Financial Data and Key Metrics Changes - The company reported core FFO for the quarter of $2.16 per diluted share, aligning with the midpoint of third quarter guidance [20] - The net debt to EBITDA ratio was 4.2 times, with outstanding debt approximately 91% fixed at an effective rate of 3.8% [21][22] - Adjustments to guidance included lowering the midpoint of effective rent growth to negative 0.4% and total same store revenue guidance to negative 0.05% [23] Business Line Data and Key Metrics Changes - Average physical occupancy improved to 95.6%, a 20 basis point increase from the second quarter [14] - New lease-over-lease pricing improved to -5.2%, while renewal lease-over-lease performance was +4.5% [14] - The company completed 2,090 interior unit upgrades, achieving rent increases of $99 above non-upgraded units [17] Market Data and Key Metrics Changes - Demand across markets remains healthy, with occupancy levels increasing 450 basis points over the past five quarters [7] - The company noted strong collections with net delinquency at just 0.3% of billed rents [15] - Markets such as Richmond and Washington D.C. showed strong performance, while Austin faced supply pressure leading to weak new lease pricing [15] Company Strategy and Development Direction - The company is focusing on high-demand, high-growth markets and significant redevelopment opportunities [10] - A total of 15 development sites with approvals for over 4,200 units are owned or controlled, with plans to start construction on six to eight projects over the next six quarters [10] - The company aims to capitalize on situations where developers face equity challenges, allowing for acquisitions at compelling bases [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute during the transition, anticipating an acceleration of the recovery cycle in 2026 [11] - The broader economic environment has introduced challenges, but strong occupancy and solid collections indicate momentum [6] - Management expects continued strong performance in renewals and a gradual improvement in new lease rates as supply moderates [19] Other Important Information - The company amended its revolving credit facility, increasing capacity from $1.25 billion to $1.5 billion [22] - The company is experiencing a competitive advantage due to access to capital and development expertise in the current equity-constrained environment [10] Q&A Session Summary Question: Recent pricing trends on new leases and market performance - Management noted typical seasonality in pricing, with new lease rates declining less than normal from Q2 to Q3, and some markets like D.C. and Dallas showing encouraging trends [26][27] Question: Thoughts on 2026 earnings and contribution from other income - Management indicated that demand fundamentals for 2026 appear similar to 2025, with expectations for flat to slightly negative rent growth [30][31] Question: Year-over-year comparisons for expenses in 2026 - Management expects real estate taxes to grow at a normal rate of 2.5% to 3.5%, with no significant increases anticipated in insurance and personnel costs [39][41] Question: Concessions in development markets - Concessions were slightly higher in Q3 compared to Q2, with typical concessions ranging from half a month to a month free [43] Question: Lease-up cadence for development properties - Leasing velocity has been slower than expected, but rents remain in line with original performance, with expectations for improvement in the spring and summer [46][49] Question: Capital allocation and development yields - Management emphasized a focus on generating compounded earnings growth and maintaining a steady dividend, with selective capital deployment in development opportunities yielding 6% to 6.5% [56][58] Question: Disposition strategy and potential for share buybacks - Management indicated a willingness to accelerate dispositions to improve portfolio quality, with a typical annual strategy to dispose of around $300 million worth of assets [62] Question: Understanding investor underwriting in the current market - Management noted that the cost of capital is a significant driver for current cap rates, with many investors underwriting aggressive rent growth to achieve returns [65]