Hello everybody. Welcome to the Independence Realty Trust Q1 2023 conference call. My name is Sam. I'll be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. I'll now like to hand you over to your host, Lauren Torres, to begin. Lauren, please go ahead.
Thank you, and good morning, everyone. Thank you for joining us to review Independence Realty Trust first 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, thank you all for joining us this morning. We delivered strong same-store NOI growth of 8.2% during the first quarter. As discussed on our last earnings call, we focused on implementing operational changes and have since seen significant improvement in our processes and resulting occupancy. I'm pleased to announce that our occupancy has increased approximately 130 basis points since our operating update in early March, and we expect it to continue to increase as leasing season gets underway. Today, our Same-Store portfolio is 94.3% occupied, with our same-store non-value-add portfolio at 94.7% and our same-store value-add portfolio at 92.3%. These occupancy gains are broad-based and across all communities.
Of note, our Same-Store portfolio is 96.7% leased as of today, which puts us in a position of strength heading into leasing season. Regarding first quarter results, here are some highlights. Our average rental rate increased 10.8% year-over-year, supporting a 7.5% increase in revenue. Our same-store NOI core FFO increased 8.3% in the quarter, both compared to last year. We renovated 635 units in our value-add renovation program, generating a 19.1% ROI based on interior renovation costs and a 17.8% total ROI, including common area improvements.
These results continue to reflect the many strengths of IRT's portfolio, from our strong rental rate growth to the effective way we execute on our value-add renovation program. We continue to prudently manage leverage and monitor both our interest rate risk and maturity ladder to ensure that IRT does not have any undue exposure. As we sit here today, 97% of our debt is either fixed or hedged, we have only 9.8% of our debt maturing through the end of 2025. This exposure is the lowest among our public peers. During the first quarter, we continued to advance our value-add program, which reinforces our expectation to deliver between 2,500 and 3,000 renovated units that we previously guided for in 2023. Currently, we have ongoing value-add renovations at 20 properties in 10 markets.
Over the course of 2023, we plan to add another five properties in markets where we already have renovation teams in place. We expect to continue to achieve an approximate return on investment of 20% on these new starts, which is consistent with returns that we have achieved to date. Our value-add program has been designed to be flexible, allowing us to increase or decrease volumes as market conditions warrant. Despite continued economic volatility and uncertainty, our portfolio continues to demonstrate resilience driven by our presence across key Sunbelt markets that position us well at all points of market cycles. We see no real signs of stress in our markets as we achieve double-digit NOI growth during the first quarter in key markets such as Raleigh-Durham, Tampa, Charlotte, Myrtle Beach, Denver, and Charleston, among others.
We continue to see positive job and migration growth in our markets, leading to residential demand. Our value-add communities provide renters with a real alternative to new construction, but at a much lower price point. With inflationary pressures driving residents to Class B living, we are well positioned in cost-effective, well-maintained, highly defensive middle-market communities. I'd now like to turn the call over to Mike Daley, our EVP of Operations and People, for an operational update.
Thanks, Scott. As Scott touched on, our strategic positioning in non-gateway markets within the Sunbelt led to strong first quarter results.
We delivered an 8.2% increase in NOI, supported by double-digit NOI increases in several markets and our accretive value-add program. We continue to remain laser focused on achieving sustainable operating gains across the entire portfolio. As discussed last quarter, we have added senior leaders to the team who have a proven track record in operating large, diverse portfolios of apartment communities. In addition, we continue to improve our leasing and sales processes. Specifically, we have enhanced the speed of local market pricing feedback from our communities to the revenue management team. This allows us to augment our technical pricing tools and make any needed real-time adjustments to price. We have fully established our 24/7 call center to capture 100% of leads, significantly expanded our sales training program, and continued to leverage technology to support process changes and maximize lead-to-lease conversion.
