Q1 2025 Mid-America Apartment Communities Inc Earnings Call

And only mode. Afterwards, the company will conduct a question Indians are session. As a reminder, this conference call is being recorded today may 1st 2025, I will now turn the call over to Andrew Schaffer, Senior Vice President Treasurer, and director of capital markets at MAA for opening comments.

Good morning, ladies and gentlemen, and welcome to D. N. A a first quarter 'twenty 25 earnings conference call. During the presentation. All participants will be in a listen only mode. Afterwards, the company will conduct a question Indians are session. As a reminder, this conference call is being recorded today may 1st 2025.

Thank you Regina and good morning, everyone. This is Andrew Schaffer, Treasurer, and director of capital markets for him.

Speaker Change: Members of the management team participating on the call. This morning are Brad Hill, Tim Argo Clay holder and Rob Delpriore before we begin with prepared comments. This morning, I want to point out that as part of this discussion company management will be making forward looking statements actual results may differ materially from our projections. We encourage you to refer to the forward.

Speaker Change: Now I'll turn the call over to Andrew Shaper, Senior Vice President Treasurer, and director of capital markets at MAA for opening comments.

Speaker Change: Thank you Regina and good morning, everyone. This is Andrew Schaffer, Treasurer, and director of capital markets for EM.

Speaker Change: Looking statements section in yesterday's earnings release, and our 34 Act filings with the SEC, which describe risk factors that may impact future results. During this call. We will also discuss certain non-GAAP financial measures a presentation of the most directly comparable GAAP financial measures as well as reconciliations of the differences differences between non-GAAP and comparable GAAP measures.

Speaker Change: Members of the management team participating on the call. This morning are Brad Hill, Tim Argo quite holder and Rob Delpriore before we begin with prepared comments. This morning, I want to point out that as part of this discussion company management will be making forward looking statements actual results may differ materially from our projections. We encourage you to refer to the fore.

Speaker Change: Can be found in our earnings release and supplemental financial data our earnings release and supplement are currently available on the for investors page of our website at Www Dot M. A C dot com a copy of our prepared comments and an audio recording of this call will also be available on our website later today after some brief prepared.

Speaker Change: Looking statements section in yesterday's earnings release, and our 34 Act filings with the SEC, which describe risk factors that may impact future results. During this call. We will also discuss certain non-GAAP financial measures a presentation of the most directly comparable GAAP financial measures as well as reconciliations of the differences.

Brad Hill: Comments the management team will be available to answer questions I will now turn the call over to Brad.

Speaker Change: For instance between non-GAAP and comparable GAAP measures can be found in our earnings release and supplemental financial data on the earnings release and supplement are currently available on the for investors page of our website at Www Dot AAC Dot com a copy of our prepared comments and an audio recording of this call will also be.

Brad Hill: Thanks, Andrew and good morning, everyone.

Brad Hill: As detailed in our release first quarter performance results were ahead of our expectations.

Brad Hill: Demand was evident in multiple areas of our performance, including occupancy collections and pricing trends.

Brad Hill: Available on our website later today after some brief prepared comments the management team will be available to answer your questions I will now turn the call over to Brad.

Brad Hill: Pricing trends for new resident move ins continue to reflect the impact from new supply delivering in several of our markets.

Brad Hill: Renewal pricing remained strong and our retention rate, increasing leaving the first quarter 'twenty five blended lease pricing that was ahead of our expectations.

Brad Hill: Thanks, Andrew and good morning, everyone.

Speaker Change: As detailed in our release first quarter performance results were ahead of our expectations.

Speaker Change: Strong demand was evident in multiple areas of our performance, including occupancy collections and pricing trends.

Brad Hill: We are encouraged by the resilience of our portfolio has displayed in the face of the unprecedented levels of new supply that we've experienced over the past year as well as our positioning to capture continued improvement as we enter the summer leasing season.

Speaker Change: While pricing trends for new resident move ins continue to reflect the impact from new supply delivering in several of our markets.

Speaker Change: Renewal pricing remained strong and our retention rate, increasing leaving the first quarter 'twenty five blended lease pricing that was ahead of our expectations.

Brad Hill: Tim will discuss in more detail, we are seeing encouraging signs that indicate leasing conditions are poised to support stable occupancy and improvement in blended lease rates that are aligned with the outlook that we provided in our prior guidance.

Speaker Change: We are encouraged by the resilience of our portfolio has displayed in the face of the unprecedented levels of new supply that we've experienced over the past year as well as our positioning to capture continued improvement as we enter the summer leasing season as Tim will discuss in more detail, we are seeing encouraging signs that indicate leasing conditions.

Brad Hill: A compounding impact on revenue performance performance throughout the year.

Brad Hill: While macroeconomic uncertainties have increased due to the potential tariffs our exclusive focus on high growth markets.

Brad Hill: Lower average price point broad diversification by market Submarket and price point, our operating efficiencies and scale should position MAA to weather tariff for economic challenges and allow us to take advantage of growth opportunities that may arise.

Speaker Change: Are poised to support stable occupancy and improvement in blended lease rates that align with the outlook that we provided in our prior guidance, having a compounding impact on revenue performance performance throughout the year.

Speaker Change: While macroeconomic uncertainties have increased due to the potential tariffs our exclusive focus on high growth markets.

Brad Hill: Because of these portfolio characteristics MAA has not only outperformed in previous downturns in times of uncertainty, but delivered good performance over the past year in the face of a 50 year record high level of supply in the first quarter, we were able to increase our year over year occupancy by 30 basis points.

Speaker Change: The lower average price point broad diversification by market Submarket and price point, our operating efficiencies and scale should position MAA to weather tariff for economic challenges and allow us to take advantage of growth opportunities that may arise.

Brad Hill: <unk> average effective rent per unit that was only down $9 per unit from the level, we achieved in first quarter of 'twenty four.

Speaker Change: Because of these portfolio characteristics MAA has not only outperformed in previous downturns in times of uncertainty, but delivered good performance over the past year in the face of a 50 year record high level of supply in the first quarter, we were able to increase our year over year occupancy by 30 basis points and produce average effective.

Brad Hill: Our current metrics are indicating no material change in customer behavior leads in leasing traffic remained strong collections are solid migration trends are positive and the challenges of single family home availability and affordability continued to support our strong renewal performance.

Speaker Change: Rent per unit that was only down <unk>.

Brad Hill: Our focus on customer service is paying off as reflected in our sector, leading Google scores contributing to our growing retention rates supported by our asset management group. The teams are focused on harvesting the benefits of several leasing and reporting tools introduced over the past few years to maximize our operational effectiveness.

Speaker Change: $9 per unit from the level, we achieved in first quarter of 'twenty four.

Speaker Change: Our current metrics are indicating no material change in customer behavior lead to leasing traffic remained strong collections are solid migration trends are positive and the challenges of single family home availability and affordability continued to support our strong renewal performance.

Brad Hill: We continue to invest in key areas that will support future earnings growth, including various new technology initiatives and enhanced efficiencies and support our centralization and specialization efforts.

Speaker Change: Our focus on customer service is paying off as reflected in our sector, leading Google scores contributing to our growing retention rates supported by our asset management group. The teams are focused on harvesting the benefits of several leasing and reporting tools introduced over the past few years to maximize our operational effectiveness.

Brad Hill: We are ramping up the rollout of property wide Wi Fi across our portfolio and investments in our interior renovation and repositioning programs are increasing.

Brad Hill: On the external growth front, our pipeline of lease ups in active development stand at a combined cost of $1 5 billion.

Speaker Change: We continue to invest in key areas that will support future earnings growth, including various new technology initiatives and enhance efficiencies and support our centralization and specialization efforts.

Brad Hill: Our operating performance at these properties should benefit from a supply environment that is trending below historical levels. We continue to believe investing in new developments will produce strong future earnings growth, especially considering the declining new starts and additional headwinds from decreased equity capital available for new projects, we anticipate.

Speaker Change: We are ramping up the rollout of property wide Wi Fi across our portfolio and investments in our interior renovation and repositioning programs are increasing.

Speaker Change: On the external growth front, our pipeline of lease ups in active development stand at a combined cost of $1 5 billion.

Brad Hill: <unk> between three to four new developments this year with a suburban development in the Charleston, South Carolina market on track to start construction during the second quarter.

Speaker Change: Our operating performance at these properties should benefit from a supply environment that is trending below historical levels. We continue to believe investing in new developments will produce strong future earnings growth, especially considering the declining new starts and additional headwinds from decreased equity capital available for new projects, we anticipate.

Brad Hill: Based on our expected starts and completions for the year, our development pipeline should remain in the 1 billion to $1 $2 billion range, a very comfortable level, given our scale and balance sheet strength we.

Brad Hill: We are focused on acquiring properties, where we can utilize our various platform capabilities to generate attractive long term returns for capital, but with the transaction market pretty slow it will likely be in the back half of the year before we see more compelling opportunities begin to materialize.

Speaker Change: Starting between three to four new developments this year with the suburban development in the Charleston, South Carolina market.

Speaker Change: On track to start construction during the second quarter based on our expected starts and completions for the year our development pipeline should remain in the <unk>.

Brad Hill: Part of our ongoing recycling efforts to improve the earnings quality of our portfolio. During the first quarter of 'twenty five we exited Columbia South Carolina with.

Speaker Change: <unk> to $1 $2 billion range at a very comfortable level, given our scale and balance sheet strength.

Speaker Change: We are focused on acquiring properties, where we can utilize our various platform capabilities to generate attractive long term returns for capital.

Brad Hill: With the sale of two properties with an average age of 32 years.

Brad Hill: It went under contract in 2024, we expect continued recycling efforts to occur later this year.

Speaker Change: With the transaction market pretty slow and will likely be in the back half of the year before we see more compelling opportunities begin to materialize as.

Brad Hill: With a 30 year performance record focused on high growth markets and an average executive team member 10 year of 16 years, we have operated through prior cycles of high supply and uncertainty.

Speaker Change: As part of our ongoing recycling efforts to improve the earnings quality of our portfolio.

Turning first to the first quarter of 'twenty, five we exited Columbia, South Carolina with the sale of two properties with an average age of 32 years. They went under contract in 2024, we expect continued recycling efforts to occur later this year.

Brad Hill: I remain optimistic about the approaching recovery cycle, and our market's ability to absorb the new supply today are more diversified and higher quality portfolio stronger operating platform and stronger balance sheet position us to compete at an even higher level, our high growth markets continue to see stronger job growth household formation and.

Speaker Change: With a 30 year performance record focused on high growth markets and an average executive team member tenure of 16 years, we have operated through prior cycles of high supply and uncertainty.

Brad Hill: <unk> demand.

Brad Hill: Through our internal and external investments, we have meaningful future value growth on the horizon as new supply deliveries decline in leasing conditions strengthen we remain excited about the outlook over the next few years.

Speaker Change: I remain optimistic about the approaching recovery cycle in our markets ability to absorb the new supply today are more diversified and higher quality portfolio stronger operating platform and stronger balance sheet.

Brad Hill: To all our associates at the properties and our corporate and regional offices. Thank you for your hard work and dedication in preparation for the busy leasing season, your commitment and dedication to our residents and fellow associates are greatly appreciated with that I'll turn the call over to Tim.

Speaker Change: Position us to compete at an even higher level, our high growth markets continue to see stronger job growth household formation and investor demand.

Speaker Change: Through our internal and external investments, we have meaningful future value growth on the horizon as new supply deliveries decline in leasing conditions strengthen we remain excited about the outlook over the next few years.

Tim Argo: Thank you Brad and good morning, everyone.

Tim Argo: Following up on Brad's comments, we are encouraged by the first quarter operating trends with blended pricing occupancy and collections all slightly outperforming our expectations.

Speaker Change: To all our associates at the properties and our corporate and regional offices. Thank you for your hard work and dedication in preparation for the busy leasing season, your commitment and dedication to our residents and fellow associates are greatly appreciated with that I'll turn the call over to Tim.

Tim Argo: We entered 2025 and with market occupancy and exposure in a strong position that helped drive a steady increase in pricing, particularly on our new leases.

Tim Argo: Acceleration in new lease over lease pricing growth was greater than what we've seen on average historically, increasing 180 basis points sequentially from the fourth quarter of 2024.

Tim Argo: Thank you Brad and good morning, everyone.

Tim Argo: Following up on Brad's comments, we are encouraged by the first quarter operating trends with blended pricing occupancy and collections all slightly outperforming our expectations.

Tim Argo: The resulting new lease pricing on a lease over lease basis for the first quarter was negative six 3%.

Tim Argo: We entered 2025 and as market occupancy and exposure in a strong position that helped drive a steady increase in pricing, particularly on our new leases.

Tim Argo: Additionally, renewal rates for the quarter showed strength growing four 5% on a lease over lease basis, which was a 30 basis point increase sequentially over the fourth quarter.

Tim Argo: Acceleration in new lease over lease pricing growth was greater than what we've seen on average historically.

Tim Argo: The resulting lease over lease pricing on a blended basis was negative <unk>, 5%, which represented 160 basis point improvement sequentially from the fourth quarter of 2024.

180 basis points sequentially from the fourth quarter of 2024.

Tim Argo: The resulting new lease pricing on a lease over lease basis from the first quarter was negative six 3%. Additionally.

Tim Argo: Average physical occupancy was 95, 6% up 30 basis points as compared to the same period in 2024 <unk>.

Tim Argo: Additionally, renewal rates for the quarter showed strength growing four 5% on a lease over lease basis, which was a 30 basis point increase sequentially over the fourth quarter the.

Tim Argo: Collections continue to outperform expectations with net delinquency, representing just <unk>, 3% of billed rents. These factors combined drove the resulting same store revenue growth of <unk>, 1% for the quarter.

Tim Argo: The resulting lease over lease pricing on a blended basis was negative <unk>, 5%, which represented 160 basis point improvement sequentially from the fourth quarter of 2024.

Tim Argo: Many of the markets that were outperformers in 2024 from a blended lease over lease pricing standpoint continues to do well in the first quarter of 2025, including several of our mid tier markets.

Tim Argo: Average physical occupancy was 95, 6%.

Tim Argo: 30 basis points as compared to the same period in 2024 collections continued to outperform expectations with net delinquency, representing just <unk>, 3% of billed rents. These factors combined drove the resulting same store revenue growth <unk>, 1% for the quarter.

Tim Argo: Virginia stands out with Richmond, and Norfolk, Fredericksburg in our four northern Virginia properties, all exceeding the portfolio average Charleston, Savannah, and Greenville also demonstrated strong pricing power.

Tim Argo: Many of the markets that were outperformers in 2024 from a blended lease over lease pricing standpoint continue to do well in the first quarter of 2025, including several of our mid tier markets.

Tim Argo: Of our larger markets Tampa continue to show pricing recovery Houston held steady and encouragingly, we saw significantly improved performance from Atlanta, particularly as compared to market conditions. There in the first quarter of 2024.

Tim Argo: <unk> stands out with Richmond, Norfolk, Fredericksburg in our four northern Virginia properties, all exceeding the portfolio average Charleston, Savannah, and Greenville also demonstrated strong pricing power of our <unk>.

Tim Argo: Austin remains the laggard as it continues to face significant supply pressure with Phoenix, and Nashville, continuing to struggle with lingering supply concerns also.

Tim Argo: Larger markets Tampa continue to show pricing recovery, Houston held steady and encouragingly, we saw significantly improved performance from Atlanta, particularly as compared to market conditions. There in the first quarter 2024.

Tim Argo: Touching on our lease up portfolio, we had one property in a optimists part reached stabilization in the quarter are set and the remaining lease up properties are competing well against the record new supply being delivered in our markets and ended the quarter with a combined occupancy of 71, 6%.

Tim Argo: <unk> remains the laggard as it continues to face significant supply pressure with Phoenix, and Nashville, continuing to struggle with lingering supply and concerns also.

Tim Argo: We pushed the expected stabilization date back in one quarter for MAA Boggy Creek in Orlando and expect six months out and lease up properties to stabilize in 2025.

Tim Argo: Touching on our lease up portfolio, we had one property Nia optimists part reached stabilization in the quarter are set and the remaining lease up properties are competing well against the record new supply being delivered in our markets and ended the quarter with a combined occupancy of 71, 6%.

