Executed five capital recycling transactions,
selling three communities held for sale and acquiring two
high-quality communities in attractive submarkets
5.6% increase year-over-year in same-store
net operating income for the second quarter 2017
Completed the shared services period with
RAIT Financial Trust to become fully internalized
Transferred listing to the New York Stock
Exchange effective July 31
Independence Realty Trust, Inc. (“IRT”) (NYSE:IRT), a
multi-family apartment REIT, today announced its second quarter
2017 financial results.
Results for the Quarter
- Net income available to common
shareholders was $18.7 million for the quarter ended June 30, 2017
as compared to $29.0 million for the quarter ended June 30,
2016.
- Core Funds from Operations (“CFFO”) per
share of $0.19 for the quarter ended June 30, 2017 as compared to
$0.22 for the quarter ended June 30, 2016.
- Adjusted EBITDA of $19.5 million for
the quarter ended June 30, 2017 as compared to $18.7 million for
the quarter ended June 30, 2016.
Same-Store Property Operating Results
Second Quarter 2017Compared to Second
Quarter 2016(1)
Rental income 3.9% increase Total revenues
4.3% increase Property level operating expenses
2.2% increase Net operating income (“NOI”)
5.6% increase Portfolio average occupancy 60 bps
increase to 95.0% Portfolio average rental rate 3.3%
increase to $1,013 NOI Margin 80 bps increase to
60.6%
(1) Same store portfolio for the three months
ended June 30, 2017 and 2016 includes 42 properties which
represents 11,676 units.
Property Acquisitions
- On June 30, 2017, IRT acquired a
328-unit apartment community located in Durham, NC for a purchase
price of $42.95 million, primarily using available cash and its
line of credit to fund the acquisition. The apartment community was
constructed in 2002. The community is located in the South Durham
submarket; one of the fastest growing submarkets by rent growth in
the Raleigh-Durham area, and contains one, two, and three-bedroom
units with an average unit size of 1,208 square feet.
- On May 24, 2017, IRT acquired a
160-unit apartment community in Lexington, KY for $14.2 million
using available cash and its line of credit to fund the
acquisition. The apartment community was constructed in 2001. The
community is located in Georgetown, part of the Lexington, KY
submarket known as Scott County, and contains one, two and
three-bedroom units with an average unit size of 1,206 square
feet.
Dispositions
- In the quarter ended June 30, 2017, we
sold three class C communities: a 320-unit community in Austin, TX
on May 5, a 200-unit community in Newport News, Virginia on June 1,
and a 354-unit community in Indianapolis, Indiana on June 9, for a
combined sale price of $59.6 million. IRT recognized a gain of
approximately $16.1 million associated with the sales in the
quarter ending June 30, 2017. All of the communities were
previously classified as held for sale.
“In the second quarter of 2017, we executed on the goals we
outlined from the beginning of our transformative management
internalization,” said Scott Schaeffer, IRT’s Chairman and CEO.
“Through our five capital recycling transactions, we strengthened
our portfolio by maintaining our simple portfolio investment
strategy targeting middle-market communities in economically
attractive sub-markets. This approach continues to demonstrate
value, with 5.6% year-over-year same-store NOI growth for the
second quarter and 5.4% for the first half of the year. Looking
forward, we will continue to seek out accretive opportunities that
align with our portfolio composition while maximizing value for our
shareholders.”
Capital Expenditures
For the three months ended June 30, 2017, recurring capital
expenditures for the total portfolio was $1.9 million, or $142 per
unit.
New Line of Credit Refinancing
As previously announced, on May 1, 2017, IRT closed on a new
$300.0 million unsecured credit facility refinancing the previous
secured credit facility. The new facility is comprised of a $50.0
million term loan and a revolving commitment of up to $250.0
million. The maturity date on the new term loan is May 1, 2022 and
the maturity date on borrowings outstanding under the revolving
commitment is May 1, 2021, extending the September 17, 2018
maturity of the previous secured credit facility. Borrowings under
the revolving commitment can be extended through two, six-month
extension options. The new unsecured credit facility also provides
for an accordion feature allowing for an additional $200 million of
capacity resulting in a maximum borrowing capacity of $500 million,
a portion of which may be drawn as an incremental term loan with a
maturity date of five years from the date of such draw. The
exercise of the accordion is subject to customary terms and
conditions. Based on our leverage levels as of closing, IRT’s
annual interest cost would be LIBOR plus 145 basis points under the
term loan and LIBOR plus 150 basis points for borrowings
outstanding under the revolving commitments, an annual savings of
approximately 35 to 40 basis points from IRT’s previous secured
credit facility. The new facility is unsecured and improves IRT’s
flexibility to effectively manage its assets by creating a pool of
unencumbered assets.
