Speaker #1: Good morning , gentlemen , and the welcome to Mar ladies and full fourth quarter and year 2025 earnings call . During the Conference presentation , all participants will be in a listen only .
Andrew Schaeffer: Thank you, Julianne, and good morning, everyone. This is Andrew Schaeffer, Treasurer and Director of Capital Markets for MAA. Members of the management team participating on the call this morning are Brad Hill, Tim Argo, Clay Holder, and Rob DelPriore. Before we begin with prepared comments this morning, I want to point out that as part of this discussion, company management will be making forward-looking statements. Actual results may differ materially from our projections. We encourage you to refer to the forward-looking statements section in yesterday's earnings release and our 34 Act filings with the SEC, which describe risk factors that may impact future results. During this call, we will also discuss certain non-GAAP financial measures.
Andrew Schaeffer: Thank you, Julianne, and good morning, everyone. This is Andrew Schaeffer, Treasurer and Director of Capital Markets for MAA. Members of the management team participating on the call this morning are Brad Hill, Tim Argo, Clay Holder, and Rob DelPriore. Before we begin with prepared comments this morning, I want to point out that as part of this discussion, company management will be making forward-looking statements. Actual results may differ materially from our projections. We encourage you to refer to the forward-looking statements section in yesterday's earnings release and our 34 Act filings with the SEC, which describe risk factors that may impact future results. During this call, we will also discuss certain non-GAAP financial measures.
Speaker #2: Julian , everyone . This is Schaffer , morning , treasurer and Andrew you , markets for management . capital team participating on the call this morning are Brad Tim Argo , A.
Speaker #2: Delport Clay we begin with prepared comments this morning , I want to Mar . that as part of this discussion , company management will be making looking statements .
Speaker #2: Actual forward results may differ materially from our you to projections . We refer to the forward looking encourage section in yesterday's earnings statements release , and our 34 filings with the SEC , risk describe factors that which impact future results .
Andrew Schaeffer: A presentation of the most directly comparable GAAP financial measures, as well as reconciliations of the differences between non-GAAP and comparable GAAP, and GAAP measures, can be found in our earnings release and supplemental financial data. Our earnings release and supplement are currently available on the For Investors page of our website at www.maac.com. A copy of our prepared comments and audio recording of this call will also be available on our website later today. After some brief prepared comments, the management team will be available to answer questions. When we get to Q&A, please be respectful of everyone's time. In an attempt to complete our call within 1 hour due to other earnings calls today, we will limit questions to 1 per analyst. We ask that you rejoin the queue if you have any follow-up questions or additional items to discuss.
Andrew Schaeffer: A presentation of the most directly comparable GAAP financial measures, as well as reconciliations of the differences between non-GAAP and comparable GAAP, and GAAP measures, can be found in our earnings release and supplemental financial data. Our earnings release and supplement are currently available on the For Investors page of our website at www.maac.com. A copy of our prepared comments and audio recording of this call will also be available on our website later today. After some brief prepared comments, the management team will be available to answer questions. When we get to Q&A, please be respectful of everyone's time. In an attempt to complete our call within 1 hour due to other earnings calls today, we will limit questions to 1 per analyst. We ask that you rejoin the queue if you have any follow-up questions or additional items to discuss.
Speaker #2: During this call , also discuss non-GAAP financial A presentation may comparable GAAP as well as reconciliations of the measures , between financial we will differences GAAP can be found in our earnings release and supplemental financial data .
Speaker #2: Our earnings release and currently supplement are available on the . For page of our Investors website at measures . A copy of our prepared comments and audio recording call will also be of this available on our website later brief prepared comments , the management team available to today .
Speaker #2: questions . get to answer When we be everyone's Q&A , please an attempt to complete our call within After some other earnings calls .
Andrew Schaeffer: I will now turn the call over to Brad.
Andrew Schaeffer: I will now turn the call over to Brad.
Speaker #2: Today Due to respectful of will limit , we questions to one per ask that you analyst . We rejoin the queue if you have any follow up additional items to discuss .
Brad Hill: Thank you, Andrew, and good morning, everyone. As highlighted in our release, our Q4 Core FFO results met expectations, despite continued elevated supply levels. With occupancy up 10 basis points and same-store blended lease-over-lease performance 40 basis points stronger year-over-year, the recovery in fundamentals is underway. As we look ahead, we are entering 2026 in a stronger position, with higher earnings and more upside to top-line revenue momentum that we expect to build throughout the year, particularly in new lease rates, driving an anticipated 110 to 160 basis point improvement in blended lease rates and an 85 basis point improvement in effective rent growth compared to 2025. While uncertainty remains in the broader economy, the level of uncertainty appears lower than what we navigated in 2025, supported by expectations for sustained GDP growth.
Brad Hill: Thank you, Andrew, and good morning, everyone. As highlighted in our release, our Q4 Core FFO results met expectations, despite continued elevated supply levels. With occupancy up 10 basis points and same-store blended lease-over-lease performance 40 basis points stronger year-over-year, the recovery in fundamentals is underway. As we look ahead, we are entering 2026 in a stronger position, with higher earnings and more upside to top-line revenue momentum that we expect to build throughout the year, particularly in new lease rates, driving an anticipated 110 to 160 basis point improvement in blended lease rates and an 85 basis point improvement in effective rent growth compared to 2025. While uncertainty remains in the broader economy, the level of uncertainty appears lower than what we navigated in 2025, supported by expectations for sustained GDP growth.
Speaker #2: I turn the call over to Brad
Speaker #3: , Andrew , and good morning Thank you
Speaker #3: everyone one hour . . highlighted in will now release , our
Speaker #3: results met expectations despite continued elevated supply levels with occupancy . up ten basis points store , lease over lease performance 40 basis points stronger blended year .
Speaker #3: year over The recovery in fundamentals is underway as we look ahead , we are entering position with a higher in same earn 2026 in a stronger and more tight in top line revenue we momentum that expect to build throughout the year , particularly in new lease rates .
Speaker #3: anticipated Driving an 110 to 160 basis point improvement in blended lease rates and an 85 basis point improvement in rent effective growth compared to While uncertainty remains in the broader 2025 .
Speaker #3: uncertainty economy , of lower appears than what we navigated in 2025 , supported by expectations for sustained GDP growth . Several of last year's headwinds are showing signs of easing .
Brad Hill: Several of last year's major headwinds are showing signs of easing. At the same time, the economy should benefit from the working family's tax cut, easing inflationary pressure and improving consumer sentiment, which is showing signs of recovering from multi-decade lows. Looking at our portfolio, rent-to-income ratios have improved, making rents more affordable. New deliveries are decelerating sharply, down over 60% in 2026 from the peak, and new starts are muted and have been for nearly 3 years, down nearly 70% from peak levels. Against this improving backdrop, we anticipate demand across our markets to remain solid and broad-based, supported by stable job growth, continued in-migration, healthy wage gains, and record levels of resident retention.
Brad Hill: Several of last year's major headwinds are showing signs of easing. At the same time, the economy should benefit from the working family's tax cut, easing inflationary pressure and improving consumer sentiment, which is showing signs of recovering from multi-decade lows. Looking at our portfolio, rent-to-income ratios have improved, making rents more affordable. New deliveries are decelerating sharply, down over 60% in 2026 from the peak, and new starts are muted and have been for nearly 3 years, down nearly 70% from peak levels. Against this improving backdrop, we anticipate demand across our markets to remain solid and broad-based, supported by stable job growth, continued in-migration, healthy wage gains, and record levels of resident retention.
Speaker #3: At the same time, the economy should benefit from the Working Families tax cut, easing inflationary pressure and improving consumer sentiment, which is showing signs of recovering from multi-decade lows.
Speaker #3: our Looking at , rent to income ratios have improved , making rents more deliveries are affordable , new sharply , over portfolio 2026 from the peak decelerating , and new starts are muted and have been for nearly three down years , nearly 70% from peak levels .
Speaker #3: Against backdrop , we the level demand markets to across our remain broad solid in based , supported by stable job growth , continued 60% in In-migration wage gains .
Brad Hill: These trends point to a financially healthy resident base, supporting our consistently strong collections, reinforcing the durability of our revenue profile, and suggesting that absent a meaningful shift in the broader economy, underlying demand conditions remain well supported. Building on this foundation, our long-term earnings growth will benefit from numerous strategic investments we're making. This includes expanding our technology initiatives, such as community-wide Wi-Fi and other enhancements designed to elevate the resident experience and improve operational efficiency. Our residents value our communities and the exceptional service our teams provide, reflected in record retention levels, strong renewal rates, and sector-leading resident Google scores, averaging 4.7 out of five for the year.... Persistent single-family affordability challenges, combined with favorable demographic trends, continue to support renter demand and keep move-outs to purchase a home near historical lows.
Brad Hill: These trends point to a financially healthy resident base, supporting our consistently strong collections, reinforcing the durability of our revenue profile, and suggesting that absent a meaningful shift in the broader economy, underlying demand conditions remain well supported. Building on this foundation, our long-term earnings growth will benefit from numerous strategic investments we're making. This includes expanding our technology initiatives, such as community-wide Wi-Fi and other enhancements designed to elevate the resident experience and improve operational efficiency. Our residents value our communities and the exceptional service our teams provide, reflected in record retention levels, strong renewal rates, and sector-leading resident Google scores, averaging 4.7 out of five for the year.... Persistent single-family affordability challenges, combined with favorable demographic trends, continue to support renter demand and keep move-outs to purchase a home near historical lows.
Speaker #3: And record levels of resident retention. These healthy trends point to a financially healthy resident base supporting our consistency, reinforcing the collection durability of our revenue profile, and that suggests absent a meaningful shift in the broader underlying demand, the economy remains well.
Speaker #3: Building on this foundation , our long term earnings benefit from numerous strategic investments we're making . This includes expanding our technology growth will initiatives such community as wide Wi-Fi enhancements designed to and elevate the other resident experience and improve operational efficiency .
Speaker #3: residents Our value our and the communities exceptional service our provide teams reflected in record retention levels , renewal strong rates and sector leading resident Google scores averaging 4.7 out year .
Speaker #3: Single persistent family of challenges, combined with demographic trends, continue to support renter demand and outcomes to keep move purchase near a home historical.
Brad Hill: These trends, along with fewer competitive units in lease-up, support strong returns from our repositioning and redevelopment projects. As a result, we're expanding our capital investments in these areas by more than 10% in 2026. Beyond these investments, we continue to grow our development pipeline by leveraging our strong balance sheet and development capabilities to invest early to take advantage of growth opportunities at a time when access to capital is more limited for others. As such, during Q4, we purchased a shovel-ready project in Scottsdale, Arizona, from a developer that was unable to line up equity for their project after three years of due diligence, bringing our active development pipeline to $932 million.
Brad Hill: These trends, along with fewer competitive units in lease-up, support strong returns from our repositioning and redevelopment projects. As a result, we're expanding our capital investments in these areas by more than 10% in 2026. Beyond these investments, we continue to grow our development pipeline by leveraging our strong balance sheet and development capabilities to invest early to take advantage of growth opportunities at a time when access to capital is more limited for others. As such, during Q4, we purchased a shovel-ready project in Scottsdale, Arizona, from a developer that was unable to line up equity for their project after three years of due diligence, bringing our active development pipeline to $932 million.
Speaker #3: These lows trends , along with fewer up competitive lease units . and Support strong from our redevelopment repositioning and . projects As a result , we're expanding our capital returns areas by more than 10% in 2026 .
Speaker #3: Beyond continuing to invest, we leverage our strong balance sheet and development capabilities early to invest in our pipeline and take advantage of growth opportunities.
Speaker #3: these Beyond continue to investments , we pipeline by leveraging our strong balance development capabilities early grow our At a time when access to capital is limited more for others .
Speaker #3: As during the such , fourth quarter we purchased a shovel ready project in Scottsdale , Arizona from a developer that was unable to line their up equity for project .
Brad Hill: Additionally, during Q1 2026, we purchased a land parcel in the Clarendon neighborhood of Arlington, Virginia, and expect to start construction on a 287-unit apartment community later this year. As demand remains robust, new deliveries slow, and new starts track well below historical levels across our region, our development should continue to generate strong returns and earnings growth, with stabilized NOI yields between 6 and 6.5, well above current market cap rates. Subject to market conditions, we expect to begin construction on 5 to 7 new development projects in 2026 that should deliver into a much stronger operating environment than the one experienced over this past year. Additionally, our balance sheet provides the flexibility to pursue compelling acquisition opportunities as they materialize. We remain encouraged by the progress we're seeing across our portfolio.
Brad Hill: Additionally, during Q1 2026, we purchased a land parcel in the Clarendon neighborhood of Arlington, Virginia, and expect to start construction on a 287-unit apartment community later this year. As demand remains robust, new deliveries slow, and new starts track well below historical levels across our region, our development should continue to generate strong returns and earnings growth, with stabilized NOI yields between 6 and 6.5, well above current market cap rates. Subject to market conditions, we expect to begin construction on 5 to 7 new development projects in 2026 that should deliver into a much stronger operating environment than the one experienced over this past year. Additionally, our balance sheet provides the flexibility to pursue compelling acquisition opportunities as they materialize. We remain encouraged by the progress we're seeing across our portfolio.
Speaker #3: After three years of due diligence , active development pipeline to $932 million , additionally , quarter of bringing our 2026 , we land purchased a the Clarendon neighborhood of Arlington , Virginia , and expect to start construction on a 287 unit apartment community later this year .
Speaker #3: As demand remains robust , new slow and new deliveries track well historical below levels across our region . development should continue to generate returns and strong earnings growth with stabilized yields between 6 and 6 and a , well current market half cap rates market .
Speaker #3: NOI conditions. We, above subject, expect to begin construction on 5 to 7 new development projects in 2026. That should deliver into a much stronger environment than experienced over this past year. Additionally, operating our...
Speaker #3: balance sheet the provides pursue compelling flexibility to acquisition opportunities as they materialize . We remain encouraged by the progress we're seeing across our portfolio .
Brad Hill: With more than 30 years of navigating economic cycles, we believe we are well positioned to serve our residents and to deliver compounded earnings growth over the full cycle. As market conditions continue to strengthen, improving fundamentals, coupled with our strategic investments, should provide meaningful opportunities to enhance performance and support a stronger revenue trajectory over the next few years. To all our associates across our properties and corporate offices, thank you for your continued commitment to customer service. With that, I'll turn the call over to Tim.
Brad Hill: With more than 30 years of navigating economic cycles, we believe we are well positioned to serve our residents and to deliver compounded earnings growth over the full cycle. As market conditions continue to strengthen, improving fundamentals, coupled with our strategic investments, should provide meaningful opportunities to enhance performance and support a stronger revenue trajectory over the next few years. To all our associates across our properties and corporate offices, thank you for your continued commitment to customer service. With that, I'll turn the call over to Tim.
Speaker #3: With more than 30 years of navigating cycles, we are well positioned to serve our residents and to deliver compounded economic growth full cycle.
Speaker #3: As market conditions continue to strengthen , improving over the coupled with our investments fundamentals provide meaningful should opportunities to strategic enhance performance and support a stronger trajectory over the next years .
Timothy Argo: Thank you, Brad, and good morning, everyone. For Q4, the key operating fundamentals of pricing and occupancy combined were in line with expectations. New lease growth continues to be muted due to the moderating but still elevated supply picture, combined with the normal seasonal slowdown in Q4. We did, however, continue to have strong retention and renewal lease rates and achieve sequentially improved average physical occupancy. As compared to Q4 of 2024, blended rates improved 40 basis points, supported by a 50 basis point improvement in renewal rates and flat new lease rates. Average physical occupancy was 95.7%, which was a 10 basis point improvement from both Q4 of 2024 and Q3 of 2025.
Timothy Argo: Thank you, Brad, and good morning, everyone. For Q4, the key operating fundamentals of pricing and occupancy combined were in line with expectations. New lease growth continues to be muted due to the moderating but still elevated supply picture, combined with the normal seasonal slowdown in Q4. We did, however, continue to have strong retention and renewal lease rates and achieve sequentially improved average physical occupancy. As compared to Q4 of 2024, blended rates improved 40 basis points, supported by a 50 basis point improvement in renewal rates and flat new lease rates. Average physical occupancy was 95.7%, which was a 10 basis point improvement from both Q4 of 2024 and Q3 of 2025.
Speaker #3: To all our associates across our properties and corporate, thank you. Brad, Tim, and everyone, good morning. For the fourth quarter, the key operating fundamentals of pricing and occupancy were in line with expectations and combined for a few revenue highlights.
Speaker #3: New lease growth continues to be muted due to the moderating , but still elevated supply in mind normal seasonal slowdown in the fourth quarter .
Speaker #3: We did , however , continue to have retention and renewal rates and achieve improved sequentially average physical occupancy as the compared to 2020 .
Speaker #3: Fourth quarter blended rates improved 40 basis points, driven by a 50 basis point improvement in renewal rates and flat new lease rates.
Speaker #3: Average occupancy was supported 95.7% , which was a ten basis point With the improvement both the fourth quarter from of 2024 the third quarter and of 2025 .
