Independence Realty Trust, Inc. · NYSE:IRT
Independence Realty Trust — Investor Presentation (March 2024)
53 slides from Independence Realty Trust's investor presentation, Mar 1, 2024
Slide 1: Investor Presentation March 2024
INVESTOR PRESENTATION March 2024 Reveal on Cumberland Fishers, IN
Slide 2: Table of Contents
1 Table of Contents Overview 2 Recent Operating Metrics 3 Company History and Performance 4 – 6 Current Priorities / Business Plan 7 – 18 Differentiated Portfolio in Attractive Markets 19 – 24 Path to Long-Term Growth 25 Appendix 2024 Guidance 27 ESG Initiatives 28 Market Statistics 29 Value Add Sum
Slide 3: IRT Overview
2 IRT Overview OWN AND OPERATE Sunbelt Exposure 75% of NOI 110 Communities 32,685 Units 6.4%(2) 2023 Portfolio Average Rental Rate Growth PORTFOLIO SUMMARY (1) SAME STORE HIGHLIGHTS Full Year 2023 (2) • Revenue growth: +5.7% Y-o-Y • Avg occupancy: -70bps to 94.0% • NOI growth: 5.7% Y-o-Y UPSIDE FROM
Slide 4: Strong Performance Across Key Operating Metrics
3 Strong Performance Across Key Operating Metrics Same Store Excluding Value Add Note: As of February 28, 2024, same-store portfolio occupancy was 94.5%, same-store portfolio excluding ongoing value add occupancy was 94.9% and value add occupancy was 93.4%. All notations throughout this presentation
Slide 5: Company History
4 Trade Street Acquisition Steadfast Acquisition Company History To ta l N u m b e r o f O p er at in g U n it s (2 ) Aug. 2013 Completes IPO; begins trading on the NYSE Sep. 2015 Acquires Trade Street Residential (NASDAQ: TSRE) for $264 mm Dec. 2016 Completes internalization of management (1) Apr.
Slide 6: IRT is Delivering Industry Leading Operating Performance
5 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 7: Track Record of Value Creation
6 Source: Bloomberg Market data as of February 22, 2024. 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) 4% 15% 23% 99% -5% 5% 17% 141% -13% 17% 81% 240% -50%
Slide 8: Current Priorities / Business Plan
7 Continue value add renovations at ~2,500 annually Current Priorities / Business Plan 1 Complete on-balance sheet and joint venture developments 2 Complete Portfolio Optimization & Deleveraging Strategy by exiting lower growth, single asset markets 3 Use free cash flow to further delever the balanc
Slide 9: Value Add Program: Improving Our Growth Profile
8 In-Place Program Identified 2024 Starts Future Pipeline Total Units to Renovate 13,281 1,893 9,409 24,583 Units Renovated-to-Date (7,771) - - (7,771) Remaining Units to Renovate 5,510 1,893 9,409 16,812 Remaining Renovation Costs (3) $83 - $88 $28 - $30 $141 - $151 $252 - $269 Incremental NOI (4)
Slide 10: Value-Add Case Study: Avalon Oaks – Project Overview
9 Value-Add Case Study: Avalon Oaks – Project Overview Before After Columbus, OH community acquired for $23.0mm in February 2018 ▪ Middle market community with 235 units that at the time of acquisition helped to increase our scale in the Columbus market ▪ Attractive Columbus submarket insulated from
Slide 11: Value-Add Case Study: Avalon Oaks – The Economics
10 Value-Add Case Study: Avalon Oaks – The Economics $23.0 $6.2 $19.0 $48.2 Purchase Price Invested Capital Value Created Total Value At Acquisition (2/27/2018) 12/31/2023 Change Revenue (TTM) $2.6mm $4.0mm +52% NOI (TTM) $1.4mm $2.6mm +89% NOI Margin 52.6% 66.9% +1,430 bps Average Effective Monthly
Slide 12: Value-Add Case Study: Rocky Creek – Project Overview
11 Value-Add Case Study: Rocky Creek – Project Overview Before After Acquired in July 2019 for $48.0mm this was our 3rd community in Tampa, FL market ▪ Located in West Tampa, this property was built in 1999 and has 264 units ▪ Convenient access to major employment centers including Westshore area to
Slide 13: Value-Add Case Study: Rocky Creek – The Economics
12 Value-Add Case Study: Rocky Creek – The Economics $48.0 $6.7 $18.7 $73.4 Purchase Price Invested Capital Value Created Total Value At Acquisition (7/11/2019) 12/31/2023 Change Revenue (TTM) $4.2mm $6.1mm +45% NOI (TTM) $2.6mm $3.9mm +52% NOI Margin 61.1% 63.4% +230 bps Average Effective Monthly R
Slide 14: Real Estate Under Development: Expected to Generate Strong NOI
