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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended September 30, 2020

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

For the transition period from                      to                     

Commission file number 001-36041

 

INDEPENDENCE REALTY TRUST, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Maryland

26-4567130

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

 

 

1835 Market Street, Suite 2601

Philadelphia, PA

19103

(Address of Principal Executive Offices)

(Zip Code)

(267) 270-4800

(Registrant’s Telephone Number, Including Area Code)

N/A

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

 

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

 

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common stock

 

IRT

 

NYSE

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

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

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

 

Large Accelerated filer

Accelerated filer

 

 

 

 

 

 

Non-Accelerated filer

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

 

 

 

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

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

As of October 26, 2020 there were 94,840,052 shares of the Registrant’s common stock issued and outstanding.

 

 

 


INDEPENDENCE REALTY TRUST, INC.

INDEX

 

 

 

 

 

Page

 

 

 

 

 

PART I—FINANCIAL INFORMATION

 

3

 

 

 

 

 

Item 1.

 

Financial Statements (unaudited)

 

3

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2020 and September 30, 2019

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months ended September 30, 2020 and September 30, 2019

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months ended September 30, 2020 and September 30, 2019

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2020 and September 30, 2019

 

8

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements as of September 30, 2020

 

9

 

 

 

 

 

Item 2.

 

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

 

19

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

30

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

30

 

 

 

 

 

PART II—OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

30

 

 

 

 

 

Item 1A.

 

Risk Factors

 

30

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

31

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

31

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

31

 

 

 

 

 

Item 5.

 

Other Information

 

31

 

 

 

 

 

Item 6.

 

Exhibits

 

31

 

 

 

 

 

Signatures

 

32

 

 

 


PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

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

 

 

 

As of

September 30, 2020

 

 

As of

December 31, 2019

 

ASSETS:

 

 

 

 

 

 

 

 

Investments in real estate:

 

 

 

 

 

 

 

 

Investments in real estate, at cost

 

$

1,815,754

 

 

$

1,796,365

 

Accumulated depreciation

 

 

(194,644

)

 

 

(158,435

)

Investments in real estate, net

 

 

1,621,110

 

 

 

1,637,930

 

Real estate held for sale

 

 

49,264

 

 

 

 

Cash and cash equivalents

 

 

9,891

 

 

 

9,888

 

Restricted cash

 

 

7,218

 

 

 

4,545

 

Other assets

 

 

12,945

 

 

 

10,380

 

Derivative assets

 

 

 

 

 

953

 

Intangible assets, net of accumulated amortization of 0 and $540, respectively

 

 

 

 

 

410

 

Total Assets

 

$

1,700,428

 

 

$

1,664,106

 

LIABILITIES AND EQUITY:

 

 

 

 

 

 

 

 

Indebtedness, net of unamortized deferred financing costs of $4,571 and $5,606, respectively

 

$

1,004,237

 

 

$

985,572

 

Accounts payable and accrued expenses

 

 

34,319

 

 

 

25,399

 

Accrued interest payable

 

 

1,888

 

 

 

2,196

 

Dividends payable

 

 

11,449

 

 

 

16,491

 

Derivative liabilities

 

 

33,453

 

 

 

7,769

 

Other liabilities

 

 

6,736

 

 

 

6,922

 

Total Liabilities

 

 

1,092,082

 

 

 

1,044,349

 

Equity:

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Common stock, $0.01 par value; 300,000,000 shares authorized, 94,823,806 and 91,070,637 shares issued and outstanding, including 331,671 and 326,541 unvested restricted common share awards, respectively

 

 

948

 

 

 

911

 

Additional paid-in capital

 

 

820,105

 

 

 

765,992

 

Accumulated other comprehensive income (loss)

 

 

(37,688

)

 

 

(12,099

)

Retained earnings (accumulated deficit)

 

 

(179,834

)

 

 

(141,525

)

Total stockholders’ equity

 

 

603,531

 

 

 

613,279

 

Noncontrolling interests

 

 

4,815

 

 

 

6,478

 

Total Equity

 

 

608,346

 

 

 

619,757

 

Total Liabilities and Equity

 

$

1,700,428

 

 

$

1,664,106

 

 

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

 

 

3


Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

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

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental and other property revenue

