Apartment Income REIT Corp - Ordinary Shares (AIRC) 2 May 232023 Q1 Earnings call transcript

Welcome, and thank you for attending today's AIR Communities First Quarter 2023 Earnings Conference Call. My name is Sierra, and I will be your moderator for today's call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]

to General conference Counsel like Cohn, to now and President of would pass over the Lisa I AIR Communities.

proceed. may You

Thank My day. I General and Lisa of Sierra, Counsel and and am name Communities. AIR Cohn, President you, is good

found the conditions, this market related make are of trends, to including projections socioeconomic drivers our statements based During forward-looking we performance management's on call, subject judgment are factors, XXXX what conference macroeconomic of to certain current our uncertainties, and other results and Actual description be today. may from statements risks which a may can These in discussed materially filings. SEC expectations. differ be

We today will Kimmel, that Keith management of the of Beldin, remarks reconciled members Officer. FFO. our are Prepared to as McGrath, also those President Investment published Other of full come comparable our earnings Committee; is from Considine, such part Chairman Operations; release and in also Paul present. discuss John Financial our Terry on information non-GAAP CEO; measures GAAP website. AIR's are supplemental and Chief are financial Property These of defined measures certain the

All of be the during session, will us follow remarks. prepared available which our question-and-answer will

the now call Considine. will Terry turn I Terry? to

line margins, flow the top rate rental after of the free year-over-year of the call interest our plans. highest highest highest to bottom AIR thanks of Thank and rate corporate operating expenses. were with measured track brief. results you, revenue with on expense will Lisa, my lowest the the AIR's to operations in My be cash all line you for on comments all each in and Communities. this your AIR first peers growth, most growth quarter net led increases income, conversion

AIR effective consistently and AIR teamwork the culture is public raise team, consistently playbook, as the liquidity. best teams are continuous Keith market most multifamily improvement lead who AIR place to to with committed who site and leads emphasizes know and Edge veteran stable work. way to the in efficient invest AIR the

are the important who higher tenure. service and Two and AIR customers. personal relationship sense buying and managers together gives explanation their the that efficiency, technological of AIR to a to commitment of productivity mission low of priority high expenses a respect controllable teams long and a AIR's values

the rate the satisfaction, sector-leading of together, XX Taken results customer customer costs. sector-leading XX% is operating in sector and retention, low growth in months last

the the growth. In apartment moment, in average comment on required quality XXXX. all AIR balance a REITs of measured on to refund the little rents will of No liquidity, Paul billion to maturities AIR top comment the will sheet. of years, of rent in John enough number the when by refunding repricing until safety almost three follow for portfolio and risk, two $X

of of the XXXX, and rest to same. Looking to the should quarter more expect ahead this shareholders

Solid strong the my execution to thanks aggressive the management, on in board. entire including colleagues grounded balance portfolio But team, and a engaged culture, helpful sheet. a AIR AIR safe

I'll AIR turn to Keith, Keith? of the Head Ops, call

Thanks, Terry.

quarter was are effort. a and good like on Results a The these first plan. team quarter

led has that who charge appealing. find years, portfolio in residents the markets two John, over the past right to much communities us with owes transform ops the in and to success Our our placing

for collections position now much disciplined are good restrictions during a and puts owe approach the rent. rent accounting Paul also We winding to It in down. his pandemic due us that past on

Paul's from AIR benefits approach. two gets

and today First, provisions ago. have to we years two not make for not received do rent three

we have is rents collected. fact, upsides reserved when In previously

today. XXX begin that are to is or X,XXX It during government January leases than and in to apartments, and to able the residents moved move of with residents when quite The pandemic customers, restrictions normal so And more delinquent who previous of actually ballooned now out apartments is low. from number higher to re-rent income. rent their non-paying times Second, we now we to add as two decreasing doing are the steadily to paying and those are these XX% positive residents XXXX re-rented out, in months the XXX during resident.

to residents technology, hard to is us quarter a impactful the is long Most business most and want Edge, analytics our that and a importantly, the Edge residents evidence result. to is we matter and that stay creating an further This team. attract of operations different a The We impactful too, platform community call term. We is what process, quality our to and with worked develop AIR first people. is begin relationships core where combination make stickier. of AIR playbook, performance approach our with high leads a the

building We're taking care diligently X.X made community of the our quarter. resident are on-site properties, of world-class the That surveys X is our but out teams, scoring XX,XXX and on provide of service only not service with possible to maintaining our who residents. sense customer during first us by committed customer

