Independence Realty Trust, Inc. (“IRT”) (NYSE MKT: IRT) today
announced its first quarter 2016 financial results. All per share
results are reported on a diluted basis.
Results for the Quarter
- Core Funds from Operations (“CFFO”) per
share increased 11% to $0.21 for the quarter ended March 31, 2016
from $0.19 for the quarter ended March 31, 2015.
- Earnings per share (“EPS”) was $(0.00)
for the quarter ended March 31, 2016 as compared to $(0.01) for the
quarter ended March 31, 2015.
- Earnings before interest, taxes,
depreciation and amortization and before acquisition expenses
(“Adjusted EBITDA”), increased 90.9% to $18.9 million for the
quarter ended March 31, 2016 from $9.9 million for the quarter
ended March 31, 2015.
Property Sales and Refinancing Activity
- On February 18, 2016, IRT sold a 222
unit apartment property located in Atlanta, Georgia for $18.0
million. IRT received net cash proceeds of approximately $9.7
million, after transaction costs and full repayment of the debt
underlying the property.
- On April 7, 2016, IRT sold a 162 unit
apartment property located in Denver, Colorado for $23.0 million.
IRT received net cash proceeds of approximately $11.6 million,
after transaction costs and full repayment of the debt underlying
the property.
- On March 29, 2016, IRT refinanced the
$43.9 million first mortgage on its Oklahoma City portfolio, which
had a maturity date in April 2016, with a loan made pursuant to
IRT’s secured credit facility.
Scott Schaeffer, IRT’s Chairman and CEO said, “During the
quarter, we continued executing on our previously announced
strategy of maximizing the operating performance of the portfolio
while selling non-core apartment communities to reduce leverage.
We’ve sold two communities so far this year and expect to close on
a third sale during the second quarter. We are also in the process
of refinancing three communities which are currently on our credit
facility with long-term, fixed rate mortgages.”
Same-Store Property Operating Results
First Quarter 2016 Compared
to First Quarter 2015(1)
Rental income 3.1% increase Total revenues 3.5%
increase Property level operating expenses 3.3% increase Net
operating income (“NOI”) 3.7% increase Portfolio average
occupancy 93.3%, no change Portfolio average rental rate
3.4% increase to $856
NOI Margin 0.1% increase to 53.4%
(1)
Same store portfolio for the three months
ended March 31, 2016 and 2015 consists of 28 properties with 8,277
apartment units.
Capital Expenditures
For the three months ended March 31, 2016, our recurring capital
expenditures for the total portfolio was $1.6 million, or $117 per
unit.
2016 CFFO Guidance
IRT reaffirms its estimate and underlying assumptions that 2016
full year CFFO per diluted share will be in a range of $0.82-$0.88
per common share. A reconciliation of IRT's projected net income
(loss) allocable to common shares to its projected CFFO, a non-GAAP
financial measure, is included below. Also included below are the
primary assumptions underlying this estimate. See Schedule II to
this release for further information regarding how IRT calculates
CFFO and Schedule V to this release for management’s definition and
rationale for the usefulness of CFFO.
2016 Full Year
CFFO Guidance (1)
Low High Net
income (loss) available to common shares $0.34 - $0.39
Adjustments: Depreciation and amortization 0.95 - 0.95 Gains on
asset sales (0.56) - (0.56) Share base compensation 0.02 - 0.03
Amortization of deferred financing fees 0.07 - 0.07 CORE FFO per
diluted share allocated to common shareholders $0.82 - $0.88
(1) This guidance, including the underlying assumptions,
constitutes forward-looking information. Actual full 2016 CFFO
could vary significantly from the projections presented. Our
estimate is based on the following key operating assumptions:
(a) For 2016, a same store pool of 26 properties totaling
7,755 units. For purposes of this guidance, the same store pool
reflects properties which have been or are expected to be sold
subsequent to March 31, 2016 as discussed in (e) below. (b) Same
store NOI growth of 4.5% to 5.5%, driven by revenue growth of 4% to
5% and property operating expense growth of 2% to 3%. (c) The
portfolio of properties acquired from TSRE, which is not included
in the same store pool, experiences NOI growth of 6% to 7%, driven
by revenue growth of 4% to 5% and an improved operating margin of
56%, up from 54% in 2015. The improved operating margin is driven
through reduced operating expenses for property insurance. (d) No
property acquisitions in 2016. (e)
Reflects the completion of the sale of
Cumberland Glen in February 2016 for $18 million and the sale of
Belle Creek in April 2016 for $23 million and assumes the
completion of the sale of Tresa at Arrowhead in May 2016 for $47
million. Assumes substantially all net cash proceeds from the sales
of these assets are used to repay the KeyBank interim facility.
