Independence Realty Trust Announces Fourth Quarter and Fiscal 2014 Financial Results

PHILADELPHIA, PA — February 25, 2015 — Independence Realty Trust, Inc. (“IRT”) (NYSE MKT: IRT) today announced its fourth quarter and fiscal 2014 financial results.

Highlights

    Core funds from operations (“CFFO”) increased 147% to $4.7 million for the quarter ended December 31, 2014 from $1.9 million for the quarter ended December 31, 2013.

    CFFO per share was $0.17 for the quarter ended December 31, 2014 and $0.68 for the year ended December 31, 2014.

    Total revenues grew 183% to $16.4 million for the quarter ended December 31, 2014 from $5.8 million for the quarter ended December 31, 2013.

    Operating income increased 146% to $3.2 million for the quarter ended December 31, 2014 from $1.3 million for the quarter ended December 31, 2013.

    Investments in real estate, at cost, increased 263% to $689 million at December 31, 2014 from $190 million at December 31, 2013.

    IRT acquired 8 properties totaling 2,349 units for purchase prices totaling $246.7 million during the quarter ended December 31, 2014. IRT acquired 20 properties totaling 6,029 units for purchase prices totaling $497.1 million during the year ended December 31, 2014.

    IRT declared monthly common stock dividends of $0.06 per share for a total of $0.72 of common dividends declared during 2014.

    On November 25, 2014, IRT completed its underwritten public offering selling 6,000,000 shares of IRT common stock for $9.60 per share raising gross proceeds of $57.6 million.

Financial Results

IRT reported CFFO, a non-GAAP financial measure, of $4.7 million for the three-month period ended December 31, 2014, or $0.17 per share — diluted based on 28.6 million weighted-average shares outstanding – diluted, as compared to CFFO for the three-month period ended December 31, 2013 of $1.9 million, or $0.20 per share – diluted based on 9.6 million weighted-average shares outstanding – diluted. IRT reported net income allocable to common stock for the three-month period ended December 31, 2014 of $0.2 million, or $0.01 per share — diluted based on 28.6 million weighted-average shares outstanding – diluted, as compared to net income allocable to common stock for the three-month period ended December 31, 2013 of $0.3 million, or $0.03 per share – diluted based on 9.6 million weighted-average shares outstanding – diluted.

IRT reported CFFO for the year ended December 31, 2014 of $14.6 million, or $0.68 per share - diluted based on 21.5 million weighted-average shares outstanding – diluted, as compared to CFFO for the year ended December 31, 2013 of $5.8 million, or $0.81 per share – diluted based on 7.2 million weighted-average shares outstanding – diluted, which includes limited partnership units. IRT reported a net income allocable to common stock for the year ended December 31, 2014 of $2.9 million, or $0.14 per share — diluted based on 21.5 million weighted-average shares outstanding – diluted, as compared to net income allocable to common stock for the year ended December 31, 2013 of $0.6 million, or $0.12 per share – diluted based on 5.3 million weighted-average shares outstanding – diluted.

A reconciliation of IRT’s reported net income (loss) to its funds from operations (“FFO”) and CFFO is included as Schedule I to this release. Schedule I also includes management’s rationale for the usefulness of each of these non-GAAP financial measures.

Distributions

On January 19, 2015, IRT’s Board of Directors declared monthly cash dividends for the first quarter of 2015 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 first 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
 
                                                   
January 2015
              $ 0.06                 01/30/2015               02/17/2015
February 2015
              $ 0.06                 02/27/2015               03/16/2015
March 2015
              $ 0.06                 03/31/2015               04/15/2015

Key Statistics
(Unaudited and dollars in thousands, except per share and per unit information)

      As of or For the Three-Month Periods Ended
                                         
    December 31, 2014   September 30, 2014   June 30, 2014   March 31, 2014   December 31, 2013
Financial Statistics:
                                       
Total revenue
  $ 16,362     $ 13,057     $ 11,649     $ 8,135     $ 5,768  
Earnings (loss) per share-diluted
  $ 0.01     $ (0.00 )   $ (0.01 )   $ 0.19     $ 0.03  
Funds from Operations (“FFO”) per share
  $ 0.14     $ 0.14     $ 0.18     $ 0.33     $ 0.17  
Core funds from operations (“CFFO”) per share
  $ 0.17     $ 0.17     $ 0.19     $ 0.17     $ 0.20  
Dividends declared per common share
  $ 0.18     $ 0.18     $ 0.18     $ 0.18     $ 0.16  
Total Shares Outstanding
    31,800,076       25,801,540       17,751,540       17,742,540       9,652,540  
Apartment Property Portfolio:
                                       
