AvalonBay Communities (AVB) 26 Oct 232023 Q3 Earnings call transcript

Welcome, ladies and gentlemen, and welcome to AvalonBay Communities Third Quarter 2023 Earnings Conference Call. [Operator Instructions]

Your host for today's conference call is Mr. Jason Reilley, Vice President of Investor Relations. Mr. your begin may you conference. Reilley,

and Thank Quarter AvalonBay Third to Earnings you, Conference Rob, XXXX Call. Communities welcome

Form a Form and Before afternoon's in we and a during as are discussion made well statements actual press may of XX-K begin, please the materially. the SEC. XX-Q risks in note release this that results may of filed discussion. as There forward-looking these associated with yesterday with uncertainties forward-looking and differ be variety company's statements, risks is There uncertainties and

and does results As press other to refer an this and used and website operating attachment usual, during we definitions information may available this www.avalonbay.com/earnings, reconciliations which non-GAAP release in review financial encourage and include measures you also of attachment This our discussion. our is financial to with performance. the today's be of on terms, at

over of Ben? Schall, I'll with Ben CEO the remarks. his to for President call and Communities, And turn that, AvalonBay

you, Thank you, Jason, and everyone, for us. joining thank

a our accompany release. In keeping earnings our we to night presentation custom, last with posted

opening by you and and to Matt, my our of for from the on from on being revenue building comments, performance projects addition will blocks XXXX; Sean hear on earnings the strength significant our our In development operating generated from and Kevin, lease-up; balance sheet.

and from technology, by our and our of of uncertain powered portfolio. from led bottom performance and laser-focused AvalonBay centralized our continue expectations. operating environment on-site X,XXX-plus and rates financial and science outpace to results. associates the team revenue to data and another we want management teams transformation, cap the model my our delivering teams proprietary strong with and to are interest flow I results line quarter by thanks our start Particularly cash growth on higher for systems, rates, current driving The operating in

primarily in suburban limited supply. operating continue which new suburban combination which to also is portfolio a coastal benefit and and to speaks positioning, our demand performance from markets, strong Our XX% steady of

Turning to growth, ahead This slower as of X FFO core positions driven by the revenue we better-than-expected us which presentation. expectations. the grew enter outperformance in well leasing season. Slide X.X% was by was which QX, in primarily $X.XX our We traditional

shown we've bottom which $XXX share, have includes of Slide a X.X% this and of sold cost, X.X%. at the million average asset we equity remainder As on rate from $XXX at an forward, which of X, priced that at per coming raised cap we with year sales million our the initial capital drawdown $XXX the of

and in a We completed the in suburban X.X% submarkets Northeast at in three development stabilized projects yield. one in two QX, Miami,

later, These funded lease-up by yesterday's capital outsized creation communities at As and value earnings are Matt and yesterday's cost our will capital, continue projects wide outperform investors. original our emphasize a slated margin. expectations to are with generate for to

on new our end We projected positioning capital two also at in range. come Princeton, development Jersey projects with one this prepared and the South Miami, I New back to the will mid-X% one in remarks. yields of quarter, and in started our allocation

in attractive QX, XX% or new program, fortunate this of investment feel our to made million these and of be book generating an under In commitments we commitments SIP, structured business building environment, $XX return. today's with

the points XX improving XX our XX higher a basis basis July, of QX end outperformance guidance basis with higher-than-expected Slide and revenue X provides from points rates of from uplift occupancy, from point debt. relative bad to from the breakdown

down up core XXX to revenue XXX year. in for to expectations above are FFO We XXXX, to growth the slightly, Xx X. NOI exceeded Same-store year. Turning is X.X% guidance which growth Expenses of expectations our leading X.X%. Slide We've this and points are expect basis raised initial basis grow points. now

with in a markets demand drivers and that, comment supply to the Sean favorable provide it turn fuller and to operating our on I'll And update.

Thanks, Ben.

some on thoughts topics. As thought we two start to I look to XXXX, I'd initial forward provide

First, of our performance And a revenue coming relates I'd macro will highlight a specifically. for year. factors outlook few support building second, to blocks that like few the the portfolio to the as growth in it then share XXXX

single-family over we compared years. it wage Chart experienced as Starting well affordability, to believe the as actually other that can regions than country affordability rental that's on positioned last product. given Slide our is see regions you In is particularly growth strong to rental few and X, our for relates sale of in established X, levels, the the been better pre-pandemic portfolio

owning X, regions. more Chart relative to established the option a of in attractive at in X the by home apartment between median-priced roughly our first if difference you XXXX, in rent quarters median the during has look cost makes regions XXx these the which of the certainly living increased XXXX, and And average

seen this already multiple points. of We've in the trend impact data

For of sales roughly to well existing our And the move-outs purchase home has this a over past declined own regions below has the percentage XX% example, below in by XX% in dipped of the year. long-term our year, volume home mid-teens established portfolio, average. the

Moving to X. Slide

And of established roughly to during supply, X% revenue existing we supply well but approximately cycles, This economic a Sunbelt. is new stock. multifamily if valuable compared market growth for is we new weaker of the a particularly regions, attribute own be submarkets environment of of XXXX. our portfolio portfolio bodes is to the projected relatively deliveries all also Our In our particularly where assets, in we stock. X.X% specific insulated as from expect experience in new

four Slide revenue blocks to for to I'd specific X. Transitioning XXXX growth. building highlight like

rent of long-term in average which growth stands the XXXX embedded executed our X.X%, during approximately the this from year. leases First, roll is point the at above we've at

trailed roughly about X.X% behind our regions basis West is the expansion and Second, the approximately at led at and X%, current loss-to-lease XX while Coast by East respectively. points, X.X%, Coast

model incremental operating our drive continue initiatives. from revenue we Third, to

For X year, the from revenue continue AvalonConnect XXXX. the and September and average for grow revenue XX% throughout of that about X our monthly greater will of offering the was than XXXX months to example, the run during last rate monthly revenue the months first

we're Lastly, bad debt. continued of tailwind normalization the expecting from a

the improvement bad loss in of improvement the the a bad X%, XXXX, will but benefit year, first underlying During roughly average The underlying from benefit XXXX. rent meaningful XXXX. we've be be averaged through as of recognized we debt we offset half approximately X.X% for relief continued partially an move QX the by to expect of compared still and as in debt net

should growth the during year. revenue these building blocks support upcoming together, healthy Taken

with lease-up turn structured Matt investment activity So platform. to it that, to I'll over address Matt? our and

