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Section 1: 8-K (IRT-Q4 2018-12-31)

irt-8k_20190221.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): February 21, 2019

 

Independence Realty Trust, Inc.

(Exact name of registrant as specified in its charter)

 

 

Maryland

 

001-36041

 

26-4567130

(State or other jurisdiction

 

(Commission

 

(I.R.S. Employer

of incorporation)

 

File Number)

 

Identification No.)

 

Two Liberty Place

50 S. 16th Street, Suite 3575

Philadelphia, Pennsylvania, 19102

(Address of Principal Executive Office) (Zip Code)

 

(267) 270-4800

(Registrant’s telephone number, including area code)

 

N/A

Former name or former address, if changed since last report

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

 

 

 

 


 

Item 2.02

Results of Operations and Financial Condition.

On February 21, 2019, Independence Realty Trust, Inc. (“IRT”) issued a press release regarding its earnings for the year ended December 31, 2018. Additionally, IRT is furnishing certain supplemental information with this Current Report. Copies of such press release and such supplemental information are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report and are incorporated by reference herein.  The information in this Current Report, including Exhibit 99.1 and Exhibit 99.2 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.

Item 7.01

Regulation FD Disclosure.

The information provided in Item 2.02 above is incorporated by reference into this Item 7.01.

Item 8.01

Other Events.

Independence Realty Trust, Inc. (the “Company”) previously commenced an “at the market” offering under which the Company may, through its sales agents, offer and sell over a period of time and from time to time shares of the Company’s common stock having an aggregate offering price of up to $150 million (the “Shares”), as described in the Company’s prospectus supplement, dated November 13, 2017 (the “Prospectus Supplement”), to the prospectus, dated November 9, 2017, which forms part of the registration statement on Form S-3 (No. 333-218130) (the “Registration Statement”). The disclosure under the heading “Legal Matters” that appears on page S-7 of the Prospectus Supplement is hereby restated and superseded in its entirety to read as follows:

The legality of the securities to be offered hereby has been passed upon for us by Pepper Hamilton LLP. Certain legal matters will be passed upon for the sales agents by Fried, Frank, Harris, Shriver & Jacobson LLP.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

 

99.1

 

Press Release

 

 

 

99.2

 

Supplemental Information

 

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

Independence Realty Trust, Inc.

 

 

 

 

 

February 21, 2019

 

By:

 

/s/ James J. Sebra

 

 

Name:

 

James J. Sebra

 

 

Title:

 

Chief Financial Officer and Treasurer

 

 

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

irt-ex991_7.htm

Exhibit 99.1

 

Independence Realty Trust Announces Fourth Quarter and Full Year 2018 Financial Results

 

Introduces 2019 Full Year Guidance Metrics

 

PHILADELPHIA – (BUSINESS WIRE) – February 21, 2019 — Independence Realty Trust, Inc. (“IRT”) (NYSE: IRT), a multifamily apartment REIT, today announced its fourth quarter and full year 2018 financial results.

 

Fourth Quarter Highlights

 

 

Net income allocable to common shares of $14.6 million for the quarter ended December 31, 2018 as compared to $6.3 million for the quarter ended December 31, 2017.

 

 

Earnings per diluted share of $0.16 for the quarter ended December 31, 2018 as compared to $0.08 for the quarter ended December 31, 2017.

 

 

Core Funds from Operations (“CFFO”) of $16.6 million for the quarter ended December 31, 2018 as compared to $15.3 million for the quarter ended December 31, 2017. CFFO per share was $0.19 for the fourth quarter of 2018 as compared to $0.18 for the fourth quarter of 2017.

 

 

Adjusted EBITDA of $25.7 million for the quarter ended December 31, 2018 as compared to $21.7 million for the quarter ended December 31, 2017.

 

Full Year Highlights:

 

 

Since the inception of our value add program, IRT has completed renovations in 1,232 units, achieving a weighted average return on investment of 18.4% on interior renovations.

 

 

Net income allocable to common shares of $26.3 million for the twelve months ended December 31, 2018 as compared to $30.2 million for the twelve months ended December 31, 2017.

 

 

Earnings per diluted share of $0.30 for the twelve months ended December 31, 2018 as compared to $0.41 for the twelve months ended December 31, 2017.

