NexPoint Residential Trust Inc (NXRT) 2016 Q3 法說會逐字稿

Good day, everyone, and welcome to the NexPoint Residential Trust, Inc. third-quarter 2016, conference call. Today's conference is being recorded. At this time I would like to turn the conference over to Miss Marilynn Meek. Please go ahead, ma'am.

Thank you. Good day, everyone, and welcome to NexPoint Residential Trust's conference call to review the Company's results for the third quarter ended September 30. On the call today are Brian Mitts, Executive Vice President and Chief Financial Officer, and Matt McGraner, Executive Vice President and Chief Investment Officer. As a reminder, this call is being webcast through the Company's website at www.NexPointLiving.com. Additionally, a copy of the Company's third-quarter 2016 supplemental information is available for your review on the investor relations section of the Company's website.

Before we begin, I would like to remind everyone that this conference call contains forward-looking statements that are based on Management's current expectations, assumptions and beliefs. Forward-looking statements can often be identified by words such as expect and similar expressions and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding the Company's guidance for financial results for the 2016 full year. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement.

Listeners should not place undue reliance on any forward-looking statements and are encouraged to review the Company's Form 10-K for the year ended December 31, 2015, for a more complete discussion of risks and other factors that could affect the forward-looking statements. Except as required by law, NXRT does not undertake any obligations to publicly update or revise any forward-looking statements.

This conference call includes analysis of adjusted funds from operations, or AFFO, funds from operations, or FFO, and net operating income, or NOI, all of which are non-GAAP financial measures of performance. These non-GAAP measures should be used as a supplement to and not a substitute for net income loss computed in accordance with GAAP. For a more complete discussion of AFFO, FFO and NOI, see the Company's earnings release that was filed earlier today and the Company's 10-Q for the third-quarter 2016, which will be filed with the SEC today, November 10, 2016, as well is our Form 10-K for the year ended December 31, 2015. I would now like to turn the call over to Brian Mitts. Please go ahead, Brian.

Thank you, Marilynn, and want to welcome everybody to the NXRT third-quarter conference call. I'm Brian Mitts, Chief Financial Officer.

I'm going to go through some of the results, a couple high points for the quarter, which I think was very, very good. Give a couple stats and then I'm going to turn it over to Matt McGraner, who is our Chief Investment Officer, to go through some of the detailed portfolios of markets, et cetera. So with that, let me start off with our results for the third quarter.

Our net income -- total net income was $8.8 million, driven by our results for the quarter but also a $9.6 million gain on dispositions. Our FFO was $6.9 million or $0.32 per share for the third quarter. Our AFFO was $16.2 million or $0.77 -- $0.76 per share for the third quarter.

Our net operating income was $17.1 million for the quarter. Our rental income was $28.6 million for the quarter. We finished the quarter with an average rent -- effective rent per unit of $848 and occupancy of 93.6%. That was -- that included 36 properties with 11,626 units across ten markets.

We successfully completed the sale of four properties for a combined proceeds of $69.7 million. The aforementioned gain of $9.6 million, which resulted in a 17.3% levered IRR of those properties and an approximately 1.4 times multiple on our equity in those deals.

Our same-store results we think were quite good. For the quarter we had 32 properties in our same-store pool which represented approximately 89% of our total units. We were able to increase our rents 9%, our rental income, other [jumped] 19% increase, for an overall NOI increase of 12.8% on a same-store basis for the quarter. And that was also driven by an increase in occupancy of 48 basis points on the same-store pool. And again Matt will go through some of that in some more detail in a minute.

Also wanted to go through some of our capital structures, some of the stats. We ended the quarter with $68.2 million in cash on our balance sheet. $34.1 million of that cash is free cash, $14 million is earmarked for the value-add program. The remainder is deposits and lender required escrows, et cetera.

For now, we intend to fund any acquisitions we do, and there is a couple to talk about, from our free cash flow. We are generating quite a bit of excess cash as our dividend coverage is quite high, as well as the proceeds we've received from the sales that we have yet to deploy.

On the topic of the value-add program, we have 538 units -- or begin rehab on partial units for a total of 538 units for the quarter, which was $4.2 million in costs for the quarter and a total of $15.2 million over the course of the year, through the nine months ended September 30.

We also did some things with the balance sheet as far as leverage. Our leverage is down to 57%. That's our net debt to our enterprise value. So those of you who have been following us for a while know that when we first came to market our leverage was much, much higher so we have been working that number down.

