Alex Kim

Alex Kim inquired about any differences in performance or rent growth between the company's urban and suburban assets and the expectations for these trends through the remainder of the year.

Answer

Alex Jessett, President and CFO, noted that urban assets are currently outperforming suburban assets and are expected to continue to do so throughout 2026. He described this as a turnaround from previous years, with Class A urban properties showing stronger recovery after being more impacted earlier.

Alex Kim asked about any observed differences in performance or rent growth between Camden Property Trust's urban and suburban assets and the expectations for these trends through the remainder of the year.

Answer

President and CFO Alex Jessett noted that urban assets are currently outperforming suburban assets, particularly Class A urban properties, a reversal from previous years. He expects this trend to likely continue throughout 2026, as urban assets recover from prior impacts.

Alex Kim from Zelman & Associates inquired about the opportunity to acquire assets below replacement cost, as seen with the Camden Leander deal, and how long this market condition is expected to last.

Answer

Chairman and CEO Ric Campo believes the opportunity will persist for a while, especially in markets like Austin and Nashville that will take longer to recover. He noted that general economic uncertainty is keeping institutional investors on the sidelines, and pressure on merchant builders to sell will likely increase supply. This combination should keep the acquisition environment reasonable, with the largest discounts remaining in the most challenged markets.

Alex Kim asked about the leasing trends for Camden's three communities currently in lease-up and how their performance affected the lease-up revenue line in Q4 and the outlook for 2025.

Answer

President and CFO Alexander Jessett reported that the two single-family rental communities are experiencing a slower lease-up pace, which is typical for that product type. The third property, Camden Durham, saw seasonally slower leasing in Q4. He provided occupancy updates (Woodmill Creek at 89%, Durham at 78%, Long Meadow Farms at 53%) and noted that the first two are nearing stabilization, which should contribute positively to 2025 revenue.

Alex Kim asked if Essex anticipates further improvement in delinquencies, potentially below pre-COVID norms, and requested quantification of the contribution from the 'other income' bucket to the full-year same-store revenue growth guidance.

Answer

Barbara Pak (EVP and CFO) stated that delinquencies are at 50 basis points, about 10 basis points off the pre-COVID average, primarily due to elevated eviction court processing times in Los Angeles. She confirmed that no meaningful benefit from delinquency is baked into 2026 guidance, as the bulk of the benefit was realized in prior years. The 30 basis point tailwind from other income was mentioned in prepared remarks.

Alex Kim asked about the potential for further improvement in delinquency rates beyond pre-COVID norms and the specific contribution from the 'other income' bucket to the full-year same-store revenue growth guidance.

Answer

Barbara Pak (EVP and CFO, Essex Property Trust) stated that delinquency is at 50 basis points, 10 basis points off the pre-COVID average, primarily due to LA eviction court processing times. She noted that no meaningful benefit from delinquency is baked into 2026 guidance, as the bulk of the benefit was realized in prior years.

Alex Kim from Zelman & Associates asked about the drivers that will keep blended rent growth on track for the full-year outlook in November and December, and for details on Q4 assumptions for bad debt and other income.

Answer

Executive Angela Kleiman expressed confidence, citing multiple factors: no concession headwinds, abating overhang from LA evictions, easier new lease rate comps, and strong renewals. Executive Barb Pak projected full-year bad debt would be around 1%. She also noted that other income will see a sequential decline in Q4 because a non-recurring lease break fee from a corporate tenant in Q3 will not repeat.

Alex Kim observed the widening spread between renewal and new move-in rents and asked for AvalonBay's insights on this dynamic and its implications for rent growth, both for front-end pricing and renewals, moving into 2026.

Answer

Sean Breslin, Chief Operating Officer, confirmed the typical seasonal shift in rent changes between renewals and new move-ins. However, he noted that move-in rents were weaker than anticipated, reflecting deceleration in markets like the Mid-Atlantic, Los Angeles, and Denver. He expects this trend to persist through year-end, with a material shift typically not occurring until the spring leasing season when asking rents usually begin to rise.

Alex Kim asked about the widening spread between renewal and new move-in rent changes and its implications for rent growth into 2026.

Answer

COO Sean Breslin confirmed that a seasonal shift between renewal and move-in rent change is typical for this time of year. However, he noted that move-in rents were weaker than anticipated, reflecting deceleration in markets like the Mid-Atlantic, Los Angeles, and Denver. He expects this trend to continue through year-end, with shifts typically occurring during the spring leasing season, though no 2026 forecast was provided.

