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

The 10:35 a.m. session at Citi's 2023 Global Property CEO Conference. I'm Eric Wolf, Citi Research, and we are pleased to have with us Dallas Tanner, CEO of Invitation Homes. 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. And as a reminder, the questions I will ask during the session will not reflect or imply user opinions for myself or Citi research and have been asked for informational purposes only. For those in the room or on the webcast, you can sign on to liveqa.com and enter code Citi2023 to submit any questions if you not want to raise your hand. Dallas Tanner, I'll turn it over to you to introduce your company, the management team and give some brief opening remarks. Thank you.

Hi, guys. It's good to be with everybody. Thanks for having us. Nick, you guys run a great conference, and we appreciate being in front of everybody. First, to my left, I have my 2 CFOs. I have my outgoing CFO, Ernie Freedman, who we all know and love; and our incoming CFO, Jon Olsen, who as many of you know. And so we have both in case one of them doesn't get the question right. The other guy will jump in. And then we have Charles Young, our President -- now President and COO to my right. So we appreciate having everybody with us. If it's okay, I'd like to just start with a few opening comments, Nick. First and foremost, business is really good. It's healthy. Occupancy is up 40 bps from December to February, we're sitting at 97.8%. Our February new renewal and blended rate growth of 5.7%, 7.8% blending to a 7.2%. It's extremely healthy for this time of the year. If you go back to like our 2019 numbers, those numbers are typically in the low single digits. So the fundamentals around demand just still continue to impress and feel very healthy. And our loss to lease increased plus or minus 4% by the end of February. Second point is in really our longer-term fundamentals around the business. Lack of housing in this country, as many of you know, will continue to put positive pressure on demand. We've had basically a decade of underbuilding. We have uncertainty in the market with development costs and cost of capital, cost of goods sold, all much higher than they were 4 or 5 years ago. So we think this is going to continue to unfortunately accentuate the problems with the lack of supply in the country. But then those with scale and density in the right markets, it should be favorable from a demand perspective. The aging of the millennial cohort, which we talked to many of you about over time. The average age of our resident is about 39 years old, has a combined household income of about $135,000. This is lending itself to a stickier duration of stay. Many of our markets now are pushing well beyond 3 years in average length of stay. And in our West Coast and kind of earliest markets where our business was established, we're starting to see that push into a fourth year, manifesting itself in much lower turnover over the last couple of years. And lastly, on that point, the growing affordability gap. As you look at the cost of ownership with rising mortgage rates, where things are going in terms of decisions around homeownership, it has created additional dislocation in the value proposition of leasing a single-family home for rent. Today, those averages in our markets are somewhere around $900, and that it is $900 more expensive to own versus to rent in Invitation Homes' product. Third point I want to make, as we think about this year and we've talked about this internally, a great deal is we have to control the controllables and yet maintain an opportunistic approach to growth as it comes in front of us. Our acquisition activity, primarily as we laid out in our guidance call, is generally mostly new product in that guidance that we have scheduled deliveries on in 2023, of which we put in contract within the last few years. Balance sheet is in a terrific spot, courtesy of Ernie and Jon's work over really the last 5 to 7 years. We have no maturities due until 2026, and our weighted average cost of debt is somewhere in the mid-3s. And on a net debt to EBITDA, we're inside of 6 turns. We're in a really, really healthy spot there. We're looking to outperform really in the near term around revenue and managing the expenses and some of the inflationary and transitory pressures most people in housing where construction are facing. So Nick, with that, I think that's to kick off and we'll open it up for questions.

Great. So we've been starting out each session asking the same question, which is what are the top 3 reasons to buy your stock today?

