My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to Independence Realty Trust, Inc. Q4 and Full Year 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. We do request for today's session that you please limit to one question and one follow-up. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star then one again. I would now like to turn the conference over to Stephanie Krewson-Kelly, Head of Investor Relations. You may begin. Good morning, and thank you for joining us to review Independence Realty Trust, Inc. fourth quarter and full year 2025 financial results. On the call with me today are Scott Schaeffer, Chief Executive Officer; James J. Sebra, President and Chief Financial Officer; Janice Richards, Executive Vice President of Operations; and Jason Lynch, Senior Vice President of Investments. Today's call is being recorded and webcast through the Investors section of our website at irtliving.com, and a replay will be available shortly after this call ends.

Before we begin our prepared remarks, I will remind everyone we may make forward-looking statements based on current expectations and beliefs as to future events and financial performance. These statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially. Such statements are made in good faith pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and Independence Realty Trust, Inc. does not undertake to update them except as may be required by law. Please refer to Independence Realty Trust, Inc.'s press release, supplemental information, and filings with the SEC for further information about these risks. A copy of Independence Realty Trust, Inc.'s earnings press release and supplemental information is attached to Independence Realty Trust, Inc.'s current report on Form 8-K that is available in the Investors section of our website. They contain reconciliations of non-GAAP financial measures referenced on this call to the most direct comparable GAAP financial measure. With that, it is my pleasure to turn the call over to Scott Schaeffer.

Thanks, Stephanie, and thank you all for joining us this morning. 2025 was a solid year for Independence Realty Trust, Inc. During another year of challenging market fundamentals, we delivered same-store NOI growth that exceeded our initial guidance. We also adopted new technologies that will drive operating efficiencies and cost savings for years to come. Some of the most impactful initiatives included implementing our AI leasing agent to support the time and talents of our property teams, fine-tuning how we manage bad debt, and reducing the turn time on our value-add renovations to an average of just 25 days. We also successfully rolled out our Wi-Fi initiative and will be expanding it to 63 communities covering 19,000 units as part of our 2026 plan. On the capital front, last year, we sold two older communities and redeployed the proceeds into three newer communities with higher rental rates and lower CapEx profiles. We profitably exited two joint ventures and invested into new joint ventures. Lastly, we purchased 1,900,000 of our shares, taking advantage of market dislocation. Because of these and other initiatives, our company is stronger than ever and ready to capitalize on the growth opportunities ahead. So before I say anything else, I want to thank the entire Independence Realty Trust, Inc. team for last year's extraordinary efforts and successes. Regarding capital allocation, we continue to view investments in our value-add program as our best use of capital. In 2025, we renovated 2,003 units, achieving an average unlevered return on investment of 15.3%. In 2026, we expect to renovate between 4,500 units at ROIs that are consistent with our historical results and have added six new communities to the value-add program. We expect market fundamentals to continue to improve across our portfolio of well-located communities in desirable submarkets. In 2026, CoStar forecasts inventory will increase by 2.1% across our markets, weighted by our NOI exposure. This increase is significantly lower than the 3.7% increase in 2025, the 5.9% increase in 2024, and the 3.2% long-term average prior to 2024. Drivers of apartment demand in our markets remain solid. Job growth, population growth, and household formation rates within our markets are expected to outpace the national average for 2026. For example, according to CoStar, job growth across our markets is forecasted to average 60 basis points, double the national average of 30 basis points. Our major markets like Atlanta, Dallas, Indianapolis, and Raleigh are forecasted to achieve 50 to 80 basis points of job growth. This shows that people will continue migrating to our markets for employment opportunities and a better quality of life. As evidenced in the 2025 U-Haul Growth Index, nearly 70% of our NOI is generated from communities located in seven of the ten highest in-migration states. And the high cost of homeownership will continue to support apartment fundamentals. Against this backdrop of improving supply and demand, we see the majority of our markets recovering this year.