Reported investments in real estate at cost
  $ 689,112     $ 444,050     $ 362,323     $ 320,437     $ 190,096  
Net operating income
  $ 8,660     $ 6,905     $ 6,064     $ 4,147     $ 3,159  
Number of properties owned
    30       22       19       17       10  
Multifamily units owned
    8,819       6,470       5,342       4,970       2,790  
Portfolio weighted average occupancy
    92.7 %     92.6 %     93.1 %     93.9 %     94.6 %
Same store portfolio weighted average occupancy
    94.5 %     93.8 %     95.4 %     95.4 %     94.4 %
Weighted average monthly effective rent per unit (1)
  $ 788     $ 791     $ 764     $ 730     $ 765  
Same Store weighted average monthly effective rent per unit
  $ 790     $ 778     $ 766     $ 762     $ 760  

  (1)   Weighted average monthly effective rent per occupied unit represents the average monthly rent collected for all occupied units after giving effect to tenant concessions. We do not report average effective rent per unit in the month of acquisition as it is not representative of a full month of operations.

Properties

The following table presents an overview of our apartment portfolio as of December 31, 2014:

                                         
                                    Average Monthly
            Year                   Effective
        Acquisition   Built or           Physical   Rent per
Property Name   Location   Date   Renovated(1)   Units (2)   Occupancy (3)   Occupied Unit(4)
                         
Belle Creek   Henderson, CO   4/29/2011   2011   162(5)   92.6%   $1,074
Copper Mill
  Austin, TX   4/29/2011     2010       320       98.4 %     831  
Crestmont
  Marietta, GA   4/29/2011     2010       228       94.7 %     755  
Cumberland Glen
  Smyrna, GA   4/29/2011     2010       222       96.4 %     719  
Heritage Trace
  Newport News, VA   4/29/2011     2010       200       90.5 %     683  
Tresa at Arrowhead
  Phoenix, AZ   4/29/2011     2006       360       96.4 %     849  
Centrepoint
  Tucson, AZ   12/16/2011     2006       320       96.3 %     827  
Runaway Bay
  Indianapolis, IN   10/11/2012     2002       192       92.7 %     934  
Berkshire Square
  Indianapolis, IN   9/19/2013     2012       354       90.1 %     581  
The Crossings
  Jackson, MS   11/22/2013     2006       432       85.7 %     757  
Reserve at Eagle Ridge
  Waukegan, IL   1/31/2014     2008       370       92.7 %     929  
Windrush
  Edmond, OK   2/28/2014     2011       160       93.8 %     788  
Heritage Park
  Oklahoma City, OK   2/28/2014     2011       453       88.3 %     635  
Raindance
  Oklahoma City, OK   2/28/2014     2011       504       92.7 %     533  
Augusta
  Oklahoma City, OK   2/28/2014     2011       197       93.4 %     721  
Invitational
  Oklahoma City, OK   2/28/2014     2011       344       91.6 %     670  
King’s Landing
  Creve Coeur, MO   3/31/2014     2005       152       85.2 %     1,435  
Carrington Park
  Little Rock, AR   5/07/2014     1999       202       97.0 %     985  
Arbors at the Reservoir
  Ridgeland, MS   6/04/2014     2000       170       95.9 %     1,079  
Walnut Hill
  Cordova, TN   8/28/2014     2001       360       92.8 %     900  
Lenoxplace
  Raleigh, NC   9/05/2014     2012       268       92.5 %     834  
Stonebridge
  Cordova, TN   9/15/2014     1994       500       92.2 %     735  
Bennington Pond
  Groveport, OH   11/24/2014     2000       240       96.3 %     781  
Prospect Park
  Louisville, KY   12/08/2014     1990       138       89.9 %   —  (6)
Brookside
  Louisville, KY   12/08/2014     1987       224       95.1 %   —  (6)
Jamestown
  Louisville, KY   12/08/2014     1970       355       92.4 %   —  (6)
Meadows
  Louisville, KY   12/08/2014     1988       400       92.5 %   —  (6)
Oxmoor
  Louisville, KY   12/08/2014     1999-2000       432       90.3 %   —  (6)
Stonebridge at the
Ranch
 
Little Rock, AR
 
12/16/2014
 
2005
 
260
 
95.0%
 
—  (6)
Iron Rock Ranch
  Austin, TX   12/30/2014     2001-2002       300       96.0 %   —  (6)
 
     
 
 
 
 
Total/Weighted Average.
                    8,819       92.7 %   $ 788  
 
                                       

(1)   All dates are for the year in which a significant renovation program was completed, except for Runaway Bay, Arbors at the Reservoir, King’s Landing, Walnut Hill, Stonebridge, Bennington Pond, Prospect Park, Brookside, Jamestown, Meadows, Oxmoor, Stonebridge at the Ranch and Iron Rock Ranch which is the year construction was completed.

