Greetings, and welcome to the American Homes 4 Rent third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Nick Fromm, Senior Manager of Investor Relations. Thank you, sir. You may begin. Good morning. Thank you for joining us for our third quarter 2022 earnings conference call. With me today are David Singelyn, Chief Executive Officer, Bryan Smith, Chief Operating Officer, and Chris Lau, Chief Financial Officer. Please be advised that this call may include forward-looking statements. All statements other than statements of historical fact included in this conference call are forward-looking statements that are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected in these statements. These risks and other factors that could adversely affect our business and future results are described in our press releases and in our filings with the SEC. All forward-looking statements speak only as of today, November 4, 2022. We assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. A reconciliation of GAAP to non-GAAP financial measures is included in our earnings press release and supplemental information package. As a note, our operating and financial results, including GAAP and non-GAAP measures, are fully detailed in our earnings release and supplemental information package. You can find these documents as well as SEC reports and the audio webcast replay of this conference call on our website at www.americanhomesforrent.com. With that, I will turn the call over to our CEO, David Singelyn. Welcome, everyone, and thank you for joining us today. Before we begin, I want to take a moment and thank our team members for their efforts surrounding Hurricane Ian. The safety of our residents and team members is our number one priority, and our disaster response team was in place and ready to act within a moment's notice. Chris will talk through the numbers later in the call, but we were fortunate with the ultimate path of the hurricane. That said, we recognize many others are suffering hardships from the storm. To help, American Homes 4 Rent has donated to various Hurricane Ian relief efforts. Our employees are also assisting their communities by working with shelters, contributing to charitable groups, and providing necessary food and supplies. Our thoughts go out to everyone who has been affected as we hope for a quick recovery. Now turning to the quarter. We delivered another round of consistent results with core FFO per share of $0.39, representing 11.6% year-over-year growth. Bryan and Chris will provide more details on our operating results in a moment. First, I will discuss the macro environment. This country is in an uncertain economic period. Elevated inflation has been persistent and has forced the Fed to significantly raise interest rates. Today, the housing market is showing signs of disruption like it did in the 1980s and the global financial crisis. In this environment, the resiliency of the single-family rental asset class is on full display. Our national platform and strong balance sheet position us to capitalize on any opportunities that may arise. Cyclical durability has been at the core of the American Homes 4 Rent thesis from day one. Housing is a bedrock need, and single-family rental fundamentals are supported by favorable long-term supply and demand dynamics. On the supply side, our country has a housing shortage. This is only getting worse as projections for single-family housing permits continue to decline. On the demand side, our business continues to benefit as the value proposition of high-quality housing without the headaches of homeownership becomes more appreciated. Recently, this demand trend has been supplemented by the fact that renting today is significantly more affordable than homeownership. Using recent John Burns data, it is about 15% cheaper to rent versus own across our top 20 markets. On the investment front, we continue to deliver high-quality homes from our development program. I am excited to see the progress we have made in some of our recently opened development markets in the West. Please keep in mind that costs for initial deliveries in newly opened markets tend to be elevated, which is reflected in this quarter's deliveries. Over time, our pipeline in these markets will continue to mature, and we will realize economies of scale. Also, as outlined in yesterday's press release, our 2022 delivery guidance was slightly reduced to modest construction delays in Florida. This is purely a timing issue caused by the hurricane. Now, looking forward, today's uncertain housing market reminds us of 2011 when American Homes was launched and began significantly growing its portfolio. Today, we are taking a patient and disciplined approach to acquiring homes and land parcels. Price discovery continues, and further adjustments are necessary before it makes sense for us to come back in a meaningful way to the open market. With borrowing rates remaining elevated, challenging times may be ahead for private portfolios, home builders, and landowners. This will likely result in significant opportunities for American Homes 4 Rent. Today, there is inventory of tens of thousands of builder homes and a growing backlog of homes on the MLS as days on market continue to elongate. While the majority of these homes are in secondary and tertiary markets or do not meet our quality standards, we are beginning to see price reductions on those homes that do. Today, these homes do not fit our yield requirements, but over time, I believe we will see opportunities to acquire high-quality, well-located homes. While we are excited about these opportunities, our development program remains the best avenue for consistent growth. Today, we see two encouraging signs. First, high quality and well-located land is becoming available, including vacant developed lots that are ready for vertical building. We continue to see price adjustments and remain patient and disciplined in our land acquisition program. Second, with home builders slowing their development programs, we are seeing favorable price movements in construction materials and labor. To date, prices have declined on most early-stage home-building input costs through the drywall phase. As home building slows, I expect we will continue to see favorable movement in our cost to build homes. This, along with favorable operating trends, should result in higher yields for future development deliveries. At quarter end, we owned or optioned more than 15,000 lots, representing a long runway of built-in growth. We will continue to take a prudent and disciplined approach with investments as we execute on our long-term growth plans. On the sustainability front, we continue to make great progress. To date, we have installed solar systems on amenity centers and begun pioneering solar build-to-rent communities. Our sustainability department remains hard at work evaluating science-based targets, focusing on energy-efficient solutions, and creating action plans to achieve net zero carbon emissions over time. In closing, we all need to acknowledge that we are in uncertain times. I remind you that our asset class was born out of an opportunity created by a housing disruption. While these uncertain times may lead to some short-term issues and noise, the big picture here is that long-term opportunities will present themselves and separate the players in our industry. Today, we are prepared for those opportunities with a diversified portfolio and scalable platform supported by a strong balance sheet. Now, I'll turn the