Q1 2025 Invitation Homes Inc Earnings Call

Operator: Welcome to the Invitation Homes First Quarter 2025 Earnings Conference. All participants are in a listen-only mode at this time. If you need assistance, please signal a conference specialist by pressing the star key, followed by . As a reminder, this conference is being recorded.

Welcome to the invitation homes first quarter 2025 earnings conference call.

All participants are in a listen only mode at this time.

Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero as a reminder, this conference is being recorded.

Scott Mclaughlin: At this time, I would like to turn the conference over to Scott McLaughlin, Senior Vice President and investor. Thank you, operator, and good morning. I'm joined today from Invitation Homes with Dallas Tanner, our Chief Executive Officer. Charles Young, our president. John Olsen, Chief Financial Officer Scott Eisen, Chief Investment Officer Following our prepared remarks, we'll open the line for questions from our covering sell-side analysts.

Speaker Change: At this time I would like to turn the conference over to Scott Mclaughlin Senior Vice President of Investor Relations. Please go ahead.

Speaker Change: Thank you operator, and good morning, I'm joined today from invitation homes with Dallas Tanner, Our Chief Executive Officer.

Charles Young: Charles Young our president.

Charles Young: John Olson, our Chief Financial Officer, and Scott <unk>, our Chief investment Officer.

Charles Young: Following our prepared remarks, we'll open the line for questions from our covering sell side analysts.

Scott Mclaughlin: During today's call, we may reference our first quarter 2025 earnings release and supplemental information. We issued this document yesterday afternoon after the market closed, and it is available on the investor relations section of our website at www.invh.com.

Charles Young: During today's call we may reference our first quarter 2025 earnings release and supplemental information.

Charles Young: We issued this document yesterday afternoon. After the market closed and is available on the Investor Relations section of our website at Www Dot I N V H Dot com.

Scott Mclaughlin: Certain statements we make during this call may include forward-looking statements relating to the future performance of our business, financial results, liquidity and capital resources, and other non-historical statements, which are subject to risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated. We describe some of these risks and uncertainties in our 2024 Annual Report on Form 10-K and other filings we make with the SEC from time to time. Except to the extent otherwise required by law, we do not update forward-looking statements and expressly disclaim any obligation to do so.

Charles Young: Certain statements we make during this call may include forward looking statements relating to the future performance of our business financial results liquidity and capital resources and other non historical statements, which are subject to risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated.

Charles Young: We describe some of these risks and uncertainties in our 2024 annual report on Form 10-K, and other filings, we make with the SEC from time to time.

Charles Young: Except to the extent otherwise required by law, we do not update forward looking statements and expressly disclaim any obligation to do so.

Scott Mclaughlin: We may also discuss certain non-GAAP financial measures during the call. You can find additional information regarding these non-GAAP measures, including reconciliations to the most comparable GAAP measures in yesterday's earnings release.

Charles Young: We may also discuss certain non-GAAP financial measures during the call you can find additional information regarding these non-GAAP measures, including reconciliations to the most comparable GAAP measures in yesterdays earnings release.

Dallas Tanner: With that, I'll now turn the call over to Dallas Tanner. Please begin, Dallas. Thanks, Scott. And good morning, everyone. We're pleased to share another quarter of solid performance, further demonstrating the resilience of the single-family rental market, and the strength of our operating platform. as well as the dedication of our associates and the trust our residents place in us every day. During the first quarter, our same store portfolio delivered 97.2% average occupancy, 3.6% blended rent growth, and 3.7% year-over-year increase in NOI. Core FFO per share grew 3.5% year over year and AFFO per share grew 4%.

Dallas Tanner: With that I'll now turn the call over to Dallas Tanner. Please begin Dallas.

Thanks, Scott and good morning, everyone. We're pleased to share another quarter of solid performance further demonstrating the resilience of the single family rental market and the strength of our operating platform.

Dallas Tanner: As well as the dedication of our associates and the trust our resins place in US every day.

Dallas Tanner: During the first.

Dallas Tanner: First quarter, our same store portfolio delivered 97, 2% average occupancy.

Dallas Tanner: Three 6% blended rent growth and three 7% year over year increase in NOI.

Dallas Tanner: Core <unk> per share grew three 5% year over year and <unk> <unk> per share grew 4%.

Dallas Tanner: These metrics underscore our ability to achieve solid rent growth, sector leading occupancy, and strong financial performance, even in a volatile environment. And I'm grateful to our team for the terrific start to the year.

These metrics underscore our ability to achieve solid rent growth sector, leading occupancy and strong financial performance, even in a volatile environment.

Dallas Tanner: And I am grateful to our team for the terrific start to the year.

Dallas Tanner: The demand for single-family homes is driven by several factors. We've often discussed the favorable demographics, the shift towards value and convenience, and flexibility over long-term commitments, and the high cost of homeownership. On average, in our markets, it's currently over $1,000 per month less expensive to lease a home than it is to own. Whether that's due to elevated mortgage rates or rising homeowners insurance premiums and property taxes, we provide a valuable alternative to the 14 million individuals and families who choose the leasing lifestyle. Housing is a fundamental human need, and we believe there is a strong desire for well-located, high-quality, professionally serviced homes for lease.

Dallas Tanner: The demand for single family homes is driven by several factors.

Dallas Tanner: We have often discussed the favorable demographics, the shift towards value and convenience and flexibility over long term commitments and the high cost of homeownership.

Dallas Tanner: On average in our markets currently over $1000 per month less expensive to Liza home than it is to own.

Dallas Tanner: Whether that's due to elevated mortgage rates are rising homeowners insurance premiums and property taxes, we provide a valuable alternative for $14 million individuals and families who choose the leasing lifestyle.

Dallas Tanner: Housing is a fundamental human need and we believe there is a strong desire for well located high quality professionally serviced homes for lease.

Dallas Tanner: We've observed this to be true in many recent cycles, including in Houston during the energy crisis, across all of our markets during the pandemic, and in my previous business in Phoenix during the global financial crisis prior to co-founding Invitation Homes. In general, in periods of economic uncertainty, SFR occupancy has tended to remain steady and rents have held flat or even increased slightly. In short, we believe Invitation Homes can deliver stable, sticky, and growing property cash flows in both prosperous and challenging times.

Dallas Tanner: We have observed this to be true in many recent cycles, including in Houston during the energy crisis across all of our markets during the pandemic and in my previous business in Phoenix during the global financial crisis prior to co founding invitation homes.

Dallas Tanner: In general in periods of economic uncertainty as if our occupancy has tended to remain steady and rents have held flat or even increased slightly and.

Dallas Tanner: In short, we believe invitation homes can deliver stable sticky and growing property cash flows and both prosperous and challenging times.

Dallas Tanner: Consistent with our corporate DNA, we believe that capital recycling and prudent portfolio growth are essential parts of our overall strategy. Our approach of partnering with homebuilders to redeploy disposition proceeds in the new well-located homes has shown to be both effective and accretive. During the quarter, we acquired 577 wholly-owned homes for approximately $194 million, nearly all of which were newly built. while strategically disposing of 454 homes, many to first-time homeowners. Additionally, we're helping our partners develop nearly 2,000 additional homes in many of our West Coast and Sunbelt markets. This provides us with a reliable pipeline of future growth.

Dallas Tanner: Consistent with our corporate DNA, we believe that capital recycling and prudent portfolio growth are essential parts of our overall strategy.

Dallas Tanner: Our approach of partnering with homebuilders to redeploy disposition proceeds and a new well located homes is shown to be both effective and accretive.

Dallas Tanner: During the quarter, we acquired 577 wholly owned homes for approximately $194 million.

Dallas Tanner: Nearly all of which were newly built.

Dallas Tanner: While strategically disposing of 454 homes, many to first time homeowners.

Dallas Tanner: Additionally, we're helping our partners develop nearly 2000 additional homes in many of our west coast and Sunbelt markets.

Dallas Tanner: This provides us with a reliable pipeline of future growth opportunities with virtually none of the risks of on balance sheet development.

Dallas Tanner: with virtually none of the risks of on-balance sheet development, which we believe is an advantage in the current environment.

Dallas Tanner: Which we believe is an advantage in the current environment.

Dallas Tanner: In addition to new BTR communities and scattered site development, we continue to evaluate stabilized portfolio acquisitions and are exploring several opportunities that we hope to be able to discuss later this year. As always, we remain dedicated to maintaining a disciplined capital allocation strategy. consistently focusing on investments that meet our risk-adjusted return criteria. We continue to target a 6% average yield on cost that's supported by the significant economies of scale we and our partners enjoy. Our ability to de-risk larger communities and acquire brand new scatter site homes combined with the synergies we create through best-in-class operations further support this objective.

Dallas Tanner: In addition to new BTR communities and scattered site development, we continue to evaluate stabilized portfolio acquisitions and are exploring several opportunities that we hope to be able to discuss later this year.

Dallas Tanner: As always we remain dedicated to maintaining a disciplined capital allocation strategy.

Consistently focusing on investments that meet our risk adjusted return criteria.

Dallas Tanner: We continue to target a 6% average yield on cost that supported by the significant economies of scale.

Dallas Tanner: And our partners enjoy.

