Introduces Full Year 2022 Guidance
Independence Realty Trust, Inc. (“IRT”) (NYSE: IRT), a
multifamily apartment REIT, today announced its fourth quarter and
full year 2021 financial results.
Fourth Quarter Highlights
- Net income available to common shares of $28.6 million for the
quarter ended December 31, 2021 compared to $13.3 million for the
quarter ended December 31, 2020.
- Earnings per diluted share of $0.23 for the quarter ended
December 31, 2021 compared to $0.14 for the quarter ended December
31, 2020.
- Same store net operating income (“NOI”) growth of 15.1% for the
quarter ended December 31, 2021 compared to the quarter ended
December 31, 2020.
- Core Funds from Operations (“CFFO”) of $31.0 million for the
quarter ended December 31, 2021 compared to $19.7 million for the
quarter ended December 31, 2020. CFFO per share was $0.24 for the
fourth quarter of 2021, as compared to $0.21 for the fourth quarter
of 2020.
- Adjusted EBITDA of $42.3 million for the quarter ended December
31, 2021 compared to $28.5 million for the quarter ended December
31, 2020.
- Completed our strategic merger with Steadfast Apartment REIT,
Inc. (“STAR”) on December 16, 2021, adding 68 properties
aggregating 21,394 rentable units and two development properties
aggregating 621 rentable units.
Full Year Highlights
- Since the inception of our value add program in January 2018
through December 31, 2021, IRT has completed renovations at 4,672
units, achieving a weighted average return on investment of 20.2%
on interior renovations and 18.0% on total renovation costs.
- Net income available to common shares of $44.6 million for the
year ended December 31, 2021 compared to $14.8 million for the year
ended December 31, 2020.
- Earnings per diluted share of $0.41 for the year ended December
31, 2021 compared to $0.16 for the year ended December 31,
2020.
- Same store net operating income (“NOI”) growth of 11.4% for the
year ended December 31, 2021 compared to the year ended December
31, 2020.
- Core Funds from Operations (“CFFO”) of $92.0 million for the
year ended December 31, 2021 compared to $68.9 million for the year
ended December 31, 2020. CFFO per share was $0.84 for the full year
2021, as compared to $0.73 for the full year 2020.
- Adjusted EBITDA of $128.9 million for the year ended December
31, 2021 compared to $105.3 million for the year ended December 31,
2020.
2022 Guidance Highlights
- Introduced 2022 guidance including CFFO per share of $1.02 at
the mid-point of our guidance range.
- 2022 same store NOI growth of 11.0% at the mid-point of our
guidance range.
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
“2021 was an exceptional year for IRT underscored by outsized
organic growth across the portfolio, as well as the completion of
the STAR merger that cements our position as a leading multifamily
REIT focused on the high growth U.S. Sunbelt region,” said Scott
Schaeffer, Chairman and CEO of IRT. “We delivered fourth quarter
and full year same store NOI growth of 15.1% and 11.4%,
respectively, supported by improvements in average occupancy rates
and rental income. In addition, we continued to advance our high
return value add program and drive accretive growth through asset
acquisitions and dispositions, as well as joint venture
relationships in new multifamily development.”
“Looking ahead, we are excited for our next phase of growth,
having doubled our property and unit count through our merger with
STAR. Our integration efforts remain on-track, with our property
and revenue management systems now fully implemented across all
properties. In addition, we expect to achieve at least $28 million
in annual synergies and effectively improve our leverage position.
These advancements, along with our plans to continue to drive
strong operating results, well position IRT to realize attractive
growth in the multifamily sector for years to come.”
Same Store Property Operating Results
Fourth Quarter 2021 Compared to
Fourth Quarter 2020(1)
Full Year 2021 Compared to Full
Year 2020(1)
Rental and other property revenue
10.2% increase
8.4% increase
Property operating expenses
1.8% increase
3.8% increase
Net operating income (“NOI”)
15.1% increase
11.4% increase
Portfolio average occupancy
90 bps increase to 95.7%
230 bps increase to 95.7%
Portfolio average rental rate
9.7% increase to $1,266
5.9% increase to $1,209
NOI Margin
280 bps increase to 65.6%
170 bps increase to 62.7%
(1)
Same store portfolio for the three and
twelve months ended December 31, 2021 includes 47 properties, which
represent 12,838 units.
