irt-8k_20200729.htm
false 0001466085 0001466085 2020-07-29 2020-07-29

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): July 29, 2020

 

Independence Realty Trust, Inc.

(Exact name of registrant as specified in its charter)

 

 

Maryland

 

001-36041

 

26-4567130

(State or other jurisdiction

 

(Commission

 

(I.R.S. Employer

of incorporation)

 

File Number)

 

Identification No.)

 

1835 Market Street, Suite 2601

Philadelphia, Pennsylvania, 19103

(Address of Principal Executive Office) (Zip Code)

 

(267) 270-4800

(Registrant’s telephone number, including area code)

 

N/A

Former name or former address, if changed since last report

 

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

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

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

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

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

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common stock

 

IRT

 

NYSE

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

Emerging growth company  

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

 

 


 

Item 2.02

Results of Operations and Financial Condition.

On July 29, 2020, Independence Realty Trust, Inc. (“IRT”) issued a press release regarding its earnings for the three and six months ended June 30, 2020. Additionally, IRT is furnishing certain supplemental information with this Current Report. Copies of such press release and such supplemental information are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report and are incorporated by reference herein.  The information in this Current Report, including Exhibit 99.1 and Exhibit 99.2 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.

Item 7.01

Regulation FD Disclosure.

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

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

 

99.1

 

Press Release

99.2

 

Supplemental Information

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 


 

SIGNATURES

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

 

 

 

Independence Realty Trust, Inc.

 

 

 

 

 

July 29, 2020

 

By:

 

/s/ James J. Sebra

 

 

Name:

 

James J. Sebra

 

 

Title:

 

Chief Financial Officer and Treasurer

 

 

 

irt-ex991_6.htm

Exhibit 99.1

Independence Realty Trust Announces Second Quarter 2020 Financial Results

 

 

PHILADELPHIA – (BUSINESS WIRE) – July 29, 2020 — Independence Realty Trust, Inc. (“IRT”) (NYSE: IRT), a multifamily apartment REIT, today announced its second quarter 2020 financial results.

 

Second Quarter Highlights

 

 

Net income available to common shares of $0.8 million for the quarter ended June 30, 2020 compared to $14.7 million for the quarter ended June 30, 2019.

 

 

Earnings per diluted share of $0.01 for the quarter ended June 30, 2020 compared to $0.16 for the quarter ended June 30, 2019.

 

 

Same store net operating income (“NOI”) growth of 1.2% for the quarter ended June 30, 2020 compared to the quarter ended June 30, 2019.

 

 

Core Funds from Operations (“CFFO”) of $18.0 million for the quarter ended June 30, 2020 compared to $16.9 million for the quarter ended June 30, 2019. CFFO per share was $0.19 for the second quarter of 2020, in-line with the second quarter of 2019.

 

 

Adjusted EBITDA of $25.6 million for the quarter ended June 30, 2020 compared to $25.3 million for the quarter ended June 30, 2019.

 

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

 

Management Commentary

“We are pleased with our second quarter 2020 results, which continue to demonstrate IRT’s resiliency during these challenging times brought on by the COVID-19 pandemic” said Scott Schaeffer, Chairman and CEO of IRT. “Through the committed efforts of our team, we were able to deliver growth across the portfolio in the second quarter, as reflected in quarterly NOI growth of 1.2%.”

 

“We remain cautiously optimistic as new lease traffic has not only rebounded but is also exceeding 2019 levels. We will continue to work through current headwinds and are mindful of challenges ahead as the economy remains under pressure. We remain focused on capital preservation and balance sheet strength, with approximately $248 million in total liquidity at quarter-end.  We will also remain flexible relative to our value add initiative, which is positioned to continue delivering attractive returns on investment.”

 

Same Store Property Operating Results

 

Second Quarter 2020 Compared to Second Quarter 2019(1)

Six Months Ended 6/30/20 Compared to Six Months Ended 6/30/19 (1)

Rental and other property revenue

1.7% increase (2)

3.1% increase (2)

Property operating expenses

2.3% increase (3)

1.8% increase (3)

Net operating income (“NOI”)

1.2% increase

4.0% increase

Portfolio average occupancy

120 bps decrease to 93.0%

70 bps decrease to 92.8%

Portfolio average rental rate

4.0% increase to $1,098

4.4% increase to $1,093

NOI Margin

30 bps decrease to 60.1%

50 bps increase to 60.8%

 

 

(1)

Same store portfolio for the three months ended June 30, 2020 includes 54 properties, which represent 14,748 units.

 

(2)

Excluding the provision for bad debt discussed below, rental and other property revenue growth was 3.1% for the three months ended June 30, 2020 and 3.9% for the six months ended June 30, 2020.

 

(3)

Controllable operating expenses decreased 0.2% and increased 1.8% for the three and six months ended June 30, 2020. Non-controllable operating expenses increased 6.7% and increased 1.8% for the three and six months ended June 30, 2020.

 

Same Store Property Operating Results, Excluding Value Add

The same store portfolio results below exclude 16 communities that are both part of the same store portfolio and were actively undergoing Value Add renovations during the three months ended June 30, 2020.


 

 

 

 

Second Quarter 2020 Compared to Second Quarter 2019(1)

Six Months Ended 6/30/20 Compared to Six Months Ended 6/30/19 (1)

Rental and other property revenue

1.4% increase (2)

2.5% increase (2)

Property operating expenses

0.6% increase (3)

0.4% decrease (3)

Net operating income (“NOI”)

1.9% increase

4.4% increase

Portfolio average occupancy

90 bps decrease to 94.3%

20 bps decrease to 94.2%

Portfolio average rental rate

2.8% increase to $1,080

3.1% increase to $1,076

NOI Margin

30 bps increase to 60.9%

110 bps increase to 61.3%

 

 

(1)

Same store portfolio, excluding value add, for the three months ended June 30, 2020 includes 38 properties, which represent 9,680 units.

 

(2)

Excluding the provision for bad debt discussed below, rental and other property revenue growth was 2.5% for the three months ended June 30, 2020 and 3.0% for the six months ended June 30, 2020.

 

(3)

Controllable operating expenses did not change and increased 0.6% for the three and six months ended June 30, 2020. Non-controllable operating expenses increased 1.6% and decreased 2.1% for the three and six months ended June 30, 2020.

 

COVID-19 Metrics (1)(2)

(Dollars in thousands, except per unit data)

 

Rent collections

2Q 2020

2Q 2019

1Q 2020

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

97.1%

99.0%

98.6%

 

 

 

 

Deferred payment plans: (3)

 

 

 

Number of deferred payment plans

260

-

-

Amount of monthly rent deferred for period presented

$424

-

-

Amount of monthly rent deferred for the period presented, as a percentage of rent billed

0.9%

0.0%

0.0%

 

 

 

 

Combined rent collected and rent subject to deferred payment plans, as a percentage of rent billed

98.0%

99.0%

98.6%

 

 

(1)

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)

Deferred payment plans allow residents to defer between 25% and 75% of their monthly rent for between one and three months. Residents must provide evidence of hardship and commit to a full 12-month lease term, which allows deferred payments to be repaid over a longer remaining lease term. As of June 30, 2020, residents who entered into deferred payment plans had, on average, deferred 56% of their monthly rent for 2.7 months and have agreed to repay the deferred rent over 9.5 months.

 

During the second quarter of 2020 and as a result of the COVID-19 pandemic, we recorded a $723,000 provision for bad debts, representing 1.4% of total revenue for our 58 communities.  Of this amount, $690,000 relates to the 54-property same store portfolio.  The table below presents additional details on the components of bad debt:

 

Components of Bad Debt (1)

2Q 2020

2Q 2019

1Q 2020

Amount

Percentage

Amount

Percentage

Amount

Percentage

Charge-offs, net

$28

0.0%

$236

0.5%

$337

0.6%

Provision for bad debt

723

1.4%

-

-

-

-

Net bad debt

$751

1.4%

$236

0.5%

$337

0.7%

 

 

(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

July 2020

July 2019

2Q 2020

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

96.9%

98.0%

97.1%

Amount of monthly rent deferred for the period presented, as a percentage of rent billed

0.3%

0.0%

0.9%

 


 

Combined rent collected and rent subject to deferred payment plans, as a percentage of rent billed

97.2%

98.0%

98.0%

Average occupancy

93.8%

93.9%

92.9%

Average effective monthly rent per unit

$1,109

$1,060

$1,108

Resident retention rate

59.1%

56.8%

54.4%

Traffic (1)

16,246

12,093

47,947 (1)

 

 

(1)

Traffic represents instances of first contact with potential residents through email, phone call, office visit, etc. Traffic during 2Q 2020 was 26.6% higher than 2Q 2019.  

 

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 54-property same store portfolio.  

 

Lease Type

Q2 2020

July 2020

New Leases

1.4%

1.1%

Renewal Leases

2.4%

0.7%

Total

1.9%

0.9%

 

 

(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.  

 

Value Add Program

Since the inception of our value add program, we have completed renovations in 3,252 units, achieving a weighted average return on investment of 18.2% on interior renovation costs.  

 

As part of our COVID-19 pandemic response in the first quarter of 2020, we delayed the start of renovations at six communities and paused renovations at five communities. During June and July of 2020, with traffic returning in most of our markets, we resumed renovation efforts at all five communities that had been paused. As demonstrated by these actions, we will continue to assess the potential to resume projects currently on hold as market conditions improve.

 

Financial Flexibility

As of June 30, 2020, we had a total liquidity position of approximately $248 million, which includes unrestricted cash, additional capacity under our unsecured line of credit, and proceeds upon the future settlement of the unsettled portion of our forward equity offering.  Subsequent to quarter-end, we used our unsecured line of credit to prepay, without penalty, $32.1 million of property level debt with a weighted average interest cost of 3.9%.  

 

Capital Expenditures

For the three months ended June 30, 2020, recurring capital expenditures for the total portfolio were $1.4 million, or $89 per unit. For the six months ended June 30, 2020, recurring capital expenditures for the total portfolio were $2.7 million, or $172 per unit.  

 

Distributions

On June 15, 2020, our Board of Directors declared a quarterly cash dividend of $0.12 per share of our common stock, which was paid on July 24, 2020 to stockholders of record at the close of business on July 2, 2020.

 

2020 EPS and CFFO Guidance

On March 26, 2020, we suspended our fiscal 2020 guidance, given the uncertainty around the length and depth of the coronavirus crisis and its impact on our business and the economy. At this time, we believe it is prudent to keep our guidance suspended and we anticipate resuming our practice of providing full year guidance when there is more clarity on economic conditions.

    

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, July 30, 2020 from the investor relations section of the IRT website at www.irtliving.com or by dialing 1.844.775.2542, access code 9172655. 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, August 6, 2020 by dialing 1.855.859.2056, access code 9172655.

