Greetings, and welcome to the Invitation Homes Fourth Quarter 2023 Earnings Conference Call. All participants are in a listen-only mode at this time. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. As a reminder, this conference is being recorded. At this time, I would like to turn the conference over to Scott McLaughlin, Senior Vice President of Investor Relations. Please go ahead. Good morning, and welcome. I'm here today from Invitation Homes with Dallas Tanner, Chief Executive Officer, Charles Young, President and Chief Operating Officer, Jon Olsen, Chief Financial Officer, and Scott Eisen, Chief Investment Officer. 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 fourth 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 Tanner, our Chief Executive Officer. Good morning, everyone, and thanks for joining us. Our customers' needs are straightforward. They want to lease a great home in a safe neighborhood with great schools and easy access to jobs. They want professional services and genuine care, and they want flexibility and convenience that allows them to live more freely. 12 years ago, a lot of these options either didn't exist or weren't readily available. Today, they all do. Thanks to the hard work and the commitment of our associates, thanks to the mission of this company, that together with you, we make a house a home, and thanks to the hundreds of thousands of residents who have put their trust in us to do exactly that. Last year marked many important milestones for Invitation Homes. We returned to a more sustainable growth profile while continuing to expand and improve on the overall resident experience. It was a year in which we helped our home builder partners start construction on thousands of much-needed new homes across the country. It was a year in which we recycled over $500 million of capital, selling nearly 1,500 homes on the MLS, predominantly to homeowners. It was a year in which we executed one of the more significant portfolio acquisitions in our company's history. We are excited to continue this momentum into 2024 as we expand on what it means to live in an Invitation Home. By this, I'm referring to last month's announcement that our industry-leading operating platform is now available to not just our residents and joint venture partners, but also to large portfolio owners who are seeking the best in single-family property management for their residents and the best in single-family asset management for their investors. Let me be really clear here. We believe providing professional property and asset management services is both a logical next step for our business as well as a strategic, significant leap forward. It empowers us to accretively leverage our platform in a capital-light manner while helping us to achieve further scale, increased efficiency, and additional margin expansion for our company, and substantial savings and convenience for our residents. It all began with last month's inaugural agreement to become the property and asset manager on over 14,000 single-family homes. We expect this agreement to drive incremental AFFO of a couple of cents per share in 2024. This results from meaningful property management and asset management fees that we believe fairly compensate us for our unrivaled capability, scale, and expertise. In addition to this, we'll also learn an outsized share of value-add service revenues, such as from Smart Home, bundled internet, and other initiatives we may roll out in the future, along with potential future incentives based on the operating and financial performance we're able to drive over time. We believe this inaugural agreement is the first of what could be many such arrangements. As we pursue additional opportunities, we expect professional management to help us build and grow strategic relationships while we continue to become even more efficient through greater density, improved procurement, better resident engagement, and thoughtful use of data and technology. Most importantly, as in other REIT subsectors, we expect professional management to help us create a pipeline of potential future acquisition opportunities for homes about which we'll have an information advantage. In the meantime, we believe the fundamental tailwinds for our business will continue to drive outsized NOI and earnings growth relative to other REIT property types. This includes a well-documented lack of new housing supply across our markets as well as the strong demand from a surge of young adults who are just starting to reach our average new resident age in their late thirties. These younger generations often favor experiences over possessions and prefer convenience and flexibility over financial anchors and 30 year contracts. It's also important that we underscore the massive savings from leasing a home today versus owning. Using John Burns' fourth quarter data as weighted by our markets, it is $1,200 per month less expensive to lease a home than to own it. That's an average savings for our residents of over $14,000 a year. We see this reflected in our latest surveys, in which a substantial majority of our new residents say that our rents and services are affordably priced. One of these services, which we just started to provide last year, completely free of charge, is Esusu's Positive Credit Reporting Program. Already, over half of our residents have improved their credit score since enrolling, with the average credit score improvement of about 35 points. This could help our residents achieve thousands of dollars in lifetime savings on their borrowing costs, further enhancing the value proposition for leasing a home with us. In summary, we're very proud of the choices we offer individuals and families to live in a great home without the high costs and burdens of homeownership. We remain committed to investing in our technology systems, value-add services, and other tools to help our residents thrive, and we're excited by how we can continue to grow our business, further enhance the resident experience, and meaningfully broaden the professional services we offer. In this regard, we truly believe we are just getting started. With that, I'll pass the call on to Charles Young, our President and Chief Operating Officer. Thanks, Dallas. Our fourth quarter operating results were a solid finish to close out the year. In particular, our teams worked hard to deliver strong same-store NOI growth, occupancy, and resident service. In 2023, we saw a return to more normal patterns of rent growth, seasonality, and lease compliance. And as Dallas mentioned, it was a year of working towards several new milestones, including our large portfolio acquisition in July and getting prepared to provide professional third-party management services. Our local market teams continue to take all of this in stride. "It's what we do," they often tell me, and I'm very grateful for their attitudes and achievements. Thanks to these strong efforts, I am pleased to see how efficiently and effectively we have onboarded these new homes, engaged with our new residents, and rolled out desirable new services. I'll now walk you through our operating results in more detail. Same-store NOI growth of 5.6% in the fourth quarter brought our full-year 2023 same-store NOI growth to 4.8%. Same-store core revenues in