IRT(US:IRT)2025-02-13 20:10Financial Data and Key Metrics Changes - Core FFO per share for 2024 was $1.16, at the high end of guidance, driven by same-store NOI growth of 3.2% [10][23] - Same-store NOI increased by 5.3% in Q4 2024, with revenue growth of 2.3% and a 3% decrease in operating expenses [24] - Average effective monthly rent increased by 1.3% for the year, with average same-store occupancy rising by 110 basis points to 95.2% [11][25] Business Line Data and Key Metrics Changes - In Q4 2024, 395 units were completed under the value-add program, achieving a weighted average return on investment of 15.1% [12] - For the full year, 1,671 renovations were completed, resulting in an average increase of $239 in monthly rent per unit on renovated comps, equating to a 15% return on investment [12] Market Data and Key Metrics Changes - Across the top ten markets, supply increased by 5.8% in 2024 but is forecasted to increase by just 1.8% and 1.3% in 2025 and 2026, respectively [19] - New supply in same-store markets increased by 6.2% in 2024, with a forecasted decrease to 2.1% in 2025 and 1.5% in 2026 [18] Company Strategy and Development Direction - The company aims to drive NOI and core FFO growth by increasing rental rates at existing properties and making strategic investments [17] - A portfolio optimization and deleveraging strategy was completed in early 2024, improving financial flexibility and enabling the company to become an investment-grade issuer [15][30] - The company plans to significantly accelerate value-add renovation volumes in 2025, targeting 2,500 to 3,000 units [36] Management's Comments on Operating Environment and Future Outlook - Management expects a steep decline in new deliveries across markets in 2025, allowing for greater pricing power without sacrificing occupancy [20] - The company anticipates strong demand due to population growth and job growth exceeding the national average, particularly in Sunbelt and Midwest markets [19] - Management expressed confidence in achieving higher rents and maintaining occupancy levels, with a focus on optimizing leasing economics [34] Other Important Information - The company reduced total debt by over $200 million in 2024, improving the net debt to adjusted EBITDA ratio to 5.9 times [28] - The company has nearly $750 million in liquidity available for strategic investments [32] Q&A Session Summary Question: What does guidance assume for new lease rate growth this year? - Guidance assumes a blended lease rate growth of 1.6% for the year, excluding benefits from value-add and other income [44] Question: Can you talk about the investment pipeline? - The company has a robust pipeline of both new construction communities and existing Class B properties, with opportunities arising from distressed assets due to higher interest rates [48] Question: Why are you increasing the value-add spend in 2025? - The company plans to increase value-add renovations due to waning supply pressure and rising rents, aiming for 2,500 to 3,000 units [55] Question: What caused the sequential increase in bad debt in Q4? - The increase in bad debt was attributed to timing and seasonality, particularly in markets like Atlanta and Memphis [58] Question: Can you provide a breakdown of the expected revenue growth for 2025? - The expected revenue growth for 2025 is 3.4% for the Midwest and 2.2% for the Sunbelt markets [79]