Independence Realty Trust, Inc. (“IRT”) (NYSE: IRT), a
multifamily apartment REIT, today announced its third quarter 2021
financial results.
Third Quarter Highlights
- On July 26, 2021, IRT announced that it reached a definitive
agreement to merge with Steadfast Apartment REIT, Inc. (“STAR”),
creating a leading multifamily REIT focused on the high-growth U.S.
Sunbelt region. The transaction is expected to close in
mid-December 2021, following a stockholder vote scheduled for
December 13, 2021, and we are on track to deliver the $28 million
in annual synergies and immediate 11% accretion to Core Funds from
Operations.
- Net income available to common shares of $11.5 million for the
quarter ended September 30, 2021 compared to $1.1 million for the
quarter ended September 30, 2020. Earnings per diluted share of
$0.11 for the quarter ended September 30, 2021 compared to $0.01
for the quarter ended September 30, 2020.
- Same store net operating income (“NOI”) growth of 14.7% for the
quarter ended September 30, 2021 compared to the quarter ended
September 30, 2020.
- Core Funds from Operations (“CFFO”) of $22.7 million for the
quarter ended September 30, 2021 compared to $18.2 million for the
quarter ended September 30, 2020. CFFO per share was $0.21 for the
third quarter of 2021, as compared to $0.19 for the third quarter
of 2020.
- Adjusted EBITDA of $31.4 million for the quarter ended
September 30, 2021 compared to $27.1 million for the quarter ended
September 30, 2020.
- Increased full year 2021 same store NOI guidance to a midpoint
of 10.25% and full year 2021 CFFO guidance to a midpoint of $0.81
per share.
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.
Management Commentary
“The combination of favorable macro trends across our core
markets and the execution of our growth initiatives continues to
yield impressive returns,” said Scott Schaeffer, Chairman and CEO
of IRT. “We delivered a 14.7% year-over-year increase in third
quarter same store NOI, with our occupancy rate up 220 basis points
to 96% and our average rental rate increasing 7.3% on a
year-over-year basis. As we look forward, our ability to maintain
occupancy, drive rental rates, and advance our value add program
gives us confidence that we can continue to unlock value within our
portfolio. We are also focused on the integration of the planned
merger with STAR and are excited about the growth potential of our
combined business.”
Same Store Property Operating Results
Third Quarter 2021 Compared to
Third Quarter 2020(1)
Nine Months Ended 9/30/21
Compared to Nine Months Ended 9/30/20
Rental and other property revenue
9.4% increase
7.8% increase
Property operating expenses
1.7% increase
4.4% increase
Net operating income (“NOI”)
14.7% increase
10.1% increase
Portfolio average occupancy
220 bps increase to 96.0%
270 bps increase to 95.6%
Portfolio average rental rate
7.3% increase to $1,227
4.6% increase to $1,190
NOI Margin
290 bps increase to 62.2%
130 bps increase to 61.7%
(1)
Same store portfolio for the three months ended September
30, 2021 includes 47properties, which represent 12,838 units.
Same Store Property Operating Results, Excluding Value
Add
The same store portfolio results below exclude 13 communities
that are both part of the same store portfolio and were actively
undergoing Value Add renovations during the three months ended
September 30, 2021.
Third Quarter 2021 Compared to
Third Quarter 2020(1)
Nine Months Ended 9/30/21
Compared to Nine Months Ended 9/30/20(1)
Rental and other property revenue
8.3% increase
6.1% increase
Property operating expenses
1.6% increase
4.5% increase
Net operating income (“NOI”)
12.8% increase
7.1% increase
Portfolio average occupancy
230 bps increase to 96.4%
250 bps increase to 96.1%
Portfolio average rental rate
6.3% increase to $1,219
3.3% increase to $1,186
NOI Margin
250 bps increase to 61.6%
60 bps increase to 61.5%
(1)
Same store portfolio, excluding value add, for the three
months ended September 30, 2021 includes 34 properties, which
represent 8,908 units.
COVID-19 Metrics (1)(2)
Rent collections
3Q 2021
3Q 2020
2Q 2021
Rent collected for the period presented,
as a percentage of rent billed (3)
98.4%
99.7%
99.4%
(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 September 30, 2021, there
were no active deferred payment plans outstanding.
