Independence Realty Trust, Inc. · NYSE:IRT
Independence Realty Trust — Investor Presentation (March 2023)
53 slides from Independence Realty Trust's investor presentation, March 2023
Slide 1: Investor Presentation March 2023
INVESTOR PRESENTATION Monticello by the Vineyard March 2023 Euless, TX
Slide 2: Table of Contents
Table of Contents Overview and Performance 2–3 Recent Operating Metrics and 2023 Guidance 4–7 Our Competitive Advantage 8 – 15 Our Strategic Investment Opportunities 16 – 22 Capitalization and Leverage 23 – 25 Our Path to Long-Term Growth 26 Appendix Track Record of Value Creation 28 Market Statisti
Slide 3: IRT Overview
IRT Overview PORTFOLIO SUMMARY (1) OWN AND OPERATE Average community age (2) 22 years IN OH PA IL Sunbelt Exposure 120 CO KY VA Communities (2) 71% of NOI OK $6.2B In gross assets TN AL GA NC SC TX 35,526 Units (2) 12% FL Full Year 2022 Average Rental Rate Growth Independence Realty Trust (IRT) Comm
Slide 4: IRT is Delivering Industry Leading Operating Performance
IRT is Delivering Industry Leading Operating Performance Relative to peers in non-gateway and coastal markets, IRT outpaced industry growth over the past few years and momentum is expected to continue due to our attractive location in sunbelt markets, as well as our investments in value add renovati
Slide 5: Recent Operating Metrics and 2023 Guidance
Recent Operating Metrics and 2023 Guidance Cyan Craig Ranch 4 McKinney, TX
Slide 6: Strong Performance Across Key Operating Metrics
Strong Performance Across Key Operating Metrics Same Store Excluding Value Add Same Store Value Add Same Store Total (2) 100% 95.4% 95.7% 95.6% 94.8% 94.8% 95.3% 94.6% 94.7% 94.3% 95% 93.9% 93.8% 93.0% Occupancy 92.6% 90.2% 89.7% 90% 85% 80% Q1 22 Q2 22 Q3 22 Q4 22 QTD Q1 23 Q1 22 Q2 22 Q3 22 Q4 22
Slide 7: Driving an Improvement in Operating Performance
Driving an Improvement in Operating Performance Focused on achieving sustainable occupancy gains across the entire portfolio Key Initiatives to Improve Occupancy: ➢ Added senior leaders with a proven operating track record ➢ Improving our leasing and sales process ✓ Enhancing speed of pricing feedba
Slide 8: Full Year 2023 Guidance
Full Year 2023 Guidance 2023 Full Year EPS and CFFO Guidance (1)(2) Key Operating Assumptions Low High Same Store Communities 2023 Outlook (4) Earnings per share $0.23 $0.27 Number of communities/units 116 communities/34,571 units Adjustments: Property revenue growth 5.7% to 7.0% Depreciation and am
Slide 9: Our Competitive Advantage
Our Competitive Advantage Talison Row 8 Charleston, SC
Slide 10: Our Portfolio is Focused On the High Growth Sunbelt Region
Our Portfolio is Focused On the High Growth Sunbelt Region (1) IRT is present in 120 communities across resilient, high growth markets PORTFOLIO SUMMARY Geographic Geographic Distribution Distribution Top 10 Markets Independence Realty Trust % % Market Units Communities Unit NOI Atlanta 5,180 15% 15
Slide 11: IRT's Markets Have Strong Fundamentals
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 Outsized Population Growth Employment Change vs. 2019 National Average 20’ vs. 19’ 21’ vs. 19’ 22’ vs. 19’ 20’ vs. 19’
Slide 12: The Impact of New Supply on IRT Will Not Be Significant
The Impact of New Supply on IRT Will Not Be Significant New apartment deliveries for 2023 and 2024 in IRT's markets, as a percentage of existing apartment inventory, are expected to be broadly consistent with recent history 3.3% 2.8% 2.6% 2.8% 2.4% 2020 2021 2022 2023E 2024E New Deliveries as a % of
Slide 13: IRT Continues to Benefit from Positive Migration Trends
IRT Continues to Benefit from Positive Migration Trends U.S. Census Bureau reported that Florida, Texas, North and South Carolina, Tennessee, and Georgia were the states with highest net domestic migration gains in 2022 Inbound Move Rate in 2022 (for areas with more than 150,000 households) Domestic