All right. Sean. Thanks,

to Slide XX. Turning

results, foundation for both and laying growth outstanding NAV. Our lease-ups continue earnings strong to in the future deliver

per are We five rents $XXX yield fund have years communities had they on to and ago. even of investments driving any leasing above up underwriting. that XX these or five basis to development in is our that are of back X.X%, point broke deals the we a deals estimate above far further sourced leasing ground and turn, when current capital cost This, initial these several increase the above QX, at cap XX% active those month, in in rates

increase of provide FFO communities 'XX, apartment incremental which a a light in these we completions our relatively reach as will do year in expect NOI and XXXX, After deliveries in significant stabilization. to see

on XX interest quarter initiated XX%. at Slide investment two program, of provides an an million new average where last lend structured our rate update investments $XX we to all-in

the X- these X-year calls, we've common to merchant discussed loan, capital construction to equity capital provide are the sits on above prior that in As structure. where below we but investments builders

also We're expect get to additions roughly $XXX few We're this most earning grow buildup dollars years, providing invested to more million still early this a latest tailwind a in these return, earnings new we're the risk-adjusted able it continue underwrite to over start growth of the particularly business the to in of and of providing business for environment, to fortunate that program. a nice restrictive today's the strong return. as to line and next

turn I'll to with And over Kevin. that, it

Thanks, Matt.

the next to Turning two slides.

a to enjoy continue flexibility, both sheet financial tremendous and perspective. from and liquidity balance We a strength

can Specifically, is net our Slide Xx as of which below to debt on EBITDA to from X.Xx, you leverage Xx. low we of enjoy range a balance with target sheet see XX, perspective,

X.Xx Our of respectively. interest record coverage ratio and near and our unencumbered levels XX%, percentage are NOI at

capital, debt a match-funded are growth stabilized. laddered, maturities weighted provide And of nearly turn, yesterday's Our these cost projects earnings ensure in is years. X.X NAV helps which, are lower with well completed and average underway they to and when our of essentially with maturity years that XXX% development

for commitments a of a our excess development from addition, products continue shown investment we liquidity relative structured high liquidity perspective, maintain XX, quarter on of open to In Slide to and end. as level as

liquidity. $X.X excess enjoy we Specifically, billion of

flexibility a strength attractive pursue as the across emerge opportunities continue tremendous enjoy our and and we result, so the coming And to to in investment financial platforms months. stability that growth may

I'll it with And turn to Ben. back that,

All right. Thanks, Kevin.

as consistently are have well environment. We result, sheet And the a a throughout cycles. for balance current maintained we prepared strong

shown changes emphasized of years, environment, the sourcing over proactively have in we and we As past the based adjust couple on activities XX. as on Slide allocation capital our capital

as starts cost our assets, responsive net to forward acquisitions fund activity. adjusting as portfolio and be accretive continued the portion shifted changed. XXXX and We development XXXX And our the in development. start half to early of being be we to the activity, locked utilized and last a our in development XXXX year reshape a have future balance equity in fund in year this in the capital second to of we reducing prefund We to proceeds of of with seller

raised match-funded us of As and has that significant on deliver earnings and value. all we've and emphasized, projects will at to we in cost capital means underway, an XX% allows XXXX development attractive XXXX already our which that been generate are initial

On have on a new return go-forward basis, requirements development. raised our we

target the XXX of are cap target since development XXX yields underwriting of basis over low standard points is in market the in our For These in middle today. Xs points the return mid-Xs mid-to-high XXX was the a of with to and year, the and between basis spread returns development up year last to deal, goal rates.

after given our might double-digit and do returns are that the balance our to capabilities, through able we that term, at while we modest, positioned, ample liquidity from In opportunities on result to believe We be a maintaining outsized development environment of current on years and this in start expect lower we to environment end development in the -- to tighter range the of coming expect in And the the profit with of our we're at leverage, dislocations. market capitalize while number we're SIP are spreads low near a sheet be strategic volumes capital well in development strength, quarters focused margins. deploy lower unique program.

Slide prepared our XX takeaways. our key remarks concludes with

We balance by continue our incremental results to suburban coastal all from to deliver tailwinds a with operating our sheet. markets, lease-up fantastic NOI developments specific and to supported strong come and

line And operator, questions. with please the that, for open

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

I think your said to you be mid-to-high Xs. raised you yields that that's development underwritten

your And started under that everything curious level? appropriate you take pipeline think if what pipeline just So rights the else, percentage what that criteria? why percentage you Just and criteria? that's of development be with your future would

guess Eric, I it's a that I can one speak little to Matt. bit.

rates Ben spread of really between XXX cap trying that development to we're yields. and basis XXX preserve mentioned, As points to

of X spot rates cap hard know a would reflection where be so where It's mid-to-high to is we today. think. very And

summer where of I when sense to think a that had they the transaction were activity good has we up. started over pick pretty

most a bit little in of rates, a guess. the current With it's rise

It But would mid-to-high that's by maybe the to product vary in in of type does development by are preserve Xs the into translate of then that if -- the behind region, that. so yields think cap spread. you rates course. really But thinking kind that and mid-Xs,

meets necessarily of permits book what much. drawings percentage we found down, come go. the are in And They really don't to know actually only hard street, And you threshold, when today. hard have on it's moving don't that it hard bid ready you because what to around is CDs, hand, so realize we say realize as relates are that are really starting that to things where estimates, on but the you're to until current we that costs that to

a that the do I deals over have indeed, hurdle. quarter this have what that plenty say deals could next least think of mid-Xs. of couple we And in that the And started of were couple just that clear kind would So position. in two more we at we that that quarters we are is start

in ago, the will And that we're those changes landowner some to will cases, most that maybe XX go, from and on short have to engineering, land time the a by meet fall that, are months many that. economics those with bit probably they hoping current costs, of value some changes the ready X We to do the underwriting deals some with that. in hard of little

market today, through if for rate were give and sort just then That's building some growth out, revenue around Understood. could on the in you missing good early sense one the sense piece And you go you it terms growth Obviously, next was of that I us down, but do. whether if market the that your figuring for that, do detail what like. I too will helpful. rents look a hoping year. expectation a you're building of have provide up process would And to for you gave same-store to for then or just blocks know is it's that's just you what