 

 

Core Funds from Operations (“CFFO”) of $65.1 million for the twelve months ended December 31, 2018 as compared to $55.7 million for the twelve months ended December 31, 2017. CFFO per share was $0.74 for the full year 2018 as compared to $0.73 for the full year 2017.

 

 

Adjusted EBITDA of $97.1 million for the twelve months ended December 31, 2018 as compared to $81.0 million for the twelve months ended December 31, 2017.

 

Included later in this press release are definitions of CFFO, Adjusted EBITDA and other Non-GAAP financial measures and reconciliations of such measures to their most comparable financial measures as calculated and presented under GAAP.  

 

Management Commentary:

 

“IRT’s 2018 performance highlights our focus on providing strong, consistent results at the property level while investing in long-term growth through portfolio enhancements.,” said Scott Schaeffer, IRT’s Chairman and CEO. “We are executing on our value add program which is designed to increase rents while lowering operating costs resulting in expanded operating margins, as highlighted by the 3.9% same store NOI growth achieved in the fourth quarter. During 2018 we continued to demonstrate our ability to identify high-quality, middle market communities in core markets like Columbus and Tampa, while exiting markets where we do not see favorable, long-term fundamentals.  We also strengthened the balance sheet with a new $200 million term loan, extending our maturities by over 2 years and reducing our interest cost by 15 basis points.  As we look to 2019, we are encouraged by the positive macro outlook for multifamily communities, and are dedicated to driving strong NOI growth through our value add program. We are confident that our strategies and execution puts us on the right path to achieve our long-term objectives.”


 

 

Same Store Property Operating Results

 

 

Fourth Quarter 2018 Compared to Fourth Quarter 2017(1)

Twelve Months Ended 12/31/18 Compared to Twelve Months Ended 12/31/17(1)

Rental income

1.6% increase

1.7% increase

Total revenues

1.7% increase

2.0% increase

Property level operating expenses

1.5% decrease

1.1% increase

Net operating income (“NOI”)

3.9% increase

2.6% increase

Portfolio average occupancy

170 bps decrease to 93.1%

60 bps decrease to 94.1%

Portfolio average rental rate

3.3% increase to $1,049

2.4% increase to $1,033

NOI Margin

130 bps increase to 61.7%

30 bps increase to 60.1%

 

 

(1)

Same store portfolio for the three and twelve months ended December 31, 2018 includes 37 properties, which represent 10,329 units.

 

Same Store Property Operating Results, Excluding Value Add

The same store portfolio results below exclude seven communities that are both part of our same store portfolio and part of our Value Add program for the three and twelve months ended December 31, 2018.

 

 

 

Fourth Quarter 2018 Compared to Fourth Quarter 2017(1)

Twelve Months Ended 12/31/18 Compared to Twelve Months Ended 12/31/17(1)

Rental income

2.2% increase

2.1% increase

Total revenues

2.5% increase

2.5% increase

Property level operating expenses

0.9% increase

2.4% increase

Net operating income (“NOI”)

3.5% increase

2.6% increase

Portfolio average occupancy

50 bps decrease to 94.3%

30 bps increase to 95.0%

Portfolio average rental rate

2.8% increase to $1,045

1.9% increase to $1,032

NOI Margin

50 bps increase to 61.3%

10 bps increase to 60.0%

 

 

(1)

Same store portfolio, excluding value add, for the three and twelve months ended December 31, 2018 includes 30 properties, which represent 7,976 units.

 

 

Capital Recycling

As previously announced, IRT commenced a capital recycling initiative in the third quarter of 2018 aimed to dispose of assets in markets that lack desirable long-term fundamentals in order to invest in attractive non-gateway markets to gain scale. As part of this capital recycling initiative, IRT identified four acquisitions in target markets as well as five properties in its portfolio that it identified as held for sale. IRT completed the acquisition of the fourth target community during the quarter, and completed the disposition of two communities held for sale in the quarter.

 

Acquisitions completed in the fourth quarter:

 

On October 11, 2018, IRT completed the acquisition of a 260-unit community located in McDonough, GA for a purchase price of $30.5 million. IRT assumed $15.5 million of property level debt in connection with this acquisition. As of December 31, 2018, the community was 96.9% occupied with average rent per unit of $981. IRT closed this acquisition using proceeds from its line of credit in advance of completing sales associated with the capital recycling initiative.