13 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 53% Occupied(1) Feb 2024 Flatirons Apartment Denver, CO Costs NOI In Place NOI – Q4 2023 $271k / In lease-up # of
Slide 15: Joint Venture Communities: Selected Case Studies
14 Joint Venture Communities: Selected Case Studies ▪ Year Built: 2023 ▪ Status: In lease up ▪ Units: 402 units ▪ Rents have increased 10% since we underwrote the community The Mustang (2) Dallas, TX The Crockett Nashville, TN Metropolis at Innsbrook Richmond, VA ▪ Year Built: 2023 ▪ Status: In leas
Slide 16: Portfolio Optimization and Deleveraging Strategy
15 12/31/2023 Actual 12/31/2023 Pro Forma Consolidated Operating Communities(2) 116 110 Total Operating Units(3) 34,431 32,685 Average Effective Monthly Rent(4) $1,558 $1,555 Net Debt / TEV(5) 42% 39% Net Debt / LOA Adjusted EBITDA(6) 6.7x 6.2x Portfolio Optimization and Deleveraging Strategy ▪ Stra
Slide 17: Deleveraging: Where We Are and Where We Are Going
16 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
Slide 18: Maintain a Simple Capital Structure
17 58.1% 41.9% Maintain a Simple Capital Structure $6.1bn Common Equity Debt • Simple capital structure consisting of secured and unsecured debt • Maintain conservative financial and credit policies and expect to further deliver the balance sheet through organic NOI & EBITDA growth and excess cash f
Slide 19: Continuing Our Efforts in Technology
18 Continuing Our Efforts in Technology Business Intelligence For Property Managers Value Add ERP Platform Incident Reporting App Month-End Close Automation Property Phone System Standardization & Consolidation Our Goals Offer a Superior Prospect & Resident Experience Automate Processes to Lower Ope
Slide 20: Established a Differentiated Portfolio in Attractive Markets
19 75% Class B community profile is highly defensive during times of economic stress Established a Differentiated Portfolio in Attractive Markets Benefit from favorable resident demographics Focused on the high growth Sunbelt & Midwest regions Possess a unique hedge against new supply Well-positione
Slide 21: Defensive Middle Market Communities, Positioned to Perform
20 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 22: IRT's Resident Demographic Trends Are Favorable
21 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 ~$85,000, resulting in a ~22% rent to income(1) Market Resident Average Age(1) 1 Atlanta, GA 38 2 Dallas, TX 37 3 Denver, CO 37 4 Columbus, OH 38 5 Ra
Slide 23: Our Portfolio is Focused On the High Growth Sunbelt & Midwest Regions
22 TOP 10 MARKETS Our Portfolio is Focused On the High Growth Sunbelt & Midwest Regions PORTFOLIO SUMMARY IRT owns 110 communities and has 2 communities under development across resilient, high growth markets Geographic Distribution Operating Communities • Strong presence in high growth metros inclu
Slide 24: The Impact of New Supply on IRT Will Not Be Significant
23 The Impact of New Supply on IRT Will Not Be Significant Estimated new apartment deliveries from 2024 through 2026 in IRT's markets, as a percentage of existing apartment inventory, are expected to decline over this 3-year period IRT's Class B communities do not directly compete with new Class A d
Slide 25: Rent vs. Buy Differential Will Support Rental Demand in 2024
24 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 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
Slide 26: Compelling Investment Opportunity With a Path to Long-Term Growth
25 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 Talison Row at Daniel Island Charleston, SC Eleven10 at Farmers Market Dallas, TX North Park at Eagle’s Landing Stockb
Slide 27: Appendix & Definitions
Appendix & Definitions Oxmoor Louisville, KY
Slide 28: 2024 Guidance
27 Low High Earnings per share $0.40 $0.44 Adjustments: Depreciation and amortization 0.87 0.87 Gains on sale of real estate assets (3) (0.11) (0.11) FFO per share 1.16 1.20 Loan (premium accretion) discount amortization, net (0.04) (0.04) CORE FFO per share $1.12 $1.16 CORE FFO ($s in millions) Sam
Slide 29: Focusing on Our ESG Initiatives
28 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 30: Assets Demonstrate Attractive Apartment Industry Dynamics
29 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 2024 projected spreads in vacancy rates between Class A & B, with Class B at 7.2% and Class A at 9.6% o
Slide 31: IRT Value Add Summary
30 IRT Value Add Summary Project Life to Date as of December 31, 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 (3) Ongoing Memphis,
Slide 32: IRT Resident Demographics at a Glance
31 IRT Resident Demographics at a Glance(1) All notations throughout this presentation appear as “End Notes” on pages 47-48. 47% 53% Gender Breakdown 79% 21% Marital Status Average Resident Age: 37 Residents make up a diverse job pool Top Industries of Residents: 1. Services 2. Medical Services 3. P
Slide 33: Our Markets | Atlanta
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 Communities located within 5 min. of major highways Communities located in top school distric
Slide 34: Our Markets | Dallas
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 9th largest city in the U.S. by population 4 The Dallas MSA has had the largest population gr
Slide 35: Our Markets | Denver
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 Population growth in the metro area is expected to exceed 5.5% over the next five years4 The
Slide 36: Our Markets | Columbus
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 14th largest city in the U.S. by population4 Strong accessibility to major highway I-270 Near
Slide 37: Our Markets | Louisville
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 Located within 5 min. of major highways Benefiting from the proximity to growing industrial f
Slide 38: Our Markets | Indianapolis
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 15th largest city in the U.S. by population Communities located in top school districts Exper
Slide 39: Our Markets | Raleigh–Durham
38 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 40: Our Markets | Oklahoma City
39 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 The metro’s population grew 0.5% this year, which was above the 0.2% national average4 Active
Slide 41: Our Markets | Houston
40 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 Job growth is expected to be 2.7% annually through 2025, compared to 1.7% nationally4 Houston
Slide 42: Our Markets | Tampa
41 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 43: Our Markets | Nashville
42 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 44: Our Markets | Memphis
43 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 Memphis has all the amenities of a large city with a cost of living more than 20% below the n
Slide 45: Our Markets | Huntsville
44 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 46: Our Markets | Charlotte
45 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 47: Our Markets | Orlando
46 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 Established tourism hub Centrally located in FL, easily accessible to drive to and from close
Slide 48: End Notes
47 Slide 2 (1) Portfolio Summary data is as of December 31, 2023 or full year 2023, as applicable, and is pro forma for completion of property sales included in our Portfolio Optimization Strategy. (2) Highlights are for the IRT same store portfolio for the twelve months ended December 31, 2023 vs.
Slide 49: End Notes (continued)
48 End Notes (continued) Slide 17 (1) Market data as of December 31, 2023. Slide 21 (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 December 31, 2023. Employment
Slide 50: Definitions and Non-GAAP Financial Measure Reconciliations
49 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 51: Net Operating Income
50 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 52: Definitions and Non-GAAP Financial Measure Reconciliations
51 Definitions and Non-GAAP Financial Measure Reconciliations December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 Reconciliation of same-store net operating income to net income (loss) Same-store net operating income 95,907$ 93,779$ 91,076$ 90,783$ 92,868$ Non same-st
Slide 53: Forward-Looking Statement
52 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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