Q2 2020 Apartment Investment and Management Co Earnings Call
<unk> second quarter 2020 earnings conference call.
Participants will be in listen only mode.
Can you just before we take away conference specialist by pressing Star key followed by zero.
After today's presentation there'll be an opportunity to ask questions.
And.
Then one on your Touchtone itself.
I would draw your question. Please press Star then too.
Please note. This event is being recorded I would now like turn the conference or at least until please go ahead.
Thank you and good day.
This conference call. The forward looking statements, we make our based on management's judgment, including projections related to 2020 expectation.
These statements are subject to certain risks and uncertainties description of which can be found in our filings.
Actual results may differ materially what maybe just got today.
We will also discuss certain non-GAAP financial measures such as asset though.
These are defined and reconciled to the most comparable GAAP measures in the supplemental information that is part of the earnings release I wished on Inco's website.
Prepared remarks today come from Terry Considine, our chairman and CEO.
She's Campbell executive Vice President in charge of property operations.
Oh executive Vice President in charge of redevelopment and told them, our Chief Financial Officer.
Other members of management.
It will be available during our question and answer session.
Prepared remarks, well now turn the call Terry Considine area.
Thank you Lisa.
That's good for your interest in Immco.
Second quarter economic contraction was most abrupt most severe U.S. history.
Resilient business absorb that you blow and it's not recovering from the shock.
And the locked out of the economy.
Good morning case, an anchor leasing was cut in half.
And weeks later in May we were behind plan by thousand remedies.
In June we saw an increase in customer breaking leases because of job losses and other financial problems.
Increased demand on the excellent work horse I team produced about 100 leases that ahead of plan.
Shortfall at 900.
In July early terminations continued.
The demand remains strong.
Leasing towards rose, 20% year over year.
And we finished the month 225 leases Yep ahead of plan.
Year to date shortfall at 675.
Just trying to continues cheap expects the bottom in monthly average daily documents, you well either this month or the month before.
In all this season is ops teammates maintain their usual high standards for customer selection.
Yeah, we're concerned and so once were carefully adjusted.
But there were not panic and across the board rent reduction.
Your carefully building a high quality rental which will make a solid foundation for 2021.
It's increasing consumer demand west restarted at a measured pace.
Some of the short cycle redevelopment, which have been paused in March.
Wes and his team also put the finishing touches and park was taken bolder and continued five motorcycle development and redevelopment.
Which when stabilized glad about $30 million a year to net operating income.
In the transaction market.
Actively closed in March.
And is good.
Increasing.
In May and go close the sale of a property in northern Virginia.
In July except to the hard money deposits for the sale of the second properly.
In both cases prices are I had a year ago values.
Ensco's balance sheet designed at times of uncertainty in mine.
I mean, taking place.
Our leverage consist primarily of single asset property debt.
We are highly liquid currently has over $1 billion cashing committed credit.
Income team the foundation of our success adapted to ever changing work environments, including enhanced safety procedures and remain committed to excellence and serving our customers and each other whether in person or virtually.
As we look ahead to the second half of 2020 remain cautious.
Wary of elevated unemployment and the recent resurgence in coated cases.
Perhaps most concerning it's been the assertion by government at all levels.
Power to disregard constitutional protections and personal liberties private property rights same Steve contracts.
I mean, it without concern for the liabilities encouraging our consideration of the damage done to the economy on which all depend.
So when you an uncertain times I.
I like the stability of Mancos high quality diversified portfolio.
Discipline ineffectiveness of in cooperation.
Safety and liquidity them to balance sheet.
And the commitment that capability by Immco teammates down together by our culture of customer focused personal responsibility and working together.
And on that note I'm reminded to thank you again my aim to teammates.
Initiative and hard work and the difficult circumstances in the past 15 weeks.
Since admission to provide homes for others, you're a culture of caring courage and commitment.
My respect affection and gratitude.
That will turn the call over to Keith Kimmel had a property operations he.
Thanks Terry.
I'd like to start my thinking our entire team for their ongoing commitment to serving our residents.
Together, we navigated a challenging quarter with disruptions to demand increased unemployment.
And I'm predictable regulatory environment.
Despite these obstacles nothing has changed in our operating philosophy.
