Welcome to the Invitation Homes 3rd Quarter 2025 Earnings Conference Call. All lines are in a listen-only mode at this time. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. As a reminder, this conference is being recorded. At this time, I would like to turn the conference over to Scott McLaughlin, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Operator, and good morning. Joining me today from Invitation Homes are Dallas Tanner, our President and Chief Executive Officer, Tim Loebner, our Chief Operating Officer, John Olson, our Chief Financial Officer, and Scott Eisen, our Chief Investment Officer. Following our prepared remarks, we'll open the line for questions from our covering sell-side analysts. During today's call, we may reference our third quarter 2025 earnings release and supplemental information. We issued this document yesterday afternoon after the market closed, and it is available on the Investor Relations section of our website at www.invh.com. Certain statements we make during our call may include forward-looking statements relating to the future performance of our business, financial results, liquidity and capital resources, and other non-historical statements that are subject to risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated. We describe some of these risks and uncertainties in our 2024 Annual Report on Form 10-K and other filings we make with the SEC from time to time. Except to the extent otherwise required by law, we do not update forward-looking statements and expressly disclaim any obligation to do so. We may also discuss certain non-GAAP financial measures during the call. You can find additional information regarding these non-GAAP measures, including reconciliations to the most comparable GAAP measures in yesterday's earnings release. With that, I'll now turn the call over to Dallas Tanner. Go ahead, Dallas.

Thank you, Scott, and good morning, everyone. I'll start by recognizing our exceptional teams across the country. Their dedication to our residents and to operational excellence continues to drive performance and reinforces our leadership in single-family rental housing. Stepping back, our business is built on a simple but powerful value proposition, choice, flexibility, and high-quality single-family living, without the long-term financial and maintenance commitment of homeownership. That value proposition is resonating broadly, from families seeking space and schools to professionals who value mobility. Today's housing dynamics continue to support steady demand for SFR. Even as mortgage rates move around, overall affordability remains stretched and transaction activity has been muted, partly because 70% of homeowners are still locked in at mortgage rates below 5%. For many households, the all-in monthly cost of owning a home, including mortgage, tax, insurance, and maintenance, remain more expensive than leasing a comparable home. Based on the latest John Burns data weighted to our markets, those who choose to lease save an average of almost $900 per month compared to owning. Against that backdrop, our third quarter results reflect the strength and the resilience of our platform. Demand remains consistent, and while new lease growth continues to be an opportunity, our renewal performance is outstanding. During the third quarter, we delivered same-store renewal rate growth of 4.5%, or 30 basis points higher than our third quarter result last year. At the same time, our average resident tenure further increased to 41 months, among the best in the industry. These outcomes speak to the stability, quality, and location of our portfolio, the professional service we provide, and the value our customers place on staying with Invitation Homes. That stability gives us the confidence and flexibility to invest for the future, and it underpins our disciplined approach to growth. Today, we're pursuing channel-agnostic, location-specific growth focused on long-term total returns, primarily through the following four channels. First, our home builder partnerships that cultivate reliable and predictable forward purchases of full and partial new communities. Second, home builder month-end inventory or lists of homes shared by regional and national builders that we've carefully screened to identify those that meet our location and pricing criteria. Third, our construction lending program, which is gaining traction as a strategic way for us to deepen our relationships with smaller developers and facilitate delivery of much-needed new housing supply. And fourth, our third-party management business, which represents a capital-light way to leverage our platform and grow our scale and earnings. In the meantime, our capital allocation framework remains unchanged to fund organic growth, invest where long-term total returns are most compelling, and maintain a strong balance sheet so we're able to capitalize on opportunities when they arise. Naturally, we'll weigh the relative attractiveness of external growth, internal investment, and now share repurchases with a clear focus on long-term value creation. In summary, we remain confident in the durability of demand for well-located single-family rentals, in our ability to operate efficiently at scale, and in our capacity to grow prudently. Our markets continue to benefit from strong long-term fundamentals supported by healthy demographics and sustained desirability. Even if lower mortgage rates become more prevalent, we believe that will be a strong positive for our business, as greater liquidity and transaction volumes should benefit the housing market broadly. And we're well positioned to perform and capture opportunity across these cycles. Before I hand it over to Tim, one last note. We'll be hosting our Investor Day and Analyst Day on November 17th. This event will provide a deeper look into our strategy, growth initiatives, and our long-term outlet. Look for the live stream webcast details to be shared on our website about a week or so prior to the event. With that, I'll pass the call over to Tim Loebner, our Chief Operating Officer.

