Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Independence Realty Trust Q3 2023 conference call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. At this time, I would like to turn the conference over to Lauren Torres. Please go ahead. Thank you, and good morning, everyone. Thank you for joining us to review Independence Realty Trust's third quarter 2023 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. 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 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 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. Thank you, Lauren, and thank you all for joining us this morning. On our last earnings call, we specifically noted four areas of focus at IRT: drive occupancy, deliver planned value add improvements, further manage our cost structure, and reduce our... Since then, we have made progress on each of these fronts and have recognized ways to further optimize our portfolio, which will accelerate our deleveraging and better position IRT for the future. Let me take them one by one. First, our same-store occupancy in the third quarter improved 40 basis points to 94.6% on both a year-over-year and sequential basis, reflecting our team's ability to continue to implement operational enhancements. Second, we continue to invest in our communities, particularly through our value-add renovation program, where we renovated 709 units in the third quarter and 1,969 units in the first nine months of 2023, achieving an unlevered return on investment of 16%. Third, we continued to better manage our cost structure by reducing overhead costs by $2 million this year as compared to our original guidance issued in February. This is in addition to the $2.5 million in annual savings associated with the centralization of resident services and sales performance management teams. Looking into 2024, we are rolling out several new technology initiatives that will create further efficiencies. And fourth, we are now announcing a program to accelerate the sale of non-core properties and immediately delever. More on this strategy in a minute. While we remain encouraged by our strategic initiatives to support continued growth at IRT, we and other multifamily operators are facing an increasingly challenging environment. Specifically, we have seen a slower rate of occupancy gains than expected due to the softening economic environment, along with pricing pressure as new supply is offering aggressive concessions. These factors are affecting some of our markets, such as Atlanta, Dallas, and Nashville. So as a result of these recent trends, we are adjusting our 2023 guidance. Jim will provide greater detail behind our guidance update later on this call. We firmly believe that our core markets are well- positioned to continue to see strong absorption of multifamily units. Further, we will continue to benefit from our market diversification in affordable, defensive middle-market communities that are more resilient, but not immune to current elevated supply pressure. While we work to navigate the current environment, we must also think strategically to ensure that we are well- positioned for the future. Accordingly, we are initiating our portfolio optimization and deleveraging strategy, which is focused over the near- term on reducing our presence in non-core markets while also significantly deleveraging our balance sheet. We are accelerating this plan due to the broad view that interest rates will remain higher for longer, which will continue to impact property values. Our plan is to sell 10 non-core properties with the proceeds used to immediately reduce debt. The plan reduces near-term maturities and better positions IRT for an investment-grade rating. Before handing the call over to Mike, I'd like to stress our continued confidence in our core markets, where demand fundamentals remain favorable and supply pressure should begin to abate over the next six to 12 months. We expect to continue to benefit from positive migration, demographic, and employment trends. This is a core strength to the IRT portfolio and will position us favorably going forward. I'd now like to turn the call over to Mike. Thanks, Scott. As Scott mentioned, and has been noted by other companies and multifamily economists, we are operating in a challenging environment with the impact of new supply and the impact of inflation on consumers. These factors have led to more options for renters in the near- term and higher sensitivity to price than we've seen in recent years. This has created headwinds for us and for the industry. Despite these challenges, in the third quarter, we delivered a same-store average occupancy rate of 94.6%, a 40 basis point increase on a quarter-over-quarter and year-over-year basis, and a 150 basis point increase from Q1 of this year. As of today, our same-store occupancy is 94.6%, and our same-store non-value add occupancy is 95%. Our portfolio average rental rate increased 4.4% in Q3, contributing to 5.4% year-over-year