Welcome to Citi 2025 Global Property CEO Conference. I'm Nick Joseph here with Eric Wolfe with Citi Research. We're pleased to have with us Invitation Homes and CEO Dallas Tanner. This session is for Citi clients only, and disclosures have been made available at the corporate access desk. To ask a question, you can raise your hand or go to liveqa.com and enter code GPC25 to submit any questions. Dallas, we'll turn it over to you to introduce the company and team, provide any opening remarks, tell the audience the top reasons an investor should buy your stock today, and then we'll get into Q&A.
Okay, great. Hey, can you all hear us okay? Thanks for having us. To my left, Scott Eisen, our Chief Investment Officer. To my right, Charles Young, our President. And to his right, Jon Olsen, our Chief Financial Officer. And to his right, Scott McLaughlin, our Head of Investor Relations & Tax. First of all, thanks for having us. I think it's a really good time for Invitation Homes. One, three reasons why you should buy the stock. I'd say first, sort of a great entry point. I think we're, you know, pretty—I think we're priced pretty favorable from an entry point perspective. We feel like the second point would be that our fundamentals are really good right now. We've got something somewhere around 13,000 people a day turning age 35 in this country. Our average age of our customers is 38 years old.
The demographic tailwinds, you know, as you guys know, support the thesis that millennials are going to have much more input on the way they live, the flexibility that they're choosing, which lines up very similarly with the trends we see in our own portfolio. Today, we have roughly a customer that's staying with us 38+ months, continues to renew, with renewals making, you know, close to 80% of our business from a revenue perspective. You know, second to those fundamental points is we've seen sort of the ability to weather, you know, sort of different inflection points, whether it's a hot market or a slow market or a market with low interest rates or high interest rates. The fundamentals sort of carry the day. And I would say lastly is the growth prospects of our business. Renewals, as I mentioned before, continue to stay very sticky.
I think like what we've talked about coming off of our October call and was sort of confirmed on our earnings call last week is that we figured we would see really strong numbers in that renewals business through the end of the year and early this first part of the year. We shared updates through February with, you know, with renewal rates pushing sort of into the mid fives. And then our new lease would start to bottom out in January. Turning into February, we'd start to see that reaccelerate. And so we shared some of that data, and we feel pretty positive that the company's footing is really in a healthy place going into 2025. I'll stop there.
All right. So there's probably going to be a lot of questions on operations. So maybe we'll just start actually with external growth. You know, we were talking about this a little bit last night, but I was curious, you know, you know, how many sort of home builders you're working with at this point, type of partnerships, how you think those partnerships could evolve over time. And if you think about what the greatest pain points are that you're trying to solve for them, you know, what are those and sort of how can you work together to solve those pain points on your end and on their end as well?
Let me just say a couple of things, and I'll hand it over to Scott. I think on the pain points, we're typically trying to solve for speed and certainty of close, right, for a builder and sort of keeping the drag down in their business, letting them be much more of a manufacturing plant and a sponsor of homes versus running an entire delivery process with normal sales. Scott, why don't you provide as much color as you want around structures, partnerships, and how that's evolving?
Sure. So in terms of our builder partnerships, you know, we've over the last, you know, three years developed relationships with, call it, you know, 10 either national or regional production builders. And look, our goal and objective is to, you know, work with them to buy new construction product. And as we think about that new construction product, we view ourselves as being part of their ecosystem, right? You know, the primary market that a home builder is trying to build for is for an end user. But when we think about how we work with those builders and participate in their ecosystem, you know, we will say to a builder, look, if you're developing a 400-home community, you know, we are open to participating with you on buying homes in that community and sort of various formats.
So one format where we could buy with a builder is to say we'd like to buy 100 homes. Let's say it's a 400 home community. We would buy 100 homes scattered throughout that community, and we would take down houses, you know, as they are developing that community. The second way we participate is, let's say it's a three-phase community. We may say to the builder, we'll buy phase one or we'll buy phase two. And then, you know, the other phases could be end user sales as well. And then the third way we would work with a home builder is, for example, they would give us a full dedicated community that might be, you know, 150, 200 homes that would be sort of a separate community that we would run as a full community BTR.
