Q1 2025 Elme Communities Earnings Call
Yeah.
Operator: Good day and welcome to the Elme Communities First Quarter 2025 Earnings Conference.
Speaker Change: Good day and welcome to the communities first quarter 2025 earnings Conference call.
Amy Hopkins: As a reminder, today's call is being recorded, and at this time, I would like to turn the call over to Amy Hopkins, Vice President, Investor Relief. Amy, please go ahead. Good morning, and thank you for joining our first quarter earnings call.
As a reminder, today's call is being recorded.
Speaker Change: This time I would like to turn the call over to Amy Hopkins, Vice President Investor Relations.
Speaker Change: Please go ahead.
Good morning, and thank you for joining our first quarter earnings call today's call will be available for replay on the investors section of our website statements made during this call may constitute forward looking statements that involve known and unknown risks and uncertainty, which may cause actual results to differ materially and we undertake no duty to update them as actual events unfold.
Amy Hopkins: Today's call will be available for replay on the Investors section of our website. Statements made during this call may constitute forward-looking statements that involve known and unknown risks and uncertainties, which may cause actual results to differ materially, and we undertake no duty to update them as actual events unfold. We refer to certain of these risks in our SEC filings.
Speaker Change: We refer to certain of these risks in our SEC filings reconciliations of the GAAP and non-GAAP financial measures discussed on this call are available in our most recent earnings press release and financial supplement which was distributed yesterday and can be found on the investors page of our website.
Amy Hopkins: Reconciliations of the GAAP and non-GAAP financial measures discussed on this call are available in our most recent earnings press release and financial supplement, which was distributed yesterday and can be found on the Investors page of our website.
Amy Hopkins: Presenting on the call today will be Paul McDermott, our CEO, Tiffany Butcher, our COO, and Steve Freishtat, our CFO. And with that, I will turn the call over to Paul. Thanks, Amy.
Speaker Change: On the call today will be Paul Mcdermott, our CEO, Tiffany Butcher, our CLO with Steve <unk> our CFO.
Paul McDermott: And with that I will turn the call over to Paul.
Paul McDermott: Welcome, everyone, and thank you for joining us this morning. We kicked off the year with strong momentum as both same store revenue and NOI came in ahead of our expectations. And the trends we are seeing as we enter peak leasing season are encouraging. I'll start today's call by highlighting what we're seeing on the ground here in the DMV and how we're positioned as regional employment trends evolve.
Speaker Change: Thanks, Amy welcome everyone and thank you for joining us this morning.
Speaker Change: We kicked off the year with strong momentum as both same store revenue and NOI came in ahead of our expectations and the trends that we are seeing as we enter peak leasing season are encouraging.
Speaker Change: I'll start today's call by highlighting what we're seeing on the ground here in the D. M D and how we're positioned as regional employment trends evolve.
Paul McDermott: Tiffany will provide a more detailed update on our operating trends, and Steve will discuss our outlook for 2025. While the new administration continues to work to streamline the federal workforce, the fundamentals that we are seeing across our Washington Metro portfolio remain solid and in line with seasonal norms. Looking forward, apartment tour volumes and renewal lease negotiations for June and July expirations remain strong and in line with our expectations. While we acknowledge that the region could be impacted by employment losses and a slowdown in economic growth, our mid-market rent levels and geographic focus on northern Virginia put us in a better position than higher-end rentals and the broader regional housing market overall.
Speaker Change: <unk> will provide a more detailed update on our operating trends and Steve will discuss our outlook for 2025.
Speaker Change: While the new administration continues to work to streamline the federal workforce. The fundamentals, we're seeing across our Washington Metro portfolio remains solid and in line with seasonal norms look.
Speaker Change: Going forward, our apartment tour volumes and renewal lease negotiations for June and July explorations remained strong and in line with our expectations.
Speaker Change: While we acknowledge that the region could be impacted by employment losses, and a slowdown in economic growth, our mid market rent levels and geographic focus on northern Virginia.
Speaker Change: It's in a better position than higher end rental and the broader regional housing market overall.
