Scott McLaughlin: Certain statements we make during this call may include forward-looking statements relating to the future performance of our business, financial results, liquidity and capital resources, and other non-historical statements, which are subject to risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated. We describe some of these risks and uncertainties in our 2025 annual report on Form 10-K and other filings we make with the SEC from time to time. Except to the extent otherwise required by law, we do not update forward-looking statements and expressly disclaim any obligation to do so. We may also discuss certain non-GAAP financial measures during the call. You can find additional information regarding these non-GAAP measures, including reconciliations to the most comparable GAAP measures, in yesterday's earnings release. With that, I'll turn the call over to Dallas Tanner. Please begin, Dallas.
Dallas Tanner: Thank you, Scott, and good morning, everyone. Since our Investor Day last November, we've been focusing on executing the plan we laid out while serving residents better, running more efficiently, and allocating capital in ways that create the most value for stockholders. It's been an eventful year, and I want to thank our associates for staying focused on our residents. Helping families find quality homes they can afford is common ground for us, for policymakers, and most importantly, for our residents. Last week, Treasury released proposed regulations under the 21st Century ROAD to Housing Act that are now open for public comment. Our preliminary read is that the framework is workable, generally in line with what Congress intended. We're reviewing the details and will remain engaged in the comment process. Millions of American families rely on leasing a single-family home.
Dallas Tanner: It's important they continue to have that flexible and affordable choice. Through it all, our associates delivered another solid quarter. Same-store blended rent growth came in at 3%, our best quarter of the year, with renewals at 4.3%. We also grew core FFO per share 2.4% to $0.48. This performance reflects a resilient business and a team that delivers. Part of this resilience comes from healthy demand for our homes. Based on John Burns data and weighted to our markets, as of September, it was on average over $1,000 a month cheaper to lease a home than own one. As mortgage rates rise, that gap likely widens. With our average resident staying with us for more than 41 months, this adds up to savings of over $42,000. That's money a family could put toward a down payment on a home of their own if they should so choose.
Dallas Tanner: Nowhere is our discipline clearer than in how we've allocated capital this past year. As you've seen, we've sold a substantial number of homes on the open market this year, mostly to families buying for their own use. These sales give us real-time read on both value and demand. Since December of last year, our average gross sales price has been approximately $460,000 per home. Meanwhile, at the prices at which we've been buying back our own stock, the market is valuing our homes at only $280,000 each. It's one thing to say our stock is undervalued, it's another to act on it again and again. And that's what we've done. This past year, we've repurchased nearly $1 billion of our stock, which represents 6% of our shares outstanding, funded in large part by proceeds from home sales.
Dallas Tanner: Against our revised full-year disposition guidance midpoint of $950 million, we have already sold $833 million through September. We have been pleased with the execution to date. In fact, we believe that we have bought back more stock this past year than any other residential REIT. In addition, the new $500 million repurchase program our board just authorized, we intend to keep funding buybacks with home sale proceeds whenever our stock trades at a meaningful discount to the value of our homes, guided by market conditions and a disciplined approach to the balance sheet. In summary, our business remains healthy and leasing offers real value that our residents appreciate. We are focused on earning their trust every day with the same discipline we bring to allocating capital. With that, I will hand it over to Tim to discuss our operating results.
Tim Lobner: Thanks, Dallas, and good morning, everyone. The story this quarter is renewal strength, partly offset by softer new lease growth, with fundamentals that remain supportive as we head into year-end. During the Q3, our teams delivered same-store NOI growth of 1.1% year-over-year. That reflects core revenue growth of 1.6%, tempered by core operating expense growth of 2.5%. Breaking that down, let me cover revenue first, where rent growth was the key driver. Blended rent growth was 3% in the Q3, up from 2.7% in the Q2 and 1.6% in the Q1, representing sequential improvement in each quarter of 2026 year to date. Looking at the components, rent growth is driven largely by renewals. Renewal rents grew 4.3% in the Q3, a full point above the Q2. New lease rent growth was -0.2%, or 50 basis points better than last year.
Tim Lobner: That is down from +1.2% in the Q2, but in line with normal seasonal patterns. Together, those produced the 3% blend in the Q3. Beyond rent growth, average monthly rent grew 1.8% year-over-year. Turnover edged down 10 basis points to 6.2%, and occupancy averaged 96.4% for the quarter. Let me add some additional color, beginning with supply. Supply from large single-family rental operators has been moderating.
Tim Lobner: According to John Burns data, listings were down 13% year-over-year in August, including declines in our three largest markets of Atlanta, Tampa, and Phoenix. Builder and deliveries also peaked two years ago in 2024, and Burns expects the pace to keep slowing through 2027 and 2028. That data tells part of the story. Mom-and-pop landlords matter here too. They are harder to measure and can play a sizable role within infill neighborhoods. We are also watching the for sale side. Higher mortgage rates are contributing to greater supply in some markets, resulting in unsold homes from both accidental landlords and builders. In short, the supply picture remains mixed, and we will continue to monitor it, though at present, we do not see any signals that warrant a change to our approach. On the demand front, conditions remain healthy.