We finished the quarter with $626 million of total debt. Of that, approximately 90% was fixed-rate debt. However, at the end of last quarter, and then these became effective this quarter, we did a series of interest-rate swaps to the tune of $400 million which effectively fixes about 74% of our debt -- or our floating-rate debt. So that's, we think, hedges us quite a bit from any potential interest rate increases. Overall, our effective fixed-rate on our debt is 2.96% when you factor in the impact of those swaps. So we think that is a very good position for us to be in.

I want to point out again, our line of interest with shareholders continues to be strong. At the end of the quarter, we owned approximately 17.9% of the stock, which was an increase from last quarter. We purchased about 121 shares -- excuse me,121,000 shares during the quarter, as a Management Team, so we continue to add to that total. We like to buy the dips and, as you guys know, the REIT's stocks have been quite volatile here in the last quarter. Hopefully, with the settlement of the election and a path forward there, we will see a little more calm in the markets.

We announced during the third quarter a repurchase program for the stock. We began doing that in earnest in the third quarter, and beyond. As of November 9, we have purchased approximately $4.3 million of stock, that is 233,000 shares. And we continue to utilize that program, particularly when the stock drops. We will talk about this later but we feel that our NAV is approximately $22 a share at the midpoint. So at the current levels of stock we think it is quite a bit undervalued. So we are using the buy-back program to mix and accretive acquisitions of our stock.

Speaking of acquisitions, on the property side we did one during the third quarter and we've done another post-third quarter. We purchased CityView property, [property new] CityView, in July. It's a -- purchase price $23.3 million. We put [$15.8 million] debt on it. Matt will go into more detail on that, as well is our most recent acquisition, which we did last month for $44.6 million and put debt of $29.5 million on that.

We continue to have a very healthy FFO and AFFO coverage of our dividend. We're 1.59 times covered on an FFO basis and 1.77 times covered on an AFFO basis, excluding the gain on sales, that we add back to AFFO.

Let me finish, before turning it over to Matt, by highlighting a dividend increase we just announced as well as talk about our guidance for full-year 2016. Our board has approved a dividend increase of 6.8%. So the new dividend beginning for shareholders of record on December 15, payable on the 30th of December is $0.22 per share. Given our continued results, which includes our third quarter in a row of double-digit same-store NOI growth and what we feel to be very good results, we think that it is time to do a dividend increase. We have talked about it for little while, but given our results we think that it is in order.

So to finish, before we turn it over to Matt, we want to reiterate our prior quarter guidance for the full-year, which includes revenue on the low-end for the full-year of $130.6 million to $132.6 million on the high-end. That is obviously going to be dependent upon sales or new acquisitions, but does factor in the acquisitions that we've made so far this year.

Our NOI guidance on the low-end is $68 million, on the high-end is $70 million. We are currently right on target with that. FFO per share, on the low-end $1.38 per share on the high-end $1.47 per share. And for AFFO, we were guiding to $1.46 per share on the low end and $1.55 per share on the high end, and again those are not inclusive of the gain on sales that we do add back to arrive at AFFO.

So with that let me turn it over to Matt to give you some details on some of these results. And then we will turn it back over for questions.

Thanks, Brian. 36 properties to-date for value add and we are doing either interior or exterior in each one of them. Approximately 76% of all budgeted exterior in common area dollars have been spent and approximately 51% of budgeted interiors have been spent.

As Brian said, we completed upgrades on 538 units during the quarter. Portfolio-wise, and since inception of our programs, we have now done 4,118 interiors or about 35.4% of the gross portfolio. Our average cost per unit is looking good around $4,648 a unit, achieving approximately $85 a month in rent premium there for a 21.1% ROI increase.

In our same store portfolio, as Brian mentioned, we did on a cumulative basis 12.8% NOI year-over-year. More specifically by market, Dallas was up year-over-year in the third quarter by 13.8%, Houston was 11.2% and the D.C. Metro area deals were flat. Atlanta was very strong with 18.3%, Nashville at 10.5%, Charlotte at 10.6%, West Palm Beach at 1%, Orlando at 9.6% and Tampa with 17.6% total.

As we've mentioned continually on the calls, as we continue to see strong effective rent growth across our portfolio, especially in the B space, so year-over-year in the third quarter Tampa led net effective rental increases by 9.34% growth. Nashville was second with 9.1% growth, Charlotte third at 8.75% year-over-year and Atlanta was fourth at 8.49%. Dallas was next at 5.59% and then the Regatta Bay in Houston, our one property there, continues to do very well. That is up 4.6% year-over-year.

