Q2 2024 Independence Realty Trust Inc Earnings Call

Thank you for standing by. My name is Amy and I will be your conference operator for today.

Unknown Executive: Welcome to the Independence Realty Trust Q2 2024 earnings conference call. At this time, all lines have been placed on mute to prevent any background noise.

Operator: Thank you for joining us. This concludes today's conference. Welcome to the Independence Realty Trust Q2 2024 Earnings Conference Call. At this time, all lines have been placed on mute to prevent any background noise.

Unknown Executive: After the speaker's remarks, there will be a Q&A session. And if you would like to ask a question during this time, please press star and the number one on your telephone keypad. If you would like to withdraw your question, again, press star and the number one.

Operator: After the speaker's remarks, there will be a Q&A session, and if you would like to ask a question during this time, please press star and the number 1 on your telephone keypad. If you would like to withdraw your question, again, press star and the number 1. I would like to now turn the call over to Maddie Zimba.

Maddie Zimba: I would like to now turn the call over to Maddie Zimba. You may begin. Thank you and good morning, everyone. Thank you for joining us to review Independence Realty Trust's second quarter 2024 financial results.

If you would like to withdraw your question, again, press star and the number one. I would like to now turn the call over to Maddie Zimba. You may begin.

Maddie Zimba: You may begin. Thank you, and good morning, everyone. Thank you for joining us to review Independence Realty Trust's second quarter 2024 financial results. On the call with me today are Scott Schaeffer, Chief Executive Officer, Mike Daley, EVP of Operations and People, Jim Sebra, Chief Financial Officer, and Janice Richards, SVP of Operations. Today's call is being webcast on our website at IRTLiving.com. There will be a replay of the call available via webcast on our investor relations website and telephonically beginning at approximately 12 o'clock p.m. Eastern Time today.

Maddie Zimba: On the calls we today are Scott Schaeffer, Chief Executive Officer; Mike Daley, EVP of Operations and People; James Sebra, Chief Financial Officer; and Janice Richards, SVP of Operations. Actual results could defer substantially and materially from what IRT is projected. Such statements are made in good faith pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Please refer to IRTLS press release supplemental information and filing with the SEC for factors that could affect the accuracy of our expectations or cause our future results to defer materially from those expectations. Participants may discuss non-GAAP financial measures during this call.

Maddie Zimba: Before I turn the call over to Scott, I'd like to remind everyone that there may be forward-looking statements made on this call. These forward-looking statements reflect IRT's current views with respect to future events and financial performance, and actual results could differ substantially and materially from what IRT is projecting.

Maddie Zimba: Before I turn the call over to Scott, I'd like to remind everyone that there may be forward-looking statements made on this call. These forward-looking statements reflect IRT's current views with respect to future events and financial performance. Actual results could differ substantially and materially from what IRT has projected.

Maddie Zimba: Such statements are made in good faith pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Please refer to IRT's press release, supplemental information, and filings with the SEC for factors that could affect the accuracy of our expectations or cause our future results to differ materially from those expectations. Participants may discuss non-GAAP financial measures during this call. A copy of IRT's earnings press release and supplemental information containing financial information, other statistical information, and a reconciliation of non-GAAP financial measures to the most direct comparable GAAP financial measure is attached to IRT's current report on the Form 8K, available on IRT's website under best relations. IRT's other SEC filings are also available through this link.

Speaker Change: Please refer to IRT's press release, supplemental information, and filings with the SEC for factors that could affect the accuracy of our expectations or cause our future results to differ materially from those expectations. Participants may discuss non-GAAP financial measures during this call.

Maddie Zimba: A copy of IRTL's earnings press release and supplemental information containing financial information, other statistical information, and a reconciliation of non-GAAP financial measures to the most direct comparable GAAP financial measure is attached to IRT's current report on the Form 8-K available at IRTL's website under Investor Relations. Irtls other sec filings are also available through this link. Irt does not undertake to update for looking statements on this call or with respect to matters described herein, except this may be required by law.

Maddie Zimba: IRT does not undertake to update forward-looking statements on this call or with respect to matters described herein, except as may be required by law. With that, it's my pleasure to turn the call over to Scott Schaeffer. Thank you for joining us this morning.

Scott Schaeffer: With that, it's my pleasure to turn the call over to Scott Shaker. Thank you for joining us this morning. Our second quarter results highlight our strategy to drive occupancy through stronger resident attention, along with higher lead volume for new leases, while continuing to prudently manage our expenses. Specifically, we delivered an increase of 120 basis points in average occupancy to 95.4% in the second quarter, with lease over lease effective run array growth of 3.5% for these renewals and resident retention at 55.8%. As of July 30th, same store occupancy was 95.6% with July lease renewal tradeouts at 2.9%, and total resident retention at 55.4%.

Scott F. Schaeffer: Our second quarter results highlight our strategy to drive occupancy through stronger resident retention, along with higher lead volume for new leases, while continuing to prudently manage our expenses. Specifically, we delivered an increase of 120 basis points in average occupancy to 95.4% in the second quarter, with lease over lease effective rental rate growth of 3.5% for lease renewals and resident retention at 55.8%. We are pleased with our team's ability to manage operating expenses, along with a notable decline in bad debt expense, during the second quarter.

Scott: Thank you for joining us this morning. Our second quarter results highlight our strategy to drive occupancy through stronger resident retention, along with higher lead volume for new leases, while continuing to prudently manage our expenses.

Scott Schaeffer: We will provide more detail on our operational metrics momentarily. We are pleased with our team's ability to manage operating expenses, along with the notable decline in bad debt expense during the second quarter. Later on this call, Jim will provide an update on our expense outlook, particularly the recent renewal of our insurance policies and our current view for 2024 real estate tax expense. Looking at the broader market, we are in the midst of a transitionary period as supply and demand levels are rebalancing across our portfolio and are expected to improve further in the back half of 2024 and into 2025.

Scott F. Schaeffer: Later in this call, Jim will provide an update on our expense outlook, particularly the recent renewal of our insurance policies and our current view for 2024 real estate tax expenses. Looking at the broader market, we're in the midst of a transitionary period as supply and demand levels are rebalancing across our portfolio and are expected to improve further in the back half of 2024 and into 2025. While the second quarter continued to see pressure from new deliveries, it was matched by strong demand as apartment absorption outpaced historical levels.

Scott Schaeffer: While the second quarter continued to see pressure from new deliveries, it was matched by strong demand as apartment absorption outpaced historical levels. By the fourth quarter of 2024, coastal reports that the delivery should slow to about 60 basis points of inventory, with 2025 new supply deliveries expected to decline further to a quarterly average of 50 basis points of our submarkets inventory. As we look across our portfolio, the Midwest continues to have a limited supply pipeline, and we do not see that changing over the coming months. We still expect to experience new supply across some of our sundial markets, including Austin, Charlotte, Raleigh Durham, Huntsville, and Nashville. However, in these markets, employment and population growth are among the highest in the country, supporting our expectation for positive net absorption in 2025.

Speaker Change: While the second quarter continued to see pressure from new deliveries, it was matched by strong demand as apartment absorption outpaced historical levels.

