Independence Realty Trust Q4 and Full Year 2025 Earnings Call - Same-store NOI outperformed; 2026 guided on gradual rent recovery

Bella, Conference Operator: Hello, and thank you for standing by. 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 Q4 and full year 2025 earnings conference call. 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. 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 one again. I would now like to turn the conference over to Stephanie Krewson-Kelly, Head of Investor Relations. You may begin.

Stephanie Krewson-Kelly, Head of Investor Relations, Independence Realty Trust: Good morning, and thank you for joining us to review Independence Realty Trust fourth quarter and full year 2025 financial results. On the call with me today are Scott Schaeffer, Chief Executive Officer; Jim 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’ll 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 IRT does not undertake to update them, except as may be required by law. Please refer to IRT’s press release, supplemental information, and filings with the SEC for further information about these risks. A copy of IRT’s earnings press release and supplemental information is attached to IRT’s current report on the 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’s my pleasure to turn the call over to Scott Schaeffer.

Scott Schaeffer, Chief Executive Officer, Independence Realty Trust: Thanks, Stephanie, and thank you all for joining us this morning. 2025 was a solid year for IRT. 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 in two new joint ventures. Lastly, we purchased 1.9 million 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 IRT 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. During 2025, we renovated 2,003 units, achieving an average unlevered return on investment of 15.3%.

In 2026, we expect to renovate between 2,000 and 2,500 units at rates that are consistent with our historical results and have added 6 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 forecast 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 50-80 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 10 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. With that, I will now turn the call over to Jim.

Stephanie Krewson-Kelly, Head of Investor Relations, Independence Realty Trust: Thank you, Scott, and good morning, everyone. Core FFO per share during the fourth quarter and the full year of 2025 of $0.32 and $1.17, respectively, were 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’re 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 124 basis point improvement in bad debt over the fourth quarter of 2024, a 60 basis point increase in average effective monthly rents, and partially offset by a 10 basis point decrease in average occupancy.

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: ...The year-over-year increase in fourth quarter same-store operating expenses was due to higher repairs and maintenance related to a greater volume of turns, the 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’ll 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 -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, 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’ll discuss momentarily. Regarding transactions, during the quarter, we sold the 356-unit community that we had held for sale in Louisville for $50 million, 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 the second half of 2027.

Subsequent to the quarter, we purchased a 140-unit community in Columbus for $30 million, which represented an economic cap rate of 5.6%. The community is located 2 miles from existing IRT communities. We also acquired our JV partner’s 10% interest in the Tisdale at Lakeline Station in Austin, Texas, and began consolidating this $115 million asset on our balance sheet. The property is fully developed and currently in lease-up. We’ve been busy on the capital markets front as well. During the quarter, we allocated $30 million to buy back 1.9 million of our common shares at an average price of $16 a share. Additionally, we entered into a new $350 million 4-year unsecured term loan.

We used the proceeds to repay our $200 million 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 0 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 1 cent from lower preferred income from our joint ventures during the year, 3 cents 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 1 cent 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. 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 $5.5 million, which is expected to commence in July 2026. And lastly, a blended effective rent growth of 1.7%. Our blended rental rate growth assumption is comprised of new lease trade outs of -75 basis points and a renewal trade out of 3.25%, along with a resident retention rate of 60%.

As part of our rental rate expectation, we are expecting that market rents will increase approximately 1.5%-2%. Operating expenses are expected to grow 3.4% at the midpoint, driven by a 5.1% increase in controllable operating expenses and a 50 basis point increase in property tax and insurance expense. The 5.1% increase in controllable operating expenses includes $1.9 million of Wi-Fi contract costs in our contract services line items. Excluding the Wi-Fi costs, our controllable expenses are increasing 3.5%. The 50 basis point increase in non-controllable costs is comprised of a 2.6% increase in real estate taxes and an 11.5% decrease in property insurance costs. Our non-same store portfolio to start 2026 consists of 8 communities aggregating 2,541 units.

