Haendel St. Juste: I appreciate that. If I could ask about new lease rates. You mentioned that you had tweaked some of the underlying assumptions within your same-store revenue, but can you talk about what your expectation on the new lease rate side is here? Maybe give us a sense of where you expect that to be broadly for the year and maybe over the next couple of quarters? Thanks.
Ric Campo: Yes, absolutely. So when we are looking at new leases, we are assuming that we are going to be probably right around a negative 2% for the second quarter and then negative 1% for the next two quarters after that.
Haendel St. Juste: Thank you.
Operator: The next question comes from John Kim with BMO Capital Markets. Please go ahead.
John Kim: Thank you. Can I just follow-up on [indiscernible]. So your guidance now has 25 basis points of market rental growth, and that’s down from the original guidance that’s offset by higher occupancy and better bad debt. But I guess my question is how realistic is that 25 basis points? Is that something that you just plug into maintain your same-store revenue guidance? Or do you think that’s what you’re going to achieve?
Alex Jessett: No. It’s absolutely what we think we are going to achieve. Obviously, what we do is we look at the conditions on the ground, we look at our third-party data providers and we take all that information and just like we do our original budgets, we do reforecast from the community level on up, and so this is exactly what we expect to achieve.
John Kim: And is that the occupancy versus rate trade-off? Or are there some markets that are potentially underperforming your original expectations?
Alex Jessett: Well, if you think about it on the occupancy side, all of our markets are doing better than we thought on occupancy. And then clearly, we are bringing down the rental rates. So the rental rate bring down is generally across the board. The offset, once again, is the much lower bad debt.
John Kim: Okay.
Operator: The next question comes from Austin Wurschmidt with KeyBanc Capital Markets. Please go ahead.
Austin Wurschmidt: Yes. Hi, Alex. Just wanted to clarify what the revised lease rate growth assumption is for this year versus the 1.2% you had previously provided. And can you just share, I guess, what the implied lease rate growth is then you need for the balance of the year?
Alex Jessett: Yes. I mean here’s probably the best way to think about it. We are assuming a 75% blend new lease and renewals for the full year, 75 basis point positive. And so you’ve got a component of that, that is picking up the earn-in. And then you’ve got — which is about 50 basis points, and then you’ve got the 25 basis points that you’re getting from the market rent growth to that, that gives you 75 basis points. To that, you’re going to add to 10 basis points of higher occupancy ’24 versus ’23, that gets you to 85 basis points. And then we are assuming that our bad debt is going to be 75 basis points for the full year that compares to 140 basis points last year. So that’s a 65 basis point pickup, and that’s how you get to the 1.5%.
Austin Wurschmidt: Got it. Okay. So it seems like about 1.25% to 1.5% from here out on the blend is kind of the math I was getting to.
Alex Jessett: Yes. That’s right.
Austin Wurschmidt: Ric, I guess — okay, thank you for that, for clarifying. Ric, with the setup you highlighted in your prepared remarks around the strong absorption, supply is poised to hit multiyear lows in the next couple of years. I guess, how do you further take advantage of that backdrop prior to development ramping back up and just — other types of activity with others being in a better position from a cost of capital and financing market perspective?
Ric Campo: Well, clearly, the — when you think about how you set up for ’26, ’27, it would be on the development side of the equation, we have a decent pipeline that we can start. And I guess the real question is, when do you pivot? And I think as we see more cards in terms of how the absorption and the demand continues, if it continues the way we think it could and should continue given everything that we talked about earlier, then you will see us pivot and get more aggressive on the development side towards the end of the year and beginning of next year. Clearly, right now, the best trade in the first quarter was selling assets and buying stock. And we are buying stock at a high 6 cap rate when the market is trading today at a low 5 cap rate.
And so it’s a very reasonable trade to make. And so ultimately, we’ll be able to pivot to a more aggressive mode when we start seeing that the supply does get taken up between now and, say, the middle of the summer. And we really need to see that the peak leasing season and how that unfolds for us to get more aggressive at this point.
Operator: The next questions comes from Rich Anderson with Wedbush. Please go ahead.
Rich Anderson: Good morning. And I’m trying to keep to the one question rule here. So yes, it’s just observational stuff. It’s pretty easy. So what do you think explains the difference in perspective between you guys saying accelerating rent growth in 2025 and ’26 and Equity Residential and Avalon Bay, which essentially think that you’re not going to get any rent growth until 2026. Is there an interpretation issue? Is it just you have more information, so you have more sort of knowledge is a concern you when you hear them say that because they’re not dummies either. So like I’m just curious what you think the differences?
Ric Campo: I think the difference is that pretty much everybody talks to their book, right, and that’s part of it. But when …
Rich Anderson: Is that what you’re doing?
Ric Campo: No. Well, sure, you’re going to — we are going to — if we didn’t believe what we are saying, we wouldn’t say it, and I’m sure they believe what they say, but the issue is they’re not operating in these markets. So I’m not going to opine about what San Francisco is doing, even though San Francisco hasn’t added back their jobs that they lost during COVID, yet. If you look at — so we look at our markets, and I use a fair — we use a fair number of data providers. And when you look at some of those data providers, they show pretty good demand and the numbers are sort of — when you look at Ron Witten [ph], for example, I use him a lot. Ron has been around for a long time. He’s shown accelerating rent growth in 2025 because of the excess of this demand that’s coming from multifamily because of all the things we talked about at the beginning.