Dallas Tanner: Our ability to derisk larger communities and acquire brand new scatter site homes combined with the synergies we create through best in class operations further support this objective.

Dallas Tanner: Looking ahead, we remain committed to our priorities with a measured outlook. We believe our consistent operating performance, execution of our strategic initiatives, and diversified acquisition pipeline form a robust foundation for sustainable growth. Despite the occasional volatility and uncertainty in the financial markets, Invitation Homes is dedicated to focusing on long term value and opportunity. With that, I've concluded my prepared remarks.

Dallas Tanner: Looking ahead, we remain committed to our priorities with a measured outlook. We believe our consistent operating performance execution of our strategic initiatives and diversified acquisition pipeline from a robust foundation for sustainable growth.

Dallas Tanner: Despite the occasional volatility and uncertainty in the financial markets invitation homes is dedicated to focusing on long term value and opportunities.

Dallas Tanner: With that I've concluded my prepared remarks, Charles over to you. Please.

Charles Young: Charles, over to you, please. Thanks. As Dallas mentioned, we posted a strong first quarter achieving 3.7% same store NOI growth driven by core revenue growth of 2.5%. Thanks to the hard work of our associates, our peak leasing season kicks solidly into gear with new lease rate growth that's accelerated each month since December. In addition, FAD debt has continued to improve, underscoring both the strength of our customer and the defensive nature of housing generally. Other sources of property income, such as value-added services like smart home and bundled internet, continue to enhance our overall revenue performance, while also providing desirable offerings to our residents.

Charles Young: Thanks, as Dallas mentioned, we posted a strong first quarter, achieving three 7% same store NOI growth driven by core revenue growth of two 5%.

Speaker Change: Thanks to the hard work of our associates, our peak leasing season kicks solidly into gear with new lease rate growth that's accelerated each month since December.

Speaker Change: In addition, bad debt has continued to improve underscoring both the strength of our customer and the defensive nature of housing generally.

Speaker Change: Other sources of property income such as value add services like smart home and bundle the Internet continued to enhance our overall revenue performance, while also providing desirable offerings to our residents.

Charles Young: On the expense front, we maintained our disciplined approach to cost controls during the first quarter. Same-store core operating expenses were flat year-over-year, in part due to our team's continued focus on leveraging operational efficiencies and scale advantages across our portfolio. Additionally, we experienced milder weather in most of our markets during the first quarter versus the same time last year, which helped us achieve a 2% reduction in repair and maintenance expense year-over-year. Turnover expenses also contributed to our favorable overall expense result, decreasing 5.1% year-over-year in the first quarter, driven by the large number of residents who opted to renew their leases with us.

Speaker Change: On the expense front, we maintained our disciplined approach to cost controls during the first quarter same store core operating expenses were flat year over year in part due to our team's continued focus on leveraging operational efficiencies and scale advantages across our portfolio.

Speaker Change: Additionally, we experienced milder weather in most of our markets during the first quarter versus the same time last year, which helped us achieve a 2% reduction in repair and maintenance expense year over year.

Speaker Change: Turnover expenses also contributed to our favorable overall expense result, decreasing five 1% year over year in the first quarter driven by the large number of residents who opted to renew their leases with us.

Charles Young: This positive trend in renewals was further supported by our same-store leasing performance year-over-year. During Q1, we posted a 5.2% increase in renewal rents, and new lease rents generally held steady. This resulted in blended rental rate growth of 3.6% for the quarter. In addition, average occupancy remained healthy at 97.2% reflecting sustained demand for our homes. Our average length of stay is now 38.5 months with a nearly 80% renewal rate during the first quarter, which we believe validates our long-standing resident-centric approach.

Speaker Change: This positive trend in renewals was further supported by our same store leasing performance year over year. During Q1, we posted a five 2% increase in renewal rents and new lease rents generally held steady.

Speaker Change: This resulted in blended rental rate growth of three 6% for the quarter.

Speaker Change: In addition average occupancy remained healthy at 97, 2%, reflecting sustained demand for our homes.

Speaker Change: Our average length of stay is now 38, five months with a nearly 80% renewal rate during the first quarter, which we believe validates our long standing resident centric approach.

Charles Young: Drilling in now to a few of our specific Our Western U.S. markets are experiencing strong occupancy and robust renewal and new lease rate growth, with the exception of Phoenix, which we've previously called out, along with Texas and Florida, where we continue to keep a close eye on some of the ongoing supply pressures. Nevertheless, we've seen some encouraging signs in these markets so far this year, with solid absorption and steady improvement, including a return last month to positive new lease rates. Meanwhile, the Midwest has been performing well, and our Southeast markets are achieving solid results that are in line with expectations.

Speaker Change: Drilling in now to a few of our specific markets our western U S markets are experiencing strong occupancy and robust renewal and new lease rate growth with the exception of Phoenix, which we previously called out along with Texas, and Florida, where we continue to keep a close eye on some of the ongoing supply pressures.

Speaker Change: Nevertheless, we are seeing some encouraging signs in these markets. So far this year with solid absorption steady improvement, including a return last month to positive new lease rate growth.

Speaker Change: Meanwhile, the Midwest has been performing well and our southeast markets are achieving solid results that are in line with expectations.

Charles Young: As we move further into peak leasing season, preliminary same-store results for the month of April reinforce the encouraging trends are just out. Blended Rent Growth was 4% in April, composed of 4.5% Renewal Rent Growth and 2.7% New Lease Rent Growth. In addition, April occupancy remained very healthy at an average of 97.4%. These higher year-to-date occupancy levels are slightly ahead of our initial expectations, primarily due to lower-than-expected turnovers. As Dallas mentioned earlier, it's common for SFR residents to stay put during times of uncertainty. We'll continue to monitor how this trend might affect our usual seasonality patterns, especially as we anticipate some moderation in occupancy this summer when move-outs typically peak.

Speaker Change: As we move further into peak leasing season preliminary same store results for the month of April reinforced the encouraging trends I just outlined.

Speaker Change: Blended rent growth was 4% in April composed of four 5% renewal rent growth in two 7% new lease rent growth.

Speaker Change: In addition April occupancy remained very healthy at an average of 97, 4%.

Speaker Change: These higher year to date occupancy levels are slightly ahead of our initial expectations, primarily due to lower than expected turnover.

Speaker Change: As Dallas mentioned earlier it is common for <unk> residents to stay put during times of uncertainty we.

Speaker Change: We will continue to monitor how this trend might affect our usual seasonality patterns, especially as we anticipate some moderation in occupancy this summer when move outs typically peak.

Charles Young: With all of this in mind, we believe we remain well positioned to capture market rate. Looking ahead, we're optimistic about maintaining this positive trajectory. Our teams are well prepared to capitalize on seasonal demand while maintaining our high standards for resident quality and service.

Speaker Change: With all of this in mind, we believe we remain well positioned to capture market rate growth.

Speaker Change: Looking ahead, we're optimistic about maintaining this positive trajectory our teams are well prepared to capitalize on seasonal demand, while maintaining our high standards for resident quality and service I'll now turn the call over to you John.

John Pawlowski: I now turn the call over to you, John. Thanks, Charles. Today, I'll provide a review of our balance sheet and financial results for the first quarter of 2025, and then discuss some high-level thoughts on our guidance for the remainder of the year. I'll start with our balance. As of March 31st, our total available liquidity stood at nearly $1.4 billion, comprised of unrestricted cash on our balance sheet and undrawn capacity on our revolving credit facility. Our net debt to adjusted EBITDA ratio was 5.3 times and we have no debt reaching final maturity until 2027. As of quarter end, 87.5% of our debt was fixed rate or swapped to fixed rate, 83% of our debt was unsecured, and approximately 90% of our wholly owned properties were unencumbered.

John: Thanks, Charles today, I'll provide a review of our balance sheet and financial results for the first quarter of 2025, and then discuss some high level thoughts on our guidance for the remainder of the year.

John: I'll start with our balance sheet.

John: As of March 31, our total available liquidity stood at nearly $1 4 billion.

John: Comprised of unrestricted cash on our balance sheet and undrawn capacity on our revolving credit facility.

John: Our net debt to adjusted EBITDA ratio was five three times and we have no debt, reaching final maturity until 2027.

John: As of quarter end 87, 5% of our debt was fixed rate or swapped to fixed rate, 83% of our debt was unsecured and approximately 90% of our wholly owned properties were unencumbered.

John Pawlowski: As we announced in last night's earnings release, Standard & Poor's recently reaffirmed our BBB flat credit rating while also upgrading our outlook from stable to positive. We've been glad to see the rating agencies acknowledge the strength of our ballot sheet over the past year, reflecting our steady progress. In addition, earlier this week, we closed a repricing amendment for our $725 million term loan that was originally scheduled to mature in June 2029. The amended term loan has a final maturity date in April 2030 and now bears interest based on the five-year pricing grid, which results in amended pricing of SOFR plus 85 basis points.

John: As we announced in last Night's earnings release standard and Poor's recently reaffirmed our triple B flat credit rating, while also upgrading our outlook from stable to positive.

