American Homes 4 Rent (AMH) Earnings Call Transcript & Summary

Good morning. Welcome to Bank of America's 2025 Global Real Estate Conference. I'm Jana Galan, and I cover the residential REITs at Bank of America. We're very pleased to have with us AMH's CEO, Bryan Smith; CFO, Chris Lau; and EVP and COO, Lincoln Palmer. Bryan will start with a few opening remarks, and then we can jump into Q&A.

Thank you, Jana. I'll start today with some brief comments on the single-family rental industry, and then I'll highlight a few key points specific to AMH. And then Chris will take over and maybe give a little bit more detail on the operations and talk about the update that we posted last week. To start, the SFR industry is in a great place and continues to benefit from very strong long-term fundamentals. Most notably, demand across the industry will continue to be strong as the large millennial cohort ages into prime single-family rental age. This, coupled with the challenging affordability dynamics, provides us with great support for long-term future growth within the industry. And AMH, in particular, is in a great position to continue its track record of outperformance in the residential space. We've strategically assembled a portfolio of high-quality assets in superior locations and have a well-diversified portfolio footprint around the United States. In addition, these high-quality assets are supported by a very robust and efficient services platform that's benefited from our continued investment in technology, which has created an efficient and very high industry-leading resident experience. And finally, on the growth side, we have the only vertically integrated development program in the single-family industry. We're on track to deliver over 2,200 homes this year of newly built rentals across our portfolio. And outside of development, we're staying true to our buy box and remaining patient. When we find opportunities like the one we saw last year, portfolio acquisition that we completed in the fourth quarter, we're prepared both from a balance sheet perspective and from an operational perspective to integrate those homes quickly and seamlessly. In a nutshell, AMH is very well positioned to expand on its success as we continue to innovate within the single-family rental industry. Now I'll pass it over to Chris.

Yes. Look, in terms of updates, from a high-level perspective, the business is performing very, very well for anyone that followed the quarter. I think you clearly saw that in results this past quarter. I think you would have clearly seen that in updates to the guide, which as you guys probably all took note was pretty much positively revised across the board. In terms of update today, we put out an updated deck. It hit the website on Wednesday, I want to say. The punchline there is, as you guys know, this time of year is the middle of move-out and turnover season, and the teams are doing a great job executing. August quarter-to-date same-home occupancy was 96%. Blended spreads in the high 3s, pretty much right on top of what we were expecting. At this point in the year, new leases are kind of following the seasonal moderation shape. Like we've been talking about, this year, we're expecting to see less moderation in that shape than last year and long-term average. And we see that being balanced by continued strength in renewals, which for this time of year and really for the balance of this year, renewals represent the bulk of our leasing activity and is essentially the name of the game as we're thinking about shape of top line for the balance of the year. In terms of -- in addition to operating updates, we always think that it's helpful to reinforce a couple of the key strategic differences that differentiate us and our results. Bryan touched on a couple of them, but just to recap them real quick before we kick it off into Q&A. As we think about the things that make us different, it really comes down to 3 key things: One, the portfolio, the commitment to diversification, like Bryan was talking about. Also increasingly important is the focus on single-family detached product. Like we all know, there's a lot of different forms of supply out there right now, apartment supply, flat BTR type of supply that is head-winding a lot of other residential portfolios differently and more than ours. And you can clearly see that reflected in our results. That's a function of diversification, product type. Demand is very important, like Bryan talked about, that would be number two. And then the third that we like to reinforce is the importance of capital allocation strategy and, importantly, access to the development program. I'd encourage you all to take a look at the updated investor deck that's on the website. I would check out Page 9, where you can tangibly and incrementally see FFO contribution coming from the various different components of the business. Same-store, which is, yes, meaningful, but also non-same-store contribution largely coming from the development program. And when you look at it over the last couple of years, it's actually 3 years on the slide, it's very enlightening seeing the contribution from both. We know our industry -- our FFO has led the industry, seeing the componentry is very eye-opening. So I'd encourage you to take a look at that. But to hand it back over to you, I think we'd say business is performing well. FFO expectations for this year, once again leading the residential sector by hundreds of basis points, and we continue to be really optimistic forward-looking.

Great. Thank you. Happy to take any questions from the room. But I guess maybe we could start with just if you could talk about the demand environment and maybe geographically, is it still kind of Midwest leading? What do you see on the ground? And if you could talk to the different markets?

