IRT Independence Realty Trust Inc

Independence Realty Trust, Inc. (“IRT”) (NYSE: IRT), a multifamily apartment REIT, today announced its second quarter 2024 financial results and raised the midpoint of its full year 2024 same store NOI, EPS, and Core FFO guidance ranges.

Second Quarter Highlights

• Net income available to common shares of $10.4 million for the quarter ended June 30, 2024 compared to $10.7 million for the quarter ended June 30, 2023.
• Earnings per diluted share of $0.05 for the quarter ended June 30, 2024 compared to $0.05 for the quarter ended June 30, 2023.
• Same-store portfolio net operating income (“NOI”) growth of 2.8% for the quarter ended June 30, 2024 compared to the quarter ended June 30, 2023.
• Core Funds from Operations (“CFFO”) of $63.6 million for the quarter ended June 30, 2024 compared to $63.7 million for the quarter ended June 30, 2023. CFFO per share was $0.28 for the second quarter of 2024, as compared to $0.28 for the second quarter of 2023.
• Adjusted EBITDA of $83.6 million for the quarter ended June 30, 2024 compared to $89.2 million for the quarter ended June 30, 2023.
• Value add program completed renovations at 378 units during the quarter ended June 30, 2024, achieving a weighted average return on investment during the quarter of 15.7%.

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, as well as, discussion of our same-store methodology.

Management Commentary

“Our results for the second quarter of 2024 highlight our strategy of driving occupancy, which was up 120 basis points year-over-year,” said Scott Schaeffer, Chairman and CEO of IRT. “While industry-wide factors impacted our ability to achieve expected rental rate growth during the first half of this year, we stayed focused on resident retention and occupancy and delivered 3.6% revenue growth with 2.8% same store NOI growth. For the remainder of this year, we are increasing the mid-point of our full-year NOI and Core FFO guidance given our view of stable occupancy and our ability to drive lower operating expenses. Overall, we are confident in our team’s ability to achieve these results and believe IRT remains well-positioned in the multifamily sector due to our attractive portfolio which continues to see strong fundamentals.”

Same-Store Portfolio(1) Operating Results

 

Three Months Ended June 30, 2024

Compared to

Three Months Ended June 30, 2023

Six Months Ended June 30, 2024

Compared to

Six Months Ended June 30, 2023

Rental and other property revenue

3.6% increase

3.5% increase

Property operating expenses

4.9% increase

5.0% increase

NOI

2.8% increase

2.6% increase

Portfolio average occupancy

120 bps increase to 95.4%

120 bps increase to 94.9%

Portfolio average rental rate

1.6% increase to $1,555

1.6% increase to $1,553

NOI Margin

40 bps decrease to 61.7%

60 bps decrease to 62.1%

(1)

Same-store portfolio includes 108 properties, which represent 32,153 units.

Operating Metrics

The table below summarizes operating metrics for the same-store portfolio for the applicable periods.

 

2Q 2024

 

July 2024(3)

Same-Store Portfolio(1)

 

 

 

Average Occupancy

95.4

%

95.2

%

(4)

Lease Over Lease Effective Rental Rate Growth:(2)

 

 

 

New Leases

(1.0

)%

(3.3

)%

(5)

Renewal Leases

3.5

%

2.9

%

(5)

Blended

1.8

%

0.2

%

(5)

Resident Retention Rate

55.8

%

55.4

%

 

Same-Store Portfolio excluding Ongoing Value Add

 

 

 

Average Occupancy

95.6

%

95.6

%

(4)

Lease Over Lease Effective Rental Rate Growth:(2)

 

 

 

New Leases

(1.6

)%

(3.8

)%

 

Renewal Leases

3.4

%

2.9

%

 

Blended

1.6

%

0.1

%

 

Resident Retention Rate

55.3

%

56.0

%

 

Value Add (26 properties with Ongoing Value Add)

 

 

 

Average Occupancy

94.8

%

94.3

%

(4)

Lease Over Lease Effective Rental Rate Growth:(2)

 

 

 

New Leases (all)

1.0

%

(2.2

)%

 

1st generation renovation leases (6)

6.3

%

5.5

%

 

Renewal Leases

3.5

%

3.0

%

 

Blended

2.7

%

0.5

%

 

Resident Retention Rate

57.3

%

53.8

%

 

(1)

Same-store portfolio includes 108 properties, which represent 32,153 units.

