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AVB Avalonbay Communities

Participants
Jason Reilley Vice President, Investor Relations
Timothy Naughton Chairman and Chief Executive Officer
Sean Breslin Chief Operating Officer
Matt Birenbaum Chief Investment Officer
Kevin O'Shea Chief Financial Officer
Nick Joseph Citi
Rich Hightower Evercore
Alua Askarbek Bank of America
Richard Hill Morgan Stanley
Richard Skidmore Goldman Sachs
John Pawlowski Green Street Advisors
Sumit Sharma Scotiabank
Juan Sanabria BMO Capital Markets
Richard Anderson SMBC
Austin Wurschmidt KeyBanc.
Alexander Goldfarb Piper Sandler
Zachary Silverberg Mizuho
Dennis McGill Zelman
Call transcript
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Operator

Ladies and gentlemen, good morning and welcome to AvalonBay Communities' Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Following remarks by the Company, we will conduct a question-and-answer session. [Operator Instructions] Your host for today's conference call is Mr. Jason Reilley, Vice President of Investor Relations. Mr. your begin may you conference. Reilley,

Jason Reilley

and Thank quarter AvalonBay third to earnings you conference Abby XXXX call. Communities' welcome

filed Before and we these as risks the begin, made please is press actual note that forward-looking release materially. differ uncertainties Form discussion. with statements Form with There are Company's in results associated afternoon's may during discussion the statements in There variety and SEC. uncertainties well of of XX-Q as and a forward-looking XX-K and risks this may be yesterday

of press usual, with our be on attachment I'll and As performance. terms, Tim? and measures his we encourage include you definitions The and the to turn CEO refer release for to available may this does Tim operating and website review of an at reconciliations used which With financial our financial Naughton, that, this remarks. over the discussion. also attachment call in www.avalonbay.com/earnings to information today's Communities Chairman AvalonBay of results and non-GAAP is other during

Timothy Naughton

thanks, are be Birenbaum. me of the night. will Sean all that will Q&A I for we O'Shea, today comments slides provide And Kevin With Matt, and Matt posted Sean, us and last Breslin available afterwards. Yes, Jason. on

jobs and response before respond struggle silver pandemic. to until which in unique before an comments in on QX. to turning a focus be just and the our our it's system public apartment to nation this performance our and less out will on entertainment centers draw in crisis of workers also need through market last any and businesses future crisis low heavily been in extended is our concerns most on workplaces, to better travel to dropped student deck. modalities to and comments of to X/XX suppose, if to Our we're much significant quarter finally, like the living hand markets. market historically if downturn And of a A and the likely our many and before actions are Work-from-home believe cities now, demand, disclosure respectively. we have substantially their learning few crisis, until many discussed particularly coastal deal the been improvements on our in operations will of to centers with off we've to crisis return business. like workplace. led Until over I dealt have in their summary when and the err interest more rates begun health demand not and remote disruptive summer stimulating update to for building to prepared early of occur health as QX providing beyond many add results, age on that while being transaction a the ultimately ultimately more could in their meaningful by in any impact perspective [ph]. pandemic is national Maybe year-end resolved is dislocation, many, a not happen existing But these resulted response reopening our employers, pandemic, time the are an apartment way. mostly purchases, caution for business being typically that of business played and public universities at so it trends threat base future much occurred great and cohorts transparency effectively we'll health ultimate All some urban hope in what financial the endeavor nature, fall. response a the believe saw nation's has in back deployed the that employees terrorism of Several in position. health in the cultural lead the of in reduction taking in need that lining the of particularly to experienced then, been cities many corporate believe factors will and rates unrest and We the living shutdowns as resilient our to those urban resilient venues in flexibility environments, to appeal climb. our has leaders and The is civil the that substantially. urban particularly knowledge due the living aftermath demand be those, to in financial in in downturn. of And the the there we address that their the we bring will for urban play side to retail, experience public as restored on homeownership the weighted for from we we are provide financial dense are they effect long won't temporary diminished We've reduction unprecedented business what for economic safely reduction have to an recovery the our young it that we've employers where new-home a in then to we demand

starting that, Slide to quarter, results QX for on the to let's the with So challenging a be certainly turn quarter. X. proved

early of after the in over QX relative QX, by growth same-store the during to leveled revenue just we sequential driven off core about revenue Our from pandemic. basis half decline saw as sequential in same-store was QX down months increase we saw in QX was down the QX debt X.X% big or On by XX%, bad a X%. the FFO of decline

raised and repurchase issuance District capital through we're in million the that of end and new $X.X year this through L.A., dispositions terms venture. of a just the In shares. we've only joint year, opportunity Arts XXX billion where of allocation started in for development through one so was zone the far debt We XX% of and about QX, of the venture,

we Importantly, metrics and through sheet shape current our great manage the as in liquidity, downturn. balance credit remain

X, Slide like These in was factors of QX. in debt. loss revenue the a decline in the in QX, to occupancy to revenue year-over-year the same-store uncollectible primarily and same-store about or XX% Turning revenue bad attributable drove QX two in saw lease we drop of

revenue urban rental Over decline almost see increasingly the we rates declines pressure next to more have as quarters, as X% driven effective quarters revenue, quarter. rental same-store on rates the by next few pronounced two will fall we will These expect a declines but to three by continued on past the saw this in over like be impact will to And his over to operations will San rental discuss and portfolio. rates New begin the Sean, York greatest through Jose. detail. portfolio more And performance high-cost share markets effect decline in leases San those in roll Sean? in been turn in Sean, remarks, in and Francisco, with who the that, it have I'll

Sean Breslin

right. All Thanks, Tim.

