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DATE

Tuesday, April 28, 2026 at 1 p.m. ET

Call participants

  • President and Chief Executive Officer — Benjamin W. Schall
  • Chief Financial Officer — Kevin P. O'Shea
  • Chief Operating Officer — Sean J. Breslin
  • Chief Investment Officer — Matthew H. Birenbaum

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Takeaways

  • Same-store residential revenue growth -- 1.6% year over year, with occupancy improving 10 basis points to 96.1%.
  • First quarter dispositions -- $340 million of asset sales completed, including the sale of 40-year-old high-rise assets.
  • Share repurchases -- $200 million of stock repurchased during the quarter at an implied cap rate in the low 6% range.
  • New development starts -- Nearly $190 million initiated, with two starts in suburban New Jersey; targeted to reach $800 million for the year with expected stabilized yields of 6.5%-7%.
  • Development NOI ramp -- Projecting $47 million of development NOI in 2026, increasing to $120 million in 2027.
  • Incremental NOI targets -- $55 million annual increment expected by year-end 2026 (Horizon One), advancing toward an $80 million target (Horizon Two) in coming years.
  • Leasing velocity in lease-ups -- Achieved 32 leases per month in the first quarter, exceeding a historical pace of 23 per month, and at average effective rents above pro forma.
  • Renewal rental rates -- May and June renewal offers up 5%-5.5%, approximately 100 basis points higher than offers in February and March, driving a 260 basis point ramp in rent change since year-begin.
  • Turnover rate -- Q1 turnover declined to 31%, down 50 basis points from last year, with the annual expectation remaining in the low 40% range.
  • Customers leaving to purchase homes -- Reached a historical low of 8%, supporting steady occupancy and reduced turnover.
  • Expense timing impact -- Of the $0.02 core NOI outperformance, 80% came from lower-than-expected operating expenses, which are now expected to be incurred later in the year.
  • Capex-driven disposition impact -- Asset sales focused on older properties to improve forward cash flow growth after CapEx.
  • Guidance affirmed -- Blended rent change guidance maintained at 2% for 2026, comprising 1.25% in the first half and 2.5% in the second half; guidance reaffirmed despite first quarter outperformance.
  • Development pipeline -- $4.2 billion development rights at quarter-end, with $3.5 billion under construction at a projected initial stabilized yield of 6.3%.
  • Remaining share repurchase authorization -- $914 million available for future buybacks.

Summary

The portfolio experienced average asking rent growth in the upper 4% range since January 1, surpassing last year's pace. Regional performance was strongest in the New York Metro Area and Northern California, while Boston, Los Angeles, and Seattle underperformed internal revenue expectations. Development investments were match-funded with capital raised over the past three years at a 4.9% weighted average cost, positioning new projects for yield spreads well above cost of capital. Average lease terms in lease-up properties exceeded 15 months during the first quarter. The company’s capital plan contemplates net asset sales of $100 million in 2026, with flexibility to redeploy proceeds between development and buybacks on a leverage-neutral basis.

  • Chief Investment Officer Birenbaum stated that most of the $4.2 billion pipeline is AvalonBay development, with a minority of deals via the Developer Funding Program, allowing for even swifter deployment if market conditions justify.
  • Chief Financial Officer O'Shea highlighted that "Access to the debt market is excellent—we" with recent 10-year debt priced in the low-5% range, supporting funding flexibility.
  • Chief Operating Officer Breslin described the current concessions environment as "very regional," noting concessions are notably higher in Boston, Seattle, and Los Angeles and down in Northern California and the New York Metro Area.
  • President and Chief Executive Officer Schall said, “market occupancy in our established regions remains solid,” and stressed "the economics of renting versus homeownership remain very favorable."
  • Birenbaum clarified that the recent Avalon Sunset Tower sale does not represent prevailing San Francisco market metrics, with most comparable San Francisco assets now priced at cap rates in the low to mid-4% range.
  • The supply environment continues to favor landlords, with new market-rate apartment deliveries described as being at "historically low" levels, particularly in established markets.

