Rent Growth Outlook
Q: Why aren't rents increasing more despite affordability gap?
A: Dallas Tanner explained that despite a large affordability gap between owning and renting, they're seeing a return to pre-pandemic seasonality. While demand remains strong, especially with average resident incomes at $150,000 and rent-to-income ratios of 5.4x, they are being cautiously optimistic due to the slowing macroeconomic environment. They expect rent growth in line with traditional years before the pandemic, aiming for blended rent spreads of high 4% to low 5%.

Property Management Expansion
Q: What's the opportunity and risk in third-party management?
A: Dallas Tanner highlighted their move into third-party management, starting with 14,000 homes from Starwood, contributing $0.02 to guidance. They see significant opportunities to scale by managing portfolios for professional owners, driving efficiencies and possibly lowering resident costs. While aware of regulatory scrutiny in the sector, they believe their professional approach mitigates risks.

Bad Debt Guidance
Q: Where will bad debt start and end this year?
A: Jonathan Olsen noted they expect continued improvement in bad debt, starting at 120 basis points in Q4 2023, down from 170 basis points in Q4 2022. They aren't assuming any rental assistance in 2024 but believe enforcing lease terms from the start of the year will help reduce bad debt steadily throughout 2024.

Acquisition Opportunities
Q: What's the outlook for portfolio acquisitions this year?
A: Scott Eisen stated they're seeing opportunities as some owners face negative cash flows due to rising debt costs. They're in dialogue with various parties and believe accretive acquisitions could arise from portfolios where owners didn't fix their debt and are now seeking options.

Balance Sheet Plans
Q: What's the plan for the $2.5 billion term loan maturing?
A: Jonathan Olsen clarified that the term loan matures in January 2026, not next year. They plan to recast the facility between now and summer 2025, monitoring rate markets and engaging with their bank group. They feel comfortable with their access to capital and will be patient and opportunistic.

Expense Control
Q: How will you manage low expense growth rates?
A: Jonathan Olsen explained that they expect moderation in controllable expense growth, with significant improvements made in repair and maintenance efficiency. The operations team has been driving more efficiency, and they believe they can continue this trend without substantial year-over-year increases in most expense line items.

Cap Rates and Dispositions
Q: Are you seeing changes in cap rates in the MLS market?
A: Dallas Tanner noted they continue to sell dispositions back into the MLS at cap rates in the mid to high 3% range, sometimes low 4%, depending on the market. Demand from homebuyers remains strong, and this strategy provides an accretive way to recycle capital.

Build-to-Rent Strategy
Q: What's preventing higher new home deliveries?
A: Dallas Tanner and Scott Eisen said their builder pipeline is growing, with 760 new home deliveries expected, up by 150 from 2023. Builders see institutional buyers like them as an important business line. They're increasingly partnering with national and regional builders, and despite a strong for-sale market, builders value the incremental demand from institutional partners.

Supply Impact on Rents
Q: Could supply pressure from build-to-rent hurt rents?
A: Charles Young acknowledged supply pressures in markets like Phoenix and Las Vegas due to build-to-rent developments. However, strong occupancy at 97.5% puts them in a position of strength to hold and lean into rates. They are already seeing acceleration from January into February and are confident demand remains strong.

Rent Concessions
Q: Have you offered concessions to drive occupancy?
A: Charles Young stated they aren't currently offering concessions in the same-store portfolio. They pushed occupancy prior to the holidays by running some concessions in November but have since removed them. Any concessions now are minimal and may occur one-off in smaller build-to-rent areas facing more competition.