Timothy Argo: Additionally, we had another quarter of strong collections, with net delinquency representing just 0.3% of billings, in line with the collection performance for the full year. While we broadly saw normal seasonality in pricing during the fourth quarter, many of our mid-tier markets, particularly in Virginia and South Carolina, continue to be outperformers relative to the portfolio. Charleston, Greenville, Richmond, and the DC area markets all demonstrated strong pricing power and strong occupancy in the quarter. Encouragingly, our two highest concentration markets, Atlanta and Dallas, continue to show improvement as compared to the prior year. Of our top 20 largest markets, these two, along with Denver, had the largest year-over-year improvement in blended pricing as compared to the fourth quarter of last year.
Timothy Argo: Additionally, we had another quarter of strong collections, with net delinquency representing just 0.3% of billings, in line with the collection performance for the full year. While we broadly saw normal seasonality in pricing during the fourth quarter, many of our mid-tier markets, particularly in Virginia and South Carolina, continue to be outperformers relative to the portfolio. Charleston, Greenville, Richmond, and the DC area markets all demonstrated strong pricing power and strong occupancy in the quarter. Encouragingly, our two highest concentration markets, Atlanta and Dallas, continue to show improvement as compared to the prior year. Of our top 20 largest markets, these two, along with Denver, had the largest year-over-year improvement in blended pricing as compared to the fourth quarter of last year.
Speaker #3: Additionally , we had another quarter of strong collections with net delinquency representing 0.3% of build rents just in line with the collection full performance .
Speaker #3: year For the . While we broadly seasonality normal in pricing during the fourth quarter , many of our mid markets , particularly in Virginia Carolina , continue to be and South outperformers the relative to portfolio .
Speaker #3: Charleston , Greenville . Richmond and area markets all demonstrated strong pricing power and strong in the occupancy quarter . Encouragingly , our two highest concentration markets , and Atlanta continue to show Dallas , improvement as compared to the prior .
Speaker #3: Charleston , Greenville . Richmond and area markets all demonstrated strong pricing power and strong in the occupancy quarter . Encouragingly , our two highest concentration markets , and Atlanta continue to show Dallas , improvement as compared to the prior year top our 20 largest markets , along with Denver , largest these two , year over year improvement in blended pricing as last the fourth quarter of had the .
Timothy Argo: Austin continues to be our weakest market in terms of pricing, as it continues to work through the 25% of inventory that has been delivered cumulatively, cumulatively over the last 4 years. In our lease-up portfolio, MAA Vail in the Raleigh-Durham market reached stabilization in Q4. We now have 3 properties remaining in lease-up, with a combined occupancy of 65.7% as of the end of Q4, and an additional 3 development properties that are actively leasing units. Elevated concessions and longer lease-up periods continue to have a greater impact on the lease-up properties and have pushed the full earnings contribution from these out about a year. However, these projects are still expected to achieve our underwritten yields as markets continue to improve and retain the long-term value creation opportunity, despite the overall leasing velocity being behind original expectations.
Timothy Argo: Austin continues to be our weakest market in terms of pricing, as it continues to work through the 25% of inventory that has been delivered cumulatively, cumulatively over the last 4 years. In our lease-up portfolio, MAA Vail in the Raleigh-Durham market reached stabilization in Q4. We now have 3 properties remaining in lease-up, with a combined occupancy of 65.7% as of the end of Q4, and an additional 3 development properties that are actively leasing units. Elevated concessions and longer lease-up periods continue to have a greater impact on the lease-up properties and have pushed the full earnings contribution from these out about a year. However, these projects are still expected to achieve our underwritten yields as markets continue to improve and retain the long-term value creation opportunity, despite the overall leasing velocity being behind original expectations.
Speaker #3: continues Austin of pricing as it in terms work through continues to the 25% of inventory that has been cumulatively , cumulatively over the our lease up last four years .
Speaker #3: portfolio . Ma Vail in the Raleigh market reached stabilization in the fourth quarter . We now remaining in three properties with a combined lease up occupancy of 65.7% as of the end of the fourth quarter , and additional three development properties that are leasing actively units elevated concessions and longer lease up periods have impact on the lease up properties and have full earnings about from a these out year .
Speaker #3: contribution these projects are still achieve our yields underwritten markets expected to improve and long term value creation opportunity . retain the leasing velocity being overall behind .
Timothy Argo: We continued to progress on our various targeted redevelopment and repositioning initiatives in Q4, and as Brad mentioned, expect to accelerate each of these programs in 2026 with improving fundamentals. During Q4 2025, we completed 1,227 interior unit upgrades, bringing the total for the year to 5,995 units renovated, with rent increases of $95 above non-upgraded units and a cash-on-cash return of 19%. Despite this more competitive supply environment for the full year, these units leased on average 11 days faster than non-renovated units when adjusted for the additional turn time. For our common area and amenity repositioning program, we are on average over 70% reprice six recent projects, with an average NOI yield above 10% and rent growth far exceeding peer MAA properties.
Timothy Argo: We continued to progress on our various targeted redevelopment and repositioning initiatives in Q4, and as Brad mentioned, expect to accelerate each of these programs in 2026 with improving fundamentals. During Q4 2025, we completed 1,227 interior unit upgrades, bringing the total for the year to 5,995 units renovated, with rent increases of $95 above non-upgraded units and a cash-on-cash return of 19%. Despite this more competitive supply environment for the full year, these units leased on average 11 days faster than non-renovated units when adjusted for the additional turn time. For our common area and amenity repositioning program, we are on average over 70% reprice six recent projects, with an average NOI yield above 10% and rent growth far exceeding peer MAA properties.
Speaker #3: The original expectations , we continue to progress on our various repositioning redevelopment and initiatives . In the fourth quarter . And as mentioned , Brad accelerate expected , each of these programs in 2026 with improving fundamentals during the fourth 2025 , we completed quarter of 1227 Interior upgrades , unit bringing the total for the to year 5995 units renovated with rent increases of above , non upgraded $95 units and a cash on cash return of 19% .
Speaker #3: Despite with an average NOI yield above 10% and rent growth far exceeding peer Emaar Properties projects . Five additional are well projects underway , with anticipated repricing in mid 2026 .
Speaker #3: this , more competitive supply environment , for the year , full units these leased on average 11 days faster than non units . renovated adjusted for the turn additional time for our amenity area and program , Repositioning we are average on over 70% reprice at six .
Timothy Argo: 5 additional projects are well underway, with anticipated repricing in mid-2026 during the prime leasing season. We have targeted an additional 6 properties to begin later this year that will reprice in 2027. While vendor challenges and equipment delivery delays have slowed progress on our community-wide Wi-Fi retrofit projects, we are live on 14 of the 23 projects started in 2025, with the remaining 9 expected to go live in Q1. Similar to our redevelopment plans, we expect to expand this initiative in 2026 also. Looking forward to 2026, we are well positioned. While winter storm Fern did impact about 70% of our portfolio and slowed traffic for several days, we ended January with physical occupancy of 95.6% and sixty-day exposure of 7.1%, both in line with this time last year.
Timothy Argo: 5 additional projects are well underway, with anticipated repricing in mid-2026 during the prime leasing season. We have targeted an additional 6 properties to begin later this year that will reprice in 2027. While vendor challenges and equipment delivery delays have slowed progress on our community-wide Wi-Fi retrofit projects, we are live on 14 of the 23 projects started in 2025, with the remaining 9 expected to go live in Q1. Similar to our redevelopment plans, we expect to expand this initiative in 2026 also. Looking forward to 2026, we are well positioned. While winter storm Fern did impact about 70% of our portfolio and slowed traffic for several days, we ended January with physical occupancy of 95.6% and sixty-day exposure of 7.1%, both in line with this time last year.
Speaker #3: During the Prime season leasing targeted . an We have additional six properties to later reprice that will this year in 2027 . While challenges and equipment delivery slowed delays have community wide progress on our Wi-Fi retrofit on 14 of the 23 projects live started in 2025 , projects , we are with remaining nine expected to go begin live in the first quarter .
Speaker #3: Similar to our redevelopment plans , we expect to expand this initiative in 2026 , offset forward . Looking to 2026 . We are well positioned .
Speaker #3: did While Fern Winter storm impact about 70% of our and slowed traffic for portfolio several days , we ended January with physical occupancy of 95.6% exposure 60 day of both in 7.1% , line with this time last year and .
Timothy Argo: As Brad referenced, new supply pressures continue to moderate and demand remains strong, with market-level occupancies, including lease-ups in our markets, well above where they were this time last year. Strong renewal performance continues in Q1, with high retention rates and lease or release growth rates on renewals accepted for January, February, and March, all above 5%. This compares to the 4.5% we achieved in Q1 of 2025. We expect gradual seasonal improvement in new lease rates, along with consistent renewal growth, will drive improved performance in 2026 and be particularly impactful to 2027 as pressure from supply subsides throughout the year. That's all I have in the way of prepared comments. Now I'll turn the call over to Clay.
Timothy Argo: As Brad referenced, new supply pressures continue to moderate and demand remains strong, with market-level occupancies, including lease-ups in our markets, well above where they were this time last year. Strong renewal performance continues in Q1, with high retention rates and lease or release growth rates on renewals accepted for January, February, and March, all above 5%. This compares to the 4.5% we achieved in Q1 of 2025. We expect gradual seasonal improvement in new lease rates, along with consistent renewal growth, will drive improved performance in 2026 and be particularly impactful to 2027 as pressure from supply subsides throughout the year. That's all I have in the way of prepared comments. Now I'll turn the call over to Clay.
Speaker #3: As Brad, new supply pressures continue to ease, and moderate demand remains strong, with market-level occupancies—including lease-ups—in our markets well above where they were at this time last year.
Speaker #3: Strong renewal performance continues in the quarter , with retention high rates and lease or growth rates on renewals first release January , February and March .
Speaker #3: All above 5%. This compares to the 4.5% we achieved in the first quarter 2025. We expect gradual seasonal improvement in lease new rates, with consistent renewal.
Speaker #3: Will growth drive performance in particularly 2026 and be impactful to 2027 as pressure from supply subsides throughout the year? I have—that's all in the way of prepared now.
Clay Holder: Thank you, Tim, and good morning, everyone. We reported core FFO for the quarter of $2.23 per diluted share, which was in line with the midpoint of our fourth quarter guidance and contributed to core FFO for the full year of $8.74 per share. Fourth quarter same-store NOI was in line with our guidance as same-store revenues were 1 cent unfavorable due to other revenues and pricing, offset by same-store expenses, favorable by 1 cent due to office operations, repair and maintenance, and real estate taxes. Favorable interest expense was offset by overhead expenses and the operating performance from our non-same-store portfolio.
Clay Holder: Thank you, Tim, and good morning, everyone. We reported core FFO for the quarter of $2.23 per diluted share, which was in line with the midpoint of our fourth quarter guidance and contributed to core FFO for the full year of $8.74 per share. Fourth quarter same-store NOI was in line with our guidance as same-store revenues were 1 cent unfavorable due to other revenues and pricing, offset by same-store expenses, favorable by 1 cent due to office operations, repair and maintenance, and real estate taxes. Favorable interest expense was offset by overhead expenses and the operating performance from our non-same-store portfolio.
Speaker #3: comments . turn the I'll call over to Clay . Thank you , Tim , and good morning , everyone . We reported for the quarter .
Speaker #2: Of $2.23 .
Speaker #3: Per diluted share , which was in line with the of our fourth quarter guidance . And midpoint core contributed to FFO for year of $8.74 per share .
Speaker #3: Fourth quarter same store NOI was in line with our guidance of same store revenues $0.01 unfavorable due to other revenues and pricing , offset by same store the full expenses favorable by office operations , $0.01 due to maintenance , and real estate taxes .
Clay Holder: During the quarter, we funded approximately $81 million in development costs for our current $932 million pipeline, leaving an expected $306 million to be funded on the current pipeline over the next three years. As Brad noted, our balance sheet remains well positioned to support these and other future growth opportunities. At the end of the quarter, we had $880 million in combined cash and borrowing capacity under our revolving credit facility, and our net debt-to-EBITDA ratio was 4.3 times. At quarter end, our outstanding debt was approximately 87% fixed, with an average maturity of 6.4 years at an effective rate of 3.8%.
Clay Holder: During the quarter, we funded approximately $81 million in development costs for our current $932 million pipeline, leaving an expected $306 million to be funded on the current pipeline over the next three years. As Brad noted, our balance sheet remains well positioned to support these and other future growth opportunities. At the end of the quarter, we had $880 million in combined cash and borrowing capacity under our revolving credit facility, and our net debt-to-EBITDA ratio was 4.3 times. At quarter end, our outstanding debt was approximately 87% fixed, with an average maturity of 6.4 years at an effective rate of 3.8%.
Speaker #3: interest Favorable expense was offset by overhead expenses and operating our performance from non non store portfolio funded quarter , we . During the approximately $81 million in development costs for our current $932 million pipeline , leaving an expected $306 million to be funded on the current pipeline over the next three years .
Speaker #3: As Brad noted , our balance sheet remains well were positioned to support these and future growth other . At the opportunities end of the quarter , we $880 million in combined cash and borrowing had capacity under our revolving credit facility and our net debt to EBITDA ratio was 4.3 times at outstanding debt was approximately 87% fixed , with an average maturity Our of 6.4 years at an effective rate of 3.8% .
Clay Holder: During November, we issued $400 million of 7-year public bonds at an effective rate of just over 4.75%, using proceeds to repay borrowings under our commercial paper program, which were used to repay the November 2020 bond-2025 bond maturity. During the quarter, we repurchased 207,000 shares at a weighted average share price of $131.61, our first repurchase since 2001. Finally, we provided initial earnings guidance for 2026 in our release, which is detailed in the supplemental information package. Core FFO for 2026 is projected to be $8.35 to 8.71, or $8.53 per share at the midpoint.
Clay Holder: During November, we issued $400 million of 7-year public bonds at an effective rate of just over 4.75%, using proceeds to repay borrowings under our commercial paper program, which were used to repay the November 2020 bond-2025 bond maturity. During the quarter, we repurchased 207,000 shares at a weighted average share price of $131.61, our first repurchase since 2001. Finally, we provided initial earnings guidance for 2026 in our release, which is detailed in the supplemental information package. Core FFO for 2026 is projected to be $8.35 to 8.71, or $8.53 per share at the midpoint.
Speaker #3: During November, we issued $400 million of bonds at an effective rate of just over seven percent for a seven-year public offering. Using the proceeds to repay our borrowings under the commercial paper program, we also used them to repay the November 2025 bond.
Speaker #3: Maturity quarter , we During the 207,000 shares at repurchased a weighted average share price of $131.61 . Our first repurchase since which 2001 .
Speaker #3: Finally , we provided initial earnings guidance for 2026 . In our release , which is detailed in the Supplemental Package for FFO for 2026 , is projected to be $8.35 to $8.71 , or $8.53 per the .
Clay Holder: As was outlined in the prior comments, with continuing improvement in supply with in supply impacting our markets, coupled with solid demand fundamentals, we expect rental pricing to grow during the year and to drive improving earnings performance as we progress throughout the year. Projected 2026 same-store revenue growth midpoint of 0.55% results from a rental pricing earn in of -0.2%, an improvement compared to 2025's earn in, combined with a blended rental pricing expectation in the range of 1% to 1.5% for the year. New lease pricing is expected to show improvement over last year. We expect supply levels to continue to impact new lease pricing, particularly in the first half of the year, but believe the impact will increasingly improve over the course of the year as the effect from new supply continues to decline.
Clay Holder: As was outlined in the prior comments, with continuing improvement in supply with in supply impacting our markets, coupled with solid demand fundamentals, we expect rental pricing to grow during the year and to drive improving earnings performance as we progress throughout the year. Projected 2026 same-store revenue growth midpoint of 0.55% results from a rental pricing earn in of -0.2%, an improvement compared to 2025's earn in, combined with a blended rental pricing expectation in the range of 1% to 1.5% for the year. New lease pricing is expected to show improvement over last year. We expect supply levels to continue to impact new lease pricing, particularly in the first half of the year, but believe the impact will increasingly improve over the course of the year as the effect from new supply continues to decline.
Speaker #3: was outlined midpoint As in the prior . share , at continuing improvement in supply with in supply impacting our markets Information with solid demand we fundamentals , expect rental pricing to grow during the and to year improving earnings performance as we progress throughout the year .
Speaker #3: Projected revenue 2026 same store growth midpoint of 0.55% . Results from a rental pricing Earnout of -0.2% , and compared to 2025 earned in .
Speaker #3: improvement blended pricing rental expectation in the range of 1 to 1.5% for the year . New lease pricing is expected to show improvement over last year .
Speaker #3: We expect supply levels to continue to impact new lease pricing , first half of the particularly in the year , but impact will increasingly improve over course of the year as the effect from new continues to supply decline believe the .
Clay Holder: Renewal pricing is expected to remain strong and in the 5% to 5.25% range throughout the year. For the same-store portfolio, we expect effective rent growth to be approximately 0.35% at the midpoint of our range, occupancy to average 95.6% at the midpoint, and other revenue items, primarily from reimbursement and fee income, to grow just over 2%. Same-store operating expenses are projected to grow at a midpoint of 2.65% for the year. Personnel costs are expected to grow by less than 2%, while we expect some continued pressure from utilities, marketing costs, and office operations. These expense projections, combined with the revenue growth of 0.55%, results in a projected decline in same-store NOI of 0.75% at the midpoint.
