Announces Strategic Merger with Steadfast
Apartment REIT, to Create a Leading Sunbelt Multifamily
Operator
IRT to Host a Conference Call Today at 5pm ET
to Discuss Merger Announcement & Second Quarter 2021
Results
Independence Realty Trust, Inc. (“IRT”) (NYSE: IRT), a
multifamily apartment REIT, today reported its second quarter 2021
financial results.
Second Quarter Highlights
- Net income available to common shares of $3.4 million for the
quarter ended June 30, 2021 compared to a net income of $0.8
million for the quarter ended June 30, 2020.
- Earnings per diluted share of $0.03 for the quarter ended June
30, 2021 compared to $0.01 for the quarter ended June 30,
2020.
- Same store net operating income (“NOI”) growth of 9.6% for the
quarter ended June 30, 2021 compared to the quarter ended June 30,
2020.
- Core Funds from Operations (“CFFO”) of $20.2 million for the
quarter ended June 30, 2021 compared to $16.4 million for the
quarter ended June 30, 2020. CFFO per share was $0.20 for the
second quarter of 2021, as compared to $0.17 for the second quarter
of 2020.
- Adjusted EBITDA of $28.7 million for the quarter ended June 30,
2021 compared to $25.6 million for the quarter ended June 30,
2020.
- Collected 98.4% of rents billed during the quarter ended June
30, 2021.
- Company increases fiscal year 2021 same store NOI and CFFO
guidance targets.
Included later in this press release are definitions of NOI,
CFFO, Adjusted EBITDA and other Non-GAAP financial measures and
reconciliations of such measures to their most comparable financial
measures as calculated and presented in accordance with GAAP.
Merger Agreement with Steadfast Apartment REIT
IRT and Steadfast Apartment REIT today announced that they have
entered into a definitive merger agreement under which Steadfast
will merge with IRT, with IRT surviving as the continuing company.
The merger will join together two high-quality portfolios with
complementary geographic footprints in the highly desirable Sunbelt
region of the United States. The combined company will own and
operate over 38,000 apartment units across 131 multifamily
communities in non-gateway MSA’s in 16 states, increase IRT’s
exposure to core markets including Atlanta and Dallas, and expand
its presence into attractive new markets including Denver and
Nashville. Pro forma equity market capitalization of the combined
company is expected to be approximately $4 billion, with a pro
forma total market capitalization of approximately $7 billion.
Under the terms of the merger agreement, each Steadfast common
share will be converted into 0.905 shares of newly issued IRT
common stock. On a pro forma basis, following the merger, IRT
shareholders are expected to own approximately 50% of the combined
company’s equity, and Steadfast shareholders are expected to own
approximately 50%. The transaction is expected to close during the
fourth quarter of 2021, subject to customary closing conditions,
including approval of both IRT and Steadfast shareholders. This
strategic transaction was unanimously approved by the Board of
Directors of IRT and the Board of Directors of Steadfast.
Management Commentary
“Strong momentum continues at IRT, as evidenced by exceptional
second quarter results. Our performance was supported by favorable
trends, including positive population and employment growth
dynamics in our markets, as well as our initiatives to increase
occupancy levels and drive rent growth,” said Scott Schaeffer,
Chairman and CEO of IRT. “In the second quarter of 2021, we
increased same store NOI by 9.6%, with occupancy rates up 300 basis
points from a year ago to 96.1% and lease over lease rental rates
up 7.3%. We continued to see strong results from our value add
program and made new investments, including the acquisition of
communities in Charlotte and Dallas, as well as, the closing of a
joint venture to develop a community in Richmond, VA. As a result
of our strong results and increased positive outlook, we are
raising our full year 2021 CFFO per share and same store NOI growth
guidance.”
Scott Schaeffer continued, “We are incredibly optimistic for
what lies ahead at IRT. The combination of IRT and Steadfast will
create a leading, more diversified multifamily REIT focused on
non-gateway markets in the high-growth Sunbelt region. We are
excited for this unique opportunity to expand our proven value add
program and unlock value across the combined portfolio, as we
expect to add 12,000 Steadfast units to our value add pipeline.
Through increased scale and operational efficiencies, we expect to
generate approximately $28 million in annual cost synergies, as we
look forward to integrating best practices from both companies and
driving long-term value creation for our stakeholders.”