Same Store Property Operating Results, Excluding Value
Add
The same store portfolio results below exclude 18 communities
that are both part of the same store portfolio and were actively
undergoing Value Add renovations during the three and twelve months
ended December 31, 2021.
Fourth Quarter 2021 Compared to
Fourth Quarter 2020(1)
Full Year 2021 Compared to Full
Year 2020(1)
Rental and other property revenue
8.5% increase
6.1% increase
Property operating expenses
5.3% increase
4.0% increase
Net operating income (“NOI”)
10.4% increase
7.4% increase
Portfolio average occupancy
80 bps increase to 96.6%
180 bps increase to 96.6%
Portfolio average rental rate
8.4% increase to $1,254
4.5% increase to $1,203
NOI Margin
100 bps increase to 64.6%
80 bps increase to 62.5%
(1)
Same store portfolio, excluding value add,
for the three and twelve months ended December 31, 2021 includes 29
properties, which represent 7,034 units.
IRT and STAR Merger
On December 16, 2021, we completed our merger with STAR. Through
the STAR Merger, we acquired 68 apartment communities that contain
21,394 units and two apartment communities that are under
development and approved for 621 units in the aggregate. We
acquired assets totaling $4.8 billion, assumed liabilities totaling
$1.9 billion, and issued an aggregate of 99,720,948 shares of
common stock and 6,429,481 IROP units in our merger with STAR.
Leading up to and after the closing of the STAR Merger, we also
successfully delevered the combined balance sheet through a
combination of our July forward equity raise of $271 million on
16.1 million shares, the disposition of three STAR properties in
November 2021 for a total sales price of $107 million, and the
disposition of six IRT properties between December 2021 and
February 2022 for a total sales price of $297 million.
Same Store Comparisons and STAR
As discussed above, we completed our merger with STAR, which
more than doubled our property and unit counts. We will continue to
follow our previous definition of same store and will formally add
STAR to the same store pool on January 1, 2023 in accordance with
our current same store definition. However, in 2022 we will begin
presenting a Combined Same Store portfolio to help investors
understand the larger same store portfolio. We’ve included two new
appendices this quarter. Appendix A shows the impact of
consolidating STAR’s business for 2021. To aid in future modeling,
we have added Appendix B, which provides the 2021 quarterly
property operating results for the 2022 Combined Same Store
portfolio. The following Operating Metrics and 2022 Guidance are
presented considering these new same store portfolios. See the
Definitions section of this release for full definitions of these
new same store portfolios.
Operating Metrics
The table below summarizes operating metrics for the noted same
store portfolios for the applicable periods.
4Q 2021
1Q 2022(3)
IRT Same Store Portfolio (47 properties
/ 12,838 units) (1)
Average Occupancy
95.7%
95.4%
Lease Over Lease Effective Rental Rate
Growth (2):
New Leases
22.3%
20.3%
Renewal Leases
8.0%
11.3%
Blended
15.2%
14.3%
Resident retention rate
42.6%
48.4%
STAR Same Store Portfolio (62
properties / 19,860 units) (1)
Average Occupancy
96.1%
95.3%
Lease Over Lease Effective Rental Rate
Growth (2):
New Leases
16.2%
13.7%
Renewal Leases
11.4%
9.3%
Blended
13.6%
10.9%
Resident retention rate
45.7%
47.7%
Combined Same Store Portfolio (109
properties / 32,698 units) (1)
Average Occupancy
95.9%
95.4%
Lease Over Lease Effective Rental Rate
Growth (2):
New Leases
18.8%
16.4%
Renewal Leases
10.2%
10.2%
Blended
14.2%
12.4%
Resident retention rate
44.8%
48.0%
(1)
See same store definitions.
