Invitation Homes Inc. (INVH) Earnings Call Transcript & Summary

All right. Welcome to the 2:45 PM session at Citi's 2022 Global Property CEO Conference. I'm Nick Joseph. Michael Bilerman will be here in a second with Citi Research. Pleased to have with us Invitation Homes and CEO, Dallas Tanner. This session is for Citi clients only. If media or other individuals are on the line, please disconnect now. Disclosures are available on the webcast and at the AV desk. [Operator Instructions] Dallas, I'll turn it over to you to introduce the company and the management team, and then we can get into Q&A.

Thanks, Nick. It's a pleasure to be here. Thank you for hosting us. It's been a terrific conference. I'm Dallas Tanner, President and Chief Executive Officer of Invitation Homes. And to my left, I've got Charles Young, our Chief Operating Officer; and to his left, we have Tim Lobner, our Executive Vice President of Operations. To my right, this tall fella, who's joining me right now is Jon Olsen, also an Executive Vice President of Strategy and Finance for the company. I want to start with a couple of high-level comments. And then obviously, we'll make ourselves available for any questions you guys have. First and foremost, couldn't be more excited about the fundamentals in our business and also how the business is running as a whole. We provided a February update to investors and to those attending the conference. But we're starting to see new lease growth this early in the year at around 15%. Our renewals are starting to push close to 10%. And so there's kind of 2 things I want to highlight there. One, we're starting to see that gap. We've talked a lot about it over the last couple of quarters in terms of our embedded loss to lease in our renewal business. And while we still have a lot of ground to make up there, we're starting to see that gap thin. The second point is, just by way of reminder, the way we've built our revenue management curve for our business, we'll recycle about 65% of our leases between the months of March and, call it, early August. So the majority of our leasing activity is starting to occur. This gives us some of the most absolute pricing power that we have during the year going into the summer months. And I'm sure you're hearing it from some of the other residential companies, the amount of demand we're seeing in the business is just phenomenal right now in terms of both people's propensity to renew as well as the new lease rate growth and the pricing power as we're testing the marketplace coming out with new pricing. There's 2 other kind of points on the growth side, and then I want to take a second just to talk about a regulatory update. First, on the announcement that we made in Pathway Homes. This was a really strategic move by us to start to participate in the discussion around some of these alternative products that we're seeing in the marketplace, particularly around rent-to-own. Our partners at Pathway Homes are both people that we have known from when we put Invitation Homes together back in 2012, but also have had a lot of success with some of these social housing constructs over in the U.K. We're very excited about participating in that program. The vast majority of those customers ultimately do not take the option to purchase, but rather it's a very efficient way to get a more-than-qualified lessee into your business across quality real estate that begins to cash flow day 1. The second announcement that we've made centers around, as we've continued to try to look for ways to expand our access to capital in our JV businesses is the high-value venture that we announced on Friday with Rockpoint. Rockpoint, by way of reminder, has done an initial joint venture with us that centered in and around a lot of the same types of real estate that we buy on balance sheet. We did that for a variety of reasons when we started that venture, in large part to make sure that we are insulated from any of the noise around the pandemic initially. That joint venture will basically be done in early summer. And we would anticipate, those buys, which are still between about 5% and 5.5% cap on NOI going in, would then, once that venture being finished revert back to our balance sheet buying, any of those incremental assets we've been putting