Scott F. Schaeffer: By the fourth quarter of 2024, CoStar reports that delivery should slow to about 60 basis points of inventory, with 2025 new supply deliveries expected to decline further to a quarterly average of 50 basis points of our sub-market's inventory. As we look across our portfolio, the Midwest continues to have a limited supply pipeline, and we do not see that changing over the coming months.

Speaker Change: By the fourth quarter of 2024, COSTAR reports that delivery should slow to about 60 basis points of inventory, with 2025 new supply deliveries expected to decline further to a quarterly average of 50 basis points of our submarket's inventories.

Scott F. Schaeffer: We still expect to experience new supply across some of our sundialed markets, including Austin, Charlotte, Raleigh-Durham, Huntsville, and Nashville. However, in these markets, employment and population growth are among the highest in the country, supporting our expectation for positive net absorption in 2025. While we have felt the increasing impact of supply pressure on runner rates this year, we expect this to ease in the second half of 2024, positioning us well going into 2025.

Scott Schaeffer: While we have felt the increasing impact of supply pressure on runner rates this year, we expect this to ease in the second half of 2024.

Scott Schaeffer: Positioning us well going into 2025. We manage our business to deliver long-term sustainable growth, and we continue to see strong fundamentals with favorable population trends and employment growth. For example, CoStar reports that for every one unit of new supply in our submarkets, we expect to see population growth with 6.7 people in 2025, and this increases to 9.6 people in 2026. Clearly, this will be a good priority from both an occupancy and a rental rate growth perspective.

Scott F. Schaeffer: We manage our business to deliver long-term sustainable growth, and we continue to see strong fundamentals with favorable population trends and employment growth. For example, CoStar reports that for every one unit of new supply in our submarkets, we expect to see population growth of 6.7 people in 2025, and this increases to 9.6 people in 2026. Clearly, this will be a good priority from both an occupancy and a rental rate growth perspective. Investing in our existing communities also continues to be a key element of our strategy, especially our value-add renovation program that focuses on improving the quality and value of our apartments.

Speaker Change: For example, COSTAR reports that for every one unit of new supply in our submarkets, we expect to see population growth of 6.7 people in 2025, and this increases to 9.6 people in 2026. Clearly, this will be a good priority from both an occupancy and a rental rate growth perspective.

Scott Schaeffer: Investing in our existing communities also continues to be a key element of our strategy, especially to our value ad renovation program that focuses on improving the quality and value of our apartments. During the second quarter, we completed renovations on 378 units, achieving a weighted average return on investment of 15.7%. These efforts also continue to drive meaningful premiums as compared to unrenovated comparable units. In the second quarter, this average monthly rent increase per unit was $236 over unrenovated costs. In the second half of 2024, we expect to complete renovations on approximately 1,300 additional units, with 700 of those renovations coming in the third quarter to reach our updated full-year target of approximately 2,000 units.

Speaker Change: Investing in our existing communities also continues to be a key element of our strategy, especially to our value-add renovation program that focuses on improving the quality and value of our apartments. During the second quarter, we completed renovations on 378 units, achieving a weighted average return on investment of 15.7%.

Scott F. Schaeffer: During the second quarter, we completed renovations on 378 units, achieving a weighted average return on investment of 15.7%. These efforts also continue to drive meaningful premiums as compared to unrenovated comparable units. In the second quarter, this average monthly rent increase per unit was $236 over unrenovated comps.

Scott F. Schaeffer: In the second half of 2024, we expect to complete renovations on approximately 1,300 additional units, with 700 of those renovations coming in the third quarter to reach our updated full-year target of approximately 2,000 units. As we've noted in the past, the number of units renovated will vary due to resident retention levels and the timing of new renovation starts. Turning to capital recycling, we plan to use the proceeds from the sale of our property in Birmingham to acquire a property in Tampa through a 1031 exchange during the third quarter. This property in Tampa is situated in an infill location with centralized access to both downtown Tampa and downtown St. Petersburg, along with easy access to the beaches along the western coast.

Scott Schaeffer: As we've noted in the past, the number of units renovated will vary due to revenue retention levels and the timing of new renovation starts.

Scott Schaeffer: Turning to capital recycling, we plan to use the proceeds from the sale of our property in Birmingham to acquire a property in Tampa through a 1031 exchange during the third quarter. This property in Tampa is situated in an infill location with centralized access to both downtown Tampa and downtown St. Petersburg, along with easy access to the beaches along the western coast. Overall, we continue to be bullish on Tampa as we drive further expansion in this market to achieve future rent growth.

Speaker Change: Turning to capital recycling, we plan to use the proceeds from the sale of our property in Birmingham to acquire a property in Tampa through a 1031 exchange during the third quarter. This property in Tampa is situated in an infill location with centralized access to both downtown Tampa and downtown St. Petersburg, along with easy access to the beaches along the western coast.

Scott F. Schaeffer: Overall, we continue to be bullish on Tampa as we drive further expansion in this market to achieve future rent growth. We remain confident in the strength of our portfolio and our ability to navigate headwinds in the broader market. Looking ahead to the second half of 2024, we will continue to focus on maintaining our high occupancy and retention levels while optimizing rental rate growth and effectively managing our expenses. These efforts, along with continuing our value-add renovations and capital recycling program, as well as resetting our leverage profile, will enable us to achieve our updated full-year guidance and drive growth over the long term. I'll now turn the call over to Mike.

Speaker Change: Overall, we continue to be bullish on Tampa as we drive further expansion in this market to achieve future rent growth.

Scott Schaeffer: We remain confident in the strength of our portfolio and our ability to navigate headwinds in the broader market. Looking ahead to the second half of 2024, we will continue to focus on maintaining our high occupancy and retention levels while optimizing rental rate growth and effectively managing our expenses. These efforts, along with continuing our value ad renovations and capital recycling program, as well as resetting our leverage profile, will enable us to achieve our updated full-year guidance and drive growth over the long term.

Mike: These efforts along with continuing our value-add renovations and capital recycling program, as well as resetting our leverage profile, will enable us to achieve our updated four-year guidance and drive growth over the long term. I'll now turn the call over to Mike.

Mike Daley: I'm now turning the call over to Mike. Thanks, Scott. During the second quarter, we continue to operate in a dynamic macroeconomic environment with pressure from new supply and inflation on controllable expenses. With this in mind, we successfully increased occupancy and retention, which in turn resulted in lower turnover and repair and maintenance expenses in the first half of this year compared to the first half of 2023. In the second quarter, we deliver the same store average occupancy rate of 95.4%, an increase of 120 basis points year over year, and a resident retention rate of 55.8%, an increase of 160 basis points compared to last year.

Mike Daley: Thanks, Scott. During the second quarter, we continue to operate in a dynamic macroeconomic environment with pressure from new supply and inflation on controllable expenses. With this in mind, we successfully increased occupancy and retention, which in turn resulted in lower turnover and repair and maintenance expenses in the first half of this year compared to the first half of 2023. Our same store portfolio average rental rate increased 1.6% in Q2, contributing to 3.6% year-over-year property revenue growth for the quarter.

Mike: Thanks, Scott. During the second quarter, we continue to operate in a dynamic macroeconomic environment with pressure from new supply and inflation on controllable expenses.

