Independence Realty Trust Announces Second Quarter 2014 Financial Results

Independence Realty Trust, Inc. (“IRT”) (NYSE MKT: IRT) today announced second quarter 2014 financial results.

Highlights
  • Core funds from operations (“CFFO”) increased 160% to $3.4 million for the quarter ended June 30, 2014 from $1.3 million for the quarter ended June 30, 2013.
  • Operating income increased 47% to $1.8 million for the quarter ended June 30, 2014 from $1.2 million for the quarter ended June 30, 2013.
  • Total revenues grew 148% to $11.6 million for the quarter ended June 30, 2014 from $4.7 million for the quarter ended June 30, 2013.
  • On July 21, 2014, IRT completed its underwritten public offering selling 8,050,000 shares of IRT common stock for $9.50 per share raising gross proceeds of $76.5 million. RAIT Financial Trust (“RAIT”), IRT’s largest stockholder and the parent company of IRT’s external advisor, purchased 300,000 shares of common stock in the offering, at the public offering price, for which no underwriting discounts and commissions were paid to the underwriters. After giving effect to this offering, the percent of IRT’s outstanding common stock held by RAIT was reduced from 39.4% to 28.2%.
  • IRT acquired 2 properties totaling 372 units for $41.8 million during the quarter ended June 30, 2014.

Financial Results

IRT reported CFFO, a non-GAAP financial measure, for the three-month period ended June 30, 2014 of $3.4 million, or $0.19 per share – diluted based on 17.7 million weighted-average shares outstanding – diluted, as compared to CFFO for the three-month period ended June 30, 2013 of $1.3 million, or $0.23 per share – diluted based on 5.6 million weighted-average shares outstanding – diluted. IRT reported a net loss allocable to common stock for the three-month period ended June 30, 2014 of $(0.1) million, or $(0.01) per share – diluted based on 17.7 million weighted-average shares outstanding – diluted, as compared to net income allocable to common stock for the three-month period ended June 30, 2013 of $0.05 million, or $0.01 per share – diluted based on 5.6 million weighted-average shares outstanding – diluted.

IRT reported CFFO for the six-month period ended June 30, 2014 of $5.9 million, or $0.36 per share – diluted based on 16.5 million weighted-average shares outstanding – diluted, as compared to CFFO for the six-month period ended June 30, 2013 of $2.6 million, or $0.46 per share – diluted based on 5.6 million weighted-average shares outstanding – diluted. IRT reported a net income allocable to common stock for the six-month period ended June 30, 2014 of $2.8 million, or $0.17 per share – diluted based on 16.5 million weighted-average shares outstanding – diluted, as compared to net income allocable to common stock for the six-month period ended June 30, 2013 of $0.05 million, or $0.01 per share – diluted based on 5.6 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 July 10, 2014, IRT’s Board of Directors declared monthly cash dividends for the third quarter of 2014 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 third 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
June 2014 $0.06 7/31/2014 8/15/2014
July 2014 $0.06 8/29/2014 9/16/2014
August 2014 $0.06 9/30/2014 10/15/2014
 
 

Key Statistics

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

As of or For the Three-Month Periods Ended
 
June 30,   March 31,   December 31,   September 30,   June 30,
2014   2014   2013   2013   2013
Financial Statistics:
Total revenue $11,649 $8,135 $5,768 $4,787 $4,700
Earnings (loss) per share-diluted $(0.01) $0.19 $0.03 $0.03 $0.01
Funds from Operations (“FFO”) per share $0.18 $0.33 $0.17 $0.17 $0.23
Core funds from operations (“CFFO”) per share $0.19 $0.17 $0.20 $0.17 $0.23
Dividends declared per common share $0.18 $0.18 $0.16 $0.16 $0.16
Total Shares Outstanding 17,751,540 17,742,540 9,652,540 9,643,540 5,643,540
 
Apartment Property Portfolio:
Reported investments in real estate at cost $362,323 $320,437 $190,096 $166,665 $154,040
Net operating income $6,064 $4,147 $3,159 $2,373 $2,459
Number of properties owned 19 17 10 9 8
Multifamily units owned 5,342 4,970 2,790 2,358 2,004
Portfolio weighted average occupancy 93.1% 93.9% 94.6% 94.4% 94.2%
Weighted average monthly effective rent per unit (1) $764 $730 $765 $784 $784
 
(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. Same Store weighted average effective rent per unit was $798, $795, $792, $784 and $784 for the periods presented above, respectively.
 