 

$

54,001

 

 

$

51,057

 

 

$

157,244

 

 

$

151,370

 

Other revenue

 

 

199

 

 

 

242

 

 

 

574

 

 

 

425

 

Total revenue

 

 

54,200

 

 

 

51,299

 

 

 

157,818

 

 

 

151,795

 

EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

 

22,129

 

 

 

20,546

 

 

 

62,840

 

 

 

60,504

 

Property management expenses

 

 

2,078

 

 

 

1,901

 

 

 

6,311

 

 

 

5,776

 

General and administrative expenses

 

 

2,912

 

 

 

3,113

 

 

 

11,862

 

 

 

9,758

 

Depreciation and amortization expense

 

 

15,232

 

 

 

13,434

 

 

 

45,291

 

 

 

38,602

 

Abandoned deal costs

 

 

 

 

 

 

 

 

130

 

 

 

 

Casualty losses

 

 

 

 

 

 

 

 

411

 

 

 

 

Total expenses

 

 

42,351

 

 

 

38,994

 

 

 

126,845

 

 

 

114,640

 

Interest expense

 

 

(8,917

)

 

 

(9,783

)

 

 

(27,616

)

 

 

(29,353

)

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

 

 

(1,840

)

 

 

2,390

 

 

 

(1,840

)

 

 

14,532

 

Net income:

 

 

1,092

 

 

 

4,912

 

 

 

1,517

 

 

 

22,334

 

Income allocated to noncontrolling interest

 

 

(2

)

 

 

(49

)

 

 

(10

)

 

 

(222

)

Net income allocable to common shares

 

$

1,090

 

 

$

4,863

 

 

$

1,507

 

 

$

22,112

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.01

 

 

$

0.05

 

 

0.02

 

 

$

0.25

 

Diluted

 

$

0.01

 

 

$

0.05

 

 

0.02

 

 

$

0.25

 

Weighted-average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

94,456,987

 

 

 

90,027,540

 

 

 

93,261,757

 

 

 

89,513,834

 

Diluted

 

 

95,222,623

 

 

 

90,691,368

 

 

 

94,099,091

 

 

 

90,234,840

 

 

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

 

 

 

4


Independence Realty Trust, Inc. and Subsidiaries

 

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited and dollars in thousands)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income

 

$

1,092

 

 

$

4,912

 

 

$

1,517

 

 

$

22,334

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of interest rate hedges

 

 

3,225

 

 

 

(5,633

)

 

 

(22,170

)

 

 

(20,583

)

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

 

 

(1,752

)

 

 

251

 

 

 

(3,575

)

 

 

1,277

 

Total other comprehensive income (loss)

 

 

1,473

 

 

 

(5,382

)

 

 

(25,745

)

 

 

(19,306

)

Comprehensive income (loss) before allocation to noncontrolling interests

 

 

2,565

 

 

 

(470

)

 

 

(24,228

)

 

 

3,028

 

Allocation to noncontrolling interests

 

 

(64

)

 

 

5

 

 

 

146

 

 

 

(29

)

Comprehensive income (loss)

 

$

2,501

 

 

$

(465

)

 

$

(24,082

)

 

$

2,999

 

 

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

 

 

5


Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

(Unaudited and dollars in thousands, except share information)

 

 

 

Common

Shares

 

 

Par

Value

Common

Shares

 

 

Additional

Paid In

Capital

 

 

Accumulated Other Comprehensive Income (loss)

 

 

Retained

Earnings

(Deficit)

 

 

Total

Stockholders’

Equity

 

 

Noncontrolling

Interests

 

 

Total

Equity

 

Balance, December 31, 2019

 

 

91,070,637

 

 

$

911

 

 

$

765,992

 

 

$

(12,099

)

 

$

(141,525

)

 

$

613,279

 

 

$

6,478

 

 

$

619,757

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(372

)

 

 

(372

)

 

 

(2

)

 

 

(374

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

(23,651

)

 

 

 

 

 

(23,651

)

 

 

(189

)

 

 

(23,840

)

Stock compensation expense

 

 

183,940

 

 

 

2

 

 

 

2,642

 

 

 

 

 

 

 

 

 

2,644

 

 

 

 

 

 

2,644

 

Issuance of common shares, net

 

 

3,406,000

 

 

 

35

 

 

 

49,729

 

 

 

 

 

 

 

 

 

49,764

 

 

 

 

 

 

49,764

 

Repurchase of shares related to equity award tax withholding

 

 

(51,128

)

 

 

(1

)

 

 

(1,489

)

 

 

 

 

 

 

 

 

(1,490

)

 

 

 

 

 

(1,490

)

Conversion of noncontrolling interest to common shares

 

 

82,357

 

 

 

 

 

 

627

 

 

 

 

 

 

 

 

 

627

 

 

 

(627

)

 

 

 

Common dividends declared ($0.18 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,148

)

 

 

(17,148

)

 

 

 

 

 

(17,148

)

Distribution to noncontrolling interest declared ($0.18 per unit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(142

)

 

 

(142

)

Balance, March 31, 2020

 

 

94,691,806

 

 

$

947

 

 

$

817,501

 

 

$

(35,750

)

 

$

(159,045

)

 

$

623,653

 

 

$

5,518

 

 

$

629,171

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

789

 

 

 

789

 

 

 

10

 

 

 

799

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

(3,349

)

 

 

 

 

 

(3,349

)

 

 

(29

)

 

 

(3,378

)

Stock compensation expense

 

 

49,340

 

 

 

 

 

 

1,250

 

 

 

 

 

 

 

 

 

1,250

 

 

 

 

 

 

1,250

 

Issuance of common shares, net

 

 

 

 

 

 

 

 

(32

)

 

 

 

 

 

 

 

 

(32

)

 

 

 

 

 

(32

)

Common dividends declared ($0.12 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,329

)

 

 

(11,329

)

 

 

 

 

 

(11,329

)

Distribution to noncontrolling interest declared ($0.12 per unit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(95

)

 

 

(95

)

Balance, June 30, 2020

 

 

94,741,146

 

 

$

947

 

 

$

818,719

 

 

$

(39,099

)

 

$

(169,585

)

 

$

610,982

 

 

$

5,404

 

 

$

616,386

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,090

 

 

 

1,090

 

 

 

2

 

 

 

1,092

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

1,411

 

 

 

 

 

 

1,411

 

 

 

62

 

 

 

1,473

 

Stock compensation expense

 

 

(4,488

)

 

 

 

 

 

920

 

 

 

 

 

 

 

 

 

920

 

 

 

 

 

 

920

 

Issuance of common shares, net

 

 

 

 

 

 

 

 

(102

)

 

 

 

 

 

 

 

 

(102

)

 

 

 

 

 

(102

)

Conversion of noncontrolling interest to common shares

 

 

87,148

 

 

 

1

 

 

 

568

 

 

 

 

 

 

 

 

 

569

 

 

 

(569

)

 

 

 

Common dividends declared ($0.12 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,339

)

 

 

(11,339

)

 

 

 

 

 

(11,339

)

Distribution to noncontrolling interest declared ($0.12 per unit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(84

)

 

 

(84

)

Balance, September 30, 2020

 

 

94,823,806

 

 

$

948

 

 

$

820,105

 

 

$

(37,688

)

 

$

(179,834

)

 

$

603,531

 

 

$

4,815

 

 

$

608,346

 

 

6


 

 

Common

Shares

 

 

Par

Value

Common

Shares

 

 

Additional

Paid In

Capital

 

 

Accumulated Other Comprehensive Income (loss)

 

 

Retained

Earnings

(Deficit)

 

 

Total

Stockholders’

Equity

 

 

Noncontrolling

Interests

 

 

Total

Equity

 

Balance, December 31, 2018

 

 

89,184,443

 

 

$

892

 

 

$

742,429

 

 

$

2,016

 

 

$

(122,342

)

 

$

622,995

 

 

$

7,050

 

 

$

630,045

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,540

 

 

 

2,540

 

 

 

26

 

 

 

2,566

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

(4,324

)

 

 

 

 

 

(4,324

)

 

 

(44

)

 

 

(4,368

)

Stock compensation expense

 

 

189,986

 

 

 

1

 

 

 

633

 

 

 

 

 

 

 

 

 

634

 

 

 

 

 

 

634

 

Issuance of common shares, net