Jeff Spector

Jeff Spector asked for more specifics on the supply pressure experienced in 2025, including surprising elements and particular markets affected, and how this might influence AMH's market strategy going forward, especially regarding leaning into the Midwest.

Answer

Lincoln Palmer, Chief Operating Officer, explained that the supply impact was visible in Q4 results, stemming from deliveries heavily outpacing absorption across various product types. He cited San Antonio (multifamily), Phoenix (build-to-rent), and Las Vegas (for-sale to for-rent conversions) as heavily impacted markets. He reaffirmed strong underlying fundamentals in the Midwest, noting its supply-constrained and affordable nature, and stated AMH is watching markets carefully while remaining committed long-term.

Jeff Spector asked for more specifics on the supply pressure American Homes 4 Rent experienced in 2025, including what surprised the company and which markets were most affected. He also questioned how this might influence future market strategy, particularly regarding leaning into Midwest markets versus the Sun Belt, and the outlook for supply pressure in 2026.

Answer

COO Lincoln Palmer attributed supply impact to heavy deliveries outpacing absorption across various product types, noting that while starts have slowed, standing inventory remains. He cited San Antonio (multifamily deliveries), Phoenix (build-to-rent epicenter), and Las Vegas (for-sale to for-rent conversions) as heavily impacted markets. He reaffirmed strong underlying fundamentals and supply constraints in Midwest markets like Columbus, which did not experience the same high delivery levels.

Jeff Specter asked about global institutional interest in U.S. real estate, the strategy for exiting office and retail assets, and the apartment supply outlook in Sunbelt markets like Texas and Arizona.

Answer

CEO William J. McMorrow confirmed very strong institutional interest in U.S. real estate, particularly from Asia, and noted the credit business is creating new equity opportunities in the Sunbelt. President Matthew Windisch clarified that while balance sheet capital won't go to office/retail, the investment management platform might pursue opportunistic deals. He also noted that new construction starts remain low, suggesting a significant ramp-down in supply deliveries in about 18 months.

An analyst on behalf of Jeff Spector asked if demographic shifts are influencing MAA's long-term portfolio strategy regarding asset class and urban/suburban mix. They also requested details on recent transaction cap rates and the target yield spread between development and acquisitions.

Answer

Brad Hill, President and CEO, affirmed that the long-term strategy remains consistent, focusing on high-demand Sunbelt regions with a diverse market mix to attract a broad renter base. On transactions, he disclosed that recent dispositions traded at cap rates in the low 6% range, while acquisitions of lease-up assets are projected to stabilize near 6%. He highlighted that their new developments are yielding around 6.4%, representing a 140-basis-point spread over current market cap rates of approximately 5.5%.

Jeff Spector of Bank of America requested more color on the market dynamics supporting the positive absorption outlook for 2025, beyond just lower lease expirations. He also asked for details on the industries driving the new demand from larger tenants.

Answer

President and CEO Jordan Kaplan attributed his optimism to a significant increase in leasing activity and showings, particularly the return of tenants seeking over 10,000 square feet, which he noted was a missing piece previously. Executive Stuart McElhinney added that the Q4 demand from larger tenants was broad-based and not concentrated in any single industry.

An analyst on behalf of Jeff Spector of Bank of America asked for the source of confidence that leasing to tenants over 10,000 square feet will continue into 2025. He also inquired about which specific industries are driving the current leasing demand.

Answer

President and CEO Jordan Kaplan clarified that while the current pipeline for larger tenants looks good, he cannot predict its continuation into 2025. However, he expressed confidence based on a more favorable lease expiration schedule over the next five years, which should aid in achieving positive absorption. Executive Stuart McElhinney added that recent leasing demand was broad-based across all key industries, including legal, financial services, entertainment, and healthcare.

Jeff Spector from Bank of America asked for more color on the increased leasing demand in July, questioning if it was tied to specific price points and where new residents were coming from. He also inquired about the transaction market and the stability of cap rates for planned dispositions.

Answer

EVP of Property Operations Keith Kimmel attributed the strong July leasing to a combination of pent-up demand and typical peak season activity, noting the trend was broad-based across markets and price points. On transactions, Chairman and CEO Terry Considine stated that buyer demand is strong, allowing Aimco to be selective on pricing, and that low interest rates are helping to offset broader economic uncertainty.