About Scott Schaeffer
In a September 2018 interview, Scott Schaeffer, chairman and CEO of Independence Realty Trust, stated that he believes the shift toward renting has long-term staying power. He attributed this to tenants seeking flexibility and affordability, citing a Freddie Mac survey in which 70% of respondents said renting was more affordable than owning. Schaeffer also noted that changes to tax law, including potential limits on mortgage interest and real estate tax deductions, could affect the rent-versus-buy decision.
Schaeffer described the company's strategy as owning B-class assets in non-gateway markets with supply-demand imbalances driven by population and job growth. He said a recent acquisition fit this strategy, adding that the portfolio was "under-managed" and offered opportunities for improved operational performance. Schaeffer also discussed the company's internalization of management earlier that year, saying it was done once the company reached sufficient size. He said the move saved approximately $2.5 million in general and administrative expenses and aligned management with shareholders, and noted that the stock had risen about 30% since the announcement.
Source: AI-verified profile updated from Scott Schaeffer's recent appearances.
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Transcript (13 segments)
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Matt0:00
A map B shard here in Dallas for Nareit's Real World 2017. Joining me today is Scott Schaeffer, Chairman and CEO of Independence Realty Trust. Scott, thanks so much for joining us today.
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Scott Schaeffer0:15
Thank you, Matt. Thanks for having me.
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Matt0:17
Now, you've been in the multifamily real estate business for nearly three decades now. Do you believe that the current shift that we've seen in the desire to rent really has long-term staying power?
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Scott Schaeffer0:26
You know, I do. And you're right, I've been in this business for a long time. I've seen many cycles, both good and bad, but I think this one's a little bit different. There's a couple of factors or a couple of reasons I think that this one has real staying power. First, I think that today's tenant is a little different. They want flexibility, they want the ability to move if they're changing a job without having to sell a home or just pick up and move for other reasons. And having the obligation and the stress of owning a home really does impact someone's decision whether to rent or to own. And the other one is affordability. In a recent Freddie Mac survey, 7 out of 10 people said that they felt that renting was much more affordable than owning. And then, finally, you have the whole Tax Act that's coming down the pike. Is there going to be a limitation on mortgage interest deductions or real estate tax deductions? And that really will impact people's view of the rent versus buy analysis.
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Matt1:17
Now, how does your company's recent acquisition fit into your broader portfolio strategy?
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Scott Schaeffer1:23
Our strategy is to own B Class assets in non-gateway markets where there is a supply-demand imbalance. And when I say supply-demand imbalance, I'm really speaking about population growth, job growth, some wage growth, all with limited additions to new supply. So those are the markets that we're seeking. This acquisition fits perfectly within that strategy. Many of the assets are in markets where we already have exposure, so there's overlap which generates economies of scale. And in addition, this portfolio we felt was under-managed, so we think that by putting it on our operating platform, there's tremendous opportunity for increased operational performance.
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Matt2:03
Now, what are some of the key economic indicators or market metrics that you're going to be watching in particular as we head into 2018?
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Scott Schaeffer2:11
It's population growth, it's job growth, all with looking at new construction and what the additions to supply will be. I have this phrase that I use all the time about it's the perfect storm. So you're looking at that again: the job growth which supports demand, the population growth supports demand, and then the limited supply really creates an environment where you get good stable occupancies with the ability to push rents year-over-year.
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Matt2:33
Now, your company recently completed an internalization earlier this year. What drove that decision and how do you see that benefiting the company as well as the shareholders?
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Scott Schaeffer2:44
We always wanted to be internally managed. In the beginning, we were just too small to really support a public company infrastructure, but we got to the right size where we felt it made sense. So we went through the process of bringing management in-house. The immediate benefit to shareholders is about a two and a half million dollar savings to G&A expense. But long term, it really does align shareholders with management — management, I should say, with shareholders — for future growth. And clearly, the stock has performed. We're up probably 30% since we announced the internalization, and we have really great access to capital, better access to capital today than we did while we were an externally managed company.
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Matt3:25
Scott, thank you so much for joining us.
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Scott Schaeffer3:27
Thank you.
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Narrator3:29
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