Q4 2021 Mid-America Apartment Communities Inc Earnings Call

Okay.

Speaker 1: Good morning ladies and gentlemen and welcome to the MAA fourth quarter and full year 2021 earnings conference call. During the presentation all participants will be in a listen-only mode. Afterwards the company will conduct a question and answer session.

Good morning, ladies and gentlemen, and welcome to the MAA, a fourth quarter and full year 2021 earnings conference call.

During the presentation.

Presentation, all participants will be in a listen only mode. Afterwards, the company will conduct a question and answer session.

Speaker 1: As a reminder, this conference call is being recorded today, February 3rd, 2022. And I will now turn the call over to Andrew Schaffer, Senior Vice President, Treasurer and Director of Capital Markets of MAA for opening comments. Please go ahead.

As a reminder, this conference call is being recorded today February 3rd 2022.

And I will now turn the call over to Andrew Schaffer, Senior Vice President Treasurer, and director of capital markets of MAA for his opening comments. Please go ahead.

Thank you Chris and good morning, everyone. This is Andrew Schaffer, Treasurer, and director of capital markets for MAA members of the management team also participating on the call with me. This morning are Eric Bolton, Tim Argo Al Campbell Rod Mill for a Joe for Ikea, Tom Grimes Brad Hill.

Speaker 2: Thank you, Chris, and good morning, everyone. This is Andrew Schafer, treasurer and director of capital markets for MAA. Members of the management team also participating on the call with me this morning are Eric Bolton, Tim Argo, Al Campbell, Rob Delfroer, Joe Fraki, Tom Grimes, and Brad Hill.

Speaker 2: Before we begin with our prepared comments this morning, I want to point out that it's part of this discussion. Company management will be making forward-looking statements.

Before we begin with our prepared comments. This morning, I want to point out that as part of this discussion company management will be making forward looking statements actual results may differ materially from our projections. We encourage you to refer to the forward looking statements section in yesterday's earnings release, and our 34 Act filings with the SEC, which describe risk factors that may have.

Speaker 2: Actual results may differ materially from our projections. We encourage you to refer to the forward-looking statements section in yesterday's earnings release and our 34-Acts filings with the SEC, which describe risk factors that may impact future results. During this call, we will also discuss certain non-GAAP financial measures. A presentation of the most directly comparable GAAP financial measures, as well as reconciliations of the differences between non-GAAP and comparable GAAP measures can be found in our earnings release and supplemental financial data.

<unk> future results. During this call. We will also discuss certain non-GAAP financial measures a presentation of the most directly comparable GAAP financial measures as well as reconciliations of the differences between non-GAAP to comparable GAAP measures can be found in our earnings release and supplemental financial data and our earnings release and supplement are currently available on the for investors page of our website.

Speaker 2: Our earnings release and supplement are currently available on the four investors page of our website at www.mac.com. A copy of our prepared comments and audio recording of this call will also be available on our website later today. After some brief prepared comments, the management team will be available to answer questions. I will now turn the call over to Eric.

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Copy of our prepared comments and an audio recording of this call will also be available on our website. Later today. After some brief prepared comments the management team will be available to answer your questions I will now turn the call over to Eric.

Speaker 3: Thanks, Andrew, and good morning, everyone. MAA wrapped up calendar year 2021 with strong momentum in rent growth, driving fourth quarter results that were ahead of expectations.

Thanks, Andrew and good morning, everyone.

Hey wrapped up calendar year 2021 was strong momentum in rent growth driving fourth quarter results that were ahead of expectations. The demand for apartment housing across our markets continues to grow comparing the pricing achieved on all the leases that went into effect during the fourth quarter on a lease over lease basis rents Jeff.

Speaker 3: The demand for apartment housing across our markets continues to grow. Comparing the pricing achieved on all the leases that went into effect during the fourth quarter on a lease over lease basis, rents jumped 16% as compared to the rents on expiring leases. This is 100 basis points ahead of the performance in the preceding third quarter.

16% as compared to the rents on expiring leases. This is a 100 basis points ahead of the performance in the preceding third quarter.

Speaker 3: We're clearly carrying good momentum for continued strong rent growth in the coming year.

We are clearly carrying good momentum for continued strong rent growth in the coming year.

As outlined in our earnings guidance for 2022, we plan to take further advantage of the strong leasing environment and drive additional rate growth through unit interior upgrades and more extensive full repositioning projects at several communities.

Speaker 3: As outlined in our earnings guidance for 2022, we plan to take further advantage of the strong leasing environment and drive additional rent growth through unit interior upgrades and more extensive full repositioning projects at several communities. Additionally, we continue a steady rollout of a number of new technology initiatives aimed at further expanding our operating margins.

Additionally, we continue a steady rollout of a number of new technology initiatives aimed at further expanding our operating margins.

Speaker 3: We are just beginning to harvest some of the benefits of our new tech initiatives with 30 leasing positions eliminated through attrition in 2021 and another 50 leasing positions targeted to be eliminated by the end of this year.

We are just beginning to harvest some of the benefits of our new tech initiatives with 30 leasing positions eliminated through attrition in 2021 and another 50 leasing position is targeted to be eliminated by the end of this year.

Speaker 3: Our new development and lease up portfolios continue to make solid progress with leasing velocity and rents running ahead of our pro forma expectations. As Brad will outline in his comments, we have several additional new projects that we are expected to start in 2022.

Our new development and lease up portfolios continue to make solid progress with leasing velocity and rents running ahead of our pro forma expectations as Brad will outline in his comments, we have several additional new projects that we are expected to start in 2022.

Speaker 3: The balance sheet remains in a very strong position and during the fourth quarter, Standard and Poor's moved their credit rating outlook on MAA to a positive status. Given the strong earnings performance and robust pricing being captured on property dispositions, we expect to see the balance sheet metrics improve further in 2022.

Our balance sheet remains a very strong position and during the fourth quarter standard and Poor's moved their credit rating outlook on MAA to a positive status given the strong earnings performance and robust pricing being captured on property dispositions, we expect to see the balance sheet metrics improved further in 2022.

Our initial earnings guidance for 2022 outlines in more detail our expectations for continued strong performance from our existing portfolio. The expansion of our new development pipeline and our commitment to maintain a strong balance sheet. Following a 9% growth in core <unk> per share in calendar year 2021.

Speaker 3: Our initial earnings guidance for 2022 outlines in more detail our expectations for continued strong performance from our existing portfolio, the expansion of our new development pipeline and our commitment to maintain a strong balance sheet.

Speaker 3: Following a 9% growth in Core FFO per share in calendar year 2021, we're forecasting a 13% growth in Core FFO in 2022 at the midpoint of our guidance range.

We're forecasting a 13% growth in core <unk> in 2022 at the midpoint of our guidance range.

Speaker 3: Our team of MAA associates had a terrific year of performance in 2021, and I very much appreciate their service to our residents and support to each other.

Our team of MAA Associates had a terrific year of performance in 2021 and I very much appreciate their service to our residents and support to each other.

Speaker 3: And that's all I have in the way prepared comments. And I'll turn the call over to Tom to update on property operations. Tom. Thank you Eric and good morning everyone. Performance for the quarter was once again robust and those trends carried into 2022. We saw strong pricing performance across the portfolio during the fourth quarter. Blended lease over lease pricing achieved during the quarter was up to 16%.

That's all I have in the way of prepared comments and I'll turn the call over to Tom to update on property operations Tom.

Eric and good morning, everyone. Our performance for the quarter was once again robust in those trends carried into 2022.

Strong pricing performance across the portfolio during the fourth quarter blended lease over lease pricing achieved during the quarter was up 16%.

Speaker 4: As a result, all in place rents or effective rent growth increased 10.1% on a year of a year basis. Average effective rent growth is our primary revenue driver and with current blended pricing momentum we expected to continue to strengthen. In addition, average daily occupancy for the quarter was a strong 96%.

As a result, all in place rents are effective rent growth increased 10, 1% on a year over year basis average effective rent growth is our primary revenue driver and with current blended pricing momentum we expect it to continue to strengthen.

In addition average daily occupancy for the quarter was a strong 96%.

Speaker 4: As outlined in the release, we saw study progress from our product upgrade initiatives. This includes our interior unit redevelopment program as well as installation of our smart home technology package that includes mobile control of lights, thermostat and security as well as weak detection.

As outlined in the release, we saw steady progress from our product upgrade initiatives. This includes our interior unit redevelopment program as well as installation of our smart home technology package that includes mobile control lights thermostats security as well as a weak detection for the full year 2021, we completed 6300.

Speaker 4: For the full year 2021, we completed 6,360 interior unit upgrades and installed 23,579 smart home packages. This brings the total number of smart units to 48,000.

60 interior unit upgrades and installed 23579 smart home packages. This brings the total number of smart units to 48000 and.

Speaker 4: In 2022, we plan to complete a similar level of interior unit upgrades and smart home packages.

In 2022, we plan to complete a similar level of interior unit upgrades and smart home packages.

Speaker 4: For our repositioning programs, we're in the final stages of completing work on our first eight properties in the program and have another eight that are underway this year.

For our repositioning programs are in the final stages of completing work on our first eight properties in the program and have another eight that are underway this year.

Speaker 4: The strong leasing activity continued into 2022. Lease over lease pricing on new move in leases for January was 15.4% ahead of the rent on the prior lease. Renewal lease pricing for January was running 17.1% ahead of the prior lease. As a result, blended lease pricing for the portfolio was up approximately 16.3% in January .

The strong leasing activity continued into 2022 lease over lease pricing on new move in leases for January was 15, 4% ahead of the rent on the prior lease renewal lease pricing for January was running 17.1% ahead of the prior lease as a.

All ended lease pricing for the portfolio was up approximately 16, 3% in January .

Speaker 4: average daily occupancy for the month of January is currently 95.9%, which is 50 basis points better than January flash year exposure, which is all vacant units plus notices through a 60 day period is just 7.4%. This is 60 basis points better than prior year. This supports our ability to continue to prioritize rent growth for a well-positioned as we move into 2022.

Average daily occupancy for the month of January is currently 95.9%, which is 50 basis points better than January of last year exposure, which is all vacant units plus notices through a 60 day period is just 7.4%. This is 60 basis points better than prior year. This supports our.

Our ability to continue to prioritize rent growth, we're well positioned as we move into 2022.

Speaker 4: I'm grateful for our team's continued resilience and strong performance. I'm excited to see what they accomplished in 2022. I'll now turn the call over to Brad.

I'm grateful for our team's continued resilience and strong performance I'm excited to see what they accomplished in 2022, I'll now turn the call over to Brad.

Speaker 3: Thank you, Tom. And good morning, everyone. 2021 was a record year for multifamily transactions in the fourth quarter was no exception. We continue to see very strong asset pricing trends across our footprint with an acceleration in pricing in the fourth quarter. Operational performance across our markets is strong, driving continued high investor demand.

You, Tom and good morning, everyone.

2021 was a record year for multifamily transactions in the fourth quarter was no exception.

We continue to see very strong asset pricing trends across our footprint with an acceleration in pricing in the fourth quarter operational performance across our markets is strong driving continued high investor demand beds.

Speaker 3: Bid sheets are deep with winter surviving multiple best and final rounds and offering aggressive all-around deal terms. To date, we've seen no negative impact on asset values from expected rising interest rates and we believe the tremendous amount of liquidity coupled with continued strong rate growth expectations will drive values higher.

Bedsheets or deep with winter surviving multiple best and final rounds, and offering aggressive all around deal terms to date, we've seen no negative impact on asset values from expected rising interest rates and we believe the tremendous amount of liquidity coupled with continued strong rate growth expectations will drive values higher.

Speaker 3: We remain active in the transaction market and are constantly evaluating several acquisition opportunities and believe that as we move further into the recovery part of the cycle, particularly in a rising rate environment, more compelling opportunities for acquiring stabilized and lease-up properties could materialize.

We remain active in the transaction market and are constantly evaluating several acquisition opportunities and believe that as we move further into the recovery part of the cycle, particularly in a rising rate environment more compelling opportunities for acquiring stabilized and lease up properties could materialize.

Speaker 5: New development continues to provide a more attractive investment basis, higher stabilized NOI yield, and higher long-term returns to capital as compared to acquisitions. So we will continue to focus on growing our development pipeline.

New development continues to provide a more attractive investment basis higher stabilized NOI yield and higher long term returns to capital as compared to acquisitions. So we will continue to focus on growing our development pipeline.

Speaker 5: Our pipeline ended 2021 at $460 million under construction and $242 million in Lisa. As we've indicated in the past, the size of our development pipeline will fluctuate due to the timing differences of starts and completions, but we remain focused on expanding our opportunity.

Our pipeline ended 2021 at $460 million under construction and $242 million in lease up as.

As we've indicated in the past the size of our development pipeline will fluctuate due to the timing differences of starts and completions, but we remain focused on expanding our opportunity later in 2022 the growth in our pipeline will be more evident as we expect to end the year with $900 million to $1 billion under construction and $300 million in <unk>.

Speaker 5: Later in 2022, the growth in our pipeline will be more evident as we expect to end the year with 900 million to a billion dollars under construction and 300 million dollars in Lisa

Lisa.

Speaker 5: Therefore, we expect our total under construction and in lease up.

Therefore, we expect our total under construction and in lease up to grow from approximately $700 million at the end of 2021 to $1 2 billion to $1 $3 billion by the end of 2022. This ramp up will include in house developments at two owned sites in Denver, one of which is a three phased site and owned site.

Speaker 5: to grow from approximately 700 million dollars at the end of 2021.

Speaker 5: to 1.2 billion to 1.3 billion dollars by the end of 2022. This ramp up will include in-house developments at two owned sites in Denver, one of which is a three-phase site, an owned site in Tampa.

In Tampa.

Speaker 5: and two controlled sites in Denver and Raleigh. On the pre-purchase side of our development operation, we are in pre-development on the Salt Lake City site that we hope to start in late 2022. Performance at communities in their initial lease up is going well. Absorption is stronger than we expected in rents on average, or five to 13% above performance.

And two controlled sites in Denver, and Raleigh on the pre purchase side of our development operation. We are in pre development on our Salt Lake City site and we hope to start in late 2022.

Formats at communities in their initial lease up is going well absorption is stronger than we expected and rents on average are 5% to 13% above pro forma reflective of the strong absorption. We've moved up the expected stabilization date of our novel Midtown community to first quarter 'twenty two.

Speaker 5: Reflective of the strong absorption, we've moved up the expected stabilization date of our novel midtown community to first quarter 22.

Speaker 5: All of our under construction projects remain at or below our budgeted construction costs, but we continue to see increased and broad-based material shortages in delivery delays. In addition, we began to see some level of labor shortages in the market.

All of our under construction projects remain at or below <unk>.

Budgeted construction costs, but we continue to see increased and broad based material shortages and delivery delays. In addition, we began to see some level of labor shortages in the market.

Speaker 5: Our construction team has done a great job navigating these challenges and minimizing the impact to schedules and the economics of our projects. But this is an area we'll need to actively monitor throughout the year.

Our construction team has done a great job navigating these challenges and minimizing the impact to schedules and the economics of our projects, but this is an area we'll need to actively monitor throughout the year, we expect.

Speaker 5: We expect these challenges to add 60 days or so to any new starts this year, and we expect a 30-day delay at our Val Vista and West Glen projects. We've adjusted our construction schedules as noted in the supplemental to reflect the delay at these two properties. We had tremendous execution on our property dispositions in 2021, selling seven assets and achieving pricing well ahead of our expectations.

These challenges to add 60 days or so to any new starts this year and we expect a 30 day delay delay at our Val Vista and Westland projects, we've adjusted our construction schedules as noted in the supplemental to reflect the delay at these two properties, we had tremendous execution on our property dispositions in 2021, selling seven assets in it.

<unk> pricing well ahead of our expectations.

Our fourth quarter dispositions were sold above our guidance range generating a leveraged investment IRR of 26% for these 29 year old assets and 2022, we will continue our disciplined pruning of the portfolio and expect to sell another four properties over the coming year. That's all out of the way of prepared comments, so I'll turn it over to al.

Thank you Brad and good morning, everyone.

Speaker 3: CoreFFO performance of $1.90 per share for the fourth quarter was seven cents per share above the midpoint of our guidance, producing CoreFFO of $7.01 per share for the full year, which is Eric mentioned is 9% above the prior year. The importance for the quarters virtually all from revenue growth. This time outlined, strong pricing trends continue through the fourth quarter, showing no seasonal slowdown, which is not only benefit of the fourth quarter, but provide additional strength for 2022 expectations, which I'll talk about more in just a moment.

<unk> performance of $1 90 per share for the fourth quarter was <unk> <unk> per share above the midpoint of our guidance producing <unk> that $7.01 per share for the full year, which as Eric mentioned is 9% above the prior year.

Our performance for the quarter as virtually all from revenue growth as Tom outlined strong pricing trends continued through the fourth quarter, showing no seasonal slowdown, which isn't which not only benefited the fourth core provide additional strength for 2022 expectations, which I'll talk about more in just a moment.

Speaker 3: In total, same store operating expenses for the fourth quarter were essentially in line with our expectations. As some inflationary pressures impacted repair and maintenance costs, real estate taxes were lower than expected due to favorable appeals and rate rollbacks finalized during the quarter.

Total same store operating expenses for the fourth quarter were essentially in line with our expectations as some inflationary pressures impacted repair and maintenance costs real estate real estate taxes were lower than expected due to favorable appeals and rate rollbacks finalized during the quarter.

Speaker 6: We expect some continued inflationary pressures and are operating expenses during 2022, but we expect the impact to be more than absorbed through the continued strong revenue growth for the year.

We expect some continued inflationary pressures in our operating expenses during 2022, but we expect the impact to be more than absorbed through the continued strong revenue growth for the year.

Speaker 6: We did provide initial earnings guidance for 2022 with the release, which is detailed in the sub-elemental package with the release. Core FFO for the full year is projected to be $7.92 per share at the midpoint of the range, which represents a 13% growth over the prior year.

We did provide initial earnings guidance for 2022 with the release, which is detailed in our mineral package with release core FIFO for the full year is projected to be $7 92 per share at the midpoint of the range, which represents a 13% growth over the prior year.

Speaker 6: The overall backdrop for our projected 2022 performance is continued strong occupancy levels remaining between 95.6 and 96% for the full year, providing a foundation supporting continued strong growth and effective rent per unit as the strong blended lease-over-lease rent rates continue to work through our portfolio.

Overall backdrop for our projected 2022 performance is continued strong occupancy levels remaining between $95 six and 96% for the full year, providing a foundation supporting continued strong growth in effective rent per unit as the strong blended lease over lease rent rates continued to work through our portfolio.

Speaker 6: Effective growth effective rent growth is given as projected to be 10% for the year at the midpoint, which is nearly twice the total of effective rent growth posted for 2021. This results is based on continued strong blended lease right growth through the first few quarters with some normal seasonal trends and challenging comparisons beginning to be felt late in the year, particularly during the fourth quarter. This produces projected total same store revenue growth of 8% to 10% for the full year.

Effective growth effective rent growth excuse me is projected to be 10% for the year at the midpoint, which is nearly twice the total of effective rent growth posted for 2021.

This result is based on continued strong blended lease rate growth through the first few quarters with some normal seasonal trends and challenging comparisons beginning to be felt late in the year, particularly during the fourth quarter as producers projected total same store revenue growth of 8% to 10% for the full year.

Speaker 6: As mentioned, we expect to see some inflationary pressures impacting our same store operating expenses for the year, with personnel costs, repair maintenance costs, real estate taxes and insurance costs all trending above long term growth rates, producing 5 to 6% growth overall for 2022. However, this pressure is expected to be more than offset by the strong revenue trends producing an NOI growth expectation of 10 to 12% for the year.

As mentioned, we expect to see some inflationary pressures impacting our same store operating expenses for the year with personnel costs repair and maintenance costs real estate taxes and insurance costs are trending above long term growth rates producing five years to 6% growth overall for 2022. However, this pressure is expected to be more than offset by the strong revenue trends producing NOI growth.

Spectation of 10% to 12% for the year.

Speaker 6: Our forecast also assumes an active transaction year with projected development funding of 200 to 300 million per year and acquisitions of 75 to 125 million. We expect the majority this to be funded by disposition proceeds of between 300 to 350 million. Our forecast anticipates a starting six new development projects during the year, a combination of in-house, pre-purchase deals is outlined by Brad, which will increase our total pipeline and funding commitment as we enter to 2023.

