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Section 1: 10-Q (10-Q)

irt-10q_20190630.htm
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2018-05-23

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 001-36041

 

INDEPENDENCE REALTY TRUST, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Maryland

26-4567130

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

 

 

1835 Market Street, Suite 2601

Philadelphia, PA

19103

(Address of Principal Executive Offices)

(Zip Code)

(267) 270-4800

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to section 12(b) of the Act:

 

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common stock

 

IRT

 

NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated filer

Accelerated filer

 

 

 

 

 

 

Non-Accelerated filer

Smaller reporting company

 

 

 

 

 

 

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of July 29, 2019 there were 90,190,145 shares of the Registrant’s common stock issued and outstanding.

 

 

 


INDEPENDENCE REALTY TRUST, INC.

INDEX

 

 

 

 

 

Page

 

 

 

 

 

PART I—FINANCIAL INFORMATION

 

3

 

 

 

 

 

Item 1.

 

Financial Statements (unaudited)

 

3

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the Three and Six Months ended June 30, 2019 and June 30, 2018

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months ended June 30, 2019 and June 30, 2018

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Changes in Equity for the Three and Six Months ended June 30, 2019 and June 30, 2018

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2019 and June 30, 2018

 

8

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements as of June 30, 2019

 

9

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

20

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

30

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

30

 

 

 

 

 

PART II—OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

30

 

 

 

 

 

Item 1A.

 

Risk Factors

 

30

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

30

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

31

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

31

 

 

 

 

 

Item 5.

 

Other Information

 

31

 

 

 

 

 

Item 6.

 

Exhibits

 

31

 

 

 

 

 

Signatures

 

32

 

 

 


PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited and dollars in thousands, except share and per share data)

 

 

 

As of

June 30, 2019

 

 

As of

December 31, 2018

 

ASSETS:

 

 

 

 

 

 

 

 

Investments in real estate:

 

 

 

 

 

 

 

 

Investments in real estate, at cost

 

$

1,704,769

 

 

$

1,660,423

 

Accumulated depreciation

 

 

(136,488

)

 

 

(112,270

)

Investments in real estate, net

 

 

1,568,281

 

 

 

1,548,153

 

Real estate held for sale

 

 

50,494

 

 

 

77,285

 

Cash and cash equivalents

 

 

11,060

 

 

 

9,316

 

Restricted cash

 

 

7,780

 

 

 

6,729

 

Other assets

 

 

16,364

 

 

 

8,802

 

Derivative assets

 

 

1,558

 

 

 

8,307

 

Intangible assets, net of accumulated amortization of $105 and $787, respectively

 

 

210

 

 

 

744

 

Total Assets

 

$

1,655,747

 

 

$

1,659,336

 

LIABILITIES AND EQUITY:

 

 

 

 

 

 

 

 

Indebtedness, net of unamortized deferred financing costs of $6,139 and $5,927, respectively

 

$

989,499

 

 

$

985,488

 

Accounts payable and accrued expenses

 

 

26,374

 

 

 

22,815

 

Accrued interest payable

 

 

691

 

 

 

719

 

Dividends payable

 

 

16,285

 

 

 

16,162

 

Derivative liabilities

 

 

7,394

 

 

 

-

 

Other liabilities

 

 

7,595

 

 

 

4,107

 

Total Liabilities

 

 

1,047,838

 

 

 

1,029,291

 

Equity:

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value; 50,000,000 shares authorized, 0 and 0 shares issued and outstanding, respectively

 

 

-

 

 

 

-

 

Common stock, $0.01 par value; 300,000,000 shares authorized, 89,932,418 and 89,184,443 shares issued and outstanding, including 339,525 and 303,819 unvested restricted common share awards, respectively

 

 

899

 

 

 

892

 

Additional paid-in capital

 

 

749,552

 

 

 

742,429

 

Accumulated other comprehensive income (loss)

 

 

(11,769

)

 

 

2,016

 

Retained earnings (accumulated deficit)

 

 

(137,539

)

 

 

(122,342

)

Total stockholders’ equity

 

 

601,143

 

 

 

622,995

 

Noncontrolling interests

 

 

6,766

 

 

 

7,050

 

Total Equity

 

 

607,909

 

 

 

630,045

 

Total Liabilities and Equity

 

$

1,655,747

 

 

