Independence Realty Trust, Inc. · NYSE:IRT
Independence Realty Trust — Investor Presentation (June 2023)
53 slides from Independence Realty Trust's investor presentation, Jun 5, 2023
Slide 1: Investor Presentation June 2023
INVESTOR PRESENTATION June 2023 The Adley Craig Ranch McKinney, TX
Slide 2: Table of Contents
1 Table of Contents 2 – 4Overview and Performance 5Our Path to Long‐Term Growth 6 – 13Our Well‐Positioned Portfolio 14 – 19Our Strategic Investment Opportunities 20 – 22 Capitalization and Leverage 23 – 26Recent Operating Metrics and 2023 Guidance Appendix 28Market Statistics 29 – 30 Value Add Summa
Slide 3: IRT Overview
2 IRT Overview OWN AND OPERATE Sunbelt Exposure 71% of NOI 119 Communities 35,249 Units 10.8% 1Q23 Portfolio Average Rental Rate Growth PORTFOLIO SUMMARY (1) SAME STORE HIGHLIGHTS Q1 2023 (3) • Revenue growth: +7.5% Y‐o‐Y • NOI growth: 8.2% Y‐o‐Y • NOI margin: +40bps to 63.3% UPSIDE FROM VALUE ADD •
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: Track Record of Value Creation
4 Source: S&P Global, FactSet. Market data as of May 31, 2023. Note: Represents compound total return, with dividends reinvested. Track Record of Value Creation IRT has a proven track record of outperforming its peers and the broader market Year-to-date 3-Year 5-Year Since IPO (1) 0% 27% 26% 80% 3%
Slide 6: Compelling Investment Opportunity With a Path to Long-Term Growth
5 Compelling Investment Opportunity With a Path to Long‐Term Growth Leading Multifamily REIT, Well‐Positioned in Class B Communities, Focused on the High‐Growth U.S. Sunbelt Region Los Robles San Antonio, TX Eleven10 at Farmers Market Dallas, TX The Residences on McGinnis Ferry Suwanee, GA Investing
Slide 7: Our Well-Positioned Portfolio
6 Our Well‐Positioned Portfolio Eleven10 at Farmers Market Dallas, TX
Slide 8: Our Portfolio is Focused On the High Growth Sunbelt Region
7 TOP 10 MARKETS Our Portfolio is Focused On the High Growth Sunbelt Region PORTFOLIO SUMMARY IRT owns 119 communities and has 2 communities under development across resilient, high growth markets Geographic Distribution Operating Communities • Expanded presence in high growth metros including Charl
Slide 9: The Sunbelt Continues to Benefit from Positive Migration Trends
8 The Sunbelt Continues to Benefit from Positive Migration Trends IRT’s exposure to the six states mentioned above represent ~60% of total company NOI; These states experienced a robust job market recovery after the pandemic, averaging 5% job growth since March 2020 Inbound Move Rate in 2022 (for ar
Slide 10: Our Markets Have Strong Fundamentals
9 Our Markets Have Strong Fundamentals Outsized Population Growth vs. 2019 National Average Employment Change vs. 2019 National Average 21’ vs. 19’ 22’ vs. 19’ 23’E vs. 19’ 21’ vs. 19’ 22’ vs. 19’ 23’E vs. 19’ (1) (2) Source: Costar Q1 2023 Data Release -1.93% 1.75% 8.11% -4.37% -0.41% 10.27% -0.31%
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 ~$86,000, resulting in a ~21% rent to income(1) Average Age(1)Market 35Atlanta, GA1 37Dallas, TX2 35Denver, CO3 37Columbus, OH4 36Raleigh‐Durham, NC5
Slide 12: The Impact of New Supply on IRT Will Not Be Significant
11 The Impact of New Supply on IRT Will Not Be Significant Estimated new apartment deliveries for 2023 through 2025 in IRT's markets, as a percentage of existing apartment inventory, are expected to be broadly consistent with recent history IRT's Class B communities do not directly compete with new
Slide 13: Well-Positioned in Affordable, Highly Defensive Middle Market Communities
12 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 14: Attractive Portfolio Has Led to a Stable Cash Flow Profile
13 ‐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 2022 2023 USA Gateway Class A Class B WAV IRT Markets Attractive Portfolio Has Led to a Stable Cash Flow Profile Source: Costar Q1 2023
Slide 15: Our Strategic Investment Opportunities
14 Our Strategic Investment Opportunities Collier Park Grove City, OH
Slide 16: Driving Accretive Growth with Multiple Investment Levers
15 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 17: Improved Long-Term Growth Profile through Value Add Program
16 TotalFuture Pipeline2023 StartsIn‐Place Program 24,58312,7271,32010,536Units to Renovate (5,951)‐‐(5,951)Units Renovated‐to‐Date 18,63212,7271,3204,585Remaining Units to Renovate $252 ‐ $270$172 ‐ $185$18 ‐ $19$62 ‐ $66Remaining Renovation Costs (3) $48 ‐ $52$33 ‐ $35$3 ‐ $4$12 ‐ $13Incremental N
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 market • Invested $16.4 million in a horizontal multifamily joint venture consisting of 178 homes in March 2022 • As of May 2023,
Slide 19: Continuing Our Efforts in Technology
18 Continuing 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 inv
Slide 20: Focusing on Our ESG Initiatives
