Conference Transcript - INVH 2026-03-02

Nick Joseph, Analyst — Citi Research

Nick's Global Property CEO Conference. I'm Nick Joseph here with Eric Wolf with City Research. Pleased to have with us Invitation Homes and CEO Dallas Tanner. This session is for City clients only and disclosures have been made available at the Corporate Access Desk. To ask a question, you can raise your hand or go to liveqa.com and enter code GPC26 to submit questions. Dallas, we'll turn it over to you to introduce the company and team, provide any opening remarks, tell the audience the top reasons an investor should buy your stock today, and then we'll get into Q&A.

Dallas Tanner, CEO

Hey Nick, thank you to you and your team for hosting us today. We're grateful to be here. We appreciate all the support we've had in the level of investor meetings. To my right is Scott Eisen, our Chief Investment Officer. To my left is John Olson, our Chief Financial Officer, and Tim Loebner, our Chief Operating Officer. I'll start today with just a high level, kind of hitting three points first that our business continues to remain healthy performing in line with our expectations as we enter our peak leasing season which is typically from now till I call it the middle part of summer we continue to see actually pretty healthy demand I would say really strong resident retention and I would I would call it you know solid traffic as it comes into the business I think naturally there's a little bit of some stagnation between sort of home buying and selling activity which probably is what you see impacted in the new lease numbers as well as some of the additional supply that we're still working through we've talked about for the last several quarters. The platform has been continuously I would say executing at a pretty high level. Expense controls are totally in check. We feel like we have pretty good tailwinds with property taxes and the like. I think the second point that we we want to talk about is that the political overhang is creating you know real opportunities as an entry point for long-term investors. You know while the headlines have put some temporary pressure on valuation we feel encouraged by the discussions that we're having with both sides of the aisle in washington i've spent a lot of time there over the last month i'm encouraged by what i would call the productive conversations we're having with both both sides of the aisle and the administration as well as a whole my while there's no guarantees my expectation is that this will work itself through over the coming months and we continue to reinforce and i think what's been a net benefit of moment has been that there's been really healthy dialogue about the industry and i think people have a better understanding of who we are who we serve and what the businesses actually do and so that that moment has created real clarity and then i think the third point and we can talk more about this is our acquisition of resi built will continue to strengthen our growth engine it'll give us another level of optionality as we think about uh the balance of how we want to grow in the future uh we would you know add to that that we we think about these things side by side obviously with share repurchase and additional investments or things that we would do we look at all things um sort of in a in a view of what is our highest and best use of capital in the moment and with that nick i think i turn it over uh to the room for questions great um so you mentioned that um you've been spending a lot of time in washington i guess what are you hoping to see like what are you what are you pushing for um you know maybe we'll start we'll start there and i

Eric Wolf, Analyst — Citi Research

guess what do you I guess I get on the other side of that what don't you want to see from this legislation and then I guess last I'll add on to it because you love three-parters is where is the industry right now is it things just sort of like frozen are people just holding on to what they have or things still transacting business as usual or people just sort of said you know until we see some clarity here we're just not going to do much let me start with the last part of what you said there is that you know it definitely feels like since the tweet and the corresponding executive order capital flow has been stymied to say the least I think you see it in our public valuation you see it in the private conversations we're having with private operators that there are a lot of deals sitting on an