Clay Holder: Renewal pricing is expected to remain strong and in the 5% to 5.25% range throughout the year. For the same-store portfolio, we expect effective rent growth to be approximately 0.35% at the midpoint of our range, occupancy to average 95.6% at the midpoint, and other revenue items, primarily from reimbursement and fee income, to grow just over 2%. Same-store operating expenses are projected to grow at a midpoint of 2.65% for the year. Personnel costs are expected to grow by less than 2%, while we expect some continued pressure from utilities, marketing costs, and office operations. These expense projections, combined with the revenue growth of 0.55%, results in a projected decline in same-store NOI of 0.75% at the midpoint.
Speaker #3: prices Renewal expected to remain strong and in the 5 to 5.25% range throughout the year same for the store portfolio , effective expect approximately 0.35% at the midpoint of our be range , occupancy to average 95.6 at the other items midpoint , and from reimbursement and fee , primarily income to just grow over 2% .
Speaker #3: Same store operating expenses are at a midpoint projected to grow year Personnel 2.65% for the . expected to grow less than by 2% .
Speaker #3: While we expect expect some continued pressure from utilities , marketing and office costs operations , these expense projections , the growth of 0.55% , results projected in a in same store NOI of revenue 0.75% at the midpoint , as outlined in our release , we expect our same store portfolio to contribute $0.19 in NOI during 2026 , with the related interest carry with a slower leasing velocity and higher lease up concessions Tim We anticipate mentioned .
Clay Holder: As outlined in our release, we expect our non-same-store portfolio to contribute $0.19 in NOI during 2026. With the related interest carry, along with a slower leasing velocity and higher lease-up concessions that Tim mentioned, we anticipate the recently completed developments and acquisitions will be slightly accretive to 2026 core FFO and move closer to their expected yields in 2027 and beyond. We expect continued external growth in 2026, consisting of our current development pipeline and the projected new starts that Brad noted, with funding between $350 million and $450 million coming from debt financing and internal cash flow. We also expect to match fund $250 million in acquisition opportunities with dispositions.
Clay Holder: As outlined in our release, we expect our non-same-store portfolio to contribute $0.19 in NOI during 2026. With the related interest carry, along with a slower leasing velocity and higher lease-up concessions that Tim mentioned, we anticipate the recently completed developments and acquisitions will be slightly accretive to 2026 core FFO and move closer to their expected yields in 2027 and beyond. We expect continued external growth in 2026, consisting of our current development pipeline and the projected new starts that Brad noted, with funding between $350 million and $450 million coming from debt financing and internal cash flow. We also expect to match fund $250 million in acquisition opportunities with dispositions.
Speaker #3: recently completed developments and acquisitions will be slightly to 2026 core FFO and move closer to their expected yields in 2027 and beyond . We expect continued growth in 2026 , consisting current development of our pipeline and the projected new starts that Brad noted with funding between that the 350 million to $450 million coming from debt internal cash flow .
Clay Holder: This external growth is expected to be slightly dilutive to Core FFO in 2026 and then turn accretive to Core FFO after stabilization. We project total overhead expenses, a combination of property management expenses and G&A expenses, to be $136 million, a 5% increase over 2025 results, bringing our 3-year average increase to 2.5%. We also expect to refinance $300 million in bonds maturing in September 2026, which have an effective rate of 1.2%. Further, we plan to redeem the outstanding preferred shares.
Clay Holder: This external growth is expected to be slightly dilutive to Core FFO in 2026 and then turn accretive to Core FFO after stabilization. We project total overhead expenses, a combination of property management expenses and G&A expenses, to be $136 million, a 5% increase over 2025 results, bringing our 3-year average increase to 2.5%. We also expect to refinance $300 million in bonds maturing in September 2026, which have an effective rate of 1.2%. Further, we plan to redeem the outstanding preferred shares.
Speaker #3: We also expect to match fund acquisition $250 million in opportunities with dispositions external growth is expected to be slightly diluted to core FFO in .
Speaker #3: 2026 , and then turn after FFO to core stabilization accretive . We total overhead project combination of management property expenses and expenses to be $136 million , This a 5% increase over 2025 results , three year bringing our average increase to 2.5% .
Speaker #3: We also expect to refinance $300 million in bonds maturing in September 2026 , which had an effective rate of 1.2% . Further , we redeem the plan to outstanding shares in preferred year .
Brad Hill: ...second half of the year. These anticipated transactions, coupled with our 2025 refinancing activities, will result in incremental interest expense of over $0.05. Combined with financings to support our 2025 development deliveries and the expected deliveries in 2026, we project interest expense to increase by over 15% for the year. We are still early in the assessment of the impact of winter storm Firm, but based on initial assessments, we anticipate excluding the impact from our core FFO results, as we expect to receive insurance proceeds to cover a portion of the cost of the damages. That is all that we have in the way of prepared comments. So Julianne, we will now turn it back to you for questions.
Clay Holder: ...second half of the year. These anticipated transactions, coupled with our 2025 refinancing activities, will result in incremental interest expense of over $0.05. Combined with financings to support our 2025 development deliveries and the expected deliveries in 2026, we project interest expense to increase by over 15% for the year. We are still early in the assessment of the impact of winter storm Firm, but based on initial assessments, we anticipate excluding the impact from our core FFO results, as we expect to receive insurance proceeds to cover a portion of the cost of the damages. That is all that we have in the way of prepared comments. So Julianne, we will now turn it back to you for questions.
Speaker #3: the second half of the These anticipated coupled with our 2025 refinancing activities , will result in interest incremental expense of over $0.05 and financing to combined transactions , support our 2025 development deliveries expected project we interest in 2026 , deliveries by over 1,515% for the increase .
Speaker #3: are year still We early in the impact of winter firm of the storm , but based on initial assessments , we the anticipate impact from our core FFO results excluding as we to expect receive insurance proceeds to cover a portion of the cost of the damages .
Operator: Thank you. We will now open the call up for questions. If you would like to ask a question, please press star, then one on your touchtone phone. If you would like to withdraw your question, you may press star one again. Our first question comes from Jamie Feldman from Wells Fargo. Please go ahead. Your line is open.
Operator: Thank you. We will now open the call up for questions. If you would like to ask a question, please press star, then one on your touchtone phone. If you would like to withdraw your question, you may press star one again. Our first question comes from Jamie Feldman from Wells Fargo. Please go ahead. Your line is open.
Speaker #3: That is all that we have in the way of prepared comments . So , Julianne , we will now turn it back to you for questions .
Speaker #1: We will Thank you . now open the call up for questions . If you would like to ask question , please press star then one on your touchtone phone .
Speaker #1: If you would like to withdraw your question , you may press star one again . Our first question comes Jamie Feldman from Wells a Fargo .
Speaker #1: If you would like to withdraw your question , you may press star one again . Our first question comes Jamie Feldman from Wells a from line is open .
[Analyst] (Wells Fargo): Great, thanks for taking the question. You know, I apologize that you went really quickly through the new renewal and blend outlook. Can you just run through those numbers again and maybe just talk us through your level of confidence in each, your cadence on each throughout the quarters, and just where you think, you know, if you think about your markets, where you're most confident and most concerned about hitting those numbers? Thank you.
Jamie Feldman: Great, thanks for taking the question. You know, I apologize that you went really quickly through the new renewal and blend outlook. Can you just run through those numbers again and maybe just talk us through your level of confidence in each, your cadence on each throughout the quarters, and just where you think, you know, if you think about your markets, where you're most confident and most concerned about hitting those numbers? Thank you.
Speaker #4: Great . Thanks for taking the question . quickly apologize that you the new went through really renewal and outlook . Can blend you just run through those numbers just talk maybe again and us through your level of each your confidence cadence on each in throughout the quarters and just think you know , if you think about your where you most concerned most hitting confident and about numbers .
Brad Hill: Yeah, Jamie, this is Tim. I can, I can walk you through that, and, and Clay may have some to add as well. As Clay mentioned, our, our blended guidance is about 1 to 1.5 for 2026. You know, on the renewal side, I mentioned in, in my comments that we're seeing a little bit above 5% so far this year. So we would expect renewals to be in that 5.5 to 5.25 range, and then start to slowly see momentum on the new lease side. You can kind of do the math on the new lease side with, with those components. And, and I would say, generally, we expect a normal seasonal curve where we see strength into the summer and then start to moderate into the late summer and fall.
Timothy Argo: Yeah, Jamie, this is Tim. I can, I can walk you through that, and, and Clay may have some to add as well. As Clay mentioned, our, our blended guidance is about 1 to 1.5 for 2026. You know, on the renewal side, I mentioned in, in my comments that we're seeing a little bit above 5% so far this year. So we would expect renewals to be in that 5.5 to 5.25 range, and then start to slowly see momentum on the new lease side. You can kind of do the math on the new lease side with, with those components. And, and I would say, generally, we expect a normal seasonal curve where we see strength into the summer and then start to moderate into the late summer and fall.
Speaker #4: Thank those you .
Speaker #3: this is Yeah . Jamie , Tim . I can I can walk you that . And then Clay through something may have to add well as as Clay mentioned , our blended guidance about 1 to 1 and a half for 2026 .
Speaker #3: You know , on the side , I mentioned renewal in my comments that we're seeing a little bit above 5% so far this So we would year .
Speaker #3: expect renewals to be in that five and five and a quarter range . And to five , see then start slowly on the new lease kind of do the math on the new side with with lease those components .
Speaker #3: And I side and would say a expect normal curve where generally we we see strength summer and into then start to moderate late summer and into the , but see less of moderation in late that fall Q3 and Q4 than we typically do .
Brad Hill: But see less of that moderation in late Q3 and in Q4 than we typically do, again, as we get further away from the peak of the supply and expected demand to solidify as well. So normal seasonality, but less steep declines as we get late in the year. As far as markets, you know, I mentioned a few of those on the prepared comments. We're continuing to see strength out of the markets that have been strong, some of the Carolinas and Virginia. Encouraged with what we're seeing out of Atlanta and Dallas. Those are obviously our two largest markets. We continue to see steady progress there, both on the pricing front and the occupancy front. The year-over-year improvement in Q4 pricing for both of those was significant, and two are highest.
Timothy Argo: But see less of that moderation in late Q3 and in Q4 than we typically do, again, as we get further away from the peak of the supply and expected demand to solidify as well. So normal seasonality, but less steep declines as we get late in the year. As far as markets, you know, I mentioned a few of those on the prepared comments. We're continuing to see strength out of the markets that have been strong, some of the Carolinas and Virginia. Encouraged with what we're seeing out of Atlanta and Dallas. Those are obviously our two largest markets. We continue to see steady progress there, both on the pricing front and the occupancy front. The year-over-year improvement in Q4 pricing for both of those was significant, and two are highest.
Speaker #3: Again , as we get from the peak of the away and expected to solidify as well . So normal seasonality , the but less steep declines as we get late in year the less as far as markets , you know , I mentioned a few of those prepared comments for continuing to see strength out of the markets that have been strong .
Speaker #3: the Some of the Carolinas and and Virginia encouraged with what we're seeing out of Atlanta and Dallas . Those are our two largest markets .
Speaker #3: continue to see steady there , both on the progress pricing on the occupancy front . The and the year over year front pricing Q4 , for those was improvement in significant .
Brad Hill: I think we'll start to see a little bit of momentum in Tampa. That's one where occupancy has stabilized, and expect to see a decent amount of demand there. But other than that, I think the ones that have been pretty solid for us this year, I expect those to continue to be solid for us in 2026.
Timothy Argo: I think we'll start to see a little bit of momentum in Tampa. That's one where occupancy has stabilized, and expect to see a decent amount of demand there. But other than that, I think the ones that have been pretty solid for us this year, I expect those to continue to be solid for us in 2026.
Speaker #3: And two of our highest , I we'll think start to see a little bit of of momentum . And that's one where stabilized and occupancy is to decent see amount the of a there .
Speaker #3: But that , I other than ones that have been pretty solid for us this year , I expect those to continue to be us solid for in 2026 .
Operator: Our next question comes from Jana Galan from Bank of America. Please go ahead, your line is open.
Operator: Our next question comes from Jana Galan from Bank of America. Please go ahead, your line is open.
Jana Galan: Thank you. Good morning. I was curious if you could comment a little more on the transaction market. We're hearing there's more variance on cap rates between core and value add, and then, you know, maybe on your decision to add to the development pipeline rather than buying assets or buying back more stock.
Jana Galan: Thank you. Good morning. I was curious if you could comment a little more on the transaction market. We're hearing there's more variance on cap rates between core and value add, and then, you know, maybe on your decision to add to the development pipeline rather than buying assets or buying back more stock.
Speaker #1: next Our from question comes Galen from Bank of America . Please go ahead . Your line is open .
Speaker #5: Thank morning you . Good was curious if you could comment a little more on the transaction . We're hearing there's more variance on cap rates between core and value add then , you know , , and maybe on your decision add to the development pipeline rather than buying or buying back assets more stock .
Brad Hill: Yeah, thanks. This is Brad. I'll kick that one off. I mean, you know, in terms of the transaction market, you know, it continues to be pretty aggressive on those core assets, as you mentioned. You know, what we looked at in Q4, we continue to see cap rates in the, call it, 4-6 range. In terms of the spread between core and value add, you know, I would say you're probably seeing a 50 to 75 basis point spread, all depending on, you know, certainly the markets that the value add's located in, what that upside opportunity looks like. But those can trade, you know, somewhere in the 5.25 to, you know, call it 5.5 range, again, depending on the market that that's located in.
Brad Hill: Yeah, thanks. This is Brad. I'll kick that one off. I mean, you know, in terms of the transaction market, you know, it continues to be pretty aggressive on those core assets, as you mentioned. You know, what we looked at in Q4, we continue to see cap rates in the, call it, 4-6 range. In terms of the spread between core and value add, you know, I would say you're probably seeing a 50 to 75 basis point spread, all depending on, you know, certainly the markets that the value add's located in, what that upside opportunity looks like. But those can trade, you know, somewhere in the 5.25 to, you know, call it 5.5 range, again, depending on the market that that's located in.
Speaker #6: Yeah . Thanks . This is Brad . I'll kick that one mean off . I , you know , the transaction continues to in terms of market , you know , it be pretty aggressive on assets .
Speaker #6: As you mentioned . know what we looked at in the fourth quarter , we continue to see cap rates in those core You the call it a 4 to 6 range in terms of the spread between and core value add .
Speaker #6: You know , I would say you're probably seeing a to 55 or 50 point 75 basis depending spread , all , you know , on markets that value the adds located in upside what that looks opportunity like .
Speaker #6: But those can trade , you know , certainly the five and a half Again range . depending on the market that that's but in .
Brad Hill: But I don't think that spread has changed. You know, that spread has been there for the last couple of years, so I wouldn't say there's a material change in that at the moment. In terms of our capital allocation, yeah, I mean, development continues to be a big focus of ours. If we can, you know, as I indicated in my comments, you know, when we're in an environment where demand continues to be solid, the supply pipeline over the next few years continues to be muted. We've got the past three years now of starts have been below long-term averages in our region of the country.
Brad Hill: But I don't think that spread has changed. You know, that spread has been there for the last couple of years, so I wouldn't say there's a material change in that at the moment. In terms of our capital allocation, yeah, I mean, development continues to be a big focus of ours. If we can, you know, as I indicated in my comments, you know, when we're in an environment where demand continues to be solid, the supply pipeline over the next few years continues to be muted. We've got the past three years now of starts have been below long-term averages in our region of the country.
Speaker #6: don't think I , I But that changed has spread that that spread has been located for the last couple of years . wouldn't say there's So I a change there in material that at the in terms of our capital allocation .
Speaker #6: Yeah . I mean , continues to be a big focus of moment ours . If we . You know , as I development indicated in my can you know , when we're in an environment where demand continues to to be solid , the , supply pipeline over the years next muted .
Brad Hill: You know, this is a good time for us to be able to use our balance sheet capacity to invest in new, new assets that will deliver into a much stronger operating environment. The development yields that we're still able to achieve today, selectively, not on everything that we look at, but on the deals that we move forward with, and we're in the 6 to 6.5% range. So, we continue to believe that that's a good use of our capital to drive long-term earnings growth out of our portfolio. In terms of share repurchases, you know, again, we look at all opportunities for capital allocation, whether that's external growth, internal growth, developing, excuse me, investing in our existing platform.
Brad Hill: You know, this is a good time for us to be able to use our balance sheet capacity to invest in new, new assets that will deliver into a much stronger operating environment. The development yields that we're still able to achieve today, selectively, not on everything that we look at, but on the deals that we move forward with, and we're in the 6 to 6.5% range. So, we continue to believe that that's a good use of our capital to drive long-term earnings growth out of our portfolio. In terms of share repurchases, you know, again, we look at all opportunities for capital allocation, whether that's external growth, internal growth, developing, excuse me, investing in our existing platform.
Speaker #6: be We've past three years the now of starts have below got averages in long term been of the our region You know , this is a good time for us able to use our balance sheet capacity to new , new assets that will deliver into a much operating environment .