As a result of the COVID-19 pandemic, we recorded a provision
for bad debts of $122,000 in the third quarter of 2021. The table
below presents additional details on the components of bad
debt:
Components of Bad Debt (1)
3Q 2021
3Q 2020
2Q 2021
Amount
Percentage
Amount
Percentage
Amount
Percentage
Charge-offs, net
$534
0.9%
$260
0.5%
$512
0.9%
Provision for bad debt
$122
0.2%
$80
0.1%
$78
0.1%
Net bad debt
$656
1.1%
$340
0.6%
$590
1.0%
(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
October 2021
October 2020
3Q 2021
Rent collected for the period presented,
as a percentage of rent billed (1)
95.9%
99.5%
98.4%
Total portfolio average occupancy
96.2%
94.9%
96.1%
Total portfolio average effective monthly
rent per unit
$1,217
$1,120
$1,212
Resident retention rate
52.7%
47.5%
60.3%
(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 47-property same store portfolio.
Lease Type
3Q 2021
4Q 2021(2)
New Leases
19.8%
24.1%
Renewal Leases
5.0%
9.4%
Total
10.5%
14.2%
(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 4Q 2021 that
were signed as of October 25, 2021.
Value Add Program
We completed renovations on 330 units during the quarter ended
September 30, 2021. From inception of our value add program in
January 2018 through September 30, 2021, we completed renovations
on 4,419 units, achieving a return on investment of 17.6% (19.8% on
interior renovation costs) and an average monthly rental increase
of 19.3%.
In addition, we announced that five new properties have been
added to our value add program with renovations expected to begin
in 2022. The five properties are comprised of 1,295 units and we
expect to achieve returns on investment at these properties
consistent with prior value add projects.
Capital Recycling
In the third 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:
- Joint Venture in Nashville, TN: On September 3, 2021, we closed
on a joint venture for the development of three communities
totaling 504-units with our JV partner that is managing
construction and is expected be completed in the first half of
2022. IRT’s investment is expected to total $14.4 million.
Dispositions/Property Held for Sale:
- Kings Landing in St. Louis, MO: We sold this property on July
28, 2021 and recognized a gain on disposition of $11.5
million.
- Plan to dispose of six assets: In connection with our merger
with Steadfast Apartment REIT, we plan to sell Crestmont (228
units) and Creekside Corners (444 units) in Georgia, Riverchase
(216 units) in Indiana, Haverford Place (160 units) in Kentucky,
and Heritage Park (453 units) and Raindance (504 units) in
Oklahoma. Proceeds from these sales will be used to repay debt of
the combined company.
Capital Expenditures
For the three months ended September 30, 2021, recurring capital
expenditures for the total portfolio were $1.9 million, or $118 per
unit. For the nine months ended September 30, 2021, recurring
capital expenditures for the total portfolio were $4.8 million, or
$307 per unit.
Distributions
On September 13, 2020, our Board of Directors declared a
quarterly cash dividend of $0.12 per share of our common stock,
which was paid on October 22, 2021 to stockholders of record at the
close of business on October 1, 2021.
2021 EPS and CFFO Guidance
Given portfolio performance during the quarter ended September
30, 2021, IRT is updating its 2021 full year EPS and CFFO
guidance.
Previous Guidance
Current Guidance
2021 Full Year EPS and CFFO Guidance
(1)(2)
Low
High
Low
High
Earnings (loss) per share
$0.09
$0.11
$0.18
$0.23
Adjustments:
Depreciation and amortization
0.67
0.67
0.65
0.65
Gains on sale of real estate assets
(3)
0.00
0.00
(0.83)
(0.86)
Merger and integration costs (4)
0.00
0.00
0.80
0.80
Core FFO per share allocated to common
shareholders
$0.76
$0.78
$0.80
$0.82
(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 105.0 million weighted
average shares and units outstanding, which excludes the impact of
shares issued in conjunction with the STAR merger.
(3)
Current guidance for gains on sale of real estate assets
assumes the sale of Kings Landing plus two of the properties
identified as held for sale as of September 30, 2021.
(4)
Merger and integration costs incurred to date primarily
consist of advisory fees, attorney fees, accountant fees, and SEC
filing fees related to our merger with Steadfast Apartment REIT. We
expect additional such merger and integration costs to be incurred
during 4Q 2021 in addition to severance and debt prepayment penalty
related costs that are expected in conjunction with the closing of
the merger.
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. (“STAR”),
merger-related transaction expenses or any equity offerings. We
expect the merger with STAR to close in mid-December and,
therefore, the impact to our full year 2021 guidance is not
expected to be significant.
