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DATE

Thursday, Aug. 6, 2026 at 11:00 a.m. ET

CALL PARTICIPANTS

• Investor Relations - Kristen Griffith
• Executive Vice President and Chief Financial Officer - Paul Richards
• Executive Vice President and Chief Investment Officer - Matt McGraner
• Vice President, Asset and Investment Management - Bonner McDermett

TAKEAWAYS

• Core FFO -- $16.9 million or $0.66 per diluted share, representing a decrease from $18 million or $0.71 per diluted share in the second quarter of 2025.
• Full Year Core FFO Guidance -- Lowered to a midpoint of $2.45 per diluted share from the previous $2.57 per share, primarily reflecting an upward shift in the interest rate forward curve.
• Interest Expense Revision -- $14.6 million in fewer projected swap inflows are expected for the remainder of the year, creating a $0.16 per share headwind for full year 2026.
• Total Revenue -- $64.6 million, an increase from $63.1 million in the second quarter of 2025 as the Sedona property came online.
• Same-Store Revenue -- $62.4 million, a decrease of 0.6% year over year, with full year guidance lowered by 90 basis points to a 0.2% growth midpoint.
• Same-Store NOI -- $36.9 million, down 2.9% year over year, with full year guidance revised to a range of negative 2.5% to 0.5%.
• Same-Store Operating Expenses -- Increased 2.4% during the quarter, though full year guidance was improved by 140 basis points to a 2.1% midpoint due to real estate tax and insurance savings.
• Interest Rate Swaps -- $717.5 million in protection at a weighted average fixed rate of 1.1392% is scheduled to roll off in Sept. 2026.
• Full Year Interest Expense Guidance -- $71.2 million, an increase from the $69 million projected in the previous quarter and $67 million in the original model.
• Nashville Market Performance -- Accounted for 85% of the same-store NOI reduction, driven by softer revenue and a 15% increase in same-store expenses.
• Value-Add Program (Interiors) -- 459 upgrades completed in the second quarter, generating an average monthly rent premium of $89 per unit at a 23% return.
• Kitchen and Tech Package Upgrades -- 5,130 kitchen packages and 11,199 technology packages completed since inception, yielding rent increases of $51 and $43 per unit, respectively.
• Leasing Trade-Outs -- New lease trade-outs were negative 5.0% and renewals were 1.9% for a blended trade-out of negative 1.16% in the second quarter.
• July Leasing Trajectory -- Blended trade-outs turned positive at 0.3% in July, improving from a negative 1.7% reported in April.
• Same-Store Occupancy -- 93.6% at the end of the quarter, an increase of 30 basis points year over year.
• Bad Debt -- Improved to 60 basis points of gross potential rent compared to 1.02% in the first quarter of last year.
• Net Asset Value -- Estimated at $46.76 per diluted share at the midpoint, implying a 40% discount based on recent trading prices.
• Waterford DST Loan -- $22.1 million deployed into a 10.00% fixed-rate term loan to finance a multifamily acquisition in North Carolina.
• Unrestricted Cash and Liquidity -- $14.6 million in cash and $118.9 million in undrawn credit facility capacity for total available liquidity of $133.5 million.
• Total Indebtedness -- $1.6 billion as of June 30, 2026, with an adjusted weighted average interest rate of 3.58%.
• Dividend -- $0.53 per share declared for the second quarter, representing a 157.3% increase since the company's inception.
• Sedona Property Performance -- Physical occupancy reached 92.2%, up 430 basis points from the first quarter, with NOI exceeding budget by approximately 5%.
• Concession Trends -- Utilization of free rent offers for new leases fell from 55.6% in the first quarter to 27.7% in the second quarter.
• Lead-to-Lease Conversion -- 24,703 leads converted into 1,226 move-ins, with self-guided tours increasing to 26.2% of total tours.
• Debt Maturity -- No scheduled maturities until 2028, which consist only of a $33 million fixed-rate loan.

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RISKS

• Richards stated, "The curve then moved against us more than we assumed and a handful of markets' revenue production came in softer than we modeled," attributing the guidance revision to volatility in the forward SOFR curve and specific regional weakness.

SUMMARY

Management at **NexPoint Residential Trust, Inc.** (NXRT -0.12%) lowered the full year 2026 Core FFO guidance midpoint to $2.45 per share, citing a significant shift in the interest rate forward curve and revenue softness in specific markets, particularly Nashville. The company reported that interest expense headwinds increased by $14.6 million for the remainder of the year due to lower projected swap inflows. Despite these financial adjustments, the company noted improving operational metrics, including a recovery in leasing trade-outs and substantial expense savings in real estate taxes and insurance. Strategic focus remains on capital recycling, value-add interior upgrades, and utilizing the company's technology platform to drive management efficiencies and reduce controllable expenses.