call over to Bryan for an update on our operations. Thank you, Dave. Before I discuss our operating results, I would like to join Dave in recognizing our team for the care and support they showed our residents during Hurricane Ian. Not only did they secure all the vacant properties before the storm, but they made sure operations were back online immediately after the storm had passed. Our teams performed wellness checks in the hardest hit areas, were prepared with emergency supplies, extended around-the-clock resident support, and maintained communications with those affected by the storm. This highlights one of the major advantages of our internal services platform, which enables us to divert critical field personnel and resources to assist our residents. Moving on to operations. Demand for single-family rentals remained strong. In the third quarter, we received nearly 250,000 inbound leasing inquiries. Website traffic was up 21% year-over-year. Most importantly, our distinct showings per rent-ready property remained 60% higher than pre-pandemic averages. Same home average occupied days was 97.1%. New renewal and blended rental rate growth was 12.5%, 8.3%, and 9.5% respectively, which drove 8.1% same home core revenue growth for the quarter. Core operating expenses came in at 6.1%, resulting in 9.3% same home core NOI growth. We had another outstanding quarter. As expected, the current operating environment is showing a return of seasonality, which was a natural part of our business prior to the pandemic. For the month of October, same home average occupied days was 96.9%, and new and renewal spreads were 9.1% and 8.2% respectively. This resulted in blended rate growth of 8.5% for the month. More color on next year's outlook will be provided during our fourth quarter call. As we think about 2023, two major areas come to mind. First, on the revenue side, the combination of earn-in from leases signed this year, expected loss to lease recapture, continued robust demand, and increased deliveries from our development program set us up favorably for 2023. Second, because inflation does not seem to be letting up in the near term, one of our top operational priorities next year is expense mitigation through optimization of our services platform. To sum things up, this was a great operational quarter, and our outlook remains optimistic. We are looking forward to a strong finish to 2022, which will position us well for growth in 2023. With that, I'll turn the call over to Chris for the financial update. Thanks, Bryan, and good morning, everyone. I'll cover three areas in my comments today. First, a brief review of our quarterly results, including a summary of our estimated financial impact from Hurricane Ian. Second, the latest updates on our balance sheet and capital plan. Third, I'll wrap up with an update on our 2022 guidance and latest property tax outlook. Starting off with our results, we reported another strong quarter with net income attributable to common shareholders of $50.7 million or $0.14 per diluted share, which included a $6.1 million estimated net loss from Hurricane Ian. As Dave shared, we were fortunate with the ultimate path of the storm. Despite Hurricane Ian being one of the most powerful storms in recent history, our damages largely consisted of cleanup and repair costs across Florida and the Carolinas, as well as our insurance deductible primarily related to a small subset of flooded homes in the Orlando area. Please keep in mind that these amounts still represent preliminary estimates and may continue to change going forward. Excluding the estimated net loss from Hurricane Ian, during the third quarter, we generated $0.39 of core FFO per share and unit, representing 11.6% year-over-year growth, and $0.33 of adjusted FFO per share and unit, representing 9.8% year-over-year growth. Underlying our performance was another strong operational quarter, generating 9.3% same home core NOI growth, as well as continued steady deliveries from our AMH development program. During the quarter, we delivered 501 homes from our AMH development program, which was in line with our expectations. Of our total deliveries, 265 homes and 236 homes were delivered to our wholly owned and joint venture portfolios respectively. Additionally, we continued to execute on our recently moderated acquisition plan, acquiring a total of 145 homes during the quarter. In total, for our wholly owned portfolio during the quarter, we added 410 homes for an estimated total investment cost of approximately $155 million. This is especially notable during the currently constrained acquisition environment, which adds extra reinforcement to the value of our AMH development program and land pipeline of over 15,000 lots. Not only do we have years of built-in development growth, but as we've talked about many times, we also have the balance sheet and cash flow profile to fund our existing development pipeline each calendar year going forward without the need for additional equity capital. Finally, on the disposition side, we sold 164 properties during the quarter, generating total net proceeds of approximately $49 million. Next, I'd like to share a few updates around our balance sheet and recent capital activity. At the end of the quarter, our net debt including preferred shares to adjusted EBITDA was 5.9 x. Our $1.25 billion revolving credit facility was fully undrawn, and we had approximately $97 million of cash available on the balance sheet. Additionally, during the quarter, we utilized $186 million of forward equity shares that were previously raised in our January equity offering. At the end of the quarter, we had approximately $300 million of remaining forward equity shares that we anticipate utilizing towards the end of this calendar year or beginning of 2023. Finally, I'll close with some additional color around our 2022 guidance, which was updated in yesterday's press release for our latest property tax outlook and a few refinements around our moderated capital plan. From a high level, I'd like to highlight that all aspects of our full year same home operating outlook remain unchanged other than property taxes in the state of Texas, where we recently received some surprising and disappointing news. As you may recall, during 2019, Texas passed the Texas Property Tax Reform and Transparency Act, which created a 3.5% cap on overall property tax revenue growth for cities, counties, and certain special districts. Since being passed in 2019, the Texas Property Tax Reform and Transparency Act has served as an important governor of property tax growth for all asset classes. However, based on preliminary information, we recently learned that for 2022, non-owner occupied single-family homes are expected to receive a disproportionately large year-over-year increase. While we are still actively appealing assessed values in the state of Texas, it is likely that our 2022 Texas property taxes will now increase by over 20%. Outside of Texas, however, the remainder of our 2022 property tax estimates, which contemplated elevated increases in Florida and Georgia, continue to track in line with our previous expectations. As I mentioned, please keep in mind that our estimates are still based on preliminary information and that a full year 2022 Texas property tax true-up will be reflected in our fourth quarter earnings when actual property tax bills are received. However, taking our latest estimates into account, we have increased the midpoint of our full year 2022 same home core operating expense growth expectations by 200 basis points to 7.75%. At the midpoint, this translates into a revised full year same home core NOI growth expectation of 9% and full year core FFO per share of $1.54, which still represents SFR industry-leading growth of 13.2%. Before we open the call to your questions, I'd like to leave you with three key takeaways from our comments this morning. First, Dave is right. These are uncertain economic times. Remember that our business is built on the fundamental need of housing, which continues to be in short supply with growing demand across our diversified footprint. Second, our operating platform is efficient, scalable, and ready to stand up to the test of today's inflationary environment. Third, our growth programs, supported by our investment-grade balance sheet, are unparalleled in their ability to consistently deliver inventory from the backbone of our development program, while our nimble acquisition channels stand ready to create unique shareholder value from the likely growth opportunities ahead. With that, we'll open the call to your questions. Operator. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question comes from the line of Nick Joseph with Citi. Please proceed with your question. Thank you, and appreciate the early 2023 building blocks. I was hoping you could quantify the expected earnings for next year and then the loss to lease both currently and then what you would expect it to be at the end of this year based off of 2022 guidance and rent trends. Hey, thanks, Nick. This is Bryan. Yeah, the earn-in that we're expecting from this year is in the 4%-5% for 2023, that reflects our in-place leases. In terms of the loss to lease, we're estimating it to be in the high single digits at this point. Our expectations for the balance of this year on rate growth, if you look at the re-leasing side, continuing in the 8% range with renewals consistent with what we posted in October for November and December. Thanks. That's helpful. Just on real estate taxes, understand the impact of Texas. As you look to 2023, are there other states that could be at risk of elevated either millage or real estate taxes broadly? Could you see additional kind of separation between owner-occupied versus owner considerations on the tax front? Yep. Thanks, Nick. Chris here. Great question, and appreciate you connecting the dots to other states, which I think is really important. You know, look, on the topic of property taxes overall, I would start by saying that our property tax team did a really good job this year. Outside of the Texas curveball, which by the way, I mentioned this in my prepared remarks, it really surprised the entire property tax consulting industry. Outside of that, our overall property taxes this year are landing pretty in line with our 5% growth expectations from the start of this year, which, you know, as I mentioned, contemplated some pretty hefty increases in states like Florida and Georgia, which are in part being offset by other states that have caps in place, and then the portfolio diversification benefit from other multi-year revaluation states that did not revalue this year. At this point, you know, look, we still have some moving pieces, but for the most part, we have nearly all of our assessed values in hand at this point. Our teams have a good feel for where appeals are likely going to land, and we're just waiting now for our remaining tax rates to be published towards the end of this year. Overall, as I mentioned, excluding the curveball in Texas, our remaining states are shaping up pretty much largely as expected. To your point about 2023, you know, look, it's a little bit too early to speculate with numbers, especially given the moving pieces in Texas. As we've talked about many times before, over time, we generally expect property taxes to trend directionally with HPA, you know, oftentimes on a partially lagged basis. As home price appreciation has clearly hit an inflection point, you know, we think it's reasonable to assume that property tax growth has an inflection point on the horizon at some point as well. With that said, you know, it's just a little bit too early for us to comment on whether or not we think we'll see that inflection point in 2023, versus later. We definitely know it's out there on the horizon. Nick, this is Dave. Let me tackle your second part of that question about whether this is a precursor to other states. The answer is, I don't know. To date, what we have seen is that there is symmetry between homeownership and rental rates. What we can tell you is this is very new news, and we are looking into it, and we have a government affairs department, and we are having discussions with those individuals. Too early to report back on what we are finding there. One thing I will tell you is we have seen in other forms where there's either rent control measures or other ways that impact housing. In the long term, those provisions get reviewed, in many cases, adjusted or repealed. The most recent one we can look at is November of 2021, very recent. St. Paul, Minnesota passed a rent control measure limiting rents to 3%, 8% on re-leasing. Today they're seeing their housing stock and their ability to grow their economy being impacted. That provision is being reviewed today. These type of actions do have a negative impact in the long term. We are working through our channels to have discussions with the appropriate people, but I would tell you it's too early to have a firm answer. Thank you. Thanks, Nick. Our next question comes from the line of Juan Sanabria with BMO Capital Markets. Please proceed with your question. Hi, good morning. Just hoping to talk a little bit about the developer market, for sale and kind of the impact of rising mortgage rates that they've had on their business. Whether as a result of a softening there in the for sale market, you're seeing any dislocation as they convert some of those for sale houses to rentals, and whether there's a dislocation in occupancy or leasing trends for new homes or what have you. Yeah. Good morning, Juan. You know, there's a lot to unpack in your comment. You know, the first thing I will tell you is that we look and see tremendous opportunities in growth. What you're talking about not only impacts our ability or gives us opportunities to buy from the builder. It first and foremost has a very positive impact on our development program. As the builders slow down their development, which they are doing today, they're still building and completing their inventory that they started, but as they slow it down, we are seeing benefits in our development program in the reduced cost of being able to build homes, all the way from land all the way through the vertical construction cost. If you look at the construction cost benefits to date, I'd call them about 10%, but where we see them coming out is much greater than that. Turning to your direct question about builder inventories and are they available to acquire, there is significant builder inventories in the marketplace. They're in the tens of thousands of homes that we have seen. To date, the majority of them don't meet our location or our quality requirements, but many of them do. But those today are not priced at a point that we believe are attractive prices for us to be acquiring those homes. Today, the builders are continuing to protect their backlog, and when that backlog is resolved, then they will be lowering prices. That could be later this year. It could be early next year. We will be