Q2 2026 UDR Inc Earnings Call

July 28, 2026

Speaker #1: Greetings. Welcome to UDR's second quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

Operator 2: Greetings. Welcome to UDR's Q2 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Vice President of Investor Relations, Trent Trujillo. Thank you, Mr. Trujillo. You may begin.

Operator: Greetings. Welcome to UDR's Q2 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Vice President of Investor Relations, Trent Trujillo. Thank you, Mr. Trujillo. You may begin.

Speaker #1: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker #1: It is now my pleasure to introduce your host, Vice President of Investor Relations, Trent Trujillo. Thank you, Mr. Trujillo. You may begin.

Speaker #2: Thank you, and welcome to UDR's quarterly financial results conference call. Our press release and supplemental disclosure package were distributed yesterday afternoon and posted to the Investor Relations section of our website, ir.udr.com.

Trent Trujillo: Thank you. Welcome to UDR's quarterly financial results conference call. Our press release and supplemental disclosure package were distributed yesterday afternoon and posted to the investor relations section of our website, ir.udr.com. In the supplement, we have reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Regulation G requirements. Statements made during this call which are not historical may constitute forward-looking statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be met. A discussion of risks and risk factors are detailed in our press release and included in our filings with the SEC. We do not undertake a duty to update any forward-looking statements.

Speaker #2: In the supplement, we have reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements. Statements made during this call, which are not historical, may constitute forward-looking statements.

Speaker #2: Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be met.

Speaker #2: A discussion of risks and risk factors is detailed in our press release and included in our filings with the SEC. We do not undertake a duty to update any forward-looking statements.

Speaker #2: When we get to the question-and-answer portion, to be respectful of everyone's time and in an attempt to complete our call within one hour, we will limit questions to one per analyst.

Trent Trujillo: When we get to the question and answer portion, to be respectful of everyone's time and in an attempt to complete our call within 1 hour, we will limit questions to one per analyst. We kindly ask that you rejoin the queue if you have a follow-up question or additional items to discuss. Management will be available after the call to address any questions that did not get answered during the Q&A session today. I will now turn over the call to UDR's Chairman, President, and CEO, Tom Toomey.

Speaker #2: We kindly ask that you rejoin the queue if you have a follow-up question or additional items to discuss. Management will be available after the call to address any questions that were not answered during the Q&A session today.

Speaker #2: I will now turn over the call to UDR's Chairman, President, and CEO, Thomas Toomey.

Speaker #3: Thank you, Trent. And welcome to UDR's second quarter 2026 conference call. Presenting on the call with me today are Chief Operating Officer Michael Lacy, Chief Financial Officer David Bragg, and Senior Officer Chris Van Ends, who will be available during the Q&A portion of the call.

Tom Toomey: Thank you, Trent. Welcome to UDR's Q2 2026 conference call. Presenting on the call with me today are Chief Operating Officer Mike Lacy, Chief Financial Officer Dave Bragg, and Senior Vice President, Investment Strategy Chris Van Ens, who will be available during the Q&A portion of the call. To begin, the fundamentals of the apartment industry have been favorable in 2026. Specifically, employment growth has exceeded consensus expectations. Housing affordability remains in favor of renting relative to homeownership, and new supply of apartment homes continues to abate. This backdrop, combined with our execution across operations and capital allocation, produced Q2 results that exceeded our expectations. In turn, this led us to raise our full-year same-store growth and FFOA per share guidance. Operationally, we performed exceptionally well. The apartment industry is strengthening, but what differentiates UDR is our data-driven capabilities, continuous innovation, and disciplined execution.

Speaker #3: To begin, the fundamentals of the apartment industry have been favorable in 2026. Specifically, employment growth has exceeded consensus expectations. Housing affordability remains in favor of renting relative to homeownership, and new supply of apartment homes continues to abate.

Speaker #3: This backdrop, combined with our execution across operations and capital allocation, produced second-quarter results that exceeded our expectations. In turn, this led us to raise our full-year same-store growth and FFOA per share guidance.

Speaker #3: Operationally, we performed exceptionally well. The apartment industry is strengthening, but what differentiates UDR is our data-driven capabilities, continuous innovation, and disciplined execution. Mike will elaborate on our operating strategies and tactics employed to generate results that delivered more cash to our bottom line.

Tom Toomey: Mike will elaborate on our operating strategies and tactics employed to generate results that delivered more cash to our bottom line. As it relates to capital allocation, we follow a data-driven approach to risk-adjusted returns when determining sources and uses of capital, which we visualize through a heat map. This process led us to sell assets, with proceeds used to repurchase our shares at sizable discounts to NAV. Furthermore, as our tools for evaluating risk-adjusted returns have advanced, we have made the strategic decision to let our debt and preferred equity book run off in the coming years. Our focus on operational excellence and data-driven approach to identify investments with outsized growth led us to this choice. UDR is an industry leader and operator, not a lender, and we do not plan to re-enter the debt and preferred equity business.

Speaker #3: As it relates to capital allocation, we follow a data-driven approach to risk-adjusted returns when determining sources and uses of capital, which we visualize through a heat map.

Speaker #3: This process led us to sell assets, with the proceeds used to repurchase our shares at sizable discounts to NAV. Furthermore, as our tools for evaluating risk-adjusted returns have advanced, we have made the strategic decision to let our debt and preferred equity book run off in the coming years.

Speaker #3: Our focus on operational excellence and a data-driven approach to identifying investments, without size growth, led us to this choice. UDR is an industry leader as an operator, not a lender.

Speaker #3: And we do not plan to reenter the debt and preferred equity business. Dave will further discuss this and our capital allocation activities in his remarks.

Tom Toomey: Dave will further discuss this and our capital allocation activities in his remarks. Later this week, UDR will distribute its first monthly dividend. Our history of delivering nearly $9 billion of dividends over 54 years demonstrates UDR's track record of stability, growth, transparency, liquidity, and robust results. As we shared last quarter, our research indicated an opportunity to diversify our investor base by appealing to a growing segment of the market that values frequent cash flow distributions. Since announcing our shift to a monthly dividend, we have extensively engaged with a number of new capital channels and have received positive feedback. Finally, I'm happy to report that UDR has recently been named a Top Workplace winner in the real estate industry for the third consecutive year.

Speaker #3: Moving on, later this week, UDR will distribute its first monthly dividend. Our history of delivering nearly $9 billion of dividends over 54 years demonstrates UDR's track record of stability, growth, transparency, liquidity, and robust results.

Speaker #3: As we shared last quarter, our research indicated an opportunity to diversify our investor base by appealing to a growing segment of the market that values frequent cash-flow distributions.

Speaker #3: Since announcing our shift to a monthly dividend, we have extensively engaged with a number of new capital channels and have received positive feedback. Finally, I'm happy to report that UDR has recently been named a top workplace winner in the real estate industry for the third consecutive year.

Speaker #3: This achievement extends our track record as a leader in corporate stewardship and reflects the engaging employee experience we have built, while solidifying our stature as an employer of choice.

Tom Toomey: This achievement extends our track record as a leader in corporate stewardship and reflects the engaging employee experience we have built while solidifying our stature as an employer of choice. This is further evidenced by our associate turnover rate at only 19%, which is substantially better than the industry norm of 34%. In conclusion, we're pleased with our results in the H1 of the year, which has set us up for a better than expected 2026. We are focused on excellence across operations, capital allocation, and access to capital. This constant pursuit is underpinned by our innovative culture and approach to data. With that, I'll turn the call over to Mike.

Speaker #3: This is further evidenced by our associate turnover rate at only 19%, which is substantially better than the industry norm of 34%. In conclusion, we're pleased with our results in the first half of the year.

Speaker #3: Which has set us up for a better-than-expected 2026. We are focused on excellence across operations, capital allocation, and access to capital. This constant pursuit is underpinned by our innovative culture and approach to data.

Speaker #3: With that, I'll turn the call over to Mike.

Speaker #4: Thanks, Tom. Today I'll cover our second quarter same-store results, our increased full-year 2026 same-store growth guidance (including underlying assumptions), recent operating trends, and our strategic position.

Mike Lacy: Thanks, Tom. Today I'll cover our Q2 same-store results, our increased full year 2026 same-store growth guidance, including underlying assumptions and recent operating trends, as well as our strategic position. The Q2 exceeded our outlook as we leveraged real-time data to drive total revenue and cash flow growth. Specific to the quarter, year-over-year same-store revenue growth of 1.8% was driven by the following. Blended lease rate growth of 2.1%, which accelerated by 50 basis points compared to the Q1 results and exceeded the high end of our 1.5% to 2% range. Year-over-year innovation income growth in the mid-single digit range, which continued to bolster our results. Healthy occupancy that remained in the mid-96% range. A 60 basis point contribution from improved delinquency, reflective of our focus on attracting and retaining high-quality residents.

Speaker #4: The second quarter exceeded our outlook as we leveraged real-time data to drive total revenue and cash flow growth. Specific to the quarter, year-over-year same-store revenue growth of 1.8% was driven by the following: blended lease rate growth of 2.1%, which accelerated by 50 basis points compared to the first quarter results.

Speaker #4: And exceeded the high end of our 1.5% to 2% range. Year-over-year, innovation income growth was in the mid-single-digit range, which continued to bolster our results.

Speaker #4: Healthy occupancy that remained in the mid-96% range, and a 60-basis-point contribution from improved delinquency, reflective of our focus on attracting and retaining high-quality residents.

Speaker #4: Resident retention of 60% marked an all-time seasonal high and was 140 basis points better than the prior year. This not only supported occupancy and improved bad debt, but also led to constrained same-store expense growth of only 2.6%.

Mike Lacy: Resident retention of 60% marked an all-time seasonal high and was 140 basis points better than the prior year. This not only supported occupancy and improved bad debt, also led to constrained same-store expense growth of only 2.6%. This demonstrates the value we created by delivering a high-quality customer experience, as well as the scalability of our platform, as evidenced by our industry-leading efficiency of 43 apartment homes managed per associate. Based on our year-to-date results, we raised our full year 2026 same-store growth guidance in conjunction with yesterday's release. Starting with same-store revenue growth, we raised our midpoint by 12.5 basis points, resulting in a new range of 0.75% to 2%. The increased midpoint is entirely driven by blended lease rate growth, with H1 performance of 1.9%, exceeding our midpoint expectations of 1.75% as the spring and summer leasing season is elongated compared to our original expectations.

Speaker #4: This demonstrates the value we created by delivering a high-quality customer experience, as well as the scalability of our platform, as evidenced by our industry-leading efficiency of 43 apartment homes managed per associate.

Speaker #4: Based on our year-to-date results, we raised our full-year 2026 same-store growth guidance in conjunction with yesterday's release. Starting with same-store revenue growth, we raised our midpoint by 12.5 basis points, resulting in a new range of 0.75% to 2%.

Speaker #4: The increased midpoint is entirely driven by blended lease rate growth, with first-half performance of 1.9% exceeding our midpoint expectations of 1.75%, as the spring and summer leasing season is elongated compared to our original expectations.

Speaker #4: We continue to expect blended lease rate growth for the second half of the year will be between 1.5% and 2%. This means blended lease rate growth does not need to accelerate versus the first half for us to achieve our revenue growth guidance.

Mike Lacy: We continue to expect blended lease rate growth for the H2 of the year will be between 1.5% and 2%, which means blended lease rate growth does not need to accelerate versus the H1 for us to achieve our revenue growth guidance. In the event H2 blended lease rate growth exceeds our expectations, that benefit would mostly accrue to 2027, since we have already completed the majority of our 2026 leasing activity. Beyond blended rent growth, we expect to operate with occupancy in the mid-96% range for the rest of the year and generate mid-single digit growth from innovation income. Moving on to same-store expenses, we improved our full year midpoint by 50 basis points to 3.25%. This was driven by constrained growth across repairs and maintenance, real estate taxes, and insurance.

Speaker #4: If second-half blended lease rate growth exceeds our expectations, that benefit would mostly accrue to 2027, since we have already completed the majority of our 2026 leasing activity.

Speaker #4: Beyond blended rent growth, we expect to operate with occupancy in the mid-96% range for the rest of the year and generate mid-single-digit growth from innovation income.

Speaker #4: Moving on to same-store expenses, we improved our full-year midpoint by 50 basis points to 3.25%. This was driven by constrained growth across repairs and maintenance, real estate taxes, and insurance.

Speaker #4: Combining the improvements to both our revenue and expense growth guidance, we increased our same-store NOI growth guidance by 50 basis points. Turning to regional performance, second quarter results were led by our coastal markets, which delivered blended lease rate growth of 3.8% on average.