Speaker #6: The development yields that we're able to today still achieve on everything that selectively , not we look at , stronger on the deals that we move forward with .
Speaker #6: And we're the in 6 to 6.5% range . we So continue to that's believe that a good use of our drive long term capital to growth our out of of our out in terms earnings of share repurchases .
Speaker #6: You know , again , we look at all other opportunities for capital allocation , whether that's growth , internal growth , developing external or excuse investing in our existing platform .
Brad Hill: We talked about the redevelopment, repositioning, the Wi-Fi initiatives, various initiatives we have to drive margin expansion opportunities. Those continue to be very, very compelling for us. And, you know, when we look at our opportunity set there, that does leave us with limited capacity for share repurchases. You know, one of the things that we're not really targeting is a big disposition, a portfolio of properties to dispose of, and we generally like where we're located, and we don't need to reallocate capital between markets. So, you're generally not gonna see us move forward with a big disposition plan to support a share repurchase. Rather, what we'll do on the disposition side is continue to cycle out of older assets, redevelop or redeploy that capital into newer assets.
Brad Hill: We talked about the redevelopment, repositioning, the Wi-Fi initiatives, various initiatives we have to drive margin expansion opportunities. Those continue to be very, very compelling for us. And, you know, when we look at our opportunity set there, that does leave us with limited capacity for share repurchases. You know, one of the things that we're not really targeting is a big disposition, a portfolio of properties to dispose of, and we generally like where we're located, and we don't need to reallocate capital between markets. So, you're generally not gonna see us move forward with a big disposition plan to support a share repurchase. Rather, what we'll do on the disposition side is continue to cycle out of older assets, redevelop or redeploy that capital into newer assets.
Speaker #6: about the redevelopment , repositioning the initiatives , various Wi-Fi initiatives we have to drive We expansion margin continue to be opportunities . Those very , very compelling us .
Speaker #6: look at our when we opportunity set does , you know , leave with us for capacity a limited for for share repurchases . that You know , one of the things we're not really targeting is a big disposition portfolio of properties to dispose of .
Speaker #6: I mean, we generally like talked location, and we don't need to reallocate capital between markets. So you're generally not going to see us move forward with a disposition plan to big support a repurchase.
Speaker #6: Rather , what we'll do on the side share is disposition continue to older assets cycle , redevelop , redeploy that capital into newer assets .
Brad Hill: And if you look at what we've done over the last five years, we've taken capital off of dispositions. We've earned almost a 20% IRR on those and redeployed them into new assets, driving a 1,000 basis points better in ROI margins and a 1,500 basis points better after CapEx in ROI margins. So we think that's the best opportunity for us on dispositions moving forward.
Brad Hill: And if you look at what we've done over the last five years, we've taken capital off of dispositions. We've earned almost a 20% IRR on those and redeployed them into new assets, driving a 1,000 basis points better in ROI margins and a 1,500 basis points better after CapEx in ROI margins. So we think that's the best opportunity for us on dispositions moving forward.
Speaker #6: if you look at what And we've done over the we've taken capital off of almost dispositions . earned We've a those and redeployed them assets into new five years , 1000 basis better .
Speaker #6: points NOI margins and a 1500 basis points better CapEx . NOI margin . So we best think for opportunity us on on dispositions moving forward that's the .
Operator: Our next question comes from Nick Yulico from Scotiabank. Please go ahead, your line is open.
Operator: Our next question comes from Nick Yulico from Scotiabank. Please go ahead, your line is open.
Nick Yulico: Thanks. Good morning, everyone. So, in terms of development, I was hoping you could talk some more about, you know, why that you have a focus on development right now when, you know, clearly, you have a view there's value creation to be had over time. You're building at, you know, higher yield than where you think assets are trading, but from a FFO and accretion, growth standpoint, it's not helping right now. I mean, you've talked about slower development lease-up periods. You have an issue like others, where capitalized interest benefit is lower than where you're borrowing. So, can you just maybe talk about how this, you know, makes sense to be picking up development right now if you are having all these, you know, near-term FFO impacts because of that?
Nick Yulico: Thanks. Good morning, everyone. So, in terms of development, I was hoping you could talk some more about, you know, why that you have a focus on development right now when, you know, clearly, you have a view there's value creation to be had over time. You're building at, you know, higher yield than where you think assets are trading, but from a FFO and accretion, growth standpoint, it's not helping right now. I mean, you've talked about slower development lease-up periods. You have an issue like others, where capitalized interest benefit is lower than where you're borrowing. So, can you just maybe talk about how this, you know, makes sense to be picking up development right now if you are having all these, you know, near-term FFO impacts because of that?
Speaker #1: Our next question comes from Nick Yulico , Scotiabank . open line is ahead .
Speaker #1: .
Speaker #7: Thanks . Good morning everyone . terms of in So development , I you was hoping talk some about , you could know , why more you have focus on development a now after .
Speaker #7: When I clearly you have a view . There's value , you know , creation building time . to be higher yield than where you think assets from trading .
Speaker #7: are and accretion growth FFO it's standpoint , helping right now . I mean , you've talked about slower development lease up periods . You have an an issue like others where capitalized interest benefit lower is you're than where borrowing .
Speaker #7: So can you maybe just talk about how this sense to be makes right development picking up if you If now ? having are these , you all know , near-term FFO impacts because of that .
Brad Hill: Yeah. Thanks, Nick. This is Brad. Yeah, I think that's a good question, fair question. I think it's important to keep in mind with our development pipeline, that we are delivering currently at a time where those particular properties are under more pressure than they ever have been. I mean, keep in mind that if you look at the amount of supply that's delivered on our markets from 2023 to 2025, we delivered five years' worth of supply over a 3-year period. So, those properties are facing much more pressure, which we are seeing right now in terms of their ability to lease up, the velocity of their lease-up, and certainly the use of concessions right now. But that's temporary.
Brad Hill: Yeah. Thanks, Nick. This is Brad. Yeah, I think that's a good question, fair question. I think it's important to keep in mind with our development pipeline, that we are delivering currently at a time where those particular properties are under more pressure than they ever have been. I mean, keep in mind that if you look at the amount of supply that's delivered on our markets from 2023 to 2025, we delivered five years' worth of supply over a 3-year period. So, those properties are facing much more pressure, which we are seeing right now in terms of their ability to lease up, the velocity of their lease-up, and certainly the use of concessions right now. But that's temporary.
Speaker #6: Yeah . Thanks , Nick . Brad This is think . Yeah , I that's a good question . Fair question . I think it's important to keep in with our development mind pipeline , that we are delivering at a currently time that those properties are under more particular where have been .
Speaker #6: I mean , keep in mind pressure than they that if you look at the amount of supply that's delivered on our markets from 23 to 25 , we delivered five years worth of supply over a three year period .
Speaker #6: So those properties are are are facing much pressure , which right in terms of their ability to to lease up the velocity of their lease up .
Brad Hill: If you look at the lease over lease return or rents we're getting on renewals on our new lease-up properties, we're getting low double-digit returns, so the concessions that we're offering are burning off. If you look at the recurring rents that are in place on those development projects right now, they're 2% above pro forma. So again, this is a temporary issue with our developments. If you look at what we've developed over the last five years, we have delivered developments on average that have exceeded our underwritten yields by 90 basis points. So you're right, we're under pressure right now on that development pipeline, and we do think that that's temporary.
Brad Hill: If you look at the lease over lease return or rents we're getting on renewals on our new lease-up properties, we're getting low double-digit returns, so the concessions that we're offering are burning off. If you look at the recurring rents that are in place on those development projects right now, they're 2% above pro forma. So again, this is a temporary issue with our developments. If you look at what we've developed over the last five years, we have delivered developments on average that have exceeded our underwritten yields by 90 basis points. So you're right, we're under pressure right now on that development pipeline, and we do think that that's temporary.
Speaker #6: And use of concessions now . certainly the right But that's now seeing . It if temporary you look at the the over lease lease rents , we're renewals on new lease up properties .
Speaker #6: We're getting low digit double returns . So concessions the that we're offering are If you burning off . at the recurring are in rents that those development now , projects right proforma .
Speaker #6: So again , this is 2% above temporary issue with with our developments . If you look at what we've a developed over the last five years , we have delivered developments on average place on that have exceeded our underwritten 90 basis points .
Brad Hill: And as the market firms up and concessions burn off, we will, as Tim mentioned in his comments, capture the value proposition associated with those. And then in terms of starting new developments today, you know, they'll be delivering in 2028, 2029. And as I mentioned in my comments, you know, we've had 3 years now of below long-term average supply in our starts in our market, which will support a stronger operating environment when those new developments come online. So we very much believe in the merits of continuing to allocate capital to development, despite the pressure that we're under currently.
Brad Hill: And as the market firms up and concessions burn off, we will, as Tim mentioned in his comments, capture the value proposition associated with those. And then in terms of starting new developments today, you know, they'll be delivering in 2028, 2029. And as I mentioned in my comments, you know, we've had 3 years now of below long-term average supply in our starts in our market, which will support a stronger operating environment when those new developments come online. So we very much believe in the merits of continuing to allocate capital to development, despite the pressure that we're under currently.
Speaker #6: you're under right . We're yields by that development right now on pipeline . And we do that's temporary . And as the market firms and concessions off , we burn will as Tim think that , capture the value proposition those .
Speaker #6: you're under right . We're yields by that development right now on pipeline . And we do that's temporary . And as the market firms and concessions off , we burn will as Tim think that , capture the value proposition his comments in terms associated with And developments , you know , they'll be delivering in 28 , And as I mentioned in my comments , you three years now had know , of 29 .
Speaker #6: below
Speaker #6: average supply in our starts in our market , which will stronger support a operating environment when those new developments come online . So we believe in the of continuing merits of to allocate capital to developments pressure that we're under despite the currently .
Operator: Our next question comes from Eric Wolfe from Citi. Please go ahead, your line is open.
Operator: Our next question comes from Eric Wolfe from Citi. Please go ahead, your line is open.
Eric Wolfe: Hey, thanks, and good morning. You mentioned that renewals are being accepted above 5% so far this year. Could you just talk about what the dollar premium is on renewals versus new leases right now, and how that premium compares versus history? And just any thoughts on how sustainable you think this 5% renewal rate is.
Eric Wolfe: Hey, thanks, and good morning. You mentioned that renewals are being accepted above 5% so far this year. Could you just talk about what the dollar premium is on renewals versus new leases right now, and how that premium compares versus history? And just any thoughts on how sustainable you think this 5% renewal rate is.
Speaker #1: Our next question comes from Eric Wolf with Citi. Please go ahead. The question is open.
Speaker #8: thanks . And good Hey , morning . mentioned that You being accepted above 5% so far year . this Could you about what the dollar just talk premium is on renewals leases versus new now ?
Speaker #8: How that premium versus compares versus . And just thoughts on how you think this 5% renewal rate is renewals are .
Brad Hill: Yeah, Eric, this is Tim. You know, as far as the gap, Q4 was around $180, $185 dollars or so, new leases versus renewal. Now that's, that's after the renewal increase, and the renewal increase is about $80 or so. That's certainly higher than our long-term averages, but not too much different. Q4 is when it always tends to gap out as we see, obviously, more moderation in new lease rates and traffic patterns, that sort of thing. So if I look, you know, look back to the last couple of Q4s, that's not too much different than what we've seen there. So... But we've now seen that, you know, there's been 8 or 9 quarters now where it's been a little bit wider than normal, but still been able to maintain the growth that we've achieved on renewals.
Timothy Argo: Yeah, Eric, this is Tim. You know, as far as the gap, Q4 was around $180, $185 dollars or so, new leases versus renewal. Now that's, that's after the renewal increase, and the renewal increase is about $80 or so. That's certainly higher than our long-term averages, but not too much different. Q4 is when it always tends to gap out as we see, obviously, more moderation in new lease rates and traffic patterns, that sort of thing. So if I look, you know, look back to the last couple of Q4s, that's not too much different than what we've seen there. So... But we've now seen that, you know, there's been 8 or 9 quarters now where it's been a little bit wider than normal, but still been able to maintain the growth that we've achieved on renewals.
Speaker #3: Yeah , Eric , this is Tim . You know , as far as
Speaker #3: the gap Q4 it was 180 , releases renewals . versus Now that's that's around after the increase renewal and the increase $80 or so is about .
Speaker #3: That sort of thing . So if I look back to the last couple of our long that's not too much different Q4 , than what patterns .
Speaker #3: seen So there . but we've that , now seen you know , there's been 8 or 9 quarters now it's where look , you been a little bit wider than normal , but still been able to maintain the growth that we've achieved on sustainable renewals .
Brad Hill: And I think, you know, there's a lot of reasons for that. We've talked about this in the past. I mean, I think, you know, there's a cost, there's a hassle to moving. As you know, as our residents get a little bit older, the cost of that and the willingness to go through that hassle and spend that money and take that time, I think people are less willing to do that with the resident base that we have. And we're very thoughtful of how we go about our renewal increases. It's based on where our residents are relative to market, and we scale that.
Timothy Argo: And I think, you know, there's a lot of reasons for that. We've talked about this in the past. I mean, I think, you know, there's a cost, there's a hassle to moving. As you know, as our residents get a little bit older, the cost of that and the willingness to go through that hassle and spend that money and take that time, I think people are less willing to do that with the resident base that we have. And we're very thoughtful of how we go about our renewal increases. It's based on where our residents are relative to market, and we scale that.
Speaker #3: And I think , you know , there's a lot of reasons for that . We've this in the about mean , I think you the , know , there past .
Speaker #3: there's a cost . There's a hassle to is moving , you know , as as our our residents little bit older , the cost of get a that I willingness to , to go through that and spend hassle that money and take that time , I think is less people are to do willing with And resident we have .
Speaker #3: there's a cost . There's a hassle to is moving , you know , as as our our residents little bit older , the cost of get a that I willingness to , to go through that and spend hassle that money and take that time , I think is less people are to do willing with And resident we have . that we're with the very renewal how we go about a It's increases .
Speaker #3: there's a cost . There's a hassle to is moving , you know , as as our our residents little bit older , the cost of get a that I willingness to , to go through that and spend hassle that money and take that time , I think is less people are to do willing with And resident we have . that we're with the very renewal how we go about a It's increases . on based where our residents relative to market .
Timothy Argo: ... higher or lower based on that, and we're looking at it on a very strategic basis, and there's a customer service factor there as well. You know, Brad mentioned the Google score that we have, which are highest in the sector, the customer service component. And I think when you factor all those things in, the service you're getting, the cost, the hassle, the everything that goes into moving, it's just not worth it for a lot of our residents when they consider the value that they're getting with us.
Timothy Argo: ... higher or lower based on that, and we're looking at it on a very strategic basis, and there's a customer service factor there as well. You know, Brad mentioned the Google score that we have, which are highest in the sector, the customer service component. And I think when you factor all those things in, the service you're getting, the cost, the hassle, the everything that goes into moving, it's just not worth it for a lot of our residents when they consider the value that they're getting with us.
Speaker #3: scale And we that higher or lower base based on that . And we're at it in a very strategic basis . And there's a there's a service factor there as well .
Speaker #3: You know , mentioned Google scores that we have , which are highest in the sector . The service the I think when you component .
Speaker #3: those things in and the And getting the cost , the hassle , the into goes it's just worth it for a lot of our not residents .
Timothy Argo: Particularly in this environment, when you think about the concessions on lease-ups and some of the 8 to 10 weeks free that they're seeing, that's a short-term thing, and you're gonna get that big increase when you try to renew if you are willing to move. So we expect, you know, we've got visibility really out into April now and seeing consistent take rates and consistent performance on renewals. So feel confident and comfortable about where we are in the renewal set.
Timothy Argo: Particularly in this environment, when you think about the concessions on lease-ups and some of the 8 to 10 weeks free that they're seeing, that's a short-term thing, and you're gonna get that big increase when you try to renew if you are willing to move. So we expect, you know, we've got visibility really out into April now and seeing consistent take rates and consistent performance on renewals. So feel confident and comfortable about where we are in the renewal set.
Speaker #3: everything that When they consider their getting with us , and particularly in this that they're value , environment , when you think the concessions on lease ups and some of the about short term thing that's that's a .
Speaker #3: And you're going to you're get big increase to renew . you if If you are that move . So we we we've willing to got when you try into visibility really out now April .
Speaker #3: you know , take consistent consistent performance on renewals . So , feel comfortable where we are about in the .
Speaker #3: you know , take consistent consistent performance on renewals . So , feel comfortable where we are about in the .
Operator: Our next question comes from Michael Goldsmith from UBS. Please go ahead. Your line is open.
Operator: Our next question comes from Michael Goldsmith from UBS. Please go ahead. Your line is open.
[Analyst] (UBS): Hi, thanks. This is Amy. I'm with Michael. What gives you the confidence that you can see an acceleration in new lease, through and maybe a little bit past the typical lease season, given the softer macro? I know you mentioned some tailwinds, but within your markets, what are you seeing in terms of job growth that really gives you confidence that the remaining supply can be absorbed and rents can accelerate? And maybe if you could talk about the, new lease growth from trough to peak and how that would compare to historical. Thank you.