XX.X%. As stay a put, turnover over our or of the to of result, retention a XX.X% just year leading past residents our

had pricing costs. higher To with turnover of the one lower the AIR's lease fewer context, in long is decreases drivers decade key we in marketing and power. Fewer That put XXX move-outs XXXX. drives that in units personnel, of turnover compared first to quarter

low. into not available the created motivated community and with friends too of experienced is turnover value and philosophical needs supports community, the just that, matching team when the product This process, commodity. so leasing and selling So our only their the applicants the Not just It a by does isn't neighbors results. stable translates throughout stance.

the average growth first growth up up of renewals was leases our through blended for X.X%, prior us I into more you growth translated to allows revenue staffing XX.X% due which robust basis the which lower in expenses Occupancy be lease new remained our XX efforts. strong at points quarter, X.X%. turnover were and XX.X% operating the from up mentioned, X.X% walk rate quarter. signed with year. marketing Rate me to efficient Controllable and Let down

income from last as This year. operating in is net And results. of margin peer drives XX.X%. predictable AIR culminated point first were basis of increase a growth acquisition growth net an as result, engine Adding up leading to a XX.X%, XXX our a demonstrated by market Edge to quarter above that was operating Total expenses X.X%.

now basis XXXX the of D.C. Fort same-store growth our class and Washington, same-store same-store than to in portfolio of in Our higher XX rest the Lauderdale and growth. communities, revenue contributing XX% points

communities AIR were XX% at continue the The Controllable efficiencies in operating inherent down expenses these earn platform to in. acquisition year-over-year.

COE. to acquisition Miami of class on roughly decreases days, stabilized is Beach but in performance track the similar our Southgate with the after implementation very AIR is Our XX% In growth is XXXX XXXX on similar trajectory. in Edge of same-store with expected in be revenue with a the early above

plan, above renewals our spring seasonal vacancy. and typical average the the April Rates bringing lease, is lease the blended frictional acceleration rates continue to prior rates be up on up expected leases in in up signed X.X% strong trend lease with X%. X.X% up

forward in during blends And occupancy third X% peak and declined the associated as quarter. churn are rebound with season at in similar the second move-outs expected, planned in Looking range years to the quarter, our an see has occupancy daily see Leasing average to XX.X% sequentially expirations. beginning with to volume. performance anticipate We we April up line of as accelerating the past. we rates, from seasonal is throughout ending with March of XX% expectations,

leasing through so, a confidence. And gives is year. days everything It see are solid. strong. remains roughly The early third I the we're me our for demand Rates even

the drive forward and rent to AIR above season trend to you. successful year. service a are the me to residents Edge team will AIR look for a remains world-class, the continue to XXXX. day for energy paying with each every customer all Our great and Their turnover consistent balance members of is and thanks low, results inspires start My peak

of with over And Committee. turn I'll McGrath, Investment Chairman the now the John that, our to John? call

improved on on focused and remain portfolio operate team's was allocation, the good just repositioning Keith us it already This, price a extraordinary the capital by including better. made make We has Keith. disciplined accretive REITs. AIR quite enabled you, take management market through and capital to an portfolio coupled his multifamily to that AIR portfolio point and and allocation. has with even work Thank diversification

ranked is we in and our rank in average same-store where growth we that's And quality portfolio. among one. portfolio rate three number our evident rental in peers improved rents, where Our number

acquisition Edge. AIR Our the portfolio and is team growing thanks faster, to Keith's even

proud we there While of are is to do. the still work results,

properties excellence, that the leverage. Looking limited operational will ahead, generate I by high-quality in from focus expect capital work enhanced business increase no as quality usual. and with recycling I benefit Keith sufficiently improve risk well-located, returns into business and financial portfolio to Edge AIR to will on will

to ability accretive busy continue to cost the highly are in Although source Josh transactions. which no the I and trades, am goal additional execute returns of I we whose in have to capital. acquisitions AIR confident be our of will XXXX, fixed discussing possible portfolio and improve quality our will for and

I'll to that, call Officer. turn our With Chief the Financial Beldin, Paul over

on Thank sheet year for full with high-quality capital our and our brief conclude will quarter you, uncertainties the The the discuss and today's John. dividend. markets. balance balance of report for positioned sheet, I AIR our expectations Today, first the is results comment well

today moment spend rate I'd leverage to relative its risk risk, and to addressing like repayment liquidity, a interest EBITDA.

