Table of Contents



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

FORM 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

OR

2022

☐

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to

_________

Commission file number 001-36041

INDEPENDENCE REALTY TRUST, INC.

(Exact Name of Registrant as Specified in Its Charter)

Maryland

26-4567130

(Exact Name of Registrant as Specified in Its Charter)

Maryland26-4567130
(State or Other Jurisdiction of


Incorporation or Organization)

(I.R.S. Employer


Identification No.)

Two Liberty Place

50 S. 16th

1835 Market Street, Suite 3575

2601

Philadelphia, PA

19102

19103

(Address of Principal Executive Offices)

(Zip Code)

(267) 270-4800

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stockIRTNYSE
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒x No ☐

o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒x No ☐

o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer

☐

x

Accelerated filer

☒

o

Non-Accelerated filer

☐ (Do not check if a smaller reporting company)

o

Smaller reporting company

☐

o

Emerging growth company

☐

o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes☐oNo☒

x

As of October 30, 201724, 2022 there were 83,518,602224,074,403 shares of the Registrant’s common stock issued and outstanding.


Table of Contents



INDEPENDENCE REALTY TRUST, INC.

INDEX

Page

Page

3

3

3

4

5

6

7

8

8

9

22

32

36

32

36

33

33

38

33

38

33

38

33

38

33

38

33

38

33

39

35

40


Table of ContentsPART



PART I—FINANCIAL INFORMATION

Item 1.

Item 1.    Financial Statements

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited and dollars in thousands, except share and per share data)

 

As of September 30, 2017

 

 

As of December 31, 2016

 

As of
September 30,
2022		As of December 31, 2021

ASSETS:

 

 

 

 

 

 

 

 

ASSETS:

Investments in real estate:

 

 

 

 

 

 

 

 

Investments in real estate:

Investments in real estate, at cost

 

$

1,427,057

 

 

$

1,249,356

 

Investments in real estate, at cost$6,634,087 $6,462,355 

Accumulated depreciation

 

 

(75,084

)

 

 

(51,511

)

Accumulated depreciation(379,171)(243,475)

Investments in real estate, net

 

 

1,351,973

 

 

 

1,197,845

 

Investments in real estate, net6,254,916 6,218,880 

Real estate held for sale

 

 

22,031

 

 

 

60,786

 

Real estate held for sale82,178 61,560 
Investment in real estate under developmentInvestment in real estate under development86,763 41,777 

Cash and cash equivalents

 

 

10,128

 

 

 

20,892

 

Cash and cash equivalents23,753 35,972 

Restricted cash

 

 

6,665

 

 

 

5,518

 

Restricted cash35,829 29,699 

Accounts receivable and other assets

 

 

9,416

 

 

 

5,211

 

Investments in unconsolidated real estate entitiesInvestments in unconsolidated real estate entities70,608 24,999 
Other assetsOther assets34,480 38,052 

Derivative assets

 

 

3,581

 

 

 

3,867

 

Derivative assets43,967 2,488 

Intangible assets, net of accumulated amortization of $664 and $0, respectively

 

 

1,418

 

 

 

118

 

Intangible assets, net of accumulated amortization of $97 and $4,779, respectivelyIntangible assets, net of accumulated amortization of $97 and $4,779, respectively1,039 53,269 

Total Assets

 

$

1,405,212

 

 

$

1,294,237

 

Total Assets$6,633,533 $6,506,696 

LIABILITIES AND EQUITY:

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY:  

Indebtedness, net of unamortized deferred financing costs of $5,697 and $6,371, respectively

 

$

731,625

 

 

$

743,817

 

Indebtedness, netIndebtedness, net$2,667,183 $2,705,336 
Indebtedness associated with real estate held for saleIndebtedness associated with real estate held for sale46,442 — 

Accounts payable and accrued expenses

 

 

23,236

 

 

 

14,028

 

Accounts payable and accrued expenses126,310 106,332 

Accrued interest payable

 

 

134

 

 

 

491

 

Accrued interest payable11,019 7,175 

Dividends payable

 

 

5,176

 

 

 

4,297

 

Dividends payable32,188 16,792 
Derivative liabilitiesDerivative liabilities— 11,896 

Other liabilities

 

 

3,063

 

 

 

2,913

 

Other liabilities13,816 17,089 

Total Liabilities

 

 

763,234

 

 

 

765,546

 

Total Liabilities2,896,958 2,864,620 

Equity:

 

 

 

 

 

 

 

 

Equity:  

Stockholders’ equity:

 

 

 

 

 

 

 

 

Stockholders’ equity:  

Preferred stock, $0.01 par value; 50,000,000 shares authorized, 0 and 0 shares issued and outstanding, respectively

 

 

-

 

 

 

—

 

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, 83,518,602 and 68,996,070 shares issued and outstanding, including 295,846 and 281,000 unvested restricted common share awards, respectively

 

 

835

 

 

 

690

 

Common stock, $0.01 par value; 500,000,000 shares authorized,
224,056,179 and 220,753,735 shares issued and outstanding, including
233,370 and 269,622 unvested restricted common share awards, respectively
Common stock, $0.01 par value; 500,000,000 shares authorized,
224,056,179 and 220,753,735 shares issued and outstanding, including
233,370 and 269,622 unvested restricted common share awards, respectively
2,241 2,208 

Additional paid-in capital

 

 

691,550

 

 

 

564,633

 

Additional paid-in capital3,749,550 3,678,903 

Accumulated other comprehensive income

 

 

3,466

 

 

 

3,683

 

Accumulated other comprehensive income (loss)Accumulated other comprehensive income (loss)37,569 (11,940)

Retained earnings (accumulated deficit)

 

 

(76,419

)

 

 

(62,181

)

Retained earnings (accumulated deficit)(194,014)(188,410)

Total stockholders’ equity

 

 

619,432

 

 

 

506,825

 

Total stockholders’ equity3,595,346 3,480,761 

Noncontrolling interests

 

 

22,546

 

 

 

21,866

 

Noncontrolling interests141,229 161,315 

Total Equity

 

 

641,978

 

 

 

528,691

 

Total Equity3,736,575 3,642,076 

Total Liabilities and Equity

 

$

1,405,212

 

 

$

1,294,237

 

Total Liabilities and Equity$6,633,533 $6,506,696 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Table of Contents



Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited and dollars in thousands, except share and per share data)

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

For the Three Months Ended September 30,For the Nine Months Ended September 30,

 

2017

 

 

2016

 

 

2017

 

 

2016

 

2022202120222021

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE:

Rental income

 

$

35,531

 

 

$

34,333

 

 

$

105,444

 

 

$

103,271

 

Tenant reimbursement income

 

 

1,373

 

 

 

1,351

 

 

 

4,232

 

 

 

4,194

 

Other property income

 

 

2,960

 

 

 

2,680

 

 

 

8,514

 

 

 

7,892

 

Property management and other income

 

 

202

 

 

 

-

 

 

 

579

 

 

 

-

 

Rental and other property revenueRental and other property revenue$160,300 $60,592 $464,921 $172,689 
Other revenueOther revenue300 188 805 647 

Total revenue

 

 

40,066

 

 

 

38,364

 

 

 

118,769

 

 

 

115,357

 

Total revenue160,600 60,780 465,726 173,336 

EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:    

Property operating expenses

 

 

16,196

 

 

 

16,107

 

 

 

48,106

 

 

 

47,588

 

Property operating expenses59,967 23,164 174,825 66,300 

Property management expenses

 

 

1,328

 

 

 

1,219

 

 

 

4,310

 

 

 

3,710

 

Property management expenses5,744 2,199 17,440 6,318 

General and administrative expenses

 

 

2,322

 

 

 

2,665

 

 

 

7,128

 

 

 

8,074

 

General and administrative expenses5,625 3,985 20,521 14,168 

Acquisition and integration expenses

 

 

569

 

 

 

19

 

 

 

956

 

 

 

37

 

Depreciation and amortization expense

 

 

8,671

 

 

 

7,765

 

 

 

24,289

 

 

 

26,927

 

Depreciation and amortization expense49,722 17,384 200,688 50,699 
Casualty (gains) losses, netCasualty (gains) losses, net(191)— (7,176)359 

Total expenses

 

 

29,086

 

 

 

27,775

 

 

 

84,789

 

 

 

86,336

 

Total expenses120,867 46,732 406,298 137,844 

Operating income

 

 

10,980

 

 

 

10,589

 

 

 

33,980

 

 

 

29,021

 

Interest expense

 

 

(6,963

)

 

 

(8,820

)

 

 

(21,573

)

 

 

(27,815

)

Interest expense(22,093)(8,700)(63,618)(25,644)

Hedge ineffectiveness

 

 

12

 

 

 

-

 

 

 

-

 

 

 

-

 

Gain on sale of real estate assets, netGain on sale of real estate assets, net— 11,492 94,712 11,492 
Merger and integration costsMerger and integration costs(275)(5,276)(3,477)(5,276)

Other income (expense)

 

 

-

 

 

 

(2

)

 

 

(5

)

 

 

(2

)

Other income (expense)765 — 1,501 — 

Net gains (losses) on sale of assets

 

 

(92

)

 

 

(1

)

 

 

15,873

 

 

 

31,773

 

Gains (losses) on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

(572

)

 

 

(558

)

Acquisition related debt extinguishment expenses

 

 

(2,781

)

 

 

-

 

 

 

(2,781

)

 

 

-

 

Gains (losses) on TSRE merger

 

 

-

 

 

 

641

 

 

 

-

 

 

 

732

 

Net income (loss):

 

 

1,156

 

 

 

2,407

 

 

 

24,922

 

 

 

33,151

 

(Income) loss allocated to noncontrolling interest

 

 

(59

)

 

 

(140

)

 

 

(1,009

)

 

 

(1,972

)

Net income (loss) allocable to common shares

 

$

1,097

 

 

$

2,267

 

 

$

23,913

 

 

$

31,179

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from investments in unconsolidated real
estate entities		Loss from investments in unconsolidated real
estate entities		(1,477)— (2,411)— 
Net income:Net income:16,653 11,564 86,135 16,064 
Income allocated to noncontrolling interestIncome allocated to noncontrolling interest(430)(62)(2,517)(90)
Net income allocable to common sharesNet income allocable to common shares$16,223 $11,502 $83,618 $15,974 
Earnings per share:Earnings per share:    

Basic

 

$

0.02

 

 

$

0.05

 

 

$

0.34

 

 

$

0.66

 

Basic$0.07 $0.11 $0.38 $0.16 

Diluted

 

$

0.02

 

 

$

0.05

 

 

$

0.34

 

 

$

0.66

 

Diluted$0.07 $0.11 $0.38 $0.15 

Weighted-average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares:

Basic

 

 

71,972,394

 

 

 

47,215,918

 

 

 

69,875,802

 

 

 

47,164,543

 

Basic221,960,609 104,918,674 221,312,261 102,882,723 

Diluted

 

 

72,144,544

 

 

 

47,314,629

 

 

 

70,105,571

 

 

 

47,190,139

 

Diluted222,867,546 107,668,675 222,359,585 104,062,661 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Table of Contents



Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited and dollars in thousands)

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income (loss)

 

$

1,156

 

 

$

2,407

 

 

$

24,922

 

 

$

33,151

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of interest rate hedges

 

 

(14

)

 

 

217

 

 

 

(424

)

 

 

(990

)

Realized (gains) losses on interest rate hedges reclassified to earnings

 

 

(14

)

 

 

251

 

 

 

177

 

 

 

271

 

Total other comprehensive income

 

 

(28

)

 

 

468

 

 

 

(247

)

 

 

(719

)

Comprehensive income (loss) before allocation to noncontrolling interests

 

 

1,128

 

 

 

2,875

 

 

 

24,675

 

 

 

32,432

 

Allocation to noncontrolling interests

 

 

(33

)

 

 

(140

)

 

 

(979

)

 

 

(1,972

)

Comprehensive income (loss)

 

$

1,095

 

 

$

2,735

 

 

$

23,696

 

 

$

30,460

 

For the Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021
Net income$16,653 $11,564 $86,135 $16,064 
Other comprehensive income (loss):
Change in fair value of interest rate hedges19,439 4,759 54,318 20,296 
Realized gains (losses) on interest rate
  hedges reclassified to earnings		214 (2,238)(3,408)(5,859)
Total other comprehensive income19,653 2,521 50,910 14,437 
Comprehensive income before allocation to
  noncontrolling interests		36,306 14,085 137,045 30,501 
Allocation to noncontrolling interests(944)(79)(3,918)(212)
Comprehensive income$35,362 $14,006 $133,127 $30,289 
The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Table of Contents



Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

(Unaudited and dollars in thousands, except share information)

 

 

Common

Shares

 

 

Par

Value

Common

Shares

 

 

Additional

Paid In

Capital

 

 

Accumulated Other Comprehensive Income

 

 

Retained

Earnings

(Deficit)

 

 

Total

Stockholders’

Equity

 

 

Noncontrolling

Interests

 

 

Total

Equity

 

Balance, January 1, 2017

 

 

68,996,070

 

 

$

690

 

 

$

564,633

 

 

$

3,683

 

 

$

(62,181

)

 

$

506,825

 

 

$

21,866

 

 

$

528,691

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

23,913

 

 

 

23,913

 

 

 

1,009

 

 

 

24,922

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(217

)

 

 

-

 

 

 

(217

)

 

 

(30

)

 

 

(247

)

Stock compensation expense

 

 

168,010

 

 

 

1

 

 

 

1,547

 

 

 

-

 

 

 

-

 

 

 

1,548

 

 

 

-

 

 

 

1,548

 

Issuance of common shares

 

 

14,375,000

 

 

 

144

 

 

 

125,563

 

 

 

 

 

 

 

 

 

 

 

125,707

 

 

 

 

 

 

 

125,707

 

Issuance of LP Units related to acquisitions

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,654

 

 

 

1,654

 

Repurchase of shares related to equity award tax withholding

 

 

(60,377

)

 

 

