Independence Realty Trust, Inc. · NYSE:IRT
Independence Realty Trust — Investor Presentation (September 2024)
55 slides from Independence Realty Trust's investor presentation, Sep 30, 2024
Slide 1: Investor Presentation September 2024
INVESTOR PRESENTATION September 2024 Talison Row at Daniel Island Charleston, SC
Slide 2: Table of Contents
1 Table of Contents Overview 2 Recent Operating Trends, Metrics, and Business Updates 3 – 6 Company History and Performance 7 – 9 Current Priorities / Business Plan 10 – 21 Differentiated Portfolio in Attractive Markets 22 – 27 Path to Long-Term Growth 28 Appendix ESG Initiatives 30 Market Statistic
Slide 3: IRT Overview
2 IRT Overview OWN AND OPERATE Sunbelt Exposure 74% of NOI 110 Communities 32,685 Units 95.4% 2Q24 Avg Occupancy +100 basis points vs 1Q24 PORTFOLIO SUMMARY (1) SAME STORE HIGHLIGHTS Q2 2024 (2) • Revenue growth: 3.6% Y-o-Y • Resident retention: 55.8%, +160bps Y-o-Y and +150bps Q-o-Q • Avg rental ra
Slide 4: Recent Operating Trends
3 Recent Operating Trends Occupancy and Retention Effective Same-Store Rental Rate Trade Outs Operating Expenses • Same store occupancy remains steady as leasing season concludes. 3Q 2024 average occupancy was 95.4%, up 20 bps from our July 2024 average occupancy of 95.2%. Given the small number of
Slide 5: Strong Performance Across Key Operating Metrics
4 -4.2% -2.4% -1.0% -3.4% -3.0% -3.1% -5.0% -3.0% -1.0% 1.0% 3.0% 5.0% Q4 23 Q1 24 Q2 24 Jul-24 Aug-24 Sep-24 4.9% 4.4% 3.5% 2.9% 4.6% 3.9% -5.0% -3.0% -1.0% 1.0% 3.0% 5.0% Q4 23 Q1 24 Q2 24 Jul-24 Aug-24 Sep-24 Strong Performance Across Key Operating Metrics Same Store Excluding Value Add Note: As
Slide 6: Unsecured Debt Private Placement (August 2024)
5 Unsecured Debt Private Placement (August 2024) 7 Year 10 Year Amount $75mm $75mm Coupon (Fixed Rate) 5.32% 5.53% Expected Funding Date October 2024 October 2024 Maturity Date October 2031 October 2034 Ranking Pari Passu with other unsecured debt Use of Net Proceeds Repayment of property level secu
Slide 7: Forward Common Equity Issuance (August - September 2024)
6 Forward Common Equity Issuance (August - September 2024) Shares Offered 13.0mm common shares (11.5mm shares sold via follow-on marketed offering and 1.5mm shares via ATM program) Weighted Average Public Offering Price $19.75 / share Net Offering Proceeds $246mm Use of Proceeds To fund potential ac
Slide 8: Company History
7 Trade Street Acquisition Steadfast Acquisition Company History To ta l N um be r o f O pe ra tin g U ni ts (2 ) Aug. 2013 Completes IPO; begins trading on the NYSE Sep. 2015 Acquires Trade Street Residential (NASDAQ: TSRE) for $264 mm Dec. 2016 Completes internalization of management (1) Apr. 2018
Slide 9: IRT is Delivering Industry Leading Operating Performance
8 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 10: Track Record of Value Creation
9 Source: Bloomberg Market data as of September 27, 2024. Note: Represents compound total return, with dividends reinvested. Track Record of Value Creation IRT has a proven track record of outperforming its peers Year-to-Date 3-Year 5-Year Since IPO(2)(1) 15% 14% 30% 135% 17% 0% 21% 194% 36% 9% 70%
Slide 11: Current Priorities / Business Plan
10 Continue value add renovations at ~2,500 annually Current Priorities / Business Plan 1 Complete on-balance sheet and joint venture developments 2 Capital recycling to position portfolio for long-term growth while deleveraging 3 Use free cash flow to further delever the balance sheet to ~5.0x 4 Dr
Slide 12: Value Add Program: Improving Our Growth Profile
11 In-Place Program Future Pipeline Total Units to Renovate 13,281 9,381 22,662 Units Renovated-to-Date (8,469) - (8,469) Remaining Units to Renovate 4,812 9,381 14,193 Remaining Renovation Costs (3) $87 - $91 $169 - $178 $255 - $270 Incremental NOI (4) $15- $16 $29 - $30 $29 - $30 Incremental Value
Slide 13: Value-Add Case Study: Avalon Oaks – Project Overview
12 Value-Add Case Study: Avalon Oaks – Project Overview Before After Columbus, OH community acquired for $23.0mm in February 2018 § Middle market community with 235 units that at the time of acquisition helped to increase our scale in the Columbus market § Attractive Columbus submarket insulated fro
Slide 14: Value-Add Case Study: Avalon Oaks – The Economics