Mike Lacy: Combining the improvements to both our revenue and expense growth guidance, we increased our same-store NOI growth guidance by 50 basis points. Turning to regional performance. Q2 results were led by our coastal markets, which delivered blended lease rate growth of 3.8% on average, as compared to -2% blends in the Sun Belt. More specifically, on the West Coast, San Francisco remains a standout market with the strongest revenue growth across our portfolio, driven by blended lease rate growth of approximately 13% and occupancy in the high 97% range. Orange County also delivered attractive results with blended lease rate growth of more than 3%. The East Coast was led by New York and Philadelphia with mid-single digit blended lease rate growth and mid-97% occupancy in each market.

Speaker #4: As compared to negative 2% blends in the Sun Belt. More specifically, on the West Coast, San Francisco remains a standout market with the strongest revenue growth across our portfolio.

Speaker #4: Driven by blended lease rate growth of approximately 13% and occupancy in the high 97% range. Orange County also delivered attractive results, with blended lease rate growth of more than 3%.

Speaker #4: The East Coast was led by New York and Philadelphia, with mid-single-digit blended lease rate growth and mid-97% occupancy in each market. Dallas remained our strongest Sun Belt market, while Austin showed the best momentum in blended lease rate growth, coupled with 97% occupancy.

Mike Lacy: Dallas remained our strongest Sun Belt market, while Austin showed the best momentum in blended lease rate growth coupled with 97% occupancy. Beyond market influences, we continued to differentiate ourselves from the peers by enhancing our revenue growth with services and amenities desired by our residents. To conclude, we delivered Q2 results that exceeded our expectations and drove our full year guidance raise. Our team's ability to leverage real-time data continues to bear fruit and early Q3 results are tracking similar to the Q2. Demand for our high-quality apartments is outpacing supply, our ability to tactically adjust operating strategies tailored to each asset is a testament to the exceptional caliber of our teams across the country. We will continue to innovate, improve resident satisfaction, and expand operating margin while positively impacting the communities we serve. I will now turn over the call to Dave.

Speaker #4: Beyond market influences, we continue to differentiate ourselves from our peers by enhancing our revenue growth with services and amenities desired by our residents. To conclude, we delivered second quarter results that exceeded our expectations and drove our full-year guidance raise.

Speaker #4: Our teams’ ability to leverage real-time data continues to bear fruit, and early third-quarter results are tracking similarly to the second quarter. Demand for our high-quality apartments is outpacing supply, and our ability to tactically adjust operating strategies tailored to each asset is a testament to the exceptional caliber of our teams across the country.

Speaker #4: We will continue to innovate, improve resident satisfaction, and expand operating margin, while positively impacting the communities we serve. I will now turn over the call to Dave.

Speaker #2: Thank you, Mike. The topics I will cover today include our second-quarter financial results and third-quarter guidance, recent transactions and capital markets activity, and a balance sheet and liquidity update.

Dave Bragg: Thank you, Mike. The topics I will cover today include our Q2 financial results and Q3 guidance, recent transactions and capital markets activity, and a balance sheet and liquidity update.

Speaker #2: To begin, second quarter FFOA per share of $0.64 achieved the high end of our guidance range and exceeded consensus. The $0.02 per share increase versus the first quarter was driven primarily by higher NOI.

Dave Bragg: To begin, Q2 FFOA per share of $0.64 achieved the high end of our guidance range and exceeded consensus. The $0.02 per share increase versus Q1 was driven primarily by higher NOI. As year-to-date results have exceeded our initial midpoint expectations, we have raised full year 2026 FFOA guidance by $0.01 per share at the midpoint to $2.53. Looking ahead to Q3, our FFOA per share guidance range is $0.63 to $0.65. The $0.64 midpoint contemplates the operating environment that Mike discussed. Next, capital allocation. Our perspective on the risk-adjusted returns on sources and uses of capital, as reflected in our capital allocation heat map, continues to guide our strategy. For much of Q2, our stock traded at an unusually wide discount to private market apartment asset pricing.

Speaker #2: As year-to-date results have exceeded our initial midpoint expectations, we have raised full year 2026 FFOA guidance by one penny per share at the midpoint to $2.53.

Speaker #2: Looking ahead to the third quarter, our FFOA per share guidance range is $0.63 to $0.65. The $0.64 midpoint contemplates the operating environment that Mike discussed.

Speaker #2: Next, capital allocation. Our perspective on the risk-adjusted returns on sources and uses of capital, as reflected in our capital allocation heat map, continues to guide our strategy.

Speaker #2: For much of the second quarter, our stock traded at an unusually wide discount to private market apartment asset pricing. This allowed us to take advantage of the public versus private market arbitrage opportunity to sell assets and repurchase our shares.

Dave Bragg: This allowed us to take advantage of the public versus private market arbitrage opportunity to sell assets and repurchase our shares. Our data-focused and collaborative process, which includes our Orion Analytics platform, as well as our perspective on operating upside potential and CapEx, yields disposition assets that offer inferior cash flow growth prospects in the remaining portfolio. As a result, the process of selling assets and repurchasing shares enhances long-term cash flow per share growth. As the discount on our stock narrowed, we stayed nimble and turned our attention to select development and opportunistic acquisitions. As such, we executed the following transactional and capital markets activity during Q2 and thus far in Q3. First, we completed the sale of one apartment community and are under contract to sell three more.

Speaker #2: Our data-focused and collaborative process, which includes our Orion Analytics platform, as well as our perspective on operating upside potential and capex, yields disposition assets that offer inferior cash flow growth prospects than the remaining portfolio.

Speaker #2: As a result, the process of selling assets and repurchasing shares enhances long-term cash flow per share growth. As the discount on our stock narrowed, we stayed nimble and turned our attention to select development and opportunistic acquisitions.

Speaker #2: As such, we executed the following transactional and capital markets activity during the second quarter and thus far in the third quarter. First, we completed the sale of one apartment community and are under contract to sell three more. Estimated gross proceeds from these four dispositions total approximately $295 million, and would result in 2026 disposition activity of approximately $650 million, at a mid-5% buyer cap rate on average.

Dave Bragg: Estimated gross proceeds from these four dispositions total approximately $295 million and would result in 2026 disposition activity of approximately $650 million at a mid 5% buyer cap rate on average. We selected these assets for sale based on property-level characteristics with a focus on three criteria. One, the outlook for rent growth per our proprietary analytical tool named Orion. Two, CapEx requirements, and three, potential operational upside or lack thereof. This group of assets screens inferior to our retained portfolio on these metrics. Next, on share buybacks. We recently expanded our share repurchase program to approximately 30 million shares, and during the quarter, we repurchased approximately 5.5 million shares for $200 million at an average price of $36.49 per share.

Speaker #2: We selected these assets for sale based on property-level characteristics, with a focus on three criteria: one, the outlook for rent growth per our proprietary analytical tool named Orion; two, capex requirements; and three, potential operational upside, or lack thereof.

Speaker #2: This group of assets screens inferior to our retained portfolio on these metrics. Next, on share buybacks: We recently expanded our share repurchase program to approximately 30 million shares, and during the quarter we repurchased approximately 5.5 million shares for $200 million at an average price of $36.49 per share.

Speaker #2: This brings total repurchase activity since September of 2025 to 11.5 million shares, for approximately $420 million at an average price per share, which equates to a mid-6% implied cap rate.

Dave Bragg: This brings total repurchase activity since September 2025 to 11.5 million shares for approximately $420 million at an average price of $36.34 per share, which equates to a mid 6% implied cap rate. We commenced development on a 385-apartment home community in Northern Virginia. This is a phase two development located adjacent to an existing UDR apartment community, which enhances efficiencies and therefore the stabilized yield we expect to achieve. Sticking with development, our team also continues to impress on 3099 Iowa, our ground up development in Riverside, California, which is now two quarters ahead of schedule for initial occupancy and 5% under budget. For both developments, we expect to achieve a mid 6% stabilized yield. Also, we opportunistically acquired two communities in Portland and one in Los Angeles through our debt and preferred equity program.

Speaker #2: Then we commenced development on a 385-apartment home community in Northern Virginia. This is a phase two development located adjacent to an existing UDR apartment community, which enhances efficiencies and, therefore, the stabilized yield we expect to achieve.

Speaker #2: Sticking with development, our team also continues to impress on 3099 Iowa, our ground-up development in Riverside, California, which is now two quarters ahead of schedule for initial occupancy and 5% under budget.

Speaker #2: For both developments, we expect to achieve a mid-6% stabilized yield. Also, we opportunistically acquired two communities in Portland and one in Los Angeles through our debt and preferred equity program.

Speaker #2: Thinking about these assets as a three-property portfolio, it screens well on our primary investment criteria, namely our Orion Analytics platform signal for rent growth, capex, and operating upside potential once transitioned to the UDR platform.

Dave Bragg: Thinking about these assets as a three-property portfolio, it screens well on our primary investment criteria, namely our Orion Analytics platform signal for rent growth, CapEx, and operating upside potential once transitioned to the UDR platform. Additionally, by adding more than 500 units in Portland, we do enhance our operating efficiencies in that market. Lastly, we're pleased to have formed a new joint venture with Carmel Partners, who acquired MetLife's 50% interest in our Columbus Square assemblage in New York. UDR's economic interest and fee structure in the joint venture did not change. With the transaction, we funded a $50 million mezzanine loan to Carmel. This loan is unique in that we have been and will continue to be the operator of Columbus Square. Also, the contractual return will be paid current in cash. Considering our year-to-date activity, we have updated our full year capital sources and uses guidance.

Speaker #2: Additionally, by adding more than 500 units in Portland, we do enhance our operating efficiencies in that market. Lastly, we're pleased to have formed a new joint venture with Carmel Partners, who acquired MetLife's 50% interest in our Columbus Square Assemblage in New York.

Speaker #2: UDR's economic interest and fee structure in the joint venture did not change. With the transaction, we funded a $50 million mezzanine loan to Carmel.

Speaker #2: This loan is unique in that we have been, and will continue to be, the operator of Columbus Square. Also, the contractual return will be paid current in cash.

Speaker #2: Considering our year-to-date activity, we have updated our full-year capital sources and uses guidance. Included in this outlook is our expectation that the size of our debt and preferred equity portfolio will continue to decline from $380 million at the end of the second quarter to approximately $250 to $300 million at year-end. This is due to successful repayments, opportunities to gain control of assets, and our disciplined underwriting, where other capital uses offer superior risk-adjusted returns and growth.

Dave Bragg: Included in this outlook is our expectation that the size of our debt and preferred equity portfolio will continue to decline from $380 million at the end of Q2 to approximately $250 to $300 million at year-end due to successful repayments, opportunities to gain control of assets and our disciplined underwriting where other capital uses offer superior risk-adjusted returns and growth. As Tom touched on, UDR has better tools today than it did more than a decade ago when we entered the debt and preferred equity business. Our focus on operational excellence and our data-driven approach to investing underpinned by Orion, increasingly allows us to find and execute on investments with outsized upside. By contrast, the returns on our debt and preferred equity or DPE business are capped.

Speaker #2: As Tom touched on, UDR has better tools today than it did more than a decade ago when we entered the debt and preferred equity business.

Speaker #2: Our focus on operational excellence and our data-driven approach to investing, underpinned by Orion, increasingly allows us to find and execute on investments with outsized upside.

Speaker #2: By contrast, the returns on our Debt and Preferred Equity, or DPE, business are capped. Upon consideration of these dynamics, we have made the strategic decision to let our DPE balance run off over the next several years as maturities occur and/or as we gain access to assets for which we see upside potential.

Dave Bragg: Upon consideration of these dynamics, we have made the strategic decision to let our DPE balance run off over the next several years as maturities occur and/or we gain access to assets for which we see upside potential. Going forward, as successful paybacks occur and/or we gain control of assets that we like out of the book, we think about the impact of deploying into alternative investments such as acquisitions or redevelopment as having an approximately 400 basis points lower yield than DPE. This results in initial dilution of about one penny per share for each $100 million not redeployed into the DPE business. Over the long term, this impact narrows due to the growth we will see from these investments relative to the capped returns on DPE. In all, our capital allocation and balance sheet management strategies remain nimble as market conditions warrant.

Speaker #2: Going forward, as successful paybacks occur and/or we gain control of assets that we like out of the book, we think about the impact of deploying into alternative investments—such as acquisitions or redevelopment—as having an approximately 400 basis points lower yield than DPE.

Speaker #2: This results in initial dilution of about 1 penny per share for each $100 million not redeployed into the DPE business. Over the long term, this impact narrows due to the growth we will see from these investments relative to the capped returns on DPE.

Speaker #2: Overall, our capital allocation and balance sheet management strategies remain nimble as market conditions warrant. What does not change is our emphasis on data-driven decisions that drive long-term cash flow per share accretion. Our investment-grade balance sheet remains highly liquid and fully capable of funding our capital needs, with nearly $1 billion of liquidity.

Dave Bragg: What does not change is our emphasis on data-driven decisions that drive long-term cash flow per share accretion. Our investment-grade balance sheet remains highly liquid and fully capable of funding our capital needs with nearly $1 billion of liquidity. With that, I will open up the call for Q&A. Operator?