Dallas Tanner, CEO

investment committee desk that aren't sure what to do and so part of the argument that we've had as we've spent time with policymakers and with the administration and their teams has been guys you want capital flow to come into housing and we get the head nod in the affirmative this has had the opposite effect in the near term which is to be expected and there's sort of you know three or four major areas we want to focus on one is you need to understand fundamentally what it is the single family rental is in the overall housing ecosystem and guys we're starting in a lot of these conversations with very basic points that if you go back to lbj in 1962 or 1963 homeownership has been between basically 62 and at the lowest and 69% at the highest, and that basically a third of the country is leased for the last 40 or 50 years, and that's okay. And we talk about upward mobility and social contract and things that different housing providers provide at different times in that housing continuum. Then we are able to clearly identify where we fit and what our customer profile looks like in that category. And I'd add, guys, I'm not up there by myself. I'm with, you know, the four or five CEOs of the bigger companies. We're represented by the National Rental Housing Council and we have the right consultants and lobbyists helping us through this process. I would just say that everybody gets it. I think they understand that we're a valued part of the the upward mobility cycle. They love the fact that we have 150,000 people enrolled in positive credit reporting and that we've seen those credit scores go up by almost 50 points over the last 18 months. Those kind of facts are very helpful as we describe the industry as a whole and what we are. What we've helped them understand is also what we aren't. We aren't home flippers. We're not in and out of a market. We're not calling your uncle 30 times in a week to say sell us your home so we can put a can of paint on it and flip it like that's who we aren't and so that that process is as painful as sort of you know the last six weeks have been from a perspective and an outsider's view of the industry it's actually been really good because it's forced conversation and the conversation I would say has been very fair and very objective I've been encouraged actually by the process I think what we're hoping for is that potential policy could land in a place that's reasonable, that it solves sort of the issues around affordability that the administration is currently focused on. And look, we by and large agree with them that there's an affordability challenge in the country and that we fit into a very specific segment of that, and that as we walk people through the basic sort of rubric, that when people come into our business, probably plus or minus 10 percent of them could afford to own a home, real time. When they leave, we know this by our surveys, about 20 to 30 percent end up owning a home along the way. And that is natural. And there's a lot of different versions of right for families in this country, but they shouldn't be excluded, and being a renter isn't necessarily a bad word, of which they all agree with, right? And so the key thing is helping them understand who we aren't. You know, our company's bought less than 200 homes, one off on the MLS in the last three years, okay? We've been growing through our partnerships with builders, the extension of what we're going to do with ResiBuilt, and obviously, occasionally, on opportunities, there's some M&A in terms of existing portfolios and I think creating those lines of clarification have been very helpful in the conversation so I go back to what I'd say like I can't tell you with any certainty that the discussions and the part of the process that we've been with is guaranteed to land in X or Y I would tell you that I'm growing increasingly confident that this will land in a reasonable place for the industry and I think for for the administration in terms of their focus on affordability and let's oh man my voice here sorry about that and let's say that you know there's a ban on Ford purchases so you know whatever your

Eric Wolf, Analyst — Citi Research

you know your portfolio is at today you're sort of at that level the only way to sort of grow it is through development or some kind of agreement on development do you think capital withdraws from the industry in that case or do you think so much more capital then goes towards the supply side and I you know I'd add on to that is there a risk that if you're taking all this capital that was focused on acquiring and putting it now towards supply and development, that there's an overbuild, especially in certain areas like Atlanta, Phoenix, and other places that have tended to see some of those problems?

Dallas Tanner, CEO

Well, I think on the latter point, just remember, you guys, everyone in this room is really Developers are generally really smart. So if they don't think the bid is there right from the demand side, especially in a softer environment like right now, just because, say, BTR in all its forms were to end up being excluded and that that is viewed as a good thing, which I think is where it will land I don't think that there's a flush run of capital into an environment where the absorption has been a little bit slower over the last year or two. I think it takes a minute to, you know, people are going to have the same lines of defenses and thinking around their returns on their own capital that we would. And so if you see that new lease growth is a little bit slower or you see that absorption in the BTR space has been, you know, a little bit slower over the last year or two, my guess is there will be measured expectations around returns. So I would expect normal market dynamics to sort of step in there. What I would also add is that as you think about sort of what are the exclusions, at least in the discussions we've been having, it feels really rational. I think they want to protect this concept of boxing out home buyers, which we'd be fully for, 100 percent full stop. And I think there's a lot of ways that you can protect homeowners or potential homeowners in a resale environment, which they all understand the numbers too, right? There's a million more resales on the market today than there was last year and we're not seeing home buying pick up. We have more of a mortgage affordability issue at the moment. The spreads between existing mortgages of homeowners and where kind of the market is today is probably lending to the dislocation more than anything. And I think that view might be commonly shared, sort of generally speaking, but at the same time I think you want to create lanes that sort of protect those that are an FHA 3% down buyer right or something like that, which we, again, the industry would be fully supportive And I think that there is sort of a common ground there. I think probably a focus on how much CapEx is going into these homes is something they might care about in our conversation. So that seems pretty rational and something that we've generally always supported. And then I think pathways to ownership are things that probably can incentivize capital to come in in a way where if you have an off-ramp for folks that they can get into home ownership should they choose, I bet that would be viewed favorably.

