INDEPENDENCE REALTY TRUST, INC. Q3 FY2024 earnings call

• Thanked on-site teams for their role in ensuring safety of residents and communities affected by Hurricanes Helene and Milton. • Reported solid third quarter results with same-store NOI growth of 2.2% and core FFO of $0.29 per share. • Average occupancy was 95.4%, 90 basis points higher than the previous year, driven by resident renewal rate of 66% and retention rate of 57%. • Blended rental rate growth was 0.8%, with new leases down 3.6% and renewals up 3.8%. • Renovated 578 units in the third quarter with a weighted average return on investment of 14.9%, expecting to renovate ~400 units in the fourth quarter. • Continued capital recycling initiatives, including selling a property in Birmingham and buying a property in Tampa, and under contract to acquire three properties adding 776 units. • Received a BBB flat investment-grade rating from S&P Global Ratings, which will improve cost of capital and access to additional capital sources.

Independence Realty Trust delivered solid third quarter results with same-store NOI growth of 2.2% and core FFO of $0.29 per share. Average occupancy was 95.4%, 90 basis points higher than the third quarter of last year. Blended rental rate growth was 0.8%, with new leases down 3.6% and renewals up 3.8%. In the third quarter, 578 units were renovated with a weighted average return on investment of 14.9%. For the fourth quarter, they expect to renovate approximately 400 units, bringing the full year target to 1,700 units. They continued capital recycling initiatives, including selling a property in Birmingham and buying a property in Tampa. They are under contract to acquire three properties in Charlotte, Orlando and Columbus at an aggregate purchase price of approximately $184 million, adding 776 units to the portfolio with a stabilized economic cap rate of 6%.

• Maintained the midpoint of full year 2024 same-store NOI guidance range and now expect to be at the high end of the previous core FFO per share guidance range. • Expect to renovate approximately 400 units in the fourth quarter, bringing full year target to 1,700 units. • Under contract to acquire three properties in Charlotte, Orlando and Columbus at an aggregate purchase price of ~$184 million, adding 776 units, with a stabilized economic cap rate of 6%. • Revised full year core FFO per share guidance, increasing the midpoint by $0.01 per share. • Full year same-store revenue growth expected to be between 3% and 3.2%, with fourth quarter same-store revenue guidance midpoint reflecting average occupancy of 95.6% and blended rental rate growth of 50 basis points. • Full year total operating expense growth guidance remains at 3% midpoint. • Acquisition volume guidance revised to a range of $264 million to $268 million for the year.

• Uneven macroeconomic environment characterized by new supply and effects of inflation on controllable expenses. • Pressure from new supply impacting new lease rent growth. • Potential for insurance premiums to ratchet up in 2025 due to severe weather events.

Q: Brad Heffern asked about the ability to maintain the spread between new and renewal lease rates and Scott Schaeffer responded about seeing renewal rates through December and being confident in it.

A: Scott Schaeffer said they are seeing renewal rates through December, with about 30% of outstanding leases renewed in December and expecting low-50%s, feeling good about it.

Q: Austin Wurschmidt asked about earn-in expectations and Jim Sebra responded it's expected to be approximately 50 basis points for next year.

A: Jim Sebra stated the earn-in for next year is expected to be around 50 basis points.

Q: Austin Wurschmidt asked about occupancy growth and when to switch back to pushing rent, and Scott Schaeffer responded they are happy at 95.5% to 96% occupancy and will have a balanced approach going forward.

A: Scott Schaeffer said they are happy with occupancy at 95.5% to 96% and will maintain it with a balanced rent growth approach.

Q: Austin Wurschmidt asked about when new lease rate growth could turn positive and Scott Schaeffer and Janice Richards responded about supply growth expected to be lower in 2025 and seeing signs of asking rents creeping up.

A: Scott Schaeffer said supply growth in 2025 is expected to be significantly lower than 2024, and Janice Richards added they are seeing signs of asking rents creeping up.

Q: Eric Wolfe asked about what's driving sequential same-store revenue increase and Jim Sebra responded it's bad debt expense and other income growth.

A: Jim Sebra said sequential same-store revenue increase is due to bad debt expense and other income growth.

Q: John Kim asked about markets with new lease rates and Janice Richards responded about no negative impact seen and waiting for pricing power moving forward.

A: Janice Richards said they didn't see negative impact on new lease rates and are waiting for pricing power to move forward.

Q: John Kim asked about recent acquisitions' characteristics and Scott Schaeffer responded two are new constructions delivered in early 2024 and one is an older asset in Columbus.

A: Scott Schaeffer said two of the three acquisitions are new constructions delivered in early 2024, 87% occupied, and one is an older asset in Columbus.

Q: Omotayo Okusanya asked about new development starts and Scott Schaeffer responded they are not looking to start new developments yet.

A: Scott Schaeffer said they are not currently looking to start new development projects.

Q: Omotayo Okusanya asked about insurance premium risks and Jim Sebra responded about insurers potentially ratcheting up premiums but they are happy with current situation.

A: Jim Sebra said insurers may ratchet up premiums but they are happy with their current insurance situation and expect to negotiate well next year.

Q: Omotayo Okusanya asked about the preferred investment impact on core FFO and Jim Sebra responded it's about a $0.015 benefit to core FFO per share.

A: Jim Sebra said the preferred investment will provide approximately a $0.015 benefit to core FFO per share.

Q: Ann Chan asked about competition in markets with higher supply and Janice Richards responded about trends in Dallas, Atlanta, etc.

A: Janice Richards said they have seen ebb in Dallas, Atlanta has stayed consistent with concessions, and they are targeted with concessions.

Q: Linda Tsai asked about institutional owners taking on higher deductibles and Jim Sebra responded they haven't seen a clear trend of that.

A: Jim Sebra said he doesn't have clear anecdotes of institutional owners taking on higher deductibles as a trend