Mike: With this in mind, we successfully increased occupancy and retention, which in turn resulted in lower turnover and repair and maintenance expenses in the first half of this year compared to the first half of 2023.

Mike: In the second quarter, we delivered a same-store average occupancy rate of 95.4 percent, an increase of 120 basis points year-over-year, and a resident retention rate of 55.8 percent, an increase of 160 basis points compared to last year.

Mike Daley: Our same store portfolio average rental rate increased 1.6% in Q2, contributing to 3.6% year-over-year property revenue growth for the quarter. As we mentioned on our Q1 earnings call, we continue to reduce the use of concessions in the second quarter, and the average concession remained the equivalent of about two weeks' rent. For July, our highest expiration month of the year, we saw pressure from new supply and moved quickly to buy some occupancy through concessions. This has positioned us well for the balance of the year, and the volume of expiration is lower, and we expect supply pressure to decline.

Mike Daley: As we mentioned on our Q1 earnings call, we continued to reduce the use of concessions in the second quarter, and the average concession remained the equivalent of about two weeks' rent. For July, our highest expiration month of the year, we saw pressure from new supply and moved quickly to buy some occupancy through concessions.

Mike: For July , our highest expiration month of the year, we saw pressure from new supply and moved quickly to buy some occupancy through concessions.

Mike Daley: This has positioned us well for the balance of the year, and the volume of expirations is lower, and we expect supply pressure to decline. Selective concessions are one tool, but we primarily focus on effective pricing strategies, strong sales performance, and our ongoing initiatives to drive high resident retention as the basis of our efforts to sustain strong occupancy. Newly spreads were negative in the second quarter due to the continued supply pressure that Scott discussed, and this continued into July.

Mike Daley: Selective concessions are one tool, but we primarily focus on effective prices on increasing strategies, strong sales performance, and our ongoing initiatives to drive high-resistant retention as the basis of our efforts to sustain strong occupancy. Newly spread were negative in the second quarter due to the continued supply pressure that Scott discussed, and this continued into July. We do not expect this trend to continue as we now have only about 30% of lease expiration remaining for the rest of this year. Lease over lease effective rent growth for renewals in the second quarter was 3.5%, and we are forecasting continued strong renewal rental rate growth for the second half of 2024.

Mike: Selective concessions are one tool, but we primarily focus on effective pricing strategies, strong sales performance, and our ongoing initiatives to drive high resident retention as the basis of our efforts to sustain strong occupancy.

Mike Daley: We do not expect this trend to continue as we now have only about 30% of lease expirations remaining for the rest of this year. Average lease over lease effective rent growth for renewals in the second quarter was 3.5%, and we are forecasting continued strong renewal rental rate growth for the second half of 2024. So far, for July and August, we have signed approximately 97% of our expected renewals, with an effective rental rate increase of 3.6%. Occupancy remains strong.

Mike: Lease-over-lease effective rent growth for renewals in the second quarter was 3.5%, and we are forecasting continued strong renewal rental rate growth for the second half of 2024.

Mike Daley: So far for July and August, we have signed approximately 97% of our expected renewals, with an effective rental rate increase of 3.6%. Occupancy remained strong; as of July 30th, our full same store occupancy was 95.6%. Similarly, occupancy at our non-value ad communities as of July 30th was 95.9%.

Mike Daley: As of July 30th, our full same-store occupancy was 95.6%. Similarly, occupancy at our non-value-add communities as of July 30th was 95.9%. For 2024, we've refined marketing strategies and increased our spend on lead generation; lead volume for new leases is up about 25% in 2024 year to date compared to the same period last year. On prior calls, we've highlighted some initiatives to leverage technology in order to increase operational efficiency and performance. We are piloting the use of AI to improve collections and reduce bad debt.

Mike: Similarly, occupancy at our non-value-add communities as of July 30th was 95.9%.

Mike Daley: For 2024, we refined marketing strategies and increased our spend on lead generation. Lead volume for new leases is up about 25% in 2024, year to date, compared to the same period last year. We're through the peak of leasing season and remaining consistent in our prioritization of occupancy balance with sustainable optimized blended rent growth. As Scott reviewed in detail, we expect new supply pressure to lessen in the coming months and are well positioned both geographically and operationally to adapt to those more favorable conditions.

Mike: For 2024, we refined marketing strategies and increased our spend on lead generation.

Mike: Lead volume for new leases is up about 25% in 2024, year-to-date, compared to the same period last year.

Mike: As Scott reviewed in detail, we expect new supply pressure to lessen in the coming months and are well positioned, both geographically and operationally, to adapt to those more favorable conditions.

Mike Daley: On prior calls, we've highlighted some initiatives to leverage technology in order to increase operational efficiency and performance. We are piloting the use of AI to improve collections and reduce bad debt with fast, effective two-way communication with residents regarding the payment of rent and details about their account 24 hours a day. If early results are positive, and this technology is enhancing the effectiveness of our centralized resident accounts team.

Speaker Change: On prior calls, we've highlighted some initiatives to leverage technology in order to increase operational efficiency and performance.

Scott: The early results are positive, and this technology is enhancing the effectiveness of our centralized resident accounts team.

Mike Daley: Finally, I would like to close my remarks by again thanking the IRT team for driving these results while progressing our strategic initiatives. This is the most intense time of year operationally for all of our employees, and they continue to deliver every day for our residents and our shareholders. We are confident in our ability to deliver sustainable high performance in the second half of 2024 and over the long term.

Mike Daley: Finally, I would like to close my remarks by again thanking the IRT team for driving these results while progressing our strategic initiative. This is the most intense time of year operationally for all of our employees, and they continue to deliver every day for our residents and our shareholders. I'll now turn the call over to Jim.

Speaker Change: Finally, I would like to close my remarks by again thanking the IRT team for driving these results while progressing our strategic initiatives.

Scott: This is the most intense time of year operationally for all of our employees, and they continue to deliver every day for our residents and our shareholders.

Scott: We are confident in our ability to deliver sustainable high performance in the second half of 2024 and over the long term. I'll now turn the call over to Jim.

James Sebra: I'll not turn the call over to Jim. Thanks, Mike, and good morning, everyone. Beginning with their second quarter performance update, net income available to common shareholders was $10.4 million. Down slightly from $10.7 million in the second quarter of 2023. 4FFO was $63.6 million and $28 per share, in line with the year ago. IRT, Samster and a Y growth in the second quarter was 2.8 percent, driven by revenue growth of 3.6 percent. This growth was led by a 1.6 percent increase in average monthly rental rates to $1,555 per month and a 120 basis point increase in average occupancy to 95.4 percent, both as compared to Q2 of 2023.

Jim: Beginning with our second quarter performance update, net income available to common shareholders was $10.4 million, down slightly from $10.7 million in the second quarter of 2023.

James J. Sebra: Core FFO was $63.6 million and 28 cents per share, in line with a year ago. During Q2, bad debt was 1.6% of revenue, down 40 basis points from 2% in Q2 of last year. On the operating expense side, IRT same store operating expenses increased 4.9% during the quarter. This increase was primarily driven by higher advertising expenses, as we increased our efforts to drive occupancy, as well as higher personnel expenses. Contract service expense decreased approximately 1% in the quarter, while repairs and maintenance expenses increased 8% due to the timing of repair and maintenance projects.