property revenue growth for the quarter. New lease rent growth in Q3 reflected changing market conditions, with new lease rates 80 basis points higher. This includes the impact of concession activity to counter those conditions. In the third quarter, we increased the use of concessions, especially in markets such as Atlanta and Dallas, to remain competitive and prioritize occupancy. Lease-over-lease effective rent growth for renewals in Q3 2023 was 4.8%, and in Q4 2023 to date is 5%, which reflects approximately 82% of our total expected Q4 lease renewals. Our Q4 2023 to date blended lease-over-lease effective rental rate growth is 2.3%. We continued to achieve double-digit NOI growth in the third quarter in a number of markets, including Houston, Tampa, Louisville, and Lexington. These markets have displayed increases in average monthly rent, benefiting from strong job markets. We continue to focus on driving operational performance through process improvement, role specialization, and ongoing technology enhancements. These initiatives include a pilot program to build on organizational improvements that have increased the speed of our response to local market changes. Another example is in the screening and qualification process for new residents. Across the industry, efforts to ensure screening effectiveness and to fight fraud are a high priority. We are deploying new technology solutions to improve the accuracy and confidence of prospect ID verification and are preparing to deploy a new, robust income verification solution in early 2024. We expect these technology enhancements will improve the speed and effectiveness of resident screening. In addition, our specialized teams focused on sales and resident account management have had a positive impact on staffing efficiency, resident experience and reputation, streamlining the collections process, and greater efficiency and focus for our community teams. As we look ahead, our focus is on prioritizing occupancy throughout our portfolio while optimizing rent growth where possible. Our results in Q3 show the success of our initiatives, and we will continue to explore opportunities to increase efficiencies and drive results. I will now turn the call over to Jim. Thanks, Mike, and good morning, everyone. Beginning with our third quarter 2023 performance, net income available to common shareholders was $3.9 million, as compared to a $16.2 million dollar in the third quarter of 2022. This decrease is a result of an asset impairment we recorded this quarter associated with the portfolio optimization and deleveraging strategy Scott mentioned. During the third quarter, core FFO per share increased 7.1% to $0.30 per share from $0.28 per share a year ago. This growth reflects the organic rent and NOI growth that we experienced in the quarter on a year-over-year basis. IRT same-store NOI growth in the third quarter was 4.8%, driven by revenue growth of 5.4%. This growth was led by a 4.4 increase in average monthly rental rates to $1,549 per month. On the operating expense side, IRT same-store operating expenses increased 6.3% during the third quarter, led by higher property insurance and contract services due to inflation, as well as higher advertising expenses as a result of our increased efforts to drive occupancy amid a slowing macroeconomic environment. Turning to our balance sheet, as of September 30th, our liquidity position was $276 million. We had approximately $17 million of unrestricted cash and $259 million of additional capacity through our unsecured credit facility. Before turning to 2023 guidance, I'd like to provide more details behind our newly initiated portfolio optimization and deleveraging strategy. As Scott mentioned, we are focused on reducing our presence in non-core markets while also delevering our balance sheet. In particular, we plan to sell 10 properties in seven markets for estimated gross proceeds between $521 million and $533 million, which equates to a weighted average economic cap rate of approximately 5.9% at the midpoint. After repaying debt at the property level associated with the sold properties, we estimate that we will have between $232 million and $244 million of remaining proceeds, and we'll use those remaining proceeds to repay unhedged floating rate borrowing and various other high-cost property mortgages that mature in 2024, 2025, and 2026. The weighted average coupon of the debt we plan to repay is approximately 6.1%. As we sell all these properties, nine of which were acquired from our merger with STAR in late 2021, we are expecting to record a net loss on sale of between $39 million and $51 million, which includes a $20 million-$24 million gain on the single legacy IRT asset that is expected to be sold. We expect this strategy will result in $0.02-$0.03 of annual dilution to core FFO per share, and after the effect of annual CapEx, we expect it to be break even on a free cash flow basis. In addition, the related deleveraging is expected to reduce our