The Rent Roll with Jay Parsons

EP#71 – Jana Galan | 7 Takeaways From Apartment REIT Calls

Date: February 12, 2026
Host: Jay Parsons
Guest: Jana Galan (Director, Bank of America Securities)

Episode Overview

This episode is a deep-dive into the Q4 2025 earnings calls of the “big six” apartment REITs—AvalonBay, Camden, MAA, Equity Residential, Essex, and UDR. Jay Parsons summarizes seven key takeaways from those calls, explores hot topics in rental housing policy and market trends, and sits down with Jana Galan of Bank of America for a data-rich industry analyst’s perspective. Core themes include the slowly-improving fundamentals in multifamily, the uncertain rent growth outlook, muted development, and notable operational trends in both Sun Belt and coastal markets.

Key Discussion Points & Insights

1. Fundamentals Incrementally Improving; Concessions Starting to Abate

Timestamp: [06:45]

• Summary:
  After several tough years, there's cautious optimism among major REITs. Rent concessions are finally starting to burn off and momentum in lease rate growth and high occupancy is noted, even in Sun Belt markets. Supply is trending down after three years of heavy deliveries.

• Notable Quotes:

  • “The positive operating momentum we achieved in the final months of 2025 has continued into 2026 with further acceleration in lease rate growth coupled with high occupancy.” – Tom Toomey, UDR ([07:49])
  • “We’ve had four straight quarters now of blends improving year over year, which really indicates that we're turning the corner.” – Brad Hill, MAA ([08:37])

• Context:
  Most REIT leaders are careful not to suggest a return to “boom times,” but instead describe these developments as moving past the bottom of the cycle (likely around October 2025), with the spring leasing season seen as the next critical test.

2. Muted Rent Growth Expectations for 2026; Possible Acceleration Second Half

Timestamp: [11:15]

• Summary:
  Despite positive trends, rent and revenue growth outlooks are subdued. Many anticipate a better second half for 2026, but improvements will be gradual, not dramatic.

• Notable Quotes:

  • “We expect supply levels to continue to impact new lease pricing, particularly in the first half of the year, but believe the impact will increasingly improve over the course of the year...” – Clay Holder, MAA ([12:15])
  • “We expect market rent growth of approximately 2% for our portfolio over the course of the year, with most of that growth occurring in the second half.” – Alex Jesset, Camden ([13:10])

• Context:
  Even coastal REITs with stabilizing supply expect expense growth to outpace revenue growth in 2026. Investors and executives alike see 2026 as a set-up year for 2027.

3. Uncertainty Still Clouds Demand and Rent Outlook

Timestamp: [15:28]

• Summary:
  Macroeconomic, policy, and job-market uncertainty remains a major drag, tempering both renter and employer confidence. This “cloud” pulls down rent growth almost everywhere except San Francisco and NYC.

• Notable Quotes:

  • “Every sign suggests the first half of 2026 will be marked by the same cautious tone as last year.” – Rick Campo, Camden ([15:55])
  • “Heightened policy and geographic uncertainty took a toll on consumer and employer confidence, causing an abrupt slowdown in job and rent growth in the second and third quarters.” – Mark Perel, Equity Residential ([16:50])

• Additional Point:
  Lower move-outs to home purchase are notable, with EQR noting a record low of 7.4% in 2025. Uncertainty means a wide range of possible outcomes for the year.

4. Construction Costs Down, Development Still Difficult

Timestamp: [19:27]

• Summary:
  Construction costs are down—by low to mid single digits—but high land prices and soft rents mean most new development deals still don’t pencil. REITs are pulling back on starts, focusing on fewer, higher-yield projects.

• Notable Quotes:

  • “We’re seeing anywhere from 5% to 8% reduction in costs. But clearly developments are still hard to pencil.” – Alex Jesset, Camden ([22:30])
  • “You really need to see land sales take a reduction in their expectation on land prices…and/or you’re going to need to see 10+% rent growth for some of these deals to make economic sense.” – Ryland Burns, Essex ([23:45])

• Nuance:
  Some REITs (AvalonBay) are building larger units for work-from-home and changing demographics. However, overall, most are tightening their development pipelines for 2026.

