSING MARKET – AUGUST 2019

Policy Initiatives: Government policy can explain approximately 75% of changes in the homeownership rate since 1971.

Therefore, policy initiatives will have an ongoing influence on the housing market. The homeownership rate is currently near

64.8% but has trended lower over the previous two economic cycles. The rate fell from a high of 69.2% in 2004 to a 50-year low

of 62.9% in 2016. During this period, every 1% decline in the homeownership resulted in approximately 1.2 million new renters

as a growing number of households shifted away from homeownership. The current socioeconomic and demographic

tailwinds suggests that homeownership could remain relatively low in the near term. Prudent investors must be

mindful of emerging political and regulatory factors that could impact housing conditions.

Exhibit 10: U.S. Homeownership Rate Remains Near Historic Lows

Economic Outlook: Recessions have occurred approximately every seven years on average since the 1960s, and

any long-term housing investment strategy will almost certainly face an economic slowdown. In that regard, the U.S.

economy is unique relative to other advanced countries in its resilience following a recession. For instance, the U.S. was the

first advanced economy to emerge from the GFC and has experienced the most robust GDP growth over the last decade as well.

There is also reason to be optimistic going forward, as the U.S. has the youngest populations among countries with advanced

economies, which will fuel GDP growth and serve as a catalyst for an economic rebound when a recession eventually occurs in

the future.13

13. Sourced from World Population Review (worldpopulationreview.com).

70

69

68

67

66

65

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63

62

61

60

1980

1982

1984

1986

1988

1990

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1998

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2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

Homeownership Rate (%)

USAA REAL ESTATE – RESEARCH REPORT 11

”We see enduring demand and significant value creation opportunity across U.S. rental housing sectors through ground-up developments and value-add acquisitions.”

– HAILEY GHALIB, AIA Executive Managing Director

12 STATE OF THE U.S. HOUSING MARKET – AUGUST 2019

Investment PerspectiveExecution & Strategy: A Prudent Approach

A broad demographic coalition — consisting of Millennials, Generation Z, and aging seniors within the Baby Boomer and Silent Generation cohorts — combined with insufficient housing supply has given rise to enduring investment opportunities across the rental housing spectrum (e.g., Multifamily, Senior, Workforce, Single-Family Rental, and Student Housing) that should persist for many years to come.

However, a pressing question remains: how should market participants position themselves to take advantage of this rapidly expanding, and attractive investment opportunity?

One prudent strategy would be to consider the entire rental housing market (including all the major sectors as noted earlier) as a cohesive housing platform opportunity, with an emphasis on investments that primarily target middle-market rents (per Exhibit 3) while maintaining a keen focus on location, quality, and other differentiation attributes. This approach would allow investors access to a deep pool of potential renters in each market while focusing on

the sectors that serve the most significant population segments, provide the highest renter demand, and offer attractive long-

term risk-adjusted returns. This approach is appropriate primarily because the housing market is multifaceted, fluid, and shaped by several complex factors (e.g., an evolving demographic landscape, government policy, consumer preferences, and economic cyclicality).

Rental Housing is an attractive long-term investment mainly due to the following attributes: 1) having an efficient cash flow, 2) being an excellent inflation hedge, 3) and providing rent growth that has historically outpaced inflation. Over an extended period, the various underlying housing sectors will eventually present more significant opportunities for value creation and risk-adjusted returns depending on the market and the timing in the economic cycle. Therefore, a flexible, value-oriented strategy that seeks rental housing opportunities in different markets at various

points in the cycle and can allocate capital across the entire rental housing spectrum (rather than focusing on one sector) has

the potential to outperform. Furthermore, it allows for both strategic and tactical investing and geographic diversity, all while focusing on segments where the opportunity for value creation is the greatest.

In the end, successfully capitalizing on the U.S. rental housing opportunity, as previously described, requires the ability to recalibrate an investment focus as market conditions fluctuate, understand the demand drivers within each underlying housing sector, and recognize how macro factors influence the investment environment. We have

found that these attributes generally reveal themselves in an investment manager who has a consistent and proven track

record capable of beating the broader industry in both bull and bear markets. Given the appropriate manager combined with a prudent strategy, conditions are in place to capitalize on enduring investment opportunities within the U.S. rental housing market in the years ahead.

1 2 3 4 5

USAA REAL ESTATE – RESEARCH REPORT 13

Hailey Ghalib, AIAExecutive Managing Director, Portfolio Management & Developmenthailey.ghalib@usrealco.com210.641.8488

John Kirk, CAIA, CCIMSenior Directorjohn.kirk@usrealco.com210.690.6715

Mark Fitzgerald, CFA, CAIASenior Director, Researchmark.fitzgerald@usrealco.com210.690.6706

Will McIntosh, Ph.DGlobal Head of Researchwill.mcintosh@usrealco.com210.641.8416

Important DisclosuresThese materials represent the opinions and recommendations of the author(s) and are subject to change without notice. USAA Real Estate, its affiliates and personnel may

provide market commentary or advice that differs from the recommendations contained herein. Certain information has been obtained from sources and third parties. USAA

Real Estate does not guarantee the accuracy or completeness of these materials or accept liability for loss from their use. USAA Real Estate and its affiliates may make

investment decisions that are inconsistent with the recommendations or views expressed herein.

The opinions and recommendations herein do not take into account the individual circumstances or objectives of any investor and are not intended as recommendations of

particular investments or strategies to particular investors. No determination has been made regarding the suitability of any investments or strategies for particular investors.

Research team staff may make or participate in investment decisions that vary from these recommendations and views and may receive compensation based on the overall

performance of the USAA Real Estate or its affiliates or certain investment funds or products. USAA Real Estate and/or its affiliates or clients may be buying, selling, or

holding significant positions in investments referred to in this report.

August 2019

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