(1

)

 

 

(564

)

 

 

-

 

 

 

-

 

 

 

(565

)

 

 

-

 

 

 

(565

)

Conversion of noncontrolling interest to common shares

 

 

39,899

 

 

 

1

 

 

 

371

 

 

 

-

 

 

 

-

 

 

 

372

 

 

 

(372

)

 

 

-

 

Common dividends declared

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(38,151

)

 

 

(38,151

)

 

 

-

 

 

 

(38,151

)

Distribution to noncontrolling interest declared

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,581

)

 

 

(1,581

)

Balance, September 30, 2017

 

 

83,518,602

 

 

$

835

 

 

$

691,550

 

 

$

3,466

 

 

$

(76,419

)

 

$

619,432

 

 

$

22,546

 

 

$

641,978

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common
Shares		Par
Value
Common
Shares		Additional
Paid In
Capital		Accumulated Other Comprehensive Income (Loss)Retained
Earnings
(Accumulated Deficit)		Total
Stockholders’
Equity		Noncontrolling
Interests		Total
Equity
Balance, December 31, 2021220,753,735 $2,208 $3,678,903 $(11,940)$(188,410)$3,480,761 $161,315 $3,642,076 
Net income— — — — 74,600 74,600 2,280 76,880 
Common dividends declared ($0.12 per share)— — — — (26,833)(26,833)— (26,833)
Other comprehensive income— — — 21,898 — 21,898 692 22,590 
Stock compensation395,029 3 3,535 — — 3,538 — 3,538 
Repurchase of shares related to equity award tax
  withholding		(48,452)— (3,183)— — (3,183)— (3,183)
Conversion of noncontrolling interest to common shares10,848 — 68 — — 68 (68)— 
Issuance of common shares, net51,498 1 (845)— — (844)— (844)
Distribution to noncontrolling interest declared ($0.12 per unit)— — — — — — (837)(837)
Balance, March 31, 2022221,162,658 $2,212 $3,678,478 $9,958 $(140,643)$3,550,005 $163,382 $3,713,387 
Net loss— — — — (7,205)(7,205)(194)(7,399)
Common dividends declared ($0.14 per share)— — — — (31,054)(31,054)— (31,054)
Other comprehensive income— — — 8,472 — 8,472 195 8,667 
Stock compensation19,297 — 1,715 — — 1,715 — 1,715 
Repurchase of shares related to equity award tax withholding(1,496)— (2,698)— — (2,698)— (2,698)
Conversion of noncontrolling interest to common shares879,821 9 21,384 — — 21,393 (21,393)— 
Issuance of common shares, net— — (116)— — (116)— (116)
Distribution to noncontrolling interest declared ($0.14 per unit)— — — — — — (852)(852)
Balance, June 30, 2022222,060,280 $2,221 $3,698,763 $18,430 $(178,902)$3,540,512 $141,138 $3,681,650 
Net income— — — — 16,223 16,223 430 16,653 
Common dividends declared ($0.14 per share)— — — — (31,335)(31,335)— (31,335)
Other comprehensive income— — — 19,139 — 19,139 514 19,653 
Stock compensation(3,080)— 1,096 — — 1,096 — 1,096 
Repurchase of shares related to equity award tax withholding(1,021)— — — — — — — 
Issuance of common shares, net2,000,000 20 49,691 — — 49,711 — 49,711 
Distribution to noncontrolling interest declared ($0.14 per unit)— — — — — — (853)(853)
Balance, September 30, 2022224,056,179 $2,241 $3,749,550 $37,569 $(194,014)$3,595,346 $141,229 $3,736,575 

The accompanying notes are an integral part of these condensed consolidated financial statements.

statements

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Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Changes in Equity

(Unaudited and dollars in thousands)

thousands, except share information)

 

 

For the Nine Months Ended September 30,

 

 

 

2017

 

 

2016

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

24,922

 

 

$

33,151

 

Adjustments to reconcile net income (loss) to cash flow from operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

24,289

 

 

 

26,927

 

Amortization of deferred financing costs

 

 

1,160

 

 

 

2,236

 

Stock compensation expense

 

 

1,548

 

 

 

832

 

Net (gains) losses on sale of assets

 

 

(15,873

)

 

 

(31,773

)

(Gains) losses on extinguishment of debt

 

 

572

 

 

 

558

 

Acquisition related debt extinguishment expenses

 

 

2,781

 

 

 

-

 

(Gains) losses on TSRE merger

 

 

-

 

 

 

(732

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable and other assets

 

 

(1,931

)

 

 

(1,377

)

Accounts payable and accrued expenses

 

 

8,098

 

 

 

3,895

 

Accrued interest payable

 

 

(345

)

 

 

(376

)

Other liabilities

 

 

(165

)

 

 

(11

)

Net cash provided by operating activities

 

 

45,056

 

 

 

33,330

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Disposition of real estate properties

 

 

34,519

 

 

 

39,690

 

Acquisition of real estate properties

 

 

(169,156

)

 

 

-

 

Capital expenditures

 

 

(10,100

)

 

 

(8,039

)

(Increase) decrease in restricted cash

 

 

(1,147

)

 

 

(2,615

)

Cash flow (used in) provided by investing activities

 

 

(145,884

)

 

 

29,036

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from unsecured credit facility

 

 

148,190

 

 

 

93,501

 

Unsecured credit facility repayments

 

 

(138,500

)

 

 

(197,666

)

Proceeds from mortgages

 

 

-

 

 

 

105,980

 

Mortgage principal repayments

 

 

(1,969

)

 

 

(44,532

)

Payments for deferred financing costs

 

 

(1,166

)

 

 

(1,450

)

Proceeds from issuance of common stock

 

 

125,707

 

 

 

-

 

Distributions on common stock

 

 

(37,279

)

 

 

(25,495

)

Distributions to noncontrolling interests

 

 

(1,573

)

 

 

(1,615

)

Payments related to extinguishment of debt

 

 

(2,781

)

 

 

-

 

Repurchase of shares related to equity award tax withholding

 

 

(565

)

 

 

(143

)

Cash flow provided by (used in) financing activities

 

 

90,064

 

 

 

(71,420

)

Net change in cash and cash equivalents

 

 

(10,764

)

 

 

(9,054

)

Cash and cash equivalents, beginning of period

 

 

20,892

 

 

 

38,301

 

Cash and cash equivalents, end of the period

 

$

10,128

 

 

$

29,247

 



 Common
Shares		Par
Value
Common
Shares		Additional
Paid In
Capital		Accumulated Other Comprehensive Income (Loss)Retained
Earnings
(Accumulated Deficit)		Total
Stockholders’
Equity		Noncontrolling
Interests		Total
Equity
Balance, December 31, 2020101,803,762 $1,018 $919,615 $(33,822)$(178,751)$708,060 $4,711 $712,771 
Net income— — — — 1,086 1,086 7 1,093 
Common dividends declared ($0.12 per share)— — — — (12,486)(12,486)— (12,486)
Other comprehensive income— — — 13,325 — 13,325 88 13,413 
Stock compensation286,647 2 3,346 — — 3,348 — 3,348 
Repurchase of shares related to equity award tax withholding(56,677)(2)(2,860)— — (2,862)— (2,862)
Issuance of common shares, net— — (59)— — (59)— (59)
Distribution to noncontrolling interest declared ($0.12 per unit)— — — — — — (80)(80)
Balance, March 31, 2021102,033,732 $1,018 $920,042 $(20,497)$(190,151)$710,412 $4,726 $715,138 
Net income— — — — 3,386 3,386 21 3,407 
Other comprehensive income (loss)— — — (1,514)— (1,514)17 (1,497)
Stock compensation23,436 1 1,356 — — 1,357 — 1,357 
Repurchase of shares related to equity award tax withholding(1,674)1 (81)— — (80)— (80)
Issuance of common shares, net2,932,000 30 41,580 — — 41,610 — 41,610 
Conversion of noncontrolling interest to common shares122,155 1 857 — — 858 (858)— 
Common dividends declared ($0.12 per share)— — — — (12,585)(12,585)— (12,585)
Distribution to noncontrolling interest declared ($0.12 per unit)— — — — — — (67)(67)
Balance, June 30, 2021105,109,649 $1,051 $963,754 $(22,011)$(199,350)$743,444 $3,839 $747,283 
Net income— — — — 11,502 11,502 62 11,564 
Other comprehensive income— — — 2,504 — 2,504 17 2,521 
Stock compensation(2,209)— 1,298 — — 1,298 — 1,298 
Repurchase of shares related to equity award tax withholding(726)— 36 — — 36 — 36 
Issuance of common shares, net— — (70)— — (70)— (70)
Common dividends declared ($0.12 per share)— — — — (12,581)(12,581)— (12,581)
Distribution to noncontrolling interest declared ($0.12 per unit)— — — — — — (66)(66)
Balance, September 30, 2021105,106,714 $1,051 $965,018 $(19,507)$(200,429)$746,133 $3,852 $749,985 
The accompanying notes are an integral part of these condensed consolidated financial statements.

statements

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Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows
(Unaudited and dollars in thousands)
For the Nine Months Ended September 30,
20222021
Cash flows from operating activities:
Net income$86,135 $16,064 
Adjustments to reconcile net income to cash flow from operating activities:
Depreciation and amortization200,688 50,699 
Accretion of loan discounts and premiums, net(8,245)— 
Amortization of deferred financing costs, net2,727 1,154 
Stock compensation expense6,238 5,914 
Gain on sale of real estate assets, net(94,712)(11,492)
Amortization related to derivative instruments958 920 
Casualty (gains) losses, net(7,176)359 
Loss from investments in unconsolidated real estate entities2,411 — 
Other (income) expense(1,249)— 
Changes in assets and liabilities:
Other assets(2,266)(2,518)
Accounts payable and accrued expenses5,507 12,834 
Accrued interest payable3,844 (268)
Other liabilities(3,619)59 
Cash flow provided by operating activities191,241 73,725 
Cash flows from investing activities:
Acquisition of real estate properties(201,777)(139,231)
Investments in unconsolidated real estate entities(51,426)(13,561)
Return of investment in unconsolidated real estate entities3,406 — 
Disposition of real estate properties, net155,639 39,182 
Capital expenditures(55,648)(31,827)
Additions to real estate under development(40,009)— 
Proceeds from insurance claims15,653 — 
Cash flow used in investing activities(174,162)(145,437)
Cash flows from financing activities:
      Proceeds from issuance of common stock, net48,751 41,481 
Proceeds from unsecured credit facility and term loans687,500 387,500 
Unsecured credit facility and term loan repayments(666,525)(234,800)
Mortgage principal repayments(5,514)(79,582)
Payments for deferred financing costs(1,654)(1,261)
Distributions on common stock(74,479)(37,249)
Distributions to noncontrolling interests(1,891)(228)
Repurchase of shares related to equity award tax withholding(5,881)(2,906)
Payments for interest rate collars(3,475)— 
Cash flow (used in) provided by financing activities(23,168)72,955 
Net change in cash and cash equivalents, and restricted cash(6,089)1,243 
Cash and cash equivalents, and restricted cash, beginning of period65,671 13,615 
Cash and cash equivalents, and restricted cash, end of the period$59,582 $14,858 
Reconciliation of cash, cash equivalents, and restricted cash to the Consolidated Balance Sheet
Cash and cash equivalents$23,753 $8,720 
Restricted cash35,829 6,138 
Total cash, cash equivalents, and restricted cash, end of period$59,582 $14,858 
The accompanying notes are an integral part of these condensed consolidated financial statements
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Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

As of

September 30, 2017

2022

(Unaudited and dollars in thousands, except share and per share data)



NOTE 1: Organization

Independence Realty Trust, Inc. (“IRT”), or IRT,is a self-administered and self-managed Maryland real estate investment trust (“REIT”) which was formed on March 26, 2009 as a Maryland corporation that has elected2009. Our primary purposes are to be taxed as a real estate investment trust, or REIT, commencing with the taxable year ended December 31, 2011.acquire, own, operate, improve and manage multifamily apartment communities in non-gateway markets. As of September 30, 2017,2022, we ownowned and operate 50operated 122 multifamily apartment properties totaling 13,729that contain 36,176 units (unaudited) across non-gateway U.SU.S. markets including Atlanta, Columbus, Dallas, Denver, Houston, Indianapolis, Louisville, Memphis, AtlantaOklahoma City, and Raleigh. Our investment strategy is focused on gaining scale within key amenity rich submarketsIn addition, as of September 30, 2022, we owned interests in five unconsolidated joint ventures that offer good school districts, high-quality retail and major employment centers.are developing multifamily apartment communities. We aim to provide stockholders with attractive risk-adjusted returns through diligent portfolio management, strong operational performance, and a consistent return through distributions and capital appreciation. We own substantially all of our assets and conduct substantially all of our operations through Independence Realty Operating Partnership, LP which we refer to as IROP,(“IROP”), of which we are the sole general partner.

We became an internally managed REIT on December 20, 2016. Prior to that date, we were externally managed by a subsidiary of RAIT Financial Trust, or RAIT, a publicly traded Maryland REIT whose common shares are listed on the New York Stock Exchange under the symbol “RAS” (referred to as our former advisor).  On December 20, 2016, we completed our management internalization, which was announced on September 27, 2016 as part of the agreement, or the internalization agreement, with RAIT and RAIT affiliates that provided for transactions which changed us from being externally managed to being internally managed and separated us from RAIT.  The management internalization consisted of two parts: (i) our acquisition of our former advisor, which was a subsidiary of RAIT, and (ii) our acquisition of substantially all of the assets and the assumption of certain liabilities relating to the multifamily property management business of RAIT, including property management contracts relating to apartment properties owned by us, RAIT and third parties. Also, pursuant to the internalization agreement, on October 5, 2016, we repurchased all of the 7,269,719 shares of our common stock owned by certain of RAIT’s subsidiaries and retired these shares.  

As used herein, the terms “we,” “our” and “us” refer to Independence Realty Trust, Inc. and, as required by context, IROP and their subsidiaries.