 

 

On November 7, 2018, IRT completed the acquisition of a 276-unit community located in Brandon, FL for a purchase price of $47.0 million. As of December 31, 2018, the community was 96.4% occupied with average rent per unit of $1,145. IRT closed this acquisition using proceeds from its line of credit in advance of completing sales associated with the capital recycling initiative.

 

Dispositions completed in the fourth quarter:

 

On December 20, 2018, IRT completed the disposition of a 346-unit community located in Greenville, SC for $52.5 million, which was previously identified as held for sale.

 


 

 

 

On December 27, 2018, IRT completed the disposition of a 170-unit community located in Ridgeland, MS for $24.8 million, which was previously identified as held for sale.

 

Term Loan Agreement

As previously announced, on October 30, 2018 IRT entered into a five-year, $200 million unsecured term loan that will mature in January 2024. The proceeds were used to paydown borrowings outstanding under the revolving portion of IRT’s $300 million unsecured credit facility. The term loan bears interest at a spread over LIBOR based on IRT’s overall leverage. At closing, the spread to LIBOR was 145 basis points. To continue IRT’s practice of reducing exposure to floating interest rates, IRT purchased an interest rate collar that caps LIBOR at 2.50%, subject to a floor on LIBOR of 2.25%, during the five-year term.

 

At-the-Market Offering

During the fourth quarter of 2018, IRT issued 273,000 shares of common stock under IRT’s at-the-market sales program at a weighted average per share price of $10.35, yielding net proceeds of approximately $2.8 million.

 

Capital Expenditures

For the three months ended December 31, 2018, recurring capital expenditures for the total portfolio were $1.9 million, or $120 per unit. For the twelve months ended December 31, 2018, recurring capital expenditures for the total portfolio were $7.3 million, or $463 per unit.

 

Value Add Update

Value add initiatives, comprised of renovations and upgrades at selected communities to drive increased rental rates, remain a core component of IRT’s growth strategy for the fourth quarter of 2018 and beyond. IRT currently executing on two phases of value add projects covering 4,314 units across 14 communities. Seven of these 14 communities are part of the same store portfolio in 2018. These value-add initiatives have an estimated total investment of approximately $50.0 million and are expected to unlock an additional $8.0 to $9.0 million in NOI once all of the renovations are completed.  

 

During the fourth quarter of 2018, IRT continued to execute on its value add program completing 385 units, which brings the total units completed to 1,232 units, or 29% of the Phase 1 and 2 value add program. The remaining value add projects, covering 3,082 units, are expected to be completed in 2019 and through the beginning of 2020. To-date, 90% of the completed units have been leased with a rental premium of $156 per unit per month, generating an 18.4% return on interior renovations. In addition to interior unit renovations, we are also improving many of the common area amenities at these value add communities as we position them to compete with Class A properties in their markets, but at a much lower price point.  See the “Value Add Summary” within our Supplemental Information for additional detail.

 

Distributions

On December 13, 2018, IRT’s Board of Directors declared a quarterly cash dividend for the fourth quarter of 2018 of $0.18 per share of IRT common stock, payable on January 24, 2019 to stockholders of record on December 27, 2018.

 

2019 EPS and CFFO Guidance

IRT is announcing 2019 full year guidance. EPS per diluted share is projected to be in a range of $0.76 to $0.80. CFFO per diluted share, a non-GAAP financial measure, is projected to be in the range of $0.74 to $0.78. A reconciliation of IRT's projected net income allocable to common shares to its projected CFFO per share, is included below. Also, included below are the primary assumptions underlying these estimates. 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.

 

2019 Full Year EPS and CFFO Guidance (1)(2)

Low

High

Earnings per share

$0.76

$0.80

Adjustments:

 

 

Depreciation and amortization

0.43

0.47

Gains on sale of assets

(0.51)

(0.55)

Share base compensation

0.04

0.04

Amortization of deferred financing fees

0.02

0.02

CORE FFO per share allocated to common shareholders

$0.74

$0.78

 

 


 

 

(1)

This guidance, including the underlying assumptions, constitutes forward-looking information. Actual full year 2019 EPS and CFFO could vary significantly from the projections presented. See “Forward-Looking Statements” below. Our guidance is based on the following key assumptions for our 2019 performance.