Yes. Demand overall is in line with seasonal expectations. It looks a lot like last year, maybe a little bit better. When we look on a market-by-market basis, I think it's important to point back to something that Chris said, which is we're committed to this diversified portfolio. And these times like this are when that shows real strength. We have a lot of, I would call, differentiated markets that are performing extremely well. The Midwest is one of those, Jana. Seattle, while we have competition there, it's one of our new development markets. Salt Lake City continues to perform extremely well; again, a differentiated market for us. The Carolinas are doing very well also. There's been talk about Florida a little bit in the news lately when it comes to supply and demand and migration. Our Florida markets, Orlando, especially is performing very well. Jacksonville is right behind it. Tampa, while it seems to be experiencing a little bit more of the pressures that otherwise others may be seeing, our new development product in that market continues to be something that people are looking for and demanding and our communities are moving very well there also. So overall, very pleased with demand. We're pleased with the -- this diversified footprint in the markets that are still challenged, call it, Phoenix, San Antonio, that have a lot of that influx of all of the different types of product that Chris talked about. We're still committed to those markets long term. We see great fundamentals there and expect those to correct at some point when supply eases a bit.

And I'm curious, do you notice any type of differentiation in performance or demand between the scattered site product and the BTR communities?

We operate all of our properties the same way. We're still developing our community management strategy. One of the things that we have the unique ability to do in our communities is to match our deliveries in those communities with demand. It's a lot different than delivering, say, a horizontal type apartment, townhomes, or multifamily. So instead of dropping a building in a community with 30 units in it or 20 units in it, we match our deliveries to the demand. So in our communities, we'll take, call it, 4 to 6 deliveries a month depending on the pace, and we have the ability to shift that up and down. So it allows us to lease through without the use of concessions. And that's one of the differences between the scattered site portfolio and those communities. It's a real nice benefit that those provide to us.

Great. And you touched on the current occupancy, but it is move-out season. Can you kind of walk us through how you expect that to trend through year-end? And I know you also did some work in terms of the renewal schedules and optimizing when leases expire. If you could kind of explain that to us.

Sure.

Yes. Maybe that's the right place to start because that's really a key theme to this year, and that's our objective of optimizing the shape of how leases expire over the course of the year to best match up with the strongest parts of the leasing season. And so the right way to think about it is, historically, our lease expirations were typically split 50% first half of the year, 50% second half of the year. What we've been able -- Lincoln and the team have been able to accomplish is really shifting that earlier into the year to better match up with the strength of leasing season. So today, lease expirations are split more 60% first half of the year, 40% back half of the year. And importantly, the places that we've been able to move leases from is largely out of the fourth quarter, moving expirations out of the fourth quarter and shifting them into the spring time. So what that's doing for us is that it is increasing the proportion of new lease opportunities during the stronger rate environment time of the year. And then decreasing the proportion of new leases that get reset during a seasonally slower time of the year being the fourth quarter. In terms of what that means for this year, that's translating into less steepness in the back half of the year that we're expecting on new leases and also occupancy. For this year, full year expectation on blended spreads is high 3s. And then importantly, we're also expecting to see less moderation in occupancy in the back half of this year as well. Naturally, occupancy will moderate in the back half of the year. That's just a function of it being turnover season. There's naturally frictional time between tenant A and tenant B, but we're expecting less of that this year compared to last year.

Great. And a lot of us try amongst you and your peers to take a look at this type of blended spread activity and kind of an earn-in that you'd be starting the year at. I don't know if you can kind of walk us through how you think about those different components and kind of help us with the 2026 earn-in.

Yes. Based on the midpoint of expectations as of today, and I think expectation for earn-in going into next year, probably just sub 2% or so, not too far different than 2024 earn-in rolling into '25. I think this year's start of the year earn-in was more like 2%. So similar ballpark, probably a little bit sub-2%.

And if we could talk a little bit about supply trends in your markets. And I think the BTR is a little easier for us to track, but how do we think about more of that someone who can't sell their home potentially turning that into a rental unit. Yes, if you could kind of help us with the supply outlook.

