Joshua Dennerlein • BofA Securities

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CFO Mike Eastwood provided examples of durable high-growth products, such as Practical Law (acquired 2013) and Dominio (acquired 2014), which continue to grow above 10%. CEO Steve Hasker added that the underlying secular trends, like the talent shortage in tax and the transformation in legal, are multiyear or even decade-long transitions, suggesting the growth trends are durable, contingent on execution.

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CFO Steve Weber mentioned that fraud solutions on the platform are a key focus, with most expected to be available next year. CEO Will Lansing confirmed that FICO World is their '#1 sales pipeline building effort,' as it facilitates deep customer engagement and knowledge transfer that directly drives future business.

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CFO Steve Weber mentioned that fraud solutions on the platform are a work in progress, with full availability expected next year. CEO Will Lansing and VP of Investor Relations Dave Singleton both pointed to FICO World for major announcements on platform innovation. Lansing confirmed the event is their '#1 sales pipeline building effort,' driving significant customer engagement and future sales.

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CEO Martina Cheung reported 'very nice' progress, with senior leadership actively engaging top clients in partnership with the office. This has strongly positioned the company for vendor consolidation opportunities. She cited several significant new business wins with large banks for products like counterparty manager, primary markets issue book, and corporate actions as evidence of early success.

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CEO Robert Fauber and CFO Noemie Heuland distinguished the current environment from 2022. They explained that 2022 saw a severe revenue decline of around 30%, making margin preservation difficult. The current forecast is within a manageable 'band' where traditional levers like incentive comp and discretionary spending control are more effective. They are not forecasting a 2022-like scenario and still expect a year-over-year increase in the MIS adjusted operating margin to 61-62%.

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CEO Mark Begor reiterated that bolt-on M&A is integral to their strategy, focusing on four priorities: strengthening Workforce Solutions, differentiated data, identity & fraud, and international platforms. He specified that the recent acquisition of a small competitor was not a strategic fit for Equifax. He affirmed that growing free cash flow and leverage capacity support their plans for CapEx, bolt-on M&A, and shareholder returns.

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Chairman and CEO Henry Fernandez explained that the partnership evolved from their successful ESG collaboration and focuses on combining Moody's credit risk models with MSCI's extensive private credit investment data to create a joint product for assessing creditworthiness. Chief Financial Officer Andrew Wiechmann added that the financial impact in the current year is expected to be immaterial.

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Co-CEO and Co-President Randall Starr responded that the pipeline is robust, with acquisitions averaging in the high 7% cap rate range due to their niche, entrepreneurial approach. He stated they are targeting essential services, health, and wellness—specifically medical, dental, vet, and auto services—while avoiding casual dining and pharmacies. Starr noted that a decrease in 1031 exchange buyers has created favorable pricing opportunities.

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CEO Shankh Mitra emphasized that talent retention is his top priority and stated with a "resounding no" that Welltower does not have a retention problem. He elaborated that his focus is on proactive measures to maintain a positive environment, or 'keeping the grass wet,' to prevent future issues amid high industry demand for talent.

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Shankh Mitra (CEO & CIO) agreed that simply returning to pre-COVID levels would be a 'complete failure.' He explained the analysis should also factor in the cumulative effect of revenue growing faster than expenses over time, as well as achieving a new, higher stabilized occupancy level driven by platform initiatives.

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Gabe Willhite, COO, explained that as the new 100% owner of Trilogy, AHR can now leverage Trilogy's best-in-class proprietary strategies in revenue management, marketing, and employee retention to support its other regional operators. Chief Financial Officer Brian Peay clarified that the insurance benefit is part of a miscellaneous collection of non-real estate income, with proceeds from property losses being the largest component.

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CEO George Chappelle defended the partnership strategy, stating it's more efficient to leverage the massive R&D investment of major tech companies in areas like AI rather than trying to compete for talent and resources. He highlighted that this approach delivered bottom-line results just months after the ERP (Project Orion) went live. Looking ahead, he mentioned the continued ERP rollout in Europe and plans to explore embedded and generative AI capabilities to drive further productivity gains.