Speaker #2: With that, I will open up the call for Q&A. Operator?

Speaker #1: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Operator 2: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Eric Wolfe with Citibank. Please proceed.

Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Eric Wolfe with Citibank. Please proceed.

Speaker #1: You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker #1: Our first question is from Eric Wolf with Citibank. Please proceed.

Speaker #3: Hey, thanks for taking my question. There have been some questions and discussion from investors about UDR potentially being involved with AVB and EQR, I think, just based on some of the details in the merger proxy.

Eric Wolfe: Hey, thanks for taking my question. There's been some questions and discussion from investors about UDR potentially being involved, with AVB and EQR, I think just based on some of the details in the merger proxy. I assume you don't want to comment on that specifically, but I was hoping to understand the process you go through and the board goes through to gauge whether something strategic might make sense and sort of how that overlays with how you think the business will change going forward.

Speaker #3: I assume you don't want to comment on that specifically, but I was hoping to understand the process you go through and the board goes through to gauge whether something strategic might make sense, and sort of how that overlays with how you think the business will change going forward.

Speaker #2: Hey Eric, I appreciate the question and we received the same number. What I'd start off with is, I'm not going to respond to speculation, okay?

Tom Toomey: Hey, Eric, I appreciate the question, and we received the same number. What I'd start off with is I'm not going to respond to the speculation, okay. What I am going to focus on, and what the board and management team is on our strategy and acting in the best interest of our shareholders. We'll always weigh the options that are presented to us, in front of us, and also what we are capable of executing. We're excited about what our strategy points to, which is operational excellence, capital allocation, as well as access to capital. We think our strategy as laid out has great potential. We're excited about it, and we'll continue to execute on it.

Speaker #2: What I am going to focus on, and what the board and management team is focused on, is our strategy and acting in the best interest of our shareholders. So we're always weighing the options that are presented to us, and also what we are capable of executing.

Speaker #2: We're excited about what our strategy points to, which is operational excellence, capital allocation, as well as access to capital. We think our strategy, as laid out, has great potential.

Speaker #2: We're excited about it, and we'll continue to execute on it.

Speaker #3: Thank you.

Eric Wolfe: Thank you.

Speaker #1: Our next question is from Steve Sackler with Evercore ISI. Please proceed.

Operator 2: Our next question is from Steve Sakwa with Evercore ISI. Please proceed.

Operator: Our next question is from Steve Sakwa with Evercore ISI. Please proceed.

Speaker #4: Yeah, thanks. I was wondering, maybe Mike, if you could provide just some July, maybe August, September trends in terms of renewal notices that you sent out.

Steve Sakwa: Yeah, thanks. I was wondering maybe, Mike, if you could provide just some July, maybe August, September trends in terms of renewal notices that you sent out. I look back at my notes from May read, and I thought you had maybe talked about a mid-four kind of renewal. Maybe just kind of update us on kind of where you're trending on that and anything around new lease growth in July would be helpful. Thanks.

Speaker #4: I think I looked back at my notes from Nate Readen. I thought you had maybe talked about a mid-fours kind of renewal, so maybe just update us on where you're trending on that. And anything around new lease growth in July would be helpful. Thanks.

Speaker #3: Yeah, of course, Steve. Appreciate the question. I'd say, first and foremost, we're very pleased with our second quarter results and the continuation of that relatively strong leasing season that we've been talking about.

Dave Bragg: Yeah, of course, Steve. Appreciate the question. I'd say first and foremost, we're very pleased with our Q2 results and the continuation of that relatively strong leasing season that we've been talking about. Turning to current trends, specifically around your question on July and August, what I would tell you is it looks a lot like the last couple of months. What I'm seeing today is occupancy in the mid-ninety-sixes, a sustained level of blends currently at the top end of our H2 range. As a reminder, that's 1.5% to 2%. We're seeing continued progress on lower turnover, better cost controls as we move forward. I think it's important to maybe give you a few observations on what we're seeing around some of our regions. I'd tell you our coastal markets, as a reminder, make up 75% of our NOI.

Mike Lacy: Yeah, of course, Steve. Appreciate the question. I'd say first and foremost, we're very pleased with our Q2 results and the continuation of that relatively strong leasing season that we've been talking about. Turning to current trends, specifically around your question on July and August, what I would tell you is it looks a lot like the last couple of months. What I'm seeing today is occupancy in the mid-ninety-sixes, a sustained level of blends currently at the top end of our H2 range. As a reminder, that's 1.5% to 2%. We're seeing continued progress on lower turnover, better cost controls as we move forward. I think it's important to maybe give you a few observations on what we're seeing around some of our regions. I'd tell you our coastal markets, as a reminder, make up 75% of our NOI.

Speaker #3: Turning to current trends, specifically around your question on July and August, what I would tell you is it looks a lot like the last couple of months.

Speaker #3: What I'm seeing today is occupancy in the mid-96s, a sustained level of blends currently at the top end of our second half range, and as a reminder, that's one and a half to two percent.

Speaker #3: And we're seeing continued progress on lower turnover and better cost controls as we move forward. I think it's important to maybe give you a few observations on what we're seeing around some of our regions.

Speaker #3: I’d like to remind you that our coastal markets make up 75% of our NOI. Again, we had blended rent growth of 3.8% during the quarter.

Dave Bragg: Again, we had blended rent growth of 3.8% during the quarter. What I'm seeing in July is very similar. Again, sustained blends. In the Sun Belt markets, where we have 25% of our NOI, as we previously discussed, we saw a little bit of pricing weakness during the Q2. That turned into about -2% that we experienced. Right now, I'll tell you month to date in July, it's a little bit better. I'm seeing a little bit more momentum there. I'm seeing around one, call it -1.5% versus that -2%. Again, slightly better, but we're feeling good about where we're progressing. Again, it's more of an elongated season. Specific to your question around renewals, we are still sending out between, call it 5% to 5.5%.

Mike Lacy: Again, we had blended rent growth of 3.8% during the quarter. What I'm seeing in July is very similar. Again, sustained blends. In the Sun Belt markets, where we have 25% of our NOI, as we previously discussed, we saw a little bit of pricing weakness during the Q2. That turned into about -2% that we experienced. Right now, I'll tell you month to date in July, it's a little bit better. I'm seeing a little bit more momentum there. I'm seeing around one, call it -1.5% versus that -2%. Again, slightly better, but we're feeling good about where we're progressing. Again, it's more of an elongated season. Specific to your question around renewals, we are still sending out between, call it 5% to 5.5%.

Speaker #3: What I'm seeing in July is very similar. So again, sustained blends. In the Sunbelt markets where we have 25% of our NOI, and as we previously discussed, we saw a little bit of pricing weakness during the second quarter—that turned into about negative 2% that we experienced.

Speaker #3: Right now, if I tell you month-to-date in July, it's a little bit better. So I'm seeing a little bit more momentum there. I'm seeing around negative 1.5% versus that negative 2%.

Speaker #3: So again, slightly better, but we're feeling good about where we're progressing. And again, it's more of an elongated season. Specific to your question around renewals, we are still sending out between, call it, 5% to 5.5%.

Speaker #3: We're still negotiating around 100 basis points. And so my expectation for the third quarter is we're probably going to see around plus or minus 4% moving forward.

Mike Lacy: We're still negotiating around 100 basis points. My expectation for Q3 is we're probably going to see around ±4% moving forward. Still feel good about that. As it relates to new lease growth, what I would tell you, market rents today feel pretty good. When I look at market rents over the next, call it four to five months, just thinking about kind of normal seasonality, if you will, that trajectory we typically see on a sequential month-over-month basis, I expect we'll probably continue to see blends around that 2% range specific to new leases. You're probably looking at flat, and I think in all regions, we could see flat new lease growth through September, which again is a little bit more elongated than we originally thought when we came into the year.

Speaker #3: So, still feel good about that as it relates to new lease growth. What I would tell you is, market rents today feel pretty good. And when I look at market rents over the next, call it, four to five months—just thinking about kind of normal seasonality, if you will—that trajectory we typically see on a sequential month-over-month basis, I expect we'll probably continue to see blends around that 2% range, specific to new leases.

Speaker #3: You're probably looking at flat. And I think, in all regions, we could see flat new lease growth through September, which, again, is a little bit more elongated than we originally thought when we came into the year.

Speaker #4: Great, thanks for the caller.

Steve Sakwa: Great. Thanks for the color.

Speaker #1: Our next question is from Jamie Feldman with Wells Fargo. Please proceed.

Operator 2: Our next question is from Jamie Feldman with Wells Fargo. Please proceed.

Operator: Our next question is from Jamie Feldman with Wells Fargo. Please proceed.

Speaker #4: Great, thanks for taking the question. I guess, just, you keep reporting—like many of your peers—this historically high retention rate. So, as we're thinking about the back half of the year, I appreciate all the color you just provided on renewals and outlook.

Jamie Feldman: Great. Thanks for taking the question. I guess just you keep reporting in many of your peers this historically high retention rate, as we're thinking about H2, I appreciate all the color you just provided on renewals and outlook, but how should we think about where the cycle is now versus historic seasonality and historic operating conditions? As it does seem like the supply pipeline's kind of working its way through the system. Just maybe some bigger picture context of what you think 2027 and the next couple of years should look like, given what the industry's gone through the last several.

Speaker #4: But how should we think about where the cycle is now versus historic seasonality and historic operating conditions? And as it does seem like the supply pipeline is kind of working its way through the system, just maybe some bigger picture context of what you think 2027 and the next couple of years should look like, given what the industry's gone through the last several?

Speaker #3: Hey Jamie, it's Mike. I'll start and see if anybody else wants to jump in. I think, for this one, it's good to give a little context.

Mike Lacy: Jamie, it's Mike. I'll start and see if anybody else wants to jump in. I think for this one, it's good to give a little context. Historically speaking, we would typically see around 50% to 51% turnover. When I quote that's more of a 2010, 2019 timeframe. Since then, we've really put a lot of focus, and we've talked a lot about the customer experience and where we've leaned in to try to drive our turnover down. Last year, we hovered around 38% to 39% turnover, significantly different. Going into the year, we expected it to be roughly flat. I'll tell you right now, it's probably trending to about 150 to maybe 200 basis points better, around that 37%, 38% range.

Speaker #3: So, historically speaking, we would typically see around 50 to 51 percent turnover. When I quote that, that's more of a 2010 to 2019 time frame.

Speaker #3: But since then, we've really put a lot of focus—and we've talked a lot about—the customer experience, and where we've leaned in to try to drive our turnover down.

Speaker #3: Last year, we hovered around 38% to 39% turnover, so significantly different. Going into the year, we expected it to be roughly flat. And I'll tell you right now, it's probably trending to about 150 to maybe 200 basis points better.

Speaker #3: And so, around that 37–38% range. And so, significantly different than where we've been. But I think it's important to talk a little bit about some of the things that make UDR different, and how we compare to some of our peers.

Mike Lacy: Significantly different than where we've been, I think it's important to talk a little bit about some of the things that make UDR different, how we compare to some of our peers. When you look at our turnover, we're outpacing them by about 400 to 500 basis points over the last couple of years. That has everything to do with the work that we've done with the customer, understanding that lifetime value versus transactional approach, utilizing the millions of data elements every day to have those conversations with individuals and change that trajectory. That's led us to some pretty significant results. What we're more excited about what's coming next.

Speaker #3: And when you look at our turnover, we're outpacing them by about 400 to 500 basis points over the last couple of years. That has everything to do with the work we've done with the customer, understanding that lifetime value versus a transactional approach.

Speaker #3: Utilizing the millions of data elements every day to have those conversations with individuals and change that trajectory. So, that's led us to some pretty significant results.

Speaker #3: But what we're more excited about is what's coming next. And when we think about kind of that phase three, if you will, it's more around the rent roll quality where we're going to take this.

Mike Lacy: When we think about kind of that phase three, if you will, it's more around the rent roll quality, where we're going to take this, we still think that there's gas left in this tank. We're going to continue to lean in to not only drive our turnover down, but we're also looking for opportunities to bring our pricing up. I think you've seen that when I quote things like our blends in the coast being at 3.8% versus some of the other coastal peers that have recently reported. We have strong growth coming out of those areas. In addition to that, the teams have really started to lean into some best practices, things that are really working for us, things that we believe will continue to drive turnover down and again, increase our renewals.

Speaker #3: We still think that there's gas left in this tank, and we're going to continue to lean in to not only drive our turnover down, but we're also looking for opportunities to bring our pricing up.

Speaker #3: And I think you've seen that when I quote things like our blends in the coast being at 3.8%, versus some of the other coastal peers that have recently reported.

Speaker #3: We have strong growth coming out of those areas. In addition to that, the teams have really started to lean into some best practices—things that are really working for us, things that we believe will continue to drive turnover down.

