Attachment: 8-K


irt-ex991_6.htm

Exhibit 99.1

Independence Realty Trust Announces Third Quarter 2021 Financial Results & Updates Full Year 2021 Guidance

 

PHILADELPHIA – (BUSINESS WIRE) – October 27, 2021 — Independence Realty Trust, Inc. (“IRT”) (NYSE: IRT), a multifamily apartment REIT, today announced its third quarter 2021 financial results.

 

Third Quarter Highlights

 

On July 26, 2021, IRT announced that it reached a definitive agreement to merge with Steadfast Apartment REIT, Inc. (“STAR”), creating a leading multifamily REIT focused on the high-growth U.S. Sunbelt region. The transaction is expected to close in mid-December 2021, following a stockholder vote scheduled for December 13, 2021, and we are on track to deliver the $28 million in annual synergies and immediate 11% accretion to Core Funds from Operations.

 

 

Net income available to common shares of $11.5 million for the quarter ended September 30, 2021 compared to $1.1 million for the quarter ended September 30, 2020.  Earnings per diluted share of $0.11 for the quarter ended September 30, 2021 compared to $0.01 for the quarter ended September 30, 2020.

 

 

Same store net operating income (“NOI”) growth of 14.7% for the quarter ended September 30, 2021 compared to the quarter ended September 30, 2020.

 

 

Core Funds from Operations (“CFFO”) of $22.7 million for the quarter ended September 30, 2021 compared to $18.2 million for the quarter ended September 30, 2020. CFFO per share was $0.21 for the third quarter of 2021, as compared to $0.19 for the third quarter of 2020.

 

 

Adjusted EBITDA of $31.4 million for the quarter ended September 30, 2021 compared to $27.1 million for the quarter ended September 30, 2020.

 

 

Increased full year 2021 same store NOI guidance to a midpoint of 10.25% and full year 2021 CFFO guidance to a midpoint of $0.81 per share.

 

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

 

Management Commentary

“The combination of favorable macro trends across our core markets and the execution of our growth initiatives continues to yield impressive returns,” said Scott Schaeffer, Chairman and CEO of IRT. “We delivered a 14.7% year-over-year increase in third quarter same store NOI, with our occupancy rate up 220 basis points to 96% and our average rental rate increasing 7.3% on a year-over-year basis. As we look forward, our ability to maintain occupancy, drive rental rates, and advance our value add program gives us confidence that we can continue to unlock value within our portfolio. We are also focused on the integration of the planned merger with STAR and are excited about the growth potential of our combined business.”

 

Same Store Property Operating Results

 

 

Third Quarter 2021 Compared to Third Quarter 2020(1)

Nine Months Ended 9/30/21 Compared to Nine Months Ended 9/30/20

Rental and other property revenue

9.4% increase

7.8% increase

Property operating expenses

1.7% increase

4.4% increase

Net operating income (“NOI”)

14.7% increase

10.1% increase

Portfolio average occupancy

220 bps increase to 96.0%

270 bps increase to 95.6%

Portfolio average rental rate

7.3% increase to $1,227

4.6% increase to $1,190

NOI Margin

290 bps increase to 62.2%

130 bps increase to 61.7%

 

 

(1)

Same store portfolio for the three months ended September 30, 2021 includes 47 properties, which represent 12,838 units.

 

Same Store Property Operating Results, Excluding Value Add

The same store portfolio results below exclude 13 communities that are both part of the same store portfolio and were actively undergoing Value Add renovations during the three months ended September 30, 2021.

 


 

 

 

 

Third Quarter 2021 Compared to Third Quarter 2020(1)

Nine Months Ended 9/30/21 Compared to Nine Months Ended 9/30/20(1)

Rental and other property revenue

8.3% increase

6.1% increase

Property operating expenses

1.6% increase

4.5% increase

Net operating income (“NOI”)

12.8% increase

7.1% increase

Portfolio average occupancy

230 bps increase to 96.4%

250 bps increase to 96.1%

Portfolio average rental rate

6.3% increase to $1,219

3.3% increase to $1,186

NOI Margin

250 bps increase to 61.6%

60 bps increase to 61.5%

 

 

(1)

Same store portfolio, excluding value add, for the three months ended September 30, 2021 includes 34 properties, which represent 8,908 units.

 

COVID-19 Metrics (1)(2)

 

Rent collections

3Q 2021

3Q 2020

2Q 2021

Rent collected for the period presented, as a percentage of rent billed (3)

98.4%

99.7%

99.4%

 

 

(1)

Dollar amounts in thousands. All metrics presented are for our total portfolio in the period presented.

 

(2)

All metrics are based on our internal data, which management uses to monitor property performance on a daily or weekly basis.

 

(3)

Rent collected as a percentage of rent billed includes rent deferred under any deferred payment plans that may have been offered in the period presented. Deferred payment plans were offered to residents in 2020 and early 2021 to allow residents to defer a portion of their monthly rent for one or more months or to repay over time past-due rent which was unpaid due to a COVID-related financial hardship. As of September 30, 2021, there were no active deferred payment plans outstanding.

 

As a result of the COVID-19 pandemic, we recorded a provision for bad debts of $122,000 in the third quarter of 2021. The table below presents additional details on the components of bad debt:

 

Components of Bad Debt (1)

3Q 2021

3Q 2020

2Q 2021

Amount

Percentage

Amount

Percentage

Amount

Percentage

Charge-offs, net

$534

0.9%

$260

0.5%

$512

0.9%

Provision for bad debt

$122

0.2%

$80

0.1%

$78

0.1%

Net bad debt

$656

1.1%

$340

0.6%

$590

1.0%

 

 

(1)

Dollar amounts are in thousands and percentages are as a percentage of total rental and other property income. Bad debt is recorded as a reduction to rental and other property revenue in our consolidated statements of operations.

 

Operating statistics

October 2021

October 2020

3Q 2021

Rent collected for the period presented, as a percentage of rent billed (1)

95.9%

99.5%

98.4%

Total portfolio average occupancy

96.2%

94.9%

96.1%

Total portfolio average effective monthly rent per unit

$1,217

$1,120

$1,212

Resident retention rate

52.7%

47.5%

60.3%

 

 

(1)

Rent collected as a percentage of rent billed includes rent deferred under any deferred payment plans that may have been

offered in the period presented.

 

Lease-Over-Lease Effective Rent Growth (1)

The table below depicts lease-over-lease effective rent growth for all new and renewal leases entered into during the respective periods for the 47-property same store portfolio.  

 

Lease Type

3Q 2021

4Q 2021(2)  

New Leases

19.8%

24.1%

Renewal Leases

5.0%

9.4%

Total

10.5%

14.2%

 

 

(1)

Lease-over-lease effective rent growth represents the change in effective monthly rent, as adjusted for concessions, for each unit that had a prior lease and current lease that are for a term of 9-13 months.

 

(2)

For new leases and renewals commencing during 4Q 2021 that were signed as of October 25, 2021.

 


 

 

 

Value Add Program

We completed renovations on 330 units during the quarter ended September 30, 2021. From inception of our value add program in January 2018 through September 30, 2021, we completed renovations on 4,419 units, achieving a return on investment of 17.6% (19.8% on interior renovation costs) and an average monthly rental increase of 19.3%.  

 

In addition, we announced that five new properties have been added to our value add program with renovations expected to begin in 2022. The five properties are comprised of 1,295 units and we expect to achieve returns on investment at these properties consistent with prior value add projects.  

 

Capital Recycling

In the third quarter of 2021, we continued our capital recycling activity in support of our ongoing initiative to establish and grow our presence in markets where we see long-term growth opportunities and reevaluate those that may not be attractive long-term investments.

 

Acquisitions/Joint Venture:

 

Joint Venture in Nashville, TN: On September 3, 2021, we closed on a joint venture for the development of three communities totaling 504-units with our JV partner that is managing construction and is expected be completed in the first half of 2022. IRT’s investment is expected to total $14.4 million.

 

Dispositions/Property Held for Sale:

 

Kings Landing in St. Louis, MO: We sold this property on July 28, 2021 and recognized a gain on disposition of $11.5 million.

 

Plan to dispose of six assets: In connection with our merger with Steadfast Apartment REIT, we plan to sell Crestmont (228 units) and Creekside Corners (444 units) in Georgia, Riverchase (216 units) in Indiana, Haverford Place (160 units) in Kentucky, and Heritage Park (453 units) and Raindance (504 units) in Oklahoma. Proceeds from these sales will be used to repay debt of the combined company.

 

Capital Expenditures

For the three months ended September 30, 2021, recurring capital expenditures for the total portfolio were $1.9 million, or $118 per unit. For the nine months ended September 30, 2021, recurring capital expenditures for the total portfolio were $4.8 million, or $307 per unit.

 

Distributions

On September 13, 2020, our Board of Directors declared a quarterly cash dividend of $0.12 per share of our common stock, which was paid on October 22, 2021 to stockholders of record at the close of business on October 1, 2021.

 

2021 EPS and CFFO Guidance

Given portfolio performance during the quarter ended September 30, 2021, IRT is updating its 2021 full year EPS and CFFO guidance.

 

 

Previous Guidance

Current Guidance

2021 Full Year EPS and CFFO Guidance (1)(2)

Low

High

Low

High

Earnings (loss) per share

$0.09

$0.11

$0.18

$0.23

Adjustments:

 

 

 

 

Depreciation and amortization

0.67

0.67

0.65

0.65

Gains on sale of real estate assets (3)

0.00

0.00

(0.83)

(0.86)

Merger and integration costs (4)

0.00

0.00

0.80

0.80

Core FFO per share allocated to common shareholders

$0.76

$0.78

$0.80

$0.82

 

 

(1)

This guidance, including the underlying assumptions presented in the table below, constitutes forward-looking information. Actual full year 2021 EPS and CFFO could vary significantly from the projections presented. See “Forward-Looking Statements” below. Our guidance is based on the key guidance assumptions detailed below.

 

(2)

Per share guidance is based on 105.0 million weighted average shares and units outstanding, which excludes the impact of shares issued in conjunction with the STAR merger.

 

(3)

Current guidance for gains on sale of real estate assets assumes the sale of Kings Landing plus two of the properties identified as held for sale as of September 30, 2021.  

 

(4)

Merger and integration costs incurred to date primarily consist of advisory fees, attorney fees, accountant fees, and SEC filing fees related to our merger with Steadfast Apartment REIT. We expect additional such merger and integration costs to be incurred during 4Q 2021 in addition to severance and debt prepayment penalty related costs that are expected in conjunction with the closing of the merger.

 

 


 

 

2021 Guidance Assumptions

Our key guidance assumptions for 2021 are enumerated below and our guidance does not give effect to the announced

merger between us and Steadfast Apartment REIT, Inc. (“STAR”), merger-related transaction expenses or any equity offerings. We expect the merger with STAR to close in mid-December and, therefore, the impact to our full year 2021 guidance is not expected to be significant.  

 


Same Store Communities

Previous 2021 Outlook

Current 2021 Outlook

Number of properties/units

53 properties / 14,843 units

47 properties / 12,838 units (5)

Property revenue growth

5.25% to 6.0%

7.25% to 7.75%

Controllable property operating expense growth

2.5% to 3.0%

4.0% to 4.5%

Real estate tax and insurance expense increase

4.0% to 5.0%

0.0% to 1.0%

Total real estate operating expense growth

3.0% to 4.0%

2.5% to 3.0%

Property NOI growth

6.5% to 7.5%

9.75% to 10.75%

 

 

 

Corporate Expenses (including stock compensation)

 

 

General and administrative expenses

$17.0 to $18.0 million

$18.0 to $18.5 million

Property management expenses

$8.25 to $8.75 million

$8.25 to $8.75 million

 

 

 

Interest expense (including amortization of deferred financing costs)

$34.0 to $35.0 million

$34.0 to $34.5 million

 

 

 

Transaction/Investment Volume

 

 

Acquisition volume

$100 million to $200 million

No additional acquisitions (6)  

Disposition volume

$40 million to $100 million

$170 million to $180 million (6)

 

 

 

Capital Expenditures

 

 

Recurring

$7.0 to $7.5 million

$6.5 to $7.0 million

Value add & non-recurring

$28.5 to $32.5 million

$28.0 to $30.0 million

 

 

(5)

Number of same store communities reduced for the six assets held for sale as of September 30, 2021.

 

(6)

Current 2021 outlook for acquisition volume excludes the STAR merger while disposition volume includes the Kings Landing sale and assumes two of the properties identified as held for sale as of September 30, 2021 are also sold during 2021.

Selected Financial Information

See the schedules at the end of this earnings release for selected financial information for IRT.

 

Non-GAAP Financial Measures and Definitions

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

 

Conference Call

All interested parties can listen to the live conference call webcast at 9:00 AM ET on Thursday, October 28, 2021 from the investor relations section of the IRT website at www.irtliving.com or by dialing 1.833.789.1330. For those who are not available to listen to the live call, the replay will be available shortly following the live call from the investor relations section of IRT’s website and telephonically until Thursday, November 4, 2021 by dialing 1.800.585.8367, access code 7818225.

 

Supplemental Information

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

 


 


 

 

About Independence Realty Trust, Inc.

Independence Realty Trust, Inc. (NYSE: IRT) is a real estate investment trust that owns and operates multifamily apartment properties across non-gateway U.S. markets, including Atlanta, Dallas, Louisville, Memphis, Raleigh and Tampa. IRT’s investment strategy is focused on gaining scale within key amenity rich submarkets that offer good school districts, high-quality retail and major employment centers. IRT aims to provide stockholders attractive risk-adjusted returns through diligent portfolio management, strong operational performance, and a consistent return on capital through distributions and capital appreciation. More information may be found on IRT’s website at www.irtliving.com.

