Vivmark Residential (VMRK) Q3 2026 Earnings Call Transcript

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DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• Senior Vice President, Investor Relations - Marty McKenna
• President and Chief Executive Officer - Ben Schall
• Chief Operating Officer - Michael Manelis
• Chief Financial Officer - Kevin O'Shea
• Chief Development Officer - Matt Birenbaum

TAKEAWAYS

• Core FFO -- $1.03 per share, reflecting results for the accounting acquirer before Aug. 17 and the combined company thereafter.
• Same-Store Revenue Guidance -- 2.2% for 2026, representing a 20 basis point increase from the previous 2.0% outlook.
• Gross Annual Synergies -- $185 million, an increase from the initial $175 million target driven by incremental property operations opportunities.
• Net Annual Synergies -- $135 million, raised from the original $125 million target after accounting for property tax resets.
• Merger Costs -- $725 million, decreased from an initial $750 million estimate and now encompassing both transaction and integration expenses.
• Merger Accretion -- 3%, an increase from the previously projected 2% run rate benefit for shareholders.
• Upfront Value Creation -- $1.45 billion, representing a $200 million increase over initial underwriting estimates.
• Embedded Revenue Growth -- 1% entering 2027, up from the 60 basis points recorded at the start of 2026.
• Incremental Development NOI -- $70 million expected in 2027, as communities under development move toward stabilization.
• Development Pipeline -- $4.4 billion in active projects, with an average stabilized yield exceeding 6%.
• Physical Occupancy -- 96% for the merged same-store portfolio, which management expects to remain flat or slightly higher in 2027.
• Blended Rate Change -- 3.1% for the third quarter, representing a 150 basis point increase versus last year.
• Net Effective Asking Rents -- 4% above last year, reflecting pricing strength as the company enters the fall leasing season.
• Turnover -- 12.7%, a decline of 50 basis points year over year that puts the company on track for historically low levels.
• Investment Capacity -- $2 billion annually on a leverage-neutral basis, supported by free cash flow and disposition capacity.
• Debt Offering -- $1 billion, which was oversubscribed and completed prior to the merger closing.
• Credit Rating Upgrade -- S&P upgraded the company from A- to A, resulting in an immediate 5 basis point benefit on commercial paper borrowings.
• Property NOI Synergies -- $70 million target, which includes $10 million in new opportunities from telecom, screening, and parking services.
• Interest Expense Adjustment -- $8 million, an accounting adjustment intended to present legacy debt portfolios on a comparable basis.
• Bad Debt Improvement -- 20 basis points of total revenue improvement, supported by better screening and collection practices.

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RISKS

• Manelis stated, "the recovery that we expected of pricing power just has not materialized" in the Mid-Atlantic region, noting that the market has taken longer than anticipated to absorb previously delivered inventory.
• O'Shea warned of "annualized property tax and transaction financing headwinds" that are expected to be offset by gross synergies only after the end of the second quarter of 2027.
• Manelis indicated that "Washington D.C. proper remains the weakest submarket in the Mid-Atlantic," contributing to softer regional performance.

SUMMARY

Vivmark Residential (NYSE:VMRK) reported on its first quarter as a merged entity, outlining a strategy to utilize its 185,000-home portfolio and increased scale to drive structurally higher cash flow growth. Management stated that underlying business performance and integration progress have exceeded initial internal projections, leading to increased synergy targets and higher full-year revenue guidance. The company indicated it will leverage its A credit rating and $2 billion in annual self-funding capacity to expand its development activities, aiming to double previous standalone levels. Integration efforts are currently ahead of schedule, with organizational redesigns complete and all major technology enterprise systems selected.

• The company completed the deployment of an AI-enabled maintenance service platform across the entire portfolio within 60 days of the merger closing.
• Management said on the call that it expected to have at least 50% of identified gross synergies in place on a run-rate basis by the end of the second quarter of 2027.
• Schall noted that the company plans to at least double development activity by utilizing its cost of capital advantage and higher operational density.
• The company is implementing a single human resources platform by Jan. 1 and plans to launch a common CRM and leasing platform before the 2027 peak leasing season.
• O'Shea indicated that current share prices make a stock buyback more likely than a forward equity issuance for development funding.
• Management is utilizing a multiyear data set from 185,000 units to conduct A/B testing on renewal pricing and resident retention strategies.
• Planned 2027 development starts include a shift toward California and South Florida, where operating fundamentals and supply dynamics appear more favorable.

INDUSTRY GLOSSARY

• Core FFO: A supplemental metric for REITs that adjusts Funds From Operations for non-core items to provide a more consistent view of operating performance.
• Same-Store: A comparison of performance for communities owned and operated for the entirety of both periods being compared.
• NOI: Net Operating Income, calculated as property revenue minus property operating expenses.
• Earn-in: The portion of revenue growth in the current year that is already committed through leases signed in the prior year.
• Concession: An incentive offered to a tenant, such as one month of free rent, to encourage a lease signing.
• Basis Point: A unit of measure equal to one-hundredth of 1% (0.01%).
• Net Effective Rent: The average rent a tenant pays over the lease term after accounting for concessions and other discounts.
• Lease-up: The initial phase of a new community's operations as it moves from completion to stabilized occupancy.
• Untrended Yield: A projected return on investment based on current market rents and costs without assuming future inflation or growth.

Full Conference Call Transcript

Operator: Good afternoon, ladies and gentlemen, and welcome to Vivmark Residential's third quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. Following remarks by the company, we will conduct a question-and-answer session. You may enter the question-and-answer queue at any time during this call by pressing star one. If your question has been answered or you wish to remove yourself from the queue, press star two. If you are using a speakerphone, please lift the handset before asking your question. We ask that you refrain from typing and have your cell phones turned off during the question-and-answer session.

In the interest of getting as many questions as possible, the company asks that you limit your questions to one per analyst and requeue with follow-up questions. Your host for today's conference is Marty McKenna, Senior Vice President, Investor Relations. Mr. McKenna, you may begin your conference call.

