IRT - Earnings call transcript Q2 2019 | Independence Realty Trust, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Q2 2019 Independence Realty Trust Earnings Conference Call.

As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Ted McHugh, Investor Relations.

Ted McHugh

Thank you, Ashley, and good morning, everyone. us Results. Independence joining Quarter Trust for Financial XXXX you to Realty review Second Thank

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

Before statements turn to forward-looking IRT has I'd this and I financial views call the Scott, and Actual there projected. These events current performance. like over substantially that materially everyone results with from may to future differ respect statements call. made what remind reflect IRT's be to forward-looking in could

statements with SEC press results good made of refer our Private pursuant to Security safe XXXX. our accuracy the the expectations. from supplemental Reform differ release, expectations that in information to the or of future those to the Please harbor cause Act for filings of factors provisions Litigation can affect IRT's materially are Such faith and

X-K IRT's information, a recent release to measures may of statistical press Participants call. at most on containing direct comparable website and available most Form other the IRT's is reconciliation and financial to A current supplemental measure financial the information of attached IRT's non-GAAP information under measures copy Investor discuss during non-GAAP financial the financial Relations. GAAP report

with matters herein, be law. pleasure forward-looking IRT the it's not are With SEC to may undertake filings link. to required over to other Scott update described or in call that, also to statements Schaeffer. does as call by my available this through turn except this IRT's respect

Scott Schaeffer

us this Thank thank you, for Good and morning. morning, joining you everyone, Ted.

consecutive the continues second drive creating with of This through a upgrading pleased to growth, we're is in portfolio. made value-add X% than same-store the X.X% progress of our quarter. to greater our NOI quarter robust are NOI initiative, especially second the testament the during value quarter, which growth the We

unique is cities amass differentiation leading economics. and cycles. our unwavering demonstrate positions since communities attractive but It's us across non-gateway we favorable for space every growth strategy a Our been simple, estate portfolio supply-demand within the are and of day in working that has varying real high-quality to maintain inception, multifamily favorably its

Our capital are two recycling value-add of primary growth investment. and levers

Looking to of and XXX Little in first Rock, recycling, remaining the sale Florida, subsequent represents unit a end, that dynamics a capital for strategy. in sale the held at with we acquired supply-demand directly Arkansas, pleased our attractive our our community to we I'm completed that report aligns two quarter communities believe market Tampa,

review goal value of the our our We maximizing will all continue shareholders. communities of with we to work to portfolio the position as for

are front, and are value-add through launch halfway to officially Phase excited Phase approximately of the I we the III. On the and Phase we II programs, announce

utilizing months, incremental an anticipate over commence As The will Louisville, of complete, and communities next across these $X.X and eight to totaling these platforms $XX Atlanta. Tampa, units in identified the five markets, spending of XX efficiencies at markets million Phase on once generating renovations, value-add in the annual maximize existing III and additional end, Memphis, the X,XXX returns. million renovations quarter we Raleigh NOI. We communities

growth balance this growth, see trajectory. initiatives quarter. this the the call continue on and Farrell? our that, dive and during Farrell year the I'll activity recycling into to of AFFO support of to our markets year, by With be our the fundamentals market middle With the value-add an turn and this to deep As for track we program, cover expected multifamily basis we dividend that benefits continue look to to the we expect capital at healthy of over on a thereafter. end

Farrell Ender

Thanks, good morning, everyone. Scott, and

at greater markets of second XX differentiated, Memphis we growth revenue growth, of amenity-rich than When communities. middle driven XX markets. the portfolio outperformance. communities significant by specifically markets our quarter, the in our growth generated markets. largest primarily looking experienced During in all growth X% Louisville of a Raleigh, highlights specifically, our XX%, XX those advantages with owning provided in NOI market above value-add NOI This and