Industry glossary

  • NOI (Net Operating Income): Earnings from property operations before interest, taxes, depreciation, and amortization; a principal REIT performance metric.
  • Cap rate (Capitalization Rate): Property net operating income divided by asset value, illustrating real estate yield and acquisition/disposition pricing.
  • DFP (Developer Funding Program): AvalonBay’s program for providing capital to third-party builders; enables rapid scaling of external development partnerships.
  • Horizon One/Two: Internal strategic benchmarks for incremental NOI gains by specific periods, used in AvalonBay’s operational guidance.

Full Conference Call Transcript

Benjamin W. Schall: I am here with Kevin O'Shea, our Chief Financial Officer; Sean Breslin, our Chief Operating Officer; and Matthew Birenbaum, our Chief Investment Officer. As is our custom, we have also posted an earnings presentation, which Sean and I will reference during our prepared remarks before turning to Q&A. Starting with the key takeaways on slide four, our first quarter results exceeded our expectations, driven by lower expenses, higher development NOI, and the benefits of our share buyback activity, which was not included in our original outlook for 2026. Our portfolio is well positioned heading into peak leasing season, with very low turnover, solid occupancy, and rents tracking as expected through the first four months of the year.

We are also benefiting from the ramp in development NOI in 2026, which will further accelerate during the year and into 2027. Leasing velocity at our projects in lease-up has been strong in a typically slower first quarter, which bodes well for the upcoming peak leasing season. During the quarter, we completed $340 million of dispositions and repurchased $200 million of our shares at an implied cap rate in the low 6% range. Turning to slide five, same-store residential revenue grew 1.6% year-over-year, with occupancy up 10 basis points to 96.1%.

During the quarter, we started nearly $190 million of new development, with two starts in suburban New Jersey, and are on track for $800 million of planned 2026 development starts with projected initial stabilized yields of 6.5% to 7%. Our performance in Q1, both operationally and from a capital allocation perspective, sets us up well for the balance of the year. Slide six details the components of our favorable first quarter core FFO per share results relative to our initial outlook. Of our $0.02 of NOI outperformance, 20% was revenue-driven and 80% was attributable to lower operating expenses.

On the expense side, certain operating costs budgeted for the first quarter are now expected to be incurred over the balance of the year. Other drivers of our outperformance for the quarter were $0.01 of favorable development NOI from our lease-up communities, as well as $0.01 from our share repurchases in the quarter. Looking ahead, slide seven highlights several factors that continue to support apartment demand and our operating outlook as we move through 2026. First, market occupancy in our established regions remains solid, supporting near-term fundamentals and allowing us to enter the peak leasing season with relative strength. Second, our customers continue to experience healthy wage growth, which will support rent growth throughout the year.

Third, the supply backdrop remains very constructive in our markets, with new market-rate apartment deliveries expected to stay at historically low levels for the foreseeable future. And fourth, the economics of renting versus homeownership remain very favorable. During the quarter, the percentage of customers leaving us to purchase a home declined to 8%. Taken together, these factors give us confidence in the resiliency of apartment fundamentals and in the positioning of our portfolio as we move through the balance of the year. Slide eight highlights the strength of our operating and development capabilities to drive differentiated internal and external growth in the years ahead.

On operations, we continue to leverage our scale, and leadership in centralization, technology, and AI to deliver superior service for our residents and drive operating efficiencies and incremental NOI. Our forecast has us on track to generate $55 million of annual incremental NOI by year end, our original Horizon One target. Our next set of priorities includes the further deployment of AI solutions and our seamless digital self-service experiences, additional enhancements to our technology and data platforms, and further optimization of neighborhood and centralized staffing, all on our way to our Horizon Two target of $80 million of annual incremental NOI in the coming years.

On development, our sector-leading platform is poised to contribute meaningful earnings and value creation in the coming years, with $3.5 billion of development underway, with a projected initial stabilized yield of 6.3% at quarter end. These investments were match-funded with capital raised over the past three years at a weighted average initial cost of 4.9%. This spread is well within our strike zone, targeting yields of 100 to 150 basis points above our cost of capital and underlying market cap rates. These deals were conservatively underwritten on an untrended basis, and in many instances are seeing favorable construction cost buyouts relative to pro forma. These communities will also deliver into an operating environment with meaningfully less new supply.