Jim: This growth was led by a 1.6% increase in average monthly rental rates to $1,555 per month and a 120 basis point increase in average occupancy to 95.4%.

James Sebra: During Q2, bed debt was 1.6 percent of revenue, down 40 basis points from 2 percent in Q2 of last year. On the operating expense side, IRT's same store operating expenses increased 4.9 percent during the quarter. This increase was primarily driven by higher advertising expenses as we increase our efforts to drive occupancy, as well as higher personnel expenses. Contract service expense increased approximately 1 percent in the quarter, while repairs and maintenance expenses increased 8 percent due to the timing of repair maintenance projects. For the six months ended, repairs and maintenance expenses are 1 percent lower than last year.

Jim: On the operating expense side, IRT's same-store operating expenses increased 4.9% during the quarter. This increase was primarily driven by higher advertising expenses as we increased our efforts to drive occupancy, as well as higher personnel expenses.

Jim: Contract service expense decreased approximately 1% in the quarter while repairs and maintenance expenses increased 8% due to the timing of repair maintenance projects. For the six months ended, repairs and maintenance expenses are 1% lower than last year.

James J. Sebra: For the six months ended, repairs and maintenance expenses were 1% lower than last year. Before turning to the balance sheet, let me make a few remarks regarding our non-controllable expenses for insurance and real estate taxes. Year to date, we've made notable progress in these areas and are now expecting to see lower overall growth for the full year 2024 than we originally expected. In our initial guidance earlier this year, we expected a 17.5% increase in those premiums. For real estate taxes, assessed values are coming in lower than we anticipated, and we are not expecting an increase in millage rates to counteract the benefits of those lower assessed values.

James Sebra: Before turning to the balance sheet, let me make a few remarks regarding non-controllable expenses for insurance and real estate assets. Here today, we've made notable progress in these areas and are now expecting to see lower overall growth for the full year of 2024 than what we originally expected. On property insurance, we renewed our main policy in May and saw a 10 percent reduction in our premiums without changing our deductibles or coverage. In our initial guidance earlier this year, we expected a 17.5 percent increase in those premiums. For real estate taxes, assessed values are coming in lower than we anticipated, and we are not expecting an increase in knowledge rates to counteract the benefits of those lower assessed values.

Jim: For real estate taxes, assessed values are coming in lower than we anticipated, and we are not expecting an increase in millage rates to counteract the benefits of those lower assessed values. As a result of these benefits, we are improving our guidance, which I will cover in a minute.

James Sebra: As a result of these benefits, we are improving our guidance, which I will cover in a minute. On our balance sheet, as of June 30th, our liquidity position was $418 million, an increase of approximately $129 million from year end 2023, primarily due to the completion of our de-leveraging plan earlier this year. For Q2 2024, our leverage was 6.5 times, down from 7.2 times in Q2 of last year, again due to the benefits from our de-leveraging strategy. We are still on target to be at approximately 6 times net debt-adjusted EBITDA in Q4 of this year. We have about 7 percent of our debt maturing through year end 2025, with only 17.5 million of maturities in 2024.

James J. Sebra: As a result of these benefits, we are improving our guidance, which I will cover in a minute. On our balance sheet, as of June 30th, our liquidity position was $418 million, an increase of approximately $129 million from year-end 2023, primarily due to the completion of our deleveraging plan earlier this year. For Q2 2024, our leverage was 6.5 times, down from 7.2 times in Q2 of last year, again due to the benefits of our deleveraging strategy.

Jim: On our balance sheet, as of June 30th, our liquidity position was $418 million, an increase of approximately $129 million from year-end 2023, primarily due to the completion of our deleveraging plan earlier this year.

Jim: For Q2 2024, our leverage was 6.5 times, down from 7.2 times in Q2 of last year, again, due to the benefits from our deleveraging strategy.

James J. Sebra: We are still on target to be at approximately six times net debt-adjusted EBITDA in Q4 of this year. We have about 7% of our debt maturing through year-end 2025, with only $17.5 million of maturing in 2024. We also have adequate hedges in place that have effectively converted our floating rate debt to fixed rate debt, such that our debt at June 30th is 100% fixed and or hedged. In connection with our capitalist housing program, we sold a legacy steadfast asset in Birmingham on July 17 for a gross sales price of $70.8 million.

Jim: We are still on target to be at approximately six times net debt adjusted EBITDA in Q4 of this year. We have about 7% of our debt maturing through year-end 2025, with only $17.5 million of maturity in 2024.

James Sebra: We also have adequate hedges in place that have effectively converted our floating rate debt to fixed rate debt, such that our debt at June 30th is 100 percent fixed end of hedge. In connection with our capital resettlement program, we sold a legacy steadfast asset in Birmingham on July 17th for a gross sales price of $70.8 million, with an economic cap rate of 5.8%. We expect to use the proceeds from the sale as part of a 1031 exchange to acquire a property in Tampa during the third quarter of 2024 at an economic cap rate of 5.7%.

Jim: We also have adequate hedges in place that have effectively converted our floating rate debt to fixed rate debt, such that our debt at June 30th is 100% fixed and or hedged.

James Sebra: This capital resettlement transaction will reduce our exposure in Birmingham while adding to our Tampa portfolio, a market with an attractive growth profile, as Scott mentioned earlier.

James J. Sebra: This capital recycling transaction will reduce our exposure in Birmingham while adding to our Tampa portfolio, a market with an attractive growth profile, as Scott mentioned earlier. With respect to our full-year 2024 outlook, we are making some adjustments to our guidance based on our performance in the first half of this year and expectations for the second half of 2024. In particular, we are increasing the midpoint of our full-year EPS and core FFO per share guidance by one penny per share at the midpoint. The midpoint of our core FFO range is now $1.15 per share for 2024. The higher core fulfilled per share is driven by higher same store NLI growth.

James Sebra: With respect to our full year 2020, we are making some adjustments through our guidance based on our performance in the first half of this year and expectations for the second half of 2024. In particular, we are increasing the midpoint of our full year EPS and core FFO per share guidance by one penny per share at the midpoint. The midpoint of our core FFO range is now $1.15 per share for 2024. The higher core FFO per share is driven by higher same-store NOI growth. The guidance updates for our operating metrics are as follows. We now expect full-year same-store revenue growth of 3% to 3.3%, which reduces the midpoint by 60 basis points compared to our prior guidance.

Jim: The midpoint of our core FFO range is now $1.15 per share for 2024. The higher core FFO per share is driven by higher same-store NLI growth. The guidance updates for our operating metrics are as follows.

James J. Sebra: The guidance updates for our operating metrics are as follows. We now expect full-year same-store revenue growth of 3% to 3.3%, which reduces the midpoint by 60 basis points compared to our prior guidance. This is due to the lower blended rental rate growth we've experienced year-to-date as we focus on improving resident retention and occupancy this year. For the second half of 2024, the midpoint of our revised same-store revenue guidance reflects an average occupancy of 95.6% and a blended rental rate growth of 2.3%.

Jim: We now expect full-year same-store revenue growth of 3% to 3.3%.