net debt to adjusted EBITDA by almost one full turn and further improve our unencumbered asset ratios as we work towards achieving an investment-grade rating. We also expect that the strategy will remove all floating rate risk from our balance sheet and will significantly reduce our debt maturities in 2024 and 2025, as we disclosed in our earnings supplement. With respect to our full year 2023 outlook, we are lowering our EPS guidance range from $0.25 to $0.27, to -$0.07 to -$0.02, which now reflects estimated impairment losses of real estate assets, just as discussed, as a result of our strategy. Our 2023 core FFO per share guidance midpoint changes by roughly $0.005. We are reducing our same-store portfolio from 115 to 106 properties as a result of this portfolio optimization and deleveraging strategy, as we just discussed. The midpoint of our new same-store revenue guidance is 5.6%, down from 6.35% previously. This reflects the following assumptions for the fourth quarter of 2023: average occupancy of 94.4%, a blended net effective rental rate increase of 90 basis points, and bad debt at approximately 2% of revenue. On the expense side, our guidance for full year 2023 total operating expense growth is now more favorable at 5.7%, down from 6.1% at the midpoint of our ranges. Controllable operating expenses are now expected to be up 6.5% at the midpoint versus previous guidance of 5.1%, driven by higher inflationary pressure on services, as well as higher cost to turn units associated with evictions. Non-controllable operating expenses for real estate taxes and insurance are now expected to be up 4.5% at the midpoint. This is down from our previous guidance of 7.8%, driven by lower assessed values than expected and early successes with 2023 real estate tax appeals. As a result of these changes, our revised midpoint for property NOI growth is now 5.5%, down from 6.5%. We are reducing our G&A and property management expense guidance to a midpoint of $50.5 million, down from $51 million previously. We are also reducing the range and midpoint for full-year interest expense to $101.5 million, down from $103 million. While we're still not assuming any acquisition volumes for this year, we are maintaining our disposition guidance of $124.5 million at the midpoint, as we are not expecting the additional sales from our portfolio optimization strategy will occur this year, but rather in early 2024. Now I'll turn the call back to Scott. Scott? Thanks, Jim. In closing, we feel very good about our position despite the near-term environment. First, we have the right assets in the right markets that will continue to benefit from favorable demographic trends. Second, value add is core to who we are and will remain a consistent source of organic growth for the portfolio throughout the cycle. And lastly, we are now taking decisive action to optimize the portfolio and fundamentally reset our leverage profile. We are committed to this strategy as we believe it will deliver sustainable earnings growth. We thank you for joining us today, and we look forward to speaking with many of you at Nareit’s REITworld Conference in the coming weeks. Operator, you can open the call for questions. Thank you. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll take our first question from Austin Wurschmidt at KeyBanc Capital Markets. Hi, good morning, and thank you. Are the 10 assets being marketed as one-off sales, or are you attempting to sell as a portfolio? And can you give us a sense how far along you are in the marketing process and just how deep the pool of buyers has been so far? Sure, Austin. Thanks for the question. They're being marketed as one-off transactions because they're in varied markets. We started this process a little bit ago and are well along. We have a couple under agreement. There's a third agreement ready to be signed. There's a couple more LOIs. We're well into the process, and that's what gives us confidence that we'll get this done. And I guess just what gives you the confidence that you can execute a sale at the pricing you've alluded to in your prepared remarks? I mean, other than, you know, it does sound like you've made some progress here before. But then upon executing a sale, I'm also curious what the ultimate target is now, for, you know, net debt to EBITDA over, call it, the next 24 months or so. Well, I'm going to let Jim answer the last part of that question. But there was good demand for these properties as we took them out to market. Multiple bids, very qualified and well-heeled buyers, that we know is because we took them through buyer interviews. So it, it gives us confidence that we'll get it done, and we intend to sell these assets. Austin, you know, on the question on the net debt to EBITDA, you know, we've given our perspective that we expect it to be, you know, kind of mid-5s at the end of 2025. We fully expect that we'll be pulling that up into certainly 2024, if not maybe mid-2024. So we expect our net debt to EBITDA to ratchet