Marty McKenna: Good afternoon, and thanks for joining us to discuss Vivmark Residential's 3Q 2026 results. Our featured speakers today are Ben Schall, our President and CEO, our Chief Operating Officer, Michael Manelis, and our Chief Financial Officer, Kevin O'Shea. Matt Birenbaum, our Chief Development Officer, is with us as well for the Q&A. Both the press release and investor presentation are available on our investor website. For today's Q&A, we ask that analysts limit themselves to one question each so that everyone gets a turn. Please be advised that certain matters discussed during this conference call may constitute forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to certain economic risks and uncertainties.

The company assumes no obligation to update or supplement these statements that become untrue because of subsequent events. Now, I will turn the call over to Ben Schall.

Ben Schall: Good afternoon, and welcome to our first earnings call as Vivmark Residential, another important milestone in our company's trajectory. I begin by thanking our Vivmark team members. Our highest priority through the transaction process and integration has been to deliver a seamless experience to our customers, and in turn, to protect operating and financial performance. Vivmark team members, you delivered and continue to deliver. Your energy and commitment to building a new and stronger company have been exceptional. Thank you. Our vision for Vivmark is to be the most trusted and best-performing rental housing company in the country.

For our fellow shareholders, that vision will translate into a company that harnesses its scale and differentiated capabilities to generate structurally higher earnings and cash flow growth, and superior returns that compound over time. As we begin our next chapter, the central messages from our inaugural earnings report are straightforward. The underlying business is performing better than expected. The integration is advancing ahead of plan. We are surfacing more upfront value than we originally underwrote, and we are entering 2027 with multiple Vivmark-specific growth drivers. I'll now go deeper in each of these areas before turning the call to Kevin O'Shea and Michael Manelis for their prepared remarks. Let me start with the underlying business.

Our portfolio strength, combined with our operating discipline, is producing stronger results than we expected. In early September, we guided the same-store revenue growth for 2026 of 2.0%, and are now increasing that outlook by 20 basis points to 2.2%. As we look ahead, our goal is to utilize our scale, data, and insights to make faster and higher-quality decisions, and to deploy best practices and successful initiatives across a much larger portfolio. For residents, our goal is to make Vivmark the easiest rental housing company to do business with, and to provide more consistent, responsive, and personalized experiences.

A tangible early win is the deployment of our AI-enabled maintenance service platform across the entire portfolio within 60 days of closing, providing an enhanced resident experience and expanded data for us to further refine and optimize our operational execution. My second area of emphasis is on the integration, which is ahead of plan. Since our closing, we've continued to make foundational decisions in a structured way and at a rapid pace. Our organizational redesign is complete, and our leaders are selected and in place across our principal functions and regions. We've selected all of the major technology enterprise systems for Vivmark, with implementation being sequenced in order to ensure stability. We are also making strong progress on synergies.

At our merger announcement in May, we projected $175 million of gross annual synergies, with $125 million of net synergies after the reset of our property taxes. Based on our team's work to date, on an initiative-by-initiative basis, we are increasing our expected gross synergies to $185 million and net synergies to $135 million. The increase is primarily driven by incremental opportunities in property NOI, which Michael will further discuss. To emphasize, we view the $135 million as just the starting point. We continue to expect 85% of the synergies, now on the higher number, to be in place by year-end 2027, with 100% in place by March 2028, or 18 months after merger closing.

We also now project total merger-related costs to be $725 million, down from the initial estimate of $750 million. It is important to note that the initial estimate included transaction costs only, whereas the updated estimate covers both transaction and integration costs. As you know, there was no premium paid as part of this merger of equals, and as a result, there is no hurdle to clear there from an earnings or value creation perspective. So what is the upfront net benefit for shareholders? The combination of higher synergies and lower transaction costs increases the projected run rate merger accretion to approximately 3% from 2%, and increases estimated upfront value creation by an additional $200 million to approximately $1.45 billion.

From a timing perspective, as Kevin will further discuss, as we get to the end of Q2 next year, we expect to have at least 50% of the identified gross synergies in place on a run rate basis, and be at a point where those earning benefits exceed the upfront cost of the property tax reset and the financing of the transaction, setting the table for a ramp in net synergy accretion in the second half of 2027. This leads me to my final area of emphasis, which are the additional Vivmark-specific earnings growth drivers as we head into 2027. First and foremost is the momentum of the existing portfolio.

As an initial building block, we expect earn-in of approximately 1%, up from the 60 basis points where both legacy companies began 2026. We also expect occupancy to be flat to slightly higher in 2027. While we are still developing our 2027 outlook, including detailed expense forecasting, these starting points reinforce our operating momentum as we enter the new year. Second, we expect meaningfully higher development NOI in 2027, as communities under development and in lease-up deliver more homes and move towards stabilization. Our development underway consists of $4.4 billion of projects, with an average stabilized yield north of 6%, which was substantially funded at yesterday's cost of capital.

For 2027, these projects are expected to generate an incremental $70 million of NOI, which we expect to directly contribute to outsized earnings growth next year. To conclude, we are energized by the new company that we are building, confident in the path ahead, and focused on delivering measurable results for residents, team members, and shareholders. We are making the investments today that will fuel the first rotations of the Vivmark flywheel, which we call the Vivmark effect, and allow us to utilize our scale and capabilities to drive more cash flow from the existing portfolio and underwrite and execute investments more effectively. Our stronger internal growth and better investment outcomes will in turn support stronger per-share earnings growth.

Our superior growth, financial strength, and consistent execution should then create a durable cost of capital advantage, which will expand our capacity to reinvest in the portfolio, pursue new opportunities, and strengthen our capabilities further. That is the power of Vivmark, and that is where we are headed. I will now turn the call over to Kevin.

Kevin O'Shea: Thank you, Ben, and good afternoon, everyone. Before discussing our results and outlook, I would like to step back and share what excites me about the opportunity ahead from my perspective as a real estate finance professional who has worked in the REIT industry since the 1990s. Our opportunity is not simply to be larger. It is to convert our greater scale, financial strength, and cost of capital advantage into a stronger and more consistent source of per-share growth. We have already seen early evidence of that advantage in the heavily oversubscribed $1 billion debt offering completed before closing, and S&P's credit upgrade of Vivmark from A- to A immediately afterward.

With an A credit rating and more than $2 billion of annual leverage-neutral investment capacity, we can remain patient and highly selective in challenging environments and act with conviction when opportunities are compelling. Our scale should also allow us to pursue development, investment, and capital opportunities that fewer competitors can effectively access, and to finance those opportunities on attractive terms. Over time, that should add a durable source of external earnings growth to the internal growth generated by our communities and the operating synergies created by the merger. That reinforcing cycle is how Vivmark can compound value and become stronger as it grows.

Turning to our earnings results and outlook, I would like to explain how Vivmark's first reported quarter is presented. EQR was the legal acquirer in the transaction, while AVB was the accounting acquirer. Therefore, results for the third quarter reflect AVB alone before the merger date of August 17, and the combined company after it. Prior period results reflect AVB alone. Our operating metrics generally follow EQR's historical definitions, while our development and investment metrics generally follow AVB's. The earnings release provides the detailed definitions. To provide a more useful view of the combined operating platform, we present results for our merged same-store portfolio.

This represents combined same-store results for AVB and EQR for periods before the merger and for Vivmark after the merger, as though the portfolios had been combined since January 1, 2025. Third quarter Core FFO was $1.03 per share. These results reflect AVB alone before August 17, and the combined company after it. Q3 results also include one month of the merger-related property tax reassessment. In addition, Q3 Core FFO results reflect an approximately $8 million merger accounting interest expense adjustment, which presents the two legacy debt portfolios on a more comparable economic basis. Looking ahead, Q4 will be Vivmark's first full quarter, and therefore provides a more useful forward view.

For Q4, we expect Core FFO of $1.03 per share at the midpoint of our range. Our guidance provides detailed assumptions for merged same-store NOI, lease-up and other community NOI, interest income and expense, overhead expense, and other earnings components. Q4 is the best available starting point for understanding Vivmark's earnings capacity, but it should not simply be annualized. Stabilized community NOI provides a useful base after adjusting for seasonality. Other components will evolve as lease-up NOI grows, synergies are realized, and future investment and financing activity affect earnings. For 2027, we are providing selected building blocks for earnings, which include embedded merged same-store revenue growth entering the year in the range of approximately 1%.

We also expect approximately $70 million of incremental development NOI in 2027. Additionally, we expect development investment, construction in progress, and capitalized interest to remain broadly comparable with 2026. Therefore, after considering incremental funding costs for this activity, we expect development to contribute approximately 150 basis points of Core FFO growth above the base business. As Ben noted, we expect at least 50% of our in-place run rate gross synergies to be achieved by mid-year 2027, roughly offsetting the annualized property tax and transaction financing headwinds. From there, the in-place run rate should build to approximately 85%, or about $160 million by year-end, producing a meaningful and growing net synergy benefit during the second half of 2027.

We will provide full 2027 guidance when we report our fourth quarter results early next year. With that, I will turn the call over to Michael.

Michael Manelis: Thanks, Kevin. After more than 27 years in this industry, I have never been more excited about the opportunity to rethink how we serve our residents and operate our business. That means moving beyond the individual lease transaction to focus on the entire resident journey, from the first interaction with our company through the many years somebody may call a Vivmark community home. With the scale, data, and capabilities of our combined company, we can better understand resident needs and deliver a more consistent and frictionless experience. We believe a better resident experience and a more efficient operating model go hand-in-hand. Higher satisfaction, longer tenure, stronger retention, and fewer days vacant all contribute to better financial performance.

Ultimately, our goal is to make Vivmark the easiest company to do business with, for our residents and service providers, and a place where the best professionals in our industry want to work. We believe the companies that win over the next decade will be those that build the strongest resident relationships and deliver an exceptional experience at the most efficient cost. Turning to our integration, I am very pleased with the progress we have made. On day one, more than 5,500 team members gained access to shared applications, and our Vivmark brand launched across our digital platforms. Since then, we focused on executing our integration priorities and capturing operating efficiencies while protecting day-to-day performance.

I want to recognize our teams across the country who have maintained an intense focus on delivering the high level of service our residents expect, even as we navigate significant change. Their commitment has been instrumental in maintaining strong operating performance throughout the integration. As Ben mentioned, we just completed deployment of our AI-enabled maintenance service application across the entire portfolio, which will improve the resident experience, increase team productivity, and reduce unnecessary dispatches to control cost. We are also on track to implement a single HR platform by January 1, and a common CRM and leasing platform ahead of next year's peak leasing season, including enhanced screening, application processing, and automated lease generation.

Turning to synergies, as outlined in the release, we are increasing our targeted property NOI synergies from $60 million-$70 million, reflecting additional opportunities identified as we have gone deeper into the operations. The incremental $10 million comes primarily from new identified opportunities in telecom, screening, and parking, and this is all beyond our original $60 million target. Our existing merger-related initiatives across procurement, centralized operations, and maintenance also remain on track. Importantly, our revised $70 million target excludes potential upside from harmonizing renewal strategies and further revenue optimization, which we are continuing to evaluate. Given the size of our portfolio, even modest improvements in these areas could translate into meaningful incremental NOI. Ultimately, we are doing more than capturing synergies.

We are leveraging Vivmark's scale and capabilities to create a more efficient operating platform that can deliver sustainable margin improvement as we grow. Turning to the quarter, I am pleased with the performance of the merged portfolio. Occupancy remains strong at just under 96%, and we are seeing improved pricing momentum across much of the portfolio. As detailed on page eight of the management presentation, blended rate change was strong at 3.1% in the quarter, up 150 basis points year-over-year, and declined just 10 basis points sequentially, significantly better than historical seasonal trends in either portfolio.

More importantly, our current net effective asking rents are running 4% above last year, reflecting continued pricing strength as we move through the fall leasing season. We are also benefiting from easier year-over-year comparisons in the fourth quarter. While we anticipate normal seasonal moderation in blended rate growth, the strength in current pricing should allow us to maintain better blended rate performance than we typically would experience at this point in the year. On the resident side, third quarter turnover declined 50 basis points year-over-year to 12.7%, putting us on track for another year of historically low turnover.

Strong retention and lower turnover support revenue growth while reducing vacancy and turnover-related costs, reinforcing the connection between the resident experience and financial performance. Equally encouraging, rent-to-income ratios remain healthy, supporting the underlying stability of our rent roll. With homeownership affordability remaining challenged, we are continuing to see historically low levels of residents moving out to purchase homes. From a market perspective, Northern California and New York continue to demonstrate strength, while we are seeing signs of stabilization in many of our more supply-challenged markets. Given the strength of our operating performance and improving pricing power, we have raised our full-year same-store revenue guidance by 20 basis points to 2.2%.

Looking ahead, we are entering 2027 with three important building blocks working in our favor, as highlighted on page 11 of our management presentation. First, we are starting from a position of strength, with physical occupancy around 96%, providing a solid foundation to manage pricing and capturing improving market conditions. We anticipate slightly higher full-year 2027 occupancy compared to 2026, supported by operating and data science initiatives focused on improving retention and reducing days vacant. Second, we are carrying stronger embedded revenue growth into 2027, improving new lease pricing and healthy renewal increases position us for a better starting point. Third, we are entering a more favorable supply-demand environment.

New apartment deliveries are declining significantly across much of our footprint, while demand and absorption remain healthy. We anticipate demand outpacing new supply in 2027, creating a more favorable environment for pricing power. While the recovery won't be uniform, the combination of strong occupancy, improving embedded growth, and declining supply gives us a very encouraging starting position. Beyond our same-store portfolio, I am particularly excited about our upcoming lease-ups. We have an exceptional collection of new communities coming online in terrific locations, with an impressive combination of product quality and scale. It's a tremendous opportunity to introduce new residents to Vivmark and establish strong relationships from day one.

All of this is happening while we are beginning to unlock the operating advantages of Vivmark's scale and density. With approximately 185,000 homes, we have a tremendous opportunity to leverage technology, data, procurement, and centralized services to improve the resident experience while lowering our cost to serve. We are building an operating platform that gets better as it gets bigger, creating a differentiated resident experience and a sustainable competitive advantage. As I look ahead, I'm excited about both sides of the equation, a healthy underlying business with improving fundamentals heading into 2027, and an extraordinary opportunity to unlock the full potential of Vivmark. We are just getting started.

With that, I'll turn the call over to the operator to begin the Q&A session.

Operator: Thank you. We will now conduct the management Q&A session. As a reminder, you may enter the question-and-answer queue at any time during this call by pressing star one. As a reminder, in the interest of getting to as many questions as possible, the company asks that you limit your questions to one per analyst and requeue with follow-up questions. Our first question comes from the line of Steve Sakwa with Evercore ISI. Please proceed with your question.

Steve Sakwa: Yeah, thanks. Good afternoon. Sounds like a lot of things are off to a good start in the merger. I am just curious, were there any things that maybe didn't go quite as planned from the get-go, and maybe how did you deal with them, and what sort of operational challenges might have come up that you didn't foresee at the time of the merger?

Ben Schall: Yeah, thanks, Steve, and welcome everybody to the call. We've made terrific progress in our early days at Vivmark, and a true testament to the team. This is some very intense work, and to be able to make our integration progress while also protecting the underlying business and exceeding our expectations on underlying business is a great start to where we're headed. As we think about the balance that we need to strike, is wanting to get the clarity, wanting to make rapid decisions, but also balancing the sequencing and the timing of implementation. One of the emphasis areas I've made and want to make it again, we are building a new company, right?

We want to build a new and fundamentally stronger company. We are putting in the work now to think about processes, technology, finding better ways of conducting our business, better ways to serve our residents. So there's a level of intensity there, and we do want to make sure we're finding the right balance. This is not an acquisition, right? If we were an acquisition, it'd be sort of full speed ahead, just onboarding the portfolio. This is about finding the better ways. So that's the intensity that our team is going through, and my huge thanks to them.

Operator: Thank you. Your next question comes from Jana Galan with Bank of America. Please proceed with your question.

Jana Galan: Thank you, and congrats on the quarter and integration. Curious if we could spend a little bit of time on how you're thinking about ramping the development pipeline, maybe how you're thinking about underwriting in this volatile interest rate environment, where you think, what regions you're looking to start projects, and then maybe just what you see in terms of available land pricing out there.

Ben Schall: Yeah, thanks, Jana. This is Ben. I'll start briefly and then turn it over to Matt, our Chief Development Officer. As we look out on our horizon around development opportunities, there's at least two meaningful areas that do feel different under Vivmark that I want to call out. The first is $2 billion of self-funding capacity, and then the second is the operational uplift in the near term from just having incremental density, which provides us to underwrite stronger returns in the markets we're already active and have nearby assets, and then over the coming years, be able to underwrite stronger returns given the increase in operating margins that Michael and his team are set out to deliver.

With those strategic capabilities in hand, we've set the goal of at least doubling development activity under Vivmark, but it's not doubling development activity just to double development activity. We think we have a unique opportunity to lean into our access to capital, cost of capital, our capabilities to deliver more and more earnings growth per share via our development channel. In order to do that, we need to make sure that we're allocating capital appropriately, and for folks that have followed AvalonBay, the structure around orienting around 100 basis points-150 basis points of spread between our untrended development yields and both our underlying cost of capital and underlying market cap rates, that remains.

That's sort of the standard that we bring to it to make sure that we're allocating capital appropriately for shareholders to create the profit that we want via development. That's where we're headed there, and I'll turn it to Matt to give some more color.

Matt Birenbaum: Sure. Thanks, Ben. We are continuing, we're always adjusting our target returns based on changes to our cost of capital and to the environment we're seeing out there. When you think about last year, we started $1.6 billion, $1.7 billion, at initial untrended yields, which is the way we always underwrite in the kind of low-sixes, and that was mapped against the cost of capital at that time. We had just done a large equity offering with a cost of around 5%. A lot of that is communities which will move into lease-up in 2027 and are providing some of that lift that we've been talking about.

When we looked at this year's starts, it's a lower volume of starts, maybe around $700 million, $800 million. Those yields are underwriting into the high-sixes, and that's a reflection of both kind of an increase in our targets and also, to some extent, the geographic mix, which does change. There's some markets where development economics are working today and are attractive, and there's other markets where it's very, very challenged. You see that in how the start activity changes geographically. This year, it's primarily kind of northeast-driven from here in the Mid-Atlantic up through New Jersey and suburban Boston.

When we look to 2027, we're fortunate in that we control over $4 billion in development rights today, which is future starts that could happen anytime over the next couple years. A lot of those could start next year, and what we're looking at is a mix next year that's likely a little heavier to California, where operating fundamentals are strong, almost no new supply, and those are markets where cap rates and yields are a little bit lower. But also, we have a couple of sizable starts potentially in South Florida the first half of next year. That's also very stable, of among our Sunbelt markets, probably the most stable performer.

So you'll see the mix start to move around, but yields again kind of in that high 6% range, depending on the market, anywhere from mid-sixes to low-sevens, and we would expect that to continue. As it relates to the land market, we are seeing more opportunities. We're definitely seeing, particularly in the last 60-90 days, many of the private developers, merchant builders that had sites tied up are not able to get the equity and are dropping those deals. In some cases, we may be able to reconstitute that in a way that will be profitable for Vivmark. In other cases, those deals just won't go forward, but we're definitely seeing more and more inbound.

Operator: Thank you. Your next question comes from the line of Nick Joseph with Citibank. Please proceed with your question.

Nick Joseph: Thanks. You talked about rethinking the operating platform and already identified the additional operating synergies. As part of that, you mentioned an opportunity about renewal strategy and pricing strategy. I was hoping you could talk a little more about the size of that potential opportunity and some more specifics around it, given both predecessor companies were obviously very focused on operations, so curious where that opportunity is now on the combination.

Michael Manelis: Yeah. Hey, Nick. This is Michael. Yeah, I think this just comes down to the fact that with 185,000 units, we basically inherited an incredible opportunity of a multi-year A/B test across these portfolios, across comparable communities, to evaluate different strategies, measure what actually drives the better outcomes, and then scale it. Specific to renewal harmonization or even into the broader pricing optimization, we're seeing the behaviors around renewal offer quotes going into the market, how you negotiate in certain settings. And on the new lease side, we have an unbelievable data set right now about features and functions inside units, and we understand from prospects where that demand is, how to price some of those amenities.

And just doing this A/B test, this back testing, I think is going to unlock significant opportunities. I mean, the business from an operations standpoint is really about managing nickels and dimes, and I think when you look across 185,000 units, it's not going to take much on the revenue side for us to hone in on the opportunities for it to really compound and be meaningful NOI opportunities to the company.

Operator: Thank you. Your next question comes from the line of Adam Kramer with Morgan Stanley. Please proceed with your question.

Adam Kramer: Hey, thanks for the time here, and congrats on everything so far with the transaction. I wanted to ask about the sort of 4% net effective asking rent growth. I think a really strong number certainly relative to last year, relative to prior years even. Maybe just sort of help us understand that in the context of the new lease trade-outs you reported for 3Q, and then sort of what the expectation is for the rest of the year, and sort of help us tie together that 4% versus sort of the new lease growth.

Michael Manelis: Yeah. Hey, Adam. This is Michael. I mean, you're right. The 4%, it's a pretty healthy kind of increase versus the prior period. A lot of that is the foundational, just an easier comparable period. You remember this time last year, kind of the rent decelerations that we saw in the portfolios were beyond a typical kind of seasonal pattern. I think right now, our expectation is we are kind of going to see additional deceleration, especially across the new lease side for the balance of the year. It's not going to be as pronounced as what it was last year. It seems to be tracking more like a 2024 year.

In the relationship to new lease pricing, clearly it's an indicator as to what can happen with new lease pricing. New lease pricing has a lot of volatility in it based on kind of who moved out, when they actually moved in, did they receive a concession when they moved in or not, was it a longer tenured resident that moved out, and are we moving somebody in with a concession? There's a lot of volatility that goes into that new lease number. I think for us, the key takeaway for this is that whether you're talking about new lease pricing, renewals, occupancy, days, all of these things contribute to us maximizing revenue growth.

Not one stat in and by themselves is how we run the business. We're looking at a collection of all of them and figuring out which way do we need to lean to maximize revenue growth. The takeaway is that the broader improvement in pricing that you are seeing on that pricing trend, which is page eight in the management presentation, an easier comparable period for the rest of the year, continued strength in renewals, it provides us with a very strong foundation heading into 2027.

Operator: Thank you. Your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Please proceed with your question.

Austin Wurschmidt: Great. Thanks. Good afternoon. Ben or Kevin, just going back to the $2 billion of leverage neutral free cash flow that you highlighted. I guess, how much of that is spoken for from expanding the development pipeline, and how much do you have to really be opportunistic around other investments or debt repayment? Just making a range of assumptions, I mean, can you give us a sense of how much that could expand the Core FFO growth above base growth assumptions? Thanks.

Kevin O'Shea: Austin, thanks for the question. What I guess I would do from a framing point of view is just say, the business combined is expected to generate about $2 billion of annual investment capacity from those three sources, and it can be put to whatever use we think is most attractive and accretive for our investors. Traditionally, looking at sort of like the legacy Avalon and bringing that into the development business into Vivmark, our presumption is that go forward, development is likely to be, from a real estate investment standpoint, the highest and best use of that capital.

If you look at what we have in that regard, there is still, as Matt outlined, a very rich, diverse set of development right opportunities that currently comprise over $4 billion that we will be able to look at in the coming years and add to that based on opportunities that emerge in the market, and be able to fund that without needing to tap the equity markets with $2 billion or more of this annual investment capacity on a leverage-neutral basis by drawing upon free cash flow, disposition capacity, and then just leaning into corporate EBITDA growth and applying leverage multiple of 5x to source incremental borrowing capacity. That is sort of the first quarter impact.

