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

Global Property CEO Conference. I'm Nick Joseph here with Eric Wolfe for Citi Research. Pleased to have with us Invitation Homes and CEO, Dallas Tanner. This session is for Citi clients only and disclosures have been made available at the corporate access desk. [Operator Instructions] Dallas, we'll turn it over to you to introduce the company and team, provide any opening remarks, tell the audience the top reasons that investors should buy your stock today and then we'll get into Q&A.

Nick, thank you to you and your team for hosting us today. We're grateful to be here. We appreciate all the support we've had in the level of investor meetings. To my right is Scott Eisen, our Chief Investment Officer. To my left is John Olsen, our Chief Financial Officer; and Tim Lobner, our Chief Operating Officer. We'll start today with just a high level kind of hitting 3 points: first, that our business continues to remain healthy, performing in line with our expectations as we enter our peak leasing season, which is typically from now to I call it the middle part of summer. We continue to see actually pretty healthy demand, I would say, really strong retention -- and I would call it solid traffic as it comes into the business. I think naturally, there's a little bit of some stagnation between sort of home buying and selling activity which probably is what you see impacted in the new lease numbers as well as some of the additional supply that we're still working through, we talked about for the last several quarters. The platform has been continuously, I would say, executing at a pretty high level. Expense controls are totally in check. We feel like we have pretty good tailwinds with property taxes and the like. I think the second point that we want to talk about is that the political overhang is creating real opportunities as an entry point for long-term investors. While the headlines have put some temporary pressure on valuation. We feel encouraged by the discussions that we're having with both sides of the aisle. In Washington, I've spent a lot of time there over the last month. I'm encouraged by what I would call the productive conversations we're having with both sides of the aisle and the administration as well as a whole. While there's no guarantees, my expectation is that this will work itself through over the coming months. And we continue to reinforce, and I think what's been a net benefit of the moment has been that there's been really healthy dialogue about the industry, and I think people have a better understanding of who we are, who we serve and what the businesses actually do. And so that moment has created real clarity. And then I think the third point, and we can talk more about this, is our acquisition of ResiBuilt will continue to strengthen our growth engine. It will give us another level of optionality as we think about the balance of how we want to grow in the future. We would add to that we think about these things side by side, obviously, with share repurchase and additional investments or things that we would do. We look at all things sort of in a view of what is our highest and best use of capital in the moment. And with that, Nick, I think I turn it over to the room for questions.

Great. So you mentioned that you've been spending a lot of time in Washington. I guess what are you hoping to see? Like what are you pushing for maybe we'll start there. And I guess what do you -- I guess, I get on the other side of that, what don't you want to see from this legislation and then I guess last, I'll add on to it because you love 3 partners is where is the industry right now? Is it things just sort of like frozen, are people just holding on to what they have or things still transacting business as usual or people just sort of said, until we see some clarity here, we're just not going to do much.

Let me start with the last part of what you said there is that -- it definitely feels like since the tweet and the corresponding executive order, capital flow has been stymied to say the least. And I think you see it in our public valuation. You see it in the private conversations we're having with private operators that there are a lot of deals sitting on an investment committee desk that aren't sure what to do. And so part of the argument that we've had as we spent time with policymakers and with the administration and their teams, has been, guys, you want capital flow to come into housing and we get the head nod in the affirmative. This has had the opposite effect in the near-term, which is to be expected. And there's sort of 3 or 4 major areas we want to focus on. One is you need to understand fundamentally what it is the single-family rental is in the overall housing ecosystem. And guys, we're starting in a lot of these conversations, the very basic points. But if you go back to LBJ in 1962 or 1963, home ownership has been between basically 62% and at the lowest and 69% at the highest. And that basically 1/3 of the country is leased for the last 40 or 50 years. And that's okay. And we talk about upward mobility and social contract and things that different housing providers provide at different times in that housing continuum. Then we are able to clearly identify where we fit and what our customer profile looks like in that category. And I'd add, guys, I'm not up there by myself. I'm with the 4 or 5 CEOs of the bigger companies. We're represented by the National Rental Housing Council, and we have the right consultants and lobbyists helping us through this process. I would just say that everybody gets it. I think they understand that we're a valued part of the upward mobility cycle. They love the fact that we have 150,000 people enrolled in positive credit reporting and that we've seen those credit scores go up by almost 50 points over the last 18 months. Those kind of facts are very helpful as we described the industry as a whole and what we are. What we've helped them understand is also what we aren't. We aren't home flippers. We're not in and out of a market. We're not calling your uncle 30 times in a week to say, sell us your home so we can put a can of paint on it and flip it. Like that's who we aren't. And so that process is as painful as sort of the last 6 weeks have been from a perspective and an outsider's view of the industry, it's actually been really good because it's forced conversation. And the conversation, I would say, has been very fair and very objective. I've been encouraged actually by the process. I think what we're hoping for is that potential policy could land in a place that's reasonable that it solves sort of the issues around affordability that the administration is currently focused on. And look, we by and large agree with them that there's an affordability challenge in the country and that we fit into a very specific segment of that. And then as we walk people through the basic sort of rubric that when people come into our business, probably plus or minus 10% of them could afford to own a home real time. When they leave, we know this buyer survey is about 20% to 30% end up owning a home along the way. And that is natural. And there's a lot of different versions of right for families in this country, but they shouldn't be excluded in being a renter isn't necessarily a bad word, of which they all agree with, right? And so the key thing is helping them understand who we aren't. We -- our companies bought less than 200 homes, 1 off on the MLS in the last 3 years, okay? We've been growing through our partnerships with builders the extension of what we're going to do with ResiBuilt and obviously, occasionally on opportunities, there's some M&A in terms of existing portfolios. And I think creating those lines of clarification have been very helpful in the conversation. So I go back to what I'd say, like, I can't tell you with any certainty that the discussions and the part of the process that we've been with is guaranteed to land in X or Y. I would tell you that I'm growing increasingly confident that this will land in a reasonable place for the industry and I think for the administration in terms of their focus on affordability.

