Independence Realty Trust, Inc. · NYSE:IRT
Independence Realty Trust — Investor Presentation (June 2020)
39 slides from Independence Realty Trust's investor presentation, Jun 1, 2020
Slide 1: Investor Presentation June 2020
INVESTOR PRESENTATION June 2020 Talison Row at Daniel Island, South Carolina Exhibit 99.1
Slide 2: Table of Contents
Table of Contents IRT Overview Enterprise Snapshot 2 Addressing COVID-19 3 – 6 Key Assumptions 7 Highlighting IRT’s Competitive Advantage 8 – 13 Value Add Program / Case Studies 14 – 19 Capital Structure 20 Conclusion 21 Appendix Market Statistics 23 – 24 Market Profiles 25 – 32 Value Add Summary 33
Slide 3: IRT Enterprise Snapshot
IRT Enterprise Snapshot (1) OWN AND OPERATE Average community age 19 years 58 Communities 15,805 Units $1.9B In gross assets PORTFOLIO SUMMARY SAME STORE HIGHLIGHTS NOI growth: 7.0% (2) Average effective rent $1,089 (3) Average occupancy: 92.7% (3) VALUE ADD SUMMARY 23 communities identified for red
Slide 4: Addressing COVID-19
Addressing COVID-19 Thornhill Apartments, Raleigh, NC
Slide 5: IRT's Response to COVID-19 Impact
IRT’s Response to COVID-19 Impact Closely following CDC guidelines to ensure resident and employee safety Practicing social distancing, closing common areas to residents and community offices to non-employees, and repetitive deep cleaning of commonly used surfaces Identified opportunities to rotate
Slide 6: Resilient Portfolio to Weather Near-Term Impact
Resilient Portfolio to Weather Near-Term Impact Real Estate / Liquidity Metrics (1)(2) (1) All collection metrics presented are for our total portfolio in the period presented. (2) All collection metrics are based on IRT’s internal data, which management uses to monitor property performance on a dai
Slide 7: Financial Flexibility to Fund Our Long-Term Growth Strategy
Financial Flexibility to Fund Our Long-Term Growth Strategy Identified 7,136 units under Phase I, II, and III of value add program Completed renovations at 3,025 units Across 17 communities Generated rent increase of 18.3% Recognized ROI of 16.3% Paused renovations on 2,477 units Across 11 communiti
Slide 8: Key Assumptions to Consider for Q2 and FY20
Key Assumptions to Consider for Q2 and FY20 Moderating rent growth in Q2, in order to support near-term occupancy Continued cost mitigation efforts, including lower property operating expenses Pausing a portion of value add initiatives, resulting in $10.2 million in reduced capex No assumed capital
Slide 9: Highlighting IRT's Competitive Advantage
Highlighting IRT’s Competitive Advantage
Slide 10: Resilient Portfolio and Business Model Positioned for Long-Term Value Creation
Resilient Portfolio and Business Model Positioned for Long-Term Value Creation Clear investment strategy focused on middle-market communities which offer affordable high-quality product with attractive amenities Strong portfolio of assets in non-gateway markets which offer a resident-first approach
Slide 11: Clear Investment and Ownership Strategy
Clear Investment and Ownership Strategy Assets Our Focus: Well-located middle-market communities, likely to benefit from: Robust management platform, including revenue management Operational expertise Economies of scale Markets Our Focus: Targeted submarkets within non-gateway markets exhibiting: St
Slide 12: Portfolio Scale and Platform Deliver Operational Excellence
Portfolio Scale and Platform Deliver Operational Excellence IRT’s Management Platform: Manage all 58 communities Capitalizing on economies of scale through regional managers’ ability to be on-site, which results in cost management efficiencies Algorithmic-based revenue optimization Regional manageme
Slide 13: Well-Positioned in Affordable, Highly Defensive Middle Market Communities
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 retirement Captu
Slide 14: Stable Cash Flow Profile
Stable Cash Flow Profile Source: Costar Q1 2020 Data Release Gateway Markets represent an arithmetic average of New York, Washington DC, San Francisco and Los Angeles. IRT weighted averages are based on unit count as of 3/31/2020 Annual Change in Effective Rent (IRT Markets vs. the National Average,