(f) General and administrative expenses of approximately $1.25
million to $1.75 million.
Selected Financial Information
See Schedule I to this Release for selected financial
information for IRT.
Non-GAAP Financial Measures and Definitions
IRT discloses the following non-GAAP financial measures in this
release: funds from operations (“FFO”), CFFO, Adjusted EBITDA and
NOI. A reconciliation of IRT’s reported net income (loss) to
its FFO and CFFO is included as Schedule II to this release. A
reconciliation of IRT’s same store NOI to its reported net income
(loss) is included as Schedule III to this release. A
reconciliation of IRT’s Adjusted EBITDA, to net income
(loss) is included as Schedule IV to this release. See
Schedule V to this release for management’s respective definitions
and rationales for the usefulness of each of these non-GAAP
financial measures and other definitions used in this release.
Distributions
On April 14, 2016, IRT’s Board of Directors declared monthly
cash dividends for the second quarter of 2016 on IRT’s shares of
common stock in the amount of $0.06 per share per month. The
monthly dividends total $0.18 per share for the second quarter. The
month for which each dividend was declared is set forth below, with
the relevant amount per share, record date and payment date set
forth opposite the month:
Month Amount Record Date
Payment Date April 2016 $0.06 04/29/2016 05/16/2016
May 2016 $0.06 05/31/2016 06/15/2016 June 2016 $0.06 06/30/2016
07/15/2016
Conference Call
All interested parties can listen to the live conference call
webcast at 9:00 AM ET on Wednesday, May 4, 2016 from the investor
relations section of the IRT website at www.irtreit.com or by
dialing 1.877.787.3988, access code 91313256. For those who are not
available to listen to the live call, the replay will be available
shortly following the live call on IRT’s website and telephonically
until Wednesday, May 11, 2016, by dialing 855.859.2056, access code
91313256.
Supplemental Information
IRT produces 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 the Company's website, www.irtreit.com, through the
"Investor Relations" section.
About Independence Realty Trust, Inc.
Independence Realty Trust, Inc. (NYSE MKT: IRT) is a real estate
investment trust that seeks to own well-located apartment
properties in geographic submarkets that it believes support strong
occupancy and the potential for growth in rental rates. IRT seeks
to provide stockholders with attractive risk-adjusted returns, with
an emphasis on distributions and capital appreciation. IRT is
externally advised by a wholly-owned subsidiary of RAIT Financial
Trust (NYSE: RAS).
Forward-Looking Statements
This press release may contain 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
"may," “trend”, "will," "expect," "intend," "anticipate,"
"estimate," "believe," "continue," “seek,” “outlook,” “in the
process,” “assumption,” “project,” “guidance” or other similar
words. 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 IRT’s 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 IRT’s control. In addition, these forward-looking
statements are subject to assumptions with respect to future
business strategies and decisions that are subject to change. These
risks, uncertainties and contingencies include, but are not limited
to, whether IRT will be able to refinance properties currently
financed under its secured credit facility with long-term, fixed
rate mortgages; whether IRT can maintain its assumed same store
pool in 2016; whether it can achieve projected same store NOI
growth and revenue growth and limit projected property operating
expense growth; whether the TSRE portfolio of properties achieves
projected NOI growth, revenue growth, improved operating margins
and reduced operating expenses for property insurance; whether IRT
will not make any property acquisitions in 2016; whether the sale
of Tresa at Arrowhead can be completed at the expected time on the
projected terms generating the expected net cash proceeds; whether
substantially all net proceeds from such sales will be available to
be used to repay the KeyBank interim facility; whether general and
administrative expenses can be limited to projected levels; and
those disclosed in IRT’s filings with the Securities and Exchange
Commission. IRT undertakes no obligation to update these
forward-looking statements to reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated
events, except as may be required by law.