Quarter-over-quarter effective rent growth was also very good. Since the second quarter, Tampa led the portfolio with quarter-over-quarter growth of 3.06% growth. Atlanta, Charlotte, Dallas, Dallas-Fort Worth, deals in Nashville all saw effective rent growth above 1.5% quarter-over-quarter. New lease growth was also very good, which is the same-unit, new tenant. Across the portfolio it was 7.7% overall on 1,687 new leases during the quarter. That's a $64 average monthly premium. And then seven markets saw 7.5% plus growth on new leases.

Tampa saw the -- dramatically the most at 18.17% during the quarter. That was on 67 new leases signed at $150 average premium. West Palm Beach was next at $119 premium, which was a 12% increase, Atlanta at 11.54%, Nashville at 10.75%, Jacksonville was right at the top five with 10%.

Renewal growth was also very good at 5.9% overall on 963 renewals during the quarter; that's a $50 average monthly increase. Atlanta saw the highest growth on our renewals, same unit -- tenant, new lease up 14.64% during the quarter. That's $121 average premium on 284 renewals in that market. Charlotte was second with 5.54% growth on renewals, West Palm Beach was third with 4.9% renewal increases.

As Brian mentioned, we sold -- we were active selling deals in the quarter as well. We completed our exit from the Jacksonville market, generated in the tune of 25 -- during the time of 25 months, 31.5% IRR and a 1.6 times multiple on that portfolio. Year-to-date we've sold $134 million worth of assets in our non-core markets. We've generated approximately $58.5 million in net proceeds and a GAAP gain of about $26 million. We're actively looking to exit our mid-Atlantic portfolio. Those are held for sale, I believe, in our Q, as you'll see. And are also mulling two -- asset sales in Dallas, two to three deals that we have created tremendous value in over the course of the last couple of years.

With the proceeds, we continued to allocate capital pretty well with stock buybacks at discounts to NAV, we'll look to retire debt and then opportunistically pursue acquisitions. Specifically, we are looking more closely in Houston. We think that the ability to sell Dallas B assets at 5.25% or 5.5% cap rates and swap into Houston north of 6% cap rates make a lot of sense.

Recapping the acquisitions that Brian mentioned earlier, during the quarter we acquired CityView in West Palm Beach, a 217-unit property for $22.4 million. We've hit the ground running on this deal, in particular, and expect to move the cap rate 75 basis points in the next 12 months.

Subsequent to quarter-end, we acquired The Colonnade. It's a well-located 415-unit property just a few blocks away from the Biltmore Fashion Park Mall in Phoenix in the Biltmore district for approximately $44.6 million. It was capitalized using a combination of proceeds from the sales of Jade Park and Willowdale together with an additional drawdown on our Freddie Mac credit facility. Purchase price of the dirt totaled $100 a square foot, which we believe creates an enviable covered land play over the long-term. Over the short term, we expect our fully-loaded tax-adjusted year one economic cap rate to be about 5.3%, which we believe we can move 60 basis points to 75 basis points a year through 2019, using our value-add strategies.

Let me close by saying we are excited about how our portfolio is performing. Specifically, the internal growth prospects within our existing portfolio, given the cash that we have on the balance sheet to continue to do the value-added programs and those opportunities that we think are as attractive as ever right now. Quite tellingly, despite having sold $134 million worth of assets year-to-date, we're still on track to hit our full-year 2016 NOI guidance targets, which speaks to the strength of our strategy.

I'd like to thank our property management partners always, BH Management, for continuing to do a fantastic job operating the assets, as well our guys here at NexPoint, for their continued hard work. So, Brian, back to you.

Thank you. Before we turn it over for questions, let me recap a little bit, obviously a lot of information there. First, we think the results were quite good. When we first started this about 18 months ago, we told everybody that would listen that this was an NOI growth story, which we thought was very unique in the publicly traded REIT space and we think we continue to form, as I mentioned, this is our third quarter in a row of double-digit NOI growth on a same-store basis, which if you compare it to the peers in the multi-family space that is pretty fantastic returns.

In addition to that, a new stat that we started to talk about -- or a couple stats, is what is the upside on the renewals? So after we do a rehab we are seeing a nice bump in rents but what happens on the next renewal, whether it's a new tenant or same tenant? And I think as you can see from -- or hear from the results that Matt discussed, we're seeing some pretty great upside there as well. So we think that this NOI growth story continues.