Yes, as. sort I'll Good things. do crystal Eric. two guess, characterize we ball I But question. Sean. question, Good It's of it

macro We a a and then have there's bottom-up view approach. sort grassroots of

to terms that as from we've time, just is which a based today, slower a more factors of prices, loans, macro what on demand cetera. we seeing into standpoint, to decelerate that's perspective, headwinds expectation the headwinds. anticipate of student interest appear be From macro commentary job know that for probably XXXX, we a spend cetera, providing today, other things obviously, costs, I'd would whether it's wage growth given terms where been et the and what of as would we in relates move in There's it et number and potential oil

a January, it outlook take like forecast variables every our much naive drive pretty calendar year. look of good does consensus XXXX, a latest at points macroeconomic throughout into really the certainly, get We the at forecast the for when multiple But year. number for helps for we

on then estimate what what we algorithms in we market to our up cetera, line the based deliver use. And the of that growth ground on we re-scrub we're and going would as with seeing it's et pipeline, try terms what supply actually affected be to rent

a approach, you're as of depending So that bottoms-up as macro the it really is, again, at. top-down a on well looking sort variables

of environment mentioned, variables. sort of to terms hard softer for the In in XXXX it's I an as compared would provide estimate other macro based than, a 'XX today, outlook demand we to current on as expect consensus

with Our Capital KeyBanc comes Markets. next question Austin Wurschmidt from

lost near term, then to softer California, guess, in moderation build expansion of has to growth partly More to across of leasing the it portfolio some occupancy I the kind lease occupancy you've pockets softness some backfill rate like, been your midyear? this And of more of sought also you then in looks related season. Northern part strategic just as the Or the around continued of the into and markets? the like in is you

continue early quarter, our I part to Yes. of say At the efforts Austin, successful it I'd which number was reflection those markets. a I'd that. with, or as got Combined the And even region to third experienced one we as the I where remain and California two end point that would Northern of little certainly we a to of a occupancy, in the of of of would it's frankly. question. answers, a say, kind more primary to good build mix was the say places soft third softer quarter.

what saw quarter a two combination really, you relates well of as into change things through it as to rent as the October. So in

do you deliveries in do size to into your on mean markets? and And that completions those just maintain the pipeline? how of feeling your know think going some up spent profile able what dry And size next dollars you reward based you do to as you powder the expansion and the growth of on are pick the be pipeline about getting of of Or think just today, side new goals I year, investment better the risk of then given those external kind just side. 'XX? you the and strategic or on are development acquisitions are

with Austin, Ben. I'll that. start It's

strong underway, on we obviously they're are going good the And have So we when do to be delivering. value. that have conviction earnings got continue we create going there those to on and meaningful to developments visibility

head that be XXXX a pool. of the we that expect as not expecting do significant but It out quite that at XXXX, and into same ramp-up over And may outperformance of performance levels fairly seen activity. last year, the strong we've still

process to new the if I that rates. cap we're sufficient the relative a new development We about and development market clear. going side, there capital decision-making think on sure there's want profit been to think we've underlying margin make we very undertake to As

way to could where sure to there's of we an make buy asset. saying, Another sufficient we want profit margin

certain spreads. of for And or able we're over and in assets and in an opportunities we're those to there's that been been new you quarter cost two, are where we've the markets, some to this and there certain sufficient in able last our projects where in activity as And There today's build are in acquisition Dallas, portfolio start both. environment, structure the markets. obtain other to buy markets to development below replacement saw example, able

a as time. on and environment levels approach in we've market continue multiple that happening that to of cost over to a happening we our depending make fortunate it's sure on capital. well have And multifaceted that our approach. flexible grow as what's So us as in the team emphasized, in change as stay with we We're to approaches what's it's

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

kind an you demand in looks that which diverged can where But like which a tech of market and specifically those in to discuss in wanted markets? saw performance nosedived a the terms why there trends just Seattle, you leasing lease growth, was in California, on from your ask I such And September is improvement. rates picture? And growth in job of similar difference the of two some markets, October. Northern

Yes, John. couple that. Good There's It's different Sean. of to question. answers a

the meaningful regions occurred have saw comps those year-over-year starting reflection the particularly step-up the as get period, a it saw to change a you in what the we just you fourth noticed. are that's as also Mid-Atlantic further Denver, a first, in by particularly easier into way, relates to more where and Seattle, of into a Seattle, get rent as three So we're that quarter which the may in is on basis. that you here, in And in way, in

meaningfully Whereas in in it Cal concentrated I which quarter October, down and saw reflected so, you mid-September is to rent portfolio. the Things particularly San as the of Northern Francisco, say, what's XX% California, more then would did of our to more soften got most that's into as we change only October. continued in and into through sort Nor tick

think since just number headwinds And there's It's of I -- there's of pick to a to on Francisco, there. a is One everyone lately. things San different there. to couple seems it, like

I not probably of, case. the year the best to there. not some the It's aware of time As elevated well just we're think all demand seeing be

not great for this office the there's coming to to at still. And be reason people back really a point

as weak, remained and into through did So get moved fundamentals October. we quarter have they the weaker

and we why the uptick see So to weakness the Seattle, saw level be than to in the weaker year-over-year know with comp exactly say that overall, combine you that I'd hard did what's that's demand But same there. trying precise. not it's Seattle, you and in underneath other of

a then example, year, on there a in activity leasing throughout short-term basis not it burned for So year Seattle But the still off and compared was of is last where QX. year-over-year to lot a QX pressure is on at relative rates the have of and, end easier. in third comp more put the of demand the lot We quarter, didn't XXXX that short-term and therefore, strong.

saw Seattle compared to insight a what So not as the place in like into but to that's weeds, Northern get too far Cal. you some into

in bad That's you of be likely relief in commentary quarter? wondering I My year X.X% you this is question bad market a My 'XX an was, improvement tailwind was is earnings. in if debt. much Florida could the very improved which from you discussed, debt, and can on Southeast provide how you question helpful. to has see pre-resident this on got some second your funds And that. that And particular, surprisingly, worst-performing is

Sure.

rough XXXX, around the trending so relates question, to as on XXX debt, where about you beginning in sort X% trending at the look first today. of point basis X%, bad it underlying to down sort year we're of roughly there's debt, just justice, today, bad to improvement the So of of if sort

roughly improvement think We've there a being almost seen noted. all in XXXX, the what and across as market improved you year at rate. meaningful but of like now modest as Florida Southern certainly I improvement X%, at seen But improved outlier, regions, some California, we're kind to regions compared a which started X%, it that we've the other below was in more

we at I experienced But to look improvement be experienced the forward given may meaningful in XXXX, what for it XXXX, as that think lower we rate than California. we So is continued slightly in improvement expectation a Southern the there.

York slowly. we're And New down a like moving some little now things more an example, where as are to regions,

than we makes if that what improvement throughout may throughout slightly lower So be sense. XXXX, pace experienced XXXX the of

improvement, some But we're that will mind in that in is not the loss did by but it XXXX. that offset roughly $X we recognize be, in rent million expecting call be that's will to relief the partially of other we it, meaningful to thing keep have to XXXX going recognize

So of debt to helpful. blocks some relates as bad are hopefully are that the these it building

and was. would other has of have West kind Palm it's Miami beyond in debt elevated expectations. tell been, where The As been seen Beach but expected our where have It's it in elevated I frankly, been it really Fort our the and market expectation relates is would what Florida, has specifically, Lauderdale. to it what held up markets been would we've you two we bad beyond

Stanley. comes question Morgan next Adam from with Our Kramer

December sending for Wondering and where out at? renewals November lease you're

which we QX Yes, sent X is the December, November out at call. relatively and X% them for last for what we quoted the where We with were on consistent for Adam. months of

seen in seeing have still renewals the at to in markets X% X.X%, point within to We committed you're range, the But recent of in basis to a realization. XXX looking come more depending terms on little time sort degradation we're the at. of some offer it's where more period XXX

it. Got Yes. maybe one. another Helpful. just then And quick

us Just of recent -- where what remind kind percent to the -- move-outs of quarter, the where in most or was? buy a home

Yes.

in been mentioned remarks, It's my XX% I QX. in all As prepared X.X% it's about trending year. below

so I been think down. we're it QX, roughly X% has for trending

of As long-term mentioned, sort high of the I kind been the as as high kind it's average and the is of teens in mid-teens, pre-GFC.

just kind of recovery pre-COVID I debt -- guess, of back of is maybe back one the of there? specific that bad of frame about time all, achievable, not to kind which all kind kind pre-COVID last To And get way is to time that's I think from me, okay, path of of kind I'm then necessarily. of frame if to And first Great. back it goal? levels, the for or kind or the kind getting kind is But a of what's levels? for quick the rough the guess, just for you asking if progression. one number

question. Good Yes.

a be pre-COVID it, of which is new us, normal points typically, call are XX, or XX not. whether for going terms basis to the In levels, it's question

occurred is really get changes or points. country, probably, to have both the it various given be more XX, back across the basis that XX, know yet. realistic. XX ideal that industry XX Maybe markets think I I don't in expectations, to think we might regulatory

believe I like terms say into certainly, it Greater to full expect we markets as back of more see is I the really York to XXXX. through carry XXXX. to relates there, moving particularly courts, Maryland, D.C. need to get by little would time New a the cases And the I region. would and what movement in stabilization get don't And of in to what the is end it we'll

earlier, I sub-X% X% bad As mentioned California, in debt, progress seen significant we've now. Southern down

of some We of other mentioned. haven't in that percentage terms seen like just anything I in regions the improvement

Our Pawlowski with next question Green John comes Street. from

the on follow-up tenant a conversation. delinquent Just the -- just

of the evictions a maintenance expect and you through backlog repair in next acceleration long-term work you meaningful year? and As units, costs delinquent do

John. Yes. can. Good question, We

of some posted year And that damage resident, there's, seen we've but greater then be yes, collecting pretty you're have billing cost you We the this units. the receipts terms might it in writing back reflected obviously, just damage what as off not much because of to because you're in in it. immediately

both So has costs, remain eviction I rate and a not It would from say remain to along but that, that to it in I been should elevated in 'XX with and expect significant would elevated growth legal this also that, XXXX. year, categories. may elevated be 'XX,

quarter? sequential in D.C. proper Okay. Sean, past revenue color market-level just one large the you question. Can give a this us -- on some color decline

issues a issue. what of as seasonal you've it there's to a number got relates is -- of proper, there, D.C. sort Yes, primarily,

We the probably have other universities. AU have to three that or student exposure there population assets near

and that most typically occur you see so QX. the That's bounces component. back quarter, And in then that sequentially meaningful during it

relates it top in supply submarket on student far, overlay the There change NoMa to one. other as is population things that and that. are things could sequential you by But of the miscellaneous the the most other meaningful of

Our Feldman next James with Wells question Fargo. from is

like acquisitions, did before sellers? I you any Great. guess decided the the much were looks in move talk pricing is first my both quarter more what October color the pricing. to can market just about the in the how about question, you acquisitions? love the I assets? How hear Just to buy distressed I'd guess what for and on

Matt. speak It's that one. I'll to Sure.

of worth sold next So will million again, week. we just -- at last one back close dispo, including which here, $XXX taking -- end a the step this assets year, close our

XX high at a all the And assets the kind year, were sold and $XXX blended three were softer rates days. bought year. year, Xs. those those a We in for of priced a in earlier later cap throughout i.e., the rate about Those cap the like last in the were kind And million, pricing of more mid-Xs. pricing average better in