Schedule I
Independence Realty Trust, Inc.
Selected Financial Information
(Dollars in thousands, except share and
per share amounts)
(unaudited)
As of or For the Three-Month Periods Ended March
31, December 31, September 30,
June 30, March 31, 2016 2015
2015 2015 2015 Operating Statistics:
Total revenue $ 38,666 $ 39,709 $ 25,492 $ 22,718 $ 21,657 Total
property operating expenses $ 17,120 $ 17,398 $ 11,945 $ 10,517 $
10,095 Net operating income ("NOI") $ 21,546 $ 22,311 $ 13,547 $
12,201 $ 11,562 NOI margin 55.7 % 56.2 % 53.1 % 53.7 % 53.4 %
Adjusted EBITDA $ 18,924 $ 19,720 $ 11,742 $ 10,518 $ 9,851 Net
income available to common shares $ (75 ) $ 4,123 $ 24,015 $ 337 $
(233 ) Earnings (loss) per share -- diluted $ - $ 0.09 $ 0.71 $
0.01 $ (0.01 ) Funds from operations ("FFO") per share -- diluted $
0.18 $ 0.19 $ 0.86 $ 0.18 $ 0.18
Core funds from operations ("CFFO") per
share -- diluted
$ 0.21 $ 0.22 $ 0.20 $ 0.19 $ 0.19 Dividends per share $ 0.18 $
0.18 $ 0.18 $ 0.18 $ 0.18 CORE FFO payout ratio 85.7 % 81.8 % 90.0
% 94.7 % 94.7 %
Portfolio Data:
Total gross assets (total assets plus
accumulated depreciation)
$ 1,389,072 $ 1,422,826 $ 1,437,858 $ 751,355 $ 718,339 Total
number of properties 48 49 50 31 30 Total units 13,502 13,724
14,044 9,055 8,819 Average occupancy 93.5 % 93.6 % 94.0 % 93.6 %
93.5 % Average monthly effective rent, per unit $ 952 $ 947 $ 949 $
840 $ 827 Same store portfolio average occupancy
(a) 93.3 %
92.7 % 93.6 % 93.7 % 93.3 %
Same store portfolio average effective
monthly rent (a)
$ 856 $ 852 $ 846 $ 839 $ 828
Capitalization: Total debt $
940,336 $ 966,611 $ 983,207 $ 454,210 $ 419,659 Common share price,
period end $ 7.12 $ 7.51 $ 7.21 $ 7.53 $ 9.49 Market equity
capitalization $ 358,913 $ 377,194 $ 362,127 $ 249,915 $ 314,852
Total market capitalization $ 1,299,249 $ 1,343,805 $ 1,345,334 $
704,125 $ 734,511 Total debt/total gross assets 67.7 % 67.9 % 68.4
% 60.5 % 58.4 %
Net debt to adjusted EBITDA (b)
12.1 x 11.8 x 12.2 x
(c) 10.3 x 10.2 x Interest coverage 1.9
x 1.9 x 2.1 x
(c) 2.5 x 2.4 x
Common shares and OP
Units: Shares outstanding 47,458,250 47,070,678 47,070,678
31,933,218 31,894,751 OP units outstanding 2,950,816
3,154,936 3,154,936 1,255,983 1,282,450 Common
shares and OP units outstanding 50,409,066 50,225,614 50,225,614
33,189,201 33,177,201 Weighted average common shares and units
50,113,693 50,101,609 35,472,807 33,066,770 31,768,468 (a)
Same store includes 28 properties which represents 8,277 units. (b)
Net debt equals total debt less cash and cash equivalents. (c)
Annualized assuming the TSRE merger which closed September 17, 2015
occurred at the beginning of the period.
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)
Three-Months Ended March 31, 2016(a)
2015(b) Amount Amount Funds
From Operations: Net Income (loss) $ (46 ) $ (241 )
Adjustments: Real estate depreciation and amortization 11,527 6,038
Net (gains) losses on sale of assets (2,453 ) — Funds
From Operations $ 9,028 $ 5,797
FFO per share--diluted $
0.18 $ 0.18
Core Funds From Operations: Funds From
Operations $ 9,028 $ 5,797 Adjustments: Equity based compensation
205 70 Amortization of deferred financing costs 1,197 147
Acquisition and integration expenses 10 33 (Gains) losses on TSRE
merger and property acquisitions (91 ) — Core Funds
From Operations $ 10,349 $ 6,047
CFFO per share--diluted $
0.21 $ 0.19 Weighted-average shares and units outstanding
50,113,693 31,768,468 (a) Based on 50,113,693
weighted-average shares outstanding-diluted for the three-month
period ended March 31, 2016. (b) Based on 31,768,468
weighted-average shares outstanding-diluted for the three-month
period ended March 31, 2015.
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) March
31, December 31, September 30,
June 30, March 31, 2016
2015 2015 2015 2015
Reconciliation of Same-Store Net
Operating Income to Net Income (loss)
Same-store net operating income
(a) $ 11,235 $ 11,031 $
10,768 $ 11,063 $ 10,837 Non same-store net operating income 10,311
11,280 2,779 1,138 725 Asset management fees (1,696 ) (1,882 )
(1,259 ) (1,260 ) (1,212 ) General and administrative expenses (926
) (709 ) (546 ) (423 ) (499 ) Acquisition and integration expenses
(10 ) (524 ) (12,830 ) (168 ) (33 ) Depreciation and amortization
(11,527 ) (11,632 ) (4,704 ) (5,720 ) (6,038 ) Interest expense
(9,977 ) (10,160 ) (5,094 ) (4,277 ) (4,022 ) Interest income — —
18 — 1 Net gains (losses) on sale of assets 2,453 6,412 — — —
TSRE financing extinguishment and employee
separation expenses
— — (27,508 ) — —
Gains (losses) on TSRE merger and property
acquisitions
91 592 64,012 — —
Net income
(loss) $ (46 ) $ 4,408 $ 25,636 $ 353 $ (241 ) (a) Same
store portfolio includes 28 properties which represents 8,277
units.
Schedule IV
Independence Realty Trust, Inc. Reconciliation of Adjusted EBITDA,
Before Acquisition Expenses to Net Income (loss) (Dollars in
thousands) (unaudited)
Three-Months Ended March
31, 2016 2015 Net income (loss) $
(46 ) $ (241 ) Add-Back (Deduct): Depreciation and amortization
11,527 6,038 Interest expense 9,977 4,022 Interest Income — (1 )
Acquisition and integration expenses 10 33 Net (gains) losses on
sale of assets (2,453 ) —
(Gains) losses on TSRE merger and property
acquisitions
(91 ) —
Adjusted EBITDA $ 18,924 $ 9,851
For the Three-Months Ended March 31,
December 31, September 30, June
30, March 31, 2016 2015
2015 2015 2015 Net income (loss) $ (46
) $ 4,408 $ 25,636 $ 353 $ (241 ) Add-Back (Deduct): Depreciation
and amortization 11,527 11,632 4,704 5,720 6,038 Interest expense
9,977 10,160 5,094 4,277 4,022 Interest Income — — (18 ) — (1 )
Acquisition and integration expenses 10 524 12,830 168 33 Net
(gains) losses on sale of assets (2,453 ) (6,412 ) — — —
TSRE financing extinguishment and employee
separation expenses
— — 27,508 — —
(Gains) losses on TSRE merger and property
acquisitions
(91 ) (592 ) (64,012 ) — —
Adjusted EBITDA $ 18,924 $ 19,720 $ 11,742 $ 10,518 $ 9,851
Schedule VIndependence 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 of the daily physical
occupancy for the period presented.
Adjusted EBITDA
EBITDA is defined as net income before gains or losses on asset
sales, gains or losses on debt extinguishments, depreciation and
amortization expenses, interest expense, income taxes, and
amortization of deferred financing costs. Adjusted EBITDA is EBITDA
before acquisition expenses and gains. EBITDA and Adjusted EBITDA
are each non-GAAP measures. We consider EBITDA and Adjusted EBITDA
to be an appropriate supplemental measure of our performance
because it eliminates depreciation, income taxes, interest and
acquisition expenses and gains relating to IRT’s acquisition of
TSRE, which permits investors to view income from operations
without non-cash items such as depreciation, amortization, the cost
of debt or items specific to the TSRE acquisition. The table is a
reconciliation of net income applicable to common stockholders to
Adjusted EBITDA. IRT’s calculation of Adjusted EBITDA differs from
the methodology used for calculating Adjusted EBITDA by certain
other REITs and, accordingly, IRT’s Adjusted EBITDA may not be
comparable to Adjusted EBITDA reported by other REITs.
Funds From Operations (“FFO”) and Core Funds From Operations
(“CFFO”)
IRT believes that FFO and CFFO, each of which is a non-GAAP
measure, are additional appropriate measures of the operating
performance of a REIT and IRT in particular. IRT computes FFO in
accordance with the standards established by the National
Association of Real Estate Investment Trusts, or NAREIT, as net
income or loss allocated to common stock (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 acquisition and integration expenses, expensed costs
related to the issuance of shares of our common stock, gains or
losses on real estate transactions and equity-based compensation
expenses, from the determination of FFO. IRT incurs acquisition
expenses in connection with acquisitions of real estate properties
and expenses those costs when incurred in accordance with U.S.
GAAP. As these expenses are one-time and reflective of investing
activities rather than operating performance, IRT adds back these
costs to FFO in determining CFFO. In connection with the TSRE
transaction, IRT modified the calculation of CFFO to adjust for
amortization of deferred financing costs and TSRE financing
extinguishment and employee separation expenses because these are
non-cash items or reflective of investing activities rather than
operating performance similar to the other CFFO adjustments. The
effect of these modifications on prior periods is reflected in the
reconciliation of IRT’s reported net income (loss) allocable to
common shares to its FFO and CFFO included herein.
IRT’s calculation of CFFO differs from the methodology used for
calculating CFFO by certain other REITs and, accordingly, IRT’s
CFFO may not be comparable to CFFO reported by other REITs. IRT’s
management utilizes FFO and CFFO as measures of IRT’s operating
performance, and believes they are also useful to investors,
because they facilitate an understanding of IRT’s operating
performance after adjustment for certain non-cash items, such as
depreciation and amortization expenses, equity based compensation,
amortization of deferred financing costs, and acquisition expenses,
TSRE financing extinguishment and employee separation expenses,
gain on TSRE merger and property acquisitions and pursuit costs
that are required by GAAP to be expensed but may not necessarily be
indicative of current operating performance and that may not
accurately compare IRT’s operating performance between periods.
Furthermore, although FFO, CFFO and other supplemental performance
measures are defined in various ways throughout the REIT industry,
IRT also believes that FFO and CFFO may provide IRT and our
investors with an additional useful measure to compare IRT’s
financial performance to certain other REITs. IRT also uses CFFO
for purposes of determining the quarterly incentive fee, if any,
payable to our advisor. 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
IRT’s operating performance or as an alternative to cash flow from
operating activities as a measure of IRT’s liquidity.
Net Operating Income
IRT believes that Net Operating Income (“NOI”), a non-GAAP
measure, is a useful measure of its operating performance. IRT
defines NOI as total property revenues less total property
operating expenses, excluding depreciation and amortization, asset
management fees, acquisition expenses and general 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. We use NOI to evaluate our performance on a same store
and non-same store basis because NOI measures the core operations
of property performance by excluding corporate level expenses and
other items not related to property operating performance and
captures trends in rental housing and property operating expenses.
However, NOI should only be used as an alternative measure of our
financial performance.
Same Store Properties and Same Store Portfolio
IRT reviews its same store properties or 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 have been sold are excluded from the same
store portfolio.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160504005959/en/
Independence Realty Trust, Inc.Andres Viroslav,
215-207-2100aviroslav@irtreit.com
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