13 Value-Add Case Study: Avalon Oaks – The Economics At Acquisition (2/27/2018) 6/30/2024 Change Revenue (TTM) $2.6mm $4.0mm +53% NOI (TTM) $1.4mm $2.7mm +95% NOI Margin 52.6% 66.9% +1,430 bps Average Effective Monthly Rent $868 $1,440 +66% Achieved outsized value creation § Post renovation communit
Slide 15: Value-Add Case Study: Rocky Creek – Project Overview
14 Value-Add Case Study: Rocky Creek – Project Overview Before After Acquired in July 2019 for $48.0mm this was our 3rd community in Tampa, FL market § Located in West Tampa, this property was built in 1999 and has 264 units § Convenient access to major employment centers including Westshore area to
Slide 16: Value-Add Case Study: Rocky Creek – The Economics
15 Value-Add Case Study: Rocky Creek – The Economics At Acquisition (7/11/2019) 6/30/2024 Change Revenue (TTM) $4.2mm $6.2mm +46% NOI (TTM) $2.6mm $4.0mm +53% NOI Margin 61.1% 64.0% +290 bps Average Effective Monthly Rent $1,256 $2,048 +63% Achieved outsized value creation § Post renovation communit
Slide 17: Real Estate Under Development: Expected to Generate Strong NOI
16 Real Estate Under Development: Expected to Generate Strong NOI Total Projected Development Spend ~$103M Q1 2025 Construction Starts Q3 2021 Delivery period Q4 2023 Est. Stabilization 81% Occupied Sept 2024 Flatirons Apartment Broomfield, CO Costs NOI In Place NOI – Q2 2024 $550k / In lease-up # o
Slide 18: Joint Venture Communities: Selected Case Studies
17 Joint Venture Communities: Selected Case Studies § Year Built: 2023 § Status: In lease up § Units: 402 units § Today’s rents are 6% higher than we originally expected for 2024 The Mustang (2) Dallas, TX The Crockett Nashville, TN Metropolis at Innsbrook Richmond, VA § Year Built: 2023 § Status: I
Slide 19: Portfolio Capital Recycling
18 Portfolio Capital Recycling § Closed on the sale of Tapestry Park on July 17, 2024 § 354-unit property in Birmingham, Alabama § Identified as held for sale during Q1 2024 § Gross sale price was $70.8 million § Proceeds were used in a 1031 exchange 3 § Closed on the purchase of Gateway at Pinellas
Slide 20: Deleveraging: Where We Are and Where We Are Going
19 Deleveraging: Where We Are and Where We Are Going • Organic NOI growth from stabilized portfolio consistent with long-term historical growth rates • Higher NOI from ongoing value add renovations consistent with historical track record • Incremental NOI from delivery of two Denver, CO development
Slide 21: Maintain a Simple Capital Structure
20 $3 $17 $425 $23 $1,035 $721 2024 2025 2026 2027 2028 Thereafter Proforma Debt 65.8% 34.2% Maintain a Simple Capital Structure $6.6bn Common Equity Debt • Simple capital structure consisting of secured and unsecured debt • Maintain conservative financial and credit policies and expect to further d
Slide 22: Continuing Our Efforts in Technology
21 Continuing Our Efforts in Technology Business Intelligence For Property Managers Value Add ERP Platform Incident Reporting App Month-End Close Automation Property Phone System Standardization & Consolidation Our Goals Offer a Superior Prospect & Resident Experience Automate Processes to Lower Ope
Slide 23: Established a Differentiated Portfolio in Attractive Markets
22 77% Class B community profile is highly defensive during times of economic stress Established a Differentiated Portfolio in Attractive Markets Benefit from favorable resident demographics Focused on the high growth Sunbelt & Midwest regions Possess a unique hedge against new supply Well-positione
Slide 24: Defensive Middle Market Communities
23 Defensive Middle Market Communities, Positioned to Perform Even in Tough Economic Times 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
Slide 25: IRT's Resident Demographic Trends Are Favorable
24 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) Market Resident Average Age(1) 1 Atlanta, GA 38 2 Dallas, TX 37 3 Denver, CO 34 4 Columbus, OH 35 5 Ra
Slide 26: Portfolio Focused On High Growth Sunbelt & Midwest Regions
25 TOP 10 MARKETS Our Portfolio is Focused On the High Growth Sunbelt & Midwest Regions PORTFOLIO SUMMARY IRT owns 110 communities and has 2 communities under development across resilient, high growth markets Geographic Distribution Operating Communities • Strong presence in high growth metros inclu
Slide 27: The Impact of New Supply on IRT Will Not Be Significant