And let's -- I mean my voice here, so about that. And let's say that there's a ban on forward purchases. So whatever your portfolio is at today, you're sort of at that level. The only way to sort of grow it is through development or some kind of agreement on development. Do you think capital withdraws from the industry in that case? Or do you think so much more capital then goes towards the supply side? And I'd add on to that, is there a risk that if you're taking all this capital that was focused on acquiring and putting it out towards supply and development that there's an overbuild, especially in certain areas like Atlanta, Phoenix and other places that have tended to see some of those problems.

Well, I think on the latter point, just remember, you guys -- everyone in this room is really smart. Developers are generally really smart. So if they don't think the bid is there right from the demand side, especially in a softer environment like right now, just because, say, BTR in all its forms were to end up being excluded. And that, that is viewed as a good thing, which I think is where it will land personally. I don't think that there's a flush run of capital into an environment where the absorption has been a little bit slower over the last year or 2. I think it takes a minute to -- people are going to have the same lines of defenses and thinking around their returns on their own capital that we would -- and so if you see that new lease growth is a little bit slower or you see that absorption in the BTR space has been a little bit slower last year to my guess is there'll be measured expectations around returns. So I would expect normal market dynamics to sort of step in there. What I would also add is that as you think about sort of what are the exclusions, at least in the discussions we've been having, it feels really rational. I think they want to protect this concept of boxing out homebuyers, which we'd be fully for 100% full stop. And I think there's a lot of ways that you can protect homeowners or potential homeowners in a resale environment, which they all understand the numbers, too, right? There's 1 million more resales in the market today than there was last year. We're not seeing home buying pickup. We have more of a mortgage affordability issue at the moment. The spreads between existing mortgages of homeowners and where kind of the market is today is probably lending to the dislocation more than anything. And I think that view might be commonly shared sort of generally speaking. But at the same time, I think you want to create lanes that sort of protect those that are an FHA 3% down buyer, right or something like that, which we, again, the industry would be fully supportive of. And I think that there is sort of a common ground there. I think probably a focus on how much CapEx is going into these homes is something they might care about in our conversations. So that seems pretty rational and something that we generally always supported. And then I think pathways to ownership are things that probably can incentivize capital to come in, in a way where if you have an off-ramp for folks that they can get into homeownership show should they choose, I thought that would be viewed favorably.

And you mentioned in your opening remarks that you've seen, I think, fairly consistent demand. I think what people are trying to figure out is, at this time last year, sort of really kind of off to the races in terms of occupancy and blended rate. I know we probably make way too much ahead of every single month of data. When we hear that things have softened, it's usually because of sort of supply. But I guess my question is, is there a demand component, right? I mean clearly, in apartments and other areas, you're seeing lower demand. It doesn't sound like you feel like that's the case, but maybe tell us why, like what do you -- how are you measuring demand. And is it truly not lower? And if not, why not, given the fact that you've seen such a degradation in job growth over the last 9 months?