Same Store Property Operating Results
Second Quarter 2021 Compared to
Second Quarter 2020(1)
Six Months Ended 6/30/21 Compared
to Six Months Ended 6/30/20
Rental and other property revenue
8.5% increase
7.1% increase
Property operating expenses
6.8% increase
6.5% increase
Net operating income (“NOI”)
9.6% increase
7.5% increase
Portfolio average occupancy
300 bps increase to 96.1%
280 bps increase to 95.7%
Portfolio average rental rate
3.9% increase to $1,146
3.4% increase to $1,136
NOI Margin
60 bps increase to 60.7%
20 bps increase to 61.1%
(1)
Same store portfolio for the
three and twelve months ended June 30, 2021 includes 53 properties,
which represent 14,843 units.
Same Store Property Operating Results, Excluding Value
Add
The same store portfolio results below exclude 20 communities
that are both part of the same store portfolio and were actively
undergoing Value Add renovations during the three months ended June
30, 2021.
Second Quarter 2021 Compared to
Second Quarter 2020(1)
Six Months Ended 6/30/21 Compared
to Six Months Ended 6/30/20(1)
Rental and other property revenue
5.5% increase
4.1% increase
Property operating expenses
7.1% increase
5.8% increase
Net operating income (“NOI”)
4.6% increase
3.0% increase
Portfolio average occupancy
210 bps increase to 96.7%
190 bps increase to 96.3%
Portfolio average rental rate
2.1% increase to $1,101
1.8% increase to $1,094
NOI Margin
60 bps decrease to 60.5%
60 bps decrease to 60.9%
(1)
Same store portfolio, excluding
value add, for the three months ended June 30, 2021 includes 33
properties, which represent 8,607 units.
COVID-19 Metrics (1)(2)
Rent collections
2Q 2021
2Q 2020
1Q 2021
Rent collected for the period presented,
as a percentage of rent billed (3)
98.4%
98.1%
99.2%
(1)
Dollar amounts in thousands. All metrics
presented are for our total portfolio in the period presented.
(2)
All metrics are based on our internal
data, which management uses to monitor property performance on a
daily or weekly basis.
(3)
Rent collected as a percentage of rent
billed includes rent deferred under any deferred payment plans that
may have been offered in the period presented. Deferred payment
plans were offered to residents in 2020 and early 2021 to allow
residents to defer a portion of their monthly rent for one or more
months or to repay over time past-due rent which was unpaid due to
a COVID-related financial hardship. As of June 30, 2021, there were
16 active deferred payment plans with an aggregate of $11,949 of
deferred rent outstanding.
As a result of the COVID-19 pandemic, we recorded a provision
for bad debts of $78,000 in the second quarter of 2021. The table
below presents additional details on the components of bad
debt:
Components of Bad Debt (1)
2Q 2021
2Q 2020
1Q 2021
Amount
Percentage
Amount
Percentage
Amount
Percentage
Charge-offs, net
$512
0.9%
$28
0.0%
$386
0.7%
Provision for bad debt
$78
0.1%
$723
1.4%
$47
0.1%
Net bad debt
$590
1.0%
$751
1.4%
$433
0.8%
(1)
Dollar amounts are in thousands
and percentages are as a percentage of total rental and other
property income. Bad debt is recorded as a reduction to rental and
other property revenue in our consolidated statements of
operations.
Operating statistics
July 2021
July 2020
2Q 2021
Rent collected for the period presented,
as a percentage of rent billed (1)
95.7%
98.2%
98.4%
Total portfolio average occupancy
96.1%
93.8%
95.9%
Total portfolio average effective monthly
rent per unit
$1,196
$1,109
$1,171
Resident retention rate
64.1%
59.1%
54.8%
(1)
Rent collected as a percentage of
rent billed includes rent deferred under any deferred payment plans
that may have been offered in the period presented.
Lease-Over-Lease Effective Rent Growth (1)
The table below depicts lease-over-lease effective rent growth
for all new and renewal leases entered into during the respective
periods for the 53-property same store portfolio.
Lease Type
2Q 2021
3Q 2021(2)
New Leases
11.4%
17.5%
Renewal Leases
3.7%
4.6%
Total
7.3%
6.7%
(1)
Lease-over-lease effective rent
growth represents the change in effective monthly rent, as adjusted
for concessions, for each unit that had a prior lease and current
lease that are for a term of 9-13 months.
(2)
For new leases and renewals
commencing during 3Q 2021 that were signed as of July 21, 2021.
Value Add Program
We completed renovations on 228 units during the quarter ended
June 30, 2021. From inception of our value add program in January
2018 through June 30, 2021, we completed renovations on 4,089
units, achieving a return on investment of 17.1% (19.3% on interior
renovation costs) and an average monthly rental increase of
18.9%.