$

1,659,336

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

3


Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited and dollars in thousands, except share and per share data)

 

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental and other property revenue

 

$

50,848

 

 

$

46,734

 

 

$

100,313

 

 

$

92,350

 

Other revenue

 

 

108

 

 

 

155

 

 

 

183

 

 

 

294

 

Total revenue

 

 

50,956

 

 

 

46,889

 

 

 

100,496

 

 

 

92,644

 

EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

 

20,072

 

 

 

18,703

 

 

 

39,958

 

 

 

37,121

 

Property management expenses

 

 

2,062

 

 

 

1,592

 

 

 

3,875

 

 

 

3,275

 

General and administrative expenses

 

 

3,538

 

 

 

2,872

 

 

 

6,645

 

 

 

5,606

 

Depreciation and amortization expense

 

 

12,721

 

 

 

11,583

 

 

 

25,168

 

 

 

22,807

 

Total expenses

 

 

38,393

 

 

 

34,750

 

 

 

75,646

 

 

 

68,809

 

Interest expense

 

 

(9,849

)

 

 

(8,594

)

 

 

(19,570

)

 

 

(16,934

)

Other income

 

 

 

 

 

 

 

 

 

 

 

144

 

Gain (loss) on sale of assets

 

 

12,142

 

 

 

 

 

 

12,142

 

 

 

 

Net income:

 

 

14,856

 

 

 

3,545

 

 

 

17,422

 

 

 

7,045

 

Income allocated to noncontrolling interest

 

 

(147

)

 

 

(36

)

 

 

(173

)

 

 

(124

)

Net income allocable to common shares

 

$

14,709

 

 

$

3,509

 

 

$

17,249

 

 

$

6,921

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.16

 

 

$

0.04

 

 

$

0.19

 

 

$

0.08

 

Diluted

 

$

0.16

 

 

$

0.04

 

 

$

0.19

 

 

$

0.08

 

Weighted-average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

89,513,105

 

 

 

86,644,716

 

 

 

89,252,724

 

 

 

85,978,431

 

Diluted

 

 

90,019,909

 

 

 

86,908,978

 

 

 

89,902,637

 

 

 

86,208,502

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

4


Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited and dollars in thousands)

 

 

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income

 

$

14,856

 

 

$

3,545

 

 

$

17,422

 

 

$

7,045

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of interest rate hedges

 

 

(10,023

)

 

 

1,532

 

 

 

(14,950

)

 

 

4,887

 

Realized (gains) losses on interest rate hedges reclassified to earnings

 

 

467

 

 

 

(306

)

 

 

1,026

 

 

 

(480

)

Total other comprehensive income (loss)

 

 

(9,556

)

 

 

1,226

 

 

 

(13,924

)

 

 

4,407

 

Comprehensive income (loss) before allocation to noncontrolling interests

 

 

5,300

 

 

 

4,771

 

 

 

3,498

 

 

 

11,452

 

Allocation to noncontrolling interests

 

 

(52

)

 

 

(49

)

 

 

(34

)

 

 

(54

)

Comprehensive income (loss)

 

$

5,248

 

 

$

4,722

 

 

$

3,464

 

 

$

11,398

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

5


Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

(Unaudited and dollars in thousands, except share information)

 

 

 

Common

Shares

 

 

Par

Value

Common

Shares

 

 

Additional

Paid In

Capital

 

 

Accumulated Other Comprehensive Income (loss)

 

 

Retained

Earnings

(Deficit)

 

 

Total

Stockholders’

Equity

 

 

Noncontrolling

Interests

 

 

Total

Equity

 

Balance, December 31, 2018

 

 

89,184,443

 

 

$

892

 

 

$

742,429

 

 

$

2,016

 

 

$

(122,342

)

 

$

622,995

 

 

$

7,050

 

 

$

630,045

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,540

 

 

 

2,540

 

 

 

26

 

 

 

2,566

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,324

)

 

 

-

 

 

 

(4,324

)

 

 

(44

)

 

 

(4,368

)

Stock compensation expense

 

 

189,986

 

 

 

1

 

 

 

633

 

 

 

-

 

 

 

-

 

 

 

634

 

 

 

-

 

 

 

634

 

Issuance of common shares

 

 

510,000

 

 

 

5

 

 

 

5,304

 

 

 

-

 

 

 

-

 

 

 

5,309

 

 

 

-

 

 

 

5,309

 

Repurchase of shares related to equity award tax withholding

 

 

(49,636

)

 

 

-

 

 

 

(635

)

 

 

-

 

 

 

-

 

 

 

(635

)

 

 

-

 

 

 

(635

)

Common dividends declared ($0.18 per share)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(16,318

)

 

 

(16,318

)

 

 

-

 

 

 

(16,318

)

Distribution to noncontrolling interest declared ($0.18 per unit)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(159

)

 

 

(159

)

Balance, March 31, 2019

 

 

89,834,793

 

 

$

898

 

 

$

747,731

 

 

$

(2,308

)

 

$

(136,120

)

 

$

610,201

 

 

$

6,873

 

 

$

617,074

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

14,709

 

 

 

14,709

 

 

 

147

 

 

 

14,856

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(9,461

)

 

 

-

 

 

 

(9,461

)

 

 

(95

)

 

 

(9,556

)

Stock compensation expense

 

 

32,155

 

 

 

-

 

 

 

1,099

 

 

 

-

 

 

 

-

 

 

 

1,099

 

 

 

-

 

 

 

1,099

 

Issuance of common shares

 

 

65,704

 

 

 

1

 

 

 

722

 

 

 

-

 

 

 

-

 

 

 

723

 

 

 

-

 

 

 

723

 

Repurchase of shares related to equity award tax withholding

 

 

(234

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Common dividends declared ($0.18 per share)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(16,128

)

 

 

(16,128

)

 

 

-

 

 

 

(16,128

)

Distribution to noncontrolling interest declared ($0.18 per unit)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(159

)

 

 

(159

)

Balance, June 30, 2019

 

 

89,932,418

 

 

$

899

 

 

$

749,552

 

 

$

(11,769

)

 

$

(137,539

)

 

$

601,143

 

 

$

6,766

 

 

$

607,909

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

6


Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

(Unaudited and dollars in thousands, except share information)

 

 

 

 

 

Common

Shares

 

 

Par

Value

Common

Shares

 

 

Additional

Paid In

Capital

 

 

Accumulated Other Comprehensive Income

 

 

Retained

Earnings

(Deficit)

 

 

Total

Stockholders’

Equity

 

 

Noncontrolling

Interests

 

 

Total

Equity

 

Balance, December 31, 2017

 

 

84,708,551

 

 

$

846

 

 

$

703,849

 

 

$

4,626

 

 

$

(85,221

)

 

$

624,100

 

 

$

22,019

 

 

$

646,119

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,412

 

 

 

3,412

 

 

 

88

 

 

 

3,500

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,264

 

 

 

-

 

 

 

3,264

 

 

 

(83

)

 

 

3,181

 

Stock compensation expense

 

 

194,622

 

 

 

1

 

 

 

469

 

 

 

-

 

 

 

-

 

 

 

470

 

 

 

-

 

 

 

470

 

Repurchase of shares related to equity award tax withholding

 

 

(41,912

)

 

 

-

 

 

 

(345

)

 

 

-

 

 

 

-

 

 

 

(345

)

 

 

-

 

 

 

(345

)

Conversion of noncontrolling interest to common shares

 

 

2,112,136

 

 

 

21

 

 

 

14,287

 

 

 

-

 

 

 

-

 

 

 

14,308

 

 

 

(14,308

)

 

 

-

 

Common dividends declared ($0.18 per share)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(15,772

)

 

 

(15,772

)

 

 

-

 

 

 

(15,772

)

Distribution to noncontrolling interest declared ($0.18 per unit)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(163

)

 

 

(163

)

Balance, March 31, 2018

 

 

86,973,397

 

 

$

868

 

 

$

718,260

 

 

$

7,890

 

 

$

(97,581

)

 

$

629,437

 

 

$

7,553

 

 

$

636,990

 

Net income (loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,509

 

 

 

3,509

 

 

 

36

 

 

 

3,545

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,213

 

 

 

-

 

 

 

1,213

 

 

 

13

 

 

 

1,226

 

Stock compensation expense

 

 

5,868

 

 

 

1

 

 

 

933

 

 

 

-

 

 

 

-

 

 

 

934

 

 

 

-

 

 

 

934

 

Issuance of common shares

 

 

61,656