Two of these communities are currently held for sale and are expected to be sold by mid-year. The remaining six communities include two communities that are in lease-up, our legacy development deal in Broomfield, Colorado, and our most recent JV acquisition in Austin, Texas. Both of these deals are leasing up, albeit at a slower pace than anticipated and with larger concessions than we previously modeled. We expect both of these communities will reach their targeted NOI just later than expected, as rent growth will come once the communities hit a stabilized occupancy. Overall, for 2026, the midpoint of our guidance assumes non-same-store NOI of between $25 million-$26 million. G&A and property management expense guidance for the full year is $56 million, reflected standard inflationary growth and incremental costs associated with expanded training and development of our community teams.

We forecast an $8 million increase in interest expense, driven primarily by $3 million of higher interest expenses associated with our net acquisitions last year and our two acquisitions earlier this year. $3.9 million of lower expected capitalized interest on development projects, and $1 million associated with hedges burning off. Scott, back to you.

Scott Schaeffer, Chief Executive Officer, Independence Realty Trust: 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 exceeded 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, and operator, you can now open the call for questions.

Bella, Conference Operator: 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 do request for today’s session that you please limit to one question and one follow-up. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Your line is now open. Please go ahead.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: Hey, good morning, guys. Jim, just curious how the new lease rate growth assumption, 75 basis point decrease this year, does that fully incorporate that you capture the 1.5%-2% market rent growth? And then can you break out how that 75 basis points, you know, is comprised for the first half of the year and then in the back half of the year?

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: Yeah, great question. Thank you for, Austin, obviously, the insight. The seventy-five basis points of new lease growth obviously starts negative in January, like I kind of mentioned, very consistent with fourth quarter and continues to get better throughout the year. The new lease growth that we’ve got baked into guidance for the first half of the year is down about 2.25%, and then the second half of the year is up roughly 75 basis points, such that for the year, new lease growth is about seven-- sorry, negative 75 basis points for the year. And that does assume that you capture... I don’t know the exact-- I can’t remember the exact percentage, but a vast majority of that market rent growth.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: That’s helpful. And then just on the non-same-store pool, I mean, can you talk a little bit about, you know, how that stacks up, I guess, you know, versus the same-store pool? It sounds like, you know, you got a little bit of slower growth there from some of the drag on the lease-up, but is there any conservatism in that figure, just based on what you’ve experienced more recently? And just trying to think about, you know, kind of the brackets on upside/downside risk for that pool of assets. Thanks.

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: Yes, great question. I’ll, I’ll break it into two components. Obviously, the same-store properties that we bought last—I’m sorry, the non-same-store properties 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-up perspective and from, obviously, as I mentioned, some 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, like the deal we bought in in Austin or the JV we took over in Austin.

You know, our anticipation 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’s assumed that we own it for the full year.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: Understood. Thanks for the time.

Bella, Conference Operator: Your next question comes from the line of Jamie Feldman with Wells Fargo. Please go ahead.

Jamie Feldman, Analyst, Wells Fargo: Great. Thanks for taking the question, and good morning. Can you talk about the impact of concessions burning off and what you think that’ll do to help your rent growth projections? And if you could provide any more color on, you know, just your confidence in going from the -2.25 to the +75, that would be helpful too?

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: Yeah. No, great. You know, I’ll start with the last one. You know, 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. You know, as I mentioned on the prepared remarks, you know, our asking rents in January are up 75 basis points from where they were at December thirty-first. As I mentioned earlier, the market rent growth assumption is about 1.5%, so we’re halfway there. And obviously, the year has to continue to play out. But we’re quite excited to see the strength in the asking rent growth so far this year. The...

When you look at kind of where the asking rents are today versus the expiring rents out month by month throughout the year, you know, you pretty much hit that kind of break-even point, you know, June, July time frame, and you turn positive on new lease trade outs in the back half of the year. From a concession standpoint, you know, we do assume lower concessions in the back half of the year. I don’t have the exact improvement at my fingertips, so I’ll get back to you on that one. But I think ultimately, it does produce better comps for us in terms of the ability to kind of 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 hit them.

Jamie Feldman, Analyst, Wells Fargo: Okay. And then I guess just turning to the markets, I think you said most of your markets will be in recovery this year. Can you just talk about, like, some that, you know, the standouts on both the, the best markets, you know, that are kind of surprising you to the upside and, and where you think the drags will be? And then maybe focus specifically on the Midwest markets where you have unique exposure?