Paul McDermott: Mid-market rent levels are widely recognized for offering relative resilience during periods of economic volatility. Looking back at performance during sequestration in 2013 and 2014, Class B apartments outperformed Class A in effective rent growth by over 1.8% according to data collected by RealPay. And with regard to our geographic focus, nearly 75% of Elm's Washington Metro homes are located in Northern Virginia, which is known for having the strongest private sector employment growth in the Washington Metro region. Over the past four years, Northern Virginia's private sector job growth was two and a half times the private sector job gains in the Washington metro region, according to BLS debt.
Speaker Change: Mid market rent levels are widely recognized for offering relative Brazilians during periods of economic volatility.
Speaker Change: Looking back at performance during sequestration in 2013 in 2014 class B apartments outperformed class, a and effective rent growth by over 1.8%. According to data collected by real page.
Speaker Change: And with regard to our geographic focus nearly 75% of albums, Washington Metro homes are located in Northern Virginia, which is known for having the strongest private sector employment growth in the Washington Metro region.
Speaker Change: Over the past four years, northern Virginia's private sector job growth was two and a half times the private sector job gains in the Washington Metro region. According to BLS data.
Paul McDermott: Although Northern Virginia is known as a major hub for federal contractors, we believe Elm's exposure to government contractors is very low at approximately 5% of our Washington Metro resident base as of April. More details about our exposure to federal workforce reductions can be found on slide 11 of our latest investor presentation. Additionally, most federal employees fall outside the typical age range of apartment renters. As of September 2024, over 70% of federal government employees were over 40 per OPM data. In contrast, only 30% of Elm residents fall into that age group, suggesting a lower impact on apartments compared to the broader housing market overall.
Speaker Change: Although northern Virginia is known as a major hub for federal contractors, we believe elms exposure to government contractors is very low at approximately 5% of our Washington Metro resident base as of April.
Speaker Change: More details about our exposure to federal workforce reductions can be found on slide 11 of our latest investor presentation.
Speaker Change: Additionally, most federal employees fall outside the typical age range of apartment runners.
Speaker Change: As of September 2020 for over 70% of federal government employees, where over 40 for O P. M death.
Speaker Change: In contrast, only 30% of Elm residents fall into that age group, suggesting a lower impact on apartments compared to the broader housing market overall.
Paul McDermott: Looking at supply, conditions are shaping up for a very positive trajectory in the Washington metro. According to RealPage, annual supply peaked in Q1 2025 at 2.2% annual net inventory growth. below the national average of 2.9%. New construction starts in the Washington Metro are down over 70 percent from their peak and supply is projected to decline steeply from here to 1.8 percent annual net inventory growth by the fourth quarter of this year and still further to nearly half at 1.1 percent by the fourth quarter of 2026, which would be the lowest level reported since 2012. Beyond 2026, supply could drop even further depending on the effects of tariffs and increased construction costs, paving the way for additional favorable competitive dynamics in the region.
Speaker Change: Looking at supply conditions are shaping up for a very positive trajectory in the Washington Metro.
Speaker Change: According to real page annual supply peaked in Q1 2025 at 2.2% annual net inventory growth.
Speaker Change: The national average of two 9%.
Speaker Change: New construction starts in the Washington Metro are down over 70% from their peak and supply is projected to decline steeply from here to one 8% annual net inventory growth by the fourth quarter of this year and still further to nearly half at one 1%.
Speaker Change: The fourth quarter of 2026.
Speaker Change: It would be the lowest level reported since 2012.
Speaker Change: Beyond 2026 supply could drop even further depending on the effects of tariffs and increased construction costs paving the way for additional favorable competitive dynamics in the region.
Paul McDermott: Turning to our strategic review, as announced on February 13th, 2025, our Board of Trustees is overseeing a formal evaluation of strategic alternatives to maximize shareholder value. This process was initiated from a position of strength and having transformed Elme into a multifamily REIT while improving performance and profitability and underscores our commitment to acting in the best interest of Elme and its shareholders. Despite the current volatility and uncertain capital markets environment, this evaluation remains ongoing. The Board is working with independent financial and legal advisors to assess alternatives and determine the best path forward for Elm. As we said when we announced this formal evaluation, there can be no assurance that this process will result in Elme pursuing a transaction or any other strategic outcome.
Speaker Change: Turning to our strategic review as announced on February 13, 2025, our board of Trustees has overseen a formal evaluation of strategic alternatives to maximize shareholder value.
