Independence Realty Trust, Inc. (“IRT”) (NYSE: IRT), a
multifamily apartment REIT, today announced its first quarter 2018
financial results.
First Quarter Highlights
- Completed the acquisition of the last
two properties in the nine-community portfolio acquisition
announced in September 2017.
- Completed the acquisition of two
communities in Columbus, OH that align with IRT’s investment
strategy.
- Commenced first phase of the value add
initiative in all five identified communities and on target to
deliver projected returns by late 2018 and early 2019.
- Net income allocable to common shares
of $3.4 million for the quarter ended March 31, 2018 as compared to
$4.1 million for the quarter ended March 31, 2017.
- Core Funds from Operations (“CFFO”) of
$15.6 million for the quarter ended March 31, 2018 as compared to
$13.0 million for the quarter ended March 31, 2017. CFFO per share
was $0.18 for the first quarter.
- Adjusted EBITDA of $23.0 million for
the quarter ended March 31, 2018 as compared to $19.5 million for
the quarter ended March 31, 2017.
Same-Store Property Operating
Results
First Quarter 2018 Compared to First Quarter 2017(1)
Rental income 1.7% increase Total revenues 2.0% increase Property
level operating expenses 2.1% increase Net operating income (“NOI”)
2.0% increase Portfolio average occupancy 50 bps increase to 94.4%
Portfolio average rental rate 1.5% increase to $1,020 NOI Margin 10
bps decrease to 59.7%
(1) Same store portfolio for the three months ended March 31,
2018 includes 42 properties, which represent 11,677 units.
“IRT’s first quarter performance demonstrates our continued
ability to generate organic operating returns while simultaneously
bolstering our presence in core markets,” said Scott Schaeffer,
IRT’s Chairman and CEO. “Healthy fundamentals across our key
markets, combined with a proactive approach to asset management,
has supported continued accretion of same-store fundamentals.
Further, our recent acquisitions fit perfectly with our investment
thesis to own and operate in non-gateway markets with supply and
demand imbalances, while enhancing scale. Looking ahead, we remain
on track to achieve our 2018 guidance objectives. We believe our
value add initiatives and focused strategy will unlock substantial
value and position IRT for success over the long term.”
Property Acquisitions
On January 3, 2018, IRT completed the acquisition of two
communities representing the completion of the nine-property
portfolio acquisition initially announced in September 2017. In
whole, the nine-community portfolio totaled 2,352 units and was
acquired for a gross purchase price of $228.1 million. IRT assumed
$58.5 million of property level debt in association with three of
the acquired assets.
On January 4, 2018, IRT completed the acquisition of a 312-unit
community located in Columbus, OH for approximately $36.8 million.
As of March 31, 2018, the community was 93.0% occupied with average
rent of $1,079.
On February 27, 2018, IRT completed the acquisition of a
235-unit community located in Columbus, OH for approximately $23.0
million. As of March 31, 2018, the community was 99.2% occupied
with average rent of $881.
Capital Expenditures
For the three months ended March 31, 2018, recurring capital
expenditures for the total portfolio were $1.2 million, or $80 per
unit.
2018 EPS and CFFO Guidance
IRT is reiterating its 2018 full year guidance. EPS per diluted
share is projected to be in a range of $0.26 to $0.31. CFFO per
diluted share is projected to be in the range of $0.74 to $0.79. A
reconciliation of IRT's projected net income allocable to common
shares to its projected CFFO per share, a non-GAAP financial
measure, is included below. Also included below are the primary
assumptions underlying this estimate. See the statements and
definitions at the end of this release for further information
regarding how IRT calculates CFFO and for management’s definition
and rationale for the usefulness of CFFO.
2018 Full Year EPS and CFFO Guidance (1)
Low High Net income
allocable to common shares $ 0.26 $ 0.31 Earnings per share $ 0.26
$ 0.31
2018 EPS and CFFO Guidance
Net income allocable to common shares $ 0.26 $ 0.31
Adjustments: Depreciation and amortization
0.43 0.43 Share base compensation 0.03 0.03
Amortization of deferred financing fees 0.02 0.02
CORE FFO per share allocated to common shareholders $ 0.74 $ 0.79
(1) This guidance, including the underlying assumptions,
constitutes forward-looking information. Actual full year 2018 EPS
and CFFO could vary significantly from the projections presented.
