Q1 2024 Centerspace Earnings Call
Operator: Welcome to the CentrSpace Q1 2024 earnings call. My name is Karly, and I'll be coordinating your call today. During the presentation, you can register to ask a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two. We will now hand you over to your host, Josh Klaetsch, to begin. Josh, please go ahead. Good morning.
Welcome to defer interest page Q1, 2024 earnings call. My name is Carla and I'll be coordinating your call today. During the presentation. You can question to ask a question by pressing star followed by one on your telephone keypad. If you change your mind push by softball about you.
Josh Klaetsch: We will now hand, you over to your host Josh.
Clutch: Clutch to begin Josh. Please go ahead, good morning, Dennis basis Form 10-Q for the quarter ended March 31, 2024 was filed with the SEC yesterday after the market closed.
Josh Klaetsch: Good morning. Center Spaces' Form 10-Q for the quarter ended March 31, 2024, was filed with the SEC yesterday after the market closed. Additionally, our earnings release and supplemental disclosure package have been posted to our website at centerspacehomes.com and filed on Form 8K. It's important to note that today's remarks will include statements about our business outlook and other forward-looking statements that are based on management's current views and assumptions. These statements are subject to risks and uncertainties discussed in our filing under the section titled Risk Factors and in our other filings with the FEC.
Additionally, our earnings release and supplemental disclosure package have been posted to our website at Dennis based on Dot Com and filed on form 8-K.
Josh Klaetsch: It is important to note that today's remarks will include statements about our business outlook and other forward looking statements that are based on management's current views and assumptions.
Josh Klaetsch: These statements are subject to risks and uncertainties discussed in our filings under the section titled risk factors and in our other filings with the SEC.
Josh Klaetsch: We cannot guarantee that any forward-looking statements will materialize, and you're cautioned not to place undue reliance on these forward-looking statements. Please refer to our earnings release for reconciliations of any non-GAAP information, which may be discussed on today's call. I'll now turn it over to CenterSpace's president and CEO, Anne Olson, for the company's prepared remarks.
We cannot guarantee that any forward looking statements will materialize and you are cautioned not to place undue reliance on these forward looking statements.
Anne M. Olson: Please refer to our earnings release for reconciliations of any non-GAAP information, which may be discussed on today's call.
Now I'll turn it over to center stage as President and CEO and also for the company's prepared remarks.
Anne M. Olson: Good morning, everyone, and thank you for joining Center Space's first quarter earnings call. With me this morning is Bhairav Patel, our Chief Financial Officer, and Grant Campbell, our Senior Vice President of Capital Markets.
Anne M. Olson: Good morning, everyone and thank you for joining centers basis first quarter earnings call with me. This morning is brought to tell our Chief Financial Officer, and Greg Campbell, Our senior Vice President of capital markets.
Anne M. Olson: Before taking your questions, we will briefly cover our first quarter results and trends, our transaction activity, and our outlook for the remainder of 2024. I'm happy to report Core FFO per share of $1.23 for the first quarter, driven by stable fundamentals across our markets, paired with disciplined expense management, and a little help from a mild winner that reduced our utilities and associated expenses. While Bhairav will discuss our quarterly results in detail, I would like to take a minute to discuss our current leasing trend.
Anne M. Olson: Before taking your questions. We will briefly cover our first quarter results and trend our transaction activity and our outlook for the remainder of 2024.
Anne M. Olson: I'm happy to report core <unk> per share of $1 23 for the first quarter driven by stable fundamentals across our markets paired with disciplined expense management and a little help from the mild winter that reduced our utilities and associated expenses.
Anne M. Olson: Well, Rob will discuss our quarter results in detail I would like to take a minute to discuss our current leasing trends.
Anne M. Olson: In our same store portfolio, market rent has increased year over year for the first quarter, and while a moderate amount of 2.5%, this is in line with our expectations. And year to date, we are pleased to see that translate into positive lease over lease growth. For new visas, our trade outs were flat for the quarter, and renewals prices increased by an average of 3.4% for blended rate increases of 1.5%. The new lease tradeouts increase each month in the quarter.
Josh Klaetsch: And our same store portfolio market rent has increased year over year for the first quarter and while a moderate amount of two 5%. This is in line with our expectations and year to date, we are pleased to see that translate into positive lease over lease growth.
Anne M. Olson: For new leases are trade outs were flat for the quarter and renewals price debt increases averaging three 4% for a blended rate increases of one 5%.
Anne M. Olson: The new lease trade outs increased each month in the quarter. This bodes well for us as we begin the leasing season.
Anne M. Olson: This bodes well for us as we begin the leasing process. Occupancy remains the focus, and today we are slightly above 95 percent. Our marketing strategy aimed at the highest intent lease has led to converting more leases in this quarter than the same period last year. As we look at April, pricing is trending positively, with indications of new lease tradeouts of approximately 3.5% and renewal increases of 3.3%. We feel good about our resident retention rates, which are above 50%.
Anne M. Olson: Occupancy remains a focus and today, we're slightly above 95%.
Anne M. Olson: Our marketing strategy aimed at the highest assembly. It has led to converting more leases in this quarter than the same period last year.
Anne M. Olson: As we look at April pricing is trending positively with indications of new lease trade outs of approximately three 5% and renewal increases of three 3% we feel good about our resident retention rates, which are above 50%.
Anne M. Olson: Our results in Q1 and the trends we see give us confidence to bring up the low end of our guidance, raising our outlook for 2024 at the midpoint to reflect estimated annual core FFO growth year over year of 1%, with this growth coming in addition to the deleveraging and portfolio upgrades we achieved last year. Our confidence in this portfolio is bolstered by low VAT debt of just 26 basis points in Q1, as well as continued stability in our regional economy.
Anne M. Olson: Our results in Q1, and the trends, we see give us confidence to bring up the low end of our guidance raising our outlook for 2024 at the midpoint to reflect the estimated annual core <unk> growth year over year of 1% with this growth coming in addition to the deleveraging and portfolio upgrades, we achieved last year.
Anne M. Olson: Our confidence in this portfolio is bolstered by low bad debt of just 26 basis points in Q1 as well as continued stability in our regional economy.
Anne M. Olson: On the whole, our portfolio is not experiencing the high supply dynamics of Sunbelt and some coastal markets, and our supply profile remains relatively muted. Denver and Minneapolis are the markets with the highest levels of supply. And we are seeing tapering of homes under construction and projected deliveries into next year. With respect to Minneapolis, our largest market concentration, it ranked eighth in the nation for most apartment absorption over the last 12 months. And according to, rent cafes was the number one search market for the fourth month in a row.
Anne M. Olson: Our portfolio is not experiencing the highest supply dynamics of sunbelt in some coastal markets and our supply profile remains relatively muted.
Anne M. Olson: Denver, and Minneapolis, our markets with the highest levels of supply and we are seeing tapering of homes under construction and projected deliveries into next year with respect to Minneapolis, our largest market concentration. It ranked eighth in the nation for most apartment absorption over the last 12 months and according to run cafes was the number one search market for.
Anne M. Olson: The fourth month in a row.
Anne M. Olson: Turning to transaction activity, all is quiet on the acquisition front. We believe some recent larger transactions could help narrow the bid-ask spread on valuations and loosen up the market for acquisition activity. During the first quarter, we closed the previously disclosed sales of two communities in Minneapolis for gross proceeds of $19 million.
Anne M. Olson: Turning to transaction activity olive quiet on the acquisition front, we believe some recent larger transactions could help narrow that bid ask spread on valuations and loosen up the market for acquisition activity. During the first quarter. We closed the previously disclosed sales of two communities in Minneapolis for gross proceeds of $19 million. These.
Anne M. Olson: These proceeds were used to pay down the line of credit debt that was associated with our Q4 2023 acquisition in Port Collins, completing our capitalization of that transaction, advancing our capital recycling initiative, and facilitating the purchase of $4.9 million worth of our common stock early in the quarter. We're committed to growing our business, and while the overall economic environment has limited our access to capital, we do believe we can effectively recycle portions of our current portfolio for the right opportunities.
Anne M. Olson: These proceeds were used to pay down the line of credit debt that was associated with our Q4 2023 acquisition in Fort Collins complete.
Anne M. Olson: Completing our capitalization of that transaction advancing our capital recycling initiatives and facilitating the purchase of $4 $9 million worth of our common stock early in the quarter.
Anne M. Olson: We're committed to growing our business and while the overall economic environment has limited our access to capital we.
Anne M. Olson: We do believe we can effectively recycled portions of our current portfolio for the right opportunities.
Anne M. Olson: We will be well positioned when those opportunities arrive. I'm extremely grateful for all our teams do each day to deliver value to our shareholders. Our strong culture is evident in our recent diversity, equity, and inclusion report, highlighting our advancement of, and commitment to, providing a great home for our teams to achieve the best results. This report is available on our website. Now, I'll turn it over to Bharath to discuss our overall financial results and outlook for the remainder of 2024.
Anne M. Olson: We will be well positioned when those opportunities arise.
Bharath: I'm extremely grateful for all of our teams do each day to deliver value to our shareholders. Our strong culture is evident in our recent diversity equity and inclusion report highlighting our advancement of and commitment to providing a great home for our team to achieve the best results. This report is available on our website now I'll turn it over to Brian to discuss our overall financial.
Bharath: Our results and outlook for the remainder of 2024.
Bhairav Patel: Thanks, Anne, and good morning, everyone. We are pleased to report another quarter of strong earnings growth with COREXA for $1.23 per diluted share, driven by a 7.5-year increase in SankStore F&I, revenues from same store communities increased 3.5% compared to the same period in 2023, with the increase attributable to 3.9% growth in average monthly revenue for occupied homes, which was partially driven by higher roughs income as the rollout was fully implemented at the end of last year.
Bharath: Thanks, Dan and good morning, everyone.
Bhairav Patel: We're pleased to report another quarter of strong earnings growth with core of the pool.
Bhairav Patel: $1.23 per diluted share driven by a seven five.
Bhairav Patel: The increase in same store NOI.
Bhairav Patel: Revenues from same store communities increased three 5% compared to the same period in 2023 with the increase attributable to three 9% growth in average monthly revenue per occupied homes, which was partially driven by higher rubs income as the rollout was fully implemented at the end of last year.
Bhairav Patel: The higher per home revenue was slightly offset by a 30 basis point yearly or decrease in weighted average occupancy to 94.6%. However, occupancy has picked up nicely in April, as Anne noted in her remarks, and with market rents trending in line with expectations, we are well positioned as we enter the leasing season. Property operating expenses were down by 2.2% year over year. The decrease was driven by lower utilities costs and successful real estate tax appeals, offset by increases in compensation, administrative, and marketing costs, and higher insurance costs. While successful tax appeals are not uncommon, we recognize approximately $700,000 or $0.04 per diluted share from one such appeal spanning multiple years.
Bhairav Patel: The higher per home revenue was slightly offset by a 30 basis point year over year decrease in weighted average occupancy to 94, 6%.
Bhairav Patel: However, occupancy has picked up nicely in April as Anne noted in her remarks in this market rents trending in line with expectations, we are well positioned as we enter the leasing season.
Bhairav Patel: Property operating expenses were down by two 2% year over year. The decrease was driven by lower utilities costs and successful real estate tax appeals.
Bhairav Patel: Set by increases in compensation administrative and marketing costs and higher insurance premiums.
Bhairav Patel: While successful tax appeals are not uncommon, we recognized approximately 700000 or <unk> <unk> per diluted share from one such appeal spanning multiple years.
Bhairav Patel: However, it did not materially impact our full-year projections as the anticipated refund was incorporated in our prior projections and corresponding guidance ranges we shared last quarter. Turning to guidance, we updated our 2024 expectation in last night's press release. For 2024, we now expect quarterly revenue of $4.74 to $4.92 for diluted share, an increase of three cents at the midpoint from prior expectation. This number assumes same-store NOI growth of 2.5% to 4% driven by same-store revenue growth of 3% to 4.5% and same-store total expense growth of 4% to 5.5%.
Bhairav Patel: However, it did not materially impact our full year projections as the anticipated refund was incorporated in our prior projections and corresponding guidance ranges, we shared last quarter.
Bhairav Patel: Turning to guidance, we updated our 2024 expectations in last Night's press release, where 2024, we now expect quarter $4 74 to $4 92 per diluted share an increase of <unk> <unk> at the midpoint from prior expectations.
Bhairav Patel: This number assumes same store NOI growth of two 5% or 4% driven by same store revenue growth of 3% to four 5% and same store total expense growth of 4% or five 5%.
Bhairav Patel: A warmer-than-usual winter and favorable changes in natural gas pricing led to better-than-expected results in utilities during the first quarter, helping us reduce year-over-year controllable expenses and, in turn, decrease our expectations for controllable expense growth. On the non-controllable expense side, favorable results, particularly in real estate taxes related to both the previously mentioned rebate and other tax adjustments, as well as lower non-reimbursable losses, Importantly, I'd like to highlight the relation between utility expenses and RUV's revenues and remind everyone that lower utility costs drive lower expectations for RUV's revenues, which has led to a decrease in the high end of our revenue.
Bhairav Patel: A warmer than usual winter and favorable changes in natural gas pricing led to better than expected results in utilities during the first quarter, helping us reduce year over year controlling expenses and in turn decreased our expectations were controllable expense growth.
Bhairav Patel: On the non controllable expense side favorable results, particularly in real estate taxes related to both the previously mentioned rebate and other tax adjustments.
Bhairav Patel: As well as lower non reimbursable losses are leading us to decrease full year expectations.
Bhairav Patel: Importantly, I'd like to highlight the relation between utility expenses and rubs revenues and remind everyone that the lower utilities costs drove lower expectations for rubs revenues, which led to the decrease in the high end of our revenue guidance.
Bhairav Patel: Moving on to other components of that GNA, and property management costs, and interest expense are expected to be slightly higher than previously projected. Our guidance for capital expenditures, including value-added spend, is unchanged from last quarter. On the capital front, our balance sheet remains flexible. We have a one-ladder debt maturity schedule that features a weighted average cost of 3.6% and a weighted average time to maturity of six years. And we had approximately $230 million of liquidity at quarter end via cash and line of credit capacity.
Bhairav Patel: Moving on to other components of G&A and property management costs and interest expense are expected to be slightly higher than previously projected.
Bhairav Patel: Guidance for capital expenditures, including value add spend is unchanged from last quarter.
Bhairav Patel: On the capital front, our balance sheet remains flexible.
Bhairav Patel: Little ladder debt maturity schedule that features the weighted average cost of three 6% and weighted average time to maturity of six years, and we had approximately $230 million of liquidity at quarter end cash and line of credit capacity.
Bhairav Patel: Her capital repositioning activities last year drove leverage down half a turn over the course of the year, leading to Q1 net debt to EBITDA of 7.1 times. As noted in our February call, this balance sheet strength allowed us to opportunistically buy back shares with Centerspace, repurchasing 88,000 shares at an average price of $53.62 during Q1. We have already funded $8.8 million of the $15.1 million to be committed to a development project in the Minneapolis area, with the remaining funding expected to occur over the next several months.
Bhairav Patel: Our capital repositioning activities last year drove leverage down half a churn or the course of the year, leading to Q1 net debt to EBITDA of seven one times.
Bhairav Patel: As noted in our February call this balance sheet strength.
Bhairav Patel: Loud us to Opportunistically buy back shares with center space Repurchasing 88000 shares at an average price of $53 62 during Q1.
Bhairav Patel: We've already funded $8 8 million of the $15 1 million, we've committed to a development project Apple This area with the remaining funding expected to occur over the next several months.
Bhairav Patel: This, along with the sale of two assets in the Minneapolis metro area for roughly $19 million, has been incorporated in our guidance. Our guidance assumes no additional investment activity for the rest of 2024. To conclude, we are proud of the results we achieved in the quarter, and I commend our Center Space team for providing us with an excellent start to the year. We look forward to building upon these results in the rest of 2024. And with that, I will turn the line back to the operator for your question.
Bhairav Patel: This along with the sale of two assets in the Minneapolis Metro area for roughly $19 million has been incorporated in our guidance.
Bhairav Patel: Our guidance assumes no additional investment activity for the rest of 2024.
Bhairav Patel: To conclude we are proud of the results we achieved in the quarter and I commend our center space and providing us with an excellent start to the year.
Bhairav Patel: We look forward to building upon these results and the rest of 2024 and with that I will turn the line back to the operator for your questions.
Speaker Change: Thank you.
Speaker Change: To ask a question. Please press star followed by one on your telephone keypad. If you change your mind. Please press star followed by two am preferring to ask your question. Please make sure your devices on music locally.
Operator: Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Brad Heffer from RBC.
Operator: Our first question comes from Brad Heffer from RBC.
Bradley Barrett Heffern: Hey, good morning, everybody can you walk through how things look on the ground in your smaller markets I think we all have a pretty good handle on Minneapolis, and Denver, but it would be great to get a quick perspective on Rochester, St Cloud Omaha, North Dakota et cetera.
Bradley Barrett Heffern: Hey, good morning, everybody. Thanks. Can you walk us through how things look on the ground in your smaller markets? I think we all have a pretty good handle on Minneapolis and Denver, but it would be great to get a quick perspective on Rochester, Zancloud, Omaha, North Dakota, etc.
Speaker Change: Yeah. Good morning, Brian Great question as you know our smaller markets do make up a pretty significant portion of our NOI and we've seen real strength out of those markets, particularly across North Dakota on a year over year basis. Those market no hallmarks are really lack of supply there and so we and continued demand so we <unk>.
Anne M. Olson: Yeah, good morning, Brad. Great question. As you know, our smaller markets do make up a pretty significant portion of our NOI, and we've seen real strength in those markets, particularly across North Dakota, on a year over year basis. Those markets, the hallmarks are really a lack of supply there. And so we, and continued demand. So we have been able to see good rental increases, good renewal increases, and really steady occupancy across those markets.
Anne M. Olson: Been able to see good rental increases good renewal increases and really steady occupancy across those markets.
Anne M. Olson: A lot of very low unemployment in those markets. So we have really good strong job and regional economies supporting that supporting that demand in Omaha.
Anne M. Olson: There is a lot of very low unemployment in those markets. So we have really good, strong jobs and regional economies supporting that, supporting that demand in, you know, Omaha, Rapid City, Billings, across North Dakota; we've seen a lot of strength.
Anne M. Olson: <unk> city billings across North Dakota, we've seen a lot of strength.
Anne M. Olson: Okay.
Speaker Change: Got it and then you mentioned that April pricing, new lease had a pretty significant inflection there is kind of the mid threes, where you would expect it to shake out for the bulk of leasing season or do you expect to see sort of more of a sequential gain there as we get deeper into it.
Anne M. Olson: Okay, got it. And then you mentioned that April pricing for new leases had a pretty significant inflection there in the mid-threes. Where would you expect it to shake out for the bulk of leasing season? Or do you expect to see sort of more of a sequential gain there as we get deeper into it? Yeah, we're we're right on where we are.
Anne M. Olson: Yes, where we are right on where we expected right now and we do expect some acceleration into the leasing season.
Anne M. Olson: We may see the renewals stay right around where they are a little bit flat for a few more months, but we do expect that new lease pricing is going to continue to accelerate.
Anne M. Olson: Yeah, we're right on where we expected right now, and we do expect some acceleration into the leasing season, but we may see the renewal stay right around where they are a little bit flat for a few more months. But we do expect that new lease pricing is going to continue to accelerate.
Speaker Change: Okay. Thank you.
Anne M. Olson: Our next question comes from John Kim from BMO capital markets.
John P. Kim: Our next question comes from John Kim from BMO Capital Markets.
John P. Kim: Thank you.
John P. Kim: The opposite question, Nebraska first question, what's going on in Minneapolis.
John P. Kim: Thank you. I have the opposite question to Brad's first question. What's going on in Minneapolis? You mentioned it's one of the top net absorption markets; it's one of the most searched markets for months in a row.
John P. Kim: You mentioned that from one of the top net absorption markets. It's one of the most searched markets four months in a row, what's driving the demand right now.
Anne M. Olson: What's driving the man right now?
Anne M. Olson: Yeah, I think similar to some of our smaller markets, Minneapolis has very low unemployment and, you know, continued rising costs of housing for single family homes, particularly single family homes, and then coupled with high interest rates. So, you know, one of the reasons Minneapolis or any market gets supply is because there is demand. I think Minneapolis had quite a bit of pent-up demand, you know, a lot of years of lack of supply.
John P. Kim: Yes, I think similar to some of our smaller markets Minneapolis has very low unemployment and continued rising cost of housing from single family homes.
Anne M. Olson: Single family homes, and then coupled with high interest rates.
Anne M. Olson: No.
Anne M. Olson: One of the reasons Minneapolis or any market get supply because there was demand I think Minneapolis had quite a bit of pent up demand.
Anne M. Olson: Lot of years of lack of supply.
Anne M. Olson: I'll let Grant touch on the supply and demand dynamics just a little bit, but I, you know, here, what we're seeing on the ground is continued interest and good traffic and rising occupancy rates, coupled with strong renewals and now, you know, new lease pricing that's positive. So, Grant, do you want to just give a couple comments on supply? Certainly. Morning, John.
Anne M. Olson: I'll, let grant touch on touch on the supply and demand dynamics with a little bit but.
Grant: What we're seeing on the ground is.
Grant: Continued interest and good traffic and rising occupancy rates, coupled with strong renewals and now.
Anne M. Olson: New lease pricing that's positive. So grant do you want to just give a couple of comments on the supply certainly morning, John from a supply perspective in Minneapolis. The pipeline certainly has tapered over recent quarters.
Grant P. Campbell: Certainly. Morning, John.
Grant P. Campbell: From a supply perspective in Minneapolis, the pipeline certainly has tapered over recent quarters. Currently, we're at about 3.7% of existing stock under construction. That is down from 6% at mid-year 2023. Thus, the tapering has been realized. Peak supply, in our opinion, has been realized in Minneapolis, and we've moved past it. The next 12-month forecasted deliveries in this market are 6,700 apartment homes. And if you look at the five-year annual average between 2019 and 2023, our next 12-month figure is about two-thirds of that annual run rate that has been realized historically.
Grant P. Campbell: Currently we're at about three 7% of existing stock under construction that is down from 6% at midyear 2023.
Grant P. Campbell: So that that tapering has been realized peak supply in our opinion has been realized in Minneapolis, and we've moved past. It next 12 months' forecasted deliveries in this market.
Grant P. Campbell: Our 6700 apartment homes and if you look at the five year annual average between 2019 and 2023. Our next 12 month figures about two thirds of that annual run rate that had been realized historically.
Grant P. Campbell: Okay.
Grant P. Campbell: And you mentioned in your prepared remarks, I think the April new and renewal leases were.
Anne M. Olson: And then, Anne, you mentioned in your prepared remarks that April new and renewal leases were, the growth rates were right on top of each other. Historically, you've had 120 basis points spread, renewals higher. Was there anything in April, whether it's concessions or something else building occupancy that led to that renewal rate not being higher than new lease growth rates?
Anne M. Olson: Growth rates were right on top of each other historically, you've had 120 basis points spread.
Anne: It was higher.
Anne M. Olson: Was there anything in April that.
Anne M. Olson: Whether it's concessions or something else building occupancy that led to that.
Anne M. Olson: Renewal rate not being higher than new new lease growth rate.
Anne M. Olson: Yeah, yes. Part of it is building occupancy; we were back up above 95%, as we were, you know, as of April 15. And I think we are aiming towards 96 as we head into leasing season, so that is holding the renewal rates a little bit flatter. Also, you know, these renewals that priced in April or that were effective in April, you know, those really priced in January. And so at that time, we did have, you know, really low, slightly negative new lease rates. So some of the deceleration is just timing wise from when they priced to when they're actually effective for April. But yes, also, we are building occupancy with a really strong focus on that.
Anne: Yeah, Yes part of it is building occupancy we were back.
Anne M. Olson: Back up above 95% as we.
Anne M. Olson: As of April 15th and I think.
Anne M. Olson: Aiming towards 96, as we head into leasing season, so that is holding the renewal rates a little bit flatter also these renewals that priced in April or that were affected in April those really priced in January and so at that time, we did have.
Anne M. Olson: Really low slightly negative new lease rate. So some of the deceleration is it just timing wise from when they price when they are actually effective for April but yes. Also we are building occupancy with a with a really strong focus on that.
Anne M. Olson: And how do you see renewals for the remainder of the quarter of the year? Yeah, I think
Speaker Change: And how do you see renewals for the remainder of.
Anne M. Olson: Over the quarter of the year.
Anne M. Olson: Yeah, I think, you know, right now, renewables are pricing around 3.3%. And that's out into July. And so I think for the quarter, they're going to come in right around, you know, 3, 3.5. Between 3 and 3.5 for the quarter is our estimate right now.
Speaker Change: Yes, I think right now renewals are pricing around three 3%.
Anne M. Olson: And thats out into July and so I think for the quarter theyre going to come in right around.
Anne M. Olson: Three three and a half between three and three and a half for the quarter as is our estimate right now.
Speaker Change: Great. Thank you.
Brad Stevenson: Our next question comes from Brad Stevenson of Janey.
Anne M. Olson: Our next question comes from Rob Stevenson from Janney.
Anne M. Olson: Good morning, guys. And just to follow up on John's question, at what point do you expect new lease growth to have the inflection go back below renewals? Because it's, you know, you guys are one of, you know, maybe one, maybe two companies that are seeing that strong new lease growth. Just curious as to when that stays relatively consistent throughout the year, or whether or not that sort of falls back at some point.
Speaker Change: Hey, good morning, guys and just to follow up on John's question.
Anne M. Olson: At what point do you expect new lease growth to have the inflection go back below renewals because it's.
Anne M. Olson: You guys are one of maybe one maybe two companies that are seeing that strong new lease growth just curious as to.
Anne M. Olson: When that if that stays relatively consistent throughout the year or whether or not that sort of falls back at some point here.
Bhairav Patel: Morning, Rob. This is Bhairav. I'll take that one. So with respect to new lease pricing, typically, we see that higher than renewals in the second quarter and the third quarter, just given how our market rent, you know, acts as we go through the season. So towards the end of the third quarter and the beginning of the fourth quarter is when you'll see that kind of trend slip.
Anne M. Olson: Good morning, Rob This is Bob I'll take that one so with respect to new lease pricing typically we see that.
Bhairav Patel: Higher than renewals in the second quarter in the third quarter, just given how a market rent.
Bhairav Patel: Ask as we go through the season, so towards the end of the third quarter into fourth quarter is when you'll see that kind of trend slip.
Speaker Change: Okay and then the mid point of the same store revenue guidance I think is 375 now versus the three and a half you did in the first quarter.
Bhairav Patel: Okay, and then the midpoint of the same store revenue guidance I think is 3.75 now versus the three and a half you did in the first quarter. What is it over the remainder of the year? Is it just conservatism that doesn't see revenue growth accelerate from here given the seasonally beneficial moves usually in the second and third quarter?
Bhairav Patel: What is it over the remainder of the year or is it just conservatism that doesn't see revenue growth accelerate from here given the seasonally beneficial.
Bhairav Patel: Moves usually in second and third quarter.
Bhairav Patel: Yeah, I mean, from our perspective, the first quarter was about a couple of things, right? It was utilities costs, which had an impact on revenue. But with respect to actual rental revenue, it's trending exactly the way we had expected. So heading into the second quarter and the third quarter, our projections haven't really materially changed. We price 60% of our leases in the second quarter and third quarter, so if the trend continues, we do expect to be in the same ballpark that we had expected, you know, two months ago.
Speaker Change: Yes, I mean, so from our perspective.
Bhairav Patel: The first quarter was about a couple of things right. It was utilities cost, which has an impact on <unk> revenues.
Bhairav Patel: With respect to actual rental revenue, it's been trending exactly the way we had expected heading into the second quarter in the third quarter, our projections haven't really materially changed we do price 60% of our leases in the second quarter and third quarters. If the trend continues we do expect to be in the same ballpark.
Bhairav Patel: We had expected two months ago, what's driving the lower revenues really rubs income because of the lower utilities costs is reducing rental revenue. So but overall I think I mentioned on the last call. There are blended rate rate estimate for for the year was about 3% that is still what we're expecting what you've seen is rental revenue trend.
Bhairav Patel: What's driving the lower revenues really hurts income because the lower utilities cost is reducing rental revenue. So, but overall, I think I mentioned on the last call that our blended rate estimate for the year was about 3%. That is still what we are expecting.
Bhairav Patel: What you've seen is, you know, rental revenue trending exactly the way we had thought it would. You know, in the first quarter, it was about 1.6%. In April, it's about 3%. We would expect to see it increase a little bit as we enter Q2 and Q3. So again, not materially different from a revenue perspective on the expense side, but there's a couple of things that are driving the change. And, you know, we mentioned real estate taxes.
Bhairav Patel: <unk> the way we had thought it would.
Bhairav Patel: In the first quarter. It was about one 6% in April it's about 3%, we would expect to see an increase a little bit as we enter Q2 and Q3.
Bhairav Patel: Again, not materially different from a revenue perspective on the expense side. There's a couple of things that are driving.
Bhairav Patel: The change and we mentioned real estate taxes, that's a onetime thing in the first quarter.
Bhairav Patel: That's a one-time thing in the first quarter. And, you know, again, utilities costs, which are again related to the mild winter. So as you think about the rest of the year, our projections are materially different from what we had said last time, and revenue is trending exactly the way we had thought, including occupancy, which is trending.
Bhairav Patel: And.
Bhairav Patel: No.
Bhairav Patel: Again utilities cost, which again is related to the minus debentures. So as you think about the rest of the year, our projections aren't materially different from what we had said last time and revenue is trending exactly the way, we have thought including occupancy which is trending in the right direction.
Bhairav Patel: Okay.
Anne M. Olson: Okay, and then I guess the other question... Oh, go ahead. No, no. Go ahead, Anne.
Speaker Change: And then I guess the other question.
Anne M. Olson: Yeah.
Anne: Oh go ahead.
Anne M. Olson: No no go ahead Anne.
Anne M. Olson: I was just going to say, you know, the corresponding offset to that revenue is actually greater on the expense saving side. So overall, even though we're being, it feels conservative on the revenue decline, that decline and what we're projecting for total revenue, I mean, it's actually going to drop to the bottom line in a positive manner in NOI.
Anne: I was just going to say the corresponding offset to that revenue is actually greater on the expense savings side. So overall, even though we're being conservative on the revenue that decline and what we're projecting for total revenue I mean, it's actually going to drop to the bottom line in a positive manner in NOI.
Speaker Change: Okay. That's helpful and then.
Speaker Change: Can you talk a little bit about the pricing environment for the types of assets in the markets and submarkets that you're looking.
Anne M. Olson: Okay, that's helpful. And then, can you talk a little bit about the pricing environment for the types of assets and the markets and sub-markets that you're looking, you know, to potentially sell? Where was the sort of cap rate fallout on that $19 million of dispositions? And, you know, you guys, I know, it's not in guidance, but are you guys thinking about marketing more assets for sale and seeing if you can get your price hit this year? You know, how are you thinking about, you know, sort of culling the portfolio over the remainder of 2020?
Anne M. Olson: To potentially sell.
Anne M. Olson: Where was the sort of cap rate fallout on that $19 million of dispositions.
Anne M. Olson: You guys I know, it's not in guidance, but are you guys thinking about marketing more assets for sale and seeing if you can get your price hit this year you.
Anne M. Olson: Are you thinking about it.
Anne M. Olson: Sort of calling the portfolio over the remainder of 'twenty four.
Speaker Change: Yeah. This is an and then I'm going to ask Graham to comment specifically on pricing, but as we look at 24, we certainly do have assets that we believe could be good candidates for capital recycling, we need some pickup in transaction volume in the markets that we'd like to acquire so if we found it.
Anne M. Olson: Yeah, this is Anne. And then I'm going to ask Grant to comment specifically on pricing. But as we look at 24, you know, we certainly do have assets that we believe could be good candidates for capital recycling; we need some pickup in transaction volume in the markets that we'd like to acquire. So if we found a great opportunity, or there was some good transactions that we thought we would have a good use of proceeds, you know, we have some assets in mind, like our historical capital recycling assets, those are, you know, in markets where we think So you know, we do feel like we have a pipeline that we could use for capital recycling; we just need some acquisition activity and the right opportunity in order to implement that.
Grant: Great opportunity or there was some good transactions that we thought we would have a good use of proceeds.
Grant: We do have some assets in mind like our historical capital recycling those are in markets, where we think have lower growth theyre older assets.
Anne M. Olson: With high Capex and low growth potential lower rents overall.
Anne M. Olson: We do feel like we have a pipeline that we could use for capital recycling, we just need some some acquisition activity.
Grant: The right opportunity in order to implement that with respect to the Minneapolis assets that we sold in pricing I'll, let Graham answer yes, the Minneapolis sale those older vintage communities cap rate there was low sixes.
Grant P. Campbell: With respect to the Minneapolis assets that we sold in pricing, I'll let Grant Yeah, the Minneapolis sale, those older vintage communities, the cap rate there was low sixes. Regarding your question on the current pricing landscape, you know, one there continues to be a bid-ask spread that exists in a lot of cases today on individual asset conversations that we're having. Along with that, there is a continued disconnect between public market valuations and private market valuations based on the recent transaction data points that do exist.
Grant P. Campbell: Regarding your question on current pricing landscape.
Grant P. Campbell: One there continues to be a bid ask spread that exists in a lot of cases today on individual asset conversations that we're having.
Grant P. Campbell: Along with that there is the continued disconnect between public market valuations and private market valuations based on the recent transaction data points that do exist.
Grant P. Campbell: And Denver current price talk today is five to five and a half we did see an incremental uptick approximately one month ago and valuation conviction in the private market, where buyers and sellers were increasingly finding common ground at call. It five to five in a quarter.
Grant P. Campbell: In Denver, current price talk today is five to five and a half. We did see an incremental uptick approximately one month ago in valuation conviction in the private market, where buyers and sellers were increasingly finding common ground at call it five to five and a quarter for well-located communities. That was then followed by the recent run-up in the 10-year Treasury, which has again brought real-time volatility to asset pricing and is leading to, you know, what I'll call the latest installment of price discovery.
Grant P. Campbell: For well located communities that was then followed by the recent run up in the 10 year Treasury, which is again brought real time volatility to asset pricing and is leading to what I'll call. The latest installment of price discovery.
Speaker Change: Okay, and I guess the question.
Grant P. Campbell: <unk>.
Grant P. Campbell: Asks raises is what is the financing environment I mean, you've got Fannie and Freddie and you've got some other stuff available to them.
Brad Stevenson: Okay. And I guess the question that that asks or raises is, what is the funding environment? I mean, you've got Fannie and Freddie, and you've got some other stuff available to apartments that aren't available to other guys, but are you seeing the financing market flow reasonably? Is it still tight? Is it choppy with whether or not, you know, guys are using bank financing? And if they pull back in your markets, how would you characterize the financing environment for somebody buying, you know, $19 million worth of assets or, you know, the sort of BB minus stuff?
Brad Stevenson: <unk> that aren't available to other guys, but.
Brad Stevenson: Are you seeing the the financing market flow reasonably is it still tight as a choppy with whether or not you guys are using bank financing and if they pulled back in your markets. How would you characterize the financing environment for somebody buying <unk>.
Brad Stevenson: The $19 million worth of assets or.
Brad Stevenson: B B minus stuff.
Brad Stevenson: Rob This is Rob so from a financing perspective.
Brad Stevenson: <unk> seen spreads hold steady I mean, I think the volatility is really driven by mix.
Brad Stevenson: Treasury market.
Bhairav Patel: Bhairav, this is Bhairav. So from a financing perspective, we have kind of seen spreads hold steady. I mean, I think the volatility is really driven by the Treasury market or the Treasury rates. So from a financing perspective, we haven't really seen a big change in terms of being able to finance some of these assets. Overall, I think, despite the volatility, the spreads have held steady. You know, the banks are still willing to lend.
Brad Stevenson: The treasury rates, so from a financing perspective, we haven't really seen a big change in terms of being able to finance some of these assets.
Bhairav Patel: Overall I think.
Bhairav Patel: Despite the volatility of the spreads have held.
Bhairav Patel: The banks.
Bhairav Patel: Or still.
Bhairav Patel: Willing to lend.
Bhairav Patel: Loan environment is a little bit challenged the pricing from our private placement perspective for someone like us is a little bit challenged in terms of spreads but from.
Bhairav Patel: The term loan environment is a little bit challenged. You know, the pricing, from a private placement perspective for someone like us, is a little bit challenged in terms of spreads, but from a treasury or from an agency perspective, I think the financing is still available on assets that are cash flowing. Okay.
Bhairav Patel: From a treasuries.
Bhairav Patel: From our agency perspective, I think the financing is still available.
Bhairav Patel: On assets that are cash flowing.
Speaker Change: Okay. That's helpful. Thank you I appreciate the time this morning guys.
Bhairav Patel: Our next question comes from Connor Mitchell from Piper Sandler.
Brad Stevenson: Okay, that's helpful. Thank you. I appreciate the time this morning, guys.
Brad Stevenson: Hey, good morning, Thanks for taking my question.
Connor Mitchell: Our next question comes from Connor Mitchell of Piper Sandler.
Connor Mitchell: And abroad, you guys kind of answered this a little bit, but maybe going back to the rubs and how that's affecting you guys. Just maybe asked a different way how much of the lighter winter.
Connor Mitchell: Hey, good morning. Thanks for taking my question. Anne and Bhairav, you guys kind of answered this a little bit, but maybe going back to the rubs and how that's affecting you guys, just maybe ask it another way. How much of the lighter winter has benefited cost savings or lower revenue for you guys versus savings for the residents since you implemented the rubs?
Connor Mitchell: Benefited.
Connor Mitchell: <unk> cost savings or lower expenses or lower revenue for you guys versus savings for the residents.
Connor Mitchell: You have implemented the rubs.
Bhairav Patel: Connor. So, you know, from a full year perspective. [inaudible] If you look at our revenue guide, we kind of reduced it at the midpoint. Most of that reduction is driven by RUBS revenue, which is expected to be lower as the expense is lower as well. So I would say at the beginning of the year, we expected about 50 basis points of year-over-year increase during my RUBS, and now it's about 30 basis points. So that's really driving the reduction in rental revenue projections or overall revenue.
Connor Mitchell: Okay.
Bhairav Patel: Conor so from.
Bhairav Patel: From a full year perspective, maybe.
Bhairav Patel: The if you look at our revenue guide.
Bhairav Patel: <unk> reduced it at the midpoint most of that reduction is driven by rubs.
Bhairav Patel: Revenue that is expected to be lower as.
Bhairav Patel: As the expense.
Bhairav Patel: Laura as well so I would say about at the beginning of the year, we expect about 50 basis points of year over year increase driven by rubs and now it's about 30 basis points. So that's really driving the reduction.
Bhairav Patel: And rental revenue projections are overall revenue projections.