These changes collectively increased occupancy to 94.3% as of today, up 130 basis points when compared to our operational update in early March. We will continue to enhance and streamline our operational processes to maximize our performance and efficiency. From the lead volume perspective, as Scott mentioned, we are seeing good demand for rental housing as we enter leasing season. Through today, lead volumes year to date are up 6% over 2022, and our lead-to-lease conversion has improved 290 basis points from 5.5% last year to 8.4% year to date in 2023. For all of these new leases signed, the average rent to income ratio was 22% and had lease over lease effective rent growth of 3.1% in Q1.
So far in Q2 2023, we have seen an improvement in new leasing spreads to 4.2%. From a resident retention perspective, the retention rate in Q1 was 48.2% and has increased in Q2 to date to 56.7%. This has been driven by the enhancements of our renewal process as part of our sales and leasing improvements we discussed earlier, and is a key component of our plan to drive occupancy gains. Lease over lease rent growth for renewals was 4.8% in Q1 2023 and is 1.7% in Q2 2023 to date. These lower second quarter to date renewal rates were a result of us prioritizing occupancy.
As we monitor submarket fluctuations in occupancy and revenue growth, we take a balanced approach to optimize new lease growth while retaining residents through normalized renewal trade-outs and our improved retention program. We are already seeing this in pricing power with June and July renewal rates currently at 2.6% and 4.2% respectively. I'd now like to turn the call over to Jim.
Thanks, Mike, and good morning, everyone. Beginning with our first quarter 2023 performance update, net income available to common shareholders was $8.6 million compared to $74.6 million in the first quarter of 2022. During core FFO increased 8.3% to core FFO per share grew 8% to $0.27 per share from a year ago. This growth reflects the organic rent and NOI growth that we experienced in the quarter. IRT same-store NOI growth in the first quarter was 8.2%, driven by revenue growth of 7.5%. This growth was led by a 10.8% increase in average monthly rental rates to $1,530 per month.
On the operating expense side, IRT same-store operating expenses increased 6.4% during the first quarter, led by higher repairs and maintenance costs, contract services, and property insurance. Inflationary pressures are certainly having an impact on operating costs and causing higher than normal increases. We continue to use our procurement teams to rebid contracts and technology solutions to help reduce costs wherever possible. Regarding the increase in repairs and maintenance costs, several factors have caused this increase. First, during Q1 2023, we had a higher volume of units to turn due to the lower resident retention rate. Second, we've performed a number of seasonal maintenance projects in Q1 ahead of leasing season as compared to last year when we started most of these projects in April or May. Finally, inflationary pressures continue to cause an increase in prices for services.
As Scott and Mike both mentioned, during Q1, we executed on our reorganization of our operations and revenue management teams. These efforts are positively impacting our operations by providing a sustainable improvement in occupancy. While we incurred a one-time cost for severance from the reorganization, we do expect our annual G&A expenses will be lower over the remainder of 2023. Turning to our balance sheet, as of March 31st, our liquidity position was $327 million. We had approximately $12 million of unrestricted cash and $315 million of additional capacity through our unsecured credit facility. During Q1, we entered into a new SOFR swap that immediately reduces our floating rate borrowing exposure and provides an immediately lower interest rate by approximately 140 basis points today.
This new swap is expected to reduce our interest expense by $1 million for 2023. Regarding leverage, we ended the first quarter at 7.3x net debt to EBITDA, down from 7.6x a year ago. With the improvement in occupancy and our forward expectations for the remainder of the year, we still expect to achieve our leverage target of mid-sixes by year-end 2023. While we continue to anticipate macroeconomic uncertainty in the coming months, I wanted to reiterate that we have no debt maturities in 2023 and only $70 million in maturities in 2024.
Today, our exposure to floating interest rates is only 3% of our total indebtedness, and our maturity exposure through year-end 2025 is the lowest of our public peers at only 9.8% of our debt. With respect to our 2023 outlook, we are reaffirming our initial guidance that we provided on our year-end conference call in February. Our EPS guidance remains at a range of $0.23-$0.27 per diluted core FFO, a range of $1.12-$1.16 per share. Our same-store operational guidance remains unchanged with growth of 6.4% in revenue, 6.1% in operating expenses, and 6.5% in NOI, all at the midpoint of the guided ranges. Our previous guidance on transaction and investment expectations also remains unchanged.
