Q1 2021 NexPoint Residential Trust Inc Earnings Call
And here are some good.
Good day and welcome to the next point residential Trust, Inc. First quarter Conference call. Today's conference is being recorded at this time I would like to turn the call over to Jackie Graham. Please go ahead ma'am.
Thank you good day, everyone and welcome to <unk> residential Trust conference call to review the company's results for the first quarter ended March 31st 2008.
On the call today, and Brian Mitts, Executive Vice President and Chief Financial Officer, and Matt screening and executive Vice President and Chief and back now.
As a reminder, this call is being webcast and the company's website.
And SRT dot net.
Before we begin I would like to remind everyone that this conference call contains forward looking statements within the meaning of the private Securities Litigation Reform Act and 1995 that are based on management's current expectations assumptions here.
Forward looking statements can often be identified by words, such as expect anticipate estimate may shed and tank and similar expressions and variations.
And before.
These forward looking statements include but are not limited to statements regarding any turnkey business and industry in general and I start Keith updated guidance for financial results for the full year 2021 and the related assumptions, including the effects of tornado damage and Qatar.
<unk> expected acquisitions, and dispositions and shares outstanding and real estate taxes, and <unk> net asset value and related components and inspection.
And included including estimated value attics mandatory debt payments outstanding debt and share count standing guidance from second quarter, 2021 and.
And the related assumptions and value add programs, including projected average rent change and return on investment expected return and just service and unit and expected acquisitions and dispositions. They are not guarantees of future results and forward looking statements are subject to risks uncertainties and assumptions that could cause actual results.
To differ materially from those expressed and any forward looking statement, including the ultimate geographic spread duration and severity of the COVID-19 pandemic and the effectiveness of actions taken or actions that may be taken by governmental authorities and outbreak or true impact as well.
And so as described in greater detail in our filings with the Securities and Exchange Commission, particularly but those specifically described and the company's annual report on form 10-K.
And quarterly reports on form 10-Q.
Listeners should not place undue reliance on any forward looking statements and are encouraged to review the company's most recent annual report on form 10-K, and the company's other filings with the SEC for a more complete discussion of risks and other factors that could affect any forward looking statement.
Payments made during this conference call speak only as of today and see.
And except as required by law and I start to eat and not take undertake any obligation to publicly update or revise any forward looking statements. This conference call. Also includes analysis of funds from operation or F. L core funds from operations or core <unk>.
Adjusted funds from operations or <unk> net operating.
<unk> income or NOI and net debt all of which are non-GAAP financial metrics and performance of our total debt. These non-GAAP measures should be used as a supplement to and not a substitute for net income loss and total debt computed in accordance with GAAP from more complete discussion of <unk> core F. N. A S. S L.
NOI and net debt due to the company's earnings release that was filed earlier today I would now like to turn the call over to Brian Mitts. Please go ahead Brian.
Thanks, Jackie just seems like that was a little longer than usual.
Lawyers got a hold of that and well.
Well, yes. Thank you are welcome to everyone joining us I'll start with the highlights and commentary for the quarter discuss results and guidance and then turn it to Matt for his commentary on the quarter and outlook and then we will go to Q&A. So I'll start with highlights for Q1, our net income for the <unk>.
First quarter was negative $6 9 million or negative <unk> 27 cents per diluted share as compared to $28 million or $1.08 per diluted share and the same period of 2020.
Same store NOI decreased by 100000 per decrease of 30 basis points as compared to 2020.
We reported Q1 core <unk> of $14 1 billion or 56 cents per diluted share, which is an increase of six 9% compared to the same period and 2020.
Total revenue for Q1 was $51 8 million and total NOI was $29 6 million, which was a decrease from 2020.
And one 5% and one 3% respectively.
And why margins for Q1, 2021 were 57, 1%, which is a slight increase over margins of 57% same period of two points.
We continue to execute our value add business plan by completing 285 full and partial renovations during the quarter, achieving an average monthly rent premium of $163 on 421 lease upgraded units.
Which resulted in a 27% or on during the quarter.
Inception to date and the portfolio as of March 31, we've completed 5543 full and partial upgrades 4364 kitchen upgrades washer dryer installs and 9000, and 422 technology package installs and achieving an average rent monthly rent premium of 120.
948, and $44, respectively, and a return on investment of 21.5, $74, one and 33, 3% respectively.
Based on current cap rates and our NOI were reported in and EV per share range as follows $45.07 on the low end.
