EQUITY RESIDENTIAL — Call Transcript 2025

Today, and welcome to the Equity Residential third quarter 2025 earnings conference call and webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Marty McKenna. Please go ahead, sir. Good morning, and thanks for joining us to discuss Equity Residential's third quarter 2025 results. Our featured speakers today are Mark Parrell, our President and CEO, Michael Manelis, our Chief Operating Officer, and Bret McLeod, our CFO. Bob Garechana, our Chief Investment Officer, is here with us as well for the Q&A. Our earnings release is posted in the investor section of equityapartments.com. Please be advised that certain matters discussed during this conference call may constitute forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to certain economic risks and uncertainties. The company assumes no obligation to update or supplement these statements that become untrue because of subsequent events. Now, I will turn the call over to Mark Parrell. Thank you, Marty. Good morning, and thanks for joining us today. I will lead us off with some broader commentary. Michael Manelis will provide color on our third quarter revenue performance, as well as what he is seeing in the markets today, followed by Bret McLeod, our new Chief Financial Officer, who will address expenses and our NFFL guidance. We'll go ahead and take your questions. Our third quarter results reflect the resilience of our business. Despite what is generally a mixed macroeconomic picture, we continue to see good demand and excellent resident retention across most of our markets, with results strongest in San Francisco and New York where continuing high demand has met modest supply. We see our existing residents as having a generally stable employment situation and good wage growth. When last reported, the unemployment rate for the college-educated, our key renter demographic, was 2.7%, considerably below the national average. This is consistent with the experience at our properties, as we see continued improvements in delinquency and no other signs of customer financial stress. We have also seen incomes rise for our new residents by 6.2% year-over-year, a healthy rate of growth. Finally, we continue to see residents react to the uncertainty in the economy and the quality of our properties and people by renewing with us at record rates. In fact, we reported the highest third quarter resident retention in our company's history, allowing us to maintain high occupancy rates in the mid-96% range. In sum, our existing customer is financially healthy and happy to stay with us. On the new customer acquisition side, we began to see weakness in traffic during the back half of September. This was most pronounced in Washington, DC, but did manifest itself in other markets as well. The best way to think about this is for us to say that our normal pattern of a seasonal decline in traffic began one month earlier than usual. Everything this year feels like it was pulled forward. The leasing season started earlier than usual and peaked earlier than usual, just as the normal seasonal pattern of traffic decline began earlier than usual. This acceleration of seasonal patterns, weakness in Washington, DC, and some minor delays in the rollout of another income initiative that Bret will discuss in a moment led us to adjust down the midpoint of our annual same-store revenue guidance by 15 basis points to 2.75%. In terms of market commentary, Michael will speak in a moment on specifics in DC and elsewhere, but I did want to make a general comment on San Francisco, where we have 15% of our net operating income. After a prolonged recovery, we are excited by what we are seeing in San Francisco, particularly the urban core, where we have more exposure than our competitors. As we talked about at our Investor Day earlier this year, we thought San Francisco had the opportunity to be a strong performer in 2025, and that is exactly what is happening in this, the epicenter of the AI technology revolution. As a result, we expect San Francisco to be our best-performing market this year. At our Investor Day, we also spoke positively about the Seattle recovery story, and we do see improvement there, but due to higher supply levels in Seattle than San Francisco, this improvement is occurring at a slower pace. Conversely, as we generally expected, we are seeing very different conditions in our higher supplied markets, specifically Denver, Dallas, Austin, and Atlanta, where we have about 11% of our NOI. In these markets, where the slowing job picture is meeting continued high levels of supply, we see a significant lack of pricing power. To be clear, the supply pressure includes both recent new apartment deliveries, which are pretty well tracked by all the data providers, and the continuing pressure from slow lease-ups of already completed properties, as well as the first round of lease renewals at properties that were delivered a year ago, where landlords are struggling to remove lease-up concessions when going through the renewal process in places with many choices for consumers. This not yet fully stabilized supply is less well tracked by data providers and is not as well understood by investors, but is certainly impactful. Over time, all of this supply will clear the market, and we remain comfortable with the cost basis at which we acquired the assets we own in these markets. We also are positive on longer-term return prospects in these markets, complementing our portfolio diversification goals. As we've said on prior earnings calls, we do expect to see an elongated recovery in these markets. Switching over to capital allocation, as you saw in the release, we have been active in buying our shares, with the company repurchasing approximately $100 million of its stock during the third quarter and subsequent to quarter end. We see our company, with its high-quality asset base and sophisticated operating platform and forward growth prospects, as greatly undervalued versus asset prices in the private market. Also, we closed on one acquisition in the quarter, a 375-unit property in Arlington, Texas, that has been in process for some time. This property was just completed in 2023 and is a nice complement to our Dallas area portfolio. We sold two deals in the quarter, one in suburban Boston and one in suburban DC. These were older assets, averaging nearly 30 years in age. These transactions all traded right around a 5% cap rate. As you also saw in our release, we have lowered our acquisitions and dispositions guidance for the full year to $750 million of each, from $1 billion of each, with the vast majority of these transactions already completed. As I just discussed, with private market assets often trading at sub-5% cap rates and at or above replacement cost, our stock presents a compelling value at current levels, making us selective and limited in our acquisition activity for the time being. Dispositions of properties to fund the buyback will occur over the next several quarters and will focus on properties with lower forward growth potential or where we are overconcentrated. Before I turn the call over to Michael, I want to reiterate how excited we are about the forward prospects for our business. Our internal tracking shows deliveries of competitive new supply in our markets declining 35% or by about 40,000 units in 2026 versus 2025 levels. The results we are seeing in San Francisco and New York demonstrate the earnings growth power of our business when we are operating in markets with sustained demand and low levels of competitive new housing supply. We believe more markets we operate in will trend in that direction in 2026, assuming the job situation is reasonably constructive. For example, our internal tracking shows 2026 new apartment supply in the Washington, DC market that is competitive with our properties will be declining by over 8,000 units or down 65% to below 5,000 units, a level we have not seen since at least the Great Financial Crisis. With portfolio-wide occupancy of more than 96% and occupancy nearly 97% in some of our key markets, we think this sets us up well for another year of solid performance in 2026. If job growth reignites, we could see some very good results. In sum, we continue to see the current and future drivers of our business as healthy and the forward momentum is solid. With that, I'll turn the call over to Michael Manelis. Thanks, Mark, and thanks to all of you for joining us today. Our third quarter results reflect solid demand with outside performance in San Francisco and New York. Currently, general macroeconomic uncertainty remains as a result of tariffs, lower job growth, and more recently, the government shutdown. These factors make forecasting demand a little bit more challenging today than it was 90 days ago, but what has not changed is the excellent setup we have going into next year due to the dramatic reductions to competitive new supply. Breaking down our third quarter operating results, our renewal rate achieved for the quarter remains strong and was up 4.5%, with nearly 59% of our leases renewing, and both of these were in line with what we thought would happen through the quarter. Our centralized renewal process and intense focus on customer satisfaction has helped deliver the lowest reported third quarter turnover in our history. Across our portfolio, the average length of stay has increased by nearly 20% from 2019, and retention is at record levels. As secular trends and our focus on enhanced customer experiences have driven increased retention, the positive impact on same-store revenue growth from renewals has become more significant. Our unique value proposition and customized renewal experience reduces costs associated with vacancy and new customer acquisition, like marketing and concessions, while enhancing customer satisfaction and removing the friction costs on our residents who choose to remain with us. This strategy optimizes overall revenue and improves customer satisfaction despite potential short-term variability in new lease change, which is an output that is greatly impacted by who moved in or out. With that said, new lease rates at -1% came in lower than we expected and resulted in a 2.2% blended rate increase for the quarter, which was at the low end of our range. As Mark described, pricing trends peaked in July this year at a level that was both lower and earlier than normal. Prices stayed relatively flat through August and started the seasonal descent in September, which is typical. We did observe some late quarter pricing softness, mostly in Washington, DC, which I will describe in a minute, which impacted our new lease change. For the entire portfolio, physical occupancy remained high at 96.3% for the quarter, driven by solid demand and strong retention in our coastal markets, excluding DC, which gave up some occupancy at the end of the quarter. Let me take a minute and highlight a few of the markets that are driving performance. The recovery in San Francisco, particularly downtown, is real. As the epicenter of all things tech, workers have returned to the market and drove high occupancy and very good rate growth on both new lease and renewal rates. This strength was supported by the positive trends we observed in our migration data, with just over 4% more move-ins coming to us from outside both the MSA and the state of California. In addition, we have a very favorable new supply setup in the market in 2026, with only about 1,000 units of competitive new supply being delivered. San Francisco will be our best-performing market in 2025 and most likely again in 2026, as we are just now approaching 2019 rent levels in our downtown portfolio, while median incomes in the market are up 22% since 2019. Similarly, New York continues to be a strong performer. Job sentiment in the market has been good, and competitive new supply has been and will continue to be very low, which should position us to deliver above-average revenue growth again next year. I would note that our combined exposure to urban San Francisco and New York and the positive demand and supply outlook in 2026 is particularly unique to EQR and should be a relative strength for us versus peers next year. While DC will end up having a strong 2025, the year has certainly been a tale of two markets. The strength we saw early in the year carried through most of the third quarter, but as I mentioned, in late September, we definitely started to see some softness in demand and pricing power. A combination of federal job cuts and the National Guard deployment, followed by the government shutdown, has created a lot of uncertainty in the local market. Most of the pressure is being felt in the district and in pockets of Northern Virginia, and in these areas, our current operational focus is preserving occupancy. While we aren't experiencing residents turning in keys due to job loss, our overall turnover in the DC market did increase slightly in the quarter, and the volume of leasing activity has slowed as the overall market still needs to absorb the nearly 13,000 units delivered this year. The good news is that in 2026, competitive supply in DC will drop 65% and remain low for the foreseeable future, which is a marked change from the past decade. Add to that our sense that in the long term, the federal government will continue to be a job engine, regardless of the near-term headwinds of temporary cuts or shutdowns. Overall, we feel very good about DC as a market in the long term. Shifting to Los Angeles, the city continues to face challenges and remains a wildcard as we head into 2026. We continue to see overall market weakness driven primarily by slowdowns in the entertainment industry, and although the quality of life issues are improving, they are still not where we would like them to be. We have demand, but less pricing power, particularly in the urban portfolio, where we continue to feel the impact of new supply in our downtown, Koreatown, and Midwilshire portfolios. Our suburban submarkets of Santa Clarita, Inland Empire, and Ventura County are performing well. As in many of our coastal markets, supply will be lower in 2026, but we will need to see a catalyst for demand in order for us to have pricing power return. Our hope is that with the upcoming World Cup in 2026 and the Olympics in 2028, there will be long-term incentives for the quality of life to improve in LA, albeit from a low base. In our expansion markets, which currently represent only 6% of our same-store NOI and 11% of our total NOI, high levels of new supply continue to impact operating results in Atlanta, Dallas, Denver, and Austin. Atlanta is faring the best of the four, and Denver the worst. Our same-store portfolios in both Atlanta and Dallas should see improved results and perform better than the broader market next year as we add our recently acquired more suburban assets to the same-store portfolios next year. Before I turn it over to Bret, let me take a minute to highlight our current activities around innovation. In the third quarter, we deployed our AI-driven application processing tool, which has already delivered a 50% reduction in the overall application time. We currently have about half of all applications being completed within one day, and this process includes a more robust, comprehensive ID verification process that should help reduce fraudulent activity going forward. Overall, I am really excited about the opportunities in 2026 as we continue to implement AI in other key areas of the resident experience. Next month, we will begin testing a new service request module that is designed to improve service request intake, provide self-service tips, optimize team schedules, and ensure qualified team members address tasks efficiently in a single visit. This is a great example of how we are focused on increasing the utilization of our workforce, while at the same time creating a more seamless and responsive experience for our residents. I want to give a shout out to our amazing teams across our platform for their continued dedication to our residents while embracing change to further enhance our operating platform. Our portfolio will end 2025 well-occupied with a strong platform that combines automation, centralization, along with a local team that knows how to keep our customers satisfied while getting a larger share of the demand pool, whatever that level may be in the markets. I will turn the call over to Bret. Thanks, Michael. Before I walk through our updated guidance, I first wanted to say how excited I am to be here at Equity Residential, working alongside Mark, Michael, Bob, and the rest of our talented corporate team. It's been nearly 100 days since I joined the company, and I'm even more impressed with the organization than when I started. I'm comfortable stating that because one of the first things I did here was hit the road and visit many of our communities and hardworking associates across the country. My early travels included some of our top-performing markets, such as San Francisco and New York, where I saw the quality and location of our assets firsthand, as well as the innovative operating platform Michael and the team have established. I visited Seattle, where we are set up well for 2026, benefiting from local return-to-office mandates and continued AI investment growth. I also traveled to Dallas, one of our larger expansion markets, and witnessed constant examples of the outsized demand growth dynamics that are driving our positive long-term thesis on that metro area. I'm grateful to all my new colleagues for helping me get up to speed so quickly. With that said, let me provide some color on the guidance adjustments we made this quarter, which continued to reflect a stable and resilient business outlook, albeit amidst some macroeconomic and employment uncertainty, as Mark and Michael described. We've adjusted the top end of our full-year same-store revenue outlook down as a result of third quarter same-store blended rate coming in at the lower end of our prior range and what we have seen in early fourth quarter trends. In addition, a portion of other income growth related to bulk Wi-Fi that we expected to realize in the second half of 2025 has rolled out slightly slower than planned and will now be pushed into 2026. That said, we still saw strong quarter-over-quarter growth in other income of 9%, demonstrating our ability to continue to pull multiple levers to drive overall revenue. The combination of these two factors resulted in a revised 2025 same-store revenue range of 2.5%-3%, with a midpoint of 2.75%, which matches the midpoint of the range we guided to at the beginning of this year. We've held same-store expenses steady at 3.5%-4% for the full year and continue to see sub-inflationary trends on payroll, insurance, and real estate taxes, partially offset by higher utility expenses, particularly in California. I would remind you that our 2025 same-store expenses are approximately 40 basis points higher this year due to the continued rollout of bulk Wi-Fi, which sits in repairs and maintenance, but is positively contributing to outsized other income growth for the remainder of the year and will continue to do so as we move into 2026. The net result of these same-store revenue and expense adjustments is a revised annual same-store NOI range of 2.1%-2.6% and a midpoint of 2.35%, 15 basis points higher than our original 2025 guidance, but 15 basis points lower than the midpoint we provided in the second quarter. For normalized FFO, we've tightened our range of both the top and bottom end and are estimating full-year 2025 NFFO per share of $3.98-$4.02, leaving the midpoint unchanged from Q2 at $4 per share. Slightly reduced same-store NOI should be offset by expected continued improvements in lease-up NOI and lower property management expense. With that, I will turn it over to the operator and open it up for questions. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, you can press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll now take your first question coming from the line of Eric Wolfe with Citi. Thanks. It's Nick Joseph here with Eric. I appreciate the comments on the peak leasing season and totally understand that the timing of each year is a bit unique. I guess in the past, when you've seen rent growth falling at this time of the year, how do you approach the forecast for next year's growth? How do you decide whether these are more temporary factors affecting rent growth or something that's more likely to persist going forward? Yeah. Hey, Nick. This is Michael. That's a great question. I think what I would start with is just say, as what we felt coming out of that peak leasing season and looking at some of the decelerations that occurred in that later part of September and has carried through October, we basically just took that seasonality through the rest of the year. You know how it kind of manifests itself into next year, there's still a lot of seasonality to these blends. I think I'm going to stay away from giving the exact guidance or outlook to next year. We do expect to start out next year well-occupied with some embedded growth that looks very similar to how we started out this year. I think the wildcard for us is really going to be what does that intra-period rate growth look like? For us, in many of these markets, it's going to be when does that consumer sentiment turn positive again? We have such a great setup with the reduction of competitive supply being so much lower in many of these markets. It's not going to take much of a catalyst from that sentiment change or any catalyst in the job growth in these markets to really fuel that intra-period growth. I think for us, I'm going to stay away, like I said, from giving you the guidance, but we're modeling right now for continued deceleration for the back of the year, but still feel pretty good about the setup and the outlook into next year. Thanks. I appreciate that. In terms of capital allocation, you've done $100 million on the buyback so far. Given where the stock is today, what are the factors or how are you thinking about really leaning into that and doing it at a much more meaningful scale versus other opportunities with your capital allocation? Hey, Nick. It's Mark. Thanks for that question. There's really two inputs. One is the attractiveness of our other investment opportunities, which is predominantly buying existing assets or building new assets versus the stock. Obviously, we voted for the stock over the last quarter and bought that. There's also the availability and cost is the other factor of the capital we need to acquire the stock. That's really, really only two places. We either have to issue debt or we have to sell assets because, as you well know, as a REIT, we just can't retain much in the way of earnings. We pay a really nice $1 billion-a-year dividend already. Our lean right now is to continue to do asset sales of these lower return profile assets or assets where we have an overconcentration in the submarket, kind of improve the forward growth potential of the business, and arbitrage the private-public markets and continue to be thoughtful about buying more stock. Exact levels and stuff are just dependent on where the stock price goes and the opportunity set goes. We'll be open to that. I just want to remind everyone, and again, I know you know this, Nick, but there are real tax gain limits. We have a lot of embedded gain in our assets. We've done a lot of good investing over the years, and our assets are worth a lot more than their basis is a lot lower than the tax basis, so there'd be a lot of gain. We also did 1031s. I'd also point out I want to be careful about not descaling the company too much. There's a lot of fixed costs in running a public company of this size, so we just want to be thoughtful about that. We're very open to additional buyback activity in the quarter. Thank you. Next question is coming from the line of Steve Sakwa with Evercore ISI. Thanks. Good morning. I was wondering, Michael, if you could provide any color on just kind of where the earn-in sits today as we kind of head towards the end of the year. Yeah. I think maybe I'm going to just start off and let me define or clarify embedded growth, which is kind of also referred to as that earn-in. It basically just means that you're freezing the rent roll on 1231. You annualize all the leases in place with no changes to occupancy or vacancy loss throughout the year. We started 2025 out with approximately 80 basis points of embedded growth on this same-store set. While that was slightly below the historical average of 1%, it was still a pretty solid position for us to start off the year. Given the current momentum that we see now and some of that deceleration that I just referred to that we modeled, we now expect 2026 to start out in a relatively similar position than we did this year. Our view is a little bit lower than what we thought 90 days ago. This is really just a result of us taking down that trajectory of the fourth quarter, given some of the deceleration that we saw begin in kind of late September. I do want to call out because I know a lot of you guys have these models. While the math is not perfect, right, rough estimates, you start out with about 50% of the expected full-year blended growth. In 2026, we're going to also be folding in some of the assets in the expansion markets. While these assets are clearly performing better than the same-store assets in those markets, they're not performing better than the overall kind of coastal same-store portfolio. It's going to be a little bit diluted to that embedded starting point. Again, I think at the high level, we would say we're going to start out 2026 in a relatively similar position as we did in 2025. Great. That's helpful. Thanks. Maybe just going back, it sounds like with the slowdown in the seasonal trend, there's a bit more pressure on the new lease trend and top-of-funnel demand. I'm just curious if you're seeing any change in behavior on the renewal side. Have you had any real change in the renewal success, or is most of the weakness really happening on the new lease side of the business? Yeah, Steve. This is Michael again. Great question. I think what we noticed in select pockets of markets in the renewal process, there tended to be a little bit of hesitation, a little bit more back and forth. We have centralized our, you know, we have a centralized renewal team handling all of these negotiations or conversations. It's really allowed us to execute these various strategies. We noticed a little bit more kind of back and forth, a little bit of this hesitation. Right now, for the next several months, our quotes have been sent out in the marketplace. We typically send out renewal offers about 90 days in advance. Those markets, those quotes were sent out about 6%. Sitting here today, we had a lot of confidence in our process. We would expect to have achieved kind of net effective renewal increases to land right around 4.25%. This is typically a time where we're going to lean into retention, and we'll tend to negotiate a little bit more as we hit the shoulder part of the seasons. I think we saw a little bit of that hesitation, but we still have a lot of confidence in our process. We're seeing really strong resident retention occur. It's just taking a little bit more kind of back and forth, a little more effort to secure those leases. Great. Thanks for the color. Next question is coming from the line of Alexander Goldfarb with Piper Sandler. Hey. Good morning out there. Two questions. Bret, maybe I'll start with you and kick it off. By the way, nice job on your Blue Jays last night. Thank you. This may predate you, but I think you guys did converts back in 2006. Once again, they seem to be all the rage. You guys have some mid-3% debt coming due next year. Just curious where your headset is on the potential to reenter the convert market or if your view is, you know, hey, we did it two decades ago. We had an experience. We haven't done it since. That's the message, that you guys may just stick with traditional. Just trying to understand, especially given some of the receptiveness we've seen from some other large REITs, pricing converts pretty tightly. Alex, it's Mark. I'm going to start here. It is historical context that Bret lacks, but certainly he understands converts very well given his experience level. When we did that back in 2006, we did that in part because we were working with the Lexford portfolio sale and buying into lower cap rate, higher growth markets like New York. This was a little bit of an asset matching exercise for us, and the terms were pretty appealing. I do think converts are an interesting tool. I think there are times they're very beneficial. If we got our hands, for example, on a portfolio where it was a big lease-up effort that we were going to have or a big renovation effort, and it was pretty material, you might match fund that with some converts. The accounting disclosure of converts is pretty favorable now. If it succeeded, the convert holders would benefit, the existing equity holders would benefit, and it would all make some sense. Otherwise, we're an opportunistic and infrequent issuer of converts. It's a little awkward to be buying your stock back and issuing converts at the same time. We'll just have to balance that out. Okay. The second question is on AI. There is a lot of discussion on whether it's sort of a net job creator or it's maybe a job eliminator or it's just obviously different headlines on layoffs and stuff. In your key AI markets like New York and San Francisco, are you seeing a ripple effect where the AI job hiring is benefiting other related industries and you're seeing net overall job growth, or are you seeing sort of the reverse where AI job growth is ending up with other positions in those markets being eliminated and replaced by AI? Yeah. What an excellent question. It's Mark. I'm going to suggest that Michael just tell you what he's hearing from people on site and in the markets and give you that intel. I'm going to sort of give you what we've been thinking about on the AI side and employment in the long run. I tell you, it's very, of course, very unknown at this point. Michael. Yeah. I mean, I think one of the best indicators we have is when we drill into some of our migration data, which is, you know, where are new residents coming to us from? What industries are they working with? I wouldn't necessarily say, Alex, that this is all driven because of AI that we're feeling. When you look at San Francisco and New York, San Francisco clearly saw in migration 4% more of our move-ins coming to us from outside the state of California, outside kind of that MSA, which basically is telling us there's a lot of kind of excitement going on. I mean, this is the epicenter of tech. Even though you see the big guys kind of really dominating the headlines around AI, there's a lot of other startup industries. There's a lot of businesses now that are benefiting from just an overall shift in the technology strategy of companies. I think we're benefiting from that. New York, what was interesting for us is we saw a slight uptick in that migration pattern coming in from outside that MSA. What was cool on the outbound side, people that were leaving our portfolio were staying in the state and in the MSA at a higher degree than what we saw before, which gives us confidence that kind of that market is going to be doing really well for us next year. Yeah. Just to tack on, one last thought on the AI side. I mean, clearly, there's been a lot of talk about whether AI is going to get rid of a lot of white-collar jobs. No one knows the answer to that question. A lot of the comments about vast displacement are being made by folks, Alex, as you know, who greatly benefit from the AI boom. It's a little bit about talking your own book. That said, I do think AI is an interesting tool. I think it's going to change the relationship between colleges, students, and employers. Right now, I think the unspoken deal is colleges turn out smart people with good general skill sets, but not necessarily work-ready skills. I think what's going to happen going forward, you spend a year or two teaching those people your vocation, their vocation, and then they're pretty productive for you. I think colleges are going to have to put at a premium teaching people data analytics and AI skills. They're going to show up with the equivalent of second or third-year employee skill sets and be able to move forward. You know the kind of people that we have at our properties. These are highly educated folks. These are often Gen Z and Millennials that are digital natives. They understand technology. They will learn AI, and they'll learn to use it better, I would argue, than anyone else. My sense is the market will adapt to this. I'm not a believer in the, you know, no one will have a job theory of AI employment. Okay. Great. Thank you, Mark. Next question is coming from the line of Jana Galan with Bank of America. Thank you. Good morning. Question for Michael, following up on your San Francisco comments. If you could speak to your prior experience in that market when demand starts to accelerate, how quickly can rents increase, and then does seasonality still hold or kind of not as much given the growth in jobs? Yeah. I mean, obviously, anytime you have supply-demand kind of imbalance, and in this case, in San Francisco, you have very little competitive supply and you have more demand coming into the portfolio, that creates this opportunity for rent growth. I think I alluded to in my prepared remarks, we're just now getting back to 2019 kind of rent levels in our portfolio. When you look at incomes in that market, it's up 22% since 2019. I think historically, what you see is anytime you have this imbalance and you have strong demand, less supply, you're going to be in a position of pricing power. I don't know that it's going to completely abate any kind of seasonality trend. You may see some softening in very strong numbers still, like in the fourth quarter or in the first quarter. We clearly have an opportunity in front of us. This is exactly what we kind of highlighted earlier in the year at our Investor Day. This recovery is taking hold, and we're really excited to see it kind of playing out at this pace. Thank you. Quick one for Bret on the Wi-Fi expenses. You mentioned it was kind of a 40 bps delta in 2025. Is there additional expense related to this initiative in 2026, or will that kind of just be smoothed out? Thanks for the question. No, that's primarily for this year. Right now, we're just looking forward to getting the revenue after we've had the expenses run through this year. Thank you. Next question is coming from the line of Brad Heffern with RBC Capital Markets. Can you give your perspective on what you expect to happen in Washington, DC over the next six to 12 months, and how much of an impact has a shutdown historically had, and how much do you expect this one to have? Yeah. Hey, Brad. This is Michael. Maybe I'm going to start. I just want to give a little bit of color as to what have we observed in DC, how do the various submarkets kind of appear today, and then I'll kind of shift it as to what we would expect for the balance of the year or turning into next year. First and foremost, I think what we observed in that first or second week of September is a little bit of that hesitancy that I described on that renewal process, but also taking hold with prospects. There was just a little less sense of urgency to buy and sign on the dotted line and commit to kind of move-in dates. That manifested itself as we worked our way through September into October with just a lower volume of kind of new leases occurring. The retention side held up strong. When you look at DC today, if you peeled out our DC market, we have a suburban Maryland portfolio doing very well, right? It's 97% plus occupied. It's got rents slightly on top of where they were last year. You go into the Virginia portfolio, go deep suburban into Fairfax. I got good occupancy and I got rents up a couple percent. Start coming in towards DC in that Virginia portfolio where you got a more urban concentration competing with the supply. I've still got solid occupancies, but I got pockets where I don't have pricing power, where I had to start utilizing concessions. Then you get into DC, Northwest DC, along with DC, kind of the district central area. I've got occupancies that are running 95%, 95.5%. I've got concession