The best results come from residents, who are meticulously selected provided exceptional customer service.
We continue to optimize our business using data to solve each problem the tailored approach.
And we avoid one size fits all solutions in short term fixes.
Looking ahead I see reasons for optimism.
Residents will continue to pay rent.
July leasing volume exceeded last year turnover remains low and our disciplined in innovative approach continues to drive lower expenses.
The best measure of our core business is residential net rental income.
Which was up 1.1% in the second quarter.
Average daily occupancy was 95.5% down 140 basis points from last year [noise].
Great Great work, but remain positive.
Good news new lease rates down 2.4%.
No rates up 5.1%, resulting in blended lease rates up 1.8% 200 basis points behind 2019.
Offsetting the residential revenue growth bad debt expense was 160 basis points, and we had headwinds in commercial and fee income.
This resulted in same store revenue declined 1.1% from the second quarter 2019.
Controllable operating expenses were down 6.3%.
With roughly half of the decrease due to improve sapping efficiency and better turnover performance.
Once was related to timing of property repairs, which were slow during markdowns.
Savings were offset by increased taxes and insurance, leading to total expenses down 40 basis points.
As a result same store second quarter net operating income decreased 1.4% year over year.
As I mentioned earlier, our philosophy is unchanged and begins with customer selection and satisfaction.
Based on 15000 surveys in the second quarter customer satisfaction. Once again 4.3 out of five stars.
Our satisfied customers live with us longer leading to our lowest turnover.
At 40% you pick up 500 basis point improvement over last year.
Now turning to July.
As Terry mentioned this brings economic class created a shortfall the thousand leases to work plan.
July leasing pace was 20% ahead of last year and cut the gap by more than the third.
Average deal the occupancy for the month was 93.8%.
Given the frictional vacancy peak leasing season occupancy will likely remain low through labor day.
July pricing has been mixed with new lease rates down 5.6%.
Renewals up 3.4% and blended lease rates down 1.1%.
We saw the most pressure in Los Angeles in Miami, well, Washington, DC, Boston, Denver, and San Diego, All had positive blended lease rates.
Lastly July collections were in the high Ninetys consistent with recent months.
Our operations team has been no for times like this in mind and while we expect more choppy waters ahead, I'm confident our team's ability to deliver outstanding results and with that I'll now turn the call over the West power Executive Vice President of redevelopment Wes.
Thank you Pete.
During the quarter Aimco remain focused on the construction and lease up of our active long cycle redevelopment projects.
In addition, we restarted select short cycle projects and property upgrades after pausing those efforts earlier in the year.
I'll provide a few updates on second quarter activity and further details can be found within our release.
At Park Mosaiq in Boulder, Colorado, where construction was completed earlier in the year, Keith and his team at least 84% if the property and are on pace to reach stabilized occupancy before year end.
At seven no seven Leahy in Redwood City construction resumed in early May following a five week county mandated work stoppage.
To date, we have delivered 43 homes, 77% have been leased and we anticipate the remaining goes will be delivered this fall with occupancy stabilizing early next year at the Fremont and the answer its medical campus 86 homes have been delivered and about half of those have been leased here. We expect the remaining units can be completed around.
Around year end and the lease up to be completed during 2021.
Our townhome project in L. Hurst, Illinois continues to perform well with 23 homes delivered today and more than 90% of those already leased.
Instruction is on track to be completed in Q4 this year.
Our final too long cycle projects, the prism in Cambridge, and the North tower at Flamingo are scheduled for delivery by the middle of next year.
The cost to complete these long cycle redevelopment is approximately $150 million an amount equal to just 1% of Aimcos. Most recently published JV.
In the second quarter Inco resumed select short cycle redevelopment projects and property upgrades.
While our pace of investment will be governed by market demand and rental rate achievement. Our current forecast assumes approximately $25 million of investment between now and year end.
As always the Aimco redevelopment team continues to explore new opportunities core value, creating investment, though we are mindful of the increased uncertainty in today's market.
With that I would love to offer special thanks to my Immco teammates for their continued dedication and positive results over these past few months.
And I will now turn the call over to Paul Beldin, Our Chief Financial Officer Paul.