 


 


 

 

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “will,” “strategy,” “expects,” “seeks,” “believes,” “potential,” or other similar words. These forward-looking statements include, without limitation, our expectations with respect to our 2021 earnings and CFFO, capital allocations, including as to the timing and amount of future dividends, and anticipated benefits of our announced merger transaction with Steadfast Apartment REIT, Inc. (“STAR”). Such forward-looking statements involve risks, uncertainties, estimates and assumptions and our actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and not within our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Risks and uncertainties that might cause our future actual results and/or future dividends to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: risks related to the impact of COVID-19 and other potential future outbreaks of infectious diseases on our financial condition, results of operations, cash flows and performance and those of our residents as well as on the economy and real estate and financial markets; changes in market demand for rental apartment homes and pricing pressures, including from competitors, that could limit our ability to lease units or increase rents or that could lead to declines in occupancy and rent levels; uncertainty and volatility in capital and credit markets, including changes that reduce availability, and increase costs, of capital; inability of tenants to meet their rent and other lease obligations and charge-offs in excess of our allowance for bad debt; legislative restrictions that may delay or limit collections of past due rents; risks endemic to real estate and the real estate industry generally; impairment charges; the effects of natural and other disasters; delays in completing, and cost overruns incurred in connection with, our value add initiatives and failure to achieve projected rent increases and occupancy levels on account of the initiatives; the structure, timing and completion of our announced merger transaction with STAR and any effects of the announcement, pendency or completion of the merger, including failure to realize the cost savings, synergies and other benefits expected to result from the merger; the ability to successfully integrate the IRT and STAR businesses; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, including failure to receive required stockholder approvals; the risk that the parties may not be able to satisfy the conditions to the merger in a timely manner or at all; risks related to disruption of management time from ongoing business operations due to the announced merger transaction; the risk that the merger and its announcement could have an adverse effect on our ability to retain and hire key personnel and maintain relationships with our customers and suppliers, and on our operating results and businesses generally; unexpected costs of REIT qualification compliance; unexpected changes in our intention or ability to repay certain debt prior to maturity; inability to sell certain assets within the time frames or at the pricing levels expected; costs and disruptions as the result of a cybersecurity incident or other technology disruption; and share price fluctuations. Please refer to the documents filed by us with the SEC, including specifically the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2020, our subsequently filed quarterly reports on Form 10-Q and our other filings with the SEC, which identify additional factors that could cause actual results to differ from those contained in forward-looking statements. We undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required by law. In addition, the declaration of dividends on our common stock is subject to the discretion of our Board of Directors and depends upon a broad range of factors, including our results of operations, financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code of 1986, as amended, applicable legal requirements and such other factors as our Board of Directors may from time to time deem relevant. For these reasons, as well as others, there can be no assurance that dividends in the future will be equal or similar to the amount of the quarterly dividend described in this press release.

 

Additional Information and Where to Find It

In connection with its announced merger transaction with STAR, IRT filed with the SEC a registration statement on Form S-4 to register the shares of IRT Common Stock to be issued in connection with the proposed merger transaction.  The registration statement was declared effective by the SEC on September 29, 2021, and includes a joint proxy statement/prospectus which was sent to the stockholders of IRT and the stockholders of STAR. INVESTORS AND SECURITY HOLDERS OF IRT AND STAR ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors and security holders are able to obtain free copies of these documents and other documents filed with the SEC by IRT and/or STAR through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by IRT are available free of charge on IRT’s internet website at http://www.irtliving.com or by contacting IRT’s Investor Relations Department by email at IRT@edelman.com or by phone at +1-917-365-7979.

 


 

Copies of the documents filed with the SEC by STAR are available free of charge on STAR’s internet website at http://www.steadfastliving.com or by contacting STAR’s Investor Relations Department by phone at +1-888-223-9951.

 

Participants in Solicitation

IRT, STAR, their respective directors and certain of their respective executive officers may be considered participants in the solicitation of proxies in connection with the announced merger transaction. Information about the directors and executive officers of IRT is set forth in its Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on February 18, 2021, and its proxy statement for its 2021 annual meeting of stockholders, which was filed with the SEC on March 29, 2021. Information about the directors and executive officers of STAR is set forth in its Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 12, 2021, and in its proxy statement for its 2021 annual meeting of stockholders, which was filed with the SEC on June 14, 2021. These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC.

 

No Offer or Solicitation

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.  No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.

Independence Realty Trust, Inc. Contact

Edelman Financial Communications & Capital Markets

Ted McHugh and Lauren Torres

917-365-7979

IRT@edelman.com

 

 


 

 

Schedule I

Independence Realty Trust, Inc.

Selected Financial Information

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

(unaudited)

 

 

 

For the Three Months Ended

 

 

 

 

September 30,

2021

 

 

June 30,

2021

 

 

March 31,

2021

 

 

December 31,

2020

 

 

September 30,

2020

 

 

Selected Financial Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common shares

 

$

11,502

 

 

$

3,386

 

 

$

1,086

 

 

$

13,261

 

 

$

1,090

 

 

Earnings (loss) per share -- diluted

 

$

0.11

 

 

0.03

 

 

$

0.01

 

 

$

0.14

 

 

$

0.01

 

 

Rental and other property revenue

 

$

60,592

 

 

$

57,286

 

 

$

54,811

 

 

$

53,923

 

 

$

54,001

 

 

Property operating expenses

 

$

23,164

 

 

$

22,298

 

 

$

20,838

 

 

$

20,138

 

 

$

22,129

 

 

Net operating income

 

$

37,428

 

 

$

34,988

 

 

$

33,973

 

 

$

33,785

 

 

$

31,872

 

 

NOI margin

 

 

61.8

%

 

 

61.1

%

 

 

62.0

%

 

 

62.7

%

 

 

59.0

%

 

Adjusted EBITDA

 

$

31,432

 

 

$

28,729

 

 

$

26,389

 

 

$

28,534

 

 

$

27,081

 

 

CORE FFO per share (c)

 

$

0.21

 

 

$

0.20

 

 

$

0.18

 

 

$

0.22

 

 

$

0.20

 

 

Dividends per share

 

$

0.12

 

 

$

0.12

 

 

$

0.12

 

 

$

0.12

 

 

$

0.12

 

 

CORE FFO payout ratio

 

 

57.1

%

 

 

60.0

%

 

 

66.7

%

 

 

54.5

%

 

 

60.0

%

 

Portfolio Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total gross assets

 

$

2,114,743

 

 

$

2,133,021

 

 

$

1,970,979

 

 

$

1,962,895

 

 

$

1,920,513

 

 

Total number of properties

 

57

 

 

58

 

 

56

 

 

56

 

 

 

58

 

 

Total units

 

 

16,109

 

 

 

16,261

 

 

 

15,667

 

 

 

15,667

 

 

 

15,805

 

 

Period end occupancy

 

 

96.0

%

 

 

95.6

%

 

 

95.5

%

 

 

95.3

%

 

 

94.4

%

 

Total portfolio average occupancy

 

 

96.1

%

 

 

95.9

%

 

 

95.4

%

 

 

95.0

%

 

 

94.1

%

 

Total portfolio average effective monthly rent, per

   unit

 

$

1,212

 

 

$

1,171

 

 

$

1,142

 

 

$

1,136

 

 

$

1,118

 

 

Same store period end occupancy (a)

 

 

95.8

%

 

 

95.4

%

 

 

95.2

%

 

 

95.1

%

 

 

94.1

%

 

Same store portfolio average occupancy (a)

 

 

96.0

%

 

 

95.9

%

 

 

95.1

%

 

 

94.8

%

 

 

93.8

%

 

Same store portfolio average effective monthly rent,

   per unit (a)

 

$

1,227

 

 

$

1,183

 

 

$

1,161

 

 

$

1,154

 

 

$

1,143

 

 

Capitalization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total debt (d)

 

$

996,270

 

 

$

1,036,841

 

 

$

947,631

 

 

$

945,686

 

 

$

1,004,237

 

 

Common share price, period end

 

$

20.35

 

 

$

18.23

 

 

$

15.20

 

 

$

13.43

 

 

$

11.59

 

 

Market equity capitalization

 

$

2,150,162

 

 

$

1,926,218

 

 

$

1,561,165

 

 

$

1,376,283

 

 

$

1,107,144

 

 

Total market capitalization

 

$

3,146,432

 

 

$

2,963,059

 

 

$

2,508,796

 

 

$

2,321,969

 

 

$

2,111,381

 

 

Total debt/total gross assets

 

 

47.1

%

 

 

48.6

%

 

 

48.1

%

 

 

48.2

%

 

 

52.4

%

 

Net debt to Adjusted EBITDA (pro forma) (b)

 

 

8.2

x

 

 

8.5

x

 

 

8.2

x

 

 

8.2

x

 

9.1x

 

 

Interest coverage

 

 

3.6

x

 

 

3.4

x

 

 

3.1

x

 

 

3.2

x

 

 

3.0

x

 

Common shares and OP Units:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding

 

 

105,106,714

 

 

 

105,109,649

 

 

 

102,033,733

 

 

 

101,803,762

 

 

 

94,823,806

 

 

OP units outstanding

 

 

552,360

 

 

 

552,360

 

 

 

674,515

 

 

 

674,517

 

 

 

701,986

 

 

Common shares and OP units outstanding

 

 

105,659,074

 

 

 

105,662,009

 

 

 

102,708,248

 

 

 

102,478,278

 

 

 

95,525,792

 

 

Weighted average common shares and units

 

 

107,094,044

 

 

 

102,584,809

 

 

 

102,353,380

 

 

 

95,529,788

 

 

 

95,227,176

 

 

 

(a)

Same store portfolio consists of 47 properties, which represent 12,838 units.

 

(b)

Reflects pro forma net debt to Adjusted EBITDA for each period presented, which includes adjustments for the timing of acquisitions, the full quarter effect of current value add initiatives, the completion of capital recycling activities including paydown of associated indebtedness, and the normalization of items impacting quarterly EBITDA. Actual net debt to Adjusted EBITDA for the five quarters ended September 30, 2021 was 8.0x, 9.1x, 8.9x, 8.3x, and 9.3x, respectively.

 

(c)

Reflects adjustment to prior periods to conform to our current definition of CFFO. See our definition of CFFO for additional discussion.

 

(d)

Includes indebtedness associated with real estate held for sale

 

 

 

 

 


 

 

Schedule II

Independence Realty Trust, Inc.

Reconciliation of Net Income (loss) to

Funds From Operations and  

Core Funds From Operations

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

(unaudited)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Funds From Operations (FFO):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (loss)

 

$

11,564

 

 

$

1,092

 

 

$

16,064

 

 

$

1,517

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

 

17,263

 

 

 

15,155

 

 

 

50,418

 

 

 

45,036

 

Funds From Operations

 

$

28,827

 

 

$

18,087

 

 

$

54,694

 

 

$

48,393

 

FFO per share

 

$

0.16

 

 

$

0.19

 

 

$

0.53

 

 

$

0.51

 

Core Funds From Operations (CFFO):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds From Operations

 

$

17,039

 

 

$

18,087

 

 

$

54,694

 

 

$

48,393

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other depreciation and amortization

 

 

121

 

 

 

77

 

 

 

281

 

 

 

225

 

Abandoned deal costs

 

 

 

 

 

 

 

 

 

 

 

130

 

Merger and integration costs

 

 

5,276

 

 

 

 

 

 

5,276

 

 

 

 

Prepayment penalties on asset dispositions

 

 

295

 

 

 

 

 

 

295

 

 

 

 

Casualty losses

 

 

 

 

 

 

 

 

359

 

 

 

411

 

Core Funds From Operations

 

$

22,731

 

 

$

18,164

 

 

$

60,905

 

 

$

49,159

 

CFFO per share

 

$

0.21

 

 

$

0.19

 

 

$

0.59

 

 

$

0.52

 

Weighted-average shares and units outstanding

 

 

107,094,044

 

 

 

95,227,176

 

 

 

103,511,115

 

 

 

94,061,963

 

 

 

 


 

 

Schedule III

Independence Realty Trust, Inc.

Reconciliation of Same-Store Net Operating Income to Net Income (loss)

(Dollars in thousands)

(unaudited)

 

 

 

For the Three-Months Ended (a)

 

 

 

September 30,

2021

 

 

June 30,

2021

 

 

March 31,

2021

 

 

December 31,

2020

 

 

September 30,

2020

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-store net operating income

 

$

30,450

 

 

$

28,862

 

 

$

28,126

 

 

$

28,370

 

 

$

26,547

 

Non same-store net operating income

 

 

6,978

 

 

 

6,126

 

 

 

5,847

 

 

 

5,415

 

 

 

5,325

 

Other revenue

 

 

188

 

 

 

158

 

 

 

301

 

 

 

165

 

 

 

199

 

Property management expenses

 

 

(2,199

)

 

 

(2,176

)

 

 

(1,943

)

 

 

(2,183

)

 

 

(2,078

)

General and administrative expenses

 

 

(3,985

)

 

 

(4,241

)

 

 

(5,942

)

 

 

(3,233

)

 

 

(2,912

)

Depreciation and amortization expense

 

 

(17,384

)

 

 

(16,763

)

 

 

(16,552

)

 

 

(15,396

)

 

 

(15,232

)

Interest expense

 

 

(8,700

)

 

 

(8,559

)

 

 

(8,385

)

 

 

(8,872

)

 

 

(8,917

)

Merger and integration costs

 

 

(5,276

)

 

 

 

 

 

 

 

 

 

 

 

 

Casualty losses

 

 

 

 

 

 

 

 

(359

)

 

 

(300

)

 

 

 

Gain on sale (loss on impairment) of real estate assets, net

 

 

11,492

 

 

 

 

 

 

 

 

 

9,394

 

 

 

(1,840

)

Net income (loss)

 

$

11,564

 

 

$

3,407

 

 

$

1,093

 

 

$

13,360

 

 

$

1,092

 

 

(a)Same store portfolio includes 47 properties, which represent 12,838 units.

 

 


 

 

Schedule IV

Independence Realty Trust, Inc.

Reconciliation of Net Income (Loss) to Adjusted EBITDA

And Interest Coverage Ratio

(Dollars in thousands)

(unaudited)

 

 

Three Months Ended

 

 

ADJUSTED EBITDA:

 

September 30,

2021

 

 

June 30,

2021

 

 

March 31,

2021

 

 

December 31,

2020

 

 

September 30,

2020

 

 

Net income (loss)

 

$

11,564

 

 

$

3,407

 

 

$

1,093

 

 

$

13,360

 

 

$

1,092

 

 

Add-Back (Deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

17,384

 

 

 

16,763

 

 

 

16,552

 

 

 

15,396

 

 

 

15,232

 

 

Interest expense

 

 

8,700

 

 

 

8,559

 

 

 

8,385

 

 

 

8,872

 

 

 

8,917

 

 

Net loss on impairment (gain on sale) of real estate assets

 

 

(11,492

)

 

 

 

 

 

 

 

 

(9,394

)

 

 

1,840

 

 

Merger and integration costs

 

 

5,276

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Casualty losses

 

 

 

 

 

 

 

 

359

 

 

 

300

 

 

 

 

 

Adjusted EBITDA

 

$

31,432

 

 

$

28,729

 

 

$

26,389

 

 

$

28,534

 

 

$

27,081

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST COST:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

$

8,700

 

 

$

8,559

 

 

$

8,385

 

 

$

8,872

 

 

$

8,917

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST COVERAGE:

 

 

3.6

x

 

 

3.4

x

 

 

3.1

x

 

 

3.2

x

 

 

3.0

x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

Schedule V

Independence Realty Trust, Inc.