Speaker Change: This process was initiated from a position of strength and having transformed <unk> into a multifamily REIT, while improving performance and profitability and underscores our commitment to acting in the best interests of Elm and its shareholders.
Speaker Change: Despite the current volatility and uncertain capital markets environment. This evaluation remains ongoing.
Speaker Change: The board is working with independent financial and legal advisors to assess alternatives and determine the best path forward for <unk>.
Speaker Change: As we said when we announced this formal evaluation there can be no assurance that this process will result in L pursuing a transaction or any other strategic outcome and we do not intend to provide further details on the process in connection with the discussion of our first quarter earnings results today.
Paul McDermott: And we do not intend to provide further details on the process in connection with the discussion of our first quarter earnings results today.
Paul McDermott: Thank you for your understanding and keeping your questions focused on our results and outlines.
Speaker Change: Thank you for your understanding it and keeping your questions focused on our results and outlook.
Tiffany Butcher: And with that, I'll turn it over to Tiffany to discuss our operation. Thanks, Paul. Looking at our operational highlights, we are off to a solid start to the year. Demand trends across our Washington metro and Atlanta portfolios reflect typical seasonality against the backdrop of stable supply levels in the DMV and improving supply dynamics in Atlanta. Elme's same-store multifamily occupancy averaged 94.8% during the first quarter, in line with our targeted range and up 50 basis points year over year. We achieved 1.9% same-store blended lease rate growth during the quarter. And our initial estimated blended rate growth for April is 2.6%, reflecting a typical upswing heading into the spring leasing season.
Speaker Change: And with that I'll turn it over to Tiffany to discuss our operations.
Tiffany Butcher: Thanks, Paul looking at our operational highlights we are off to a solid start to the year demand trends across our Washington Metro in Atlanta portfolios reflect typical seasonality against the backdrop of stable supply levels in the D M D and improving supply dynamics in Atlanta.
Tiffany Butcher: Same store multifamily occupancy averaged 94, 8% during the first quarter in line with our targeted range and up 50 basis points year over year, we achieved 1.9% same store blended lease rate growth during the quarter and our initial estimated blended rate growth for April it's two 6%.
Tiffany Butcher: Reflecting a typical upswing heading into the spring leasing season.
Tiffany Butcher: Within our DMV portfolio, forward occupancy trends remain in line with our expectations and renewal rates remain strong. We are continuing to closely monitor our forward-looking demand indicators and plan to adjust our pricing strategies accordingly. In Atlanta, we are experiencing stable rent and occupancy trends and better than expected bad debt performance. New delinquencies have declined since the second quarter of last year, supported by higher credit standards, process changes, and technology enhancements implemented last year. Eviction delays in Atlanta are steadily decreasing with the continued use of Georgia House Bill 1203, and improved processing efficiency is also helping to reduce bad debt.
Tiffany Butcher: Within our D. N V portfolio forward occupancy trends remain in line with our expectations and renewal rates remain strong we are continuing to closely monitor our forward looking demand indicators and plan to adjust our pricing strategy accordingly.
Tiffany Butcher: In Atlanta, we are experiencing stable rent and occupancy trends and better than expected bad debt performance.
Tiffany Butcher: New delinquencies have declined since the second quarter of last year supported by higher credit standards process changes and technology enhancements implemented last year.
Tiffany Butcher: Actual delays in Atlanta are steadily decreasing with the continued use of Georgia House fell 12 O theory and improved processing efficiency is also helping to reduce bad debt.
Tiffany Butcher: As Steve will discuss in a moment, we expect improvement in bad debt to be a larger contributor to revenue growth in 2025 than we had initially anticipated. Now turning to renovations, we completed 88 renovations during the quarter at an ROI of approximately 18% and remain on track to complete over 500 full renovations in 2025. We expect the pace of renovations to increase as expirations pick up during the summer leasing season, and we maintain flexibility to adjust the pace of renovations as market demand shifts. Moving on to operating initiatives, our managed Wi-Fi program is ramping up more quickly than anticipated, and we now expect to capture $600,000 to $800,000 of additional NOI in 2025 from the seven communities that are part of Phase 1 and the four communities that are part of Phase 2.
