IRT(US:IRT)2022-02-17 19:20Financial Data and Key Metrics Changes - In Q4 2021, net income available to common shareholders was $28.6 million, up from $13.3 million in Q4 2020, while full-year net income was $44.6 million, up from $14.8 million in 2020 [34] - Core FFO grew 57.9% to $31 million in Q4 2021, with core FFO per share increasing 14.3% to $0.24 per share; for the full year, core FFO grew 33.6% to $92 million, and core FFO per share grew 15.1% to $0.84 per share [35] - The net debt to adjusted EBITDA ratio improved to 7.5 times after property sales, down from 7.7 times at the end of 2021 [14][43] Business Line Data and Key Metrics Changes - Same-store NOI growth was 15.1% in Q4 2021, driven by a 10.2% revenue growth, with a 9.7% increase in average rental rates and a 90 basis points increase in average occupancy [38] - For the full year 2021, same-store revenue grew 8.4%, driven by a 5.9% increase in average rental rates and a 230 basis points increase in average occupancy [39] - The value-add program completed renovations on 953 units for the full year, achieving a return on investment of nearly 30% [24] Market Data and Key Metrics Changes - The merger with STAR has expanded the portfolio to 119 communities, with approximately 70% of NOI coming from the Sunbelt region, which is expected to continue experiencing strong growth fundamentals [12] - Same-store average occupancy for the combined portfolio was 95.9% during Q4 2021, reflecting strong demand in non-gateway markets [19] Company Strategy and Development Direction - The company aims to achieve at least $28 million in annual synergies from the STAR merger, focusing on capital recycling and expanding presence in high-growth markets [50] - The strategy includes continuing the value-add program and exploring joint venture development opportunities while maintaining a conservative financial structure [13][74] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the future growth potential, citing strong demand for multifamily apartments and a significant supply-demand imbalance in the market [17] - The company expects NOI at the combined same-store portfolio to increase by 11% in 2022, with average occupancy projected at 95.7% and rental rates expected to increase by 10% [45] Other Important Information - The company completed the sale of six properties for a total of $297 million, realizing a total gain of $172 million [31] - The company has a pipeline of approximately 20,000 value-add units, with plans to renovate 2,000 units in 2022 and ramping up to 4,000 units per year thereafter [26] Q&A Session Summary Question: Transitioning STAR assets onto IRT operating system - The transition was completed smoothly, with occupancy trending slightly down but expected to recover [55][58] Question: Shareholder turnover since the merger - Approximately $750 million in incremental purchasing demand is expected from index rebalancing, with around $15 million to $16 million in retail volume increase since the merger [60][62] Question: Main risks present for integration - The major integration efforts are largely complete, with only the payroll systems remaining to be combined [65] Question: Synergies realization - $6 million of the anticipated $8 million in property management expense synergies has already been locked in for 2022, with potential additional upside [67] Question: Rent growth and tenant affordability - Rent-to-income ratios across the portfolio are at 19%, indicating tenants can manage further price increases despite inflation [79] Question: Funding commitments for development projects - Operating cash flow, projected at $105 million for the year, will be used to fund development commitments without increasing leverage [87] Question: Future large transactions - The company remains open to acquisitions that meet specific criteria but will prioritize capital recycling and internal opportunities [90]