Independence Realty Trust, Inc. · NYSE:IRT
Independence Realty Trust — Investor Presentation (September 2022)
51 slides from Independence Realty Trust's investor presentation, Sep 12, 2022
Slide 1: Investor Presentation September 2022
Cyan Mallard Creek, Charlotte, NC INVESTOR PRESENTATION September 2022
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 – 11 Our Strategic Investment Opportunities 12 – 19 Capitalization and Leverage 20 – 22 Our Path to Long-Term Growth 23 Appendix Track Record of Value Creation 25 Market St
Slide 3: IRT Overview
2 IRT Overview OWN AND OPERATE Sunbelt Exposure 69% of NOI 120 Communities (2) 35,594 Units (2) 12.6% Same Store Blended Lease Over Lease Rent Growth YTD PORTFOLIO SUMMARY (1) 1H22 COMBINED SAME STORE HIGHLIGHTS • NOI growth: 15.3% (5) • Avg effective rent: +11.2% Y-o-Y(6) • Avg occupancy: 95.4% (6)
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 Reserve at Creekside Chattanooga, TN
Slide 6: Strong Performance Across Key Operating Metrics
5 14.5% 17.2% 16.2% 15.4% 16.5% 26.7% 24.2% 19.2% 21.1% 20.4% 6.3% 10.3% 13.3% 11.9% 14.7% Q3 21 Q4 21 Q1 22 Q2 22 3Q22 to date Blended New Renewal 11.5% 13.2% 12.0% 12.0% 13.4% 19.1% 16.8% 14.8% 16.3% 17.3% 6.1% 10.0% 9.5% 9.1% 11.6% 0% 5% 10% 15% 20% 25% 30% Q3 21 Q4 21 Q1 22 Q2 22 3Q22 to date Bl
Slide 7: 2022 Full Year EPS and CFFO Guidance
6 2022 Full Year EPS and CFFO Guidance (1)(2) Low High Earnings per share $0.48 $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 $1.06 $1.08 CORE FFO ($s in millions) Same Store Communities 2022 Outlook (5) Number
Slide 8: Our Competitive Advantage
7 Our Competitive Advantage PeakView by Horseshoe Lake Loveland, CO
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 Sources: IRT filings as of 6/30/2022, CoStar, Kinder Institute. Note: IRT excludes three development assets. Sunbelt markets defined as AL, FL, GA, NC, OK, SC, TN and TX. Geographic Distribution Combined co
Slide 10: IRT's Markets Have Strong Fundamentals
9 IRT's Markets Have Strong Fundamentals IRT’s markets outperform the national average and gateway markets in two key demand drivers of multifamily asset performance: population and employment growth Outsized Population Growth Employment Change vs. 2019 National Average 20’ vs. 19’ 21’ vs. 19’ 22’E
Slide 11: Well-Positioned in Affordable, Highly Defensive Middle Market Communities
10 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 12: Attractive Portfolio Has Led to a Stable Cash Flow Profile
11 Attractive Portfolio Has Led to a Stable Cash Flow Profile Source: Costar Q2 2022 Data Release All notations throughout this presentation appear as “End Notes” on pages 45 -46. Annual Change in Effective Rent (IRT Markets vs. the National Average, Gateway Markets and Selected Asset Class Segments
Slide 13: Our Strategic Investment Opportunities
12 Our Strategic Investment Opportunities The Views of Music City Nashville, TN
Slide 14: Driving Accretive Growth with Multiple Investment Levers
13 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 15: Improved Long-Term Growth Profile through Value Add Program
14 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 21.7%
Slide 16: Continue to Invest in Our Long-Standing Value Add Program
15 Continue to Invest in Our Long-Standing Value Add Program—— Year to date 2022, value add renovations have generated a 33.5% ROI Units to Be Renovated* Total Units 1Q22 143 2Q22 3Q22e 4Q22e FY22E FY22e 195 525 675 1,538 Pipeline of ~20,000 value add units which includes ~12,000 former STAR units *
Slide 17: Joint Venture Development Program
16 Engaging in Attractive Investment Opportunities with Our Joint Venture Development Program Focused on joint ventures in new multifamily development in core non-gateway markets • Two-phase horizontal multifamily development with 400 purpose-built rentals, all within one community • Phase 1 consist
Slide 18: Accelerating Our Efforts in Technology
17 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 19: Focusing on Our ESG Initiatives
18 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 20: Examples of IRT's ESG Initiatives
19 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 21,000 trees through our partner, One Tree
Slide 21: Capitalization and Leverage
20 Capitalization and Leverage Millenia 700 Orlando, FL
Slide 22: Maintain a Simple Capital Structure
21 65.0% 35.0% Maintain a Simple Capital Structure $7.3bn 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 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 combined company’s leverage profile 7.4x 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 24: Compelling Investment Opportunity With a Path to Long-Term Growth
23 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 25: Appendix & Definitions
Appendix & Definitions Canyon Resort at Great Hills, Austin, TX
Slide 26: Track Record of Value Creation
25 -10% 10% 31% 94% -12% 13% 47% 170% -11% 42% 75% 177% -3% 57% 141% 312% -50% 0% 50% 100% 150% 200% 250% 300% 350% RMS Multifamily Index S&P 500 IRT Source: S&P Global, FactSet. Market data as of August 31, 2022. Note: Represents compound total return, with dividends reinvested. Track Record of Val
Slide 27: Assets Demonstrate Attractive Apartment Industry Dynamics
26 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 5.0% and Class A at 7.5% o The majorit
Slide 28: Merger of IRT and Steadfast Apartment REIT
27 A Compelling Transaction: Merger of IRT and Steadfast Apartment REIT Synergies and Strengthened Operating Platform Improved Long-Term Growth Profile Through Value Add Program Complementary Portfolios with Benefits of Size and Scale Expanded Presence Across High Growth U.S. Sunbelt Region Creation
