IRT(US:IRT)2024-02-15 19:49Financial Data and Key Metrics Changes - For the full year 2023, net loss available to common shareholders was $17.2 million, down from a net income of $117.2 million in 2022, primarily due to asset impairments related to the portfolio optimization strategy [10][115] - Core FFO per share increased to $1.15 for 2023, reflecting a 6.5% growth year-over-year [94][88] - Same-store revenue and NOI each increased by 5.7% for the full year 2023, with rental rates increasing by 6.4% to $1,537 per month [33][94] Business Line Data and Key Metrics Changes - The same-store portfolio NOI grew 3.3% year-over-year in Q4 2023, supported by a 70-basis point increase in average occupancy to 94.5% and a 2.4% increase in rental rates [27][94] - The average rental rate for the portfolio increased by 2.4% in Q4, contributing to a 3.7% year-over-year property revenue growth for the quarter [8][94] Market Data and Key Metrics Changes - The Sunbelt region is experiencing unprecedented levels of new supply, with markets like Nashville, Orlando, Dallas, and Atlanta forecasted to see elevated deliveries [6] - In contrast, Midwest markets such as Columbus, Indianapolis, and Louisville are expected to have a more balanced supply and absorption this year [6] Company Strategy and Development Direction - The company is focused on executing its 2024 business plan, which includes solidifying operating gains, driving further on-site efficiencies, and continuing value-add renovations [14] - The portfolio optimization and deleveraging strategy aims to reduce net debt to adjusted EBITDA ratio by approximately one full turn by the end of 2024 [111] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business model and strategy, expecting growth in 2024 driven by occupancy gains and rental rate growth despite near-term market challenges [7] - The company anticipates that the operating environment will remain challenging, with elevated new supply and inflationary cost pressures persisting [111] Other Important Information - The company plans to maintain sufficient liquidity to address debt maturities, with only $22 million of maturities in 2024 [11] - The guidance for full-year 2024 total operating expense growth is projected to be between 5.4% and 6.4% [13] Q&A Session Summary Question: How did the company come up with the occupancy forecast? - Management indicated that they are starting the year significantly above last year, with a 110 basis point improvement quarter to date, and expect to sustain this through their renewal and retention strategies [16] Question: What is the expected retention rate for the year? - The company is targeting a 55% retention rate on average throughout the year, with 90% of leases set to expire in Q1 already renewed [17] Question: How is the company addressing bad debt? - Bad debt as a percentage of revenue was about 2.1% in Q4, with expectations to average around 1.75% for the year, aided by improved technology solutions for fraud detection [44][45] Question: What are the market rent growth assumptions for Sunbelt versus Midwest markets? - The blended market rent growth guidance is about 60 basis points overall, with Sunbelt markets around 80 basis points and Midwest markets at approximately 2.2% [64][73]