Tim Argo: Rents for the group continued to exceed our pro forma expectations and should result in significant value creation for this portfolio.

Tim Argo: We continue to execute on our various redevelopment and repositioning initiatives in the first quarter and we expect to accelerate these programs over the course of 2025 and enter 2026 for the first quarter of 2025, we completed 1100 into interior unit upgrades.

Tim Argo: We pushed the expected stabilization date back in one quarter for MAA Boggy Creek in Orlando and expect six months out and lease up properties to stabilize in 2025 reps.

Tim Argo: <unk> for the group continued to exceed our pro forma expectations and should result in significant value creation for this portfolio.

Tim Argo: Achieving rent increases of $90 above non upgraded units and a cash on cash return of just under 18% <unk>.

Tim Argo: We continue to execute on our various redevelopment and repositioning initiatives in the first quarter and we expect to accelerate these programs over the course of 2025 and enter 2026 for the first quarter of 2025, we completed 1102 interior unit upgrades.

Tim Argo: Despite this more competitive supply environment. These units were making an average of nine days less than non renovated units when adjusted for the additional turn time.

Tim Argo: We expect to renovate even more units in Q2 and Q3 with a goal to renovate approximately 6000 units in 2025 with an even larger increase expected in 2026.

Tim Argo: Achieving rate increases of $90 above non upgraded units and a cash on cash return of just under 18% <unk>.

Tim Argo: Our repositioning program, we have effectively completed the repricing phase on all the legacy 2023, 2024 projects with NOI yields approaching 10%.

Tim Argo: Despite this more competitive supply environment. These units were making on average nine days less than non renovated units when adjusted for the additional turn time.

Tim Argo: I have an additional six projects, finishing up construction that will begin the repricing phase between now and July and what we believe will be a strengthening leasing environment.

Tim Argo: We expect to renovate even more units in Q2 and Q3 with the goal to renovate approximately 6000 units in 2025 with an even larger increase expected in 2020.

Tim Argo: We're also now live on the for property wide Wi Fi retrofit projects, we began in 2024.

Tim Argo: For our repositioning program, we have effectively completed the repricing phase on all the legacy 2023, 2024 projects with NOI yields approaching 10%.

Tim Argo: Currently in the planning or construction phase for an additional 23 projects that we targeted for 2025.

Tim Argo: As we closed out April we continue to see encouraging trends that are aligned with our guidance new lease in blended pricing in April improved as compared to both March and the full first quarter with average daily occupancy for the month of 95, 5%. Our 60 day exposure for April was eight 4% 20 basis points lower than this time last year.

Tim Argo: We have an additional six projects, finishing up construction that will began the repricing phase between now and July and what we believe will be a strengthening leasing environment.

Tim Argo: We are also now live on the <unk> property wide Wi Fi retrofit projects. We began in 2024 and are currently in the planning or construction phase for an additional 23 projects that we targeted for 2025.

Keeps us in a position for stable occupancy to allow for pricing power.

Tim Argo: As we closed out April we continue to see encouraging trends that are aligned with our guidance new lease in blended pricing in April improved as compared to both March and the first quarter with average daily occupancy for the month of 95, 5%. Our 60 day exposure for April was eight 4% and 20 basis points lower than this time last year.

Tim Argo: The strong demand we've seen today remains intact.

Tim Argo: On the demand side absorption in our markets in the first quarter was at a record level and represented the third straight quarter units absorbed exceeded units delivered putting our market is in a good position to achieve a robust recovery as supply continues to decline.

Tim Argo: This really the percentage of our residents' excepting renewal offers exceeded last year's record level with lease over lease growth rates on renewals, except for May and June and outpacing our strong year to date renewal growth rates.

Tim Argo: Keeps us in a position for stable occupancy to allow for pricing power, assuming the strong demand we've seen today remains intact.

Tim Argo: On the demand side absorption in our markets in the first quarter was at a record level and represented a third straight quarter units absorbed exceeded units delivered putting our market is in a good position to achieve a robust recovery as supply continues to decline. Additionally.

Tim Argo: Lower turnover as another mitigating factor against supply pressure with fewer units coming to market improve.

Tim Argo: Improving new lease rates should further help support continued strong renewal performance throughout the spring and summer leasing season, that's all the way I haven't prepared comments and now I'll turn the call over to clay.

Tim Argo: Additionally, the percentage of our residents' excepting renewal offers exceeded last year's record level with lease over lease growth rates on renewals and access it for May and June outpacing our strong year to date renewal growth rates.

Clay Holder: Thank you, Tim and good morning, everyone.

Clay Holder: We reported core <unk> for the quarter of $2.20 per diluted share, which was four cents per share above the midpoint of our first quarter guidance.

Tim Argo: Slower turnover is another mitigating factor against supply pressure with fewer units coming to market in.

Clay Holder: About two of the assets of the favorability was due to same store NOI performance with an additional two and a half since due to favorable timing of overhead and interest expenses, partially offset by one set of non same store NOI performance.

Tim Argo: Improving new lease rates should further help support continued strong renewal performance throughout the spring and summer leasing seasons.

Clay: That's all the way to have in prepared comments now ill turn the call over to clay.

Clay: Thank you Tim and good morning, everyone, we reported fourth or third quarter of $2 20 per diluted share, which was <unk> <unk> per share above the midpoint of our first quarter guidance.

Clay Holder: In addition to our same store revenue performance slightly exceeding our expectations real estate tax expense was favorable in the quarter due to the timing of tax litigation settlements that were initially projected to be completed in the second quarter.

Speaker Change: About two five assets of the favorability was due to same store NOI performance with an additional two assets due to favorable timing of overhead and interest expenses, partially offset by one set of non same store NOI performance.

Clay Holder: Personnel costs repair and maintenance expenses and marketing costs were all generally in line with our expectations.

Clay Holder: During the quarter, we funded approximately $67 million in development cost of the current $852 million pipeline, they've been an expected $305 million to be funded on our current pipeline over the next two to three years.

Speaker Change: In addition to our same store revenue performance slightly exceeding our expectations real estate tax expense was favorable in the quarter due to the timing of tax litigation settlements that were initially projected to be completed in the second quarter.

Speaker Change: We also invested approximately $17 billion of capital in the first quarter through our redevelopment repositioning and Wi Fi retrofit initiatives that Tim spoke of earlier.

Speaker Change: Personnel costs repair and maintenance expenses and marketing costs were all generally in line with our expectations.

Speaker Change: During the quarter, we funded approximately $67 million in development cost of the current $852 million pipeline, leaving any unexpected $305 million to be slightly on our current pipeline over the next two to three years.

Speaker Change: Our balance sheet remains strong with $1 billion in combined cash and borrowing capacity under our revolving credit facility and our low debt net a low net debt to EBITDA at four times, our balance sheet is well positioned to take advantage of opportunities should they emerge.

Speaker Change: We also invested approximately $17 million of capital in the first quarter through our redevelopment repositioning and Wi Fi retrofit initiatives that Tom spoke of earlier.

Speaker Change: At quarter end, our outstanding debt was approximately 94% fixed with an average maturity of seven years and an effective rate of three 8%.

Speaker Change: Our balance sheet remains strong with $1 billion in combined cash and borrowing capacity under our revolving credit facility and our low debt net Carlo net debt to EBITDA at four times, our balance sheet is well positioned to take advantage of opportunities should they emerge at.

Speaker Change: Finally with much of the leasing season still ahead of us coupled with the uncertain macroeconomic environment, we are maintaining our core <unk> and same store guidance for the year.

Speaker Change: As outlined in our release, we expect cost for the second quarter of 2025 to be in the range of $2 a box at $2.21 per diluted share of $2.13 per share at the midpoint.

Speaker Change: At quarter end, our outstanding debt was approximately 94% fixed with an average maturity of seven years at an effective rate of three 8%.

Speaker Change: This midpoint includes the timing impact of the real estate tax litigation settlement previously discussed along with the typical seasonality of leasing and maintenance related operating expenses.

Speaker Change: Finally with much of the leasing season still ahead of us coupled with the uncertain macroeconomic environment, we are maintaining our core.

Speaker Change: And same store guidance for the year.

Speaker Change: As outlined in our release, we expect core assets over the second quarter of 2025 to be in the range of $2. It Bob.

Virgina: That is all that we have in the way of prepared comments. So virgina, we will now turn the call back to you for questions.

Speaker Change: We will now open the call up for questions if you'd like to ask a question. Please press Star then one on your telephone if you'd like to withdraw your question press the star one a second time.

Speaker Change: 21 per diluted share or $2 13 per share at the midpoint.

Speaker Change: This midpoint includes the timing impact of the real estate tax litigation settlement previously discussed along with the typical seasonality of leasing and maintenance related operating expenses.

Virgina: Interest that time the company has requested a two question limit.

Speaker Change: Our first question will come from the line of Eric Wolfe with Citigroup. Please go ahead.

Virginia: That is all that we have in the way of prepared comments. So virgina, we will now turn the call back to you for questions.

Hey, thanks.

Speaker Change: So right now I guess you know we're at the beginning of May I assume most people probably sign a new lease about a months before they move in but correct me if I'm wrong on that so is it just fair to say that you have a pretty good idea of where new lease spreads will be in late may or early June or do you still not have visibility into that yet.

Virginia: We will now open the call up for questions if you'd like to ask a question. Please press Star then one on your telephone if you'd like to withdraw your question Press Star one a second time.

Virginia: Interest to join the company has requested a two question limit.

Speaker Change: Our first question will come from the line of Eric Wolfe with Citigroup. Please go ahead.

Tim Argo: Barry This is Tim we do have pretty good visibility obviously, the renewal side, we have really good visibility with 60 day notice required there and to your point on the new lease side I mean, it varies you get you do get a lot of people that are looking to move than more immediately in that zero to seven day range, but we've we put.

Eric Wolfe: Hey, thanks so.

Virginia: So right now I guess.

Virginia: The beginning of May I assume most people probably sign a new lease spread of months before they move in but correct me if I'm wrong on that.

Is it just fair to say that you have a pretty good idea of where new lease spreads will be in late may or early June or do you still not have visibility into that yet.

Speaker Change: A little bit.

Speaker Change: Extra focus on pre leasing that has pushed that out a little bit. So we probably have you know a little more color or a little more visibility. This year than we did this time last year. So yeah. We've got a fair amount of visibility certainly April new leases. We know there's I would say, we'd probably have a good handle on call it half of the new lease.

Virginia: Barry This is Tim we do that pretty good visibility obviously, the renewal side, we have really good visibility with 60 day notice required there and to your point on the new lease side I mean, it varies you get you do get a lot of people that are looking to move than more immediately in that zero to seven day range that we put.

Speaker Change: And then probably 25% or so of the general leases.

Virginia: A little bit.

Virginia: Extra focus on pre leasing that has pushed that out a little bit. So we probably have a little more color a little more visibility this year than we did this time last year. So yes, we've got a fair amount of visibility certainly April new leases, we know that as I.

Speaker Change: Yeah, Yeah, and I asked the question, mainly because if you kind of look at the first quarter and it's tracking pretty similarly to what you saw.

Speaker Change: Last year, and so I think what people are trying to figure out is as you know are you seeing anything in the recent data whether that's April may June but gives you more confidence in this inflection in rent growth that the companies are predicting because so far the results have been you know.

Virginia: I'd say, we probably have a good handle on it.

Virginia: Half of the new leases and probably 25% or so of January leases.

Virginia: Got it and I ask the question, mainly because if you kind of look at the first quarter, it's tracking pretty similarly to what you saw last year and so I think what people are trying to figure out is it.

Speaker Change: Like last year, so what kind of gives you the constant competence based on recent activity that youre going to see that inflection.

Speaker Change: Yeah, I mean, we're we're continuing to see you know like I said, particularly when we looked at our pre leasing activity, we're continuing to see those new lease rates accelerate and so if you look at kind of where we are December through to April we were almost negative 9% on new leases in December and went up to 90, 446% in April.

Virginia: Are you seeing anything in the recent data whether that's April may June but gives you more confidence.

Virginia: And this inflection in rent growth that companies are predicting because so far the result has been a.

Virginia: A bit like last year, so what kind of gives you the constant competence based on recent activity that youre going to see that inflection.

Speaker Change: We saw a continued steady acceleration I would expect that to continue into Q2, and then typically Q3.

Virginia: Yes, I mean, we're continuing to see like I said, particularly when we look at our pre leasing activity, we're continuing to see those new lease rates accelerate and so if you look at kind of where we are in December through to April we were almost negative 9% on new leases in December and then a negative $4 four 6% in April.

Speaker Change: Continues to accelerate a little from there obviously dependent on how the economic environment plays out but from what we're saying right now we feel pretty good where we are.

Speaker Change: Our next question comes from the line of Nick <unk> with Scotiabank. Please go ahead.

Virginia: Solid continued steady acceleration I would expect that to continue into Q2, and then typically Q3.

Speaker Change: Hey, good morning, its standards of care go on with Nick maybe a follow up on Erik's question on the maybe the confidence level of the bonds now how should we think about the comp period related to concessions and the burn off impact.

Virginia: Continues to accelerate a little from there obviously dependent on how the economic environment plays out but from what we're seeing right now we feel pretty good where we are.

Speaker Change: As we get into the second and third quarters.

Speaker Change: Well I mean, certainly all the you know when you hear us quote lease over lease rates at that is that is net of concessions and cleans out sort of spreading those concessions out I'm sorry, you know there's nothing specifically there, but you know I would say whether you want to call. It you know easier.

Speaker Change: Our next question comes from the line of Nick <unk> with Scotiabank. Please go ahead.

Speaker Change: Hey, good morning, its downturn go on with Nick maybe to follow up on Erik's question on the maybe the confidence level of the blends how should we think about the comp period related to concessions and the burn off impact.

Speaker Change: And easier comps or however, you want to think about that that is that it is playing a part in this we saw you know a struggle with new lease rates for most of 2024.

Speaker Change: As we get into the second and third quarters.

Well I mean, certainly when you hear us quote lease over lease rates at that is that is net of concessions and claims are sort of spreading those concessions out.

Speaker Change: And continued into the lower rates continuing into early 2025, so there's no need to combine the normal seasonality combined with declining supply pressure and frankly, a little bit easier comps that that helps gives us confidence in where we're sitting today.

Speaker Change: There's nothing specifically there but.

Speaker Change: I would say, whether you want to call it easier comps or however, you want to think about that that is that it is playing a part in there as we saw.

Speaker Change: Great. Thanks, and then a follow up on development.

Speaker Change: Our struggle with new lease rates for most of 2024.

Speaker Change: Is there a potential to extend lease up expectations at any of the other development properties and how should we think about the supply impact potentially being stretched out into 2026 and some of these markets that are still working through that pipeline.

Speaker Change: And continued in the lower rates continuing into early 2025. So there is combined of normal seasonality combined declining supply pressure and frankly, a little bit easier comps that helps gives us confidence in where we're sitting today.

Speaker Change: So I mean I think in terms of this is Brad in terms of development. In particular, you know I mean, we feel good about the dates that we that we have in terms of lease up performance in our packet I mean for US one of the important things is we want to be able to protect the revenue performance of those properties and the.

Speaker Change: Great. Thanks, and then a follow up on development.

Speaker Change: Is there a potential to extend lease up expectations at any of the other development properties and how should we think about the the supply impact potentially being stretched out into 2026 and some of these markets that are still working through that pipeline.

Speaker Change: Our rent performance of those properties and given.

Speaker Change: Certainly our focus there will be a little bit more patient on the lease up performance and so in.

Brad Hill: Yes, I mean I think in terms of this is Brad in terms of development in particular.

Speaker Change: Still good about the dates that we that we have.

Speaker Change: In our packet we we have a couple of our lease ups that have leased up a little bit slower than what we expected.

Brad Hill: In terms of lease up performance in our packet.

Brad Hill: For us one of the important things is we want to be able to protect the other revenue or performance of those properties and the performance of those properties and given.

Speaker Change: But the good news is that the rents that we're getting from those properties continue to outperform.

Speaker Change: Our expectations are the yield expectations again outperformed what our expectations are so we continue to believe that.

Brad Hill: Certainly our focus there will be a little bit more patient on the lease up performance and so.

The lease up focus that we have will continue to perform in line with our expectations and they're outperforming on the rent side. So we feel really good about the lease ups that we have at this point.