Thank you, Dallas, and good morning, everyone. I'm pleased to walk through our third quarter operating results, including our same-store renewal and leasing performance, as well as our controllable expense management. But before I do that, I want to recognize the strength of our portfolio, the exceptional execution of our associates across every market we serve, and most importantly, the trust and loyalty of our residents. Their confidence in Invitation Homes is what allows us to deliver on our mission every day. Together, these relationships and efforts form the foundation of our success. Since this is my first earnings call speaking with you directly, I'd also like to share a few thoughts on the road ahead. The current landscape brings both opportunities and challenges, which I see as a proving ground for our team and the vision I have for leading it. That vision is rooted in relentless execution, operational excellence, and a customer-centric mindset. We will pursue every opportunity, engage every prospect, and deliver service that sets the standard in our industry. Through disciplined oversight, accountability, and a culture of hard work, we'll continue to drive strong results, and I look forward to sharing more on that at our Investor Day on November 17th. The commitment I just mentioned is already beginning to show in our performance. In a dynamic operating environment, our teams continue to deliver solid same-store results. This included third-quarter average occupancy of 96.5%, consistent with our expectations. In addition, our renewal business, which accounts for over 75% of our book, continue to be a reliable source of strength, demonstrating both the durability of our model and the value residents place on the product and service we provide. We achieved renewal rent growth of 4.5% in the third quarter, underscoring our pricing power with existing residents and reinforcing the quality and appeal of our homes. Shifting to the new lease side of our business, as expected, third quarter new lease rent growth was slightly negative, driven by elevated supply in select markets that is amplifying typical seasonal patterns. Taken together, blended rent growth for the quarter was 3%. Looking more broadly at the components of same-store core revenue growth, we saw solid contributions across key areas. Other property income grew 7.7%, driven by continued adoption of value-add services that our residents desire, such as our internet bundle, our smart home features, and other resident offerings. In addition, bad debt improved by 20 basis points year over year, reflecting the quality of our resident base and the sustained rigor of our screening and collection processes. Together, these factors contributed to core revenue growth of 2.3% for the quarter. On the expense side, our teams continued to manage cost effectively while maintaining high service standards. Same-store core expenses increased 4.9% year over year, with fixed expense growth showing some welcome moderation this year compared to recent years. The overall result was same-store NOI growth of 1.1% for the third quarter, which is typically our most modest growth period due to elevated seasonal turnover and other transitory factors. Turning to October, our preliminary same-store results were generally in line with expectations. New lease rates were down 2.9% year-over-year, reflecting the impact of targeted specials we ran to drive traffic and strengthen occupancy, which averaged approximately 96% in October. Importantly, October renewal spreads remain strong at 4.3%, supporting blended rent growth of 2.3% for the month. That represents a notable acceleration in blended lease spreads of 20 basis points compared to this time last year to close i want to once again thank our associates for their continued focus and commitment their efforts have helped to enable our growth while ensuring that our residents feel safe supported and at home we have the right team in place to finish the year strong and continue executing on our strategic priorities with that i'll turn the call over to John Olson, our Chief Financial Officer.

