IRT(US:IRT)2021-04-29 18:29Financial Data and Key Metrics Changes - Net income available to common shareholders was $1.1 million, up from a net loss of $372,000 in Q1 2020 [13] - Core FFO grew to $18 million, up 23.5% from $14.6 million in Q1 2020, with core FFO per share at $0.18, a 12.5% increase from $0.15 per share in Q1 2020 [13] - Same store NOI increased by 5.3%, driven by a 5.6% revenue growth [14] - Average effective monthly rent per unit grew by 2.9% in the quarter [6] - Total portfolio average occupancy improved to 96%, a 330 basis point increase compared to April of the previous year [6] Business Line Data and Key Metrics Changes - Same store average occupancy increased to 95.3%, a 260 basis point increase year-over-year [6] - New lease rates increased by 6.8% and renewals were up 4.8% during Q1, resulting in a combined lease over lease rental rate increase of 5.9% [10] - In the second quarter, new leases increased by 9.6% and renewed leases were up 3.7%, with a blended lease over lease rental rate increase of 4.6% [10] Market Data and Key Metrics Changes - The company is seeing a 6% to 8% inflow from New York, New Jersey, and Pennsylvania markets into its Carolina properties [25] - The Dallas property acquisition is in a strong growth area with three other assets nearby, while the Charlotte property is well-located with minimal future competition [32] Company Strategy and Development Direction - The company is focusing on capital recycling through acquisitions and divestitures, with two new construction communities under contract for approximately $140 million [12] - The value add program has completed renovations on 3,861 units since its inception, achieving a weighted average return on investment of 18.5% [7] - The company is exploring joint venture relationships for new multifamily development in core non-gateway markets, particularly in the Southeast and Sunbelt region [8] Management's Comments on Operating Environment and Future Outlook - Management is optimistic about growth potential due to favorable demand trends, vaccine distribution, and a healthier economic outlook [5] - The company raised its 2021 guidance for NOI growth from 2.5% to a range of 4.1% to 5% [6] - Management expressed caution regarding the ongoing eviction moratorium and its potential impact on rent collections [41] Other Important Information - The company declared a quarterly cash dividend of $0.12 per share, representing a payout ratio of 71% on $0.17 of AFFO during Q1 2021 [16] - Liquidity position as of March 31 was $206 million, including $8.7 million of unrestricted cash [16] Q&A Session Summary Question: Progress on joint ventures and preferred equity investments - The company has entered into three letters of intent for new construction communities, with an appetite to limit investment to $100 million [21][22] Question: In-migration trends and market observations - The company has observed a consistent inflow from Northeastern states into its Carolina properties, with 6% to 8% of new leases coming from these areas [25] Question: Details on preferred equity development joint ventures - The three deals are located outside Richmond, in Austin, Texas, and in Nashville, Tennessee, with developers contributing land and equity [28][30] Question: Ability to push rents and market strength - The company is seeing better pricing on new leases due to strong demand and the value add program, with expectations to continue driving rates while maintaining occupancy [36] Question: Guidance increase and surprises in 2021 - The increase in guidance reflects better-than-expected rental rate growth and lower bad debt expense, with management remaining cautious about the ongoing eviction moratorium [41] Question: Cap rate expectations for acquisitions - The company is targeting acquisitions at a blended stabilized economic cap rate of 4.5% for new construction properties [12][32]