Greetings, welcome to the Invitation Homes First Quarter 2023 Earnings Conference Call. All participants are in listen-only mode at this time. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. As a reminder, this conference is being recorded. At this time, I would like to turn the conference over to Scott McLaughlin, Senior Vice President of Investor Relations. Please go ahead. Good morning, welcome. I'm here today from Invitation Homes with Dallas Tanner, Chief Executive Officer, Charles Young, President and Chief Operating Officer, Ernie Freedman, Chief Financial Officer, and Jon Olsen, EVP of Corporate Strategy and Finance. As previously announced, the company's CFO beginning June 1st. Following our prepared remarks, we'll conduct a question-and-answer session with our covering sell-side analysts. In the interest of time, we ask that you limit yourselves to one question and then re-queue if you'd like to ask a follow-up question. During today's call, we may reference our 1st quarter 2023 earnings release and supplemental information. This document was issued yesterday after the market closed and is available on the investor relations section of our website at www.invh.com. Certain statements we make during this call may include forward-looking statements relating to the future performance of our business, financial results, liquidity and capital resources, and other non-historical statements, which are subject to risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated. We describe some of these risks and uncertainties in our 2022 annual report on Form 10-K and other filings we make with the SEC from time to time. Invitation Homes does not update forward-looking statements and expressly disclaims any obligation to do so. We may also discuss certain non-GAAP financial measures during the call. You can find additional information regarding these non-GAAP measures, including reconciliations to the most comparable GAAP measures in yesterday's earnings release. I'll now turn the call over to Dallas, our Chief Executive Officer. Good morning, and thank you for joining us. We're pleased to report a strong first quarter result yesterday afternoon, reflecting a great start for our year. Average paid store occupancy improved 50 basis points over the fourth quarter to 97.8%. New lease rent growth has accelerated sequentially every month so far this year. We're encouraged by the execution of our team and remain bullish on our industry and our business. As long-term fundamentals continue to be favorable, bolstered by our superior balance sheet liquidity and backed by our best-in-class platform, we will seek to continue to deliver sector-leading NOI growth as we've done for the past 5 years. Since our inception, we've matured and performed through a variety of operating and macroeconomic environments, including a global pandemic and record high inflation. Throughout this time, we've witnessed the resilience and the relative strength of our business. This is illustrated by a great chart from John Burns Research and Consulting that we included in our March investor deck. This data shows that over the past 40 years, national SFR rent growth has historically stayed positive even during recessions. In a recessionary period, we would expect that our business could see a reduction in move-outs and a benefit to occupancy, and that external growth opportunities could become more attractive. For these reasons and more, we believe single-family leasing is one of the most stable property types in real estate, and that Invitation Homes offers one of the best risk-adjusted return propositions compared to other commercial real estate sectors. To start, supply and demand fundamentals continue to favor our business. On the demand side, this includes the demographic surge of the millennial generation, who have begun reaching our average resident age of 39 years old. It also includes individuals and families of all ages who desire the flexibility and convenience of leasing a single-family home. Like all of us on the call today, our residents value great schools, proximity to growing job centers, access to transportation corridors, and desirable neighborhoods for their families. They usually need or want more space with a garage and a yard to better fit their growing household and to have more room for a home office, kids' playroom, and their pets. More importantly, today's residents are requesting flexibility and choice, along with the appeal of a down payment-light lifestyle. Further driving the demand for single-family home leasing is the rising cost of homeownership, as well as the lack of inventory of for-sale housing. According to John Burns March data and weighted by our markets, the monthly cost of owning a single-family home remained on average over $900 more expensive than leasing that same home. Others have calculated an even higher cost of average for ownership versus leasing. On the supply side, the U.S. continues to suffer from a shortage of housing, with the shortfall in supply relative to demand estimated to be in the millions of units. Like most economists, we think the best way to improve housing affordability is to grow the U.S. housing stock, and more specifically, by encouraging development of new housing supply. This important work really needs to begin at the state and local levels, including planning and zoning boards. We stand in strong support of those who want to bring positive change in this regard. In fact, we see ourselves as part of the solution to increasing housing supply through our new product pipeline that is now approaching $1 billion. We will continue to seek out responsible opportunities to add supply and, as a result, help improve housing availability and affordability. In consideration of these fundamentals, we believe leasing a home is a great option for anyone who wants all the benefits of living in a home without the hassle or expense of homeownership. We believe Invitation Homes offers the best service, platform, and locations for residents to choose from. One reason for this relates to the core belief we've held since the early days of our business, that we should revolutionize the single-family resident experience by professionalizing