Thanks, Tim. Today, I'll provide an update on our strong balance sheet position, recent capital markets activities, and third quarter financial performance. I'll then wrap up with an update on our full year guidance revisions outlined in yesterday's earnings release. We ended the quarter with total available liquidity of $1.9 billion, which combines unrestricted cash on hand with the undrawn capacity on our revolving credit facility. This substantial liquidity position provides us with the financial capacity and flexibility to pursue growth opportunities, manage operations, and navigate market volatility with confidence. In addition, our debt structure continues to reflect the high-quality, investment-grade profile we've worked diligently to build. As we've discussed in the past, over 83% of our debt is unsecured, over 95% of our debt is either fixed rate or swapped to fixed rate, and approximately 90% of our wholly owned homes are unencumbered. We have a well-laddered maturity profile with no debt reaching final maturity prior to 2027, and our net debt to EBITDA ratio was 5.2 times at quarter end. Combined, these attributes provide meaningful cushion for both operational flexibility and future growth investments. A highlight of our third quarter capital markets activity was the successful completion of a $600 million bond offering in August. The unsecured notes mature in January 2033 and have a coupon of 4.95%, which represents an attractive long-term cost of funds. The deal also extends our maturity profile and frees up capacity on our revolving credit facility. The offering received a strong reception from investors, reflecting the market's confidence in our credit quality and business fundamentals. Also included in yesterday's earnings release was our announcement that our Board of Directors has authorized a share repurchase program of up to $500 million. We view this as a tool that is part of our disciplined capital allocation plan and an ordinary course approach to enhancing shareholder value. Turning now to our third quarter financial results. For the third quarter of 2025, we delivered core FFO per share of $0.47 and AFFO per share of $0.38. Tim already covered our third quarter same-store results, but I want to provide a bit more detail on two items. First, property taxes were up 6.3% year-over-year in the quarter, largely due to the benefit we realized this time last year from favorable developments in Florida and Georgia. This year, bills from those two states, which together represent more than half of our property tax expense, have so far come in slightly better than expected. Second, we received a favorable premium adjustment related to what is effectively a rebate structure built into our insurance program. This contributed to a 21.1% decrease in insurance expense year over year. As a result of our year-to-date performance, we are raising our full-year 2025 guidance. We have increased the midpoints for core FFO and AFFO by one penny each to $1.92 per share and $1.62 per share, respectively. Additionally, we have raised our same-store NOI growth expectations by 25 basis points at the midpoint, now 2.25%. This was comprised of narrowed core revenue growth guidance in the range of two to three percent and improved core expense growth guidance in the range of two to three and a half percent. Further details of our revised guidance are included in yesterday's earnings release. As we near the end of the year, I want to acknowledge the great progress we've made in the first 10 months. These achievements are a testament to the hard work and discipline of our associates, and I'm thankful for what we've accomplished in a dynamic operating environment. That said, we know we need to remain focused and agile as we approach the remainder of the year, and I have every confidence we'll deliver on that front. This concludes our prepared remarks. Operator, please open the line for questions.

We will now begin our question and answer session. To ask a question, please press star, then 1 on your telephone keypad. To withdraw your question, press star 1 again. If you are using a speakerphone, please pick up your handset before pressing the keys. In the interest of time, we ask the participants limit themselves to one question and then re-queue by pressing star 1 to ask a follow-up question. One moment while we compile the Q&A roster. Your first question comes from Yana Gowan with Bank of America.

Thank you. Good morning. Congrats on a great quarter. I was wondering if you could spend a little time talking about your supply outlook for 2026 with both kind of the BTR deliveries that are expected to deliver next year relative to this year, and then also how you kind of think about that more shadow supply of whether it's an owner-occupied household or becomes a renter household.

Thanks, Shanna, for the question. This is Dallas. You know, it's been interesting. as we've sort of looked at the supply backdrop, it sort of fits into a few categories, right? First is, and we called this out sort of last fall in our third quarter call, this BTR delivery that we were starting to see show up in our markets, create a little bit of noise on the supply side. The second piece of it is also, and it's a fairly small percentage, but some of the for sale product that maybe isn't moving in the market that may convert to single family rental from a listing perspective. And then lastly, as we kind of follow and cover some of the professional operators, it's the amount of supply and scale that we see even in those books of businesses that compete in some of our similar markets. Generally speaking, it's nuanced by market. What we've seen so far is that through the most of this year, it's gone pretty much as we expected in what we laid out at the beginning part of the year. We expected new lease to sort of tick up and get a bit better as we kind of went through peak leasing season and into the summer. But we expected that towards the end of summer, things would likely be a little softer just given the lack of homeowner velocity, buying and selling, and also just some of that shadow supply that we had called out last year. The good news is there are certainly markets like Florida and Atlanta where we're seeing some of that supply and delivery schedule now kind of get over the hump and come into our favor. The unknowns are still what's going to happen sort of in the one-off kind of single-family rental market. And so we'll continue to monitor supply as it comes through, we're actually pretty encouraged by some of the signs we've seen both in the starts that we're hearing from some of the builder partners and things like that. But ultimately, we've probably got a couple more quarters of supply, specifically in some of these Sunbelt markets where there'll be a bit more supply as we've called out for the last couple of quarters.

Your next question comes from Eric Wolf with Citigroup.