See “Forward-Looking Statements” below. Our estimate is based on
the following key operating assumptions for IRT’s 2018
performance:
Same Store Communities 2018 Outlook Number of
properties/units 42 properties /11,677 units Property revenue
growth 3.0% to 4.0% Controllable property operating expense growth
1.6% to 2.0% Real estate tax and insurance expense increase 4.6% to
5.6% Total real estate operating expense growth 2.5% to 3.5%
Property NOI growth 3.0% to 4.0%
Corporate
Expenses General and administrative expenses
(excluding stock based compensation)
$8.0 to $9.0 million
Capital Expenditures
Recurring $7.8 to $8.8 million Value add & non-recurring
$32 to $40 million
Distributions
On March 13, 2018, IRT’s Board of Directors declared a quarterly
cash dividend for the first quarter of 2018 of $0.18 per share of
IRT common stock, payable on April 20, 2018 to stockholders of
record April 4, 2018.
The inaugural quarterly distribution completes IRT’s previously
announced transition to a quarterly distribution of cash
dividends.
Selected Financial Information
See the schedules at the end of 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: FFO, CFFO, Adjusted EBITDA and NOI. Included at the end of
this release is a reconciliation of IRT’s reported net income to
its FFO and CFFO, a reconciliation of IRT’s same store NOI to its
reported net income, a reconciliation of IRT’s Adjusted EBITDA to
net income, and management’s respective definitions and rationales
for the usefulness of each of these non-GAAP financial measures and
other definitions used in this release.
Conference Call
All interested parties can listen to the live conference call
webcast at 9:30 AM ET on Wednesday, April 25, 2018 from the
investor relations section of the IRT website at www.irtliving.com
or by dialing 1.844.775.2542, access code 9668145. 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
Wednesday, May 2, 2018 by dialing 1.855.859.2056, access code
9668145.
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.irtliving.com, through the
"Investor Relations" section.
About Independence Realty Trust, Inc.
Independence Realty Trust (NYSE: IRT) is a real estate
investment trust that owns and operates 56 multifamily apartment
properties, totaling 15,280 units, 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 of capital through distributions and capital
appreciation.
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,” “will,” “expect,” “intend,” “anticipate,” “estimate,”
“believe,” “seek,” “outlook,” “assumption,” “projected,”
“strategy”, “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. Some of the factors which may
cause the Company’s actual results or performance to differ
materially from those contemplated by forward-looking statements
include, but are not limited to, the assumptions underlying IRT’s
2018 EPS and CFFO guidance; changes in financial markets and
interest rates, or to the business or financial condition of IRT;
changes in market demand for rental apartment homes and competitive
pricing from projected apartment industry dynamics, demographic and
employment information; IRT’s maintenance of real estate investment
trust (“REIT”) status; availability of financing and capital; risks
associated with pursuing additional strategic acquisitions,
including risks associated with the need to raise additional
capital to fund the acquisitions; and those additional risks and
factors discussed in reports filed with the Securities and Exchange
Commission (“SEC”) by IRT from time to time, including those
discussed under the heading “Risk Factors” in IRT’s most recently
filed reports on Forms 10-K and 10-Q. Dividends are subject to the
discretion of IRT’s Board of Directors, and will depend on IRT’s
financial condition, results of operations, capital requirements,
compliance with applicable laws and agreements and any other
factors deemed relevant by IRT’s Board. 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)
For the Three Months Ended March 31,
2018
December 31,
2017
September 30,
2017
June 30,
2017
March 31,
2017
Selected Financial Information: Operating Statistics:
Net income available to common shares $ 3,412 $ 6,293 $ 1,097 $
