Raises Full Year 2022 Guidance
Independence Realty Trust, Inc. (“IRT”) (NYSE: IRT), a
multifamily apartment REIT, today announced its first quarter 2022
financial results.
First Quarter Highlights
- Net income available to common shares of $74.6 million for the
quarter ended March 31, 2022 compared to $1.1 million for the
quarter ended March 31, 2021.
- Earnings per diluted share of $0.34 for the quarter ended March
31, 2022 compared to $0.01 for the quarter ended March 31,
2021.
- Combined same-store net operating income (“NOI”) growth of
16.2% for the quarter ended March 31, 2022 compared to the quarter
ended March 31, 2021.
- Core Funds from Operations (“CFFO”) of $57.7 million for the
quarter ended March 31, 2022 compared to $18.0 million for the
quarter ended March 31, 2021. CFFO per share was $0.25 for the
first quarter of 2022, as compared to $0.18 for the first quarter
of 2021.
- Adjusted EBITDA of $81.4 million for the quarter ended March
31, 2022 compared to $26.4 million for the quarter ended March 31,
2021.
- Value add program for the quarter ended March 31, 2022, has
completed renovations at 143 units, achieving a weighted average
return on investment during the quarter of 32.0%.
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
“We are pleased with the outstanding results our newly combined
portfolio generated during the first quarter of 2022,” said Scott
Schaeffer, Chairman and CEO of IRT. “For the first quarter of 2022,
combined same-store NOI increased by 16.2%, led by blended lease
over lease rental growth of 12.8%. Our merger integration is
complete, and we have secured $31 million in annual synergies. We
continue to evaluate accretive joint venture opportunities,
including a new investment in a single-family rental development.
Overall, we are excited for what lies ahead in 2022 and the years
to come, as we remain confident in our strategy focused on
multifamily properties in the high-growth Sunbelt region.”
Combined Same-Store Property Operating Results
First Quarter 2022 Compared
to
First Quarter 2021(1)
Rental and other property
revenue
11.0% increase
Property operating expenses
3.2% increase
Net operating income (“NOI”)
16.2% increase
Portfolio average occupancy
10 bps increase to 95.4%
Portfolio average rental rate
10.4% increase to $1,373
NOI Margin
280 bps increase to 62.9%
(1)
Combined same-store portfolio for
the three months ended March 31, 2022 includes 113 properties,
which represent 33,804 units.
Operating Metrics
The table below summarizes operating metrics for the combined
same-store portfolio for the applicable periods.
1Q 2022
2Q 2022(3)
Combined Same-Store
Portfolio(1)
Average Occupancy
95.4 %
95.4 %
Lease Over Lease Effective Rental Rate
Growth:(2)
New Leases
15.7 %
15.8 %
Renewal Leases
10.2 %
9.5 %
Blended
12.8 %
11.5 %
Resident retention rate
50.9 %
54.6 %
(1)
Combined same-store portfolio for
the three months ended March 31, 2022 includes 113 properties,
which represent 33,804 units.
(2)
Lease-over-lease effective rent
growth represents the change in effective monthly rent, as adjusted
for concessions, for each unit that had a prior lease and current
lease that are for a term of 9-13 months.
(3)
2Q 2022 average occupancy and
resident retention rates are as through May 1, 2022. 2Q 2022 new
lease and renewal rates are for leases commencing during 2Q 2022
that were signed as of May 1, 2022.
Value Add Program
We completed renovations on 143 units during the quarter ended
March 31, 2022, achieving a return on investment of 32.0%, with an
average cost per unit renovated of $12,436, and average rent
increase per renovated unit of $331. See the Value Add Summary page
of our supplemental for additional information.
Investment Activity
Acquisitions
Subsequent to quarter-end, on April 6, 2022, we purchased for
$25.4 million the Views of Music City (Phase 1), a 96-unit
community in Nashville, TN from one of our unconsolidated joint
ventures. The property was developed by our joint venture partner
and was completed in January 2022. The Views of Music City (Phase
1) has an average rent per occupied unit of $1,451 and is currently
in lease-up with stabilization expected to occur in June 2022. The
acquisition represents the exercise of our purchase option under
the terms of the joint venture agreement entered into on September
3, 2021. Development of Phase 2, which consists of 209 units, is
expected to be completed during Q4 2023.
Dispositions
In connection with our merger with STAR and during the three
months ended March 31, 2022, we completed the following
dispositions and used net proceeds from these sales to repay debt
of the combined company.
- Riverchase in Indianapolis, IN: sold on January 18, 2022 and
recognized a gain on sale of $12.9 million.
