IRT - Earnings call transcript Q3 2019 | Independence Realty Trust, Inc.

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Operator

Thank you for standby and welcome to the Q3 2019 Independence Realty Trust Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Ms. Lauren Tarola[ph], Investor Relations Representative. Please go ahead.

Lauren Tarola

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

On the Farrell call CEO; with me today are our IRT. Financial of Jim Scott Chief Officer; President and Ender, Sebra, Schaeffer, our

Today's call website There our available be Eastern will approximately Investor call today. on Relations replay the telephonically webcast Time at XX beginning of at www.irtliving.com. a via being is webcast our on website and PM

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

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

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

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

Scott Schaeffer

which strong X.X% thank of to in NOI three joining with quarter demand year-to-date. fuel momentum our morning. a and housing units, you Consistent for helped execute and in marked initiative for strong up our two and within X% generated progress us newly Lauren have coupled growth to projects. same core With renovated another this lease our and process revenue growth. phases we the for value-add sound ability and you, store NOI Thank value-add of steady QX all one, quarter our markets underway, place

end those units have been of have been XX% completed As and X,XXX quarter units of leased.

We seeing nearly rate average an return total XX.X% are investment. rental XX% increase on and

to-date. We progress At we current value rates, created every are $X have very with dollar invested. pleased cap for of the

scratched the However, surface. we just have only

X eight earmarked completed. renovations We our within have Phase substantial to to the within just commence, amount meaning is yet there properties X,XXX are under have that of six program. for opportunity units current yet the be And ahead of a

believe more are we in Phase beyond our addition, there X. portfolio In opportunities

in rate increases, value-add not also foundation create that initiative build Our price offer communities residents NOI decision long-term a for this to to was and short-term and upgraded to intended at invest a only point. growth living rental experience create lower strategic sustainable but we an as

also and our to quality operating create continue recycle both the to efficiencies improve in assets of We markets. capital our

with portfolio scale the of growth. lower growth operating reducing and in in attractive to efficiencies goal the exposure all our limited while with review scale continue our in markets building We communities and markets,

of XXXX capital you in our plan. we completing QX Little with mid-July closed properties sale our discussed As on in Arkansas, call the two Rock, recycling our

in Austin, in Our Texas expected under contract is with mid-December. settlement community currently held for sale

beyond. North in Tampa, exposure want this July confident, a discuss in line, in then Farrell the more additional to the we to flow in these allowing to and by Carolina, the our are initiative markets. from we as quarter acquired result value-add reiterate community that in cover bottom us a Raleigh, and through an dividend our portfolio detail, continues we will dynamic to our increasing As then growth community benefit and I will to fourth October acquired Florida

dive a markets now and to for over Farrell? activity into our Farrell during call turn I'll the And deep the quarter.

Farrell Ender

Thanks we non-gateway Revenue strong a Scott and and from rich across increased everyone. execution standpoint grew store continued the an NOI of of both portfolio. strong echo XX middle-market for and X.X%, had and performance To quarter Scott in morning our markets. comments, the good XX same indicators many communities markets demand our

the Charlotte growth an NOI portfolio. markets these In Wilmington, the broader Raleigh-Durham, Myrtle country. initiative. along of growth Tampa the Louisville, population been from with a market, XX% year. Wilmington drawing market, are livability store of and growth Beach, people a to the at IRT Looking all performers strong and also Wilmington, and consistently These the combination XX.X% benefit have job for compared Louisville Beach, exceeded quarter, continue markets for as value-add by Myrtle our Raleigh same influx of increased as NOI last to sense areas of leading to

is enabled with market has when through supply three compared combined increase going as One XX.X% last our rents us of to renovations limited in this by year. communities

seen the as the both the service average. health current of and and market metros population rate two during The having Beach communities the other cycle. over experiencing significant industries in also XX% are market from Our employment growth is growth country in XXXX posted to grown education times four among Myrtle increases fast X%. national the benefiting, has as this rental has fastest XXXX in growing

normalize In average. and seeing is significant Raleigh-Durham, QX is early rates of average XXXX XX% most we the our The from and renovations and occupancy we one on near to-date this Village rental Auburn project of to completion up on value-add as are increasing. at XX.X%. occupancy X.X% community,

see without quick uptown light projects. the benefit In aid submarket and which organically we easy End reduced the Charlotte, continue mentioned being are as I cost. access of growing Shifting located Charlotte to the our at rail to South on which from the and Tampa, value-add provides to in a Charlotte link

and and the has opportunities, pushing suburban to has We've time rents. Charlotte same our those deliveries. the supply while in significant with has in market’s built with the Given to jobs Over X.X%. XX% four occupancy has fallen inventory over supply risen uptown been and XX.X% years the favorable couple to location at paying of occupancy this of both while able development submarkets seen waned. high average past the increased We increasing occupancy by rental less been and gain rate years past