On July 26, 2021, IRT, together with IROP, and IRSTAR Sub, LLC, a wholly-owned subsidiary of IRT (“IRT Merger Sub”), entered into an agreement and plan of merger (the “Merger Agreement”) with Steadfast Apartment REIT, Inc. (“STAR”) and its operating partnership, Steadfast Apartment REIT Operating Partnership, L.P. (“STAR OP”). Consummation of the mergers provided for in the Merger Agreement (which we refer to collectively as the “STAR Merger”) was subject to customary closing conditions, including, among others, receipt of IRT stockholder approval and STAR stockholder approval, which occurred on December 13, 2021. The STAR Merger closed on December 16, 2021. For further discussion, see Note 3: IRT and STAR Merger included in our 2021 Annual Report on Form 10-K.

NOTE 2: Summary of Significant Accounting Policies

a. Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared by management in accordance with generally accepted accounting principles in the United States or GAAP.(“GAAP”). Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe that the included disclosures are adequate to make the information presented not misleading. The unaudited interim consolidated financial statements should be read in conjunction with our audited financial statements as of and for the year ended December 31, 20162021 included in our 2021 Annual Report on Form 10-K, or the 2016 annual report.10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position and consolidated results of operations and cash flows are included. The results of operations for the interim periods presented are not necessarily indicative of the results for the full year.

The Company evaluated subsequent events through the date its financial statements were issued. No significant recognized or non-recognized subsequent events were noted other than those described in the footnotes.

b. Principles of Consolidation

The consolidated financial statements reflect our accounts and the accounts of IROP and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Pursuant to FASBthe Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification Topic 810, “Consolidation”, IROP is considered a variable interest entity.entity of which we are the primary beneficiary. As our significant asset is our investment in IROP, substantially all of our assets and liabilities represent the assets and liabilities of IROP.

c. Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

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Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

As of

September 30, 2017

2022

(Unaudited and dollars in thousands, except share and per share data)


d. Cash and Cash Equivalents

Cash and cash equivalents include cash held in banks and highly liquid investments with original maturities of three months or less when purchased. Cash, including amounts restricted, may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit of $250 per institution. We mitigate credit risk by placing cash and cash equivalents with major financial institutions. To date, we have not experienced any losses on cash and cash equivalents.

e. Restricted Cash

Restricted cash includes escrows of our funds held by lenders to fund certain expenditures, such as real estate taxes and insurance, or to be released at our discretion upon the occurrence of certain pre-specified events. As of September 30, 20172022 and December 31, 2016,2021, we had $6,665$35,829 and $5,518,$29,699, respectively, of restricted cash.

f. Accounts Receivable and Allowance for Bad Debts

We make estimates of the collectability of our accounts receivable related to base rents, expense reimbursements and other revenue.  We analyze accounts receivable and historical bad debt levels, tenant credit worthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts.  In addition, tenants experiencing financial difficulties are analyzed and estimates are made in connection with expected uncollectible receivables.  Our reported operating results are affected by management’s estimate of the collectability of accounts receivable. For the three months ended September 30, 2017 and 2016, we recorded bad debt expense of $101 and $306, respectively. For the nine months ended September 30, 2017 and 2016, we recorded bad debt expense of $670 and $727, respectively.  

g. Investments in Real Estate

Investments in real estate are recorded at cost less accumulated depreciation. Costs, including internal costs, that both add value and appreciably extend the useful life of an asset are capitalized. Expenditures for repairs and maintenance are expensed as incurred.

Investments in real estate are classified as held for sale in the period in which certain criteria are met including when the sale of the asset is probable, and actions required to complete the plan of sale indicate that it is unlikely that significant changes to the plan of sale will be made or the plan of sale will be withdrawn.

Allocation of Purchase Price of Acquired Assets

We account for acquisitions of properties that meet the definition of a business pursuant to Financial Accounting Standards Board, or

In accordance with FASB Accounting Standards Codification, or ASC Topic 805, “Business Combinations”. The fair value of the properties we acquire are generally accounted for as asset acquisitions. Under asset acquisition accounting, the costs to acquire real estate, acquired isincluding transaction costs related to the acquisition, are accumulated and then allocated to the acquired tangible assets, generally consisting of land, building and tenant improvements, and identified intangibleindividual assets and liabilities consisting of the value of above-market and below-market leases for acquired in-place leases and the value of tenant relationships, based in each case onupon their relative fair values. Purchase accounting is applied to assets and liabilities associated with the real estate acquired. Transaction costs and fees incurred related to an acquisition are expensed as incurred.value. Transaction costs and fees incurred related to the financing of an acquisition are capitalized and amortized over the life of the related financing.

Upon the acquisition of properties, we

We estimate the fair value of acquired tangible assets (consisting of land, building and improvements) and, identified intangible assets (consisting of in-place leases), and assumed debt at the date of acquisition, based on the evaluation of information and estimates available at that date.  Based on these estimates, we allocate the initial purchase price to the applicable assets and liabilities. As final information regarding fair value of the assets acquired and liabilities assumed is received and estimates are refined, appropriate adjustments will be made to the purchase price allocation, in no case later than twelve months after the acquisition date.  

The aggregate value of in-place leases is determined by evaluating various factors, including the terms of the leases that are in place and assumed lease-up periods. During the three and nine months ended September 30, 2017, we acquired in-place leases with a value of $1,034 and $1,963, respectively, as part of related property acquisitions that are discussed further in Note 3. The value assigned to this intangible assetin-place lease assets is amortized over the assumed lease up period, typically six months. During the three and nine months ended September 30, 2022, we acquired in-place leases with a value of $1,099 and $1,136, respectively, related to our acquisitions that are discussed further in Note 3: Investments in Real Estate. For the three and nine months ended September 30, 2017,2022, we recorded $416$79 and $664,$53,367, respectively, of amortization expense for intangible assets. For the three and

9

Independence Realty Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

As of September 30, 2017

(Unaudited and dollars in thousands, except share and per share data)

nine months ended September 30, 2016,2021, we recorded $0$368 and $3,735,$1,203, respectively, of amortization expense for intangible assets. For the three and nine months ended September 30, 2022, we wrote-off fully amortized intangible assets of $0 and $58,048, respectively. For the three and nine months ended September 30, 2021, we wrote-off fully amortized intangible assets of $0 and $792, respectively. As of September 30, 2017,2022, we expect to record additional amortization expense on current in-place intangible assets of $795$556 for the remainder of 2017.  

2022.

Business Combinations
For properties we acquire or transactions we entered into that are accounted for as business combinations, we apply the acquisition method of accounting under ASC 805, which requires the identification of the acquiror, the determination date, and the recognition and measurement, at fair value, of the assets acquired and liabilities assumed. To the extent that the fair value of net assets acquired differs from the fair value of consideration paid, ASC 805 requires the recognition of goodwill or a gain from a bargain purchase price, if any. For the three and nine months ended September 30, 2022, we incurred merger and integration costs of $275 and $3,477. These amounts were expensed as incurred, and are included in the consolidated statements of operations in the item titled "Merger and integration costs", and primarily consist of technology migration and implementation, consulting and professional fees and employee severance costs.
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Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(Unaudited and dollars in thousands, except share and per share data)

Impairment of Long-Lived Assets

Management evaluates the recoverability of our investment in real estate assets, including related identifiable intangible assets, in accordance with FASB ASC Topic 360, “Property, Plant and Equipment”. This statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that recoverability of the assets is not assured.

Management reviews itsour long-lived assets on an ongoing basis and evaluates the recoverability of the carrying value when there is an indicator of impairment. An impairment charge is recorded when it is determined that the carrying value of the asset exceeds the fair value. The estimated cash flows used for the impairment analysis and the determination of estimated fair value are based on our plans for the respective assets and our views of market and economic conditions. The estimates consider matters such as current and historical rental rates, occupancies for the respective and/or comparable properties, and recent sales data for comparable properties. Changes in estimated future cash flows due to changes in our plans or views of market and economic conditions could result in recognition of impairment losses, which, under the applicable accounting guidance, could be substantial.

Depreciation Expense

Depreciation expense for real estate assets is computed using a straight-line method based on a life of 40 years for buildings and improvements and five to ten years for equipmentfurniture, fixtures, and fixtures.equipment. For the three and nine months ended September 30, 2017,2022, we recorded $8,255$49,268 and $23,625$146,222 of depreciation expense, respectively. For the three and nine months ended September 30, 2016,2021, we recorded $7,765$17,016 and $23,192$49,496 of depreciation expense, respectively.

During the three and nine months ended September 30, 2022, we wrote-off fully depreciated fixed assets of $0 and $3,092, respectively.

Casualty Related Costs
Occasionally, we incur losses at our communities from wind storms, floods, fires and similar hazards. Sometimes, a portion of these losses are not fully covered by our insurance policies due to deductibles. In these cases, we estimate the carrying value of the damaged property and record a casualty loss for the difference between the estimated carrying value and the insurance proceeds. Any amount of insurance recovery in excess of the amount of the losses incurred is considered a gain contingency and is recorded in casualty (gains) losses, net when the proceeds are received. During the three and nine months ended September 30, 2022, we recorded $191 and $7,176 of net casualty gains, respectively. During the three and nine months ended September 30, 2021, we incurred $0 and $359 of casualty losses, respectively.
g. Investments in Real Estate Under Development
We capitalize direct and indirect project costs incurred during the development period such as construction, insurance, architectural, legal, interest costs, and real estate taxes. At such time as the development is considered substantially complete, the capitalization of certain indirect costs such as real estate taxes, interest costs, and all project-related costs in real estate under development are reclassified to investments in real estate.

As of September 30, 2022 and December 31, 2021, the carrying value of our investments in real estate under development totaled $86,763 and $41,777, respectively, and was recorded as a separate line item on the face of our consolidated balance sheet.
h. Investments in Unconsolidated Real Estate Entities
We invest in joint ventures in which we exercise significant influence but do not control the major decisions of the joint venture. Therefore, we account for these investments using the equity method of accounting. Under the equity method of accounting, the investments are carried at cost plus our share of net earnings or losses. As of September 30, 2022 and December 31, 2021, the carrying value of our investments in joint ventures totaled $70,608 and $24,999, respectively, and were recorded as a separate line item on the face of our consolidated balance sheet. We recognized losses of $1,477 and $2,411 from equity method investments during the three and nine months ended September 30, 2022, and these losses were recorded in loss from investments in unconsolidated real estate entities on the face of our consolidated statements of operations.
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Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(Unaudited and dollars in thousands, except share and per share data)

i. Revenue and Expenses

Rental revenues are recognized on an accrual basis when due from residents.and Other Property Revenue
We apply FASB ASC Topic 842, “Leases” with respect to our accounting for rental income. We primarily lease apartmentsapartment units under operating leases generally with terms of one year or less. Rental payments are generally due monthly and rental revenues are recognized on an accrual basis when earned. Rental income represents gross market rent less adjustmentsWe have elected to account for concessionslease (i.e. fixed payments including base rent) and vacancy loss.  Tenant reimbursement income represents reimbursement from tenants for utility charges whilenon-lease components (i.e. tenant reimbursements and certain other service fees) as a single combined operating lease component since (1) the timing and pattern of transfer of the lease and non-lease components is the same, (2) the lease component is the predominant element, and (3) the combined single lease component would be classified as an operating lease.
We make ongoing estimates of the collectability of our base rents, tenant reimbursements, and other service fees included within rental and other property revenue. If collectability is not probable, we adjust rental and other property income includes parking, trash, late fees, and other miscellaneous property related income.

Forfor the three and nine months ended September 30, 2017, we recognized revenuesamount of $11 and $96, respectively, related to recoveries of lost rental revenue due to natural disasters and other insurable events from our insurance providers. For the three and nine months ended September 30, 2016, we recognized revenues of $38 and $151, respectively, related to recoveries of lost rental revenue due to natural disasters and other insurable events from our insurance providers.

For the three and nine months ended September 30, 2017, we incurred $437 and $1,285 of advertising expenses, respectively. For the three and nine months ended September 30, 2016, we incurred $435 and $1,325 of advertising expenses, respectively.  

For the three months ended September 30, 2017 and 2016, we incurred $0 and $1,933 of asset management and incentive fees, respectively. For the nine months ended September 30, 2017 and 2016, we incurred $0 and $5,491 of asset management and incentive fees, respectively. Asset management and incentive fees are now included in general and administrative expenses since as an internally-managed REIT, we no longer incur external asset management fees and the compensation cost of our employees who now perform this function are recorded within general and administrative expenses.  See Note 8: Related Party Transactions and Arrangements.  

For the three months ended September 30, 2017 and 2016, we incurred $1,328 and $1,219 of property management expenses, respectively. For the nine months ended September 30, 2017 and 2016, we incurred $4,310 and $3,710 of property management expenses, respectively. Subsequent to our management internalization, property management expenses include payroll and related expenses that directly support on-site property management.  Prior to our management internalization, property management expenses included property and construction management fees paid to our former property manager.  See Note 8: Related Party Transactions and Arrangements.    

10

Independence Realty Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

As of September 30, 2017

(Unaudited and dollars in thousands, except share and per share data)

i.uncollectible revenue.

j. Derivative Instruments

We may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with our borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with our operating and financial structure, as well as to hedge specific anticipated transactions. While these instruments may impact our periodic cash flows, they benefit us by minimizing the risks and/or costs previously described. The counterparties to these contractual arrangements are major financial institutions with which we and our affiliates may also have other financial relationships. In the event of nonperformance by the counterparties, we are potentially exposed to credit loss. However, because of the high credit ratings of the counterparties, we do not anticipate that any of the counterparties will fail to meet their obligations.

