AvalonBay Communities (AVB) 5 Nov 242024 Q3 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to AvalonBay Communities Third Quarter 2024 Earnings Conference Call. [Operator Instructions]

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

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

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

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

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

and and I Sean open our for line Financial Officer; you, Jason, Officer. Chief our Investment Chief Thank everyone, Birenbaum, our our today. and Chief Officer; joining in I'm we'll we with Sean Operating and O'Shea, have Matt you, remarks, thank Per we presentation earnings Breslin, questions. conjunction on some posted a our here release, today's call. then Kevin practice, with for which the reference prepared will us

priorities we our start to on during call four with highlighted like today's strategic Day update I'd last an Investor November. the

continue confident of in will to one laser on plans focused As they the each for superior presentation, growth been has areas, these executing summarized earnings shareholders. deliver on Slide our X organization of our that

to and result initiatives. meaningful incremental million to of target incremental a we X, raised to operating transforming Slide November, NOI of annual efficiencies and revenue. on highlighted these operating both as our continue our progress we come make $XX driving in Last as First, model operating

as AvalonConnect operating well utilization our deployments our of on as are and AI. further model, in tracking plan, including neighborhood of We advancements

to significant By towards strong earnings runway $XX $XX expect the the target, over years. another million achievement million $XX deliver to total our our year-end, our to we both date coming add of future progress to expect we and million, bringing highlighting

continue our portfolio proactive we management growth to suburbs our as our Slide the future to X. portfolio's our increase to Second, optimize expansion allocation through summarized strategy and and on regions

Our from XX% and is last and suburban, portfolio demand from term near benefit shifting from the low supply, including term, of and XX% up in aging millennials. positioned long well to year, new demographics, levels now the steady in

continue at sold our reached of We $XXX steady make established toward as regions, our This portfolio for future. also regions to progress expansion almost urban year, assets allocation. and now predominantly reallocated XX% a to all suburban we assets, that we half in from our further capital the of target XX%, to and very half million optimize region expansion a attractive look basis and suburban, diversify having our

external growth. unique our growth accretive to The Investor we area detailed was our third development consistently at engine Day and ability our drive that

original and growth a Slide completions value XXXX achieving or generating highlighted our pro X.X% on As meaningfully additional creation. X, points outperformed basis our have earnings XX yield, forma, above underwriting,

and consider X.X% strike our nearly planned XXX within zone $X.X a of initial on for to cap to We've of rates generating increased year well this points development spread of our to untrended projects our both stabilized be these cost to capital. basis starts yield projected XXX billion, underlying we of with which

fourth share Which of forward, ensuring of capture level growth. lower there strategic cost-effective and be Looking industry. overall to in continuous of an an window to capabilities attractive be our likely cost future starts to fuel new our capital outsized capital access the believe to what's could a we leverage to priority, development further advantage to brings our me

As Slide equity of sheet the activity, strongest million been, as at an sourcing is approximately initial and $XXX fund our in accretive among forward it's the implied by ever as strong supported X% X, balance cost future recent development. further highlighted to our on REIT industry,

our strategies We're committed type their continued for we've as of progress commitment transition for at these quarter follow-up delivering on of a to for last and quarters QX strong last and growth months. Day want to over in to you to the I these will providing strategic XX X,XXX in year, thank the superior out And years the another effort, of priorities AvalonBay pleased associates collaboration to strong confident ahead. each strategic our and we're AvalonBay We're X and this I that to results. Investor our report results, these position priorities made

exceeded summarizes Slide and year-to-date with activities, the we FFO core by X for $X.XX being QX results guidance and per headline share. quarter that the

quarter this projects couple $X.X part starts our when as of We competition planned for a a open should of less in million this developments years. leasing vintage year, also of billion face started it $XXX of of that new

growth continued Slide XXXX core as implying for increased highlighted peer-leading guidance per time third Based momentum, rate XX. FFO we on the for a this $XX.XX year, share, our operating our on year X.X% core to full FFO

of year we of XX the basis by midpoint estimate continue for portfolio, our guidance an X% X.X%, to operating full the same-store which same-store our to growth in expense expect and NOI increase revenue in to resulted same-store we same-store XXXX. points lowered our For X.X%,

now to XXXX. we our and detail, Sean QX in blocks in into as performance will building Sean? speak our more momentum head our

Ben. Thanks, right. All

to portfolio XX address Moving trends. Slide recent to

heading lows. same-store volume year home the is a was Turnover which historical is to into move-outs at our leasing regions season. around continues a norms, positioned part which performance to trend by well substantially in quarter XX% below our in strong, remains well basis, on lower slower of typically driven purchasing portfolio and established Third full record

mid point, summer low stable remain the and from we during to increased it has occupancy economic expect Additionally, QX. relatively

XX. Slide to Turning

trend mentioned a asking left, and the further of fruition. about average earnings roughly asking see will the come through on now to experience portfolio our same December. West rent to with change of from The and November change midyear was the rent in flow QX reacceleration possibility the softer and X, same-store last We're the the starting asking we our rent In improved new that we're for XXXX. level forecasting given the to and forward. comps call, to X% the during outperformed be During traditional followed year has average outperformance Recently, as seasonal curves widened, East has throughout particularly of chart growth X% November as Currently, move XXXX. our rent for the change through asking year, and in rent than rent October greater than rent increase Coast approximately higher look Coast as date we move-ins X%. higher stronger I

the Slide outlook revenue growth. XXXX for to XX Pivoting and

wage and a apartment job ahead. renter and healthy support relatively alternatives expect demand housing the We for growth, homes well-positioned year our unaffordable for-sale all in financially steady will

Chart on strong wage renters our established regions XX, several In the Slide in growth last coastal X over years. have experienced

potential at else This currently and is have where important understanding capacity to So all the about of were being rents, they declined below actually higher beginning XXXX. renters pay the equal. XX% are of rent-to-income in ratios

more renting to being lack ever with be lower the alternatives households the than resident own. affordable to to Chart continue propensity This level a support our a established of seen. rent new spread X, Moving for-sale owning a versus and in regions we've widest apartment greater an home, continues should much of affordable to turnover for

the for and XX outlook Slide to Moving supply.

