Today’s edition sponsored by: JPI, Madera Residential, Foxen, Authentic, and Mason Joseph.

Here are my 11 takeaways from the big seven apartment REITs’ Q4’25 earnings calls that just wrapped up

It’s earnings call season, and the big seven multifamily REITs kicked things off — AvalonBay, Camden, Equity Residential, Essex, IRT, MAA and UDR. We’ll hear from the smaller apartment REITs in coming weeks. The big two single-family rental REITs both report next week (Feb 18 and Feb 19).

If you’d like to get highlights from individual REITs’ earnings calls, I post them on my Twitter/X account. Here’s a running thread (still playing catch-up, so come back for updates).

Also: Check out latest episode of The Rent Roll podcast, diving into more highlights from the apartment REITs and featuring special guest Jana Galan, a REIT analyst for Bank of America. You can find that on Spotify or Apple or YouTube or wherever else.

Let’s jump in.

#1: Fundamentals are slowing improving, and concessions are starting to (partially) burn off in some spots.

When everyone was saying “Survive ‘til 2025,” maybe what they really meant was: “Survive THROUGH 2025”? In hindsight, that may have been more accurate. Either way, REITs say the tide is starting to turn.

• Equity Residential CEO Mark Parrell said they saw momentum in December and January, and they’re pulling back concessions. Essex said the same.

• UDR said they’re seeing concessions starting to abate, as well, even in a Sun Belt market like Dallas. UDR’s Tom Toomey said: “The positive operating momentum we achieved in the final months of 2025 has continued into 2026 with further acceleration in lease rate growth, coupled with high occupancy.”

• Brad Hill at MAA said: “We’re seeing the momentum. Now it takes time for that to make its way into the revenue and earnings portion as the rent roll turns. But we’ve had four straight quarters now of blends improving year-over-year, which really indicates that we’re turning the corner.”

• Camden said they’ve “got quite a few markets that are improving. And really, we don’t have any markets that are declining … We’re absolutely seeing green shoots in some of our markets.”

And of course, reduced supply plays a role in all this. After three years of heavy deliveries, we’re now seeing a lot less, and that’s true pretty much everywhere (though still plenty of 2024-25 lease-ups working to get stabilized).

Now to be very clear, no one is saying the boom times are back … except maybe for assets in San Francisco or New York City. (More on that later.) But it’s really more about being over the hump. It looks like the market may have bottomed around October, so if that holds, that’s a big deal. Of course, everyone knows it’s really all about the spring leasing season… so building that momentum through March and April and beyond is much more critical than whatever happens in the winter months.

#2: But rent expectations for 2026 are muted, with hope for acceleration as 2026 progresses

The consensus view on rents: 2026 should bring gradual improvement, but not a big rebound. And the second half of 2026 should be better than the first half, particularly in higher-supplied markets as the deliveries rapidly taper back.

But even with a potentially stronger second half, REITs seemed careful not to set the bar too high. Why? Lingering headwinds from 2025 – lease-up competition (as the tail end of the supply wave works to reach stabilized occupancy) plus macroeconomic uncertainty. The blended rent expectations generally aren’t much more bullish than 2025.

Most of them, even the coastal REITs, still expect another year where expense growth outpaces revenue growth – and that’s even with normalized, muted expense growth rates now. (More on that later.)

However, several REITs implied that growth could improve as the year goes on, and that would set the stage for a stronger 2027.

• Clay Holder at MAA said: “We expect supply levels to continue to impact new lease pricing, particularly in the first half of the year, but believe the impact will increasingly improve over the course of the year as the effect from new supply continues to decline.”

• Sean Breslin at AvalonBay said: “We’re expecting year-over-year revenue growth in the second half of the year to exceed what we produced in the first half.”

• Alex Jessett at Camden said: “We expect market rent growth of approximately 2% for our portfolio over the course of the year, with most of that growth occurring in the second half of the year.”

• IRT’s Jim Sebra said they do “assume lower concessions in the back half of the year.”

• Some other REITs like Essex and UDR were a bit more balanced on the split of first half versus second half, but UDR noted the Sun Belt specifically may see better numbers in the second half just because there should be less supply to wrestle with at that point.

#3: Uncertainty casts a cloud on the 2026 outlook

Uncertainty was a big theme throughout 2025. From the earnings calls, you can tell REIT execs still worry about the impact uncertainty could have on 2026, and (as noted above) that’s contributing to the rather tepid rent expectations for the near term.

• Camden’s Ric Campo said: “The operating environment last year was uncertain. Every sign suggests that the first half of 2026 will be marked by the same cautious tone as last year.”

• Essex’s Angela Kleiman: “This uncertainty has contributed to a measured hiring environment, which has tempered near-term acceleration in demand.”

• Equity’s Mark Parrell said uncertainty has spread even to lower supplied coastal markets, and it’s pulled down performance everywhere other than San Francisco and New York. He said EQR believes “heightened policy and geopolitical uncertainty took a toll on consumer and employer confidence causing an abrupt slowdown in job and rent growth in the second and third quarters.”

Of course, consumer uncertainty also means lower turnover. Mobility tends to go down in times of uncertainty, especially for would-be homebuyers. EQR said their move-outs to home purchase hit a record low in 2025 at just 7.4%.

But all this uncertainty creates a wider range of possibilities for 2026. Multiple REITs noted that if the cloud of uncertainty holds and the economy weakens, that’s the downside scenario. The upside is to restore some degree of normalcy. They don’t need to see a booming job market given the lower supply environment of 2026. Steady, solid growth would likely be sufficient.

#4: Construction costs are going down, but development remains tough to pencil out

A year or so ago, the REITs were boasting of lower cost of capital – that being an advantage to build when others can’t. But that advantage has eroded as their stock prices have been trading at bigger discounts to net asset value, and that’s shifting some capital back into stock buybacks instead. So the tone around new development has soured a bit.

BUT not because of construction costs. Big theme we heard a lot is that construction costs are down by mid-single digits. Yet that’s not enough to offset high land costs and soft rents … which is the same as we hear from the private market.

AvalonBay and MAA have been the most active REITs in development these past couple years. And AvalonBay said they would pull back by about 50% on starts here in 2026, down to seven projects.

MAA said they expect to start 5 to 7 new development projects in 2026, with the goal being that these projects deliver into a much more favorable operating environment by time they complete.

EQR said they plan two starts in Atlanta.

Camden said they might do a couple starts, but said the math is tough

Essex said they have two land sites they like, but they won’t be 2026 starts because the math doesn’t work yet.

Alex Jessett at Camden said: “We’re seeing anywhere between 5% to 8% reduction in costs. But clearly, developments are still hard to pencil… When we look at rental rates, obviously, the way we think about things is we try not to look at trended too much. We try to look at what everything looks like on an un-trended basis, and we’re seeing really in line with, call it, 5%, 5.5% on an un-trended basis, which can get you up to a 6% on a trended basis.” So what he’s saying is that those deals only look attractive if you’re baking in some assumed growth between now and lease up.

Rylan Burns at Essex said: “You really need to see land sellers take a reduction in their expectation on land prices to make the numbers work today and/or you’re going to have to see 10%-plus rent growth for some of these deals to make economic sense.”

#5: San Francisco and New York City are still strong, but it’s a mixed story in other coastal markets

Everyone is saying San Francisco and New York remain strong markets, and expect more of the same in 2026. They’re still the belles of the ball for sure.

Strong rent growth is drawing capital back into San Francisco. AvalonBay said they sold a deal in San Francisco for a 5.1% cap rate.  When I first saw that stat, I didn’t think much of it. But then I saw this property is 50+ years old, it has heavy CapEx needs AND … it’s rent controlled. And yet it traded at a 5.1 cap. That’s pretty wild. San Francisco is hot once again thanks to tech jobs, back to the office, improving quality of life issues, plus very low supply in recent years.

New York remains strong, too, with the luxury market-rate market (where the REITs mostly operate) so far largely left alone while the new mayor targets older, rent stabilized housing.

• In other coastal markets, though, fundamentals softened in the second half of 2025. Specifics vary a lot by REIT.

• Broadly, Washington D.C. and Boston both cooled way down, primarily due to cutbacks in federal spending and jobs.

• Seattle is a mixed bag, but softening job growth plus elevated supply has put downward pressure on rents. (UDR did note concessions coming down in areas like Bellevue.)

• In Los Angeles (every REITs’ punching bag for the last 5+ years), it’s still a tough environment in almost every way, but Essex said they actually saw a strong occupancy bump in Q4. Not quite back to 95% yet but trending that way. We did hear more favorable sentiment on next-door Orange County.

#6: Camden exits Southern California, and Equity says it’s underwriting higher costs in CA due to litigation risk

Beyond Camden’s news (more on that in a moment), Equity Residential also called out growing long-term risks in Los Angeles.

• Mark Parrell at EQR said he has “continuing anxiety over Los Angeles, which lacks both economic drivers and quality of life drivers, but we’ll remain hopeful.”

• Mark said EQR sold a property in Downtown L.A. and said “that partly was a sale because those regulatory conditions in that market are really hard.”

• He also said for ANY acquisition or development deal in California, EQR is now underwriting higher costs associated with litigation risk and regulatory risk.

• He also said L.A. should improve due to drivers like the World Cup and Olympics, and “we’ll have an opportunity to sell some product in Los Angeles as time goes on.” So that suggests EQR might further reduce its presence there over time.