the fourth quarter grew 5.9% year-over-year. This increase was driven by average monthly rental rate growth of 5.3%, an 11.2% increase in other income, and a 50 basis points year-over-year improvement in bad debt. That marks three consecutive quarters of improvement in bad debt. I'm pleased to see lease compliance continuing to move in the right direction, while at the same time also seeing our new residents' household income reach its highest level to date, just shy of $150,000 a year on average during 2023. This represents an income-to-rent ratio of 5.4 x and is indicative of the high quality, location, and desirability of our homes. Returning to same-store growth results, full year 2023 same-store revenue growth was 6.5%, while full year same-store core expense growth was 10.3%. The main drivers of this expense growth included the temporary cost of working through our lease compliance backlog, which drove higher property administrative and turnover costs, as well as higher property tax and insurance expense. By contrast, repairs and maintenance expense came in flat for the full year 2023, a testament to moderating inflation pressures and our team's ability to effectively control costs. Next, I'll cover leasing trends in the fourth quarter of 2023. As we typically do in the slower winter leasing season, we prioritized higher occupancy in the fourth quarter to better position a portfolio as we head into our upcoming peak leasing season. As a result, same-store average occupancy grew each month, averaging 97.1% in the fourth quarter. In addition, new lease rate growth was flat during the quarter, representing an expected return to more normal seasonal trends. While renewal lease growth of 6.8% was the highest we've seen in the fourth quarter, other than during the pandemic. As renewals comprise a substantial majority of our leasing business, this strong result drove a fourth quarter blended rent growth of 4.6%. I'll now also share our January 2024 same-store leasing results. We started the year off with an increase in average occupancy to 97.5%. In addition, January blended rent growth was 3.5%, comprised of renewal rent growth of 5.9% and a negative new lease growth of 1.5%. Early indications lead us to believe that new lease rates have already begun to turn positive again in February's activity to date. In combination with the favorable tailwinds that Dallas mentioned and the strong delivery by our teams, we believe we are well positioned to capture strong demand for our homes as we enter the traditional peak leasing season later this month, and to continue to provide the best resident experience in the industry. I'll now turn the call over to Jon Olsen, our Chief Financial Officer. Thanks, Charles. Today, I'll cover the following topics. First, an update on our Investment Grade rated balance sheet and the capital markets. Second, financial results for the fourth quarter and full year 2023. And finally, 2024 full year guidance.... Leading off with the balance sheet, I'll start with several of our team's key accomplishments in 2023. These include $800 million of senior notes that we issued at approximately 5.5% in August, as well as outlook or ratings upgrades from all three of our corporate credit rating agencies during the year. We ended 2023 with $1.7 billion in available liquidity, which includes $700 million of unrestricted cash and $1 billion of capacity on our undrawn revolving credit facility. Our net debt to adjusted EBITDA ratio improved to 5.5x as of December 31st, 2023, down from 5.7x as of the year prior. 99.4% of our total debt was fixed rate or swapped to fixed rate as of year-end 2023, with those over 75% of our total debt unsecured and no debt reaching final maturity prior to 2026. I'm really pleased by the meaningful execution our teams delivered last year and believe our balance sheet continues to offer us strong positioning to achieve our goals in 2024 and beyond. I'll now cover our recent financial results and year-over-year growth. Core FFO for the fourth quarter 2023 was $0.45 per share, an increase of 4.6%, while core FFO for the full year 2023 was $1.77 per share, an increase of 6%. AFFO for the fourth quarter 2023 was $0.38 per share, an increase of 5.8%, and AFFO for the full year 2023 was $1.50 per share, an increase of 6.3%. These strong results were primarily driven by higher same-store NOI during the quarter and full year. The last thing I'll cover is 2024 guidance. This is led by our expectation for same-store NOI growth in a range of 3.5%-5.5%, resulting from expected same-store core revenue growth in the range of 4.5%-5.5% and same-store core expense growth in the range of 5.5%-7%. Our same-store core revenue growth guidance assumes 2024 average occupancy will be similar to our full year 2023 result. In addition, guidance assumes same-store blended rent growth in the high 4% to low 5% range and continued improvement in our bad debt as a percentage of rental revenue to an expected range of 65 basis points-95 basis points. Our same-store core expense growth guidance assumes higher fixed expense growth to continue in 2024, with property tax expense growth in a range of 8%-10% and insurance expense growth in the mid- to high-teens. We expect this to be partially offset by moderating growth in our controllable expenses. From a timing perspective, we anticipate same-store NOI growth will be higher in the second half of the year than in the first half. All of this brings our full year 2024 core FFO guidance to a range of $1.82-$1.90 per share. This guidance assumes, as a base case, that we will acquire between $600 million and $1 billion of homes on balance sheet in 2024, mostly from our home builder partners and via portfolio acquisitions. We expect to fund much of these home purchases by continuing to accretively recycle capital from wholly owned dispositions in an expected range of between $400 million and $600 million. A detailed bridge of 2023 Core FFO per share to the midpoint of our 2024 guidance is included within last night's earnings release. Lastly, we provided full-year 2024 AFFO guidance in a range of $1.54-$1.62 per share. As a result of our anticipated growth in AFFO per share in 2024, last month, we increased our quarterly dividend by nearly 8% to $0.28 per share. In closing, we plan to keep a close eye on the capital markets throughout the year and continue our long track record of being disciplined and proactive. We'll prudently pursue opportunities for meaningful growth and accretive capital recycling, and we'll continue to lead the industry in our quest to provide the best choices, convenience, and overall resident experience for the millions of Americans who prefer to lease a single-family home. With that, we have now concluded our prepared remarks. Operator, please open the line for questions. We will now begin our question and answer session. To ask a question, please press star, then one on your telephone keypad. To withdraw your question, please press star one again. If you are using a speakerphone, please pick up your handset before pressing the keys. In the interest of time, we ask that participants limit themselves to one question and then requeue by pressing star one for a follow-up question. One moment please, while we poll for questions. Our first question