AvalonBay Communities, Inc.

Good morning, ladies and gentlemen, and welcome to Avalon Bay Community's second quarter 2025 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 queue at any time during this call by pressing star and 1 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, Press star and two. 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 call is Mr. Jason Riley, Vice President of Investor Relations. Mr. Riley, you may begin your conference call.

Thank you, Zico, and welcome to Avalon Bay Community's second quarter 2025 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 SEC. As usual, the 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 will turn the call over to Ben Shaw, CEO and President of Avalon Bay Communities, for his remarks.

Ben? Thank you, Jason, and thank you, everyone, for joining us today. I'm joined by Kevin O'Shea, our Chief Financial Officer, Sean Breslin, our Chief Operating Officer, and Matt Bierenbaum, our Chief Investment Officer. Starting with our key takeaways on slide four of our earnings presentation, our second quarter and first half of the year results exceeded our initial guidance. As Sean will discuss further, our revenue growth was better than expected through the first half of the year. with higher occupancy and other rental revenue growth driving most of the favorable variance. We also benefited from tight management of operating expenses, which contributed to our same-store NOI outperformance during the first half of the year. As Kevin will detail, these operating expense savings carry through to our updated outlook for the year, with OPEX growth now forecasted at 3.1%, 100 basis points better than our original guidance, and translating into higher NOI growth in 2025, now projected at 2.7%. While our expectations for job growth in the second half of the year are a little more muted than they were in January, demand remains healthy across most of our portfolio. And importantly, new supply in our established regions continues to decline to levels not seen in over a decade. This low level of supply should continue for the foreseeable future, given that the barriers to new development, particularly in our suburban established regions, are substantially greater than most markets across the country. As Matt will further discuss, our $3 billion of development projects are expected to continue to generate differentiated external growth, with our development underway trending above our PERFORMA stabilized yields. While we experience some timing delays in occupancies in the first half of the year, we expect to occupy roughly the same number of homes by year end. Looking ahead to 2026 and beyond, this unique book of business will generate meaningful, incremental earnings and value creation and is one of the primary reasons we continually produce core FFO growth in excess of our same-store NOI growth. We're also making strong progress in advancing on our portfolio allocation objectives. We're well on our way towards our target of acquiring $900 million of assets this year, most of which is being funded by capital from dispositions. a continual process that we're confident will position the portfolio for stronger cash flow growth over time. And lastly, on the key takeaways, our balance sheet is in terrific shape, having raised $1.3 billion of capital year-to-date at an initial cost of 5.0%, an attractive cost of capital relative to our uses, and particularly to yields of north of 6% on new development projects. Page 5 highlights our Q2 and first half of the year metrics. including core FFO growth of 3.3% year-to-date, continuing to position us toward the top of the sector. We also started $610 million of new development projects in the first half of the year and have now raised our target to $1.7 billion for development starts for the full year, up from $1.6 billion. We continue to believe that we are uniquely positioned to secure an outsized share of what will be a lower level of starts in the industry, utilizing our strategic capabilities to execute on high-quality projects and an attractive long-term basis. Page 6 provides the roadmap for our second quarter core FFO of $2.82 per share relative to guidance of $2.77, with revenue exceeding by $0.02, operating expenses better by $0.05, partially offset by lease-up NOI and overhead. Please note that two cents of the five cents of the lower than expected operating expenses were timing related, which we now expect to incur later in 2025. As shown on slide seven, we head into the second half of the year with very healthy occupancy in our established regions, with total market occupancy at 94.8%. In contrast, market occupancy in the Sunbelt region stands at 89.5%, as those markets continue to struggle with elevated levels of standing inventory from recent deliveries. Our established regions are also well positioned from a new supply perspective, with deliveries expected to drop to 80 basis points of stock in 2026, further supporting healthy operating fundamentals. Before turning it to Kevin, I want to take a moment to say thank you and congratulations to Jason Riley. This is his last earnings call before his retirement from Avalon Bay later this summer. After 21 years at the company and over a decade as our head of investor relations, Jason has been an integral partner with the executive team here and a thoughtful resource to the investment community, shaping the dialogue for Avalon Bay and for the wider multifamily REIT sector. Jason has also been a strong developer of talent, including most recently with Matt Grover, who will now be stepping in to lead our investor relations team. Many of you know Matt from his prior roles on the buy side and for the last three-plus years at Avalon Bay. Congrats to Jason on his retirement, and we all wish him well in his next stage. I'll now turn to Kevin to further discuss our updated outlook.