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| And I would also note that our entree into third-party management will, over time and distance, have benefits for the operating efficiency of our owned portfolio |
| As far as what the opportunity could be over time and distance, yes, as we talked about, we believe that this will allow us to enhance the efficiency with which we manage our owned portfolio |
| Getting full in that period is important because it gives us that position of strength to capture the demand of new lease rent growth |
| Our quarter-over-quarter improvements in bad debt really began in the second quarter of 2023, and that improvement has continued every quarter since then |
| So we improved 50 basis points year-over-year to the 120 basis points we saw in Q4 of last year |
| But I think in the grand scheme, we feel very comfortable with the fact that turnover is trending much lower than it was pre-pandemic, and we think that's emblematic of a really strong demand backdrop, a favorable sort of affordability picture relative to homeownership |
| We made great strides in reducing bad debt in 2023 |
| Bad debt in the second half of 2023 was significantly better than in the first half, despite the fact that rent assistance was less than half it was -- half of what it was in the first half |
| So, as you go into spring -- and we're also -- when you bring up to build-to-rent relative to our infill portfolio, that puts us in a really strong position to think about the same store able to hold, given that we're in that position of strength |
| So I think if you put it all together, having the ability to enforce the terms of our leases from the start of the year in 2024 will allow us to continue to make steady improvements over the course of this year |
| And with acceleration into February, we feel really good |
| I'm pleased to see lease compliance continuing to move in the right direction, while at the same time, also seeing our new residents' household income reach its highest level to date, just shy of $150,000 a year on average during 2023 |
| It empowers us to accretively leverage our platform in a capital-light manner, while helping us to achieve further scale, increased efficiency and additional margin expansion for our company, and substantial savings and convenience for our residents |
| I would also note that the operations team has done a fantastic job over time of continuing to make the R&M portion of our business more and more efficient |
| And I think as we look at the controllable side of the house, we feel really good about where we are |
| But long term, they're fantastic because it's a great experience for the resident, the amenities that come with it |
| In addition, guidance assumes same store blended rent growth in the high-4% to low-5% range and continued improvement in our bad debt as a percentage of rental revenue to an expected range of 65 basis points to 95 basis points |
| These strong results were primarily driven by higher same store NOI during the quarter and full year |
| In the meantime, we believe the fundamental tailwinds for our business will continue to drive outsized NOI and earnings growth relative to other REIT property types |
| This includes a well-documented lack of new housing supply across our markets, as well as the strong demand from a surge of young adults who are just starting to reach our average new resident age in their late 30s |
| I'm really pleased by the meaningful execution our teams delivered last year and believe our balance sheet continues to offer us strong positioning to achieve our goals in 2024 and beyond |
| And I think we feel good about where the spread is on potential cap rates for us |
| And it ultimately becomes, I believe, a good opportunity for us as the manager of those assets to be -- obviously have better market intel on what those portfolios are doing |
| This could help our residents achieve thousands of dollars in lifetime savings on their borrowing costs, further enhancing the value proposition for leasing a home with us |
| In summary, we're very proud of the choices we offer individuals and families to live in a great home without the high costs and burdens of home ownership |
| In combination with the favorable tailwinds that Dallas mentioned and the strong delivery by our teams, we believe we are well positioned to capture strong demand for our homes as we enter the traditional peak leasing season later this month and to continue to provide the best resident experience in the industry |
| And we're excited by how we can continue to grow our business, further enhance the resident experience and meaningfully broaden the professional services we offer |
| Our fourth quarter operating results were a solid finish to close out the year |
| In particular, our teams worked hard to deliver strong same store NOI growth, occupancy and resident service |
| It can inform us of better opportunities of how we can actually enhance our own businesses, and we can certainly drive efficiencies in our future pipelines for growth |
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| That's kind of below historical levels and was negative in January |
| Bad debt in the first quarter of 2023 was 180 basis points, which was one of our worst results since the start of the pandemic |
| One, you called out appropriately, which is I think there is an adverse ability to drive efficiencies for other professional owners of single-family rental, but to do it in a very deliberate and purposeful way on our behalf |
| I think it's also important to point out that comparing our 2024 bad debt guidance with our 2023 actual result has a few challenges |
| We also saw some local supply pressures |
| I think clearly, we are seeing some owners of portfolios where what was very cheap debt a few years ago is now breakeven to negative on cash flow |
| If you look at the weakness you had in 4Q, clearly, those are some of the markets that have a lot more supply in the build-to-rent business |
| So with political season ahead of us, I'm sure this subsector will face incremental scrutiny |
| Again, came down slightly as we were following for occupancy, but we're still seeing steady renewal rates when you go back to anything that's pre-pandemic |
| I think we've had the luxury in the last few years of thinking about massive tailwinds, putting pressure on rate |
| We had restrictions -- at the first part of last year, there were restrictions in place in Southern California that prevented us from beginning to work through our delinquency backlog |
| All things being equal, we do also want to be sensitive to the fact that we are in sort of a slowing growth environment macro-wise for the country, and just be sort of modestly aggressive in our approach |
| I guess, just wanted to understand, you mentioned a high-single-digit loss to lease, but your new lease spreads are kind of flat to down a bit, it seems |
| Earlier in the call, you made the point that you're seeing more competition in the build-to-rent type product versus the infill |
| It was abnormal |
| In addition, January blended rent growth was 3.5%, comprised of renewal rent growth of 5.9% and a negative new lease growth of 1.5% |
| But I think, as Dallas said earlier, there is certainly the potential for a little bit of upside there, but we're going to wait and see how the year develops |
| I'm sorry to belabor this rent growth question, revenue growth guidance, but I'm still confused |
| If you look at it, our expectation is that we will see some moderation in controllable expense growth |
| And so, when you go back, yes, this is in January, a little lower than we've been, but we explained why we did that |
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