And so from our perspective, we look at the builders and say, look, we can be a supplement and a complement to your retail sales. And if you think about how the builders produce, generally speaking, their retail sales tend to be three to five homes per month. The delivery schedule they have with us tends to be something in the range of eight to 10 homes per month. And so if we're working with them on having them make deliveries for us, it both gives them confidence to potentially take on a larger project because they know they've got an institutional buyer that will be taking down some percentage of that community. And we will also accelerate their completion and sell out of that community because the pace of deliveries that they have with us is at a faster rate than they might have to an end user sale.
And so when we work with them, we are very open with them on our analysis, right? They're open book with us on what cost they would deliver us a home for. We're open book with them on what yield on cost and what rents we're underwriting. We're not trying to hide anything from them. And we try to come to a decision where, you know, we try not to take denominator risk in terms of the cost of the home, but obviously we're taking numerator risk in terms of what rent and margins that we're underwriting. And so when we work with them, we view ourselves as being some percentage of their sales.
Like, you know, we would never be 100% of a sale for a home builder, but if they could just use us as a way to complement and continue to grow their business, and if we could be 3%, 5% of their sales and just help them, you know, think of it. I think we've referred to this before as the concept of fleet sales with car sales, something like that for us would be a way we would work with the builders and help them to continue to deliver supply. And so that's kind of how we think about, you know, participating in that ecosystem and really being a long-term partner with them. You know, in an ideal situation, when we work with a builder, we would like to say to them, look, what do you have, you know, coming in Florida for the next 12 months, right?
Show us your entire backlog and inventory of communities. And look, some communities might not be in a market where we have boots on the ground. Some communities might be at a price point that's just too expensive for the consumer we're targeting. Some communities, just for whatever reason, may not work for us. And if it's one-car garages, you know, if it doesn't have yards, et cetera. And so as we think about the product type, the location, and frankly the cost, you know, we try to narrow down that funnel to something that works for us and works for them. Not everything's going to work, and we understand that. That's what our funnel's for, and that's what our, you know, screening and underwriting process is.
Got it. And you've generally not been, you know, a fan of balance sheet development, you know, as you said, taking numerator risk and not taking denominator risk. Is there anything that would, you know, make you take a little bit more denominator risk in terms of, say, maybe taking, you know, some construction risk, you know, lending to builders at, say, a certain LTV, you know, different types of strategies where you can earn maybe an excess return in the short term and increase your deal flow from working with developers that need that cost of capital to build the properties that you want?
Yeah, I think we've said this before where if you think of sort of the two extremes, right? The one side where we are right now is we are entering into forward purchase agreements with the builders. They deliver us a home. We lease it up ourselves. Obviously, there's the other side of the spectrum where you take the full construction risk. You take down the land. You take down, you know, the risk yourself. You have the development team, the GCs, et cetera, on your team. We view there being lots of ways in between where we can work with developers, work with home builders, allocate capital to help them in the construction progress, the process, without us taking on 100% of that activity on our balance sheet.
We're thinking through ways where we can be in that in-between area where we can work with the builders, help build new product, and ultimately get something that would be, you know, community and homes that we would want to own long-term on balance sheet. We're thinking through various ways to allocate capital to that structure that we think would be accretive to our shareholders. It's kind of in that in-between zone that I just referred to.
Got it. And maybe just one last question. I think on the call, you said you at some point there could be like a convergence between multifamily and SFRs in terms of operating structures. I didn't really know what that meant. I didn't know if that was like, you know, thinking through, you know, some multifamily development with townhomes. Like, I'm just trying to understand what the convergence would be between the two. And maybe it was just the transcript was really wrong, but I wanted to understand what it meant.
It's always the transcript. I would just say, look, we see this in smaller companies today where you see some, you know, people that have deployed capital and they've done some SFR, maybe even a little BTR, and they own a handful of apartment buildings, and they'll talk about some of the synergies between the two businesses. You know, even one of our peers, when they were public, had a multifamily portfolio. I'm thinking of Tricon, and that they ran very well, but they eventually got out of that business and they held on to their SFR business. So the P&Ls look very similar. The businesses can be a little bit different. There's some nuance. I think both could support each other in the right context.