26 3.3% 3.0% 4.8% 4.6% 1.7% 1.9% 2021 2022 2023 2024E 2025E 2026E New Deliveries as a % of Existing Inventory The Impact of New Supply on IRT Will Not Be Significant Estimated new apartment deliveries from 2024 through 2026 in IRT's markets, as a percentage of existing apartment inventory, are expec
Slide 28: Rent vs. Buy Differential Will Support Rental Demand
27 Rent vs. Buy Differential Will Support Rental Demand in 2024 • Median home price is approximately $445,000(1) across IRT’s top 10 markets(2) weighted by NOI at the zip code level • With interest rates expected to remain higher for longer, mortgage rates will remain high and support rental demand
Slide 29: Compelling Investment Opportunity With a Path to Long-Term Growth
28 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 Cyan Mallard Creek Charleston, NC Cyan Craig Ranch McKinney, TX Destination at Arista Broomfield, CO Investing in Tech
Slide 30: Appendix & Definitions
Appendix & Definitions Legacy at Jones Farm Huntsville, AL
Slide 31: Focusing on Our ESG Initiatives
30 Focusing on Our ESG Initiatives Find out more on the Sustainability page of IRT’s Investor Relations website at http://investors.irtliving.com. Enhancing Residential Living We are dedicated to pursuing excellence, providing our residents with an exceptional living experience and delivering superi
Slide 32: Assets Demonstrate Attractive Apartment Industry Dynamics
31 Assets Demonstrate Attractive Apartment Industry Dynamics Low Homeownership More Insulated from New Supply n The national Class B vacancy rate remains resilient to supply and demand shocks with 2024 projected spreads in vacancy rates between Class A & B. Class B vacancy is projected to be 7.3% an
Slide 33: Value Add Summary: Renovation Costs per Unit
32 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 Atlanta, GA 5 2,344 1,053 1,052 259 18.9% 18,620 2,283 20,903 16.7% 14.9% D
Slide 34: IRT Resident Demographics at a Glance
33 IRT Resident Demographics at a Glance(1) All notations throughout this presentation appear as “End Notes” on pages 49-50. 47% 53% Gender Breakdown 79% 21% Marital Status Average Resident Age: 37 Residents make up a diverse job pool Top Industries of Residents: 1. Services 2. Medical Services 3. P
Slide 35: Our Markets | Atlanta
34 Community Map Job Growth Population Growth Supply Growth 2 2025 Job Growth US Average 0.74% Gateway Markets 0.69% 2025 Population Growth US Average 0.56% Gateway Markets 0.76% Differentiators Our Markets | Atlanta(1) Footnotes: (1) Source: CoStar (2) Source: CoStar, new units estimated to be deli
Slide 36: Our Markets | Dallas
35 Community Map Job Growth Population Growth Supply Growth 2 2025 Job Growth US Average 0.74% Gateway Markets 0.69% 2025 Population Growth US Average 0.56% Gateway Markets 0.76% Differentiators 9th largest city in the U.S. by population 4 The Dallas MSA has had the largest population growth within
Slide 37: Our Markets | Denver
36 Community Map Job Growth Population Growth Supply Growth 2 2025 Job Growth US Average 0.74% Gateway Markets 0.69% 2025 Population Growth US Average 0.56% Gateway Markets 0.76% Differentiators Population growth in the metro area is expected to exceed 5.5% over the next five years4 The MSA had the
Slide 38: Our Markets | Columbus
37 Community Map Job Growth Population Growth Supply Growth 2 2025 Job Growth US Average 0.74% Gateway Markets 0.69% 2025 Population Growth US Average 0.56% Gateway Markets 0.76% Differentiators 14th largest city in the U.S. by population4 Strong accessibility to major highway I-270 Near thriving em
Slide 39: Our Markets | Louisville
38 Community Map Job Growth Population Growth Supply Growth 2 2025 Job Growth US Average 0.74% Gateway Markets 0.69% 2025 Population Growth US Average 0.56% Gateway Markets 0.76% Differentiators Located within 5 min. of major highways Benefiting from the proximity to growing industrial footprint Eac
Slide 40: Our Markets | Indianapolis
39 Community Map Job Growth Population Growth Supply Growth 2 2025 Job Growth US Average 0.74% Gateway Markets 0.69% 2025 Population Growth US Average 0.56% Gateway Markets 0.76% Differentiators 15th largest city in the U.S. by population Communities located in top school districts Experienced outsi
Slide 41: Our Markets | Raleigh–Durham
