IRT(US:IRT)2022-07-28 18:37Financial Data and Key Metrics Changes - The company reported a net loss available to common shareholders of $7.2 million compared to a net income of $3.4 million in Q2 2021, primarily due to higher depreciation and amortization expenses related to the merger with Steadfast Apartment REIT [32] - Core FFO grew to $58.6 million, up from $20.2 million a year ago, with core FFO per share increasing 30% to $0.26 per share [32] - Combined same-store NOI growth was 14.4%, driven by revenue growth of 11.4% and a 12% increase in average rental rates [33] Business Line Data and Key Metrics Changes - The average occupancy rate for Q2 was 95.7%, with new lease rates increasing by 17.2% and renewals up 9.7%, resulting in a blended lease over lease rental rate increase of 12.7% [18][19] - The company completed renovations on 195 units in Q2, achieving an average rent increase of $333 per unit, yielding an unlevered return on investment of 33.5% [24] Market Data and Key Metrics Changes - Approximately 70% of the company's NOI is derived from non-gateway markets in the Sunbelt region, which continue to experience high residential demand due to employment opportunities and population growth [10] - The company noted that the average rent to income ratio for new leases was around 20%, indicating affordability for residents [21] Company Strategy and Development Direction - The company is focused on expanding its presence in the Sunbelt markets and is actively investing in existing communities through a robust renovation pipeline [11][12] - The company raised its full-year 2022 guidance, now targeting 13.75% combined same-store NOI growth and 27% core FFO per share growth at the midpoint of its guided ranges [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the multifamily sector, citing increasing home prices and mortgage rates leading to greater demand for affordable apartment rents [14] - The company is mindful of economic volatility and inflationary pressures but believes its strong portfolio and strategic initiatives will continue to yield strong results [12] Other Important Information - The company closed on a new $400 million unsecured term loan, extending the maturity of $300 million to 2028 and increasing liquidity by $100 million [13] - The company plans to renovate approximately 1,800 units in 2022, with a target of ramping up to 4,000 units in 2023 [26] Q&A Session Summary Question: About same-store revenue guidance - Management acknowledged the guidance is cautious due to broader economic conditions, with an average occupancy target of 95.3% [47][48] Question: Cap rates in the markets - Management noted that cap rates are expanding, with valuations peaking six months ago and a recent adjustment in pricing [51] Question: Capital priorities in the current environment - The company prioritizes capital allocation towards value-add programs, with a disciplined approach to acquisitions [58] Question: Impact of macroeconomic pressures on operating performance - Management confirmed no significant signs of macroeconomic pressure affecting delinquency rates or occupancy [68] Question: Occupancy trends and rent increases - Management indicated that while occupancy dipped slightly, they expect to meet guidance for the year, balancing rent growth with occupancy [70] Question: Property tax assessments - Management is currently appealing higher-than-expected property tax assessments and hopes for better outcomes [85]