Sure. I talked a little bit about supply in some of the specific markets. So maybe more generally, it's very shadow supply is something that's very difficult to measure, I think, for everyone because they can kind of come on and off. There's optionality. A lot of times, people will have their home listed for sale at the same time that it's -- they may also be willing to rent it. So it's a little bit challenging for us to measure. What we do is kind of start with a broad level of what all those -- all the different supply inputs are. And so that would be the build-to-rent, the multifamily, the single-family, maybe some of that shadow supply to the extent that we can measure it, and then we're going to drill down to AMH type product that is competitive directly with us. One of the important things that I think differentiates us from most of the product that's on the market today is just our commitment to, I think Chris mentioned the single-family detached product. There's a lot of townhome out there. There's a lot of this horizontal apartment. And more importantly, we've stayed committed to A locations, places where people want to be convenient to work. A lot of the development that's taken place has happened in tertiary markets. And that's the stuff that's going to be really challenging to move through over the next whatever period of time it takes to absorb that inventory. So for us, as I said, in most of our markets for competitive AMH supply, we're seeing little pressure in most of the places. The couple that I mentioned are the places where you've seen the biggest influx of supply in maybe some of our Texas markets and Arizona.

I guess maybe if we could look a little bit more at those markets. Is it all supply, is it the shadow supply that's causing an issue? Or if you could kind of help us understand what's happening specifically in kind of the weaker rent growth markets?

Yes. For sure, in Austin, San Antonio, it's just -- it's all supply. There's -- now there are some indications that depending on which reports you look at, there are some indications that, that supply, at least deliveries have peaked. I think the multifamily especially expected a little bit more relief in '25 than they saw and maybe that got extended out to '26 just based on the pace of absorption. So it has something to do with that. Again, the shadow supply is tough to separate out individually. But when you compound all of that together in a market like Austin, a lot of pressure. And then Phoenix is a little bit the same way. But again, Phoenix is a -- it's always been a great market for us. We continue to develop in Phoenix and the communities continue to perform well there. So overall, the most important piece for us is to just drill directly down to competitive supply that looks like AMH product in AMH locations. And that's the easiest way, I think, for us to get a picture around it. And again, most of the places, we're just not experiencing a lot.

And then maybe just kind of different portfolio operating trends. If you can give us an update kind of how bad debt is trending and then kind of any changes in residents taking a little bit longer to pay or on the margin changes with the resident profile, rent to incomes?

Chris, do you want to start on bad debt and then maybe I'll talk about the resident.

Sure. Collections and bad debt have been a bright spot year-to-date through the first 6 months, tracking a little bit better than our expectations. First 6-month bad debt was sub-100 basis points. That's moving in the right direction. As we think about the balance of this year, as many of you know, naturally, there is some level of seasonality to bad debt that typically ticks up a touch as we get into move-out time. So we'd expect that to, as I said, bump up as we get into the third quarter, but still heading in the right direction, which we take as a good indication of resident wherewithal and health.

Yes. And as far as portfolio goes, residents are coming to the platform still have strong incomes north of $150,000, 5x multiples on rent, 2 income earners, which gives us some comfort that there's redundancy in our households. And then the profile hasn't changed a whole lot. It's the late 30s resident who is kind of the peak of that millennial profile that Chris talked about, that's the support for our long-term demand. So overall, things are good. I think there's been a lot of question over the last couple of days about the jobs revision that came out and how that may be affecting our residents. If you look back at the period that, that covers, it's retroactive. And what we're seeing in our residents, despite all of that information being out there, it's already baked into the portfolio. Residents are coming in with, again, still high incomes, credit scores aren't suffering. I think the most -- probably the most concurrent place that you would see something coming into the portfolio as a result of job loss or difficulty to pay would probably be in our delinquency rates. Those continue to perform extremely well and are at least as good or higher than they've been for several years. So residents continue to be strong. And we also take comfort in the fact that a lot of our residents are employed in essential industries, whether it's health care, first responders, teachers. These are people who are members of their community that are involved in essential activities. And again, the redundancy gives us some comfort as well that we have some backup in the event that there are some disruptions in households. But so far, we're not seeing anything in the AMH resident.

Great. So maybe just to kind of tie it all together, earn-in on the rents slightly less than last year or potentially in line, occupancy a little bit better and then bad debt kind of stable.

We're talking this year or next year?

Just looking forward.

Looking forward. Well, yes, occupancy is at a stable point, similar year-over-year '24 into '25, 96%, low 96s or so. We like that area. Earn-in, yes, just sub 2% going into next year. We'll have to see where market rent growth ultimately shapes up going into next year. That will be a big factor. And then collections and bad debt, yes, heading in the right direction. We do know that there are still a number of municipalities and court systems that continue to process at slightly slower than kind of historical kind of normal time lines. That will probably still be a factor going into next year, but collection is definitely moving in the right direction as well.