• Management confirmed that July blended lease trade-outs turned positive for the first time since early 2025.
• CFO Richards noted that 85% of the same-store NOI revision was localized to the Nashville market, where expenses rose near 15%.
• CEO McGraner stated, "The supply cliff remains intact and the backdrop continues to improve, we think leading to a clean inflection approaching in late 2026 and into 2027."
• The company deployed $22.1 million into a new DST bridge-lending initiative, earning a 10.00% fixed interest rate.
• Self-guided tours now account for 26.2% of total tours, allowing the company to capture after-hours demand without additional headcount.
• CIO McGraner indicated that move-outs to buy homes decreased to 8.7% from 10.9% year over year, as the affordability gap between owning and renting reached historically wide levels.
• Management highlighted a 40% discount to their estimated midpoint net asset value of $46.76, prioritizing stock buybacks and capital recycling to close this valuation gap.

INDUSTRY GLOSSARY

• Core FFO: A non-GAAP financial measure that adjusts Funds From Operations for specific items like acquisition costs, casualty losses, and other non-recurring expenses to provide a clearer view of recurring performance.
• Same-Store: Properties that were owned and operated for the entirety of both periods being compared, allowing for an organic growth analysis excluding acquisitions and dispositions.
• NOI (Net Operating Income): Total property revenue minus property operating expenses, excluding interest, taxes, and depreciation.
• SOFR (Secured Overnight Financing Rate): A broad measure of the cost of borrowing cash overnight collateralized by Treasury securities, used as a benchmark for floating-rate debt.
• DST (Delaware Statutory Trust): A legal entity that allows investors to hold undivided fractional interests in real estate, often used for tax-deferred exchanges.
• NAV (Net Asset Value): The estimated total value of a company's assets minus its liabilities, often expressed on a per-share basis.
• Trade-out: The percentage change in rent between a new lease or renewal and the previous lease for the same unit.
• Bad Debt: Uncollectible rent or other fees that are written off as an expense, often due to resident non-payment.
• Yield on Cost: The annual NOI of a property divided by the total investment cost, including purchase price and renovation expenses.

Full Conference Call Transcript

Operator: Hello, everyone. Thank you for joining us and welcome to the NexPoint Residential Trust Q2 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Kristen Griffith, Investor Relations. Kristen, please go ahead.

Kristen Thomas: Thank you. Good day, everyone, and welcome to NexPoint Residential Trust's conference call to review the company's results for the second quarter ended June 30, 2026. On the call today are Paul Richards, Executive Vice President and Chief Financial Officer; Matt McGraner, Executive Vice President and Chief Investment Officer; and Bonner McDermett, Vice President, Asset and Investment Management. As a reminder, this call is being webcast through the company's website at nxrt.nexpoint.com. Before we begin, I would like to remind everyone that this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions and beliefs.

Listeners should not place undue reliance on any forward-looking statements and are encouraged to review the company's most recent annual report on Form 10-K and the company's other filings with the SEC for a more complete discussion of risks and other factors that could affect any forward-looking statements. The statements made during this conference call speak only as of today's date, and except as required by law, NXRT does not undertake any obligation to publicly update or revise any forward-looking statements. This conference call also includes an analysis of non-GAAP financial measures. For a more complete discussion of these non-GAAP financial measures, see the company's earnings release that was filed earlier today.

I would now like to turn the call over to Paul Richards. Please go ahead, Paul.

Paul Richards: Thank you, Kristen, and welcome, everyone. We appreciate you joining us this morning. I'll take you through our second quarter results and the changes we're making for our full year outlook, and then Matt will cover the operating environment, our leasing trajectory, the technology platform and how the portfolio is positioned. In April, we affirmed our full year guidance. This morning, we are lowering it to a core FFO midpoint of $2.45 per share, down $0.12 from $2.57. I'll explain what drove the change and what has and has not changed. In short, most of the reduction is from higher interest rate expense, reflecting an upward shift in the forward curve since our last update.

