Mid-America Apartment Communities (MAA) 31 Oct 192019 Q3 Earnings call transcript

Company Profile

Participants

Tim Argo	Senior Vice President and Director of Finance
Eric Bolton	Chairman and Chief Executive Officer
Thomas Grimes	Executive Vice President and Chief Operating Officer
Albert Campbell	Executive Vice President and Chief Financial Officer
Bradley Hill	Executive Vice President and Director of Multifamily Investing
Trent Trujillo	Scotiabank
Nick Joseph	Citigroup Investment Research
Austin Wurschmidt	KeyBanc Capital Markets, Inc.
Zachary Silverberg	Mizuho Securities USA, Inc.
John Kim	BMO Capital Markets
Wes Golladay	RBC Capital Markets
Drew Babin	Robert W. Baird & Co.
Richard Anderson	SMBC Group
John Guinee	Stifel, Nicolaus & Company, Inc.
Neil Malkin	Capital One Securities, Inc.
Rob Stevenson	Janney Montgomery Scott, LLC
John Pawlowski	Green Street Advisors, Inc.

Call transcript

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Operator

Good morning, ladies and gentlemen. Welcome to the MAA Third Quarter 2019 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, the companies will conduct a question-and-answer session.

As a reminder, this conference is being recorded today October 31, 2019.

the for to MAA. turn Vice Argo, now Finance President, will conference Tim over Senior I Please ahead. go

Tim Argo

Good morning, Eric everyone. our Brad President Al of Hill, This our General is Tim for Campbell, Head our With Argo, Counsel; MAA. EVP Tom me COO; Rob and are CFO; Bolton, Grimes, CEO; Finance our DelPriore, Senior and Vice Transactions. of

with making that company with morning, our an may be describe yesterday’s from that I forward-looking point results. available this may copy refer release and be out this management the along results our today’s with discussions, want to the comments future of will as risk copy comments prepared XX-Act a statements. prepared begin in of differ audio morning’s we of and factors our on Before encourage part Actual which projections. SEC, call, the forward-looking will you impact website. section earnings to materially reports, statements We our filings to These

this financial and the be Investors measures. discuss website on GAAP page of A certain GAAP as the our non-GAAP can in For call, and release comparable data, earnings financial which non-GAAP differences financial are reconciliations measures www.maac.com. of directly comparable between most also found presentation we supplemental the at During as measures, well will available our of

call Eric. the to turn over now I’ll

Eric Bolton

despite remains run our important during Sunbelt at and the momentum that I continues and X%. quarter on-site turnover to solid resident performed high lease the Performance Tim, appreciate season our work Thanks, pricing third and Reflecting by across demand morning. was our everyone occupancy. markets renewal strong in historically growth with this leasing participating low levels above associates, rent in great continued strong call

the best growth. We cycle, believe remains on focus rent at point strategy pushing a our in this that

rent next trends encouraged year. performance the with into carry and calendar momentum that We’re we’ll happy are with on the

our compiling of in expect the elevated to is any in in simply point, There to the much available the supply sort are pipeline and we pull this a at back. persist process XXXX new will new of point surrounding at we detailed While developers expect capital likely XXXX. currently locations, each this outlook of levels at meaningful supply too the impact

However, accelerating. also current see the trends, that is believe supply meaningfully keep it among will I pick costs other unlikely rising new from development we from things as new levels up will

some sure markets next we will As supply finalize I’m deliveries. property will in experience a in likely decline new process, year budgeting markets and that we’ll have some that increase our experience new

quarter our the point, will And any heightened XXXX markets more remains while demand continue supply but We population we strong to when increased with concerns for fueled migration year’s this on releasing leasing growth shifts have across to and do our not fourth results, we new by to expectations next elevated, report see environment. have specific Sunbelt. surrounding at growing job

of Arkansas rate cap expect capture has of during We the current on Based average this close on to years. a before XX year-end. four in of the closed Little pricing, a portfolio sale properties located property properties we expect market market on October age the that the and of X.X% to that remaining contract in Rock, disposition on an

these will property several year-end. negotiating close more one one-off by We’re are we acquisitions deals and of currently or hopeful on that

transactions market some lease-up. next will and we months. case the The we of properties acquisition few few that been over of the remains in initial underwriting but expect with opportunities years, are high the we continue As volume acquisitions competitive, see have very are has to success new each a past the lease-up over

and expect an now we our in the projects additional underway projects, to Orlando and schedules two have before new As to Houston supplemental release, year-end. start earning noted development in located six

we pipeline. And great our of to continue out redevelopment performance capture finally,

accretive unit-interior several extensive initiatives very of few focus believe Post we property expanding base more the and over generate our legacy are will on planning at from earnings existing year to addition upgrade locations. accretive In growth to program, our earnings We calendar efforts returns the capital initiate on further our boost redevelopment asset in redevelopment next years. very XXXX

leasing thank to season. work associates big their our for busy the great over send to and want results a of team I you summer

multiple the are work and fronts We platform, appreciate I across and hard of our progress. building momentum all great positive

I’ll turn it over to now. Tom

Thomas Grimes

everyone. Thank morning, you, and Eric, good

strong exceeded for quarter performance operating and the our expectations. Our was third

apartments With rent demand growth, occupancy we strong and daily average in enhanced have trends. platform, our and for steady the continued momentum improving

the growth – rent X.X% for result of the effective year-over-year is ERU this quarter. growth. sixth per unit straight the was improving This quarter is Same-store

