Thank you for standing by. My name is Dee, and I will be your conference operator today. At this time, I would like to welcome everyone to the Independence Realty Trust First Quarter 2024 Earnings Conference Call. Thank you.

Thank you, and good morning, everyone. Thank you for joining us to review Independence Realty Trust's First Quarter 2024 Financial Results. On the call with me today are Scott Schaeffer, Chief Executive Officer; Mike Daley, EVP of Operations and People; Jim Sebra, Chief Financial Officer; and Janice Richards, SVP of Operations. We also have a special guest joining us today, Lilly Schaeffer, Scott's grandchild as it's Bring Your Child to Work day. Welcome, Lilly. 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 12:00 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 the reconciliation of non-GAAP financial measures to the most direct comparable GAAP financial measure is attached to IRT's current report on the Form 8-K 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 Schaeffer.

Thanks, Lauren, and thank you all for joining us this morning. During the first quarter, we made notable progress on our initiatives to grow occupancy and increase resident retention, execute our portfolio optimization and deleveraging strategy, and deliver on our planned value-add improvements. We are pleased with the results of our efforts in the first quarter as we delivered an increase of 120 basis points in average occupancy to 94.4%, lease renewal at 65.4%, and resident retention at 54.3%, all above first quarter of 2023. And we continue to see sequential improvements in April, with same-store occupancy today at 95.4%, with lease renewal at 66.7%, and total resident retention at 55.7%. Year-to-date, our lead volume is up approximately 17.4% year-over-year due to our enhanced marketing initiatives. This lead volume along with the improvement in occupancy puts us in a position of strength to drive growth in the coming months and keeps us on track to deliver our full-year operating guidance. Last October, with the view that interest rates would stay higher for longer, we announced our portfolio optimization and deleveraging strategy, in which we identified 10 non-core properties for sale. I'm pleased to report we have closed on the sale of 9 of these properties, exited 4 single-asset markets, and paid off $489 million of debt, thereby extending our maturity profile and eliminating all of our exposure to floating rate debt. The 10th and final property targeted for sale under this program is currently under contract with a hard deposit and we expect it to close on April 30th. This puts us on track to achieve our 6x net debt-to-EBITDA target in the fourth quarter of this year. To that end, we received an investment-grade credit rating from Fitch Ratings in early March. This is a significant milestone for IRT and reflects our efforts to fundamentally reset our leverage profile through profitable growth with lower leverage. With this rating, we can further improve our cost of capital and gain access to additional capital sources to implement our business plan and invest in our portfolio. Additionally, as part of our regular capital recycling initiatives, we have identified an asset in Birmingham, Alabama as held-for-sale and may use the proceeds to purchase one of our new construction joint venture assets in Nashville. Jim will discuss this in more detail during his remarks. But the Birmingham property is now under contract and is expected to close in the third quarter of 2024. With respect to value-add renovations, our program is well received by both current and prospective residents as we seek to improve the quality and value of their rental experience. We now continue to see significant premiums as compared to unrenovated comparable units despite current market dynamics that are impacting new lease rates. With that, we completed renovations on 320 units during the first quarter and achieved a weighted average return on investment of 18% when compared to unrenovated comps. Throughout the rest of 2024, we expect to complete renovations at approximately 2,100 additional units. Please note this number could vary depending on resident retention. In addition, we currently own over 12,000 additional units that are appropriate for renovation over the long term. We believe these efforts to drive strong demand and attract value-driven residents seeking an effective alternative to newer class A communities at a lower price point. We continue to believe in the strength of our portfolio and our team's ability to manage through a difficult operating environment in 2024. While the Sunbelt region continues to see elevated levels of new supply, IRT's predominantly B-class portfolio is somewhat insulated from the resulting effects, and we are confident in our ability to navigate these headwinds. Before I wrap up my remarks, I also wanted to highlight that we recently published our 2023 sustainability report, which details the progress we have made on our sustainability strategy over the last year and the initiatives we have in place to continue building a sustainable and inclusive future for our business and all of our stakeholders. We see continuing opportunities to further enhance our sustainability practices and look forward to continuing these initiatives, which will support our long-term success. In conclusion, our results demonstrate the strength and resiliency of our portfolio and the ability of our team during a challenging economic climate. I'm confident these results will drive further growth throughout 2024, and we look forward to continuing to build on these successes going forward. And I'll now turn the call over to Mike.

