Independence Realty Trust, Inc.

Thank you for joining us to review Independence Realty Trust second quarter 2021 financial results and recent merger announcement. On the call with me today are Scott Schaefer, our Chief Executive Officer, Jim Sebra, our Chief Financial Officer, and Farrell Ender, our President. Today's call is being webcast on our website at www.irtliving.com. Please note that given today's announcement, there will be no Q&A session following management's remarks on this call. There will be a replay of the call available via webcast on our investor relations website and telephonically. Before I turn the call over to Scott, I'd like to remind everyone that there may be forward-looking statements made on this call. These forward-looking statements reflect IRT's current views with respect to future events financial performance, and the recently announced merger. Actual results could differ substantially and materially from what IRT has projected, and there can be no assurance that IRT will consummate the merger within the expected timeframe or at all. Such statements are made in good faith pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Please refer to IRT's press releases, supplemental information, and filings with the SEC for factors that could affect the accuracy of our expectations or cause our future results to differ materially from those expectations. Participants may disclose non-GAAP financial measures during this call. A copy of IRT's earnings press release and supplemental information containing financial information, other statistical information, and a reconciliation of non-GAAP financial measures to the most direct comparable GAAP financial measure is attached to IRT's current report on the Form 8K available at IRT's website under Investor Relations. IRT's other SEC filings are also available through this link. IRT does not undertake to update forward-looking statements on this call or with respect to matters described herein except as may be required by law. With that, it's my pleasure to turn the call over to Scott Schaefer.

Thank you, Lauren. First, let me thank all of you for joining us on short notice to participate in today's call. We're excited to share with you the announcement of our proposed merger with Steadfast Department REIT, which joins together two very similar high-quality portfolios with complementary geographic footprints in the highly desirable Sunbelt region of the United States. On a pro forma basis, The combined company will be a top three publicly traded multifamily REIT focused on the Sunbelt region and will own a portfolio of 131 apartment communities with over 38,000 units across 16 states. Upon completion of the proposed merger, we will have a combined equity market capitalization of approximately $4 billion and a total enterprise value of approximately $7 billion. It's important to highlight that this transaction will be immediately accretive to Core FFO per share by approximately 11%. Before I go into greater detail on this transaction, including deal rationale and expected benefits, we would first like to touch upon our second quarter results and why we remain incredibly optimistic about the future of IRT. Strong momentum continues year to date as we benefit from our proven portfolio of assets in non-gateway markets. In particular, our presence in the Sun Belt is a driving force behind our performance as this region continues to experience a notable lift from favorable population and employment growth trends. With more than half of 2021 now behind us and good momentum going into the second half of this year, we remain highly encouraged and are meaningfully increasing our earnings guidance for 2021 without taking into account any impact of the pending merger with Steadfast. Jim will cover this later on today's call. I'd now like to highlight some key points from the second quarter. Our same-store NOI increased 9.6% and our core FFO improved 22.7% compared to a year ago. Our same store average occupancy increased to 96.1%, a 300 basis point increase on a year over year basis. Our lease over lease rental rate growth in the second quarter was 7.3%. We collected 98.4% of second quarter rents and have now collected over 99% of first quarter 2021 rents. And with favorable demand trends continuing, we are seeing strong results so far in July. Our total portfolio average occupancy is 96.1%, a 230 basis point improvement compared to July of last year. We have collected almost 96% of July rents, which is consistent with collections at this point in prior months. And given our high occupancy in the second quarter, we continue to drive rent growth, averaging 6.7% for leases signed so far in the third quarter on a blended basis. I'm also excited to announce that we've closed on our first joint venture transaction on a community under development in Richmond, Virginia, and we expect to close on our second joint venture within 30 days. And I would now like to turn the call over to Farrell for an operational update, followed by Jim with the financial update, and then I'll return to provide more details on our merger announcement. Thanks, Scott.

We're incredibly pleased with our results. In the second quarter, our same-store occupancy grew 300 basis points to 96.1%, from 93.1% a year ago. This has continued in July with total portfolio average occupancy at 96.1%, up 230 basis points year over year. On a lease over lease basis for the same store portfolio, new lease rates increased 11.4% and renewals were up 3.7% during the second quarter, yielding a combined lease over lease rental rate increase of 7.3%. Strong trends continue in the third quarter to date with new leases having increased 17.5% led by our value add communities, while renewed leases are up 4.6%, with a blended lease over lease rental rate increase of 6.7% for our same store portfolio. We continue to see strong resident retention with a second quarter retention rate of 54.8%, consistent with the second quarter of 2021. And this rate has improved to 64.1% in July, up from 59.1% a year ago. To give you an update on our Value Add program, we completed renovations on 228 units in the second quarter. We are currently performing renovations at 21 of our communities, having added Thornhill in Raleigh, Walnut Hill in Memphis in the second quarter, and Meadows in Louisville in July. The renovation program at six of our communities is nearing completion, as we have renovated 85% or more of the units. Since the inception of our Value Add program in January of 2018, Through the end of the second quarter, we've completed renovations on 4,089 units, achieving a weighted average return on investment of 19.3% on interior renovation costs. Lastly, we continue to evaluate our current portfolio for value-add opportunities and believe that we can engage in future redevelopment efforts at approximately 5,000 additional units. The economics of these incremental initiatives, which are in addition to our current 21 communities, is consistent with our current ROI run rate of 15% to 20%. The redevelopment of these units will not start until next year, but we plan to share further details later this year as we finalize our plans. With regard to capital recycling, we acquired two new construction communities in the second quarter. On May 18th, we added Solis City Park in Charlotte to our portfolio, a 272-unit community for a purchase price of $66.5 million. Charlotte is a market we have targeted for expansion, given its favorable population and job growth dynamics. And on June 8, we acquired Scion Craig Ranch for $73.4 million, a 322-unit community, which expanded our footprint in Dallas. These two new additions to our portfolio have already reached 95% occupancy, which is well ahead of our underwritten lease-up schedule, confirming strong resident demand in these markets. As Scott mentioned, we closed on a joint venture on June 8th in Richmond, Virginia to develop a 402-unit community with a joint venture partner. This property is expected to take 18 months to complete, with IRT investing a total of $16 million and having the right to purchase the community upon completion. Lastly, we expect to close on a sale of King's Landing, our only mixed-use property located in St. Louis later this week, with a projected gain on disposition of $11.5 million. The economic cap rate on this disposition is expected to be 4.5%. I'd now like to turn the call over to Jim.