5. San Francisco and New York Remain Bright Spots; Mixed Results Elsewhere on Coasts

Timestamp: [26:12]

• Summary:
  The strongest demand and rent growth are in San Francisco and NYC, fueled by tech hiring, AI, back-to-office trends, and very limited new supply. Other coastal cities like Boston, Seattle, DC, and especially Southern California present a varied, sometimes challenging, picture.

• Notable Quotes:

  • “San Francisco is clearly hot again...tech jobs, back to office, AI plus very low supply.” – Jay Parsons ([27:21])
  • “Continuing anxiety over Los Angeles, which lacks both economic and quality of life drivers, but we'll remain hopeful.” – Mark Perel, EQR ([29:24])

• Additional Point:
  Camden is selling its entire California portfolio (valued at $1.5–2B), aiming to redeploy capital in the Sun Belt and stock buybacks.

6. Sun Belt Still Soft, but Momentum Emerging (Atlanta, Dallas)

Timestamp: [31:16]

• Summary:
  While the Sun Belt is still underperforming in rent growth, “green shoots” are emerging (especially in Dallas and Atlanta). High supply is finally working through, and occupancy and blended rent rates are rebounding modestly.

• Notable Quotes:

  • “We are starting to see a little bit more positive momentum in places like Dallas. Positive blends, occupancy back in that 96.5% range.” – Michael Lacey, UDR ([31:30])
  • “Improving numbers for Atlanta and Dallas... Denver, Nashville, South Florida [will] do relatively well in 2026. Austin still the big laggard.” – Jay Parsons ([32:10])

• Theme:
  There’s a sense that, as supply burns off, these markets could rebound briskly—but it will play out over time.

7. REIT Stocks Trade at Huge Discounts to NAV; More Stock Buybacks

Timestamp: [33:10]

• Summary:
  REIT share prices are well below net asset value, with implied cap rates around 6% (versus transaction comps in the low 5s or even high 4s). Many REITs are opting for stock buybacks, selling off low-return assets to recycle capital.

• Notable Quotes:

  • “The best capital allocation opportunity we see now is to sell properties that we see as having lower forward return profiles and using the sales proceeds to buy back our stock.” – Mark Perel, EQR ([33:41])

• Upcoming:
  Parsons teases a deeper discussion on this topic with guest analyst Jana Galan.

Policy & Market Headlines

Timestamp: [36:10]

• Congressional Hearing Recap:
  A recent House committee hearing on housing affordability gave almost no attention to the hot-button issue of institutional bans in the single-family rental market. Both Republicans and Democrats focused instead on mortgage access, zoning, and Dodd-Frank legislative reform.

  • Quote:
    “Let me tell you this, I kept looking and listening and trying to wait for talk about single family rentals. But there ended up being almost no discussion at all...” – Jay Parsons ([37:58])

• Legislative Outlook:
  Despite White House support for a SFR investor ban, Congress seems unmotivated to advance such a measure, and bipartisan housing supply bills are instead moving forward.

• Industry News Briefs:

  • Congress advances the Housing for the 21st Century Act with supply-focused policies (e.g., curbing environmental reviews, zoning reforms).
  • Varys Residential is reportedly under pressure to consider a sale. Parsons laments the shrinking universe of public REITs as more are acquired or privatized.