Phase and market, overall Looking NOI at same-store growth for the Village of portfolio led for at improvement a increase XX.X% increasing and the that program results tangible units our is investment to Auburn Raleigh of our X.X%. positive this in value-add at X The of included date, XXX occupancy our XX% by with rental renovation example community. NOI portfolio value-add the which by specific markets, driven occupancy program. market a The growth quarter of at has

for we Raleigh continues population display and Atlanta four our six currently We market core job exceed with growth averages. this properties to a demonstrate market same-store for fundamentals continues to the fundamentals look communities. with in in portfolio. our in own national optimal that

entry portfolio barrier located the are under communities with with currently suburban fill and Our four renovation. in communities of to three in locations mature high our same-store

in an combined presence effort in fundamentals, Overall, the has performing X.X% grow property is taxes well. of increased slightly pushed rent rental market to we increased year-over-year us our occupancy revenue by with markets. displaying NOI XX.X%, quarter-over-quarter, X.X%, optimize enabling with portfolio as of to an core our value-add Strong X.X% Average increase XX%. our

rental performance significant XXXX. producing for should rest that the growth also generate of rate positive are We

of we rate quarter, by X.X% X.X% new combined second able leases year-over-year. raise and to which X%, the In by rental renewals a were increase yielded

this generate is anticipated. and to X.X%. for beginning rate of increase producing internalized leases continuing a we blended rental leases to X% effort renovations fully out are the increase renewed an new build achieving X.X% to platform growth to with date growth quarter, returns The a third in generate the We

and We Raleigh, scale Columbus teams and leverage our have built local Atlanta, in Memphis.

renovated total to bringing date to renovated the our units units second since X,XXX. We XXX quarter,

with largely complete units expect balance the complete additional by of We year, X of end being end the by II Phase X,XXX year an and to XXXX. of this Phase during the the

renovations have two the four with XXXX. III in expanded begun started As early in Tampa Scott Phase of our mentioned, be market, at we balance properties this the to recently and of to communities

the two renovations believe one to III best With have renovation markets Phase II to the of delay Louis communities. chose it's We Phase for of teams, at all value-add in properties, in one projects commencement the existing Indianapolis. Phase which III, St. case located where we we and in is prioritize

in mentioned will overall not five million cap $XXX market. communities now As we outperform capital we recycling we sold In completed at markets, the total, believe, Scott the announced for X.X% economic earlier, rate mid-XXXX. have in initiatives a

one We this and rate a acquisitions totaled located Columbus. communities $XXX into capital redeploy five in with economic Atlanta year million, blended X.X%. of cap Tampa, These

economic is for favorable expected performance. years, average market In targeted in the robust its I'll the fourth five solid community a July, Tampa purchased Employment fundamentals. as Tampa for over now Austin. in process grow we growth in footing due market our multifamily the above community the to We hand next to addition, providing to and Jim. remain our call national began the of to sale

James Sebra

Farrell, and everyone. morning, Thanks, good

million, XXXX, We XXXX. reported Core X.X%, up For million was growth of of level property grew was $XX.X FFO up to per NOI income $X.XX. shareholders net million, to with the X.X%, quarter expenses allocable FFO share XXXX. quarter of in increasing $XX.X same-store second in from Core the from and growth second $X.X revenue million common $XX.X X.X%. of

we mentioned, strong Farrell in As our continue to rate rental growth see markets.

up points XX in was of On XX.X% basis communities $X,XXX, up during average averaged year. and the rent QX, occupancy the QX same-store from effective since revenue X.X% our last last year, side, QX monthly

On controllable half significant contract see the significantly in overall were utility, operating our payroll and expected. trending in seasonally XXXX. of services categories We as not not expenses, the forecast do than these as increasing original are expense while higher as QX, second side, in increases lower

category, taxes, our As remaining we received largest consistent of our expectations. with real for assessments estate the majority believe the communities on will be expense and assessments our

be the elevated as recycling this last second timing year we our as expense assessments, to for quarter guidance these Interest compared was activities. year, Given the the the of result midpoint outcome of of range. expect a to primarily at quarter capital

a guidance. the during consistent which including in of platform our XXXX, people technology, G&A The is is in result original increase year-over-year our with investment and expenses