resident service. In short, we took a decades-old, antiquated mom-and-pop model and transformed that based on the needs and desires of a 21st century resident. As part of that approach, we continue to expand our service offerings and look for new and better ways to enhance the simplicity and convenience of the leasing lifestyle. At the same time, we continue to explore ways to improve efficiency through size and scale. We also remain focused on growing our portfolio creatively over the long term, and more importantly, in locations where we would expect the most favorable long-term fundamentals. With regards to growth, we're committed to being prudent capital allocators through all real estate cycles. For the first quarter of 2023, this meant being a net seller of homes, disposing of 284 wholly owned homes for gross proceeds of $95 million and buying 181 wholly owned homes for $62 million. For the most part, we've recycled capital out of less desirable homes and into brand new, well-located homes as part of our new product pipeline. We believe our strategy of partnering with the best homebuilders is a superior approach to investing on a risk-adjusted basis as it keeps development and its associated risks, including an expensive land bank and high G&A load off of our balance sheet. At the same time, our strong balance sheet and current liquidity, including JV capital, allows us to remain nimble, and as opportunities arise, we will be ready. Before I close, I want to speak to the continued dislocation between the retail pricing of single-family homes and public market valuations. Strong demand for housing continues to support home prices in our markets and in our price points. While the lock-in effect, which existing homeowners are discouraged from giving up their lower mortgage rates, is keeping resale supply relatively low. We're seeing evidence of this supply and demand imbalance when we list our homes for sale and receive multiple competing offers at great prices. We believe the resilience of the U.S. housing market in the current cycle has been underestimated over the past year, and that the protracted supply and demand imbalance for single-family housing continues to provide good structural support for home prices, just as it does for rent growth. Lastly, on the topic of sustainability, I hope you've taken a moment to read our new progress overview, which we published last month. It's available on our sustainability webpage and includes information about our efforts to increase the quantity and the quality of our ESG disclosures. This includes new greenhouse gas emission disclosures and an opportunity for engaged stakeholders to participate in an online survey to share their thoughts and ideas with us. We welcome this feedback. My thanks again to all of our teams for their hard work, dedication, and commitment this past quarter and for the remainder of the year ahead. Our associates are the heart and soul of Invitation Homes, and we appreciate how they embrace the responsibility to deliver the highest level of service to our residents and strong results for our shareholders. Our plan is to keep pushing to be great here. With that, I'll pass it on to Charles, our President and Chief Operating Officer. Thanks, Dallas. Good morning, everyone. I'd like to begin by thanking our associates for starting off the year strong. I'm really proud of the efforts you display every single day to ensure that our residents feel heard, served, and appreciated. I'll now review the details of our first quarter operating results. I'll start with same-store core revenues, which grew 7.7% year-over-year. This growth was primarily driven by an 8.5% increase in average monthly rent and a 7.3% increase in other income. These results include some encouraging signs. Over half of our markets are now operating in a more normal course of business in terms of timely rent payments and resolution processes. For our other markets, progress continues to move in the right direction as we work through these lease compliance backlogs. These improvements were reflected in our first quarter bad debt, which beat our expectations by holding flat with our fourth quarter reported results, even as rental assistance declined by over half during the same period. This indicates to us that residents are returning to a more normal payment pattern post-COVID. We're also seeing strong demand return following the winter leasing season, with new lease rent growth accelerating sequentially each month during the first quarter. Overall, for the first quarter, same-store new lease rent growth came in at 7% and same-store renewal growth was 8%, resulting in blended rent growth of 7.3%. Our preliminary April results show further acceleration in the new lease size to 7.5%, with renewals at 7.2% and blend at 7.3%. Preliminary average occupancy in April was 97.8%. Turning back to our first quarter same-store results. Core operating expenses increased 14% year-over-year, representing a favorable result compared to our initial guidance expectations for the first quarter expense growth in the mid-teens. The year-over-year increase was driven by an expected year-over-year increase in property taxes due to robust home price appreciation. In addition to the under-accrual of property taxes expenses in the first three quarters of 2022, as we've previously discussed. Expense growth was also impacted by progress we've made in working through more of the lease compliance backlog compared with last year, as well as higher vacant utility costs and rates and continued inflationary pressures. Taken together, these results led to first quarter growth in same-store NOI of 5% year-over-year. Our teams continue to pursue various ways to improve our efficiency and resident experience, with technology upgrades frequently topping the list. For example, we continue to put mobile technology into the hands of our residents. This includes a mobile experience for maintenance, which we've spoken about previously. This has been a great success, with residents using it to send us over 40% of maintenance requests. We've also just launched a new mobile experience for leasing that enables prospective residents to create a profile, save