We continue to try to be good stewards of managing and the capital and allocating the capital, continue to be net sellers, obviously we sold quite a bit this year. But we have done some acquisitions and we continue to look at acquisitions but want it to be on an accretive basis. So one of the reasons why we continue, despite asset sales, to be pretty much in line with our full-year guidance on FFO, AFFO and NOI basis.

As mentioned before we continue to try to de-lever the portfolio through gains in the value of the asset as well as good balance sheet management. And then as we've said many times on this call and elsewhere, we like floating rate debt, not because we are trying to make a play on interest rates, but we like the flexibility of it. And recently have made some moves to mitigate any upside risk that we may see in interest rates, by putting the swaps in place, which we have always had something there in the form of interest-rate caps, but we have effectively fixed our interest-rate on the vast majority of our portfolio to below 3%, which we think is very, very good.

We continue to use the stock buybacks strategically to purchase stock accretively throughout the course of the last few months and continue to do so. We think the dividend increase is obviously a very healthy sign and shows the strength of the strategy and the NOI growth, the cash flow that we are bringing in. And then we continue to do our value-add program through the renovations, which we think is clearly generating superior results.

And then finally we put our money where our mouth is on that and continue to buy stock. We believe the story, as a Management Team and as a Board, and we continue to show that, prove that through our acquisitions in the open market on an individual basis. So with that, let me turn it over to the operator to take questions.

(Operator Instructions)

Michael Kodesh with Canaccord.

Good morning, guys. Thanks for taking my questions. Just a few for me and mostly on the portfolio itself. Just looking actually at first at some of the sales that you guys have done.

Colonial Forest, I think 34% of that was renovated, Jade Park 29%, Park at Blanding 29%, Willowdale 8%, and I think your asset held for sale, The Grove is 26%. It looks like you guys were selling these off a little earlier than planned. I think you had benchmarked 60% of a property being renovated before considering it for sale. So just trying to get a better idea of what your thoughts are on asset sales, maybe what the market looks like?

Maybe those specific assets? Any color you can give there and not leaving any extra money on the table as well. Thanks.

Good question. And there's -- it's a bifurcated answer and a tale of two markets from my perspective. Willowdale, as well is The Grove, and I would also lump Southpoint into there, the mid-Atlantic B market has not been a strong as we would have thought or liked over the past couple of years.

When we spent the money we weren't getting the type of rent premiums that we normally get or like. We got some. They were low-double digits but they're not what we aspire to be.

So we thought that it was a good time to cut our losses there when we can get a good -- we won't lose any money but just to move on from that market and swap into higher growth markets such as the Phoenix and then opportunistically maybe a Houston. So that's the story on the mid-Atlantic.

The Jacksonville portfolio is different in that we didn't have to spend the money to get the outsized returns that we were looking for. In fact, our underwritten exit on the Jackson portfolio was achieved in two years when we had originally underwritten the same type of returns over a five-year period.

The Jacksonville market was paying you for work that you didn't do, that way we just kept the cash our pocket and moved on. So we thought that, that was the right time to sell that. And then, like I said, the mid-Atlantic deals just not a strong market, not a core market for us.

Great, that's really helpful. And then looking at Pointe at Foothills. On your last supplemental you had them under a planned rehab, and I'm sorry if I missed this in the prepared remarks, but I think it was removed this time around. Just trying to get an idea of what is going on there?

We are doing a full rehab there. So, yes.

Okay, I will take another look at that I guess. And then for the Radbourne Lake asset, I noticed that for the past couple of quarters, I think the past four quarters, it has been over that 60% threshold. What is going on at that asset?

Anything special in that market, or just where the NOI growth is currently? Thanks.

Yes. So Charlotte has been a tremendous story of late. We probably could move our NAV range up on those two assets. We've seen a tremendous amount of transaction activities and compression in cap rates and so we have continued to get the type of ROI on the rent on a rehab. So we still have cash to do it, so we're still doing it and want to maximize the opportunity there to drive NOI.

But Charlotte as a market and these two deals in particular, Timber Creek's market and sub-market's on fire. And then Radbourne, like I said, we just continue to push because we can get that type of rent volume.

Great this really helpful and then just one more for me. And this one is more of just a general question on the acquisition market at present. It sounds like you guys have identified a couple of other opportunities. It sounds like Phoenix is still good, as well as maybe Houston.