XXXX, Our record environment, established coastal see level are of lower of the over XXX for stock past what's already points the challenging operating expected a deliveries in Sunbelt facing the deliveries new of regions than roughly existing to which forecast given year. is basis X.X%

will X% Overall, are to from suburban, further well being roughly portfolio believe we same-store new of is in portfolio where XXXX. XX% insulated excessive of from Our our impact roughly stock XXXX. benefit be the expected supply deliveries in

for Slide to I'll address building XXXX. growth Turning in blocks revenue XX. the

roughly growth, started XXXX. to embedded basis where projecting the points we're than we First, or earn-in, approximately or XX greater revenue be X.X%,

underlying basis that each so roughly basis has far from we've it Second, improve year. this debt will from points residents XXXX, in estimated and improved quarter bad year-over-year a XXXX to XX by on

yet rental revenue other our in for And underlying forecast debt we the year. XXXX, produce continued during the again completed improvement throughout expect year. we strong upcoming to growth bad haven't third, While coming we expect

overall as revenue While expect growth strong we it to XXXX. don't the still increase to growth XXXX, quite the should roughly for be forecasting meaningfully contribute for we're as rate XX%

outlook the for on to operating growth Moving Slide XX. expense

moderate XXXX. move overall we expense as expect We pressures operating to into

XXXX. in New still expiration York In from the of drivers, be terms key some of program the tax impact XXX-a the will City, in but the present abatement eased programs, notably of

our given will XXXX Most substantially portfolio, to impact XXXX. as are Additionally, the we utilities other our in grow XXXX. what expected offering across in than will materially AvalonConnect to less modestly be deployed expense categories we be look the experienced on

Now back to we I'll to more comments summary it Ben? some for Ben Q&A. open turn before up it

exceeded to To earnings our supported increase results summarize, guidance. full quickly Thanks, further QX Sean. and expectations our year a

shareholders. leaning into fundamentals development, to priorities we driver heading execute the we set regions. continue confident that continue creation. value on a further outlook a of will earnings to Our powerful of as superior looks XXXX in organization differentiated for And growth an into and given our will growth established deliver healthy, We're particularly strategic are

I'll with the that, it turn to questions. And facilitate to operator

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

bit should deliveries percentage I think little a next You year, from mentioned is stock a be down this year. of which as X.X% that around

pro couple you risk especially trying that how Sunbelt on understand the concentration? based years? go seeing you're to I'm just ground, percentage could formas, on your next do the over you're change, Just might like as what supply where your of increasing think

a one material deliveries But across XXXX, a actually relates this It's in our regions, being others coastal Eric, then have in is the exception I a is expecting delivery it Matt which reduction regions Sean. York forecast speak established and or slight comment well. to we're first not as for can as with uptick. XXXX. New uptick to can Yes, it certainly those but in slight to City,

As seen happening costs, I'd for builders merchant reasons, climate it where across the the a is, and number region. challenging we've with say certainly relates of been been what further, speak and cost beyond is what's our to has on impact, development particularly what that, settle can construction in capital given they to this Matt

come gestation that a couple lengthy period of our for our, in So the down years. given be fact coastal type and the fairly the to to wouldn't for trend to is down surprise construction product see deliveries next coastal markets the the established regions again, it continue that fact starts have over given

seen associated of with Given what projects the those terms regions. we've underwriting in activity and same new in starts

question. your answers that hopefully, So

for you then margin And the those could projects? you the creation you're about just X helpful. project yields Sunbelt this That's talk the those how looking apartments at underwritten or quarter, on started and on value

a for for that I it's to And I market Austin, a guess think certainly it people little while. on specifically, expect weigh been supply

to if get So the than that project there's just achieve? a about something market you higher that would yield curious lets specific overall maybe

Sure. speak I Eric, is one. Matt. can that this to

So Carolina, we North in which Texas. X%, the quarter, deals of deals like X the yields, I those our would low- starts range end development ,X.X%. in tighter X all of this a start more were rents be which underwriting to for whole is book development to And X mid-X% on of did on around today's in are our the expansion across year regions, think

So lower we cost be or well range, of assets that excess it'd would capital trading. well excess of our in cap in of at and where still think the rates of but be end

Every deal is different.

deal or garden years unit what we The that a that's eventually Austin, in deal. couple XXXX there be So and owned characteristics. it's first that unique could phase land we've of parcel the started a of are for of X,XXX

for kind So it's phase loaded a the going And and unusual community into that amenities some are to of the a costs because that's in us our signature there of of start. first be infrastructure front-loading first market. lot really we're -- what's

Austin. in Our first investment

competition for of it match until about we one costs months pretty deal, when years XX X deal quite to on bullish point, nice by down double in little a been asset costs, that low the started could And won't and have we facing of a on where point down be was as regions 'XX. Austin we like hard our cautious but have new have up when hitting digits very that with come the timing lease should compared hard particular about they start expansion we have it's it that -- been bit. that would identified until first But the you we're We've in to be feel basis about or really because X think ready ago are start. pretty now. when that think we which between the up And

a Eric, of your I'll couple sort to on additional of positioning. question add comments relative

growth think external capital private is we cost of the the right. And a about into cost and to development and We've one are increasingly leaning our drive our new our development. acquisitions As advantage lot second able those goes and that competitors. relative we capital today, initiatives investments. operating of got advantage, is from from to bringing new those yield And on investments, model incremental a taking transformation both and to of sector

into XX tapping basis in that lot set but of of And we're submarket of to yield to generate capabilities. able strategic incremental projects, these so project-specific by XX points obviously, a and specific,

comes line Feldman of question Jamie Wells the Our with next from Fargo.