prepared to take advantage of those opportunities when they do come about. Sorry, Dave. The question was more meant around whether that inventory that's now being delivered, that they're not being able to sell to home builders, whether that's affecting the rental market and any impact to your kind of core business, not the development business, in terms of. Yeah what you're able to lease up and/or charge the tenants. Yes. Sorry if I misunderstood. But on that point, yeah, you are correct. A number of the homes that builders have, they are looking at alternative ways of resolving their backlog, and they are turning some of them into rentals. I remind you that the majority of these homes are in secondary and tertiary markets, not located where our homes are located. So they're not direct competitors to us. I'd also remind you that over the last 10 years, we've seen single-family rental inventory increase by 4 million homes, from 13 million to 17 million homes. That's 400,000 homes on average per year. The backlog we're looking at is 20,000-30,000 homes. Those homes, that 400,000 per year were absorbed well. Occupancies remain very, very strong. Demand for single-family rentals is higher today than we've ever seen. While they may have a very short-term impact on absorption, they will be absorbed, and they will not have an impact to the long-term viability of single-family rentals. Great. With regards to the development platform as a whole, just curious on the yield expectations there. Are those keeping up with significantly higher capital costs given the move we've seen in rates? Or how do you think about putting incremental dollars to work on a pipeline in the face of higher capital costs today? Yeah. Yeah. Juan, you're correct. I mean, you got to look at the capital that you're raising and the investment opportunities, and you have to match them. If capital is more expensive, your yield opportunities need to be better. What we are seeing in development is significant reductions in the cost to build homes. As I indicated, as the home builders slow their production, we are seeing land that was previously not available, including very important land. We call them VDL, vacant developed lots. This is land that we can acquire and immediately go vertical. Don't have to do any land infrastructure. We are seeing these land opportunities today being offered at discounts to what we saw six months ago. They range from small discounts all the way up to 40% discounts. As time goes on, we expect those to get even more attractive and come more in line to what we historically saw before the pandemic. On the construction cost, same thing. If you look at the pre-pandemic trends, we are moving back towards those trends. A couple cases in point. Lumber has come down from $1,600 a thousand board feet to $500. That's a two-thirds decline. That's more than a $20,000 savings in building a home. We've also seen it in the trades all through drywall. We've seen it in the products and the trades, in the framing, in the electrical, et cetera. Post drywall, we expect to see it. We haven't seen it yet. The home builders are still finishing up the homes that they're building, and then they're gonna slow the post drywall phase down as well. We expect that we're gonna see 20%-25% reductions in input costs. The yields are still very, very strong. No change to the yields. All that results in significant increases to the ultimate yield for our invested dollar. I just go back. Our development program, I see tremendous opportunities, and this is the benefit of having a diversified portfolio where we can build in many places but also have the multiple channels that we can acquire. Yes, the development program is very, very healthy today, the existing program as well as opportunities on the horizon. Very helpful. Thank you, David. Mm-hmm. Our next question comes from the line of Steve Sakwa with Evercore ISI. Please proceed with your question. Thanks. Good morning out there. Dave, I realize the Texas thing's kind of new and you don't really know where it all settles out. You know, to the extent that it seems like the state sort of has a target on the SFR back, would that, I guess, ultimately get you to rethink your long-term commitment to owning in Texas? Yeah. Steve, I think that's a little early to draw any conclusions. We haven't had discussions with the taxing authorities. Our government affairs department will. I think part of it is also education of many parties, maybe us, but definitely the state parties as well. Kind of show them what has happened in other instances where there's been regulations that have been adverse to rentals and what the long-term impact is. I'm not here willing to say that we're adjusting any programs at this state. I think it's just way too early to make those calls. Got it. Chris, could you just remind us sort of what's embedded, excuse me, in Q4 guidance for bad debt? Just remind us overall what the, I guess, the net bad debt figure is for 2022 and maybe how you see that trend playing into 2023. Yep. Great question, Steve. You know, look, on collections more broadly, I would say collection trends have continued to hold strong, you know, with third quarter bad debt as you saw landing in the low 1% area, which was pretty consistent with our expectations. Just, you know, unpacking that a bit, as expected, we've continued to see a reduction in rental assistance payments, and that's been paralleled by improving collections more broadly. You know, another, you know, piece of information in there, I would say the overall bad debt picture is supported by the fact that, you know, for any remaining households that we may have that have been impacted by COVID that are continuing to work their way through the process, if you recall, we took a very conservative and prudent stance to how we accrued for our bad debt in earlier stages of the pandemic. Those types of households have largely been provided for previously in our prior period bad debts. As we head into the fourth quarter, at this point, still very consistent with our prior expectations. We see collections continuing to remain strong and expect that debt will likely continue to run in the low 1% area, which is what we have contemplated in guidance. Sorry, sorry. Where does that bring you sort of for the full year on 2022, if you kind of were to just wrap up kind of the gross, the net, the rental assistance, bad debt will be what for the year? About 1% to low ones area. It's difficult to unpack the pieces because there's so many different moving layers at this point, but 1% to low ones on a full year basis. Would you broadly see that being kind of consistent, or do you think that, without rental assistance, you know, given the state of the economy, does that number maybe go up next year? Or do you think there's a possibility that could go down and be a tailwind? You know, look, at this point, rental assistance has done its job. Rental assistance has been very successful in helping to bridge households in need. It's been winding down for some time now, just to give you some context. In the third quarter of this year, rental assistance was down in the $3 million area. If you recall, that compares to, you know, $7 million-$9 million per quarter towards the second half of 2021. We've already seen that winding down. We've already seen that, again, paralleled by improving collections more broadly. You know, it's too early for me to comment specifically on the shape of all of that into 2023. So far we've, you know, felt