In accordance with FASB ASC Topic 815, “Derivatives and Hedging”, we measure each derivative instrument (including certain derivative instruments embedded in other contracts) at fair value and record such amounts in our consolidated balance sheets as either an asset or liability. For derivatives designated as cash flow hedges, the changes in the fair value of the effective portions of the derivative are reported in other comprehensive income and changes in the fair value of the ineffective portions of cash flow hedges, if any, are recognized in earnings. For derivatives not designated as hedges (or designated as fair value hedges), or for derivatives designated as cash flow hedges associated with debt for which we elected the fair value option under FASB ASC Topic 825, “Financial Instruments”, the changes in fair value of the derivative instrument are recognized in earnings. Any derivatives that we designate in hedge relationships are done so at inception. At inception, we determine whether or not the derivative is highly effective in offsetting changes in the designated interest rate risk associated with the identified indebtedness using regression analysis. At each reporting period, we update our regression analysis and use the hypothetical derivative method to measure any ineffectiveness.

j.

k. Fair Value of Financial Instruments

In accordance with FASB ASC Topic 820, “Fair Value Measurements and Disclosures”, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity for disclosure purposes. Assets and liabilities recorded at fair value in our consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined in FASB ASC Topic 820, “Fair Value Measurements and Disclosures” and directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities, are as follows:

•Level 1: Valuations are based on unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. The types of assets carried at Level 1 fair value generally are equity securities listed in active markets. As such, valuations of these investments do not entail a significant degree of judgment.

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Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(Unaudited and dollars in thousands, except share and per share data)

•Level 2: Valuations are based on quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

•Level 3: Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The availability of observable inputs can vary depending on the financial asset or liability and is affected by a wide variety of factors, including, for example, the type of investment, whether the investment is new, whether the investment is traded on an active exchange or in the secondary market, and the current market condition. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by us in determining fair value is greatest for instruments categorized in Level 3.

11

Independence Realty Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

As of September 30, 2017

(Unaudited and dollars in thousands, except share and per share data)

Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, our own assumptions are set to reflect those that management believes market participants would use in pricing the asset or liability at the measurement date. We use prices and inputs that management believes are current as of the measurement date, including during periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition could cause an instrument to be transferred from Level 1 to Level 2 or Level 2 to Level 3.

Fair value for certain of our Level 3 financial instruments is derived using internal valuation models. These internal valuation models include discounted cash flow analyses developed by management using current interest rates, estimates of the term of the particular instrument, specific issuer information and other market data for securities without an active market. In accordance with FASB ASC Topic 820, “Fair Value Measurements and Disclosures”, the impact of our own credit spreads is also considered when measuring the fair value of financial assets or liabilities, including derivative contracts. Where appropriate, valuation adjustments are made to account for various factors, including bid-ask spreads, credit quality and market liquidity. These adjustments are applied on a consistent basis and are based on observable inputs where available. Management’s estimate of fair value requires significant management judgment and is subject to a high degree of variability based upon market conditions, the availability of specific issuer information and management’s assumptions.

FASB ASC Topic 825, “Financial Instruments” requires disclosure of the fair value of financial instruments for which it is practicable to estimate that value. Given that cash and cash equivalents and restricted cash are short term in nature with limited fair value volatility, the carrying amount is deemed to be a reasonable approximation of fair value and the fair value input is classified as a Level 1 fair value measurement. The fair value input for the derivatives is classified as a Level 2 fair value measurement within the fair value hierarchy. The fair value inputs for our unsecured credit facility and our former secured credit facilityterm loans are classified as Level 2 fair value measurements within the fair value hierarchy. The fair value of mortgage indebtedness is based on a discounted cash flows valuation technique. As this technique utilizes current credit spreads, which are generally unobservable, this is classified as a Level 3 fair value measurement within the fair value hierarchy. We determine appropriate credit spreads based on the type of debt and its maturity. There were no transfers between levels in the fair value hierarchy for the nine months ended September 30, 2022. The following table summarizes the carrying amount and the fair value of our financial instruments as of the periods indicated:

 

As of September 30, 2017

 

 

As of December 31, 2016

 

 As of September 30, 2022As of December 31, 2021

Financial Instrument

 

Carrying

Amount

 

 

Estimated

Fair Value

 

 

Carrying

Amount

 

 

Estimated

Fair Value

 

Financial InstrumentCarrying
Amount		Estimated
Fair Value		Carrying
Amount		Estimated
Fair Value

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets    

Cash and cash equivalents

 

$

10,128

 

 

$

10,128

 

 

$

20,892

 

 

$

20,892

 

Cash and cash equivalents$23,753 $23,753 $35,972 $35,972 

Restricted cash

 

 

6,665

 

 

 

6,665

 

 

 

5,518

 

 

 

5,518

 

Restricted cash35,829 35,829 29,699 29,699 

Derivative assets

 

 

3,581

 

 

 

3,581

 

 

 

3,867

 

 

 

3,867

 

Derivative assets43,967 43,967 2,488 2,488 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

Debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt:

Secured credit facility

 

 

-

 

 

 

-

 

 

 

147,280

 

 

 

150,000

 

Unsecured credit facility

 

 

157,163

 

 

 

159,690

 

 

 

-

 

 

 

-

 

Mortgages

 

 

574,462

 

 

 

565,954

 

 

 

596,537

 

 

 

588,523

 

Unsecured RevolverUnsecured Revolver195,932 195,932 274,109 274,109 
Unsecured Term loansUnsecured Term loans596,907 596,907 497,951 497,951 
Secured credit facilitiesSecured credit facilities661,193 586,867 664,618 668,352 
Mortgages(1)Mortgages(1)1,259,593 1,129,909 1,268,658 1,282,495 
Derivative liabilitiesDerivative liabilities— — 11,896 11,896 

k.

(1)Includes indebtedness associated with real estate held for sale.
l. Deferred Financing Costs

Costs incurred in connection with debt financing are deferred and classified within indebtedness and charged to interest expense over the terms of the related debt agreements, under the effective interest method. As of January 1, 2016, we adopted the accounting standard classified under
m. Office Leases
In accordance with FASB ASC Topic 835, “Interest” which842, “Leases”, lessees are required deferred financing costs to be presentedrecognize a right-of-use asset and a lease liability on the balance sheet asat the lease commencement date for all leases, except those leases with terms of less than a direct deduction from indebtedness.

l.year. We lease corporate office space under leases with terms of up to 10 years and that may include extension

13
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(Unaudited and dollars in thousands, except share and per share data)

options, but that do not include any residual value guarantees or restrictive covenants. As of September 30, 2022, we have $3,049 of operating lease right-of-use assets and $3,368 of operating lease liabilities related to our corporate office leases. The operating lease right-of-use assets are presented within other assets and the operating lease liabilities are presented within other liabilities in our consolidated balance sheet. We recorded $252 and $1,096 of total operating lease expense during the three and nine months ended September 30, 2022, which is recorded within property management expense and general and administrative expenses in our condensed consolidated statements of operations.
n. Income Taxes

We have elected to be taxed as a REIT beginning with the taxable year ended December 31, 2011.REIT. Accordingly, we recorded no income tax expense for the three and nine months ended September 30, 20172022 and 2016.

12

Independence Realty Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

As of September 30, 2017

(Unaudited and dollars in thousands, except share and per share data)

2021.

To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our ordinary taxable income to stockholders. As a REIT, we generally are not subject to federal income tax on taxable income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to stockholders; however, we believe that we are organized and operate in such a manner as to qualify and maintain treatment as a REIT and intend to operate in such a manner so that we will remain qualified as a REIT for federal income tax purposes.

m. Recent

o. Employee Retention Credit
Under the terms of the March 27, 2020 Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), we are eligible and applied for assistance in the form of a refundable employee retention credit. Since applicable GAAP guidance is limited, we adopted an accounting policy by analogizing to International Accounting Pronouncements

Below isStandard 20 “Accounting for Government Grants” to recognize employee retention credits as a brief descriptionreimbursement of recent accounting pronouncements that could havepayroll related expenses within property operating expenses, property management expenses, and general and administrative expenses in our condensed consolidated statements of operations. During the three months ended September 30, 2022, we received employee retention credit refunds totaling $6,238 and recognized $738 in property operating expenses, $212 in property management expenses and $211 in general and administrative expenses representing a materialreimbursement of previously paid employer payroll taxes, $788 in property operating expenses and $6 in property management expenses representing a reimbursement for retention costs and $257 representing interest within other income (expense) in our condensed consolidated statements of operations. The remainder will be included in accounts payable and accrued expenses in our condensed consolidated balance sheets and recognized on a systematic basis through December 2023 as a reimbursement of payroll related expenses attributable to off-cycle compensation increases awarded to employees beginning in July 2022 and intended to support employee retention during the pandemic and its ongoing effect on our financial statements.  

Adopted Within these Financial Statements

In March 2016, the FASB issued an accounting standard classified under FASB ASC Topic 718, “Compensation – Stock Compensation”.  This accounting standard simplifies several aspects of the accounting for share-based payment award transactions, including: (i) income tax consequences; (ii) classification of awards as either equity or liabilities; and (iii) classification on the statement of cash flows.  This standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The adoption of this accounting standard did not have a material impact on our consolidated financial statements.

Not Yet Adopted Within these Financial Statements

In May 2014, the FASB issued an accounting standard classified under FASB ASC Topic 606, “Revenue from Contracts with Customers”. This accounting standard generally replaces existing guidance by requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This accounting standard applies to all contracts with customers, except those that are within the scope of other Topics in the FASB ASC. During 2016, the FASB issued three amendments to this accounting standard which provide further clarification to this accounting standard. These standards amending FASB ASC Topic 606 are currently effective for annual reporting periods beginning after December 15, 2017. We are finalizing our evaluation of the impact that these standards may have on our consolidated financial statements however, a majority of our revenue is derived from real estate lease contracts which are specifically excluded from the scope of this standard.

In February 2016, the FASB issued an accounting standard classified under FASB ASC Topic 842, “Leases”.  This accounting standard amends lease accounting by requiring the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases on the balance sheet and disclosing key information about leasing arrangements.  This standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years.  Early application of the amendments in this standard is permitted.  Management is currently evaluating the impact that this standard may have on our consolidated financial statements.

In August 2016, the FASB issued an accounting standard classified under FASB ASC Topic 230, “Statement of Cash Flows”.  This accounting standard provides guidance on eight specific cash flow issues: (i) debt prepayment or debt extinguishment costs; (ii) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (iii) contingent consideration payments made after a business combination; (iv) proceeds from the settlement of insurance claims; (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (vi) distributions received from equity method investees; (vii) beneficial interests in securitization transactions; and (viii) separately identifiable cash flows and application of the predominance principle.  The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.  Management is currently evaluating the impact that this standard may have on our consolidated statement of cash flows.

In January 2017, the FASB issued an accounting standard update under FASB ASC Topic 805, “Business Combinations” that changes the definition of a business to assist entities with evaluating whether a set of transferred assets is a business. As a result, the accounting for acquisitions of real estate could be impacted. The updated standard will be effective for us on January 1, 2018 with

13

Independence Realty Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

As of September 30, 2017

(Unaudited and dollars in thousands, except share and per share data)

early adoption permitted. The new definition will be applied prospectively to any transactions occurring within the period of adoption. Management expects that the updated standard will result in fewer acquisitions of real estate meeting the definition of a business and fewer acquisition-related costs being expensed in the period incurred.

In May 2017, the FASB issued an accounting standard update under FASB ASC Topic 718, “Compensation – Stock Compensation.” The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. As a result, the accounting for share-based payment award transactions could be impacted. The updated standard will be effective for us on January 1, 2018 with early adoption permitted. The new definition will be applied prospectively to an award modified on or after the adoption date. Management is currently evaluating the impact that this standard may have on our consolidated financial statements.

In August 2017, the FASB issued an accounting standard update under FASB ASC Topic 815, “Derivatives and Hedging.” The amendments in this update provide guidance about the application of the hedge accounting guidance in current GAAP based on the feedback received from preparers, auditors, and other stakeholders. As a result, the accounting for derivatives and hedging transactions could be impacted. The updated standard will be effective for us on January 1, 2019 with early adoption permitted. The new definition will be applied prospectively to any transactions occurring within the period of adoption. Management is currently evaluating the impact that this standard may have on our consolidated financial statements.

macroeconomic environment. R

NOTE 3: Investments in Real Estate

As of September 30, 2017,2022, our investments in real estate consisted of 50122 apartment properties with 13,729 units.that contain 36,176 units (unaudited). The following table below summarizes our investments in real estate:

 

As of September 30, 2017

 

 

As of December 31, 2016

 

 

Depreciable Lives

(In years)

 

As of September 30, 2022As of December 31, 2021Depreciable Lives
(In years)

Land

 

$

187,935

 

 

$

165,120

 

 

 

—

 

Land$581,698 $567,507 —

Building

 

 

1,211,985

 

 

 

1,066,611

 

 

 

40

 

Building5,728,487 5,622,492 40

Furniture, fixtures and equipment

 

 

27,137

 

 

 

17,625

 

 

5-10

 

Furniture, fixtures and equipment323,902 272,356 5-10

Total investment in real estate

 

$

1,427,057

 

 

$

1,249,356

 

 

 

 

 

Total investments in real estateTotal investments in real estate$6,634,087 $6,462,355  

Accumulated depreciation

 

 

(75,084

)

 

 

(51,511

)

 

 

 

 

Accumulated depreciation(379,171)(243,475) 

Investments in real estate, net

 

$

1,351,973

 

 

$

1,197,845

 

 

 

 

 

Investments in real estate, net$6,254,916 $6,218,880  

As of September 30, 2017 and December 31, 2016,2022, we had investments in real estate with a carrying value of $22,031 and $60,786, respectively,owned two properties that were classified as held for sale.