Thank you, Scott, and good morning, everyone. Core FFO per share during the fourth quarter and the full year of 2025 was $0.32 and $1.17, respectively, in line with our guidance. Same-store NOI grew 1.8% in the quarter, driven by a 2% increase in same-store revenue and a 2.4% increase in operating expenses over the prior year. For the year, same-store NOI increased 2.4% based on 1.7% growth in revenues and a 50 basis point increase in operating expenses. We are pleased with our performance this year amidst a difficult environment and ultimately delivering better same-store NOI growth than we originally anticipated. As compared to the prior year period, fourth quarter same-store revenue growth was led by a 124 basis point improvement in bad debt over 2024, a 60 basis point increase in average effective monthly rents, and partially offset by a 10 basis point decrease in average occupancy. The year-over-year increase in fourth quarter same-store operating expense was due to higher repairs and maintenance related to a greater volume of turns, timing of certain projects, and increased contract services related primarily to ancillary services offered to residents that were offset by other income. These cost increases were mitigated by overall lower real estate taxes and insurance costs. For the full year, 2025 same-store revenue growth was led by an 80 basis point increase in average effective monthly rents, a 30 basis point increase in average occupancy, and a 70 basis point improvement in bad debt year over year. Same-store operating expenses in 2025 were modestly higher than in 2024 due to higher advertising and contract service costs largely offset by lower insurance and real estate taxes. Sequential point-to-point occupancy during the fourth quarter in our same-store portfolio was stable at 95.6%. Our strategy of having higher year-end occupancy is supporting the solid start to 2026 leasing, which I will address momentarily. Rental rate growth in the quarter was in line with our expectations. New lease trade-outs in the seasonally slower fourth quarter were negative 3.7%, 20 basis points lower sequentially from the third quarter. Renewal rates increased 30 basis points to 2.9% in the quarter and resident retention increased another 100 basis points to 61.4%. Regarding leasing so far in 2026, asking rents in our same-store portfolio have increased 73 basis points since December 31, and new lease trade-outs remain consistent with the fourth quarter. Renewal lease trade-outs in January were 20 basis points higher than in Q4. We are making good progress on our February and March renewals and expect to achieve approximately 3.5% trade-outs for those months. This leasing activity to date is in line with the trajectory of our 1.7% blended effective rental rate growth assumed in our 2026 full year guidance, which I will discuss momentarily. Regarding transactions, during the quarter, we sold the 356-unit community that we had held for sale in Louisville for $15,000,000, reflecting an economic cap rate of 5.2%. Also during the quarter, we entered into a new joint venture in Indianapolis to develop a 318-unit community that is slated for completion during 2027. Subsequent to the quarter, we purchased a 140-unit community in Columbus for $30,000,000, which represented an economic cap rate of 5.6%. The community is located two miles from existing Independence Realty Trust, Inc. communities. We also acquired our JV partner's 10% interest in the Tisdale at Lakeline Station in Austin, Texas, and began consolidating this $115,000,000 asset on our balance sheet. The property is fully developed and currently in lease-up. We have been busy on the capital markets front as well. During the quarter, we allocated $30,000,000 to buy back 1,900,000 of our common shares at an average price of $16 per share. Additionally, we entered into a new $350,000,000 four-year unsecured term loan and used the proceeds to repay our $200,000,000 term loan and mortgages that mature later this year. Our balance sheet remains flexible with strong liquidity. As of December 31, our net debt to adjusted EBITDA ratio was 5.7x, and we intend to continue improving this ratio to the mid to low 5x. Adjusting our full-year stats for the term loan activity I just discussed, we have zero debt maturities between now and 2028. Turning to our outlook for 2026, our markets are in various stages of recovery driven by receding supply pressures and demand fueled by job growth, continued population, and migration into our markets. In this improving leasing environment, we expect to drive NOI growth by capturing recovery market rents and maintaining our focus on operating efficiencies to keep costs low while providing a well-maintained, safe environment for our residents and their families. We are establishing full-year EPS guidance of between $0.21 and $0.28 per share and core FFO guidance in the range of $1.12 to $1.16 per share. The bridge from our $1.17 starting point of core FFO in 2025 to the $1.14 midpoint of our 2026 guidance includes the following components: a $0.01 increase from same-store NOI growth and a $0.01 increase in non-same-store NOI growth. These two are offset by $0.01 from lower preferred income from our joint ventures during the year, $0.03 of higher interest expense caused primarily by lower levels of capitalized interest, incremental interest expense from recent acquisitions, and the expiration of our 2026 SOFR swap, and $0.01 associated with higher corporate costs reflective of inflationary pressures and increased training and development costs for our community teams. Our 2026 guidance assumes same-store NOI increases 80 basis points at the midpoint driven by 1.7% same-store revenue growth and a 5.1% increase in controllable operating expenses, and a 50 basis point increase in non-controllable operating expenses, resulting in overall a 3.4% increase in total same-store operating expenses for the year. The midpoint of our same-store rental revenue growth of 1.7% is based on the following assumptions: average occupancy of 95.5%, an average increase of 20 basis points from 2025; bad debt of 90 basis points of revenue, which is approximately 20 basis points lower than 2025; a 5.4% increase in other income, primarily comprised of the incremental revenue from our Wi-Fi program of $5,500,000, which is expected to commence in July 2026; and lastly, a blended effective rent growth of 1.7%.

