Creates a leading public multifamily REIT focused on the
high-growth U.S. Sunbelt region; combined company will own
approximately 38,000 apartment units across 131 communities
Creates a top 3 publicly traded multifamily REIT focused on the
Sunbelt region
Merger will join together two high-quality portfolios in
attractive non-gateway markets demonstrating outsized growth
fundamentals
Enhances opportunity to execute proven value-add program and
unlock value across combined portfolio
Increased scale and operational efficiencies expected to
generate approximately $28 million in annual synergies
Expected to be immediately accretive to key earnings metrics
Independence Realty Trust, Inc. (NYSE: IRT) (“IRT”) and
Steadfast Apartment REIT, Inc. (“STAR”) today announced that
they have entered into a definitive merger agreement under which
STAR will merge with and into IRT, with IRT surviving as the
continuing public company. The merger will join together two
high-quality portfolios with complementary geographic footprints in
the highly desirable Sunbelt region of the United States. On a pro
forma basis, the combined company will own a portfolio of 131
apartment communities comprising approximately 38,000 units across
16 states. The combined company is expected to have a pro forma
equity market capitalization of approximately $4 billion and a pro
forma total enterprise value of approximately $7 billion.
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Under the terms of the merger agreement, each STAR common share
will be converted into 0.905 shares of newly issued IRT common
stock, including cash in lieu of fractional shares. On a pro forma
basis, following the merger, IRT stockholders are expected to own
approximately 50% of the combined company’s equity, and STAR
stockholders are expected to own approximately 50%. The parties
currently expect the transaction to close during the fourth quarter
of 2021, subject to customary closing conditions, including
approval of both IRT and STAR stockholders. This strategic
transaction was unanimously approved by the Board of Directors of
IRT and the Board of Directors of STAR.
The proposed merger will create a portfolio of 131 multifamily
apartment properties comprising approximately 38,000 units in urban
and suburban locations in Georgia, North Carolina, Tennessee,
Kentucky, Ohio, Oklahoma, Indiana, Texas, Florida, South Carolina,
Missouri, Alabama, Colorado, Kansas, Illinois, and Virginia. The
combined company’s ten largest markets by unit count would be
Atlanta, Dallas/Ft. Worth, Denver, Oklahoma City, Louisville,
Columbus, Indianapolis, Raleigh-Durham, Houston, and Memphis.
Commenting on the proposed merger, Scott F. Schaeffer, IRT’s
Chairman and CEO, said, “The combination of IRT and STAR’s highly
complementary portfolios will create a leading multifamily REIT in
the attractive Sunbelt region, that we believe will be
well-positioned to unlock significant value and improve our market
diversification. We expect to realize notable economies of scale
and synergies, develop a more competitive operating platform and
further capitalize on our redevelopment initiative. We’re excited
to partner with STAR and welcome their team, as we together plan to
capture many opportunities in our high-growth markets and deliver
value for our stakeholders for years to come.”
Rodney F. Emery, STAR’s CEO, stated “The STAR team is excited
for this milestone, as we engage in this strategic partnership with
IRT. We believe that our business combination will allow us to more
effectively compete in the multifamily sector and realize greater
earnings potential. This is a natural combination that is expected
to uniquely position us to strengthen our presence in U.S.
communities where we see substantial room for growth.”
Summary of Strategic Benefits
The merger of IRT and STAR is expected to create a number of
operational and financial benefits, including:
- Enhanced Portfolio Reach and Diversification Across
High-Growth Sunbelt Markets: The transaction will strengthen
IRT’s diversification across the high-growth Sunbelt region, which
has and is expected to continue to experience strong population and
employment growth trends. The combined company will own and operate
131 multifamily communities in non-gateway MSAs 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. The combination will also add to
the portfolios’ Class B mid-market communities that continue to
demonstrate strong resident demand throughout all points of
economic and real estate cycles.
- Expanded Value Add Pipeline Leading to Significant Organic
Growth and Value Creation Opportunities: The combined company
will have a pipeline of approximately 20,000 units available for
future redevelopment through IRT’s proven and robust value add
program that has generated a historical weighted average return on
investment in excess of 17%. The continued execution of this
expanded redevelopment opportunity is expected to enable IRT to
deliver greater NOI and earnings growth over time.
