Independence Realty Trust, Inc. · NYSE:IRT
Independence Realty Trust — Investor Presentation (September 2023)
54 slides from Independence Realty Trust's investor presentation, Sep 11, 2023
Slide 1: Investor Presentation September 2023
INVESTOR PRESENTATION September 2023 Millenia 700 Orlando, FL
Slide 2: Table of Contents
1 Table of Contents Overview and Performance 2 – 4 Our Path to Long-Term Growth 5 Our Well-Positioned Portfolio 6 – 12 Our Strategic Investment Opportunities 13 – 22 Capitalization and Leverage 23 – 25 Recent Operating Metrics and 2023 Guidance 26 – 28 Appendix Market Statistics 30 Value Add Summary
Slide 3: IRT Overview
2 IRT Overview OWN AND OPERATE Sunbelt Exposure 71% of NOI 120 Communities 35,427 Units 8.0% 2Q23 Portfolio Average Rental Rate Growth PORTFOLIO SUMMARY (1) SAME STORE HIGHLIGHTS Q2 2023 (3) • Revenue growth: +6.2% Y-o-Y • NOI growth: 6.3% Y-o-Y • NOI margin: +10bps to 62.1% UPSIDE FROM VALUE ADD •
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: Track Record of Value Creation
4 Source: S&P Global, FactSet. Note: Represents compound total return, with dividends reinvested. Market data as of July 31, 2023. Track Record of Value Creation IRT has a proven track record of outperforming its peers and the broader market Year-To-Date 3-Year 5-Year Since IPO (1) 8% 28% 28% 95% 10
Slide 6: Compelling Investment Opportunity With a Path to Long-Term Growth
5 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 Investing
Slide 7: Our Well-Positioned Portfolio
6 Our Well-Positioned Portfolio Waterford Place at Riata Ranch Cypress, TX
Slide 8: Our Portfolio is Focused On the High Growth Sunbelt Region
7 TOP 10 MARKETS Our Portfolio is Focused On the High Growth Sunbelt Region PORTFOLIO SUMMARY IRT owns 120 communities and has 2 communities under development across resilient, high growth markets Geographic Distribution Operating Communities • Expanded presence in high growth metros including Charl
Slide 9: The Sunbelt Continues to Benefit from Positive Migration Trends
8 The Sunbelt Continues to Benefit from Positive Migration Trends IRT’s exposure to the six states mentioned above represent ~60% of total company NOI; These states experienced a robust job market recovery after the pandemic, averaging 5% job growth since March 2020 Inbound Move Rate in 2022 (for ar
Slide 10: Our Markets Have Strong Fundamentals
9 Our Markets Have Strong Fundamentals Outsized Population Growth vs. 2019 National Average Employment Change vs. 2019 National Average 21’ vs. 19’ 22’ vs. 19’ 23’E vs. 19’ 21’ vs. 19’ 22’ vs. 19’ 23’E vs. 19’ (1) (2) Source: Costar Q2 2023 Data Release Population and employment growth is fueling mo
Slide 11: IRT's Resident Demographic Trends Are Favorable
10 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 Average Age(1) 1 Atlanta, GA 36 2 Dallas, TX 38 3 Denver, CO 36 4 Columbus, OH 37 5 Indianapoli
Slide 12: The Impact of New Supply on IRT Will Not Be Significant
11 The Impact of New Supply on IRT Will Not Be Significant Estimated new apartment deliveries for 2023 through 2025 in IRT's markets, as a percentage of existing apartment inventory, are expected to be broadly consistent with recent history IRT's Class B communities do not directly compete with new
Slide 13: Well-Positioned in Affordable, Highly Defensive Middle Market Communities
12 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 14: Our Strategic Investment Opportunities
13 Our Strategic Investment Opportunities Vesta City Park Charlotte, NC
Slide 15: Driving Accretive Growth with Multiple Investment Levers
14 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 16: Improved Long-Term Growth Profile through Value Add Program
15 In-Place Program Future 2023 Starts Future Pipeline Total Units to Renovate 11,382 474 12,727 24,583 Units Renovated-to-Date (6,576) - - (6,576) Remaining Units to Renovate 4,806 474 12,727 18,007 Remaining Renovation Costs (3) $55 - $59 $18 - $20 $178 - $191 $252 - $270 Incremental NOI (4) $10 -
Slide 17: Value Add Case Study: Avalon Oaks – Project Overview