- Haverford Place in Louisville, KY: sold on February 2, 2022 and
recognized a gain on sale of $16.7 million.
- Heritage Park in Oklahoma City, OK: sold on February 2, 2022
and recognized a gain on sale of $31.4 million.
- Raindance in Oklahoma City, OK: sold on February 2, 2022 and
recognized a gain on sale of $33.7 million.
Held for Sale
As of March 31, 2022, in connection with our ongoing capital
recycling program, we identified two properties, Meadows Apartments
in Louisville, KY and Sycamore Terrace in Terra Haute, IN, as held
for sale. We expect these dispositions to close in the third
quarter of 2022. We intend to recycle the net proceeds from the
sales into the acquisition of properties in markets that we believe
have better long-term growth prospects.
Virtuoso Joint Venture Investment
On March 31, 2022, we formed a joint venture to acquire and own
a project comprised of 400 single family home rental units in
Huntsville, AL. Development of phase one of this project (comprised
of 178 homes) was completed in 2021 and was acquired by the joint
venture on March 31, 2022. Upon acquisition of phase one by the
joint venture, 85% of the homes were leased. The joint venture
expects to acquire phase two of the project (comprised of 222
homes), currently expected to occur in the second quarter of 2022.
We have committed to invest an aggregate $37.1 million in this
joint venture, of which $16.4 million was funded on March 31,
2022.
Capital Expenditures
For the three months ended March 31, 2022, recurring capital
expenditures for the total portfolio were $3.9 million, or $106 per
unit.
At-the-Market Offering
On November 13, 2020 we entered into an equity distribution
agreement pursuant to which we may from time to time offer and sell
shares of our common stock having an aggregate offering price of up
to $150 million (the “ATM Program”) in negotiated transactions or
transactions that are deemed to be “at the market” offerings. Under
the ATM Program, we may also enter into one or more forward sale
transactions for the sale of shares of our common stock on a
forward basis. During the three months ended March 31, 2022, we
entered into a forward sale transaction under the ATM Program for
the forward sale of 1,000,000 shares of our common stock. We expect
to physically settle the forward sale transaction by the maturity
date (March 31, 2023) of the forward sale transaction. Assuming the
forward sale transaction is physically settled in full utilizing
the current forward sale price of $26.86 per share, we expect to
receive proceeds, net of sales commissions, of approximately $26.5
million, subject to adjustment in accordance with the forward sale
transaction.
Distributions
On March 14, 2022, our Board of Directors declared a quarterly
cash dividend of $0.12 per share of our common stock, which was
paid on April 22, 2022 to stockholders of record at the close of
business on April 1, 2022.
2022 EPS and CFFO Guidance
We are raising our 2022 full year guidance. Earnings per diluted
share is now projected to be in the range of $0.50 to $0.52. A
reconciliation of IRT's projected net income allocable to common
shares to its projected CFFO per share is included below. See the
schedules and definitions at the end of this release for further
information regarding how IRT calculates CFFO and for management’s
definition and rationale for the usefulness of CFFO.
Previous Guidance
Current Guidance
2022 Full Year EPS and CFFO Guidance
(1)(2)
Low
High
Low
High
Earnings per share
$0.32
$0.36
$0.50
$0.52
Adjustments:
Depreciation and amortization (3)
1.10
1.10
1.12
1.12
Gain on sale of real estate assets (4)
(0.42)
(0.42)
(0.58)
(0.58)
Core FFO per share allocated to common
shareholders
$1.00
$1.04
$1.04
$1.06
(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 the four asset sales that occurred during the first
quarter of 2022 and the two properties identified as held for sale
as of March 31, 2022.
2022 Guidance Assumptions
Our key guidance assumptions for 2022 are enumerated below. See
definitions at the end of this release for further information
regarding our same-store definitions.