With this tailwind of activity, we continue to expect a meaningful ramp in development NOI, and are projecting $47 million of development NOI this year, increasing to $120 million in 2027. Turning to slide nine, we had three dispositions close during the first quarter, and we continue to deploy capital into accretive share repurchases. Beyond crystallizing the significant public-private disconnect in asset values, selling 40-year-old high-rise assets improves our go-forward cash flow growth profile, particularly after factoring in CapEx. Including our repurchases last year, we have now repurchased $690 million of our stock and have $914 million of remaining authorization.

In summary, we have a high-quality portfolio, well positioned heading into the peak leasing season; operating and technology initiatives that continue to drive internal growth; and a development platform that we expect to contribute an accelerating stream of earnings over the next several years. With that, I will turn it over to Sean to walk through the operating environment and leasing trends in more detail.

Sean Breslin: Thank you, Ben. Turning to slide 10 to address recent portfolio trends, year-to-date asking rent growth has been pretty consistent with historical norms and our original expectations for this year. Since January 1, the average asking rent for our same-store portfolio has increased in the high-4% range, and importantly, the growth we have experienced this year is well ahead of what we realized in 2025, setting us up well for better rent change as we look forward. Turning to slide 11, our same-store portfolio is well positioned as we look ahead to the peak leasing season. Occupancy has been north of 96% and trending modestly ahead of our budget. Turnover remains well below historical norms.

It even ticked down 50 basis points compared to Q1 of last year, supported by a variety of factors, including a historical low 8% of residents moving out to purchase a new home and declining new supply in our established regions. As a result, the number of homes available to lease has been lower than last year and has contributed to the 260 basis point ramp in rent change we have experienced since the beginning of the year. Looking forward, we expect a continued acceleration in rent change.

Renewal offers for May and June were delivered at an average increase in the 5% to 5.5% range, which is about 100 basis points higher than where we sent offers for February and March. In terms of regional color, the stronger performers continue to be in the New York Metro Area and Northern California, both of which produced revenue growth slightly ahead of our budget through Q1. Within the New York Metro Area, the strongest markets were New York City and Northern New Jersey. In Northern California, San Francisco has been the strongest market followed by San Jose and then the East Bay.

The entire region has benefited from relatively healthy net job growth the last few quarters, so the strengthening we have experienced in San Francisco and San Jose started to spill over into the East Bay this past quarter. The Mid-Atlantic also outperformed our revenue budget for the quarter, albeit modestly, with slightly higher occupancy across the region and greater other rental revenue. With the hangover from job cuts over the past year starting to fade, we believe the meaningful reduction in new supply will help support the stabilization of the Mid-Atlantic region sometime this year. I would not say it has turned the corner just yet, but it is definitely more stable than mid to late last year.

In terms of the weaker markets, Boston, Los Angeles, and Seattle modestly underperformed our revenue expectations during the quarter, and the other regions were collectively on plan. Moving to slide 12 to address our lease-up portfolio, we generated very strong leasing velocity of 32 per month during Q1, well ahead of our historical velocity of 23 a month, and we generated that velocity at an average effective rent that is slightly above our original pro forma. It is clear our customers value the new, differentiated product we are delivering in these various submarkets and selected an average lease term that exceeded 15 months during the quarter.

The occupancies that result from our leasing activity will continue to support the meaningful increase in development NOI projected for this year and into 2027 as Ben noted earlier. Overall, we are off to a good start this year with same-store metrics trending at or slightly ahead of expectations, strong leasing activity at our lease-up communities, and the recycling of capital into buybacks at a compelling value. I will now turn the call back to the operator to begin Q&A. Thank you.

Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Again, to get to as many of your questions as possible, we kindly ask participants to limit their questions to only one, and you can rejoin the queue after with any follow-ups. Our first question comes from the line of James Feldman with Wells Fargo. Please proceed with your question.