Tim Lobner: Lead and showing volumes are meeting or beating last year's levels, and we continue to move home steadily through the re-leasing process. Turning now to expenses. Core expenses grew 2.5% in the Q3 and 3.3% year-to-date, which is inside our full year guidance range. Fixed expenses grew just 1.1% in the quarter, as slightly lower property taxes offset higher insurance and HOA costs. Controllable expenses grew 4.9%, mostly on higher repair and utility expenses as a result of this summer's extreme heat. Now to October. Preliminary same-store results showed blended rent growth of 2.2%, slightly ahead of last year and reflecting an expected seasonal moderation from the Q3. Within that, new lease rent growth improved 100 basis points from a year ago to -2.2%, and renewal rent growth was 4.2%, in line with last year. October average occupancy was 96.1%, nearly flat with a year ago.
Tim Lobner: Beyond the leasing numbers, our teams continue to make progress on several of our Investor Day initiatives, including centralizing our rent collection and HOA functions. We have also advanced our resident CRM system, which lets us communicate with residents on a more personal basis. We look forward to sharing more as we get further along. As we move into the winter months, we will continue to balance occupancy with rate, with the goal of starting the new year from a strong position. Thank you to all of our teams for their hard work behind these results and for their continued efforts as we close out the year. Jon, over to you.
Jon Olsen: Thanks, Tim. This morning I will cover four things: an update on our capital allocation activity, Q3 results, the balance sheet, and guidance. I will start with capital allocation since this has been a big focus for us this past year. During the Q3, we sold 658 wholly owned homes for gross proceeds of approximately $318 million, representing an average sale price of about $484,000 per home. Net of the 216 wholly owned homes we acquired in the Q3, most of which were deliveries from our builder partners, net disposition proceeds were approximately $245 million. These disposition proceeds went toward repurchasing approximately 8.9 million shares of our stock for $250 million in the Q3. Since last December and through this past Tuesday, we have repurchased approximately 37 million shares for a total of $989 million at an average repurchase price of $26.78 per share.
Jon Olsen: That represents buybacks totaling 6% of our outstanding shares in less than one year's time while staying within our targeted leverage range. In addition, our board has just authorized a new $500 million share repurchase program, which gives us the ability to continue buying back stock while it trades at a meaningful discount to the value of our homes with the same discipline you have seen from us to date. Turning now to Q3 results. Core FFO per share was $0.48, up 2.4% from a year ago, while AFFO per share was $0.38, up slightly from last year. As Tim mentioned, same-store property taxes were a favorable factor in the quarter, down slightly year-over-year. Florida and Georgia together make up more than half of our total property tax expense, and both states send their final bills later in the year.
Jon Olsen: The bills we have received thus far are coming in better than we originally expected, and we will keep monitoring as the rest arrive and give a final update on our next earnings call. Moving now to the balance sheet. We ended the quarter with $1.3 billion of available liquidity. Roughly 90% of our total debt is unsecured, 90% is fixed rate or swap to fixed rate, and about 90% of our wholly owned homes are unencumbered. Net debt to adjusted EBITDA was 5.5x within our 5.5x to 6x target range, and up slightly from 5.4x last quarter. As we discussed on last quarter's call, in July, we issued $500 million of long 5-year bonds with a coupon of 4.95% and used the net proceeds to prepay about half of our 2017-1 securitization.
Jon Olsen: The remaining $500 million of our 2017-1 securitization matures in June 2027, and we have no other debt maturing before then. Lastly, guidance. You can refer to last night's earnings release for the complete details, but here are the highlights. Based on our year-to-date results, we have raised our full year 2026 guidance for core FFO per share by a penny at the midpoint to a range of $1.94 to $1.98 per share.
Jon Olsen: We have also narrowed our full year same-store revenue growth guidance range, lowered our same-store expense growth guidance range by 30 basis points, mostly due to lower anticipated property tax expense, and slightly raised our same-store NOI growth guidance to a midpoint of 1.2%. In addition, we have raised the midpoint of our wholly owned disposition guidance by $100 million to a range of $900 million to $1 billion, reflecting the strong execution of our disposition program this year.
Jon Olsen: Looking ahead, our priorities are unchanged. Serve our residents well, run the business efficiently, and put capital where it creates the most value for stockholders. This concludes our prepared remarks. Operator, please open the line for questions.
Operator: We will now begin our question and answer session. To ask a question, please press star then one on your telephone keypad. To withdraw your question, please press star then two. If you are using a speakerphone, please pick up your handset before pressing the keys. In the interest of time, we ask that participants limit themselves to one question, and then re-queue by pressing star one to ask a follow-up question. One moment please, while we poll for questions. Your first question comes from the line of Nick Joseph with Citi. Nick, please go ahead.
[Analyst] (Citi): Hey, it is Eric here with Nick. You are probably one of the largest home sellers in the market. I think that is probably fair to say. I am just curious if you have seen any change in your ability to sell as interest rates have risen versus a couple of months ago. I think at this time last year, you started to see a bit more pressure from some shadow rental supply. So I was just curious about whether you are seeing any of that this year. If you could maybe give us your expectation for how occupancy should trend over the next couple of months, just given the balance between supply and demand.