18,739 $ 4,077 Earnings (loss) per share -- diluted $ 0.04 $ 0.08 $
0.02 $ 0.27 $ 0.06 Total property revenue $ 45,616 $ 42,307 $
39,864 $ 39,431 $ 38,895 Total property operating expenses $ 18,418
$ 16,610 $ 16,196 $ 15,918 $ 15,992 Net operating income $ 27,198 $
25,697 $ 23,668 $ 23,513 $ 22,903 NOI margin 59.6 % 60.7 % 59.4 %
59.6 % 58.9 % Adjusted EBITDA $ 23,012 $ 21,743 $ 20,220 $ 19,493 $
19,512 FFO per share $ 0.17 $ 0.14 $ 0.13 $ 0.12 $ 0.17 CORE FFO
per share $ 0.18 $ 0.18 $ 0.19 $ 0.19 $ 0.18 Dividends per share $
0.18 $ 0.18 $ 0.18 $ 0.18 $ 0.18 CORE FFO payout ratio 100.0 %
100.0 % 94.7 % 94.7 % 100.0 %
Portfolio Data: Total gross
assets $ 1,689,689 $ 1,551,238 $ 1,497,546 $ 1,400,864 $ 1,390,589
Total number of properties 56 52 50 46 47 Total units 15,280 14,017
13,729 12,812 13,198 Period end occupancy 93.5 % 94.0 % 94.8 % 94.5
% 94.7 % Total portfolio average occupancy 93.7 % 94.1 % 94.7 %
94.9 % 93.8 % Total portfolio average effective monthly rent, per
unit $ 1,004 $ 1,003 $ 1,002 $ 1,008 $ 976
Same store period end occupancy (a)
94.2 % 94.9 % 94.9 % 94.6 % 94.8 %
Same store portfolio average occupancy
(a)
94.4 % 94.7 % 94.7 % 95.0 % 93.9 %
Same store portfolio average effective
monthly rent,
per unit (a)
$ 1,020 $ 1,018 $ 1,018 $ 1,012 $ 1,005
Capitalization:
Total debt $ 903,286 $ 778,442 $ 731,625 $ 764,521 $ 765,695 Common
share price, period end $ 9.18 $ 10.09 $ 10.17 $ 9.87 $ 9.37 Market
equity capitalization $ 806,671 $ 885,094 $ 880,257 $ 712,413 $
674,591 Total market capitalization $ 1,709,957 $ 1,663,536 $
1,611,882 $ 1,476,934 $ 1,440,286 Total debt/total gross assets (b)
53.5 % 50.2 % 48.9 % 54.6 % 55.1 % Net debt to adjusted EBITDA (b)
9.7 x 8.8 x 8.9 x 9.7 x 9.7 x Interest coverage (b) 2.8 x 3.0 x 2.9
x 2.7 x 2.6 x
Common shares and OP Units: Shares outstanding
86,973,397 84,708,551 83,518,603 69,143,955 69,125,681 OP units
outstanding 899,215 3,011,351 3,035,654
3,035,654 2,869,050 Common shares and OP units outstanding
87,872,612 87,719,902 86,554,257 72,179,609 71,994,731 Weighted
average common shares and units 87,466,518 86,646,371 75,009,859
71,703,735 71,656,205
(a) Same store portfolio consists of 42 properties, which
represent 11,677 units.
(b) In Q3 2017, we announced the acquisition of a nine-property
portfolio and completed an equity raise aggregating $133.0 million
in gross proceeds. These transactions temporarily reduced our
leverage as the closing of the acquisitions occurred on various
dates through January 3, 2018. For the three months ended March 31,
2018, our proforma net debt to EBITDA would have been 9.4x if
adjusted for the timing of acquisitions and timing of current value
add initiatives.
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 March 31, 2018
2017 Funds From Operations (FFO): Net Income
(loss) $ 3,500 $ 4,245 Adjustments: Real estate depreciation and
amortization 11,201 7,595 Net (gains) losses on sale of assets
excluding defeasance costs - 85 Funds From Operations
$ 14,701 $ 11,925
FFO per share 0.17 0.17
Core Funds From Operations (CFFO): Funds From Operations
14,701 11,925 Adjustments: Stock compensation expense 470 388
Amortization of deferred financing costs 444 519 Acquisition and
integration expenses - 122 Other depreciation and amortization 23
12 Other expense (income) (52 ) - Core Funds From
Operations $ 15,586 $ 12,966
CFFO per share 0.18 0.18
Weighted-average shares and units outstanding 87,466,518
71,656,205
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,
2018
December 31,
2017
September 30,
2017
June 30,
2017
March 31,
2017
Reconciliation of same-store net operating income to net income
(loss) Same store $ 21,623 $ 21,924 $ 21,652 $ 21,943 $ 21,208
Non same store 5,575 3,773 2,016 1,570 1,695 Property management
income 139 140 202 130 247 Property management expenses (1,683 )
(1,696 ) (1,328 ) (1,444 ) (1,538 ) General and administrative
expenses (2,734 ) (2,398 ) (2,322 ) (2,706 ) (2,100 ) Acquisition
and integration expenses - (386 ) (569 ) (265 ) (122 ) Depreciation
and amortization expense (11,224 ) (9,912 ) (8,671 ) (8,011 )
(7,607 ) Interest expense (8,340 ) (7,129 ) (6,963 ) (7,162 )
(7,448 ) Other income (expense) 144 94 12 (12 ) (5 ) Net gains