And, of course, Camden announced they’re exiting California altogether. They own 11 properties, all in SoCal. Camden is expecting to get $1.5-$2b for that portfolio, and hopes to close around mid-year.

CEO Ric Campo gave three big reasons for the exit:

1. Camden wants to invest in Sun Belt ahead of an expected re-acceleration in rents.

2. Camden wants to capitalize on buyer demand in CA, which has picked up of late.

3. Camden wants to buy back stock at favorable trade.

Of course, I’d assume some of the operational challenges in SoCal (which Camden has called out previously in that market) were likely a factor too.

#7: Sun Belt remains soft, but signs of momentum emerging – particularly in Atlanta and Dallas

The Sun Belt is still underperforming on rents, but momentum appears to be shifting.

• UDR’s Michael Lacy said: “I’ve seen a little bit more of an inflection in the Sun Belt over the last couple of months … We are starting to see a little bit more positive momentum in place like Dallas, positive blends, occupancy back in that 96.5% range. So that’s been a positive surprise to start the year.”

• MAA called out improvement in both Atlanta and Dallas. Those are MAA’s two largest markets, so they’ve got a big presence in both. MAA also highlighted improvement in smaller markets like Charleston, Greenville and Richmond.

• EQR said, of their Sun Belt markets, Atlanta has been the top performer and Dallas right behind it.

• Camden said they’re expecting improving numbers in Atlanta and Dallas, too, and also Denver, Nashville and South Florida, among others.

• IRT’s Janice Richards said: “Atlanta showing strong fundamentals, delivering 100 basis points improvement in occupancy and 490 basis point expansion in blended growth from January of ’25 to December of ’25.”

• Camden also made the point that those markets can rebound pretty briskly once supply drops down and occupancy recovers, starting with concession burn-off.

Multiple REITs called out Austin as still the big laggard, just with so much supply still to work through there. We also heard some negative takes on Denver due to both supply and policy issues. EQR even noted Denver was underperforming Austin in their portfolio.

#8: REIT stocks are trading at big discounts to net asset value, and that means stock buybacks for some REITs

REIT stock prices are trading at levels well below net asset value. That makes buybacks more appealing. My guest on this week’s podcast, Bank of America REIT analyst Jana Galan, said the REITs are trading at an implied cap rate around 6%. Meanwhile, we’re seeing REIT-quality apartments selling for cap rates ranging from mid-4s to low 5s. That’s a sizable gap that makes buybacks more attractive.

EQR’s Mark Parrell said: “The best capital allocation opportunity we see now is to sell properties that we see as having lower forward return profiles and using the sales proceeds to buy back our stock. As you saw in the release, the company purchased approximately $206 million of its stock during the fourth quarter and just subsequent to quarter end for total stock purchases of $300 million in 2025. We see our company with its high-quality asset base and sophisticated operating platform as greatly undervalued in the public markets versus private market values. Also, by acquiring stock with the proceeds from the sales of slower growth properties, we’re effectively improving our forward growth rate as well, a double benefit.”

UDR’s Dave Bragg: “The magnitude of discount to NAV that has persisted in the space just doesn’t happen very often, and we are fortunate that we’ve taken advantage of it so far and plan to continue to do so as we execute on dispositions.”

Camden’s Ric Campo: Once Camden sells its SoCal portfolio, “We also look at the opportunity to redeploy the capital not only in the Sun Belt, but also to buy the shares. And so when we can sell the California portfolio at a cap rate that’s substantially less than our implied cap rate implied in our stock.”

IRT’s Jim Sebra: “Like a lot of our peers, there is a fundamental disconnect between implied cap rates as well as market cap rates. And we looked at that as a good opportunity … to buy back stock.”

#9: Renewals continue to carry the load on apartment revenues, even in lower-supplied Coastal markets

The REITs saw much better growth on renewals than on new leases last year. High retention and solid renewal trade-out, that remains the story, and those renewals are carrying the weight on the revenue side of the ledger — and not just in high-supplied Sun Belt markets, but on the coasts too.

(Friendly reminder: Yes, move-outs to home purchase are very low right now given homebuyer affordability issues; however, renters today still have A LOT of options for rental alternatives. It’s a renter’s market, so high retention is still notable.)

Ben Schall at AvalonBay said: “High levels of retention and strong renewal acceptance serving as a ballast to overall revenue growth of 2.1% during the year. In fact, our turnover rate of 41% in 2025 and was the lowest in our company’s history.”

EQR said they achieved 4.5% renewal rent growth in Q4, but saw rent declines for new leases everywhere but San Francisco. That’s not too unusual for Q4, but it continues a pattern we saw throughout 2025.

MAA’s Tim Argo said: “New lease growth continues to be muted due to the moderating, but still elevated supply picture combined with the normal seasonal slowdown in the fourth quarter. We did, however, continue to have strong retention and renewal lease rates and achieved sequentially improved average physical occupancy.”

#10: Everyone is talking about AI and automation

It’s obligatory for all businesses in any industry, right?

Not new theme of course, but just a couple quick highlights.

• Equity Residential said they’ve reduced on-site payroll costs by 15% and expect another 5-10% over the next few years.

• UDR said they’re using AI for front-office and back-office, and noted they’re using it to proactively identify and work with renters at risk of falling behind on rent.

• AvalonBay said they expect to achieve another $7 million in incremental NOI boost from tech initiatives this year.

More details:

AvalonBay’s Ben Schall: “We will continue to utilize our scale, particularly our investments in technology and centralized services to drive incremental growth from our existing portfolio. We’re now 60% of our way towards a target of $80 million of annual incremental NOI from our operating initiatives, with an incremental $7 million of NOI slated for this year.”

Essex’s Angela Kleiman: “On the sales and leasing front, it’s really more AI focused. And of course, on the bottom line, as it relates to expenses, there’s some expense management opportunities and technology that we are implementing.”

IRT’s Scott Schaeffer: “We also adopted new technologies that will drive operating efficiencies and cost savings for years to come. Some of the most impactful initiatives included implementing our AI leasing agent to support the time and talents of our property teams, fine-tuning how we manage bad debt and reducing the turn time on our value-add renovations to an average of just 25 days.”

#11: OpEx growth has normalized, but could still exceed revenue growth for most REITs in 2026

After a few years of inflationary expense pressures (especially taxes, insurance and payroll at various points), 2025 brought more stability to the expense side of the ledger. And REITs generally expect another year of stable expense growth in 2026.

Some noted continued reductions in insurance costs (a theme we heard in 2025 following a few years of massive hikes) and more predictable property tax increases. One category that may continue to outpace inflation could be utility costs.

— My Latest Posts on LinkedIn —

Here are some recent posts if you missed them:

• AvalonBay sold a rent controlled, 50+ year-old apartment property in San Francisco (which they said also need heavy CapEx work) for a 5.1% cap rate.

• Here are the fastest-growing submarkets (in terms of new apartment supply) over the past five years.

• What markets are showing some renewed momentum in apartment rents?

• Apartment rent movement this winter looks suddenly normal, returning to normal seasonal patterns after unusual weak summer and fall seasons.

• Homebuilders are pitching a rent-to-own concept to the White House. For that to work, we need to understand why rent-to-own hasn’t worked well historically.

• Most policymakers (and most Americans, too) probably have no idea that the U.S. LOST more than 1 million single-family rental homes over the past decade.

• Camden is looking to exit California and re-invest more in the Sun Belt.

• Here are my takeaways from NMHC’s Annual Meeting.

• Who will be the buyer (at scale) of older vintage apartments in weak submarkets? There isn’t an obvious answer, but that could become a big storyline soon.

• Here are 20 apartment markets where we could see gain-to-lease be a challenge here in 2026.

• Here are some takeaways, open questions and implications from President Trump’s executive order on institutional single-family investors.

— Now Spinning on The Rent Roll Podcast —

For 2025, The Rent Roll with Jay Parsons podcast ranked in Spotify’s top 2% of podcasts for minutes played and in the top 1% for most shared shows. Additionally, The Rent Roll continues to frequently rank on Apple’s charts for investing-themed podcasts, and was recently ranked as the third-best podcast in all commercial real estate (and #1 in housing) by the readers of CRE Daily!

Thank you to everyone who’s made The Rent Roll part of your weekly routine! New episodes are released every Thursday morning.

Find us on YouTube, Spotify, Apple and Amazon. Recent episodes:

Episode 71: 7 Takeaways from Apartment REIT Calls with Bank of America’s Jana Galan

Episode 70: 5 Takeaways from NMHC Annual Meeting with Northmarq’s Jeff Weidell

Episode 69: Where’s All the Distress? with Benefit Street Partners’ Michael Comparato

Episode 68: Q1’26 Multifamily Update and Outlook with RealPage’s Carl Whitaker

Episode 67: Top 10 Myths About Institutional Investors in Housing with Baruch College’s Joshua Coven.

Episode 66: Q1’26 SFR/BTR Update and Outlook with NexMetro’s Josh Hartmann

Episode 65: 15 Predictions for Apartments and SFR in 2026 with JBREC’s John Burns

Episode 64: What I Got Wrong (and Right!) in 2025 … Plus a multifamily capital markets update with Newmark’s Mike Wolfson

Disclaimer: The contents of this newsletter are for informational purposes, not investment advice. No recommendation or advice is being given. The content — including commentaries, sponsorships, ads and affiliate links — is not financial advice or endorsements. We are not responsible for any losses from relying on this information.

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