American Homes 4 Rent

NYSE:AMH

Earnings Call Transcript 2018-Q4

[Operator]

Greetings and welcome to the American Homes 4 Rent Fourth Quarter and Full Year 2018 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Stephanie Heim. Please go ahead.

[Stephanie Heim, EVP, Counsel and Assistant Secretary]

Good morning. Thank you for joining us for our fourth quarter 2018 earnings conference call. I'm here today with Dave Singelyn, Chief Executive Officer; Jack Corrigan, Chief Operating Officer; and Chris Lau, Chief Financial Officer of American Homes 4 Rent.

At the outset, I need to advise you that this call may include forward-looking statements. All statements other than statements of historical fact included in this conference call are forward-looking statements that are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected in those statements. These risks and other factors that could adversely affect our business and future results are described in our press releases and in our filings with the SEC.

All forward-looking statements speak only as of today, February 22nd, 2019. We assume no obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

A reconciliation to GAAP of the non-GAAP financial measures we are providing on this call is included in our earnings press release. As a note, our operating and financial results, including GAAP and non-GAAP measures, are fully detailed in our earnings release and supplemental information package. You can find these documents as well as SEC reports and the audio webcast replay of this conference call on our webcast at www.americanhomes4rent.com.

With that, I will turn the call over to our CEO, David Singelyn.

[Dave Singelyn, CEO]

Thank you, Stephanie. Good morning, and welcome to our fourth quarter 2018 earnings conference call. We started this business more than seven years ago, with the goal of building the premier national operating platform or the single-family rental business. At the time, we saw a unique combination of factors to accretively grow a national portfolio, institute operational best practices, and deliver quality housing to our residents.

Today, while much has changed, our focus remains consistent with our outlook remaining positive. Global uncertainties are a concern for many sectors, but for our business, the demand drivers remain strong and supportive.

The overall economy is healthy, with underlying job growth within our markets increasing about one-third faster than the national average. Additionally, housing demand continues to outpace new supply in most markets and renting remains the preferred housing option for many families.

Within this support of macro environment, we continued to refine and improve our world-class operating platform based on four cornerstones; operational excellence, consistent and accretive growth, financial flexibility, and superior customer service.

Let me touch on each of these cornerstones, which continue to be the principles on which we operate, firstly, regarding our ongoing optimization of the American Homes 4 Rent operating platform.

Today, our platform is the most efficient in the industry, providing the best service at the lowest cost, but not just due to economies of scale. We have designed and implemented management and operational best practices to standardize processes, and maximize efficiencies.

We have trained a best-in-class team and created a culture of innovation and success. We have invested in technology that fundamentally changes the way we do business from marketing and leasing to resident and interaction, to maintenance and to capital investment.

Most importantly, we're not sitting still, but engage constantly in the refinements and enhancements as we learn from our experiences in real-time. Similar to prior efforts, including Let Yourself In technology, internalizing the deal management process and handling maintenance request with our own personnel, these functions have the impact of improving efficiencies and customer service.

Today as asset managers with the long-term view, we continue to expand our preventative maintenance programs. While this results in higher maintenance and capital expenditures, today, it reduces maintenance-related expenditures over the long term compared to a program without a robust preventative maintenance program, while also improving resident satisfaction. Jack will elaborate more on this in a few moments.

Second, we will continue to grow and strengthen our portfolio through accretive investment and prudent asset management. Since our start formation, we have grown through a variety of channels, taking advantage of the best market opportunities available at the time; REO and market listings, auctions, portfolio acquisitions, and mergers.

More recently, we've focused on capital on our national builder and in-house development programs, as we believe these homes are the best risk-adjusted investment opportunity, while further strengthening our portfolio metrics in terms of age and average expenditures per home.

Our third cornerstone for excellence is our conservative and flexible balance sheet. Since our formation, we have maintained a long-term focus on our capital structure and steadily worked to expand our sources of capital and lower our average cost of capital.

I am proud of our investment-grade rating, which earlier this year facilitated our raise of $400 million of unsecured debt with great execution. Today, our balance sheet has greater capacity and flexibility than ever, and we are positioned to take advantage of any opportunities that arise.

And finally, we will continue to focus on delivering a superior customer experience to our residents. The fact is that our homes or their homes and our residents need to feel at home to enjoy a sense of comfort and connection in their community. In all of our resident interactions, we emphasize convenience and work to ensure successful solutions.

Our training and operational strategies are designed to deliver responsive and efficient service. Our customer surveys and external ratings demonstrate our continued improvement in providing superior customer service, but we know we can always do better.

Before I turn the call over to Jack and Chris, I would like to mention that our Board of Trustees recently revised and updated our executive compensation plan. After a thorough review, the Board replaced our legacy comp plan, which largely rewarded management with equity in place of the time of the IPO.

At this point, given the maturation of the company, the Board felt it was important to implement a more forward-looking structure with performance-based incentives. The full details of the new compensation program will be available when our proxy is filed in March and Chris will provide details on the impact on G&A later on the call.

On a related note, we expect loans made by affiliates of the company in connection with stock acquired by certain executives prior to the IPO will need to be repaid this year, which may trigger related stock sales. However, management remains committed to alignment of interest with shareholders and expects to retain a substantial ownership stake going forward.

In closing, we are proud of our accomplishments and believe we are well positioned for continued success. Fundamentals remain robust and our portfolio is highly occupied as we move into our strong leasing season. Our development initiatives are maturing and are a key driver of accretive growth going forward.

Finally, our platform has been strengthened, our team is experienced, and we believe we are well-positioned to continue to create long-term value for our shareholders.

And now I'll turn over the call to Jack.

[Jack Corrigan, COO]

Thank you, Dave and good morning everyone. I'll begin with revenue growth. For the same-home portfolio, during the fourth quarter, we achieved a 94.8% average occupied days percentage, up 80 basis points from the fourth quarter of 2017 and average monthly realized rent was up 3.4%, resulting in quarter-over-quarter same-home core revenues increasing 4.1%.

Full year 2018 same-home core revenues increased 3.9%. We saw sustained strong demand and maintains an average occupancy days percentage of 95% during the year, up 40 basis points from the prior year.

Average monthly realized rents were up 3.6% and I am pleased to say that despite some of the leasing challenges that we faced in 2018, our blended rental rate growth was better during each quarter of 2018 than the same quarter in 2017.

As we look ahead to 2019, we believe there is still room for modest occupancy lift. And based on current levels of demand, we do not expect any material shift in our ability to sustain our rental rate growth. Chris will provide more details on our guidance later on the call.