A smaller portion reflects the slower same-store revenue rebound, which affects the full year. Importantly, our operating trajectory continues to improve month by month. Given recent macro shifts and clear visibility into Q3 operating performance, we believe this is the right time to update our forecast. Q2 2026 results. Second quarter core FFO was $16.9 million or $0.66 per diluted share, $0.01 ahead of consensus. That compared to $18 million or $0.71 a year ago. FFO was $15.2 million or $0.60 per share and AFFO was $19.7 million or $0.77 per share. Total NOI was $37.9 million across our 36 properties, essentially flat with the last year.

Net loss for the quarter was $8.6 million or $0.34 per diluted share, which includes $23.9 million of depreciation and amortization. That compares to a net loss of $7 million or $0.28 per share in the second quarter of 2025. Total revenue was $64.6 million, up from $63.1 million a year ago as Sedona came online and into the numbers. On a same-store basis, 35 properties, which is about 98% of our units, total revenue was $62.4 million, down 0.6% and same-store NOI was $36.9 million, down 2.9%. Same-store occupancy closed the quarter at 93.6%, up 30 basis points from a year ago, and average effective rent was $1,487, down 80 basis points.

One point on the first half of the year before I get into guidance. It came in about where we expected on that. The company earned $0.68 in the first quarter and $0.66 in the second, which equates to $1.34 through June, each quarter a little ahead of the Street. The revision today is almost entirely about the back half, and it's driven mostly by interest expense as our swap protection steps down, which I'll run through now. Interest expense and hedging. We've mentioned since our initial guidance that 2026 carries a real interest rate -- interest expense headwind as certain swap positions roll off and the step down lands in the second half.

Q2 interest expense was $15.8 million versus $15.2 million a year ago. What changed since April is the rate curve. The forward SOFR has moved higher, roughly 30 basis points in the third quarter and 72 basis points in the fourth relative to our assumptions. In practical terms, that's about $14.6 million fewer projected swap inflows over the rest of the year, or roughly $0.16 per share of additional interest expense. It's the single largest piece of today's revision. Full year 2026 interest expense is now projected at approximately $71.2 million, up from roughly $69 million discussed last quarter and $67 million in the original model. One timing note.

The Federal Reserve met last week and held its benchmark rate at 3.5% to 3.75%, with a few members dissenting in favor of a hike. Interest rate swaps currently fix the rate on $817.5 million, or approximately 51.5% of our floating rate mortgage debt, and we have full visibility into the maturity schedule. The bulk of that protection, approximately $717.5 million at a weighted average fixed rate near 1.1392% rolls off in September. We have the ability to layer in more protection, and we'll do it when the risk-adjusted economics make sense. Second, on the affirmation. In April, we mentioned the offsets we identified neutralized this headwind and we affirmed.

The curve then moved against us more than we assumed and a handful of markets' revenue production came in softer than we modeled. Rather than lean on offsets to hold that number, we're resetting to a level we're confident we can deliver. I'll walk through the bridge in a minute. Moving on to expense detail. The expense side is where we're picking up real ground. We're lowering our full year same-store expense growth outlook by 140 basis points to about 2.1% at the midpoint from 3.5% originally. It's broad-based.

Every market in the portfolio is now guiding to lower expense growth than we assumed at the start of the year, led by real estate taxes, insurance and continued payroll discipline from the centralized operating model Matt will describe. Our April insurance renewal, which came in more than 30% year-over-year is now fully in the run rate. Let me put some numbers on the quarter itself. Same-store operating expenses were up 2.4% year-over-year, and the mix is favorable where it counts most. Real estate taxes were down 3.5%, insurance was down 11.7% on the April renewal and payroll was down 1%, with property management fees and office operations each down about 1%. The pressure sat in 2 lines.

Repairs and maintenance up 13.9% and marketing up 38.2% off a small base, where we've leaned into lead generation at properties below target occupancy. Utilities were up 6.1%. The repair and maintenance increase is concentrated rather than broad, and we treat that as episodic rather than a change in our underlying cost base. Net controllables held roughly in line, while our 2 largest noncontrollables, real estate taxes and insurance came down, which is what underpins the improved full year expense outlook. One important note regarding the elevated R&M cost. We aggregate resident amenity services, including bulk fiber, into the total here.

The resident amenity services subcategory drives 83% of total R&M growth and is concentrated in the 4 markets undergoing a fiber build-out: Atlanta, Nashville, Phoenix, and South Florida. We see a corresponding offset to these expense increases within the resident amenity fee subcategory of other income, which is a significant driver of the 29.2% other income growth for the quarter. A value-add update. During the second quarter, we completed 459 full and partial upgrades and leased 258 upgraded units at an average monthly rent premium of $89 and a 23% return.

