Q3 2024 Independence Realty Trust Inc Earnings Call
Trust third quarter 2024 earnings conference call all lines have been please on mute to prevent any background noise. After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again.
[music].
Ladies and gentlemen, thank you for standing by my name is desert rain I will be your conference operator today at this time I would like to welcome everyone to the Independence Realty Trust third quarter 'twenty 'twenty four earnings conference call. All lines have been pleasing mute to prevent any background noise. After the speakers' remarks, there will be a question and.
Speaker Change: Press Star one I would now like to turn the conference over to Matti Zumba you may begin.
Thank you and good morning, everyone. Thank you for joining us to review Independence Realty Trust's third quarter 2020 for financial results on the call with me today are Scott Schaeffer, Chief Executive Officer, Jim Zebra, Chief Financial Officer, and Janus Richards SVP of operations today's call is being webcast.
Speaker Change: On our website at IRET living dotcom there'll be a replay of the call available via webcast on our Investor Relations website, and Telefonica <unk> beginning at approximately 12 P M Eastern time today.
Speaker Change: 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 <unk> current views with respect to future events and financial performance actual results could differ substantially and Richard really from what IRT has projected such statements are made in good faith pursuant to the safe Harbor provisions of the private <unk>.
Securities Litigation Reform Act of 1095, 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.
Copy of the Irish <unk> 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 Irt's website under Investor Relations Irt's. Other SEC filings are also available through this.
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 cheaper.
Thanks, Matt and thank you all for joining us this morning.
Scott: I would like to begin the call today by thanking our onsite teams for their role in ensuring the safety of our residents and communities affected by Hurricanes Helene and Milton I'm happy to report that all of our residents and employees are safe, we did not experience any significant damage from the storms and there are no down apartment units.
Now onto the results.
We delivered solid third quarter results with same store NOI growth of two 2% and core <unk> of <unk> 29 per share. We continue to operate in an uneven macroeconomic environment characterized by new supply and the effects of inflation on controllable expenses. Despite these conditions, we remain focused on driving occupancy gains while executing on our strategic.
<unk> initiatives and.
In the third quarter, our average occupancy was 95, 4% 90 basis points higher than the third quarter of last year. This was driven by our resident renewal rate of 66% and our resident retention rate was 57% in the quarter.
As we've stated throughout this year, we have been focused on growing occupancy for balancing rental rate growth and targeted concessions to maximize leasing economics in this environment.
During the third quarter, we continued to experience pressure from new supply, which is impacting new lease rent growth.
Speaker Change: Blended rental rate growth was 8% with new leases down three 6% and renewals up three 8%. We expect continued strong renewal rate growth in the fourth quarter as we have signed approximately 91% of expected renewals for October and November and have achieved an effective rental rate increase of five 3% of onsite renewals and our <unk>.
Occupancy momentum continues our same store occupancy was 95, 7% as of October 29, a 30 basis point improvement over our third quarter average with October lease renewal trade outs at 5% same store occupancy at our non value add communities as of October 29th was 96%.
Speaker Change: In the quarter, we completed renovations on 578 units achieving a weighted average return on investment of 14, 9%. This brings our total renovations for the first nine months of 2024 to 1276 units, resulting in a weighted average return on investment of 15, 9%. These efforts drove an increase in average monthly rent per unit of two.
Speaker Change: <unk> hundred $42 exhibiting a significant premium compared to unregulated comps.
While we have historically talked about cash on cash returns for our value add projects, we do track the longer term benefits and the IRR is for each community generally speaking the irr's on our projects range from 20% to 30% with some even higher when you compare these irr's with our cost of equity you can see how beneficial. These projects are from an NAV perspective over time.
Looking to the fourth quarter, we expect to renovate approximately 400 units, which will bring us to our updated full year target of 1700 units as we've noted in the past the number of units renovated will vary due to the resident retention levels and the timing of new renovation starts.
We also continued with our capital recycling initiatives, which include the sale of a property in Birmingham and the purchase of a property in Tampa also after raising equity in September we are under contract to acquire three properties one each in Charlotte Orlando in Columbus. This will be done at an aggregate purchase price of approximately $184 million and at 776 units to our <unk>.