James Feldman: Hi. Thanks for taking the question. If you could provide an update on your thoughts on hitting your new, renewal, and blend guidance for the rest of the year. You still have a pretty meaningful ramp, so can you remind us what you are thinking in terms of the math behind it and what kind of tailwind that gives you? And then, as you think about the markets that are doing better and the markets that are doing worse—you also did not mention the expansion markets—how they fit into the story. What gives you comfort on keeping the guidance where it is and your ability to hit those numbers?

Sean Breslin: Hey, Jamie. In terms of the outlook, just to remind everybody, we said we expected rent change to average 2% for the calendar year 2026, which reflected the first half forecast at 1.25% and the second half at 2.5%. Breaking it out between move-ins and renewals, we essentially reflected move-ins being about 0% for the year and renewals averaging around 3.5%, blending to that 2%. As I mentioned in my prepared remarks, asking rent growth is tracking about what we expected—it is actually slightly ahead—so where we came out in the first quarter was slightly better than we anticipated, and we have pretty good momentum going into the second quarter.

Obviously, you can interpolate the math required for Q2 to get to the 1.25%, and we feel very confident that we are in the right strike zone to hit those numbers. In terms of various markets, as I noted, the momentum is certainly in the New York Metro Area. The Bay Area certainly has good momentum, and it is nice to see things start to spill over into the East Bay. We expected that to happen; it typically lags behind San Francisco and San Jose. The expansion regions are performing pretty much collectively as expected at this point. Some are slightly ahead, some are slightly behind, but as a basket, they are pretty much on track.

Operator: Our next question comes from the line of Eric Wolfe with Citibank. Please proceed with your question.

Eric Wolfe: Hey. Good afternoon. It looks like the percentage of available homes in April is down year-over-year, and you mentioned the very low turnover in April as well. Does that allow you to be a bit more aggressive on asking rents and new leases going forward? Maybe share thoughts on what the current data is telling you about pricing power into May and some of the early results on new leases in May?

Sean Breslin: Yeah, Eric, happy to take that. Based on what we saw in the first quarter, as I mentioned and Ben indicated in his prepared remarks, we are slightly ahead of our revenue plan—a little bit on rate and a little bit on occupancy. Looking forward, if you interpolate the math to get to our 1.25% blended for the first half, and you start with April kind of in the high-1% range, almost 2%, I think we are in good shape overall. The low turnover and low availability continue to support slightly better pricing power, and we are certainly seeing that relative to what we experienced in 2025, where around this time of year things started to soften.

Those lines continue to spread further, which bodes well for the rest of the leasing season and the second half of the year.

Operator: Our next question comes from the line of Steve Sakwa with Evercore ISI. Please proceed with your question.

Steve Sakwa: Thanks. I wanted to focus on the dispositions and the buyback. Can you help us frame out how aggressive or how large you would be willing to pursue both sides of that equation, given the dislocation we have seen in apartment valuations of late?

Kevin O'Shea: Sure, Steve. I will offer a few comments. We are in a very strong position to create value through both development and share buyback activity, supported by our balance sheet and continued access to the asset sale and debt markets. At current pricing, our stock implies a cap rate in the low 6% range, which makes repurchases attractive and immediately accretive. At the same time, development remains compelling for us, with projected initial stabilized yields in the mid-6% range or higher, while also driving longer-duration earnings growth and portfolio refreshment—so it is not a binary choice.

Our capital plan for the year contemplated that we would be a net seller of about $100 million—roughly $500 million of dispositions and $400 million of acquisition activity. Year-to-date, we have completed $340 million of asset sales and $200 million of share repurchases, which has effectively replaced a portion of the acquisition activity that we originally had planned. Looking forward, we are already marketing additional communities for sale, so that will give us additional proceeds.

As those sales are completed, if our stock remains attractively priced, we would consider additional repurchases, and to the extent we did so, we would do that instead of acquiring the remaining $200 million of acquisitions in our plan, and we would do so on a leverage-neutral basis. How much we might do beyond that—we are certainly open to the idea of doing more and are prepared to be nimble, while preserving our balance sheet strength and flexibility to deploy capital to the incrementally highest and best use available to us. I would not put a single fixed number on how much more we could flex dispositions up to fund buyback activity.