project you with clearly, is thoughts navigate 'XX? mean, you guess, what's in we term how Sunbelt you're certainly the possibly from you've can't a facing thoughts, could the glut, pipeline is to the say you And your Austin supply here projects but of on through I on happen the I of recovering all think done early think Sunbelt, starting? who your differently about it a are can I just a in you kind longer supply unique. as can that can just guess development The discussion than But based starts again. start talk with sticking who people continuing in about the talk with lot similar you just better sounds development, the Sunbelt in

When either have this guidance could range a But a $X.X volume something range, billion to be 'XX, our 'XX start year about of look billion our book Yes. can Matt. Jamie, at in to opportunity certainly we could I not side see speak we guess next an providing one. this to that moment. is I starts at our we on activity do and increasing we're that and we start $X.XXX This further from increase of think year.

we greater are where balance bring up, response the and a was capital talking it. So what capabilities about ramping think in Ben a really position a of can given of our sheet to we it we And to lesser share we our starts partially number get and it's mix.

in year, our be be So percentage about XX% expansion similar I activity little the maybe think XX% regions. to next Probably this year. will a to a start that, less as

on have So shoots starts starting see we We're cost and the couple pretty do there, development both few a a operating some Coast hard pressure West on to savings. the have the under where been quite side years. on significant of economics side, green for

next starting East a Diego. could have Bay. start in the We wind deal. we So up might large We deal year in San a

deal Denver. region. be garden a expansion would have We in in That an

Jersey, the in Mid-Atlantic, deal in deal a start of County in a Boston, We Palm business Florida. here higher kind opportunities New in Beach to have more yield in

a it's So mix.

the specific are submarket it replacement depend Carolina pressure assets more the more looking specific at. does of Texas, there. better construction. the product trading it particular, expansion to the probably -- in cost I'm That's the a in some site and some and where tends established our garden kind There's our lower little it be now. regions expansion likely -- of Florida regions and or dynamics on sorry, product And tends Florida, where or simpler that's right I North in more really Denver regions you're of to be more Southeast generally say will and and density would the working in the be of above in

just that number. One lower 'XX? for gives you is to Florida question. go helpful, I happening clearly, year. to What -- gears ways insurance view mean can a That's $X.X I specifically. expenses. just Florida. is next in focusing appreciate confidence detailed We guess impressive, on lot Okay. very billion happened that in insurance I the ask switching line-by-line two the guess, in

the And you third you're your that able 'XX, rate were you do or boil is question. answer than lower then higher in to even if expense on also think just column 'XX right, this down if growth to

I'll Kevin. broader on look on the Sean is OpEx year. probably start insurance this follow for next Jamie, on and will

May terms that of this property in losses higher a due some kind roughly in increases premium of year. year's of where of that this in insurance our in from So related insurance us decline flat successful partly May to year. increase prior in to And affect expense premium about premiums next primarily this But earlier expected and year, and of of the in year's that past we property years. relative property insurance, context. from continue numbers just flat the had to premiums that It's this provided kind renewal property property XX%, the being you insurance this increases market some insurance renewal XXXX into to renewal abatement to driven very May the give or regard, in pressures relief impact by

generally move stabilization and of see have going markets other as we property continued into we program renew renew more based we look we typical various just year, types rates. insurance insurance costs, such XXXX, to in on that we that As what's those next the towards and movement a at expect on to growth

as concrete where is very to know, of where have there's coastal generally Florida, been renewal such a more areas in exposure have the there May. have we Florida, Southeast to in have little and property where you And footprint. construction exposure as we Our problems high-risk limited

pressures as those well. from we've So insulated of been lot a

than total with our which liability but seen X/X insurance less The overall of premium has liability insurance spend. insurance fortunately, above some average only increases insurance, exception to we is comprises respect see

when and put result, in while mid- a at as to expect it the costs for to overall currently cost for be insurance to insurance next us. early, levels normal for range next still more year, you closer which we more So is look year, single-digit it's together our high

known. question some direction XXXX give Jamie, general as of that growth to of the sense it callouts as the was about growth in to relative it broader Yes, XXXX the relates XXXX, purpose rate. are relates rates relatively the expect you to relative that XXXX's we that to slide items the growth to to in ease and well the main do are OpEx

the basis point about growth XXX-a, pilot impact That's XXXX will an the the as diminish somewhat on that XXXX. programs. get XX example, overall rate For into we

In in growth our initiatives, be operating much terms That's was be 'XX. of year-end will on pretty total leases in 'XX, gross still impact OpEx some deployed basis points. of There'll but the AvalonConnect forecast. the XXXX that XX% XXX of by roll-through

will So that down. come

X that of an example. lead points Just alone We see items in overcome to some X categories the the would as various those items will there. easing other pressure don't impact those

relative expect come do rates to 'XX. we So growth down to 'XX

Our question Morgan Kramer line Stanley. with comes next Adam from of the

here of or give that indications the to relative at kind maybe last in just December. and to the kind portfolio of maybe kind in October? other things I look of in guess wanted lease for what just the November the X seeing projection are I you the growth things the or today easy months comps of improvement that could confidence whether it's in year reaccelerate you're kind of

one. Sean. that I take is this Adam, Yes, can

on midyear So nice had at we the of beginning throughout kind high-level us, I call, of the first, in run year of terms a in as occupancy mentioned up quarter. the first for the strategy

when our of it the do volume. do given most through to the as started we those related expire so we X that to able pushing Roughly heavy rate were which of and growth want expiration you during XX% that leases QX, is quarters. lease to time And and QX hard

occupancy in September slower sort it. But that's you leasing of So into the do overall head as you season. get when and to to in then, strategy you want terms of you as want October, stabilize get

saw as move-in move on October, particularly through deceleration, in of So that the you terms into we side. the September new

strategy. part was the broader of that So

they mentioned we softer in the QX asking in comp asking where my of stable. to prepared they occupancy today, given as XXXX, rents are And X% where relates are where is to last remarks, relatively than rents higher it as in are relative were of now, where year. about terms As were I of

leases side. the are move-in where signing is nice So on we currently a presenting spread

as high ticking see X.X%. it forward, the and X% blended the for range was look So up change then in rent mid-Xs we October November We into December.