As a year-over-year growth XXXX. was X%, been our since highest result, same-store revenue the it’s

growth XXX for rate sequentially. points growth in year-over-year XX the quarter increased The our also the quarter markets. Revenue our second was rate third basis the in The of widespread acceleration revenues in markets. revenue XX exceeded year-over-year across

blended XXX than performance renewal Dallas led points for up Nashville Austin, was time last in this the year. blended basis X.X% by steady lease momentum better particularly quarter, pricing, and Revenue pricing Atlanta, and new was in The in seen impactful. improvement which is

occupancy over than Same-store with during our line at expenses blended great the pricing, recently. but lease have quarter operating average XX.X%. they traction the in were remained been strong to addition daily guidance, In lease in higher

X%. on is on of prior platform have the and captured expense expense the have now improved we mentioned comparisons the management calls, normalized Post benefits portfolio, are more the growth we now As year-to-date

expense reflective on The October. is a into efficiencies driving X.X%, average. our sector below our of has the just favorable our As XXXX operating This annual continued trends operation. well growth been into long-term focus same-store reminder, since

that this when As occupancy. demand should we growth the rent have prioritize over discussed, cycle strong we feel part is in we of higher

in ahead X% blended occupancy lease over daily for October revenue sustained October’s support rent XX.X%, lease as and year. for of was of in growth. well posted will growth compared the October XX.X% growth last the momentum up for Average and year which rents X.X% continued month effective at steady in last is is rent which are strong to of portfolio, month-to-date, the blended important

redevelopment the rent, on units we redevelop X,XXX for completed us in return On track of third capital. XX%. the This keeps year XX% front, which additional and to year-to-date, generating we XXXX. $X,XXX of one uses unit one is cash per excess an about achieved On in units, on X,XXX cash average, quarter, the best a of in spent

units. now Our pipeline stands total in neighborhood redevelopment of XX,XXX XX,XXX to the

expand. technology continues to Our platform

engage results are evident website our our our for The and operating system overhauled aided blended have residents. value and Our new create traction. in to pricing ability attract,

been Our received test technology minimum by installed at residents. has are XX our homes smart on going with and The has communities disruption well. well been

are AI, of also a Resource exploring Chat, Management Customer We engagement and range prospect tools.

season and move teams have positioned forward. handled well busy well Our have very us to the

the have work to and XXXX pleased in mirror. are view We integration XXXX the rear of

We are encouraged about Al? with growth the opportunities excited rent momentum and the in ahead.

Albert Campbell

good for year. Thank commentary performance, balance company’s everyone. morning, on some guidance brief finally of the and remainder our I’ll you, third updated sheet the then on provide the Tom, and activity, quarter earnings

per items third FFO significant a earnings Reported outlined $X.XX to share the of included which of share for added quarter of in non-cash FFO. non-core per the release, $X.XX couple

primarily of and $X.XX these share per favorable which which result analyst of outlined quarter. Excluding quarter was revenue total outperformance as guidance pricing was for This acceleration the above growth FFO produced $X.XX our the consensus. the trends, items, by for the per was Tom, continued mid-point the share, in

These repair taxes under also remained and moderation with well operating of and partially were reductions areas primary a the estate the by costs. control Overall, quarter. in and in for real personnel offset expense producing expenses maintenance marketing pressure

expense quarter for were are Repair real producing produce comparisons, X.XX% and prior expect in as in valuations by to the growth to certain the markets to the for impacted end our We the year year, expenses full-year. range projected final received for for aggressive estate but maintenance taxes of in top some outlined difficult continue full-year. of pressure range third increase will X.X% the

the funding for $XX with development of This million million towards total year-to-date during current continued full-year. our progress $XXX We lease-up million portfolio and projected brings our million, to $XX to the on to make completion funding the $XXX quarter, funding our pipeline.

were quarter, bond active fairly notes XX in reopened the an effective at issue third rate to years. series over an remaining about February on the we the initially additional financing interest of X.X% unsecured front. We of issued the During million of term $XXX

rate utilizing this We used of loan, the environment excuse me. our the the was pay the to and early to is low year used which proceeds down $XXX on payoff seven at year, extend which were proceeds average. – end next rate fix million a at the due our The remaining of quarter, end more the maturity portfolio, to of variable to debt line term of credit years

to the strong and performance. Finally, we our both third reflect increasing full-year same-store quarter are for FFO guidance the

We’re per now the or be share related $X.XX $X.XX in midpoint, third quarter of the projecting a per for at per the full-year non-core includes share share, gain favorable and FFO range $X.XX which in fourth mentioned the release. $X.XX to of sale the items to $X.XX quarter to land

the quarter fourth guidance from preferred or the assumes share unconsolidated affiliate. further impact no updated from valuation Our activity

the for combined, in adds a is combined. produces the range and additional points full-year, the grow projecting per a related QX our mid-point. expenses, share for are which by to which reduction share the X% interest This now and all We our G&A partially QX for about at full-year same-store $X.XX basis X.X% to FFO, the per to of an expense NOI to our offset in revenues, increase expectations and same-store NOI full-year changes $X.XX the year XX

have we prepared way all in That’s comments. of the

to the now you Chris, questions. So, call we’ll turn for back

Operator

And comes Scotiabank. our ahead. go Instructions] Please Trent Certainly. from [Operator question Trujillo first from

Trent Trujillo

Hi, good morning.

rate update from August. quarter, at bit just little was growth, the X.X% looking lease intra-quarter down for your So blended a it the in

and you’re to there September. growth held in It occupancy, up it like rate sounds focus So slowdown seasonal on some well. over sounds has like continuing demand was

some you’re Post but mainly the rest portfolio. improvements you the quarter? of level of do starting lap because to And for the expect do – So some moderation the legacy of from you asking,

it’s from ahead. of more trajectory see here? difficult do kind So you a comps What