Scott McLaughlin: Hey, Nick. Thanks for the question. It is Scott. Listen, we have had a very measured pace of how we have been managing our disposition program this year. As always, we start the year with a pre-identified list of homes that have been identified by our asset management team for disposition. When a house becomes vacant, it goes through our process to evaluate it for sale. I think that, as you can see, we have been very successful this year in terms of executing on the sales. What we disclosed in Q3 is obviously our sales through 30 September. The move in the interest rates has obviously happened in the last 30 days. It is frankly just a little too soon to see what impact it would have on anything going forward. But thus far, year to date, I think we are pleased with the execution we have seen.
Scott McLaughlin: We are pleased with our days on market. To date, we have seen no material change in the amount of time it takes us to sell a home. So I think from our perspective, look, we are watching this very closely. Q4 is always our slowest period for the selling season of homes in general. So we will see where we end up in Q4. But like I said, this is usually our slowest quarter. We are watching it. We will be able to give guidance when we are ready.
Operator: Your next question comes from the line of Steve Sakwa with Evercore ISI. Steve, please go ahead.
Steve Sakwa: Yeah. Thanks, Tim. I appreciate the October trends. Could you maybe just talk about where you are sending out renewal notices, maybe for November, December, January? Could you just quickly comment on the bad debt trend? I think that ticked up about 20 basis points in the quarter. Thank you.
Jon Olsen: Thanks, Steve. Yeah, I appreciate the question. We typically do not share what we go out at on our renewal offers. We did finish October at 4.2%. I can tell you that November is looking a lot like October. As I have shared in the past, both on earnings calls and in investor meetings, the renewal book of business, which accounts for 75% of the book, generally runs 3.5% to 4.5%. Super reliable part of our rent growth. Look, it is a reflection, I think, of the good service our teams are providing. As you know, our residents vote with their pen and their pocketbook. Again, that 75% book of the business is an important part. I would say we are cautiously optimistic about the balance of the year, and we are going to watch those renewal rates closely. You asked about bad debt.
Jon Olsen: Look, bad debt was 75 basis points for the quarter. I would point out that over the course of the year, we are at 60 basis points of bad debt, right in line with our pre-pandemic range of 40 to 60 basis points. We are going to continue to watch that in the fall. As we have talked about in the past, there is a degree of seasonality that comes with bad debt that we typically see come into the system in H2. That is pretty normal course of business for us.
Operator: Your next question comes from the line of Jamie Feldman with Wells Fargo. Jamie, please go ahead.
Jamie Feldman: Great, thanks for taking the question. Between the acquisitions completed during Q3 and Pathway consolidation, you increased your exposure in several markets where leasing remains softer due to supply. Can you distinguish how much of that reflects existing home builder commitments or the Pathway reclassification versus a deliberate decision to add capital in those markets? What property or sub-market characteristics give you confidence in the long-term returns in those markets despite weaker near-term lease pricing?
Jon Olsen: Sure. I will start with just the Pathway observation. The Pathway was showing up in our financial statements previously in management fee income. Now that we have consolidated those homes, you will see management fee income tick down. NOI will step up commensurately, and we will have a little bit of a good guy just because our cost of capital is better, and we will no longer be paying certain fees that were going out the door. But in terms of footprint, I think Pathway is quite small relative to the overall enterprise. So I think we will evaluate those homes. The investment decisions vis-à-vis the Pathway portfolio were not made by us. So I think as we look at where those 800, 900 homes are, we are pretty comfortable with those markets. I would note that we effectively already represented 100% of the equity in those assets.
Jon Olsen: The only difference is we have now consolidated those. So I think from a P&L perspective, it should be neutral.
Dallas Tanner: One other thought just to add to Jon's. This is Dallas. We have operated these assets for a number of years, so it was not like there was new inventory coming in line with your questioning around adding additional supply. Look, I think the supply question at large is a good one. We have seen it incrementally come down year-over-year. Tim talked about that in his numbers. If last year, per se, we troughed, we are seeing new lease being a little bit better at this time in the year versus last. All things being equal, the blend is also better, call it 10, 20 bps year-over-year. So we are encouraged by the progress that the market is making in digesting both the new BTR supply, existing home builder stock.
Dallas Tanner: I think we have to be mindful, and Tim and I watch this and talk about this all the time, is in an elevated mortgage rate environment. It's obviously beneficial for our renewals business, but it could bring additional supply pressure around new lease side. We'll be mindful of that. We'll watch that over the coming quarters and see what happens with existing home builder stock. Does that go into the marketplace in the for-rent space? What do the mom and pops do that are maybe sitting on a home they're trying to sell? Does that then kind of come back into play as well? It's too early to tell on any of those from a supply-oriented story, but it's something we're mindful of, and we pay attention to.
Operator: Your next question comes from the line of Anthony Paolone with JPMorgan. Please go ahead.
[Analyst] (JPMorgan): Thanks for taking the question, guys. You have Nahum on for Tony this morning. I guess, could you maybe expand on your expectations and maybe the building blocks you're expecting for Q4? I think the same-store revenue guide implies a step-up in the fourth quarter. Could you help us understand what gets us there? I think Tim mentioned earlier that October occupancy was flat, so just trying to understand where the pickup comes from. Thanks.