But just what are some of your thoughts there? What's the competition like and then where are you guys looking as well? And then also, how are you weighing that decision with buybacks and deploying capital in that manner? Thanks.

So we like the markets we are in. I actually had dinner last night with Harry Bookey of BH and we were talking about our target markets and we don't really want to grow into any new markets, per se. We do like swapping out of deals in the mid-Atlantic to go into covered land plays, really well-located deals, that have an underlying land premium to them, such as the Colonnade, such as CityView.

And so those are the types of acquisitions we will look for at this point in the cycle given that we are, admittedly, long in the tooth in the real estate cycle. We want to -- can't miss on location so that's what we are focused on first and foremost with respect to doing an acquisition. In markets in particular, we'd like to grow in Phoenix, the Colonnade helped. A lot of people have said that Houston hasn't cracked yet.

We think it has. We've seen some opportunities to buy some 1990s-vintage deals at 6.5% plus cap rates if you can move quickly. And so we are starting to sniff around there. Like I said, rotate, sell deals in Dallas for 5.25% cap rates and rotate into Houston at 6% plus.

That feels pretty good over the long-term, particularly if you don't think Houston is going to fall in the Gulf of Mexico, which we do not. And then how do we judge that with respect to share buybacks? We have an internal target of where we think -- where we want to put more money to work, with respect to where the stock is trading, based on our NAV. And I can tell you anywhere in the $17 per share, in the $18 per share or lower, we are going to be really aggressive with it.

But we are subject to the volume, the 10b-5 volume limitations, which we can only purchase a certain amount of value in our stock. And I can tell you that on certain down days, we've hit that several times. We are asset allocators here at the firm and we will continue to be aggressive with the buyback. Brian, I don't know if you have anything to add to that.

If there is an opportunity to deploy capital accretively through buying our stock at very cheap price, we are going to do that. We haven't historically been huge fans of buybacks and we think that the current program in place is very measured and is good uses of the capital. Just to recap, it is a $30 million program to date we've spent about $4.3 million. So it's not like we're out there just buying back our stock willy-nilly. It's very strategic.

Awesome, that's really helpful color, guys. I appreciate you taking my questions and nice quarter.

Thanks, Mike.

Daniel Donlan with Ladenburg Thalmann.

Thank you and good morning. Just going back to the buyback question, with interest rates rising as much as they have in the last two or three days, does that change a little bit your view on any of the -- obviously that could put pressure -- upward pressure on cap rates? Are you taking little bit less aggressive approach, at least in the interim until you see where long-term interest rates shakeout?

I would say absolutely. We're wanting to see, just as you are and just as the investment community is, where do these rates normalize. And we heard two theories yesterday that, one, interest rates were rising because of the growth that maybe some of the Trump programs will bring or that some of the spending that might be for infrastructure-whatever might add more debt to the country's balance sheet and push rates up.

So I think it's kind of a wait-and-see approach. But with respect to how we allocate capital, I don't think we are going to have a tantrum up to 3% and so I think, barring something short-term like that, I think everything from a cap rate perspective in a transaction market will still be healthy. But of course this is a huge move, I will give you that. It's a huge move in the last couple days in interest rates. So we will just have to see. We'll be measured. We won't get ahead of ourselves with any buyback or allocating capital over the next week or so. We will have to wait and see how it -- how everything plays out

Okay. That's helpful. And Colonnade, you mentioned a 5.3% economic, what was the nominal, or what are you looking at in terms of CapEx in the first year? Is that 5.3% based upon a standard $300, $350 a door of CapEx reserve or that based upon something very -- a lot more robust? $1,000 a door? Just kind of curious how you got to that metric.

Yes. So it based upon our fully-loaded year one including our rehab dollars. We are expecting some sizable rent bumps there in some floor plans ranging upwards of $200 rent premiums because the net effective rents there are just so low. And it's what we look for. Some of the handles on the rents are $600 and when you can walk to a Saks and a Whole Foods, it doesn't make any sense when you can put the money to work and upgrade the interior. So that's on our year-one CapEx number of upgrading about 15% of the units for that first year. Our plan -- we plan 60% rehabs historically on every deal and that's 15% to 20% number.

And the Grove at Alban, how close are you to selling that? Is that the only asset in the held-for-sale bucket?