Eric Bolton

blended a XXX it but demand seasonal Yes. see year. patterns year’s last still we October, basis down. would will Trent, pricing, it cushion with you points I run over to I But come better than moderate would moderate us expect expect prior as just seasonally. with were reasonable to

Albert Campbell

rents. hold new up X%, pretty about And to On that’s it renewal primarily strong correct. pricing, continues on lease right

Trent Trujillo

just disposition of inspire all you potential Okay. you within that. then Thank seeing to look Arkansas improved higher assets seeking Arkansas on you’re good the But those pricing quarter, on guess, transaction get roughly at the on levels the is maybe for of assets, sell? additional in realm to can pointed as cap you X.X% at the market, you a you CapEx? are last X.X% pricing prepared the cited you. that And need does I disposition, such if And maybe to dispositions, older that that remarks

Eric Bolton

pull investments to trigger let on your a that’s But Trent, happening. I’ll And up. we of is year the go I’m about sure, of every will Yes, year. portfolio Brad in what’s point about very and Rock something of this year, We similar tee we this next And cap this some you into we’ll on Little our I have earlier believe little cycling as much Eric. bit. had targeted tell importance broadly. out that rates the would talk dispositions

little off bigger performance bit to need significant if capital compelling any as the continue the discipline is anything look just invested at assets that. a pull year, – that, to unlikely our have getting of have of It part yield always off to don’t in a as you create will, really desire or our normal existing go-forward to bottom, do are alternatives. that portfolio is and the look to We we that than we’re every

but And next just we stick nothing we’ll Brad to? do significant into want so that discipline that. more head as to you year, than

Bradley Hill

yes. Yes,

is this Brad. Trent, So,

assets, Sunbelt smaller of a for of bit had indicative we’re the for all the what Just seeing within XX completely give little our were and qualified insight buyers buyers bid Certainly demand in within those it’s certainly different over focus market. our Little Rock you transaction market a assets is on footprint. which those. to We into,

that there. about were certainly the excited had participation we we So

us. we’re anything Cap a think, markets be that Little demand forward. strong. market for continue which extremely seeing and certainly for see going rates is assets is in our Rock, strong, I in changing to certainly that And the very we smaller But don’t those

Trent Trujillo

Thank All right. you.

Operator

ahead. go from Citi. Please And our next comes Joseph question from Nick

Nick Joseph

first Thanks. on following Maybe question. just Trent’s up

growth, rate improvement quarter third there previously you expected an the on or what to lease well as expected? the In results, increase than terms of is blended versus fourth better guidance based is only quarter

Albert Campbell

Nick, look quarter, coming course, our what that’s do expect we you earlier, this different healthy point planned, saw Tom’s terms is for blended. so of the X.XX% third full-year, year Obviously, a growth. that’s but the seasonally something pretty Al. To guidance at over quarter-over-quarter the We, quarter. we as the prior still for in of is we fourth in expect off of

but seasonally we So position. still come will a down, have strong

Thomas Grimes

add I’ll that, last been We’ve to one year. running points basis than XXX Nick. point about better

power closer to in we a basis QX bit tougher those XXXX. XXX So that little to spread far this comps as late just we’re have point year, forecasting see start pricing as gotten

Nick Joseph

quarter? third then And rate and new for the lease what Thanks. was renewal growth

Eric Bolton

was lease gives quarter, new the X%, renewal for Nick, which X.X%, – new X.X%. was us third and

Nick Joseph

I just they’re Birmingham smaller then know Huntsville? in markets, driving revenue but in what’s And finally, growth strength and Thanks. the

Eric Bolton

Huntsville the been growth little strong of that’s been a years just the quarters last supply. has just well. you primarily the in and up by growth with job in two – during you’ll And spot us running along trajectory, is It’s less doing the Northeast Birmingham – for has see then strength good years, a tech. well. Northwest that through with back quiet as that year, has little been a and a picked aerospace bit Alabama there. been look a driven on Birmingham two if And for Huntsville little very It pocket – job is really

Nick Joseph

Thanks.

Operator

And our KeyBanc from go next Capital Please ahead. Austin question from Wurschmidt Markets. comes

Austin Wurschmidt

the morning, good the everybody. breakout portfolio? for a I if Post could was provide Hi, wondering versus lease-over-lease year-to-date MAA the you pricing of portfolio legacy

Eric Bolton

quarter-to-date on for you improvement a for X.X% and side. for – the I significant quickly. it’s be X.X% And for can lease that the give blended, real would Post Mid-America, Post new

Albert Campbell

and X.X% Post, year-to-date, for similar MAA X.X% blended. Pretty

Austin Wurschmidt

that Post then, on And guys. guess, those increases have wondering that non-renovated about – you’ll really units a full-year I’m period. is year a Thanks, asset? next so of first, first potential hitting just the versus thinking you’re renewal renewal year that renovated how renovations the I after the

Thomas Grimes

No. delta on very a resident renewal no come similar There’s basis, a at in because really in. that, renovate new coming it levels. between The that’s almost

the the So like bump improvement. got and it’s not resident old then the renewal

A, this portfolio front. the seen up real MAA… quite as on That’s B, Post consistency renewal well as we’ve So and held across the well year in both

Austin Wurschmidt

it. Got

Eric Bolton

and renovated non …in renovated.

Austin Wurschmidt

expect understood. And be the just the you versus contribution can into as last of in increases Yes, roll investments? XXXX then one, revenue remind what the home smart us the contribution to on you that XXXX? same-store you’re And that you targeting

Thomas Grimes

good able equation. of consider give in that a us we’re mean, for down and savings enhancement revenue some in we’ve there the this really forecast at that implementation hope and to the get that got side, haven’t the market expense comes I So but that to process early also then are nailed test we’ll as to XXXX it be point. bump by on planning

Albert Campbell

Austin, I’ll certainly year. expect just of We Al, would this the grow is back to that towards And this the add. –

little So with certainly, the impact in very roll mentioned. as back-half, more in of minimal out, year bit as first-half the we Tom the this a

Thomas Grimes

Right.