I think what we were talking about more on the earnings call related to some of the townhome and more infill type of product that we're doing. We have a lot of that going with different partners around the country right now. We like it. A little higher price points, a little bit more infill. Sometimes it shares a common wall. It might look and feel a little more homogeneous with like a multifamily sort of product or a brownstone product. But the reality is at the end of the day, it's sort of your typical SFR customer that's going to stay with us sort of 38 months, kind of fits our target demographic in terms of what we're trying to do. That's all we were trying to say on the call.
Got it. And then in terms of funding this, you know, investment activity, dispositions have been a great source of capital. Everyone can see that you've been, you know, selling assets for 4% or under. You know, what's in guidance in terms of the cap rate on those dispositions? And then, you know, given that these yields are just, well, you know, well below your cost of debt, you know, why not be a little bit more aggressive in terms of selling more of these homes?
Jon, do you want to take the lead on placing the guidance? I can talk about that.
Yeah. I mean, we haven't specified the cap rate. What I'll say is our disposition activity over the last several years has been sort of in the low fours zip code. You know, ultimately, year by year, it depends on market mix, depends on the actual product we're selling. And it's been a very attractive source of capital for us. I think, you know, to your question, why not sell more? I mean, we're not trying to shrink the balance sheet. We're trying to shape the portfolio, prune the portfolio, and in the course of so doing, improve our overall growth and margin profile with a focus on, you know, long-term risk-adjusted total return.
So it's a means to an end as we sort of manage the business, as we think about, you know, what are going to be the evergreen assets that we want to hold on our book long-term. But the reality is, you know, we can flex that level of activity up or down depending on sort of what market conditions are offering to us.
Yeah, Eric, let me just jump in here. You know, look, Jon and I work and we talk about, we were literally talking about this last week. Like, we just, we're constantly looking at where our sort of cost of capital can come from. And we did, you know, a really good bond deal in October of last year. I think the Treasuries were somewhere in like the 375-ish sort of range. And when that all in coupon for us came just inside of 5%. So, you know, we'll certainly use, we have capacity on the debt side of the house as well in terms of to fund future growth. And so it's just really to Jon's point, like, what's the best sort of option for us real-time? Accretion, dilution analysis, where do we think we can drive the best risk-adjusted returns for our shareholders?
You know, it's not, it's never a one-size-fits-all approach. We certainly have expectations around forward deliveries for the year. I think, Scott, we've got currently committed what, 2,000? No, I know, but how many come in delivery in 2025? 1,400 units that we know are coming in for sure. So some of the early guidance will reflect that, right? And then as the year plays out, to Jon's point, we'll look for things as we evaluate other opportunities as well.
Got it. You know, looking at your update, also your recent earnings, it seems like things bottomed around October. You've seen some pretty nice sequential growth since then. Obviously, the year-to-date results are a little bit below what you were doing last year, but nonetheless, it does seem like there's been a pretty good recovery since call it October. Can you maybe just talk about what's caused that? I know it's always hard to sort of dissect the impact of supply, but we have a lot of audience questions coming in about supply and the impact. And so, you know, maybe help us understand what's happened over the last couple of months in terms of that recovery, what's causing it, and whether you see it continuing.
Just let me offer a couple of thoughts, and I asked Charles to get, you know, really deep on the color real-time. It's important for the street to understand that we view we're getting a return to normalcy in terms of how we've typically seen SFR rents behave pre-pandemic, which is very cyclical. So our renewals will tend to be really strong from a rate perspective in the back half of the year into the early part of spring. And then as people make decisions around moving in and out of our portfolio, typically between the, you know, March and August, that's when typically we have the greatest pricing power on the new lease site. I'll hand it to Charles who can talk to you real-time about the differences between this year and last.