use that has clearly increased in the last four weeks. I got net effective prices that are down 4%. We've modeled that out for the rest of the year. We're not seeing folks that lost their job with the government turning in keys. We're not seeing any of this increase in lease breaks. You're just seeing an overall slowdown in the top of the funnel and this willingness to commit to a lease. I think for us, we'll have to expect that to continue through the balance of the year. I think consumer sentiment is tricky, right? It can shift on us very quickly and turn back positive. You can get past the government shutdown. You can get some confidence back in hiring. That market is going to be really well positioned again because we just have a huge decline in competitive supply coming to our advantage next year that it's not going to take much for us to have pricing power. The trick is exactly when does that inflection point take hold. Okay. Got it. Thanks for that. On San Francisco, you've called out the difference in rent growth and income since the pandemic a couple of times. Do you think we're in sort of a multi-year above-average growth environment where we might see that differential narrow quite a bit, or is there some component of rent having outrun fundamentals in the past and now we're seeing sort of a catch-up as well? I think our view clearly when you look at the recovery is that we have some good years in front of us in that market. Technology is advancing quickly. That market is clearly at the center of that. You see the migration patterns. You see the incomes going up. You see rent levels that are still at a really good discount relative to historical standards. When you put it all in the blender, it tells me that we should expect some outsized kind of growth for the next couple of years there. Okay, thank you. Next question is coming from the line of Adam Kramer with Morgan Stanley. Hey, thanks for the time. I think, Mark, in your opening comments, you used the word elongated, talking about sort of the recovery in the expansion markets. I wanted to maybe double-click on that. I'd be interested to hear if that's more of a lease growth comment, if that's sort of relative to expectations about the seasonal curve, that maybe you don't expect a normal seasonal curve there in the expansion markets in 2026. I guess just more broadly, any color in market rent growth expectations. I know it's still early, but market rent growth expectations for next year, maybe coastal versus expansion markets, would be really helpful. Yeah. Thanks, Adam. I'll start. Michael or Bob may contribute as well. I was alluding in part to the fact that though people are very aware of deliveries in these expansion markets, in these Sun Belt markets, they don't really think as much about how long it takes to fully absorb, which in a highly supplied market can be at least one renewal cycle. That was the other point I made in the remarks. I want to give some perspective. We're not prescient about all this, but I think we were rational about how quickly absorption would occur and pricing power return to landlords. The assets that we bought a couple of years ago in these markets, when we were looking recently at their performance, we were within 1% of our underwriting on NOI. I think what we just had in mind was that concessions would persist, that rent growth would be minimal to negative for a while, that that was just what happens when you're in a very heavily supplied situation. You'll get out of it and you'll roll. I think that inflection point, people have kept wanting to put that inflection point on the date that deliveries declined, and we just didn't believe that. That sums up how we underwrote differently. We were more focused on the full absorption, the full amount of the supply being just part of the normal volume in that market and not pressuring existing owners very much. I would expect coastal markets to have higher same-store revenue growth by a fair margin next year. All the low leases that were written this year are going to be in next year's rent roll and are going to pressure those numbers. You may see, and we expect to see some improvement, I hope earlier next year, but it could be later depending on the job situation in the second derivative and that rate of change number on new lease and otherwise. It all comes from a really low base. I think it's a certainty that coastal markets will have higher same-store revenue growth, and every market's a little different because they've written better leases this year and those are going to affect next year. I think the opportunity in the Sun Belt markets, including our expansion markets, is to start to maybe stabilize occupancy and maybe start to move up, reduce concessions and move up new lease levels. I think it's just going to be more of higher cash flow late in 2026 and into 2027 more so. Great. That's helpful. Maybe just a little bit of a wonky one here, but just wanted to ask about some of the same-store pool changes with some of the kind of prior year acquisitions folding into the same store, you know, going into next year. Maybe if you could just sort of quantify what percent of, and I think you mentioned it earlier, but just what percent of the same-store pool today is expansion markets and what that's going to look like next year, and then maybe some of the specific assets that are going into the pool as we go to next year. Yeah. Great question. I think maybe stepping back for a minute when we think about just same-store results and kind of the sets we have. Just a reminder, we have three same-store sets. We've got the quarter versus same period last year, all at about 75,000 units. Current quarter versus last quarter, which is sequential, that's about 80,000 units. There's about a 5,000 unit difference there. Year to date, same period, that's about 74,000 unites-75,000 units as well. I think, as we look to next year, my guess is it's about a 5,000 unit increase that goes into our same-store set in 2026. That's primarily coming from those expansion markets. That's exactly right. It's Mark. All I'd add there, Adam, is this is something Michael said. A lot of the assets we're adding are suburban assets in Dallas, suburban assets in Atlanta, suburban assets in Denver that, by and large, are going to look better than the performance of the assets we already own in the same-store set, which because we brought them early, we got pretty good basis. They tended to be urban assets, and they've not performed as well as our suburban portfolio has in the last year or so. Though when they weren't in same-store, they did pretty well. Some of that is less observable to you. I would guess that you're going to see 4,000-5,000 more units in the annual same-store set that Michael will give you guidance on in three months. Great. Thank you. Next question is coming from the line of John Pawlowski with Green Street. Hey. Good morning, guys. Michael, outside of the DC Metro, what other markets do you see a real cooling of demand in the last month or two? Hey, John. It's a little bit hard to hear you. Are you just asking where else did we see a decline in demand in the last month or so, other markets? Yeah, outside of DC Metro. Sorry for the quiet voice. Yeah, no, that's okay. I think I would put Boston kind of into this mix as well for us, which is, we've been watching kind of Boston. It's a very seasonal market in general. I think what we've seen right now is just a little bit more softening than you otherwise would have expected. When we started this year, we thought this urban core of Boston was going to do better than the suburban. Again, we're 70% urban in that market, 30% suburban. It's absolutely playing out that way where the urban portfolio is outperforming the suburban, but it's just not as robust as what we would have thought. We've kind of taken down that fourth quarter projection as well. I think I even alluded to some of this on the last quarter call, which is, we clearly had headline risk there. I think right now what we're seeing is a confirmation that a weaker biotech sector, pullback in university and research funding, immigration challenges are all just chipping away at this overall demand levels in the market. I think right now, when we turn the corner and we start off next year, I still think the urban portfolio is positioned to outperform the suburban, but we got to get through some of these kind of near-term demand driver vulnerabilities that we're seeing right now. Okay. Second one for me. Bob, could you spend a minute or two just helping frame like what type of changes are you going to be incorporating in the underwriting process now that you're at the helm of the investments organization and just generally how your approach will be different, either philosophically or the data you're using, the processes? Could you just spend a few minutes talking through how the investments work and how your underwriting properties and markets are going to be different in the next five to 10 years versus the last five to 10 years? I don't think there's anything that's particularly a wholesale change in terms of strategy, etc. I think you pinpointed something that is a huge opportunity that Alex was already really starting on, which is just this data-driven mindset. I think you guys probably see it in your own investment space where there's just incredibly larger amounts of data sets, and there's better ways of analyzing that data and relational data around that. We're fortunate to have a long history of our own data set that we can work together in making better decisions. I think it's just continuing to lean into something that frankly started before my transition and that I hope to accelerate. I think that's part of the excitement of the opportunity for me personally, to take it to call it EQR 3.0, 4.0, whatever iteration you want to say. We're fortunate to be on a platform where we have a lot of data and a lot of skilled people who know how to do this. That's the excitement if you can't hear it in my voice. All right. Thanks. Next question is coming from the line of Michael Goldsmith with UBS. Hi. This is Ami. I'm with Michael. What impact, if any, do you expect from the announced Amazon layoffs? How exposed is your portfolio to the specific submarkets most likely to be impacted? Yeah. Hey, Ami. This is Michael. I'll take a shot at that. First and foremost, I think this is one of the benefits you have of us having a diversified portfolio that you kind of de-risk some of this kind of direct pressure from any one employer. That being said, if I looked at the entire portfolio today, again, we capture employment data at the time of application. We don't follow somebody once they move in as to where they're currently being employed. If I just looked at that snapshot today, we have about 3% of our units that had residents employed at Amazon at the time they moved in with us. I looked at the concentration across them. Obviously, markets like a Seattle, where you have a heavy employment base from Amazon, we have a higher percentage there. For us, that gets very isolated. We have three properties in South Lake Union where we have a high percentage of Amazon employees. I also want to just call out that we've been through this before with these kind of layoff announcements and looking at some of the stuff that's hitting the press now about Amazon. It is more dispersed across several markets. This is not a light switch. It's not immediate. These are very kind of well-skilled, employed individuals. Many of them will receive severance packages. I think in the case of Amazon, they're given 90 days to go find alternative roles within the company. I looked yesterday even at a couple of markets like in DC. They still have 300 positions posted. It's not like they pulled down all their available positions either. I look at this and I say, look, anytime you have these big headlines that take away from the top of funnel demand, that's not a positive, right, in today's day and time where we're looking for job growth. Comparing that to isolated pressure, I just don't see this as a big concern for us. Okay. That's helpful. Next question is on leasing concessions. They're still at a relatively low level of rents, but on a year-over-year basis, they jumped up pretty materially. What are you offering in terms of concessions, and are they concentrated in certain markets? Last question, are you offering any concessions on renewals? This is Michael again. Very, very limited concessions are being used into our renewal process at all. I think on a cash basis in the third quarter, we did use more concessions than we originally expected. I will just put this in terms of days per move-in. In the third quarter move-ins, we averaged about seven days of rent being concessed. That increase was clearly targeted into occupancy liens in some of these markets like DC, and the expansion markets are pretty heavy use of concessions right now. As we think about the fourth quarter, I would expect that concessions on an absolute dollar basis will drop off a little bit just because the sheer volume of transactions on the new lease side drops off. When I look at that relative to move-ins and days being concessed, my guess is we're going to tick up one day and probably be in a position next quarter to say that we've concessed about eight days per move-in for the folks that moved in in the fourth quarter. Concessions right now are sticky in some of the markets. Even in a market like Seattle that has some decent demand, you just see some more widespread use happening. I think this is just a function of where you had supply delivered in 2025, and you're still working through the absorption of that supply. Many of the owners of those types of assets increased concessions heading into the fourth quarter, and many of the stabilized assets in those submarkets followed suit. That's kind of what we're feeling. Okay. That's helpful. Thanks, Chris. Your next question is coming from the line of Haendel St. Juste with Mizuho. Hey, thanks for taking the question. My question is on the 4Q 2025 blend guide, 50 basis points. I was hoping you could shed some light on the range of expectations there for, say, your weaker coastal markets like DC, Boston, LA, as well as some of your better markets like San Francisco, New York, Seattle. Thanks. Yeah. Hey, Haendel. This is Michael. I'm going to stay away from giving any specific market numbers relative to blends. I'll tell you, the trends that you see are probably going to manifest and continue in the fourth quarter. San Francisco is going to be one of the better performing markets, same with New York. You clearly have seasonality in these stats. I think everybody needs to remember, even if you went back and looked at 2019 data, you have material declines in the fourth quarter just based on seasonality in it by itself. Markets like Boston will be more negative in the fourth quarter than they were in the third, even when the market is performing well. I think for us, rather than go market by market, I would expect to say that the trends that you see in the fourth quarter or the pecking order is probably going to continue into, or what you see in the third quarter is probably going to continue into the fourth quarter, but there will be continued deceleration probably across most of the markets. Got it. Fair enough. I don't know if I missed it, but did you give new and renewals for October? We did not give that, and we're not going to give any kind of spot month kind of stats. I think I gave some of my remarks around the renewal side of the business that the quotes are out in the marketplace, and you know we have a lot of consistency there and would expect about 4.25% achieved renewal rate increases in the fourth quarter. Okay. Fair enough. Thank you. Next question will be coming from the line of Rich Hightower with Barclays. Hey, good morning, guys. Thanks for taking the question. Mark, I think just to maybe put a finer point on some of the comments on the expansion markets, I guess with some of the absorption dynamics that you described, do you expect a normal seasonal curve next year, starting in the spring, or is it going to look different, kind of in the way it looked this year? Similarly, can we expect positive market rents given the trends that you're seeing and sort of extrapolating? Just to be clear, thanks. Every portfolio is different, and every market's different. You could have people less and more optimistic because of their portfolio composition in a specific place. Again, we don't purport to be experts on every submarket in every location. There are a lot of places in the Sun Belt like Phoenix we don't do business at all, so we wouldn't have a perspective on that. I think the answer to that is this job growth thing. If we, as a country, see decent job growth next year, I think the markets will have their normal seasonality. Most markets across the country have less supply, and the coastal markets particularly we've highlighted have a lot less supply. If we see job growth, I think we are off to the races in our coastal markets. I think you'll see the recovery begin in our expansion markets in a more profound way than it has so far. My bet is that this is a pause in jobs, not a significant and long-lived downturn. The big question, to be honest, is whether the pause continues in and through the leasing season. If it gets better in the third and fourth quarter of next year, that's nice, but we will have done, and our competitors will have done, a lot of their leases by then. I think, Rich, it's just a question of whether when you start to get to April and May, you're feeling better about the job situation. There's reasons you should, right? I mean, the Fed, we expect in a few hours, is going to lower interest rates. There is more certainty on the tax and regulatory side than there was even six months ago. There appears to be more certainty even on the tariff side, though that is a dynamic input still. There are a lot of things that look a little better known, and I think maybe employers will be a little more risk-on in the new year. We'll just have to see. I think the job thing is the key to the whole puzzle, and it certainly is a wildcard at this point. Okay. That's helpful. Finally, just a quick one, and maybe this one's for Bret. Bret, it's good to hear you on the other end of the line. Thanks, Rich. It's good to hear you too. Of course. Just on the guidance really quick, guys, there's a $0.04 swing on a dollar for midpoint for 4Q. Help explain what the swing factors might be between now and the end of the year, which is obviously not so many days. Yeah. Look, I think we've got clearly other income growth, which we mentioned is going to help alongside with that swing. We've also got rental income contributing in the fourth quarter as well. That pretty much makes up the difference of it. Yeah. Just to understand the variation, because that, you know, you're sort of highlighting that that's $16 million of total difference. We do have our overhead stuff, and a lot of the bonuses and other things, frankly, are determined in the current period. We don't know those numbers. The same with a lot of medical reserves and things, Rich, that kind of are inside baseball and not particularly interesting, but do have an effect on the numbers. That was just giving us the ability to deal with those in the period. I mean, we obviously feel good about the midpoint, or we wouldn't have said it there. There are puts and takes at the end of each year, and they are, frankly, relatively unpredictable and uncorrelated to each other. Very helpful. Thank you, guys. Your next question will be coming from the line of Jamie Feldman with Wells Fargo. Great. Thanks for taking the question. I guess just some of the line items in our model we're hoping to get a little more clarity on as we think about 2026. Can you talk us through your latest thoughts on loss to lease? If the push-out of other income will affect 2026 at all, and if there will be any kind of bump there that we should be thinking about? Any thoughts on your insurance renewal for March, and then any other key expense line items we should be thinking about? Wow. That's the gamut. It's Mark. I'm going to have Michael speak to loss to lease, which right now is going to probably be about end of year again, the lease thing and other income a little. I'll talk to insurance, and we'll work on expenses for you a little bit. We are, just to be fair, rolling numbers up. We don't have visibility into a lot of these numbers at the level of precision I think you're asking, but we can talk directionally. Yeah. I think Mark, this is Michael. Mark just hit on it, right? Today, the snapshot of the portfolio, we have a gain to lease of about 1%. This is where the portfolio was in November of 2024. I think while we originally modeled, you know, to have a little more pricing power kind of, you know, through this peak leasing season, all of this stuff does appear to be very consistent in the fact with many of the other metrics and that everything is happening about a month sooner than normal. My expectation is that we're going to start out 2026 in a continued gain-to-lease environment. We'll go through the leasing season, and as Mark just talked about, many of those variables are going to dictate how quickly we shift back into a loss to lease, which is kind of what happened to us in 2025 because we started out in a moderate gain to lease and very quickly moved into a loss-to-lease environment. I'll also hit on one of the other items. I think, as Bret alluded to, some of the shift in the other income that we saw in 2025, it's really just a timing delay. We're talking about it's a couple of million dollars that deferred from 2025 into 2026. Yes, it's going to help in 2026, but we're still in this process of rolling all of this up to understand exactly what the full contribution from other income will be to revenue. Yeah. Insurance, just to hit on that, for us, pretty small line item, 3% or 4% of same-store expense. Good number this year after some really outsized numbers. Let's see how the rest of the hurricane season goes. We don't have a hurricane exposure in our portfolio, but it does affect. Marketplace as a whole. Right now it feels like the loss history or losses these insurers have incurred hasn't been very high. We'll be pretty careful and thoughtful, Jamie, like we always are, on the fourth quarter call with the building blocks on revenue. Clearly there is going to be more emphasis on intra-period revenue growth next year to get to good numbers because the embedded will be good, but about the same as it was this year. I think we got something we can give you on occupancy because some of the markets are very highly occupied, like New York, but we have opportunity in Los Angeles in some of these expansion markets, and that number has opportunity. I think we continue to have really good, interesting other income initiatives that provide value to our residents that continue to roll out successfully. There are pluses and minuses in timing, but those will be in there too. There will be a pretty fulsome discussion with you when we get there, but I feel confident about next year. It feels like the setup is good, and the biggest thing we need is just some level of job growth. I think we're off to the races. Okay, great. That's very helpful. You guys have quoted a couple of times now this 6.2% income growth since 2019. If you were to mark that over the last 12 months or even thoughts going forward, where are we today on that number and how does it differ across your markets and what does that tell you about your ability to push rents? Jamie, just to clarify, 6.2% is year-over-year for all our new residents across the whole portfolio. 22% is the increase of all employment in the San Francisco metro area in wages. It's grown by 22% since 2019. Not just our residents, just in general, incomes have, and rents in the market are a little above, but in the downtown area below what they were in 2019. That's what we meant by that. Is that helpful clarification? Yeah, I was thinking more across like other markets. Are you seeing deceleration, acceleration? I assume that'll be, you know, that's a big governor on how much you can push rents. Just anything else that as you look at the data stands out to you guys? I guess I would just look at what I would say as an affordability index that rents at the percent of income. Based on new move-ins coming in in the quarter, we're running just below 20% rent-to-income ratios, which gives us a lot of confidence in the financial health of our consumers and the ability for them to be able to absorb kind of whatever the market rate growth is. Income growth's been pretty good across all our markets. It's that rent growth is widely varied. Some places, rent growth's been relatively significant until two years ago and then went down, like in the Sun Belt markets. Places like Seattle and San Francisco, that's the dry powder. If we give them a great experience and if the supply picture improves, we have a bigger opportunity there because they have good incomes and they've had good income growth in nominal dollars, while rents in nominal dollars haven't moved very much. Okay, great. Thank you. Your next question will be coming from the line of John Kim with BMO Capital Markets. Thank you. You're probably going to hate this question, but Mark, you mentioned that your Sun Belt markets are seeing a significant lack of pricing power, and that's due to the lingering impact of new supply. You've been talking about that for the last several years. Michael, you mentioned that net migration trends are favoring San Francisco, New York due to tech and AI demand. Yet this quarter, your Sun Belt concentration continues to grow with the acquisition in Arlington, Texas. Given those dynamics that you're seeing today and the fact that your same-store NOI in expansion markets are down 7%, have you thought about pausing acquisitions in the Sun Belt? I don't hate that question at all. I like that question, John. Thank you. I mean, we're committed to the strategy of having this sort of all-weather diversified portfolio. Like we said at an Investor Day, we're trying to balance supply, demand, opportunities, and risks, as well as regulation and resilience, and kind of have a portfolio that is very consistent and is just a cash flow growth machine. That said, we don't have a clock over here. Right now, it is not in our shareholders' best interests to continue to move quickly into these expansion markets, not just because of the forward, you know, next year's likely numbers in those markets, but because of the price. When we were buying earlier, we were buying better, at better prices. Right now, sub 5%, 4.75% cap rates that Bob and his team have been bringing to us in premiums to replacement costs from our perspective, given where the stock is, is not a prescription for long-term investment success. No clock over here. We like being more diversified in the long run, but we will do the best thing in the current period and in the long run. The great thing about the buyback this quarter and potentially going forward is by selling these lower growth assets in our existing markets, in the coastal markets, we're improving the growth rate of our NOI going forward. We are improving the percentage of exposure because we're lowering the denominator in these expansion markets. By the way, we're making a great arbitrage trade between private and public. It kind of works all those ways, but you shouldn't think that we feel like we've got a clock going off that we need to finish this by a date. There's an opportunity to do it accretively. We're going to hit it. If not, we're going to stand still or buy our own stock. Okay. Thanks for answering that. Michael, you mentioned in your response to Brad's question about what you're seeing in DC today, that net effective pricing is down 4%. I just wanted some clarification on what that meant. Is that what you're seeing currently on leases signed or what you're seeing kind of year-to-date? Yeah. Hey, John, this is Michael. What I was saying, DC, I want to make sure we're clear. I'm talking about the micro submarket of DC, the district, DC kind of northwest, excluding Maryland, Virginia portfolios. When I referenced the rates, that's our pricing trend. You were out looking on our website and you snapshotted today with the net effective price against all those concessions, compared it to the exact same day last year, same methodology. Where would rents be on a year-over-year basis? How that manifests itself through the blends and through the new lease change, it's not fully correlated because new lease is very much subjective to who moved out and then who moved into that unit and the time duration in between all of that. I think just that spot check-in time of where rents are, absolute rents are on a year-over basis, is an indicator of what when I was saying that we felt pressure in isolated pockets, what did I mean by that? The pricing trend tends to be a leading indicator of where blended rates are. Yeah. I mean, there has to be some correlation, right? If rents are down 4% and I'm getting ready to generate renewals, that's going to put pressure on the quoted renewal offers that go out in the marketplace. Got it. Okay, thank you. Your next question will be coming from the line of Alex Kim with Zelman & Associates. Hey, guys. Thanks for taking my question. Could you talk about what you're seeing in the transaction market and just the quantity of for sale supply in your markets? What does the kind of bid-ask spread look like? Could you put that in the context of the share buy? Yeah. Hey, Alex, it's Bob, and I'll start and maybe some of the team will augment a little bit. In terms of transaction volume, we're seeing pretty healthy transaction volume in the private markets, right? It's a very big, as Mark has mentioned a few times on the call already, there's a fairly large disconnect between what you're seeing in the public markets versus the private markets. Volume overall is about on parity with 2024, which in broader kind of historical context is about 50% of what we would have done pre-pandemic, but has in fact been accelerating. It's a tale of different markets and different assets. When you have assets that are in that kind of down the middle of the fairway, call it $80 million-$100 million, relatively new, maybe a little bit of light value add, you see a lot of bidders in the tent, you see a decent amount of transactions, and you see sellers getting good prices around that kind of 4.75% cap rate that Mark alluded to in his last response, and that's fairly active. If you look at larger scale transactions, larger assets, assets that might have a mixed-use component, there isn't much of a bidding tent. There isn't a lot of people interested there. That also applies to some of the geographies, right? Some of the markets that are more geographically challenged because the operating momentum may be a little bit weaker, you're not seeing a lot of activity there. There is plenty of private capital out there in general, and it's fairly liquid and pretty aggressive on pricing. The opportunity set, as we've said on the call already, is our shares more at the moment. Got it. I appreciate the detail there. I noticed that the completion date for your unconsolidated development in Washington State was pulled forward about a year. Could you talk about what allowed for the faster construction timeline? Yeah. Bret and I were actually just out there in August, and you know, it's a market where the rain and seasonal patterns matter a lot. They got the footings in early and some of the more complex, riskier excavation work done faster than they thought. It was just kind of binary. It's moving along really, really well. Kirkland is a great place to have a brand new asset. We're really excited about that and thrilled that we'll be getting our hands on it a little sooner. It really was, we made a sort of average estimate on how long it would take. Some of this more complex and riskier, frankly, excavation and other work just got done really quick and really well without any problems at all. Off to the races we are now with framing and a lot of stuff that is generally more routine. Got it. Appreciate the detail. Next question will be coming from the line of Omotayo Okusanya with Deutsche Bank. Hi, yes. Good afternoon, everyone. As we're about to go into election cycle, just curious if there are any states or counties that you're kind of watching for anything on any kind of the ballot that could have an impact on your rent practices? Specifically also kind of around New York, any thoughts on the mayoral race and any potential implications? Sure. It's Mark. Thanks for that question. I'm going to start by taking a little bit of what I think is a fair and more optimistic take on regulation. We've had good activity in California with Governor Newsom's leadership and passing a new law that really liberalizes zoning in areas that are near transit hubs and will create more supply and is really good public policy. It's similar, frankly, to what was done in a very red state down in Florida. There are a lot of places where there's a lot of good things going on in terms of increasing housing supply. Congress, or at least, excuse me, the Senate passed a bill that was bipartisan, again, supporting housing. The federal government doesn't have nearly the tools that the states and localities do, but that was very positive as well. In terms of areas of concern, areas of focus, New York, we've talked about it on prior calls. We are assuming, I think, like many, that Mr. Mamdani will win. The industry associations we belong to have been in conversation with him. He has said in his various campaign announcements he'd like to increase supply a lot in New York. The private sector builders are the ones who can do that for him. Our message to him through our association is use us to help add to New York's housing supply and that rent control is bad. By the time he gets in office, if he wins, and the Rent Control Stabilization Board speaks on these rent issues, we're just going to have a very small percent of our units subject to that risk. For us, it's not as significant directly, but certainly we want to keep having those conversations if he ends up being the mayor and push these supply side solutions. Programs like the new 421A program and things like that are really positive. We are keeping our eyes on Seattle. There's a big mayoral election there next year or next week, pardon me, that is important for the city to continue to make progress. Those are the areas. We've seen a lot of positives as well as things we need to keep focused on as an industry. That's helpful. One more for me. From an operating expense perspective, any other opportunities to keep making progress there? I know same store payroll was down 2% year-over-year. Just curious, any other levers that can be pulled in that area to contain operating expense growth? Maybe I'll start and Bret can kind of add some color on top of it. I think just in terms of operational excellence, the reality is we're never done with that pursuit. This is something that's wired into the D&A of our company. We just outlined, in my prepared remarks, some of the initiatives that we've been working on to layer in continuations of automation and centralization. All of those do lead to reduced payroll and operating efficiencies being garnered inside the portfolio. We're really excited. I wouldn't even say that we're in the early inning. There's still a lot of opportunity in front of us to become a more efficient operator by leveraging technology. Yeah. I might add, I think one of the things we called out was utility expenses were a bit higher. I think one of the areas that stood out was trash. I think there's some opportunities for us, as Michael alluded to, to put some best practices in place where we can actually really drive that specific number down. I think that'll be helpful as we go into next year. Thank you very much. Good luck. It appears there are no additional questions at this time. I'll turn the call back to Mark Parrell for closing remarks. Thank you, Shelley. I thank everyone on the call for their interest in Equity Residential, and we'll see you on the road over the next few months. Thank you very much. This concludes today's call. Thank you for your participation. You may. Everyone else has left the call.