And those some little were price. the I cases, cases say, one In in to of distressed. the gave probably boost assume we seller would a did which no debt,

assets, than and much higher if at -- if cap they -- price certainly those in of So all know that. higher. don't would how we today's price were market, to rate I a

seller and appetite But what of is happened dispos. being in for net so with a to side. XXXX on we again, that's sell first. the buy many holding cases, assets, exchange, pivoted same informing we're the proceeds And And some our those of we a kind of

we of of or from debt really million $XXX So $XXX proceeds were cash the assumed sellers you more realized million the we factor in net terms in it. like after

The the regions. I'd sold you is We think assets our old. assets bought years with what an average a of a allocation. good doing out them our We on established on They what were, illustration price and month. four rents at is average average, of other of unit, XX $X,XXX $XXX,XXX say a the sold, those sold we was when portfolio thing we we're what about it versus

able part in our to in regions. assets area. of cases, assets are they are to bought The Greater value in through Charlotte the in It's operating operating platform three add those and scale many three cases. were getting we where Dallas we In all

while that rate in yield think X. we more is So is the a cap like the mid-Xs,

it and those scale onto as a with flooring. economies of we're washer is regions. we get a bit doing bringing of value-add, some of lot in surface dryers just hard platform light our little some Between But operating value-add, it

X cost, And and We average, years $X,XXX. those average mentioned, which $XXX,XXX of three assets, as today's door, are is replacement old. below a paid, Ben rent on average, on

much think better much has growth we point, So which price a profile. affordable more a

Okay. rents get and that up debt maturities. I mean commented morning can if so ready they they're seeing sale occupancy this get developers that MAA cut they're assets for having

XX So I expansion you kind guess as similarly, in the months? book I And that's could mentioned distressed think over of sticking about view line And the this years, the few accelerate I kind the over way you you think with questioning, that? mean million, environment markets? SIP of maybe then coming what a you And you your next your $XXX do think you what next yields? you but of do do do on helps have know

comes in. Ben. side, expect some point. the system. couple in the We to which areas And there of it's We're a this different Jamie, not we're distress hunting. seeing buying that at step be I'll dislocation through on do

what where is we about, portfolio our places initiative to our add the talked where to bringing the activity One by incremental we adding be can operating over and nearby value assets, can acquisitions. Matt of places other density assets

top much mind. very that's So of

coming and/or close is opportunities nearer-term loans. those them deals, here, deals maturities. effectively up we've Another out been to potential equity who situations lenders loan there into are more against maybe lease-up potential capital and where recapitalizing extend that pool, seeing What and to date agreeing been is are those we've staying to are equity putting

is agreeing fully least finding to you're asset the extend for better flow types extend to but off Not what the interest of to get the of to the there, monetize we're lenders borrowers at in get generated so be it, cash rate. And markets are you in and of in. going acquire the it then out, that looking a the say, assets leased, I'll asset step-up lot

won't the lenders, certain going only There's types for equity have equity. profiles all that and ability to right? of can for out. types doesn't that more be of to put case, in it capital, won't that lenders of the There's case extend Now be the right, all be

an to. So it's that area close are we staying

of on the Quickly, other two one of kind opportunity, side. on areas land

existing about reworking are expect the and next talked see there. out in today, our will Matt opportunities we deals. over environment new as the opportunities. our And pipeline, year, land be capital what environment developers, for to for expectations also We're restriking current that our capital actively deals, looking So recutting

less competition Apparently, there's be going merchant those markets. from to builders in

we So area we'll SIP. of third-party opportunity be selective, a developers. programs but the then and could there, fruitful to be third the providing two is area. have capital that And And DFP

quality real of But and of We'll they in enhanced have the this the estate that us, that that's the quality be the terms deals, those of of selective. for sure, profile all is of return under environment. control in approaching sponsor

And that's deploy that capital accretively. so place another can we

how the so? next a on over of or deploy So you year can do sense much have SIP, the you

$XXX have it's to of building period. So in up million to of that million a target a $XXX we book couple -- SIP, the business over of year

to are it but do. pencil, there that is for Given deals tough some the financing markets,

them, owning need we These if attractive we're return, think We to are where pretty comfortable be a are very own not we them source selective. we that's in places deals a underwriting but of to to. And XX% capital. can get

to I a to We accelerate the that of way focus. say necessarily couple area build we're looking of area years. book it's over measured wouldn't want activity. up in an an next it's So

with from Goldsmith comes UBS. next Our question Michael

And on then up? on Can buy -- My XXXX ago, related about in color homes, believe first you seems traffic, it people to doubling if November, like little to customer question rebounded seeing just move and a that, out XXXX. but in was weak percentage a looking to the early you're December I and long it anything time of of residents provide behavior. particularly is

So to expect trajectory did how better it Do some repeat see comparisons? X last fourth should are year? growth you thinking on the easier here about as we you months? quarter in last the Or the the

Yes, Michael. It's those. I'll Sean. take

So say we've trends relatively the of consistent. seen behavior, customer remained year in I'd have terms this

in to earlier, response to well my for sub-XX%, home long-term a remarks, a I and question below As purchase below move-outs been well, prepared in now. time has is there some averages, mentioned

if anyways. mode, et run-up it risk-off values purchase inclined for not terms slowing in terribly of you're you're the not single-family cetera, home. market, a only are now more sale in sort of affordable, experiencing surprising, not in but you is in to people everything rates renting may not So market, want given and to consider and a And the

Nothing in notable, I time. behavior of this in customer say, point else at terms would

we year-over-year As proceed does you noted, easier get as the comp further into QX.

regions. a little Denver the in rent as So relates uptick to Mid-Atlantic, mentioned, in of as in and bit I it change Seattle the that, October

change super be be that's should won't And it year what And anything December. rent while somewhat what stable know it an at more rebound, to today. a as significant look we and stabilize experienced November we we do as based we expect last terrific than on in example, of terms

how estate follow-up New the real should burn-off in real factor to tax the was significant a related York expansion And my coastal impact tax The estate tax. the taxes. the expected question versus for markets And we about is think What's going City forward? markets?

Yes. Good question.

of that of As it tax expiration of related impact will the structure, to experienced to abatement another tax Most expect similar XXXX. about are in elevated year next to pressure those property XX% year. level And relates taxes, XXXX. this our the do it we relatively programs we year expense of which of be

our certainly, tax the in tax it would pressure run-up programs, they or regions As Sunbelt relates those the expiration independent to versus regions. the last -- and to established in or the expansion of established regions, growth in values have over experienced relative abatement X tax regions rate just I general, the expansion that Sunbelt more in the the expect significant given years, of the

that's I pretty think clear.

