Good day and welcome to the Equity Residential 3Q 2016 Earnings Call. Today' conference is being recorded. At this time, I would like to turn the conference over to Marty McKenna. Please go ahead.

Thank you, Cynthia. Good morning and thank you for joining us to discuss Equity Residential's third quarter 2016 results. Our featured speakers today are David Neithercut, our President and CEO; David Santee, our Chief Operating Officer; and Mark Parrell, our Chief Financial Officer. Please be advised that certain matters discussed during this conference call may constitute forward-looking statements within the meaning of the federal securities law. 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. I'll now turn it over to David Neithercut.

Thanks Marty. Good morning everyone, thank you for joining us this morning's call. As we discussed over the last several quarters, 2016 will not turn out to be a year we had originally expected due to elevated levels of new supply in both San Francisco and New York City which combined made up a large share of our initial growth forecast for the year. And as a result after five years of extraordinary strong fundamentals, revenue growth this year will now be more in line with long-term historical trends. Good news however is that exceptionally strong demand continues unabated across our markets with current occupancies remaining at or near 96% and lower exposure on the horizon. Turnover across all markets when excluding same property movement is actually decreased for the first nine months of the year compared to the same period last year. Move outs to buy single-family homes remain a non-factor in our high cost of housing markets and our recently completed development properties are absorbing units to significantly faster and at rates above or closer to our original expectations. Furthermore while our markets have experienced the slowdown in the growth of high income jobs, the absolute number of new high income jobs remains relatively strong and our preliminary indications that the trend may be reversing. Perhaps more importantly for the first time since recovery began there are abundant times and wage growth occurring in all the industries across the country which obviously the very good signs of the apartment business. So as we look forward to what we see as peak deliveries next year, our teams across the country will work very hard in carrying for our existing residence, welcoming prospects and trying them into new residence and we remain extraordinarily excited about the outlook for our business, portfolio and the company. So with that said, we’ll let David Santee go into more details on what we’re seeing across our markets today.

Okay, thank you David. Good morning everyone. Today I'll update you our Q3 results, discuss the current state of each market which we operate as well as providing additional color on 2017 deliveries. As David said, demand for quality apartments remain pretty robust with occupancies and our markets averaging 96 or better and resident turnover continuing to decline. Year-to-date turnover net of same property transfers decreased 30 basis points versus the 10 basis point increase and the gross turnover that we reported demonstrated the strong customer satisfaction that are fully strived to deliver each and every day and the great locations our portfolio continues to enjoy. Renewal rates achieved for the quarter continued to be well above historical averages at 5.3% while new lease over least pricing was plus 90 basis points. Combined results were in line with our revised expectations at 3.1%. Moving on to the market, in Seattle new lease over lease growth average 4.9% for the quarter while renewals achieved were 8.1%. Seattle continues to distinguish itself as the epicenter of cloud computing services as Amazon remains the catalyst with the rapid downtown expansion of both jobs and new apartment deliveries. Through August Seattle, Bellevue and Redmond realize job growth of 3.50% that allows 7,200 apartment deliveries this year to be easily absorbed with virtually zero pricing pressure. Now with 7,000 new deliveries expected in '17 and job growth well above the national average, we see Seattle is our best revenue growth market next year. Again easy job, Amazon job openings is a proxy for demand. Last week there were 8,000 openings in Seattle almost double from same time last year, 3300 of which are for high paying software developer positions. This concentration of intellectual capital is also forcing the large well established tech companies to expand…

Thank you, David. Today, I will be giving some color behind our same-store expense growth in the quarter and on normalized FFO guidance and I’m going to move on to talk a bit about our recent debt deal. On the same-store expense side, we moved our annual same-store expense range to 2.8% to 3.2%, which moved the center of our range back to the mid-point of our original February guidance range and to the high-end of our July guidance range of 2.5% to 3%. This is the relatively modest change for us, 25 basis points in annual expense growth is about $1.5 million. Our same-store expenses through June 30 grew at a rate of only 0.9%, therefore as we mentioned on the second quarter call, we always expected our second half expenses to grow at a considerably higher rate somewhere in the mid 4% range in order to meet our July guidance range of 2.5% to 3%. In a moment I will give some detail on payroll expense and on leasing and advertising expense which were the two main drivers of our change in expense guidance. But first I want to mention one of the bigger drivers of our overall same-store expense growth this year and that’s the recent adverse legal decision regarding the calculation of property taxes for several of our properties in Jersey City that I noted on our second quarter call. The same-store impact of this decision was an increase of 2016 annual real estate tax expense of $1.6 million. We were aware of this and maintaining our same-store expense range of 2.5% to 3% back in July, but still thought that we could stay within that range. So overall for 2016, we expect property tax expense to grow by 6%. So getting back to the change…