Austin Wurschmidt

Got it. Thank you.

Operator

Our question from next comes St. Haendel

Mizuho. Please with ahead. Juste go

Zachary Silverberg

Hi, for here it’s Silverberg Haendel. Zachary

is level leverage over the do You Where more view rate guys leverage four, the your cap environment? seven And acquire see you given times cycle? your have using at five from past delevered in point optimal low to the year. assets, to on this what

Albert Campbell

to high down. is. about we’re we with feel Well, I’ll bring particularly our very as the to good Right to good assets, a said, is over very you several leverage debt now, We or it XX% the debt last to about be, strategy. low Xs worked and years that, hard start risk where our year EBITDA given of and lower place risk pretty gross competitive

to So in different do seem that. anything we don’t need to significantly

expect do also year our asset marginal when this so, need internal at you look don’t we acquisition development As or And the leverage flow point. it’s we next the over have. that do, plan combine a pretty that our we and look we free a we huge or plans to see plans cash sales capital with funding at at neutral for

certainly So are your jump but really, fund we that’s opportunities anything way out, option a other, leverage do use of things to to where facility. that. we we very – that and a point, need significant we either like no have to lot we our there one change the happy we is, are billion-dollar credit could have do to capacity, If

balance not amount good assets very could about revenue. our sheet to feel so of and and our harm that pretty significant we on put quickly do And

Eric Bolton

also moved while down, has anything the than point now we’ve out I has worth the down, leverage things dome our in the one other our it that’s duration duration portfolio had come And and our of out on longer noting XX years. ever out the is has cost is, debt beyond is

little approaching seven So seven as it’s years, years. around over

where with that’s pleased pretty we’re gotten to. So

Zachary Silverberg

two starts projected how And development just the up any to market? significant to And guys – ramp the yield on potential opportunities do development development you quarter was IRR. in And are you you front, a see seen guys level? the or do this more inclined

Eric Bolton

have and end new still to yields. addition X% X% of we’re to stabilized mean, the out supplemental. to will yields I terms listed in we are to now going in between two deals is – start NOI of now, believe we year-end right Well, These X.X% north in be already going where what stabilized

point the of $XXX $XXX to we’re we range. development believe We’re somewhere now. our X% comfortable carrying in what have of pretty And value yields, attractive. we’ll pretty still terms those million kind which as take the That’s pipeline, of time. in of enterprise kind comfortable million as pretty obviously, X% it we But think we that, number right we’re – if at any puts about far to it’s with

Zachary Silverberg

Thanks, guys.

Operator

from BMO Kim go Capital Markets. from Please question And John our next comes ahead.

John Kim

Thank you. of Can mentioned a you versus elaborate XXXX? And done historically? at dollar also, extensive increase will unit what Eric, you’ve prepared what that your the redeveloping amount, – all? number on that next redevelopment units year. you in remarks, more program the you’re Will versus change

Eric Bolton

the upgrade I referring that Well, doing with years, start When can redevelopment. of any reference we’ve number the next if I’m then you and we And kitchen Tom bath program continue will I’ll the continue will. that, to details. will interiors, add I make past as and to mean, initiative for years. unit really been

What’s we going Post is, up repositioning efforts locations. are to stepping extensive some be more of the different at legacy

initially other we think come have repositioning we’ve a of some given levels, in in about and these that’s that the upgrades much, property We of extensive much rent spend real elevates at a portfolio opportunity location a completely higher to we that that CapEx new see more do superior the some go properties locations price believe different supply value. offer And to and identified amenity we really XX all point. around

market based think opportunity. on happening around We these what we see And certainly the that, that offers locations.

year And in $XX harvest rent so will – and growth year that’s XXXX beyond. spend we of work think course we next will that the about from terms roughly and the revenues next in over million aggregate, will on in opportunity to – begin that really it about of and that be

to of great of was gotten Post estate one the market. that as locations this lot the with that merger coming real a new to this was great were a that’s of in has very aspects only But we real better supply consequence drawn that

John Kim

remain would For properties the offline same-store be taken or those XX they pool? in

Thomas Grimes

before. and resident. done of do these level – minor is disruption – found assets what is No. the kind exterior we’ve repositions in the And we allows to work John, of it the the for us work we on really around

on not in this most bath. and were case We’re forcing turnover and already underway kitchen of these the

So the it stays in same-store.

John Kim

nationally side. mortgage wondering supply year, may the demand be rates. It in you ticked third that and like you’re what like looks but I’m next about have homeownership concerned on quarter we sounds It Okay. rates obviously, the about not attractive the more up concerned

can anything side comment far that on as seen So as on you’ve And you to what homeownership? the demand maybe? else you move-outs think

Eric Bolton

side. to on really Well, any of we be note seen continues demand changes quite the It strong. haven’t

we been home two Our consistent any years behavior. very haven’t move-outs home in to seen have now really past move-outs due change to buying, or the for renting three and

for-sale single be for continue We a worried to not either a product. or family about for-rent as

as completely I how think just that to in people sort the approach now we’re mindset it a relates of housing. different

Having said the you’re that, right. –

are year. to to long-term this is particularly is now, We’re And about about nervous than I’m as all I me, read growth various employment we right slowdown accelerating moderating with thing next more right not to is begin the job where growth broader risk about. obviously, as being there we think to nervous job from that, that picture are To supply or there’s levels due factors robust they what their more economy degree now.

something or regarding – holds all that reasons in continues that, regions to the But sort the equation we fuel bit. Southeast from our and a than expectations side for we regions to believe the up that better on country. other regarding to a the than to we’re the of believe, lot dial of broader demand – if begin going tell to recession, a would favorable a to in hold that you country, want up to all I regions a employment the that a on expectations other of continue markets we the I it’s country in we recession, the picture you of watch most slowdown in perspective, in believe we growth just continue continue affordability will employment Sunbelt markets, a So, know better and this will in will little these regarding regional suffer say monitor. think a and you – recession the

John Kim

you. Thank Great.

