Q1 2024 UDR Inc Earnings Call

Operator: Greetings and welcome to UDR's first quarterly 2024 opening call. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Greetings and welcome to Udr's first quarter 2024 next call.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Operator: As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Vice President of Investor Relations, Trent Trujillo. Thank you, Mr. Trujillo. You may begin.

A reminder, this conference is being recorded it is now my pleasure to introduce your host Vice President of Investor Relations treachery yellow. Thank you Mr. Truly low you may begin.

Trent Nathan Trujillo: Welcome to UDR's quarterly financial results conference call. Our press release and supplemental disclosure package were distributed yesterday afternoon and posted to the investor relations section of our website, ir.udr.com. In the supplement, we have reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements.

Treachery Yellow: Welcome to Udr's quarterly financial results Conference call, our press release and supplemental disclosure package were distributed yesterday afternoon and posted to the Investor Relations section of our website IR Dot UDR dotcom.

Treachery Yellow: In the supplement we have reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements.

Trent Nathan Trujillo: Statements made during this call, which are not historical, may constitute forward-looking statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be met. A discussion of risks and risk factors is detailed in our press release and included in our filings with the SEC. We do not undertake a duty to update any forward-looking statements.

Treachery Yellow: Statements made during this call, which are not historical may constitute forward looking statements. Although we believe the expectations reflected in any forward looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be met.

Treachery Yellow: A discussion of risks and risk factors are detailed in our press release and included in our filings with the SEC, we do not undertake a duty to update any forward looking statements.

Trent Nathan Trujillo: When we get to the question and answer portion, we ask that you be respectful of everyone's time and limit your questions to one plus a follow-up. Management will be available after the call for your questions that did not get answered on the call today. I will now turn the call over to UDR's Chairman and CEO, Tom Toomey. Thank you, Trent, and welcome to UDR's first quarter 2024 conference. Presenting on the call with me today are President and Chief Financial Officer, Joe Fisher, and Senior Vice President of Operations, Mike Lacy. Senior Officers Andrew Kanter and Chris Van Enns will also be available during the Q&A portion of the webinar.

When we get to the question and answer portion we ask that you be respectful of everyone's time and limit your questions to one plus a follow up management will be available after the call for your questions that did not get answered on the call today.

Treachery Yellow: I will now turn the call over to Udr's, Chairman and CEO Tom Toomey.

Tom Toomey: Thank you Trent and welcome to Udr's first quarter 2024 conference call.

Tom Toomey: Presenting on the call with me today are President and Chief Financial Officer, Joe Fisher, and senior Vice President of operations, Mike Lacey.

Tom Toomey: Senior officers, Andrew Kantor, and Chris Van Ens will also be available during the Q&A portion of the call.

Tom Toomey: 2024 is off to a very solid start, due to a better fundamental backdrop than initially expected and the operating strategies we continue to employ to outgrow competitors in our market. Positive fundamental drivers for the industry include the first year to date employment creation of approximately 800,000 jobs, which has already exceeded initial full-year economists' consensus growth expectations. Second, more than 100,000 newly delivered apartment homes were absorbed during the first quarter, the strongest first quarter in over two decades. Added to that, total housing deliveries remain stable, and development starts continue to decline.

Tom Toomey: 'twenty 'twenty four is off to a very solid start.

Due to better fundamental backdrop than initially expected.

Tom Toomey: And the operating strategies, we continue to employ to outgrow our competitors in our markets.

Tom Toomey: Positive fundamental drivers for our industry include first year to date employment creation of approximately 800000 jobs.

Tom Toomey: Has already exceeded initial full year economists consensus growth expectations.

Tom Toomey: Second more than 100000 newly delivered apartment homes were absorbed during the first quarter.

The strongest first quarter in over two decades.

Tom Toomey: Adding to that total housing deliveries have remained stable and development starts continue to decline.

Tom Toomey: This bodes well for rent growth in the years ahead. And third, renting an apartment is, on average, 60% more affordable than owning a single-family home in the markets where we operate, the cycle best level of relative affordability. These trends, combined with the operating tactics we utilize, have led to positive momentum across all key operating areas. This includes more robust traffic, higher leasing activity, lower turnover, lower concessions, higher occupancy, and better pricing power than originally expected. In all, this translates to what I would characterize as green sprouts.

Tom Toomey: This bodes well for rent growth in the years ahead.

Tom Toomey: And third renting an apartment is on average 60% more affordable.

Tom Toomey: Owning a single family home in the markets, where we operate a cycle best level of relative affordability.

Tom Toomey: These trends combined with the operating tactics, we utilize have led to positive momentum across all key operating metrics.

Tom Toomey: This includes more robust traffic.

Tom Toomey: Higher leasing activity lower turnover, lower concessions higher occupancy and better pricing power than originally expected.

Tom Toomey: All this translates to what I would characterize as green sprouts.

Tom Toomey: Mike will provide additional details in his remarks. However, as we only have completed the first four months of the year, We remain wary of the volatile and elevated interest rate environment and the effect it may have on pricing and concessions of lease-up communities given the heightened new supply the industry faces in 2020. We feel good about 2024 thus far, but we'd like to see more evidence of continued operating momentum as we progress through peak lease, before revisiting our full year. The bigger picture.

Tom Toomey: Mike will provide additional details in his remarks.

Speaker Change: Uh huh.

Tom Toomey: However, as we only have completed the first four months of the year.

Tom Toomey: We remain wary of the volatile an elevated interest rate environment and the effect. It may have on pricing and concessions of lease up communities given the heightened new supply the industry faces in 2024.

Tom Toomey: We feel good about 'twenty 'twenty, four thus far but we'd like to see more evidence of continued operating momentum as we progress through peak leasing season.

Tom Toomey: Before revisiting our full year guidance.

Tom Toomey: I remain optimistic about the long-term growth prospects of the multifamily industry and UDR's unique competitive advantages that should enhance that. We have a strong culture, a talented team with a robust track record of performance, and we continue to invest in our associates and embrace technology to create value for all of UDR's stakeholders. Finally, I'd like to take a moment to celebrate the upcoming retirement of senior vice president and chief investment officer, Harry Alcott, who will soon be transitioning to a consulting role with a focus on sourcing transactions. Harry and I have worked together for approximately 30 years, and he has been a trusted partner through all of it.

Tom Toomey: Big picture I remain optimistic on the long term growth prospects of the multifamily industry and UDR unique competitive advantages that should enhance that growth.

Tom Toomey: We have a strong culture, a talented team with a robust track record of performance and we continue to invest in our associates and embraced technology to create value for all of UDR stakeholders.

Tom Toomey: He helped UDR grow to be the thriving $20 billion enterprise we are today, while also grooming our next wave of talented investment and development professionals. Harry, thank you for all you've done, and we all look forward to working with you in your new role. With that, I will turn the call over to Mike. Thanks, Tom.

Tom Toomey: Finally, I'd like to take a moment to celebrate the upcoming retirement of senior Vice President and Chief Investment Officer, Harry Alcock.

Tom Toomey: Who will soon.

Tom Toomey: Be transitioning to a consulting role with a focus on sourcing transactions.

Tom Toomey: And I have worked together for approximately 30 years and he has been a trusted partner through all of it.

Tom Toomey: He helped beauty our grow to be a thriving 20 billion dollar enterprise. We are today, but also grooming our next wave of talented investment and development professionals.

Tom Toomey: Barry Thank you for all you've done and we all look forward to working with you in your new role.

Tom Toomey: That I will turn the call over to Mike.

Michael D. Lacy: Today we'll cover the following topic: our first quarter, same score as all, early second quarter 2024 trends and how they factor into our full year 2024 same store growth guide. An update on our various innovation initiatives and expectations for operating trends across our region. To begin, first quarter year-over-year same-store revenue and NOI growth of 3.1% and 1.2%, respectfully, and 0.4% sequential same-store revenue growth were slightly above our expectations. These results were driven by first.

Michael D. Lacy: Thanks, Tom today I'll cover the following topics.

Michael D. Lacy: Our first quarter same store results.

Michael D. Lacy: Early second quarter, 'twenty, 'twenty, four trends and how they factor into our full year 2020 for same store growth guidance.

Michael D. Lacy: An update on our various innovation initiatives.

Michael D. Lacy: And expectations for operating trends across our regions.

Tom Toomey: To begin first quarter year over year same store revenue and NOI growth of three 1% and 1.2% respectfully and 0.4% sequential same store revenue growth were slightly above our expectations.

Tom Toomey: These results were driven by first.

Michael D. Lacy: 0.8% blended lease rate, which resulted from nearly 4% renewal rate growth and new lease rate growth of negative 2.5%. New lease rate growth improved 260 basis points versus fourth quarter results as concessions decreased by approximately a half of a week on average. Second, 35% annualized resident turnover was 400 basis points better than the prior year. The 630 basis point delta between new and renewal rate growth, when combined with higher retention, led to a favorable outcome.

Tom Toomey: 0.8% blended lease rate growth.

Tom Toomey: Which resulted from nearly 4% renewal rate growth and new lease rate growth of negative two 5%.

Tom Toomey: New lease rate growth improved 260 basis points versus fourth quarter results as concessions decreased by approximately a half of a week on average.

Tom Toomey: Second 35% annualized resident turns.

Tom Toomey: It was 400 basis points better than the prior here.

Tom Toomey: The 630 basis point Delta between new and renewal rate growth when combined with higher retention led to a favorable outcome.

Michael D. Lacy: And third, occupancy remains strong at 97.1%, supported by healthy traffic and leasing bonds. New York, Washington, D.C., San Francisco, and Seattle, which collectively constitute 36% of our same store pool, were standouts, averaging nearly 98% during the quarter. Shifting to expenses, year-over-year same-store expense growth of 7.5% in the first quarter was in line with our expectations and inflated by a tough comp against the one-time $3.7 million payroll tax credit we recorded and disclosed in the first quarter of 2023. After excluding this credit, our year-over-year same-store expense growth would have been a more reasonable 4%.

Tom Toomey: And third occupancy remains strong at 97, 1% supported by healthy traffic and leasing volume.

Tom Toomey: In New York, Washington, D C, San Francisco, and Seattle, which collectively constitute 36% of our same store pool were standouts, averaging nearly 98% during the quarter.

Tom Toomey: Shifting to expenses year over year same store expense growth of seven 5% in the first quarter was in line with our expectations and inflated by a tough comp against the one time $3 7 million payroll tax credit, we recorded and disclosed in the first quarter of 2023.

Tom Toomey: After excluding this credit our year over year same store expense growth would've been a more reasonable 4%.

Michael D. Lacy: Moving on, strong core operating trends continued into the second quarter, and every key revenue metric is exceeding our expectations through the first four months of the year. First, blended lease rate growth continued to accelerate from approximately 1% in March to roughly 2% in April, with concessions stabilizing at lower levels than the fourth quarter of 2023. All regions have demonstrated sequential blended lease rate growth improvement versus March, with our West Coast and Mid-Atlantic regions showing the most strength at approximately 3.5 percent. Based on current trends, we expect May blended lease rate growth to demonstrate further sequential improvement. Second, resident retention continues to compare well with historical norms.

Tom Toomey: Moving on strong core operating trends have continued into the second quarter and every key revenue metric is exceeding our expectations through the first four months of the year.

Tom Toomey: First blended lease rate growth continued to accelerate from approximately 1% in March to roughly 2% in April with concession stabilizing at lower levels than the fourth quarter of 2023.

Tom Toomey: All regions have demonstrated sequential blended lease rate growth improvement versus March with our west coast and mid Atlantic regions, showing the most strength at approximately three 5%.

Tom Toomey: Based on current trends, we expect may blended lease rate growth to demonstrate further sequential improvement.

Michael D. Lacy: Due in part to our customer experience project, which I will touch on later, April retention is 400 basis points above prior year levels, representing the 12th consecutive month our year-over-year turnover has improved. Third, occupancy is holding firm at a high 96%. Strong demand from continued job and wage growth has allowed us to simultaneously operate with high occupancy and push rental rates while maintaining rent-to-income levels in the low 20% range. And fourth, other income continued to grow at approximately 10% in April, similar to what we achieved in the first quarter.

Tom Toomey: Second <unk>.

Tom Toomey: Our resident retention continues to compare well against historical norms.

Tom Toomey: Due in part to our customer experience project, which I will touch on later April retention is 400 basis points above prior year levels, representing the 12th consecutive month or year over year turnover has improved.

Tom Toomey: Third occupancy is holding firm in the high 96% range strong demand from continued job and wage growth has allowed us to simultaneously operate with high occupancy and push rental rate, while maintaining rent income levels in the low 20% range.

Tom Toomey: And fourth other income continued to grow at approximately 10% in April similar to what we achieved in the first quarter.

Michael D. Lacy: As a reminder, other income constitutes roughly 10% of our total revenue. We remain pleased with the trajectory of our other income initiatives, such as the roll out and penetration of building-wide Wi-Fi, which contributes significantly to incremental same store revenue. Looking ahead, we reaffirmed our full year 2024 same store growth guidance in conjunction with our release. We are encouraged by the strength of macroeconomic indicators such as year-to-date job growth and wage growth and the effect those demand drivers have had on our key performance indicators thus far.

Tom Toomey: As a reminder, other income constitutes roughly 10% of our total revenue.

Tom Toomey: We remain pleased with the trajectory of our other income initiatives such as the rollout and penetration of building wide Wi Fi, which contributes significantly to incremental same store revenue growth.

Tom Toomey: Looking ahead, we reaffirmed our full year 2024 same store growth guidance in conjunction with our release, we are encouraged by the strength of macroeconomic indicators such as year to date job growth and wage growth.

Tom Toomey: And the effect those demand drivers have had on our key performance indicators thus far.

Michael D. Lacy: But we remain somewhat cautious given the volatile and elevated interest rate environment combined with peak supply deliveries yet to come. Turning to regional trends, our coastal results have been above our expectations, while sunbelt markets are in line and trending better. More specifically, the East Coast, which comprises approximately 40% of our NOI, was our strongest region in the first quarter. Boston, Washington, D.C., and New York all performed well, with a weighted average occupancy of 97.5%.

Tom Toomey: But we remain somewhat cautious given the volatile and elevated interest rate environment combined with peak supply deliveries yet to come.

