独立地产信托 (IRT) 2026年第三季度业绩电话会：租赁改善，重申业绩指引

要点速览

• Independence Realty Trust 公布 2026 年第三季度核心运营现金流（Core FFO）为每股 0.29 美元，同店净营业收入（NOI）增长 1.6%，均符合管理层预期。
• 同口径综合租金增长率达 2.8%，创五个季度以来最佳表现。新签租金价差环比改善 210 个基点至 -0.6%，续签租金价差升至 4.6%。
• 平均入住率维持在 95.0%，租户留存率环比上升 240 个基点至 60.5%。意向客源量同比增加 11%。
• IRT 重申 2026 全年核心 FFO 指引为每股 1.13 美元至 1.15 美元，并维持同店收入及 NOI 增长指引的中点不变。
• 在保持杠杆率中性的前提下，受已识别出的 2400 万美元协同效益支撑，管理层预计待完成的 Centerspace 合并案将推动 2027 年每股核心 FFO 增长约 5%。
• 前九个月，IRT 完成了 1,707 套增值改造项目，无杠杆平均投资回报率（ROI）约为 15%。公司仍按计划推进 2026 年完成 2,200 套改造的目标。

关键财务数据

业务与运营业绩

IRT 在租赁旺季优先保障租金水平的策略使得新签租金优惠的力度较第二季度减少了近一半。挂牌租金比 2026 年初高出约 3%。

亚特兰大市场表现出最大的同比改善，同口径新签租金价差为 2.1%，较 2025 年第三季度上升 755 个基点。俄克拉荷马城为 2.9%，罗利-达勒姆为 2.5%，哥伦布为 1.5%。丹佛持平，达拉斯仍为负数（-3.5%），不过同比改善了 70 个基点。

管理层指出，亚特兰大、罗利和纳什维尔的租赁趋势有所改善。达拉斯、坦帕和丹佛继续面临与供应相关的压力并需提供租金优惠。在丹佛，2026 年上半年的强劲去化有助于稳定市场。

公司在 2026 年前九个月完成了 1,707 套公寓的改造，无杠杆平均投资回报率约为 15%。平均改造周期从约 25 天缩短至 17 天，管理层预计 2027 年改造量将进一步增加。

IRT 还提前完成了社区 Wi-Fi 的初期铺设。该项目在第三季度带来 230 万美元收入，预计将在 2027 年贡献一整年的收入和 NOI。公司计划在 2027 年将 Wi-Fi 扩展至至少 7,000 套新增公寓，其中包括 4,000 套 IRT 公寓和 3,000 套 Centerspace 公寓。

本季度结束后，IRT 收购了其合资伙伴在达拉斯拉斯科利纳斯拥有 275 套公寓的社区 Mustang 的权益。在当前的入住率和优惠水平下，预计稳定经济资本化率为 5.9%，而首年预估收益率约为 5.2%。

管理层业绩指引

IRT 重申 2026 全年每股核心 FFO 指引为 1.13 美元至 1.15 美元。公司还收窄了同店收入及 NOI 的增长区间，中点保持不变。每股收益（EPS）和 FFO 指引现已包含迄今为止发生的合并相关费用（主要是公平性意见书费用、法律及备案费），但未包含待完成的 Centerspace 交易的其他影响。

更新后的收购指引为 2.66 亿美元，反映了对 Mustang 的并表。如果不考虑 Centerspace 的合并，IRT 预计 2026 年不会进行额外的收购。

管理层估计，目前为 2027 年带来的租金翘尾效应约为 80 个基点，而一年前为 0 至负 10 个基点。2027 全年指引定于 2027 年 2 月随 2026 年第四季度财报一同发布。

对于第四季度，IRT 计划在租赁到期淡季优先提升入住率。管理层的目标是在年底前增加 30 至 40 个基点的入住率，使组合处于有利位置，以便在 2027 年上半年追求租金增长。