40 Community Map Job Growth Population Growth Supply Growth 2 2025 Job Growth US Average 0.74% Gateway Markets 0.69% 2025 Population Growth US Average 0.56% Gateway Markets 0.76% Differentiators Communities located within 5 min. of major throughways Easy access to local retail centers Concentration
Slide 42: Our Markets | Oklahoma City
41 Community Map Job Growth Population Growth Supply Growth 2 2025 Job Growth US Average 0.74% Gateway Markets 0.69% 2025 Population Growth US Average 0.56% Gateway Markets 0.76% Differentiators The metro’s population grew 0.5% this year, which was above the 0.2% national average4 Actively executing
Slide 43: Our Markets | Houston
42 Community Map Job Growth Population Growth Supply Growth 2 2025 Job Growth US Average 0.74% Gateway Markets 0.69% 2025 Population Growth US Average 0.56% Gateway Markets 0.76% Differentiators Job growth is expected to be 2.7% annually through 2025, compared to 1.7% nationally4 Houston sits at #2
Slide 44: Our Markets | Tampa
43 Community Map Job Growth Population Growth Supply Growth 2 2025 Job Growth US Average 0.74% Gateway Markets 0.69% 2025 Population Growth US Average 0.56% Gateway Markets 0.76% Differentiators $3 billion Water Street mixed-use investment backed by Jeff Vinik and Bill Gates is underway downtown Maj
Slide 45: Our Markets | Nashville
44 Community Map Job Growth Population Growth Supply Growth 2 2025 Job Growth US Average 0.74% Gateway Markets 0.69% 2025 Population Growth US Average 0.56% Gateway Markets 0.76% Differentiators Metro area job growth expected to outpace the national rate through 20254 Oracle plans to expand in the m
Slide 46: Our Markets | Memphis
45 Community Map Job Growth Population Growth Supply Growth 2 2025 Job Growth US Average 0.74% Gateway Markets 0.69% 2025 Population Growth US Average 0.56% Gateway Markets 0.76% Differentiators Memphis has all the amenities of a large city with a cost of living more than 20% below the national aver
Slide 47: Our Markets | Huntsville
46 Community Map Job Growth Population Growth Supply Growth 2 2025 Job Growth US Average 0.74% Gateway Markets 0.69% 2025 Population Growth US Average 0.56% Gateway Markets 0.76% Differentiators Metro area ranked 1st in 2020 projected rent growth of the top 100 metros by population1 Major employers
Slide 48: Our Markets | Charlotte
47 Community Map Job Growth Population Growth Supply Growth 2 2025 Job Growth US Average 0.74% Gateway Markets 0.69% 2025 Population Growth US Average 0.56% Gateway Markets 0.76% Differentiators 16th largest city in the U.S. by population4 Long-term demand fundamentals are favorable with outsized po
Slide 49: Our Markets | Orlando
48 Community Map Job Growth Population Growth Supply Growth 2 2025 Job Growth US Average 0.74% Gateway Markets 0.69% 2025 Population Growth US Average 0.56% Gateway Markets 0.76% Differentiators Established tourism hub Centrally located in FL, easily accessible to drive to and from close markets Job
Slide 50: End Notes
49 Slide 2 (1) Portfolio Summary data is as of June 30, 2024 or for the quarter-ended June 30, 2024, as applicable. (2) Highlights are for the IRT same store portfolio for the three months ended June 30, 2024 vs. the three months ended June 30, 2023. NOI is a non-GAAP financial measure. See slides 4
Slide 51: End Notes (continued)
50 End Notes (continued) Slide 25 (1) Portfolio Summary as of June 30, 2024, NOI for 2Q 2024 and total communities as of June 30, 2024. (2) Includes communities located in Denver, Fort Collins, Colorado Springs and Loveland, CO. Slide 26 (1) New deliveries as a % of existing inventory are from CoSta
Slide 52: Definitions and Non-GAAP Financial Measure Reconciliations
51 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 53: Net Operating Income
52 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 54: Definitions and Non-GAAP Financial Measure Reconciliations
53 Definitions and Non-GAAP Financial Measure Reconciliations June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 Reconciliation of same-store net operating income to net income (loss) Same-store net operating income 94,928$ 94,371$ 97,164$ 94,952$ 92,375$ Non same-store
Slide 55: Forward-Looking Statement
54 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 include, but are not limited to,
Independence Realty Trust — Investor Presentation (September 2024) on 6ix