Our forecast also assumes an active transaction year with projected development funding of 200, and 300 million for the year and acquisitions of $75 million to $125 million. We expect the majority of this to be funded by disposition proceeds of between 303 hundred $50 million a.

Our forecast anticipates, a starting six new development projects during the year the combination of in house, a pre purchase deals as outlined by Brad which will increase our total pipeline and funding commitment as we enter 2023.

We currently have no plans to raise additional equity during the year as our forecast projects, our labors to end the year slightly below the current level with debt to EBITDA ranging four to four five times also virtually all of our debt is currently fixed with maturities well lateral over $8 seven years on average providing some protection against rising interest rates.

Speaker 6: We currently have no plans to raise additional equity during the year as our forecast projects are leveraged in the year slightly below the current level with debt to evad ranging four to four and a half times. Also virtually all of our data is currently fixed with the turties well-latted over eight point seven years on average, providing some protection against rising interest rates.

Speaker 6: So that's all we have in the way of prepared comments. So Chris, we'll now turn the call back over to you for any questions.

So that's all we have no way of prepared comments, so Chris we'll now turn the call back of you for any questions.

Speaker 1: Certainly at this time if you would like to ask a question, please press star and one on your touch tone phone. You may withdraw yourself from the question queue at any time by pressing the pound key.

Certainly at this time, if you would like to ask a question. Please press star and one on your Touchtone phone you may withdraw yourself in the question queue at any time by pressing the pound key.

Speaker 1: And our first question comes from Nick. You go from Squishy Bank. Your line is open.

And our first question comes from Nick.

You usually go from Scotiabank Your line is open.

Speaker 7: Hi, good morning, everyone. In terms of the guidance, I was hoping you could maybe give a little bit more detail on the 10 percent effective rent growth at the midpoint. Your blended lease pricing has been trending higher than that in January , fourth quarter, so just trying to understand. You talked about some slowing in the back half of the year, but just trying to understand how you're thinking about future market rent growth on top of what you've already achieved so far.

Hi, Good morning, everyone in terms of the guidance I was hoping you can maybe give a little bit more detail on the 10% effective rent growth at the midpoint.

Yes, your blended lease pricing has been trending higher than that in January 4th quarter. So just trying to understand I know you talked about some slowing in the back half of the year, but just trying to understand how we should how you were thinking about sort of future market rent growth on top of what.

You've already achieved so far.

Yes, Nick this is al I can give you some color on that.

Speaker 8: Yeah, Nick, this is Al. I can give you some color on that. And as we talked about a little bit in the comments, it's really, I mean, it's based on a strong projection of revenue, for sure, but carrying the significant strength of what you're seeing in the fourth quarter, end of the year, and having pricing at the beginning of the year, as we talked about moved to the back half of the year, being impacted by a couple of things, really just a normal, some normal seasonality. As we entered the back part of this year, particularly in the fourth quarter, we thought we'd see some seasonality really powered through that. I mean, it was just continued to accelerate in rent pricing. So our forecast is built on continued strong pricing, particularly in the first half of the year, beginning in the back half to feel a little bit of normal seasonality, and then hitting those tough comps that we saw from the fourth quarter. So I wouldn't say that we're projecting weakness at all. We're just projecting a couple of things that come back to sort of normality in the back part of the year. And I think that's, yeah, we felt like that was a prudent forecast.

Let's talk a little bit in the comments, it's really based on strong projection of revenue for sure but carrying significant strength.

Are you seeing in the fourth quarter into the year.

Having pricing at the beginning year as we talked about move to the back half of the year being impacted by a couple of things really just our normal some normal seasonality as we enter the back part of this year, particularly in the fourth quarter.

Thought we'd see some some seasonality really powered through that I mean, it was just continued to accelerate in rent pricing. So our forecast is built on continued strong pricing, particularly in the first half of the year beginning in the back half to fill a little bit of normal seasonality and then and then hitting those tough comps that we saw from the fourth quarter. So I wouldn't say that we're projected weakness at all we're just projecting a couple of things that come back to us.

Normal abnormality in the backyard here I think we thought that was it.

Premium forecasts for the year.

Speaker 9: for the year.

Okay. That's helpful. I guess just on the renewal piece of that maybe you can give us a feel for again I mean, you've been pushing renewals are well over 10%. So I mean, what at what point does that sort of slowdown you think this year.

Speaker 7: Okay, that's helpful. I guess just on the renewal piece of that, maybe you can give us a feel for, again, I mean...

Speaker 7: You've been pushing renewals at well over 10 percent. So, I mean, at what point does that sort of slow down, you think?

Speaker 6: I'll give you overall and some of these other guys want to jump in here, but what I'll say is first the forecast, we build our forecast off of blended first and foremost because that's really...

I'll give you overall in some of these other guys want to jump in here, but what I'm, saying is first the forecast. We started we built our forecast blended first and foremost because thats really.

That drives obviously, the economic portion of the forecast and so how it falls out from renewals new leases, where we don't focus specifically on for the forecast other than I would say the underlying belief expectation is that youll see renewals be pretty steady through the year, that's where youll see.

Speaker 7: say the underlying belief expectation is that you'll see renewals be pretty steady through the year. That's where you'll see, you know, the strength continue or the market that we're seeing right now continue. If we see the seasonality that we're talking about in new comps, you'll feel that more in the new lease pricing. So, you know, I hesitate to give too much detail there because really we're focused on blended. I think that's the most important number. But that's how we think about it and we've laid it out in our forecast. You'll see that those two normalizing factors get the new lease pricing for the year. Okay, thanks. Just one last quick one is if you had any latest move-in data into your portfolio from, you know, stats from...

The strength continue.

The market that we're seeing right now continue if we see the seasonality that we've been talking about a new comps you'll feel that more on the new lease pricing. So so.

To give too much details there because really we're focused on blended I think thats. The most important number but that's how we think about it and we've laid out in our forecast as youll see that that those two numbers to normalizing factors to get the new lease pricing for the year.

Speaker 7: Okay, thanks. Just one last quick one is if you had any latest move-in data into your portfolio from

Okay. Thanks, just one last quick one is if you had any latest move in data.

And to your portfolio from <unk>.

Speaker 7: you know, stats from areas outside of the Sun Belt and any markets that that's more beneficial right now.

Stats from areas outside of the Sun belt, and any markets that that's more beneficial right now.

Speaker 4: I mean, that continues to be the trend. And we saw, you know, in 2019, it was 11, 10 percent, then 11 percent, and now 14 percent. In the markets that we're seeing, 25 percent of move-ins are in Phoenix, 22 in Tampa, 20 percent in Asheville, 19 in Charleston. Honestly, it's just a continuation of the trends you've been seeing and we've been talking about for the last year or so.

Yes.

That continues to be the trend.

We've solved.

2019, it was 10% and 11% and now 14%.

The markets that we're seeing is.

25% of move ins are in Phoenix 22 in Tampa Twentyish percent Nashville, 19 in Charleston, honestly, it's just a continuation of the trends you've been seeing and we've been talking about for the last year or so.

Alright, thanks, guys.

Thanks, Dan.

Speaker 1: Thanks, Nick. And our next question comes from Brad Hepburn from RBC Capital Markets. Your line is open.

And our next question comes from Brad Heffern from RBC capital markets. Your line is open.

Speaker 2: Hey, good morning, everyone. First, could you give the current loss to lease number, and can you talk about how much of the revenue growth you're projecting for 22 comes from realization of that loss to lease versus how much of it comes from underlying market rank growth?

Hey, good morning, everyone.

First could you give the current loss to lease number and can you talk about how much of the revenue growth you are projecting for 'twenty. Two comes from realization of that loss to lease versus how much of it comes from underlying market rent growth.

Yes, Brian This is Tom So there's couple of way to think couple ways to think about our loss to lease but if you look at the leases. We did in December for example, the average price of the blended average price for December of all those leases was about $15 74.

Speaker 3: Yeah, we're out of this town. So, you know, there's a couple ways to think, couple ways to think about our lost Elise. But, you know, if you look at the leases we did in December , for example, the average price of the blended average price for December of all those leases was about 1574.

Speaker 10: And you compare that to our December effective rent per unit, so all the leases in place in December was about $1443, so if you do the math on that, it's roughly 9%. Now, recognizing December is only about 5% of the leases, so it takes some time to work through that and get through a full loss to lease. Alternatively, if you base it on our new leases that we did in December , it's a little bit higher, closer to 12% or so.

And you compare that to our December effective rent per unit. So all the leases in place in December was about $14 43. So if you do the math on that it's roughly 9% now recognizing December is only about 5% of our leases.

It takes some time to work through that and get it through a full whilst the lease Alternatively, if you base. It on our new leases that we did in December it's a little bit higher closer to 12% or so but.

Speaker 10: In terms of what's going to flow into 2022, it's really more of a function of all the blended lease that we saw in 21. So 10.7 was our full year blended lease that we released in 2021.

In terms of what's going to flow into 2022, its really more of a function of all the blended lease over lease that we saw in 'twenty one to $10 seven was our full year blended lease over lease in 2021.

Speaker 10: Assuming the normal seasonality that Al talked about, we would expect half of that or so to flow into 2022. So you've got, call it, 5% to 6% of earned-in rent growth sitting here as of January 1.

Assuming the normal seasonality that al talked about we would expect half of that or so.

Flow into 2022, so you've got call it 5% to 6% of sort of earned in rent graphs sitting here on.

On January one.

Speaker 2: OK, got it. And then on the dispositions for this year, obviously the balance sheet's improving pretty rapidly. So I'm curious why have dispositions at all and why not fund the capital needs with debt.

Okay got it.

And then on the dispositions for this year, obviously, the balance sheet, the improving pretty rapidly. So I'm curious why have dispositions at all and why not fund the capital needs with that.

Speaker 3: Well, Brad, this is Eric, you know, we just think that it's really important to continue a discipline of cycling off the bottom, if you will, a little bit every year.

Well Brad this is Eric we just think that it's it's really important to continue a discipline of cycling off the bottom if you will a little bit every year spin.

