IRT(US:IRT)2020-07-30 18:53Financial Data and Key Metrics Changes - In Q2 2020, net income available to common shareholders was $789,000, a significant decrease from $14.7 million in Q2 2019, which included a $12.1 million net gain on asset sales [31] - Core FFO grew to $18 million, up 6.8% from $16.9 million in Q2 2019, with Core FFO per share remaining at $0.19 [32] - Average monthly rent increased by 4% year-over-year to $1,091, with same-store rental rates growing by 2.8% [32] Business Line Data and Key Metrics Changes - The value-add program completed renovations on 227 units in Q2, with strong rent premiums observed [27] - Same-store property operating results showed a 1.2% growth in NOI, driven by a 1.7% revenue increase [32] - New lease rates increased by 1.4% and renewals were up 2.4%, resulting in a combined lease over lease rental rate increase of 1.9% [21] Market Data and Key Metrics Changes - Total portfolio occupancy improved to 94.1%, a 160-basis-point increase since the end of the previous year [14] - Approximately 97.2% of July rents were collected, consistent with June collections [14] - Average occupancy across the same-store portfolio was 94.3% in Q2, increasing to 94.8% as of the current date [20] Company Strategy and Development Direction - The company aims to be the leading middle market multifamily owner and operator across non-gateway markets, with a focus on long-term value creation [16] - The value-add initiative is foundational to the company's strategy, with plans to renovate 500 units in the second half of 2020 [29] - The company is prioritizing resident retention and occupancy while driving rent growth where appropriate [43] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the recovery from the COVID-19 pandemic, noting the importance of flexibility in operations [8] - The company is prepared to manage through uncertainty and is focused on maintaining liquidity, with a total liquidity position of approximately $248 million [15] - Management acknowledged the fluidity of the situation and the potential for changes in state and local plans [14] Other Important Information - The company recorded a provision for bad debt of $723,000 due to the pandemic, representing 1.4% of total second-quarter revenue [33] - The Board of Directors declared a quarterly cash dividend of 12 cents per share, equating to a 71% payout ratio on 17 cents of AFFO for Q2 [41] - The company has no significant debt maturities until 2023, with a normalized net debt to adjusted EBITDA ratio of 9.2 times at the end of the quarter [40] Q&A Session Summary Question: On the value-add renovations, can you provide insights on occupancy and renewal rates? - Management indicated that they are monitoring occupancy closely and are pushing renewal rates opportunistically in properties with good occupancy [49][50] Question: What is the current strategy for using the unsettled forward equity? - Management stated it is too early to determine the exact use of proceeds, focusing on generating the best return for the company while considering deleveraging [54][55] Question: Which markets are currently favorable for rent growth? - Management highlighted Huntsville and Atlanta as markets with potential for rent growth, emphasizing property focus over market focus [56][57] Question: Can you discuss the dynamics at the properties that have restarted renovations versus those that have not? - Management explained that the decision to pause renovations was based on supply issues and uncertainty in the market, with plans to restart when demand is clearer [60][62] Question: Are there notable impacts from COVID-19 on traffic and rent deferral requests? - Management noted that they have not seen significant impacts on staff or residents, and they expect to have a clearer picture of rent deferral requests in early August [64][66] Question: Is there potential for opportunities in the value-add market? - Management agreed that there may be opportunities in the value-add market as conditions evolve, with expectations for more favorable pricing in the second half of the year [68]