$55.31 on the high and with the midpoint and $50.19 user based on cap rates ranging from four 5% on the low end to four 8% on the high and the updated NAV compares to a midpoint of $38 47 at March 31, 2020 or 30% year.
And over year increase from.
First quarter, we paid a dividend of $34 125 cents per share on March 31 to shareholders of record as of March and tea.
The board has declared a dividend per share of $34 125 cents payable on June 30 to shareholders of record on June 15, since inception, we've increased our dividends and 66% and year to date, our dividend was 165 times covered by core <unk> per payout ratio of 61% of cash.
<unk>.
On to some high level comments on the business, Matt will provide a little more detail on his commentary.
By the unprecedented challenges in 2020 and.
And that's our key came through the year and paint and makes it very good shape and.
In fact, we believe the COVID-19 and ensuing impact further per the resiliency of our strategy our market selection, our capital allocation strategy our value added strategy. Most importantly, our focus on affordable housing and sunbelt markets and the resiliency of our tenant cohort.
Net migration into our sunbelt markets, which had been trending positive for a decade plus accelerated during COVID-19 is highlighted by the newly released census, this and cap rates to historic lows and our markets with decreases in population and jobs and these markets competition for Xyrem and product has naturally increased since going public and <unk>.
Our key is both the cost of capital advantage over many of our competitors that allows us to bid aggressively for the best assets.
Additionally, our value add strategy, where we can move cap rates 75 to 150 basis points over three years to five years from acquisition.
US less sensitive to absolute cap rate levels.
The ongoing and widening shortage of affordable housing and U S, which is most acute and our sunbelt markets and getting worse as new household formation outpaces, new housing supply and it gives us plenty of runway to continue implementing our value add strategy across existing our existing portfolio and new acquisitions and increase.
Increased net migration, coupled with and the shortage of houses allowed our portfolio to achieve all time high Occupancies and sets us up to aggressively push rates for Peter and the year, while maintaining these high occupancies.
Because demand for our renovated product.
We will be able to replace nonpaying and tenants with new tenants over time is necessary because the book.
And moratorium and the current environment also allows us to sell at a premium assets have been fully renovated and will likely underperform compared to other properties on our portfolio and redeploy that capital freely into new value add opportunity.
Let me talk about collections for just a second.
Kind of focusing on the governmental assistance.
Through March 31.
Since the beginning of the pandemic, we received $1 1 million of government assistance or more correctly, our tenants have which is being used to pay rent.
And through March 31, we had been approved for but not yet received 615000 of governmental assistance and through March 31, we were requested but have yet to get approved 356000 of additional.
And governmental assistance so.
And we fully expect that to be approved so there's another $1 1 million.
Just right there that we've got and we expect that to increase with the new.
Legislation, that's been passed and starting to filter out.
Well now move to our results for the first quarter total revenues were $51 8 million.
First quarter 2021, as compared to $52 6 million for 2020, which is a decrease of one 5% net income declined or was negative $6 9 million as compared to 28.002 million 20 core <unk> was $14 1 million or <unk> 56 cents per diluted.
Share, which is a <unk> <unk> increase over 2020 and represents a six 9% increase on a per share basis.
For our same store properties encompasses 13564 units across 35 properties same store rent increase was two 2% our occupancy for first quarter 2021 and 95, 3% or sorry 95, 3%.
As compared to 94, 2% and 2020, which is 110 basis point increase.
Same store NOI was $28 3.002 million 21, as compared to 24 million per 2020, which was a 30 basis point decrease.
You go to guidance from.
For the remainder of the year on gives me a quick note on our same store results in comparison to Q1, 2020.
And the various times during the first quarter of 2021 with up to 90 per units across multiple properties that were down due to casualty.
And he is down units were down as a result of the winter storm in Texas during mid February which is a rare event.
Under our convention for determining and same store properties. If you don't remove individual units of our operational one period, but non operations and in other periods due to a casualty event.
Like we would with an entire properties and on an operational and due to casualty. For example, cutters was completely destroyed by a tornado and has been removed from our same store pool and all of its units.
We removed these 90 per units from the first quarter 2020 results. The period over period same store NOI for Q1, 'twenty. One would have been 38 basis point increase over Q1 'twenty <unk>.
Versus the 30 basis point decrease however to be consistent we show our same store NOI with the results of the ninth per units included in Q1 2020 same store results.