Speaker #3: And again, increase our renewals. Aside from that, we've created about 40,000 touchpoints with our existing resident base. That's making a difference. And I'll tell you one other thing I'd point to is our reviews.

Mike Lacy: Aside from that, we've created about 40,000 touchpoints with our existing resident base. That's making a difference. I'd tell you one other thing I'd point to is our reviews. When you look at four and five-star reviews, we're up 50% on a year-over-year basis. Really starting to make a difference on what you see when you go out to our websites. It's creating reduced turnover, lower bad debt, you've seen that in our numbers, better pricing power across new and renewals. We think it's going to provide us a more effective marketing avenue as we go forward. A lot of excitement here.

Speaker #3: When you look at four- and five-star reviews, we're up 50% on a year-over-year basis, so it's really starting to make a difference in what you see when you go out to our websites.

Speaker #3: And again, this is—it's creating reduced turnover, lower bad debt—you've seen that in our numbers. Better pricing power across new and renewals. And we think it's going to provide us a more effective marketing avenue as we go forward.

Speaker #3: There's a lot of excitement here.

Speaker #2: Hey Jamie, this is Dave. I would also just provide a broader historical perspective for the industry. That tells us that, subject to the economic landscape, higher turnover can be a good thing.

Dave Bragg: Hey, Jamie, this is Dave. I would also just provide a broader historical perspective for the industry that tells us that subject to the economic landscape, higher turnover can be a good thing. If we look back to, say, the middle of the 2000s, turnover was around 55% at that time, with very high rates of move-out to buy. Apartment revenue growth was in the mid-single-digit range, thank you to great job growth at that time.

Speaker #2: If we look back to, say, the middle of the 2000s, turnover was around 55% at that time, with very high rates of move-outs to buy.

Speaker #2: But apartment revenue growth was in the mid-single-digit range, thanks to great job growth at that time.

Speaker #5: Jamie, you're catching the trifecta. I think all of us want to weigh in on such a nice, open-ended question. My characterization would be along the following lines.

Tom Toomey: Jamie, you're catching the trifecta. I think all of us want to weigh in on such a nice open-ended question. My characterization would be along the following. One, 50-year record high supply, a good stable economy, competing product not affordable. I mean, the runway for the housing rental market looks very solid. You think about what our business is driven off of is job growth and supply, and then how we operate. On the things that we control, thematically, you could see that we have invested heavily and built tools around data to cash flow conversion. Mike's highlighted, Dave as well, is fundamentals around how we price the product and how we invest our capital.

Speaker #5: One, 50-year record high supply. A good, stable economy. Competing product not affordable. I mean, the runway for the housing rental market looks very solid.

Speaker #5: And you think about what our business is driven off of—job growth and supply. And then how we operate. And on the things that we control, thematically, you could see that we have invested heavily and built tools around data to cash flow conversion.

Speaker #5: And Mike's highlighted, Dave as well, is fundamentals around how we price the product and how we invest our capital. And I think just the refinement of those leads to excellence around operations, excellence around capital allocation, and that will garner a better cost of capital for us in the long run.

Tom Toomey: I think just the refinement of those leads to excellence around operation, excellence around capital allocation, that will garner a better cost of capital for us in the long run. We're excited about the overall, I would say simplicity of a strategy, but more importantly, the execution around it and the foundation that we've built. I think we're well set up. I really appreciate the question. Really want to dig into it more and got to get moving on to the next question.

Speaker #5: So we're excited about the overall, I would say, simplicity of the strategy, but more importantly, the execution around it and the foundation that we've built.

Speaker #5: So, I think we're well set up. I really appreciate the question and really want to dig into it more, but we've got to get moving on to the next question.

Speaker #4: Thank you very much. I really appreciate all the color.

Jamie Feldman: Thank you very much. Really appreciate all the color.

Speaker #1: Our next question is from Nick Ulyko with Scotiabank. Please proceed.

Operator 2: Our next question is from Nicholas Yulico with Scotiabank. Please proceed.

Operator: Our next question is from Nicholas Yulico with Scotiabank. Please proceed.

Speaker #4: Oh, thanks. Hi, everyone. So Dave, I just wanted to go back to your commentary on the DP book and the likely wind-down there, and the earnings impact.

Nicholas Yulico: Oh, thanks. Hi, everyone. Dave, I just wanted to go back to your commentary on the DPE book and the likely wind down there and the earnings impact. I think you said it is about a $0.01 dilution for each $100 million not redeployed into DPE. Is it right then to think about there is like a cumulative $0.04 annual impact to FFO that could hit at some point? I guess from a timing standpoint, you have two years left to maturity on those investments. How should we think about that timing impact? Is there any difference between taking back assets versus getting redeemed at par and redeploying into new investments that would change that math? Thanks.

Speaker #4: I think you said it's about a penny dilution for each $100 million not redeployed into DP. So, is it right then to think about this as a cumulative $0.04 annual impact to FFO that could hit at some point?

Speaker #4: And I guess from a timing standpoint, you have two years left to maturity on those investments. How should we think about that timing impact? And then also, is there any difference between taking back assets versus getting redeemed at par and redeploying into new investments that would change that math?

Speaker #2: Nick, thank you for the question. So to start, let's frame the journey that we've been on over the last year. The DPE book balance has shrunk from a peak of about $725 million in the first quarter of last year to about $380 million at the end of the second quarter this year.

Dave Bragg: Nick, thank you for the question. To start, let us frame the journey that we have been on over the last year. The DPE book balance has shrunk from a peak of about $725 million in Q1 of last year to about $380 million at the end of Q2 this year. That is for three reasons. The market has become increasingly competitive, and we have remained quite disciplined. Also, we have enjoyed successful paybacks. Third, we have been able to get a hold of some assets that we are really excited about. What we seek to do is really enhance our focus on investments where we will see upside. We have a focus on operational excellence and also a data-driven approach to investing that is underpinned by Orion. That allows us to find opportunities that do not just produce a yield today, but one that grows over time.

Speaker #2: And that's for three reasons. The market has become increasingly competitive, and we've remained quite disciplined. Also, we've enjoyed successful paybacks, and third, we've been able to get a hold of some assets that we're really excited about.

Speaker #2: So, what we seek to do is really enhance our focus on investments where we will see upside. We have a focus on operational excellence, and also a data-driven approach to investing that's underpinned by Orion.

Speaker #2: That allows us to find opportunities that don't just produce a yield today, but one that grows over time. By contrast, the returns on DPE are capped.

Dave Bragg: By contrast, the returns on DPE are capped. We are excited to narrow that capital allocation focus and play for a higher quality and ultimately a better growing stream of earnings over time. To make that transition, it does require us to get from here to there and to put some parameters around it for you. First, I would touch on 2026 because we are not in a position to provide guidance on future years, but I can frame the size of it. 2026, we are going from an average balance of about $550 million, that was last year, to an average balance in the $300 to $350 million range this year. That couple hundred million dollar difference at that spread that I mentioned of three to 400 basis points, depending on what we are redeploying into, such as buybacks, has been a big focus this year, or potentially redevelopment.

Speaker #2: So we're excited to narrow that capital allocation focus and pursue a higher quality and, ultimately, better-growing stream of earnings over time. To make that transition, it does require us to get from here to there.

Speaker #2: And to put some parameters around it for you, first I would touch on 2026. Because we're not in a position to provide guidance on future years, but I can frame the size of it.

Speaker #2: 2026, we're going from an average balance of about 550 million dollars to an average that was last year, to an average balance in the 300 to 350 million dollar range this year.

Speaker #2: So, that couple hundred million dollar difference at that spread that I mentioned of 300 to 400 basis points, depending on what we're redeploying into—such as buybacks, which has been a big focus this year, or potentially redevelopment.

Speaker #2: That would result in about a penny per 100 million. So we've contemplated that already in our guidance for 2026. The path from $380 million at the end of the second quarter to the range of $250 to $300 million.

Dave Bragg: That would result in about $0.01 per $100 million. We've contemplated that already in our guidance for 2026 to pass from $380 million at the end of Q2 to the range of $250 to 300 million. That's in guidance. As we go forward, we think about the book having maturities that are staggered pretty equally over the course of 2027 through 2031. The size of the book for 2026 is about $0.10 per share. You could think about over the next several years, 2027 through 2031, the maturities occurring over that time to take us down. That's a near term impact because you're redeploying into assets that didn't have growth. That earnings impact mitigates over time as we grow into our new investments.

Speaker #2: That's in guidance. Then, as we go forward, we think about the book having maturities that are staggered pretty equally over the course of 2027 through 2031.

Speaker #2: And so, the size of the book for 2026 is about $0.10 per share. You could think about, over the next several years—'27 through '31—the maturities occurring over that time to take us down.

Speaker #2: But that's a near-term impact, because you're redeploying into assets that didn't have growth. So that earnings impact mitigates investments.

Speaker #1: Our next question is from Austin Worstman with KeyBank Capital Markets. Please proceed.

Operator 2: Our next question is from Austin Wurschmidt with KeyBanc Capital Markets. Please proceed.

Operator: Our next question is from Austin Wurschmidt with KeyBanc Capital Markets. Please proceed.

Speaker #4: Thanks. Good morning, everybody. Mike, I wanted to go back and touch on the Sunbelt trends a bit, including your comments about the momentum in Austin and Dallas—Dallas being one of the strongest markets across the region.

Rachel Smith: Thanks. Good morning, everybody. Mike, wanted to go back and touch on the Sun Belt trends a bit, including your comments about the momentum in Austin and Dallas being one of the strongest markets across the region. You really saw minimal new lease rate growth within those regions, even deceleration in the Southwest. I was just hoping you could expand on the underlying kind of market trends and whether you think that the lower turnover is actually elongating the pressure on new lease rate growth across the Sun Belt.

Austin Wurschmidt: Thanks. Good morning, everybody. Mike, wanted to go back and touch on the Sun Belt trends a bit, including your comments about the momentum in Austin and Dallas being one of the strongest markets across the region. You really saw minimal new lease rate growth within those regions, even deceleration in the Southwest. I was just hoping you could expand on the underlying kind of market trends and whether you think that the lower turnover is actually elongating the pressure on new lease rate growth across the Sun Belt.

Speaker #4: But you really saw minimal new lease rate growth within those regions, even deceleration in the Southwest. I was just hoping you could expand on the underlying kind of market trends, and whether you think that the lower turnovers are actually elongating the pressure on new lease rate growth across the Sunbelt.

Speaker #2: Yeah, great question, Austin. I think, specific to some of the markets within the region, I can give you a little bit of color. Maybe starting with Dallas, because on an absolute basis, when you look at blends and occupancy, it's still our best performing down there.

Dave Bragg: Yeah, great question, Austin. I think specific to some of the markets within the region, I can give you a little bit of color, maybe starting with Dallas, because on an absolute basis, when you look at blends and occupancy, it's still our best performing down there. Given that it's 9% of our NOI, it's an important market for us. Today, what I'm seeing is about 97% occupancy there. Blend's still in that ±1% range. Still feeling some of the pressure of supply there. I would tell you there's some notable things that are driving some of the demand that I think are important to note. A couple of them. Public Storage moved their headquarters to Frisco. We have a couple thousand units in and around that area, and they can support up to 1,000 employees.

Mike Lacy: Yeah, great question, Austin. I think specific to some of the markets within the region, I can give you a little bit of color, maybe starting with Dallas, because on an absolute basis, when you look at blends and occupancy, it's still our best performing down there. Given that it's 9% of our NOI, it's an important market for us. Today, what I'm seeing is about 97% occupancy there. Blend's still in that ±1% range. Still feeling some of the pressure of supply there. I would tell you there's some notable things that are driving some of the demand that I think are important to note. A couple of them. Public Storage moved their headquarters to Frisco. We have a couple thousand units in and around that area, and they can support up to 1,000 employees.

Speaker #2: And given that it's 9% of our NOI, it's an important market for us. Today, what I'm seeing is about 97% occupancy there. Blends are still in that plus or minus negative 1% range.

Speaker #2: So, still feeling some of the pressure of supply there. But I would tell you there's some notable things that are driving some of the demand that I think are important to note.

Speaker #2: A couple of them, Public Storage moved their headquarters to Frisco. We have a couple thousand units in and around that area, and they can support up to 1,000 employees.

Speaker #2: So we're seeing a little bit of a benefit there. We see Samsung moving their headquarters to Plano. That's supporting about 1,000 employees, so that's beneficial to us.

Dave Bragg: We're seeing a little bit of a benefit there. We see Samsung moving their headquarters to Plano. That's supporting about 1,000 employees, that's beneficial to us. AT&T's headquarters will be located close to about 2,000 homes as well. There's some strong dynamics coming out of the demand side in Dallas that we are looking forward to taking advantage of.