 

Properties
 

The following table presents an overview of our apartment portfolio as of June 30, 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, Colorado 4/29/2011

2011

162(5)
97.5% $989
Copper Mill Austin, Texas 4/29/2011 2010 320 97.5% 786
Crestmont Marietta, Georgia 4/29/2011 2010 228 99.1% 716
Cumberland Glen Smyrna, Georgia 4/29/2011 2010 222 96.4% 704
Heritage Trace Newport News, Virginia 4/29/2011 2010 200 90.5% 687
Tresa at Arrowhead Phoenix, Arizona 4/29/2011 2006 360 95.0% 821
Centrepoint Tucson, Arizona 12/16/2011 2006 320 95.9% 816
Runaway Bay Indianapolis, Indiana 10/11/2012 2002 192 95.3% 909
Berkshire Square Indianapolis, Indiana 9/19/2013 2012 354 92.1% 584
The Crossings Jackson, Mississippi 11/22/2013 2006 432 92.4% 735
Reserve at Eagle Ridge Waukegan, Illinois 1/31/2014 2008 370 94.6% 934
Windrush Edmond, Oklahoma 2/28/2014 2011 160 85.6% 775
Heritage Park Oklahoma City, Oklahoma 2/28/2014 2011 453 90.5% 619
Raindance Oklahoma City, Oklahoma 2/28/2014 2011 504 90.5% 532
Augusta Oklahoma City, Oklahoma 2/28/2014 2011 197 82.2% 724
Invitational Oklahoma City, Oklahoma 2/28/2014 2011 344 93.0% 673
King’s Landing Creve Coeur, Missouri 3/31/2014 2005 152 93.6% 1,460
Carrington Park Little Rock, Arkansas 5/07/2014 1999 202 92.6% 1,066
Arbors at the Reservoir Ridgeland, Mississippi 6/04/2014 2000 170 93.5% (6)
 
Total/Weighted Average 5,342 93.1% $764
 
(1)   All dates are for the year in which a significant renovation program was completed, except for Runaway Bay, Arbors at the Reservoir and King’s Landing, which is the year construction was completed.
(2) Units represents the total number of apartment units available for rent at June 30, 2014.
(3) Physical occupancy for each of our properties is calculated as (i) total units rented as of June 30, 2014 divided by (ii) total units available as of June 30, 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 June 30, 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 $1,603, 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. As of June 2014, the average monthly effective rent per occupied unit was $1,064.
 

Conference Call

All interested parties can listen to the live conference call webcast at 9:00 AM ET on Friday, August 1, 2014 from the investor relations section of the IRT website at www.irtreit.com or by dialing 877.280.4956, access code 81504352. 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 Friday, August 8, 2014, by dialing 888.286.8010, access code 49252720.

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.

Consolidated Statements of Operations

(Dollars in thousands, except share and per share information)

(unaudited)
 
For the Three-Month For the Six-Month
Period Ended Period Ended
June 30 June 30
2014   2013 2014   2013
Revenues:    
Rental income $ 10,613 $ 4,218 $ 17,966 $ 8,396
Tenant reimbursement income 436 220 802 443
Other income   600     262     1,016     549  
Total revenue 11,649 4,700 19,784 9,388
Expenses:
Property operating expenses 5,585 2,241 9,573 4,406
General and administrative expenses 378 94 546 271
Asset management fees 501 79 647 161
Acquisition expenses 152 - 514 -
Depreciation and amortization   3,232     1,063     5,355     2,099  
Total expenses   9,848     3,477     16,635     6,937  
Operating income 1,801 1,223 3,149 2,451
Interest expense (1,930 ) (899 ) (3,229 ) (1,787 )
Interest income 1 - 5 -
Gain (loss) on assets   -     -     2,882     -  
Net income (loss): (128 ) 324 2,807 664
(Income) loss allocated to preferred stock - (4 ) - (8 )
(Income) loss allocated to non-controlling interests   -     (272 )   -     (604 )
Net income (loss) allocable to common stock $ (128 ) $ 48   $ 2,807   $ 52  
 