[Operator Instructions] We'll take our first question from Nick Yulico from UBS.

Thanks everyone. I think the primary worry for your company and some of the other multi-family REITs remains New York City and San Francisco and how bad these markets can get in 2017. You gave some commentary on it, but I was hoping to get some more parameters on how you're thinking about the downside for same-store revenue or rent growth in these two markets next year.

I believe we probably said and we intend to say at this junction Nick and we'll save more in detail, more color than we actually given, more complete guidance on our next quarter conference call. I think David was pretty clear about directionally what was happening in the supply and what have been happening in jobs et cetera and so what our expectations would directionally but we won’t go any further than that at this time.

Okay. And then could you just remind us for those markets what the assumptions are for fourth quarter, this year same-store revenue growth?

I'm sorry. Do you mean the overall or by market?

For San Francisco and New York separately what were the assumptions for fourth quarter this year?

I am going to talk just for a second about the overall assumption. So our guidance is wise about a 3% fourth quarter same-store revenue number, about a 4.5% or so same-store expense number in the fourth quarter. I am not sure if we have market-by-market numbers right here in front of us and we don’t.

Okay. And then just going back to, David, if we think about multi-family valuations in the private market, do you think cap rates have changed in the past year for your core markets, particularly in New York or San Francisco, if rent growth has come down? Do you think, if you were to sell assets in those markets today versus a year ago, has the pricing changed?

I think it's tough to tell, Nick, I am not sure if there has been sufficient price discovery but if there has been some modest change in cap rates I am not sure that it’s had a big impact on value. We've had even San Francisco we'll still have strong decent NOI growth on a year-over-year basis so any modest change in cap rates they don’t necessarily mean value so they have decreased. We've certainly seen fewer players in the marketplace looking for assets but I will tell you, not a week goes by when Alan George is not showing me some deal that traded at some very strong price across these markets. So we're watching it closely. Certainly revenues not growing at the same rate, bottom lines are not growing at the same rate that they had but bottom lines by large they'll continue to improve, continue to grow. There continues to be a need or demand for yield, and so when you do trade they continue to trade fairly strong pricing.

Okay. So given that's the case, that valuation seems to be holding up in the private market and your stock is at a big discount to NAV, what point do you think about, does the Board think about, selling more assets, doing a stock buyback to exploit that arbitrage in pricing? And also, did the asset sales year-to-date and the special dividend delay any sort of process you might have had to sell assets this year and do a buyback to force that discussion until 2017? Thanks.

In response to the answer of your second question, no, I can tell you that very specifically as the Board table as we talked about large portfolio sale and the special dividend, distribution back to shareholders, we spoke very specifically with the Board that, that did not - would not impact any other things that the steps we might take to address the discount that you know. So those things are not - we're not precluded by having done what we did do. In terms of when does the Board do that, there is no bright line, every situation will be different but I can tell you I guess I have on this most recent call and the call even before that, that we talk about that at the Board level. And the Board just believes that that activity we requires probably a bigger discount than what many on the street might suggest there what answers they get with their arithmetic. We got a significant amount of gain built into most of our assets and that there is just not a lot of capacity after - we are doing things on debt neutral basis and distributing - dealing with the gains actually buy much stock back with the proceeds. And then with respect to borrowing to buy stock back that these are - you get relatively few bites of the apple and we want to make sure that if and when we do, there will be appropriate time. And we'll continue to monitor this as we do on a regular and consistent basis with the Board and we'll – makes sense to do something down the road, we are certainly - we would be willing to do that. We've done in the past and we certainly will do so in the future if the circumstances are large and we talked about it with the Board all the time but in terms of when exactly what's the bright line I can't tell you that's we'll know when we see it.