 

(2)

Per share guidance is based on weighted average shares and units outstanding of 90.2 million.

 


Same Store Communities

2019 Outlook

Number of properties/units

50 properties / 13,697 units

Property revenue growth

4.0% to 6.0%

Controllable property operating expense growth

2.5% to 3.5%

Real estate tax and insurance expense increase (1)

6.0% to 12.0%

Total real estate operating expense growth

4.0% to 6.0%

Property NOI growth

3.5% to 5.5%

 

 

Corporate Expenses

 

General and administrative expenses

(excluding stock based compensation)

$9.0 to $10.0 million

 

 

Transaction/Investment Volume

 

Acquisition volume (2)

$30.0 to $110.0 million

Disposition volume (3)

$100.0 to $180.0 million

 

 

Capital Expenditures

 

Recurring

$8.0 to $9.0 million

Value add & non-recurring

$30.0 to $38.0 million

 

 

(1)

In 2019, we are expecting increases in real estate tax expense in several of our recently acquired communities that are new to our same store portfolio. Our underwriting contemplates tax increases due to re-assessments, however, the ultimate timing is difficult to predict.

 

(2)

Acquisition volume includes the completion of acquisitions from the 2018 capital recycling program ($30.0 million) and potential capital recycling acquisitions in 2019.

 

(3)

Dispositions include the completion of dispositions from the 2018 capital recycling program ($100.0 million) and potential capital recycling dispositions in 2019.

    

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

IRT discloses the following non-GAAP financial measures in this earnings release: FFO, CFFO, Adjusted EBITDA and NOI.  Included at the end of this release is a reconciliation of IRT’s reported net income to its FFO and CFFO, a reconciliation of IRT’s same store NOI to its reported net income, a reconciliation of IRT’s Adjusted EBITDA to net income, and management’s respective definitions and rationales for the usefulness of each of these non-GAAP financial measures and other definitions used in this release.

 

Conference Call

All interested parties can listen to the live conference call webcast at 10:00 AM ET on Thursday, February 21, 2019 from the investor relations section of the IRT website at www.irtliving.com or by dialing 1.844.775.2542, access code 4378632. 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 28, 2019 by dialing 1.855.859.2056, access code 4378632.

 

Supplemental Information

IRT produces supplemental information that includes details regarding the performance of the portfolio, financial information, non-GAAP financial measures, same store information and other useful information for investors.  The supplemental information is available via the Company's website, www.irtliving.com, through the "Investor Relations" section.

 

 

 

 


 

About Independence Realty Trust, Inc.

Independence Realty Trust (NYSE: IRT) is a real estate investment trust that currently owns and operates 58 multifamily apartment properties, totaling 15,880 units, across non-gateway U.S. markets, including Atlanta, Louisville, Memphis, and Raleigh. IRT’s investment strategy is focused on gaining scale within key amenity rich submarkets that offer good school districts, high-quality retail and major employment centers. IRT aims to provide stockholders attractive risk-adjusted returns through diligent portfolio management, strong operational performance, and a consistent return of capital through distributions and capital appreciation.

 

 


 


 

Forward-Looking Statements

This press release 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 “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “seek,” “outlook,” “assumption,” “projected,” “strategy”, “guidance” or other, similar words. Because such forward-looking statements involve significant risks, uncertainties and contingencies, many of which are not within IRT’s control, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such statements. These forward-looking statements are based upon the current judgements and expectations of IRT’s management.  Risks and uncertainties that might cause IRT’s actual results to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: adverse changes in national, regional and local economic climates; changes in market demand for rental apartment homes and pricing pressures from competitors that could limit our ability to lease units or increase rents; competition that could adversely affect our ability to acquire additional properties; volatility in capital and credit markets, including changes that reduce availability, and increase costs, of capital; unexpected changes in the assumptions underlying our 2019 EPS, CFFO and same store NOI growth guidance; delays in completing, and cost overruns incurred in connection with, the value add initiatives and failure to achieve projected rent increases and occupancy levels on account of the initiatives; risks associated with pursuit of strategic acquisitions, including risks associated with the need to raise additional capital to fund the acquisitions and failure of acquisitions to produce expected returns; failure to complete planned sales on expected terms or at all; unexpected costs of REIT qualification compliance; costs and disruptions as the result of a cybersecurity incident or other technology disruption; and share price fluctuations.  Additional risks and uncertainties that could cause our actual results to differ materially from those expressed or implied by the forward-looking statements in this press release are discussed in IRT’s filings with the Securities and Exchange Commission (“SEC”), including those under the heading “Risk Factors” in IRT’s most recently filed Annual Report on Form 10-K.  Dividends are subject to the discretion of IRT’s Board of Directors, and will depend on IRT’s financial condition, results of operations, capital requirements, compliance with applicable laws and agreements and any other factors deemed relevant by IRT’s Board.  IRT undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required by law.