searches, and view their favorite houses. In today's mobile-first world, these new mobile experiences are game changers for our residents and us. Many thanks to all of our teams for working diligently to manage all the details of our business this past quarter while staying focused on resident service and operational excellence. I believe we are well equipped and energized to carry the positive momentum we've begun through our peak leasing season and the remainder of the year. I'll now turn the call over to Jon Olsen, the company's next Chief Financial Officer. Thank you, Charles. I'm excited to join you all today. I've been part of the Invitation Homes team since 2012, and I'm honored to have been named CFO upon Ernie's departure next month. Ernie has led our finance organization for the past seven and a half years, and in that time, he has overseen tremendous growth and many important milestones for the company. We're both here in the room this morning to answer any questions you may have following our prepared remarks. I'll begin by covering our financial results for the first quarter and then provide an update on our investment grade rated balance sheet and liquidity position before wrapping up to open the line for questions. As we stated, our first quarter results were in line with or slightly ahead of our expectations and offer a solid start to the year. Core FFO for the first quarter of 2023 increased 9.5% year-over-year to $0.44 per share, primarily due to an increase in NOI. AFFO increased 9% to $0.38 per share. Our full year 2023 guidance remains unchanged from the initial guidance we provided in February, as we are still early in the year. Next, I'll cover our balance sheet and liquidity position. We believe this is an area of strength for us, not only in comparison to how far we've come since our public listing over six years ago, but also relative to many of our investment grade peers today. In the six years since our IPO and merger, we have applied a consistent and measured strategy to delever the balance sheet, improve the laddering of our debt maturities, refinance secured debt with unsecured debt, unencumber assets, and lower our net debt to EBITDA ratio. We ended the first quarter with over $1.3 billion in available liquidity comprised of our unrestricted cash and undrawn revolver capacity. We have no debt reaching final maturity before 2026, and at the end of the first quarter, over 99% of our debt was fixed rate or swapped to fixed rate. Nearly three-quarters of our debt was unsecured and over 83% of our homes were unencumbered. Our net debt to EBITDA ratio improved from 5.7x at the end of 2022 to 5.5x as of March thirty-first. In recognition of the great work by our team and the meaningful progress we've made, in March, S&P Global Ratings upgraded our issuer and issue level credit ratings from triple B-minus to triple B flat. In addition, last week, Moody's Investors Service revised our rating outlook from stable to positive. In closing, we're pleased to start the year strong and believe our favorable fundamentals, best in class operating platform, dedicated associates and strong balance sheet position us well to continue delivering solid results. On behalf of everyone at Invitation Homes, we extend our thanks to Ernie for the enormous impact he has made and look forward to furthering the legacy he helped build. With that, operator, please open the line for questions. We will now begin our question and answer session. To ask a question, please press star then one on your telephone keypad. To withdraw your question, please press star then one again. If you are using a speakerphone, please pick up your handset before pressing keys. In the interest of time, we ask that participants limit themselves to one question and then queue by pressing star one to ask a follow-up question. One moment while we poll for questions. The first question comes from the line of Josh Dennerlein with Bank of America. Your line is open. Josh Dennerlein, your line is open. It's Josh Dennerlein. In the opening remarks you mentioned demographics are influencing demand and it sounds like you expect secular NOI growth to kind of continue as a result. I guess, can you maybe walk us through the demographics that you're seeing come through your portfolio today and how that's impacting your outlook? Yeah, I think, you know, I think. This is Dallas, by the way. You know, one of the things we've been most bullish on has been the consistency around the fundamentals of who our customer is as they come in, the strength of what we would call Kind of the credit quality and the personal balance sheet. I think lastly, the duration of stay. As we've looked at our business over the last decade, literally quarter-over-quarter, we're seeing that duration and length of stay push well into, you know, 40-ish type of months with us as they move out. We're seeing that in our West Coast markets, and we're seeing our eastern markets start to, you know, quickly kind of close the gap. I think if you think about this millennial cohort, the types of things they want, the flexibility around choice, a leasing lifestyle. Charles talked about it on his opening remarks, this mobile friendly kind of universe that we all operate in personally. It sets itself up to be very favorable for somebody who is looking for choice and flexibility while maintaining a down payment light approach. We're seeing continued strength in the underwriting of the customers. I mentioned my second point, and it continues to be, you know, impressed upon us that our top of funnel and the demand side of our business is extremely healthy. We have a lot of intrigue in properties as they become available. We have a lot of pre-leasing activity, and we're not seeing any real degradation in our customer, I would say. Your next question comes from the line of Eric Wolfe with Citi. Your line is open. Thanks. Dallas, you talk a lot about the lock and effect on interest rates and what's doing to sale inventory and ultimately transactions. Just curious whether you can see anything that would change that going forward or should we ultimately just expect a pretty depressed level of acquisitions for a long time? I think there's two questions