Hey, thanks for taking my question. I think you said in your marks that um october was like 96 um you know i can see which i think is kind of like down you know sort of 50 basis points from the third quarter and then you gave the the new lease down i think 2.9 and renewals 3.4.3 i guess when i'm sort of putting that all together um you know i guess it's a little bit tough for me to get to that sort of fourth quarter number that you need um to hit guidance and so i didn't know if there's something in the fourth quarter like lower bad debt or improving fees or something that gets you to that sort of positive sequential growth to hit the midpoint. And apologies if I'm just missing something on those numbers. Those are just what I've heard from remarks.

Yeah, hey, this is Tim. Thanks for the question. Look, the occupancy dip that you referenced down in the 96.5 range, that was expected. If you recall going back to the beginning of the year, we talked about that we'd be taking a more measured approach. We anticipated that occupancy would come in a bit as the year progressed, get to a healthy level in the mid-96% range, which it has. We also anticipated that the new supply would create some pressure on new lease growth, which it also has. The good news is, as you look at the fourth quarter, our renewal book of business, which accounts for about 75% of the book, is super healthy. Our Q3 renewal rates grew to 4.5% year over year, about 30 basis points higher than the same period in 2024. October, as you pointed out, renewal rate was 4.3%. That's an important part of the Invitation Homes story. Our customer is very healthy from a financial standpoint, pleased with the Invitation Homes leasing experience. They're staying for 41 months. I think that's the most important thing to point out as we head into Q4. Remember, Q4, you don't see a lot of people leaving. Turnover tends to be low, and so we feel like we're in a really healthy spot, and the year is progressing as expected.

Thank you.

Your next question comes from Michael Goldsmith with UBS. Hi, this is Amy. I'm with Michael. I was wondering, do tenants tend to look to negotiate more on renewals and assets in BTR communities where they can see competitive pricing on units and really have a market comparison?

Look, I think this is Tim. Thanks for the question. Look, the consumer does negotiate on renewal. They do see the open market. And we do negotiate as needed to maintain the occupancy targets that we're looking for. So, yes, we don't see a difference between build-to-rent and our same-store-scattered-side portfolio. Consumers tend to behave similarly across asset types within the portfolio.

Your next question comes from Steve Sakhwa with Evercore.

Thanks. Good morning. Dallas, you know, there's been a lot of rhetoric out of Washington between the Trump administration, Bill Pulte, just about, you know, trying to bring down, you know, house prices and make things more affordable.

I'm just curious, you know, what are you hearing in your discussions with the homebuilders? You know, how do you think this might impact your business, either good or bad?

Interesting question, Steve, and it's one that, you know, we've had kind of a couple different ways. You know, let me just take a step back, you know, speaking broadly to the homebuilders, and we've obviously paid attention to some of their calls over the last week or two. You know, they're certainly seeing a little bit of softening demand, it sounds like. Now, it sounds like they're managing inventory a little bit better as well. Yet, you know, some of these guys have done a really nice job of leaning out and trying to put more production into the market in 2025 specifically. And they've talked about that as they put that production out, they've actually had a lower pricing because the bid-ask spread had been a little wide. In our one-on-ones, which, you know, I always want to protect and be careful about talking about what anybody says, you know it feels like they're hearing the message that that that you know from a federal perspective they'd like to see a bit more production i think that being said if we're being fair you know there's plenty of supply in the marketplace right now i think four sale listings are up over a million units this year the challenge is uh on an annualized basis we're only seeing something like four to four and a half million sales nationally and that that just doesn't work like we need to get back to a place where we're seeing five to five and a half million sales a year in this country. And I think a lot of that has to do more with the liquidity around mortgage and mortgage rate. There's still something like 70% of mortgage holders in the U.S. are at 5% or better. 80% are at 6% or better. So that spread, back to our earlier comments around the total cost to own versus the total cost to lease, is still really wide. I think that's why we're seeing the pickup in our renewals business is one example of why, you know, in a year where maybe there is actually more product on the market, we're actually renewing at a higher rental rate than we were at the same time last year. And I think it's indicative of the fact that if you have location already solved, you're not looking to absorb future costs right now. And so I think I would expect that, you know, the builders are probably weighing that out as well. And we've certainly seen that, and Scott can talk more about this later, in some of the opportunities we've seen over the last couple of quarters. There's been some really good opportunities on newer product because inventory is sitting.

