HFF s Houston office assembled the following carefullyanalyzed data to most accurately depict the damage caused by Tropical Storm Harvey to Houston. Harvey was the worst rain event in U.S. history Over 50 inches of rain (>1 trillion gallons of water) fell on Houston over the span of 4 days Equal to 70% of Harris County s annual rainfall Previous record set in Louisiana in 1940 A 5,000 yr 20,000+ yr storm Total Cost: Moody s Analytics cut its estimate to $76-$87B, down from $86-108B because housing stock fared better than expected. Economic Losses - $ Billions Hurricane/Storm Total Property Output Death Toll Katrina 174.5 143.6 30.9 1,836 Harvey 87 77 10 82 Irma 83 67 16 78 Sandy 73 46.8 26.2 71 Andrew 60.5 45.9 14.6 23 The combined costs of Harvey and Irma may not reach the total cost of Hurricane Katrina, and the loss of life in Harvey was a fraction of that experienced during Katrina. HOUSTON REBOUNDED QUICKLY Harvey made landfall near Corpus Christi on August 25th, 2017, and its effects were felt in Texas through August 29th, 2017; 90% of Houston area businesses returned to work by September 5th and 95% were open the following Monday. The key economic drivers Energy industry, Port of Houston, and Health Care received very little impact. MULTI-HOUSING H O U S T O N OFFICE H O U S T O N INDUSTRIAL & RETAIL H O U S T O N 0.6% of buildings reported all units affected (15 buildings) 2.5% of metro area units damaged (15,662 units) 7.9% of buildings reported some kind of damage (215 buildings) 0.8% of SF in the metro damaged (2.0 MSF) 4.0% of buildings reported some kind of damage (58 buildings) Negligible effects HFF 1
HOME SALES BOUNCED BACK SINGLE-FAMILY OVERVIEW THERE ARE APPROXIMATELY 1.7 MILLION SINGLE- FAMILY HOMES IN THE HOUSTON METRO. HOME SALES Single-family home sales staged an impressive post-harvey rebound, rising 4.2% year-over-year with 6,913 units sold. On a year-to-date basis, single-family home sales remain 2.3% ahead of the 2016 volume. The single-family home median price $232,000 and average price $291,767 both set September records, increasing 5.5% and 5.4%, respectively. DAMAGE ASSESSMENT 0.2% OF HOMES DESTROYED 2.2% OF HOMES SUSTAINED MAJOR DAMAGE 9.8% 3,629 36,345 165,630 OF HOMES REPORTED SOME AMOUNT OF DAMAGE SEPTEMBER 2017 HOME SALES DATA IS AN INDICATOR OF RECOVERY EXISTING-HOME MARKET 100,000 Dollars; Sales per 1,000 Employed People HARVEY Notes: 1. Home sales fell in August as flooding and rainfall suppressed buying activity toward the end of the month. 2. September home sales bounced back as homebuyers were able to resume normal activity, which caused the inventory of homes for sale to dip below four months. Sources: Dallas Fed, U.S. Bureau of Labor Statistics, Houston Association of Realtors, Notes: Numbers in parentheses are for September 2017. Sales are number of homes sold divided by the six-month moving average of employed people. Prices are in current dollars. All data are seasonally adjusted. Image Source: https://www.bostonglobe.com/metro/2017/08/25/what-those-hurricane-categories-really-mean/tql9or1jilirq8nyjepvao/story.html HFF 2
HOUSTON REBOUNDED QUICKLY MULTI-HOUSING OVERVIEW THERE ARE 2,716 MULTI-HOUSING PROPERTIES TOTALING 636,699 UNITS IN THE HOUSTON METRO. HARVEY EFFECT ON MULTI-HOUSING FUNDAMENTALS: 10,926 units were estimated to have been leased in the five weeks after Harvey Citywide multi-housing occupancy increased 0.4% after Harvey with the down units included in the inventory and 1.1% (to reach 90.2%) when the down units are removed from the inventory. Effective rents increased 1.5% from July to October, accelerating positive rent trends from the summer. 115 Class A multi-housing properties dropped concessions after Harvey, dropping the percentage with concessions from 55% to 32% citywide DAMAGE ASSESSMENT 0.6% 2.5% 7.9% 15 Buildings OF BUILDINGS REPORTING ALL UNITS AFFECTED 15,662 Units OF METRO AREA UNITS DAMAGED 215 Buildings OF BUILDINGS REPORTED SOME AMOUNT OF DAMAGE $1.14 HOUSTON MULTI-HOUSING EFFECTIVE RENT AND OCCUPANCY GROWTH POST-HARVEY 89.0% Effective Rent/SF $1.13 $1.12 $1.11 $1.10 $1.09 $1.08 $1.07 $1.06 88.8% 88.6% 88.4% 88.2% 88.0% 87.8% 87.6% Occupancy $1.05 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Effective Rent/SF Average Occupancy Source: Apartment Data Services 87.4% Image: AMLI Houston HFF 3