Speaker 3: Today, and welcome to the Equity Residential third quarter 2025 earnings conference call and webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Marty McKenna. Please go ahead, sir. Today, and welcome to the Equity Residential third quarter 2025 earnings conference call and webcast. today and welcome to the equity residential third quarter 2025 earnings conference call and webcast Today's conference is being recorded. today's conference is being recorded At this time, I would like to turn the conference over to Mr. Marty McKenna. at this time i would like to turn the conference over to mr marty mckenna Please go ahead, sir. please go ahead sir

Speaker 11: Good morning, and thanks for joining us to discuss Equity Residential's third quarter 2025 results. Our featured speakers today are Mark Parrell, our President and CEO, Michael Manelis, our Chief Operating Officer, and Bret McLeod, our CFO. Bob Garechana, our Chief Investment Officer, is here with us as well for the Q&A. Our earnings release is posted in the investor section of equityapartments.com. Please be advised that certain matters discussed during this conference call may constitute forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to certain economic risks and uncertainties. The company assumes no obligation to update or supplement these statements that become untrue because of subsequent events. Now, I will turn the call over to Mark Parrell. Good morning, and thanks for joining us to discuss Equity Residential's third quarter 2025 results. good morning and thanks for joining us to discuss equity residential's third quarter 2025 results Our featured speakers today are Mark Parrell, our President and CEO, Michael Manelis, our Chief Operating Officer, and Bret McLeod, our CFO. our featured speakers today are mark parrell our president and ceo michael manelis our chief operating officer and bret mcleod our cfo bob Bob Garechana, our Chief Investment Officer, is here with us as well for the Q&A. bob garechana our chief investment officer is here with us as well for the q&a Our earnings release is posted in the investor section of equityapartments.com. our earnings release is posted in the investor section of equityapartments.com Please be advised that certain matters discussed during this conference call may constitute forward-looking statements within the meaning of the federal securities laws. please be advised that certain matters discussed during this conference call may constitute forward-looking statements within the meaning of the federal securities laws These forward-looking statements are subject to certain economic risks and uncertainties. these forward-looking statements are subject to certain economic risks and uncertainties The company assumes no obligation to update or supplement these statements that become untrue because of subsequent events. the company assumes no obligation to update or supplement these statements that become untrue because of subsequent events Now, I will turn the call over to Mark Parrell. now i will turn the call over to mark parrell

Speaker 20: Thank you, Marty. Good morning, and thanks for joining us today. I will lead us off with some broader commentary. Michael Manelis will provide color on our third quarter revenue performance, as well as what he is seeing in the markets today, followed by Bret McLeod, our new Chief Financial Officer, who will address expenses and our NFFL guidance. We'll go ahead and take your questions. Our third quarter results reflect the resilience of our business. Despite what is generally a mixed macroeconomic picture, we continue to see good demand and excellent resident retention across most of our markets, with results strongest in San Francisco and New York where continuing high demand has met modest supply. We see our existing residents as having a generally stable employment situation and good wage growth. Thank you, Marty. thank you marty Good morning, and thanks for joining us today. good morning and thanks for joining us today I will lead us off with some broader commentary. i will lead us off with some broader commentary Michael Manelis will provide color on our third quarter revenue performance, as well as what he is seeing in the markets today, followed by Bret McLeod, our new Chief Financial Officer, who will address expenses and our NFFL guidance. michael manelis will provide color on our third quarter revenue performance as well as what he is seeing in the markets today followed by bret mcleod our new chief financial officer who will address expenses and our nffl guidance We'll go ahead and take your questions. we'll go ahead and take your questions Our third quarter results reflect the resilience of our business. our third quarter results reflect the resilience of our business Despite what is generally a mixed macroeconomic picture, we continue to see good demand and excellent resident retention across most of our markets, with results strongest in San Francisco and New York where continuing high demand has met modest supply. despite what is generally a mixed macroeconomic picture we continue to see good demand and excellent resident retention across most of our markets with results strongest in san francisco and new york where continuing high demand has met modest supply We see our existing residents as having a generally stable employment situation and good wage growth. we see our existing residents as having a generally stable employment situation and good wage growth When last reported, the unemployment rate for the college-educated, our key renter demographic, was 2.7%, considerably below the national average. This is consistent with the experience at our properties, as we see continued improvements in delinquency and no other signs of customer financial stress. We have also seen incomes rise for our new residents by 6.2% year-over-year, a healthy rate of growth. Finally, we continue to see residents react to the uncertainty in the economy and the quality of our properties and people by renewing with us at record rates. In fact, we reported the highest third quarter resident retention in our company's history, allowing us to maintain high occupancy rates in the mid-96% range. In sum, our existing customer is financially healthy and happy to stay with us. On the new customer acquisition side, we began to see weakness in traffic during the back half of September. When last reported, the unemployment rate for the college-educated, our key renter demographic, was 2.7%, considerably below the national average. when last reported the unemployment rate for the college-educated our key renter demographic was 2.7% considerably below the national average This is consistent with the experience at our properties, as we see continued improvements in delinquency and no other signs of customer financial stress. this is consistent with the experience at our properties as we see continued improvements in delinquency and no other signs of customer financial stress We have also seen incomes rise for our new residents by 6.2% year-over-year, a healthy rate of growth. we have also seen incomes rise for our new residents by 6.2% year-over-year a healthy rate of growth Finally, we continue to see residents react to the uncertainty in the economy and the quality of our properties and people by renewing with us at record rates. finally we continue to see residents react to the uncertainty in the economy and the quality of our properties and people by renewing with us at record rates In fact, we reported the highest third quarter resident retention in our company's history, allowing us to maintain high occupancy rates in the mid-96% range. in fact we reported the highest third quarter resident retention in our company's history allowing us to maintain high occupancy rates in the mid-96% range In sum, our existing customer is financially healthy and happy to stay with us. in sum our existing customer is financially healthy and happy to stay with us On the new customer acquisition side, we began to see weakness in traffic during the back half of September. on the new customer acquisition side we began to see weakness in traffic during the back half of september This was most pronounced in Washington, DC, but did manifest itself in other markets as well. The best way to think about this is for us to say that our normal pattern of a seasonal decline in traffic began one month earlier than usual. Everything this year feels like it was pulled forward. The leasing season started earlier than usual and peaked earlier than usual, just as the normal seasonal pattern of traffic decline began earlier than usual. This acceleration of seasonal patterns, weakness in Washington, DC, and some minor delays in the rollout of another income initiative that Bret will discuss in a moment led us to adjust down the midpoint of our annual same-store revenue guidance by 15 basis points to 2.75%. This was most pronounced in Washington, DC, but did manifest itself in other markets as well. this was most pronounced in washington dc but did manifest itself in other markets as well The best way to think about this is for us to say that our normal pattern of a seasonal decline in traffic began one month earlier than usual. the best way to think about this is for us to say that our normal pattern of a seasonal decline in traffic began one month earlier than usual Everything this year feels like it was pulled forward. everything this year feels like it was pulled forward The leasing season started earlier than usual and peaked earlier than usual, just as the normal seasonal pattern of traffic decline began earlier than usual. the leasing season started earlier than usual and peaked earlier than usual just as the normal seasonal pattern of traffic decline began earlier than usual This acceleration of seasonal patterns, weakness in Washington, DC, and some minor delays in the rollout of another income initiative that Bret will discuss in a moment led us to adjust down the midpoint of our annual same-store revenue guidance by 15 basis points to 2.75%. this acceleration of seasonal patterns weakness in washington dc and some minor delays in the rollout of another income initiative that bret will discuss in a moment led us to adjust down the midpoint of our annual same-store revenue guidance by 15 basis points to 2.75% In terms of market commentary, Michael will speak in a moment on specifics in DC and elsewhere, but I did want to make a general comment on San Francisco, where we have 15% of our net operating income. After a prolonged recovery, we are excited by what we are seeing in San Francisco, particularly the urban core, where we have more exposure than our competitors. As we talked about at our Investor Day earlier this year, we thought San Francisco had the opportunity to be a strong performer in 2025, and that is exactly what is happening in this, the epicenter of the AI technology revolution. As a result, we expect San Francisco to be our best-performing market this year. In terms of market commentary, Michael will speak in a moment on specifics in DC and elsewhere, but I did want to make a general comment on San Francisco, where we have 15% of our net operating income. in terms of market commentary michael will speak in a moment on specifics in dc and elsewhere but i did want to make a general comment on san francisco where we have 15% of our net operating income After a prolonged recovery, we are excited by what we are seeing in San Francisco, particularly the urban core, where we have more exposure than our competitors. after a prolonged recovery we are excited by what we are seeing in san francisco particularly the urban core where we have more exposure than our competitors As we talked about at our Investor Day earlier this year, we thought San Francisco had the opportunity to be a strong performer in 2025, and that is exactly what is happening in this, the epicenter of the AI technology revolution. as we talked about at our investor day earlier this year we thought san francisco had the opportunity to be a strong performer in 2025 and that is exactly what is happening in this the epicenter of the ai technology revolution As a result, we expect San Francisco to be our best-performing market this year. as a result we expect san francisco to be our best-performing market this year At our Investor Day, we also spoke positively about the Seattle recovery story, and we do see improvement there, but due to higher supply levels in Seattle than San Francisco, this improvement is occurring at a slower pace. Conversely, as we generally expected, we are seeing very different conditions in our higher supplied markets, specifically Denver, Dallas, Austin, and Atlanta, where we have about 11% of our NOI. In these markets, where the slowing job picture is meeting continued high levels of supply, we see a significant lack of pricing power. At our Investor Day, we also spoke positively about the Seattle recovery story, and we do see improvement there, but due to higher supply levels in Seattle than San Francisco, this improvement is occurring at a slower pace. at our investor day we also spoke positively about the seattle recovery story and we do see improvement there but due to higher supply levels in seattle than san francisco this improvement is occurring at a slower pace Conversely, as we generally expected, we are seeing very different conditions in our higher supplied markets, specifically Denver, Dallas, Austin, and Atlanta, where we have about 11% of our NOI. conversely as we generally expected we are seeing very different conditions in our higher supplied markets specifically denver dallas austin and atlanta where we have about 11% of our noi In these markets, where the slowing job picture is meeting continued high levels of supply, we see a significant lack of pricing power. in these markets where the slowing job picture is meeting continued high levels of supply we see a significant lack of pricing power To be clear, the supply pressure includes both recent new apartment deliveries, which are pretty well tracked by all the data providers, and the continuing pressure from slow lease-ups of already completed properties, as well as the first round of lease renewals at properties that were delivered a year ago, where landlords are struggling to remove lease-up concessions when going through the renewal process in places with many choices for consumers. This not yet fully stabilized supply is less well tracked by data providers and is not as well understood by investors, but is certainly impactful. Over time, all of this supply will clear the market, and we remain comfortable with the cost basis at which we acquired the assets we own in these markets. We also are positive on longer-term return prospects in these markets, complementing our portfolio diversification goals. To be clear, the supply pressure includes both recent new apartment deliveries, which are pretty well tracked by all the data providers, and the continuing pressure from slow lease-ups of already completed properties, as well as the first round of lease renewals at properties that were delivered a year ago, where landlords are struggling to remove lease-up concessions when going through the renewal process in places with many choices for consumers. to be clear the supply pressure includes both recent new apartment deliveries which are pretty well tracked by all the data providers and the continuing pressure from slow lease-ups of already completed properties as well as the first round of lease renewals at properties that were delivered a year ago where landlords are struggling to remove lease-up concessions when going through the renewal process in places with many choices for consumers This not yet fully stabilized supply is less well tracked by data providers and is not as well understood by investors, but is certainly impactful. this not yet fully stabilized supply is less well tracked by data providers and is not as well understood by investors but is certainly impactful Over time, all of this supply will clear the market, and we remain comfortable with the cost basis at which we acquired the assets we own in these markets. over time all of this supply will clear the market and we remain comfortable with the cost basis at which we acquired the assets we own in these markets We also are positive on longer-term return prospects in these markets, complementing our portfolio diversification goals. we also are positive on longer-term return prospects in these markets complementing our portfolio diversification goals As we've said on prior earnings calls, we do expect to see an elongated recovery in these markets. Switching over to capital allocation, as you saw in the release, we have been active in buying our shares, with the company repurchasing approximately $100 million of its stock during the third quarter and subsequent to quarter end. We see our company, with its high-quality asset base and sophisticated operating platform and forward growth prospects, as greatly undervalued versus asset prices in the private market. Also, we closed on one acquisition in the quarter, a 375-unit property in Arlington, Texas, that has been in process for some time. This property was just completed in 2023 and is a nice complement to our Dallas area portfolio. We sold two deals in the quarter, one in suburban Boston and one in suburban DC. These were older assets, averaging nearly 30 years in age. As we've said on prior earnings calls, we do expect to see an elongated recovery in these markets. as we've said on prior earnings calls we do expect to see an elongated recovery in these markets Switching over to capital allocation, as you saw in the release, we have been active in buying our shares, with the company repurchasing approximately $100 million of its stock during the third quarter and subsequent to quarter end. switching over to capital allocation as you saw in the release we have been active in buying our shares with the company repurchasing approximately $100 million of its stock during the third quarter and subsequent to quarter end We see our company, with its high-quality asset base and sophisticated operating platform and forward growth prospects, as greatly undervalued versus asset prices in the private market. we see our company with its high-quality asset base and sophisticated operating platform and forward growth prospects as greatly undervalued versus asset prices in the private market Also, we closed on one acquisition in the quarter, a 375-unit property in Arlington, Texas, that has been in process for some time. also we closed on one acquisition in the quarter a 375-unit property in arlington texas that has been in process for some time This property was just completed in 2023 and is a nice complement to our Dallas area portfolio. this property was just completed in 2023 and is a nice complement to our dallas area portfolio We sold two deals in the quarter, one in suburban Boston and one in suburban DC. we sold two deals in the quarter one in suburban boston and one in suburban dc These were older assets, averaging nearly 30 years in age. these were older assets averaging nearly 30 years in age These transactions all traded right around a 5% cap rate. As you also saw in our release, we have lowered our acquisitions and dispositions guidance for the full year to $750 million of each, from $1 billion of each, with the vast majority of these transactions already completed. As I just discussed, with private market assets often trading at sub-5% cap rates and at or above replacement cost, our stock presents a compelling value at current levels, making us selective and limited in our acquisition activity for the time being. Dispositions of properties to fund the buyback will occur over the next several quarters and will focus on properties with lower forward growth potential or where we are overconcentrated. Before I turn the call over to Michael, I want to reiterate how excited we are about the forward prospects for our business. These transactions all traded right around a 5% cap rate. these transactions all traded right around a 5% cap rate As you also saw in our release, we have lowered our acquisitions and dispositions guidance for the full year to $750 million of each, from $1 billion of each, with the vast majority of these transactions already completed. as you also saw in our release we have lowered our acquisitions and dispositions guidance for the full year to $750 million of each from $1 billion of each with the vast majority of these transactions already completed As I just discussed, with private market assets often trading at sub-5% cap rates and at or above replacement cost, our stock presents a compelling value at current levels, making us selective and limited in our acquisition activity for the time being. as i just discussed with private market assets often trading at sub-5% cap rates and at or above replacement cost our stock presents a compelling value at current levels making us selective and limited in our acquisition activity for the time being Dispositions of properties to fund the buyback will occur over the next several quarters and will focus on properties with lower forward growth potential or where we are overconcentrated. dispositions of properties to fund the buyback will occur over the next several quarters and will focus on properties with lower forward growth potential or where we are overconcentrated Before I turn the call over to Michael, I want to reiterate how excited we are about the forward prospects for our business. before i turn the call over to michael i want to reiterate how excited we are about the forward prospects for our business Our internal tracking shows deliveries of competitive new supply in our markets declining 35% or by about 40,000 units in 2026 versus 2025 levels. The results we are seeing in San Francisco and New York demonstrate the earnings growth power of our business when we are operating in markets with sustained demand and low levels of competitive new housing supply. We believe more markets we operate in will trend in that direction in 2026, assuming the job situation is reasonably constructive. For example, our internal tracking shows 2026 new apartment supply in the Washington, DC market that is competitive with our properties will be declining by over 8,000 units or down 65% to below 5,000 units, a level we have not seen since at least the Great Financial Crisis. Our internal tracking shows deliveries of competitive new supply in our markets declining 35% or by about 40,000 units in 2026 versus 2025 levels. our internal tracking shows deliveries of competitive new supply in our markets declining 35% or by about 40,000 units in 2026 versus 2025 levels The results we are seeing in San Francisco and New York demonstrate the earnings growth power of our business when we are operating in markets with sustained demand and low levels of competitive new housing supply. the results we are seeing in san francisco and new york demonstrate the earnings growth power of our business when we are operating in markets with sustained demand and low levels of competitive new housing supply We believe more markets we operate in will trend in that direction in 2026, assuming the job situation is reasonably constructive. we believe more markets we operate in will trend in that direction in 2026 assuming the job situation is reasonably constructive For example, our internal tracking shows 2026 new apartment supply in the Washington, DC market that is competitive with our properties will be declining by over 8,000 units or down 65% to below 5,000 units, a level we have not seen since at least the Great Financial Crisis. for example our internal tracking shows 2026 new apartment supply in the washington dc market that is competitive with our properties will be declining by over 8,000 units or down 65% to below 5,000 units a level we have not seen since at least the great financial crisis With portfolio-wide occupancy of more than 96% and occupancy nearly 97% in some of our key markets, we think this sets us up well for another year of solid performance in 2026. If job growth reignites, we could see some very good results. In sum, we continue to see the current and future drivers of our business as healthy and the forward momentum is solid. With that, I'll turn the call over to Michael Manelis. With portfolio-wide occupancy of more than 96% and occupancy nearly 97% in some of our key markets, we think this sets us up well for another year of solid performance in 2026. with portfolio-wide occupancy of more than 96% and occupancy nearly 97% in some of our key markets we think this sets us up well for another year of solid performance in 2026 If job growth reignites, we could see some very good results. if job growth reignites we could see some very good results In sum, we continue to see the current and future drivers of our business as healthy and the forward momentum is solid. in sum we continue to see the current and future drivers of our business as healthy and the forward momentum is solid With that, I'll turn the call over to Michael Manelis. with that i'll turn the call over to michael manelis