Your next question comes from Handel Think Just with Mizuho.

Hey, guys. Good morning. Thanks for taking the question. Dallas, I wanted to ask a question on capital allocation. I guess first, maybe can you talk about the increasing acquisitions guide? I'm assuming that's coming from your builder relationships and some of the dynamics you're talking about earlier, but I'm also curious on the yields you're seeing there and how that compares to stock buybacks. I think a lot of us were hoping or maybe expecting to see you act on buying back the stock a bit sooner. Thanks.

Thanks, Handel, for the question. First and foremost, on our capital allocation through, call it the first half of this year, we've had many things in flight from a delivery perspective that were part of our BTR programming that are just ordinary course and they were kind of built into our thinking. There's been a little bit of more opportunistic buying, Scott can give some color on this when I finish here, around things that we've seen in the last quarter and a half or so in some of these end-of-month, end-of-quarter, end-of-cycle opportunities with some of our both regional and national builders. In terms of stock buyback, look, this is something we started to think about this summer going into our fall board meeting, and it was one of the items that we'd put together to talk about with our board, that we wanted to be in a position that if the volatility was going to exist in the stock price, that if or when appropriate, and on a measured kind of basis as we think about how to use our capital, capital allocation, disposition proceeds, we certainly want to have this be one of the tools in our tool belt if stock price is going to kind of stay in these ranges for some period of time. So we'll obviously look for opportunities to use it. We just hadn't had the plan in place. We'd never set one up. So we're in a good spot now. We feel like it's an added tool to the tool belt, and we'll use it appropriately and in discussion with our board. Scott, anything to add on deliveries?

No, I think the only other thing I would address, Handel, is that when you look at our acquisitions for the quarter, probably about 70% of it was, as Dallas said, forward purchase deliveries where we're sort of on the back half of community deliveries that we started in last year and we're getting towards the tail end of that. And about, you know, 30% or so of what we did this quarter was really opportunistically buying homes on a one-off basis from the home builders off their tapes. I think it's been widely reported that the homebuilders have had a lot of inventory and they've been trying to, you know, sell homes that, you know, have deliveries in 30 days. And so I think for us, it's been a great opportunistic way for us not only to pick up homes at 20-plus percent discounts to market value, but also get a home for almost immediate delivery that we can put into the market and hopefully get leased within 60, 90 days. So I think we feel good about what we've done, and we've been smart and opportunistic, I think, about where we've allocated.

Your next question comes from Austin Werschmidt with KeyBank Capital Markets.

Good morning, everybody. Just going back to an earlier question, you know, you guys affirm the same store revenue guidance, but you did keep a wider range late in the year. So I guess despite kind of, Tim, your comments on trends being largely as expected, why not tighten the range this late in the year? And then also curious, are you continuing to offer similar concessions that you referenced in October to hold that that occupancy at 96%. Thanks.

Hey, thanks for the question. It's John. I'll chat briefly about the revenue range. Just to be clear, we did tighten that range. You know, I think if if it strikes you as particularly wide late in the year, I would just point out that, you know, this is sort of a dynamic environment and we want to be mindful of that. We continue to feel good about the way the year is shaping up, and I would remind folks that, you know, really from the first part of the year, we've been talking about rate and occupancy in terms of our overall expectations for 2025. And the first part of the year, I think repeatedly we said we were running a little bit ahead of where we expected to be, and I think what we're seeing is that results are sort of aligning around what our full year expectations were. And so, you know, still feel very good about our full year occupancy guide. I think, you know, with respect to some of the other items, time will tell, feel good about where we're coming in from a tax perspective. You know, recall our original range was five to six percent. We expect we'll be around the bottom end of that range and hopefully do a little bit better than we anticipated with respect to insurance expense and some of the controllables. But I think from a revenue perspective, you know, we want to be mindful of the fact that this is an environment where we have to be nimble, and we have to really pursue every lead, every opportunity, because it's just a little bit softer than it's been. Anything you want to add?

Yeah, thanks, John. Yeah, I can touch on the specials. Like, on the specials that we're offering, we typically run targeted specials in October and November. It's a great tool in the toolbox. Our goal when we present these to the market is to boost traffic and generate leasing momentum ahead of the holiday season when the market tends to slow down a little bit. We're pleased with the results we're seeing, and we'll continue to evaluate the need to keep those in place.