 

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, Louisville, Memphis, and Raleigh. IRT’s investment strategy is focused on gaining scale within key amenity rich submarkets that offer good school districts, high-quality retail and major employment centers. IRT aims to provide stockholders attractive risk-adjusted returns through diligent portfolio management, strong operational performance, and a consistent return 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 capital allocations, including as to the timing and amount of future dividends. Because such statements include risks, uncertainties and contingencies, 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 generally 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 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; 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; unexpected costs of REIT qualification compliance; 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 Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, 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 expected amount of the quarterly dividend described in this press release.

 

Independence Realty Trust, Inc. Contact

Edelman Financial Communications & Capital Markets

Ted McHugh and Lauren Torres

212.704.8112

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

 

 

 

 

June 30,

2020

 

 

March 31,

2020

 

 

December 31,

2019

 

 

September 30,

2019

 

 

June 30,

2019

 

 

Selected Financial Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common shares

 

$

789

 

 

$

(372

)

 

$

23,784

 

 

$

4,863

 

 

$

14,709

 

 

Earnings (loss) per share -- diluted

 

$

0.01

 

 

$0.00

 

 

$

0.26

 

 

$

0.05

 

 

$

0.16

 

 

Rental and other property revenue

 

$

52,087

 

 

$

51,156

 

 

$

51,250

 

 

$

51,057

 

 

$

50,848

 

 

Property operating expenses

 

$

20,974

 

 

$

19,737

 

 

$

19,064

 

 

$

20,546

 

 

$

20,072

 

 

Net operating income

 

$

31,113

 

 

$

31,419

 

 

$

32,186

 

 

$

30,511

 

 

$

30,776

 

 

NOI margin

 

 

59.7

%

 

 

61.4

%

 

 

62.8

%

 

 

59.8

%

 

 

60.5

%

 

Adjusted EBITDA

 

$

25,643

 

 

$

24,081

 

 

$

27,427

 

 

$

25,739

 

 

$

25,284

 

 

CORE FFO per share

 

$

0.19

 

 

$

0.19

 

 

$

0.20

 

 

$

0.19

 

 

$

0.19

 

 

Dividends per share

 

$

0.12

 

 

$

0.18

 

 

$

0.18

 

 

$

0.18

 

 

$

0.18

 

 

CORE FFO payout ratio

 

 

63.2

%

 

 

94.7

%

 

 

90.0

%

 

 

94.7

%

 

 

94.7

%

 

Portfolio Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total gross assets

 

$

1,916,424

 

 

$

1,949,494

 

 

$

1,841,738

 

 

$

1,821,173

 

 

$

1,817,207

 

 

Total number of properties

 

 

58

 

 

 

58

 

 

 

57

 

 

 

57

 

 

 

58

 

 

Total units

 

 

15,805

 

 

 

15,805

 

 

 

15,554

 

 

 

15,536

 

 

 

15,734

 

 

Period end occupancy

 

 

93.5

%

 

 

92.7

%

 

 

92.5

%

 

 

92.8

%

 

 

94.0

%

 

Total portfolio average occupancy

 

 

92.9

%

 

 

92.5

%

 

 

92.5

%

 

 

93.5

%

 

 

94.4

%

 

Total portfolio average effective monthly rent, per

   unit

 

$

1,108

 

 

$

1,100

 

 

$

1,088

 

 

$

1,084

 

 

$

1,058

 

 

Same store period end occupancy (a)

 

 

93.4

%

 

 

93.0

%

 

 

92.5

%

 

 

92.8

%

 

 

94.0

%

 

Same store portfolio average occupancy (a)

 

 

93.0

%

 

 

92.7

%

 

 

92.4

%

 

 

93.4

%

 

 

94.2

%

 

Same store portfolio average effective monthly rent,

   per unit (a)

 

$

1,098

 

 

$

1,089

 

 

$

1,083

 

 

$

1,077

 

 

$

1,056

 

 

Capitalization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total debt

 

$

1,008,911

 

 

$

1,049,541

 

 

$

985,572

 

 

$

979,330

 

 

$

989,499

 

 

Common share price, period end

 

$

11.45

 

 

$

8.94

 

 

$

14.08

 

 

$

14.31

 

 

$

11.57

 

 

Market equity capitalization

 

$

1,093,822

 

 

$

853,600

 

 

$

1,294,545

 

 

$

1,313,311

 

 

$

1,050,712

 

 

Total market capitalization

 

$

2,102,733

 

 

$

1,903,141

 

 

$

2,280,117

 

 

$

2,292,641

 

 

$

2,040,211

 

 

Total debt/total gross assets

 

 

52.6

%

 

 

53.8

%

 

 

53.5

%

 

 

53.8

%

 

 

54.5

%

 

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

 

9.2x

 

 

 

9.0

x

 

 

8.9

x

 

 

9.0

x

 

9.2x

 

 

Interest coverage

 

 

2.8

x

 

 

2.5

x

 

 

2.8

x

 

 

2.6

x

 

 

2.6

x

 

Common shares and OP Units:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding

 

 

94,741,146

 

 

 

94,691,806

 

 

 

91,070,637

 

 

 

90,894,656

 

 

 

89,932,418

 

 

OP units outstanding

 

 

789,134

 

 

 

789,134

 

 

 

871,491

 

 

 

881,107

 

 

 

881,107

 

 

Common shares and OP units outstanding

 

 

95,530,279

 

 

 

95,480,939

 

 

 

91,942,128

 

 

 

91,775,763

 

 

 

90,813,525

 

 

Weighted average common shares and units

 

 

95,224,855

 

 

 

91,737,113

 

 

 

91,526,726

 

 

 

90,908,646

 

 

 

90,394,212

 

 

 

 

(a)

Same store portfolio consists of 54 properties, which represent 14,748 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 one-time items impacting quarterly EBITDA. Actual net debt to Adjusted EBITDA for the five quarters ended June 30, 2020 was 9.7, 10.3x, 8.9x, 9.4x, and 9.7x, 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 share and per share amounts)

(unaudited)

 

 

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Funds From Operations (FFO):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (loss)

 

$

799

 

 

$

14,856

 

 

$

425

 

 

$

17,422

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

 

15,156

 

 

 

12,675

 

 

 

29,881

 

 

 

24,993

 

Net (gains) losses on sale of assets excluding debt extinguishment costs

 

 

 

 

 

(14,171

)

 

 

 

 

 

(14,171

)

Funds From Operations

 

$

15,955

 

 

$

13,360

 

 

$

30,306

 

 

$

28,244

 

FFO per share

 

$

0.17

 

 

$

0.15

 

 

$

0.32

 

 

$

0.31

 

Core Funds From Operations (CFFO):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds From Operations

 

$

15,955

 

 

$

13,360

 

 

$

30,306

 

 

$

28,244

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock compensation expense (a)

 

 

1,233

 

 

 

1,086

 

 

 

3,860

 

 

 

1,708

 

Amortization of deferred financing costs

 

 

362

 

 

 

362

 

 

 

723

 

 

 

701

 

Other depreciation and amortization

 

 

75

 

 

 

46

 

 

 

178

 

 

 

175

 

Abandoned deal costs

 

 

 

 

 

 

 

 

130

 

 

 

 

Casualty losses

 

 

411

 

 

 

 

 

 

411

 

 

 

 

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

 

 

 

 

 

2,029

 

 

 

 

 

 

2,029

 

Core Funds From Operations

 

$

18,036

 

 

$

16,883

 

 

$

35,608

 

 

$

32,857

 

CFFO per share

 

$

0.19

 

 

$

0.19

 

 

$

0.38

 

 

$

0.36

 

Weighted-average shares and units outstanding

 

 

95,224,855

 

 

 

90,394,212

 

 

 

93,462,270

 

 

 

87,870,135

 

 

 

(a)

Included in the six-months ended June 30, 2020 is $1.7 million of stock compensation expense recorded with respect to stock awards granted during the period to retirement eligible employees.

 

 

 


 

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)

 

 

 

June 30,

2020

 

 

March 31,

2020

 

 

December 31,

2019

 

 

September 30,

2019

 

 

June 30,

2019

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-store net operating income

 

$

28,963

 

 

$

29,455

 

 

$

29,810

 

 

$

28,829

 

 

$

28,615

 

Non same-store net operating income

 

 

2,150

 

 

 

1,964

 

 

 

2,376

 

 

 

1,682

 

 

 

2,161

 

Other revenue

 

 

181

 

 

 

194

 

 

 

178

 

 

 

242

 

 

 

108

 

Property management expenses

 

 

(2,077

)

 

 

(2,156

)

 

 

(1,950

)

 

 

(1,901

)

 

 

(2,062

)

General and administrative expenses

 

 

(3,574

)

 

 

(5,376

)

 

 

(2,987

)

 

 

(3,113

)

 

 

(3,538

)

Depreciation and amortization expense

 

 

(15,231

)

 

 

(14,828

)

 

 

(14,213

)

 

 

(13,434

)

 

 

(12,721

)

Interest expense

 

 

(9,202

)

 

 

(9,497

)

 

 

(9,873

)

 

 

(9,783

)

 

 

(9,849

)

Abandoned deal costs

 

 

 

 

 

(130

)

 

 

 

 

 

 

 

 

 

Casualty losses

 

 

(411

)

 

 

 

 

 

 

 

 

 

 

 

 

Net gains (losses) on sale of assets

 

 

 

 

 

 

 

 

20,679

 

 

 

2,390

 

 

 

12,142

 

Net income (loss)

 

$

799

 

 

$

(374

)

 

$

24,020

 

 

$

4,912

 

 

$

14,856

 

 

(a)Same store portfolio includes 54 properties, which represent 14,748 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:

 

June 30,

2020

 

 

March 31,

2020

 

 

December 31,

2019

 

 

September 30,

2019

 

 

June 30,

2019

 

 

Net income (loss)

 

$

799

 

 

$

(374

)

 

$

24,020

 

 

$

4,912

 

 

$

14,856

 

 

Add-Back (Deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

15,231

 

 

 

14,828

 

 

 

14,213

 

 

 

13,434

 

 

 

12,721

 

 

Interest expense

 

 

9,202

 

 

 

9,497

 

 

 

9,873

 

 

 

9,783

 

 

 

9,849

 

 

Net (gains) losses on sale of assets

 

 

 

 

 

 

 

 

(20,679

)

 

 

(2,390

)

 

 

(12,142

)

 

Abandoned deal costs

 

 

 

 

 

130

 

 

 

 

 

 

 

 

 

 

 

Casualty losses

 

 

411

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

25,643

 

 

$

24,081

 

 

$

27,427

 

 

$

25,739

 

 

$

25,284

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST COST:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

$

9,202

 

 

$

9,497

 

 

$

9,873

 

 

$

9,783

 

 

$

9,849

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST COVERAGE:

 

 

2.8

x

 

 

2.5

x

 

 

2.8

x

 

 

2.6

x

 

 

2.6

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

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. EBITDA and Adjusted EBITDA are each non-GAAP measures.  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 IRT in particular. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, as net income or loss (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.

