Independence Realty Trust (NYSE:IRT) reported Q3 2023 financial results, emphasizing progress in driving occupancy, delivering value-add improvements, and reducing debt. Despite a challenging economic environment, the company remains confident in its core markets and its ability to optimize rent growth.
Key takeaways from the call include:
- IRT achieved a same-store occupancy rate of 94.6% and renovated 1,969 units in the first nine months of 2023.
- Overhead costs were reduced by $2 million, and technology initiatives are planned for further efficiencies in 2024.
- The company intends to sell 10 non-core properties as part of a portfolio optimization and deleveraging strategy.
- Net income available to common shareholders was $3.9 million, and core FFO per share increased 7.1% to $0.30 per share.
- The company revised its full-year 2023 outlook, lowering EPS guidance and reducing the same-store portfolio due to the portfolio optimization and deleveraging strategy.
Despite slower occupancy gains and pricing pressure, IRT managed to deliver a same-store average occupancy rate of 94.6% and achieved 4.4% average monthly rental rate growth. The company's strategy to sell 10 non-core properties is expected to result in a net loss on sale of $39 million to $51 million. However, this move aims to reduce debt and better position IRT.
The company also discussed its strategy to sell various high-cost property mortgages maturing in 2024, 2025, and 2026. The debt to be repaid has a weighted average coupon of approximately 6.1%. The strategy is expected to reduce net debt and improve unencumbered asset ratios, with the goal of achieving an investment-grade rating.
IRT revised its full-year 2023 outlook, lowering EPS guidance and reducing the same-store portfolio due to the portfolio optimization and deleveraging strategy. The company anticipates a decrease in same-store revenue and an increase in controllable operating expenses, while non-controllable operating expenses are expected to decrease.
In terms of property types, the company's B assets have shown stronger occupancy and rent growth compared to A properties. The company anticipates continued rent growth and a decrease in concessions as supply pressure alleviates in 2024.
The company plans to focus on operational efficiencies, particularly in reducing bad debt. They have a target of 2,500 to 3,000 units for their value-add program in 2024. More guidance on expenses and future asset sales will be provided in February.
The company concluded the call with the expectation of speaking again next quarter, expressing confidence in its strategies and commitment to sustainable earnings growth.
InvestingPro Insights
As we delve into the real-time data from InvestingPro, we find some interesting insights. Independence Realty Trust (IRT) has a market cap of $2850M with a high P/E ratio of 48.38, indicating that the stock is currently trading at a high earnings multiple. The PEG ratio stands at -0.87, suggesting that the company may be undervalued given its earnings growth rate. Over the last twelve months as of Q3 2023, the company has seen revenue growth of 21.57%, though it's important to note that this growth has been slowing recently.
From the InvestingPro Tips, it's apparent that the stock is in oversold territory, as suggested by the RSI. This could potentially present a buying opportunity for investors. The company's price has fallen significantly over the last three months, likely due to the short term obligations exceeding liquid assets. Despite this, analysts predict the company will be profitable this year, and it has indeed been profitable over the last twelve months.
For more detailed insights and tips, consider checking out the InvestingPro platform, which offers a plethora of additional tips and data to help you make informed investment decisions.
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