Acquisitions

The below table summarizessale of Meadows Apartments closed on October 26, 2022 and we expect Sycamore Terrace to close in the acquisitions for the nine months ended September 30, 2017:

Property Name

 

Date of Purchase

 

Location

 

Units (unaudited)

 

 

Purchase Price

 

Lakes of Northdale

 

2/27/2017

 

Tampa, FL

 

 

216

 

 

$

29,750

 

Haverford Place

 

5/24/2017

 

Lexington, KY

 

 

160

 

 

$

14,240

 

South Terrace (1)

 

6/30/2017

 

Durham, NC

 

 

328

 

 

$

42,950

 

Cherry Grove (2)

 

9/26/2017

 

North Myrtle Beach, SC

 

 

172

 

 

$

16,157

 

Riverchase (2)

 

9/26/2017

 

Indianapolis, IN

 

 

217

 

 

$

18,899

 

Kensington (2)

 

9/26/2017

 

Canal Winchester, OH

 

 

264

 

 

$

24,409

 

Schirm Farms (2)

 

9/26/2017

 

Canal Winchester, OH

 

 

264

 

 

$

23,749

 

Total

 

 

 

 

 

 

1,621

 

 

$

170,154

 

fourth quarter of 2022. In

(1)

This property was acquired from a joint venture of which our former advisor was a controlling member.  See Note 8: Related Party Transactions and Arrangements.  In conjunction with this acquisition, we issued IROP units to third parties that were members of the joint venture that owned the property.  See Note 6: Shareholder Equity and Noncontrolling Interests.  

14

14

Table of Contents
Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

As of

September 30, 2017

2022

(Unaudited and dollars in thousands, except share and per share data)

(2)

These properties were acquired as the first phase of our acquisition of a nine-community portfolio, totaling 2,353 units, which we agreed to acquire on September 3, 2017 for a total purchase price of $228,144. In connection with the acquisition of these properties, we incurred defeasance costs totaling $2,781, which are included in Acquisition related debt extinguishment expenses within the Consolidated Statements of Operations.


connection with the sale of these properties we expect to extinguish $46,087 of mortgage debt. The table below summarizes our held for sale properties.
Property NameNet carrying valueUnits (unaudited)
Meadows Apartments - Louisville, KY$36,545 400 
Sycamore Terrace - Terre Haute, IN45,633 250 
Totals$82,178 650 
Acquisitions
On April 6, 2022, we acquired Views of Music City (phase I), a 96-unit property (unaudited) located in Nashville, TN for $25,440. We purchased this property from one of our unconsolidated joint ventures. On account of our equity interest in this joint venture, we received $4,428 of the sales proceeds, comprised of $3,406 as a return of capital and $1,022 as a preferred return on capital. In accordance with ASC 970-323-30-7, we recorded the preferred return on capital as a reduction to the carrying value of the purchased real estate, deferring the gain which will be recognized as income on a pro rata basis as the real estate is depreciated or when it is sold to a third party.
On August 16, 2022, we acquired Cyan Mallard Creek, a 234-unit property (unaudited) located in Charlotte, NC for $80,000.
On September 13, 2022, we acquired The Enclave at Tranquility Lake, a 348-unit property (unaudited) located in Tampa, FL for $98,000.
The following table summarizes the aggregaterelative fair value of the assets and liabilities associated with the properties acquiredacquisitions during the nine-month periodnine months ended September 30, 2017,2022, on the date of acquisition accounted for under FASB ASC Topic 805.

805-50-15-3.

Description

 

Fair Value

of Assets Acquired

During the

Nine-Month Period Ended

September 30,

2017

 

Assets acquired:

 

 

 

 

Investments in real estate

 

$

168,191

 

Accounts receivable and other assets

 

$

463

 

Intangible assets

 

$

1,963

 

Total assets acquired

 

$

170,617

 

Liabilities assumed:

 

 

 

 

Accounts payable and accrued expenses

 

$

1,502

 

Other liabilities

 

$

490

 

Total liabilities assumed

 

$

1,992

 

Estimated fair value of net assets acquired

 

$

168,625

 

Fair Value of Assets Acquired During the Nine Months Ended September 30, 2022
Assets acquired:
      Investments in real estate$201,611 
      Other assets229 
      Intangible assets1,136 
      Total assets acquired202,976 
Liabilities assumed:
      Accounts payable and accrued expenses872 
      Other liabilities327 
      Total liabilities assumed1,199 
Estimated fair value of net assets acquired$201,777 

Dispositions
The following table below presents the revenue and net income (loss)summarizes our dispositions for the properties acquired during the nine-month periodnine months ended September 30, 2017 as reported in our consolidated financial statements, excluding any related acquisition and integration expenses.

2022:

 

 

 

For the Three-Month Period

Ended September 30, 2017

 

 

For the Nine-Month Period

Ended September 30, 2017

 

Property

 

Total revenue

 

 

Net income (loss) allocable to common shares

 

 

Total revenue

 

 

Net income (loss) allocable to common shares

 

Lakes of Northdale

 

$

789

 

 

$

223

 

 

$

1,829

 

 

$

447

 

Haverford Place

 

$

452

 

 

$

107

 

 

$

637

 

 

$

179

 

South Terrace

 

$

1,039

 

 

$

198

 

 

$

1,049

 

 

$

203

 

Cherry Grove

 

$

26

 

 

$

17

 

 

$

26

 

 

$

17

 

Riverchase

 

$

25

 

 

$

13

 

 

$

25

 

 

$

13

 

Kensington

 

$

35

 

 

$

25

 

 

$

35

 

 

$

25

 

Schirm Farms

 

$

35

 

 

$

23

 

 

$

35

 

 

$

23

 

Total

 

$

2,401

 

 

$

606

 

 

$

3,636

 

 

$

907

 

Property NameDate of SaleSale PriceGain on sale
Riverchase01/18/2022$31,000 $12,901 
Heritage Park02/02/202248,500 31,366 
Raindance02/02/202247,500 33,748 
Haverford02/02/202231,050 16,697 
Total$158,050 $94,712 

The table below represents the revenue, net income and earnings per share effect


15
Table of the acquired property, as reported in our consolidated financial statements and on a pro forma basis as if the acquisition occurred on January 1, 2016. These pro forma results are not necessarily indicative of the results that actually would have occurred if the acquisition had occurred on January 1, 2016, nor does the pro forma financial information purport to represent the results of operations for future periods.

Contents

15

Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

As of

September 30, 2017

2022

(Unaudited and dollars in thousands, except share and per share data)

Description

 

For the

Three-Month

Period Ended

September 30, 2017

 

 

For the

Three-Month

Period Ended

September 30, 2016

 

 

For the

Nine-Month

Period Ended

September 30, 2017

 

 

For the

Nine-Month

Period Ended

September 30, 2016

 

Pro forma total revenue (unaudited)

 

 

43,421

 

 

 

42,695

 

 

 

128,834

 

 

 

128,350

 

Pro forma net income (loss) allocable to common shares (unaudited)

 

 

2,347

 

 

 

3,211

 

 

 

27,663

 

 

 

34,012

 

Earnings (loss) per share attributable to common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic-pro forma (unaudited)

 

$

0.03

 

 

$

0.07

 

 

$

0.40

 

 

$

0.72

 

Diluted-pro forma (unaudited)

 

$

0.03

 

 

$

0.07

 

 

$

0.39

 

 

$

0.72

 


NOTE 4: Investments in Unconsolidated Real Estate
We didhave entered into joint ventures with unrelated third parties to own, operate, acquire, develop and manage real estate assets that are accounted for under the equity method of accounting, and are included in investments in unconsolidated real estate entities on the consolidated balance sheets.
Our joint ventures are funded with a combination of debt and equity. We will consolidate entities that we control as well as any variable interest entity where we are the primary beneficiary. Under the VIE model, we will consolidate an entity when we have the ability to direct the activities of the VIE and the obligations to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, we consolidate an entity when we control the entity through ownership of a majority voting interest. We separately analyzed the initial accounting for each investment in unconsolidated entity and concluded that each are a voting interest entity. Our equity interest varies for each joint venture between 50% to 90% but, in each case, we share control of the major decisions that most significantly impact the joint ventures with our partners. Since we do not make any purchase price allocation adjustments duringcontrol the nine-month period endedjoint venture through our ownership interest, they are accounted for under the equity method of accounting. As of September 30, 2017.

On October 25, 2017, we acquired a 264 unit residential community located2022, our investments in Baton Rouge, LA, known as Live Oak Trace, for $28,501. This acquisition was partunconsolidated real estate entities had aggregate land, building, and construction in progress costs capitalized of $174,839 and aggregate construction debt of $77,975. We do not guarantee any debt, capital payout or other obligations associated with our joint ventures. We recognize earnings or losses from our investments in unconsolidated real estate entities consisting of our proportionate share of the nine-property portfolio acquisition announced on September 5, 2017.

Dispositions

net earnings or losses of the joint ventures.

The following table below summarizes the dispositions for the nine months endedour investments in unconsolidated real estate entities as of September 30, 20172022 and also presentsDecember 31, 2021:
Carrying Value As Of
Investments in Unconsolidated Real Estate EntitiesLocation
Units(1) (Unaudited)
IRT Ownership InterestSeptember 30, 2022December 31, 2021
Metropolis at InnsbrookRichmond, VA40284.8 %$17,152 $14,632 
Views of Music City II / The CrockettNashville, TN40850.0 %11,198 10,368 
VirtuosoHuntsville, AL40090.0 %14,170 — 
Lakeline StationAustin, TX37890.0 %18,810 — 
The MustangDallas, TX27585.0 %9,278 — 
Total1,863$70,608 $24,999 
(1)Represents the total number of units after development is complete and each property’s contribution to net income (loss) allocable to common shares, excludingproperty is placed in service. As of September 30, 2022 only 178-units at the impact of the gain (loss) on sale:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) allocable to common shares

 

Property Name

 

Date of Sale

 

Sale Price

 

 

Gain (loss) on sale (1)

 

 

For the Three Months Ended September 30, 2017

 

 

For the Nine Months Ended September 30, 2017

 

Copper Mill

 

5/5/2017

 

$

32,000

 

 

$

15,616

 

 

$

(3

)

 

$

794

 

Heritage Trace

 

6/1/2017

 

 

11,600

 

 

 

(1,237

)

 

 

(3

)

 

 

477

 

Berkshire

 

6/9/2017

 

 

16,000

 

 

 

1,579

 

 

 

(33

)

 

 

457

 

Total

 

 

 

$

59,600

 

 

$

15,958

 

 

$

(39

)

 

$

1,728

 

Virtuoso investment’s development is complete and has ongoing operations.

(1)

The gain (loss) on sale for these properties is net of $2,748 of defeasance costs.  All properties were previously classified as held for sale.

NOTE 4:5: Indebtedness

The following tables contain summary information concerning our indebtedness as of September 30, 2017:

Debt:

 

Outstanding Principal

 

 

Unamortized Discount and Debt Issuance Costs

 

 

Carrying Amount

 

 

Type

 

Weighted Average Rate

 

 

Weighted Average Maturity (in years)

 

     Unsecured credit facility (1)(2)

 

$

159,690

 

 

$

(2,527

)

 

$

157,163

 

 

Floating

 

 

2.7%

 

 

 

3.9

 

     Mortgages-Fixed rate

 

 

577,632

 

 

 

(3,170

)

 

 

574,462

 

 

Fixed

 

 

3.7%

 

 

 

6.0

 

Total Debt

 

$

737,322

 

 

$

(5,697

)

 

$

731,625

 

 

 

 

 

3.5%

 

 

 

5.6

 

2022:

(1)

The unsecured credit facility total capacity is $300,000, of which $159,690 was outstanding as of September 30, 2017.

Debt:Outstanding PrincipalUnamortized Debt Issuance CostsUnamortized Loan (Discount)/PremiumsCarrying
 Amount		TypeWeighted
Average Rate		Weighted
Average
Maturity
(in years)
Unsecured revolver(1)$197,978 $(2,046)$— $195,932 Floating3.6%3.3
Unsecured term loans600,000 (3,093)— 596,907 Floating3.4%4.8
Secured credit facilities635,128 (2,783)28,848 661,193 Floating/Fixed4.2%6.2
Mortgages(2)1,233,097 (7,996)34,492 1,259,593 Fixed3.9%5.4
Total Debt$2,666,203 $(15,918)$63,340 $2,713,625 3.8%5.3

(2)

As of September 30, 2017, IRT maintained a float-to-fixed interest rate swap with a $150,000 notional amount. This swap, which expires on June 17, 2021 and has a fixed rate of 1.1325%, has converted $150,000 of our floating rate debt to fixed rate debt.

16

Table of Contents

16

Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

As of

September 30, 2017

2022

(Unaudited and dollars in thousands, except share and per share data)

 

 

Original maturities on or before December 31,

 

 

 

Debt:

 

2017

 

 

2018

 

 

2019

 

 

2020

 

 

2021

 

 

Thereafter

 

 

 

Unsecured credit facility

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

109,690

 

 

$

50,000

 

 

 

Mortgages-Fixed rate

 

 

685

 

 

 

3,245

 

 

 

4,660

 

 

 

7,611

 

 

 

102,597

 

 

 

458,834

 

 

 

Total

 

$

685

 

 

$

3,245

 

 

$

4,660

 

 

$

7,611

 

 

$

212,287

 

 

$

508,834

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


As

(1)The unsecured revolver's maximum borrowing capacity is $500,000, of which $197,978 was outstanding as of September 30, 2022.
(2)Includes indebtedness associated with real estate held for sale.
The following table contains summary information concerning our indebtedness as of September 30, 2017, we were in compliance with all financial covenants contained in our indebtedness.