Eric Wolf, Analyst — Citi Research

Got it. And you mentioned in your opening remarks that you've seen, I think, fairly consistent demand. I think, you know, what people are trying to figure out is, you know, at this time last year, you're sort of really kind of off to the races in terms of occupancy and blended rate. I know, you know, we probably make way too much out of every single month of data. You know, when we hear that things have softened, it's usually because of sort of supply. But I guess my question is, you know, is there a demand component, right? I mean, clearly in apartments and other areas you're seeing, you know, lower demand. It doesn't sound like you feel like that's the case, but maybe tell us why. Like, how are you measuring demand, and is it truly not lower? And if not, why not, given the fact that you've seen such a degradation in job growth over the last, you know, nine months?

Scott Eisen, CIO

I'll take the demand question. We get a lot of questions about supply. Good to hear questions about demand. you know we look at the demand funnel in two parts there's kind of the digital external part of demand and that starts with people that are looking online on a Google you know searching on Google people looking on Zillow that then translates into access to our website people go and number of times people land on our website that then trends over transitions over to the second bucket which is actual lead generation followed by showings followed by gross applications that get submitted and then net applications that get approved ultimately move in what we're seeing is really strong numbers there we're seeing that there's an ongoing demand for single-family housing we're seeing a healthy customer profile and what we look at for customer financial health is first the credit score that's still sticking right around 700 that hasn't changed for us and so that's a good sign the other sign is our application approval rate i talked about going from gross apps to net apps sticking around 65 70 percent so people that are applying for our houses their financial health is strong the same is true of our customers that are in our houses we're seeing really strong rent collection saw in our numbers from 2024 to 2025 bad debt improved. We're back in a territory that we saw pre-pandemic and we expect that to stay the same. We are watching, you know, nothing's certain for long. We are watching 30 and 90 day credit card delinquencies. We're watching mortgage rate delinquencies. We're also watching student housing debt delinquencies, all as kind of canaries in the coal mine for what could impact financial health of our customer in the future so demand side looks good supply side you've heard you know we talked about it on the earnings call supply side is a little bit higher than what we've seen in the past but look the reality is there's a big gap between where the multifamily space ends right you've got two bedroom units you've got a very small percentage of three bedroom plus units it's a single-digit number and then the next step over here is home ownership and so there's you know 35% as Dallas mentioned since the formation of HUD in 1965 homeownership has not gone more than 400 basis points either direction so there is clearly a demand for single-family housing for professionally well maintained single-family homes and there's a lot of people that are we continue to see more people choosing to rent so we don't anticipate especially Especially with the wave of people turning 35 every single year, that number, depending on which report you look at, it's 10,000, 12,000, somewhere in there, every single day turning 35. They haven't even hit our sweet spot yet, average age of 38, 39 of people moving into our homes. So we feel pretty strongly about the long-term demand for the product.

Eric Wolf, Analyst — Citi Research

And you mentioned on the call that the inventory of homes on your books was a bit high. is that only in sort of markets where you have that supply impact? And I guess if not, why is that the case in other markets where you see this good demand? Why is it taking people longer to make a decision to move into a home?