16 Value Add Case Study: Avalon Oaks – Project Overview All notations throughout this presentation appear as “End Notes” on pages 48-49. Before After Columbus, OH asset acquired for $23M in February 2018 • Middle market asset with 235 units that at the time of acquisition helped us increase scale in
Slide 18: Value Add Case Study: Avalon Oaks – The Economics
17 Value Add Case Study: Avalon Oaks – The Economics All notations throughout this presentation appear as “End Notes” on pages 48-49. Achieved outsized value creation • Post renovation asset value $44.7 million, representing an increase of 94% from acquisition • Incremental value creation of $21.6 m
Slide 19: Value Add Case Study: Rocky Creek – Project Overview
18 All notations throughout this presentation appear as “End Notes” on pages 48-49. Before After Acquired in July 2019 for $48M this was our 3rd asset in Tampa, FL market • Located in West Tampa, this property was built in 1999 and has 264 units • Convenient access to major employment centers includ
Slide 20: Value Add Case Study: Rocky Creek – The Economics
19 Value Add Case Study: Rocky Creek – The Economics All notations throughout this presentation appear as “End Notes” on pages 48-49. Achieved outsized value creation • Post renovation asset value $71.4 million, representing an increase of 49% from acquisition • Incremental value creation of $23.4 m
Slide 21: Joint Venture Development Program
20 Engaging in Attractive Investment Opportunities with Our Joint Venture Development Program Focused on joint ventures in new multifamily development in core non-gateway market • Invested $16.4 million in a horizontal multifamily joint venture consisting of 178 homes in March 2022 • Effective Augus
Slide 22: Continuing Our Efforts in Technology
21 Continuing 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 inv
Slide 23: Focusing on Our ESG Initiatives
22 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 24: Capitalization and Leverage
Capitalization and Leverage The Enclave at Tranquility Lake Tampa, FL
Slide 25: Maintain a Simple Capital Structure
24 61.3% 38.7% Maintain a Simple Capital Structure $6.9bn 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 26: Leverage: Where We Are and Where We Are Going
25 Leverage: Where We Are and Where We Are Going We are focused on continuing to improve the company’s leverage profile Progressing Towards Our Target of Mid-6’s by Year-End 2023 and Mid-5’s by Year-End 2025 through the Following Drivers: • Organic NOI growth from stabilized portfolio consistent wit
Slide 27: Recent Operating Metrics and 2023 Guidance
Recent Operating Metrics and 2023 Guidance Creekstone at RTP Durham, NC
Slide 28: Strong Performance Across Key Operating Metrics
27 Strong Performance Across Key Operating Metrics Same Store Excluding Value Add Note: As of September 9, 2023, same-store portfolio occupancy was 94.7%, same-store portfolio excluding ongoing value add occupancy was 95.2%, and value add occupancy was 93.2%. All notations throughout this presentati
Slide 29: 2023 Guidance and Outlook
28 Low High Earnings per share $0.25 $0.27 Adjustments: Depreciation and amortization 0.95 0.95 Gain on sale of real estate assets (3) (0.01) (0.01) Loan (premium accretion) discount amortization, net (0.05) (0.05) CORE FFO per share $1.14 $1.16 CORE FFO ($s in millions) Same Store Communities 2023
Slide 30: Appendix & Definitions
Appendix & Definitions Canyon Resort at Great Hills Austin, TX
Slide 31: Assets Demonstrate Attractive Apartment Industry Dynamics
30 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 2023 projected spreads in vacancy rates between Class A & B, with Class B at 6.9% and Class A at 9.9% o The majorit
Slide 32: IRT Value Add Summary
31 IRT Value Add Summary Project Life to Date as of June 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, TN
Slide 33: Our Markets | Atlanta