Brad Hill: In our packet we have a couple of our lease ups.

Brad Hill: <unk> leased up a little bit slower than what we expected.

Brad Hill: The good news is the rents that we're getting from those properties continue to outperform.

Cooper Clark: Our next question comes from the line of Cooper Clark with Wells Fargo. Please go ahead.

Brad Hill: Our expectations for the yield expectations again outperformed what our expectations are so we continue to believe that the.

Cooper Clark: Hi, Thanks for taking the question could you talk about the cost side of development and how much is more or less locked in when you begin construction and then also if you could touch on the same thing for the redevelopment pipeline as well.

Brad Hill: The lease up focus that we have will continue to perform in line with our expectations and they're outperforming on the rent side. So we feel really good about the lease ups that we have at this point.

Cooper Clark: Okay.

Brad Hill: Yeah. This is Brad I'll hit on development, Tim can talk about redevelopment nor.

Cooper Clark: Our next question comes from the line of Cooper Clark with Wells Fargo. Please go ahead.

Tim Argo: Normally when we could see it depends on if the development is an in house development versus a pre purchase development in our pre purchase pipeline.

Cooper Clark: Hi, Thanks for taking the question can you talk about the cost side of development and how much is more or less locked in when you begin construction and then also if you could touch on the same thing for the redevelopment pipeline as well.

Brad Hill: Our development partners, giving us a construction cost guarantee so so effectively the costs are locked in when we go to agreement.

Tim Argo: So so we shouldn't face any pressure associated with those pre purchase developments that we have.

Cooper Clark: Yes. This is Brad I'll hit on development, Tim can talk about redevelopment.

Cooper Clark: Normally when we it depends on the development and in house development versus a pre purchase development in our pre purchase pipeline.

Tim Argo: Ongoing for our in house development normally those are call it 95% or so locked in when we go under construction to buyout from the G. CS are normally done pretty quickly from when we start start construction on the projects. So those are generally locked in as well.

Cooper Clark: Our development partners, giving us a construction cost guarantee so so effectively the costs are locked in when we go to agreement.

Cooper Clark: So so.

Cooper Clark: We shouldn't face any pressure associated with those pre purchase developments that we have.

Tim Argo: So we're not seeing any impact to construction cost for in place developments to date and for new developments that we're looking at you know, we're really not seeing any.

Cooper Clark: Ongoing for our in house development normally those are call it 95% or so.

Cooper Clark: Locked in when we go under construction the buyout from the Gcs are normally done pretty quickly from when we start start construction on the projects. So those are generally locked in as well.

Tim Argo: Impact to date of <unk>.

Tim Argo: Potential impacts from tariffs or.

Tim Argo: The immigration changes and the impact that could have on the labor side in fact, what we're what we're hearing from some of our contractors is given the reduction in the new starts and the supply pipeline that we are we're getting better pricing at the moment from many of our G CS and development partners.

Cooper Clark: We're not seeing any impact to construction cost for in place developments to date and for new developments that we're looking at we're really not seeing any.

Cooper Clark: Impact to date.

Cooper Clark: Potential impacts from tariffs or.

Tim Argo: Margins are tightening up a bit and they're getting a little bit hungrier for new starts so were seeing that at the moment on the new development side.

Cooper Clark: Yes.

Cooper Clark: The immigration changes and the impact that could have on the labor side in fact, what we're what we're hearing from some of our contractors is given the reduction in the new starts and the supply pipeline that we are we're getting better pricing at the moment from many of our Gcs and development partners margins are tightening.

Tim Argo: Yeah, and I'll touch on the on the redevelopment and no no pressure, we're seeing so far and I don't really expect any this year on that component for one appliances make up about 25% of our cost in terms of our overall redevelopment and we have locked in pricing on those through about this.

Cooper Clark: Up a bit and they are getting a little bit hungrier for new starts so were seeing that at the moment on the new development side Tim.

Tim Argo: Time next year, and then we have several sources and availability on countertops and other things. So we've pretty much source you know we know how many units we're going to do and we have a plan for those units in and have a lot of that already here in place. If you will so yeah. This is Terry.

Tim Argo: Yeah, and I'll touch on the on the redevelopment and no no pressure, we're seeing so far and I don't really expect any this year on that component for one appliances make up about 25% of our cost in terms of our overall unit redevelopment and we have locked in pricing on that is through about this time net.

Tim Argo: Of concerns or others played on front for awhile it could start to impact us this year into 2026, but not seen any pressure right now.

Tim Argo: Each year and then we have several sources and availability on countertops and other things.

Tim Argo: Great. Thanks, and then if you could also just touch on urban versus suburban performance in some of your key markets and if it's fair to say that there's more upside to urban here over the next few years as supply normalizes, just given the higher density.

Tim Argo: We pretty much sourcing and we know how many units we're going to do and we have a plan for those units and have a lot of that already here.

Tim Argo: In place if you will so yes, if tariff concerns or others played on for a while it can it start to impact US late this year into 2020, but not seeing any pressure right now.

Tim Argo: Yeah, I mean on David to answer the second part of your question I think it was probably a little more upside potential on the more urban assets, primarily because they they tended to get more of the supply over these last couple of years I think you know as that supply die down it probably helps out back that group in general.

Speaker Change: Great. Thanks, and then if you could also just touch on urban versus suburban performance in some of your key markets and if it's fair to say that there's more upside to urban here over the next few years as supply normalizes, just given the higher density.

Tim Argo: A little more but we've seen you know in our portfolio, we've seen the performance between urban and suburban pretty much converge. There was very minor differences now and what we're seeing with with occupancy or pricing. The the suburban had been outperforming probably for the last couple of years relatively significantly.

Speaker Change: Yes, David to answer the second part of your question I would say, it's probably a little more upside potential on the more urban assets, primarily because they have tended to get more of the supply over these last couple of years. So I think as that supply does.

Speaker Change: It probably helps out back that group in general a little more.

Tim Argo: That gap has narrowed as a supply pressures starting to wane a little bit. It's obviously market by market Atlanta is one where we're still stand.

Speaker Change: But we have seen in our portfolio, we've seen the performance between urban and suburban pretty much converge. There is very minor differences now and what we're seeing with with occupancy or pricing.

Tim Argo: Better performance outside the perimeter, if you will as compared to inside or Midtown buckhead areas, but but generally we're seeing that performance start to converge.

Speaker Change: Suburban had been outperforming probably for the last couple of years relatively significantly and that gap has narrowed as supply pressure is starting to weigh in a little bit. It's obviously market by market Atlanta is one where we're still stand.

Speaker Change: Our next question comes from the line of Jana Galan with Bank of America. Please go ahead.

Speaker Change: Thank you good morning.

Speaker Change: Maybe if you could talk a little bit more about that improvement that you're seeing in Atlanta from the market data, it's still pretty weak, but that's very encouraging that your portfolio has seen a turnaround.

Speaker Change: Better performance outside of the perimeter, if you will as compared to inside our Midtown buckhead areas, but generally we're seeing that performance start to converge.

Speaker Change: Yeah, I would say you know Atlanta, certainly on a relative basis, it's not I'm I'm not counting it as one of our top markets right now certainly in terms of performance, but relative to where it was for most of 2024 and it is starting to show some improvement you know our new lease pricing.

Speaker Change: Our next question comes from the line of Jana Galan with Bank of America. Please go ahead.

Jana Galan: Thank you good morning.

Speaker Change: Maybe if you could talk a little bit more about that improvement that youre seeing in Atlanta from the market data, it's still pretty weak, but that's very encouraging that your portfolio is seeing a turnaround.

Speaker Change: And in Atlanta is the best it's been since going back to commence in early 2023, and we've seen a little bit of occupancy recovery as well and we're about 120 basis points or so better in terms of occupancy than we were this time last year. So it's it's certainly a relative store income parents.

Jana Galan: Yes, I would say Atlanta.

Jana Galan: Atlanta is certainly on a relative basis, it's not I'm not counting it as one of our top markets right now certainly in terms of performance, but relative to where it was for most of 2024. It is starting to show some improvement at our new lease pricing.

Speaker Change: You look at it compared to the broader problem and it still.

Jana Galan: Atlanta is the best it's been since going back to commence in early 2023, and we've seen a little bit of occupancy recovery as well and we're about 120 basis points or so better in terms of occupancy than we were this time last year. So that's it.

Speaker Change: Lags our portfolio a little bit, but it's it's much improved from where it was this time last year.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Adam Kramer with Morgan Stanley. Please go ahead.

Jana Galan: Certainly a relative story in comparison.

Adam Kramer: Hey, Thanks for the time guys I'm, just wondering about that kind of level of concessions in your markets today, maybe just high level.

Jana Galan: Yeah.

Look at it compared to the broader problematic still.

Jana Galan: Lags our portfolio a little bit, but it's much improved from where it was this time last year.

Speaker Change: And then you know how does that compare to <unk>.

Speaker Change: Whether it's early in the year, when you know seasonally slower period or even a year ago maybe.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Adam Kramer with Morgan Stanley. Please go ahead.

Speaker Change: I'm, just just again level of concessions today, maybe versus a year ago.

Speaker Change: Yeah, let's see yeah.

Adam Kramer: Hey, Thanks for the time guys.

Speaker Change: We've seen concessions broadly be relatively consistent the last couple of quarters.

Adam Kramer: I'm wondering about the kind of level of concessions in your markets today, maybe just high level.

Speaker Change: All the way down a little bit from where it was this time last year I would say you know the portfolio Broadway or markets broadly anywhere from a half month to a month.

Adam Kramer: And then how does that compare to whether it's early in the year when.

Adam Kramer: Even with slower period, or even a year ago maybe.

Just again level of concessions today, maybe versus a year ago.

Speaker Change: It is pretty consistent there are pockets, obviously it works a little bit higher there's you know lease ups, probably more in that month and a half to two month range, but but broadly we're seeing kind of half a month two months be pretty consistent in most markets, it's a little bit lower from from where it was this time last year pretty concerned.

Adam Kramer: Yes.

Adam Kramer: And we've seen concessions broadly be relatively consistent for the last couple of quarters, and probably down a little bit from where it was this time last year I would say.

Adam Kramer: The portfolio of Broadway or markets broadly anywhere from a half months two months is pretty consistent there are pockets, obviously, where it's a little bit higher than theirs.

Speaker Change: So with where it was in Q4 of 2024.

Speaker Change: Great.

Speaker Change: Just.

Adam Kramer: Probably more in that month, and a half to two months range, but but broadly we're seeing kind of half a month two months be pretty consistent in most markets. It's a little bit lower from where it was this time last year pretty consistent with where it was in Q4 of 2024.

Speaker Change: On the capital allocation and cost of capital here.

Speaker Change: Talks to a little bit better than some of the peers year to date, just wondering how you kind of view.

Speaker Change: The cost of capital your debt cost of capital I guess, even disposition cost of capital you don't know when it comes to kind of funding. These developments funding other other sources or other uses rather how do you kind of assess the bulk of the cost of capital the capital allocation priorities here.

Adam Kramer: Great and then just.

Adam Kramer: And then kind of capital allocation and cost of capital here.

Brad Hill: Yes. This is Brad.

Adam Kramer: Stocks are a little bit better than some of the peers year to date, just wondering how you kind of view your equity cost of capital your debt cost of capital I guess, Stephen disposition cost of capital.

Speaker Change: Adam.

Speaker Change: I think given where.

Speaker Change: Where we are in terms of as clay mentioned and given where our current leverage is at four times I mean, we view or kind of an incremental dollar at this point.

Adam Kramer: And when it comes to kind of funding new development funding other other sources.

Speaker Change: The best place to pull that from is generally through.

Adam Kramer: Other uses rather how do you kind of assess the bulk of the cost of capital in our capital allocation priorities here.

Speaker Change: Through debt and so you know really at this point given that leverage level, we could.

Brad Adams: Yes. This is Brad Adams and I think given.

Speaker Change: Grow our debt by 1 billion billion, and a half or so and still be okay.

Brad Adams: Where we are in terms of as clay mentioned and given where are our current leverage is at four times I mean, we view or kind of an incremental dollar at this point.

Speaker Change: Within the ranges of kind of where we think our credit metrics need to be so.

Speaker Change: We think that that's the best use of our capital at this point and you'll see us continue to fund.

Brad Adams: The best place to pull that from is generally through.

Brad Adams: Through debt and so really at this point given that leverage level, we could.

Speaker Change: Through debt anything incremental and certainly as we as we continue to sell properties. This year.

Brad Adams: Grow our debt by 1 billion billion, a half or so and still be okay.

Speaker Change: We did in the first quarter, we will continue to sell some properties. Later this year that'll also be a source of capital for for external growth.

Brad Adams: Within the range is kind of where we think our credit metrics need to be so.

Brad Adams: Yes, we think that that's the best use of our capital at this point and Youll see us continue to fund.

Speaker Change: [laughter] uses as well so that that's where it will come from.

Speaker Change: Our next question comes from the line of Michael Goldsmith with UBS. Please go ahead.

Brad Adams: Through debt anything incremental and certainly as we as we continue to sell properties this year as.

Michael Goldsmith: Good morning, Thanks, a lot for taking my questions.

Brad Adams: As we did in the first quarter, we'll continue to sell some properties. Later this year that will also be a source of capital for for our external growth.

Michael Goldsmith: New lease growth was down in December by 9%, you've seen some sequential improvement in.

Michael Goldsmith: April to down four 6% I believe last quarter you spoke to.

Brad Adams: [laughter] uses as well, so that's where it will come from.

Speaker Change: This growth hitting pause at some point. This year. So are you still on track to achieve our base.

Speaker Change: Our next question comes from the line of Michael Goldsmith with UBS. Please go ahead.

Michael Goldsmith: Based on what you've seen so far this year or has the environment changed to the point, where maybe that's not a.

Michael Goldsmith: Good morning, Thanks, a lot for taking my questions.

Speaker Change: No no it is likely this year. Thanks.

Michael Goldsmith: New lease growth was down in December by 9%, you've seen some sequential improvement in equal to down four 6% I believe last quarter, you spoke to new lease growth hitting pause at some point. This year. So are you still on track to achieve this based on what you've seen so far this year or has the environment changed to the point, where maybe that's not.

Speaker Change: I'd say, yeah, we still have an expectation that we could see it go slightly positive you know call. It in the third quarter or so we don't we don't expect it to get significantly positive. We have just to slightly positive and then starting to trend back down as we get into Q4. So yeah. That's.

Michael Goldsmith: No no it is likely this year. Thanks.

Speaker Change: A little more uncertainty right now just given what's what's going on in the economy, but but generally the trends, we're seeing with support that and that's what we're expecting as of right now.

Michael Goldsmith: I would say, yes, we still have an expectation that we could see it go slightly positive call. It in the third quarter or so.

Speaker Change: Got it and then as a follow up.

Michael Goldsmith: We don't expect it to get significantly positive we have.

Speaker Change: Sold out of the Columbia, South Carolina markets.

Michael Goldsmith: Just slightly positive and then starting to trend back down as we get into Q4, so there's probably a little more uncertainty right now just given what's what's going on in the economy.

Speaker Change: Or are there other markets that you can fill out of where you. Maybe you don't have a sufficient scale to kind of really do with what youre looking to do and so.

Michael Goldsmith: But generally the trends, we're seeing with support that and that's what we're expecting as of right now.

Speaker Change: Or are there other markets you could look to sell out of Hell, if you reallocate that those.

Speaker Change: Got it and then as a follow up.

Speaker Change: Proceeds into markets, where you do have scale how.

Michael Goldsmith: Sold out of the Columbia, South Carolina markets.

Speaker Change: How much benefit can that have on expenses over time.

Michael Goldsmith: Are there other markets that you can fill out of where you may be you don't have.

Speaker Change: Closing the markets, where you don't have scale and reinvesting it where you can.

Michael Goldsmith: Sufficient scale to kind of really do what you are looking to do and so.

Brad Hill: Yeah. This is Brad I mean, certainly we will look to continue to drive efficiencies through our portfolio and I do think one way to do that is for us to continue to sell.

Or are there other markets you could look to sell out of them.

Michael Goldsmith: If you reallocate those.

Michael Goldsmith: Proceeds into markets, where you do have scale.