One is really cheap. Two, the residential fundamentals are about as good as any sector in the country right now based on that kind of long dialogue I just laid out. Things feel really, really good in terms of the macros. If you want to invest in housing or you have an ability to invest in housing, it's one of the more sure bets out there in my opinion. And lastly, I think we proved this during the COVID downturn, and I think we'll prove it now. I think SFR is much more resilient than other residential types. Duration of stay with the customer, the ability to bring in ancillary services and help drive down costs in other categories of their life is just something that we're just barely hitting the tip of the spear on. Our ancillary business this year will be close to $50 million, whereas 3 years ago it was next to nothing. And we see a lot of runway there as we continue to find ways to enhance the customer experience and drive additional value beyond your lease.

In terms of operations, you gave February update. It seems like things are still pretty strong, went from 7.4% to 7.2%. Can you -- based on what you're seeing today in signing leases today, in renewals, new leases, where do you think that's going in March and April? And maybe you can help us think about how the peak leasing season should end up.

Yes. It's Charles here. Look, we like the position. As Dallas said, 97.8% on occupancy gives us a really healthy kind of strength position in terms of capturing the market rate that's out there. We had acceleration from January to February on the annuity side from 4.9% to 5.7%, and we're seeing further acceleration. It's early in March, we're seeing further acceleration as we would expect, given the kind of seasonal curve. Post Super Bowl, this is when demand starts to pick up. And when you look at all our metrics across all the markets, good demand, good top of the funnel of pulling through. So that's looking good. And we're seeing good steady growth on the renewal side. Again, we're pricing those 90 days in advance, and so you get a little bit of a timing issue. But for March, we went out at 8%. And after that, going into April, we're in the 7%. So we're still at a really healthy rate given Q1 historically, as Dallas said. If you go back pre-COVID terms, these are just phenomenal numbers, which would normally be in the low single digits. We're pushing towards the 7% and seem to be maintaining. We'll see what the acceleration will be going into the summer, but we're optimistic given our occupancy and execution.

What would cause you to back off from that sort of 8% renewal level that you're seeing, just a higher rate of turnover, less acceptance? And sort of on the flip side, what would cause you to get a little bit more concerned? I mean, it sounds like things on the ground today are strong, but what would change your view?

Really, on all of our rents, we're just setting that market. And right now, the -- as Dallas said, there's an undersupply of our product that's being built. It's been that way for a decade now. Given the affordability gap, we're just seeing good demand and -- with there being a lack of supply and we have our great locations infill that others can't compete with. We're seeing good stuff. And I think right now, it's all around watching those dials and metrics and things are going in the right direction in terms of that demand and our execution and being able to capture.

In your loss to lease, you said went to 4% from 1% to 2%. So do you -- can we take from that, that market runs are already up, call it, 2% to 3% so far this year?

That's generally right. I mean, you could see it in terms of our acceleration from January to February. We normally would be a little flat month-to-month. That acceleration is healthy when you look back historically. The acceleration going to March is what we would normally expect, and that's continuing to happen. So yes, I think what you're seeing is that new lease side and demand, what's happening with the occupancy that we're starting to see some -- that market rate on the new lease side start to capture in the numbers. We'll see if we can kind of capture as much as we can going forward.

And I know it's early in the year, but any markets that are standing out in terms of sort of being stronger or weaker than initially viewed?

Yes. Florida continues to be a strength for us. South Florida here specifically has been really strong, demographic changes and all of that. Phoenix slowed down a little bit second half of the year, but it's starting to bounce back really quickly, which is what we expect, and that's been healthy. All our other markets is kind of across the board, they're doing well. the seasonal markets with the weather, the Denvers and the Chicagos, Minneapolis, they see a bit more seasonal slowdown, but we expect those to pop out. But outside of that, it's kind of across the board that we're seeing both health and strength on new lease and renewals.

And maybe in terms of L.A., Southern California specifically, where do you think sort of bad debt can get to? And by the end of this year, do you think you're going to be at a sort of normal run rate of bad debt? And does that sort of help your sort of 2024 numbers?