2017 EPS and CFFO Guidance
IRT is amending its 2017 full year EPS and CFFO guidance. EPS
per diluted share is projected to be in a range of $0.54 to $0.57,
compared to $0.40 to $0.44 previously, and CFFO per diluted share
is projected to be in the range of $0.73 to $0.76, compared to
$0.72 to $0.76 previously. A reconciliation of IRT's projected net
income (loss) allocable to common shares to its projected CFFO per
share, a non-GAAP financial measure, is included below. Also
included below are the primary assumptions underlying this
estimate. See Schedule II to this release for further information
regarding how IRT calculates CFFO and Schedule V to this release
for management’s definition and rationale for the usefulness of
CFFO.
2017 Full Year EPS and CFFO
Guidance (1) Low
High Net income (loss) available to common
shares $ 0.54 $ 0.57 Earnings per share $ 0.54 $ 0.57
2017 EPS and CFFO Guidance Net income (loss)
available to common shares $ 0.54 $ 0.57 Adjustments: Depreciation
and amortization 0.42 0.42 Gains on asset sales (0.29 ) (0.29 )
Share base compensation 0.03 0.03 Amortization of deferred
financing fees 0.03 0.03 CORE FFO per
diluted share allocated to common shareholders $ 0.73 $ 0.76
(1) This guidance, including the underlying
assumptions, constitutes forward-looking information. Actual full
2017 EPS and CFFO could vary significantly from the projections
presented. See “Forward-Looking Statements” below. Our estimate is
based on the following key operating assumptions for IRT’s 2017
performance:
Same Store Communities Revised 2017
Outlook Previous 2017 Outlook
Number of properties/units 42 properties /11,676 units 42
properties/11,676 units Property revenue growth 4.0% to 4.5% 3.5%
to 4.5% Controllable property operating expense growth 1.6% to 2.0%
1.5% to 2.5% Real estate tax and insurance expense increase 4.5% to
5.5% 6.5% to 7.5% Property NOI growth 4.5% to 5.5% 3.5% to 4.5%
Corporate Expenses General and administrative
expenses
(excluding stock based compensation)
$7.3 to $7.7 million $7.0 to $8.0 million
Transaction/Investment Volume Acquisition volume $87 million
$75 to $100 million Disposition volume $87 million $75 to $100
million
Capital Expenditures Recurring $6.5 to $6.8
million $6.0 to $7.0 million Value Add $5.5 to $6.0 million $5.0 to
$6.0 million
Selected Financial Information
See Schedule I to this Release for selected financial
information for IRT.
Completed Internalization
On June 20, 2017, IRT ended its use of shared services
previously provided by RAIT Financial Trust (“RAIT”) and has fully
completed its previously disclosed management internalization. As
announced on December 20, 2016, IRT entered into a shared service
agreement in which RAIT provided IRT certain transitional services
such as information technology, human resources, insurance,
investor relations, legal, tax and accounting for a transition
period after the closing.
Non-GAAP Financial Measures and Definitions
IRT discloses the following non-GAAP financial measures in this
release: FFO, CFFO, Adjusted EBITDA and NOI. A reconciliation of
IRT’s reported net income (loss) to its FFO and CFFO is
included as Schedule II to this release. A reconciliation of
IRT’s same store NOI to its reported net income (loss) is
included as Schedule III to this release. A reconciliation of
IRT’s Adjusted EBITDA, to net income (loss) is included as
Schedule IV to this release. See Schedule V to this release
for management’s respective definitions and rationales for the
usefulness of each of these non-GAAP financial measures and other
definitions used in this release.