John: We have been glad to see the rating agencies acknowledged the strength of our balance sheet over the past year, reflecting our steady progress. In addition earlier. This week, we closed a repricing amendment for our $725 million term loan that was originally scheduled to mature in June 2029.

John: The amended term loan has a final maturity date in April 2030, and now bears interest based on the five year pricing grid, which results an amended pricing of sofa, plus 85 basis points.

John Pawlowski: Based on the new pricing grid, this amendment lowers our borrowing costs by 40 basis points compared to the original term loan and further optimizes our debt maturity ladder. Turning now to our first quarter financial results, we delivered Core FFO of $0.48 per share, representing a solid 3.5% increase year-over-year. Similarly, AFFO grew 4% year-over-year to $0.42 per share. Looking ahead, we are confident in our ability to navigate the macroeconomic landscape, supported by our well-qualified and resilient customer base. We believe our business is both defensive and growth-oriented, which should benefit shareholders in times of uncertainty, thanks to the effective execution of our strategy, strong customer retention, and diligent expense management.

John: Based on the new pricing grid. This amendment lowers our borrowing cost by 40 basis points compared to the original term loan and further optimizes our debt maturity ladder.

John: Turning now to our first quarter financial results, we delivered core <unk> of <unk> 48 per share representing a solid three 5% increase year over year.

John: Similarly, <unk> grew 4% year over year to <unk> 42 per share.

John: Looking ahead, we are confident in our ability to navigate the macroeconomic landscape supported by our well qualified and resilient customer base. We believe our business is both defensive and growth oriented which should benefit shareholders in times of uncertainty. Thanks to the effective execution of our strategy strong customer retention.

John: <unk> and diligent expense management.

John Pawlowski: That being the case, we are pleased to reaffirm our full year 2025 guidance provided in late February. In closing, our business remains strong, supported by our solid balance sheet, stable operating performance, and thoughtful growth initiatives. Our well-structured capital position continues to provide the flexibility to pursue appropriate investment opportunities while maintaining our commitment to disciplined growth and steady value creation for our shareholders.

John: That being the case, we are pleased to reaffirm our full year 2025 guidance provided in late February.

John: In closing our business remains strong supported by our solid balance sheet stable operating performance and thoughtful growth initiatives.

John: Our well structured capital position continues to provide the flexibility to pursue appropriate investment opportunities, while maintaining our commitment to disciplined growth and steady value creation for our shareholders.

Unknown Executive: This concludes our prepared remarks.

John: This concludes our prepared remarks, operator, we're ready to begin the question and answer session.

Operator: Operator, we're ready to begin the question and answer session. Thank you. We will now begin our question and answer session. To ask a question, please press star, then 1 on your telephone keypad. To draw your question, please press star, then 1. If you are using a speakerphone, please pick up your handset before pressing the button.

John: Thank you we will now begin our question and answer session to ask a question. Please press Star then one on your telephone keypad to withdraw your question. Please press Star then one again sure.

John: If youre using a speakerphone please pick up your handset before pressing the keys in the interest of time, we ask that participants limit themselves to one question and then re queue by pressing star one to ask a follow up question one.

Operator: In the interest of time, we ask that participants limit themselves to one question, and then recue by pressing star 1 to ask a follow-up. One moment, please, while we post.

Speaker Change: One moment, please while we poll to your questions.

Michael Goldsmith: Your first question comes from the line of Michael Goldsmith of UBS. Your line is open. Good morning. Thanks a lot for taking my questions. Seems like the renewal rate was in the first quarter was 5.2%. And in April, it dipped to four and a half percent.

Speaker Change: Your first question comes from the line of Michael Goldsmith of UBS. Your line is open.

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

Michael Goldsmith: It seems like the renewal rate was in the first quarter was five 2% in April it dipped to four 5%. So just trying to understand.

Charles Young: So just trying to understand, you know, what are the dynamics that would drive the renewal rate down? I will be back shortly. And if there's any other factors that Yeah, thanks for your question.

Michael Goldsmith: What are the dynamics that would drive the renewal rate.

Michael Goldsmith: Down.

Michael Goldsmith: Sequentially and if there is any other factors that were weighing on that.

Michael Goldsmith: Yes. Thanks for your question. This is Charles we signaled this last quarter. This is kind of the typical.

Charles Young: This is Charles. We signaled this last quarter. This is kind of the typical kind of flow of renewals throughout the year. They're going to peak in Q1, which you saw really strong. There's usually and typically a little bit of moderation into the summer and we're starting to see that a little bit as we go into Q2. It's not going to move much from here and month by month, it's going to go up and down. And we expect at the end of the year, it's going to come back up. So this is exactly unfolding exactly as we expected.

Michael Goldsmith: Flow of renewals throughout the year Theyre going to peak in Q1.

Michael Goldsmith: Which you saw really strong there's usually a typically a little bit of moderation.

Michael Goldsmith: Into the summer and you're starting to see that a little bit as we go into Q2.

Michael Goldsmith: It's not going to move much from here and month by month, it's going to go up and down and we expect at the end of the year, it's going to come back up. So this is exactly.

Michael Goldsmith: Unfolding exactly as we expected.

Charles Young: And as you look at it combined with the new lease rate, blends have been going up every month since December. So this is in line with what we thought. As you go into the summer, you get a little higher turnover and that's kind of natural what you see on the renewal process.

Michael Goldsmith: And as you look at it combined with the renewal with the new lease rate blends have been going up every month since December. So this is in line with what we thought as you go into the summer you get a little higher turnover and that's kind of natural of what you see on the renewal process.

Eric Wolfe: Your next question comes from the line of Eric Wolfe of Citigroup. Your line is open.

Speaker Change: Your next question comes from the line of Eric Wolfe of Citigroup. Your line is open.

Michael Goldsmith: Thanks.

Scott Eisen: A home builder commentary has been somewhat subdued thus far, so I was just wondering If you could talk maybe about the new homebuilders that are approaching you now, given some of the weakness from the retail buyer, how much you could scale up the partnerships, and then secondly, to what extent, you know, some of this weaker homebuilder commentary gets you worried about some of the shadow supply impact that maybe you saw last year. Thanks, Eric.

Michael Goldsmith: Homebuilder commentary has been somewhat subdued thus far so I was just wondering.

Michael Goldsmith: If you could talk maybe about the new homebuilders that are approaching you know given some of the weakness from the retail buyer how much you could scale up the partnerships and then secondly.

Michael Goldsmith: To what extent some of this weaker homebuilder commentary.

Michael Goldsmith: Are you worried about some of the shadow supply impact that maybe you saw.

Michael Goldsmith: Last year. Thanks.

Scott Mclaughlin: Thanks, Eric Hi, it's Scott.

Scott Eisen: Hey, it's Scott Eisen. Yeah, look, our dialogue with the home builders continues to be strong. We've obviously really built out our relationships with them over the last two years. We continue to engage daily, weekly with the national and regional home builders. I'd say that in terms of our forward flow for the CFO, we continue to sift through lots of opportunities and we selectively choose the forward purchase communities that make sense for us in our buy box locations and demographics. And so that flow continues and I think we're pleased with what we see from the builders.

If you look our dialogue with the homebuilders, who continues to be strong. We've obviously really built out our relationships with them over the last two years, we continued as engaged daily weekly with National and regional homebuilders.

Scott Mclaughlin: Say that in terms of our forward flow for the CFO, we continue to ship through lots of opportunities and we selectively choose the forward purchase communities that makes sense for us and our buy box locations and demographics and so that flow continues and I think we're pleased with what we see from the builders I think theres, probably been a little bit of an increase.

Scott Eisen: I think there's probably been a little bit of an increase in the dialogue we've had with them on the end of month tapes and I think, you know, opportunistically we're seeing some ability to buy some homes, you know, two, three, five homes at a time, you know, at the end of month. And, you know, we're seeing some ability to execute there. But I'd say generally speaking, the dialogue is strong and continues to be strong.

Scott Mclaughlin: In the dialogue, we've had with them on the end of month tapes and I think opportunistically, we're seeing some ability to buy some homes to three five homes at a time at the end of month and we're seeing some ability to execute there, but I'd say generally speaking when the dialogue is strong and continues to be strong.

Stephen Sakwa: Your next question comes from the line of Steve Sakwa of Evercore ISI, your line is . Yeah, maybe just following up on that question. How are you thinking about your yield hurdles, just kind of with more volatility, bond market pricing, you know, I guess there's a 6% yield, you know, still adequate in today's environment. And do you have any ability to sort of push that up?

Speaker Change: Your next question comes from the line of Steve <unk> of Evercore ISI. Your line is open.

Speaker Change: Maybe just following up on that question.

Speaker Change: Are you thinking about your yield hurdles, just kind of with more volatility.

Speaker Change: Bond market pricing I guess, it was a 6% yield still adequate in today's environment and do you have any ability to sort of push that up.

Dallas Tanner: Hi, Steve, Dallas. As Scott mentioned, look, we're, he used the word sifting, we're getting to see more deal flow. There's no doubt about that right now, than maybe where we were a year ago. All things being equal in terms of how we're underwriting yield on cost, and what is our cost of capital, to be able to lean in there, I would say it's sort of the following. We've been pretty active, as you know, disposing and culling assets that are sort of in the low fours on a on a on a run rate cap rate basis.

