Independence Realty Trust, Inc. · NYSE:IRT
Independence Realty Trust — Investor Presentation (May 2022)
52 slides from Independence Realty Trust's investor presentation, May 11, 2022
Slide 1: Investor Presentation May 2022
Bridge Pointe Huntsville, AL INVESTOR PRESENTATION May 2022
Slide 2: Table of Contents
1 Table of Contents Overview 2 Recent Developments 3 – 7 Our Competitive Advantage 8 – 14 Our Strategic Investment Opportunities 15 – 21 Our Path Forward 22 – 25 Appendix Track Record of Value Creation 27 Market Statistics 28 Value Add Summary 29 Market Profiles 30 – 44 Demographic Profile 45 End No
Slide 3: IRT Overview
2 IRT Overview OWN AND OPERATE Sunbelt Exposure 70% of NOI 119 Communities 35,498 Units 95.4% Combined Same Store Average Occupancy PORTFOLIO SUMMARY (1) 1Q22 COMBINED SAME STORE HIGHLIGHTS • NOI growth: 16.2% (4) • Avg effective rent $1,373, +10.4% Y-o-Y(5) • Average occupancy: 95.4% (5) UPSIDE FRO
Slide 4: Highlighting IRT's Recent Developments
3 Highlighting IRT’s Recent Developments Brunswick Point Wilmington, NC
Slide 5: IRT and Steadfast Apartment REIT Merger Integration Complete
4 IRT and Steadfast Apartment REIT (STAR) Merger Integration Complete On December 16, 2021, IRT and STAR merged to form a combined company with an equity market capitalization of approximately $5.6 billion and a total enterprise value of approximately $8.1 billion(1) Creation of a best-in-class plat
Slide 6: Strong Performance Across Key Operating Metrics
5 Strong Performance Across Key Operating Metrics 11.6% 20.6% 18.5% 15.7% 16.0% 4.0% 6.1% 10.1% 10.2% 9.6% 8.2% 12.1% 14.0% 12.8% 11.7% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 2Q21 3Q21 4Q21 1Q22 2Q22 to date Blended Lease-Over-Lease Rental Rate Changes (1) New lease Renewal lease Blended 95.5% 9
Slide 7: IRT is Delivering Industry Leading Operating Performance
6 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 8: 2022 Full Year EPS and CFFO Guidance
7 2022 Full Year EPS and CFFO Guidance (1)(2) Low High Earnings per share $0.50 $0.52 Adjustments: Depreciation and amortization (3) 1.12 1.12 Gain on sale of real estate assets (4) (0.58) (0.58) CORE FFO per share $1.04 $1.06 CORE FFO ($s in millions) Same Store Communities 2022 Outlook (5) Number
Slide 9: Merger with Steadfast Strengthens Our Competitive Advantage
8 Merger with Steadfast Strengthens Our Competitive Advantage VV&M Dallas, TX
Slide 10: A Compelling Transaction – Joining Together Two High-Quality Portfolios
9 A Compelling Transaction – Joining Together Two High-Quality Portfolios 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 Creati
Slide 11: Meaningful and Identifiable Synergies to Drive Growth
10 Meaningful and Identifiable Synergies to Drive Growth Portfolio Overlap Creates Operating Synergies Immediate Core FFO/Share Accretion with Additional Earnings Enhancement Potential • Significant portfolio overlap and economies of scale expected to generate at least $8 million of annual operating
Slide 12: Top Markets: Expanded Presence Across High Growth U.S. Sunbelt Region
11 Top 10 Markets Expanded Presence Across High Growth U.S. Sunbelt Region PORTFOLIO SUMMARY Sources: IRT and STAR filings as of 3/31/2022, CoStar, Kinder Institute. Note: STAR excludes three development assets. Sunbelt markets defined as AL, FL, GA, NC, OK, SC, TN and TX. Geographic Distribution Co
Slide 13: Increased Presence in Markets with Strong Fundamentals
12 Increased Presence in Markets with Strong Fundamentals Combined company’s markets outperform the national average and gateway markets in two key fundamentals for multifamily asset performance, population and employment growth Outsized Population Growth Employment Change vs. 2019 National Average
Slide 14: Well-Positioned in Affordable, Highly Defensive Middle Market Communities
13 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 15: Stable Cash Flow Profile
14 Stable Cash Flow Profile Source: Costar Q1 2022 Data Release All notations throughout this presentation appear as “End Notes” on pages 46-47. Annual Change in Effective Rent (IRT Markets vs. the National Average, Gateway Markets and Selected Asset Class Segments) Supply and Demand fundamentals in
Slide 16: Our Strategic Investment Opportunities
15 Our Strategic Investment Opportunities Cottage Trails Chesapeake, VA
Slide 17: Driving Accretive Growth with Multiple Investment Levers
16 Driving Accretive Growth with Multiple Investment Levers Value Add Renovations Acquisitions / Capital Recycling Preferred Equity Investments and Joint Ventures Renovate existing properties/units where there is the potential for outsized rent growth Expand presence in markets where we see attracti