down by that almost that entire full turn, and continue to make additional progress as just EBITDA grows. That's helpful. I'll, I'll leave it there. Thanks for the time. Thanks, Austin. We'll go next to John Kim at BMO Capital Markets. Thank you. Can you discuss where bad debt was during the third quarter, and how you see that improving or progressing over the next 12 months? Yeah, the bad debt in the third quarter was about 1.9%. We expect, right now—you know, in our initial guidance for the year, we expected it to be about 1.5%. We think that it'll be kind of hovering for the full year right around 2%. And then, as Mike alluded to in his prepared remarks, you know, as we make additional progress on, you know, the ID verification as well as an improved income verification tool, that we'll continue to see that bad debt ratchet down next year. That 1.9%, was that gross or net of resident relief fund? There really wasn't very much resident relief fund, so I would say it's both. Okay. On your value add, the 23 properties, the new lease growth rate decelerated and was down 1.6% in the fourth quarter. Can you explain this dynamic? I thought the renovated units themselves were generating enough rent, I guess, with tHe 20% uplift in rents, to bring up the overall -average of the buildings. Sure. It's really a seasonality and timing issue. As we worked to push occupancy, the value add was part of that effort. There is good demand. We're not carrying a lot of value add units that have been completed. They're getting leased, and we expect that to normalize back to more historical levels next year. Now that occupancy is stable, it gives us, you know, the view that it'll again normalize next year. Do you expect the return expectations to continue to moderate? To moderate? No. No, I expect it to be back towards that 18% in 2024. Okay. Great. Thank you. Thanks, John. We'll go next to Brad Heffern at RBC Capital Markets. Hey, everybody. Can you talk about why you're pursuing this deleveraging program now? Obviously, you bought STAR a couple years ago, so I guess why not sell these kind of one-off cats and dogs immediately, and what made now the right time to do it? So, a good question. You know, we looked at the current interest rate environment, and with the broad view that now rates will stay higher for longer, we felt that cap rates probably were not going to go down in the near- term. What kept us from doing it previously was that there was significant yield maintenance or defeasance costs associated with the property-level mortgages on these properties. Now those, because of the increase in rates and the passage of time, that prepayment penalty, if you will, is gone. So, you know, with the view that rates are going to be higher for longer and with no prepayment costs, now we've decided it was time to just exit these markets. So we had always planned on exiting, and to use the proceeds to delever. Okay, got it. And then probably for you, Jim, I guess some of the building blocks for 2024, I was wondering if you could give them, like, your current expectation for earnings, the loss to lease, and any initial thoughts on whether we'll see market rent growth. So, good question. You know, obviously, 2024 is still very much unknown, but the current building blocks, the current loss to lease is 1.8% across the portfolio. Our current expectations for earn-in for next year are about 1.3%, and obviously, that's assuming kind of that, kind of continual what we've seen rent growth so far in the fourth quarter, that continues for November, December. And then right now, CoStar is reporting that our submarkets should experience 2.4% market rent growth. Okay, thank you. We'll move to our next question from Anthony Powell at Barclays. Hi, good morning. You talked in the past about how Class B apartments should benefit from trade down in a slower economic environment. Are you seeing any of that, or is the supply environment maybe making that more difficult this time around? Thanks for the question. This is Mike. I think we are continuing to see that, you know, A properties are being hit harder than B. I think, you know, those are the ones where we see the developers getting more aggressive with concessions. Obviously, that directly impacts the A market more so than the B market, and I think that our properties have definitely shown more occupancy and rent growth strength on our B assets. As far as markets being impacted, I think, you know, 2024, we expect that to be better from an impression, from a concession perspective. I think Atlanta, less pressure with the new supply, which is good for us. Obviously, that's a big market. Dallas, Nashville, the other ones that were mentioned earlier, you know, either very slightly up in terms of new supply or even with this year. Thanks. And more generally, I mean, are you seeing any signs of stress in the consumer base? I mean, outside of things like, you know, fraud, are you seeing tenants coming to you saying they can't pay