Jim: which reduces the midpoint by 60 basis points compared to our prior guidance. This is due to the lower blended rental rate growth we've experienced year-to-date as we focused on improving resident retention and occupancy this year.

James Sebra: This is due to the lower blended rental rate growth we've experienced year to date as we focus on improving resident retention and occupancy this year. For the second half of 2024, the midpoint of our revised same-store revenue guidance reflects an average occupancy of 95.6% and a blended rental rate growth of 2.3%. With regards to property operating expenses, we now have a more favorable view primarily due to the reductions in real estate taxes and insurance that I previously mentioned. Our revised guidance range for full year 2020 for total operating expense growth is 3% at the midpoint.

James J. Sebra: With regard to property operating expenses, we now have a more favorable view, primarily due to the reductions in real estate taxes and insurance that I previously mentioned. Our revised guidance range for full year 2024 total operating expense growth is 3% at the midpoint. This compares to our previous guidance midpoint of 5.9%. Controllable operating expenses are also now expected to be lower as we have seen lower repairs and turnover costs as a result of having better resident retention.

James Sebra: This compares to our previous guidance midpoint of 5.9%. Controllable operating expenses are also now expected to be lower, as we have seen lower repairs and turnover costs as a result of having better resident retention. As a result of these changes, we expect that our same-store property NOI growth in 2024 will be 3.2% at the midpoint. That is 28% higher than our previous guidance of 2.5% at the midpoint. This expectation for the full year is one of the highest within the multi-family peer group and is on top of the 5.7% increase in IRT achieved last year.

Jim: Controllable operating expenses are also now expected to be lower as we have seen lower repairs and turnover costs as a result of having better resident retention.

James J. Sebra: As a result of these changes, we expect that our same store property NOI growth in 2024 will be 3.2% at the midpoint. That is 28% higher than our previous guidance of 2.5% at the midpoint. This expectation for the full year is one of the highest within the multifamily peer group and is on top of the 5.7% increase that IRT achieved last year. Regarding our other updates to our four-year outlook, we are lowering the high end of our interest expense guidance and now expect $83.5 million at the midpoint.

Jim: As a result of these changes, we expect that our same store property NOI growth in 2024 will be 3.2% at the midpoint.

Jim: That is 28% higher than our previous guidance of 2.5% at the midpoint.

James Sebra: Regarding our other updates to our full year outlook, we are lowering the high end of our interest expense guidance and now expect 83.5 million dollars at the midpoint. For acquisition volume, we now expect a range of 80 to 82 million dollars for the year, which reflects the one property mentioned earlier in Tampa that we planned to acquire. While this position volume was adjusted to reflect finalization of the previously guided property sales. Lastly, we are reducing our guidance range for value add a non-returned capex to 77 million dollars, down from 84 million dollars each at the midpoint, reflecting fewer units to be renovated this year than initially expected due to higher resident retention rates.

James J. Sebra: For acquisition volume, we now expect a range of $80 to $82 million for the year, which reflects the one property mentioned earlier in Tampa that we plan to acquire in the third quarter, while disposition volume was adjusted to reflect finalization of the previously guided property. Lastly, we are reducing our guidance range for value-added non-recurring CapEx to $77 million, down from $84 million, each at the midpoint reflecting fewer units to be renovated this year than initially expected due to higher resident retention. All other guidance, including recurring and development CapEx, remains unchanged.

Jim: For acquisition volume, we now expect a range of $80 to $82 million for the year, which reflects the one property mentioned earlier in Tampa that we plan to acquire in the third quarter, while disposition volume was adjusted to reflect finalization of the previously guided property sales.

James Sebra: All other guidance, including recurring and development capex, remain unchanged.

Jim: All other guidance, including recurring and development CapEx, remain unchanged.

James Sebra: Scott, that's it.

Scott Schaeffer: Back to you. Thanks, Jim.

Scott F. Schaeffer: Scott, that's it. Back to you. Thanks, Jim. With the first half of 2024 now behind us, we remain confident in our portfolio's solid rent or demand fundamentals and our ability to execute our 2024 business plan. For the remainder of the year, we will continue to focus on solidifying our operating gains and driving further on-site efficiencies, continuing our value-add renovations, strengthening our presence in our core growth markets, and supporting occupancy while optimizing rent growth.

Scott Schaeffer: With the first half of 2024 now behind us, we remain confident in our portfolio, solid runner demand fundamentals, and our ability to execute our 2024 business plan. For the remainder of the year, we will continue to focus on solidifying our operating gains and driving further onsite efficiencies, continuing our value ad renovations, strengthening our presence in our core growth markets and supporting occupancy while optimizing rent growth.

Speaker Change: Thanks, Jim.

Speaker Change: With the first half of 2024 now behind us, we remain confident in our portfolio's solid rent or demand fundamentals and our ability to execute our 2024 business plan.

Speaker Change: For the remainder of the year, we will continue to focus on solidifying our operating gains and driving further on-site efficiencies, continuing our value-add renovations, strengthening our presence in our core growth markets, and supporting occupancy while optimizing rent growth.

Scott Schaeffer: We thank you for joining us today.

Scott F. Schaeffer: We thank you for joining us today, and Operator, you can now open the call for questions. Thank you. The floor is now open for questions. I would like to remind everyone that in order to ask a question, press star and the number one on your keypad to enter the question. We do request that for today's session you please limit your question to one question and one follow-up. Our first call comes from Eric Wolfe with Citi. Your line is now open. Thanks, it's Nick Joseph here with Eric.

Unknown Executive: Operator, you can all open the call for questions. Thank you. The floor is now open for questions. I would like to remind everyone that, in order to ask a question, press star in the number one on your keypad to enter the queue.

Speaker Change: Thank you. The floor is now open for questions. I would like to remind everyone that in order to ask a question, press star and the number one on your keypad to enter the queue.

Unknown Executive: We do request that for today's session that you please limit your question to one question and one follow up.

Speaker Change: We do request that for today's session that you please limit your question to one question and one follow-up.

Eric Wolfe: Our first call comes from Eric Wolfe with City. Your line is now opened. Thanks.

Nicholas Joseph: It's Nick Joseph here with Eric.

James Sebra: Jim, appreciate the second half blended rate growth and occupancy comments you made in the prepared remarks. So just curious how you're thinking about kind of the re-acceleration from your July results in terms of blended rate growth and kind of that strategy of rate versus occupancy in the back half of the year, just given some typical seasonality that we'd expect you to see. Good question, and thanks, Nick. We're seeing good progress already for August and September and feel good about hitting the rental rate kind of forecast we put out there.

James J. Sebra: Jim, I appreciate the second half blended rate growth and occupancy comments you made in your prepared remarks. So just curious how you're thinking about kind of the re-acceleration from your July results in terms of blended rate growth and kind of that strategy of rent versus occupancy in the back half of the year, just given some typical seasonality that we'd expect you to. Regarding new leases, the August trends have improved significantly from what we saw so far in July.

Nick Joseph: Thanks. It's Nick Joseph here with Eric. Jim, appreciate the second half blended rate growth and occupancy comments you made in the prepared remarks. So just curious how you're thinking about kind of the re-acceleration from your July results in terms of blended rate growth and kind of that strategy of rent versus occupancy.