(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)
1Q 2022 average occupancy and resident
retention rates are as through February 14, 2022.1Q 2022 new lease
and renewal rates are for leases commencing during 1Q 2022 that
were signed as of February 14, 2022.
Value Add Program
We completed renovations on 253 units and 953 units during the
quarter ended and year ended December 31, 2021, respectively. From
inception of our value add program in January 2018 through December
31, 2021, we completed renovations on 4,672 units, achieving a
return on investment of 18.0% (20.2% on interior renovation costs)
and an average monthly rental increase of 19.6%.
Dispositions/Property Held for Sale:
In connection with our merger with STAR, we completed the
following dispositions and used net proceeds from these sales to
repay debt of the combined company.
- Crestmont in Atlanta, GA: sold on December 13, 2021 and
recognized a gain on disposition of $33.1 million.
- Creekside Corner in Atlanta, GA: sold on December 16, 2021 and
recognized a gain on disposition of $43.1 million.
- Riverchase in Indianapolis, IN: sold on January 18, 2022 and
expect to recognize a gain on disposition of $13.0 million.
- Haverford Place in Louisville, KY: sold on February 2, 2022 and
expect to recognize a gain on disposition of $16.8 million.
- Heritage Park in Oklahoma City, OK: sold on February 2, 2022
and expect to recognize a gain on disposition of $31.5
million.
- Raindance in Oklahoma City, OK: sold on February 2, 2022 and
expect to recognize a gain on disposition of $33.9 million.
Capital Expenditures
For the three months ended December 31, 2021, recurring capital
expenditures for the total portfolio were $1.8 million, or $112 per
unit. For the year ended December 31, 2021, recurring capital
expenditures for the total portfolio were $6.8 million, or $422 per
unit.
Distributions
On December 2, 2021, our Board of Directors declared two
prorated quarterly cash dividends based on IRT’s current quarterly
dividend rate of $0.12 per share of our common stock. The first
prorated dividend was $0.09913 and was paid on January 14, 2022 to
stockholders of record as of the close of business on December 15,
2021. The second prorated dividend was $0.02087 and was paid on
January 21, 2022 to stockholders of record as of the close of
business on December 30, 2021.
2022 EPS and CFFO Guidance
We are introducing 2022 full year guidance. Earnings per diluted
share is projected to be in the range of $0.32 to $0.36. 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.
2022 Full Year EPS and CFFO
Guidance (1)(2)
Low
High
Earnings per share
$0.32
$0.36
Adjustments:
Depreciation and amortization
(3)
1.10
1.10
Gain on sale of real estate
assets (4)
(0.42)
(0.42)
Core FFO per share
$1.00
$1.04
(1)
This guidance, including the underlying
assumptions presented in the table below, constitutes
forward-looking information. Actual full year 2022 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 228.0
million weighted average shares and units outstanding.
(3)
Depreciation and amortization includes
$53.3 million ($0.23 per share) of amortization related to STAR
in-place lease intangibles that are a result of GAAP purchase
accounting. These intangibles are expected to be amortized over
less than one year.
(4)
Gains on sale of real estate assets
include only the four asset sales that occurred in January and
February 2022.
2022 Guidance Assumptions
Our key guidance assumptions for 2022 are enumerated below.
Note, the same store portfolio assumptions reflect the expected
composition of the same store portfolio in 2022 as indicated. See
definitions at the end of this release for further information
regarding our same store definitions. See also, Appendix B, which
includes 2021 property operating results for the 2022 Combined Same
Store portfolio.
Combined Same Store
Portfolio
2022 Outlook (1)
Number of properties/units
115 properties / 34,454 units
Property revenue growth
8.1% to 9.1%
Controllable operating expense
growth
2.5% to 3.5%
Real estate tax and insurance
expense growth
6.5% to 8.5%
Total operating expense
growth
4.0% to 5.5%
Property NOI growth
10.0% to 12.0%
General and administrative
& Property management expenses
$48.0 million to $51.0
million
Interest expense (2)
$100.0 million to $103.0
million
Transaction/Investment Volume
(3)
Acquisition volume
None assumed
Disposition volume
$157 million
Capital Expenditures
Recurring
$18.5 million to $21.5
million
Value add & non-recurring
$42.5 million to $47.5
million
Development
$65.0 million to $75.0
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” below.