Speaker 3: specific properties that we think that either due to the age of the asset or submarket or neighborhood concerns that the outlook for the property is not likely to be as strong as the rest of the portfolio. And in an effort to sort of manage earnings performance and earnings stability over a full cycle, one of the ways that we feel like we accomplish that is by having a discipline to cycle off a little bit every year some of the weakest outlook some of the weaker properties from an outlook perspective. So, you know, we we think that, you know, certainly obviously we're getting great pricing today. So we just you know, we sold seven properties in 2021. We'll sell four is our plan at the moment in 2022. And we think that that effort is just part of our of our chemistry to continue to compound long term earnings growth.

Specific properties that we think that either due to the age of the asset or a sub market or neighborhood.

<unk> that the outlook for the property is not like to not likely to be as strong as the rest of the portfolio and in an effort to sort of manage your earnings performance and earnings stability over a full cycle one of the ways that we feel like we accomplish that is by having a disciplined to cycle off a little bit every year.

Some of the weakest outlook some of the weaker properties from an outlook perspective, So you know.

We think that.

Certainly, obviously, we're getting great pricing today.

We just we sold seven properties in 2021 will sell for.

Our plan at the moment in 2022, and and we think that that effort is just part of our of our chemistry to continue to compound long term earnings growth.

Speaker 11: Okay, thank you.

Okay. Thank you.

And our next question comes from Neil Malkin from capital One your line is open.

Speaker 1: And our next question comes from Neil Malkin from Capital One, your line is open.

Speaker 12: Good morning guys. Nice job on another stellar recorder.

Good morning, guys.

Nice job on another stellar quarter.

Speaker 12: You know, can you, okay, can you guys please give an update on what you're sending out for renewals in February and March?

Good morning can you.

Hey can you guys. Please give an update on what you're sending out for renewals in February and March.

Speaker 4: Neil, renewals are in the mid-teens, you know, ranging from sort of 15% to 17% on where they've gone out. Okay.

Hi.

Neil renewals are in the mid teens.

Ranging from sort of 15% to 17%.

On where they've gone out.

Okay.

Speaker 12: OK, great, and I know that you mentioned a little bit in the prepared remarks.

Great.

I know that you mentioned a little bit in the prepared remarks.

Speaker 12: about how, you know, potentially rising interest rates may, you know, yield some acquisition opportunities. You've been pretty outspoken about, you know, kind of focusing your capital on development, just given the, you know, historically low cap rate environment. Do you expect that, you know,

About how you know potentially rising interest rates may.

Yield some acquisition opportunities you've been pretty outspoken about.

Kind of focusing your capital on development, just given the historically low cap rate environment do you expect that.

You know in some of your markets rising rates.

Speaker 12: you know, in some of your markets, rising rates will eliminate, you know, some incremental marginal buyers who, you know, use a lot of leveraged, you know, floating rate to finance the property and can pay, you know, essentially uneconomic rates. Is that something that you think will actually come to fruition? Is it more of a market-specific thing? Is it, you know, can you just kind of comment on, you know, that outlook as the year progresses and rates, you know, at least in the short part of the curve go higher?

We'll eliminate.

Some incremental marginal buyer too.

Use a lot of leverage no floating rate debt to finance the property and can pay.

Essentially uneconomic rates.

Is that something that you think will actually come to fruition or is it more of a market specific thing is that you know.

Can you just kind of comment on that.

That outlook as the year progresses and that rates.

At least in the short.

Part of the curve go higher.

Yes, Neal this is Brad.

Speaker 5: Yeah, Neil, this is Brad. I'll answer that. You know, I would say, you know, we expect as we get later in this year, and as as some of these interest rates do start to increase a little bit that on the margin, we could see some of the buyer interest in some of the markets that we're looking at could come down a little bit. But

I'll answer that.

I would say.

We expect as we get later in this year and as some of these interest rates.

Do start to increase a little bit that on the margin we could see some of the buyer interest in some of the markets that we're looking at could come down a little bit but.

Speaker 5: You know, I'd say there's so much capital that's out there in the market right now that I think that's that's really on the margin. I don't see anything indicative on the horizon or

I'd say there is so much capital that's out there in the market right now that I think that's really on the margin I don't see.

Anything indicative on the horizon or.

Speaker 5: you know, from the buyers and brokers that we're talking to to indicate that some level of interest rate rise would drive a big fall off in pricing. We're not really seeing that. We've certainly seen a run up in pricing.

From the buyers and brokers that were talking to to indicate that.

Some some level of interest rate rise would drive a big fall off in pricing, we're not really seeing that we've certainly seen a.

A run up in pricing here.

Speaker 5: Here in the fourth quarter and also in the first quarter cap rates are, you know, really stable But the underwriting the underlying underwriting is very aggressive. So we continue to see a price increasing but I think as we as we the operations start to Normalize a little bit more. I do think that the run-up in pricing that we've seen The run-up in rent growth that we've seen is is already priced in so I think to see another large increase in asset pricing from here

Here in the fourth quarter and also in the first quarter cap rates are really stable, but the underwriting the underlying underlying underwriting is very aggressive. So we continue to see a price increasing.

But I think as we as we.

The operations start to normalize a little bit more I do think that the run up in pricing that we've seen.

The run up in rent growth that we've seen is already priced in so I think to see.

Another large increase in asset pricing from here.

Speaker 5: on the acquisitions is not likely to come. So I think from a seller's perspective, kind of the benefit that they're going to get is already baked in at this point. And so from the sellers and brokers, we're talking to certainly prices, the most important characteristic or function right now in a transaction. I do think as we get later in the year, that starts to shift a little bit more to some level of strength that we have, of execution, all cash closing speed, those type things become a little bit more valuable as we get later in the year in our markets.

On the acquisitions is not likely to come so I think from a seller's perspective.

The benefit that Theyre going to get is already baked in at this point and so from the sellers and brokers, we're talking to certainly price is the most important.

Characteristic or function right now in a transaction I do think as we get later in the year that starts to shift a little bit more to some level of.

<unk> strength that we have.

Execution, all cash closing speed those type things become a little bit more valuable as we get later in the year in our markets.

Speaker 12: Yeah, that's super helpful. I could just quick one that I've heard from rumbling about, you know, some sundault apartment owners looking at potentially single family rental portfolios or assets, you know, kind of in their backyard to sort of tap into that strength and continue to follow the the renter through their life cycle genius coming on that.

Yeah, that's super helpful.

Just quick one that I've heard rumblings about.

Some sunbelt apartment owners looking at potentially single family rental portfolios or assets.

Canada in their backyard.

Sort of tap into that strength and continue to follow the renter through their lifecycle can you comment on that.

Well Neil this is Eric.

Speaker 3: Well, Neil, this is Eric. You know, we get asked this a lot. I think that for us at the moment, you know, we continue to find ample opportunity, we think, to deploy capital and achieve some growth and very attractive yields through the development and pre-purchase programs that Brad has detailed.

We get asked this a lot.

That for us at the moment, we continue to find ample opportunity, we think to deploy capital and achieve some growth at very attractive yields through the through the development and pre purchase programs that Brad as detailed and as we sit here today.

The notion of a consciously going out and really deploying capital.

In single family rental is not something that really we're focused on doing just don't see frankly, a real need to do that is you mentioned that that segment of the residential market continues to attract us to enormous amounts of capital and anything in that area much like in the apartment sector.

Speaker 2: It continues to attract just enormous amounts of capital. And anything in that area, much like in the apartment sector, is going to be very expensive to execute on today. And so, you know, we continue to believe that the renter pool, if you will, for our product is still quite significant, growing significantly, quite deep, particularly at our affordable price point. So we think that it's better for us to stick to our focus that we have on multifamily, and that's certainly what our plans are at the moment. Thanks. Makes a lot of sense. Thanks, guys. Great quarter. Thanks. Thanks, Sam. And our next question comes from Nick Joseph from Citi. Your line is open. Hey, this is Michael Griffin on for Nick. I wanted to circle back on the effective rent growth question.

There is going to be very expensive to execute on today and so.

And we continue to believe that the the the renter pool. If you will for our product is still quite significant growing significantly quite the particularly at our affordable price point. So we think that's better for us to stick to our focus that we have on multifamily and.

And that's certainly what our plans are at the moment.

Speaker 12: Thanks a lot of sense. Thanks guys. Great quarter.

Thanks, a lot of sense, thanks, guys great quarter.

Thanks Pam.

Speaker 1: And our next question comes from Nick Joseph from Citi. Your line is open.

And our next question comes from Nick Joseph from Citi. Your line is open.

Speaker 13: Hey, this is Michael Griffin on for Nick. I wanted to circle back on the effective rent growth question posed initially. So I'm just curious, how do you get both to the low end and the high end of that expected guidance range?

Hey, This is Michael Griffin on for Nick I wanted to circle back on the effective rent growth question posed initially so I'm just curious how do you get to the low end and the high end of that expected guidance range.

I think it would come down to Mark This is Alan and Jim can jump in here as well I mean, it's going to come it's going to come into to what happens with those leasing trends from here as you move into the year, what we've got dialed in as we talked about two kind of normalizing factors happen in the back part of the year.

Speaker 6: I think it would come down to, Mark, this is Al, and Jim can jump in here as well. I mean, it's going to come in to what happens with those leasing trends from here as we move into the year. What we've got dialed in is, as we talked about, two kind of normalizing factors happen in the black part of the year. You know, we start seeing some normal season out to come in, and we bump into those comps. And so I think the low end would be, it's going to, you know, would be bumping into that worse than we have projected right now, obviously, where you see, I would say, new lease pricing gets challenged earlier in the year. That is the most...

We start seeing some normal seasonality come in with and we bump into those comps. So I think the low end would be it's going to it.

It would be worse than we had projected right now, obviously, where you see I would say new lease pricing gets challenged earlier in the year that is the most.

Speaker 8: aggressive point of that negotiation or the most challenging part of that negotiation, I think rules will be stable, but it will be those new leases. Right now, as Tom mentioned, they're going out well. If we saw that happen earlier, it would likely push toward that low end. On the other side of that, if we saw that environment we're seeing right now, as we saw in January , we saw 16.3% blended pricing. If we saw that go for a couple of more months or a few more months, I think we would be talking about the top end of that. So that's really how we think about it. We put the forecast based on recent projection that we would see some of those factors happen. They're certainly reasonable, and so we'll monitor that as we move forward.

