Top 5 Takeaway from Apartment REITs' Q1'25 Earnings Calls

Today’s edition sponsored by: JPI, Waymaker and Foxen.

We’re a bit late on this one, so let’s get to it: The apartment REITs big and small wrapped up Q1 earnings calls in recent weeks. The biggest takeaways? We’ll get to that, but here’s a one big highlight that should encourage everyone in the multifamily industry — public or private: There’s no sign (yet?) of any slowdown.

And for those wanting a deeper dive, check out our recent podcast episode breaking down Five Takeaways from the Apartment REITs Earnings Calls on Spotify, Apple or YouTube.

Also got a new feature in this edition, and by (semi-) popular demand: A list of recent commentaries posted to LinkedIn, to make them easier to find. (Blame the algorithm.)

Let’s dive in.

1. No signs of a slowdown — not yet, at least.

Nearly across the board, we saw good numbers reported. Strong demand, some occupancy growth for some, solid renewal growth, shifting momentum for new lease rents… even if still negative, trending in right direction. Overall, good story on demand and revenue fundamentals for multifamily REITs.

And that was true all over the country. Coastal and Sun Belt. Urban and suburban. In high-supplied markets, rents are still negative, but “less negative” — trending upward.

Fundamentals held strong even in Washington, D.C., where federal layoffs have the apartment industry on high alert. More on D.C. later on in this edition.

And yet…

NO ONE is rushing to raise expectations, largely due to what nearly everyone called “MACROECONOMIC UNCERTAINTY,” which is a nicer way of saying fears of a recession driven by tariff disputes. (Worth noting these calls occurred prior to the 90-day agreement with China.)

Here’s what some of the REIT execs said about it:

Essex’s Angela Kleiman: “With our solid performance today, under normal circumstances, Essex would consider revising our guidance upward. But lack of clarity on the US and global trade policy have led to macroeconomic uncertainty, including the impact on business investment and job growth…”

EQR’s Mark Parrell: “Our operating dashboards continue to show good to excellent demand across all of our markets... (BUT) Like most market participants, we see a higher-than-usual level of uncertainty in the forward path of the economy given various recent governmental actions relating to tariffs and other matters. The impact of these actions on the larger economy and on our business are hard to estimate currently and will take some time to unfold.”

UDR’s Tom Toomey: “2025 is off to a very solid start. Our first quarter same-store revenue, expense and NOI growth exceeded initial expectations due to a healthy fundamental backdrop, combined with operating strategies we employ to create value. These trends have led to positive momentum across most key operating metrics, including lower resident turnover, higher occupancy, lower concessions and improving pricing power.”

UDR’s Mike Lacy: “When considering these factors, our same-store results are trending above the midpoint of our guidance expectations. However, we are cognizant of potential volatility that could affect the macroeconomic environment and pricing of our apartment homes.”

AVB’s Ben Schall: “We produced strong core FFO growth of 4.8% in Q1 relative to last year and exceeded our prior Q1 guidance by $0.03.” (BUT) “Our Q2 guidance is generally consistent with our original expectations…” He added later that there are some “concerning horizons out there that we're closely monitoring,” referencing the macroeconomic environment.

And one of the smaller REITs, Veris Residential said the same thing – they said they’ve had some earnings, quote, “not contemplated in our original guidance and we've not seen any disruption to our business, we've decided to leave guidance unchanged at this time given the high degree of market volatility and economic uncertainty that persists as a result of the recently implemented tariffs and changes to trade policy.”

BY THE WAY it’s not just the primarily coastal REITs. It’s the big Sun Belt REITs too. Let’s look at MAA and Camden.

MAA’s Clay Holder: “We reported core FFO for the quarter of $2.20 per diluted share, which was $0.04 per share above the midpoint of our first quarter guidance. But then later he added: “With much of the leasing season still ahead of us, coupled with the UNCERTAIN MACROECONOMIC ENVIRONMENT, we are maintaining our core FFO and same-store guidance for the year.”

Camden’s Ric Campo: “We had a great first quarter and exceeded our operating expectations, beating our guidance by $0.04 per share. Clearly, in the last month, the operating outlook has become more complicated, but the good news is clear. New supply has peaked in our markets, and apartment absorption continues to be strong.” But then

Camden’s Alex Jessett added: “While we are pleased with our strong first quarter outperformance, at this point, we are not adjusting our full-year same-store guidance. ”

Camden’s Ric Campo added some great color later when asked about revising guidance if not for the uncertainty. He said: “Uncertainty is the watch word today. And if we had more certainty about what the summer was going to look like and what the end of the year was going to look like, we might have been more constructive on our guidance change. But that isn't where we are today. So we are going to be, I think, like most other folks, in a wait-and-see mode. We feel really good about where we are. We have seen really no cracks in the ice, if you want to call it that, for the business. Things are going along very well for our business. But on the other hand, when you have these wild gyrations in the market and uncertainty about jobs long-term, you have to be a little cautious.”

2. No affordability headwind: Market-rate renters remain in strong financial shape

Affordability remains perhaps the most misunderstood topic in housing — with far greater complexity and bifurcation than most headlines (and investors) suggest. For REITs and other Class A/B apartment owners, affordability remains more of a tailwind than a headwind. (It’s a different story at the lower end of the rental market, but that’s a topic for another day.)

AvalonBay’s Ben Schall: “Rental affordability has also improved in our established regions, given solid income growth in recent years, resulting in rent-to-income ratios below pre-COVID levels.”

IRT’s Scott Schaeffer: “IRT’s average resident rent-to-income ratio is stable at approximately 21%, indicating our residents are on solid financial footing.”

MAA’s Brad Hill: “Our current metrics are indicating no material change in customer behavior. Lease and leasing traffic remains strong. Collections are solid, migration trends are positive and the challenges of single-family home availability and affordability continue to support our strong renewal performance.”

Centerspace’s Anne Olson: “Resident health remains strong with growth in income levels, keeping the rent to income ratio at 21.6%.”

EQR’s Michael Manelis: “As of today, we are not seeing any signs of consumer weakness, which typically shows up and increases the number of lease breaks, unit transfers to lower rent units, increases in delinquencies or a slowing percent of residents renewing their leases with us.”

Camden said bad debt, which measures unpaid rent, improved even more than expected and is now within 10 bps of the pre-COVID average.

UDR’s Mike Lacy said credit scores are up 20 points, from 710 to 730, among new lease signers.

3. Apartment resident turnover remains ultra low … and not just because of reduced moves to home purchase

One of the hottest topics in the apartment business right now: Turnover continues to come in at/near historically low levels. That’s true among public and private companies. And it’s true essentially all across the country at all price points — even in top-of-market properties in high-supplied markets.

AVB’s Sean Breslin: “Resident turnover continues to set new historical lows, which supports higher physical occupancy.”

EQR’s Michael Manelis said EQR’s turnover rate was 7.9%, “which set the record for the lowest that we have ever reported. This is a continuation of a very favorable prior trend and supports the strength of our centralized renewal process and intense focus on delivering our residents a quality experience.”

Now to be clear, I think EQR is measuring turnover differently than its peers, so I assume that’s 7.9% of the rent roll as opposed to only 7.9% of those with expiring leases choosing to not renew. But even still, that’s super impressive.

But I also like Michael’s point on the centralized renewal process, and I think others who’ve done that would say the same… it’s certainly a factor. The industry has made renewals less frictional, while at the same time normalizing renewal rent increases (after a couple years of inflationary hikes) and doubling down on making their communities stickier via enhanced resident care programs. See Camden’s comment below for more on this.

Remember that MOST MOVES-OUTS HISTORICALLY ARE TO OTHER RENTALS, NOT TO BUY HOMES. So just because moves-out to purchase are down does not mean renters don’t have options. They have a lot of options, and yet most are choosing to stay put rather than chase a better deal.

UDR’s Mike Lacy: “32% annualized resident turnover was more than 300 basis points below the prior year period and nearly 700 basis points better than our first quarter average over the last 10 years … and April represents the 24th consecutive month our year-over-year turnover has improved…

Camden’s Keith Oden: “Turnover rates across our portfolio remained very low, and our first quarter 2025 annualized net turnover rate of 31% was one of the lowest in our company's history. We attribute this in part due to continued low levels of move-outs for home purchases, which were 10.4% this quarter, along with high resident retention driven by the hard work, dedication and commitment of our team members in delivering exceptional service and support to our customers, as indicated by our customer sentiment score. Camden's customer sentiment score was 91.1 for the first quarter of 2025. This is the highest score we have ever received since we began measuring customer sentiment in 2014 and clearly demonstrates the appreciation and satisfaction of our residents and customers feel for Camden.”

MAA’s Brad Hill: “Our turnover is 41.5%. Two years ago, it was 46%. So that 5% reduction is a long-term trend that I think will stay low and that there's significant implications for that.”

I tend to agree with that. I think lower turnover is a new norm for a lot of reasons – from macro factors like cost to rent vs buy to operational factors like improved resident experience and less frictional renewals.

Also, MAA called low turnover a “mitigating factor against supply pressure,” which is true. Protect the leases you already have.

4. Minimal impact (so far?) from tariffs and from federal layoffs

First, let’s talk tariffs. I had a podcast episode on this recently with two executives from NRP Group, Scott Villani and Dan Hull. They’re one of the biggest apartment builders in the country, and they estimated the impact of tariffs on construction costs in the low single digits. My friends at JPI say the same — as have several other builders. I also wrote a newsletter on this topic.

REITs are saying the same. Camden said 2-3%. AvalonBay said 3-4%.

MAA said: “We’re really not seeing any impact to date.”

And that was PRIOR to the 90-day agreement with China.

So let’s move and talk about the impact of federal layoffs in the D.C. area. This topic came up in REIT calls a quarter ago, and at the time, the consensus was that it was too early to know. Three months later, REITs with D.C. exposure seem to be feeling a lot better about their positions there.

UDR said D.C. was its best performing market overall. They reported for the DC market--- 4.9% revenue growth with occupancy at 97.7%. Strong numbers.

Sean Breslin from AVB said that while there’s chatter and nervousness, “we have not seen any impact on our data in terms of leasing velocity, renewal acceptance, pricing, et cetera, across the region.”

EQR’s Michael Manelis: “We are over 97% occupied in the DC market and producing good rent growth. There are a few stories of residents expressing concern due to job loss but nothing at the moment that is impacting any of our stats, results or projections for the next 90 days in the market.”

Camden’s Ric Campo: “We are seeing absolutely zero anecdotal information about DOGE and the negative effect that I think some people think it's going to have on the D.C. market. As a matter of fact, D.C. continues to be really good, high occupancy, very good new lease rate growth and renewal growth.” Campo pointed out that REIT-quality apartments generally serve mid and upper income renters with college degrees, and the unemployment rate among those 25+ with college degrees is 3.2%., so it’s still a tight employment market for target apartment renters.

He added “There's a lot of discussion, a lot of noise, but absolutely zero evidence on the ground that it's having any kind of negative effect on our business at all.”

Paul McDermott of Elme Communities, the REIT formerly known as WASH REIT given its heavy presence in DC, said this: “While the new administration continues to work to streamline the federal workforce, the fundamentals that we are seeing across our Washington Metro portfolio remain solid and in line with seasonal norms.”

Of course, this is all happening in real time and I like something Michael Manelis at EQR said. He said “we’re a lagging indicator, not a leading one” – so if there are issues, it may take some time to play out. But so far, nothing of material it seems.

5. REITs are active buyers and builders … but it ain’t easy in today’s market

REITs want to be active. Buying and/or building. And they’re better situated than most of their competitors given a lower cost of capital, bigger balance sheets, more flexibility. But that doesn’t make it easy. They are buyers right now, yes. But it still ain’t easy. It’s still competitive.

NexPoint’s Bonner McDermett: “For quality assets, those are getting bid up. We were in a process on the deal we liked in Las Vegas … We put what we thought was a very compelling offer out there and got outbid.”

EQR’s Alex Brackenridge said of buying in the Sun Belt, he said they’re seeing more product come to market but also a lot of competition for deals. He said: “Multifamily remains a favorite asset class, and we expect to see that continue. So pricing for deals is around a five cap. People are buying into an environment where they think that, the dramatically decreasing supply will offset some uncertainty on the job side. I think everyone is a little uncertain about where we're headed, but buying in at a good basis in markets that, have robust likely future job growth. That’s something that is attractive to us and others, but we anticipate being active.”

Camden completed two acquisitions and broke ground on one development. Camden is also looking to sell some of its older properties. Ric Campo said they got 35 offers on one property they’re selling in Dallas. And when asked about the buyer pool, Alex Jesset said that for value-add plays, “there are so many funds out there and a lot of funds that you've never even heard of that have a great deal of capacity.” He particularly mentioned well-funded local operators with proven track records.

Speaking of acquisitions and dispositions, there was a big one between two REITs in Q1 – BSR selling 8 Texas properties to AvalonBay at what was reported in the news release to be a cap rate in the high 4s. But in their earnings call, AVB said underwritten to an initial stabilized yield of 5.1%. So a little difference there but that partly just reflects that cap rate is as much art as science.

BSR’s Dan Oberste noted benefits of the sale to AVB, but also said BSR wants to be a buyer in those same markets, noting “we have unprecedented dry powder” post-sale. Oberste said BSR is “focused on relatively new construction assets that are in the path of growth, with a focus on Houston and Dallas. We are actively engaged in discussions with potential sellers and fully expect to be adding to our portfolio in the coming months.”

Essex said they closed $345 million in acquisitions in Northern California, funded by dispositions in Southern California.

And in talking about the transaction market, Essex’s Rylan Burns said: “I would say consensus sentiment on NorCal has improved materially over the past year and we do think that we are losing out to some deals where people are getting a little bit more aggressive on the rent underwriting side. So trying to be prudent and take swings where we see a fat pitch.” But they do plan to be active buyers this year, even still.

Beyond its recent acquisitions, AvalonBay remains aggressive on development too, with $3 billion in active construction or planned pipeline. The REITs are generally quite bullish on the timing of new development given the big slowdown across the industry in starts, meaning that whatever breaks ground is likely to complete in a potentially more favorable leasing environment.

MAA is still planning to start 3-4 projects this year, and plans to break ground on a project in Charleston SC in Q2.

Now of course the question is not Q1 but going forward. And the uncertainty we talked about plays a role in that outlook. Brad Hill from MAA said as much. He said: “we've certainly seen a reduction in terms of the number of deals here in, call it, April … I'd say the volume of deals on the market here in April has dropped significantly in our market. So I would say the volume definitely has dropped. The pricing that we've seen, I would say, has been still pretty consistent, sub-5% cap rates in general on everything that we've seen trade. So, there's certainly uncertainty out there that's impacting volume. But at this point, it doesn't seem to be impacting price.”

This goes back to what I mentioned earlier. The market hates uncertainty. The sooner we have clarity on tariffs, the better. And certainly the temporary deal between China and the U.S. is a positive step boosting the market. But it’s a 90-day window. So it’s a good step but still lingering uncertainty out there casting a cloud over the outlook.

— My Latest Posts on LinkedIn —

Here are some recent posts if you missed them:

1. The “One Big, Beautiful Bill” House bill came up short on Opportunity Zones and would likely result in reduced apartment supply. But OZ advocates in the Senate could save the day.

2. Low turnover is making a lot of headlines, but too often one key factor gets overlooked — property managers.

3. With Warren Buffett’s retirement, let’s look back at his view on the age-old debate: Is it financially better to rent or buy?

4. This WSJ articles makes it clear that many Gen Z renters’ tastes in apartment living may have been spoiled by amenity-rich student housing.

5. Is YIMBY-ism having its moment? I think so — and I think every apartment developer AND owner should be paying attention.

— Now Spinning on The Rent Roll Podcast —

The Rent Roll with Jay Parsons podcast continues to rank in the Top 200 podcasts on Apple’s charts for investing-themed podcasts. Thank you for helping us grow so quickly. New episodes are released every Thursday morning.

Episode 34 dropped last week, diving into the themes shared on this newsletter. If you’ve read this newsletter but missed the podcast, you can skip the REIT recap portion and jump ahead to to the interview with Alfonso Costa Jr. — a former HUD senior official and now the COO at the Falcone Group. Alfonso offers a really unique perspective on development (and incentives needed to spur supply) given his roles in both the public and private sectors.

Find us on YouTube, Spotify, Apple and Amazon. The Rent Roll with Jay Parsons. Recent episodes:

Episode 31: How Tariffs Impact Apartments & BTR with NRP’s Dan Hull and Scott Villani

Episode 32: Can YIMBYs Reverse the Supply Slowdown? with Up for Growth’s Mike Kingsella

Episode 33: Can I Airbnb My Apartment? with Airbnb’s global head of real estate, Jesse Stein

JUST RELEASED, Episode 34: 5 Takeaways from Apartment REIT Calls

Coming Thursday, Episode 35: This week’s episode will be all about SFR and BTR, with updates on the SFR REITs.

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