Great. Maybe we could turn it over to kind of the development side. And if you can just kind of walk us through kind of the underwriting on development today. And I think there was a lot of expectations of tariff impacts. Just kind of curious how the year has played out thus far and how you're thinking about it going forward?

Sure. We set expectations at the beginning of this year to deliver the newly built homes at a going-in yield of the mid-5s. If you remember, if you followed, that was slightly lower in Q1 as expected as we caught up on some extra inventory that we saw at the end of last year. But we're on track for that. So those yields have improved as we progress through the year. With regards to tariffs, we're really pleased with the fact that our vertical construction costs are the same as last year, if not slightly down. So there's -- we've been able to absorb any impact that we would have seen from tariffs through a couple of different areas, optimization, maturation of our platform and then really an increased availability of labor that we're seeing because home starts from the other homebuilders are down or certainly below our expectations. So our team has done a fantastic job managing those vertical construction costs, muting any effect that tariffs might have. And we expect that to continue into the near future as well. So really pleased with that part of the business and the results that we've shown this year.

And then maybe just on -- we saw homebuilders had a pretty challenging spring selling season. I'm sure you looked at opportunities to buy in bulk from them. If you could kind of walk us through what their expectations are?

Sure. The biggest news there is, there's been a little bit of a change, at least we feel like there's been a change in sentiment. We've been looking at very large tapes from the national builders for as many quarters as I can remember, 7 or 8 at least. And as I talked about on the last call, we saw a little bit of a change over the last couple of months where some of the larger national builders were more willing to discuss price, more flexible in that negotiation. It's moved the yields, potential yields slightly, but they're still in the high 4s under our underwriting model. And when you lay that next to what we're able to deliver our own internal development, which is built to our exact specs in the exact locations that we want, built for long-term durability from a maintenance perspective and significantly upgraded from a lot of the other entry-level homes that are on these tapes, it really shows the strength of our internal development program as the right place to kind of form the foundation of our growth programs. Going forward, we're optimistic in that willingness. We see that continuing. We still have a long way to go before it makes sense to do anything at scale. But there's one other piece that's kind of surfaced of late that's unique to us, I think, and that is national builders and regionals being willing to talk about trading or selling us finished lots in some of their communities. So a lot of the stuff that we saw coming through on tapes over the past few quarters, think about mostly townhomes, a lot of attached, maybe 20% fit our buy box, characterized by kind of maybe B-ish locations. And the homebuilders are still having success moving product in their A locations, but just not at the same pace. So as they project fewer sales per month, they're starting to consider maybe we cut out a piece at the back end of the phase, sell finished lots to AMH, they can develop noncompeting product. We're not going to be selling houses. So it's a nice -- there's some nice synergies there that they're starting to surface. We haven't done anything yet, but that we're optimistic that there could be opportunities there as well. And we're the only one that's completely vertically integrated that can take advantage of those lot opportunities as they come.

And what would that kind of look like in terms of pricing? Would that help the kind of mid-5% yields? Or how should we think about that opportunity versus finished?

And it's nice, too, because it's -- the cycle time to get those houses delivered is obviously a lot shorter. If all the horizontal development is complete, we would be taking these lots down later in the cycle at, at least maybe even a discount to what we could deliver the internal development. So there's a nice savings on the time and the speed. But yes, the expectation is it's going to push those yields in the 6 to 6 plus.

Great. And then maybe turning over to -- you had great success last -- at the end of last year with the portfolio acquisition. Just curious kind of what you're hearing might come to market? Is it dependent on rates coming down?

Yes, we've been a little bit surprised at the lack of portfolio activity. We closed the one about this time last year, fourth quarter. And it was a perfect scenario for us. We were able to provide a comprehensive solution to an owner that had -- that wanted to exit the space. Because we operate so many markets, it was an easy overlay, and we have a very mature disposition program to call some of those assets that didn't fit for either one of us. So we saw that as a great opportunity to go out and kind of leverage that solution. But since we closed that particular transaction, it's been really quiet, almost kind of a wait and see what happens from some of the other portfolio owners. I think it's a matter of time before some more of those opportunities come in front of us, but not a lot is traded. And I have to say the activity, maybe even slightly less activity in terms of seeing different tapes than maybe even 6 months ago.

Is there a kind of enough out there to kind of assess like what's the bid-ask spread between where they want to sell these portfolios and where you'd be willing to buy them?