Yes. The way we've looked at it this year, the first half of the year will be a little elevated on the bad debt side. We have opportunity, especially in California and some of the other markets that have been slower in terms of the systems -- the court systems and process to clean up. But our focus in this first 6 months is to try to get as much of that through the system as possible and start to return back to normal in the second half. We're not going to capture our historical numbers this year. Given the L.A. County and Southern California noise, there may be a little bleed over into 2024, but we expect that most of the cleanup is going to happen this year. The good news that we're seeing is about half of our markets are running towards our historical bad debt numbers, which is great. That means when the system is working and the courts are opened up, we're able to get back to where we were. The courts -- the places that are in transition, we're working through. Again, we see this as more of a transitory issue and that by -- as we get through this year. Next year, we'll start to return to normal outside of the kind of blend of how long California takes to clean up, because even when we get to L.A. County, the courts do that take a lot longer. So it could push into the latter part of the year into next year.

Does this experience with California change your views on long-term ownership in that market?

Look, and I'm on the record with this, like there's some amazing things about owning residential in California. The margins are terrific. The demand is off the charts. It comes with the nuance around this stuff, Nick. I don't think it changes it programmatically for us and that we love what we have. We bought less than 400 homes there since 2017. So it's not like we've been investing new capital in that market. But yes, it may affect how you asset manage out of particular parts of the state over time, but nothing wholesale at this point. We still love the business there. The residents are terrific. It's just fraught with legal gymnastics from time to time, unfortunately. And outside of that, it's an amazing economy with healthy demographics and great job growth and GDP that's fantastic. So you want to be in those markets as an owner of real estate. I think just managing the civil side of what all the stuff Charles talked about has been proved a lot more difficult sitting here 3 years later after the pandemic. It just has gone a bit too long. And I think even generally, they know that. I think they're trying to work through it. It's just fraught with politics.

I guess maybe more broadly, has anything that's happened with COVID shifted your view of any of the markets out there just in terms of thinking about people can work generally where they want now, not everybody, but there's a lot more movement to certain markets as -- do you think that's sort of a permanent shift or a temporary COVID-induced shift?

Look, I think we got it right 12 years ago in focusing on the Sun Belt in the Southeast and getting as much concentration at scale as we could in these markets, not being distracted by like yields in the Midwest. We've got a little distracted with Chicago, but it's actually been a really good market for us the last 24, 30 months probably. I think if anything, we'd love to have more scale in the 16 markets we're in. We'd love to ultimately get some exposure maybe to a couple of new markets. You could argue we should be in San Antonio and Austin and Salt Lake and some of these higher-growing markets as you think about the next 10 years for the business. But no, I think by and large, we got it right. I think it was emphasized during the pandemic. And I think states that have favorable metrics around productivity, whether it's state income tax rates or abilities to bring in new product and new supply into the market are going to benefit over the long haul. And so we're going to continue to work with our partners to build as much new product as we can in these markets that are willing to have us. We want to build a ton of it over time.

I'll just add from an overall demand perspective as we survey our residents. They -- it's clear they're asking for more space. They want the extra bedroom if it's a hybrid environment. So outside of the -- going into markets, there is an overall strong demand for the single-family given the space and optionality that our school districts and job centers that we offer.

I was going to ask on scale, right? So you want more scale. What is the benefit from a margin perspective as you get that scale within an individual market? I recognize margins are impacted by property taxes. But if you just think about 1 individual market, what's the opportunity there?

Yes. If you look at -- we have a handful of markets that we are 6,000 homes or larger, South Florida being one of them, Tampa, Phoenix, Atlanta, South SoCal. You get to a place where you get the real economies of scale, and you can get some redundancy in terms of talent. If you lose somebody, it's the next person up and you can keep moving. You get some of that local density in terms of how we utilize our maintenance, our superintendence as we're taking in homes and growing in terms of leasing. So there's real benefit there. Our smaller markets, like the Denvers and the Dallases have an opportunity to try to grow into some of that scale. And there's some benefit. They're large enough now that we're at that base size where it's really effective and still healthy, but there's opportunities when you can create a second team and start to get some of that crossover. And then broader outside of the local density is that national scale that we have with our procurement power, our ability to think about pricing power on appliances and paint and flooring and all those things that drive our cost a little bit of a change in dollars that permeate through all of our homes really make a difference. So our national scale is a big benefit for us as well, and we continue to try to squeeze on that, especially in this inflationary environment. We can't stop it, but we can be better than others than a mom-and-pop or retail would have to deal with otherwise.