Combined Same-Store
Portfolio
Previous 2022 Outlook
Current 2022
Outlook(1)
Number of properties/units
115 properties / 34,454 units
113 properties / 33,804 units
Property revenue growth
8.1% to 9.1%
9.1% to 10.1%
Controllable operating expense growth
2.5% to 3.5%
3.0% to 4.0%
Real estate tax and insurance expense
growth
6.5% to 8.5%
6.5% to 8.5%
Total operating expense growth
4.0% to 5.5%
4.25% to 5.75%
Property NOI growth
10.0% to 12.0%
11.5% to 13.5%
General and administrative & Property
management expenses
$48.0 million to $51.0
million
$48.0 million to $51.0
million
Interest expense(2)
$100.0 million to $103.0
million
$98.0 million to $100.0
million
Transaction/Investment
Volume(3)
Acquisition volume
None assumed
$25 to $250 million
Disposition volume
$157 million
$157 to $400 million
Capital Expenditures
Recurring
$18.5 million to $21.5
million
$18.5 million to $21.5
million
Value add & non-recurring
$42.5 million to $47.5
million
$42.5 million to $47.5
million
Development
$65.0 million to $75.0
million
$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)
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 Wednesday, May 4, 2022 from the investor
relations section of the IRT website at www.irtliving.com or by
dialing 1.844.200.6205, access code 594917. For those who are not
available to listen to the live call, the replay will be available
shortly following the live call from the investor relations section
of IRT’s website until the next earnings release. A playback of the
conference call can also be accessed telephonically until
Wednesday, May 11, 2022 by dialing 1.866.813.9403, access code
681002.
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, 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) 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, 2021, 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.
FINANCIAL & OPERATING
HIGHLIGHTS
Dollars in thousands, except per
share data
For the Three Months
Ended
March 31,
2022
December 31,
2021
September 30,
2021
June 30,
2021
March 31,
2021
Selected Financial Information:
Operating Statistics:
Net income available to common shares
$
74,600
$
28,615
$
11,502
$
3,386
$
1,086
Earnings (loss) per share -- diluted
$
0.34
$
0.23
$
0.11
$
0.03
$
0.01
Rental and other property revenue
$
149,977
$
76,803
$
60,592
$
57,286
$
54,811
Property operating expenses
$
55,883
$
26,952
$
23,164
$
22,298
$
20,838
Net operating income
$
94,094
$
49,851
$
37,428
$
34,988
$
33,973
NOI margin
62.7
%
64.9
%
61.8
%
61.1
%
62.0
%
Adjusted EBITDA
$
81,375
$
42,301
$
31,432
$
28,729
$
26,389
CORE FFO per share
$
0.25
$
0.24
$
0.21
$
0.20
$
0.18
Dividends per share
$
0.12
$
0.12
$
0.12
$
0.12
$
0.12
CORE FFO payout ratio
48.0
%
50.0
%
57.1
%
60.0
%
66.7
%
Portfolio Data:
Total gross assets
$
6,731,377
$
6,785,648
$
2,114,743
$
2,133,021
$
1,970,979
Total number of operating properties
119
123
57
58
56
Total units
35,498
36,831
16,109
16,261
15,667
Period end occupancy
95.4
%
95.6
%
96.0
%
95.6
%
95.5
%
Total portfolio average occupancy
95.2
%
96.0
%
96.1
%
95.9
%
95.4
%
Total portfolio average effective monthly
rent, per unit
$
1,374
$
1,329
$
1,212
$
1,171
$
1,142
Combined same store period end
occupancy(a)
95.5
%
95.7
%
96.2
%
96.1
%
95.5
%
Combined same store portfolio average
occupancy(a)
95.4
%
96.0
%
96.5
%
96.2
%
95.3
%
Combined same store portfolio average
effective monthly rent, per unit(a)
$
1,373
$
1,346
$
1,305
$
1,261
$
1,244
Capitalization:
Total debt(b)
$
2,542,088
$
2,705,336
$
996,270
$
1,036,841
$
947,631
Common share price, period end
$
26.44
$
25.83
$
20.35
$
18.23
$
15.20
Market equity capitalization
$
6,031,873
$
5,882,410
$
2,150,162
$
1,926,218
$
1,561,165
Total market capitalization
$
8,573,961
$
8,587,746
$
3,146,432
$
2,963,059
$
2,508,796
Total debt/total gross assets
37.8
%
39.9
%
47.1
%
48.6
%
48.1
%
Net debt to Adjusted EBITDA (pro
forma)(c)
7.6x
7.7x
8.2x
8.5x
8.2x
Interest coverage
4.0x
3.9x
3.6x
3.4x
3.1x
Common shares and OP Units:
Shares outstanding
221,163,391
220,753,735
105,106,714
105,109,649
102,033,733
OP units outstanding
6,970,993
6,981,841
552,360
552,360
674,515
Common shares and OP units outstanding
228,134,384
227,735,577
105,659,074
105,662,009
102,708,248
Weighted average common shares and OP
units
227,778,484
127,046,225
107,094,044
102,584,809
102,353,380
(a)
Combined same-store portfolio
consists of 113 properties, which represent 33,804 units.
(b)
Includes indebtedness associated
with real estate held for sale.
(c)
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
March 31, 2021 were 7.5x, 15.4x, 8.0x, 9.1x, and 8.9x,
respectively.
STATEMENTS OF OPERATIONS, FFO
& CORE FFO
THREE MONTHS ENDED MARCH 31,
2022 and 2021
Dollars in thousands, except per
share data
For the Three Months
Ended
March 31,
2022
2021
Revenue:
Rental and other property revenue
$
149,977
$
54,811
Other revenue
385
301
Total revenue
150,362
55,112
Expenses:
Property operating expenses
55,883
20,838
Property management expenses
5,556
1,943
General and administrative expenses(a)
7,928
5,942
Depreciation and amortization expense
78,174
16,552
Casualty (gains) losses, net
(1,393
)
359
Total expenses
146,148
45,634
Other income (expense), net
380
—
Interest expense
(20,531
)
(8,385
)
Gain on sale of real estate assets,
net
94,712
—
Merger and integration costs
(1,895
)
—
Net income (loss)
76,880
1,093
(Income) loss allocated to
noncontrolling
(2,280
)
(7
)
Net income (loss) available to common
shares
$
74,600
$
1,086
EPS - basic
$
0.34
$
0.01
Weighted-average shares outstanding -
Basic
220,798,692
101,678,865
EPS - diluted
$
0.34
$
0.01
Weighted-average shares outstanding -
Diluted
222,045,286
102,763,106
Funds From Operations (FFO):
Net income (loss)
$
76,880
$
1,093
Add-Back (Deduct):
Real estate depreciation and
amortization
77,943
16,472
Gain on sale of real estate assets, net,
excluding debt extinguishment costs
(94,712
)
—
FFO
$
60,111
$
17,565
FFO per share
$
0.26
$
0.17
CORE Funds From Operations
(CFFO):
FFO
$
60,111
$
17,565
Add-Back (Deduct):
Other depreciation and amortization
231
80
Casualty (gains) losses, net
(1,393
)
359
Loan (premium accretion) discount
amortization, net
(2,754
)
—
Other (income) expense, net
(380
)
—
Merger and integration costs
1,895
—
CFFO
$
57,710
$
18,004
CFFO per share
$
0.25
$
0.18
Weighted-average shares and units
227,778,484
102,353,380
(a)
Included in the three-months
ended March 31, 2022 and 2021 is $2.4 million and $2.1 million,
respectively, of stock compensation expense recorded with respect
to stock awards granted during the respective period to retirement
eligible employees.
ADJUSTED EBITDA RECONCILIATION
AND COVERAGE RATIO
Dollars in thousands
Three Months Ended
ADJUSTED EBITDA:
March 31,
2022
December 31,
2021
September 30,
2021
June 30,
2021
March 31,
2021
Net income (loss)
$
76,880
$
29,465
$
11,564
$
3,407
$
1,093
Add-Back (Deduct):
Depreciation and amortization
78,174
26,210
17,384
16,763
16,552
Casualty (gains) losses, net
(1,393
)
—
—
—
359
Interest expense
20,531
10,757
8,700
8,559
8,385
Gain on sale of real estate assets
(94,712
)
(76,179
)
(11,492
)
—
—
Loss on extinguishment of debt
—
10,261
—
—
—
Merger and integration costs
1,895
41,787
5,276
—
—
Adjusted EBITDA
$
81,375
$
42,301
$
31,432
$
28,729
$
26,389
INTEREST COST:
Interest expense
$
20,531
$
10,757
$
8,700
$
8,559
$
8,385
INTEREST COVERAGE:
4.0x
3.9x
3.6x
3.4x
3.1x
COMBINED SAME-STORE PORTFOLIO
NET OPERATING INCOME
TRAILING FIVE QUARTERS
Dollars in thousands, except per
unit data
For the Three-Months
Ended
March 31,
2022
December 31,
2021
September 30,
2021
June 30,
2021
March 31,
2021
Revenue:
Rental and other property revenue
$
141,706
$
138,712
$
136,563
$
131,544
$
127,667
Property Operating Expenses:
Real estate taxes
18,726
16,488
16,143
18,917
18,132
Property insurance
2,784
3,027
3,170
2,712
2,660
Personnel expenses
12,052
12,233
12,064
11,758
11,460
Utilities
7,308
7,069
7,244
6,719
7,207
Repairs and maintenance
4,209
5,282
5,399
4,574
4,250
Contract services
4,722
4,787
4,915
4,726
4,365
Advertising expenses
1,180
1,323
1,334
1,308
1,258
Other expenses
1,556
1,489
1,488
1,515
1,588
Total property operating expenses
$
52,537
$
51,698
$
51,757
$
52,229
$
50,920
Combined same-store net operating
income (a)
$
89,169
$
87,014
$
84,806
$
79,315
$
76,747
Combined same-store NOI margin
62.9
%
62.7
%
62.1
%
60.3
%
60.1
%
Average occupancy
95.4
%
96.0
%
96.5
%
96.2
%
95.3
%
Average effective monthly rent, per
unit
$
1,373
$
1,346
$
1,305
$
1,261
$
1,244
Reconciliation of combined same-store
net operating income to net income (loss)
Combined same-store portfolio net
operating income
$
89,169
$
87,014
$
84,806
$
79,315
$
76,747
Combined non same-store net operating
income
4,925
7,923
7,054
5,179
4,805
Pre-Merger STAR Portfolio NOI
—
(45,086
)
(54,433
)
(49,506
)
(47,579
)
Other revenue
385
113
188
158
301
Other income (expense), net
380
—
—
—
—
Property management expenses
(5,556
)
(3,221
)
(2,199
)
(2,176
)
(1,943
)
General and administrative expenses
(7,928
)
(4,442
)
(3,985
)
(4,241
)
(5,942
)
Depreciation and amortization expense
(78,174
)
(26,210
)
(17,384
)
(16,763
)
(16,552
)
Casualty gains (losses), net
1,393
—
—
—
(359
)
Interest expense
(20,531
)
(10,757
)
(8,700
)
(8,559
)
(8,385
)
Gain on sale of real estate assets,
net
94,712
76,179
11,492
—
—
Loss on extinguishment of debt
—
(10,261
)
—
—
—
Merger and integration costs
(1,895
)
(41,787
)
(5,276
)
—
—
Net income (loss)
$
76,880
$
29,465
$
11,564
$
3,407
$
1,093
(a)
Combined same-store portfolio
consists of 113 properties, which represent 33,804 units.
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.
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
March 31,
2022
December 31,
2021
September 30,
2021
June 30,
2021
March 31,
2021
Total debt
$
2,542,088
$
2,705,336
$
1,018,729
$
1,056,463
$
947,631
Less: cash and cash equivalents
(23,971
)
(35,972
)
(8,720
)
(7,566
)
(8,653
)
Less: loan discounts and premiums, net
(68,832
)
(71,586
)
—
—
—
Total net debt
$
2,449,285
$
2,597,778
$
1,010,009
$
1,048,897
$
938,978
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. Because our portfolio of properties
changed significantly as a result of our STAR Merger, which closed
on December 16, 2021, we also present, as described below,
information on the IRT Same-Store Portfolio, STAR Same-Store
Portfolio and Combined Same-Store Portfolio.
IRT Same-Store Portfolio
IRT Same-Store Portfolio represents the 48 properties that IRT
owned and consolidated as of January 1, 2021 and through March 31,
2022 (other than properties held for sale as of March 31,
2022).
STAR Same-Store Portfolio
STAR Same-Store Portfolio represents the 65 properties that STAR
owned and consolidated as of January 1, 2021 and that, following
the consummation of the Merger on December 16, 2021, continued to
be owned and consolidated by IRT through March 31, 2022 (other than
properties held for sale as of March 31, 2022).
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 of 113 properties.
Pre-Merger STAR Portfolio NOI
In order to reconcile Combined Same-Store NOI to net income for
periods prior to our December 16, 2021 merger with STAR, our
reconciliation excludes NOI generated by the STAR Portfolio because
IRT did not own these properties prior to December 16, 2021.
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
March 31,
2022
December 31,
2021
September 30,
2021
June 30,
2021
March 31,
2021
Total assets
$
6,387,322
$
6,506,696
$
1,846,911
$
1,875,122
$
1,728,016
Plus: accumulated depreciation(a)
291,199
254,123
247,563
237,684
223,187
Plus: accumulated amortization
52,856
24,829
20,269
20,215
19,776
Total gross assets
$
6,731,377
$
6,785,648
$
2,114,743
$
2,133,021
$
1,970,979
(a)
Includes accumulated depreciation
associated with real estate held for sale.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220503006129/en/
Independence Realty Trust, Inc. Contact Edelman Financial
Communications & Capital Markets Ted McHugh and Lauren Torres
917-365-7979 IRT@edelman.com
Independence Realty (NYSE:IRT)
Historical Stock Chart
From Jun 2024 to Jul 2024
Independence Realty (NYSE:IRT)
Historical Stock Chart
From Jul 2023 to Jul 2024