Turning to operating expenses, for the full year 2018, same-home core property operating expenses were up 5.8%. Property taxes, which represents nearly 50% of total expenditures, were up 3.6% for the full year, reflecting the timing of reassessments and higher home values, partially offset by continued successful deals of assessed values.

Across the rest of our operating expense categories, consisting primarily of repair and maintenance, turnover cost and property management cost, we experienced an increase of 8.1% in 2018 over the prior year.

Cost to maintain our homes, consisting of repairs and maintenance, were up 11.2% in 2018. As we've previously discussed, the increases for the year were driven by a variety of factors, including inflation, higher available inventory coming into the year, some weather-related costs, and the rollout of our preventative maintenance program.

Now, I will provide additional color on our preventative maintenance program. Preventative maintenance has always been a focus for AMH to ensure asset quality and maximized customer satisfaction.

However, as portions of our portfolio age, we recognize the need for a more robust preventative maintenance program to ensure long-term efficiency and predictability of expenditures.

Historically, we completed preventative maintenance on turns using third-party vendors. Following the pattern of internalizing operating functions to improve efficiencies, both in terms of cost and disruption to our residents, during 2018, we hired additional in-house technicians to internalize a portion of the preventative maintenance initiatives, most of which are focused on the exterior of our homes.

This new process allows for cataloging of exterior conditions and scheduling exterior maintenance in a more orderly manner. We expect that one of the benefits will be to speed up turn times, as the exterior work can more efficiently be performed on occupied homes.

Looking ahead to 2019, we expect our overall cost to maintain a home to increase by approximately 4% to 5% prior to the impact of our expanded preventative maintenance program. This reflects higher wage, labor, and material inflation along with consideration for unknown weather-related events, offset by the benefit of favorable prior year comps.

Incorporating the impact of our expanded preventative maintenance programs, we expect total 2019 cost to maintain to increase between 5.5% and 6.5%, resulting in an average cost to maintain in the $2,200 to $2,300 range. While this program adds incremental costs in the near-term, we believe a proactive approach is the right decision and will ultimately result in long-term savings.

On the staffing front, last year as we discussed, we incurred higher turnover at some of our experienced operating and leasing team members. Today, our staffing levels are back to normal. And while turnover may continue to confront us, given our best-in-class teams, we believe we have the depth across our platform, including mobile teams ready to assist in markets hit suddenly by turnover or other disruptions. Further, when not in the field on assignment, these teams will be available to provide training and support to our teams across the platform.

Turning to growth, as Dave mentioned, we are increasing our focus on our built-for-rent programs as the best risk-adjusted opportunity for accretive growth. This initiative adds newer assets that are more in demand and provides better near and long-term economics.

During the fourth quarter 2018, we added 699 homes for an estimated total investment, including renovations, of $188 million. 220 of these homes, totaling $59 million, were added through our built-for-rent programs.

For the full year, we added 2,237 homes for an estimated total investment of $583 million, including 663 homes for $182 million through our built-for-rent programs. We were most active in Atlanta, Austin, Charlotte, and Phoenix.

For 2019, our target is to take $300 million to $500 million of homes into inventory, with about 80% expected to be from our built-for-rent pipeline and the rest from our other channels.

For the majority of these inventory additions, we expect the first half activity to be the slowest, with additions weighted toward the back half of the year. Further, we expect to invest an additional $200 million to $400 million into our development pipeline that we expect will deliver in future years.

Turning to dispositions, we continue to strategically prune our portfolio where it makes sense for operational reasons. During the fourth quarter, we sold 380 homes for net proceeds of $58 million, bringing the full year 2018 total dispositions to 691 homes for net proceeds of $105 million.

For 2019, we have identified approximately 2,000 homes, which we intend to sell, both in bulk and on a single-asset basis when the homes are vacant. Our objective is to complete the majority of these sales over the next 24 months and we anticipate generating approximately $400 million in proceeds, which we intend to recycle into our new investments.

In summary, we did a lot of heavy operational lifting in 2018 and we enter 2019 in a strong position to execute with year-end occupancy up 260 basis points higher than last year. We continue to strengthen our platform and improve efficiency to deliver superior customer service for our residents.

So far, in 2019, we have seen positive absorption in the same-home pool and lower than anticipated turnover. For January, average occupied days were 95.1%, up 60 basis points from 2018.

Now, I will turn the call over to Chris.

[Chris Lau, CFO]

Thanks Jack. In my comments today, I'll briefly touch on our fourth quarter operating results, update you on our balance sheet, and then provide some additional color on the introduction of our 2019 guidance.

Starting off with the summary of our operating results. For the fourth quarter of 2018, we generated net income attributable to common shareholders of $17.6 million or $0.06 per diluted share. This compares to a net loss of $22 million or $0.08 loss per diluted share for the fourth quarter of 2017.

Also, for the fourth quarter of 2018, core FFO was $98.5 million or $0.28 per FFO share and unit as compared to $89.4 million or $0.26 per FFO share and unit for the same quarter last year. The increase in core FFO is primarily attributable to continued growth in our net operating income from both our same-home pool of properties as well as cash flow contribution from our acquisition and development activity over the last 12 months.

Adjusted FFO was $86.9 million in the fourth quarter of 2018 as compared to $79.8 million for the fourth quarter of 2017. On a per share basis, adjusted FFO was $0.25 per FFO share and unit for the fourth quarter of 2018, up 8.7% from $0.23 per FFO share and unit for the fourth quarter of 2017.

Next, I'll provide a quick update on our balance sheet and recent capital markets activity. In November, we completed the previously announced repayment of our $115 million exchangeable senior notes at maturity for total cash consideration of $135.1 million.

At year-end 2018, we had $2.8 billion of total debt with a weighted average interest rate of 4.2% and a weighted average term to maturity of 13.4 years. Our $800 million revolving credit facility had $250 million balance, which was subsequently paid off in January of this year, which I'll discuss in a minute.

At year end, our net debt to adjusted EBITDA was 5.0 times and debt plus preferred shares to adjusted EBITDA was 6.8 times. Subsequent to year end, in January, we completed our second unsecured bond offering, raising $400 million of 4.9% senior notes, which are due in 2029.

As I just mentioned, the net proceeds were used in part to repay the $250 million outstanding balance on our revolving credit facility, leaving approximately $150 million of remaining net proceeds to fund a portion of our 2019 acquisitions and development program as well as general corporate purposes.

