Independence Realty Trust, Inc. · NYSE:IRT
Independence Realty Trust — Investor Presentation (November 2022)
51 slides from Independence Realty Trust's investor presentation, Nov 14, 2022
Slide 1: Investor Presentation November 2022
INVESTOR PRESENTATION November 2022 The Enclave at Tranquility Lake Tampa, FL
Slide 2: Table of Contents
1 Table of Contents Overview and Performance 2 – 3 Recent Operating Metrics and 2022 Guidance 4 – 6 Our Competitive Advantage 7 – 12 Our Strategic Investment Opportunities 13 – 20 Capitalization and Leverage 21 – 23 Our Path to Long-Term Growth 24 Appendix Track Record of Value Creation 26 Market St
Slide 3: IRT Overview
2 IRT Overview OWN AND OPERATE Sunbelt Exposure 70% of NOI 122 Communities (2) 36,176 Units (2) 12.7% Same Store Blended Lease Over Lease Rent Growth PORTFOLIO SUMMARY (1) COMBINED SAME STORE HIGHLIGHTS – YTD Q3 2022 • Revenue growth: +11.0% Y-o-Y(5) • NOI growth: 14.0% Y-o-Y (6) • Avg rental rate g
Slide 4: IRT is Delivering Industry Leading Operating Performance
3 Source: Company reports; coastal peer group includes AVB, EQR, ESS, and UDR; non-gateway peer group includes CPT, CSR, MAA, and NXRT. Same store NOI growth and CFFO per share metrics are based on the definitions used by the peer group companies and may not be comparable. IRT is Delivering Industry
Slide 5: Recent Operating Metrics and 2022 Guidance
4 Recent Operating Metrics and 2022 Guidance Legacy at Jones Farm Huntsville, AL
Slide 6: Strong Performance Across Key Operating Metrics
5 1 4 .0 % 1 2 .8 % 1 2 .7 % 1 2 .7 % 7 .7 % Q4 21 Q1 22 Q2 22 Q3 22 QTD Q4 22 New Renewal Blended 1 6 .3 % 1 5 .3 % 1 4 .4 % 1 5 .0 % 1 0 .8 % Q4 21 Q1 22 Q2 22 Q3 22 QTD Q4 22 New Renewal Blended 1 3 .3 % 1 1 .9 % 1 2 .2 % 1 2 .0 % 6 .8 % 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Q4 21 Q1 22 Q2 22 Q3 22 Q
Slide 7: 2022 Full Year EPS and CFFO Guidance
6 2022 Full Year EPS and CFFO Guidance (1)(2) Low High Earnings per share $0.49 $0.50 Adjustments: Depreciation and amortization (3) 1.09 1.09 Gain on sale of real estate assets (4) (0.51) (0.51) CORE FFO per share $1.07 $1.08 CORE FFO ($s in millions) Same Store Communities 2022 Outlook (5) Number
Slide 8: Our Competitive Advantage
7 Our Competitive Advantage Avenues at Craig Ranch McKinney, TX
Slide 9: Our Portfolio is Focused On the High Growth Sunbelt Region
8 Top 10 Markets Our Portfolio is Focused On the High Growth Sunbelt Region PORTFOLIO SUMMARY Geographic Distribution Combined company includes 122 communities across resilient, high growth markets i i i i Independence Realty Trust Communities Expand IRT’s presence in high-growth metros including
Slide 10: IRT's Markets Have Strong Fundamentals
9 4.0% 5.6% 2.8% 2.3% 2.4% 3.3% 2.8% 2.9% 2.2% 1.8% 2020 2021 2022 2023 2024 Demand Growth Supply Growth (3)(3) IRT's Markets Have Strong Fundamentals Population and employment growth is fueling more resident demand for apartments in IRT’s markets than the national and gateway market average Outsize
Slide 11: IRT's Resident Demographic Trends Are Favorable
10 IRT’s Resident Demographic Trends Are Favorable Recent residents in IRT’s top 10 markets are in their mid-30s and make an average annual income of ~$89,000, resulting in a ~22% rent to income(1) Top 10 IRT Markets Average community age (2) 22 years 130 Communities 37,828Units $6.2B In gross asset
Slide 12: Well-Positioned in Affordable, Highly Defensive Middle Market Communities
11 Well-Positioned in Affordable, Highly Defensive Middle Market Communities A B C ◼ Higher income residents move down in a recession ◼ Renters move down to Class B as rent increases outstrip income growth ◼ Capture households moving down in a recession ◼ Capture seniors who sell homes to fund retir
Slide 13: Attractive Portfolio Has Led to a Stable Cash Flow Profile
12 -10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q3 2022 USA Gateway Class A Class B WAV IRT Markets Attractive Portfolio Has Led to a Stable Cash Flow Profile Source: Costar Q3 2022 Da
Slide 14: Our Strategic Investment Opportunities
13 Our Strategic Investment Opportunities The Views of Music City Nashville, TN
Slide 15: Driving Accretive Growth with Multiple Investment Levers
14 Driving Accretive Growth with Multiple Investment Levers Value Add Renovations Acquisitions / Capital Recycling Preferred Equity Investments and Joint Ventures Renovate existing communities/units where there is the potential for outsized rent growth Expand presence in markets where we see attract
Slide 16: Improved Long-Term Growth Profile through Value Add Program
15 Improved Long-Term Growth Profile through Value Add Program ~12,000 former STAR units and ~8,000 IRT units identified for value add renovations Expect to implement IRT’s value add platform at former STAR units and drive outsized rental growth IRT’s historical projects have generated a 21.6%
Slide 17: Continue to Invest in Our Long-Standing Value Add Program
