Rent Growth Outlook
Q: How realistic is your 25 bps market rental growth guidance?
A: Management believes the 25 basis points market rental growth is achievable, based on current conditions and data from third-party providers. They reforecast from the community level up and have confidence in meeting their revenue targets. The lower rental rates are offset by better occupancy and significantly reduced bad debt.

Occupancy and Pricing Strategy
Q: Will you push rents after reaching desired occupancy?
A: With occupancy back to 95.4%, management plans to push rents, especially in stronger markets like D.C. Metro and Houston. They use forward-looking tools like YieldStar to make pricing decisions based on projections 6–8 weeks out, aiming to capitalize on the regained occupancy to increase rents.

Capital Allocation and Buybacks
Q: How do you plan to allocate capital given market conditions?
A: Currently, the best use of capital is selling assets and buying back stock at a high 6% cap rate when the market trades at a low 5% cap rate. Management will consider continuing buybacks if the stock remains undervalued and may pivot to more aggressive development or acquisitions after evaluating the peak leasing season's performance. They avoid joint ventures to maintain full ownership and control.

Supply and Development Plans
Q: How will you take advantage of future low supply?
A: Management plans to capitalize on the expected supply decline in 2025–2026 by resuming development projects, particularly in markets like Charlotte where demand is strong, leasing over 40 units per month. They are cautious and will decide to commit capital once they see how the peak leasing season unfolds, ensuring that demand absorbs current supply.

Bad Debt Reduction
Q: Is the improvement in bad debt sustainable?
A: Management believes the current bad debt levels are sustainable and aims to return to the long-term average of 50 basis points. While they have made significant progress through legislation and enhanced screening, they are cautious about improving beyond historical levels due to potential changes in consumer behavior.

Impact of Supply Deliveries
Q: How do you view absorption amid increasing supply?
A: They expect 230,000 completions in 2024, declining to 200,000 in 2025, with deliveries in 2025 being front-end loaded. Management is confident that strong demand and absorption rates will continue to support occupancy, assuming no hard economic landing.

Recession Concerns
Q: Is the economy stronger in your markets than expected?
A: While acknowledging recession risks, management observes that the current economy is strong in their Sunbelt markets, with plentiful jobs primarily in this region. They note that if a hard landing occurs with significant job losses, it would negatively impact multifamily demand.

New Lease Rate Growth
Q: What are your new lease rate growth assumptions?
A: They expect new lease rates to be around negative 2% in Q2 and negative 1% in the following two quarters. Renewals are assumed to be close to 4% in Q3 and Q4, leading to blended growth rates of 1.6% in Q3 and 1.2% in Q4. They do not anticipate new leases reaching flat during this period.

Occupancy Projections
Q: What occupancy rates do you expect for the year?
A: Management projects occupancy to be around 95.4% in Q2, 95.5% in Q3, and 95.4% in Q4, slightly higher than previous expectations. They use forward-looking models to maintain these levels and adjust strategies accordingly.

Market Performance Variances
Q: Have any markets performed differently than expected?
A: While most markets are performing as anticipated, Austin and Nashville have underperformed in terms of new lease rates. Management notes these are the worst-performing markets in their portfolio and may adjust strategies there.

Sunbelt Job Growth
Q: Are your markets' economies stronger than portrayed?
A: Management believes their Sunbelt markets exhibit stronger economies than general consensus suggests, driven by significant job growth and in-migration. They expect these trends to continue supporting demand for multifamily housing.

Differences with Peers' Perspectives
Q: Why does your rent growth outlook differ from peers?
A: They attribute differing outlooks to operating in different markets. Their markets are experiencing robust job growth and household formation, leading to a more optimistic rent growth outlook for 2025 and beyond compared to peers focused on coastal markets.