Steve Dallas: Hi, Steve Dallas.

Scott Mclaughlin: Scott mentioned look.

Scott Mclaughlin: He's the words shifting where we're getting to see more deal flow. There is no doubt about that right now.

Scott Mclaughlin: And then maybe where we were a year ago.

Scott Mclaughlin: All things being equal in terms of how we're underwriting yield on cost and what is our cost of capital to be able to lean in there I would say, it's sort of the following we've been pretty active as you know disposing and calling assets that are sort of in the low fours on a on a on a run rate cap rate basis reinvesting at a six.

Dallas Tanner: reinvesting at a six. I think Scott and I hope that sort of forward opportunities may get a little bit better. We're certainly seeing more volume, which typically would lead to a conversation around seeing better pricing. We can't obviously speak for each builder or what they're dealing with. I think for John and I, as we sit around and think about our sources and uses and how we want to grow, both on balance sheet and in our joint venture partnerships, we're trying to be as deliberate as we can around what is the highest investment and best use of our cost of capital at any given point.

Scott Mclaughlin: I think Scott and I hope that sort of forward opportunities may get a little bit better. We're certainly seeing more volume, which typically would lead to a conversation around seeing better pricing.

Scott Mclaughlin: <unk>.

Speaker Change: We can't obviously speak for each builder or what theyre dealing with I think for John and I as we sit around and think about our sources and uses and how we want to grow both on balance sheet and in our joint venture partnerships, we're trying to be as deliberate as we can.

Speaker Change: Around what is the highest and best use of our cost of capital at any given point and so we've got somewhere around call. It a 1 billion and a half of dry powder between.

Dallas Tanner: And so we've got, you know, somewhere around, call it a billion and a half of dry powder between our revolver and cash, we can dispose of more assets, we'd love to see the spreads get wider, to your point. But I think development and development costs aren't necessarily coming in. Right. So it's more around finding stuff where a seller or a partner is willing to build at a margin that's just a bit more creative than it was maybe a year or two before below. And then, look, to your point on the bond markets, and John can speak more on this later, it's been hard to sort of think about in the spot where long term debt is or as we think about how to sort of think about that as another source of capital over time.

Speaker Change: Our revolver and cash we can dispose of more assets, we'd love to see the spreads get wider to your point.

Speaker Change: But I think development and development costs aren't necessarily coming in right. So it's more around finding stuff where.

Speaker Change: A seller or a partner is willing to build at a margin. That's just a bit more accretive than it was maybe a year or two before below and then look to your point on the bond markets and John can speak more on this later, it's been hard to sort of think about in the spot where long term debt is.

Speaker Change: As we think about how to sort of think about that as another source of capital over time, but right now we're going to use as much of our disposition proceeds and cash and just keep kind of evolving out of older homes.

Dallas Tanner: But right now, we're going to use as much of our disposition proceeds in cash and just keep kind of evolving out of older homes into newer product, both at the community level and also scattered.

Speaker Change: Into newer product both at the community level and also scattered.

Yana Gowin: Your next question comes from the line of Yana Gowin of Bank of America, Yolanda. Thank you. Good morning. Congratulations on the bad debt achieving a new post-pandemic low. I was curious, do you think you have further opportunity to bring it down, or is it better to be more cautious now in this macro environment? I appreciate the question. Yeah, we're proud of the work that the teams have done to bring bad debt in. It's been a good effort. You know, it's also a reflection of the quality of our resident. We have, you know, we're off to a good start.

Speaker Change: Your next question comes from the line of Yana gallon of Bank of America. Your line is open.

Yana Gallon: Thank you and good morning.

Speaker Change: Congratulations on the bad debt, achieving a new post pandemic low.

Speaker Change: Was curious do you think you have further opportunity to bring it down or is it better to be more cautious now in this macro environment.

Speaker Change: I appreciate the question, yes, we're proud of the work that the teams have done to bring bad debt and it's been a good effort.

Speaker Change: It's also a reflection of the quality of our resident.

Speaker Change: We have.

Charles Young: We'll see how the summer goes. There's a macro backdrop that's out there. But, you know, right now, teams are executing as we look across the markets. It's really kind of improvement across the board. Some of our historically low bad debt markets are getting back to their levels that we expected. The markets that we're keeping an eye on are Atlanta, Chicago, Southern California, a little bit of Carolinas, all improving. But as we look at the court times and kind of that process, that's something we keep an eye on. So we're cautiously optimistic that we're going in the right direction.

Speaker Change: We're off to a good start we will see how the summer goes as the macro backdrop, that's out there but.

Speaker Change: Right now our teams are executing as we look across the markets, it's really kind of improvement across the board some of our historically low bad debt markets are getting back to there.

Speaker Change: Levels that we expected the markets that we're keeping an eye on our Atlanta Chicago.

Speaker Change: Southern California, a little bit of Carolinas all improving.

Speaker Change: But as we look at the core times and kind of that process is something we keep an eye on so we're cautiously optimistic that we're going in the right direction here.

Austin Wurschmidt: Your next question comes from the line of Austin Wurschmidt of Key Bank, your line Yeah, look, the year's unfolding as we expected, you know, demand is still, you know, healthy. We're looking at, you know, all of our dials, as you talked about, you know, new visitors to the website from Q4 to Q1 are up. Demand is still here. You see we're absorbing well. We're holding occupancy while getting new lease rate growth every month. You know, the way this typically unfolds is that there'll be some continued acceleration as we look at the new lease side into the summer.

Speaker Change: Your next question comes from the line of Austin <unk>.

Sorry, Austin, where Schmidt of Keybanc. Your line is open great.

Speaker Change: Thanks, Good morning, everybody I.

Austin: Appreciate all the detail on an April leasing trends, but I'm just curious if I recall correctly around mid may of last year, maybe into June you had started to see some softening in trends. So I'm just wondering when you look at your dashboards, the leading indicators if theres anything that suggests the momentum you've seen year to date.

Austin: It could be moderating into the peak leasing season, or if the runway looks clear as far out as youre able to see.

Austin: Yes look the year is unfolding as we expected.

Austin: Demand is still.

Austin: Healthy we're looking at all of our dials as you've talked about new visitors to the website from Q4 to Q1 are up.

Austin: Demand is still here you see we're absorbing well, we're holding occupancy while.

Austin: Getting new lease rate growth every month.

Austin: The way. This typically unfolds is that there'll be some continued acceleration as we look at the new lease side into the summer.

Austin Wurschmidt: We typically peak out somewhere around, you know, June-ish, plus, minus, could go July, It varies each year. But the most important thing is renewals are steady. Talked about it earlier, they're strong. You know, you get a little bit of, like we just talked about, moderation in the summer, but they're going to stay where they are, if not slightly higher, and then accelerate at the end of the year. So you put that all together, we're seeing exactly what we want. You know, look, occupancy has held strong in Q1. That's going to come down a little bit.

Austin: We typically peak out somewhere around June ish, plus minus could go July August it varies each year, but the most important thing is renewals are steady talked about it earlier. There are strong you get a little bit of like we just talked about moderation in the summer, but theyre going to stay where they are if not slightly higher and then accelerated at the end of the year. So you put.

Austin: Altogether, we're seeing exactly what we want look occupancy has held strong in Q1, that's going to come down a little bit get into move out season.

Austin Wurschmidt: Get into move-out season, and we're trying to make sure that we're optimizing and capturing market rate on RETS. So we like the setup, you know, coming off of Q1, and I think we're here to capture all that we can going into the peak leasing season.

Austin: We're trying to make sure that we're optimizing and capturing market rate on rate. So we like the setup.

Austin: <unk> off of Q1, and we think we are here to capture all that we can going into the peak leasing season.

Haendel St. Juste: Your next question comes from the line of Haendel St. Juste of Missouho State.

Speaker Change: Your next question comes from the line of Hendel, St. Juste of Mizuho Securities. Your line is open.

Charles Young: Hey guys, good morning. So I understand the importance of the renewal rates you were just talking about. I want to talk about turnover here for a moment. Turnover continues to come in really, really low. As a matter of fact, lower than last year, which was a really low year. So maybe you could talk a bit about what you sense is the drivers of this increasingly lower turnover, and then maybe some color around what's embedded in your guide for turnover this year. And if this lower trend of turnover continues, could this be a source of upside to the FFO guide?

Speaker Change: Hey, guys good morning.

Speaker Change: I understand the importance of of the renewal rates you were just talking about wanted to talk about turnover here for a moment turnover continues to come in really really low in a matter of fact lower than last year, which was a really low year. So maybe you could talk a bit about what you said.

Speaker Change: The drivers of this increasingly lower turnover and then maybe some color around what's embedded in your guide for turnover this year.

Speaker Change: This low lower trend of turnover continues to just be a source of upside to the <unk>.

Speaker Change: Thanks, Andrew for the question. This is Dallas and ill ask Charles to add a little color here to my comments, but I think you guys take a step back and I think as you think about the business the industry our company well.

What's the SFA or resident is sort of proved out over the last decade is that theyre by nature, a lot stickier than maybe what we see in some of the other subsectors, excluding MH and so I mentioned in my prepared remarks through both sort of fast and fee.