rent? Just any kind of signs that consumers are being more stressed on a broader level than just more specific situations? Specific to our business, no. You know, our rent-to-income ratio has remained very consistent at 22%. We've not seen any upward trend in any inability to pay, you know, than we have in the, you know, the prior periods. We do actually have better credit in our applicants than we did, you know, say, a year ago. So we're seeing an upward trend in, in terms of, creditworthiness of our applicants. And I don't, you know, I don't think it's any surprise that, you know, any pressure on consumers generally impacts the residents in, in all multifamily, but, nothing specific to our business, beyond that, beyond that normal consumer pressure. Okay. Thank you. Next, we'll move to Eric Wolfe at Citigroup. Hey, thanks. Can you talk about where you expect new and renewal rate growth to go through the rest of the year? And if you think we'll sort of see peak pressure from supply on your rate growth in the first half of next year, or if there's gonna be a bit of a lag there, just given the time it takes to lease up all the new supply? Yeah, but I think, Again, I think we'll continue to see a little bit of that, the rent growth that we've seen so far, that we've reported in the fourth quarter, we think that'll continue, for November, December. I think the blend, you know, in our guidance that we have for the entire fourth quarter is about 90 basis points of blended rent growth. You know, as far as the new supply, I think, you know, we are looking at our submarket new supply. I think that the, as I mentioned earlier, you know, Dallas, Nashville, Atlanta, we see that moderating, especially in Atlanta. And I think that in terms of the delivery, we do see that in the first half of next year. Obviously, there'll be some absorption tail on that delivery, but definitely to your point, first half. I'd like to add that for the fourth quarter, as we sit here today, if you use the 50% renewal rate for lease expirations, 85% of that 50% has already renewed, and they've renewed it at an average 5% rent increase. So that gives you a good idea how we see the fourth quarter, you know, finishing out. Got it. And I think you mentioned that one of your data providers is predicting, I think, like, 2.4% market rent growth next year. I mean, do you think that's, I guess, reasonable, given everything that's going on? I mean, I would say that the market would probably be, you know, pretty excited about that growth, just given views around what Sunbelt Supply is going to do, as sort of the compounding effect of it keeps increasing. So, I mean, just from your perspective, I mean, do you think that 2.4% is reasonable? When you're looking to set your guidance early next year, I mean, are you mainly looking at some of the third-party data providers, or is it more of a sort of ground-up, you know, look, you know, each of your properties puts out a forecast, and you build that into your guidance? So a long question there, so let me see. I'll try to break it to pieces. So, in terms of our budgeting and forecasting process, it's very much a ground-up process with each one of our communities kind of having input into kind of what they think rents could grow by in terms of renewal and new leases. You know, as we can always say that, you know, our data providers certainly provide data, and we use multiple ones. The one I quoted was CoStar, and it's kind of that 2.4%. I think it's, it's probably certainly reasonable given what, you know, their data and how their economists have predicted. Obviously, 2024 is still very much unknown, and we're all evaluating kind of what the effects of new supply will continue to have across certainly us as well as our markets. Okay. All right. Thank you. We'll go next to Wes Golladay at Baird. Hey, good morning, guys. As you look to next year for the value add program, I think you mentioned you're still gonna get those high-teen returns. Do you expect the same amount of projects next year? Yes, our target next year will be for about 2,500-3,000 units for next year. Okay, fantastic. And then you mentioned that about operational efficiencies, you know, rolling out next year. How should we think about, you know, expense growth compared to this year? Is there any one-time items that will be hard to comp next year or, or easy comps? And how will these efficiencies, you know, benefit you next year? Yeah, so, I mean, good question. We're obviously not giving any color yet on 2024 expenses. You know, we're still through the budgeting process. I would think that, you know, one of the big areas that we'll expect to see some further progress on is bad debt. I realize that's not necessarily an expense, it's a negative to the revenue line. But that's a key area that Mike and Janice, and team expect to see some really, you know, progress on as we roll out these new technology tools. So I think, you know, we're very much still open on 2024, and we'll be prepared