Mike Lacy: We're seeing a little bit of a benefit there. We see Samsung moving their headquarters to Plano. That's supporting about 1,000 employees, that's beneficial to us. AT&T's headquarters will be located close to about 2,000 homes as well. There's some strong dynamics coming out of the demand side in Dallas that we are looking forward to taking advantage of.

Speaker #2: And then also, AT&T's headquarters will be located close to about 2,000 homes as well. So there's some strong dynamics coming out of the demand side in Dallas that we are looking forward to taking advantage of.

Speaker #2: Moving down to Florida—Florida is about 10% of our NOI, split between Orlando and Tampa. What I would tell you is that we're experiencing some momentum in both areas.

Mike Lacy: Moving down to Florida. Florida is about 10% of our NOI split between Orlando and Tampa. What I would tell you there is experiencing some momentum in both areas, running around 97% occupancy today compared to 96% during Q1. I'm seeing blends here around -1.5%, which is a bit of a change from what we experienced during the last quarter where we were between call it -2.5% to -3%. Strong momentum there. Maybe one other one, Nashville. Only 2.5% of our NOI, it's a relatively small market for us. Occupancy is in that 95.5% range, which it's mainly due to a building that's down. We have some down units there. It's causing a little friction on our occupancy. Blends are still in the -2% to -3% range.

Speaker #2: We're running around 97% occupancy today compared to 96% during the first quarter. I'm seeing blends here around negative 1.5%, which is a bit of a change from what we experienced last quarter, where we were between, call it, negative 2.5% to negative 3%.

Speaker #2: So, strong momentum there. Maybe one other one—Nashville. Only 2.5% of our NOI, so it's a relatively small market for us. Occupancy is in that 95.5% range.

Speaker #2: Which is mainly due to buildings that are down. So we have some down units there. It's causing a little friction on our occupancy. Blends are still in the negative 2% to negative 3% range.

Speaker #2: So, we are still seeing some pressure from supply in different parts of Nashville. But what's promising is that some of the major employers continue to expand their presence in Nashville.

Mike Lacy: We are still seeing some pressure from supply in different parts of Nashville. What's promising is some of the major employers continue to expand their presence in Nashville, and specifically the key anchors such as Amazon's towers down in the Nashville yards. We've got Oracle's $1.2 billion campus, the revitalization surrounding the new Nissan stadium is really driving some demand too. Again, if we can get through some of the supply pressures in these markets, which we're starting to see, we do think that there will be some uptick in some of our market rents as well as renewal growth as we go forward.

Speaker #2: And specifically, the key anchors such as Amazon's towers down in the Nashville Yards, we've got Oracle's $1.2 billion campus, and the revitalization surrounding the new Nissan Stadium is really driving some demand too.

Speaker #2: So again, if we can get through some of the supply pressures in these markets, which we're starting to see, we do think that there will be some uptick in some of our market rents as well as renewal growth as we go forward.

Speaker #4: Mike, did you want to tie back to the earlier comment and question on DP and dilution about growth?

Tom Toomey: Mike, did you want to tie back to the earlier comment and question on DPE and dilution about growth?

Speaker #2: Yeah, absolutely.

Mike Lacy: Yeah, absolutely.

Speaker #4: Some color around what we mean by growth.

Tom Toomey: Give some color around what we mean by growth.

Speaker #2: Happy to. I think, I mean, first and foremost, whenever we can get our hands on these properties and start to manage them, we can definitely see a difference.

Mike Lacy: Happy to. First and foremost, whenever we can get our hands on these properties and start to manage them, we can definitely see a difference. Maybe to Tom Toomey's point, I can give a little bit of color on some examples. I think first and foremost, when you think about a place like San Francisco, everybody knows very strong growth there. What's been interesting to see for us, you have a place like Oakland, that's where we had one of these DPE deals that we took over. That's been our best performing asset in that market. When you think about San Francisco, we had 8% revenue growth. We had 14% growth at that deal in Oakland, a lot of that's being driven by the rents that we're achieving there, which we're seeing around 20% versus 13% across the rest of the MSA.

Speaker #2: And maybe to Thomas' point, I can give a little bit of color on some examples. I think, first and foremost, when you think about a place like San Francisco, everybody knows there's very strong growth there.

Speaker #2: But what's been interesting to see for us, you have a place like Oakland, and that's where we had one of these DP deals that we took over.

Speaker #2: That's been our best performing asset in that market. And so, when you think about San Francisco, we had 8% revenue growth. We had 14% growth at that deal in Oakland.

Speaker #2: And a lot of that's being driven by the rents that we're achieving there, which we're seeing around 20% versus 13% across the rest of the MSA.

Speaker #2: So, strong performance coming out of there. I think maybe another example is just Philadelphia. We've got a deal down in Center City, Philadelphia. We're seeing around 8% growth down in Center City today, compared to the market in general being around 4%.

Mike Lacy: Strong performance coming out of there. I think maybe another example is just Philadelphia. We've got a deal down in Center City, Philadelphia. We're seeing around 8% growth down in Center City today compared to the market in general being around 4%. That's just on the top line, some of the results that we're seeing coming out of this book, and there's significant savings as it relates to cost controls too. They're performing well today.

Speaker #2: So that's just on the top line—some of the results that we're seeing coming out of this book. And there's significant savings as it relates to cost controls, too.

Speaker #2: So they're performing well today.

Speaker #1: Our next question is from Michael Goldsmith with UBS. Please proceed.

Operator 2: Our next question is from Michael Goldsmith with UBS. Please proceed.

Operator: Our next question is from Michael Goldsmith with UBS. Please proceed.

Speaker #5: Good afternoon. Thanks a lot for taking my question. I'm here with Amy Proband. It definitely looks like it's been much more like a normalized, peak leasing season this year.

Michael Goldsmith: Good afternoon. Thanks a lot for taking my question. I'm here with Ami Probandt. It definitely looks like it's been much more like a normalized peak leasing season this year. What do you think has changed from the perspective of demand that is driving that? Thanks.

Speaker #5: So, what do you think has changed from the perspective of demand that is driving that? Thanks.

Speaker #2: I think there are a few things. Maybe I can highlight some of the stats—things that we watch as leading indicators. But one of the big things I'd say is just some of the migration patterns.

Mike Lacy: I think there's a few things. Maybe I can highlight some of the stats, things that we watch as leading indicators. One of the big things I'd say is just some of the migration patterns. When you think about individuals that are leaving the MSA, what we're seeing today is it's around 19%, which is down from 23% last year. Not necessarily as many people leaving the MSA, and as it relates to people coming into our portfolio, it's rather similar. Right around 26% of our move-ins today, it was 27% last year. That's been pretty consistent. I think some of the other things that jump off the page to me is no doubling up. We're still not seeing people double up. It's still around 1.8 residents per home. We still have low rent-to-income ratios across our portfolio, still in that 21% range.

Speaker #2: When you think about individuals that are leaving the MSA, what we're seeing today is it's around 19%, which is down from 23% last year.

Speaker #2: So, not necessarily as many people leaving the MSA. And as it relates to people coming into our portfolio, it's rather similar—so, right around 26% of our move-ins today.

Speaker #2: It was 27% last year, so that's been pretty consistent. I think some of the other things that jump off the page to me is no doubling up.

Speaker #2: So we're still not seeing people double up. It's still around 1.8 residents per home. We still have low rent-to-income ratios across our portfolio.

Speaker #2: Still in that 21% range, so that's been beneficial. And I think, in addition to that, we have lower cancels and denials today than we did a year prior.

Mike Lacy: That's been beneficial. I think in addition to that, we have lower cancels and denials today than we did a year prior. We're hovering back in that 35% to 37% range. Previously, that was just above 40%. A little bit more stickier. People are taking those applications and they're moving in. It feels like it's just been a little bit stronger than we would have expected. I think I highlighted it's definitely more pronounced in some of those coastal markets today than maybe the Sun Belt, but it's nice to see some momentum as we go into July here in some of those markets as well.

Speaker #2: So we're hovering back in that 35% to 37% range. Previously, that was just above 40%, and so a little bit more stickier. People are taking those applications and they're moving in.

Speaker #2: And so it feels like it's just been a little bit stronger than we would have expected. I think I highlighted it's definitely more pronounced in some of those coastal markets today than maybe the Sun Belt.

Speaker #2: But it's nice to see some momentum as we go into July here on some of those markets as well.

Speaker #4: Michael, Amy, I appreciate the question. This is Toomey. With respect to the biggest difference, I think it's supply and the way it's getting priced.

Tom Toomey: Michael Goldsmith, Ami Probandt, I appreciate the question. This is Tom Toomey. With respect to the biggest difference, I think it is supply and the way it is getting priced. We are looking at it and seeing what people are sending out for renewals, how much is coming online. The abatement of supply has helped us a lot to lengthen the leasing season, the backdrop of that is a solid employment picture across a lot of our markets supporting it. With that dynamic, you can see how it sets up for a better 2027. We won't be facing that element of supply that we've had to deal with in the past. With some luck, a robust job market continues.

Tom Toomey: Michael, Ami, I appreciate the question. This is Tom Toomey. With respect to the biggest difference, I think it is supply and the way it is getting priced. We are looking at it and seeing what people are sending out for renewals, how much is coming online. The abatement of supply has helped us a lot to lengthen the leasing season, the backdrop of that is a solid employment picture across a lot of our markets supporting it. With that dynamic, you can see how it sets up for a better 2027. We won't be facing that element of supply that we've had to deal with in the past. With some luck, a robust job market continues.

Speaker #4: And we're looking at it and seeing what people are sending out for renewals, how much is coming online. The abatement of supply has helped us a lot to lengthen the leasing season.

Speaker #4: And the backdrop of that is a solid employment picture across a lot of our markets, supporting it. So, with that dynamic, you can see how it sets up for a better 2027.

Speaker #4: We won't be facing that element of supply that we've had to deal with in the past. And, with some luck, a robust job market continues.

Speaker #5: Thank you very much. Good luck in the back half.

Michael Goldsmith: Thank you very much. Good luck in the H2.

Speaker #1: Our next question is from Julian Bullen with Goldman Sachs. Please proceed.

Operator 2: Our next question is from Julien Blouin with Goldman Sachs. Please proceed.

Operator: Our next question is from Julien Blouin with Goldman Sachs. Please proceed.

Speaker #6: Yeah, thank you for taking my question. Mike, I just want to double-click on some of those comments around new lease. I think I heard you mention that you think new lease could be flat through September.

Julien Blouin: Thank you for taking my question. Mike Lacy, I just want to double-click on some of those comments around new lease. I think I heard you mention that you think new lease could be flat through September. I think that would imply about a 60 basis points acceleration versus the Q2. I was just looking over the last few years, it seems like we saw over 200 basis points of sequential deceleration in new lease into Q3 in those years. I just guess, how much visibility and confidence do you have at this point on new lease sort of bucking that trend this year? What sort of feels different?

Speaker #6: I think that would imply about a 60 bps acceleration versus the second quarter. And I was just looking over the last few years; it seems like we saw over 200 basis points of sequential deceleration in new lease into Q3 in those years.

Speaker #6: So I guess, how much visibility and confidence do you have at this point on new lease sort of bucking that trend this year?

Speaker #6: What sort of feels different?

Speaker #2: The thing that I typically point to, and one of the leading indicators that I find to be most beneficial, is our 30-day trend. And today, when we're running closer to 96%, it does give us confidence that we can continue to try to test the waters as it relates to market rents.

Mike Lacy: The thing that I typically point to, and one of the leading indicators that I find to be most beneficial, is our 30-day trend. Today when we're running closer to 96%, it does give us confidence that we can continue to try to test the waters as it relates to market rents. I'm looking 30 days out. I've got a pretty good idea of where July and August are going to shake out. That gives me confidence that we're going to continue to see a similar trend today. I think we still do have some of the dynamics of market rents coming off pretty significantly in some areas last year, especially through the back H2. There may be some opportunity to anniversary off of that, but we're just not banking on it yet.

Speaker #2: And so I'm looking 30 days out. I've got a pretty good idea of where July and August are going to shake out, so that gives me confidence that we're going to continue to see a similar trend today.

Speaker #2: I think we still do have some of the dynamics of market rents coming off pretty significantly in some areas last year, especially through the back half of the year.

Speaker #2: And so there may be some opportunity to anniversary off of that, but we're just not banking on it yet. I'm mainly going off of what's happening today—what's that sequential line item look like in terms of market rents.

Mike Lacy: I'm mainly going off of what's happening today, what's that sequential line item look like in terms of market rents, and again, where's our occupancy and where do we have the opportunity to push. Right now it feels good. It feels like that ±0% on new lease is achievable. If we can get that to that 4% to 4.5% achieved renewals, you're still in that top end of our 1.5% to 2% range that we're looking at for the back H2. Again, if we can beat that, we're going to take advantage of it. I do think a lot of that will accrue to 2027 versus 2026, but we are looking to try to optimize as much as possible and drive as much cash flow as we can.