Brad Hill: Some of these markets, where we may have one or two assets and we still have a few of those we've got one in Panama City and we've got one in Gulfport or Gulf shores, We've got two in Las Vegas. So you know.

Michael Goldsmith: How much benefit can that have on expenses over time.

Michael Goldsmith: Closing down markets, where you don't have scale and reinvesting it where you can.

Michael Goldsmith: Yes. This is Brad I mean, certainly we will look to continue to drive efficiencies through our portfolio and I do think one way to do that is for us to continue to sell.

Brad Hill: And in markets, where we only have a couple of assets certainly by selling those we can reallocate the time and energy specifically of our regional folks to other properties to drive efficiencies throughout the portfolio.

Michael Goldsmith: Some of these markets, where we may have one or two assets and we still have a few of those we've got one in Panama City, and we've got one and Gulfport are Gulf shores, We've got two in Las Vegas.

Brad Hill: We will continue to evaluate that every fourth.

Brad Hill: The fourth quarter.

We go through an evaluation process to look at properties that we have in our portfolio and begin to look at those and prioritize what our disposition disposition needs are for the following year. So that'll continue to be a focus of ours, along with looking at properties, where perhaps the growth rate is.

Michael Goldsmith: No.

Michael Goldsmith: In markets, where we only have a couple of assets certainly by selling those we can reallocate the time and energies of specifically of our regional folks to other properties to drive efficiencies throughout the portfolio. So we will continue to evaluate that every.

Brad Hill: Not what we desire from our portfolio or there are the capex needs are growing and it's just not a fit for our portfolio anymore, but that's a very thorough process that we go through every year.

Michael Goldsmith: Fourth quarter.

Michael Goldsmith: We go through an evaluation process to look at properties that we have in our portfolio and begin to look at those and prioritize what our disposition disposition needs are for the following year. So that will continue to be a focus of ours, along with looking at properties, where perhaps the growth rate is.

Speaker Change: Our next question the person Obrien and Julian balloon with Goldman Sachs. Please go ahead.

Speaker Change: Thank you for taking my question.

Speaker Change: You know your markets have tended to be relatively resilient during past recessions, but do you worry a recession. This time around we would potentially be different just given the amount of supply youre still dealing with vacancies still still pretty elevated pricing power as the starting point is it is weaker.

Michael Goldsmith: Not what we desire from our portfolio are the capex needs are growing and it's just not a fit for our portfolio anymore, but that's a very thorough process that we go through every year.

Speaker Change: Our next question comes from O'brien as Julian balloon with Goldman Sachs. Please go ahead.

Speaker Change: So do you think maybe performance this time would be.

Julian Balloon: Thank you for taking my question.

Speaker Change: Worse than in the past.

Julian Balloon: Your markets have tended to be relatively resilient during past recessions, but do you worry a recession. This time around would potentially be different just given the amount of supply youre still dealing with vacancy is still it's still pretty elevated pricing power as a starting point is weaker.

Brad Hill: Well. This is Brad you know as we look at certainly the demand fundamentals in our region of the country No I mean, we would not think that.

Brad Hill: If there were a slowdown in the economy that we would expect any type of different performance in our region of the country than we have experienced historically.

Julian Balloon: So do you think maybe performance this time would be worse than in the past.

Julian Balloon: Yeah.

Brad Hill: Certainly as you mentioned if you go back to.

Brad: Well this is Brad.

Julian Balloon: As we look at.

Brad Hill: The three previous downturns that we've seen whether it's the 2002 or three.

Speaker Change: Certainly the demand fundamentals in our region of the country No I mean, we would not think that.

Brad Hill: The tech bubble in 2009 G. F C are 2020 Covid.

Speaker Change: If there were a slowdown in the economy that we would expect any type of different performance in our region of the country than we have experienced historically.

Brad Hill: The performance of our portfolio significantly exceeded.

Brad Hill: What we saw out of our peers and we have every reason to believe that that that continues and I would say.

Speaker Change: Certainly as you mentioned if you go back to.

Speaker Change: The three previous downturns that we've seen whether it's the 2002 or three tech.

Brad Hill: Certainly when the economy slows we have historically seen our high growth markets hold up better than the national norms as the broad diversification of industries and employers.

Speaker Change: Tech bubble the 2009.

Speaker Change: <unk>, our 2020 Covid.

Speaker Change: The performance of our portfolio significantly exceeded.

Brad Hill: With more affordable employment costs.

Brad Hill: As compared particularly to other regions of the country have tended to drive that resiliency, you just talked about within our markets.

Speaker Change: What we saw out of our peers and we have every reason to believe that that that continues and I would say.

Brad Hill: For us specifically.

Speaker Change: Certainly when the economy slows we have historically seen our high growth markets hold up better than the national norms as the broad diversification of industries and employers coupled with more affordable employment cost.

Brad Hill: Our unique diversification by market and submarket or product types.

Brad Hill: Our price point, and then the diversification between large and mid tier markets.

Brad Hill: <unk> has continued to to provide steadier performance for us and we think that is a component that will will certainly continue and then the other thing that we've seen in the Sun belt.

Speaker Change: As compared particularly to other regions of the country have tended to drive that resiliency you just talked about within our markets and I think for us specifically.

Brad Hill: Kelly over the last five years or so is just the sunbelt job machine continues to to outperform we've seen numerous knowledge based.

Speaker Change: Our unique diversification by market and submarket or product types.

Speaker Change: Our price point, and then the diversification between large and mid tier markets.

Brad Hill: Employment growth come to our region of the country.

Speaker Change: <unk> has continued to.

Brad Hill: And then what we also have seen.

Speaker Change: To provide steadier performance for us and we think that is a component that will will certainly continue and then the other thing that we've seen in the sunbelt.

Brad Hill: That I think is very important as they are.

Brad Hill: The local and municipal governments are stronger than they are in other regions of the country and I think that really supports the pro business. Our view of this region of the country.

Speaker Change: Over the last five years or so is just the sunbelt job machine continues to outperform we've seen numerous knowledge based.

It also supports the ability to add subsidies and incentives to really support the job locations and relocations that we've seen so no we think especially as.

Speaker Change: Employment growth come to our region of the country.

And then what we also have seen that.

Speaker Change: I think is very important is the.

Brad Hill: Potential onshoring continues it picks up speed the sunbelt is in a pretty good position to take advantage of that.

Speaker Change: The local and municipal governments are stronger than they are in other regions of the country and I think that really supports the pro business view of this region of the country.

Brad Hill: The other point I would just make relative to demand certainly job growth is a component of that and is that just laid out we think that continues to perform quite well in our region of the country going forward, but there are other demand drivers in our region of the country that continue to perform pretty well migration trends continue to be positive.

Speaker Change: It also supports the ability to add subsidies and incentives to really support the job locations and relocations that we've seen so no we think especially as.

Speaker Change: Potential onshoring continues it picks up speed the sunbelt in a pretty good position to take advantage of that and then the other point I would just make relative to demand certainly job growth is a component of that and as I. Just laid out we think that continues to perform quite well in our region of the country going forward, but there are other demand driver.

Brad Hill: The single family availability and affordability is a challenge in our region of the country.

Brad Hill: And that's also a challenge that I think is a newer challenge to our region of the country. It's perhaps always existed in some of the coastal markets, but its newer in our region of the country, but I do think that's a phenomenon that's going to drive retention rates up over the long term and today. Our turnover is 41, 5% two years ago. It was it was.

Speaker Change: In our region of the country that continue to perform pretty well migration trends continue to be positive.

Speaker Change: The single family availability and affordability is a challenge in our region of the country.

Brad Hill: 46%, so that 5% reduction as a long term trend that I think will will.

Speaker Change: That's also a challenge that I think is a newer challenge to our region of the country. It's perhaps always existed in some of the coastal markets, but its newer in our region of the country, but I do think thats, a phenomenon thats going to drive retention rates up over the long term and today. Our turnover is 41, 5% two years ago. It was it was.

Brad Hill: Stay low and that Theres significant implications for that so so long term, we think that the sunbelt continues to perform quite well regardless of.

Brad Hill: The economic.

Brad Hill: We view that's out there.

Brad Hill: And then and then do you think that our portfolio in particular for the diversification reasons I mentioned continues to perform well.

Speaker Change: 46%, so that 5% reduction as a long term trend that I think will will.

Speaker Change: Great. Thank you that's all from me.

Speaker Change: Stay low and that Theres significant implications for that so so long term, we think that the sunbelt continues to perform quite well regardless of.

Speaker Change: Our next question comes from the line of John Kim with BMO capital markets. Please go ahead.

Speaker Change: The economic.

John Kim: Good morning.

John Kim: Based on your second quarter, and your full year guidance, you'll need to achieve about a two 5% to 3% increase in episode per share compared to what you'll achieve in the first half of the year I'm wondering how much of that is driven by seasonality in rents and you know what are some of the other factors that would contribute to the ramp up in earnings.

Speaker Change: Few that's out there.

Speaker Change: And then do you think that our portfolio in particular for the diversification reasons I mentioned continues to perform well.

Speaker Change: Great. Thank you that's all for me.

John Kim: Our next question comes from the line of John Kim with BMO capital markets. Please go ahead.

John Kim: Yeah, John I think in addition to some seasonality factors that you pointed out the other the other piece of that that should continue to benefit.

John Kim: Good morning.

John Kim: Based on your second quarter, and your full year guidance, you'll need to achieve about a two 5% to 3% increase in <unk> per share.

John Kim: Over the course of the remainder of the year is our is our lease up properties and as they as they continue to gain for velocity and <unk>.

Speaker Change: Alright, two what you'll achieve in this first half of the year I'm wondering how much of that is driven by seasonality rents and what are some of the other factors that would contribute to the ramp up in earnings.

John Kim: And go back to the points that Brad and Tim mentioned earlier that the pricing power that.

John Kim: Yes.

John Kim: Those properties have continued to show.

John Kim: John I think in addition to some seasonality factors that you pointed out the other the other piece of that that should continue to benefit.

John Kim: Our head of our pro forma so we think that there's nothing.

John Kim: With our pricing and also.

High yield basis. So all of that we think will is really what's going to drive that continued acceleration and performance over the course of the year.

John Kim: Over the course of the remainder of the year as our as our lease up properties and as they as they continue to gain for velocity.

John Kim: And go back to the points that Brad and Jim mentioned earlier that the pricing our debt.

John Kim: Yeah.

John Kim: And you reiterated your outlook to rollout wife signed 23 of your projects. This year can you just remind us what the.

John Kim: Those properties have continued to show.

John Kim: Our head of our pro forma so we think that this.

John Kim: With our pricing and also.

John Kim: Contribution that is to your same store revenue for this year and what's the timing of the completion for the rollout of the remaining of remainder of your portfolio.

John Kim: High yield basis so.

John Kim: All of that we think will is really what's going to drive that continued acceleration and performance over the course of the year.

John Kim: John as Tim said, it's not a huge component. This year. So we have the we have the four that we completed late last year and then the 23 that as I mentioned are under construction now we're down at about between one and one and a half million combined between those 27 projects I guess it is for 2025 is based on.

John Kim: Okay.

John Kim: And you reiterated your outlook too.

Speaker Change: Rollout wife signed 23 of your projects. This year can you just remind us what the.

Speaker Change: The contribution that is to your same store revenues for this year and what's the timing of the completion for the rollout of the remaining of remainder of your portfolio.

John Kim: On the rollout and how those roll out over lease explorations in the timing of the construction those to those 27 in general we expect would contribute close to $6 million once everything gets fully rolled out and so you know we were due.

Speaker Change: John as Tim said, it's not a huge competitive this year. So we have the we have the four that we completed late last year and then the 23 that as I mentioned are under construction now we're down at about between one and one 5 million combined between those 27 projects I guess it is for 2025 just based on.

John Kim: The 23 of this year well what makes sure that sort of go to those plans and we would potentially look to accelerate that even more so in 2020 six but it is going to be a multi year project.

Speaker Change: On the rollout and how those rollout over lease explorations in the timing of the construction.

Speaker Change: To that <unk> 27 in general, we expect would contribute close to $6 million once everything gets fully rolled out.

John Kim: Over the next four five years would be my guess is we continue to accelerate it and ultimately want to roll it out to most if not all of the portfolio.

Speaker Change: So.

John Kim: Yeah.

Speaker Change: Our next question comes from the line of Wes Golladay with Baird. Please go ahead.

Speaker Change: Hey, Yeah. Good morning, everyone can you talk about maybe your markets that are surprising to the upside answer the downside.

Speaker Change: The initial expectations.

Speaker Change: For the next four five years would be my guess is we continue to accelerate it and ultimately look to roll it out to most if not all of the portfolio.

Wes Golladay: Sure Wes this time.

Speaker Change: <unk>.

Wes Golladay: Good ones and I've mentioned several of them on in the prepared comments you know not not any huge surprises there the ones that have been pretty strong for the last 12 months or so it continues to be strong tape is one that I that I highlighted I believe in the last quarter that we could see some some upside in that that is starting to play out so that'd be.

Speaker Change: Hey, good morning, everyone can you talk about maybe your markets that are surprising to the upside answer the downside.

Speaker Change: Versus initial expectations.

Speaker Change: One that I would point to that.

Speaker Change: On the on the up cycle, I mentioned, Atlanta, being an improvement relative to where that one had been in the Jacksonville or another where it's still a laggard in general, but it's showing some some pretty good acceleration and some resilience. Despite some heavy supply there. So that's another one that was in one of our bottom three are.

Speaker Change: Not a huge surprises there the ones that have been pretty strong for the last 12 months or so and continue to be strong tap is one that.

Speaker Change: Highlighted I believe in the last quarter that we can see some some upside and that is starting to play out so that'd be one that I would point to that.

Speaker Change: Four markets last year that that I would expect to show a little bit more strength. There. So that would probably be one that I would put in a little bit up.

Speaker Change: On the up cycle, I mentioned, Atlanta, being an improvement relative to where that wanted then.

Speaker Change: The surprise category and then now really mentioned the ones that are still laggards, Austin Phoenix and Nashville are the three that I would point out there that just continue to work through quite a bit of supply.

Speaker Change: Jacksonville, or another where it's still a laggard in general, but it's showing some some pretty good acceleration in <unk> and brasilia. Despite some heavy supply there. So that's another one that was in one of our.

Speaker Change: Okay, and then for your insurance renewal, that's coming up any change in thought there.

Speaker Change: Bottom three or four markets last year that that I would expect to show a little bit more strength. There. So that's probably the one that I would put in a little bit up the.

Speaker Change: We're still up we're still kind of in the process of working through that.

Speaker Change: Surprise category and then now really mentioned the ones that are still laggards, Austin Phoenix and Nashville are the three that I would point out there that just continue to work through quite a bit of supply.

Speaker Change: Still a little early on we'll have more to say about it whenever we released second quarter earnings, but you know just the initial conversations we've had been had been a positive and it's a lot more more more to come.

Okay, and then for your insurance renewal, that's coming up any change in thought there.

Speaker Change: Our next question comes from Novartis in Dallas and used with Mizuho. Please go ahead.

Speaker Change: We're still up we're still kind of in the process of working through that.

Good morning. This is Mike on with hand out. My question is can you just provide a little more detail on the cadence you're expecting in both your blended spreads throughout the remaining three quarters of the year and your same store right.

Speaker Change: Okay.

Allison: Our next question comes from Nevada, and Allison just with Mizuho. Please go ahead.

Speaker Change: Well as far as the blended trends I mean pretty consistent with what we talked about.

Speaker Change: Last quarter, you know and pretty consistent with what I would say, it's more normal seasonality. So we continue to expect you know for our blended for Q1 was negative <unk> five we continue to expect to see that push for in both Q2 and Q3, and then and then moderating a little bit in Q4, but you know we talked about the trajectory of <unk>.

Allison: Well as far as the blended trends remain pretty consistent with what we talked about.

Speaker Change: These pricing and what we're saying there encouragingly other renewals you know may and June look really strong in and sending out July right now, which we expect to be strong as well. So we think the renewals will continue to have a a bigger part of that index would continue to see the renewal of a separate space.

Speaker Change: Last quarter and pretty consistent with what I would say, it's more normal seasonality. So we continue to expect.

Speaker Change: Stronger than what they were last year and then obviously the rates we're getting there. So I think you have the mix between new leases and renewals, probably a little heavier weighted towards renewals than what we had in right at the beginning of the year, but generally the trend and trajectory is about the same as when we started the year with.

