IRT - Earnings call transcript Q3 2017 | Independence Realty Trust, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Q3 2017 Independence Royalty Trust's Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to turn the call over to Ms. Lauren Tarola, Investor Relations. yours. is podium the Ma'am,

Lauren Tarola

Thank you. to Financial for us and morning, Independence Realty everyone, review XXXX thank Trust's joining Good Third Results. Quarter

website our our on Sebra, replay Time available call telephonically, are approximately of and be and IRT. the me a is Chief of Investor at President Schaeffer, Executive via XX being www.irtliving.com. call webcast will On Farrell Ender, call Officer; website at webcast Chief IRT's Eastern with Jim Relations Today's Financial our on Officer; the beginning Scott p.m. today There today.

over Before IRT herein, future the Securities the I made turn Please future Scott, events has undertake will over this expectations. are though IRT's current and actual provisions the and other SEC reflect what other the also Schaeffer. financial IRT's with information differ IRT's copy made IRT's X-K our press to to differ like the recent law. I report does there CEO, statements release pursuant to link. harbor forward-looking through to matters forward-looking except information and call with to that respect IRT's remind financial comparable statistical and statements GAAP statements affect factors performance, call of turn in SEC in of may as current XXXX. These be reconciliation cause and materially or Investor could maybe from described financial expectations financial at those of the to by of A forward-looking containing time, everyone Form our safe results included projected. materially may results views At measure IRT to would call. non-GAAP update respect information substantially statements financial call. this Such in required Scott available I Act under this filings this IRT's for Private Participants to in in to this directly available that discuss information, during measures the refer release, of from Reform most supplemental could faith website or filings most supplemental is good accuracy press measures are a our Relations. to not call Litigation with non-GAAP

Scott Schaeffer

you Class strong middle-market insulated Thank and continue future well-located, quarter another and stable to you, strategy, today. simple positioned a capital in on ourselves concentrating long-term we Lauren, communities, By delivered portfolio thank new markets, non-gateway our conservative maintaining deliveries, joining from have growth. of for in ourselves as while all B structure. we IRT and execute maintained rental owning our for us operating majority and communities occupancy

X%, was During attractive the our attributes growth was growth the third reflecting we core NOI quarter Same-store year-to-date FFO the NOI of for communities. market strong X.X%, same-store $X.XX. quarter, of reported while fundamentals and

portfolio, which While September, driven we detail, our our would ourselves align in our magnitude that acquire an a transaction MSAs from growth reach to helped growth. be expands in key portfolio. but economies to while confident we that value attractive position to on expertise, assets I on assets thesis with able these will middle-market local us dynamics. we in clear this offer discuss able insights enhance was possible extract our our These and made the which leverage determine compelling supply-demand that portfolio reached agreement will that capitalizes this more our capitalized located and non-gateway non-community future for these by and for to the are that communities scale. By from of ability well investment portfolio, structure acquiring high-quality of the be applying perfectly teams Farrell of management opportunity was strong a organically, In returns. into to are our to our we markets, like markets also communities these we and emphasize integrating generate will management quarter

ahead opportunities we portfolio and identifying to where remain look and economies to number of consolidate can key our XXXX, capital to we term. recycle a of the over we leverage committed exposure As value unlock markets, scale within long

and million proceeds of our common without will equity. We the transparent as This in the issuance through the we funding decision of conjunction complete a recent gave ability to to we $XXX move us accordingly the be transaction portfolio continue the that with of plans recycling gross increasing leverage. update In forward. acquisition, public was strategic you raised

reduce fact, In our opportunity believe further we of as NOI there for net growth drive metric time. further debt-to-EBITDA and we ratios leverage significant to contraction the our over acquisition served continue organic to is

the of accomplished I'm have such we pleased approach we X-year As completed in management anniversary short internalization, what the with period of very time. a

redevelopment structure. made growth that capital that initiative of operational and progress will portfolio importance we strategy that What not our that our rotated investment our in which values. do have We scale long-term will accentuated high-quality is simultaneously recent markets, increase us dispose ultimately gain drive returns the this to assets equal on investment, noncore capital We've by value-add started middle-market our into is have fit while and to moved have key strengthening deliver quickly transaction. long-term outsized asset organic communities NOI allow of and

of portfolio, work be is pleased we honor we shareholder there's that with to more to to trajectory value our this long-term with accelerate done in ultimate our While growth are using acquisitions progress, embedded value. still while understand goal driving the