For full year.
We expect to stabilize the economic cap rate on these three assets to be 6%. These transactions reflect <unk> ongoing efforts to increase our exposure in attractive markets, where we have a strong presence and reduce our ownership.
Speaker Change: Potential.
In addition, one of our JV investments in Nashville noticed the profit was paid off in October with US receiving the 20% annual preferred return along with the return of all of our capital.
Before I hand, the call over to Jim I'd like to share. Some recent news just yesterday IRT received a triple B flat investment grade rating from S&P Global ratings, making this our second investment grade rating since receiving one from Fitch ratings in early March both of these ratings Mark a significant milestone for Iot and reflect our efforts to reset our leverage profile and drive profitable growth.
This additional ratings will improve our cost of capital and give us access to additional capital sources to implement our business plan and invest in our portfolio to.
To sum up our performance this quarter showcases our track record of delivering solid results.
A difficult macroeconomic backdrop looking ahead, we remain confident in our ability to continue driving strong results underpinned by the effective positioning of our portfolio in high growth markets and continued execution on our value add renovation strategy. As a result, we are maintaining the midpoint of our full year 2020 for same store NOI guidance range and now expect to be at the high end of.
Speaker Change: Our previous core <unk> per share guidance range. We believe we will achieve this by remaining focused on sustaining high levels of occupancy, while optimizing rental rate growth and effectively managing our expenses I'll now turn the call over to Jim.
Jim: Thanks, Scott and good morning, everyone, beginning with our third quarter performance update net income available to common shareholders was $12 4 million up from $3 9 million in the third quarter of 2023 for <unk> was $66 8 million and 29 per share both just bill.
A year ago due to our asset sales, which were completed in connection with our portfolio optimization and deleveraging strategy. As a result of these asset sales and deleveraging. We are also happy to report that our net debt to adjusted EBITDA is now six three times down from seven times, a year ago, and we remain on track to be at six times net debt to <unk>.
The EBITDA by year end.
Iot same store NOI growth in the third quarter was two 2% driven by revenue growth of two 5%. This growth was led by a one 2% increase in our average monthly rental rates to $1566 per month, and a 90 basis point increase in average occupancy to 95, 4%.
0.3 times down from seven times, a year ago, and we remain on track to be at the six times net debt to adjusted EBITDA by year end.
Both as compared to Q3 of 2023.
On the operating expense side Iot same store operating expenses increased two 8% during the quarter. This increase was primarily due to higher personnel costs and higher repairs and maintenance and utilities cost all driven by continued inflationary pressures.
Speaker Change: Iot same store NOI growth in the third quarter was two 2% driven by revenue growth of two 5%. This growth was led by a one 2% increase in our average monthly rental rates to $1566 per month, and a 90 basis point increase in average occupancy to 95, 4%.
These increases in some controllable operating expenses were offset by year over year declines in real estate taxes and property insurance in Q3, reflecting the notable progress we've made in these areas as noted last quarter, we renewed our main property insurance policy in May and saw a 10% reduction in our premiums without changing our deductibles or a coverage for real estate.
Speaker Change: As compared to Q3 of 2023.
Speaker Change: On the operating expense side IRT same store operating expenses increased two 8% during the quarter. This increase was primarily due to higher personnel costs and higher repairs and maintenance and utilities cost all driven by continued inflationary pressures. These.
Texas assessed values have come in lower than we anticipated in states like Texas, which is 7% lower Florida, which is 13% lower in Indiana, which is 11% lower and all of those states reassess annually.
Speaker Change: These increases in some controllable operating expenses were offset by year over year declines in real estate taxes and property insurance in Q3, reflecting the notable progress we've made in these areas.
The remaining portion of our expenses for property management and G&A are all trending consistent with our prior guidance.
Speaker Change: As noted last quarter, we renewed our main property insurance policy in May and saw a 10% reduction in our premiums without changing our deductibles or coverage.
On our balance sheet as of September 30, our liquidity position was $722 million and was comprised of $18 million of unrestricted cash $308 million available on our line of credit $150 million available under our private placement bonds and $246 million available under our forward equity agreements.