(2)
Interest expense includes amortization of
deferred financing costs but excludes loan premium accretion, net.
As a result of purchase accounting, we recorded a $72.1 million
loan premium, net, related to STAR debt. This loan premium will be
accreted into and reduce GAAP interest expense over the remaining
term of the associated debt. However, loan premium accretion will
be excluded from CFFO.
(3)
Disposition volume guidance represents
only the four asset sales that occurred in January and February
2022. Net proceeds from these four assets sales were used to reduce
indebtedness. We continue to evaluate our portfolio for capital
recycling opportunities so actual acquisitions and dispositions
could vary significantly from our projections. We undertake no duty
to update these assumptions. See “Forward-Looking Statements”
below.
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, February 17, 2022 from the
investor relations section of the IRT website at www.irtliving.com
or by dialing 1.844.200.6205, access code 873786. 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, February 24, 2022 by dialing 1.866.813.9403, access code
506270.
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 in 119 communities, across non-gateway U.S. markets
including Atlanta, GA, Dallas, TX, Denver, CO, Columbus, OH,
Indianapolis, IN, Oklahoma City, OK, Raleigh-Durham, NC, Houston,
TX , Nashville, TN, and Memphis, TN. 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 the Company’s website 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 operating
performance and financial results, including our 2022 earnings
guidance, timing and amount of future dividends, timing and terms
of property acquisitions, dispositions, joint venture investments,
developments and redevelopments and other capital expenditures,
timing and terms of capital raising and other financing activity,
lease pricing, revenue and expense growth, occupancy levels, supply
levels, job growth, interest rates and other economic expectations,
and anticipated benefits of our recently completed merger (the
“STAR Merger”) with Steadfast Apartment REIT, Inc. (“STAR”),
including as to the amount of synergies from the STAR Merger. 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: (i) risks related to the impact of COVID-19 and other potential
outbreaks of infectious diseases on our financial condition,
results of operations, cash flows and the impact of such risks on
the financial condition of our residents and their ability to pay
rent; (ii) the nature and duration of measures taken by federal,
state and local government authorities to combat the spread of
disease; (iii) 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; (iv) uncertainty and
volatility in capital and credit markets, including changes that
reduce availability, and increase costs, of capital; (v) increased
costs on account of inflation; (vi) inability of tenants to meet
their rent and other lease obligations and charge-offs in excess of
our allowance for bad debt; (vii) legislative restrictions that may
regulate rents or delay or limit collections of past due rents;
(viii) risks endemic to real estate and the real estate industry
generally; (ix) impairment charges; (x) the effects of natural and
other disasters; (xi) 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; (xii) failure to realize the cost savings,
synergies and other benefits expected to result from the STAR
Merger; (xiii) unexpected costs or delays in integration of the IRT
and STAR businesses; (xiv) unknown or unexpected liabilities
related to the STAR Merger; (xv) unexpected costs of REIT
qualification compliance; (xvi) unexpected changes in our intention
or ability to repay certain debt prior to maturity; (xvii)
inability to sell certain assets within the time frames or at the
pricing levels expected; (xviii) costs and disruptions as the
result of a cybersecurity incident or other technology disruption;
and (xix) 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.
Schedule I
Independence Realty Trust, Inc.