Aggressive point of that negotiation of the most challenging part of that negotiation, we think renewals will be stable, but it will be those new leases right now as Tom mentioned Theyre going out well, we saw that happen earlier.

Would likely push towards that low end on the other side of that if we saw that.

We're seeing right now as we saw in January we saw 16, 3%.

The price of oil we saw that go for a couple of more months a few more months I mean, I think we would be talking about the top end of that so that's really how we think about it we put the forecast based on projections.

Injection that we would see some of those factors happened certainly reasonable and so we'll monitor that as we move forward.

Speaker 10: I'll add one point, Mike. I think overall we've assumed economic backdrop of pretty good job growth and supply levels, moderating a little bit. So, to ours point, if...

I'll add one point Michael.

Overall, we've assume economic backdrop, that's a pretty good job growth and supply levels moderating a little bit.

Point, if if we had a shock in the on the job side or economic shock, one way or the other that would be something that might drive the pricing down and pushes towards the towards the lower end I'll add one more factor to that Tim and I have talked about it but one thing we did our forecast also and we've done this in the past as we left ourselves room. If you look at the projection for average occupancy we lost 30 base.

Speaker 8: If we had a shock on the job side or economic shock, one way or the other, that would be something that might drive the pricing down and push us towards the lower end. I'll add one more factor too, that Tim and I have talked about quite a one thing we did on the forecast also, we've done this in the past, as we left ourselves room, if you look at the projection for average occupancy, we left 30 basis points below the average of this year, thinking that we want to continue pushing on that price and have a little bit on the gas. So we have that support, but that's how we think about it.

This points below the average of this year thinking that we want to continue pushing on that price will have a little bit on the gas. So we have that best support, but that's how we're thinking about it.

Speaker 13: Gotcha. I appreciate the color on that for sure. And then just turning to the development side, you know, you anticipate two to three hundred million spend this year building the pipeline to a billion plus by the end of that year. Where do you see that sort of in the near to medium term and how much more could you see that grow in the coming years?

Got you I appreciate the color on that for sure and then just turning to the development side. You know you anticipate $2 million to $300 million spend this year building the pipeline to $1 billion plus by the end of that year.

Where do you see that sort of in the near to medium term and how much market do you see that grow in the coming years.

Speaker 5: Oh Michael, this is Brad. I'll certainly talk about a little bit about the near term here this year. You know, we have pretty good visibility.

Well Michael this is Brad.

Certainly talk about a little bit about the.

The near term here this year.

We have pretty good visibility.

Speaker 5: in terms of our starts this year. This is a focus that we've had for the last couple of years. I'm really focusing on building out our development capability, our development platform. And we have good visibility on the six projects that we've indicated this year and expect to start those between...

In terms of our starts this year. This is a focus that we've had for the last couple of years.

Really focusing on building out our development capability our development platform.

And we have good visibility on the six projects that we've indicated this year and expect to start those between.

Speaker 5: 650 to 750 million dollars here by the end of this year. We've got two own sites in Denver that we should start here in the first half of the year. We've got an own site.

$650 to $750 million here by the end of this year we've got.

Two owned sites in Denver that we should start here in the first half of the year, we've got in one site.

Speaker 5: in Tampa that we will also start first part of this year. We have a site under.

In Tampa that we will also start first part of this year.

We have a site under contract.

Speaker 5: in Raleigh that should start this year. We've got another site in Denver that we're working on that should start late this year. And then on top of that, those are all in-house projects, so we have good visibility on those. We're also working on our JV platform. We're in pre-development on a site right now in Salt Lake City that should start by the end of this year. And then in addition to those, we've got other JV projects that we're working on.

Raleigh that should start this year, we've got another site in Denver that we're working on that should start late this year and then on top of that those are all in house projects that we have good visibility on those we're also working on our JV platform were in pre development on the site right now in Salt Lake City that should start by the end of this year and then.

In addition to those we've got other JV projects that we're working on.

One of the nice things about those as the lead time, a lot of times is less than our in house development. So sometimes those can start within the year. So we're hopeful that we can continue to build out that even more than where we are today, but those are the starts that we have this year again, good visibility on that and good momentum really.

And building that platform and the capabilities there and Michael This is Eric just to add to what Brad is saying I think that with six new starts this year.

Speaker 3: Six new starts this year and the funding associated with that. I would suggest to you that that's probably what we're attempting to do is build a process and seek opportunities either through pre-purchase or a landsite, a landsite that we can acquire that I would view that as our goal is to sort of have a steady state level of funding that approximates kind of the funding that you're seeing taking place this year. It would mean depending on the pace of construction and the pace of lease that our overall aggregate sort of pipeline, if you will, is going to be hovering around a billion dollars. And we have said for some time that from an enterprise perspective, we're comfortable carrying up to about 5% of our enterprise value in a development pipeline, which at today's valuation would suggest that we're comfortable somewhere around 1.3, 1.4 billion dollars. So I would tell you that we would expect going forward that you're going to see the pipeline sort of steady around a billion dollars. And annual funding needs are going to be approximating

And the funding associated with that I would suggest to you that that's probably what we're attempting to do is build a process and seek opportunities either through pre purchase or land site.

The insights that we can acquire that I would I would view that as our goal is to sort of have a steady state level of funding that approximates kind of the funding that youre seeing taking place. This year. It would mean, depending on the pace of construction and the pace of lease up that our overall aggregate sort of pipeline if you will.

There's going to be hovering around $1 billion and we have said for some time that from an enterprise perspective, we're comfortable carrying up to about 5% of our enterprise value.

Speaker 3: And we have said for some time that from an enterprise perspective, we're comfortable carrying up to about 5 percent of our enterprise value in a development pipeline, which at today's valuation would suggest that we're comfortable somewhere around $1.3, $1.4 billion. So I would tell you that we would expect going forward that you're going to see the pipeline sort of stay around $1 billion, and annual funding needs are going to be approximating $300 million or so.

In our development pipeline, which at today's valuation, which suggests that we're comfortable somewhere around 131 $4 billion. So I would tell you that we would expect going forward that you're going to see the pipeline sort of stay around $1 billion in <unk>.

Annual funding needs are going to be approximating 300 million or so.

Great.

Speaker 13: Great. Well, I really appreciate the color. Thanks for the time and the port is getting all in Florida next month.

I really appreciate the color. Thanks for the time and look forward to seeing you all in Florida next month.

Hi, Ken.

Speaker 1: And our next question comes from John Kim from BMO Capital Market. Your line is open.

And our next question comes from John Kim from BMO Capital markets. Your line is open.

Thank you.

Speaker 14: Thank you. I wanted to ask about your optimism and acquisitions this year and how pricing is, it's just getting better. How does an indicator cap rates to due to not only interest rate movements, but the NOI growth that's being achieved? So if NOI growth is 15 to 20%, I would you see a similar amount of increase in cap rates this year?

I wanted to ask about your.

Optimism in acquisitions this year in <unk>.

As you anticipate getting better.

How does limit or cap rates to do to not only interest rate movements, but the NOI growth that's being achieved.

Growth of 15% to 20% and we can see a similar amount of increase in cap rates. This year.

Well John This is Brad I mean based on the numbers that we're seeing.

Speaker 5: Well, John , this is Brad. I mean, you know, based on the numbers that we're seeing, I mean, it looks to us like forward cap rates are pretty constant there. They're hovering around that low 3% range right now. But what we're seeing is, as you mentioned, the rent growth and the underlying NOI growth that's being underwritten right now is in that

I mean, it looks to us like forward cap rates are pretty constant there, they're hovering around that low 3% range right now, but what we're seeing as you mentioned the rent growth in the underlying NOI growth, it's been underwritten right now.

Is in that.

Speaker 5: you know, it can be 15, 20% depending on the market, which is really driving the value growth at the moment. So, you know, I think cap rates are going to be pretty steady where they are right now. I think the question is just what are folks going to underwrite on the NOI growth perspective. And that's, you know, very aggressive as, you know, from where we sit today. And certainly based on the amount of liquidity that's in the market from some of the folks that we're talking to in the markets, some believe that cap rates go down from where we are today. You know, I don't know if that's true or not, but certainly values appear to be increasing at a pretty rapid pace right now based on the underlying fundamentals.

It can be 15, 20%, depending on the market, which is really driving the value growth at the moment. So I think cap rates are going to be.

Pretty steady where they are right now I think the question is just what our folks can underwrite on the NOI growth perspective.

And that's very aggressive.

Where we sit today and certainly based on the amount of liquidity that's in the market.

Some of the folks that we're talking to in the markets. Some believe that cap rates go down from where we are today.

I don't know.

If that's true or not but certainly values appear to be increasing at a pretty rapid pace right now based on the underlying fundamentals.

Speaker 3: And John , this is Eric again, you know, the thing I would tell you about...

And John This is Eric again, the thing I would tell you about why I think there is reason to believe that there may be better buying opportunities ahead is that when we see <unk> been through these cycles before and typically what happens is that as you get later into the recovery cycle.

Speaker 3: why I think there is reason to believe that.

Speaker 3: There may be better buying opportunities ahead is that when we see vintage cycles before and typically what happens.

Speaker 3: is that as you get later into the recovery cycle, what you begin to see are sellers or developers, capital is looking for a little bit more certainty for close. Particularly, you see this happen towards the end of the year where contracts that have been, or properties have been produced into contract fallout, and they have a year in closing mandates, and therefore going to contract with someone like us who they know can be an all cash buyer, not subject to any kind of financing risk, and just a very good track record of closing. Those attributes become more important as you get later into the cycle. I think that given what's happening within a wide growth, we don't really see the market changing from a pricing perspective so much. And for all the reasons Brad said, cap rates we think are going to continue to hold very, very strong, because even with the the prospect of some slight rise in interest rates, the end of wide growth rate is more than compensating for that. So it's going to cause, I think, values to hold up quite strong, but the early indication that you see that as you get later in the cycle, the early trends that sometimes happen is certainty of close becomes a more important characteristic. And when we get into that kind of point, get to that point. That's where we think that, that we may have a little bit more success.

What you begin to see our sellers our developers capital is looking for.