When you think about climate risk and resiliency and the interconnected issue of casualty insurance pricing, does that lead you to think about shifting capital in any way towards some markets away from others?

It definitely weighs into our thinking and sort of serendipitous were in Florida having this conversation. But you think about the way that insurance rates are moving. I'm sure you all have heard this from other real estate operators, this year is going to be a little bit more costly on the insurance side. I think to a degree, Scott, I think the challenge is, it's hard to pivot really fast. So I think it's longer and thematical. But I mean, again, if you invest more capital in Arizona, you're going to start to think about drought and water table issues. If you invest more in California, you're going to worry about earthquakes at some point. So it's not that there's like any 1 market that makes a ton of sense. I lived in Dallas the last 7 years, and my house froze twice in the last 7 years. So I think it's sort of the part of what we just have to manage. And I don't know that there's like an aha answer to any of it. Maybe you'd be more deliberate about which flood plans you're willing to be near versus not, if you're in Florida, for example. But I think just having a balanced and measured approach to kind of spreading that risk across the basket in your portfolio is really the way to do it. I think we, by and large, for the most part, have been pretty lucky and have been measured in kind of how we've done that. We've had some issues, but we haven't had anything that was overly intense where we couldn't manage and handle it. I think our operating infrastructure allows us to react to that type of stuff a lot quicker than most. The flexibility we have with 400-plus bands on the road, and relationships like Home Depot and Lowe's and some of our big suppliers who are literally in our business every day with their products. We can get sandbags and lumber and all that stuff in place so we can maybe mitigate some of that CapEx risk when there is an event. But in terms of how you think about potential exposure down the road, you'll just asset manage your way through it to some degree. I don't know if you guys want to add anything to that on the insurance side.

Was there a question? And if you could just repeat it, in case others can't hear you.

Sure. Dallas, you talked about controlling the controllables. And I'm just wondering the evolution of your industry in terms of preventive maintenance sort of practices and policies and how that's evolving for you and the industry to avoid unnecessary CapEx or premature CapEx.

Yes, I can jump in. Yes. So we -- our ProCare approach, which is the proactive maintenance, is key and it's been a big part of our success. I will highlight that, when COVID kicked in, we pulled back on some of that. We had to. We couldn't get inside people's homes, and we had to be thoughtful around a lot of interaction. So we're trying to get back on, caught up for times that we haven't been able to get in. And as we're dealing with delinquency, we're also not able to do what we call our PMOVs, our pre-move-out visits that usually allow us to get our homes back in better shape because we set expectations with the resident. This is what you can do to maximize the return of your deposit, and that gives us the home back in better shape. At the same time, we can turn it quicker. So we're back on that ProCare offense. But it takes some time with some homes that we hadn't seen, and we're trying to get through this cleanup phase that we're in right now. I think that's a big part of our business. It's not only on the exit, it's also for us, what we call our resident orientation. When we move somebody in, we want to set expectation on, this is what you manage, this is what we manage. We create a fridge list, come back 45 days later and say, "Hey, let's -- what's on your list? And is there anything we can do while we're in here?" So we're back on that program. We started rolling that back out last year. That's great, but there's some catch-up and cleanup to do. And as we go through that and we introduce technology and other things, we can get smarter and better with it faster for our field's teams to implement as well as make it more transparent and easier for our residents to see it as well. That's where technology steps in.