2022:

 Scheduled maturities on our indebtedness outstanding as of September 30, 2022
Debt:20222023202420252026Thereafter
Unsecured revolver$— $— $— $— $197,978 $— 
Unsecured term loans— — — — 200,000 400,000 
Secured credit facilities— — — 3,525 10,492 621,110 
Mortgages(1)2,327 10,998 70,292 194,259 145,383 809,839 
Total$2,327 $10,998 $70,292 $197,784 $553,853 $1,830,949 
(1)Includes indebtedness associated with real estate held for sale.
The following table contains summary information concerning our indebtedness as of December 31, 2016:

2021:

Debt:

 

Outstanding Principal

 

 

Unamortized Discount and Debt Issuance Costs

 

 

Carrying Amount

 

 

Type

 

Weighted Average Rate

 

 

Weighted Average Maturity (in years)

 

Debt:Outstanding PrincipalUnamortized Debt Issuance CostsUnamortized Loan (Discount)/PremiumsCarrying AmountTypeWeighted
Average Rate		Weighted
Average
Maturity
(in years)

Secured credit facility (1)

 

$

150,000

 

 

$

(2,720

)

 

$

147,280

 

 

Floating

 

 

3.0%

 

 

 

1.7

 

Mortgages-Fixed rate

 

 

600,188

 

 

 

(3,651

)

 

 

596,537

 

 

Fixed

 

 

3.8%

 

 

 

6.7

 

Unsecured revolver(1)Unsecured revolver(1)$277,003 $(2,894)$— $274,109 Floating1.5%4.1
Unsecured term loansUnsecured term loans500,000 (2,049)— 497,951 Floating1.4%3.2
Secured credit facilitiesSecured credit facilities635,128 (2,840)32,330 664,618 Floating/Fixed4.0%6.9
MortgagesMortgages1,238,612 (9,210)39,256 1,268,658 Fixed3.9%6.1

Total Debt

 

$

750,188

 

 

$

(6,371

)

 

$

743,817

 

 

 

 

 

3.6%

 

 

 

5.7

 

Total Debt$2,650,743 $(16,993)$71,586 $2,705,336 3.2%5.6

(1)

(1)The secured credit facility totalunsecured revolver's maximum borrowing capacity was $312,500,$500,000, of which $150,000$277,003 was outstanding as of December 31, 2016.

2021.

In February 2017, IROP drew down $22,000 on

On July 25, 2022, we entered into the securedFourth Amended, Restated and Consolidated Credit Agreement (the “Restated Credit Agreement”) which amended and restated in its entirety the Third Amended and Restated Credit Agreement dated as of December 14, 2021 (the "Prior Credit Agreement"). The Restated Credit Agreement provides for an aggregate amount available for borrowing of $1,100,000, which represents an increase of $100,000 over the Prior Credit Agreement. The Prior Credit Agreement provided for a $500,000 unsecured revolving credit facility in connection(the “Revolving Credit Facility”) with a January 31, 2026 scheduled maturity date and three unsecured term loans, specifically: (i) a $200,000 term loan with a May 18, 2026 maturity date (the “2026 Term Loan”); (ii) a $200,000 term loan with a January 17, 2024 maturity date (the “January 2024 Term Loan”); and (iii) a $100,000 term loan with a November 20, 2024 maturity date (the “November 2024 Term Loan” and, together with the Lakes of Northdale acquisition.  

On May 1, 2017, we closed onJanuary 2024 Term Loan, the “2024 Term Loans”). The Restated Credit Agreement provides for a new $300,000 unsecured credit facility, refinancing and terminating the previous secured credit facility. The new facility is comprised of a $50,000$400,000 term loan andwith a revolving commitment of up to $250,000. TheJanuary 28, 2028 maturity date on(the “2028 Term Loan”). Proceeds of the new term loan is May 1, 2022,2028 Term Loan were used to (i) repay and retire the 2024 Term Loans, and (ii) reduce $100,000 of outstanding borrowings under the Revolving Credit Facility. In addition, the Restated Credit Agreement changed the LIBOR interest rate option to SOFR. The Restated Credit Agreement otherwise continues, without material change, the 2026 Term Loan and the maturity date on borrowings outstandingRevolving Credit Facility. We recognized the restructuring of the Restated Credit Agreement as a modification of debt for all lenders except for one and incurred deferred financing costs of $1,477 associated with the transaction. We recognized the portion of debt associated with the lender no longer participating in the Restated Credit Agreement as an extinguishment of debt and wrote off their de minimis deferred financing costs.

17
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(Unaudited and dollars in thousands, except share and per share data)

Borrowings under the revolving commitment is May 1, 2021, extending2028 Term Loan bear interest at a rate equal to either (i) the September 17, 2018 maturitySOFR rate plus a margin of the previous secured credit facility. Based on our current leverage levels, our annual interest cost is LIBOR plus 145115 to 180 basis points, or (ii) a base rate plus a margin of 15 to 80 basis points. These margins represent a 5-basis point decrease from those applicable to the term loans that were repaid and retired. The margin for borrowings under the term loanRevolving Credit Facility and LIBORthe 2026 Term Loan remained unchanged, with (1) Revolving Credit Facility borrowings bearing interest at a rate equal to either (i) the SOFR rate plus 150a margin of 125 to 200 basis points, or (ii) a base rate plus a margin of 25 to 100 basis points; and (2) 2026 Term Loan borrowings bearing interest at a rate equal to either (i) the SOFR rate plus a margin of 120 to 190 basis points, or (ii) a base rate plus a margin of 20 to 90 basis points. The applicable margin will be determined based upon IROP’s consolidated leverage ratio. At the time of closing, based on IROP’s consolidated leverage ratio, the applicable margin was 125 basis points for borrowings outstanding under the revolving commitments.  We recognizedRevolving Credit Facility, 120 basis points for the refinance as a partial extinguishment2026 Term Loan and 115 basis points for the 2028 Term Loan.
IROP has the right to request an increase in the aggregate amount of our prior secured credit facilitythe Restated Credit Agreement from $1,100,000 to up to $1,500,000, subject to certain terms and recognized a loss on extinguishmentconditions, including receipt of debtcommitments from one or more lenders, whether or not currently parties to the Restated Credit Agreement, to provide such increased amounts, which increase may be allocated, at IROP’s option, to the Revolving Credit Facility and/or to one or more of $572.

In May 2017, IROP drew down $9,000 on the unsecured credit facilityTerm Loans, in connectionaccordance with the Haverford Place acquisition.

In June 2017, IROP drew down $31,250 on the unsecured credit facility in connection with the South Terrace acquisition.

In September 2017, IROP (1) paid down $117,500 on the unsecured credit facility using proceeds from the common stock offering on September 11, 2017, which is discussed in Note 6: Shareholders Equity, and (2) drew down $85,000 in connection with the four properties acquired on September 26, 2017.

In connection with the three property dispositions during the nine months endedRestated Credit Agreement.


As of September 30, 2017,2022, we extinguished, through defeasance, property mortgages totaling $20,586.

were in compliance with all financial covenants contained in the documents governing our indebtedness.

NOTE 5:6: Derivative Financial Instruments

We may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with our borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with our operating and financial structure as well as to hedge specific anticipated transactions.  While these instruments may impact our periodic cash flows, they benefit us by minimizing the risks and/or costs previously described.  

Interest Rate Swaps and Caps

We have entered into an interest rate cap contract and an interest rate swap contract to hedge interest rate exposure on floating rate indebtedness.          

On June 24, 2016, we entered into an interest rate swap contract with a notional value of $150,000, a strike rate of 1.145% and a maturity date of June 17, 2021.  We designated this interest rate swap as a cash flow hedge at inception and determined that the hedge

17

Independence Realty Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

As of September 30, 2017

(Unaudited and dollars in thousands, except share and per share data)

is highly effective in offsetting interest rate fluctuations associated with the identified indebtedness. We did not recognize any ineffectiveness associated with this cash flow hedge through April 2017.  On April 17, 2017, in conjunction with the refinance of our credit facility, we restructured our existing interest rate swap to remove the LIBOR floor.  This resulted in a decrease in the strike rate to 1.1325%.  The notional value and maturity date remained the same.  We designated the restructured interest rate swap as a cash flow hedge at inception and determined that the hedge is highly effective in offsetting interest rate fluctuations associated with the identified indebtedness. However, since the fair value of the swap at inception of the hedging relationship was not zero, we expect some ineffectiveness to be recognized over the life of the instrument.  During the three and nine months ended September 30, 2017, we recognized $(12) and $0 of ineffectiveness based on the hypothetical derivative method. Our interest rate cap is not designated as a cash flow hedge.  

The following table summarizes the aggregate notional amountamounts and estimated net fair valuevalues of our derivative instruments as of September 30, 20172022 and December 31, 2016:

2021:

 

 

As of September 30, 2017

 

 

As of December 31, 2016

 

 

 

Notional

 

 

Fair Value of

Assets

 

 

Fair Value of

Liabilities

 

 

Notional

 

 

Fair Value of

Assets

 

 

Fair Value of

Liabilities

 

Cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap

 

$

150,000

 

 

$

3,581

 

 

$

—

 

 

$

150,000

 

 

$

3,867

 

 

$

—

 

Freestanding derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate cap

 

 

200,000

 

 

 

—

 

 

 

—

 

 

 

200,000

 

 

 

—

 

 

 

—

 

Net fair value

 

$

350,000

 

 

$

3,581

 

 

$

—

 

 

$

350,000

 

 

$

3,867

 

 

$

—

 

As of September 30, 2022As of December 31, 2021
NotionalFair Value of
Assets		Fair Value of
Liabilities		NotionalFair Value of
Assets		Fair Value of
Liabilities
Cash flow hedges:
Interest rate swap$300,000 $27,907 — $150,000 $2,488 $6,463 
Interest rate collars250,000 8,253 — 250,000 — 5,433 
Forward interest rate collars200,000 7,807 — — — — 
Total$750,000 $43,967 — $400,000 $2,488 $11,896 

Effective interest rate swaps and caps are reported in accumulated other comprehensive income, and the fair value of these hedge agreements is included in otherrecorded as derivative assets or other liabilities.

liabilities on the face of our consolidated balance sheet.

For our interest rate swap and collars that isare considered a highly effective hedge,hedges, we reclassified realized gains of $27 and(gains) losses of $156$(537) and $2,452 to earnings within interest expense for the three and nine months ended September 30, 2017, respectively,2022, and we expect $471$11,896 to be reclassified out of accumulated other comprehensive income to earnings over the next 12 months.

NOTE 6: Shareholder Equity

On July 12, 2022, we entered into forward starting interest rate collars with a total notional value of $200,000, a cap rate of 2.50%, a floor rate of 1.50% and Noncontrolling Interests

Stockholder Equity

Our boarda maturity date of directors has declaredJanuary 17, 2028. The effective date for $100,000 of the following dividendsforward interest rate collars is January 17, 2024 and November 17, 2024, respectively. We designated these forward interest rate collars as cash flow hedges at inception and determined that the hedges are highly effective in 2017: 

Month

 

Declaration Date

 

Record Date

 

Payment Date

 

Dividend

Declared

Per Share

 

January 2017

 

January 12, 2017

 

January 31, 2017

 

February 15, 2017

 

$

0.06

 

February 2017

 

January 12, 2017

 

February 28, 2017

 

March 15, 2017

 

$

0.06

 

March 2017

 

January 12, 2017

 

March 31, 2017

 

April 17, 2017

 

$

0.06

 

April 2017

 

April 12, 2017

 

April 28, 2017

 

May 15, 2017

 

$

0.06

 

May 2017

 

April 12, 2017

 

May 31, 2017

 

June 15, 2017

 

$

0.06

 

June 2017

 

April 12, 2017

 

June 30, 2017

 

July 17, 2017

 

$

0.06

 

July 2017

 

July 14, 2017

 

July 31, 2017

 

August 15, 2017

 

$

0.06

 

August 2017

 

July 14, 2017

 

August 31, 2017

 

September 15, 2017

 

$

0.06

 

September 2017

 

July 14, 2017

 

September 29, 2017

 

October 13, 2017

 

$

0.06

 

October 2017

 

October 12, 2017

 

October 31, 2017

 

November 15, 2017

 

$

0.06

 

November 2017

 

October 12, 2017

 

November 30, 2017

 

December 15, 2017

 

$

0.06

 

December 2017

 

October 12, 2017

 

December 29, 2017

 

January 15, 2018

 

$

0.06

 

Common Shares

Duringoffsetting interest rate fluctuations associated with the three and nine months ended September 30, 2017, we also paid $0 and $126, respectively,identified indebtedness.

18
Table of dividends on restricted common share awards that vested during the period.

18

Contents

Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

As of

September 30, 2017

2022

(Unaudited and dollars in thousands, except share and per share data)


NOTE 7: Stockholders' Equity and Noncontrolling Interests
Stockholders’ Equity
On August 4, 2017,September 12, 2022, our board of directors declared a dividend of $0.14 per share on our common stock, which was paid on October 21, 2022 to common stockholders of record as of September 30, 2022.
On May 18, 2022, our board of directors declared a dividend of $0.14 per share on our common stock, which was paid on July 22, 2022 to common stockholders of record as of July 1, 2022.
On March 14, 2022, our board of directors declared a dividend of $0.12 per share on our common stock, which
was paid on April 22, 2022 to common stockholders of record as of April 1, 2022.
On November 13, 2020, we entered into an At-the-Market Issuance Sales Agreement (the “Sales Agreement”) with various sales agents. Pursuantequity distribution agreement pursuant to the Sales Agreement,which we may from time to time offer and sell shares of our common stock $0.01 par value per share, having an aggregate offering price of up to $150,000 from time(the “ATM Program”) in negotiated transactions or transactions that are deemed to time throughbe “at the sales agents. The sales agents are entitled to compensationmarket” offerings as defined in an agreed amount not to exceed 2.0% of the gross sales price per share for any shares sold from time to timeRule 415 under the Sales Agreement. We have no obligation to sell anySecurities Act of 1933, as amended. Under the shares underATM Program, we may also enter into one or more forward sale transactions for the Sales Agreement and may at any time suspend solicitations and offers under the Sales Agreement. No shares were issued pursuant to the Sales Agreement assale of September 30, 2017.

On September 11, 2017, we issued 12,500,000 shares of our common stock aton a public offering priceforward basis. We entered into forward sale transactions under the ATM Program on November 1, 2021 and on March 7, 2022 each for the forward sale of $9.25 per share. We also closed on the underwriters’ option to purchase an additional 1,875,0001,000,000 shares of common stock at the public offering price. As a result of the offering and exercise or the underwriters’ option, we received approximately $126,100 in net proceeds, after deducting the underwriting discount and offering expenses.