(2)   Units represent the total number of apartment units available for rent at December 31, 2014.

(3)   Physical occupancy for each of our properties is calculated as (i) total units rented as of December 31, 2014 divided by (ii) total units available as of December 31, 2014, expressed as a percentage.

(4)   Average monthly effective rent per occupied unit represents the average monthly rent for all occupied units for the three-month period ended December 31, 2014.

(5)   Includes 6,256 square feet of retail space in six units, of which 1,010 square feet of space is occupied by RAIT Residential for use as the leasing office. The remaining 5,246 square feet of space is 86% occupied by four tenants with an average monthly base rent of $1,623, or $16 per square foot per year. These four tenants are principally engaged in the following businesses: grocery, retail and various retail services.

(6)   We do not report average effective rent per unit in the month of acquisition as it is not representative of a full month of operations.

Conference Call

All interested parties can listen to the live conference call webcast at 9:00 AM ET on

Wednesday, February 25, 2015 from the investor relations section of the IRT website at www.irtreit.com or by dialing 1.877.415.3184, access code 82961401. 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, March 4, 2015, by dialing 888.286.8010, access code 76638151.

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” 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 risks, uncertainties and contingencies include, but are not limited to, 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.

Independence Realty Trust, Inc. Contact
Andres Viroslav
215.243.9000
aviroslav@irtreit.com

1

Independence Realty Trust, Inc.
Consolidated Statements of Operations
(Dollars in thousands, except share and per share information)
(unaudited)

                                         
    For the Three-Month           For the Year
    Period Ended                   Ended
    December 31           December 31
    2014   2013   2014   2013
Revenues:
                                       
Rental income
  $ 14,996     $ 5,188             $ 44,834     $ 17,843  
Tenant reimbursement income
    617       275               1,924       943  
Other income
    749       305               2,445       1,157  
                             
Total revenue
    16,362       5,768               49,203       19,943  
Expenses:
                                       
Property operating expenses
    7,702       2,609               23,427       9,429  
General and administrative expenses
    343       274               1,137       648  
Asset management fees
    644       107               1,736       272  
Acquisition expenses
    641       198               1,842       248  
Depreciation and amortization
    3,856       1,306               12,520       4,413  
                             
Total expenses
    13,186       4,494               40,662       15,010  
                             
Operating income
    3,176       1,274               8,541       4,933  
Interest expense
    (2,986 )     (966 )             (8,496 )     (3,659 )
Interest income
    5                     17        
Gain (loss) on assets
                        2,882        
                             
Net income (loss):
    195       308               2,944       1,274  
(Income) loss allocated to preferred stock
                              (10 )
(Income) loss allocated to non-controlling interests
    (6 )                   (4 )     (649 )
                             
Net income (loss) allocable to common stock
  $ 189     $ 308             $ 2,940     $ 615  
                             
Earnings (loss) per share:
                                       
Basic
  $ 0.01     $ 0.03             $ 0.14     $ 0.12  
                             
Diluted
  $ 0.01     $ 0.03             $ 0.14     $ 0.12  
                             
Weighted-average shares:
                                       
Basic     28,174,568       9,649,801     21,315,928     5,330,814  
                             
Diluted     28,578,949       9,649,801     21,532,671     5,330,814  
                             

2

Independence Realty Trust, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except share and per share information)
(unaudited)

                 
    As of   As of
    December 31,   December 31,
    2014   2013
Assets:
               
Investments in real estate:
               
Investments in real estate at cost
  $ 689,112     $ 190,096  
Accumulated depreciation
    (23,376 )     (15,775 )
 
               
Investments in real estate, net
    665,736       174,321  
Cash and cash equivalents
    14,763       3,334  
Restricted cash
    5,206       1,122  
Accounts receivable and other assets
    2,270       1,731  
Intangible assets, net of accumulated amortization of $4,346 and $569, respectively
    3,251       517  
Deferred costs, net of accumulated amortization of $505 and $151, respectively
    2,924       846  
 
               
Total assets
  $ 694,150     $ 181,871  
 
               
Liabilities and Equity:
               
Indebtedness
  $ 418,901     $ 103,303  
Accounts payable and accrued expenses
    8,353       2,374  
Accrued interest payable
    49       63  
Dividends payable
    1,982       515  
Other liabilities
    1,831       708  
 
               
Total liabilities
    431,116       106,963  
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, 31,800,076 and 9,652,540 shares issued and outstanding, including 36,000 unvested restricted common stock awards as of December 31, 2014
    318       96  
Additional paid-in capital
    267,683       78,112  
Retained earnings (accumulated deficit)
    (16,728 )     (3,300 )
 
               
Total shareholders’ equity
    251,273       74,908  
Non-controlling interests
    11,761        
 
               
Total Equity
    263,034       74,908  
 
               
Total liabilities and equity
  $ 694,150     $ 181,871  
 
               

3

Schedule I
Independence Realty Trust, Inc.
Reconciliation of Net income (loss) Allocable to Common Stock and
Funds From Operations (“FFO”) and
Core Funds From Operations (“CFFO”) (1)
(Dollars in thousands, except share and per share amounts)
(unaudited)

                                                                 
                                         
    For the Three-Month Period Ended        
    December 31,           For the Year Ended December 31,        
    2014           2013           2014           2013        
 
  Amount   Per Share (2)   Amount   Per Share (3)   Amount   Per Share (2)   Amount   Per Share (3)
 
                                                               
Funds From Operations:
                                                               
Net income (loss)
  $ 195     $ 0.01     $ 308     $ 0.03     $ 2,944     $ 0.14     $ 1,274     $ 0.18  
Adjustments:
                                                               
Income allocated to preferred shares
                      (0.00 )                 (10 )     0.00  
Income allocated to preferred units
    (6 )     (0.00 )           (0.00 )     (4 )     0.00       (220 )     (0.03 )
Real estate depreciation and amortization
    3,856       0.13       1,306       0.14       12,520       0.58       4,413       0.61  
 
                                                               
Funds From Operations
  $ 4,045     $ 0.14     $ 1,614     $ 0.17     $ 15,460     $ 0.72     $ 5,457     $ 0.76  
 
                                                               
Core Funds From Operations:
                                                               
Funds From Operations
  $ 4,045     $ 0.14     $ 1,614     $ 0.17     $ 15,460     $ 0.72     $ 5,457     $ 0.76  
Adjustments:
                                                               
Acquisition fees and expenses
    641       0.03       198       0.02       1,842       0.09       248       0.04  
Equity based compensation
    32       0.00       77       0.01       206       0.01       77       0.01  
(Gains) losses on assets
                            (2,882 )     (0.13 )            
 
                                                               
Core Funds From Operations
  $ 4,718     $ 0.17     $ 1,889     $ 0.20     $ 14,626     $ 0.68     $ 5,782     $ 0.81  
 
                                                               

(1)   IRT believes that FFO and Core FFO, 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.

Core FFO 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 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 Core FFO.

IRT’s calculation of Core FFO differs from the methodology used for calculating Core FFO by certain other REITs and, accordingly, IRT’s Core FFO may not be comparable to Core FFO reported by other REITs. IRT’s management utilizes FFO and Core FFO 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, and acquisition expenses 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, Core FFO and other supplemental performance measures are defined in various ways throughout the REIT industry, IRT also believes that FFO and Core FFO may provide IRT and our investors with an additional useful measure to compare IRT’s financial performance to certain other REITs. IRT also uses Core FFO for purposes of determining the quarterly incentive fee, if any, payable to our advisor beginning with the second quarter of 2013.Neither FFO nor Core FFO is equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and Core FFO 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 Core FFO 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.

(2)   Based on 28,578,949 and 21,532,671 weighted-average shares outstanding-diluted for the three-month period and year ended December 31, 2014.

(3)   Based on 9,649,801 and 7,151,738 weighted-average shares outstanding-diluted for the three-month period and year ended December 31, 2013.  Weighted-average shares include 5,274,900 limited partnership units that were exchanged for common stock on May, 2013.

4


The following information was filed by Independence Realty Trust, Inc. (IRT) on Wednesday, February 25, 2015 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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