- Core FFO per Share Growth: 8.5% year over year.
- Net Income Attributable to Common Shareholders: $92.1 million or $0.25 per diluted share.
- Core FFO per Share: $0.45, representing 8.5% year-over-year growth.
- Adjusted FFO per Share: $0.39, representing 9.4% year-over-year growth.
- Same-Home Average Occupied Days: 96.6% for the second quarter.
- New Lease Growth: 6.3% in June and 5.7% overall for the quarter.
- Renewal Increases: 5.2% for the quarter.
- Blended Spreads: 5.3%.
- Same-Home Core Revenue Growth: 5.5%.
- Same-Home Core Operating Expense Growth: 4.8%.
- Same-Home Core NOI Growth: 5.9% for the quarter.
- Full Year Same-Home Core NOI Growth Guidance: Increased by 50 basis points to 4.5% at the midpoint.
- Newly Developed Homes Delivered: Between 2,200 and 2,400 homes expected for the year.
- Net Debt to Adjusted EBITDA: 5.1 times.
- Revolving Credit Facility: $1.25 billion, fully undrawn.
- Cash Available on Balance Sheet: Over $700 million.
- Unsecured Bond Offering: $500 million with a 5.5% coupon.
- Full Year Core Revenue Growth Expectations: Increased by 25 basis points to 5%.
- Full Year Core Expense Growth Expectations: Reduced by 25 basis points to 6%.
- Full Year Core NOI Growth Expectation: Increased by 50 basis points to 4.5%.
- Full Year Core FFO per Share Expectations: Increased by $0.03 to $1.76 per share, representing 6% year-over-year growth.
Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Core FFO per share growth of 8.5% year over year.
- Increased core FFO per share outlook by $0.03 to $1.76 at the midpoint.
- Successfully issued a 10-year unsecured bond, derisking debt maturities.
- Same-Home core NOI growth of 5.9% for the quarter.
- Strong leasing spreads and improved bad debt outlook.
Negative Points
- Increased supply pressures in markets like Phoenix affecting occupancy.
- Higher property tax growth expectations at 7% for the full year.
- Continued dependency on the resale market for growth.
- Potential impact of lower mortgage rates on occupancy and turnover.
- Challenges in managing turnover inventory during move-out season.
Q & A Highlights
Q: Can you talk about the July trends, specifically new lease rate growth and renewals?
A: July was strong with new lease rate growth of 6.2% and renewals at 5%. We are sending out renewals in the low fives, reflecting a balanced approach to revenue management. Our outlook for the second half has increased by 50 basis points due to strong demand across our diversified portfolio.
Q: Are you seeing any impact from new supply in specific regions?
A: The area most affected by new supply is Phoenix, which has seen a lot of new build-to-rent supply. However, not all build-to-rent is the same. Our single-family detached homes are performing well, with occupancy rates over 97% in Phoenix. We believe any supply pressure will be temporary.
Q: Can you explain the increase in your full-year guidance and the factors contributing to it?
A: The increase in our full-year guidance is largely due to better-than-expected leasing spreads and improved bad debt outlook. We have increased our full-year core revenue growth expectations by 25 basis points to 5% and reduced our full-year core expense growth expectations by 25 basis points to 6%.
Q: What are your current assumptions for property taxes in states like Florida and Georgia?
A: We have received initial assessed values for over half of our portfolio. In Georgia, initial assessed values are slightly below expectations, but it's too early to say definitively. Florida is a third and fourth-quarter event, so we will have more visibility later in the year.
Q: How do you view your cost of capital, particularly equity cost of capital?
A: We are opportunistic about our cost of capital. Our development program is sized so that it can be funded without the need for equity in any given year. Equity can be used opportunistically for incremental opportunities like development or portfolio acquisitions.
Q: Can you provide an update on your insurance expense and what you're seeing in the market?
A: Our insurance renewal came in at high single digits for the full year, reflecting an improving insurance market and the favorable risk profile of our dispersed single-family assets. Our mature disaster preparedness and response programs also contribute to our favorable risk profile.
Q: Are you concerned about the high exposure of your development pipeline to markets with increased supply, like Phoenix and Vegas?
A: No, we are not concerned. Our build-to-rent product is high quality and located in infill areas with high demand. Our detached homes are performing well, with occupancy rates over 97%. We believe our product is differentiated and will continue to perform strongly.
Q: What is your take on the potential impact of lower mortgage rates on your occupancy and turnover?
A: While lower mortgage rates could lead some renters to buy homes, we believe the overall housing shortage and high demand for rental homes will continue to support our occupancy and rental rates. Our markets are characterized by supply constraints, which should provide support.
Q: Can you quantify the impact of bad debt on your guidance?
A: Our bad debt for the second quarter was 90 basis points. We have left our bad debt outlook for the second half of the year in the low 1% area, consistent with the back half of last year. This brings our full-year bad debt outlook to 1% on average.
Q: How do you view your geographic footprint and the potential for concentrating capital in fewer markets?
A: We are pleased with our diversified footprint and manage it efficiently through a hub-and-spoke system. Our development program is concentrated in select markets, allowing us to achieve efficiencies while maintaining a broad geographic presence.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