Speaker Change: A bigger part of that mix will continue to see the renewal separates be stronger than what they were last year and then obviously the rates we're getting there so I think yes.

Speaker Change: Yeah.

Speaker Change: Thank you that's helpful.

Speaker Change: And just one follow up can you give any color on potential impact of.

Speaker Change: Immigration policy and demand trends sunbelt markets that are lagging in the second half of this year.

Speaker Change: Yeah.

Brad Hill: Well this is Brad.

Speaker Change: Certainly.

Speaker Change: And I on the immigration trends.

Thank you that's helpful and just one follow up can you give any color on potential impact.

Speaker Change: We're frankly not seeing much of an impact on that at this point from an operating perspective, we're not seeing much of an impact either on the construction side, which is I think where perhaps.

Speaker Change: Immigration policy and demand trends.

Speaker Change: But a sunbelt markets that are lagging in the second half of this year.

Speaker Change: We could see.

Speaker Change: Are likely to see some impact there if it manifests itself, but at this point, we're not seeing much of an impact on immigration the immigration policy changes at this point.

Well this is Brad.

Speaker Change: Keeping an eye on the immigration trends.

Speaker Change: Our next question comes from the line of Alexander Goldfarb with Piper Sandler. Please go ahead.

Alexander Goldfarb: Hey, good morning, good morning down there.

Alexander Goldfarb: First question is when do you think that you guys would have a sense of how much of the competitive supply potentially slips into next year.

Alexander Goldfarb: Curious.

Alexander Goldfarb: Yeah.

Speaker Change: Our next question comes from the line of Alexander Goldfarb with Piper Sandler. Please go ahead.

Alexander Goldfarb: Well nothing that we're seeing right now you know theres been a little bit of slowdown in some lease ups in some some partner sub submarkets, but broadly the supply picture looks pretty.

Alexander Goldfarb: Pretty much like like it has or like we've talked for the last few quarters, where we're continuing to see a slightly moderate I mean, we're still.

Speaker Change: Curious.

Still I mean, obviously at a at a higher than normal delivery cadence. So even though 2025 is lower than 2024, it's still what I would call above.

Speaker Change: There has been a little bit of slowdown in some lease ups in some some part in sub submarkets, but broadly the supply picture looks.

Alexander Goldfarb: Normal for 2026, we expect that to drop pretty significantly to where it's below our long term average so yeah.

Alexander Goldfarb: We said all along I think where you really start to see that that strength is like 25, which will be offset by some normal seasonality that tends to wane, but 2026 is when we really expect to see that acceleration.

Speaker Change: So.

Speaker Change: Above normal for 2026, we expect that to drop pretty significantly to where it's below our long term average so yes.

Alexander Goldfarb: And then the second question is on the leasing front you guys have spoken about you have good visibility out 60 days.

Speaker Change: As we've said all along I think where you really start to see that that strength is like 25, which will be offset by some normal seasonality that tends to wane, but 2026 is when we really expect to see that acceleration.

Speaker Change: But do you see leasing as a good healthy leading indicator or your view is still apartments or lagging because if theres any job disruption or any tightening of the belt you know it takes a while before you know the renter and downsizing or doing something different.

Alexander Goldfarb: I think leasing is.

Alexander Goldfarb: One is a better leading indicator than it has been I think we just have more transparency more more data and more information that we look at in different cuts of it where you talked about pre leasing earlier, we can see see what's out there and so the new lease new lease rates in particular are back nice says that's somebody who's.

Speaker Change: I think leasing as well.

Alexander Goldfarb: Out in the market they were looking for somewhere to live that can shop all of the comp. So I think it's it's a leading indicator.

Speaker Change: One is a better leading indicator than it has been I think we just have more transparency and more and more data and more information that we look at in different cuts of it we're talking about pre leasing earlier, we can see see what's out there and so the new lease new lease rates in particular are.

Alexander Goldfarb: You know as much or more so things like collections and move out reasons for move out. So it can be pretty good indicators as well typically you're going to start to see along with new lease pricing, you're going to see people, having a move out perhaps before their lease term or early early terms with job loss or other things.

Speaker Change: <unk>, that's somebody who's out in the market. They are looking for somewhere to where they can shop all of the comp. So I think it's a leading indicator.

Speaker Change: Our people.

Alexander Goldfarb: Not able to pay pay their rents and see delinquency.

Speaker Change: <unk>.

Speaker Change: As much or more subtle things like collections and move outs and reasons for move out. So it can be pretty good indicators as well typically youre going to start to see along with new lease pricing youre going to see people, having a move out perhaps before their lease term or early early terms with job loss or other things or people.

Alexander Goldfarb: So between the three of those are relatively good leading indicators, but but not seeing any concerns there certainly on any of those right now.

Speaker Change: Our next question comes from the line of Rob Stevenson with Janney Montgomery Scott. Please go ahead.

Speaker Change: Our brands are you seeing any meaningful changes in the acquisition volumes in your markets and pricing expectations, given this market turmoil rates and the potential that at all the tax codes get passed and reconciliation.

Speaker Change: Not able to pay pay their rents and see delinquency.

Speaker Change: So between the three of those are relatively good leading indicators, but not seeing any concerns there certainly on any of those right now.

Speaker Change: Well, we've certainly seen a reduction in terms of the number of deals here.

Rob Stevenson: Our next question comes from the line of Rob Stevenson with Janney Montgomery Scott. Please go ahead.

Speaker Change: Here in April I mean first quarter is hard to gauge because a lot of the deals that closed in first quarter went under contract in 2024, we did see a slight uptick in the number of deals that we tracked in the first quarter I'd say the.

Speaker Change: Brad are you seeing any meaningful changes in the acquisition volumes in your markets and pricing expectations, given this market turmoil rates and the potential that not all of the tax cuts get passed and reconciliation.

Speaker Change: The volume.

Speaker Change: Well, we've certainly seen a reduction in.

Speaker Change: Deals on the market here in April has dropped significantly.

Speaker Change: In terms of the number of deals.

Speaker Change: Our market, so I would say that the volume.

Speaker Change: Absolutely.

Speaker Change: Has dropped the pricing that we've seen I would say, it's been still pretty consistent sub 5% cap rates in general on everything that we've seen seen trade. So.

Speaker Change: There's certainly uncertainty out there that's impacting volume, but at this point it doesn't seem to be impacted impacting price.

Speaker Change: The volume.

Speaker Change: Deals on the market here in April has dropped significantly.

Rob Stevenson: Our market, so I'd say the volume.

Tim: Alright, that's helpful and then Tim.

Tim: What's the cadence of the comps on a year over year basis throughout the year do you get consistently easier comps on it like a same store revenue basis as we move throughout the year with the fourth quarter being the easiest or are there pockets between Dow and ended the year, where you had particular strength in 2000.

Rob Stevenson: Definitely.

Rob Stevenson: Has dropped.

Rob Stevenson: Pricing that we've seen I would say, it's been still pretty consistent sub 5% cap rates in general on everything that we've seen seen trade. So.

Speaker Change: There is certainly uncertainty out there thats impacting volume, but at this point it doesn't seem to be impact impacting price.

Tim Argo: Alright, that's helpful and then Tim.

Tim: 24, and that the comps aren't as easy.

Speaker Change: What's the cadence of the comps on a year over year basis throughout the year do you get consistently easier comps on a same store revenue basis as we move throughout the year with the fourth quarter being the easiest or are there pockets between now and ended the year, where you had particular strengths in 'twenty.

Tim: Well certainly it certainly as we get late in the air in the fourth quarter.

Tim: B quote the easiest comps in terms of that's that's when our new lease pricing trough, but.

Tim: I will say, even during Q2 and Q3 of last year.

Tim: Well that was our biggest strength on the new lease rates on a relative basis. We saw our best rates. If you will that part of 'twenty 'twenty four we didn't see quite the de acceleration in those quarters that we typically do last year. So it didn't in other words, the newly trace and accelerate as much in Q2 and Q3.

Speaker Change: 24, and that the comps aren't as easy.

Well, certainly certainly as we gain weight in the air in the fourth quarter those will be called the easiest comps in terms of that's when our new lease pricing trough, but.

Speaker Change: I will say even.

Speaker Change: During Q2 and Q3 of last year.

Tim: Last year as they typically do so.

Speaker Change: Well that was our biggest strength on the new lease rates on a relative basis. We saw our best rates. If you will that part of 2024, and we didn't see quite the acceleration in those quarters that we typically do last year. So and then in other words, the new lease rates would accelerate as much in Q2 and Q3.

Tim: Well, the new lease rates were where the absolute highest the middle of last year I think they still presents some some decent comps in terms of where they are compared to normal. So there's a bit of a comp benefit the rest of the year, but certainly the most as you get late in the year and then you factor in obviously we.

Last year as we typically do so.

Tim: We expect to continue to see Wes.

Speaker Change: While the new lease rates were where the absolute highest.

Tim: Less impact from suppliers that can that can help to.

Speaker Change: Middle of last year, I think they still present, some decent comps in terms of where they are compared to normal. So there's a bit of comp benefit the rest of the year, but certainly the medicine as you get late in the year and then you factor in obviously, we expect to continue to see Wes.

Tim: Accelerates some of that in the late in 2025.

Tim: Okay. Thanks, guys.

Tim: Okay.

Anne Kane: Our next question comes from the line of Anne Kane with Green Street. Please go ahead.

Anne Kane: Good morning.

Speaker Change: Jumping back to the topic of lease ups or.

Speaker Change: Less impact from suppliers that can that can help to.

Anne Kane: Well most of it.

Anne Kane: Some context on what issues are causing occupancy to decline at the NHL, Lisa and rally.

Speaker Change: Accelerates some of that.

Speaker Change: Late in 2025.

Okay. Thanks, guys.

Speaker Change: Sure.

Tim: Yeah. This is Tim I I didn't hit on that one I mean, certainly we saw some slowdown just seasonally in terms of traffic and leads and and the qualified traffic. There were some some flooding issues are frankly that that's flowed down the lease up as well that we have now fixed and then.

Speaker Change: Our next question comes from the line of Tan with Green Street. Please go ahead.

Speaker Change: Hey, good morning.

Speaker Change: Jumping back to the topic of lease ups.

Speaker Change: First off can you provide some.

Speaker Change: Some context on what issues are causing occupancy to decline at the NHL Lisa can rally.

Tim: And what we've seen over the last 45 days or so is that the read and what are you seeing borrowers have picked up pretty significantly lead volume is up.

Yes. This is Tim I think I said I will now and I mean, certainly we saw some slowdown just seasonally in terms of traffic and leads and and the qualified traffic there were some some flooding issues or frankly, the slowdown in the lease up as well that we have now fixed and then.

Tim: 50% or so in April as compared to March and we've we've done 39 net leases over the last 45 days, which is about double where we were trending before so we're trending trending back towards 70% now centers. There was a little bit of uniqueness. There and then combine that with the time of the year and seasonality, but feel like it's back on track at this point.

Speaker Change: And what we've seen over the last 45 days or so is that the reed's and leasing buyers have picked up pretty significantly re volume is up.

50% or so in April as compared to March and we've we've done 39 net leases over the last 45 days, which is about double where we were trending before so we're trending trending back towards 70% now senators there was a little bit of uniqueness. There and then combine that with the time of the year and seasonality, but feel like it's back on track at this point.

Tim: Okay. Thank you.

Tim: And just a second question for me are there any expense line item, but you expect may deviate meaningfully from <unk>.

Tim: And yourself.

Tim: That's it.

Tim: And just this is clay.

Speaker Change: No I would say at this point in the year.

Tim: So pretty lined up with what are the expectations we had.

Speaker Change: <unk>.

Speaker Change: Okay. Thank you.

Tim: And it at just a couple of months ago, but no real changes across the board on any of them really in any of those line items.

Speaker Change: And just a second question from me are there any expense line items that you expect may deviate meaningfully from.

Speaker Change: Your initial guidance as the year progresses.

Yeah.

Buck Horne: Our next question comes from the line of Buck Horne with Raymond James. Please go ahead.

Clay: And just this is clay.

Buck Horne: Hey, Thanks, Good morning, I'm wondering if you could speak a little bit about.

Speaker Change: I'd say at this point in the year.

Speaker Change: So pretty lined up with what the expectations we had.

The trends you saw in terms of move outs to buy and purchase a single family home I think you've mentioned that.

Speaker Change: Rented at just a couple of months ago, no real changes across the board on any really any of those line items.

Buck Horne: That hit a new record low in the quarter, just wondering like what kind of anecdotal feedback you're hearing from customers that.

Speaker Change: Okay.

Buck Horne: Our next question comes from the line of Buck Horne with Raymond James. Please go ahead.

You know either either in that decision process and really wondering how sustainable you think those trends are going forward.

Speaker Change: Hey, Thanks, good morning I.

Speaker Change: I'm wondering if you could speak a little bit about.

Buck Horne: Yeah, but at this time that we did see a significant continued significant drop in move outs to buy it represented about 12% of our move outs in Q1, which was down 16% or so from where it was this time last year and I think it's a combination of two things.

The trends you saw in terms of move outs to buy in.

Speaker Change: Purchase a single family home I think you've mentioned that hit a new record low in the quarter, just wondering like what kind of anecdotal feedback you're hearing from customers that.

Either either in that decision process and really just wondering how sustainable you think those trends are going forward.

Buck Horne: One obviously is just the affordability issue of a single family home pricing is even even as rents have moderated call. It over the last 12 to 18 months a single family home prices have continued to go up and then mortgage rates, obviously are pretty elevated as well. So even if you were to put a two.

Yes. This is Chad.

Speaker Change: <unk> see a significant continued significant drop in move outs to buy a home and it represented about 12% of our move outs in Q1, which was down 16% or so from where it was this time last year and I think it's a combination of two things. The biggest one obviously is just the affordability issue.

Buck Horne: Per cent down payment right now to buy a house on average of one of our markets would be about 40 to 50 per cent higher cost before you even consider things like taxes insurance I think affordability continues to be the the biggest thing and then I think with <unk>.

Speaker Change: <unk>.

Single family home pricing is even even as rents have moderated call. It over the last 12 to 18 months single family home prices have continued to go up and then mortgage rates, obviously are pretty elevated as well. So even if you were to put 20% down payment right now to buy a house on average.

Buck Horne: Some of the increased uncertainty in the economy and people just tend to stay put where they are I think that's helping to benefit our turnover and people just a little more hesitant to make big life decisions like that and then thirdly I think there is a.

Speaker Change: One of our markets would be about 40% to 50% higher cost before we even considered phase like taxes insurance I think affordability continues to be the the biggest thing and then I think with.

Buck Horne: A transition over the last few years just in terms of how.

Buck Horne: How many people want to buy a house or or what the flexibility or the lifestyle that the apartments can provide so while I don't think it stay this low forever I don't think it gets back to the levels that we saw.

Speaker Change: Some of the increased uncertainty in the economy and people just tend to stay where they are I think that's helping to benefit our turnover and people just a little more hesitant to make big life decisions like that and then thirdly I think there is.

And in past times either.

Buck Horne: But usually what you weren't seeing like a concurrent uptick in move out to rent a single family house necessarily where you.

Speaker Change: <unk> said over the last few years just in terms of.

How many people want to buy a house or want the flexibility or the lifestyle that the apartments can provide so while I don't think it stayed this low forever I don't think it gets back to the levels that we saw.

Buck Horne: No.

Buck Horne: It was down a little bit as well frankly.

Buck Horne: Okay, and just one last quick one just thinking about Houston and maybe some of the Texas markets, given where energy prices are and in this particular cycle are you watching the energy sector in particular as it relates to kind of your Texas markets and how do you think you know job growth trends might play out and in this particular cycle there.

Past times either.

Speaker Change: Got it thank.

Speaker Change: But usually what you werent seeing like a concurrent uptick in move out to rent a single family house necessarily where you.

Speaker Change: No. It was it was down a little bit as well frankly.

Buck Horne: I mean, nothing that were necessarily watching more than more than we ever did I mean, Houston Houston is diversifying their economy quite a bad it's still heavily energy dependent but has a lot of other industries that have popped up and it's it's continue to be a strong market for us.