Going forward, we don't have any debt maturities other than regular principal amortization for the next three years, which combined with our strong and growing annual routine cash flow of approximately $250 million and our capital recycling program, we have a very solid foundation on which to grow our platform and portfolio.

Before I get into guidance, I'd like to make one quick note about 2019. Consistent with the rest of the real estate industry, beginning in 2019, we have adopted the new lease accounting standard, which results in a larger proportion of our internal leasing costs now being expensed and included within property management costs rather than capitalized.

If the new methodology had been in place for all of 2018, we would have expensed approximately $8 million more of leasing costs, approximately $6 million of which would have been included in same-home operations.

For reference, this would have reduced our 2018 same-home NOI margins by nearly 100 basis points to the 63% range and lowered our 2018 core FFO by approximately $0.02 to $1.04 per FFO share and unit.

As a reminder, this represents merely a change in accounting financial statement line items and has no impact on actual cash expenditures, and importantly, no impact to AFFO. For ease of preference, however, we have provided a reconciliation table on page 31 of the supplemental, showing what our 2018 FFO metrics would have looked like on a pro forma basis with the new lease accounting standard.

For 2019 NOI margins and core FFO, we expect the lease accounting standard impact to be similar to 2018 and we'll continue to provide you with conformed and comparable prior year metrics.

Finally, I would like to introduce our 2019 guidance, which I'm sure you all have noticed now includes guidance to core FFO, which for 2019 we expect full range from $1.06 to $1.14 per FFO share and unit. At the midpoint of $1.10 per FFO share and unit, this represents a 5.8% growth over our comparable 2018 metric conformed for the new lease accounting standard. Supporting our range are several assumptions that I'll provide you with more color on.

For our same-home pool, which will now include about 41,000 properties in 2019, our core revenues growth is expected to be in the range of 3.2% to 4.2%, which as Jack already covered is based on our expectation for a slight uptick in year-over-year average occupied days and similar year-over-year growth in average monthly realized rent.

Additionally, core property operating expense growth for the 2019 same-home pool is expected to be in the 3.5% to 4.5% range, driven by a 4% to 5% increase in property taxes and 3% to 4% increase in all the line items.

As a quick note on property taxes, we are expecting a slightly higher increase in 2019, as we have a larger proportion of multi-year revaluation states resetting property tax values this year, notably North Carolina, South Carolina, and Colorado.

As always, we plan to actively appeal property tax values where possible and have assumed a conservative level of success in our guidance range, but have less than perfect visibility at this point and will need to update you on this front as we progress throughout the year.

Tying things together, our revenue and expense expectations taken with our capital expenditures outlook, including the preventative maintenance program that Jack discussed, translates into an expectation for same-home core NOI after capital expenditures growth in the range of 2.6% to 3.6%.

Additionally, as Jack mentioned, we expect to invest between $600 million and $800 million of total capital this year and take into inventory between $300 million and $500 million of homes from both our acquisitions and development programs, with the balance of this year's capital deployment representing investment into our 2020 pipeline of AMH-developed homes.

Also, from a timing perspective, it's important to note that this year's inventory additions are expected to be much more heavily weighted towards the second half of the year as our AMH Development program continues its ramp-up.

We expect to fund this year's go through a combination of the remaining proceeds from this January's bond offering, reinvestment of retained cash flow, recycled capital from our disposition program, and modest usage of our fully available revolving credit facility as necessary.

And finally, we expect 2019 general and administrative expenses to be in the range of $36.5 million to $38.5 million, reflecting the impact of our new executive compensation program that Dave discussed, along with a modest 1% to 2% increase on all other components of G&A.

And with that, that concludes our prepared remarks and now we'll open the call to your questions. Operator?

[Operator]

At this time, we will be conducting a question-and-answer session. In interest of time, please limit yourself to one question and one follow-up. [Operator Instructions]

Our first question comes from the line of Richard Hill with Morgan Stanley. Please proceed with your question.

[Ronald Kamdem, Morgan Stanley]

Hey this is Ron Kamdem on for Richard Hill. First question I have was just on the cost to maintain. I think you've provided some good color and transparency. Just try digging into that a little bit more, you said some of the drivers were higher wages, higher material costs, and so forth. Just trying to understand how much is that? Is that a 2019 thing? And how should we think about that post is number one?

And then number two, are there opportunities down the line to see that line item potentially start to flatten or go down?

[Jack Corrigan, COO]

It's really a 2018, 2019 extraordinary inflation in wages in general, I think. With unemployment down in the 4% range, it's -- people are having to pay more for their people and then they're going to charge us more. And same thing goes -- material is probably is not as much as the actual cost of the labor, but it's been at right around 5%. And expect in 2019, it'll be up another 5%.

And in the future, whether that goes down, I think would also depend on where the economy is and where the unemployment rate and demand for labors are.

[Ronald Kamdem, Morgan Stanley]

Great. And then my follow-up was just going to be going back to the margin. I think you mentioned that the lease accounting change was 100 basis points headwind to 2018. What's that -- how should we think about margins for 2019 and beyond?

[Chris Lau, CFO]

Yes. Ron, this is Chris. Good question. Your number is spot on. Adjusted for the lease accounting standard, our 64% margin range that we reported for 2018 on a comparable basis would be in the 63% range.

For purposes of thinking about 2019, you can do the math on our revenue and expense ranges and see that we're thinking about margins in the context of 2019 kind of on a flattish basis in the 63% range or so.

[Ronald Kamdem, Morgan Stanley]

Helpful. Thank you.

[Chris Lau, CFO]

Sure. Thanks Ron.

[Operator]

Our next question comes from the line of Nick Joseph at Citi. Please proceed with your question.

[Nick Joseph, Citigroup]

Thanks. As you start to take delivery of newly constructive homes, are there any lessons learned or changes to the specs you're implementing for the next wave for homes that you're building?

[Dave Singelyn, CEO]

Yes. Not a lot, but we have this -- doing things again to reduce maintenance. We make sure that the washer and dryers are on the bottom floor. And so any water damage caused by a wrong hookup is maintained to the bottom floor, same with water heaters. And we make the stairways a little wider, so they're not -- they're easier to move in and out of.

And a lot of little things that we put regular doors on walk-in closets instead of the sliding doors, because the sliding doors are constantly having to be maintained. So, it's just little things all over the houses.

[Nick Joseph, Citigroup]

Thanks. And then bad debt was higher for the quarter in 2018. What's driving that? And have your leasing underwriting standards changed at all?