(2)

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

(3)

July 2024 average occupancy is through July 30, 2024. New, renewal, and blended lease rates, and resident retention are for leases commencing during July 2024 that were signed as of July 30, 2024.

(4)

As of July 30, 2024, same-store portfolio occupancy was 95.6%, same-store portfolio excluding ongoing value add occupancy was 95.9%, and value add occupancy was 94.6%.

(5)

For the full third quarter 2024, we expect effective rent growth for new leases to be -1.0% to 0.3% and renewal leases to be 4.25% to 4.75% resulting in blended effective rent growth of 1.6% to 3.0%.

(6)

1st generation renovation leases are a subset of new leases at value add properties and represent the first new lease in a unit after a completed renovation.

Value Add Program

We completed renovations on 378 units during the quarter ended June 30, 2024, achieving a return on investment of 15.7%, with an average cost per unit renovated of $18,067, and an average monthly rent increase per unit of $236 over unrenovated comps. We completed renovations on 698 units during the six months ended June 30, 2024, achieving a return on investment of 16.7%, with an average cost per unit renovated of $18,099, and an average monthly rent increase per unit of $253 over unrenovated comps. See the Value Add Summary page of our supplemental information for additional information on our projects’ life to date as of June 30, 2024.

Investment Activity

Properties Held for Sale and Dispositions

As of June 30, 2024, we had one property classified as held for sale and had sold one property during the three months ended June 30, 2024.

• Reserve at Creekside, Chattanooga, Tennessee: Sales of properties under our Portfolio Optimization and Deleveraging Strategy concluded with the sale of our tenth and final property on April 30, 2024, for a gross sales price of $28.5 million, and proceeds from the sale were used to pay outstanding mortgage debt in the amount of $15.0 million, and $13.3 million in borrowings under our unsecured revolver. In total, the Portfolio Optimization and Deleveraging Strategy resulted in the sale of ten properties for an aggregate gross sales price of $525.3 million and proceeds from the sales were used to repay $517.1 million of debt.

• Tapestry Park, Birmingham Alabama: During the three months ended March 31, 2024, in connection with our capital recycling program, we identified this property as held for sale and recognized a loss on impairment of $15.1 million. As of June 30, 2024, this property continued to be held for sale and was subsequently sold on July 17, 2024, for a gross sales price of $70.8 million. We expect to use the proceeds from this sale as part of a 1031 exchange to acquire a property in Tampa, Florida during the third quarter 2024.

Capital Expenditures

For the three months ended June 30, 2024, recurring capital expenditures for the total portfolio were $8.3 million, or $254 per unit, value add and non-recurring expenditures for the total portfolio were $24.8 million and development expenditures for the total portfolio were $15.4 million, respectively. For the six months ended June 30, 2024, recurring capital expenditures for the total portfolio were $13.5 million, or $412 per unit, value add and non-recurring expenditures for the total portfolio were $46.7 million and development expenditures for the total portfolio were $26.4 million, respectively.

Dividend Distribution

On June 10, 2024, our Board of Directors declared a quarterly dividend of $0.16 per share of common stock. The second quarter dividend was paid on July 19, 2024 to stockholders of record at the close of business on June 28, 2024.

2024 EPS, FFO and CFFO Guidance

We increased the midpoint of our 2024 earnings per diluted share, FFO, CFFO per share, and same-store NOI guidance ranges, while updating our interest expense, transaction volume, and capital expenditure guidance. Earnings per diluted share is now projected to be in the range of $0.36 to $0.38. A reconciliation of IRT's projected net income allocable to common shares to its projected CFFO per share is included below. See the schedules and definitions at the end of this release for further information regarding how IRT calculates CFFO and for management’s definition and rationale for the usefulness of CFFO.