of to points new offers all November flip be backs that basis on Our over that already out. modestly were XXX and in we points We which October, expectation in move-ins, is about in expect positive residents. the down were but with basis to December. Renewal really that is a little XXX of negotiate

the and you're today. new improvement So for what rents see given asking November on coming through we the most part, where to going move-ins December, move is are as

really of And That's improvement. debt maybe helpful. forward-looking kind here question a bad along the lines, similar just on

can tough So XXX kind this a to will is forward? get maybe bogey line know it forecast back long of think of the going as get maybe make early. the it -- to the is the year of to and debt of whether level know basis or it level -- it's and but call about take it's of pre-COVID still take looks you item year. you bad for predict just sense way it's asking of that bad it a could next potentially to just year or a other like I how next I points even the debt

probably different of that question. on And are accurate. everyone good of XXX% which a ours Yes, none probably one has ball crystal

regions. the issue, nature given our is the which in of outside really things the dependent control Just upon highly of various various

as it basis nice come XXXX XXX roughly year from points year-over-year performance coming this basis to down a XXXX, the seen XX down, we've improvement it obviously, relates points. So to

see or towards by use that what estimate we're fully significant through good volume we of that we and that to more we is normalized the level, making sort a improvement. My but skips XXXX, of expectation time get we're is portfolio. it. stabilized evicts So progress a probably through not And the the to back

the a So for example, quarter. in we evictions saw XXX-plus third

X,XXX needed still are accounts skip that be through situation. evict about to a sitting have there that or out We are sort either processed of

it's a guess likely least So rate, run more a that bit is year. certainly at at it's that. more -- My little certainly than

as that into start some XXXX, normalization to opposed XXXX. expecting see occur get we you probably would as that to to it's So in

next Our Steve of Evercore the from comes question Sakwa line ISI. with

think, quoted renewals I how don't I Sean, is X were but mentioned months? a kind November, you over Could renewals negotiation just on that for think out maybe those on going X you those. figure December, I on what's And you of today share guess, the that? to versus much last happened

for I what expectation can mean I November December, our you talked about move-ins. I tell and the Yes. is

On range the in and for today, for the that expecting negotiation based X% achievement signed expectation on high what November be we we're spreads. renewal already well to know both as December renewals, the as

expectation November at of It's kind trending they're kind December renewals it's those more for point. this out, irrelevant of that's where where and our So and went high-Xs. as

Okay. used acquisitions? know to there. versus And the I development that just Kevin, accelerating is have partially assuming, we comments pipeline opportunities given basically about forward that's equity of kind fund you the out forward Are sitting development equity then, the Matt's

deal what It the an correct, support back Steve. was next we year. that's Yes, forward executed when to was in our intended September. equity That elevated early level development was intention starts

kind ramp but year, next starts. this forward the as under shares the we year development to issuing so expect anticipate do of don't we So

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

mean, think in I expansion regions, short-lived? underwrite you Just the markets you're bottomed Or submarkets would the to any into we be least pullback going I in starts at that, back rents and the have those fact new guess, developing? should within this yields, on additional current expansion that that you read

Yes, Austin, it's Matt.

I conservative basis an over reason that, think we rents feel untrended underwrite on pretty that is that's time, why grow. average, we the on

to current of So works deal rents to as that trended the we're wouldn't start We only not rents because rents. of work. trending the opposed that counting make deal the on a

yield forward. I So then -- those years. we're have basis X view we're really happens any today's say can with not years their now or comfortable X.X deal on maybe now, starting our going leasing deals it and starting our And own what we're environment. in it's for on everybody we're probably would

the whether little rent kind of So affect and will think of momentum probably in or acquisitions happens lost now turn, it think probably to margin a to lease on greater gains do lease I then, in roll markets rent it's market year on every existing kind the are market. there, creation subject that has we short-term, to investments that to So our What IRR based roll yield more on and by value of scrutiny a should there. weighs one vary more it's and that positive time our that's into that, in our on the than almost development from just for And in case, development. we relevant Because them. going honestly, would have between stepping acquisitions

talking expands the in. Austin, about couple our call. of This I'll components a of terms on lean we're emphasize in other earlier what on

expansion As we're basis capital. market rates to regions, both and on XXX to XXX rates regions about spread focused know, we think as development our both of points cap established and yields, and cost you of underlying

spoke Kevin We've So our ]. that to cost locked [ starts, right? and capital a next in at set of of X year

regions. huge activity, are. And on is, everywhere, have has more seen around visibility not our underlying values have the over given a X confidence more third lot but construction we of which activity, the but come piece transaction us last where months, then down, of transaction not costs have amount gotten a we We in

net has our or time, that a also basis long-term we in think at point when stepping about at external So new leaning growth. this us into

your some within expansion seeing the now limitations I strategy the the you And markets -- the strategy are next pair you market. appreciate on annual paired I capital come to responses, lead start kind does into proceeds dispositions? gains more of and curious, capital commitments next opportunities equity to on help from Yes. Both the forth? there, question that they the given, investment are color think the to accelerate just fund And trade year, there transaction of with enable development

Yes. latter former not question, point, It's Austin. say, so question I would yes. yes, the so To a good And the much.