[Analyst] (UBS): Hi, thanks. This is Amy. I'm with Michael. What gives you the confidence that you can see an acceleration in new lease, through and maybe a little bit past the typical lease season, given the softer macro? I know you mentioned some tailwinds, but within your markets, what are you seeing in terms of job growth that really gives you confidence that the remaining supply can be absorbed and rents can accelerate? And maybe if you could talk about the, new lease growth from trough to peak and how that would compare to historical. Thank you.
Speaker #1: from Michael Goldsmith from UBS . Please go ahead . question Your line Our next
Speaker #9: Amy . Thanks . Michael This is . gives you the What confidence that
Speaker #9: Amy . Thanks . Michael This is . gives you the What confidence that
Speaker #9: in acceleration in lease renewal new maybe a you the typical lease season , given the
Speaker #9: seeing in
Speaker #9: that really confidence little bit the growth supply through and gives you absorbed can be and rents remaining accelerate . could talk if you about And maybe the new lease softer trough to and how that would compare to peak historical .
Brad Hill: Yeah, Amy, this is Brad. I'll kick off, and Tim can certainly give you some details. But I think it's, you know, the pace of recovery and the expectation for a recovery to accelerate this year for us is really, as I mentioned in my comments, really anchored in the fact that we do think some of the headwinds that we had last year are a little bit less than what we or less this year than what we expected last year. And we're seeing the momentum. If you look at our fundamentals, as we talked about, they're improving. The operating fundamentals are. Now it takes time for that to make its way into the revenue and earnings portion as the rent roll turns.
Brad Hill: Yeah, Amy, this is Brad. I'll kick off, and Tim can certainly give you some details. But I think it's, you know, the pace of recovery and the expectation for a recovery to accelerate this year for us is really, as I mentioned in my comments, really anchored in the fact that we do think some of the headwinds that we had last year are a little bit less than what we or less this year than what we expected last year. And we're seeing the momentum. If you look at our fundamentals, as we talked about, they're improving. The operating fundamentals are. Now it takes time for that to make its way into the revenue and earnings portion as the rent roll turns.
Speaker #9: Thank you
Speaker #9: .
Speaker #6: this is Brad . Yeah , Amy , I'll kick and off Tim can some details , but but I think it's , you know , the pace of recovery and the
Speaker #6: I mentioned we do fact anchored in the that think some of is the headwinds that we year some of the a little bit less we are are year than what we expected last year .
Speaker #6: And we're seeing that, with the momentum. Less so than fundamentals we talked about, they're improving—the operating fundamentals are now. It takes time for you to look at that, to have it make its way to the earnings portion.
Brad Hill: But we've had 4 straight quarters now of blends improving year-over-year, which really indicates that we're turning the corner. Certainly less uncertainty, as I talked about. And then I think as you look out into the next year and the cadence of new deliveries declining this year, where they'll be down by more than 60% from the peak, and down 35% year-over-year. And then I think, as Tim mentioned earlier, with the backdrop of market-level occupancies continuing to firm up in less units in lease-up, the sustained demand that we're seeing across our portfolio right now should have a more pronounced impact on fundamentals.
Brad Hill: But we've had 4 straight quarters now of blends improving year-over-year, which really indicates that we're turning the corner. Certainly less uncertainty, as I talked about. And then I think as you look out into the next year and the cadence of new deliveries declining this year, where they'll be down by more than 60% from the peak, and down 35% year-over-year. And then I think, as Tim mentioned earlier, with the backdrop of market-level occupancies continuing to firm up in less units in lease-up, the sustained demand that we're seeing across our portfolio right now should have a more pronounced impact on fundamentals.
Speaker #6: As the as roll turns. But for straight, the rent we've had blends improving really year, which really that we're turning the corner, and certainly less as I talked about.
Speaker #6: And then quarters now I think as you look out into the next year and the cadence of deliveries declining this year , revenue and where they'll be more than 60% from the peak down 35% year over year .
Speaker #6: And then I, as Tim mentioned, and continuing to firm up less units in lease-up, that we're seeing across our sustained now, should be more pronounced. The portfolio has an impact on, and is certainly getting, as we head into Q1, particularly on the new lease rate side.
Brad Hill: And as certainly as we get into, and particularly on the new lease rate side, and as we get into the spring and summer leasing season, we would expect that to continue to manifest itself to a larger degree.
Brad Hill: And as certainly as we get into, and particularly on the new lease rate side, and as we get into the spring and summer leasing season, we would expect that to continue to manifest itself to a larger degree.
Timothy Argo: Yeah, and I'll just add one point. I mean, I think important to keep in mind on the new lease side is, you know, typically in Q4 and Q1, we historically see negative new lease rates, even in a good environment, even in a, you know, more historically favorable supply-demand environment, you see negative new lease rates in those two quarters, just from normal seasonality, from traffic declining. So that's not unusual to see that. But we would expect some good acceleration, as I mentioned, into the summer, and then start to moderate in the fall. But all the things Brad mentioned, and think about it, when we get to the back half of 2026, how far we are from the peak, continuing to see those units absorbed.
Timothy Argo: Yeah, and I'll just add one point. I mean, I think important to keep in mind on the new lease side is, you know, typically in Q4 and Q1, we historically see negative new lease rates, even in a good environment, even in a, you know, more historically favorable supply-demand environment, you see negative new lease rates in those two quarters, just from normal seasonality, from traffic declining. So that's not unusual to see that. But we would expect some good acceleration, as I mentioned, into the summer, and then start to moderate in the fall. But all the things Brad mentioned, and think about it, when we get to the back half of 2026, how far we are from the peak, continuing to see those units absorbed.
Speaker #6: And as into the spring and leasing summer would we get expect that to continue to season , we itself to a larger
Speaker #3: from two quarters , seasonality from declining . So that's that's not unusual that . to see But we would expect some acceleration . some good As I into the summer then start to moderate .
Speaker #3: in the in things But all the Brad And traffic and think about get to the mentioned half of mentioned the far we peak , continuing to see those fall .
Timothy Argo: We think the demand picture will continue to solidify all the various factors in our region of the country, whether it's job growth, migration, household formation, population growth, the health of our renters in terms of income, rent to income, are all extremely strong, particularly compared to other areas of the country. So all of those factors are combined to give us the confidence that we think 2026 looks better than 2025.
Timothy Argo: We think the demand picture will continue to solidify all the various factors in our region of the country, whether it's job growth, migration, household formation, population growth, the health of our renters in terms of income, rent to income, are all extremely strong, particularly compared to other areas of the country. So all of those factors are combined to give us the confidence that we think 2026 looks better than 2025.
Speaker #3: solidify all the various factors in of the country , whether growth , it's job migration , household continue to growth , the health of our renters of population rent , income are all extremely strong , particularly areas compared to other country .
Speaker #3: of the So all of those factors are combined to give us the we think confidence that 2026 looks better than 2025 .
Operator: Our next question comes from Haendel St. Juste from Mizuho. Please go ahead. Your line is open.
Operator: Our next question comes from Haendel St. Juste from Mizuho. Please go ahead. Your line is open.
Haendel St. Juste: Hey, guys. Just wanted to come back to the point on blend one more time. Just doing the quick math by our numbers, it looks like there's about a 200 basis point ramp implied into the back half of the year versus the first half, which is similar to what you saw or what we saw at this point last year, and you subsequently had to cut a few times. So first, I guess, is my math correct? And it sounds like, secondly, that it's a little bit of lower supply. You have some optimism in the demand picture here, but what about turnover? I'm curious kind of what you're factoring as well for turnover into that math. Thanks.
Haendel St. Juste: Hey, guys. Just wanted to come back to the point on blend one more time. Just doing the quick math by our numbers, it looks like there's about a 200 basis point ramp implied into the back half of the year versus the first half, which is similar to what you saw or what we saw at this point last year, and you subsequently had to cut a few times. So first, I guess, is my math correct? And it sounds like, secondly, that it's a little bit of lower supply. You have some optimism in the demand picture here, but what about turnover? I'm curious kind of what you're factoring as well for turnover into that math. Thanks.
Speaker #1: question next comes from in terms Our
Speaker #10: guys , just Hey wanted to come back to the point on on blends . time . doing a quick Just One more It looks like there's about a point 200 basis ramp implied into the back half versus the of the year first half , which is you similar to what saw .
Speaker #10: What we point saw at this last year , and you subsequently had So first , I guess , is my is few times .
Speaker #10: correct ? And it sounds like my math to cut a little bit of lower it's a supply . You have some picture demand here .
Speaker #10: correct ? And it sounds like my math to cut a little bit of lower it's a supply . You have some picture demand here secondly , that But what about turnover ?
Timothy Argo: And I'll hit that last point. I might like to talk a little bit about the first part. As far as turnover, we're expecting pretty consistent turnover. You know, there's nothing that suggests that we think it'll pick up, so we've effectively dialed in consistent turnover from what we did last year. So certainly the renewal performance and the impact of renewals versus new leases is helping in that blend as we expect turnover to stay low. We're not necessarily dialing it in to be lower, but not dialing in to be any higher either.
Timothy Argo: And I'll hit that last point. I might like to talk a little bit about the first part. As far as turnover, we're expecting pretty consistent turnover. You know, there's nothing that suggests that we think it'll pick up, so we've effectively dialed in consistent turnover from what we did last year. So certainly the renewal performance and the impact of renewals versus new leases is helping in that blend as we expect turnover to stay low. We're not necessarily dialing it in to be lower, but not dialing in to be any higher either.
Speaker #10: I'm what you're factoring curious kind of as well for into turnover math . Thanks that .
Speaker #10: I'm what you're factoring, curious kind of as well, for into turnover math. Thanks for that.
Speaker #3: point . I hit that I'll might And last a little the first far as bit about part as talk turnover . the We're expecting consistent turnover .
Speaker #3: know , You there's nothing that we it'll pick think up . So we've effectively dialed in consistent what we did turnover with last suggests year .
Speaker #3: So certainly the the . Renewal and the impact of renewals versus new that helping in we expect blend . As turnover to stay low .
Brad Hill: And add just on the, on the new lease side, I mean, as far as kind of the pace that that plays itself out to be, I mean, you know, it's, it's, it's, it's increasing over the, the first half of the year and then, and then subsiding over the back half of the year, kind of following the typical seasonal curves. But we do expect there to be continued improvement versus what we've seen in 2024. And so as that, as that ramps up over the course of the, uh, over the, over the course of the year, you know, we've seen that playing itself out into the blended rates that we, that we were describing.
Brad Hill: And add just on the, on the new lease side, I mean, as far as kind of the pace that that plays itself out to be, I mean, you know, it's, it's, it's, it's increasing over the, the first half of the year and then, and then subsiding over the back half of the year, kind of following the typical seasonal curves. But we do expect there to be continued improvement versus what we've seen in 2024. And so as that, as that ramps up over the course of the, uh, over the, over the course of the year, you know, we've seen that playing itself out into the blended rates that we, that we were describing.
Speaker #3: We're not necessarily dialing it in, but not lower—I'm pretty dialed in either.
Speaker #6: And just on .
Speaker #3: on the new The lease side , I mean , it's the first that the out to be . plays I pace mean , you know , it's as Tim mentioned it's itself the first half of the year .
Speaker #3: and then subsiding then back half of the year , kind of the And typical seasonal But we do of that continued improvement versus expect there what we've curve .
Speaker #3: seen in 2024 . And to be so is that that is the over the course of the We see playing over the that that year .
Speaker #3: seen in 2024 . And to be so is that that is the over the course of the We see playing over the that that itself out into the splendid we over the .
Speaker #3: seen in 2024 . And to be so is that that is the over the course of the We see playing over the that that itself out into the splendid we that we were describing ramps up
Operator: ... Our next question comes from Brad Heffern from RBC Capital Markets. Please go ahead. Your line is open.
Operator: ... Our next question comes from Brad Heffern from RBC Capital Markets. Please go ahead. Your line is open.
Brad Heffern: Yeah. Hey, everybody, thanks. Can you talk through what the path is back to positive new lease growth? Obviously, it was originally expected in mid-2025. Doesn't look like the guidance would suggest that we would see it in 2026. And then if renewals are a little higher than normal, I don't, I don't think you've done anything in the five since 2023. So it feels like that would put pressure on new lease in 2027 as well. So I'm just wondering your best guess on, you know, when we would see positive new lease growth, and then when new lease growth, in general, could kind of go back to normal.
Brad Heffern: Yeah. Hey, everybody, thanks. Can you talk through what the path is back to positive new lease growth? Obviously, it was originally expected in mid-2025. Doesn't look like the guidance would suggest that we would see it in 2026. And then if renewals are a little higher than normal, I don't, I don't think you've done anything in the five since 2023. So it feels like that would put pressure on new lease in 2027 as well. So I'm just wondering your best guess on, you know, when we would see positive new lease growth, and then when new lease growth, in general, could kind of go back to normal.
Speaker #1: question comes next from Heffern Our from Brad RBC Capital Markets . Please go ahead . Your open line is .
Speaker #11: Yeah . Thanks . Can Hey , you talk through what the path is back new lease ? growth . to Positive everybody . was originally expected in Obviously it mid 25 .
Speaker #11: It doesn't look guidance would would see it like the in 26 . suggest that we then if renewals are a little normal higher than think you've I don't done anything in the five since would put pressure on new lease in 23 .
Speaker #11: well . So I'm just So it wondering your feels like that best guess on would see positive new lease when we growth and then when new lease growth in general of go back to could kind normal .
Brad Hill: Well, I'm not, I'm not gonna put a target on going to positive new lease growth. I mean, we don't, we don't necessarily have that dialed into our expectations, as you noted in, in 2026. We do expect it to continue to accelerate from where we are now, and then, as mentioned, seeing the steady renewals. But, you know, I think as we get into 2027, I mean, I think one thing to be clear about on, on what we dialed in 2026, because of the acceleration in new lease rates, and I mentioned in my comments, less of the normal seasonality as we get into August, September and beyond, more of that impact in new lease rates is, is going to impact 2027 more so on the revenue side than 2026 because of it being a little more backloaded.
Brad Hill: Well, I'm not, I'm not gonna put a target on going to positive new lease growth. I mean, we don't, we don't necessarily have that dialed into our expectations, as you noted in, in 2026. We do expect it to continue to accelerate from where we are now, and then, as mentioned, seeing the steady renewals. But, you know, I think as we get into 2027, I mean, I think one thing to be clear about on, on what we dialed in 2026, because of the acceleration in new lease rates, and I mentioned in my comments, less of the normal seasonality as we get into August, September and beyond, more of that impact in new lease rates is, is going to impact 2027 more so on the revenue side than 2026 because of it being a little more backloaded.
Speaker #3: I'm not to put a target going to I'm not going on positive don't we mean , we that expectations . noted don't in to our in 2026 , to continue As you to accelerate from where expect it Well , now .
Speaker #3: And new lease then , as mentioned , I steady renewals seeing the you know , I into necessarily have think think we get one thing to be clear .
Speaker #3: on on bout in 2026 because of about new acceleration of in my mentioned comments lease rates . less of the And I normal But , seasonality as we get into August , September and beyond .
Speaker #3: More of that rate is going to impact 2027, more so on the revenue side than 2026 because of it being a loaded.
Brad Hill: And so, you know, part of, part of that leads into where we expect 2027 to be. And again, we're even further from the supply peak. Consistently, starts are, are continuing to go down. We think demand will be solidified. So as we get into 2027, I think that's when you see real sustained momentum and start to see potentially where we get into some of those positive new lease, new lease rate ranges.
Brad Hill: And so, you know, part of, part of that leads into where we expect 2027 to be. And again, we're even further from the supply peak. Consistently, starts are, are continuing to go down. We think demand will be solidified. So as we get into 2027, I think that's when you see real sustained momentum and start to see potentially where we get into some of those positive new lease, new lease rate ranges.
Speaker #3: And so , you know , part part of that back leads where we into 2027 to expect be . And again , we're even further from the supply consistently peak starts or continuing to .
Speaker #3: down of think demand So will be as we 2027 , I think get into real those sustained new positive lease rate . you see
Operator: Our next question comes from John Kim from BMO. Please go ahead. Your line is open.
Operator: Our next question comes from John Kim from BMO. Please go ahead. Your line is open.
John Kim: Thank you. I wanted to follow up on your disposition guidance of $250 million, which is following a year in which you had sold just a couple of assets. But just given the strong demand from institutions for your product, I'm wondering what's holding you back from selling more into this strength?
John Kim: Thank you. I wanted to follow up on your disposition guidance of $250 million, which is following a year in which you had sold just a couple of assets. But just given the strong demand from institutions for your product, I'm wondering what's holding you back from selling more into this strength?
Speaker #1: Our next question comes from John Kim from BMO. Please go ahead, your line is open.
Speaker #1: Our next comes from John Kim from BMO . Please go ahead . Your line
Speaker #12: I follow up Your question wanted to on . disposition guidance of 250 million , which is had sold just a couple of assets , but just given the from product , I'm wondering back from holding you what's strong demand from selling more into the strength ranges .