Centerspace 合并案进展

管理层表示，Centerspace 的整合工作按计划推进。IRT 正积极寻求贷款人同意，以承接约 5 亿美元的担保债务，平均利率约为 3.5%。

公司预计，在保持杠杆率中性的前提下，该交易将推动 2027 年每股核心 FFO 增长约 5%，且从第一天起即可增厚净资产价值（NAV）。预期收益包括已确定的 2,400 万美元协同效益、约 3,200 套适合进行增值改造的 Centerspace 单元，以及 10,000 套符合社区 Wi-Fi 接入条件的单元。

IRT 表示，扣除协同效应和一次性费用后，该收购对应的名义资本化率为 7.3%。Centerspace 的 10,500 套单元将使合并后的组合规模扩大 30% 以上，达到约 44,400 套公寓住所。

IRT 预计，为使合并保持杠杆中性而此前确定的 1.4 亿美元资产出售计划将在 2027 年第一季度完成。管理层称协同效益预测偏保守，但指出部分运营效益（包括租客保险计划）将逐步释放，而非立即生效。

风险与关注事项

• 达拉斯、坦帕和丹佛继续面临供应压力，仍需提供一定的租金优惠。
• Centerspace 近期的运营压力主要集中在科罗拉多州，当地的竞争性供应影响了入住率和定价。
• 合并收益取决于能否成功整合、按计划处置资产以及及时实现运营协同效益。
• 美债收益率上升已导致部分私营市场买家寻求更高的资本化率，不过管理层表示，已完成交易的资本化率是否会走高尚不明确。
• 在租赁淡季期间，竞争对手的优惠策略仍是一个潜在的压力来源。

分析师问答集锦

管理层认为，在未来 12 至 18 个月内，无需依赖额外的资产出售，仅通过 EBITDA 的增长，即可将净债务与 EBITDA 之比降至 5 倍出头的区间。鉴于约 15% 的平均回报率，增值改造仍是留存现金流的首选用途。

管理层表示，在当前股价水平下，相比进一步削减债务，股票回购被列为更高优先级，但资本配置将取决于资金到位时的具体情况。

从第一季度到第三季度，所有市场的坏账率均有所下降。据管理层称，亚特兰大第三季度的坏账率为 1.4%，而数年前约为 5%。

管理层表示需求指标依然良好，意向客源量同比增加 11%。管理层还表示，除正常季节性因素外，未发现任何令人对 2027 年产生担忧的迹象，同时指出入住率、租金增长和坏账的具体假设将在 2 月的业绩指引中提供。

业绩电话会议完整文字记录

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完整财报电话会议逐字稿

管理层陈述

Operator

Good morning, ladies and gentlemen, and welcome to Independence Realty Trust's Third Quarter 2026 Earnings Conference Call. As a reminder, today's call is being recorded, and a replay will be available in the Investors section of the company's website shortly after the call concludes.

At this time, I'd like to turn the call over to Stephanie Krewson-Kelly, Senior Vice President of Investor Relations and Capital Markets. Ms. Krewson-Kelly, please go ahead.

Stephanie Krewson-Kelly

Thank you, and good morning.

Today's call will focus on IRT's third quarter results and stand-alone outlook with a brief update on the pending merger with Centerspace. We will provide more detail on the combined company after the merger closes.

On the call with me today are Scott Schaeffer, Chairman and Chief Executive Officer; Jim Sebra, President and Chief Financial Officer; Janice Richards, Executive Vice President of Revenue Strategy; and Jason Lynch, Senior Vice President of Investments.

Before we begin, please note that there may be forward-looking statements made during this call. These forward-looking statements reflect IRT's current views with respect to future financial performance, future events and the proposed merger with Centerspace. 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, including the definitive joint proxy prospectus for further information about these risks.

A copy of IRT's third quarter earnings press release and supplemental information is attached to IRT's current report on Form 8-K, which is available in the Investors section of our website. They contain reconciliations of non-GAAP financial measures referenced on this call to the most directly comparable GAAP financial measures.

With that, it is my pleasure to turn the call over to Scott Schaeffer.

Scott Schaeffer

Thanks, Stephanie, and thank you all for joining us this morning.

I'm pleased to report another solid quarter. Core FFO per share of $0.29 and same-store NOI growth of 1.6% were both in line with our expectations, and we are reaffirming the midpoint of full year guidance for both metrics. Our rate over occupancy strategy this leasing season worked as intended. During the third quarter, asking rents held firm and we cut concession use on new leases nearly in half from second quarter levels. As a result, new lease trade-outs on like-term leases accelerated by 210 basis points sequentially and increased 310 basis points year-over-year. The recovery is now broad-based. Over the past year, new lease spreads on like-term leases improved in 9 of our 10 largest markets, led by Atlanta and lead volume was up 11%. Renewal rents improved 200 basis points year-over-year. Average occupancy of 95% was flat sequentially and resident retention improved. Taken together, blended rents on like-term leases grew 2.8% in the quarter, our best result in 5 quarters.

During the quarter, we continued to recycle capital, selling the property in Memphis and subsequent to quarter end, acquired our joint venture partner's interest in the Mustang, a 275-unit newly constructed community on the last Lakefront multifamily development parcel in the Las Colinas submarket of Dallas. As we close out 2026, favorable market tailwinds and company-specific growth initiatives position IRT for meaningful earnings growth in 2027. First, supply-demand fundamentals continue to improve and support higher effective rents. New deliveries in our markets have fallen by more than half since peaking in 2024 to about 2.5% of inventory this year, and CoStar projects a further decline in 2027. Demand continues to outpace national averages and absorption remains strong.

Second, with sticky inflation and higher interest rates, the cost of homeownership continues to favor renting over ownership, generating more demand for rental apartments. Third, people continue to migrate to our non-gateway markets motivated by employment opportunities and are seeking a better quality of life, which includes overall affordability. IRT's portfolio offers residents the attractive solution of high-quality housing at monthly rents that are materially below new construction rents. Fourth, we completed our initial rollout of community Wi-Fi ahead of plan, and it will contribute a full year of revenue and NOI to 2027 results. Finally, our value-add program remains an important low-risk way to capture higher market rents and drive core FFO growth.

During the first 9 months of this year, we completed nearly 1,800 value-add renovations at an average unlevered return on investment of approximately 15%, and we remain on track to complete 2,200 renovations for the year. We are always refining our renovation processes and have further reduced the average unit turn time from approximately 25 days to now 17 days. This shortened turn time allows us to complete more renovations without meaningfully impacting occupancy. Accordingly, we expect to increase the number of units renovated during 2027, which will further drive NOI and earnings growth.

Turning to Centerspace. The pending merger builds on the momentum I just outlined and amplifies it across 3 dimensions: growth, value and scale. First is growth. We expect the transaction to be approximately 5% accretive to 2027 core FFO per share on a leverage-neutral basis and accretive to day 1 NAV, driven largely by the operating synergies of IRT's more cost-efficient platform. More importantly, it enhances our longer-term earnings profile. Beyond the $24 million of identified synergies, approximately 3,200 of Centerspace apartment units are right for our value-add program and 10,000 units will be added to our community Wi-Fi program, extending these 2 revenue-enhancing initiatives across a larger combined portfolio.

Second is value. After accounting for synergies and onetime costs, we are acquiring Centerspace at a 7.3% nominal cap rate, a meaningful discount to its net asset value and at a price per door that is well below replacement cost. Third is scale. Centerspace's 10,500 units will increase our unit count by more than 30% to approximately 44,400 apartment homes in markets that are demand-rich and supply constrained. The merger also brings our G&A load in line with our larger cap peers. As a final note, since the merger announcement, both Fitch and S&P have reaffirmed our investment-grade ratings, and I am pleased to report that multiple independent proxy advisory firms have recommended that IRT stockholders vote in favor of the merger. Our special meeting is November 10, and we encourage all stockholders to vote their shares.

With that, I'll turn the call over to Jim.

James Sebra

Thank you, Scott, and good morning, everyone.

I'll start with a brief update on our integration with Centerspace. While we are still in the early stages, the overall process is on schedule. Lender consents for the assumption of approximately $500 million of Centerspace's secured debt with an average interest rate of approximately 3.5% are progressing as planned. On the people side, we have identified the go forward and transition teams and execute employment letters accordingly. Our technology integration is planned and ready to launch shortly after closing. Additionally, the $140 million of dispositions that we identified to keep the Centerspace merger leverage neutral are progressing and expected to close in the first quarter of next year. All of this is pointing to a successful integration post-closing and securing the synergies we've identified.

Turning to our third quarter results. Core FFO per share of $0.29 was in line with our expectations. Same-store NOI grew 1.6%, also in line with expectations as a 2% increase in same-store revenue was partially offset by a 2.5% increase in operating expenses. Same-store revenue growth reflected a 60 basis point increase in average effective monthly rents, a 16% increase in other property revenue driven by $2.3 million of Wi-Fi revenue and stable bad debt of approximately 90 basis points.

As Scott mentioned, we prioritized rate over occupancy for the duration of our peak leasing season. Stable asking rents, which are up approximately 3% since the start of the year and the demand environment that required fewer concessions drove our effective rents higher during the third quarter. We maintained stabilized occupancy of 95% during the quarter and resident retention increased 240 basis points sequentially to 60.5%. Improving fundamentals continue to support better pricing power in the quarter. For like-term leases, new lease trade-outs were negative 60 basis points in the quarter, improving 210 basis points sequentially and 310 basis points year-over-year.

Looking at like-term new leases by market, Atlanta was our largest market, registered the biggest improvement year-over-year with new lease trade-outs of positive 2.1%, a 755 basis points improvement over the third quarter of 2025. Oklahoma City delivered positive 2.9% and Raleigh-Durham and Columbus saw new lease spread of positive 2.5% and 1.5%, respectively. In Denver, new lease trade-outs were breakeven, up 360 basis points year-over-year. In Dallas, new lease trade-outs were negative at 3.5%, improving, albeit by 70 basis points over last year.

Renewal lease spreads remained strong, reflecting solid demand, high resident satisfaction and our data-driven approach to maximizing revenue growth. Renewal spreads on like-term leases were 4.6% in the quarter, up 50 basis points from the second quarter and 200 basis points year-over-year. As a result, like-term blended rent growth of 2.8% was 150 basis points higher sequentially and 270 basis points higher than a year ago.

For same-store operating expenses, the 4% increase in controllable expenses was driven primarily by higher contract service costs associated with the Wi-Fi rollout. Without the Wi-Fi service fees, the increase in controllable expenses would have been 3% year-over-year. Recall that our Wi-Fi program requires no capital from IRT. Noncontrollable expenses were flat year-over-year as a 17% decrease in insurance offset a 3% increase in real estate taxes. Please note that 2025 real estate taxes were low due to real estate and franchise tax refunds in the prior year.

Turning to capital allocation. During the first 9 months of the year, we completed 1,707 unit renovations at an average ROI of approximately 15%. Value-add activity continues to be an attractive investment opportunity to support long-term earnings growth. We expect to increase future renovation volume to capture higher rent premiums as market rents continue to recover. As Scott mentioned, subsequent to quarter end, we acquired our joint venture partner's interest in the Mustang and began consolidating this 275-unit community on our balance sheet. Our basis represent a 5.9% economic cap rate on stabilized NOI.

We did borrow $79 million on our line of credit to repay the in-place construction loan, which improves the earnings profile of the property for the remainder of 2026 and beyond. The previous construction loan was bearing interest at SOFR plus 275 basis points, whereas our line of credit bears interest at SOFR plus 77 basis points. The consolidation is reflected in our updated acquisition guidance of $266 million. Other than our pending merger with Centerspace, we do not forecast any additional acquisitions this year.

On the capital recycling front, in September, we sold a property in Memphis for $55.8 million. We used the proceeds to delever the balance sheet ahead of the Mustang closing in October. Our balance sheet remains flexible with strong liquidity. As of September 30, our net debt to annualized adjusted EBITDA was 6.2x, down from 6.5x last quarter. We had approximately $492 million of liquidity, 86.5% of our debt was fixed or hedged at a weighted average effective interest rate of 4.3%, and we have no significant debt maturities until 2028.

Heading into the fourth quarter, leasing is following its normal seasonal pattern with demand still better than in prior years. Without getting into monthly details, asking rents are remaining flat with blended lease spreads continuing their year-over-year improvement. Like the third quarter, double-digit growth in other property revenue led by Wi-Fi will continue to drive fourth quarter revenue growth. With respect to our Wi-Fi program, we plan to expand it to at least another 7,000 units in 2027, consisting of 4,000 IRT units and 3,000 units from Centerspace. With expirations seasonally light, we're building occupancy now, which positions us well to push rate in 2027.

Turning to guidance. Our EPS and FFO per share guidance now reflect merger-related costs incurred to date, consisting primarily fairness opinions, legal and filing fees. Otherwise, our guidance does not incorporate the pending merger with Centerspace. We are reaffirming our core FFO per share range of $1.13 to $1.15. We are also narrowing our same-store revenue and NOI growth ranges around unchanged midpoints. Overall, we are on track to deliver on our full year 2026 guidance, and we look forward to completing the merger with Centerspace. We will provide full year 2027 guidance with our fourth quarter results in February 2027.

Scott, that's it. Back to you.

Scott Schaeffer

Thanks, Jim.

In closing, our year-to-date results are solid, and we are reaffirming our 2026 guidance. Lease rates are improving as fundamentals strengthen across our markets, and IRT is building earnings momentum heading into 2027. We expect the proposed Centerspace merger to amplify that momentum, creating a larger IRT with more runway for low-risk internal growth through value-add and community Wi-Fi backed by our disciplined operating platform. On behalf of IRT's management team, I want to thank our stockholders for their support and every IRT and Centerspace team member for their hard work and dedication.

Operator, please open up the call for questions.

Operator

[Operator Instructions] Our first question comes from Austin Wurschmidt with KeyBanc Capital Markets.

分析师问答

Austin Wurschmidt

Just given the improvement in leasing spreads versus last year that you talked about in your prepared remarks, I think you said that continued into the fourth quarter. Can you share how you expect your 2027 earn-in to shake out and just how that compares versus last year?

James Sebra

Yes. Good question, Austin. Thank you. I think we continue to see good trajectory, as I said in my prepared remarks, we're really getting away from trying to give monthly details on these calls. We continue to see great trajectory in the blended spreads, kind of a 220 basis points improvement year-over-year in third quarter and certainly continued to kind of perform in Q4. And when it comes to our earn-in, that estimates in earn-in kind of give or take about 80 basis points today. That earn-in last year was about either anywhere between 0 and minus 10 basis points.

Austin Wurschmidt

That's helpful. And then just second question, recognizing you're a little bit limited in what you can say about the Centerspace transaction. But first, can you just provide some thoughts about how maybe the results last night stacked up relative to what you had underwritten? And anything that would change that 5% accretion? And then can you also just share when those synergies are expected to kick in?

Scott Schaeffer

Sure. Yes. Centerspace's third quarter results was very consistent with what we underwrote and obviously, within their guidance range. The pressure for them is concentrated in Colorado, where competitive supply certainly weighed on occupancy and pricing. Every other region grew revenue and same-store NOI. It's not a one quarter thesis for us. Obviously, we're acquiring what we believe is a well-located portfolio on an attractive basis. And it's exactly where our operating platform and value-add programs will make a difference over time.

And I think on the synergy side, we underwrote the synergies to be 5%. And it's everything is within our control. As I mentioned in our prepared remarks, the G&A stuff and the people is certainly the big driver of it and all the operating synergies associated with property insurance and other kind of things are all things that will just kind of start to happen as the portfolio comes on to our platform. Obviously, like renters insurance programs, the synergies is assuming that, that kind of happens and gets billed through time. It's not all day 1. So we think the synergy number is still very conservative off the run rate.

Operator

Our next question comes from Eric Wolfe with Citi Research.

Eric Wolfe

For the fourth quarter, can you just talk about your strategy on the rate and occupancy side? So how much occupancy do you want to build going into next year's peak leasing season? And why do you think that specific level is the right level going into next year?

James Sebra

Yes. Obviously, the right level is obviously in the eyes of the beholder. I would say if you look at kind of the strategy that we communicated around last year by building occupancy in Q4 so we could attract or achieve rate growth in the first half of '27 and be able to maintain it, that certainly worked, it really benefited us. As you know, the seasonal kind of expiration curve for leases in the Q4 is the lowest that it generally throughout the year. So it's the right time to prioritize occupancy and not focus so much on rate growth. I think for us, our goal is to try to build it 30, 40 basis points of occupancy into the end of the year, and we think that's a good level. I mean we'll obviously continue to try to grow it as much as we possibly can. You've heard Scott certainly say over the years, occupancy between 95% and 96% is probably the right level. And if we start seeing our occupancy building over 96% we'll certainly move back to a great priority.

Eric Wolfe

Got it. That's helpful. And then you talked about the earn-in. I think you said 80 basis points. I guess any other thoughts, I know it's still early on sort of the more predictable pieces of growth for next year, whether that's the other income, the Wi-Fi income, how that should trend or bad debt to the extent that there's a certain amount of bad debt improvement you think is predictable or the contribution from the value-add program. Just any thoughts on some of the other pieces that are going to be contributing to growth next year?

Scott Schaeffer

Yes. We'll obviously give guidance in February 27. So I don't want to get too far ahead of myself. I would say that the other things that are currently being planned out is obviously the incremental Wi-Fi program of about 7,000 units, 4,000 IRT units and 3,000 Centerspace units. Obviously, you will have good revenue growth coming from this year's Wi-Fi program in the first half of next year. And we expect those kind of 4,000, call it, 7,000 total units will start to hit, call it, in the kind of late second quarter next year, maybe a little bit earlier depending on how fast we get it moving, but that will certainly provide a lot of revenue growth in the back half of next year. As for the rest of it, occupancy trajectory, rental rate growth and bad debt, we'll leave all that for the February guidance update.

Operator

Our next question comes from Jason Wayne with Barclays.

Jason Wayne

So just with the occupancy-led strategy, you're looking into next quarter, should we expect concession usage to remain elevated versus recent quarters? And which markets are you seeing the heaviest concession usage in still today?

Scott Schaeffer

I'll ask Janice to answer that one.

Janice Richards

Yes. I think seasonal -- we'll continue to follow seasonal patterns and leverage concessions. We were able to minimize concession uses during our peak season, and we'll follow those seasonal patterns throughout the rest of the year. I think we're still seeing some concessions in the Tampa, Dallas and Denver market as we're working through supply challenges, and we'll continue to optimize where we can and continue to pull back when demand is stable.

Jason Wayne

Got it. And then -- so as those concessions burn off, could that be a tailwind to same-store revenue growth kind of, I guess, in the second half next year?

Scott Schaeffer

For sure. Certainly, as concessions burn off, depending on the size and amount. Obviously, you never know who's going to renew and who's going to move out. And if you need to give a new concession on somebody moves out. But yes, the expectation would be just like we're experiencing this year, nice renewal growth that's coming from just that concession burn off.

Operator

Our next question comes from Jamie Feldman with Wells Fargo.

James Feldman

Great. I appreciate the update on your leverage level. Can you just talk more about target leverage, where you think that's going to go, kind of the road map to get there? And then as you just think about uses of capital between Wi-Fi build-out, acquisitions, development, anything else, share buybacks, how we should think about a, the target level and b, getting there?

James Sebra

Sure. Jamie, obviously, our goal was to kind of get to the mid-5s net debt to EBITDA in Q4. We'll probably be a little bit higher than that with just the Mustang that's kind of taken over in early October. But we see certainly a path towards low 5 net debt to EBITDA in the next kind of 12 to 18 months, just simply through EBITDA growth, no extraneous kind of events like selling assets and delevering. So again, we think the leverage trajectory and path is certainly achievable.

In terms of capital allocation, obviously, you've heard us say multiple times, the value-add continues to be our best use of capital. So kind of all of our retained earnings or free cash flow that's available. It's been going into the value-add program, and it continues to produce really good returns. Outside of that, any capital coming back through a joint venture redemption, a desire to sell an asset, we will evaluate at that time for what at that time, the best opportunity is. Today, where the stock price is, it certainly screens that buybacks are a higher priority than debt deleveraging. But again, it just depends on the situation that the circumstance at the moment.

James Feldman

Okay. That's helpful. And then I guess just thinking about market conditions versus the start of the year or your September update, can you just help us understand which are kind of acting better than you thought they would, which are a little slower? And then I guess, focusing on Denver specifically, I know you mentioned it as kind of a drag in the CSR portfolio. What are your thoughts on that time line for recovery there or bottoming out there?

Janice Richards

Yes. So we're seeing strong recovery in the Atlanta market. Year-over-year, we saw a 50 basis point increase in our blended rent trade-out on all leases and new lease trade-outs were positive for the first time in 2 years and average occupancy increased year-over-year. So excited on the Atlanta front. Raleigh following that, blended trade-outs have improved, and we've reduced average concessions on new lease by more than half in Q2, and we'll follow seasonal patterns throughout the year -- for the rest of the year. And Nashville is also showing some really positive lease trade-out improvement year-over-year, driven by new lease trade-outs.

For the communities where we're still seeing some headwinds in supply, we've got Dallas. We're still seeing positive trade of 110 basis points year-over-year there. So we're excited to see that continue as it starts to accelerate. And then Tampa working through the supply as well. Absorption is steady in both markets. And then I'll turn it over to Jason to dive into the Denver market specifically.

Jason Lynch

Yes. This is Jason. On Denver, we're seeing -- we've seen absorption really pick up in the first half of this year and kind of outsized relative to historical performance. That is helping to stabilize the market and to help to raise rental rate growth momentum there. So we're seeing that as a positive trend being in next year.

Operator

Our next question comes from Peter Abramowitz with Deutsche Bank.

Peter Abramowitz

Just wanted to ask first, I guess, in terms of the interest rate backdrop, you had a couple of transactions in the quarter. But just from kind of a more macro higher-level perspective, what have you seen in terms of early changes in terms of the private capital markets? And any changes that you're seeing on the ground? Just curious for some color there.

Jason Lynch

Yes, sure. So we've seen some live deals where the cap rates have obviously buyers have looked to push up cap rates as treasuries have pulled back around at 5% range or we still haven't seen whether or not that will translate into actual printed cap rates moving higher, and we'll continue to follow that.

Peter Abramowitz

All right. I appreciate that. And then just as a follow-up, just kind of curious, maybe some high-level thoughts on the demand environment. Certainly, the supply narrative, and we can look at CoStars or the RealPages for how much supply is dropping off in your markets, and that's been a big part of sort of the debate for a while now. But just curious from a demand perspective, anything that's kind of surprising you on the ground either way? Or just curious for your sort of high-level thoughts on employment growth, household formation and how you're thinking about that and how it feels as you consider your 2027 budget?

Janice Richards

Yes, we're seeing positive trajectory with our lead volume being up 11% year-year and that's converting well for us. We -- no surprises, only positive trajectory. And so we're going to continue to optimize on that through '27 as we build occupancy and get ready for that pricing power.

Scott Schaeffer

Yes. A little bit of additional color. I think the job growth and the population growth, we're certainly seeing it continue to develop. And there's nothing that we see other than just kind of seasonality that would give us any kind of cause or pause for 2027.

Operator

Our next question comes from Ami Probandt with UBS.

Ami Probandt

I appreciate your commentary on concessions. But I'm wondering how concessions at your competitors are trending and if that could be a pressure point as we move into the slower demand season, the seasonally slower demand season. So do your competitors have occupancy levels that you think enable them to start focusing on rate as well? Or at what point do you think the concessions can be mostly burned off across your MSAs?

Janice Richards

Yes. So overall, we're starting to see some stabilization in our market occupancy over that 90% to 92% average occupancy that allows for pricing power to kick in. I can't speak to exactly what they're going to do on their strategy with concessions. However, we continue to monitor on a daily, weekly basis to optimize at that floor plan level and create -- continue to create the value that we saw in Q3.

Scott Schaeffer

Yes. I mean, Ami, as I kind of alluded to earlier, our occupancy strategy over rate kind of heading into this kind of slower expiration period simply is a goal of being able to set ourselves up for a stronger 2027, at least to push rate in the first half of '27. I think the expectation we have and what we see on the ground is different developers, different owners follow different strategies. Right now, we haven't seen a significant increase in concessions. Certainly, one here, one there might be ebbing and flowing. But ultimately, our goal is to continue to kind of work in and function in the market that we're focused on while still achieving our overall guidance and our overall revenue strategy.

Ami Probandt

Great. And apologies if I missed this. Were there any moving pieces that changed within your maintained same-store revenue guidance midpoint in terms of blends, occupancies, other income, et cetera?

Scott Schaeffer

So no, I think ultimately, they're all pretty much kind of continue to move forward with what our original kind of guidance was that we updated in early -- sorry, early August. I was going to say early July, early August. No, I think generally speaking, everything is continuing to kind of line up with our expectations. We thought that Q4 was going to kind of develop the way we see it developing, and we're excited to finish out the year strong and deliver the midpoint of our guidance.

Operator

Our next question comes from Wesley Golladay with Baird.

Wesley Golladay

Can you talk about what your expectations are for year 1 yield at the Mustang and an overall stabilized yield?

Jason Lynch

Yes. So the overall stabilized yield that we're expecting at the Mustang is about 5.9%.

Scott Schaeffer

That's an economic cap rate.

Jason Lynch

Economic cap rate, and that's after burn-off of concessions that were used during the lease-up of the asset. Year 1 is probably around 5.2% or so based on current concession levels and occupancy.

Wesley Golladay

And it looks like the Tisdale had a nice increase in the leasing activity in 3Q. Can you talk about how rate is tracking versus your expectation?

Jason Lynch

I think rates are tracking in line to what our expectations were. Concessions are being used, but we're -- like Janice mentioned, we're working on trying to pull those back as best as we can through the lease-up.

Scott Schaeffer

Yes. I would say just a little bit of additional color. The Tisdale, we originally anticipated that it would be, call it, stabilized occupancy by the, I think, end of Q1 of next year. So we certainly see it in that trajectory still.

Operator

Our last question comes from Ann Chan with Green Street.

Ann Chan

So just quickly going back to the bad debt. Could you share whether any markets have seen an increase in bad debt in the last few quarters and where Atlanta is currently trending versus pre-COVID?

James Sebra

Good question. I would say that from looking at the data here across our markets, no increases in bad debt in any markets from Q2 -- from Q1 to Q2 to Q3, they're all moving down. I don't remember Atlanta pre-COVID. I would tell you, I think a few years ago, Atlanta was plus or minus 5% bad debt. In the third quarter, their bad debt was 1.4%.

Operator

This concludes our Q&A session. I will now turn the call back to Scott Schaeffer for closing remarks.

Scott Schaeffer

Thank you all for joining us this morning. We appreciate your continued support of IRT and look forward to seeing many of you at the upcoming NAREIT conference in Atlanta. Have a good day all.

Operator

This concludes today's call. Thank you for joining. You may now disconnect.