Thank you Wes.
Hey, I will discuss aimco strong balance sheet second quarter financial results and how we account for bad debt.
First infill completed the financing activities discussed our May conference call.
We capitalize on current interest rates and bolstered liquidity by closing 689 million fixed rate property loans generated $370 million of proceeds.
Financings have a weighted average term to maturity of 9.3 years at a weighted average interest rate of 2.9%.
They lowered the weighted average interest rate of Aimco leverage to 3.69% address all 2020 maturities and increased liquidity and reduced refunding risk such that Aimco committed credit and cash on hand exceeds 150 million dollar cost to complete continuing law.
Cycle redevelopment and development plus 960 million of debt maturing the next 30 months.
Well inco's balance sheet provides flexibility in abundant liquidity leverage as measured by leveraged to EBITDA remains above targeted levels.
We plan to reduce leverage to less than seven to one to the lease up of the five long cycle projects mentioned by Wes after approximately $350 million of property sales.
Half of which have either closed or under contract.
Given aimcos abundant liquidity, we have plenty of flexibility on the timing and pricing of property sales in may and Copel. It was on the sale of an apartment community located in Annandale, Virginia at a price of 58.9 million.
And in July and could agreed to sell community at a price of 126 billion with a $5 million deposit at risk to guarantee the purchasers performance.
Both of these properties were priced at more than 3% above the prior year estimate a gross asset value.
Now on the income financial results.
Second quarter pro forma Fo 63 cents per share was up 5% year over year and AFFO of 55 cents per share was up 8%.
The results included four cents per share of interest accrued on the mezzanine loan made to the partnership owning part preset apartments in San Francisco.
The accrual is one provided for in the loan to required by GAAP and three secured by more than $300 million, a borrower equity junior today pillow.
Our results are after subtraction of five cents of cold weather related costs, a summary of which can be found and answers earnings release.
Next I'd like to spend a minute discussing the incorrect collections and bad debt.
Residential revenue includes apartment rents and also such items as storage rats are paying rent and related fees only by residents.
Residential revenue comprises 97% of Aimco revenue and its recognition is based on the same policy described in our May earnings call.
The second quarter Aimco recognize 98.4% of all residential revenue treating the balance of 1.6% as bad debt.
Of the 98.4%, 97.2% was paid in cash.
70 basis points subject to recovery by offset against cash security deposits and $1 million or 50 basis points is considered collectible based on Aimco review of individual customers credit.
In July infill also recognize 98.4% of all residential revenue treating the balance of 1.6% as bad debt.
Over 98.4%.
95.8% was paid in cash 30 basis points subject to recovery by offset against cash security deposits and 1.6 billion EUR, 2.3% is considered collectible based on Aimco review of individual customers credit as typical we expect you talked about half during August.
And $800000 remaining remainder in future months.
Lastly, Aimco board of directors declared a quarterly cash dividend of 41 cents per share for the quarter ended June Thirtyth 2020.
5% over the regular quarterly dividends paid in 2019.
With that well now open up the call for questions. Please limit your questions. A two part time in the queue operator, I'll turn it over to you for the first question.
Thank you [noise], we will now begin the question answer session.
Question I Press Star then one on your Touchstone so.
If you would like to withdraw your question. Please press Star then too.
Our first question will come from John Kim with BMO capital markets. Please go ahead.
[noise]. Thanks, Good morning, I'm, just looking at the sequence of occupancy and not the gorilla glass four month or both.
Rental revenue or rent and occupancy decline each month.
So I'm wondering now which one are you prioritizing to maximize revenue.
Hey, John it's Keith.
I I would say neither [laughter] because what we saw students total contribution and so at the end of the day, we think that it's a combination of both occupancy rental rates and turnover that finds its way to the bottom line and margin and so what we do is in its also really market by market and you find one market like say.
San Diego that is running at 97% together very specific strategy, there and we might have a different strategy in northern California, or Miami, where we're feeling more rate pressure. So.
That's that's how we're approaching it.
Okay, and then the 1.6% of bad debt I was wondering if you could provide.
Any color that too.
Product type or geography, where this is usually high and also how comfortable do you feel on the collectability of the kind of based on the credit profile, you mentioned, Paul that 50 basis points second quarter them up to 2.3%.