All right. Thanks, David.

[Operator Instructions] We'll take our next question from Nick Joseph with Citi.

Thanks. Giving the operating environment is at inflection point, how do you think about setting the 2017 same-store revenue growth guidance range? Historically, you've had a pretty tight range of 75 to 100 basis points for that initial range. So how wide could that be in 2017?

Well, I guess I won't say how wide it could be, but I'll tell you it will likely be lighter to your point. We acknowledged that by now operating in fewer markets. There is risk of more volatility in those - in our results and that we will likely provide wider guidance and what we have been able to do in the past. In terms of how wide that will be, will be same and you will certainly see when we share those results with you with that guidance on our next earnings call.

Thanks. And then just appreciate the details on the concessions and the gift cards. But from an operating standpoint, how do you think about incentivizing with free rent versus using gift cards or other basic incentives?

Nick, this is David Santee. As we've always said even in the last downturn, we were very committed to our net effective price again that is our preferred method of pricing because it provides complete transparency, it's easier to manage from here. So that will always be our tried and true method. Occasionally, you get into some submarkets or different owners that do different things that cater to certain niches in our prospect base, and we try to stick to our guns as far as net effective pricing, but at times we find it we have to kind of match the market. And I think that's been our philosophy for the last seven or eight years and that will be our philosophy going forward.

Thanks. And just finally on supply, I appreciate the detailed walk through by market. But if you step back and think about all of your markets blended together, what are your expectations for next year’s supply deliveries of the urban versus suburban sub markets? I think we heard from one of your peers yesterday that they think there will be two times the amount of supply in urban submarkets as suburban?

Well, I guess I would say that we just – we don’t necessarily look at it urban, suburban. We look at it as what set of properties are in a reasonable and conservative geographic area that could potentially compete with us and probably New York is a great example of where we have nothing in Long Island City. There will be a lot of new supply in Long Island City and the price point maybe very attractive that could draw people from Brooklyn or Manhattan or what have you and the Long Island City just because of an affordability issue. So I mean all in numbers for 2017 are 65,000 units. I would say a very high percentage of those are in the urban core. Q – Nick Yulico: Thanks.

And we will take our next question from Rich Hightower with Evercore ISI.

Hi, good morning, guys. I want to go back to one of the prepared comments related to San Francisco, I think when David Santee was giving the market detail there. I thought I picked up on some comments around a potential stabilization there. Is that accurate, just in terms of how new and renewals are trading today, or is that just a function of lower turnover at this point in the leasing season, or a shift in timing of supply, or some other factor?

Well, I guess I would say stable relative to what we experienced over the past four or five months. I would say certainly not – the market is not moving back up, it’s kind of moving sideways right now. But we started off with going from rent that were up 5%, 6% that within a couple of months went down to negative 2%. We saw occupancies that were well above 96% fall off over a 100 basis points in the peak leasing season, which is not a time that you would expect lower demand. So the market just zigging and zagging for most of the summer, and so today our exposure is right back where it was, our occupancies for the most part right on top of last year. We don’t see any crazy pricing mechanisms in the market, I mean the newbies up will continue to offer the one, one and a half months free rent and we expect that. But for the most part, I would really just say the market appears to be more disciplined today, instead of stable, it’s just more disciplined today than it has been over the last four months.

All right, would you say then that properties that are in lease up currently, the market overall is just getting a little more rational, in that sense? So it would indeed be a positive change that we could sort of extrapolate from here or anything else?

Yes, I mean you had a very large concentration of assets in the SoMa area, which really trickled across, as well as South San Francisco and I go back to the kind of original underwriting where the market rent growth in San Francisco are out paced underwriting or new assets. I mean even looking at our own assets the market went well above what we underwrote on our new delivery. So owners had a lot of wiggle room to price discover. There hasn’t really been any high rise brand new vertical class, great views with the way assets delivered in San Francisco for years. So there was some element of price discovery and I feel like some could have probably achieved higher rents when you look at the pace of lease up. So I think you'll see, obviously you'll see less of that type of product. In 2017 probably more podium, traditional development that you see down in San Jose what have you and pricing should - we expect and hope that it would be more reasonable than what we saw last year or this year.