HOUSTON MULTI-HOUSING DAMAGE HEAT MAP # OF DOWN UNITS NW26 Submarket Heat Map Legend # of Down Units Less than 100 units NW25 Between 100 and 500 units Greater than 500 units NW24 NE32 NW20 NE31 NW21 NE30 NE33 NW22 NW19 NE29 NE28 NW17 SE40 NW23 NW18 SW8 SW7 SW6 SW9 SW11 SW12 SW10 SW13 C4 C2 C1 C3 C5 SE35 NE27 SE37 SW15 SW14 SE34 SE36 SW16 SE38 SE39 Galveston SE42 SE41 Source: Apartment Data Services (98.4% of properties surveyed as of September 27, 2017) LOCATION DISTRIBUTION CLASSIFICATION DISTRIBUTION 12.6% 9.0% 28.4% Southwest 17.6% 24.5% 25.5% Northeast Northwest Southeast Central 82.4% Class A Class BCD HFF 4
HOUSTON REBOUNDED QUICKLY OFFICE OVERVIEW OFFICE DAMAGE HEAT MAP NW25 NW24 NW20 NW26 NE31 Submarket Heat Map Legend NE32 # of Down Units Less than 100,000 SF Between 100,000 SF and 500,000 SF Greater than 500,000 SF DAMAGE ASSESSMENT 0.8% MSF IN THE METRO DAMAGED 4.0% 2.0 MSF 58 Buildings OF BUILDINGS REPORTED SOME AMOUNT OF DAMAGE NW21 NE30 NE33 NW23 SW16 NW22 NW19 NE29 NE28 NW17 NW18 C4 NE27 SW8 SW7 C5 SW6 C2 C1 SW9 SW11 SW12 C3 SW10 SE35 SW13 SW14 SE34 SE36 SW15 SE38 SE42 SE37 SE39 SE41 SE40 Galveston Of the damaged square footage, over half was expected to be back online within one month of the event with another 20% repaired prior to year-end. The timeline for the remaining 27% of the damaged space is unknown and 3% had minor damage but no interruption of service. Source: HFF Research HFF 5
HFF RECENTLY CLOSED TRANSACTIONS On Thursday, August 31 st, we officially re-opened HFF Houston and are successfully closing real estate transactions, including two loan closings on multi-housing and office assets within 48 hours of Harvey. We stand ready to provide the professional service to which you have grown accustomed, and we are available to answer any questions you may have relating to conditions across the city. Thank you for your care and for your confidence. Please reach out to any one of us with your needs. EXAMPLE HOUSTON DEALS CLOSED BY HFF SINCE HARVEY LANDFALL Deal Name Platform Stage Deal Type Date Closed Property Type H6 Investment Advisory Closed Property Sale 10/06/2017 Apartments 2100 West Loop South Investment Advisory Closed Property Sale 09/26/2017 Office 2100 West Loop South - Debt Debt Closed Fixed-rate 09/25/2017 Office The Villages of Cypress Creek Investment Advisory Closed Property Sale 09/08/2017 Apartments The Villages of Cypress Creek - Debt Debt Closed Fixed-rate 09/08/2017 Apartments 700 Louisiana Debt Closed Floating-Rate 08/31/2017 Office Total SF Closed 4,425,652 Total SF In Closing / Under Contract 9,865,494 Source: HFF Research H6 700 LOUISIANA 2100 WEST LOOP SOUTH THE VILLAGES OF CYPRESS CREEK HFF 6
HFF HARVEY RESPONSE WE ARE COMMITTED TO EACH OTHER & OUR COMMUNITY HFF Houston extends our gratitude to those offering their thoughtful condolences in the wake of Harvey. National media outlets have made clear the citizens response to the adverse conditions impacting the city we are committed to each other and to our community. The firm has established a 501(c)(3) Foundation to help the immediate and extended family of HFF employees, associates, and any cause deemed worthy. It is intended to provide relief to individuals who have suffered loss from a natural disaster or personal hardship. The process of developing the foundation was spurred by the many who have been affected by Harvey. The Houston Astros are the 2017 WORLD SERIES CHAMPIONS! HFF 7