Noncontrolling Interest

In June 2017, we issued 166,604 IROP units in connection with our acquisition of South Terrace.  The IROP units were valued at $1,654 based on the price of our common stock. See Note 3: Investments

On May 18, 2022, our Board of Directors authorized a common stock repurchase program (the "Stock Repurchase Program") covering up to $250,000 in Real Estate for detailsshares of our common stock. Under the Stock Repurchase Program, we, in our discretion, may purchase our shares from time to time in the open market or in privately negotiated transactions. The amount and timing of the purchases will depend on a number of factors, including the property acquisition.

price and availability of our shares, trading volumes and general market conditions. The Stock Repurchase Program has no time limit and may be suspended or discontinued at any time. During the three and nine months ended September 30, 2022, we had no repurchases of shares under the Stock Repurchase Program. As of September 30, 2017, 3,035,6542022, we had $250,000 remaining authorized for purchase under the Stock Repurchase Program.

On September 28, 2022, we physically settled in full 2,000,000 shares that were previously sold on a forward basis under the ATM Program. The forward shares were settled at the current weighted average sales price of $24.97 per share and we received proceeds, net of sales commissions, of approximately $49,935. No forward sale transactions under the ATM Program were entered into during the three months ended September 30, 2022 and there were no forward sale transactions that had not been settled as of September 30, 2022. As of September 30, 2022, approximately $56,836 remained available for issuance under the ATM Program.
Prior to the September 28, 2022 physical settlement, we evaluated the accounting for the forward sale transactions under FASB ASC Topic 480 “Distinguishing Liabilities from Equity” and FASB ASC Topic 815 “Derivatives and Hedging”. As the forward sale transactions were considered indexed to our own equity and since they met the equity classification conditions in ASC 815-40-25, the forward sale transactions were classified as equity.
Noncontrolling Interest
During the three and nine months ended September 30, 2022, holders of IROP units exchanged 0 and 890,669 units for 0 and 890,669 shares of our common stock, respectively. As of September 30, 2022, 6,091,171 IROP units held by unaffiliated third parties remain outstanding withoutstanding.
On September 12, 2022, our board of directors declared a redemption valuedividend of $30,873, based$0.14 per unit, which was paid on IRT’s stock priceOctober 21, 2022 to IROP LP unit holders of $10.17record as of September 29, 2017.

Our30, 2022.

On May 18, 2022, our board of directors has declared the following distributionsa dividend of $0.14 per unit, which was paid on IROP’sJuly 22, 2022 to IROP LP unitsunit holders of record as of July 1, 2022.
On March 14, 2022, our board of directors declared a dividend of $0.12 per unit, which was paid on April 22,
2022 to IROP LP unit holders of record as of April 1, 2022.
19
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(Unaudited and dollars in 2017:

thousands, except share and per share data)

Month

 

Declaration Date

 

Record Date

 

Payment Date

 

Dividend

Declared

Per Share

 

January 2017

 

January 12, 2017

 

January 31, 2017

 

February 15, 2017

 

$

0.06

 

February 2017

 

January 12, 2017

 

February 28, 2017

 

March 15, 2017

 

$

0.06

 

March 2017

 

January 12, 2017

 

March 31, 2017

 

April 17, 2017

 

$

0.06

 

April 2017

 

April 12, 2017

 

April 28, 2017

 

May 15, 2017

 

$

0.06

 

May 2017

 

April 12, 2017

 

May 31, 2017

 

June 15, 2017

 

$

0.06

 

June 2017

 

April 12, 2017

 

June 30, 2017

 

July 17, 2017

 

$

0.06

 

July 2017

 

July 14, 2017

 

July 31, 2017

 

August 15, 2017

 

$

0.06

 

August 2017

 

July 14, 2017

 

August 31, 2017

 

September 15, 2017

 

$

0.06

 

September 2017

 

July 14, 2017

 

September 29, 2017

 

October 13, 2017

 

$

0.06

 

October 2017

 

October 12, 2017

 

October 31, 2017

 

November 15, 2017

 

$

0.06

 

November 2017

 

October 12, 2017

 

November 30, 2017

 

December 15, 2017

 

$

0.06

 

December 2017

 

October 12, 2017

 

December 29, 2017

 

January 15, 2018

 

$

0.06

 


NOTE 7:8: Equity Compensation Plans

Long Term Incentive Plan

In

On May 2016,18, 2022, our shareholdersstockholders approved and our board of directors adopted an amended and restated2022 Long Term Incentive Plan or(the “2022 Incentive Plan”). The 2022 Incentive Plan replaces our 2016 Long Term Incentive Plan (the “Prior Plan”) and no new awards may be made under the incentivePrior Plan, although awards outstanding under the Prior Plan will remain subject to the terms of the Prior Plan. The 2022 Incentive plan which provides for the grants of equity and equity-based awards to our directors,employees, officers, and full-time employees, full-time employees of our former advisor and its affiliates, full-time employees of entities that provide services to our former advisor, directors, of our former advisor or of entities that provide services to it, certain of our consultants and certain consultants to our former advisorother service providers, and its affiliates or to entities that provide services to our former advisor. The incentive plan authorizessuch awards may take the grantform of restricted or unrestricted shares of our common stock, non-qualified andstock options, incentive stock options, restricted stock units (“RSUs), stock appreciation rights (“SARs”), dividend equivalents and other stock- orequity and cash-based awards. In conjunction with the amendment, the numberA maximum of 8,000,000 shares of our common stock issuable(plus up to an additional 1,280,610 shares of our common stock, to the extent that shares subject to outstanding awards under the incentive plan was increasedPrior Plan are recycled into the 2022 Incentive Plan) may be awarded under the 2022 Stock Incentive Plan, subject to 4,300,000customary adjustment for stock splits, reverse stock splits and similar corporate events or transactions affecting shares of our common stock.
Under the 2022 Stock Incentive Plan and the term of the incentive plan was extended to May 12, 2026.  

       Under the incentive plan or predecessor incentive plans,Prior Plan, we have granted restricted shares, RSUs, and stock appreciation rights, or SARs,PSUs to our employees and employees of our former advisor.employees. These awards generally vest or vested over a three-yeartwo-to four-year period. In addition, we have granted unrestricted shares to our non-employee directors. These awards generally vest or vested immediately.

19

Independence Realty Trust, Inc.A summary of restricted common share award and Subsidiaries

Notes to Consolidated Financial Statements

As of September 30, 2017

(Unaudited and dollars in thousands, except share and per share data)

RSU activity is presented below.

 2022
 Number of SharesWeighted Average Grant Date Fair
Value Per Share
Balance, January 1,404,988 $13.75 
Granted220,593 23.76 
Vested(183,455)12.78 
Forfeited(45,408)21.33 
Balance, September 30,(1)
396,718 $18.89 
(1)The outstanding award balances above include 163,348 and 67,381 RSUs as of September 30, 2022 and December 31, 2021, respectively.
On February 28, 2017,8, 2022, our compensation committee awarded 143,180 restricted stock awards, valued at $9.19 per share, or $1,316 in the aggregate.  The restricted stock awards vest over a three-year period except for 6,585 awards that vested immediately.  In addition, our compensation committee awarded performance share units, or198,099 PSUs to eligible officers under a newly adopted 2017 Annual Equity Award Program pursuant to the incentive plan.our executive officers. The number of PSUs awardedearned will be based on attainment of certain performance criteria over a three-year period, with 226,469 PSUs granted for achieving the maximum performance criteria. The aggregate grant date fair valueactual number of shares issuable ranging between 0% and 150% of the number of PSUs was $1,076.

On May 16, 2017, our compensation committee granted stock undergranted. Half of any PSUs earned will vest, and shares will be issued in respect thereof, immediately following the incentive plan such that our independent directors receivedend of the three-year performance period; the remaining half of any PSUs earned will vest, and shares will be issued in respect thereof, after an aggregateadditional one-year period of 24,830 shares of our common stock, valued at $225 using our closing stock price of $9.06.  These awards vested immediately.

NOTE 8: Related Party Transactions and Arrangements

Fees and Expenses Paid to Our Former Advisor

On December 20, 2016, in connection with our management internalization, we acquired our former advisor and, therefore, fees and expenses to our former advisor are no longer incurred.

For the three months ended September 30, 2017 and 2016, our former advisor earned $0 and $1,727 of asset management fees, respectively, and $0 and $5,141 forservice.

During the nine months ended September 30, 20172022 and 2016, respectively. These fees are included within general and administrative expenses in our consolidated statements of operations.

For the three months ended September 30, 2017 and 2016, our former advisor earned $0 and $206 of incentive fees, respectively, and $0 and $350 for the nine months ended September 30, 2017 and 2016, respectively.  These fees are included within general and administrative expenses in our consolidated statements of operations.

For the nine months ended September 30, 2017 and 2016, we incurred costs of $727 and $0, respectively, with respect to our shared services agreement with our former advisor. The term2021, a portion of the agreement was from December 21, 2016RSUs and PSUs granted were issued to June 20, 2017 andemployees who are retirement eligible. The fact that the grantees are retirement eligible resulted in immediate recognition of the associated fees are included within generalstock-based compensation expense totaling $2,422 and administrative expenses in our consolidated statements$2,112, respectively.

20
Table of operations.

As of September 30, 2017 and December 31, 2016, we had no liabilities payable to our former advisor for asset management fees, incentive fees or shared service fees.

Property Management Fees Paid to Our Former Property Manager

On December 20, 2016, in connection with our management internalization, we acquired property management agreements with respect to each of our properties from RAIT Residential, our former property manager, which is wholly owned by RAIT.

For the three months ended September 30, 2017 and 2016, our former property manager earned $0 and $1,219, respectively, and $0 and $3,710 for the nine months ended September 30, 2017 and 2016, respectively, of property management and leasing fees. As of September 30, 2017 and December 31, 2016, we had no liabilities payable to our property manager for property management and leasing fees.

Dividends Paid to Affiliates of Our Former Advisor

On October 5, 2016, we repurchased and retired all 7,269,719 shares of our common stock owned by subsidiaries of RAIT.

Since October 5, 2016, RAIT has not owned any shares of our common stock.  For the three months ended September 30, 2017 and 2016, we declared and subsequently paid dividends of $0 and $1,309, respectively, and $0 and $3,926 for the nine months ended September 30, 2017 and 2016, respectively, related to shares of common stock owned by subsidiaries of RAIT.  

20

Contents

Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

As of

September 30, 2017

2022

(Unaudited and dollars in thousands, except share and per share data)

RAIT Indebtedness

In the second quarter of 2016, we repaid $38,075 of mortgage indebtedness with proceeds from two property dispositions.  This indebtedness was held by RAIT. Total interest expense paid to RAIT for the three and nine months ended September 30, 2017 and 2016 was $0 and $486, respectively.

Related Party Transaction

In June 2017, we acquired South Terrace, a 328-unit property in Durham, NC for $42,950 from a joint venture, of which a subsidiary of RAIT was a controlling member. For further information, see Note 3: Investment in Real Estate.


NOTE 9: Earnings (Loss) Per Share

The following table presents a reconciliation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 20172022 and 2016:

2021:

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income (loss)

 

$

1,156

 

 

$

2,407

 

 

$

24,922

 

 

$

33,151

 

(Income) loss allocated to non-controlling interests

 

 

(59

)

 

 

(140

)

 

 

(1,009

)

 

 

(1,972

)

Net income (loss) allocable to common shares

 

 

1,097

 

 

 

2,267

 

 

 

23,913

 

 

 

31,179

 

Weighted-average shares outstanding—Basic

 

 

71,972,394

 

 

 

47,215,918

 

 

 

69,875,802

 

 

 

47,164,543

 

Weighted-average shares outstanding—Diluted

 

 

72,144,544

 

 

 

47,314,629

 

 

 

70,105,571

 

 

 

47,190,139

 

Earnings (loss) per share—Basic

 

$

0.02

 

 

$

0.05

 

 

$

0.34

 

 

$

0.66

 

Earnings (loss) per share—Diluted

 

$

0.02

 

 

$

0.05

 

 

$

0.34

 

 

$

0.66

 

For the Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021
Net income$16,653 $11,564 $86,135 $16,064 
Income allocated to noncontrolling interest(430)(62)(2,517)(90)
Net income allocable to common shares$16,223 $11,502 $83,618 $15,974 
Weighted-average shares outstanding—Basic221,960,609 104,918,674 221,312,261 102,882,723 
Weighted-average shares outstanding—Diluted222,867,546 107,668,675 222,359,585 104,062,661 
Earnings per share—Basic$0.07 $0.11 $0.38 $0.16 
Earnings per share—Diluted$0.07 $0.11 $0.38 $0.15 

Certain IROP units stock appreciation rights, or SARs, and unvested shares were excluded from the earnings (loss) per share computation because their effect would have been anti-dilutive, totaling 3,035,6546,091,171 and 6,091,171 for the three and nine months ended September 30, 2017,2022, respectively, and 2,915,008552,360 and 3,091,380552,360 for the three and nine months ended September 30, 2016,2021, respectively.

NOTE 10: Other Disclosures

Litigation

We are subject to various legal proceedings and claims that arise in the ordinary course of our business operations. Matters which arise out of allegations of bodily injury, property damage, and employment practices are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, we currently believe the final outcome of such matters will not have a material adverse effect on our financial position, results of operations or cash flows.

Other Matters

To

Loss Contingencies
We record an accrual for loss contingencies when a loss is probable and the extent thatamount of the loss can be reasonably estimated. Management reviews these accruals quarterly and makes revisions based on changes in facts and circumstances. When a natural disasterloss contingency is not both probable and reasonably estimable, management does not accrue the loss. However, if the loss (or an additional loss in excess of an earlier accrual) is at least a reasonable possibility and material, then management discloses a reasonable estimate of the possible loss, or similar event occurs with more than a remote risk of having a material impact on the consolidated financial statements, we will disclose the estimated range of loss, if such reasonable estimate can be made. If we cannot make a reasonable estimate of the possible outcomes,loss, or range of loss, then a statement to that effect is disclosed.
21
Table of Contents
Item 2.    Management’s Discussion and if an outcome is probable, accrue an appropriate liability.