We currently are not assuming any acquisition volume. Did close on the sale of our community in Indianapolis at a price of $37.3 million. This disposition was at an economic cap rate of 4.8%. No additional dispositions are currently expected. I'll turn the call back to Scott. Scott?
Thanks, Jim. To sum up, we are off to a strong start in 2023 and remain on track to achieve our 2023 guidance. Our portfolio of properties in attractive markets in the Sunbelt region continues to perform well, supported by solid renter demand fundamentals. Our efforts to improve occupancy are materializing, and our value-add program is contributing high returns on an ongoing basis. At IRT, we have built a company that will perform in all market cycles and are encouraged by our ability to capture the growth opportunities that lie ahead. We thank you for joining us today and look forward to speaking with you again. Operator, you can now open the call for questions.
Thank you. If you'd like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your line is unmuted locally. Our first question comes from Austin Wurschmidt from KeyBanc Capital Markets. Austin, your line is now open. Please go ahead.
Hey, good morning, everybody. Jim, maybe kicking off with you. Given how the operating results have played out here to for in the transition to favoring occupancy versus rate in the short run, you know, one, how should we think about occupancy and lease rate growth assumptions embedded in guidance and then kind of the trajectory of same-store revenue through the balance of the year? Second, you know, what would it take at this point for you to get, you know, within the higher end of the range of revenue guidance?
Good question, Austin. You know, our guidance assumptions or the operational assumptions embedded in our guidance, 94.5% occupancy. Obviously we have the earn-in from last year and then plus another 3% blended rent growth for all of 2023. We still feel quite good about that occupancy assumption. The blended rent growth, we're just above 3% so far year to date, so we're feeling good about that as well. I think, you know, we'll come out with second quarter guidance updates, you know, as part of our second quarter earnings call.
I think generally speaking, you know, as occupancy is building here in second quarter, through third quarter, you know, the, the same-store revenue kind of growth trajectory will, you know, will mostly be dependent on that occupancy growth and will be at kind of the low 95% range, in third quarter. We're feeling quite confident and good about our overall assumptions around the occupancy end of revenue forecast that we've baked into guidance.
That's helpful. How does that 96.7% lease percentage compare versus periods where maybe occupancy was more stable and, you know, you've clearly started, you know, begun pushing rental rates, it sounds like, into June and July. Is it sort of data dependent or, you know, how much room do you think you have to run on sort of the renewal rate growth side?
Yeah. I mean, I think, you know, as we mentioned, in our prepared remarks, you know, the renewal rent growth is re-accelerating or accelerating in June and July, 2.4% in June and 4.2% in July. We see, you know, great, you know, continued ability to kind of now that we're, you know, that non-value-add same-store pool is 94.7% and approaching that 95% occupancy. We feel quite good about being able to now have this pricing power as we head in the leasing season. The, you know, the difference is really kind of on the lease percentage, you know.
In a period of time when the occupancy is more stable, you know, you'll see a little bit less gap between the lease percentage and the actual occupancy percentage, so that the width of that gap gives us great confidence in that this occupancy is here to stay and will be stable, as it continues to build through leasing season.
That's helpful. Then last one. You know, you guys gave a little bit of detail in the opening remarks. You know, Scott, and maybe Mike or Janice, you can chime in here, but can you just share what you've done differently, you know, sort of interacting with the revenue management system? You highlighted some different, you know, protocols within the operations team. You know, do you think those specifically are what driving this inflection occupancy or is seasonality having, you know, some impact as well? What's the confidence level you think you can sustain in sort of the gains you've achieved and keep things, you know, stable moving forward on the occupancy side?
This is Scott. Thanks, Austin. I'll start, and then I'll let Janice give you her color. I think the big thing was that we consolidated asset management, revenue management, and marketing under one unified leadership team. Also really stressed improving the training of our sales and marketing. It is some seasonality, of course, but we think that these changes that we've made to the operations platform is what is really driving the occupancy growth that we're seeing. You know, that renewal rate was by design and giving us now pricing power with this higher occupancy and with
Higher leads and higher conversion rate going into leasing season. Janice, do you want to add anything?
Absolutely, Scott. Thank you. We joined IRT a little bit over 90 days, and during that time, we implemented a few key components that have improved operational performance and allowed us to continue to sustain those performance through 2023. On the revenue side, we implemented a real-time communication where the teams and the revenue management are interacting on a daily, minimally a weekly basis to ensure that we are maximizing blended rent growth as well as driving occupancy. We're continuing that balanced approach that we've had in the past, and just making sure that we're improving the efficiency and the timeliness of it. We implemented a focused renewal program immediately, while implementing sales training and support for the teams.
Also, during this time, we rolled out the call center to all of our communities, which has helped greatly with our lead volume. One of the sales trainings that we implemented was a six-week sales training that was a series of workshops with our community sales professionals, where we really dove into improving the sales process as well as follow-up and creating value within the rents as well as our communities. We rolled out a sales performance team. This team is specialized trainers that are focused on sales performance for assigned area. They really dive into those KPIs, ensure our teams are maximizing every point of contact and working those leads all the way through to the process of the sale. These specialized coach and development sales teams will continue to monitor lead management.
They'll work on the sales performance of the teams, and they will work concurrently with the VPs of operations and the entire marketing and revenue team to ensure that we are able to sustain the performance throughout 2023.
To finish up, Austin, we're very confident that this is, you know, sticky, and that you'll continue to see a stable occupancy, you know, at that full occupancy level, into the future.
Great. Thank you.
Thanks, Austin.
Our next question comes from Eric Wolfe of Citi. Eric, your line is now open. Please go ahead.
Thank you. It's actually, Nick Joseph here with Eric. I was hoping you could walk through kind of the relationship between the value-add within the Same-Store, how those returns that you're getting, call it near, you know, high teens, near 20%, plays into both renewal and new lease rate growth within that portfolio. I recognize you usually do it on the term, but if you could just kind of walk through that relationship and how that should trend going forward.
Yeah, sure. It's a good question. Obviously, you know, our value-add portfolios within our Same-Store portfolio, it's about 20 properties of the full same-store portfolio. You know, the returns and the ROIs that we get on the value-add portfolio, the value-add units are based on a, you know, kind of how we rent that unit to an unrenovated comp, that's either in the building or presumably outside of the building that we were actually competing with as part of the competitive set properties. The data that you see in the same-store operational metrics that we've provided kind of breaks out the new lease growth and that renewal rent growth. As you mentioned, the value-add units are value added on turn.
The new lease growth of, I think just a little over 5% doesn't show that 20% rent growth because it's got a mixture of other new leases that are happening in the portfolio because the entire property is part of that same-store value-add component. The new leases are in there that are new leases on existing value-add units, such that you don't see that 20% top on those other new leases that are, you know, again, on second turns, if you will. What we're seeing, you know, we're continuing to see great demand for the value-add units, as well as those premiums that we're seeing versus the unrenovated comps and are pretty confident in the portfolio and the business plan going forward.
I think an important thing to add, Nick, is that when we look at the value-add communities, and the units that are being improved, over the next 30 days, every unit that is being improved and delivered is already pre-leased. That gives us great confidence that the demand is ongoing and that we'll be able even to increase those returns as we move further into leasing season.
Thanks. That's very helpful. Then just maybe on supply, curious to get your thoughts on how kind of recent deliveries or expected deliveries play into the pricing strategy, and then what you're seeing or expecting in terms of new starts given kind of the contraction on the construction lending side, how you would expect those to trend throughout 2023.
Well, you know, new supply has been a headline for 2023 for some time now, and we are seeing it. You know, we are not seeing any real effect in our portfolio. As we've stated our lead volume is up, our conversion rate is up, occupancy is increasing. So you know, it's, it really. When you look at CoStar, they talk about markets such as, you know, an Atlanta, a Dallas or a Raleigh-Durham. They're big markets. So we break it down into the submarkets, you know, as we're monitoring this. You know, we're really not seeing any effect today from new supply. We all know that with interest rates and with
You know, the view of recession potentially coming that new supply or that volume of new supply I know it's expected to, but I'm very confident it will slow down dramatically in 2024 and 2025. You know, we're well in now to 2023, and we're seeing no effect, and we think, you know, even, you know, the effect that's there will wane as we move latter into the latter parts of this year and next year.
Thank you very much.
Thank you.
Our next question comes from Brad Heffern of RBC Capital Markets. Brad, your line is now open. Please go ahead.
Yeah, thanks. Morning, everyone. On the July renewals of 4.2%, I'm curious, is that where the offers are going out, or is that a number that you expect to realize? If it is what the offers are at, can you give the differential where those typically go out versus what is realized?
Yeah. There, the 4.2% is what's been signed already for July renewals. Generally speaking, it's also in line with what the offers went out as.
Okay. Got it. Last quarter, I think you said you were seeing more tenants moving out because they were finding roommates or because they were moving to live with their family. Has that trend continued, or are you seeing less of that given the focus on occupancy?
I think the comments. This is Mike. I think the comments last call were really around, you know, kind of the qualitative kind of anecdotal feedback from the communities. We really haven't seen any change in reason for move-out from a quarter-to-quarter basis. Really, you know, despite the headlines, you know, the fact that we, you know, early mentioned the very strong job markets and, you know, inbound migration, we really haven't seen significant changes in the reason for move-out. I don't think anything from our perspective has changed in that regard.
Okay. Got it. Then finally, is there any notable concession use currently in the portfolio?
Where we've seen, an influx of new supply on a small level where concessions have entered into the market in some of the sub-markets, we have stayed competitive, but no large, concession usage, across our core markets.
Okay. Thank you.
Our next question comes from John Kim of BMO Capital Markets. John, your line is now open. Please go ahead.
Thank you. Good morning. You have a number of.
Morning, John.
where you only own one or two assets, and I'm wondering if that puts you at a disadvantage compared to larger peers that have bigger scale, or do the revenue management systems put you at more of an even playing field?
This is Scott, John. Yes, we think there is an advantage to having multiple communities in a market with operating efficiency. I don't think it puts us at a disadvantage relative to pricing because the revenue management does level that out. We've stated on many occasions that we are looking through, you know, the recycling program that we always discuss to consolidate, you know, our portfolio and eliminate some of those smaller or single asset markets. You know, right now the transaction market is, you know, more or less frozen. The properties are performing fine, but as you see more transactions get done, don't be surprised if you see us start to exit some of those single market communities, single community markets.
What about some of the markets where you have, let's say, two to three assets? Do you need to build more scale in those markets?
In some of them, we're looking to build more, you know, when the time is right, and in others, we're looking to exit. I can, you know, give you an example. We like Orlando long term. We have one community there. We would add. Birmingham, Alabama, where we have two, we probably would exit that one. It's a market by market, you know, decision.
Okay. On the lease growth rates, is there any noticeable trend that you could talk about whether, you know, some markets or regions are doing better than the others? In particular, wanted to ask about the Midwest, which, you know, according to CoStar, is performing very well.
I think that is... this is Mike again. I think that's very accurate. You know, our top performing markets on blended rent growth are actually Columbus at 7%, Oklahoma is 5.4%, and Atlanta 5%. Your comment is correct. We're seeing a lot of that Midwest strength. I think overall performance in those markets are good, and we see, you know, other markets are also performing well and showing signs of strength like Tampa and Charleston and Myrtle Beach, the Midwest is definitely a point of strength.
On the flip side, what's underperforming then?
I think, the one that is, you know, kind of on our because of our size and our exposure to the market, Atlanta, I think, is probably the one that we're watching the closest. you know, there's a lot of things that, you know, I don't, Janice, if you wanna share some detail in terms of kind of the things we're watching in Atlanta, I would say that's probably the single market we have the most focus on the performance front.
Absolutely. We've seen although we've had great performance to market, we've seen that there's been some opportunity to really hone in on operational efficiencies and making sure that we're maximizing the performance on the property level. You know, there was a flat absorption, but it doesn't really affect us in the sub-markets that we are in. We are continuously looking for ways to. We have a ton of value adds in that community or in that market, and we're looking to maximize the work there. You might see a little bit of fluctuation in the occupancy based on the percentage and the concentration of value adds.
We are pretty confident that we'll continue to outperform the market, but the market has softened, and so we just wanna make sure that we are on point operationally to work through that.
Okay. Just final question, if you could disclose what the bad debt was in the first quarter and what you're expecting for the year?
Sure, yeah. The bad debt for the first quarter was 2% of revenue. We've guided to 1.5% of revenue for the year and are still confident in that guidance. We expect that, you know, as the eviction, you know, queues were kind of opening up earlier this year, that we would have a little bit higher in Q1. I'm sorry, Q1. Apologies for that, and then it'll come down as we get through that throughout the year and, you know, kind of stabilizes at 1.5% through this year and then seeks even lower next year.
That's great. Thank you.
Thanks, John.
Our next question comes from Wes Golladay from Baird. Wes, your line is now open. Please go ahead.
Hey. Good morning, everyone. You highlighted a lot of changes you made on the operational front. I'm just curious if everything is now optimal or will we be hearing about, you know, improvements throughout the year?
We think we are done with the changes, Wes. We're very confident with where we are. We're confident with the team that we have in place. The results are all trending in very positive way. I'm very happy and comfortable to say that we're through the changes in the organization.
Okay. You know, capital markets have been a little bit softer. Still there's a lot of capital, but things may change in the future. Just curious how you view the value-add program. Still delivering very strong results, high teens, 20% level. If, you know, cost of debt were to increase further, would you change... I guess, what is your hurdle now? Is it, you know, do you still have a meaningful room to continue doing this program?
Well, you know, it's a 20% unlevered return. That does not include the cost savings, because we have all new systems, new appliances, new, you know, hardwood flooring. The cost of maintaining these units is reduced on a, on a forward basis. That's not even, as I say, included in the 20%. We built this platform, if you will, with an eye towards being able to expand it, or contract it, the number of units that we do, based upon market conditions. You know, we're always looking at what the returns are and where does it make sense. You know, so far so good.
As we've said, all of the units that we're delivering over the next 30 days are already pre-leased. We're seeing good demand even beyond that. Again, a 20+ % unlevered return is pretty attractive.
Okay. Then just one question on supply. I know you don't have a whole lot of traditional supply in your markets. Just wondering if you can maybe comment on or if you're seeing a lot of competition from the value-adds. Not really new supply, but maybe enhanced, improved supply coming in with a lot of other participants in your local markets doing the value-add competition. Are you seeing a lot there or is it pulling back? Any kind of color there would be helpful.
We're not seeing a lot. Again, I think it goes to, you know, interest rates. You know, most of the competition that we saw on the value-add front in the past was from small, you know, levered operators. You know, it doesn't really work as well today as it used to, and just the availability of financing is more difficult. You know, our value-add program is really designed to compete with the newer construction. Again, and you've heard me say this, I'm sure, that we're delivering a product that competes very well against new supply, but at a $400-$500 price reduction or lower rent. It gives us, you know, a real advantage.
As we start to see, you know, changes in the economy and, you know, potentially a recession, you know, we think that the value-add will be even more powerful because we'll be delivering that Class A product, at a better price point.
Great. Thanks for the time, everyone.
Thank you.
Thanks, Wes.
Our next question comes from Anthony Powell from Barclays. Your line is now open. Please go ahead.
Hi, good morning. I wanna go back to the Midwest markets that are performing well. Could you maybe go into the supply outlook you're seeing in markets like Indianapolis, Columbus, and even OKC, and what's driving kind of the better demand you're seeing in those markets overall?
You know, I don't. This is Mike Daley. I don't have the new supply in front of me. You know, CoStar just came out with updated information yesterday. You know, there's some, you know, digging I'd need to do to be able to give you a better answer. You know, at a glance, when I was reviewing those yesterday, there was not massive influx of new, you know, new product coming online in any of the markets you mentioned. You know, I think that's just something that we keep an eye on, we watch. You know, and we'll, you know, we'll see what that unfolds to be. You know, right now, those markets appear to be very stable from a, you know, from a new supply perspective.
Yeah. Anthony, this is Jim, just a follow-up to Mike's commentary there. We obviously CoStar's coming out with obviously their new data set. When we looked at it before for 2023, like Indianapolis, the new supply deliveries was pretty low, at like 1.2% of the existing stock. We feel quite confident that those markets are pretty robust in terms of continuing to see great job growth, and we're expecting to see, you know, not a lot of pressure, as Scott mentioned, from new supply in our markets.
Are you buyers in these markets long term?
You know, it all depends. We're not buyers of anything right now because, you know, we're still unsure of where values are. Yeah, we've bought in Columbus and Indianapolis, obviously, in the past. You know, those are our two main Midwest markets. You know, depending on market fundamentals, you know, in the future, I think yes, we would add there if it made sense.
It's not like you're not making make a play on the Midwest versus the Coastal or Sunbelt. It's more of an opportunistic kind of view. Is that fair?
Absolutely. You know, that's the way we built this portfolio was by identifying markets where we felt there was good long-term prospect, that will continue. We still like the Sunbelt. We still think that the, you know, the demographics of the Sunbelt will outperform long term. If there's an opportunity to buy something in the Midwest that makes sense in a market that we're already in, we will absolutely look at it.
Got it. Maybe on these June and July renewals, what percent of the roll has been renewed already as of now? Is that higher or lower than, I think, average for this time of the year?
Yeah. About For July, it's pretty much a vast majority of the renewals have already been done. I'm sorry, for June, that is. For July, it's about 30% have already been renewed. That's actually ahead of where we would have been this time last year.
Right. I guess the tenants are taking these price increases, and you're not seeing any incremental, I guess attrition given the slightly higher renewal rates. Is that fair?
No, that's exactly right. To Janice's point, all the focus that we've had on the operational processes and the sales trading is really paying dividends.
All right. Thank you.
Thanks.
We next have a follow-up from Austin Wurschmidt from KeyBanc Capital Markets. Austin, your line is now open. Please go ahead.
Great. Thanks, guys. Appreciate you taking the follow-up. Just a question. I realize the transaction market is a bit frozen, but can you just give us a sense of, you know, on the deals that are transacting, you know, where you think cap rates are today, and maybe pair that with sort of where, you know, where you can get secured financing for multifamily assets today? Thank you.
Sure. Thanks, Austin. Our acquisitions team who continues to monitor all the markets that we're focused on, recently told me that they are starting to see more properties being listed, and the whisper from the brokers is that the sellers will accept 5% - 5.5% cap rates depending on marketing property, you know, quality. That's better information than what we've had. I still think there's a disconnect between, you know, the buyers and sellers, the bid ask, if you will. This is the first information that I've seen that shows there may be the movement may be starting. I hope that answers your question.
Yes. Thank you.
Thank you.
There are no further questions, so I'll hand the call back to Scott now for any closing remarks.
Well, thank you for joining us, and we look forward to speaking with you again, next quarter. Thank you all.
This concludes today's call. Thank you everyone for joining. You may now disconnect.