Farrell? fortunate recent to serve. of any we more hurricanes. to to in was in dedication on our team ground no We moment hard the call of our teams available suffer clean-up I Florida a and any needed though the the with major ready outreach the and the highlight take our amid in were to work broader to markets communities and would discuss like damage communities, help and our passing Texas depth, debris Farrell Before to to

Farrell Ender

Scott. Thanks,

highlights basis, grew portfolio markets, performance of across On revenues fundamentals our and key by broader stability X% healthy market same-store the a quarter throughout our by growth operating portfolio. expenses the supported Third year-over-year X.X%, increased operating XX X% average remaining of XX net greater. on for growth of quarter. we in our markets In or revenue was the experienced generating flat our income X%. Revenue of by markets,

majority strongest at own be growth our market Pointe A of value-add was totaling units, the Our project was Ridge, can XX.X% X.X%. X,XXX from to revenue at organic. but of representing growth Atlanta We perspective this the rent in X at a small the portion communities Atlanta the currently of Canyon NOI. attributed

market XXX closing final additional previously of units on acquisition. will Our announced exposure by an in the the this portfolio increase

portfolio single we'll growth totaling Our last be communities third quarter units two additional in experienced the as adding X.X% in Columbus property to Through in Columbus organic the compared year. XXX revenue market. acquisition, the

of experienced percentage This representing the us X and overall market is to and market. growth across communities all minimal growth X%. months, new our due over X.X% one allowed provide as overall units last than has the increase saw Additionally, XX Dallas, a supply. Orlando above Little of of larger of NOI by supply the to revenue Rock, Memphis delivered less revenue our in markets XXX X.X%. Indianapolis The continues to outsized

with Class allocated to new own located Class portfolio A our in B that markets exposure strong of supply. fundamentals, greater are we with communities towards communities market be continues majority to the X While also

term the units in X,XXX it X.X% market. In our or like one amount will long-term year-over-year, to market, existing of Greenville, experienced the X the has significant deliveries by a For total this reflecting fundamentals Charleston, in declined example, the of represents new X.X% revenue supply of at given in inventory. the of short These NOI, of revenue size which We over add but various decreased our X.X%. stages the up. property of impact X.X% properties lease

are directly has leased begin rents planned middle this of The XX% X between compete recently, located the portfolio One new during X with lease on of causing community process to revenue was Island acquisition X.X% and Most in and Daniel X.X%. with Class our growth X.X%. revenue and this for the of the this quarter there balance new pushing year, years we XXXX our new dip, in since in has ago. in market A our occupancy had the a up now to rents submarket. there supply and saw periodically no down our Today, of that up construction leased deliveries are communities

by Expenses fundamentals help market. job of combination which into The limited the this portfolio editions an XXXX in which Finally, line, NOI with multifamily The provided growth. and were growth increase in Oklahoma saw offset occupancy, behind City, decline across we believe a the was small basically in worst unchanged. board rents, in in in with continuing to revenue left the supply, should is flat us. XXXX, overall flat positive

property and to a growth job $XXX X in our XX-community to expand age announced is continue which easily key of demonstrate employment, acquisition acquisition our in We actively also North absorbed $XXX. our supply. adjacent and our can presence second X is units, Baton The containing exposure. we Beach, and in average of with Louisiana. above-average Wilmington, were wage in acquisitions our properties cities in date The with Columbus, footprint Carolina average the Indianapolis On markets. X,XXX to region. years increase Class grow XX These in leverage Myrtle X-community an rent September growth portfolio last existing X, The North and and B Atlanta, a new markets portfolio, contains limited looking Carolina we of to where million market, Rouge, accelerates our largest be

properties, it While rest we to upon not operating by at our properties the a operating implementing strategically, aim At portfolio of model of potential. improving the we and are we to there the manager's of practices. portfolio, similar the in is upside significant previous each a value was part think market looking unlock transaction, the

standardizing revenue for and functions a For implementing being management system not addressed. many that operational example, basic were process the

economic budget the integrated Also, we we've are to fifth and of We XX, X% the anticipated portfolio property's properties X September additional The a value-add once the any acquisition million X returns X G&A. the rate stabilized. on of candidates and adding in on of XX%. cost X without XX. and fully of X% October to able Additionally, year community closed identified to on the of $XX is our X.X% absorb the completed cap with