 

 

Previous Guidance

 

Current Guidance

 

Change at Midpoint

2024 Full Year EPS and CFFO Guidance(1)(2)

 

Low

 

High

 

Low

 

High

 

Earnings per share

 

$

0.34

 

 

$

0.38

 

 

$

0.36

 

 

$

0.38

 

 

$

0.01

Adjustments:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

0.87

 

 

 

0.87

 

 

 

0.87

 

 

 

0.87

 

 

 

—

Gain on sale of real estate assets(3)

 

 

(0.05

)

 

 

(0.05

)

 

 

(0.05

)

 

 

(0.05

)

 

—

FFO per share

 

 

1.16

 

 

 

1.20

 

 

 

1.18

 

 

 

1.20

 

 

 

0.01

Loan (premium accretion) discount amortization, net

 

 

(0.04

)

 

 

(0.04

)

 

 

(0.04

)

 

 

(0.04

)

 

 

—

CFFO per share

 

$

1.12

 

 

$

1.16

 

 

$

1.14

 

 

$

1.16

 

 

$

0.01

(1)

This guidance, including the underlying assumptions presented in the table below, constitutes forward-looking information. Actual full year 2024 EPS, FFO, and CFFO could vary significantly from the projections presented. See “Forward-Looking Statements”. Our guidance is based on the key guidance assumptions detailed below.

(2)

Per share guidance is based on 230.9 million weighted average shares and units outstanding.

(3)

Gain on sale of real estate assets includes the gains on sale (losses on impairment) recognized during the first quarter of 2024.

2024 Guidance Assumptions

Our key guidance assumptions for 2024 are enumerated below. See the definitions at the end of this release for further information regarding our same-store definitions.

Same-Store Portfolio

Previous 2024 Outlook(1)

Current 2024 Outlook(1)

Change at Midpoint

Number of properties/units

108 properties / 32,153 units

108 properties / 32,153 units

—

Property revenue growth

3.0% to 4.5%

3.0% to 3.3%

(0.6)%

Controllable operating expense growth

4.9% to 5.9%

4.0% to 4.5%

(1.15)%

Real estate tax and insurance expense growth

6.1% to 7.1%

0.5% to 1.7%

(5.5)%

Total operating expense growth

5.4% to 6.4%

2.6% to 3.4%

(2.9)%

NOI growth

1.0% to 4.0%

2.7% to 3.7%

0.7%

 

 

 

 

Corporate Expenses

 

 

 

General and administrative & property

management expenses

$51.5 million to $54.5 million

$52.5 million to $53.5 million

—

Interest expense(2)

$83.0 million to $85.0 million

$83.0 million to $84.0 million

($0.5) million

 

 

 

 

Transaction/Investment Volume(3)

 

 

 

Acquisition volume

$0 to $40 million

$80 million to $82 million

$61.0 million

Disposition volume

$392 million to $396 million

$395 million

$1.0 million

 

 

 

 

Capital Expenditures

 

 

 

Recurring

$21.0 million to $23.0 million

$21.0 million to $23.0 million

—

Value add & non-recurring

$83.0 million to $85.0 million

$76.0 million to $78.0 million

($7.0) million

Development

$54.5 million to $55.5 million

$54.5 million to $55.5 million

—

(1)

This guidance, including the underlying assumptions, constitutes forward-looking information. Actual results could vary significantly from the projections presented. See “Forward-Looking Statements”.

(2)

Interest expense includes amortization of deferred financing costs but excludes loan premium accretion, net. As a result of purchase accounting we recorded loan premiums, net, that are accreted into and reduce GAAP interest expense over the remaining term of the associated debt. However, loan premium accretion is excluded from CFFO.

(3)

Acquisition volume reflects one property in Tampa, Florida that we expect to acquire in the third quarter of 2024. Disposition volume includes $324.6 million related to the sale of six properties sold during the six months ended June 30, 2024, and $70.8 million related to one property held for sale as of June 30, 2024. We continue to evaluate our portfolio for capital recycling opportunities so actual acquisition and disposition volume could vary significantly from our projections. We undertake no duty to update these assumptions. See “Forward-Looking Statements”.