(losses) on sale of assets — 2,952 (92 ) 16,050 (85 ) Gains
(losses) on extinguishment on debt — — — (572 ) — Acquisition
related debt extinguishment expenses — (843 )
(2,781 ) — —
Net income (loss) $ 3,500 $ 6,519
$ 1,156 $ 19,521 $ 4,245
(a) Same store portfolio consists of 42 properties, which
represent 11,677 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: March
31,
2018
December 31,
2017
September 30,
2017
June 30,
2017
March 31,
2017
Net income (loss) $ 3,500 $ 6,519 $ 1,156 $ 19,521 $ 4,245
Add-Back (Deduct): Depreciation and amortization 11,224 9,912 8,671
8,011 7,607 Interest expense 8,340 7,129 6,963 7,162 7,448 Other
(income) expense (52 ) (94 ) (12 ) 12 5 Acquisition and integration
expenses — 386 569 265 122 Net (gains) losses on sale of assets —
(2,952 ) 92 (16,050 ) 85 (Gains) losses on extinguishment of debt —
— — 572 — Acquisition related debt extinguishment expenses —
843 2,781 — —
Adjusted EBITDA $
23,012 $ 21,743 $ 20,220 $ 19,493 $ 19,512
INTEREST
COST: Interest expense $ 8,340 $ 7,129 $ 6,963 $ 7,162 $ 7,448
INTEREST COVERAGE: 2.8 x 3.0 x 2.9 x 2.7 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 of the daily physical
occupancy for the period presented.
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 acquisition and
integration expenses, asset sales, debt extinguishments and
acquisition related debt extinguishment expenses. EBITDA and
Adjusted EBITDA are each non-GAAP measures. We consider each of
EBITDA and Adjusted EBITDA to be an appropriate supplemental
measure of our 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. 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 (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, acquisition and integration expenses, and other
non-cash or non-operating gains or losses related to items such as
defeasance costs we incur when we sell a property subject to
secured debt, asset sales, debt extinguishments, and acquisition
related debt extinguishment expenses from the determination of
FFO.
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 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 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 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. 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.
Interest Coverage
Interest coverage is a ratio computed by dividing our Adjusted
EBITDA by our interest expense.
Net Debt
Net debt, a non-GAAP measure, equals total debt less cash and
cash equivalents. The following table provides a reconciliation of
total debt to net debt (Dollars in thousands).
As of March 31,
2018
December 31,
2017
September 30,
2017
June 30,
2017
March 31,
2017
Total debt $ 903,286 $ 778,442 $ 731,625 $ 764,521 $ 765,695 Less:
cash and cash equivalents (10,399 ) (9,985 )
(10,128 ) (6,271 ) (10,065 ) Total net debt $ 892,887
$ 768,457 $ 721,497 $ 758,250 $ 755,630
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 in that IRT may not always be
able to use cash to repay debt on a dollar for dollar basis.
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 interest expenses, depreciation and
amortization, acquisition expenses, 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. 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, 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
IRT reviews its 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 March 31,
2018
December 31,
2017
September 30,
2017
June 30,
2017
March 31,
2017
Total assets $ 1,577,879 $ 1,450,624 $ 1,405,212 $ 1,317,177 $
1,306,986 Plus: accumulated depreciation (a) 94,001 84,097 76,664
68,433 68,262 Plus: accumulated amortization 17,809
16,517 15,670 15,254 15,341 Total gross assets
$ 1,689,689 $ 1,551,238 $ 1,497,546 $ 1,400,864 $ 1,390,589
(a) Includes previously recognized depreciation on properties
classified as held-for-sale.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180425005517/en/
Independence Realty Trust, Inc. ContactEdelman Financial
Communications & Capital MarketsTed McHugh and Lauren Tarola,
212.277.4322IRT@edelman.com
Independence Realty (NYSE:IRT)
Historical Stock Chart
From Jun 2024 to Jul 2024
Independence Realty (NYSE:IRT)
Historical Stock Chart
From Jul 2023 to Jul 2024