Thanks, Scott. The priority of IRT heading into this year was to increase retention and reduce unit vacancies. We accomplished this in the first quarter, delivering a resident retention rate of 54.3%, which represented a 610 basis point improvement versus a year ago and a 330 basis point increase on a sequential basis. Similarly, our same-store average occupancy rate increased 120 basis points year-over-year to 94.4% for the quarter. For April to date, same-store average occupancy is 95%, improving another 60 basis points on a sequential basis as compared to the first quarter, which reflects our ongoing efforts to drive occupancy. At our non-value-add communities, average occupancy was 94.6% in the first quarter and is 95.2% for April to date. Our same-store portfolio average rental rate increased 1.5% in Q1, contributing to 3.4% year-over-year property revenue growth for the quarter. As mentioned on last quarter's call, we are reducing the use of concessions. In the first quarter, 15% of leases signed had a concession and the average concession was 2 weeks. For April to date, concessions are even lower at 10% of leases signed, again, with an average concession of 2 weeks. While new lease spreads remain negative in the first quarter due to lower seasonal demand and supply pressure, we are seeing a pickup in April, improving 190 basis points on a sequential basis due to more favorable demand and the reduced use of concessions. The benefit of higher occupancy is helping to mitigate the pressure on rents from the impact of new supply mentioned earlier. Also, renting continues to be more attractive than owning for many people, with persistently high interest rates and inflation continuing to make home ownership less affordable. In our top 10 markets, owning a home is approximately 104% more expensive than renting when factoring in all the costs of homeownership, including a mortgage payment, property taxes, and insurance. Lease over lease effective rent growth for renewals in the first quarter was 4.4%, and for April to date it’s 3%. We've also signed 86% of our expected May and June renewals with an effective rental rate increase of 3.5%. I've mentioned on our prior calls we continue to utilize technology to increase our operational efficiency and performance. One example of this is enhanced ID screening, which was fully implemented across the portfolio earlier this year. We've seen a meaningful positive improvement in our ability to identify potential fraud. This technology, in addition to the enhanced income verification technology currently being rolled out, will not only improve business results but also deliver a better applicant experience and help drive efficiencies for our teams on-site. These technologies are key drivers to improve our bad debt this year from about 2.1% last year to our interim goal of 1.5% by year-end 2024. Before handing it to Jim, I would like to thank our team for driving these results and progress on our key initiatives. We've made notable advancements over the past year despite the industry pressure we've described. Improvements we've made are systemic and sustainable, and we expect to continue driving strong results and high efficiency for 2024 and into the future. I will now turn the call over to Jim.

