AvalonBay Communities, Inc.

Good day, everyone, and welcome to Avalon Bay Community's second quarter 2021 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. You may enter the question and answer session at any time by pressing star 1 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, you may press star 2. If you are using a speakerphone, please lift the handset before asking your question, and we ask that you refrain from typing and have your cell phones turned off during the question and answer session. Your host for today's conference is Mr. Jason Riley, Vice President of Investor Relations. Mr. Riley, you may begin.

Thank you, April, and welcome to Avalon Bay Community's second quarter 2021 earnings conference call. Before we begin, please note that forward-looking statements may be made during this discussion. There are a variety of risks and uncertainties associated with forward-looking statements, and actual results may differ materially. There is a discussion of these risks and uncertainties in yesterday afternoon's press release, as well as in the company's Form 10-K and Form 10-Q filed with the FCC. As usual, this press release does include an attachment with definitions and reconciliations of non-GAAP financial measures and other terms, which may be used in today's discussion. The attachment is also available on our website at www.avalonbay.com forward slash earnings, and we encourage you to refer to this information during the review of our operating results and financial performance. And with that, I'll turn the call over to Tim Naughton, Chairman and CEO of Avalon Bay Communities, for his remarks. Tim?

Thanks, Jason, and welcome to our Q2 call. With me today are Ben Shaw, Kevin O'Shea, Matt Bierenbaum, and Sean Breslin. For our prepared comments today, I'll start by providing some high-level comments on apartment marketing conditions and how the current operating capital environment is shaping our actions, including our recent decision to enter new markets in North Carolina and Texas. Ben will provide a summary of second quarter results, including a detailed roadmap of results on a year-over-year and a sequential quarter basis. Sean will then elaborate on operating trends in the portfolio. where we've seen a robust recovery in fundamentals and performance since the first of the year. Matt will review performance in our development portfolio, including lease-up performance, and an overview of our first Conzo community located in Rockville, Maryland, where we completed construction this past quarter. Kevin will then provide an overview of our outlook for Q3 and the full year. And lastly, Ben will provide some summary comments on how AVB is well positioned to deliver earnings and NAV growth as we look forward. Before turning to the deck, I thought I'd provide some perspective on what we're seeing in the markets and how it's shaping our actions in terms of operations and capital allocation. Since the first of the year, the recovery in the apartment market conditions has been dramatic. Effective move-in rents have fully recovered from the trough, up almost 20% over the last two quarters alone. And asking rents grew even faster, up over 20% since the beginning of the year, and now stand at 8% above pre-pandemic peak. Concessions, which were significantly elevated last year, have fallen back to a modest level, closer to what we experienced pre-pandemic. As you might guess, the speed and steepness of the recovery has been driven by very strong rental demand. In fact, Q2 traffic was up over 40% from last year, It continues to outpace last year despite very low levels of availability. The combination of strong traffic and low inventory propelled rental rates through Q2, and that has continued through July. While all regions and sub markets are improving and most are back to or near pre pandemic levels, there's still a fair bit of variability across the portfolio. Specifically, suburban continues to outperform urban. Class A is outperforming Class B. And regionally, Southern California and our expansion markets of Southeast Florida and Denver are outperforming the portfolio average, while the Bay Area continues to lag the average. In addition to strong apartment markets, the capital markets are also extremely healthy and constructive for apartment investment. The transaction debt and equity markets are all wide open and are supporting strong growth in asset values, as we've seen cap rates fall below 4% across most markets and sub-markets over the last few quarters. Based on the strong market sentiment, we expect capital flows to remain healthy over the foreseeable future. With this operating and capital backdrop, we have shifted to offense and have increased our planned investment activity for the year by almost a billion between new development starts and acquisitions. In addition, in our release, we announced our intent to enter the Raleigh and Charlotte markets in North Carolina, as well as the Austin and Dallas markets in Texas. As we discussed over the last two to three years, we've been evaluating expansion into markets that we believe will disproportionately benefit from the growth in the knowledge economy and domestic migration, particularly in those markets that figure to see some migration from our existing legacy markets. We'll have more to share with you about our growth plans in these markets over the next couple of quarters. And lastly, as we mentioned last quarter, after completing a comprehensive mid-year reforecast, We are now providing full-year outlook in addition to quarterly guidance. While risks remain to our outlook, including the impact of the virus and the Delta variant, the exact timing of eventual phase-out of eviction moratorium across our markets, and the receipt of any rent relief payments from state and local governments, we believe we have enough clarity to provide a meaningful perspective with respect to our operating performance for the rest of the year. With that, now let me turn it over to Ben, who will discuss Q2 results.