• Same Store NOI Growth: 2.2% in the third quarter.
• Core FFO: $0.29 per share.
• Average Occupancy: 95.4%, up 90 basis points from last year.
• Blended Rental Rate Growth: 0.8% with new leases down 3.6% and renewals up 3.8%.
• Net Income: $12.4 million, up from $3.9 million in Q3 2023.
• Net Debt to Adjusted EBITDA: 6.3 times, down from 7 times a year ago.
• Same Store Revenue Growth: 2.5% in the third quarter.
• Average Monthly Rental Rates: $1,566 per month, a 1.2% increase.
• Same Store Operating Expenses Increase: 2.8% due to higher personnel, repairs, maintenance, and utilities costs.
• Liquidity Position: $722 million as of September 30.
• Unsecured Notes Issued: $150 million with a weighted average coupon of 5.4%.
• Investment Grade Rating: BBB flat from S&P Global Ratings.
• Property Sales and Acquisitions: Sold a property in Birmingham for $70.8 million; acquired a property in Tampa for $82 million.
• Under Contract Properties: Three properties in Charlotte, Orlando, and Columbus for approximately $184 million.
• Full Year 2024 Same Store NOI Guidance: Midpoint maintained, expecting to be at the high end of core FFO per share guidance range.

• Warning! GuruFocus has detected 10 Warning Signs with IRT.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Independence Realty Trust Inc (NYSE:IRT) reported a solid third quarter with same store NOI growth of 2.2% and core FFO of $0.29 per share.
• The company achieved a high average occupancy rate of 95.4%, which is a 90 basis point increase from the previous year.
• IRT completed renovations on 578 units in the quarter, achieving a weighted average return on investment of 14.9%.
• The company received a BBB flat investment grade rating from S&P Global Ratings, marking its second investment grade rating this year.
• IRT's capital recycling initiatives included the sale of a property in Birmingham and the purchase of a property in Tampa, reflecting strategic market positioning.

Negative Points

• The company is experiencing pressure from new supply, impacting new lease rent growth, with new leases down 3.6%.
• IRT's same store operating expenses increased by 2.8% during the quarter, driven by higher personnel costs and maintenance expenses.
• Despite improvements, the company continues to face challenges with bad debt, particularly in markets like Atlanta.
• The blended rental rate growth was only 0.8%, indicating limited growth in rental rates amidst market conditions.
• There is ongoing pressure from inflation on controllable expenses, affecting the company's overall cost management.

Q & A Highlights

Q: Are you interested in pursuing more acquisitions in 2025 given the current cost of capital and opportunity set? A: Scott Schaeffer, CEO, stated that there is nothing unique about the current opportunities other than they are good assets in markets where IRT wants to expand. They are being judicious with capital use to ensure acquisitions are accretive to NAV and earnings. Opportunities exist, and they will transact when it makes sense.

Q: How do you feel about maintaining the spread between new and renewal lease rates? A: Scott Schaeffer, CEO, expressed confidence in maintaining renewal rates above 5% through November and December, with December renewals already showing high 5% to 6% increases. They are optimistic about sustaining this spread.

Q: What are your updated thoughts on the earn-in for next year? A: James Sebra, CFO, indicated that based on current trends, they expect the earn-in for next year to be approximately 50 basis points.

Q: When do you expect new lease rate growth to turn positive given the supply perspective? A: James Sebra, CFO, anticipates that new lease trade-out will improve rapidly in early 2025 as supply growth is expected to be significantly lower than in 2024. Janice Richards, SVP of Operations, added that they are already seeing signs of asking rents starting to increase.

Q: Can you provide details on your recent acquisitions and their expected yields? A: Scott Schaeffer, CEO, explained that two of the three acquisitions are new constructions delivered in early 2024, currently in lease-up, and expected to stabilize in Q1 2025. The third is an older asset in Columbus, Ohio, targeted for value-add strategy. The stabilized economic cap rate is expected to be 6%.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.