獨立不動產信託 (IRT) 2026 年第三季法說會：租賃改善，重申財測指引

重點摘要

• Independence Realty Trust 公布 2026 年第三季每股核心 FFO 為 0.29 美元，同店 NOI 年增 1.6%，兩者均符合管理層預期。
• 同口徑綜合租金成長率達 2.8%，為五個季度以來最佳表現。新租約租金調整幅度較上季改善 210 個基點至負 0.6%，而續約租金價差則上升至 4.6%。
• 平均出租率維持在 95.0%，租戶留存率較上季上升 240 個基點至 60.5%。潛在客戶詢問量較去年同期成長 11%。
• IRT 重申 2026 年全年每股核心 FFO 財測指引為 1.13 至 1.15 美元，並維持同店營收與 NOI 成長預測的中位數。
• 管理層預計，在槓桿中立的前提下，待完成的 Centerspace 合併案將為 2027 年每股核心 FFO 帶來約 5% 的增益效果，這得益於已確認的 2,400 萬美元綜效。
• IRT 在前九個月完成了 1,707 間房屋的增值翻新，平均無槓桿投資報酬率 (ROI) 約為 15%。公司仍按計畫朝 2026 年完成 2,200 間翻新的目標邁進。

關鍵財務數據

業務與營運績效

IRT 在租賃旺季優先維護租金水準的策略，使新租約的租金優惠使用量較第二季減少近一半。掛牌租金較 2026 年初上漲約 3%。

亞特蘭大錄得最大的同一年份改善幅度，同口徑新租約租金調整幅度為 2.1%，較 2025 年第三季上升 755 個基點。奧克拉荷馬城達 2.9%，羅利-德罕為 2.5%，哥倫布為 1.5%。丹佛持平，達拉斯則維持在負 3.5%，但較去年同期改善了 70 個基點。

管理層表示，亞特蘭大、羅利及納許維爾展現出租賃改善趨勢。達拉斯、坦帕及丹佛則繼續面臨供應壓力與租金優惠壓力。在丹佛，2026 年上半年的強勁吸納量正有助於穩定市場。

公司在 2026 年前九個月完成了 1,707 間房屋翻新，平均無槓桿 ROI 約為 15%。平均翻修交屋時間從約 25 天縮短至 17 天，管理層預期 2027 年的翻修量將會增加。

IRT 還比預期提前完成了首期社區 Wi-Fi 鋪設。該方案在第三季貢獻了 230 萬美元營收，預計將在 2027 年貢獻全年的營收與 NOI。公司計畫在 2027 年將 Wi-Fi 擴展至至少額外 7,000 間房屋，包括 4,000 間 IRT 房屋與 3,000 間 Centerspace 房屋。

在本季度結束後，IRT 收購了合資夥伴在 Mustang（位於達拉斯拉斯科林納斯、擁有 275 個單元的社區）的權益。預計穩定後的經濟資本化率為 5.9%，相比之下，在當前出租率和租金優惠水準下的第一年估算收益率約為 5.2%。

管理層財測指引

IRT 重申 2026 全年每股核心 FFO 指引為 1.13 至 1.15 美元。公司亦在維持中位數不變的情況下，收窄了同店營收與 NOI 成長的預測區間。EPS 與 FFO 指引現已包含迄今發生的合併相關費用（主要包括公正意見書、法律及申報費用），但在其他方面仍排除待完成的 Centerspace 交易。

更新後的收購指引為 2.66 億美元，反映了併入 Mustang。若排除 Centerspace 合併案，IRT 預計 2026 年不會有額外的收購案。

管理層估計 2027 年當前的租金翹尾效應約為 80 個基點，而前一年同期為 0 至負 10 個基點。2027 全年指引預計將於 2027 年 2 月隨 2026 年第四季財報一同公布。

針對第四季，IRT 計畫在季節性租約到期量較少的時期優先維持出租率。管理層的目標是在年底前提升 30 至 40 個基點的出租率，為物業組合在 2027 年上半年追求租金成長做好準備。

Centerspace 合併案最新動態

管理層表示 Centerspace 的整合進度符合預期。IRT 正推進取得債權人同意，以承擔約 5 億美元平均利率約 3.5% 的擔保債務。

公司預期在槓桿中立的前提下，該交易將使 2027 年每股核心 FFO 成長約 5%，且從第一天起即能提升每股淨值 (NAV)。預期效益包括已確認的 2,400 萬美元綜效、約 3,200 間適合進行增值翻新的 Centerspace 房屋，以及 10,000 間符合社區 Wi-Fi 鋪設資格的房屋。

IRT 表示，扣除綜效及一次性成本後，該收購案的名目資本化率為 7.3%。Centerspace 的 10,500 間房屋將使合併後的物業組合擴大 30% 以上，達到約 44,400 間公寓住宅。

IRT 預計先前確認為保持合併案槓桿中立所需的 1.4 億美元資產出售案將於 2027 年第一季完成。管理層形容綜效預估相當保守，但也指出包括租戶保險計畫在內的部分營運效益將分階段導入，而非立即生效。

風險與關注事項

• 達拉斯、坦帕及丹佛繼續面臨供應壓力，且需要提供一定程度的租金優惠。
• Centerspace 近期的營運壓力主要集中在科羅拉多州，當地的競爭性供應影響了出租率與定價。
• 合併效益取決於成功整合、按計畫處置資產以及營運綜效的即時實現。
• 美債殖利率上升已導致部分私募市場買家尋求更高的資本化率，但管理層表示，已完成交易的資本化率是否會進一步走高尚不明朗。
• 在季節性租賃淡季期間，競爭對手的租金優惠策略仍是潛在的壓力點。

分析師問答亮點

管理層認為，在未來 12 至 18 個月內，透過 EBITDA 的成長而非依賴額外的資產出售，有信心將淨債務對 EBITDA 比率降至 5 倍出頭的水準。鑑於增值翻新平均約 15% 的報酬率，這仍是保留現金流的首選用途。

管理層表示，在目前的股價水準下，庫藏股買回的優先順序高於額外償還債務，但資金到位時的資本配置仍將視當時情況而定。

從第一季到第三季，所有市場的呆帳均有所下降。據管理層表示，亞特蘭大第三季的呆帳率為 1.4%，而數年前約為 5%。

管理層表示需求指標保持正面，潛在客戶詢問量年增 11%。除了正常季節性因素外，並未發現任何引發 2027 年疑慮的徵兆，同時指出出租率、租金成長及呆帳的詳細假設將在 2 月財測中提供。

法說會電話會議完整逐字稿

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完整財報電話會議逐字稿

管理層陳述

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.

分析師問答

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.