Speaker #2: And again, where's our occupancy, and where do we have the opportunity to push? And so right now, it feels good. It feels like that plus or minus 0% on new leases is achievable.

Speaker #2: And then if we can get that to that 4 to 4 and a half percent achieved renewals, you're still in that top end of our 1 and a half to 2% range that we're looking at for the back half of the year.

Speaker #2: Again, if we can beat that, we're going to take advantage of it. I do think a lot of that will accrue to 2027 versus 2026.

Speaker #2: But we are looking to try to optimize as much as possible and drive as much cash flow as we can.

Speaker #6: Great. Thank you. That's really helpful.

Julien Blouin: Great. Thank you. That's really helpful.

Speaker #1: Our next question is from Anthony Peloni with J.P. Morgan. Hold on. Please proceed.

Operator 2: Our next question is from Anthony Paolone with J.P. Morgan. Hold on. Please proceed.

Operator: Our next question is from Anthony Paolone with J.P. Morgan. Hold on. Please proceed.

Speaker #7: Hey, guys. Thanks for taking the question. You have no home run for Tony today. Maybe switching gears a little bit, could you guys speak to the new JV with Carmel?

[Analyst] (J.P. Morgan): Hey, guys. Thanks for taking the question. You have Nahum on for Tony today. Maybe switching gears a little bit, could you guys speak to the new JV with Carmel? It sounds like it came about in a unique way from MetLife selling their stake in Columbus Square. Is there any room or appetite for you or your partner to maybe expand this venture or if there's any more room to expand maybe some of your other ventures with LaSalle, maybe as you guys wind down the DPE book? Thank you.

[Analyst] (JPMorgan): Hey, guys. Thanks for taking the question. You have Nahum on for Tony today. Maybe switching gears a little bit, could you guys speak to the new JV with Carmel? It sounds like it came about in a unique way from MetLife selling their stake in Columbus Square. Is there any room or appetite for you or your partner to maybe expand this venture or if there's any more room to expand maybe some of your other ventures with LaSalle, maybe as you guys wind down the DPE book? Thank you.

Speaker #7: It sounds like it came about in a unique way from MetLife selling their stake in Columbus Square. But is there any rumored appetite for you or your partner to maybe expand this venture, or if there’s any more room to expand, maybe some of your other ventures with LaSalle?

Speaker #7: Maybe as you guys wind down the DPE book. Thank you.

Speaker #4: Yeah. I appreciate the question. This is Toomey. With regards to Carmel, exceptional, if not best-in-class, type A developer who has an exhaustive and experienced track record around New York in particular.

Tom Toomey: Yeah, appreciate the question. This is Toomey. With regards to Carmel, exceptional, if not best in class, type A developer who has an exhaustive and experienced track record around New York in particular. What drew us to them as a partner is as we look at the Upper West Side and our data from our resident profile and the supply picture, there's going to be a gap in a higher price point product. They have experience in both installing that and attracting the residents that fit that profile. We see the IRRs on this substantially improving with their help and their experience. Like any other company, you think you're good, know what you're good at, and when you think you can add other talent to the mix, certainly look at it.

Speaker #4: And what drew us to them as a partner is, as we look at the Upper West Side and our data from our resident profile and the supply picture, there's going to be a gap in a higher price-point product.

Speaker #4: They have experience in both installing that and attracting the residents that fit that profile, so we see the IRRs on this substantially improving with their help and their experience.

Speaker #4: And like any other company, you think you're good. Know what you're good at. And when you think you can add other talent to the mix, certainly look at it.

Speaker #4: And I think the Carmel represents a great partner for us on this deal, and we're excited to see both our investments rewarded for that.

Tom Toomey: I think Carmel represents a great partner for us on this deal, and we're excited to see both our investments rewarded for that. As it relates to any expansion beyond that, yeah, certainly there's always a dialogue around us trying to optimize the value out of every asset and how does it fit. I think with our data, we're digging through a lot of those opportunities and see similar type circumstances with assets where we can partner with capital, who can enhance the returns beyond our current scope. We'll see how that plays out over time. We're excited about Columbus Square and our joint venture with them, and we'll weigh in the future how that might expand on an opportunistic type one-off basis.

Speaker #4: As it relates to any expansion beyond that, yes, certainly there's always a dialogue around us trying to optimize the value out of every asset.

Speaker #4: And how does it fit? I think with our data, we're digging through a lot of those opportunities and see similar-type circumstances with assets where we can partner with capital who can enhance the returns beyond our current scope.

Speaker #4: And we'll see how that plays out over time. But we're excited about Columbus Square and our joint venture with them. We'll weigh in the future how that might expand on an opportunistic, one-off basis.

Speaker #1: Our next question is from Brad Heffern with RBC Capital Markets. Please proceed.

Operator 2: Our next question is from Brad Heffern with RBC Capital Markets. Please proceed.

Operator: Our next question is from Brad Heffern with RBC Capital Markets. Please proceed.

Speaker #8: Yeah. Hey, everybody. Thanks for the question. Dave, you talked in your prepared remarks about taking advantage of the public arbitrage during the quarter, but then shifting to development and acquisitions.

Brad Heffern: Yeah. Hey, everybody. Thanks for the question. Dave, you talked in your prepared remarks about taking advantage of the public-private arbitrage during the quarter, but then shifting to development and acquisitions as that discount narrowed. Can you just talk about the relative attractiveness of the repurchase versus other capital uses as we sit here today at the current share price?

Speaker #8: Has that discount narrowed? Can you talk about the relative attractiveness of the repurchase versus other capital uses as we sit here today at the current share price?

Speaker #2: Sure, Brad. Thanks for the question. So, as you noted, buybacks have been the top priority—$300 million repurchased year to date, on top of about $120 million in the final four months of last year.

Dave Bragg: Sure, Brad. Thanks for the question. As you noted, buybacks have been a top priority. USD 300 million repurchase year to date on top of about $120 million in the final four months of last year. This is the most in UDR's history around an episode of dislocation between public and private market values. As it relates to future buybacks, we have not and will not provide guidance on buybacks. We'll just point to that track record, including the average purchase price, around what we measure to be a 20% discount to NAV. It remains prominent in the capital allocation playbook. At the same time, we remain mindful, given the dispositions that we've executed on tax gain capacity, as well as some other opportunities that pop up at times.

Speaker #2: This is the most in UDR's history, around an episode of dislocation between public and private market values. As it relates to future buybacks, we have not, and will not, provide guidance on buybacks.

Speaker #2: But we'll just point to that track record, including the average purchase price around what we measure to be a 20% discount to NAV. So, it remains prominent in the capital allocation playbook.

Speaker #2: At the same time, we remain mindful, given the dispositions that we've executed on tax gain capacity, as well as some other opportunities that pop up at times.

Speaker #8: Okay. Thank you.

Operator 1: Okay. Thank you.

Brad Heffern: Okay. Thank you.

Speaker #1: Our next question is from Jana Galan with Bank of America. Please proceed.

Operator 2: Our next question is from Jana Galan with Bank of America. Please proceed.

Operator: Our next question is from Jana Galan with Bank of America. Please proceed.

Speaker #9: Thank you, and congrats on a great quarter. Mike, I really appreciate the detail on your major markets. Can you comment on Greater D.C., and how your communities are performing following the DOGE disruptions last year?

Jana Galan: Thank you. Congrats on a great quarter. Mike, really appreciate the detail on your major markets. Can you comment on Greater DC, how your communities are performing following the DOGE disruptions last year, then the decision to expand exposure there with the development in Northern Virginia?

Speaker #9: And then the decision to expand exposure there with the development in Northern Virginia?

Speaker #2: Yeah, of course. I think first, just to size it a little bit, D.C. is about 16% of our NOI. We are diversified across Virginia, Maryland, and D.C.

Mike Lacy: Yeah, of course. I think first, just to size it a little bit, DC is about 16% of our NOI. We are diversified across Virginia, Maryland, and DC. To your point, we have seen demand a little bit weaker in that MSA, with occupancy dropping right around 95% to slightly below that in the MSA in general due to federal employment across the market. On a positive note, our markets are performing relatively well. What we're seeing today is the DC proper 14th Street corridor outperforming our suburban assets today. A lot of that has to do with the health, biotech, and even the defense national security remaining at the region's list. That's something that's driving some of that demand for us.

Speaker #2: And to your point, we have seen demand a little bit weaker in that MSA, with occupancy dropping to around 95%, or slightly below that, in the MSA in general, due to federal employment across the market.

Speaker #2: But on a positive note, our markets are performing relatively well. And what we're seeing today is the D.C. proper 14th Street corridor outperforming our suburban assets today.

Speaker #2: A lot of that has to do with health, biotech, and even the defense and national security sectors remaining at the top of the region's list. That's something that's driving some of that demand for us.

Speaker #2: So while it's been a little bit weaker for us, a little bit below the median, if you will, DC is performing for us. We're still around 96 and a half to 97% for our portfolio.

Mike Lacy: While it's been a little bit weaker for us, a little bit below the median, if you will, DC is performing for us. We're still around 96.5% to 97% for our portfolio against the market average, blends are right around that, call it -1%, -2% today in general.

Speaker #2: Against the market average. And blends are right around that—call it negative 1%, negative 2% today, in general.

Speaker #9: Thank you.

Jana Galan: Thank you.

Speaker #1: Our next question is from Rich Hightower with Barclays. Please proceed.

Operator 2: Our next question is from Rich Hightower with Barclays. Please proceed.

Operator: Our next question is from Rich Hightower with Barclays. Please proceed.

Speaker #10: Hey, good afternoon, guys. Just to continue the line of questioning, let's keep going around the horn. Maybe some anecdotal comments, if you don't mind, on strength in the New York market and also in the Bay Area.

Rich Hightower: Hey, good afternoon, guys. Just to continue the line of questioning, let's just keep going around the horn. Maybe some anecdotal comments, if you don't mind, on strength in the New York market, and also in the Bay Area. Just what are you seeing on the ground and anything about your expectations in either place?

Speaker #10: Just what are you seeing, kind of, on the ground? And anything about your expectations in either place?

Speaker #2: Yeah, of course. Happy to give some color there. I think, first, with New York—again, 6% of our NOI—what we're hearing and seeing today is Manhattan's producing the highest growth.

Mike Lacy: Yeah, of course. Happy to give some color there. I think first with New York, again, 6% of our NOI. What we're hearing and seeing today is Manhattan's producing the highest growth. I think specific to tech remaining one of the city's strongest growth engines, that's driving a lot of it. We're also seeing wage growth in Manhattan, hovering in that 5% to 6% range. That's allowing us to lean into some of the renewals and really attract some of that demand. Again, Manhattan's the strongest. The other thing I'd point to is office leasing. Volume hit 9.5 million square feet in Q2 2026, and that's the strongest quarterly total since 2019. New York's been probably our second-best performing market year to date.

Speaker #2: I think, specific to tech remaining one of the city's strongest growth engines, that's driving a lot of it. We're also seeing wage growth in Manhattan hovering in that 5 to 6 percent range.

Speaker #2: So that's allowing us to lean into some of the renewals and really attract some of that demand. But again, Manhattan's the strongest. The other thing I'd point to is office leasing.

Speaker #2: Volume hit 9.5 million square feet in Q1 '26, and that's the strongest quarterly total since 2019. So, New York's been probably our second-best performing market year to date.

Speaker #2: Jumping over to the West Coast, what I would tell you is—and it's not going to surprise you—San Francisco is definitely our strongest market in the portfolio.

Mike Lacy: Jumping over to the West Coast, what I would tell you is, it's not going to surprise you, San Francisco is definitely our strongest market in the portfolio. I think that's being led because there's very little supply to speak of across the region. The return to office is definitely helping us out. We're seeing a revitalized shopping/dining experience, we're also seeing low rent-to-income ratio. Even with rents moving as fast as they are, we have the ability to capture that today because those rents were so depressed from that COVID era. Seeing some strength there. Maybe some of the things that I'm hearing and I'd point to is office leasing is on pace to reach a 30-year high with nearly 6.4 million square feet leased year to date. Tourism is also strengthening the market, with 2026 visitor spending expected to exceed that pre-pandemic level.

Speaker #2: I think that's being led because there's very little supply to speak of across the region. The return to office is definitely helping us out.

Speaker #2: We're seeing a revitalized shopping and dining experience, and we're also seeing low rent-to-income ratios. So even with rents moving as fast as they are, we have the ability to capture that today because those rents were so depressed from that COVID era.

Speaker #2: So, seeing some strength there, maybe some things that I'm hearing and I'd point to is office leasing is on pace to reach a 30-year high, with nearly 6.4 million square feet leased year to date.

Speaker #2: And tourism is also strengthening the market, with 2026 visitor spending expected to exceed that pre-pandemic level. So again, it points to the strength of just people returning back to that area.