debt committed a sufficient repay is in for credit about billion. to put existing established we are six that complement due comes secured to the revolving this facility our peer April, all available is AIR average. Adjusting liquidity credit times X First, for years. this size, approximately next the current facility. of To $X.X context, our sources In

bond to $X from minimal XX next basis the can quickly The provides with as-needed new and current provides of which for and on new added insurance. points, for structure currently committed years. basis is pricing have secured the while an facility financing The to facility costs. XX up lower Properties billion we inexpensive XX removed be today plans basis Mae financing that is Fannie on a no than based by points access to grid, the

months. maturing no to AIR before XXXX. as committed has XX financing And sufficient previously, maturities debt option our all debt have at the we noted next refinance available Second, for

net affect approximates X% rate per a by earnings rate per limited less share rates Third, interest X% is risk than year. leverage, in our change would debt, to $X.XX floating which of

our leverage Fourth, the in is Southgate by acquisition today January. Towers of elevated

renewal earn-in the property EBITDA leases, that from plus current new that and reduced will X.X% be borrowed and with will proceeds amount expect leasing loss our the existing sales We increase lease. to captures from of that

the with EBITDA X. to of X.X We expect leverage to to finish AIR

quarter Turning results. to first

same-store FFO the the The midpoint our losses. $X.XX equal recurring is per by positive exceeded to of was negative casualty offset non-recurring quarter First of higher-than-anticipated guidance. NOI growth was slightly share, but expectations,

$X.XX a $X.XX portfolios the acquisition and our and from Looking by we we sequential NOI the of half. between forward, second $X.XX per same-store midpoint second per share, FFO first in share driven and FFO anticipate acceleration quarter at anticipate $X.XX we half what in expect growth

We acquisition come $X.XX rent roll roughly same-store in two-thirds of portfolios. space approximately earn-in anticipate that or will from and the the

is market today's Another through collection consistent levels real likely achieved at including so to resolution rent reserve to with a lease. to $X.XX be achieved costs, rent The Lincoln loss may estate and/or the successful season at for Place. leasing future be appeal at long-running remaining lower typical through sources, outside tax of $X.XX variety growth or future results past-due peak a

a AIR declared share. Board cash dividend the annualized on per reflects On dividend of of of share based over yield price. the X% current basis, Last, $X.XX quarterly a Directors the an

average. present nature to peer receive Additionally, investors taxable XX% compared AIR's the of dividend to more allows dividend as tax-efficient

questions, we you time it will queue. that, your question. per I'll turn for now to Sierra, questions first call over for the With the the for open in letting two

from Instructions] [Operator Our comes question with Wolfe Eric first today Citi.

open is now line Your

for taking my questions. Hi. Thanks

question just First growth. on is market rent

in growth year? released the to you grown this it's it's market whether what that rent far any And in do so guidance there's Just think be not your how they're line that year, expectations? curious with still going for

far. has bit Eric. Keith. year, built we've about that I so started would out market X% It's we've as it's seen in say been a been that -- the of Hi, little growth, rent

April, of of tell to it. But the we continue the But think Now a third July only really leasing to third second blends the in has I lot a would way and of quarter. you that activity at in be little can that June, is clear, have happen a through what our course, the that into a August. we're balance we seeing of -- over X% we're

And get but wouldn't I ahead indicators. seeing ourselves, of we're so good some

think implementing you'll us coming from where for new upside the highlighted you see it's do release Southgate curious your then And specifically, there, on Understood. acquisitions. achieve just from? When of system understand you kind NOI Towers could just your it? what you upside But help

Eric, to it can -- in you repeat the a little question hard bit came hear. was

said highlighting good your that did release Understood. job your system. upside the a implementing I from Yeah.

for Southgate of sort of coming was whether I would increase NOI you in just and sort specifically, similar So a curious expect Towers that's XX% from? where

give This wonderful acquisition due although capture performance. early we're the when at to platform the over actually fruition the and underwrote I'll Southgate, how that, loss but specifics, Eric. ability Hi, it were Keith's a specifically that operating we cost had to implement John. the opportunity, looking seeing coming that's AIR On underwrote more the to reduced lease, days, And we're pass to Edge had the seeing beginning. Keith to it opportunities to fact at we today. of we it is we at looking that we

we looked at one took was opportunity. a about we a first XX% at, of loss there things went believe we the we Eric, to So look lease when that saw Southgate,

course, to it has realized one the takes and cycles way over. its that upsides one in actually to of that greatest we of a of saw taking was through. work become couple Now But that

Got you. it. Thank

question St. comes from next Our Haendel

Juste with Mizuho.