Yeah, look, the book has set up well as we worked hard in Q4. We showed, you said we kind of bottomed out at, you know, high 97% occupancy. We've been building from there into the low 97%, which is great. We've been accelerating on the new lease side since November, and renewals, as Dallas just mentioned, really strong. Look, mid-year last year, we saw that we were having some supply and having to compete on price a bit more in three of our bigger markets, Central Florida, Texas, Phoenix, and when we flagged that, you know, we were ahead of others in terms of that coming, and I think others have kind of confirmed that there were some, you know, those markets, some build-to-rent was being delivered and people started competing on price and that put some pressure on that new lease side.
Those are big markets for us, so they had an impact. You know, this year we went into with our guidance a bit more measured. We've set up the book really well. We're going into peak leasing season in strong occupancy with acceleration on the blended rent side and, you know, new lease side. In terms of February, we've turned positive and we're accelerating here into March, which is good and healthy. I think the question is, you know, the absorption in these markets that we're talking about. We'll have to see how it goes. We're seeing some signs in Phoenix that things are starting to stabilize a little bit. Tampa, you know, coming off of the hurricanes, there's some homes offline that gives a little bit more demand. I think we might be able to absorb a little quicker. Texas, a little slower right now.
So that one may be a little slower for us. But those are the markets that we signal where there are supply challenges or absorption challenges. Reality is other markets are running normal on a seasonal curve. It's not the COVID kind of top-line keep going. We're back to kind of 2019, 2018 levels where there's seasonality in the business where our occupancy kind of tops out here in Q1. We'll come down, you know, Q2, Q3 with turnover spiking as our families are looking for homes for their schools and resettling. And new lease will accelerate here to maybe May or June and then kind of hold and then towards the end of the year come down. That's the normal seasonal curve on the new lease side. Renewals, Dallas said it, Q4, Q1 a little higher, summer slightly down, not as volatile as new lease, slightly down.
So expect that will happen a little bit. But we're right in line. We like how we're set up. What you saw in our guide is, you know, we've been running at north of 97% occupancy. You know, for this year, we're looking at 96.5%. A lot of that is our turn times will remain strong. We're doing great there. Turnover will remain strong. It's really knowing that we want to optimize for rate growth as much as possible. And we may need to stay on market a little longer to capture that rate. And so we're going to get as much rate as possible and make sure that we kind of solve for the occupancy on the back half. Can I just ask on that last point? You might have to stay on market for a little bit longer to get the rate that you want.
I guess that hasn't been the case thus far this year, though, right? Or has it been?
It has. I mean, what we've set up is it's a matter of kind of going back to normal. This is during COVID. Things were just moving so fast, and we're not talking material days, but it could be instead of, you know, 20 days. It could be 30 days, and it varies by market, so in those markets that we're competing, it may take a little bit longer, so we've kind of baked that into let's just go back to what that normal kind of supply demand metrics. Good news is demand is here. I think what you're seeing happening early in the year is that when you compare this demand, January, February, early this year compared to pre-COVID, we're up. It's good demand metrics.
And so given our occupancy, given where we are, some of our markets are normal, we're seeing a nice acceleration at the start of the year. We'll see how long that sustains.
Got it. We have an audience question. I think it's effectively, you know, you're saying you're returning to normal, normal seasonality, kind of like more normal type of rent growth. What is normal rent growth and how should we think about, you know, revenue growth over the medium term? You have the occupancy impact this year, but how should we think about a more normalized level of same-store revenue growth?
Sure. I think, you know, we think that this business should see renewal rent growth depending on the market, depending on the time of year between 3% and 5%. You know, new lease growth, as Charles noted, is going to have a higher degree of variability. I think, you know, if you set aside the sort of reset in occupancy and our guide contemplating more openness to stay on the market a little bit longer to go capture rate, I think really, you know, our revenue growth guide is reflective of, you know, a reasonable decline year over year in average occupancy. I think absent that, you know, fundamental shift in average occupancy year over year, you would expect to see revenue growth that is, you know, certainly north of where we've guided to.