Speaker Change: For real estate taxes assessed values have come in lower than we anticipated in states like Texas, which is 7% lower Florida, which is 13% lower in Indiana, which is 11% lower and all of those states reassess annually.
During Q3, we completed an inaugural private placement and issued $150 million of unsecured notes. The proceeds from these notes will be used to fully repay all of our 2025 debt maturities.
Speaker Change: The remaining portion of our expenses for property management and G&A are all trending consistent with our prior guidance.
Unsecured notes have a weighted average life of eight five years and a weighted average coupon of five 4%.
As Scott mentioned earlier, we are also happy to report that we received a triple B flat investment grade credit rating from S&P yesterday for some time now we've indicated our efforts to achieve this rating and are excited to deliver on our promise to our shareholders and employees. This rating will open a new capital source for Iot the public bond markets and will reduce the.
The effective cost of all outstanding bank borrowings by approximately 20 basis points or $1 $5 million annually.
In connection with our capital recycling program, we sold a legacy steadfast asset in Birmingham in July for a gross sales price of $70 $8 million with an economic cap rate of five 8%. We used the proceeds from this sale to acquire a property in Tampa in August for $82 million at an economic cap rate.
Jim: Five 9%.
Jim: We are also under contract on three properties is Charlotte Orlando in Columbus, the aggregate purchase price of these three properties is approximately $184 million with a blended year, one economic cap rate of five 7% and a stabilized blended economic cap rate of 6% as two of these communities are new development.
And currently approximately 87% occupied.
We expect to close on these transactions in the fourth quarter, using approximately 35% leverage and the rest coming from our outstanding forward equity agreements.
With respect to our full year 2024 outlook, we are making some minor adjustments to our guidance based on our performance through Q3 and expectations as we close out this year in particular, we are increasing the midpoint of our full year quarter <unk> per share by one penny per share.
Jim: The guidance updates for our operating metrics are as follows.
Speaker Change: We now expect full year same store revenue growth of between 3% and three 2%, which reduces the midpoint by five 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 supporting occupancy this year.
For the fourth quarter 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 50 basis points.
While we are continuing to see pressure on some categories of controllable operating expenses that pressure is being offset by further positive outcomes on real estate taxes and insurance expense, our revised guidance for the full year 2020 for total operating expense growth remains at 3% at the midpoint.
The midpoint of our same store property NOI growth for 2024 remains at three 2% and is on top of the five 7% increase that IRT achieved last year.
Regarding other updates to our full year outlook, we are increasing our guidance for acquisition volume and now expect a range of 264% to $268 million for the year. This reflects not only the one property in Tampa, we acquired in the third quarter, but also our plans to close on the property as mentioned earlier that are currently under contract and Charlotte Orlando.
So in Columbus, our disposition volume guidance remains broadly unchanged.
Lastly, we do not provide guidance on income from our unconsolidated joint ventures, while we wanted to highlight that the 20% annual preferred return that we received related to the Crockett joint venture will be recorded in Q4, and we will provide approximately $3 million of benefit to <unk> in 2024.
Speaker Change: Scott back to you.
Scott: Thanks, Jim.
Our performance in the third quarter gives us a great foundation to continue driving growth across the business and to achieve our 2020 for guidance in the fourth quarter and into next year. We will remain focused on solidifying our position in attractive markets driving high occupancy and rental rate growth executing our value add renovations in our capital recycling strategy.
And delivering shareholder value by returning capital to our shareholders and further strengthening our balance sheet I would like to close my remarks by thanking the <unk> team for their hard work and dedication that made these strong results possible. They continue to remain focused on driving forward, our strategic initiatives and delivering value for our residents and shareholders. We remain confident in our ability to achieve a solid performance throughout the rest of 2000.
Speaker Change: <unk> 24, and beyond we thank you for joining us today, and we look forward to speaking with many of you at NAREIT REIT World Conference in the coming weeks operator, you can now open the call for questions.
Speaker Change: Okay.
Speaker Change: We will now begin the question and answer session. If you have dialed in and we would like to ask a question. Please press star one on your telephone keypad duration Heng and joined the queue.
Would like to withdraw your question simply press Star one again.
You are called upon to ask your question and I was listening via Speakerphone Inger device. Please pickup your handset that ensure that your phone is not on mute when asking a question again press one for trying to queue.
Speaker Change: Our first question comes from the line of Austin, <unk> with Keybanc capital markets. Your line is open.
Speaker Change: Okay.
Speaker Change: Austin.
Austin, you may want to mute your line.
Speaker Change: <unk>.
Let's go to the next one operator.
Our next question comes from the line of Brad Heffern with RBC capital markets. Your line is open.
Hey, Good morning, you guys hear me.
Speaker Change: Yes, good morning.
Thanks, Brad.
Speaker Change: Okay.
So obviously, you've firmed up the use of proceeds for a lot of the equity deal at this point I am curious just at the current cost of capital and the opportunity set that you see right. Now are you interested in re upping and pursuing more acquisitions in 2025 or was there something unique about.
Speaker Change: The opportunities that you were seeing when you did that deal.
Speaker Change: Hi.
Nothing unique other than we felt.
Speaker Change: That there were.
Good assets in markets, where we wanted to expand that could be bought.
At cap rates that were accretive relative to our cost of capital.
And that's why we set out to raise the capital we didn't have anything under contract at the time.
But were quickly able to put together a pipeline and identified these three communities again that we think will be.
Additive to the portfolio and got them under contract.
We're working through due diligence now and we expect them all to close in the fourth quarter.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: The opportunity is that more broad than this or was this just like three sort of unique deals et cetera.
Speaker Change: But were quickly able to put together a pipeline and identified these three communities again that we think will be.
There's opportunities out there and we're seeing a lot of them.
We want to be judicious on our use of capital and make sure that everything that we do is accretive to both NAV.
Speaker Change: Additive to the portfolio and got them under contract and they're working through due diligence now and we expect them all to close in the fourth quarter.
Speaker Change: And an earnings point of view.
So we're being patient and.
Speaker Change: Okay.
Speaker Change: Sure.
We'll transact when it makes sense, but there are transactions out there today.
Speaker Change: Okay.
Speaker Change: Opportunities that more broad than this.
Speaker Change: With this just like three sort of unique deals that fit them.
Speaker Change: Okay got it.
Speaker Change: The September renewal spreads are the highest of the year, but the newly spread is the lowest it does seem like you have confidence in that renewal rate continuing to be above five through November but how do you feel about the ability to maintain that spread of close to 10% between new and renewal.
There's opportunities out there and we're seeing a lot of them.
Speaker Change: We want to be judicious on our use of capital and make sure that everything that we do is accretive to both NAV and an earnings point of view.
So we're being patient and.
Speaker Change: We're seeing that also for December and the renewal rates.
We'll transact when it makes sense, but there are transactions out there today.
Even a little bit higher in December now its early and we only have I think 40% of.
Okay got it.
Speaker Change: The September renewal spreads are the highest of the year, but the newly spread is the lowest it does seem like you have confidence in that renewal rate continuing to be above 5% or in November, but how do you feel about the ability to maintain that spread of close to 10% between new and renewal.
Our December renewals, we have about 40% of expiring leases how renewed in December and that will end up in the low <unk>.
Speaker Change: So there are a good chunk of the December renewals are already in and there as I said they are in the high 5% to 6%.
Speaker Change: So we feel good about it.
Speaker Change: We're seeing that also for December and the renewal rates.
Speaker Change: Okay. Thank you.
Even a little bit higher in December now its early and we only have I think 40%.
And our next question comes from the line of Austin, Grishman Keybanc capital markets. Your line is open.
Speaker Change: <unk>.
Speaker Change: Our December renewals, we have about 40% of expiring leases have renewed in December.
Hey, everybody can you hear me now.
Speaker Change: We'll end up in the low <unk>.
Speaker Change: We got you.
There are a good chunk of the December renewals are already in and there as I said they are in the high 5% to 6%.
Alright, perfect sorry about that a little bit of a technical issue on our end.
Just wanted to hit on.
Speaker Change: So we feel good about it.
Speaker Change: If I didn't if you didn't ask this if somebody didn't ask this already but.
Okay. Thank you.
Speaker Change: Last quarter, you had estimated the earn in around 90 basis points expectations, obviously for the latter half have shifted a bit can you just share what the updated thoughts are of where you expect to earn in to shake out heading into next year.
Speaker Change: Based on where we are today and kind of what we think will continue to happen as Scott just mentioned for November and December we think the earn in for next year will be approximately 50 basis points.
Thanks for that and then just with respect to the operating strategy.
Where would you guys like to grow occupancy too and I guess to the extent conditions do improve on the ground at what point.
Speaker Change: Does it really makes sense for you to switch back to pushing rate again.
We're basically there Austin unhappy at $95, 5% to 96% occupancy.
That's where we are so our strategy going forward will be to maintain that and to have been a more balanced approach to rent growth going forward.
And just last one for me I guess based on what you see from a supply perspective in front of you. When do you think you could start to see new lease rate growth turned positive.
Yes, I mean, I think the supply growth, but I think we all widely believed based on the data that's in Costar and you already matrix for 2025 will be significantly lower than 2024, So I think youre going to start seeing that new lease.
Speaker Change: Trade out improve quite rapidly throughout the beginning part of 2025, I don't know Janice feel free to if you want to add anything else, but I think generally speaking we were quite bullish on the ability for that supply to benefit the new lease growth going forward, absolutely. We are seeing signs of that already within kind of the asking rents starting to creep up.
Speaker Change: It looks like for that.
New supply diminish and we're ready to take advantage of that.
That's helpful. Thanks, everybody.
Speaker Change: Thank you.
Speaker Change: Next question comes from the line of Eric Wolfe with Citi. Your line is open.
Eric Wolfe: Hey, thanks.
I guess looking at your your sequential same store revenue increase it was one 2% this quarter. It looks like 70 bps of that was from increased rate occupancy was I think flattish quarter over quarter. So I was just curious what's driving the other sort of.
Eric Wolfe: 50 bps of that improvement sequentially.
Yes, it's both.
Speaker Change: Bad debt expense and other income growth.
Speaker Change: Got it okay.
Speaker Change: So I guess that leads into the next question is.
I know, it's still early but if you have any thoughts on sort of.
Some of those items for next year, because I guess at least for bad debt, you're probably ending a little bit over.
One 5% on bad debt that creates a little bit of embedded growth I'm. Just curious if there is other income growth or anything else that you could talk about that we should be thinking about.
For next year in terms of your in terms of your same store revenue.
Yes, I mean, I think we're not ready to give guidance. Obviously for next year, just yet I would say that largely speaking sure. We're working on continuing to move bad debt lower we're looking at additional kind of amenity offerings to increase other income growth all those great things I would say the market rent growth is one that way.
For someone to ask that question.
Costar in the already matrix of the world kind of show market rent growth and they're kind of the three to three 5% range.
So thats, probably the only bit of data point that we would say that's out there because everybody can download that information and get it.
But I would say that's probably one of the bigger building blocks for our revenue growth for next year. It is.
As Scott mentioned with a with a more stable occupancy we're going to be able to have a more balanced approach to rate growth.
Speaker Change: Got it thank you.
Next question from John Kim with BMO capital markets. Your line is open.
Good morning.
Speaker Change: Great.
Speaker Change: Renewals.
Strong and rebounded well so far this quarter.
The new lease rates, probably were below expectations, bringing down.
Speaker Change: The total.
Speaker Change: Were there any markets that surprised you as far as.
New lease rates not.
Speaker Change: Coming in lower than expected.
And how does that compare versus Jimmy just mentioned market forecast of three to three 5% I mean do you think there will be a lingering impact of supply on new lease rates going forward.
Sure I'll take that one Phil.
I don't believe we saw any negative impact I think we didn't see as much lift as we were helping farhan I mean lease rates based on the seasonality and a little bit of a layover from leasing season in October and which we were able to push through that additional supply and see that boost in occupancy which allows for us now to be poised for the pricing power moving forward again.
On supply.
Speaker Change: The majority of our supply adds in Q1, and most of our markets and we're pretty confident with the continued pricing power through next year or two.
In and around what the market is anticipating.
Speaker Change: Okay, and then can I just ask on your recent acquisitions, you mentioned, 6% stabilized.
Speaker Change: How long does it take to get there.
The going in yield and are these.
Speaker Change: As far as these assets are they new developments recently completed or the potential for.
Value add if you can just provide some characteristics on them.
Speaker Change: Sure. So two of the three are new construction.
Speaker Change: <unk>.
Speaker Change: In early 2024, the one in Charlotte Charlotte and one in Orlando there both in finishing their lease up and those are the ones that are about 85% occupied and will be stable in the first quarter of 2025, 87% occupied 87% IRR excuse me.
The third is a smaller asset adjacent to one of our existing communities in Columbus, Ohio, that's a bit older and will it be prime for our value add strategy.
The yield seems a little bit higher than would be heard in the market.
Speaker Change: Okay.
Speaker Change: Well I think.
Speaker Change: Well.
Speaker Change: One I think.
Having capital available and moving quickly and knowing the market. So that you can shorten the due diligence time is all of the benefit and get you a better execution.
And you also there is always a small benefit at least we've always been able to achieve a small benefit when youre willing to take some lease up risks. So when we put these under contract.
I think.
Speaker Change: Well.
Speaker Change: They were in the lower 80% occupied that continues to grow but we're seeing that we get a better price because we're taking that little bit of risk.
One I think.
Speaker Change: Having capital available and moving quickly and knowing the market. So that you can shorten the due diligence time.
And again, it's not really a risk for us per se, because we know the markets and we know.
Speaker Change: As all of the benefit and gets you better execution.
Speaker Change: We understand the assets.
And you also there is always a small benefit at least we've always been able to achieve a small benefit when youre willing to take some lease up risk. So when we put these under contract.
Speaker Change: That's great. Thank you.
Speaker Change: Sure.
Our next question comes from the line of Tayo Okusanya with Bell Shebang. Your line is open.
They were in the lower 80% occupied that continues to grow but we're seeing that we get a better price because we're taking that little bit of risk.
Tayo Okusanya: Good morning, everyone.
Couple of quick ones from me first of all.
Speaker Change: And again, it's not really a risk for us per se, because we know the markets and we know.
How should we think about potential new development starts again, you have improved liquidity and local it sounds like you have better cost of capital and you know congrats on the on the <unk> investment grade rating, but you're kind of at the point now where you can actually start a new project or does.
We understand the assets.
Speaker Change: That's great. Thank you.
Speaker Change: Youre welcome.
Our next question comes from the line of Tayo Okusanya with Deutsche Bank. Your line is open.
Tayo Okusanya: The cost of building still kind of prohibitively high relative to our relative surround.
Hi, Yes, good morning, everyone a couple.
Couple of quick ones from me first of all.
This is Scott.
How should we kind of think about potential new development starts again, you have improved liquidity and local it sounds like you have better cost of capital and you know congrats on the on the S&P investment grade rating, but you're kind of at the point now where you can actually start a new project or does.
It's still not something that we are looking to do.
Again, we completed the two ground up construction development deals that we inherited from steadfast in the merger.
Tayo Okusanya: But as we continue to look to deleverage the balance sheet.
What does it cost of building still kind of prohibitively high relative to our relative to rents.
We like buying stable, we're very very close to stable.
Tayo Okusanya: The performing assets and I am not ready to add development risk to our balance sheet.
This is Scott, it's still not something that we are looking to do.
Tayo Okusanya: At this time.
Speaker Change: We again, we completed the two ground up construction development deals that we inherited from steadfast in the merger.
That's all helpful.
And then if you could talk about insurance a little bit again.
Good year for you guys in regards to ensuring that those won't once talked about and think about next year again, it's hopefully it's not too early to start thinking about next year.
But as we continue to look to deleverage the balance sheet.
Speaker Change:
We like buying stable, we're very very close to stable.
Everything we've seen with hurricanes and the payouts all the insurance companies off to make.
Performing assets and I am not ready to add development risk to our balance sheet.
There are risks that they kind of ratchet up premiums.
At this time.
Tayo Okusanya: 2025.
That's all helpful.
Speaker Change: Great question, we've gotten a few different times and obviously the insurers are going to use all of the severe weather events as a reason for our rates to increase I would say that over the past few years as premiums have increased insurers have come back to the marketplace. So therefore, the competitive edge that you have is a.