I think if you look about the broader Vivmark effect, tying together the operating synergies that we anticipate creating here over the next year or two, that in turn will enhance our own free cash flow, and improve our performance, and augment that $2 billion over time, and kind of get the flywheel going, the first turn, the second turn. That over time will allow us to augment that $2 billion level, and be able to augment it over time with fresh equity. So when we think about the opportunity set longer term, there is a much more than a $2 billion set of annual investment capacity that we hope to be able to achieve.

It is probably more of $2 billion-$3 billion. But right now, we are starting with kind of just over $2 billion+, and we anticipate leaning into development where we think we will get the best and highest returns over the near term.

Operator: Thank you. Your next question comes from the line of Jamie Feldman with Wells Fargo. Please proceed with your question.

Jamie Feldman: Great. Thanks for taking the question. Exciting to hear everyone so enthusiastic about everything happening. I think since you guys announced the transaction and some of the meetings you've had since then, there's been questions around how wide of a net across residential do you think this company is going to cast. Can you just talk a little bit more about what this company will be and what this company will not be going forward as you think about your investment opportunities?

Ben Schall: Yeah. Thanks, Jamie, for raising that. I want to be super clear here, and first, that our primary focus right now is on execution. Execution of the underlying business and execution of our integration. The term that I use internally is we need to get the core right. We need to make the investments in our capabilities, our processes, our technology, to be able to drive better outcomes for residents, drive better outcomes out of our portfolio, and be ready to take on more growth. As we're going through that process, we are building our platform with an orientation around building for scale, right.

We want to be able to bring on those next assets at a much lower cost, as I referenced. In terms of the question around expanded opportunity set, where do we head? We have defined our vision as Vivmark is going to be the most trusted and best-performing rental housing company in the country, and we did choose rental housing consciously. The first part of it is that's who we measure ourselves against. When we think about competing for investor dollars, right, that's who we're competing against. The second part of it is a longer-term orientation in and around where it could take us, and utilizing our scale more broadly.

But we sit here today, we're focused on execution, and we have a tremendous amount of opportunity in our existing portfolio. I also expect we're going to have a tremendous amount of opportunity in our core business, in apartments, investments, developments in the years ahead.

Operator: Thank you. Your next question comes from the line of Ann Chan with Green Street. Please proceed with your question.

Ann Chan: Hi. Thanks for taking the time. Question on markets. The Mid-Atlantic markets saw a relatively larger sequential deceleration in blended lease spreads in the third quarter. Could you provide some color on what's driving that incremental softness in demand, given that there should be pretty easy comps benefiting this market?

Michael Manelis: Yeah. Hey, Ann, this is Michael. I think if I would put the Mid-Atlantic portfolio up, I would say the recovery that we expected of pricing power just has not materialized. Both companies entered 2026 with pretty modest expectations for the first half of the year. We anticipated gradual improvement, I think, as the new deliveries were declining by about 65%. While the reduction in supply remains very supportive, the market clearly has just taken longer than expected to absorb kind of the previously delivered units. We did have a little bit of pricing power boost at the end of the peak leasing season, but it was pretty short-lived. We saw concessions kind of come back.

We are experiencing a seasonal slowdown, but it's not as pronounced as what it was this time last year. This is a market that if you look at where it was relative to 2024, seems like that's the trend line that we're following. If you drill into the market right now, I would say Northern Virginia, which is about 50% of this region's NOI, is the strongest submarket supported by diversified employment, resilient demand. Baltimore, which is the smallest submarket in this portfolio, remains stable, consistent. Montgomery County, definitely a little bit weaker, and Washington D.C. proper remains the weakest submarket in the Mid-Atlantic.

As we look forward and looking ahead into 2027, I'm going to tell you, I definitely expect to see better pricing power next year, kind of as this market is absorbing this inventory. It just took a little bit longer than what we expected.

Operator: Thank you. Your next question comes from the line of Rich Hightower with Barclays. Please proceed with your question.

Rich Hightower: Hi, everybody. Good afternoon. If I go back to one of the original parts of the thesis for the merger, synergies with respect to the cost of capital specifically was definitely a part of that. Kevin, maybe one for you. You think about the bond deal that the company did prior to closing, as you think about benefits to equity, liquidity, and even the trading multiple, what evidence do you see so far that those sorts of cost of capital synergies are actually playing out, and what should we be looking for as we kind of roll through the next several quarters?

Kevin O'Shea: Sure. Thanks, Rich. I guess maybe a few ways to look at it. First, just look at sort of the cost of capital benefits that can arise over time. They broadly come in two forms. One is an improved cost of debt, which we're already seeing manifest itself here. I'll come back to that in a second. The second is, over time, through execution of the merger successfully, achievement of the operating and overhead synergies, and getting the flywheel moving, the expectation is that we will be able to achieve an improved cost of equity capital.

That putting those two together, that'll expand the aperture of what we can potentially apply Vivmark's value-creating machine against from an investment standpoint, hopefully, doing more development activity over time and really getting the flywheel moving. To come back to where you started on the cost of debt side, we wanted to call out the credit upgrade from S&P as well as the success just before closing on the bond deal, where it was just heavily oversubscribed very quickly. The demand was incredibly strong from fixed income investors for that offering. Then, we closed the deal and learned right away that we were going to receive an upgrade.

There's really two benefits of that already that are tangible with respect to the cost of debt. They may be modest, but they're there, and they're happening right away. The cost of debt side, initially, what we saw was an immediate observable benefit of approximately about 5 basis points on our commercial paper borrowings, together with modestly lower credit facility fees. That's real. It's modest, but it's tangible. Over time, our hope is that we'll see some additional benefit from tighter unsecured bond spreads, although the amount of that will depend on market conditions when we issue debt, and it's a little harder to nail down right now.

I think the second aspect of that early win, if you will, on the cost of debt side is really more the signal and the demonstration value of it. It's the direct financial benefit of really having a tangible, externally validated evidence from Vivmark's combined scale and financial strength from an outside party that knows and understands credit deeply well. That's sort of evidence of the benefits of the merger happening on day one. A little bit of economic benefit there and an important external validation from a credible outside source of that opportunity.