Alex Kim inquired about recent trends in lease-up velocity and the use of concessions to start the year, and whether concession usage is expected to moderate.

Answer

COO Sean Breslin reported that lease-up velocity was solid at 22-23 leases per month in Q1 with about a half-month of concessions on average. He stated that concession usage will not necessarily moderate, as it is driven by the market environment and the need to lease up entire communities quickly, and he doesn't see a reason for it to change at this time.

Alex Kim asked for clarification on whether the Development Funding Program (DFP) volume is included in the overall development start target and what percentage of developments include townhomes. He also questioned if the expansion into BTR products would require an increase in overhead.

Answer

CIO Matthew Birenbaum confirmed that DFP is included in the development start figures, likely accounting for 2-3 of the planned starts in 2025. He noted that mixing townhomes into garden communities is a successful formula they use often. He also clarified that the DFP model does not require incremental internal overhead, as they pay fees to the third-party developers who carry their own overhead, making it a capital-efficient way to grow.

Alex Kim asked about the current transaction market, including the quantity of for-sale supply, the bid-ask spread, and how these factors relate to the company's share buyback strategy. He also inquired about the faster construction timeline for an unconsolidated development in Washington State.

Answer

Bob Garechana, Chief Investment Officer, described a healthy private transaction volume, noting a disconnect between public and private market pricing. He highlighted active bidding for 'middle of the fairway' assets at around 4.75% cap rates, but less activity for larger or geographically challenged assets, concluding that Equity Residential's shares currently present a better opportunity. Mark Parrell, President and CEO, explained that the Washington State development's faster timeline was due to early completion of footings and complex excavation work, driven by favorable seasonal patterns.

Alex Kim asked if there could be upside to the $1.5 billion acquisition target due to distressed merchant-builder assets coming to market and whether the company is looking at any new expansion markets.

Answer

CIO Alec Brackenridge confirmed they are optimistic and well-positioned to act on such opportunities, citing their ability to execute large transactions quickly. CEO Mark Parrell stated that their primary expansion focus remains on Atlanta, Dallas, and Denver, with Austin on hold due to supply, and that no new markets are being announced at this time.

Alex Kim asked what makes the company's chosen expansion markets so attractive for the long term and inquired about other markets that might fit the same criteria.

Answer

CIO Alex Brackenridge stated the strategy is to follow their high-earning customers to markets with growing tech and finance job bases, such as Denver, Dallas, and Atlanta. He identified Charlotte and Raleigh as other potential targets but noted they are currently on the sidelines due to the 'daunting' amount of new supply in those markets.

Alex Kim from Zelman & Associates asked if UDR's AI screening program for bad debt has led to any incremental improvements and requested details on its impact.

Answer

COO Mike Lacy confirmed the program, which includes ID and income verification, is paying dividends. He pointed to improved metrics for new residents, including a 17% increase in average deposits, a 1% increase in the use of co-signers, and a 20-point increase in average credit scores to 730. CFO Joe Fisher quantified the remaining opportunity, stating that reducing bad debt from the current ~100 bps to the pre-COVID level of 40-50 bps represents a $15-20 million bottom-line cash flow opportunity, including savings on turnover and other expenses.

Alex Kim asked how renewal rent growth has remained so resilient despite the historically wide gap to new lease rates and whether this spread varies by market.

Answer

EVP & COO Tim Argo explained that despite the percentage gap, the absolute dollar difference is manageable. He attributed strong renewal performance (4.7-4.8% for May/June) and record acceptance rates to MAA's customer service, detailed renewal process, and strong brand reputation (e.g., high Google scores). He added that this dynamic is relatively consistent across most of their markets.

Alex Kim from Zelman & Associates asked about the drivers of the Q3 sequential occupancy increase, the strategic balance between occupancy and rent growth, and the rationale for acquiring properties in lease-up.

Answer

Tim Argo, EVP and COO, attributed the occupancy gain to strong absorption and noted that the company balances pricing and occupancy at a property level. He explained that the current record-low exposure of 6.3% provides stability and allows for pushing prices where possible. Brad Hill, EVP and President, reiterated that acquiring properties in lease-up is a core strategy because it's harder for others to finance, allowing MAA to use its all-cash ability to secure higher returns than on stabilized assets.