Janice Richards, Executive Vice President of Operations, Independence Realty Trust: Absolutely. So the Midwest, Columbus, Indiana, Kentucky, delivered consistent performance throughout 2027. We anticipate this to continue in 2026, and all signs and starting point indicate that. And I’ll-

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: You mean 25.

Janice Richards, Executive Vice President of Operations, Independence Realty Trust: Sure. Throughout 2026.

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: Okay.

Janice Richards, Executive Vice President of Operations, Independence Realty Trust: Consistent performance. Yeah. Some of our emerging markets, as we would, as we say, is Atlanta, showing strong fundamentals, delivering 100 basis points improvement in occupancy and 490 basis point expansion in blended growth from January 2025 to December 2025. So we’re positioned to continue this growth and momentum through 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 remains stable as well through 2025, providing consistent foundation. Blended rent growth is showing momentum. As Jenna alluded to, we’re excited about the asking rent momentum we’re seeing through the start of 2026.

So there’s clear signs that the market inflection is, it’s on its way, and we’re anticipating the second half of it to come to fruition in the second half of 2026. Raleigh blended rent growth momentum is building here. Net absorption is projected to be positive in 2026. And so we’ve anticipated to see that inflection point in the second half of 2026 as well. Some of the markets that you know are weaker is Memphis. Memphis is facing a slower macro growth environment in 2026 with jobs and population. However, we’re gonna remain focused on protecting that occupancy while we you know wait for gradual improvement in the fundamentals to, and fundamentals start to recover. New supply is elevated in Denver and in our submarkets.

Lease-ups are taking a little longer to stabilize, as we mentioned, with Flatirons. Concessions are remaining above normalized level. We believe primarily this is due to timing of delivery. Sorry. Our focus in 2026 is disciplined occupancy management, as the market works through the supply, and we position ourselves for 2027.

Jamie Feldman, Analyst, Wells Fargo: Okay, great. Thanks for all that color.

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: Yeah, Jamie, just a quick follow-up. You know, obviously, the market performance, excuse me, and the new lease performance you asked before, they go obviously hand in hand. But when you look at 2024 to 2025 and kind of our thinking about 2026 guidance, you know, there is acceleration in new lease trade outs in eight of our 10 top markets. Right? Just to put a finer point on just how excited we are about what we see coming and the acceleration of asking rents and the burn off of, or I should say, where the expiring rents are relative to those asking rents.

Jamie Feldman, Analyst, Wells Fargo: All right. Thank you.

Bella, Conference Operator: Your next question comes from the line of Eric Wolf with Citi. Please go ahead.

Eric Wolf, Analyst, Citi: ... Hey, 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’ve seen over the last couple of months.

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: It’s probably a little bit faster pace than what we would normally see in the, call it, seasonally slower period of January. It is slower, though, than what we saw in January of last year. So it gives us confidence that, you know, we’re back to, you know, while it’s a little bit heavier, a little bit faster paced, it’s not as faster paced or as extreme as it was in January of last year. So it gives us confidence that the asking rent growth, you know, could firm up in this kind of area.

Eric Wolf, Analyst, Citi: Got it. And then could you talk about how you set your bad debt guidance, maybe how it trended fourth quarter, where you ended the year, and what you’re expecting in 2026 relative to 2025?

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: Yeah, 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 kind of 100 basis point range, and then stepping down to the kind of 80, 70 basis point range in the fourth quarter of 2026.

Eric Wolf, Analyst, Citi: Got it. Thank you.

Bella, Conference Operator: Next question comes from the line of Brad Heffern with RBC Capital Markets. Please go ahead.

Brad Heffern, Analyst, RBC Capital Markets: Yeah. Hey, good morning, everyone. Just as a follow-on to the last question, you said last January had stronger growth than this January did. Obviously, last year, that proved to be kind of a head fake. So I guess, what gives you confidence that we’re not in a similar situation this time?

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: Yeah, well, the asking rent growth in early January of last year was probably three times as higher as it was today, but we also see just a little more stability around the demand picture. We don’t see the ebb and flow that we saw in January and February of last year.

Brad Heffern, Analyst, RBC Capital Markets: Okay, got it. And then you have a couple assets designated for sale. Do you have a likely use of those proceeds at this point?

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: We don’t have a defined use of proceeds. You know, we obviously assumed in guidance that they are kind of sold in the middle of the year, and we’ll use the capital to either acquire something else, delever, or buy back stock.

Brad Heffern, Analyst, RBC Capital Markets: Okay, thanks.

Bella, Conference Operator: Your next question comes from the line of Amy Probant with UBS. Please go ahead.

Amy Probant, Analyst, UBS: Thanks. I was hoping that you could break down the blended spread forecast into Sunbelt and Midwestern buckets. And then if you could comment on what impact value has on the blends, that would be great. Thank you.

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: Value-add impact on the blends, I’ll start with that one first. You know, we have obviously a bunch of properties in the value-add program. They do get kind of a nice premium over comps. It is supporting the blends by roughly 70, sorry, not 70, 70 basis points on the individual units, but for the overall blends, about 20-30 basis points of support. In terms of the blended rental rate growth trajectory, throughout the year, we expect it to be about 1% in the first half of the year, about 2.5% in the second half of the year.

And in terms of looking at kind of the, the individual market growth between, like, the Sun Belt markets, the, the Midwest markets, and Denver, we expect negative overall blended rent growth in Denver, throughout the year, simply because as, as Janice mentioned, the overall, supply pressures and kind of what it’s expected to do on, new lease growth. In terms of the Sun Belt... I’m sorry, in terms of the Midwest, we expect the blends for the, for the full year to be, right around kind of 2.5%-3%, really supporting it. And then the, the Sun Belt, you’re just under 2% blends.

Amy Probant, Analyst, UBS: Thanks for that. And then, how does the lower supply environment impact your decisions around capital allocation for redevelopment? And do you typically see higher returns on redevelopment in the lower supply environment?

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: Yes, of course, because the redeveloped units are competing directly with the newer product. So with less newer product, we’ll have better pricing power on our renovated units.

Amy Probant, Analyst, UBS: Are you able to provide any context how much higher the returns could be?

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: Well, last year, the return on investment was about 15.3%, and in years prior, to all of this supply hitting, we were in the high teens, 18, 19, and in a couple of years, even north of 20%. Correct.

Amy Probant, Analyst, UBS: Great. Thank you.

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: You’re welcome.

Bella, Conference Operator: Your next question comes from the line of Omotayo Okusanya with Deutsche Bank. Please go ahead.

Eric Wolf, Analyst, Citi: Yes, good morning, everyone.

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: Good morning.

Eric Wolf, Analyst, Citi: I was wondering if you could talk a little bit about the same-store OpEx guide for 2026. I think, again, the controllable expenses, you did talk a little bit about the Wi-Fi program having some impact on it, but even ex the Wi-Fi, it’s still about 3.5%, which is kind of higher than where you trended recently. So just kind of curious, kind of what else is kind of trending up within that, those controllable expenses?

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: ... Yeah, no, great question. I think if you look at the rest of the controllable expenses, the increases are, you know, primarily the heavier increases that I would say above inflationary, primarily are in payroll and utilities. And they’re the other drivers. But again, even as I mentioned on the call, in the prepared remarks, if you remove the cost of the Wi-Fi program, you’re still. The controllable expense is only growing about 3.5%. But it’s really kind of the payroll and the utilities is pushing it up a little bit.

Eric Wolf, Analyst, Citi: And then payroll, is ’cause you’re just hiring more people, or you’re paying to kind of compete with the market? Just kind of curious what’s happening there.

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: So it’s a variety of things. It’s primarily, you know, inflationary increases, for the team members. It’s also increased incentive compensation to drive results, are the, the key drivers. There’s also a little bit of, you know, there were some, benefits in healthcare savings in 2025 that are not expected to repeat in 2026. But I think the overall increase in payroll is in the kind of 6%-7% range, which is almost entirely driven by some of that, savings on benefit programs in 2025.

Eric Wolf, Analyst, Citi: Okay, that’s helpful. Then, development spending guidance as well. I mean, you only have one development project left. It’s, you know, it’s pretty much almost complete. You’re already kind of in lease-up mode on that project, but I think you were still kind of forecasting a meaningful amount of development spend in 2026. Just kind of curious what that pertains to.

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: We weren’t forecasting development spend in 2026. But you’re right, we did have one final on-balance sheet development called Flatirons. That one was completed, and all of that development spend has been incurred, so there’s not really an expected increase, increased development spend for this year. We obviously continue to expect to spend redevelopment money on value add programs-

Eric Wolf, Analyst, Citi: Okay.

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: but not development money.

Eric Wolf, Analyst, Citi: Gotcha. Okay, that’s helpful. And then, sticking with the redev, what were the... For the 2026 guidance, again, good to kind of see the amount of, you know, units that are gonna probably be up versus 2025. But curious what kind of yields are being assumed. Again, just kind of given some of the yield pressure that we’ve seen in this past year or so.

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: So, I apologize. We’ll have to obviously make this your last question so we can get some other analysts. But, you know, ultimately on the redev, you know, we did about 2,000 units in 2025. We’re planning to do somewhere in the kind of the 2,000-2,500 units in 2026. The ROIs that we assumed on the six new properties that we’re adding to the redevelopment program are very consistent with kind of historical trends, about 15%-16%. As Scott mentioned earlier, as the market cycles come back and the supply pressures wane, we should be able to see more pricing power in our redevelopment program, and therefore, be able to compete more directly with some of the Class A stuff, and even generate higher returns.

Eric Wolf, Analyst, Citi: Thank you.

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: Thanks.

Bella, Conference Operator: Your next question comes from the line of John Kim with BMO Capital Markets. Please go ahead.

John Kim, Analyst, BMO Capital Markets: Thank you. Just going to your Flatirons development, is expected to be a drag this year as you lease up the asset and you’re expensing the interest. But where do you see occupancy stabilizing in terms of timing? And then maybe if you could just comment on why it’s taken longer to lease up the asset.

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: Sure. I’ll the occupancy forecast is. The guidance assumes that we hit occupancy at about 90% in the month of June. That’s about a quarter behind expectations, and certainly, you know, I wouldn’t even say fully stabilized yet, because again, 90%, we would want to see 93%, 94%, 95%. But I think the other, you know, component of just the drag on earnings is just lower rent growth or so lower actual rents we’re signing, and then just having a little higher concessions. Janice, do you want to add anything? Feel free.

Janice Richards, Executive Vice President of Operations, Independence Realty Trust: Yeah, I think we’re seeing it, the sub-market as a whole in Broomfield. Obviously, there’s been an onslaught of supply in that market that kind of all came to fruition at the same time. And so really just working through that fundamental. We’re seeing high conversion of the leads that are coming through the door. Tours are strong, and so with that continuing momentum, we see that, you know, we’re gonna hit that stabilized marker.

John Kim, Analyst, BMO Capital Markets: Okay, and then just going back to your blended guidance, you’re expecting a pickup in the second half of the year, and that goes against what you’ve experienced in the last few years, where blended rents have kind of peaked in the first half. I understand this, like the easier comps and concessions, but what other assumptions do you have in terms of the dynamics and getting that improvement later this year?

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: I think, you know, it’s primarily obviously better comps in the back half of the year, right? Just, like I mentioned before, a little bit lower, you know, concessionary expectations. We also think, just generally speaking, you know, the market rent growth is gonna be better in the second half of the year, simply because, you know, by the supply pressures are less, and then at all the lease up, all the deliveries that have happened should be leased up by then, really further enhancing the opportunity for pricing power.

John Kim, Analyst, BMO Capital Markets: Okay, thank you.

Bella, Conference Operator: Your next question comes from the line of John Pawlowski with Green Street. Please go ahead.

Eric Wolf, Analyst, Citi: Thanks. Good morning. Jim, it’d be helpful to hear what kind of balance between fixed and floating rate debt you’re gonna target in the next, well, 2-3 years, as you have a significant amount of swaps or collars expiring, as well as just the duration of debt, with maturities in 2028, 2029. Just would love to hear your strategy the next couple of years.

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: ... Sure, great question. Obviously, we just did this $350 million bank term loan, and we obviously thank all of our banking partners for participating in that. You know, the expectation we had this year was that, you know, when all the debt that was maturing this year, we would be hitting the investment grade market, which is why we got the rating a few years ago. You know, obviously, the investment grade costs are much more expensive today than where a floating rate environment is, and we actually are okay being a little more floating rate in today’s environment than trying to fix everything.

And we want to be able to enjoy some of that kind of expected, either where the SOFR is today relative to Treasuries or, a potentially declining SOFR curve over the next, you know, few months, quarters, again, depending on what the Fed decides to do. For the 2028 maturities, our goal is to be in the investment grade market for some or all of those expirations. You know, when we hit it and how fast we hit it or how sizable the individual bond issuance is. But the goal is to, you know, a lot of those maturities that are going to start happening in 2028 are mortgages. That will improve the unencumbered pool and potentially allow us to, you know, further enhance our rating profile and maybe even securing a better rating.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets2: Okay, that helps. So we should assume, I think maybe you already took this swap out or it rolled, but about $250 million in swaps maturing this year, we should expect you guys just roll to floating rate debt?

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: So, we have. There’s two swaps maturing this year. There’s one that’s maturing in March of 2026. That was a 1-year swap we put in place, last year, simply because of just 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 going to happen as planned, and we actually thankfully won on that swap from a cash flow perspective. We’re not anticipating redoing that swap. We’re gonna, again, stay floating, and we’ll enjoy about a 30 basis point improvement on the underlying SOFR from the 3.9 that were swapped at to the 3.6 that SOFR is today.

For the June swap, that’s maturing of $150 million, we’ve already put a forward starting swap in place. That swap that’s maturing is 2.2%, and we’ve put a new swap in place that’s swapping at 3.25% SOFR.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets2: Okay. Thanks for all the-

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: We’re not at this point anticipating putting any other swaps in place. That being said, we are watching the interest rate markets like a hawk, and we will continue to do and protect, as best we can, the interest rate expense going forward.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets2: Okay, thanks.

Bella, Conference Operator: Your last question comes from the line of Mazen Ghaul with Baird. Please go ahead.

Mazen Ghaul, Analyst, Baird: Hey, good morning, everyone. For your Mustang joint venture property in Dallas, is the call option period open? What are your thoughts on exercising the call option, and what is the forward NOI yield?

Scott Schaeffer, Chief Executive Officer, Independence Realty Trust: So yes, the call option is open. When we look at where that property will 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.

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: Better ways relative to owning that asset.

Scott Schaeffer, Chief Executive Officer, Independence Realty Trust: Owning that asset, correct.

Mazen Ghaul, Analyst, Baird: Great. And then, and kind of piling on that, you repurchased some shares in the quarter. Can you kind of talk about your thought process for doing so?

Jim Sebra, President and Chief Financial Officer, Independence Realty Trust: Sure. You know, obviously, like us, like, like a lot of our peers, you know, there is a, you know, fundamental disconnect between implied cap rates as well as market cap rates. We looked at that as a good opportunity to take capital that was, or earnings or capital that was from non-EBITDA-generating sources and use that capital to buy back stock. Because obviously, if you sell an asset, you lose the EBITDA, you lose the earnings. We’re obviously very much focused on long term. You know, ever since our start, we’ve always said we’re gonna be patient and disciplined, and, and we’re gonna 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 was existing in the forward contracts. We just took those proceeds and used that to buy back stock in a positive and accretive way for shareholders.

Mazen Ghaul, Analyst, Baird: Great. Thank you.

Bella, Conference Operator: There are no questions at this time. I would now like to turn the call back over to Scott Schaeffer, CEO, for closing remarks.

Scott Schaeffer, Chief Executive Officer, Independence Realty Trust: 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. So thanks for joining us, and we look forward to speaking with you next quarter.

Bella, Conference Operator: 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.