In July so I'm just wondering yeah.
That number going up is it more at risk are being.
Good.
Thanks for the question, John I'll start and I'll see if Keith wants to add anything starting with the second part of your question first on the collection is what you see is that in July we collected 95.8%.
July rent in July that percentages on top of what we experienced from April through June for collections in the month of billing and so the differences between our total second quarter collections and our dry collections is the passage of time and we expect as time continues to pass will collect more and more than July rent I'll leave it ultimately about 1.6.
<unk> percent uncollected and that analysis that we did was based upon our past history of collections with tenants that have had similar credit profiles are guarantors with similar credit profile and so we feel like this is a a an appropriate approach and really one that I think will serve us well because if you look back to where we've had more time to collect our rents and looking at him.
Yes that are outstanding has a few too it's only a million dollars and so that's only 50 bips of our quarterly revenue. So we feel quite good about our approach.
[noise] Keith anything you can supplement that well I was I would just add up all John you had a question just sort of how we're seeing it across markets and are the most pressure we're seeing isn't into that I would point out one one being Los Angeles, where there's a greater influence of what I'd call regulatory or or city impacts.
Decisions around those areas.
And then the second one I'd point out would be Miami for us and that's more of a employment related.
Where we have a greater hospitality sort of influence in that marketplace. So those two stood out but but you know on the flip side of that we see some dark best collections coming out of places like Northern California in Denver as examples where I've got one was very little to no impact whatsoever.
Correct.
[noise] and the next question will come from Jeff Spector with Bank of America. Please go ahead.
Thank you. Good afternoon. My first question I wanted to focus please on the pickup in demand you saw in July you said I believe you said that leasing volumes were higher than last year.
But you know you continue to see early terminations I guess can you talk a little bit more about that demand.
Is it.
That.
Particular pricing a beaver C and no. When you survey these folks where where are they coming from if you could give us some some color on that thank you.
Hi, Jeff I'll I'll take that you listen it's hard to say I think there's certainly been some level of pent up demand where are you may have had individuals who may have been into locked down or shelter in place, who who are coming out of that situation. I'd also point to that we always see a pickup of demand. During this time of year. So this is.
Peak season for us and we see it and what and what we're happy to see is is that its outstripping previous highs and so the 20%.
Our performance has been.
Frankly across the board we've seen it almost in every market in almost every price point.
And we continue to believe that we'll see some of that as it goes through the balance of the summer and we're looking forward to continuing to make up a ground there.
Okay, so no market differences or or pricing differences.
No no one in particular I mean, there's no question that as we look at it we've seen our suburban portfolio performed more you know stronger than than some of the urban.
Assets, but even in those urban places a you know I gave an example in Los Angeles over the past couple of weeks, we've seen a an acceleration of leasing activities that have been picking up so.
You know is as you think about how the impacts of coal going across the country are very particular to each city, they sort of going ebbs and flows. We also see the same type of activity was asked where as things change, we see pickups, where the consumer I still has to live live their lives and take care of their.
Theres circumstances.
Thank you and then my second question I wanted to focus please on the transaction markets I know you're it sounds like I believe you stated 350 million to sell half under contract.
How aggressive bill you need to to be.
To push those sales along I mean, what are you seeing on cap rate front and you expect cap rates to remain stable here I see some very low financing rates.
And your sector, you know due to where I guess what does your view they are on both of those please.
Yes, it's tight and I'll take that we see lots of demand, we see lots of interest and we're.
Selective and looking for good price realization on the ones, we have for sale, but I think that low interest rates have offset the economic turbulence.
Thank you.
[noise] Austin Wurschmidt with Keybanc capital markets. Please go ahead.
Hi, good morning, everybody and thanks for taking the time I wanted to go back to John's question on on pricing strategy and certainly appreciate the answer that that each markets a little bit.
Unique right now, but I was curious if if you are targeting you know any type of average portfolio occupancy just just overall and if demand or traffic where to slow more than historical seasonal trends would you intent would you continue to let occupancy slide or is there.
Or a level that you're not willing to go below and and you would you know maybe let revenue management takeover and have to to cut rate further.