Jon Olsen: Yeah. It's a good question. I think as we look at the fourth quarter, I would point out a couple things. One, it's a relatively easy comp for us based on what took place in the fourth quarter of last year. Secondly, I think as Tim touched on, we are pleased to see that occupancy is sort of moving in a better direction than it was this time last year. So I think there'll be some benefit from that as well. As Dallas mentioned, on the blend, we're just seeing a little bit better blended rent growth than we were this time last year. So, when we put it together, that is what gives us comfort. I think there's enough of the year left to go that we need to continue to focus on the things that are going to move the needle. I think we are.
Operator: Your next question comes from the line of Juan Sanabria with BMO Capital Markets. Please go ahead.
Juan Sanabria: Hi, good morning. I guess a two-part question. One, just piggybacking on the last question, is there any preference or comfort level within the same-store revenue range? Part two would be, you mentioned the 21st Century ROAD to Housing Act and the details starting to come out there. Anything you are trying to push back on or get clarified? I think there was something about the timing of when you would have to acquire build to rent, and would that maybe limit what you can buy from some of your home builder programs and the timing of that?
Jon Olsen: Hey, Juan, it is Jon. I will take the first part of the question, and Dallas can cover the ROAD Act. Look, there is a reason that our guidance is a range. We are not 10 basis points smart one way or the other. I think we are still comfortable with our midpoints. As we look to Q4, the things I just referenced in my prior response are the things that give us comfort with continuing on with the midpoint we have already established. We will see where we are at the end of the year and report back.
Dallas Tanner: Yeah. I will share some thoughts on the ROAD to Housing question. Look, let me start by saying and sort of reemphasizing that the collaboration with the administration and Treasury is one that I have been quite pleased with in terms of the ability to engage policymakers and have active discussion on some of these topics. The process is not finished. I think the first draft that has come out has a 30-day review period. I would imagine not only from our trade association, but many associations are looking at the way the language is currently drafted and probably providing feedback. I would expect we will provide some additional feedback through this process. By and large, from where it sits today, Invitation Homes feels like it can, for the most part, operate within this framework.
Dallas Tanner: Albeit there may be a couple of areas we would like to see some of the language or the way things are written be slightly improved. We will provide that feedback, and we will continue to try to work with our elected officials to land this in a place that is not only commercial, but protects the intent of the bill that Congress passed. I think by and large, we feel like we are in an okay spot.
Dallas Tanner: It has been an interesting year. As you can imagine, we have done a lot of work with our partners in the industry, also in multifamily and home building, to focus on this very important issue, which is how do we create additional housing stock both in the for-rent space and the for-sale place. We have a lot of data that suggests our customers are looking for the flexibility that the for-lease space services.
Dallas Tanner: We want to be mindful of that, continue to find ways to innovate and bring more of that supply to the market.
Operator: Your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Austin, please go ahead.
Austin Wurschmidt: Great. Thanks. Good morning. You guys have continued to lean into the buybacks as you have highlighted, completing $1 billion around where the stock is trading today. Just given that accretion and arbitrage between selling assets and redeploying it into shares, why not increase the size of the program? I guess how should we think about the pace of dispositions in 2027, just given that earnings accretion math and the attractiveness of that as well as probably the relative quality of what you are selling versus the balance of the portfolio?
Jon Olsen: Hey, Austin. It's Jon. That's a good question. I think with respect to repurchases, we manage share repurchases within the leverage range we've articulated. As we sell these homes, we are shrinking the EBITDA that the enterprise throws off, and we distribute gains. Sale proceeds don't convert dollar for dollar into buybacks. I think the point is that we need to be mindful of the balance sheet. We need to be mindful of market conditions. Those are going to be our two North Stars as we think about the share repurchase opportunity over time.
Operator: Your next question comes from the line of Haendel St. Juste with Mizuho.
Haendel St. Juste: Hey, guys. Wanted to ask about the setup here over the next couple of months into 2027. Understanding it's the shoulder months here, obviously, you're going to balance occupancy and rate. Curious if you're feeling that perhaps, one, you have a bit more pricing power given slightly higher occupancy versus a year ago. Is there any notable change in kind of the demand versus a year ago? Then some color on earn-in for next year. One last thing, how much of your lease expirations for the year tend to come up in the Q4 and Q1? Guess I'm curious on the balance of the lease expiration schedule over the course of the year. Thanks.
Tim Lobner: Hey, Handel. This is Tim. Hey, thanks for the questions. I'll cover supply and demand, then I'll hand it over for Jon on the earn-in. On the supply side, we keep a really close eye on supply. We're looking carefully in our markets at comparable product, comparable locations, comparable pricing. What I can tell you is broadly across the US, we're up slightly year-over-year, but in our markets, in IH markets, our footprint, we're actually down slightly year-over-year. Obviously, it varies by market. I think the message that I shared earlier in the year is one that I'll reiterate, that the year started much higher on a year-over-year basis in January, and it certainly moderated over the course of the year. We like what we're seeing. The one area of focus, and Dallas talked about this earlier, was the mom-and-pop shadow supply.
Tim Lobner: We are trying to keep an eye on that. Too early to tell where that is going to go with interest rates where they are. As we look more broadly, though, at the housing supply, it is interesting. Build to rent delivery peaked in 2024. The pace of build to rent deliveries are anticipated to keep slowing through 2027 and 2028 based on John Burns' data. Apartment completions peaked in 2024, so that is on the downswing. When you compare kind of the home building sides, Burns' data suggests that single-family starts are forecasted down this year 7% and down another 5% next year. Again, I think our position is fairly good right now in the Sun Belt locations where we are. We think that they are going to continue to perform well. When you look at migration data, which we follow closely, we use Oxford Economics.
Tim Lobner: There is certainly some good signals, although not as high as, say, in a pandemic period. But the Houstons, the Dallas, the Austins, the Tampas, and Phoenix, and Atlanta all showing nice signs of movement into the market. On the demand side, look, demand continues to be healthy. We have seen nice demand come into the fall, in line with expectations, perhaps even a little bit above our expectations. I think it is a clear signal that single family rentals continues to play a really important in the housing ecosystem, and it is a good reminder that 35% of people lease something. Let me break it down a little bit more. External to the company, we look at Google Search data. That is up year-over-year. We look at Zillow and their renter demand index. That is up year-over-year.
Tim Lobner: When we look internal at our own funnel, we are seeing healthy lead and showing volume, and that is continuing again into the fall. We are seeing nice conversion rates as well.
Tim Lobner: I think the long-term story for the portfolio is good, and we like how the end of the year is setting up. But look, there is a degree of cautious optimism here as we watch the rest of the year unfold. As for the lease expirations, look, I will answer the question. We try to put about 55% in the H1 of the year, kind of Q1, Q2, and then about 45% in the back half in Q3 and Q4. That mirrors kind of how movement in the single-family space, and I think broadly how people move. We continue to manage our lease expiration curve to ensure that we keep those numbers. Jon, you want to talk about it?
Jon Olsen: Yeah. Handel, appreciate the question on earn-in. We are going to hold discussion of 2027 until we introduce guidance, and we will talk about our 2027 view holistically at that time.
Operator: Your next question comes from the line of Julien Blouin with Goldman Sachs. Julian, please go ahead.
Julien Blouin: Yes, thank you for taking my question. Just a question on shadow supply. It looks like when you look at rental listings inclusive of mom-and-pop and home builder stock in recent weeks, it started to pick up, especially I think in Florida. I was wondering if you are seeing that on the ground and whether you are seeing any of that show up in pricing, specifically in your Florida markets.
Tim Lobner: Look, it is a great question. This is Tim. The supply side, like I mentioned earlier, is an area that we do track closely. I would say South Florida has shown a little bit more supply on the market. But Orlando, Tampa, and even Jacksonville have shown some nice green shoots in terms of less supply year-over-year. Again, when you look at supply numbers, it is tough because people look at different comparable product. We really zone in on, again, comparable product in terms of size, comparable location, sub-market specific, and then comparable price.
Tim Lobner: We do not find that people are looking at everything. They are looking at a fairly narrow product offering and price point. It is hard to tell where the shadow supply that you referenced. There is certainly a lot of articles that we are seeing that talk about accidental landlords and shadow supply, but it is really tough to track.
Tim Lobner: We do our very best capturing information. But remember that mom-and-pop, sometimes they are posting yard signs. That is hard to track from a digital footprint. But we do our very best to monitor that. And we have data that we find is very helpful as we look at being nimble pricers in today's operating environment.
Operator: Your next question comes from the line of John Pawlowski with Green Street. John, please go ahead.
John Pawlowski: Thanks for the time. Just one question on the impacts from dispositions this year on 2026 same store. I would imagine it would have some positive lift to same store revenue for this year, but the guidance is unchanged since the start of the year. So John, can you just help frame what type of impact the disposition have on same store revenue metrics?
Jon Olsen: Yeah, John. I would say that it has not actually had an appreciable impact that we have been tracking. The reality is the way from an asset management perspective, we think about the homes that we elect to sell. That review process, that rebuy analysis is looking at things like location, operational KPIs. How long has it taken that home to lease relative to other homes in the sub-market? What has our experience been in terms of demand relative to other similar homes in the same area? And what does that tell us about the home's ability to generate property cash flow over time, right? We are risk-adjusted total return investors, and that total return is driven by sort of property level cash flow.
Jon Olsen: So we are not paying a tremendous amount of attention to the specifics of revenue relative to expense. It is just how much NOI is this home throwing off?
Jon Olsen: Do we think we can grow that NOI over time to a degree that allows for an appropriate sort of rebuy total return view? If not, then we will go ahead and put that home on the market and move it off the books and seek to redeploy that capital creatively.
Operator: Your next question comes from the line of Brad Heffern with RBC Capital Markets. Brad, please go ahead.
Brad Heffern: Can you hear me? Hello?
Tim Lobner: Yeah. We can hear you.
Brad Heffern: Oh, okay. Thanks. Just trying Austin's repurchase question from earlier in a different way. Is the 2026 volume that you have done something that can be replicated in future years? I know it depends on obviously where disposition cap rates are and where the stock is, but just mechanically, is it possible to do this much ratably within the REIT rules and without significant tax consequences, or is there maybe something that was unique this year in terms of being able to offset the gains with losses somewhere else that maybe isn't around on the same scale in the future?