Operator

ahead. go question next our Golladay And from markets. comes Wes capital RBC Please from

Wes Golladay

growth to remain Hey, make this to year, least assumption comparable you we would guys. be the over we good strategy next would job assume at when the If to that push look be year, occupancy? rate to morning, will were

Eric Bolton

point We do. Yes, we that’s in this cycle the that, do. the at think thing to

appreciate thing growth, get we get the more vacancy or think to at think than it. regarding better is way can trade-off other even the so rent revenue that variables over least really have better is to I at variable look any we And drives the time it growth. you you the when the that make. pressure you And if think a short-term a expense we from at rent year-over-year higher of comes that’s right little perspective,

And in so the that’s exactly at cycle, point doing. this what we’re

Wes Golladay

looking that Okay. next like a you on it one started looks developments, you’re quarter, Orlando. going or right are where one start more Is this high-conviction in in Orlando, opportunities now? falling And then at is to the Orlando call just that quarter of

Eric Bolton

in It that Orlando, it that’s our developer, got, They’ll which a something It’s developer other more a upon with not that to you in then if is a is, self is as we’ll take way. is and that out. – One the for noted a just opportunities be in we’re pre-purchase them out. the structuring – suburban Downtown fell stabilization, is we’ve location. And we’re us, it’s two build the the it JV. will, build of initially happens one then really going opportunity supplemental. to developing in And

long-term, just – but be, a these opportunities to to popped happen So be prospects feel happens that like Orlando market we continue the to very lot it good two up. and mean, just of with about I

Wes Golladay

Thank you. it. Got

Operator

Drew Babin Baird. ahead. question Please from from next Our comes Instructions] [Operator go

Drew Babin

Hey, good morning.

Eric Bolton

Drew. morning, Good

Drew Babin

going kind heavy good third think, you in sequentially to CapEx A I those how fuel we the we see point pretty were we sharper in and might Are on quick next revenue both the question. acceleration they the the they think some those. other Dallas, how guess, into mentioned the that and next at where should kind a And It markets, throw Atlanta fire spreads take plans you’re year? I of about kind quarter, strong growth leasing fit of do guess, about, some of to I of Charlotte. And might how was really kind talking Post Legacy in accelerate markets of see the year? in of

Thomas Grimes

The to a hit what little through the I done The in we’ve bit and right that run benefit is repositioning it’ll in And the is of on thus mean, based the weaker earlier, of its I Austin is continue come amenity touched than improve really Dallas Atlanta, Yes. to redevelopment I the excuse see expect a current far. momentum. the really on place – would Nashville on then And what peers now. that me, XXXX additional building, we that but XXXX. exterior – of – will improving, sort packages

Drew Babin

And in Dallas? renovations, the you’re those context of mentioning exterior that

Thomas Grimes

Three XX in a Yes. at. are – are couple we’re the – looking Dallas. those properties There

Drew Babin

Okay.

Thomas Grimes

And they spread the primarily, But in across footprint, though. mentioned as Eric the Post portfolio.

Drew Babin

your see size an retail existing I amount the thanks the quarter the of the in was properties, didn’t acquisition there. the Is in of it one amount spent? what that. then at of nominal terms in And for Okay, made relatively that?

Thomas Grimes

small. was It was pretty It Yes. feet. XX,XXX

it’s really retail It’s better just on that the ground to control floor the of and ground that So an we that acquisition own currently feel we it’s retail floor. own asset assets there. of

pretty yes, So it’s small.

Drew Babin

like know one me. you the ratio it for The last that’s is sheet, Al, asked where it exactly earlier. leverage Okay. because the on And this Rock want become market? different to acquire assets it’s disposition. make where it is, to for obviously to difficult it going be is, still be, a balance it Little where properties where And or that I in very sense is, way was there’s in your is because it

leverage needs? at that redevelopment, development you’re the with margin that a tick with? – ratio type we up next might little that Do year you see something bit Is okay

Albert Campbell

all, to. I that investments additional with of it would driven. pieces we comfortable and hope we access in comfortable have of to very say, invest high-quality if in opportunity certainly capital We that need need first honestly, where the do to we have we we’re We leverage. capital Well, capital all like good is. feel

look to So we protect. will

flexibility the to it. in that So for we early good if to amount necessary range, add we’re sizable available have to use leverage that but that have and know

that flexibility to our have plans. it business So we built for

We’re use necessary. not – we it have protected, but when

Drew Babin

the me. That’s appreciate I Great. all detail. for

Operator

next with go from Anderson SMBC. ahead. question comes Please our Rich And

Richard Anderson

Thanks. Good morning, everyone.

Eric Bolton

Hi, Rich.

Albert Campbell

Good morning.

Richard Anderson

what you and So in I occupancy obviously, the relative do mind, mindset year occupancy lost – have environment. rent the way to appreciate in where go. other flip But that determined of third the direction? pushing the level know to current quarter. little best occupancy that the switch economics you’ve And ago kind of you of sort of you strategy at are have the expense I the back a the in at to a bit point

Just that this perhaps wondering as where oh, number of you working is, isn’t to and as have reassess? well say, kind we what

Eric Bolton

to rent back an of make on of renewals. with – we at the result Well, rent turnover being we a in lower aggressive some optimize evidence that the all to revenue particularly and in and after. call overall a day, on of creating long-term. our it’s at like. trending order that Rich, the that easy what that where if revenue revenue too manage performance would to Then ourselves And of And I off scenario as trying than practices, overall and protect And to trying think little again, a it’s optimize both an occupancy we’re see revenue to more point we bit we’re results. about call prioritization are to results in that a at back end consequence are the point we find growth results, near-term the revenue

variable long I And easy it’s But to that I opportunity. and very mentioned you gain boost And sugar to rent is by year-over-year value you growth. as earlier, long-term tell of results short-term get I’ve giving consumed think that high you’re are revenue the that, occupancy again, in the the over while enjoying that haul performance would up drives revenues. phenomenon,

higher to current can revenue very And And right rent do now, tolerate to I vacancy. we that think much longer-term trade-off growth you it’s right about. on through little is so a think thoughtful a up as performance through opportunity and thing have give as we on the be gaining revenues protect

Richard Anderson

That’s Post a from? it’s a in it X%, October. the something might can that, that your is renewal way great. achievable with that have you – to missed perhaps Is the is for where the repeat And amount. in future? of Where you average I speaking the or is but peers relative or of that the merger, Okay, foreseeable think Is future? you that above think is I of I think the – significant said renewal in activity tied level in by kind that coming natural range.

Eric Bolton

has been X.X% win. you. tell Post, on you, I’ll renewals we’re first and natural X% system long bump. of pretty pricing we did platform a our on Thank on property. Rich, got steady in over the with When set But to a that we place

X.X%. across consistent property a that the is so And number in fairly X%,

We’re October, excited with X% or certainly that in won’t forward. you promise X.X% to going

There where of expensive it’s is care are And we’re everywhere. where move. a markets people more or the are our to long as getting for create a to living, hesitancy housing value teams residents. our good and appreciate point, taking where very folks, they’re as we pain at But move resident where

able able pretty We’re put and we’ve increase to been that through do fare consistently. a to

Richard Anderson

pain. history. to on it the Yes, in basis hasn’t and And seen to relative your always your cash and just company, perhaps, absolute today too, history then moved an level you which probably is NAV the a premium cost peers, both in is that your Eric, case been last capital is of multiple of at very much flow a a I haven’t comparable the question, before,

changing your an you changing you near-term. But lease-up said will capital is cake? narrative external that have icing growth approach same some applying this or you decline kind just are of to acquire in is cost assets process I to on know think the and considering some external standpoint, How from opportunities the is you growth? of your the

Eric Bolton

component we’ve is I out. always say balance – a mean, can I to deploying we key capital like clearly, the approach to mean a I cost about done. sheet as capital our think we put to No, where at degree, we remain about with that the moment. what that our it thoughts think our large consistent capital I deciding and will

talking our where like Al about is we our like leverage, was we balance earlier, on As sheet. the capacity

than forms strong other going growth. keep strong some sheet the what work balance effort we going able we’re an to weaken if more we’ve to said to going debt capital to of evidence we other materially effort an assumed, sheet about to having in We’re not money than the balance capture find in that that, And put forward to will then be think

point, we put we work, equation. be But to capital like move some to of we if then confident going put that all we it that I’ve degree direction. for that understand that with very, at into that got capital go and we that feel factor in the it wouldn’t to to equity to to certainty hope hesitate And a to very can not we can high has put I’m can So ask work. work. to

Richard Anderson

color. Thanks, Eric. great Thanks, everyone. Hey,

Eric Bolton

bet. You

Operator

ahead. Stifel. question And next from John our comes Please from go Guinee

John Guinee

Two Thank you. Great. questions.

Your rent aggressively with rent peers maybe the in markets, control. your and control Austin? anywhere are show a spending a or lot Is in dollars effort DC time of up dealing

And then product are kind what second about do your you’re is, XXX,XXX announced developments – a building building it it a products looks in two or Orlando? of you at question What and the wrap are a there? what or like you podium recent Denver building Is you most unit. last

Eric Bolton

and seen I tell se control you I’ll second. not the rent What Well, New have heard Brad, any nothing take footprint. coming evidence we out can our York across of of part would California we’ve the per real the John, what of first really take you, no, certainly like question,

folks – and – gets new local we development doing more being in that that is not some requiring think about that of Austin component I the some every mean, affordability often approved. to more aggressive I and places talking Nashville requiring see the what like about than more

in forth. certain have the a units terms rent to so be percentage in area median the of and income to limited of relative So levels the

of. that’s see a and suggesting keep of rent control where see that think by efforts really housing that we getting local narrative officials I Brad? So real but costs the out only aware hand, no we’re thing from to that we

Bradley Hill

Brad, Yes, is this John.

surface deal walk-up of service. that a Denver, a doing years. of park, is structured seen the a with elevator certainly in doing Downtown four-storey And four-storey we’ve deal were walk-up the component. in product. project high-rise XX product Austin, what we’re the storey we’re elevated are that we But then Orlando, parking kind now that’s a couple doing right So last from Denver that’s in

John Guinee

for with a build unit? parking XXX,XXX XX-storey a can concrete You structured

Bradley Hill

Yes.

deal And we’re a that technique kind firm. really construction the a using to this cost, part offsite design-build build is of they’re which construction Florida And those reduces done interest So keeps market. it. and and little number different product really guaranteed it’s it. and of it the that they system They throughout by FINFROCK, guys bit use a concise, have a onsite more may erect the then and timeframe of it able proprietary of that a like the time cost bring also things there, times the period

– deal. keeps They’ve slightly it the a it’s technique. really down on different that perfected So cost

John Guinee

you. Thank Interesting.