I'll take the demand question. It's a good one. We get a lot of questions about supply, good to hear questions about demand. We look at the demand funnel in 2 parts, just kind of the digital external part of demand, and that starts with people that are looking online on a Google -- searching on Google, people looking on Zillow that then translates into access to our website. People go and a number of times people land on our website. That then transitions over the second bucket, which is actual lead generation, followed by showings, followed by gross applications that get submitted, and then net applications that get approved ultimately move in. What we're seeing is really strong numbers there. We're seeing that there's an ongoing demand for single-family housing. We're seeing a healthy customer profile and what we look at for customer financial health is, first, the credit score that's still sticking right around 700. That hasn't changed for us. And so that's a good sign. The other sign is our application approval rate, I talked about going from gross apps to NetApps, sticking around 65%, 70%. So people that are applying for our houses, their financial health is strong. The same is true of our customers that are in our houses. We're seeing really strong rent collection saw in our numbers from 2024 to 2025. Bad debt improved. We're back in a territory that we saw pre-pandemic, and we expect that to stay the same. We are watching, nothing certain for long, we are watching 30- and 90-day credit card delinquencies. We're watching mortgage rate delinquencies. We're also watching student housing debt delinquencies, all as kind of canaries in the coal mine for what could impact financial health of our customer in the future. So demand side looks good. Supply side, you've heard -- we talked about it on the earnings call. The supply side is a little bit higher than what we've seen in the past. But look, the reality is -- there is a big gap between where the multifamily space ends, right? You've got 2 bedroom units. You've got a very small percentage of 3-bedroom plus units. It's a single-digit number. And then the next step over here is homeownership. And so there's 35% as Dallas mentioned since the formation of HUD in 1965, homeownership has not gone more than 400 basis points either direction. So there is clearly demand for single-family housing for professionally well-maintained single-family homes and there's a lot of people that are -- we continue to see more people choosing to rent. So we don't anticipate, especially with the wave of people turning 35 every single year that number, depending on which report you look at, it's 10,000, 12,000, somewhere in there every single day turning 35. We haven't even hit our sweet spot yet, average age of 38, 39 of people moving into to our homes. So we feel pretty strongly about the long-term demand for the product.

And you mentioned on the call that the inventory of homes on your books was a bit high. Is that only in sort of markets where you have that supply impact? And I guess, if not, why is that the case in other markets where you see this good demand? Why is it taking people longer to make a decision to move into a home?

Yes. The pronounced areas where we're seeing higher supply are areas that were focal points for builders, right? You've got North Florida, not so much where we are right now in South Florida. The Texas markets, Houston and Dallas as well as Phoenix. Look, in terms of the amount of time you talked about people taking longer to lease, when there is more supply, just like when you go to the grocery store, any sort of retailer, when there's more product to look at, people generally take a little bit longer. They're a bit more discerning. That's where I believe and we believe collectively as a management team that the quality of our product, the quality of our experience, it will stand up to that test really well as people look at what the offering is. So yes, a little bit elongated time lines for the Day resident, and that's kind of normal with more supply.

Got it. And you said earlier that you're really kind of kicking off your big peak leasing season sort of after the Super Bowl I think as part of your revenue management system, you do have a pretty good understanding of sort of what's going to happen over the next 30 to 60 days. Obviously, we got the update in terms of what happened in February and January, so we see that. But maybe just help us understand how the forward indicators are looking. What are you seeing in terms of retention your ability to send out renewals and sort of transact without much negotiation. Just sort of any type of commentary on the strength of the early part of the peak leasing season?

Okay. We don't have a crystal ball in terms of how many leads we're going to get tomorrow or the next day, but everything we're seeing in the pipeline is strong. On the renewal side of the business, which I'm glad you brought up, 75% of our book, that continues to be really healthy. We do not see degradation right now in the decision-making of the consumer to stay in place. Obviously, we do use lease negotiations to make sure that we're landing the plane in terms of renewals. But generally, it's such a healthy part of our business, runs between 3.5% and 4.5% in terms of the renewal growth rate. But we anticipate continuing to see 75% up to 80% renewal rates going forward. Remember, like people move into single-family houses, they need more space. They have more stuff. They're generally stickier. The average family or the average household is 2 incomes, they have a child, they have a pet. They're coming from a single-family home, so they know what they're looking for. They know kind of what they leased the product. It's not like it's something different, and they're not accustomed to it. So we feel pretty good about the renewal side of the business, it's healthy right now.

So that you're saying like the low 4% range for the next couple of months?