Jon Olsen: Hey, great question. Thanks. As you know, as a REIT, we generally do not pay federal income tax to the extent we fully distribute our taxable income to stockholders. The gains we realize on disposition of assets are part of that taxable income.
Jon Olsen: We obviously use the tax planning tools available to us to manage the relationship between taxable income and our regular dividend. Some of those tools are finite, and their availability changes year to year. So tax capacity is one of the factors we weigh in sizing dispositions and share repurchases alongside market condition and leverage. We are comfortable with where we stand for 2026, and we will say more about 2027 when we give guidance in February.
Operator: Your next question comes from the line of Adam Kramer with Morgan Stanley. Adam, please go ahead.
Adam Kramer: Hey, thanks for the time. Just wanted to ask about the Pathway Homes update here. I think dissolving that. Understand the financial impact, Jon. That was really helpful you walked through earlier, but maybe just asking about the strategic decision to what looks like wind that down, what was behind that. I guess just overall thoughts on the rent-to-own model at this point.
Dallas Tanner: Yeah. Hey, this is Dallas. Look, particularly on the model, it is interesting in our elevated mortgage rate environment. Rent-to-own as a pathway for customers could make a lot of sense. It is one of the areas in the ROAD to Housing Act that particularly lawmakers had focused on in creating frameworks with which people could offer rent-to-own products. I do think the private market can solve some of the mortgage imbalances and also help people leg into down payment assistance over time. That being said, we did this in a venture with an operating partner. The expectation from our end is that we would have anchored it like we did 4 or 5 years ago, that we would operate the assets, and that they would continue to grow the business. Timing really is the issue here, I think, for the particular venture. Again, we weren't steering the venture.
Dallas Tanner: We just supported it as a GP, and the first initial major LP. As the Fed continued to crank on rates, I think fundraising got trickier in that environment. That being said, we are very familiar with the assets. We have operated them for a number of years. We are familiar with the program. We are still believers that there are Pathway programs that will work. I think we will measure over time and distance how much that operating model could make sense for us in the future. To date, we have had a very limited amount of customers actually buy their homes. It is less than 10 in that particular venture. We will continue to honor the contracts and work with customers. We have a long track record of selling assets to our customers.
Dallas Tanner: The take rates are obviously pretty small, by and large, when they choose to execute on these programs, in large part because they are down payment light. Most of our customers today are seeking flexibility in a leasing program for a number of reasons. We don't particularly cater to potential homeowners as a way of how we attract our customers today. There is no real change in how this program is being operated. It is just coming on the balance sheet officially for purposes that Jon stated earlier on the call.
Operator: Your next question comes from the line of Jana Galan with Bank of America. Jana, please go ahead.
Jana Galan: Thank you. Good morning. Maybe a bigger picture question on the transaction market. I am curious, Scott, if there is anything you have observed that has changed in terms of volumes, bid-ask spreads over the last 30 days from the home builders portfolio opportunities, BTR development, land sales. Maybe when you look at when the Fed started hiking in 2022, what was the first part of the housing ecosystem that started to reprice?
Scott McLaughlin: Yeah, just in terms of transaction. That is a great question. Thanks. This is Scott. In terms of transaction activity, first of all, look, we have continued to see inventory from the home builders in terms of them wanting to sell homes on monthly tapes like we have been looking at for the last few years here. We have seen an increase in the last quarter or so, mainly because I think some of the home builders are trying to maybe reduce their standing inventory going into next spring selling season. We actually have a few new builders that have reached out to us for the first time that are people we have not heard from before.
Scott McLaughlin: So I think we have definitely seen an increase of inbound activity from the builders, and I think the builders are clearly interested in potentially doing larger discounts and taking lower margins in order to move that inventory.
Scott McLaughlin: I think probably last year we were seeing stuff at a 20% discount to market and to retail values, and now we are probably seeing something at a larger discount to where the list price is. So that is one thing we have seen in transaction activity that I think is relevant at the moment. I think the second is the transaction market was on pause probably for the first half of the year because of ROAD to Housing and people waiting to see some resolution on the legislative side. We have seen some pickup in broker deals in the last quarter or so. I think we are still in that bid-ask exploration stage in terms of where pricing is in the market. I think we have seen obviously with the increase in rates. We are waiting to see where that transaction market would settle.
Scott McLaughlin: Obviously, in terms of our company year to date, buybacks have been our primary use of proceeds. We are monitoring the transaction market closely, and we are curious to see where things settle out, especially with the 10-year being 50 basis points higher than it was in the H1 of the year.
Operator: Your next question comes from the line of Rich Hightower with Barclays. Rich, please go ahead.
Rich Hightower: Hey, guys. Good morning. Obviously covered a lot of ground today, so just one here. Back to the bad debt, slight uptick, which I think had a seasonal component too. Just generally, if we do start to see broader weakness in the consumer or in the sort of core renter demographic in your portfolio, where within the various KPIs should we really expect to see that show up first? Is it bad debt? Is it renewals start to soften? Is it on a lag versus the broader macro? Just tell us how to expect if that were to occur.