Jim: In the back half of the year, just given some typical seasonality that we'd expect you to see.

James Sebra: Let me give you a few, and let me give all the investors and analysts a few statistics on what we're seeing already for August and September. Regarding new leases, the August trends have improved significantly from what we saw so far in July. So far in August of our expected new leases that we would expect to sign to hit that off to be forecast 54% or already signed at a minus 1.7%, which is roughly 160 basis points improvement over where we were in July. Regarding renewal, this is August and September trends are also outpacing July. For August, 95% of our expected renewals are done and effective rental rate growth of 5.4%. For September, 78% of our expected renewals are also signed at an effective rental rate growth of 4.6%.

James J. Sebra: So far in August, of the expected new leases that we would expect to sign to hit that occupancy forecast, 54% are already signed at a minus 1.7%, which is roughly 160 basis points improvement over where we were in July. Regarding renewal leases, August and September trends are also outpacing July. For August, 95% of our expected renewals are done at an effective rental rate growth of 5.4%.

Speaker Change: So far in August .

Speaker Change: of our expected new leases that we would expect to sign to hit that occupancy forecast. 54% are already signed at a minus 1.7%, which is roughly 160 basis points improvement over where we were in July .

Nick Joseph: Regarding renewal leases, August and September trends are also outpacing July . For August , 95% of our expected renewals are done at an effective rental rate growth of 5.4%.

James J. Sebra: For September, 78% of our expected renewals were also signed at an effective rental rate growth of 4.6%. We feel good about kind of hitting that, you know, the rental rates re-accelerating given our goal to continue to kind of drive them up. Sure. So, we are definitely seeing supply pressures in expected markets such as Atlanta, Raleigh, Nashville, and Huntsville, as it has continued through the year. Concessions are ranging on the new development anywhere from three weeks to two months, depending upon what phase of the lease-up they're in.

Nick Joseph: For September , 78% of our expected renewals are also signed at an effective rental rate growth of 4.6%. We feel good about kind of hitting that, you know, the rental rates re-accelerating given our goal to continue to kind of drive occupancy.

James Sebra: We feel good about kind of hitting that, you know, the rental rates recelerating given our goal of continuing to kind of drive occupancy.

James Sebra: Thanks, that was very helpful, and then you've mentioned some of the markets that you're obviously facing new supply competition right now. Can you just touch on the concessions that you're seeing from competitors in some of those markets? Sure, so we are definitely seeing the supply pressures in the expected markets such as Atlanta, Raleigh, Nashville, and Huntsville.

Speaker Change: Thanks, that was very helpful. And then you mentioned some of the markets that you're obviously facing new supply competition right now. Can you just touch on the concessions that you're seeing from competitors in some of those markets?

James Sebra: As it's continued through the year, concessions are ranging on the new development anywhere from three weeks to two months, dependent upon what stays of the lease up therein. Through the July month, we did see a slight increase in concessions being offered. That was anticipated just because of the seasonality and the demand being there to capture.

Speaker Change: As it's continued through the year, concessions are ranging on the new development anywhere from three weeks to two months, depending upon what phase of the lease-up they're in.

James J. Sebra: Through the July month, we did see a slight increase in concessions being offered. That was anticipated just because of the seasonality and the demand being there to be captured. Thank you very much.

Unknown Executive: Thank you very much.

Brad Hepburn: The next question comes from Brad Hepburn with RBC Capital Markets. Your line is open. Yeah, thanks everybody. Jim, I appreciate the answer to the last question with the additional color on how the new leases are trending.

Operator: The next question comes from Brad Heffern with RBC Capital Markets. Your line is open. Yeah, thanks. Hey, everybody.

Speaker Change: The next question comes from Brad Heffern with RBC Capital Markets.

James J. Sebra: Jim, I appreciate the answer to the last question with the additional color on how the new leases are trending. But it still seems like you would need to see another sequential uplift in September to hit the guidance. So any color you can give there about what gives you that confidence? Is it easier comps?

Brad Heffern: Yeah, thanks. Hey, everybody. Jim, I appreciate the answer to the last question with the additional color on how the new leases are trending.

James Sebra: But it still seems like you would need to see another sequential uplift in September to hit the guidance. So any color you can give there about what gives you that confidence is it easier comps as if something else. Yeah, great. Thanks, Brian. Good question. It's really, the obviously September is really early far from a newly standpoint. We really think that as we kind of continue to push occupancy in July and, you know, kind of at that kind of level that we like, that we should be able to kind of now push rates a little more.

Brad Heffern: But it still seems like you would need to see another sequential uplift in September to hit the guidance. So any color you can give there about what gives you that confidence. Is it easier comps? Is it something else?

James J. Sebra: Is it something else? Yeah, great. Thanks, Brad. Good question.

James J. Sebra: It's really obvious that September is really early so far from a new lease standpoint. We really think that as we kind of continue to push occupancy in July and are kind of at that kind of level that we like, that we should be able to kind of now push rates a little more as I think, as we also mentioned, or in Scott's prepared remarks, you know, the volume of new supply or pressure from new deliveries is beginning to wane. And that will also help support, you know, us driving rental rates.

Jim: Yeah, great. Thanks, Brad. Good question. It's really, obviously, September is really early so far from a new lease standpoint. We really think that as we kind of continue to push occupancy in July , then, you know, we're kind of at that kind of level that we like.

James Sebra: As I think, as we also mentioned, or in Scott's prepared remarks, you know, the volume of new supply or pressure from new deliveries is beginning to wane, and that will also help support, you know, our striving rent or driving rental rate.

Speaker Change: that we should be able to kind of now push rates a little more. As I think as we also mentioned, or in Scott's prepared remarks, you know, the volume of new supply or pressure from new deliveries is beginning to wane, and that will also help support, you know, us driving rent or driving rental rates.

Scott Schaeffer: Okay, got it. And then I noticed in the footnotes that you did some recent modifications to the JV agreements for the properties under development. Can you walk through how those work exactly? What's going on there and why you made those modifications?

James J. Sebra: Okay, got it. And I noticed in the footnotes that you did some recent modifications to the JV agreements for the properties under development. Can you walk through how those work, exactly what's going on there, and why you made those modifications? Sure. This is Scott.

Scott F. Schaeffer: The modifications were really related to the two properties in Nashville where we have, it's not so much a JV, but we have a preferred equity stake where our investment is accruing at 20%, and we have a right of first offer to purchase. They're both completed.

Scott Schaeffer: Sure, this is Scott. The modifications were really related to the two properties in Nashville where we have, it's not so much a JV, but we have a preferred equity on stake. Where we are, our investment is approving at 20%. We had a right of first offer to purchase. They're both completed. They're both well in the lease up. But we could not come to terms with the developer partner, if you will, on what the value was. So we modified the agreement that instead of a right of first offer, we have a right of first refusal. And they've agreed to take it to market before the end of this year.

Nick Joseph: Sure, this is Scott. The modifications were really...

Scott F. Schaeffer: They're both well in the lease up process, but we could not come to terms with the developer partner, if you will, on what the value was. So we modified the agreement so that instead of a right of first offer, we have a right of first refusal, and they've agreed to take it to market before the end of this year. And then we'll basically have a last look at wherever the market sets the value, rather than us trying to put in an initial offer and come to an agreement with the developer.