comes from Michael Goldsmith from UBS. Please go ahead. Your line is open. Good morning. Thanks a lot for taking my question. The question is on the guidance, and what does the guidance assume in terms of new and renewal lease spreads as we move through 2024? And, you know, new lease spreads were flat in the fourth quarter. That's kind of below historical levels and was negative in January. What gives you confidence that you can kind of maintain your renewal spreads in this sort of environment? Yeah, thanks for the question. I'll start off. This is Charles, and just talk a little bit around where we currently are in terms of rate and occupancy. As we signaled on the last call, we purposely pushed for occupancy in the fourth quarter to set us up for a peak leasing season. We looked at the landscape back in September and October and decided to get aggressive on occupancy. What we were seeing was return to normal seasonality, as I mentioned. We're also coming off a little bit of a spike in turnover in Q3 from the lease compliance cleanup, which is a good thing, and it's part of why we have confidence in where we're going on bad debt. We also saw some local supply pressures, and when we step back, we know that history tells us it's best to be full going into peak leasing season, and that's exactly where we are. So today, we're sitting at 97.5% occupancy in January in a position of strength. And we're going to start to lean in on the rate side now. And what we're seeing already from January into February is an acceleration into February and into spring leasing season. As we lean in on that rate, you can also see that renewals have stayed steady. And as a reminder, that's the majority of our lease as we pull through, usually around 75%. Our blend in January is at 3.5%, which is really healthy. If you look back on historical rates pre-pandemic of 2018, 2019 or 2020, we're right in line where we want to be, and with acceleration into February, we feel really good. So what I, what I'll leave with you is we'll give an update in February on in March when at the Citi conference, but we like our positioning, and it's put us in a good place with our occupancy, and we'll go from there. Our next question comes from Jamie Feldman from Wells Fargo. Please go ahead. Your line is open. Great, thanks for taking the question. So I guess just to follow up on the new, the new lease rates. You know, if you look at the weakness you had in 4Q, clearly, those are some of the markets that have a lot more supply in the build-to-rent business. I mean, what are the odds here that maybe you get, you know, you get caught off guard, surprised at the downside, just how much supply pressure there really is in those markets, and it's just more than seasonal? Kind of what gives you comfort that the supply story won't be too bad, or maybe just give us your thoughts on supply in those major markets where you did see the weakest new rents? Yeah. So, you're probably calling out Phoenix, a little bit of Vegas. Two things I'd highlight: One, some of that confidence comes from our current level of occupancy. We're in that position of strength, so we can kind of hold and know whether we're not trying to solve for the occupancy, and we can lean in. We're also seeing that we've gotten occupied in those specific areas, so the demand is still there. That's what's great. We're still seeing strong demand. We wouldn't have been able to move occupancy from a low of 96.8% up to 97.5% if that demand wasn't there. So as you go into spring, and we're also, when you bring up the build-to-rent relative to our infill portfolio, that puts us in a really strong position to think about the same-store being able to hold, given that we're in that position of strength, and we're already seeing some acceleration from January into February. Our next question comes from Eric Wolfe from Citigroup. Please go ahead. Your line is open. Hey, thanks. For your bad debt guidance, can you talk about where you expect to start and end the year and how you get comfortable with that? So do you start at over 100 basis points and then kind of end around 50 basis points, or is there some point in the year where the bad debt should step down? Yeah, thanks. It's a good question. You know, we made great strides in reducing bad debt in 2023. If you look back to the fourth quarter of 2022, same-store bad debt was 170 basis points. So we improved 50 basis points year-over-year to the 120 basis points we saw in Q4 of last year. That improvement came against a backdrop in which rental assistance decreased by $57 million year-over-year. And between the first quarter of 2023 and the fourth quarter of 2023, we had four markets that improved bad debt by between 100 basis points and 265 basis points. We continue to see a healthy percentage of lease compliance move-outs, which allows us to keep increasing the proportion of residents who are making timely payments. In the fourth quarter of 2023, Atlanta and Southern California were two of our markets with the highest levels of bad debt, but they were also two of the highest markets in terms of lease compliance move-outs. So that, that's really part of the, the continued progress we're making with respect to bad debt. I think it's also important to point out that, you know, comparing our 2024 bad debt guidance with our 2023 actual result has a few challenges. Bad debt in the first quarter of 2023 was 180 basis points, which was one of our worst results since the start of the pandemic. That Q1 result caused an outsized impact on our overall 2023 full year bad debt results. Our quarter-over-quarter improvements in bad debt really began in the second quarter of 2023, and that improvement has continued every quarter since then. I think it's also important to note that the reasons for that outsized bad debt result in the first quarter of 2023 don't really exist any longer. We had restrictions. You know, at the first part of last year, there were restrictions in place in Southern California that prevented us from beginning to work through our delinquency backlog at. You know, it's not like it was a January 1st kickoff. And so over time, I think the moratoriums burning off and improvement in the significant court backlogs we saw in the first half of last year have really eased for us. Bad debt in the second half of 2023 was significantly better than in the first half, despite the fact that rent assistance was less than half it was, half of what it was in the first half. I would also point out that we are not assuming any rental assistance in our 2024 guidance. So I think if you put it all together, having the ability to enforce the terms of our leases from the start of the year in 2024, will allow us to continue to make steady improvements over the course of this year. But obviously, it's going to continue to be a major area of focus for us, and we're prepared to go out and execute. Our next question comes from Jeff Spector from Bank of America. Please go ahead. Your line is open. Great, thank you. Can you talk more about the new customer demand? I believe you mentioned in January, new rate was minus 1.5%. I guess, can you talk about that strength in demand, and then put into context how that number compares to prior years when you talk about normal seasonality, and then maybe