Definitions

Average Effective Monthly Rent per Unit

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

Average Occupancy

Average occupancy represents the average occupied units for the reporting period divided by the average of total units available for rent for the reporting period.

EBITDA and Adjusted EBITDA

Each of EBITDA and Adjusted EBITDA is a non-GAAP financial measure. EBITDA is defined as net income before interest expense including amortization of deferred financing costs, income tax expense, and depreciation and amortization expenses. Adjusted EBITDA is EBITDA before certain other non-cash or non-operating gains or losses related to items such as asset sales, debt extinguishments and acquisition related debt extinguishment expenses, casualty losses, and abandoned deal costs. We consider each of EBITDA and Adjusted EBITDA to be an appropriate supplemental measure of performance because it eliminates interest, income taxes, depreciation and amortization, and other non-cash or non-operating gains and losses, which permits investors to view income from operations without these non-cash or non-operating items. Our calculation of Adjusted EBITDA differs from the methodology used for calculating Adjusted EBITDA by certain other REITs and, accordingly, our Adjusted EBITDA may not be comparable to Adjusted EBITDA reported by other REITs.

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

We believe that FFO and Core FFO (“CFFO”), each of which is a non-GAAP financial measure, are additional appropriate measures of the operating performance of a REIT and us in particular. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”), as net income or loss allocated to common shares (computed in accordance with GAAP), excluding real estate-related depreciation and amortization expense, gains or losses on sales of real estate and the cumulative effect of changes in accounting principles. While our calculation of FFO is in accordance with NAREIT’s definition, it may differ from the methodology for calculating FFO utilized by other REITs and, accordingly, may not be comparable to FFO computations of such other REITs.

We updated our definition of CFFO during Q1 2021 to the definition described below. All prior periods have been adjusted to conform to the current CFFO definition.  

CFFO is a computation made by analysts and investors to measure a real estate company’s operating performance by removing the effect of items that do not reflect ongoing property operations, including depreciation and amortization of other items not included in FFO, and other non-cash or non-operating gains or losses related to items such as merger and integration costs, casualty losses, abandoned deal costs and debt extinguishment costs from the determination of FFO.

Our calculation of CFFO may differ from the methodology used for calculating CFFO by other REITs and, accordingly, our CFFO may not be comparable to CFFO reported by other REITs. Our management utilizes FFO and CFFO as measures of our operating performance, and believe they are also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash or non-recurring items that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and our operating performance between periods. Furthermore, although FFO, CFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we believe that FFO and CFFO may provide us and our investors with an additional useful measure to compare our financial performance to certain other REITs. Neither FFO nor CFFO is equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and CFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Accordingly, FFO and CFFO do not measure whether cash flow is sufficient to fund all of our cash needs, including principal amortization and capital improvements. Neither FFO nor CFFO should be considered as an alternative to net income or any other GAAP measurement as an indicator of our operating performance or as an alternative to cash flow from operating, investing, and financing activities as a measure of our liquidity.

 


 

Interest Coverage

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

Net Debt

Net debt, a non-GAAP financial measure, equals total debt less cash and cash equivalents. The following table provides a reconciliation of total debt to net debt (Dollars in thousands).

We present net debt because management believes it is a useful measure of our credit position and progress toward reducing leverage. The calculation is limited because we may not always be able to use cash to repay debt on a dollar for dollar basis.

 

As of

 

 

September 30,

2021

 

 

June 30,

2021

 

 

March 31,

2021

 

 

December 30,

2020

 

 

September 30,

2020

 

Total debt (a)

$

1,018,729

 

 

$

1,056,463

 

 

$

947,631

 

 

$

945,686

 

 

$

1,004,237

 

Less: cash and cash equivalents

 

(8,720

)

 

 

(7,566

)

 

 

(8,653

)

 

 

(8,751

)

 

 

(9,891

)

Total net debt

$

1,010,009

 

 

$

1,048,897

 

 

$

938,978

 

 

$

936,935

 

 

$

994,346

 

 

(a)

Includes indebtedness associated with real estate held for sale.

Same Store Portfolio Net Operating Income

We believe that Net Operating Income (“NOI”), a non-GAAP financial measure, is a useful measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding depreciation and amortization, casualty related costs, property management expenses, general administrative expenses, interest expense, and net gains on sale of assets.

Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. We believe that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income. We use NOI to evaluate our performance on a same store and non same store basis because NOI measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance and captures trends in rental housing and property operating expenses. However, NOI should only be used as an alternative measure of our financial performance.

Same Store Properties and Same Store Portfolio

We review our same store portfolio at the beginning of each calendar year. Properties are added into the same store portfolio if they were owned at the beginning of the previous year. Properties that are held-for-sale or have been sold are excluded from the same store portfolio.

Total Gross Assets

Total Gross Assets equals total assets plus accumulated depreciation and accumulated amortization, including fully depreciated or amortized real estate and real estate related assets. The following table provides a reconciliation of total assets to total gross assets (Dollars in thousands).

 

As of

 

 

September 30,

2021

 

 

June 30,

2021

 

 

March 31,

2021

 

 

December 30,

2020

 

 

September 30,

2020

 

Total assets

$

1,846,911

 

 

$

1,875,122

 

 

$

1,728,016

 

 

$

1,734,897

 

 

$

1,700,428

 

Plus: accumulated depreciation

 

247,563

 

 

 

237,684

 

 

 

223,187

 

 

 

208,618

 

 

 

200,258

 

Plus: accumulated amortization

 

20,269

 

 

 

20,215

 

 

 

19,776

 

 

 

19,380

 

 

 

19,827

 

Total gross assets

$

2,114,743

 

 

$

2,133,021

 

 

$

1,970,979

 

 

$

1,962,895

 

 

$

1,920,513

 

 

 


irt-ex992_7.htm

Exhibit 99.2

 

 

 

 

Legacy at Jones Farm, Huntsville, AL

 

EARNINGS RELEASE & SUPPLEMENTAL INFORMATION

Q3 2021

 

 

 

NYSE: IRT

WWW.IRTLIVING.COM

 


TABLE OF CONTENTS

 

Company Information

 

3

 

 

 

Forward-Looking Statements

 

4

 

 

 

Earnings Release Text

 

6

 

 

 

Financial & Operating Highlights

 

13

 

 

 

Balance Sheets

 

14

 

 

 

Statements of Operations, FFO & CORE FFO

 

 

Trailing Five Quarters

 

15

Three and Nine Months Ended September 30, 2021 and 2020

 

16

 

 

 

Adjusted EBITDA Reconciliations and Coverage Ratio

 

 

Trailing Five Quarters

 

17

Three and Nine Months Ended September 30, 2021 and 2020

 

17

 

 

 

Same-Store Portfolio Net Operating Income

 

 

Trailing Five Quarters

 

18

Three and Nine Months Ended September 30, 2021 and 2020

 

19

 

 

 

Net Operating Income Bridge

 

20

 

 

 

Same-Store Portfolio Net Operating Income by Market

Three Months Ended September 30, 2021 and 2020

 

 

21

         Nine Months Ended September 30, 2021 and 2020

 

22

 

 

 

Total Portfolio NOI Exposure by Market

 

23

 

 

 

Value Add Summary

 

24

 

 

 

Capital Recycling Activity

 

26

 

 

 

Debt Summary

 

27

 

 

 

Debt Covenant & Unencumbered Asset Statistics

 

28

 

 

 

Definitions

 

29

 

2

 


 

Independence Realty Trust

September 30, 2021

Company Information:

 

Independence Realty Trust, Inc. (NYSE: IRT) is a real estate investment trust that owns and operates multifamily apartment properties across non-gateway U.S. markets, including Atlanta, Dallas, Louisville, Memphis, Raleigh and Tampa. IRT’s investment strategy is focused on gaining scale within key amenity rich submarkets that offer good school districts, high-quality retail and major employment centers. IRT aims to provide stockholders attractive risk-adjusted returns through diligent portfolio management, strong operational performance, and a consistent return on capital through distributions and capital appreciation. More information may be found on the Company’s website at www.irtliving.com.

 

Corporate Headquarters

 

1835 Market Street, Suite 2601

 

 

Philadelphia, PA 19103

 

 

267.270.4800

 

 

Trading Symbol

 

NYSE: “IRT”

 

 

Investor Relations Contact

 

Edelman Financial Communications & Capital Markets

 

 

Ted McHugh and Lauren Torres

 

 

917-365-7979

 

 

IRT@edelman.com

 

 

 

 

 


3

 


 

Forward-Looking Statements

This supplemental information contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “will,” “strategy,” “expects,” “seeks,” “believes,” “potential,” or other similar words. These forward-looking statements include, without limitation, our expectations with respect to our 2021 earnings and CFFO, capital allocations, including as to the timing and amount of future dividends, and anticipated benefits of our announced merger transaction with Steadfast Apartment REIT, Inc. (“STAR”). Such forward-looking statements involve risks, uncertainties, estimates and assumptions and our actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and not within our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Risks and uncertainties that might cause our future actual results and/or future dividends to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: risks related to the impact of COVID-19 and other potential future outbreaks of infectious diseases on our financial condition, results of operations, cash flows and performance and those of our residents as well as on the economy and real estate and financial markets; changes in market demand for rental apartment homes and pricing pressures, including from competitors, that could limit our ability to lease units or increase rents or that could lead to declines in occupancy and rent levels; uncertainty and volatility in capital and credit markets, including changes that reduce availability, and increase costs, of capital; inability of tenants to meet their rent and other lease obligations and charge-offs in excess of our allowance for bad debt; legislative restrictions that may delay or limit collections of past due rents; risks endemic to real estate and the real estate industry generally; impairment charges; the effects of natural and other disasters; delays in completing, and cost overruns incurred in connection with, our value add initiatives and failure to achieve projected rent increases and occupancy levels on account of the initiatives; the structure, timing and completion of our announced merger transaction with STAR and any effects of the announcement, pendency or completion of the merger, including failure to realize the cost savings, synergies and other benefits expected to result from the merger; the ability to successfully integrate the IRT and STAR businesses; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, including failure to receive required stockholder approvals; the risk that the parties may not be able to satisfy the conditions to the merger in a timely manner or at all; risks related to disruption of management time from ongoing business operations due to the announced merger transaction; the risk that the merger and its announcement could have an adverse effect on our ability to retain and hire key personnel and maintain relationships with our customers and suppliers, and on our operating results and businesses generally; unexpected costs of REIT qualification compliance; unexpected changes in our intention or ability to repay certain debt prior to maturity; inability to sell certain assets within the time frames or at the pricing levels expected; costs and disruptions as the result of a cybersecurity incident or other technology disruption; and share price fluctuations. Please refer to the documents filed by us with the SEC, including specifically the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2020, our subsequently filed quarterly reports on Form 10-Q and our other filings with the SEC, which identify additional factors that could cause actual results to differ from those contained in forward-looking statements. We undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required by law. In addition, the declaration of dividends on our common stock is subject to the discretion of our Board of Directors and depends upon a broad range of factors, including our results of operations, financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code of 1986, as amended, applicable legal requirements and such other factors as our Board of Directors may from time to time deem relevant. For these reasons, as well as others, there can be no assurance that dividends in the future will be equal or similar to the amount of the quarterly dividend described in this press release.

Additional Information and Where to Find It

In connection with its announced merger transaction with STAR, IRT filed with the SEC a registration statement on Form S-4 to register the shares of IRT Common Stock to be issued in connection with the proposed merger transaction.  The registration statement was declared effective by the SEC on September 29, 2021, and includes a joint proxy statement/prospectus which was sent to the stockholders of IRT and the stockholders of STAR. INVESTORS AND SECURITY HOLDERS OF IRT AND STAR ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors and security holders are able to obtain free copies of these documents and other documents

4

 


filed with the SEC by IRT and/or STAR through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by IRT are available free of charge on IRT’s internet website at http://www.irtliving.com or by contacting IRT’s Investor Relations Department by email at IRT@edelman.com or by phone at +1-917-365-7979. Copies of the documents filed with the SEC by STAR are available free of charge on STAR’s internet website at http://www.steadfastliving.com or by contacting STAR’s Investor Relations Department by phone at +1-888-223-9951.

 

Participants in Solicitation

IRT, STAR, their respective directors and certain of their respective executive officers may be considered participants in the solicitation of proxies in connection with the announced merger transaction. Information about the directors and executive officers of IRT is set forth in its Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on February 18, 2021, and its proxy statement for its 2021 annual meeting of stockholders, which was filed with the SEC on March 29, 2021. Information about the directors and executive officers of STAR is set forth in its Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 12, 2021, and in its proxy statement for its 2021 annual meeting of stockholders, which was filed with the SEC on June 14, 2021. These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC.

 

No Offer or Solicitation

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.  No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.

 


5

 


Independence Realty Trust Announces Third Quarter 2021 Financial Results & Updates Full Year 2021 Guidance

 

PHILADELPHIA – (BUSINESS WIRE) – October 27, 2021 — Independence Realty Trust, Inc. (“IRT”) (NYSE: IRT), a multifamily apartment REIT, today announced its third quarter 2021 financial results.

 

Third Quarter Highlights

 

On July 26, 2021, IRT announced that it reached a definitive agreement to merge with Steadfast Apartment REIT, Inc. (“STAR”), creating a leading multifamily REIT focused on the high-growth U.S. Sunbelt region. The transaction is expected to close in mid-December 2021, following a stockholder vote scheduled for December 13, 2021, and we are on track to deliver the $28 million in annual synergies and immediate 11% accretion to Core Funds from Operations.

 

 

Net income available to common shares of $11.5 million for the quarter ended September 30, 2021 compared to $1.1 million for the quarter ended September 30, 2020.  Earnings per diluted share of $0.11 for the quarter ended September 30, 2021 compared to $0.01 for the quarter ended September 30, 2020.

 

 

Same store net operating income (“NOI”) growth of 14.7% for the quarter ended September 30, 2021 compared to the quarter ended September 30, 2020.

 

 

Core Funds from Operations (“CFFO”) of $22.7 million for the quarter ended September 30, 2021 compared to $18.2 million for the quarter ended September 30, 2020. CFFO per share was $0.21 for the third quarter of 2021, as compared to $0.19 for the third quarter of 2020.

 

 

Adjusted EBITDA of $31.4 million for the quarter ended September 30, 2021 compared to $27.1 million for the quarter ended September 30, 2020.