32 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 0.44% Gateway Markets 0.58% 2023 Population Growth National Average 0.43% Gateway Markets 1.03% 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 0.44% Gateway Markets 0.58% 2023 Population Growth National Average 0.43% Gateway Markets 1.03% 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 0.44% Gateway Markets 0.58% 2023 Population Growth National Average 0.43% Gateway Markets 1.03% Differentiators -0.02% 2.55% 0.12% Population growth in the metro area is expected to exceed 5.5% over the ne
Slide 36: Our Markets | Columbus
35 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 0.44% Gateway Markets 0.58% 2023 Population Growth National Average 0.43% Gateway Markets 1.03% 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 0.44% Gateway Markets 0.58% 2023 Population Growth National Average 0.43% Gateway Markets 1.03% Differentiators -1.21% 2.45% 0.25% Located within 5 min. of major highways Benefiting from the proximity to g
Slide 38: Our Markets | Indianapolis
37 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 0.44% Gateway Markets 0.58% 2023 Population Growth National Average 0.43% Gateway Markets 1.03% 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 0.44% Gateway Markets 0.58% 2023 Population Growth National Average 0.43% Gateway Markets 1.03% 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 0.44% Gateway Markets 0.58% 2023 Population Growth National Average 0.43% Gateway Markets 1.03% 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 0.44% Gateway Markets 0.58% 2023 Population Growth National Average 0.43% Gateway Markets 1.03% Differentiators -1.01% 5.05% 1.00% Job growth is expected to be 2.7% annually through 2025, compared to 1.7%
Slide 42: Our Markets | Tampa
41 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 0.44% Gateway Markets 0.58% 2023 Population Growth National Average 0.43% Gateway Markets 1.03% 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 0.44% Gateway Markets 0.58% 2023 Population Growth National Average 0.43% Gateway Markets 1.03% 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 0.44% Gateway Markets 0.58% 2023 Population Growth National Average 0.43% Gateway Markets 1.03% Differentiators -1.15% 2.94% -0.01% Memphis has all the amenities of a large city with a cost of living more
Slide 45: Our Markets | Huntsville
44 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 0.44% Gateway Markets 0.58% 2023 Population Growth National Average 0.43% Gateway Markets 1.03% 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 0.44% Gateway Markets 0.58% 2023 Population Growth National Average 0.43% Gateway Markets 1.03% 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 0.44% Gateway Markets 0.58% 2023 Population Growth National Average 0.43% Gateway Markets 1.03% Differentiators -0.02% 6.01% 1.48% Established tourism hub Centrally located in FL, easily accessible to driv
Slide 48: IRT Resident Demographics at a Glance
47 IRT Resident Demographics at a Glance(1) All notations throughout this presentation appear as “End Notes” on pages 48-49. 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. Professional
Slide 49: End Notes
48 Slide 2 (1) For the total portfolio as of August 31, 2023 or for 2Q 2023, as applicable; including portfolio average rental rate growth for the IRT same store portfolio for the three months ended June 30, 2023. (2) As of market close on August 31, 2023. (3) Highlights are for the IRT same store p
Slide 50: End Notes (continued)
49 End Notes (continued) Slide 24 (1) Market data as of June 30, 2023. Slide 27 (1) Lease-over-lease effective rent growth represents the change in effective monthly rent, as adjusted for concessions, for each unit that had a prior lease and current lease that are for a term of 9-13 months. Lease-ov
Slide 51: Definitions and Non-GAAP Financial Measure Reconciliations
50 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 52: Net Operating Income
51 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 53: Reconciliation of Same-Store Net Operating Income to Net Income
52 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) June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 Re
Slide 54: Forward-Looking Statement
53 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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