property by time retired on once such be November, XX the the balance closing we the the debt anticipate at to sixth end be and We that can the on we existing process. complete will deck of assumption November close

which aggregating to $X Finally, unit million We a $XX.X provide $X additional up totaling revenue, million, total the a return premiums, total rent is on of our XXXX. an is on initiatives. This amenities. units underway, alone. want on budget million X we and an monthly properties anticipate generate million of year be by interiors or Currently, expected X to X,XXX and value-add improvements a communities XX.X% renovations exterior these additional we being have XX% the $XXX renovation value-add on which ramping to $X.X and represents is in which interior update has spent renovations on year-end at complete project

quarter. projects month, future, rent this part These extending projects through generating QX growing X,XXX Looking starts per currently we in our in organically of totaling expected X,XXX are to the to XX targeting $XXX show of cost and million X ability rolling our value-add have total of the deliver beginning additional our projects in XXXX. XX%. with improvements approximately units to These average were pipeline units a to the totaling that and XX pipeline portfolio. projects have through portfolio QX returns we transaction communities shareholders of bring the $XX of are in value XXXX announced in

to the over financial would Now discuss like I to turn Jim the to call results.

James Sebra

Farrell. Thanks,

million, to sequentially, to year-over-year NOI the contributed was XX% the and increased million $X.XX ended $XX million deleveraging in for million. strong total was Adjusted share. X-month the shareholders top revenue share X.X% increased year-over-year with XXXX. net growth, down revenue X.X% Core per approximately internalization quarter, million EBITDA and of $X.X Growth in diluted due occurred and flat same-store while period FFO by income For driven Same-store which $XX.X but $XX.X level XX, of by total NOI expenses operating QX strong fourth increased available $X.XX transactions XXXX. was to $XX per to X% to the in EPS to growth, line the million XXXX. $X.XX, September property $XX.X X% year-over-year compared quarter to

occupancy same-store months year for first X X the point up Additionally, average higher percentage of was portfolio this XX.X%, year-over-year. full

NOI, deeper increased Class which growth NOI NOI B same-store year-over-year, margin corresponding the of up on XX% XX.X%. deliver focus the X% excellence same-store into year-over-year same-store with Our Diving to period. to which Class accretion, operational during same-store growth our portfolio, our XX composition continues bps realized A portfolio our NOI makes X.X% communities, of our

supply of our across As drive our our previously B allowing mentioned, healthy within the is and risk property economics, remains further of validation set, new us Class middle-market markets. muted non-gateway a strategy investment to

balance XX billion to closed gross Turning the the of We with sheet. properties $X.X aggregating quarter assets.

on Our QX. represent a XX% assets XX% year-over-year, activity a to after the acquisition increased our long pro basis, has and to our QX. sequentially from property term. our as debt property down net the after X.Xx, X% down a mid-Xs On net value, recycling pending debt to has portfolio. focused portfolio unencumbered to at in NOI, factoring as of end pro By the adjusted of in the assets portfolio and and remain recent X.Xx indebtedness forma our of million, total asset total XX%, helped the exposure. from XX% the a was is our By debt-to-EBITDA We EBITDA our unencumbered $XXX us basis on our acquisitions ratio gross our ratio lower pro in forma reducing up pending basis, forma on percent sale, capital sale,

line underwriters' million goal common an assumed forward, total, acquisition. million proceeds Also In are net completed XX.X capital the over-allotment growth our being in of to strategically the IRT to by NOI credit proceeds, our NOI offering million. Going with acquisition, in recycling conjunction fund $XXX plan shares, option. supplement an organic X.XXX additional These approximately to supplemented with were exercised through of September, through we million and along a accomplish used of shares, additional growth. million $XXX $XX debt, and

borrowings. out and line and on should $XX line majority the terming exposure those - through the we the extend of of increased and are XXXX. line credit $XXX This on our profile, million increase process our capacity in between Given maturity of million of maturity the the borrowings

our Turning guidance. to

Core We while to portfolio projection FFO diluted share previously. are $X.XX, to our costs additional share will $X.XX diluted guidance our depreciation and acquisition. reiterating remain in the $X.XX to FFO expected per now EPS our from fiscal core XXXX due EPS per acquisition-related a to be range of to of share $X.XX year compared in per reducing while to range is $X.XX $X.XX for