- Unlock Corporate Synergies and Operational Savings: The
combination of IRT and STAR will create a stronger and more
competitive operating platform through the integration of best
practices from both companies. Annual gross synergies are estimated
to be approximately $28 million, including $20 million of annual
general, administrative and property management synergies through
the elimination of duplicative costs associated with back-office
functions and property management administration. In addition,
through enhanced scale and leveraging of the combined company’s
technology and operating systems, IRT expects the combined company
to capture $8 million in operational synergies annually. These
enhancements are expected to be realized upon full integration,
which is expected to occur over the 12-month period following the
closing of the merger.
- Immediately Accretive: The transaction is expected to be
immediately accretive to IRT’s Core FFO per share and provide the
combined company with an attractive growth profile. Further, the
transaction allows IRT to maintain one of the lowest payout ratios
amongst peers.
- Increased Scale Delivers Value Across Portfolio: The
transaction will create a leading publicly-traded multifamily REIT,
with a combined portfolio of approximately 38,000 units in 131
communities. The combined company is well-positioned to increase
cash flow at the property level due to economies of scale,
including enhanced pricing leverage with strategic partners and
vendors. Further, the increased scale will support IRT’s ongoing
efforts to retain top talent, increase brand recognition in the
multifamily industry, and more effectively compete for acquisition
and development opportunities.
- Increased Financial Strength and Flexibility: Larger
scale is expected to improve IRT’s access to capital markets and
lower its cost of capital over the long-term, with the combined
company benefitting from an expanded investor base through enhanced
trading liquidity.
Leadership and Organization
The combined company is committed to retaining a strong, highly
qualified and diverse board of directors that has the requisite
skills, knowledge and experience to oversee the company and its
long-term strategic growth and performance. Upon completion of the
merger, the size of the board of directors of IRT will be expanded
to 10 members, comprised of five incumbent directors of IRT and
five incumbent directors of STAR. Scott F. Schaeffer will continue
to serve as Chairman of the Board of Directors of the combined
company.
Mr. Schaeffer will continue to lead the combined company as
Chief Executive Officer. James J. Sebra will continue to serve as
Chief Financial Officer of the combined company. Farrell Ender will
continue to serve as President of the combined company. Jessica
Norman, currently IRT’s Executive Vice President and General
Counsel, will serve as Chief Legal Officer of the combined company.
Ella S. Neyland, currently STAR’s President, Chief Financial
Officer and Treasurer, will join the combined company as its Chief
Operating Officer.
Upon completion of the merger, the company will retain the
Independence Realty Trust name and will trade under the ticker
symbol “IRT” (NYSE).
Dividend Policy and Declaration
The timing of the pre-closing dividends of IRT and STAR will be
coordinated such that, if one set of stockholders receives their
dividend for a particular period prior to the closing of the
merger, the other set of stockholders will also receive their
dividend for such period.
IRT intends to maintain its current dividend level
post-closing.
Advisors
Barclays is acting as lead financial advisor and BMO Capital
Markets is acting as financial advisor, and Troutman Pepper
Hamilton Sanders LLP is acting as legal advisor to IRT. RBC Capital
Markets and Robert A. Stanger & Co. are acting as financial
advisors, and Morrison & Foerster LLP is acting as legal
advisor to STAR.
Conference Call and Webcast
All interested parties can listen to a conference call webcast
to discuss the proposed merger on Monday, July 26, 2021 at 5:00
p.m. ET from the investor relations section of the IRT website at
www.irtliving.com or by dialing 1.833.789.1330. Participants will
include IRT’s CEO and CFO.
For those who are not available to listen at 5:00 p.m. ET, a
replay will be available shortly following the call from the
investor relations section of IRT’s website and telephonically
until Monday, August 2, 2021 by dialing 1.800.585.8367.
About IRT
Independence Realty Trust (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 www.irtliving.com.
About STAR
STAR is a non-traded public real estate investment trust that
was formed to acquire and operate a diverse portfolio of
well-positioned, institutional-quality apartment communities in
targeted markets throughout the United States that have
demonstrated high occupancy and income levels across market cycles.
More information can be found on STAR’s website at
https://www.steadfastliving.com/.
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act and Section 21E of
the Exchange Act. These forward-looking statements, which are based
on current expectations, estimates and projections about the
industry and markets in which IRT and STAR operate and beliefs of
and assumptions made by IRT and STAR management, involve
uncertainties that could significantly affect the financial results
of IRT or the combined company. Words such as “expects,”
“anticipates,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” variations of such words and similar expressions are
intended to identify such forward-looking statements, which
generally are not historical in nature. Such forward-looking
statements include, but are not limited to certain actions to be
taken by IRT and STAR in connection with the closing of the merger
and anticipated benefits of the merger. All statements 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. These statements are not guarantees of
future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. Although IRT and STAR
believe the expectations reflected in any forward-looking
statements are based on reasonable assumptions, neither IRT nor
STAR can give any assurances that such expectations will be
attained. Actual results and the timing of events could differ
materially from those anticipated in such forward-looking
statements as a result of these risks and uncertainties, which
include, without limitation, risks and uncertainties associated
with: IRT’s and STAR’s ability to complete the merger on the
proposed terms or on the anticipated timeline, or at all, including
risks and uncertainties related to securing the necessary
stockholder approvals and lender consents and satisfaction of other
closing conditions to consummate the merger; the occurrence of any
event, change or other circumstance that could give rise to the
termination of the merger agreement; risks related to diverting the
attention of IRT and STAR management from ongoing business
operations; failure to realize the expected benefits of the merger;
significant transaction costs and/or unknown or inestimable
liabilities; the risk of stockholder litigation in connection with
the proposed merger, including resulting expense or delay; the risk
that STAR’s business will not be integrated successfully or that
such integration may be more difficult, time-consuming or costly
than expected; risks related to future opportunities and plans for
the combined company, including the uncertainty of expected future
financial performance and results of the combined company following
completion of the merger; effects relating to the announcement of
the merger or any further announcements or the consummation of the
merger on the market price of IRT common stock; the possibility
that, if IRT does not achieve the perceived benefits of the merger
as rapidly or to the extent anticipated by financial analysts or
investors, the market price of IRT common stock could decline;
general adverse economic and local real estate conditions; the
inability of residents to continue paying their rent obligations
due to bankruptcy, insolvency or a general downturn in their
business; local real estate conditions; adverse changes in
financial markets that result in increases in interest rates and
reduced availability and increased costs of capital; increases in
operating costs and real estate taxes; changes in the dividend
policy for IRT common stock or IRT’s ability to pay dividends;
impairment charges; unanticipated changes in IRT’s intention or
ability to prepay certain debt prior to maturity; pandemics or
other health crises, such as coronavirus disease 2019 (COVID-19);
and other risks and uncertainties affecting IRT and STAR, including
those described from time to time under the caption “Risk Factors”
and elsewhere in IRT’s and STAR’s SEC filings and reports,
including IRT’s Annual Report on Form 10-K for the year ended
December 31, 2020, STAR’s Annual Report on Form 10-K for the year
ended December 31, 2020, and future filings and reports by either
company. Moreover, other risks and uncertainties of which IRT and
STAR are not currently aware may also affect each of the companies’
forward-looking statements and may cause actual results and the
timing of events to differ materially from those anticipated. The
forward-looking statements made in this communication are made only
as of the date hereof or as of the dates indicated in the
forward-looking statements, even if they are subsequently made
available by IRT or STAR on their respective websites or otherwise.
Neither IRT nor STAR undertakes any obligation to update or
supplement any forward-looking statements to reflect actual
results, new information, future events, changes in its
expectations or other circumstances that exist after the date as of
which the forward-looking statements were made.
Additional Information about the Proposed Merger and Where to
Find It
This communication relates to a proposed merger transaction
pursuant to the terms of the Agreement and Plan of Merger dated as
of July 26, 2021, among IRT, STAR and the other parties thereto. In
connection with the proposed merger transaction, 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. This communication is not a
substitute for any proxy statement, registration statement, proxy
statement/prospectus or other document IRT and/or STAR may file
with the SEC in connection with the proposed merger transaction.
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.
Certain Information Regarding Participants
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 proposed Merger.
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 U.S.
Securities Act of 1933, as amended.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210726005755/en/
Independence Realty Trust, Inc. Edelman Financial
Communications & Capital Markets Ted McHugh and Lauren Torres
917-365-7979 IRT@edelman.com
Steadfast Apartment REIT, Inc. Jennifer Franklin
949-427-1385 jennifer@spotlightmarcom.com
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