Slide 15: Flexible Approach to Our Value Add Opportunity
Flexible Approach to Our Value Add Opportunity After Before At a Glance While 11 of 23 value add projects are currently on hold, this remains a core part of IRT’s strategy to maximize portfolio value Opportunity Approximately 7,136 units identified for redevelopment across 23 properties creating out
Slide 16: Value Add Case Study: The Village at Auburn – Project Overview
Value Add Case Study: The Village at Auburn – Project Overview Before After Acquired asset in Durham, NC for $43m in June 2017 Middle market asset with 328 units that fit perfectly with long-term investment criteria Attractive Durham submarket, combination of universities and corporations, supported
Slide 17: Value Add Case Study: The Village at Auburn – The Economics
Value Add Case Study: The Village at Auburn – The Economics ($ in millions, except monthly data) Before Acquisition Today Change Revenue $4.0 $4.7 +18% NOI $2.4 $3.0 +25% NOI Margin 59.7% 64.4% +470bps Average Effective Rental Rate $1,007/ month $1,229/month +22% Cap Rate 5.2% 5.0% -20bps Achieved o
Slide 18: Value Add Case Study: Pointe at Canyon Ridge – Project Overview
Value Add Case Study: Pointe at Canyon Ridge – Project Overview Before After Acquired asset in Sandy Springs, GA for $49m in September 2015, as part of the Trade Street portfolio acquisition Located just outside of Atlanta, this property was built in 1986, has 494 units and significant ROI potential
Slide 19: Value Add Case Study: Pointe at Canyon Ridge – The Economics
Value Add Case Study: Pointe at Canyon Ridge – The Economics Achieved outsized value creation Post renovation asset value of $87.3 million, representing an increase of 80% from acquisition Incremental value creation of $33.5 million, after renovation investment Enhanced resident profile, resulting i
Slide 20: Value Add Projects and Pipeline Maximize Portfolio Value
Phase 1 Net Value Per Share 3 $1.38 Value Add Projects and Pipeline Maximize Portfolio Value Total Value Creation Opportunity of $1.95 per share $'s in 000's, except units and per share amounts 4.4K UNITS REMAINING IN PROJECT PIPELINE IRT’s Redevelopment Opportunity Future VALUE OPPORTUNITY(2) (1) I
Slide 21: Simple Capital Structure
Total Market Capitalization calculated based on share price as of market close on 3/31/2017 and 3/31/2020, respectively. Reflects debt maturities as of 3/31/2020. Reflects pro forma net debt to Adjusted EBITDA for each period presented, which includes adjustments for the timing of acquisitions, the
Slide 22: Path to Continued Long-Term Growth
Path to Continued Long-Term Growth Operational efficiencies and enhanced resident experience through: Smart home technology pilot High-speed internet rollout Innovative technology strategy Value add community redevelopment initiatives: Redevelopment ongoing at 3,656 units across 12 properties, creat
Slide 23: Appendix & Definitions
Ws-— Independence N Realty Trust Appendix & Definitions
Slide 24: Markets Demonstrate Strong Population & Employment Growth
Source: Costar 2020 Q1 data release. IRT weighted averages are based on unit count as of 3/31/20. Gateway markets represent an arithmetic mean of New York, Washington DC, San Francisco and Los Angeles. Markets Demonstrate Strong Population & Employment Growth Population & Employment growth in IRT’s
Slide 25: Assets Demonstrate Attractive Apartment Industry Dynamics
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 2020 projected to be the largest spread in vacancy rates between Class A & B, with Class B at 6.8% and Class A at 11.9%
Slide 26: Our Markets | Atlanta
Communities located within 5 min. of major highways Communities located in top school districts Benefiting from suburban sprawl, well-positioned in MSA with growing ancillary job markets Major company presence in Atlanta include: Our Markets | Atlanta (1) Source: CoStar 2020 Q1 Data Release New unit