The ultimate level of activity will depend on the timing and amount of future asset sales, the valuation of our shares at the time, and the remaining capital gains capacity that we have. In a normal year, without engaging any special tax planning efforts, we have about $100 million in disposition capacity where we can keep the proceeds. So that is essentially what we were thinking about in our plan this year. Beyond that, we have a very clean tax position. We could use one-time levers to increase disposition capacity and have those proceeds available for any purpose, including buyback activity.

But as I said, I would not put any fixed number on how much more we could flex beyond what is contemplated in our plan by potentially repurposing proceeds from acquisition activity.

Operator: Our next question comes from the line of Jana Galan with Bank of America. Please proceed with your question.

Jana Galan: Thank you, and congrats on the strong start to the year. A question on the decision to maintain the midpoint of FFO guidance despite the $0.05 outperformance in the first quarter. I think you said close to $0.02 is expenses that may be incurred later in the year, but then you are also benefiting from the share repurchases being maybe a little bit larger and earlier. Can you walk us through that?

Kevin O'Shea: Sure, Jana. We think affirming guidance is the disciplined and appropriate decision today. To be sure, as you point out, we are off to a strong start, with revenue trends on track, a first quarter earnings beat, and completed buyback activity that should add a couple more cents of incremental earnings as the year progresses. At the same time, we are still early in the year, with peak leasing still ahead of us, and some of the Q1 beat was expense timing, not a full-year run-rate change.

So while full-year earnings are currently tracking modestly ahead of our original plan, it is more appropriate to affirm full-year guidance today and revisit it on the second quarter call, when we will have a much better read on the peak leasing season and the balance of the year.

Operator: Our next question comes from the line of John Pawlowski with Green Street. Please proceed with your question.

John Pawlowski: Thanks. Matt, a question for you on the Avalon Sunset Tower sale. Are you able to share the cap rate both on your seller NOI as well as your best guess of the cap rate on the buyer's NOI? You have owned the property since the mid-1990s, so I am just curious what type of property tax reset would be felt on that property.

Matthew Birenbaum: Hey, John. That is a very atypical transaction. You are right—it is a very old asset, late-1960s vintage, and it is subject to San Francisco rent control. So it really is not representative of where the San Francisco asset sales market would be today. There is also quite a bit of overhang there with some regulatory upgrades that are going to be required—seismic and sprinkler retrofits—which was part of what drove us to sell it.

The cap rate we would talk about as a market cap rate, which would be the buyer’s forward T-12, we think was probably in the low-5% range, but that does provide an allowance for a certain amount of CapEx that the buyer is going to have to do related to that retrofit work. So it does not really map cleanly to anything else. I would say there are other assets we own in the city of San Francisco where, given the loss-to-lease, those would probably be, honestly, in the low to mid-4% cap rate today. So if you are thinking about it relative to how to value the portfolio, that is probably more typical.

John Pawlowski: And then, Sean, a question on two markets where their economies have been kind of stuck in the mud—DC and Los Angeles. Do you expect pricing power to either reaccelerate from here in the coming quarters, just muddle along, or get worse before it gets better in both DC Metro and Los Angeles?

Sean Breslin: Yeah, John, good questions. As I see it today, based on what we know, things feel a little bit better in the Mid-Atlantic. Things were rough mid to late last year in the Mid-Atlantic. The feedback from our teams on the ground—in terms of leasing traffic and renewals—shows not as much angst among prospective or existing renters. We have been able to peel back on concessions a little bit. The average asking rent year-over-year is about flat right now—we thought it would be down a little bit. So it feels a little bit better in the Mid-Atlantic. The job worries have faded, and in certain submarkets, probably more defense-sector oriented, there may even be a little bit of optimism.

If I had to pick one of the two right now, I would say we are getting more anecdotal feedback and on-the-ground data that supports the Mid-Atlantic being a little bit better as we look forward. I would not say it is overly positive compared to, say, the Bay Area, but it looks pretty good. In Los Angeles, it has been tough, as you know. There is not necessarily a near-term catalyst other than potential investments related to the World Cup and Olympics bringing in jobs. The state did pass some tax subsidies last year to help promote entertainment content being developed in LA—probably across California, but mainly LA.