So still And not distress. the thin. transaction we're not market, it's seeing activity. much still There's pretty

bunch were the ULI and of distressed and conference lack week, In fact, everybody of last us that of the was just about at talking opportunities. kind a

X.X If a tenure and mid-Xs, That you'd free when days market to was a to like kind volatile just with and It's think transaction X.X, activity obviously, pullback range, in the the said long that on get robust of about days. break in we've quite I time. was was optimism me the a last would and ago, confidence. a asked the XX have rate back it's of volume. there lot I the seems level bit, And XX moving up finally transaction seen of a

this be would asset like are confidence And portfolio because are, more continue kind select to large-scale to where values trading. we the lot for we select activity looking in same of us. But like including for transaction will that and more So looking where gotten those environment we've a that assets buyers in criteria meet are Ben of trade. folks mentioned, we that would the the buy, to see do we of stuff to kind haven't as seen

hopefully, far, we disposition year-end. But bought $XXX more it yet. probably so at acquisition up We'll million end of, before So $XXX have million. we've and year another seller least the we're to to $XXX not done million, $XXX million. looks and it, going net or We're this year, two call one like sold

need we able same to to you through the point goal the the fund Our be we're disposition net don't net And as development. out, to be capital as neutral and volume be selling. would to at growth buy

we're and trades that we're So making. happy with -- the

kind are We point feel have price that a like the don't years, we're -- many established are that were which part profile in is investments and we're much strategy as selling our growth same regions assets well. that exposure buying of older, for what but our good we significantly also of as that necessarily regulatory higher that had

trading transaction be more things So of do 'XX. certainly we able to in all to those and that continue of hope

comes Our Josh question of of with line the next Bank America. from Dennerlein

rate at growth the Just lease across looking the markets.

and stood of give kind Pacific October on into in color of out Northern you you maybe kind the versus the you XQ? going decel California. what Any to Just Northwest could saw

broad I sort mean pretty single new what and region. brush moves came much of down is said Sean. rent this change a was is Josh, I in every

issue the occupancy some a you're of markets going as stabilize take is one to primary you As the as more I mentioned, sort harder average. to to it kind submarket California, of tends are availability is we that occupancy of point on a by really more would quite move-ins bit the seasonal are that and maybe just little slower season. The strategy note nothing that relative was attempting other occupancy for thing And pricing help of to to sort Northern target. market be decision leasing into seasonal. to Seattle. In the submarket that average, new based to I went significant a as in build and there. That's really therefore, on seasonal It's than the Seattle sort on

a in mind. into than too side. not on read move-in It's more little much wouldn't I other particular submarkets. We up a keep that volume, those in the shore it gave lot bit of So to

Okay.

it Maybe they Amazon's seeing said were kind in traffic like were office Seattle, Okay. you your Are or anticipating think returned after more seeing benefit? particular, felt announcement. any that on of guys to competitor they I hearing --

is QX. closer getting back MSA. in in seen are Amazon's employers than part and the Yes. slowly the Seattle back to steadily due and or starting same of thing. regions performed anticipated the No, XXXX in other of to through we've There originally doing much better people sort call of has that kind one we that really Seattle

would So say side that of of I Amazon San there's and people to come, we've as the trend impact portion time we announcement result on a Salesforce made throughout started announcements San return early to back Seattle positive trends probably about from think, office this markets. I Francisco, overall whereas things return ago,and all quite for Seattle and seen year. some in of good still the signs a to Salesforce but more it, movement that the for it's Amazon or to in in office, a those those Francisco, are January, calling whether to see

Our Brad comes line of next Markets. question RBC from Capital the Heffern with

could a I guys give you number? maybe this, but Yes. loss-to-lease didn't Yes, catch

actually basis this situation of in across X, gain-to-lease the modest Brad, November East ] XXX haven't. in regions. portfolio, about expansion as Yes, [ But points Sean. actually we're is the We loss-to-lease overall in is higher a West, slightly and the and the

the mentioned at rent. DFP to new then least. the Okay. in now build that me program to slides And That's covers you

that develop? that property you can guess it type especially addition, I you isn't So given through walk the

Yes.

apartment to So the purpose-built expansion A made townhomes, the building we're do We lot decision of BTR space, more plans business. since rent, And AvalonBay. today. a with of really have in been on existing flats. beginning our we conjunction consider times the advance there. an formally townhomes, We've building our townhomes of to it build we

we're building types of communities. full sometimes town home And

take opportunity and bring for and we the the operating expanded it, opportunities. development And side of call it what into on so us it feels to an like set side do this, on well I'll

larger -- we specific And more communities the set, are see term, within scope growth resources one, second, around the the on acquisitions. As of the be our be townhome to of organizing likely we of to in in BTR. nearer via you're focus, terms channels opportunity

an through Plano full is we that funding project acquisition so program, and which townhome referenced. the developer And was which community had in you a our Austin,

bear can provide So to really about we and there more We forward. set. we're growth the our opportunities bring strategic opportunity excited advantages going think

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

growth you property On yet think asset where quantum? year are following Can down values the higher. going just a the you've maybe year see have taxes and one for is call rates haven't to item on comment I next you is next Do this you go And addressed you why taxes. and year? building this exposure the next NOI same-store that expect gone down blocks your year, on Sunbelt increased up that where your

Sean. Yes, in abatement all the property XXXX, taxes yet. haven't John, and will The rate the budgets we But of -- particularly main impact is by various the to of expiration which XXX-a tax City, diminished XX roughly programs, overall a driver this growth is property points for notably York our year. growth this main that the program settled in modestly impact driver relative tax XXXX, expense basis New from boosted

next We to expect that down year. come

on values markets move will rates else across when needle, assessed being the based today something significant. in that's that you in other have So the changes what know equal or terms of we all

sense. far which development lower know typically And budgeted your rent then yields But X.X%, that I costs That stabilize projections any the makes levels or last underperformed you on yields. versus are there you the as slightly is on was it once initial now your quarter. Were Okay. outperform projects. pipeline projects your than expectations? as current

Matt. a which complete that's just in in no X No, were of mean, bucket whose the high-Xs, longer We other it's I really, the mix John, came there now development change. the deals in last out stabilized. quarter, They're had yields basket.