Same Store Communities
Previous 2021 Outlook
Current 2021 Outlook
Number of properties/units
53 properties / 14,843 units
47 properties / 12,838 units (5)
Property revenue growth
5.25% to 6.0%
7.25% to 7.75%
Controllable property operating expense
growth
2.5% to 3.0%
4.0% to 4.5%
Real estate tax and insurance expense
increase
4.0% to 5.0%
0.0% to 1.0%
Total real estate operating expense
growth
3.0% to 4.0%
2.5% to 3.0%
Property NOI growth
6.5% to 7.5%
9.75% to 10.75%
Corporate Expenses (including stock
compensation)
General and administrative expenses
$17.0 to $18.0 million
$18.0 to $18.5 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 $35.0 million
$34.0 to $34.5 million
Transaction/Investment Volume
Acquisition volume
$100 million to $200 million
No additional acquisitions (6)
Disposition volume
$40 million to $100 million
$170 million to $180 million (6)
Capital Expenditures
Recurring
$7.0 to $7.5 million
$6.5 to $7.0 million
Value add & non-recurring
$28.5 to $32.5 million
$28.0 to $30.0 million
(5)
Number of same store communities reduced for the six assets
held for sale as of September 30, 2021.
(6)
Current 2021 outlook for acquisition volume excludes the
STAR merger while disposition volume includes the Kings Landing
sale and assumes two of the properties identified as held for sale
as of September 30, 2021 are also sold during 2021.
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 reported net income to our
Adjusted EBITDA, 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, October 28, 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 Thursday, November 4, 2021
by dialing 1.800.585.8367, access code 7818225.
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 transaction 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 transaction 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
transaction; 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; inability to sell certain assets within the time frames
or at the pricing levels expected; 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 Annual Report on Form 10-K for the year ended
December 31, 2020, our subsequently filed quarterly reports on Form
10-Q 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 filed 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
was declared effective by the SEC on September 29, 2021, and
includes a joint proxy statement/prospectus which was 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 BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors and
security holders are able to obtain free copies of these documents
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 are 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 are 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, is contained in the
joint proxy statement/prospectus and other relevant materials filed
with the SEC.
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
September 30,
2021
June 30, 2021
March 31, 2021
December 31, 2020
September 30,
2020
Selected Financial Information:
Operating Statistics:
Net income available to common shares
$
11,502
$
3,386
$
1,086
$
13,261
$
1,090
Earnings (loss) per share -- diluted
$
0.11
0.03
$
0.01
$
0.14
$
0.01
Rental and other property revenue
$
60,592
$
57,286
$
54,811
$
53,923
$
54,001
Property operating expenses
$
23,164
$
22,298
$
20,838
$
20,138
$
22,129
Net operating income
$
37,428
$
34,988
$
33,973
$
33,785
$
31,872
NOI margin
61.8
%
61.1
%
62.0
%
62.7
%
59.0
%
Adjusted EBITDA
$
31,432
$
28,729
$
26,389
$
28,534
$
27,081
CORE FFO per share (c)
$
0.21
$
0.20
$
0.18
$
0.22
$
0.20
Dividends per share
$
0.12
$
0.12
$
0.12
$
0.12
$
0.12
CORE FFO payout ratio
57.1
%
60.0
%
66.7
%
54.5
%
60.0
%
Portfolio Data:
Total gross assets
$
2,114,743
$
2,133,021
$
1,970,979
$
1,962,895
$
1,920,513
Total number of properties
57
58
56
56
58
Total units
16,109
16,261
15,667
15,667
15,805
Period end occupancy
96.0
%
95.6
%
95.5
%
95.3
%
94.4
%
Total portfolio average occupancy
96.1
%
95.9
%
95.4
%
95.0
%
94.1
%
Total portfolio average effective monthly
rent, per
unit
$
1,212
$
1,171
$
1,142
$
1,136
$
1,118
Same store period end occupancy (a)
95.8
%
95.4
%
95.2
%
95.1
%
94.1
%
Same store portfolio average occupancy
(a)
96.0
%
95.9
%
95.1
%
94.8
%
93.8
%
Same store portfolio average effective
monthly rent,
per unit (a)
$
1,227
$
1,183
$
1,161
$
1,154
$
1,143
Capitalization:
Total debt (d)
$
996,270
$
1,036,841
$
947,631
$
945,686
$
1,004,237
Common share price, period end
$
20.35
$
18.23
$
15.20
$
13.43
$
11.59
Market equity capitalization
$
2,150,162
$
1,926,218
$
1,561,165
$
1,376,283
$
1,107,144
Total market capitalization
$
3,146,432
$
2,963,059
$
2,508,796
$
2,321,969
$
2,111,381
Total debt/total gross assets
47.1
%
48.6
%
48.1
%
48.2
%
52.4
%
Net debt to Adjusted EBITDA (pro forma)
(b)
8.2
x
8.5
x
8.2
x
8.2
x
9.1x
Interest coverage
3.6
x
3.4
x
3.1
x
3.2
x
3.0
x
Common shares and OP Units:
Shares outstanding
105,106,714
105,109,649
102,033,733
101,803,762
94,823,806
OP units outstanding
552,360
552,360
674,515
674,517
701,986
Common shares and OP units outstanding
105,659,074
105,662,009
102,708,248
102,478,278
95,525,792
Weighted average common shares and
units
107,094,044
102,584,809
102,353,380
95,529,788
95,227,176
(a) Same store portfolio consists of 47 properties, which
represent 12,838 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 September
30, 2021 was 8.0x, 9.1x, 8.9x, 8.3x, and 9.3x, 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
September 30,
For the Nine Months Ended
September 30,
2021
2020
2021
2020
Funds From Operations (FFO):
Net Income (loss)
$
11,564
$
1,092
$
16,064
$
1,517
Adjustments:
Real estate depreciation and
amortization
17,263
15,155
50,418
45,036
Funds From Operations
$
28,827
$
18,087
$
54,694
$
48,393
FFO per share
$
0.16
$
0.19
$
0.53
$
0.51
Core Funds From Operations
(CFFO):
Funds From Operations
$
17,039
$
18,087
$
54,694
$
48,393
Adjustments:
Other depreciation and amortization
121
77
281
225
Abandoned deal costs
—
—
—
130
Merger and integration costs
5,276
—
5,276
—
Prepayment penalties on asset
dispositions
295
—
295
—
Casualty losses
—
—
359
411
Core Funds From Operations
$
22,731
$
18,164
$
60,905
$
49,159
CFFO per share
$
0.21
$
0.19
$
0.59
$
0.52
Weighted-average shares and units
outstanding
107,094,044
95,227,176
103,511,115
94,061,963
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)
September 30,
2021
June 30, 2021
March 31, 2021
December 31,
2020
September 30,
2020
Reconciliation of same-store net
operating income to net income (loss)
Same-store net operating income
$
30,450
$
28,862
$
28,126
$
28,370
$
26,547
Non same-store net operating income
6,978
6,126
5,847
5,415
5,325
Other revenue
188
158
301
165
199
Property management expenses
(2,199
)
(2,176
)
(1,943
)
(2,183
)
(2,078
)
General and administrative expenses
(3,985
)
(4,241
)
(5,942
)
(3,233
)
(2,912
)
Depreciation and amortization expense
(17,384
)
(16,763
)
(16,552
)
(15,396
)
(15,232
)
Interest expense
(8,700
)
(8,559
)
(8,385
)
(8,872
)
(8,917
)
Merger and integration costs
(5,276
)
—
—
—
—
Casualty losses
—
—
(359
)
(300
)
—
Gain on sale (loss on impairment) of real
estate assets, net
11,492
—
—
9,394
(1,840
)
Net income (loss)
$
11,564
$
3,407
$
1,093
$
13,360
$
1,092
(a) Same store portfolio includes 47 properties, which
represent 12,838 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:
September 30,
2021
June 30, 2021
March 31, 2021
December 31,
2020
September 30,
2020
Net income (loss)
$
11,564
$
3,407
$
1,093
$
13,360
$
1,092
Add-Back (Deduct):
Depreciation and amortization
17,384
16,763
16,552
15,396
15,232
Interest expense
8,700
8,559
8,385
8,872
8,917
Net loss on impairment (gain on sale) of
real estate assets
(11,492
)
—
—
(9,394
)
1,840
Merger and integration costs
5,276
—
—
—
—
Casualty losses
—
—
359
300
—
Adjusted EBITDA
$
31,432
$
28,729
$
26,389
$
28,534
$
27,081
INTEREST COST:
Interest expense
$
8,700
$
8,559
$
8,385
$
8,872
$
8,917
INTEREST COVERAGE:
3.6
x
3.4
x
3.1
x
3.2
x
3.0
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 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 merger and integration costs, 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
September 30,
2021
June 30, 2021
March 31, 2021
December 30,
2020
September 30,
2020
Total debt (a)
$
1,018,729
$
1,056,463
$
947,631
$
945,686
$
1,004,237
Less: cash and cash equivalents
(8,720
)
(7,566
)
(8,653
)
(8,751
)
(9,891
)
Total net debt
$
1,010,009
$
1,048,897
$
938,978
$
936,935
$
994,346
(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
September 30,
2021
June 30, 2021
March 31, 2021
December 30,
2020
September 30,
2020
Total assets
$
1,846,911
$
1,875,122
$
1,728,016
$
1,734,897
$
1,700,428
Plus: accumulated depreciation
247,563
237,684
223,187
208,618
200,258
Plus: accumulated amortization
20,269
20,215
19,776
19,380
19,827
Total gross assets
$
2,114,743
$
2,133,021
$
1,970,979
$
1,962,895
$
1,920,513
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211027006044/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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