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 stock compensation expense, depreciation and amortization of other items not included in FFO, amortization of deferred financing costs, and other non-cash or non-operating gains or losses related to items such as casualty losses and abandoned deal costs.

Our calculation of CFFO differs from the methodology used for calculating CFFO by certain 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 believes they are also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash or non-operating items that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare 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 provide investors with additional useful measures 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. Neither FFO nor CFFO should be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow from operating 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).

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

 

As of

 

 

June 30,

2020

 

 

March 31,

2020

 

 

December 31,

2019

 

 

September 30,

2019

 

 

June 30,

2019

 

Total debt

$

1,008,911

 

 

$

1,049,541

 

 

$

985,572

 

 

$

979,330

 

 

$

989,499

 

Less: cash and cash equivalents

 

(11,652

)

 

 

(57,436

)

 

 

(9,888

)

 

 

(6,587

)

 

 

(11,060

)

Total net debt

$

997,259

 

 

$

992,105

 

 

$

975,684

 

 

$

972,743

 

 

$

978,439

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Operating Income

We believe that Net Operating Income (“NOI”), a non-GAAP financial measure, is a useful supplemental measure of its operating performance. We define NOI as total property revenues less total property operating expenses, excluding interest expenses, depreciation and amortization, property management expenses, and general and administrative expenses. 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 insofar as the measure reflects only operating income and expense at the property level. We use NOI to evaluate performance on a same store and non-same store basis because NOI measures the core operations of property performance by excluding corporate level expenses, financing 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

 

 

June 30,

2020

 

 

March 31,

2020

 

 

December 31,

2019

 

 

September 30,

2019

 

 

June 30,

2019

 

Total assets

$

1,708,912

 

 

$

1,757,138

 

 

$

1,664,106

 

 

$

1,653,017

 

 

$

1,655,747

 

Plus: accumulated depreciation

 

187,758

 

 

 

172,789

 

 

 

158,435

 

 

 

148,924

 

 

 

141,965

 

Plus: accumulated amortization

 

19,754

 

 

 

19,567

 

 

 

19,197

 

 

 

19,232

 

 

 

19,495

 

Total gross assets

$

1,916,424

 

 

$

1,949,494

 

 

$

1,841,738

 

 

$

1,821,173

 

 

$

1,817,207

 

 

 

irt-ex992_7.htm

Exhibit 99.2

Talison Row at Daniel Island, South Carolina

 

EARNINGS RELEASE & SUPPLEMENTAL INFORMATION

Q2 2020

 

 

NYSE: IRT

WWW.IRTLIVING.COM

 

 

1

 


TABLE OF CONTENTS

 

Company Information

 

3

 

 

 

Forward-Looking Statements

 

4

 

 

 

Earnings Release Text

 

5

 

 

 

Financial & Operating Highlights

 

10

 

 

 

Balance Sheets

 

11

 

 

 

Statements of Operations, FFO & CORE FFO

 

 

Trailing Five Quarters

 

12

Three and Six Months Ended June 30, 2020 and 2019

 

13

 

 

 

Adjusted EBITDA Reconciliations and Coverage Ratio

 

 

Trailing Five Quarters

 

14

Three and Six Months Ended June 30, 2020 and 2019

 

14

 

 

 

Same-Store Portfolio Net Operating Income

 

 

Trailing Five Quarters

 

15

Three and Six Months Ended June 30, 2020 and 2019

 

16

 

 

 

Net Operating Income Bridge

 

17

 

 

 

Same-Store Portfolio Net Operating Income by Market

 

 

Three Months Ended June 30, 2020 and 2019

 

18

Six Months Ended June 30, 2020 and 2019

 

19

 

 

 

Total Portfolio NOI Exposure by Market

 

20

 

 

 

Value Add Summary

 

21

 

 

 

Capital Recycling Activity

 

22

 

 

 

Debt Summary

 

23

 

 

 

Debt Covenant & Unencumbered Asset Statistics

 

24

 

 

 

Definitions

 

25

 

2

 


Independence Realty Trust

June 30, 2020

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, Louisville, Memphis, and Raleigh. IRT’s investment strategy is focused on gaining scale within key amenity rich submarkets that offer good school districts, high-quality retail and major employment centers. IRT aims to provide stockholders attractive risk-adjusted returns through diligent portfolio management, strong operational performance, and a consistent return 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

 

 

212-704-8112

 

 

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 capital allocations, including as to the timing and amount of future dividends. Because such statements include risks, uncertainties and contingencies, 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 generally 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 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; 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; unexpected costs of REIT qualification compliance; 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 Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, 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 expected amount of the quarterly dividend described in this supplemental information.

 


4

 


Independence Realty Trust Announces Second Quarter 2020 Financial Results

 

 

PHILADELPHIA – (BUSINESS WIRE) – July 29, 2020 — Independence Realty Trust, Inc. (“IRT”) (NYSE: IRT), a multifamily apartment REIT, today announced its second quarter 2020 financial results.

 

Second Quarter Highlights

 

 

Net income available to common shares of $0.8 million for the quarter ended June 30, 2020 compared to $14.7 million for the quarter ended June 30, 2019.

 

 

Earnings per diluted share of $0.01 for the quarter ended June 30, 2020 compared to $0.16 for the quarter ended June 30, 2019.

 

 

Same store net operating income (“NOI”) growth of 1.2% for the quarter ended June 30, 2020 compared to the quarter ended June 30, 2019.

 

 

Core Funds from Operations (“CFFO”) of $18.0 million for the quarter ended June 30, 2020 compared to $16.9 million for the quarter ended June 30, 2019. CFFO per share was $0.19 for the second quarter of 2020, in-line with the second quarter of 2019.

 

 

Adjusted EBITDA of $25.6 million for the quarter ended June 30, 2020 compared to $25.3 million for the quarter ended June 30, 2019.

 

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

 

Management Commentary

“We are pleased with our second quarter 2020 results, which continue to demonstrate IRT’s resiliency during these challenging times brought on by the COVID-19 pandemic” said Scott Schaeffer, Chairman and CEO of IRT. “Through the committed efforts of our team, we were able to deliver growth across the portfolio in the second quarter, as reflected in quarterly NOI growth of 1.2%.”

 

“We remain cautiously optimistic as new lease traffic has not only rebounded but is also exceeding 2019 levels. We will continue to work through current headwinds and are mindful of challenges ahead as the economy remains under pressure. We remain focused on capital preservation and balance sheet strength, with approximately $248 million in total liquidity at quarter-end.  We will also remain flexible relative to our value add initiative, which is positioned to continue delivering attractive returns on investment.”

 

Same Store Property Operating Results

 

Second Quarter 2020 Compared to Second Quarter 2019(1)

Six Months Ended 6/30/20 Compared to Six Months Ended 6/30/19 (1)

Rental and other property revenue

1.7% increase (2)

3.1% increase (2)

Property operating expenses

2.3% increase (3)

1.8% increase (3)

Net operating income (“NOI”)

1.2% increase

4.0% increase

Portfolio average occupancy

120 bps decrease to 93.0%

70 bps decrease to 92.8%

Portfolio average rental rate

4.0% increase to $1,098

4.4% increase to $1,093

NOI Margin

30 bps decrease to 60.1%

50 bps increase to 60.8%

 

 

(1)

Same store portfolio for the three months ended June 30, 2020 includes 54 properties, which represent 14,748 units.

 

(2)

Excluding the provision for bad debt discussed below, rental and other property revenue growth was 3.1% for the three months ended June 30, 2020 and 3.9% for the six months ended June 30, 2020.

 

(3)

Controllable operating expenses decreased 0.2% and increased 1.8% for the three and six months ended June 30, 2020. Non-controllable operating expenses increased 6.7% and increased 1.8% for the three and six months ended June 30, 2020.

5

 


Same Store Property Operating Results, Excluding Value Add

The same store portfolio results below exclude 16 communities that are both part of the same store portfolio and were actively undergoing Value Add renovations during the three months ended June 30, 2020.

 

 

 

Second Quarter 2020 Compared to Second Quarter 2019(1)

Six Months Ended 6/30/20 Compared to Six Months Ended 6/30/19 (1)

Rental and other property revenue

1.4% increase (2)

2.5% increase (2)

Property operating expenses

0.6% increase (3)

0.4% decrease (3)

Net operating income (“NOI”)

1.9% increase

4.4% increase

Portfolio average occupancy

90 bps decrease to 94.3%

20 bps decrease to 94.2%

Portfolio average rental rate

2.8% increase to $1,080

3.1% increase to $1,076

NOI Margin

30 bps increase to 60.9%

110 bps increase to 61.3%

 

 

(1)

Same store portfolio, excluding value add, for the three months ended June 30, 2020 includes 38 properties, which represent 9,680 units.

 

(2)

Excluding the provision for bad debt discussed below, rental and other property revenue growth was 2.5% for the three months ended June 30, 2020 and 3.0% for the six months ended June 30, 2020.

 

(3)

Controllable operating expenses did not change and increased 0.6% for the three and six months ended June 30, 2020. Non-controllable operating expenses increased 1.6% and decreased 2.1% for the three and six months ended June 30, 2020.

 

COVID-19 Metrics (1)(2)

(Dollars in thousands, except per unit data)

 

Rent collections

2Q 2020

2Q 2019

1Q 2020

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

97.1%

99.0%

98.6%

 

 

 

 

Deferred payment plans: (3)

 

 

 

Number of deferred payment plans

260

-

-

Amount of monthly rent deferred for period presented

$424

-

-

Amount of monthly rent deferred for the period presented, as a percentage of rent billed

0.9%

0.0%

0.0%

 

 

 

 

Combined rent collected and rent subject to deferred payment plans, as a percentage of rent billed

98.0%

99.0%

98.6%

 

 

(1)

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)

Deferred payment plans allow residents to defer between 25% and 75% of their monthly rent for between one and three months. Residents must provide evidence of hardship and commit to a full 12-month lease term, which allows deferred payments to be repaid over a longer remaining lease term. As of June 30, 2020, residents who entered into deferred payment plans had, on average, deferred 56% of their monthly rent for 2.7 months and have agreed to repay the deferred rent over 9.5 months.

 

During the second quarter of 2020 and as a result of the COVID-19 pandemic, we recorded a $723,000 provision for bad debts, representing 1.4% of total revenue for our 58 communities.  Of this amount, $690,000 relates to the 54-property same store portfolio.  The table below presents additional details on the components of bad debt:

 

Components of Bad Debt (1)

2Q 2020

2Q 2019

1Q 2020

Amount

Percentage

Amount

Percentage

Amount

Percentage

Charge-offs, net

$28

0.0%

$236

0.5%

$337

0.6%

Provision for bad debt

723

1.4%

-

-

-

-

Net bad debt

$751

1.4%

$236

0.5%

$337

0.7%

 

 

(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.