X a were added around and X%. that so And we deals --

maybe X%. mix. The of, change as lease-up, pro as of when ahead which per think years currently we kind deals aggressive pro it's on the we're yield. many really away just much running are 'XX forma from year, into is ahead deals So -- in they're still on ahead that basis moving completed that there a that's Not I now and -- of rent we're points forma. we this XX $XXX have don't really some growth. we ahead But have couple only rent They are the we that of as pretty earlier still basket a month of had now getting running of

at So -- and that's X.X%.

were to see the the of up by year, year Xs cap those yields this underwritten started start quarters probably then 'XX of and start And and over as time that that into into next deals next of what complete in the rise. which of were couple you'll as more is were roll it 'XX, Xs the Xs and and out rates in X% into that the deals 'XX started the and you'll low and see when basket, the deals we X.X% mid-Xs that move into more number this will

Our next question of Ann comes the with Green from line Chan Street.

the on as any are a acquiring give the pipeline comments your more so, to can product? And or anticipating if to build-to-rent the homes of communities, townhome single-family back sense you're evaluating? of well like us stick you build-to-rent Going size communities you detached the

scale the not operators set. communities, think one like buy particularly we we community, where our townhome many feel there which the to per activity. to a of going So said, product units institutional if regular of XX in emphasized this necessarily purpose-built -- to It's I when is as we're are our bring Ann, we're these places closer the on your communities, in and our starting. unit large-scale going the question, is possibility where first bring BTR space. space, an detached is we in But operating bit range asset, about XXX can the little We're generally heft to, product operating to opportunities

and mix. in have like can synergies apartments that And feel we there both so are and come around can BTR, we in places that where

pipeline defined at the haven't this point. We

set and a the area resources, of of target an specific overall we XX it portfolio, have but We will percentage XX the be emphasis of to next the dedicated months. over haven't in incremental terms

just about and And how to talking have sense down. been moving also for you Could over last the values it's costs construction earlier, provide and shifting cost over the labor in land trended construction that the months particular? you're a few the

Land stickiest the Yes, equation local. it development, Ann, completely is it's are in and Matt. of values the usually part

generalize on to that. hard it's So

how traded highlighted have our able peak the the in buy we of land and at would Quincy, than Day the XX% one seen we now were it at have last that actually year have Mass, we deals under to frenzy. We where construction at Investor less of

we've extent because North regions the where generally of Carolina, it's get the retrenchment. high seen cap. is California, trading seen very -- But move. I'd Sunbelt situations that of land the lot those is of land high Texas, deal development in it of even cap. In a say land kind to that deal the to some where does, to difficult not a in in And land places are of it's percentage very underwrite So there percentage the some not represents kind of markets there. that's we've significant where a

a or or what's that's XX So land, XX the really whether XX difference. to for make door the you're paying not going

probably some there, give not much. as but is back there So

So to a market with a major not few -- of been the kind it's board. but it say, varies I it across would been move market, hasn't exceptions,

from line with comes the UBS. Ami question next Probandt of Our

terms to equilibrium What the power? some is when supply of reach in for an expansion could pricing markets see the and outlook return demand a and

Yes.

continue both XXXX the expectations submarkets in flows for rent on particularly impact to fairly the then Our supply are going is meaningful rolls pressure and regions cash and face Sunbelt to high for the properties of those types those coming then in Sunbelt definitely into they're see, our established coming we over would down. are submarkets volumes, regions. would in and I the down all and roll XXXX. Start as emphasize

of sort lower expect levels So we as of as of in I'd demand expansion demand of our all drivers our supply. established regions. kind equal, else XXXX you relative levels into in we do say think get to out being regions drivers demand equal And about

quick into a Does baked your year? earning of assumptions the end the then the one. include calculation? rents prospective this What are through Okay. And

Ami, on does Yes, based numbers I described the previously. it

So yes, it does.

line Our question next Rich comes Wedbush. of from with the Anderson

little the assumptions more terms in going, bit of on to range timing comfortable to particularly get about that is But broader a where you're -- obviously the the year? You're So deliveries. so with got using and following. some new for of sounding on there, you're you next what's upbeat clearly, get you've XXXX year employment economy idea economic

confident where for to year get sort XXXX wondering the of So in broader could picture if next of give a what deliveries? assumptions you just are you I'm underlying the --

year the down could range. Couple would to Association generally of consider on look million Business color call-outs. look provide going jobs in economy, economic our to One economics some XXXX Consensus, sort from and of National Yes. into knowledge-based I'll jobs consensus, Sure, around at core type this guide next year different our context X the XXXX our net potentially we the job jobs XXXX of focus customer. and income and a of for in we the X.X of really on relative of what has type and Rich. jobs slowing sort as is of in outlook growth higher point. new million mix and than this

outlook. So bit. that's in this core outlook next heading leaning have Those job customer, of generally, continued Wage we're to sort into And prospects of a to supply our as then for year. the look strong. also the little also strong look kind connects

do of markets, down a sort jobs in Maybe little a are lot bit, a a You coming a seems supplies little relative bit. But jobs to fairly compare contrast of consistent and slowing 'XX. of across 'XX are to the supply ratio. country from

are to about think that ones with they're we are ones new the as levels higher to be lower to coming supply be going those under online. continue and going pressure have of of to levels so year, And of to supply what types new to continue the going outperform the that be markets that next are going

