Independence Realty Trust (IRT) Q3 Earnings call transcript Oct 31, 2024
In the third quarter of 2024, Independence Realty Trust (IRT) reported a solid financial performance, with same-store NOI growth of 2.2% and core FFO of $0.29 per share. Despite facing challenges in an uneven macroeconomic environment, IRT maintained a focus on driving occupancy gains and executing strategic initiatives. The company's resilience is evident in its ability to navigate through new supply pressures and inflationary impacts on controllable expenses.
One of the key highlights of the earnings call was the strong occupancy performance, with an average occupancy of 95.4% and a resident retention rate of 57% in the quarter. IRT's strategic approach to balancing rental rate growth and concessions has enabled it to maximize leasing economics in the current environment. While new lease rent growth has been impacted by new supply, the company's blended rental rate growth was 0.8%, with a 3.8% increase in renewals. This demonstrates the strength of IRT's portfolio and its ability to retain and attract residents.
IRT's focus on value-add renovations has been a significant driver of growth. The company completed renovations on 578 units in the first nine months of 2024, achieving a return on investment of 14.9%. This strategic investment has resulted in an increase in average monthly rent per unit of $242, showcasing the premium value that renovated units command compared to unrenovated comps. The company's long-term view on these projects is noteworthy, with IRRs ranging from 20% to 30%, underscoring the strategic importance of these initiatives for IRT's future growth.
IRT's capital recycling initiatives have been another key contributor to its financial performance. The sale of a property in Birmingham and the purchase of a property in Tampa, along with the acquisition of three new properties in Charlotte, Orlando, and Columbus, reflect the company's ongoing efforts to increase its exposure in attractive markets and reduce ownership potential. These transactions will add 776 units to IRT's portfolio and are expected to contribute positively to the company's financial performance.
The company's financial health is further bolstered by its strong liquidity position, with a liquidity position of $722 million and a net debt to adjusted EBITDA of 6.3x. The recent achievement of an investment-grade rating from S&P Global Ratings marks a significant milestone for IRT and will improve its cost of capital, giving it access to additional capital sources to implement its business plan and invest in its portfolio.
Looking ahead, IRT remains confident in its ability to continue driving strong results. The company's strategic positioning in high-growth markets and its value-add renovation strategy position it well for future growth. IRT is maintaining its midpoint of full-year 2024 same-store NOI guidance and expects to be at the high end of its previous core FFO per share guidance. This optimism is underpinned by the company's focus on sustaining high levels of occupancy, optimizing rental rate growth, and effectively managing expenses.
The earnings call provided valuable insights into the company's financial performance and strategic initiatives. IRT's resilience and strategic focus on value-add renovations, capital recycling, and strategic acquisitions are key drivers of its financial performance and future growth prospects. The company's strong liquidity position, combined with its investment-grade rating, positions it well for continued growth and value creation for its shareholders.