Speaker 12: Thanks, Mark, and thanks to all of you for joining us today. Our third quarter results reflect solid demand with outside performance in San Francisco and New York. Currently, general macroeconomic uncertainty remains as a result of tariffs, lower job growth, and more recently, the government shutdown. Thanks, Mark, and thanks to all of you for joining us today. thanks mark and thanks to all of you for joining us today Our third quarter results reflect solid demand with outside performance in San Francisco and New York. our third quarter results reflect solid demand with outside performance in san francisco and new york Currently, general macroeconomic uncertainty remains as a result of tariffs, lower job growth, and more recently, the government shutdown. currently general macroeconomic uncertainty remains as a result of tariffs lower job growth and more recently the government shutdown These factors make forecasting demand a little bit more challenging today than it was 90 days ago, but what has not changed is the excellent setup we have going into next year due to the dramatic reductions to competitive new supply. Breaking down our third quarter operating results, our renewal rate achieved for the quarter remains strong and was up 4.5%, with nearly 59% of our leases renewing, and both of these were in line with what we thought would happen through the quarter. Our centralized renewal process and intense focus on customer satisfaction has helped deliver the lowest reported third quarter turnover in our history. Across our portfolio, the average length of stay has increased by nearly 20% from 2019, and retention is at record levels. These factors make forecasting demand a little bit more challenging today than it was 90 days ago, but what has not changed is the excellent setup we have going into next year due to the dramatic reductions to competitive new supply. these factors make forecasting demand a little bit more challenging today than it was 90 days ago but what has not changed is the excellent setup we have going into next year due to the dramatic reductions to competitive new supply Breaking down our third quarter operating results, our renewal rate achieved for the quarter remains strong and was up 4.5%, with nearly 59% of our leases renewing, and both of these were in line with what we thought would happen through the quarter. breaking down our third quarter operating results our renewal rate achieved for the quarter remains strong and was up 4.5% with nearly 59% of our leases renewing and both of these were in line with what we thought would happen through the quarter Our centralized renewal process and intense focus on customer satisfaction has helped deliver the lowest reported third quarter turnover in our history. our centralized renewal process and intense focus on customer satisfaction has helped deliver the lowest reported third quarter turnover in our history Across our portfolio, the average length of stay has increased by nearly 20% from 2019, and retention is at record levels. across our portfolio the average length of stay has increased by nearly 20% from 2019 and retention is at record levels As secular trends and our focus on enhanced customer experiences have driven increased retention, the positive impact on same-store revenue growth from renewals has become more significant. Our unique value proposition and customized renewal experience reduces costs associated with vacancy and new customer acquisition, like marketing and concessions, while enhancing customer satisfaction and removing the friction costs on our residents who choose to remain with us. This strategy optimizes overall revenue and improves customer satisfaction despite potential short-term variability in new lease change, which is an output that is greatly impacted by who moved in or out. With that said, new lease rates at -1% came in lower than we expected and resulted in a 2.2% blended rate increase for the quarter, which was at the low end of our range. As secular trends and our focus on enhanced customer experiences have driven increased retention, the positive impact on same-store revenue growth from renewals has become more significant. as secular trends and our focus on enhanced customer experiences have driven increased retention the positive impact on same-store revenue growth from renewals has become more significant Our unique value proposition and customized renewal experience reduces costs associated with vacancy and new customer acquisition, like marketing and concessions, while enhancing customer satisfaction and removing the friction costs on our residents who choose to remain with us. our unique value proposition and customized renewal experience reduces costs associated with vacancy and new customer acquisition like marketing and concessions while enhancing customer satisfaction and removing the friction costs on our residents who choose to remain with us This strategy optimizes overall revenue and improves customer satisfaction despite potential short-term variability in new lease change, which is an output that is greatly impacted by who moved in or out. this strategy optimizes overall revenue and improves customer satisfaction despite potential short-term variability in new lease change which is an output that is greatly impacted by who moved in or out With that said, new lease rates at - 1% came in lower than we expected and resulted in a 2.2% blended rate increase for the quarter, which was at the low end of our range. with that said new lease rates at - 1% came in lower than we expected and resulted in a 2.2% blended rate increase for the quarter which was at the low end of our range As Mark described, pricing trends peaked in July this year at a level that was both lower and earlier than normal. Prices stayed relatively flat through August and started the seasonal descent in September, which is typical. We did observe some late quarter pricing softness, mostly in Washington, DC, which I will describe in a minute, which impacted our new lease change. For the entire portfolio, physical occupancy remained high at 96.3% for the quarter, driven by solid demand and strong retention in our coastal markets, excluding DC, which gave up some occupancy at the end of the quarter. Let me take a minute and highlight a few of the markets that are driving performance. The recovery in San Francisco, particularly downtown, is real. As Mark described, pricing trends peaked in July this year at a level that was both lower and earlier than normal. as mark described pricing trends peaked in july this year at a level that was both lower and earlier than normal Prices stayed relatively flat through August and started the seasonal descent in September, which is typical. prices stayed relatively flat through august and started the seasonal descent in september which is typical We did observe some late quarter pricing softness, mostly in Washington, DC, which I will describe in a minute, which impacted our new lease change. we did observe some late quarter pricing softness mostly in washington dc which i will describe in a minute which impacted our new lease change For the entire portfolio, physical occupancy remained high at 96.3% for the quarter, driven by solid demand and strong retention in our coastal markets, excluding DC, which gave up some occupancy at the end of the quarter. for the entire portfolio physical occupancy remained high at 96.3% for the quarter driven by solid demand and strong retention in our coastal markets excluding dc which gave up some occupancy at the end of the quarter Let me take a minute and highlight a few of the markets that are driving performance. let me take a minute and highlight a few of the markets that are driving performance The recovery in San Francisco, particularly downtown, is real. the recovery in san francisco particularly downtown is real As the epicenter of all things tech, workers have returned to the market and drove high occupancy and very good rate growth on both new lease and renewal rates. This strength was supported by the positive trends we observed in our migration data, with just over 4% more move-ins coming to us from outside both the MSA and the state of California. In addition, we have a very favorable new supply setup in the market in 2026, with only about 1,000 units of competitive new supply being delivered. San Francisco will be our best-performing market in 2025 and most likely again in 2026, as we are just now approaching 2019 rent levels in our downtown portfolio, while median incomes in the market are up 22% since 2019. Similarly, New York continues to be a strong performer. As the epicenter of all things tech, workers have returned to the market and drove high occupancy and very good rate growth on both new lease and renewal rates. as the epicenter of all things tech workers have returned to the market and drove high occupancy and very good rate growth on both new lease and renewal rates This strength was supported by the positive trends we observed in our migration data, with just over 4% more move-ins coming to us from outside both the MSA and the state of California. this strength was supported by the positive trends we observed in our migration data with just over 4% more move-ins coming to us from outside both the msa and the state of california In addition, we have a very favorable new supply setup in the market in 2026, with only about 1,000 units of competitive new supply being delivered. in addition we have a very favorable new supply setup in the market in 2026 with only about 1,000 units of competitive new supply being delivered San Francisco will be our best-performing market in 2025 and most likely again in 2026, as we are just now approaching 2019 rent levels in our downtown portfolio, while median incomes in the market are up 22% since 2019. san francisco will be our best-performing market in 2025 and most likely again in 2026 as we are just now approaching 2019 rent levels in our downtown portfolio while median incomes in the market are up 22% since 2019 Similarly, New York continues to be a strong performer. similarly new york continues to be a strong performer Job sentiment in the market has been good, and competitive new supply has been and will continue to be very low, which should position us to deliver above-average revenue growth again next year. I would note that our combined exposure to urban San Francisco and New York and the positive demand and supply outlook in 2026 is particularly unique to EQR and should be a relative strength for us versus peers next year. While DC will end up having a strong 2025, the year has certainly been a tale of two markets. The strength we saw early in the year carried through most of the third quarter, but as I mentioned, in late September, we definitely started to see some softness in demand and pricing power. Job sentiment in the market has been good, and competitive new supply has been and will continue to be very low, which should position us to deliver above-average revenue growth again next year. job sentiment in the market has been good and competitive new supply has been and will continue to be very low which should position us to deliver above-average revenue growth again next year I would note that our combined exposure to urban San Francisco and New York and the positive demand and supply outlook in 2026 is particularly unique to EQR and should be a relative strength for us versus peers next year. i would note that our combined exposure to urban san francisco and new york and the positive demand and supply outlook in 2026 is particularly unique to eqr and should be a relative strength for us versus peers next year While DC will end up having a strong 2025, the year has certainly been a tale of two markets. while dc will end up having a strong 2025 the year has certainly been a tale of two markets The strength we saw early in the year carried through most of the third quarter, but as I mentioned, in late September, we definitely started to see some softness in demand and pricing power. the strength we saw early in the year carried through most of the third quarter but as i mentioned in late september we definitely started to see some softness in demand and pricing power A combination of federal job cuts and the National Guard deployment, followed by the government shutdown, has created a lot of uncertainty in the local market. Most of the pressure is being felt in the district and in pockets of Northern Virginia, and in these areas, our current operational focus is preserving occupancy. While we aren't experiencing residents turning in keys due to job loss, our overall turnover in the DC market did increase slightly in the quarter, and the volume of leasing activity has slowed as the overall market still needs to absorb the nearly 13,000 units delivered this year. The good news is that in 2026, competitive supply in DC will drop 65% and remain low for the foreseeable future, which is a marked change from the past decade. A combination of federal job cuts and the National Guard deployment, followed by the government shutdown, has created a lot of uncertainty in the local market. a combination of federal job cuts and the national guard deployment followed by the government shutdown has created a lot of uncertainty in the local market Most of the pressure is being felt in the district and in pockets of Northern Virginia, and in these areas, our current operational focus is preserving occupancy. most of the pressure is being felt in the district and in pockets of northern virginia and in these areas our current operational focus is preserving occupancy While we aren't experiencing residents turning in keys due to job loss, our overall turnover in the DC market did increase slightly in the quarter, and the volume of leasing activity has slowed as the overall market still needs to absorb the nearly 13,000 units delivered this year. while we aren't experiencing residents turning in keys due to job loss our overall turnover in the dc market did increase slightly in the quarter and the volume of leasing activity has slowed as the overall market still needs to absorb the nearly 13,000 units delivered this year The good news is that in 2026, competitive supply in DC will drop 65% and remain low for the foreseeable future, which is a marked change from the past decade. the good news is that in 2026 competitive supply in dc will drop 65% and remain low for the foreseeable future which is a marked change from the past decade Add to that our sense that in the long term, the federal government will continue to be a job engine, regardless of the near-term headwinds of temporary cuts or shutdowns. Overall, we feel very good about DC as a market in the long term. Shifting to Los Angeles, the city continues to face challenges and remains a wildcard as we head into 2026. We continue to see overall market weakness driven primarily by slowdowns in the entertainment industry, and although the quality of life issues are improving, they are still not where we would like them to be. We have demand, but less pricing power, particularly in the urban portfolio, where we continue to feel the impact of new supply in our downtown, Koreatown, and Midwilshire portfolios. Our suburban submarkets of Santa Clarita, Inland Empire, and Ventura County are performing well. Add to that our sense that in the long term, the federal government will continue to be a job engine, regardless of the near-term headwinds of temporary cuts or shutdowns. add to that our sense that in the long term the federal government will continue to be a job engine regardless of the near-term headwinds of temporary cuts or shutdowns Overall, we feel very good about DC as a market in the long term. overall we feel very good about dc as a market in the long term Shifting to Los Angeles, the city continues to face challenges and remains a wildcard as we head into 2026. shifting to los angeles the city continues to face challenges and remains a wildcard as we head into 2026 We continue to see overall market weakness driven primarily by slowdowns in the entertainment industry, and although the quality of life issues are improving, they are still not where we would like them to be. we continue to see overall market weakness driven primarily by slowdowns in the entertainment industry and although the quality of life issues are improving they are still not where we would like them to be We have demand, but less pricing power, particularly in the urban portfolio, where we continue to feel the impact of new supply in our downtown, Koreatown, and Midwilshire portfolios. we have demand but less pricing power particularly in the urban portfolio where we continue to feel the impact of new supply in our downtown koreatown and midwilshire portfolios Our suburban submarkets of Santa Clarita, Inland Empire, and Ventura County are performing well. our suburban submarkets of santa clarita inland empire and ventura county are performing well As in many of our coastal markets, supply will be lower in 2026, but we will need to see a catalyst for demand in order for us to have pricing power return. Our hope is that with the upcoming World Cup in 2026 and the Olympics in 2028, there will be long-term incentives for the quality of life to improve in LA, albeit from a low base. In our expansion markets, which currently represent only 6% of our same-store NOI and 11% of our total NOI, high levels of new supply continue to impact operating results in Atlanta, Dallas, Denver, and Austin. Atlanta is faring the best of the four, and Denver the worst. As in many of our coastal markets, supply will be lower in 2026, but we will need to see a catalyst for demand in order for us to have pricing power return. as in many of our coastal markets supply will be lower in 2026 but we will need to see a catalyst for demand in order for us to have pricing power return Our hope is that with the upcoming World Cup in 2026 and the Olympics in 2028, there will be long-term incentives for the quality of life to improve in LA , albeit from a low base. our hope is that with the upcoming world cup in 2026 and the olympics in 2028 there will be long-term incentives for the quality of life to improve in la albeit from a low base In our expansion markets, which currently represent only 6% of our same-store NOI and 11% of our total NOI, high levels of new supply continue to impact operating results in Atlanta, Dallas, Denver, and Austin. in our expansion markets which currently represent only 6% of our same-store noi and 11% of our total noi high levels of new supply continue to impact operating results in atlanta dallas denver and austin Atlanta is faring the best of the four, and Denver the worst. atlanta is faring the best of the four and denver the worst Our same-store portfolios in both Atlanta and Dallas should see improved results and perform better than the broader market next year as we add our recently acquired more suburban assets to the same-store portfolios next year. Before I turn it over to Bret, let me take a minute to highlight our current activities around innovation. In the third quarter, we deployed our AI-driven application processing tool, which has already delivered a 50% reduction in the overall application time. We currently have about half of all applications being completed within one day, and this process includes a more robust, comprehensive ID verification process that should help reduce fraudulent activity going forward. Overall, I am really excited about the opportunities in 2026 as we continue to implement AI in other key areas of the resident experience. Our same-store portfolios in both Atlanta and Dallas should see improved results and perform better than the broader market next year as we add our recently acquired more suburban assets to the same-store portfolios next year. our same-store portfolios in both atlanta and dallas should see improved results and perform better than the broader market next year as we add our recently acquired more suburban assets to the same-store portfolios next year Before I turn it over to Bret, let me take a minute to highlight our current activities around innovation. before i turn it over to bret let me take a minute to highlight our current activities around innovation In the third quarter, we deployed our AI-driven application processing tool, which has already delivered a 50% reduction in the overall application time. in the third quarter we deployed our ai-driven application processing tool which has already delivered a 50% reduction in the overall application time We currently have about half of all applications being completed within one day, and this process includes a more robust, comprehensive ID verification process that should help reduce fraudulent activity going forward. we currently have about half of all applications being completed within one day and this process includes a more robust comprehensive id verification process that should help reduce fraudulent activity going forward Overall, I am really excited about the opportunities in 2026 as we continue to implement AI in other key areas of the resident experience. overall i am really excited about the opportunities in 2026 as we continue to implement ai in other key areas of the resident experience Next month, we will begin testing a new service request module that is designed to improve service request intake, provide self-service tips, optimize team schedules, and ensure qualified team members address tasks efficiently in a single visit. This is a great example of how we are focused on increasing the utilization of our workforce, while at the same time creating a more seamless and responsive experience for our residents. I want to give a shout out to our amazing teams across our platform for their continued dedication to our residents while embracing change to further enhance our operating platform. Our portfolio will end 2025 well-occupied with a strong platform that combines automation, centralization, along with a local team that knows how to keep our customers satisfied while getting a larger share of the demand pool, whatever that level may be in the markets. Next month, we will begin testing a new service request module that is designed to improve service request intake, provide self-service tips, optimize team schedules, and ensure qualified team members address tasks efficiently in a single visit. next month we will begin testing a new service request module that is designed to improve service request intake provide self-service tips optimize team schedules and ensure qualified team members address tasks efficiently in a single visit This is a great example of how we are focused on increasing the utilization of our workforce, while at the same time creating a more seamless and responsive experience for our residents. this is a great example of how we are focused on increasing the utilization of our workforce while at the same time creating a more seamless and responsive experience for our residents I want to give a shout out to our amazing teams across our platform for their continued dedication to our residents while embracing change to further enhance our operating platform. i want to give a shout out to our amazing teams across our platform for their continued dedication to our residents while embracing change to further enhance our operating platform Our portfolio will end 2025 well-occupied with a strong platform that combines automation, centralization, along with a local team that knows how to keep our customers satisfied while getting a larger share of the demand pool, whatever that level may be in the markets. our portfolio will end 2025 well-occupied with a strong platform that combines automation centralization along with a local team that knows how to keep our customers satisfied while getting a larger share of the demand pool whatever that level may be in the markets I will turn the call over to Bret. I will turn the call over to Bret. i will turn the call over to bret

Speaker 15: Thanks, Michael. Before I walk through our updated guidance, I first wanted to say how excited I am to be here at Equity Residential, working alongside Mark, Michael, Bob, and the rest of our talented corporate team. It's been nearly 100 days since I joined the company, and I'm even more impressed with the organization than when I started. I'm comfortable stating that because one of the first things I did here was hit the road and visit many of our communities and hardworking associates across the country. My early travels included some of our top-performing markets, such as San Francisco and New York, where I saw the quality and location of our assets firsthand, as well as the innovative operating platform Michael and the team have established. Thanks, Michael. thanks michael Before I walk through our updated guidance, I first wanted to say how excited I am to be here at Equity Residential, working alongside Mark, Michael, Bob, and the rest of our talented corporate team. before i walk through our updated guidance i first wanted to say how excited i am to be here at equity residential working alongside mark michael bob and the rest of our talented corporate team It's been nearly 100 days since I joined the company, and I'm even more impressed with the organization than when I started. it's been nearly 100 days since i joined the company and i'm even more impressed with the organization than when i started I'm comfortable stating that because one of the first things I did here was hit the road and visit many of our communities and hardworking associates across the country. i'm comfortable stating that because one of the first things i did here was hit the road and visit many of our communities and hardworking associates across the country My early travels included some of our top-performing markets, such as San Francisco and New York, where I saw the quality and location of our assets firsthand, as well as the innovative operating platform Michael and the team have established. my early travels included some of our top-performing markets such as san francisco and new york where i saw the quality and location of our assets firsthand as well as the innovative operating platform michael and the team have established I visited Seattle, where we are set up well for 2026, benefiting from local return-to-office mandates and continued AI investment growth. I also traveled to Dallas, one of our larger expansion markets, and witnessed constant examples of the outsized demand growth dynamics that are driving our positive long-term thesis on that metro area. I'm grateful to all my new colleagues for helping me get up to speed so quickly. With that said, let me provide some color on the guidance adjustments we made this quarter, which continued to reflect a stable and resilient business outlook, albeit amidst some macroeconomic and employment uncertainty, as Mark and Michael described. We've adjusted the top end of our full-year same-store revenue outlook down as a result of third quarter same-store blended rate coming in at the lower end of our prior range and what we have seen in early fourth quarter trends. I visited Seattle, where we are set up well for 2026, benefiting from local return-to-office mandates and continued AI investment growth. i visited seattle where we are set up well for 2026 benefiting from local return-to-office mandates and continued ai investment growth I also traveled to Dallas, one of our larger expansion markets, and witnessed constant examples of the outsized demand growth dynamics that are driving our positive long-term thesis on that metro area. i also traveled to dallas one of our larger expansion markets and witnessed constant examples of the outsized demand growth dynamics that are driving our positive long-term thesis on that metro area I'm grateful to all my new colleagues for helping me get up to speed so quickly. i'm grateful to all my new colleagues for helping me get up to speed so quickly With that said, let me provide some color on the guidance adjustments we made this quarter, which continued to reflect a stable and resilient business outlook, albeit amidst some macroeconomic and employment uncertainty, as Mark and Michael described. with that said let me provide some color on the guidance adjustments we made this quarter which continued to reflect a stable and resilient business outlook albeit amidst some macroeconomic and employment uncertainty as mark and michael described We've adjusted the top end of our full-year same-store revenue outlook down as a result of third quarter same-store blended rate coming in at the lower end of our prior range and what we have seen in early fourth quarter trends. we've adjusted the top end of our full-year same-store revenue outlook down as a result of third quarter same-store blended rate coming in at the lower end of our prior range and what we have seen in early fourth quarter trends In addition, a portion of other income growth related to bulk Wi-Fi that we expected to realize in the second half of 2025 has rolled out slightly slower than planned and will now be pushed into 2026. That said, we still saw strong quarter-over-quarter growth in other income of 9%, demonstrating our ability to continue to pull multiple levers to drive overall revenue. The combination of these two factors resulted in a revised 2025 same-store revenue range of 2.5%-3%, with a midpoint of 2.75%, which matches the midpoint of the range we guided to at the beginning of this year. We've held same-store expenses steady at 3.5%-4% for the full year and continue to see sub-inflationary trends on payroll, insurance, and real estate taxes, partially offset by higher utility expenses, particularly in California. In addition, a portion of other income growth related to bulk Wi-Fi that we expected to realize in the second half of 2025 has rolled out slightly slower than planned and will now be pushed into 2026. in addition a portion of other income growth related to bulk wi-fi that we expected to realize in the second half of 2025 has rolled out slightly slower than planned and will now be pushed into 2026 That said, we still saw strong quarter-over-quarter growth in other income of 9%, demonstrating our ability to continue to pull multiple levers to drive overall revenue. that said we still saw strong quarter-over-quarter growth in other income of 9% demonstrating our ability to continue to pull multiple levers to drive overall revenue The combination of these two factors resulted in a revised 2025 same-store revenue range of 2.5%- 3%, with a midpoint of 2.75%, which matches the midpoint of the range we guided to at the beginning of this year. the combination of these two factors resulted in a revised 2025 same-store revenue range of 2.5%- 3% with a midpoint of 2.75% which matches the midpoint of the range we guided to at the beginning of this year We've held same-store expenses steady at 3.5%- 4% for the full year and continue to see sub-inflationary trends on payroll, insurance, and real estate taxes, partially offset by higher utility expenses, particularly in California. we've held same-store expenses steady at 3.5%- 4% for the full year and continue to see sub-inflationary trends on payroll insurance and real estate taxes partially offset by higher utility expenses particularly in california I would remind you that our 2025 same-store expenses are approximately 40 basis points higher this year due to the continued rollout of bulk Wi-Fi, which sits in repairs and maintenance, but is positively contributing to outsized other income growth for the remainder of the year and will continue to do so as we move into 2026. The net result of these same-store revenue and expense adjustments is a revised annual same-store NOI range of 2.1%-2.6% and a midpoint of 2.35%, 15 basis points higher than our original 2025 guidance, but 15 basis points lower than the midpoint we provided in the second quarter. For normalized FFO, we've tightened our range of both the top and bottom end and are estimating full-year 2025 NFFO per share of $3.98-$4.02, leaving the midpoint unchanged from Q2 at $4 per share. I would remind you that our 2025 same-store expenses are approximately 40 basis points higher this year due to the continued rollout of bulk Wi-Fi, which sits in repairs and maintenance, but is positively contributing to outsized other income growth for the remainder of the year and will continue to do so as we move into 2026. i would remind you that our 2025 same-store expenses are approximately 40 basis points higher this year due to the continued rollout of bulk wi-fi which sits in repairs and maintenance but is positively contributing to outsized other income growth for the remainder of the year and will continue to do so as we move into 2026 The net result of these same-store revenue and expense adjustments is a revised annual same-store NOI range of 2.1%- 2.6% and a midpoint of 2.35%, 15 basis points higher than our original 2025 guidance, but 15 basis points lower than the midpoint we provided in the second quarter. the net result of these same-store revenue and expense adjustments is a revised annual same-store noi range of 2.1%- 2.6% and a midpoint of 2.35% 15 basis points higher than our original 2025 guidance but 15 basis points lower than the midpoint we provided in the second quarter For normalized FFO, we've tightened our range of both the top and bottom end and are estimating full-year 2025 NFFO per share of $3.98- $4.02, leaving the midpoint unchanged from Q2 at $4 per share. for normalized ffo we've tightened our range of both the top and bottom end and are estimating full-year 2025 nffo per share of $3.98- $4.02 leaving the midpoint unchanged from q2 at $4 per share Slightly reduced same-store NOI should be offset by expected continued improvements in lease-up NOI and lower property management expense. With that, I will turn it over to the operator and open it up for questions. Slightly reduced same-store NOI should be offset by expected continued improvements in lease-up NOI and lower property management expense. slightly reduced same-store noi should be offset by expected continued improvements in lease-up noi and lower property management expense With that, I will turn it over to the operator and open it up for questions. with that i will turn it over to the operator and open it up for questions

Speaker 3: Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, you can press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll now take your first question coming from the line of Eric Wolfe with Citi. Thank you. thank you If you would like to ask a question, please signal by pressing star one on your telephone keypad. if you would like to ask a question please signal by pressing star one on your telephone keypad If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. if you're using a speakerphone please make sure your mute function is turned off to allow your signal to reach our equipment Again, you can press star one to ask a question. again you can press star one to ask a question We'll pause for just a moment to allow everyone an opportunity to signal for questions. we'll pause for just a moment to allow everyone an opportunity to signal for questions We'll now take your first question coming from the line of Eric Wolfe with Citi. we'll now take your first question coming from the line of eric wolfe with citi

Speaker 17: Thanks. It's Nick Joseph here with Eric. I appreciate the comments on the peak leasing season and totally understand that the timing of each year is a bit unique. I guess in the past, when you've seen rent growth falling at this time of the year, how do you approach the forecast for next year's growth? How do you decide whether these are more temporary factors affecting rent growth or something that's more likely to persist going forward? Thanks. thanks It's Nick Joseph here with Eric. it's nick joseph here with eric I appreciate the comments on the peak leasing season and totally understand that the timing of each year is a bit unique. i appreciate the comments on the peak leasing season and totally understand that the timing of each year is a bit unique I guess in the past, when you've seen rent growth falling at this time of the year, how do you approach the forecast for next year's growth? i guess in the past when you've seen rent growth falling at this time of the year how do you approach the forecast for next year's growth How do you decide whether these are more temporary factors affecting rent growth or something that's more likely to persist going forward? how do you decide whether these are more temporary factors affecting rent growth or something that's more likely to persist going forward

Speaker 12: Yeah. Hey, Nick. This is Michael. That's a great question. I think what I would start with is just say, as what we felt coming out of that peak leasing season and looking at some of the decelerations that occurred in that later part of September and has carried through October, we basically just took that seasonality through the rest of the year. You know how it kind of manifests itself into next year, there's still a lot of seasonality to these blends. I think I'm going to stay away from giving the exact guidance or outlook to next year. We do expect to start out next year well-occupied with some embedded growth that looks very similar to how we started out this year. I think the wildcard for us is really going to be what does that intra-period rate growth look like? Yeah. yeah Hey, Nick. hey nick This is Michael. this is michael That's a great question. that's a great question I think what I would start with is just say, as what we felt coming out of that peak leasing season and looking at some of the decelerations that occurred in that later part of September and has carried through October, we basically just took that seasonality through the rest of the year. i think what i would start with is just say as what we felt coming out of that peak leasing season and looking at some of the decelerations that occurred in that later part of september and has carried through october we basically just took that seasonality through the rest of the year You know how it kind of manifests itself into next year, there's still a lot of seasonality to these blends. you know how it kind of manifests itself into next year there's still a lot of seasonality to these blends I think I'm going to stay away from giving the exact guidance or outlook to next year. i think i'm going to stay away from giving the exact guidance or outlook to next year We do expect to start out next year well-occupied with some embedded growth that looks very similar to how we started out this year. we do expect to start out next year well-occupied with some embedded growth that looks very similar to how we started out this year I think the wildcard for us is really going to be what does that intra-period rate growth look like? i think the wildcard for us is really going to be what does that intra-period rate growth look like For us, in many of these markets, it's going to be when does that consumer sentiment turn positive again? We have such a great setup with the reduction of competitive supply being so much lower in many of these markets. It's not going to take much of a catalyst from that sentiment change or any catalyst in the job growth in these markets to really fuel that intra-period growth. I think for us, I'm going to stay away, like I said, from giving you the guidance, but we're modeling right now for continued deceleration for the back of the year, but still feel pretty good about the setup and the outlook into next year. For us, in many of these markets, it's going to be when does that consumer sentiment turn positive again? for us in many of these markets it's going to be when does that consumer sentiment turn positive again We have such a great setup with the reduction of competitive supply being so much lower in many of these markets. we have such a great setup with the reduction of competitive supply being so much lower in many of these markets It's not going to take much of a catalyst from that sentiment change or any catalyst in the job growth in these markets to really fuel that intra-period growth. it's not going to take much of a catalyst from that sentiment change or any catalyst in the job growth in these markets to really fuel that intra-period growth I think for us, I'm going to stay away, like I said, from giving you the guidance, but we're modeling right now for continued deceleration for the back of the year, but still feel pretty good about the setup and the outlook into next year. i think for us i'm going to stay away like i said from giving you the guidance but we're modeling right now for continued deceleration for the back of the year but still feel pretty good about the setup and the outlook into next year

Speaker 17: Thanks. I appreciate that. In terms of capital allocation, you've done $100 million on the buyback so far. Given where the stock is today, what are the factors or how are you thinking about really leaning into that and doing it at a much more meaningful scale versus other opportunities with your capital allocation? Thanks. thanks I appreciate that. i appreciate that In terms of capital allocation, you've done $100 million on the buyback so far. in terms of capital allocation you've done $100 million on the buyback so far Given where the stock is today, what are the factors or how are you thinking about really leaning into that and doing it at a much more meaningful scale versus other opportunities with your capital allocation? given where the stock is today what are the factors or how are you thinking about really leaning into that and doing it at a much more meaningful scale versus other opportunities with your capital allocation

Speaker 20: Hey, Nick. It's Mark. Thanks for that question. There's really two inputs. One is the attractiveness of our other investment opportunities, which is predominantly buying existing assets or building new assets versus the stock. Obviously, we voted for the stock over the last quarter and bought that. There's also the availability and cost is the other factor of the capital we need to acquire the stock. That's really, really only two places. We either have to issue debt or we have to sell assets because, as you well know, as a REIT, we just can't retain much in the way of earnings. We pay a really nice $1 billion-a-year dividend already. Hey, Nick. hey nick It's Mark. it's mark Thanks for that question. thanks for that question There's really two inputs. there's really two inputs One is the attractiveness of our other investment opportunities, which is predominantly buying existing assets or building new assets versus the stock. one is the attractiveness of our other investment opportunities which is predominantly buying existing assets or building new assets versus the stock Obviously, we voted for the stock over the last quarter and bought that. obviously we voted for the stock over the last quarter and bought that There's also the availability and cost is the other factor of the capital we need to acquire the stock. there's also the availability and cost is the other factor of the capital we need to acquire the stock That's really, really only two places. that's really really only two places We either have to issue debt or we have to sell assets because, as you well know, as a REIT, we just can't retain much in the way of earnings. we either have to issue debt or we have to sell assets because as you well know as a reit we just can't retain much in the way of earnings We pay a really nice $1 billion-a-year dividend already. we pay a really nice $1 billion-a-year dividend already Our lean right now is to continue to do asset sales of these lower return profile assets or assets where we have an overconcentration in the submarket, kind of improve the forward growth potential of the business, and arbitrage the private-public markets and continue to be thoughtful about buying more stock. Exact levels and stuff are just dependent on where the stock price goes and the opportunity set goes. We'll be open to that. I just want to remind everyone, and again, I know you know this, Nick, but there are real tax gain limits. We have a lot of embedded gain in our assets. We've done a lot of good investing over the years, and our assets are worth a lot more than their basis is a lot lower than the tax basis, so there'd be a lot of gain. We also did 1031s. Our lean right now is to continue to do asset sales of these lower return profile assets or assets where we have an overconcentration in the submarket, kind of improve the forward growth potential of the business, and arbitrage the private-public markets and continue to be thoughtful about buying more stock. our lean right now is to continue to do asset sales of these lower return profile assets or assets where we have an overconcentration in the submarket kind of improve the forward growth potential of the business and arbitrage the private-public markets and continue to be thoughtful about buying more stock Exact levels and stuff are just dependent on where the stock price goes and the opportunity set goes. exact levels and stuff are just dependent on where the stock price goes and the opportunity set goes We'll be open to that. we'll be open to that I just want to remind everyone, and again, I know you know this, Nick, but there are real tax gain limits. i just want to remind everyone and again i know you know this nick but there are real tax gain limits We have a lot of embedded gain in our assets. we have a lot of embedded gain in our assets We've done a lot of good investing over the years, and our assets are worth a lot more than their basis is a lot lower than the tax basis, so there'd be a lot of gain. we've done a lot of good investing over the years and our assets are worth a lot more than their basis is a lot lower than the tax basis so there'd be a lot of gain We also did 1031s. we also did 1031s I'd also point out I want to be careful about not descaling the company too much. There's a lot of fixed costs in running a public company of this size, so we just want to be thoughtful about that. We're very open to additional buyback activity in the quarter. I'd also point out I want to be careful about not descaling the company too much. i'd also point out i want to be careful about not descaling the company too much There's a lot of fixed costs in running a public company of this size, so we just want to be thoughtful about that. there's a lot of fixed costs in running a public company of this size so we just want to be thoughtful about that We're very open to additional buyback activity in the quarter. we're very open to additional buyback activity in the quarter

Speaker 17: Thank you. Thank you. thank you

Speaker 3: Next question is coming from the line of Steve Sakwa with Evercore ISI. Next question is coming from the line of Steve Sakwa with Evercore ISI. next question is coming from the line of steve sakwa with evercore isi

Speaker 6: Thanks. Good morning. I was wondering, Michael, if you could provide any color on just kind of where the earn-in sits today as we kind of head towards the end of the year. Thanks. thanks Good morning. good morning I was wondering, Michael, if you could provide any color on just kind of where the earn-in sits today as we kind of head towards the end of the year. i was wondering michael if you could provide any color on just kind of where the earn-in sits today as we kind of head towards the end of the year