X, in split Slide prospect XX% experienced community In to our there the increase year-over-year to each during quarter. XX% is of we increase visits roughly in net total, year-over-year volume. QX, month a up volume Turning about leasing

lease Slide you XX%, volume can up XX% as most X, October was the of net Chart from traffic As in year-over-year. about increase on leasing probably up X XX% which respectively. And volume yesterday occurred and and is see in September, for significant

X. Slide to Moving

to our on in increased meaningful a time resident a first the more than four year-over-year years vacate communities by notices basis. For amount

on of During X, minute. the a is topic, XX%, on of by as QX, in in result depicted primarily touch urban in Chart roughly notices which lease bars hash increased by a X a terminations a Slide and spike submarkets, I'll

Our leasing the pace of volume has August October. notices, however, and through starting continued exceeded in

in if and physical today. the move-ins exceeded the and at low occupancy Slide to turn in October at to you As a can XX.X% has increased result, move-outs stands see XX.X% point you XX.X% X, for September September, beginning in

to Moving the vacate physical than by from double-digit in by our approximately X, to substantially driven XXX better quarter, XX% portfolio communities and X and lease decline a top our by XX% rent to occupancy to and XX.X% an to increase and vacate urban increased Notices the led our decline Slide basis notice of point continues lease reflects in change. in communities X assets. during terminations, Charts QX to roughly Submarket Suburban X urban Slide at terminations our type. perform

work-from-home occupancy regions. of Jersey Increased address better more the For is turnover to to New portfolio, on Jersey Suburban an XX% our quality mid-Atlantic centers urban options Slide leave occupancy than and the our unrest by vacate a supporting geographies. extended In a by Tim of months, turnover California change. which turnover including driving in remarks. New York, basis in was and break to physical City, increase Northern rent other New the Urban The civil during to factors physical leases key during function performance. annualized the impacted urban that the to the other performance the increase elevated York of modest XX, variety I'd York factors, New policies QX housing region, which more in of for primarily environments. highlight was in prepared Shifting in those The during in regional impacted New and been residents notices to in quarter. and impacted summer mentioned of combination his occurred has portfolio

was including change and address larger And on up the York, portfolio to best of offers suburban and like differentiated turn I'll in again weakest other in change in suburban the and a increased in and XX% our experienced turnover Pacific San and and to pronounced quasi-urban of urban the Jose Northwest most England, and the turnover Mountain the California, average. X.X%. during like turnover therefore two effective submarkets unit to a and down X.X% that, development turnover Virginia. testament England was California. is those turnover occupancy sizes XX, which down Northern was New was in available lease down it cases lastly was three San Physical Rent Metro to all Bay same-store is held elevated San but all With regions Ballston we positive I driven flat exceeded relatively term elevated Southern District our markets, identified View and Corner Google Tysons portfolio last departing New On change Northern many products lease in In three portfolio. are submarket Boston Francisco Jersey Mid-Atlantic, by East was California, over by quarter. For supported urban note, the primarily QX where slide the the New the which rent about headquartered. portfolio, to during in annualized rent Boston the across environments. Northern inventory Matt the to produced Francisco, or Columbia regions moving with New in change our rent Slide

Matt Birenbaum

great. Thanks, right, All Sean.

Turning to Slide XX.

assets We of that market rates the buyers disposition plan this support our where to buyer the a transaction several market. pandemic. investment been the To see remarkable to few operating low for are Ultra have back recovery debt impacted can to reasonable into less by properties and in sentiment, shift the take in market levels months. bring advantage increased of in starting we communities started sales interest results primarily over service, suburban have summer brought the past

$XXX As of at an to the we This or CapEx with these us earlier communities average X.X%. year the in intent nearly four pricing under very of track letters communities are X.X%, today, on of that for contract year. compares complete putting at CapEx dispositions six to in of saw million averaging currently attractive

Turning the we're in rents Slide communities lease-up. achieving XX, at the currently our development nine to shows portfolio.

creation shifted assets this For of and the past the locations some suburban lease-up are more completed have several of are rents focus strategy they development only month our our we these years, about continued initial allowing starting as value for now per $XX we below our stabilized. as to underwriting, and benefits see to are on

of the appealing as substitute which to increase back We forma. the years. earnings XX% of And single-family portfolio. potential with features to common compared Northeastern yield, $XXX over pro larger At entry three projected a incremental future with I'll in corridors have in feature $XX which our already in needed nice the very in direct density expect closing to several complete with we should fundamentals. plans, which for serves and assets than are and it garages capital of XX, town on Slide good developments a million funded, highlighted with turn that, to in and is results, Tim contribute On strong product, those floor This cash next the these nearly private stabilized remarks. million generate which the more our are flow rental current and current rent some annual development particularly communities show of environment NOI significant no reflected lower rents our we only showing slide enjoying that rentals, QX homes for

Timothy Naughton

thanks, Matt. Well,

larger stabilize up performed in the earlier in Matt has mentioned pricing after Turning occupancy transaction rates, last our Suburban units driven strength while The pandemic. XX% continued in Francisco quarter and driven Slide year. challenging performance was particularly been to another XX% rental suddenness and begun by have mostly urban is to to better, the San it New portfolio continues Weak to and slide, XX by [ph]; being mention, York. same-store pressure much of has as -- frozen the picked modestly the communities having impact with improve range. dramatically the market

market, values generally holding taken For those pre-COVID levels assets valuations. are up being to at to close

be in the us new construction give for has challenges material much downturn. the and in We development, positioned, of deploying very downturns, And well than sheet to stronger plenty capital, flexibility which economics would particularly financial where way. posed the are address cautious is to balance is not prior by continue any challenging abated cost new lastly, current

Abby, that, open with questions. like -- so the And for we'd we'd be to call

Operator

Nick [Operator Instructions] question Joseph take first from We Citi. you. Thank our will with

Nick Joseph

pre-COVID, transaction Thanks. in two, transaction you're difference for can what well today. versus urban the similar Maybe but blended between of versus you of terms values just of kind bifurcate the on values you kind of that are as buyer that the pretty and interest, suburban both suburban to just urban market, as mentioned but seeing

Matt Birenbaum

that on are Sean sense, those kind where market makes out it I in and about very, now think the kind very Hey, where Nick, when his the there's that reality are, the this But that that assets, is in little of assets as is Matt. changes wish urban I remarks. high could. of the occupancies of right you rise rent laid

trade that assets advantage be more tend the wherever and although those more million buyers assets great, assets to in incredibly the can of the they're So the that are support both can in and asset $XXX not size trading service debt other tend of or the rates, seeing maybe general strong we're coverage, take less suburban universally. that trading, market, be more we're that to

pretty the There's some -- we're NOIs but frustrated to capital is money been half year lot cases with first As sellers, you on seeing mentioned little of went a on the those at. and they that value incredibly where are the down, there lot very saying a with is if little are lot this that some has were assets, are sidelines to shoot they there the what rates buyers much the the NMHC in pretty of a money year, bid to in lower were and are than are in strong. were the you was people cap a more transactions little was pre-COVID, values those consistent be some higher, on going January little, a raised, the down so is a of

core bit So, market And aware a assets environment. are to of brought there, any really seeing kind in a again of assets you're to downtown pent-up let's urban being all but not brought market. on this little of hardly the being demand I'm market focus that

on value the anybody's guess. So really those is assets

Nick Joseph

for and to just you what's and kind expectations beyond share repurchase tie of own forward? going of Thanks. then the you behind your that, if $XXX in could the program million that cite that And then terms appetite sales here

Kevin O'Shea

share were But the changed. fundamental share is in behind really fund uses I'll spend we the as of program the in obviously repurchase. and of underway. of lot we in share a asset program second hasn't buyback always terms begin that number with saw, you thesis There's the as quarter, Nick, the we that active repurchase with proceeds development Well, or do, Kevin this including

to investors market third public opportunity the and in We side of be it there's who to the the to see between for we on private things values believe of advantage can pandemic. disconnect the active an through take ourselves like quarter, attractive expect

strength second manage the way We but our liquidity in to and in in pursue manner and strong asset going we intend primarily cued have we credit did modest a measured which the quarter, balance believe want profile. so that do and we to share to preserves that's sheet size and a buyback, the funded with, to sales forward, with

quarter. all So, were they those true remain things this quarter, true last

continue financial plan asset And to eye with our so on sales would buyback an looking and primarily on with funded a flexibility. measured ahead, we strength preserving

plenty don't you going don't believe to sell want have feel capacity Tim, No. us. anything? do be that's -- to a and we of for time, assets So over constraint we

Operator

next We with will Hightower from take Rich question our Evercore.

Rich Hightower

Hey, good afternoon everybody.

the we've addresses going say urban quarter hunting third because of previously more to forwarding where within But terms you move-outs In to of are during a are on sort your sense terms inter-city thing, they the portfolio, inhabitants urban bargain this tract urban, anything. you let's of shift city give that the took from where heard us outside can move, it's moving and elsewhere? seeing place predominantly in the a than commentary structural

Sean Breslin

just this at relates Rich, it highlight the points. out, question, three forwarding Sean, based sort I'd stands is three on look good Yes. a what it of two or data, and there's it's when and as very -- I'd say things do to, that addresses, we track you really, probably

QX City, York move increased classify population year our QX is more QX. and departing of in XX%, was miles we we to two XXX move-outs, miles that it moving they're about in categories that San is, which between than of last was your location. 'XX XX% about that highlight the big about miles and about this a Francisco year. population XX that In And XX% then XXX regional XX% to define percentage is resident New that of First for this of a category from moved somewhere move, up away other the

New out one between in XX and probably XX% we to is which Boston, the and I'd it consider to York to really meaningful and you Boston, XX% about was a keep what one a highlighted, XX some then this from a stood San from double. City, up when obviously feels move it go some increased Francisco last of so about miles increase move-outs XX X% than they mind urban moved less primarily where XX%, local us, that like move, from but X% didn't that the market XX in of miles of XX%, to -- One less where environments, think miles, these to miles thing way. have through urban can you be these but in is out long things it, XX than about

could leaving Francisco, QX. or going out places terms the sort of someone of into stood miles larger XX the in San So, down move, like in that data Peninsula that, be that's but the

Rich Hightower

And just or properties side by Okay, or maybe the helpful end, quick the those the on then what's that a are in expect the the stats. you of close but sale timing those year under housekeeping there? Thanks. to contract are -- asset market question for

Matt Birenbaum

Hi, is Matt. this

But end of would two of I might those expect slip one proceeds by of January. think the year-end. the year. will possible into most we in to by or It's most come them close

Rich Hightower

perfect. Thank you. Okay,

Operator

take next Bank with question of our from Alua America. We'll Askarbek

Alua Askarbek

taking everyone, the for thanks Hi, question.

highest like months. with as today California. are to on do area trying work things And the going to see move market focusing we keep had the and where stand to Bay Northern But into offering out winter them Just you of residence options specifically suburban network? kind which do back the moderating and you in are move-outs within

Matt Birenbaum

Alua. Yes,

first or Francisco, up your seeing and was broke you a I decelerate, that San said, question residents of of terms bit part in Your little question? whether that party to in we're accelerate think

Alua Askarbek

moderate starting move-outs to Yes, the into we I just wondering was are months. if winter like as head

Matt Birenbaum

starting move-in sustainable as move-outs we I the on posted to chart can fourth and Yes, ease specifically, the October that Tim factors. quarter mean, relatively we that terms the will see up volume of on move you not regarding there. as in We're see remarks. in depend into whether which prepared many of of different seasonal mentioned in typical is But terms a And in that's his or of lot patterns.

of that relates and So too that would your transfer conclude that up whether early a around was and than activity, residents facilitate downtrend and we help for third then to were to the we do definitive it's think probably case. transfers year-over-year. about normally I part a And other seasonally roughly be it's transfers the it question second

the communities seeing reasonable are departing. same might that of we community another to that are both be increased a -- within So community activity, and within the within distance

way. So there, to meaningful definitely just a of the about it's activity but total a not think increase move-outs, want that percentage in it

Alua Askarbek

Got other one then question. it. just And

So some Have desk markets track or transforming have in mix by urban work-from-home renters. track to peers asking amenities for market, spaces in done this? are have guys start into to the renters apartments building get creative your different apartment renters different like to empty themselves into anything in you in the urban various

Sean Breslin

return where of in in locations. exploring work environment, not when looking suburban as suburban a home location sort to not geography. for short-term the left some be that Yes. people a are It who just could to urban in a a may in urban to normal a We're done may different environments a fair No, urban good have not furnished bit this environment. they be It and their they stay it lot of the a like therefore relates we've sure rent have different apartment question. they're environment that in it's that's environment, things but

the that best from delivery doing and a as to that relates give to we're facilitate that best we to sort, things of standpoint, as can of as bit trying amenities, then we building we're little in and it the facilitate certainly trying a as physical of So through constraints, can. obvious we're near

our to amenities sure customers make urban the access trying to are normally enjoy different that just that that have in they would that way. a home in environment for they So

Alua Askarbek

Great, you. thank

Operator

take Hill Morgan will next with our We Stanley. question from Rich

Richard Hill

I guys. to improvement discussed remarks, in good Hey, in occupancy. that had in you presentation, some there were the looked to October your healthy like come of want some your afternoon updates prepared back put pretty you it

maybe I'm bit So forward. have little think see whereby the do a going and to back trying markets up starting better it is, come understand in to question start less you your to rents is call enough demand bad, to come down you're going leasing spreads

So and in it's a you velocity of starting you're really some question do demand? see that going think here forward to that stabilization

Sean Breslin

your October the good given is I'm to should really had, Yes, to particularly going and question favorable forward of full need overall, we people to Rich environment, drive factors macro those a really it recent environment either lease that's I the are as to the stabilize all relates you told They pressure within but the to macro ultimate until more and coming into is they question. pricing, into that obviously to choose as environment will go we more Yes, it. story -- terms office, the be environment thoughts kind have of tilted to what sort get drivers of here And a your competitive yet the particularly turnover to towards or inventory others the may it I in it this factors deteriorate, fair is really say, particularly in share decision environments, that further additional macro I as back and those be be feel in. because inventory positive a that some of absorbing comfortable about which and key join really long whether did demand in obviously the urban return had on few but some year-end. as put they think to trends, urban September and bit then school, to, going just move the I in that market here and can available the things more of mentioned, we and were think rates price back little that

Timothy Naughton

Yes, little add that a bit. so just to mean, I I'd

what had a bit, of you a will reach sort to of of we're rental market what in normally will, think if your pricing sort down little level points is of of as you to of dynamic which the is to about the into resetting basis I XXX if housing downturn, And share, its so occupancy. we seeing see is and that, in we bit part would pool lost of a you you renters. little the pool. attract got order will, fair if We've to adjust sort kind

public or to in centers a workplace. into to therapeutic that back -- a we give employees think into the said I really to I the in going thing easily start sort employers it's stabilizes, stabilize, that the the particular to the think whether question hope a into then help outlook at just not bit confidence a mean, it protracted urban be get us vaccine could the more we it's and unique this to as the the contracted. for a as penetration, extent vaccine going arrangement urban But in of or to terms terms enough urban -- or we in back these be really particularly front, approved centers system to ultimately demand create bring think have don't Sean macro on also health can environment and net get living of, for some to of as for to that's help don't get appear will this if an their improve, to new stay, extend as be don't I continue very it's I going -- mentioned, coming but obviously way impacting effective just happening centers. what's starts They're

Richard Hill

that you -- improvement it are that? the would suggesting in more other noted factors is October you understand, are -- or that Yes, is are just I driving so or was that -- are there seasonal you

Timothy Naughton

we've to and market continue to just of a fair the which lot we've think XX% able to range Rents sequentially of been have is of our terms honestly. down in gotten price of sort I in driven, share to the occupancy. attract it the point, come XX%

whether that's So it driving of the I initially mentioned I think some mentioned. function and what's Sean I it of to are that stabilizes, -- things as think it's there a

Richard Hill

Helpful. it. Got

I guys. Thank it you from very me that's much. think

Operator

will Rick from with question We Skidmore our Sachs. Goldman take next

Richard Skidmore

you. Thank Good afternoon.

development forward starts not about are know the that pipeline, new about as than the talked one you development guess, thinking thinking doing you from yet as and about How you Just geographic about future look mix, as thinking pipeline, suburban? of, other you think any I and JV, both new are it mix both I the then about but urban, starts. you how a also

Matt Birenbaum

still Yes, I'd availability cost talking that the I I terms well. then options Matt. as in take hi, is just Tim a really of the our as are attractive pencil basis was terms may for this bottom as be other some top Yes, are add Kevin in our and it's as want say capital deals of an value we what seeing to and combination about. of can up creation well you guess both down

be start of my forma this to two are Northeastern actually these might is from likely more some ups even you pretty deal their we deals sooner deals suburban The a some going or remarks, significantly. beating to of that So, are where quarter. lease start pro saw prepared those are

seen migration be from locations hard last to submarkets, certainly. terms same five the XX tend beta the some in first or place, run cost much years volatile just tend from of in less they some are lower of those the of they of markets rent, over the that years, out in haven't some up So, and be to the are urban those benefiting

some maybe is bit give hard So, on of back in little there costs markets. less a those

probably more to short that's So in start. where likely we're the term

We are still looking expansion to grow in markets. our

prior other high there basis, sky So some start the line inflation see at not surpass downturn, that not real did start reaction we come although what's a more whether happen down, plays to just year to down we that's to regional may go of have that next quite so another the out after of them have of I crisis, kind waiting while know it's cost down seen fell bit out how the is a that in great we then it hard to but but anything, number's our quarter, to markets, cost there markets. they've place and cycles cost deal back and with to and of recession going you a on still don't it starting some in some this we're cycles next stay there have ago come just of if flattened basis and our the the hard don't a we're kind flat still was hard each maybe in nominal and some they two piece financial and point going but come for

Timothy Naughton

already to market that $X it mid-cycle, Matt, other terms or $XXX with Yes of are it million, 'XX, have might construction the the that that. billion, Maybe relates options just just in about running our probably the bit, the between last $X.X billion visibility volume, sort we and mentioned, I agree 'XX downsized last of we call we next factors as million markets. certainly depending and start well to to then as And the share. kind anywhere repurchase including capital, to so around capital little could world the markets we it kind upon year back with of of year, over three Matt all step years of a $X.X $XXX probably at and

on So the it probably months. ultimately -- how a all how between somewhere billion, next start form $X XX mix factors those those ultimately of going to and we $X.X deploy to much capital views we decide XX are over to our it's it's and

Richard Skidmore

Thank you.

Operator

will take We our Pawlowski Street. from next John Green question with

John Pawlowski

Thanks is how lot. economic occupancy share curious just and question those Washington two for power how markets, Metro a from into me. Sean, trend Could October Northern just could trending, the in it California you winter? one pricing

Sean Breslin

you in bit, Northern in little you're John, said broke California a October? occupancy Yes,

Timothy Naughton

Economics.

Matt Birenbaum

Economic.

Sean Breslin

Yes, physical...

John Pawlowski

Eco...

Sean Breslin

you. Yes, physical occupancy I tell can

Sorry say it again?

John Pawlowski

it. take I'll

Sean Breslin

Sorry, say again? that

John Pawlowski

Northern physical California had DC. is Yes, If all occupancy you and fine, Washington in that's

Sean Breslin

Yes.

Jose, and down believe is pockets really XX% California San which View - we experiencing I range today we're numbers. So lower San in XX% around is we're in and the -- primarily in San define by in occupancy Jose, Francisco running down Northern I which of how pulled Jose running the those that San pulling overall, Mountain Central today, we're XX% believe the,

is are again. is those and Physical, So today. around believe -- two D.C. Washington physical district so occupancy it's where relates to weaker areas as it XX% I the itself, occupancy

John Pawlowski

slide? or expect on And markets today, or continued you stabilization in Okay. improvement based current those trends do

Matt Birenbaum

trends occupancy terms stabilized say bit little of trend with based same-store actually have they portfolio the would I prepared described up in in on No, recent a that started my to consistent and earlier pattern I remarks.

weeks function that expect quickly they of seen lease based we've over terms those just and forward of the but of at velocity notices or next off some. recently. then how as on the both is I velocity is back a in which will the demand least Now, you availability in come And through, of side terms of the on price it would so look the a primarily six come such. drift function

John Pawlowski

All you. right, thank

Matt Birenbaum

Yes.

Operator

from will our with question Yulico next We Scotiabank. take Nick

Sumit Sharma

is this in Nick. guys, for Sumit Hi Sharma here

maybe So give update... could if us quick a you

Sean Breslin

We hear Nick? try bit. could you speak we Warned can't you. to if -- little a that can't you you, up hear

Sumit Sharma

Sumit, So sorry, Nick. phone for this Speaker is problem. in

you us a the Park on could sales at So maybe if pipeline update give Loggia. quick

seeing of rental interest sort uptick guys the you as you're condos, think I filtering market the out understanding, on there or of the in if have any -- weakness market sales about XX XXX NYC in sold in is understanding well?

Matt Birenbaum

This is you can an Sure. I update. give Matt.

we about have total per million closed, again, building, XX are we the have we XX, million in price, units in $X.X unit. today that's there's that of as XXX $XXX sales closed units So

contract have another contract nine out signature. for and we units We also have seven under today

pretty of at would -- us XX, fourth a the traffic's I been XX would in the another I put top quarter. which in or the have we're steady, buildings we month, many in So good, running deals about new of say, would of three guess which three condo months, XX performing are has last interest two Manhattan. that been deals among probably close pretty the all couple are top pending,

the than share. we sales, more a is well but open was get there than building fair So to for there we're still when lot of kind our continuing supply more

since I'd the good traction. of sales lockdowns mid-summer kind the get So, lifted steady been pretty activity and in say were initial has we're to pretty continuing

Sumit Sharma

bedrooms you in unit thinking off urban about sort just of terms changed towards guess you kind should development but when be what your longer-term we outside of plans your line shift Thank three or it to we of two development today, so think or that I is pipeline pandemic and unit the question, Great. with how the in classical more the And with everything, plans your when -- of or and mix? the much. towards even does shift suburban mix, more

Timothy Naughton

to try of up little long-term, the capability speak that. development important had that I'll Again, in terms it's public advantage Yes, competitive breaking a of an in we've to but in a bit, markets. terms it's you're and distinguishing

we're into providing talk mix going particular to translate some is, mix sort I from home the product the with We did there on in a development a is of exacerbated that value. ago all best for program we pivoted pivoting or table co-working in three last are and think years do -- about suburban, strengthen, we many was the that maybe to the flexibility unit will agnostic to start changes, the last has the the I the very as it two back call, -- where starting either start to everything where already more work lies time point for interested development four just extra -- work our suggest and had about demand still reasons move edge suburban more will of spaces. double a -- within suburbs and times and the been to grow are suburban to we been millennials, go they be we've unit, dedicated sort residents we're likely to economic. significant leading spaces also double to trying value Again majority any format think worked continue it's -- urban maybe confined see there data greater think but better little an bedrooms spaces that and because lead that fundamentals to relatively but just or markets an space seeing in we'll only part bit. safer we the there activity, yes time and think economic XX% sort -- of we've so likely the versus new space within said obviously that pretty XX% the as unit touch or change dedicated discussing or can sort office As urban co-working by started said start between Having we where to in the suspect people just are so well, homes past open the stabilize in of have at we're spaces of of I to to either we've are that's buying of giving much continue years as to of suburbs, approaching types in sort -- but outpace or redevelopment and and more three the of kind pandemic, opportunity survey

the expect going we think be we are to of think, it's are that, changes forward those a our the kind we of to real so flexibility I already we'll as that. respond some likely to is only is that come -- trend, a work-from-home of portfolio greater a really see going and think needs to result

Sumit Sharma

very you Thank much.

Operator

Juan Capital We from Sanabria BMO question will Markets. take next with our

Juan Sanabria

Kim. with I'm Hi, John thanks. here

noted to change was in in improvement that of in in Just a versus first the quarter the in had the previous there the questions, drop increase third stimulate pricing October, October couple just just rent or you strategically, concessions occupancy? a the either on that months in

Sean Breslin

Yes, fair is point. Sean. this Yes, Juan

noted so that kind August on notice in my the of obviously second the put that, breaks. I signed showed pressure we those leases think a slide as see quarter, prepared quarter. on become mentioned to I -- in vacate in and pricing obviously for available, And on additional result example, in As in all they've particularly occurred July and inventory of that increase third turnover during remarks, you it and the I was the lease in we urban environments could had additional

urban example, look in as months, all the you three-quarters If half across concession the July August, month. average of leases environments at an was between and a

in September on into all that and moved just then we about QX a month October, signed. increased getting As beyond leases

more having some you as to it So, price, relates certainly to yes, to progressive relates we but have XX through. breaks their in because lease came additional of days that at kind been that response we of as quickly price even to that to notice. advance days opposed of be have substantially XX delivered the least as faster, availability probably, Could it inventory if

discount You heavily, pretty would inventory we have quickly. more had that receive to trying that price just the absorb incremental

was strategy a put makes our a reasonable pace, so sense. but not out at fast absorbed to that sort, speak So, very, fire inventory the to if a sale very

Juan Sanabria

of your curious just the to the foot people sort it offices. parity core Yes, a work markets, relative some does. pricing getting to maybe and the to the the to to urban you. of closer of kind in And between on then it between are I return block assets relative in was where that and and Thank back we given trend safe to of, they some suburban suburban pricing switching urban close the whenever proximity you commuting entire could see for do

Sean Breslin

can to markets Yes, think as about opposed a in to you still have even in. bit talking come though example, into City as question. New comment Central others we're that Island and I'm of happy good about, think New it's pretty Long the City the on rents or mean, New York down if Northern and York I or quite it's West a big trade, an a Chester moving trade. City, big Jersey, kind York jump in the rental But about

place the returning we were a macro establishments, either to as cetera. really environments be meaningful need because required And you urban it the is office, in in part earlier into of be office, comfortable were environments of the of situation, more to relates -- restaurants, healthcare will by et universities being way. of desire urban terms people's they better the that I be with those driven about whether function those or it's these that in that think factors office So we in in crisis or just talking to to their to a where resolved retail some they move be school, feeling about is a feel the in that need

I just issues purely to opposed the as So, are price. those think bigger

Timothy Naughton

and -- today are I'll they're I just mean add, commute. having -- just not to

make say, I tried they're to obviously going their of, mixed-use of a is -- three But markets four they So week have would that I five stay the lot be before maybe to just or were in forced when sort margin clarity in still they're I lowering versus come to where these we one the in do in the they've rent. to be I to side days a expect think COVID once are environmentally sort sustainable to commute, it I great this make it's people back COVID. urban they been These days certainly to great, only I able proximate after of things mean, ask the life will the I of five. they at to flexibility, this, think people to the infrastructure week, cause in it's may say care some invested guess, or -- There more the a dynamic two but more to has are environments call jobs. they that about I'd tolerate that of that sort have your in, guess living advantage in other again, mean take to them you back box work. -- question, we're that of yourself come all pre-COVID, there. work-from-home suburbs. was better

urban demand So, margin to going the be that see think urban I'd the may but expect not robust back to when of coming that's on changes there's as was pricing, pre-COVID people it I we've layer you kind though seen of as plenty you the say to centers.

Juan Sanabria

York Different from the New MSA?

Timothy Naughton

including MSA? did say the New you York sorry, I'm

Juan Sanabria

downtown relative Oakland New Francisco or there? in No, South the York different thinking Northern versus California rent differential and from I'm of just is San terms the

Matt Birenbaum

Pretty delta. big

Sean Breslin

think Bay just Francisco. the pretty pockets It's as -- in say you and got the big being mentioned, of compared more spreads rent will the Peninsula standing I I big down Peninsula in those quality moving be lower the office. lifestyle of be be want necessarily or even a Yes, pretty I in to just East between reasons spread San city into urban to it the is the their to in really around environment and the

Juan Sanabria

Thank you.

Operator

next question We from will Anderson with Rich our take SMBC.

Richard Anderson

everybody. afternoon, Good thanks. Hey,

it urban and AvalonBay people putting as some AvalonBay share Jersey, think and someplace resolution turned interesting when but So, a world in would in to not having better as much Edgewater, without be spot, do centers that to the the the New into when about in as to have maybe the York get so? people of of urban of when this around -- people from environment, the come we little of sort a up feel Nebraska, go from you thinking or all permanent would York comfortable back much moves would you you something. thereby puzzle. How had initially that back would flexibility New as full was an didn't here turnover have be a soon then the that but because about relatively a thought how to to go they But, step people I into maybe how lion these sort want to I Do to I I tease to way more of and spot people move are transfers into piece away bit, they idea New respond these suburbs, understand also understand I back happened out have in a do sense the portfolios it's in. small Manhattan,

Timothy Naughton

Rich. Yes,

when environments. urban back We post-COVID pre-COVID infill sort use a that's we I lifestyle a in there and maybe of, I already you only decent sort mix that with on it's days the even I you week maybe also affordability couple of And before add can bucks sort train think opportunity say, light, transit stronger versus of sort infill in of, interesting sort of two it's five the or mixed -- a of mean, question. suburb would flip then a was couple in a really days you when a downtown. think believer giving hop opportunity, for being be all maybe still week. a great of have kind the of to then already three were

positioned. think So, that infill is I kind of extremely really suburb well

flexibility, bit when question, that is does into still work-from-home living doesn't affordability rental. attractive. change it last and as it things trends I like just I the already seems on but were kind before, mentioned had as about it we've anyway, very to think these that be talked layer your But current make -- does -- of urban it a you to demographics, marginal that for -- the make but this calculus COVID, accelerating many little

Richard Anderson

or maybe Florida? performing first, how the of by that and little and perhaps because you about now the change. become South think talked those does unrelated may businesses a not second you does this and more aftermath in And your in resilient speaking? -- to piece Okay. to or be future feeling this better change, development pie that chart relatively markets your it the are fledgling Do be all environment they of informed of a bigger get but bit to it How activity how Denver apply might

Matt Birenbaum

Hey, Rich, it's Matt.

of legacy markets are those better our So doing markets. now most right than

their some as cost it. we well, so that's to assets initially, more true less the I we're markets, our lower be was markets those of least anyway of at of part probably that's of shutdown, think -- And portfolio. definitely a the have function that's happen their in of there suburban market Denver

about we we halfway be which we're was only of those our $X be quite yet. $X.X portfolio, to even went about our each not get said billion to there when billion would So, markets, each X% to into goal them

that up kind COVID to X%? tolerating is were look trends those saying a over are we I aggressive again, those we'll the the to of I had is more markets in the Tim that there, to saw first it us and continue to pre-COVID trends seeing the we're could, we time. place. be led was what to aggressive mean than that think that there but of extent, the like same response lot Could looking to migrate So, be

Timothy Naughton

just was saying. I agree with Yes, to Rich, that maybe what with add to that. Matt

based New markets I are too go think we've as us new spillover California to said might benefit indexed some on of it's big to but York calls from and are well or likely kind those to jobs we industries map, want places of as it diversified prior tech have also the completely lead into and heavily places markets, that we knowledge respond knowledge to whether based if need need their we Denver be Florida, workers to think are Southeast workforces of like the kind the strategically, be to of kind and where going in, be that. they're allocation are to across their

Richard Anderson

much everyone. very Thanks Great. Yes.

Operator

Austin next take with question our from Wurschmidt We KeyBanc. will

Austin Wurschmidt

now walk as peak third rents improve expirations, do think season I was could month-to-month, could more you to and the and rates through good October maybe closer occupancy? are levels as to continue try grow your you you to the fewer see keep leasing rent through Hi, and guys quarter that you October apt due growth September to well provide and you're everybody. if afternoon wondering in effective

Sean Breslin

this question. Austin, Sean, good Yes, is

quarter on to suburban In quarter, of to of terms a change, of basis environment broader the relates change question, mean, that, plan of off terms the in have move move to is thing the good the stabilization. down as mid-Xs of through in XX%, in from We've months concessions in you say volume. couple of basically here. only walking you kind and had the now month and about I reduction terms we in the particularly through October up mid-Xs each I'd sort past of is it in leveled in rent right the rent

bag into haven't the generate in today, of remarks to you So saw I seeing say and comfortable the prepared to dig reasonably that what necessarily deeper had my concession the with we're we we're I'd is on expressed slide. kind which and velocity velocity

take deeper I'd that we but into we better it it. extent than pricing continue while to little that little kind wouldn't side, shape. we the bit on urban, like we urban velocity to see a dig to a continue think environments, to these pricing, off price but we extent to level where out the bag see suburban to good that things re-evaluate, say in the fell So we're the here going was to again, at be And the pace pretty how to in to right plays of concession demand longer it have today, attract but for have good on we and in need that's feel will based it

Austin Wurschmidt

helpful. enter very target you your those look you've higher new expansion next the since over trends are either several to kind the And on to Got best then decided as change it. earlier of comments markets, seen No, relates the markets you lower, where forward as years? your of that's into going it to allocation does fundamentals of investment activity, any or

Matt Birenbaum

of they Matt. that and markets over be plug ours in Yes, objective like like I point, to to think mentioned to that those at may on, one I kind the the additional add other this about next that total of X% mean XX% there markets relative some time. that size above the that grow those allocation in No, we would is in to we're Tim prior to of the year, markets of just questions, driven size said, those get as get each, of markets, as looking markets, I by we we in our is like is some

Austin Wurschmidt

Thanks guys.

Operator

Alexander next Goldfarb take Sandler. our question We with will from Piper

Alexander Goldfarb

thank and afternoon good Hey, you.

development the $X just had questions, on last to being the the program about it the do call would I that front in can't would with start so you that especially some further of a be as you think that today? place year necessitate as if to P&L on your to So, there that but these is and you that P&L, keep have -- changes wide this would see range keep $X expenses the going said, of development, much what Tim, be two suburban that markets on talked you think changes, development, on costs were like capitalized or call, back your billion, earlier with be obviously we current talked no do level team to end we impact about your the of team the you you some think this you have would do about -- next you the said starts afoot in the year could adamant of level sort place, as constant answers, you guys up had would where where on you think down and would you development in try in

Timothy Naughton

to to be that, but on about the $XXX call, get I Alex, actually gone as to we other as over worth Yes about maybe little back I sort typically. that years last bit three $XXX versus from do a of, expensing two call, mentioned capacity billion, probably if from about it things depending have look think capitalizing, billion let's into for $X to million, development five billion four talked a simple flex to probably it development cut say, can you think upon the down you million a the around is start we've or quarters, a in early Yes, or prior past year, our needs. group $X.X to lot up or scale honest. know, suspended downturns, the too $X of When answers another is we

a of would The makes this think looks, those size extent I -- or three for -- right sense So about like about you're in downturn talking group we're don't at thing we're length. to just it the I development we're It concern years, somewhat again, a expand some if looking to don't talking is have downturn a costs. doesn't going there's think to the start where a new about. those

So to to premature fallout. of of that's where kind it's likely kind -- think I know, but

Alexander Goldfarb

a pause on to The Okay. so Kevin. five for you be, that. so -- quarter actually That-- helpful is if next four thank maybe the would reference you

are balance the out would -- the help next it's property you the about efficiencies saves or you revenue we think thinking as cost speak Just could that drops sheet, forward mitigate for whether G&A, do or year? look the guys on level operational, some into where that

Kevin O'Shea

maybe is just Alex, to some Well, I put Kevin. mean, this context

million year-over-year experienced we think NOI past million, I this $XX $XX climb quarter.

up you they costs If quarterly number. that are add about management costs, property G&A, the over in

and so and relative the represent overall how of forth. business proportionately overhead puzzle we structure part small terms So a of the in our the and -- revenue to costs

So here of -- just I opportunities fair in is we it's those acute, naturally to not are manage one year. biggest simply particularly submit, costs are incentive the potentially can manage bit cycle. throughout it, opportunities There and a of how we this correct of some terms it costs would overhead the going or

management something? And little So, there's add then piece. Sean overhead, a you property a in bit self-correcting of do of want to kind terms of

Sean Breslin

the investing Sean. I the that's One we're I on to on to level already things in throughout and some think thing least at fair on we operating planning help create portfolio of it about, think one Alex, at it that technology based if seeing property over of it's Yes, on probably $XX result path operational million pandemic, what's happened those we centralizing somewhere talked through savings year, the as address data model various that. some things $XX on of those we're talking was more visualization to more of efficiencies accelerated were operating anything, of the relates a leasing P&L. the still it say magnitude things offset to the the great about next through we in I the as on a order years automation, path calls of use will The various still relates to renewals were certainly forward last session, and and would like it's whether million as a that what we're be initiatives and different is approaching to initiatives, couple

Timothy Naughton

and Alex, add just finally to

Alexander Goldfarb

Right...

Timothy Naughton

XX in compare it's be models business efficient G&A that, then Tim, talking pretty again. side the to if on points total kind is of to add just XX a to efficient and basis of Kevin and G&A points model, costs May mentioning, This as assets, other was finally so efficient it's business you of we're I about the compared mean, terms business maybe private basis it's Alex. G&A pretty to

a XX%, of through body incentive get Kevin of is So and a to to, buys G&A to it's weakens, it. side, opportunities aren't it's system not the when less, as pay mentioned, as extra XX% lot its of incentive self-correcting the is they are lot down G&A there there's -- you just, on get -- some performance but

Alexander Goldfarb

Yes, big doesn't payroll was It exactly like anything of the picture. margin, fair of of is sounds expenses expense are level, better our it's takeaway? point sort was on a and up, lot seem are there the like they'd that sound like only insurance, like those savings a margin, bulk like Is would but of expenses sort set. on think the Tim, I taxes it came the it the the the I estate that's the at seems property and so categories after real go

Timothy Naughton

across get are think of there level, function have would -- the say side G&A activities opportunity on XXX the it's the of some on number the where bodies. as community a working we Those side, when overhead automation that's a within payroll a of the where or terms people some savings side, and of in Yes, some can property may scale could automate the Not so. clear real benefit is. I centralize, we portfolios XXX benefit of the as that's group well be on a two you that unit particular of

Alexander Goldfarb

thank Okay, you.

Timothy Naughton

Sure.

Operator

will Silverberg Zach we next And with Instructions]. take [Operator our question from Mizuho.

Zachary Silverberg

guys. thanks, Hi,

Just your credit Boston if concern is profile prevalent. like a from rent in now? profiles talk more portfolio of the entering more income there a and any if wondering challenged payments the of the today year ones. where the be future couple submarkets appear of you quick over Can and concessions some York may about different any and New are I'm residents

Sean Breslin

question. Yes, good Zach,

least a be. we in other have probably of fraud, XXXX in at that standards more it really late we started We be customers people to that certain particularly than qualifying it renewal into to as standards can rent not you the to materially LA markets. increases with would still I side haven't be say, relaxed detecting other comfortable to our really as are it relates have But timeframe as that and diligence it to that manner as the you're so diligent to comes whatever our tends rent credit afford changing may this, look one like changed credit even it or we relates can mind. we move

the there -- risk if standards risk, a anything stringent more just it relates always their we is but relax not So, they're to is little as would fraud protection.

Zachary Silverberg

combat an potential communities, within guess guys I uptick the And --or corner, you. are season our any season you earlier on piggybacking preventive to preventative question the with Got taking sanitary the spread and flu with corner. measures around the around the the given flu communities [ph] COVID in

Sean Breslin

we've healthy And of to a it environment. a lot Yes. as relates kind promoting done

and If things. and of as cleaning you million disinfectants relates expense spent bucks look other PPE that couple year it this beyond noted we've various table, we then already at our operating a to for and that

may amenity a whatever chill or have gym be. time within it reserve reservation a to system have We where people space, a

need gym of our impact bit into understanding to the And to good whenever score environment. they they through and so lucky that feedback the walk so for a promoter protocol And community. far we're what comment, any think part, community professional most we're not just want, a people can't in to but for doing very efforts the the knock certainly fair very we've some relatively limit the we've promote wood, seen appreciating our healthy it that on been relates to as I terms at frustration the getting net from

and ways for to doing environment. what we're that good healthy So we promote look about feel to continue

Zachary Silverberg

Got you. Thank you, guys.

Operator

I with will take McGill Dennis our next from question Zelman.

Dennis McGill

X the Slide The split as we taking at that guys. and suburban everyone, good on urban. Thanks time. for look question Hi, is between

vacate understand maybe were you urban up causes that on conditions the or chart, and I was in the there X% suburban and the rents do the seeing of market? sort are What the analyze well, you're there based the in and seeing quantify where going, you environment to weakness it and you When think pressure on down X%, if the it's are factors leading weakness up forth. move-outs turnover suburban like on easy pricing? think living speculate are to change tenants those looks so notices you the are as of your what in the that portfolio

Matt Birenbaum

it suburban say side on market. call on it's you mean right, I give question. X% examples. good Yes, a factors are I the did roughly you peg variety of would rents down, I'll depending or it really so. of a couple

would Mountain San we View, various degree. Jose including San some So, consider an pockets example, Central of as Jose, to

can protocol a residents for is in Apple We but on for there current need like location. companies Northeast you and that that Google Jose and based the others, tell suburban to have those be San I just not

result, pressure in off, of is there. But just we've fallen the as where we've as policies, from there demand not what those much some San because As turnover pressure pockets in obviously those seen has on of Francisco. a experienced demand

of so, is little And in Mountain View, San separate San what we seeing a of the at B which compression sort there, the in higher coming existing -- compete end other those type are of terms a minus we're A Jose bit with inventory what and of price assets down of markets. there some those Northeast supply, to in to particularly we have of, representative Jose, central Pyramid in pockets, assets

Redmond, kind what to see like there of type you similar certain pressure you in and the that's might in that's in So Northeast. then of environment, in Seattle, pockets is see that in other the pockets

have making it we but relatively Boston to are choices holding relates So, up from staying and elsewhere. but relates people holding moving it populated Island's is recession living are as to the Long well, you decisions some degree or densely to as still -- are of environments up relatively into some a are moving different those do in making well, different environment, environments, urban midst there people others

just overall, contraction. we're demand, household So seeing

just as environments So that not much what environments. nearly as we've urban will seen suburban impact in

the macro Tim. and So that's view kind of

Timothy Naughton

Den now. that of a age moving is particularly right seeing younger you're cohorts part

XX under highs. under number percentage -- XX historical moving a back, particularly So of

the and from are So haven't normal we anything, you if seen just of in is any the home back more the get they get out trying roommates, of have But to to basement work probably up, we're camping to doubling room to we've from definitely it yet, sort away both downturn, home are trying their over. with they seen space. fill if consolidation people same have, people where move do

apartments self-storage mentioned earlier sort are occupied, the or fully have of parent's We occupied. homes and little fully more occupied less more is

some usually trends of the So that's that seeing. we're

Dennis McGill

you That's or helpful think that, perspective. versus the demographics may a was base? more cohort be those seeing Tim, early across about that skewing are terminations it I vacate, fairly to distributed younger actually be families. mobile going to on your continuing of is if more the client that be -- second can the Where you question,

Timothy Naughton

occupancy floor lease of a Yes, related in I No I if example. mean you the it is plans. an fair XX%, that's average Urban at and during sort know XX%, you environment QX, pressure definitely think studios spreads, as more studio look point. was occupancy the

for on sure. left mom people moving So, flexible stuff to more dad and

Dennis McGill

All right.

you. Okay, Thank guys. Good well. luck,

Timothy Naughton

you. Thank

Operator

to like any Naughton And turn with questions, no Tim additional would to remarks. additional or I for closing call the back

Timothy Naughton

suppose care. the Abby. virtual Take maybe but you busy, and again I today, of we'll Thank you, world. at in lot thanks NAREIT in I joining everyone's see calls for know November.

Operator

you and call Ladies we and concludes this participation. today's thank your gentlemen, for

disconnect. You may now