19 Focusing on Our ESG Initiatives Find out more on the Sustainability page of IRT’s Investor Relations website at http://investors.irtliving.com. Diversity, Equity and Inclusion Committee formed to ensure a culture of understanding and respect as representation across gender, race, age and sexual o
Slide 21: Capitalization and Leverage
Capitalization and Leverage Vantage on Hillsborough Tampa, FL
Slide 22: Maintain a Simple Capital Structure
21 58.4% 41.6% Maintain a Simple Capital Structure $6.3bn Common Equity Debt • Simple capital structure consisting of secured and unsecured debt • Maintain conservative financial and credit policies and expect to further deliver the balance sheet through organic NOI & EBITDA growth and excess cash f
Slide 23: Leverage: Where We Are and Where We Are Going
22 Leverage: Where We Are and Where We Are Going We are focused on continuing to improve the company’s leverage profile Progressing Towards Our Target of Mid‐6’s by Year‐End 2023 through the Following Drivers: • Organic NOI growth from stabilized portfolio consistent with long‐term historical growth
Slide 24: Recent Operating Metrics and 2023 Guidance
Recent Operating Metrics and 2023 Guidance Fountains Southend Charlotte, NC
Slide 25: Strong Performance Across Key Operating Metrics
24 95.5% 94.2% 93.9% 93.1% 94.2% Q2 22 Q3 22 Q4 22 Q1 23 QTD Q2 23 Strong Performance Across Key Operating Metrics Same Store Excluding Value Add Note: As of June 4, 2023, same-store portfolio occupancy was 94.4%, same-store portfolio excluding ongoing value add occupancy was 95.0%, and value add oc
Slide 26: Driving an Improvement in Operating Performance
25 Driving an Improvement in Operating Performance Focused on achieving sustainable occupancy gains across the entire portfolio Targeting occupancy of 95% for our non‐value add communities, while continuing to drive rent growth where appropriate; currently leased at 96.6% Key Initiatives to Improve
Slide 27: 2023 Guidance
26 HighLow $0.27$0.23Earnings per share Adjustments: 0.950.95Depreciation and amortization (0.01)(0.01)Gain on sale of real estate assets (3) (0.05)(0.05)Loan (premium accretion) discount amortization, net $1.16$1.12CORE FFO per share CORE FFO ($s in millions) 2023 Outlook (4)Same Store Communities
Slide 28: Appendix & Definitions
Appendix & Definitions Los Robles San Antonio, TX
Slide 29: Assets Demonstrate Attractive Apartment Industry Dynamics
28 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 2023 projected spreads in vacancy rates between Class A & B, with Class B at 7.4% and Class A at 11.0% o The majori
Slide 30: IRT Value Add Summary
29 IRT Value Add Summary Project Life to Date as of March 31, 2023 Renovation Costs per Unit (2) ROI ‐ Total Costs (4) ROI ‐ Interior Costs (3) TotalExteriorInterior% Rent Increase Rent Premium (1) Units Leased Units Complete Total Units To Be Renovated Total PropertiesMarket Ongoing 29.0%30.6%15,49
Slide 31: Continue to Invest in Our Long-Standing Value Add Program
30 Continue to Invest in Our Long‐Standing Value Add Program Pipeline of ~19,000 value add units to be renovated 2023Units to Be Renovated Total Units 1Q23 2Q23 Estimate 3Q23 Estimate 4Q23 Estimate FY23 Estimate 635 600 ‐ 765 815 ‐ 1,050 450 ‐ 550 2,500 ‐ 3,000
Slide 32: Our Markets | Atlanta
31 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth ‐0.10%National Average ‐0.09%Gateway Markets 2023 Population Growth 0.43%National Average 1.03%Gateway Markets Differentiators Communities located within 5 min. of major highways Communities located in top school districts
Slide 33: Our Markets | Dallas
32 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth ‐0.10%National Average ‐0.09%Gateway Markets 2023 Population Growth 0.43%National Average 1.03%Gateway Markets Differentiators 9th largest city in the U.S. by population 4 The Dallas MSA has had the largest population grow
Slide 34: Our Markets | Denver
33 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth ‐0.10%National Average ‐0.09%Gateway Markets 2023 Population Growth 0.43%National Average 1.03%Gateway Markets Differentiators Population growth in the metro area is expected to exceed 5.5% over the next five years4 The MS
Slide 35: Our Markets | Columbus
34 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth ‐0.10%National Average ‐0.09%Gateway Markets 2023 Population Growth 0.43%National Average 1.03%Gateway Markets Differentiators 14th largest city in the U.S. by population4 Strong accessibility to major highway I‐270 Near t
Slide 36: Our Markets | Louisville
35 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth ‐0.10%National Average ‐0.09%Gateway Markets 2023 Population Growth 0.43%National Average 1.03%Gateway Markets Differentiators Located within 5 min. of major highways Benefiting from the proximity to growing industrial foo
Slide 37: Our Markets | Indianapolis