Okay.

that as it And So observations, for if more some 'XX I with good. Or good. multifamily it's bull you owning just is case equity bigger like But not-sideways It -- in that's, But a of prize sort 'XX? year feeling year? described residential you're to things think wonder just economic decent I year? than okay. the there's of generally stable that, the next and moving got you year sort optimistic do guess, next next for what's color, and sounds

Yes.

to us, I'll Rich, couple our highlight of for areas. to a suburban outperform. business coastal One, continue expect So we

If about that positive going look there. we've into that relatively Sean the drivers and year talked feel we detailed, and blocks building the next at you

lean around think players year The markets, with to leads and platform, generate which on development prospects and to also our around further by value there. buildup that our should some visibility us 'XX, rates the And enhanced we've then other ability -- for that some more growth. with and component of more and think our activity, our external scale, about growth. capital, transaction allow talked about potentially when next external the cost activity into rates, transaction to is going the I And assets and prospects I into having cap hopefully, and a lean-in stability the and some

Our from the next question Piper comes Goldfarb Sandler. Alexander line of with

first, leasing X we've years on up questions question. Two since normal a land. And you. had maybe apartment following and just for market been It's Rich's

guys be think look we what some see a XXXX, normal be you through you back will to XXXX? do we in go do still you As there as market? leasing to will think Or it anomalies

in just When seasonal got patterns said you what you normal is normal, it's Alex, pricing mean specifically? Sean. a

it's we since mean, topsy-turvy COVID, was -- XXXX then. had Yes. I yes, been and

Salesforce we as sure to all to our positive I'm D.C. in confidence bringing inching we full regions and and impact city, across when L.A. are traditional and people to want sort that the markets, the I apartments about likely of what I if seasonal the they about mean expectation reasons you move, that's their and terms office normal they that that state. kind is soon of background, the shift in things think think part, certainly places that that generated played coastal patterns Yes. earlier, a but they're talked a back return terms people are sort. The move, in helps anytime demand. in is that. back haven't sort the fully yet still terms to the the our San maybe are is in felt wage what mentioned build coastal think the of way of of curves beyond have -- desiring job issues of for Certainly unusual for and not demand in of of what people two particularly of aren't out things Amazon's is think are better. in January, sort little And trends. in Francisco our I Ben patterns how like announcement, of what follows the And other pricing of most growth, to -- gotten

ever relative that's two seen. -- for-sale is, they out. the one still Those are widest hard the established how we've But lack think of would playing then our I it's tell home to play out, a fully affordable I on So is, in factor. And this the cost renting where say. certainly, to housing regions

You the while. impact really more historical up durable for being can see like option. a to side, in think going we on and options relative But And it their be to options, for-sale the lower on looks attractive to still return it's showing households trends. norms turnover, which office of formed -- new and is renting

So may may patterns support established not it how different, for but relative those we've seen in look into play seasonal just the provide regions historically. to further those what growth

especially in floods. The Jersey here a New the lot lower site second on clearly, of had is question have Westchester and selection, Northeast,

some on and therefore, considered now selection selection your such rivers these curious changed site your in if, fact, is and overflowing site area has storms. changed. I'm has based how guys with existing as are change seen in your ago have you looking not throughout land As markets expansion that the far and was years a that at flood land considered you're look you of markets, as

Matt. it's Alex,

fluvial tries at site for for all every last years, a X resiliency say, the I'd or to actually that, model. us, flooding, risk actually For heat, do flooding, coastal have pluvial through which run different third-party formal model, where flooding, process wind, wildfire least X gets It's capture a risk, we excessive things. those a pretty risk

I'd say adopters early of we that. were So

for been would format of sites more so financed a to But we've have robust been there reporting years than ago. vendors And that. to get somebody pretty on passed probably harder today mindful the case we would X switch did on we've that be are always maybe And that.

St. of Our line next question comes Haendel from the

Mizuho with Juste Securities.

X here. have quick ones I

San very been clarity. comparison year some have while easier this your comps RTO talk in West guess, the I First, opportunity East expectations about and have markets? can the some bit you of relative and D.C. Seattle Boston, versus Coast Francisco your East year, outlined, year-to-date upside markets is York, strong of year-over-year a tougher the on -- Coast West and as some your thoughts but but New markets, versus Coast you less performance a next ahead initial

Yes, a Haendel, West the New for To York, Sean. what this and seen also is year bit in the Boston, performance I'd then better certainly, the certain specifically Jersey a is of and degree of New provide say out color New Coast Seattle. York, of to Yes, Mid-Atlantic little there. region we've this

in to it to that In markets, want certainly earn-in, a is the others. little those markets terms yes, of for relative describe outlook robust the more it those way, if you

haven't So terms relative But being of rent outperform the equal all ones momentum would extent performed to earn due across That in to the can just the as in well those XXXX other as those in in see else that was else markets, 'XX. in everything equal of certainly you in to factors other overwhelm. terms various -- significant pretty change markets They XXXX. quickly.

and really trends performance impact think it's leaderboard in they the growth return the 'XX top market. it of terms and versus to then terms to of these for-sale and for play that a I you can not? in how in housing want really are expectations out, how of office How of who's would So job blends with supply the what other look reflection at particular