Tom Toomey: Turning to regional trends or coastal results have been above our expectations, while sunbelt markets are in line and trending better.

Tom Toomey: More specifically the east coast, which comprises approximately 40% of our NOI was our strongest region in the first quarter.

Tom Toomey: Boston, Washington, D C and New York, all performed well with weighted average occupancy of 97, 5%.

Michael D. Lacy: Blended lease rate growth was nearly 2.5%, and same store revenue growth was 4.25%, which is slightly above the high end of our full year expectations for the region. We expect this regional strength to continue. The West Coast, which comprises approximately 35% of our NOI, has performed better than expected. At the beginning of the year, we anticipated San Francisco and Seattle would lag our West Coast markets.

Tom Toomey: Blended lease rate growth was nearly two 5% and same store revenue growth was four point to 5%.

Tom Toomey: Which is slightly above the high end of our full year expectations for the region.

Tom Toomey: We expect this regional strength to continue.

Tom Toomey: The West Coast, which comprises approximately 35% of our NOI has performed better than expected.

Tom Toomey: At the beginning of the year, we anticipated San Francisco, and Seattle would lag our west coast markets, while revenue growth results in the first quarter show this to be true on an absolute basis, both markets new lease rate growth improved by nearly 900 basis points compared to our fourth quarter results. The.

Michael D. Lacy: While revenue growth results in the first quarter show this to be true on an absolute basis, both markets saw new lease rate growth improve by nearly 900 basis points compared to our fourth quarter results. The momentum in these markets has exceeded our expectations due to various employers more strictly enforcing return to office mandates, as well as increased office leasing activity from technology and AI companies. Lastly, our Sunbelt markets, which comprise roughly 25% of our NOI, continue to lag our coastal markets due to elevated levels of new supply, but they have performed in line with our expectations. Better job growth in these markets appears to be bolstering demand and absorption. And, similar to other regions, we have seen the Sunbelt concession stable. Sequential Blend Elysrae Growth Accelerate and Retention Improved

Tom Toomey: The momentum in these markets has exceeded our expectations due to various employers more strictly enforcing returned to office mandates as well as increased office leasing activity from technology and AI companies.

Tom Toomey: Lastly, our sunbelt markets, which comprise roughly 25% of our NOI continue to lag our coastal markets due to elevated levels of new supply, but have performed in line with our expectations.

Tom Toomey: Better job growth in these markets appear to be bolstering demand and absorption and some of the other regions, we have seen sunbelt concession stabilize.

Tom Toomey: Sequential blended lease rate growth accelerate and retention improve.

Michael D. Lacy: We remain cautious on the Sun Belt in the near term but have been pleasantly surprised by its recent trajectory. These regional dynamics reinforce the value of a diversified portfolio across markets and price points that allow us to pivot our short and long-term operating strategies to maximize revenue and New York growth. Moving on, we continue to make progress on various innovation projects that will benefit same store growth in 2024 and beyond. One example of this is our customer experience project.

Tom Toomey: We remain cautious on the sunbelt in the near term, but have been pleasantly surprised by its recent trajectory.

Tom Toomey: These regional dynamics reinforced the value of a diversified portfolio across markets and price points that allow us to pivot our short and long term operating strategies to maximize revenue and NOI growth.

Tom Toomey: Moving on we continue to make progress on various and innovation projects that would benefit same store growth in 2024 and beyond. One example of this is our customer experience project.

Michael D. Lacy: We have consistently outperformed the public and private markets on NOI and margins over time due to the focus on our leading operating platform and innovative culture, which has historically driven all aspects of income growth, operating efficiencies, and contained our costs. We are now turning to the next phase of our business, which focuses on customer experience and retention. Through our proprietary data hub and the millions of data points we have accumulated over the last seven years, we have found that 50% of resident turnover is controllable.

Tom Toomey: We have consistently outperformed the public and private markets on NOI and margins over time due to the focus on our leading operating platform and innovative culture, which has historically driven all aspects of income growth operating efficiencies and contained our cost structure.

Tom Toomey: We are now turning to the next phase of our platform, which focuses on customer experience and retention.

Tom Toomey: Through our proprietary data hub in the millions of data points, we have accumulated over the last seven years, we have found that 50% of resident turnover is control.

Tom Toomey: And that.

Michael D. Lacy: Those residents had positive experiences, and scores were new at a rate 20% higher than those with bad experiences. Knowing this, we see an opportunity to improve retention by 5% to 10% versus the industry average of 50%, resulting in a $15 to $30 million incremental NOI opportunity. To capture this upside, we now track and score every interaction with our residents.

Tom Toomey: Those residents with positive experiences and scores renew at a rate 20% higher than those with bad experiences.

Tom Toomey: Knowing this we see an opportunity to improve retention by 5% to 10% versus the industry average of 50% <unk>.

Tom Toomey: Resulting in a $15 million to $30 million incremental NOI opportunity.

Tom Toomey: To capture this upside we now track and score every interaction with our residents.

Michael D. Lacy: This has allowed us to make a transformational shift in the way we do business, with a move from being transactional in nature to focusing on the lifetime value of our customers. We are equipping our UDR team members with tools, training, and the ability to prevent or rectify bad customer experiences, which we believe over the coming two to three years will materially improve the customer experience and our relative turnover. This should positively impact pricing, occupancy, other income expenses, and margin as well.

Tom Toomey: This has allowed us to make a transformational shift in the way we do business with have moved from being transactional in nature to a focus on the lifetime value of our customer.

Tom Toomey: We are equipping our UDR team members with tools training and the ability to prevent or rectify bad customer experiences, which we believe over the coming two to three years will materially improve the experience and our relative turnover.

Tom Toomey: This should positively impact pricing occupancy other income expenses and margin as well.

Michael D. Lacy: My thanks go out to the UDR associates nationwide that remain committed to delivering on our strategic priority. You rightfully deserve credit for embracing our innovative culture and improving how we conduct our business. I will now turn over the call to Jim.

Tom Toomey: My Thanks go out to the UDR associates nationwide they remain committed to delivering on our strategic priorities you rightfully deserve credit for embracing our innovative culture and improving how we conduct our business.

Tom Toomey: I will now turn over the call to Joe.

Joseph D. Fisher: Thank you, Mike. The topics I will cover today include our first quarter results and our updated full-year guidance, a summary of recent transactions and capital markets activity, and a balance sheet and liquidity update. Our first quarter FFO, adjusted per share of 61 cents, achieved the midpoint of our previously provided guidance and was supported by same store revenue and NOI growth. It was slightly above our expectations. The modest sequential FFOA decline was driven by an approximately one and a half penny decrease in same store NOI, primarily due to higher expenses attributable to seasonal patterns, and approximately a half penny decrease from higher interest expense and GNA.

Joseph D. Fisher: Sure Mike.

Joseph D. Fisher: Looking ahead, our second quarter FFOA per share guidance range is $0.60 to $0.62, with the 61-cent midpoint flat compared to the first quarter due to nominal expected changes across NOI, interest expense, and G&A. Year-to-date operating results are trending above our initial expectations. But with macro uncertainty and the peak leasing season ahead of us, we have reaffirmed our full year 2024 same store growth guidance ranges and plan to revisit them in the future.

Joseph D. Fisher: Next I will cover today include our first quarter results and our updated full year guidance.

Joseph D. Fisher: Summary of recent transactions and capital markets activity.

Joseph D. Fisher: And a balance sheet and liquidity update.

Joseph D. Fisher: Our first quarter <unk> as adjusted per share of 61.

Joseph D. Fisher: The midpoint of our previously provided guidance and was supported by same store revenue and NOI growth that was slightly above our expectations.

Joseph D. Fisher: The modest sequential decline.

Joseph D. Fisher: Decline was driven by an approximately one and a half penny decrease from same store NOI, primarily due to higher expenses attributable to seasonal patterns.

Joseph D. Fisher: And approximately half Penny decrease from higher interest expense and G&A.

Joseph D. Fisher: Looking ahead, our second quarter <unk> per share guidance range of 60 to 62 cents with a 61 set the midpoint flat compared to the first quarter due to nominal expected changes across NOI interest expense and G&A.

Joseph D. Fisher: Year to date operating results are trending above our initial expectations.

Joseph D. Fisher: But with macro uncertainty and peak leasing season ahead of US we have reaffirmed our full year 'twenty 'twenty four same store growth guidance ranges and plan to revisit them in the future.

Joseph D. Fisher: However, we did increase our full year FFOA per share guidance range by two pennies due to the joint venture's successful refinancing of its senior construction loan at our DCP investment in Philadelphia with no additional investment from UDR. Having addressed this risk, there are no remaining DCP senior loan maturities until 2025.

Joseph D. Fisher: However, we did increase our full year <unk> per share guidance range by two pennies due to the joint venture successful refinancing of its senior construction loan at our D. C. P investment in Philadelphia with no additional investment from UDR.

Joseph D. Fisher: Having addressed this risk there are no remaining D C P senior loan maturities until 2025.

Joseph D. Fisher: In addition to the Philadelphia investment, there remain three additional DCP investments totaling approximately $50 million on our watch list, with no material changes since the fourth quarter. Beyond this, our remaining $440 million of DCP investments are performing well, as they were primarily 2021 and 2022 vintage developments, which have not encountered material construction cost overruns or delays and are performing in line to above pro forma on rent. Next, a Transactions and Capital Markets update.

Joseph D. Fisher: In addition to the Philadelphia investment there remain three additional DCP investments totaling approximately $50 million on our watch list with no material changes since the fourth quarter.

Joseph D. Fisher: Beyond this our remaining $440 million of DCP investments are performing well as they were primarily 2021 and 'twenty to 'twenty, two vintage developments, which have not encountered material construction cost overruns or delays and are performing in line to above pro forma on rents.

Joseph D. Fisher: Next a transactions and capital markets update.

Joseph D. Fisher: First, in alignment with our capital light strategy, we made no acquisitions, new DCP investments, or development starts during the first quarter. We remain active in evaluating potential acquisitions through our joint venture with LaSalle and are optimistic about the ability to complete additional accretive deals in the coming quarter. Second, during the quarter, we completed construction of a $54 million, 85-unit townhome community in Dallas, Texas.

Joseph D. Fisher: First in alignment with our capital light strategy.

Joseph D. Fisher: We made no acquisitions, new DCP investments or development starts during the first quarter.

Joseph D. Fisher: We remain active in evaluating potential acquisitions through our joint venture with Lasalle and are optimistic on the ability to complete additional accretive deals in the coming quarters.

Joseph D. Fisher: Second during the quarter, we completed construction of a $54 million 85 unit Townhome community in Dallas, Texas.

Joseph D. Fisher: This community adds density to our existing Addison portfolio while offering residents a complementary living option. Our current development pipeline consists of just one community in Tampa, Florida, totaling 330 homes at a budgeted cost of $134 million, with 94% of this cost already incurred, thereby limiting our forward funding capacity. And third, during the quarter, we completed the previously disclosed sale of Crescent Falls, a 214-home apartment community in the Washington, D.C. area at a mid-5% buyer's cap rate for proceeds of approximately $100 million.

Joseph D. Fisher: This community adds density to our existing Edison portfolio, while offering residents a complimentary living option.

Joseph D. Fisher: Our current development pipeline consist of just one community in Tampa, Florida totaling 330 homes at a budgeted cost of $134 million with 94% of those costs already incurred thereby limiting our forward funding commitments.

Joseph D. Fisher: And third during the quarter, we completed the previously disclosed sale of Crescent balls Church.

Joseph D. Fisher: 214 home apartment community in the Washington D. C area at a mid 5% buyers cap rate for proceeds of approximately $100 million.

Joseph D. Fisher: Finally, our investment grade balance sheet remains liquid and fully capable of funding our capital. Highlights include, first, we have nearly $1 billion of liquidity as of March 31. Second, we have only $113 million of consolidated debt, or approximately 0.6% of enterprise value, scheduled to mature through the end of the year and only 11% of total consolidated debt scheduled to mature through 2026, thereby reducing future refinancing risk. Our proactive approach to managing our balance sheet has resulted in the best three-year liquidity outlook in the sector and the lowest weighted average interest rate amongst the multifamily peer group at 3.4 percent.

Joseph D. Fisher: Finally, our investment grade balance sheet remains liquid and fully capable of funding our capital needs.

Joseph D. Fisher: And third, our leverage metrics remain strong. Debt to enterprise value was just 30% at quarter end, while net debt to EBITDA RE was 5.7 times, which is approximately a half turn better versus the pre-COVID level. In all, our balance sheet and liquidity remain in excellent shape.

Joseph D. Fisher: Some highlights include.

Joseph D. Fisher: First we have nearly $1 billion of liquidity as of March 31.

Joseph D. Fisher: Second we have only $113 million of consolidated debt or approximately 0.6% of enterprise value scheduled to mature through the end of the year.

Joseph D. Fisher: And only 11% of total consolidated debt scheduled to mature through 2026.

Joseph D. Fisher: By reducing future refinancing risk.

Joseph D. Fisher: Our proactive approach to manage on our balance sheet as a resulted in the best three year liquidity outlook in the sector and the lowest weighted average interest rate amongst the multifamily peer group at three 4%.

Joseph D. Fisher: And third our leverage metrics remained strong.

Joseph D. Fisher: Debt to enterprise value was just 30% at quarter end, while net debt to EBITDA or E was five seven times, which is approximately a half turn better versus pre COVID-19 levels.

Joseph D. Fisher: In all our balance sheet and liquidity remained in excellent shape.

Joseph D. Fisher: We remain opportunistic in our capital deployment.

Joseph D. Fisher: We remain opportunistic in our capital deployment, and we continue to utilize a variety of capital allocation competitive advantages to drive long-term accretion. With that, I will open it up for Q&A. Operator.

Joseph D. Fisher: And we continue to utilize a variety of capital allocation competitive advantages to drive long term accretion.

Speaker Change: With that.

Speaker Change: We'll open it up for Q&A.

Speaker Change: Operator.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your hand.

Joseph D. Fisher: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Your first question comes from Nick Joseph with Citi. Please go ahead. Thank you. Maybe just starting on the same store revenue. Obviously, the first quarter was a bit better than you expected. But I'm hoping you could actually quantify kind of what your expectations were versus the 3.1% that you put up. Hey Nick, it's Mike.

Joseph D. Fisher: Sat before pressing the star keys.