Slide 29: IRT Value Add Summary
28 IRT Value Add Summary Project Life to Date as of June 30, 2022 Renovation Costs per Unit (2) Property Market Percentage Complete 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 T
Slide 30: Our Markets | Atlanta
29 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.05% Gateway Markets 5.40% 2022 Population Growth: National Average 0.29% Gateway Markets 0.95% • Communities located within 5 min. of major highways • Communities located in top school d
Slide 31: Our Markets | Charlotte
30 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.05% Gateway Markets 5.40% 2022 Population Growth: National Average 0.29% Gateway Markets 0.95% -2.25% 0.89% 4.00% • 16th largest city in the U.S. by population 4 • Long-term demand funda
Slide 32: Our Markets | Columbus
31 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.05% Gateway Markets 5.40% 2022 Population Growth: National Average 0.29% Gateway Markets 0.95% • 14th largest city in the U.S. by population 4 • Strong accessibility to major highway I-2
Slide 33: Our Markets | Dallas
32 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.05% Gateway Markets 5.40% 2022 Population Growth: National Average 0.29% Gateway Markets 0.95% • 9th largest city in the U.S. by population 4 • The Dallas MSA has had the largest populat
Slide 34: Our Markets | Denver
33 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.05% Gateway Markets 5.40% 2022 Population Growth: National Average 0.29% Gateway Markets 0.95% • Population growth in the metro area is expected to exceed 5.5% over the next five years4
Slide 35: Our Markets | Houston
34 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.05% Gateway Markets 5.40% 2022 Population Growth: National Average 0.29% Gateway Markets 0.95% • Job growth is expected to be 2.7% annually through 2025, compared to 1.7% nationally. 4 •
Slide 36: Our Markets | Huntsville
35 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.05% Gateway Markets 5.40% 2022 Population Growth: National Average 0.29% Gateway Markets 0.95% • Metro area ranked 1st in 2020 projected rent growth of the top 100 metros by population 1
Slide 37: Our Markets | Indianapolis
36 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.05% Gateway Markets 5.40% 2022 Population Growth: National Average 0.29% Gateway Markets 0.95% • 15th largest city in the U.S. by population • Communities located in top school districts
Slide 38: Our Markets | Louisville
37 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.05% Gateway Markets 5.40% 2022 Population Growth: National Average 0.29% Gateway Markets 0.95% -4.37% -1.48% 2.28% • Located within 5 min. of major highways • Benefiting from the proximi
Slide 39: Our Markets | Memphis
38 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.05% Gateway Markets 5.40% 2022 Population Growth: National Average 0.29% Gateway Markets 0.95% -2.95% -0.47% 3.00% • Memphis has all the amenities of a large city with a cost of living m
Slide 40: Our Markets | Nashville
39 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.05% Gateway Markets 5.40% 2022 Population Growth: National Average 0.29% Gateway Markets 0.95% • Metro area job growth expected to outpace the national rate through 2025 4 • Oracle plans
Slide 41: Our Markets | Oklahoma City
40 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.05% Gateway Markets 5.40% 2022 Population Growth: National Average 0.29% Gateway Markets 0.95% • The metro’s population grew 0.5% this year, which was above the 0.2% national average 4 •
Slide 42: Our Markets | Orlando
41 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.05% Gateway Markets 5.40% 2022 Population Growth: National Average 0.29% Gateway Markets 0.95% -9.40% -1.27% 5.36% • Established tourism hub • Centrally located in FL, easily accessible
Slide 43: Our Markets | Raleigh – Durham
42 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.05% Gateway Markets 5.40% 2022 Population Growth: National Average 0.29% Gateway Markets 0.95% -1.85% 2.76% 3.44% • Communities located within 5 min. of major throughways • Easy access t
Slide 44: Our Markets | Tampa
43 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.05% Gateway Markets 5.40% 2022 Population Growth: National Average 0.29% Gateway Markets 0.95% • $3 billion Water Street mixed-use investment backed by Jeff Vinik and Bill Gates is under
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. 47% 53% Gender Breakdown 75% 25% Marital Status 33 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 June 30, 2022 or for 2Q 2022, as applicable. (2) Communities and units as of June 30, 2022. (3) IRT also has a corporate office in Irvine, CA. (4) As of market close on June 30, 2022. (5) Represents year-over-year change, comparing six months en
Slide 47: End Notes (continued)
46 End Notes (continued) Slide 11 (1) Gateway markets represent an arithmetic mean of New York, Washington DC, San Francisco, and Los Angeles. (2) Proforma IRT weighted averages are based on the 120 properties / 35,594 units owned by IRT as of June 30, 2022 and excludes two development assets. Slide
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 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Reconciliation of same-store net operating income to net income (loss) Same-store net operating income 90,735$ 89,169$ 87,014$ 84,806$ 79,315$ Non same-store
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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