Slide 27: Our Markets | Columbus
14th largest city in the U.S. by population Strong accessibility to major highway I-270 Near thriving employment hubs such as Rickenbacker International airport Class B communities insulated from new Class A construction Major employers, and companies with headquarter-presence include: Our Markets |
Slide 28: Our Markets | Raleigh – Durham
Communities located within 5 min. of major throughways Easy access to local retail centers Concentration around Research Triangle Park Many companies have a strong presence in the area, including: Our Markets | Raleigh – Durham (1) Source: CoStar 2020 Q1 Data Release New units estimated to come as a
Slide 29: Our Markets | Louisville
Located within 5 min. of major highways Benefiting from the proximity to growing industrial footprint Each community is in a top school district in the market Burgeoning tourism hub Major employers include: Our Markets | Louisville (1) Source: CoStar 2020 Q1 Data Release New units estimated to come
Slide 30: Our Markets | Tampa
$3 billion Water Street mixed-use investment backed by Jeff Vinik and Bill Gates is underway downtown Major employers in the area include: Major companies have committed to a major presence in the market such as: Our Markets | Tampa (1) Source: CoStar 2020 Q1 Data Release New units estimated to come
Slide 31: Our Markets | Indianapolis
15th largest city in the U.S. by population Located within 5 min. of major highways Communities located in top school districts Experienced outsized job growth in health care and retail trade industries Major employers include: Our Markets | Indianapolis (1) Source: CoStar 2020 Q1 Data Release New u
Slide 32: Our Markets | Charlotte
17th largest city in the U.S. by population Long-term demand fundamentals are favorable with outsized population growth projected in the key age group of 20-34 (4) Favorable average rent growth outpaces national average (4) Job growth driven by an economic shift away from a manufacturing economy tow
Slide 33: Our Markets | Orlando
Metro area ranked 8th in the U.S. in terms of population growth in 2018 (4) New development lags rental market supply (5) Major employers include: Our Markets | Orlando (1) Source: CoStar 2020 Q1 Data Release New units estimated to come as a percentage of total supply For Budgeted 2020 Fiscal Year,
Slide 34: Value Add Summary
Value Add Summary Project Life to Date as of March 31, 2020 Renovation Costs per Unit (b) Property Market Percentage Complete Total Units To Be Renovated Units Complete Units Leased Rent Premium (a) % Rent Increase Interior Exterior Total ROI - Interior Costs(c) ROI - Total Costs (d) Ongoing The Vil
Slide 35: Resident Demographics at a Glance
Resident Demographics at a Glance (1) Data as of 3/31/2020. 47% 53% Gender Breakdown 76% 24% Marital Status 38 Average Income of residents between 40% $70k Average Rent to Income 18-29 years old Average Age with Young, growing resident population benefiting from amenity-rich communities without over
Slide 36: Sustainability Commitment
Sustainability Commitment We believe that operating multifamily real estate can be conducted with a conscious regard for the environment and wider society. Find out more on the Sustainability page of IRT’s Investor Relations website at http://investors.irtliving.com.
Slide 37: Definitions and Non-GAAP Financial Measure Reconciliations
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 do
Slide 38: Definitions and Non-GAAP Financial Measure Reconciliations (Net Debt)
As of March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 Total debt $1,049,541 $985,572 $979,330 $989,499 $990,920 Less: cash and cash equivalents (57,436) (9,888) (6,587) (11,060) (9,030) Total net debt $992,105 $975,684 $972,743 $978,439 $981,890 Interest Coverage Int
Slide 39: Forward-Looking Statements
Forward-Looking Statements 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 our
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