to kind of talk about it more in February when we give our guidance for 2024. Got it. And if I can get squeeze one more in. I mean, there's commentary on other calls where, you know, the concessions were so, so low or so high that, you know, some people are moving from B to A assets. Are you seeing that in any of your markets where, you know, maybe a year from now, when they can't afford the A rent, they come back? Just trying to get a feel for, you know, the dynamic in some of these markets. This is Janice. I think in the three markets that we mentioned, where we've seen that increased supply during a low seasonality, which is Atlanta and Dallas and Nashville, we've seen some of that, but we still see that our, our, our B assets are outperforming our A assets holistically. Great. Thank you for the time. Thank you. Next, we'll go to Merrill Ross at Compass Point. Good morning. Thank you for taking my questions. I wanted to just make sure I heard properly on rent concessions. Do you expect them to alleviate early next year or continue to be high? And how does that change your focus in terms of tenant retention? I think in terms of retention, this is Mike. I think in terms of retention, you know, we've seen, as Scott referenced earlier, very strong numbers in terms of both renewals as well as the rate that those renewals are being accepted at. Concessions are gonna go down. They're going down, you know, as we speak, relatively speaking. As we see that supply pressure continue to alleviate, obviously, the concession as a strategy would go down as well. We think the approach that we've taken is very good from a renewal perspective in the future because our residents will not have that kind of sticker shock when they, you know, when they have moved... Those folks that have moved to A, are going to have to pay that, you know, additional amount, if they've received a rent reduction. Whereas with our concessions, they'll have paid 11 months, at the higher rate, and will be, you know, not surprised when renewal time comes around. Right. Right. That totally makes sense. And totally, a separate question. Since the reception was relatively strong to the asset sales and the dividend coverage remains deep, is it possible that you'd go for another round of, you know, maybe five more assets, or are you done? We're always looking to, you know, concentrate and you know, better manage the portfolio as a whole. Right now, we've only identified these 10. But depending on you know, demographic changes, you know, there may be more in the future, but there's no plans at this point. Great. Thank you. Thank you, Merrill. We'll take our next question from John Kim at BMO Capital Markets. Thank you. On the dispositions, can you provide some more commentary on how many of the 10 assets have mortgage debt in place and what the average interest rate is? Yeah. So nine of the 10 assets have mortgage debt in place. One asset is, you know, free and clear. And the average interest rate of the debt that we will pay off, because we're gonna have about $240 million of excess cash after the sales to pay off, you know, kind of line of credit, et cetera, is about 6.1%. I was more questioning the average interest rate on those assets, and if that played a major factor in identifying those assets for sale. Yeah, the average interest rate on the mortgages, those nine mortgages themselves are, I don't have the exact numbers, low 5%, like 5%, 5.1%. I can come back to you with the specific. Okay, great. Thank you. Next, we'll move to Linda Tsai at Jefferies. Hi. Who are the potential buyers for the assets from your deleveraging program, and would you expect multiple bidders? We've had multiple bidders, and we can't identify who the buyers are. But each property was marketed independent of the others as one-off sales, and there were multiple bidders on each one. Apologies if I missed this. With the 10 assets for sale, are there other assets no longer subject to prepayment penalty that you would consider for sale? There are lots of other assets that are not subject to prepayment penalties, but that was really not the driving force. The driving force was that we wanted to exit certain markets, and we couldn't do it, or we decided not to do it earlier, because of the prepayment penalties. But the driving force is exiting the markets and then generating the capital to retire the debt. With this sale, are you exiting all the markets you would like to exit? All of the sales are in markets that we want to exit. We will continue to, you know, view the portfolio going forward for additional markets, but at this time, we're exiting the ones we want to. Thank you. That does conclude our question-and-answer session. At this time, I would like to turn the conference back to Scott Schaeffer for closing remarks. Thank you all for joining us today, and we look forward to speaking with you next quarter. That does conclude today's conference call. Thank you for your participation. You may now disconnect.