Scott Eisen, CIO

The pronounced areas where we're seeing higher supply are areas that were focal points for builders. You've got North Florida, not so much where we are right now in South Florida. the Texas markets Houston and Dallas as well as Phoenix look in terms of the amount of time you talked about people taking longer to lease you know when there is more supply just like when you go to the grocery store any sort of retailer when there's more product to look at people generally take a little bit longer they're a bit more discerning you know that's where I I believe and we believe collectively as a management team that the quality of our product the quality of our experience, it will stand up to that test really well as people look at what the offering is. So, yeah, elongated, a little bit elongated timelines for the days to be resident, and that's kind of normal with more supply.

Eric Wolf, Analyst — Citi Research

Got it. And you said earlier that, you know, you're really kind of kicking off your big peak leasing season sort of after the Super Bowl. You know, I think as part of your revenue management system, you do have a pretty good understanding of sort of what's going to happen over the next 30 to 60 days. Obviously, we got the update in terms of what happened in February and in January, so we see that. But maybe just help us understand how the forward indicators are looking, you know, what are you seeing in terms of retention, your ability to send out renewals and sort of transact without much negotiation, just sort of any type of commentary on the strength of the early part of the peak leasing season.

Scott Eisen, CIO

Yeah, you know, we don't have a crystal ball in terms of how many leads we're going to get tomorrow or the next day, but everything we're seeing in the pipeline is strong. On the renewal side of the business, which I'm glad you brought up, 75% of our book, that continues to be really healthy. We do not see degradation right now in the decision-making of the consumer to stay in obviously we do use lease negotiations to make sure that we're landing the plane you know in terms of renewals but generally that's such a healthy part of our business runs between three and a half and four and a half percent in terms of the renewal growth rate but we anticipate continuing to see 75 up to 80 percent renewal rates going forward remember like you know people move into single-family houses they need more space they have more stuff they're generally stickier the average family or the average household is you know two incomes they have a child they have a pet they're coming from a single-family home so they know what they're looking for they know what you know kind of what they leased the product it's not like it's something different and they're not accustomed to it so I feel pretty good about the the renewal side of the business it's healthy right now and so that should say in like the low 4% range for the next couple months you know generally three and a half to four and half percent kind of mid threes to mid fours is typically what we see and occupancy should just trend higher as you kind of get into the you know more peak you know March April strength timing you know yeah typically that's right you see it go told kind of mid-year and then in the fall season you see it come down a little bit but that's pretty much the normal curve that we see for occupancy.

Eric Wolf, Analyst — Citi Research

We have some questions here. You know, we can switch over to capital allocation, but I guess with regard to capital allocation, you haven't done as much buybacks despite trading at a very large discount relative to where your homes trade.

Dallas Tanner, CEO

Why haven't you bought back more I guess is the question well I think you know at a high level we shared what we shared on the earnings call I think we did a hundred million between the the the call that we did in the fall or the late fall into the end of the year we have certain windows and we also have certain sources and uses with cash I think we're pretty clear about it on our guide this year that we expect probably share or purchase to be a bigger part of our programming but that'll be you know relative to where we sit with you know capital allocation decisions. We think we have a pretty good line of sight for most of the year, but I'll let John add any commentary that he'd like on this topic.

Speaker 1

Yeah, sure. I think, you know, on Dallas's point about open windows, you know, we had our investor day in November. You know, we were planning to talk about that value creation roadmap, and so, you know, deemed that to be the type of non-public information that we wanted to be sensitive to. So, look, I think we were pleased that we were able to do $100 million of repurchases between the tail end of the fourth quarter and early in the first quarter. I think looking at our capital deployment guide, it is, I hope, clear that we anticipate being a net seller this year. And I would say that looking at where the shares are trading today, pick your metric that you want to use to measure, but give or take $275,000, $280,000 implied valuation per wholly owned home. I would contrast that with the fact that in 2025 we sold around 1,400 homes at an average disposition price of around $400,000. Where the shares are trading today is an implied cap rate that starts with a seven handle. We haven't been able to buy assets at a 7% plus yield since 2014. That is a mid 6% AFFO yield and a mid 4% dividend yield. So I think by any metric you choose to look at, it's hard to argue that the highest and best use of surplus capital isn't buying back shares. And so I will say that if we had the opportunity to deploy capital acquiring assets at a 7% plus yield, we would be backing up the truck right now. And so we are keenly aware that this is a compelling valuation you know I'm biased but I think we have the most attractive single-family rental portfolio in the US I think we have the most concentrated the most scaled the most infill the most defensive portfolio there is and so if you tell me I have an opportunity to reinvest in that portfolio, some of the metrics that I just outlined, clearly that is compelling.