Your next question comes from Brad Heffern with RBC Capital Markets.

Okay. Thanks, everybody. Another one on the repurchase. Do you see that as an attractive use of capital as we sit here today? And then can you talk through what the governor on that activity is? I would think using dispositions to fund it might get complicated just because zones have appreciated so much, but is that an issue? And is there anything else you would call out on the philosophy there?

Look, the one governor, just to remind everyone, is that we're subject to the same blackout periods that we traditionally have. In terms of it being an interesting price in the spot, there certainly are times where if we have excess capital or an ability to deploy accretively and a share buyback could fit into that category, it's something we consider. I'd hate to say what we are going to do or not going to do. And just remember, there's always sort of a spread between what the market thinks you can do at any given time as you balance out sort of deliveries and cost of capital and things that are going on in the business. So we'll use it judiciously. We'll be smart about it. We'll do it in concert with our board investments and finance committee. And that's how we're going to approach it going at the end of the year.

Your next question comes from Jamie Feldman with Wills Fargo.

Great. Thank you. I guess kind of sticking with some policy questions here. What do you think the impacts have been on immigration policy changes in your markets, whether it's on construction costs with labor or overall demand? And are you seeing any difference across different regions or markets?

Look, I'll handle the first part on immigration. You know, we've asked the same question of home builders, and we paid attention to some of the commentary. I mean, look, it has to have some effect, right? I mean, we're not seeing anything from an occupancy perspective. We're sort of in the sweet spot of our range, as John and Tim mentioned. You know, our expectations going into the year were that, you know, we had run kind of in the low to mid 97s as an average occupancy in 24. We just knew that wasn't sustainable. It was going to kind of come into the kind of the mid-96s. We're not seeing anything in terms of lead volume or customer profile. In fact, our FICO scores are basically in the same range they've been for several quarters in a row. As far as what we're seeing with labor costs and land costs and input costs, Scott, you want to provide a little color there?

Yeah, I mean, you know, for a broader question, Jamie, I think as it relates to what we're seeing on construction costs with the home builders, I think so far so good. I think finished lot prices have kind of slowed down their their rising pricing and you know i think there's been a decline in lot buying by the builders i think construction costs have moderated and are generally under control i think the data we've seen says that maybe there's a little bit of a labor cost rising in terms of the total production for homes but i think in general like in terms of the purchase prices that we're seeing and the construction costs that the home builders are passing on us i think we're seeing it kind of in line with what we expected and in a pretty decent place your next question comes from jesse Letterman with Zellman and Associates.

Hey, good morning. Thanks for taking the question. I'm curious what you're seeing from a front-end demand perspective that gives you confidence that the headwind from a pricing power perspective is supply-related and not demand-related. Maybe some commentary surrounding the reception to the new move-in specials or any other way that you quantified demand would be great. Thank you.

Yeah, great question. This is Tim here. Look, on the demand side, we are continuing to see a healthy demand for single-family homes. Our website traffic remains very consistent. Obviously, there's more product out on the market, as Dallas talked about earlier, the couple different channels that have produced that supply. So that demand is being spread across more homes on the market, but look, we like our position. The Invitation Homes promise is a good one. We try to differentiate our brand through our pro care, through our value-add services. So we think we're going to still capture our fair share of the marketplace. So obviously heading into the fourth quarter, demand does go down a little bit, but that's a seasonal component. But we like our position as we head into the end of the year.

Your next question comes from Juan Sanabria, with BMO Capital Markets.

Hi. Good morning, and thanks for the time. Just a question on the loss to lease. Where do you see that presently? And then kind of a part B, turnover, it seems to finally be kind of inching up. Do you think we've kind of bottomed out there, and do you expect to see more turnover going forward, given some of the competing factors, both on the supply and demand side.