Thinking about Houston, and maybe some of the Texas markets, given where energy prices are and in this particular cycle are you watching the energy sector in particular as it relates to kind of your Texas markets and how do you think.

Speaker Change: Job growth trends might play out in this particular cycle there.

Buck Horne: There has been.

Buck Horne: So really really low about when that D. C. Our lowest supply markets and continues to have good household formation job growth and population growth. So no concerns there and I think all the Texas markets will continue to be huge job generators and job machines, regardless of what's what's going on in the energy sector.

Speaker Change: I mean, nothing that were necessarily watching more than more than we ever had.

Speaker Change: Houston Houston from the liners diversifying our economy quite a bad it's still heavily energy dependent but has a lot of other industries that have popped up and it's it's continue to be a strong market for us.

Speaker Change: There has been.

Buck Horne: Yeah.

Alex Kim: Our next question comes from the line of Alex Kim with Zelman and Associates. Please go ahead.

Really really low.

Speaker Change: When that D C. Our lowest supply markets and continues to have good household formation job growth and population growth. So no concerns there and I think all the Texas markets will continue to be huge job generators and job machines, regardless of what's what's going on in the energy sector.

Alex Kim: Hey, Thanks for taking my question just one for me here.

Alex Kim: The spread between renewals and new move in rent growth tightened slightly from the end of last year this quarter and it still remains historically wide I was just curious.

Alex Kim: How renewal rent growth has remained resilient despite the gap and what this dynamic means fear high expectation for renewals as a percentage of signed leases.

Speaker Change: Our next question comes from the line of Alex Kim with Zelman <unk> Associates. Please go ahead.

Speaker Change: Hey, Thanks for taking my question just one for me here.

Alex Kim: Well as you said the gap the gap did narrow a little bit in Q1, and even more so in April and so even even though on a percentage basis since it's a pretty wide gap on a dollar basis for April for example, it's about $130 or so gap between the absolute rents on new leases first renewals. So it's not.

Speaker Change: The spread between renewals and new move in rent growth tightened slightly from the end of last year this quarter and it still remains historically wide I was just curious.

Speaker Change: How renewal rent growth has remained resilient despite the gap and what this dynamic means sphere higher expectation for renewals as a percentage of signed leases.

Alex Kim: Not as huge as you may think but we've continued we've had this larger than normal if you will gap now for six seven quarters and continue to get that four in a quarter four and a half range on renewals.

Well as you said the gap the gap did narrow a little bit in Q1, and even more so in April and so even even though on a percentage basis since it's a pretty wide gap on a dollar basis for April for example, it's about $130 or so gap between the absolute rents on new leases versus renewals. So it is not.

Alex Kim: Look out for what we're achieving for both May and June renewals are in the 4748 range on those and in continuing to get even higher accept rates than we did last year, which was a record level of except right. So I think you got to remember the process. We go through and the customer service is involved in.

Not as huge as you may think but we've continued we've had this larger than normal if you will gap now for six seven quarters and continue to get that four in a quarter four and a half range on renewals.

Alex Kim: Everything that goes into renewal, it's a lot more than just what is that absolute rate maybe compare it to the street rents. There's a lot of other factors and cost to play into it and we did a very detailed analysis of.

Speaker Change: Look out for what we're achieving for both May and June renewals are in the 4748 range on that is in and continuing to get even higher except rates than we did last year, which was record level separate. So I think you got to remember the process, we go through and the customer services involved.

Alex Kim: What we're going to send out as our renewal rates and then Brian mentioned in his comments at the highest Google Google scores of anybody in the sector and that certainly plays into it so.

Alex Kim: Nothing right now we can look out.

Even into July so fans strong renewal ex separates and.

Alex Kim: Rental rates.

Alex Kim: Got it that's helpful. I guess, just a quick follow up here than any markets in particular, where that spread is.

Alex Kim: Tighter than the average or even just wider and I was just to provide some basis.

Alex Kim: It varies a little bit here and there, but not not significantly I mean with with what we've seen in the cadence of supply being pretty consistent across most markets.

Alex Kim: The seasonality or the gas and all that had been relatively consistent across most of our markets.

Speaker Change: Our next question comes from the line of Brian Hoffman with RBC capital markets. Please go ahead.

Speaker Change: Yeah. Thanks, Hi, everybody. So new lease spreads I think you said last quarter that the full year average would be around minus 1.5.

Speaker Change: I'll have a third of the year locked in I think the math on that would be like high minus fives and that might imply something close to zero for the rest of the year. So I guess, if you're still confident in the minus one five or is the higher renewal acceptance rate offsetting maybe a lower new lease target.

Speaker Change: Yeah, we did we tweaked our forecast a little bit in terms of that mix I mean generally were as we said with our.

Speaker Change: Guidance, maintaining the guidance, where we where are our overall expectation of blended pricing is pretty much in the same spot. It was before but we did dial in a little bit heavier mix, a little bit more on the renewal side, a little bit and we tweaked, our new lease expectations, a little bit not not significantly but down a little bit just really based on.

Speaker Change: The uncertainty in some of the economics.

Speaker Change: Seeing how that'll play out over the next few months, but broadly you havent changed a lot from from where we were.

Speaker Change: Coming out of Q4.

Speaker Change: Okay got it and then on D. C. Obviously, a pretty small exposure for you guys, but I'm, hoping that lead to maybe an unbiased opinion.

Speaker Change: Are you seeing anything there from does and what do you expect to happen is the layoffs and buyouts sort of accumulate.

Speaker Change: Yeah right now we're not we're not seeing anything you know, it's our if I look at April and some of the more leading indicators in our D. C market. The move outs are down in April even where they were this time last year, we're well over 96% occupancy in that market and to your point, it's not a not a huge market for us we have.

Speaker Change: We have one property in the desert, but it's a JV property that we only own 35%.

For northern Virginia to that a little more.

Speaker Change: Closer in Pentagon City, and Tysons corner, then to them a little further out and then we have you know four or five properties in Fredericksburg, which Fredericksburg, our best market across the portfolio right now and so I think on the Tysons for example.

Speaker Change: Any weakness we're seeing in terms of job losses being is being offset by a return to work in some some tech type jobs that are in that market that are.

Speaker Change: Having the return to work as well and then you know where were seeing nothing really changed with some of the ones that are a little further out so long way of saying no impact as of right now of anything we're looking at and continues to be a strong.

Speaker Change: Yeah, not a super high concentration market for us.

Speaker Change: We have no further questions I'll return the call to <unk> for closing remarks.

Speaker Change: Alright, no no other comments for us if you guys have any questions feel free to reach out and we look forward to seeing you guys in about a month.

Speaker Change: This concludes today's program. Thank you for participating you may disconnect at any time.

Andrew Schaeffer: I will now turn the call over to Andrew Schaeffer, Senior Vice President, Treasurer and Director of Capital Markets of MAA, for opening comments. Thank you, Regina, and good morning, everyone. This is Andrew Schaeffer, Treasurer and Director of Capital Markets for MAA.

Andrew Schaeffer: Members of the management team participating on the call this morning are Brad Hill, Tim Argo, Clay Holder, and Rob DelPriore. Before we begin with prepared comments this morning, I want to point out that as part of this discussion, company management will be making forward-looking statements. Actual results may differ materially from our projections. We encourage you to refer to the forward-looking statements section in yesterday's earnings release and our 34-act filings with the SEC, which describe risk factors that may impact future results. During this call, we will also discuss certain non-GAAP financial measures. A presentation of the most directly comparable GAAP financial measures as well as reconciliations of the differences between non-GAAP and comparable GAAP measures can be found in our earnings release and supplemental financial data.

Andrew Schaeffer: Our earnings release and supplement are currently available on the For Investors page of our website at www.maac.com. A copy of our prepared comments and an audio recording of this call will also be available on our website later today.

Andrew Schaeffer: After some brief prepared comments, the management team will be available to answer questions.

Brad Hill: I will now turn the call over to Brad. Thanks, Andrew, and good morning, everyone. As detailed in our release, first quarter performance results were ahead of our expectations. A strong demand was evident in multiple areas of our performance, including occupancy, collections, and pricing trends. While pricing trends for new resident move-ins continue to reflect the impact from new supply delivering in several of our markets, Renewal pricing remains strong and our retention rate increasing, leading to first quarter 25 blended lease pricing that was ahead of our expectations. We are encouraged by the resilience our portfolio has displayed in the face of the unprecedented levels of new supply that we've experienced over the past year, as well as our positioning to capture continued improvement as we enter the summer leasing season.

Tim Argo: As Tim will discuss in more detail, we are seeing encouraging signs that indicate leasing conditions are poised to support stable occupancy and improvement in blended lease rates that align with the outlook that we provided in our prior guidance.

Brad Hill: Having a compounding impact on revenue performance performance throughout the year. While macroeconomic uncertainties have increased due to the potential tariffs, our exclusive focus on high growth markets Lower Average Price Point, Broad Diversification by Market, Sub-Market, and Price Point. Our operating efficiencies and scale should position MAA to weather tariff or economic challenges and allow us to take advantage of growth opportunities that may arise. Because of these portfolio characteristics, MAA has not only outperformed in previous downturns and times of uncertainty, but delivered good performance over the past year in the face of a 50-year record high level of supply.

Brad Hill: In the first quarter, we were able to increase our year-over-year occupancy by 30 basis points and produce average effective rent per unit that was only down $9 per unit from the level we achieved in first quarter of 2004. Our current metrics are indicating no material change in customer behavior. Leads and leasing traffic remain strong, collections are solid, migration trends are positive, and the challenges of single-family home availability and affordability continue to support our strong renewal performance. Our focus on customer service is paying off, as reflected in our sector-leading Google scores, contributing to our growing retention rates.

Brad Hill: Supported by our asset management group, the teams are focused on harvesting the benefits of several leasing and reporting tools introduced over the past few years to maximize our operational effectiveness. We continue to invest in key areas that will support future earnings growth, including various new technology initiatives that enhance efficiencies and support our centralization and specialization efforts. We are ramping up the rollout of property-wide Wi-Fi across our portfolio, and investments in our interior renovation and repositioning programs are increasing. On the external growth front, our pipeline of lease-ups and active development stand at a combined cost of $1.5 billion.

Brad Hill: Our operating performance at these properties should benefit from a supply environment that is trending below historical levels. We continue to believe investing in new developments will produce strong future earnings growth, especially considering the declining new starts and additional headwinds from decreased equity capital available for new projects. We anticipate starting between three to four new developments this year, with a suburban development in the Charleston, South Carolina market on track to start construction during the second quarter. Based on our expected starts and completions for the year, our development pipeline should remain in the billion to $1.2 billion range, a very comfortable level, given our scale and balance sheet strength.

Brad Hill: We are focused on acquiring properties where we can utilize our various platform capabilities to generate attractive long-term returns for capital.

Brad Hill: But with the transaction market pretty slow, it will likely be the back half of the year before we see more compelling opportunities begin to materialize. As part of our ongoing recycling efforts to improve the earnings quality of our portfolio, during the first quarter of 25, we exited Columbia, South Carolina, with the sale of two properties with an average age of 32 years that went under contract in 2024. We expect continued recycling efforts to occur later this year. With a 30-year performance record focused on high-growth markets and an average executive team member tenure of 16 years, we have operated through prior cycles of high supply and uncertainty.

Brad Hill: I remain optimistic about the approaching recovery cycle and our market's ability to absorb the new supply. Today our more diversified and higher quality portfolios, stronger operating platform and stronger balance sheet position us to compete at an even higher level. Our high growth markets continue to see stronger job growth, household formation and investor demand. Through our internal and external investments, we have meaningful future value growth on the horizon as new supply deliveries decline and leasing conditions strengthen. We remain excited about the outlook over the next few years.

Brad Hill: To all our associates at the properties and our corporate and regional offices, thank you for your hard work and dedication in preparation for the busy leasing season. Your commitment and dedication to our residents and fellow associates are greatly appreciated.

Tim Argo: With that, I'll turn the call over to Tim. Thank you, Brad, and good morning, everyone. Following up on Brad's comments, we were encouraged by the first quarter operating trends, with blended pricing, occupancy, and collections all slightly outperforming our expectations. We entered 2025 with occupancy and exposure in a strong position that helped drive a steady increase in pricing, particularly on our new lease The acceleration of new lease over lease pricing growth was greater than what we have seen on average historically, increasing 180 basis points sequentially from the fourth quarter of 2024. The resulting new lease pricing on a lease-over-lease basis for the first quarter was negative 6.3%.

Tim Argo: Additionally, renewal rates for the quarter showed strength, growing 4.5% on a lease-over-lease basis, which was a 30-basis point increase sequentially over the fourth quarter. The resulting lease-over-lease pricing on a blended basis was negative 0.5%, which represented a 160-basis point improvement sequentially from the fourth quarter of 2024. Average physical occupancy was 95.6% up 30 basis points as compared to the same period in 2024. Collections continue to outperform expectations with net delinquency representing just 0.3% of billed rents. These factors combined are the resulting same store revenue growth of 0.1% for the quarter. Many of the markets that were outperformers in 2024 from a blended lease and release pricing standpoint, continue to do well in the first quarter of 2025, including several of our mid tier markets.

Tim Argo: Virginia stands out with Richmond, Norfolk, Fredericksburg, and our four Northern Virginia properties all exceeding the portfolio average. Charleston, Savannah, and Greenville also demonstrated strong pricing power. Of our larger markets, Tampa continued to show pricing recovery, Houston held steady, and encouragingly, we saw significantly improved performance from Atlanta, particularly as compared to market conditions there in the first quarter of 2024. Austin remains the laggard as it continues to face significant supply pressure, with Phoenix and Nashville continuing to struggle with lingering supply concerns also. Touching on our lease-up portfolio, we had one property, NAA Optimist Park, reach stabilization in the quarter.

Tim Argo: Our seven remaining lease-up properties are competing well against the record new supply being delivered in our markets and ended the quarter with a combined occupancy of 71.6%. We push the expected stabilization date back one quarter for MAA Boggy Creek in Orlando and expect six of the seven lease-up properties to stabilize in 2025. Rents for the group continue to exceed our pro forma expectations and should result in significant value creation for this portfolio.

Tim Argo: We continue to execute on our various redevelopment and repositioning initiatives in the first quarter, and we expect to accelerate these programs over the course of 2025 and into 2026. For the first quarter of 2025, we completed 1,102 interior unit upgrades. Achieving rent increases of $90 above non-upgraded units and a cash-on-cash return of just under 18%. Despite this more competitive supply environment, these units were vacant on average nine days less than non-renovated units when adjusted for the additional turn time. We expect to renovate even more units in Q2 and Q3, with a goal to renovate approximately 6,000 units in 2025, with an even larger increase expected in 2026.

Tim Argo: For our repositioning program, we have effectively completed the repricing phase on all the legacy 2023-2024 projects with NOI yields approaching 10%. We have an additional six projects finishing up construction that will begin the repricing phase between now and July in what we believe will be a strengthening leasing environment. We're also now live on the four property-wide Wi-Fi retrofit projects we began in 2024 and are currently in the planning or construction phase for an additional 23 projects that we targeted for 2025. As we close out April, we continue to see encouraging trends that are aligned with our guidance.

Tim Argo: New lease and blended pricing in April improved as compared to both March and the full first quarter, with average daily occupancy for the month of 95.5%. Our 60-day exposure for April was 8.4%, 20 basis points lower than this time last year. It keeps us in a position for stable occupancy to allow for pricing power, assuming the strong demand we have seen today remains intact. On the demand side, absorption in our markets in the first quarter was at a record level and represented the third straight quarter units absorbed exceeded units delivered, putting our markets in a good position to achieve a robust recovery as supply continues to decline.

Tim Argo: Additionally, the percentage of our residents accepting renewal offers exceeded last year's record level, with lease-over-lease growth rates on renewals accepted for May and June, outpacing our strong year-to-date renewal growth rates. The slower turnover is another mitigating factor against supply pressure, with fewer units coming to market. Improving new lease rates should further help support continued strong renewal performance throughout the spring and summer leasing seasons.

Tim Argo: That's all the way I have in prepared comments.