quarters criteria, Tampa this community communities we've same market only with investment is several anchored discussed increased several we rental that market, both past align own our a infill supply revenue of rates growth XXX over is a limited suburb basis It consistently occupancy center. in the very one dynamics our is the points, currently schools the directly X.X%. in supply-demand whole and while portfolio. store shopping by matured We've and foods in great across with located street a as generating from

renovation portfolio on whole The occupancy the occupancy XXXX. growth. during powerful XX.X% value-add short-term more rental QX at the On the communities in was QX, long-term average versus by is than effect slightly our flat down and process rate quarter-over-quarter offset

a leases rental QX, leases X.X%, spring X.X%. rental of accelerate Total typical expected fourth year-over-year of we while during and Through into the rate QX, are and cyclical season. quarter nature On X.X% X.X%, our value-add the month increased up rates of rental X.X% lease-over-lease combined driven rate rates renewals lease-over-lease a is with properties. X.X%. our will by in new were new entered increase March lease-over-lease are a and deceleration up increased X.X%, yielding of portfolio the rates average for increase renewed begin as is again the up lease business, first blended rental lease-over-lease This of to basis, leasing

explorations into the Our strategy is lease to and most the increase we our of quarters, rates. second drive where ability third and the majority to demand experienced

July units X.X% our stabilization. recycling, XXX unit Turning market, We and was renovation a fourth counts bringing the year built and rate our our X,XXX total to based our nearly one purchased cap NOI. X% at the rate be property attention cap in Tampa added our The our acquired of we community to in program. of on of and X.X% a will XXXX, on property units economic contains capital XXth, total

closed District. our in added units year unit purchased stabilized based Raleigh-Durham in NOI. rate total has $XX,XXX community Wake X% proximity income The from medium The median The contains our home this community benefits an October, XX% property renovation and the rate and of and of third will one X,XXX in to sixth mile market Subsequent cap and $XXX,XXX a County X.X%. also pipeline to was a community our its within total radius. in This a School three quarter, was XXXX to of our triangle count on XXX and brings we and household highly-rated It also value built to cap property market. research the units. the be

our discuss to Jim to over call results. the turn now I'll financial

Jim Sebra

Thanks Farrell, and morning good everyone.

million, FFO grew net up stable Core third shareholders $XX the allocable in to FFO XXXX, XXXX. XXXX. remain at per common $X.X from For million $X.X third Core the per income $XX.X quarter $X.XX of from share quarter was up share. million of in million to

growth, the flat rent X.X% communities property was X.X% the NOI third during rates quarter, an same-store monthly average the Turning growth year-over-year. XX.X% for year-over-year average for excuse last in X.X%. Rental and X.X% quarter, with increasing up revenue communities me, to this expenses QX, year. $X,XXX of of since portfolio with same-store level Occupancy same-store increased our effective

in real QX estate primarily taxes. non-controllable the over same expenses last our and period operating X.X% Controllable driven operating year expenses, On X.X% year-to-date, increased increased year-to-date. of expenses by X.X%

due with call, discussed the is Namely, earnings elevated capital continuing associated mentioned same this trends our to interest we recycling some we second As our debt initiatives. higher balances quarter. in are of quarter expense then

sale reduce Looking the debt in our at and Texas interest balances community QX, related expense. overall will of Austin, our

and our to enabled in as a in the critical further increased year-to-date continued of for growth. to have G&A already G&A platform deliver us and without to outsize invest XXXX, team. represent we foundation management expenses growth the over Additionally, incremental our the These investments scaling portfolio support platform

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

normalized is XXXX. down end, with at no level times. At hedged net X.X slightly XX% rate debt fixed quarter adjusted maturities a debt came Our or to EBITDA until debt significant with our

to expect no year with basis in interest change market reprice of later be our annually the to existing saving maturity seven and year We points date. loan the approximately us this XX term

a share, weighted XXX,XXX at $XX.XX though, price our shares ATM During the the shares through $XX.X net discussed the average Year-to-date value-add million, issued of We program more we $XX.X approximately to as per million. to fund raised previously, the quarter, active and generating proceeds quarter-end, we recently have and with issued we've we used were of at times on selling shares used opportunity X.X million delever. proceeds ATM.

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

than what on the and assumed previous lower reflect reduced of sale dispositions in EPS XXXX, our to was been Our gain guidance in number property guidance. had

However, per our remains range unchanged at for FFO to core $X.XX per share guidance $X.XX share.

range, to expected a property operating realized to X% X.X% we the appeal updating estate a be Turning of to outlook to we rental property and favorable additional our revenue drive at revenue which our are The guidance X% a total assessments lowering help into below range. top results. guidance, due expenses to the year-to-date, tax to same-store in This growth operating have property of of to the strong to expenses in guidance fourth increase will previous previous range quarter. X.X% results growth reflects while be real end our expected of revenue is range decrease

X.X% same-store for growth range X% to we now expect Overall, within NOI XXXX. a of

that believe continue Looking provide growth. renovation NOI we strong forward to program XXXX, value-add to will

our We for earnings February, call year-end XXXX on will in provide XXXX. guidance

With over back turn to call that, the I'll Scott.