Speaker Change: Dominant feast excuse me the customer has sort of been extremely sticky and has continued to show propensity to renew that being said Charles signaled. This in the fall of last year.

Speaker Change: We're seeing we've seen renewal rates as high as 80%, which which we would not expect I want to emphasize that point Charles just made in the previous question. We know that has to come in you know traditionally pre pandemic, we're sort of in the low to mid <unk> in terms of how often we renew and then through the pandemic, it's sort of creep dipped into the <unk> in the high <unk> I would just.

Speaker Change: Also add there is this mortgage dynamic that's going on right now that's really interesting and if you just think about the setup with both how the company's performing what the customers likely feeling and seeing in the marketplace. Our move out to homeownership buying is as low as it's ever been on our surveys.

Charles Young: And that continues to sort of lend itself to this thesis that the customer is going to stay longer and longer whats been equally sort of supportive in both our backdrop and the setup as we go into summer as Charles mentioned is that this new lease acceleration is doing what we thought it would do.

Charles Young: In the summer and so while we would expect to have less renewal. We certainly are renewing more earlier in the year than we underwrote originally to your point and Dell and we got to see how that plays out through summer and I don't want to set Charles up to be a good guy or the bad Guy in terms of what every customer does with their decision, making through summer, but we have seen and Charles.

Charles Young: Just alluded to it we can see out 60, 90 days and it feels pretty good so maybe I'll hand that to Charles to add a bit more perspective, but just the backdrop and the setup is really favorable right now yeah look I think it's a combination of.

Charles Young: Residents.

Charles Young: Enjoying our product theyre staying longer were up to 38 and a half months.

Charles Young: We're providing value add services that make it easy for them to stay with US and then you have the macro backdrop as Dallas talked about.

Charles Young: It does vary market by market.

Charles Young: But overall, it's a good start handled in Q1 turnover was slightly lower than we expected thats why youre seeing some of the strong occupancy, but we're going into the kind of move out season, if you will and there'll be some some step up in that turnover. So we're going to keep an eye on it.

Speaker Change: I'll, let John speak to where we are on our guide, but right now we feel like we're on track on turnover, maybe a little bit ahead of it and but we got some months left here to see our plays out.

Speaker Change: Yes handle its John.

Speaker Change: It's a good question as Charles noted were maybe slightly ahead of where we expected to be in terms of turnover, but I would remind everyone that.

Speaker Change: Turnover combined with days to re resident is really the driving force in terms of how how those statistics flow through to occupancy I think when we laid out our guidance.

John Pawlowski: We sort of articulated our expectation that days to re-resident would be marginally higher this year than in the last few, and that's primarily driven by longer days on market as we go out and try to optimize and capture the market rate that's available. So I think it's too early in the year to really be able to say whether there is upside relative to the guide based on what we're seeing vis-a-vis turnover, but as Dallas and Charles both said, we're really pleased with the first quarter results. Our customer is sticky.

Speaker Change: We sort of articulated our expectation that days to re resident would be marginally higher this year than in the last few.

Speaker Change: That's primarily driven by longer days on market as we go out and try to optimize and capture the market rate. That's available. So I think it's too early in the year to really be able to say, whether there is upside relative to the guide based on what we're seeing vis vis turnover, but as Dallas and Charles both said.

Speaker Change: We're really pleased with the first quarter results.

Speaker Change: Our customer is sticky business is quite stable and we're looking forward to getting into the meat of peak season, and seeing where we go from here.

John Pawlowski: The business is quite stable, and we're looking forward to getting into the meet-a-peak season and seeing where we go from here.

Daniel Tricarico: Your next question comes from the line of Daniel Tricarico of Scotiabank. Daniel, perhaps you'll end this on me?

Speaker Change: Your next question comes from the line of Daniel <unk> of Scotiabank. Your line is open.

Speaker Change: Daniel perhaps your line is on mute.

Jamie Feldman: Your next question comes from the line of Jamie Feldman of Wells Fargo.

Speaker Change: Your next question comes from the line of Jamie Feldman of Wells Fargo. Your line is open.

Cooper Clark: Hello, this is Cooper Clark on. Did you talk about the strong OPEX performance in 1Q and how much, if any, of the lower growth was timing-related? And also, what numbers might have come in lower versus what you assumed in guidance outside of the positive?

Hello. This is Cooper Clark on for Jamie. Thanks for taking the question could you talk about the strong opex performance in <unk> and how much if any of the lower growth was timing related and also what numbers might have come in lower versus what you assumed in guidance outside of the positive update on your insurance renewal.

Charles Young: Hey, Cooper, this is Charles. Yeah, I think I mentioned on the call, you know, the reduction in R&M, kind of quarter over quarter is really what drove the good performance on OPEX. This year, you know, that cost to maintain overall, we've been tracking in the right direction, but quarter to quarter can really vary based on weather when it comes to R&M. And we saw a much more mild, kind of early part of the year here than we did last year. And that's the big driver. Overall, though, you know, we are controlling what we control, our teams are executing well.

Charles Young: Hey, Coover. This is Charles Yeah, I think I mentioned on the call the reduction in R&M kind of quarter over quarter is really what drove the good performance on Opex this year.

Charles Young: That cost to maintain overall, we've been tracking in the right direction, but quarter to quarter can really vary based on on whether when it comes to R&M and we saw a much more mild kind of early part of the year here than we did last year and Thats the big driver.

Charles Young: Overall, though we.

Charles Young: We are controlling what we can control our teams are executing well.

Charles Young: You know, we have a, you know, just such a great platform when it comes to our scale and density procurement, all that we do. And that just shows up in how we do things. I would also say that execution on turns has been strong. In addition to R&M, we're turning well in terms of time. And, you know, as you think about the turnover, we just talked a little bit about that being lower, that's another driver of why the R&M number is slightly lower.

Charles Young: We have.

Charles Young: Such a great platform when it comes to our scale and density procurement all that we do and that just shows up in how we do things I would also say that execution on turns has been strong in addition to R&M.

Charles Young: Turning well in terms of time and.

Charles Young: Do you think about the turnover, we just talked a little bit about that being lower that's another driver of why the R&M number or slightly lower.

Charles Young: Yes.

John Pawlowski: Your next question comes from the line of John Pawlowski of Green Street. Thanks for the time. John, can you provide some color around the large increase year-over-year on share-based comp? I think it was up about 30 percent. And is this $40 million kind of plus or minus annual rate reasonable assumption moving forward?

John Pawlowski: Your next question comes from the line of John Pawlowski of Green Street. Your line is open.

John Pawlowski: Okay. Thanks for the time.

John Pawlowski: John can you provide some color around the large increase year over year on share based comp I think it was up about 30% and is this $40 million kind of plus or minus annual rate a reasonable reasonable assumption moving forward.

John Pawlowski: Yeah, thanks for the question, John. I think, you know, we made some changes to the way our share-based comp program works. We used to have, you know, sort of periodic performance-based plans that would run for a period of years and then get replaced. As we laid out in the proxy, we've moved away from that approach. And so now we're going to have more performance-based grants annually, rather than the lumpy every few year OPP plan or outperformance plan. You know, happy to go into more detail on that offline, but that's what's driving the difference.

John Pawlowski: Yes. Thanks for the question John I think we made some changes to the way our share based comp program works.

John Pawlowski: We used to have sort of periodic performance based <unk>.

John Pawlowski: Plans that would run for a period of years and then get replaced.

John Pawlowski: As we laid out in the proxy we've moved away from that approach and so now we're going to have more performance based grants annually rather than the lumpy every few year OPB planner outperformance plan.

John Pawlowski: Happy to go into more detail on that offline, but thats whats driving the difference.

Adam Kramer: Your next question comes from the line of Adam Kramer of Morgan Stanley. Your line is open. Great. Good morning, guys.

Speaker Change: Your next question comes from the line of Adam Kramer of Morgan Stanley. Your line is open.

Speaker Change: Great. Good morning, guys. Thanks for the time just wanted to ask about the kind of state of build to rent. The competition here I know you guys have talked about it in the past. It I think you guys were pretty early on to kind of talk about the competitive pressure there for new BTR deliveries where are we today in that process. I think you guys had talked about the deliveries that were down that would be down pretty significantly.

Charles Young: Thanks for the So I wanted to ask about the kind of state of dolterant competition here. I know you guys have talked about it in the past. I think you guys were pretty early on to kind of talk about the competitive pressure there. BTR deliveries, where are we today in that process? I think you guys have talked about the deliveries that were down, you know, that would be down pretty significantly year over year in 25. So is that kind of still the base case here? And, you know, what are you seeing with regards to?

Speaker Change: Year over year and 25.

Speaker Change: So is that kind of still the base case here and what are you seeing with regards to.

Charles Young: second half of the year 25 deliveries, maybe even into 2026 deliveries, just generally kind of the state of Yeah, this is Charles. Look, we signaled this last year that we saw some supply coming in the middle of the year in Phoenix, Texas, and Central Florida. The good news is those deliveries are down, and we're working through it. We're absorbing well. You can see it in our results. Those markets specifically, while behind some of the Western markets and the Midwest, as I talked about in my prepared remarks, they're turning positive on the new lease side, and occupancy is holding steady, if not increasing.

The second half of the year 25 deliveries, maybe even into 2026 deliveries just generally kind of the state of the PTR compensation.

Speaker Change: Yes. This is Charles look we are.

Speaker Change: Signaled this last year that we saw some supply coming in middle of the year in Phoenix.

Speaker Change: Phoenix, Texas and Central Florida.

Speaker Change: The good news is those deliveries are down.

Speaker Change: And we're working through it we're absorbing well you can see it in our results those markets specifically, while behind some of the western markets in the Midwest as I talked about in my prepared remarks.

Speaker Change: Theyre turning positive on the new lease side and occupancy is holding steady if not increasing so.

Charles Young: So we're working through it. Can't tell you exactly how long it's going to take. We're keeping an eye on it. But the good news is, as we're looking forward, we're not seeing a lot of new deliveries come on. It's down substantially, but we need to absorb in those markets. The other markets, we can have more of a balance of supply and demand, maybe a slight uptick in terms of overall, given what's going on with mortgage rates. But the reality is they're acting as we would expect when you think about Atlanta and the Carolinas, Chicago, the California markets, Seattle, Denver, in line with a balanced supply and demand.

Speaker Change: We're working through it can't tell you exactly how long it's going to take we're keeping an eye on it but the good news is by.

Speaker Change: We're looking forward.

Speaker Change: We're not seeing a lot of deliveries new deliveries come on it's down substantially, but we need to absorb in those markets.

Speaker Change: The other markets, we can have more of a balance of supply and demand maybe a slight uptick in terms of overall given kind of what's going on with.

Speaker Change: Mortgage rates, but the reality is they are acting as we would expect when you think about Atlanta, and the Carolinas Chicago, The California markets Seattle Denver in line with kind of a balanced supply and demand demand is still here for our product as you can see from our turnover in all of our metrics. So.

Charles Young: Demand is still here for our product, as you can see from our turnover and all of our metrics. We expect that we're going to work through it in these markets. We'll keep an eye on it and keep you guys updated.

Speaker Change: We expect that we're going to work through it in these markets will keep an eye on it and keep you guys updated.

Brad Heffern: Your next question comes from a line of Brad Heffern of RBC Yearline. Yeah, thanks, everybody.

Speaker Change: Your next question comes from the line of Brad Heffern of RBC. Your line is open.

Speaker Change: Yes, Thanks, everybody on third party management, you, obviously got a lot over the finish line right. When the program was launched but it's been kind of quiet since mid last year or so is there anything to read into that and what would you attribute the lull to and are you continuing to have lots of conversations around the offering.

Dallas Tanner: On third party management, you obviously got a lot over the finish line, right when the program was launched, but it's been kind of quiet since mid last year. So is there anything to read into that? And what would you attribute the lull to? And you know, are you continuing to have lots of conversations around the offering?

Dallas Tanner: Hi, great question. This is Dallas. First, as we laid out last year, as we started to announce the program, we said that we were going to be really specific about who, when, what, which portfolios, it has to make sense. We don't want to create noise in our own business. We want to try to do things that are both accretive internally and how we can operate a more efficient business and also look for, you know, the right sort of portfolio overlap, etc. They got to be strategic partners. And we're having a number of conversations. We always do.

Dallas Tanner: Hi, Great question. This is Dallas first as we laid out last year as we started to announce the program. We said that we're going to be.

Dallas Tanner: Really specific about who when what which portfolios. It has to make sense, we don't want to create noise in our own business. We want to try to do things that are both accretive internally on how we can operate a more efficient.

Dallas Tanner: Business and also <unk>.

Dallas Tanner: Look for the right sort of portfolio overlap et cetera, they've got to be strategic partners and we're having a number of conversations we always do.

Dallas Tanner: And we, you know, haven't seen anything yet that's truly fitting that strategic bucket. I would say that, like I said, last summer, we're fine if this stays at three clients, you know, candidly. We'd also would be fine if it were 10 clients that were the right portfolio. So our goal is just to do things that make our business better, that create strategic value add for the company.

Dallas Tanner: And we haven't seen anything yet.

That's truly fit into that strategic bucket I would say that.

Dallas Tanner: Like I said last summer we're fine at this stays at three clients candidly.

Dallas Tanner: We'd also would be fine if it were 10 clients who are the right portfolio. So our goal is just to do things that make our business better.

Dallas Tanner: That create strategic value add.

Dallas Tanner: But you know, I think that this will be a continued industry that will evolve. And I think our opportunity set will get wider over time.

Dallas Tanner: For the company, but I think that this will be a continued industry that will evolve and I think our opportunity set will get wider over time.

Dallas Tanner: Okay.

Julien Blouin: Your next question comes from the line of Julien Blouin of Goldman Sachs. Yeah, thank you for taking my question. Could you help us understand how we should think about the defensiveness of the SFR sector if the macro were to deteriorate? It tends to be relatively more resilient when we look at recent instances, but does maybe even the larger portability gap versus home ownership make it that much more resilient than in the past, sort of becoming a trade-down option for some homeowner families that fall on hard times? It's a great, it's a great question. I think you sort of led with the answer, which is, when you think about the customer base of who we have, it's a number of healthcare professionals, teachers, you know, people that work across a variety of subsectors and industries.

Speaker Change: Your next question comes from the line of Julien <unk> of Goldman Sachs. Your line is open.

Speaker Change: Yes. Thank you for taking my question.

Speaker Change: Could you sort of help us understand how we should think about the defensiveness of the <unk> sector. If the macro were to deteriorate I mean, it tends to be relatively more resilient.

Speaker Change: When we look at sort of recent instances, but does maybe even the large affordability gap versus homeownership make it that much more resilient than in the past sort of becoming a trade down option for some homeowner families that fall on hard times.

Speaker Change: It's a great. It's a great question I think you sort of led with the answer which is when you think about the customer base, who we have a number of health care professionals teachers.

Speaker Change: Sure.

Speaker Change: People that work across a variety of sub sectors and industries, they're looking for three basic things that we see over and over in our data.

Dallas Tanner: They're looking for three basic things that we see over and over in our data. They want space, they want access to a yard for their kids, for their pets, for their animals. They want proximity to good transportation corridors that make their commute times reasonable. And then they ultimately want access to great schools and can be in a school district or proximity to school districts they might otherwise not be able to afford. That as the backdrop generally, regardless of the cycle, would tend to continue to promote this concept or idea that if I can have that quality of life, that quality of a leasing lifestyle at a fraction of the cost of ownership, there is a value opportunity there for our customers.

Speaker Change: I want space, they want access to yard for their kids for their pets for their animals. They want proximity to good transportation corridors that make their commute time is reasonable.

Speaker Change: And then they ultimately want access to great schools.

Speaker Change: <unk> can be in a school district or proximity to school districts, they might otherwise not be able to afford.

Speaker Change: That as the backdrop generally regardless of the cycle would tend to continue to promote this concept or idea that if I can have that quality of life that quality of a leasing lifestyle at a fraction of the cost of ownership there is a value opportunity there for our customers now.

Dallas Tanner: Now, if the market starts to shift, to double click on your question, you look at us relative to multifamily or some of the other sectors, on a rent per square foot basis, we're far more affordable, and on a quality of sort of space, and the cost to move, or if they need to have somebody live with them, i.e. maybe a parent who's aging out, those are all additional value adds to the leasing lifestyle. And so, we've talked about this in the past, our bucket of customers sort of fit into three buckets. One is out of need, one is because they have a transitional event happening in their life, and the third is they're preferential, and they want the leasing lifestyle versus maybe an ownership lifestyle.

Speaker Change: If the market starts to shift to double click on your question.

Speaker Change: You look at us relative to multifamily or some of the other sectors on our rent per square foot basis, we're far more affordable and on our quality of sort of space and the cost to move.

Speaker Change: Or if they need to have somebody live with them I E. Maybe apparent who's aging out those are all additional value adds to the leasing lifestyle and so we've talked about this in the past our bucket of customers sort of fit into three buckets. One is that a need one is because they have a transitional event happening on their life and the third is <unk>.

Speaker Change: They are preferential and they want to they want to they want the leasing lifestyle versus maybe its ownership lifestyle. So look I do think we're defensive to John's prepared remarks earlier in the call.

Dallas Tanner: So look, I do think we're defensive. To John's prepared remarks earlier in the call, I think the value proposition of invitation homes is that while there can be uncertainty in the market, it can definitely act as a defensive opportunity, but more or less, we're still going to see pretty significant opportunities for growth. And look, we sit in a really favorable backdrop, both on the revenue and the defensive side, but also on the expense side. We haven't talked about this, but we had fundamental headwinds with property tax and a number of these things, as we had rapid homeowners, excuse me, home price appreciation, and those are going to be continued tailwinds for us on the expense side as well.

Speaker Change: I think the value proposition of invitation homes is that while there can be uncertainty in the market. It can definitely act as a defensive opportunity, but more or less we're still going to see pretty significant opportunities for growth and look we sit in a really favorable backdrop. Both on the on the on the revenue and the defensive side, but also on the expense side, we haven't talked about this but we had funding.

Speaker Change: Fundamental headwinds with property tax and a number of these things as we had.