Hey, Juan, it's John. Thanks for the question. You know, with respect to loss to lease, I would say that's kind of low to mid single digits. I think it's important to remember with respect to loss to lease that that is not consistent across every home and every market, right? You can create cohorts of homes that have varying degrees of loss to lease. And so, you know, over time and distance as, you know, our expectation would be that you know 70 75 percent of those are going to renew you're going to extract what you can but recognize that that loss to lease number relative to to what we actually achieve sort of depends on a number of variables um you know i think overall uh sorry remind me the second part of your question one third over and how you guys think about that going forward thank you I mean I think turnover obviously is certainly seasonal. We expect to see turnover pick up in the second and third quarters and then moderate in the first and fourth. Do expect that you know turnover will return to something closer to a long-term average, you know kind of closer to 25 percent than the 22 percent that we were seeing. But we continue to see a high propensity to renew. We continue to see the affordability gap really drive demand for single-family rental product and feel good that, you know, even at a somewhat higher level of turnover going forward, this is a really, really sticky customer. They appreciate the product and the service that we deliver, and, you know, they continue to stay with us longer and longer. So, you know, we feel really good about the setup and think that single-family rentals in particular are well-positioned in the residential market.

Your next question comes from Adam Kramer with Morgan Stanley.

Hey, thanks for the question here. Maybe a little bit of a higher level, bigger picture one. I think our view has been that, you know, the apartments have underperformed of late. I think a lot of that's been driven by, you know, sort of slowing job growth and concerns around the job growth from here. I think our view has been that SFRs should be a little bit more insulated from that, right, given, I think, some demographic reasons. I'm wondering, sir, when you guys think about your own business, how you sort of think about the demand drivers. Obviously, there's the housing market, you know, and sort of what's happening there on the four-sell side. But when you think about job growth and sort of the path forward there, you know, how much do you think that sort of matters or doesn't matter for your business?

And as we look to next year, you know, I guess, sir, how would you think about demand next year maybe versus what you've had this year? it you know it's hard to tell the weather perfectly when it's you know that far out but i would just say our setup coming into this year we felt very confident that we could renew sort of in that 75 to 77 percent of the time with our current customer that we don't see any anything that suggests that change is going into next year so it feels like the renewals from that perspective you know have kind of done what we thought i want to be careful on any guide and john will get frustrated with me if I say anything prior to our February call. But look, we're not seeing any degradation of our customer. Tim talked about leads and leads coming in. You know, it's still pretty healthy. Our actual conversion efforts on leads is a bit higher than what we've typically seen. And our collections have been actually quite better than what we've seen historically. So there's nothing in the customer profile in our current customer base that suggests big changes are on the horizon. I think it has more to do, the only kind of variable that we keep working through is this new lease supply issue. It's really the only thing in our business that we feel like is something that is sort of hard to forecast perfectly. And a lot of that has to do with what the housing market does generally, to your point. We'd like to see more, Canada, we'd like to see more homes selling on the market. That transaction volume is a good proxy for home price appreciation, obviously, but also a good proxy for rent growth going forward. And so we'll continue to just keep our back door as efficiently closed as we have. John talked about that. We're not seeing anything there. Our FICO scores look great from our customers coming in. Our collections and our bad debt are exactly where we want them to be. So just keep grinding on the opportunity set that's in front of us from a new lease and a supply perspective. Outside of that, the business is doing pretty much what we thought it would do.

Your next question comes from John Paulowski with Green Street.

Hey, thanks for the time. Just a quick question on essentially I'm trying to get around or get at the performance of the non-same store pool. So can you help frame like the 23 vintages of acquisitions and 24 vintages of acquisitions, how NOI has performed relative to your underwriting to date?

Yeah, John, I'm probably going to have to come back to you with more of that detail as a follow-up. But I would say that, you know, homes that we bought in kind of the 22-23 timeframe were basically sort of when the market had the most froth and when, you know, underwriting was arguably more likely to anticipate continued strong rent growth. So I think that vintage of homes, you know, probably has a little more wood to chop to get itself in line from a margin perspective. But we feel really good about the product we have bought. We feel really good about the way we are approaching investing in this marketplace. I think right now it's just a function, as Dallas said, of getting this new supply absorbed and hopefully seeing the resale market get to a healthier, more liquid place.

Your next question comes from Julian Blowne with Goldman Sachs.

Thank you for the question. Dallas, I wonder what you make of the current public versus private market valuation disconnect reflected in your stock today. And maybe to an earlier question on capital allocation, do you feel like just executing your strategy and starting to be aggressive on the share repurchase front can sort of help narrow that? Or at some point, are there sort of additional strategic options you and the board sort of start to look at to drive shareholder value?

Thanks for the question. You know, on the strategic side of it, obviously, we're going to sort of keep that in-house in terms of the things we think about. But I feel comfortable saying that, you know, our disposition strategy where we can continue to sell homes between a four and a four-and-a-half cap and accretively reinvest either in, you know, share buyback or new acquisitions that are in the, you know, call it six-cap range with really good revenue growth profiles in front of them will continue to be a creative way to create shareholder value. We've been, you know, obviously as frustrated as probably most our residential peers have been in terms of the dislocation between public values and private values. It's hard when REIT outflows are moving in the way that they have and where 80% of the S&P is sort of been lifted by AI or anything tech-induced. It's just an interesting environment for real estate businesses at the moment in the public sector. We're certainly seeing private transactions trade at much lower implied cap rates than where public market valuations sit today. But we're also, you know, we've been in this business long enough and in and around real estate long enough to know that there are cycles to it. And sometimes at times things don't make sense, specifically in the public space. And so we just keep our heads down and we'll keep, you know, recycling capital in a way that's meaningful. And we'll certainly look for some of those other opportunities in our tool belt when they present themselves.

Your next question comes from Rich Hightower with Barclays.

Thank you, Barney, guys. Just a quick clarifying question. And Dallas, I want to go back to the sort of the different buckets of potential competitive supply you referenced earlier on the call. And I think last quarter, the forecast was for BTR specifically to drop pretty significantly in 2026. And so I'm just kind of piecing that together with what you said earlier. So does that imply that those other buckets that are sort of the non-BTR would be maybe bigger question marks or growing at a more rapid rate? Just help us understand maybe some of the dynamics there.

Yeah, no, it's a fair question. On the latter point, there isn't anything suggesting we're seeing like an acceleration in terms of supply. In fact, as I mentioned before, there are some markets where we're actually cautiously optimistic. I don't want to call a bottom yet, but we're seeing some good signs in Florida. You know, there's markets like Phoenix where it's still pretty tough from a new lease perspective. There's just more inventory on the market. And those are the markets where we obviously have the biggest exposure. And so we spend a lot of time, you know, looking at these markets and sort of dissecting those three different buckets, which is what are we seeing in BTR? And actually, we've seen better velocity in our own book of business on the BTR leasing There seems to be like a pickup in demand there, which has been pretty helpful. We've spent a lot of times with, you know, our partners in data out there to try to understand what's going on in the listing universe and how much of that is maybe Joe Homeowner converting to a lease. You see more of that in the summer. We'd expect some of that to wane here as we get into Q4 and Q1 to John's point. So, no, it feels like it's sort of, you know, flattened out. It's kind of right where we expected it would have been, albeit it's just a pair more competitive if you're vacant in those markets right now and you're competing for the customer. You've got to be on your game. You have to be priced appropriate. And as Tim mentioned before, there are times, and we've done this in normal markets, October, November, where you've got to be a little bit more aggressive. And so, you know, our philosophy right now is versus having something sit on the market for an extra three or four weeks, we might be a little bit more aggressive and fill it up here in Q4.

Your last question comes from Jade Bramani with KBW.

Thanks for taking my question. Just to touch on geographies, it'd be helpful to hear if there are any markets that you were surprised with either their outperformance or underperformance relative to your expectations.

Thanks. um it's an interesting question and we probably all have different views on different things in our business i would just say generally and this i really should say this just kudos to our team like costa maintains they've done a wonderful job in terms of managing the turnover and costs and the way that we're managing sort of some of those expenses i think on the renewal side of the house we've been very pleased with the things that we've even seen in markets like miami some of the florida markets are still really really strong on the renewals while maybe it's a different story on the new lease side of things. And Atlanta has been a generally pretty strong market. I think what we've sort of acknowledged over the last couple of calls is that Chicago and Minneapolis have both been outperforming now for four to six quarters. I'm not sure that that can go on forever in terms of what the Midwest does, but that has been a very good bright spot for us over the last year, year and a half, where those markets have basically had no new supply over the last 10 years, and you're seeing it in some of the data.

That completes our question-and-answer session. I would now like to turn the conference back over to Dallas Tanner for any closing remarks.

Thank you guys for joining us today. We're looking forward to seeing many of you at our upcoming Investor Day and looking forward to sharing more of our story broadly through the webcast. Thanks for all your support and for listening. We'll see you soon.

The conference is now concluded. You may now disconnect.