All right. That's actually very helpful color. Second, and final question, it's another twist on the 2017 question. But would you guys be able to rank order your markets next year, just in terms of top to bottom, strongest versus weakest?

Okay. At Seattle we would expect it would be the best. I think Southern – all three of the Southern California markets would probably be in the middle. Boston would probably be below that and there would be a wide range between SoCal and Boston. Well, actually we want to put D.C. before Boston, I'm sorry. So D.C. would be between SoCal and Boston. D.C. continues to improve, great acceleration, great job growth. Boston will be at the bottom and probably only slightly above our worst market New York.

Great. Thank you.

We will take our next question from Conor Wagner with Green Street Advisors.

Good morning. I noticed that you guys are offering some 24-month leases in New York and in the Bay area. What was the uptake on that? And is that something that you're going to continue to offer going into 2017?

So we've tried in different ways we had a better take rate with no step up we've tried it with built in step ups. I think our customer is well educated enough to know what's going on in the market. So when we built in the step up meaning you know call it 2% or 3% increase in year two, our take rate bill to basically zero. So you know we did that in D.C. When we expected rates to fall in D.C. we had probably in the neighborhood of 15% take rate. That's what we're seeing today is about 15% take rate and we will continue to you know experiment with that, but monitoring so that we don't you know get to committed.

And in the Bay Area how is the performance of your East Bay assets versus the overall Bay area versus San Francisco.

The East Bay is you know obviously the best I thing you know when we just look at you know were we flip today I mean obviously you know we were if not - if not the accelerating as such as example year-to-date East Bay is 7.5% on revenue growth the current month, buildings are 5%. So the East Bay still hanging I mean obviously Berkeley is helping that as well.

And then a question for David Neithercut. You mentioned the challenges of doing a stock buyback due to the gains. What do you view as your most attractive use of capital going into 2017?

All right now complaining our developments we've made a significant amount of money we will make a significant amount of money on the developments and we've got yet to complete and much of the free cash flow that we have for the next couple of years we’ll complete that and we make significant returns. In fact we’ve got a page in the most recent investor information we put up on our website. It sort of shows how we’ve done throughout the cycle. And then after that we’ve not started much development at all so that the development spend will slow. We continue to do very well with our redevelopment, with our kind of kitchen and bath rehab spend that’s been up 50 plus or so million dollar of spend per year which we’ve been realizing very strong low-to-mid double-digit returns for the foreseeable future and we look at those as great uses of capital.

And then as kitchen and bath spend has been elevated this year versus last year, have there been any markets that you've been particularly focused in with that, or has it been broad-based?

It’s been rather broad based.

Okay. And do you have an estimate on what contribution that's been to revenue growth this year?

Year-to-date Connor its Mark Parrell. It’s 10 basis points and remember it varies around that. It can be zero to 20. It doesn’t move the meter that considerably.

Just to be clear, when we talk about this program because others talk about programs that they call rehab or whatever. We’re spending depending on the property $10,000 to maybe $14,000 per door on kitchen and baths. This is not the $30,000, $60,000, $80,000 a door total renovation that some people undertake. We may remove that from same-store. And if we did, we have done that very limited, we removed that from same-store ourselves when we do something of that magnitude.

Thank you guys very much.

And we’ll take our next question from Wans Nabria with Bank of America Merrill Lynch.

Good morning. I was hoping you could comment a little bit on the performance of A’s and B’s you're seeing across the market and maybe specifically between New York and San Francisco?

Well, I guess I would say that San Francisco especially all of our communities kind of down the Peninsula what have you, are mostly be communities, garden communities. I am not sure it’s about A’s and B’s. I think it’s more about location, supply, pricing of that supply, so there is no definitive obvious answer to your question.

And across the portfolio? Any comments you could make about A versus B?

Again it’s sub market by sub market. We can tell you that one sub market maybe doing, as David just did about downtown San Francisco versus East Bay but that’s more sub market versus sub market rather than A versus B.

I mean a lot of it has to do with market momentum. I mean, you look at our DC portfolio in the District. We have high end building that we bought in the last downturn that were built to condo and specs that are doing just as well as the 30-year-old old Charles E. Smith portfolio up Connecticut Avenue. So again it’s probably more about location and the impact of supply.