We sequential increase and The at on retaining with QX from the recruiting compensation drive future focused costs. top IRT. is in are growth talent driven timing stock annual G&A and to expenses meeting XXXX help associated some normal of higher by

sheet. balance closed XX and assets of the We properties Turning $X.X billion. total with approximately QX towards gross

sales started community As the for this process Farrell of in year. July mentioned, one we

removed portfolio sale from that in a will in community quarter, QX. the will result, be and As same-store our be considered held for third

with is XXXX. net debt-to-adjusted normalized end, stayed debt until And significant no consistent of June maturities debt of Our a hedged quarter our as with level EBITDA X.Xx. XX%

average and $XX.XX of Regarding our program. ATM, per with to proceeds we issued XX,XXX at an price used value-add share, CapEx the fund associated the shares

included earnings release year As updated XXXX our have we today, guidance. our full in

our store, reflect X%, between lowering growth to the for outlook X.X% expenses, be previously For X% lower to increasing X.X% as property growth operating controllable and range property between revenue same controllable to to are be we our expense discussed. to

be for We the reflect NOI half of our the to performance expectations are increasing between year-to-date second growth X% to and same-store property to strong X% XXXX.

projected per the share. EPS our in be turn per over Core the share. a to of to and Scott. Scott? We is to are back FFO $X.XX $X.XX range $X.XX call share I'll of that, now With updating per to between $X.XX range be

Scott Schaeffer

Thank Jim. you,

into at and to in [Operator Operator, and confident move you joining questions ahead XXXX, of the our open this call strategy. the to we remain excited for like the today. continue call we the time. As appreciate by Instructions]. We I'd second opportunity half be portfolio

comes Your first Markets. Wurschmidt with KeyBank question Capital from Austin

Austin Wurschmidt

to opportunistic how NAV, your just ATM of maybe of out bit the on the little as curious today, at willingness curious, you your quarter. use manage program kind should become cost look trading a the you capital of Just to kind this under premium the and we forward to about stock you at and as acquisition using ATM your a leverage now dripped look But think front.

Scott Schaeffer

and year. thanks, cover the markets is on The the had acquisitions, dividend the to the that marketplace line by goal, We on. especially competitive a Well, in of we're in Austin. set end focused today we're very

or considered earnings. anything those So be might do ultimately might that we're going to dilutive not be to

So we to renovation was capital second then ATM used was we bit renovation fund or And use that in program did the accretive. quarter, talked a properties. about, as -- money that it's directly the the the little at

on the depending either. and consensus dilutive that's want price I any anything I consensus, So to NAV, do the don't think, to of because

that investing again, in in But be be the will in will capital any the quarter dilutive. covering the We way being dividend not opportunistic the that future. or fourth using ATM impact would

Austin Wurschmidt

the appreciate the thoughts mentioned there. mean, I Great. bit year. landscape take you competitive you acquisition in guidance your comments up your acquisition But a for there. I did a full

how curious terms pipeline in just what volume you're seeing of looks today? And the opportunities. So of

Scott Schaeffer

The to chasing these down. In X%. especially is acquisition B many this markets competitive. the that instances, of rates driven scenario very again, And in assets add. Class in And we're the below value cap focused everybody on, assets, view is XX XX-year-old with it's well

actually little upside even So down. it's a bit

points seeing A XX are, B XX cap are assets. trading that assets We're instances, markets these as higher some much basis in in that as rates at to than

watch on aggressive right scenario opportunistic. it's now to a want for an keeping We But close be the assets. we're B So it.

Farrell Ender

been makes just that I we where successful, want agreed with number to to Tampa I to our say, and sense we're was here, us would the going execution, able that marketed, a seller. we've and and deal value in a a obviously, where is we've was closed. at preempt the That be agree. people for also, they number, mentioned us came to deal And

Austin Wurschmidt

rate Is that in quarter? on to say that, similar you closed it was the second cap fair the to what

Farrell Ender

was a cap April cap on economic underwriting. bit lower. rate the little deal And cap deal in X.X one a rate. was on X.X bought year our It in a the Atlanta was economic rate The Tampa we

Austin Wurschmidt

the for? from does much of account And that spend Phase then program, it. how you on X X Phase much of for the last is properties Or of value-add one how properties two your pulled incorporate? did me Got those

Farrell Ender

$XXX,XXX They premium about have projects, smaller the were capital premium. would a or NOI of costs of million, with total two $X yielded our rent or construction

Austin Wurschmidt

total, correct? $X in that's million And

Farrell Ender

$X million total costs. construction

Scott Schaeffer

those We between deals. two took

Operator

Your Joseph next from question Citi. Nick with comes

Michael Griffin

is This Michael on Nick. for Griffin

the rest see you add and same-store do how NOI, NOI the same-store same-store Regarding trending between the NOI value of year? total of throughout spread the excluding the

James Sebra

Yes.