[Jack Corrigan, COO]

No, the underwriting standards haven't changed. I think for the full year and it -- sometimes it gets a little lumpy, but for the full year, we were right around just under 1%, which is kind of historically where we've been.

[Chris Lau, CFO]

Yes, that's exactly right. And I think -- Nick, its Chris. The way that we think about it is, to us, that bad debt in the range of 1% or less is about kind of what we're expecting. And to Jack's point, it does move around a little bit on a quarter-to-quarter basis. But when you look at the fourth quarter as a percent of rent and fees, we're right on 1%.

[Nick Joseph, Citigroup]

Thanks.

[Chris Lau, CFO]

Sure. Thanks Nick.

[Operator]

Our next question comes from the line of Ryan Gilbert with BTIG. Please proceed with your question.

[Ryan Gilbert, BTIG]

Hi, thanks guys. So, just to clarify, the change in the accounting standard impacted 2018 -- or would have impacted 2018 core FFO per share by $0.02. Is it fair to use that $0.02 number for the 2019 guidance range as well? Or do you think the impact could be greater than that?

[Chris Lau, CFO]

No, Ryan, it's Chris. As I mentioned, our expectation is that the 2018 impact is pretty representative of what we're expecting for 2019. And keep in mind, our guidance range contemplates or is on the new lease accounting standard basis. So, that's already factored in there.

And just as a reminder, really this is just accounting line item geography. There is no change to, obviously, actual cash dollars or economics going out the door and no impact to AFFO. So, for us, as I'm sure you're aware, we've always taken leasing costs as a deduct to AFFO.

And from a lease accounting change standpoint, it's essentially just moving those dollars up a few line items from an FFO perspective. So, now it's going to be above the line in NOI and be reflected in core FFO. But again, there's no change to the ultimate bottom line of AFFO.

[Ryan Gilbert, BTIG]

Okay, understood. And is the change reflected in the same-store expense guidance as well or are you going to be restating the 2018 same-store expense numbers?

[Chris Lau, CFO]

No, it's all reflected in there. And keep in mind, it will impact dollars and margin. But from a growth percentage basis, so long as you're setting kind of apples-to-apples on both 2018 and 2019, it's not going to have much -- penny of a difference in terms of percentage growth year-over-year.

But specifically, it is contemplated in our guidance range. And as I mentioned in my prepared remarks, as we move throughout 2019, we'll make sure that we're providing conformed and comparable prior year metrics, so everyone can be comparing things on an apples-to-apples basis.

[Ryan Gilbert, BTIG]

Okay, that's great. And then on turnover, I was a little surprised to see it flat on a year-over-year basis. Was -- is that number impacted by the hurricanes that we had in the fall at all? Or were there any markets where you saw an increase in move-outs to homeownership?

[Jack Corrigan, COO]

That quarter-over-quarter, I think, we were flat. But for the year, we were down in terms of turn. And so far in 2019, we're down as far as turns. So, I think that was just -- I don't -- I'm not sure exactly why it flattened out for the quarter, but I expect it will be down again in 2019.

[Ryan Gilbert, BTIG]

Okay. Thank you.

[Chris Lau, CFO]

Thanks Ryan.

[Operator]

Our next question comes from the line of Jason Green with Evercore. Please proceed with your question.

[Jason Green, Evercore]

Good morning. So, last year, you had onetime expenses related to cosmetic expenses in the front half of the year to push occupancy as well as some one-time expenses related to inclement weather. So, I guess, can you remind us what the dollar value was of each of those separate spends in 2018? And then what's included in the expense guidance for 2019?

[Chris Lau, CFO]

Yes, Jason, it's Chris. I'll start and trying to keep it just kind of at a slightly higher level. Ballpark numbers for last year, there was probably about, call it, again rounded here, $4 million or so, and of total, what we're kind of thinking is non-recurring type of items. But keep in mind, probably a good half or so of that was related to weather type of events. We had the freeze at the beginning of last year and then we had the two hurricanes towards the back part of the year.

And as we were mentioning all throughout last year, as we're thinking about guidance coming into this year, we're taking a fulsome kind of comprehensive look at total expected kind of expenditures on the year, including some element of likelihood of non-recurring type events that may occur this year again.

So, in our guidance ranges, we have contemplated the fact that we could potentially have additional kind of unforeseen weather-type events this year. So, I would say the piece that's related to weather from last year, I wouldn't really view that as a favorable comp necessary from a 2018 actuals to 2019 guidance.

In the event that we have a calm and mild year in terms of weather, then that's a great discussion that we'd love to be having at the end of the year. And that will turn into a favorable comp, but we don't want to count on it. And again, the objective here is to be comprehensive in our outlook for the year to minimize the number of kind of unforeseen events as we progress throughout the year.

[Jason Green, Evercore]

Okay. And then on the real estate taxes and the increase in the multi-year tax states, I guess, can you give us a better sense for how -- A, how dramatic those increases can be? And I guess, B, what percentage of your portfolio is experiencing that? And what percentage experience is that next year if there is any?

[Chris Lau, CFO]

Yes, sure. Good question. So, again, just as a reminder, we are expecting 4% to 5% on property taxes for this year, 4.5% to the midpoint. In my prepared remarks, I mentioned the primary drivers of those multi-year reevaluation states are North Carolina, South Carolina and Colorado.

Also pointed out that we are expecting slightly higher than normal increases in Houston this year. Last year on the back of Harvey, essentially there's kind of a relief type measure, Houston stayed flattish and we are expecting that there will be a catch-up there this year.

And some of those increases can be pretty dramatic. There are places in North Carolina that I know many people are aware of where values can be going up 15%-plus, because they have not been revalued for several years. I think in one particular county, I don't think they've been revalued for eight years. So, there is kind of a large kind of multi-year catch-up.

Thinking about 2020, for the jurisdictions that have multi-year resets going on right now, those will reset this year and they will then stay constant next year unless the jurisdiction decides to do something with rate, which in off-cycle years is not too common.

So, there are some pretty meaningful increases in those specific areas that I've mentioned. For some level of context, that 4.5% -- this is not an exact number, but just to give you some context here. That 4.5%, if you were to normalize it for North Carolina, South Carolina and Colorado, which represent 20% of the portfolio or so and then normalized for Houston, that 4.5% would be more like in the upper 3s, 3.7%, 3.8%, something in that ballpark. So, pretty meaningful impact to this year.