So with that let me go to the guidance for the remainder of 2021 were revising guidance as follows.
Core <unk> per diluted share of $2 and 21 on the low and $2.37 on the high end per midpoint of $2 29 per share.
And that represents a <unk> <unk> increase at the midpoint.
Same store revenues increase of four 3% on the low and five 4% on high and with an increase of four 8% at the mid <unk>, which represents a 30 basis point increase at the midpoint same store expenses are flat from prior guidance at seven point some percent on low and.
Five 5% and high end and six 6% the mid <unk>.
Same store NOI, increasing one 8% on the low and five 4% on the high and with a three 6% increase at the mid level, which represents a 60 basis point increase it from it.
With that let me turn it over to Matt for his commentary on the quarter and our outlook and then we'll go to Q&A.
Thanks, Brian Let me start by reviewing our Q1 operational results, although same store NOI was essentially flat from first quarter.
And do a large part to a double digit increase and property taxes, along with a peak high operational comp. We're excited about the portfolio's performance and the positive trends were experiencing is our sunbelt markets hit their strides.
Cash collections remain favorable to innovate and see comps with 99% of Q1 rents collected and 97 eight per cent collected for April.
While federal stimulus and local rental assistance programs.
Ryan just mentioned have helped overall demand for upgraded affordable housing and the Sunbelt continues to register at historical highs.
Population inflows into sunbow into our sunbelt communities have never been stronger and the history of our company and that migration from California, and New York continues to dominate our leasing applications accounting for over 25% of our new leases signed during the first quarter with total out of market applications accounts for over half of new lease ups.
On migration and outflows from our markets and consistent resident retention also explained strong operational performance performance during the quarter.
Operationally Archimedes or are experiencing all time highs and occupancy as Brian mentioned, our Q1 same store occupancy ended at 95, 3% and as of April 26 yesterday. The portfolio is 95, 6% occupied and 98% leased with a 93% trend.
These historically strong occupancies and trends are allowing us to materially increase rents and most of our markets.
And so our revenue growth for example exceeded two five per cent and seven out of our 10 markets and Q1 with virtually every market experiencing positive real growth on.
On the leasing front, new leases ended the quarter and a positive three 9% renewal finished at a positive two two per cent for Q1 blended rental growth of 3%.
Q1, new lease growth was strongest and Atlanta, Tampa, South, Florida, Phoenix, and Las Vegas, with each market growing rents by at least five per cent.
Renewals were also positive for the quarter every market, even in Houston and Orlando.
April so far has been even stronger April to date, and we signed over 550, new leases with an average rental increase of 11% with seven markets bumping rents by 10% or more.
Renewals are all positive as well registering at a blended three and 5% growth for April.
On the transaction front for US Q1 was relatively quiet, but the market for our product type continues to be historically strong.
Here are a few examples of marketed deals we participated in during the quarter, none of which hit.
We bid on a deal called Paragon, and Carolyn and 2000 and vintage at value add and Prime Scottsdale location guidance registered a 360000, a unit and roughly a 3% nominal cap rate on in place numbers, obviously, we missed that one.
We bid on discovery on broad at 2001 vintage and value ideal and Durham, North Carolina guidance was for two 5% nominal cap rate on in place numbers and the property was split up so significantly over guidance.
Finally, we bid on a deal called City center on seventh of 2013 vintage asset within one mile of our avant at Pembroke Pines guidance came in at $210 million or 300000, a unit versus our fully loaded value added basis of 233000 units at a on.
This guidance represented roughly a 4% year, one economic cap rate.
These examples illustrate to us what it and attractive by fairways at San Marcos was for US late last year since closing that deal and O I's beating budget by over 16% Q1, new leases were up seven 8% and April month to date are a very healthy 16, 7%.
Turning to full year 2021 guidance as Brian stated, we are pleased to announce a <unk> <unk> increase in copper flow at the midpoint to $2.29 a share which reflects an increase and total revenue by 30 basis points to four 8% primary drivers of this increase were lower vacancy losses due to increased occupancy dip.
<unk> and our renewed ability to charge fees and obtain ancillary income.
On the expense side, we see modest decreases in both controllable and non controllable expenses, while still carrying a healthy property tax budget for the remainder of the year as of today, we still don't have visibility on 2000 22021 real estate tax values for 16 assets and therefore, we are still carrying and appropriately conservative budget for those deals.
Yeah.