Selected Financial Information

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

Non-GAAP Financial Measures and Definitions

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

Conference Call

All interested parties can listen to the live conference call webcast at 9:00 AM ET on Thursday, August 1, 2024 from the investor relations section of the IRT website at www.irtliving.com or by dialing 1.888.440.3307, access code 1963990. For those who are not available to listen to the live call, the replay will be available shortly following the live call from the investor relations section of IRT’s website until the next earnings release. A replay of the conference call can also be accessed telephonically until Thursday, August 8, 2024 by dialing 1.800.770.2030, access code 1963990.

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 communities, across non-gateway U.S. markets including Atlanta, GA, Dallas, TX, Denver, CO, Columbus, OH, Indianapolis, IN, Raleigh-Durham, NC, Oklahoma City, OK, Nashville, TN, Houston, TX, and Tampa, FL. IRT’s investment strategy is focused on gaining scale near major employment centers within key amenity rich submarkets that offer good school districts and high-quality retail. IRT aims to provide stockholders attractive risk-adjusted returns through diligent portfolio management, strong operational performance, and a consistent return on capital through distributions and capital appreciation. More information may be found on the Company’s website www.irtliving.com.

Forward-Looking Statements

This 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 include, but are not limited to, our earnings guidance, and the assumptions underlying such guidance, and anticipated enhancements to our financial results and future growth from our Portfolio Optimization and Deleveraging Strategy. All statements in this release that address financial and operating performance, events or developments that we expect or anticipate will occur or be achieved in the future are forward-looking statements.

Our forward-looking statements are not guarantees of future performance and involve estimates, projections, forecasts and assumptions, including as to matters that are not within our control, and are subject to risks and uncertainties including, without limitation, risks and uncertainties related to changes in market demand for rental apartment homes and pricing pressures, including from competitors, 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, unexpected changes in our intention or ability to repay certain debt prior to maturity, increased costs on account of inflation, increased competition in the labor market, failure to realize cost savings, efficiencies and other benefits that we expect to result from our Portfolio Optimization and Deleveraging Strategy, inability to sell certain assets, including those assets designated as held for sale, within the time frames or at the pricing levels expected, failure to achieve expected benefits from the redeployment of proceeds from asset sales, delays in completing, and cost overruns incurred in connection with, our value add initiatives and failure to achieve rent increases and occupancy levels on account of the value add initiatives, unexpected impairments or impairments in excess of our estimates, increased regulations generally and specifically on the rental housing market, including legislation that may regulate rents and fees or delay or limit our ability to evict non-paying residents, risks endemic to real estate and the real estate industry generally, the impact of potential outbreaks of infectious diseases and measures intended to prevent the spread or address the effects thereof, the effects of natural and other disasters, unknown or unexpected liabilities, including the cost of legal proceedings, costs and disruptions as the result of a cybersecurity incident or other technology disruption, unexpected capital needs, inability to obtain appropriate insurance coverages at reasonable rates, or at all, or losses from catastrophes in excess of our insurance coverages, 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, 2023, 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.

These forward-looking statements are based upon the beliefs and expectations of our management at the time of this release 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. 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.

 

Schedule I

Independence Realty Trust, Inc.

Selected Financial Information

Dollars in thousands, except per share data

(unaudited)

 

 

For the Three Months Ended

 

Jun 30, 2024

 

Mar 31, 2024

 

Dec 31, 2023

 

Sep 30, 2023

 

Jun 30, 2023

Selected Financial Information:

 

 

 

 

 

 

 

 

 

Operating Statistics:

 

 

 

 

 

 

 

 

 

Net income (loss) available to common shares

$10,354

 

$17,577

 

$(40,515)

 

$3,930

 

$10,709

Earnings (loss) per share -- diluted

$0.05

 

$0.08

 

$(0.18)

 

$0.02

 

$0.05

Rental and other property revenue

$158,104

 

$160,331

 

$166,730

 

$168,375

 

$163,601

Property operating expenses

$60,883

 

$59,971

 

$59,703

 

$63,300

 

$62,071

NOI

$97,221

 

$100,360

 

$107,027

 

$105,075

 