Speaker 12: Yeah. I think maybe I'm going to just start off and let me define or clarify embedded growth, which is kind of also referred to as that earn-in. It basically just means that you're freezing the rent roll on 1231. You annualize all the leases in place with no changes to occupancy or vacancy loss throughout the year. We started 2025 out with approximately 80 basis points of embedded growth on this same-store set. While that was slightly below the historical average of 1%, it was still a pretty solid position for us to start off the year. Given the current momentum that we see now and some of that deceleration that I just referred to that we modeled, we now expect 2026 to start out in a relatively similar position than we did this year. Our view is a little bit lower than what we thought 90 days ago. Yeah. yeah I think maybe I'm going to just start off and let me define or clarify embedded growth, which is kind of also referred to as that earn-in. i think maybe i'm going to just start off and let me define or clarify embedded growth which is kind of also referred to as that earn-in It basically just means that you're freezing the rent roll on 1231. it basically just means that you're freezing the rent roll on 1231 You annualize all the leases in place with no changes to occupancy or vacancy loss throughout the year. you annualize all the leases in place with no changes to occupancy or vacancy loss throughout the year We started 2025 out with approximately 80 basis points of embedded growth on this same-store set. we started 2025 out with approximately 80 basis points of embedded growth on this same-store set While that was slightly below the historical average of 1%, it was still a pretty solid position for us to start off the year. while that was slightly below the historical average of 1% it was still a pretty solid position for us to start off the year Given the current momentum that we see now and some of that deceleration that I just referred to that we modeled, we now expect 2026 to start out in a relatively similar position than we did this year. given the current momentum that we see now and some of that deceleration that i just referred to that we modeled we now expect 2026 to start out in a relatively similar position than we did this year Our view is a little bit lower than what we thought 90 days ago. our view is a little bit lower than what we thought 90 days ago This is really just a result of us taking down that trajectory of the fourth quarter, given some of the deceleration that we saw begin in kind of late September. I do want to call out because I know a lot of you guys have these models. While the math is not perfect, right, rough estimates, you start out with about 50% of the expected full-year blended growth. In 2026, we're going to also be folding in some of the assets in the expansion markets. While these assets are clearly performing better than the same-store assets in those markets, they're not performing better than the overall kind of coastal same-store portfolio. It's going to be a little bit diluted to that embedded starting point. Again, I think at the high level, we would say we're going to start out 2026 in a relatively similar position as we did in 2025. This is really just a result of us taking down that trajectory of the fourth quarter, given some of the deceleration that we saw begin in kind of late September. this is really just a result of us taking down that trajectory of the fourth quarter given some of the deceleration that we saw begin in kind of late september I do want to call out because I know a lot of you guys have these models. i do want to call out because i know a lot of you guys have these models While the math is not perfect, right, rough estimates, you start out with about 50% of the expected full-year blended growth. while the math is not perfect right rough estimates you start out with about 50% of the expected full-year blended growth In 2026, we're going to also be folding in some of the assets in the expansion markets. in 2026 we're going to also be folding in some of the assets in the expansion markets While these assets are clearly performing better than the same-store assets in those markets, they're not performing better than the overall kind of coastal same-store portfolio. while these assets are clearly performing better than the same-store assets in those markets they're not performing better than the overall kind of coastal same-store portfolio It's going to be a little bit diluted to that embedded starting point. it's going to be a little bit diluted to that embedded starting point Again, I think at the high level, we would say we're going to start out 2026 in a relatively similar position as we did in 2025. again i think at the high level we would say we're going to start out 2026 in a relatively similar position as we did in 2025

Speaker 6: Great. That's helpful. Thanks. Maybe just going back, it sounds like with the slowdown in the seasonal trend, there's a bit more pressure on the new lease trend and top-of-funnel demand. I'm just curious if you're seeing any change in behavior on the renewal side. Have you had any real change in the renewal success, or is most of the weakness really happening on the new lease side of the business? Great. great That's helpful. that's helpful Thanks. thanks Maybe just going back, it sounds like with the slowdown in the seasonal trend, there's a bit more pressure on the new lease trend and top-of-funnel demand. maybe just going back it sounds like with the slowdown in the seasonal trend there's a bit more pressure on the new lease trend and top-of-funnel demand I'm just curious if you're seeing any change in behavior on the renewal side. i'm just curious if you're seeing any change in behavior on the renewal side Have you had any real change in the renewal success, or is most of the weakness really happening on the new lease side of the business? have you had any real change in the renewal success or is most of the weakness really happening on the new lease side of the business

Speaker 12: Yeah, Steve. This is Michael again. Great question. I think what we noticed in select pockets of markets in the renewal process, there tended to be a little bit of hesitation, a little bit more back and forth. We have centralized our, you know, we have a centralized renewal team handling all of these negotiations or conversations. It's really allowed us to execute these various strategies. We noticed a little bit more kind of back and forth, a little bit of this hesitation. Right now, for the next several months, our quotes have been sent out in the marketplace. We typically send out renewal offers about 90 days in advance. Those markets, those quotes were sent out about 6%. Sitting here today, we had a lot of confidence in our process. We would expect to have achieved kind of net effective renewal increases to land right around 4.25%. Yeah, Steve. yeah steve This is Michael again. this is michael again Great question. great question I think what we noticed in select pockets of markets in the renewal process, there tended to be a little bit of hesitation, a little bit more back and forth. i think what we noticed in select pockets of markets in the renewal process there tended to be a little bit of hesitation a little bit more back and forth We have centralized our, you know, we have a centralized renewal team handling all of these negotiations or conversations. we have centralized our you know we have a centralized renewal team handling all of these negotiations or conversations It's really allowed us to execute these various strategies. it's really allowed us to execute these various strategies We noticed a little bit more kind of back and forth, a little bit of this hesitation. we noticed a little bit more kind of back and forth a little bit of this hesitation Right now, for the next several months, our quotes have been sent out in the marketplace. right now for the next several months our quotes have been sent out in the marketplace We typically send out renewal offers about 90 days in advance. we typically send out renewal offers about 90 days in advance Those markets, those quotes were sent out about 6%. those markets those quotes were sent out about 6% Sitting here today, we had a lot of confidence in our process. sitting here today we had a lot of confidence in our process We would expect to have achieved kind of net effective renewal increases to land right around 4.25%. we would expect to have achieved kind of net effective renewal increases to land right around 4.25% This is typically a time where we're going to lean into retention, and we'll tend to negotiate a little bit more as we hit the shoulder part of the seasons. I think we saw a little bit of that hesitation, but we still have a lot of confidence in our process. We're seeing really strong resident retention occur. It's just taking a little bit more kind of back and forth, a little more effort to secure those leases. This is typically a time where we're going to lean into retention, and we'll tend to negotiate a little bit more as we hit the shoulder part of the seasons. this is typically a time where we're going to lean into retention and we'll tend to negotiate a little bit more as we hit the shoulder part of the seasons I think we saw a little bit of that hesitation, but we still have a lot of confidence in our process. i think we saw a little bit of that hesitation but we still have a lot of confidence in our process We're seeing really strong resident retention occur. we're seeing really strong resident retention occur It's just taking a little bit more kind of back and forth, a little more effort to secure those leases. it's just taking a little bit more kind of back and forth a little more effort to secure those leases

Speaker 6: Great. Thanks for the color. Great. great Thanks for the color. thanks for the color

Speaker 3: Next question is coming from the line of Alexander Goldfarb with Piper Sandler. Next question is coming from the line of Alexander Goldfarb with Piper Sandler. next question is coming from the line of alexander goldfarb with piper sandler

Speaker 9: Hey. Good morning out there. Two questions. Bret, maybe I'll start with you and kick it off. By the way, nice job on your Blue Jays last night. Hey. hey Good morning out there. good morning out there Two questions. two questions Bret, maybe I'll start with you and kick it off. bret maybe i'll start with you and kick it off By the way, nice job on your Blue Jays last night. by the way nice job on your blue jays last night

Speaker 15: Thank you. Thank you. thank you

Speaker 9: This may predate you, but I think you guys did converts back in 2006. Once again, they seem to be all the rage. You guys have some mid-3% debt coming due next year. Just curious where your headset is on the potential to reenter the convert market or if your view is, you know, hey, we did it two decades ago. We had an experience. We haven't done it since. That's the message, that you guys may just stick with traditional. Just trying to understand, especially given some of the receptiveness we've seen from some other large REITs, pricing converts pretty tightly. This may predate you, but I think you guys did converts back in 2006. this may predate you but i think you guys did converts back in 2006 Once again, they seem to be all the rage. once again they seem to be all the rage You guys have some mid-3% debt coming due next year. you guys have some mid-3% debt coming due next year Just curious where your headset is on the potential to reenter the convert market or if your view is, you know, hey, we did it two decades ago. just curious where your headset is on the potential to reenter the convert market or if your view is you know hey we did it two decades ago We had an experience. we had an experience We haven't done it since. we haven't done it since That's the message, that you guys may just stick with traditional. that's the message that you guys may just stick with traditional Just trying to understand, especially given some of the receptiveness we've seen from some other large REITs, pricing converts pretty tightly. just trying to understand especially given some of the receptiveness we've seen from some other large reits pricing converts pretty tightly

Speaker 20: Alex, it's Mark. I'm going to start here. It is historical context that Bret lacks, but certainly he understands converts very well given his experience level. When we did that back in 2006, we did that in part because we were working with the Lexford portfolio sale and buying into lower cap rate, higher growth markets like New York. This was a little bit of an asset matching exercise for us, and the terms were pretty appealing. I do think converts are an interesting tool. I think there are times they're very beneficial. If we got our hands, for example, on a portfolio where it was a big lease-up effort that we were going to have or a big renovation effort, and it was pretty material, you might match fund that with some converts. The accounting disclosure of converts is pretty favorable now. Alex, it's Mark. alex it's mark I'm going to start here. i'm going to start here It is historical context that Bret lacks, but certainly he understands converts very well given his experience level. it is historical context that bret lacks but certainly he understands converts very well given his experience level When we did that back in 2006, we did that in part because we were working with the Lexford portfolio sale and buying into lower cap rate, higher growth markets like New York. when we did that back in 2006 we did that in part because we were working with the lexford portfolio sale and buying into lower cap rate higher growth markets like new york This was a little bit of an asset matching exercise for us, and the terms were pretty appealing. this was a little bit of an asset matching exercise for us and the terms were pretty appealing I do think converts are an interesting tool. i do think converts are an interesting tool I think there are times they're very beneficial. i think there are times they're very beneficial If we got our hands, for example, on a portfolio where it was a big lease-up effort that we were going to have or a big renovation effort, and it was pretty material, you might match fund that with some converts. if we got our hands for example on a portfolio where it was a big lease-up effort that we were going to have or a big renovation effort and it was pretty material you might match fund that with some converts The accounting disclosure of converts is pretty favorable now. the accounting disclosure of converts is pretty favorable now If it succeeded, the convert holders would benefit, the existing equity holders would benefit, and it would all make some sense. Otherwise, we're an opportunistic and infrequent issuer of converts. It's a little awkward to be buying your stock back and issuing converts at the same time. We'll just have to balance that out. If it succeeded, the convert holders would benefit, the existing equity holders would benefit, and it would all make some sense. if it succeeded the convert holders would benefit the existing equity holders would benefit and it would all make some sense Otherwise, we're an opportunistic and infrequent issuer of converts. otherwise we're an opportunistic and infrequent issuer of converts It's a little awkward to be buying your stock back and issuing converts at the same time. it's a little awkward to be buying your stock back and issuing converts at the same time We'll just have to balance that out. we'll just have to balance that out

Speaker 9: Okay. The second question is on AI. There is a lot of discussion on whether it's sort of a net job creator or it's maybe a job eliminator or it's just obviously different headlines on layoffs and stuff. In your key AI markets like New York and San Francisco, are you seeing a ripple effect where the AI job hiring is benefiting other related industries and you're seeing net overall job growth, or are you seeing sort of the reverse where AI job growth is ending up with other positions in those markets being eliminated and replaced by AI? Okay. okay The second question is on AI. the second question is on ai There is a lot of discussion on whether it's sort of a net job creator or it's maybe a job eliminator or it's just obviously different headlines on layoffs and stuff. there is a lot of discussion on whether it's sort of a net job creator or it's maybe a job eliminator or it's just obviously different headlines on layoffs and stuff In your key AI markets like New York and San Francisco, are you seeing a ripple effect where the AI job hiring is benefiting other related industries and you're seeing net overall job growth, or are you seeing sort of the reverse where AI job growth is ending up with other positions in those markets being eliminated and replaced by AI? in your key ai markets like new york and san francisco are you seeing a ripple effect where the ai job hiring is benefiting other related industries and you're seeing net overall job growth or are you seeing sort of the reverse where ai job growth is ending up with other positions in those markets being eliminated and replaced by ai

Speaker 20: Yeah. What an excellent question. It's Mark. I'm going to suggest that Michael just tell you what he's hearing from people on site and in the markets and give you that intel. I'm going to sort of give you what we've been thinking about on the AI side and employment in the long run. I tell you, it's very, of course, very unknown at this point. Michael. Yeah. yeah What an excellent question. what an excellent question It's Mark. it's mark I'm going to suggest that Michael just tell you what he's hearing from people on site and in the markets and give you that intel. i'm going to suggest that michael just tell you what he's hearing from people on site and in the markets and give you that intel I'm going to sort of give you what we've been thinking about on the AI side and employment in the long run. i'm going to sort of give you what we've been thinking about on the ai side and employment in the long run I tell you, it's very, of course, very unknown at this point. i tell you it's very of course very unknown at this point Michael. michael

Speaker 12: Yeah. I mean, I think one of the best indicators we have is when we drill into some of our migration data, which is, you know, where are new residents coming to us from? What industries are they working with? I wouldn't necessarily say, Alex, that this is all driven because of AI that we're feeling. When you look at San Francisco and New York, San Francisco clearly saw in migration 4% more of our move-ins coming to us from outside the state of California, outside kind of that MSA, which basically is telling us there's a lot of kind of excitement going on. I mean, this is the epicenter of tech. Even though you see the big guys kind of really dominating the headlines around AI, there's a lot of other startup industries. Yeah. yeah I mean, I think one of the best indicators we have is when we drill into some of our migration data, which is, you know, where are new residents coming to us from? i mean i think one of the best indicators we have is when we drill into some of our migration data which is you know where are new residents coming to us from What industries are they working with? what industries are they working with I wouldn't necessarily say, Alex, that this is all driven because of AI that we're feeling. i wouldn't necessarily say alex that this is all driven because of ai that we're feeling When you look at San Francisco and New York, San Francisco clearly saw in migration 4% more of our move-ins coming to us from outside the state of California, outside kind of that MSA, which basically is telling us there's a lot of kind of excitement going on. when you look at san francisco and new york san francisco clearly saw in migration 4% more of our move-ins coming to us from outside the state of california outside kind of that msa which basically is telling us there's a lot of kind of excitement going on I mean, this is the epicenter of tech. i mean this is the epicenter of tech Even though you see the big guys kind of really dominating the headlines around AI, there's a lot of other startup industries. even though you see the big guys kind of really dominating the headlines around ai there's a lot of other startup industries There's a lot of businesses now that are benefiting from just an overall shift in the technology strategy of companies. I think we're benefiting from that. New York, what was interesting for us is we saw a slight uptick in that migration pattern coming in from outside that MSA. What was cool on the outbound side, people that were leaving our portfolio were staying in the state and in the MSA at a higher degree than what we saw before, which gives us confidence that kind of that market is going to be doing really well for us next year. There's a lot of businesses now that are benefiting from just an overall shift in the technology strategy of companies. there's a lot of businesses now that are benefiting from just an overall shift in the technology strategy of companies I think we're benefiting from that. i think we're benefiting from that New York, what was interesting for us is we saw a slight uptick in that migration pattern coming in from outside that MSA. new york what was interesting for us is we saw a slight uptick in that migration pattern coming in from outside that msa What was cool on the outbound side, people that were leaving our portfolio were staying in the state and in the MSA at a higher degree than what we saw before, which gives us confidence that kind of that market is going to be doing really well for us next year. what was cool on the outbound side people that were leaving our portfolio were staying in the state and in the msa at a higher degree than what we saw before which gives us confidence that kind of that market is going to be doing really well for us next year

Speaker 20: Yeah. Just to tack on, one last thought on the AI side. I mean, clearly, there's been a lot of talk about whether AI is going to get rid of a lot of white-collar jobs. No one knows the answer to that question. A lot of the comments about vast displacement are being made by folks, Alex, as you know, who greatly benefit from the AI boom. It's a little bit about talking your own book. That said, I do think AI is an interesting tool. I think it's going to change the relationship between colleges, students, and employers. Right now, I think the unspoken deal is colleges turn out smart people with good general skill sets, but not necessarily work-ready skills. I think what's going to happen going forward, you spend a year or two teaching those people your vocation, their vocation, and then they're pretty productive for you. Yeah. yeah Just to tack on, one last thought on the AI side. just to tack on one last thought on the ai side I mean, clearly, there's been a lot of talk about whether AI is going to get rid of a lot of white-collar jobs. i mean clearly there's been a lot of talk about whether ai is going to get rid of a lot of white-collar jobs No one knows the answer to that question. no one knows the answer to that question A lot of the comments about vast displacement are being made by folks, Alex, as you know, who greatly benefit from the AI boom. a lot of the comments about vast displacement are being made by folks alex as you know who greatly benefit from the ai boom It's a little bit about talking your own book. it's a little bit about talking your own book That said, I do think AI is an interesting tool. that said i do think ai is an interesting tool I think it's going to change the relationship between colleges, students, and employers. i think it's going to change the relationship between colleges students and employers Right now, I think the unspoken deal is colleges turn out smart people with good general skill sets, but not necessarily work-ready skills. right now i think the unspoken deal is colleges turn out smart people with good general skill sets but not necessarily work-ready skills I think what's going to happen going forward, you spend a year or two teaching those people your vocation, their vocation, and then they're pretty productive for you. i think what's going to happen going forward you spend a year or two teaching those people your vocation their vocation and then they're pretty productive for you I think colleges are going to have to put at a premium teaching people data analytics and AI skills. They're going to show up with the equivalent of second or third-year employee skill sets and be able to move forward. You know the kind of people that we have at our properties. These are highly educated folks. These are often Gen Z and Millennials that are digital natives. They understand technology. They will learn AI, and they'll learn to use it better, I would argue, than anyone else. My sense is the market will adapt to this. I'm not a believer in the, you know, no one will have a job theory of AI employment. I think colleges are going to have to put at a premium teaching people data analytics and AI skills. i think colleges are going to have to put at a premium teaching people data analytics and ai skills They're going to show up with the equivalent of second or third-year employee skill sets and be able to move forward. they're going to show up with the equivalent of second or third-year employee skill sets and be able to move forward You know the kind of people that we have at our properties. you know the kind of people that we have at our properties These are highly educated folks. these are highly educated folks These are often Gen Z and Millennials that are digital natives. these are often gen z and millennials that are digital natives They understand technology. they understand technology They will learn AI, and they'll learn to use it better, I would argue, than anyone else. they will learn ai and they'll learn to use it better i would argue than anyone else My sense is the market will adapt to this. my sense is the market will adapt to this I'm not a believer in the, you know, no one will have a job theory of AI employment. i'm not a believer in the you know no one will have a job theory of ai employment

Speaker 9: Okay. Great. Thank you, Mark. Okay. okay Great. great Thank you, Mark. thank you mark

Speaker 3: Next question is coming from the line of Jana Galan with Bank of America. Next question is coming from the line of Jana Galan with Bank of America. next question is coming from the line of jana galan with bank of america

Speaker 4: Thank you. Good morning. Question for Michael, following up on your San Francisco comments. If you could speak to your prior experience in that market when demand starts to accelerate, how quickly can rents increase, and then does seasonality still hold or kind of not as much given the growth in jobs? Thank you. thank you Good morning. good morning Question for Michael, following up on your San Francisco comments. question for michael following up on your san francisco comments If you could speak to your prior experience in that market when demand starts to accelerate, how quickly can rents increase, and then does seasonality still hold or kind of not as much given the growth in jobs? if you could speak to your prior experience in that market when demand starts to accelerate how quickly can rents increase and then does seasonality still hold or kind of not as much given the growth in jobs

Speaker 12: Yeah. I mean, obviously, anytime you have supply-demand kind of imbalance, and in this case, in San Francisco, you have very little competitive supply and you have more demand coming into the portfolio, that creates this opportunity for rent growth. I think I alluded to in my prepared remarks, we're just now getting back to 2019 kind of rent levels in our portfolio. When you look at incomes in that market, it's up 22% since 2019. I think historically, what you see is anytime you have this imbalance and you have strong demand, less supply, you're going to be in a position of pricing power. I don't know that it's going to completely abate any kind of seasonality trend. You may see some softening in very strong numbers still, like in the fourth quarter or in the first quarter. We clearly have an opportunity in front of us. Yeah. yeah I mean, obviously, anytime you have supply-demand kind of imbalance, and in this case, in San Francisco, you have very little competitive supply and you have more demand coming into the portfolio, that creates this opportunity for rent growth. i mean obviously anytime you have supply-demand kind of imbalance and in this case in san francisco you have very little competitive supply and you have more demand coming into the portfolio that creates this opportunity for rent growth I think I alluded to in my prepared remarks, we're just now getting back to 2019 kind of rent levels in our portfolio. i think i alluded to in my prepared remarks we're just now getting back to 2019 kind of rent levels in our portfolio When you look at incomes in that market, it's up 22% since 2019. when you look at incomes in that market it's up 22% since 2019 I think historically, what you see is anytime you have this imbalance and you have strong demand, less supply, you're going to be in a position of pricing power. i think historically what you see is anytime you have this imbalance and you have strong demand less supply you're going to be in a position of pricing power I don't know that it's going to completely abate any kind of seasonality trend. i don't know that it's going to completely abate any kind of seasonality trend You may see some softening in very strong numbers still, like in the fourth quarter or in the first quarter. you may see some softening in very strong numbers still like in the fourth quarter or in the first quarter We clearly have an opportunity in front of us. we clearly have an opportunity in front of us This is exactly what we kind of highlighted earlier in the year at our Investor Day. This recovery is taking hold, and we're really excited to see it kind of playing out at this pace. This is exactly what we kind of highlighted earlier in the year at our Investor Day. this is exactly what we kind of highlighted earlier in the year at our investor day This recovery is taking hold, and we're really excited to see it kind of playing out at this pace. this recovery is taking hold and we're really excited to see it kind of playing out at this pace

Speaker 4: Thank you. Quick one for Bret on the Wi-Fi expenses. You mentioned it was kind of a 40 bps delta in 2025. Is there additional expense related to this initiative in 2026, or will that kind of just be smoothed out? Thank you. thank you Quick one for Bret on the Wi-Fi expenses. quick one for bret on the wi-fi expenses You mentioned it was kind of a 40 bps delta in 2025. you mentioned it was kind of a 40 bps delta in 2025 Is there additional expense related to this initiative in 2026, or will that kind of just be smoothed out? is there additional expense related to this initiative in 2026 or will that kind of just be smoothed out

Speaker 20: Thanks for the question. No, that's primarily for this year. Right now, we're just looking forward to getting the revenue after we've had the expenses run through this year. Thanks for the question. thanks for the question No, that's primarily for this year. no that's primarily for this year Right now, we're just looking forward to getting the revenue after we've had the expenses run through this year. right now we're just looking forward to getting the revenue after we've had the expenses run through this year

Speaker 4: Thank you. Thank you. thank you

Speaker 3: Next question is coming from the line of Brad Heffern with RBC Capital Markets. Next question is coming from the line of Brad Heffern with RBC Capital Markets. next question is coming from the line of brad heffern with rbc capital markets

Speaker 13: Can you give your perspective on what you expect to happen in Washington, DC over the next six to 12 months, and how much of an impact has a shutdown historically had, and how much do you expect this one to have? Can you give your perspective on what you expect to happen in Washington, DC over the next six to 12 months, and how much of an impact has a shutdown historically had, and how much do you expect this one to have? can you give your perspective on what you expect to happen in washington dc over the next six to 12 months and how much of an impact has a shutdown historically had and how much do you expect this one to have

Speaker 12: Yeah. Hey, Brad. This is Michael. Maybe I'm going to start. I just want to give a little bit of color as to what have we observed in DC, how do the various submarkets kind of appear today, and then I'll kind of shift it as to what we would expect for the balance of the year or turning into next year. First and foremost, I think what we observed in that first or second week of September is a little bit of that hesitancy that I described on that renewal process, but also taking hold with prospects. There was just a little less sense of urgency to buy and sign on the dotted line and commit to kind of move-in dates. That manifested itself as we worked our way through September into October with just a lower volume of kind of new leases occurring. Yeah. yeah Hey, Brad. hey brad This is Michael. this is michael Maybe I'm going to start. maybe i'm going to start I just want to give a little bit of color as to what have we observed in DC, how do the various submarkets kind of appear today, and then I'll kind of shift it as to what we would expect for the balance of the year or turning into next year. i just want to give a little bit of color as to what have we observed in dc how do the various submarkets kind of appear today and then i'll kind of shift it as to what we would expect for the balance of the year or turning into next year First and foremost, I think what we observed in that first or second week of September is a little bit of that hesitancy that I described on that renewal process, but also taking hold with prospects. first and foremost i think what we observed in that first or second week of september is a little bit of that hesitancy that i described on that renewal process but also taking hold with prospects There was just a little less sense of urgency to buy and sign on the dotted line and commit to kind of move-in dates. there was just a little less sense of urgency to buy and sign on the dotted line and commit to kind of move-in dates That manifested itself as we worked our way through September into October with just a lower volume of kind of new leases occurring. that manifested itself as we worked our way through september into october with just a lower volume of kind of new leases occurring The retention side held up strong. When you look at DC today, if you peeled out our DC market, we have a suburban Maryland portfolio doing very well, right? It's 97% plus occupied. It's got rents slightly on top of where they were last year. You go into the Virginia portfolio, go deep suburban into Fairfax. I got good occupancy and I got rents up a couple percent. Start coming in towards DC in that Virginia portfolio where you got a more urban concentration competing with the supply. I've still got solid occupancies, but I got pockets where I don't have pricing power, where I had to start utilizing concessions. Then you get into DC, Northwest DC, along with DC, kind of the district central area. I've got occupancies that are running 95%, 95.5%. I've got concession use that has clearly increased in the last four weeks. The retention side held up strong. the retention side held up strong When you look at DC today, if you peeled out our DC market, we have a suburban Maryland portfolio doing very well, right? when you look at dc today if you peeled out our dc market we have a suburban maryland portfolio doing very well right It's 97% plus occupied. it's 97% plus occupied It's got rents slightly on top of where they were last year. it's got rents slightly on top of where they were last year You go into the Virginia portfolio, go deep suburban into Fairfax. you go into the virginia portfolio go deep suburban into fairfax I got good occupancy and I got rents up a couple percent. i got good occupancy and i got rents up a couple percent Start coming in towards DC in that Virginia portfolio where you got a more urban concentration competing with the supply. start coming in towards dc in that virginia portfolio where you got a more urban concentration competing with the supply I've still got solid occupancies, but I got pockets where I don't have pricing power, where I had to start utilizing concessions. i've still got solid occupancies but i got pockets where i don't have pricing power where i had to start utilizing concessions Then you get into DC, Northwest DC, along with DC, kind of the district central area. then you get into dc northwest dc along with dc kind of the district central area I've got occupancies that are running 95%, 95.5%. i've got occupancies that are running 95% 95.5% I've got concession use that has clearly increased in the last four weeks. i've got concession use that has clearly increased in the last four weeks I got net effective prices that are down 4%. We've modeled that out for the rest of the year. We're not seeing folks that lost their job with the government turning in keys. We're not seeing any of this increase in lease breaks. You're just seeing an overall slowdown in the top of the funnel and this willingness to commit to a lease. I think for us, we'll have to expect that to continue through the balance of the year. I think consumer sentiment is tricky, right? It can shift on us very quickly and turn back positive. You can get past the government shutdown. You can get some confidence back in hiring. I got net effective prices that are down 4%. i got net effective prices that are down 4% We've modeled that out for the rest of the year. we've modeled that out for the rest of the year We're not seeing folks that lost their job with the government turning in keys. we're not seeing folks that lost their job with the government turning in keys We're not seeing any of this increase in lease breaks. we're not seeing any of this increase in lease breaks You're just seeing an overall slowdown in the top of the funnel and this willingness to commit to a lease. you're just seeing an overall slowdown in the top of the funnel and this willingness to commit to a lease I think for us, we'll have to expect that to continue through the balance of the year. i think for us we'll have to expect that to continue through the balance of the year I think consumer sentiment is tricky, right? i think consumer sentiment is tricky right It can shift on us very quickly and turn back positive. it can shift on us very quickly and turn back positive You can get past the government shutdown. you can get past the government shutdown You can get some confidence back in hiring. you can get some confidence back in hiring That market is going to be really well positioned again because we just have a huge decline in competitive supply coming to our advantage next year that it's not going to take much for us to have pricing power. The trick is exactly when does that inflection point take hold. That market is going to be really well positioned again because we just have a huge decline in competitive supply coming to our advantage next year that it's not going to take much for us to have pricing power. that market is going to be really well positioned again because we just have a huge decline in competitive supply coming to our advantage next year that it's not going to take much for us to have pricing power The trick is exactly when does that inflection point take hold. the trick is exactly when does that inflection point take hold