But as Dallas and Charles have both said, you know, we are trying to take a measured outlook. There is a fair amount of supply in certain of our markets. We feel really good about sort of the re-acceleration we've seen thus far. We feel good about the demand we are seeing. To be clear, demand is down from what it was during the COVID period, but relative to 2019, sort of the last pre-COVID unaffected year, we are seeing demand is higher today, which we think is a testament to us being in the right markets. You know, I'm not going to really get into what expectations ought to be for revenue growth beyond 2025. We're focused on this year. There's a lot of this year left. We'll talk about the years to come at the appropriate time.
I guess if you're underwriting a portfolio today, what kind of rent growth do you normally assume for the next couple of years?
I think, you know, for a base case, like if we're looking, it's a great question. It depends on the market, to be fair. So if it's a portfolio, you know, if we were in Phoenix, we'd probably write a little less sort of new lease growth. We'd be pretty bullish on our renewals because that's sort of what we're seeing in the business. I think, you know, a good rule of thumb is that you're going to have somewhere between 3.5% and 4.5% rent growth, right? Normalized expense assumptions and you can calculate your NOI from there. I think that's another point that Jon, you know, sort of scratched at. But, you know, we've come off of a couple of years of insane property tax growth, which has really been a proxy for home price appreciation and all the value we've seen created in our portfolio.
It's nice to see that we're guiding much closer to what we view as sort of normal, considering tax makes up about 50% of our expenses, so to be, you know, with a target of between 5% and 6%, it's not, it's probably still a little bit high, but we would think that we have pretty good expense tailwinds in the business for this year and hopefully for the years beyond that as well.
I guess at what point in the year do you know, you know, sort of the majority of assessments? I know you weighed in on sort of the millage rates. Sort of like when do you have a good sense of sort of where assessments have come out relative to your expectations?
Yeah, I mean, it obviously varies by jurisdiction. I think the challenging element of our particular portfolio is that, you know, California, Georgia, and Florida make up about 70% of our total property tax expense. California is generally, you know, very knowable because of Prop 13, which caps the rate at which property taxes can increase. Georgia and Florida, you know, typically we won't get our final bills, so assessed value and millage rates until late in the third quarter, early in the fourth quarter, and so that is fundamentally the challenge. In Florida, I believe we start getting values over the course of the summer, but we don't actually get bills until a little bit later.
So that has been the sort of sticky wicket for us is, you know, for a very sizable chunk of your largest expense component, we don't know the final answer until pretty late in the year. I think the good news is, as Dallas alluded to, you know, we do feel as though the rate of increase in property tax expenses is moderating to a degree. I think it's really important to remember that, you know, John Q. Homeowner is experiencing the same property tax increases that we are, and they vote in local elections and their voices, their voices, I hope are being heard because it's been a painful experience. And I think it's a not insignificant part of the affordability challenge in U.S.
housing and the reason why on average it is $1,100 a month cheaper to lease an Invitation Homes property than it would be to own a similar property oneself.
Maybe to that last point about the huge gap between renting and owning, I think Dallas, when we were talking yesterday, you mentioned you wouldn't mind seeing, you know, interest rates come down a little bit, a little bit more home price appreciation, more movement in the housing market. Can you just explain why that is? Because obviously, you know, the way some investors look at it is that, you know, this huge gap between renting and owning is what's keeping, you know, 80% of your tenants in place, allowing you to push through, you know, 5.5% renewal increases. And so if interest rates come down and becomes a little bit more affordable, maybe you lose that. So maybe just talk about the interplay between that and why you might actually be comfortable with seeing interest rates decline and that gap closing a bit.
Yeah, great question. So from 2012-2022, we built the business in a very low interest rate environment, right? So we're used to dealing with low interest rates as an operator. That doesn't seem to sort of move our needle one way or the other. I mean, somewhere between 16% and 27% of our move-outs every year are because of a decision to go purchase a home. Right now, that number is sort of in the high teens in terms of our surveys on people on the way out. I think for a healthy housing market, which I would argue that we're not seeing the transaction volume right now, but you're in a pretty healthy housing market. You have 68% plus or minus homeownership, it feels like, based on some of the different data that's out there.