Both of these adjustments together with a favorable cough and the second half of 2021 and most importantly, the strong portfolio operational performance trends, we are raising the low end and midpoint of same store NOI guidance to one 8% and three 6% respectively.
And closing I'll reiterate that we're excited about the rest of the 'twenty, one 'twenty and 2021 for these for these reasons and the future of the company as well as a portfolio.
So all I have for prepared remarks turn it over back over to Brian.
Yeah, just real quick before we go to Q&A I think hopefully my commentary and mats.
So the strength of the sunbelt and value add opportunities as well as affordable housing opportunity.
And Ironically COVID-19 just seems to have accelerated a lot of the trends we have already seen.
And I think we've talked a lot about the net migration.
And our calls and Investor presentations, and I think all that's bearing out and presents a very very favorable.
Platform for us to grow and it and the next few years, so with that let's go to the set of questions.
If you would like to ask a question please signal and by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.
And press Star one to ask a question.
Our first question comes from Amanda Sweitzer Baird.
Thanks, Good morning, and all.
And on your comments on your value add program kind of what levels of increases are you seeing in terms of renovation costs and is that impacting your projected rois and all of the day.
Hey, Matt its Matt no.
We're still seeing the 20 plus percent rois.
Q3, Q4 and even.
The first quarter of have remained at day.
21 or higher level.
Any increases due to labor and.
<unk> cost of materials, and there's been a lot of talk about lumber et cetera, but most of our most of our sourcing in terms of materials is done and bolt per BH and their capacity to.
And I get discounted pricing and then maybe.
Any any additional costs, we've been able to pass on to the tenants.
That's helpful and good day here and then what are the drivers of miscellaneous income during the quarter and can you talk about your decision and can put it in and Hawaii and I believe you previously excluded it in the past.
Yeah, Hey man and so it's Brian what was included in this quarter was business interruption insurance related to those down units I mentioned.
And so we included and NOI to get more of an apples to apples comparison to last quarter.
I mentioned, we didn't pull any of those units outs, we're still carrying expense load and Q1 2021.
Although we did get a little bit of offset with the business interruption insurance, but.
Still it's a pretty big mismatch versus what the.
Going rate for those units for.
And the insurance company those are on formulas for calculating that but that's what's included in there and that and that's why we put it in Hawaii.
Yeah that makes sense and when I say, great and then last one from me on the Tennessee property tax rates on that I saw your note on valuations coming down a bit better than expected, but has the mill rate and announced yet or is that go on and area of uncertainty.
And it's still an area of uncertainty but.
There's a lot of forces pulling hopefully and our direction from a from an ownership perspective.
We are cautiously optimistic there, but nothing has been decided yet.
Okay and that is that continued uncertainty delaying your planned dispositions outside Nashville at all on our buyers waiting to see what those property tax increases will be.
Yeah, I think I think the millage rate is less.
It was less of an issue versus the tax values, which came last Friday.
Now that you have some certainty.
Around the values, we can for example to take.
Better clarity on pricing for our.
And the prices.
So it's about 200000 or so differential.
Okay, and then how quickly you guys expecting to be able to get the 93 units down back into service and where these already renovated units are is there and upgrade opportunity is there down as well.
Yeah, there's and upgrade area, where I was mad there's and upgrade opportunity for for most of them because you guys pipe pipe burst or some kind of issue with the interior of that you might as well go ahead and just renovate the whole entire unit.
We think that by.
In July and we should have all and back and force.
Okay and then the last one from me anything in particular, driving the sub 95% occupancy in Nashville, and Las Vegas, given how hot those markets have been.
That's a heavy upgrades anything in particular asset or anything.
Yeah there's.
There's one particular asset and.
And Nashville that drove the.
Drove occupancy there that was brandywine and that was due to.
From some amenity stuff that we had down during during the storms and during the first quarter, there that asset and then.
Vegas, and just kind of a one time thing today, we're I think we're over 95 per cent of occupied there as we sit there today, so and one of our stock markets, we're seeing that migration from California and spin.
Kind of unique great story for us when when most of the most of the folks thought it would be.
And the other way.
Okay. Thanks, guys appreciate it thanks.
Thanks. Thanks.
Our next question comes from John Peterson Jefferies.
Great. Thanks.
On the property taxes I guess my first question is does that does the <unk> results include like your anticipation of the property tax increase in on these Nashville properties and then I was also wondering on the guidance like if you're able to parse out.