Generally, 3.5% to 4.5% kind of mid-3s to mid-4s is typically what we see.

Got it. And occupancy should just trend higher as you kind of get into the more peak March, April strength timing.

Yes. Typically, that's right. You see it go to kind of midyear and then in the fall season, you see it come down a little bit, but that's pretty much the normal curve that we see for occupancy.

We have some questions here. We can switch over to capital allocation. But I guess, with regard to capital application, you haven't done as much buybacks despite trading at a very large discount relative to where your homes trade. Why? Why haven't you bought back more, I guess, is the question.

Well, I think at a high level, we shared what we shared on the earnings call, I think we did $100 million between the call that we did in fall or the late fall into the end of the year. We have certain windows, and we also have certain sources and uses with cash. I think we're pretty clear about it on our guide this year that we expect probably share repurchase to be a bigger part of our programming. But that will be relative to where we sit with capital allocation decisions. We think we have a pretty good line of sight for most of the year, but I'll let Jon add any commentary that he'd like on this topic.

Yes, sure. I think on Dallas' point about open windows, we had our Investor Day in November. We were planning to talk about that value creation road map. And so gain that to be the type of nonpublic information that we wanted to be sensitive to. So look, I think we were pleased that we were able to do $100 million of repurchases between the tail end of the fourth quarter and early in the first quarter. I think looking at our capital deployment guide, it is, I hope, clear that we anticipate being a net seller this year. And I would say that looking at where the shares are trading today, pick your metric that you want to use to measure, but give or take, $275,000, $280,000 implied valuation per wholly owned home I would contrast that with the fact that in 2025, we sold around 1,400 homes at an average disposition price of around $400,000. And where the shares are trading today is an implied cap rate that starts with a 7 handle. We haven't been able to buy assets at a 7% plus yield since 2014 that is a mid-6% AFFO yield and a mid 4% dividend yield. So I think by any metric you choose to look at -- it's hard to argue that the highest and best use of surplus capital isn't buying back shares. And so I will say that if we had the opportunity to deploy capital, acquiring assets at a 7% plus yield, we would be backing up the truck right now. And so we are keenly aware that this is a compelling valuation. I'm biased, but I think we have the most attractive single-family rental portfolio in the U.S. I think we have the most concentrated, the most scaled, the most infill, the most defensive portfolio there is. And so if you tell me, I have an opportunity to reinvest in that portfolio, some of the metrics that I just outlined. -- clearly, that is compelling.

I guess we get the question all the time. Obviously, the single-family market is the largest and most liquid there is, but at the same time, it's very granular. There's transaction costs, there's other considerations, liquidity costs in terms of selling a bunch of homes in an individual market to end users. How do you think about the ability to actually sell in size, particularly if maybe the institutional side is maybe paused with some of the regulatory uncertainty.

I think you're right on the last point. Like I don't think it's the time to go out and market a $1 billion sale. I don't think you get the price you want, first and foremost, and second, I don't know that you want the scrutiny until you have clear visibility as to what's going on. Look, we run a business where we're in the business of housing families, and we have a lot of families as you know, that have been with us 4 or 5 years. So it's also not our intention to go to these families and say, it's time to get out. But we definitely have 25% of our book that revolves every year. And so there are markets where the spread, for example, in California, it is incredibly efficient as we sell California homes and then either reinvest in new assets or share repurchase to Jon's point. And we've been more of a net seller in California for years. So could we be more of a seller in California, Perhaps. I think it sort of depends on how the business sort of works and flows. And then again, in the back of our minds, too, we're always -- we want to be a great capital allocator. We want to make decisions when we can, where things make sense. At the same time, we're also building business for the long haul. And what happens with dispositions in California isn't exactly how it works in Charlotte. that market could be softer. And so you may not get the exact same sort of cap rates. So it's all a balancing act. We have a really strong asset management group that looks at this under Scott's leadership, and we're constantly evaluating what on the turn we should be selling versus what should be keeping.

That's a good point, and it's something that people ask us frequently as well as just selling to the existing renter. And I know you've piloted and tried these different programs. Is there just not the uptake for it?

You'd be surprised, I mean, it's about a 5% to 10% hit rate when you go out and scale with like a big tape and again, it goes back to our earliest points like we're meeting families where they want to be met for the most part. And many of them in a position from a down payment perspective to just lean in nor should they, the cost of property taxes and insurance and the like. And we handle pretty much everything, right? And so I think people get sort of used to the fact that it's plug and play with a professional operator.