Just to add one thing. Charles has done an amazing job. And really, we forget we've got this big company, right, with 88,000 assets. We're only 10 years into running the company. And we're still in the earliest innings of where we're going with mobile technologies and with our customers and the way that we route vans and how a service operator in our company can go from 6 work orders a day to 7 work orders a day. You guys would be shocked at what that does for us from an efficiency perspective and how we can continue to drive down costs over the long haul. We download our apps, we've been downloaded something like 120,000 times in the first year. And so just our communication and how we're dealing with the resident is far different than how it was 3 years ago. And that is like the first inning of how we plan on communicating to residents. And so as you think about what Charles said around, how do you move somebody in, how do you move somebody out? Those are like table stakes. We've got to be excellent at that. But where it gets really interesting and exciting for us is can we start to turn a home inside of 12 days instead of it taking 12 days. And every market is a little bit different. But when you pick up a day one way or the other, it's a massive amount of bottom line for our shareholders. And so we have spent a lot of money the last year investing in technology, systems, people, and we're just now starting to see a lot of the net benefit there. So as you think about -- I want to go back to your question, which is -- I think my team is sick of hearing me say this, but we want to control the controllables. There are certain things that are going to be outside of our elements like a hurricane that rips through Fort Myers or something like that. But if we can control the communication with the customer, the expectations set upfront and how we expect to get that home back at the end and then all the little nuance on the operating side of it along the way, the sky is the limit for how efficient this business can get over time.

I'll just add something. I sold a pretty large portfolio in Indianapolis to SFR players, and I was shocked that they were apathy and ignorant about simple maintenance issues, people -- your competitors in the industry, not yourself.

Thank you very much.

And for example, like you walk in and you walk into a garage door opener, you turn the garage door opener. It's loud and noisy. It takes 15 seconds to put some silicon grease on these things. If you -- that garage goes out, that's going to cost you $2,000.

Right.

So simple little things like that, they were not doing, I'm shocked.

Well, to your point, like smaller operators have a hard time doing that in scale. So that's the -- someone asked a question about scale and why it matters, like that's exactly why it matters. If we have 30 vans in Atlanta, they can keep silicone in the van or WD-40, right, or all these little kind of nuanced thing. And then by the way, to Charles' point, when we move somebody and we say, "Hey, if it's not major, we're going to be back in 45 days. Here's your kitchen list." That squeaky garage door or that hinge on a door that's making noise, just mark it down and then Dallas will be out here in 45 days, and it won't be me because I'm not very handy, but you will hit every one of those items, right? And so that also lowers the angst. It makes the experience more professional, and it just adds to the overall ability to retain that resident at the end of the lease. You just have to do it upfront. You have to do it appropriately.

It's a great point. It's a game interest, and we know that. And every little $5 and that time you put there to avoid a $500 replacement is the mentality that we're making sure that we give to our teams.

You guided to about, I think, 7% on property tax increases this year. I think 10% for the remaining part of your expenses. Can you just help us think about sort of when some of those expenses should normalize? And obviously, you're not in control of property taxes, but you are in control of some piece. So for that other, call it, 40%, 50% of your expenses, when should those normalize and come back to more like a 3% type number?

Unfortunately, I left my crystal ball at home. But I'll say that, look, clearly, we think that there is still some runway left from the perspective of property taxes, which are far and away the largest component of our cost structure. We've talked a little bit about insurance. Insurance is only about 5% of our cost structure. But as other property owners are experiencing, our sense is that, that's going to be elevated. And then I think if you look at the rest of the cost structure, we continue to expect sort of inflationary pressures to work their way through the system. I think our hope is that as we get into the back part of this year and early next, we start to see some degree of normalization. But again, we're focused on the things we can control, which are how do we influence the efficiency with which we approach certain things, how can we be thoughtful about where we are spending dollars either in a preventative manner or a reactive manner and how does that flow through our asset management decisions, right? I mean one of the nice things about our business is there's an incredibly liquid underlying market. And if on a turn, we identify a home where the capital reinvestment that would be necessary just doesn't pencil from the perspective of a rebuy analysis, we can sell that home into the end user market. And what we're experiencing right now is multiple offers on the homes that we're selling. So I think it really comes back to being prudent, being careful and controlling what you can control and trying to be transparent with respect to the rest of it.