Tiffany Butcher: As Steve will discuss in a moment, we expect improvement in bad debt to be a larger contributor to revenue growth in 2025 than we had initially anticipated.
Tiffany Butcher: Now turning to renovation, we completed 88 renovations during the quarter and an ROI of approximately 18% and remain on track to complete over 500 full renovations in 2025.
Tiffany Butcher: We expect the pace of renovations to increase exploration pick up during the summer leasing season, and we maintain flexibility to adjust the pace of renovation as market demand shifts move.
Tiffany Butcher: Moving on to operating initiatives are managed Wifi program is ramping up more quickly than anticipated and we now expect to capture 600000 to $800000 of additional NOI in 2025, and the seven communities that are part of phase one and four communities that are part of phase two.
Tiffany Butcher: Once Phase I and Phase II are fully integrated by mid-2026, we expect to capture $1.5 million to $2 million of additional NOI per year, with further upside from future phases.
Tiffany Butcher: Once phase one and phase two are fully integrated by mid 2026, we expect to capture at 1.5 million to $2 million of additional NOI per year with further upside from future phases.
Steve Freishtat: And with that, I'll turn it over to Steve to cover our performance and outlook. Thanks, Tiffany. Our first quarter results were very strong, with same-store revenue growth of 3.9% and NOI growth of 5.5% year-over-year. Our better-than-expected performance was driven primarily by stronger rent growth across our Washington metro portfolio and two favorable real estate tax appeals in Atlanta. As Tiffany mentioned, our managed Wi-Fi rollout is going very well, and the associated income is ramping up more quickly than we had anticipated. Additionally, Atlanta bad debt continues to decline, and we expect improvement in bad debt to be a larger contributor to revenue growth in 2025 than we had initially anticipated.
Tiffany Butcher: And with that I'll turn it over to Steve to cover our performance and outlook.
Steve: Thanks, Tiffany our first quarter results were very strong with same store revenue growth of three 9% and NOI growth of five 5% year over year.
Steve: Our better than expected performance was driven primarily by stronger rent growth across our Washington Metro portfolio and two favorable real estate tax appeals in Atlanta.
Steve: As Stephanie mentioned, our managed Wi Fi rollout is going very well.
Steve: And the associated income is ramping up more quickly than we had anticipated.
Steve: Additionally, Atlanta bad debt continues to decline and we expect improvement in bad debt to be a larger contributor to revenue growth in 2025 than we had initially anticipated.
Steve Freishtat: Based on our year-to-date performance and updated projections for fee income and bad debt, we believe we only need an additional 50 to 60 basis points of revenue growth from rent and occupancy changes across the rest of the year to reach the midpoint of our revenue forecast, a target we consider highly attainable. Additionally, our balance sheet remains in very good shape. Annualized net debt to adjusted EBITDA was 5.6 times during the first quarter, and we have over 60% of our total capacity available on our line of credit and no secured debt.
Steve: Based on our year to date performance and updated projections for fee income and bad debt. We believe we only need an additional 50 to 60 basis points of revenue growth from rent and occupancy changes across the rest of the year to reach the midpoint of our revenue forecast.
Steve: Target, we consider highly attainable.
Steve: Additionally, our balance sheet remains in very good shape annualized net debt to adjusted EBITDA was five six times during the first quarter and we have over 60% of our total capacity available on our line of credit and no secured debt.
Steve Freishtat: In closing, our revenue and NOI are ahead of expectations at this point in the year, and we are encouraged by the positive momentum heading into the peak leasing season. Although the macro environment is in flux, the strong fundamentals of our portfolio and business along with the ongoing success of our value-add renovation pipeline and platform initiatives gives us confidence in our ability to deliver resilient performance.
Steve: In closing our revenue and NOI are ahead of expectations at this point in the year.
Steve: And we are encouraged by the positive momentum heading into the peak leasing season.
Steve: Although the macro environment is in flux, the strong fundamentals of our portfolio and business along with the ongoing success of our value add renovation pipeline and platform initiatives gives us confidence in our ability to deliver a resilient performance.
Operator: And now operator, I'd like to open it up for questions. Thank you, sir. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone key. The confirmation tone will indicate your line is in the question. You may press star 2 if you would wish to remove your question. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. One moment please, while we poll for questions.