Speaker Change: Rapid homeownership excuse me home price appreciation and those are going to be continued talus for us on the expense side as well so all things being equal we can't see perfectly in the future, but we've now.

Dallas Tanner: So all things being equal, we can't see perfectly in the future, but we've now had two or three sort of cycles that we've lived through where there's been economic uncertainty and the company's been resilient through kind of each of those cycles in its own way.

Speaker Change: I had two or three sort of cycles that we've lived through where there has been economic uncertainty and the company has been resilient through kind of each of those cycles in its own way.

Richard Hightower: Your next question comes from the line of Richard Hightower of Barclays. Hey guys, thanks for taking the question here. I guess to continue a little bit of that same line of questioning, you know, obviously the, the, I guess the for sale. Market for Housing in this country is pretty much broken for a lot of reasons. I think that have probably been articulated on these calls. But, you know, do you guys have, it's kind of a wonky question, but do you have a sense? and Dub Demand for people who really would prefer.

Rich Hightower: Your next question comes from the line of Rich Hightower of Barclays. Your line is open.

Rich Hightower: Hey, guys. Thanks for taking the question here I guess to continue a little bit of that same line of questioning.

Rich Hightower: Obviously, the I guess the for sale.

Rich Hightower: Market for housing in this country is pretty much broken for a lot of reasons I think that is probably been articulated on these calls but do.

Rich Hightower: You guys have kind of a wonky question, but do you have a sense of.

Rich Hightower: Pent up demand for people, who really would prefer to own.

Dallas Tanner: They just can't afford the monthly payment because of mortgage rates, but if that math ever changes, what's the risk to Invitation Homes? Current Demand Set, if you've ever thought about it that way. Oh, good question. We think about that way all the time. And don't forget, we built this business in an incredibly low mortgage rate environment, two, three, 4% mortgages, and we had 96 to 97% occupancy through all those sort of chapters. So even in a low cost of ownership environment, it doesn't change the fact that there's 47 million households, at least in the US.

Rich Hightower: They just can't afford the monthly payment because of mortgage rates, but.

Rich Hightower: That math over changes what's the risk.

Rich Hightower: Invitations.

Rich Hightower: Current demand said, if you've ever thought about it that way.

Rich Hightower: Good question, we think about that way all the time and don't forget we built this business in an incredibly low mortgage rate environment.

Rich Hightower: Two to three 4% mortgages, and we had 96% 97% occupancy through all of those sort of chapter so even in a low cost of ownership environment. It doesn't change. The fact that there's 47 million households at least in the U S. So that's sort of always a plus on our business.

Dallas Tanner: So that's sort of, you know, always a plus on our business. I think to your point around if mortgage rates were to go through the floor, and that spurs homeownership activity, we view that as a positive. Our businesses typically run between about call it 18 and 27% of our customers moving out and clicking the box saying I'm moving out because I'm going to purchase a home. We view our company as a normal part of that housing continuum. So we're okay there. I think the retention and the renewals that Charles talked about earlier are more probably more indicative of it being a little bit higher and elevated right now, which is net net a positive, but it's just a near term positive.

Rich Hightower: I think to your point around if mortgage rates were to go through the floor and that Spurs homeownership activity, we view that as a positive our business is typically run between about call. It 18, and 27% of our customers moving out and clicking the box, saying I'm moving out because I'm going to purchase a home we view our company as a normal part of that housing continuum. So Roe.

Charles Young: K, there I think the retention and the renewals that Charles talked about earlier or more probably more indicative of it being a little bit higher and elevated right now which is net net a positive but it's just a near term positive. It's not anything that we would view as sort of ordinary course to be an 80% renewal business I think if homeownership picks up as I mentioned before hugely.

Dallas Tanner: It's not anything that we would view as sort of ordinary course to be an 80% renewal business. I think if homeownership picks up, as I mentioned before, hugely positive for a couple of reasons for our business. One, it's a healthier market overall. We prefer that candidly where there's enough supply in the market and enough transaction volume where you get a better sense of values. Two, if home price appreciation starts to pick up, that is actually a proxy for where rents typically go. And so in our business, as the values of our assets increase, typically you'll see that the rents are increasing as well.

Charles Young: For a couple of reasons for our business one it's a healthier market overall, we prefer that candidly, where theres enough supply in the market and enough transaction volume, where you get a better sense of values too if home price appreciation starts to pick up that is actually a proxy for where rents typically go and so in our business as the values of our assets increase.

Charles Young: Typically you will see that the rents are increasing as well.

Dallas Tanner: And then SFR supply obviously sort of is indicative of what happens there. So today you're seeing more resale supply kick up in the marketplaces, more options for people, which we view as a good thing. And I think the calculus is that right now people are wanting to sort of stand pat, hunker down and bet on predictability versus anything.

And then as far as supply outage Lee sort of is indicative of what happens there. So today youre seeing more resale supply pick up in the marketplaces more options for people, which we view as a good thing and I think the calculus is at right now people are wanting to sort of stand Pat hunker down.

And bet on predictability versus anything.

Charles Young: Okay.

Jesse Lederman: Your next question comes from the line of Jesse Lederman of Zellman & Associates. Your line is open. Hey, thanks for taking my question. I wanted to ask a little bit on property management expense. Looks like it's been a little bit higher the last couple quarters and on an apple to apples basis. From 1Q24, it's up about 80 basis points. Apples to apples meaning you also had 3pm at that point as well.

Speaker Change: Your next question comes from the line of Jesse Letterman of Zelman and Associates. Your line is open.

Jesse Letterman: Hey, Thanks for taking my question.

Speaker Change: To ask a little bit on property management expense it looks like it's been a little bit higher the last couple of quarters and on an apples to apples basis.

Speaker Change: <unk> 24, it's up about 80 basis points.

Speaker Change: Apples to apples, meaning you also had three P. M at that point as well. So can you maybe talk about what's driving the increase if it's the.

John Pawlowski: So can you maybe talk about what's driving the increase if it's the wholly owned portfolio or the third party property management portfolio and any moving pieces there? Thanks.

Speaker Change: The wholly owned portfolio or the third party property management portfolio and any moving pieces there.

John Pawlowski: Hey, Jesse, it's John. That's a good question. I would remind you that, you know, we phased on we onboarded our third party management clients over the course of last year. And so if you're comparing first quarter 25 to first quarter 24, first quarter 24 was not reflective of, you know, the headcount addition, some of the technology investments we made, in order to put ourselves in a position to service these new third party management customers. So that's really what the primary increases is related to.

Speaker Change: Hey, Jesse as John that's a good question I would remind you that we phased on we on boarded our third party management clients over the course of last year and so if you're comparing first quarter, 25% of first quarter 'twenty for first quarter 'twenty four was not reflective of the head Count addition, some of the technology.

Speaker Change: <unk> we made.

Speaker Change: Order to put ourselves in a position to service. These new third party management customers. So that's really what the primary increase is related to.

Charles Young: Your next question comes from Juan Sanabrio of BMO Capital Markets. Hi, good morning. Question on tariffs. Curious what you think may happen during the peak leasing season, the summer season with HVACs and should we anticipate any increase in costs as a result of presumably higher replacement costs and what have you, given that proposed tariffs at the Yeah, look, we're this is Charles, we're monitoring the situation closely. It's too early to tell kind of where and if it's going to flow through. And so, you know, you're asking the right question. You know, there's there's a pause, we'll see where it all comes out.

Speaker Change: Your next question comes from the line of Juan Sanabria of BMO capital markets. Your line is open.

Juan Sanabria: Hi, good morning.

Question on tariffs.

Juan Sanabria: Curious what you think may happen.

Juan Sanabria: During the peak leasing season, the summer season with any tracks.

Juan Sanabria: Should we anticipate any increase in costs as a result of presumably higher replacement costs and what have you.

Juan Sanabria: Given our proposed tariffs at this point.

Charles Young: Yes look we're this is Charles we're monitoring the situation closely it's too early to tell kind of awareness, it's going to flow through and so you are asking the right question.

Charles Young: Theres, a pause, we'll see where it all comes out the reality is.

Speaker Change: We're in a really great position given our.

Charles Young: You know, the reality is, we're in a really great position, given our, you know, scale, size, our procurement, our national programmatic partnerships that we have, we have dual partnerships, when you talked about HPAC and appliances, so we kind of back up between a couple of options. This gives us some of the best pricing in the industry. That being said, we're going to have to watch how it flows through. HPAC and appliances are probably the area on the R&M side we pay attention to. But you also need to talk about this is a small part of our of our overall kind of book where you know, we're turning homes, labor is a bigger part of our cost structure, if you will.

Speaker Change: On a scale size our procurement.

Speaker Change: Our national program programmatic partnerships that we have we have dual partnerships when you talked about HVAC and appliances. So we are kind of back up between.

Speaker Change: A couple of options. This gives us some of the best pricing in the industry that being said, we're going to have to watch how it flows through.

Speaker Change: HBC and appliances are probably the area on the R&M side, we pay attention to.

But you also need to talk about this is a small part of our of our overall kind of book.

Speaker Change: We're turning homes labor.

Speaker Change: Labor is a bigger part of our cost structure, if you will.