I guess the impact of the.
Every four year increase in Nashville to kind of a more normalized.
Property tax increase like what what kind of normalized Opex growth are you guys expecting to see this year.
Just just for Nashville.
Well, I guess and I'm just looking at your guidance and it was.
Is it like positive like five to seven per cent ish somewhere in that range and I'm trying to think if Nash if the four year increase wasn't happening and in Tennessee. This year, what would that number have been.
Oh.
Yeah, I mean, I mean taxes and the first and the first quarter for example.
And Nashville jumped 77% so that it didn't didn't happen and we look at a very different I think overall portfolio same store report reported number.
The guidance does does incorporate.
The changes to Nashville, which we are already carrying a a very healthy budget for.
So there's some modest pick up I think it's about $70000 ish a quarter.
To where we budget and taxes the underlying kind of.
Uncertainty on those 16 assets that I mentioned, we will get clarity on I think eight is between now and the end of next quarter, which should help.
Hopefully give us the ability to.
To tighten that range, even more but overall for our for our midpoint of 2021 guidance that has just been revised we're still carrying and 11 plus per cent increase year over year at the midpoint, so still feel pretty good about where we're carrying and hopefully our ability to to realize from savings.
Alright, and that alluded to it and his his answer but directly answer. Your question Q1 results don't reflect any assumption that we've been making.
For guidance so in other words it was just.
And what we knew at the time, so to match point and saw some dramatic increases and taxes and some of the markets and Q1, and we think will will decline and our guidance.
So so the opex increases are going to get higher from that property tax impact on over the balance of the three quarters of the year and I guess, the upward trend and NOI will be made up for by accelerating rental growth and.
The right way to think about.
No I think the the Opex.
Numbers that we report.
And.
Account for the increases that we think that will get I mean, we take we don't just.
Look our finger and put it in the and the air were net consulting with our tax consultants.
And they are very very conservative so we pushed them and.
Try to try to figure out where we're going to land and that's where we come up with our budget and 2021 numbers and Q4.
And when we don't even have the information so as the year gets better and we're our ability to litigate.
Throughout the year.
Materializes, and hopefully will continue to see from savings but.
And the guidance.
The bulk if you will as a result of Q1.
Better occupancy and and and vacancy losses, and then combined with what we believe to be achievable revenue goals over the course of the rest of the year, which.
It was basically.
Growing revenues by anywhere from 3% to 4%, which store if we we've been able to do and given the net migration and transit both Brian I mentioned.
We feel pretty good about yeah.
Yeah, Okay, and so that on the on the helpful. And then on the revenue side.
I guess, how much more aggressive do you think you can be on pushing rents on renewals this year and I don't I don't know if I missed it but what does the tenant and what was the tenant retention on your portfolio and <unk>.
And 52%.
Was the retention.
The we're being very aggressive what I can tell you and April which are reported added check with our our guys to make sure I was right. When we saw of April numbers because they were.
11 cost per cent, 20% and Florida, we're sending out renewal notices and markets that are.
Strong and experienced in the net migration from South, Florida and Phoenix.
Atlanta, these types of markets and and some cases and noticing tenants 10 or 15%.
And and that way, we can we can replace the attendant with someone that's either willing to pay that for.
Or renovated unit and get and get the 11 and 12% increase in terms of the.
And the new the new lease right this improve so.
I think that's going to continue and may and in June.
Especially if you if you walk around the streets and and these some of these commute agency the virus and the activity. It's it's good to see.
Okay, and then just one more from me I think you guys had 25 per cent of your applications were coming from New York, and California, and I think that's about 50 per cent of your out of state applications and.
And you remind us what those numbers work on a pre pandemics and we can kind of have a.
This level there.
Yes top of that so.
So prepaid and then make at least and 20 Q1 of 2020.
California was.
Eight 9% now it's 19.
New York was.
One 2%.
Closer to attend so.
It's about the trial doubling year over year.
Okay alright, thank you.
Thanks So.
Our next question comes from Buck Horn Raymond James.
Good morning and get.
You haven't mentioned it with the bad debt accrual was for the quarter as a percentage of gross revenue.
And and with the it gets additional assistance, you're you're expecting to come through from government rental assistance, what's the prospect that your your your or what what's embedded and your guidance for a bad debt accrual going forward does that have a chance of of normalizing in the back half of the year.
Yes.
A book.
Q1 bad debt was.
Was about 700 Grand.