I'm often asked keep.
Ill take it and maybe I can add some additional color to to John's question that will walk through it.
I think that I think the thing I want to make sure that.
We focus on is that we're playing the long game, if we sold to the bottom line total contribution margin and in so maybe I can walk you through sort of where we're at today. We're at 93 eight.
Physically occupied if you go back to the prepared remarks, and we're talking about the 675 leases that were still closing that represents about two and a half a percent of occupancy. So if you put those pieces together that puts us in the mid 96 is and also what I would just say is is that this is the time of the year that by design we.
You have more frictional vacancy and so that really isn't anything that were put off by and it. What we focus on is is we want to be having a steady hand as we approach. This and there were not really want to make we think the quality of the residents not having short term fixes.
Short term leases things that today would say, what we feel more highly occupied but we're going to pay for it later or have some other challenges as we look forward.
We know that we're gonna if we're going to fight through this is the balance of the summer, but we believe that will benefit from these decisions in the way we're approaching it over the next 12 to 24 months. So we're making decisions over time, and we're just really not willing to compromise against our convictions run resin already or any of those other things and so you know Austin revenue manager.
I mean, it's like a thermostat on a wall well, while if you could set in certain ways. We have individuals who put their hands on this every single day, making decisions building by building unit by unit and at the end of the day, we're very comfortable about where we're at and we believe that as we work through our call. It through labor day, we think that we won't be mudding through this that will start.
Seeing some acceleration in blue skies and front as we get into the ended the year.
Understood. Okay. That's helpful detail there.
Appreciate that and then as it relates to leverage and dispositions I was wondering if you could bridge the gap between the 750 million you flagged to us last quarter with Paul I think you mentioned 350 million in your prepared remarks, and how that gets you down to the target leverage is.
1.0 times and I'm also curious if that assumes that you have no additional funding on the redevelopment pipeline or no no future starts once that 30 million of incremental NOI flows through.
Yes. Thanks for the question Austin, and I think I'll, maybe start more broadly around leverage in general and what I'd like to just say is that we're very very comfortable with our leverage.
We have as I mentioned in my prepared remarks.
We have no remaining 2020 maturities our maturities during the next four years through 2024 average only 260 million per year. The LTV on those properties is about 33% such a low LTV that's readily refund asphalt.
And we don't have any have covenants that are tied leverage so to a certain extent leverage is a a numerical outcome of of your debt level than your EBITDA and so we don't feel any pressure at all to sell assets at a quick pace or a discounted price in order to achieve a number of what we're really focused on is the safety of our balance sheet.
And we feel like their balance sheet is very very safe at its current leverage level now with all that being said our leverage EBITDA is higher than the peer group, but we'd like to be more in line with peers, but we're going to take a very measured and disciplined approach at getting to that that level and so I outlined was away that we would get to seven times leverage.
And a you know we could end up going lower it stopped doing it presents itself, but if we end up at seven times, we're very comfortable at that level.
And then can you can you bridge the gap from the 750 last quarter 350, what what changed in your assumptions.
I think that the conversation last quarter around that 750 that you may have noted down was really kind of a in response to some questions about how does our sales volume change with the reduction in capital spending. So I think that was more of an example, rather than a target.
Got it okay. Thank you.
[noise] and the next question will come from Rich Anderson with SMBC. Please go ahead.
Hey, good good morning out there everybody. So that keeps you made a comment that auger pairs of made about urban suburban moves.
Are you seeing any of that with in the aimco portfolio or you're talking to people like if there is there they want to move out of the urban center, but you have this option or you are you having those types of proactive conversations with your test and turn the you know some lemons and eliminate.
Rich great question for years, we've had a program called coast to Coast program.
And then something that actually win win residents move and we immediately let them know not only about how great communities or that they are at but we know that lives circumstances change and that we help them realize that we can help them do a transition to other parts of the country or in this case as you described if someone's an urban environment wants to be in suburban or vice versa that we help us.
Militate that so it's always been part of the way that we approach our business and we continue to do that today.
Okay, great, but no no no more.
No nothing more in terms of that effort, it's sort of status quo.
All right for that in that category. These days.
