One of the largest U.S. single-family rental companies said Los Angeles County’s recent eviction moratorium extension could drive its bad debt higher this year, joining a chorus of voices in the apartment sector warning of similar results.

Invitation Homes, which owns more than 74,000 properties across the country, reported that unpaid rent is expected to rise to 2% of gross revenue this year from 1.5% last year.

Ernest Freedman, the Dallas-based company’s chief financial officer, said on an earnings call Thursday that a “vast majority" of that unpaid rent is in Southern California. It’s mostly because of the regulatory environment there but court backlogs elsewhere are contributing to the overall cause for the increase in bad debt, Freedman said.

Los Angeles County extended its eviction moratorium through the end of March. Apartment real estate investment trusts have forecast rising bad debt at their Los Angeles properties as a result.

San Mateo, California-based Essex Property Trust, with an apartment portfolio concentrated in its home state and the Seattle area, forecast last week that bad debt could rise to 2% this year from 1.3%. It noted on an earnings call that the REIT has been able to recover 50% of delinquent units last year compared to 2021 when excluding Los Angeles County and Alameda County where elected officials are fighting over ending the eviction moratorium.

Houston-based Camden Property Trust took the moratorium extension in stride, with executives saying on an earnings call that the REIT has been navigating California’s regulatory environment for nearly 30 years.

Though bad debt is expected to rise, it hasn’t dampened revenue and rent growth expectations for the new year at the apartment REITs or at Invitation Homes.

Last year was a strong year for Invitation Homes with total revenue increasing to $2.2 billion from just under $2 billion in 2021. Net income increased from $262.8 million in 2021 to $384.8 million.

Core funds from operations, a key performance metric for rental real estate, rose from $869 million in 2021 to $1 billion last year.

New lease rent growth was 13.5% for 2022 with renewal rents rising 10% to put blended rent growth at 10.9%. Invitation Homes forecast rent growth in the high single digits for this year.

Rising property taxes in Florida, Georgia and Southern California contributed to an increase in operating expenses. All three have the largest concentrations of Invitation Homes properties, representing 70% of total tax bills, Freedman said. The company expects property tax expenses to revert to more normal levels this year.

The company’s expansion plans slowed considerably last year when interest rates rose dramatically while home prices pushed higher.

“Things are still relatively tight,” Dallas Tanner, CEO of Invitation Homes, said on the earnings call. Tanner said there is plenty of capital interested in buying more homes for single-family rental but there is limited opportunity.

Meanwhile, the company has 2,300 homes in the construction pipeline over the next few years in partnerships with homebuilders, Tanner said.