And then we haven't normalizing too.
350 Q too.
Hi, $200 and the rest of the year for a total of about 161 $6 million.
Which.
Is is about double of what what it should be.
And then and then 2020 and the whole year was two six.
Hopefully hopefully seen that come down, but still healthy enough.
Of a pro forma number within the guidance that.
They might.
Help us see from savings later and the year.
Perfect very helpful. I wanted to also just dig and a little bit on the new lease rates and the first quarter, just Houston and Orlando and the two that kind of jumped out its negative and kind of curious about Orlando and particular, given the strength of that market.
Anything in particular and and the new lease rates and those markets. That's that's notable.
Yeah, I mean there.
There's really there's really one deal that was the pain and I would say will call and that was the Disney deal.
On the occupancy was a challenge and look latter half of the year.
And we saw and Q1, we bought from occupancy there and got and.
A new lease rates were down three and 5% renewals were positive 50 basis points.
Occupancy then materialize too.
Over 90, 694, and 5% as we as we sit today. So that's that's good and and in April.
Sable was.
Positive by just 20 basis points, and then renewals were were positive by 60 basis points and so in April.
The Orlando market and general perform pretty well, so far new leases are up and April and Orlando at five 4% and the renewals or about 60 basis points, so recovering recovering pretty well there and then.
The one asset and Houston, the just the larger asset and that had.
Some storm related noise was was old farm and that two and April has recovered and the Houston market is positive well at 1.6% per April.
On new eases and 1.2% on renewals.
Awesome very thorough thank you for that and one last one just quickly just.
I'm wondering if you know given.
And given the tightness and the competitiveness of the acquisition market I mean, what's what's the realistic goal in terms of acquisition and disposition throughout the remainder of the year and what do you think's achievable.
The dispositions.
I think I think that we're going to we will transact on beechwood and Cedar this year.
We've just complete our business plan and we're going to make a ton of money there.
And and we're going to look to recycle and proceeds I do think I do think the 100 million.
On the acquisition price.
Is achievable some of the larger deals or cluster portfolio deals that we look at our still.
Tougher and tougher to buy and execute on for for most value add leverage fires, especially gives.
Given the cap right. So I think we're on.
Cautiously optimistic and places like North Carolina, or Phoenix, where we can.
Take advantage of some of our ability to find 100 ish million dollar deals.
And move quickly and decisively given are scaled and these markets and and come up with some good.
With some great properties for our investors.
Oh, thank God.
Thanks book.
Our next question comes from John Mexica Ladenburg Thalmann.
Good morning.
Okay, and Joe I think maybe build and on the.
And the acquisition environment, how sensitive have cap rates and demand and two interest rate fluctuations and and I guess, specifically was there any change and kind of a broader market.
And then it's short acceleration and rates earlier, and this year and they largely been more a function of kind of demand.
Four and I think it's the parents' yet.
Yeah.
And.
Yeah, sure, where you go and so the the spike and interest rates, we thought would create and opportunity for some deals that would fall out.
Do some of the leverage.
And the leverage nature.
Of of value admire that didn't occur.
So the deal as I mentioned and Scottsdale, and we sit on the Paragon deal. That's a <unk>, that's a 3% and place cap right. So when you throw leverage on there you are barely barely breaking even and.
So that's the kind of dismissed scratch our heads but is continuing to be.
To be competitive as we sit today and spreads are coming and a little bit.
As interested as interest rates rise, but.
So far there's.
There is.
50 offers for every value ideal we're seeing this marketed.
Okay, and then maybe going back to the first question on the call.
I guess, how if at all has the calculus chains with regards to rehab budgeting and specifically maybe what has been the cost growth in terms of the inputs for rehab or if you want to take the and burst of it kind of what has been what is the new if at all kind of expectation in terms of rent and you need to get out of rehab <unk>.
<unk> now.
Yeah, I don't think in terms of the the actual.
The actual cost I think it's been pretty consistent the biggest driver of the increases the extent there is an increase.
What I would say is we're just buying higher.
A higher quality larger unit deals.
The average unit sizes.
Eight and 900.
Where feet instead of six or 700 square feet, which just naturally makes you have to buy more and.
More materials, but and.
And all cases without exception.
Not even.
Meaning to knock on wood, we've been able to to pass through the.
The increases to the extent there already and costs and received is.
10, and 12% real increases.
The demand is there, which is which is exciting for us because we're and internal growth company.