Maybe maybe but I can give you. The particular riches is that we call every single one of our residents individually one by one due to understand their circumstances and so if someone to having a challenge.
And so you know when we think about when people give notices and they give a maybe a self reported reason for what they're doing well, but our efforts are around is having a personal relationship one on one going to each every one of them, saying, what's really driving it what's behind it and and how can we help facilitated so I would say that that's the color.
Thats in addition to maybe something that would have been different.
So some period I agree.
Good question is.
So.
Perhaps saying this specifically, but maybe this second quarter is sort of a a trough period as you. As you described you get beyond Labor day, and you start to feel a little bit better who knows right. We all know how this environment happens, but everything that we're talking about here a lot of at least is present tense observation of what's happening.
July.
I'm wondering if you know can you make a comment.
About how how this could perhaps the trough or does it.
The the changing dynamics the geographical footprint of of the covert 19, and how it's affecting now different parts of the country is that causing you to perhaps having a net sort of neutral perspective about how things are changing but that some markets are now becoming more on the radar screen and some are coming off the radar screen or are you.
Are you sort of seeing you have any kind of color from that standpoint.
[noise] rich, it's Keith I'll I'll give you my inside and then I'll see you Terry wants to add a little maybe.
Additional.
I think you have an exact Ryan that is is that it is a changing dynamic and in my prepared remarks, I talked about how we're seeing improvement, but but we're not going to confuse ourselves that there's likely to more choppy waters ahead, we just don't know where that might come in so whether that comes from you know some other flare up or some other change.
Those are things that we're going to be prepared for and we're ready to deal with and so an example of that is I think about our San Diego portfolios is running at 97% plus occupied.
As had very little impact on some of the things that that a a place like Los Angeles is that as an example, workplace like Miami and so we're not going to confuse ourselves and just can't.
Well into different places across the country and we also see reemergence of strengths.
I'll point to our DC in Boston suburban portfolios that are gaining strength and we can see them building occupancy and coming into a better position is we're coming through the peak season. So.
I I think the point is is that isn't the trough.
As as we sit here right now without information, we see a path in which we're going to have to month through a couple of.
Periods in front of us as we get through the end of Labor day call. It and then we can see things getting better, but but we also aren't going to be caught off guard if something changes along the way.
Thats right, but I would add yes, but I have it enriches.
That I just teeth. Keith example shows you it's partly the economy is partly local regulation.
San Diego in Los Angeles, or 100 miles apart, but because of local regulation you have different consumer behavior in different outcomes.
And so what.
We have to.
Forecast at this time is partly disease, partly the economy and partly what local governments will imposed on us and it's just it's a uncertain time, we feel it's great to be diversified unbalanced, we feel comfortable but.
Each of those problems could occur at any one of our markets.
Okay, great. Thanks, Terry appreciate that girl.
Yeah.
[noise] Mr. Joseph your line is lives.
The operating performance versus underwriting in the second quarter.
[noise] I I we.
I have to believe it's Terry we have to blades that they are subject to the same pressures and so forth that we are and that the economy. The impacts of regulation in the city of San Francisco I have to make an a turbulent time.
We're not really in a position is creditor to to comment on their operations.
Although edge as their debt is publicly held some of that is publicly available, but what I can say is that we feel secure we feel that it's a great piece of ground and in a wonderful city and we're very comfortable that either they will perform or that are remedies will make it an opportunity to frame.
Uh huh.
Thanks.
I guess, if anything changed from one Q because I guess in the first quarter release, you you put out that there was 98% of underwriting.
So I was hoping to get that statistic for the second quarter given the disruption.
You know I don't I don't have that available to me right here, but yet as I say.
Any operator in San Francisco, probably had a tough the second quarter and.
As a debt holder that doesn't immediately affect us are directly affects.
Okay, well that maybe just in terms of the cash payments for taking the first quarter, you're seeing 600000 restaurants acquired or was there any cash received in the second quarter was it all crude.
Comes out electrode at which is permitted under the no.
And when would you expect cash payments towards them.
I I don't have the same answer as before as to the uncertainty in the future, but again I feel that as the debt holders were very secure position.
Thank you.
[noise] and the next question will come from John Pilevsky with Green Street Advisors. Please go ahead.