Brad Hill: Yeah. Hey, John, this is Brad. I mean, I think what's holding us back from selling more is, you know, one, what we've always talked about, you know, we wanna protect the earnings quality and capability of our portfolio without introducing a lot of volatility into our earnings performance. And I think for us to go out and sell a large part of our portfolio, I think, could potentially introduce some earnings volatility. Second, you know, we like where we're located. We like the diversification of our portfolio in both large and mid-tier markets, and there's really not a portion of our portfolio that we are really targeting moving out of and reallocating that capital to another region of the country.
Brad Hill: Yeah. Hey, John, this is Brad. I mean, I think what's holding us back from selling more is, you know, one, what we've always talked about, you know, we wanna protect the earnings quality and capability of our portfolio without introducing a lot of volatility into our earnings performance. And I think for us to go out and sell a large part of our portfolio, I think, could potentially introduce some earnings volatility. Second, you know, we like where we're located. We like the diversification of our portfolio in both large and mid-tier markets, and there's really not a portion of our portfolio that we are really targeting moving out of and reallocating that capital to another region of the country.
Speaker #13: from selling what's more one what we've always
Speaker #13: we want about protect to the and earnings capability of our portfolio holding quality into our earnings think performance . for us to And I go out and a sell large of our introducing a think could potentially introduce some earnings .
Speaker #13: portfolio , Second , you know , following a where we're we like located . We volatility diversification of our portfolio in both large and markets .
Speaker #13: And there's mid-tier not of our portion we are targeting out . Moving really And reallocating of . that another region of the country .
Brad Hill: So, you know, we don't really have the need to do that. And, if you look, again, as I said earlier, what we've been selling over the last couple of years, you know, it's 30-year-old properties, and I think that really fits nicely into our overall strategy of improving the earnings quality of the portfolio, versus going out and selling a big portion of our portfolio and trying to determine what to do with that capital. I think you also have to remember that the fact that we are selling assets that are 30 years old, the taxable gains associated with that are sizable.
Brad Hill: So, you know, we don't really have the need to do that. And, if you look, again, as I said earlier, what we've been selling over the last couple of years, you know, it's 30-year-old properties, and I think that really fits nicely into our overall strategy of improving the earnings quality of the portfolio, versus going out and selling a big portion of our portfolio and trying to determine what to do with that capital. I think you also have to remember that the fact that we are selling assets that are 30 years old, the taxable gains associated with that are sizable.
Speaker #13: So , capital to so , you know , so we don't really need the And and if you again , as have like the earlier , what we've been over the last couple of years , you know , to 30 year old And I think properties .
Speaker #13: really fits that nicely into our overall strategy that . earnings quality of the portfolio going out versus selling improving the a big of our portfolio .
Speaker #13: And and trying and to determine what capital . I think you also have to remember selling assets that are 30 years old , the selling the taxable associated with that are for us And protect that really sizable .
Brad Hill: For us to really protect that from having to pay, you know, some type of tax on that, you know, we want to be able to ten thirty-one exchange that, and that's harder to do at a large scale in this market without paying cap rates that we think are very aggressive at the 4.5% range or so. We think our opportunity is better to be measured and to deploy capital into the other avenues.
Brad Hill: For us to really protect that from having to pay, you know, some type of tax on that, you know, we want to be able to ten thirty-one exchange that, and that's harder to do at a large scale in this market without paying cap rates that we think are very aggressive at the 4.5% range or so. We think our opportunity is better to be measured and to deploy capital into the other avenues.
Speaker #13: from , from pay some type having to of tax on you know , we want to be able to . 1031 exchange that and and harder to that's do at a scale in this market that , without cap rates that we think are very at the aggressive 4.5% range or so .
Speaker #13: we think our And opportunity is better to measured . our be deploy capital into other to avenues .
Operator: Our next question comes from Austin Wurschmidt from KeyBanc Capital Markets. Please go ahead. Your line is open.
Operator: Our next question comes from Austin Wurschmidt from KeyBanc Capital Markets. Please go ahead. Your line is open.
Austin Wurschmidt: Hey, good morning, everybody. Recognize it's still pretty early in the year, but just wondering if the pace of improvement in new lease rate growth from Q4 into January, February, and, you know, any future visibility you have into future months, how does that compare versus last year? And do you expect just that gap or improvement to just gradually widen through the year? Is that what's in that new lease rate growth assumption? Thanks.
Austin Wurschmidt: Hey, good morning, everybody. Recognize it's still pretty early in the year, but just wondering if the pace of improvement in new lease rate growth from Q4 into January, February, and, you know, any future visibility you have into future months, how does that compare versus last year? And do you expect just that gap or improvement to just gradually widen through the year? Is that what's in that new lease rate growth assumption? Thanks.
Speaker #1: Next question comes from Our Wurschmidt, Capital KeyBanc. Please go ahead, Austin.
Speaker #14: Hey , good Your line is . everybody it's still pretty early in the year , Recognize wondering
Speaker #14: Hey , good Your line is . everybody it's still pretty early in the year , Recognize wondering if the but just pace of improvement in new lease rate growth from the fourth quarter into January , February .
Speaker #14: And any future you have into visibility future months, how versus last compare does that year? And do you expect just that gap or markets. Rate, what's that year?
Speaker #14: And any future you have into visibility future months , how versus last compare does that year ? And do you expect just that gap or Markets .
Brad Hill: Yeah, Austin, this is Tim. I think you characterized it well in the last part of your question. We would expect that, you know, variance, if you will, the prior year, to continue to get a little bit wider as we get later in the year for all the reasons we've talked about with moderating supply. You know, right now, particularly on the blended side, we're seeing, we would expect pricing in Q1 blended to be better than what it was this time last year. And then we start to see it accelerate from there. So, so far, as expected, and as I mentioned, I think the way you characterize it is the right way to think about it.
Timothy Argo: Yeah, Austin, this is Tim. I think you characterized it well in the last part of your question. We would expect that, you know, variance, if you will, the prior year, to continue to get a little bit wider as we get later in the year for all the reasons we've talked about with moderating supply. You know, right now, particularly on the blended side, we're seeing, we would expect pricing in Q1 blended to be better than what it was this time last year. And then we start to see it accelerate from there. So, so far, as expected, and as I mentioned, I think the way you characterize it is the right way to think about it.
Speaker #14: gradually new lease widen growth assumption ? Thanks
Speaker #3: This is think
Speaker #3: you characterize it you
Speaker #3: of your Tim . we expect that would , you know , well in the you will , variance , if . prior continue little last part get later in the improvement to , for all the year reasons we've with moderating supply right , particularly now blended side , we're we would expect pricing seeing in better what it was this time last year .
Speaker #3: And blended to be then we start to see accelerate there . from we're , so on the expected . And as I mentioned , I you is the right way to is , think about it think the way .
Operator: Our next question comes from Richard Hightower from Barclays. Please go ahead. Your line is open.
Operator: Our next question comes from Richard Hightower from Barclays. Please go ahead. Your line is open.
Brad Heffern: Hey, guys. Thanks for taking the question. Just to maybe follow on Austin and even Jamie earlier, just to confirm, you guys wouldn't want to put a number on what new lease growth in Q1 is going to be? And that's not even my real question. My real question is, just on share repurchases. It seems like, you know, the philosophy, you know, it was always there as a possibility, but maybe it changed later in Q4. And just wondering, you know, what the math around sort of, you know, sources and uses-
Richard Hightower: Hey, guys. Thanks for taking the question. Just to maybe follow on Austin and even Jamie earlier, just to confirm, you guys wouldn't want to put a number on what new lease growth in Q1 is going to be? And that's not even my real question. My real question is, just on share repurchases. It seems like, you know, the philosophy, you know, it was always there as a possibility, but maybe it changed later in Q4. And just wondering, you know, what the math around sort of, you know, sources and uses-
Speaker #1: Our question comes from Hightower , Rich go ahead . Your line is open .
Speaker #1: Please
Speaker #15: Hey ,
Speaker #15: for taking the guys . Thanks . I just question maybe Barclays .
Speaker #15: Austin, and even you guys earlier, confirm, to put a number, lease growth in the first quarter is just 2 on. Be.
Speaker #15: And on even follow question . My real question is just on share repurchases . It seems like the that's not philosophy ,
Speaker #15: but maybe it changed
Speaker #15: but maybe it changed later in the fourth know , quarter and wondering , you know , the what the math
Alexander Goldfarb: ... you know, how that changed kind of later in the fourth quarter that led to, you know, repurchases for the first time in a long time? Thank you.
Richard Hightower: ... you know, how that changed kind of later in the fourth quarter that led to, you know, repurchases for the first time in a long time? Thank you.
Speaker #15: sort of around sources and uses , you know , how from that changed kind of later in the fourth quarter that led to , you know , repurchases for the first time in a long time .
Brad Hill: Hey, Rich, this is Brad. I'll kick that off, and others can jump in if they need to. You know, I wouldn't say it's been a material change in terms of our outlook there. I mean, honestly, we've always had the position that if our shares traded at a persistent and sizable discount to our underlying value, and we felt that investing in our existing shares provided an opportunity to drive earnings growth and value proposition for our shareholders, then we would do that. And I'd say, you know, what's unique right now versus historical times is that we're trading at a sizable discount persistently.
Brad Hill: Hey, Rich, this is Brad. I'll kick that off, and others can jump in if they need to. You know, I wouldn't say it's been a material change in terms of our outlook there. I mean, honestly, we've always had the position that if our shares traded at a persistent and sizable discount to our underlying value, and we felt that investing in our existing shares provided an opportunity to drive earnings growth and value proposition for our shareholders, then we would do that. And I'd say, you know, what's unique right now versus historical times is that we're trading at a sizable discount persistently.
Speaker #15: Thank you .
Speaker #13: Hey , Rich , this is Brad . I'll off . And others can jump in if they need to . You know , I wouldn't say kick that it's been a material change in terms of our outlook there .
Speaker #13: I mean , honestly , always had the the position that if if our shares traded persistent , next discount to our sizable underlying at a and we felt value we that our existing provided shares an to drive opportunity earnings growth characterize it and value proposition for our shareholders , then we would do that .
Speaker #13: And I'd say , you know unique right now versus times is , historical is that trading we've at a sizable what's discount , persistently really have that .
Speaker #13: And I'd say , you know unique right now versus times is , historical is that trading we've at a sizable what's discount , persistently really have .
Brad Hill: You know, we really have not done that, if you go back and look at our history, in a long, long time, hence, why we haven't repurchased shares since 2001. So it, it's, it's not a position that we have found ourselves in historically, and certainly think it's unique, given the supply pressures that, that we are under right now, that are dissipating. So we do think that it is a temporary item, given where we continue to see private market pricing relative to the public market. So, as I mentioned, we, we have a limited appetite to do that, and so we have an authorization that's in place, remains in place.
Brad Hill: You know, we really have not done that, if you go back and look at our history, in a long, long time, hence, why we haven't repurchased shares since 2001. So it, it's, it's not a position that we have found ourselves in historically, and certainly think it's unique, given the supply pressures that, that we are under right now, that are dissipating. So we do think that it is a temporary item, given where we continue to see private market pricing relative to the public market. So, as I mentioned, we, we have a limited appetite to do that, and so we have an authorization that's in place, remains in place.
Speaker #13: If you go back and look at not done our history we're in a long , long We Hence haven't repurchased shares 2001 . it's So time .
Speaker #13: Since found position that we in historically. And have certainly think it's unique, given the supply pressures that we are under right now that are dissipating.
Speaker #13: So we do it think that is a temporary item where we continue to see private market given relative to the public pricing markets .
Speaker #13: So as I have a we limited appetite to to do And so we have an that . that's in place , in place .
Brad Hill: And so if we continue to find that to be the case, and we think that's the best opportunity for our capital to drive long-term shareholder returns, we'll continue to monitor that and execute in that way.
Brad Hill: And so if we continue to find that to be the case, and we think that's the best opportunity for our capital to drive long-term shareholder returns, we'll continue to monitor that and execute in that way.
Speaker #13: we continue to And so if find remains the that to be case , and we think opportunity for our capital to long term shareholder best returns , authorization continue to monitor that and execute in that way drive .
Operator: Our next question comes from Steve Sakwa from Evercore ISI. Please go ahead, your line is open.
Operator: Our next question comes from Steve Sakwa from Evercore ISI. Please go ahead, your line is open.
Steve Sakwa: Yeah, thanks. Good morning. I just was curious if you had sort of an overarching kind of macro view that you're laying on top of your expectations. I mean, you're talking very positively about renewal pricing. Obviously, job growth kind of slowed in the back half of last year. I'm just curious if there's an underpinning or kind of broad assumption that you guys have about job growth, kind of in either absolute terms or percentage growth, because obviously, job growth slowed pretty meaningfully from 2024 into 2025. Thanks.
Steve Sakwa: Yeah, thanks. Good morning. I just was curious if you had sort of an overarching kind of macro view that you're laying on top of your expectations. I mean, you're talking very positively about renewal pricing. Obviously, job growth kind of slowed in the back half of last year. I'm just curious if there's an underpinning or kind of broad assumption that you guys have about job growth, kind of in either absolute terms or percentage growth, because obviously, job growth slowed pretty meaningfully from 2024 into 2025. Thanks.
Speaker #1: Our next question comes from Sakwa from Evercore ISI . Please go ahead . Your line is open .
Speaker #16: Thanks . Good morning . I just was curious if you had sort of an overarching kind of macro view that you're laying on top of your expectations .
Speaker #16: very positively about talking , pricing job growth kind of . slowed in the Obviously , back half of last year . And I'm just if an there's or kind curious of broad guys assumption that you job underpinning of in either absolute growth , kind terms or growth , because obviously job growth slowed pretty meaningfully from 24 into 25 .
Brad Hill: Steve, this is Brad. I'll kick off, and Tim can add any details if he wants. You know, I would say the broad view is that, you know, as I mentioned in my comments, that GDP continues to be relatively strong this year. I think from a job growth number perspective, what we're looking at, the numbers we're looking at for our markets showed absolute job growth going up slightly versus last year. The other demand metrics that we're looking at continue to remain positive. As Tim mentioned earlier, household formation, population growth, in migration or migration trends continue to be positive in our region of the country, and then just wage growth. We continue to see very strong wage growth in our resident base, supporting declining rent-to-income ratios.
Brad Hill: Steve, this is Brad. I'll kick off, and Tim can add any details if he wants. You know, I would say the broad view is that, you know, as I mentioned in my comments, that GDP continues to be relatively strong this year. I think from a job growth number perspective, what we're looking at, the numbers we're looking at for our markets showed absolute job growth going up slightly versus last year. The other demand metrics that we're looking at continue to remain positive. As Tim mentioned earlier, household formation, population growth, in migration or migration trends continue to be positive in our region of the country, and then just wage growth. We continue to see very strong wage growth in our resident base, supporting declining rent-to-income ratios.
Speaker #16: Thanks , Steve .
Speaker #13: wants . say the You know , broad view know , as I mentioned in my is that , you comments , that GDP continues be to relatively strong this year .
Speaker #13: I think from a job growth number perspective , what we're looking at , we're the numbers looking at for our markets , showed absolute growth going up slightly last year versus demand metrics that we're looking at .
Speaker #13: remain positive , as Tim mentioned earlier , household formation , population The other , migration or migration continue to trends be positive region of the country .
Brad Hill: So, you know, I think all of those things really support just the broad view that we have, that things on the demand side are holding up quite well in our region of the country and should continue to hold up quite well this year, with the supply-demand dynamics improving as we progress through the year.
Brad Hill: So, you know, I think all of those things really support just the broad view that we have, that things on the demand side are holding up quite well in our region of the country and should continue to hold up quite well this year, with the supply-demand dynamics improving as we progress through the year.
Timothy Argo: Just, just one thing I'll add, just put some numbers on it. We're, we're projecting, you know, somewhere in the 340, 350 thousand jobs in our markets in 2026, and then about half of that in terms of number of completions. So you think about that job-to-completion ratio is certainly improving in a lot, lot better position than we've been in the last few years.
Timothy Argo: Just, just one thing I'll add, just put some numbers on it. We're, we're projecting, you know, somewhere in the 340, 350 thousand jobs in our markets in 2026, and then about half of that in terms of number of completions. So you think about that job-to-completion ratio is certainly improving in a lot, lot better position than we've been in the last few years.
Speaker #13: the demand dynamics improving as we progress through the year .
Speaker #3: Just just put some numbers one day I'll add We're we're projecting , on it . somewhere in you know , 340 , the 350,000 jobs in our markets in 2026 .
Speaker #3: And then about half of that in terms of number of completions . Think about
Operator: Our next question comes from Linda Tsai from Jefferies. Please go ahead, your line is open.
Operator: Our next question comes from Linda Tsai from Jefferies. Please go ahead, your line is open.
Speaker #3: improving . And a lot we've been in lot , a few . better position than years the last
Linda Tsai: Thank you. For the markets where you're seeing higher concessions, where would you expect to see the concessions burn off the soonest, and then alternatively, markets where the concessions might persist?
Linda Tsai: Thank you. For the markets where you're seeing higher concessions, where would you expect to see the concessions burn off the soonest, and then alternatively, markets where the concessions might persist?
Speaker #1: Linda comes from Our next Jefferies . Please go question ahead to Tsai line is .
Speaker #1: open Thank
Speaker #17: you markets . For the higher where you're seeing concessions , where would expect to see the concessions off the soonest ? alternatively , markets you where the might persist .
Speaker #17: burn
Timothy Argo: Yeah, this is Tim. I mean, I would, I would say at a broad level, concessions have been pretty consistent. There's, you know, probably about 2/3 or so of our direct comps are offering concessions, and they're averaging somewhere in the 5-week range. That's kind of a broad assessment, which is pretty consistent with what it's been. Some of the lease-up properties, as we mentioned, if there's a lot of lease-ups, have been a little bit higher, more in the 8 to 10 weeks. We're starting to... You know, we've seen a little bit of increase in downtown Nashville, a little bit Raleigh and Charlotte. Those are ones where we've seen concessions pick up a little bit. We've seen them drop a little bit in Tampa and some in Houston.
Timothy Argo: Yeah, this is Tim. I mean, I would, I would say at a broad level, concessions have been pretty consistent. There's, you know, probably about 2/3 or so of our direct comps are offering concessions, and they're averaging somewhere in the 5-week range. That's kind of a broad assessment, which is pretty consistent with what it's been. Some of the lease-up properties, as we mentioned, if there's a lot of lease-ups, have been a little bit higher, more in the 8 to 10 weeks. We're starting to... You know, we've seen a little bit of increase in downtown Nashville, a little bit Raleigh and Charlotte. Those are ones where we've seen concessions pick up a little bit. We've seen them drop a little bit in Tampa and some in Houston.
Speaker #3: Tim . I mean , I would I would say at broad a , at a level Yeah , this is been pretty consistent , concessions .
Speaker #3: There's , you about two thirds or so of our direct comps are concessions averaging and they're offering somewhere in the know , five week range .
Speaker #3: That's of a broad
Speaker #3: assessment , which is consistent with what it's been . Some of the lease up properties , as we if mentioned , lease bit ups that have more in the 8 to 10 weeks , higher , we're we're starting to have , you know , we've seen a increase in Nashville , a little up bit in Raleigh and Charlotte .
Timothy Argo: We've seen a lot of good stability in Phoenix, where occupancy has stabilized, and we're not, we're not seeing the concession pick up. But, you know, broadly, where we've seen some improvement over the last few quarters is a couple of markets I mentioned earlier, Dallas and Atlanta, and really starting to see those inner loop and urban areas across the portfolio work through that level of supply. So we've seen concessions in some of the more urban areas come down, which again is encouraging that they've seen a lot of supply. So broadly, concession's pretty consistent, and then it's, you know, some increasing, some decreasing, depending on certain pockets and certain markets.
Timothy Argo: We've seen a lot of good stability in Phoenix, where occupancy has stabilized, and we're not, we're not seeing the concession pick up. But, you know, broadly, where we've seen some improvement over the last few quarters is a couple of markets I mentioned earlier, Dallas and Atlanta, and really starting to see those inner loop and urban areas across the portfolio work through that level of supply. So we've seen concessions in some of the more urban areas come down, which again is encouraging that they've seen a lot of supply. So broadly, concession's pretty consistent, and then it's, you know, some increasing, some decreasing, depending on certain pockets and certain markets.
Speaker #3: ones where Those are we've concessions pick little up a little seen them And then bit bit . some in Houston , We've we've seen a lot seen stability that's kind Phoenix , where been a little occupancy bit of is and we're not we're not seeing the concession pick up , but , you know , broadly where seen some we've improvement over the last few quarters couple of is a markets I Atlanta .
Speaker #3: And really starting to see those urban across the mentioned inner loop and work through that level of So we've seen more concessions . Some of the urban areas supply .
Speaker #3: come down which , is encouraging . They've seen a lot of supply . So pretty consistent . concessions broadly then some know , increasing , some it's you on depending certain decreasing pockets and markets certain
Operator: Our next question comes from Alexander Goldfarb from Piper Sandler. Please go ahead, your line is open.
Operator: Our next question comes from Alexander Goldfarb from Piper Sandler. Please go ahead, your line is open.
Alexander Goldfarb: Hey, morning, morning down there. Just, you know, thinking about concessions, is there a risk of all the supply that was delivered the past 2 years presumably had a lot of concessions in that, and those existing renters, you know, got the benefit of whatever, 1, 2, 3 months free. As those leases roll and those renters face market rents... Are you expecting a lot of churn, where once again, even though supply is coming down, there's suddenly a lot of competitive supply, if you will, because those units now, you know, are looking for full freight renters versus, you know, the concessionary ones that were currently in the lease-up? I'm just trying to understand how the first year anniversary of all that supply rolls, how that's gonna impact you guys in the overall market.
Alexander Goldfarb: Hey, morning, morning down there. Just, you know, thinking about concessions, is there a risk of all the supply that was delivered the past 2 years presumably had a lot of concessions in that, and those existing renters, you know, got the benefit of whatever, 1, 2, 3 months free. As those leases roll and those renters face market rents... Are you expecting a lot of churn, where once again, even though supply is coming down, there's suddenly a lot of competitive supply, if you will, because those units now, you know, are looking for full freight renters versus, you know, the concessionary ones that were currently in the lease-up? I'm just trying to understand how the first year anniversary of all that supply rolls, how that's gonna impact you guys in the overall market.
Speaker #1: next question comes Alexander Goldfarb from Piper Sandler . from line is Please go ahead . Your open .
Speaker #18: . Morning . Morning down there Hey
Speaker #18: concessions . Is there a risk . Just , of all the past delivered the two years , had a lot of presumably concessions in that .
Speaker #18: renters , And those got the supply that was two , whatever one , existing three months as leases those those benefit market rents .
Speaker #18: you expecting a roll and lot of where once again , though supply is coming down , there's lot of if you will , supply , those units now .
Speaker #18: full freight renters versus , concessionary you know , ones that were currently in the lease up . face trying to understand I'm just how the first year anniversary is all that suddenly a supply that's going to roles , how the impact you guys and the overall
Speaker #18: full freight renters versus , concessionary you know , ones that were currently in the lease up . face trying to understand I'm just how the first year anniversary is all that suddenly a supply that's going to roles , how the impact you guys and the overall .
Timothy Argo: Yeah, Alex, this is Tim. I mean, I, you know, certainly relative to where we've been over the last couple of years, I don't, I don't consider that to be too much of a risk. I mean, because it still comes down to just, you know, how many units are out there, that are available. We think there's probably 110,000 to 120,000 less units in lease-up, in our markets than there were, you know, at the peak. And then you combine the, the lower turnover, that's helping as well, where there's just fewer units of existing assets. So, you know, I don't, I don't consider that. I think it still just comes down to more of a supply-demand picture of, how many units of lease-up, and that, that really drives it more than anything else.
Timothy Argo: Yeah, Alex, this is Tim. I mean, I, you know, certainly relative to where we've been over the last couple of years, I don't, I don't consider that to be too much of a risk. I mean, because it still comes down to just, you know, how many units are out there, that are available. We think there's probably 110,000 to 120,000 less units in lease-up, in our markets than there were, you know, at the peak. And then you combine the, the lower turnover, that's helping as well, where there's just fewer units of existing assets. So, you know, I don't, I don't consider that. I think it still just comes down to more of a supply-demand picture of, how many units of lease-up, and that, that really drives it more than anything else.
Speaker #18: market
Speaker #3: be to too a don't mean , because it still down to consider that just , you know , how many much of units are out Alex , there comes available .
Speaker #3: there's couple of 110 , that are 120,000 less units in up We think markets than there were , you know , the peak at then you combine .
Speaker #3: The lower end helping as well, where there's just—that's units, fewer existing assets. So, I don't, I don't, you know, consider that. I still just think it comes down to more of a lease-up picture, demand of how many can lease up.
Timothy Argo: I think where it has helped us more, honestly, is on the retention side, where people knowing those concessions are gonna burn off, and I think that's helped us more on the renewal side, but we don't see that as a real risk.
Timothy Argo: I think where it has helped us more, honestly, is on the retention side, where people knowing those concessions are gonna burn off, and I think that's helped us more on the renewal side, but we don't see that as a real risk.
Speaker #3: And units that a that really drives it more , more anything think I where it has helped more honestly is on us the retention else .
Operator: Our next question comes from Buck Horne, from Raymond James. Please go ahead. Your line is open.
Operator: Our next question comes from Buck Horne, from Raymond James. Please go ahead. Your line is open.
Speaker #3: think that's off . helped the renewal side , but we that as a risk . real
Buck Horne: Hey, thanks. Good morning, guys. I was wondering if you could help us stratify maybe the recent performance between your Class A units versus Class B, and however you wanna describe it, you know, new lease rates, occupancy, any sort of metric between As and Bs. And I'm just wondering if we're starting to see any sort of incremental pressure from kind of the vacancy increases in the Class C units, if that's starting to filter upwards or not.
Buck Horne: Hey, thanks. Good morning, guys. I was wondering if you could help us stratify maybe the recent performance between your Class A units versus Class B, and however you wanna describe it, you know, new lease rates, occupancy, any sort of metric between As and Bs. And I'm just wondering if we're starting to see any sort of incremental pressure from kind of the vacancy increases in the Class C units, if that's starting to filter upwards or not.
Speaker #1: Next comes a question from Raymond. Your line is, go ahead. Open James, please.
Speaker #1: next comes from question from Raymond Your line is go ahead . open James . Please Buckhorn , .
Speaker #1: next comes from question from
Speaker #19: help stratify . Maybe the us recent between your class A think it's units versus class B performance , and however you want to describe know , new it , you lease rates , occupancy , any sort of
Speaker #19: Metric A's between, and I'm just wondering if we're starting to see any sort of incremental B's from the kind of vacancy increases and the Class C, if that's starting to filter upwards, or if that's going to burn, not.
Speaker #19: metric A's between And I'm just wondering if we're starting any sort to see of incremental and B's . from the kind of vacancy increases and the class C if starting to filter upwards or that's going to burn not
Timothy Argo: Hey, Buck, this is Tim. As far as A, B, and, you know, you can think about A, B, or you can think about urban, suburban, depending on how you want to define it. But the way we define A and B, I haven't seen a real differentiation in performance there. But I did mention this a little bit earlier, where we have started to see some differentiation over the last couple of quarters is more of the urban versus suburban, more of the central business district and urban areas. You know, particularly, we don't have a ton of that, but we have a fair amount in Dallas and Atlanta, and we've seen that performance start to differentiate, both on the occupancy side and the pricing side.
Timothy Argo: Hey, Buck, this is Tim. As far as A, B, and, you know, you can think about A, B, or you can think about urban, suburban, depending on how you want to define it. But the way we define A and B, I haven't seen a real differentiation in performance there. But I did mention this a little bit earlier, where we have started to see some differentiation over the last couple of quarters is more of the urban versus suburban, more of the central business district and urban areas. You know, particularly, we don't have a ton of that, but we have a fair amount in Dallas and Atlanta, and we've seen that performance start to differentiate, both on the occupancy side and the pricing side.
Speaker #3: .
Speaker #13: As .
Speaker #3: AB and Hey , buddy you know , you can think about can think about urban suburban , depending on how you the way we find it .
Speaker #3: define A and B haven't seen a real real a differentiation of performance . There I where we did a little bit started to see some earlier couple of quarters is more of the urban versus is , more suburban of the central district and areas , urban we we particularly don't have a last that , but we have a amount in business we've that Atlanta , and performance start to the on the occupancy side and the side .
Timothy Argo: We're seeing, you know, pricing about 40 basis points better on blended pricing and probably 10 basis points or so higher occupancy. So I think that's encouraging, given where supply was occurring in those markets, but not a big mix on the A/B side.
Timothy Argo: We're seeing, you know, pricing about 40 basis points better on blended pricing and probably 10 basis points or so higher occupancy. So I think that's encouraging, given where supply was occurring in those markets, but not a big mix on the A/B side.
Speaker #3: We're seeing , you know , pricing pricing about better on blended pricing and probably ten basis points or so higher 40 basis points So I think that's that's encouraging given where was was supply in those markets .
Operator: Our next question comes from Wesley Golladay from Baird. Please go ahead. Your line is open.
Operator: Our next question comes from Wesley Golladay from Baird. Please go ahead. Your line is open.
Speaker #3: But not a big mix on the side. AB
Wes Golladay: Hey, thanks. Good morning, everyone. On the acquisition side, are you seeing more opportunities to acquire lease-ups with the cycle taking longer to turn?
Wes Golladay: Hey, thanks. Good morning, everyone. On the acquisition side, are you seeing more opportunities to acquire lease-ups with the cycle taking longer to turn?
Speaker #1: Our next question comes from Mason Gehl from ahead . Your line is Please go open .
Speaker #20: Good morning. Hey, thanks. Are you seeing more opportunities on the acquisition side? Are you looking to acquire or lease, with the cycle taking longer to turn?
Timothy Argo: Yeah, this is Brad. I wouldn't say that we're seeing more opportunities. I mean, certainly there are a lot of lease-ups that are out there right now, but honestly, I think we've seen less lease-ups actually being marketed than what we have historically. And I think that's just because the valuation is more impacted right now, because there's just more uncertainty about the timing of the lease-up, the roll-off of concessions and things of that nature. So I think from a buyer's perspective, there's a little bit more hesitancy on lease-ups versus a stabilized, and so therefore, the valuation could be impacted. So, sellers are really holding on to those assets a little bit longer right now, trying to lease those up before they really bring them to market. So we've seen...
Wes Golladay: Yeah, this is Brad. I wouldn't say that we're seeing more opportunities. I mean, certainly there are a lot of lease-ups that are out there right now, but honestly, I think we've seen less lease-ups actually being marketed than what we have historically. And I think that's just because the valuation is more impacted right now, because there's just more uncertainty about the timing of the lease-up, the roll-off of concessions and things of that nature. So I think from a buyer's perspective, there's a little bit more hesitancy on lease-ups versus a stabilized, and so therefore, the valuation could be impacted. So, sellers are really holding on to those assets a little bit longer right now, trying to lease those up before they really bring them to market. So we've seen...
Speaker #20: ? Yeah , everyone .
Speaker #13: this is Brad
Speaker #13: wouldn't say that we're
Speaker #13: more seeing I opportunities . I mean , certainly there the are a lot of lease occupancy . ups that are out there right now , we've but honestly , I think we've lease less ups , being actually marketed than what And I think we have historically .
Speaker #13: that's just because the valuation is more , because there's just more impacted right now uncertainty about the timing of the lease up , the of concessions roll off of that nature .
Speaker #13: So I from a buyers perspective , more there's a little bit hesitancy lease versus and things a on on so therefore the stabilized .
Speaker #13: valuation could be impacted . So , so sellers are really holding on to And those assets a little bit longer right now trying to lease those up before they really bring them to market .
Timothy Argo: There's lease-ups out there that certainly being marketed, but I think there's less of those today than there have been in the years past.
Wes Golladay: There's lease-ups out there that certainly being marketed, but I think there's less of those today than there have been in the years past.
Speaker #13: So seen there's there's lease out there we've ups certainly that be in marketed . But there's I think you less of today those there's than there have past been in the .
Operator: Our next question comes from Ann Chan from Green Street. Please go ahead. Your line is open.
Operator: Our next question comes from Ann Chan from Green Street. Please go ahead. Your line is open.
Alexander Goldfarb: Hi, good morning. Thanks for taking my question. Could you share how renewal and new lease rates in Atlanta have trended, late last year and into early this year?
Alexander Goldfarb: Hi, good morning. Thanks for taking my question. Could you share how renewal and new lease rates in Atlanta have trended, late last year and into early this year?
Speaker #1: Our next question comes from Anne Chan from Green Street. Please go ahead, your line is open.
Speaker #21: Hi . Good for taking morning . Thanks my question . you Could how share renewal and new lease Atlanta have rates in trended late last year and into early this year ?
Timothy Argo: Yeah, as far as Atlanta, and I touched on this a little bit earlier, we've continued to see pretty good performance, continually increasing performance, both in terms of really the blended pricing and occupancy. If I look at 2025 full year blended pricing for Atlanta versus where it was in 2024, it's about 260 basis points higher blended pricing for the full year in 2025, and occupancy about 70 basis points higher for the full year. So continue to see steady improvement there. When I isolate to just the Q4, saw that improvement as well. So that's the market that I talked about, that we're starting to see some stability from. We've seen delinquency go down to just about the portfolio average as well, so don't see any concerns there.
Timothy Argo: Yeah, as far as Atlanta, and I touched on this a little bit earlier, we've continued to see pretty good performance, continually increasing performance, both in terms of really the blended pricing and occupancy. If I look at 2025 full year blended pricing for Atlanta versus where it was in 2024, it's about 260 basis points higher blended pricing for the full year in 2025, and occupancy about 70 basis points higher for the full year. So continue to see steady improvement there. When I isolate to just the Q4, saw that improvement as well. So that's the market that I talked about, that we're starting to see some stability from. We've seen delinquency go down to just about the portfolio average as well, so don't see any concerns there.
Speaker #3: Yeah , as far as the touched on this a little bit earlier . We've we've continued to see pretty good performance , continually increasing performance both in terms of really blended pricing and occupancy .
Speaker #3: I look If at 2025 full year blended Atlanta versus was in pricing for it was about 260 basis point blended pricing for the higher 2024 , year in 2025 and occupancy about 70 basis points higher for the full year .
Speaker #3: So continue to see steady improvement . There when isolated to just the fourth quarter . Saw that improvement as well . So that's that's market that I talked about we're that starting to see some stability from .
Timothy Argo: And on a relative basis, Atlanta has had less supply than some of our markets. So broadly, pretty encouraged with what we've seen from Atlanta.
Timothy Argo: And on a relative basis, Atlanta has had less supply than some of our markets. So broadly, pretty encouraged with what we've seen from Atlanta.
Speaker #3: We've seen delinquency go down to just about the average portfolio as well . So don't don't see any concerns . There . on a relative basis has Atlanta has had less supply than some of our markets .
Operator: Our next question comes from Alexander Kim, from Zelman & Associates. Please go ahead. Your line is open.
Operator: Our next question comes from Alexander Kim, from Zelman & Associates. Please go ahead. Your line is open.
Speaker #3: So so broadly pretty encouraged with what we've seen from Atlanta .
Alex Kim: Good morning. Thanks for taking my question. I wanted to dive into the transaction market a bit more here. Pricing power overall has been relatively soft, and particularly on the new move-in side. At the same time, you cited market cap rates in the 4-6 range, with investor demand still obvious. Can you talk about what you're seeing in the transaction market for a stabilized product, I guess, and what you expect moving forward for transaction volumes with this particular dynamic in play?
Alex Kim: Good morning. Thanks for taking my question. I wanted to dive into the transaction market a bit more here. Pricing power overall has been relatively soft, and particularly on the new move-in side. At the same time, you cited market cap rates in the 4-6 range, with investor demand still obvious. Can you talk about what you're seeing in the transaction market for a stabilized product, I guess, and what you expect moving forward for transaction volumes with this particular dynamic in play?
Speaker #1: Our next question comes from Alexander Kim from Zelman and Associates. Please go ahead, your line is open.
Speaker #22: Good morning . Thanks for taking my question . I wanted to dive into the transaction market a bit more here . Pricing power overall has been relatively soft , and particularly on the new move inside .
Speaker #22: the same time , And at you cited market cap rates in the 4 to 6 range with investor demand still obvious . Could you talk about what you're seeing in the transaction market for stabilized product ?
Brad Hill: Yeah, I mean, we continue to see very robust investor appetite for assets in our region of the country. You know, I think the volume of properties that have come to market have increased steadily during 2025, certainly as interest rates stabilized and were more attractive for folks. So I do think that that is likely to continue in 2026. I think the appetite for properties in our region of the country will continue to be very, very strong. There's a lot of capital out there. Interest rates spreads have decreased. Overall, the cost of capital has decreased, so I do think that the transaction market could be pretty healthy with healthy cap rates as we go forward. I don't really see those changing at this point. I think from a...
Brad Hill: Yeah, I mean, we continue to see very robust investor appetite for assets in our region of the country. You know, I think the volume of properties that have come to market have increased steadily during 2025, certainly as interest rates stabilized and were more attractive for folks. So I do think that that is likely to continue in 2026. I think the appetite for properties in our region of the country will continue to be very, very strong. There's a lot of capital out there. Interest rates spreads have decreased. Overall, the cost of capital has decreased, so I do think that the transaction market could be pretty healthy with healthy cap rates as we go forward. I don't really see those changing at this point. I think from a...
Speaker #22: I guess, and what do you expect moving forward for transaction volumes with this particular dynamic in play?
Speaker #13: Yeah , I mean , we continue to see very robust investor appetite for for assets in our region of the country know , .
Speaker #13: of I think the volume You have come to properties that market have increased steadily during 25 , certainly as interest rates stabilized and we're more attractive for folks .
Speaker #13: So I do think that that is likely to continue in '26. I think the appetite for properties in our region of the country will continue to be very, very strong.
Speaker #13: There's a lot of capital out there . Interest rates , spreads have have decreased . Overall , the cost of capital has decreased .
Speaker #13: So I do think that the transaction market could be pretty healthy with healthy cap rates as we go forward . I don't really see those changing at this point .
Brad Hill: As I mentioned a moment ago, I think from an underwriting perspective, you know, there's a little bit of more uncertainty, or has been for the past year, of what happens on the new lease rate side. And since these lease-ups are in generally leasing, predominantly to, or for the most part, at least in the first year, to new lease rates, there's more pressure there. So then it comes down to the ability to earn those concessions off. So I think the market is certainly optimistic about what that looks like going forward, and hence the low cap rates. And so I see the transaction market picking up in activity as we go through 2026.
Brad Hill: As I mentioned a moment ago, I think from an underwriting perspective, you know, there's a little bit of more uncertainty, or has been for the past year, of what happens on the new lease rate side. And since these lease-ups are in generally leasing, predominantly to, or for the most part, at least in the first year, to new lease rates, there's more pressure there. So then it comes down to the ability to earn those concessions off. So I think the market is certainly optimistic about what that looks like going forward, and hence the low cap rates. And so I see the transaction market picking up in activity as we go through 2026.
Speaker #13: I think from a, as I mentioned a moment ago, I think from an underwriting perspective, you know, there's a little bit more uncertainty than there has been for the past year of what happens on the new lease rate side.
Speaker #13: And since these lease ups are generally leasing predominantly or for the most at year , to part , new lease rates . there .
Speaker #13: comes There's more So then it pressure down to the ability burn those to concessions off . So I think the market is certainly optimistic about what that looks like going forward .
Speaker #13: And hence the low cap rates . And so I see the transaction market picking up in activity as we go through 26 .
Operator: Our next question comes from Haendel St. Juste from Mizuho. Please go ahead, your line is open.
Operator: Our next question comes from Haendel St. Juste from Mizuho. Please go ahead, your line is open.
Haendel St. Juste: Hey, guys. Thanks for taking the follow-up. I might have missed it, but can you tell us what the new lease rate was for January specifically? And then would you also comment, or can you comment on the pending settlement for the RealPage multi-district lawsuit? And then maybe remind us what other litigation there is on that front, outstanding. Thanks.
Haendel St. Juste: Hey, guys. Thanks for taking the follow-up. I might have missed it, but can you tell us what the new lease rate was for January specifically? And then would you also comment, or can you comment on the pending settlement for the RealPage multi-district lawsuit? And then maybe remind us what other litigation there is on that front, outstanding. Thanks.
Speaker #1: Our next question comes from Saint just from Mizuho . Please go ahead . Your line is open .
Speaker #10: Hey guys . Thanks taking the for follow up . I might have missed it , you tell us what the but can new lease rate was for January specifically ?
Speaker #10: And then would you also comment or can you comment on the pending settlement for the RealPage multidistrict lawsuit and then maybe remind us what other litigation there is on that front ?
Timothy Argo: Yeah, Haendel, this is Tim. I'll, I'll answer the first part. We're not going to get into individual months on the new lease side. Like, you know, it's just pretty granular to small population. But I will say, you know, I think the, when you think about new lease pricing compared to last year, we expect the smallest delta between those two in Q1, and then the, to get larger for all the reasons we've talked about, and then blended basis to, to broadly, we expect we would have better pricing in Q1 versus what we did this time last year.
Timothy Argo: Yeah, Haendel, this is Tim. I'll, I'll answer the first part. We're not going to get into individual months on the new lease side. Like, you know, it's just pretty granular to small population. But I will say, you know, I think the, when you think about new lease pricing compared to last year, we expect the smallest delta between those two in Q1, and then the, to get larger for all the reasons we've talked about, and then blended basis to, to broadly, we expect we would have better pricing in Q1 versus what we did this time last year.
Speaker #10: Outstanding . Thanks .
Speaker #3: Yeah . And I'll answer the first part . We're not going to get into individual months on the new lease side . I think , you know , it's just pretty granular in a small population .
Speaker #3: But I will say , you know , I think the when you think about new lease pricing compared to last year , we expect the smallest delta between those two and Q1 .
Speaker #3: all the And then larger , for to reasons we've talked about . And then blended basis to to broadly , we expect we would have better pricing in Q1 versus what we did this time last year .
Rob DelPriore: Hey, Haendel, this is Rob. On the RealPage settlement, I think, I mean, first and foremost, I would say, the settlement is no admission of wrongdoing or liability, and remain confident that we've acted lawfully and responsibly. Secondly, it does not require any material changes to how we operate the business. The prospective commitments are all ones that we believe are consistent with how we conduct operations today, so we don't really expect any significant disruptions there. Then, finally, it really is just about removing distraction and uncertainty in a complex and evolving legal environment where this is really an attack on the entire industry and not just MAA.
Rob DelPriore: Hey, Haendel, this is Rob. On the RealPage settlement, I think, I mean, first and foremost, I would say, the settlement is no admission of wrongdoing or liability, and remain confident that we've acted lawfully and responsibly. Secondly, it does not require any material changes to how we operate the business. The prospective commitments are all ones that we believe are consistent with how we conduct operations today, so we don't really expect any significant disruptions there. Then, finally, it really is just about removing distraction and uncertainty in a complex and evolving legal environment where this is really an attack on the entire industry and not just MAA.
Speaker #23: And Alice , Rob , on the on the RealPage settlement , I I mean , foremost , I would say the settlement is no admission of wrongdoing or liability and we remain confident that we've we've acted lawfully and responsibly .
Speaker #23: And secondly, it does not require any material changes to how we operate the business. The prospective commitments are all ones that we believe are consistent with how we conduct operations today.
Speaker #23: So we don't expect really any any significant disruptions there . And then finally , it just about really is removing and distraction uncertainty .
Speaker #23: And a complex and evolving legal environment, where this is really an attack on the entire not industry and just MAA, the allowed resolution did allow us to eliminate significant cost and complexity and distraction of continued and prolonged litigation and keep the focus of leadership where we really want it, which is on resident operations and value creation.
Rob DelPriore: The resolution did allow us to eliminate significant cost and complexity and distraction of, the continued and prolonged litigation, and keep the focus of leadership where we really want it, which is on residents, operations, and value creation. And then the two ongoing attorney general matters that are disclosed in our financial reports are still continuing, and we will continue to defend those.
Rob DelPriore: The resolution did allow us to eliminate significant cost and complexity and distraction of, the continued and prolonged litigation, and keep the focus of leadership where we really want it, which is on residents, operations, and value creation. And then the two ongoing attorney general matters that are disclosed in our financial reports are still continuing, and we will continue to defend those.
Speaker #23: Then the the two ongoing attorney general matters that are the disclosed in our financial reports are are still and we continuing , will continue to defend those .
Operator: And our last question will come from Julien Blouin from Goldman Sachs. Please go ahead, your line is open.
Operator: And our last question will come from Julien Blouin from Goldman Sachs. Please go ahead, your line is open.
Julien Blouin: Yeah, thank you for taking my question. I just wanted to check on maybe just the trend of absorption volumes in your markets. It seemed to maybe normalize somewhat in Q4, certainly lower than it was in Q4 2024. Do you worry at all that maybe absorption is starting to slow amidst, you know, the job environment that Steve alluded to, and maybe in this sort of slower migration environment? You know, you're still dealing with elevated levels of vacant units in your markets, but just wondering how you feel about absorption.
Julien Blouin: Yeah, thank you for taking my question. I just wanted to check on maybe just the trend of absorption volumes in your markets. It seemed to maybe normalize somewhat in Q4, certainly lower than it was in Q4 2024. Do you worry at all that maybe absorption is starting to slow amidst, you know, the job environment that Steve alluded to, and maybe in this sort of slower migration environment? You know, you're still dealing with elevated levels of vacant units in your markets, but just wondering how you feel about absorption.
Speaker #1: In our last question will come from Julian Bloom , from Goldman Sachs . Please go ahead . Your line is open .
Speaker #4: Yeah . Thank you for taking my question . I just wanted to check on maybe just the trend of absorption volumes in your markets .
Speaker #4: It seemed to it seemed to maybe normalize somewhat in fourth quarter , certainly lower than it was in the fourth quarter of 24 .
Speaker #4: Do you worry that maybe at all absorption is starting to slow amidst the job environment ? The Steve alluded to , and maybe in this sort of migration slower environment , you know , you're still dealing with elevated levels of vacant units in your markets , but just wondering how you feel about absorption .
Timothy Argo: Yeah, this is... Julian, this is Tim. We did see absorption slow a little bit in the back part of the year and into Q4, but not really surprisingly. I mean, you know, one, just there's a seasonal component to that, that is not unexpected. And then frankly, there's just as supply and starts have continued, as we've continued to get further from that peak, we would expect absorption to go down or just fewer units to be absorbed. But so we didn't necessarily need to stay at those extremely high levels that we've seen over the last few quarters.
Timothy Argo: Yeah, this is... Julian, this is Tim. We did see absorption slow a little bit in the back part of the year and into Q4, but not really surprisingly. I mean, you know, one, just there's a seasonal component to that, that is not unexpected. And then frankly, there's just as supply and starts have continued, as we've continued to get further from that peak, we would expect absorption to go down or just fewer units to be absorbed. But so we didn't necessarily need to stay at those extremely high levels that we've seen over the last few quarters.
Speaker #3: Yeah . Julian , this is Tim . We did see slow a little bit absorption of the year and surprisingly . back part not into mean , you in the , but know , really And then not component to that unexpected .
Speaker #3: frankly , as as just one just there's there's seasonal and starts have as we continued further continue expect units just would we be absorption fewer to go But absorbed .
Speaker #3: frankly , as as just one just there's there's seasonal and starts have as we continued further continue expect units just would we be absorption fewer to go But absorbed . down .
Speaker #3: to get so we to necessarily stay at need to those extremely high we've seen over the levels that last few quarters . But as we look forward , just we as fact that there's so many fewer units in lease up than there were , you know , you know , 12 , 18 months 15 , ago , continued demand steady scenario .
Timothy Argo: As we look forward, just given the fact that there's so many fewer units in lease-up than there were, you know, here, you know, 12, 15, 18 months ago, continued steady demand scenario, no sign of supply kicking back up, you know, we would expect absorption to be pretty consistent, demand to be pretty consistent, and not concerned overall on that front.
Timothy Argo: As we look forward, just given the fact that there's so many fewer units in lease-up than there were, you know, here, you know, 12, 15, 18 months ago, continued steady demand scenario, no sign of supply kicking back up, you know, we would expect absorption to be pretty consistent, demand to be pretty consistent, and not concerned overall on that front.
Speaker #3: No , no sign of supply picking back up . You know , we would expect absorption to be consistent , demand to be pretty pretty consistent and not concerned on that overall front .
Brad Hill: Hey, Julian, this is Brad. I'll just add one thing to that. You know, as Tim mentioned, as new deliveries continue to decline, the absorption numbers, you know, the way they're calculated, are gonna, by nature, continue to decline. And so one of the things that we're also focused on is what are market-level occupancies look like in our markets? And certainly, we look at that on a total basis as well as just the stabilized occupancy. And the numbers are...
Brad Hill: Hey, Julian, this is Brad. I'll just add one thing to that. You know, as Tim mentioned, as new deliveries continue to decline, the absorption numbers, you know, the way they're calculated, are gonna, by nature, continue to decline. And so one of the things that we're also focused on is what are market-level occupancies look like in our markets? And certainly, we look at that on a total basis as well as just the stabilized occupancy. And the numbers are...
Speaker #13: Julian , this is Brad . I'll just add one thing to that . You as Tim mentioned , as new deliveries continued to decline , the absorption numbers , you know , the way they're calculated are going to by nature , continue to decline .
Speaker #13: And so, one of the things that we're also focused on is what level our market occupancies look like in our markets. And certainly, we look at that on a...
Speaker #13: Total basis as as , well you know , just the stabilized occupancy . And as Tim mentioned , I think in his opening comments , I mean , we've seen significant improvement in those market level occupancies over the past year .
Brad Hill: Continue to show that the lease-ups that are in the market continue to be filled up and therefore the market-level occupancies are firming, which is one of the components of our strengthening belief of the strengthening performance throughout this year. So, occupancies appear to continue to improve.
Brad Hill: Continue to show that the lease-ups that are in the market continue to be filled up and therefore the market-level occupancies are firming, which is one of the components of our strengthening belief of the strengthening performance throughout this year. So, occupancies appear to continue to improve.
Speaker #13: And the numbers are continue to show that the lease ups that are in the market continue to be filled up , and therefore is level the market firming , occupancies are one of the which components of our strengthening belief of the performance strengthening throughout this year .
Operator: And we have no further questions. I will return the call to MAA for closing remarks.
Operator: And we have no further questions. I will return the call to MAA for closing remarks.
Speaker #13: So occupancies appear to continue to to improve .
Brad Hill: All right. Thanks for joining the call today. If you've got any follow-ups, don't hesitate to reach out. Thanks.
Brad Hill: All right. Thanks for joining the call today. If you've got any follow-ups, don't hesitate to reach out. Thanks.
Speaker #1: And we have no further questions. I will turn the call to Ma for closing remarks.
Operator: This concludes today's program. Thank you for your participation. You may disconnect at any time.
Operator: This concludes today's program. Thank you for your participation. You may disconnect at any time.
Speaker #13: All right . Thanks for joining the call today . If you've got any follow ups , don't hesitate to out . reach Thanks .