A little bit more certainty for clothes are particularly you see this happened towards the end of the year, where contracts that had been our properties had been previously under contract fallout and they have a year end closing mandates and therefore going to contract with someone like us who they know can be an all cash buyer not subject to any kind of financing risk.

And just.

A very good track record of closing.

Those attributes become more important as you get as you get later into the cycle I think that given what's happening with NOI growth, we don't really see.

The market changing from a pricing perspective, so much.

And for all the reasons, Brad said cap rates, we think are going to continue to hold very very strong because even with the prospect of some slight rise in interest rates. The NOI growth rate is more than compensating for that so it's going to cause I think values to hold up quite strong, but the early indication that you see that as you get les.

And the cycle the early trends that sometimes happen is.

Certainty of close becomes a more important characteristic and and when we get into that kind of point get to that point, but that's where we think that that we may have a little bit more success.

Speaker 14: That's very color, thank you. I was on one of the follow up on your San Francisco revenue guidance, which was 9% at the midpoint. Tim mentioned the earn and you're getting from Rensign last year. But the last couple quarters you had at 16% and 16% and this quarter's trending at 16% as well. So what gets you to the 9% revenue? Is there any other offsetting factors that would offset?

That's great color. Thank you.

So I wanted to follow up on your same store revenue guidance, which was 9% at the midpoint Tim mentioned the earnings Youre getting from rent signed last year, but the last couple of quarters, you had seen and 16% in this quarter is trending at 60% as well. So what gets you to the 9% revenue is there.

Any other offsetting factors.

And that would offset that.

Speaker 14: very high rent growth that's already been achieved.

Very high rent growth that's already been achieved.

Speaker 10: I'll start with that and then pitch it to Tim to, I think, a couple things. One, you're looking at revenue, so what we're talking about is effective rent growth is going to be 10 percent, which is a little higher, and that's going to be based on largely what we talked about. Starting off at that 16 percent level, which is great to see, and expecting as we move late into the year to see those two normalizing factors happen, occur a little bit, so it's normal seasonal pressure hitting those comps. And so that's the pricey part. And also, in terms of effective rent down to that nine, you've got some other areas, other income items that, though they're growing, they're not going to grow at 10 percent, so that kind of gets you to the nine there, and so that's how we're thinking about that factor. So, Tim, is there anything, what color are you thinking about, I think? No, I think the fees and the dialing in a little bit lower occupancy is what gets you from the effective rent growth to the revenue growth. And then back, you know, on the pricing, it's, again, sort of back to Al's point about seasonality. You know, typically we would

I'll start with that and then Tim.

Tim I think a couple of things when Youre looking at revenue. So what we're talking about is effective rent growth is going to be 10%, which is little higher and that's going to be based on largely what we talked about starting off that 16% level, which is great to see and expecting as we move late into the year to see those two normalizing factors happened, our carload business almost seasonal pressure hitting those cars.

And so thats the project also.

Thanks, Brent now that you've got some other areas other income items that though theyre growing theyre not going to grow at 10%. So that kind of gets you to the nine there and so that's how we're thinking about that factor so I'll, let Ted.

Color you think about a thing no I think the fees down a little bit lower occupancy is what gets you from the effective rent growth to the to the revenue growth and then back on the pricing, it's again sort of back.

<unk> pointed out seasonality typically we would see Q2 is kind of the highest price point for blended price in Q3 down a little bit in Q4 down from there with seasonality and that's that's really what's driving it and sort of we expect that return to.

Speaker 8: Q2 is kind of the highest price point for one at price. I think Q3 down a little bit and Q4 down from there with seasonality. And that's really what's driving it. It is sort of we expect that return to normal seasonality, but starting all certainly to a higher point than we would in a quote normally year. Yeah, don't forget. I'm also mentioning earlier, we're also giving ourselves 30 basis points. We're sort of eating 30 basis points of occupancy that's in that total revenue to give ourselves the room to continue pushing prices as well. So I think all those factors in there.

The normal seasonality, but starting off certainly at a higher point than we.

In a normal year don't forget also mentioned earlier, we were also given ourselves 30 basis points were started eating 30 basis points of occupancy that's in that total revenue to give ourselves the room to continue pushing price as well. So I think all of those factors impact.

Great. Thank you looking forward to seeing you somewhere.

Speaker 14: Thank you. Looking forward to seeing you somewhere. Yeah, absolutely. That was great. Thank you.

Yes, absolutely.

Thanks.

And our next question comes from Rich Anderson from SMB see your line is open.

Speaker 1: and our next question comes from Rich Anderson from SMBC.

Speaker 15: Hey, thanks. Good morning everyone. So, you said a few times that kind of the main variable to guidance among the main variables is what happens with new lease growth. You know, a rule of thumb in my mind about the strength of a market in multifamily is when new lease growth exceeds renewal, and that's been happening, that's obviously likely to shift this year. Do you have an idea of how low new lease growth could go embedded in your blended number of 10%? And the reason why I ask is I feel like if you've done six, seven, almost 20% new lease growth in the fourth quarter, could it be

Hey, Thanks, good morning, everyone. So that a few times.

The kind of main variable to guidance.

The main variables is what happens with new lease growth.

A rule of thumb in my mind about the strength of a market multifamily is when new lease growth exceeds renewal and that's been happening.

Obviously likely to shift this year.

Do you have an idea of how low new lease growth could go embedded in your blended number of 10%.

And the reason why I ask is I feel like we've done six seven almost 20% new lease growth in the fourth quarter could it be could it.

Speaker 15: Could it be possible that you could get close to zero newly scroats by the end of this year? You know, back half of this year?

Be possible that you could get close to zero new lease growth by the end of this year.

Back half of this year.

Speaker 3: No, the short answer to that Rich is no. We think that when you look at sort of the supply demand dynamics and just overall strength of the market.

No.

The answer to that rich is no.

We think that when you look at sort of the.

The supply demand dynamics, and just overall strength of the market.

And as you are right.

New lease pricing is kind of the tip of the spear. If you will we don't see any scenario, suggesting that we see.

That that kind of zero percent growth I think that.

Speaker 15: I think that particularly in the Sunbelt markets, where we continue to see a demand drivers, job growth, household formation trends, population trends, migration trends, such that the demand side of the equation, we think in 2022 is likely to be as strong, if not stronger than what we saw in 2021. And then following on what Tim mentioned as well, supply levels and deliveries in 2022 are actually down slightly from 2021. So, while clearly there was some COVID recovery kind of in unique circumstances taking place in 2021, that helped there a little bit, when you just look at the key fundamentals that drive absorption and our ability to push rents in 2022, we see no reason at the moment to believe that there's going to be any material deterioration and fundamentals. As Al mentioned, the only thing that we're really thinking about is that we know that we've got some tough prior year comps and it's hard to put a number on that, but it's fair. And we'll have to wrestle with that topic a bit later in the year. And then we do think that contrary to 2021, there probably will be some seasonality that will come back into 2022. And as you get particularly in the fourth quarter and the holiday season, leasing volumes tend to, or traffic tends to moderate a little bit. So, we didn't see that in 2021. We may not see it in 2022, but we're assuming we will. And as to where that actually gets to from a new lease pricing perspective, we will see. As Al mentioned, we really budget and forecast and manage our business based on blended performance, but we certainly see new lease pricing remaining positive in 2022. And I recognize zero is an extreme range, but nonetheless, it got the answer I was looking for. So, second question, you had a great year last year. You're looking to have another great year this year.

Particularly in the Sun belt markets, where we continue to see demand drivers job growth household formation trends population transmigration trends such that the demand side of the equation. We think in 2022 is likely to be as strong if not stronger than what we saw in 2021 and then following on.

What Tim mentioned as well supply levels in deliveries in 2022 are actually down slightly from 2021, so while clearly there was some.

Covid recovery, Canada, and unique circumstances, taking place in 2021 that help there a little bit when you just look at the key fundamentals that drive absorption and our ability to push rents in 2022, we see no reason at the moment to believe that there's going to be any any.

A real deterioration in fundamentals as al mentioned, the only thing that we're really thinking about is that we know that we've got some tough prior year comps and the and that it's hard to put.

A number on that but but it's there and then we'll have to we'll have to wrestle with that topic a bit later in the year and then we do think that contrary to 2021.

There probably will be some seasonality that will come back into 2022, and as you get particularly in the fourth quarter and the holiday season leasing volumes tend to our traffic tends to moderate a little bit. So we didn't see that in 2021, we may not see it in 2022, but we're assuming we will and.

As to where that actually gets too from a new lease pricing perspective.

We will see as Al mentioned, we really budget and forecast and manage our business based on blended performance, but we certainly see new lease pricing remaining positive in 2020 to recognize zero as an extreme.

Speaker 15: You know, range, but, but, but nonetheless it got

But nonetheless, it got answered.

Speaker 15: answer I was looking for. So the second question.

Looking forward.

So second question.

Speaker 15: you know, you had a great year last year, you're looking to have another great year this year, but perhaps a mirror image of last year where it's great in the first half and slows down the second half. Considering that cadence, I mean, you know, we should be starting to condition people that this type of growth, double-digit blended growth, is not a forever circumstance. Is that the right way to think of it? You know, I'm not looking for 23 guidance, obviously, but I mean, this is...

You got it you had a great year last year, you are looking to have another great year. This year, but perhaps a mirror image of last year, where it's great in the first half and slows down in the second half.

Considering that cadence I mean, we should be starting to condition people that this type of growth double digit blended growth is not a forever circumstance.

Is that the right way to think of it.

I'm not looking for 'twenty three guidance, obviously, but.

This is this is setting up for CPI plus return to growth type of thing in 2023 and beyond would you would you agree with that assessment.

Speaker 15: setting up for CPI plus return to growth type of thing in 2023 and beyond. Would you agree with that assessment?

Yeah.

Rich is.

Yes.

Speaker 3: you know it's hard to say I think if you look at 23 and beyond

It's hard to say I think if you look at 'twenty three and beyond.

Speaker 3: You know, it's probably the biggest challenge we have is just we're dealing with prior year comparisons at a level that we never dealt with before. But again, fundamentally, when you think about the drivers of demand for housing broadly, there's been all kind of studies, I'm sure you've seen a lot of the research done, suggesting that broadly in the U.S. we have undersupplied housing in the U.S. by a significant amount for the last, you know, five to ten years. And so you take a region like these Sunbelt markets where the migration trends, the population grant trends and the job growth trends are such that they're, you know, outpacing other regions of the country and the demand is strong.