Nick Joseph, Analyst — Citi Research

I guess we get the question all the time. Obviously, the single-family market is the largest and most liquid. There is, but at the same time, it's very granular. There's transaction costs. There's other considerations, liquidity costs in terms of selling a bunch of homes in an individual market to end users. How do you think about the ability to actually sell in size, particularly if maybe the institutional side is maybe paused with some of the regulatory uncertainty?

Dallas Tanner, CEO

I think you're right on the last point. I don't think it's the time to go out and market a billion-dollar sale. I don't think you get the price you want, first and foremost, and second, I don't know that you want the scrutiny until you have clear visibility as to what's going on. Look, we run a business where we're in the business of housing families, and we of families as you know that have been with us four or five years so it's also not our intention to go to these families and say it's time to get out um but you know we definitely have you know 25 of our book that revolves every year and so you know there are markets where the spread for example in california it is incredibly efficient as we sell california homes and then either reinvest in new assets or share a purchase to john's point and we've been more of a net seller in california for years so could we be more of a seller in california perhaps i think it sort of depends on how the business sort of works and flows and then again in the back of our minds too we're always we want to be a great capital allocator we want to make decisions when we can where things make sense but at the same time we're also building a business for the long haul and and and what happens with dispositions in california isn't exactly how it works in charlotte right that market could be softer and so you may not get the exact same sort of cap rate so it's all a balancing act we have a really strong asset management group that looks at this under scott's leadership and we're constantly evaluating what on the turn we should be selling versus what should be keeping that's a good point and something that people ask us frequently as well is just selling to the existing renter and i know you've piloted and tried these different programs is there just not the uptake for it you'd be surprised i mean it's about a five to ten percent hit rate when you go out and scale with like a big tape um and again it goes back to our earliest points like we're we're meeting families where they want to be met for the most part and and and many of them aren't in a position from a down payment perspective to just lean in nor should they the cost of property taxes and insurance and the like and you know we handle pretty much everything right and so I think people get sort of used to the fact that it's plug and play with a professional operator.

Speaker 1

Is there an ability you mentioned selling assets to fund buybacks I guess what's the limit on that from a tax perspective and how should we think about the cap rate on say the 515 million of dispositions you're doing this year look I don't think we're gonna guide to the cap rate but my expectation would be that it should probably align with what our most recent historical experience has been from a tax perspective you know we are comfortable with the level of dispositions we've guided to we have a variety of tools in the toolkit to manage through that whether it be some some NOLs that we continue to have ten and 31 exchanges and the like. So I don't view tax to be a governor on our ability to sell assets near term.

Eric Wolf, Analyst — Citi Research

Got it. And then, can you talk a little bit about ResiBuilt? Obviously, you said on the call it's gonna be a fee builder for the near term, but how are you thinking long-term about the ability to develop on balance sheet? And then, as you transition to something like that, Will it involve, you know, increased G&A, increased costs, or are the costs that are there in place today fairly scalable?