Speaker 13: Okay. Got it. Thanks for that. On San Francisco, you've called out the difference in rent growth and income since the pandemic a couple of times. Do you think we're in sort of a multi-year above-average growth environment where we might see that differential narrow quite a bit, or is there some component of rent having outrun fundamentals in the past and now we're seeing sort of a catch-up as well? Okay. okay Got it. got it Thanks for that. thanks for that On San Francisco, you've called out the difference in rent growth and income since the pandemic a couple of times. on san francisco you've called out the difference in rent growth and income since the pandemic a couple of times Do you think we're in sort of a multi-year above-average growth environment where we might see that differential narrow quite a bit, or is there some component of rent having outrun fundamentals in the past and now we're seeing sort of a catch-up as well? do you think we're in sort of a multi-year above-average growth environment where we might see that differential narrow quite a bit or is there some component of rent having outrun fundamentals in the past and now we're seeing sort of a catch-up as well

Speaker 12: I think our view clearly when you look at the recovery is that we have some good years in front of us in that market. Technology is advancing quickly. That market is clearly at the center of that. You see the migration patterns. You see the incomes going up. You see rent levels that are still at a really good discount relative to historical standards. When you put it all in the blender, it tells me that we should expect some outsized kind of growth for the next couple of years there. I think our view clearly when you look at the recovery is that we have some good years in front of us in that market. i think our view clearly when you look at the recovery is that we have some good years in front of us in that market Technology is advancing quickly. technology is advancing quickly That market is clearly at the center of that. that market is clearly at the center of that You see the migration patterns. you see the migration patterns You see the incomes going up. you see the incomes going up You see rent levels that are still at a really good discount relative to historical standards. you see rent levels that are still at a really good discount relative to historical standards When you put it all in the blender, it tells me that we should expect some outsized kind of growth for the next couple of years there. when you put it all in the blender, it tells me that we should expect some outsized kind of growth for the next couple of years there

Speaker 13: Okay, thank you. Okay, thank you. okay thank you

Speaker 3: Next question is coming from the line of Adam Kramer with Morgan Stanley. Next question is coming from the line of Adam Kramer with Morgan Stanley. next question is coming from the line of adam kramer with morgan stanley

Speaker 7: Hey, thanks for the time. I think, Mark, in your opening comments, you used the word elongated, talking about sort of the recovery in the expansion markets. I wanted to maybe double-click on that. I'd be interested to hear if that's more of a lease growth comment, if that's sort of relative to expectations about the seasonal curve, that maybe you don't expect a normal seasonal curve there in the expansion markets in 2026. I guess just more broadly, any color in market rent growth expectations. I know it's still early, but market rent growth expectations for next year, maybe coastal versus expansion markets, would be really helpful. Hey, thanks for the time. hey thanks for the time I think, Mark, in your opening comments, you used the word elongated, talking about sort of the recovery in the expansion markets. i think mark in your opening comments you used the word elongated talking about sort of the recovery in the expansion markets I wanted to maybe double-click on that. i wanted to maybe double-click on that I'd be interested to hear if that's more of a lease growth comment, if that's sort of relative to expectations about the seasonal curve, that maybe you don't expect a normal seasonal curve there in the expansion markets in 2026. i'd be interested to hear if that's more of a lease growth comment if that's sort of relative to expectations about the seasonal curve that maybe you don't expect a normal seasonal curve there in the expansion markets in 2026 I guess just more broadly, any color in market rent growth expectations. i guess just more broadly any color in market rent growth expectations I know it's still early, but market rent growth expectations for next year, maybe coastal versus expansion markets, would be really helpful. i know it's still early but market rent growth expectations for next year maybe coastal versus expansion markets would be really helpful

Speaker 20: Yeah. Thanks, Adam. I'll start. Michael or Bob may contribute as well. I was alluding in part to the fact that though people are very aware of deliveries in these expansion markets, in these Sun Belt markets, they don't really think as much about how long it takes to fully absorb, which in a highly supplied market can be at least one renewal cycle. That was the other point I made in the remarks. I want to give some perspective. We're not prescient about all this, but I think we were rational about how quickly absorption would occur and pricing power return to landlords. The assets that we bought a couple of years ago in these markets, when we were looking recently at their performance, we were within 1% of our underwriting on NOI. Yeah. yeah Thanks, Adam. thanks adam I'll start. i'll start Michael or Bob may contribute as well. michael or bob may contribute as well I was alluding in part to the fact that though people are very aware of deliveries in these expansion markets, in these Sun Belt markets, they don't really think as much about how long it takes to fully absorb, which in a highly supplied market can be at least one renewal cycle. i was alluding in part to the fact that though people are very aware of deliveries in these expansion markets in these sun belt markets they don't really think as much about how long it takes to fully absorb which in a highly supplied market can be at least one renewal cycle That was the other point I made in the remarks. that was the other point i made in the remarks I want to give some perspective. i want to give some perspective We're not prescient about all this, but I think we were rational about how quickly absorption would occur and pricing power return to landlords. we're not prescient about all this but i think we were rational about how quickly absorption would occur and pricing power return to landlords The assets that we bought a couple of years ago in these markets, when we were looking recently at their performance, we were within 1% of our underwriting on NOI. the assets that we bought a couple of years ago in these markets when we were looking recently at their performance we were within 1% of our underwriting on noi I think what we just had in mind was that concessions would persist, that rent growth would be minimal to negative for a while, that that was just what happens when you're in a very heavily supplied situation. You'll get out of it and you'll roll. I think that inflection point, people have kept wanting to put that inflection point on the date that deliveries declined, and we just didn't believe that. That sums up how we underwrote differently. We were more focused on the full absorption, the full amount of the supply being just part of the normal volume in that market and not pressuring existing owners very much. I would expect coastal markets to have higher same-store revenue growth by a fair margin next year. I think what we just had in mind was that concessions would persist, that rent growth would be minimal to negative for a while, that that was just what happens when you're in a very heavily supplied situation. i think what we just had in mind was that concessions would persist that rent growth would be minimal to negative for a while that that was just what happens when you're in a very heavily supplied situation You'll get out of it and you'll roll. you'll get out of it and you'll roll I think that inflection point, people have kept wanting to put that inflection point on the date that deliveries declined, and we just didn't believe that. i think that inflection point people have kept wanting to put that inflection point on the date that deliveries declined and we just didn't believe that That sums up how we underwrote differently. that sums up how we underwrote differently We were more focused on the full absorption, the full amount of the supply being just part of the normal volume in that market and not pressuring existing owners very much. we were more focused on the full absorption the full amount of the supply being just part of the normal volume in that market and not pressuring existing owners very much I would expect coastal markets to have higher same-store revenue growth by a fair margin next year. i would expect coastal markets to have higher same-store revenue growth by a fair margin next year All the low leases that were written this year are going to be in next year's rent roll and are going to pressure those numbers. You may see, and we expect to see some improvement, I hope earlier next year, but it could be later depending on the job situation in the second derivative and that rate of change number on new lease and otherwise. It all comes from a really low base. I think it's a certainty that coastal markets will have higher same-store revenue growth, and every market's a little different because they've written better leases this year and those are going to affect next year. I think the opportunity in the Sun Belt markets, including our expansion markets, is to start to maybe stabilize occupancy and maybe start to move up, reduce concessions and move up new lease levels. All the low leases that were written this year are going to be in next year's rent roll and are going to pressure those numbers. all the low leases that were written this year are going to be in next year's rent roll and are going to pressure those numbers You may see, and we expect to see some improvement, I hope earlier next year, but it could be later depending on the job situation in the second derivative and that rate of change number on new lease and otherwise. you may see and we expect to see some improvement i hope earlier next year but it could be later depending on the job situation in the second derivative and that rate of change number on new lease and otherwise It all comes from a really low base. it all comes from a really low base I think it's a certainty that coastal markets will have higher same-store revenue growth, and every market's a little different because they've written better leases this year and those are going to affect next year. i think it's a certainty that coastal markets will have higher same-store revenue growth and every market's a little different because they've written better leases this year and those are going to affect next year I think the opportunity in the Sun Belt markets, including our expansion markets, is to start to maybe stabilize occupancy and maybe start to move up, reduce concessions and move up new lease levels. i think the opportunity in the sun belt markets including our expansion markets is to start to maybe stabilize occupancy and maybe start to move up reduce concessions and move up new lease levels I think it's just going to be more of higher cash flow late in 2026 and into 2027 more so. I think it's just going to be more of higher cash flow late in 2026 and into 2027 more so. i think it's just going to be more of higher cash flow late in 2026 and into 2027 more so

Speaker 7: Great. That's helpful. Maybe just a little bit of a wonky one here, but just wanted to ask about some of the same-store pool changes with some of the kind of prior year acquisitions folding into the same store, you know, going into next year. Maybe if you could just sort of quantify what percent of, and I think you mentioned it earlier, but just what percent of the same-store pool today is expansion markets and what that's going to look like next year, and then maybe some of the specific assets that are going into the pool as we go to next year. Great. great That's helpful. that's helpful Maybe just a little bit of a wonky one here, but just wanted to ask about some of the same-store pool changes with some of the kind of prior year acquisitions folding into the same store, you know, going into next year. maybe just a little bit of a wonky one here but just wanted to ask about some of the same-store pool changes with some of the kind of prior year acquisitions folding into the same store you know going into next year Maybe if you could just sort of quantify what percent of, and I think you mentioned it earlier, but just what percent of the same-store pool today is expansion markets and what that's going to look like next year, and then maybe some of the specific assets that are going into the pool as we go to next year. maybe if you could just sort of quantify what percent of and i think you mentioned it earlier but just what percent of the same-store pool today is expansion markets and what that's going to look like next year and then maybe some of the specific assets that are going into the pool as we go to next year

Speaker 12: Yeah. Great question. I think maybe stepping back for a minute when we think about just same-store results and kind of the sets we have. Just a reminder, we have three same-store sets. We've got the quarter versus same period last year, all at about 75,000 units. Current quarter versus last quarter, which is sequential, that's about 80,000 units. There's about a 5,000 unit difference there. Year to date, same period, that's about 74,000 unites-75,000 units as well. I think, as we look to next year, my guess is it's about a 5,000 unit increase that goes into our same-store set in 2026. That's primarily coming from those expansion markets. Yeah. yeah Great question. great question I think maybe stepping back for a minute when we think about just same-store results and kind of the sets we have. i think maybe stepping back for a minute when we think about just same-store results and kind of the sets we have Just a reminder, we have three same-store sets. just a reminder we have three same-store sets We've got the quarter versus same period last year, all at about 75,000 units. we've got the quarter versus same period last year all at about 75,000 units Current quarter versus last quarter, which is sequential, that's about 80,000 units. current quarter versus last quarter which is sequential that's about 80,000 units There's about a 5,000 unit difference there. there's about a 5,000 unit difference there Year to date, same period, that's about 74,000 unites- 75,000 units as well. year to date same period that's about 74,000 unites- 75,000 units as well I think, as we look to next year, my guess is it's about a 5,000 unit increase that goes into our same-store set in 2026. i think as we look to next year my guess is it's about a 5,000 unit increase that goes into our same-store set in 2026 That's primarily coming from those expansion markets. that's primarily coming from those expansion markets

Speaker 20: That's exactly right. It's Mark. All I'd add there, Adam, is this is something Michael said. That's exactly right. that's exactly right It's Mark. it's mark All I'd add there, Adam, is this is something Michael said. all i'd add there adam is this is something michael said A lot of the assets we're adding are suburban assets in Dallas, suburban assets in Atlanta, suburban assets in Denver that, by and large, are going to look better than the performance of the assets we already own in the same-store set, which because we brought them early, we got pretty good basis. They tended to be urban assets, and they've not performed as well as our suburban portfolio has in the last year or so. Though when they weren't in same-store, they did pretty well. Some of that is less observable to you. I would guess that you're going to see 4,000-5,000 more units in the annual same-store set that Michael will give you guidance on in three months. A lot of the assets we're adding are suburban assets in Dallas, suburban assets in Atlanta, suburban assets in Denver that, by and large, are going to look better than the performance of the assets we already own in the same-store set, which because we brought them early, we got pretty good basis. a lot of the assets we're adding are suburban assets in dallas suburban assets in atlanta suburban assets in denver that by and large are going to look better than the performance of the assets we already own in the same-store set which because we brought them early we got pretty good basis They tended to be urban assets, and they've not performed as well as our suburban portfolio has in the last year or so. they tended to be urban assets and they've not performed as well as our suburban portfolio has in the last year or so Though when they weren't in same-store, they did pretty well. though when they weren't in same-store they did pretty well Some of that is less observable to you. some of that is less observable to you I would guess that you're going to see 4,000- 5,000 more units in the annual same-store set that Michael will give you guidance on in three months. i would guess that you're going to see 4,000- 5,000 more units in the annual same-store set that michael will give you guidance on in three months

Speaker 7: Great. Thank you. Great. great Thank you. thank you

Speaker 3: Next question is coming from the line of John Pawlowski with Green Street. Next question is coming from the line of John Pawlowski with Green Street. next question is coming from the line of john pawlowski with green street

Speaker 10: Hey. Good morning, guys. Michael, outside of the DC Metro, what other markets do you see a real cooling of demand in the last month or two? Hey. hey Good morning, guys. good morning guys Michael, outside of the DC Metro, what other markets do you see a real cooling of demand in the last month or two? michael outside of the dc metro what other markets do you see a real cooling of demand in the last month or two

Speaker 12: Hey, John. It's a little bit hard to hear you. Are you just asking where else did we see a decline in demand in the last month or so, other markets? Hey, John. hey john It's a little bit hard to hear you. it's a little bit hard to hear you Are you just asking where else did we see a decline in demand in the last month or so, other markets? are you just asking where else did we see a decline in demand in the last month or so other markets

Speaker 10: Yeah, outside of DC Metro. Sorry for the quiet voice. Yeah, outside of DC Metro. yeah outside of dc metro Sorry for the quiet voice. sorry for the quiet voice

Speaker 12: Yeah, no, that's okay. I think I would put Boston kind of into this mix as well for us, which is, we've been watching kind of Boston. It's a very seasonal market in general. I think what we've seen right now is just a little bit more softening than you otherwise would have expected. When we started this year, we thought this urban core of Boston was going to do better than the suburban. Again, we're 70% urban in that market, 30% suburban. It's absolutely playing out that way where the urban portfolio is outperforming the suburban, but it's just not as robust as what we would have thought. We've kind of taken down that fourth quarter projection as well. I think I even alluded to some of this on the last quarter call, which is, we clearly had headline risk there. Yeah, no, that's okay. yeah no that's okay I think I would put Boston kind of into this mix as well for us, which is, we've been watching kind of Boston. i think i would put boston kind of into this mix as well for us which is we've been watching kind of boston It's a very seasonal market in general. it's a very seasonal market in general I think what we've seen right now is just a little bit more softening than you otherwise would have expected. i think what we've seen right now is just a little bit more softening than you otherwise would have expected When we started this year, we thought this urban core of Boston was going to do better than the suburban. when we started this year we thought this urban core of boston was going to do better than the suburban Again, we're 70% urban in that market, 30% suburban. again we're 70% urban in that market 30% suburban It's absolutely playing out that way where the urban portfolio is outperforming the suburban, but it's just not as robust as what we would have thought. it's absolutely playing out that way where the urban portfolio is outperforming the suburban but it's just not as robust as what we would have thought We've kind of taken down that fourth quarter projection as well. we've kind of taken down that fourth quarter projection as well I think I even alluded to some of this on the last quarter call, which is, we clearly had headline risk there. i think i even alluded to some of this on the last quarter call which is we clearly had headline risk there I think right now what we're seeing is a confirmation that a weaker biotech sector, pullback in university and research funding, immigration challenges are all just chipping away at this overall demand levels in the market. I think right now, when we turn the corner and we start off next year, I still think the urban portfolio is positioned to outperform the suburban, but we got to get through some of these kind of near-term demand driver vulnerabilities that we're seeing right now. I think right now what we're seeing is a confirmation that a weaker biotech sector, pullback in university and research funding, immigration challenges are all just chipping away at this overall demand levels in the market. i think right now what we're seeing is a confirmation that a weaker biotech sector pullback in university and research funding immigration challenges are all just chipping away at this overall demand levels in the market I think right now, when we turn the corner and we start off next year, I still think the urban portfolio is positioned to outperform the suburban, but we got to get through some of these kind of near-term demand driver vulnerabilities that we're seeing right now. i think right now when we turn the corner and we start off next year i still think the urban portfolio is positioned to outperform the suburban but we got to get through some of these kind of near-term demand driver vulnerabilities that we're seeing right now

Speaker 10: Okay. Second one for me. Bob, could you spend a minute or two just helping frame like what type of changes are you going to be incorporating in the underwriting process now that you're at the helm of the investments organization and just generally how your approach will be different, either philosophically or the data you're using, the processes? Could you just spend a few minutes talking through how the investments work and how your underwriting properties and markets are going to be different in the next five to 10 years versus the last five to 10 years? Okay. okay Second one for me. second one for me Bob, could you spend a minute or two just helping frame like what type of changes are you going to be incorporating in the underwriting process now that you're at the helm of the investments organization and just generally how your approach will be different, either philosophically or the data you're using, the processes? bob could you spend a minute or two just helping frame like what type of changes are you going to be incorporating in the underwriting process now that you're at the helm of the investments organization and just generally how your approach will be different either philosophically or the data you're using the processes Could you just spend a few minutes talking through how the investments work and how your underwriting properties and markets are going to be different in the next five to 10 years versus the last five to 10 years? could you just spend a few minutes talking through how the investments work and how your underwriting properties and markets are going to be different in the next five to 10 years versus the last five to 10 years

Speaker 14: I don't think there's anything that's particularly a wholesale change in terms of strategy, etc. I think you pinpointed something that is a huge opportunity that Alex was already really starting on, which is just this data-driven mindset. I think you guys probably see it in your own investment space where there's just incredibly larger amounts of data sets, and there's better ways of analyzing that data and relational data around that. We're fortunate to have a long history of our own data set that we can work together in making better decisions. I think it's just continuing to lean into something that frankly started before my transition and that I hope to accelerate. I think that's part of the excitement of the opportunity for me personally, to take it to call it EQR 3.0, 4.0, whatever iteration you want to say. I don't think there's anything that's particularly a wholesale change in terms of strategy, etc. I think you pinpointed something that is a huge opportunity that Alex was already really starting on, which is just this data-driven mindset. i don't think there's anything that's particularly a wholesale change in terms of strategy etc i think you pinpointed something that is a huge opportunity that alex was already really starting on which is just this data-driven mindset I think you guys probably see it in your own investment space where there's just incredibly larger amounts of data sets, and there's better ways of analyzing that data and relational data around that. i think you guys probably see it in your own investment space where there's just incredibly larger amounts of data sets and there's better ways of analyzing that data and relational data around that We're fortunate to have a long history of our own data set that we can work together in making better decisions. we're fortunate to have a long history of our own data set that we can work together in making better decisions I think it's just continuing to lean into something that frankly started before my transition and that I hope to accelerate. i think it's just continuing to lean into something that frankly started before my transition and that i hope to accelerate I think that's part of the excitement of the opportunity for me personally, to take it to call it EQR 3.0, 4.0, whatever iteration you want to say. i think that's part of the excitement of the opportunity for me personally to take it to call it eqr 3.0 4.0 whatever iteration you want to say We're fortunate to be on a platform where we have a lot of data and a lot of skilled people who know how to do this. That's the excitement if you can't hear it in my voice. We're fortunate to be on a platform where we have a lot of data and a lot of skilled people who know how to do this. we're fortunate to be on a platform where we have a lot of data and a lot of skilled people who know how to do this That's the excitement if you can't hear it in my voice. that's the excitement if you can't hear it in my voice

Speaker 10: All right. Thanks. All right. all right Thanks. thanks

Speaker 3: Next question is coming from the line of Michael Goldsmith with UBS. Next question is coming from the line of Michael Goldsmith with UBS. next question is coming from the line of michael goldsmith with ubs Hi. This is Ami. I'm with Michael. What impact, if any, do you expect from the announced Amazon layoffs? How exposed is your portfolio to the specific submarkets most likely to be impacted? Hi. hi This is Ami. this is ami I'm with Michael. i'm with michael What impact, if any, do you expect from the announced Amazon layoffs? what impact if any do you expect from the announced amazon layoffs How exposed is your portfolio to the specific submarkets most likely to be impacted? how exposed is your portfolio to the specific submarkets most likely to be impacted

Speaker 12: Yeah. Hey, Ami. This is Michael. I'll take a shot at that. First and foremost, I think this is one of the benefits you have of us having a diversified portfolio that you kind of de-risk some of this kind of direct pressure from any one employer. That being said, if I looked at the entire portfolio today, again, we capture employment data at the time of application. We don't follow somebody once they move in as to where they're currently being employed. If I just looked at that snapshot today, we have about 3% of our units that had residents employed at Amazon at the time they moved in with us. I looked at the concentration across them. Obviously, markets like a Seattle, where you have a heavy employment base from Amazon, we have a higher percentage there. For us, that gets very isolated. Yeah. yeah Hey, Ami. hey ami This is Michael. this is michael I'll take a shot at that. i'll take a shot at that First and foremost, I think this is one of the benefits you have of us having a diversified portfolio that you kind of de-risk some of this kind of direct pressure from any one employer. first and foremost i think this is one of the benefits you have of us having a diversified portfolio that you kind of de-risk some of this kind of direct pressure from any one employer That being said, if I looked at the entire portfolio today, again, we capture employment data at the time of application. that being said if i looked at the entire portfolio today again we capture employment data at the time of application We don't follow somebody once they move in as to where they're currently being employed. we don't follow somebody once they move in as to where they're currently being employed If I just looked at that snapshot today, we have about 3% of our units that had residents employed at Amazon at the time they moved in with us. if i just looked at that snapshot today we have about 3% of our units that had residents employed at amazon at the time they moved in with us I looked at the concentration across them. i looked at the concentration across them Obviously, markets like a Seattle, where you have a heavy employment base from Amazon, we have a higher percentage there. obviously markets like a seattle where you have a heavy employment base from amazon we have a higher percentage there For us, that gets very isolated. for us that gets very isolated We have three properties in South Lake Union where we have a high percentage of Amazon employees. I also want to just call out that we've been through this before with these kind of layoff announcements and looking at some of the stuff that's hitting the press now about Amazon. It is more dispersed across several markets. This is not a light switch. It's not immediate. These are very kind of well-skilled, employed individuals. Many of them will receive severance packages. I think in the case of Amazon, they're given 90 days to go find alternative roles within the company. I looked yesterday even at a couple of markets like in DC. They still have 300 positions posted. It's not like they pulled down all their available positions either. We have three properties in South Lake Union where we have a high percentage of Amazon employees. we have three properties in south lake union where we have a high percentage of amazon employees I also want to just call out that we've been through this before with these kind of layoff announcements and looking at some of the stuff that's hitting the press now about Amazon. i also want to just call out that we've been through this before with these kind of layoff announcements and looking at some of the stuff that's hitting the press now about amazon It is more dispersed across several markets. it is more dispersed across several markets This is not a light switch. this is not a light switch It's not immediate. it's not immediate These are very kind of well-skilled, employed individuals. these are very kind of well-skilled employed individuals Many of them will receive severance packages. many of them will receive severance packages I think in the case of Amazon, they're given 90 days to go find alternative roles within the company. i think in the case of amazon they're given 90 days to go find alternative roles within the company I looked yesterday even at a couple of markets like in DC. i looked yesterday even at a couple of markets like in dc They still have 300 positions posted. they still have 300 positions posted It's not like they pulled down all their available positions either. it's not like they pulled down all their available positions either I look at this and I say, look, anytime you have these big headlines that take away from the top of funnel demand, that's not a positive, right, in today's day and time where we're looking for job growth. Comparing that to isolated pressure, I just don't see this as a big concern for us. I look at this and I say, look, anytime you have these big headlines that take away from the top of funnel demand, that's not a positive, right, in today's day and time where we're looking for job growth. i look at this and i say look anytime you have these big headlines that take away from the top of funnel demand that's not a positive right in today's day and time where we're looking for job growth Comparing that to isolated pressure, I just don't see this as a big concern for us. comparing that to isolated pressure i just don't see this as a big concern for us Okay. That's helpful. Next question is on leasing concessions. They're still at a relatively low level of rents, but on a year-over-year basis, they jumped up pretty materially. What are you offering in terms of concessions, and are they concentrated in certain markets? Last question, are you offering any concessions on renewals? Okay. okay That's helpful. that's helpful Next question is on leasing concessions. next question is on leasing concessions They're still at a relatively low level of rents, but on a year-over-year basis, they jumped up pretty materially. they're still at a relatively low level of rents but on a year-over-year basis they jumped up pretty materially What are you offering in terms of concessions, and are they concentrated in certain markets? what are you offering in terms of concessions and are they concentrated in certain markets Last question, are you offering any concessions on renewals? last question are you offering any concessions on renewals This is Michael again. Very, very limited concessions are being used into our renewal process at all. I think on a cash basis in the third quarter, we did use more concessions than we originally expected. I will just put this in terms of days per move-in. In the third quarter move-ins, we averaged about seven days of rent being concessed. That increase was clearly targeted into occupancy liens in some of these markets like DC, and the expansion markets are pretty heavy use of concessions right now. As we think about the fourth quarter, I would expect that concessions on an absolute dollar basis will drop off a little bit just because the sheer volume of transactions on the new lease side drops off. This is Michael again. this is michael again Very, very limited concessions are being used into our renewal process at all. very very limited concessions are being used into our renewal process at all I think on a cash basis in the third quarter, we did use more concessions than we originally expected. i think on a cash basis in the third quarter we did use more concessions than we originally expected I will just put this in terms of days per move-in. i will just put this in terms of days per move-in In the third quarter move-ins, we averaged about seven days of rent being concessed. in the third quarter move-ins we averaged about seven days of rent being concessed That increase was clearly targeted into occupancy liens in some of these markets like DC, and the expansion markets are pretty heavy use of concessions right now. that increase was clearly targeted into occupancy liens in some of these markets like dc and the expansion markets are pretty heavy use of concessions right now As we think about the fourth quarter, I would expect that concessions on an absolute dollar basis will drop off a little bit just because the sheer volume of transactions on the new lease side drops off. as we think about the fourth quarter i would expect that concessions on an absolute dollar basis will drop off a little bit just because the sheer volume of transactions on the new lease side drops off When I look at that relative to move-ins and days being concessed, my guess is we're going to tick up one day and probably be in a position next quarter to say that we've concessed about eight days per move-in for the folks that moved in in the fourth quarter. Concessions right now are sticky in some of the markets. Even in a market like Seattle that has some decent demand, you just see some more widespread use happening. I think this is just a function of where you had supply delivered in 2025, and you're still working through the absorption of that supply. Many of the owners of those types of assets increased concessions heading into the fourth quarter, and many of the stabilized assets in those submarkets followed suit. That's kind of what we're feeling. When I look at that relative to move-ins and days being concessed, my guess is we're going to tick up one day and probably be in a position next quarter to say that we've concessed about eight days per move-in for the folks that moved in in the fourth quarter. when i look at that relative to move-ins and days being concessed my guess is we're going to tick up one day and probably be in a position next quarter to say that we've concessed about eight days per move-in for the folks that moved in in the fourth quarter Concessions right now are sticky in some of the markets. concessions right now are sticky in some of the markets Even in a market like Seattle that has some decent demand, you just see some more widespread use happening. even in a market like seattle that has some decent demand you just see some more widespread use happening I think this is just a function of where you had supply delivered in 2025, and you're still working through the absorption of that supply. i think this is just a function of where you had supply delivered in 2025 and you're still working through the absorption of that supply Many of the owners of those types of assets increased concessions heading into the fourth quarter, and many of the stabilized assets in those submarkets followed suit. many of the owners of those types of assets increased concessions heading into the fourth quarter and many of the stabilized assets in those submarkets followed suit That's kind of what we're feeling. that's kind of what we're feeling Okay. That's helpful. Thanks, Chris. Okay. okay That's helpful. that's helpful Thanks, Chris. thanks chris

Speaker 3: Your next question is coming from the line of Haendel St. Juste with Mizuho. Your next question is coming from the line of Haendel St. Juste with Mizuho. your next question is coming from the line of haendel st juste with mizuho

Speaker 1: Hey, thanks for taking the question. My question is on the 4Q 2025 blend guide, 50 basis points. I was hoping you could shed some light on the range of expectations there for, say, your weaker coastal markets like DC, Boston, LA, as well as some of your better markets like San Francisco, New York, Seattle. Thanks. Hey, thanks for taking the question. hey thanks for taking the question My question is on the 4Q 2025 blend guide, 50 basis points. my question is on the 4q 2025 blend guide 50 basis points I was hoping you could shed some light on the range of expectations there for, say, your weaker coastal markets like DC, Boston, LA , as well as some of your better markets like San Francisco, New York, Seattle. i was hoping you could shed some light on the range of expectations there for say your weaker coastal markets like dc boston, la as well as some of your better markets like san francisco new york seattle Thanks. thanks

Speaker 12: Yeah. Hey, Haendel. This is Michael. I'm going to stay away from giving any specific market numbers relative to blends. I'll tell you, the trends that you see are probably going to manifest and continue in the fourth quarter. San Francisco is going to be one of the better performing markets, same with New York. You clearly have seasonality in these stats. I think everybody needs to remember, even if you went back and looked at 2019 data, you have material declines in the fourth quarter just based on seasonality in it by itself. Markets like Boston will be more negative in the fourth quarter than they were in the third, even when the market is performing well. Yeah. yeah Hey, Haendel. hey haendel This is Michael. this is michael I'm going to stay away from giving any specific market numbers relative to blends. i'm going to stay away from giving any specific market numbers relative to blends I'll tell you, the trends that you see are probably going to manifest and continue in the fourth quarter. i'll tell you the trends that you see are probably going to manifest and continue in the fourth quarter San Francisco is going to be one of the better performing markets, same with New York. san francisco is going to be one of the better performing markets same with new york You clearly have seasonality in these stats. you clearly have seasonality in these stats I think everybody needs to remember, even if you went back and looked at 2019 data, you have material declines in the fourth quarter just based on seasonality in it by itself. i think everybody needs to remember even if you went back and looked at 2019 data you have material declines in the fourth quarter just based on seasonality in it by itself Markets like Boston will be more negative in the fourth quarter than they were in the third, even when the market is performing well. markets like boston will be more negative in the fourth quarter than they were in the third even when the market is performing well I think for us, rather than go market by market, I would expect to say that the trends that you see in the fourth quarter or the pecking order is probably going to continue into, or what you see in the third quarter is probably going to continue into the fourth quarter, but there will be continued deceleration probably across most of the markets. I think for us, rather than go market by market, I would expect to say that the trends that you see in the fourth quarter or the pecking order is probably going to continue into, or what you see in the third quarter is probably going to continue into the fourth quarter, but there will be continued deceleration probably across most of the markets. i think for us rather than go market by market i would expect to say that the trends that you see in the fourth quarter or the pecking order is probably going to continue into or what you see in the third quarter is probably going to continue into the fourth quarter but there will be continued deceleration probably across most of the markets

Speaker 1: Got it. Fair enough. I don't know if I missed it, but did you give new and renewals for October? Got it. got it Fair enough. fair enough I don't know if I missed it, but did you give new and renewals for October? i don't know if i missed it but did you give new and renewals for october

Speaker 15: We did not give that, and we're not going to give any kind of spot month kind of stats. I think I gave some of my remarks around the renewal side of the business that the quotes are out in the marketplace, and you know we have a lot of consistency there and would expect about 4.25% achieved renewal rate increases in the fourth quarter. We did not give that, and we're not going to give any kind of spot month kind of stats. we did not give that and we're not going to give any kind of spot month kind of stats I think I gave some of my remarks around the renewal side of the business that the quotes are out in the marketplace, and you know we have a lot of consistency there and would expect about 4.25% achieved renewal rate increases in the fourth quarter. i think i gave some of my remarks around the renewal side of the business that the quotes are out in the marketplace and you know we have a lot of consistency there and would expect about 4.25% achieved renewal rate increases in the fourth quarter

Speaker 1: Okay. Fair enough. Thank you. Okay. okay Fair enough. fair enough Thank you. thank you

Speaker 3: Next question will be coming from the line of Rich Hightower with Barclays. Next question will be coming from the line of Rich Hightower with Barclays. next question will be coming from the line of rich hightower with barclays

Speaker 18: Hey, good morning, guys. Thanks for taking the question. Mark, I think just to maybe put a finer point on some of the comments on the expansion markets, I guess with some of the absorption dynamics that you described, do you expect a normal seasonal curve next year, starting in the spring, or is it going to look different, kind of in the way it looked this year? Similarly, can we expect positive market rents given the trends that you're seeing and sort of extrapolating? Just to be clear, thanks. Hey, good morning, guys. hey good morning guys Thanks for taking the question. thanks for taking the question Mark, I think just to maybe put a finer point on some of the comments on the expansion markets, I guess with some of the absorption dynamics that you described, do you expect a normal seasonal curve next year, starting in the spring, or is it going to look different, kind of in the way it looked this year? mark i think just to maybe put a finer point on some of the comments on the expansion markets i guess with some of the absorption dynamics that you described do you expect a normal seasonal curve next year starting in the spring or is it going to look different kind of in the way it looked this year Similarly, can we expect positive market rents given the trends that you're seeing and sort of extrapolating? similarly can we expect positive market rents given the trends that you're seeing and sort of extrapolating Just to be clear, thanks. just to be clear thanks

Speaker 20: Every portfolio is different, and every market's different. You could have people less and more optimistic because of their portfolio composition in a specific place. Again, we don't purport to be experts on every submarket in every location. Every portfolio is different, and every market's different. every portfolio is different and every market's different You could have people less and more optimistic because of their portfolio composition in a specific place. you could have people less and more optimistic because of their portfolio composition in a specific place Again, we don't purport to be experts on every submarket in every location. again we don't purport to be experts on every submarket in every location There are a lot of places in the Sun Belt like Phoenix we don't do business at all, so we wouldn't have a perspective on that. I think the answer to that is this job growth thing. If we, as a country, see decent job growth next year, I think the markets will have their normal seasonality. Most markets across the country have less supply, and the coastal markets particularly we've highlighted have a lot less supply. If we see job growth, I think we are off to the races in our coastal markets. I think you'll see the recovery begin in our expansion markets in a more profound way than it has so far. My bet is that this is a pause in jobs, not a significant and long-lived downturn. The big question, to be honest, is whether the pause continues in and through the leasing season. There are a lot of places in the Sun Belt like Phoenix we don't do business at all, so we wouldn't have a perspective on that. there are a lot of places in the sun belt like phoenix we don't do business at all so we wouldn't have a perspective on that I think the answer to that is this job growth thing. i think the answer to that is this job growth thing If we, as a country, see decent job growth next year, I think the markets will have their normal seasonality. if we as a country see decent job growth next year i think the markets will have their normal seasonality Most markets across the country have less supply, and the coastal markets particularly we've highlighted have a lot less supply. most markets across the country have less supply and the coastal markets particularly we've highlighted have a lot less supply If we see job growth, I think we are off to the races in our coastal markets. if we see job growth i think we are off to the races in our coastal markets I think you'll see the recovery begin in our expansion markets in a more profound way than it has so far. i think you'll see the recovery begin in our expansion markets in a more profound way than it has so far My bet is that this is a pause in jobs, not a significant and long-lived downturn. my bet is that this is a pause in jobs not a significant and long-lived downturn The big question, to be honest, is whether the pause continues in and through the leasing season. the big question to be honest is whether the pause continues in and through the leasing season If it gets better in the third and fourth quarter of next year, that's nice, but we will have done, and our competitors will have done, a lot of their leases by then. I think, Rich, it's just a question of whether when you start to get to April and May, you're feeling better about the job situation. There's reasons you should, right? I mean, the Fed, we expect in a few hours, is going to lower interest rates. There is more certainty on the tax and regulatory side than there was even six months ago. There appears to be more certainty even on the tariff side, though that is a dynamic input still. There are a lot of things that look a little better known, and I think maybe employers will be a little more risk-on in the new year. We'll just have to see. If it gets better in the third and fourth quarter of next year, that's nice, but we will have done, and our competitors will have done, a lot of their leases by then. if it gets better in the third and fourth quarter of next year that's nice but we will have done and our competitors will have done a lot of their leases by then I think, Rich, it's just a question of whether when you start to get to April and May, you're feeling better about the job situation. i think rich it's just a question of whether when you start to get to april and may you're feeling better about the job situation There's reasons you should, right? there's reasons you should right I mean, the Fed, we expect in a few hours, is going to lower interest rates. i mean the fed we expect in a few hours is going to lower interest rates There is more certainty on the tax and regulatory side than there was even six months ago. there is more certainty on the tax and regulatory side than there was even six months ago There appears to be more certainty even on the tariff side, though that is a dynamic input still. there appears to be more certainty even on the tariff side though that is a dynamic input still There are a lot of things that look a little better known, and I think maybe employers will be a little more risk-on in the new year. there are a lot of things that look a little better known and i think maybe employers will be a little more risk-on in the new year We'll just have to see. we'll just have to see I think the job thing is the key to the whole puzzle, and it certainly is a wildcard at this point. I think the job thing is the key to the whole puzzle, and it certainly is a wildcard at this point. i think the job thing is the key to the whole puzzle and it certainly is a wildcard at this point

Speaker 18: Okay. That's helpful. Finally, just a quick one, and maybe this one's for Bret. Bret, it's good to hear you on the other end of the line. Okay. okay That's helpful. that's helpful Finally, just a quick one, and maybe this one's for Bret. finally just a quick one and maybe this one's for bret Bret, it's good to hear you on the other end of the line. bret it's good to hear you on the other end of the line

Speaker 15: Thanks, Rich. It's good to hear you too. Thanks, Rich. thanks rich It's good to hear you too. it's good to hear you too

Speaker 18: Of course. Just on the guidance really quick, guys, there's a $0.04 swing on a dollar for midpoint for 4Q. Help explain what the swing factors might be between now and the end of the year, which is obviously not so many days. Of course. of course Just on the guidance really quick, guys, there's a $0.04 swing on a dollar for midpoint for 4Q. just on the guidance really quick guys there's a $0.04 swing on a dollar for midpoint for 4q Help explain what the swing factors might be between now and the end of the year, which is obviously not so many days. help explain what the swing factors might be between now and the end of the year which is obviously not so many days

Speaker 15: Yeah. Look, I think we've got clearly other income growth, which we mentioned is going to help alongside with that swing. We've also got rental income contributing in the fourth quarter as well. That pretty much makes up the difference of it. Yeah. yeah Look, I think we've got clearly other income growth, which we mentioned is going to help alongside with that swing. look i think we've got clearly other income growth which we mentioned is going to help alongside with that swing We've also got rental income contributing in the fourth quarter as well. we've also got rental income contributing in the fourth quarter as well That pretty much makes up the difference of it. that pretty much makes up the difference of it

Speaker 20: Yeah. Just to understand the variation, because that, you know, you're sort of highlighting that that's $16 million of total difference. We do have our overhead stuff, and a lot of the bonuses and other things, frankly, are determined in the current period. We don't know those numbers. The same with a lot of medical reserves and things, Rich, that kind of are inside baseball and not particularly interesting, but do have an effect on the numbers. That was just giving us the ability to deal with those in the period. I mean, we obviously feel good about the midpoint, or we wouldn't have said it there. There are puts and takes at the end of each year, and they are, frankly, relatively unpredictable and uncorrelated to each other. Yeah. yeah Just to understand the variation, because that, you know, you're sort of highlighting that that's $16 million of total difference. just to understand the variation because that you know you're sort of highlighting that that's $16 million of total difference We do have our overhead stuff, and a lot of the bonuses and other things, frankly, are determined in the current period. we do have our overhead stuff and a lot of the bonuses and other things frankly are determined in the current period We don't know those numbers. we don't know those numbers The same with a lot of medical reserves and things, Rich, that kind of are inside baseball and not particularly interesting, but do have an effect on the numbers. the same with a lot of medical reserves and things rich that kind of are inside baseball and not particularly interesting but do have an effect on the numbers That was just giving us the ability to deal with those in the period. that was just giving us the ability to deal with those in the period I mean, we obviously feel good about the midpoint, or we wouldn't have said it there. i mean we obviously feel good about the midpoint or we wouldn't have said it there There are puts and takes at the end of each year, and they are, frankly, relatively unpredictable and uncorrelated to each other. there are puts and takes at the end of each year and they are frankly relatively unpredictable and uncorrelated to each other

Speaker 18: Very helpful. Thank you, guys. Very helpful. very helpful Thank you, guys. thank you guys

Speaker 3: Your next question will be coming from the line of Jamie Feldman with Wells Fargo. Your next question will be coming from the line of Jamie Feldman with Wells Fargo. your next question will be coming from the line of jamie feldman with wells fargo

Speaker 16: Great. Thanks for taking the question. I guess just some of the line items in our model we're hoping to get a little more clarity on as we think about 2026. Can you talk us through your latest thoughts on loss to lease? If the push-out of other income will affect 2026 at all, and if there will be any kind of bump there that we should be thinking about? Any thoughts on your insurance renewal for March, and then any other key expense line items we should be thinking about? Great. great Thanks for taking the question. thanks for taking the question I guess just some of the line items in our model we're hoping to get a little more clarity on as we think about 2026. i guess just some of the line items in our model we're hoping to get a little more clarity on as we think about 2026 Can you talk us through your latest thoughts on loss to lease? can you talk us through your latest thoughts on loss to lease If the push-out of other income will affect 2026 at all, and if there will be any kind of bump there that we should be thinking about? if the push-out of other income will affect 2026 at all and if there will be any kind of bump there that we should be thinking about Any thoughts on your insurance renewal for March, and then any other key expense line items we should be thinking about? any thoughts on your insurance renewal for march and then any other key expense line items we should be thinking about

Speaker 20: Wow. That's the gamut. It's Mark. I'm going to have Michael speak to loss to lease, which right now is going to probably be about end of year again, the lease thing and other income a little. I'll talk to insurance, and we'll work on expenses for you a little bit. We are, just to be fair, rolling numbers up. We don't have visibility into a lot of these numbers at the level of precision I think you're asking, but we can talk directionally. Wow. wow That's the gamut. that's the gamut It's Mark. it's mark I'm going to have Michael speak to loss to lease, which right now is going to probably be about end of year again, the lease thing and other income a little. i'm going to have michael speak to loss to lease which right now is going to probably be about end of year again the lease thing and other income a little I'll talk to insurance, and we'll work on expenses for you a little bit. i'll talk to insurance and we'll work on expenses for you a little bit We are, just to be fair, rolling numbers up. we are just to be fair rolling numbers up We don't have visibility into a lot of these numbers at the level of precision I think you're asking, but we can talk directionally. we don't have visibility into a lot of these numbers at the level of precision i think you're asking but we can talk directionally

Speaker 12: Yeah. I think Mark, this is Michael. Mark just hit on it, right? Today, the snapshot of the portfolio, we have a gain to lease of about 1%. This is where the portfolio was in November of 2024. I think while we originally modeled, you know, to have a little more pricing power kind of, you know, through this peak leasing season, all of this stuff does appear to be very consistent in the fact with many of the other metrics and that everything is happening about a month sooner than normal. My expectation is that we're going to start out 2026 in a continued gain-to-lease environment. Yeah. yeah I think Mark, this is Michael. i think mark this is michael Mark just hit on it, right? mark just hit on it right Today, the snapshot of the portfolio, we have a gain to lease of about 1%. today the snapshot of the portfolio we have a gain to lease of about 1% This is where the portfolio was in November of 2024. this is where the portfolio was in november of 2024 I think while we originally modeled, you know, to have a little more pricing power kind of, you know, through this peak leasing season, all of this stuff does appear to be very consistent in the fact with many of the other metrics and that everything is happening about a month sooner than normal. i think while we originally modeled you know to have a little more pricing power kind of you know through this peak leasing season all of this stuff does appear to be very consistent in the fact with many of the other metrics and that everything is happening about a month sooner than normal My expectation is that we're going to start out 2026 in a continued gain-to-lease environment. my expectation is that we're going to start out 2026 in a continued gain-to-lease environment We'll go through the leasing season, and as Mark just talked about, many of those variables are going to dictate how quickly we shift back into a loss to lease, which is kind of what happened to us in 2025 because we started out in a moderate gain to lease and very quickly moved into a loss-to-lease environment. I'll also hit on one of the other items. I think, as Bret alluded to, some of the shift in the other income that we saw in 2025, it's really just a timing delay. We're talking about it's a couple of million dollars that deferred from 2025 into 2026. Yes, it's going to help in 2026, but we're still in this process of rolling all of this up to understand exactly what the full contribution from other income will be to revenue. We'll go through the leasing season, and as Mark just talked about, many of those variables are going to dictate how quickly we shift back into a loss to lease, which is kind of what happened to us in 2025 because we started out in a moderate gain to lease and very quickly moved into a loss-to-lease environment. we'll go through the leasing season and as mark just talked about many of those variables are going to dictate how quickly we shift back into a loss to lease which is kind of what happened to us in 2025 because we started out in a moderate gain to lease and very quickly moved into a loss-to-lease environment I'll also hit on one of the other items. i'll also hit on one of the other items I think, as Bret alluded to, some of the shift in the other income that we saw in 2025, it's really just a timing delay. i think as bret alluded to some of the shift in the other income that we saw in 2025 it's really just a timing delay We're talking about it's a couple of million dollars that deferred from 2025 into 2026. we're talking about it's a couple of million dollars that deferred from 2025 into 2026 Yes, it's going to help in 2026, but we're still in this process of rolling all of this up to understand exactly what the full contribution from other income will be to revenue. yes it's going to help in 2026 but we're still in this process of rolling all of this up to understand exactly what the full contribution from other income will be to revenue

Speaker 20: Yeah. Insurance, just to hit on that, for us, pretty small line item, 3% or 4% of same-store expense. Good number this year after some really outsized numbers. Let's see how the rest of the hurricane season goes. We don't have a hurricane exposure in our portfolio, but it does affect. Yeah. yeah Insurance, just to hit on that, for us, pretty small line item, 3% or 4% of same-store expense. insurance just to hit on that for us pretty small line item 3% or 4% of same-store expense Good number this year after some really outsized numbers. good number this year after some really outsized numbers Let's see how the rest of the hurricane season goes. let's see how the rest of the hurricane season goes We don't have a hurricane exposure in our portfolio, but it does affect. we don't have a hurricane exposure in our portfolio but it does affect Marketplace as a whole. Right now it feels like the loss history or losses these insurers have incurred hasn't been very high. We'll be pretty careful and thoughtful, Jamie, like we always are, on the fourth quarter call with the building blocks on revenue. Clearly there is going to be more emphasis on intra-period revenue growth next year to get to good numbers because the embedded will be good, but about the same as it was this year. I think we got something we can give you on occupancy because some of the markets are very highly occupied, like New York, but we have opportunity in Los Angeles in some of these expansion markets, and that number has opportunity. I think we continue to have really good, interesting other income initiatives that provide value to our residents that continue to roll out successfully. Marketplace as a whole. marketplace as a whole Right now it feels like the loss history or losses these insurers have incurred hasn't been very high. right now it feels like the loss history or losses these insurers have incurred hasn't been very high We'll be pretty careful and thoughtful, Jamie, like we always are, on the fourth quarter call with the building blocks on revenue. we'll be pretty careful and thoughtful jamie like we always are on the fourth quarter call with the building blocks on revenue Clearly there is going to be more emphasis on intra-period revenue growth next year to get to good numbers because the embedded will be good, but about the same as it was this year. clearly there is going to be more emphasis on intra-period revenue growth next year to get to good numbers because the embedded will be good but about the same as it was this year I think we got something we can give you on occupancy because some of the markets are very highly occupied, like New York, but we have opportunity in Los Angeles in some of these expansion markets, and that number has opportunity. i think we got something we can give you on occupancy because some of the markets are very highly occupied like new york but we have opportunity in los angeles in some of these expansion markets and that number has opportunity I think we continue to have really good, interesting other income initiatives that provide value to our residents that continue to roll out successfully. i think we continue to have really good interesting other income initiatives that provide value to our residents that continue to roll out successfully There are pluses and minuses in timing, but those will be in there too. There will be a pretty fulsome discussion with you when we get there, but I feel confident about next year. It feels like the setup is good, and the biggest thing we need is just some level of job growth. I think we're off to the races. There are pluses and minuses in timing, but those will be in there too. there are pluses and minuses in timing but those will be in there too There will be a pretty fulsome discussion with you when we get there, but I feel confident about next year. there will be a pretty fulsome discussion with you when we get there but i feel confident about next year It feels like the setup is good, and the biggest thing we need is just some level of job growth. it feels like the setup is good and the biggest thing we need is just some level of job growth I think we're off to the races. i think we're off to the races

Speaker 16: Okay, great. That's very helpful. You guys have quoted a couple of times now this 6.2% income growth since 2019. If you were to mark that over the last 12 months or even thoughts going forward, where are we today on that number and how does it differ across your markets and what does that tell you about your ability to push rents? Okay, great. okay great That's very helpful. that's very helpful You guys have quoted a couple of times now this 6.2% income growth since 2019. you guys have quoted a couple of times now this 6.2% income growth since 2019 If you were to mark that over the last 12 months or even thoughts going forward, where are we today on that number and how does it differ across your markets and what does that tell you about your ability to push rents? if you were to mark that over the last 12 months or even thoughts going forward where are we today on that number and how does it differ across your markets and what does that tell you about your ability to push rents

Speaker 20: Jamie, just to clarify, 6.2% is year-over-year for all our new residents across the whole portfolio. 22% is the increase of all employment in the San Francisco metro area in wages. It's grown by 22% since 2019. Not just our residents, just in general, incomes have, and rents in the market are a little above, but in the downtown area below what they were in 2019. That's what we meant by that. Is that helpful clarification? Jamie, just to clarify, 6.2% is year-over-year for all our new residents across the whole portfolio. 22% is the increase of all employment in the San Francisco metro area in wages. jamie just to clarify 6.2% is year-over-year for all our new residents across the whole portfolio 22% is the increase of all employment in the san francisco metro area in wages It's grown by 22% since 2019. it's grown by 22% since 2019 Not just our residents, just in general, incomes have, and rents in the market are a little above, but in the downtown area below what they were in 2019. not just our residents just in general incomes have and rents in the market are a little above but in the downtown area below what they were in 2019 That's what we meant by that. that's what we meant by that Is that helpful clarification? is that helpful clarification

Speaker 16: Yeah, I was thinking more across like other markets. Are you seeing deceleration, acceleration? I assume that'll be, you know, that's a big governor on how much you can push rents. Just anything else that as you look at the data stands out to you guys? Yeah, I was thinking more across like other markets. yeah i was thinking more across like other markets Are you seeing deceleration, acceleration? are you seeing deceleration acceleration I assume that'll be, you know, that's a big governor on how much you can push rents. i assume that'll be you know that's a big governor on how much you can push rents Just anything else that as you look at the data stands out to you guys? just anything else that as you look at the data stands out to you guys

Speaker 15: I guess I would just look at what I would say as an affordability index that rents at the percent of income. Based on new move-ins coming in in the quarter, we're running just below 20% rent-to-income ratios, which gives us a lot of confidence in the financial health of our consumers and the ability for them to be able to absorb kind of whatever the market rate growth is. I guess I would just look at what I would say as an affordability index that rents at the percent of income. i guess i would just look at what i would say as an affordability index that rents at the percent of income Based on new move-ins coming in in the quarter, we're running just below 20% rent-to-income ratios, which gives us a lot of confidence in the financial health of our consumers and the ability for them to be able to absorb kind of whatever the market rate growth is. based on new move-ins coming in in the quarter we're running just below 20% rent-to-income ratios which gives us a lot of confidence in the financial health of our consumers and the ability for them to be able to absorb kind of whatever the market rate growth is

Speaker 20: Income growth's been pretty good across all our markets. It's that rent growth is widely varied. Some places, rent growth's been relatively significant until two years ago and then went down, like in the Sun Belt markets. Places like Seattle and San Francisco, that's the dry powder. If we give them a great experience and if the supply picture improves, we have a bigger opportunity there because they have good incomes and they've had good income growth in nominal dollars, while rents in nominal dollars haven't moved very much. Income growth's been pretty good across all our markets. income growth's been pretty good across all our markets It's that rent growth is widely varied. it's that rent growth is widely varied Some places, rent growth's been relatively significant until two years ago and then went down, like in the Sun Belt markets. some places rent growth's been relatively significant until two years ago and then went down like in the sun belt markets Places like Seattle and San Francisco, that's the dry powder. places like seattle and san francisco that's the dry powder If we give them a great experience and if the supply picture improves, we have a bigger opportunity there because they have good incomes and they've had good income growth in nominal dollars, while rents in nominal dollars haven't moved very much. if we give them a great experience and if the supply picture improves we have a bigger opportunity there because they have good incomes and they've had good income growth in nominal dollars while rents in nominal dollars haven't moved very much

Speaker 16: Okay, great. Thank you. Okay, great. okay great Thank you. thank you

Speaker 3: Your next question will be coming from the line of John Kim with BMO Capital Markets. Your next question will be coming from the line of John Kim with BMO Capital Markets. your next question will be coming from the line of john kim with bmo capital markets

Speaker 5: Thank you. You're probably going to hate this question, but Mark, you mentioned that your Sun Belt markets are seeing a significant lack of pricing power, and that's due to the lingering impact of new supply. You've been talking about that for the last several years. Michael, you mentioned that net migration trends are favoring San Francisco, New York due to tech and AI demand. Yet this quarter, your Sun Belt concentration continues to grow with the acquisition in Arlington, Texas. Given those dynamics that you're seeing today and the fact that your same-store NOI in expansion markets are down 7%, have you thought about pausing acquisitions in the Sun Belt? Thank you. thank you You're probably going to hate this question, but Mark, you mentioned that your Sun Belt markets are seeing a significant lack of pricing power, and that's due to the lingering impact of new supply. you're probably going to hate this question but mark you mentioned that your sun belt markets are seeing a significant lack of pricing power and that's due to the lingering impact of new supply You've been talking about that for the last several years. you've been talking about that for the last several years Michael, you mentioned that net migration trends are favoring San Francisco, New York due to tech and AI demand. michael you mentioned that net migration trends are favoring san francisco new york due to tech and ai demand Yet this quarter, your Sun Belt concentration continues to grow with the acquisition in Arlington, Texas. yet this quarter your sun belt concentration continues to grow with the acquisition in arlington texas Given those dynamics that you're seeing today and the fact that your same-store NOI in expansion markets are down 7%, have you thought about pausing acquisitions in the Sun Belt? given those dynamics that you're seeing today and the fact that your same-store noi in expansion markets are down 7% have you thought about pausing acquisitions in the sun belt

Speaker 20: I don't hate that question at all. I like that question, John. Thank you. I mean, we're committed to the strategy of having this sort of all-weather diversified portfolio. Like we said at an Investor Day, we're trying to balance supply, demand, opportunities, and risks, as well as regulation and resilience, and kind of have a portfolio that is very consistent and is just a cash flow growth machine. That said, we don't have a clock over here. Right now, it is not in our shareholders' best interests to continue to move quickly into these expansion markets, not just because of the forward, you know, next year's likely numbers in those markets, but because of the price. When we were buying earlier, we were buying better, at better prices. I don't hate that question at all. i don't hate that question at all I like that question, John. i like that question john Thank you. thank you I mean, we're committed to the strategy of having this sort of all-weather diversified portfolio. i mean we're committed to the strategy of having this sort of all-weather diversified portfolio Like we said at an Investor Day, we're trying to balance supply, demand, opportunities, and risks, as well as regulation and resilience, and kind of have a portfolio that is very consistent and is just a cash flow growth machine. like we said at an investor day we're trying to balance supply demand opportunities and risks as well as regulation and resilience and kind of have a portfolio that is very consistent and is just a cash flow growth machine That said, we don't have a clock over here. that said we don't have a clock over here Right now, it is not in our shareholders' best interests to continue to move quickly into these expansion markets, not just because of the forward, you know, next year's likely numbers in those markets, but because of the price. right now it is not in our shareholders' best interests to continue to move quickly into these expansion markets not just because of the forward you know next year's likely numbers in those markets but because of the price When we were buying earlier, we were buying better, at better prices. when we were buying earlier we were buying better at better prices Right now, sub 5%, 4.75% cap rates that Bob and his team have been bringing to us in premiums to replacement costs from our perspective, given where the stock is, is not a prescription for long-term investment success. No clock over here. We like being more diversified in the long run, but we will do the best thing in the current period and in the long run. The great thing about the buyback this quarter and potentially going forward is by selling these lower growth assets in our existing markets, in the coastal markets, we're improving the growth rate of our NOI going forward. We are improving the percentage of exposure because we're lowering the denominator in these expansion markets. By the way, we're making a great arbitrage trade between private and public. Right now, sub 5%, 4.75% cap rates that Bob and his team have been bringing to us in premiums to replacement costs from our perspective, given where the stock is, is not a prescription for long-term investment success. right now sub 5% 4.75% cap rates that bob and his team have been bringing to us in premiums to replacement costs from our perspective given where the stock is is not a prescription for long-term investment success No clock over here. no clock over here We like being more diversified in the long run, but we will do the best thing in the current period and in the long run. we like being more diversified in the long run but we will do the best thing in the current period and in the long run The great thing about the buyback this quarter and potentially going forward is by selling these lower growth assets in our existing markets, in the coastal markets, we're improving the growth rate of our NOI going forward. the great thing about the buyback this quarter and potentially going forward is by selling these lower growth assets in our existing markets in the coastal markets we're improving the growth rate of our noi going forward We are improving the percentage of exposure because we're lowering the denominator in these expansion markets. we are improving the percentage of exposure because we're lowering the denominator in these expansion markets By the way, we're making a great arbitrage trade between private and public. by the way we're making a great arbitrage trade between private and public It kind of works all those ways, but you shouldn't think that we feel like we've got a clock going off that we need to finish this by a date. There's an opportunity to do it accretively. We're going to hit it. If not, we're going to stand still or buy our own stock. It kind of works all those ways, but you shouldn't think that we feel like we've got a clock going off that we need to finish this by a date. it kind of works all those ways but you shouldn't think that we feel like we've got a clock going off that we need to finish this by a date There's an opportunity to do it accretively. there's an opportunity to do it accretively We're going to hit it. we're going to hit it If not, we're going to stand still or buy our own stock. if not we're going to stand still or buy our own stock

Speaker 5: Okay. Thanks for answering that. Michael, you mentioned in your response to Brad's question about what you're seeing in DC today, that net effective pricing is down 4%. I just wanted some clarification on what that meant. Is that what you're seeing currently on leases signed or what you're seeing kind of year-to-date? Okay. okay Thanks for answering that. thanks for answering that Michael, you mentioned in your response to Brad's question about what you're seeing in DC today, that net effective pricing is down 4%. michael you mentioned in your response to brad's question about what you're seeing in dc today that net effective pricing is down 4% I just wanted some clarification on what that meant. i just wanted some clarification on what that meant Is that what you're seeing currently on leases signed or what you're seeing kind of year- to- date? is that what you're seeing currently on leases signed or what you're seeing kind of year- to- date

Speaker 12: Yeah. Hey, John, this is Michael. What I was saying, DC, I want to make sure we're clear. I'm talking about the micro submarket of DC, the district, DC kind of northwest, excluding Maryland, Virginia portfolios. When I referenced the rates, that's our pricing trend. You were out looking on our website and you snapshotted today with the net effective price against all those concessions, compared it to the exact same day last year, same methodology. Where would rents be on a year-over-year basis? How that manifests itself through the blends and through the new lease change, it's not fully correlated because new lease is very much subjective to who moved out and then who moved into that unit and the time duration in between all of that. Yeah. yeah Hey, John, this is Michael. hey john this is michael What I was saying, DC, I want to make sure we're clear. what i was saying dc i want to make sure we're clear I'm talking about the micro submarket of DC, the district, DC kind of northwest, excluding Maryland, Virginia portfolios. i'm talking about the micro submarket of dc the district dc kind of northwest excluding maryland virginia portfolios When I referenced the rates, that's our pricing trend. when i referenced the rates that's our pricing trend You were out looking on our website and you snapshotted today with the net effective price against all those concessions, compared it to the exact same day last year, same methodology. you were out looking on our website and you snapshotted today with the net effective price against all those concessions compared it to the exact same day last year same methodology Where would rents be on a year-over-year basis? where would rents be on a year-over-year basis How that manifests itself through the blends and through the new lease change, it's not fully correlated because new lease is very much subjective to who moved out and then who moved into that unit and the time duration in between all of that. how that manifests itself through the blends and through the new lease change it's not fully correlated because new lease is very much subjective to who moved out and then who moved into that unit and the time duration in between all of that I think just that spot check-in time of where rents are, absolute rents are on a year-over basis, is an indicator of what when I was saying that we felt pressure in isolated pockets, what did I mean by that? I think just that spot check-in time of where rents are, absolute rents are on a year-over basis, is an indicator of what when I was saying that we felt pressure in isolated pockets, what did I mean by that? i think just that spot check-in time of where rents are absolute rents are on a year-over basis is an indicator of what when i was saying that we felt pressure in isolated pockets what did i mean by that

Speaker 5: The pricing trend tends to be a leading indicator of where blended rates are. The pricing trend tends to be a leading indicator of where blended rates are. the pricing trend tends to be a leading indicator of where blended rates are

Speaker 12: Yeah. I mean, there has to be some correlation, right? If rents are down 4% and I'm getting ready to generate renewals, that's going to put pressure on the quoted renewal offers that go out in the marketplace. Yeah. yeah I mean, there has to be some correlation, right? i mean there has to be some correlation right If rents are down 4% and I'm getting ready to generate renewals, that's going to put pressure on the quoted renewal offers that go out in the marketplace. if rents are down 4% and i'm getting ready to generate renewals that's going to put pressure on the quoted renewal offers that go out in the marketplace

Speaker 5: Got it. Okay, thank you. Got it. got it Okay, thank you. okay thank you

Speaker 3: Your next question will be coming from the line of Alex Kim with Zelman & Associates. Your next question will be coming from the line of Alex Kim with Zelman & Associates. your next question will be coming from the line of alex kim with zelman & associates

Speaker 8: Hey, guys. Thanks for taking my question. Could you talk about what you're seeing in the transaction market and just the quantity of for sale supply in your markets? What does the kind of bid-ask spread look like? Could you put that in the context of the share buy? Hey, guys. hey guys Thanks for taking my question. thanks for taking my question Could you talk about what you're seeing in the transaction market and just the quantity of for sale supply in your markets? could you talk about what you're seeing in the transaction market and just the quantity of for sale supply in your markets What does the kind of bid-ask spread look like? what does the kind of bid-ask spread look like Could you put that in the context of the share buy? could you put that in the context of the share buy

Speaker 14: Yeah. Hey, Alex, it's Bob, and I'll start and maybe some of the team will augment a little bit. In terms of transaction volume, we're seeing pretty healthy transaction volume in the private markets, right? It's a very big, as Mark has mentioned a few times on the call already, there's a fairly large disconnect between what you're seeing in the public markets versus the private markets. Volume overall is about on parity with 2024, which in broader kind of historical context is about 50% of what we would have done pre-pandemic, but has in fact been accelerating. It's a tale of different markets and different assets. Yeah. yeah Hey, Alex, it's Bob, and I'll start and maybe some of the team will augment a little bit. hey alex it's bob and i'll start and maybe some of the team will augment a little bit In terms of transaction volume, we're seeing pretty healthy transaction volume in the private markets, right? in terms of transaction volume we're seeing pretty healthy transaction volume in the private markets right It's a very big, as Mark has mentioned a few times on the call already, there's a fairly large disconnect between what you're seeing in the public markets versus the private markets. it's a very big as mark has mentioned a few times on the call already there's a fairly large disconnect between what you're seeing in the public markets versus the private markets Volume overall is about on parity with 2024, which in broader kind of historical context is about 50% of what we would have done pre-pandemic, but has in fact been accelerating. volume overall is about on parity with 2024 which in broader kind of historical context is about 50% of what we would have done pre-pandemic but has in fact been accelerating It's a tale of different markets and different assets. it's a tale of different markets and different assets When you have assets that are in that kind of down the middle of the fairway, call it $80 million-$100 million, relatively new, maybe a little bit of light value add, you see a lot of bidders in the tent, you see a decent amount of transactions, and you see sellers getting good prices around that kind of 4.75% cap rate that Mark alluded to in his last response, and that's fairly active. If you look at larger scale transactions, larger assets, assets that might have a mixed-use component, there isn't much of a bidding tent. There isn't a lot of people interested there. That also applies to some of the geographies, right? Some of the markets that are more geographically challenged because the operating momentum may be a little bit weaker, you're not seeing a lot of activity there. When you have assets that are in that kind of down the middle of the fairway, call it $80 million- $100 million, relatively new, maybe a little bit of light value add, you see a lot of bidders in the tent, you see a decent amount of transactions, and you see sellers getting good prices around that kind of 4.75% cap rate that Mark alluded to in his last response, and that's fairly active. when you have assets that are in that kind of down the middle of the fairway call it $80 million- $100 million relatively new maybe a little bit of light value add you see a lot of bidders in the tent you see a decent amount of transactions and you see sellers getting good prices around that kind of 4.75% cap rate that mark alluded to in his last response and that's fairly active If you look at larger scale transactions, larger assets, assets that might have a mixed-use component, there isn't much of a bidding tent. if you look at larger scale transactions larger assets assets that might have a mixed-use component there isn't much of a bidding tent There isn't a lot of people interested there. there isn't a lot of people interested there That also applies to some of the geographies, right? that also applies to some of the geographies right Some of the markets that are more geographically challenged because the operating momentum may be a little bit weaker, you're not seeing a lot of activity there. some of the markets that are more geographically challenged because the operating momentum may be a little bit weaker you're not seeing a lot of activity there There is plenty of private capital out there in general, and it's fairly liquid and pretty aggressive on pricing. The opportunity set, as we've said on the call already, is our shares more at the moment. There is plenty of private capital out there in general, and it's fairly liquid and pretty aggressive on pricing. there is plenty of private capital out there in general and it's fairly liquid and pretty aggressive on pricing The opportunity set, as we've said on the call already, is our shares more at the moment. the opportunity set as we've said on the call already is our shares more at the moment

Speaker 8: Got it. I appreciate the detail there. I noticed that the completion date for your unconsolidated development in Washington State was pulled forward about a year. Could you talk about what allowed for the faster construction timeline? Got it. got it I appreciate the detail there. i appreciate the detail there I noticed that the completion date for your unconsolidated development in Washington State was pulled forward about a year. i noticed that the completion date for your unconsolidated development in washington state was pulled forward about a year Could you talk about what allowed for the faster construction timeline? could you talk about what allowed for the faster construction timeline

Speaker 20: Yeah. Bret and I were actually just out there in August, and you know, it's a market where the rain and seasonal patterns matter a lot. They got the footings in early and some of the more complex, riskier excavation work done faster than they thought. It was just kind of binary. It's moving along really, really well. Kirkland is a great place to have a brand new asset. We're really excited about that and thrilled that we'll be getting our hands on it a little sooner. It really was, we made a sort of average estimate on how long it would take. Some of this more complex and riskier, frankly, excavation and other work just got done really quick and really well without any problems at all. Off to the races we are now with framing and a lot of stuff that is generally more routine. Yeah. yeah Bret and I were actually just out there in August, and you know, it's a market where the rain and seasonal patterns matter a lot. bret and i were actually just out there in august and you know it's a market where the rain and seasonal patterns matter a lot They got the footings in early and some of the more complex, riskier excavation work done faster than they thought. they got the footings in early and some of the more complex riskier excavation work done faster than they thought It was just kind of binary. it was just kind of binary It's moving along really, really well. it's moving along really really well Kirkland is a great place to have a brand new asset. kirkland is a great place to have a brand new asset We're really excited about that and thrilled that we'll be getting our hands on it a little sooner. we're really excited about that and thrilled that we'll be getting our hands on it a little sooner It really was, we made a sort of average estimate on how long it would take. it really was we made a sort of average estimate on how long it would take Some of this more complex and riskier, frankly, excavation and other work just got done really quick and really well without any problems at all. some of this more complex and riskier frankly excavation and other work just got done really quick and really well without any problems at all Off to the races we are now with framing and a lot of stuff that is generally more routine. off to the races we are now with framing and a lot of stuff that is generally more routine

Speaker 8: Got it. Appreciate the detail. Got it. got it Appreciate the detail. appreciate the detail

Speaker 3: Next question will be coming from the line of Omotayo Okusanya with Deutsche Bank. Next question will be coming from the line of Omotayo Okusanya with Deutsche Bank. next question will be coming from the line of omotayo okusanya with deutsche bank

Speaker 2: Hi, yes. Good afternoon, everyone. As we're about to go into election cycle, just curious if there are any states or counties that you're kind of watching for anything on any kind of the ballot that could have an impact on your rent practices? Specifically also kind of around New York, any thoughts on the mayoral race and any potential implications? Hi, yes. hi yes Good afternoon, everyone. good afternoon everyone As we're about to go into election cycle, just curious if there are any states or counties that you're kind of watching for anything on any kind of the ballot that could have an impact on your rent practices? as we're about to go into election cycle just curious if there are any states or counties that you're kind of watching for anything on any kind of the ballot that could have an impact on your rent practices Specifically also kind of around New York, any thoughts on the mayoral race and any potential implications? specifically also kind of around new york any thoughts on the mayoral race and any potential implications

Speaker 11: Sure. It's Mark. Thanks for that question. I'm going to start by taking a little bit of what I think is a fair and more optimistic take on regulation. We've had good activity in California with Governor Newsom's leadership and passing a new law that really liberalizes zoning in areas that are near transit hubs and will create more supply and is really good public policy. It's similar, frankly, to what was done in a very red state down in Florida. There are a lot of places where there's a lot of good things going on in terms of increasing housing supply. Congress, or at least, excuse me, the Senate passed a bill that was bipartisan, again, supporting housing. The federal government doesn't have nearly the tools that the states and localities do, but that was very positive as well. Sure. sure It's Mark. it's mark Thanks for that question. thanks for that question I'm going to start by taking a little bit of what I think is a fair and more optimistic take on regulation. i'm going to start by taking a little bit of what i think is a fair and more optimistic take on regulation We've had good activity in California with Governor Newsom's leadership and passing a new law that really liberalizes zoning in areas that are near transit hubs and will create more supply and is really good public policy. we've had good activity in california with governor newsom's leadership and passing a new law that really liberalizes zoning in areas that are near transit hubs and will create more supply and is really good public policy It's similar, frankly, to what was done in a very red state down in Florida. it's similar frankly to what was done in a very red state down in florida There are a lot of places where there's a lot of good things going on in terms of increasing housing supply. there are a lot of places where there's a lot of good things going on in terms of increasing housing supply Congress, or at least, excuse me, the Senate passed a bill that was bipartisan, again, supporting housing. congress or at least excuse me the senate passed a bill that was bipartisan again supporting housing The federal government doesn't have nearly the tools that the states and localities do, but that was very positive as well. the federal government doesn't have nearly the tools that the states and localities do but that was very positive as well In terms of areas of concern, areas of focus, New York, we've talked about it on prior calls. We are assuming, I think, like many, that Mr. Mamdani will win. The industry associations we belong to have been in conversation with him. He has said in his various campaign announcements he'd like to increase supply a lot in New York. The private sector builders are the ones who can do that for him. Our message to him through our association is use us to help add to New York's housing supply and that rent control is bad. By the time he gets in office, if he wins, and the Rent Control Stabilization Board speaks on these rent issues, we're just going to have a very small percent of our units subject to that risk. In terms of areas of concern, areas of focus, New York, we've talked about it on prior calls. in terms of areas of concern areas of focus new york we've talked about it on prior calls We are assuming, I think, like many, that Mr. Mamdani will win. we are assuming i think like many that mr mamdani will win The industry associations we belong to have been in conversation with him. the industry associations we belong to have been in conversation with him He has said in his various campaign announcements he'd like to increase supply a lot in New York. he has said in his various campaign announcements he'd like to increase supply a lot in new york The private sector builders are the ones who can do that for him. the private sector builders are the ones who can do that for him Our message to him through our association is use us to help add to New York's housing supply and that rent control is bad. our message to him through our association is use us to help add to new york's housing supply and that rent control is bad By the time he gets in office, if he wins, and the Rent Control Stabilization Board speaks on these rent issues, we're just going to have a very small percent of our units subject to that risk. by the time he gets in office if he wins and the rent control stabilization board speaks on these rent issues we're just going to have a very small percent of our units subject to that risk For us, it's not as significant directly, but certainly we want to keep having those conversations if he ends up being the mayor and push these supply side solutions. Programs like the new 421A program and things like that are really positive. We are keeping our eyes on Seattle. There's a big mayoral election there next year or next week, pardon me, that is important for the city to continue to make progress. Those are the areas. We've seen a lot of positives as well as things we need to keep focused on as an industry. For us, it's not as significant directly, but certainly we want to keep having those conversations if he ends up being the mayor and push these supply side solutions. for us it's not as significant directly but certainly we want to keep having those conversations if he ends up being the mayor and push these supply side solutions Programs like the new 421A program and things like that are really positive. programs like the new 421a program and things like that are really positive We are keeping our eyes on Seattle. we are keeping our eyes on seattle There's a big mayoral election there next year or next week, pardon me, that is important for the city to continue to make progress. there's a big mayoral election there next year or next week pardon me that is important for the city to continue to make progress Those are the areas. those are the areas We've seen a lot of positives as well as things we need to keep focused on as an industry. we've seen a lot of positives as well as things we need to keep focused on as an industry

Speaker 2: That's helpful. One more for me. From an operating expense perspective, any other opportunities to keep making progress there? I know same store payroll was down 2% year-over-year. Just curious, any other levers that can be pulled in that area to contain operating expense growth? That's helpful. that's helpful One more for me. one more for me From an operating expense perspective, any other opportunities to keep making progress there? from an operating expense perspective any other opportunities to keep making progress there I know same store payroll was down 2% year-over-year. i know same store payroll was down 2% year-over-year Just curious, any other levers that can be pulled in that area to contain operating expense growth? just curious any other levers that can be pulled in that area to contain operating expense growth

Speaker 12: Maybe I'll start and Bret can kind of add some color on top of it. I think just in terms of operational excellence, the reality is we're never done with that pursuit. This is something that's wired into the D&A of our company. We just outlined, in my prepared remarks, some of the initiatives that we've been working on to layer in continuations of automation and centralization. All of those do lead to reduced payroll and operating efficiencies being garnered inside the portfolio. We're really excited. I wouldn't even say that we're in the early inning. There's still a lot of opportunity in front of us to become a more efficient operator by leveraging technology. Maybe I'll start and Bret can kind of add some color on top of it. maybe i'll start and bret can kind of add some color on top of it I think just in terms of operational excellence, the reality is we're never done with that pursuit. i think just in terms of operational excellence the reality is we're never done with that pursuit This is something that's wired into the D&A of our company. this is something that's wired into the d&a of our company We just outlined, in my prepared remarks, some of the initiatives that we've been working on to layer in continuations of automation and centralization. we just outlined in my prepared remarks some of the initiatives that we've been working on to layer in continuations of automation and centralization All of those do lead to reduced payroll and operating efficiencies being garnered inside the portfolio. all of those do lead to reduced payroll and operating efficiencies being garnered inside the portfolio We're really excited. we're really excited I wouldn't even say that we're in the early inning. i wouldn't even say that we're in the early inning There's still a lot of opportunity in front of us to become a more efficient operator by leveraging technology. there's still a lot of opportunity in front of us to become a more efficient operator by leveraging technology

Speaker 15: Yeah. I might add, I think one of the things we called out was utility expenses were a bit higher. I think one of the areas that stood out was trash. I think there's some opportunities for us, as Michael alluded to, to put some best practices in place where we can actually really drive that specific number down. I think that'll be helpful as we go into next year. Yeah. yeah I might add, I think one of the things we called out was utility expenses were a bit higher. i might add i think one of the things we called out was utility expenses were a bit higher I think one of the areas that stood out was trash. i think one of the areas that stood out was trash I think there's some opportunities for us, as Michael alluded to, to put some best practices in place where we can actually really drive that specific number down. i think there's some opportunities for us as michael alluded to to put some best practices in place where we can actually really drive that specific number down I think that'll be helpful as we go into next year. i think that'll be helpful as we go into next year

Speaker 2: Thank you very much. Good luck. Thank you very much. thank you very much Good luck. good luck

Speaker 3: It appears there are no additional questions at this time. I'll turn the call back to Mark Parrell for closing remarks. It appears there are no additional questions at this time. it appears there are no additional questions at this time I'll turn the call back to Mark Parrell for closing remarks. i'll turn the call back to mark parrell for closing remarks

Speaker 20: Thank you, Shelley. I thank everyone on the call for their interest in Equity Residential, and we'll see you on the road over the next few months. Thank you very much. Thank you, Shelley. thank you shelley I thank everyone on the call for their interest in Equity Residential, and we'll see you on the road over the next few months. i thank everyone on the call for their interest in equity residential and we'll see you on the road over the next few months Thank you very much. thank you very much

Speaker 3: This concludes today's call. Thank you for your participation. You may. Everyone else has left the call. This concludes today's call. this concludes today's call Thank you for your participation. thank you for your participation You may. you may Everyone else has left the call. everyone else has left the call