Slide 14: IRT's Resident Demographic Trends Are Favorable
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 ~22% rent to income(1) Average Rent / Market Market Age(1) Income(1) Top 10 IRT Markets 1 Atlanta, GA 36 1 Atlanta, GA 23.6% 2 D
Slide 15: Well-Positioned in Affordable, Highly Defensive Middle Market Communities
Well-Positioned in Affordable, Highly Defensive Middle Market Communities Class B Positioning: ◼ Higher income ◼ Most opportunity to consistently increase rents A residents move down in a recession ◼ Less exposure to homeownership ◼ Renters move down ◼ Less likely to be impacted from new constructio
Slide 16: Attractive Portfolio Has Led to a Stable Cash Flow Profile
Attractive Portfolio Has Led to a Stable Cash Flow Profile Supply and Demand fundamentals in IRT’s markets have resulted in a more stable rent profile through multiple economic cycles, as compared to Gateway Markets and Class A communities Annual Change in Effective Rent (IRT Markets vs. the Nationa
Slide 17: Our Strategic Investment Opportunities
Our Strategic Investment Opportunities Garrison Station Murfreesboro, TN 16
Slide 18: Driving Accretive Growth with Multiple Investment Levers
Driving Accretive Growth with Multiple Investment Levers Preferred Equity Value Add Acquisitions / Capital Investments and Renovations Recycling Joint Ventures Renovate existing Expand presence in Invest in multifamily development by Investment communities/units where markets where we see providing
Slide 19: Improved Long-Term Growth Profile through Value Add Program
Improved Long-Term Growth Profile through Value Add Program IRT’s historical projects have generated a 19.6% return on investment across approximately 5,316 units, resulting in over $239 million of incremental value creation (1) Sizeable ~19,000 unit value add pipeline providing ~$900 million of inc
Slide 20: Continue to Invest in Our Long-Standing Value Add Program
Continue to Invest in Our Long-Standing Value Add Program—— IRT’s value add program generated a 24.1% return on investment in 2022 2023e Units to Be Renovated* Total Units 1Q23e 500 - 600 2Q23e 650 - 800 3Q23e 900 - 1,050 4Q23e 450 - 550 FY23e 2,500 - 3,000 *All quarterly & FY23 units to be renovate
Slide 21: Joint Venture Development Program
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 joint venture developing three communities totaling 504 homes in September 2021 • Exercised our purchase opt
Slide 22: Continuing Our Efforts in Technology
Continuing Our Efforts in Technology Our Focus Marketing & Leasing Operations, Maintenance Automation & Big Data & Resident Experience IRT is investing in technology which will IRT is focused on further enhancing its leasing IRT is proactively using technology to create create additional efficiencie
Slide 23: Focusing on Our ESG Initiatives
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 Provide a Residence Proud to Call Home, Diversity, Equity and Inclusion with enhanced amenities, a robust Committee formed to ensure a main
Slide 24: Capitalization and Leverage
Capitalization and Leverage Creekstone at RTP Durham, NC 23
Slide 25: Maintain a Simple Capital Structure
Maintain a Simple Capital Structure Balance Sheet Highlights Total Capitalization (1) 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 & EBITDA growth and exce
Slide 26: Leverage: Where We Are and Where We Are Going
Leverage: Where We Are and Where We Are Going We are focused on continuing to improve the company’s leverage profile Progressing Towards Our Mid-Term Target of Mid-6’s through the Following Drivers: Organic NOI growth from stabilized portfolio consistent with long-term historical growth rates Co