Tim Lobner: Rich, thanks for the question. This is Tim. The 80 basis points of bad debt that you mentioned, it is actually 75 for the quarter. I want to point that out. I also want to point out that, as I mentioned earlier, it is 60 basis points for the year. That is not that large in the grand scheme of things, and it is something we watch closely. We do look for leading indicators. We are not seeing anything broad yet, but we keep a close eye on it. Like I mentioned earlier, there is certainly a degree of seasonality that comes with this. To the extent that this is any different, it is not. It is something we saw last year and we will continue to monitor. I am proud of the team and their collection efforts year to date.
Operator: Your next question comes from Michael Goldsmith with UBS. Michael, please go ahead.
[Analyst] (UBS): Hi, this is Amy. I am with Michael. Previously, you have discussed full-year blended rents coming in in the mid 2% level, which suggests that blends in Q4 should be a little bit ahead of preliminary October numbers. Understanding that there are different levers that you can pull, I was hoping that you could address the blend. Then to the extent that occupancy is higher, how much pricing power does that give you across the portfolio, given that most of it is scatter site?
Jon Olsen: Hey, it is Jon. Thanks for the question. I think as far as the blend goes, we continue to be pleased with what we are seeing. I will refer back to some of our earlier commentary on the improvement year-over-year on both the new and renewal side. The renewal business continues to really be doing the bulk of the work, and that continues to be, as Tim said, in kind of a steady 3.5% to 4.5% range. As we look at the balance of the year and how we are going to finish out the year, and as we compare it to what our experience was in Q4 last year, that is what gives us comfort and we are going to continue to drive for that mid 2 blend, and focus on controlling the things we can control.
Jon Olsen: As far as pricing power goes, I would just remind folks that we sort of closed out the year a little bit softer from an occupancy perspective last year. We had a fair bit of standing inventory as we closed out Q4 and entered Q1. That is a backdrop we would like to try to avoid. We want to start the year from a stronger occupancy position because it does give us that much more incremental pricing power as we operate in these markets. The hope is that that along with a moderating supply picture subject to some of the questions around builder inventory and shadow supply in the scattered site market. Those are all things that are going to kind of factor into where we land the plane. But we continue to be comfortable with that sort of blend for the full year.
Operator: Your next question comes from Peter Abramowitz with Deutsche Bank. Peter, please go ahead.
Peter Abramowitz: Yes. Thanks for taking the time. Just curious if you could give an update on what you are seeing in the private market for potential portfolio sales. Particularly, I know there has been some conversation around smaller players in the market looking to exit or trim their exposure in the business, just given the legislative changes. Just curious, any changes in what you have seen there and how you are thinking about potential return hurdles as you evaluate portfolio opportunities?
Scott McLaughlin: Yeah. I think to date, as we said, our primary use of proceeds year to date has been for share buybacks. Again, in the last quarter after the ROAD to Housing Act got passed, I think we saw a couple of small brokered transactions in the market right now, and it is too soon to tell kind of where those portfolios end up in terms of valuation and pricing. I think maybe the timing of some of those portfolios might not have been great given the fact that interest rates have gone up 50 basis points since they launched. Again, we are monitoring the market, but I do not really have any guidance to see where we are seeing portfolios trade, and it is kind of early.
Scott McLaughlin: I think the only transaction I would mention is that, as you saw we disclosed in the quarter, we did close on a small portfolio of about $80 million into a joint venture with one of our joint venture partners. On that particular transaction, this is something that we had looked at earlier in the year and then put it on pause during ROAD to Housing, and then revived after the bill got passed. I think that was a very attractive portfolio, and I could tell you on that particular portfolio, pricing was north of a six cap into the joint venture, and so the returns to us in terms of our share of equity, including our share of property management and asset management fees, is substantially above that six. I think we were pleased with that, and our partner was pleased with that transaction.
Scott McLaughlin: But other than that, I think some of these other portfolios, we will kind of have to see where they shake out.
Operator: Your next question comes from Michael Gorman with US Bank. Michael, please go ahead.
Zach Light: Thanks. Hi, this is Zach Light on for Michael Gorman. Thanks for taking my question. Building on an earlier question on transactions, I want to ask about the cost basis differential between acquisitions versus development. The average acquisition basis appears to be below that of the development pipeline, and though the sample size is small, we have seen this happen across recent quarters. Does this spread potentially signal that the acquisition channel is starting to make more sense again? Also, how should we be thinking about incremental CapEx required on those homes relative to that initial basis?
Dallas Tanner: Hi, this is Dallas. I will try to answer a couple of your questions. First and foremost, some of the legacy deliveries are coming in off of commitments we had made years prior. So that cap rate, I do not want to call it artificially low, but it was just underwritten in an environment that was far different than the one today. Scott just talked about it. I think for us to do something beyond share repurchase right now, it has to be really compelling. Right now, share repurchase has been, by and large, our most compelling use of capital over the past four quarters. We started to see that going into the end of last year. We were clear about it in our Investor Day, and I think our actions have followed through and sort of backed up what we talked about in November of last year.
Dallas Tanner: That being said, I will hand it to Scott here in just a second. He can give you some color as to sort of where cap rates are on things that we are seeing in the private markets. But I do think it is really important to emphasize one thing he said earlier, which is capital is just starting to poke its eyes up after the ROAD to Housing piece of it, and the market is still trying to find itself. There is going to be some volatility in what a stabilized portfolio or a new acquisition will trade for, I would bet, over the coming quarters, given the volatility with the 10-year and how people are thinking about their own cost of capital. Scott?
Scott McLaughlin: Yeah, and one other question you asked that I want to address was on the capital invested, which is, as Dallas said, these were the legacy final deliveries of some of our communities. But in terms of the upfront CapEx, these are brand-new homes we are buying in general. The acquisitions that you saw in the quarter on balance sheet were brand-new homes. The one you saw in the joint venture was an existing SFR portfolio that had tenants in place. But on the new construction, our upfront CapEx is pretty de minimis. Other than maybe having to put in a fan or a fence, there is a pretty de minimis upfront capital investment. So when we buy new homes, there is really no incremental capital above the purchase price of the home itself.
Operator: Your next question is from Jesse Lederman with Zelman. Jesse, please go ahead.
Jesse Lederman: Hey. Thanks for taking the question. I want to ask about expenses. Full-year expense growth guidance seems to imply several of the non-tax expense categories are expected to be flattish or maybe even decline year-over-year in Q4. So would love to learn more about maybe which categories and what is driving that, and would love some more commentary maybe from Tim or Jon on what specific line items across the model we should expect to see some of the realized achievable accretion from the Investor Day initiatives, and if that is still on track. Thank you.
Jon Olsen: That's a good question, Jesse. I'll cover just sort of the P&L line items and then let Tim speak to some of the Investor Day initiatives for a moment. Look, I think as we look at the balance of the year, we are cautiously optimistic based on what we've seen with property tax bills thus far. I think we've got about 40%ish of bills in Florida. I would say that that is what gave us comfort adjusting our expense growth guidance, and the hope is that we will come in closer to the bottom end of that range. We have seen some volatility in some other line items. In Q3, it was a pretty hot summer, and Q3 in particular saw cost to maintain run a little bit hot.
Jon Olsen: We saw a lot of HVAC replacements and some of the other things that you experience when the temperatures tick up and then stay up. As we look at the balance of the full year, I feel pretty good about the midpoint. My hope is that we will continue to see moderation in some of these line items, particularly as we look to the future. Obviously, we'll talk about the property tax outlook when we get around to 2027 guidance next quarter. I think these last few years, we've seen a pretty good amount of deflation in some of these expense line items that were a little bit more elevated for a period there, and we think that's good news for the long term.
Tim Lobner: Jesse, this is Tim. Thanks for your question on Investor Day and the efforts that we're making there. On several fronts, actually. I mentioned them briefly in my prepared remarks. Let me go into a little more detail. On the modernization side, we've centralized our HOA management function. Some parts remain in the field that need to remain in the field, but we've brought it under central management. On the rent collection side, we've modernized and centralized that as well. Those were two key areas. In fact, we didn't talk about any degree of accretion until 2028, so we're actually ahead of schedule on modernizing our operational program. Another area we talked about, and this was on the technology side, Virginia Suliman had mentioned it, was our customer centricity.
Tim Lobner: We launched our first version of our enhanced customer relationship management, our CRM system, with our leasing associates, and that has gone well. We are progressing as planned there. The last area I'll touch on that I discussed at Investor Day was ancillary. Our ancillary services or ancillary revenue program. We continue to build out that program. We remain on track in terms of the financials that we discussed. We're growing the internet and media platform. We've expanded that to a larger percentage of our footprint. We've also, since the last earnings call, introduced our washer and dryer program in nearly every single market, and that continues to go really well. Residents are finding that of value, and we look forward to continuing to expand that. To summarize, I'd say our Investor Day efforts that we outlined are on track or ahead of schedule.
Tim Lobner: Appreciate the question.
Operator: Your final question will come from Jason Sabshon with KBW. Jason, please go ahead.
Jason Sabshon: Hi, this is Jason. Thanks for taking the question. I just wanted to ask about the new lease deceleration. Last quarter you viewed the sequential pickup mainly as reflective of improving fundamentals rather than seasonality. Just curious what drove the deceleration that you saw this quarter end in October. Thanks.
Tim Lobner: Hey, thanks, Jason. This is Tim again. As we shared on the call, our new lease growth in Q3 was -0.2%. Look, that number was largely anticipated. We typically see a decline in this part of the year. There is certainly a degree of seasonality as more product comes onto the market after peak season move-out. I would point out that we saw the same trend last year. Look, I also would like to add that we have made progress every single month, year-over-year. Every month we have seen a higher new lease rent growth. We are going to continue to, I would say, optimize our leasing program even more. We have got a great sales team. We do not comment on future months. I would also point out that the new lease rent growth is not really what drives our overall blended rent growth.
Tim Lobner: 75% of the book's renewal, that remains healthy, and we expect to see kind of the blended rent growth that Jon talked about earlier.
Operator: This completes our question and answer session. I would now like to turn the conference over to Dallas Tanner for any closing remarks.
Dallas Tanner: I want to thank everyone for their questions today and their participation on our earnings call. We look forward to seeing many of you at the upcoming conference. Thanks for being with us today.
Operator: This concludes today's call. Thank you for attending. You may now disconnect.