and seen. We've, you know, seen positive information, felt good about the improving collections, you know, situation alongside rental assistance tapering off. Okay, one last question for Bryan. Just if you kind of parse through the data, you know, in terms of showings or collection issues, you know, ability to push rent or renewals, is there anything that you can discern from the demographics of the renter base in, you know, in terms of average incomes, or, you know, types of jobs? I guess I'm just looking for anything anecdotal that might suggest, you know, something, kind of regional or, you know, by consumer type that might be helpful. Yeah, thanks, Steve. There are a number of different data points that I wanna bring up. We talked about the rent coverage, the income, rent coverage, that our resident base has in the 5 x range. The fact that the average household has multiple earners gives us a lot of confidence going into these kind of uncertain times. In terms of where our residents are employed and the industries that they work in, well, first of all, it's generally characterized by knowledge or professional industries. Our surveys show that close to 90% of our residents have college degrees. They're employed in essential industries, healthcare, education, government, military, with functions on the professional side, like tech support, as an example. We feel like they're in a really good position. In the event that there is you know any economic pressures for individual cases, we're still very happy about the demand backdrop. We're able to turn homes quickly if there was any sort of stress on our resident base. In terms of their industries, where they work, their existing in-place income and their kind of excess capacity, we feel like they're in a really good position. Great. Thanks. That's it for me. Thanks, Steve. Our next question comes from the line of Adam Kramer with Morgan Stanley. Please proceed with your question. Hey, appreciate the question, guys. Just to follow up a little bit on Steve's question, and it's really good color on kind of the rent relief and bad debt. Just to confirm kind of that 1% figure, I think, that you cited for bad debt, that that's net of the rental assistance? I think you kind of cited $3 million of rental assistance. That's correct. That's bad debt recorded to the P&L, which is net of that. Again, there are a lot of moving pieces to it, but that's one component. Got it. That makes total sense. Just thinking about some of the expense line items, I recognize property tax has kind of been in focus for people when we kind of think about 4 Q in 2023. Just thinking of some of the other expense lines, you know, any, I guess, kind of puts and takes to, you know, whether it's, you know, potentially turnover increasing and kind of how that might shake through kind of through the P&L. You know, are there other inflationary impacts, certainly? Recognizing you guys are certainly doing stuff to mitigate costs, be it technology improvements, be it densification in the portfolio. Just would love to kind of hear maybe some puts and takes to some of the other expense lines. Yep, sure. Adam, Chris here again. Let me walk you through the fourth quarter and what's contemplated in guidance. Then I'm sure Bryan would love to talk about some of the great initiatives we have going on from an efficiency standpoint. But if you do the math on it, the midpoint of guidance actually implies a deceleration in our fourth quarter non-property tax expense growth, which is largely a function of the timing of where some of our prior year quarterly comps fell. If you recall, towards the tail end of 2021, we began to see some of the current period's inflationary pressures. You may also recall that we made the decision to accelerate the timing of some of our calendar year and salary increases to bolster talent retention coming into the fourth quarter of last year. The combination of all that created an easier non-property tax expense comp in the fourth quarter of 2021, which is what we're seeing contemplated in guidance. Just wanted to unpack that for you, and then I'm sure Bryan would love to talk about all the good stuff we have going on from an efficiency initiative standpoint. Yeah, Adam, I think the best place to start on that side would be on repairs and maintenance. You can see the increases are well below kind of the inflationary expectations. Our team's just done a wonderful job of increasing self-performance. There are certain areas that we can control and certainly mitigate inflation, and that's by doing more work internally, by preparing early for any supply chain issues that we might have seen this year, and really taking an active approach of doing self-performance work. So you're seeing that reflected in the R&M line. On the property management side, the changes there reflect the fact that we're fully staffed. We're in a really, really good position from a personnel perspective to finish this year strong and be prepared for a strong 2023. Great. Just a last one, a quick one here. Just on the kind of Florida, Georgia, I know, Chris, you kind of cited them earlier. That's kind of the initial guides you know, included hefty increases there. Just wanted to, and again, to the extent that you can comment, just kind of confirm that, I guess, that those assessments have already come in for you guys. In other words, you've kind of seen the final product, you know, in terms of kind of the increases there and that's kind of what was baked in. That's correct. I think your line might have broken up for a second. I think the question was Florida and Georgia fully contemplated in what we were expecting previously? The answer is yes. In both of those, we've seen some pretty heavy increases to where market values have gone in the 20%-30% area for those two states. The simple answer is yes, those were contemplated in our expectations previously. Great. Thanks so much for the time. Really appreciate it, guys. Thanks, Adam. Our next question comes from the line of Haendel St. Juste with Mizuho. Please proceed with your question. Hey, good morning out there. Yeah, Haendel. First question for Dave. Dave, hey there. Dave, I wanted to go back and clarify your comments on development, a bit, the cost and yields. I was curious, how did the yields on homes being started today compare to the 6% you've seen historically? And when do you expect the lower input costs you outlined to benefit those yields? Are we thinking that's more of a 2024, 2025? I'm just trying to get a sense for how yields could be looking here the next couple of years. Thanks. Yeah. Good question, Haendel. When you look at development, we talk about development being in cycles. The homes that we would acquire today, we would get the benefit of the land, and we would get the future benefit of the reductions in the cost of the commodities and the input costs. For homes that we delivered this period, those that we will be delivering next quarter, those homes were not only started earlier this year when the pricing of those commodities were at their peak. A lot of the commodities were contracted a few months before that. The homes that are being delivered in the third quarter, fourth quarter, and maybe even the very first quarters of next year are going to be with the commodity costs that are incurred in the early part of 2022. They're gonna be more elevated. The yields are gonna be in the fives that we underwrote them on. The capital that is being utilized for those was raised early in 2022. Those