Tim Loebner, COO

Look, we're really excited about the ResiBuild acquisition. We've always said that we're location-specific and channel-agnostic. Over the last three or four years, I think we bought our first new construction sort of forward purchase communities in 2022, as we talked about in our Investor Day in November. We've been looking for ways to build up our new construction capabilities. We did our forward purchases, we built out our operating model, and now obviously we have the ResiBuild platform as part of Invitation Homes. We've known this team a long time, Jay Bice and his team. Jay has been around since the beginning in terms of the space. He started the ResiBuild platform in the 2018 timeframe. I think it's a management team and a platform we're very comfortable with. I think one of the most interesting parts of the acquisition is not only do they have a team in place that's experienced with the general contracting work, but they have an existing book of business of doing fee build on behalf of third-party customers. And so in the near run as we think about where we want to take the platform over the medium and long term, we've got the benefit of other customer relationships that we're working with in terms of acting as their general contractor in the markets where they have a presence. The main presence for ResiBuilt is in the Georgia market, the Carolinas market, and North Florida. And those are markets where they have their boots on the ground and continue to operate. I think over time, as we think about the platform and where we'll take it, we'll continue to build on behalf of others. We intend to build on behalf of existing and future joint venture partners, and at some point we'll also do it, you know, for the benefit of the balance sheet as well.

Dallas Tanner, CEO

But I think in the near term we've got a business that's cash flow positive from an expense and revenue perspective, and over time, you know, we'll incorporate that into our overall It's really an important point you made around G&A creep. we wouldn't anticipate any gene a creep in fact we'd probably appreciate at some point some synergies between the size of his team and the size of our investment and asset management group and I think the the more important part that's sort of the follow-up question is what other markets would you be in and we would expect that over the coming years we'll add a handful of markets right to where we want deeper concentration or have an ability to also perform and within our JVs or our third-party partners what is the current

Speaker 1

gene name what are you expecting to spend on that this year yeah I think you know implicit in the two cents of contribution that was included in our bridge is the GNA load I think that's something that we're still evaluating as we sort of integrate and we'll we'll have more to say about that on our next earnings call okay so I mean what would be the part that needs to be figured out from here well I think the blend of activity in terms of on behalf of third parties versus on behalf of something that's going to go on our balance sheet or the balance sheet of a joint venture. I mean, that's going to be a significant determinant. I think we've had some questions in our one-on-ones about the way we might scale that platform and expand that platform into new markets over time, but I think above all, you know, we are going to remain laser focused on making sure that this is accretive and creating value for our shareholders, and so we're going to, I think, take a fairly measured approach, continuing to focus for the immediate term on the third-party fee bill business and then over the intermediate and longer term that focus will likely shift to our joint ventures and the balance sheet and I guess what are the most attractive markets for you going forward I mean it seems like there's so much development in Atlanta Phoenix parts of Florida and it I don't know

Dallas Tanner, CEO

maybe you can tell me whether that's sort of lightening up if we're sort of at the tail end that but are there certain markets that you think are more interesting from a development perspective that aren't seeing that sort of same level of supply we can both take some of this so I just say look at a high level we've seen some green shoots in North Florida and some things that appear a little bit more compelling and not saying that necessarily with a development minded lens but I think as we think about the total equation we're seeing demand it's pretty healthy right now in Orlando we'd like to see Tampa get a little bit stronger so maybe it takes a little bit longer there but but I would say look by large, could you see us, you know, going into markets like Nashville or some of these markets as we work our way west? Could we be at a place where we had, you know, three to five years from now, six or seven markets that we want to be long in, where we'd like additional scale, we'd like the opportunity to build, we see compelling fundamentals? Like, I think that's how we think about this.

Tim Loebner, COO

Yeah, and the only thing I would add is, you know, we closed on this acquisition six weeks ago. So we are working closely with the team on evaluating opportunities and markets where they have experience over the last seven or eight years of building historically 4,000 homes in those markets. So we're focused in the markets where they have the boots on the ground and the experience.