West quantify wait? some to versus for Coast care perhaps those markets you of earn or Would that in East

earn-in a on an XX, I is -- XXX Yes. it's point, X can under around of I XXX [ number and mean, gave I forecast. the points. overall about ] points. Earn-in about basis just on mean at basis it's is XX And West we look the East

earlier, as lease lease, as gain it's XX bit little lease, move around a bit can lease points. mentioned it or negative talking of things here. regions, relates to to actually expansion then a So basis our to little And loss to as we're around about I

on could, if the Got one more, just it. Appreciate income. I other that. And then

opportunity or rolling there? XX%, I another you'd it's of you out that What's think this initiatives I how so what's the year, associated next into for numbers the I'm And year. next costs should to the driving on I think we XX% some about year? up think next those related be remaining year? guess curious then outlined

problem. Yes. no Yes,

put are the on 'XX sort existing push revenue So will the that decelerate of the the -- growth. primary by through it be for year-end because offering, programs 'XX leases. still AvalonConnect through our growth rate the be place above-average we to it XXXX, in deployed we There's flows level that number do to XXXX. fully today. expect categories to what one rental XX% get we deployed, that's already and other in has producing which you we'll But different a people are can't revenue know where to to relative on it been in driving based XXXX in present then as leases Since about expire of

OpEx XXXX And basis driver. And so is initiatives the terms in expect to the do that's points result of earlier, mentioned the the main is terms as of for of trends, of some I then XXX is as in impact a pretty get diminish more fully XXXX. into units. many materially we the impact and on not XXXX, in deployed, Again, impacting it's that OpEx total growth as program we because around

in XXXX. soften So will that

Our Jefferies. [Operator Tsai question the next Linda with line of from Instructions] comes

on in January effective too? positive this be as that to Page comparisons hold view lease expect well? like chart new year-end. Does into would is positioned reaccelerating stay into the Just rent be The like-term looks on the growth reasonable you to January, XX

haven't rents sort lease of just more in it we're through asking Linda about as yet and feel months, November, already doing Yes, the of provided still we shift forecast that. we for expirations in a working the know January for December, We comfortable that importantly. volume given those what

not about what providing and but for did November January, feel for we're provide we that good December. So

And differ from townhomes perspective on do between and preferences, attached how townhomes then then the single single fit traditional, BTR, detached? would say, where of resident just homes? multifamily yield And between over,

say broadly. really new our that relatively because rates. and more experience with we it's would yields It's to it's a own for expanding that rental still matter, housing early of the business are aren't what and do third Linda, significantly townhomes from Matt. cap quickly and But the nor subsector tell probably our I parties, the we've of seen different

And don't is have further I locations there has family think customers, is in Families location would As where a the I larger starts a that detach single-family that seen you, than be going in -- customer empty huge difference prefer whom townhomes other some at yard. the of that in is where the have number see who's yard versus the for different garage to nesters, well and there that's fair townhomes to probably valuable in garages. customer, BTR know to don't that land base as the there's We townhouse probably single-family. I as their might where townhome the with a do for acre. much. XX well are with you're believe you community customer their I obviously, XX, a closer bit we too do the single it get you as townhome, the relates X-story is started And kind something with of important. Plano lot. more I haven't own have kids as own yards also, out, what just true or as a particularly do able land quarter-acre developing have you're get lots and people XX, to -- start to it

there so probably in differences of stage. terms but -- So subtle life are

all townhome and school product. get of this probably single-family in product learn more more certainly more But So an lot product we a a days, the this important we'll as is SF out district early is there. for

Associates. of question Alexander the Zelman Our & with comes from Kim line next

move demographic base. any as recently How millennials to the out buy to you your low. your up remains showing about continue to and wanted ask are I younger portfolio? in renter shifts apartment cohorts Have seen age age

transition Yes things meaningful Alex, The lot [ the initially households. you sort single-person was levels. as lot went there and say in I normal say, then out as I'd COVID recently. this started through of any et cetera. those a have not up, wouldn't a of much COVID movement there's percentage more All Obviously, coming Sean. COVID, shifts been ], of just COVID, stabilized initially doubling of is through at more roommates

have been think any don't significant I there So shifts.

the they be of heavily It's nature home you buy profile forward, the given about, infill town some being as little in want was think established I more home. expensive a fits look more just to some millennial to product regions. demographics of aging certainly I suburban, a I and the the development think where our talking of very

and small nice get a we attractive. quality can if a being So yard product, good district, nice deck highly that's a townhome school a or

are false the over of come anything demand wouldn't resulted past. But these shifts that's sure you in really noise larger period in the some at our than of what in has which well households a in there you we of it say terms of markets few in in short the in to of is include making I kids slightly So when just may get portfolio we've last seen for represent necessarily positioned some that a significant lot time, signals quarters. terms looking

Makes it. gears Got switching bad then here to sense. And debt.

you that about talk which well? markets have to debt as to mean you could XXXX. runway anticipate bad change mentioned for may improve that You or more continue are I in improvement driving specifically

mean regions X I greatest with to or happy that. top do OkayYes, the I'll say, the opportunities, X.

market New running in being to still at York, within issues range pretty well. basis doing about as running bit D.C. L.A. still Mid-Atlantic, back low Northern basis over well, issues running Maryland the Diego, New X% XX in Southern being low to the and XX getting mentioned, little XX. A basis historical norms, New Virginia little Orange points. actually Jersey, to relative to The but as closer County, and high the X% Ventura particularly X% outlier L.A. York a City still it's range. California. with San norm is relative XX the XX points. there to Boston's the points. around California particularly Virginia, I the

it's the where through we L.A., markets and Jersey, degree, XXXX. and Northern in a do to the New we York certain move New then So really improvement Mid-Atlantic California significant more see as

Ladies session. Mr. floor that back final Schall I'll our for comments. gentlemen, concludes any the and turn to question-and-answer

shortly you seeing at us to Thank of look you, many forward everyone, today, for we and NAREIT. joining

conference today's concludes This call.

at your You this you for time. participation. may Thank disconnect lines your