Is there an ability -- you mentioned selling assets to fund buybacks I guess, what's the limit on that from a tax perspective? And how should we think about the cap rate on, say, the $550 million of dispositions you're doing this year?

Look, I don't think we're going to guide to the cap rate, but my expectation would be that it should probably align with what our most recent historical experience has been. From a tax perspective, we are comfortable with the level of dispositions we've guided to. We have a variety of tools in the toolkit to manage through that, whether it be some NOLs that we continue to have, 1031 exchanges and the like. So I don't view tax to be a governor on our ability to sell assets near-term.

Got it. And then could you talk a little bit about ResiBuilt. Obviously, you said on the call, it's going to be a fee builder for the near-term. But how are you thinking long-term about the ability to develop on balance sheet. And then as you transition to something like that, will it involve increased G&A, increased costs? Or are the costs that are there in place today fairly scalable.

Look, we're really excited about the ResiBuilt acquisition. We've always said that we're a location-specific and channel agnostic. Over the last 3 or 4 years, I think we bought our first new construction sort of forward purchase communities in 2022, as we talked about on our Investor Day in November. We've been looking for ways to build up our new construction capabilities. We did our forward purchases. We've built out our operating model. And now obviously, we have the ResiBuilt platform as part of Invitation Homes. We've known this team a long time. Jay Byce and his team, Jay has been around since the beginning in terms of the space. He started the ResiBuilt platform in the 2018 time frame. I think it's a management team and a platform we're very comfortable with. I think one of the most interesting parts of the acquisition is not only do they have a team in place that's experienced with the general contracting work, but they have an existing book of business of doing fee build on behalf of third-party customers. And so in the near run, as we think about where we want to take the platform over the medium and long-term, we've got the benefit of other customer relationships that we're working with in terms of acting as their general contractor in the markets where they have a presence. The main presence for ResiBuilt is in, the Georgia market, the Carolinas market in North Florida, and those are markets where they have their boots on the ground and continue to operate. I think over time, as we think about the platform and where we'll take it, we'll continue to build on behalf of others. We intend to build on behalf of existing and future joint venture partners. I mean, at some point, we'll also do it for the benefit of the balance sheet as well. But I think in the near-term, we've got a business that's cash flow positive from an expense and revenue perspective. And over time, we'll incorporate that into our overall plan.

It's really an important point you made around G&A creep. We wouldn't anticipate any in area. In fact, we'd probably appreciate some point some synergies between the size of his team and the size of our investment and asset management group. And I think the more important part that sort of the follow-up question is, what other markets would you be in? And we would expect that over the coming years, we'll add a handful of markets, right, to where we want deeper concentration or have an ability to also perform within our JVs or our third-party partners.

What is the current -- what are you expecting to spend on that this year?

Yes. I think implicit in the $0.02 of contribution that was included in our bridge is the G&A load I think that's something that we're still evaluating as we sort of integrate and we'll have more to say about that on our next earnings call.

Okay. So I mean what would be the part that needs to be figured out from here?

Well, I think the blend of activity in terms of -- on behalf of third parties versus on behalf of something that's going to go on our balance sheet or the balance sheet of a joint venture, I mean, that's going to be significant determinant. I think we've had some questions in our one-on-ones about the way we might scale that platform and expand that platform into new markets over time. But I think above all, we are going to remain laser-focused on making sure that this is accretive and creating value for our shareholders. And so we're going to, I think, take a fair measured approach, continuing to focus for the immediate term on the third-party fee build business and then over the intermediate and longer term that focus will likely shift to our joint ventures and the balance sheet.

And I guess what are the most attractive markets for you going forward? I mean it seems like there's so much development in Atlanta, Phoenix, parts of Florida. And I don't know, maybe you can tell me whether that's sort of lightening up if we're sort of at the tail end of that. But are there certain markets that you think are more interesting from a development perspective that aren't seeing that sort of same level of supply?

We can both take some of this. So I'd just say, look, at a high level, we've seen some green shoots in North Florida and some things that appear a little bit more compelling. I'm not saying that necessarily with the development minus lens. But I think as we think about the total equation, we're seeing demand. It's pretty healthy right now in Orlando. We'd like to see Tampa get a little bit stronger, so maybe it takes a little bit longer there. But I would say, look, by and large, could you see us going into markets like Nashville or some of these markets as we work our way west. Could we be at a place where we had 3 to 5 years from now, 6 or 7 markets that we want to be long in where we'd like additional scale, we'd like the opportunity to build. We see compelling fundamentals, like I think that's how we think about this.

