Lease Rate Growth Guidance
Q: What are your assumptions for lease rate growth?
A: Management expects 1.25% growth for new leases and 1.75% for renewals this year. Renewal growth should be above 2% in the first half, then drift down to 1.25% in the back half.

Concessions Impact on Rent Spreads
Q: Why is the spread between new and renewal rates tight?
A: The tight spread is due to concessions burning off; about 50% of January's 4.8% lease growth was from concessions expiring, not real market rent growth. The company aims to price renewals appropriately, without pushing them above market.

Delinquency Concerns
Q: What caused the jump in delinquencies in January?
A: Delinquencies increased seasonally post-holidays, as people prioritize paying off credit cards. January saw an 80 basis point increase, lower than last year's 190 basis point rise. Management is monitoring but not overly concerned.

Preferred Equity Risks
Q: What risks exist in your preferred equity book?
A: The company takes a prudent approach, assessing factors like market value, maturity, and sponsor support. They have put two assets on nonaccrual status, totaling $25 million, and are monitoring a few others. Overall, the book is performing as expected.

Capital Recycling Plans
Q: How will you use capital from preferred equity redemptions?
A: Management views acquisitions as more compelling now due to upside in rent growth in their markets. The preferred equity book may drift lower as they focus on acquisitions. Joint venture partners remain interested in deploying capital.

Northern California Rent Outlook
Q: Why is rent growth guidance muted despite improvement?
A: While Northern California showed the largest improvement in January, the overall economic environment and elevated supply in areas like Oakland dampen rent growth. Northern California is expected to grow at 1%, below the portfolio average.

Insurance Cost Increases
Q: How are insurance costs impacting you?
A: Insurance costs have increased by 30%, which is factored into this year's expenses. The company uses a captive insurance entity to minimize premiums. Recent storms haven't materially impacted costs yet.

Rent Control Environment
Q: Have there been changes in the rent control environment?
A: Management doesn't anticipate heightened concerns over rent control due to low rent growth. They are monitoring a proposition to repeal the Costa-Hawkins Housing Act but believe it lacks political support and is unlikely to pass.

Delinquency Collection Efforts
Q: Can you collect past-due rents from tenants?
A: The company is pursuing all avenues to collect the $134 million in receivables, including credit reporting and legal action. They are collecting small amounts monthly, but timing depends on when former tenants need their credit restored.

Application Fraud Concerns
Q: Is application fraud increasing?
A: Management has not seen an uptick in fraud or misrepresentations by tenants. They remain vigilant, and fraud has not been a driver of financial impact.