 

 

Increased full year 2021 same store NOI guidance to a midpoint of 10.25% and full year 2021 CFFO guidance to a midpoint of $0.81 per share.

 

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

 

Management Commentary

“The combination of favorable macro trends across our core markets and the execution of our growth initiatives continues to yield impressive returns,” said Scott Schaeffer, Chairman and CEO of IRT. “We delivered a 14.7% year-over-year increase in third quarter same store NOI, with our occupancy rate up 220 basis points to 96% and our average rental rate increasing 7.3% on a year-over-year basis. As we look forward, our ability to maintain occupancy, drive rental rates, and advance our value add program gives us confidence that we can continue to unlock value within our portfolio. We are also focused on the integration of the planned merger with STAR and are excited about the growth potential of our combined business.”

 

Same Store Property Operating Results

 

 

Third Quarter 2021 Compared to Third Quarter 2020(1)

Nine Months Ended 9/30/21 Compared to Nine Months Ended 9/30/20

Rental and other property revenue

9.4% increase

7.8% increase

Property operating expenses

1.7% increase

4.4% increase

Net operating income (“NOI”)

14.7% increase

10.1% increase

Portfolio average occupancy

220 bps increase to 96.0%

270 bps increase to 95.6%

Portfolio average rental rate

7.3% increase to $1,227

4.6% increase to $1,190

NOI Margin

290 bps increase to 62.2%

130 bps increase to 61.7%

 

 

(1)

Same store portfolio for the three months ended September 30, 2021 includes 47 properties, which represent 12,838 units.

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Same Store Property Operating Results, Excluding Value Add

The same store portfolio results below exclude 13 communities that are both part of the same store portfolio and were actively undergoing Value Add renovations during the three months ended September 30, 2021.

 

 

 

Third Quarter 2021 Compared to Third Quarter 2020(1)

Nine Months Ended 9/30/21 Compared to Nine Months Ended 9/30/20(1)

Rental and other property revenue

8.3% increase

6.1% increase

Property operating expenses

1.6% increase

4.5% increase

Net operating income (“NOI”)

12.8% increase

7.1% increase

Portfolio average occupancy

230 bps increase to 96.4%

250 bps increase to 96.1%

Portfolio average rental rate

6.3% increase to $1,219

3.3% increase to $1,186

NOI Margin

250 bps increase to 61.6%

60 bps increase to 61.5%

 

 

(1)

Same store portfolio, excluding value add, for the three months ended September 30, 2021 includes 34 properties, which represent 8,908 units.

 

COVID-19 Metrics (1)(2)

 

Rent collections

3Q 2021

3Q 2020

2Q 2021

Rent collected for the period presented, as a percentage of rent billed (3)

98.4%

99.7%

99.4%

 

 

(1)

Dollar amounts in thousands. All metrics presented are for our total portfolio in the period presented.

 

(2)

All metrics are based on our internal data, which management uses to monitor property performance on a daily or weekly basis.

 

(3)

Rent collected as a percentage of rent billed includes rent deferred under any deferred payment plans that may have been offered in the period presented. Deferred payment plans were offered to residents in 2020 and early 2021 to allow residents to defer a portion of their monthly rent for one or more months or to repay over time past-due rent which was unpaid due to a COVID-related financial hardship. As of September 30, 2021, there were no active deferred payment plans outstanding.

 

As a result of the COVID-19 pandemic, we recorded a provision for bad debts of $122,000 in the third quarter of 2021. The table below presents additional details on the components of bad debt:

 

Components of Bad Debt (1)

3Q 2021

3Q 2020

2Q 2021

Amount

Percentage

Amount

Percentage

Amount

Percentage

Charge-offs, net

$534

0.9%

$260

0.5%

$512

0.9%

Provision for bad debt

$122

0.2%

$80

0.1%

$78

0.1%

Net bad debt

$656

1.1%

$340

0.6%

$590

1.0%

 

 

(1)

Dollar amounts are in thousands and percentages are as a percentage of total rental and other property income. Bad debt is recorded as a reduction to rental and other property revenue in our consolidated statements of operations.

 

Operating statistics

October 2021

October 2020

3Q 2021

Rent collected for the period presented, as a percentage of rent billed (1)

95.9%

99.5%

98.4%

Total portfolio average occupancy

96.2%

94.9%

96.1%

Total portfolio average effective monthly rent per unit

$1,217

$1,120

$1,212

Resident retention rate

52.7%

47.5%

60.3%

 

 

(1)

Rent collected as a percentage of rent billed includes rent deferred under any deferred payment plans that may have been

offered in the period presented.

 

 

 

 

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Lease-Over-Lease Effective Rent Growth (1)

The table below depicts lease-over-lease effective rent growth for all new and renewal leases entered into during the respective periods for the 47-property same store portfolio.  

 

Lease Type

3Q 2021

4Q 2021(2)  

New Leases

19.8%

24.1%

Renewal Leases

5.0%

9.4%

Total

10.5%

14.2%

 

 

(1)

Lease-over-lease effective rent growth represents the change in effective monthly rent, as adjusted for concessions, for each unit that had a prior lease and current lease that are for a term of 9-13 months.

 

(2)

For new leases and renewals commencing during 4Q 2021 that were signed as of October 25, 2021.

 

Value Add Program

We completed renovations on 330 units during the quarter ended September 30, 2021. From inception of our value add program in January 2018 through September 30, 2021, we completed renovations on 4,419 units, achieving a return on investment of 17.6% (19.8% on interior renovation costs) and an average monthly rental increase of 19.3%.  

 

In addition, we announced that five new properties have been added to our value add program with renovations expected to begin in 2022. The five properties are comprised of 1,295 units and we expect to achieve returns on investment at these properties consistent with prior value add projects.  

 

Capital Recycling

In the third quarter of 2021, we continued our capital recycling activity in support of our ongoing initiative to establish and grow our presence in markets where we see long-term growth opportunities and reevaluate those that may not be attractive long-term investments.

 

Acquisitions/Joint Venture:

 

Joint Venture in Nashville, TN: On September 3, 2021, we closed on a joint venture for the development of three communities totaling 504-units with our JV partner that is managing construction and is expected be completed in the first half of 2022. IRT’s investment is expected to total $14.4 million.

 

Dispositions/Property Held for Sale:

 

Kings Landing in St. Louis, MO: We sold this property on July 28, 2021 and recognized a gain on disposition of $11.5 million.

 

Plan to dispose of six assets: In connection with our merger with Steadfast Apartment REIT, we plan to sell Crestmont (228 units) and Creekside Corners (444 units) in Georgia, Riverchase (216 units) in Indiana, Haverford Place (160 units) in Kentucky, and Heritage Park (453 units) and Raindance (504 units) in Oklahoma. Proceeds from these sales will be used to repay debt of the combined company.

 

Capital Expenditures

For the three months ended September 30, 2021, recurring capital expenditures for the total portfolio were $1.9 million, or $118 per unit. For the nine months ended September 30, 2021, recurring capital expenditures for the total portfolio were $4.8 million, or $307 per unit.

 

Distributions

On September 13, 2020, our Board of Directors declared a quarterly cash dividend of $0.12 per share of our common stock, which was paid on October 22, 2021 to stockholders of record at the close of business on October 1, 2021.

 

 

 

 

 

 

 

 

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2021 EPS and CFFO Guidance

Given portfolio performance during the quarter ended September 30, 2021, IRT is updating its 2021 full year EPS and CFFO guidance.

 

 

Previous Guidance

Current Guidance

2021 Full Year EPS and CFFO Guidance (1)(2)

Low

High

Low

High

Earnings (loss) per share

$0.09

$0.11

$0.18

$0.23

Adjustments:

 

 

 

 

Depreciation and amortization

0.67

0.67

0.65

0.65

Gains on sale of real estate assets (3)

0.00

0.00

(0.83)

(0.86)

Merger and integration costs (4)

0.00

0.00

0.80

0.80

Core FFO per share allocated to common shareholders

$0.76

$0.78

$0.80

$0.82

 

 

(1)

This guidance, including the underlying assumptions presented in the table below, constitutes forward-looking information. Actual full year 2021 EPS and CFFO could vary significantly from the projections presented. See “Forward-Looking Statements” below. Our guidance is based on the key guidance assumptions detailed below.

 

(2)

Per share guidance is based on 105.0 million weighted average shares and units outstanding, which excludes the impact of shares issued in conjunction with the STAR merger.

 

(3)

Current guidance for gains on sale of real estate assets assumes the sale of Kings Landing plus two of the properties identified as held for sale as of September 30, 2021.  

 

(4)

Merger and integration costs incurred to date primarily consist of advisory fees, attorney fees, accountant fees, and SEC filing fees related to our merger with Steadfast Apartment REIT. We expect additional such merger and integration costs to be incurred during 4Q 2021 in addition to severance and debt prepayment penalty related costs that are expected in conjunction with the closing of the merger.

 

2021 Guidance Assumptions

Our key guidance assumptions for 2021 are enumerated below and our guidance does not give effect to the announced

merger between us and Steadfast Apartment REIT, Inc. (“STAR”), merger-related transaction expenses or any equity offerings. We expect the merger with STAR to close in mid-December and, therefore, the impact to our full year 2021 guidance is not expected to be significant.  

 


Same Store Communities

Previous 2021 Outlook

Current 2021 Outlook

Number of properties/units

53 properties / 14,843 units

47 properties / 12,838 units (5)

Property revenue growth

5.25% to 6.0%

7.25% to 7.75%

Controllable property operating expense growth

2.5% to 3.0%

4.0% to 4.5%

Real estate tax and insurance expense increase

4.0% to 5.0%

0.0% to 1.0%

Total real estate operating expense growth

3.0% to 4.0%

2.5% to 3.0%

Property NOI growth

6.5% to 7.5%

9.75% to 10.75%

 

 

 

Corporate Expenses (including stock compensation)

 

 

General and administrative expenses

$17.0 to $18.0 million

$18.0 to $18.5 million

Property management expenses

$8.25 to $8.75 million

$8.25 to $8.75 million

 

 

 

Interest expense (including amortization of deferred financing costs)

$34.0 to $35.0 million

$34.0 to $34.5 million

 

 

 

Transaction/Investment Volume

 

 

Acquisition volume

$100 million to $200 million

No additional acquisitions (6)

Disposition volume

$40 million to $100 million

$170 million to $180 million (6)

 

 

 

Capital Expenditures

 

 

Recurring

$7.0 to $7.5 million

$6.5 to $7.0 million

Value add & non-recurring

$28.5 to $32.5 million

$28.0 to $30.0 million

 

 

(5)

Number of same store communities reduced for the six assets held for sale as of September 30, 2021.

 

(6)

Current 2021 outlook for acquisition volume excludes the STAR merger while disposition volume includes the Kings Landing sale and assumes two of the properties identified as held for sale as of September 30, 2021 are also sold during 2021.

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Selected Financial Information

See the schedules at the end of this earnings release for selected financial information for IRT.

 

Non-GAAP Financial Measures and Definitions

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

 

Conference Call

All interested parties can listen to the live conference call webcast at 9:00 AM ET on Thursday, October 28, 2021 from the investor relations section of the IRT website at www.irtliving.com or by dialing 1.833.789.1330. For those who are not available to listen to the live call, the replay will be available shortly following the live call from the investor relations section of IRT’s website and telephonically until Thursday, November 4, 2021 by dialing 1.800.585.8367, access code 7818225.

 

Supplemental Information

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

 

About Independence Realty Trust, Inc.

Independence Realty Trust, Inc. (NYSE: IRT) is a real estate investment trust that owns and operates multifamily apartment properties across non-gateway U.S. markets, including Atlanta, Dallas, Louisville, Memphis, Raleigh and Tampa. IRT’s investment strategy is focused on gaining scale within key amenity rich submarkets that offer good school districts, high-quality retail and major employment centers. IRT aims to provide stockholders attractive risk-adjusted returns through diligent portfolio management, strong operational performance, and a consistent return on capital through distributions and capital appreciation. More information may be found on IRT’s website at www.irtliving.com.

 


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Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “will,” “strategy,” “expects,” “seeks,” “believes,” “potential,” or other similar words. These forward-looking statements include, without limitation, our expectations with respect to our 2021 earnings and CFFO, capital allocations, including as to the timing and amount of future dividends, and anticipated benefits of our announced merger transaction with Steadfast Apartment REIT, Inc. (“STAR”). Such forward-looking statements involve risks, uncertainties, estimates and assumptions and our actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and not within our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Risks and uncertainties that might cause our future actual results and/or future dividends to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: risks related to the impact of COVID-19 and other potential future outbreaks of infectious diseases on our financial condition, results of operations, cash flows and performance and those of our residents as well as on the economy and real estate and financial markets; changes in market demand for rental apartment homes and pricing pressures, including from competitors, that could limit our ability to lease units or increase rents or that could lead to declines in occupancy and rent levels; uncertainty and volatility in capital and credit markets, including changes that reduce availability, and increase costs, of capital; inability of tenants to meet their rent and other lease obligations and charge-offs in excess of our allowance for bad debt; legislative restrictions that may delay or limit collections of past due rents; risks endemic to real estate and the real estate industry generally; impairment charges; the effects of natural and other disasters; delays in completing, and cost overruns incurred in connection with, our value add initiatives and failure to achieve projected rent increases and occupancy levels on account of the initiatives; the structure, timing and completion of our announced merger transaction with STAR and any effects of the announcement, pendency or completion of the merger, including failure to realize the cost savings, synergies and other benefits expected to result from the merger; the ability to successfully integrate the IRT and STAR businesses; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, including failure to receive required stockholder approvals; the risk that the parties may not be able to satisfy the conditions to the merger in a timely manner or at all; risks related to disruption of management time from ongoing business operations due to the announced merger transaction; the risk that the merger and its announcement could have an adverse effect on our ability to retain and hire key personnel and maintain relationships with our customers and suppliers, and on our operating results and businesses generally; unexpected costs of REIT qualification compliance; unexpected changes in our intention or ability to repay certain debt prior to maturity; inability to sell certain assets within the time frames or at the pricing levels expected; costs and disruptions as the result of a cybersecurity incident or other technology disruption; and share price fluctuations. Please refer to the documents filed by us with the SEC, including specifically the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2020, our subsequently filed quarterly reports on Form 10-Q and our other filings with the SEC, which identify additional factors that could cause actual results to differ from those contained in forward-looking statements. We undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required by law. In addition, the declaration of dividends on our common stock is subject to the discretion of our Board of Directors and depends upon a broad range of factors, including our results of operations, financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code of 1986, as amended, applicable legal requirements and such other factors as our Board of Directors may from time to time deem relevant. For these reasons, as well as others, there can be no assurance that dividends in the future will be equal or similar to the amount of the quarterly dividend described in this press release.