There's always lag effect. a

is expect So to in which regions pressure those certainly, still regions, majority our more which the our tax submarket, compared is But cetera. just the portfolio. as market, question jurisdiction, et of established which

comes Joshua from question Dennerlein next America. of with Our Bank

on And kind in in lease-up how the new projects project right of also now. disclosure that the mid-Xs. appreciate the then starts two beating the you're with I

You've got point spread. XX basis higher

to... trying Just

getting Josh, really lot you. of the on feedback We call. can't a hear we're

Is that better?

in Not we'll Why you don't really. the and line. [Technical Difficulty] back dial you back in,

Evercore. from Steve comes question next with The Sakwa

development. want circle to just I on back the

likely just planning in are things range. up quarter? pencil that, give in you It the time in were to that maybe economy some those starts would of anything sounded the kind here? high how fourth plays is guys actually X%, if the some like, we you And would out 'XX about had to on I'm most Or be the Matt, yourself if X% quarter. sure So starts, fourth starting But air? see not you think it development back half-weighted

we the development a economics would fourth QX underway well similar quarter Yes, we're Steve. match-funded XX% that start be Again, Yes, the starts. may to deal today. in on on

So that sense, think if do have we room we make there. think deals we we some have

is I activity two one or It kind half-weighted surprised if I probably When to that you're how deals, evolve a and that we new level would to access of So QX, have we in be it's on capital start know. whether 'XX, probably maybe similar think of and pricing back more kind our business. don't of fund wouldn't capital think right. the I markets about QX based of

what to we for under pretty bit same that last into and going the if a was million year than little in $XXX maybe But or light a certainly a starts track we in this we've been roughly -- for again, us, the which be expected would us lighter year year, year. that,

a a pretty we but at to long-run seeing view level. what markets, of as of we're And volume think modest significant capacity relative a starts we're our and So kind level I would to in don't that's averages. response the that

come than but on range. you kind X-plus the still bit expenses, in originally it. then elevated a And little better just what they've of secondly, guided, in Got

the overall next and headwinds What and a bit trending? maybe expenses what puts about into might as you think into better might Just be takes year? be how you still see next year, do little

earlier, Sean. year, It's do it few elevated which factors we taxes, mentioned programs about Steve. a elevated I expect be I abatement expect primarily those XXXX I another at is to can due property mean of I grow to can one. mentioned to One, our structure. on. somewhat expiration touch Yes, take I an to XX% of expense due We rate do previously. the tax that that

be which is structure. our Utilities, is about in of we it as step being The to do and continued NOI similar a expecting continuing The growth program. the XXXX implementation that of through to there million as it's to begin PILOT burden of is in endeavor, the $XX XXXX. we implemented, But down profitable we're is that see which incremental of burn-off burden AvalonConnect it before kind from XX% offering, on XXXX, expect relatively expense well. OpEx a XXXX,

strategies to and be mitigate really sort our trends. other to to are use captive elevated of And only be other going X% still offset pressure relative then to the difficult of Even sort growth help a maybe to OpEx, still market of But points trying that though through pressure relative it's normal market. it two it it's insurance. of rate. We'll

a continuing is earlier, legal which pressure costs, the legal and on And to mentioned costs, and result maintenance nonpaying last then turn out cost, one of and move et the is the residents puts cetera. and of eviction repairs I sort

in by of offset similar to continued to will But those certainly, other benefits on offset things. 'XX we'd be macro all of trends particularly see that able be occurring the side Some that won't the payroll we from initiatives, 'XX.

it elevated, So be but really the I down. a there's of for it next it sounds guess, would nonrecurring bit run in like of maybe that call but put not It like like sound a kind don't expenses Sean, better, sounds or rate, lot to to words ballpark but want could I X.X%, doesn't maybe burn to your mouth, that relative a year history. little in

Yes.

I statement think there. operative the the elevated relative history is to

we relief should year. of some contracts I some in think profitable, areas. Again, moving But do that's it's but appropriate. have through the in There a in to AvalonConnect be still little utilities, 'XX better bit offering. relative the may we Like have 'XX.

the think So your in is ballpark. generally phrase I

question with comes Sandler. Piper Connor next Our from Mitchell

So question, talked bit. environment deals in little a you my distressed the about guys first

maybe make earlier how does I similar? those the were deals project. over I underwriting it guys also the internal guys lot underwrite the do have Or have those how deals to discussing So to of a versus And case you SIP in the you that to of your wondering, was adjustments? when about private underwriting? you deals, can guess relate a compare assumptions you just you in take approach over program distressed for Are taking

we take value would our to less It's we develop everything we or be. we think the asset -- the what view where going think is of one. same, underwrite can I and own which is I the try more be NOI and guess that

everything NOI the the place a rolls way us in rent real lot have and a again, is assets invest operate good one have and markets programs. that leverage data why to frequently, our that so prudent an a And appropriate these and the to almost proprietary think projection can of underwriting in for SIP, optimistic. And leverage data. we our we of will And capabilities is always, provide reason and these we that else that overly own in and in we we this do think is of fact all sponsor

we're we in asset of back expectation NOI our we that, We a we that, when stack sale And capital were of high won't build asset I in then back out the but And developing. again, paid we we the their would margin we willing think an if based on view throw -- do how be own think underwriting. about of underwriting. safety where So similar lend an our it end. was get to very say of trash, own on the come under we it kind we're for with to the in that the in we to that going up asset, be

an we us but from step view, be pay the they point our basis would prepared in and have outcome view bad lender would our not for in to investment basis that the that are have basis a be at step can that at of we if back, in lender -- because to us we And asset.