what you would expect as we move into peak leasing, which I believe you said should start at the end of this month? Thank you. Yeah, no, great question. This is Charles. You know, as we mentioned, seasonality has returned. During the pandemic, it was really high occupancy, a high demand. It was abnormal. And if you go back and think about our pre-pandemic years, 2018, 2019, 2020, when we were full like we are now, we're really seeing that similar type of demand. That's seasonal, that slows down typically in Q4 and into Q1, and picks up right after the Super Bowl, which just happened. So we're in a place now where we're looking across the portfolio, we're seeing that we're occupied. We did what we wanted to there, and we see the demand. It's not the same exact levels that we saw during a pandemic, but those are artificially high. When you go back and you compare it to our 2018, 2019, early 2020, we're right in line with what we've seen historical, and we're in really good shape in terms of our occupancy and our blended rent growth going into now, accelerating spring leasing season. Our next question comes from Austin Wurschmidt, from KeyBanc Capital Markets. Please go ahead. Your line is open. Great. Thanks. Good morning, everybody. Charles, how have you been? Have you been offering any concessions to drive some of the traffic and build occupancy here during this softer part of the season? And maybe just to push back a little bit on your comment on renewal rates remaining steady. I mean, if I recall, you were sending out, you know, renewal notices in the 9%+ arena and ended up kind of below 7% for the quarter. So how's that dynamic also playing out early in the year as to where you're sending out increases and what you're achieving? Thanks. Yeah, a couple of thoughts there. You know, one, as we said, we pivoted to occupancy, that's on new lease and on renewals. And so while we went out, you know, in 8% and low 9%, in Q4, we told the teams, negotiate. We wanted to try to make sure that we're keeping occupancy high, so we've done that. As you look forward now, we went out in February in the low 8%, in April and May, in the high 7%. Again, if you look back historically, these are really great rates, and we'll see where that all kind of settles out. But when you think about where we're looking at the combination of accelerating new lease and holding steady on renewals, we look at that blend and say we're in really healthy shape relative to any historical period outside of the pandemic. Going back to your original question around concessions, we are running no concessions on any of the same store portfolio right now. We really talked about this on the last call. We pushed hard prior to the holidays, so we ran some concessions in November, prior to Thanksgiving, and then we took them off. And that was all around just trying to accelerate demand while it was still there, knowing that things slow down come December, January. Today, if there's any concessions out there, it might be one-off on some of our smaller build-to-rent areas where we talked about where there may be some more competition in a Phoenix or a Vegas. But outside of that, minimal concessions and none in the same store portfolio at all. Our next question comes from Steve Sakwa, from Evercore ISI. Please go ahead. Your line is open. Yeah, thanks. Good morning. I guess I wanted to pivot a little bit to expenses and just get your thoughts around the real estate taxes and insurance commentary that you put in the release. And if you do the math, I guess, on those numbers against your overall expense growth, it sort of implies something in the 1%-2% range for the rest of the expense line items. So just some comments around kind of that low growth rate on the other items would be great. Thanks. Yeah. Thanks, Steve. It's Jon. Good question. I think you're right. If you look at it, you know, our expectation is that we will see some moderation in controllable expense growth. You know, last year was a very heavy year in terms of turnover, in terms of all the things that we're doing in the background to work through our lease compliance backlog. And so from a comparability standpoint, year-over-year, we don't anticipate seeing sizable increases in those line items. I would also note that, you know, the operations team has done a fantastic job over time of continuing to make the R&M portion of our business more and more efficient. And I think, you know, as we look at the controllable side of the house, we feel really good about where we are. I think a big part of what makes our platform so powerful is the ability to continue to drive more efficiency. And I would also note that, you know, our entry into third-party management will, over time and distance, have benefits for the operating efficiency of our own portfolio. But I would also point out that that is not factored into our guidance for 2024. Our next question comes from John Pawlowski, from Green Street. Please go ahead. Your line is open. Hey, thanks for the time. I want to talk through the guidance for internally blended rent spreads of high 4% to low 5% expected for this year, but then you marry that with Dallas, your opening remarks on the massive affordability gap between the cost to own versus cost to rent. So I guess, why aren't we seeing larger rent spikes or the ability to push rents at a much higher clip? Is there a true price sensitivity among tenants, or is there any self-governing of rent increases going on in your platform? No, it's-- Hey, John, Dallas. Really good question. I think, you know, by and large, and I, I believe Charles would echo the same here, we're not seeing any degradation necessarily in demand. When you have vacant product on the market, especially at year-end, Charles, I think, summed it up really well, where you do have to compete a little bit more like we did traditionally in 2017, 2018, and 2019. It feels to us, based on what we're seeing with the customer, our average rent-to-income ratios right now are 5.4 x, so we're qualifying a much more qualified customer at about an average household income of $150,000. We don't necessarily disagree, John, that there could be some upside to those numbers throughout the year. We're certainly not baking that into our guidance. I think we've had the luxury of the last few years of thinking about massive tailwinds, putting pressure on rate. We are gonna view 2024, at least sitting here, you know, in early February, to be more in line with traditional years pre-pandemic. We're gonna see seasonality in the curve. I think the, the positives, though, to, to necessarily call out to your question are: we have a more full portfolio as we go into 2024, we have a customer that's more qualified, and we're far more sophisticated in the way that we capture that demand. So I like our chances as we head into the year. All things being equal, we do also want to be sensitive to the fact that we are in sort of a slowing growth environment, macro-wise, for the country, and just be, you know, sort of modestly aggressive in our approach. So I like where we're sitting with the year. I think Charles summed it up well from an occupancy perspective. Our goal is to go out and execute, manage cost controls, and make sure that we deliver. And I think you are right to sort of point out that there could be more demand in the market throughout the year. It's just too early to tell. We'll have a better sense as we get through peak and into the summer. Our next question comes from Haendel St. Juste from Mizuho Securities. Please go ahead. Your line is open. Hey, good morning. Thanks for taking my question. Dallas, I guess my question is on the property management platform. So, you know, the guide for this year includes $0.02 from Starwood that many of us weren't expecting, but I'm more curious about, you know, the opportunity, you know, the fees you're charging, are able to charge for this business, how we should think about the sizing of the opportunity, ability to scale it over the near term, and how you might be thinking about the risk and maybe perception for this in what is clearly a very sensitive political sector. The apartment REITs are facing a class action lawsuit over, you know, revenue management sharing or allegedly sharing of information. So with, you know, political silly season ahead of us, I'm sure this subsector will, you know, face incremental scrutiny. Maybe, again, just the high-level opportunity, the pricing, the opportunity to scale it up, and how you're thinking about some of the risk. Thanks. Thanks, Haendel. So, so first, I think what I'd sort of take a step back, and if you look at multifamily, professional management's been in place for decades. There are wonderful companies, both in the public and private sector, that do a really good job managing scale and creating services and predictability of experience that I think the single-family rental space has yet to achieve, except for a couple of us larger operators. I think our goal has been, over time, to be methodical in our approach to would we do this, and what would be the reason for doing so? One, you called out appropriately, which is I think there is a, an adverse ability to drive efficiencies for other professional owners of single-family rental, but to do it in a very deliberate and purposeful way on our behalf. So I think we've been pretty clear from the outset, as we've talked about this over the last couple of quarters and conferences, that we believe the size and scale of our platform is meaningful. We believe as the sector starts to develop professional services and ancillary opportunities for our customers, that you can provide that at a much better cost and help drive down the cost of living for people, but you need scale. And so for us, I think we want to work with professional capital, professional size, and create those efficiencies that we already enjoy in our portfolio for our customers. But by and large, over time, that will also have a compounding effect for us, that we can go out and price and procure opportunities that will be beneficial to our residents as well. In terms of kind of what that scale could be over time and those factors, look, we wouldn't do it if it wasn't an effective way to create shareholder earnings for our company and for our shareholders, but we're not in the business of looking at doing this in small scale. We want to work with professional capital of scale, and it ultimately becomes, I believe, a good opportunity for us, as the manager of those assets, to obviously have better market intel on what those portfolios are doing. It can inform us of better opportunities of how we can actually enhance our own businesses, and we can certainly drive efficiencies in our future pipelines for growth. The last comment I would make is, as you look at our platform today, we now have two markets that are well into, you know, the tens of thousands of units. That in itself will allow us to get creative on services we provide residents, efficiencies and economies of scale, and how we deliver those services. And I think ultimately, we're gonna learn a whole heck of a lot more about how our platform gets efficient, more and more efficient over time to drive further margin expansion. Our next question comes from Juan Sanabria from BMO Capital Markets. Please go ahead. Your line is open. Hi, good morning. Just a question on the acquisitions. You previously talked about maybe some freeing up of portfolios with some of the debt maturity issues, so for caps kind of wearing down or running out. Just curious on what you're seeing on the portfolio acquisition opportunity set to start the year. Thanks. Hey, it's Scott Eisen. Thanks for the question. Look, we are in the market right now, obviously, in dialogue with various people about opportunities. I think clearly we are seeing some owners of portfolios where, you know, what was very cheap debt a few years ago is now, you know, break even to negative on cash flow. And I think there are people out there that are looking to explore other opportunities, and we're looking at options on acquisitions that, you know, if accretive to us, we think could be interesting growth opportunities for us. It is clear that there are some people out there that, you know, never fixed and were floating on it, and those opportunities, I think, could potentially come our way. Our next question comes from Adam Kramer from Morgan Stanley. Please go ahead. Your line is open. Hey, guys. Thanks for the time. Just wanted to ask about the $0.02 kind of benefit or tailwind to the midpoint of the guidance that you included in the bridge from the third-party management. It seems like that's only from kind of the kind of formal managing of the 14,000 homes and not from any kind of expense savings or other synergies back to the owned portfolio. So just wanted to ask about, you know, maybe kind of what exactly is in that $0.02. And, you know, and then, again, maybe a little bit bigger picture, taking a step back, you know, what is the opportunity for maybe kind of the rest of this year in terms of adding additional homes to the managed portfolio? Thanks, Adam. It's Jon. That's a great question. I think firstly, the $0.02 that we outlined in the bridge, just to be clear, that is the net contribution based on the property management and asset management fees that we will earn, net of the incremental cost that we would expect to incur to manage those additional 14,000 homes. As far as what the opportunity could be over time and distance, yes, as we talked about, we believe that this will allow us to enhance the efficiency with which we manage our owned portfolio. I would say that those efficiency gains are not factored into our guidance. I think the reality is that we are going to, over time and distance, figure out how do we adjust our gearing model, how do we take advantage of the opportunities to scale, which are going to vary by market, and how do we think about ways to drive incremental opportunity, both for us and for those third-party portfolio owners? As far as what it could be down the line, I think time will tell. You know, I would say since we announced this transaction, there have been a number of inbounds from sizable owners of portfolios interested in exploring ways to achieve better operational and financial performance. And that's what we're here for. We're here to drive value for our stakeholders and for our customers by doing what we do, which is leverage the best platform in the business. Our next question comes from Daniel Tricarico from Scotiabank. Please go ahead. Your line is open. Hey, good morning. Another guidance question, a few quick related ones. I don't believe you've given this detail so far, but what was the revenue earn-in at the beginning of the year? You know, where is the loss to lease in the portfolio today, and if you have it, what is the embedded market rent growth for the year? Yeah, so the earn-in is about 2.5%-3%, and then loss to lease, I would say, is high single digits. Our next question comes from Brad Heffern from RBC Capital Markets. Please go ahead. Your line is open. Yeah, thank you. Can you talk about how you approach the property tax guide for the year? Obviously, the past few years you've been surprised on the millage rate. So does this guide reflect any offset there, or is this purely where you would expect valuations to go? Yeah, great question. I would say that, as we talked about on past calls, we have made some adjustments in terms of, you know, how we think about property tax. And I think ultimately, you know, as we've talked about, we are not assuming any improvement in millage rates. I think we are taking a somewhat more conservative approach, as I think our experience over the last couple of years warrant. And as we sort of work our way through the year, you know, we'll be able to report back on what we're seeing in a variety of markets. I do think it's important to remember that, you know, two of our three biggest markets, you know, we don't actually learn the final quote, unquote, "answer" until fairly late in the year. So I think we want to be mindful of what our experience has been the last couple of years, and that I think that's reflected in our current guide, and that's going to be reflected in how we may or may not adjust that over time. Our next question comes from Keegan Carl from Wolfe Research. Please go ahead. Your line is open. Yeah, guys, thanks for the time. So I noticed Pathway sold a home in the quarter, which I believe gives you three total homes sold in the program. Just curious if you could give an update on progress in general, how you see it scaling over time, and you know, what sort of expectations are baked in for more residents potentially buying that home? Hey, it's a great question. You know, Pathway, and again, we're a minority partner on the platform, so I want to be careful to speak on their behalf. But they've basically taking a cautious approach, kind of in the interest rate and mortgage cycle that they've been in and have been selectively deploying capital and sort of fine-tuning their business model when and where it matters. They've certainly continued to add homes, a lot in the new construction side of the world as well. But I think that that's a program that will continue to develop and get smarter over time. I know they're exploring some opportunities in shared ownership programming and things like that. So we view them as a terrific partner in terms of how we sort of probe the market and understand where the puck is going. I think as they have more to report on the early wins in terms of the categories and also the products that will lend themselves to the kind of the greatest upside, we're certainly keen on getting a little bit smarter and deciding when and where we might want to lean in. Our next question comes from Anthony Paolone, from JP Morgan. Please go ahead. Your line is open. Yeah, thanks. I guess just wanted to understand, you mentioned a high single digit loss to lease, but your new lease spreads are, you know, kind of flat to down a bit it seems. So I'm just wondering like how that works, and also just your thought as the year progresses, like, this new renewal spreads, the spread between those two numbers. Just kinda abnormally wide for, for I guess you guys and multifamily, and just trying to think, like, is there rent fatigue? Like, which side kind of goes either up or down, or does that converge? So this is Charles. As we talked about, you know, we set ourselves up here at the start of the year with occupancy at 97.5%, that we can start to capture that new lease demand that shows up here in February. And so when you go back, yeah, this is in January, a little lower than we've been, but we explained why we did that. That was a conscious effort. But we're set now to start to capture the demand that we expect will historically always shows up in the summer. We'll see where that goes to, but right now we're already seeing the acceleration, and I think we're in good shape, given our occupancy now to capture that. That being said, we're also been really holding steady on the renewal side at pretty healthy rates. Again, came down slightly as we were, you know, solving for occupancy, but we're still seeing steady renewal rates when you go back to anything that's pre-pandemic. And with that loss to lease, that's what gives us the confidence with our current occupancy to try to capture what's in the market. We'll see where it ends up, but we're seeing acceleration from January to February, and we expect that will continue into spring and summer demand. Our next question comes from Linda Tsai from Jefferies. Please go ahead. Your line is open. Yes, hi. What is the breakdown in the guide between new and renewal? Hey, Linda, it's Jon. We actually haven't talked about that, and I think we're gonna stick with what we did include in the guide, which is, you know, a blend for the year, high 4%, low 5%. Our next question comes from Anthony Powell from Barclays. Please go ahead. Your line is open. Hi, good morning. A question on, I guess, the cap rates in the MLS market. Are you seeing any change there? And also, your dispositions and cap rates still remain pretty low at 1.9%. What's the outlook for that this year? You know, it certainly feels. I'll let Scott add any commentary to this. It certainly feels like we can continue to sell our dispositions back into the MLS, you know, kind of in the mid to high threes, low fours, depending on the marketplace. Now, again, we have a much, typically a much more expensive home than most of our peers. So when we go to market with some of that product, there's massive demand from home buyers. And I think that's a little bit subject to where mortgage rates are at any given time, but that feels like a very accretive way for us to recycle capital. Scott, anything you'd add to that? No, I just, I would just add that, you know, we are continuing our dialogue with the national and regional builders, and, you know, we just have a growing backlog of opportunities to work with them on buying partial and full community deals. And I think we feel good about, you know, where the spread is on potential cap rates for us, and I think it's in, you know, consistent with, you know, what we're, you know, it's clearly, you know, call it in the high fives, low sixes in terms of where we think there are opportunities for that. Our next question comes from Jesse Lederman from Zelman. Please go ahead. Your line is open. Hey, thanks for taking my questions, and, congrats on the strong results. Just looking at your estimate for new home deliveries, looks like 760, 150 more than in 2023. But just becoming more of a focus for you, what's presenting-- what's preventing this from being even higher? Is it interest rates, or are you finding it more challenging to compete with primary home