Joseph D. Fisher: Your first question comes from Nick Joseph with Citi. Please go ahead.

Joseph D. Fisher: Thank you maybe just start on the same store revenue obviously, the first quarter was a bit better than what you expected, but hoping you could actually quantify kind of what your expectations were versus the three 1% that you put up.

Michael D. Lacy: I'll take the first crack at it. What we're looking at, and as a reminder, we had 70 basis points of blends for the year, and I would tell you our blends right now in the first quarter are running about 20 basis points higher to start the year, but April and May, trending even higher, I'd say about 100 basis points higher than what we had in our original business plan going into the year, so to quantify that, if we were able to sustain that 1%, that's equal to about $8 million, and for us on our revenue line, that's about 50 basis points.

Joseph D. Fisher: Hey, Nick it's Mike I'll take first crack at it well.

Michael D. Lacy: Well, we're looking at and as a reminder, we had 70 basis points of blends for the year and I would tell you our plans right now in the first quarter are running about 20 basis points higher to start the year, but April may trending even higher I'd say about 100 basis points higher than what we had in our original business plan going into the year or so.

Speaker Change: Quantify that if we're able to.

Speaker Change: Sustained at 1%, that's equal to about $8 million and for us on a revenue line. That's about 50 basis points. So again, it's early in the season right now we want to see how the next 30 60 days play out.

Michael D. Lacy: So again, it's early in the season right now. We want to see how the next 30, 60 days play out. But right now, we feel really good about where we're trying to go. Thanks, that's helpful. And how about on the occupancy and the other income side relative to initial estimates? Occupancy in the first quarter was about 10, 20 basis points higher than we expected, and over the last 30 days or so, we brought that down. So we're running right around 96.9 today.

Speaker Change: Right now we feel really good about where we're trying to.

Speaker Change: Thanks, that's helpful and how about on the occupancy and the other income side relative to initial expectations.

Michael D. Lacy: Expectations are we'll continue to see that probably migrate down maybe 10 or 20 bits as we continue to push our blends a little bit higher. So overall, I'd say occupancy is pretty much on target through the first four months or so. Other income, though?

Speaker Change: Occupancy in the first quarter was about 10 20 basis points higher than we expected and over the last 30 days or so we brought that down. So we're running right around 96 nine today expectations are will continue to see that probably migrate down maybe 10 or 20 bps as we continue to push our plans a little bit higher so overall I'd say.

Speaker Change: Occupancy is pretty much on target through the first four months or so other income now great. I mean, I'll tell you we were 10% above last year to start the year April's trending in the same direction, that's probably two to 300 basis points higher than we originally thought and a lot of that has to do with the success from the <unk>.

Michael D. Lacy: Great. I mean, I'll tell you. We were 10% above last year. To start the year, April's trending in the same direction, so that's probably 200 to 300 basis points higher than we originally thought. And a lot of that has to do with the success of the team really driving these initiatives home. So right now, other income feels really strong. And a lot of this just points back to our strategy, and we've talked about this over the last couple of months. Start the year with high occupancy, start to push our blends, test the water as we have demand, and it's all starting to play out for us today. Thanks, that's very helpful.

Speaker Change: <unk> really driving these initiatives home so right now other income feels really strong.

Speaker Change: Lot of it is just point back to our strategy strategy and we've talked about this over the last couple of months its start the year with high occupancy start to push our blends test the waters, we have demand and it's all starting to play out for us today.

Michael D. Lacy: And then you touched on the prepared remarks about the benefits of low turnover that continues to drive low retention. When you look at the renewals you've sent out for May and June, I guess, first of all, where are those renewals going out? And then, is there anything from a take perspective or negotiating perspective that gives you any indications that turnover won't continue to stay low or even trend lower from here? Mike, again, good question, Nick.

Speaker Change: Thanks, That's helpful. And then you touched on the prepared remarks about the benefits of the low turnover that continues to drive lower the high retention. When you look at the renewals you've sent out for May and June I guess first of all where are those renewals going out and then is there anything from a take perspective or negotiating perspective that gives you any.

Speaker Change: Any indications that turnover won't continue do stay low or even trend lower from here.

Michael D. Lacy: Right now, we're sending out around 3.8 percent through June on renewals. And then in July, we just sent out about four and a half percent growth. So we are getting a little bit more aggressive on our renewals. But at the same time, we're really pushing our market rents. And so we're trying to compress the new and renewals.

Speaker Change: Yeah, It's Mike again, good question, Nick right now, we're sending out around it was around three eight through June on renewals and then in July we just sent out about four 5% growth. So we are getting a little bit more aggressive on our renewals, but at the same time, we're really pushing our market rents and so we're trying to compress the the new and renewed.

Speaker Change: And I think what you saw from US in the first quarter was about a 600 basis point difference between new and renewal my expectation, it's going to come down to around three to 400 basis points as we move throughout the second quarter, and that's really setting us up to drive total blends which is equating to total revenue growth a little bit ahead of our expectations.

Speaker Change: Okay.

Speaker Change: Thank you.

Michael D. Lacy: And I think what you saw from us in the first quarter was about a 600 basis point difference between new and renewals. My expectations are that it's going to come down to around three to 400 basis points as we move throughout the second quarter. And that's really setting us up to drive total blends, which is equating to total revenue growth a little bit ahead of our expectations. Next question, Austin Wurschmidt with Keep Bank Capital Markets, please go ahead. Yeah, great question, Austin.

Austin Todd Wurschmidt: Next question, Austin, where Schmidt with Keybanc capital markets. Please go ahead.

Austin Todd Wurschmidt: Great. Thanks, Mike you commented when they get back on the leasing trends about may lease rate growth improving versus April.

Austin Todd Wurschmidt: Talked about how things have kind of trended.

Austin: Through the first quarter in April relative to expectation, which markets are really driving that improvement into may and and maybe where you're becoming a little bit more aggressive on the renewal rate growth.

Austin Todd Wurschmidt: And then do you think you can kind of keep retention or keep occupancy high you know, while pushing a little bit harder.

Austin Todd Wurschmidt: We are seeing more strength, based on our own expectations coming into the year, really out of the West Coast. Right now, we've talked a little bit about what we've experienced in Seattle and San Francisco. And we're starting to see the same thing come out of the East Coast.

Speaker Change: Yeah, Great question, Austin, we are seeing more strength.

Austin Todd Wurschmidt: With our own expectations coming into the year really out of the West Coast right now and we've talked a little bit about what we've experienced in Seattle and San Francisco and are starting to see the same thing come out of the East Coast, New York is really picking up as demand picks up so a lot of strength coming out of our coastal markets and that's why we're saying on an absolute basis the high.

Michael D. Lacy: New York's really picking up as demand picks up. So a lot of strength coming out of our coastal markets, and that's where we're seeing, on an absolute basis, the highest rent. And I'll tell you the one that's been a surprise as of late, and thankfully, it's 15% of our NOI, is D.C.

Austin Todd Wurschmidt: Lost rent and I'll tell you. The one that's been a surprise as of late and thankfully, it's 15% of our NOI is D. C. It's really starting to come on strong starting to see blinds and that plus four 5% growth and a lot of that has to do with getting more aggressive to your point on renewal being that they are very sticky and it's allowing us to drive our market rent.

Michael D. Lacy: It's really starting to come on strong, starting to see blends in that plus 4% to 5% growth. And a lot of that has to do with getting more aggressive, to your point on renewals, seeing that they're very sticky, and it's allowing us to drive our market rents up as well, and it's translating to positive new lease growth. So overall, the coasts feel very strong, but in addition to that, the Sunbelt's hanging in there.

Austin Todd Wurschmidt: <unk> as well and it's translating into positive new lease growth. So overall the coast feel very strong but in addition to that sunbelt hanging in there and what I'm experiencing today is momentum on a month over month basis seeing positive trends coming out of those parts of the country as well so overall feel very positive.

Michael D. Lacy: And what I'm experiencing today is momentum on a month-over-month basis, seeing positive trends coming out of those parts of the country as well. So overall, things feel very positive today. Yeah, my follow-up kind of wanted to dig in a little further on sort of the positive surprise or, seemingly, like you feel fairly good about the Sun Belt relative to expectations. So I mean, would you be willing to say that the worst is behind you in the Sun Belt and that, you know, potentially, the benefit of better jobs? Yeah, Austin, that's why I'm getting a lot of questions on the Sunbelt.

Austin Todd Wurschmidt: Yes.

Speaker Change: Yes, my follow up kind of wanted to dig in a little further on sort of the positive surprise or or.

Speaker Change: Seemingly like you're you know feel fairly good about the sunbelt relative to expectations. So I mean would you would be willing to say that the worst is behind you in the Sun belt and that you know potentially.

Speaker Change: The benefit of better job growth and maybe easier comps in the back half of the year could lead to continued acceleration what are sort of the updated thoughts on you know the.

Speaker Change: Outlook through the balance of the year.

Michael D. Lacy: So maybe, maybe, let me step back for a second and just give you a little bit more color. And as a reminder to the group, that's about 25% of our NOI. And to your point, we know supply is a certainty, and it's in front of us; peak deliveries are still right around the corner. But at the same time, it's during peak demand, so that's, that's a positive.

Speaker Change: Yeah, Austin, that's been getting a lot of questions on the sunbelt. So maybe maybe let me step back a second and just give you a little bit more color.

Speaker Change: As a reminder for the group is that's about 25% of our NOI and to your point, we know suppliers, it's a certainty and it's in front of US peak deliveries are still right around the corner, but at the same time. It's during peak demand. So that's that's a positive and we're seeing stronger job growth as well as.

Michael D. Lacy: And we're seeing stronger job growth, as well as demand being a little bit stronger, and a lot of that has to do with record absorption. So overall, while it feels good, we're cautiously optimistic, just given that supply is still coming. But just to give you a little bit more color on what we're seeing on the ground, I think the things that we look at, first and foremost, are your concessions. And I would point out that in Texas today, we're seeing one and a half weeks.

Austin Todd Wurschmidt: Demand a little bit stronger than a lot of that has to do with record absorption. So overall.

Austin Todd Wurschmidt: It feels good we're cautiously optimistic just given that supply is still coming but just to give you a little bit more color on what we're seeing on the ground I think things that we look at it first and foremost of your concessions and I would point to in Texas today, We're seeing one five weeks.

Austin Todd Wurschmidt: And in Florida, it's about a half a week session on our portfolio, which is a pretty significant improvement over the last six months and lower than what we're seeing from some of the comps in those areas. In addition to that occupancy in the sunbelt, we're running around 96 five to 96 seven today, so still very healthy occupancy and again, we're seeing blends.

Michael D. Lacy: And in Florida, it's about a half-week concession on our portfolio, which is a pretty significant improvement over the last six months and lower than what we're seeing from some of the comps in those areas. In addition to that, occupancy in the Sunbelt is running around 96.5 to 96.7 today. So still very healthy occupancy.

Austin Todd Wurschmidt: Improving on a month over month basis, and just to give you a couple of stats.

Austin Todd Wurschmidt: In April we were negative $1 five in the sunbelt or blend that compares to negative two 2% during the first quarter and I'd tell you may is shaping up to be even better. So overall blend has continued to improve.

Austin Todd Wurschmidt: Where I'm most excited is our other income.

Michael D. Lacy: And again, we're seeing blends improving on a month over month basis. And just to give you a couple of stats, in April, we were negative 1.5 in the Sunbelt for blends. That compares to negative 2.2% during the first quarter. And I tell you, May is shaping up to be even better.

Austin Todd Wurschmidt: We've been driving home some of our initiatives in the Sunbelt and specific Li Yu.

Austin Todd Wurschmidt: Internet rollout, that's really taking hold so, allowing us to drive our other income above 10% in that part of the country and it's allowing us to drive our total revenue. So again cautiously optimistic just given that peak supply is in front of us, but it's a much better position knowing that demand is also coming at the same time.

Michael D. Lacy: So overall, blends continue to improve. But where I'm most excited is our other income. We've been driving home some of our initiatives in the SunBell, I think specifically.

Michael D. Lacy: 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0, We were between 5% to 7% growth on our other income line, and again, we're holding around 10% today. So that's a 200 to 300 basis point improvement from what we originally had. Next question, Steve Sakwa with Evercore ISI, please go ahead.

Austin Todd Wurschmidt: And then just can you just clarify did you guys underwrite 5% other income growth for the year.

Austin Todd Wurschmidt: We were between 5% to 7% growth on our other income line and again, we're holding around 10% today. So that's a two to 300 basis points.

Austin Todd Wurschmidt: From what we originally thought.

Speaker Change: Okay I appreciate the time thank you.

Austin Todd Wurschmidt: Next question, Steve <unk> with Evercore ISI. Please go ahead.

Stephen Thomas Sakwa: Yeah, thanks, Mike. Appreciate all the comments on some of the trends by market. I'm just curious in the Sunbelt, you know, given that we've got heavy deliveries coming over the next four quarters, is it your expectation that the better trends continue? Or is this maybe a little bit of a lack of supply or maybe stronger demand?

Steve: Yeah. Thanks, Mike appreciate all the comments on some of the trends by market I'm just curious in the Sun belt, you know given that we've got heavy deliveries coming over the next four quarters is it your expectation that the better trends continue or is this maybe been either a little bit of lull in supply or maybe stronger day.

Michael D. Lacy: And like, I guess, how are you thinking about those concession trends maybe over the next several quarters? Yeah, see that we still think that peak supply is it's going to hit us here in the next couple quarters. So we're going to continue to watch that and lean into the things that we control.

Michael D. Lacy: And then like I guess, how are you thinking about those concession trends maybe over the next several quarters.

Michael D. Lacy: And again, that's where we're hitting our other income and driving our results against the peers on a relative basis. But we do expect that we're going to continue to see Edwin just given supplies in front of us for the next six to 12 months in that market. Steve, this is Toomey, just to add some more color, and I think we had it in our prepared remarks, record absorption in the first quarter. The High for two decades. The Jobs number, I think, surprised us all through the balance of the year. If that continues, the Sun Belt has a pretty good path, if you will, to absorb it.

Michael D. Lacy: Yes, we still think that peak supply is it's it's going to hit US here in the next couple of quarters. So we're going to continue to watch that lean into the things that we control and again, that's where we're hitting our other income and driving our our results again.

