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INDEPENDENCE REALTY TRUST, INC. (IRT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered stable results: same-store NOI rose 2.7% on stronger occupancy (95.4%) and modest rent growth; Core FFO/share held at $0.27; diluted EPS was $0.04 .
  • Guidance was affirmed for FY 2025 (EPS $0.19–$0.22, FFO/share $1.19–$1.22, CFFO/share $1.16–$1.19, same-store NOI growth 0.8%–3.3%) .
  • S&P Global consensus for Q1 implied a revenue miss and mixed EPS read: Revenue est. $163.85M vs S&P actual $160.65M (company-reported $160.91M); EPS est. $0.0385 vs S&P actual $0.0288 (company-reported $0.04). Note definitional differences between S&P “Primary EPS” and GAAP diluted EPS* [GetEstimates] .
  • Strategic catalysts: capital markets flexibility (revolver increased to $750M; 100% debt fixed/hedged), accretive acquisitions pipeline (high-5s year-1 economic cap rates), and a 6.3% dividend increase to $0.17 in Q2 2025 .

What Went Well and What Went Wrong

What Went Well

  • Occupancy and NOI improved: same-store NOI +2.7% YoY; average occupancy +100 bps to 95.4%; NOI margin +30 bps to 63.0% .
  • Value-add ROI strong: 275 renovations with weighted avg ROI of 16.2%, $250 monthly rent lift per unit, avg cost $18,463 .
  • Balance sheet/liquidity: net debt/Adj. EBITDA at 6.3x; ~$743M liquidity; revolver expanded to $750M; 100% debt fixed/hedged .
    • CEO tone: “We continue to believe we are at the beginning of a multi-year period of improving fundamentals and growth” .

What Went Wrong

  • Operating expenses rose: same-store operating expense +1.6% YoY, with controllable expense growth +2.9% (contract services, advertising) .
  • Leasing spreads mixed: Q1 like-term blended +10 bps; new leases -4.6% offset by renewals +4.8%—new lease rate pressure persists in supply-heavy submarkets .
  • EPS lower YoY: diluted EPS $0.04 vs $0.08 in Q1 2024; net income to common down to $8.4M vs $17.6M YoY .

Financial Results

Quarterly Comparison

MetricQ3 2024Q4 2024Q1 2025
Rental and other property revenue ($USD Millions)$159.86 $160.62 $160.91
GAAP Diluted EPS ($USD)$0.05 $0.00 $0.04
NOI Margin (%)62.1% 66.3% 63.2%
Adjusted EBITDA ($USD Millions)$87.45 $94.53 $85.75
FFO per share ($USD)$0.30 $0.33 $0.28
CFFO per share ($USD)$0.29 $0.32 $0.27
Portfolio average occupancy (%)95.4% 95.4% 95.3%
Same-store avg effective monthly rent per unit ($USD)$1,569 $1,569 $1,568

Consensus vs Actual (Q1 2025)

MetricQ1 2025 S&P ConsensusQ1 2025 S&P ActualQ1 2025 Reported GAAP
Revenue ($USD Millions)163.85* [GetEstimates]160.65* [GetEstimates]160.91
Primary EPS ($USD)0.0385* [GetEstimates]0.0288* [GetEstimates]Diluted EPS 0.04

*Values retrieved from S&P Global.

Same-store vs Non Same-store (Q1 2025)

MetricSame-storeNon same-storeTotal
Rental & other property revenue ($USD Millions)$151.72 $9.18 $160.91
Property operating expenses ($USD Millions)$56.13 $3.13 $59.26
NOI ($USD Millions)$95.60 $6.05 $101.64
NOI Margin (%)63.0% —63.2%
Avg occupancy (%)95.4% —95.3%
Avg effective monthly rent/unit ($USD)$1,568 —$1,583

KPIs

KPIQ4 2024Q1 2025
Resident retention rate (like-term) (%)55.1 59.5
New lease effective rent growth (like-term) (%)-4.7 -4.6
Renewal effective rent growth (like-term) (%)5.4 4.8
Blended like-term trade-out (%)0.0 0.1
Value-add units renovated (units)395 (Q4) 275
Value-add ROI (%)15.1 (Q4) 16.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EPS ($)FY 2025$0.19–$0.22 $0.19–$0.22 Maintained
FFO per share ($)FY 2025$1.19–$1.22 $1.19–$1.22 Maintained
CFFO per share ($)FY 2025$1.16–$1.19 $1.16–$1.19 Maintained
Same-store NOI growth (%)FY 20250.8–3.3 0.8–3.3 Maintained
G&A + Property Mgmt ($M)FY 2025$55–$57 $55–$57 Maintained
Interest Expense ($M)FY 2025$88–$90 $88–$90 Maintained
Acquisition Volume ($M)FY 2025$280–$320 $280–$320 Maintained
Disposition Volume ($M)FY 2025$110–$112 $110–$112 Maintained
Recurring Capex ($M)FY 2025$25–$27 $25–$27 Maintained
Value-add Capex ($M)FY 2025$48–$58 $48–$58 Maintained
Non-recurring & Revenue Enhancing Capex ($M)FY 2025$47–$51 $47–$51 Maintained
Development Capex ($M)FY 2025$5–$6 $5–$6 Maintained
Dividend per share ($)Q2 2025$0.16 (Q1) $0.17 (Q2) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Supply/deliveriesNew supply pressured new lease rates; blended +0.8% in Q3; occupancy 95.4% . Q4 guided for 2025 same-store NOI up 0.8–3.3% .Deliveries expected to drop ~60% YoY in 2025 and another 24% in 2026; submarkets forecast +8.5% net absorption (vs 1.5% U.S.) .Improving fundamentals; waning supply pressure.
Leasing spreadsQ3 new -3.6%, renewal +3.8% .Q1 like-term blended +10 bps; new -4.6%, renewal +4.8%; trade-outs improving sequentially Jan–Apr .Sequential improvement; expect acceleration H2 2025.
Bad debtQ3 embedded benefit expected for 2025 .Bad debt down ~50 bps YoY in Q1; fraud initiatives working; targeting ~1.4% of revenue for FY (down toward 1.2–1.3% exiting year) .Improving, supportive of revenue growth.
Insurance costsQ3 noted 10% reduction in property insurance premiums on May renewal .2025 guidance assumes +10% but expecting net decrease on May/Jul renewals; liability smaller than P&C .Potential tailwind vs guidance.
Acquisitions/cap ratesQ3 under contract 3 assets at ~6% stabilized cap; cost of capital accretive .Closed Indianapolis ($59.5M, 5.6% econ cap); under contract Orlando + Colorado Springs at high-5s year-1; ATM forwards used accretively (breakeven ~5.4% cap) .Accretive pipeline; leverage-neutral funding.
Debt/hedging/leverageQ3 net debt/Adj. EBITDA 6.3x; private placement notes, IG rating .Net debt/Adj. EBITDA 6.3x; 100% fixed/hedged; target mid-5x by YE 2025; ~$750M liquidity .Deleveraging path intact; risk low.
Value-add executionQ3 ROI ~14.9%, target ~1,700 units in 2024 .Q1 ROI 16.2%; planning 2,500–3,000 units in 2025 with targeted ROIs; strong pre-leasing .Durable ROIs; supports rent uplift.

