Basis protection is a supply argument, and you've read it correctly as a five-year one. A $90k per door gap means a merchant builder can't underwrite new product at your price, so your competitive set stops growing until rents rise enough or costs fall enough to close that gap. Over a full cycle that's genuinely valuable, because it's why the recovery in occupancy can run without new deliveries chewing it up. It does nothing for your exit price in year three. Your exit price is NOI divided by whatever cap rate a buyer will pay, and both of those can move against you while the replacement cost gap stays wide. Assets trade under replacement cost for years at a time and nobody arbitrages it away.
The number I'd interrogate is the 4.8% to 5.4% step. That's roughly a 12% NOI increase in one year and it's almost entirely the concession burn-off. It only lands if the two lease-ups within a mile are done giving away rent by the time your leases roll. Deliveries lag permits, so a pipeline down 45% still means competing lease-ups fighting for the same renters through the next couple of years. Pull the delivery schedule by month for the three-mile ring rather than the pipeline percentage. The percentage is a market-level statistic and your leasing office competes with four properties.
Two things eat this kind of underwriting that don't appear in your post. Insurance renewals on Sun Belt apartments have run well above general inflation and can take 40 to 60 basis points off a going-in yield on their own. And in states that reassess property at the sale price, your tax line resets to the new basis at closing, which is a permanent NOI haircut the trailing twelve doesn't show. Whether that reassessment happens depends on the state and sometimes the county, so check the specific jurisdiction.
Also ask what the debt costs and how long the rate cap runs. A three-year business plan on a two-year cap is a different deal than the memo describes.