Michael D. Lacy: The peers on a relative basis, but we do expect that we're going to continue to face headwinds just given supplies in front of us for the next six to 12 months in that market.

Two: Hey, Steve This is too I mean, just to add some more color and I think we had it in our prepared remarks.

Speaker Change: Record absorption in the first quarter.

Speaker Change: The high for two decades of the jobs number I think has surprised us all through the balance of the year if that continues.

Speaker Change: Sunbelt has a pretty good path, if you will and I'm, sorry, but I'm not sure betting on the jobs market.

Tom Toomey: I'm not sure betting on the jobs market going into an election cycle is a very strong bet on that piece of the equation. Second, you know, we're still a little raw from last September-October when we saw interest rates spike and we saw developers panic and go to a heavy concession template in that supply-type market setting. And I think it would be prudent for us to just play it through and see how it falls.

Speaker Change: Going into an election cycle is a very strong Beth.

Speaker Change: On that piece of the equation second you know.

Speaker Change: We're still a little off from last September October when we saw interest rates Spike and we saw it developers panic and go to a heavy concession template and that supply type market setting and I think we just have kind of be prudent for us to just play it through and see how it falls.

Speaker Change: I wouldn't get overly optimistic or pessimistic was it's just easier for us to say, we're gonna play it month by month.

Tom Toomey: I wouldn't get overly optimistic or pessimistic. It's just easier for us to say we're going to play it month by month and see what the traction is with respect to new and renewal. But right now, after four months, headed into the PIP, I feel better than we expected.

Speaker Change: And see what the traction is with respect to new and renewals.

Speaker Change: But right now after four months added into the fifth feel better than we expected.

Joseph D. Fisher: Okay, and maybe one for Joe, just as you think about maybe any opportunities for capital deployment, and I know you probably don't like where your stocks are trading, but how are you thinking about any kind of investment opportunities, whether it's DCP or land purchases for future developments, like just kind of where are the return opportunities? Where's the opportunity set today? Yeah. Hey, Steve.

Speaker Change: Okay, and then maybe one for Joe just as you think about maybe any opportunities for capital deployment I know you probably don't like where your stock's trading, but you know how how are you thinking about any kind of investment opportunities, whether it's D. C P or land purchases for future developments like just kind of where are the return opportunities worthy opportune.

Speaker Change: <unk> set today.

Joseph D. Fisher: So, I'd say, number one, the balance sheet remains in a phenomenal position. So, liquidity-wise, maturities, sources, and uses all look to be in a really good position. So, we're able to kind of sit back and be in this capital-light environment and wait to pivot to offense.

Joseph D. Fisher: Yeah, Hey, Steve So I'd say number one balance sheet remains in a phenomenal position so liquidity wise maturities sources and uses all love to be in really good position. So we're able to kind of sit back and be in this capital light environment waste flip it to offense.

Joseph D. Fisher: I'd say, opportunity-wise, you know, the transaction market was finding footing there in terms of agreement on where cap rates were and buyer-sellers were coming together. Obviously, this recent surge in rates creates a little bit more of an unknown in that environment. And so, we're kind of sitting back trying to see where valuation starts to settle out here a little bit, but where we probably tried to target today, two different areas. One is on the JV acquisition side, the JV that we put together with LaSalle last year. We'd, of course, like to continue to deploy with them as we did in the fourth quarter.

Joseph D. Fisher: I'd say opportunity was.

Joseph D. Fisher: Actually the market was flat and footing there in terms of our agreement on where cap rates were by ourselves we're coming together.

Speaker Change: Honestly this recent surge in rates creates a little bit more of an unknown in that environment and so we're kind of sitting back trying to see where our valuation starts to settle out here a little bit, but we're we probably tried to target today two different areas.

Speaker Change: One is on the JV acquisition side.

Speaker Change: Even though we put together with the Lasalle last year, when we would of course like to continue to deploy with them as we did in the fourth quarter. So trying to find deals in our existing markets deals down the street and then get the additional upside from the fee stream that comes off of that so continue to show them a lot of transactions hope to get some things done here in the coming quarters with them the.

Joseph D. Fisher: So, trying to find deals in our existing markets, deals down the street, and then get the additional upside from the fee stream that comes off of that. So, continue to show them a lot of transactions, and hope to get some things done here in the coming quarters with them. The other area is within the DCP pipeline.

Speaker Change: The other area is within the D. C. P pipeline, while we've not seen much on traditional D. C. P. Given that we're not seeing a lot of new starts and activity there.

Joseph D. Fisher: While we're not seeing much on traditional DCP, given that we're not seeing a lot of new starts and activity there, we are seeing a little bit more on the recap opportunity side. And so, as we look ahead to potential paydowns or payoffs that may come out of that DCP pipeline in the next 12 months, we're starting to evaluate some opportunities for redeployment to put some capital out there on that front. On the development side, you mentioned that we've got a really good land pipeline right now with a lot of deals that are shovel-ready.

Speaker Change: We are seeing a little bit more on the recap opportunity side and so as we look ahead to potential paydowns or payoffs that may come out of the D. C. P pipeline in the next 12 months, we're starting to evaluate some opportunities for redeployment to put some capital out there on that front.

Speaker Change: On the development side, you mentioned that you always got a really good land pipeline right now with a lot of deals are shovel ready.

Joseph D. Fisher: And so, that team's just continued to work out costs and monitor the market and wait to see where we get on some of those yields before we start some of those. But we've got a really good opportunity to hit that hard as well once the market kind of comes into our favor. That's it for me.

Speaker Change: So that team is just continuing to work out cost to monitor the market and wait to see where we get on some of those yields before we start some of those but we've got a really good opportunity to hit that hard as well once the box it kind of comes into our favor.

Speaker Change: That's it for me thanks.

Joseph D. Fisher: Next question, Josh Dennerlein with Bank of America, please go ahead. Hey guys, um, just wanted to hit on some of the expenses. I was looking at attachment eight. There are a couple of markets where you're like Seattle, Austin, Monterey Peninsula. Any anything going on in those markets that we should be aware of on the expense side? Josh, I'd say first and foremost, you have to remember the CARES.

Speaker Change: The next question, Josh that Arlene with Bank of America. Please go ahead.

Josh: Yeah, Hey, guys just wanted to hit on some of the expenses I was looking at attachment eight there's a couple of markets, where you had some pretty big jumps year over year like Seattle, Boston Monterey Peninsula anything going on in those markets that we should be aware of.

Josh: Syed.

Joshua Dennerlein: We're anniversary off of that. So as a whole, that had about a 350 basis point growth rate. So if we didn't have that, we would have been 4% overall. But specific to some of these markets, Seattle, as an example, we had taxes go up about 9%. So that drove a little bit more growth there. A place like Monterey Peninsula, utilities were up 7%.

Syed: Yeah, Josh I would say first and foremost you have to remember the cares or anniversary off of that so as a whole that had about a call. It 350 basis point growth rate. So if we didn't have that we would have been 4% overall, but specific to some of these markets Seattle as an example, we had tag.

Syed: Is go up about 9% so that drove a little bit more growth there a place like our Monterey Peninsula utilities were up 7%. So you have some of these other factors that are in play in addition to what we're anniversarying off of given the cares Act. So that's driving some of the higher growth if you will.

Michael D. Lacy: So you have some of these other factors that are in play in addition to what we're anniversarying off of, given the CARES Act. So that's driving some of the higher growth, if you will. Josh, I'd just add to that, just because we did get a couple of questions overnight on the expense number. I think we did a great job of telegraphing what was going on there with that CARES Act comp in one queue. And I think a lot of notes noted that, but that was, in mind, slightly better than we had expected.

Speaker Change: Josh I'd just add to that just because we did get a couple of questions overnight on the expense number.

Speaker Change: He did a great job of Telegraphing, what was going on there with that cares act comp in <unk> and I think a lot of notes noted that but that was in line to slightly better than we had expected. So that seven 5% overall expense growth number was definitely not a surprise to us and so as it relates to the range for the rest of the year, we definitely see the path to see that year over year number coming.

Joseph D. Fisher: So that 7.5% overall expense growth number was definitely not a surprise to us. And so as it relates to the range for the rest of the year, we definitely see the path to see that year-over-year number come down here for the next three quarters. And when you look at the initiatives around that, be it additional automation of leasing, more no-staff properties, some of the stuff we're doing with sweet spot maintenance, some of the procurement, we've still got a lot of initiatives out there to keep that expense number controlled as we have in the past.

Josh: On here for the next three quarters and when you look at the initiatives around that a bit additional automation of leasing more no staff properties. Some of the stuff, we're doing with sweets spot maintenance some of the purchasing we've still got a lot of initiatives out there to keep that expense number controlled as we have in the past so I would not let one to scare scary.

Joseph D. Fisher: So I would not let one queue scare you in terms of, is that going to be a recurring issue for us? Okay, I appreciate that. And then back on other income, just kind of curious, what's driving the outperformance in the other income line? The building-wide Wi-Fi, is that? Sign up anytime, or I kind of thought. Any color there would be great.

Speaker Change: In terms of is that gonna be a recurring issue for us.

Speaker Change: Okay. No I appreciate that and then back on other income just kind of curious what's driving the outperformance in the other income line you mentioned the building wide Wi Fi is that like people can sign up anytime or I kind of call. It cause that like lease renewal or when there's a new lease signed so any color there would be great.

Michael D. Lacy: Yeah, so let me give you a little bit more color just to, again, the other income. It does make up just over 10% of our total revenue. And so on our stack, we're looking at about, call it $40 million. And a quarter of that growth came from the rollout of our bulk internet, and so we did see about a million dollars in benefits during the quarter compared to about $100,000 last year.

Speaker Change: Yeah. So let me give you a little bit more color Justin again.

Speaker Change: Income it does make up just over 10% on hold right now.

Speaker Change: In stack, we're looking at about call it $40 million and a quarter of that growth came from the rollout of our bulk internet and so we did see about a $1 million benefit during the quarter compared to about $100000 last year or so.

Speaker Change: The majority of it coming from Rolling out that initiative. In addition to that I'd tell you. The teams doing a really good job just driving some of our other initiatives as it relates to renting out common area spaces.

Michael D. Lacy: So the majority of it's coming from rolling out that initiative. In addition to that, I'd tell you the team's doing a really good job just driving some of our other initiatives as it relates to renting out common area spaces or adding parking in terms of more assigned spots there. We're pushing up some of our short-term furnished rentals. And then we'll continue to lean into some of the package lockers.

Speaker Change: Adding parking in terms of more assigned spots there.

Speaker Change: Some of our short term furnished rentals and then we'll continue to lean into some of the package lockers. So you put all that together and you're looking at about a 10% increase on a year over year basis, and again April may look like they're tracking.

Speaker Change: Okay. Appreciate that thanks for the time.

Michael D. Lacy: So you put all that together, and you're looking at about a 10% increase on a year over year basis. And again, April may look like they're tracking. Oka, I appreciate it. Next question, Jamie Feldman with Wells Fargo, please go ahead. Great, thanks for taking the question. I was hoping you could talk a little bit more about how class A versus B is performing across the market, across your portfolio. Sure, I'll take that.

Speaker Change: Next question, Jamie Feldman with Wells Fargo. Please go ahead.

James Colin Feldman: Great. Thanks for taking the question I was hoping you could talk a little bit more about how class a versus b is performing across the markets.

James Colin Feldman: Across your portfolio.

James Colin Feldman: So bees outperformed our aides on a blended basis at the portfolio level by about 50 basis points. So what we saw was 1% growth for 0.5%. And I'll tell you the Sunbelt deviated from the recent trend we talked about last year, where bees were underperforming across the board.

James Colin Feldman: Sure I'll take that <unk> outperformed our as on a blended basis at the portfolio level by about 50 basis points. So what we saw was 1% growth to your 0.9%.

James Colin Feldman: I'll tell you the sunbelt deviated from the recent trend we talked about last year, where b's were underperforming these across the board.

James Colin Feldman: And this does suggest that the supply dynamics are impacting us more than beads across the Sun belt, which is more in line with traditional supply dynamics overall it feels like it's normal steady state today and these are doing a little bit better.

Michael D. Lacy: And this does suggest that the supply dynamics are impacting aides more than bees across the Sunbelt, which is more in line with traditional supply dynamics. So overall, it feels like it's just a normal steady state today, and bees are doing a little bit better. Okay. Thanks for that.

Speaker Change: Okay. Thanks.

Michael D. Lacy: And then... You talked broadly about the Sun Belt, but can you just get a little bit more granular on the trends? You know, you mentioned Texas, but how is Dallas different than Austin and then even Florida? How are Tampa, and Orlando? Can you just talk more granularly about... those markets? Are they all pretty much doing exactly what you said? Broder, Sunbelt. I can give you a little bit more color on the makeup of those regions and what we're seeing today, I think, first and foremost, starting with Florida.

Speaker Change: Thanks for that and then.

Speaker Change: Yeah, you bet you talk broadly about the sunbelt, but can you just get a little bit more granular on the trends you mentioned taxes, but as Dallas different than Austin, and then even Florida, our Tampa Orlando.

Speaker Change: And then Nashville, which of course is not Florida, but can you just talk more granular about.

James Colin Feldman: Those markets or are they all pretty much doing exactly what you said in your broader sunbelt comment.

Michael D. Lacy: Florida makes up about 10% of our NOI, and it's really split between Tampa and Orlando. Let's say Tampa; we have about 20% urban, 80% suburban portfolio. We're seeing concessions around 0.3 weeks today. Occupancy is running in that mid-96 range, and Orlando is very similar.

Speaker Change: I can give you a little bit more color on.

Speaker Change: The makeup of those regions and what we're seeing today I think first and foremost starting with Florida, Florida makes up about 10% of our our NOI and it's really split between Tampa and Orlando.

Speaker Change: Tampa, we have about 20% urban 80% suburban portfolio, we're seeing concessions around 0.3 weeks today occupancy is running in that mid 96 range and Orlando is very similar so we're seeing about <unk>, 3% we used concessions.

Michael D. Lacy: So we're seeing about 0.3% week concession. Occupancy is a little bit higher at 96.9. Blends are still slightly negative, but they continue to improve.

Speaker Change: Occupancy is a little bit higher at 96, nine planes are still slightly negative, but they continue to improve and so Florida feels like it's on track with our original expectations for the year specific to Texas similar in the sense that Texas is about 10% of our NOI, but the majority of this is coming out of <unk>.

Michael D. Lacy: And so Florida feels like it's on track with our original expectations for the year. Specific to Texas, similar in the sense that Texas is about 10% of our NOI, but the majority of this is coming out of Dallas. So Dallas is 8% of our NOI market. We're 15% urban, 85% suburban.

Speaker Change: Dallas, So Dallas is 8% of our NOI market, where 15% urban 85% suburban we are seeing elevated concessions around one and a half weeks today, but that has improved from two and a half weeks about 60 days ago, and where are you going to run occupancy in that mid 96 range. So overall.

Michael D. Lacy: We are seeing elevated concessions around 1.5 weeks today, but that has improved from 2.5 weeks about 60 days ago. And we're able to run occupancy in that mid-96 range. So overall, pretty decent numbers coming out of Dallas. Austin is probably one of the weaker performing markets today for us.

Speaker Change: Pretty decent numbers coming out of Dallas, Austin, probably the one of the weaker performing markets today for us and again. This is only 2% of our NOI. So it's a it's a relatively small market.

Michael D. Lacy: And again, this is only 2% of our NOI, so it's a relatively small market. We're seeing concessions in that 2-week range, which is probably the highest in our entire portfolio, and that's where we're facing the majority of our supply. But we're still running 96.7% occupancy. You can see here that blends are still negative, but they are improving. So again, cautiously optimistic on a lot of these Sunbelt markets, but today they're performing at expectations. Okay, great. Thank you. Next question: Anthony Paglione with J.P. Morgan. Please go ahead.

Speaker Change: Concessions in that two week range, which is probably the highest in our entire portfolio and thats what were facing the majority of our supply, but we're still running 96, 7% occupancy you can see and hear blame theres still negative, but they are improving so again cautiously optimistic on a lot of eastern belt markets, but today they.

Speaker Change: They are performing at expectations.

Speaker Change: Okay, great. Thank you.

Speaker Change: Next question, Anthony Paleo with J P. Morgan. Please go ahead.

Anthony Franklin Powell: Thanks. Maybe, Mike, for you, I mean, you talked about how high the retention is and just the strength of the renewal rates, and so I'm just wondering, like, is there a loss to lease in the portfolio still, or as we look over the course of the year, do you think this flips to, like, a gain to lease, or how should we think about that and that divergence between new and renewal spreads?

Anthony Franklin Powell: Alright, Thanks, maybe Mike for you I mean, you talked about how high the retention is and just the strength of the renewal rates and so I'm. Just wondering like is there a loss to lease in the portfolio still are as we look over the course of the year. Just do you think this flips to like a gain to lease or how should we think about that and that divergence between new and.

Anthony Franklin Powell: Renewal spreads.

Anthony Franklin Powell: Yeah, Tony, what we're seeing today is a loss to lease right around, call it two to two and a half percent. Typically, that grows as you go through the revision period over the next three to six months, and then it starts to trail off towards the end of the year.

Michael D. Lacy: Yeah, Tony what we're seeing today is a loss to lease right around call. It two to two 5% typically that grows as you go through the year.

Michael D. Lacy: And period over the next three to six months and then it starts to trail off towards the end of the year, but right now our loss to lease is hovering right around that two to two 5% range today and I got to tell you that.

Michael D. Lacy: But right now, our loss to lease is hovering right around that two to two and a half percent range today. And I got to tell you, I'm really excited about what the team's done with the Customer Experience Project. I gave a lot of high-level information in my prepared remarks, but I think it's important just to dive into some of the things that we're doing. And I think, first and foremost, our intention was to capture millions of data points. And by that, I mean we captured every voicemail, text message, email, surveys, service requests, and every personal interaction.

Anthony Franklin Powell: Really excited about what the team has done with the customer experience project and I gave a lot of high level information in my prepared remarks, but I think it's important just to dive into some of the things that we're doing and I think first and foremost our intention was to capture millions of data points and by that I mean, we captured everything.

Michael D. Lacy: And secondary to that was to develop these proprietary resident community-specific dashboards that chronologically align interactions. I think that's the key word. It's chronologically putting these in order so our teams know exactly what's happening at any given time. And I'll tell you, finally, taking all this information and scoring each experience to gauge real-time sentiment to orchestrate a better living experience has been huge for us. And so while it doesn't go unnoticed that people aren't moving out to buy homes as much as they were, say, last year or the year before, this is a big driver for us and something that our teams are really leaning into.

Anthony Franklin Powell: Joyce Mail text message email surveys service request every personal interaction and so secondary to that wants to develop these proprietary resident community specific dashboards that chronologically aligned interactions I think that's the keyword is chronologically putting these in order. So our teams know exactly what's happening at <unk>.

Anthony Franklin Powell: Given time and I think finally, taking all this information and scoring each experienced engaged real time sentiment to orchestrate a better living experience, it's been huge for us and so while it doesn't go unnoticed that people aren't moving out to buy homes as much as they were say last year or the year before this is a big dial mover for us.

Anthony Franklin Powell: And something that our teams are are really leaning into.

Michael D. Lacy: Hey Tony, just one other thing too, in terms of kind of that momentum and that lost to lease question, I think probably one of the things we're most excited about on a year-to-date basis. When you look at the combination of our gross rents and that concessionary number coming down since the start of the year, we're actually up plus or minus three percent on effective rents on a year-to-date basis, which through the first Obviously, that's being led by the east and west coasts doing a little bit better, but even Sunbelt, as Mike talked about, we're seeing market rents move higher there, and so when you worry about that gain to lease, the fact that market rents continue to move higher at the same time that we're pushing our blends both on renewal and new basis higher, we feel pretty good about that trajectory in terms of as a forward indicator Okay, thanks, that's helpful.

Anthony Franklin Powell: It's only just one other thing too in terms of kind of that momentum and that loss to lease question.

Anthony Franklin Powell: One of the things we're most excited about on a year to date basis. When you look at the combination of our gross rents and that concessionary number coming down since the start of the year were actually up plus or minus 3% on effective rents on a year to date basis, which through the first 120 days is a really good result relative to historical averages obviously, that's been led by.

Anthony Franklin Powell: Eastern West coast doing a little bit better, but even sunbelt as Mike talked about we're seeing market rents move higher there and so when you're worried about that getting to lose the fact that market rents continue to move higher at the same time that we're pushing our blends both on renewal and new basis higher yeah, we feel pretty good about that trajectory in terms of as afford indicator.

Joseph D. Fisher: And then just the other one, can you comment on what bad debts were in the first queue and whether you expect any improvement from here for the rest of the year? So when we put together guidance, we had assumed a flat year-over-year number of between 23 and 24 for bad debts. Most of that is really due to the fact that we think we did a really good job of assessing the AR balances historically and knowing kind of what we were going to receive over time, and I'd say that's continued to play out.

Speaker Change: Okay. Thanks, that's helpful.

Speaker Change: And then just the other one can you comment on what our bad debts were Q1and whether you expect any improvement from here for the rest of the year.

Speaker Change: Yeah. So when we put together guidance, we had assumed a flat year over year number from 23 to 24 for bad debts, most of that really being due to the fact that we think we did a really good job of assessing the AR balances historically and knowing kind of what we're going to receive over time and I'd say that's continued to play out.

Joseph D. Fisher: The good thing is, you know, from a trend perspective, we are seeing some of those long-term delinquents, both the number of them as well as their average balances, have actually been coming down a little bit as we've seen some of those eviction moratoriums come off and seen the courts open up. And so we're seeing the numbers get better there. We're seeing end-of-month and subsequent-to-month-end collections continue to improve and be some of the strongest that we've seen throughout COVID. And so the trends right now look pretty good. I'd say we're probably a little bit ahead from a bad-debt perspective.

Speaker Change: The good thing is from a trend perspective, we are seeing some of those long term delinquents, both the number of them as well as our average balances have actually been coming down a little bit as we've seen some of those eviction moratoriums come off since then of course open up and so we're seeing the numbers get better there we're seeing in the month and subsequent to a month and collections continue.

Speaker Change: To improve and do some of the strongest that we've seen throughout COVID-19 and so.

Speaker Change: The trends right now look pretty good I'd say, so we're probably a little bit ahead from a bad debt perspective, So I think when we revisit guidance in the future will iron out that number and talk about it a little bit more.

Joseph D. Fisher: So I think when we revisit guidance in the future, we'll iron out that number and talk about it a little bit more. But we are really excited about the potential, perhaps this year, but definitely going into the future, the actions we're taking and the opportunity that it creates. We've talked about the kind of percent-and-a-half bad debt that we're running at. That's about $25 million a year.

Speaker Change: But we are really excited about the potential perhaps this year, but definitely going into the future of the actions, we're taking and the opportunity that it creates yeah. We've talked about the kind of presenting to have bad debt that we're running at.

Speaker Change: That's about $25 million a year.

Speaker Change: But when you factor in all the other costs from they can see turn cost legal sparse capex. Yeah. That's another 25 million right. There. So it's kind of about $50 million total opportunity I'd say the actions on the front door being taken today be it the idea and income verification and utilizing some of those AI based tools adjustments.

Michael Goldsmith: But when you factor in all the other costs from vacancy, turn-cost, legal spas, and capex, that's another $25 million right there. So it's kind of a $50 million total opportunity. I'd say the actions at the front door being taken today, be it the ID and income verification and utilizing some of those AI-based tools, adjusting some of our processes and oversight and just getting more eyes on that area, and then raising some of the thresholds around deposit requirements, income verification requirements, credit scores, some of that.

Speaker Change: Our processes and oversight and just getting more eyes on that area.

Speaker Change: And then raising some of the thresholds around deposit requirements, our income verification requirements credit scores some of that.

Michael Goldsmith: We're pretty excited about what that has the potential to do as we move forward into the back half of this year and into next year. And so we hope that that's another leg up in terms of that collection percentage and some of the delinquency stats as we move into the back half. But I think by the middle of this year, we'll hopefully have a little bit more visibility to speak to on some of that. Okay, thank you. Next question, Michael Goldsmith with UBS, please go ahead. Hi, this is Amy.

Speaker Change: We're pretty excited about what that has the potential to do as we move forward into the back half of this year and into next year and so we hope that thats another leg up in terms of the collection percentage and some of the delinquency status as we move into the back half, but I think by middle of the year. This year, we'll hopefully have a little bit more visibility to speak to on some of the.

Speaker Change: Okay. Thank you.

Speaker Change: Next question, Michael Goldsmith with UBS. Please go ahead.

Michael D. Lacy: I'm with Michael. San Francisco and Seattle get a lot of attention, but the UDR portfolio has some significant exposure to Orange County and Monterey within the West Coast markets as well. So I was hoping that you could touch on the supply-demand trends in those markets. Yeah, let me give you a little bit of color on all of them.

Michael Goldsmith: Hi, This is Michael.

Michael Goldsmith: St Francisco in Seattle, I'll get a lot of attention, but the our portfolio has some significant exposure to Orange County in Monterey within the West coast markets as well. So I was hoping that you could touch on the supply demand trends in that market.

Michael D. Lacy: I think, first, starting with Seattle and San Francisco because we do get a lot of questions regarding those markets. First and foremost, performing better than we would have expected. And a lot of this has to do with things that are unique to our portfolio. So I'll give you an example.

Michael Goldsmith: Yeah.

Michael Goldsmith: Give you a little bit of color on on all of them I think first starting with Seattle, San Francisco, because we didn't get a lot of questions regarding those markets.

Michael Goldsmith: First and foremost performing better than we would've expected and a lot of this has to do with things.

Michael D. Lacy: Seattle, for us, we're not located down in Seattle, so we're not facing as much supply pressure as some others are. We're more located in Bellevue and then out in the suburbs. And what we're seeing in a place like Seattle is that Amazon's return to work has really helped demand. And in addition to that, the light rail actually just opened up in the last week or so, and that's allowing people to get to Redmond, and it leaves every 10 minutes.

Michael Goldsmith: Things that are unique to our portfolio. So I'll give you. An example, Seattle for US were not located down in Seattle. So we're not facing as much of the supply pressure and some others are or more located in Bellevue and then out.

Michael Goldsmith: Suburbs and what we're seeing in places like Seattle is Amazon's returned to works has really helped demand and in addition to that the light rail actually just opened up in the last week or so and that's allowing people to get the Redman and it leaves every 10 minutes. So that's allowing some of the Microsoft employees to live in more of these <unk>.

Michael D. Lacy: So that's allowing some of the Microsoft employees to live in more of these urban settings and have easy access to the suburbs. So that's helped out demand to some degree. I'll tell you what we're seeing in Seattle today is winds of around 4.5%, and our occupancy is running around 97%. So overall, the fact that we don't have a lot of supply there has definitely been helpful. San Francisco, You know, we're 50-50, urban, suburban; we're down in Selma as well as on the peninsula.

Michael Goldsmith: <unk> settings and have easy access to the suburbs. So that's helped out demand to some degree I'll tell you what we're seeing in Seattle today is we'll end up around four 5% and our occupancy is running around 97%. So overall the fact that we don't have a lot of supply there it's definitely been helpful. San Francisco.

Michael Goldsmith: Oh yeah.

Michael D. Lacy: We're seeing concessions come down pretty significantly. We're right around one week today compared to two to three weeks just 60 days ago. And a lot of this has to do with returning to office. I'd tell you incremental steps to cleaning up the city. And then we're seeing AI and biotech jobs return, and we're seeing jobs return as well. So there is a little bit more demand in San Francisco and not a lot of supply to speak of.

Speaker Change: Yeah, We're 50 50 urban suburban were down and so on as well as the peninsula.

Speaker Change: Seeing concessions come down pretty significantly or right around one week today compared to two to three weeks, just 60 days ago and a lot of this has to do with return to office I would tell you the incremental steps to cleaning up the city and then we're seeing AI and biotech jobs return and were seeing jobs return.

Michael D. Lacy: So those markets have allowed us to really drive our blends into 2Q. And again, both markets are in that call it four to four and a half percent range. Specific to Orange County, that is 11% of our NOI, mainly suburban, seeing a lot more growth in the Newport Beach area, then call it Huntington Beach. Just because we have a little bit more supply that's putting pressure on us there. But overall, Orange County is performing as expected and feels pretty good today. Great, thanks.

Speaker Change: As well so.

Speaker Change: Little bit more demand in San Francisco, and not a lot of supply to speak too. So those markets have allowed us to really drive our blends into <unk> and again both markets are in that call. It four to four 5% range.

Speaker Change: Specific to Orange County that is 11% of our NOI.

Speaker Change: Suburban.

Speaker Change: Being a lot more growth in the Newport Beach area, then call Huntington Beach.

Speaker Change: That's one.

Speaker Change: Because we have a little bit more supply and that's putting pressure on us there, but overall Orange County is performing as expected and feels pretty good today.

Michael D. Lacy: And then a quick question on the other income. Improving turnover is certainly possible on the revenue and expense side. But I'm hoping that you can provide some examples of what sort of bad experiences you're seeing that you think that you can do better on from a resident experience side. Like, are these people complaining about loud trash removal or their neighbors? Or, you know, how do you think that you could do better on these items?

Speaker Change: Great. Thanks, and then a quick question on the other income when traveling turnover and certainly a positive revenue and expense side.

Speaker Change: But I'm, hoping that you can provide some examples of what sort of bad experiences you're seeing that you think that you can do better on from a rather than an experience I had like I said people complaining about loud transferring know how or their neighbors are you know how do you think that you can get better on these items.

Michael D. Lacy: That's a really good question, and you'd be surprised to know that rent increases. I mean, while it's a factor, it's one of 15 factors, and it's not even in the top box. And so some of the things that we're finding with going through these billions of data points, it comes down to what you're saying; it comes down to trash, pet waste, noise, the movement experience, you have to make sure that that's bulletproof, as well as even pest issues. And so a lot of things that are very controllable, and that's why we're leaning into it. The team's very focused on it.

Speaker Change: That's a really good question and you'd be surprised to know that rent increases I mean lots of factor. It's one of 15 factors and it's not even in the top box and so some of the things that we're finding with going through these billions of data points. It comes down to what you are saying it comes down to trash pet waste.

Speaker Change: Noise the move in experience yet to make sure that that's bullet proof as well as even past issues and so a lot of things that are very controllable and that's why we're leaning into other teams are very focused on it if we can adjust some of these things. We think we can change the trajectory we're seeing it play out in front of us, but I'll tell you there's a lot.

Michael D. Lacy: If we can adjust some of these things, we think we can change the trajectory, and we're seeing it play out in front of us. But I'll tell you, there's a lot more to come. I think there's probably another year to two years of learning, and we're going to continue to put training in place. We'll continue the A.D. test things, and we'll drive this even further as we move throughout this year and into next year. Great, thank you. Next question: Nicholas Yulico with Scotia Bank. Please go ahead.

Speaker Change: More to come I think there is probably another year to two years of learning and we're going to continue to put training is in place. We'll continue to test things and will drive drive this even further as we move throughout this year and into next year.

Speaker Change: Great. Thank you.

Speaker Change: Yes.

Speaker Change: Next question Nicolas you can only go with Scotia Bank. Please go ahead.

Nicholas Philip Yulico: Thanks. I guess my first question, Mike, sorry if I missed this, but did you give the new lease rate growth, how that's looking in April for the Northeast? Can you also just explain why that number was a little bit weaker than some other markets in the portfolio in the first quarter? So we did not provide that, but I'm trying to look through some of my notes here quickly.

Nicolas: Oh, Thanks, I guess first question, Mike sorry, if I missed this but did you give the new new lease rate growth. How that's looking in April for the northeast. Thank you got to just explain why that you know that number with a little bit weaker than some some other markets in the portfolio in the first quarter.

Speaker Change: Yeah.

Michael D. Lacy: So we did not provide that but I'm trying to work through some of my notes here quickly.

Michael D. Lacy: What I would tell you is new lease growth continues to improve. And when you think about what we just put out there as a whole on our blends, being roughly around, call it 2% in April, our new lease growth is roughly flat. And as we move throughout May, expectations are that it's going to turn positive. And I think what we're seeing across the board, whether it's the Northeast or even the West and Southwest regions, we're seeing improvement there. And a lot of that has to do with.

Michael D. Lacy: What I would tell you is new lease growth continues to improve and when you think about what we just put out there is a hole on our blends being roughly around call. It 2% in April our new lease growth is roughly flat and as we move throughout may expectations are that that's going to turn positive and I think what we're seeing.

Michael D. Lacy: Across the board, whether it's the northeast or even though the west and southwest regions, We're seeing improvement there and a lot of that has to do with.

Michael D. Lacy: Pushing our retention up, holding our renewals at a pretty steady rate, and trying to find that happy medium on those blends between new and renewals. We're going to continue to test the waters while we can and see where it takes us. But overall, what we're seeing is positive momentum pretty much across the board. Okay, thanks for that.

Michael D. Lacy: Pushing our retention up.

Speaker Change: Holding our renewals at a pretty steady rate and trying to find a happy medium on those blend between new and renewals, we're going to continue to test the waters, while we can and see where it takes us but overall, what we're seeing is a positive momentum pretty much across the board.

Joseph D. Fisher: Second question is maybe for Tom or Joe, you know, in terms of, you know, it seems like you have the policy of not revising. [inaudible] What is the reason at this point to have that policy? A lot of your peers do adjust in the first quarter, and in fact, I'd say much of the broader REIT market is willing to adjust guidance in the first quarter, so if you just remind us sort of why you feel strongly about that policy, or if this is just an instance of the situation on the ground. There's no reason for caution, sunbelt, supply, whatever it is driving that. Yep, Nick, it's Joe.

Speaker Change: Okay. Thanks for that second question is.

Speaker Change: Maybe for Tom.

Speaker Change: Tom or Joe you know in terms of you know the it seems like you have the policy of not revising same store guidance in the first quarter and I know you talked about you know you still want to see the leasing season and the spring play out and you know there are some reasons to be.

Speaker Change: Cautious in some instances, but you are yeah sounds like you are trending above the guidance. So I guess I'm just wondering you know what.

Speaker Change: You know what is the reason at this point to have that policy. Since you know a lot of your peers do adjust in the first quarter and in fact, I'd say much of the broader REIT market is willing just to adjust guidance in the first quarter. So can you just remind us sort of.

Speaker Change: Why why do you feel strongly about that policy or this is just an instance of.

Speaker Change: Situation on the ground there there's no reason for caution sunbelt supplier or whatever it is draw.

Speaker Change: Driving that decision thanks.

Speaker Change: Yep.

Speaker Change: Joe.

Joseph D. Fisher: I'd say, you know, as it relates to the broader reed market, we don't pay a lot of attention to their policies, but I'd just remind everybody, by and large, the broader reed market is a longer, least duration sector, and so maybe a little bit less exposed to the volatility of supply or macros that comes quarter to quarter. So as we look at ours, we traditionally had that policy with the exception of during COVID when we saw meaningful outperformance to start the year back in 22. And so we traditionally said we're only 120 days long in the year.

Speaker Change: I'd say as it relates to the broader market.

Speaker Change: I'll pay a lot of attention to their policies, but I'd, just remind everybody by and large the battery market as a longer lease duration sector.

Speaker Change: So maybe a little bit less exposed to the volatility of supply or macros it comes quarter to quarter.

Speaker Change: As we look at ours, we traditionally had that policy with the exception of during told US when we saw meaningful outperformance to start the year back in 'twenty two and so we traditionally said were only 120 days into the year. We've got a lot of the leasing season left we've got a lot of actions that we can take from our capital markets activity perspective, a lot of off.

Joseph D. Fisher: We've got a lot of the leasing season left. We've got a lot of actions that we can take from a capital markets activity perspective, a lot of opportunities to innovate and drive performance, but also a lot of opportunities for supply to creep up on us or macro to creep up on us. And so we typically like to stay conservative, see how the market comes to us, focus on what we can control, and then as we have that news to deliver, we deliver the good news throughout the year and try not to get out of our skis.

Speaker Change: But Tony is to innovate and drive performance, but also a lot of opportunities for supply to creep up on us or macro to creep up on us and so we typically like to stay conservative and see how the market comes to US focus on what we can control and then as we have that news to deliver we deliver the good news throughout the year and try not to get out over our Skus last.

Joseph D. Fisher: Last year, you know, as Tom mentioned, we were surprised by the reaction from some of the developers on the concessionary side to higher rates and some of the new supply coming on. And that surprised us in September, October, November, and we had to reduce guidance. By no means, is that something that we want to repeat this year or at any point in the future?

Speaker Change: You know as Tom mentioned, we were surprised by the.

Speaker Change: Okay reaction from some of the developers on the Concessionaires to higher rates and some of the new supply coming on and that surprised Us September October and November and we had to reduce guidance.

Speaker Change: No means is that something that we want to repeat this year and any point in the future and so that's definitely in the back of our minds as well.

Joseph D. Fisher: And so that's definitely in the back of our minds as well. And I would say it relates to the range. We think the range is still good. If we were well outside the range, then I think we'd have to give it a good thought.

Speaker Change: And I would say is.

Speaker Change: As it relates to the range. We think the range is still good if we were well outside the range. Then I think we'd have to give it a good thought but as Mike said, we're trending ahead.

Joseph D. Fisher: But as Mike said, we're trending ahead. But ahead does not mean we're exceeding the high end of the range at this point in time based on our internal forecast. So that range is still a good range at this point in time. We're just doing better than the midpoint. Yeah, I appreciate that. Thanks. Next question is John Kim with BMO Capital Markets. Please go ahead. Morning. I don't think anyone's asked it yet, so I'll give it a shot.

Speaker Change: That does not mean, we're exceeding the high end of the range at this point in time based off our internal forecast. So that range is still a good range at this point in time, we're just doing better than the midpoint.

Speaker Change: I appreciate that thanks, Joe.

Speaker Change: Yeah.

Speaker Change: Next question, John Kim with BMO capital markets. Please go ahead.

John P. Kim: In your attachment 8E, you no longer provide the market detail on new and renewal spreads, and I was just wondering why you decreased that disclosure. I found it very helpful. Hey, John.

John P. Kim: Good morning, I don't think anyone's asked it yet so I'll give it a shot.

John P. Kim: Your attachment 80, you no longer provide the market detail on new and renewal spreads and I was just wondering why.

Speaker Change: <unk> decreased that disclosure I found it very helpful in the past.

Joseph D. Fisher: So, that's part of our annual review that we do on the Disclosure Committee. We go through and look at best practices throughout the broader REIT space but also just within the Multifamily Peer Group. And so, when we looked at what others did around disclosure and how that blends, we found that some did regional, some just did portfolio, but we were definitely an outlier with the level of detail that we provided on 20 different markets.

John P. Kim: Yeah, Hey, John So that's part of our annual review that we do with the disclosure Committee and they go through and look at best practices throughout broader REIT space, but also just within the multifamily peer group and so when we looked at what others did around disclosure and a and blends we found that some do regional so I'm just do portfolio.

Speaker Change: But we were definitely an outlier with the level of detail that we provided on 20 different markets and so when we looked at that and most of the fact that some of these markets may only have 1000 units in them. You know when you look at a L a or a Monterey peninsula Richmond in Austin, Yeah. Those are three or four assets and I know a lot of.

Joseph D. Fisher: And so, when we looked at that and looked at the fact that some of these markets, you know, may only have 1,000 units in them, you know, when you look at LA or Monterey Peninsula, Richmond, and Austin, you know, those are three or four assets. And I know a lot of investors and analysts utilize us as a read-through to some of the other portfolios that are out there, be it Coastal or Sunbelt. To the extent that you only have 1,000 units in a market, you can get more volatility out of a couple assets. It's probably not fair for a read-through to carry on to others.

Speaker Change: Investors and analysts utilize us as a read through to some of the other portfolios that are out there bit coastal or sunbelt.

Speaker Change: To the extent that you only have a 1000 units in a market you can get more volatility off a couple of assets its probably not fair for a read through do carry on to others. So we felt good regional still provided everybody across those six or so regions. The amount of detail that they didn't understand what was going on with our portfolio potentially regionally for other portfolios, but we did want them.

Joseph D. Fisher: So, we felt that the regional breakdown still provided everybody across those, you know, six or so regions with the amount of detail that they needed to understand what was going on with our portfolio and potentially regionally for other portfolios. But we did want to remove the detail on individual markets, which Mike can still speak to, but just wanted to pull it back a little bit. Joe, you also mentioned the DCP. The watch list remains at $50 million over three investments. It didn't move despite the favorable resolution at 1300 Fairmount.

Speaker Change: Most of the detail on individual market switched by can still speak to.

Speaker Change: Just wanted to pull it back a little bit.

Speaker Change: Okay Gotcha.

Speaker Change: You also mentioned on the DCP.

Speaker Change: The watch list remains at $50 million over three investments it didn't move despite the favorable resolution of 1300 Fairmount <unk>.

Joseph D. Fisher: Can I ask what investment got added to the watch list and what the likelihood of consolidating energy facets is among these three. It's a no change to the watch list. So there are a total of four assets on that watch list. It's that Philadelphia DCP that we just went through that successful refi for, plus the three others that were still on there last quarter.

Speaker Change: Can I ask what investment got added to the watch list and what the likelihood of a consolidated consolidating any of these assets are.

Speaker Change:

Speaker Change: Among these three investments.

Joseph D. Fisher: So four in total, totaling $150 million. So while we're obviously very pleased with the 1300 Fairmount transaction to see that refi get done with no additional investment required from us or the equity partner, that buys two years plus a one-year extension to continue to focus on operations there, get the NOI trajectory up, get into a potential different capital markets environment, and work through a lot of the supply that's in that sub-market right now. So it's kind of a live to fight another day situation.

Speaker Change: Yeah, So I'd say, it's a no change to the watch list. So theres a total of four assets on that watch list, it's that Philadelphia D. C. P that we just went through the successful refi four plus the three others that were still on their last quarter. So foreign total totaling $150 million and so while we were obviously.

Speaker Change: Very pleased on the 13th and a fair amount transaction to see that refund get done with no additional investment required from us or the equity partner.

Speaker Change: That five two years plus a one year extension to continue to focus on operations there get the NOI trajectory up.

Speaker Change: Get into a potential of different capital markets environment and worked through a lot of the supply that's in that sub market right. Now so it's kind of a live to fight another day situation and I'd say, thus far we're really pleased with the leasing trends in the last 30 to 60 days as we see that occupancy number start to pick up from the call It high Seventy's and Eighty's and so like the <unk>.

Joseph D. Fisher: And I'd say thus far, really pleased with the leasing trends in the last 30 to 60 days as we see that occupancy numbers start to pick up from the call it high 70s into the mid 80s. And so, like the trajectory they're on, but we're still keeping them on the top list for the time being. The three others are roughly $50 million across three investments.

Speaker Change: Director of their own, but we're still keeping them on the list for the time being the three others are roughly $50 million across three investments no change there. It's just simply the yeah. The NOI yields of the debt yields on those are kind of in that 6% to 7% range, we'd like to see those in the high single digits as the rest of our portfolio.

Joseph D. Fisher: No change there. It's just that the NOI yields or the debt yields on those are kind of in that 6% to 7% range. We'd like to see those in the high single digits, as the rest of our portfolio is. And yeah, specific to those four deals, they kind of had a confluence of the three major risks that are out there, right? They had delays or cost overruns due to COVID because they were older models.

Speaker Change: And specific to those four deals they kind of had.

Speaker Change: A confluence of three major risks that are out there that they had delays or cost overruns due to COVID-19 because they were older vintages. They had a challenging submarkets, which pushed on runs and the cash flow stream and then what everybody's dealing with which as you know lower valuations higher interest rates. So those are kind of the four assets that really have the.

Joseph D. Fisher: They had challenging sub-markets, which pushed down rents and the cashflow stream. And then what everybody's dealing with, which is lower valuations and higher interest rates. So yeah, those are kind of the four assets that really only have the confluence of those three.

Speaker Change: Only the confluence of those three the rest of the portfolio, where different vintages kind of 'twenty, one 'twenty two type vintages, where there.

Joseph D. Fisher: The rest of the portfolio was different vintages, kind of 21, 22-type vintages where they're in lease up, the performance is in line with or ahead of expectations, so that yields are materially higher. And so we'd still see risk in the rest of the portfolio at this point. Does your current guidance contemplate an unfavorable outcome for any of these three investments? In other words, could there be another upside to it? Yeah, that's a great question. I should have clarified that. Thank you.

Speaker Change: They are in lease up the pro forma or in line to ahead of expectations and so that yields a materially higher and so we just don't see RASK in the rest of the portfolio at this point.

Speaker Change: Does your current guidance contemplates unfavorable outcome for any of these three investments in other words could there be another upsell that.

Joseph D. Fisher: Now, the upgraded guidance took the downside risk from the Philadelphia out of the equation. So, there is no FFOA risk related to that or the other three that we see this year. The next maturity for one of those is January 25. And thereafter, the other three are in mid-26, generally.

Speaker Change: The guidance Yeah. That's a great question I should have clarified that thank you.

Speaker Change: No the upgraded guidance took the downside risk from the Philadelphia out of the equation. So no F away risk related to that or the other three that we see this year. The next maturity for one of those is January of 'twenty five and thereafter. The other three are in mid 'twenty six generally and so.

Speaker Change: We have time on all of those I'd say, if you wanted to bracket the potential downside.

Speaker Change: If all four of those transactions that $150 million. If we had to go off of the accrual and buy in at the lower yield that'd probably be about three pennies, but between now and two years from now we obviously expect upside on NOI from those assets and so we don't see that full rest come into fruition, even if all three of those did eventually you have to be taken.

Speaker Change: Back at their maturity.

Speaker Change: Okay.

Speaker Change: Great. Thank you.

Joseph D. Fisher: And so we have time on all of those. I'd say if you wanted to bracket the potential downside, you know, if all four of those transactions at 150 million, if we had to go off of the accrual and buy in the lower yield, it'd probably be about three pennies. But between now and two years from now, we obviously expect upside on NOI from those assets, and so we don't see that full risk come to fruition, even if all three of those did eventually have to be taken back at their maturity. Next question, Adam Kramer with Morgan Stanley, please go ahead. Hey, guys, thanks for your time.

Speaker Change: Next question, Adam Kramer with Morgan Stanley. Please go ahead.

Adam Kramer: Just want to ask maybe a little bit more of a high level, maybe theoretical, conceptual question. You talked a little bit about the kind of robust jobs growth we've had so far this year. And I think it's something to certainly focus on when it comes to apartment demand. Maybe just walk us through, is there any kind of, I don't know if it's a rule of thumb or a way that you guys think about, you know, for X number of new jobs created, how many apartment renters are created or what that does?

Adam Kramer: Hey, guys. Thanks for the time.

Adam Kramer: Wanted to ask maybe a little bit more of a high level, maybe theoretical conceptual question you talked a little bit about the kind of robust job growth. We've had so far this year and I think it's something that certainly focus on when it comes to apartment demand.

Adam Kramer: Could you just walk us through was there any kind of I don't know if it's a rule of thumb or whether you guys think about.

Adam Kramer: For X number of new jobs created how many apartment renters are created or what that does in terms of quantifying them.

Adam Kramer: Quantifying apartment demand for you guys. It's good because we kind of took a look at that as we stepped back. If you remember when we put together our initial guidance, we had put together our top-down perspective as well as the bottom-up budgeting process that we always do.

Adam Kramer: Apartment demand for you guys.

Adam Kramer: Yep.

Adam Kramer: That's good because we we kind of took a look at that as we step back if you remember when we put together our initial guidance, we have put together our top down perspective, as well as the bottom up budgeting process that we always do at our assumptions that led to that plus or minus 1% rent growth or roughly 70 basis points of blends for the year.

Joseph D. Fisher: And our assumptions that led to that plus or minus 1% rent growth or roughly 70 basis points of blends for the year, that were driven by a multitude of factors including GDP, wages, job growth, all being low single digits based off consensus. We had a declining home ownership rate, and then the higher supply number that we knew and expected. And so the general rule of thumb is that for the two biggest drivers of that number, wages and jobs, about a 1% increase in the combination of those two relates to about a 1% increase in rents.

Adam Kramer: That was driven by a multitude of factors, including GDP wages job growth all being low single digits based off consensus we had a decline in homeownership rate and then the higher supply of number that we know unexpected and so the general rule of thumb is that for the two biggest drivers of that number wages and jobs.

Adam Kramer: About a 1% and the combination of those two relates to the relates to about a 1% increase in rents and so really the only changes to our forecast at this point that we're seeing from a macro perspective.

Adam Kramer: Supply homeownership GDP, all trending as we expected, it's really been jobs and wages have been coming in about a percent or so better and so that percent better would translate if you will and so it might be a percent or so better rents over this year. If that holds obviously that's consensus and it can change, but I think that's a lot of why you're seeing some of the performance that Mike talked about coming in better than we expect.

Joseph D. Fisher: But I think that's a lot of why you're seeing some of the performance that Mike talked about coming in better than we expected. It's been a much better backdrop in terms of the demand environment to date. Great, that's really helpful.

Adam Kramer: It's been a much better backdrop in terms of the demand environment today.

Speaker Change: Great. That's really helpful. Maybe just one little bit more on the ground if you will.

Adam Kramer: Maybe just one a little bit more on the ground, if you will. You talked about it a little bit earlier, but just, you know, I think that you guys are really kind of precious. I'm not clear what the narrative last fall, post-labor. You know, it's kind of what happened with tenure at that time and kind of what that meant for concession usage on the ground. And, you know, maybe just looking at what the tenure is today, maybe not quite where it peaked out the last number of months.

Speaker Change: You talked about it a little bit earlier, but just I think you guys are really kind of pressures.

Speaker Change: Clear with the narrative class last fall post labor day.

Speaker Change: It's kind of what happened with the tenure at that time.

Speaker Change: And kind of what that what that meant for concession usage on the ground.

Speaker Change: Maybe just looking at where the tenure is today, maybe not quite where it peaked out but certainly could be higher than it has been the last number of months, maybe just walk us through are you seeing kind of elevated level of concessions again, you're seeing developers maybe change their behavior, given where given where the tenure is relative to 234 months ago.

Adam Kramer: Maybe just walk us through, you know, are you seeing kind of an elevated level of concessions? Again, are you seeing developers maybe change their behaviors, given where the tenure is relative to two, three, four months? Adam, I'll kick it off and kick it over to Joe.

Speaker Change: Yeah.

Michael D. Lacy: I'll tell you what we're seeing on the ground, and you can see it in our numbers. Concessions have been coming down, and I think this is due in large part to the fact that a lot of these deliveries are coming at a time when you also have demand picking up, and that's the big difference between what we experienced back in 3-2 last year. You had a lot of deliveries coming in when demand was starting to go the other way, and so there's a big difference there.

Speaker Change: Yes, Adam I'll kick it off and kick it over to Joe I'll tell you what we're seeing on the ground and as you can see it in our numbers concessions have been coming coming down and I think this is due in large part to the fact that a lot of these deliveries are coming at a time, where you also have demand picking up and that's the big difference between.

Joseph D. Fisher: What we experienced back in <unk> of last year, you had a lot of deliveries coming when demand was starting to go the other way and so theres a big difference there.

Michael D. Lacy: There's still more supply to come, so we're, again, cautiously optimistic about where this is headed, but from what we can see on the ground today, concessions have actually come down a little bit. This is Toomey. I probably just have a little bit more to it.

Speaker Change: Still more supply to come so we're again cautiously optimistic about where this is headed but from what we can see on the ground today concessions have actually come down a little bit.

Speaker Change: Okay.

Speaker Change: This is to me I'd, probably just happened a little bit more into it.

Tom Toomey: And in the developer's mindset, he's looking at his rollover loan on what terms he can get in the process. And so, in the case of last year, the third quarter, you're really faced with falling rates, slow traffic, a 50-bit spike in your refi, and your proceeds coming off 10 to 20%. So you got squeezed from every angle possible.

Joseph D. Fisher: And then the developers mindset, he's looking to add as rollover loan and what terms you can get in proceeds.

Joseph D. Fisher: So in a case of last year third quarter, you're really faced with falling rates slowed traffic.

Tom Toomey: And you just drop the rate to try to fill up to get some level of cash flow. Because what's probably your most stressful point isn't necessarily the rate, it's the proceeds number. And on a debt service coverage ratio, that squeeze right there means your check to rebalance your loan, if it's $100 million, and it went from $10 to $20 million, you don't have the extra $20 million in your pocket. So you hit the panic button, and you try to respond that way, and can that happen again? Unlikely, but it can.

Speaker Change: 50 bps spike in your refi and your proceeds coming off 10% to 20%. So that he got squeezed from every angle possible and you just drop right to try to fill up to get some level of cash flow because what's probably your most stressful point isn't necessarily the right. It's the proceeds number and on.

Speaker Change: The debt service coverage ratio that squeezed right. There means your check to rebalance your loan if its a 100 million box and it went from $10 million to $20 million you don't have the extra $20 million in your pocket. So you hit the panic button and then you try to respond that way and you cannot.

Mike Lacy: It happened again.

Speaker Change: Unlikely.

Tom Toomey: And I think we want to be prudent and see how that plays out. And anyone that can figure out where the 10-year Treasury is headed, please call me because it's a lot easier than buying lottery tickets. Adam, did I kill you?

Speaker Change: But it can and I think we want to be prudent and see how that emerges in anyone that can figure out where the 10 year Treasury is headed please call me because it's a lot easier than buying lottery tickets.

Nicholas Yulico: Okay.

Speaker Change: Okay.

Joseph D. Fisher: Next question, Adam did I hear you.

Speaker Change: Yeah.

Tom Toomey: Next question, Alexander Goldfarb with Piper Sandler. Hey, I think it's still a good morning out there. So, two questions.

Joe Fisher: Next question Alexander Goldfarb with Piper Sandler.

Alexander David Goldfarb: First, just looking at New York, with the recent red law changes. One, do you see any DCP opportunities for you to help finance third party office to residential conversions? And then two, with the new laws? Really? You know, do you see any buildings where either, you know, they're pre-2009, or you don't see a sightline to exceeding the luxury rents to escape a good cause that you would look to prune? Hey, Alex, this is Andrew. I'll take the first question and then pass it off to Chris for the second one.

Joe Fisher: Hey.

Alexander David Goldfarb: Its still good morning out there. So thank you two questions first just looking at New York with the recent Red law changes.

Alexander David Goldfarb: One do you see any DCP opportunities for you to help finance third party office to resin conversions and then two with the new laws are really yes, do you see any buildings, where either they are pre 2009 or you don't see a sight line to exceeding the luxury.

Andrew: Rents to escape good cost that you would look to prune.

Andrew Kanter: As it relates to DCP opportunities, you know, we're always open to underwriting any transactions that we see in the marketplace. To date, we haven't seen anything yet, but we evaluate each opportunity based on its merits. And if it's the right deal, then we'll move forward. So at this point, there's nothing we're working on, but it's not redlined by any stretch. Hey Alex,

Alexander David Goldfarb: Hey, Alex This is Andrew I'll take the first question and then pass it off to Chris or the second one.

Andrew Kantor: As it relates to DCP opportunities, we're always open to underwriting any transactions that we see in the marketplace to date, we haven't seen anything yet, but we evaluate each opportunity based on its merits and if it's the right deal and then we'll move forward. So at this point Theres nothing were working on but it's not the red button by any stretch.

Christopher G. Van Ens: You know, before I dive into New York rent control, you know, maybe I should first step back, talk about the big picture a little bit more on the regulatory side. You know, so first, I would say many of our state legislative sessions have convened for the year. You know, while we continue to see bills signed into law that impact our business at the margin, this really was the second year in a row where major legislation like extremely restrictive rent control, I would say, for example, that could negatively impact our business in a significant way was largely defeated in most of the areas we operate.

Chris: Hey, Alex it's Chris.

Chris: Before I dive into New York rent control you know, maybe let me first step back talk to the big picture, a little bit more on the regulatory side.

Chris: So first I would say many of our state legislative sessions had convened for the year.

Chris: We continue to see bill signed into law that impact our really our business at the margin. There's really was the second year in a row, where major legislation like extremely restrictive rent control I would say for example.

Christopher G. Van Ens: Obviously, a good trend for the industry, a trend we hope continues in the year ahead. So really, a big thanks goes out to our advocacy partners around the country. As far as New York rent control is concerned, you talked about pre-2009 buildings. You know, it really seems like it'll be business as usual for us right now. I mean, we've lived with similar restrictions in California and Oregon for a number of years now, and we've continued to generate good growth and good returns in those areas. We don't see it being much different moving forward in New York.

Chris: That could negatively impact our business in a significant way.

Chris: It was largely defeated and most of the areas. We operate obviously a good trend for the industry trend. We hope continues and the year ahead.

Chris: So really a big thanks goes out to our advocacy partners around the country as far as New York rent control you talked about pre 2008 or 2009 buildings.

Chris: Seems like it'll be business as usual for us right now.

Chris: I mean, we've lived with similar restrictions in California, and Oregon for a number of years now we've continued to generate good growth. Good returns in those areas, we don't see it being much different moving forward in New York, It's only very rare years I would say.

Christopher G. Van Ens: You know, it's only very rare years, I would say, where market rent growth is likely to be above CPI plus five or a cap of 10. And lastly, I'd say, of course, there's always the risk of a slippery slope, right? Does CPI plus five become more restrictive over time? Something we'll continue to monitor, you know, but again, we had the same concerns when 1482 was passed in California. And those concerns, you know, have not manifested themselves today.

Christopher G. Van Ens: You know where market rent growth is likely to be above CPI, plus five or a cap of 10 am.

Chris: Lastly, I would say, yes of course, there's always the risk of a slippery slope right to CPI plus five become more restrictive overtime and something we'll continue to monitor.

Christopher G. Van Ens: But again, we had the same concerns with 14 82 was passed in California, and those concerns have not manifested today and so well all in all New York included we feel a relatively I would say, okay about the regulatory environment right now okay.

Christopher G. Van Ens: So all in all, New York included, we feel relatively, I would say, OK, about the regulatory environment right now. Okay, and then the second question is, you guys have spoken about a pretty strong operating environment, echoing your peers. It's interesting, because on the office front, you know, there's still a sense that corporates, you know, outside of maybe Midtown Manhattan, still being hesitant to lease or take space. So what are your property managers seeing is driving the demand? Is it or isn't it really?

Michael D. Lacy: Is it just a lot of small businesses hiring, and there's a disconnect? Or are they seeing a lot of corporate jobs that are coming in to rent, you know, employees renting apartments, and therefore, you guys are indicating a sign that, you know, the corporates are going to, you know, return in a growth mode? Just trying to understand the disconnect between what the apartments and you guys are saying about healthier than expected demand versus some of the comments from other REIT sectors. Hey Alex, Mike.

Speaker Change: Okay and then the second question is you guys have spoken about a pretty strong operating environment echoing your peers. It's interesting because on the office front you know there's still a sense of corporate you know outside of maybe Midtown Manhattan still being hesitant to lease or to take space. So what are your property managers seeing as driving.

Chris: The demand as it is it really is it just a lot of small businesses hiring and theres a disconnect or are they seeing a lot of corporate jobs that are coming into rent.

Chris: Employees renting apartments, and therefore, you know that you guys are indicating a sign that the corporates are going to return into growth mode. Just trying to understand the disconnect between what the apartments and you guys are saying about healthier than expected demand versus some of the comments from other REIT sectors.

Michael D. Lacy: Funny enough, I actually spent last week with our teams out there in New York and asked them that same question. And a lot of this comes back to lifestyle. So they're still saying that people are coming back to the market; they just want to live in Manhattan, they want to feel the experience of being there. And expectations are that they've somewhat plateaued in terms of people returning to the office, but there's still room for that to continue to grow. And if and when that happens, that'll only help demand even more. But we're continuing to see occupancy of almost 98%. And our blends are back up in that 4% range.

Chris: Hey, Alex it's Mike Yeah, funny enough I actually spent last week with our teams out there in New York and asked them that same question in a lot of this comes back to lifestyle. So they're still saying that people are coming back to the market. They just want to live in Manhattan, They want to feel the experience of being there and.

Chris: Expectations are that it's a somewhat plateaued in terms of people returning to the office, but theres still room for that to continue to grow and if and when that happens that will only help demand even more but we're.

Michael D. Lacy: So very strong demand in that market, and we expect that to continue throughout the summer months, just given the fact that there's not a lot of supply to speak to in the city. Right, but Mike, across all the prop, all the markets that you guys are in, you're seeing similar dynamics; it's just people wanting to live in the different markets, not necessarily, you know, meaningful job growth, and just trying to understand the different. Yeah, Alex, I think that's a fair point.

Joe Fisher: Continuing to see occupancy.

Chris: Occupancy of almost 98% and our blends are back up in that 4% range. So very strong demand in that market and we expect that to continue throughout the summer months, just given the fact that theres not a lot of supply to speak to in the city you definitely have more in the in call It Brooklyn Long Island City.

Michael D. Lacy: Places like that and as long as they don't go to two to three months concession, that's not going to pull people out of the city and so we feel really good about New York today right.

Chris: But Mike I would cross all of them all.

Chris: Markets that you guys are and Youre seeing similar dynamic it's just people wanting to live in the different markets not necessarily.

Mike: Meaningful job growth and just trying to understand the difference.

Michael D. Lacy: I don't think every market's created equal. And as an example, I talked a little bit about San Francisco earlier. That market's still getting cleaned up. And I think once they get that cleaned up a little bit more, people will want to live down there. And it'll be a similar dynamic to what we're facing in a place like New York. But every market's created a little bit differently.

Speaker Change: Yeah. So I think that that's a fair point I don't think every market is created equal and I think as an example, I talked a little bit about San Francisco earlier that market still getting cleaned up and I think once they get that cleaned up a little bit more people want to live down there and it'll be a similar dynamic to what we're facing in a place like New York.

Adam Kramer: But every market is creating a little bit different but overall I'd say yeah. Those those sentiments are the same across the board.

Joseph D. Fisher: But overall, I'd say, yeah, those sentiments are the same across, I'd say, too, Alex, just as it relates to demand. I mean, we talked about jobs and wages both coming in ahead of expectations; the consensus is well over a million jobs at this point in time. And so while we focus a lot on the multifamily supply picture, as we should, and kind of that national picture of call it 600,000 or so units being delivered this year, keep in mind the lion's share of housing over on the single family side, which is seeing a minimal increase on a year over year supply basis at around 1.1 million units.

Michael D. Lacy: You too Alex just as it relates to the demand I mean, we talked about jobs and wages both coming in ahead of expectations and the consensus is well over 1 million jobs at this point in time and so while we focus a lot on the multifamily supply picture as we showed a guy that national picture of call. It 600000, or so units being delivered this year.

Alex: Keep in mind the launch of housing is over on the single family side, which has seen minimal increase on a year over your supply basis at around $1 1 million units, you're also seeing from a existing supply perspective really know how homes being sold you're back to Japan GSE lows. So you kind of do get into this environment, where what's available for all of those.

Joseph D. Fisher: You're also seeing from an existing supply perspective, really no homes being sold; you're back to kind of GFC lows. So you kind of do get into this environment where what's available for all those jobs that are being created and, therefore, new households that are being created. And when you have the relative affordability component and the multiple, where we are 60% less expensive than a single family home, and that if you come rent with us, you can put an extra $35,000 a year in your pocket versus buying a home, that's pretty darn compelling.

Alex: They are being created in this airport new households that are being created and when you have the relative affordability component and multi <unk>, where we are 60% less expensive than a single family home and then if you come around with US you can put an extra $35000 a year in your pocket versus buying a home that's pretty darn compelling and so you're saying mentorship gain more than their fair share.

Joseph D. Fisher: And so you're seeing rentership gain more than their fair share of that demand that's being put out there into the market right now. And so I think that's a big driver of what we're seeing. Thanks, Joe. Thanks, Mike. Next question, Linda Tsai with Jeffreys. Please go ahead.

Linda Tsai: There of that demand that's been.

Put out there into the market right now and so I think that's a big driver of what we're saying.

Speaker Change: Thanks, John Thanks, Mike.

Alex: Next question, Linda Tsai with Jefferies. Please go ahead.

Linda Tsai: Thanks for taking my question in terms of April retention, improving 400 bps from a year ago is this consistent across your portfolio or are there regional differences.

Linda Tsai: It's pretty consistent. Again, what we're seeing is a lot of these actions that are put in place from what we're doing with the Customer Experience Project. And so I'd say relatively consistent across the board. The only difference I would tell you is, in a place like the Sunbelt, historically, what we would have experienced is, call it 20% of our move outs were leaving to buy a home. Today, that's closer to

Linda Tsai: It's pretty consistent again, what we're seeing is a lot of these actions that are put in place from what we're doing with the customer experience project and so I'd say relatively consistent across the board. The only difference I would tell you is in a place like the sunbelt historically, we would've experienced is.

Linda Tsai: Call it 20% of our move outs were leaving to buy a home today, that's closer to 10% and so significantly less people moving out to buy homes in places where it was historically more affordable, but other than that a lot of this has to do with the actions that we're putting in place through our innovation.

Linda Tsai: And so significantly fewer people are moving out to buy homes in places where it was historically more affordable. But other than that, a lot of this has to do with the actions that we're putting in place through our innovation. And then, in terms of

Speaker Change: Thanks, and then in terms of automation as he move forward does it ever become apparent that automation is being relied upon too soon that you know efficacy falls short in impact service levels, and then you have to recalibrate people back into seats.

Michael D. Lacy: Does it ever become apparent that automation is being relied upon too soon, and efficacy falls short? So, you know, how do you monitor and correct that? Yeah, Linda, that's a fair point.

Linda Tsai: And so you know how do you think that the monitor and correct that.

Michael D. Lacy: Yeah, Linda that's a fair point and that's something we've experienced as we.

Michael D. Lacy: That's something we've experienced as we transitioned from, what we call, platform 1.0, where the intention was to go to that self-service model, and we reduced our head count by about 40%. We have found that there are cases where you have to add bodies back that will drive value in the long term, and so we've been going through that over probably the last 12 months or so, and we're still trying to find opportunities where we can run what we call the unmanned sites, and today we're around 20% of the portfolio.

Andrew: <unk> transitioned from call. It platform, one point out where the intention was to go to that self service model and we reduced our head count by about 40%. We have found that there are cases, where you have to add bodies back that will drive value in the long term and so we've been going through that probably in the last 12 months or so and we're still trying to find opportunities where we.

Michael D. Lacy: You can run what we call the unmanned sites and so they were around 20% of the portfolio.

Michael D. Lacy: So we are adding back from customer service-type positions in the field to make sure that we're doing all these things that we mentioned earlier as it relates to how you change that trajectory and retention. So I think there are cases where you can find opportunities to drive value, and sometimes you do have to add bodies back. Next question, Nathan Guell with Baird.

Michael D. Lacy: We are adding back.

Nathan Guell: Customer service type positions in the field to make sure that we're asking all of these items that we mentioned earlier as it relates to how you change that trajectory and in retention. So I think there are cases, where you can find the opportunities to drive value and sometimes you do have to add bodies back.

Nathan Guell: Thank you.

Michael D. Lacy: Next question Nathan go out with Baird. Please go ahead.

Nathan Guell: Please go ahead. Hey, everyone. Thanks for taking my question. Have your views changed for the Sun Belt on the timing to absorb all the new supply given the strong absorption trends you've been seeing? Now, as we kind of look through it, obviously, we go through the peak delivery cycle here over the next couple quarters. And so 2Q, 3Q is kind of your peak, but it's not a dramatic drop-off.

Nathan Guell: Hey, everyone. Thanks for taking my question I have your views changed at a sunbelt on the timing to absorb all the new supply given the strong absorption trends you've been seeing.

Nathan Guell: So as we kind of look through it obviously, we go through the peak delivery cycle here over the next couple of quarters, and so Q3, Q as kind of your peak, but it's not a dramatic drop off its going to take a while to work through the lease up so those deliveries, but even into 2025.

Joseph D. Fisher: It's going to take a while to work through the lease-up of those deliveries. But even into 2025, when you look at overall deliveries coming that year, it's going to be a pretty normal year in terms of relative to long-term averages, with the coast actually coming in a little bit lower as they start to see a drop-off a little bit quicker in terms of new starts and permanence activity. So Sunbelt still stays a little bit elevated as you go into 2025, and I don't think it's until late 2025 that you really get the benefit of that, call it, fourth quarter of 23 drop-off and seize up in capital markets, where you saw starts fall off a cliff down to kind of $200,000, $250,000 on an annualized basis and 4Q23. And so next year is probably a little bit more normal, with still some pressure on the Sunbelt.

Linda Tsai: When you look at overall deliveries coming out here, it's going to be a pretty normal year in terms of relative to long term averages with the coast actually coming in a little bit lower as they start to see a drop off a little bit quicker in terms of new starts and permits activity. So sunbelt still say is a little bit elevated as you go into 'twenty five.

Joseph D. Fisher: It gets till late 'twenty five that you really get the benefit of that call. It fourth quarter of 'twenty three drop off and seize up in capital markets, where you saw starts fall off a cliff down there kind of two 200000 200200 50000 on an annualized basis and <unk> 23, and so next year is probably a little bit more normal year still some pressure on the Sun belt.

Joseph D. Fisher: 2026 has the potential to be a pretty phenomenal year in terms of the lack of housing that's available out there and what that could mean for fundamentals for our sector. That's it for me; thank you. Thank you. I would like to turn the floor over to Tom Toomey for closing remarks. Thank you, Operator, and thanks to all of you for your interest and support of UDR. We look forward to seeing many of you at the Wells Fargo Conference next week and NARED in June. So with that, we'll close this today. You're always available to take your follow-up calls, and take care. This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation. [inaudible]

Joseph D. Fisher: 26 has the potential to be a pretty phenomenal year in terms of the lack of housing that's available out there and what that could mean for fundamentals for our sector.

Joseph D. Fisher: Yeah.

Tom Toomey: That's it for me thank you.

Linda Tsai: Thank you I would like to turn the floor over to Tom Toomey for closing remarks.

Tom Toomey: Thank you operator, and thanks to all of you for your interest and support of UDR and we look forward to seeing many of you at the Wells Fargo Conference next week.

Tom Toomey: And NAREIT in June so with that we'll close this today.

Tom Toomey: He is available to take your follow up calls and take care.

Tom Toomey: This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.

Joseph D. Fisher: [music].