Slide 27: Compelling Investment Opportunity With a Path to Long-Term Growth
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 with a Stable Cash Flow Profile Strong Long-Term Growth Profile Supported by a ~19,000 Unit Value Add Pipeline, New Devel
Slide 28: Appendix & Definitions
Canyon Resort at Great Hills, Austin, TX Appendix & Definitions
Slide 29: Track Record of Value Creation
Track Record of Value Creation IRT has a proven track record of outperforming its peers and the broader market 1-Year 3-Year 5-Year Since IPO (1) 300% 263% 250% 200% 171% 150% 134% 112% 100% 80% 57% 50% 33% 25% 31% 20% 0% 0% -3% -18% -25%-31% -50% -33% RMS Multifamily Index S&P 500 IRT Source: S&P G
Slide 30: Assets Demonstrate Attractive Apartment Industry Dynamics
Assets Demonstrate Attractive Apartment Industry Dynamics Low Homeownership Limited New Supply ◼ Growth in households increases the pool of renters, even more so during ◼ The national Class B vacancy rate remains resilient to supply and demand periods of reduced homeownership shocks with 2023 projec
Slide 31: IRT Value Add Summary
IRT Value Add Summary Project Life to Date as of December 31, 2022 Renovation Costs per Unit (2) Total Total Units To Be Units Units Rent % Rent ROI - Interior ROI - Total Market Properties Renovated Complete Leased Premium (1) Increase Interior Exterior Total Costs(3) Costs (4) Ongoing Tampa-St. Pe
Slide 32: Our Markets | Atlanta
Our Markets | Atlanta (1) Community Map Job Growth Population Growth 1.89% 4.51% 1.24% 0.77% 0.39% 2023 2021 2022 -0.01% 2021 2022 2023 2023 Job Growth: 2023 Population Growth: National Average -0.26% National Average 0.44% Gateway Markets 0.88% Gateway Markets 1.08% 2 Supply Growth 5.09% 3.34% 1.92
Slide 33: Our Markets | Dallas
(1) Our Markets | Dallas Community Map Job Growth Population Growth 5.26% 2.59% 2.91% 1.29% 1.31% 2023 2021 2022 -0.13% 2021 2022 2023 2023 Job Growth: 2023 Population Growth: National Average -0.26% National Average 0.44% Gateway Markets 0.88% Gateway Markets 1.08% 2 Supply Growth 6.37% 3.50% 2.15%
Slide 34: Our Markets | Denver
(1) Our Markets | Denver Community Map Job Growth Population Growth 1.25% 1.15% 2.94% 0.57% 0.23% 2021 2022 2023 2021 2022 2023 -0.59% 2023 Job Growth: 2023 Population Growth: National Average -0.26% National Average 0.44% Gateway Markets 0.88% Gateway Markets 1.08% 2 Supply Growth 6.75% 4.52% 3.67%
Slide 35: Our Markets | Columbus
Our Markets | Columbus(1) Community Map Job Growth Population Growth 1.37% 2.67% 0.84% 0.57% 2021 0.04% 2022 2023 -1.31% 2021 2022 2023 2023 Job Growth: 2023 Population Growth: National Average -0.26% National Average 0.44% Gateway Markets 0.88% Gateway Markets 1.08% 2 Supply Growth 5.77% 3.38% 1.97
Slide 36: Our Markets | Louisville
(1) Our Markets | Louisville Community Map Job Growth Population Growth 0.37% 2.95% 0.33% 2021 0.08% 0.05% 2022 2023 -1.48% 2021 2022 2023 2023 Job Growth: 2023 Population Growth: National Average -0.26% National Average 0.44% Gateway Markets 0.88% Gateway Markets 1.08% 2 Supply Growth 4.90% 3.09% 2
Slide 37: Our Markets | Indianapolis
(1) Our Markets | Indianapolis Community Map Job Growth Population Growth 0.90% 2.11% 0.57% 0.49% 0.46% 0.13% 2021 2022 2023 2021 2022 2023 2023 Job Growth: 2023 Population Growth: National Average -0.26% National Average 0.44% Gateway Markets 0.88% Gateway Markets 1.08% 2 Supply Growth 2.64% 1.70%
Slide 38: Our Markets | Raleigh – Durham
(1) Our Markets | Raleigh – Durham Community Map Job Growth Population Growth 4.57% 2.48% 2.76% 1.40% 1.18% 0.17% 2021 2022 2023 2021 2022 2023 2023 Job Growth: 2023 Population Growth: National Average -0.26% National Average 0.44% Gateway Markets 0.88% Gateway Markets 1.08% 2 Supply Growth 5.76% 5.