Operator: Thank you. Your next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question.

John Kim: Thank you. You mentioned for residents being a company easy to work with going forward. I was wondering what your updated views are in terms of the Vivmark name as far as that being a potentially consumer-facing property brand and how you are evaluating either retaining or possibly extending the community brands like Avalon, AVA, and Kanso.

Michael Manelis: Hey, John. This is Michael. Maybe I will start, and then you can kind of come over if there is something that I missed on. I think right now, our customers are already doing business with Vivmark. That is the corporate brand, and the focus on delivering this consistent, seamless resident experience across the portfolio is really done through common technology, service standards, and resident benefits. From the operating perspective, I think we are bringing the best of both companies together under one operating platform while preserving the distinct community identities where they create value.

We are also watching kind of the search landscape right now and how that is evolving, particularly with AI, changing how consumers may discover or evaluate apartment communities in the future. I think that could influence a little bit about how we think about brand and how we connect with the prospective prospects over time. Ultimately, right now, I would say it is one company, one operating platform with a very consistent high level of resident experience, regardless of the community brand.

Operator: Thank you. Your next question comes from the line of Haendel St. Juste with Mizuho Securities. Please proceed with your question.

Mike: Good afternoon. It's Mike on with Haendel at Mizuho. Can you please provide more detail on the pricing trends that you started to discuss in slide eight, and in particular, respect to the October leasing trends, occupancy, and what's embedded into that 4Q 2026 Core FFO guide midpoint?

Michael Manelis: Yeah. Hey, Mike. This is Michael. Maybe I'll just start. I'm going to stay away from sharing stats for any specific kind of month. I would say it's important to look at these metrics over longer periods of time rather than any single month or quarter. That being said, the third quarter blended rate of 3.1% was 150 basis points above the third quarter of 2025. Sitting here today, the first week in November, that improvement over prior year is actually widened as expected because we had an easier comp period. Renewals are remaining strong and stable. New lease rates are moderating, but they're moderating at a slightly better pace than you typically would expect.

Our assumptions for the quarter, I think I would just look at, if we said it was third quarter improved by 150 basis points, that spread's widening. Inside the earnings release on page 11, we showed that the fourth quarter of 2025 actually had a blend of -60 basis points. I would increase on that more than the 150 basis points. There is some volatility in the mix of renewals and new leases that can go into this. But sitting here today, I would expect that the fourth quarter lands somewhere around a 1.25% blend. Probably puts us on track for a full year blended rate increase about 2.25%, maybe a little bit above that.

All of this is slightly better than either one of our companies expected those stats to be in the beginning of the year.

Operator: Thank you. Your next question comes from the line of Ami Probandt with UBS. Please proceed with your question.

Ami Probandt: Thanks. A quick follow-up to that previous answer. Were merger synergies a factor in the upside to same-store revenue guidance? Just wondering, where does bad debt currently stand? I believe it is a little bit above where it has been historically. If so, do you expect it to be a tailwind into 2027?

Michael Manelis: Yeah. Hey, Ami. This is Michael. What was the first?

Ben Schall: First part was on revenue, the 2.2%.

Michael Manelis: Yeah. So inside the 2.2% or the 20 basis point increase to guidance, the bad debt improvement really wasn't part of that. The 20 basis point improvement really came from just seeing kind of stronger pricing power and when you actually achieve that pricing power. There's a little bit of improvement in bad debt, a little bit of improvement in the other income categories that go into that, but that really wasn't kind of the synergies, wasn't driving kind of any of the increases to the guidance for this quarter. As you think about next year and the improvements that we expect, we will see some marginal improvement again next year with bad debt.

Sitting here today, I think the contribution to total revenue is like 20 basis points of improvement. My guess is next year we're probably in a very similar spot, but we're just now kind of building these budgets up. Part of the increase in the synergy target for next year, or raising the synergy guidance to 70 basis points, did come from some assumptions that we now see of bringing kind of the best practices around screening and collections, and that in it by itself should contribute a few $1 million of improvement to bad debt. But that's completely separate from just the marginal improvement that we would have seen coming from the companies.

Operator: Thank you. Your next question comes from Nick Yulico with Scotiabank. Please proceed with your question.

Nick Yulico: Oh, thanks. Yeah, it was helpful getting the Q4 items that are in driving FFO. I wanted to ask about the property management G&A number in the fourth quarter, which is roughly $100 million. Separately in the deck, you say that about 25% of the gross synergies are going to be achieved by the end of this year. So, I just wanted to see if there's a way to get a kind of clean, like starting annualized property management G&A number for 2027, and just be clear then also about how many of the synergies we should be building on top of that. Thanks.

Ben Schall: Nick, I will start kind of a high level and probably suggest you take it offline with Kevin and team. As we put out our target of $185 million, in terms of the impact in 2026 and in the fourth quarter, relatively limited sort of synergy benefits. Really what you are getting is the upfront reassessment and the transfer taxes. There is probably a penny or two of sort of negative synergies in 2026.

Then as we get into 2027, that is when you will see the ramp in gross synergies, and we have broken that down in the slide where corporate G&A is targeted at $50 million, property management overhead is targeted at $65 million, and then the portfolio NOI is targeted at $70 million. As it relates to generally sort of timing, if I was going to give you sort of a rough gauge on sort of slope. The corporate G&A activity of everything from people to the reduction in duplicative public company costs, you get that sort of upfront.

Then the property management overhead and portfolio NOI, that will pace itself as we get into the first quarter and ramp up through the rest of the year. Hopefully that was helpful directionally, and if we did not get at your core question, we are happy to follow up.

Operator: Thank you. Your next question comes from the line of Alexander Goldfarb with Piper Sandler. Please proceed with your question.

