INDEPENDENCE REALTY TRUST, INC. Q1 FY2025 earnings call

• First quarter 2025 saw 2.7% same-store NOI growth due to occupancy increase and effective rent growth. Value-add renovations contributed, with 275 units completed at 16.2% ROI.
• Sold Birmingham, AL asset for $111M, acquired Indianapolis community for $59.5M, and entered joint venture for Charleston development.
• Market fundamentals: Apartment deliveries to decrease, Sunbelt markets to benefit, homeownership affordability favors renting. Submarkets forecasted to have positive net absorption with population growth outpacing new supply.

No specific product segment breakdown provided. Overall, first quarter results were solid with 2.7% same-store NOI growth driven by a 100-basis-point increase in average occupancy and an increase in average effective rent. Value-add renovations contributed, with 275 units completed at a 16.2% average ROI. 28 communities with over 4,600 units are in the ongoing value-add program, targeting 2,500-3,000 units this year.

• On track to achieve full year same-store NOI and core FFO per share guidance.
• Aim to reach mid-5 net debt-to-adjusted EBITDA ratio by year-end 2025.
• Expect 32,000 new apartment deliveries in 2025 and 24,000 in 2026, with submarkets forecasted to have positive net absorption.

• Macroeconomic uncertainties.
• Potential tariff impacts on value-add renovation costs.
• Insurance renewal uncertainties affecting operating expenses.

Q: Walk through the leading spreads for the first quarter?

A: New leases were down 4.6% in Q1, renewals up 4.8%. Trajectory is positive month-to-month with better performance in February, March, April.

Q: Have you seen evidence of tenant stress from macro uncertainty?

A: Overall, no evidence yet. Bad debt was down 50 basis points vs Q1 last year.

Q: Trends in traffic and conversion?

A: Demand is 25% higher vs same time last year. Conversion is relatively stable.

Q: Development opportunities?

A: Seeing opportunities, Charleston JV is at 6.8% yield. Deals under contract have high 5% economic cap rate year one.

Q: Cadence of same-store revenue?

A: Revenue growth will come from rental rate growth and bad debt reduction. Occupancy lift was high in Q1, future growth from rental rates and bad debt reduction.

Q: Costs in redevelopment and tariffs?

A: Most renovation costs locked in, early to tell on tariff impacts. Vinyl flooring from overseas, but pricing locked in for 2025.

Q: Exiting markets?

A: No expected exits by year-end. Dispositions guidance currently complete.

Q: Insurance renewals and OpEx?

A: Expect net decrease in insurance premiums post-renewal. Liability renewal expected to increase, but overall net decrease. Repairs and maintenance trended better than guidance.

Q: Blend difference between markets?

A: Midwest blends 2-3% based on seasonality. Sunbelt has positive trajectory from January-April and expected to continue.

Q: Delta between Class A and B performance?

A: Rental rate growth better in Class B. Class B portfolio blends positive ~40 basis points, Class A (17 properties) blends negative ~80 basis points.