buyers, given the for-sale market is, is heating back up? In other words, are home builders kind of shifting away from selling to rental operators at all because of, how strong the for-sale market's been? Thanks. Good question. I think, you know, between me and Scott, we can give a little bit more color on what we're seeing there. I think Scott summed it up nicely, which is our home builder pipeline is continuing to grow. Now, we've talked about this over the last couple of years. I think a year or so ago, our deliveries were, like, 350-400. This past year was 700+. The number that you just quoted in the mid-700s is what we have currently on schedule to deliver. We'll certainly see other opportunities in closeouts with some of our you know, current partners and new partners that will happen throughout the year that aren't on schedule, would be our, would be our best estimate. Those cap rates are typically six plus in today's environment. Now, Scott can talk and give a little bit more color, but strategically speaking, you know, we're on the record that we have a terrific partnership with Pulte Homes. We continue to evaluate opportunities. Scott, you're talking to a number of other builders about some other pipeline additions, and I think I mentioned earlier in the call or yesterday with some media, we've got about 1,800 homes under contract, plus or minus another 1,000 that we're close to putting in our pipeline. Yeah, and the only thing... This is Scott. The only thing I would add here is that, you know, it's clear in our dialogue with the builders that they are recognizing that this is an important business line for them. And they clearly have their regular way sales that they're doing to individual consumers, but at the same time, they look at, you know, having an institutional partner like us across the table from them. It gives them the ability to just continue to grow. You know, think of it like fleet sales that somebody does with an auto company, and we're just another opportunity for them to continue to provide housing to America, and for us to be an incremental buyer, to give that incremental demand, and for them to continue to grow their deliveries, and for us to have opportunities to grow our platform as well. Our next question comes from Steve Sakwa from Evercore ISI. Please go ahead. Your line is open. Yeah, excuse me. Thanks. Jon, I just wanted to maybe circle back on some of those controllable expenses and just see if you could provide a little bit more color. You know, maybe within the 2023 results, you know, what sort of elevated cost did you incur for all this, you know, extra move-out and the delinquencies? And trying to just get a feel for, you know, the quantification of that savings may be moving into 2024, and how that might keep those controllable expenses down at that, you know, low single digit growth rate. ... Yeah, Steve, it's, I think the main driver is when you think about how the delinquency backlog flows through the P&L, you know, there's obviously a bit of an impact at the occupancy line. We talked about that last year. I think the other, you know, primary areas are things like property admin expense, which is really the property-level legal cost to sort of manage through the process of enforcing the terms of our lease. You've seen, you know, substantial growth in 2023 over 2022 in that area. And the other area is sort of turn OpEx. You know, as we've talked about, when we get some of these, some of these turns back from homes that had delinquency move-outs, you know, those turns can be 50% more expensive, and they can, you know, take some number of days longer to work our way through. I think when you look at 2024 versus 2023, I think the important thing is that it's not that those costs are going down, but that we don't anticipate, you know, substantial year-over-year increases. Really, you know, the costs are stabilizing. You know, we're going to work to try to improve upon what our experience was last year, but we still got some wood to chop. Our next question comes from Eric Wolfe from Citigroup. Please go ahead. Your line is open. Thanks. It's Nick here with Eric. Just a quick question on the balance sheet. Just hoping to get your early thoughts on the plans for the $2.5 billion term loan maturing early next year. You know, will you extend it, for another year into 2026, or would you look to put new swaps in place or refinance with longer-term debt? Yeah, great question. I would start off by pointing out that that term loan final maturity is in January 2026, so it's not a next year event. We don't have any debt reaching final maturity prior to 2026. You know, with respect to the term loan, you know, we are going to be having dialogue. We're already in dialogue with our bank group, and our goal is going to be to recast that facility sometime between now and summer 2025. We'll continue to monitor the rates market as we contemplate the timing of that recast. And at the appropriate time, you know, we'll also look at our swap book to adjust it based on, you know, what our pro forma debt maturity schedule might look like. But I will say that, you know, in the grand scheme, we feel very comfortable with both our relationship with our bank group. We feel very comfortable with our access to capital. We may not love our current price, cost of capital on new debt today, but we're going to do what we've always done, which is to be patient, be opportunistic, you know, watch the market, stay in constant dialogue, and when the appropriate time comes, we'll work our way through that term loan, and we'll move on from there. Our next question comes from Jamie Feldman from Wells Fargo. Please go ahead. Your line is open. Great, thanks. I mean, sticking with the balance sheet and a debt question, what are you assuming in guidance in terms of debt paydowns this year? I know you can pay down the secured loan early, and I think you have some swaps expiring at the end of this year as well. Can you just talk about exactly what's in guidance? Sure. So in guidance, you have $800 million of bonds outstanding for 7 months of 2024 that weren't in place in 2023. So, you know, we did that deal in August of last year. You know, that would, on its own, represent about $0.04. And then you're absolutely right. The $640 million 2018-4 securitization is freely prepayable at any time. You know, we have held off on paying off that debt, even following that bond deal, because we like having excess cash on hand. It gives us flexibility to use that cash either to retire debt or for growth opportunities. In the current market, you know, I think it's important to point out that we're earning on average about 5.3% on those excess cash balances, and you can compare that to the rate at which we've swapped that 2018-4 securitization, which is around 4.20. So in our guidance is the assumption based on the forward curve and, and sort of extrapolating what we think our money market yields could be, for timing of when we would pivot to, to potentially paying off that debt. Now, I think the reality is, we're going to do exactly what I just said in response to the prior question, which is we're going to watch the market, and we're going to take what the market gives. So, I don't want to give a sense that, you know, a specific path forward