acquisitions, even though in the fives, if you match it to the capital that's being utilized, remain to be accretive. There is a time lag between the time that the commodity prices change and the time that those deliveries occur that benefit from those commodities. Thank you for that. Maybe a follow-up on development, just thinking about proportionally the starts near term. Just curious if we should expect to see more starts being done via the JV versus on balance sheet. Would you or should we expect incrementally better yields on that given the opportunity for fees there? Thanks. Sure. Haendel, Chris here. I can start with where we're seeing starts shaking out, and then Dave can jump back in on the second part of that. Generally speaking, we've talked about this before, as our development program continues to grow, we would expect a larger and larger proportion of those to be started on balance sheet. At this point, our JVs are still very active and going very well. They're about 60% or so developed and deployed on their capital and probably have another 12-24 months to finish off. As the program continues to grow, and we expand starts and deliveries, the expectation is that a larger and larger proportion of those will be on balance sheet. Thank you. Our next question comes from the line of Brad Heffern with RBC Capital Markets. Please proceed with your question. Hey, good morning, everyone. For the acquisitions that made it over the finish line this quarter, can you give the cap rate? Was there anything unique about them? Were they opportunities that just happened to be priced more appropriately at a higher cap rate? Was there a greater proportion of new homes? Anything like that? Thanks. Yeah. Brad, it's Dave. The acquisitions that we reported in the third quarter were contracted really in the second quarter of this year. They closed in the early part of the third quarter. Those acquisitions are in the fives. But again, they were contracted at a little bit different time. We continue to look at all of the acquisition and growth opportunities. We are for the most part on the sidelines right now as pricing is just we're going through price discovery, and we are looking for where those new prices are going to bottom out, at least get to a place where they match funds with our capital. We haven't put anything into the growth program on MLS in the last couple of months. What we closed were second quarter contracts that closed early in the third quarter. Okay. Got it. Thanks for that. Going back to the Texas property taxes. I guess I'm a little surprised to hear that there's a differentiation forming between renter-occupied single-family homes and owner-occupied, especially just given things tend to be controlled at the local level. Is this formalized in some way at the regulatory level? I guess where will higher valuations specifically for renter-occupied homes hold up to appeal? Yeah. You wanna go? Sure. Brad, you know, we were surprised as well, as was the industry. I would also say it's a little bit more than just owner-occupied versus non-owner-occupied and how all of it works within the 3.5% cap set by the Texas Property Tax Reform and Transparency Act. You need to mix in commercial as well. What we really saw this year is just an unprecedented disproportionate treatment across all of the asset classes, you know, with our understanding that commercial is landing very low, if not flat in certain cases. Owner-occupied homes are in or around 10%, and then that means that the balance or, you know, the resultingly large increases to non-owner-occupied single family which allows overall property tax revenues to remain within the 3.5% cap anchored by commercial and owner-occupied homes. Just again, for context, that's pretty inconsistent with the historical treatment out of Texas, which has never seen that level of disparate treatment between the asset classes. Thank you. Our next question comes from the line of Dennis McGill with Zelman & Associates. Please proceed with your question. Hey, thank you. Chris, sorry to hit you with another one on property taxes, but I just wanted to clarify a couple numbers. You said, I think, that you had already been contemplating in the accruals of Florida and Georgia being up in the neighborhood of 20% plus. I guess if Texas joins that and that's 40% of the assets across those three, it, I think it implies that there's not any increases anywhere else. I just want to make sure I'm triangulating those comments correctly. Couple different things in there. Florida and Georgia, what I was commenting on is the market component of where those values float to. Georgia was in the 20% area. Florida has a couple of different components and we're getting pretty granular here, but there's two pieces. There's a market floating component, and then they call it a capped assessed value component that caps out at a 10% increase, which represents about 60% of property taxes in Florida. The balance or 40% is what floats to market, and that's what went up about 30%. The net to Florida is a little bit lower. I think it's high teens or so. Everything else, it isn't flat, but keep in mind there are a number of other states that have caps in place. Also there are jurisdictions across our portfolios, given the broad diversification, that only revalues on a multi-year basis. There were a good number of those that did not revalue this year, bringing everything down to 5% outside of Texas. Okay, that's helpful. Also just following up on a comment, Dave, I think you made on construction costs. I didn't catch it exactly. Did you say that you're starting to see outright declines in construction costs? I would maybe exclude lumber for that. We know that that'll be a pass-through. In non-lumber categories, are you already seeing either labor and/or construction bids come down on current phases or future bids? Yes. Yes, we are, Dennis, but it's in the construction phases that are up through the drywall phase. We haven't seen it in the post drywall, the finished trades, the cabinetry, et cetera. There's still a significant demand for those trades by the builders. The pre-drywall trades, you know, we're getting inbound calls from vendors looking for work. We now have the ability to be bidding multiple vendors, or more vendors against one another, and it is benefiting in the reductions. Anywhere from single digits to low double digits at this point. I do expect it will continue to go up. If you go back to historical trend lines and trend it and take out the pandemic aberration, you know, there's 20%-25% reductions to get back to the trend line of what construction has historically been. Thank you. Our next question comes from the line of John Pawlowski with Green Street. Please proceed with your question. Good morning. Chris or Bryan, could you give us a sense of what's driving the 24% year-to-date increase in recurring CapEx per home? Hi, John. This is Bryan. Yeah, there are a couple of different factors in there, some that we anticipated at the beginning of the year. We talked about the workout of some of the distressed COVID residents, so that it's a little bit attributed to that. More importantly, it's due to just inflationary increases, centered around kind of third-party work and materials that we have less control over, less of an opportunity to mitigate. It really provides a contrast between the CapEx spend and the way that we're managing the R&M line. We're just more susceptible to third-party increases, especially in the case of HVAC as an