Distributions
On July 14, 2017, IRT’s Board of Directors declared monthly cash
dividends for the third quarter of 2017 on IRT’s shares of common
stock in the amount of $0.06 per share per month. The monthly
dividends total $0.18 per share for the third quarter. The month
for which each dividend was declared is set forth below, with the
relevant amount per share, record date and payment date set forth
opposite the month:
Month Amount Record Date
Payment Date July 2017 $0.06 07/31/2017 08/15/2017
August 2017 $0.06 08/31/2017 09/15/2017 September 2017 $0.06
09/29/2017 10/13/2017
Conference Call
All interested parties can listen to the live conference call
webcast at 9:30 AM ET on Tuesday, August 1, 2017 from the investor
relations section of the IRT website at www.irtliving.com or by
dialing 1.844.775.2542, access code 57009266. 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 Tuesday, August 8, 2017,
by dialing 1.855.859.2056, access code 57009266.
Supplemental Information
IRT produces 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 the Company's website, www.irtliving.com, through the
"Investor Relations" section.
About Independence Realty Trust, Inc.
Independence Realty Trust (NYSE: IRT) is a real estate
investment trust that owns and operates 46 multifamily apartment
properties, totaling 12,812 units, across non-gateway U.S. markets,
including Louisville, Memphis, Atlanta and Raleigh. 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 of capital through distributions and capital
appreciation.
Forward-Looking Statements
This press release may contain 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
“may,” “will,” “expect,” “intend,” “anticipate,” “estimate,”
“believe,” “seek,” “outlook,” “assumption,” “projected,”
“strategy”, “guidance” or other similar words. Because such
statements include risks, uncertainties and contingencies, 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 IRT’s
management and are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of
which are difficult to predict and generally not within IRT’s
control. In addition, these forward-looking statements are subject
to assumptions with respect to future business strategies and
decisions that are subject to change. Such forward-looking
statements include, but are not limited to, IRT’s 2017 EPS and CFFO
guidance; the assumptions underlying such guidance; the anticipated
benefits and the expected financial impact of IRT’s internalization
of its management; changes in financial markets and interest rates,
or to the business or financial condition of IRT; changes in market
demand for rental apartment homes and competitive pricing from
projected apartment industry dynamics, demographic and employment
information; IRT’s maintenance of real estate investment trust
(“REIT”) status; availability of financing and capital; dividends
are subject to the discretion of IRT’s Board of Directors, and will
depend on IRT’s financial condition, results of operations, capital
requirements, compliance with applicable laws and agreements and
any other factors deemed relevant by IRT’s Board; risks associated
with pursuing additional strategic acquisitions, including risks
associated with the need to raise additional capital to fund the
acquisitions; and those additional risks and factors discussed in
reports filed with the Securities and Exchange Commission (“SEC”)
by IRT from time to time, including those discussed under the
heading “Risk Factors” in IRT’s most recently filed reports on
Forms 10-K and 10-Q. IRT undertakes 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 share and
per share amounts)
(unaudited)
As of or For the Three-Month Periods Ended
June 30,2017
March 31,2017
December 31,2016
September 30,2016
June 30,2016