That has not really trickled in yet, and it is still early. So we have not yet seen a demand-side catalyst in LA other than very diminished supply—we are looking for it on the demand side.

Operator: Our next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Please proceed with your question.

Austin Wurschmidt: Thanks. Good afternoon. Sean, sticking with you—you referenced the operating momentum you have seen into the second quarter. Was there any specific pickup in demand into April that drove the acceleration in lease-rate growth after what appeared to be a fairly modest improvement from 4Q to 1Q? Anything specific as we get into the early part of spring leasing season that drove the improvement?

Sean Breslin: I would not necessarily point to significant macro factors. It is really regional drivers for the most part. You probably just heard my commentary on the Mid-Atlantic and why that is feeling a little bit better. There has been good momentum in the New York Metro Area for obvious reasons in terms of employment growth, and the softer places are what we would have expected. I mentioned LA. Over the last six months there has been basically no job growth in Boston and very little in Seattle. So it is more of a regional story in terms of where you are seeing momentum versus a macro shift one direction or another at this point.

Operator: Our next question comes from the line of Adam Kramer with Morgan Stanley. Please proceed with your question.

Adam Kramer: Thanks for the time. A philosophical question: in the past we have focused on job growth, and I noticed today you have a wage growth chart in the deck. Do you think one is a better indicator of apartment demand—wage growth or job growth? And second, regarding job growth, I think in the last deck there was an increase embedded into the assumptions using the NABE forecast for 2H. Is that still the assumption that you are working under, or is there a different forecast now?

Benjamin W. Schall: Hey, Adam. In terms of drivers of rental demand, it is both jobs and wages. We very much look to total income growth as the driver of rent growth over time. To your second question, our guidance and our reaffirmed outlook for this year is based on the economic environment we were experiencing in the second half of last year and continuing into the first quarter. Our outlook was not based on any inflection looking forward.

The two main drivers we talked about being different in the second half of the year were: one, the cumulative benefits of lower levels of supply in our established regions, which as we have noted are now down to about 80 basis points; and two, the dynamic of softer comps in the second half of the year, which you can see on one of the presentation slides. We naturally look at job forecasts—those are tough to peg month to month. We have generally looked at NABE, and NABE’s forecasts are down some, but when we put the pieces together, it does not change our outlook for the second half of the year.

Given Sean’s commentary and our start to the first four months, we are feeling pretty good about our progress so far and the setup for peak leasing season and the remainder of the year.

Operator: Our next question comes from the line of Richard Hightower with Barclays. Please proceed with your question.

Richard Hightower: Hey. Good afternoon, guys. A question on development. Given the progress you are seeing year-to-date—I think Matt mentioned that construction costs are maybe a little more attractive here and there versus original underwriting—how quickly can you ramp up the development pipeline, given the moving parts and other potential uses of capital? Maybe increase the development start number—what is the lag on that process internally?

Matthew Birenbaum: Sure, Rich. It is always a combination of bottom-up and top-down. Bottom-up is the deals themselves, and at any given point in time, we have a significant pipeline that we are always managing through entitlements and through final design and permitting. At the end of the first quarter, our development rights pipeline was about $4.2 billion. Through the normal course of time, those deals would bubble up over the next couple of years to being ready. Then there is the top-down—how they are underwriting, our cost of funds, our alternative investment uses, and the capital allocation decision we are going to make. We focus a lot on preserving flexibility, and I think we do a really good job with that.

We would have the ability to dial up development more, whether that is next year or even later this year, if conditions are favorable and it is the right capital allocation decision. In addition to our own pipeline—most of that $4.2 billion is AvalonBay development—we also have our Developer Funding Program where we provide capital to third-party merchant builders. Maybe five of the roughly 25 to 30 deals we have under construction today are DFP deals. Those deals we can ramp up even more quickly because somebody else is doing the early prework, and it is ready and just looking for capital. There is a lot of that business out there right now.