And then I would just reiterate that as everyone knows, we're very, very active on the appeal front and will do everything that we can to combat the revaluations where there is opportunity. And again, we've considered some level of kind of conservative estimate there in our guidance. But as I mentioned previously, we're going to have to keep everyone posted on that front as we progress throughout the year.

[Dave Singelyn, CEO]

Jason, this is Dave. Just on that last point, as you know, the way property taxes work; we get assessments throughout the year. And so we've worked with consultants today to come to the best estimates. But that number is going to get refined as we go through the first half of the year for sure.

And we have been very, very successful on appeals and last year, I believe we came in about 3.5% on our increases overall. So, again, it's not the most linear of functions just because of the way the jurisdictions assess, but we're pretty comfortable that we've got it all covered with our guidance for sure.

[Jason Green, Evercore]

Got it. And then last question from me on the same-store revenue front. You're coming into this year with higher occupancy than last year. You're talking about potentially increasing occupancy during the year. You're talking about average monthly realized rent probably being flat, maybe having some uptick.

I guess, thinking about the range in that context, what's really the likelihood that you could possibly hit the bottom of that range? And then, I guess, what's the possibility you could come in above the range?

[Dave Singelyn, CEO]

Well, this is Dave again. By definition, it's probably equal weighted. We think we have a lot of reasons that we can outperform the midpoint. But it's -- there's a lot of things that can happen over the next 12 months. Where we are -- sit today, we are very encouraged about all of the trends, whether it's the move outs being a little bit lower coming in to the quarter with higher occupancy or -- and even the trajectory of what we've seen in rental rate increases over 2018 over 2017. Each quarter, the blended rates were higher than the prior year. And that trend, I expect, will continue.

So, there is a lot of encouragement that we could beat those numbers, but I would put equal weighting just because of the unknowns.

[Jason Green, Evercore]

Got it. Thanks very much.

[Chris Lau, CFO]

Thanks Jason.

[Operator]

Our next question comes from the line of Haendel St. Juste with Mizuho. Please proceed with your question.

[Haendel St. Juste, Mizuho]

Hey good morning out there.

[Chris Lau, CFO]

Good morning.

[Haendel St. Juste, Mizuho]

So, I want to ask an earlier question on margins, but maybe with a slightly different twist. Looking at expense growth, they outpaced revenue growth on an annualized basis last year for the first time ever in your brief seven-year history as a public company. And with same-store expenses looking like the last page revenue again this year and your margins looking flattish year-over-year, I'm curious if perhaps you and the sector entering a new stage in its life cycle and thinking decelerating margins going forward?

And then maybe what measures beyond preventative maintenance are you also considering to support or enhance your margins going forward?

[Jack Corrigan, COO]

Well, this is Jack, Haendel. Yes, I wouldn't -- I think the revenues have been consistently up in the 3.5% to 4% range for the last several years. The expenses, we've had a couple of years of -- a year and plus an estimate of a year of 4% unemployment. And that has caused -- whether it's our labor that we internally have or the people that we hired to do the third-party work has just gone up, that goes down.

We had two years before that where our expenses were either flat or down. So it's just kind of where the economy is. And the property values have continued to increase and so that's going to be reflected at some point in the property taxes.

[Chris Lau, CFO]

Yes. And I would say just a quick note on that. If you would to normalize property taxes for some of the numbers I just mentioned a minute ago, down to the higher 3% range, 3.7% to 3.8%, that alone by itself would actually flip margins into a slight expansion position year-over-year.

[Haendel St. Juste, Mizuho]

Okay. Any color on additional measures perhaps you're considering to support margins beyond the preventive maintenance that you've talked about?

[Jack Corrigan, COO]

Well, we expect to continue to get better at each of the functions. And hopefully, that will result in an expenses being improved. We don't currently plan any expansion of Phase 1 or Phase 2 of our in-house maintenance.

[Haendel St. Juste, Mizuho]

Okay. And then a follow-up here. In addition to this, when you outlined 2,000 homes you expect to fill over the next 24 months, you expect it to receive in the $400 million range. I guess, tactically, are you biased to selling them as the needs arise, serving as maybe an ATM of sorts to fund your development? Or are you also open to selling them in bulk?

And maybe as part of that -- maybe some comment on what's out there today? Are there portfolio buyers? What type of pricing differential perhaps are you seeing between smaller, more bite-sized deals versus more chunky -- bidding on more chunky disposition or portfolio?

[Dave Singelyn, CEO]

Yes, we're not selling to generate the cash. We're selling in kind of a less dynamic markets where we don't have a significant presence and we don't plan to ever grow there. So, those markets, we're going out of them and we selectively -- our property management company comes to us and talks about certain properties that are either hard to lease or the cost to maintain is really highly.

And one of the other areas that we tend to sell out of our -- or the comps on septic tanks. It's just we're not -- we don't have enough room to have a good system in place to manage it and the cost to maintain those are significantly higher than the ones on sewer.

[Haendel St. Juste, Mizuho]

But just want to be clear. Should there be a bid that did arise, you are open to selling a bit sooner than perhaps you--

[Dave Singelyn, CEO]

Yes, we have three small bulk deals done in the fourth quarter. We're probably selling on average about 50% bulk and 50% as they vacate and then we put them up on the MLS.

[Chris Lau, CFO]

And that's actually a good point. Haendel, its Chris. Just from a guidance perspective, we're expecting in the ballpark of about $200 million of sales this year. We could be off on that number. And as Jack pointed out, it is difficult to predict the timing of it and it could be lumpy.

But for modeling purposes, we don't have an assumption better than just kind of evenly throughout the year. So, again, we'll keep you updated on that front. But just to point out, that is one area where there certainly will be kind of timing unpredictability throughout the year.

[Haendel St. Juste, Mizuho]

Got it. Okay. Thank you.

[Operator]

Our next question comes from the line of Jade Rahmani with KBW. Please proceed with your question.

[Jade Rahmani, Keefe, Bruyette, & Woods, Inc.]

Thanks very much. In quite a number of markets, occupancy was down sequentially, which I think is accounted to, at least, my expectation of seasonality. Some of those markets included Atlanta, Indianapolis, Charlotte, Chicago, Nashville. So, can you just touch on what's driving that?

[Jack Corrigan, COO]

Well, I think Nashville is one of the ones that has been a little more troublesome lately. I think Atlanta is still pretty high in occupancy. Nashville, we saw an increase in supply related to competition from other institutional players entering the space in late 2017 and 2018. We see these temporary absorption issues happen before and once they are resolved, the occupancy goes right back up. So, we've seen that happen in Tampa, Phoenix, and Indianapolis.