And you have a customer that's sort of locked in on a pretty good mortgage rate at the time. So I think we'd be supportive, I guess I should say, of a little bit cheaper mortgage rates because it would create good transaction volume, which we view as net positive for the whole housing ecosystem overall. Second, I think the more we have transaction volume, the more you naturally get appreciation in your own property prices. And for us, you know, home price appreciation has generally been a pretty good proxy for where rents are going. You know, you think about what happens with homeowners insurance and property tax rates and all these things. As rates go up, sorry, as values go up and to the right, that has an impact on what it costs to rent in those neighborhoods as well. And so for us, we're uniquely positioned.
It'd be very hard to recreate the portfolio that we have today in terms of markets, footprints, bulk, scattered portfolios, BTR, you know, pick any sort of piece of our portfolio, and we're sort of properly hedged. We've got a really good view of what sort of the customer wants by being infill and having these locations. As values go up, we're sort of insulated on that to a degree. We can sell homes at lower cap rates and reinvest in new development, either on balance sheet or off, and certainly, if we saw a little bit more transaction volume, it would just lend itself to probably cheaper commercial borrowing rates as well. And we could be more active in some of our own growth that we want to pursue.
Got it. And then, you know, one other question I get asked all the time is really just on, you know, the impact of supply. I think it's really hard to sort of measure it, you know, but if you kind of think about the pitch, the story that the Sunbelt multifamily guys have, it's that, you know, things are sort of a little bit weaker today, but look where supply is going next year. Things are going to dramatically accelerate because it's quite easy to measure supply. I mean, as you guys think about supply, is there any way to think through, you know, what 2026 supply would look like if you're thinking about the combination of, you know, multifamily impact, BTR impact, just any way to sort of gauge, you know, how supply might change over time?
I think for us and for SFR specifically, it's not as black and white as it is for multifamily. It's sort of easy to track multifamily permits and have a sense of which markets and why. You could argue that BTR permitting, while it's getting better at being tracked, could also compete with multifamily to some degree. From our vantage point and from the data that we've shared in the past, we shared it at the conference last June, you know, we expect BTR deliveries to sort of be down 50%-65% this year in terms of where they are. Now, starts are slightly up, but there's obviously production time to some of this. So if you really take a step back, you know, what's happened?
In 2019, 2021, as BTR was sort of developing its own narrative, you had cheap access to capital and a lot of opportunity, right, and companies like us were putting up pretty amazing metrics in terms of rent growth and occupancy, and so I think you had a lot of, you know, acquisition or beginnings of development to happen in BTR in 2020 and 2021. You start getting to 2020, 2023, that number tended to sort of slow down when you look at starts, and so we knew that this was sort of coming late spring last year. We had a chart that we used from John Burns that sort of showed his view on deliveries in a few of our key markets, and I think they do as good a job as anyone at tracking sort of BTR deliveries.
The one nuance with SFR, which I think you're all aware of, is it's really hard to handicap our people moving in and out of the for-sale housing environment into the, you know, leasing environment. Somebody making a decision not to sell their home, list it with a property management company so they rent. Happens all the time. It's happened for decades. I think what we pay attention to, though, with Zillow data and other MLS supportive data is like where are homes for lease in terms of overall listing? And look, in the markets that Charles talked about, we see that up a little bit, you know, call it in the low singles to maybe 10% in terms of listing volume. That doesn't mean it's the product type that you may want to lease per se, right? So we differentiate ourselves through a number of ways beyond just location.
It can be services, it can be fit and finish standards, it can be smart technology, you need bundled internet, you name it. I think for us, we have a view that this year moderates and is a little easier to manage going into summer, but we have to prove that out, and that's why we've taken basically a measured approach to the year as we talk about new lease. I think we have a lot of conviction around renewals, and it feels like the customer's really sticky, happy, and every metric that we sort of track based on surveys, maintenance techs going in and out of homes, we're not seeing anything different there, so we have conviction that the customer is going to sort of behave like we think they would in terms of preference of choice.