Your now open. line is

guys, to guys. there. you out Hey, morning Good

Haendel. Good morning,

Thanks. Great.

to First messages credit beyond What's are from guys you billion incremental that decision pricing? $X taking now? hoping question line. was And pursue secured? the is Thanks. we could bit Why on there expand decision? here? I the Why be other line new any a the a should secured liquidity, away this secured on the

no -- reverse are is the current have except various to particular economy. And possibilities in them there that world extreme the take let's ready and the There's unpredictable good it's inside cash. Well, order. message

arranging And us optionality. has we've low is of long gives facility, sure that be of in this and term very so lots done we liquidity, which want cost, to got and lots great very Paul a job

I in Can and pricing? new didn't the release? pricing the you share the the notice term

Yeah, Haendel. Paul. This is

new of duration to XX a XX has up years facility first can years. the originated So the be where loans during

is a as can And think pricing at you alone then upon of based So desired. for market will facility. the loans that XX time year be the

facility. -- at don't access today, So level. But be the an have the to a need the probably that intent at point around we X%, or would X.X% today's rates,

from So our I insurance is as in my mentioned future as viewed as remarks, uncertain. perspective the said, is Terry because,

bit trend perhaps an Maybe the quarter. the to or you on for you could deceleration the for color. one renewals part Keith, your Thank again, the touch Great. a that quarter fixed? little moderate on of a decision quick in sensing are you. turnover that the any intentional on in Curious renewal Is you pushback here?

Haendel, thanks the becomes rate. the really absolutely what No, for take question. It's just not.

the We from a at that the levels and strategy. line. revenues get are levels at So a higher lower the could particular we out, take will them X% that a solve different no What mix, and ultimately happen set blend to to total but is always of bottom those different have folks of some some range when they'll be increases, possibilities will XX%.

us that power, here us but anything So want to longer with residents pricing intentional. gives that stay not was we

Great. Thank you.

comes question from Capital John Kim with next Markets. BMO of Our line the

Your line is now open.

to morning. occupancy. Good wanted you. about Thank I ask

trended lease down. it last rates healthy during at the and to quarter, but versus leading, mentioned Your April the points you seems of Keith, growth second in basis occupancy, year March. sector which occupancy are And declined expense that XX be

wondering basis if it the think this similar I the I quarter. you in was a year? second during trajectory And points down XXX expecting quarter was are

to -- happened really thanks that from April, it. question. play two you there's into I When look that occupancy John, the the move would at for March factors

that's of moving vacancy by basis down came we are through design, that expirations first that frictional and points the additional lease out and had through seasonal going moving one is process just XX The it.

basis and the that about then balance be in points. of XX we're that's skips through And the would the second the impact happened quarter And first VIX piece the of the to that year. XXX that additional reoccupying the

So in the see two really deceleration at pieces, when occupancy. those you you that's where look

point we'll further being it's will And year occupancy in up and XXs exactly What that in finish will call the bounce further anticipate even plan. what as and you see anticipated is XX% what would drop July that ultimately the get have into, our we say I would we'll we that is will low grow will that hit back the back and it, it range. at we then in

Okay.

in would to clarify, in July, down range Just it'd XX% the be to XX%? it or drop

XXs. range the the It in XX will of be in --

insurance. question Okay. was on My second

in a was release in overall given there's a noted the above portfolio pool? in came on how just of on fair press and Florida I same-store budget. was wondering not pool, could XX% $X your You insurance of your you increase the your if comment assets in million amount your same-store that

release portfolio. Yeah, and John. really that The both same-store is applicable the pricing to in our This we quoted Paul. overall is the

so and context more bit And to provide a color. little

Our that we more. Patti renewal due this we a negotiating Shwayder past. of remaining we've overall thing don't want is did with to job the her on increase what increases. About increased not is for is miss and premium went XX%. and When due we any the self-insuring additional upcoming levels properties risk to increased is We're year think had or of the most I to value I But our in XX% fact did and policy consistent risks. process, through anybody not of executed the team wonderful that this the important TIV at take as XX% renewal, the

quite the we it, about higher although like. would we high-quality carriers, feel We good have costs than are very and