Operating Statistics: Net income available to common shares
$ 18,739 $ 4,077 $ (40,980 ) $ 2,267 $ 28,987 Earnings (loss) per
share -- diluted $ 0.27 $ 0.06 $ (0.61 ) $ 0.05 $ 0.61 Total
property revenue $ 39,431 $ 38,895 $ 38,002 $ 38,364 $ 38,327 Total
property operating expenses $ 15,918 $ 15,992 $ 15,560 $ 16,107 $
15,623 Net operating income ("NOI") $ 23,513 $ 22,903 $ 22,442 $
22,257 $ 22,704 NOI margin 59.6 % 58.9 % 59.1 % 58.0 % 59.2 %
Adjusted EBITDA $ 19,493 $ 19,512 $ 18,544 $ 18,373 $ 18,688 Funds
from operations ("FFO") per share -- diluted $ 0.12 $ 0.17 $ (0.50
) $ 0.20 $ 0.18
Core funds from operations ("CFFO")
per share -- diluted
$ 0.19 $ 0.18 $ 0.17 $ 0.21 $ 0.22 Dividends per share $ 0.18 $
0.18 $ 0.18 $ 0.18 $ 0.18 CORE FFO payout ratio 94.7 % 100.0 %
105.9 % 85.7 % 81.8 %
Portfolio Data: Total gross assets $
1,400,864 $ 1,390,589 $ 1,370,243 $ 1,374,353 $ 1,368,217 Total
number of properties 46 47 46 46 46 Total units 12,812 13,198
12,982 12,982 12,982 Period end occupancy 94.5 % 94.7 % 94.5 % 94.3
% 93.7 % Average occupancy 94.9 % 93.8 % 93.8 % 94.1 % 94.4 %
Average monthly effective rent, per unit $ 1,010 $ 978 $ 977 $ 977
$ 961 Same store period end occupancy 94.6 % 94.8 % 93.9 % 93.7 %
94.3 % Same store portfolio average occupancy
(a) 95.0 %
93.9 % 93.7 % 94.3 % 94.4 %
Same store portfolio average effective
monthly rent (a)
$ 1,013 $ 1,007 $ 998 $ 999 $ 981
Capitalization: Total debt
$ 764,521 $ 765,695 $ 743,817 $ 880,581 $ 880,288 Common share
price, period end $ 9.87 $ 9.37 $ 8.92 $ 9.00 $ 8.18 Market equity
capitalization $ 712,413 $ 674,591 $ 641,393 $ 453,823 $ 412,493
Total market capitalization $ 1,476,934 $ 1,440,286 $ 1,385,210 $
1,334,404 $ 1,292,781 Total debt/total gross assets 54.6 % 55.1 %
54.3 % 64.1 % 64.3 % Net debt to adjusted EBITDA 9.7 x (b) 9.7 x
9.7 x 11.6 x 11.4 x Interest coverage 2.7 x 2.6 x 2.4 x 2.1 x 2.1 x
Common shares and OP Units: Shares outstanding 69,143,955
69,125,681 68,996,070 47,509,731 47,476,250 OP units outstanding
3,035,654 2,869,050 2,908,949 2,915,008
2,950,816 Common shares and OP units outstanding 72,179,609
71,994,731 71,905,019 50,424,739 50,427,066 Weighted average common
shares and units 71,703,735 71,656,205 70,036,948 50,229,637
50,134,620 (a) Same store includes 42 properties
which represents 11,676 units. (b) Net debt to adjusted EBITDA
would be 9.5x if adjusted for acquisitions and dispositions that
occurred during the second quarter of 2017.
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 EndedJune
30,
For the Six Months EndedJune
30,
2017 2016 2017
2016 Amount Amount Amount Amount
Funds From Operations (FFO): Net Income (loss) $ 19,521 $
30,790 $ 23,766 $ 30,744 Adjustments: Real estate depreciation and
amortization 7,987 7,635 15,582 19,162
Net (gains) losses on sale of assets
excludingdefeasance costs
(18,798 ) (29,321 ) (18,713 ) (33,170 )
Funds From Operations $ 8,710 $ 9,104 $ 20,635 $ 16,736
FFO per
share--diluted 0.12 0.18 0.29 0.33
Core Funds From Operations (CFFO): Funds From Operations
8,710 9,104 20,635 16,736 Adjustments: Stock compensation expense
738 380 1,126 585 Amortization of deferred financing costs 359 749
878 1,946 Acquisition and integration expenses 265 8 387 18 Other
depreciation and amortization 24 - 36 - Hedge ineffectiveness 12 -
12 - (Gains) losses on extinguishment of debt 572 558 572 558
Defeasance costs included in net gains
(losses) onsale of assets
2,748 - 2,748 1,396 Gains (losses) on TSRE merger - -
- (91 ) Core Funds From Operations $ 13,428 $ 10,799
$ 26,394 $ 21,148
CFFO per share--diluted 0.19 0.22 0.37
0.42 Weighted-average shares and units outstanding
71,703,735 50,134,620 71,680,542 50,089,389
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
June 30,2017
March 31,2017
December 31,2016
September 30,2016
June 30,2016
Reconciliation of same-store
netoperating income to net income(loss)
Same store $ 21,943 $ 21,208 $ 21,011 $ 20,823 $ 20,779 Non same
store 1,570 1,695 1,431 1,434 1,925 Property management income 130
247 29 — — Property management expenses (1,444 ) (1,538 ) (1,137 )
(1,219 ) (1,229 )
General and administrativeexpenses
(2,706 ) (2,100 ) (2,790 ) (2,665 ) (2,787 )
Acquisition and integration expenses
(265 ) (122 ) (6 ) (19 ) (8 )
Depreciation and amortizationexpense
(8,011 ) 7,607 (7,897 ) (7,765 ) (7,635 ) Interest expense (7,162 )
(7,448 ) (7,720 ) (8,820 ) (9,018 ) Hedge ineffectiveness (12 ) — —
— — Other income (expense) — (5 ) (2 ) (2 ) — Net gains (losses) on
sale of assets 16,050 (85 ) 3 (1 ) 29,321
Gains (losses) on extinguishment
ondebt
(572 ) — (652 ) — (558 ) Gains (losses) on TSRE merger — — — 641 —
Management internalization expense — — (44,976
) — —
Net income (loss) $ 19,521 $ 4,245 $
(42,706 ) $ 2,407 $ 30,790 (a) Same store portfolio
includes 42 properties which represents 11,676 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 30,2017
March 31,2017
December 31,2016
September 30,2016
June 30,2016
Net income (loss) $ 19,521 $ 4,245 $ (42,706 ) $ 2,407 $
30,790 Add-Back (Deduct): Depreciation and amortization 8,011 7,607
7,897 7,765 7,635 Interest expense 7,162 7,448 7,720 8,820 9,018
Hedging ineffectiveness 12 — — — — Other (income) expense — 5 2 2 —
Acquisition and integration expenses 265 122 6 19 8 Net (gains)
losses on sale of assets (16,050 ) 85 (3 ) 1 (29,321 ) (Gains)
losses on extinguishment of debt 572 — 652 — 558 Management
internalization expense — — 44,976 — — Gains (losses) on TSRE
merger — — — (641 ) —
Adjusted EBITDA $ 19,493 $ 19,512 $ 18,544 $ 18,373 $ 18,688
INTEREST COST: Interest expense $ 7,162 $ 7,448 $
7,720 $ 8,820 $ 9,018
INTEREST COVERAGE: 2.7 x 2.6 x
2.4 x 2.1 x 2.1 x
Three Months Ended June
30, Six Months Ended June 30, ADJUSTED
EBITDA: 2017 2016 2017 2016
Net income (loss) $ 19,521 $ 30,790 $ 23,766 $ 30,744
Add-Back (Deduct): Depreciation and amortization 8,011 7,635 15,618
19,162 Interest expense 7,162 9,018 14,610 18,995 Hedging
ineffectiveness 12 — 12 — Other (income) expense — — 5 —
Acquisition and integration expenses 265 8 387 18 Net (gains)
losses on sale of assets (16,050 ) (29,321 ) (15,965 ) (31,774 )
(Gains) losses on extinguishment of debt 572 558 572 558 Management
internalization expense — — — — Gains (losses) on TSRE merger
— — — (91 )
Adjusted EBITDA $
19,493 $ 18,688 $ 39,005 $ 37,612
INTEREST COST:
Interest expense $ 7,162 $ 9,018 $ 14,610 $ 18,995
INTEREST COVERAGE: 2.7 x 2.1 x 2.7 x 2.0 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 of the daily physical
occupancy for the period presented.
Adjusted EBITDA
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 acquisition and integration expenses and
certain other non-operating gains or losses related to items such
as asset sales, debt extinguishments, gains on the TSRE merger, and
management internalization expenses. EBITDA and Adjusted EBITDA are
each non-GAAP measures. We consider EBITDA and Adjusted EBITDA to
be an appropriate supplemental measure of our performance because
it eliminates interest, income taxes, depreciation and
amortization, acquisition and integration expenses and other
non-operating gains and losses, which permits investors to view
income from operations without these non-cash or non-operating
items. The table is a reconciliation of net income applicable to
common stockholders to Adjusted EBITDA. IRT’s calculation of
Adjusted EBITDA differs from the methodology used for calculating
Adjusted EBITDA by certain other REITs and, accordingly, IRT’s
Adjusted EBITDA may not be comparable to Adjusted EBITDA reported
by other REITs.
Funds From Operations (“FFO”) and Core Funds From Operations
(“CFFO”)
IRT believes that FFO and CFFO, each of which is a non-GAAP
measure, are additional appropriate measures of the operating
performance of a REIT and IRT in particular. IRT computes FFO in
accordance with the standards established by the National
Association of Real Estate Investment Trusts, or NAREIT, as net
income or loss (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.
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 stock compensation expense, depreciation and amortization
of other items not included in FFO, amortization of deferred
financing costs, acquisition and integration expenses, and other
non-operating gains or losses related to items such as hedge
ineffectiveness, defeasance costs we incur when we sell a property
subject to secured debt, asset sales, debt extinguishments, gains
on the TSRE merger, and management internalization expenses, from
the determination of FFO. IRT incurs acquisition expenses in
connection with acquisitions of real estate properties and expenses
those costs when incurred in accordance with U.S. GAAP. As these
expenses are one-time and reflective of investing activities rather
than operating performance, IRT adds back these costs to FFO in
determining CFFO.
IRT’s calculation of CFFO differs from the methodology used for
calculating CFFO by certain other REITs and, accordingly, IRT’s
CFFO may not be comparable to CFFO reported by other REITs. IRT’s
management utilizes FFO and CFFO as measures of IRT’s operating
performance, and believes they are also useful to investors,
because they facilitate an understanding of IRT’s operating
performance after adjustment for certain non-cash or non-operating
items that are required by GAAP to be expensed but may not
necessarily be indicative of current operating performance and that
may not accurately compare IRT’s operating performance between
periods. Furthermore, although FFO, CFFO and other supplemental
performance measures are defined in various ways throughout the
REIT industry, IRT believes that FFO and CFFO may provide IRT and
our investors with an additional useful measure to compare IRT’s
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. Neither FFO nor CFFO should be considered as an
alternative to net income as an indicator of IRT’s operating
performance or as an alternative to cash flow from operating
activities as a measure of IRT’s liquidity.
Interest Coverage
Interest coverage is a ratio computed by dividing our Adjusted
EBITDA by our interest expense.
Net Debt
Net debt, a non-GAAP measure, equals total debt less cash and
cash equivalents. The following table provides a reconciliation of
total debt to net debt.
IRT presents net debt because management believes it is a useful
measure of IRT’s credit position and progress toward reducing
leverage. The calculation is limited in that IRT may not always be
able to use cash to repay debt on a dollar for dollar basis.
As of
June 30,2017
March 31,2017
December 31,2016
September 30,2016
June 30,2016
Total debt $ 764,521 $ 765,695 $ 743,817 $ 880,581 $ 880,288 Less:
cash and cash equivalents (6,271 ) (10,065 )
(20,892 ) (29,247 ) (28,051 ) Total net debt $
758,250 $ 755,630 $ 722,925 $ 851,334 $ 852,237
Net Operating Income
IRT believes that Net Operating Income (“NOI”), a non-GAAP
measure, is a useful measure of its operating performance. IRT
defines NOI as total property revenues less total property
operating expenses, excluding depreciation and amortization, asset
management fees, property management fees, acquisition expenses and
general administrative expenses. In connection with our management
internalization which was completed in the fourth quarter of 2016,
we modified our calculation of NOI to exclude property management
expenses. We retrospectively adjusted previously reported NOI to
conform to this change. 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
IRT reviews its same store properties or 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.
As of
June 30,2017
March 31,2017
December 31,2016
September 30,2016
June 30,2016
Total assets $ 1,317,177 $ 1,306,986 $ 1,294,237 $ 1,306,242 $
1,307,871 Plus: accumulated depreciation (a) 68,433 68,262 60,719
52,824 45,059 Plus: accumulated amortization 15,254
15,341 15,287 15,287 15,287 Total gross assets
$ 1,400,864 $ 1,390,589 $ 1,370,243 $ 1,374,353 $ 1,368,217
(a) Includes previously recognized depreciation on
properties that are classified as held-for-sale
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version on businesswire.com: http://www.businesswire.com/news/home/20170801005554/en/
Independence Realty Trust, Inc.Edelman Financial
Communications & Capital MarketsTed McHugh and Lauren
Tarola212-277-4322IRT@edelman.com
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