16 Continue to Invest in Our Long-Standing Value Add Program—— Year to date 2022, value add renovations have generated a 27.1% ROI Units to Be Renovated* Total Units 1Q22 143 2Q22 3Q22 4Q22e FY22e 195 457 605 1,400 Pipeline of ~20,000 value add units which includes ~12,000 former STAR units *4Q22 &
Slide 18: Joint Venture Development Program
17 Engaging in Attractive Investment Opportunities with Our Joint Venture Development Program Focused on joint ventures in new multifamily development in core non-gateway markets • Invested in a horizontal multifamily joint venture consisting of 178 homes in March 2022 • IRT has invested $16.4 milli
Slide 19: Accelerating Our Efforts in Technology
18 Accelerating Our Efforts in Technology Our Focus Our Goals A More Favorable Resident Experience Higher Revenue and Lower Operating Expenses Greater Profitability and Margin Expansion Improved Sustainability and Social Responsibility More Engaged and Productive Staff Automation & Big Data IRT is i
Slide 20: Focusing on Our ESG Initiatives
19 Focusing on Our ESG Initiatives We believe that operating multifamily real estate can be conducted with a conscious regard for the environment and wider society Preparing our first Sustainability Report and expect to publish it later this year Find out more on the Sustainability page of IRT’s Inv
Slide 21: Examples of IRT's ESG Initiatives
20 Examples of IRT’s ESG Initiatives IRTree Program IRT has partnered with One Tree Planted to plant one tree for every new resident that joins the IRT family. The reforestation projects are located in Florida and Appalachia. ➢ IRT sponsored the planting of 24,000 trees through our partner, One Tree
Slide 22: Capitalization and Leverage
21 Capitalization and Leverage Cherry Grove Commons North Myrtle Beach, SC
Slide 23: Maintain a Simple Capital Structure
22 58.7% 41.3% Maintain a Simple Capital Structure $6.6bn Common Equity Debt The combined company maintains a simple capital structure consisting of secured and unsecured debt Maintain conservative financial and credit policies and expect to further delever the balance sheet through organic NOI
Slide 24: Leverage: Where We Are and Where We Are Going
23 Leverage: Where We Are and Where We Are Going We are focused on continuing to improve the combined company’s leverage profile 7.2x Low-7’s Mid-6’s Progressing Towards Our Mid-Term Target of Mid-6’s through the Following Drivers: Organic NOI growth from stabilized portfolio consistent with long-
Slide 25: Compelling Investment Opportunity With a Path to Long-Term Growth
24 Compelling Investment Opportunity With a Path to Long-Term Growth The Residences on McGinnis Ferry Suwanee, GA Leading Multifamily REIT, Well-Positioned in Class B Communities, Focused on the High-Growth U.S. Sunbelt Region with a Stable Cash Flow Profile Strong Long-Term Growth Profile Supported
Slide 26: Appendix & Definitions
Appendix & Definitions Canyon Resort at Great Hills, Austin, TX
Slide 27: Track Record of Value Creation
26 -17% -6% 16% 71% -15% 2% 39% 148% -16% 26% 55% 152% -16% 30% 110% 257% -50% 0% 50% 100% 150% 200% 250% 300% RMS Multifamily Index S&P 500 IRT Source: S&P Global, FactSet. Market data as of September 30, 2022. Note: Represents compound total return, with dividends reinvested. Track Record of Value
Slide 28: Assets Demonstrate Attractive Apartment Industry Dynamics
27 Assets Demonstrate Attractive Apartment Industry Dynamics Low Homeownership Limited New Supply ◼ The national Class B vacancy rate remains resilient to supply and demand shocks with 2022 projected spreads in vacancy rates between Class A & B, with Class B at 5.3% and Class A at 7.7% o The majorit
Slide 29: IRT Value Add Summary
28 IRT Value Add Summary Project Life to Date as of September 30, 2022 Renovation Costs per Unit (2) Market Total Properties Total Units To Be Renovated Units Complete Units Leased Rent Premium (1) % Rent Increase Interior Exterior Total ROI - Interior Costs(3) ROI - Total Costs (4) Ongoing Tampa-St
Slide 30: Our Markets | Atlanta
29 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.15% Gateway Markets 4.76% 2022 Population Growth: National Average 0.29% Gateway Markets 0.80% • Communities located within 5 min. of major highways • Communities located in top school d
Slide 31: Our Markets | Dallas
30 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.15% Gateway Markets 4.76% 2022 Population Growth: National Average 0.29% Gateway Markets 0.80% -3.26% 2.91% 4.88% • 9th largest city in the U.S. by population 4 • The Dallas MSA has had
Slide 32: Our Markets | Denver
31 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.15% Gateway Markets 4.76% 2022 Population Growth: National Average 0.29% Gateway Markets 0.80% • Population growth in the metro area is expected to exceed 5.5% over the next five years4
Slide 33: Our Markets | Columbus
32 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.15% Gateway Markets 4.76% 2022 Population Growth: National Average 0.29% Gateway Markets 0.80% • 14th largest city in the U.S. by population 4 • Strong accessibility to major highway I-2
Slide 34: Our Markets | Louisville