in that question. The first piece on the lock-in effect, and, you know, with 80% of mortgages being sub 5%, it has probably caused a lot of us and people that are in the market for housing to think about staying put, which I think has also impacted some of the resale supply. That's had a positive effect on our business because I also think it's helping support, you know, longer duration of stay, demand, et cetera. I think in terms of your question around the resale market and what we'd expect from sellers, yeah, there's no doubt that if people are, you know, a mortgage today, if you acquired it or you refinanced in the last 36 months, it's an asset for folks. That may have an impact on resale supply. You know, the good news for us is our focus the last couple of years has been building out, you know, much more robust new product pipeline, which today sits close to $1 billion. We're really excited about that product as it's coming into our portfolio both this year and years beyond. I think the resale environment has been limited the last three to four years, and hasn't really been a source of truth for people as they're trying to build up, you know, call it their base. Fortunately for us, we have real scale in markets. I think where we may see other opportunities down the road this year could be, you know, as we see some of these smaller operators who are having trouble, getting scale or sizing up, there could be opportunities where, you know, potential in May over the next couple of years. I think we'll stay, you know, aggressive in our new product pipeline. We're obviously always looking at things as the resale market, changes, but just being ready, and I think we're in a position to do that. Your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Your line is open. Great. Thanks, and good morning. I'm just curious if you guys are surprised at all by the strength in new lease rate growth year-to-date, which you've highlighted as accelerating each month and surpassed renewals in April. I'm just wondering if that enabled you to pull back a bit on renewals to limit turnover and help control costs. If you could provide an update on loss of lease, that would be helpful as well. Thank you. Yeah, this is Charles. Thanks for the question. Yeah, look, we've seen really healthy demand here in the first quarter. While we expected it to be solid, it's a little bit out ahead of our expectations, which is great. The funnel is strong. We've been able to grow occupancy by 50 basis points from 97.3- 97.8, while, as you mentioned, accelerating new lease rent growth. Renewals still have been really strong. We've been in the mid-7s, and that's slightly above where we thought we'd be, and we're maintaining that in April in the 7s. As you look forward, May and June, we went out in the mid-7s on our ask, and we'll see where that ends up. You're asking the right question. There is a balance here as we're seeing this demand and trying to balance off the lease compliance backlog that we're working through to make sure that we maintain a strong occupancy. Right now, we like our kind of balance that we have, the optimization and demand to catch up when we do turnover a home because we are slightly up on turnover, but historically really low numbers still in the 22%. We like where we are. We'll see how the summer plays out. We're slightly ahead of expectations and optimistic going into the summer. Then your last question around loss of lease. Yeah, we're in the as we updated it today, about 5%-6% loss of lease. Your next question comes from the line of J.L. Feldman with Wells Fargo. Your line is open. Great. Thanks for taking my question. I was hoping you could talk more about the expense side of your outlook. You know, any of the moving pieces that maybe you have a little bit less confidence in, whether it's insurance, taxes, employees, anything, R&M, anything else you might want to think about here as the year unfolds. Also when you, if you can give a date for when you did or you will renegotiate your insurance for the year. Thank you. Sure. Thanks for the question. This is Jon Olsen. Our insurance policy period runs from March to February. We have now put our new insurance policy in place. Recall that on our last call, we talked about our expectation for the property policy being up somewhere in the neighborhood of 20%-25% year-over-year. The actual policy came in right in the middle of that range, actually a little bit closer to the bottom end. As we've talked about in the past, the other insurance line items show smaller year-over-year increases. Our expectation for the balance of the year is that for the next three quarters, we'll see the insurance line items be up in the neighborhood of 20% year-over-year. For the full year, we'd expect insurance to be up about 16% year-over-year. Your next question comes from the line of Brad Heffern with RBC Capital Markets. Your line is open. Yeah, thanks. Morning, everyone. On the property tax front, I noticed that, it was down 3% from the fourth quarter. Can you talk about what that's related to? Is it, you know, lower appraisals or appeal wins, or is there something else going on there? call that last year, in the fourth quarter, we talked about having been underaccrued for property taxes in the first part of 2022. We had a fairly sizable catch-up entry in the fourth quarter. What you can expect to see this year is much higher year-over-year property tax increases in the first three quarters of the year, and then moderating in the fourth quarter. We've said that we expect property taxes to be up in the range of 6.5%-7.5% for the full year. Your next question comes from the line of Haendel St. Juste with Mizuho. Mizuho, your line is open. Thank you. First, congrats to Jon and Charles on new roles. Ernie, it's good to be back. A A lot would you be missed. Jon, I'm going to go back to your comments earlier on. I think you mentioned working to find a responsible way to help add more supply. Just see if you can elaborate on what that means. Are you inclined to do more development partnerships or even do it on the balance sheet? If I could sneak in one, can you comment on the new SEC inquiry on page 55 of the 10-K, the inquiry into your