Thank you. great. That’s

Sachs. of comes next question Our from Luthra Chandni Goldman

Your line is now open.

that expense And Was was insurance? of non-same-store different the about call moments question was rose the talk the asking all you could Guys, that everyone. a asked just this -- conference what was way afternoon, just substantially driver? It's on the this Good ago? just morning. quarter. biggest Good in Hi.

you our and is second we couple of is in What's Chandni, same-store as report other. in One the supplemental, assets portfolios. different City. New our York is our in know, two other

see at if just has completed first And property New about you'll see and our property $X the in revenue increased so to the due that then XXXX, at quarter first each. City you we've But acquisitions look $X.X and And the that, you'll XXXX in of expenses 'XX. York portfolio. from quarter look you million that's substantially. 'XX, if million, that That's that

So there's in function that's XX the acquisitions It's happening our nothing really past or months. unique there. a of just unusual

talk you. appreciated. across markets? Are Thank Noted. And at How you're there could you using concessions color moment? market some very about you. Thank tracking? color general be would markets different any Any the geographic where supply

Chandni, I me Keith. about. that let well, you And a it's think through walk things few

good, that -- we're just and market seeing been occupancy seen good is the that is ability that, incredibly continue one been say say has is be strong to on stable. we've news has bad out. I'd first Los have to The that I'd the not to a but in going a And just there. because press standout, only there. that stands extremely we able rents Angeles D.C.,

back of the VIX One actions that skips come and those really multiple occupancy occurred was evictions, benefits the trade. to that the to came us. of have those up part have Well,

done the those us work for is then to that the balances opportunity have the have paying is residents, piece third that that we The out rootless we're from reserving first has compared seeing light is, at periods. rent to that XX% who further Paul gives plus. those are that The collections And trading is weren't. one to addition past-due what previous are that is great

a short-term San we a course, that we of acceleration and places. point just that. is top there's have would that winners occupancy, in And us. of of showing Miami is optimism one I upside see transition a L.A. then comes been in Diego out, with for whether So Denver have around, an lot variety

way markets. the are those you through So the I'd walk

so that Great. Thank for you detail. much

you. Thank

[Operator Green with Instructions] John next question Our you from Pawlowski Thank the comes Street. question. for

Your line is now open.

anything the X income me or guys residential XX for Thanks the first really outside in bottom Paul the drags I'm at table in achieved. the low the quite bps have in of A sup, struck the rental would sequential spreads same-store you put the relative growth increase Was question in for Hey. at of late you is to blended fees time. the high unusual there suppressed revenue? components revenue that lease sequential the Keith. Page quarter of looking

is would this like the Keith proceeded see rent is it's the business, we Paul. would about I nothing has I'll if consistent of probably John, anything. There's start has roll. to Keith think about, the But how through mentioned, as timing unusual expirations I and and expected. add what what rolled with guess,

Yes, add add wouldn't anything John, we going to playing just than other I I expect. -- out John, its was And as is would

in nothing there, but point And so maybe some to out. timing

low Okay. the of that addition Was of expired seasonally there actually an -- the outside normal unusually in to period? percentage leases low

our of would I number low outside of unusual norms. tell nothing was move-outs. low What No, you a had turnover we and our is

Okay. to $XX feels get are dispositions Last I of balance know Can trying outlined just more one for the deleveraging, year. trajectory what XX through just to of need terms you sup, have you're you get end the but in of dispositions I'm type like to for the clarify me, million the of only the deleveraging. you me, contemplated Page on year? the unclear by Paul, of to of in

looking So how much year? this to are sell you

we correct. that are You're and will the to our $XX and on million That's of guided expect working supplemental, In get that, dispositions. we team plan. executed. John

We also of EBITDA the benefit expect growth.

levels acceleration the of balance during as if growth EBITDA, to of you earlier wrap $X.XX that half. our year. the of think the really second so I will the on reduce to up us allow ratio That of leverage drive cadence commented And is what's increased and year, the the in about going we FFO our

Thanks for time. Okay. the

I to remarks. further call turn time. no are questions over at now the this There additional Terry Considine will any with

of your each in AIR. thank for Well, I you just interest

to call we our seeing Paul them. -- will to Matt And or please or you do myself questions, We many left answer well. look with best forward you O’Grady any Neris. month -- of at next if we Be have you

today's call. conference concludes That

now may You disconnect your lines.