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 markets • Two-phase horizontal multifamily development with 400 purpose-built rentals, all within one community • Investment is e
Slide 19: Case Study: Virtuoso Living
18 Case Study: Virtuoso Living Virtuoso Living is IRT’s investment in horizontal multifamily purpose-built rentals in the growing Huntsville market • Two-phase development with 400 purpose-built rentals all within one community • Total expected capitalization is $127m; $86m of debt and $41m of equit
Slide 20: Improved Long-Term Growth Profile through Value Add Program
19 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 19.4%
Slide 21: Accelerating Our Efforts in Technology
20 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 22: Focusing on Our ESG Initiatives
21 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 In
Slide 23: Our Path Forward: Capitalization and Leverage
22 Our Path Forward Capitalization and Leverage The Landings at Brentwood Innsbrook, TN
Slide 24: Maintain a Simple Capital Structure
23 70.4% 29.6% Maintain a Simple Capital Structure $8.6bn 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 non-core ass
Slide 25: Leverage: Where We Are and Where We Are Going
24 Leverage: Where We Are and Where We Are Going We are focused on continuing to improve the combined company’s leverage profile 7.7x Low-7’s Mid-6’s Deleveraging Post-Merger, through a combination of Our July forward equity raise of $272 million on 16.1 million shares Disposition of 9 propertie
Slide 26: Compelling Investment Opportunity With a Path to Long-Term Growth
25 Compelling Investment Opportunity With a Path to Long-Term Growth The Residences on McGinnis Ferry Suwanee, GA Leading Multifamily REIT with Benefits of Increased Size and Scale, Focused on the High-Growth U.S. Sunbelt Region Substantial Post-Merger Synergies and Strengthened Operating Platform t
Slide 27: Appendix & Definitions
Appendix & Definitions Canyon Resort at Great Hills, Austin, TX
Slide 28: Track Record of Value Creation
27 26% 37% 58% 125% 36% 51% 86% 199% 16% 68% 110% 217% 78% 177% 269% 455% 0% 50% 100% 150% 200% 250% 300% 350% 400% 450% 500% RMS Multifamily Index S&P 500 IRT Source: S&P Global, FactSet. Market data as of March 31, 2022. Note: Represents compound total return, with dividends reinvested. Track Reco
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 2022 projected spreads in vacancy rates between Class A & B, with Class B at 4.7% and Class A at 7.0% o The majorit
Slide 30: IRT Value Add Summary
29 IRT Value Add Summary Project Life to Date as of March 31, 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
Slide 31: Our Markets | Atlanta
30 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.18% Gateway Markets 5.78% 2022 Population Growth: National Average 0.29% Gateway Markets 0.27% • Communities located within 5 min. of major highways • Communities located in top school d
Slide 32: Our Markets | Charlotte
31 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.18% Gateway Markets 5.78% 2022 Population Growth: National Average 0.29% Gateway Markets 0.27% -2.25% 0.89% 3.03% • 16th largest city in the U.S. by population 4 • Long-term demand funda
Slide 33: Our Markets | Columbus
32 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.18% Gateway Markets 5.78% 2022 Population Growth: National Average 0.29% Gateway Markets 0.27% -4.05% -1.31% 3.45% • 14th largest city in the U.S. by population 4 • Strong accessibility
Slide 34: Our Markets | Dallas-Fort Worth
33 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.18% Gateway Markets 5.78% 2022 Population Growth: National Average 0.29% Gateway Markets 0.27% -3.26% 2.91% 2.30% • 9th largest city in the U.S. by population 4 • The Dallas MSA has had
Slide 35: Our Markets | Denver
34 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.18% Gateway Markets 5.78% 2022 Population Growth: National Average 0.29% Gateway Markets 0.27% -5.52% -0.59% 2.92% • Population growth in the metro area is expected to exceed 5.5% over t
Slide 36: Our Markets | Houston
35 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.18% Gateway Markets 5.78% 2022 Population Growth: National Average 0.29% Gateway Markets 0.27% -5.91% -1.40% 4.19% • Job growth is expected to be 2.7% annually through 2025, compared to
Slide 37: Our Markets | Huntsville