Thanks, Jim. The outlook for 2026 is meaningfully better than 2025. Some headwinds remain in a few markets where supply is still being absorbed, but in all cases, market fundamentals are improving. Demand in our submarkets continues to be driven by population and job growth that exceed the national average. People continue to migrate to the Sun Belt and Midwest for jobs and quality of life. And the lower cost of renting favors apartment demand. We will maintain our focus on operational stability and efficiency to maximize the flow of revenue growth to the bottom line, and we will remain nimble and disciplined in allocating capital to the highest and best uses to create value for shareholders. We thank you for joining us today. Operator, you can now open the call for questions.

Hey. Good morning, guys. Jim, just curious how the new lease rate growth assumption, a 75 basis point decrease this year, does that fully incorporate that you capture the 1% to 2% market rent growth? And then can you break out how that 75 basis points is comprised for the first half of the year and then the back half of the year? Yes. Great question. I will break it into two components. The 75 basis points of new lease growth obviously starts negative in January, like I kind of mentioned, very consistent with the fourth quarter, and continues to get better throughout the year. The new lease growth that we have got baked into guidance for the first half of the year is down about 2.25%. And then the second half of the year, it is up roughly 75 basis points, such that for the year, new lease growth is about—sorry—negative 75 basis points for the year. And that does assume that you capture—I do not know the exact, I cannot remember the exact percentage—but a vast majority of that market rent growth. That is helpful.

Obviously, the same-store properties that we bought last—I'm sorry—the non-same-store that we bought last year are very much performing kind of in line with our expectations. The two deals that are in development are behind where we want them to be from a lease perspective and from, obviously, as I mentioned, a little bit higher concessionary environment. They are both—the guidance numbers assume some conservatism in the buildup of that NOI throughout the year. Specifically, the deal we bought in Austin—the JV we took over in Austin—our expectation is that we will probably end up selling that asset maybe later this year and really begin to kind of cut off some of that drag. But, again, for guidance purposes, it is assumed that we own it for the full year.

Great. Thanks for taking the question and good morning. Can you talk about the impact of concessions burning off and what you think that will do to help your rent growth projections? And if you could provide any more color on just your confidence in going from the minus two and a quarter to the plus 75, that would be helpful too.

Yeah. No. Great. I will start with the last one. The new lease trend is obviously very much a function of just asking rent trends throughout the year and then, obviously, the expiring rents in each month. As I mentioned in the prepared remarks, our asking rents in January are up 75 basis points from where they were at December 31. As I mentioned earlier, the market rent growth assumption is about 1.5%. We are halfway there. And, obviously, the year has to continue to play out. But we are quite excited to see the strength in the asking rent growth so far this year. When you look at where the asking rents are today versus the expiring rents out month by month throughout the year, you pretty much hit that kind of breakeven point June/July timeframe, you turn positive on new lease trade-outs in the back half of the year. From a concession standpoint, we do assume lower concessions in the back half of the year. I do not have the exact improvement at my fingertips, so I will get back to you on that one. But I think, ultimately, it does produce better comps for us in terms of the ability to grow that rental rate, specifically on renewals in the back half of the year. But I just want to be clear. There has been some conservatism baked into what those renewals are just because we want to make sure we had.

Absolutely. So the Midwest—Columbus, Indiana, Kentucky—delivered consistent performance throughout 2025. Anticipate this to continue in 2026, and all signs and starting points indicate that. And all throughout 2026. Consistent performance, yeah. Some of our emerging markets, as we would say, is Atlanta showing strong fundamentals delivering a 100 basis points improvement in occupancy and 490 basis point expansion in blended growth from January 2025 to December 2025.