Indy was one of the markets we discussed, I think last quarter, where we basically had our whole turn teams coached by one of the other institutional players that caused a slowdown in getting homes ready to rent. And so consequently, the occupancy was lower than we would have liked.

[Jade Rahmani, Keefe, Bruyette, & Woods, Inc.]

How about Jacksonville and Orlando? I mean, I think that housing has been really strong in the Florida market, especially those two. But it looks like in Orlando, I mean, occupancy dropped almost 200 basis points and Jacksonville dropped almost 100 basis points. What's going on there?

[Jack Corrigan, COO]

I guess, what I'm looking at, it might be a little different.

[Chris Lau, CFO]

You're looking at, Jade, the entire portfolio. And in Jacksonville--

[Jade Rahmani, Keefe, Bruyette, & Woods, Inc.]

I'm looking at slide 14, same-home result, sequentially -- sequential quarterly metrics, average occupancy.

[Jack Corrigan, COO]

Yes.

[Chris Lau, CFO]

Same numbers?

[Jack Corrigan, COO]

Yes. I mean, I guess, 95.7%. It's really hard to keep something at 97% and it will switch back down and come back up. It's not a reflection of the market cooling off. It's just, that's -- you have a little acceleration and move outs and you're going to end up in the 95% to 96% range for a month or two.

And the other one you asked, that was Jacksonville. Again, I mean, 95% is strong. There is nothing going on that's negative. It's just a temporary thing. If I look at January of 2019 in Orlando, we're 96.3%; in Jacksonville, 95.8%. So, it's already starting to creep up.

[Dave Singelyn, CEO]

Florida the markets in total are all in the 95% range. If you have a few move-outs at the end of the month, it's going to have a small impact. None of these markets are markets that we are concerned about demand or occupancy or the ability or the operation. So, there's going to be a couple of timing things here and there, but these markets are performing well.

[Jade Rahmani, Keefe, Bruyette, & Woods, Inc.]

Okay, that's great to hear. Just on the CapEx, what is your same-home guidance implied for the increase in CapEx per home? And what are the drivers? It seems our calculations implied something like a 10% increase.

[Chris Lau, CFO]

Yes, and that's kind of in the ballpark. I mean, it's a little bit less than that. I would say that the two drivers are, as Jack mentioned in, I think it was in his prepared remarks. Kind of the underlying increase in cost to maintain, whether it's expense or capitalized, is kind of in the 4% to 5% range.

And then the incremental preventative -- or expanded preventative maintenance program will increase CapEx to kind of call it a 9% range also. And the reason for that is the majority of our preventative maintenance program is really focused on the exterior of our homes currently, kind of, bigger ticket items that have kind of a higher kind of likelihood of capitalization because they really are kind of betterments in extending the useful life of our homes.

[Jade Rahmani, Keefe, Bruyette, & Woods, Inc.]

Do you expect that given the nature of the age of your homes being younger than, say, peers, that this will be kind of an ongoing theme for several years to come as your CapEx normalizes to where others in the industry are?

[Jack Corrigan, COO]

No, one of the major things that they're doing is paving the exterior homes. Our average home is, I think, 14 or 15 years old. And we're constantly -- we're adding new homes and I think our average age should always be newer than theirs. But I don't -- I think there is one thing, one area where we may see an increase because we haven't hit the midpoint of the useful life yet and that's possibly roofing.

[Dave Singelyn, CEO]

So, Jade, a couple of things. This is Dave. One is we've been doing preventative maintenance from day one. We've been doing it on the turns and doing it with third-party, a little less efficient than what we are attempting to do now. But like everything else that we've done, when you internalize, you can get better efficiencies and better customer service.

We are proactive in the fact that we are doing maintenance today. In the long-term, we believe that the cost will be lower as a result of doing maintenance. That doesn't mean that you'll see a decline in maintenance. That means if we didn't do it, it will be much higher than we do, do it.

We have looked at this. We do think it could increase a little bit on the next couple of years. So, our maintenance expenditures may be about 1% higher on an annual basis. But I don't see us ever getting -- well, as inflation goes on, we will. But our comparable spend is going to be significantly lower than where our competitors are today, even with increases in the next couple of years in preventative maintenance.

[Jade Rahmani, Keefe, Bruyette, & Woods, Inc.]

And just lastly, I wanted to ask about the dividend. How much flexibility is there? When, under the REIT rules, would you need to start increasing the dividend to common stockholders?

[Dave Singelyn, CEO]

Yes. So, there is some information that is in our financials on this in the tax. But no, we do have net operating losses from the years and years that were generated that are available to reduce taxable income in the future years. Those obviously will burn off over time. We don't give dividend guidance, but I think if you look in the footnotes, you'll get some information that might be useful for you on that.

Our Board does look at the dividend policy on a quarterly basis. And at this time, we have -- we're not projecting an increase for the next couple of quarters or any time in the immediate future.

[Chris Lau, CFO]

And Jade it's Chris. The footnote that Dave is referring is in our 10-K that will be filed a little bit later today.

[Jade Rahmani, Keefe, Bruyette, & Woods, Inc.]

Thanks very much.

[Chris Lau, CFO]

Thanks Jade.

[Operator]

Our next question comes from the line of Jeff Spector with Bank of America. Please proceed with your question.

[Jeffrey Spector, Bank of America Merrill Lynch]

Thank you. Good morning. I wanted to focus on the build program. We've talked about it for a number of years. You've gained a lot of experience there, great balance sheet. How much more aggressive can you get with that program this year, next year? Clearly, you've laid out on the call many of the benefits of that program, and of course, owning the younger homes, not just from a maintenance standpoint but from an experience standpoint.

[Jack Corrigan, COO]

Yes, we're schedule to deliver 1,300 to 1,400 homes in 2019, which is substantially higher than what we did in 2018. We kind of are targeting somewhere in the 2,500 to 3,000 home range in 2020, but it is kind of early to really hang your hat on that. We believe we're staffed to be able to do up to 4,000 homes a year right now.

[Dave Singelyn, CEO]

Jeff its Dave. Developments, a little bit longer lifecycle than going out and buying on MLS. We started the program late last year, nurtured it through this year. We do things on a little bit smaller scale to test it out. We are very excited about our results and have been staffing up in additional markets.

And as you heard from Chris, the deliveries this year are back weighted to the back end of the year. But more importantly, there is also an investment into properties that will be delivered next year.