Scott Schaeffer

you, Thank Jim.

into in we and the XXXX, final in the a months their to moment take both dedication want our strong As recognize of to execution. team, corporate for offices field our I move and

XX Over we since months, inception. the generated NOI strongest the past our growth have

the tremendous into state-of-art very opportunities that ahead. the out XXXX, we lie Looking about excited and are business

relates to XXX to as per to it have units we to X,XXX first under phases expect XXX year. value-add the complete First, be the next quarter an program between three and units renovated the initiative, additional of

a provides markets core time best strong capitalize capital continue positive shareholder to portfolio our estate our of to to to trends. deliver to on to a drive recycling see we a growth align continue leverage ability and sight our over value. line profile fundamentals we'll improve execute these Secondly, And and lastly, our long-term outsized real across strategy

the And like open now, for – operator questions. to I'd call

Operator

Instructions] Drew [Operator you. the comes line from first of from Your Baird. Thank question Babin

Drew Babin

morning. good Hey,

Jim Sebra

Drew. you, Thank

Scott Schaeffer

Drew. Hi,

Drew Babin

color just rent touch little on it that a that where to maybe Wanted kind market and you some on that's you a more been give that into towards positive? equation turn when pressure, growth of supply occupancy sort Charleston, been expect Could of under more market is working there. to presuming both and

Farrell Ender

Drew. Sure,

Class is the a lot one Class Island going least two The one X% doing a it. We’re average Daniel there, so Class on to for supply on that through two communities we're to of B rent okay, B continue A they Northern at X%, and A is as suburbs to it's the pressure. one going a seeing away, and another and have growth. assets Class that that's We build facing in don't year just manage see we're to or market, is

Scott Schaeffer

I for that in will believe in the market. add though, long-term, we that property

as are that. says through we Farrell managing So

Drew Babin

the appreciate more one I color there. just for Okay. And me.

today? next based know that potential sell current costs want longer-term. today you’re evaluating being you net year that Independence acquirer Just to your Do envision everything based on on might capital we sort assets you a

Scott Schaeffer

I do. Yes,

Drew Babin

guess can sell properties addition subset number that you non-core all some of essentially, portfolio by aggressively talk portfolio? And Okay. the subtraction is be just that, if to some approach? you point about how how maybe prefer might willing to large on that or the you especially at I And or building of at assets,

Scott Schaeffer

we we've We the stated consistently, the either the recycling where relative we're that looking grow. not portfolio have and stated looking to or inability as exit we're the to at to exposure capital. limited Well, desire of markets

we point, important to business of haven't and specific in do expanding just near-term. in is this any recycle again, it our at strategy markets recognize So please concluded to expect we're we assets an the and portfolio focusing going of on it way. the that be, really But that part growth that – out

Drew Babin

color. appreciate That’s the I me. Okay. all for

Scott Schaeffer

Thanks, Drew.

Operator

line Your Austin comes question next from of the from Wurschmidt KeyBanc.

Austin Wurschmidt

think been the this achieving believe mistaken And I your from Hi, not good to sort year. value-add next XXX per pickup to said turns the of you're a targeting per remarks, Scott, I of I'm quarter everyone. that, you've towards XXX end if morning of that's quarter XXX you XXX year.

think if driving what's today really have of you curious and that Just in decision? place personnel that level handle heightened the you to renovations

Scott Schaeffer

and more X Austin. Thanks the with this personnel think a fact have place, been since to X. we team, And then started are starting very while the in program down we really we've and Phase processes working we that we good continuing the Phase we've is do due the Phase on X, have winding increase

continuing adding we're Phase units the still Phase being having So it's X team in is of gives us all excited some next units just and X place then year X to completed, and about it. and Phase through very yes, more renovate. in And

Farrell Ender

are And teams we're just built-out. Austin, with to that add already in markets these all the

put So leveraging what we're just already in place. we've

Austin Wurschmidt

that non-value-add little well? the lease increases you new the driving rates on then the in Appreciate October, is Farrell, as in assets value-add that's that And that there. Understood. of you're decel units thoughts referenced moderation in within strictly is a expect achieving or you also do bit

Farrell Ender

nature we cyclical expiring back less trend. we see we go year, and a it If just was and QX it traffic QX every it's the have It's last and similar board, again, year. across where leases to the less

Austin Wurschmidt

you. Got then it. Jim, And for maybe one

You aggressive a highlighted the this under were more ATM quarter. you bit

continue Just expect utilize the forward ATM opportunistically? curious, should you moving we to to

Jim Sebra

Yes. share. and decree the that's Opportunistic to would NAV the earnings ATM, be the Austin, appropriate right. for the to on NAV, per that accretion issuances

Austin Wurschmidt

Great. guys. Thanks

Scott Schaeffer

Austin. you, Thank

Operator

Nick of Joseph line the from comes question next Your from Citi.

Nick Joseph

wondering midpoint. core was and acquisition I'm if walk with Same-store little give through maintained again, of up can XX bps color growth growth midpoint you at addition the FFO a Jim, guidance. Thanks. went guidance updated at the the NOI more net

the pulls there? So can over you and wondering, pushes if go

Jim Sebra

Yes, sure.

recycling as and than the mentioned happening of the higher bit de-leveraging of we’re a later, the as rates, from then Farrell part cap the issuances certainly bit at half kind slightly are in acquiring the the happening the last cap assumed effects we of some year. rate, we the timing around little originally, ATM of of a just call, expected the – X%, the the acquisitions as later a little year we the had in rates in or also cap capital the last mentioned As X.X% just we well

Nick Joseph

and So little exists that is run the rate implied XXXX? about fourth some that are think over or a forward you given fair still run guidance think in Is $X.XX for the those I how XQ. quarter, going rate into going do

Farrell Ender

And obviously get up acquisition a recycling we'll double of bit a of of we'll of part XXXX I give exciting I cap kind $X.XX a that. property run $X.XX in has the But obviously part $X.XX with the And occur, think, is the of guidance early fair when year, in is little quarter. the next of beginning but think a the sales will certainly we offset rate. the that quarter the to

Nick Joseph

Thanks.

Operator

of comes question from final from Malkin Capital Neil One the line Your Securities.

Neil Malkin

morning. Good guys. Hey

Farrell Ender

morning. Good

Neil Malkin

and opportunities seeing Following guys this impressive you Austin's and terms Just to more one elevated it's you acquisitions day are year in down a birds to you more deals in stone easier just potentially with accretive with mean, quarter, are Raleigh? or indeed ATM kill of I two that share given obviously the up looking your to I wonder, issuance deleveraging kind on like given question, funding this and get have that dividends? of had price one, which aggressive appreciation get take would

Jim Sebra

and Well, into dividend we're are we be are to always a keeping this covered do normalized more growing it as in ratio focused we've future. this dividend to quarter covering stated, transactions in the laser and payout looking and that accretive fourth ratio,

be will NAV to use when earnings to opportunities again, look opportunistic accretive share. and we that ATM transactions the focused per So will continue will and on and we always at both

Neil Malkin

was ago? kind more of it than a year your pipeline Is robust

Scott Schaeffer

a a had and a have can identified always and chasing to again we've we're lot continues grow where current multifamily money the We've we to markets and be assets. very deals looking the No very of market fulsome pipeline there's opportunistically do aggressive that in exposure.

Neil Malkin

strategy of a All markets the same obviously are but to notorious about sort if The how easily kind assets strong moat right, to more general. maybe non-coastal question able thing, know, and following? in are that lot NAVs. thanks. yourself of I wonder in those And thinking bring say What about to growth your at also, states for great day of expected coastal have when in time, being push-back on as then than the would the that's a you Belt a A supply Sun really in population the describe you to invest do you sort more a put markets. blue the current for around – that you that? markets competitive

Scott Schaeffer

it's basis good there developing that's investment want population non-gateway, where our And in non-coastal people job markets sure. well. build as communities growth are new looking of really, and and Well, to are we you're is creation the right, who where, thesis,

of goes the B strategy, assets to years old. that XX is part other to However, which that XX Class are our typically the

being value-add have price the advantage. effectively point newer is but the as we program, attractive Class And a not still a with supply, supply a so A product a price competes B, that New very at point. built are product lower and Class we much can deliver delivering with

is how you we agree and our Sun strategy more development the in B Belt markets, compete but effectively. that Class that there goes I So to with

Neil Malkin

a is in for Could normal us same for me. give assets, last Class then of just compared post-renovated rent to example thing sort asset market? per unit A of an what the And you spread Sure.

Scott Schaeffer

we deal. $XXX constructed to a we're we new to be to want A analyzing a do post-renovation $XXX when want So below still – to renovation, Class

Neil Malkin

All Thank you. right.

Operator

this any the Scott And time. further back will Mr. am remarks. I to no showing turn call for closing now Schaeffer at I questions

Scott Schaeffer

today. look of Thank Thank next couple forward of we you in if don't you seeing weeks. joining us Nareit, all And with you. speak Nareit many quarter. we you for We you in in to will again a in see

Operator

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

now all disconnect. You may

Independence Realty Trust (IRT) 31 Oct 192019 Q3 Earnings call transcript