Operator

Capital And Neil our Please next question comes go ahead. Malkin One Securities. from from

Neil Malkin

Good morning, guys.

Eric Bolton

Good morning.

Neil Malkin

planned was guess, but the mentioned in overhead. I’m related that performance – I than accruals What that it, to, what’s if to? not for that or total increase due better you expected, sure or

Albert Campbell

It’s things. you And regional some investments our and some deserved. that we spends. is it Certainly, increase very part what Yes, good of guidance a of this Post year, our for additional technology had the good investments are it both well mentioned, for Neil, this of this many And incentive we’re performance year. two plans Al. also or Hey was had slight had we good making so really operating we year there. was our

good number we that the and guidance our vision, full-year. our for saw about feel you So

Neil Malkin

All sense. right, great. Makes

look is Sunbelt very or you like do terms of demand monitor markets. forecast guys the forward do you the things office what headquarters, that kind just incremental in relocation your strong of that, like development But things preleasing Next, – of track to the will in development order like? demand relocation sort on in obviously that, estimating markets, demand or and

Eric Bolton

in are mean, going take terms a track and corporate it’s to these in place markets the we and certainty certainly demand. any the forecast over notoriously hard real that’s – that drive it’s years I announcements – to thing several some Yes. growth of of monitor bigger the job And to with some of that relocations next scenario.

a it’d the level, happening Nashville, Austin, the look in and macro things whether good back And look market some when of step Charlotte. and at then factors. really we be at We factors Raleigh at macro the

different growth, so to an given to likely – and see which confident And a together market important. both of that lot wage are bring of growth in is it’s effort get job we good inputs good

difficult a you predicting of both a that’s head product well and in our thing in on economy general, what slowdown wrap comfort broader puts And markets, a The a that diversified focus to when take will, a bit your overall broader perspective, U.S. around story is the materially again, – i.e., really that lot in face where the economy little but we position to from that, sort to B challenge. very going if product, a and sort really is Sunbelt any in exactly we more more of of and a of for a good is recession, moderate, slowdown. U.S. believe continue A our slowdown, we to material particularly us becomes affordable

slowdown it look XX will it And still if back the that be you material find case and happens. next better last over we think and store recession historically, or the tends you the our that time years, the go you’ll to at more periods, hold

Neil Malkin

Last one for enough. me. Fair

aggressively the pursue sense does it year-to-date? Given to the – move more make to strong stock acquisitions, rent, given your your performance of particularly push

Eric Bolton

we’ll have done. week, looking But to I it we gets mentioned, as actively actually at looking pushing. diligence the at Well, the right couple hopefully – if we’re expect now. One see deals that this are gets and contract we a of in due

hard as we as pushing we like should. We’re feel

that forward. the it – as sure But get. think we’re I spread kind company would to we’re we’re of cost I of deploy in that that at end making and the strengthening we mean, the also thinking the really of earnings terms that the about of the going our yield capital we profile day, clearly the capital

want the whatever will, point, out than investment going yield we’re the to is that get be So go-forward new existing to you to a the stabilized be going yield whatever portfolio. to we would we’re of be of sure if out to better, get where going

now a just just And base. asset making sure over that we with going going profile opportunity coming what all that earnings happening investments we’re the And robust new the existing about continued create to see think market of more to so more we lease-ups that, coming it’s versus see year. given we’re that forward a levels adding high

Neil Malkin

color. Thanks for the

Operator

question And Please Rob from our Janney. go comes ahead. Stevenson next from

Rob Stevenson

relative good in more than morning, the Tom, just same-store there? weakness Dallas Hi, on supply anything a and Orlando, issue

Thomas Grimes

negative well revenue I On quarter and growth, on is rents the I pressure markets. bit we class the in up – a both traction holding blended as asset places, and negative new is of the both on quarter, the to and improvement really Dallas, X frankly, the which growth there. both in B great mean, mentioned, in In has job Orlando, seeing first growth Dallas. have on with extraordinary like X.X gone leading no, on our from little but stories. job supply, to on we’ve And X.X first And then gotten we’re A’s are what X.X quite

Rob Stevenson

are in seeing market? I A’s B’s any terms you about versus What in mean, Dallas? that of bifurcation major

Thomas Grimes

the our With bit. in bit feeling a Plano, Frisco urban and but is there up product some But little is a holding little places an with the – Dallas. the pressure, portfolio. Dallas, than split reasonably there split product Uptown it’s also well and a tougher is A B like suburban

Rob Stevenson

or your has the peak the mostly in of this. you’ve in your talked mean, pig estimations markets I markets basically, But a likely about XXXX, sources are or be bit of are any in your gone Okay. little XXXX, data to most we by deliveries python XXXX, in And to seeing now?

Thomas Grimes

and going through market running fourth a I that team, release. quarter on by we is up that mentioned by think comparing come down supply we’ll remarks, in build his it’s our to asset But, to them with that. and market, Eric that unlikely asset up. unlikely But third-party, by see it we’re it’s in early hitting where see huge that on we’ll ramp tell have of materially, Brad’s numbers, scrubbing say too, as more still the

Rob Stevenson

Okay. I Al, fees mean, rent? How change overall billion your how is significant fees revenue year-to-date. of guys are top you that much number? out just in $X.X and are line versus straight

Albert Campbell

revenue Rent is our on that. of about XX%

restaurant. both up so And and the reimbursements fees make

about are fees half So fees. of so that, X%, X.X%

So rents. fairly meaningful, it’s but certainly about

Rob Stevenson

settled Okay. is are fees guys’ drive the of rent guys continue of I sort to and of mean, just other location existing the that is above to or system overall mean, you growth rate, In composition? fees? sorts fees terms guys it parking start we words, or there in more stuff perspective, to the add fee in at in charging from the you for are I can are the still average the inflationary down from growth grow in to you other going and suburban