Okay. Great. Thank you. And you made some comments earlier about concessions and gift cards. But if we combine those two, what was the change 2017 over 2016, and do you have those numbers for New York and San Fran?

Well I gave it. It’s Mark Parrell, for the whole portfolio a moment ago. And it would have moved the number 0.10, so 0.10 lower. We actually have lower concessions than we had last year. So that isn’t going to make any difference. The concessions right now are $100,000 a quarter. They’re just not that material. They were more than significant first quarter of this year.

And that includes the gift cards, or that's a separate bucket?

Gift cards and expenses accounted for under leasing and adverting. Concessions are accounted for the month that they’re given as a reduction in revenue.

But if you combine the two, because they're essentially kind of getting to the same ends…

You have combined the two because the same-store revenue numbers reported on a cash basis and then the deduction is already made for the concession. So all you need to do is subtract the gift cards which was the number I gave earlier.

Got you. Okay, thank you for that. And just one quick question on kind of 2017 and how we should be thinking about renewal spreads versus new with how you're thinking about things today or maybe for the fourth quarter and kind of how that may trend going forward?

Well, I guess I would say kind of going back to the last downturn which is probably the best comparison. We were still able to maintain positive renewal growth. And most recently DC which is probably a market that – many markets could mirror in the next year we were able to achieve high 2s to mid 3s on renewals. So I think regardless of what the markets do we should be able to achieve favorable renewal revenue growth.

Thank you.

We will take our next question from Rob Stevenson with Janney.

Good morning guys. A few questions away from San Francisco and New York, if I might. David Santee, I think when you were talking in your prepared comments about DC, you mentioned, I think, 8 of 10 of the sub markets there showing strong growth or accelerating growth. Can you just talk a little bit about those two that aren't, what are they and is that just all supply related?

Yes, it is. Let me get to it. Give me one second.

Well, let me ask David Neithercut a question, while you're flipping ahead. David, you sold the Berkeley land parcel. It looks like you've got $115 million in the supplement of land for development in the future. How many projects is that? Or are we likely to see any of that starting in the next couple of quarters?

It’s possible. We got some land sites in Boston that were really – land sites where densely, we were able to carve out of the existing deals that we had previously acquired that could create some development potential. But we’re going to watch this all very, very closely Rob. We started very little this year after running about $1 billion average in 2013 and 2014, we cut that by almost two-thirds in 2015 and cut it by another two-thirds in 2016. We’re down considerably. So we’re going to watch all that very carefully. And I am not saying that we were not going to start anything, but whatever that starts will be, at least the present time will de minimis relative to what we have been doing.

Okay. And then one for Mark in terms of, what's the $0.05 difference between the fourth quarter guidance on a NAREIT in a normalized FFO basis?

So that’s the – we moved Rob from the third quarter the sale of a piece of land that’s in the Northeast, so that’s the $0.05 difference.

Okay. And back to David Santee on DC.

Okay. The two markets that are not accelerating are the Bethesda Chevy Chase market which represents about two or three properties for us, 9% of revenue and then far out Fairfax which is 5% of revenue. So the bulk of our revenue in DC is accelerating.

And that's just because those two sub markets are getting hit with supply, or is the demographics moving away from that? What are you identifying as the primary issues there?

So Fairfax I would say is probably more supply, Bethesda is probably more of a demographic.

Okay. All right. Perfect. I appreciate it, guys.

We’ll take our next question from Tom Lesnick with Capital One Securities.

Hi, Thanks for taking my question. Most of them have already been answered, but just curious on the financing side. You guys clearly have one of the lowest cost of capital of all REITs, and I think the most recent bond deal is indicative of that. But on the working capital side, how do you guys think about using the mix of your line and commercial paper? And are there specific instances in which you would be compelled to use one over the other?

Hi, it’s Mark Parrell. Thanks for that question Tom. So right now, we have about $200 million of commercial paper outstanding and nothing outstanding underline of credit. And I'll tell you the main reason, we use the CP program is that it's another talk in a money and right now which is vastly cheap. CP now has being priced at LIBOR plus 30 basis points, on line a credit it’s LIBOR plus 95. We are saving more than half a percent on that. So the way we think about using the CP is an adjunct to our line of credit and when it is cheaper or that market is cheaper for some reason or better for some other reason we will use the CP capability that we have.

