Independence Realty Trust, Inc. · NYSE:IRT
Independence Realty Trust — Investor Presentation (November 2023)
45 slides from Independence Realty Trust's investor presentation, Nov 13, 2023
Slide 1: Investor Presentation November 2023
INVESTOR PRESENTATION November 2023 Destination at Arista Broomfield, CO
Slide 2: Table of Contents
1 Table of Contents Overview 2 Recent Operating Metrics 3 Driving Earnings Accretion and Deleveraging 4 – 10 Well-Positioned Portfolio 11 – 14 ESG Initiatives 15 Path to Long-Term Growth 16 Appendix Our Performance 18 – 19 2023 Guidance 20 Market Statistics 21 Value Add Summary 22 Market Profiles 23
Slide 3: IRT Overview
2 IRT Overview OWN AND OPERATE Sunbelt Exposure 72% of NOI 120 Communities 35,427 Units 4.4% 3Q23 Portfolio Average Rental Rate Growth PORTFOLIO SUMMARY (1) SAME STORE HIGHLIGHTS Q3 2023 (2) • Revenue growth: +5.4% Y-o-Y • Avg occupancy: +40bps to 94.6% • NOI growth: 4.8% Y-o-Y UPSIDE FROM VALUE ADD
Slide 4: Strong Performance Across Key Operating Metrics
3 Strong Performance Across Key Operating Metrics Same Store Excluding Value Add Note: As of October 28, 2023, same-store portfolio occupancy was 94.6%, same-store portfolio excluding ongoing value add occupancy was 95.0%, and value add occupancy was 93.1%. All notations throughout this presentation
Slide 5: Focused on Driving Earnings Accretion and Deleveraging
4 Continue value add renovations at ~2,500 annually Focused on Driving Earnings Accretion and Deleveraging 1 Complete existing ground up developments 2 Optimize portfolio by exiting lower growth, single asset markets 3 Use proceeds from asset sales to delever the balance sheet 4 Drive on-site effici
Slide 6: Value Add Program: Improving Our Growth Profile
5 In-Place Program Identified 2024 Starts Future Pipeline Total Units to Renovate 11,382 474 12,727 24,583 Units Renovated-to-Date (7,285) - - (7,285) Remaining Units to Renovate 4,097 474 12,727 17,298 Remaining Renovation Costs (3) $59 - $64 $7 - $7 $185 - $197 $251 - $268 Incremental NOI (4) $11-
Slide 7: Real Estate Under Development: Expected to Generate Strong NOI
6 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 38% Occupied(1) Oct 2023 Flatirons Apartment Denver, CO Costs NOI In Place NOI – Q3 2023 $0 / In lease-up # of Unit
Slide 8: Portfolio Optimization: Reducing Our Presence in Non-Core Markets
7 Portfolio Optimization: Reducing Our Presence in Non-Core Markets • Target sales of 10 properties (~2,750 units) in 7 markets; 9 acquired as part of the STAR merger • Asset sales to generate gross sales proceeds of ~$521 to $533 million • Weighted average economic cap rate of approximately 5.9% •
Slide 9: Deleveraging: Where We Are and Where We Are Going
8 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 p
Slide 10: Maintain a Simple Capital Structure
9 $3 $68 $218 $597 $27 $1,763 $3 $24 $164 $427 $27 $1,510 2023 2024 2025 2026 2027 Thereafter Actual Debt Proforma Debt 54.4% 45.6% Maintain a Simple Capital Structure $6.0bn Common Equity Debt • Simple capital structure consisting of secured and unsecured debt • Maintain conservative financial and
Slide 11: Continuing Our Efforts in Technology
10 Continuing Our Efforts in Technology Significant Accomplishments Last 12-18 Months Modern Property Management System & CRM ‘Single Domain’ Website Strategy Value Add ERP Platform 24 Hour Leasing Call Center Digital Property Management Workflow Solutions Centralized Resident Account Services Team
Slide 12: Our Portfolio is Focused On the High Growth Sunbelt & Midwest Regions
11 TOP 10 MARKETS Our Portfolio is Focused On the High Growth Sunbelt & Midwest Regions PORTFOLIO SUMMARY IRT owns 120 communities and has 2 communities under development across resilient, high growth markets Geographic Distribution Operating Communities • Strong presence in high growth metros inclu
Slide 13: Rent vs. Buy Differential Will Support Rental Demand in 2024
12 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 Atlanta - GA Columbus - OH Dallas-Fort Worth - TX Denver - CO Houston - TX Indianapolis - IN Memphis - TN Nashville - TN Oklahoma City - OK Tampa - FL IRT Top 10 Markets WAV IRT In-Place Monthly Rent Homeownership Cost Rent vs. Buy D
Slide 14: IRT's Resident Demographic Trends Are Favorable
13 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) Market Resident Average Age(1) 1 Atlanta, GA 37 2 Dallas, TX 38 3 Denver, CO 36 4 Columbus, OH 37 5 Ra
Slide 15: Defensive Middle Market Communities, Positioned to Perform
14 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 16: Focusing on Our ESG Initiatives
15 Focusing on Our ESG Initiatives Find out more on the Sustainability page of IRT’s Investor Relations website at http://investors.irtliving.com. Diversity, Equity and Inclusion Committee formed to ensure a culture of understanding and respect as representation across gender, race, age and sexual o
Slide 17: Compelling Investment Opportunity With a Path to Long-Term Growth
16 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 Los Robles San Antonio, TX Eleven10 at Farmers Market Dallas, TX The Residences on McGinnis Ferry Suwanee, GA Investin
Slide 18: Appendix & Definitions
Appendix & Definitions Talison Row at Daniel Island Charleston, SC
Slide 19: IRT is Delivering Industry Leading Operating Performance
18 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 Industr
Slide 20: Track Record of Value Creation
19 Source: S&P Global, FactSet. Market data as of November 3, 2023. Note: Represents compound total return, with dividends reinvested. Track Record of Value Creation IRT has a proven track record of outperforming its peers 1-Year 3-Year 5-Year Since IPO (1) 3% 17% 21% 78% -2% 15% 26% 128% -13% 16% 7
Slide 21: 2023 Guidance
20 Low High Earnings per share $(0.07) $(0.02) Adjustments: Depreciation and amortization 0.94 0.94 (Gains on sale) loss on impairment of real estate assets (3) 0.32 0.28 Loan (premium accretion) discount amortization, net (0.05) (0.05) CORE FFO per share $1.14 $1.15 CORE FFO ($s in millions) Same S
Slide 22: Assets Demonstrate Attractive Apartment Industry Dynamics
21 Assets Demonstrate Attractive Apartment Industry Dynamics Low Homeownership More Insulated from New Supply ◼ The national Class B vacancy rate remains resilient to supply and demand shocks with 2023 projected spreads in vacancy rates between Class A & B, with Class B at 7.0% and Class A at 10.2%
Slide 23: IRT Value Add Summary
22 IRT Value Add Summary Project Life to Date as of September 30, 2023 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 Memphis
Slide 24: Our Markets | Atlanta
23 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators Communities located within 5 min. of major highways Communities located in top school distric
Slide 25: Our Markets | Dallas
24 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators 9th largest city in the U.S. by population 4 The Dallas MSA has had the largest population gr
Slide 26: Our Markets | Denver
25 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators -0.02% 2.99% 0.22% Population growth in the metro area is expected to exceed 5.5% over the ne
Slide 27: Our Markets | Columbus
26 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators 14th largest city in the U.S. by population4 Strong accessibility to major highway I-270 Near
Slide 28: Our Markets | Louisville
27 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators -0.09% 0.04% 0.32% -1.21% 2.45% 0.76% Located within 5 min. of major highways Benefiting from
Slide 29: Our Markets | Indianapolis
28 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators 15th largest city in the U.S. by population Communities located in top school districts Exper
Slide 30: Our Markets | Raleigh–Durham
29 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators Communities located within 5 min. of major throughways Easy access to local retail centers Co
Slide 31: Our Markets | Oklahoma City
30 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators -1.62% 3.61% 1.01% The metro’s population grew 0.5% this year, which was above the 0.2% natio
Slide 32: Our Markets | Houston
31 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators -1.01% 5.05% 1.54% Job growth is expected to be 2.7% annually through 2025, compared to 1.7%
Slide 33: Our Markets | Tampa
32 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators $3 billion Water Street mixed-use investment backed by Jeff Vinik and Bill Gates is underway
Slide 34: Our Markets | Nashville
33 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators Metro area job growth expected to outpace the national rate through 20254 Oracle plans to exp
Slide 35: Our Markets | Memphis
34 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators -0.24% -0.36% 0.18% -1.15% 2.93% -0.18% Memphis has all the amenities of a large city with a
Slide 36: Our Markets | Huntsville
35 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators Metro area ranked 1st in 2020 projected rent growth of the top 100 metros by population1 Majo
Slide 37: Our Markets | Charlotte
36 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators 16th largest city in the U.S. by population4 Long-term demand fundamentals are favorable with
Slide 38: Our Markets | Orlando
37 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators -0.02% 6.01% 2.22% Established tourism hub Centrally located in FL, easily accessible to driv
Slide 39: IRT Resident Demographics at a Glance
38 IRT Resident Demographics at a Glance(1) All notations throughout this presentation appear as “End Notes” on pages 39-40. 47% 53% Gender Breakdown 79% 21% Marital Status Average Resident Age: 37 Residents make up a diverse job pool Top Industries of Residents: 1. Medical Services 2. Services 3. P
Slide 40: End Notes
39 Slide 2 (1) For the total portfolio as of 3Q 2023, as applicable; including portfolio average rental rate growth for the IRT same store portfolio for the three months ended September 30, 2023. (2) Highlights are for the IRT same store portfolio for the three months ended September 30, 2023 vs. th
Slide 41: End Notes (continued)
40 End Notes (continued) Slide 13 (1) All resident demographic data is self-reported by residents. Average age, average income, and rent-to-income ratio are for residents that have moved in during the three months ending September 30, 2023. Employment sector data is for all residents as of September
Slide 42: Definitions and Non-GAAP Financial Measure Reconciliations
41 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 43: Net Operating Income
42 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 44: Reconciliation of Same-Store Net Operating Income to Net Income
43 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) September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 20
Slide 45: Forward-Looking Statement
44 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,
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