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Gary Shiffman, Executive, highlighted that the Board has added four new members in the last four years and is actively examining further refreshment, with one member set to step down. He stated that conversations about his future role as Chairman and Board member will be held with the search committee as part of the transition process.

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Chief Investment Officer Kevin Pascoe responded that the goal is to reach 90%+ occupancy, which would allow incentives to burn off and lead to margin expansion. He anticipates mid-single-digit revenue increases on street rates. Regarding labor, he noted that while wage rates are not expected to decrease, the growth rate has stabilized, and a potential modification of the minimum staffing rule could be a positive for the skilled nursing sector.

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COO Sean Breslin explained that the deceleration was a strategic move across all regions to stabilize occupancy heading into the slower season. He noted that Seattle is typically more seasonal, which can require more aggressive pricing on new move-ins. Regarding return-to-office, Breslin confirmed they have seen positive impacts in Seattle since Q2, driven by Amazon and other employers, which has contributed to the region's outperformance in 2024.

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President and COO Charles Young responded that in markets with supply and absorption noise like Tampa and Phoenix, teams were instructed to adjust and compete on price to avoid excessive turnover. He indicated that as absorption improves, they are regaining confidence to hold rates. Young suggested that month-to-month adjustments are normal and that they are now capturing higher rates as they build the book back.

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SVP of Operations Mike Lacy confirmed that short-term lease volume was slightly higher than normal, particularly in coastal markets, driven by an increase in summer interns. He explained that while this impacts turnover statistics, the company pursues these leases for their profitability, as they command a premium rent. The overall exposure is managed and remains less than 1% of total units.

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CFO Kevin B. Habicht explained that while Frisch's and Badcock represent 2.1% of ABR, the company would still land in the middle of its guidance range even with a worst-case 200 basis point rent loss. He noted no other major tenants of concern and stated that downtime for re-tenanting is typically 6-12 months, although strong interest in the properties could shorten this period.

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Tim Argo, EVP and Chief Operating Officer, explained that Austin was the most challenged market, significantly impacting overall new lease rates. He noted that excluding Austin, new lease rates would have accelerated from Q2 to Q3. He confirmed that high-supply markets do impact renewals, citing Austin's renewal rate of 1.5% compared to the portfolio's average of around 4.1% for the quarter.

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COO Bryan Smith explained that AMH passed on some portfolios due to a higher-than-desired proportion of townhomes and attached product, as the company believes single-family detached homes offer better long-term returns. He noted that many recently available portfolios have been heavily weighted towards more recent build-to-rent product, which often includes more attached homes, whereas scattered-site portfolios, like the one acquired, tend to have a higher proportion of detached homes.

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Executive Robert Salisbury quantified the dilution at approximately $0.01 in Q3, likely totaling $0.02 for 2024, and suggested a $0.01-$0.02 headwind is a reasonable starting point for 2025 models. CEO Peter Mavoides confirmed that lightening up on car washes is a portfolio construction decision to maintain industry concentration below a 15% soft ceiling, not a reaction to negative industry trends.

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CFO Marc Binda and executive Peter M. Moglia explained that the pending sales at higher cap rates involve non-traditional or suburban assets requiring capital, whereas the 4.9% cap rate sale of a core asset to a user is more representative of the high value of Alexandria's mega campuses. Executive Joel Marcus added that the company is strategically recycling capital from older assets that no longer fit the core mega campus strategy.

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Paul Seavey, EVP and CFO, stated that the mark-to-market on new resident rents is approximately 13%, moderating from 16% earlier in the year, and confirmed the preliminary 2025 rate growth includes this impact, consistent with prior methodology. Patrick Waite, EVP and COO, explained that payroll favorability was driven by a 5% lower headcount at RV properties year-over-year, achieved through efficient scheduling, cross-training, and managing overtime, while maintaining high customer experience scores.

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An executive provided a concise answer, stating that the occupancy decline was primarily driven by market impacts in China, with some oversupply issues in Japan also contributing to a lesser extent.

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