And so we will -- the cadence will get a little bit more normalized next year in 2020 on the deliveries as the program matures and the properties work their way through the lifecycle of from land to completed property.

[Jeffrey Spector, Bank of America Merrill Lynch]

Great. Thanks. And then my second question pertains to just the personnel turnover and your discussion on the new compensation program. How deep does that program go into the personnel to try to retain talent at the company?

[Dave Singelyn, CEO]

Yes. So, this is Dave again. So, I think my comments were really more what you will see in the proxy on senior personnel. The other piece that you are referring to, we did have done a thorough look at compensation. This is a new industry.

A couple positions were more high demand than others. We have made adjustments to our compensation. It's in our guidance for next year in the property management. It's not going to -- it's not significant. It's only a couple of tiers that we made -- had to make some significant adjustments or more, I would say, significant, but higher than inflationary adjustments.

We are today fully staffed across all of the field. I think we are in better shape today than we ever have. We have additional people in certain roles that can be moved around if necessary. And when not, they are acting as trainers and the quality control in many of our markets. So, I think we're in a very, very good place today. And all of the impacts of that are reflected in our guidance.

[Jeffrey Spector, Bank of America Merrill Lynch]

Great. Thank you.

[Chris Lau, CFO]

Thanks Jeff.

[Operator]

Our next question comes from the line of John Pawlowski with Green Street Advisers. Please proceed with your question.

[John Pawlowski, Green Street Advisors]

Dave, could you provide more details if you can on the stock sales from the C suite that you alluded to in 2019?

[Dave Singelyn, CEO]

I think it will be -- there'll be a couple of documents that will be filed here coming out that would highlight a lot of that. As you know, the compensation program of the C suite has not been traditional. We are rightsizing that. It may require some of us that have loans that are coming due this year to sell throughout the year 2019. And so it's -- there's -- I'd probably defer to the documents that will be filed over the next weeks or so on that.

It's -- at the end of day, let me say one thing, John. At the end of the day, it's not a confidence thing. The individuals, which are primarily Jack and I, will continue to own a very significant position in excess of 1 million shares each.

[John Pawlowski, Green Street Advisors]

Yes. Thanks for that. And on the disposition plan, if you look across the major markets that constitute a lot of these planned dispositions, how has home prices trended in the last couple of months there in Oklahoma cities and Augusta, Georgias of the world?

[Dave Singelyn, CEO]

Well, the fourth quarter is generally not a quarter where there is a lot of people out looking for houses, so it usually is a little flatter appreciation rate. And I would say that's pretty accurate for what we've seen.

I'd have a better answer for you if you get through the spring buying -- home buying season and what we see after that. But one of the reasons we're selling out of those markets is they have not been very dynamic in terms of rent growth or home price appreciation. So, the overall return hasn't been that good. And so I'm not expecting to see a huge appreciation coming up in March and April.

[Jack Corrigan, COO]

John, as the home price appreciation does lag a month or two, the stronger data. But as Jack said, they have lagged consistently with some of our other properties, and we had seen nothing in the last two months to indicate that it's changed that.

[John Pawlowski, Green Street Advisors]

Okay. On a seasonally adjusted basis, are home pricing declining on an absolute basis in any pockets of these disposition markets?

[Chris Lau, CFO]

Not from what I see.

[Dave Singelyn, CEO]

They just don't have the same potential.

[John Pawlowski, Green Street Advisors]

Okay. Thank you.

[Chris Lau, CFO]

Thanks John.

[Operator]

Our next question comes from the line of Douglas Harter with Credit Suisse. Please proceed with your question.

[Douglas Harter, Credit Suisse]

Thanks. Can you talk about the underlying trend on demand, specifically kind of how long properties are staying vacant? And kind of the number of applicants per vacant property?

[Jack Corrigan, COO]

Yes. Again, the fourth quarter and really, the first half of January is typically not our high demand months. And so I want to start with that. But we've seen a lot of demand for our products for those months. I expect the number of applicants will pick up substantially March, April, May, June, July, and those really are big months of leasing.

[Chris Lau, CFO]

Doug, one other thing to add. I mean, overall if you look throughout 2018, for the majority of the months, you will see that our move out activity is better in 2018 than 2017. Our rental rate increases on a blended basis, renewals and new leases, was better in every quarter 2018 over 2017 and the demand is stronger.

The issue is that if you compare sequential quarters, the seasonality does play in. But we are coming into the year better. The January leasing, as Jack indicated in his prepared remarks, was very strong. And so the demand is there. And so there will be a little short-term impact if people -- more people move out at the end of one quarter, you may see the impact as we just talked with Jade on Florida. But it's not indicative that we are concerned about Florida market.

[Douglas Harter, Credit Suisse]

Thank you.

[Operator]

Our next question comes from the line of Hardik Goel with Zelman & Associates. Please proceed with your question.

[Hardik Goel, Zelman & Associates]

Hey guys. Thanks for taking my question. Dave, I just wanted to refer back to something you had in your prepared remarks about doing exterior work on the homes while they were occupied. If you could just give us more color on what other initiatives you guys have in place that will reduce turn times and how far that could really go? If you could just quantify that in terms of days that you're saving.

[Jack Corrigan, COO]

Yes, this is Jack, I'll take that call. What we had historically done is do the external work on the turn, or in emergency cases, we'd have to do it while it was occupied. But -- and that's really the most expensive way to do that because it's one-off, you don't really know that it has to be done until you get there. And then you got to schedule it and it really -- it takes us more time if we see that a home -- and we have now a system of cataloging, that condition of the exterior of the home. We see the home may need it a year from now, may need it two years from now, it needs it within six months. We can kind of bulk that together.

And even if we don't have sufficient in-house personnel, the first choice, obviously, is to do it in-house. We can bulk an area up and sub it out to a painting contractor to go do that in that area where we buy a week of time or two weeks of time. So, it's really trying to get more efficient and not delaying the turn of the house or work that can easily be scheduled while the tenant's in there. The interior work, you really need to do on the turn.

[Hardik Goel, Zelman & Associates]

Got it. Could you give us all-in turn times, lease and the start of a new lease in 2017, 2018? And what you think it will be going forward?

[Chris Lau, CFO]

I can give you a 2017 and 2018. I'll let Jack speak to his expectations going forward. But both years in the lower 50s, 2017, I think, was kind of in the 54, 55-day range. And then in 2018 -- and keep in mind, these are cash to cash, so totally all-inclusive turn times. And then in 2018, we were more like 52, 53 days.