[noise], Thanks, a lot.
Just a one of the follow up on your comments around muddling through and I know.
I know certain operators are pulling a concession lever harder and certain they're letting occupancy slide and everybody's going or levers to different degrees, but in your in your mind as motherly muddling through these next few months is that should we think about that as holding the line on occupancy, but giving up on effective rents and so.
Rental rates keep deteriorating, but oxys flat is that kind of the balance that you have in your mind right now.
[noise].
John what I'd say that we're not afraid of the occupancy that were at if we make the right trades that finds its way to the bottom line and total contribution so what I'm trying to.
Convey is is that.
There wasn't a world even six months ago that at 93, we would have said this is what we would expect but but we are where we are and what we were very comfortable with is our approach and so I.
I don't want to solve that we wake up to say listen we have to be at 96 or 97% occupancy at all costs and because we believe that if you make those decisions that you will live with those as an anchor in rate for much more than a single month. It won't be it will go over time. So we're trying to balance with what are the market pressures around us.
If you're thinking about concessions, we think of effective rent. We think those are just marketing tools about what is that the ability and desire of of a consumer and what the we're willing to pay and we own a balance all those things and ensure that that a as we come out of peak season that were in a place of strength and you know we can always be better John when I look back.
On things, there's always a an opportunity to fine tune something but I would not a change our approach.
And we're going to continue to do that and we think there there's a the that's the modeling part through the next call. It 45 plus days.
Yeah, No I'm, just trying to understand the market health and so broadly market rents in market occupancy and determine you know trough and floors getting thrown around a lot and industry. So when you put it all together aggregate pricing power, which markets are these next few months do you guys not see.
Any kind of visibility on a trough, which markets are still in the early into deteriorate in you referenced a few markets that have improved I get unless it's less aimco specific is there a floor in the bay area right now is their floor in L.A. different operators have different opinions on that aggregate pricing power question.
It's a good one John let me, let me give you a couple of insights on that particular one.
One one that I don't think we have complete clarity on is the is the bay area, but but let's divide it because the bay area, where we don't have complete clarity as an insulet them on when we looked at the East Bay and we look at San Jose That's not an issue I don't think we're beyond the trough and we're seeing strength, but in the Bay area.
And this will in particular, you know we definitely see much more significant pressure there in Los Angeles I would say I would also separate those from those that are in mid Wilshire to those that are in our recall is Simi Valley Ventura County sort of places like that in mid Wisher I'd say in the last couple of weeks, we think we hit the bottom because we've seen something.
Acceleration, we're seeing an uptick but it's early days on that so I don't want to call. It that were out of the ones yet there's there's a lot of work can be done there.
I I My my point to Philadelphia, as an opportunity that continues to improve but but we're not through it completely.
San Diego is strong Boston strong DC is wrong. There. So it's just each one is a little bit different and so I don't think you can put a blanket answer against at all.
Understood. Thank you very much.
Yes.
And the next question will come from.
And that's something that.
Yes.
Okay.
[noise] hi.
Well that's true.
Yes, California regulation right now how are you guys approaching.
On the lots in them.
Loggers upwards with quality government there.
[noise] Alex this is.
Terry and I'm joined here by calling Patti Schrader, who is on the middle of all of those efforts and had was last time and can answer.
Betting.
Are we doing in the election in California.
Thank you that you're speaking about top 21 is on the balance and the large coalition as last time is mobilize to fight it raising money working hard we think we're actually a better position. This time because number 110 was defeated by 20% less and a couple years ago, California.
And we passed it before teenage kids, which is the rent control panel, which caps ran it.
<unk> plus five.
I see pie for 10 years at that provides a little cover and as I said he.
Hi, mobilizing there's over 100 different groups that are supporting this including those that didn't support it last time I suppose it last time I should say NAACP building trade Ironworkers and labor. So it's a pad coalition, we're working hard to know there will be successful yet.
Got it thank you very much and.
[laughter] Walt.
One of your reported a lot of.
Allen's version, you were able to some revenue growth, but just what caused that puts us in that area why.
Going up.
Alex This is Keith.
We saw as our suburban portfolio in Boston really outperformed and so we saw similar pressures when we look I'm you know in the city, but we have a smaller footprint there and our suburban portfolio really.