Since inception, for the properties currently in the portfolio, we've completed 10,474 full and partial interior upgrades, over 5,100 kitchen and laundry packages and roughly 11,200 tech packages, generating average monthly rent increases of $152, $50 and $43 per unit at returns of 20.7%, 63.4%, and 37.2%, respectively. This is still one of the most reliable, capital-efficient sources of growth we have. Moving on to the dividend. For the second quarter, we declared a dividend of $0.53 per share, payable September 30. Since inception, we've raised the dividend 157.3%. As of June 30, total indebtedness was approximately $1.6 billion at an adjusted weighted average interest rate of approximately 3.58%.

We held approximately $14.6 million of unrestricted cash on $118.9 million of undrawn capacity on the credit facility for a total available liquidity of approximately $133.5 million. We have no scheduled debt maturities until 2028, which consists of only a small $33 million fixed-rate loan. Net leverage is about 57% of our internal NAV estimate and deleveraging over the medium term, funded mainly through disposition proceeds, remains a priority. Our estimated net asset value at the quarter ended is $46.76 per diluted share at the midpoint, using a cap rate range of 5.25% to 5.75% across the portfolio. The range runs $40.35 at the high end and $53.16 at the low end.

At a recent price of $25.91, the stock trades at more of a 40% discount to that midpoint. Even at the most conservative end of our range, it's a meaningful discount to estimated liquidation value. We think the gap between where the stock trades and what the real estate is worth is significant, and our capital recycling and buyback tools give us a way to close that. 2026 guidance revised. I'll now walk through the revised guidance by component. We're lowering full year 2026 core FFO guidance to a range of $2.35 to $2.54 per diluted share at a midpoint of $2.45, down from a prior midpoint of $2.57.

We're lowering same-store NOI guidance to a range of negative 2.5% to 0.5% at a midpoint of negative 1% from a prior midpoint of negative 0.5%. The components of the bridge from $2.57 to $2.45 in 5 pieces are as follows: interest expense down $0.16. Again, the forward curve move described before, about $14.6 million of fewer projected swap inflows, the largest single driver. Same-store revenue down $0.09. We're taking full year same-store revenue growth down about 90 basis points to roughly 0.2% at the midpoint. It's concentrated. Matt has the market detail, with Nashville accounting for most of the same-store NOI reduction. Same-store expense up $0.06. The 140 basis point improvement I recently walked through for about 2.1%.

Fourth component is interest income up $0.05, realized income from bridge lending investments tied to Waterford DST transaction, which Matt will put in context. And lastly, corporate G&A and other up $0.02, favorable G&A management. That nets a $0.12 reduction to $2.45. A brief word on where the same-store cut sits because it's concentrated rather than broad. Nashville is about 85% of the same-store NOI reduction. Softer revenue combined with the steepest same-store expense growth in the portfolio, near 15%. So there's little expense cushion there. Four markets are guiding to better same-store NOI than we assumed at the start of the year: South Florida, Atlanta, Phoenix, and Raleigh-Durham.

And Dallas is a good example of the expense discipline at work. Roughly $590,000 revenue reduction was almost entirely offset by about $505,000 of expense savings, so very little drop to NOI. This is a concentrated revision, not a portfolio-wide one. On where this puts us versus Street, consensus is about $2.51 with a few more recent estimates closer to $2.40 a share. Our new midpoint is in general agreement with external estimates. The first half is in the books ahead of plan. The revision is forward-looking, largely rate-drive reset to the back half. Our acquisition with disposition assumptions are unchanged at $0 to $200 million each, $100 million at the midpoint, reflecting continued capital recycling within guidance.

And with that, let me turn it over to Matt.

Matthew McGraner: All right. Thank you, Paul. I'll start with the backdrop because the fundamental setup for our portfolio keeps improving. Starting with supply. National deliveries peaked near 700,000 units in 2024, starts are off roughly 70% from the peak, and deliveries this year are tracking to the lowest level in more than a decade. And in our Sunbelt submarkets, the drop-off is steeper still. Two-thirds of our submarkets have less than 2% active annual inventory growth, and more than half have fewer than 500 units under development today. The first half bore that out. Our submarkets absorbed almost 6,000 units in the second quarter against 3,146 units of new supply, net absorption of a positive 2,852 units.

And that follows a positive 1,307 in the first quarter. The remaining 2026 supply is real and concentrated. The most meaningful pressure for us is in North Charlotte, South Las Vegas, and the southern portion of Orange County and Orlando. Still, the supply cliff remains intact and the backdrop continues to improve, we think leading to a clean inflection approaching in late 2026 and into 2027. On demand, the structural case hasn't changed and the affordability channel has only gotten more extreme. John Burns has the premium to own versus rent at 44% against a 17% long-run average.