Mike Lacy: Again, it points to the strength of just people returning back to that area. I think there's more room to go here. I think I mentioned it in a previous remark, we're seeing blends of approximately 13%, so very strong growth out of the West Coast as well.

Speaker #2: I think there's more room to go here. I think I mentioned it in a previous remark. We're seeing blends of approximately 13%, so very strong growth out of the West Coast as well.

Speaker #10: That's great. Thank you.

Rich Hightower: That's great. Thank you.

Speaker #1: Our next question is from Adam Kramer with Morgan Stanley. Please proceed.

Operator 2: Our next question is from Adam Kramer with Morgan Stanley. Please proceed.

Operator: Our next question is from Adam Kramer with Morgan Stanley. Please proceed.

Speaker #11: Hey, great. Thanks for the time. I just wanted to ask—and I recognize it’s been touched on a few different times—maybe just ask you a little bit differently.

Adam Kramer: Great. Thanks for the time. Just wanted to ask, and I recognize it's been touched on a few different times, maybe just ask you a little bit differently, just on new lease trends, I guess, in the Southeast and Southwest regions specifically. Certainly recognize the supply impacts there and other pressures, but just looking at sort of the sequential move, I think Southeast was roughly flat sequentially. Southwest, I think decelerated a bit sequentially from Q1. Just wondering on sort of the new lease trend there, and then maybe just high level what expectations are for those two regions in the H2.

Speaker #11: Just on new lease trends—in the Southeast and Southwest regions specifically—I certainly recognize the supply impact there and other pressures. But just looking at the sequential move, I think the Southeast is roughly flat sequentially.

Speaker #11: Southwest, I think, decelerated a bit sequentially from Q1. So just wondering about the new lease trend there and then maybe, just high level, what expectations are for those two regions in the second half.

Speaker #2: Yeah, what I would tell you when you look at July today—and again, we're still working through July; there's not much left—but when I look at month-to-date trends, and I mentioned the Sunbelt's starting to show some of that momentum, a lot of that is being driven by new lease growth.

Mike Lacy: Yeah, what I would tell you, when you look at July today, and again, we're still working through July, there's not much left, but when I look at month to date trends, I mentioned the Sun Belt's starting to show some of that momentum, a lot of that is being driven by new lease growth. We have started pushing market rents a little bit. Just to size it, when I think about the Sun Belt new lease growth in Q2, we were approximately -7% to -7.5%. Right now, we're probably closer to, call it, -5.5% to -6%. That's where you're seeing some of that push. It's too early to tell, but we want to see if we can't sustain that through the back half of this leasing season. Today it feels pretty good.

Speaker #2: And so we have started pushing market rents a little bit. And just to size it, when I think about the Sunbelt new lease growth in the second quarter, we were approximately negative 7% to negative 7.5%.

Speaker #2: Right now, we're probably closer to, call it, negative 5.5 to negative 6. So that's where you're seeing some of that push.

Speaker #2: It's too early to tell, but we want to see if we can't sustain that through the back half of this leasing season. But today feels pretty good.

Speaker #1: Our next question is from Peter Abramowitz with Deutsche Bank. Please proceed.

Operator 2: Our next question is from Peter Abramowitz with Deutsche Bank. Please proceed.

Operator: Our next question is from Peter Abramowitz with Deutsche Bank. Please proceed.

Speaker #11: Yeah, thank you for taking the question. Just to go back to Mike's comments, I think you said some of the trends, in terms of slowing out-migration from some of your markets, have been an uplift to demand.

Peter Abramowitz: Yeah, thank you for taking the question. Just to go back to Mike's comments, I think you said, some of the trends in terms of slowing outmigration from some of your markets have been an uplift to demand. Wondering if you could just expand on that a little bit and talk about some of the markets, where people leaving those markets has kind of slowed down the most and where you've seen the most benefit.

Speaker #11: Wondering if you could just expand on that a little bit and talk about some of the markets where people leaving those markets has kind of slowed down the most, and where you've seen the most benefit.

Speaker #2: Yeah, great question. I'd say probably three that jump out the most when I think about that stat. Boston's down around 8 to 10%.

Mike Lacy: Yeah, great question. I'd say probably three that jump out the most when I think about that stat. Boston's down around 8% to 10%, so we're closer to around 20% of those people moving out. Austin's also down around 8% to 10%, so that's, I want to say, between 15% and 20% today compared to last year. San Francisco is another stat that points to that market still doing relatively well. That's down 5% on a year-over-year basis to around 25% of our move-outs leaving the MSA, which again, is down on a year-over-year basis. Those are the three that jump out the most in terms of positive momentum.

Speaker #2: So we're closer to around 20% of those people moving out. Austin's also down around 8 to 10%. So that's, I want to say, between 15 and 20% today compared to last year.

Speaker #2: And then, San Francisco is another stat that points to that market still doing relatively well. That's down 5% on a year-over-year basis, to around 25% of our move-outs leaving the MSA, which, again, is down on a year-over-year basis.

Speaker #2: Those are the three that jump out the most in terms of positive momentum.

Speaker #11: Right. Appreciate it.

Peter Abramowitz: All right. Appreciate it.

Speaker #1: Our next question is from Wes Goloday with Baird. Please proceed.

Operator 2: Our next question is from Wes Golladay with Baird. Please proceed.

Operator: Our next question is from Wes Golladay with Baird. Please proceed.

Speaker #12: Hey, good afternoon, everyone. Can you comment on how the corporate housing program is doing?

Wes Golladay: Hey, good afternoon, everyone. Can you comment on how the corporate housing program is doing?

Speaker #2: Sure. Corporate housing is not necessarily a big piece of our business. We have right around 500 to 600 leases today.

Mike Lacy: Sure. Corporate housing is not necessarily a big piece of our business. We have right around probably 500 to 600 leases today. It's really spread out across many of our coastal markets. The way that we think about it and the way that we manage it is how much exposure do we have at any given time and throughout the year. We try to keep that to a small book of a business for us, because during the COVID era, we definitely were bit a little harder than we would have expected by having too much exposure here. Probably the biggest markets, San Francisco, New York, and maybe it's 1% to 2% of our homes that are corporate at this point. So relatively small book of business for us.

Speaker #2: And it's really spread out across many of our coastal markets. The way that we think about it and the way that we manage it is by considering how much exposure we have at any given time and throughout the year.

Speaker #2: And so we try to keep that to a small book of business for us because during the COVID era, we definitely were hit a little harder than we would have expected by having too much exposure here.

Speaker #2: And so probably the biggest markets are San Francisco and New York, and maybe it's 1 to 2 percent of our homes that are corporate at this point.

Speaker #2: So, it's a relatively small book of business for us.

Speaker #12: Okay. Thank you.

Wes Golladay: Okay. Thank you.

Speaker #1: Our next question is from John Kim with BMO Capital Markets. Please proceed.

Operator 2: Our next question is from John Kim with BMO Capital Markets. Please proceed.

Operator: Our next question is from John Kim with BMO Capital Markets. Please proceed.

Speaker #13: Thank you. San Francisco, you mentioned, stood out from a revenue and lease perspective, but I wanted to ask about expenses. They were up 12% on the same sort of basis.

John Kim: Thank you. San Francisco, you mentioned, stood out from a revenue and lease perspective, I wanted to ask about expenses. It was up 12% on the same store basis. Are you seeing cost pressures in this market specifically, or is there some unique dynamic as you lease up this portfolio that would cause these expenses to go up, and how much of this is recurring?

Speaker #13: Are you seeing cost pressures in this market specifically, or is there some unique dynamic as you leave up this portfolio that would cause these expenses to go up?

Speaker #13: And how much of this is recurring?

Speaker #2: Really great question, John. And I'll tell you that this one jumped out at us too. And there's more of a unique situation going on here.

Mike Lacy: Really great question, John, I'll tell you that this one jumped out at us too, There's more of a unique situation going here. When you look at San Francisco and you see that plus 12% growth there, that's mainly due to a property that went mature during the quarter. That's that Oakland deal that I mentioned earlier. We had a prior year appeal that was successful that's causing a higher growth rate this year. Aside from that, we're not seeing necessarily elevated expenses in that market. It's more specific to what happened with this given property and the success that we had on taxes.

Speaker #2: So when you look at San Francisco, and you see that plus 12% growth there, that's mainly due to a property that went mature during the quarter.

Speaker #2: And that's that Oakland deal that I mentioned earlier. We had a prior-year appeal that was successful, and that's causing a higher growth rate this year.

Speaker #2: Aside from that, we're not seeing necessarily elevated expenses in that market. It's more specific to what happened with this given property and the success that we had on taxes.

Speaker #13: Great. Thank you.

John Kim: Great. Thank you.

Speaker #1: Our next question is from Alexandra Goldfarb with Piper Sandler. Please proceed.

Operator 2: Our next question is from Alexander Goldfarb with Piper Sandler. Please proceed.

Operator: Our next question is from Alexander Goldfarb with Piper Sandler. Please proceed.

Speaker #11: Hey, good morning out there. I have a question on the debt and preferred equity program. I understand that you're winding it down, but I guess two parts to that.

Alexander Goldfarb: Hey, good morning out there. A question on the debt for equity program. Understand that you're winding it down, I guess two parts to that. One, saw that you are making a $50 million mezz investment with Carmel, sort of perspective on that. Second is, isn't it a way, sort of if you think about funding development, if you fund a third party developer who takes sort of all the development risk, and then you come in at the end, you earn a coupon along the way, and then you get the project at the end. Isn't there some element of attraction on that?

Speaker #11: One, saw that you are making a $50 million MES investment with Carmel, so sort of your perspective on that. And second, isn't it a way—sort of, if you think about funding development—if you fund a third-party developer who takes all the development risk and then you come in at the end?

Speaker #11: So you earn a coupon along the way, and then you get the project at the end. Isn't there some element of attraction in that?

Speaker #2: Hey Alex, this is Dave. I'll start on the first part. So as it relates to the Carmel deal, we have long operated it and will continue to do so.

Mike Lacy: Hey, Alex, this is Dave. I'll start on the first part. As it relates to the Carmel deal, we have long operated it and will continue to do so. As part of the transaction that was discussed earlier, there was an opportunity to provide the $50 million mezzanine loan. The important part here is that this was a very extensive process. This transaction was in the marketplace for much of last year and into this year. Our commitment on that was made a while ago, whereas the DPE runoff decision was made recently, hence why we're communicating that to you now. Do you want to take the second part?

Dave Bragg: Hey, Alex, this is Dave. I'll start on the first part. As it relates to the Carmel deal, we have long operated it and will continue to do so. As part of the transaction that was discussed earlier, there was an opportunity to provide the $50 million mezzanine loan. The important part here is that this was a very extensive process. This transaction was in the marketplace for much of last year and into this year. Our commitment on that was made a while ago, whereas the DPE runoff decision was made recently, hence why we're communicating that to you now. Do you want to take the second part?

Speaker #2: As part of the transaction that was discussed earlier, there was an opportunity to provide the $50 million as a mezzanine loan. The important part here is that this was a very extensive process.

Speaker #2: This transaction was in the marketplace for much of last year and into this year, so our commitment on that was made a while ago.

Speaker #2: Whereas the DPE runoff decision was made recently, which is why we're communicating that to you now, as you want to take the second part.

Speaker #11: Yeah, Alex, to me, with respect to the program, what I'd characterize is, over 13 years, the program functioned very highly at the beginning because there was not a lot of competition.

Tom Toomey: Yeah. Alex, Toomey. With respect to the program, what I'd characterize is 13 years. The program functioned very highly at the beginning because there was not a lot of competition. What we've seen over the last couple of years is the competitive set of capital and willing to take risk and go deeper into the stack at a price that just doesn't make sense to us. That kind of led to the conclusion that part of the business cycle has been flooded with capital in a way that is not attractive to us. Why not move our capital to where we can get a higher and better return and pivot more, and if you will just follow the data and the easier path to success.

Speaker #11: And what we've seen over the last couple of years is the competitive set of capital willing to take risk and go deeper into the stack at a price that just doesn't make sense to us.

Speaker #11: And so that kind of led to the conclusion that that part of the business cycle has been flooded with capital in a way that is not attractive to us.

Speaker #11: And so why not move our capital to where we can get a higher and better return and pivot more? And, if you will, just follow the data and the easier path to success.

Speaker #11: So, I think it's both an opportunity, but also a discipline around our capital and our risk-adjusted returns that we see. Thank you, Tom.

Tom Toomey: I think it's more both a opportunity, but also a discipline around our capital and our risk-adjusted returns that we see.

Alexander Goldfarb: Thank you, Tom.

Speaker #1: Our next question is from Handel St. Juste with Mizuho Securities. Please proceed.

Operator 2: Our next question is from Haendel St. Juste with Mizuho Securities. Please proceed.

Operator: Our next question is from Haendel St. Juste with Mizuho Securities. Please proceed.

Speaker #14: Hey, guys. Good morning to you. Thanks for taking my question. So, it sounds like clearly New York and now San Francisco are doing very well.

Haendel St. Juste: Hey, guys. Good morning to you. Thanks for taking my question. It sounds like clearly New York and San Francisco are doing very well. DC may be a bit weaker. I was hoping you could give a little color on your other large coastal markets like Boston, Seattle, LA. Things there seem a little weaker. I'm wondering how they're performing versus your forecast and what your expectations are into the back half of the year. On LA specifically, see you added an asset there this past quarter. Just curious on the thinking behind that, given the headlines in LA and how you underwrote the IRRs or cap rate your IRRs on that asset. Thank you.

Speaker #14: DC may be a bit weaker. I was hoping to give a little color on your other large coastal markets like Boston, Seattle, and LA.

Speaker #14: Things there seem a little weaker. I'm wondering how they're performing versus your forecast, and what your expectations are into the back half of the year.

Speaker #14: And on LA specifically, I see you added an asset there this past quarter. Just curious about the thinking behind that, given the headlines in LA, and how you underwrote the cap rates or IRRs on that asset.

Speaker #14: Thank you.

Speaker #2: Yeah, I'll start with some of the market performance for some of these others that I haven't mentioned. I think, first of all, maybe starting out West, Seattle remains fundamentally resilient.

Mike Lacy: Yeah, I'll start with some of the market performance for some of these others that I haven't mentioned. I think, first of all, maybe starting out west, Seattle remains fundamentally resilient. I'd tell you, it's supported by private sector momentum in technology, biotech, even some of the major East Side employers really driving some of that. While it hasn't been our best performing market across the portfolio, it's still relatively strong, and I'd say it's held up well through the leasing season. Maybe jumping over to the East Coast, Boston, I didn't previously speak to, I'll give you a little color there. Still seeing strong renter demand. Supply is definitely abating, and the elevated homeownership is definitely allowing us to capture some of that renter demand as well.

Speaker #2: I'd tell you it's supported by a private sector momentum in technology, biotech, even some of the major East Side employers really driving some of that.

Speaker #2: So, while it hasn't been our best-performing market across the portfolio, it's still relatively strong. And I'd say it's held up well through the leasing season.

Speaker #2: Maybe jumping over to the East Coast—Boston—I didn't previously speak to, so I'll give you a little color there. Still seeing strong renter demand.

Speaker #2: Supply is definitely abating. And the elevated homeownership is definitely allowing us to capture some of that renter demand as well. What I'm seeing in both those markets—Seattle and Boston—is probably a little bit more of a tilt towards the urban core doing better than the suburban.

Mike Lacy: What I'm seeing in both those markets, Seattle and Boston, is probably a little bit more of a tilt towards the urban core doing better than the suburban. I'd say again, specific to Boston, downtown's drawing from healthcare, education, technology, students, it's doing better than those suburban assets in the North Shore, South Shore today. Even with the suburban assets, I think people are seeking more space, we're seeing elevated traffic come out there. We're seeing that lower relative housing costs, and it's convenient to get to a lot of these Boston employment centers. Boston's still holding up relatively well for us. I think I covered most of the other markets throughout.

Speaker #2: And I'd say again, specific to Boston, downtown's drawing from healthcare, education, technology, students, and so it's doing better than those suburban assets in the North Shore and South Shore today.

Speaker #2: But even with the suburban assets, I think people are seeking more space. So we're seeing elevated traffic out there, and we're seeing those lower relative housing costs.

Speaker #2: And it's convenient to get to a lot of these Boston employment centers, so Boston is still holding up relatively well for us. I think I covered most of the other markets.

Speaker #2: Throughout.

Speaker #13: I could pivot over to the Santa Monica asset. So, regarding that asset, it's a really intriguing asset in a terrific submarket in Santa Monica.

Dave Bragg: I could pivot over to the Santa Monica asset. Regarding that asset, it's a really intriguing asset in a terrific sub-market in Santa Monica. It's a small asset. Mike and team can essentially operate it without staff. That sub-market had been affected by COVID and then supply on a disproportionate basis, we're intrigued by the upswing that we can participate in as we get our hands on the asset below replacement cost. What we've seen from Mike and the team in the past, as they've taken over assets in the Bay Area and Philadelphia, is an ability to drive outsized growth on both a relative and absolute basis.

Speaker #13: It's a small asset. Mike and team can essentially operate it without staff. That submarket had been affected by COVID and then by supply on a disproportionate basis, but we're intrigued by the upswing that we can participate in as we get our hands on the asset below replacement cost.

Speaker #13: And what we've seen from Mike and the team in the past is they've taken over assets in the Bay Area and Philadelphia, and shown an ability to drive outsized growth on both a relative and an absolute basis.

Speaker #14: That is very helpful. Any color on how you underwrote? Cap rates, IRRs?

Haendel St. Juste: That's very helpful. Any color on how you underwrote cap rates, IRRs?

Speaker #2: So, as it relates to the yield on that asset, it's a bit depressed given the fact that it's been affected by COVID and new supply.

Dave Bragg: As it relates to the yield on that asset, it's a bit depressed given the fact that it's been affected by COVID and new supply. We're underwriting significant burn-off of concessions as well as operational margin synergies as it comes onto our platform.

Speaker #2: But we're underwriting significant burn-off of concessions, as well as operational margin synergies as it comes onto our platform.

Speaker #14: Okay, thank you.

Haendel St. Juste: Okay. Thank you.

Speaker #1: As a reminder, press Star One on your telephone keypad if you would like to requeue for additional questions. Our next question is from John Poleski with Green Street.

Operator 2: As a reminder to star one on your telephone keypad if you would like to queue for additional questions. Our next question is for John Pawlowski with Green Street. Please proceed.

Operator: As a reminder to star one on your telephone keypad if you would like to queue for additional questions. Our next question is for John Pawlowski with Green Street. Please proceed.

Speaker #1: Please proceed.

Speaker #15: Hey, thanks for keeping the call going. I have a follow-up question on the $50 million mezz loan. Please forgive the multi-part question. Can you let me know where it sits in the capital stack from a loan-to-value perspective?

John Pawlowski: Hey, thanks for keeping the call going. I have a follow-up question on the $50 million mezz loan. Please forgive the multi-part question. Can you let me know where it sits in the capital stack from a loan-to-value perspective? I'm confirming that it's secured by the real estate and not the opco. Lastly, can you just give a little color, you highlighted Carmel Partners' development capabilities. Are you expecting a big redev where NOI is going to come offline from these parcel properties? Thanks.

Speaker #15: I'm confirming that it's secured by the real estate and not the OpCo. And then lastly, can you just give a little color—you highlighted Carmel's development capabilities.

Speaker #15: Are you expecting a big redevelopment where NOI is going to come offline from these parcels of properties? Thanks.

Speaker #11: John, I appreciate the multi-question and will forgive you for that. But to get to first—first lane first, this piece of paper second, and then equity is the stack.

Tom Toomey: John, appreciate the multi question, we'll forgive you for that. To get to first. First lien first, this piece of paper second, equity is the stack. Third, we're going to rehab units on term. Okay. There won't be a degradation of the vacancy. They have experience in turning them pretty darn quickly. We're working with lease maturities on that, we're debating the finishes as we go and adjusting. The lobby will get a major rework, the pool deck as well, the amenitization. The Upper West Side's a pretty damn tight market. We like it.

Speaker #11: Third, we're going to turn rehab units on term, so there won't be a degradation of the vacancy. They have experience in turning them pretty darn quickly.

Speaker #11: We're working with lease maturities on that, and we're debating the finishes as we go and adjusting. The lobby will get a major rework.

Speaker #11: The pool deck as well, and the amenitization. And the Upper West Side's a pretty tight market, so we like it.

Speaker #15: Okay. And from a loan-to-value perspective, where does this loan sit?

John Pawlowski: Okay. From a loan-to-value perspective, where does this loan sit?

Tom Toomey: I don't have it in front of me. I think you would look at it as 40% to 50%.

Speaker #11: I don't have it in front of me. I think you would look at it as 40 to 50 percent.

Speaker #15: Okay. Thanks.

John Pawlowski: Okay, thanks.

Speaker #1: Our final question is from Alexander Kim with Zelman and Associates. Please proceed.

Operator 2: Our final question is from Alex Kim with Zelman & Associates. Please proceed.

Operator: Our final question is from Alex Kim with Zelman & Associates. Please proceed.

Speaker #16: Hey, everybody. Thanks for taking the time today. I wanted to drill a little further into your assumptions for same-store revenue growth guidance for the full year.

Alex Kim: Hey, everybody. Thanks for taking the time today. I wanted to drill a little further into your assumptions for same-store revenue growth guidance for the full year. What do you have embedded for bad debt levels in the back half of the year relative to what we saw in Q2? Any additional detail on the forecasted mid-single-digit growth for the other income bucket would be appreciated as well.

Speaker #16: What do you have embedded for the half of the year relative to what we saw in the second quarter? And any additional detail on the forecasted mid-single-digit growth for the other income bucket would be appreciated as well.

Speaker #2: Sure. I think, first and foremost, we've seen a lot of success in the first half of the year as it relates to bad debt, and I think a lot of that can be attributed to what I spoke to earlier on that rent roll quality.

Mike Lacy: Sure. I think first and foremost, we've seen a lot of success in H1 as it relates to bad debt. I think a lot of that can be attributed to what I spoke to earlier on that rent roll quality that was put into place. I think first and foremost, improving that process as it relates to our centralized teams doing more proof of income, ID verification has really made a difference for us. In addition to that, we've been driving up our deposits as well as credit screening. Maybe just a couple stats around that. Average deposits are up 20%, so we're collecting around 760 versus 640. Credit screening's up 20 points. We're around 730 versus 710. That's made a big difference.

Speaker #2: Put into place, I think first and foremost, improving that process as it relates to our centralized teams doing more proof of income and ID verification has really made a difference for us.

Speaker #2: In addition to that, we've been driving up our deposits as well as credit screening. Maybe just a couple of stats around that: average deposits are up 20%.

Speaker #2: So we're collecting around 760 versus 640 credit screenings, up 20 points. We're around 730 versus 710. So that's made a big difference. As it relates to the back half, our expectation is we're going to hover in that, call it 99% to 99.1% collections, which is consistent and better than we would have expected to start the year, but we haven't really adjusted the back half of the year.

Mike Lacy: As it relates to the back half, our expectation is we're going to hover in that, call it 99% to 99.1% collections, which is consistent and better than we would have expected to start the year. We haven't really adjusted the back half of the year. We want to see how this continues to play out. Maybe more specific to other income, we have seen some success here. We've actually seen success for multiple years on this line item, and my expectation is we're still going to be driving around, call it 5% to 7% growth across our portfolio, being led by the Sun Belt. We've seen more growth there than we have, say, in the coastal markets, just given the regulatory backdrop. We're definitely allowing us to drive our revenue growth.

Speaker #2: We want to see how this continues to play out. Maybe more specifically regarding other income, we have seen some success here where we've actually seen success for multiple years on this line item.

Speaker #2: And my expectation is we're still going to be driving around, call it 5% to 7% growth across our portfolio. Being led by the Sun Belt, we've seen more growth there than we have, say, in the coastal markets, just given the regulatory backdrop.

Speaker #2: But we're definitely allowing this to drive our revenue growth. And when you compare ourselves—and this is what we do—against our peers on a market-by-market basis, we feel good about where we stand currently versus those that have reported in the coastal markets.

Mike Lacy: When you compare ourselves, and this is what we do against our peers on a market-by-market basis, we feel good about where we stand currently versus those that have reported in the coastal markets. We think we're going to compare well against those that will report over the next few days. Overall, I'd expect to continue to see that plus or minus 5% to 7% growth in that other income line item going forward.

Speaker #2: And we think we're going to compare well against those that will report over the next few days. So overall, I'd expect to continue to see that plus or minus 5% to 7% growth in that other income line item going forward.

Speaker #16: Got it. Appreciate the detail.

Alex Kim: Got it. Appreciate the detail.

Speaker #1: There are no further questions at this time. I would like to hand the conference back over to Chairman, President, and CEO, Mr. Toomey, for closing comments.

Operator 2: There are no further questions at this time. I would like to hand the conference back over to Chairman, President, and CEO, Mr. Toomey, for closing comments.

Operator: There are no further questions at this time. I would like to hand the conference back over to Chairman, President, and CEO, Mr. Toomey, for closing comments.

Speaker #11: First, let me just thank you for all your time, interest, and support of UDR. Second, we're always available for a call, email, or anything that helps us continue our communication with you.

Tom Toomey: First, let me just thank you for all your time, interest, and support of UDR. Second, we're always available for a call, email, or anything that it takes to continue our communication with you. With that, take care.

Speaker #11: And with that, take care.

Operator 2: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.

Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.

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