Independence Realty Trust, Inc. · NYSE:IRT
Independence Realty Trust — Investor Presentation (June 2017)
30 slides from Independence Realty Trust's investor presentation, Jun 5, 2017
Slide 1: Investor Presentation June 2017
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Slide 2: Forward-looking statements
This presentation may contain 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 use of forward-looking
Slide 3: Company Introduction
Internally-managed real estate investment trust that seeks to own well-located apartment properties in geographic submarkets that it believes support strong occupancy and the potential for growth in rental rates 7.5% dividend yield (1) Listed on the NYSE MKT in August 2013 – “IRT” Added to MSCI US R
Slide 4: Corporate History
Corporate History 2013 2014 2015 Aug 2013 IRT IPOs on NYSE MKT, raising $34mm of proceeds Proceeds used to redeem Series A preferred stock and Series B preferred OP units and to fund property acquisitions Full Year IRT raised $67mm, $77mm and $58mm of proceeds in three follow-on offerings throughout
Slide 5: Investment Highlights
Recently Internalized with Bolstered Balance Sheet Focused Investment Strategy with Attractive Total Return Opportunity Strong Expected 2017 Operating Growth Investment Highlights Highly Attractive Industry and Market Fundamentals
Slide 6: Focused Investment Strategy with Attractive Total Return Opportunity
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Slide 7: Affordable B/B+ Grade Positioning Highly Defensive
Affordable B/B+ Grade Positioning Highly Defensive A B C Homeownership rates declining Higher income tenants move down in a recession Renters move down to Class B as aggressive rent increases outstrip income growth Capture households moving down in a recession Capture seniors who sell homes to fund
Slide 8: Multifamily Supply vs. Demand
Multifamily Supply vs. Demand IRT’s effective rents, on average, are $277 below the average new construction asking rents across our markets. Source: Company filings and CoStar.
Slide 9: Disciplined Approach to Acquisitions
Sourcing Disciplined Approach to Acquisitions 2 Assets 3 Acquire properties that have significant prospects for increased occupancy and rental revenue growth Mid-rise/garden style (150–500 units) with good amenities Acquire at less than replacement cost in the $15-50 million price range with a 5-15
Slide 10: Economies of Scale in Targeted Markets
Economies of Scale in Targeted Markets Runaway Bay Indianapolis, IN Oxmoor Apartment Homes Louisville, KY Bayview Club Indianapolis, IN Meadows Apartment Homes Louisville, KY Stonebridge at the Ranch Little Rock, AK Pointe at Canyon Ridge Sandy Springs, GA Waterstone Big Creek Alpharetta, GA Miller
Slide 11: Track Record of Recycling Capital to Achieve Strategic Objectives
Track Record of Recycling Capital to Achieve Strategic Objectives Successfully harvested value through recent dispositions Identified opportunities for repositioning or updating through capital expenditures Attracted and retained residents and executed rent increases Asset Location Acquired Sold Ren
Slide 12: Value Add Case Study #1: Atlanta, GA
Before After Built/Renovated 1986/2007 Total Units 494 Renovation Description: Full interior unit renovation of 324 units; other exterior upgrades Amenity Upgrade Total Renovation Costs: $2.2 mm Value Add Case Study #1: Atlanta, GA Property Overview Unit Upgrade Description Kitchen Upgrades Bathroom
Slide 13: Value Add Case Study #2: Memphis, TN
Built 1990 Total Units 191 Renovation Description Partial unit upgrade Total Renovation Cost $750,000 Value Add Case Study #2: Memphis, TN Property Overview Unit Upgrade Description Kitchen Upgrades Flooring Vinyl faux wood plank flooring first floor only Cabinets Repaint cabinet boxes and doors. Ne
Slide 14: Value Add Case Study #3: Minor upgrades that generate significant ROI
Location Louisville, KY Built/Renovated 1990 Total Units 138 Renovation Description: Flooring Upgrade Total Renovation Costs: $950,000 Value Add Case Study #3: Minor upgrades that generate significant ROI Property Overview Unit Upgrade Description Flooring Replace carpet with vinyl faux wood plank f
Slide 15: Highly Attractive Industry and Market Fundamentals
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Slide 16: Attractive Apartment Industry Dynamics Support Strong Demand
Attractive Apartment Industry Dynamics Support Strong Demand Low Homeownership Limited New Supply Growth in households increases the pool of renters, even more so during periods of declining homeownership The homeownership rate was 63.7% in 4Q 2016 down from 69.2% in 1Q 2004 (the peak) Homeownership
Slide 17: Positive Demographic Factors
Positive Demographic Factors Population growth in IRT’s markets is above the national average and is growing faster than new supply, creating increased demand for existing apartment units. Migration Outpacing New Supply Projected Net Migration / Projected Completions Population Growing at a Higher R
Slide 18: Strong Employment Outlook
Strong Employment Outlook Job growth in IRT’s markets is above the national average and is growing faster than new supply, creating increased demand for existing apartment units. Job Growth Outpacing New Supply Employment Growing at a Higher Rate in IRT’s Markets Projected Jobs / Projected Completio
Slide 19: Stable Cash Flow Profile
Stable Cash Flow Profile Annual Change in Effective Rent (IRT Markets vs. the National Average, Gateway Markets and Selected REITs) Weighted by number of units excluding units Held for Sale on 5/30/17. Rent growth data for the IRT markets of Asheville NC, Jackson MS and Huntsville AL not available.
Slide 20: Recently Internalized with Bolstered Balance Sheet
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Slide 21: Management Internalization & Stock Offering were Transformative for IRT
Management Internalization & Stock Offering were Transformative for IRT Internalization (1) Eliminated all asset management fees Eliminated advisory agreement termination fee, equal to 4x the average annual base management and incentive fees earned by the advisor during the eight full calendar quart
Slide 22: Bolstered Balance Sheet with Reduced Leverage
Bolstered Balance Sheet with Reduced Leverage Total Debt to Total Gross Assets Debt Maturity Schedule ($s in millions) Net Debt to Adjusted EBITDA (1) (3) Recently refinanced the secured credit facility maturing in September 2018 with an unsecured credit facility with a fully extended maturity date
Slide 23: Strong Expected 2017 Operating Growth
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Slide 24: 2017 Strategic Focus
2017 Strategic Focus 1. Recycle Class C Properties and Reinvest into Higher Quality Class B Properties 2. Maximize Property Operating Efficiency 3. Review and Reposition Financing Structure for Flexibility and Liquidity While Continuing to Reduce Cost and Leverage 4. Deliver a Tenant-Focused Living
Slide 25: Expected Operating Growth into 2017
Expected Operating Growth into 2017 GAAP net income for 2017 is expected to be between $0.40 and $0.44 per share. GAAP net loss for 2016 was ($0.19) per share. 2017 CORE FFO is expected to grow by 18% to 25% from 2016 as a result of: Same store NOI growth of 3.5% to 4.5% from increased rental rates
Slide 26: Investment Highlights
Recently Internalized with Bolstered Balance Sheet Focused Investment Strategy with Attractive Total Return Opportunity Strong Expected 2017 Operating Growth Investment Highlights Highly Attractive Industry and Market Fundamentals
Slide 27: Appendix
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Slide 28: Property Portfolio
At IPO (August 16, 2013) Pre TSRE Merger (September 30, 2015, excludes TSRE) At March 31, 2017 Total # of Properties 8 31 47 Total # of Units 2,004 9,055 13,198 Average Base Rent ($) (1) $791 $848 $978 Average Occupancy (%) 93.6% 93.3% 93.8% Average Age (years) 26 20 17 LTM NOI Margin (%) (2) 56% 57
Slide 29: Definitions
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Slide 30: Definitions
Definitions NetDebt Net debt, March 3, December 31, June 30, Marchal, m7 016 016 x ‘Teal ote s 685 ‘asT Ss 940336 ‘Less: cash and cash equivalents 19085) 1382) 28081) 1324) ‘Tal et db s 755630 s Sere s purity Net Operating Income ‘ad ganeral administrative £2016, ENO to axcude property REITs fi Inde
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