It's probably the biggest challenge we have is just we're dealing with prior year comparisons at a level that we've never dealt with before.

But again fundamentally when you think about.

The drivers of demand.

For housing broadly there's been all kinds of studies I'm sure you've seen a lot of the research done suggesting that broadly in the U S. We have under supplied housing in the U S. By a significant amount for the last five to 10 years and so you take a region like these sunbelt markets, where the migration trends.

And the population grant trans and the job growth trends are such that there is outpacing other regions of the country and the demand is strong single family home pricing is escalating at levels.

Speaker 3: Single-family home pricing is escalating at levels beyond anything that we've seen. Developers are having trouble, whether it be single-family, multifamily, securing the materials and the labor they need to address the demand that's there.

Beyond anything that we've seen developers are having trouble whether it be single family multifamily securing the materials and the labor they need to address the demand that's there.

Speaker 15: you know it starts to define you know a pretty robust environment for the foreseeable future I you know call it the next three or four years and particularly again is it relates to these sunbelt markets so you know it's hard to say exactly what we get to in 23 and 24 but you know reverting back to you know three and a half to three percent rent growth I don't see that for a while. Hey great well up to you in Tokyo some day soon.

It starts to define a pretty robust environment for the foreseeable future I call. It the next three or four years, and particularly again as it relates to these sunbelt markets. So you know.

It's hard to say exactly what we get to in 'twenty three 'twenty four but.

Reverting back to three 5% to 3% rent growth I don't see that for a while.

Okay, great well stay in Tokyo someday soon.

Thanks Rich.

Speaker 1: And our next question comes from Austin Orschmidt from Key Bank. Your line is open.

And our next question comes from Austin, where Schmidt from Keybanc. Your line is open.

Speaker 16: Hey, good morning everybody. So you guys talked earlier about the lost Elise being, in that high single double digit range, and you guys are achieving well above that today on the new and new Elise rate.

Hey, good morning, everybody.

I talked earlier about the loss to lease being in that high single low double digit range and you guys are achieving well above that today on on the new and renewal lease rates.

Speaker 16: So is that increase, I guess, above, above and beyond the lost release, just reflect kind of what you're expecting for market rent growth this year, or you guys kind of leading the market and could end up above market, by the time we get to your end.

Is that increase I guess above above and beyond the loss to lease just reflect kind of what you're expecting for market rent growth. This year or are you guys kind of leading the mark to market and could end up above market by the time, we get to the year end.

Speaker 10: Austin is down. I think the pricing we're seeing right now, you know, is a combination, obviously, of the strength, but also some of the comps going back to 12 months ago. We really saw pricing start to take off last year around April , May, and then continue to accelerate from there. And so, you know, we have this first three or four months where, if you want to say there's some easy comps, easier comps, those are in place, combined with the strength we saw toward the back half of last year.

Ultimate Tam I think I think the pricing, we're seeing right now.

As a combination obviously of the strength, but also some of the comps going back to 12 months ago, we really saw pricing starting to take off last year around April may and then continue to accelerate from there and so.

We have this first three or four months, where if you want to say there are some easy comps easier comps those are in place combined with the strength, we saw towards the back half of last year.

Speaker 10: I think that's kind of what's driving it now and then we'll, to Rich's point earlier, we'll see sort of a mirror reflection of that as we get into the back half of the year and get into some of those tougher comps.

I think thats kind of whats driving it now and then we will to Richard's point earlier, well see sort of a mirror reflection of that as we get into back half of the year and get into some of those tougher comps.

Speaker 16: Yep, that makes sense. So what are you projecting for market rent growth across the portfolio this year?

Yes, no that makes sense. So what are you projecting for market rent growth across the portfolio. This year.

Speaker 8: I'll tell you what's built in our, we talked about earlier, Austin, we really have blended lease pricing built in our overall and for the full year the average is going to be somewhere probably around 8% that we have built in at this point and like we talked about, we'll look at that as we move forward and we've talked about what it's built on, it's still stalling as we move to the back part, seeing some normal seasonal trends and bumping those comps that Tim talked about.

Mark you talked well ill tell you whats built into it we talked about earlier also we really blended lease pricing built in.

Overall and for the full year to average it's going to be somewhere probably around 8% that we have built in at this point and what like we talked about.

Look at that as we move forward and we've talked about when it is built on is still solid as we move into the back part seeing some normal seasonal trends and bumping those comps as Tim talked about.

Speaker 16: And then just last one, I was curious what the rent to income ratio is today and maybe more importantly what that figure looks like, you know, on some of the new move in leases over the last several months.

Got it and then just last one I was curious what the rent income ratio is today and maybe more importantly, what that figure look like.

Some of the new move in leases over.

Over the last several months.

Speaker 4: We've tracked that on a new move-in basis, and right now it's right up against a little under 24 percent, which is in line with what it is in the third quarter. It's moved up slightly over the last few quarters. It's been running in the 21, 22 percent before, but we're seeing, you know, frankly, great revenue or great salary increases in the folks that are coming in. They're doing well, and at 24 percent, quite comfortable compared to the 30 or 35 percent you hear that economists say begins to put stress on the household. So a lot of room to run there.

We track that on a new move in basis right now.

Right up again, a little under 24%, which is in line what it is in the third quarter, it's moved up slightly over.

Last few quarters, it's been running in the 'twenty, one 'twenty, 2% before but.

But we're seeing frankly, great revenue.

Great.

Salary increases and the folks that are coming in they're doing well.

And.

24% quite comfortable compared to the 30 or 35%.

Here the economist SAP against puts stress on the household so a lot of room to run there.

Speaker 17: All right. Great. Thank you.

Got it great. Thank you.

And our next question comes from Alexander Goldfarb from Piper Sandler.

Speaker 1: And our next question comes from Alexander Goldfarb from Piper Sanders.

Speaker 18: Your line is open. Oh, great. Good morning down there. And certainly, you guys are popular. A lot of people want to take you to different places. So a few questions here. One, first a clarification. On the year-over-year comps, is there any free rent that you're comping over? So like the 16% numbers that you cited, is that enhanced in any way by burn off of free rent a year ago or this is absolute rent growth?

Your line is open.

Great.

Good morning down there and certainly you guys are popular a lot of people want to take you to different places.

Yeah.

So a few questions here one first a clarification on the year over year comps.

Is there any free rent that you're comping over so like the 16%.

The numbers that you cited is that enhanced in a way by burn off of free rent a year ago or this is absolute rent growth.

Speaker 10: I mean, it's absolutely effective, I mean, concessions were a little bit higher this time last year, but we're talking, you know, 10 to 20 bass points of difference. So it's really no impact at all. That's what I'm saying. Okay.

I mean, its absolute effective rent growth.

Sessions, where a little bit higher this time last year, but we're talking.

10 to 20 basis points of difference.

Really no impact at all.

Okay.

Speaker 18: And then Eric, as far as this seasonality, I mean, you know, your market never really had the shutdown that the coast had. So it's not like there's a big reopening that said.

And then Eric as far as the seasonality, yes, I mean your market never really had the shutdown the post ad.

So it's not like there's a big reopening that said several articles have highlighted the job recovery back to near pre pandemic levels. So what do you think is causing the the the aberration in terms of basically seasonality no longer being the case last year and potentially this year is it.

Speaker 18: Several articles have highlighted the job recovery back to near pre-pandemic levels. So what do you think is causing the aberration in terms of basically seasonality no longer being the case last year and potentially this year? Because again, it's not like all these markets suddenly reopen and people are surging back. So what do you think is really driving?

Because again, it's not like all these market suddenly reopened and people are surging back. So what do you think is really driving this.

Speaker 3: Ah, you know, Alex, I think that...

Alex.

I think that.

Speaker 3: You know, the fact that we did not have a seasonal slowdown.

The the fact that we did not have a seasonal slowdown.

In 2021, I think I would just attribute to the just the continued very strong.

Speaker 3: In 2021, I think I would just attribute to

Speaker 3: The just the continued very strong demand drivers for housing across the sun about whether it's job growth.

Demand drivers for housing across the sunbelt, whether its job growth.

Speaker 3: It's migration trends as people looking to come to a more affordable region of the country. Whatever the motivations and drivers are, I think that those trends were there in 2021.

Its migration trends as people looking to.

Come to a more affordable region of the country.

Whatever the motivations and drivers are.

I think that those trends.

Were there in 2021 and more than offset whatever slowdown typically occurs when people get to the holiday timeframe and are just less reluctant to think about moving.

Speaker 3: and more than offset whatever slowdown typically occurs when people get to the holiday time frame and are just less reluctant to think about moving.

Speaker 3: I think that, you know, we just had such strong, strong pull to these markets for all the reasons I mentioned that in 21 we overcame that normal seasonal mindset. In 2022, I think, we don't know. We think that

I think that we just had such strong strong pull to these markets for all the reasons I mentioned that in 'twenty, one we overcame that normal seasonal mindset.

In 2022 I think.

We don't know.

We think that that it is prudent to think about some kind of a.

Speaker 3: that it's prudent to think about some kind of a normal seasonal slowdown. Certainly, when you look at how we stagger our lease aspirations from a fully management perspective, we tend to stagger more of our lease aspirations in the summer and spring. And we intentionally stagger fewer expirations in the winter months, believing that the traffic levels will be a little moderate, or moderate down from what you see in the spring and the summer. So that's the way we sort of set up the forecast and the way we manage our lease expirations from a portfolio perspective. We may be surprised again in 2022. And all the factors that are played a day may continue to hold up, or will hold up to some degree, I'm sure. I think that we may be surprised the upside again in 2022. But right now, we just believe that a normal seasonal slowdown in the holiday.

A normal seasonal slowdown certainly when you look at how we stagger our lease explorations from a portfolio management perspective, we tend to stagger more of our lease explorations in the summer and spring and we intentionally stagger fewer explorations in the winter months, believing that the.

Traffic levels will be a little mom.

Moderate or moderate down from what you see in the spring in the summer. So that's the way we sort of set up the forecast and the way we manage our lease explorations from a portfolio perspective, we may be surprised again in 2022 and.

With all the factors that are at play today may continue to hold up.

Or will hold up to some degree I'm sure.