Most of it does not underwrite, which is why you are not seeing start activity pick back up in any meaningful way, and we like that. We are consciously trying to take a larger share of what is a shrinking pie of development activity, and we think we are well positioned to keep doing that.

Benjamin W. Schall: To add to Matt’s commentary, at points in the cycle like we are in now—where others are pulling back but we have a set of competitive advantages and a differentiated cost of capital—it allows us to structure deals more optimally. When Matt talks about having $4.2 billion in a development pipeline, we control that at a very low cost, and in this environment we are able to get control of land with much more flexibility than in past environments.

Kevin O'Shea: And we do have the financial flexibility to lean into those opportunities should they manifest. Access to the debt market is excellent—we priced 10-year debt in the low-5% range. We have access to the transaction market—we just sold $340 million of 40-year-old assets at a 5.4% cap rate. We could sell more representative assets at a lower cap rate, which would give us an opportunity to fund, accretively, development projects that might stabilize in the mid-6% range if there is more that we want to have as quick starts to lean into.

Operator: Our next question comes from the line of Haendel St. Juste with Mizuho Securities. Please proceed with your question.

Haendel St. Juste: I was looking at the turnover chart in your deck, and it is striking how we have gone from almost 60% back in 2009, 41% a year ago, and now sitting in the low 30s. Understanding some of that is affordability dynamics, demographics, and the operating platform, is this level in the low 30s sustainable? Is it a new norm? How should we think about turnover over the next year or two? And remind us what is embedded in the guide for this year. Thanks.

Sean Breslin: Yes, Haendel. On turnover, I would parse out seasonal shifts. The 31% is really a Q1 number and tends to be one of the lower quarters of the year. On an annual basis, the last couple of years we have been mid-40s and then low-40s. Our expectation for this year is we remain in the low-40s. There are a number of different factors that drive turnover. Some relate to substitutes, which includes the availability of for-sale product—that is one macro factor we do not see changing anytime soon. Even if rates come down some, the available inventory is not there, especially across our established regions.

So we think that remains at least neutral, if not a tailwind, for the foreseeable future. Another substitute is other available rental supply. That has ticked in our favor the last couple of years, coming down to historical levels and projected to dip down even further over the next year or two. So the substitute factor is not really there. The rest comes down to normal life events—people getting married, divorced, having children, taking care of parents, multigenerational living—that stuff comes and goes and is typically embedded in the data year in, year out. The primary things that send the tickets up or down are the other options within a market.

It takes a while to build new multifamily, and it takes a long time to entitle and build single-family in these markets. So we have a pretty good runway for a couple of years on that point.

Operator: Our next question comes from the line of Michael Goldsmith with UBS. Please proceed with your question.

Michael Goldsmith: Good afternoon. Thanks for taking my question. I am here with Ami Probandt. On the renewals, there is a nice acceleration. What is driving that? Is that in line with your expectations? And how have renewal negotiations trended recently?

Sean Breslin: Overall, on renewals, we have seen nice acceleration this year, as we indicated in our earnings release, in terms of the movement from the first quarter into April. I also mentioned earlier that both occupancy and lease rates are blending to slightly ahead of our original budget, so we are in pretty good shape overall. Seasonally, asking rents tick up and renewals drift up behind them. The stronger markets we mentioned tend to see a nicer pickup versus the softer ones like Boston, Los Angeles, and Seattle. But we have seen good movement across most regions, with a few exceptions, and it is slightly ahead of our original expectation.

Operator: Our next question comes from the line of Alexander Goldfarb with Piper Sandler. Please proceed with your question.

Alexander Goldfarb: Good afternoon, and thank you. On lease-ups, the pace you had—similar to what we have seen from private developers—if new rents overall are still muted but the pace of leasing is exceeding what would normally be a monthly pace, how should we think about this? You talked about New York and Northern California being strong, yet a lot of your development is in other places. How do we think about the pace of leasing versus still muted rents overall? Is it heavy concessions, or what is the read-through on why lease-ups are so strong yet pricing is still soft?

Sean Breslin: Alex, on the lease-up basket for the quarter, that is nine communities: four in New Jersey, one in Charlotte, two in the Mid-Atlantic, one in South Miami, and one in Austin. In general, in these submarkets, people are really compelled by the product we are offering. In terms of concessions, on average people are choosing longer lease terms—over 15 months—and we are doing roughly six weeks free, so around 9%, which is not terribly different from what we would normally do. It is really about the product.

Matthew Birenbaum: Yes, as Sean mentioned, it is a combination of offering a compelling product, often in submarkets that have not seen much new supply in a long time. A lot of it is geographic mix. Most of the development NOI is coming from the four New Jersey deals plus South Miami—those are the ones where the rents are quite a bit higher. In most of those cases, that is what it is about. There is plenty of supply in South Florida, but not in a location like South Miami where that community is over a brand-new, fresh market on the south/east side of US-1, and competing neighborhoods do not have the same walkability or schools.

Similarly, in New Jersey—Avalon Wayne, where we have both townhomes and flats—is the first new product Wayne has seen in probably 35 years. That is very much part of our development strategy. For example, one of our starts this quarter is Saddle River—another place with seven-figure home values in Bergen County and no new multifamily in two generations. We are getting an outsized share of the demand because of the differentiated and compelling nature of what we are offering.

Operator: Our next question comes from the line of Rad Heffern with RBC Capital Markets. Please proceed with your question.

Rad Heffern: Thanks, everybody. Sean, to follow up on that average lease term number—over 15 months—does that come from you nudging people in that direction to lower expirations in-season, or is there something driving a broader shift away from a normal one-year lease term?

Sean Breslin: It is a little bit of both. The season you are in and the expiration profile you want for the subsequent year do matter. It is nice to see, in some of these markets where we are leasing townhomes as an example—Wayne and South Miami have some townhomes—families are bringing their kids and want to get through the school year and have some time. On average, we were nudging less in Q1 than normal, and people were picking longer lease terms for product like that. So it is a combination, but it is nice to see the customer preference for a slightly longer lease term as well.

Operator: Our next question comes from the line of Rich Anderson with Cantor Fitzgerald. Please proceed with your question.

Rich Anderson: Thanks. Good afternoon, guys. I wanted to dive into new and renewal lease-rate growth. You mentioned renewal offers out at 5% to 5.5% and 3.5% renewal for the full year. Understanding you are looking to gather more information before you revisit guidance, is it fair to say that, as you sit here today, the flat new lease-rate growth embedded in the current guidance could be something greater than that based on the numbers you see today, but you do not know yet what the future holds, so you are holding the line?

Sean Breslin: Yes, that is fair. We think about it in terms of our original guidance, and we are generally tracking on plan. Rates are slightly ahead. Q1 has fewer expirations than Q2 and Q3. We see a nice trajectory in asking rent growth, and things look pretty good, but we will have a much better set of data as we get through the second quarter, with a lot more leasing to do. We will revisit where we are at midyear and give you an update at that point. We have not seen anything yet that says we should be doing anything different other than reaffirm what we already said.

Operator: Our next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question.

John Kim: Thank you. What are you seeing in terms of market concessions that your competitors are offering—any noticeable change as you enter the peak leasing season? And what are you expecting in terms of offering concessions versus what you provided last year?

Sean Breslin: The concession story is very regional. The markets I indicated as stronger or weaker versus expectations are where you will see concession activity. Concessions are up in Boston, Seattle, and Los Angeles year-over-year, and down meaningfully in Northern California and the New York Metro Area. It depends on the market and submarket. In Denver’s urban submarkets, it is very rough—you will see 2.5 to 3 months free—and in the suburbs it might be six weeks. In parts of the Mid-Atlantic, it is down to no concessions, while in others it is a month. It is hard to generalize.

On a net effective basis for rate, things are pretty much tracking in line with what we expected—modestly ahead, but not a lot.

Operator: We have reached the end of the question and answer session. I would like to turn the floor back over to President and CEO Benjamin W. Schall for closing remarks.

Benjamin W. Schall: Thanks for your questions today. Thanks for joining us, and we look forward to visiting with you soon.

Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation.