The paragraph is an introduction to Equity Residential's Fourth Quarter 2024 Earnings Conference Call. Marty McKenna, presumably the host, introduces the key speakers: Mark Parrell, the President and CEO; Michael Manelis, the COO; and Bob Garechana, the CFO. Alex Brackenridge, the Chief Investment Officer, is also available for the Q&A session. McKenna mentions that the earnings release and management presentation are available online. He also notes that the call may include forward-looking statements with associated risks and uncertainties. Mark Parrell then thanks the Los Angeles team for their efforts during challenging times before discussing the company's 2024 results and 2025 outlook.

The company experienced a challenging year in 2024 but ended with better-than-expected same-store revenue results. Despite facing slowing bad debt improvement, demand remained strong, with supply being a key market performance factor. They commend their employees for managing expenses effectively, achieving a 2.9% same-store expense growth in 2024 and an average of 3.2% over the past five years. Looking ahead to 2025, they anticipate similar annual revenue growth but expect quarterly growth to accelerate, especially in the latter half of the year. Economic projections suggest higher office job growth in 2025, particularly on the West Coast, which supports their optimistic guidance.

The paragraph discusses the positive trends in downtown Seattle and San Francisco operations, highlighting low unemployment among college graduates and tight housing supply as favorable factors for their business. The company's earnings guidance is based on operational insights rather than economic headlines, acknowledging uncertainty due to recent governmental actions. Despite uncertainty, the company's strong cash flow and stable financial position are beneficial. They anticipate manageable levels of new housing supply in their coastal markets, expecting these units to be absorbed well in the housing-constrained areas, with supply levels similar to previous years but lower compared to Sunbelt markets.

The paragraph discusses the challenges and opportunities in the apartment market, focusing on both coastal and expansion markets. While coastal markets see significantly reduced housing starts, reflecting levels last seen post-financial crisis, this results in a favorable supply-demand situation, expected to improve by 2026. Conversely, expansion markets like Atlanta and Dallas face elevated supply levels from 2024, with uneven absorption expected in 2025 due to high job growth. The strategy emphasizes a diversified portfolio, targeting high-income renters in key metro areas to achieve long-term returns with a focus on cash flow growth, risk management, and operational efficiency.

The paragraph discusses Equity Residential's progress towards their goal of having 20% of their Net Operating Income (NOI) from expansion markets by 2024 through $2 billion in acquisitions and project developments, while disposing of $1 billion in older coastal market assets. The company plans $1.5 billion in acquisitions and $1 billion in dispositions for 2025, largely funding acquisitions with proceeds from dispositions and debt. Net acquisition activity hinges on market conditions similar to 2024. The paragraph also highlights the company's advocacy for pro-housing policies and mentions the success against rent control, attributing these achievements to industry collaboration. The text concludes by noting a shift towards more thoughtful housing policies and improved public safety in central cities. Michael Manelis is introduced to continue the discussion.

The paragraph outlines the company's strong fourth quarter 2024 performance, highlighting high occupancy rates of 96.1%, low turnover rates of 9% for the quarter, and 42.5% annually, marking historical lows. This success is attributed to favorable market dynamics and effective resource management. Expenses were controlled, with same-store operating expenses growing below 3%, aided by minimal payroll increases and reduced turnover costs. The company has implemented a shared resource model in two-thirds of its properties, enhancing efficiency. Looking forward to 2025, the company projects same-store revenue growth of 2.25% to 3.25% and an expense growth rate of 3.5% to 4.5%. The company plans to leverage further automation and centralization for continued improvement.

The company's revenue assumptions for 2025 include an 80 basis point embedded growth, 40 basis points lower than 2024, with expectations of compensating this decrease through enhanced leasing activity. This activity is anticipated to be driven by strong demand and limited new supply in key markets. Blended rate growth is expected to be 2-3%, boosted by recovering West Coast markets, leading to 3% residential same-store revenue growth, consistent with 2024. Nonresidential revenue declines will offset this, resulting in an overall guidance midpoint of 2.75%. High resident retention is expected to continue due to centralized processes, data analytics, and costly, scarce owned housing. Occupancy remains strong, aiding in capturing rates, while innovation initiatives will support operating results.

The paragraph outlines the company's strategic focus for the year, emphasizing data-driven pricing, retention strategies, and automation to enhance operating efficiencies and customer experience. It projects a $20 million growth in other income by 2025, largely driven by Internet connectivity and technology initiatives. Seattle and DC are expected to lead in same-store revenue growth, followed by New York and San Francisco, with potential for better performance if pricing power improves. The expansion markets are anticipated to see negative revenue growth due to supply issues. In Los Angeles, despite increased supply, the impact on the company's portfolio is expected to be manageable, with competitive pressure mainly from the Mid-Wilshire and Koreatown areas. The guidance does not account for potential operational impacts from fires.

The paragraph discusses the company's financial guidance, which anticipates revenue growth despite challenges such as delinquency, bad debt, fires, and potential regulatory actions in L.A. Physical occupancy and pricing trends have been improving, leading to a projected 3% revenue growth for L.A., although this could be affected by regulatory responses to fires. The fires create demand for new accommodations, especially for larger units, but also entail cleanup expenses and potential operational impacts. In San Diego and Orange County, favorable job growth and high homeownership costs make renting appealing, leading to a positive market outlook for 2025, despite slightly increased competition from new supply. The company expects to provide more updates in their first quarter call in April.

The paragraph highlights optimism in San Francisco and Seattle's real estate markets. In San Francisco, expectations for job growth and demand in downtown and Peninsula submarkets are promising, with a forecast of improved operating conditions and potential pricing power by 2025. Concessions in San Francisco remain high but showed significant improvement in 2024, and further reduction in concessions is expected if occupancy gains persist. The new supply in 2025 is expected to mirror 2024, mainly concentrated in the South Bay. In Seattle, despite increased supply in certain areas, the market showed strength in 2024, with expected rising pricing power due to consistent demand as companies like Amazon return to office work. Seattle is anticipated to be a major growth market in 2025, aided by improved quality of life and reduced new supply.

The East Coast real estate market, particularly in Boston, New York, and Washington, D.C., is expected to perform well in 2025 due to high occupancy rates and strong employment bases, with limited new competition from new supply. Urban assets in Boston are anticipated to continue outperforming suburban ones. In New York, Manhattan is showing strong performance with little new supply, and Washington, D.C. maintains high occupancy despite significant new unit deliveries. Potential challenges include the impact of federal policies on the local job market in D.C. In expansion markets like Atlanta, Dallas, and Denver, the long-term outlook is positive with expected job growth, although near-term conditions remain challenging. Stability is observed in Atlanta and Dallas, with anticipated lease rate improvements in the spring. Denver faces challenges due to nearby new developments affecting market conditions.

The paragraph discusses the company's financial outlook for 2025, highlighting expectations for lower same-store revenue in expansion markets compared to 2024. Despite this, the company is optimistic about opportunities during the spring leasing season and praises its teams for their dedication. The CFO, Robert Garechana, outlines expectations for same-store expenses and FFO, noting a projected expense growth of 3.5% to 4.5% due to factors like increased connectivity expenses from deploying bulk WiFi and tax abatement step-ups in the New York portfolio. The company anticipates these efforts will ultimately benefit net operating income (NOI) and offer future income opportunities as affordable units transition to market rates.

The paragraph discusses anticipated financial outcomes for 2025, focusing on various components affecting net funds from operations (NFFO). Same-store expense growth will be similar to 2024, with slight increases in utilities and payroll. The NFFO contributors include transaction NOI largely due to 2024 activities and market condition assumptions for 2025, as well as increased interest expenses from investment activities and refinancing at potentially higher rates. Lease-up NOI is expected to contribute minimally, with most lease-ups occurring in unconsolidated joint ventures that won't significantly impact NFFO growth due to project-level debt. Guidance details are provided in the earnings release, along with a brief mention of expected 2025 capital markets activities.

The paragraph discusses the company's plans to refinance a $450 million note maturing in June with unsecured debt, utilizing its commercial paper program for liquidity. The company's financial guidance assumes $500 million to $1 billion in debt issuance, adjusting based on transaction activity. During the Q&A, Eric Wolfe from Citi asks about same-store revenue acceleration, to which Robert Garechana responds that revenue growth will be more pronounced in the latter half of the year. This is primarily due to lower initial growth and increased leasing activity anticipated in 2025, with peak contributions during the prime leasing seasons of the second and third quarters.

The paragraph discusses anticipated growth trends in revenue and other income throughout the year, highlighting a stronger back-end growth compared to the front quarters due to embedded growth factors and connectivity initiatives, like WiFi rollout, weighted more in Q3 and Q4. Eric Wolfe inquires about blended rent rate growth expectations in specific markets, especially the Sunbelt. Michael Manelis explains that despite consistent flat renewal rates, the company expects accelerated blended rate growth in the second half of the year, particularly in Q3, followed by moderation in Q4. The pattern of growth is expected to be consistent with previous years.

The paragraph involves a discussion on real estate leasing and renewal rates. Steve Sakwa from Evercore ISI inquires about renewal rates after noticing a 5% renewal rate increase in the fourth quarter, although new lease rates were slightly weaker than anticipated. Michael Manelis responds, explaining their centralized renewal team's role in efficiently handling renewals and implementing strategies across various markets as conditions change. He mentions improved conditions in cities like Seattle, San Francisco, and LA, and expects renewal rate increases of around 5% in upcoming months. Michael is confident in the renewal performance's stability. Steve also asks about capital deployment, particularly concerning the development pipeline and yields on new projects, amidst a net acquisition volume of $500 million.

The paragraph features a conversation between Alex Brackenridge and Steve Sakwa discussing current market conditions for real estate development and acquisition. Alex notes the market's uncertainty, with acquisition cap rates around 5% and development yields targeted around 6%, but achieving this is challenging due to high costs and stable rents. Consequently, most construction is occurring in more suburban or exurban areas, which aren't as appealing. The company has been cautious, with only three development starts last year in suburban Boston and Seattle and none planned for this year, indicating difficulty in finding suitable locations. John Pawlowski then asks if urban supply is declining more than the 30% projected for 2026 relative to pre-pandemic levels and inquires about the company's market strategy regarding the urban-suburban mix.

In the paragraph, Mark Parrell discusses the company's strategy regarding urban investments, highlighting a slower pace of new high-rise construction in urban areas. He notes that while there is traditionally more supply in urban regions, the demand is deepening, and they continue to see urban centers as valuable for investment. He explains that they focus on established legacy urban markets and are expanding into new urban markets, but preferences vary by city. Alex Brackenridge adds that they differentiate between CBDs and other dense urban neighborhoods with better quality of life. John Pawlowski asks if their urban concentration strategy has become more favorable compared to 6-12 months ago, to which Mark responds that the strategy hasn't changed significantly but involves a balancing act.

The paragraph discusses a strategy of asset diversification in urban centers, mainly on the West Coast, while considering the sale of some over-concentrated properties. The speaker emphasizes the advantages of urban areas versus suburban or ex-urban locations and feels optimistic about future performance. In more detail, they mention the differences in investment strategies between markets like Dallas and New York. The conversation shifts to concerns about potential federal employee layoffs impacting the D.C. real estate market. However, currently, the D.C. portfolio remains strong with a 97.1% occupancy rate and stable pricing. There is uncertainty about the effects of potential layoffs versus returning employees to the office impacting demand.

The paragraph features a discussion between Mark Parrell and John Pawlowski about the current positioning and diversification of the market, particularly in Washington, DC. Parrell mentions the growing presence of defense industry-related employers, who may not face the same staffing restrictions as the general federal workforce, potentially leading to an increase in the DC-focused workforce despite a smaller federal workforce overall. The market's current strong positioning and minimal slack in the rental portfolio suggest the potential for new renters. Michael Goldsmith from UBS then asks about seasonal trends, noting a pattern of weaker fourth quarters followed by stronger first quarters, and inquires about the sustainability of this momentum through to the fourth quarter of 2025. Michael Manelis begins to respond.

The paragraph discusses the expected seasonal trends in the real estate market, noting that while deceleration is typical in the fourth quarter, stronger pricing power is anticipated for the current year due to positive macro indicators, particularly in markets like Boston. The fourth quarter of 2025 is also expected to see deceleration due to seasonal trends. Michael Goldsmith asks about potential revenue benefits from the expiration of 421-a tax incentives and the entry of Sunbelt properties into the same-store pool. Alex Brackenridge responds that revenue projections for 421-a properties are uncertain as they depend on tenant turnover.

The paragraph discusses the potential for significant rent increases in certain areas, with rents potentially rising from $1-$1.50 per square foot to $6-$7. Robert Garechana mentions that the same-store set in the Sunbelt region for 2025 will be similar to 2024, with most transaction activities not fully impacting the same-store set until 2026. Mark Parrell adds that the suburban properties, particularly in Atlanta, Dallas, and Denver, will enter the same-store set in 2026 and should prove beneficial due to their balanced portfolio approach, which includes both urban and suburban areas. This diversification is seen as advantageous throughout market cycles. The conversation closes with Michael Goldsmith thanking Mark Parrell, followed by the operator introducing Anthony Paolone from JPMorgan for the next question.

The paragraph discusses the current state of the private market, particularly in the multifamily sector, where there is interest but little activity due to market uncertainties. Buyers are hesitant to invest despite the potential for a 7.5% internal rate of return because of a "frozen" market and uncertainties like the 4.5% 10-year rate. However, there's an expectation that more supply will become available as lenders may stop extending deals not capitalized for the long run. Once this happens, the market might pick up in a quarter or two. Additionally, Bob Garechana talks about the impact on joint venture funds from operations (JV FFO) due to development stabilizing. He explains that the initial leasing phase incurs expenses before revenue is generated, but by the end of the year, these assets will contribute positively to net operating income (NOI).

The paragraph discusses financial expectations and strategic plans for a company moving towards 2026. Initially, they expect properties to become NOI (Net Operating Income) positive but not necessarily FFO (Funds From Operations) accretive due to high-interest construction loans. By 2026, they anticipate stabilization, and debt restructuring, potentially making them more accretive. In a Q&A segment, James Feldman asks about same-store revenue guidance and its non-residential components, while Robert Garechana explains that non-residential revenue constitutes about 4% of their portfolio and includes third-party parking and street-level retail, which serve as amenities.

The paragraph discusses the impact of a one-time accounting item in Q1 2024 that resulted in a $4.5 million revenue boost due to reinstated straight-line leases, which will not recur. The business's performance aligns with expectations, with a focus on the leasing season as it affects the same-store portfolio, which significantly influences NFFO. Strong performances in Seattle and San Francisco could boost same-store results. The core portfolio is identified as the central growth engine, while other factors like refinancing and overhead have minor impacts. The speaker, James Feldman, inquires about strategic discussions within the company's leadership concerning potential business impacts over the next few years.

Mark Parrell discusses the impact of the new administration and the current economic uncertainty. Despite heightened unpredictability, he emphasizes focusing on internal metrics and dashboards rather than external headlines, noting that their properties are showing positive trends. He suggests that uncertainty might bring opportunities, especially for well-capitalized companies. He indicates that while the market-by-market analysis may not be particularly useful, their company is prepared for potential impacts from governmental actions. Additionally, they are not directly affected by tariffs due to their limited involvement in manufacturing or foreign trade areas.

The paragraph discusses the benefits of operating a business with no foreign operations, strong cash flow, and a good dividend during uncertain times, suggesting that such companies may be valued more favorably than speculative firms. It highlights success in California and emphasizes the importance of regulatory focus on states like Washington, while noting that federal policy will play a key role. The conversation then shifts to the challenges in Los Angeles due to rent freezes and eviction moratorium proposals. The speaker expresses empathy for those affected by fires in LA and outlines efforts to support the community, including charitable contributions and being considerate about rent, even before anti-gouging measures were enacted.

The paragraph discusses concerns about proposed eviction moratoriums in Los Angeles, arguing they are counterproductive and damaging to the housing market. It highlights that LA needs significant housing investment, which is deterred by such measures, contributing to the city's anti-business and anti-housing reputation. The author advocates for alternative approaches, such as utilizing federal relief funds for targeted rent assistance and warns against extensive regulation, which they believe discourages housing production. They cite Seattle and San Francisco as examples of cities that are more accommodating to business and housing development, expressing hope that LA will adopt similar policies.

In the conversation, Michael Manelis addresses a question from Julien about January new lease rate growth and overall blends compared to a projected range for the first quarter. Michael explains that these metrics are more meaningful over a longer period rather than standalone months due to variability and the influence of transaction quantities. Although he hasn't disclosed specific January metrics, he notes a sequential improvement for the month and expresses confidence in achieving the anticipated 1.4% to 2.2% growth for the first quarter. He underscores the variability in these stats, and states that the fourth quarter results aligned with expectations. The conversation then transitions to John Kim, who touches upon their expectations for increased demand in larger units.

In the conversation between John Kim and Michael Manelis, Michael discusses the occupancy rates and demand trends in the Los Angeles and Orange County markets. He notes that there was an improvement in occupancy to $95.8 million in the fourth quarter due to increased demand, particularly for 2 and 3-bedroom units in specific submarkets like Ventura County, Glendale, Pasadena, and West LA. Despite some incremental demand growth, mostly due to fires, the overall market hasn't seen widespread improvement. Michael believes the market is positioned for potential growth, but it's not yet enough to significantly alter their existing forecasts. John Kim questions why any demand spike didn't occur sooner, considering potential displacements.

The paragraph discusses the impact of geography on housing demand following a series of fires, noting increased demand for 2 and 3-bedroom units in specific submarkets. There is uncertainty about long-term housing preferences among displaced people. The conversation then shifts to lease growth, with Michael Manelis explaining their blended lease growth guidance of 2.5%. He notes that while renewal rates might be around 5%, new lease growth could be flat due to seasonal trends, resulting in a lower overall growth rate. Some markets might see a reduction in concessions, potentially improving net effective rates. However, typical seasonal patterns may still affect performance.

In the paragraph, Mark Parrell and Haendel St. Juste discuss expectations for lease growth and rent trends across different regions. Mark Parrell emphasizes that while lease growth will not completely avoid seasonal effects, positive performance in the second and third quarters could offset potential fourth-quarter declines. Haendel St. Juste inquires about regional blended rent expectations, suggesting the East Coast may perform better than the West Coast, with the Sunbelt lagging. Michael Manelis responds, indicating that West Coast markets are expected to recover, the East Coast should maintain current strength, and stability is present in Atlanta and Dallas. He anticipates potential improvement or reduced concessions in these areas as they approach spring, leading to recovery in rental rates and setting the stage for 2026 growth.

The paragraph discusses the current state of concessions in the San Francisco and Seattle real estate markets and their expected trends. Michael Manelis notes that while San Francisco remains a concession-heavy market, Seattle saw an improvement in occupancy similar to late 2023, despite also having elevated concessions. The focus is on total revenue, with hopes for increased base rents if demand and occupancy remain strong. There is an expectation for concessions to decrease in 2025 compared to 2024. Additionally, Haendel St. Juste inquires about the breakdown of same-store expenses, including taxes, insurance, and repairs, to which Rob Garechana refers to Page 6 for more information.

The paragraph discusses financial expectations for 2025, highlighting several key expense areas. Utilities are expected to see mid to mid-single-digit growth due to higher commodity prices, contrasting with a strong 2024 performance. Repairs and maintenance expenses will appear high due to connectivity costs and wage pressures. Payroll is projected to grow by around 3%, following a flat year in 2024. Insurance costs, although a small category, are expected to stabilize with growth in high single digits rather than low double digits. Additionally, following discussions with reinsurers post-fires in LA, it is anticipated that there won't be significant impacts on commercial insurance renewals.

The paragraph discusses an optimistic outlook for insurance renewals, noting that recent fires in Los Angeles likely won't significantly impact the insurance market due to reinsurers having built up reserves and increased market capacity. It then shifts to a conversation about the potential impact of immigration on business operations, with Michael Manelis stating that there hasn't been significant change in demand or lease breaks related to immigration issues, as foreign activity remains consistent with historical trends.

The paragraph discusses the impact on contract service providers and the limited concerns regarding service disruptions or rate increases. The speaker notes that issues affecting vendors are not currently evident, making it too early to determine any potential impact on operations. The population of affected vendors and foreign renter move-ins is small. Regarding the West Coast tech markets, there is optimism about market rent growth in 2025. Seattle is projected to have the strongest revenue growth in years, while San Francisco's growth is expected to be in the mid-3% range, improving from 1.5% growth in 2024. The potential for outperformance depends on the strength of pricing power.

The paragraph discusses the strategies and expectations for leasing in the real estate market. Brad Heffern asks about the potential for revenue growth in 2025 based on early leasing and factors like occupancy and rate. Michael Manelis responds by highlighting that record-low turnover has been observed for two consecutive years, largely due to low housing move-outs and stable demand from job growth, which aren't expected to change significantly in 2025. He emphasizes the company's focus on providing quality customer experiences, evidenced by extensive data collection from residents. Jeffrey Spector inquires about the potential for office-to-residential conversions as a business opportunity, prompting a response from Alex Brackenridge.

The paragraph discusses the challenges and limited potential of converting office buildings to residential units. Despite having experience and being open to opportunities, the speaker acknowledges that such conversions often take longer, cost more, and result in less attractive projects than expected. The speaker also mentions that even in New York City, where there are specific tax incentives for these conversions, making the financials work is difficult. Although there may be some development, the impact is not expected to be significant in a large city like Manhattan, as most locations are not competitive. The conversation shifts to an upcoming Investor Day, where the focus will be on strategy, capital allocation, and operations, with the promise of showcasing the team.

In the paragraph, Michael Manelis confirms that a 7% asking rent increase is intended for the whole portfolio, not just specific cities. Richard Hightower's main question is about predicting when new lease growth in the Sunbelt expansion markets might turn positive. Mark Parrell responds, saying it depends on various factors like the lease being replaced, job growth, and market conditions. He hesitates to predict specific timelines, noting that growth could be uneven, improving in the second and third quarters but potentially declining later. Despite uncertainties, there is optimism for increased demand and better sentiment in the Sunbelt markets.

The paragraph involves a discussion between Alexander Goldfarb from Piper Sandler and Mark Parrell about the federal government's regulatory approach under a new administration. Goldfarb inquires about any updates on federal scrutiny, particularly from the DOJ or FTC, concerning business regulations. Parrell notes that they are not directly involved in the FTC fee case linked to Gray Star, and while the administration has shown interest in addressing supply issues, such as potentially making federal land available, they have not made significant progress. Parrell also mentions that there are talks at the federal level about possibly returning the GSEs, Fannie Mae and Freddie Mac, to more private ownership.

The paragraph discusses the complexities of regulatory issues affecting real estate, particularly in relation to federal and local levels. It emphasizes the significant influence of the federal government on real estate finance through GSEs, noting the importance of monitoring such developments. It also highlights discussions from the NMHC regarding market transactions, with Alexander Goldfarb asking about pricing differences between the Sunbelt and coastal areas due to regulatory changes. Alec Brackenridge responds by observing ongoing diverse investor interest in multifamily housing across various regions, including a renewed interest in previously less attractive markets like San Francisco. Mark Parrell adds that the market's activity is largely dependent on which areas are open for business.

The paragraph discusses the real estate market outlook in major U.S. cities, focusing on San Francisco and Seattle, which are expected to see increased business and larger transactions, respectively. Los Angeles, particularly downtown, is not yet attracting institutional interest, but there is hope for improvement with regulatory changes. The paragraph also compares these markets to New York, which bounced back with low cap rates after being underestimated. Alexander Goldfarb transitions the discussion to Adam Kramer from Morgan Stanley, who queries about anticipated office job growth by 2025, particularly on the West Coast, and seeks clarity on expectations for markets like New York, Boston, and D.C. Mark Parrell begins to address the inquiry.

The paragraph discusses the optimistic outlook for job growth in sectors like information services and professional and business services, particularly in markets like San Francisco and Seattle. It references recent positive trends in employment data and suggests that improvements in office-using jobs are expected to continue through 2024 and 2025. The conversation shifts to Alex Kim from Zelman & Associates, who inquires about potential upside to a $1.5 billion acquisition target in the multifamily industry, citing recent trends and opportunities in newly built assets. Alec Brackenridge responds positively, expressing optimism and readiness to take advantage of these opportunities.

The paragraph discusses a company's financial performance and strategic focus. It highlights that the company had a slow start to the year but achieved $1.5 billion in revenue during the third quarter. The company is confident in its ability to quickly scale operations and capitalize on market opportunities, partly due to its access to capital. The primary target markets for expansion are Atlanta, Dallas, and Denver, with Austin also being considered once market conditions improve. There's no announcement of new markets at the moment. Additionally, the company has a favorable view of Seattle and D.C., noting strong revenue growth and leasing performance in these areas.

The paragraph discusses the real estate market conditions in various cities, specifically comparing Seattle, New York, and San Francisco to Washington DC. Seattle is described as experiencing growth driven by current leasing activity and occupancy gains, while DC is driven by a strong embedded base. New York is similar to DC, with a strong leasing season, while San Francisco aligns more with Seattle. There is also a mention of a 2025 transaction assumption concerning a dilutive deal with a negative 25 basis points impact, questioning the comfort level with such deals despite initial dilution and how they might eventually break even and add value.

The discussed paragraph centers on a company's strategy of selling older real estate assets that require significant capital expenditure (CapEx), as they don't yield adequate returns. Alec, a key figure in the discussion, frequently underscores this. Alex Brackenridge gives a specific example, mentioning that properties sold last year averaged 35 years old while purchases averaged 5 years. This strategy suggests that selling older assets might provide immediate cash flow benefits, despite the upfront renovation costs. The conversation transitions to a Q&A session led by various analysts, focusing on market specifics like LA's projected revenue growth of around 3%. The final exchange addresses a clarification on market expansion targets, seeking confirmation whether the goal is still set at 25% or has been adjusted to 20%.

In the paragraph, Mark Parrell discusses the company’s strategic approach to expanding market exposure, particularly focusing on a target range of 20% to 25%. Parrell suggests that reaching these percentages allows for more flexibility in acquisitions and indicates no fundamental change in strategy despite potential shifts in focus. Richard Anderson inquires about the timing and financial impacts of market expansion, referencing a significant deal with Blackstone and suggesting potential growth metrics. Parrell confirms that their approach aligns with providing shareholder value without being dilutive, and estimates that their market expansion could reach around 15% if everything proceeds as planned, likely within a couple of years.

In the paragraph, during a conference call, Mark Parrell thanks everyone for attending and informs them about an upcoming Investor Day on February 25. He mentions that the event will focus on top-level strategy and the long-term outlook for the business, expressing enthusiasm about the discussions. The operator concludes the call, thanking participants and indicating they may now disconnect.

This summary was generated with AI and may contain some inaccuracies.