Steve: And now operator, I'd like to open it up for questions.
Steve: Thank you Sir.
Steve: At this time, we will be conducting our question and answer session.
Steve: If you'd like to ask a question. Please press star one on your telephone keypad.
Steve: A confirmation tone will indicate your line is in the question queue.
Steve: You May press Star two if you wish to remove your question from the queue.
Steve: And for participants using speaker equipment, it may be necessary to pick up your handset before pressing this turkeys.
Steve: One moment, please for we pull for questions.
Operator: Thank you.
Steve: Thank you.
Cooper Clark: Our first question is coming from Cooper Clark with Wells Fargo. Hey, thank you for taking the question this morning. Paul was wondering if you could talk about the multifamily transaction market in DC. Curious if you've seen any buyers taking contrarian bets on the Metro and where you're seeing deals, if any, get done today from a cap rate perspective? Sure, Cooper. So, just stepping back for a second, my overall observation would be that the living sector, you know, is continuing to do well. We're seeing continual capital flows into it. You know, we have the agencies here, so we see continued liquidity in the debt markets.
Speaker Change: Our first question is coming from Cooper Clark with Wells Fargo. Your line is live.
Cooper Clark: Hey, Thank you for taking the question. This morning, Paul I was wondering if you could talk about the multifamily transaction market in D. C. Curious if you've seen any buyers taking contrarian bets on the metro and where youre seeing deals if any get done today from a cap rate perspective.
Speaker Change: Sure Cooper.
Speaker Change: So just stepping back for a second.
Cooper Clark: My overall observation would be.
Cooper Clark: That the living sector is continuing to do well, we're seeing continual capital flows into it.
Cooper Clark: You know we have the agencies here. So we see a continued liquidity in the debt markets.
Paul McDermott: You know, all of the lenders are active. The agencies are, you know, fairly aggressive, and the debt funds are feeding kind of the higher LTV requirements and getting paid for it. And the life companies are still playing well in that 50 to 55 percent loan-to-value. I think from the equity perspective, you know, the change that we've seen probably this year are really the odysseys, you know, is there queues coming down, reentering with strategic capital allocations, and, you know, really looking for AUM. The investors that we talked to in the DMV, Cooper, you know, I think their perspective is they're looking at national construction starts down, as we said in our remarks, down 77 percent, you know, and 26 will be over 80 percent down, as I mentioned in my remarks.
Cooper Clark: All of the lenders are active the agencies are are fairly aggressive and the debt funds or our feet in kind of the higher LTV requirements and getting paid for it and the life companies are still playing well in that 50% to 55% loan to value I think from the equity perspective.
Cooper Clark: Change that we've seen probably this year.
Cooper Clark: Really the odyssey's as their queues coming down.
Cooper Clark: Re entering with strategic capital allocations.
Cooper Clark: And.
Cooper Clark: You know really looking for.
Cooper Clark: The investors that we talk to in the D. M V Cooper.
Cooper Clark: You know there I think their perspective as they're looking at national.
Cooper Clark: National construction starts down as we said in our remarks down 77% in <unk>.
Cooper Clark: Six will be over 80% down as I mentioned in my remarks.
Paul McDermott: You're balancing that with watching single-family mortgage originations at their lowest point in 30 years. And I look at Washington, D.C. for the fifth quarter in the row, we're one of the top three in rental growth. And I think investors are concluding when they look at this region that when they look at 2026 through 2028, there's a nice runway for rental growth. So the cap rates that we are seeing and that that's translated into the core buyer profile is, you know, I think gotten a little bit more competitive, and we've seen cap rates as low as 4.25, up to 5 percent, looking at levered IRRs between 9 and 11 percent.
Cooper Clark: You're balancing that with watching single family mortgage originations at their lowest point in 30 years.
Cooper Clark: And I.
Cooper Clark: I look at Washington D C for the fifth quarter in the row, we're one of the top three in.
Cooper Clark: And rental growth.
Cooper Clark: And I think investors are concluding when they look at this region that when they look at 2026 through 2028, there's a nice runway for rental growth. So the cap rates that we're seeing in that that's translated into.