to are we guidance $XXX to year to guidance same-store remain assumptions other our unchanged. acquisition. also million X%, range our revenue the approximately revising All midpoint of previously, the addition, from of guidance the guidance. for XXXX million, the for In original $XX Transaction the for full million acquisitions up $XXX reflecting increased

that, basis. for opening a would open to the we first for pay call that our Before a of will call with policy XXXX, the remind changing than payment quarterly, questions. Operator? dividend to for you With wanted IRT dividend our peers. rather the questions, REIT to we align better any monthly Effective on industry are I quarter like

Operator

Instructions]. [Operator

question from of W. line Babin Robert the comes Baird. from Our Drew first

Andrew Babin

there, the to Would in exposed that more to A up fair at be it topline some while of be Trade your Charlotte, of portfolio more occurring maybe assets like revenue Austin, the a properties, say say maybe legacy more drag some it pressure you places is little fair of may little there be to holding new Class some portfolio, the bit there Would a the properties steadily? of Street supply? where are in some are that

Scott Schaeffer

like be once leased deliveries. that in When - seeing speaking, have and we new mean I now about dip gets but Charlotte a Orlando back in mean, product new Charlotte, markets on in again see and Drew. in you're and that saw it able generally and up, you're the to get Greenville. rents, it you we've in that it saying complete, it to comp probably and I we'll talked Orlando. can We as definitely is to now see good delivered, and you will question, push occupancy - calls. have Greenville Without previous once Charleston,

Andrew Babin

calls looking come sell that that's to there the their in been of more some that something a type up in an - when some market. there's private velocity coming the the some maybe of sign to is it be of soon. talk merchant A may maybe those guess, build And type property the properties increase properties, comes of transactions Class - warning are concession environment maybe resale to I other too, developers

First is will in pricing to B value-add the IRT? what's what's guess, I on of you throughout market that kind at for anything could reaching often? where off, make that on look going happening And like maybe maybe you sense more that market expand it

Scott Schaeffer

Yes, Class rates seen evaluate what the upside. pressure about Not buying I some that We've expertise recognize bit on mean, A right what it. up seen we've can cap in thinking the almost where We'll build. Class for portfolio. a we're space. in little It's is go continue move we're this some in to in - B I we're use immediately product new now. just mean, solid looking and exactly you operational our something and

Operator

Kucera from of And next of question comes Capital Markets. line our the Craig

Craig Kucera

was future? next me of Appreciate million. Can me you what Can $XX kind again? and there's you're kind to color X this do walk the other sounds year more million sort think going CapEx, buckets. in the you through little bit it color the of you I what's of the was but like a those know on and give one $XX on

Scott Schaeffer

Sure.

And start QX all So to XX months bucket. been communities. units. X to and $XX million XX through that's start from million have to It's QX finish another the through all - we'll the all started to then And They is get XXXX. about XX of date. they take a what's that $XX we

So should something 'XX. in will in start QX up of QX wrap

should something of by 'XX. start will wrap beginning 'XX the of And in up QX

of spent the of it will will flow XXXX. into be but it majority some So next year,

Craig Kucera

the million? spend So mean on number? a different correctly does $XX Am your it is something of million, that $XX year understanding next you is think cumulative order it I or

Scott Schaeffer

number. talking totality, million. a probably about pretty $XX mean, That's we're in good I

I to probably be It'll little the that's with a probably balance think - closer XXXX it's XXXX. in bit $XX in million low. probably

Craig Kucera

see. I

you marketing a if see might Okay, the tell perfect. can how in going And I but sale? when this, Jackson Crossings for I we and us know don't missed The is

Farrell Ender

a give the the see release the us $XXX,XXX the debt - November. at done. the they another with contract. will to end within us We time I'm through at extension by they - and came in they You We into an change them at the were call, the escrow deposited which actually sale were they've close it to would sorry, borrower under that if escrow provides the are risk, of something - of it held using to in debt is however all which risk. extension they that taking buy to they by was end hard. that to out changing $XXX,XXX It's we November. the And up had gave asked them they and is It's the buyer expected us order this that looking

trade they has to thought $X,XXX,XXX extension. for And XX-day was So paid that, a up. good that have us. been $XXX,XXX a we