be want So we assets wouldn't wouldn't at there to we on are price. them lend prepared. own some We just any wouldn't because almost under really

the in SIP. screens So that's of our one

it's up. on think if make see based can tie kind view As it of we'll worth we underwrite. think deal an where relates the the to that, formulate offer same. look acquisitions and at we a And just and we of it or what should it's We'll development,

to I'm standards. not we if think Connor, maybe this market-based add try sure were what one is do of but our thing. underwriting just we to sort going, where is apply given you a exactly

platform, of of be from a a market-based it cap. basis platform buying the asset, a on sort our -- underwriting, when on based our Matt that not sort deal was number, a scrutiny cap, We reflected operating think on use mentioning points platform. if of with stand-alone X.X% it, of value it asset. earlier. we We sort the you're XX, own underwrite of XX, would may our cap, would is our X% that's with operating have we made a the bring we'll and be pick at of But the going. benefit X.X% we It in XX being where of what

that. second this. I developments outlook the driven apologies great if of color. operations? question, my Yes, appreciate is earnings versus That's much mentioned already But by guys you and And how have then improved

a update talking mean are a Connor, that our quarter $X.XX I you detail for is And our and will see year on the It's increase. midyear about as you, the release for now you $XX.XX, for have $XX.XX. of to that, recall, Page core in midyear third -- relative re-forecast in so earnings FFO it re-forecast? page X. We can you there the that was terms

down kind that revenue, line other you there get you are same-store improved you in takes of puts and If same-store the from some OpEx, additional of comes go can the $X.XX $X.XX there, residential then see and that terms $X.XX from improved residential overhead and there.

RBC next Markets. Capital with Our Brad is from question Heffern

I'm things how So basis for compares are just seasonality. that normal generally in of negative progressing you and curious time lease how October. versus guys spread reported pre-COVID new the point year to XX normal this a

year typically throughout rents year, describe October. or so August, normal to se what up an run that We X% from X%. would range or curve. bell generally, a by and seasonal know Yes, decelerate rent growth mean, the I Brad, if typical down see they a X% average or January But then there's don't good question. is it's a I per for I for July

year in most normal, it through the general Northern slightly that we've half the rent might than X.X% would on range, For January say exception this seasonal history. at I back if market what markets, in seasonality been being in effective of from look more what is about growth this year-end, relative across you less you sort year, average, point-to-point see has its California. That And in ballpark. one of seen with to somewhere

going. you're remarks, savings really life not them in costs but bids, hard it. and that expect costs about hard then real us have talked some actually of in you I cost in when gone? give think Okay. start they said where prepared to And see seeing Got the Can think you real actually color you you

is bit. that Brad, a it's speak to guess little I'll very Sure, regional. Matt. I It

hard to XX%. maybe this seen X% X%. we've in it we've Boston, significant where degree, in seen maybe to to bit compared seen it a year, costs here Mid-Atlantic, down, time the So come We've last more little say, bit little a

I just while where And we think in for it are starting see to now. very, Northern California, been very it's a soft

We it have seen Seattle. yet not in

a maybe not, up -- there went I it that bit seen yet little Austin. say, would it's much meaningful haven't so But super in costs yet. We

have by haven't And for would we that the coming Denver, it's as was that saying Florida, that's in and it necessarily seen Southeast yet, think but markets much what us Sunbelt I hard deals there. that we others, in So I we that's saying caveat you moment. really every were go a before, the bid best can ready don't data and very have this hard where is you to bidding region it. And deal at

to you're it's tell until So place. at that hard

kind really getting on But regional And it's an it a points. we're real the little advantage discrete So of vary for on region. does do kind in gives like rents, with us going the again, that each we have bit because sense what's very data informational within think, helpful of have based to dynamics we them, time. a where real of

Our next Wedbush. from Rich with question comes Anderson

guess, Not about everyone in areas is is how you areas one So the you, would to was you another? Or a and committed But perfectly process you the the is how even that? country the one tomorrow, way what's to swoop, which keeping ago. getting is the could are where all knows allowing there by word, to The and expansion the present offer pivot question applaud more it's of question if there -- fell I you market used expectations? at part that on And in to it of getting methodical at performing? would Sunbelt you? And you're does urban had coastal a to Just to interesting a an it relative it there. if flexible chance do informed, the up other it once performing hour word staying relative that, much And time? everyone stand I'm even growing -- transaction, is to underperforming direction that. is you so wondering, and or the do related get your how though relative you and

it's Rich, Ben.

comments. of couple a make me Let

of of in that: And in bring of terms for value we to generate expansion of recognition remains. markets, is First, our take portfolio order it long-term our the shareholders. we drivers customer, markets. moving our framework do our core in dispersed XX% can that knowledge-based our to a set that second, well, to one, markets of incremental worker, those what more Primary

to to and to which have In to that below opportunity. do dislocation assets started or in we or buying replacement maybe development are timing, potential the it terms regions, we some has seeing it opportunities access to our potentially It's and players as players into a the we selectively of a some same market there. in an development do, be step expansion pacing don't be in that starting we We're and opportunity cost, see have softness. of able to less see cost capital capital that same attractive

where at couple substantial right years point, -- that present we'd could that an cost the accelerate looking given today, at and some the where environment of be could could be over make I return itself, something it's There forward, where to fast could, point But -- don't capital of more our be risk-adjusted be our there movement you does think next is. that decision.

our our eyes to we'll developers, We're out acquisitions through funding development, third-party So as and it's opportunities grow radar. on for and continuing own larger well. through keep our of

realistic X, of that follow-up environment? target do Kevin, Is a get is there given The the to through way you mean, you activities? And one a rate which reasonable where Or I be X.Xx here transaction target leverage, lift mentioned how there X.X assumption, perhaps. to is at part ever earlier. of your to any X transactions soon there anytime was could environment? maybe debt The debt question costs transaction add you to this in the and

Sure, Rich. Again, it's Kevin.