Clay Holder: Now I'll turn the call over to Clay. Thank you, Tim, and good morning, everyone. We reported core FFO for the quarter of $2.20 per diluted share, which was $0.04 per share above the midpoint of our first quarter guidance. About 2.5 cents of the favorability was due to same store and a wide performance, with an additional 2.5 cents due to favorable timing of overhead and interest expenses. Partially offset by one cent of non-same-store NOI performance. In addition to our same-store revenue performance slightly exceeding our expectations, real estate tax expense was favorable in the quarter due to the timing of tax litigation settlements that were initially projected to be completed in the second quarter.

Clay Holder: Personnel Costs, Repair and Maintenance Expenses, and Marketing Costs were all generally in line with our expectations. During the quarter, we funded approximately $67 million in development costs of the current $852 million pipeline, leaving an expected $305 million to be funded on our current pipeline over the next two to three years. We also invested approximately $17 million of capital in the first quarter through our redevelopment, repositioning, and Wi-Fi retrofit initiatives that Tim spoke of earlier. Our balance sheet remains strong. With $1 billion in combined cash and borrowing capacity under our evolving credit facility and our low net debt to EBITDA at four times, our balance sheet is well positioned to take advantage of opportunities should they emerge.

Clay Holder: At quarter end, our outstanding debt was approximately 94% fixed with an average maturity of seven years at an effective rate of 3.8%. Finally, with much of the leasing season still ahead of us, coupled with the uncertain macroeconomic environment, we are maintaining our core FFO and same-store guidance for the year.

Clay Holder: As outlined in our release, we expect Core FFO for the second quarter of 2025 to be in the range of $2.05 to $2.21 per diluted share or $2.13 per share at the mid- This midpoint includes the timing impact of the real estate tax litigation settlement previously discussed, along with the typical seasonality of leasing and maintenance-related operating expenses.

Clay Holder: That is all that we have in the way of prepared comments.

Operator: So, Regina, we will now turn the call back to you for questions. We will now open the call up for questions. If you'd like to ask a question, please press star then one on your touchtone phone. If you'd like to withdraw your question, press star one a second time.

Operator: In the interest of time, the company has requested a two-question limit.

Eric Wolfe: Our first question will come from the line of Eric Wolfe with Citigroup. Please go ahead. Hey, thanks. So right now, I guess, you know, we're at the beginning of May, I assume most people probably sign a new lease about a month before they move in. But correct me if I'm wrong on that. So just fair to say that you have a pretty good idea of where new lease spreads will be in late May or early June? Or do you still not have visibility into that?

Tim Argo: Hey, Eric, this is Tim. We do have pretty good visibility. Obviously, the renewal side, we have really good visibility with 60 day notice required there. And to your point on the new lease side, I mean, it varies. You do get a lot of people that are looking to move in more immediately in that zero to seven day range, but we put a little bit of extra focus on pre-leasing that has pushed that out a little bit. So we probably have even a little more color or a little more visibility this year than we did this time of year.

Tim Argo: So, yeah, we've got a fair amount of visibility. Certainly, April new leases, we know those. I would say we probably have a good handle on call it half of the May new leases and probably 25% or so of the June new leases. Yeah, yeah.

Tim Argo: And I asked the question, mainly because if you kind of look at the first quarter, it's tracking pretty similarly to what you saw last year. And so I think what people are trying to figure out is, is, you know, are you seeing anything in the recent data, whether that's April, May, June, that gives you more confidence in this inflection and rent growth that companies are predicting? Because so far, the results have been, you know, a bit like last year. So what what kind of gives you the confidence, confidence based on recent activity that you're going to see that?

Tim Argo: inflection? Yeah, I mean, we're continuing to see, you know, like I said, particularly when we look at our pre-leasing activity, we're continuing to see those new lease rates accelerate. And so if you look at kind of where we are December through to April, we were almost negative 9% on new leases in December, and then up to negative 4.6% in April and saw a continued steady acceleration. I would expect that to continue into Q2. And then, you know, typically Q3 continues to accelerate a little from there, obviously dependent on how the economic environment plays out. But from what we're seeing right now, we feel pretty good where we are.

Nick Yulico: Our next question comes from the line of Nick Yulico with Scotiabank. Please go ahead. Hey, good morning.

Daniel Tricarico: It's Daniel Tricarico. I'm with Nick. Maybe to follow up on Eric's question on the maybe the confidence level of the blends.

Tim Argo: Now, how should we think about the comp period related to concessions and the burnoff impact as we get into the second and third quarters? Well, I mean, certainly all the, you know, when you hear us quote lease over lease rates, that that is that is net of concessions and includes us sort of spreading those concessions out. So, you know, there's nothing specifically there. But, you know, I would say, whether you want to call it, you know, easier comps, or however you want to think about that, that is that is playing a part in this, we saw, you know, a struggle with new lease rates for most of 2024.

Tim Argo: And continued into the lower rates continue in the early 2025. So there's a combined the normal seasonality combined declining supply pressure, and frankly, a little bit easier comps that helps give us confidence in where we're sitting today.

Nick Yulico: Great, thanks.

Brad Hill: And then a follow up on development. Is there potential to extend lease of expectations at any of your other development properties? And how should we think about the supply impact potentially being, you know, stretched out into 2026? And some of these markets that are still working through that pipeline?

Brad Hill: I mean, I think in terms of this is Brad, in terms of development, in particular, you know, I mean, we feel good about the dates that we that we have, in terms of lease up performance in our packet. I mean, for us, one of the important things is, we want to be able to protect the, you know, the revenue performance of those properties in the rent performance of those properties. And given, certainly our focus there, we're able to be a little bit more patient on the lease up performance. And so in our packet, we we have a couple of our lease ups that that have leased up a little bit slower than what we expected.

Brad Hill: But the good news is the rents that we're getting from those properties continue to outperform our expectations, the yield expectations, again, outperform what our expectations are. So, you know, we continue to believe that The lease up focus that we have will continue to perform in line with our expectations and they're outperforming on the rent side. So we feel really good about the lease ups that we have at this point.

Cooper Clark: Our next question comes from the line at Cooper Clark with Wells Fargo. Please go ahead. Hi, thanks for taking the question.

Brad Hill: Can you talk about the cost side of development and how much is more or less locked in when you begin construction? And then also, if you could touch on the same thing for the redevelopment pipeline as well.

Brad Hill: Yeah, this is Brad. I'll hit on development. Tim can talk about redevelopment. You know, normally, when we could, it depends on if the development is an in-house development versus a pre-purchase development. In our pre-purchase pipeline, you know, our, our development partner is giving us a construction cost guarantee. So, so effectively, the costs are locked in when we go to agreement. So, so, you know, we shouldn't face any pressure associated with those pre-purchase developments that we have ongoing for our in-house development. You know, normally, those are call it 95% or so locked in. When we go under construction, the buyout from the GCs are normally done pretty quickly from when we start construction on the project.

Tim Argo: So those are generally locked in as well. So, you know, we're not seeing any impact to construction costs for in-place developments to date. And for new developments that we're looking at, you know, we're really not seeing any impact to date of That at the moment on the new development side.

Tim Argo: Yeah, and I'll touch on the on the redevelopment. And, you know, no, no pressure we're seeing so far. And I don't really expect any this year on that component. For one, you know, appliances make up about 25% of our costs in terms of our overall, you know, redevelopment. And we have locked in pricing on those through about this time next year. And then we have several sources and availability on countertops and other things. So, you know, we pretty much source, you know, we know how many units we're going to do. And we have a plan for those units and have a lot of that already here, you know, in place, if you will.

Tim Argo: So, you know, if tariff concerns or others played on for a while, it could start to impact us late this year into 2026, but not seeing any pressure right now.

Cooper Clark: Great, thanks.

Brad Hill: And then if you could also just touch on urban versus suburban performance in some of your key markets, and if it's fair to say that there's more upside to urban here over the next few years as supply normalizes, just given the higher Yeah, I mean, to answer the second part of your question, I think, you know, there's probably a little more upside potential on the more urban assets, primarily because they've tended to get more of the supply over these last couple years. So I think, you know, as that supply dies down, it probably helps out that group in general a little more.

Brad Hill: But we've seen, you know, in our portfolio, we've seen the performance between urban and suburban pretty much converge. There's very minor differences now in what we're seeing with occupancy or pricing. The suburban had been outperforming probably for the last couple of years, relatively significantly. And that gap has narrowed as supply pressure has started to wane a little bit. It's obviously market by market.

Brad Hill: Atlanta's one where we're still seeing better performance outside the perimeter, if you will, as compared to inside or Midtown, Buckhead areas.

Jane McGowan: But generally, we're seeing that performance start to converge Our next question comes from the line of Jane McGowan with Bank of America.

Jane McGowan: Please go ahead. Thank you. Good morning. Maybe if you could talk a little bit more about that improvement that you're seeing in Atlanta. From the market data, it's still pretty weak, but that's very encouraging that your portfolio is seeing a turnaround. Yeah, I would say, you know, Atlanta, it's certainly on a relative basis, it's not, I'm not counting it as one of our top markets right now, certainly in terms of performance, but relative to where it was, for most of 2024, it is starting to show some improvement, you know, our new lease pricing in Atlanta is the best it's been, you know, since going back to mid to early 2023.

Brad Hill: And we've seen a little bit of occupancy recovery as well, we're about 120 basis points or so better in terms of occupancy than we were this time last year. So it's, it's certainly a relative story compared to, you know, if you if you look at it compared to the broader portfolio, it's still, you know, lags our portfolio a little bit. But it's, it's much improved from where it was this time last year.

Unknown Attendee: Thank you.

Adam Kramer: Our next question comes from the line of Adam Kramer with Morgan Stanley. Please go ahead. Hey, thanks for the time guys. I'm just wondering about the kind of level of concessions in your markets today, maybe just high level. And then you know, how does that compare to, you know, whether it's early in the year when you know, seasonally slower period or even a year ago, maybe just just again, level of concessions today, maybe versus a year ago. Yeah, virtually, yeah, we've seen concessions broadly be relatively consistent the last couple of quarters, and probably down a little bit from where it was this time last year, I would say, you know, the portfolio broadly, or markets broadly, anywhere from a half month to a month, is is pretty consistent, there are pockets, obviously, where it's a little bit higher, there's, you know, lease ups, probably more in that month and a half to two month range, but but broadly, we're seeing kind of half a month to a month be pretty consistent in most markets, a little bit lower from from where it was this time last year, pretty consistent with where it was in Q4 of 2024.

Brad Hill: Yeah, this is Brad, Adam. And, you know, I think given where we are in terms, as Clay mentioned, and given where our, our current leverage is at four times, I mean, we view our kind of incremental dollar at this point, the best place to pull that from is generally through, through debt. And so, you know, really, at this point, given that leverage level, you know, we could, you know, grow our debt by a billion, billion and a half or so, and still be okay, within the ranges of kind of where we think our credit metrics need to be.

Brad Hill: So, you know, we think that that's the best use of our capital at this point. And you'll see us continue to fund through debt, anything incremental. And certainly, as we as we continue to sell properties this year, as we did in the first quarter, we'll continue to sell some properties later this year, that'll also be a source of capital for for our external growth uses as well. So that's where it'll come from.

Michael Goldsmith: Our next question comes from the line of Michael Goldsmith with UBS. Please go ahead. I think, you know, we still have an expectation that we could see it go slightly positive, you know, call it mid third quarter or so. We don't we don't expect it to get significantly positive. We have just just slightly positive and then starting to trend back down as we get into Q4. So, yeah, there's probably a little more uncertainty right now, just given what's what's going on in the economy. But, but generally, the trends we're seeing would support that. And that's what we're expecting as of right now.

Michael Goldsmith: Got it.

Brad Hill: And then as a follow up, you sold out of the Columbia, South Carolina market. Are there other markets that you can sell out of where you maybe don't have sufficient scale to kind of really do what you're looking to do? And so, you know, are there other markets you could look to sell out of? And how, you know, if you reallocate those, you know, proceeds into markets where you do have scale? Yeah, how much benefit can that have on expenses over time? You know, closing down markets where you don't have scale and reinvesting it where you can.

Brad Hill: Yeah, this is Brad. I mean, certainly we'll look to continue to drive efficiencies through our portfolio. And I do think one way to do that is for us to continue to sell, you know, some of these markets where we may have one or two assets, and we still have a few of those. We've got one in Panama City, we've got one in Gulfport, or Gulf Shores, we've got two in Las Vegas. So, you know, In markets where we only have a couple of assets, certainly by selling those, we can reallocate the time and energies of specifically of our regional folks to other properties to drive efficiencies throughout the portfolio.

Brad Hill: So, you know, we'll continue to evaluate that every fourth quarter. We go through an evaluation process to look at properties that we have in our portfolio and begin to look at those and prioritize what our disposition needs are for the following year. So that'll continue to be a focus of ours, along with looking at properties where perhaps the growth rate is not what we desire from our portfolio, or the CapEx needs are growing, and it's just not a fit for our portfolio anymore. But that's a very thorough process that we go through every year.

Julien Blouin: Our next question comes from the line of Julien Blouin with Goldman Sachs. Please go ahead. Thank you for taking my question.

Brad Hill: You know, your markets have tended to be relatively resilient during past recessions, but do you worry a recession this time around would potentially be different just given the amount of supply you're still dealing with vacancy still still pretty elevated pricing power as a starting point is weaker. So do you think maybe performance this time would be worse than in the past? Well, this is Brad and, you know, as we look at certainly the demand fundamentals in our region of the country, no, I mean, we would not think that if there were a slowdown in the economy that we would expect any type of different performance in our region of the country than we have experienced historically.

Brad Hill: And certainly, as you mentioned, if you go back to the three previous downturns that we've seen, whether it's the 2002 or 2003 tech bubble, the 2009 GFC or 2020 COVID, the performance of our portfolio significantly exceeded what we saw out of our peers. And we have every reason to believe that that continues. And I would say, you know, certainly when the economy slows, we have historically seen our high growth markets hold up better than the national norms as the broad diversification of industries and employers coupled with more affordable employment costs. As compared, particularly to other regions of the country, have tended to drive that resiliency you just talked about within our markets.

Brad Hill: And I think for us specifically, our unique diversification by market and sub-market, our product types, our price point, and then the diversification between large and mid-tier markets, you know, has continued to provide steadier performance for us. And we think that is a component that will certainly continue. And then the other thing that we've seen in the Sunbelt, particularly over the last five years or so, is just the Sunbelt job machine continues to outperform. We've seen numerous knowledge-based employment growth come to our region of the country. And then, you know, what we also have seen that I think is very important is the local and municipal, you know, governments are stronger than they are in other regions of the country.

Brad Hill: And I think that really supports the pro-business view of this region of the country. It also supports the ability to add subsidies and incentives to really support the job locations and relocations that we've seen. So, no, we think, especially as. The potential onshoring continues, it picks up speed, the Sunbelt's in a pretty good position to take advantage of that. And then the other point I would just make relative to demand, certainly job growth is a component of that, and as I just laid out, we think that continues to perform quite well in our region of the country going forward.

Brad Hill: But there are other demand drivers in our region of the country that continue to perform pretty well. Migration trends continue to be positive. The single-family availability and affordability is a challenge in our region of the country. And that's also a challenge that I think is a newer challenge to our region of the country. It's perhaps always existed in some of the coastal markets, but it's newer in our region of the country. But I do think that's a phenomenon that's going to drive retention rates up over the long term. And today, our turnover is 41.5%. Two years ago, it was 46%.

Brad Hill: So that 5% reduction is a long-term trend that I think will stay low, and there's significant implications for that. So long term, we think that the Sunbelt continues to perform quite well, regardless of the economic view that's out there. And then we think that our portfolio in particular, for the diversification reasons I mentioned, continues to perform well.

Unknown Attendee: Great, thank you. That's all for me.

John Kim: Our next question comes from the line of John Kim with BMO Capital Markets. Please go ahead. Good morning. Based on your second quarter and your full year guidance, you'll need to achieve about a two and a half to 3% increase in SFO per share, compared to what you'll achieve in this first half of the year. I'm wondering how much of that is driven by seasonality and rents. And, you know, what are some of the other factors that will contribute to rent but Yeah, John, I think in addition to some seasonality factors that you pointed out, the other piece of that that should continue to benefit FFO over the course of the remainder of the year is our lease up properties and as they continue to gain some velocity and go back to the points that Brad and Tim mentioned earlier, the pricing power that those properties have continued to show, you know, are ahead of our pro forma.