compliance with building codes and permitting requirements? Thanks. Thanks, Kendall. I'll comment briefly on your last, which is we don't comment on any other legal matters other than to say that we always fully cooperate with any inquiries we get. In terms of new product pipeline and, you know, the opportunities there. We, you know, to date, we've been really cautious and careful around not putting the balance sheet in a position where, you know, we'd have to take, you know, maybe more of an egregious share of the risk in terms of how we want to build product. We really like our approach thus far. We are doing a lot of different underwrites and reviews on opportunities in the marketplace across a variety of, you know, builders and developer, potential partners. It's well noted that we have a really good partnership with Pulte Homes. We'll continue to do as much with Pulte as we can. They've been terrific. I would say that, you know, with the announcement of that partnership, what, roughly 18, 24 months ago, it's expanded to many other builders and developers coming to us looking for opportunities to grow together. You know, we've been able to be deliberate. We've been able to be picky about where we want to invest and why. I think we've been able to do it at a, at a risk basis that is very favorable to our shareholders, in terms of not having an outsized portion of risk, a bunch of land sitting on our balance sheet, et cetera. By the way, as it turned out, like very little Q&A. It's been on us with our investment management team here. We've added a couple of people over time, on the business debt side and also on the project management side. It's going really well. We're coming into these homes with really accretive bases that we feel good about. Excited to see where that, you know, continued chapter for our company's development and can have greater value. Your next question comes from the line of Adam Kramer with Morgan Stanley. Your line is open. Hey, guys. Thanks for the question. Yeah, best wishes to you, Ernie. Appreciate all the help over the years. Just wanted to ask about bad debt on kind of a gross and net basis. Maybe just kind of walk us through how gross bad debt in 1Q compared to 4 2 and then maybe the same for net. Then the areas where, you know, geographic areas, markets where you're still kind of worse than pre-COVID levels on kind of gross bad debt line. Maybe just kind of highlight for us which markets are kind of outliers on that basis. Yeah. With regards to Ernie, with regards to bad debt, what we saw was that our rent assistance that we received in the fourth quarter, the first quarter actually got cut in half. What's happening is that we're seeing it really catch up. You'll see what we report in our earnings supplemental data for the first time in a while that zero to 30 payment is increasing. It's about to 93%. We're actually seeing a nice improvement in the gross bad debt and not getting as much help from things like rent assistance as we expected. In fact, you know, the collections coming forward in the zero to 30 bucket were a little bit better than we had anticipated. We're able to clean up a little bit more than we anticipated in the first quarter. As we made the reference in our earnings release, that seemed to came in a little bit better than we expected for the first part of the year. That certainly bodes well, but it's early June, so we don't want to call it a trend yet. We're certainly happy with where it's at, not only for the first three months of the year, but for the first four months of the year. I'll turn it over to Charles, and he can talk a little bit about what we're seeing on a market by market basis. As Ernie said, you know, we're starting to see kind of a return to normal. All trends are generally positive. This is while rent assistance has gone about half of last quarter and 20% year-over-year. We're starting to get back into a normal rhythm. In terms of markets, about half of our markets are operating at their historical levels, which are great. There are a few markets that, because of kind of the lease compliance backlog in the courts and that It's a little slower, SoCal being kind of the largest of that. The LA County, LA City adjustment is favorable, and we'll see how that plays out. There's still some kind of the courts are backlogged there, it'll take a little bit of time to clean up. The other markets that are a little slower are Atlanta, Vegas, that's changing and adjusting quickly. North Cal, just the California courts as well. We have another handful of markets that are trending in the right direction, but not quite back to historical levels. We feel like we're moving in the right direction and things are kind of working themselves out. As we talked about on the last call, we knew bad debt was gonna be elevated in the first half of the year. We're trending nicely, and we'll see if we can continue to keep that momentum. By the second half, we'll be trending back towards where we wanna be in including this up. Your next question comes from the line of John Pawlowski with Green Street. Your line is open. Hey, thanks for the time. Dallas, I wanna circle back to the McCumber lawsuit. I know your views haven't changed where you do not think it has merit. Curious if the internal views have changed at all when trying to size the potential impact if you're wrong and things go south in court. Can you help us give us a sense of whether your views have changed on the potential financial impact for shareholders? There's no change in our view. We're really careful, guys. We don't want to comment on any pending litigation. No, it's just a fake run, and we'll continue to, you know, defend ourselves vigorously and believe that the claim is really without merit. Your next question comes from the line of Daniel Tricarico with Scotiabank. Your line is now open. Thank you. A question on the builder top line. It looks as though some of the 2023 and 2024 deliveries were pushed out to the following year. With the recent release, can you comment on the different components driving that? Thanks. It's just timing on projects more or less than anything. I think, you know, by and large, everything that we expected to take from a