Play to our Springs.
So thank you.
[noise] spend the next question you must come from.
No seen chest with Mizuho. Please.
Please go ahead.
Hey, thanks.
So or.
Another month related question you keep the same store revenue.
Between your top and bottom up this quarter Seattle delay was about.
That's over 70 basis point okay.
You think that spread widened out further.
And that's what it maybe you can stuff some of your Seattle portfolio positioning and what's driving the better relative performance there.
I know you have a lot of high rise more price yet that there, but I'm curious if what we're seeing between markets is reflection of between label more suburban or more people, Seattle and more and more a high right now thanks.
Thanks, and ill first I just pointed our Seattle portfolio is really just two buildings and so a while a it's a it's a nice marker.
Look at the growth the contribution is quite small as we thinking about the spreads I I don't know that I want to predict with the spreads will continue to be as we look forward, but at the end of the day. What we are seeing is is that you know when we looked at the urban versus suburban sort of portfolio.
The mix, there's more strengthen those suburban markets I'm. We've both in occupancy is in rates and we also see that that can change by marketplace and what circumstances are going on so I'm, just I can't I can't predict the future, but I can tell you that you can count on us that we're going to find a way to to be the best we can never.
<unk> against it.
Got it didn't disclose outlet collection by.
Maybe see price for the portfolio.
And this is Paul we did not but what I can add a little bit of a color and we alluded to it earlier is that right collections have been most challenging in those locations where the local governments have an active provisions that haven't bolden resins not to pay their rent and so.
When somebody does you don't have to pay rent people tend not to pay so that that would be I think I think a an appropriate way to think about it.
Okay fair enough lot Terry.
Perhaps answer one for me.
New on your mind these days with Brickell I know the class you'd mentioned you had been contemplating a range of options, including maybe monetizations or bringing a partner a curious what they're doing new thinking or median when they should be something.
Here thanks.
And the short answer is no.
The last 100 days bin bin action packed and we haven't spent a lot of time on unbearable.
[noise] okay. Thanks.
[noise] over the next question will come from a Rick Skidmore with Goldman Sachs. Please go ahead.
Hi, Good morning. Thank you just to follow up on the development pipeline redevelopment can you just talk about how who is our leasing up and it's been he mentioned 30 million NOI contribution over time, we when you might think that has not happened timelines number. Thank you.
[noise] rickets West Powell here. Thanks for the question I'll have Keith maybe provide a little bit of color on the individual lease up so I hit on a few of them in my prepared remarks.
But but but overall, they're performing in line with expectations. You know as you can imagine some are a bit head ahead of plan and some are lagging a little bit.
Broadly we feel very good about the locations or the customer we are designing for and plan to appeal to.
And the take rate has been pretty strong than the apartments that had been delivered to date I think what you'll probably see is that it may take a little longer to reach some of those stabilized.
No I targets.
But we still feel a good in the aggregate about the value creation.
Any other color you want to add on on the lease ups.
Brick houses you know maybe in context apart mosaic is coming to the end I think Wes West give you. Some insight. We're about 80 84 presented I just put that's 26 units as what's left.
And we feel quite confident that we get to a finish line there by the end year and maybe a little sooner. The Eldridge project in 10, Elmhurst and is the acceptance do it has been quite good I would say that we're leasing a little bit ahead of plan there and we have about 25 units left to finish that one.
Yup.
And then the other ones are just in different degrees of delivery. So seven no seven Fremont those are ones that we're working through a delivery, but the but the absorption.
An example, and seven no seven we're almost at 80% of what units have been a you know delivered so we're feeling good about it theres more work to be done and.
Oh, well keep you posted.
Thank you very much.
[music].
[noise] concludes today's question and answer session I would now like turn the conference over to management for any closing remarks.
Well again, our thanks for your interest tuning tell if either through their questions. Please feel free to call Paul or are keys, or me and a little try to be transparent and answered best we can.
They are choppy waters, but I feel comfortable that we're navigating them and we'll continue to do so so thank you very much.
Thank you. This concludes today's conference.
I would now like you to disconnect and thanks for joining todays conference.
Thank you.
[music].