Charles Young: So while there could be some impact, I think we're gonna be mitigated by our scale and size and our programs and our partnerships. But ultimately, we're gonna have to see how it flows through. And you know, we're not building ground up homes here. So it's we're not taking a bunch of materials, it becomes a smaller part of who we are, and how we operate. So, but we're going to keep an eye on it. It's a kind of fluid situation.

Speaker Change: So while there could be some impact I think we're gonna be mitigated by our scale and size in our programs and our partnerships.

Speaker Change: But ultimately we're going to have to see how it flows through and we're not building ground up homes here. So we're not taking a bunch of materials it becomes.

Speaker Change: A smaller part of who we are and how we operate so we're going to keep an eye on it.

Speaker Change: Kind of a fluid situation.

Speaker Change: Okay.

Dallas Tanner: Your next question comes from Daniel Tricarico of Scotiabank. Great, thanks. You can hear me, right? Yep. Dallas, last call you talked about finding ways to complement the chorus of our business and to possibly enter new markets. You know, it's only been two months, but curious if you have an update on the work being done on any. Oh, yeah, I think we mentioned, I mean, we're now operating in San Antonio, parts, broader parts of Nashville. We've talked about some of the other markets that we'd love to get in over time. We're certainly looking, we're trying to, you know, ultimately, it's not just about how many markets we can be.

Speaker Change: Your next question comes from the line of Daniel <unk> of Scotiabank. Your line is open.

Speaker Change: Great. Thanks, you can hear me right.

Speaker Change: Yep.

Speaker Change: Dallas last call you talked about finding ways to complement of course of our business and to possibly enter new markets.

Speaker Change: It's only been two months, but curious if you have an update on the work being done on any of those initiatives.

Speaker Change: So I think we mentioned I mean, we're now operating in San Antonio.

Speaker Change: Parts broader parts of Nashville.

Speaker Change: You talked about some of the other markets that wed love to get in over time.

Speaker Change: We're certainly looking we're trying to ultimately it's not just about how many markets we can be and obviously when we take a step back and we talk with our board about strategy and what the company should look like five or 10 or 15 years from now we want to have.

Dallas Tanner: And obviously, we when we take a step back, and we talked with our board about strategy and what the company should look like five or 10 or 15 years from now, we want to have a great risk adjusted basis where we've got conviction on the growth and the profile and the demographic of those markets. But I think we'll continue to try to scale up in the markets we're in, too. I think nobody should lose sight of that. We'd love to get all of our markets to sizes like Phoenix and Atlanta and Miami, where we have real scale, and we continue to drive greater cost efficiencies both with our service platform, and how Charles and Tim and the team drive down costs, and also on the revenue front, and ultimately allow Scott and his team to underwrite, you know, better on new product and new construction and the conviction we have around rents and what they're doing.

Speaker Change: A great risk adjusted basis, where we've got conviction on the growth and the profile and the demographic of those markets.

Speaker Change: But I think we'll continue to try to scale up in the markets. We're in too I think nobody should lose sight of that wed love to get all of our markets to sizes, like Phoenix, and Atlanta, and Miami, where we have real scale and we continue to drive greater cost efficiencies, both with our service platform.

Speaker Change: And how Charles Tim and the team drive down cost and also on the revenue front and ultimately allow Scott and his team to underwrite.

Speaker Change: Yes.

Speaker Change: Better on new product and new construction and the conviction, we have around rents and what they're doing so yes, I expect us to continually add markets over the coming years, but look for us to sort of double down and double click on this.

Dallas Tanner: So, you know, I expect us to continually add markets over the coming years, but look for us to sort of double down and double click on these, you know, Sunbelt and Southeast markets where we know that they're going to have a propensity for better growth for longer.

Speaker Change: Sunbelt and southeast markets, where we know that they are going to have a propensity for better growth for longer.

Linda Tsai: Your next question comes from the line of Linda Tsai of Jefferies. Yes, hi. I think last quarter you said you expected FY25 occupancy to end at 96.5%. Just wondering if that's your current expectation still. Yeah, good question. Probably in light of kind of the high occupancy we showed in Q1, you know, that's typical of how the book kind of operates throughout a year. We're going into move out season, this is the heavier kind of lease expiration part of the year. And you'll see turnover start to tick up slightly, and occupancy come down. And as John mentioned earlier in the call, you know, we're trying to capture as much of the market rate that's out there.

Speaker Change: Your next question comes from the line of Linda Tsai of Jefferies. Your line is open.

Linda Tsai: Yes, Hi, I think last quarter, you said you expected FY 'twenty five occupancy to end at 96, 5% just wondering if that's your current expectation still.

Linda Tsai: Yes, good question, probably in light of kind of the high occupancy. We showed in Q1, that's typical of how the book kind of operates throughout a year, we're going into move out season since the heavier kind of lease exploration part of the year and you will see turnover start to tick up slightly and <unk>.

Linda Tsai: Occupancy come down and as John mentioned earlier in the call. We're trying to capture as much of the market rate. That's out there. So we may be staying on the market a little longer our budget has us going up on days to re resident gear.

Charles Young: So we may be staying on the market a little longer, our budget has us going up on days to be resident year over year, because, you know, we're expecting that there is a little bit more supply than they've been during the COVID periods. And we talked about specifically in a few of our markets, we're absorbing some of the supply that's there. Again, we're absorbing well. But you know, that's, that's in our underwriting that we're going to see it come down, we'll see how it plays out through the rest of the year. But you'll see it come down from here, Q2, Q3, and then towards the end of the year, typically starts to come back up.

Linda Tsai: Year over year because.

Speaker Change: We're expecting that there is a little bit more supply than they have been during the COVID-19 periods and we talked about specifically in a few of our markets. We are absorbing some of the supply that's there again were absorbing well.

Speaker Change: But that's that's in our underwriting that we're going to see it come down we'll see how it plays out through the rest of the year, but you'll see it come down from here Q2, Q3, and then towards the end of the year typically it starts to come back up but each year has its own cycle. So we'll see how it plays.

Charles Young: But each year has its own cycle. So we'll see how it plays.

Jason Sabshon: Your last question comes from the line of Jade Romani of KBW.

Speaker Change: Your last question comes from the line of Jade Rahmani of <unk>. Your line is open.

Charles Young: Actually, Jason Sabshon on for Jade. Have you seen an increase in any move outs due to, you know, lower mortgage rates and homebuilder incentives?

Speaker Change: Hi, This is actually Jason <unk> on for Jade have you seen.

Speaker Change: An increase in any move outs due to.

Speaker Change: Lower mortgage rates and homebuilder incentives.

Speaker Change: <unk>.

Charles Young: No, this is Charles. We really haven't. Our reason, you know, to move out for purchase is as low as we've really seen. It's in the mid teens. And, you know, look, we know the home builders are buying down rate. And, you know, I think they're, you know, they've been performing well based on that. But in our book, we're not seeing a lot of move out for purchase at this point, but we're going to keep an eye on it.

Speaker Change: No. This is Charles we really haven't a reason.

Speaker Change: To move out for purchase is as low as we've really seen it's in the mid teens.

Speaker Change: And look we know the homebuilders are buying down right and I think they're they've been performing well based on that but in our book we're.

Speaker Change: We're not seeing a lot of move out for purchase at this point, but we're going to keep an eye on it.

Operator: This completes our question and answer session.

Speaker Change: This completes our question and answer session I would now.

Dallas Tanner: I would now like to turn the conference back over to Dallas Tanner for any closing remarks. Thanks, everybody, for joining us today. And a final word of thanks to all of our associates. What a great quarter.

Dallas Tanner: I'd like to turn the call conference back over to Dallas Tanner for any closing remarks.

Dallas Tanner: Thanks, everybody for joining us today and a final word of thanks to all of our associates with what a great quarter.

Dallas Tanner: We look forward to seeing many of you next month at NARIP. Thanks. Take care.

Dallas Tanner: We look forward to seeing many of you next month at NAREIT, Thanks take care.

Operator: The conference has concluded. You may now disconnect.

Dallas Tanner: The conference has concluded you may now disconnect.

Operator: Please wait, the conference will begin shortly.

Dallas Tanner: Please wait the conference will begin shortly.

Dallas Tanner: Okay.

Dallas Tanner: Okay.

Dallas Tanner: Okay.

Dallas Tanner: Okay.

Dallas Tanner: Yes.

Dallas Tanner: Okay.

Dallas Tanner: Yes.

Dallas Tanner: Yes.

Dallas Tanner: Okay.

Dallas Tanner: Yes.

Dallas Tanner: Okay.

Dallas Tanner: Okay.

Dallas Tanner: Okay.

Dallas Tanner: Right.

Dallas Tanner: Yes.

Dallas Tanner: Okay.

Dallas Tanner: Yes.

Dallas Tanner: Okay.

Dallas Tanner: Yes.

Dallas Tanner: Yes.

Dallas Tanner: Yes.

Dallas Tanner: Okay.

Dallas Tanner: Yeah.

Dallas Tanner: Sure.

Dallas Tanner: Yes.

Dallas Tanner: Yes.

Dallas Tanner: Yes.

Dallas Tanner: Sure.