Independence Realty Trust, Inc.

for today. Welcome to the Independence Realty Trust Q2 2024 Earnings Conference Call. At this time, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a Q&A session, and if you would like to ask a question during this time, please press star and the number one on your telephone keypad. If you would like to withdraw your question, again, press star and the number one. I would like to now turn the call over to Maddie Zimba. You may begin.

Thank you, and good morning, everyone. Thank you for joining us to review Independence Realty Trust second quarter 2024 financial results. On the call with me today are Scott Schaefer, Chief Executive Officer, Mike Daly, EVP of Operations and People, Jim Sebra, Chief Financial Officer, and Janice Richards, SVP of Operations. Today's call is being webcast on our website at IRTLiving.com. There will be a replay of the call available via webcast on our investor relations website and telephonically beginning at approximately 12 o'clock p.m. Eastern time today. 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 and financial performance. Actual results could differ substantially and materially from what IRT has projected. 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 release, 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 discuss 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 this may be required by law. With that, it's my pleasure to turn the call over to Scott Schaefer.

Thank you for joining us this morning. Our second quarter results highlight our strategy to drive occupancy through stronger resident retention along with higher lead volume for new leases while continuing to prudently manage our expenses. Specifically, we delivered an increase of 120 basis points in average occupancy to 95.4% in the second quarter with lease over lease effective rental rate growth of 3.5% for lease renewals and resident retention at 55.8%. As of July 30th, same store occupancy was 95.6%, with July lease renewal tradeouts at 2.9%, and total resident retention at 55.4%. Mike will provide more detail on our operational metrics momentarily. We are pleased with our team's ability to manage operating expenses, along with the notable decline in bad debt expense during the second quarter. Later on this call, Jim will provide an update on our expense outlook, particularly the recent renewal of our insurance policies and our current view for 2024 real estate tax expense. Looking at the broader market, we're in the midst of a transitionary period as supply and demand levels are rebalancing across our portfolio and are expected to improve further in the back half of 2024 and into 2025. While the second quarter continued to see pressure from new deliveries, it was matched by strong demand as apartment absorption outpaced historical levels. By the fourth quarter of 2024, CoStar reports that delivery should slow to about 60 basis points of inventory with 2025 new supply deliveries expected to decline further to a quarterly average of 50 basis points of our sub-market inventories. As we look across our portfolio, the Midwest continues to have a limited supply pipeline, and we do not see that changing over the coming months. We still expect to experience new supply across some of our sundial markets, including Austin, Charlotte, Raleigh, Durham, Huntsville, and Nashville. However, in these markets, employment and population growth are among the highest in the country, supporting our expectation for positive net absorption in 2025. While we have felt the increasing impact of supply pressure on rental rates this year, we expect this to ease in the second half of 2024, positioning us well going into 2025. We manage our business to deliver long-term sustainable growth, and we continue to see strong fundamentals with favorable population trends and employment growth. For example, CoStar reports that for every one unit of new supply in our submarkets, we expect to see population growth of 6.7 people in 2025, and this increases to 9.6 people in 2026. Clearly, this will be good for IRT from both an occupancy and a rental rate growth perspective. Investing in our existing communities also continues to be a key element of our strategy, especially to our value-add renovation program that focuses on improving the quality and value of our apartments. During the second quarter, we completed renovations on 378 units, achieving a weighted average return on investment of 15.7%. These efforts also continue to drive meaningful premiums as compared to unrenovated comparable units. In the second quarter, this average monthly rent increase per unit was $236 over unrenovated comps. In the second half of 2024, we expect to complete renovations on approximately 1,300 additional units, with 700 of those renovations coming in the third quarter to reach our updated full-year target of approximately 2,000 units. As we've noted in the past, the number of units renovated will vary due to resident retention levels and the timing of new renovation starts. Turning to capital recycling, we plan to use the proceeds from the sale of our property in Birmingham to acquire a property in Tampa through a 1031 exchange during the third quarter. This property in Tampa is situated in an infill location with centralized access to both downtown Tampa and downtown St. Petersburg, along with easy access to the beaches along the western coast. Overall, we continue to be bullish on Tampa as we drive further expansion in this market to achieve future rent growth. We remain confident in the strength of our portfolio and our ability to navigate headwinds in the broader market. Looking ahead to the second half of 2024, we will continue to focus on maintaining our high occupancy and retention levels while optimizing rental rate growth and effectively managing our expenses. These efforts, along with continuing our value-add renovations and capital recycling program, as well as resetting our leverage profile, will enable us to achieve our updated four-year guidance and drive growth over the long term. I'll now turn the call over to Mike.