Cooper Clark: The core buyer profile as you know I think gotten a little bit more competitive than we've seen cap rates as low as four four in a quarter.
Cooper Clark: Up to 5% looking at Levered IRR is between 9% and 11% the core plus buyers still solid and that $4 75 to five and a quarter cap rate range looking at 11% to 13, Levered IRR is and then value add.
Paul McDermott: The core plus buyers still solid in that 475 to 5.25 cap rate range, looking at 11 to 13 levered IRRs. And then value add, I think that's kind of low to mid-fives, you know, depending on vintage and performance, but that levered IRR is really in the 13 to 15 percent range. I'd say the one thing that we've observed over the last 12 to 18 months is that discount to replacement cost is shrinking in some of our stronger submarkets here. And so we feel pretty optimistic just about the continued investment sales activity we're seeing in the region, Cooper.
Cooper Clark: I think thats kind of low to mid fives.
Cooper Clark: You know depending on vintage and performance, but that that Levered IRR is really in the 13% to 15% range I'd say the one thing that we've observed over the last 12 to 18 months.
Cooper Clark: Is that discount to replacement cost is shrinking.
Cooper Clark: And some of our stronger submarkets here and so.
Cooper Clark: We feel we feel pretty optimistic just about the continued investment sales activity that we're seeing in the region Cooper.
Cooper Clark: Awesome. Thank you very much.
Speaker Change: Awesome. Thank you very much and then could you also just touch on the addition of Ron to your board from a high level and walk us through that process, specifically from a timing perspective as it relates to the announcement of your strategic review.
Paul McDermott: And then could you also just touch on the addition of Ron to your board from a high level and walk us through that process specifically from a timing perspective as it relates to the announcement of your strategic? Well, the announcement, let's start there. The announcement for the strategic review, you know, we made that decision last year coming out of our strategic retreat, and just the board felt it was necessary to look at options to maximize shareholder value. The process for Ron getting on our board was, Ron is a well-known entity, and our board, as we've done over the last several years, our board continues to look at a refreshment process, and I think Ron was just the appropriate candidate.
Speaker Change: Well the announcement, let's start there the announcement for the strategic review you know we made that decision last year.
Speaker Change: Coming out of our strategic retreat.
Speaker Change: And just the board felt it was necessary to look at.
Speaker Change: Options to maximize shareholder value.
Speaker Change: The process for Ron getting on our board.
Speaker Change: Was Ron is is a well known entity and our board.
Speaker Change: As as we've done over the last several years. Our board continues to look at our refreshment process and I think Ron was just.
Speaker Change: The appropriate candidate we we enjoy is his skill sets and his operating history.
Cooper Clark: We enjoy his skill sets and his operating history, and really looking forward to working with him and gaining valuable insights from him. Great, thank you very much for taking the Sure, Cooper. Thank you.
Speaker Change: We're really looking forward to working with them and gaining valuable insights from them.
Cooper Clark: Great. Thank you very much for taking the questions sure Cooper.
Anne Chan: Our next question is coming from Anne Chan with Green Street. Your line is Hey, good morning. Thanks for my question. So could you elaborate on what's driving the acceleration of the Wi-Fi initiative income? And does this imply a corresponding acceleration in the rollout related expenses as well?
Speaker Change: Thank you. Our next question is coming from Chan with Green Street. Your line is live.
Chan: Hey, good morning, Thanks for taking my question so.
Speaker Change: So could you elaborate on what's driving the acceleration.
Speaker Change: Wi Fi initiative income.
Speaker Change: Does this imply a corresponding acceleration.
Speaker Change: Oh really.
Sensors as well.
Tiffany Butcher: Sure, Anne, I can start with that, and obviously Steve or others can feel free to chime in. But we started rolling out our managed Wi-Fi initiative last year with the first seven communities. We're in the process of installing phase two, which is our next four communities. The installation process has gone a little faster than anticipated, particularly on phase two. So we're able to get those projects live a little bit quicker, and the timing is critical on that given that we are entering our spring and summer leasing season when a lot of leases roll, and we have the ability to roll residents onto that.
Speaker Change: Sure I can start with that and obviously, Steve or others can feel free to chime in.
Speaker Change: We started rolling out our managed Wi Fi initiative last year with the first southern communities. We are in the process of installing a phase two which is our next four communities.