Great, thank you very much.

We will have next from Tayo Okusanya with Jefferies.

Good morning. Two quick ones from me. First of all, again back to New York and San Francisco. In regards to underlying trends for renewals, I think everyone gets the fact that for new leases, rental rates have come down a lot. Could you just talk a little bit about what you're seeing with renewals? Has the situation with new rents caused existing tenants also to start to become more aggressive about asking for concessions or lower rents, or what have you when they come up for renewal? And how do you see that playing out going into 2017?

I think what we've seen over the eight or nine years that we've been tracking this is that, number one most residents are just programmed to expect some kind of increase from their landlord. Our expenses go up every year regardless of what happens with revenue. The other thing we see is that - the two things that people don't like most are negotiating or conflict and moving. So we see a vast majority as long as we send out reasonable requests you know a great percentage of people will check the box and choose to renew so that they don't have to relocate and go to the hassle of moving. And then there's you know then there's a very small percentage those are always the holdouts that you know kind of renew with the very last minute. And you know there are people that are well educated on what's going on in the market and those are the pros that you have to work with.

Okay. But as a subset of people where there may be some pressure, but again, it's just a subset.

Yes, the majority, again assuming were reasonable. It's played out the same we've tracked it year-after-year it's a pretty solid trend.

Okay. Great. That's helpful. And then just another quick one, just in the Bay area and San Francisco again, a lot of conversation around increased rent control initiatives showing up on the ballots during the election season. Can you talk a little bit about what you're seeing from that perspective, and what could be the potential risk to your portfolio out there?

Sure. So in terms of you work the exposure that we have it's about three property 6.4% of total NOI of San Francisco only. Okay, so it's very small percentage of the total portfolio. I would tell you that the details are unclear. As an example Mountain View has two separate items on the ballot, one is put forth by to the council and the other one is a just a voter initiative both of which have two different approaches to any potential outcomes. So that's all that I can tell you today. So we will just have to wait and see what the outcome is on the election and you know ultimately what the fine print will be.

Okay, much appreciate it, thank you.

And our next question will come from Wes Golladay with RBC Capital Markets.

Good morning, guys. Do you think increased regulation of Airbnb could lead to another step down in demand? As you look to formulate your guidance, is this something you might contemplate? And it looks like you guys might be doing some pilot programs with Airbnb. Do you have a sense of how much overall room demand you get from Airbnb?

This is David Santee, I guess I would say that you know the legislation that occurred in New York City I believe is a benefit to us. Historically you know the state would, or the city, I am sorry, would find the building owner if any transient rentals were discovered and transient rentals mean anything less than 30 days. On the other hand they do allow sharing as long as the owner is in occupancy, so I am not really sure how that gets policed and so I would say to what extent it affects Airbnb, I am not sure. But we do have a pilot, one property, we continue to learn, we continue to understand how to build-out this platform to really for the purpose of transparency and control. This would not be a huge money maker for any particular owner or any particular property, this is more about transparency, control, managing something that is already happening and will happen regardless.

Okay, excellent. Do you think as a percentage of demand, it would be relatively small, the people that were in an apartment and then just sublet it out various nights on Airbnb, do you think that's a smaller part versus the people that maybe every once in a while, they're in the apartment and they just rent out the other room they have. Do you think that's a bigger part of the picture?

Yes, I mean I don't know, I guess, I don’t understand Airbnb that much, I know they kind of put out what percentages of people that rent out entire spaces and what percentage of people rent out rooms. I guess I would say if there is a large percentage of people that rent out their entire space in New York, then that's going to be a problem for them.

Okay. I hear you. It's a hard one to track. Thanks a lot.

Yes, and it’s just not an important part of the overall picture for us. What being Airbnb is doing or not doing in any particular market has no impact on the way we think about our expected revenue for the upcoming year.

That's what I was trying to get at. It could be a component of a demand, and it could be just 1% or 10 Bips of overall city demand for people that want to run mini businesses from Airbnb…

We don’t allow those people. So we don’t allow anyone to rent an apartment from us with the sole purpose of running an Airbnb business.