John Kim: So we think that those, you know, with a pricing and also an NOI yield basis.

Clay Holder: So all of that, you know, we think will is really what's going to drive that continued acceleration and performance over the course of the year.

Tim Argo: And you reiterated your outlook to Roll out Wi-Fi in 23 of your projects this year. Can you just remind us what a contribution that is to your SAMHSA revenue for this year and what's the timing of the completion or the rollout of the remainder of your projects?

Tim Argo: John, it's Tim. So it's not a huge component this year. So we have the we have the four that we completed late last year. And then the 23 that, as I mentioned, are under construction now, we're down in about between one and one and a half million combined between those 27 projects, I guess it is for 2025, just based on the rollout and how those roll out over lease expirations and the timing of the construction. Those two, those 27 in general, we expect would contribute close to $6 million once everything gets fully rolled out. And so, you know, we've, we're doing the 23 this year, we'll want to make sure that sort of goes as planned, and we would potentially look to accelerate that even more so in 2026.

Tim Argo: But it is going to be a multi-year project, you know, over the next four or five years would be my guess as we continue to accelerate it and ultimately look to roll it out to most, if not all of the portfolio.

Wes Golladay: Our next question comes from the line of Wes Golladay with Baird. Please go ahead. Hey, good morning, everyone.

Tim Argo: Can you talk about maybe your markets that are surprising to the upside and to the downside? versus Initial Expectations. Sure, Wes.

Tim Argo: This is Tim. The good ones, and I mentioned several of them in the prepared comments, you know, not any huge surprises there. The ones that have been pretty strong for the last 12 months or so continue to be strong. Tampa's one that I highlighted, I believe, in the last quarter that we could see some upside, and that is starting to play out. So that'd be one that I would point to that's on the up cycle. I mentioned Atlanta being an improvement relative to where that one had been. And then Jacksonville's another where it's still a laggard in general, but it's showing some pretty good acceleration and some resilience, despite some heavy supply there.

Tim Argo: So that's another one that was in one of our, you know, bottom three or four markets last year that I would expect to show a little bit more strength there. So that'd probably be one that I would put in the little bit of the surprise category.

Tim Argo: And then I really mentioned the ones that are still laggards, Austin, Phoenix, and Nashville are the three that I would point out there that just continue to work through quite a bit of supply.

Unknown Attendee: Okay, and then for your insurance renewal that's coming up, any change in thought there? Yeah, we're still, we're still kind of in the process of working through that. Still a little early on, we'll have more to say about it whenever we release second quarter earnings. But you know, just the initial conversations we've had have been, you know, positive and so we'll have more, more, more to come.

Mike Juste: Our next question comes from the line of Haendel and Juste with Mizuho. Please go ahead. Good morning, this is Mike on with Haendel. My question is, can you just provide a little bit more detail on the cadence you're expecting in both your blended spreads throughout the remaining three quarters of the year and your same store revs? Well, as far as the blended trend, I mean, pretty consistent with what we talked about last quarter, you know, and pretty consistent with what I would say is more normal seasonality. So we continue to expect, you know, our blended for Q1 was negative 0.5.

Tim Argo: We continue to expect to see that push forward in both Q2 and Q3, and then moderate a little bit in Q4. But, you know, we talked about the trajectory of new lease pricing, what we're seeing there, encouraging many other renewals, you know, May and June look really strong, and sending out July right now, which we expect to be strong as well. So we think the renewals will continue to have a bigger part of that mix, we continue to see the renewal accept rates be stronger than what they were last year. And then obviously, the rates were getting there.

Tim Argo: So I think, you know, the mix between new lease and renewals probably a little heavier weighted towards renewal than what we had in right at the beginning of the year. But generally, the trends and trajectory is about the same as what we started the year with. Thank you. That's helpful. And just one follow up.

Brad Hill: Can you give any color on potential impact of Integration Policy and Demand Trends for the Sunbelt Markets that are lagging in the second half of this year. Well, this is Brad. You know, certainly, we're keeping an eye on the immigration trends. You know, we're, we're, frankly, not seeing much of an impact on that. At this point, from an operating perspective, we're not seeing much of an impact either on the construction side, which is, I think, where perhaps we could see, you know, we are likely to see some impact there if it manifests itself. But at this point, we're not seeing much of an impact on immigration, the immigration policy changes at this point.

Alexander Goldfarb: Our next question comes from the line of Alexander Goldfarb with Piper Sandler. Please go ahead. Hey, good morning down there.

Alexander Goldfarb: First question is, when do you think that you guys would have a sense of how much of the competitive supply potentially slips in the next year? Just curious. Well, I mean, nothing that we're seeing right now. You know, there's there's been a little bit of slowdown and some lease ups and some some part sub sub markets, but broadly, the supply picture looks Pretty much like it has, or like we've thought for the last few quarters, where we're continuing to see it slowly moderate. I mean, we're still... We're still obviously at a higher than normal delivery cadence.

Brad Hill: So even though 2025 is lower than 2024, it's still, you know, what I would call above normal. For 2026, we expect that to drop pretty significantly to where it's below a long-term average. So, you know, as we've said kind of all along, I think where you really start to see that strength is late 2025, which will be offset by some normal seasonality that tends to wane.

Brad Hill: But 2026 is when we really expect to see that acceleration.

Tim Argo: And then the second question is, on the leasing front, you guys have spoken about, you know, good visibility out 60 days. But do you see leasing as a good, healthy leading indicator, or your view is still apartments are lagging because if there's any job disruption or any, you know, tightening of the belt, you know, it takes a while before, you know, the renter ends up downsizing or doing something different. I think lacing is... One, it's a better leading indicator than it has been. I think we just have more transparency and more, more data and more information that we look at and different cuts of it to where, you know, talked about pre-leasing earlier, we can see, see what's out there.

Tim Argo: And, you know, so the new lease, new lease rates in particular are that nice edge. That's somebody who's out in the market, they're looking for somewhere to live, they can shop all the comps, I think it's a leading indicator. And then, you know, as much or more so things like collection, and move-outs and reasons for move-outs, those can be pretty good indicators as well. Typically, you're going to start to see, along with new lease pricing, you're going to see, you know, people having to move out perhaps before their lease term or early, early terms with job loss or other things, or people not able to pay, pay their rent and see delinquency uptick.

Tim Argo: So between the three of those, those are relatively good leading indicators, but, but not seeing any concerns there, certainly. On any of those right now.

Rob Stevenson: Our next question comes from the line of Rob Stevenson with Janie Montgomery Scott. Please go ahead. Brad, are you seeing any meaningful changes in the acquisition volumes in your markets and pricing expectations given this market turmoil rates and the potential that not all the tax cuts get passed in reconciliation? Well, we've certainly seen a reduction in terms of the number of deals, you know, here in April, I mean, first quarter is hard to gauge, because a lot of the deals that closed in first quarter, went under contract in 2024, we did see a slight uptick in the number of deals that we tracked in the first quarter, I'd say, the volume of, you know, deals on the market here in April has dropped significantly in our market.

Brad Hill: So I would say the volume, definitely has dropped the pricing that we've seen, I would say it's been still pretty consistent, sub 5% cap rates in general on everything that we've seen seen trade. So, you know, there's certainly uncertainty out there that's impacting volume, but at this point, it doesn't seem to be impact impacting price.

Brad Hill: All right, that's helpful.

Tim Argo: And then Tim, what's the cadence of the comps on a year over year basis throughout the year? Do you get consistently easier comps on like a same store revenue basis as we move throughout the year with the fourth quarter being the easiest? Or are there pockets between now and the end of the year where you had particular strengths in 2024 and that the comps aren't as easy? Well, certainly, certainly as we get late in the year in the fourth quarter, those will be, quote, the easiest comps in terms of that's, that's when our new lease pricing troughed.

Tim Argo: But I will say even, you know, during, during Q2 and Q3 of last year, while that was our biggest strength on the new lease rates on a relative basis, we saw our best rates, if you will, that part of 2024, we didn't see quite the, the acceleration in those quarters that we typically do last year. So it didn't, in other words, the new lease rates didn't accelerate as much in Q2 and Q3 last year as they typically do. So while the new lease rates were, were the absolute highest the middle of last year, I think they still present some, some decent comps in terms of where they are compared to normal.

Tim Argo: So there's, there's a bit of comp benefit the rest of the year, but certainly the most as you get late in the year. And then you factor in, obviously, we expect to continue to see less. Less impact from supply. So that can that can help to, you know, accelerate some of that in the late in 2025.

Unknown Attendee: Okay, thanks guys.

Ann Chan: Our next question comes from the line of Ann Chan with Green Street. Please go ahead. Hey, good morning.

Tim Argo: Just jumping back to the topic of lease ups, or more specifically, can you provide some context on what issues are causing occupancy to decline at the MAA Vail lease up in Raleigh? Yeah, this is Tim. I can hit on that one. I mean, certainly, we saw some slowdown just seasonally in terms of traffic and leads and the qualified traffic. There were some flooding issues there, frankly, that's slowed down the lease up as well that we have now fixed. And what we've seen over the last 45 days or so is that the leads and leasing both have picked up pretty significantly.

Tim Argo: So lead volume is up 50% or so in April, as compared to March. And we've done 39 net leases over the last 45 days, which is about double where we were trending before. So we're trending, trending back towards 70% now. So there's a little bit of uniqueness there. And then combine that with the time of the year and seasonality, but feel like it's back on track at this point.

Clay Holder: Okay, thank you.

Clay Holder: And just a second question for me. Are there any expense line items that you expect may deviate meaningfully from your initial guidance as the year progresses?

Clay Holder: Hey Ann, this is Clay. Now I would say at this point in the year, you know, we're still pretty lined up with what the expectations we had presented at, you know, just a couple of months ago.

Buck Horne: No real changes across the board on any of those line items. Our next question comes from the line of Buck Horne with Raymond James. Please go ahead. Hey, thanks. Good morning.

Tim Argo: I wonder if you could speak a little bit about the trends you saw in terms of move outs to buy and or, you know, purchase a single family home. I think you mentioned that that hit a new record low in the quarter. Just wondering, like, you know, what kind of anecdotal feedback you're hearing from customers that, you know, either in that decision process and really wondering how sustainable you think those trends are going forward.

Tim Argo: Yeah, Buck, this is Tim. We did see a significant, continued significant drop in move-outs to buy a home. It represented about 12% of our move-outs in Q1, which was down 16% or so from where it was this time last year. And I think it's a combination of two things. The biggest one, obviously, is just the affordability issue of single-family home pricing is even, even as rents have moderated, call it, over the last 12 to 18 months, single-family home prices have continued to go up. And then mortgage rates, obviously, are pretty elevated as well. So even if you were to put a 20% down payment right now to buy a house, on average, in one of our markets would be about 40% to 50% higher costs before you even consider things like taxes and insurance.

Tim Argo: So I think affordability continues to be the biggest thing. And then I think with Some of the increased uncertainty in the economy, you know, people just tend to stay put where they are. I think that's helping to benefit our turnover and people just a little more hesitant to make big life decisions like that. And then, you know, thirdly, I think there is a transition over the last few years just in terms of, you know, how many people want to buy a house or want the flexibility or the lifestyle that the apartments can provide.

Tim Argo: So while I don't think it stays this low forever, I don't think it gets back to the levels that we saw, you know, in past times either. https://www.youtube.com https://www.youtube.com No, it was it was down a little bit as well, frankly.

Tim Argo: And just one last quick one, I'm just thinking about Houston and maybe some of the Texas markets, given where energy prices are in this particular cycle, are you watching the energy sector, in particular, as it relates to kind of your Texas markets? And how do you think, you know, job growth trends might play out in this particular cycle there? I mean, nothing that we're necessarily watching more than more than we ever do. I mean, Houston, Houston, for one, has diversified their economy quite a bit. It's still heavily energy dependent, but has a lot of other industries that have popped up.

Tim Argo: And it's it's continued to be a strong market for us. Supply there has been, you know, really, really low about between that and D.C., our lowest supply markets and continues to have good household formation, job growth and population growth. So no concerns there. And I think all the Texas markets will continue to be huge job generators and job machines, regardless of what's what's going on in the energy sector.

Alex Kim: Our next question comes from the line of Alex Kim with Zellman & Associates. Please go ahead. Hey, thanks for taking my question. Just one for me here. The spread between renewals and new move in rent growth tightened slightly from the end of last year, this quarter, and it still remains historically wide.

Tim Argo: I was just curious how renewal rent growth has remained resilient, you know, despite the gap and what this dynamic means for your higher expectation for renewals as a percentage of signed leases. Well, as you said, the gap, the gap did narrow a little bit in Q1 and, and even more so in April. And so even even though on a percentage basis, that's, it's a pretty wide gap. On a dollar basis for April, for example, it's about $130 or so gap between the absolute rent on new leases versus renewal. So it's not, not as huge as you may think.

Tim Argo: But, you know, we've continued, we've had this larger than normal, if you will, gap now for six, seven quarters and continue to get, you know, in the four and a quarter, four and a half range on renewals. And if I look out for what we're achieving for both May and June renewals, we're in the four, seven, four, eight range on those and, and continuing to get even higher accept rates than we did last year, which was record level accept rates. So I think you got to remember the process we go through and the customer services involved and All, everything that goes into renewal, it's a lot more than just what is that absolute rate maybe compared to the street rents.

Tim Argo: There's a lot of other factors and costs that play into it, and we do a very detailed analysis of what we are going to send out as our renewal rates. And then Brad mentioned his comments have the highest Google scores of anybody in the sector, and that certainly plays into it. So nothing right now we can look out, even into July, and still seeing strong renewal accept rates and rental rates. Got it. That's helpful. I guess just a quick follow up here then.

Tim Argo: Any markets in particular where that spread is? Title Microsoft Office Word Document MSWordDoc Word.Document.8 It varies a little bit here and there, but not not significantly. I mean, with with what we've seen in the cadence of supply being pretty consistent across most markets, the seasonality or the gaps and all that have been relatively consistent across most of our markets.

Brad Hill: Our next question comes from the line of Brett Heffern with RBC Capital Markets. Please go ahead. Yeah, thanks, everybody. For new lease spreads, I think you said last quarter that the full year average would be around minus 1.5. You now have a third of the year locked in, I think the math on that would be like high minus fives. And that might imply something close to zero for the rest of the year. So I guess, are you still confident in the minus 1.5? Or is the higher renewal acceptance rate offsetting maybe a lower new lease target?

Brad Hill: For more information visit www.FEMA.gov Yeah, we did, we tweaked our forecast a little bit in terms of that mix. I mean, generally, we're, as we said, with our guidance, maintaining the guidance where we were, our, our overall expectation of blended pricing is pretty much in the same spot it was before. But we did dial in a little bit heavier mix, a little bit more on the renewal side, a little bit, we tweaked our new lease expectations a little bit, not, not significantly, but down a little bit, just really based on the uncertainty and some of the economics.

Brad Hill: and seeing how that will play out over the next few months, but broadly haven't changed a lot from where we were, you know, coming out of Q4.

Brad Hill: Okay, got it.

Brad Hill: And then on DC, obviously a pretty small exposure for you guys, but I'm hoping that leads to maybe an unbiased opinion. Are you seeing anything there from Doge? And what do you expect to happen as the layoffs and buyouts sort of accumulate? Yeah, right now, we're not, we're not seeing anything. You know, it's our if I look at April and some of the more leading indicators in our DC market, the move outs are down in April, even where they were this time last year, we're well over 96% occupancy in that market. And to your point, it's not a not a huge market for us.

Brad Hill: We have, we have one property in the district, but it's a JV property that we only own 35%. We have four Northern Virginia, two that are a little more, you know, close in, Pentagons, City and Tysons quarter, and then two that are a little further out. And then we have, you know, four or five properties in Fredericksburg, which Fredericksburg is our best market across portfolio right now. And so I think, you know, Tysons, for example, any any weakness we're seeing in terms of job losses being is being offset by return to work and some some tech, tech jobs that are in that market that are https://www.youtube.com.au yet not a super high concentration market for us.

Operator: And we have no further questions.

Operator: I'll return the call to MAA for closing remarks. All right, no no other comments for us. If you guys have any questions, feel free to reach out and we look forward to seeing you guys in about a month.

Operator: This concludes today's program. Thank you for participating. You may disconnect at any time.