 

6

 


 

Operating statistics

July 2020

July 2019

2Q 2020

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

96.9%

98.0%

97.1%

Amount of monthly rent deferred for the period presented, as a percentage of rent billed

0.3%

0.0%

0.9%

Combined rent collected and rent subject to deferred payment plans, as a percentage of rent billed

97.2%

98.0%

98.0%

Average occupancy

93.8%

93.9%

92.9%

Average effective monthly rent per unit

$1,109

$1,060

$1,108

Resident retention rate

59.1%

56.8%

54.4%

Traffic (1)

16,246

12,093

47,947 (1)

 

 

(1)

Traffic represents instances of first contact with potential residents through email, phone call, office visit, etc. Traffic during 2Q 2020 was 26.6% higher than 2Q 2019.  

 

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 54-property same store portfolio.  

 

Lease Type

Q2 2020

July 2020

New Leases

1.4%

1.1%

Renewal Leases

2.4%

0.7%

Total

1.9%

0.9%

 

 

(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.  

 

Value Add Program

Since the inception of our value add program, we have completed renovations in 3,252 units, achieving a weighted average return on investment of 18.2% on interior renovation costs.  

 

As part of our COVID-19 pandemic response in the first quarter of 2020, we delayed the start of renovations at six communities and paused renovations at five communities. During June and July of 2020, with traffic returning in most of our markets, we resumed renovation efforts at all five communities that had been paused. As demonstrated by these actions, we will continue to assess the potential to resume projects currently on hold as market conditions improve.

 

Financial Flexibility

As of June 30, 2020, we had a total liquidity position of approximately $248 million, which includes unrestricted cash, additional capacity under our unsecured line of credit, and proceeds upon the future settlement of the unsettled portion of our forward equity offering.  Subsequent to quarter-end, we used our unsecured line of credit to prepay, without penalty, $32.1 million of property level debt with a weighted average interest cost of 3.9%.  

 

Capital Expenditures

For the three months ended June 30, 2020, recurring capital expenditures for the total portfolio were $1.4 million, or $89 per unit. For the six months ended June 30, 2020, recurring capital expenditures for the total portfolio were $2.7 million, or $172 per unit.  

 

Distributions

On June 15, 2020, our Board of Directors declared a quarterly cash dividend of $0.12 per share of our common stock, which was paid on July 24, 2020 to stockholders of record at the close of business on July 2, 2020.

 

 

 

 

 

7

 


2020 EPS and CFFO Guidance

On March 26, 2020, we suspended our fiscal 2020 guidance, given the uncertainty around the length and depth of the coronavirus crisis and its impact on our business and the economy. At this time, we believe it is prudent to keep our guidance suspended and we anticipate resuming our practice of providing full year guidance when there is more clarity on economic conditions.

    

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, July 30, 2020 from the investor relations section of the IRT website at www.irtliving.com or by dialing 1.844.775.2542, access code 9172655. 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, August 6, 2020 by dialing 1.855.859.2056, access code 9172655.

 

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, Louisville, Memphis, and Raleigh. IRT’s investment strategy is focused on gaining scale within key amenity rich submarkets that offer good school districts, high-quality retail and major employment centers. IRT aims to provide stockholders attractive risk-adjusted returns through diligent portfolio management, strong operational performance, and a consistent return on capital through distributions and capital appreciation. More information may be found on IRT’s website at www.irtliving.com.

 


8

 


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 capital allocations, including as to the timing and amount of future dividends. Because such statements include risks, uncertainties and contingencies, 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 generally 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 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; 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; unexpected costs of REIT qualification compliance; 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 Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, 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 expected amount of the quarterly dividend described in this press release.

 

Independence Realty Trust, Inc. Contact

Edelman Financial Communications & Capital Markets

Ted McHugh and Lauren Torres

212.704.8112

IRT@edelman.com

 

 

 

 

 

 

 

 

 

 

 


9

 


FINANCIAL & OPERATING HIGHLIGHTS

Dollars in thousands, except per share data

 

 

 

For the Three Months Ended

 

 

 

June 30,

2020

 

March 31,

2020

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

 

Selected Financial Information:

 

 

 

 

 

 

 

 

 

 

 

Operating Statistics:

 

 

 

 

 

 

 

 

 

 

 

Net income available to common shares

 

$789

 

$(372)

 

$23,784

 

$4,863

 

$14,709

 

Earnings (loss) per share -- diluted

 

$0.01

 

$0.00

 

$0.26

 

$0.05

 

$0.16

 

Rental and other property revenue

 

$52,087

 

$51,156

 

$51,250

 

$51,057

 

$50,848

 

Property operating expenses

 

$20,974

 

$19,737

 

$19,064

 

$20,546

 

$20,072

 

Net operating income

 

$31,113

 

$31,419

 

$32,186

 

$30,511

 

$30,776

 

NOI margin

 

59.7%

 

61.4%

 

62.8%

 

59.8%

 

60.5%

 

Adjusted EBITDA

 

$25,643

 

$24,081

 

$27,427

 

$25,739

 

$25,284

 

CORE FFO per share

 

$0.19

 

$0.19

 

$0.20

 

$0.19

 

$0.19

 

Dividends per share

 

$0.12

 

$0.18

 

$0.18

 

$0.18

 

$0.18

 

CORE FFO payout ratio

 

63.2%

 

94.7%

 

90.0%

 

94.7%

 

94.7%

 

Portfolio Data:

 

 

 

 

 

 

 

 

 

 

 

Total gross assets

 

$1,916,424

 

$1,949,494

 

$1,841,738

 

$1,821,173

 

$1,817,207

 

Total number of properties

 

58

 

58

 

57

 

57

 

58

 

Total units

 

15,805

 

15,805

 

15,554

 

15,536

 

15,734

 

Period end occupancy

 

93.5%

 

92.7%

 

92.5%

 

92.8%

 

94.0%

 

Total portfolio average occupancy

 

92.9%

 

92.5%

 

92.5%

 

93.5%

 

94.4%

 

Total portfolio average effective monthly rent, per

   unit

 

$1,108

 

$1,100

 

$1,088

 

$1,084

 

$1,058

 

Same store period end occupancy (a)

 

93.4%

 

93.0%

 

92.5%

 

92.8%

 

94.0%

 

Same store portfolio average occupancy (a)

 

93.0%

 

92.7%

 

92.4%

 

93.4%

 

94.2%

 

Same store portfolio average effective monthly rent,

   per unit (a)

 

$1,098

 

$1,089

 

$1,083

 

$1,077

 

$1,056

 

Capitalization:

 

 

 

 

 

 

 

 

 

 

 

Total debt

 

$1,008,911

 

$1,049,541

 

$985,572

 

$979,330

 

$989,499

 

Common share price, period end

 

$11.45

 

$8.94

 

$14.08

 

$14.31

 

$11.57

 

Market equity capitalization

 

$1,093,822

 

$853,600

 

$1,294,545

 

$1,313,311

 

$1,050,712

 

Total market capitalization

 

$2,102,733

 

$1,903,141

 

$2,280,117

 

$2,292,641

 

$2,040,211

 

Total debt/total gross assets

 

52.6%

 

53.8%

 

53.5%

 

53.8%

 

54.5%

 

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

 

9.2x

 

9.0x

 

8.9x

 

9.0x

 

9.2x

 

Interest coverage

 

2.8x

 

2.5x

 

2.8x

 

2.6x

 

2.6x

 

Common shares and OP Units:

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding

 

94,741,146

 

94,691,806

 

91,070,637

 

90,894,656

 

89,932,418

 

OP units outstanding

 

789,134

 

789,134

 

871,491

 

881,107

 

881,107

 

Common shares and OP units outstanding

 

95,530,279

 

95,480,939

 

91,942,128

 

91,775,763

 

90,813,525

 

Weighted average common shares and units

 

95,224,855

 

91,737,113

 

91,526,726

 

90,908,646

 

90,394,212

 

 

 

 

(a)

Same store portfolio consists of 54 properties, which represent 14,748 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 one-time items impacting quarterly EBITDA. Actual net debt to Adjusted EBITDA for the five quarters ended June 30, 2020 was 9.7, 10.3x, 8.9x, 9.4x, and 9.7x, respectively.

 

 

 

10

 


BALANCE SHEETS

Dollars in thousands, except per share data

 

 

 

As of

 

 

June 30,

2020

 

March 31,

2020

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

Assets:

 

 

 

 

 

 

 

 

 

 

Investments in real estate at cost

 

$1,864,182

 

$1,856,760

 

$1,796,365

 

$1,732,392

 

$1,704,769

Less: accumulated depreciation

 

(187,758)

 

(172,789)

 

(158,435)

 

(145,075)

 

(136,488)

Investments in real estate, net

 

1,676,424

 

1,683,971

 

1,637,930

 

1,587,317

 

1,568,281

Real estate held for sale

 

 

 

 

32,381

 

50,494

Cash and cash equivalents

 

11,652

 

57,436

 

9,888

 

6,587

 

11,060

Restricted cash

 

6,509

 

4,740

 

4,545

 

8,960

 

7,780

Other assets

 

14,253

 

10,731

 

10,380

 

16,439

 

16,364

Derivative assets

 

 

 

953

 

982

 

1,558

Intangible assets, net

 

74

 

260

 

410

 

351

 

210

Total assets

 

$1,708,912

 

$1,757,138

 

$1,664,106

 

$1,653,017

 

$1,655,747

Liabilities and Equity:

 

 

 

 

 

 

 

 

 

 

Indebtedness, net

 

$1,008,911

 

$1,049,541

 

$985,572

 

$979,330

 

$989,499

Accounts payable and accrued expenses

 

28,748

 

21,250

 

25,399

 

32,249

 

26,374

Accrued interest payable

 

1,970

 

2,099

 

2,196

 

794

 

691

Dividends payable

 

11,423

 

17,128

 

16,491

 

16,460

 

16,285

Derivative liabilities

 

34,614

 

30,937

 

7,769

 

12,415

 

7,394

Other liabilities

 

6,860

 

7,012

 

6,922

 

7,399

 

7,595

Total liabilities

 

1,092,526

 

1,127,967

 

1,044,349

 

1,048,647

 

1,047,838

Equity:

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity:

 

 

 

 

 

 

 

 

 

 

Preferred shares, $0.01 par value per share

 

 

 

 

 

Common shares, $0.01 par value per share

 

947

 

947

 

911

 

909

 

899

Additional paid in capital

 

818,719

 

817,501

 

765,992

 

762,933

 

749,552

Accumulated other comprehensive income (loss)

