IRT(US:IRT)2024-08-01 18:41Financial Data and Key Metrics Changes - Net income available to common shareholders was $10.4 million, slightly down from $10.7 million in Q2 2023 [18] - Core FFO was $63.6 million and $0.28 per share, consistent with the previous year [18] - Same-store NOI growth in Q2 was 2.8%, driven by a revenue growth of 3.6% [18] - Average monthly rental rates increased by 1.6% to $1,555 per month [18] - Bad debt improved to 1.6% of revenue, down 40 basis points from 2% in Q2 2023 [19] - Same-store operating expenses increased by 4.9%, primarily due to higher advertising and personnel expenses [19] Business Line Data and Key Metrics Changes - Average occupancy rate increased by 120 basis points year-over-year to 95.4% [13] - Resident retention rate improved by 160 basis points to 55.8% [13] - Lease-over-lease effective rent growth for renewals was 3.5% [15] - New lease spreads were negative in Q2 due to supply pressure, but expected to improve in the second half of 2024 [15] Market Data and Key Metrics Changes - The Midwest market continues to have limited supply, while Sunbelt markets like Austin and Charlotte are experiencing new supply [7] - Apartment absorption is outpacing historical levels, with expectations for improved conditions in the second half of 2024 [6] - CoStar reports that for every 1 unit of new supply, population growth is expected to be 6.7 people in 2025 [8] Company Strategy and Development Direction - The company focuses on maintaining high occupancy and retention levels while optimizing rental rate growth [11] - Continued investment in existing communities through a value-add renovation program, with 378 units renovated in Q2 [9] - Capital recycling strategy includes selling properties in Birmingham to acquire a property in Tampa [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating market headwinds and achieving updated full-year guidance [11] - The second half of 2024 is expected to see easing supply pressure, positioning the company well for growth [8] - The company anticipates a decline in overall growth for insurance and real estate taxes, improving guidance for 2024 [20] Other Important Information - Liquidity position as of June 30 was $418 million, an increase of approximately $129 million from year-end 2023 [21] - The company expects to complete renovations on approximately 1,300 additional units in the second half of 2024 [9] - Full-year same-store revenue growth is now expected to be 3% to 3.3% [23] Q&A Session Summary Question: How is the company thinking about blended rate growth and occupancy strategy for the back half of the year? - Management noted significant improvement in August and September trends, with 54% of expected new leases signed at a -1.7% rate, a 160 basis points improvement over July [28] Question: Can you discuss the concessions being offered in competitive markets? - Concessions in markets like Atlanta and Nashville range from 3 weeks to 2 months, with a slight increase noted in July due to seasonality [29] Question: What gives confidence in hitting guidance for September? - Management believes that as new supply pressure wanes, they can push rates more effectively [31] Question: Can you elaborate on the modifications to the JV agreements for properties under development? - Modifications were made to allow a right of first refusal instead of a right of first offer for two properties in Nashville, enabling a last look at market value [32] Question: What is the outlook for revenue growth in 2025 based on current trends? - Management indicated an implication of 90 basis points earning for next year based on current trends [35] Question: What improvements are being seen in the Atlanta market? - Improvement in new lease rates and renewals was noted, with new lease rates increasing by 400 to 500 basis points over July [36]