36 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth ‐0.10%National Average ‐0.09%Gateway Markets 2023 Population Growth 0.43%National Average 1.03%Gateway Markets Differentiators 15th largest city in the U.S. by population Communities located in top school districts Experie
Slide 38: Our Markets | Raleigh-Durham
37 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth ‐0.10%National Average ‐0.09%Gateway Markets 2023 Population Growth 0.43%National Average 1.03%Gateway Markets Differentiators Communities located within 5 min. of major throughways Easy access to local retail centers Conc
Slide 39: Our Markets | Oklahoma City
38 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth ‐0.10%National Average ‐0.09%Gateway Markets 2023 Population Growth 0.43%National Average 1.03%Gateway Markets Differentiators The metro’s population grew 0.5% this year, which was above the 0.2% national average4 Actively
Slide 40: Our Markets | Houston
39 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth ‐0.10%National Average ‐0.09%Gateway Markets 2023 Population Growth 0.43%National Average 1.03%Gateway Markets Differentiators Job growth is expected to be 2.7% annually through 2025, compared to 1.7% nationally4 Houston s
Slide 41: Our Markets | Tampa
40 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth ‐0.10%National Average ‐0.09%Gateway Markets 2023 Population Growth 0.43%National Average 1.03%Gateway Markets Differentiators $3 billion Water Street mixed‐use investment backed by Jeff Vinik and Bill Gates is underway do
Slide 42: Our Markets | Nashville
41 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth ‐0.10%National Average ‐0.09%Gateway Markets 2023 Population Growth 0.43%National Average 1.03%Gateway Markets Differentiators Metro area job growth expected to outpace the national rate through 20254 Oracle plans to expan
Slide 43: Our Markets | Memphis
42 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth ‐0.10%National Average ‐0.09%Gateway Markets 2023 Population Growth 0.43%National Average 1.03%Gateway Markets Differentiators Memphis has all the amenities of a large city with a cost of living more than 20% below the nat
Slide 44: Our Markets | Huntsville
43 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth ‐0.10%National Average ‐0.09%Gateway Markets 2023 Population Growth 0.43%National Average 1.03%Gateway Markets Differentiators Metro area ranked 1st in 2020 projected rent growth of the top 100 metros by population1 Major
Slide 45: Our Markets | Charlotte
44 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth ‐0.10%National Average ‐0.09%Gateway Markets 2023 Population Growth 0.43%National Average 1.03%Gateway Markets Differentiators 16th largest city in the U.S. by population4 Long‐term demand fundamentals are favorable with o
Slide 46: Our Markets | Orlando
45 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth ‐0.10%National Average ‐0.09%Gateway Markets 2023 Population Growth 0.43%National Average 1.03%Gateway Markets Differentiators Established tourism hub Centrally located in FL, easily accessible to drive to and from close m
Slide 47: IRT Resident Demographics at a Glance
46 IRT Resident Demographics at a Glance(1) All notations throughout this presentation appear as “End Notes” on pages 47-48. 47% 53% Gender Breakdown 79% 21% Marital Status Average Resident Age: 37 Residents make up a diverse job pool Top Industries of Residents: 1. Medical Services 2. Professional
Slide 48: End Notes
47 Slide 2 (1) For the total portfolio as of March 31, 2023 or for 1Q 2023, as applicable; including portfolio average rental rate growth for the IRT same store portfolio for the three months ended March 31, 2023. (2) As of market close on May 31, 2023. (3) Highlights are for the IRT same store port
Slide 49: End Notes (continued)
48 End Notes (continued) Slide 21 (1) Market data as of March 31, 2023. Slide 24 (1) Lease‐over‐lease effective rent growth represents the change in effective monthly rent, as adjusted for concessions, for each unit that had a prior lease and current lease that are for a term of 9‐13 months. Lease‐o
Slide 50: Definitions and Non-GAAP Financial Measure Reconciliations
49 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 51: Net Operating Income
50 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 expenses, excluding depreciation and amortization, casualty relate
Slide 52: Reconciliation of Same-Store Net Operating Income to Net Income
51 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Reconciliation of same-store net operating income to net income (loss) Same-store net operating income 99,303$ 97,774$ 94,566$ 90,735$ 89,169$ Non same-store net operating income 2,577 7,269 5,767 4,932 4,925 Pre-Mer
Slide 53: Forward-Looking Statement
52 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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