Speaker Change: <unk> purchase of reinsurance is beginning to kind of flow back.
Obviously still way too early to tell for next year, our renewals not until mid May we do have a blanket policy and we have not we have not had any losses. This year that we've put onto our insurers, which will really help us.
In that kind of negotiations knock on wood.
But we're quite happy with where we sit today and obviously next year. So a bit of a question Mark but we're we think we'll have a good negotiating late next year.
Okay, one more if you don't mind the preferred.
Investment that's going to be recorded in <unk> could you just.
Tayo Okusanya: <unk>.
Impact towards <unk> impact I wasn't sure I heard that correctly.
Speaker Change: Yes, it's $3 million, it's about a one five cents.
Benefit to core <unk> per share.
Thank you.
Tayo Okusanya: Thank you.
Our next question comes from the line of Ann Chan with Green Street. Your line is open.
Speaker Change: Hey, good morning could.
Speaker Change: Could you hear what youre seeing in terms of possession of competitors foreign markets. You previously noted with higher supply competition, Atlanta, Raleigh, Nashville, Atlanta, and how that's been trending in recent months.
Speaker Change: Absolutely so.
As we've noted is that the high supply that were.
Speaker Change: Challenging Raleigh, Atlanta, Dallas, and Nashville, we've seen a little bit of adverse in Dallas.
Tayo Okusanya: Which makes us hopeful next year's growth.
Tayo Okusanya: Could be close to and are in line with what Costar in the earlier anticipating Atlantis pretty much stayed consistent especially in our submarkets with concessions we've had the ability to pull back in some areas. We still are very targeted with our concessions.
We review them and adjust them accordingly.
Basis based on how we can optimize net effective rents.
And so again.
Tayo Okusanya: We have not seen much change, we're hoping to see a little bit more changed in November December as we see the supply start to F.
Tayo Okusanya: Delivery.
Tayo Okusanya: Thank you.
Tayo Okusanya: Sorry deliveries again start to subside Lauren Q1.
So that's what we're going to start to see the concessions really start to pull back.
Tayo Okusanya: Thank you.
Speaker Change: And specifically for Atlanta.
Speaker Change: The largest markets could you share what youre seeing on the ground there operationally.
And on the excellent progress in recent months.
Speaker Change: Subsequent to the third quarter.
Speaker Change: Yes.
<unk> itself relatively challenging we've seen a bit of an upswing.
Our blended for Q3, we are at a negative 114.
Speaker Change: October we're at positive one three on the rent side. So that is definitely going in the right direction for us occupancy year over year, we had a two 4% increase.
We will then be able to maintain and so base.
Both of our mines, we were able to get another 50 basis points.
Growth there so Atlanta is definitely.
On the upswing comparatively but we will still see challenges with bad debt on the court side, we're still seeing a bit of delay not as much as we saw maybe coming into 'twenty four and we're hopeful that that will subside even more than 25 as the court start to catch up and we start to utilize all different aspects in order to minimize that.
Speaker Change: Bad debt.
Speaker Change: Great. Thank you.
Speaker Change: And our last question comes from the line of Linda Tsai with Jefferies. Your line is open.
Hi, Thank you a follow up on insurance.
Institutional owners picking on higher deductibles to help them help.
To help offset the impact of higher insurance costs do you think this is a growing trend.
Speaker Change: I don't know if its a growing trend I have said, but I, we said in the past when we did our renewal back in May we didn't change our deductibles, we do not take that high deductible, obviously, you're always willing to look at taking a higher deductible. It if it saves you that much if not more in premium dollars.
Speaker Change: We have heard some people are doing that as a way of managing their premium.
But I don't have any real kind of clear Angola is that what percentage or how much they're doing but we happened to be clear.
Speaker Change: Thank you.
That concludes the question and answer session I would like to turn the call back over to Mr. Scott Shafer.
Thank you all for joining us. This morning again, we look forward to seeing some of you in Las Vegas at the NAREIT Conference.
And otherwise we will speak to you next quarter have a good day.
Speaker Change: Ladies and gentlemen. This concludes today's conference call you may now disconnect.
Speaker Change: Okay.