Independence Realty Trust, Inc. Q4 FY2025 earnings call

Key Points

• 2025 was a solid year with same-store NOI growth exceeding initial guidance. Implemented AI leasing agent, improved bad debt management, and reduced value-add renovation turn time to 25 days.
• Rolled out Wi-Fi initiative, sold older communities and redeployed proceeds into newer ones, exited joint ventures, and repurchased 1,900,000 shares.
• In 2025, renovated 2,003 units with 15.3% unlevered ROI. In 2026, expect to renovate 4,500 units with consistent ROI and added 6 new value-add communities.
• Market fundamentals improving: lower inventory increase in 2026, solid job, population, and household formation in major markets like Atlanta, Dallas, Indianapolis, and Raleigh.

Core FFO per share in Q4 2025 was $0.32 and full year 2025 was $1.17. Same-store NOI grew 1.8% in Q4 2025, driven by 2% same-store revenue growth and 2.4% operating expenses increase. For the full year 2025, same-store NOI rose 2.4% based on 1.7% revenue growth and 50 basis point increase in operating expenses. Fourth quarter same-store revenue growth was led by 124 basis point improvement in bad debt, 60 basis point increase in average effective monthly rents, offset by 10 basis point decrease in average occupancy. Full-year 2025 same-store revenue growth was led by 80 basis point increase in average effective monthly rents, 30 basis point increase in average occupancy, and 70 basis point improvement in bad debt.

2026 Guidance

• EPS guidance: $0.21 to $0.28 per share.
• Core FFO guidance: $1.12 to $1.16 per share.
• Same-store NOI expected to increase 80 basis points at midpoint, driven by 1.7% same-store revenue growth and 3.4% total same-store operating expenses increase.
• Rental rate growth assumed at 1.7% blended, with average occupancy 95.5%, bad debt at 90 basis points, and other income from Wi-Fi program starting in July 2026.

Risks

• Market fundamentals could change, affecting performance.
• Supply pressures in some markets, impacting lease-up and occupancy.
• Interest rate fluctuations may affect debt costs and capital allocation.
• Uncertainties in lease-up and occupancy stabilization of certain properties, like the Flatiron development.

Q: How does the new lease rate growth assumption incorporate market rent growth?

A: New lease growth is negative 75 basis points for the year. First half of the year is down about 2.25%, and the second half is up roughly 75 basis points, assuming capture of most market rent growth.

Q: Impact of concessions burning off on rent growth?

A: Lower concessions in the back half of the year improve renewal comps. Asking rents in January were up 75 basis points from December 31.

Q: Standout markets and drags?

A: Midwest markets (Columbus, Indiana, Kentucky) delivered consistent performance. Atlanta, Nashville, Dallas strong; Memphis slower, Denver with elevated supply.

Q: Same-store OpEx guidance for 2026?

A: Controllable expenses excluding Wi-Fi are expected to grow 3.5%, driven by payroll and utilities.

Q: Debt strategy and swaps?

A: Plan to stay mostly floating rate, with swaps rolled. Focus on being in investment grade market for future debt maturities in 2028.

Q: Share repurchase rationale?

A: Disconnect between implied and market cap rates, using proceeds from asset sales and gains to buy back stock accretively.