Slide 39: Our Markets | Oklahoma City
(1) Our Markets | Oklahoma City Community Map Job Growth Population Growth 3.60% 1.08% 0.80% 2021 2023 0.31% 2022 -0.14% -2.12% 2021 2022 2023 2023 Job Growth: 2023 Population Growth: National Average -0.26% National Average 0.44% Gateway Markets 0.88% Gateway Markets 1.08% 2 Supply Growth 2.70% 1.9
Slide 40: Our Markets | Houston
(1) Our Markets | Houston Community Map Job Growth Population Growth 5.19% 2.54% 1.46% 1.10% 2021 2023 2022 -0.12% 2021 2022 2023 -1.40% 2023 Job Growth: 2023 Population Growth: National Average -0.26% National Average 0.44% Gateway Markets 0.88% Gateway Markets 1.08% 2 Supply Growth 5.18% 2.83% 1.8
Slide 41: Our Markets | Tampa
(1) Our Markets | Tampa Community Map Job Growth Population Growth 1.72% 3.93% 1.03% 2.09% 0.82% 2023 2021 2022 -0.36% 2021 2022 2023 2023 Job Growth: 2023 Population Growth: National Average -0.26% National Average 0.44% Gateway Markets 0.88% Gateway Markets 1.08% 2 Supply Growth 8.20% 3.75% 3.91%
Slide 42: Our Markets | Nashville
(1) Our Markets | Nashville Community Map Job Growth Population Growth 4.58% 1.98% 2.44% 1.15% 0.91% 0.32% 2021 2022 2023 2021 2022 2023 2023 Job Growth: 2023 Population Growth: National Average -0.26% National Average 0.44% Gateway Markets 0.88% Gateway Markets 1.08% 2 Supply Growth 10.28% 7.12% 4.
Slide 43: Our Markets | Memphis
(1) Our Markets | Memphis Community Map Job Growth Population Growth 3.19% 0.17% 0.10% 2021 2023 2021 2022 -0.03% -0.01% 2022 2023 -0.47% 2023 Job Growth: 2023 Population Growth: National Average -0.26% National Average 0.44% Gateway Markets 0.88% Gateway Markets 1.08% 2 Supply Growth 2.62% 1.60% 1.
Slide 44: Our Markets | Huntsville
(1) Our Markets | Huntsville Community Map Job Growth Population Growth 2.75% 2.60% 2.16% 1.58% 1.03% 0.05% 2021 2022 2023 2021 2022 2023 2023 Job Growth: 2023 Population Growth: National Average -0.26% National Average 0.44% Gateway Markets 0.88% Gateway Markets 1.08% 2 Supply Growth 18.11% 7.03% 8
Slide 45: Our Markets | Charlotte
(1) Our Markets | Charlotte Community Map Job Growth Population Growth 5.34% 2.54% 1.21% 1.43% 0.89% 0.65% 2021 2022 2023 2021 2022 2023 2023 Job Growth: 2023 Population Growth: National Average -0.26% National Average 0.44% Gateway Markets 0.88% Gateway Markets 1.08% 2 Supply Growth 9.89% 5.08% 5.9
Slide 46: Our Markets | Orlando
(1) Our Markets | Orlando Community Map Job Growth Population Growth 4.46% 2.16% 1.65% 0.30% 0.67% 2021 2022 2023 -1.27% 2021 2022 2023 2023 Job Growth: 2023 Population Growth: National Average -0.26% National Average 0.44% Gateway Markets 0.88% Gateway Markets 1.08% 2 Supply Growth 9.24% 4.73% 5.19
Slide 47: IRT Resident Demographics at a Glance
(1) IRT Resident Demographics at a Glance Residents make up Residents migrating to our communities: 47% 53% a diverse job pool Gender Top Industries of Residents Include: 18% Residents make are from out-of-state Breakdown up a diverse job 1. Medical Services 2. Professional 3. Services 27% pool of t
Slide 48: End Notes
End Notes Slide 2 (1) For the total portfolio as of December 31, 2022 or for 4Q 2022, as applicable; including portfolio average rental rate growth for the IRT same store portfolio for the twelve months ended December 31, 2022. (2) Communities and units as of December 31, 2022. (3) IRT also has a co
Slide 49: End Notes (continued)
End Notes (continued) Slide 11 (1) New deliveries as a % of existing inventory are from CoStar’s Q4 2022 data release and are specific to IRT’s submarkets. (2) IRT’s average asking rent vs. new construction for one and two-bedroom apartments. Slide 13 (1) All resident demographic data is self-report
Slide 50: 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 51: Definitions and Non-GAAP Financial Measure Reconciliations
Definitions and Non-GAAP Financial Measure Reconciliations Interest Coverage is a ratio computed by dividing Adjusted EBITDA by interest expense Net Debt, a non-GAAP financial measure, equals total debt less cash and cash equivalents. The following table provides a reconciliation of total debt to ne
Slide 52: Definitions and Non-GAAP Financial Measure Reconciliations
Definitions and Non-GAAP Financial Measure Reconciliations Independence Realty Trust Inc. Reconciliation of Same-Store Net Operating Income to Net Income (loss) (Dollars in thousands) For the Three-Months Ended (a) December 31, September 30, June 30, March 31, December 31, 2022 2022 2022 2022 2021 R
Slide 53: Forward-Looking Statement
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 our
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