example, where on an occupied home, we need to get that done quickly, and we're just more vulnerable as you've seen in Q3 numbers. Okay. Could you give us a sense what you think a normalized total cost to maintain is right now? I mean, turnover has gone down these last several years, but CapEx and R&M and turnover costs are going up. It feels like if turnover stabilized or even increased, these numbers would look a lot worse. Is a $3,000 type total cost to maintain a reasonable run rate going forward, and we just kind of grow off that at whatever CPI is? Or just any sense for what a real normalized cost figure. Any comments there would be great. Yeah. Thanks, John. I'm not ready to concede that retention is gonna do anything but improve. For an estimate for longer term run rate, I think you're pretty close. My expectation to be a little bit lower than that. Over the long term, we would expect that line item to probably increase at inflationary levels. Thank you. Our next question comes from the line of Neil Malkin with Capital One Securities. Please proceed with your question. Hey, everyone. Thank you. First one, David, you know, talked about, you know, on the call a fair amount about more opportunities, land, builder inventories. Can we just talk a little bit about the land bank owners? I think you made a reference to that last call that some of the major players have seen really well-located deals come back to them or fall out, you know, just given the rise in borrowing costs. You know, can you give us an update there? Can you talk about what you see in terms of land bank opportunities? You know, does it vary regionally? You know, like for example, you know, Phoenix or, you know, Florida, whatever, you know, certain markets that may have, you know, more upside, more things that look priced well or that are more attractive to you at present. Yeah. Yeah. Neil, in the last few weeks, we have seen a number of properties come back to land bankers. If you cover the home builders, you've heard a number of the large national home builders talk about returning, you know, large numbers of homes to the land bankers. Today, the bid-ask spread is very, very wide. There's really no activity, no trading occurring at this point. The more attractive opportunities as of today, and this is very dynamic and very, you know, it's changing, you know, daily here. The biggest opportunities are all out west. It's all of the Western markets. It's the Northwest. It is down in the Phoenix, Las Vegas areas. It's Denver. Those are where we're seeing the majority of the opportunities today. The Southeast, while there are some opportunities, not as plentiful as what we are seeing in the West. The other thing that I mentioned in the prepared remarks, or at least maybe a prior question here, is for the first time in a number of years, we are seeing vacant developed land. That's land that if we can acquire, we can turn into homes much quicker than the raw land that we have built this business on. The opportunities are showing up. Still a little bit of a gap on the bid-ask to where we wanna be trading. There's really nothing trading at all. There's nobody hitting the ask, and it's just a little bit more price discovery needs to occur. Okay. Just a follow-up on that. To be clear, when you reference the home builders giving back or, you know, inventory, you know, sitting out there in the tens of thousands, you know, you're talking about in terms of the inventory in tens of thousands, actually homes versus the actual lots, correct? Just to be clear. Right. These are not homes. That's correct, Neil. With the land bankers, they have optioned land. Home builders have optioned land with these land banking firms, and that is those options are being canceled, the deposit's forfeited, and the land bankers now control the land. That's the land I'm talking about. Thank you. Our next question comes from the line of Chandni Luthra with Goldman Sachs. Please proceed with your question. Hi. Thank you for taking my question. Guys, I wanted to ask about supply. What are you seeing on the MLS channel? Are you seeing more homes being positioned for rent now? Especially now that, you know, home buying has become very prohibitive for a lot of people. Is that driving any pressure on pricing from your standpoint? Hi, Chandni Luthra. This is Bryan. Thank you for the question. The supply— we're seeing some supply pressure in some of our MSAs, but it's really not direct competition for our homes. Our homes generally are in superior locations, and in some cases with the newer builds, really superior assets. It's a case of not all rental houses are the same. The effect of this supply, it's really been minimal on our occupancy and on our rate growth. We're still maintaining very high levels of occupancy, healthy rate growth. One thing I wanna point out, we're able to do this without the use of any concessions. Concessions are being used in some of our areas, but not by us. I wanna make that clear. Got it. That's helpful. You know, just on the flip side of that question, how are move-outs to purchase homes tracking? You know, how much have they come down from the beginning of this year, and what are you seeing on that, you know, from that standpoint? Yes, they have come down slightly. There is a little bit of a lag. I expect them to continue to come down. We saw a decrease off of August into the last couple of months. It's probably a similar proportion to the decrease in overall home sales in the low double digits. Thank you. Our next question comes from the line of Sam Choe with Credit Suisse. Please proceed with your question. Hi, guys. Thanks for taking my question. Just going back to your comment about not using a lot of concessions, Bryan, I guess I understand that. I mean, your inbound leasing inquiries are 250,000. I guess just in general, if the macro backdrop worsens, like what's your guys' view on kinda using that lever for your overall rental strategy? Yeah. Thanks, Sam. It is a tool. We have used it in the past, not for a number of years. At this point, the demand is so healthy for our specific product, and I think it has to do with a number of different things. Our homes are very, very well located in growing markets, in good neighborhoods. We have an efficient leasing platform that's able to capture this demand and utilize the demand across an entire marketplace to benefit our portfolio. The number of inbound inquiries is one piece. Website traffic is up year-over-year off of record levels from last year. Our distinct showings for rent-ready properties continue to be way above the pre-pandemic averages. The demand side for our specific product is extremely high. At this point, we just don't see the need to change anything on the concession policy. Got it. One quick one on the ancillary revenue side, anything that you're rolling out in the near term, or is it just, I mean, business as usual with what you guys have right now? Yeah. I think I'd probably consider it business as usual. We're continuing the rollout of our pet program as we've talked about before. Really no major changes to announce at this point. Thank you. Our next question comes from the line of Linda Tsai with Jefferies. Please proceed with your question. Hi. Thank you. Are you still seeing the benefits of in-migration to your markets, or is that trend slowing at all? Yeah. Thank you, Linda. This is Bryan. No, we're continuing to see it. I mean, specifically, one of the major drivers of migration into our portfolio is out of California. Even on a year-over-year comparative basis, it's still up 30%. That has not stopped. It's not slowed down at all. It has a big impact on our western markets. That's continuing. Then if you look at another metric that we follow closely, that's the number of residents that are moving from out of state into our homes, and that's still way up, both year-over-year and to pre-pandemic levels. It's still a significant part of our application volume. Thanks. On the flip side, to the extent move-outs are occurring, you know, what are the reasons being listed? The reasons are consistent with what they've been in the past. Maybe the proportions have changed slightly. Move-out to buy is still the number one reason. The rest of them are smaller in nature, life changes and so forth. We are increasing renewal rates a little bit so that reason has gone up too, but really no major change on the move-out reasons percentage. We're just really happy that the retention continues to improve, and I think it's a testament to the overall value proposition of our platform. Thank you. Our next question comes from the line of Jade Rahmani with KBW. Please proceed with your question. Thank you very much. I had a question, maybe for Bryan on the demand side. How do you view single-family rental with respect to multifamily? Is it a substitution product? In other words, are the incremental tenants coming from apartments generally and choosing to form a household in a single-family rental house, or are they would-be homeowners choosing single-family rental as an alternative? Can you just give some color on maybe the majority of the tenants that you're seeing? Sure, yes. Thanks for the question, Jade. Multifamily is a valuable source of our residents. We track, we survey where they're coming from. We haven't seen a huge change. If you remember at the beginning of the pandemic, there was a big spike on applications from multifamily, but it's normalized back down to near pre-pandemic levels. I would think of it in the low 20% range. It is a valuable component, but it's not the majority. I would think of it more in terms of as the residents mature, they get married and start families, it's a natural progression to move into single-family homes. It's not necessarily directly out of multifamily. Most of our residents are coming from single-family, whether they owned or rented prior. Thank you very much. In terms of the slowing new lease demand that we are seeing playing out in multifamily, what do you think is driving that, and do you expect that to eventually affect the single-family for rent market? Yeah. I think there's a difference between the types of residents, the difference in the demographic. Our demographic has been pretty consistent for a long time now of average age in the 37-year range, high levels of income, people who are choosing kind of higher quality of life. I think some of the migration would point to that. We have a different product than multifamily. Single-family homes offer yards and space, excellent neighborhoods. We're adding class A multifamily type amenities into our communities. We're adding a bunch of really nice features that I don't think existed in the past, certainly not on the rental side. You couple that with our services platform. I think people are really starting to understand the value proposition that we're offering, and I think that's gonna be a main driver. Thank you. Our next question comes from the line of Anthony Powell with Barclays. Please proceed with your question. Hi, good morning. I just wanna ask the supply question a different way. The concern that we hear from investors is that if rates are gonna be higher for longer, meaning mortgage rates, that people that need to sell their home for whatever reason, will opt to choose to rent their home out instead, including in some of the higher quality neighborhoods that you mentioned. That could lead to maybe higher supply for the next couple of years. Is that something that you either worry about or track, and what's your view of that potential risk? Hi, Anthony. Yeah. It's something that we're monitoring. We're monitoring supply on a daily basis in our marketplace. It is possible that scenario plays out. We're not seeing it to a great extent yet. I wanna remind you too that there is a difference between the mom and pop product and our homes, both on the services platform, the improvements that we're making to these homes on the turns. There is a differentiation in the product that I think puts us in a good position and a competitive advantage. To date, we're not seeing a ton of pressure from owner homes that are being flipped to rent. Thanks. Maybe one more on Phoenix. It's a market that's always highlighted as seeing some pretty sharp declines in home values, yet your lease spreads there are very, very strong. What's your view on the Phoenix market overall, and can this divergence of home price acceleration and your strong rents continue? Yeah. Phoenix has always been one of our favorite and top performing markets. It's fantastic from a number of different areas. You've seen the occupancy levels, you've seen the rate growth. It's also really strong on the collection side as well. We're really happy with that marketplace. It's benefited from the California migration, as I've spoken to on prior calls. It's also a market that has a lot of investment activity, and it is one of the MSAs that I referenced earlier, where we have seen an increase in supply. I wanna remind you that the supply increases that we're seeing in Phoenix are with product that's not in direct competition with ours. These are homes that aren't in as good of locations. In many cases, we talked about the horizontal apartment boom that you saw in Phoenix. Our product is differentiated there. Phoenix remains one of our top markets, and we're continuing to see strength. Thank you. Our next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Please proceed with your question. Hey, everyone. Dave, just going back to your comment about the inventory of homes on the market that meet your quality and kinda location parameters but aren't quite there on price, how can you quantify how far that bid-ask spread is, and how long you think owners can hold onto them before maybe needing to move on? Yeah. First, the area that we were talking about, I believe, on that discussion was the national builder inventory. Today we have seen, you know, a little bit of price movement, maybe 5%. We're gonna need to see another 15%-20% movement. Got it. Just kinda when you pair that with development, can you remind us what that spread is between, you know, those market cap rates or where you think values need to be and what you guys target on development is? Well, the spread between acquisitions and development has historically been about 100 basis points in yield, and we are still in that same zip code when we analyze opportunities today. Thank you. We have reached the end of the question and answer session. Mr. Singelyn, I would now like to turn the floor back over to you for closing comments. Oh, thank you, operator. In closing, let me just reiterate that, you know, today the SFR industry is proving to be very resilient. We are set up very, very well for 2023 and are seeing the early signs of very attractive incremental development opportunities as well as acquisition opportunities. Thank you very much for your interest this quarter. We look forward to speaking with you next quarter. Have a good day. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.