Grant P. Campbell: Okay, that's helpful. And then maybe considering the acquisition market and the transaction market that's been discussed a couple times. You know, you guys mentioned that it's a tough market right now. Is that primarily due to the spreads you've been discussing? Or is there more competition from, like, some cash buyers or others?
Bhairav Patel: Okay.
Bhairav Patel: Helpful.
Grant P. Campbell: And then maybe considering the acquisition market in the transaction market. That's been discussed a couple of times.
Grant P. Campbell: You guys mentioned that it's a tough market right now is that primarily due to the spreads you've been discussing or are there is there more competition from some cash buyers or other competition or another component.
Grant P. Campbell: Yeah, morning Connor, this is Grant. I'd say from a competition perspective, you know, we're seeing high net worth and private capital types as the most aggressive buyer profile right now. You know, some of those groups are obviously fully aware of what the cap rate is on the buy side, and they're taking a view that there are long-term holds. They acknowledge there may be a period of time of negative leverage.
Grant P. Campbell: What's causing this tough market at the moment.
Grant P. Campbell: Yes. Good morning counter this is grant I'd say from a competition perspective, we're seeing high net worth and private capital type is the most aggressive buyer profile right now.
Grant P. Campbell: Some of those groups are there obviously fully aware of what the cap rate is on the buy side and Theyre, taking a view that.
Grant P. Campbell: They are long term hold they acknowledged there may be a period of time of negative leverage there. They are willing to accept that there may be an all cash buyer.
Grant P. Campbell: They're willing to accept that. They may be an all-cash buyer. We have certainly seen that in many instances where groups are saying, we'll buy this all-cash, and we'll, quote-unquote, figure out financing later. So I would say that, you know, competition. For us, the same number of people are doing all the same things. So touring assets, underwriting deals, having conversations, when it comes to who's actually getting the most constructive, it's high net worth and private capital.
Grant P. Campbell: We have certainly seen that in many instances where groups are saying, we'll buy this all cash and we'll quote unquote figure out financing later, so I would say that.
Grant P. Campbell: Competition.
Grant P. Campbell: For us.
Grant P. Campbell: Same amount of people are doing all the same things so touring assets underwriting deals having conversations when it comes to who's actually getting most constructive it's high net worth and private capital types.
Anne M. Olson: Okay, that's helpful. And then you guys mentioned that you're kind of seeing this tough acquisition market. So maybe, in the meantime, you could share your thoughts on how you view utilizing that capital for stock buybacks or other purposes currently versus maybe waiting for the market to find some better spreads so you can go after some acquisition opportunities.
Speaker Change: Okay. That's helpful. And then you guys mentioned that you are kind of.
Anne M. Olson: You are seeing this tuff acquisition market. So maybe in the meantime to use.
Anne M. Olson: Share your thoughts on how you view.
Anne M. Olson: Utilizing that capital for stock buybacks or other purposes.
Anne M. Olson: Currently versus maybe waiting for the market to <unk>.
Anne M. Olson: Signs of better spreads and you can.
Anne M. Olson: Go after some acquisition opportunities.
Anne M. Olson: That's a great question. And, you know, one that is top of mind for us when we think about potentially selling or having either free cash flow or other proceeds from sales. You know, our priorities right now are keeping the balance sheets flexible. And so, and also maintaining a very low floating rate debt, which we are currently executing on our value add program this year, I think we'll spend around $20 million on value add.
Speaker Change: That's a great question.
Anne M. Olson: One that is top of mind for us I think when we think about potentially selling or having either free cash flow or other proceeds from sales in our priorities right now are keeping the balance sheet.
Anne M. Olson: Flexible and so and also maintaining a very low floating rate debt, which we have currently.
Anne M. Olson: Executing on our value add program. This year, I think we'll spend around $20 million and value add.
Anne M. Olson: This year, which is a good, good return for us and also keeps the product competitive as we, you know, hopefully move into a more competitive environment and watch the supply a little bit moderate. And then after that, I think we're more mindful of the balance sheet and I think we're more focused on deleveraging the company than executing additional stock buybacks at this time.
Anne M. Olson: This year, which that's a good good return for US and also keeps the product's competitive as we hopefully move into a more competitive environment and watch a little but the supply moderate.
Anne M. Olson: And then after that I think we are.
Anne M. Olson: More mindful of the balance sheet and I think more focused on deleveraging. The company then executing additional stock buybacks at this time.
Connor Mitchell: Okay, I appreciate it. Thanks, everyone.
Speaker Change: Okay. Appreciate it thanks, everyone.
Michael Patrick Gorman: As a reminder, if you'd like to ask a question, please press star followed by 1 on your telephone keypad. Our next question comes from Michael Gorman from VTIG.
Speaker Change: As a reminder, if you'd like to ask a question. Please press star followed by one on your telephone keypad.
Michael Patrick Gorman: Our next question comes from Michael Gorman from BT IAG.
Michael Patrick Gorman: Yeah, thanks. Good morning, and I'm sorry if I missed this. But in your discussions about the kind of quarter to date trends for the second quarter, are there any particular differences in the geography in terms of the improvement in the new leasing trends across your portfolio?
Michael Patrick Gorman: Yes, thanks, good morning, and I'm, sorry, if I missed this but in your discussions about kind of the quarter to date trends for the second quarter are there any particular differences in the geography in terms of the improvement in the new leasing trends across your portfolio.
Anne M. Olson: No, I say we're seeing improvement across the board. I mean, we've seen some outperformance in some of the smaller markets, I mentioned North Dakota; we've seen some good, good performance in Rochester year over year in St. Cloud, we've seen good performance. But, you know, overall, the market as a whole has moved in a way that's better for us, and we're seeing stronger new lease rates across the board.
Michael Patrick Gorman: No I'd say, we're seeing.
Anne M. Olson: Improvement across the board.
Anne M. Olson: We've seen some outperformance in some of the smaller markets I mentioned North Dakota, we've seen some good good performance in Rochester year over year in St Cloud, we've seen good performance, but.
Anne M. Olson: Overall, the market as a whole has moved.
Anne M. Olson: <unk> in the <unk>.
Anne M. Olson: That's better for us in seeing stronger new lease rates across the board.
Anne M. Olson: Okay, that's helpful. And then, maybe just one last question on the acquisition side of things. Understanding the bid-ask spread, obviously, given all the market volatility, is there any kind of disconnect in terms of underwriting in terms of buyer and seller expectations for the trends in NOI at the property level, just given some of the impact that we've seen across markets in terms of supply or in terms of pricing pressure? Yeah, I'd say.
Speaker Change: Okay. That's helpful. And then maybe just one last question on the acquisition side of things.