Yes, it is. We've gotten some interest -- some more interest adding -- potentially adding Southpointe, the other Fredericksburg deal with that. But it is our only one being held-for-sale marketing, but I could potentially see us exiting both of those to a single buyer -- portfolio buyer.

Okay. And I know you don't want to negotiate over the conference call but cap rate range on a nominal basis low-6%, high-5%, somewhere in that range?

Yes. It is within our NAV range on a nominal basis.

Okay. And then just as far as a portfolio -- your repairs and maintenance for the same store were up almost 26%, just curious what happened there? Is it just one of the projects that you had to -- what happened there?

So it's a shift in how we are looking at the apartment business in the B business. It's up about [500 units], or to your point, 25%. The apartment business is becoming more and more like a hotel. If you have something broken, you better get on it quickly and make sure that you can fix it.

If a toilet is broken, or if someone needs something in their apartment fixed, you've got to get on it. So I say that -- I have to say this, the maintenance techs that we have historically had on the property, we want them to be focused on customer service portfolio-wide. And so what we've done, is to the extent we've had to turn units quicker or help in rehabs, we've been contracting that out on a wholesale basis to a group that BH uses, at a discounted rate that we just think it's more accretive and we can still keep the tenant satisfaction very, very high, gauging by our renewal rate that's been happening.

But that's been a shift in how we've utilized the contract labor with respect to repairs and maintenance. It has ticked up a bit, but I think we will see that it will be worth it.

Okay. And then insurance costs were down about 19% or so. As or some type of lapping of that, that occurs or is it one-time-ish in nature? Just curious there.

It's a bulk purchasing benefit that we get from BH. They basically bid it out every year.

And because of their scale, they're a 65,000-unit operator, they get tremendous rates, tremendous quotes. We've seen this the last couple of years, they just do a great job of getting the best rates for us.

Okay. And then lastly on rehabs going forward, how do you think about that in terms of economic growth prospects and/or a rising interest-rate environment? Is there anything that would force you to slow down on that? Or speed up? What is your thought process on that going forward?

I think my personal view is we continue to do it until we don't get the types of returns that we are underwriting for. And those have been historically high-teens, low-20%s ROI on the rent bumps. When you can't get that anymore, you stop it.

And then you look to put that money elsewhere that can achieve that type of growth, that ROI growth. Whether that's a buy back of an acquisition or what have you. Probably more a buy back than an acquisition but I think that there are opportunities out there and that's where we'll use the capital. And if there aren't, then we'll return the capital to shareholders. I think that's the prudent thing to do.

Thank you very much.

(Operator Instructions)

Jim Lykins from D.A. Davidson.

Good morning guys. So in Phoenix, that was the only market that wasn't -- or didn't have rents up by at least a healthy amount. And you talked a little bit and you mentioned the Colonnade but what is the plan for rehab in Phoenix in right now? How are you thinking about that?

I think that we bifurcated between the Madera and Foothills deals, which are not as main of location, and the Colonnade. The Madera and Foothills deals, to Michael's question earlier, we're testing some of the rehabs. We're not spending as much at the Pointe and Foothills, for example, because we don't need to, to get the $60 premiums that we underwrote. And then, same thing with Madera.

You'll probably see less of a rental premium there than at the Colonnade where we think we can get $150 to $250 rent bumps. Long story short, we will pursue rehab activity at each of our three deals there. It will probably be a little more outsized at the Colonnade just because we can get the rent bumps for it.

Okay, that's helpful. Also, can you just talk a little bit about how renewals are trending into Q4? What are you seeing right now?

Yes so I think we finished, as I mentioned, in seven markets or so, we were 5% or higher. We haven't seen anything let up from the third quarter. There's been a lot of noise around, multi-family REITs in general, around growth slowing.

I think that because our price point is so competitive versus the next best option, I think we can still continue to get 5% plus renewal growth. Especially if we continue to deliver value for the resident. Vis-a-vis customer satisfaction and continuing to upgrade the amenities and provide a better living space.

I think that we don't see any headwinds in the near-term. Obviously, that could change but it feels pretty good right now.

Okay. Thanks, guys.

Thanks, Jim.

I'm showing we have no further questions at this time. I'd like to turn the call back to Management for any closing remarks today.

Thank you. We appreciate everybody's participation today. We're happy about the great quarter and looking forward to finishing up strong for 2016. Look forward to 2017. And we hope all of you are along for the ride.

Thank you very much and we will talk to you next quarter.

This does conclude today's conference. Thank you for your participation. You may disconnect at any time.