in the JV. With the high-value venture, we're actually going to target homes in price points between, say, $500,000 and $800,000 plus. This is a different customer with average rents that will be 30% to, say, 50% higher than the rents we have in place today. And there's a number of things we like about this category, particularly. One, we own real estate in those price points today. We bought a lot of homes between 2012, 2022. And a lot of our earliest buys in parts of markets where we've seen, obviously, a tremendous amount of home price appreciation as well as rate growth in those assets, are -- we're not able to target that with our -- call it, our balance sheet capital today. And it's a category that we have always wanted to add to. And so we think having a high-value venture initially will allow us to leg into more of those opportunities. A good example of something like this would be, if you look at our Dallas market, for example, we can buy homes in Plano and Richardson at these price points that lend themselves to more of 4%, 4.5% cap type of return, much different than what we're trying to currently buy on balance sheet. And so we look forward to that. Second, that customer today is much more inclined based on our own data to leg into ancillary revenue services and potentially take a lot of those services with them over time. So we view this as also a net positive. We'll continue to explore these different slugs of capital as they can be accretive to the REIT over time. And we wouldn't expect that this ever becomes a majority of our business, but complementary, too. We'll continue to generate great fees, both in property management and AUM, and it's super accretive to what we're trying to do overall in terms of shareholder return. The last piece that I wanted to spend a minute on is this updated -- how do I say it again, qui tam? I always get it wrong, qui tam suit that we were served at the end of January. Here's what we know about the case. So in the middle of 2020, there's a person behind Blackbird Special Project, LLC that has filed a suit, making a claim that we hadn't initially pulled proper permitting or done the right process with California cities around -- in and around our rehabs. There's a couple of points I want to make. First, in terms of permitting and in terms of scope of the type of jobs that we do, first and foremost, 95% plus of what we do is purely cosmetic. And we have processes for this internally when we go through homes and we scope and spec out the quality of the homes prior to buying. 9 times out of 10, if we ever get into a situation where a home has -- requires too much spec or scope of work, we typically will cancel those contracts and move on to the next opportunity. On occasion, I'm sure that we have general contractors that have had to pull permits historically, and we really feel good about the data that we have to support this. What's funny enough is even in the case, I believe the relator had mentioned that over 7% of his data that he had used using his own proprietary AI tool, and we don't know much about that at this point, had said that we have pulled permits 7% of the time. And candidly, I think that would line up with our expectations around when and where you would see those types of projects. The second part of what we wanted to address is the claim around property tax assessments. First, let's be really clear. Since 2017, we have only bought somewhere less than 400 homes in the whole state of California since our merger. All of our homes were either reassessed through the change of entity during our IPO in 2017 or subsequently in our merger with Colony, SWAY. So we've looked at that a couple of different ways, and we really don't see anything there to support that claim in terms of any sort of assessment or issue. And then lastly, as we've learned about this case, we've also learned that of the 18 cities name in the case, 8 have either declined to participate and the other 10 have gone through their so-called statute of limitations. They could still come back, I think, to the case in the event that they wanted to. But from our perspective, we want to stand behind the facts. We feel good about our facts, and we're going to use our counsel and the courts to work through this issue with California.

Dallas, effectively -- you're effectively saying in typical cases, 95% of the work you would do would be just typical cosmetic. Therefore, you would have pulled permits in 5% of the case. And so ideally, if you're saying that...

I think what I'm saying is I feel good about our facts, exactly.

Now if you step back, I mean I recognize it's a consumer-based industry, right? And so I don't think I've ever sent the complement to American Airlines after I got off on a flight or any airline for that matter. So I recognize that you're in a business, right, where you're renting and it does create a lot of potential news flow. But over the course of your time as a public company, this is not the first thing that's come up, right? And so I think the question has to be asked when you step back is, is there a bigger organizational issue, right? Because you can go back to like the broker opinions of value. You can go back to the FTC investigation, the Senate hearings, pushing renewals too hard. And so I think -- and I know you guys run hard because that was the whole focus of the first Investor Day with the Green Nike shoes. But can you just give us a little bit -- I've [ indicated a ton of value. ] So I don't want this to be negative, but help us give a little bit more what's going on?

Well, let me speak to a couple of things. First of all, we love our business in California. Let me -- we really love the market of California. Obviously, it's a trickier market to operate in. But we've had a tremendous amount of success there. The real estate that we own is terrific. But I would add that most of the noise that we deal with from a regulatory perspective tends to come out of California at the state level. I think, to your broader question, Michael, it's more of an industry issue, and it's really a cost of housing issue, if you're really being candid about it. We've seen a tremendous amount of creep in housing costs generally, not just in our business, but you've seen it across multifamily, you've seen it across housing prices. Builders are facing some of this. Builders are holding back sales right now because they don't have enough supply. We have to do, as an industry, a really good job of educating. And we feel like we do do a really good job of this. I think what we've come to grips with is, from the political side of things, we're not going to be able to tell certain sides of the political conversation to look at this objectively. Because even the data that they quote, and they have the right data, they do not quote the right data in terms of how much -- how many homes, for example, are purchased in a given year by institutions. Just for fun, on that point, there's somewhere around 6.5 million resale transactions and, call it, plus or minus 1 million new home construction sales in a given year, 7.5 million units, of which I would bet, through our trade association and the actual -- remember, we bought 4,000 homes last year, pretty de minimis at the end of the day, of which a lot of those are builder opportunities that we're sourcing. So I think the narrative that the industry buys more than maybe 100,000 homes in a given year just isn't true. And so I think there's -- one, there's education; two, we're not the only ones that get letters from committees and senators. Now I will also add, there have been a lot of great leaders at the federal and the state level that are actually getting in the weeds and understanding what's going on. We have really good representation on both sides of the aisle, quite frankly, with, I would call, moderate thinking leaders that really want to understand what's going on in the space. And then when you take a step back and you realize that there's nearly 18 million or 19 million single-family homes for lease, we really do represent a very small cog. I don't believe we have an organizational issue. I think our -- one of our challenges, and where we get picked on a little bit was our original sponsorship. When you partner with some of the best and brightest in the world at raising capital and investing in real estate, you're going to be on the bulletin board early. And so we've had a little bit of that that has probably been, I would candidly say, unfair through our process. But I will say, as a public company and having now been public for 5 years, everything we do is pretty open kimono, so to speak, in terms of how we source our product, what lines they come through, what we do in our fit and finish standards and then many people in this room have toured our product and can vouch for the cosmetic nature of what we do. We just got to do a better job of educating and continue to do the mission and work behind the scenes.

Specific to this lawsuit, and you said you feel strong about your -- the facts that you know, do you have to reserve anything for it now? And sort of where is it in the process? And how long could it take to play out? Because I do think it's creating a little bit of an overhang on the story. You certainly have some others that are trying to really use it as a way to negatively affect your stock. And so I'm just trying to understand where things stand.

Yes. On that last point, I mean, we have 0 interest in litigating this over Twitter. That's not something we're going to do. We're going to use the courts. We have great counsel. I don't believe we've done anything in terms of currently accruing. We've, obviously, just like anyone else in the room, thought through, well, what's your worst-case scenario here? And we don't know what that really is, but we view that in the -- even if you had an issue in the tens of millions, which we don't believe we have an issue, let me be really clear, we think we have a really good process and we think we have really good facts to support our case. But we're going to do that in the courts, not in the court of necessarily public opinion.

I skipped over our opening, which was 3 reasons to buy -- an investor should buy Invitation's stock over any other listed property company, not your direct peers, but any company?

One, I would say we have an amazing business in terms of the fundamentals, which I mentioned before. Two, especially if you look at today's price, to your point, it's relatively cheap, if you just look at consensus NAV that's provided by the sell side of things. And lastly, I think if you're going to make an investment in the fundamentals in any sector in real estate, seeing single-family rental professionalize in the earliest of innings is one of the last few sectors to do this. And so I think you have an opportunity to be very close to watching an industry, not only evolve, but grow and create greater efficiencies with which we can talk a little bit more about whenever you want to.

There are seats up here for everyone standing in the back. Why don't we start on point one, fundamentals. You guys did put out an operating update. Obviously, continued [ strength ] January and February. How are you thinking about pricing? And maybe we can tie it to the regulatory, right, particularly on the renewal side, kind of pushing renewals, just given your current loss to lease and the strong demand without kind of raising any additional issues?

Go ahead, you want to take it?

Sure. Nick, thanks. Look, we've been balanced throughout the pandemic. And you saw middle of last year, really new lease rent growth really started to take off. And just a reminder to everybody that renewals are priced about 90 days in advance. And so you're not going to be mark-to-market on the renewal side. At the same time, in this environment, as we just talked about, we need to be thoughtful around pushing renewals too hard. And so you've seen, since the middle of last year, we've steadily increased from about 6% up to almost 10% now here in February, and we're still seeing further acceleration. That spread to new leases -- obviously, the loss of lease that you're talking about, I think we'll work through some of that this year, but it's going to go on for a couple of years. And I see that as being kind of a derisking of the portfolio on the revenue side going forward. We're always very balanced. We don't have any hard caps other than what we do in California by the CPI plus 5%, but we do look at it by market, by submarket and then house by house with our local teams to make sure that we're not pushing too much on any individual family, but being thoughtful about how we capture and balance within the portfolio. And so there's going to continue to be a spread. You can see we brought it down slightly here so far in Q1 relative to Q4. And we'll see how the summer and rest of the kind of new lease and renewal side works out through peak season.

How do you think about capturing more of that residence wallet, right? A big focus has been on ancillary revenue, obviously, with large renewals. How do you think about the ability to also get other income?

Yes, big opportunity for us. I'm going to turn it over to Tim Lobner, who runs the ancillary side of our business. He's done a great job of setting up an infrastructure, put a team together, and we've really seen tremendous growth in infrastructure building that he can talk more about.

Thanks, Charles. If you recall, during our Investor Day back in 2019, we set some pretty big goals around ancillary revenue. And at the time, we had basically no ancillary revenue. This year, we're targeting about $45 million of ancillary revenue. We're well on our way. Last year, it was in the mid-25 to 30 range. Some of the areas where we're seeing a lot of success. First is pet revenue -- pet-related revenue. You read the headlines over the last 2 years, a lot of families have had pets joined their households. And so we're making it a lot easier for residents to be compliant. Our Smart Home program is also really taking off. We're in about 60% of our houses right now, and we are adding a ring video doorbell addition to our Smart Home solution that residents really like. Our air filter delivery program is another one that's really taking off. We're in about 50% of our houses where we're delivering a quarterly air filter -- high-quality air filter. Also a nice ESG story there as well, cleaner air for residents, but also lower maintenance costs on our HVAC system. We also offer some services that are required by the lease, but not force placed. Think about landscaping, that's a resident responsibility. Think about pest control. We're able to leverage our buying power to provide great solutions at discounted pricing for residents. Take, for example, our Terminix program that we've rolled out across the country. If any one of us were to go online and look at what it would cost to get a monthly service from Terminix versus what our residents see through our program, it's about a 30% savings. And so what we're trying to provide are lots of different programs where, as rent growth continues to be something we focus on, we're able to offset their overall cost of ownership or cost of occupying their home. We also have some exciting things coming in the future. We're going to be launching a furniture rental program. We're also looking at areas around moving costs. If you think about it, the average family spends about $2,000 a year when they move. And with about 85,000 homes, you can look at about 20,000 families moving in, 20,000 families moving out. And together, they spent about $80 million on moving costs. Interestingly, based upon our surveys, we hear that the moving experience is probably the hardest part of the leasing experience. And I think everybody in this room would recognize that to be true. There's a lot of things we can tap into to make that experience easier and look for revenue share programs alongside. One of the other nice things about ancillary revenue that most people don't realize is that some of these programs go on in perpetuity. If we bring a resident on, even if they move out, we continue to capture fees generated from that individual after they move out. So we're really bullish on the program.

In the joint ventures, are you trying to scrape all of the ancillary revenue versus sharing it with your partner? And is there a way to sort of enhance I think about like the self-storage business. You think about self-storage business, like someone like EXR takes the tenant reinsurance income and doesn't share that with their joint venture partner. And so how do you think like if you're going to grow more within that vertical, is there a way to even earn more?

Yes. We share until [ resident is in ]. So it's part of the kind of the standard structure within our joint venture. But there's no doubt, Michael, that as this part of our business evolves, it will lend itself to a lot of different opportunities. We're fortunate to have Joe Margolis on our Board. And so we're learning a lot real time in terms of how the storage business has evolved over time, and it certainly lent itself to some new thinking.

As you think about the operating platform, obviously, you've had the benefit of being able to build it basically from scratch over the last 10 years versus where we've seen apartments where they've been making pretty meaningful improvements on the operating platform, but also working with more legacy systems. Do you think there's still an opportunity from here? I know you're obviously very involved in kind of looking at new technology? Or is the vast majority of that value kind of been captured already, and it's more incremental going forward?

Maybe I'll just offer a comment and then I'll let Tim share a couple of examples, but we are still in the earliest of innings in terms of gathering efficiency. We've made a big push over the last couple of years to get our experience mobile. And we'll have a new version of our mobile applications that are actually enhancing what we currently have later this year. Remember, our Head of Technology and Digital is somebody we brought over from Hilton, who built all of Hilton's kind of fun tools of walking into the hotel and can you do keyless entry and other ways that you can make this experience that much better. And that's something that we have -- we've always had a history of innovating and thinking outside the box, I think, in this space, but we're really excited about what it's doing not only on the revenue creation side, but maybe, Tim, just take a second and share an example on the expense side.

Sure. So in April of last year, we launched the industry's first maintenance mobile app. And so a resident now can submit their work order, service requests through their mobile app. And it's interesting. We originally went into this with the idea that our sole goal was to allow a resident to communicate with us on their terms. We used to offer a call center, resident online portal and now maintenance mobile. And what we didn't realize that there were other benefits that would come from that in terms of greater efficiencies. One of the things we didn't realize was that the likelihood of a resident to submit pictures and videos regarding their problem in their home would go up dramatically. And so obviously, when you call in your work order by phone, you don't get a picture alongside that, right? We found that 65% of residents now that submit work orders through our mobile app, which, by the way, about 30% to 35% of work orders -- all work orders are now coming in through the mobile app, those extra pictures that come in, what they allow our maintenance technicians to do as well as the technicians of our vendors, allows them to diagnose the problem before they get there and sometimes even buy the part on the way. And the real meaningful statistic that we've seen is that the number of return trips needed to resolve the maintenance request has gone down by about 35%. That's meaningful, especially at a time when prices at the pump are certainly increasing, and there is a greater premium that we pay for efficiency of maintenance technicians. So we measure that in terms of number of work orders handled per day as well as number of unique homes visited per day, and we're seeing improvements in all those. The end winner of it all -- sure, we're winning because we're more efficient than we were a year ago, but the residents also really love the mobile experience. What we're seeing is an increase in the customer satisfaction scores because we do survey our residents after every single work order, and those have gone up as well. So we're pleased it's a win-win for everybody.

Dallas, I think the second answer of why people should buy your stock, was that it's cheap. We've received a couple of questions to that, just given where home prices are and the risk of rising mortgage rates. Why not sell assets and buy back stock instead of buying more assets today?

Well, I think, certainly, we want to keep all options on the table, right? But I would also add that the risk-adjusted return profile of our assets currently when you start to think about what we're seeing across rate in terms of the revenue growth and also the margin enhancement -- last year, I think we were close to 69% in terms of our core NOI margins. We only see that continuing to grow. A couple of years ago, when we were happened to be all together, we talked about this is a high 60s to maybe low 70s business. We have markets that are behaving close to mid-70s now in terms of scale, density and why it gets more efficient. So on a risk-adjusted basis, you'd certainly have to look at that. The other thing that I would just comment on in terms of -- trees don't grow to the sky. I've been on the record of saying that. But everything that we're seeing, whether it's the loss to lease that Charles mentioned, the homeownership equity that the average homeowner has in their home today on a relative basis, a more qualified owner suggests to me that the housing market, when you think about that, plus the lack of -- we're under built. It's a little bit different than when we had maybe the last slowdown in '06, where we were overbuilt. We're underbuilt by a couple of million units right now, and we have a more qualified borrower, and you have a homeowner that has a tremendous amount more equity in their home than they did then. So I just think that the nuance is different. While you can't predict exactly how the world is going to behave as evidenced by, say, the last 30 days of what's going on back -- over in the Eastern part of the world, I do think we're in a really unique position in terms of housing strength. It's a lot different to me than what it felt like 17, 18 years ago.

So how do you think about closing that valuation gap?

Well, I think we got to continue to keep our heads down and do what we do, which is we're going to continue to add great assets to the portfolio. And I recognize, Michael, to your point, some near-term overhang, maybe because of some of this California thing, but we'll work through that. We have a history of working through that. In fact, just in the last 1.5 weeks, we've been dealing with a class action, late fee issue for almost 6 years, just got dismissed within the last 2 weeks. And so California...

I thought you were about to throw another one in there that was still...

No, no, no. Good news. But I mean, look, guys...

It happens. I know you're a business, right? I mean...

It's just the nature of doing business in some of these markets, unfortunately. I think from an asset management perspective, we will certainly try to always find ways to mitigate risk. And are there markets that we should -- within a market that we should try to stay clear of over time? Sure. But at the end of the day, there's a fundamental issue of not enough housing supply, costs going up, we're all feeling it. [ We're all feeling it ] in our own housing costs. And unfortunately, that's being passed through in a lot of different categories. And I think when it comes to single family, our industry has been a little bit of a bully pulpit unfairly.

Maybe we turn to external growth. Obviously, I think you've talked about $2 billion, a lot of that on balance sheet, some through the JV and the new JV. How are you thinking about different channels and the cap rates you can achieve there today?

It feels very much like on balance sheet today, we can buy really good assets in the low to mid-5s. And we feel really confident in our ability to do that. We've done an excellent job building out a builder pipeline. We have a couple of strategic partners, one of which we always want to highlight, Pulte Homes has been fantastic as a partner. We've got our first couple of thousand homes in contract with them, working on another couple of thousand right now. We've got a number of different homebuilders that have actually approached us. The high-value venture that I mentioned before is perfect for our homebuilder partnerships. And that kind of price point between, say, $500,000 and $900,000, there's a lot of flexibility for builders in kind of those price points. Now we also don't want to stray away from things like the average footprint that we liked on this. We [ don't ] want to buy a bigger home, let's be clear. We want to more -- buy a more well-located home. And we've always been on the higher side of that spectrum in terms of price point and proximity. Those homes are going to trade in those low- to mid-4s, which I don't think makes as much sense on balance sheet given where today's price is. But I do think there's a lot of low, what I would say, capital out there that wants exposure to SFR, that has lower return thresholds, that we can offer really accretive opportunities too. And so I would expect, and I think, Michael, you may have -- we talked about this in the last earnings call. I would expect that our JV businesses will continue to get more efficient over time and distance. Not to take away anything that we want to do within the REIT per se, but we certainly can complement the REIT with that income stream, and it's a really capital-light model for us. And our efficiencies, our synergies, our NOI margins just get better and better and better.

How do you balance that with the benefits of simplicity?

More or less, it's the same product. To my earlier point, like -- you do want to keep it simple. I don't disagree. But we're not adding a bunch of bodies to do this work, quite frankly. If anything, we're leveraging the strength of the platform, which, to your point, we were able to build on its own, or using the technology in a way that's making our business more efficient. And candidly, the customer wants it. They're staying longer. One of the things that's been most remarkable about the last couple of years has been going into the pandemic, all bets were off in terms of what was going to happen. We recognized immediately that people are hunkering down and they were extending the maturity of their lease. That was given really quickly. What's since happened in terms of wage growth and some of the other inflationary things we're seeing is, our average rent-to-income ratios has gone from the mid-4s into the low to mid-5s. And that's something that we didn't expect either. So we have a more qualified customer paying somewhere between, call it, 18% and 22% of their monthly income on rent that actually lends themselves to some other thinking around some of these ancillary opportunities. And the larger our portfolio gets, the more we can lean in and use our procurement functionality to create better opportunities for the customer.

In the data, I think one of the pieces is that typically, you have dual incomes in your homes. Are you starting to survey your customers whether those jobs are remote jobs versus in-person jobs? Just trying to understand the demand drivers of people coming to rent with you, how much of it is someone moving because they can do their job from their home, how much of it is moving for a new job in one of these Sunbelt markets? And just a little bit more on the ZIP code analysis that you've been able to accomplish.

No. It's a great question. We do survey our residents each quarter as they move in. We don't have some of the granular stuff you just asked about specifically, but we do have feedback that 30% of them are expecting to work from home going forward. And because of that, they're looking for more space, which is why they want a single-family home. They need that extra bedroom. The basis of our portfolio is still the same. They want good school districts. They have families, pets. They want the backyard. Most of them are coming from single family. So we see that about 80% are moving from a single family or were in a rental before. We don't have the specific job like work from home or not. But it's clear that they're looking for the single family because they think that they're going to have the option to do more of that hybrid work and extra space is important to us. And that's why we're still seeing our 98% occupancy demand that we're seeing.

What's the biggest growth opportunity that you believe the market is not giving you credit for?

Honestly, I think if you look at our NOI growth over the last 5 years, and what -- some of the things we candidly talk about, we're getting more efficient because of technology. We're driving down costs in an inflationary environment because of our procurement functionality. And we've done a really good job if you look at the last 2 years of how we've mitigated expense growth. We've had almost flat expense growth in the last 2 years. So I think that NOI opportunity within the footprint of the portfolio that we have today is a differentiator. And we had a page in the deck just talking about the last 5 years. I think people underestimate how important scale and density in this business is.

And then what's your #1 ESG priority in 2022?

Focusing on getting a sustainability report out. That's one of the areas that we really want to focus on, Nick, in terms of starting to hold ourselves accountable. We've done GRESB now for a couple of years. And I would add as kind of 1B, hiring a full-time person to lead our ESG. It's been -- we've done it through committee with a few different people being involved for the first couple of years. And I think now we're looking for that lead.

We do have a specific question that we want to get back to, I guess, on the lawsuit. And it's really what's the first opportunity to be in front of a judge in terms of kind of dates that the market should be aware of? Just to better understand the timing of the potential lawsuit.

Yes. We've gotten that question. Here's what we know. As of this point, we're in the motion process, and we've moved -- we filed a motion to move it to federal court, so that we could deal with it in a quicker manner. We're being told by counsel that we can expect that we'll be in front of that at some point this summer.

I thought that was going to be the biggest growth opportunity that the market is not giving you credit for.

That's fair.

Rapid fire. Want to go? Yes.

What will same-store NOI growth be for the single-family rental sector overall, so not your company, next year in 2023?

There's only 2 public companies, obviously. So I think -- or 3, I should say, with Tricon who's here. I would just say high single digits, pushing double digit.

That's insult to Gary. He's like, "Oh, he's here, too." I mean, he's a big company.

They're a big company, a great company actually.

[ Don't diss ] on my Canadian friend.

Listen, it is a little different.

10-year U.S. treasury yield a year from now?

Okay. John says 2.30%. We are going to go with 2.30%.

And then finally, will the single-family rental sector have more or fewer public companies a year from now?

I'd say the same. I'd say probably the 3 that we just talked about.

Great. Dallas, thank you very much.

Always. Thanks for having us.

Thank you.

Thank you.