[Jack Corrigan, COO]

So, incremental improvement, we've -- I think we can get it down to 45 days, but I'm not promising that in 2019.

[Hardik Goel, Zelman & Associates]

Got it. Thanks guys. That's great color.

[Chris Lau, CFO]

Thanks Hardik.

[Operator]

Our next question comes from the line of Buck Horne with Raymond James. Please proceed with your question.

[Buck Horne, Raymond James & Associates, Inc.]

Hey thanks. I want to do a follow-up a little bit on the build-to-rent questions. But just looking at the housing market in general, with the steep slowdown we had in -- particularly with new home sales last year. You had a lot of builders who got caught with too much spec inventory out there. I'm wondering if you had any increased conversations with any builders out there about their spec product. And maybe if there is any new opportunities to buy some more new homes in bulk?

[Jack Corrigan, COO]

Yes, we definitely have had discussions and have brought some from the builders -- national builders and some of the smaller ones. And then in addition, trying to buy vacant developed lots was getting hard and it's getting a lot easier. Even some of the builders are selling their lots to us, so that's going to -- that leads to -- if you don't buy the raw land, then you have to develop the land. It makes it easier and shorter to get that investment into producing income.

[Buck Horne, Raymond James & Associates, Inc.]

Okay, great. And just kind of thinking more hypothetically. So, if we do see the economy and/or the housing market experience a more pronounced downturn or a pull back, how do you think about managing the self-development programs through a downturn? Do you -- can you talk about -- you shut it off or do you just keep building straight through?

[Jack Corrigan, COO]

I think you keep building straight through because we've proven we can rent houses. What I haven't seen anywhere in any large degree is where the production of houses has outpaced new household formation. So, I don't think that -- I don't see it happening projected in the future, even as slight. I think that our product will be in demand and possibly even more in demand during a downturn.

[Dave Singelyn, CEO]

Buck, this is Dave. I think you're highlighting one of the very large differences between us as a builder and a homebuilder for retail as a builder. We know where we're selling. We don't have the selling cost of a traditional homebuilder. Therefore, our risk profile is very, very different.

Jack indicated that the new starts of all housing is less than the household formation. Before we even get to that, we still have a housing shortage in the United States. And so we will be providing and adding housing stock. And the demand for rentals in a downturn in the housing cycle, in the homebuilding cycle is a benefit to us, not a detriment.

So, I think we are very, very well positioned. Overlay that that we still have the democratic changes that we have talked about historically and on prior calls. So, the demand for housing is -- for rental housing is going to be very, very strong. And it will get stronger if the economic changes make it more difficult to be going to homeownership.

With that said, just one thing you should know. We've talked about the decline in our move-out percentage, which is very favorable. A lot of that is driven by a decline in the number of people looking to buy homes as well and move out for that. So, those are a couple of our additional facts.

[Buck Horne, Raymond James & Associates, Inc.]

That's really, really helpful. And just one last one if I can right now. Just kind of the recent economics you have been achieving on the new-build assets, can you quantify a little bit what kind of rent premiums you're achieving or yield on cost? And whether there is any major differences in the economics on the internally developed versus the third-party stuff.

[Jack Corrigan, COO]

It's probably about a 20% better yield on the stuff that we develop. Premium, I don't think we're charging on average that much of a premium because in some of the developments, we're putting 100 houses up in 10 or 12 months. So, we really want to fill them up. We'll look for the premium on the renewals.

[Buck Horne, Raymond James & Associates, Inc.]

All right. Thanks guys.

[Chris Lau, CFO]

Thanks Buck.

[Operator]

Our next question comes from the line of Nick Joseph with Citi. Please proceed with your question.

[Michael Bilerman, Citi]

Hey it's Michael Bilerman here with Nick. Dave or Chris, maybe you could just go over some of the G&A changes year-to-year. So, you were running about $37 million in total aggregate G&A. It sounds like just based on the $0.01 variance for 2019, that, that should rise to probably $40.5 million give or take. Senior management, at least disclosed in the proxy in aggregate, is only $4 million from 2017. So, maybe can you talk a little bit about how that evolves and what the big changes are to cause such a big jump into 2019?

[Dave Singelyn, CEO]

Yes, this is Dave. As we indicated, the executive management comp is outlined in the proxy. There is a number of others -- the two of us for sure in the comps structure that are really comped with equity that was pre-IPO. In that program, we're unwinding we are going to move the comp to more of a market-based comp.

If you look at our increase year-over-year, it's about 9% in total and the amount that we expect to see G&A increase. 1% to 2% is recurring thing. The balance is these items that we indicated.

And as I indicated with John Pawlowski, that information will be more wholesomely described in a proxy and other materials that will be filed here shortly and so I will defer to those filings for you to get all the details.

[Michael Bilerman, Citi]

Right. So, we should expect that the top five individuals will go from $4 million in total comp to somewhere in the $6.5 million to $7 million range. Is that the way to think about it?

[Dave Singelyn, CEO]

You're in the right fit cove. Yes.

[Michael Bilerman, Citi]

And then, so -- and I think you mentioned also in terms of the stock, you and Jack both have pledged your 3.1 million shares in units for loans. And so it sounds like you said you own just about 1 million shares post. So, does that assume then you'll be liquidating each about 2 million shares in units to fund those loan repayments? Just to make sure I got the math right.

[Dave Singelyn, CEO]

Yes. No, the -- Mike, I think the words that were used was we will own more than 1 million shares without giving clarification as to what the number was. And again, I will defer to the documents at our file.

[Michael Bilerman, Citi]

And so you -- yes, the pledge of the shares, I guess that's -- what is the loan outstanding relative to the pledge? You've pledged $70 million each of your holdings, but it's to get a loan of how much?

[Dave Singelyn, CEO]

Yes, Mike, that's -- so all that detail is in the proxy in the filings that are coming out. I think we should probably wait until those are out.

[Michael Bilerman, Citi]

Yes, I'm just trying to figure out what was previous, right, so I'm just saying; the 2017 proxy states that you have pledged 3.1 million shares in units. I'm just wondering how big the loan was. That's all. I'm not asking what gets free band. I'm just trying to understand that the loan is against the shares that you've pledged.

[Dave Singelyn, CEO]

Yes. It's different for each of us. I think in aggregate, you're going to see something in the -- probably in the $40 million range, maybe $50 million in aggregate.

[Michael Bilerman, Citi]

Great. Okay. Thank you.

[Operator]

Ladies and gentlemen, we have reached the end of the question-and-answer session. And this does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.