At our core and we have another 1500 units do this year. So we're.
And we're hoping we're going to do more and Q2, and Q3 and and plan to and and produced good results.
I guess broadly what has been the increased and kind of input costs.
I think it's I think it's.
It's our decision to go with a higher upgrade higher quality upgrades. So.
Instead of.
Maybe like a vinyl countertop or.
Courts were try and granted some and some cases were doing.
Instead of lack appliances were doing stainless or flow stainless so.
Those those kind of bespoke type of choices that we're making.
And we're making them because we think that the demographic and these sites.
Once that and we will and.
And we'll pay for.
Okay, and then one last detailed question and I know it and much smaller number and attacks, but uhm.
Where do we made me sit and the insurance cycle Uhm and could there be any impact the kind of insurance expense growth given 70 events and this winter, particularly and Texas.
Yeah. So all renewals March 1st so that basically got priced and our renewal meeting the winter storm or as best that they could get and information at the time.
And we continue to pull different levers like.
And trying to take different risks vertical or horizontal within.
And the stack, but it's certainly been a challenge on the last few years has been a lot of events.
Anything and a hurricane era.
Area It gets.
Premium.
Put on it but as with taxes, we do a lot to manage that situation.
And I think with our increasing bulk we're able to to get better pricing and otherwise would be the case, if we are smaller operator.
And.
Okay.
And for me. Thank you all very much.
Okay. So.
Our next question comes from Michael Lewis True Securities.
Alright, great. Thank you I just had a quick question about.
I think Brian and said that cutters it out at the same store pool, you've got a bunch of.
These 93 units at a handful of properties that are not included and <unk>. So when when you get the full year Same-store NOI guidance.
Are these are these units at these specific properties out for the whole year I come back on line. They come back in and do you expect that to be a tailwind R. F. R. A headwind how do we kind of think about those.
And Michael will just real quick just to clarify we do include does 90 per units and the same store pool.
Okay and others.
So as they as they fell back up and that'll be a tailwind tear tears from our growth.
Yeah. So it's.
It's a detractors for Q1 is we compare that to U Q1 and 2020.
Does the 93 units on both.
Unless we're talking about occupancy or something like that but as far as results, it's it's still and that pool.
We did get some of the business interruption insurance occurred four and the first quarter, but not not all of it and then we're still carrying all the cost of those properties. Okay. So it's fridge and the $2 one per cent same-store revenue growth to add and <unk> for example to get up to the the guidance range, which is materially higher.
That's maybe that's a small piece, but that's a piece that will will help kind of bridge that gap.
Correct.
Okay.
And.
And then just.
Lastly from me.
The stock valuations improve your now trading right around the midpoint of your <unk>.
And do you think about maybe issue and some equity and freeing up.
That credit facility, which has been largely drawn for awhile.
Yeah, Hey, Michael I think.
I think we're going to continue to monitor it and.
Is kind of in concert with the plant dispositions.
Kind of the the good news and and sort of.
The opposite side of.
And the acquisition Margaret is the disposition market I think when we just for these deals.
Yeah, I think we'll probably get a little bit more than we thought we otherwise would at the beginning of the year.
So we're going to.
We're going to look to use all the tools, but.
At this at this stage, we don't have.
Any any material plans, one way or another.
And actually maybe I'll ask one more.
Which may be you answered this mostly you can ask a little bit about.
The new lease rates versus the renewals.
I noticed of course, the new lease rates are more than renewals and <unk> and a lot of your markets.
Is that largely a function of what's happened with the with the rehab is doing better.
Or is there another dynamic at play that's cause and those.
Newly spreads to be better than the renewal spreads.
I think it's.
I think it's I think it's some of the.
The renew our excuse me the upgrades, but I think what it what it speaks to more is this net migration and I think that we're seeing the demands and occupancy and people moving to these these sites and these markets that we're we have vacant units.
Our revenue managers are telling us that we can we can try to hit these these numbers.
And sort of a scale factor is is coming in and and we're able to to to push pricing on a daily basis, just given the given the submarkets that we're and we're seeing folks poor and and so I kind of chalk it up to probably more more of the net migration more than anything else.
I appreciate it thank you guys.
You bet.
There are no further questions and the queue at this time.
Right.
Well, thank you for shade and everybody's participation and we'll toss next quarter.
Thank you ladies and gentlemen. This concludes today's teleconference. You may now disconnect.