Financial Data and Key Metrics Changes - Same store revenues increased by 1% year-over-year, with same store NOI growing by 2% in the quarter [4][9] - Core FFO per share was $0.28, up from $0.27 in Q1 2025 [9] - Same store operating expenses decreased by 60 basis points compared to the prior year, fully offsetting softer revenue growth [5][9] Business Line Data and Key Metrics Changes - Renewal leasing showed strong retention, contributing to a modest increase in average occupancy [4] - Blended rent growth lagged expectations due to softer market conditions, with new lease trade-offs down 3.1% in the first half of the year [5][10] - Average effective monthly rents increased by 90 basis points, while bad debt improved by 20 basis points compared to the prior year [9] Market Data and Key Metrics Changes - Deliveries in the portfolio are tapering off, with supply growth expected to be less than 2% in 2026, a 43% reduction from 2024 [7] - Market conditions in Dallas and Tampa were noted as slower than anticipated, with increased supply impacting pricing power [44][45] - Strong absorption was observed in markets like Lexington, Columbus, and Oklahoma City, indicating potential for growth [46] Company Strategy and Development Direction - The company plans to recycle capital from older assets into newer communities with lower CapEx profiles [6][38] - An acquisition pipeline remains strong, with $315 million of additional acquisitions expected before year-end [7][13] - The company aims to maintain a balance between Sunbelt and Midwest exposure while focusing on growth in Orlando [65][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a multiyear period of improving fundamentals in the multifamily sector, with expectations for stronger leasing environments in 2026 [18] - The company anticipates continued strong demand for its communities, supported by declining bad debt and increased tour volumes [18] - Management acknowledged lingering supply pressures and macroeconomic uncertainties affecting market rates [30][57] Other Important Information - The company completed 454 value-add renovations in the quarter, achieving a weighted average return on investment of 16.2% [6] - The balance sheet remains flexible with strong liquidity, with only 16% of total debt maturing before the end of 2027 [14] - The company expects to close on two communities in Orlando for a total purchase price of $155 million, enhancing market presence [12][13] Q&A Session Summary Question: Can you share how you approached your revised outlook versus historical seasonality? - Management indicated that the new lease trajectory was based on comparing expiring rents with current estimates, expecting continued month-to-month improvement [21][24] Question: Why is there not a significant pickup in new lease growth despite high retention? - Management attributed this to ongoing supply pressure and macroeconomic uncertainties affecting market rates [29][30] Question: What are the common threads for the assets held for sale? - The assets are older, with higher CapEx loads, and the company aims to recycle capital into newer assets with better growth profiles [37] Question: Can you provide an update on market conditions and visibility for the back half of the year? - Management noted that Dallas and Tampa faced unexpected supply challenges, but strong absorption is expected to improve conditions moving forward [44][45] Question: How is the current transaction environment affecting bid-ask spreads? - Management observed that sellers are becoming more rational, narrowing the bid-ask spread due to high interest costs and lease-up challenges [62][75]

Financial Data and Key Metrics Changes - The total transaction volume for Q1 2025 was $7 billion, up 10% from the previous year, driving total revenue growth of 4% [6][7] - GAAP EPS for the quarter was $0.08, significantly down due to increased personnel costs, debt offering fees, and additions to the loan loss reserve [7][16] - Adjusted EBITDA declined to $65 million, and adjusted core EPS decreased to $0.85 [16][18] Business Line Data and Key Metrics Changes - Capital Markets segment revenues grew 25% to $103 million, with Fannie Mae lending volume up 67% and total agency volumes up 30% year over year [18][19] - The Servicing and Asset Management segment saw a 3% increase in servicing fees but total segment revenues declined 7% due to lower investment management fees and placement fees [20][21] - The research and investment banking business, Zelman, experienced a revenue increase of 129% to $11 million, driven by several investment banking transactions [19][33] Market Data and Key Metrics Changes - 88% of Q1 volume was in multifamily assets, indicating strong demand in that sector [8] - There is nearly $200 billion of equity looking to invest in North American commercial real estate, particularly in the multifamily sector [8][12] - The median priced home in America increased from $285,000 in February 2020 to $385,000 in February 2025, impacting the affordability of single-family housing [11][12] Company Strategy and Development Direction - The company is focused on expanding its market share with major lending partners like Fannie Mae, Freddie Mac, and HUD, aiming for an average production of $200 million per banker broker in 2025 [30][32] - Recent strategic moves include entering the hospitality investment sales space and opening a new office in London to tap into European and Middle Eastern markets [14][15] - The company plans to launch WD Suite, a web-based software aimed at engaging private clients and enhancing deal flow [27][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving annual guidance despite Q1 earnings being lower than expected, citing strong pipelines and market conditions [25][37] - The company noted that commercial real estate owners are under pressure to refinance and deploy capital, which is expected to drive transaction volumes [56] - Management highlighted the positive changes at HUD and the engagement of Fannie and Freddie in the market as favorable indicators for future growth [31][37] Other Important Information - The company incurred $10 million in expenses related to debt refinancing, loan loss provisions, and personnel separations during the quarter [17][18] - A quarterly dividend of $0.67 per share was approved, consistent with the previous quarter [24] Q&A Session Summary Question: Insights on investor behavior and underwriting assumptions - Management noted that there has been no significant fallout in deal flow despite market volatility, with investors eager to enter the market [42] Question: Expectations for GSEs hitting their caps - Management indicated that both Fannie and Freddie are actively competing in the market, which is a positive sign for achieving their caps [45][46] Question: Discussion on operating expenses and future cost ratios - Management confirmed that operating expenses are currently high due to volume fluctuations but expect to reduce the ratio as transaction volumes increase [53][55]