Thanks, Mike, and good morning, everyone. Beginning with our first quarter performance update, net income available to common shareholders was $17.6 million, up from $8.6 million in the first quarter of 2023 primarily due to gains on the sale of real estate during this quarter. Core FFO was $61.5 million and core FFO per share was $0.27 per share. IRT's same-store NOI growth in the first quarter was 2.4%, driven by a revenue growth of 3.4%. This growth was led by a 1.5% increase in average monthly rental rates to $1,551 per month and a 120 basis point increase in average occupancy to 94.4% both as compared to Q1 of 2023. On the operating expense side, IRT same-store operating expenses increased 5% during this quarter. This increase was primarily driven by higher property insurance expenses due to the notable increase last year, as well as higher advertising and personnel expenses as we increased our efforts to drive occupancy. Contract service expenses were flat in the quarter, while repairs and maintenance expenses decreased 11% due to the timing of repair and maintenance projects and a continual focus on managing expenses. Regarding property management expenses and G&A, our Q1 results were in line with the guidance we previously provided. Turning to the balance sheet, as of March 31, our liquidity position was $412 million, an increase of approximately $124 million from year-end 2023. We had approximately $21 million of unrestricted cash and $391 million of available capacity through our unsecured credit facility. As noted earlier, we're pleased to have received our investment grade credit rating from Fitch, assigning IRT a long-term issuer default rating of BBB flat with a stable outlook. This is yet another example of our strong underlying fundamentals and, as Scott mentioned, opens up additional sources of capital for IRT as we seek to operate, grow, and be a leading apartment company in the United States. For Q1 2024, our leverage was 6.7x on a net debt to adjusted EBITDA basis. This is down from 7.3x in Q1 of last year. Clearly, we are beginning to see the impact of our portfolio optimization and deleveraging strategy. On a trailing 12-month basis, our leverage is 6.5x and we are still on target to be closer to 6x net debt to adjusted EBITDA in Q4 of this year. We still have only about 7% of our pro forma debt maturing through year-end 2025, with only $20 million of maturities in 2024. We also have adequate hedges in place that have effectively converted our floating rate debt to fixed-rate debt such that our debt as of March 31 is 100% fixed and/or hedged. Before I discuss our 2024 guidance, I'd like to provide an update on our portfolio optimization and deleveraging strategy. During the first quarter, we sold 5 properties that were included in our portfolio optimization plan for a combined sales price of $296.1 million and we recognized a net gain of $25.6 million. In total, and as of the end of the first quarter, we sold 9 of the 10 properties which were part of our plan for a gross sales price of $496.8 million. The proceeds from these sales were used to repay $488.9 million of debt, including $218 million paid back on our credit facility to date from this plan. As part of our initial plan, we have one remaining asset to sell in Chattanooga, Tennessee, which we expect to close next week. The sales price for that asset is $28.5 million, which, when aggregated with the other 9 sales, achieves our targeted gross sales proceeds of approximately $525 million. As mentioned by Scott, in connection with our capital recycling program, we have also identified a legacy steadfast asset in Birmingham, Alabama as held-for-sale and recognized a loss on impairment of $15.1 million. This property is now under contract at an economic cap rate of 5.2%. The sale is expected to close during Q3 2024 and the proceeds may be used to acquire one of our properties developed by our joint venture partner in Nashville, Tennessee. This capital recycling transaction will reduce our exposure in Birmingham while adding to our Nashville portfolio and allows us to realize the benefits of our joint venture and preferred equity investment strategy. With respect to our full year 2024 outlook, we are reaffirming our FFO and core FFO per share guidance that we provided on our year-end conference call in February. But we are updating our EPS guidance range given the planned sale of the Birmingham community and the associated impairment loss we recorded in Q1 2024. Our revised EPS range is $0.34 to $0.38 per share. Relatedly, we also updated our same-store portfolio to be 108 properties, down from 109 properties as we updated our transaction volume guidance. The midpoint of our 2024 core FFO per share guidance remains at $1.14 per share. As mentioned last quarter, when thinking about our core FFO per share guidance for this year, the bridge from our $1.15 per share starting point at the year-end 2023 would include $0.04 of accretion from additional NOI growth in 2024, offset by dilution of $0.03 from our portfolio optimization strategy and $0.02 from increased expenses, bringing us to our guided midpoint of $1.14 per share for 2024. While our same-store portfolio has changed, there is no impact on our operating guidance as we are reiterating our previous outlook for same-store revenue and operating expenses. Our guidance range for same-store revenue growth in 2024 remains at 3% to 4.5%. And on the expense side, our guidance range for full-year 2024 total operating expense growth continues to be between 5.4% and 6.4%. Controllable operating expenses are expected to be up 5.4% at the midpoint, with non-controllable operating expenses for real estate taxes and insurance to be up 6.6% at the midpoint. As a result, for 2024, we continue to expect that property NOI growth will be between 1% and 4% or 2.5% at the midpoint. New to our full-year guidance is acquisition volume, which reflects our potential plan to acquire a property in Nashville that was developed by our joint venture partner and where we exercised our right of first offer. We are also increasing our disposition volume guidance to reflect the additional asset held-for-sale in Birmingham. Scott, that's it. Back to you.

Thanks, Jim. Our performance in the first quarter gives us a solid foundation to drive further growth of our business in 2024, which includes supporting increased occupancy, which in turn will give us the ability to drive rent growth in the coming quarters and allows us to remain confident in delivering our full-year guidance, and completing our portfolio optimization and deleveraging strategy by selling the 10th and final property, fundamentally resetting our leverage profile and reducing our exposure to noncore markets. As we focus on these initiatives throughout the organization, we also maintain our commitment to delivering shareholder value and returning capital to our shareholders. We thank you for joining us today and look forward to seeing many of you at BMO's Annual Real Estate Conference in May and Nareit's REITWeek conference in June. Operator, you can now open the call for questions.

And your first question comes from Austin Wurschmidt from KeyBanc Capital Markets.

Mike, you highlighted in your prepared remarks that you've signed, I believe, 85% of the renewals for May and June at a 3.5% increase. What's the retention related to that 85% figure? And what sort of the thinking on the remaining 15% as it relates to what you think you can achieve on the renewal rate growth? Just wondering how that changes the 3.5% figure?

Retention is at 55%, and we are consistently focusing on it. We saw some improvement in our renewal rent growth momentum in April. I anticipate that the first batch of renewals for July, which have been sent out, will achieve about a 3.5% increase. Overall, I am optimistic about the strength of these renewals.

So based on the month-to-date for April, what you achieved in May and June, I mean, it feels like you think you can achieve that 55% retention target with renewals holding around the 3% to 3.5% range. Do you think that this gets offset by softer-than-expected new lease rate growth? Or could blended rate growth exceed the 2.1 that you assumed in your initial same-store revenue growth guidance?

I don’t think we want to say that blended rate growth will exceed the guidance. I believe the guidance is solid; our approach has been a balance between our focus on retention and the renewal rates for retained leases compared to new leases. Overall, our emphasis on retention and occupancy remains strong, and we are comfortable with the current guidance.

Our next question comes from the line of Eric Wolfe from Citi.