 

(39,099)

 

(35,750)

 

(12,099)

 

(17,097)

 

(11,769)

Retained earnings (deficit)

 

(169,585)

 

(159,045)

 

(141,525)

 

(148,977)

 

(137,539)

Total shareholders' equity

 

610,982

 

623,653

 

613,279

 

597,768

 

601,143

Noncontrolling Interests

 

5,404

 

5,518

 

6,478

 

6,602

 

6,766

Total equity

 

616,386

 

629,171

 

619,757

 

604,370

 

607,909

Total liabilities and equity

 

$1,708,912

 

$1,757,138

 

$1,664,106

 

$1,653,017

 

$1,655,747

 

11

 


STATEMENTS OF OPERATIONS, FFO & CORE FFO

TRAILING FIVE QUARTERS

Dollars in thousands, except per share data

 

 

For the Three-Months Ended

 

 

June 30,

2020

 

March 31,

2020

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

Revenue:

 

 

 

 

 

 

 

 

 

 

Rental and other property revenue

 

$52,087

 

$51,156

 

$51,250

 

$51,057

 

$50,848

Other revenue

 

181

 

194

 

178

 

242

 

108

Total revenue

 

52,268

 

51,350

 

51,428

 

51,299

 

50,956

Expenses:

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

20,974

 

19,737

 

19,064

 

20,546

 

20,072

Property management expenses

 

2,077

 

2,156

 

1,950

 

1,901

 

2,062

General and administrative expenses (a)

 

3,574

 

5,376

 

2,987

 

3,113

 

3,538

Depreciation and amortization expense

 

15,231

 

14,828

 

14,213

 

13,434

 

12,721

Abandoned deal costs

 

 

130

 

 

 

Casualty losses

 

411

 

 

 

 

Total expenses

 

42,267

 

42,227

 

38,214

 

38,994

 

38,393

Interest expense

 

(9,202)

 

(9,497)

 

(9,873)

 

(9,783)

 

(9,849)

Net gains (losses) on sale of assets

 

 

 

20,679

 

2,390

 

12,142

Net income (loss)

 

799

 

(374)

 

24,020

 

4,912

 

14,856

(Income) loss allocated to noncontrolling interests

 

(10)

 

2

 

(236)

 

(49)

 

(147)

Net income (loss) available to common shares

 

$789

 

$(372)

 

$23,784

 

$4,863

 

$14,709

EPS - basic

 

$0.01

 

$0.00

 

$0.26

 

$0.05

 

$0.16

Weighted-average shares outstanding - Basic

 

94,435,722

 

90,895,488

 

90,646,142

 

90,027,540

 

89,513,105

EPS - diluted

 

$0.01

 

$0.00

 

$0.26

 

$0.05

 

$0.16

Weighted-average shares outstanding - Diluted

 

95,092,860

 

90,895,488

 

91,409,854

 

90,691,368

 

90,019,909

Funds From Operations (FFO):

 

 

 

 

 

 

 

 

 

 

Net Income (loss)

 

$799

 

$(374)

 

$24,020

 

$4,912

 

$14,856

Add-Back (Deduct):

 

 

 

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

15,156

 

14,725

 

14,175

 

13,313

 

12,675

Net (gains) losses on sale of assets excluding debt extinguishment costs

 

 

 

(22,862)

 

(5,594)

 

(14,171)

FFO

 

$15,955

 

$14,351

 

$15,333

 

$12,631

 

$13,360

FFO per share

 

$0.17

 

$0.16

 

$0.17

 

$0.14

 

$0.15

CORE Funds From Operations (CFFO):

 

 

 

 

 

 

 

 

 

 

FFO

 

$15,955

 

$14,351

 

$15,333

 

$12,631

 

$13,360

Add-Back (Deduct):

 

 

 

 

 

 

 

 

 

 

Stock compensation expense (a)

 

1,233

 

2,627

 

717

 

692

 

1,086

Amortization of deferred financing costs

 

362

 

361

 

370

 

351

 

362

Other depreciation and amortization

 

75

 

103

 

38

 

121

 

46

Abandoned deal costs

 

-

 

130

 

 

 

Casualty losses

 

411

 

-

 

 

 

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

 

 

 

2,184

 

3,204

 

2,029

CFFO

 

$18,036

 

$17,572

 

$18,642

 

$16,999

 

$16,883

CFFO per share

 

$0.19

 

$0.19

 

$0.20

 

$0.19

 

$0.19

Weighted-average shares and units outstanding

 

95,224,855

 

91,737,113

 

91,526,726

 

90,908,646

 

90,394,212

 

 

(a)

The three-months ended March 31, 2020 included $1.7 million of stock compensation expense recorded with respect to stock awards granted during the period to retirement eligible employees.

 

12

 


STATEMENTS OF OPERATIONS, FFO & CORE FFO

THREE AND SIX MONTHS ENDED JUNE 30, 2020 and 2019

Dollars in thousands, except per share data

 

 

 

For the Three Months Ended June 30,

 

For the Six Months Ended June 30,

 

 

2020

 

2019

 

2020

 

2019

Revenue:

 

 

 

 

 

 

 

 

Rental and other property revenue

 

$52,087

 

$50,848

 

$103,243

 

$100,313

Other revenue

 

181

 

108

 

375

 

183

Total revenue

 

52,268

 

50,956

 

103,618

 

100,496

Expenses:

 

 

 

 

 

 

 

 

Property operating expenses

 

20,974

 

20,072

 

40,711

 

39,958

Property management expenses

 

2,077

 

2,062

 

4,233

 

3,875

General and administrative expenses (a)

 

3,574

 

3,538

 

8,950

 

6,645

Depreciation and amortization expense

 

15,231

 

12,721

 

30,059

 

25,168

Abandoned deal costs

 

-

 

-

 

130

 

-

Casualty losses

 

411

 

-

 

411

 

-

Total expenses

 

42,267

 

38,393

 

84,494

 

75,646

Interest expense

 

(9,202)

 

(9,849)

 

(18,699)

 

(19,570)

Net gains (losses) on sale of assets

 

-

 

12,142

 

-

 

12,142

Net income (loss)

 

799

 

14,856

 

425

 

17,422

(Income) loss allocated to noncontrolling interests

 

(10)

 

(147)

 

(8)

 

(173)

Net income (loss) available to common shares

 

$789

 

$14,709

 

$417

 

$17,249

EPS - basic

 

$0.01

 

$0.16

 

$0.00

 

$0.19

Weighted-average shares outstanding - Basic

 

94,435,722

 

89,513,105

 

92,646,891

 

89,252,724

EPS - diluted

 

$0.01

 

$0.16

 

$0.00

 

$0.19

Weighted-average shares outstanding - Diluted

 

95,092,860

 

90,019,909

 

93,550,425

 

89,902,637

 

 

 

 

 

 

 

 

 

Funds From Operations (FFO):

 

 

 

 

 

 

 

 

Net Income (loss)

 

$799

 

$14,856

 

$425

 

$17,422

Adjustments:

 

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

15,156

 

12,675

 

29,881

 

24,993

Net (gains) losses on sale of assets excluding debt extinguishment costs

 

 

(14,171)

 

-

 

(14,171)

Funds From Operations

 

$15,955

 

$13,360

 

$30,306

 

$28,244

FFO per share

 

$0.17

 

$0.15

 

$0.32

 

$0.31

Core Funds From Operations (CFFO):

 

 

 

 

 

 

 

 

Funds From Operations

 

$15,955

 

$13,360

 

$30,306

 

$28,244

Adjustments:

 

 

 

 

 

 

 

 

Stock compensation expense (a)

 

1,233

 

1,086

 

3,860

 

1,708

Amortization of deferred financing costs

 

362

 

362

 

723

 

701

Other depreciation and amortization

 

75

 

46

 

178

 

175

Abandoned deal costs

 

 

 

130

 

Casualty losses

 

411

 

 

411

 

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

 

 

2,029

 

 

2,029

Core Funds From Operations

 

$18,036

 

$16,883

 

$35,608

 

$32,857

CFFO per share

 

$0.19

 

$0.19

 

$0.38

 

$0.36

Weighted-average shares and units outstanding

 

95,224,855

 

90,394,212

 

93,462,270

 

90,133,830

 

 

(a)

Included in the six-months ended June 30, 2020 is $1.7 million of stock compensation expense recorded with respect to stock awards granted during the period to retirement eligible employees.

 

 

 

13

 


ADJUSTED EBITDA RECONCILIATION AND COVERAGE RATIO

Dollars in thousands

 

 

Three Months Ended

 

ADJUSTED EBITDA:

 

June 30,

2020

 

March 31,

2020

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

 

Net income (loss)

 

$799

 

$(374)

 

$24,020

 

$4,912

 

$14,856

 

Add-Back (Deduct):

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

15,231

 

14,828

 

14,213

 

13,434

 

12,721

 

Interest expense

 

9,202

 

9,497

 

9,873

 

9,783

 

9,849

 

Net (gains) losses on sale of assets

 

 

 

(20,679)

 

(2,390)

 

(12,142)

 

Abandoned deal costs

 

 

130

 

 

 

 

Casualty losses

 

411

 

 

 

 

 

Adjusted EBITDA

 

$25,643

 

$24,081

 

$27,427

 

$25,739

 

$25,284

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST COST:

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

$9,202

 

$9,497

 

$9,873

 

$9,783

 

$9,849

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST COVERAGE:

 

2.8x

 

2.5x

 

2.8x

 

2.6x

 

2.6x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30,

 

For the Six Months Ended June 30,

ADJUSTED EBITDA:

 

2020

 

2019

 

2020

 

2019

Net income (loss)

 

$799

 

$14,856

 

$425

 

$17,422

Add-Back (Deduct):

 

 

 

 

 

 

 

 

Depreciation and amortization

 

15,231

 

12,721

 

30,059

 

25,168

Interest expense

 

9,202

 

9,849

 

18,699

 

19,570

Net (gains) losses on sale of assets

 

 

(12,142)

 

 

(12,142)

Abandoned deal costs

 

 

 

130

 

Casualty losses

 

411

 

 

411

 

Adjusted EBITDA

 

$25,643

 

$25,284

 

$49,724

 

$50,018

 

 

 

 

 

 

 

 

 

INTEREST COST:

 

 

 

 

 

 

 

 

Interest expense

 

$9,202

 

$9,849

 

$18,699

 

$19,570

 

 

 

 

 

 

 

 

 

INTEREST COVERAGE:

 

2.8x

 

2.6x

 

2.7x

 

2.6x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 


SAME STORE PORTFOLIO NET OPERATING INCOME

TRAILING FIVE QUARTERS

Dollars in thousands, except per unit data

 

 

 

For the Three-Months Ended (a)

 

 

June 30,

2020

 

March 31,

2020

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

Revenue:

 

 

 

 

 

 

 

 

 

 

Rental and other property revenue

 

$48,176

 

$47,893

 

$47,433

 

$48,006

 

$47,389

Property Operating Expenses:

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

6,261

 

5,921

 

5,457

 

5,951

 

5,937

Property insurance

 

1,097

 

917

 

998

 

987

 

963

Personnel expenses

 

4,658

 

4,385

 

4,416

 

4,706

 

4,512

Utilities

 

2,555

 

2,766

 

2,623

 

2,648

 

2,451

Repairs and maintenance

 

1,697

 

1,500

 

1,243

 

1,970

 

1,955

Contract services

 

1,969

 

1,751

 

1,737

 

1,738

 

1,782

Advertising expenses

 

485

 

535

 

526

 

528

 

522

Other expenses

 

491

 

663

 

623

 

649

 

652

Total property operating expenses

 

19,213

 

18,438

 

17,623

 

19,177

 

18,774

Same-store net operating income (a)

 

$28,963

 

$29,455

 

$29,810

 

$28,829

 

$28,615

Same-store NOI margin

 

60.1%

 

61.5%

 

62.8%

 

60.1%

 

60.4%

Average occupancy

 

93.0%

 

92.7%

 

92.4%

 

93.4%

 

94.2%

Average effective monthly rent, per unit

 

$1,098

 

$1,089

 

$1,083

 

$1,077

 

$1,056

Reconciliation of same-store net operating

   income to net income (loss)

 

 

 

 

 

 

 

 

 

 

Same-store net operating income

 

$28,963

 

$29,455

 

$29,810

 

$28,829

 

$28,615

Non same-store net operating income

 

2,150

 

1,964

 

2,376

 

1,682

 

2,161

Other revenue

 

181

 

194

 

178

 

242

 

108

Property management expenses

 

(2,077)

 

(2,156)

 

(1,950)

 

(1,901)

 

(2,062)

General and administrative expenses

 

(3,574)

 

(5,376)

 

(2,987)

 

(3,113)

 

(3,538)

Depreciation and amortization expense

 

(15,231)

 

(14,828)

 

(14,213)

 

(13,434)

 

(12,721)

Abandoned deal costs

 

 

(130)

 

 

 

Casualty losses

 

(411)

 

 

 

 

Interest expense

 

(9,202)

 

(9,497)

 

(9,873)

 

(9,783)

 

(9,849)

Net gains (losses) on sale of assets

 

 

 

20,679

 

2,390

 

12,142

Net income (loss)

 

$799

 

$(374)

 

$24,020

 

$4,912

 

$14,856

 

(a)

Same store portfolio consists of 54 properties, which represent 14,748 units.

15

 


SAME STORE PORTFOLIO NET OPERATING INCOME

THREE AND SIX MONTHS ENDED JUNE 30, 2020 and 2019

Dollars in thousands, except per unit data

 

 

 

For the Three Months Ended June 30,

 

For the Six Months Ended June 30,

 

 

2020

 

2019

 

% change

 

2020

 

2019

 

% change

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Rental and other property revenue

 

$48,176

 

$47,389

 

1.7%

 

$96,069

 

$93,136

 

3.1%

Property Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

6,261

 

5,937

 

5.5%

 

12,182

 

12,028

 

1.3%

Property insurance

 

1,097

 

963

 

13.9%

 

2,014

 

1,916

 

5.1%

Personnel expenses

 

4,658

 

4,512

 

3.2%

 

9,043

 

8,820

 

2.5%

Utilities

 

2,555

 

2,451

 

4.2%

 

5,321

 

5,028

 

5.8%

Repairs and maintenance

 

1,697

 

1,955

 

-13.2%

 

3,197

 

3,454

 

-7.4%

Contract services

 

1,969

 

1,782

 

10.5%

 

3,720

 

3,434

 

8.3%

Advertising expenses

 

485

 

522

 

-7.1%

 

1,020

 

986

 

3.4%

Other expenses

 

491

 

652

 

-24.7%

 

1,154

 

1,316

 

-12.3%

Total property operating expenses

 

19,213

 

18,774

 

2.3%

 

37,651

 

36,982

 

1.8%

Same-store net operating income (a)

 

$28,963

 

$28,615

 

1.2%

 

$58,418

 

$56,154

 

4.0%

Same-store NOI margin

 

60.1%

 

60.4%

 

-0.3%

 

60.8%

 

60.3%

 

0.5%

Average occupancy

 

93.0%

 

94.2%

 

-1.2%

 

92.8%

 

93.5%

 

-0.7%

Average effective monthly rent, per unit

 

$1,098

 

$1,056

 

4.0%

 

$1,093

 

$1,047

 

4.4%

Reconciliation of same-store net operating

   income to net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

Same-store portfolio net operating income

 

$28,963

 

$28,615

 

 

 

$58,418

 

$56,154

 

 

Non same-store net operating income

 

2,150

 

2,161

 

 

 

4,114

 

4,201

 

 

Other revenue

 

181

 

108

 

 

 

375

 

183

 

 

Property management expenses

 

(2,077)

 

(2,062)

 

 

 

(4,233)

 

(3,875)

 

 

General and administrative expenses

 

(3,574)

 

(3,538)

 

 

 

(8,950)

 

(6,645)

 

 

Depreciation and amortization expense

 

(15,231)

 

(12,721)

 

 

 

(30,059)

 

(25,168)

 

 

Abandoned deal costs

 

 

 

 

 

(130)

 

 

 

Casualty losses

 

(411)

 

 

 

 

(411)

 

 

 

Interest expense

 

(9,202)

 

(9,849)

 

 

 

(18,699)

 

(19,570)

 

 

Net gains (losses) on sale of assets

 

 

12,142

 

 

 

 

12,142

 

 

Net income (loss)

 

$799

 

$14,856

 

 

 

$425

 

$17,422

 

 

 

(a)

Same store portfolio consists of 54 properties, which represent 14,748 units.

16

 


NET OPERATING INCOME (NOI) BRIDGE

TRAILING FIVE QUARTERS

Dollars in thousands

 

 

For the Three-Months Ended

 

 

June 30,

2020

 

March 31,

2020

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

Rental and other property revenue

 

 

 

 

 

 

 

 

 

 

Same store (a)

 

$48,176

 

$47,893

 

$47,433

 

$48,006

 

$47,389

Non same-store

 

3,911

 

3,263

 

3,817

 

3,051

 

3,459

Total rental and other property revenue

 

52,087

 

51,156

 

51,250

 

51,057

 

50,848

Property operating expenses

 

 

 

 

 

 

 

 

 

 

Same store (a)

 

19,213

 

18,438

 

17,623

 

19,177

 

18,774

Non same-store

 

1,761

 

1,299

 

1,441

 

1,369

 

1,298

Total property operating expenses

 

20,974

 

19,737

 

19,064

 

20,546

 

20,072

Net operating income

 

 

 

 

 

 

 

 

 

 

Same-store (a)

 

28,963

 

29,455

 

29,810

 

28,829

 

28,615

Non same-store

 

2,150

 

1,964

 

2,376

 

1,682

 

2,161

Total property net operating income

 

$31,113

 

$31,419

 

$32,186

 

$30,511

 

$30,776

Reconciliation of NOI to net income (loss)

 

 

 

 

 

 

 

 

 

 

Total property net operating income

 

$31,113

 

$31,419

 

$32,186

 

$30,511

 

$30,776

Other revenue

 

181

 

194

 

178

 

242

 

108

Property management expenses

 

(2,077)

 

(2,156)

 

(1,950)

 

(1,901)

 

(2,062)

General and administrative expenses

 

(3,574)

 

(5,376)

 

(2,987)

 

(3,113)

 

(3,538)

Depreciation and amortization expense

 

(15,231)

 

(14,828)

 

(14,213)

 

(13,434)

 

(12,721)

Abandoned deal costs

 

 

(130)

 

 

 

Casualty losses

 

(411)

 

 

 

 

Interest expense

 

(9,202)

 

(9,497)

 

(9,873)

 

(9,783)

 

(9,849)

Net gains (losses) on sale of assets

 

 

 

20,679

 

2,390

 

12,142

Net income (loss)

 

$799

 

$(374)

 

$24,020

 

$4,912

 

$14,856

 

(a)

Same store portfolio consists of 54 properties, which represent 14,748 units.

 

17

 


SAME-STORE PORTFOLIO NET OPERATING INCOME BY MARKET

THREE MONTHS ENDED JUNE 30, 2020

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

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

Atlanta, GA

 

5

 

1,796

 

$6,391

 

$6,224

 

2.7%

 

$2,292

 

$2,246

 

2.0%

 

$4,099

 

$3,978

 

3.0%

 

94.3%

 

94.9%

 

-0.6%

 

$1,219

 

$1,157

 

5.4%

Raleigh - Durham, NC

 

5

 

1,372

 

5,041

 

4,937

 

2.1%

 

1,667

 

1,866

 

-10.7%

 

3,374

 

3,071

 

9.9%

 

93.9%

 

95.1%

 

-1.2%

 

1,209

 

1,166

 

3.7%

Louisville, KY

 

6

 

1,710

 

5,100

 

5,149

 

-1.0%

 

2,151

 

1,995

 

7.8%

 

2,949

 

3,154

 

-6.5%

 

88.4%

 

91.7%

 

-3.3%

 

1,022

 

986

 

3.6%

Memphis, TN

 

4

 

1,383

 

4,681

 

4,623

 

1.3%

 

1,727

 

1,739

 

-0.7%

 

2,954

 

2,884

 

2.4%

 

89.5%

 

92.9%

 

-3.4%

 

1,163

 

1,116

 

4.2%

Columbus, OH

 

6

 

1,547

 

4,749

 

4,545

 

4.5%

 

2,367

 

1,936

 

22.3%

(a)

2,382

 

2,609

 

-8.7%

 

93.2%

 

92.6%

 

0.6%

 

1,043

 

991

 

5.2%

Oklahoma City, OK

 

5

 

1,658

 

3,532

 

3,416

 

3.4%

 

1,429

 

1,410

 

1.3%

 

2,103

 

2,006

 

4.8%

 

96.7%

 

95.7%

 

1.0%

 

689

 

667

 

3.3%

Indianapolis, IN

 

4

 

916

 

2,977

 

2,815

 

5.8%

 

1,206

 

1,126

 

7.1%

 

1,771

 

1,689

 

4.9%

 

96.3%

 

95.9%

 

0.3%

 

1,040

 

992

 

4.8%

Tampa-St. Petersburg, FL

 

3

 

840

 

2,950

 

2,981

 

-1.0%

 

1,354

 

1,334

 

1.5%

 

1,596

 

1,647

 

-3.1%

 

89.9%

 

95.0%

 

-5.1%

 

1,253

 

1,170

 

7.1%

Dallas, TX

 

3

 

734

 

2,703

 

2,689

 

0.5%

 

1,130

 

1,139

 

-0.8%

 

1,573

 

1,550

 

1.5%

 

94.9%

 

96.2%

 

-1.4%

 

1,216

 

1,186

 

2.5%

Myrtle Beach, SC - Wilmington, NC

 

3

 

628

 

1,892

 

1,963

 

-3.6%

 

665

 

651

 

2.2%

 

1,227

 

1,312

 

-6.5%

 

91.1%

 

95.3%

 

-4.1%

 

1,034

 

1,014

 

2.1%

Charleston, SC

 

2

 

518

 

2,136

 

2,119

 

0.8%

 

976

 

1,025

 

-4.8%

 

1,160

 

1,094

 

6.0%

 

93.9%

 

95.2%

 

-1.3%

 

1,325

 

1,297

 

2.1%

Orlando, FL

 

1

 

297

 

1,255

 

1,323

 

-5.1%

 

475

 

494

 

-3.8%

 

780

 

829

 

-5.9%

 

93.6%

 

96.6%

 

-3.0%

 

1,485

 

1,466

 

1.3%

Charlotte, NC

 

1

 

208

 

1,008

 

1,035

 

-2.6%

 

347

 

358

 

-3.1%

 

661

 

677

 

-2.4%

 

92.8%

 

96.9%

 

-4.1%

 

1,537

 

1,549

 

-0.8%

Asheville, NC

 

1

 

252

 

869

 

869

 

0.0%

 

279

 

286

 

-2.4%

 

590

 

583

 

1.2%

 

96.1%

 

97.4%

 

-1.3%

 

1,144

 

1,128

 

1.5%

Chattanooga, TN

 

2

 

295

 

913

 

868

 

5.2%

 

426

 

419

 

1.7%

 

487

 

449

 

8.5%

 

97.3%

 

96.0%

 

1.3%

 

998

 

973

 

2.6%

St. Louis, MO

 

1

 

152

 

723

 

682

 

6.0%

 

249

 

246

 

1.2%

 

474

 

436

 

8.7%

 

96.3%

 

92.8%

 

3.5%

 

1,457

 

1,470

 

-0.8%

Huntsville, AL

 

1

 

178

 

591

 

542

 

9.0%

 

193

 

198

 

-2.5%

 

398

 

344

 

15.7%

 

97.5%

 

98.2%

 

-0.8%

 

1,051

 

956

 

9.9%

Baton Rouge, LA

 

1

 

264

 

665

 

609

 

9.2%

 

280

 

306

 

-8.5%

 

385

 

303

 

27.1%

 

84.3%

 

79.2%

 

5.0%

 

922

 

893

 

3.3%

Total/Weighted Average

 

54

 

14,748

 

$48,176

 

$47,389

 

1.7%

 

$19,213

 

$18,774

 

2.3%

 

$28,963

 

$28,615

 

1.2%

 

93.0%

 

94.2%

 

-1.2%

 

$1,098

 

$1,056

 

3.9%

 

 

(a)

Increase in Columbus, OH property operating expenses is due to non-controllable property tax and insurance costs


18

 


 

SAME-STORE PORTFOLIO NET OPERATING INCOME BY MARKET

SIX MONTHS ENDED JUNE 30, 2020

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

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

Atlanta, GA

 

5

 

1,796

 

$12,860

 

$12,261

 

4.9%

 

$4,510

 

$4,430

 

1.8%

 

$8,350

 

$7,831

 

6.6%

 

94.1%

 

94.6%

 

-0.5%

 

$1,215

 

$1,146

 

6.0%

Raleigh - Durham, NC

 

5

 

1,372

 

10,034

 

9,590

 

4.6%

 

3,451

 

3,628

 

-4.9%

 

6,583

 

5,962

 

10.4%

 

93.8%

 

93.3%

 

0.4%

 

1,204

 

1,153

 

4.4%

Louisville, KY

 

6

 

1,710

 

10,244

 

10,043

 

2.0%

 

4,241

 

3,984

 

6.5%

 

6,003

 

6,059

 

-0.9%

 

89.0%

 

90.3%

 

-1.3%

 

1,016

 

982

 

3.5%

Memphis, TN

 

4

 

1,383

 

9,156

 

9,091

 

0.7%

 

3,503

 

3,414

 

2.6%

 

5,653

 

5,677

 

-0.4%

 

89.0%

 

92.6%

 

-3.6%

 

1,157

 

1,100

 

5.2%

Columbus, OH

 

6

 

1,547

 

9,457

 

8,928

 

5.9%

 

4,371

 

3,859

 

13.3%

 

5,086

 

5,069

 

0.3%

 

93.1%

 

92.2%

 

0.8%

 

1,037

 

982

 

5.6%

Oklahoma City, OK

 

5

 

1,658

 

7,023

 

6,748

 

4.1%

 

2,810

 

2,748

 

2.3%

 

4,213

 

4,000

 

5.3%

 

96.2%

 

95.2%

 

1.0%

 

685

 

663

 

3.2%

Indianapolis, IN

 

4

 

916

 

5,851

 

5,513

 

6.1%

 

2,340

 

2,339

 

0.0%

 

3,511

 

3,174

 

10.6%

 

95.2%

 

94.7%

 

0.4%

 

1,035

 

986

 

4.9%

Tampa-St. Petersburg, FL

 

3

 

840

 

5,860

 

5,908

 

-0.8%

 

2,543

 

2,615

 

-2.8%

 

3,317

 

3,293

 

0.7%

 

88.8%

 

94.7%

 

-5.9%

 

1,244

 

1,164

 

6.8%

Dallas, TX

 

3

 

734

 

5,380

 

5,351

 

0.5%

 

2,245

 

2,280

 

-1.5%

 

3,135

 

3,071

 

2.1%

 

95.4%

 

96.4%

 

-1.0%

 

1,209

 

1,182

 

2.2%

Myrtle Beach, SC - Wilmington, NC

 

3

 

628

 

3,756

 

3,793

 

-1.0%

 

1,291

 

1,264

 

2.1%

 

2,465

 

2,529

 

-2.5%

 

90.5%

 

94.1%

 

-3.6%

 

1,036

 

991

 

4.5%

Charleston, SC

 

2

 

518

 

4,270

 

4,142

 

3.1%

 

1,891

 

1,911

 

-1.0%

 

2,379

 

2,231

 

6.6%

 

94.2%

 

94.5%

 

-0.2%

 

1,320

 

1,280

 

3.2%

Orlando, FL

 

1

 

297

 

2,612

 

2,632

 

-0.8%

 

964

 

952

 

1.3%

 

1,648

 

1,680

 

-1.9%

 

94.9%

 

97.0%

 

-2.1%

 

1,491

 

1,457

 

2.3%

Charlotte, NC

 

1

 

208

 

2,076

 

2,011

 

3.2%

 

675

 

717

 

-5.9%

 

1,401

 

1,294

 

8.3%

 

95.5%

 

95.2%

 

0.3%

 

1,550

 

1,530

 

1.4%

Asheville, NC

 

1

 

252

 

1,751

 

1,724

 

1.6%

 

542

 

539

 

0.6%

 

1,209

 

1,185

 

2.0%

 

96.0%

 

97.1%

 

-1.1%

 

1,151

 

1,121

 

2.7%

Chattanooga, TN

 

2

 

295

 

1,827

 

1,725

 

5.9%

 

843

 

843

 

0.0%

 

984

 

882

 

11.6%

 

97.2%

 

95.1%

 

2.1%

 

996

 

970

 

2.6%

St. Louis, MO

 

1

 

152

 

1,434

 

1,405

 

2.1%

 

496

 

500

 

-0.8%

 

938

 

905

 

3.6%

 

96.9%

 

94.3%

 

2.6%

 

1,462

 

1,452

 

0.7%

Huntsville, AL

 

1

 

178

 

1,179

 

1,077

 

9.5%

 

398

 

387

 

2.8%

 

781

 

690

 

13.2%

 

97.6%

 

97.6%

 

0.0%

 

1,030

 

944

 

9.2%

Baton Rouge, LA

 

1

 

264

 

1,299

 

1,194

 

8.8%

 

537

 

572

 

-6.1%

 

762

 

622

 

22.5%

 

83.5%

 

75.4%

 

8.1%

 

915

 

919

 

-0.4%

Total/Weighted Average

 

54

 

14,748

 

$96,069

 

$93,136

 

3.1%

 

$37,651

 

$36,982

 

1.8%

 

$58,418

 

$56,154

 

4.0%

 

92.8%

 

93.5%

 

-0.7%

 

$1,093

 

$1,047

 

4.4%

 

19

 


TOTAL PORTFOLIO NOI EXPOSURE BY MARKET

Dollars in thousands, except rent per unit

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2020

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

 

$258,038

 

95.2%

 

$1,205

 

$4,520

 

14.5%

Raleigh - Durham, NC

 

6

 

1,690

 

244,526

 

94.6%

 

1,190

 

4,029

 

13.0%

Louisville, KY

 

6

 

1,710

 

199,944

 

89.1%

 

1,022

 

2,949

 

9.5%

Memphis, TN

 

4

 

1,383

 

147,716

 

92.6%

 

1,163

 

2,953

 

9.5%

Columbus, OH

 

6

 

1,547

 

154,876

 

92.9%

 

1,043

 

2,382

 

7.7%

Tampa-St. Petersburg, FL

 

4

 

1,104

 

177,769

 

91.8%

 

1,269

 

2,152

 

6.9%

Oklahoma City, OK

 

5

 

1,658

 

79,096

 

95.1%

 

689

 

2,104

 

6.8%

Dallas, TX

 

4

 

985

 

91,589

 

95.6%

 

1,291

 

2,077

 

6.7%

Indianapolis, IN

 

4

 

916

 

139,650

 

95.2%

 

1,040

 

1,771

 

5.7%

Myrtle Beach, SC - Wilmington, NC

 

3

 

628

 

64,272

 

93.5%

 

1,034

 

1,228

 

3.9%

Charleston, SC

 

2

 

518

 

80,093

 

92.9%

 

1,325

 

1,160

 

3.7%

Orlando, FL

 

1

 

297

 

48,926

 

96.0%

 

1,485

 

781

 

2.5%

Charlotte, NC

 

1

 

208

 

42,229

 

92.8%

 

1,537

 

660

 

2.1%

Asheville, NC

 

1

 

252

 

28,803

 

97.2%

 

1,144

 

589

 

1.9%

Chattanooga, TN

 

2

 

295

 

27,533

 

97.0%

 

998

 

487

 

1.6%

St. Louis, MO

 

1

 

152

 

33,633

 

90.8%

 

1,457

 

475

 

1.5%

Huntsville, AL

 

1

 

178

 

16,515

 

96.1%

 

1,051

 

398

 

1.3%

Baton Rouge, LA

 

1

 

264

 

28,974

 

87.5%

 

922

 

386

 

1.2%

Total/Weighted Average

 

58

 

15,805

 

$1,864,182

 

93.5%

 

$1,108

 

$31,101

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

20

 


VALUE ADD SUMMARY

PROJECT LIFE TO DATE AS OF JUNE 30, 2020

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

The Village at Auburn

Raleigh-Durham, NC

88.1%

 

328

289

264

178

17.1%

14,486

2,108

16,594

14.7%

12.9%

Pointe at Canyon Ridge

Atlanta, GA

77.1%

 

494

381

374

171

17.8%

9,077

1,773

10,850

22.6%

18.9%

Haverford

Lexington, KY

81.3%

 

160

130

128

87

10.2%

5,550

798

6,347

18.8%

16.4%

Crestmont

Atlanta, GA

93.3%

 

208

194

188

148

16.0%

12,263

7,742

20,005

14.5%

8.9%

The Commons at Canal Winchester

Columbus, OH

58.0%

 

264

153

132

203

23.4%

10,662

402

11,064

22.8%

22.0%

Creekside Corners

Atlanta, GA

66.7%

 

444

296

289

176

18.7%

8,927

1,314

10,241

23.7%

20.7%

Stonebridge Crossing

Memphis, TN

69.6%

 

500

348

317

136

16.1%

9,950

1,131

11,082

16.4%

14.7%

Arbors River Oaks

Memphis, TN

63.4%

 

191

121

125

252

22.0%

9,655

561

10,215

31.4%

29.7%

Vantage at Hillsborough

Tampa, FL

42.8%

 

348

149

144

177

17.1%

14,373

2,155

16,528

14.8%

12.9%

Waterford Landing

Atlanta, GA

23.5%

 

260

61

65

169

16.7%

8,785

685

9,470

23.1%

21.4%

North Park

Atlanta, GA

19.2%

 

224

43

46

151

14.7%

8,895

268

9,163

20.3%

19.7%

Avalon Oaks

Columbus, OH

11.5%

 

235

27

39

252

28.5%

11,695

1,021

12,716

25.9%

23.8%

Schirm Farms (f)

Columbus, OH

76.1%

 

264

201

194

80

9.3%

7,749

613

8,362

12.4%

11.5%

Jamestown (f)

Louisville, KY

71.1%

 

356

253

247

280

33.8%

16,043

5,161

21,203

21.0%

15.9%

Oxmoor (f)

Louisville, KY

68.1%

 

432

294

286

190

21.1%

16,344

127

16,471

13.9%

13.8%

Lucerne (f)

Tampa, FL

40.6%

 

276

112

98

243

22.2%

14,606

634

15,240

20.0%

19.1%

Brunswick Point (f)

Wilmington, NC

69.4%

 

288

200

189

61

6.1%

6,921

56

6,977

10.5%

10.4%

Total/Weighted Average

 

 

 

5,272

3,252

3,125

$170

18.1%

$11,190

$1,775

$12,966

18.2%

15.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

On hold (e)

 

 

 

 

 

 

 

 

 

 

 

 

 

Rocky Creek

Tampa, FL

0.0%

 

264

0

0

-

0.0%

-

-

-

0.0%

0.0%

Meadows

Louisville, KY

0.0%

 

400

0

0

-

0.0%

-

-

-

0.0%

0.0%

Westmont Commons

Asheville, NC

0.0%

 

252

0

0

-

0.0%

-

-

-

0.0%

0.0%

Walnut Hill

Memphis, TN

0.0%

 

362

0

0

-

0.0%

-

-

-

0.0%

0.0%

Lenoxplace

Raleigh-Durham, NC

0.0%

 

268

0

0

-

0.0%

-

-

-

0.0%

0.0%

Thornhill

Raleigh-Durham, NC

0.0%

 

318

0

0

-

0.0%

-

-

-

0.0%

0.0%

Total/Weighted Average

 

 

 

1,864

0

0

$-

0.0%

$-

$-

$-

0.0%

0.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grand Total/Weighted Average

 

 

 

7,136

3,252

3,125

$170

18.1%

$11,190

$1,775

$12,966

18.2%

15.7%

 

 

(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)

Renovations at these properties have been delayed as we evaluate market conditions amid the COVID-19 pandemic.

 

(f)

Renovations at these properties were paused in March 2020, but were restarted in June and July 2020.

 

 

21

 


 

CAPITAL RECYCLING

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions to Date 2020

 

Market

 

Units

 

Acquisition Date

 

Contract Price

 

Price per Unit

 

Average Rent Per Unit

The Adley at Craig Ranch

 

Dallas, TX

 

251

 

February 11, 2020

 

$51,204

 

$204

 

$1,552

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

251

 

 

 

$51,204

 

$204

 

$1,552

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22

 


DEBT SUMMARY AS OF JUNE 30, 2020

Dollars in thousands

 

 

Amount

 

Weighted Average Rate (c)

 

Type

 

Weighted

Average

Maturity

(in years)

 

Debt:

 

 

 

 

 

 

 

 

 

Unsecured credit facility (a)

 

$212,802

 

1.6%

 

Floating

 

2.9

 

Unsecured term loans (b)

 

300,000

 

1.5%

 

Floating

 

3.8

 

Mortgages

 

501,041

 

3.9%

 

Fixed

 

3.5

 

Unamortized deferred financing costs

 

(4,932)

 

 

 

 

 

 

 

Total Debt

 

1,008,911

 

2.7%

 

 

 

3.5

 

Market Equity Capitalization, at period end

 

1,093,822

 

 

 

 

 

 

 

Total Capitalization

 

$2,102,733

 

 

 

 

 

 

 

 

 

(a)

Credit facility total capacity is $350,000, comprised entirely of an unsecured revolving line of credit, of which $212,802 was drawn as of June 30, 2020. 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 and a $100,000 unsecured term loan with a maturity date of November 20, 2024.

 

(c)

Represents the weighted average of the contractual interest rates in effect as of quarter-end without regard to any interest rate swaps or collars. The effective interest rate during 2Q 2020 on our floating rate debt, after giving effect to the impact of interest rate swaps and collars, was 3.2%.

 

    

 

(d)

As of June 30, 2020, we maintained a float-to-fixed interest swap with a $150,000 notional amount. This swap, which expires on June 17, 2021 and has a fixed rate of 1.1325%, has converted $150,000 of floating rate debt to fixed rate debt. We also maintain: (1) an interest rate collar with a $100,000 notional amount, which expires on November 20, 2024, has a floor of 1.25% and a cap of 2.00%, and (2) an interest rate collar with a $150,000 notional amount, which expires on January 17, 2024, has a floor of 2.25% and a cap of 2.50%. These collars have converted $250,000 of floating rate debt to fixed rate debt when LIBOR is above the cap rate or below the floor rate.  

 

(e)

Debt maturity schedule reflects the July 2020 refinance of $32.2 million of property level debt using our unsecured revolving line of credit.


23

 


 

DEBT COVENANT AND UNENCUMBERED ASSET STATS AS OF JUNE 30, 2020

Dollars in thousands

 

Debt Covenant Summary (a)

Requirement

Actual

Compliance

Consolidated leverage ratio

60%

47.8%

Yes

Consolidated fixed charge coverage ratio

1.5x

2.2x

Yes

Unsecured leverage ratio

60%

46.2%

Yes

Unencumbered asset debt service ratio

1.3x

1.8x

Yes

 

Encumbered & Unencumbered Statistics

 

 

Total Units

 

% of Total

 

Gross Assets

 

% of Total

 

Q2 2020 NOI

 

% of Total

   Unencumbered assets

 

 

9,087

 

57.5%

 

$1,062,901

 

55.5%

 

$16,872

 

54.2%

   Encumbered assets

 

 

6,718

 

42.5%

 

853,523

 

44.5%

 

14,241

 

45.8%

 

 

 

15,805

 

100.0%

 

$1,916,424

 

100.0%

 

$31,113

 

100.0%

 

(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 exhibits 10.20, 10.6, and 10.15 of our 2019 Form 10-K.

24

 


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

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. EBITDA and Adjusted EBITDA are each non-GAAP measures.  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 IRT in particular. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, as net income or loss (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.

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 stock compensation expense, depreciation and amortization of other items not included in FFO, amortization of deferred financing costs, and other non-cash or non-operating gains or losses related to items such as casualty losses and abandoned deal costs.

Our calculation of CFFO differs from the methodology used for calculating CFFO by certain 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 believes they are also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash or non-operating items that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare 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 provide investors with additional useful measures 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. Neither FFO nor CFFO should be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

Interest Coverage

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

 

25

 


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

 

June 30,

2020

 

March 31,

2020

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

Total debt

$1,008,911

 

$1,049,541

 

$985,572

 

$979,330

 

$989,499

Less: cash and cash equivalents

(11,652)

 

(57,436)

 

(9,888)

 

(6,587)

 

(11,060)

Total net debt

$997,259

 

$992,105

 

$975,684

 

$972,743

 

$978,439

 

 

 

 

 

 

 

 

 

 

Net Operating Income

We believe that Net Operating Income (“NOI”), a non-GAAP financial measure, is a useful supplemental measure of its operating performance. We define NOI as total property revenues less total property operating expenses, excluding interest expenses, depreciation and amortization, property management expenses, and general and administrative expenses. 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 insofar as the measure reflects only operating income and expense at the property level. We use NOI to evaluate performance on a same store and non-same store basis because NOI measures the core operations of property performance by excluding corporate level expenses, financing 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

 

June 30,

2020

 

March 31,

2020

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

Total assets

$1,708,912

 

$1,757,138

 

$1,664,106

 

$1,653,017

 

$1,655,747

Plus: accumulated depreciation

187,758

 

172,789

 

158,435

 

148,924

 

141,965

Plus: accumulated amortization

19,754

 

19,567

 

19,197

 

19,232

 

19,495

Total gross assets

$1,916,424

 

$1,949,494

 

$1,841,738

 

$1,821,173

 

$1,817,207

 

26

 

v3.20.2
Document and Entity Information
Jul. 29, 2020
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Entity Registrant Name Independence Realty Trust, Inc.
Entity Central Index Key 0001466085
Document Period End Date Jul. 29, 2020
Entity Incorporation, State or Country Code MD
Entity Emerging Growth Company false
Entity File Number 001-36041
Entity Tax Identification Number 26-4567130
Entity Address, Address Line One 1835 Market Street,
Entity Address, Address Line Two Suite 2601
Entity Address, City or Town Philadelphia
Entity Address, State or Province PA
Entity Address, Postal Zip Code 19103
City Area Code (267)
Local Phone Number 270-4800
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of each class Common stock
Trading Symbol IRT
Name of each exchange on which registered NYSE