33 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.15% Gateway Markets 4.76% 2022 Population Growth: National Average 0.29% Gateway Markets 0.80% • Located within 5 min. of major highways • Benefiting from the proximity to growing indust
Slide 35: Our Markets | Indianapolis
34 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.15% Gateway Markets 4.76% 2022 Population Growth: National Average 0.29% Gateway Markets 0.80% • 15th largest city in the U.S. by population • Communities located in top school districts
Slide 36: Our Markets | Raleigh – Durham
35 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.15% Gateway Markets 4.76% 2022 Population Growth: National Average 0.29% Gateway Markets 0.80% -1.85% 2.76% 4.04% • Communities located within 5 min. of major throughways • Easy access t
Slide 37: Our Markets | Oklahoma City
36 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.15% Gateway Markets 4.76% 2022 Population Growth: National Average 0.29% Gateway Markets 0.80% • The metro’s population grew 0.5% this year, which was above the 0.2% national average 4 •
Slide 38: Our Markets | Houston
37 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.15% Gateway Markets 4.76% 2022 Population Growth: National Average 0.29% Gateway Markets 0.80% -5.91% -1.40% 4.52% • Job growth is expected to be 2.7% annually through 2025, compared to
Slide 39: Our Markets | Tampa
38 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.15% Gateway Markets 4.76% 2022 Population Growth: National Average 0.29% Gateway Markets 0.80% • $3 billion Water Street mixed-use investment backed by Jeff Vinik and Bill Gates is under
Slide 40: Our Markets | Nashville
39 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.15% Gateway Markets 4.76% 2022 Population Growth: National Average 0.29% Gateway Markets 0.80% -2.77% 2.44% 4.30% • Metro area job growth expected to outpace the national rate through 20
Slide 41: Our Markets | Memphis
40 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.15% Gateway Markets 4.76% 2022 Population Growth: National Average 0.29% Gateway Markets 0.80% • Memphis has all the amenities of a large city with a cost of living more than 20% below t
Slide 42: Our Markets | Huntsville
41 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.15% Gateway Markets 4.76% 2022 Population Growth: National Average 0.29% Gateway Markets 0.80% -0.53% 2.16% 3.27% • Metro area ranked 1st in 2020 projected rent growth of the top 100 met
Slide 43: Our Markets | Charlotte
42 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.15% Gateway Markets 4.76% 2022 Population Growth: National Average 0.29% Gateway Markets 0.80% • 16th largest city in the U.S. by population 4 • Long-term demand fundamentals are favorab
Slide 44: Our Markets | Orlando
43 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.15% Gateway Markets 4.76% 2022 Population Growth: National Average 0.29% Gateway Markets 0.80% • Established tourism hub • Centrally located in FL, easily accessible to drive to and from
Slide 45: IRT Resident Demographics at a Glance
44 IRT Resident Demographics at a Glance (1) All notations throughout this presentation appear as “End Notes” on pages 45-46. 46% 54% Gender Breakdown 79% 21% Marital Status 36 Average Resident Age Young, growing resident population benefiting from amenity-rich communities without overextending on r
Slide 46: End Notes
45 End Notes Slide 2 (1) For the total portfolio as of September 30, 2022 or for 3Q 2022, as applicable. (2) Communities and units as of September 30, 2022. (3) IRT also has a corporate office in Irvine, CA. (4) As of market close on November 7, 2022. (5) Represents rental and other property revenue
Slide 47: End Notes (continued)
46 End Notes (continued) Slide 10 (1) All resident demographic data is self-reported by residents. Average age, average income, and rent-to-income ratio are for residents that have moved in during the three months ending September 30, 2022. Employment sector data is for all residents as of September
Slide 48: Definitions and Non-GAAP Financial Measure Reconciliations
47 Definitions and Non-GAAP Financial Measure Reconciliations This presentation may contain non-U.S. generally accepted accounting principals (“GAAP”) financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is included in this
Slide 49: Definitions and Non-GAAP Financial Measure Reconciliations
48 Definitions and Non-GAAP Financial Measure Reconciliations Net Operating Income We believe that Net Operating Income (“NOI”), a non-GAAP financial measure, is a useful supplemental measure of its operating performance. We define NOI as total property revenues less total property operating expense
Slide 50: Definitions and Non-GAAP Financial Measure Reconciliations
49 Definitions and Non-GAAP Financial Measure Reconciliations
Slide 51: Forward-Looking Statement
50 Forward-Looking Statement This presentation contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by o
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