Financial Data and Key Metrics Changes - The third quarter 2025 corporate FFO per share was $0.29, in line with expectations [11] - Same-store NOI grew by 2.7% in the quarter, driven by a 1.4% increase in same-store revenue and a 70 basis point decrease in operating expenses compared to the prior year [11][15] - Average occupancy at the end of the quarter was 95.6%, a 20 basis point improvement from the end of the second quarter [4] Business Line Data and Key Metrics Changes - Same-store revenue increased due to higher average rents per unit and improved bad debt, which now represents less than 1% of same-store revenues [4][15] - The company completed 788 units during the quarter, achieving an average monthly rent increase of approximately $250 over unrenovated market comps, resulting in a weighted average ROI of 15% [5] - Same-store operating expenses decreased over the prior year, primarily due to lower property insurance and turnover costs [5][16] Market Data and Key Metrics Changes - Positive net absorption was observed in over half of the markets, encompassing 60% of NOI exposure [8] - Atlanta, the largest market, saw occupancy increase by 50 basis points, with asking rents up 5% [8][14] - New deliveries in IRT submarkets declined by 56% from the 2023 to 2024 quarterly averages, with supply forecasted to grow by less than 2% per year for the next several years [7] Company Strategy and Development Direction - The company will continue to evaluate investment opportunities, including value-add renovations, acquisitions, deleveraging, and share buybacks to drive long-term shareholder value [6][19] - The focus remains on optimizing near-term performance through stable occupancy, managing expenses, and investing in the value-add program [10] - The company is cautiously optimistic about a better operating environment in 2026, supported by a differentiated portfolio of Class B assets and a strong balance sheet [21] Management's Comments on Operating Environment and Future Outlook - Management noted that while market fundamentals are improving, it is taking longer than expected, but there is light at the end of the tunnel with increasing pricing power [10][21] - The company expects apartment demand to remain steady, driven by employment opportunities and favorable rent versus buy economics [8] - Management highlighted that bad debt has improved significantly, with expectations to stabilize sustainably below 1% of revenues [15][16] Other Important Information - The company acquired two communities in Orlando for an aggregate purchase price of $155 million, which more than doubled its number of apartment units in the area [5][17] - The company recorded a $12.8 million impairment on an asset held for sale in Denver due to recent market pressures [17] - The updated acquisition guidance is $215 million, reflecting only closed acquisitions to date, while disposition guidance is $161 million [20] Q&A Session Summary Question: Can you discuss the current supply pressures compared to earlier in the year? - Management noted that while some markets are experiencing softness, they expect movement early next year as supply pressures are waning [25][27] Question: What are the expectations for lease rate growth in 2026? - Management indicated that they expect new leases to begin hitting break-even points in the first half of next year, with cautious optimism for lease rate growth [51][55] Question: How are concessions trending in competitive markets? - Concessions are generally stable, with 23% of leases having some type of concession, down from 30% in Q3 of last year [56][60] Question: What is the company's appetite for buybacks given the current market conditions? - Management expressed a strong appetite for buybacks, recognizing the disconnect between market trading and implied cap rates [66][70] Question: Are there any labor availability issues affecting operations? - Management confirmed that there are no significant labor availability issues across their teams [110][111] Question: Have there been any shifts in tenant behavior that could influence rent growth? - Management has not observed significant shifts in tenant behavior affecting rent growth, but they are actively monitoring the situation [113][106]