Albert Campbell

to can Let and certainly this. add me something, say Tom

Thomas Grimes

sure. Yes, I’m

Albert Campbell

of think seen seeing year blocky. so kind it’s I last fees, the what as you’re you’ve or in our

have are for new they and couple that a going of we increase programs as roll stay significant have to We in, stable to out. years programs get

as rents say, assure more of XXXX programs, Rob, As we growing of and line than productive the we expect. build more So out with what have about a will couple XXXX, fees XXXX have years, in what you XXXX, couple rents. into seeing in we of less that so in is would we’ll Tom talk line grown last we’re sort of got has and I move

Thomas Grimes

Yes.

going to front as drives to focus. forward, sometimes is technology I business things but there saying Rob. the deal some have the I We’ll few in the a Al driver us the are the what going is do, be and rents main thing, main will on of rent think keeping opportunities going mean, But that’s our the forward. forward thing, be the

Rob Stevenson

the for X cap what remaining saw – Rock disposition? for rate was then of housekeeping not then And indicate does one price What I’m Little the just And X.X% sure I Okay. somewhere. the the type sales item. Ridge Chenal the price portfolio? at

Albert Campbell

Chenal And $XX assets cap million, the $XX portfolio. was as talked about, are The at to that’s the about whole Ridge deal, the rate X.X%. similar All together million. for overall pretty

their all they’re tight pretty think, I bandwidth. on

Rob Stevenson

for is the all sales What Rock of the gross Little price portfolio?

Albert Campbell

million somewhere that $XXX in range. About

Rob Stevenson

me, Excuse sorry about that.

Albert Campbell

$XXX million.

Rob Stevenson

Okay, Have a perfect. one. guys. Thanks good

Eric Bolton

Rob. Thanks,

Operator

our Please John Advisors. question Green Pawlowski Street comes go And next from from ahead.

John Pawlowski

growth back – understand renewal to your remarks, wanted Tom, so go remarks just it. to Thanks. I I renewal

in year, in for then interpretation? business you Post been So bit a to accurate X.X% you that drove this Is and an course X% legacy have of the a portfolio renewal the range would higher. normal

Thomas Grimes

No.

Post is during there people it just mix more the impression, in quarter had point. We the X%, Sorry, John, right a where different higher better not was they but what doing. market accept of based us our to And if lower. rate and push we group. sub-market got at sort that’s asks. I give you at not. accept with are higher basically, we is rates Post the the higher was out different in We slightly price on a Mid some driving America, for the It just that had of the just renewals

John Pawlowski

rate. of the Maybe some Okay. to going the color could ground in what’s theories higher you that give higher if lead of then on acceptance

lower probably ago, forecast rate a did. in – have actual supply happened gave the a renewal you if and I actually So me or a and would job year XXXX predicted what I

side is on So that leading the incremental you think? to I’m just lift on ground do renewals, curious, the and what demand

Thomas Grimes

a John, little we that. think, My a yours, Yes. are X%. has as at improved. would been than – like I But earlier, substantially take guess bit I have can I stab lower on touched platform

fine where and just and deferring are an taking at changes single think I home society of staying childbirth to us, rate. longer, thus, I because continues this in Our of they’re they’re of again to part deferring people of move-outs they’re our did – buying And secular today, marriage, that awfully our drop quarter. and think is teams job is a of higher because renewing of residents. doing that but are are They care part

primarily making changes think the is So that it those I are difference.

Eric Bolton

product, of though, mean, coming supply That even also when would our John. that’s one guess, that. – think I I to past. market, as I that in the price product have is be much Eric. products. This we And competing this realize concessions with to I the is other things have supply this we there seen high-priced lease-up supply, are pretty point know, done, of high-priced really add past the we’ve you into lot than new Yes. you in things higher – is may temporary new a in up some ever pick years a

In more is so things balanced and moving. got it because now us be aggressive think of given so all the renewals know up, point price development when hanging to now, relating forth, still a the about which more supply cycles to onto product, tended prior you whereas higher a everything just also picked much I for a really you’ve right hassle an be ability bit lot of people, to price is little and on more fueling cost

a seen price. offer as And hassle even that we’ve if mean, you’re comparable got compelling, at just a past to in product either I you lower – price the product really to something incur a the going go new at doesn’t is to I But that moving, lot superior cycles. really think far that a dynamic same or of that

John Pawlowski

down of one when interesting your bit period, And the, out, what and within Fannie spreads one saw Brad, they the came year in there Freddie the was and markets terms for intense? But any of across I quick you in pretty you. Okay. time quickly. Curious know strength the gapped of back earlier that bifurcation

Bradley Hill

not really you we’ve within all much at mentioned No, our seen markets. as there bifurcation,

Once there so in out demand the talked much I reasons about. again, think there for is were assets our region. just that

stuff. of part, that at It sense it’s for in not we’re moving there up Fannie the by think are type lined of being any – is doing. of what And sources demand buyers alternative a capital folks all. the Freddie like not have the seeing past that, most impacting I seems impacted the are lot and

John Pawlowski

Yep. you. Great. Thank

Eric Bolton

Thanks, John.

Operator

it no And appear there to are it this the I’d to questions the time. for does back any at turn phone over like speakers remarks. closing further

Tim Argo

being of We and this you many at of couple in the NAREIT weeks. morning, a on appreciate everyone we’ll see call

So thank you.

Operator

program. you This today’s your does conclude for Thank participation.

any time. You at may disconnect

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