Anne M. Olson: Understanding that bid ask spread obviously, given all the market volatility is there any kind of disconnect in terms of underwriting in terms of buyer and seller expectations for the trends and NOI at the property level, just given some of the impact that we've seen across markets in terms of supplier in terms of pricing pressure.
Speaker Change: Yes, I'd say in this environment.
Grant P. Campbell: Yeah, I'd say in this environment, it's very hard to underwrite, you know, large outsized rent growth that maybe certain groups were underwriting here in prior years. So, I think the dispersion of underwritten rent growth, if we stick with that variable, that dispersion was wider a couple of years ago than it is today. I think people that are being thoughtful, if they were underwriting heavier growth, they've dialed that back. Groups that were fair to conservative a couple of years ago continue to be fair to conservative.
Anne M. Olson: Very hard to underwrite.
Grant P. Campbell: Large outsized rent growth that may be certain groups, where underwriting here over prior years. So.
Grant P. Campbell: I think the dispersion of underwritten rent growth, if we stick with that variable that dispersion was wider a couple of years ago than it is today I think people that are being thoughtful if they were underwriting heavier growth they've dialed that back.
Grant P. Campbell: Groups that were.
Grant P. Campbell: Fair to Conservative a couple of years ago continue to be fair to conservative. So that dispersion has tightened from a rent growth perspective, and I think at the end of the day.
Grant P. Campbell: So, that dispersion has tightened from a rent growth perspective, and I think at the end of the day, it's which group is willing to accept some of the variables that we've touched on here earlier. Perhaps negative leverage, perhaps a cap rate that, you know, doesn't maybe feel great to them today, but they believe in the long-term story of the submarket.
Grant P. Campbell: Which group is willing to accept.
Grant P. Campbell: Some of the variables that we touched on year earlier, perhaps negative leverage.
Grant P. Campbell: Perhaps cap rate.
Grant P. Campbell: Doesn't make me feel great to them today, but they believe in the long term story of the Submarket.
Speaker Change: Great. Thanks for the time.
Buck Horne: Our next question comes from Buck Horne of Raymond James.
Grant P. Campbell: Our next question comes from Buck Horne from Raymond James.
Buck Horne: Hey, good morning, everybody. Thanks for the time. This is a quick question for Grant because the deep dive on Minneapolis was a really helpful discussion about the supply pipeline there. I was wondering if you could do the same for Denver, just kind of discussing where we are in terms of the supply pipeline, if we're kind of getting close to peak deliveries, and also just any additional color in terms of trends between the suburban assets versus downtown Denver.
Speaker Change: Hey, good morning, everybody and thanks for the time.
Speaker Change: Quick quick question for grant because.
Buck Horne: The deep dive on Minneapolis was that not really helpful discussion there about the supply by pipeline. There I was wondering if you could do the same for Denver.
Buck Horne: Just kind of discussing where we're at in terms of the supply pipeline. If we're kind of getting close to peak deliveries in and also just any additional color in terms of trends between the suburban assets versus downtown Denver.
Grant P. Campbell: Yeah, morning Buck. From a supply perspective, Denver is our market with the highest levels of supply. Currently, 9% of existing stock is under construction, which represents about 25,000 apartment homes. These figures, similar to Minneapolis, have also tapered since last quarter. Minneapolis has seen a longer period of tapering, but the data is telling us and telling others that the tapering could be beginning in Denver.
Grant: Yes, good morning, Buck from a supply perspective, Denver is our market with the highest levels of supply currently.
Grant P. Campbell: 9% of existing stock is under construction, which represents about 25000 apartment homes deeds.
Grant P. Campbell: These figures similar to Minneapolis have also tapered.
Grant P. Campbell: Last quarter, Minneapolis has been a longer period of tapering, but the data is telling us and telling others that the tapering as could be beginning in Denver next.
Grant P. Campbell: Next 12-month deliveries in Denver are forecasted to be 11,000 apartment homes, which is consistent with 2022 and 2023 delivery levels in that market. So, you know, we really try and bifurcate what's in the pipeline. Will that all get completed versus what is actually going to deliver? And delivery forecasts tell us that we're not going to see any outsized deliveries. It's going to be on par with what the market has produced here over the recent past.
Grant P. Campbell: Our next 12 month deliveries and Denver are forecasted at 11000 apartment homes.
Grant P. Campbell: That is consistent with 2022 and 2023 delivery levels in that market. So we really try and.
Grant P. Campbell: Bifurcate, what's in the pipeline will that all get completed versus what is actually going to deliver and delivery forecast tell us that we're not.
Grant P. Campbell: Not going to see any outsize deliveries, it's going to be on par with what the market has produced here over the recent past.
Grant P. Campbell: Awesome. And are there any differences between the kind of suburban assets versus downtown Denver?
Grant P. Campbell: Awesome.
Grant P. Campbell: Any differences between kind of the suburban assets versus downtown Denver.
Grant P. Campbell: Yeah, I think certain pockets of the downtown or the urban environment are feeling maybe more concessionary pressures. You have had more construction activity when you think of just the size of the geography in that downtown area. You know, suburban Denver certainly has had new construction. There are highly desirable micro markets where people have been building and will continue to desire to build. But the spread of that over a larger geography is leading to, in our opinion, on a relative basis, less concessionary pressure in the suburban environment.
Grant P. Campbell: Yes, I think certain pockets of downtown or the urban environment.
Grant P. Campbell: Feeling maybe more concessionary pressures you have had more construction activity. When you think of just the size of geography.
Grant P. Campbell: In that downtown area.
Grant P. Campbell: Suburban Denver, certainly has had new construction there are highly desirable micro markets, where people have been building and we'll continue to desire to build but the.
Grant P. Campbell: The spread of that over a larger geography is leading to in our opinion on a relative basis less concessionary pressure in the suburban environment.
Buck Horne: All right. Thanks, guys. Good luck.
Speaker Change: Got it alright, thanks, guys. Good luck.
Anne M. Olson: We currently have no further questions. I will hand the floor back over to Anne Olson for final remarks.
Anne M. Olson: We currently have no further questions.
Anne M. Olson: Back over to <unk>.
Anne M. Olson: Thanks everyone for joining us this morning. And we look forward to seeing many of you at the upcoming DTIG, BMO, and G&E real estate conferences. And if we don't catch you there, we'll see you at NARIT in June.
Allison: Allison for final remarks.
Anne M. Olson: Thanks, everyone for joining us this morning, and we look forward to seeing many of you at the upcoming <unk> BMO and Janney real estate conferences, and if we don't catch you. There we will see you at NAREIT in June.
Operator: This concludes today's call. Thank you for joining us. You may now disconnect your line.
Operator: This concludes today's call. Thank you for joining you may now disconnect your lines.
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Operator: Sure.
Operator: Yes.
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