Yes. Not a ton of activity to nail that down with any precision, but there's an expectation. If you look at the way we're managing our disposition program and the fact that we can sell houses to end users in the 3 cap range, which would technically be the market value of a vacant house. There's a gap between the value of a vacant house to a homeowner and value to an investor from a cash flow basis right now. So bridging that difference is an important consideration. With a sophisticated seller that we had that we transacted with last year, it was pretty easy. But some of the smaller portfolios, which are also very good fits, we still need to close that gap. Their expectations for market value a little bit different than what it would show to an investor. That's one of the hurdles. But again, there hasn't been a lot of dialogue about it, but we do expect it to come at some point.

And then just curious, we're hearing home prices are coming down in Florida and Texas. Is it anywhere close to where these one-off acquisitions of how you kind of started the company makes sense or that's no longer going to apply in the growth strategy?

No, we'd love to. And that's one of the benefits we have. We've got a really nice foundation with the development program, and then we can be opportunistic either on the MLS portfolios or from a national builder perspective. The homes that are having the greatest price pressures are not necessarily the -- wouldn't necessarily be the top of our list. So you're seeing slightly inferior product. You've got a lot of attached homes, a lot of town homes, maybe a little bit further out, and they're seeing a little bit more pressure. But if you factor in like a true underwriting model on that, it makes it less attractive to us. So despite the fact that the home prices are coming down in the event that it would be a product that we like, it's a little bit crowded. So we don't see a great opportunity there in the short term.

Maybe turning it over to Chris, just help us think about the cost of capital and how you're kind of financing the developments, but also potentially if these opportunities do -- larger portfolio opportunities do come to market.

Yes. When we think about funding of the development program, it's a really important topic. I think a lot of people in this room have heard us kind of broken record the intentionality we have there in terms of how we have sized that program such that it is fundable without any need for incremental equity as we think about future years of development pipeline, no need for equity and minimal-ish amounts of incremental debt. So the primary funding blocks for the way that we have the development program sized is retained cash flow from the business, recycled capital from dispositions, which today, as Bryan mentioned, is screening very attractively selling with dispo cap rates in the 3s and then some level of modest incremental leverage capacity off of the balance sheet as EBITDA grows, which is really important in terms of dependability of funding sight line to the development program. What that then in turn does is means that incremental forms of capital, whether it be incremental debt or equity for that matter, become opportunistic weapons to think about additional opportunities for growth, whether it is if things on a one-off basis end up making sense, opportunities to buy from builders make sense. Portfolios, we love the strategy and idea of portfolio consolidations. It's a great way to essentially match timing against then cost of capital; again, when the math makes sense. And it's a fantastic value creation opportunity for us as well, using the fourth quarter portfolio as an example that Bryan was talking about, that portfolio under the previous owner was being managed by 4, 5, 6 different local and regional third-party property managers, doing a fine job. They just cannot operate at the same level of standard that we can and someone with 60,000 units can. And so based on in-place cash flows, we bought that deal in the low 5s. Over the first 12 months, as we overlay our pricing acumen, collection processes, expenditure management controls, our expectation is that yields out of that portfolio should grow into the high 5s, if not even potentially close to 6 as operations come up to our level of standards, again, creating value that is unlocked by bringing those portfolios onto our platform, which represent really unique opportunities.

And I guess just when you think about your cost of capital relative to this kind of mid-5, are you getting enough of a premium for...

We are. And again, that comes down to how we have it sized, right? If we think about 2/3 or more of this year's development spend is coming from retained cash flow out of the business, disposition proceeds in the 3s and incremental cost of borrowing in the 5 to low 5s, blended in, definitely.

Great. And then I believe you have a final securitization coming due. Maybe if you can kind of walk us through the plan.

Yes. That final securitization is actually scheduled for payoff at the end of this month. Very excitingly, that represents our last securitization on the balance sheet, which means by the end of this year, the balance sheet will be 100% unencumbered, which has been a goal of ours basically since the beginning. Happy to see this day come. When that is paid off, that frees up another 4,500 units or so of previously collateralized homes that can now be freely reviewed by our asset management program and considered for disposition. To give you some context in terms of the securitizations that we've been paying off of the balance sheet. Last year, we paid off 2 securitizations. This year, we will -- with this last one, we will have paid off 2 securitizations this year as well. That frees up a total of about 18,000 homes that can now be freely reviewed again by the asset management program. Our best guess is plus or minus 10% of those could be disposition candidates essentially helping to fuel our pipeline of disposition opportunities over the next couple of years as we think about various different funding sources.