Management Commentary

  • “We are off to a solid start in 2025. CFFO per share for the quarter of $0.27 and same-store NOI growth of 2.7%, driven by a 100 basis point increase in occupancy to 95.4%, were in-line with our expectations” — Scott Schaeffer, CEO .
  • “Apartment fundamentals will improve… deliveries decreased sharply… we expect our Sunbelt markets will benefit the most… submarkets forecast positive net absorption of 8.5%” — CEO prepared remarks .
  • “Our balance sheet is strong with low risk… net debt to adjusted EBITDA 6.3x… 100% of our debt being fixed and/or hedged… nearly $750 million of liquidity” — CFO prepared remarks .
  • “We sold our final asset in Birmingham… purchased a 280-unit community in Indianapolis at a 5.6% economic cap rate… under contract on 2 additional communities… blended economic cap rate ~5.8% year 1” — CEO and CFO .

Q&A Highlights

  • Leasing trajectory: Management cited month-to-month improvement in trade-outs (Feb > Jan, Mar > Feb, Apr > Mar), expecting further acceleration as supply wanes; Q1 like-term spreads new -4.6%, renewals +4.8% .
  • Bad debt/fraud: Bad debt improved ~50 bps YoY with anti-fraud initiatives; retention efforts helped reduce turn costs and repairs vs guidance .
  • Insurance renewals: Assuming +10% in guidance but expecting a net decrease on P&C renewal in May; liability premium smaller; overall net decrease anticipated .
  • Capital deployment/ATM: Breakeven accretion threshold ~5.4% cap rates; under-contract deals at ~5.8% year-1; preference is opportunistic in accretive markets, values below replacement cost .
  • Regional mix: Midwest blended rent growth 2–3% (seasonal), Sunbelt showing positive trajectory from Jan–Apr; Charlotte/Colorado face supply pressure in 2025 .

Estimates Context

  • Q1 2025 S&P Global consensus EPS: $0.0385; S&P actual EPS: $0.0288; company-reported diluted EPS: $0.04 [GetEstimates] . Differences reflect S&P “Primary EPS” methodology vs GAAP diluted EPS reporting.
  • Q1 2025 S&P Global consensus revenue: $163.85M; S&P actual: $160.65M; company-reported: $160.91M, indicating a modest revenue miss vs consensus* [GetEstimates] .
  • Guidance affirmed, with management signaling improving leasing/price power in H2 and potential insurance cost tailwinds; Street may fine-tune near-term revenue assumptions while maintaining FY ranges in line with company guidance .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Trajectory positive: occupancy solid, trade-outs improving sequentially, and supply/deliveries set to drop sharply—supporting rent growth in H2 2025 and into 2026 .
  • Guidance reaffirmed across EPS/FFO/CFFO and same-store NOI; expect earnings momentum to build as supply wanes and insurance costs likely undercut initial assumptions .
  • Capital flexibility and accretive deployment: expanded $750M revolver, fixed/hedged debt, and forward equity give room to fund high-5s cap-rate acquisitions without levering up .
  • Value-add ROI remains compelling (16.2% in Q1), driving ~$250/unit monthly rent uplift—an ongoing lever for same-store revenue .
  • Dividend increased to $0.17 for Q2 2025, a visible cash return catalyst that can support sentiment near-term .
  • Watch list: pace of new lease recovery in supply-heavy markets (Charlotte, Colorado), real estate tax assessments in mid-year, and bad debt trending toward 1.2–1.3% exit rate .
  • Setup favors H2: affirmed guidance + improving monthly trade-outs + potential insurance tailwind suggest upside risk to expense lines and stabilization of revenue growth—balance supports medium-term total return .

Appendix: Additional Q1 2025 Press Releases (for context)

  • Dividend declaration for Q1 2025: $0.16 per share (paid Apr 21, 2025) .
  • Dividend increased to $0.17 for Q2 2025 (payable Jul 18, 2025) .