I think new lease, you know, there's still a little bit of BTR out there. Let's see how much we're competing with the multifamily story that's in that market. I don't think we cross over necessarily a ton, but I'm sure there's a little bit, and I think we'll have a better view by summer of how things are going to shape up for the back half of the year, and if we continue to see that acceleration, I would say there's nothing that we can see in the foreseeable future that would suggest, you know, we have big shadow supply coming into SFR.
I think if anything, if you listen to the narrative around builders, what they're talking about in terms of production, what we're seeing in spec inventory, my instincts are that some of that market could slow a little, which will actually put additional pressure on demand. I think we'll have plenty of healthy demand.
And you said before that HPA home price appreciation is kind of a good leading indicator for rent growth. I was just curious, you know, if you look at home price appreciation from, say, 2020, you know, right around COVID to today, you know, I guess how much more has that been than the rent growth in your markets? Or maybe it's been less, but I would assume HPA has been more. Just curious if there's a gap that needs to be sort of made up.
I have to come back to you on that question because I have to look at it by market, by market, but you know, we had years, I think it was like October of 2022, where we were peaking on blended rate. Full disclaimer, this number could be wrong, but it's pretty close. It was either 14% or 16%, I want to say, on blend. That was sort of where we peaked, and I bet if you had a look-back basis, home prices were up 10% to 20% probably. So it's probably a fairly good proxy. I wouldn't say it's the exact science, and it varies by market.
Got it. And then in thinking about, you know, the impact of, you know, weather events, whether it's, you know, hurricanes, wildfires, can you maybe just talk about sort of how you're trying to structure your insurance? You know, you had some payments, I think, associated with Hurricane Milton in the third and fourth quarter. So could you just talk about how you're structuring your insurance and whether any of these sort of devastating sort of events that have happened, more impactful weather events that have happened, have made you rethink how you're going to do that going forward?
Yeah, I would say that we haven't made any material changes or really materially changed the way we think about the structure of our insurance program. You know, we have a master all-risk policy. I think we benefit from a few things. One, the geographic dispersion of our assets. Two, the fact that we're not coastal. You know, we're not in these heavily wooded canyons of Southern California. You know, the fact that we can asset manage on a house-by-house basis and basically identify individual assets that represent outsized risk relative to the portfolio overall. And we can just, you know, prune those assets out of the portfolio over time. So for example, let's say we bought 123 Main Street at the time that we underwrote that acquisition. The home was not mapped to a special flood hazard zone. Flood maps do get redrawn from time to time.
And if today the maps are redrawn so that 123 Main Street is now in an SFHA, well, that can automatically trigger a flag and does on an asset management dashboard for Scott's team. And when the in-place resident moves out, that home will go through an asset review and we will, you know, sort of identify whether that is a home that we want to continue to own or whether that's a home we want to divest and recycle the capital into another asset in a location with a better, you know, sort of risk-adjusted total return profile. We've done a fair bit of that. If you look at our disposition activity last year, call it 70% of the homes we sold were in places like Southern California, Florida, Houston. You know, some of that was, you know, due to regular way asset management decision-making.
Some of that was due to, you know, a recognition that places like Los Angeles County, you know, represent outsized sort of political and regulatory risk, and we want to lighten the footprint there. Some of that is down to the fact that those markets have, you know, kind of a higher risk of catastrophic loss, whether it be named windstorm or potentially earthquake. So I think, you know, you have to think about our approach to insurance in totality. It has certainly served us in good stead up until now. We have a very favorable loss history, and we're going to keep doing, you know, what we're doing, which is, you know, thinking about our portfolio from a risk-adjusted total return perspective because I think that is how you sort of ultimately make the right decision for your shareholders.
By the way, Eric, it was 17% in July of 2022, new lease. I got the number. I got the month wrong.
That was pretty close. Rapid fire. Same-store NOI growth for the single-family rental sector overall next year in 2026.
I think there were two guides and they were sort of between 2% and 3%-ish, some odd percent. I'd say in that zip code.
That zip code. And then, same thing. More, fewer, the same number of public single-family rental companies a year from now.
I'm about the same.
Great. Thank you very much.