 

Additional Information and Where to Find It

In connection with its announced merger transaction with STAR, IRT filed with the SEC a registration statement on Form S-4 to register the shares of IRT Common Stock to be issued in connection with the proposed merger transaction.  The registration statement was declared effective by the SEC on September 29, 2021, and includes a joint proxy statement/prospectus which was sent to the stockholders of IRT and the stockholders of STAR. INVESTORS AND SECURITY HOLDERS OF IRT AND STAR ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors and security holders are able to obtain free copies of these documents and other documents

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filed with the SEC by IRT and/or STAR through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by IRT are available free of charge on IRT’s internet website at http://www.irtliving.com or by contacting IRT’s Investor Relations Department by email at IRT@edelman.com or by phone at +1-917-365-7979. Copies of the documents filed with the SEC by STAR are available free of charge on STAR’s internet website at http://www.steadfastliving.com or by contacting STAR’s Investor Relations Department by phone at +1-888-223-9951.

 

Participants in Solicitation

IRT, STAR, their respective directors and certain of their respective executive officers may be considered participants in the solicitation of proxies in connection with the announced merger transaction. Information about the directors and executive officers of IRT is set forth in its Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on February 18, 2021, and its proxy statement for its 2021 annual meeting of stockholders, which was filed with the SEC on March 29, 2021. Information about the directors and executive officers of STAR is set forth in its Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 12, 2021, and in its proxy statement for its 2021 annual meeting of stockholders, which was filed with the SEC on June 14, 2021. These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC.

 

No Offer or Solicitation

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.  No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.

 

Independence Realty Trust, Inc. Contact

Edelman Financial Communications & Capital Markets

Ted McHugh and Lauren Torres

917-365-7979

IRT@edelman.com

 

 

 

 

 

 


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FINANCIAL & OPERATING HIGHLIGHTS

Dollars in thousands, except per share data

 

 

For the Three Months Ended

 

 

 

September 30,

2021

 

June 30,

2021

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

Selected Financial Information:

 

 

 

 

 

 

 

 

 

 

 

Operating Statistics:

 

 

 

 

 

 

 

 

 

 

 

Net income available to common shares

 

$11,502

 

$3,386

 

$1,086

 

$13,261

 

$1,090

 

Earnings (loss) per share -- diluted

 

$0.11

 

0.03

 

$0.01

 

$0.14

 

$0.01

 

Rental and other property revenue

 

$60,592

 

$57,286

 

$54,811

 

$53,923

 

$54,001

 

Property operating expenses

 

$23,164

 

$22,298

 

$20,838

 

$20,138

 

$22,129

 

Net operating income

 

$37,428

 

$34,988

 

$33,973

 

$33,785

 

$31,872

 

NOI margin

 

61.8%

 

61.1%

 

62.0%

 

62.7%

 

59.0%

 

Adjusted EBITDA

 

$31,432

 

$28,729

 

$26,389

 

$28,534

 

$27,081

 

CORE FFO per share (c)

 

$0.21

 

$0.20

 

$0.18

 

$0.22

 

$0.20

 

Dividends per share

 

$0.12

 

$0.12

 

$0.12

 

$0.12

 

$0.12

 

CORE FFO payout ratio

 

57.1%

 

60.0%

 

66.7%

 

54.5%

 

60.0%

 

Portfolio Data:

 

 

 

 

 

 

 

 

 

 

 

Total gross assets

 

$2,114,743

 

$2,133,021

 

$1,970,979

 

$1,962,895

 

$1,920,513

 

Total number of properties

 

57

 

58

 

56

 

56

 

58

 

Total units

 

16,109

 

16,261

 

15,667

 

15,667

 

15,805

 

Period end occupancy

 

96.0%

 

95.6%

 

95.5%

 

95.3%

 

94.4%

 

Total portfolio average occupancy

 

96.1%

 

95.9%

 

95.4%

 

95.0%

 

94.1%

 

Total portfolio average effective monthly rent, per

   unit

 

$1,212

 

$1,171

 

$1,142

 

$1,136

 

$1,118

 

Same store period end occupancy (a)

 

95.8%

 

95.4%

 

95.2%

 

95.1%

 

94.1%

 

Same store portfolio average occupancy (a)

 

96.0%

 

95.9%

 

95.1%

 

94.8%

 

93.8%

 

Same store portfolio average effective monthly rent,

   per unit (a)

 

$1,227

 

$1,183

 

$1,161

 

$1,154

 

$1,143

 

Capitalization:

 

 

 

 

 

 

 

 

 

 

 

Total debt (d)

 

$996,270

 

$1,036,841

 

$947,631

 

$945,686

 

$1,004,237

 

Common share price, period end

 

$20.35

 

$18.23

 

$15.20

 

$13.43

 

$11.59

 

Market equity capitalization

 

$2,150,162

 

$1,926,218

 

$1,561,165

 

$1,376,283

 

$1,107,144

 

Total market capitalization

 

$3,146,432

 

$2,963,059

 

$2,508,796

 

$2,321,969

 

$2,111,381

 

Total debt/total gross assets

 

47.1%

 

48.6%

 

48.1%

 

48.2%

 

52.4%

 

Net debt to Adjusted EBITDA (pro forma) (b)

 

8.2x

 

8.5x

 

8.2x

 

8.2x

 

9.1x

 

Interest coverage

 

3.6x

 

3.4x

 

3.1x

 

3.2x

 

3.0x

 

Common shares and OP Units:

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding

 

105,106,714

 

105,109,649

 

102,033,733

 

101,803,762

 

94,823,806

 

OP units outstanding

 

552,360

 

552,360

 

674,515

 

674,517

 

701,986

 

Common shares and OP units outstanding

 

105,659,074

 

105,662,009

 

102,708,248

 

102,478,278

 

95,525,792

 

Weighted average common shares and units

 

107,094,044

 

102,584,809

 

102,353,380

 

95,529,788

 

95,227,176

 

 

(a)

Same store portfolio consists of 47 properties, which represent 12,838 units.

 

(b)

Reflects pro forma net debt to Adjusted EBITDA for each period presented, which includes adjustments for the timing of acquisitions, the full quarter effect of current value add initiatives, the completion of capital recycling activities including paydown of associated indebtedness, and the normalization of items impacting quarterly EBITDA. Actual net debt to Adjusted EBITDA for the five quarters ended September 30, 2021 was 8.0x, 9.1x, 8.9x, 8.3x, and 9.3x, respectively.

 

(c)

Reflects adjustment to prior periods to conform to our current definition of CFFO. See our definition of CFFO for additional discussion.

 

(d)

Includes indebtedness associated with real estate held for sale

 

 

 

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BALANCE SHEETS

Dollars in thousands, except per share data

 

 

 

As of

 

 

September 30,

2021

 

June 30,

2021

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

Assets:

 

 

 

 

 

 

 

 

 

 

Investments in real estate at cost

 

$1,904,760

 

$2,035,988

 

$1,922,071

 

$1,916,770

 

$1,815,754

Less: accumulated depreciation

 

(223,244)

 

(231,866)

 

(223,187)

 

(208,618)

 

(194,644)

Investments in real estate, net

 

1,681,516

 

1,804,122

 

1,698,884

 

1,708,152

 

1,621,110

Real estate held for sale

 

120,409

 

27,910

 

 

 

49,264

Cash and cash equivalents

 

8,720

 

7,566

 

8,653

 

8,751

 

9,891

Restricted cash

 

6,138

 

6,441

 

4,449

 

4,864

 

7,218

Investment in unconsolidated real estate entities

 

13,561

 

10,205

 

 

 

Other assets

 

15,053

 

17,311

 

12,824

 

12,338

 

12,945

Derivative assets

 

1,168

 

853

 

2,810

 

 

Intangible assets, net

 

346

 

714

 

396

 

792

 

Total assets

 

$1,846,911

 

$1,875,122

 

$1,728,016

 

$1,734,897

 

$1,700,428

Liabilities and Equity:

 

 

 

 

 

 

 

 

 

 

Indebtedness, net

 

$996,270

 

$1,036,841

 

$947,631

 

$945,686

 

$1,004,237

Indebtedness associated with real estate held for sale, net

 

22,459

 

19,622

 

 

 

Accounts payable and accrued expenses

 

39,593

 

30,530

 

24,535

 

25,416

 

34,319

Accrued interest payable

 

1,708

 

1,909

 

1,888

 

1,976

 

1,888

Dividends payable

 

12,648

 

12,648

 

12,293

 

12,257

 

11,449

Derivative liabilities

 

17,492

 

19,386

 

19,540

 

29,842

 

33,453

Other liabilities

 

6,756

 

6,903

 

6,991

 

6,949

 

6,736

Total liabilities

 

1,096,926

 

1,127,839

 

1,012,878

 

1,022,126

 

1,092,082

Equity:

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity:

 

 

 

 

 

 

 

 

 

 

Preferred shares, $0.01 par value per share

 

 

 

 

 

Common shares, $0.01 par value per share

 

1,051

 

1,051

 

1,018

 

1,018

 

948

Additional paid in capital

 

965,018

 

963,754

 

920,042

 

919,615

 

820,105

Accumulated other comprehensive income (loss)

 

(19,507)

 

(22,011)

 

(20,497)

 

(33,822)

 

(37,688)

Retained earnings (deficit)

 

(200,429)

 

(199,350)

 

(190,151)

 

(178,751)

 

(179,834)

Total shareholders' equity

 

746,133

 

743,444

 

710,412

 

708,060

 

603,531

Noncontrolling Interests

 

3,852

 

3,839

 

4,726

 

4,711

 

4,815

Total equity

 

749,985

 

747,283

 

715,138

 

712,771

 

608,346

Total liabilities and equity

 

$1,846,911

 

$1,875,122

 

$1,728,016

 

$1,734,897

 

$1,700,428

 

14

 


 

STATEMENTS OF OPERATIONS, FFO & CORE FFO

TRAILING FIVE QUARTERS

Dollars in thousands, except per share data

 

 

 

For the Three-Months Ended

 

 

September 30,

2021

 

June 30,

2021

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

Revenue:

 

 

 

 

 

 

 

 

 

 

Rental and other property revenue

 

$60,592

 

$57,286

 

$54,811

 

$53,923

 

$54,001

Other revenue

 

188

 

158

 

301

 

165

 

199

Total revenue

 

60,780

 

57,444

 

55,112

 

54,088

 

54,200

Expenses:

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

23,164

 

22,298

 

20,838

 

20,138

 

22,129

Property management expenses

 

2,199

 

2,176

 

1,943

 

2,183

 

2,078

General and administrative expenses (a)

 

3,985

 

4,241

 

5,942

 

3,233

 

2,912

Depreciation and amortization expense

 

17,384

 

16,763

 

16,552

 

15,396

 

15,232

Casualty losses

 

 

 

359

 

300

 

Total expenses

 

46,732

 

45,478

 

45,634

 

41,250

 

42,351

Interest expense

 

(8,700)

 

(8,559)

 

(8,385)

 

(8,872)

 

(8,917)

Gain on sale (loss on impairment) of real estate assets, net

 

11,492

 

 

 

9,394

 

(1,840)

Merger and integration costs

 

(5,276)

 

 

 

 

Net income (loss)

 

11,564

 

3,407

 

1,093

 

13,360

 

1,092

(Income) loss allocated to noncontrolling interests

 

(62)

 

(21)

 

(7)

 

(99)

 

(2)

Net income (loss) available to common shares

 

$11,502

 

$3,386

 

$1,086

 

$13,261

 

$1,090

EPS - basic

 

$0.11

 

$0.03

 

$0.01

 

$0.14

 

$0.01

Weighted-average shares outstanding - Basic

 

104,918,674

 

102,023,204

 

101,678,865

 

94,846,369

 

94,456,987

EPS - diluted

 

$0.11

 

$0.03

 

$0.01

 

$0.14

 

$0.01

Weighted-average shares outstanding - Diluted

 

107,668,675

 

102,923,924

 

102,763,106

 

95,876,357

 

95,222,623

Funds From Operations (FFO):

 

 

 

 

 

 

 

 

 

 

Net Income (loss)

 

$11,564

 

$3,407

 

$1,093

 

$13,360

 

$1,092

Add-Back (Deduct):

 

 

 

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

17,263

 

16,683

 

16,472

 

15,316

 

15,155

Loss on impairment (gain on sale) of real estate assets, net

 

(11,788)

 

 

 

(9,394)

 

1,840

FFO

 

$17,039

 

$20,090

 

$17,565

 

$19,282

 

$18,087

FFO per share

 

$0.16

 

$0.20

 

$0.17

 

$0.20

 

$0.19

CORE Funds From Operations (CFFO): (b)

 

 

 

 

 

 

 

 

 

 

FFO

 

$17,039

 

$20,090

 

$17,565

 

$19,282

 

$18,087

Add-Back (Deduct):

 

 

 

 

 

 

 

 

 

 

Other depreciation and amortization

 

121

 

80

 

80

 

80

 

77

Merger and integration costs

 

5,276

 

 

 

 

Prepayment penalties on asset dispositions

 

295

 

 

 

 

Casualty losses

 

 

 

359

 

300

 

CFFO

 

$22,731

 

$20,170

 

$18,004

 

$19,662

 

$18,164

CFFO per share

 

$0.21

 

$0.20

 

$0.18

 

$0.21

 

$0.19

Weighted-average shares and units outstanding

 

107,094,044

 

102,584,809

 

102,353,380

 

95,529,788

 

95,227,176

 

 

(a)

Included in the three-months ended March 31, 2021 is $2.1 million of stock compensation expense recorded with respect to stock awards granted during the period to retirement eligible employees.

 

(b)

Reflects adjustment to prior periods to conform to our current definition of CFFO. See our definition of CFFO for additional discussion.

 

15

 


 

STATEMENTS OF OPERATIONS, FFO & CORE FFO

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 and 2020

Dollars in thousands, except per share data

 

 

 

For the Three Months Ended September 30,

 

For the Nine Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Revenue:

 

 

 

 

 

 

 

 

Rental and other property revenue

 

$60,592

 

$54,001

 

$172,689

 

$157,244

Other revenue

 

188

 

199

 

647

 

574

Total revenue

 

60,780

 

54,200

 

173,336

 

157,818

Expenses:

 

 

 

 

 

 

 

 

Property operating expenses

 

23,164

 

22,129

 

66,300

 

62,840

Property management expenses

 

2,199

 

2,078

 

6,318

 

6,311

General and administrative expenses (a)

 

3,985

 

2,912

 

14,168

 

11,862

Depreciation and amortization expense

 

17,384

 

15,232

 

50,699

 

45,291

Abandoned deal costs

 

 

 

 

130

Casualty losses

 

 

 

359

 

411

Total expenses

 

46,732

 

42,351

 

137,844

 

126,845

Interest expense

 

(8,700)

 

(8,917)

 

(25,644)

 

(27,616)

Gain on sale (loss on impairment) of real estate assets, net

 

11,492

 

(1,840)

 

11,492

 

(1,840)

Merger and integration costs

 

(5,276)

 

 

(5,276)

 

Net income (loss)

 

11,564

 

1,092

 

16,064

 

1,517

(Income) loss allocated to noncontrolling interests

 

(62)

 

(2)

 

(90)

 

(10)

Net income (loss) available to common shares

 

$11,502

 

$1,090

 

$15,974

 

$1,507

EPS - basic

 

$0.11

 

$0.01

 

$0.16

 

$0.02

Weighted-average shares outstanding - Basic

 

104,918,674

 

94,456,987

 

102,882,723

 

93,261,757

EPS - diluted

 

$0.11

 

$0.01

 

$0.15

 

$0.02

Weighted-average shares outstanding - Diluted

 

107,668,675

 

95,222,623

 

104,062,661

 

94,099,091

 

 

 

 

 

 

 

 

 

Funds From Operations (FFO):

 

 

 

 

 

 

 

 

Net Income (loss)

 

$11,564

 

$1,092

 

$16,064

 

$1,517

Adjustments:

 

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

17,263

 

15,155

 

50,418

 

45,036

Net loss on impairment (gain on sale) of real estate assets excluding debt extinguishment costs

 

(11,788)

 

1,840

 

(11,788)

 

1,840

Funds From Operations

 

$17,039

 

$18,087

 

$54,694

 

$48,393

FFO per share

 

$0.16

 

$0.19

 

$0.53

 

$0.51

Core Funds From Operations (CFFO): (b)

 

 

 

 

 

 

 

 

Funds From Operations

 

$17,039

 

$18,087

 

$54,694

 

$48,393

Adjustments:

 

 

 

 

 

 

 

 

Other depreciation and amortization

 

121

 

77

 

281

 

225

Abandoned deal costs

 

 

 

 

130

Merger and integration costs

 

5,276

 

 

5,276

 

Prepayment penalties on asset dispositions

 

295

 

 

295

 

Casualty losses

 

 

 

359

 

411

Core Funds From Operations

 

$22,731

 

$18,164

 

$60,905

 

$49,159

CFFO per share

 

$0.21

 

$0.19

 

$0.59

 

$0.52

Weighted-average shares and units outstanding

 

107,094,044

 

95,227,176

 

103,511,115

 

94,061,963

 

(a)

Included in the three-months ended March 31, 2021 is $2.1 million of stock compensation expense recorded with respect to stock awards granted during the period to retirement eligible employees.

 

(b)

Reflects adjustment to prior periods to conform to our current definition of CFFO. See our definition of CFFO for additional discussion.

 

 

16

 


 

ADJUSTED EBITDA RECONCILIATION AND COVERAGE RATIO

Dollars in thousands

 

 

Three Months Ended

 

ADJUSTED EBITDA:

 

September 30,

2021

 

June 30,

2021

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

Net income (loss)

 

$11,844

 

$3,407

 

$1,093

 

$13,360

 

$1,092

 

Add-Back (Deduct):

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

17,384

 

16,763

 

16,552

 

15,396

 

15,232

 

Interest expense

 

8,700

 

8,559

 

8,385

 

8,872

 

8,917

 

Net loss on impairment (gain on sale) of real estate assets

 

(11,492)

 

 

 

(9,394)

 

1,840

 

Merger and integration costs

 

5,276

 

 

 

 

 

Casualty losses

 

 

 

359

 

300

 

 

Adjusted EBITDA

 

$31,712

 

$28,729

 

$26,389

 

$28,534

 

$27,081

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST COST:

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

$8,700

 

$8,559

 

$8,385

 

$8,872

 

$8,917

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST COVERAGE:

 

3.6x

 

3.4x

 

3.1x

 

3.2x

 

3.0x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30,

 

For the Nine Months Ended September 30,

ADJUSTED EBITDA:

 

2021

 

2020

 

2021

 

2020

Net income (loss)

 

$11,844

 

$1,092

 

$16,344

 

$1,517

Add-Back (Deduct):

 

 

 

 

 

 

 

 

Depreciation and amortization

 

17,384

 

15,232

 

50,699

 

45,291

Interest expense

 

8,700

 

8,917

 

25,644

 

27,616

Net loss on impairment (gain on sale) of real estate assets

 

(11,492)

 

1,840

 

(11,492)

 

1,840

Merger and integration costs

 

5,276

 

 

5,276

 

Abandoned deal costs

 

 

 

 

130

Casualty losses

 

 

 

359

 

411

Adjusted EBITDA

 

$31,712

 

$27,081

 

$86,830

 

$76,805

 

 

 

 

 

 

 

 

 

INTEREST COST:

 

 

 

 

 

 

 

 

Interest expense

 

$8,700

 

$8,917

 

$25,644

 

$27,616

 

 

 

 

 

 

 

 

 

INTEREST COVERAGE:

 

3.6x

 

3.0x

 

3.4x

 

2.6x

 

 

 

 

 

 

 

 

 

 


17

 


 

SAME STORE PORTFOLIO NET OPERATING INCOME

TRAILING FIVE QUARTERS

Dollars in thousands, except per unit data

 

 

For the Three-Months Ended

 

 

September 30,

2021

 

June 30,

2021

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

Revenue:

 

 

 

 

 

 

 

 

 

 

Rental and other property revenue

 

$48,942

 

$47,251

 

$45,574

 

$45,169

 

$44,734

Property Operating Expenses:

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

5,384

 

5,947

 

5,871

 

5,486

 

5,778

Property insurance

 

1,107

 

1,078

 

1,036

 

1,039

 

1,019

Personnel expenses

 

4,434

 

4,197

 

3,876

 

3,965

 

4,293

Utilities

 

2,584

 

2,270

 

2,509

 

2,320

 

2,505

Repairs and maintenance

 

2,124

 

1,996

 

1,431

 

1,353

 

1,815

Contract services

 

1,894

 

1,895

 

1,776

 

1,758

 

1,814

Advertising expenses

 

474

 

488

 

453

 

407

 

502

Other expenses

 

491

 

518

 

496

 

471

 

461

Total property operating expenses

 

18,492

 

18,389

 

17,448

 

16,799

 

18,187

Same-store net operating income (a)

 

$30,450

 

$28,862

 

$28,126

 

$28,370

 

$26,547

Same-store NOI margin

 

62.2%

 

61.1%

 

61.7%

 

62.8%

 

59.3%

Average occupancy

 

96.0%

 

95.9%

 

95.1%

 

94.8%

 

93.8%

Average effective monthly rent, per unit

 

$1,227

 

$1,183

 

$1,161

 

$1,154

 

$1,143

Reconciliation of same-store net operating

   income to net income (loss)

 

 

 

 

 

 

 

 

 

 

Same-store net operating income

 

$30,450

 

$28,862

 

$28,126

 

$28,370

 

$26,547

Non same-store net operating income

 

6,978

 

6,126

 

5,847

 

5,415

 

5,325

Other revenue

 

188

 

158

 

301

 

165

 

199

Property management expenses

 

(2,199)

 

(2,176)

 

(1,943)

 

(2,183)

 

(2,078)

General and administrative expenses

 

(3,985)

 

(4,241)

 

(5,942)

 

(3,233)

 

(2,912)

Depreciation and amortization expense

 

(17,384)

 

(16,763)

 

(16,552)

 

(15,396)

 

(15,232)

Casualty losses

 

 

 

(359)

 

(300)

 

Interest expense

 

(8,700)

 

(8,559)

 

(8,385)

 

(8,872)

 

(8,917)

Gain on sale (loss on impairment) of real estate assets, net

 

11,492

 

 

 

9,394

 

(1,840)

Merger and integration costs

 

(5,276)

 

 

 

 

Net income (loss)

 

$11,564

 

$3,407

 

$1,093

 

$13,360

 

$1,092

(a)

Same store portfolio consists of 47 properties, which represent 12,838 units.

18

 


SAME STORE PORTFOLIO NET OPERATING INCOME

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 and 2020

Dollars in thousands, except per unit data

 

 

 

For the Three Months Ended September 30,

 

For the Nine Months Ended September 30,

 

 

2021

 

2020

 

% change

 

2021

 

2020

 

% change

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Rental and other property revenue

 

$48,942

 

$44,734

 

9.4%

 

$141,767

 

$131,482

 

7.8%

Property Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

5,384

 

5,778

 

-6.8%

 

17,202

 

17,293

 

-0.5%

Property insurance

 

1,107

 

1,019

 

8.6%

 

3,221

 

2,830

 

13.8%

Personnel expenses

 

4,434

 

4,293

 

3.3%

 

12,507

 

12,116

 

3.2%

Utilities

 

2,584

 

2,505

 

3.2%

 

7,363

 

7,099

 

3.7%

Repairs and maintenance

 

2,124

 

1,815

 

17.0%

 

5,551

 

4,642

 

19.6%

Contract services

 

1,894

 

1,814

 

4.4%

 

5,565

 

5,253

 

5.9%

Advertising expenses

 

474

 

502

 

-5.6%

 

1,415

 

1,382

 

2.4%

Other expenses

 

491

 

461

 

6.5%

 

1,505

 

1,427

 

5.5%

Total property operating expenses

 

18,492

 

18,187

 

1.7%

 

54,329

 

52,042

 

4.4%

Same-store net operating income (a)

 

30,450

 

$26,547

 

14.7%

 

$87,438

 

$79,440

 

10.1%

Same-store NOI margin

 

62.2%

 

59.3%

 

2.9%

 

61.7%

 

60.4%

 

1.3%

Average occupancy

 

96.0%

 

93.8%

 

2.2%

 

95.6%

 

92.9%

 

2.7%

Average effective monthly rent, per unit

 

$1,227

 

$1,143

 

7.3%

 

$1,190

 

$1,138

 

4.6%

Reconciliation of same-store net operating

   income to net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

Same-store portfolio net operating income

 

$30,450

 

$26,547

 

 

 

$87,438

 

$79,440

 

 

Non same-store net operating income

 

6,978

 

5,325

 

 

 

18,951

 

14,964

 

 

Other revenue

 

188

 

199

 

 

 

647

 

574

 

 

Property management expenses

 

(2,199)

 

(2,078)

 

 

 

(6,318)

 

(6,311)

 

 

General and administrative expenses

 

(3,985)

 

(2,912)

 

 

 

(14,168)

 

(11,862)

 

 

Depreciation and amortization expense

 

(17,384)

 

(15,232)

 

 

 

(50,699)

 

(45,291)

 

 

Abandoned deal costs

 

 

 

 

 

 

(130)

 

 

Casualty losses

 

 

 

 

 

(359)

 

(411)

 

 

Interest expense

 

(8,700)

 

(8,917)

 

 

 

(25,644)

 

(27,616)

 

 

Gain on sale (loss on impairment) of real estate assets, net

 

11,492

 

(1,840)

 

 

 

11,492

 

(1,840)

 

 

Merger and integration costs

 

(5,276)

 

 

 

 

(5,276)

 

 

 

Net income (loss)

 

$11,564

 

$1,092

 

 

 

$16,064

 

$1,517

 

 

 

(a)

Same store portfolio consists of 47 properties, which represent 12,838 units.

19

 


NET OPERATING INCOME (NOI) BRIDGE

TRAILING FIVE QUARTERS

Dollars in thousands

 

 

For the Three-Months Ended

 

 

September 30,

2021

 

June 30,

2021

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

Rental and other property revenue

 

 

 

 

 

 

 

 

 

 

Same store (a)

 

$48,942

 

$47,251

 

$45,574

 

$45,169

 

$44,734

Non same-store

 

11,650

 

10,035

 

9,237

 

8,754

 

9,267

Total rental and other property revenue

 

60,592

 

57,286

 

54,811

 

53,923

 

54,001

Property operating expenses

 

 

 

 

 

 

 

 

 

 

Same store (a)

 

18,492

 

18,389

 

17,448

 

16,799

 

18,187

Non same-store

 

4,672

 

3,909

 

3,390

 

3,339

 

3,942

Total property operating expenses

 

23,164

 

22,298

 

20,838

 

20,138

 

22,129

Net operating income

 

 

 

 

 

 

 

 

 

 

Same-store (a)

 

30,450

 

28,862

 

28,126

 

28,370

 

26,547

Non same-store

 

6,978

 

6,126

 

5,847

 

5,415

 

5,325

Total property net operating income

 

$37,428

 

$34,988

 

$33,973

 

$33,785

 

$31,872

Reconciliation of NOI to net income (loss)

 

 

 

 

 

 

 

 

 

 

Total property net operating income

 

$37,428

 

$34,988

 

$33,973

 

$33,785

 

$31,872

Other revenue

 

188

 

158

 

301

 

165

 

199

Property management expenses

 

(2,199)

 

(2,176)

 

(1,943)

 

(2,183)

 

(2,078)

General and administrative expenses

 

(3,985)

 

(4,241)

 

(5,942)

 

(3,233)

 

(2,912)

Depreciation and amortization expense

 

(17,384)

 

(16,763)

 

(16,552)

 

(15,396)

 

(15,232)

Casualty losses

 

 

 

(359)

 

(300)

 

Interest expense

 

(8,700)

 

(8,559)

 

(8,385)

 

(8,872)

 

(8,917)

Gain on sale (loss on impairment) of real estate assets, net

 

11,492

 

 

 

9,394

 

(1,840)

Merger and integration costs

 

(5,276)

 

 

 

 

Net income (loss)

 

$11,564

 

$3,407

 

$1,093

 

$13,360

 

$1,092

 

(a)

Same store portfolio consists of 47 properties, which represent 12,838 units.

 

20

 


 

SAME-STORE PORTFOLIO NET OPERATING INCOME BY MARKET

THREE MONTHS ENDED SEPTEMBER 30, 2021

Dollars in thousands, except rent per unit

 

 

 

 

 

 

Rental and Other Property Revenue

 

Property Operating Expenses

 

Net Operating Income

 

Average Occupancy

 

Average

Effective

Monthly Rent

per Unit

Market

 

Number of Properties

 

Units

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Raleigh - Durham, NC

 

6

 

1,690

 

$6,694

 

$6,263

 

6.9%

 

$2,199

 

$2,339

 

-6.0%

 

$4,495

 

$3,924

 

14.6%

 

95.7%

 

94.4%

 

1.3%

 

$1,266

 

$1,191

 

6.2%

Atlanta, GA

 

4

 

1,348

 

5,642

 

5,108

 

10.5%

 

1,753

 

1,737

 

0.9%

 

3,889

 

3,371

 

15.4%

 

97.0%

 

94.9%

 

2.1%

 

1,358

 

1,247

 

8.9%

Memphis, TN

 

4

 

1,383

 

5,485

 

4,869

 

12.7%

 

1,949

 

1,870

 

4.2%

 

3,536

 

2,999

 

17.9%

 

95.4%

 

93.8%

 

1.6%

 

1,295

 

1,165

 

11.1%

Columbus, OH

 

6

 

1,547

 

5,390

 

4,924

 

9.5%

 

2,148

 

2,326

 

-7.7%

 

3,242

 

2,598

 

24.8%

 

95.5%

 

93.6%

 

1.9%

 

1,135

 

1,057

 

7.4%

Tampa-St. Petersburg, FL

 

4

 

1,104

 

4,726

 

4,231

 

11.7%

 

1,825

 

1,688

 

8.1%

 

2,901

 

2,543

 

14.1%

 

95.7%

 

93.6%

 

2.2%

 

1,409

 

1,294

 

8.9%

Louisville, KY

 

5

 

1,550

 

5,219

 

4,652

 

12.2%

 

2,428

 

2,183

 

11.2%

 

2,791

 

2,469

 

13.0%

 

93.8%

 

88.4%

 

5.4%

 

1,062

 

1,016

 

4.5%

Dallas, TX

 

3

 

734

 

2,925

 

2,749

 

6.4%

 

1,270

 

1,286

 

-1.2%

 

1,655

 

1,463

 

13.1%

 

97.9%

 

95.1%

 

2.8%

 

1,284

 

1,216

 

5.6%

Indianapolis, IN

 

3

 

700

 

2,587

 

2,373

 

9.0%

 

1,070

 

1,024

 

4.5%

 

1,517

 

1,349

 

12.5%

 

96.4%

 

95.5%

 

0.9%

 

1,196

 

1,096

 

9.1%

Myrtle Beach, SC - Wilmington, NC

 

3

 

628

 

2,222

 

2,011

 

10.5%

 

727

 

672

 

8.2%

 

1,495

 

1,339

 

11.7%

 

96.0%

 

95.2%

 

0.7%

 

1,137

 

1,046

 

8.8%

Charleston, SC

 

2

 

518

 

2,263

 

2,140

 

5.7%

 

998

 

981

 

1.7%

 

1,265

 

1,159

 

9.1%

 

96.4%

 

94.9%

 

1.4%

 

1,370

 

1,299

 

5.5%

Oklahoma City, OK

 

3

 

701

 

1,786

 

1,659

 

7.7%

 

731

 

684

 

6.9%

 

1,055

 

975

 

8.2%

 

97.6%

 

96.6%

 

1.0%

 

796

 

750

 

6.1%

Orlando, FL

 

1

 

297

 

1,336

 

1,281

 

4.3%

 

554

 

562

 

-1.4%

 

782

 

719

 

8.8%

 

96.5%

 

94.7%

 

1.9%

 

1,483

 

1,457

 

1.8%

Charlotte, NC

 

1

 

208

 

1,059

 

968

 

9.4%

 

325

 

353

 

-7.9%

 

734

 

615

 

19.3%

 

96.0%

 

91.7%

 

4.3%

 

1,561

 

1,458

 

7.0%

Asheville, NC

 

1

 

252

 

944

 

881

 

7.2%

 

292

 

278

 

5.0%

 

652

 

603

 

8.1%

 

97.9%

 

96.6%

 

1.3%

 

1,205

 

1,140

 

5.6%

Huntsville, AL

 

1

 

178

 

664

 

625

 

6.2%

 

223

 

204

 

9.3%

 

441

 

421

 

4.8%

 

97.1%

 

98.0%

 

-1.0%

 

1,168

 

1,062

 

10.0%

Total/Weighted Average

 

47

 

12,838

 

48,942

 

$44,734

 

9.4%

 

$18,492

 

$18,187

 

1.7%

 

$30,450

 

$26,547

 

14.7%

 

96.0%

 

93.8%

 

2.2%

 

$1,227

 

$1,143

 

7.4%

 


 


 

SAME-STORE PORTFOLIO NET OPERATING INCOME BY MARKET

NINE MONTHS ENDED SEPTEMBER 30, 2021

Dollars in thousands, except rent per unit

 

 

 

 

 

 

Rental and Other Property Revenue

 

Property Operating Expenses

 

Net Operating Income

 

Average Occupancy

 

Average

Effective

Monthly Rent

per Unit

Market

 

Number of Properties

 

Units

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Raleigh - Durham, NC

 

6

 

1,690

 

$19,452

 

$18,431

 

5.5%

 

$6,529

 

$6,636

 

-1.6%

 

$12,923

 

$11,795

 

9.6%

 

95.8%

 

93.7%

 

2.1%

 

$1,228

 

$1,187

 

3.4%

Atlanta, GA

 

4

 

1,348

 

16,355

 

14,980

 

9.2%

 

5,321

 

5,123

 

3.9%

 

11,034

 

9,857

 

11.9%

 

96.7%

 

94.2%

 

2.5%

 

1,311

 

1,238

 

5.9%

Memphis, TN

 

4

 

1,383

 

15,920

 

14,025

 

13.5%

 

5,552

 

5,373

 

3.3%

 

10,368

 

8,652

 

19.8%

 

96.3%

 

90.6%

 

5.8%

 

1,248

 

1,160

 

7.6%

Columbus, OH

 

6

 

1,547

 

15,433

 

14,381

 

7.3%

 

6,644

 

6,697

 

-0.8%

 

8,789

 

7,684

 

14.4%

 

94.6%

 

93.3%

 

1.3%

 

1,104

 

1,044

 

5.8%

Louisville, KY

 

5

 

1,550

 

15,113

 

13,933

 

8.5%

 

6,846

 

6,027

 

13.6%

 

8,267

 

7,906

 

4.6%

 

93.1%

 

88.7%

 

4.4%

 

1,039

 

1,017

 

2.1%

Tampa-St. Petersburg, FL

 

4

 

1,104

 

13,623

 

12,155

 

12.1%

 

5,458

 

5,089

 

7.3%

 

8,165

 

7,066

 

15.6%

 

94.8%

 

91.0%

 

3.8%

 

1,357

 

1,272

 

6.7%

Dallas, TX

 

3

 

734

 

8,480

 

8,129

 

4.3%

 

3,738

 

3,531

 

5.9%

 

4,742

 

4,598

 

3.1%

 

96.3%

 

95.3%

 

1.0%

 

1,252

 

1,211

 

3.4%

Indianapolis, IN

 

3

 

700

 

7,553

 

7,036

 

7.3%

 

3,074

 

2,852

 

7.8%

 

4,479

 

4,184

 

7.1%

 

96.7%

 

95.7%

 

1.0%

 

1,151

 

1,082

 

6.4%

Myrtle Beach, SC - Wilmington, NC

 

3

 

628

 

6,364

 

5,767

 

10.4%

 

2,097

 

1,962

 

6.9%

 

4,267

 

3,805

 

12.1%

 

95.5%

 

92.1%

 

3.4%

 

1,096

 

1,039

 

5.4%

Charleston, SC

 

2

 

518

 

6,586

 

6,410

 

2.7%

 

2,892

 

2,873

 

0.7%

 

3,694

 

3,537

 

4.4%

 

95.8%

 

94.5%

 

1.3%

 

1,340

 

1,313

 

2.1%

Oklahoma City, OK

 

3

 

701

 

5,144

 

4,862

 

5.8%

 

2,066

 

1,902

 

8.6%

 

3,078

 

2,960

 

4.0%

 

97.6%

 

96.4%

 

1.2%

 

775

 

743

 

4.3%

Orlando, FL

 

1

 

297

 

4,001

 

3,893

 

2.8%

 

1,645

 

1,525

 

7.9%

 

2,356

 

2,368

 

-0.5%

 

96.6%

 

94.8%

 

1.8%

 

1,461

 

1,479

 

-1.2%

Charlotte, NC

 

1

 

208

 

3,084

 

3,043

 

1.3%

 

990

 

1,028

 

-3.7%

 

2,094

 

2,015

 

3.9%

 

95.7%

 

94.2%

 

1.5%

 

1,532

 

1,520

 

0.8%

Asheville, NC

 

1

 

252

 

2,739

 

2,632

 

4.1%

 

845

 

821

 

2.9%

 

1,894

 

1,811

 

4.6%

 

97.9%

 

96.2%

 

1.7%

 

1,170

 

1,147

 

2.0%

Huntsville, AL

 

1

 

178

 

1,920

 

1,805

 

6.4%

 

632

 

603

 

4.8%

 

1,288

 

1,202

 

7.2%

 

97.9%

 

97.8%

 

0.1%

 

1,114

 

1,041

 

7.1%

Total/Weighted Average

 

47

 

12,838

 

$141,767

 

$131,482

 

7.8%

 

$54,329

 

$52,042

 

4.4%

 

$87,438

 

$79,440

 

10.1%

 

95.6%

 

92.9%

 

2.7%

 

$1,190

 

$1,138

 

4.6%

 

 

 

22

 


 

TOTAL PORTFOLIO NOI EXPOSURE BY MARKET

Dollars in thousands, except rent per unit

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2021

Market

 

Number of Properties

 

Units

 

Gross Real

Estate

Assets

 

Period End

Occupancy

 

Average

Effective

Monthly Rent

per Unit

 

Net Operating

Income

 

% of NOI

Atlanta, GA

 

6

 

2,020

 

$264,430

 

96.6%

 

$1,323

 

$5,281

 

14.1%

Raleigh - Durham, NC

 

6

 

1,690

 

249,887

 

95.7%

 

1,266

 

4,495

 

12.0%

Memphis, TN

 

4

 

1,383

 

152,457

 

94.0%

 

1,295

 

3,536

 

9.5%

Dallas, TX

 

5

 

1,307

 

186,483

 

97.7%

 

1,449

 

3,267

 

8.8%

Columbus, OH

 

6

 

1,547

 

204,920

 

95.8%

 

1,135

 

3,243

 

8.7%

Louisville, KY

 

6

 

1,710

 

214,411

 

94.0%

 

1,066

 

3,127

 

8.4%

Tampa-St. Petersburg, FL

 

4

 

1,104

 

159,840

 

95.7%

 

1,409

 

2,902

 

7.8%

Oklahoma City, OK

 

5

 

1,658

 

80,594

 

97.1%

 

738

 

2,263

 

6.1%

Indianapolis, IN

 

4

 

916

 

110,217

 

96.8%

 

1,145

 

1,878

 

5.0%

Huntsville, AL

 

2

 

599

 

92,532

 

97.6%

 

1,345

 

1,787

 

4.8%

Myrtle Beach, SC - Wilmington, NC

 

3

 

628

 

65,946

 

96.0%

 

1,137

 

1,495

 

4.0%

Charlotte, NC

 

2

 

480

 

80,383

 

96.7%

 

1,363

 

1,351

 

3.6%

Charleston, SC

 

2

 

518

 

108,839

 

96.4%

 

1,370

 

1,265

 

3.4%

Orlando, FL

 

1

 

297

 

49,489

 

96.5%

 

1,483

 

783

 

2.1%

Asheville, NC

 

1

 

252

 

29,059

 

97.9%

 

1,205

 

652

 

1.7%

Total/Weighted Average

 

57

 

16,109

 

$2,049,487

 

96.0%

 

$1,212

 

$37,325

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23

 


 

VALUE ADD SUMMARY

PROJECT LIFE TO DATE AS OF SEPTEMBER 30, 2021

 

 

 

 

 

 

 

 

 

Renovation Costs per Unit (b)

 

 

Property

Market

Percentage Complete

 

Total

Units To Be Renovated

Units Complete

Units

Leased

Rent Premium (a)

% Rent Increase

Interior

Exterior

Total

ROI - Interior Costs(c)

ROI - Total Costs (d)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ongoing

 

 

 

 

 

 

 

 

 

 

 

 

 

Arbors River Oaks

Memphis, TN

83.8%

 

191

160

160

249

20.4%

11,489

561

12,050

26.0%

24.8%

Brunswick Point

Myrtle Beach, SC - Wilmington, NC

83.7%

 

288

241

233

62

6.1%

7,015

56

7,071

10.6%

10.5%

Creekside Corners

Atlanta, GA

80.6%

 

444

358

345

180

18.7%

9,088

1,314

10,402

23.7%

20.7%

Stonebridge Crossing

Memphis, TN

79.0%

 

500

395

384

150

17.3%

10,639

1,131

11,771

16.9%

15.3%

Vantage at Hillsborough

Tampa-St. Petersburg, FL

75.9%

 

348

264

250

190

17.6%

13,944

2,155

16,099

16.3%

14.1%

The Commons at Canal Winchester

Columbus, OH

75.4%

 

264

199

186

219

24.6%

10,852

402

11,254

24.3%

23.4%

Avalon Oaks

Columbus, OH

66.8%

 

235

157

153

277

31.7%

11,565

1,021

12,586

28.7%

26.4%

Lucerne

Tampa-St. Petersburg, FL

65.9%

 

276

182

178

249

21.7%

13,542

634

15,240

22.1%

19.6%

Waterford Landing

Atlanta, GA

60.4%

 

260

157

149

182

16.3%

8,976

685

9,661

24.3%

22.6%

North Park

Atlanta, GA

54.9%

 

224

123

123

183

16.6%

8,099

268

8,367

27.1%

26.3%

Rocky Creek

Tampa-St. Petersburg, FL

29.9%

 

264

79

82

365

26.8%

12,265

960

13,225

35.7%

33.1%

Thornhill

Raleigh-Durham, NC

17.3%

 

318

55

61

168

14.0%

13,147

1,046

14,193

15.3%

14.2%

Walnut Hill

Memphis, TN

15.5%

 

362

56

71

437

41.2%

13,388

807

14,195

39.1%

36.9%

Meadows

Louisville, KY

1.8%

 

400

7

8

271

30.9%

9,324

415

9,739

34.9%

33.4%

Total/Weighted Average

 

 

 

4,374

2,433

2,383

$198

19.4%

$10,719

$875

$11,594

22.2%

20.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Future 2022 Projects

 

 

 

 

 

 

 

 

 

 

 

 

 

Collier Park

Columbus, OH

0.0%

 

232

0

0

-

0.0%

-

-

-

0.0%

0.0%

Bayview Club

Indianapolis, IN

0.0%

 

236

0

0

-

0.0%

-

-

-

0.0%

0.0%

Augusta

Oklahoma City, OH

0.0%

 

197

0

0

-

0.0%

-

-

-

0.0%

0.0%

Invitational

Oklahoma City, OH

0.0%

 

344

0

0

-

0.0%

-

-

-

0.0%

0.0%

Fox Trails

Dallas, TX

0.0%

 

286

0

0

-

0.0%

-

-

-

0.0%

0.0%

Total/Weighted Average

 

 

 

1,295

0

0

$-

0.0%

$-

$-

$-

0.0%

0.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Completed (f)

 

 

 

 

 

 

 

 

 

 

 

 

 

Crestmont

Atlanta, GA

100.0%

 

208

208

207

$154

16.4%

$12,323

$7,742

$20,064

15.0%

9.2%

The Village at Auburn

Raleigh-Durham, NC

98.5%

 

328

323

306

$183

17.3%

$14,423

$2,108

$16,531

15.2%

13.3%

Pointe at Canyon Ridge

Atlanta, GA

89.5%

 

494

442

425

$175

17.9%

$9,086

$1,773

$10,859

23.1%

19.3%

Oxmoor

Louisville, KY

88.9%

 

432

384

374

$182

20.1%

$16,058

$127

$16,471

13.6%

13.2%

Jamestown

Louisville, KY

88.9%

 

296

263

279

$277

33.3%

$15,753

$5,161

$21,203

21.1%

15.7%

Haverford

Louisville, KY

87.5%

 

160

140

138

$102

12.0%

$5,646

$798

$6,444

21.8%

19.1%

Schirm Farms

Columbus, OH

85.6%

 

264

226

217

$92

10.7%

$7,902

$613

$8,514

14.0%

13.0%

 

 

 

 

2,182

1,986

1,946

$176

19.1%

$12,188

$2,438

$14,625

17.3%

14.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grand Total/Weighted Average

 

 

 

7,851

4,419

4,329

$188

19.3%

$11,376

$1,407

$12,783

19.8%

17.6%

24

 


 

 

 

(a)

The rent premium reflects the per unit per month difference between the rental rate on the renovated unit and the market rent for an unrenovated unit as of the date presented, as determined by management consistent with its customary rent-setting and evaluation procedures.

 

(b)

Includes all costs to renovate the interior units and make certain exterior renovations, including clubhouses and amenities. Interior costs per unit are based on units leased. Exterior costs per unit are based on total units at the community. Excludes overhead costs to support and manage the value add program as those costs relate to the entire program and cannot be allocated to individual projects.

 

(c)

Calculated using the rent premium per unit per month, multiplied by 12, divided by the interior renovation costs per unit.

 

(d)

Calculated using the rent premium per unit per month, multiplied by 12, divided by the total renovation costs per unit.

 

(e)

We expect these future projects to commence during 2022.

 

(f)

We consider value add projects completed when over 85% of the property’s units to be renovated have been completed. We continue to renovate remaining unrenovated units as leases expire until we complete 100% of the property’s units.

 

 

 

25

 


 

INVESTMENT ACTIVITY

Dollars in thousands with respect to Contract Price and Price per Unit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions 2021

 

Market

 

Units

 

Acquisition Date

 

Purchase Price

 

Price per Unit

 

Average Rent Per Unit

Solis City Park

 

Charlotte, NC

 

272

 

May 18, 2021

 

$66,544

 

$245

 

$1,374

Cyan at Craig Ranch

 

McKinney, TX

 

322

 

June 8, 2021

 

73,372

 

$228

 

1,404

Total

 

 

 

594

 

 

 

$139,916

 

$236

 

$1,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dispositions 2021

 

Location

 

Units

 

Disposition Date

 

Sale Price

 

Price per Unit

 

Average Rent Per Unit

Kings Landing

 

St. Louis, MO

 

152

 

July 28, 2021

 

$40,100

 

$264

 

$1,457

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

152

 

 

 

$40,100

 

$264

 

$1,457

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets Held for Sale as of September 30, 2021

 

Location

 

Units

 

Estimated Disposition Date

Crestmont

 

Atlanta, GA

 

228

 

4Q 2021

Creekside Corners

 

Atlanta, GA

 

444

 

4Q 2021

Riverchase

 

Indianapolis, IN

 

216

 

1Q 2022

Heritage Park

 

Oklahoma City, OK

 

453

 

1Q 2022

Raindance

 

Oklahoma City, OK

 

504

 

1Q 2022

Haverford

 

Louisville, KY

 

160

 

1Q 2022

 

 

 

 

 

 

 

Total

 

 

 

2,005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in Unconsolidated Real Estate Entities

 

Location

 

Units

 

Estimated Delivery Date

 

Total Construction Budget

 

Total Project Debt

 

Total Expected IRT Investment

 

Current IRT Investment

Metropolis at Innsbrook

 

Richmond, VA

 

402

 

2Q 2023

 

$83,383

 

$64,000

 

$16,430

 

$12,165

Views of Music City I & II / The Jackson

 

Nashville, TN

 

504

 

1Q 2022

 

83,074

 

54,275

 

14,400

 

1,395

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

906

 

 

 

$166,457

 

$118,275

 

$30,830

 

$13,560


26

 


 

DEBT SUMMARY AS OF SEPTEMBER 30, 2021

Dollars in thousands

 

 

Amount

 

Weighted Average Rate (d)

 

Type

 

Weighted

Average

Maturity

(in years)

 

Debt:

 

 

 

 

 

 

 

 

 

Unsecured credit facility (a)

 

$137,503

 

1.4%

 

Floating

 

1.6

 

Unsecured term loans (b)

 

500,000

 

1.3%

 

Floating

 

3.4

 

Mortgages (c)

 

385,508

 

3.8%

 

Fixed

 

2.8

 

Unamortized deferred financing costs

 

(4,282)

 

 

 

 

 

 

 

Total Debt

 

1,018,729

 

2.3%

 

 

 

2.9

 

Market Equity Capitalization, at period end

 

2,150,162

 

 

 

 

 

 

 

Total Capitalization

 

$3,168,891

 

 

 

 

 

 

 

 

 

(a)

Credit facility total capacity is $350,000, comprised entirely of an unsecured revolving line of credit, of which $137,503 was drawn as of September 30, 2021. The maturity date of borrowings under the revolving line of credit is May 9, 2023.

 

(b)

Comprised of a $200,000 unsecured term loan with a maturity date of January 17, 2024, a $100,000 unsecured term loan with a maturity date of November 20, 2024, and a $200,000 unsecured term loan with a maturity date of May 18, 2026.

 

(c)

Includes $22,459 of indebtedness associated with real estate held for sale.

 

(d)

Represents the weighted average of the contractual interest rates in effect as of quarter-end without regard to any interest rate swaps or collars. Our total weighted average effective interest rate during 3Q 2021, after giving effect to the impact of interest rate swaps and collars, was 3.4%.

 

    

 

(e)

As of September 30, 2021, we maintained the following hedges that have effectively fixed a portion of our floating rates debt. Fixed v. Floating percentage above includes impact of future starting swaps.

 

Hedges:

 

Notional

 

Start

 

End

 

Swap Rate

 

Floor Rate

 

Cap Rate

Collar

 

$100,000

 

11/17/2017

 

11/17/2024

 

-

 

1.25%

 

2.00%

Collar

 

$150,000

 

10/17/2018

 

1/17/2024

 

-

 

2.25%

 

2.50%

Swap

 

$150,000

 

6/17/2021

 

6/17/2026

 

2.1760%

 

-

 

-

Forward starting swap

 

$150,000

 

5/17/2022

 

5/17/2027

 

0.9850%

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27

 


 

DEBT COVENANT AND UNENCUMBERED ASSET STATS AS OF SEPTEMBER 30, 2021

Dollars in thousands

 

Debt Covenant Summary (a)

Requirement

Actual

Compliance

Consolidated leverage ratio

60%

40.0%

Yes

Consolidated fixed charge coverage ratio

1.5x

2.9

Yes

Unsecured leverage ratio

60%

42.5%

Yes

Unencumbered asset debt service ratio

1.3x

2.0

Yes

 

(a)

For a complete listing of all debt covenants along with definitions of each covenant calculation see the Unsecured Credit Facility and Unsecured Term Loan Agreements, which are included as exhibit 10.1 of the Form 8-K filed on May 18, 2021, and exhibits10.6 and 10.15 of our Form 10-K.

Encumbered & Unencumbered Statistics

 

 

Total Units

 

% of Total

 

Gross Assets

 

% of Total

 

Q3 2021 NOI

 

% of Total

   Unencumbered assets

 

 

11,133

 

69.1%

 

$1,440,484

 

68.1%

 

$25,649

 

68.5%

   Encumbered assets

 

 

4,976

 

30.9%

 

674,259

 

31.9%

 

11,779

 

31.5%

 

 

 

16,109

 

100.0%

 

$2,114,743

 

100.0%

 

$37,428

 

100.0%

 

28

 


 

Definitions

Average Effective Monthly Rent per Unit

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

Average Occupancy

Average occupancy represents the average occupied units for the reporting period divided by the average of total units available for rent for the reporting period.

EBITDA and Adjusted EBITDA

Each of EBITDA and Adjusted EBITDA is a non-GAAP financial measure. EBITDA is defined as net income before interest expense including amortization of deferred financing costs, income tax expense, and depreciation and amortization expenses. Adjusted EBITDA is EBITDA before certain other non-cash or non-operating gains or losses related to items such as asset sales, debt extinguishments and acquisition related debt extinguishment expenses, casualty losses, and abandoned deal costs. We consider each of EBITDA and Adjusted EBITDA to be an appropriate supplemental measure of performance because it eliminates interest, income taxes, depreciation and amortization, and other non-cash or non-operating gains and losses, which permits investors to view income from operations without these non-cash or non-operating items. Our calculation of Adjusted EBITDA differs from the methodology used for calculating Adjusted EBITDA by certain other REITs and, accordingly, our Adjusted EBITDA may not be comparable to Adjusted EBITDA reported by other REITs.

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

We believe that FFO and Core FFO (“CFFO”), each of which is a non-GAAP financial measure, are additional appropriate measures of the operating performance of a REIT and us in particular. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”), as net income or loss allocated to common shares (computed in accordance with GAAP), excluding real estate-related depreciation and amortization expense, gains or losses on sales of real estate and the cumulative effect of changes in accounting principles. While our calculation of FFO is in accordance with NAREIT’s definition, it may differ from the methodology for calculating FFO utilized by other REITs and, accordingly, may not be comparable to FFO computations of such other REITs.

We updated our definition of CFFO during Q1 2021 to the definition described below. All prior periods have been adjusted to conform to the current CFFO definition.  

CFFO is a computation made by analysts and investors to measure a real estate company’s operating performance by removing the effect of items that do not reflect ongoing property operations, including depreciation and amortization of other items not included in FFO, and other non-cash or non-operating gains or losses related to items such as merger and integration costs, casualty losses, abandoned deal costs and debt extinguishment costs from the determination of FFO.

Our calculation of CFFO may differ from the methodology used for calculating CFFO by other REITs and, accordingly, our CFFO may not be comparable to CFFO reported by other REITs. Our management utilizes FFO and CFFO as measures of our operating performance, and believe they are also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash or non-recurring items that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and our operating performance between periods. Furthermore, although FFO, CFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we believe that FFO and CFFO may provide us and our investors with an additional useful measure to compare our financial performance to certain other REITs. Neither FFO nor CFFO is equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and CFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Accordingly, FFO and CFFO do not measure whether cash flow is sufficient to fund all of our cash needs, including principal amortization and capital improvements. Neither FFO nor CFFO should be considered as an

29

 


alternative to net income or any other GAAP measurement as an indicator of our operating performance or as an alternative to cash flow from operating, investing, and financing activities as a measure of our liquidity.

Interest Coverage

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

Net Debt

Net debt, a non-GAAP financial measure, equals total debt less cash and cash equivalents. The following table provides a reconciliation of total debt to net debt (Dollars in thousands).

We present net debt because management believes it is a useful measure of our credit position and progress toward reducing leverage. The calculation is limited because we may not always be able to use cash to repay debt on a dollar for dollar basis.

 

As of

 

September 30,

2021

 

June 30,

2021

 

March 31,

2021

 

December 30,

2020

 

September 30,

2020

Total debt (a)

$1,018,729

 

$1,056,463

 

$947,631

 

$945,686

 

$1,004,237

Less: cash and cash equivalents

(8,720)

 

(7,566)

 

(8,653)

 

(8,751)

 

(9,891)

Total net debt

$1,010,009

 

$1,048,897

 

$938,978

 

$936,935

 

$994,346

 

(a)

Includes indebtedness associated with real estate held for sale.

Same Store Portfolio Net Operating Income

We believe that Net Operating Income (“NOI”), a non-GAAP financial measure, is a useful measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding depreciation and amortization, casualty related costs, property management expenses, general administrative expenses, interest expense, and net gains on sale of assets.

Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. We believe that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income. We use NOI to evaluate our performance on a same store and non same store basis because NOI measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance and captures trends in rental housing and property operating expenses. However, NOI should only be used as an alternative measure of our financial performance.

Same Store Properties and Same Store Portfolio

We review our same store portfolio at the beginning of each calendar year. Properties are added into the same store portfolio if they were owned at the beginning of the previous year. Properties that are held-for-sale or have been sold are excluded from the same store portfolio.

Total Gross Assets

Total Gross Assets equals total assets plus accumulated depreciation and accumulated amortization, including fully depreciated or amortized real estate and real estate related assets. The following table provides a reconciliation of total assets to total gross assets (Dollars in thousands).

 

As of

 

September 30,

2021

 

June 30,

2021

 

March 31,

2021

 

December 30,

2020

 

September 30,

2020

Total assets

$1,846,911

 

$1,875,122

 

$1,728,016

 

$1,734,897

 

$1,700,428

Plus: accumulated depreciation

247,563

 

237,684

 

223,187

 

208,618

 

200,258

Plus: accumulated amortization

20,269

 

20,215

 

19,776

 

19,380

 

19,827

Total gross assets

$2,114,743

 

$2,133,021

 

$1,970,979

 

$1,962,895

 

$1,920,513

 

30

 


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Attachment: XBRL TAXONOMY EXTENSION SCHEMA


irt-20211027_lab.xml
Attachment: XBRL TAXONOMY EXTENSION LABEL LINKBASE


irt-20211027_pre.xml
Attachment: XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE