Independence Realty Trust, Inc. (“IRT”) (NYSE: IRT), a
multifamily apartment REIT, today announced its first quarter 2021
financial results.
First Quarter Highlights
- Net income available to common shares of $1.1 million for the
quarter ended March 31, 2021 compared to a net loss of $0.4 million
for the quarter ended March 31, 2020.
- Earnings per diluted share of $0.01 for the quarter ended March
31, 2021 compared to $0.00 for the quarter ended March 31,
2020.
- Same store net operating income (“NOI”) growth of 5.3% for the
quarter ended March 31, 2021 compared to the quarter ended March
31, 2020.
- Core Funds from Operations (“CFFO”) of $18.0 million for the
quarter ended March 31, 2021 compared to $14.6 million for the
quarter ended March 31, 2020. CFFO per share was $0.18 for the
first quarter of 2021, as compared to $0.16 for the first quarter
of 2020. To note, this reflects the adoption of our new definition
of CFFO, where we no longer exclude stock compensation expense or
amortization of deferred financing costs from our computation.
- Adjusted EBITDA of $26.4 million for the quarter ended March
31, 2021 compared to $24.1 million for the quarter ended March 31,
2020.
- Collected 98.4% of rents billed during the quarter ended March
31, 2021 and 99.2% of rents billed during the quarter ended
December 31, 2020.
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 to report a strong start to the year as vaccine
distribution is supporting accelerated re-openings across all of
our markets. For the first quarter of 2021, same store NOI
increased by 5.3%, led by our continual focus on driving occupancy
and rental rates. Our same store occupancy increased 40 basis
points since the fourth quarter of 2020, and a sizeable 260 basis
points on a year-over-year basis. Rental rates continued to move
higher, growing 5.9% over the expiring leases during the first
quarter and 4.6% during the second quarter to date. We are excited
with the start of this year and remain confident in our growth
strategy. As a result, we are raising our 2021 guidance given an
improving outlook and the growth potential of our attractive market
presence,” said Scott Schaeffer, Chairman and CEO of IRT.
Same Store Property Operating Results
First Quarter 2021 Compared
to
First Quarter 2020(1)
Rental and other property revenue
5.6% increase
Property operating expenses
6.2% increase
Net operating income (“NOI”)
5.3% increase
Portfolio average occupancy
260 bps increase to 95.3%
Portfolio average rental rate
2.9% increase to $1,129
NOI Margin
20 bps decrease to 61.5%
(1)
Same store portfolio for the three and
twelve months ended March 31, 2021 includes 54 properties, which
represent 14,995 units.
Same Store Property Operating Results, Excluding Value
Add
The same store portfolio results below exclude 18 communities
that are both part of the same store portfolio and were actively
undergoing Value Add renovations during the three months ended
March 31, 2021.
First Quarter 2021 Compared
to
First Quarter 2020(1)
Rental and other property revenue
3.1% increase
Property operating expenses
4.2% increase
Net operating income (“NOI”)
2.5% increase
Portfolio average occupancy
170 bps increase to 95.8%
Portfolio average rental rate
1.7% increase to $1,099
NOI Margin
40 bps decrease to 61.5%
(1)
Same store portfolio, excluding value add,
for the three and twelve months ended March 31, 2021 includes 36
properties, which represent 9,439 units.
COVID-19 Metrics (1)(2)
Rent collections
1Q 2021
1Q 2020
4Q 2020
Rent collected for the period presented,
as a percentage of rent billed
98.4%
99.1%
99.1%
Deferred payment plans: (3)
Number of deferred payment plans
2
-
13
Amount of monthly rent deferred for period
presented
$4
-
$61
Amount of monthly rent deferred for the
period presented, as a percentage of rent billed
0.0%
0.0%
0.1%
Combined rent collected and rent subject
to deferred payment plans, as a percentage of rent billed
98.4%
99.1%
99.2%
(1)
Dollar amounts in thousands. All metrics
presented are as of April 27, 2021 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 a portion of their monthly rent for one or more months or to
repay over time past-due rent which was unpaid due to a
COVID-related financial hardship. 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 March 31, 2021, there were 104 active deferred payment plans
with an aggregate of $44,896 of deferred rent outstanding.
As a result of the COVID-19 pandemic, our bad debt continues to
exceed historical levels. During the first quarter, our net bad
debt was $433,000 or 80 basis points of revenue. The table below
presents additional details on the components of bad debt:
Components of Bad Debt (1)
1Q 2021
1Q 2020
4Q 2020
Amount
Percentage
Amount
Percentage
Amount
Percentage
Charge-offs, net
$386
0.7%
$337
0.7%
$289
0.5%
Provision for bad debt
$47
0.1%
-
-
$124
0.3%
Net bad debt
$433
0.8%
$337
0.7%
$413
0.8%
(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
April 2021
April 2020
1Q 2021
Rent collected for the period presented,
as a percentage of rent billed
96.6%
99.0%
98.4%
Amount of monthly rent deferred for the
period presented, as a percentage of rent billed
0.0%
0.6%
0.0%
Combined rent collected and rent subject
to deferred payment plans, as a percentage of rent billed
96.6%
99.6%
98.4%
Total portfolio average occupancy
96.0%
92.7%
95.3%
Total portfolio average effective monthly
rent per unit
$1,154
$1,106
$1,142
Resident retention rate
49.7%
54.8%
46.4%
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
1Q 2021
2Q 2021 (2)
New Leases
6.8%
9.6%
Renewal Leases
4.8%
3.7%
Total
5.9%
4.6%
(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.
(2)
For new leases and renewals commencing
during 2Q 2021 that were signed as of April 27, 2021.
Value Add Program
We completed renovations on 142 units during the quarter ended
March 31, 2021. From inception of our value add program in January
2018 through March 31, 2021, we completed renovations on 3,861
units, achieving a return on investment of 16.1% (18.5% on interior
renovation costs) and an average monthly rental increase of
18.5%.
At-the-Market Offering
On November 13, 2020 we entered into an equity distribution
agreement pursuant to which we may from time to time offer and sell
shares of our common stock having an aggregate offering price of up
to $150 million (the “ATM Program”) in negotiated transactions or
transactions that are deemed to be “at the market” offerings. Under
the ATM Program, we may also enter into one or more forward sale
transactions for the sale of shares of our common stock on a
forward basis. In the three months ended March 31, 2021, we entered
into a forward sale transaction under the ATM Program for the
forward sale of 2,000,000 shares of our common stock. We expect to
physically settle the forward sale transaction by the maturity date
(December 15, 2021) of the forward sale transaction. Assuming the
forward sale transaction is physically settled in full utilizing
the current forward sale price of $14.50 per share, net of sales
commissions, we expect to receive net proceeds of approximately
$29.0 million, subject to adjustment in accordance with the forward
sale transaction.
Financial Flexibility
As of March 31, 2021, we had a total liquidity position of
approximately $205.6 million, which includes unrestricted cash,
additional capacity under our unsecured line of credit, and
approximately $41.2 million of proceeds that we will receive upon
settlement of forward sale agreements covering 2,900,000 shares of
common stock.
Capital Expenditures
For the three months ended March 31, 2021, recurring capital
expenditures for the total portfolio were $1.1 million, or $73 per
unit.
Distributions
On March 15, 2021, our Board of Directors declared a quarterly
cash dividend of $0.12 per share of our common stock, which was
paid on April 23, 2021 to stockholders of record at the close of
business on April 2, 2021.
2021 EPS and CFFO Guidance
Given portfolio performance during the quarter ended March 31,
2021, IRT is updating its 2021 full year guidance. EPS per diluted
share is projected to be in a range of $0.5 to $0.8. CFFO per
diluted share, a non-GAAP financial measure, is projected to be in
the range of $0.72 to $0.75 using our new definition of CFFO. Our
previous guidance has been adjusted to conform to the current CFFO
definition, which now includes the effect of stock compensation
expense and amortization of deferred financing costs. A
reconciliation of IRT's projected net income allocable to common
shares to its projected CFFO per share is included below. Also
included below are the primary assumptions underlying these
estimates. See the schedules and definitions at the end of this
release for further information regarding how IRT calculates CFFO
and for management’s rationale for the usefulness of CFFO.
Previous Guidance
Current Guidance
2021 Full Year EPS and CFFO Guidance
(1)(2)
Low
High
Low
High
Earnings per share
$0.04
$0.08
$0.05
$0.08
Adjustments:
Depreciation and amortization
0.67
0.67
0.67
0.67
CORE FFO per share allocated to common
shareholders
$0.71
$0.75
$0.72
$0.75
(1)
This guidance, including the underlying
assumptions presented in the table below, constitutes
forward-looking information. Actual full year 2021 EPS and CFFO
could vary significantly from the projections presented. See
“Forward-Looking Statements” below. Our guidance is based on the
key guidance assumptions detailed below.
(2)
Per share guidance is based on 102.6
million weighted average shares and units outstanding.
2021 Guidance Assumptions
Our key guidance assumptions for 2021 are enumerated below:
Same Store Communities
Previous 2021 Outlook
Current 2021 Outlook
Number of properties/units
54 properties / 14,955 units
54 properties / 14,955 units
Property revenue growth
2.75% to 4.25%
3.75% to 5.0%
Controllable property operating expense
growth
2.0% to 3.0%
3.0% to 4.0%
Real estate tax and insurance expense
increase
7.0% to 9.0%
7.0% to 8.0%
Total operating expense growth
4.0% to 5.25%
4.25% to 5.5%
Same store property NOI growth
1.5% to 3.5%
3.25% to 5.0%
Corporate Expenses
General and administrative expenses
$15.5 to $17.0 million (1)
$16.5 to $18.0 million
Property management expenses
$8.5 to $9.2 million (1)
$8.25 to $8.75 million
Interest expense
$34.0 to $35.5 million (1)
$34.0 to $35.5 million
Transaction/Investment Volume
Acquisition volume
None assumed
$100 million to $200 million
Disposition volume
None assumed
$0 million to $100 million
Capital Expenditures
Recurring
$7.0 to $8.0 million
$7.0 to $7.5 million
Value add & non-recurring
$28.5 to $32.5 million
$28.5 to $32.5 million
(1)
During the three months ended March 31,
2021, we updated our definition of CFFO to include the effects of
stock compensation expense and the amortization of deferred
financing costs. As a result, we have updated our previous 2021
outlook to conform to the new definition. We previously highlighted
the impact that this definition change would have on these line
items. Please refer to footnotes 2 and 3 on page 10 of our Q4 and
Full Year 2020 Supplemental dated February 10, 2021. In addition,
please see the updated definition of CFFO within the definitions
section of this release.
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, April 29, 2021 from the investor
relations section of the IRT website at www.irtliving.com or by
dialing 1.833.789.1330. 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, May 6, 2021 by dialing
1.800.585.8367, access code 1235436.
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,
Dallas, Louisville, Memphis, Raleigh and Tampa. 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, 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 amount of the quarterly dividend described in this press
release.
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,
2021
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
Selected Financial Information:
Operating Statistics:
Net income available to common shares
$
1,086
$
13,261
$
1,090
$
789
$
(372
)
Earnings (loss) per share -- diluted
$
0.01
0.14
$
0.01
$
0.01
$0.00
Rental and other property revenue
$
54,811
$
53,923
$
54,001
$
52,087
$
51,156
Property operating expenses
$
20,838
$
20,138
$
22,129
$
20,974
$
19,737
Net operating income
$
33,973
$
33,785
$
31,872
$
31,113
$
31,419
NOI margin
62.0
%
62.7
%
59.0
%
59.7
%
61.4
%
Adjusted EBITDA
$
26,389
$
28,534
$
27,081
$
25,643
$
24,081
CORE FFO per share (c)
$
0.18
$
0.22
$
0.20
$
0.19
$
0.19
Dividends per share
$
0.12
$
0.12
$
0.12
$
0.12
$
0.18
CORE FFO payout ratio
66.7
%
54.5
%
60.0
%
63.2
%
94.7
%
Portfolio Data:
Total gross assets
$
1,970,979
$
1,962,895
$
1,914,900
$
1,916,424
$
1,949,494
Total number of properties
56
56
58
58
58
Total units
15,667
15,667
15,805
15,805
15,805
Period end occupancy
95.5
%
95.3
%
94.4
%
93.5
%
92.7
%
Total portfolio average occupancy
95.4
%
95.0
%
94.1
%
92.9
%
92.5
%
Total portfolio average effective monthly
rent, per
unit
$
1,142
$
1,136
$
1,118
$
1,108
$
1,100
Same store period end occupancy (a)
95.5
%
95.3
%
94.3
%
93.6
%
93.0
%
Same store portfolio average occupancy
(a)
95.3
%
94.9
%
94.0
%
93.1
%
92.7
%
Same store portfolio average effective
monthly rent,
per unit (a)
$
1,129
$
1,121
$
1,111
$
1,107
$
1,097
Capitalization:
Total debt
$
947,631
$
945,686
$
1,004,237
$
1,008,911
$
1,049,541
Common share price, period end
$
15.20
$
13.43
$
11.59
$
11.45
$
8.94
Market equity capitalization
$
1,561,165
$
1,376,283
$
1,107,144
$
1,093,822
$
853,600
Total market capitalization
$
2,508,796
$
2,321,969
$
2,111,381
$
2,102,733
$
1,903,141
Total debt/total gross assets
48.1
%
48.2
%
52.4
%
52.6
%
53.8
%
Net debt to Adjusted EBITDA (pro forma)
(b)
8.2
x
8.2
x
9.1
x
9.2
x
9.0
x
Interest coverage
3.1
x
3.2
x
3.0
x
2.8
x
2.5
x
Common shares and OP Units:
Shares outstanding
102,033,733
101,803,762
94,823,806
94,741,146
94,691,806
OP units outstanding
674,515
674,517
701,986
789,134
789,134
Common shares and OP units outstanding
102,708,248
102,478,278
95,525,792
95,530,279
95,480,939
Weighted average common shares and
units
102,353,380
95,529,788
95,227,176
95,224,855
91,737,113
(a)
Same store portfolio consists of 54
properties, which represent 14,995 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 items impacting quarterly EBITDA. Actual net debt
to Adjusted EBITDA for the five quarters ended March 31, 2021 was
8.9x, 8.3x, 9.3x, 9.7x, and 10.3x, respectively.
(c)
Reflects adjustment to prior periods to
conform to our current definition of CFFO. See our definition of
CFFO for additional discussion.
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,
2021
2020
Funds From Operations (FFO):
Net Income (loss)
$
1,093
$
(374
)
Adjustments:
Real estate depreciation and
amortization
16,472
14,725
Funds From Operations
$
17,565
$
14,351
FFO per share
$
0.17
$
0.16
Core Funds From Operations
(CFFO):
Funds From Operations
$
17,565
$
14,351
Adjustments:
Other depreciation and amortization
80
103
Abandoned deal costs
—
130
Casualty losses
359
—
Debt extinguishment costs included in net
gains (losses) on sale of assets
—
—
Core Funds From Operations
$
18,004
$
14,584
CFFO per share
$
0.18
$
0.16
Weighted-average shares and units
outstanding
102,353,380
91,737,113
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,
2021
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
Reconciliation of same-store net
operating income to net income (loss)
Same-store net operating income
$
31,923
$
32,027
$
29,997
$
29,723
$
30,330
Non same-store net operating income
2,050
1,758
1,875
1,390
1,089
Other revenue
301
165
199
181
194
Property management expenses
(1,943
)
(2,183
)
(2,078
)
(2,077
)
(2,156
)
General and administrative expenses
(5,942
)
(3,233
)
(2,912
)
(3,574
)
(5,376
)
Depreciation and amortization expense
(16,552
)
(15,396
)
(15,232
)
(15,231
)
(14,828
)
Interest expense
(8,385
)
(8,872
)
(8,917
)
(9,202
)
(9,497
)
Abandoned deal costs
—
—
—
—
(130
)
Casualty losses
(359
)
(300
)
—
(411
)
—
Gain on sale (loss on impairment) of real
estate assets, net
—
9,394
(1,840
)
—
—
Net income (loss)
$
1,093
$
13,360
$
1,092
$
799
$
(374
)
(a) Same store portfolio includes 54
properties, which represent 14,995 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,
2021
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
Net income (loss)
$
1,093
$
13,360
$
1,092
$
799
$
(374
)
Add-Back (Deduct):
Depreciation and amortization
16,552
15,396
15,232
15,231
14,828
Interest expense
8,385
8,872
8,917
9,202
9,497
Net loss on impairment (gain on sale) of
real estate assets
—
(9,394
)
1,840
—
—
Abandoned deal costs
—
—
—
—
130
Casualty losses
359
300
—
411
—
Adjusted EBITDA
$
26,389
$
28,534
$
27,081
$
25,643
$
24,081
INTEREST COST:
Interest expense
$
8,385
$
8,872
$
8,917
$
9,202
$
9,497
INTEREST COVERAGE:
3.1
x
3.2
x
3.0
x
2.8
x
2.5
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
Each of EBITDA and Adjusted EBITDA is a non-GAAP financial
measure. EBITDA is defined as net income before interest expense
including amortization of deferred financing costs, income tax
expense, and depreciation and amortization expenses. Adjusted
EBITDA is EBITDA before certain other non-cash or non-operating
gains or losses related to items such as asset sales, debt
extinguishments and acquisition related debt extinguishment
expenses, casualty losses, and abandoned deal costs. We consider
each of EBITDA and Adjusted EBITDA to be an appropriate
supplemental measure of performance because it eliminates interest,
income taxes, depreciation and amortization, and other non-cash or
non-operating gains and losses, which permits investors to view
income from operations without these non-cash or non-operating
items. Our calculation of Adjusted EBITDA differs from the
methodology used for calculating Adjusted EBITDA by certain other
REITs and, accordingly, our Adjusted EBITDA may not be comparable
to Adjusted EBITDA reported by other REITs.
Funds From Operations (“FFO”) and Core Funds From Operations
(“CFFO”)
We believe that FFO and Core FFO (“CFFO”), each of which is a
non-GAAP financial measure, are additional appropriate measures of
the operating performance of a REIT and us in particular. We
compute FFO in accordance with the standards established by the
National Association of Real Estate Investment Trusts (“NAREIT”),
as net income or loss allocated to common shares (computed in
accordance with GAAP), excluding real estate-related depreciation
and amortization expense, gains or losses on sales of real estate
and the cumulative effect of changes in accounting principles.
While our calculation of FFO is in accordance with NAREIT’s
definition, it may differ from the methodology for calculating FFO
utilized by other REITs and, accordingly, may not be comparable to
FFO computations of such other REITs.
We updated our definition of CFFO during Q1 2021 to the
definition described below. All prior periods have been adjusted to
conform to the current CFFO definition.
CFFO is a computation made by analysts and investors to measure
a real estate company’s operating performance by removing the
effect of items that do not reflect ongoing property operations,
including depreciation and amortization of other items not included
in FFO, and other non-cash or non-operating gains or losses related
to items such as casualty losses, abandoned deal costs and debt
extinguishment costs from the determination of FFO.
Our calculation of CFFO may differ from the methodology used for
calculating CFFO by other REITs and, accordingly, our CFFO may not
be comparable to CFFO reported by other REITs. Our management
utilizes FFO and CFFO as measures of our operating performance, and
believe they are also useful to investors, because they facilitate
an understanding of our operating performance after adjustment for
certain non-cash or non-recurring items that are required by GAAP
to be expensed but may not necessarily be indicative of current
operating performance and our operating performance between
periods. Furthermore, although FFO, CFFO and other supplemental
performance measures are defined in various ways throughout the
REIT industry, we believe that FFO and CFFO may provide us and our
investors with an additional useful measure to compare our
financial performance to certain other REITs. Neither FFO nor CFFO
is equivalent to net income or cash generated from operating
activities determined in accordance with GAAP. Furthermore, FFO and
CFFO do not represent amounts available for management’s
discretionary use because of needed capital replacement or
expansion, debt service obligations or other commitments or
uncertainties. Accordingly, FFO and CFFO do not measure whether
cash flow is sufficient to fund all of our cash needs, including
principal amortization and capital improvements. Neither FFO nor
CFFO should be considered as an alternative to net income or any
other GAAP measurement as an indicator of our operating performance
or as an alternative to cash flow from operating, investing, and
financing activities as a measure of our liquidity.
Interest Coverage
Interest coverage is a ratio computed by dividing Adjusted
EBITDA by interest expense.
Net Debt
Net debt, a non-GAAP financial measure, equals total 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
March 31,
2021
December 30,
2020
September 30,
2020
June 30,
2020
March 31,
2020
Total debt
$
947,631
$
945,686
$
1,004,237
$
1,008,911
$
1,049,541
Less: cash and cash equivalents
(8,653
)
(8,751
)
(9,891
)
(11,652
)
(57,436
)
Total net debt
$
938,978
$
936,935
$
994,346
$
997,259
$
992,105
Same Store Portfolio Net Operating Income
We believe that Net Operating Income (“NOI”), a non-GAAP
financial measure, is a useful measure of our operating
performance. We define NOI as total property revenues less total
property operating expenses, excluding depreciation and
amortization, casualty related costs, property management expenses,
general administrative expenses, interest expense, and net gains on
sale of assets.
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
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
March 31,
2021
December 30,
2020
September 30,
2020
June 30,
2020
March 31,
2020
Total assets
$
1,728,016
$
1,734,897
$
1,700,428
$
1,708,912
$
1,757,138
Plus: accumulated depreciation
223,187
208,618
194,645
187,758
172,789
Plus: accumulated amortization
19,776
19,380
19,827
19,754
19,567
Total gross assets
$
1,970,979
$
1,962,895
$
1,914,900
$
1,916,424
$
1,949,494
(IRT-ER)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210428006080/en/
Independence Realty Trust, Inc. Contact Edelman Financial
Communications & Capital Markets Ted McHugh and Lauren Torres
917-365-7979 IRT@edelman.com
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