is prescriptive, but that's how we got to the $0.03 in the bridge. Our next question comes from John Pawlowski from Green Street. Please go ahead. Your line is open. Thanks. I'm sorry to belabor this rent growth question, revenue growth guidance, but I'm still confused. Jon, I want to make sure I understand your guys' math on loss to lease and earn-in. So if you just take the midpoint of revenue guidance, 5%, and strip out the benefit of bad debt, you get the low 4%. But then you say, loss to lease is high single digits, I know you only capture a portion of that, then the earn-in is 2.5%-3%. So how do you not get well above 4%, kind of organic revenue growth for this year? Am I misunderstanding your guys' loss to lease and earn-in definition? No, I don't think you're misunderstanding, John. I, I think what it reflects is the fact that, you know, we're here in early February. It's early in the year. There's a reason that we present guidance in a range, because there are a variety of potential outcomes, both positive and negative, right? And so I think we are cognizant of the fact that we are entering into what feels like a more normal kind of market rent growth environment between new and renewal rent. You know, we are looking at the pre-pandemic experience as, as sort of our, our model for how we think the curve is going to develop over time. But, you know, I think as Dallas said earlier, there, there is certainly the potential for a little bit of upside there. But, you know, we're going to wait and see how the year develops. Our next question comes from Juan Sanabria from BMO Capital Markets. Please go ahead. Your line is open. All right, thanks for the time. Just a couple follow-up questions on guidance. One would be: How do you expect churn or turnover to trend this year relative to last year, maybe relative to pre-pandemic? And then secondly, would be just CapEx guidance. What are you assuming in terms of growth rate on a per-home basis? Thank you. Thanks, Juan. It's Jon. I think from a turnover perspective, you know, similar to our occupancy guide, when we articulated that we expect it to be generally similar to what we saw in 2023, I think the same holds true for turnover in 2024. You know, the reality is we've still got sort of the tail of the lease compliance backlog to work through. But I think, you know, in the grand scheme, we feel very comfortable with the fact that turnover is trending much lower than it was pre-pandemic, and we think that's emblematic of a really strong demand backdrop. A favorable sort of affordability picture relative to homeownership that should, you know, benefit propensity to rent, duration of stay, and likelihood of renewal. With respect to CapEx, I think that, you know, that is going to continue to grow at sort of an inflationary rate. I think we have done a particularly good job in making smart asset management decisions about where and when it does make sense to reinvest capital into our portfolio. And in places where it does not pencil, what we found is we can sell those homes into an incredibly liquid end user market at cap rates inside 4% and then recycle that capital into newer assets that are going to have less of a CapEx demand over time. Our next question comes from Keegan Carl from Wolfe Research. Please go ahead. Your line is open. Yeah, guys. Thanks for the follow-up. Just curious, did you have any material impact in your greater Los Angeles area assets from the recent flooding? And if so, was that embedded in your guidance at all? Yeah, this is Charles. You're referring to the atmospheric river event that hit California. Look, we're still in the process of fully assessing, but early indications is that the vast majority of our portfolio really was not impacted. We have some work orders. There are not that many of them. We're getting through them. As you can imagine, it's around landscaping with trees and some roof stuff, but nothing really major. And our teams are great at responding to stuff like this. So we're assessing, but we don't see it as being a major issue. Our next question comes from Michael Goldsmith from UBS. Please go ahead. Your line is open. Hey, guys. Earlier, in the call, you made the point that you're seeing more competition in the build-to-rent type product versus the infill. Are you expecting a difference in performance in between your build-to-rent and your infill product? And then separately, you know, you've talked a little bit about pushing occupancy through the winter months. Is that dissimilar to what you have done in prior years? Thanks. Yeah. I'll take the second question first. The pushing of occupancy is what we've typically done, especially as we've had more experience in the portfolio on what's the best way to operate in a seasonal business, where in, you know, the winter and early spring, the demand is lower as you go into the winter, and then it picks up going into the spring and summer. Getting full in that period is important because it gives us that position of strength to capture the demand of new lease rent growth. And what's great about renewals, which is, you know, the majority of what we do, it's pretty steady throughout the year. So this is in line with what we've done historically. During the pandemic, we did not see that seasonal pattern. And what we're recognizing now is we're back to that seasonal pattern. Going to your first question, you know, look, build-to-rent portfolios, when you take down 100, 200 homes at once, it's like a lease-up, and there's gonna be a kind of an aggressive stance to get momentum to get that project going. It's a moment in time for that project or those that are within kind of driving distance that you may be competing. My point is, the majority of our portfolio that we've acquired over the 10 years is really more infill closer into job centers, and the majority of the build-to-rent are typically further out. Now, we're really smart around what projects we pick and how they balance to us, but you have to recognize that when there are a number of build-to-rent projects that are hitting a community or a MSA at one time, and we may have other homes there, it has an effect, especially when we're pushing on occupancy. And we wanted to make sure that we got to a place where we could get to the second part of this question, where he had occupied, and make sure that we're capturing the best rent growth out there. So it's something that we're going to pay attention to. Scott knows, and the team, they're understanding what these build-to-rent projects are, but long term, they're fantastic because it's a great experience for the resident, the amenities that come with it. For us, it's going to be, you know, less capital and repair maintenance over the short period of time. So, this is a balance that you get with the opportunity to take on build-to-rent projects like this. This completes our question and answer session. I would now like to turn the conference back to Dallas Tanner for any closing remarks. Thank you. We look forward to seeing many of you in South Florida in a couple of weeks. Please reach out to Scott or Jon with any questions if we can help. Thank you very much. We hope everyone has a great day. This concludes today's conference call. Thank you for your participation. You may now disconnect.