Earnings (loss) per share:
Basic $ (0.01 ) $ 0.01   $ 0.17   $ 0.03  
Diluted $ (0.01 ) $ 0.01   $ 0.17   $ 0.03  
Weighted-average shares:
Basic   17,707,287     3,556,349     16,459,623     1,959,998  
Diluted   17,707,287     3,556,349     16,484,357     1,959,998  
Dividends declared per common share $ 0.18   $ 0.16   $ 0.36   $ 0.31  
 
   

Independence Realty Trust, Inc.

Consolidated Balance Sheets

(Dollars in thousands, except share and per share information)

(unaudited)
 
As of As of
June 30, December 31,
2014   2013
Assets:
Investments in real estate:
Investments in real estate at cost $ 362,323 $ 190,096
Accumulated depreciation   (18,804 )   (15,775 )
Investments in real estate, net 343,519 174,321
Cash and cash equivalents 8,054 3,334
Restricted cash 2,698 1,122
Accounts receivable and other assets 2,682 1,731
Intangible assets, net of accumulated amortization of $2,513 and $569, respectively 1,126 517
Deferred costs, net of accumulated amortization of $293 and $151, respectively   1,568     846  
Total assets $ 359,647   $ 181,871  
 
Liabilities and Equity:
Indebtedness $ 215,628 $ 103,303
Accounts payable and accrued expenses 5,725 2,374
Accrued interest payable 30 63
Dividends payable 1,076 515
Other liabilities   946     708  
Total liabilities 223,405 106,963
 
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, 17,751,540 and 9,652,540 shares issued and outstanding, including 40,000 unvested restricted common share awards as of June 30, 2014

177

96
Additional paid-in capital 140,973 78,112
Retained earnings (accumulated deficit)   (6,867 )     (3,300 )
Total shareholders’ equity 134,283 74,908
Non-controlling interests   1,959       -  
Total Equity   136,242       74,908  
Total liabilities and equity $ 359,647     $ 181,871  
 
 

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
   

For the Six-Month Period Ended
 

June 30,
     

June 30,
   
2014       2013       2014       2013    
  Per Share   Per Share   Per Share   Per Share

Amount

(2)

Amount

(3)

Amount

(2)

Amount

(3)
Funds From Operations:
Net income (loss) $(128) $(0.01) $324 $0.06 $2,807 $0.17 $664 $0.12
Adjustments:
Income allocated to preferred shares - - (4) 0.00 - - (8) 0.00
Income allocated to preferred units - - (88) (0.02) - - (175) (0.03)
Real estate depreciation and amortization 3,232   0.19   1,063   0.19   5,355   0.32   2,099   0.37
Funds From Operations $3,104   $0.18   $1,295   $0.23   $8,162   $0.49   $2,580   $0.46
 
Core Funds From Operations:
Funds From Operations $3,104 $0.18 $1,295 $0.23 $8,162 $0.49 $2,580 $0.46
Adjustments:
Acquisition fees and expenses 152 0.01 - - 514 0.03 - -
Equity based compensation 112 0.00 - - 142 0.01 - -
(Gains) losses on assets -   -   -   -   (2,882)   (0.17)   -   -
Core Funds From Operations $3,368   $0.19   $1,295   $0.23   $5,936   $0.36   $2,580   $0.46
 
(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 17,707,287 and 16,484,357 weighted-average shares outstanding-diluted for the three and six-month periods ended June 30, 2014.
 

(3)

Based on 5,643,122 and 5,632,028 weighted-average shares outstanding-diluted for the three and six-month periods ended June 30, 2013.
 

Copyright Business Wire 2010

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