delivery perspective this year is on schedule. Some of it has to do with the timing in P&Z and some of the zoning commission things that we mentioned in my earlier comments. Your next question comes from the line of Keegan Carl with Wolfe Research. Your line is open. My apologies. Your next question comes from the line of Juan Sanabria with BMO Capital Markets. Your line is open. Hi, thanks for the time. Just curious if you could speak a little bit more on the acquisition side. Are you seeing any potential distress from larger portfolio owners given the change in rates and some financing maybe coming due? As part of that question, maybe if you could just comment on where you see cap rates today for assets that are transacting and how does that compare to your implied cap or thinking about your all cost of capital? Yeah. Hi, Juan, Dallas. You know, first on balance sheets, we really love, you know, our current cost of capital. It feels like on a real estate basis, you know, that our current cost of capital is not, you know, truly being valued where it should be. I would say, we haven't been shy about saying this, that we'll continue to look to expand our joint venture business and raise outside capital. We can still buy really good real estate, both new product, resale product and I guess potentially you could say M&A to your question. It's terrific for the REIT. It create a bunch of fee structures, promotes and things that ultimately, you know, FFO and AFFO for shareholders. It feels like the market today is, you know, on a new home basis, if you really wanted to buy volume, you're kind of in the low to mid 5s, would be kind of on an in-place stabilized cap rate. I will go back to your other question, which is there aren't a lot of meaningful opportunities there in the resale space. I don't think we've seen as much as people have wanted to think that residential was gonna implode over the last year. We've seen really good price stability, on the single-family housing side on a relative basis. You know, it was mentioned today in the journal, new home construction is making up about 1/3 of the resale market, which is about 50% higher than where it typically is, in any given year. homebuyers have done a nice job of helping support, you know, a transaction market in a way because they've been able to buy down mortgage rates and things like that. Not seeing a lot of distress from operators. I do think there could be moments of opportunity because if you don't have enough scale, if you don't have a significant portfolio today, I don't want to say that they're stuck, but it's gonna be harder to grow. I think scale is going to be more beneficial over the next couple of years, and it should benefit companies like Caliber in the REIT space where we have, you know, very low leverage and generally access and availability to different capital buckets of capital. I think we have a good track record here over the last 12 years of finding ways to meaningfully grow when those opportunities in front of us. Like I mentioned in my opening remarks, like we feel like we're ready. We've got, you know, between call it current cash and ventures and, you know, availability of credit. We've got $2 billion of dry powder. We wanna lean in when the right opportunities are in front of us. Right now it's just a more of a capital recycling period. Your next question comes from the line of Keegan Carl with Wolfe Research. Your line is now open. Just on your JV disposition, what was the driver and what was the average cap rate on what was sold? On the JV disposition is the question? On the JV dispositions. I mean, the JV dispositions are from our legacy Fannie Mae joint venture. The plan for that joint venture over the next many years is deploy the sort of homes, and for the most part when they're not rejoined. You're just gonna continue to see, you know, I'll call it direct upsell each quarter as they go forward. For our other JVs, we just finished the investment period for the 2020 Rockpoint JV, so we're far off from doing any sales there. For the 2022 Rockpoint JV, we're still in the investment period there. With regards to what we've been selling out of, out of Fannie Mae, we see the small number, and it's consistent with that on the balance sheet. Your next question comes from the line of Dennis McGill with Zelman & Associates. Your line is now open. Hi. Thank you, guys. Dallas, I guess just going back to the transaction market, I'd be interested in what you think breaks the stalemate because you're sitting here with a cap rate that's not all that attractive, but fundamentals are good. You're able to sell at an easy cap rate, attractive cap rate. Doesn't sound like inventory is gonna be coming to market with the lock-in effect. Other than the long end of the curve coming down and debt costs coming down, which probably brings with it some economic challenges, what changes the confidence for everybody out there to just transact that this is the new norm? Well, I think one you wanna have yields that, you know, make sense, right? I don't think you wanna see, I don't think our shareholders would want us to necessarily be super active buying, you know, yields that aren't very accretive. I also think that there's going to be. Look, you've mentioned a stalemate. To be fair, the last year has been sort of tricky. I think it's been tricky for private operators that are considering reach outs or financing activities, et cetera. I think that will spur some opportunities for us. I also think we've got the right approach with our new product pipeline. With that, those deliveries are gonna start to stack at pretty meaningful yields even at today's current cost of capital. I think the opportunity will sort of play itself through the marketplace as either, you know, one of a handful of things happen. Your point around the long side of the curve comes in and, you know, credit availability maybe helps enhance some transaction activity, see more in the resale space. I also believe that the combination of our new product pipeline, potential M&A, being a bit more active in the resale space as that starts to normalize, will all lend itself to pretty normalized years for activity. It makes sense to me that a lot of, single-family rental operators you've read it kind of well, they've all taken a pause. They wanna see what happens with housing prices. I think people are wanting to make sure that there's stability and price durability in the marketplace. It feels like it's there, and I think now it's just about identifying and executing on those opportunities. Your next question comes from the line of Steve Sakwa with Evercore. Your line is open. Yes, thanks. I think Charles had provided maybe the April renewal. I'm just curious if I missed it. Could you talk about where renewals are going out for May and June? Maybe secondly, could you just maybe comment on some of the larger occupancy drops like Las Vegas and, you know, I guess what are you seeing in some of the markets where the occupancy dropped more than the portfolio averages? Yeah. Great question. I did share where we went out on renewals earlier. For May, we went out in the mid seventh and June, kind of mid to high seventh. You know, we expect that to be kind of steady where we're going right now. Given the demand and kind of where we are with current occupancy, we're in healthy shape. To your other question, you know, Vegas, I mentioned it earlier when we were talking about the lease compliance. It's one of those markets that was having some bad debt challenges and that the backlog is starting to break there. You're getting a little bit of a spike in turnover. As we clean that up, it's put some pressure on occupancy. The other kind of below average was in Minnesota. They had some earlier cleanup on the lease compliance over the winter. You also have in the colder markets some seasonality that hits them a little harder. Those are two markets that, again, high 96s are not bad, and what we're starting to see is some increase in both of those markets as we go. With the healthy demand that we're seeing, you know, generally we feel like we'll be able to kind of get the ship straight pretty quickly. The rest of the markets are running nicely in the high 97s to 98s. Your next question comes from the line of Sam Choe with Credit Suisse. Your line is now open. Hi, this is Adam Kramer on for Sam Choe. Thanks for taking my question. I wanted to circle back quickly to the lease growth discussion. We were really encouraged by the lease acceleration, especially on the new lease side, going into peak leasing season. I was wondering if you've seen anything driving that demand, you know, besides the demographic shifts you've already discussed. Adjacent to that, you mentioned some technology upgrades. Are there any new initiatives that could possibly help accelerate your growth mill on that side? Yeah. Overall funnel's really strong. I mean, I think, as you look at it, the general demand for our products, given our location, schools, safety, all of that. The other thing that does stand out is, you know, move-out reasons to purchase a home is down. It's the lowest it's been in a while. We're kind of balancing that with some of the turnover. But I, you know, you look at current interest rates, it's natural that people who need a single-family home are gonna come to us, and that's what we're seeing. About 80% are, you know, rented prior and 77% are coming from a single-family home prior to coming to us. All of that is trending in a positive direction. It gives us, kind of good demand. You know, as we looked at kinda how we were able to accelerate through Q1, it does, as you said, put us in a healthy position going into the summer. You know, our thought as we look at this and we kinda set our perspective and said, you know, we gotta be realistic to where we were the last couple of years. While we're going into it maybe a little ahead of time, we do feel like there's gonna be a peak here. It's not gonna rise through the sky like we did during COVID. We like our position given our occupancy and the acceleration that we've seen to date, and we feel really good about it. Your next question comes from the line of Chandni Luthra with Goldman Sachs. Your line is open. Hi. Good morning. This is Amelia on behalf of Chandni. Thanks for the question. Could you talk more about the turnover expense overall, especially the resident turnover? Like how much of it was, you know, from normal seasonality and inflation, and how much of it was impacted by, you know, working through the delinquent units in California? What's your expectation, you know, on the growth for the rest of the year? Thanks. Thanks. Great question. This is Jon. Look, on turnover there are a few factors at play here. The first is that you're seeing a year-over-year increase in turnover rate, and that's related to what Charles walked through, which is, the return of our markets to more normal course mechanisms related to delinquency resolution. The second component is that the average cost per turn on those delinquency turns, as we talked about on the last call, can be materially higher than a regular way turn, sometimes to the effect of 40%-50% more costly. It would follow that they're likely to also take a little bit longer. I think the other, the other less, less influential factor is that, as Dallas talked about, with average length of stay elongating, you see a little bit more kinda normal wear and tear even in our regular way turns. I think, you know, those are really the primary drivers coupled with continued inflationary pressure that we're seeing in our markets. As for the balance of the year, as we've talked about, you know, we expect to see somewhat lower occupancy in 2023 than we did last year. That's primarily related to our expectation for a little bit higher turnover, and the expectation that, you know, it's gonna take us a little bit of time to work our way through our lease compliance backlog. I think, you know, big picture, we're very optimistic about how the business is performing. Your next question comes from the line of Jade Rahmani with KBW. Your line is open. This is Jason Sabshon on for Jade. Does levering new investments make sense at this point, or is it best to stay unlevered and figure out financing later on? Look, I can defer some of this to John. I would say, you know, we really like where our leverage profile is. We've worked hard to get it to a level where on a risk-adjusted basis, we're far better than we were five years ago when the business went public. I think we've used more leverage in some of our ventures, and that's sort of been by design. We've been programmatic and, you know, thoughtful about how to do that and when to do it. I think by and large, you know, the cost of debt out there isn't that great right now, even for an unsecured borrower like ourselves. I don't see leverage being, you know, a significant part of our near-term strategy to fund our growth. Your next question comes from the line of Jamie Feldman with Wells Fargo. Your line is open. Great. Thanks for taking the follow-up question. I guess I just wanted to get your thoughts on NOI margins. I mean, year-over-year, they're clearly down in most markets. Sequentially, they're a little bit more mixed, but definitely picked up for the portfolio overall. I mean, like, how do you see this trending through the course of the year or even beyond now that you know, you got a better handle on the expense side, especially with insurance and taxes, and a pretty good view on revenue as well? Yeah, I think it's a good question. You know, we're seeing a little bit elevated expense here in the first three quarters of this year for all the reasons we've talked about previously, and that's gonna put a little bit of pressure on margin for us, at least for the first three quarters of 2023. I think over the long term, what you've seen from our business is sort of a steady improvement in NOI margin over time, as we're able to extract more and more efficiencies in terms of how our property management platform operates, continue to harvest the benefits of our unrivaled scale and markets. I think we continue to be bullish about our ability to drive NOI margin higher over the long term. Your next question comes from the line of John Pawlowski with Green Street. Your line is open. Thanks. I just had one follow-up on the turnover and repair and maintenance conversation. John, so far this year and carrying out into spring and summer, is trajectory of R&M and turnover trending in line better or worse than you originally expected heading into this year? I think they're trending generally in line with what we've expected. You know, I think overall we're, you know, performing relatively well, maybe a little bit ahead of our expectations for the year. It's early in the year, right? You know, we wanna continue to see how things develop. I would say that, you know, we feel good about what we're seeing on the cost of maintaining side of things. Your next question comes from the line of Eric Wolfe with Citi. Your line is open. Thank you. It's actually, Nick Joseph here with Eric. You know, one of Sunbelt's, or one of the Sunbelt apartment companies, mentioned on their call that they thought starts should come down about 60% from current levels. Wondering kind of historically, when you've seen big swings in apartment deliveries, what's the impact on single-family rental operations? It's an interesting question. You know, we haven't seen a whole lot of it, and there's sort of two things on there. One, our customers are a little bit different. I mentioned, you know, duration of stay, and Charles talked about it as well, that, you know, we have, you know, customers that are anchoring around schools and transportation corridors. The customer profile is a little bit different. Now, on the price per square foot, SFR is so much more affordable, generally speaking, than comparative multifamily. It's really not an apple to apples comparison. Your next question comes from the line of Michael Gorman with BTIG. Your line is open. Yeah. Thanks. Good morning. Sorry if I missed it, but I just wanted to double-check. I mean, you maintained your operating guidance for the full year for operating expenses. Should we expect any kind of outsized impact in the second quarter just because of some of the extreme weather we've seen, especially in somewhere like the Florida markets? Does that change how you're thinking about the progression of operating expenses throughout the year, even within the maintained guidance? I don't think we're anticipating, you know, a material impact related to weather patterns. I think right now, what we're seeing in the business is a business that is sort of recalibrating as some of the structural impediments to us operating the way we normally would work themselves out over time. I think, you know, weather is something that we, you know, are always gonna have to deal with. I think we feel good about the processes we have in place, the ground game that we roll out to make sure that we are protecting our assets, and that we're well-insured in the event of some sort of catastrophic event. I would say that the impact is not expected to be significant. Your next question comes from the line of Anthony Powell with Barclays. Your line is open. Hi. Thank you. Just on Phoenix and Tampa, I think two markets that people were concerned about given a lot of the supply growth, both on the multifamily and single family side. Are you seeing very strong rent growth there? Maybe comment on those two markets. Yeah, this is Charles. I can jump in. Yeah, Tampa has been really strong for us. It's newly rent growth of north of 8% in Q1 and maintaining on the renewal side in the mid-8. Phoenix, while Q4 was a little down relative to the kind of high flying we had last year, you can see it's quickly kind of bounced back and we're at the 98% occupancy and the newly rent growth at 6.3. You know, in our top five as we look at the numbers. You know, to your point, Phoenix is a resilient market and we were able to bounce back, and we have great operators there. Tampa as well. Two strong markets for us as we look at it. Most of Florida has been really strong. The demand is really there, as we think about demographic changes. This completes our question and answer session. I would now like to turn the conference back over to Dallas Tanner for any closing remarks. We appreciate everybody's participation and look forward to seeing everyone at upcoming conferences. Thank you. The conference has now concluded. You may now disconnect. Please wait. The conference will begin shortly.