Alexander Goldfarb: Good afternoon, Ben and team, congrats on all the hard work integrating the two companies. Must have been quite the process. Sort of a two-parter. Kevin, I wanted to follow up. I think you mentioned that you do not plan to do forward equity issuance for the developments. I just want to make sure I understood that correctly. My real question is, you guys spoke a lot about some of the initiatives that you are undertaking. Avalon and EQR separately were rather well-run companies. They were good at innovating new ways to drive revenue, reduce costs, operating, and such.

I'm sort of curious, as you think about the combined platform that you've talked about, how much of the upside do you see as just sort of combining the best from both companies versus, hey, there were some initiatives that each company was planning separately that weren't yet ready for prime time, but now, just coincidentally how the timing works, now these projects are, so it happens to time well with the new combined Vivmark?

Michael Manelis: Hey, Alex, this is Michael. I'll just start off and talk a little bit about the synergies and how we're kind of thinking about that, and then maybe, Kevin, you can hit the liquidity question on that. I think, look, you hit it. Both companies had significant innovation initiatives underway before the merger, and we've remained fully committed to delivering on those benefits. Those were contemplated in the standalone plans for our companies, and they are not part of any of the merger synergy targets.

Everything that we are talking about is the incremental opportunities from bringing these companies together and really leveraging this combined scale to improve, whether that be the procurement, the vendor economics, the market density, to really kind of centralize and improve the operating efficiencies. All of those things that are incremental above and beyond what either one of us had identified is what we are counting as the synergies. Importantly, we do expect to deliver on all of this, right? The innovation benefits already planned and the incremental synergies that we're committing to as part of this merger. Our focus is on maximizing the total value we create while maintaining very clear accountability for delivering on both of these things.

Ben Schall: Yeah, the part I'd add there to Michael's commentary, Alex, is, yeah, we do feel like we're really just at the early stage here, right? I mean, what we've incorporated into the property NOI synergy is an initiative-by-initiative underwriting. But the teams are surfacing tons of opportunities. They're not quite ready to be quantified and incorporated in, but there's a much more expanded opportunity set that we see potentially harvesting. When I think about upsides for next year and particularly the property NOI synergy number, one of those is the potential both for a greater volume, but also, to a certain degree, pace.

Kevin O'Shea: I guess what I'd say, Alex, I think what you're asking about is the notion to what extent might we consider issuing equity on a forward basis. The short answer to that is we're not at this point. I mean, given where we're trading today, the honest truth is, given where we're trading today, our shares are priced incredibly attractive from an investment or investor's perspective, and we're a lot closer to potentially executing a buyback of our shares than contemplating issuing shares.

I think the broader point that I was making earlier is that in executing Vivmark's strategy, our ambition and our expectation is to execute the thesis of the merger in such a way that we are able, for the benefit of shareholders, to drive an increasing level of operating and Core FFO growth performance that in turn drives an expansion of multiple and over time will unlock a greater opportunity to more creatively issue equity against future development. But given where we are today and the pricing regime that exists in the markets today, that is not what we were contemplating at the current time.

Operator: Thank you. Your next question comes from Rich Anderson with Cantor Fitzgerald. Please proceed with your question.

Rich Anderson: Hey, thanks. Good afternoon, and congrats on all this. Great fun to watch. Just looking at your portfolios as it exists today, 10 or 11 markets, you were both, probably can guess my question, going down the expansion market path. You probably aren't going to answer your appetite for expansion markets as a combined company. Maybe you will. But I'm just curious if you think your 11 markets that I'm looking at will be greater or less or equal three years from now.

Ben Schall: Yeah, thanks, Rich. We are, as you call it, we call them regions. These are the 11 regions that we are in, and we do have a high conviction over the coming years that these are the strongest markets from an apartment fundamental perspective. As we think about new markets, it could be on the radar, but we do not enter the process of Vivmark, that market expansion needs to be part of our investment thesis. It is really generating more value out of the markets that we currently exist in, and everything from the density benefits that we are seeing on the operational side, to just having a larger market presence.

If you are a land seller, if you are a seller of an asset, if you have got a portfolio, we are even more so now front and center as a potential counterparty.

Operator: Thank you. Your next question comes from Alex Kim with Zelman & Associates. Please proceed with your question.

Alex Kim: Hey, guys. Thanks for taking my question and keeping the call going, and congrats to all the projects you guys have made post-merger close. I want to ask, you have emphasized scale as a competitive advantage, but beyond operating efficiencies, how do you plan to use the combined portfolios, leasing, and operating data to improve your underwriting for acquisitions and developments? Could you maybe walk through how having more comparable assets within a market could sharpen your assumptions around achievable rents, lease up, etc, and ultimately change which investment opportunities you pursue compared to what either company would have done alone on a standalone basis?

Ben Schall: Yeah. Thanks, Alex. A good question. Definitely one of our primary focus areas, and there are a couple of areas I would call out. One is the investments in technology and AI, and mining just our existing data to make better decisions more quickly, to be able to evaluate opportunities more quickly, to get at the crux of the core issues in any investment more quickly. That is definitely an area we are spending time, and that spans acquisition activity to, we want to double development activity. How do we get even better and better at seeking out those opportunities and executing against them?

The second arena, maybe a little bit more where you are going, is just the data and the insights that we have. I am particularly excited about just the expanded set of customer insights that we have in terms of what people want in their apartments, what are they willing to pay more for, how are their habits changing. That flywheel of taking that information and then pouring it towards, in that market, which assets do we want to own that are going to have the stronger growth profile? Or when we develop our next asset, how do we include more of those attributes? That is what we are focused on.

I do think there is a great part of that component of mining data on the investment return side, in addition to mining it for outsized operational returns.

Operator: This concludes our question-and-answer session. I would like to turn the floor back over to Ben Schall for closing comments.

Ben Schall: Well, thank you for joining us today and for your questions. The enthusiasm, I hope you can hear in this room, but the enthusiasm inside of Vivmark is real. Our teams see both the responsibility and the opportunity in front of us. We are creating a company with the talent, operating capabilities, investment expertise, and financial strength to set a new standard for our industry. Thanks for joining us, and we look forward to seeing many of you in Atlanta at Nareit.

Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines, and have a wonderful day.

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