Interview: Jana Galan, Bank of America Securities

Timestamp: [32:25–56:13]

Jana’s Background & Analyst Perspective

• Origin Story:
  • Fell into REIT research in 2009.
  • Has spent time on both the research (sell-side) and investing (buy-side) sides, covering almost all property types (apartments, industrial, healthcare, SFR, etc.).
  • Returned to Bank of America bringing a holistic view for clients. ([32:42])

Behind the Scenes: REIT Earnings Season

• “Usually, you know, earnings will hit a little bit after the market close...We quickly scan the press releases, the supplementals...follow up with management teams...then we kind of go through a second time...update the models...may even take a third time...” ([35:19])

Hot Topic: Stock Buybacks & Discounts to NAV

• Why So Many Buybacks?
  • Transaction market is competitive; making new deals accretive is tough.
  • Buybacks make sense when shares trade at large NAV discounts.
  • “Investors prefer management focus on operations...but when these big discounts present themselves, it starts to make sense.” ([36:50])
• How deep are the discounts?
  • Apartments trading at 20%+ discount to NAV (even higher for SFR and office). Historically they’d trade at a modest premium.
  • On cap rate basis, public REITs are several basis points wider than private market.

Market Performance & Regional Nuance

• Sun Belt:
  • Still weighed down by supply, especially in 2025/2026, but Atlanta and Dallas progressing faster than elsewhere.
  • “Some markets may get there sooner...the expectation is Austin could stay negative in 2027 as well.” ([43:32])
• Coastal Markets:
  • “You know, for Camden [in LA], it’s a little bit more kind of strategic. They’ve been talking about this for a while. They're very excited about the growth that they expect in the sunbelt...and then also I think it’s been tough operating there and so it makes sense.” ([47:17])
  • San Francisco and New York buoyed by tech, AI, and back-to-office, plus constrained supply.
  • “New York is tons of demand, also benefiting from tech job growth. It's a really strong market and very diversified and another place where people want to live.” ([51:15])

Forward Guidance & Outlook

• “I think the kind of Sun Belt recovery was hoped for in 25, pushed out to 26, now getting pushed out to 27, potentially in aggregate. But, you know, some markets may get there sooner.” ([43:32])
• “26 is going to look like 25 until we get a little bit better visibility around jobs and what the spring leasing season looks like...” ([45:45])

SFR REITs and Regulatory Risk

• SFRs trading at even deeper discounts (25–30%).
• Policy risk from possible institutional home-buyer ban is weighing on SFR REIT stock prices.
  • “The administration is really trying to encourage for-sale housing and it’s creating a lot of headline risk for the SFR names.” ([55:47])

Notable Quotes & Memorable Moments

• “Don’t assume this means everything’s hunky dory again...No one is saying the boom times are back, except maybe those with assets in San Francisco.” – Jay Parsons ([07:07])
• “We’re starting to see a little bit more positive momentum in places like Dallas. Positive blends, occupancy back in that 96.5% range. That's been a positive surprise to start the year.” – Michael Lacey, UDR ([31:30])
• “I kind of feel like the way we’re talking about LA now, we were talking about San Francisco coming out of COVID and now it’s the best rent growth market.” – Jana Galan ([47:17])
• “Investors want to see REITs buying assets...they definitely want to see accretion in that first year. And that's been the real challenge...” – Jana Galan ([39:05])

Key Timestamps

• [06:45] Takeaway 1: Improving Fundamentals, Concessions Down
• [11:15] Takeaway 2: Muted Rent Growth Outlook
• [15:28] Takeaway 3: Uncertainty in Demand/Rents
• [19:27] Takeaway 4: Development Challenges
• [26:12] Takeaway 5: SF/NYC Strong, Coasts Mixed
• [31:16] Takeaway 6: Sun Belt Momentum
• [33:10] Takeaway 7: Big NAV Discounts, Buybacks
• [32:25] Guest Interview with Jana Galan Begins
• [36:50] Buybacks, Capital Allocation
• [40:22] REIT Discounts vs. Private Market
• [47:17] LA/Southern California Market
• [51:15] New York City and SF Outlook
• [52:39] Sun Belt Forecast
• [55:11] SFR REITs & Policy Risk

Final Thoughts

The episode underscores a turning point for multifamily REITs: a definitive bottoming in fundamentals with very gradual improvement ahead, tempered by macro and policy uncertainty, a sharply bifurcated geographic landscape, and tactical shifts in capital allocation. Both Jay Parsons and Jana Galan frame 2026 as a “staging year” for potentially stronger upside in 2027, provided job growth and the supply overhang moderate as forecast.

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