I think that we may be surprised the upside again in 2022, but right now we just believe that.

Normal seasonal slowdown in the holiday fourth quarter of next year is a prudent thing to count on.

Speaker 3: fourth quarter of next year is a prudent thing to count on.

And then just finally quick question on development yields.

Speaker 18: And then just finally, quick question on development yields. Obviously, there's cost pressure, there's timing delays, but you have really strong rent growth. So in your model, and I realize that every pro forma always pencils, but in your model, do you anticipate rent growth outpacing the timing delays in materials and labor, or do you think that the costs will outrun or that they're even, in which case yields are unchanged?

Obviously, there is cost pressure theres timing delays, but you have out really strong rent growth. So in your model and I realize that every pro forma always pencils, but in your model do you anticipate rent growth outpacing the timing delays in materials and labor or do you think that the.

<unk> will outrun or that their EBIT in which case yields are so are unchanged.

Speaker 10: Yeah, Alex, this is Brad. You know, we are underwriting a little bit of downward pressure on our development yields. The excuse me, the

Yeah, Alex this is Brad.

We are underwriting a little bit of downward pressure on our development yields the excuse me the.

Developments that we have in our pipeline right now that we've started.

Speaker 10: developments that we have in our pipeline. Right now that we've started, those are kind of locked in.

Those are kind of locked in at.

Speaker 10: Call it a five nine yield with frankly upward movement in that yield when we update with current rents that we're seeing that are outpacing what our original expectations are. So the things that are on the book will certainly outperform what we expect. We do expect those yields to come down, you know, maybe to five and a quarter, five and a half, but but I'll remind you that the way we underwrite our developments are very

Call It a five nine yield with frankly.

Upward movement in that yield when we update with current rents that we're seeing that are outpacing what our original expectations are so the things that are on the book will certainly outperform what we expect we do expect those yields to come down.

Maybe to five in a quarter five and a half, but I'll remind you that.

Way, we underwrite our developments.

We're very conservative.

Speaker 10: We're underwriting at today's rents with very little trending. So, you know, if we have a development that we're working on today that starts in 2023, we do not trend those rents for this year. And depending on, you know, what third-party provider you're looking at, you know, we're expecting rent growth this year of, you know, 10 to 15%. So if we were to underwrite our developments with those trending, I think we'll be fine and match the yields that we're seeing today. But we're not banking on that when we go into a development. We're underwriting with rents today and are just conservative in our underwriting and our expectations.

We're underwriting at today's rents with very little trending so.

If we have a development that we're working on today that starts in 2023, we do not trend those rents for this year and depending on what third party provider. You are looking at were expecting rent growth. This year of 10% to 15%. So if we were to underwrite our developments.

With those trending I think we'll be fine.

And match the yields that we're seeing today, but we're not banking on that when we go into a development where.

Underwriting with rents today are just conservative in our underwriting and our expectations.

Thank you.

Speaker 19: Thank you.

Thanks, Alex.

And our next question comes from.

Speaker 1: And our next question comes from Chandanieh, Lutra from Goldman Sachs. Your line is open.

Anthony <unk> from Goldman Sachs. Your line is open.

Speaker 20: Hi, good morning, everyone. This is Samuel O'Trugelman, thanks for taking my question. So you guys talked about supply levels in deliveries in 2020 to actually down the flight through 2020's Y.

Hi, Good morning, everyone. This is Donald Lu from Goldman Sachs. Thank you for taking my question. So you guys talked about supply.

Fly levels in deliveries in 2022 actually down slightly from 2021.

Speaker 20: So looking out to 2023 and kind of thinking about sort of this fall or rather delay from 2022 plus all this surge capital that we have been seeing into your markets, I mean what gives you comfort that there isn't an oversight, the oversupply situation developing in your backyard as we look out beyond this year and as a follow-up of that you know

So looking out to 2023.

Thinking about sort of.

Paul.

Robyn will need some 2022.

So its capital.

Into your market.

What gives you comfort.

I'm Gonna oversight.

My situation.

<unk> in your backyard as we look out beyond this year.

I can follow up with that.

Speaker 20: How do you think about your offing being competitive in fashion events?

How do you think about.

In comparison.

<unk>.

Well, we don't believe that there is a oversupply risk building at the moment, we think that as you do start to look at 2023, and particularly in 2024 based on permitting data and new start data that we see it suggests to us that.

Speaker 3: Well, we don't believe that there is a oversupply risk building at the moment. We think that as you do start to look at 2023 and particularly in 2024.

Speaker 3: based on permitting data and new start data that we see it suggests to us that supply levels may pick up or will pick up in late 23 into 2024 on what's currently happening, but.

<unk> levels may pick up.

We'll pick up in 'twenty late 'twenty three into 2024 from what's currently happening but.

Speaker 3: you know, that's a pickup in supply. And what really matters is how does that supply?

Sure.

That's a pick up in supplies, what really matters is how does that supply.

Speaker 3: level compared to the demand that is there and resulting absorption that you get. And with the strong demand trends that we expect to continue across these Sunbelt markets, I would suffice.

Level compare to the demand that is there and resulting absorption that you get and with with the strong demand trends that we expect to continue across the sunbelt markets.

I would suffice.

Speaker 3: characterize what we anticipate happening.

Characterize what we anticipate happening as a consequence of supply is perhaps the potential for some moderation in rent growth to begin to show up in late 'twenty three into 2024 as a consequence of supply levels, but the extent of that moderation if.

Speaker 3: as a consequence of supply is perhaps the potential for some moderation in rent growth to begin to show up in late 23 into 2024 as a consequence of supply levels. But the extent of that moderation, if at all, is really gonna come down to what's happening on the demand side of the equation.

It all is really going to come down to what's happening on the demand side of the equation and.

Speaker 3: And what we see happening in Sunbelt markets is continued very strong demand. Coupled with that is what's happening on the single-family side, both single-family rental and single and for sale, where the demand there continues to and the supply there continues to be limited. And so broadly speaking, we just think that it sets up for a very strong demand outlook.

And what we see happening in Sunbelt markets is continued very strong demand coupled with that is what's happening on the single family side, both single family rental and singles and four cell where the demand there continues to and the supply there continues to be.

Limited and so broadly speaking, we just think that it sets up for a very strong demand outlook for apartment housing for the next two or three years and even with some supply levels picking up a little bit in late 'twenty three 'twenty four.

Speaker 3: for apartment housing for the next two or three years, and even with some supply levels picking up a little bit in late 23 or 24, you know, I think it suggests to us that at worst, we're looking at a slight moderation, if you will, from today's performance trends on rent growth.

I think I think it suggests to us that at worst we're looking at.

A slight moderation if you will from today's performance trends on rent growth, but we don't at this point see any reason to underwrite any kind of long term expectation for even reverting back to long term historical trends, we think will be above that for some time.

Speaker 3: But we don't at this point see any reason to underwrite any kind of long-term expectation for even reverting back to long-term historical trends. We think we'll be above that for some time.

Speaker 10: And this is Brad, I'll add another point to that. On the construction side, we're seeing, schedules certainly elongated. We're seeing labor struggles in the market. So getting projects finished is taking longer. So just the overall system is pretty much a capacity. So it's really hard to see a major uptick in the supply side as we go forward from here.

This is Brad I'll add another point to that on the construction side, we're seeing schedules certainly elongated.

We're seeing labor struggles in the market. So getting projects finished is taking longer.

So.

The just the overall system is pretty much at capacity. So it's really hard to see a major.

Uptick in the supply side as we go forward.

For me.

Speaker 1: All right. And our next question comes from Rob Stevenson from JANI. Open.

And our next question comes from Rob Stevenson from Janney.

Open.

Hi, Good morning, guys a quick question on <unk>.

Speaker 21: Good morning, guys. Quick question on same store numbers. You guys are forecasting eight to 10% same store revenue growth. What is the band by market? Is that like 5% at the low end and 15% at the high end? Where is that band and what markets are you seeing at the top and which markets are you expecting to be at the bottom of that among your major ones?

Same store numbers you guys are forecasting 8% to 10% same store revenue growth what is the band by market is that like 5% at the low end at 15% at the high end, whereas that band and what markets are you seeing at the top and which markets are you expecting to be at the bottom of that among your major ones.

Hello.

And I do apologize as speakers can you hear us if you can hear us we are unable to hear you.

Speaker 1: And I do apologize, speakers, can you hear us? If you can hear us, we are unable to hear you.

And I do apologize participants for the technical difficulties, we will try and get the speakers reconnected just one moment.

Speaker 1: And I do apologize, participants, for the technical difficulties. We will try and get the speakers reconnected. Just one moment.

And I do apologize everyone. It looks like the speaker's lost power they are reconnecting just momentarily.

Speaker 1: And I do apologize, everyone. It looks like the speaker's lost power. They are reconnecting just momentarily.

Speaker 1: All right everyone, we got the speakers reconnected. They're going to let us know what happened. Go ahead.

Alright, everyone. We got the speakers reconnected, they're gonna, let us know what happened go ahead.

Speaker 22: Sorry, this is Eric Bolton here. We're actually having an ice cream snowstorm here in Memphis, believe it or not.

Oh, sorry.

Yeah.

Uh huh.

Just one here in Memphis believe it or not and one of them.

The building was power.

Speaker 22: And so the generator came back on, but the line got disconnected. So all's well, but we did lose power. I'm going to suggest that we just go ahead and wrap up the earnings call at this point. I think there were three more questions out there. And we just ask that you guys reach out to us directly. Feel free to call either myself or Al or Andrew, and we'll be happy to answer your questions. But we appreciate.

And so the generator kick back on but we've.

I got disconnected, so all's well, but we did we did lose power I'm going to suggest that we just go ahead and wrap up the earnings call. At this point I think there were three more questions out there and we're just asked that but you guys reach out to us directly feel free to call either myself or al or Andrew and we'll be happy to answer your.

<unk>, but we appreciate everyone joining us this morning, and sorry for the the lost power here, but Oh I'll get on our side. So thank you very much.

Speaker 22: everyone in joining us this morning and sorry for the loss of power here but all's good on our side so thank you very much.

Speaker 1: And this does conclude today's program. Thank you for your participation. You may disconnect at any time.

And this does conclude today's program. Thank you for your participation you may disconnect at any time.

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