Market

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Cadence

Market & Demand

Why the Sun Belt, and why rental.

MK 01 / 10

Market opportunity

A metro renter base of 665,000 households and a shortage of family-sized homes to rent

665,000Total renter demand

Renter households across metro Phoenix, growing with in-migration each year

Maricopa County and the surrounding suburban submarkets.

48,000Addressable rental pool

Households seeking a family-sized rental home in Cadence's submarkets

Family renters priced out of buying, the fastest-growing part of the pool.

260Cadence's capture

260 homes leased to about 94% occupancy at a $2,925 blended rent

$5.62M of stabilized net operating income at a 6.55% yield on cost.

MK 02 / 10

Why here, why now

Phoenix demand is structural, not cyclical

01

People keep moving to the Sun Belt

Phoenix keeps drawing residents and employers from higher-cost states. Job and population growth feed steady household formation.

02

Renting for longer

Higher home prices and mortgage rates keep would-be buyers renting. Demand for a house without a purchase keeps building.

03

Institutions want core income

Stabilised build-to-rent has become a core holding for institutional owners. Buyers stay active for well-run communities at a 5.0 percent cap.

MK 03 / 10

Business model

Rental income with a develop-to-core spread

Main income

Blended rent per home

260 homes at a $2,925 blended monthly rent, less 6% vacancy and 37% operating cost, leave $5.62M of net operating income.

Development margin

A 6.55% yield on cost against a 5.0% exit cap, a 155 basis point spread inside a $112.4M stabilized value.

MK 04 / 10

Total renter demand

Bottom-up by home type Gross potential rent = homes x monthly rent x 12, summed across the four home types Home type by home type across the 260-home community unit a = number of homes; unit b = leases per home each year; unit c = monthly rent

$9.13M

1 and 2-bed cottages Homes 160 Leases per year 1 Monthly rent $2,500 $4.79M

3-bed townhomes Homes 78 Leases per year 1 Monthly rent $3,500 $3.28M

3-bed detached Homes 22 Leases per year 1 Monthly rent $3,995 $1.05M

Blended rent of about $2,925 a month across the 260 homes Bottom-up rent roll, Cadence appraisal 2026

MK 05 / 10

Addressable rental pool 48,000

Filters applied to demand:

Home type: family-sized detached and townhome rentals only - 35% concentrates on families that want a house with a yard, not a garden apartment

Geography: the suburban submarkets inside Cadence's catchment - 45% excludes renter households outside the drive-time catchment of the community

Income: households that qualify at Cadence's rents - 70% excludes households below the income needed to lease at these rents

Timing: households moving or renewing within the lease-up window - 65% excludes households not in the market during Cadence's lease-up

665,000 x 35% x 45% x 70% x 65% = about 48,000 households, the addressable rental pool

MK 06 / 10

Cadence's capture Our target in 5 years 260

Year	Metro renters	Submarket renters	Cadence homes	Total
Y1	y1 unit a count	y1 unit b rate	y1 unit c value	y1 total
Y2	y2 unit a count	y2 unit b rate	y2 unit c value	y2 total
Y3	y3 unit a count	y3 unit b rate	y3 unit c value	y3 total
Y4	y4 unit a count	y4 unit b rate	y4 unit c value	y4 total
Y5	y5 unit a count	y5 unit b rate	y5 unit c value	y5 total

Active users

MK 07 / 10

Demand growthRenter demand growing about 2.5% a year through 2029

U.S. Census Bureau and Cadence appraisal, 2026

Metro Phoenix renter households about 665,000, growing with in-migration | census.gov

A shortage of family-sized rentals across the suburban submarket | Cadence appraisal 2026

Phoenix among the national leaders in net in-migration | census.gov

Suburban build-to-rent rents about $2,925 a month, holding through cycles | Cadence appraisal 2026

MK 08 / 10

Risks and mitigation Four real risks, and how Cadence manages each

Lease-up pace If leasing runs slower than plan, income arrives later and early distributions compress. Phased delivery keeps leasing in step with completions, and a lease-up reserve covers a slower ramp.

Construction cost Hard costs can move over a two-year build and erode the yield on cost. A 5% contingency and fixed-scope contracts hold the $85.75M budget.

Interest rates at refinance A higher rate at refinance would size the permanent loan lower and slow the cash-out to equity. The permanent loan is sized to a 1.35x debt service cover, with headroom if rates rise.

Exit cap rate An exit wider than a 5.0% cap would lower the sale value at the end of the hold. The 155 basis point spread between yield on cost and exit cap cushions a softer market.

MK 09 / 10

Key takeaway Real family-rental demand meeting a thin supply pipeline

Total renter demand 665,000

Addressable rental pool 48,000

Cadence's capture 260

Compound Annual Growth Rate 6.55%

MK 10 / 10

market_report

6.1 Market

Filters applied to demand: