IRT(US:IRT)2025-05-01 13:00Financial Data and Key Metrics Changes - Core FFO per share for Q1 2025 was $0.27, flat compared to the prior year, reflecting the impact of the final stages of the portfolio optimization and deleveraging strategy completed last year [15][19] - Same store NOI grew by 2.7%, driven by a 2.3% increase in same store revenue and a 1.6% increase in operating expenses compared to the prior year [15][19] - Average occupancy increased by 100 basis points year over year, contributing to the same store NOI growth [8][15] Business Line Data and Key Metrics Changes - Value add renovations completed during the quarter included 275 units with a weighted average return on investment of 16.2% [8] - The company has 28 communities with over 4,600 units in the ongoing value add program, expecting to complete between 505,000 units this year [8] - The company sold its final asset in Birmingham, Alabama for $111 million and acquired a 280-unit community in Indianapolis for $59.5 million at a 5.6% economic cap rate [9][15] Market Data and Key Metrics Changes - In 2025, new apartment deliveries are expected to decrease to 32,000 units, representing only 2% of existing supply, down from 6.1% in 2020 [11][64] - The company anticipates positive net absorption of 8.5% in its submarkets, significantly higher than the national average of 1.5% [12][65] - Homeownership costs in the top 10 markets are 94% higher than the company's average monthly rent, indicating strong demand for rental properties [12] Company Strategy and Development Direction - The company is focused on executing its long-term investment strategy, with a strong acquisition pipeline and ample liquidity for accretive investments [10][18] - The company expects to continue benefiting from strong demand and significant declines in new supply, leading to ongoing rental rate gains without sacrificing occupancy [13][19] - The company is cautious about macroeconomic uncertainties but remains confident in its market fundamentals [13][19] Management's Comments on Operating Environment and Future Outlook - Management believes that the fundamentals of supply and demand in their markets will continue to dominate operations, with expectations for improving rental rates and occupancy [13][19] - The company is optimistic about the trajectory of leasing spreads improving in the second half of the year due to waning supply pressures [24][30] - Management noted that they have not yet seen significant stress from macroeconomic factors such as tariffs or deportations [25][26] Other Important Information - The company ended the quarter with a net debt to adjusted EBITDA ratio of 6.3 times, with plans to achieve a mid-five ratio by year-end 2025 [18] - The company has nearly $750 million in liquidity available for investments [18] - The company is not expecting to exit any additional markets beyond Birmingham at this time [81] Q&A Session Summary Question: Can you walk through the leasing spreads for the first quarter? - New leases were down 4.6%, while renewals were up 4.8%. The company did not experience the same level of decline in rental rates as some peers due to its predominantly Class B portfolio [22][23] Question: Have you seen any evidence of stress from tariffs or macro uncertainty? - The company has not felt significant effects from tariffs or deportations and has seen a reduction in bad debt [25][26] Question: Can you speak to trends in leasing traffic and conversion? - Demand is up 25% compared to the same period last year, with conversion rates remaining stable [30] Question: What are your expectations for new lease rates and renewals? - The company anticipates positive trends in blended rental rates and expects to see upward momentum in leasing rates as the year progresses [34][35] Question: How are you thinking about the full-year revenue guidance? - The company expects job growth and population growth to remain steady, with a significant drop in new supply contributing to revenue growth [63][64] Question: Can you discuss the impact of insurance renewals on expenses? - The company expects a net decrease in insurance premiums despite initially assuming a 10% increase [73][75]