Yes. And the only thing I would add is we closed on this acquisition 6 weeks ago. So we are working closely with the team on evaluating opportunities in markets where they have experience over the last 7 or 8 years of building historically 4,000 homes in those markets. So we're focused on the markets where they have the boots on the ground and the experience. And we are now having discussions about future markets and where we might go over the next couple of years, but I think it's too soon to identify market #4, 5 and 6.

Dallas, I feel like the single-family rental business probably was built on technology, right? Being able to manage all these disparate homes at the time. I guess as we think about the ability to deploy AI internally at Invitation Homes, where are you seeing the opportunity, I guess, maybe near, medium, longer-term? And then how are you thinking about actually doing that? Is it building yourself, partnering, buying.

I would say like we're taking a very measured approach. And we've done a little bit around leasing and sort of the funnel and kind of customer interface, that will continue to get better and expand. I think we see some areas around centralization. As tech forward, as we like to say we were when we started the business in '12 because we did have to solve problems with technology that hadn't existed. We still have a long way to go. And Tim and the team have a number of centralization efforts going on right now where we've gotten smarter just in the last 5 years about where we should operate certain parts of our business from a centralized perspective. There's a cost of sort of labor and things like that, too, where you can be pretty wise about how you do this. I mean we were still running multiple call centers last year. And we're still figuring out ways to consolidate and do things in a much more efficient, robust way. I think you're going to see and again, we're not an early adopter yet, but in data and analytics and how you sort of backcast and look at your performance over history and time, a lot of these cloud bots and things that are starting to work on different things as an idea, take a lot of the work out of some of the consulting structures you have as you think through some of these ideas as well. So I think you can go a variety of ways. Look, the 1 thing that I love about our business, and this is sort of a hot like buzzword right now, there's halo companies, right, like heavy assets, low obsolescence. We are a halo company. And there's going to be a reversion to the mean in terms of sticking with businesses and profiles that aren't going to become obsolete overnight. And obviously, the asset side of our business isn't going to change all that dramatically. How we integrate with customers, how we digest the data, what that leads us to do strategically as a company and to create a better merchandising experience for our customer or all things that we're super focused on at the moment. And look, the cool thing about AI is I feel like real time for start-ups and new companies that are evaluating kind of areas of opportunity, they can use AI quickly. Now bolting that into a bigger ecosystem and our data lake and our architecture, a little trickier, right? And you got to be careful about when you make these decisions and why? So I think we'll be measured in our approach, but we're certainly excited about adding some of these tools into our business plan on a year-by-year basis.

I guess for your third-party management platform, what are your partners telling you right now? I mean there's sort of not of the same size that you are, they're sort of midsize, like if they are prevented from growing going forward, do they stay at their current size, do they decide to exit? What are the sort of the message they're sending you?

I think our third-party customers, they are looking to operate their portfolios with us and continue to earn cash flow and grow the value of their platforms. I think a lot of our partners have been in kind of a status quo mode of it's an investment. They're getting a nice return for their I don't think I've seen any sort of positive or negative change in terms of the direction there. And I think there's just a little bit of a wait and see to see where we end up with the current government relations environment.

And on the -- I guess, I don't know, for lack of a better word, like the lending, bridge lending and side, does this potentially make that a maybe even a bigger business for you because if there's certain capital that is not going to be involved in this space that allows you to sort of fill that void or TBD on that.

No, I'd say we've definitely gotten an uptick in some of the inbound phone calls we've gotten since the tweet in terms of just potential developers out there that are interested in engaging with us on the construction lending business. Again, I think we're evaluating the right opportunities in the right markets where we have boots on the ground. We have our own view on rents and expenses relative to what any developer has when we underwrite a new construction loan. We closed our third loan last month. So I think we're up to about $115 million of balance with a couple more signed term sheets in the backlog. So I think we're being measured in our approach, but we've seen some interesting opportunities, and we're continuing to try to grow this segment of our business.

And just on the rapid fire questions. What will same-store NOI growth be for the single-family rental sector overall next year in 2027.

Sorry, I always have a hard time with this one because it's just 2 of us. But look, we think the setup this year is more or less like last year to some degree, right? And we obviously have some noise in our business with the policy stuff and we talked about that on our earnings call. So I think that's the only part of our budget that's a little TBD. We want to see how many dollars have to go into those kind of work.

Excluding those dollars, what is it?

Yes. Low single digits, call it.

Perfect. And then more fewer the same number of public companies in single-family next year?

I think it's probably a very easy bet to say the same.

Great. Thank you very much.

Thank you.