It's actually Nick Joseph here with Eric. I just want to dive in on some of the capital allocation, the additional asset sale. How are you thinking about additional asset sales from here? Just trying to understand kind of the framework of what would make you want to transact? I don't know if it's either further deleveraging or kind of noncore markets use of proceeds, kind of how you're thinking about additional asset sales beyond what's announced thus far?

At this moment, we don't have any specific plans. The recent asset sale in Birmingham was part of our recycling strategy. We are evaluating our markets in the portfolio for the long term to determine where it makes sense for us to grow or scale back. We currently have two completed assets in our joint venture program in Nashville, and we are considering our purchase options. We opted to sell the Birmingham asset, and we are satisfied with the price at a 5.2% cap rate, which allows us to reallocate that money if we can agree on a suitable price for the Nashville asset. To clarify what I mean by a good price, the process involves exercising our right, followed by appraisals from both an appraiser we select and one chosen by the developer. Those two appraisers will select a third for an average appraisal value, which we will then use to decide whether to proceed with the purchase. If we choose not to buy, the developer has the option to sell to others for less than the appraised value, and in such a case, we would have the opportunity for a final review. This approach is all part of our strategy to align the portfolio with our long-term goals, and frankly, we would prefer to be invested in Nashville rather than Birmingham.

And then just from that portfolio strategy perspective, which other markets would you look to gain exposure to? It doesn't sound like in the near term, but as you look over the next few years, either from a job growth or population growth expectation, where could we expect you to kind of rotate in and out of?

Yes. I'm still a believer in the Sunbelt long term. I think that's where you will see above-average population and job growth. And we're coming through a bit of a rough patch here because of all the new supply, but that's coming to an end. And I believe you'll see continued above-average growth in the Sunbelt markets. So that's where our focus will be. And we have a couple of markets where we have only one or two assets in the Sunbelt, and we would look to expand there.

Our next question comes from the line of Anthony Powell from Barclays.

I guess a question in terms of your Midwest versus Sunbelt performance in the quarter. I guess, how much higher were Midwest, I guess, lease spreads on the new side, both in the quarter and April kind of given the lower supply growth there?

This is Janice. Overall, we've seen probably a relatively 2% spread between the Midwest and the Sunbelt area. We continue to see sustainable opportunity in the Sunbelt now that we've stabilized occupancy at 95.4%, we will continue to maintain. But ultimately, it's all about that balanced approach will be rationing the levers of new lease and renewal to ensure that we're able to maintain that occupancy through the rest of the year.

And Anthony, this is Jim. On the NOI growth kind of between the Sunbelt and the Midwest, the Midwest certainly outperformed with a roughly 4.5% NOI growth in Q1 with the Sunbelt roughly 2%.

Our next question comes from the line of Barry Oxford from Colliers.

You mentioned the Nashville asset as a potential acquisition. What else are you observing in the acquisition market? Additionally, do you think cap rates are at a comfortable level for transactions?

I'll address the last part of your question first. In short, there is still a gap between public valuations and private market valuations. For instance, cap rates in Birmingham are at 5.2%, and it wouldn't make sense for us to purchase an asset at that rate given our current cost of capital. We are consistently reviewing our entire portfolio and determining how we want to position it. We will continue to exchange some assets for newer ones, ensuring we match the cost of capital when buying and selling. Our focus remains on managing the portfolio for the long term, but we are not actively seeking acquisitions unless they align with our recycling strategy.

Our next question comes from the line of Omotayo Okusanya from Deutsche Bank.

My question is specifically about the Sunbelt market. There seems to be some commentary suggesting that supply issues may eventually become less significant. I am curious about your thoughts on supply in the Sunbelt concerning deliveries, absorption, and when we might start to see improvements in those markets.

Yes. Great question. We have some stuff in our investor deck, and we've kind of talked about it, I think, on our year-end earnings call and certainly in our Citi presentation back in March that the expectation we have is that the vast majority of the new supply should be through by mid-part of this year. There'll still be a little bit of lagging until the back half of the year, for sure, such that we'll have pricing power as we head into the back part of the year. The other thing that we expect, again, given some of the data we've seen and modeling, is absorption this year should be much better relative to the new supply growth, whereas last year, the absorption wasn't as strong. As Scott had mentioned earlier, we're still very bullish for the long term on the Sunbelt. And that we think that job growth and population growth will continue to be very bullish there, and we're quite excited about kind of how the new supply is trending this year so far and how our more Class B product is more insulated.

There are no more questions. I will now turn the conference back over to Scott Schaeffer for closing remarks.

Thank you for joining us this morning, and we look forward to seeing many of you at the upcoming conferences and then speaking again with you next quarter. Have a good day.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.