Operator

Instructions]. [Operator

Brian from Blair. comes next the William from Hogan question of Our line

Brian Hogan

cap quick pretty Can rates you on acquisitions. new the - mentioned the remind on me you of the you're

discuss like heard? I transitioned what you out fully is rate. just I cap think or had Is can that you that, mentioned And please? built once X.X%

Farrell Ender

acquisition X% it we going to upon X.X% X% cost. then in. our our management platform, based And on underwriting once put our based on

Brian Hogan

Nice.

say, rates today? it like And X% that is so cap deal, market the going the would are what going in broadly, you is

Farrell Ender

Yes.

out X% think year figure current economies scale they're in bit a we in that. than up that lower X. I Once gets our portfolio, you on expense of probably the with little side create analyzed we could it and where of

Brian Hogan

half Does million Sure. in to $XXX And realized you're in? additional the before of expect over with that time? CapEx like commence your then the properties, it to next would you How additions that making come year rent. of it

Farrell Ender

month which the aggregating Just be $X - additional per it to obviously revenue, unit do 'XX million was clarify, total rent $XXX improvements. per premium, will as in we over three the aggregating phased in in first

Brian Hogan

this but kind Okay. then And discuss things, you on sure of other that properties discuss your can Obviously, X you're - here pending you that? still pipeline, the can have in I'm pipeline? working you

Scott Schaeffer

opportunities. We we're have At We was buy that working in capital September on but more of we with the it's are. to not this always property capital portfolio out the of little allow acquisitions. to the that opportunities do we of and committed to equity needs. We're capital the always constantly upon course, raised But capital. any our bit without one have looking lots for point, pipeline. available will a cost additional matching us acquire working depending of - through additional there, you're any that There's pipeline access that opportunities

Brian Hogan

X.Xx Sure. I mid-Xs? mid-Xs you to pro mentioned What over And to what fast term? quarter. that get a leverage as long years? do expect forma you and term the target third of couple how do long of end the - of guess, you the Is at define the

James Sebra

Scott mentioned has Obviously, it depends acquisitions as is on this before. all Brian, Jim.

Xx, acquisitions, to Xs growth, the we plan leverage of kind we down acquisitions overequitize low to But assume if further. push pure by XXXX. you just kind do you incrementally just of As the hit end ratios and no to that organic additional plan them NOI help of

Operator

the of Ladenburg And from question comes next line our Thalmann. from Donlan Daniel

John Massocca

John on Massocca actually for It's Dan.

that debt what extinguishment portfolio quick a acquisition-related quarter caused or acquisition? a clarity - just So on previous expense? the closed to debt tied questions Was that this that was the from

James Sebra

was some up acquisition at in we and that payments. closed [indiscernible] was that properties debt for September. paid X some had they There the it the Yes, obviously

John Massocca

might as kind get kind portfolio? that Rouge down portfolio you're for but you And market. sense. of you where as makes the recycling. opportunities opportunity like long for Baton target of know looking That on looking one of maybe of you to where maybe you fine-tune to recycle position kind term, to good asset not Okay. I in a better touched look be to know maybe kind markets on I capital places to other was any capital that then see kind front. the but expand, we of Any

Scott Schaeffer

always looking we we're at full Well, think which where portfolio grow to want their and potential. reached have we the markets

So point, we more the size, we an additional we're recognize and growth for be we announcing of other important as doing. our than be model be not will at in and this Dan, cycling any forward. really we of recycling some areas our will consolidating part we It's that we that see markets we're going move going markets probably than should out forward. forward, better in existing But where

John Massocca

Makes sense.

calls, range on of for what the mentioned previous you've but in? general kind markets you target think want number is I of be your to

Scott Schaeffer

X,XXX.

Operator

closing to to And the for call I back would Scott I questions. like any am And Schaeffer further now currently seeing turn remarks. no

Scott Schaeffer

you to you see of thank couple to maybe And joining otherwise quarter. speak of in and in Thank for Well, you hope weeks, will us some you. a today. next we Dallas

Operator

thank a great gentlemen, does day. disconnect. the program, today's now Everyone, and you Ladies in for you This conference. may and conclude have participating

Independence Realty Trust (IRT) 31 Oct 172017 Q3 Earnings call transcript