While our focus at Limitless Investing is sourcing private real estate investment opportunities, there is a wealth of information that can be gathered from reviewing the earnings call transcripts of publicly traded REIT’s that can inform private market trends.
Here are the 3 key trends we’ve identified:
Trend #1 – Sun Belt Markets are Stronger Than Expected
MAA’s Eric Bolton: “We continue to believe that our high-growth markets are producing solid demand sufficient to absorb the new supply in a steady manner that will enable continued stable occupancy, strong renewal pricing, strong collections and overall revenue results.”
UDR’s Michael Lacy: “We remain cautious on the Sun Belt in the near term but have been pleasantly surprised by its recent trajectory.”
Camden’s Ric Campo: “When the (Sun Belt) markets right themselves from a supply perspective, the same thing that drove outperformance of revenue growth in the past – job growth and household formation – is going to continue.”
BSR’s Dan Oberste: “While we recognize the impact of short-term increase in apartment supply in our markets, it is important to recall that this is a natural response to a surge in housing demand, and that demand reflects extremely strong fundamentals.”
IRT’s Scott Schaeffer: “I’m still a believer in the Sun Belt long term. I think that’s where you will see above-average population growth and job growth. And we’re coming through a bit of a rough patch here because of all the new supply, but that’s coming to an end. And I believe you’ll see continued above-average growth in the Sun Belt markets.”
Trend #2 – Collections Remain Strong as Renters Show No Sign of Distress
UDR’s Joe Fisher: “We’re seeing collections continue to improve and be some of the strongest that we’ve seen throughout COVID.”
Camden’s Alex Jessett: “All the municipalities in which we operate have now lifted their restrictions on our ability to enforce rental contracts … As a result, we experienced 80 basis points of bad debt in the quarter as compared to our budget of 120 basis points.”
AVB’s Sean Breslin said that in Southern California, “roughly 40% of the revenue growth was related to just better underlying bad debt,” removing long-delinquent residents and “re-renting those units to people who are paying.”
MAA’s Tim Argo: “Collections outperformed expectations with net delinquency representing less than 0.4% of billed rents.”
IRT’s Scott Schaeffer: “Last year, for all of 2023, bad debt in Atlanta was about 5% of the Atlanta market revenue, and that has certainly trended better. So far in the first quarter, we’re down to about 4%” thanks to improving eviction backlogs as well as ID and income verification tech.
Trend #3 – High Mortgage Rates and Housing Prices are Keeping Move-Outs Very Low
MAA’s Tim Argo: “The 12.9% of move-outs in the first quarter that were due to a resident buying a home was the lowest ever for MAA.”
Camden’s Ric Campo: “9.4% of our move outs in the first quarter were attributed to residents’ buying a home, lowest in our history.”
EQR’s Mark Parrell: “The percentage of our residents leaving us to buy homes was 7.8%, a continuation of all-time lows.”
AVB’s Sean Breslin: “During Q1, only 7% of our residents moved out of one of our communities to purchase a home. It wasn’t that long ago that we highlighted 12% to 13% of move-outs to purchasing a home as being low.”
ESS’s Angela Kleiman: “The percentage of our turnover attributed to purchasing a home has fallen from around 12% historically to 5% today.”
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