And you've kind of talked about this has been a big goal of the company. Curious from the rating agency standpoint, how are they thinking about the fully unencumbered portfolio?

That's a good question. It's a positive. And you can see that in our S&P outlook that was moved to positive a couple of months ago. This was a key part of that discussion. So we are mid-BBB positive with S&P, Baa2 with Moody's, optimistic that Moody's will share S&P's view soon in terms of shifting of outlook.

Bringing down that low 5.

Yes. Well, I will say, the market -- anyone can see this from our last couple of executions in the market. I would say the fixed income community fully sees in respect to where the balance sheet is. The balance sheet in terms of leverage, low 5s, nearing 100% unencumbered, very much screens high BBB territory. That's where bonds are pricing for us currently, but I think it's a nice validation of that.

And then maybe just anything new on the regulatory front?

Yes. The regulatory front, just kind of zooming out, there's been a distinct change in kind of the outlook towards our industry, I think, over the past 6 months with the change in administration. And there's a lot of talk these days about this new focus on potentially declaring a housing emergency later on in the year. We're not exactly sure what that means or what effect that's going to have. But we're encouraged by the fact that it seems like there's more focus on the problem, the supply side of the housing equation rather than discussions about what was wrong with the existing home stock and problems with interest rates and so forth. So we're encouraged that people are focusing on the right things. And these conversations are similar to conversations we've had within local municipalities, with governors of some of our key states to try to figure out ways to ease up on regulations to allow us to get permits quicker to cut down on all the development fees that have really grown substantially over the past 5 or 6 years. So we're encouraged that I think they're focusing on the right things going forward. Down at a more local level, there have been a number of nice measures passed in Florida, Georgia, North Carolina and Texas that help us with managing trespassers and some other things. There's been some good progress on that over the last couple of years. But again, the focus, I think, is moving to the right place, and it's changed distinctly over the past few years from a focus on institutional owners. And again, we're in a very unique position in that we're part of the solution, too. So we get some recognition for that as well.

Okay. Last chance for any questions.

About your insurance exposure and like what you retain, what kind of risk you retain that kind of trends for insurance costs?

Sure. So for this year, our insurance renewal is done. It was done beginning part of this year in February. Our year-over-year premium change was a decrease in the mid-single digits for this year. I think as everyone knows, coming into '25, I would say the insurance kind of market and landscape is -- was in a better, healthier place coming into this year than coming into '24. And I think what that helped the insurers to be able to do was differentiate between good performing risks like ours versus some of the other risk-producing sectors out there elsewhere, and you saw that reflected in our renewal down mid-single digits. In terms of what we retain, we do run a small-ish captive insurance program, not huge, a couple of million dollars of premium per year. Going forward, we definitely see opportunity to increase that responsibly, not shifting any terms of change in risk composition on the balance sheet. But for a portfolio like ours over the past 10 years plus, our insurance program has been profitable to our insurance partners every single year, except for the year of Harvey, right? One loss year out of 10 plus at this point. That's the type of risk that would make sense to retain a little bit more of captively, helping to bring down our insurance costs over time.

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Look, it's another form of capital allocation that we evaluate all the time. The difference is development isn't just a form of allocating capital accretively both to value and earnings. It's also a function of improving the portfolio, right? If you think about the quality of product that we are delivering via the development program, this is quality of product in locations that you just can't replicate or buy anywhere else. And we truly see it improving the quality of our stock and our asset base over time, especially when you think about the fact that a good portion of that capital is coming from disposing and selling otherwise underperforming kind of lower-performing assets out of the portfolio, really creating a refreshing effect to our stock and portfolio over time. So a lot of different kind of benefits to the development program. Share buybacks are something that we evaluate all the time. I don't think we're there quite yet in terms of attractiveness of taking capital away from the development program, but it's something that we do regularly think about.

And I have a few rapid fire. So when the Fed starts to cut, do you expect rates for long-term debt to decline, stay flat or rise?

Flat to slight decline.

Last year, the majority of companies stated they're ramping up spending on AI initiatives. How would you characterize your plans over the next year, higher, flat or lower?

Higher.

And then do you believe same-store NOI for your sector will be higher, lower or the same next year?

I'd say for residential overall, higher.

Great. Thank you very much.