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Dear Partner,

We want to begin this year by thanking you for your continued interest in Gindi Equities. For this issue of our newsletter, we wanted to share our reflections on the previous year and give you some insight into our 2024 expectations and outlook. As Gindi Equities reaches its four-year anniversary, we are especially proud of having built a nimble, best-in-class team who champion our vision and we are incredibly excited for the year ahead.

2023 Year in Review

All eyes this year continued to watch the Federal Reserve’s interest rate policy and the impact that the continuation of rate hikes would have on the economy, as well as speculation as to when a pause (September 2023) or cut (stay tuned) would finally come. 2023 would become one of the most challenging years for real estate investors in memorable history and despite these headwinds, the Gindi Equities team rose to the occasion.

We completed multiple capital events in one of the most difficult real estate markets ever, accelerated the implementation of our business plans across the portfolio, and both fostered and expanded key relationships, laying the groundwork for a successful 2024 and beyond.

We share below, a synopsis of the 2023 key highlights and notable accomplishments, achieved by the Gindi Equities team:

2023 sales activity dropped significantly, as sellers refused to accept lower prices demanded by buyers as a result of climbing interest rate levels. In the backdrop of this environment, we reviewed close to 1,000 opportunities and only acquired one deal that fit our acquisition criteria.

• We closed on Cardinal Apartments, a 1993 vintage 256-unit garden-style community within Greensboro, North Carolina, in September 2023.

• This transaction materialized as a rare exception in 2023, as we were able to acquire this asset at an attractive basis from a long-term owner (18+ years) that passively managed the asset, that is perfectly positioned for a value-add business plan execution.

• The team identified this opportunity through the proprietary acquisition pipeline we have invested in and built from the start, achieving a successful and seamless close, due in part, to the reputation of integrity and follow-through we are known for in the market.

• While it was still frustrating to only acquire this one deal, we are reminded of the words spoken by our late father and grandfather, Al Gindi A”H, “The best deal is the deal you don’t buy.” We stand firmly behind this principle and highlight 2023 as an example of our commitment to invest with discipline, selectivity, and patience.

• As we look ahead, we do believe that 2023 was an outlier year and we anticipate that the pipeline of investment opportunities in 2024 and beyond, will make up for the lack attractive deal-flow in 2023.

We closed on the sale of Chapel View Apartments, a 1986 vintage 224-unit garden-style community in Chapel Hill, North Carolina. We acquired Chapel View for $34.2 million in August 2021, and closed on the sale after a 22 month hold period in June 2023 for $39.8 million.

We completed the refinancing of two properties in 2023, effectively de-risking interest rate volatility while achieving a neutral to positive distribution to our partnerships.

• Although we strive for 100% capital return in these events, we are quite proud that we outperformed revenue growth expectations, which made this outcome possible, as all of our assets were able to withstand this period of interest rate hike stress.

• We refinanced with shorter 5-year duration terms on both loans and will take advantage of a future sale or refinancing opportunity when appropriate, as we expect the capital markets environment to improve in the coming years.

We made considerable progress in managing our assets, both growing our revenues, and optimizing our expenses.

• In 2023, we achieved over 15% total revenue growth across all our assets. We also achieved over 9% effective rent growth in the portfolio. For reference, asking rents across the US increased 3.3% in 2023, according to Zillow, much of that growth coming from the front half of 2023.

• We grew our AUM and increased both the size and diversity of our target markets as well as our proprietary sourcing channels.

We continue to make significant investments into Gindi Equities and are proud that we accomplished the following in 2023:

• We implemented a goals system known as EOS (eosworldwide.com) to establish and ensure accountability around our 1,3,5-year goals.

• We added two professionals to our team to build our capital markets capabilities and add bandwidth to our acquisitions and asset management team.

• We hired a marketing company to rebrand our materials and launch a new website (stay tuned), which will showcase our growing portfolio of properties.

2024 Outlook, Headwinds and Predictions

We are quite excited for the year ahead and are well-positioned to take advantage of the opportunistic investment climate that is about to begin. Although 2023 created the challenges we described above, it has also paved the way for the new opportunities we see coming. Some of the signs we have been watching inform our predictions, which include:

Interest rate levels coupled with looming debt maturities will drive sellers to the market and inevitably lead to increases in transactional activity.

• $100B of multifamily loans are maturing into a higher-rate environment, which will create key stressors for over-leveraged and undercapitalized owners. Given the sheer volume of this stress, we believe the resulting cap rates will be driven upward.

• We believe this opportunistic window will remain open for the next 1-2 years at best, given our review of supply/demand forwards. New build activity has stalled due to challenging economics given the general inflationary environment and higher cost of borrowing. We believe that we will enter a period of historically low supply post-2025 once newly delivered supply is completely absorbed.

• We have identified and targeted new markets in the Midwest that have been “under the radar” for quite some time and we are looking forward to sharing an update on exciting plans and relationships we are building to capitalize on these.



New construction that are being delivered now and the high-end premium product in the market are feeling the most pain in terms of rent growth and concessions. We predict there will be negative rent growth in certain markets and pockets for the higher end product.

• Thankfully we are invested in more defensive workforce housing and believe there will be continued modest market rent growth in that segment. Having said this, our current rents across the portfolio are still well below market, given our acquisition strategy targets assets owned by sellers that did not optimize or grow rents. As a result, we will continue to experience outsized rent growth for the next year or two subject to property-specific details, until our rents are in line with market comparables.

• We are exploring the sale of a few of our assets to take advantage of the buildup of equity demand, which is especially high in regions where we have invested. We see this unique window as an opportunity to redeploy our capital into newer and better assets during this coming cycle.



We will continue to share updates with you as these events unfold, in the meantime keep an eye out for new deal announcements (coming soon) and our rebranding launch.