Zelman has the entry-level payment gap at its widest since 1984, and move-outs to buy a home were 8.7% this quarter, down from 10.9% a year ago. Here's the part I'd underline. On 135 million households, every 50 basis point decline in homeownership rate creates 675,000 renter households, 2 years of normal absorption from a channel that requires no population growth at all. And on the geography, Zelman's own work has national household growth running at near 70 basis points annually through the end of the decade. Our markets run at roughly twice that. And per Witten Advisors, job growth, population and domestic migration continue to favor the Sunbelt for the balance of the decade.

Slower national household formation is a real headwind to the national number. It is not the same input as the one that drives our markets. On to leasing. The leasing cadence is the real story this quarter. Across 1,360 new leases, our new lease trade-out was negative 5%, and across 1,684 renewals, we were positive 1.9%. For a blended trade-out of negative 1.16%, roughly 75 basis points better than the first quarter. The month-to-month tells a more encouraging story. Blended trade-outs went from negative 1.7% in April to negative 1.2% in May to negative 50 basis points in June. And it turned positive at about 30 basis points in July.

New lease trade-outs, the hardest line, improved from negative 5.4% in April to negative 2.3% in July, roughly 310 basis points, while renewals held above 2%. That is the first positive blended print since early 2025 for us. It is just 1 month, but encouraging nonetheless. Raleigh was our only market with positive new lease trade-outs in the quarter, and the laggards on the new lease line, Orlando, Charlotte, Dallas and Nashville, are the same markets carrying the most remaining supply. On the occupancy and revenue front, the same-store portfolio closed at 93.6% physical occupancy, up 30 basis points year-over-year and flat sequentially with leased at roughly 95%. Retention was 55.9% and turnover improved to 44.1% from 46.5%.

Same-store total revenue was $62.4 million, down 60 basis points year-over-year. The number I'd point you to is the trajectory in that comparison. We went from a negative 2.2% year-over-year in the first quarter to just negative 60 basis points in the second, a 160 basis point improvement in the year-over-year comp in a single quarter. Effective rent was down 80 basis points, a much shallower decline than the new lease line alone would suggest, and that is occupancy and retention discipline doing its job.

On bad debt, 60 basis points of gross potential rent against 1.02% in the first quarter of last year, a roughly 40% improvement and a fraction of where we ran before centralization rebuilt our screening process. Rent-to-income ratios remain 20% across the portfolio, a very healthy margin. On to concessions. Two different measures to discuss here. Utilization, the share of new leases taking a month free, we cut that roughly in half from 55.6% in the first quarter to 27.7% in the second quarter. And average weeks free fell from 2.2 weeks to 1.1 week. South Florida drove most of that going from 87.6% utilization to just 4.8% utilization in the second quarter.

On cost, concession dollars as a percentage of gross potential rent, we ran at about 1% for the quarter, still slightly above our forecast, and use was heaviest in Tampa, Orlando, Nashville, and Dallas. About 1/3 of the portfolio has no active concession offering today, and roughly half are offering selective pricing only on aged vacant and specific floor plans. We project utilization falls another $0.50 by year-end. On to our technology platform. A lot of what you're seeing in the quarter, especially on the expense side, comes out of the technology work we've laid out during REITweek in June. We run a 2-layer model. Property operations go through BH Management and their Funnel Leasing platform.

At the adviser level, we're building NexPoint Intelligence. That's deliberate. Self-managed peers have to spend across every layer at once, while our model captures a disproportionate share of that benefit at a fraction of the capital. In the quarter, the platform converted 24,703 leads into 1,321 applications and 1,226 move-ins, a 5.3% lead-to-application rate and a 34.6% tour-to-application rate, both improved from the first quarter. Self-guided touring keeps scaling. 26.2% of tours in the quarter were self-guided, and that's up from 18.7% in the first quarter, and that's after-hours demand we otherwise would lose. Quick word on Sedona Mountain, the 321-unit community in North Las Vegas that we bought in December of last year for $73.25 million.

The occupancy at the property closed at 92.2% for the quarter, up 430 basis points from the first quarter, and NOI is beating budget by almost 5% with expenses 12.2% under forecast. Roof, exterior paint, smart rent and amenity work are complete, and we're still targeting and on track to generate a 7.2% NOI CAGR through 2029, taking a high-5 cap rate purchase to a 7.5% to an 8% stabilized yield. On the transaction market and capital allocation, institutional volume remains well below last year and cap rates have remained sticky and the bid-ask remains wide with most participants pointing to 2027 for a clear recovery and more transaction volume.

That said, we watch well-located Sunbelt assets trade materially tighter than our own implied cap rate, which reinforces the NAV gap Paul described. Our capital allocation priorities are straightforward. Our job is to close the value gap through operating execution into 2027, recycling capital and buying back stock. One item on earnings composition. Our revised guidance includes about $0.05 of realized interest income from our bridge lending investment tied to a Waterford DST transaction sourced through our adviser's platform. It's a discrete realized deployment of balance sheet capacity earning an accretive market return. We're carrying it as realized income rather than embedding a forward estimate, and we'll report it as it happens. In closing, the first half beat our plan.

Same-store revenue improved 160 basis points in its year-over-year comp between the first and second quarters. Blended lease trade-outs went from a negative 1.7% in April to a positive 30 basis points in July. Occupancy is stable, retention is up and expenses are coming in better across every market and supply is rolling over fastest in the markets where we've been most pressured. That's what makes the setup compelling. 2026, we absorb the rate repricing and the last of the supply. 2027, we get to the supply cliff and the leasing earn-in. The earn-in is not a forecast. It's math on leases we've already signed.

We're moving into the best supply-demand backdrop in 5 years, and the renter by necessity cohort is only expanding as affordability stays extreme. The fundamental recovery is more certain today than it has been in recent memory. I want to thank everyone here at NexPoint and BH for their hard work. And with that, the operator, let's open it up for questions.

Peter Abramowitz: I just want to go back to Matt. I think you had some comments about the improvements in the operating environment. And I think you used the term, sort of, expecting a clean inflection in the second half of the year and into 2027. I guess just wondering how to interpret that. What do you consider sort of a clean inflection as you described it? Is it positive new lease rates or otherwise? Just help us frame how you're thinking about that and how it kind of shapes how you're thinking about the operating environment into next year?

Matthew McGraner: Yes, I was referring to positive new lease rates. Our revisions to the guidance are concentrated really in 4 assets, 4 or 5 assets, that make up about $2.2 million of gross potential rent revisions. And really, those markets were just not as strong as we originally thought. And so as we look forward in the new guidance and what it implies for new leases, we're slightly negative in the third quarter and then modeling slightly positive in the fourth quarter. And that's the quarter that I think we feel the best about of the year and that kind of clean inflection is the positive new lease pricing that's implied in that guidance.

Peter Abramowitz: Okay. That makes sense. And then I think your average occupancy was 93.6% for the entire quarter. I know in your May REIT update, I think you were running around 94% at the end of April and the end of May. So just wondering, I know there can be differences between average occupancy and month end and quarter end, but did you have a little bit of occupancy kind of give back as pricing was starting to ramp or continuing to ramp throughout June. And I guess what was the update on occupancy in July as well?

Matthew McGraner: Yes, Bonner, can you get July occupancy for me. But the -- in terms of the strategy we had, we were deliberate in trying to hold rates on the new lease front. And so we lost a little bit of, call it 30, 40 basis points, good memory back to NAREIT. But we -- the strategy was to try to hold pricing as much as we could, which bore out sequentially month by month, the new lease pricing did improve as we just reported. And then Bonner, do you July...

Bonner McDermett: Yes. And just a little bit of clarification. So Peter, the occupancy numbers we report in the supplement are as of point in time. So that 93.6% is a 6/30 physical end date. So the average financial occupancy for the quarter was about 93.8%. You're right. When we were at NAREIT early June, we were 94% flat physical. I think looking at where we thought we had some better pricing, we were a little bit more aggressive, both on new lease pricing and renewals.

I think that a certain number of these assets that Matt's talking to, we thought we had a little bit more pricing power than was borne out and that ultimately eroded, call it, 40 bps of occupancy between the first week in June toward the end of the month. Rolling into July, I think in the operational update we provided in the supplement, you'll see the leasing funnel is working. We're generating pretty high lead volume. We think it's a very healthy seasonal time. And the inflection to a positive blend on rates, we're prioritizing pricing a bit. We're trying to push pricing, and we're okay.

I mean, certainly, we would love to be a little bit healthier on occupancy, but running kind of mid-93s and getting to that inflection point in new lease rates is more of a focus today.

Matthew McGraner: Yes. Thank you for everyone's participation today and look forward to speaking after Q3. Have a good day.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.