I'll just add, anecdotally, when we talk to builders, developers, they're starting to see that cost come down like on the front-end side, wet and dry utilities, lumber, some of those things. Nobody is seeing it yet in terms of -- because there's still supply chain issues around sinks, faucets, LVP flooring. Our scale will help us with some of the procurement kind of recast that we're doing. But a lot of this stuff, just like in the insurance business, is getting passed on to some degree. So I think to Jon's point, we're still a ways away from kind of seeing, call it, the end of that pipeline come down in pricing.

Got it. And you talked about the supply-demand imbalance. We're seeing -- I think you said something like, call it, we need 13 million units over the next 7 years. But at the same time, your acquisition guidance is probably the lowest it's been in quite some time. So what's the inhibitor there? What would cause you to be more aggressive on the acquisition side? Is it just cost of capital? Or are you waiting for required returns to come up as well?

So I'll go for a little bit here, so just bear with me. I'd say, first, from a cost of capital perspective, we don't like our current cost of capital on balance sheet. The stock is really cheap. There's plenty of outside capital that wants to create additional venture with our company. The bid-ask spread is a little wide right now. And I think, in large part, it has to do with where financing costs are. So as you start to think about, we basically pared back in May of last year are buying, call it, one-off and resale type stuff, got just really careful just given how quickly interest rates and the markets are starting to move. And what we've basically seen you guys in about 9 months is cap rates that have moved from the low 5s to the mid-5s. So you couple that with the fact that on cash, we're getting paid 4.5% right now. It's hard to argue that you want to lean in and go buy 5.25 cap type assets when your cash is generating such -- it's a boring answer, but it's the truth. And so I think for us, we've got plenty of liquidity. Between our current venture, free cash flow, untapped revolver, we've got inside $2 billion of near-term liquidity. We're ready if or when the opportunities make sense. I think the positives have been so far in the first 7 months of this interest rate creep has been -- I think our conversations with our current builder partners and others are accelerating where there'll be more opportunity to continue to add to our development and build our pipelines, add structures in terms that make it cognizance for the business today. So that is an area that we're hyper focused on. The resale supply market, as we sit here in March of '23, is less than it was in March of '22. And so even if you want to be active in the resale market, which we are, we'll write 80 to 100 offers a week, but we're casting at much higher cap rates to make sure it's accretive. The last thing I want to do is do deals for the sake of doing deals that aren't accretive to my shareholders. And so we're really comfortable right now sitting on cash, operating the business as well as we can and being ready. And I do think there will be some opportunities over the next year with the smaller operators that are going to have a harder time recapping their portfolios and interest rates that don't make sense. And I think one of our benefits is that we're going to have, whether it's cash or OP units, dry powder to be able to be a good partner, a trading partner for some of these portfolios. And I would expect that last time this year, we had about 1,200 homes in our pipeline on the builder program. Today, it's at 2,300 homes. I would expect we continue to grow that to where that becomes a multibillion dollar type pipeline at returns that are far better than we get in the end user market right now.

And I guess along that, do stock repurchases make a little bit more sense now? You mentioned the stock was really cheap. I know Ernie's worked really hard to get to investment grade and build a great balance sheet. But you know where your stock is trading today, and you said it's really cheap. So why not...

It's a fair question. And it's not -- people are asking it. We certainly considered it. But if you think about where do we have the ability to make the biggest dent for shareholders, it's probably not buying $75 million to $100 million of stock each quarter right now, especially when our cash is generating a 4.5%. It's probably being ready and opportunistically buying as much assets that are going to lend itself to longer-term accretive growth. Yes, we're on -- we don't love where the prices, but it's not in a world where it's that latent that we should do that.

And since we're getting about 5 minutes here. But I want to touch on the regulatory side. I know you get asked a lot, but it's obviously really important for the industry. So a couple of questions on that. You saw certain municipalities like Charlotte come out with sort of a proposal to limit the number of purchases of institutional homes or limit the amount that institution is going to own in a certain market. I guess, first, I would love to get your thoughts on that and just anything else that we should be aware of on the regulatory side that you're watching.

We're always watching. You're right to call that it's important. Look, we're in housing. I think us, our multifamily peers, skilled nursing, assisted living, we're all kind of going to live in this environment where housing debate and housing discussions going to be more prevalent, especially in light of all the supply factors that are going to continue to be challenging, I think, for the new supply piece of the discussion. In terms of things we're hyper focused on, I would just tell you from the macros, it feels like the pendulum swung pretty hard in the last 2 years and there's sort of a little bit more balanced now at the federal level. I think in the house specifically, we have a lot of supporters of our space of trying to create regulation that actually allows for more development. And again, I think companies like ours that have existing scale, to your point in Charlotte, that is an absolute strategic advantage, if you already have scale in some of these markets. I think some of these things will pop up and some may stick and some may go away. That same argument came up in Atlanta last year. And the attorney general and the governor there got pretty active and squashed it because you want new supply. You want to encourage development new supply, not sort of the opposite. And so I think it will vary by market. I think we have to be pretty nimble in paying attention to it. And at the end of the day, I'm really grateful that we already have significant scale in some of these markets. My instincts are that this is -- I don't want to say it's fleeting because it deserves more attention than that. But I also think it's sort of like how pendulum swing one way high or the other. And right now, we're sort of on one of the higher ends of where the pendulum is. I think if interest rates stay elevated and mortgage rates stay between 6.5% and 7.5% for a long time, you're going to see more housing supply and stock come back into the resale market and that will ease some of those challenges.

I guess any desire or willingness to work with the other large SFR players to sort of self-regulate, meaning I don't know limit increases, limit the percentage that you own in a given market or just institute sort of best practices that would effectively allow you to self-regulate versus having politicians kind of come in and potentially make arbitrary rules?

I think I'm going to answer the question differently. I don't want to do anything ever that would violate any sort of an antitrust type of thing, where we're talking about rents or caps or anything like that, never. I think what we want to do is continue to work with our trade association to have engaging conversations with people at both the federal and state levels that allow for healthy conversation about what it takes to help normalize housing deficiencies. And I know I sound like a politician the way I just said that for the record. But what I mean by that is, you have to be able to get in a room without Twitter and have conversations about what can create meaningful change in the housing continuum. And the reality is, and I think you hit on this is housing is a very local issue. It's not a federal issue. Most of the noise we get comes from the federal side. The actual ability to influence supply is going to happen locally. And there, I believe we've actually made some pretty good inroads in a lot of markets. Charlotte thing is sort of new and it's sort of interesting because North Carolina has been actually a pretty easy market to look at new building projects in. We're building there. We've built several communities. So I think with some rational dialogue, most of that stuff sort of centers. And I think at the end of the day, and I've said this about rate, there are markets that have imposed restrictions on rate, which we abide by. But generally speaking, we want the market to dictate rents. We're not -- our company isn't a workforce housing business. We're a for lease, for choice entity. And so I think we love to follow where the market sets right and do our best to achieve as much of that rate as we can.

And then before we move to the rapid fire questions, we've been asking each session your top ESG priority.

To get out our sustainability report this year.

All right. Let's do rapid fire unless there's any other questions. What will same-store NOI be for your property sector in 2024, so not for your company, but for your property sector?

How many are in our sectors, are they 2?

Well, you don't have to worry about that.

Include the privates as well.

I'll just say mid-single digits.

Mid-single digits, okay. What's the best real estate decision today?

Buy, build, sell, develop, I think the whole. If you're sitting on great real estate, you should operate the heck out of it.

And then this is another one that I guess there's only 3 companies. But how many -- would there be more or less of the same number of companies in your space?

Same.

I think we all think the same.

Okay. All right. Thank you very much.

Thank you.

Thanks guys.