So we are positioned to continue this growth and momentum in 2026. Nashville has maintained stable occupancy through 2025. It created the ability to have pricing power in the second half of the year. Delivered a 280 basis point expansion in blended growth from January 2025 to December 2025. Dallas occupancy remained stable as well through 2025, providing a consistent foundation. Blended rent growth is showing momentum. As alluded to, we are excited about the asking rent momentum we are seeing through the start of 2026. So there are clear signs that the market inflection is on its way, and we are anticipating the comparison in the second half of 2026.

Your next question comes from the line of James Colin Feldman with Wells Fargo. Please go ahead.

I think you said most of your markets will be in recovery this year. Can you just talk about some that are the standouts on both the best markets that are kind of surprising you to the upside and where you think the drags will be? And then maybe focus specifically on the Midwest markets where you have unique exposure.

Yeah, we appreciate the question. Overall, I believe the fundamentals across the board are showing improvement, especially in our major markets. The migration patterns are favoring us.

From a concession standpoint, we do assume lower concessions in the back half of the year. I do not have the exact improvement at my fingertips, so I will get back to you on that one. But I think, ultimately, it does produce better comps for us in terms of the ability to grow that rental rate, specifically on renewals in the back half of the year.

Hi. Thanks. You mentioned that market rent growth was up 75 basis points in January from December. Is that a relatively normal increase from December? Just trying to put it into context with what you normally see at this time of year and maybe what you have seen over the last couple of months?

Yes, I absolutely see that as a little bit faster pace than what we would normally see in the seasonally slower period of January. It is slower, though, than what we saw in January last year. So it gives us confidence that we are back to—while it is a little bit faster pace, it is not as fast or as extreme as it was in January last year. So it gives us confidence that the asking rent growth could firm up in this area.

Great question. For the year of last year, we ended at 110 basis points of revenue. The fourth quarter alone ended at 72 basis points of revenue. For purposes of setting guidance for 2026, we assumed 90 basis points of revenue, starting a little higher in the first quarter—so call it somewhere in the 100 basis point range—and then stepping down to the 80–70 basis point range in 2026.

Next question comes from the line of Bradley Barrett Heffern with RBC Capital Markets. Please go ahead.

Yeah. Well, the asking rent growth in early January of last year was probably three times as high as it is today. We also see just a little more stability around the demand picture. We do not see the ebb and flow that we saw in January and February last year.

So there are two swaps maturing this year. There is one that is maturing in March 2026. That was a one-year swap we put in place last year simply because of where we saw the interest rate curve for one year and wanting to protect our interest expense during 2025 versus where we saw maybe the interest curve may not be as steep. The actual cuts were not going to happen as planned, and we thankfully won on that swap from a cash flow perspective. We are not anticipating redoing that swap. We are going to stay floating. And we will enjoy about a 30 basis point improvement on the underlying SOFR from the 3.9% that we were swapped at to the 3.6% that SOFR is today.

For your Mustang joint venture property in Dallas, is the call option period open? What are your thoughts on exercising the call, and what is the forward NOI yield?

Yes, the call option is open. When we look at where that property would trade today, or be valued today, it is still at a cap rate that is not our best use of capital to buy it. So I would anticipate that property being sold this year because we can use that capital in better ways, again, as Jim said, through deleveraging and/or buying back our shares.

Sure. Obviously, like a lot of our peers, there is a fundamental disconnect between implied cap rates and market cap rates. We looked at that as a good opportunity to take capital or earnings from non-EBITDA generating sources and use that capital to buy back stock. If you sell an asset, you lose the EBITDA and the earnings. We are very much focused on the long term. Ever since our start, we have always said we are going to be patient and disciplined, and we are going to continue to be that way. That being said, we did have a lot of capital that came in last year from the sale of one of our joint venture assets as well as the embedded gain that existed in the forward contracts. We took those proceeds and used that to buy back stock in a positive and accretive way for shareholders.

Well, thank you all for joining us this morning. I just want to reiterate how excited we are about 2026 and the forward trajectory that we see for our portfolio. Thanks for joining us, and we look forward to speaking with you next quarter.

Ladies and gentlemen, that does conclude our conference call for today. Thank you all for joining, and you may now disconnect. Everyone, have a great day.