Selected Financial
Information
(Dollars in thousands, except
share and per share amounts)
(unaudited)
For the Three Months
Ended
December 31,
2021
September 30,
2021
June 30, 2021
March 31, 2021
December 31,
2020
Selected Financial Information:
Operating Statistics:
Net income available to common shares
$
28,615
$
11,502
$
3,386
$
1,086
$
13,261
Earnings (loss) per share -- diluted
$
0.23
0.11
$
0.03
$
0.01
$
0.14
Rental and other property revenue
$
76,803
$
60,592
$
57,286
$
54,811
$
53,923
Property operating expenses
$
26,952
$
23,164
$
22,298
$
20,838
$
20,138
Net operating income
$
49,851
$
37,428
$
34,988
$
33,973
$
33,785
NOI margin
64.9
%
61.8
%
61.1
%
62.0
%
62.7
%
Adjusted EBITDA
$
42,301
$
31,432
$
28,729
$
26,389
$
28,534
CORE FFO per share (c)
$
0.24
$
0.21
$
0.20
$
0.18
$
0.22
Dividends per share
$
0.12
$
0.12
$
0.12
$
0.12
$
0.12
CORE FFO payout ratio
50.0
%
57.1
%
60.0
%
66.7
%
54.5
%
Portfolio Data:
Total gross assets
$
6,785,648
$
2,114,743
$
2,133,021
$
1,970,979
$
1,962,895
Total number of operating properties
123
57
58
56
56
Total units
36,831
16,109
16,261
15,667
15,667
Period end occupancy
92.1
%
96.0
%
95.6
%
95.5
%
95.3
%
Total portfolio average occupancy
92.5
%
96.1
%
95.9
%
95.4
%
95.0
%
Total portfolio average effective monthly
rent, per
unit
$
1,299
$
1,212
$
1,171
$
1,142
$
1,136
Same store period end occupancy (a)
95.6
%
95.8
%
95.4
%
95.2
%
95.1
%
Same store portfolio average occupancy
(a)
95.7
%
96.0
%
95.9
%
95.1
%
94.8
%
Same store portfolio average effective
monthly rent,
per unit (a)
$
1,266
$
1,227
$
1,183
$
1,161
$
1,154
Capitalization:
Total debt (d)
$
2,705,336
$
996,270
$
1,036,841
$
947,631
$
945,686
Common share price, period end
$
25.83
$
20.35
$
18.23
$
15.20
$
13.43
Market equity capitalization
$
5,882,410
$
2,150,162
$
1,926,218
$
1,561,165
$
1,376,283
Total market capitalization
$
8,587,746
$
3,146,432
$
2,963,059
$
2,508,796
$
2,321,969
Total debt/total gross assets
39.9
%
47.1
%
48.6
%
48.1
%
48.2
%
Net debt to Adjusted EBITDA (pro forma)
(b)
7.7x
8.2
x
8.5
x
8.2
x
8.2
x
Interest coverage
3.9
x
3.6
x
3.4
x
3.1
x
3.2
x
Common shares and OP Units:
Shares outstanding
220,753,735
105,106,714
105,109,649
102,033,733
101,803,762
OP units outstanding
6,981,841
552,360
552,360
674,515
674,517
Common shares and OP units outstanding
227,735,577
105,659,074
105,662,009
102,708,248
102,478,278
Weighted average common shares and OP
units
127,046,225
107,094,044
102,584,809
102,353,380
95,529,788
(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 multiples for the five quarters ended December
31, 2021 were 15.4x, 8.0x, 9.1x, 8.9x, and 8.3x, 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
December 31,
For the Twelve Months Ended
December 31,
2021
2020
2021
2020
Funds From Operations (FFO):
Net Income (loss)
$
29,465
$
13,360
$
45,529
$
14,877
Adjustments:
Real estate depreciation and
amortization
26,068
15,316
76,487
60,352
Loss on impairment (gain on sale) of real
estate assets, net, excluding debt extinguishment costs
(78,490
)
(9,394
)
(90,277
)
(7,554
)
Funds From Operations
$
(22,957
)
$
19,282
$
31,739
$
67,675
FFO per share
$
(0.18
)
$
0.20
$
0.29
$
0.72
Core Funds From Operations (CFFO):
(a)
Funds From Operations
$
(22,957
)
$
19,282
$
31,739
$
67,675
Adjustments:
Other depreciation and amortization
142
80
423
335
Abandoned deal costs
—
—
—
130
Merger and integration costs
41,787
—
47,063
—
Loan (premium accretion) discount
amortization
(501
)
—
(501
)
—
Prepayment penalties on asset
dispositions
2,312
—
2,607
—
Casualty losses
—
300
359
711
Debt extinguishment costs included in net
gains (losses) on sale of assets
10,261
—
10,261
—
Core Funds From Operations
$
31,044
$
19,662
$
91,951
$
68,851
CFFO per share
$
0.24
$
0.21
$
0.84
$
0.73
Weighted-average shares and units
outstanding
127,046,225
95,529,788
109,418,810
87,870,135
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)
December 31,
2021
September 30,
2021
June 30, 2021
March 31, 2021
December 31,
2020
Reconciliation of same-store net
operating income to net income (loss)
Same-store net operating income
$
32,662
$
30,450
$
28,862
$
28,126
$
28,370
Non same-store net operating income
17,189
6,978
6,126
5,847
5,415
Other revenue
113
188
158
301
165
Property management expenses
(3,221
)
(2,199
)
(2,176
)
(1,943
)
(2,183
)
General and administrative expenses
(4,442
)
(3,985
)
(4,241
)
(5,942
)
(3,233
)
Depreciation and amortization expense
(26,210
)
(17,384
)
(16,763
)
(16,552
)
(15,396
)
Casualty losses
-
-
-
(359
)
(300
)
Interest expense
(10,757
)
(8,700
)
(8,559
)
(8,385
)
(8,872
)
Gain on sale (loss on impairment) of real
estate assets, net
76,179
11,492
—
—
9,394
Gain (loss) on extinguishment of debt
(10,261
)
—
—
—
—
Merger and integration costs
(41,787
)
(5,276
)
—
—
—
Net income (loss)
$
29,465
$
11,564
$
3,407
$
1,093
$
13,360
(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:
December 31,
2021
September 30,
2021
June 30, 2021
March 31, 2021
December 31,
2020
Net income (loss)
$
29,465
$
11,564
$
3,407
$
1,093
$
13,360
Add-Back (Deduct):
Depreciation and amortization
26,210
17,384
16,763
16,552
15,396
Casualty losses
—
—
—
359
300
Interest expense
10,757
8,700
8,559
8,385
8,872
Net loss on impairment (gain on sale) of
real estate assets
(76,179
)
(11,492
)
—
—
(9,394
)
Loss on extinguishment of debt
10,261
—
—
—
—
Merger and integration costs
41,787
5,276
—
—
—
Adjusted EBITDA
$
42,301
$
31,432
$
28,729
$
26,389
$
28,534
INTEREST COST:
Interest expense
$
10,757
$
8,700
$
8,559
$
8,385
$
8,872
INTEREST COVERAGE:
3.9
x
3.6
x
3.4
x
3.1
x
3.2
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 and loan premiums and discounts. 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
December 31,
2021
September 30,
2021
June 30, 2021
March 31, 2021
December 30,
2020
Total debt
$
2,705,336
$
1,018,729
$
1,056,463
$
947,631
$
945,686
Less: cash and cash equivalents
(35,972
)
(8,720
)
(7,566
)
(8,653
)
(8,751
)
Less: loan discounts and premiums, net
(71,586
)
-
-
-
-
Total net debt
$
2,597,778
$
1,010,009
$
1,048,897
$
938,978
$
936,935
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. We may also refer to the Same Store
Portfolio as the IRT Same Store Portfolio.
STAR Same Store Portfolio
STAR Same Store Portfolio represents the STAR portfolio that
would be part of the Same Store Portfolio had the STAR portfolio
been owned by IRT since January 1, 2020 and assuming the actual
purchase date for any properties owned by a STAR-related entity
prior to STAR’s merger with Steadfast Income REIT, Inc. on March 6,
2020. Because these properties have only been owned by IRT since
December 16, 2021, they are not included in the IRT Same Store
Portfolio. Results for periods prior to December 16, 2021 have been
adjusted for consistency with IRT accounting policies and
classifications.
Combined Same Store Portfolio
Combined Same Store Portfolio represents the combination of the
IRT Same Store Portfolio and the STAR Same Store Portfolio
considered as a single 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
December 31,
2021
September 30,
2021
June 30, 2021
March 31, 2021
December 30,
2020
Total assets
$
6,506,696
$
1,846,911
$
1,875,122
$
1,728,016
$
1,734,897
Plus: accumulated depreciation (a)
254,123
247,563
237,684
223,187
208,618
Plus: accumulated amortization
24,829
20,269
20,215
19,776
19,380
Total gross assets
$
6,785,648
$
2,114,743
$
2,133,021
$
1,970,979
$
1,962,895
(a)
Includes accumulated depreciation
associated with real estate held for sale.
APPENDIX A
STAR MERGER IMPACT ON STATEMENTS OF
OPERATIONS, FFO & CORE FFO
THREE AND TWELVE MONTHS ENDED DECEMBER
31, 2021
Dollars in thousands, except per share
data
For the Three Months Ended
December 31, 2021
For the Year Ended December
31, 2021
IRT
STAR
Total
IRT
STAR
Total
Property revenue
$
61,218
$
15,585
$
76,803
$
233,907
$
15,585
$
249,492
Property operating expenses
20,940
6,012
26,952
87,240
6,012
93,252
Net operating income
$
40,278
$
9,573
$
49,851
$
146,667
$
9,573
$
156,240
Other revenue
113
—
113
760
—
760
Property management expenses
2,498
723
3,221
8,816
723
9,539
General and administrative expenses
4,325
117
4,442
18,493
117
18,610
Depreciation and amortization expense
16,643
9,567
26,210
67,342
9,567
76,909
Casualty losses
—
—
—
359
—
359
Interest expense
8,126
2,631
10,757
33,770
2,631
36,401
Loss on impairment (gain on sale) of real
estate assets, net
(76,179
)
—
(76,179
)
(87,671
)
—
(87,671
)
Loss on extinguishment of debt
10,261
—
10,261
10,261
—
10,261
Merger and integration costs
41,787
—
41,787
47,063
—
47,063
Net income (loss)
32,930
(3,465
)
29,465
48,994
(3,465
)
45,529
(Income) loss allocated to noncontrolling
interests
(850
)
—
(850
)
(940
)
—
(940
)
Net income (loss) available to common
shares
$
32,080
$
(3,465
)
$
28,615
$
48,054
$
(3,465
)
$
44,589
EPS - basic
$
0.30
$
(0.07
)
$
0.23
$
0.46
$
(0.05
)
$
0.41
Weighted-average shares outstanding -
Basic
108,071,107
17,304,587
125,375,694
104,190,480
4,361,704
108,552,185
EPS - diluted
$
0.29
$
(0.06
)
$
0.23
$
0.46
$
(0.05
)
$
0.41
Weighted-average shares outstanding -
Diluted
109,370,964
17,304,587
126,675,551
105,469,816
4,361,704
109,831,520
Funds From Operations (FFO):
Net Income (loss)
$
32,930
$
(3,465
)
$
29,465
$
48,994
$
(3,465
)
$
45,529
Adjustments:
Real estate depreciation and
amortization
16,504
9,564
26,068
66,923
9,564
76,487
Loss on impairment (gain on sale) of real
estate assets, net, excluding debt extinguishment costs
(78,490
)
—
(78,490
)
(90,277
)
—
(90,277
)
Funds From Operations
$
(29,056
)
$
6,099
$
(22,957
)
$
25,640
$
6,099
$
31,739
FFO per share
$
(0.27
)
$
0.09
$
(0.18
)
$
0.25
$
0.04
$
0.29
Core Funds From Operations (CFFO):
(a)
Funds From Operations
$
(29,056
)
$
6,099
$
(22,957
)
$
25,640
$
6,099
$
31,739
Adjustments:
Other depreciation and amortization
139
3
142
420
3
423
Casualty losses
—
—
—
359
—
359
Loan (premium accretion) discount
amortization
—
(501
)
(501
)
—
(501
)
(501
)
Prepayment penalties on asset
dispositions
2,312
—
2,312
2,607
—
2,607
Loss on extinguishment of debt
10,261
—
10,261
10,261
—
10,261
Merger and integration costs
41,787
—
41,787
47,063
—
47,063
Core Funds From Operations
$
25,443
$
5,601
$
31,044
$
86,350
$
5,601
$
91,951
CFFO per share
$
0.23
$
0.01
$
0.24
$
0.83
$
0.01
$
0.84
Weighted-average shares and units
outstanding
108,623,467
18,422,758
127,046,225
104,625,266
4,793,544
109,418,810
APPENDIX B
2022 PRO FORMA COMBINED SAME STORE
PORTFOLIO NET OPERATING INCOME
TRAILING FOUR QUARTERS
Dollars in thousands, except per unit
data
For the Three-Months Ended
(a)
December 31,
September 30,
June 30,
March 31,
Total
2021
2021
2021
2021
2021
Revenue:
Rental and other property revenue
$
140,929
$
138,795
$
133,672
$
129,699
$
543,095
Property Operating Expenses:
Real estate taxes
16,714
16,397
19,168
18,393
70,672
Property insurance
3,056
3,223
2,761
2,707
11,747
Personnel expenses
12,410
12,274
11,939
11,645
48,268
Utilities
7,227
7,406
6,858
7,354
28,845
Repairs and maintenance
5,477
5,643
4,758
4,424
20,302
Contract services
4,756
4,909
4,749
4,390
18,804
Advertising expenses
1,346
1,359
1,335
1,282
5,322
Other expenses
1,542
1,525
1,567
1,637
6,271
Total property operating expenses
52,528
52,736
53,135
51,832
210,231
Combined same-store net operating
income
$
88,401
$
86,059
$
80,537
$
77,867
$
332,864
Combined same-store NOI margin
62.7
%
62.0
%
60.2
%
60.0
%
61.3
%
Average occupancy
96.0
%
96.5
%
96.1
%
95.2
%
96.0
%
Average effective monthly rent, per
unit
$
1,339
$
1,298
$
1,254
$
1,237
$
1,282
Combined Same-store net operating
income
$
88,401
$
86,059
$
80,537
$
77,867
$
332,864
Combined Non Same-Store net operating
income
7,958
6,978
6,126
5,847
5,415
Pre-STAR Merger Combined Same-Store net
operating income (b)
(46,508
)
(55,609
)
(51,675
)
(49,741
)
(182,039
)
Other revenue
113
188
158
301
760
Property management expenses
(3,221
)
(2,199
)
(2,176
)
(1,943
)
(9,539
)
General and administrative expenses
(4,442
)
(3,985
)
(4,241
)
(5,942
)
(18,610
)
Depreciation and amortization expense
(26,210
)
(17,384
)
(16,763
)
(16,552
)
(76,909
)
Casualty losses
—
—
—
(359
)
(359
)
Interest expense
(10,757
)
(8,700
)
(8,559
)
(8,385
)
(36,401
)
Gain on sale (loss on impairment) of real
estate assets, net
76,179
11,492
—
—
87,671
Loss on extinguishment of debt
(10,261
)
—
—
—
(10,261
)
Merger and integration costs
(41,787
)
(5,276
)
—
—
(47,063
)
Net income as presented
$
29,465
$
11,564
$
3,407
$
1,093
$
45,529
(a)
Combined Same Store Portfolio consists of
115 properties, which represent 34,454 units. This is the Combined
Same Store Portfolio expected on a pro forma basis as of January 1,
2022.
(b)
Amounts presented represent the operating
results for STAR properties prior to the STAR merger that have been
included in Combined same store net operating income. Prior year
results have been adjusted for consistency with IRT accounting
policies to facilitate year over-year comparisons.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220216006165/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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