 

Independence Realty Trust, Inc. Contact

Edelman Financial Communications & Capital Markets

Ted McHugh and Lauren Tarola

212.277.4322

IRT@edelman.com


 


 

Schedule I

Independence Realty Trust, Inc.

Selected Financial Information

(Dollars in thousands, except share and per share amounts)

(unaudited)

 

 

 

As of or For the Three Months Ended

 

 

 

December 31,

2018

 

 

September 30,

2018

 

 

June 30,

2018

 

 

March 31,

2018

 

 

December 31,

2017

 

Selected Financial Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income allocable to common shares

 

$

14,580

 

 

$

4,787

 

 

$

3,509

 

 

$

3,412

 

 

$

6,293

 

Earnings (loss) per share -- diluted

 

$

0.16

 

 

$

0.05

 

 

$

0.04

 

 

$

0.04

 

 

$

0.08

 

Total property revenue

 

$

49,718

 

 

$

48,644

 

 

$

46,734

 

 

$

45,616

 

 

$

42,307

 

Total property operating expenses

 

$

19,450

 

 

$

19,792

 

 

$

18,703

 

 

$

18,418

 

 

$

16,610

 

Net operating income

 

$

30,268

 

 

$

28,852

 

 

$

28,031

 

 

$

27,198

 

 

$

25,697

 

NOI margin

 

 

60.9

%

 

 

59.3

%

 

 

60.0

%

 

 

59.6

%

 

 

60.7

%

Adjusted EBITDA

 

$

25,653

 

 

$

24,748

 

 

$

23,722

 

 

$

23,012

 

 

$

21,743

 

FFO per share -- diluted

 

$

0.16

 

 

$

0.18

 

 

$

0.17

 

 

$

0.17

 

 

$

0.14

 

CORE FFO per share -- diluted

 

$

0.19

 

 

$

0.19

 

 

$

0.19

 

 

$

0.18

 

 

$

0.18

 

Dividends per share

 

$

0.18

 

 

$

0.18

 

 

$

0.18

 

 

$

0.18

 

 

$

0.18

 

CORE FFO payout ratio

 

 

94.7

%

 

 

94.7

%

 

 

94.7

%

 

 

100.0

%

 

 

100.0

%

Portfolio Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total gross assets

 

$

1,798,736

 

 

$

1,782,186

 

 

$

1,706,465

 

 

$

1,689,689

 

 

$

1,551,238

 

Total number of properties

 

 

58

 

 

 

58

 

 

 

56

 

 

 

56

 

 

 

52

 

Total units

 

 

15,880

 

 

 

15,860

 

 

 

15,280

 

 

 

15,280

 

 

 

14,017

 

Period end occupancy

 

 

92.5

%

 

 

92.3

%

 

 

93.8

%

 

 

93.5

%

 

 

94.0

%

Total portfolio average occupancy

 

 

92.3

%

 

 

93.5

%

 

 

94.1

%

 

 

93.7

%

 

 

94.1

%

Total portfolio average effective monthly rent, per unit

 

$

1,035

 

 

$

1,024

 

 

$

1,009

 

 

$

1,004

 

 

$

1,003

 

Same store period end occupancy (a)

 

 

93.2

%

 

 

93.2

%

 

 

94.3

%

 

 

94.2

%

 

 

95.1

%

Same store portfolio average occupancy (a)

 

 

93.1

%

 

 

94.1

%

 

 

94.8

%

 

 

94.5

%

 

 

94.8

%

Same store portfolio average effective monthly rent, per unit (a)

 

$

1,049

 

 

$

1,041

 

 

$

1,025

 

 

$

1,018

 

 

$

1,015

 

Capitalization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total debt

 

$

985,488

 

 

$

963,238

 

 

$

911,772

 

 

$

903,286

 

 

$

778,442

 

Common share price, period end

 

$

9.18

 

 

$

10.53

 

 

$

10.31

 

 

$

9.18

 

 

$

10.09

 

Market equity capitalization

 

$

826,802

 

 

$

945,615

 

 

$

906,696

 

 

$

806,671

 

 

$

885,094

 

Total market capitalization

 

$

1,812,290

 

 

$

1,908,853

 

 

$

1,818,468

 

 

$

1,709,957

 

 

$

1,663,536

 

Total debt/total gross assets

 

 

54.8

%

 

 

54.0

%

 

 

53.4

%

 

 

53.5

%

 

 

50.2

%

Net debt to adjusted EBITDA

 

 

9.5

x

(b)

 

9.7

x

 

 

9.5

x

 

 

9.7

x

 

 

8.8

x

Interest coverage

 

 

2.6

x

 

 

2.7

x

 

 

2.8

x

 

 

2.8

x

 

 

3.0

x

Common shares and OP Units:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding

 

 

89,184,443

 

 

 

88,920,879

 

 

 

87,044,121

 

 

 

86,973,397

 

 

 

84,708,551

 

OP units outstanding

 

 

881,107

 

 

 

881,107

 

 

 

899,215

 

 

 

899,215

 

 

 

3,011,351

 

Common shares and OP units outstanding

 

 

90,065,550

 

 

 

89,801,986

 

 

 

87,943,336

 

 

 

87,872,612

 

 

 

87,719,902

 

Weighted average common shares and units

 

 

89,532,373

 

 

 

88,585,940

 

 

 

87,543,931

 

 

 

87,466,518

 

 

 

86,646,371

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

Same store portfolio consists of 37 properties, which represent 10,329 units.

(b)

Net debt to adjusted EBITDA would be 9.2x if adjusted for the timing of acquisitions, the full quarter effect of current value add initiatives, and the completion of the announced 2018 capital recycling activities.  

 

 


 

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

Twelve Months Ended December 31,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Funds From Operations (FFO):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (loss)

 

$

14,729

 

 

$

6,519

 

 

$

26,610

 

 

$

31,441

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

 

11,577

 

 

 

9,868

 

 

 

45,067

 

 

 

34,097

 

Net (gains) losses on sale of assets

 

 

(11,561

)

 

 

(4,455

)

 

 

(11,561

)

 

 

(23,076

)

FFO

 

$

14,745

 

 

$

11,932

 

 

$

60,116

 

 

$

42,462

 

FFO per share

 

$

0.16

 

 

$

0.14

 

 

$

0.68

 

 

$

0.56

 

Core Funds From Operations (CFFO):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO

 

$

14,745

 

 

$

11,932

 

 

$

60,116

 

 

$

42,462

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock compensation expense

 

 

558

 

 

 

420

 

 

 

2,524

 

 

 

1,967

 

Amortization of deferred financing costs

 

 

352

 

 

 

309

 

 

 

1,430

 

 

 

1,469

 

Acquisition and integration expenses

 

 

-

 

 

 

386

 

 

 

-

 

 

 

1,342

 

Other depreciation and amortization

 

 

54

 

 

 

44

 

 

 

154

 

 

 

104

 

Other expense (income)

 

 

-

 

 

 

(94

)

 

 

(52

)

 

 

(94

)

(Gains) losses on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

572

 

Debt extinguishment costs included in net gains (losses) on sale of assets

 

 

911

 

 

 

1,503

 

 

 

911

 

 

 

4,251

 

Acquisition related debt extinguishment expenses

 

 

-

 

 

 

843

 

 

 

-

 

 

 

3,624

 

CFFO

 

$

16,620

 

 

$

15,343

 

 

$

65,083

 

 

$

55,697

 

CFFO per share

 

$

0.19

 

 

$

0.18

 

 

$

0.74

 

 

$

0.73

 

Weighted-average shares and units outstanding

 

 

89,532,373

 

 

 

86,646,371

 

 

 

88,289,110

 

 

 

76,291,465

 

 


 

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,

2018

 

 

September 30,

2018

 

 

June 30,

2018

 

 

March 31,

2018

 

 

December 31,

2017

 

Reconciliation of same-store net operating income to net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-store net operating income

 

$

20,044

 

 

$

19,399

 

 

$

19,465

 

 

$

19,123

 

 

$

19,296

 

Non same-store net operating income

 

 

10,224

 

 

 

9,453

 

 

 

8,566

 

 

 

8,075

 

 

 

6,401

 

Property management income

 

 

91

 

 

 

135

 

 

 

155

 

 

 

139

 

 

 

140

 

Property management expenses

 

 

(2,027

)

 

 

(1,661

)

 

 

(1,592

)

 

 

(1,683

)

 

 

(1,696

)

General and administrative expenses

 

 

(2,633

)

 

 

(2,578

)

 

 

(2,872

)

 

 

(2,734

)

 

 

(2,398

)

Acquisition and integration expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(386

)

Depreciation and amortization expense

 

 

(11,631

)

 

 

(10,783

)

 

 

(11,583

)

 

 

(11,224

)

 

 

(9,912

)

Casualty related costs

 

 

(46

)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(9,943

)

 

 

(9,129

)

 

 

(8,594

)

 

 

(8,340

)

 

 

(7,129

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

144

 

 

 

94

 

Net gains (losses) on sale of assets

 

 

10,650

 

 

 

 

 

 

 

 

 

 

 

 

2,952

 

Acquisition related debt extinguishment expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(843

)

Debt extinguishment costs included in net gains (losses) on sale of assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

14,729

 

 

$

4,836

 

 

$

3,545

 

 

$

3,500

 

 

$

6,519

 

 

 

(a)

Same store portfolio includes 37 properties, which represent 10,329 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,

2018

 

 

September 30,

2018

 

 

June 30,

2018

 

 

March 31,

2018

 

 

December 31,

2017

 

Net income (loss)

 

$

14,729

 

 

$

4,836

 

 

$

3,545

 

 

$

3,500

 

 

$

6,519

 

Add-Back (Deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

11,631

 

 

 

10,783

 

 

 

11,583

 

 

 

11,224

 

 

 

9,912

 

Interest expense

 

 

9,943

 

 

 

9,129

 

 

 

8,594

 

 

 

8,340

 

 

 

7,129

 

Other (income) expense

 

 

 

 

 

 

 

 

 

 

 

(52

)

 

 

(94

)

Acquisition and integration expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

386

 

Net (gains) losses on sale of assets

 

 

(10,650

)

 

 

 

 

 

 

 

 

 

 

 

(2,952

)

(Gains) losses on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition related debt extinguishment expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

843

 

Adjusted EBITDA

 

$

25,653

 

 

$

24,748

 

 

$

23,722

 

 

$

23,012

 

 

$

21,743

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST COST:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

$

9,943

 

 

$

9,129

 

 

$

8,594

 

 

$

8,340

 

 

$

7,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST COVERAGE:

 

 

2.6

x

 

 

2.7

x

 

 

2.8

x

 

 

2.8

x

 

 

3.0

x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

ADJUSTED EBITDA:

 

December 31,

2018

 

 

December 31,

2017

 

 

December 31,

2018

 

 

December 31,

2017

 

Net income (loss)

 

$

14,729

 

 

$

6,519

 

 

$

26,610

 

 

$

31,441

 

Add-Back (Deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

11,631

 

 

 

9,912

 

 

 

45,221

 

 

 

34,201

 

Interest expense

 

 

9,943

 

 

 

7,129

 

 

 

36,006

 

 

 

28,702

 

Other (income) expense

 

 

 

 

 

(94

)

 

 

(52

)

 

 

(89

)

Acquisition and integration expenses

 

 

 

 

 

386

 

 

 

 

 

 

1,342

 

Net (gains) losses on sale of assets

 

 

(10,650

)

 

 

(2,952

)

 

 

(10,650

)

 

 

(18,825

)

(Gains) losses on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

572

 

Acquisition related debt extinguishment expenses

 

 

 

 

 

843

 

 

 

 

 

 

3,624

 

Adjusted EBITDA

 

$

25,653

 

 

$

21,743

 

 

$

97,135

 

 

$

80,968

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST COST:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

$

9,943

 

 

$

7,129

 

 

$

36,006

 

 

$

28,702

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST COVERAGE:

 

 

2.6

x

 

 

3.0

x

 

 

2.7

x

 

 

2.8

x

 


 

Schedule V

Independence Realty Trust, Inc.

DEFINITIONS

Average Effective Monthly Rent per Unit

Average effective rent per unit represents the average of gross rent amounts, divided by the average occupancy (in units) for the period presented.  We believe average effective rent is a helpful measurement in evaluating average pricing.  This metric, when presented, reflects the average effective rent per month.

Average Occupancy

Average occupancy represents the average of the daily physical occupancy for the period presented.

EBITDA and Adjusted EBITDA

EBITDA is defined as net income before interest expense including amortization of deferred financing costs, income tax expense, and depreciation and amortization expenses. Adjusted EBITDA is EBITDA before certain other non-cash or non-operating gains or losses related to items such as acquisition and integration expenses, asset sales, debt extinguishments and acquisition related debt extinguishment expenses. EBITDA and Adjusted EBITDA are each non-GAAP measures.  We consider each of EBITDA and Adjusted EBITDA to be an appropriate supplemental measure of our 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. IRT’s calculation of Adjusted EBITDA differs from the methodology used for calculating Adjusted EBITDA by certain other REITs and, accordingly, IRT’s Adjusted EBITDA may not be comparable to Adjusted EBITDA reported by other REITs.

Funds From Operations (“FFO”) and Core Funds From Operations (“CFFO”)

IRT believes that FFO and Core FFO, or 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. IRT computes FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, as net income or loss 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 IRT’s 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.

IRT computes CFFO by adjusting FFO to remove the effect of items that do not reflect ongoing property operations, including stock compensation expense, depreciation and amortization of other items not added back in the computation of  FFO, amortization of deferred financing costs, acquisition and integration expenses, and other non-cash or non-operating gains or losses related to items such as debt extinguishment costs we incur when IRT sells a property subject to secured debt, asset sales, debt extinguishments, and acquisition related debt extinguishment expenses. NAREIT does not provide guidelines for computing CFFO.

IRT’s calculation of CFFO differs from the methodology used for calculating CFFO by certain other REITs and, accordingly, IRT’s CFFO may not be comparable to CFFO reported by other REITs. IRT’s management utilizes FFO and CFFO as measures of IRT’s operating performance, and believe they are also useful to investors, because they facilitate an understanding of IRT’s 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 IRT’s operating performance between periods. Furthermore, although FFO, CFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, IRT believes that FFO and CFFO may provide IRT and IRT’s investors with an additional useful measure to compare IRT’s financial performance to certain other REITs. Neither FFO nor CFFO is equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and CFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Accordingly, FFO and CFFO do not measure whether cash flow is sufficient to fund all of IRT’s 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 IRT’s operating performance or as an alternative to cash flow from operating, investing, and financing activities as a measure of IRT’s liquidity.

 

 


 

Interest Coverage

Interest coverage is a ratio computed by dividing our Adjusted EBITDA by our interest expense.

Net Debt

Net debt, a non-GAAP 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).

 

 

 

 

 

 

 

 

 

             As of

 

 

 

 

 

 

 

 

 

 

December 31,

2018

 

 

September 30,

2018

 

 

June 30,

2018

 

 

March 31,

2018

 

 

December 31,

2017

 

Total debt

$

985,488

 

 

$

963,238

 

 

$

911,772

 

 

$

903,286

 

 

$

778,442

 

Less: cash and cash equivalents

 

(9,316

)

 

 

(7,645

)

 

 

(10,896

)

 

 

(10,399

)

 

 

(9,985

)

Total net debt

$

976,172

 

 

$

955,593

 

 

$

900,876

 

 

$

892,887

 

 

$

768,457

 

IRT presents net debt because management believes it is a useful measure of IRT’s credit position and progress toward reducing leverage.  The calculation is limited because I