AvalonBay Communities, Inc.

All right. If I could have everybody's attention, please. We'll get things underway here. My name is Jason Riley, head of investor relations for Avalon Bay. I want to welcome you to the management presentation portion of our investor day. I just need to make a few quick announcements before we officially get this underway. If you need any assistance today, please feel free to reach out to myself or pretty much anybody with the blue name tag on. They should be able to direct you. You should have received hard copies of the presentation in the bags, but if you do not have a hard copy of the presentation, just raise your hand. We'll get one over to you very shortly. This event is being webcasted and recorded. If you are participating in the webcast and wish to submit any questions, please feel free to email IR at avalonbay.com, and we will do our best to respond to those questions. And lastly, this presentation does include forward-looking statements. There are a number of risk and uncertainties associated with forward-looking statements. And there is a discussion of these forward-looking statements on pages two and three of your presentation. And we encourage you to review that information.

And with that, I'll hand it over to Ben. BEN COLLINS- Thank you, Jason.

And really great to see everyone. A terrific turnout, which we Very much appreciate, and we're excited to spend the afternoon together. 30 years ago this month, Avalon Properties went public, and one of my favorite quotes from that period of time was from Dick Michaud, who was one of our original founders and our first CEO, who said the following about us being public. We want to be a great public company that happens to be in real estate, an evergreen company that is built to last. I firmly believe we've lived up to that objective and I'm thrilled and I'm honored, along with the team here today, to share our vision on how we're going to continue to evolve Avalon Bay for amazing success in the years ahead. At the center of our success over the last 30 years has been two key elements, two key ingredients, our purpose, which is creating a better way to live, and our evergreen culture, which is rooted in our core values spirit of caring, integrity, and continuous improvement. We wake up every day focused on that purpose, headed towards those core values. We'll continue down our path to success. And that purpose and those core values, that's what energized me, that's what energized our team, and it will keep us connected and aligned throughout the organization as we continue to grow. We're in front of you today as the country's largest public apartment company. with enterprise value north of $30 billion. We own and operate close to 300 apartment communities in 10 of the strongest regions around the country. 70% of our portfolio is located in attractive suburban markets, steady demand, limited amounts of new supply. And as we've grown over the last 30 years, we've delivered outstanding, really remarkable results for our shareholders. Total cumulative returns north of 2,000%. and an annualized total return of 11.2%. And as we've delivered for our shareholders, we've also importantly delivered for our other key stakeholders. Our residents, who serve each and every day, our associates, 3,000 Avalon Bay associates who make it all happen, and giving back to the wider communities in which we operate. Along this journey, we as an organization have build a set of unique and differentiating capabilities, what I refer to as our foundational strengths, that I believe we'll continue to benefit from and be able to continue to leverage in the years ahead. So I'm going to start with those, and then we'll build from there. First, we are an organization with deep roots and a strong commitment to operating excellence and operating innovation. We've substantially evolved our service offering to residents over time. We've substantially evolved our service offering to residents over the last five years. And it's a core part of who we are. Second, our portfolio quality is unmatched. In addition to being in the strongest regions in the country, we're unique in that we've developed over 50% of our portfolio ourselves. No one else comes anywhere close to that. And it's allowed us to tailor those communities, evolve what we build over time to maximize their performance. Brings me to our third foundational strength, our development platform. And our development expertise and our development execution is really unrivaled. And it's been and has been and will continue to be a powerful driver of earnings and value creation going forward. And then fueling all this growth has been our balance sheet and our resolute commitment to maintaining one of the strongest balance sheets in the entire REIT sector. So those are four foundational strengths to call out for you. And I really do believe we're going to continue to benefit and leverage them in the years ahead. But on their own are not enough. We can't stay static. We need to continue to evolve because the environment around us has and will continue to change. We need to meet the elevated expectations of our customers. we recognize the opportunity to take advantage of rapid advancements in technology. We recognize the need to shift our portfolio, given population and demographic shifts that are underway, in addition to mitigate against certain risks. All of which brings me to our key objective for today, which is to leave you, our shareholders, with a deeper understanding of how we're going to continue to evolve, and in certain areas, transform Avalon Bay to deliver superior growth in the years ahead. We've structured our time today to go deep into four strategic focus areas. Four strategic focus areas that we believe will deliver this superior growth. And the beauty of it is each one of these strategic focus areas stems out of one of our foundational strengths. Our operating model transformation, our portfolio optimization initiatives, our development growth engine, and our growth-oriented balance sheet. That's what's going to be driving our success and driving our growth going forward. So let me set the table on each one of those a little bit further. At the top of our list today, top priority for us, we want to showcase our leading operating platform, our operating prowess, and the details behind our operating model transformation. Our vision for the future of operations is to deliver seamless, personalized experiences made easy, and made easy for both our customer and our associates. And on the customer side, just to translate that in my own words, we need to meet the customer where and when the customer wants to be met. And for most customers, most of the time, when you think about the rest of our consumer experiences, that increasingly means a mobile and digital-based experience. And for the department industry and for Avalon Bay, also increasingly a self-service-oriented model. So to accomplish that, we've had to go through and re-envision every step of the customer journey. and figure out ways where we can digitize huge components of that journey by developing new suites of digital tools. Looking forward, operating leadership in my mind is also going to mean leading in centralized services. And this is an area where Avalon Bay has been a longstanding leader in the sector. We're the first centralized service center in the sector going back to 2007. And we've been evolving and refining it ever since. And as we look forward in centralized services, Those services are gonna be increasingly powered by processing large proprietary data sets through the use of automation and through the use of artificial intelligence. Also looking forward, operating leadership is gonna increasingly mean tapping into and benefiting from our scale. And we're utilizing our scale in many of our sub-markets to shift our operational model to what we refer to as our neighborhood approach. We now have teams of associates handling five to eight assets per neighborhood, which is allowing us to optimize our delivery of services to residents while also driving meaningful operating efficiencies. Those are the three components of the operating model transformation, the digitization, the leveraging of centralized services, and the neighborhood approach. What we're most proud of is that operating model transformation is delivering tangible results to the bottom line, and results that I'll stack up against any of our peers. We are well on our way towards and really outpacing our progress towards our target of $55 million of NOI uplift from these operating model transformation activities. And we're excited today we're taking it up another level. We're taking it now to $80 million that we can achieve over the next couple of years. So that's a lot of time for me to start on operations, and we're overweighting our time today on operations as well, given how critical we believe it is to driving our future success.