Scott: We had a right-of-first offer to purchase. They're both completed. They're both well in the lease-up.

Speaker Change: So, we modified the agreement that instead of a right of first offer, we have a right of first refusal, and they've agreed to take it to market before the end of this year.

Scott Schaeffer: And then we'll basically have a last look at wherever the market then sets the value rather than us trying to put in an initial offering and come to an agreement with the developer. And we did that for both of the Nashville properties. If they don't pay us off, sell the property and pay us off by the end of the year, then we take control and we can sell it. Okay, got it.

Scott F. Schaeffer: And we did that for both of the Nashville properties. If they don't pay us off, sell the property, and pay us off by the end of the year, then we take control, and we can sell it.

Unknown Executive: Thank you.

Brad Heffern: Okay, got it. Thank you.

Austin Wurschmidt: The next question comes from often Verschmitz with KeyBank Capital Markets. Your line is now open. Great. Thanks, and good morning, everybody. Appreciate all the detail on kind of how the third quarter has been trending. So I guess if you're on track to kind of hit the revised lease rate growth assumptions for the back half of the year, what does that imply for a 2025 revenue growth earning? Yeah, good question. And thank you. It implies a 90 basis point to earn in for next year. That's helpful.

Operator: Okay, got it. Thank you. The next question comes from Austin Wurschmidt with KeyBank Capital Markets. Your line is now open. We appreciate all the detail on kind of how the third quarter's been trending. So, I guess if you're on track to kind of hit the, you know, revive... Yeah, good question.

Mike Daley: And thank you. It implies a 90 basis point to earn in for next year. Fundamental Perspective, as well as just, you know, maybe give an update on some of the fraud. Absolutely.

Speaker Change: For the back half of the year, what does that imply for a 2025 revenue growth earn-in?

Scott Schaeffer: And then just more specifically, I wanted to hit on Atlanta because this has been one of the more challenging markets, and obviously a top market for you guys. Could you just specifically discuss what you're seeing on the ground in Atlanta, you know, kind of subsequent to 2Q from a fundamental perspective as well as just, you know, maybe give an update on some of the fraud and bad debt challenges that you've faced in that market and more broadly, if there's anything else, any other markets that are relevant as well. Absolutely. So I can give you a few stats on the new lease and renewals that we're seeing for August and September in Atlanta.

Speaker Change: as well as just, you know, maybe give an update on some of the fraud and bad debt challenges that you've faced in that market and, you know, more broadly, if there's anything else, any other markets that are, you know, relevant as well.

Mike Daley: So I can give you a few stats on the new lease and renewals that we're seeing for August and September in Atlanta. We are seeing improvement over July. Regarding new leases for August, we are also estimating that about 55% of our needed leases are already in place.

Scott: Absolutely.

Scott Schaeffer: We are seeing improvement over July. Regarding new lease for August, we are also estimating about 55% of our needed leases are already in place. And we've seen the new lease rate increase 40, 400 to 500 basis points over what we saw in July. So we're definitely moving in the right direction. For renewals, August, we have 90% of our August renewals in place at a 5.4% versus the 2.4. We saw in July and September; we're seeing 65% in place at a 4.8. So we're moving in the right directions. We're confident in that market that we've seen improvement; will continue to do so.

Speaker Change: Regarding new lease for August , we are also estimating about 55% of our needed leases are already in place, and we've seen the new lease rate increase 400 to 500 basis points.

Mike Daley: And we've seen the new lease rate increase 400 to 500 basis points over what we saw in July, so we are definitely moving in the right direction. For renewals, August, we have 90% of our August renewals in place at 5.4% versus the 2.4% we saw in July. And September, we're seeing 65% in place at 4.8%.

Mike Daley: So we're moving in the right direction. We're confident in that market that we've seen improvement and we'll continue to do so. As for fraud, we implemented at the beginning of this year, and we spoke about it in previous earnings calls, some software that has helped us combat that fraud. We're starting to see the benefits of that now with our lower bad debt percentage that we reported in Q2.

Scott Schaeffer: As for fraud, we have implemented, in the beginning of this year, we've spoken about it in previous earning calls, some software that has helped us combat that fraud. We are starting to see the benefits of that now with our lower bad debt percentage that we reported in Q2. That's helpful.

Unknown Executive: Thanks for the update. Thank you.

Mike Daley: Thank you, and our next question comes from John Kim with BMO Capital Markets. Your line is now open. Thank you. You provide a new disclosure this quarter, which is always welcome. This one is on the renovation program lease rate growth of six point three percent. I'm looking at that versus the historical 20.4% rent growth you've gotten on the renovation program. Yeah, it's a good question.

John Kim: And our next question comes from John Kim with BMO Capital Markets. Your line is now open. Thank you.

James Sebra: You provided new disclosure of this quarter, which is always welcome. This one is on the renovation program lease rate growth of 6.3%. I'm looking at that versus the historical 20.4% red growth you've gotten on the renovation program. Are those the apples-to-apples comparisons that we should look at? And if you can comment on why it's not as strong as it has been historically?

Speaker Change: Thank you. You provided new disclosure this quarter, which is always welcome. This one is on the renovation program lease rate growth of 6.3%. I'm looking at that versus the historical 20.4% rent growth you've gotten on the renovation program.

James J. Sebra: As I think we've talked about in the past on earnings calls, certainly with investors, you know, you have the premium that we evaluate and disclose in terms of the ROI is versus an unrenovated comp. The premium that we do, the rental rate growth that we disclosed was versus kind of an expiring lease. So it's just a little bit of a difference between, you know, kind of the two basic points.

James Sebra: Yeah, it's a good question. As I think we've talked about in the past on earning calls to some of the investors, you know, you have the premium that we evaluate and we disclose in terms of the ROI versus an unrenovated comp. The premium that the rental rate growth that we disclose was versus kind of the expiring lease. So it's just a little bit of a kind of a difference of, you know, kind of the two basis points, but the obviously the current rental rate is the right way to think about it. And for us, it's always about putting capital to work that really drives that ROI for investors and looking at versus an unrenovated comparable, in our view, is the best way to evaluate it because it removes any kind of market kind of ups and downs through time.

Speaker Change: So, it's just a little bit of a kind of a difference of, you know, kind of the two basis points, but obviously the current rental rate is the right way to think about it.

James J. Sebra: But obviously, the current rental rate is the right way to think about it. And for us, it's always about putting capital to work that really drives that ROI for investors. And looking at an unrenovated comparable, in our view, is the best way to evaluate it, because it removes any kind of market kind of ups and downs through time.

James Sebra: And when the market rents were growing, that would inherently inflate the ROI when it's not the true ROI; in vice versa with market rents declining.

James J. Sebra: And, you know, when market rents are growing, that would, you know, inherently inflate the ROI when it's not the true ROI, and vice versa, with market rents declining. Maybe another way to ask this is, where would that 6.3% have been two or three years ago? It probably would have been 10 or 11 percent.

James Sebra: Maybe another way to ask this is, where would that have 6.3%? Where would that have been two or three years ago? It probably would have been 10 or 11%. Okay.

James J. Sebra: Okay. All right. Thank you. Just as a reminder, if you would like to enter the queue to ask a question, please press star and the number one on your keypad. The next question comes from Omotayo Okusanya with Deutsches Bank. Your line is now open. Yes, good morning.

Unknown Executive: All right. Thanks.

Speaker Change: It probably would have been 10 or 11 percent.

Speaker Change: Okay. All right. Thanks.

Omotayo Okusanya: Just as a reminder, if you would like to enter the queue to ask a question, please press star in the number one on your keypad. The next question comes from Oma Teo, Ocosana, with Deutsche Bank. Your line is now open. Yes. Good morning.

Speaker Change: Just as a reminder, if you would like to enter the queue to ask a question, please press star and the number one on your keypad. The next question comes from Omotayo Okusanya with Deutsches Bank. Your line is now open.

Operator: I'm still trying to assess what rent growth could look like in the back half of 2024. Could you help us kind of understand, kind of going into 3Q24, where you're earning and your loss-to-lease statistics stand going into 2025 or going into 2024?

Omotayo Okusanya: I'm still trying to assess what rent growth could look like in the back half of 24. Could you help us kind of understand kind of going into 3Q24 where you're earning and you lost at least a statistic stand? Going into 2025, we're going into 2024. Into 3Q24. As of 3Q24. Yeah. So lost to this as of July 31st was 30 basis points. And then you earn in? Earn in heading into the rest of this year. Yep.

James J. Sebra: Into 3Q24, as of 3Q24. Yeah, so lost to lease as of July 31 was 30 basis points. Okay, I'm in your earnings. I don't have that in front of me.

Speaker Change: going into 2025 or going into 2024? Into 3Q24, as of 3Q24.

Speaker Change: Okay, and then your RNN.

Omotayo Okusanya: I don't have that in front of me. I'll come back to you on that one. Tell you. Okay. But that's no worries. Yeah. It's also in your answer earlier. If we hit the kind of the midpoint of guidance, we'll be at 90 basis points earning for next year. Gotcha, okay.

James J. Sebra: I'll come back to you on that one, Teo. Okay, but no worries. Yeah, as Austin, you know, as earlier, you know, if we hit the kind of the midpoint of guidance, we'll be at 90 basis points of earnings for next year. Gotcha. Okay. And then, in terms of just asset sales, again, the recycling program is over. But again, you did identify one new asset as part of your capital recycling program. How do we kind of think about that going forward as a source of capital?

Speaker Change: Turn in heading into the rest of this year? Yep.

Speaker Change: I don't have that in front of me. I'll have to come back to you on that, Montayo. Okay. No worries. Yeah, as Austin asked earlier, if we hit kind of the midpoint of guidance, we'll be at 90 basis points earning for next year.

James Sebra: And then, in terms of just asset sales, again, the recycling program is over, but again, you did identify one new asset as part of your capital recycling program. How do we kind of think about that going forward of continued capital recycling as the source of capital? For the balance of 24, we have one asset remaining in Birmingham that we are considering. We haven't made a decision yet; we are considering trading out of. And then in 2025, it will depend on how we see growth in each individual market where we want to expand and where we may want to contract.

Montayo: Gotcha. Okay. And then, in terms of just asset sales...

Speaker Change: Again, the recycling program is over, but again, you did identify one new asset as part of your capital recycling program. How do we kind of think about that going forward of continued capital recycling as a source of capital?

Scott F. Schaeffer: For the balance of 24, we have one asset remaining in Birmingham that we are considering. We haven't made a decision yet. We are considering trading out of. And then in 2025, it will depend on how we see growth in each individual market, where we want to expand and where we may want to contract. But we have two assets in Birmingham.

Speaker Change: For the balance of 24, we have one asset remaining in Birmingham.

Scott F. Schaeffer: that we are considering. We haven't made a decision yet. We are considering...

Speaker Change: trading out of. And then in 2025, it will depend on, you know, how we see growth in each individual market, where we want to expand and where we may want to contract.

Scott F. Schaeffer: We sold one. We're redeploying that capital, as we said, into Tampa. That leaves us with one in Birmingham. And it's never ideal to own one community in a market.

James Sebra: But we had two assets in Birmingham; we sold one. We're re-deploying that capital, as we said, into Tampa. That leaves us with one in Birmingham, and it's never ideal to own one community in a market. So it's one we're looking at closely and determining if and when we should be trading out of that. Great, thank you.

Speaker Change: But we had two assets in Birmingham. We sold one. We're redeploying that capital, as we said, into Tampa. That leaves us with one in Birmingham, and it's never ideal to own one community in a market. So it's one we're looking at closely and determining if and when we should be trading out of that.

Mason Guell: Thank you. Our next question comes from Mason Guell, with Baird. Your line is now open. Hey, good morning. Thank you for giving us some color on the improvement and then when I'm since July.

Speaker Change: Great, thank you.

Scott F. Schaeffer: So it's one we're looking at closely and determining if and when we should be trading out of that. Thank you. Our next question comes from Mason Guell with Barrett. Your line is now open. Hey, good morning. Thank you for giving us some color on the improvement in Atlanta since July. Sure, I think we'll definitely start to see and have seen some improvement on the occupancy side with Raleigh and Charleston as we start to see the new supply start to ebb. So those are some markets that we'll see. Ultimately, you know, just in the Sun Belt, we're seeing improvement as the supply pressure is weighing slightly through the rest of the year and into 2025.

Speaker Change: Thank you. Our next question comes from Mason Guell with Baird.

Operator: Helpful. Thank you. Thank you. That does conclude the questions. At this time, I would like to turn it back over to Mr. Schaeffer for closing remarks. Please go ahead. October, I guess, for our third quarter earnings report. Thank you, everyone. This concludes today's conference call. You may now disconnect.

Speaker Change: Your line is now open.

Mason Guell: Hey, good morning. Thank you for giving some color on the improvement in Atlanta since July . Can you talk about any other markets you expect to maybe improve a little in the second half of the year in which Mike's offered it?

Scott Schaeffer: Can you talk about any other markets you expect to maybe improve a little in the second half of the year in which myself is this? Sure, I think we'll definitely start to see and have seen some improvement on the occupancy side with Raleigh and Charleston as we start to see the new supply start to ed. So those are some markets that we'll see ultimately, you know, just in the Sun Belt, we're seeing improvement as the supply pressures and weighing to lightly through the rest of the year and into 25. That's helpful. Thank you.

Unknown Executive: That does conclude the questions.

Scott Schaeffer: At this time, I would like to turn it back over to Mr. Shaper for closing remarks. Please go ahead. Thank you for joining us this morning, and we look forward to speaking with you in October, I guess, for our third quarter earnings report. Thank you, everyone.

Operator: Thank you. That does conclude the questions. At this time, I would like to turn it back over to Mr. Schaeffer for closing remarks. Please go ahead.

Speaker Change: Thank you for joining us this morning, and we look forward to speaking with you in...

Mr. Schaeffer: October, I guess, for our third quarter earnings report. Thank you, everyone.

Unknown Executive: This concludes today's conference call. You may now disconnect. Thank you.