Capital Recycling
In the second quarter of 2021, we continued our capital
recycling activity in support of our ongoing initiative to
establish and grow our presence in markets where we see long-term
growth opportunities and reevaluate those that may not be
attractive long-term investments.
Acquisitions/Joint Venture:
- Solis City Park in Charlotte, NC: On May 18, 2021, we acquired
a 272-unit new construction community for $66.5 million. This
acquisition expanded our footprint in Charlotte from 208 units to
480 units.
- Cyan Craig Ranch in Dallas, TX: On June 8, 2021, we acquired a
322-unit new construction community for $73.4 million. This
acquisition expanded our footprint in Dallas from 985 units to
1,307 units.
- Joint Venture in Richmond, VA: On June 8, 2021, we closed on
our initial investment in a joint venture to develop a 402-unit
community with our joint venture partner who is managing
construction that is expected to take 18 months to complete. IRT's
investment is expected to total $16 million.
Dispositions/Property Held for Sale:
- Kings Landing in St. Louis, MO: We identified this community as
an asset held for sale in the second quarter of 2021 and expect to
record a gain on disposition of $11.5 million in the third quarter
of 2021.
Financial Flexibility
As of June 30, 2021, we had a total liquidity position of
approximately $238.1 million, which includes unrestricted cash and
additional capacity under our unsecured line of credit.
On May 18, 2021, we closed on a new 5-year $200 million term
loan which extended our debt maturities and lowered our interest
rate by 10bps. Proceeds from the term loan were used to repay
outstanding borrowings on our line of credit and did not increase
our indebtedness.
On June 29, 2021, we settled forward sale contracts associated
with 2.9 million shares of our stock that were previously issued on
a forward basis under our ATM program. In connection with the
settlement of the forward sale contracts, we received proceeds of
$41.7 million.
As of June 30, 2021, our pro forma net debt to Adjusted EBITDA
was 8.5x, down from 9.2x on a year-over-basis. We remain focused on
reducing leverage and achieving our mid-term net debt to adjusted
EBITDA target of mid-7’s.
Capital Expenditures
For the three months ended June 30, 2021, recurring capital
expenditures for the total portfolio were $1.8 million, or $112 per
unit.
Distributions
On June 14, 2021, our Board of Directors declared a quarterly
cash dividend of $0.12 per share of our common stock, which was
paid on July 23, 2021 to stockholders of record at the close of
business on July 2, 2021.
2021 EPS and CFFO Guidance
Given portfolio performance during the quarter ended June 30,
2021 and into the second half of the year, IRT is increasing its
2021 full year guidance.
Previous Guidance
Current Guidance
2021 Full Year EPS and CFFO
Guidance (1)(2)
Low
High
Low
High
Earnings per share
$0.05
$0.08
$0.09
$0.11
Adjustments:
Depreciation and amortization
0.67
0.67
0.67
0.67
CORE FFO per share allocated to common
shareholders
$0.72
$0.75
$0.76
$0.78
(1)
This guidance, including the
underlying assumptions presented in the table below, constitutes
forward-looking information. Actual full year 2021 EPS and CFFO
could vary significantly from the projections presented. See
“Forward-Looking Statements” below. Our guidance is based on the
key guidance assumptions detailed below.
(2)
Per share guidance is based on
104.2 million weighted average shares and units outstanding.
2021 Guidance Assumptions
Our key guidance assumptions for 2021 are enumerated below and
our guidance does not give effect to the announced merger between
us and Steadfast Apartment REIT, Inc., merger-related transaction
expenses or any equity offerings.
Same Store Communities
Previous 2021 Outlook
Current 2021 Outlook
Number of properties/units
54 properties / 14,955 units
53 properties / 14,843 units
Property revenue growth
3.75% to 5.0%
5.25% to 6.0%
Controllable property operating expense
growth
3.0% to 4.0%
2.5% to 3.0%
Real estate tax and insurance expense
increase
7.0% to 8.0%
4.0% to 5.0%
Total operating expense growth
4.25% to 5.5%
3.0% to 4.0%
Same store property NOI growth
3.25% to 5.0%
6.5% to 7.5%
Corporate Expenses (including stock
compensation)
General and administrative expenses
$16.5 to $18.0 million
$17.0 to $18.0 million
Property management expenses
$8.25 to $8.75 million
$8.25 to $8.75 million
Interest expense (including
amortization of deferred financing costs)
$34.0 to $35.5 million
$34.0 to $35.0 million
Transaction/Investment Volume
Acquisition volume
$100 million to $200 million
$100 million to $200 million
Disposition volume
$0 million to $100 million
$40 million to $100 million
Capital Expenditures
Recurring
$7.0 to $7.5 million
$7.0 to $7.5 million
Value add & non-recurring
$28.5 to $32.5 million
$28.5 to $32.5 million
Selected Financial Information
See the schedules at the end of this earnings release for
selected financial information for IRT.
Non-GAAP Financial Measures and Definitions
We disclose the following non-GAAP financial measures in this
earnings release: FFO, CFFO, NOI and Adjusted EBITDA. Included at
the end of this release are definitions of these non-GAAP financial
measures and a reconciliation of our reported net income to our FFO
and CFFO, a reconciliation of our same store NOI to our reported
net income, a reconciliation of our Adjusted EBITDA to net income,
and management’s rationales for the usefulness of each of these and
other non-GAAP financial measures used in this release.
Conference Call
The date and time of our previously scheduled quarterly
conference call, Tuesday, July 27, 2021 at 9:00 AM ET, have been
changed. All interested parties can listen to the conference call
webcast at 5:00 PM ET on Monday, July 26, 2021 from the investor
relations section of the IRT website at www.irtliving.com or by
dialing 1.833.789.1330. For those who are not available to listen
to the live call, the replay will be available shortly following
the live call from the investor relations section of IRT’s website
and telephonically until Monday, August 2, 2021 by dialing
1.800.585.8367.
Supplemental Information
We produce supplemental information that includes details
regarding the performance of the portfolio, financial information,
non-GAAP financial measures, same store information and other
useful information for investors. The supplemental information is
available via our website, www.irtliving.com, through the "Investor
Relations" section.
About Independence Realty Trust, Inc.
Independence Realty Trust, Inc. (NYSE: IRT) is a real estate
investment trust that owns and operates multifamily apartment
properties across non-gateway U.S. markets, including Atlanta,
Dallas, Louisville, Memphis, Raleigh and Tampa. IRT’s investment
strategy is focused on gaining scale within key amenity rich
submarkets that offer good school districts, high-quality retail
and major employment centers. IRT aims to provide stockholders
attractive risk-adjusted returns through diligent portfolio
management, strong operational performance, and a consistent return
on capital through distributions and capital appreciation. More
information may be found on IRT’s website at www.irtliving.com.
Forward-Looking Statements
This press release contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such forward-looking statements can generally be
identified by our use of forward-looking terminology such as
“will,” “strategy,” “expects,” “seeks,” “believes,” “potential,” or
other similar words. These forward-looking statements include,
without limitation, our expectations with respect to our 2021
earnings and CFFO, capital allocations, including as to the timing
and amount of future dividends, and anticipated benefits of our
announced merger with Steadfast Apartment REIT, Inc. (“STAR”). Such
forward-looking statements involve risks, uncertainties, estimates
and assumptions and our actual results may differ materially from
the expectations, intentions, beliefs, plans or predictions of the
future expressed or implied by such forward-looking statements.
These forward-looking statements are based upon the current beliefs
and expectations of our management and are inherently subject to
significant business, economic and competitive uncertainties and
contingencies, many of which are difficult to predict and not
within our control. In addition, these forward-looking statements
are subject to assumptions with respect to future business
strategies and decisions that are subject to change. Risks and
uncertainties that might cause our future actual results and/or
future dividends to differ materially from those expressed or
implied by forward-looking statements include, but are not limited
to: risks related to the impact of COVID-19 and other potential
future outbreaks of infectious diseases on our financial condition,
results of operations, cash flows and performance and those of our
residents as well as on the economy and real estate and financial
markets; changes in market demand for rental apartment homes and
pricing pressures, including from competitors, that could limit our
ability to lease units or increase rents or that could lead to
declines in occupancy and rent levels; uncertainty and volatility
in capital and credit markets, including changes that reduce
availability, and increase costs, of capital; inability of tenants
to meet their rent and other lease obligations and charge-offs in
excess of our allowance for bad debt; legislative restrictions that
may delay or limit collections of past due rents; risks endemic to
real estate and the real estate industry generally; impairment
charges; the effects of natural and other disasters; delays in
completing, and cost overruns incurred in connection with, our
value add initiatives and failure to achieve projected rent
increases and occupancy levels on account of the initiatives; the
structure, timing and completion of our announced merger with STAR
and any effects of the announcement, pendency or completion of the
merger, including failure to realize the cost savings, synergies
and other benefits expected to result from the merger; the ability
to successfully integrate the IRT and STAR businesses; the
occurrence of any event, change or other circumstances that could
give rise to the termination of the merger agreement, including
failure to receive required stockholder approvals; the risk that
the parties may not be able to satisfy the conditions to the merger
in a timely manner or at all; risks related to disruption of
management time from ongoing business operations due to the
announced merger; the risk that the merger and its announcement
could have an adverse effect on our ability to retain and hire key
personnel and maintain relationships with our customers and
suppliers, and on our operating results and businesses generally;
unexpected costs of REIT qualification compliance; unexpected
changes in our intention or ability to repay certain debt prior to
maturity; costs and disruptions as the result of a cybersecurity
incident or other technology disruption; and share price
fluctuations. Please refer to the documents filed by us with the
SEC, including specifically the “Risk Factors” sections of our Form
10-K for the year ended December 31, 2020, and our other filings
with the SEC, which identify additional factors that could cause
actual results to differ from those contained in forward-looking
statements. We undertake no obligation to update these
forward-looking statements to reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated
events, except as may be required by law. In addition, the
declaration of dividends on our common stock is subject to the
discretion of our Board of Directors and depends upon a broad range
of factors, including our results of operations, financial
condition, capital requirements, the annual distribution
requirements under the REIT provisions of the Internal Revenue Code
of 1986, as amended, applicable legal requirements and such other
factors as our Board of Directors may from time to time deem
relevant. For these reasons, as well as others, there can be no
assurance that dividends in the future will be equal or similar to
the amount of the quarterly dividend described in this press
release.
Additional Information and Where to Find It
In connection with its announced merger transaction with STAR,
IRT will file with the SEC a registration statement on Form S-4 to
register the shares of IRT Common Stock to be issued in connection
with the proposed merger transaction. The registration statement
will include a joint proxy statement/prospectus which will be sent
to the stockholders of IRT and the stockholders of STAR. INVESTORS
AND SECURITY HOLDERS OF IRT AND STAR ARE URGED TO READ THE JOINT
PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH
THE SEC IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders will be able
to obtain free copies of these documents (if and when available)
and other documents filed with the SEC by IRT and/or STAR through
the website maintained by the SEC at http://www.sec.gov. Copies of
the documents filed with the SEC by IRT will be available free of
charge on IRT’s internet website at http://www.irtliving.com or by
contacting IRT’s Investor Relations Department by email at
IRT@edelman.com or by phone at +1-917-365-7979. Copies of the
documents filed with the SEC by STAR will be available free of
charge on STAR’s internet website at http://www.steadfastliving.com
or by contacting STAR’s Investor Relations Department by phone at
+1-888-223-9951.
Participants in Solicitation
IRT, STAR, their respective directors and certain of their
respective executive officers may be considered participants in the
solicitation of proxies in connection with the announced merger
transaction. Information about the directors and executive officers
of IRT is set forth in its Annual Report on Form 10-K for the year
ended December 31, 2020, which was filed with the SEC on February
18, 2021, and its proxy statement for its 2021 annual meeting of
stockholders, which was filed with the SEC on March 29, 2021.
Information about the directors and executive officers of STAR is
set forth in its Annual Report on Form 10-K for the year ended
December 31, 2020, which was filed with the SEC on March 12, 2021,
and in its proxy statement for its 2021 annual meeting of
stockholders, which was filed with the SEC on June 14, 2021. These
documents can be obtained free of charge from the sources indicated
above. Additional information regarding the participants in the
proxy solicitations and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the joint proxy statement/prospectus and other relevant materials
to be filed with the SEC when they become available.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act.
Schedule I
Independence Realty Trust, Inc.
Selected Financial
Information
(Dollars in thousands, except
share and per share amounts)
(unaudited)
For the Three Months
Ended
June 30, 2021
March 31, 2021
December 31, 2020
September 30, 2020
June 30, 2020
Selected Financial Information:
Operating Statistics:
Net income available to common shares
$
3,386
$
1,086
$
13,261
$
1,090
$
789
Earnings (loss) per share -- diluted
$
0.03
0.01
$
0.14
$
0.01
$
0.01
Rental and other property revenue
$
57,286
$
54,811
$
53,923
$
54,001
$
52,087
Property operating expenses
$
22,298
$
20,838
$
20,138
$
22,129
$
20,974
Net operating income
$
34,988
$
33,973
$
33,785
$
31,872
$
31,113
NOI margin
61.1
%
62.0
%
62.7
%
59.0
%
59.7
%
Adjusted EBITDA
$
28,729
$
26,389
$
28,534
$
27,081
$
25,643
CORE FFO per share (c)
$
0.20
$
0.18
$
0.22
$
0.20
$
0.19
Dividends per share
$
0.12
$
0.12
$
0.12
$
0.12
$
0.12
CORE FFO payout ratio
60.0
%
66.7
%
54.5
%
60.0
%
63.2
%
Portfolio Data:
Total gross assets
$
2,133,021
$
1,970,979
$
1,962,895
$
1,920,513
$
1,916,424
Total number of properties
58
56
56
58
58
Total units
16,261
15,667
15,667
15,805
15,805
Period end occupancy
95.6
%
95.5
%
95.3
%
94.4
%
93.5
%
Total portfolio average occupancy
95.9
%
95.4
%
95.0
%
94.1
%
92.9
%
Total portfolio average effective monthly
rent, per
unit
$
1,171
$
1,142
$
1,136
$
1,118
$
1,108
Same store period end occupancy (a)
95.5
%
95.4
%
95.3
%
94.3
%
93.6
%
Same store portfolio average occupancy
(a)
96.1
%
95.3
%
95.0
%
94.0
%
93.1
%
Same store portfolio average effective
monthly rent,
per unit (a)
$
1,146
$
1,125
$
1,117
$
1,107
$
1,103
Capitalization:
Total debt (d)
$
1,036,841
$
947,631
$
945,686
$
1,004,237
$
1,008,911
Common share price, period end
$
18.23
$
15.20
$
13.43
$
11.59
$
11.45
Market equity capitalization
$
1,926,218
$
1,561,165
$
1,376,283
$
1,107,144
$
1,093,822
Total market capitalization
$
2,963,059
$
2,508,796
$
2,321,969
$
2,111,381
$
2,102,733
Total debt/total gross assets
48.6
%
48.1
%
48.2
%
52.4
%
52.6
%
Net debt to Adjusted EBITDA (pro forma)
(b)
8.5
x
8.2
x
8.2
x
9.1x
9.2x
Interest coverage
3.4
x
3.1
x
3.2
x
3.0
x
2.8
x
Common shares and OP Units:
Shares outstanding
105,109,649
102,033,733
101,803,762
94,823,806
94,741,146
OP units outstanding
552,360
674,515
674,517
701,986
789,134
Common shares and OP units outstanding
105,662,009
102,708,248
102,478,278
95,525,792
95,530,279
Weighted average common shares and
units
102,584,809
102,353,380
95,529,788
95,227,176
95,224,855
(a)
Same store portfolio consists of 53
properties, which represent 14,843 units.
(b)
Reflects pro forma net debt to
Adjusted EBITDA for each period presented, which includes
adjustments for the timing of acquisitions, the full quarter effect
of current value add initiatives, the completion of capital
recycling activities including paydown of associated indebtedness,
and the normalization of items impacting quarterly EBITDA. Actual
net debt to Adjusted EBITDA for the five quarters ended June 30,
2021 was 9.1x, 8.9x, 8.3x, 9.3x, and 9.7x, respectively.
(c)
Reflects adjustment to prior
periods to conform to our current definition of CFFO. See our
definition of CFFO for additional discussion.
(d)
Includes indebtedness associated
with real estate held for sale
Schedule II
Independence Realty Trust, Inc.
Reconciliation of Net Income
(loss) to
Funds From Operations and
Core Funds From Operations
(Dollars in thousands, except
share and per share amounts)
(unaudited)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2021
2020
2021
2020
Funds From Operations (FFO):
Net Income (loss)
$
3,407
$
799
$
4,500
$
425
Adjustments:
Real estate depreciation and
amortization
16,683
15,156
33,155
29,881
Funds From Operations
$
20,090
$
15,955
$
37,655
$
30,306
FFO per share
$
0.20
$
0.17
$
0.37
$
0.32
Core Funds From Operations
(CFFO):
Funds From Operations
$
20,090
$
15,955
$
37,655
$
30,306
Adjustments:
Other depreciation and amortization
80
75
160
178
Abandoned deal costs
—
—
—
130
Casualty losses
—
411
359
411
Core Funds From Operations
$
20,170
$
16,441
$
38,174
$
31,025
CFFO per share
$
0.20
$
0.17
$
0.37
$
0.33
Weighted-average shares and units
outstanding
102,584,809
95,224,855
102,465,624
93,462,270
Schedule III
Independence Realty Trust, Inc.
Reconciliation of Same-Store Net
Operating Income to Net Income (loss)
(Dollars in thousands)
(unaudited)
For the Three-Months Ended
(a)
June 30, 2021
March 31, 2021
December 31, 2020
September 30, 2020
June 30, 2020
Reconciliation of same-store net
operating income to net income (loss)
Same-store net operating income
$
32,043
$
31,481
$
31,546
$
29,545
$
29,249
Non same-store net operating income
2,945
2,492
2,239
2,327
1,864
Other revenue
158
301
165
199
181
Property management expenses
(2,176
)
(1,943
)
(2,183
)
(2,078
)
(2,077
)
General and administrative expenses
(4,241
)
(5,942
)
(3,233
)
(2,912
)
(3,574
)
Depreciation and amortization expense
(16,763
)
(16,552
)
(15,396
)
(15,232
)
(15,231
)
Interest expense
(8,559
)
(8,385
)
(8,872
)
(8,917
)
(9,202
)
Casualty losses
—
(359
)
(300
)
—
(411
)
Gain on sale (loss on impairment) of real
estate assets, net
—
—
9,394
(1,840
)
—
Net income (loss)
$
3,407
$
1,093
$
13,360
$
1,092
$
799
(a)
Same store portfolio includes 53
properties, which represent 14,843 units.
Schedule IV
Independence Realty Trust, Inc.
Reconciliation of Net Income
(Loss) to Adjusted EBITDA
And Interest Coverage Ratio
(Dollars in thousands)
(unaudited)
Three Months Ended
ADJUSTED EBITDA:
June 30, 2021
March 31, 2021
December 31, 2020
September 30, 2020
June 30, 2020
Net income (loss)
$
3,407
$
1,093
$
13,360
$
1,092
$
799
Add-Back (Deduct):
Depreciation and amortization
16,763
16,552
15,396
15,232
15,231
Interest expense
8,559
8,385
8,872
8,917
9,202
Net loss on impairment (gain on sale) of
real estate assets
—
—
(9,394
)
1,840
—
Casualty losses
—
359
300
—
411
Adjusted EBITDA
$
28,729
$
26,389
$
28,534
$
27,081
$
25,643
INTEREST COST:
Interest expense
$
8,559
$
8,385
$
8,872
$
8,917
$
9,202
INTEREST COVERAGE:
3.4
x
3.1
x
3.2
x
3.0
x
2.8
x
Schedule V Independence Realty Trust, Inc.
Definitions
Average Effective Monthly Rent per Unit
Average effective rent per unit represents the average of gross
rent amounts, divided by the average occupancy (in units) for the
period presented. We believe average effective rent is a helpful
measurement in evaluating average pricing. This metric, when
presented, reflects the average effective rent per month.
Average Occupancy
Average occupancy represents the average occupied units for the
reporting period divided by the average of total units available
for rent for the reporting period.
EBITDA and Adjusted EBITDA
Each of EBITDA and Adjusted EBITDA is a non-GAAP financial
measure. EBITDA is defined as net income before interest expense
including amortization of deferred financing costs, income tax
expense, and depreciation and amortization expenses. Adjusted
EBITDA is EBITDA before certain other non-cash or non-operating
gains or losses related to items such as asset sales, debt
extinguishments and acquisition related debt extinguishment
expenses, casualty losses, and abandoned deal costs. We consider
each of EBITDA and Adjusted EBITDA to be an appropriate
supplemental measure of performance because it eliminates interest,
income taxes, depreciation and amortization, and other non-cash or
non-operating gains and losses, which permits investors to view
income from operations without these non-cash or non-operating
items. Our calculation of Adjusted EBITDA differs from the
methodology used for calculating Adjusted EBITDA by certain other
REITs and, accordingly, our Adjusted EBITDA may not be comparable
to Adjusted EBITDA reported by other REITs.
Funds From Operations (“FFO”) and Core Funds From Operations
(“CFFO”)
We believe that FFO and Core FFO (“CFFO”), each of which is a
non-GAAP financial measure, are additional appropriate measures of
the operating performance of a REIT and us in particular. We
compute FFO in accordance with the standards established by the
National Association of Real Estate Investment Trusts (“NAREIT”),
as net income or loss allocated to common shares (computed in
accordance with GAAP), excluding real estate-related depreciation
and amortization expense, gains or losses on sales of real estate
and the cumulative effect of changes in accounting principles.
While our calculation of FFO is in accordance with NAREIT’s
definition, it may differ from the methodology for calculating FFO
utilized by other REITs and, accordingly, may not be comparable to
FFO computations of such other REITs.
We updated our definition of CFFO during Q1 2021 to the
definition described below. All prior periods have been adjusted to
conform to the current CFFO definition.
CFFO is a computation made by analysts and investors to measure
a real estate company’s operating performance by removing the
effect of items that do not reflect ongoing property operations,
including depreciation and amortization of other items not included
in FFO, and other non-cash or non-operating gains or losses related
to items such as casualty losses, abandoned deal costs and debt
extinguishment costs from the determination of FFO.
Our calculation of CFFO may differ from the methodology used for
calculating CFFO by other REITs and, accordingly, our CFFO may not
be comparable to CFFO reported by other REITs. Our management
utilizes FFO and CFFO as measures of our operating performance, and
believe they are also useful to investors, because they facilitate
an understanding of our operating performance after adjustment for
certain non-cash or non-recurring items that are required by GAAP
to be expensed but may not necessarily be indicative of current
operating performance and our operating performance between
periods. Furthermore, although FFO, CFFO and other supplemental
performance measures are defined in various ways throughout the
REIT industry, we believe that FFO and CFFO may provide us and our
investors with an additional useful measure to compare our
financial performance to certain other REITs. Neither FFO nor CFFO
is equivalent to net income or cash generated from operating
activities determined in accordance with GAAP. Furthermore, FFO and
CFFO do not represent amounts available for management’s
discretionary use because of needed capital replacement or
expansion, debt service obligations or other commitments or
uncertainties. Accordingly, FFO and CFFO do not measure whether
cash flow is sufficient to fund all of our cash needs, including
principal amortization and capital improvements. Neither FFO nor
CFFO should be considered as an alternative to net income or any
other GAAP measurement as an indicator of our operating performance
or as an alternative to cash flow from operating, investing, and
financing activities as a measure of our liquidity.
Interest Coverage
Interest coverage is a ratio computed by dividing Adjusted
EBITDA by interest expense.
Net Debt
Net debt, a non-GAAP financial measure, equals total debt less
cash and cash equivalents. The following table provides a
reconciliation of total debt to net debt (Dollars in
thousands).
We present net debt because management believes it is a useful
measure of our credit position and progress toward reducing
leverage. The calculation is limited because we may not always be
able to use cash to repay debt on a dollar for dollar basis.
As of
June 30, 2021
March 31, 2021
December 30, 2020
September 30, 2020
June 30, 2020
Total debt (a)
$
1,056,463
$
947,631
$
945,686
$
1,004,237
$
1,008,911
Less: cash and cash equivalents
(7,566
)
(8,653
)
(8,751
)
(9,891
)
(11,652
)
Total net debt
$
1,048,897
$
938,978
$
936,935
$
994,346
$
997,259
(a)
Includes indebtedness associated
with real estate held for sale.
Same Store Portfolio Net Operating Income
We believe that Net Operating Income (“NOI”), a non-GAAP
financial measure, is a useful measure of our operating
performance. We define NOI as total property revenues less total
property operating expenses, excluding depreciation and
amortization, casualty related costs, property management expenses,
general administrative expenses, interest expense, and net gains on
sale of assets.
Other REITs may use different methodologies for calculating NOI,
and accordingly, our NOI may not be comparable to other REITs. We
believe that this measure provides an operating perspective not
immediately apparent from GAAP operating income or net income. We
use NOI to evaluate our performance on a same store and non same
store basis because NOI measures the core operations of property
performance by excluding corporate level expenses and other items
not related to property operating performance and captures trends
in rental housing and property operating expenses. However, NOI
should only be used as an alternative measure of our financial
performance.
Same Store Properties and Same Store Portfolio
We review our same store portfolio at the beginning of each
calendar year. Properties are added into the same store portfolio
if they were owned at the beginning of the previous year.
Properties that are held-for-sale or have been sold are excluded
from the same store portfolio.
Total Gross Assets
Total Gross Assets equals total assets plus accumulated
depreciation and accumulated amortization, including fully
depreciated or amortized real estate and real estate related
assets. The following table provides a reconciliation of total
assets to total gross assets (Dollars in thousands).
As of
June 30, 2021
March 31, 2021
December 30, 2020
September 30, 2020
June 30, 2020
Total assets
$
1,875,122
$
1,728,016
$
1,734,897
$
1,700,428
$
1,708,912
Plus: accumulated depreciation
237,684
223,187
208,618
200,258
187,758
Plus: accumulated amortization
20,215
19,776
19,380
19,827
19,754
Total gross assets
$
2,133,021
$
1,970,979
$
1,962,895
$
1,920,513
$
1,916,424
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210726005757/en/
Independence Realty Trust, Inc. Contact Edelman Financial
Communications & Capital Markets Ted McHugh and Lauren Torres
917-365-7979 IRT@edelman.com
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