Speaker Change: The installation process has gone a little faster than anticipated, particularly on phase two so we're able to get those projects life, a little bit quicker and the timing is critical on that given that we are entering our spring and summer leasing season, when a lot of leases roll and we have the ability to roll residents onto that so the ability to get those sis.
Steve Freishtat: So the ability to get those systems live earlier and get more residents signed up quickly is allowing us to accelerate our expectations for achieving managed Wi-Fi income this year, which is what led us to increase the amount of revenue we're expecting to get in 2025 for managed Wi-Fi.
Speaker Change: <unk> life earlier and get more resident signed up quickly is allowing us to accelerate our expectations for achieving managed Wi Fi income this year, which is what led us to increase the amount of revenue we're expecting to get in 2025 for managed Wifi and Ann This is Steve and you are correct, though there'll be an.
Steve Freishtat: And Anne, this is Steve, and you're correct. There will be an associated charge, so the expenses will see that, but to a lesser extent. Okay. Thank you.
Speaker Change: Exceeded our charge so the expenses will see that but to a lesser extent.
Speaker Change: Okay.
Steve Freishtat: And, you know, given that guidance isn't changed, you know, but you're seeing some more contribution from the Wi-Fi income this year and also from bad debt recovery in Atlanta, should we assume that there's been a shift in revenue composition? Like, in that context, are there any line items you see carrying potential downside in order to, you know, serve them the point of guidance? Yeah, and so, you know, obviously, as we talked about in the prepared remarks, we had a strong first quarter, first quarter that was above our initial expectations coming into the year. We talked about how we're tracking post-quarter end in line with seasonal norms. But, you know, when looking at, you know, the whole year and looking at the leasing that we need to get done, we're just getting into the busy spring and summer leasing season.
Anne: Thank you Anne.
Anne: Given that guidance is unchanged.
Anne: The more countries in Asia.
Anne: Wi Fi income this year.
Anne: From bad debt recovery in Atlanta.
Speaker Change: Should we assume that there's been a shifting revenue composition like in that context are there any line items, you see carrying potential downside.
Anne: To the midpoint of guidance.
Speaker Change: Yeah and so.
Speaker Change: As we talked about in the prepared remarks, we had a strong first quarter first quarter that was above our initial expectations coming into the year, we talked about how we're tracking post quarter end in line with seasonal norms.
Speaker Change: But when looking at.
Speaker Change: The whole year and looking at the leasing that we need to get done we're just getting into the busy spring and summer leasing season. So we still have a lot of leases that will.
Steve Freishtat: So we still have a lot of leases that will, you know, turn over the next few months. And you know, we feel good about the trends, but there is still in the next few months a lot to take care of. And so when looking at our guidance and the potential outcomes over the next, you know, the remainder of the year, we feel that keeping our guidance range, you know, unchanged at this point in time is appropriate, but we should know a lot more on our Q2 call and we'll look to update the guidance at that point.
Speaker Change: Turn it over the next few months.
Speaker Change: And we feel good about the trends, but there is still in the next few months a lot too.
Take care of and so when looking at our guidance and the potential outcomes over the next the remainder of the year, we feel that keeping our guidance range.
Speaker Change: Unchanged at this point in time is appropriate.
Speaker Change: But we should know a lot more on our Q2 call and we'll look to update the guidance at that point.
Anne Chan: Okay, great. Thank you.
Speaker Change: Okay, great. Thank you.
Speaker Change: Thank you.
Paul McDermott: And if there are no further questions, I'd like to turn the floor back to management for any closing Thank you very much everybody, we appreciate your time today and we're looking forward to talking to many of you in the coming weeks. Thank you.
Speaker Change: And if there are no further questions I'd like to turn the floor back to management for any closing comments.
Speaker Change: Yeah.
Speaker Change: Thank you very much everybody. We appreciate your time today and we're looking forward to talking to many of you in the coming weeks. Thank.
Speaker Change: Thank you.
Operator: Thank you ladies and gentlemen.
Speaker Change: Thank you ladies and gentlemen. This concludes today's call you may disconnect. Your lines at this time and we thank you for your participation.
Operator: This concludes today's call. You may disconnect your lines at this time and we thank you for your participation.