That is one of the benefits of the pilot is to have the transparency to prevent that.

Yes, that's exactly what I was trying to get at. So you don't have any of that subletting going on in your - unoccupied sub letting. Okay. That's what I was looking for. Thank you.

And we will take our next question from Richard Hill with Morgan Stanley

This is [Ronald Camden] [ph] on Richard Hill's line. Thank you for your time. Just two quick ones from me. One, going back to DC, you mentioned bringing in suburban renters to downtown. Just curious which suburbs are they coming from? And is there a way to quantify that for us so we can get a sense?

Yes, we did that a couple, I think a year or so ago when we saw tremendous absorption of units on top of virtually zero job growth. And we just picked the handful of properties and look to see where people's previous address was when they applied and what have you. And it was clear that lot of people were - I mean just around the gateway we are choosing to live in a city. I mean we have our office at 1500 Mass Avenue, downtown DC, we moved it from Tysons Corner and then we have people to live out near Culpeper and what have you, And it can take them - it can take them two hours just to get to the bridge to get across the river and then another hour just to go get across the bridge to the office. So, if you ever lived in DC, I live there three times, it's a very difficult place to get around and there is every reason in the world why someone would want to move from the suburbs into the city today.

Great. That's helpful. And then the last one, when I look at, take a step back looking at the portfolio of Southern California with same-store revenue growth above 5%, compared to New York, with the supply issues that you mentioned, when you think of longer term steady-state growth, what do those numbers look like? Is it one where, do they get to 3% to 4% type range. Where do you guys see a sustainable number for those two markets? Thanks.

I guess, I won't talk about specifically about those markets but just in general in the markets in which we have elected to invest our capital and…

Yes. That would be great.

The presentation we put our website that does show over extended time period, the outside revenue growth in these markets, the outside increased in sort of underlying asset values in those markets compared to other markets. So like I said about those specifically, but just long term outperformance of these coast and gateway cities in which we have invested relative to more commodity like markets in a country, in general we got several slides on our website that we'll address that for you.

Great. That's all for me. Thanks so much, guys.

And next we'll hear from Dennis McGill with Zelman & Associates.

Thank you. The first question, sorry if I missed this, but did you give the new lease growth and renewal growth that was finalized for the third quarter for the company-wide?

Yes, that was 3.1%.

Separately the new lease and then the renewal?

Okay. So renewal yes - renewal was for the quarter - renewal rates achieved were 5.3% and new lease pricing was plus 90 basis points for combined number of 3.1%.

Perfect. And do you have the assumption that's baked into 4Q for those same numbers?

No, we do not.

Separately, with regard to the development pipeline, just cost to go vertical, any kind of color you can provide on what you're seeing for both labor and material costs and all-in costs of vertical construction and how you guys think that might trend over the next 12 to 18 months?

Well, across our market we are looking at the growth in hard in cost anywhere from 2% to as high as 6% and 7%. And that's on top of 3% to 7% growth or so a year ago. So we're looking at continued increase in cost a lot of that driven by labor and you know this is just another reason why we believe that we are going to see a reduction in starts and reduction in new deliveries going out, because land prices were up, the hard cost are up and those two yields are roughly low. So we are certainly seeing solid middle or single digit growth. We are expecting growth year-over-year on top of on a light growth of one year ago.

And David, if you do get a pull back in supply, whether that's capital driven or some other reason, do you think there's an opportunity to that to alleviate some of this burden and lessen that cost increase?

Well, I guess costs are just being driven, but what's going on in new supply. Labors being - these costs are being driven by what’s going on lots of different places and in Boston lot it’s been impact of some casino that’s been built. So, it’s not simply and only exclusively multifamily and but certainly I mean if there is a reduction you’d expect there to be a modest some reduction in construction overall you'd expect to see this growth rate to moderate.

That's helpful. Appreciate guys.

And that concludes today's question-and-answer session. Mr. McKenna at this time, I will turn the conference back to you for any additional or closing remarks.

Well, thank you all, appreciate your time today. We look forward seeing many of you Phoenix, and go Cubs.