Nick Joseph, Analyst — Citi Research

And we are now having discussions about future markets and where we might go over the next couple of years, but I think it's too soon to identify market number four, five, and Dallas, I feel like the single-family rental business probably was built on technology, right being able to manage all these disparate homes at the time i guess as we think about the ability to deploy ai internally at imitation homes you know where are you seeing the opportunity i guess maybe near medium longer term and then how are you thinking about actually doing that is it you know building yourself partnering buying i i would say like we're taking a very measured approach and we've done um a little bit around leasing and sort of the funnel and kind of

Dallas Tanner, CEO

customer interface that will continue to get better and expand i think we see some areas around centralization you know as tech forward as we like to say we were when we started the business in 12 because we did have to solve problems with technology that hadn't existed we still have a long way to go and you know tim and and the team have a number of centralization efforts going on right now where we've gotten smarter just in the last five years about where we should operate certain parts of our business from a centralized perspective you know there's there's a cost of sort of labor and things like that too where you can be pretty wise about how you do this. I mean we were still running multiple call centers last year and we're still figuring out ways to consolidate and do things in a much more efficient robust way. I think you're gonna you're gonna see and again we're not an early adopter yet but in data and analytics and how you sort of backcast and look at your performance over you know history and time a lot of these clod bots and things that are starting to work on different things as an idea take a lot of the work out of some of the consulting structures you have as you think through some of these ideas as well so I think you can go a variety of ways look the one thing that I love about our business and this is sort of a hot like buzzword right now this halo companies right like heavy assets low obsolescence we are a halo company and there's going to be a reversion to the mean in terms of sticking with businesses and profiles that aren't going to become obsolete overnight and obviously the asset side of our business isn't going to change all that dramatically how we integrate with customers how we digest the data what that leads us to do strategically as a company and create a better merchandising experience for our customer are all things that we're super focused on at the moment and look they're the cool thing about ai is i feel like real real time for startups and new companies that are evaluating kind of areas of opportunity they can use ai quickly now bolting that into a bigger ecosystem and our data lake and in our architecture a little trickier right and you got to be careful about when you make these decisions and why. And so I think we'll be measured in our approach, but we're certainly excited about adding some of these tools into our business plan on a year-by-year basis.

Eric Wolf, Analyst — Citi Research

I guess for your third-party management platform, what are your partners telling you right now? I mean, they're sort of not of the same size that you are. They're sort of mid-size. Like, if they are prevented from, you know, growing going forward, do they stay, you know, at their current size? Do they decide to exit? What are they sort of the message they're sending you?

Tim Loebner, COO

I think our third-party customers, they are, you know, looking to operate their portfolios with us and continue to earn cash flow and, you know, grow the value of their platforms. I think a lot of our partners have been in kind of a status quo mode of, you know, it's an investment, they're getting a nice return for their LPs. I don't think I've seen any sort of positive or negative change in terms of the direction And I think there's just a little bit of a wait and see to see where we end up with the current government relations environment.

Eric Wolf, Analyst — Citi Research

And on the, I guess, for lack of a better word, like the lending, bridge lending side, does this potentially make that maybe even a bigger business for you? Because if there's certain capital that is not going to be involved in this space that allows you to sort of fill that void or TBD on that?

Tim Loebner, COO

No, I'd say we've definitely gotten an uptick in some of the inbound phone calls we've gotten since the tweet in terms of just potential developers out there that are interested and engaging with us on the construction lending business. Again, I think we're evaluating the right opportunities in the right markets where we have boots on the ground. We have our own view on rents and expenses relative to what any developer has when we underwrite a new construction loan. We closed our third loan last month, so I think we're up to about $115 million in balance with a couple more signed term sheets in the backlog. So I think we're being measured in our approach, but we've seen some interesting opportunities And, you know, we're continuing to try to grow this segment of our business.

Nick Joseph, Analyst — Citi Research

And just on the rapid fire questions, what will same-store NOI growth be for the single-family rental sector overall next year in 2027?

Dallas Tanner, CEO

Sorry, I always have a hard time with this one because there's just two of us. But, look, we think the setup this year is more or less like last year to some degree, right? And we obviously have some noise in our business with the policy stuff, and we talked about that on our earnings call. So I think that's the only part of our budget that's a little TBD. we want to see how many dollars have to go into those kind of that kind of work excluding those dollars what is it yeah low single digits which is called perfect and then more fewer the same number of public companies in single family next year I think it's probably a very easy bet to say the same thank you very much