I good think, Michael, question.

year so don't far significant half the to of see of that? seen it generally to half. I think, trend, We the in we speaking, continue into as the would alteration back kind any first you've expect the

Michael Griffin

announce timing Phase you the of closer as are to decided I'm it why just and curious, completion. And for to now Phase X opposed III, X waiting to regarding

Scott Schaeffer

will the year. X Phase end be by largely this of complete

So We're the doing in months. next we've five discussed improvements turns. only on the as

So be carry will of if units at largely some X will tenants But And the work are into announce some Phase year. started the on we straggler that keep XXXX. thought And end in on Phase we're of there Tampa properties we've will that renewing, at identified I it, Phase done it, it, be just we've III. should doing the we it. assets this

Michael Griffin

Okay. Got it. for me. That's it

Operator

question Guinee your Instructions]. [Operator comes Stifel. John next from And with

Aaron Wolf

This is quick Aaron A Wolf on for question. John.

in the what roll-ups. rate rate once two cap like and the acquisition the Tampa one on look and economic X.X -- What cap on initiative value-add see year the complete year yield you mentioned rent is underwriting. three, that does does You

James Sebra

Sure. In renovated, three, we're done, fully once X.X. it's year

Aaron Wolf

Okay, great.

James Sebra

a don't numbers, the get the -- in between as have obviously, I two year we through renovation. that

Aaron Wolf

And perfect. any question the of Okay, of slightest about? core markets you seeing in are last signs of that bit for any markets have me, or your softness concern you

James Sebra

job not watching, say Louisville in markets and the of as Memphis as would are other dynamic population just growth. I terms we're and

given So very them have holdings pretty in watching those a markets, we carefully. considerable we're that

have markets, I been very watching like there in communities well. Our fundamentals with But said, them the performing again, carefully. just we're those

Aaron Wolf

my taking questions. quarter. for Thanks Nice

James Sebra

you. Thank

Operator

Riley Kucera FBR. next comes Your Craig question B. from with

Craig Kucera

marketing the for the I of perspective? may a what's in here asset asset now you're but size this, dollar which third kind was of sale the have that and quarter the missed from

James Sebra

Texas, in range. Austin, going in million property to the it's Our and think $XX we sell million $XX to

Craig Kucera

likely for Phase as and go, you program, XXXX. here XX, understand III pacing turn think as that for it months? is that sort XX, relative that But as thinking of about you assets? take project, in those Got Or about to you're that in it I far are to XX starting how early

James Sebra

when or completion To we going them? start to are

Craig Kucera

completion. To

James Sebra

probably It months. would be about XX

Craig Kucera

Okay, terrific.

Scott Schaeffer

to would say like acquiring have and we wonder in property, don't for we're this long-term so -- when growth I Austin would but -- about to why it's Scott. add that I that make sense in only you one asset be us just Austin markets of we selling thing Craig, good selling may doesn't to is would does, Austin, one positive the fundamentals. like we Austin, clearly be long-term it anymore, have there. out

we So because that we're really grow. really eliminating or selling can't asset it's an area where

Operator

I I am time. for showing will no at remarks. conference now turn further closing questions the back this

Scott Schaeffer

for morning. Have you speaking look you good in again day. thank We Well, XX with forward days. to joining us a approximately this

Operator

Thank today's have concludes participation, and a this gentlemen, and conference. Ladies day. for you wonderful your

You may disconnect. all

Independence Realty Trust (IRT) 2 Aug 192019 Q2 Earnings call transcript