$101,530

NOI margin

61.5%

 

62.6%

 

64.2%

 

62.4%

 

62.1%

Adjusted EBITDA

$83,609

 

$84,683

 

$95,640

 

$94,415

 

$89,156

FFO per share

$0.28

 

$0.27

 

$0.31

 

$0.31

 

$0.28

CFFO per share

$0.28

 

$0.27

 

$0.30

 

$0.30

 

$0.28

Dividends per share

$0.16

 

$0.16

 

$0.16

 

$0.16

 

$0.16

CFFO payout ratio

57.1%

 

59.3%

 

53.3%

 

53.3%

 

57.1%

Portfolio Data:

 

 

 

 

 

 

 

 

 

Total gross assets

$6,684,029

 

$6,673,589

 

$6,960,554

 

$7,225,447

 

$7,117,404

Total number of operating properties (a)

110

 

111

 

116

 

120

 

119

Total units (a)

32,685

 

32,877

 

34,431

 

35,427

 

35,249

Portfolio period end occupancy (a)

95.5%

 

95.0%

 

94.6%

 

94.4%

 

94.6%

Portfolio average occupancy (a)

95.3%

 

94.4%

 

94.4%

 

94.6%

 

94.1%

Portfolio average effective monthly rent, per unit (a)

$1,554

 

$1,550

 

$1,558

 

$1,556

 

$1,538

Same-store portfolio period end occupancy (b)

95.5%

 

95.0%

 

94.7%

 

94.4%

 

94.6%

Same-store portfolio average occupancy (b)

95.4%

 

94.4%

 

94.5%

 

94.5%

 

94.2%

Same-store portfolio average effective

monthly rent, per unit (b)

$1,555

 

$1,551

 

$1,555

 

$1,548

 

$1,531

Capitalization:

 

 

 

 

 

 

 

 

 

Total debt (c)

$2,252,559

 

$2,277,098

 

$2,549,409

 

$2,715,710

 

$2,650,805

Common share price, period end

$18.74

 

$16.13

 

$15.30

 

$14.07

 

$18.22

Market equity capitalization

$4,330,137

 

$3,726,224

 

$3,528,996

 

$3,245,135

 

$4,202,342

Total market capitalization

$6,582,696

 

$6,003,322

 

$6,078,405

 

$5,960,845

 

$6,853,147

Total debt/total gross assets

33.7%

 

34.1%

 

36.6%

 

37.6%

 

37.2%

Net debt to Adjusted EBITDA (d)

6.5x

 

6.7x

 

6.7x

 

7.0x

 

7.2x

Interest coverage

4.8x

 

4.1x

 

4.1x

 

4.3x

 

4.0x

Common shares and OP Units:

 

 

 

 

 

 

 

 

 

Shares outstanding

225,122,235

 

225,070,396

 

224,706,731

 

224,695,566

 

224,697,889

OP units outstanding

5,941,643

 

5,941,643

 

5,946,571

 

5,946,571

 

5,946,571

Common shares and OP units outstanding

231,063,878

 

231,012,039

 

230,653,302

 

230,642,137

 

230,644,460

Weighted average common shares and OP units

230,734,872

 

230,570,707

 

230,452,570

 

230,444,945

 

230,369,086

(a)

Excludes our development projects (Destination at Arista and Flatirons Flats). See the definitions at the end of this release.

(b)

Same-store portfolio consists of 108 properties, which represent 32,153 units.

(c)

Includes indebtedness associated with real estate held for sale, as applicable.

(d)

Reflects net debt to Adjusted EBITDA, which is annualized for each period presented, including adjustments for the timing of acquisitions and dispositions impacting quarterly EBITDA. For the five quarters ended June 30, 2024, net debt to Adjusted EBITDA excluding adjustments for timing of acquisitions and dispositions was 6.6x, 6.5x, 6.5x, 7.0x, and 7.2x, respectively.

 

Schedule II

Independence Realty Trust, Inc.

Reconciliation of Net Income (Loss) to Funds from Operations and Core Funds From Operations

Dollars in thousands, except per share data

(unaudited)

 

 

For the Three Months Ended June 30,

 

For the Six Months Ended

June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Funds From Operations (FFO):

 

 

 

 

 

 

 

Net income

$

10,555

 

 

$

10,988

 

 

$

28,515

 

 

$

19,861

 

Add-Back (Deduct):

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

53,757

 

 

 

53,701

 

 

 

107,149

 

 

 

106,989

 

Our share of real estate depreciation and amortization

from investments in unconsolidated real estate entities

 

598

 

 

 

575

 

 

 

1,196

 

 

 

994

 

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

excluding prepayment gains

 

336

 

 

 

—

 

 

 

(9,273

)

 

 

(314

)

FFO

$

65,246

 

 

$

65,264

 

 

$

127,587

 

 

$

127,530

 

FFO per share

$

0.28

 

 

$

0.28

 

 

$

0.55

 

 

$

0.55

 

CORE Funds From Operations (CFFO):

 

 

 

 

 

 

 

FFO

$

65,246

 

 

$

65,264

 

 

$

127,587

 

 

$

127,530

 

Add-Back (Deduct):

 

 

 

 

 

 

 

Other depreciation and amortization

 

370

 

 

 

283

 

 

 

701

 

 

 

531

 

Casualty losses

 

465

 

 

 

680

 

 

 

2,767

 

 

 

831

 

Loan (premium accretion) discount amortization, net

 

(2,283

)

 

 

(2,737

)

 

 

(4,679

)

 

 

(5,493

)

Prepayment (gains) penalties on asset dispositions

 

(184

)

 

 

—

 

 

 

(1,105

)

 

 

(670

)

Gain on extinguishment of debt

 

—

 

 

 

—

 

 

 

(203

)

 

 

—

 

Other expense (income), net

 

—

 

 

 

192

 

 

 

1

 

 

 

234

 

Restructuring costs

 

—

 

 

 

—

 

 

 

—

 

 

 

3,213

 

CFFO

$

63,614

 

 

$

63,682

 

 

$

125,069

 

 

$

126,176

 

CFFO per share

$

0.28

 

 

$

0.28

 

 

$

0.54

 

 

$

0.55

 

Weighted-average shares and units outstanding

 

230,734,872

 

 

 

230,369,086

 

 

 

230,652,876

 

 

 

230,278,208

 

 

Schedule III

Independence Realty Trust, Inc.

Reconciliation of Net Income (Loss) to Same-Store Net Operating Income (a)

Dollars in thousands

(unaudited)

 

 

For the Three Months Ended

 

Jun 30, 2024

 

Mar 31, 2024

 

Dec 31, 2023

 

Sep 30, 2023

 

Jun 30, 2023

Net income (loss)

$

10,555

 

 

$

17,961

 

 

$

(41,654

)

 

$

3,986

 

 

$

10,988

 

Other revenue

 

(298

)

 

 

(203

)

 

 

(316

)

 

 

(232

)

 

 

(354

)

Property management expenses

 

7,666

 

 

 

7,499

 

 

 

6,660

 

 

 

7,232

 

 

 

6,818

 

General and administrative

expenses

 

6,244

 

 

 

8,381

 

 

 

5,043

 

 

 

3,660

 

 

 

5,910

 

Depreciation and amortization

expense

 

54,127

 

 

 

53,721

 

 

 

55,902

 

 

 

55,546

 

 

 

53,984

 

Casualty losses

 

465

 

 

 

2,301

 

 

 

59

 

 

 

35

 

 

 

680

 

Interest expense

 

17,460

 

 

 

20,603

 

 

 

23,537

 

 

 

22,033

 

 

 

22,227

 

Loss on impairment (gain on sale)

of real estate assets, net

 

152

 

 

 

(10,530

)

 

 

56,263

 

 

 

11,268

 

 

 

—

 

(Gain) loss on extinguishment of debt

 

—

 

 

 

(203

)

 

 

124

 

 

 

—

 

 

 

—

 

Other loss (income), net

 

—

 

 

 

1

 

 

 

79

 

 

 

369

 

 

 

72

 

Loss from investments in

unconsolidated real estate entities

 

850

 

 

 

829

 

 

 

1,330

 

 

 

1,178

 

 

 

1,205

 

NOI

$

97,221

 

 

$

100,360

 

 

$

107,027

 

 

$

105,075

 

 

$

101,530

 

Less: Non same-store portfolio NOI

 

2,293

 

 

 

5,989

 

 

 

9,863

 

 

 

10,123

 

 

 

9,155

 

Same-store portfolio NOI

$

94,928

 

 

$

94,371

 

 

$

97,164

 

 

$

94,952

 

 

$

92,375

 

(a)

Same-store portfolio consists of 108 properties, which represent 32,153 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

 

Jun 30, 2024

 

Mar 31, 2024

 

Dec 31, 2023

 

Sep 30, 2023

 

Jun 30, 2023

Net income (loss)

$

10,555

 

$

17,961

 

 

$

(41,654

)

 

$

3,986

 

$

10,988

Add-Back (Deduct):

 

 

 

 

 

 

 

 

 

Interest expense

 

17,460

 

 

20,603

 

 

 

23,537

 

 

 

22,033

 

 

22,227

Depreciation and amortization

 

54,127

 

 

53,721

 

 

 

55,902

 

 

 

55,546

 

 

53,984

Casualty losses

 

465

 

 

2,301

 

 

 

59

 

 

 

35

 

 

680

Loss on impairment (gain on sale) of

real estate assets, net

 

152

 

 

(10,530

)

 

 

56,263

 

 

 

11,268

 

 

—

(Gain) loss on extinguishment of debt

 

—

 

 

(203

)

 

 

124

 

 

 

—

 

 

—

Loss from investments in

unconsolidated real estate entities

 

850

 

 

829

 

 

 

1,330

 

 

 

1,178

 

 

1,205

Other loss (income), net

 

—

 

 

1

 

 

 

79

 

 

 

369

 

 

72

Adjusted EBITDA

$

83,609

 

$

84,683

 

 

$

95,640

 

 

$

94,415

 

$

89,156

 

 

 

 

 

 

 

 

 

 

INTEREST COST:

 

 

 

 

 

 

 

 

 

Interest expense

$

17,460

 

$

20,603

 

 

$

23,537

 

 

$

22,033

 

$

22,227

 

 

 

 

 

 

 

 

 

 

INTEREST COVERAGE:

4.8x

 

4.1x

 

4.1x

 

4.3x

 

4.0x

 

For the Three Months Ended June 30,

 

For the Six Months Ended June 30,

 

2024

 

2023

 

 

2024

 

 

 

2023

 

Net income (loss)

$

10,555

 

$

10,988

 

$

28,515

 

 

$

19,861

 

Add-Back (Deduct):

 

 

 

 

 

 

 

Interest expense

 

17,460

 

 

22,227

 

 

38,063

 

 

 

44,351

 

Depreciation and amortization

 

54,127

 

 

53,984

 

 

107,850

 

 

 

107,520

 

Casualty losses

 

465

 

 

680

 

 

2,767

 

 

 

831

 

Loss on impairment (gain on sale) of

real estate assets, net

 

152

 

 

—

 

 

(10,378

)

 

 

(985

)

Gain on extinguishment of debt

 

—

 

 

—

 

 

(203

)

 

 

—

 

Loss from investments in unconsolidated

real estate entities

 

850

 

 

1,205

 

 

1,679

 

 

 

1,981

 

Other loss (income), net

 

—

 

 

72

 

 

1

 

 

 

(21

)

Restructuring costs

 

—

 

 

—

 

 

—

 

 

 

3,213

 

Adjusted EBITDA

$

83,609

 

$

89,156

 

$

168,294

 

 

$

176,751

 

 

 

 

 

 

 

 

 

INTEREST COST:

 

 

 

 

 

 

 

Interest expense

$

17,460

 

$

22,227

 

$

38,063

 

 

$

44,351

 

 

 

 

 

 

 

 

 

INTEREST COVERAGE:

4.8x

 

4.0x

 

4.4x

 

4.0x

 

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.

Development Property

A development property is a property that is either currently under development or is in lease-up prior to reaching overall occupancy of 90%.

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 loss on impairment (gain on sale) of real estate, debt extinguishments and acquisition related debt extinguishment expenses, casualty (gains) losses, income (loss) from investments in unconsolidated real estate entities, and restructuring 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 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, loss on impairment (gain on sale) of real estate and the cumulative effect of changes in accounting principles. While our calculation of FFO is in accordance with NAREIT’s definition, it may differ from the methodology for calculating FFO utilized by other REITs and, accordingly, may not be comparable to FFO computations of such other REITs.

CFFO is a computation made by analysts and investors to measure a real estate company’s operating performance by removing the effect of items that do not reflect ongoing property operations, including depreciation and amortization of other items not included in FFO, and other non-cash or non-operating gains or losses related to items such as casualty (gains) losses, loan premium accretion and discount amortization, debt extinguishment costs, and restructuring 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 consolidated debt less cash and cash equivalents and loan premiums and discounts. The following table provides a reconciliation of total consolidated debt to net debt (dollars in thousands).

 

 

As of

 

 

Jun 30, 2024

 

Mar 31, 2024

 

Dec 31, 2023

 

Sep 30, 2023

 

Jun 30, 2023

Total debt

 

$

2,252,559

 

 

$

2,277,098

 

 

$

2,549,409

 

 

$

2,715,710

 

 

$

2,650,805

 

Less: cash and cash equivalents

 

 

(21,034

)

 

 

(21,275

)

 

 

(22,852

)

 

 

(17,216

)

 

 

(14,349

)

Less: loan discounts and premiums, net

 

 

(37,253

)

 

 

(39,804

)

 

 

(44,483

)

 

 

(50,772

)

 

 

(53,520

)

Total net debt

 

$

2,194,272

 

 

$

2,216,019

 

 

$

2,482,074

 

 

$

2,647,722

 

 

$

2,582,936

 

We present net debt and net debt to Adjusted EBITDA 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.

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 interest expense, depreciation and amortization, casualty related costs and gains, property management expenses, general and administrative expenses, net gains on sale of assets, and restructuring costs.

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.

Non Same-Store Properties and Non Same-Store Portfolio

Properties that did not meet the definition of a same-store property as of the beginning of the previous year.

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 and not a development property at the beginning of the previous year. Properties that are held for sale or have been sold are excluded from the same-store portfolio.

Rent Premium on Value Add Renovations

The rent premium reflects the per unit per month difference between the rental rate on the renovated unit excluding the impact of upfront concessions, if any, 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. We believe excluding the impact of upfront concessions from our rental rates when comparing to the market rental rates for unrenovated units makes the comparison most relevant and the resulting premium provides management with an indicator of the increased rent generated by the unit renovation.

Renovation Costs per Unit

Renovation costs per unit 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.

Return on Investment (“ROI”) on Value Add Renovations

ROI is calculated using the Rent Premium per unit per month, multiplied by 12, divided by the interior renovation costs per unit or the total renovation costs, as applicable. We use ROI on value add renovation projects to measure the profitability of a renovation project relative to other projects or relative to other uses of our capital.

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

 

 

Jun 30, 2024

 

Mar 31, 2024

 

Dec 31, 2023

 

Sep 30, 2023

 

Jun 30, 2023

Total assets

 

$

5,940,261

 

$

5,972,848

 

$

6,280,175

 

$

6,577,790

 

$

6,517,400

Plus: accumulated depreciation (a)

 

 

674,236

 

 

630,743

 

 

606,404

 

 

570,966

 

 

523,446

Plus: accumulated amortization

 

 

69,532

 

 

69,998

 

 

73,975

 

 

76,691

 

 

76,558

Total gross assets

 

$

6,684,029

 

$

6,673,589

 

$

6,960,554

 

$

7,225,447

 

$

7,117,404

(a)

Includes accumulated depreciation associated with real estate held for sale, as applicable.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240731692039/en/

Independence Realty Trust, Inc. Edelman Smithfield Ted McHugh and Lauren Torres 917-365-7979 IRT@edelman.com