Independence Realty Trust, Inc. (“IRT”) (NYSE: IRT), a
multifamily apartment REIT, today announced its second quarter 2024
financial results and raised the midpoint of its full year 2024
same store NOI, EPS, and Core FFO guidance ranges.
Second Quarter Highlights
- Net income available to common shares of $10.4 million for the
quarter ended June 30, 2024 compared to $10.7 million for the
quarter ended June 30, 2023.
- Earnings per diluted share of $0.05 for the quarter ended June
30, 2024 compared to $0.05 for the quarter ended June 30,
2023.
- Same-store portfolio net operating income (“NOI”) growth of
2.8% for the quarter ended June 30, 2024 compared to the quarter
ended June 30, 2023.
- Core Funds from Operations (“CFFO”) of $63.6 million for the
quarter ended June 30, 2024 compared to $63.7 million for the
quarter ended June 30, 2023. CFFO per share was $0.28 for the
second quarter of 2024, as compared to $0.28 for the second quarter
of 2023.
- Adjusted EBITDA of $83.6 million for the quarter ended June 30,
2024 compared to $89.2 million for the quarter ended June 30,
2023.
- Value add program completed renovations at 378 units during the
quarter ended June 30, 2024, achieving a weighted average return on
investment during the quarter of 15.7%.
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, as
well as, discussion of our same-store methodology.
Management Commentary
“Our results for the second quarter of 2024 highlight our
strategy of driving occupancy, which was up 120 basis points
year-over-year,” said Scott Schaeffer, Chairman and CEO of IRT.
“While industry-wide factors impacted our ability to achieve
expected rental rate growth during the first half of this year, we
stayed focused on resident retention and occupancy and delivered
3.6% revenue growth with 2.8% same store NOI growth. For the
remainder of this year, we are increasing the mid-point of our
full-year NOI and Core FFO guidance given our view of stable
occupancy and our ability to drive lower operating expenses.
Overall, we are confident in our team’s ability to achieve these
results and believe IRT remains well-positioned in the multifamily
sector due to our attractive portfolio which continues to see
strong fundamentals.”
Same-Store Portfolio(1) Operating Results
Three Months Ended June 30,
2024
Compared to
Three Months Ended June 30,
2023
Six Months Ended June 30,
2024
Compared to
Six Months Ended June 30,
2023
Rental and other property revenue
3.6% increase
3.5% increase
Property operating expenses
4.9% increase
5.0% increase
NOI
2.8% increase
2.6% increase
Portfolio average occupancy
120 bps increase to 95.4%
120 bps increase to 94.9%
Portfolio average rental rate
1.6% increase to $1,555
1.6% increase to $1,553
NOI Margin
40 bps decrease to 61.7%
60 bps decrease to 62.1%
(1)
Same-store portfolio includes 108
properties, which represent 32,153 units.
Operating Metrics
The table below summarizes operating metrics for the same-store
portfolio for the applicable periods.
2Q 2024
July 2024(3)
Same-Store Portfolio(1)
Average Occupancy
95.4
%
95.2
%
(4)
Lease Over Lease Effective Rental Rate
Growth:(2)
New Leases
(1.0
)%
(3.3
)%
(5)
Renewal Leases
3.5
%
2.9
%
(5)
Blended
1.8
%
0.2
%
(5)
Resident Retention Rate
55.8
%
55.4
%
Same-Store Portfolio excluding Ongoing
Value Add
Average Occupancy
95.6
%
95.6
%
(4)
Lease Over Lease Effective Rental Rate
Growth:(2)
New Leases
(1.6
)%
(3.8
)%
Renewal Leases
3.4
%
2.9
%
Blended
1.6
%
0.1
%
Resident Retention Rate
55.3
%
56.0
%
Value Add (26 properties with Ongoing
Value Add)
Average Occupancy
94.8
%
94.3
%
(4)
Lease Over Lease Effective Rental Rate
Growth:(2)
New Leases (all)
1.0
%
(2.2
)%
1st generation renovation leases (6)
6.3
%
5.5
%
Renewal Leases
3.5
%
3.0
%
Blended
2.7
%
0.5
%
Resident Retention Rate
57.3
%
53.8
%
(1)
Same-store portfolio includes 108
properties, which represent 32,153 units.
(2)
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.
(3)
July 2024 average occupancy is through
July 30, 2024. New, renewal, and blended lease rates, and resident
retention are for leases commencing during July 2024 that were
signed as of July 30, 2024.
(4)
As of July 30, 2024, same-store portfolio
occupancy was 95.6%, same-store portfolio excluding ongoing value
add occupancy was 95.9%, and value add occupancy was 94.6%.
(5)
For the full third quarter 2024, we expect
effective rent growth for new leases to be -1.0% to 0.3% and
renewal leases to be 4.25% to 4.75% resulting in blended effective
rent growth of 1.6% to 3.0%.
(6)
1st generation renovation leases are a
subset of new leases at value add properties and represent the
first new lease in a unit after a completed renovation.
Value Add Program
We completed renovations on 378 units during the quarter ended
June 30, 2024, achieving a return on investment of 15.7%, with an
average cost per unit renovated of $18,067, and an average monthly
rent increase per unit of $236 over unrenovated comps. We completed
renovations on 698 units during the six months ended June 30, 2024,
achieving a return on investment of 16.7%, with an average cost per
unit renovated of $18,099, and an average monthly rent increase per
unit of $253 over unrenovated comps. See the Value Add Summary page
of our supplemental information for additional information on our
projects’ life to date as of June 30, 2024.
Investment Activity
Properties Held for Sale and Dispositions
As of June 30, 2024, we had one property classified as held for
sale and had sold one property during the three months ended June
30, 2024.
- Reserve at Creekside, Chattanooga, Tennessee: Sales of
properties under our Portfolio Optimization and Deleveraging
Strategy concluded with the sale of our tenth and final property on
April 30, 2024, for a gross sales price of $28.5 million, and
proceeds from the sale were used to pay outstanding mortgage debt
in the amount of $15.0 million, and $13.3 million in borrowings
under our unsecured revolver. In total, the Portfolio Optimization
and Deleveraging Strategy resulted in the sale of ten properties
for an aggregate gross sales price of $525.3 million and proceeds
from the sales were used to repay $517.1 million of debt.
- Tapestry Park, Birmingham Alabama: During the three months
ended March 31, 2024, in connection with our capital recycling
program, we identified this property as held for sale and
recognized a loss on impairment of $15.1 million. As of June 30,
2024, this property continued to be held for sale and was
subsequently sold on July 17, 2024, for a gross sales price of
$70.8 million. We expect to use the proceeds from this sale as part
of a 1031 exchange to acquire a property in Tampa, Florida during
the third quarter 2024.
Capital Expenditures
For the three months ended June 30, 2024, recurring capital
expenditures for the total portfolio were $8.3 million, or $254 per
unit, value add and non-recurring expenditures for the total
portfolio were $24.8 million and development expenditures for the
total portfolio were $15.4 million, respectively. For the six
months ended June 30, 2024, recurring capital expenditures for the
total portfolio were $13.5 million, or $412 per unit, value add and
non-recurring expenditures for the total portfolio were $46.7
million and development expenditures for the total portfolio were
$26.4 million, respectively.
Dividend Distribution
On June 10, 2024, our Board of Directors declared a quarterly
dividend of $0.16 per share of common stock. The second quarter
dividend was paid on July 19, 2024 to stockholders of record at the
close of business on June 28, 2024.
2024 EPS, FFO and CFFO Guidance
We increased the midpoint of our 2024 earnings per diluted
share, FFO, CFFO per share, and same-store NOI guidance ranges,
while updating our interest expense, transaction volume, and
capital expenditure guidance. Earnings per diluted share is now
projected to be in the range of $0.36 to $0.38. A reconciliation of
IRT's projected net income allocable to common shares to its
projected CFFO per share is included below. See the schedules and
definitions at the end of this release for further information
regarding how IRT calculates CFFO and for management’s definition
and rationale for the usefulness of CFFO.
Previous Guidance
Current Guidance
Change at Midpoint
2024 Full Year EPS and CFFO
Guidance(1)(2)
Low
High
Low
High
Earnings per share
$
0.34
$
0.38
$
0.36
$
0.38
$
0.01
Adjustments:
Depreciation and amortization
0.87
0.87
0.87
0.87
—
Gain on sale of real estate assets(3)
(0.05
)
(0.05
)
(0.05
)
(0.05
)
—
FFO per share
1.16
1.20
1.18
1.20
0.01
Loan (premium accretion) discount
amortization, net
(0.04
)
(0.04
)
(0.04
)
(0.04
)
—
CFFO per share
$
1.12
$
1.16
$
1.14
$
1.16
$
0.01
(1)
This guidance, including the underlying
assumptions presented in the table below, constitutes
forward-looking information. Actual full year 2024 EPS, FFO, and
CFFO could vary significantly from the projections presented. See
“Forward-Looking Statements”. Our guidance is based on the key
guidance assumptions detailed below.
(2)
Per share guidance is based on 230.9
million weighted average shares and units outstanding.
(3)
Gain on sale of real estate assets
includes the gains on sale (losses on impairment) recognized during
the first quarter of 2024.
2024 Guidance Assumptions
Our key guidance assumptions for 2024 are enumerated below. See
the definitions at the end of this release for further information
regarding our same-store definitions.
Same-Store Portfolio
Previous 2024
Outlook(1)
Current 2024
Outlook(1)
Change at Midpoint
Number of properties/units
108 properties / 32,153 units
108 properties / 32,153 units
—
Property revenue growth
3.0% to 4.5%
3.0% to 3.3%
(0.6)%
Controllable operating expense growth
4.9% to 5.9%
4.0% to 4.5%
(1.15)%
Real estate tax and insurance expense
growth
6.1% to 7.1%
0.5% to 1.7%
(5.5)%
Total operating expense growth
5.4% to 6.4%
2.6% to 3.4%
(2.9)%
NOI growth
1.0% to 4.0%
2.7% to 3.7%
0.7%
Corporate Expenses
General and administrative &
property
management expenses
$51.5 million to $54.5
million
$52.5 million to $53.5
million
—
Interest expense(2)
$83.0 million to $85.0
million
$83.0 million to $84.0
million
($0.5) million
Transaction/Investment
Volume(3)
Acquisition volume
$0 to $40 million
$80 million to $82 million
$61.0 million
Disposition volume
$392 million to $396 million
$395 million
$1.0 million
Capital Expenditures
Recurring
$21.0 million to $23.0
million
$21.0 million to $23.0
million
—
Value add & non-recurring
$83.0 million to $85.0
million
$76.0 million to $78.0
million
($7.0) million
Development
$54.5 million to $55.5
million
$54.5 million to $55.5
million
—
(1)
This guidance, including the underlying
assumptions, constitutes forward-looking information. Actual
results could vary significantly from the projections presented.
See “Forward-Looking Statements”.
(2)
Interest expense includes amortization of
deferred financing costs but excludes loan premium accretion, net.
As a result of purchase accounting we recorded loan premiums, net,
that are accreted into and reduce GAAP interest expense over the
remaining term of the associated debt. However, loan premium
accretion is excluded from CFFO.
(3)
Acquisition volume reflects one property
in Tampa, Florida that we expect to acquire in the third quarter of
2024. Disposition volume includes $324.6 million related to the
sale of six properties sold during the six months ended June 30,
2024, and $70.8 million related to one property held for sale as of
June 30, 2024. We continue to evaluate our portfolio for capital
recycling opportunities so actual acquisition and disposition
volume could vary significantly from our projections. We undertake
no duty to update these assumptions. See “Forward-Looking
Statements”.
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
All interested parties can listen to the live conference call
webcast at 9:00 AM ET on Thursday, August 1, 2024 from the investor
relations section of the IRT website at www.irtliving.com or by
dialing 1.888.440.3307, access code 1963990. 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 until the next earnings release. A replay of the
conference call can also be accessed telephonically until Thursday,
August 8, 2024 by dialing 1.800.770.2030, access code 1963990.
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 communities,
across non-gateway U.S. markets including Atlanta, GA, Dallas, TX,
Denver, CO, Columbus, OH, Indianapolis, IN, Raleigh-Durham, NC,
Oklahoma City, OK, Nashville, TN, Houston, TX, and Tampa, FL. IRT’s
investment strategy is focused on gaining scale near major
employment centers within key amenity rich submarkets that offer
good school districts and high-quality retail. 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 the Company’s
website www.irtliving.com.
Forward-Looking Statements
This 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 include, but are not
limited to, our earnings guidance, and the assumptions underlying
such guidance, and anticipated enhancements to our financial
results and future growth from our Portfolio Optimization and
Deleveraging Strategy. All statements in this release that address
financial and operating performance, events or developments that we
expect or anticipate will occur or be achieved in the future are
forward-looking statements.
Our forward-looking statements are not guarantees of future
performance and involve estimates, projections, forecasts and
assumptions, including as to matters that are not within our
control, and are subject to risks and uncertainties including,
without limitation, risks and uncertainties related to changes in
market demand for rental apartment homes and pricing pressures,
including from competitors, 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, unexpected changes in our intention or
ability to repay certain debt prior to maturity, increased costs on
account of inflation, increased competition in the labor market,
failure to realize cost savings, efficiencies and other benefits
that we expect to result from our Portfolio Optimization and
Deleveraging Strategy, inability to sell certain assets, including
those assets designated as held for sale, within the time frames or
at the pricing levels expected, failure to achieve expected
benefits from the redeployment of proceeds from asset sales, delays
in completing, and cost overruns incurred in connection with, our
value add initiatives and failure to achieve rent increases and
occupancy levels on account of the value add initiatives,
unexpected impairments or impairments in excess of our estimates,
increased regulations generally and specifically on the rental
housing market, including legislation that may regulate rents and
fees or delay or limit our ability to evict non-paying residents,
risks endemic to real estate and the real estate industry
generally, the impact of potential outbreaks of infectious diseases
and measures intended to prevent the spread or address the effects
thereof, the effects of natural and other disasters, unknown or
unexpected liabilities, including the cost of legal proceedings,
costs and disruptions as the result of a cybersecurity incident or
other technology disruption, unexpected capital needs, inability to
obtain appropriate insurance coverages at reasonable rates, or at
all, or losses from catastrophes in excess of our insurance
coverages, and share price fluctuations. Please refer to the
documents filed by us with the SEC, including specifically the
“Risk Factors” sections of our Annual Report on Form 10-K for the
year ended December 31, 2023, 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.
These forward-looking statements are based upon the beliefs and
expectations of our management at the time of this release 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. 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.
Schedule I
Independence Realty Trust,
Inc.
Selected Financial
Information
Dollars in thousands, except per
share data
(unaudited)
For the Three Months
Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Selected Financial Information:
Operating Statistics:
Net income (loss) available to common
shares
$10,354
$17,577
$(40,515)
$3,930
$10,709
Earnings (loss) per share -- diluted
$0.05
$0.08
$(0.18)
$0.02
$0.05
Rental and other property revenue
$158,104
$160,331
$166,730
$168,375
$163,601
Property operating expenses
$60,883
$59,971
$59,703
$63,300
$62,071
NOI
$97,221
$100,360
$107,027
$105,075
$101,530
NOI margin
61.5%
62.6%
64.2%
62.4%
62.1%
Adjusted EBITDA
$83,609
$84,683
$95,640
$94,415
$89,156
FFO per share
$0.28
$0.27
$0.31
$0.31
$0.28
CFFO per share
$0.28
$0.27
$0.30
$0.30
$0.28
Dividends per share
$0.16
$0.16
$0.16
$0.16
$0.16
CFFO payout ratio
57.1%
59.3%
53.3%
53.3%
57.1%
Portfolio Data:
Total gross assets
$6,684,029
$6,673,589
$6,960,554
$7,225,447
$7,117,404
Total number of operating properties
(a)
110
111
116
120
119
Total units (a)
32,685
32,877
34,431
35,427
35,249
Portfolio period end occupancy (a)
95.5%
95.0%
94.6%
94.4%
94.6%
Portfolio average occupancy (a)
95.3%
94.4%
94.4%
94.6%
94.1%
Portfolio average effective monthly rent,
per unit (a)
$1,554
$1,550
$1,558
$1,556
$1,538
Same-store portfolio period end occupancy
(b)
95.5%
95.0%
94.7%
94.4%
94.6%
Same-store portfolio average occupancy
(b)
95.4%
94.4%
94.5%
94.5%
94.2%
Same-store portfolio average effective
monthly rent, per unit (b)
$1,555
$1,551
$1,555
$1,548
$1,531
Capitalization:
Total debt (c)
$2,252,559
$2,277,098
$2,549,409
$2,715,710
$2,650,805
Common share price, period end
$18.74
$16.13
$15.30
$14.07
$18.22
Market equity capitalization
$4,330,137
$3,726,224
$3,528,996
$3,245,135
$4,202,342
Total market capitalization
$6,582,696
$6,003,322
$6,078,405
$5,960,845
$6,853,147
Total debt/total gross assets
33.7%
34.1%
36.6%
37.6%
37.2%
Net debt to Adjusted EBITDA (d)
6.5x
6.7x
6.7x
7.0x
7.2x
Interest coverage
4.8x
4.1x
4.1x
4.3x
4.0x
Common shares and OP Units:
Shares outstanding
225,122,235
225,070,396
224,706,731
224,695,566
224,697,889
OP units outstanding
5,941,643
5,941,643
5,946,571
5,946,571
5,946,571
Common shares and OP units outstanding
231,063,878
231,012,039
230,653,302
230,642,137
230,644,460
Weighted average common shares and OP
units
230,734,872
230,570,707
230,452,570
230,444,945
230,369,086
(a)
Excludes our development projects
(Destination at Arista and Flatirons Flats). See the definitions at
the end of this release.
(b)
Same-store portfolio consists of 108
properties, which represent 32,153 units.
(c)
Includes indebtedness associated with real
estate held for sale, as applicable.
(d)
Reflects net debt to Adjusted EBITDA,
which is annualized for each period presented, including
adjustments for the timing of acquisitions and dispositions
impacting quarterly EBITDA. For the five quarters ended June 30,
2024, net debt to Adjusted EBITDA excluding adjustments for timing
of acquisitions and dispositions was 6.6x, 6.5x, 6.5x, 7.0x, and
7.2x, respectively.
Schedule II
Independence Realty Trust,
Inc.
Reconciliation of Net Income
(Loss) to Funds from Operations and Core Funds From Operations
Dollars in thousands, except per
share data
(unaudited)
For the Three Months Ended
June 30,
For the Six Months
Ended
June 30,
2024
2023
2024
2023
Funds From Operations (FFO):
Net income
$
10,555
$
10,988
$
28,515
$
19,861
Add-Back (Deduct):
Real estate depreciation and
amortization
53,757
53,701
107,149
106,989
Our share of real estate depreciation and
amortization
from investments in unconsolidated real
estate entities
598
575
1,196
994
Loss on impairment (gain on sale) of real
estate assets, net,
excluding prepayment gains
336
—
(9,273
)
(314
)
FFO
$
65,246
$
65,264
$
127,587
$
127,530
FFO per share
$
0.28
$
0.28
$
0.55
$
0.55
CORE Funds From Operations
(CFFO):
FFO
$
65,246
$
65,264
$
127,587
$
127,530
Add-Back (Deduct):
Other depreciation and amortization
370
283
701
531
Casualty losses
465
680
2,767
831
Loan (premium accretion) discount
amortization, net
(2,283
)
(2,737
)
(4,679
)
(5,493
)
Prepayment (gains) penalties on asset
dispositions
(184
)
—
(1,105
)
(670
)
Gain on extinguishment of debt
—
—
(203
)
—
Other expense (income), net
—
192
1
234
Restructuring costs
—
—
—
3,213
CFFO
$
63,614
$
63,682
$
125,069
$
126,176
CFFO per share
$
0.28
$
0.28
$
0.54
$
0.55
Weighted-average shares and units
outstanding
230,734,872
230,369,086
230,652,876
230,278,208
Schedule III
Independence Realty Trust,
Inc.
Reconciliation of Net Income
(Loss) to Same-Store Net Operating Income (a)
Dollars in thousands
(unaudited)
For the Three Months
Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Net income (loss)
$
10,555
$
17,961
$
(41,654
)
$
3,986
$
10,988
Other revenue
(298
)
(203
)
(316
)
(232
)
(354
)
Property management expenses
7,666
7,499
6,660
7,232
6,818
General and administrative
expenses
6,244
8,381
5,043
3,660
5,910
Depreciation and amortization
expense
54,127
53,721
55,902
55,546
53,984
Casualty losses
465
2,301
59
35
680
Interest expense
17,460
20,603
23,537
22,033
22,227
Loss on impairment (gain on sale)
of real estate assets, net
152
(10,530
)
56,263
11,268
—
(Gain) loss on extinguishment of debt
—
(203
)
124
—
—
Other loss (income), net
—
1
79
369
72
Loss from investments in
unconsolidated real estate entities
850
829
1,330
1,178
1,205
NOI
$
97,221
$
100,360
$
107,027
$
105,075
$
101,530
Less: Non same-store portfolio NOI
2,293
5,989
9,863
10,123
9,155
Same-store portfolio NOI
$
94,928
$
94,371
$
97,164
$
94,952
$
92,375
(a)
Same-store portfolio consists of 108
properties, which represent 32,153 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
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Net income (loss)
$
10,555
$
17,961
$
(41,654
)
$
3,986
$
10,988
Add-Back (Deduct):
Interest expense
17,460
20,603
23,537
22,033
22,227
Depreciation and amortization
54,127
53,721
55,902
55,546
53,984
Casualty losses
465
2,301
59
35
680
Loss on impairment (gain on sale) of
real estate assets, net
152
(10,530
)
56,263
11,268
—
(Gain) loss on extinguishment of debt
—
(203
)
124
—
—
Loss from investments in
unconsolidated real estate entities
850
829
1,330
1,178
1,205
Other loss (income), net
—
1
79
369
72
Adjusted EBITDA
$
83,609
$
84,683
$
95,640
$
94,415
$
89,156
INTEREST COST:
Interest expense
$
17,460
$
20,603
$
23,537
$
22,033
$
22,227
INTEREST COVERAGE:
4.8x
4.1x
4.1x
4.3x
4.0x
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2024
2023
2024
2023
Net income (loss)
$
10,555
$
10,988
$
28,515
$
19,861
Add-Back (Deduct):
Interest expense
17,460
22,227
38,063
44,351
Depreciation and amortization
54,127
53,984
107,850
107,520
Casualty losses
465
680
2,767
831
Loss on impairment (gain on sale) of
real estate assets, net
152
—
(10,378
)
(985
)
Gain on extinguishment of debt
—
—
(203
)
—
Loss from investments in
unconsolidated
real estate entities
850
1,205
1,679
1,981
Other loss (income), net
—
72
1
(21
)
Restructuring costs
—
—
—
3,213
Adjusted EBITDA
$
83,609
$
89,156
$
168,294
$
176,751
INTEREST COST:
Interest expense
$
17,460
$
22,227
$
38,063
$
44,351
INTEREST COVERAGE:
4.8x
4.0x
4.4x
4.0x
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.
Development Property
A development property is a property that is either currently
under development or is in lease-up prior to reaching overall
occupancy of 90%.
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 loss on impairment (gain
on sale) of real estate, debt extinguishments and acquisition
related debt extinguishment expenses, casualty (gains) losses,
income (loss) from investments in unconsolidated real estate
entities, and restructuring 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 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, loss on impairment (gain on sale) 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.
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 (gains) losses, loan premium accretion
and discount amortization, debt extinguishment costs, and
restructuring 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
consolidated debt less cash and cash equivalents and loan premiums
and discounts. The following table provides a reconciliation of
total consolidated debt to net debt (dollars in thousands).
As of
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Total debt
$
2,252,559
$
2,277,098
$
2,549,409
$
2,715,710
$
2,650,805
Less: cash and cash equivalents
(21,034
)
(21,275
)
(22,852
)
(17,216
)
(14,349
)
Less: loan discounts and premiums, net
(37,253
)
(39,804
)
(44,483
)
(50,772
)
(53,520
)
Total net debt
$
2,194,272
$
2,216,019
$
2,482,074
$
2,647,722
$
2,582,936
We present net debt and net debt to Adjusted EBITDA 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.
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 interest expense,
depreciation and amortization, casualty related costs and gains,
property management expenses, general and administrative expenses,
net gains on sale of assets, and restructuring costs.
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.
Non Same-Store Properties and Non Same-Store
Portfolio
Properties that did not meet the definition of a same-store
property as of the beginning of the previous year.
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 and not a development property at the beginning
of the previous year. Properties that are held for sale or have
been sold are excluded from the same-store portfolio.
Rent Premium on Value Add Renovations
The rent premium reflects the per unit per month difference
between the rental rate on the renovated unit excluding the impact
of upfront concessions, if any, and the market rent for an
unrenovated unit as of the date presented, as determined by
management consistent with its customary rent-setting and
evaluation procedures. We believe excluding the impact of upfront
concessions from our rental rates when comparing to the market
rental rates for unrenovated units makes the comparison most
relevant and the resulting premium provides management with an
indicator of the increased rent generated by the unit
renovation.
Renovation Costs per Unit
Renovation costs per unit includes all costs to renovate the
interior units and make certain exterior renovations, including
clubhouses and amenities. Interior costs per unit are based on
units leased. Exterior costs per unit are based on total units at
the community. Excludes overhead costs to support and manage the
value add program as those costs relate to the entire program and
cannot be allocated to individual projects.
Return on Investment (“ROI”) on Value Add Renovations
ROI is calculated using the Rent Premium per unit per month,
multiplied by 12, divided by the interior renovation costs per unit
or the total renovation costs, as applicable. We use ROI on value
add renovation projects to measure the profitability of a
renovation project relative to other projects or relative to other
uses of our capital.
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
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Total assets
$
5,940,261
$
5,972,848
$
6,280,175
$
6,577,790
$
6,517,400
Plus: accumulated depreciation
(a)
674,236
630,743
606,404
570,966
523,446
Plus: accumulated amortization
69,532
69,998
73,975
76,691
76,558
Total gross assets
$
6,684,029
$
6,673,589
$
6,960,554
$
7,225,447
$
7,117,404
(a)
Includes accumulated depreciation
associated with real estate held for sale, as applicable.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240731692039/en/
Independence Realty Trust, Inc. Edelman Smithfield Ted McHugh
and Lauren Torres 917-365-7979 IRT@edelman.com
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