36 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.18% Gateway Markets 5.78% 2022 Population Growth: National Average 0.29% Gateway Markets 0.27% -0.53% 2.16% 2.08% • Metro area ranked 1st in 2020 projected rent growth of the top 100 met
Slide 38: Our Markets | Indianapolis
37 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.18% Gateway Markets 5.78% 2022 Population Growth: National Average 0.29% Gateway Markets 0.27% -3.49% 0.46% 2.12% • 15th largest city in the U.S. by population • Communities located in t
Slide 39: Our Markets | Louisville
38 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.18% Gateway Markets 5.78% 2022 Population Growth: National Average 0.29% Gateway Markets 0.27% -4.37% -1.48% 2.93% • Located within 5 min. of major highways • Benefiting from the proximi
Slide 40: Our Markets | Memphis
39 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.18% Gateway Markets 5.78% 2022 Population Growth: National Average 0.29% Gateway Markets 0.27% -2.95% -0.47% 2.73% • Memphis has all the amenities of a large city with a cost of living m
Slide 41: Our Markets | Nashville
40 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.18% Gateway Markets 5.78% 2022 Population Growth: National Average 0.29% Gateway Markets 0.27% -2.77% 2.44% 2.97% • Metro area job growth expected to outpace the national rate through 20
Slide 42: Our Markets | Oklahoma City
41 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.18% Gateway Markets 5.78% 2022 Population Growth: National Average 0.29% Gateway Markets 0.27% -4.53% -2.12% 3.35% • The metro’s population grew 0.5% this year, which was above the 0.2%
Slide 43: Our Markets | Orlando
42 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.18% Gateway Markets 5.78% 2022 Population Growth: National Average 0.29% Gateway Markets 0.27% -9.41% -1.28% 6.07% • Established tourism hub • Centrally located in FL, easily accessible
Slide 44: Our Markets | Raleigh – Durham
43 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.18% Gateway Markets 5.78% 2022 Population Growth: National Average 0.29% Gateway Markets 0.27% -1.85% 2.76% 2.73% • Communities located within 5 min. of major throughways • Easy access t
Slide 45: Our Markets | Tampa
44 Community Map Differentiators Job Growth Population Growth Supply Growth 2 2022 Job Growth: National Average 3.18% Gateway Markets 5.78% 2022 Population Growth: National Average 0.29% Gateway Markets 0.27% -3.00% 2.09% 1.64% • $3 billion Water Street mixed-use investment backed by Jeff Vinik and
Slide 46: IRT Resident Demographics at a Glance
45 IRT Resident Demographics at a Glance (1) All notations throughout this presentation appear as “End Notes” on pages 46-47. 47% 53% Gender Breakdown 76% 24% Marital Status 32 Average Income of residents between 41% $71k Average Rent to Income 18-29 years old Average Age with Young, growing residen
Slide 47: End Notes
46 End Notes Slide 2 (1) For the total portfolio as of March 31, 2022 or for 1Q 2022, as applicable. (2) IRT also has a corporate office in Irvine, CA. (3) As of market close on March 31, 2022. (4) Represents year-over-year change, comparing first quarter 2022 IRT same store results to first quarter
Slide 48: End Notes (continued)
47 End Notes (continued) Slide 12 (1) Gateway markets represent an arithmetic mean of New York, Washington DC, San Francisco, and Los Angeles. (2) Proforma IRT weighted averages are based on the 119 properties/ 35,498 units owned by IRT as of March 31, 2022 and excludes two development assets. Slide
Slide 49: Definitions and Non-GAAP Financial Measure Reconciliations
48 Definitions and Non-GAAP Financial Measure Reconciliations This presentation may contain non-U.S. generally accepted accounting principals (“GAAP”) financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is included in this
Slide 50: Definitions and Non-GAAP Financial Measure Reconciliations
49 Definitions and Non-GAAP Financial Measure Reconciliations Net Operating Income We believe that Net Operating Income (“NOI”), a non-GAAP financial measure, is a useful supplemental measure of its operating performance. We define NOI as total property revenues less total property operating expense
Slide 51: Definitions and Non-GAAP Financial Measure Reconciliations
50 Definitions and Non-GAAP Financial Measure Reconciliations March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 Reconciliation of same-store net operating income to net income (loss) Same-store net operating income 89,169$ 87,014$ 84,806$ 79,315$ 76,747$ Non same-store
Slide 52: Forward-Looking Statement
51 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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