an interesting and question. It's the discuss appreciate here. internally debate I comment. So We

of to are levered, to than speaks decade, As you of normalized is net which relative sort to for had X.Xx -- environment. range, range more a point which out, Xx sort Xx that a long-term a we've a we target it's a debt-to-EBITDA been target

benefited the X.Xx, look last the more back it's broadly, moved kind at a look pandemic cash. effects don't as X just its contextual of you it's at in environment been there, normalized cash If agree If in and be But anyone the through. from we've from mid-Xs, a think weren't I we'd so, years you or as if comment. the would further

years. and about will of -- have normal out the been played year, level few $XXX as of for right reflective in year And capital at this off and we are Xx that's our part necessarily capital recycled $XXX year. low the normally, how of be so essentially new this you about debt think of million wouldn't from we've activity, year. have about this disposition not plan, this But this it net -- proven deleveraging things a forward plan our that And million year's brought equity in the because and equity to where leverage the has paid capital have plan but capital decisions last over and

in it to formation, in capital terms environment an And an given rise that of the be to additional wish liquidity capital volatile deal what flexibility recent with gives and and is deal financial to environment, rates. debt patient where with markets us does may uncertain we strength

we relative that and opportunities, investment to bear regard. can the bring debt growth point extent attractive strength at, than be as that and capacity the we us into may the that lean to opportunities attractive, the whether those our they potentially or leverage in to certain that upon balance some also established getting view we to guess seize balance I where markets in sheet on our are rely level a And gives in wish you're of and to expansion markets greater of normal generate our sheet it

X that circumstances. and there actually to in in leverage when of I as will So X.Xx right pandemic, ago preparing the the X there Xx that note -- QX to sheet we've certainly of such willing we are less desirable we gotten years for are circumstances, leverage the in net sort to were able to in debt EBITDA when get downturn. than a that's XXXX, some but times balance

ahead given because think to be hope of are, front it's with where as we with a that us. strength appropriately us to gives in well so happen deal potential challenges but that low we will opportunities could strength level, leverage So we as it it's deal potential

Our comes from question Haendel next St.

Juste with Mizuho.

there. October, on the color imply the full 'XX a on November, maybe didn't color them, expectations for I that lease October for so appreciate would year-end, your But then rates. new And color earn-in? what catch the if did I year lease renewals provide some for you earlier into new rates

Yes, it's Sean.

the in that, of X.XX%. settle range. it, The I move-in points call basis I XXX range, that to point And specific new rates X% for in XXX offers in seeing the didn't dilution off the to of so insight in, out is provide renewal months, we into similar sort kind them been expectation data few maybe we've did QX. -- provide lease to expect would last of X% one what Just went

And I mind Denver in in saw earlier you in a keep the that bit rent to the November Seattle, comps an do mentioned thing and like in Mid-Atlantic, and change December. why One is markets October. that's uptick little get in easier

X.X%. a that rates. The path expect So I'll year-end of provided relatively, kind the stable earn-in to of snapshot of earn-in, all it call to or expectation I else posted we a glide a night haven't last presented that we know put it yet. necessarily soften bit and but number year-end, about little My may at we relates sort being lease as through equal, what on based is now slides it, today on between the

it's on the give in you perhaps highest lowest? portfolio Can where an us the update and and loss-to-lease

X%, of and posted roughly as points Coast basis East the We regions. then expansion and the recorded at regions well. X%, trailing Coast led expansion X.X markets, slide points was the by north loss-to-lease the in roughly that Yes, West around on XX

lease-up there already you're But Okay. aggressive any that if And seeing last you you in or one, concessions more acceleration touched markets then for and are perhaps merchant apologies developers? an that commented this. on

extent, one San more is that been lesser Yes. but times I Northern The well. notably as couple market a Francisco, earlier San California, to mentioned recently has of most a softening Jose

question Anthony Barclays. [Operator comes next Our Instructions] with from Powell

better the positive think, your in the be growth about And points, a that you basis markets Is a region, do maybe given any some than revenue guess markets. of question on to market would loss-to-lease which think positive supply you year? expansion same-store of is loss-to-lease? expansion XX concern one all driving growth next these contributor I could

bit experienced going say question. which market. Texas it's -- where it's Where from, be is is region, rent I'd and change the we've That online in a blend have Charlotte, may of the what as Charlotte that's expansion a negative. market. Florida good you the in noted, more Yes, most environment the effective coming challenging to with is Southeast for little is a part, coming what

of end would love in supply we today. Charlotte, values. the It's or south there ownership, coming the lot online we in what the a there's X supply which great first of at a assets, we we good When assets amount bought the years submarket. fair there. them acquired of X of is knew Three we're a submarket. believe be We experiencing But

And and little be in probably there anything. So and to really much, a anything it's coming probably look specifically. maybe But that's little we too be through going might if bit in Charlotte. Southeast you Texas Florida not be a early is like tell situation in to gain-to-lease will what XXXX a even

question with comes Bank Joshua next from America. Our of Dennerlein

Hopefully, now. me can you back. hear I'm

on but lease-up. call current mid-Xs, you're in at like question, starts curious was So new mid-Xs achieving, it stuff just your because you're the underwriting I just a my looks it,

in? kind of would us going kind Just forward? there just Or element mid-Xs of to built up what is some conservatism get that of

Matt. Josh. Yes, It's

So we trend the anything. underwrite don't we is way

so two what rent things. I So we -- XX one basically, we exceeding current in by are by up, mean between the current it's and the construction to started time is the the which points, reason basis why it situation. got is that either forma -- be time growth It's or much, it lease-ups is the pro leased

too some bigger got general. a what we underwritten our than pretty in that underwriting. we put to rent were in conservative comps we there out we're And because Or had market offering the premium cases, even the initial without conservative in just growth,

stabilize X think you up, outperform, are they bit they going to why based from might when reason a years quickly. hard it we're of we saying, you starting to to pretty where buy X now cost little So certainly the they about although that's lease on tend I ask was when might and deals what get possible savings, now out the we

be favorable from be or Or more market. it now between kind response the rent could just a of then lift it could and

to to XX by we over average, run, more outperform long tend on the XX points. basis So like

vary So that's cycle. are but pretty based it on consistent, the will in where we

And but put out the Interesting. rent I'm I know guys growth. disclose missed occupancy? October you you then did I not Okay. if it, sure

in in general occupancy economic range XX.X% believe don't of that the trending of I we're but kind did, or we range in so. same terms

to like closing session. the call question-and-answer the Ben comments. reached end back for have of We to over I now turn the Schall would

you, joining you, November. everyone, you us thank look soon. Thank today. to forward Talk connecting in and with for further We

conference. today's concludes This

your for lines you participation. we disconnect thank time, and at may your You this