21

Analysis of Financial Condition and Results of Operations

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

The Securities and Exchange Commission or SEC,(the “SEC”), encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report contains or incorporates by reference such “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or Exchange Act.

amended.

Words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. As used herein, the terms “we,” “our” and “us” refer to Independence Realty Trust, Inc., which we refer to as IRT, and, as required by context, Independence Realty Operating Partnership, LP, which we refer to as IROP, and their subsidiaries.

We claim the protection of the safe harbor for forward-looking statements provided in the Private Securities Litigation Reform Act of 1995. These statements may be made directly in this report and they may also be incorporated by reference in this report to other documents filed with the SEC, and include, but are not limited to,without limitation, statements about future financial and operating results and performance, statements about our plans, objectives, expectations and intentions with respect to future operations, products and services, and other statements that are not historical facts. 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 beyond 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. Actual results may differ materially from the anticipated results discussed in these forward-looking statements.

The risk factors discussed and identified in Item 1A of our 20162021 Annual Report on Form 10-K and in Part II, Item 1A of this Quarterly Report, and in other of our public filings with the SEC, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements. We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.Quarterly Report. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this filingQuarterly Report or to reflect the occurrence of unanticipated events.

Overview

General

Our Company
We are a self-administered and self-managed Maryland corporationreal estate investment trust (“REIT”), that acquires, owns, operates, improves and operatesmanages multifamily apartment communities across non-gateway U.S. markets. As of September 30, 2022, we owned and operated 122 multifamily apartment properties across non-gateway U.S. markets, including Louisville, Memphis, Atlantathat contain 36,176 units. Our properties are located in Alabama, Colorado, Florida, Georgia, Illinois, Indiana, Kentucky, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas, and Raleigh.  Virginia. In addition, as of September 30, 2022, we owned interests in five unconsolidated joint ventures that are developing multifamily apartment communities that will contain, in aggregate, 1,863 units upon completion. We do not have any foreign operations and our business is not seasonal.
Our investment strategyBusiness Objective and Investment Strategies
Our primary business objective is focused on gaining scale within key amenity rich submarkets that offer good school districts, high-quality retail and major employment centers.  We aim to provide stockholders attractive risk-adjusted returnsmaximize stockholder value through diligent portfolio management, strong operational performance, and a consistent return of capital through distributions and capital appreciation. We electedOur investment strategy is focused on the following:
•gaining scale within key amenity rich submarkets of non-gateway cities that offer good school districts, high-quality retail and major employment centers and are unlikely to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the Code, commencing with our taxable year ended December 31, 2011.

We seek to acquire and operate apartment properties that:

have stable occupancy;

are located in submarkets that we do not expect will experience substantial new apartment construction in the foreseeable future;

•increasing cash flows at our existing apartment properties through prudent property management and strategic renovation projects; and

•acquiring additional properties that have strong and stable occupancies and support a rise in appropriate circumstances, present opportunitiesrental rates or that have the potential for repositioning or updating through capital expenditures when we see opportunities for increased rents; and

or tailored management strategies.
22

present opportunities to apply tailored marketing and management strategies to attract and retain residents and enable rent increases.

Table of Contents

22

Property Portfolio

As of September 30, 2017,2022, we owned 50and consolidated 122 multifamily apartment properties, totaling 13,72936,176 units. Below is a summary of our consolidated property portfolio by market.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per unit data)

 

As of September 30, 2017

 

 

For the Three Months Ended September 30, 2017

 

Market

 

Units

 

 

Gross Real

Estate

Assets

 

 

Period End

Occupancy

 

 

Average

Effective

Monthly Rent

per Unit

 

 

Net Operating

Income (a)

 

 

% of NOI

 

Louisville. KY

 

 

1,709

 

 

$

179,557

 

 

 

94.7

%

 

$

941

 

 

$

2,945

 

 

 

12.4

%

Memphis, TN

 

 

1,383

 

 

 

137,777

 

 

 

95.0

%

 

 

1,029

 

 

 

2,549

 

 

 

10.8

%

Atlanta, GA

 

 

1,092

 

 

 

136,681

 

 

 

96.1

%

 

 

1,105

 

 

 

2,419

 

 

 

10.2

%

Raleigh, NC

 

 

1,372

 

 

 

182,511

 

 

 

95.3

%

 

 

1,101

 

 

 

2,907

 

 

 

12.3

%

Oklahoma City, OK

 

 

1,658

 

 

 

73,256

 

 

 

92.8

%

 

 

642

 

 

 

1,595

 

 

 

6.7

%

Dallas, TX

 

 

734

 

 

 

85,390

 

 

 

95.9

%

 

 

1,138

 

 

 

1,480

 

 

 

6.3

%

Charleston, SC

 

 

690

 

 

 

94,948

 

 

 

95.8

%

 

 

1,220

 

 

 

1,217

 

 

 

5.1

%

Jackson, MS (b)

 

 

602

 

 

 

44,699

 

 

 

94.0

%

 

 

892

 

 

 

924

 

 

 

3.9

%

Little Rock, AR

 

 

462

 

 

 

54,298

 

 

 

94.8

%

 

 

992

 

 

 

849

 

 

 

3.6

%

Orlando, FL

 

 

297

 

 

 

47,517

 

 

 

94.9

%

 

 

1,380

 

 

 

760

 

 

 

3.2

%

Chicago, IL

 

 

370

 

 

 

29,385

 

 

 

93.8

%

 

 

1,007

 

 

 

675

 

 

 

2.9

%

Indianapolis, IN

 

 

645

 

 

 

60,600

 

 

 

95.0

%

 

 

928

 

 

 

710

 

 

 

3.0

%

Greenville, SC

 

 

346

 

 

 

48,176

 

 

 

93.9

%

 

 

1,092

 

 

 

687

 

 

 

2.9

%

Austin, TX

 

 

300

 

 

 

35,471

 

 

 

95.0

%

 

 

1,276

 

 

 

625

 

 

 

2.6

%

Charlotte, NC

 

 

208

 

 

 

41,749

 

 

 

93.8

%

 

 

1,461

 

 

 

628

 

 

 

2.7

%

Asheville, NC

 

 

252

 

 

 

28,291

 

 

 

94.8

%

 

 

1,054

 

 

 

576

 

 

 

2.4

%

Chattanooga, TN

 

 

295

 

 

 

25,951

 

 

 

95.9

%

 

 

961

 

 

 

486

 

 

 

2.1

%

Tampa-St. Petersburg, FL

 

 

216

 

 

 

29,735

 

 

 

92.6

%

 

 

1,212

 

 

 

489

 

 

 

2.1

%

St. Louis, MO

 

 

152

 

 

 

32,967

 

 

 

92.8

%

 

 

1,568

 

 

 

450

 

 

 

1.9

%

Columbus, OH

 

 

768

 

 

 

65,639

 

 

 

96.5

%

 

 

854

 

 

 

409

 

 

 

1.7

%

Huntsville, AL

 

 

178

 

 

 

16,070

 

 

 

98.3

%

 

 

849

 

 

 

277

 

 

 

1.2

%

Total/Weighted Average

 

 

13,729

 

 

$

1,450,668

 

 

 

94.8

%

 

$

1,004

 

 

$

23,657

 

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

Net operating income for the three months ended September 30, 2017 excludes $11 primarily related to sold properties.


(b)

Includes $23,611 of properties classified as held-for-sale.

(Dollars in thousands, except per unit data)As of September 30, 2022
For the Three Months Ended
 September 30, 2022
MarketNumber of PropertiesUnitsGross Real
Estate
Assets		Period End
Occupancy		Average
Effective
Monthly Rent
per Unit		Net Operating
Income		% of NOI
Atlanta, GA135,180 $1,057,156 93.1 %$1,578 $14,556 14.5 %
Dallas, TX144,007 846,383 95.6 %1,722 12,329 12.3 %
Denver, CO92,292 603,321 95.8 %1,655 7,940 7.9 %
Columbus, OH102,510 365,300 95.1 %1,323 6,297 6.3 %
Indianapolis, IN82,256 324,289 95.0 %1,274 5,288 5.3 %
Raleigh - Durham, NC61,690 254,799 94.6 %1,462 5,028 5.0 %
Oklahoma City, OK82,147 316,818 94.1 %1,126 4,955 4.9 %
Nashville, TN51,508 364,016 93.4 %1,565 4,800 4.8 %
Houston, TX71,932 321,804 94.9 %1,409 4,378 4.4 %
Memphis, TN41,383 158,953 93.4 %1,519 4,077 4.1 %
Tampa-St. Petersburg, FL51,452 289,386 94.7 %1,736 3,817 3.8 %
Louisville, KY51,550 193,937 94.0 %1,181 3,309 3.3 %
Birmingham, AL21,074 231,907 90.8 %1,444 2,899 2.9 %
Huntsville, AL3873 190,086 94.8 %1,493 2,775 2.8 %
Lexington, KY3886 159,694 97.6 %1,242 2,363 2.4 %
Charlotte, NC3714 189,159 95.4 %1,690 2,155 2.1 %
Myrtle Beach, SC - Wilmington, NC3628 67,713 96.2 %1,380 1,876 1.9 %
Cincinnati, OH2542 121,970 96.4 %1,542 1,708 1.7 %
Greenville, SC1702 123,093 96.7 %1,213 1,601 1.6 %
Charleston, SC2518 81,186 95.9 %1,573 1,370 1.4 %
Chicago, IL1374 90,073 94.1 %1,727 1,226 1.2 %
San Antonio, TX1306 57,017 98.7 %1,495 904 0.9 %
Orlando, FL1297 50,213 94.3 %1,713 859 0.9 %
Asheville, NC1252 29,243 95.2 %1,423 774 0.8 %
Norfolk, VA1183 53,970 97.8 %1,840 676 0.7 %
Fort Wayne, IN1222 44,098 94.1 %1,392 646 0.6 %
Austin, TX1256 55,165 89.4 %1,690 644 0.6 %
Terre Haute, IN1250 46,030 93.2 %1,405 642 0.6 %
Chattanooga, TN1192 36,915 95.8 %1,412 514 0.5 %
Total/Weighted Average12236,176 $6,723,694 94.6 %$1,484 $100,406 100.0 %



23
Current Developments
STAR Merger
On December 16, 2021, we completed our merger with STAR and STAR OP.Through the STAR Merger, we acquired 68 apartment communities that contained 21,394 units and two apartment communities that are under development and that will contain upon completion 621 units. Leading up to and shortly after the closing of the STAR Merger, we delevered our combined balance sheet through a combination of transactions totaling $600 million including the July 2021 underwritten offering, the disposition of three STAR properties prior to merger closing, the disposition of two properties in late 2021 and four properties in the first quarter of 2022 as described below.
2022 Property Sales
During the nine months ended September 30, 2022, we sold four communities for a gross sales price of $158.0 million and recognized a gain on sale of $94.7 million.
Capital Recycling
Our capital recycling program consists of disposing of assets in markets where we lack scale and/or markets where management believes that growth is slowing.
As of September 30, 2017,2022, we had two properties that were classified as held for sale. The sale of Meadows Apartments closed on October 26, 2022 and we expect Sycamore Terrace to close in the fourth quarter of 2022.
On April 6, 2022, we purchased, for $25.4 million, the Views of Music City (Phase 1), a 96-unit community in Nashville, TN, from one of our same-store portfolio consistedunconsolidated joint ventures (discussed below). On account of 42our equity interest in this joint venture, we received $4.4 million of the sales proceeds, comprised of $3.4 million as a return of capital and $1.0 million as a preferred return on capital.
On August 16, 2022, we acquired Cyan Mallard Creek, a 234-unit property located in Charlotte, NC for $80,000.
On September 13, 2022, we acquired The Enclave at Tranquility Lake, a 348-unit property located in Tampa, FL for $98,000.
Investment in Unconsolidated Real Estate Entities
To create another avenue for accretive capital allocation and to increase our options for capital investment, we partner with developers through preferred equity investments and joint venture relationships focused on new multifamily apartmentdevelopment.
In September 2021, we formed a joint venture to acquire and own the Views of Music City (comprised of Phase 1 and Phase 2) and The Crockett, each a multifamily community in Nashville, TN. As discussed above, on April 6, 2022, we purchased Phase 1 of the Views of Music City (comprised of 96 units), following completion of its development, from the joint venture. We expect Phase 2 of the Views of Music City development (comprised of 209 units) to be completed in the fourth quarter of 2023. We expect development of The Crockett (comprised of 199 units) to be completed by year-end 2022.
On March 31, 2022, we formed a joint venture to acquire and own a project comprised of 400 units in Huntsville, AL. Development of phase one of this project (comprised of 178 units) was completed in 2021. Upon acquisition of phase one by the joint venture, 85% of the units were leased. We expect phase two of the project (comprised of 222 units) to be completed during the fourth quarter of 2022. We have committed to invest an aggregate $37.1 million in this joint venture, and, as of September 30, 2022, had funded $16.4 million on account of this commitment.
On June 3, 2022, we entered into a joint venture for the development of Lakeline Station, a 378-unit community to be built in Austin, TX. We have committed to invest an aggregate $29.7 million in this joint venture, and, as of September 30, 2022, had funded $18.6 million on account of this commitment. The project is scheduled to be completed by the second quarter of 2024.
On August 16, 2022, we entered into a joint venture for the development of The Mustang, a 275-unit community to be built in Dallas, TX. We have committed to invest an aggregate $25.6 million in this joint venture, and, as of September 30, 2022, had funded $9.2 million on account of this commitment. The project is scheduled to be completed by the third quarter of 2024.
24
Value Add
Our value add program provides us with the opportunity to improve long-term growth through targeted unit renovations at communities where there is the potential for outsized rent growth.
We completed renovations on 457 units during the quarter ended September 30, 2022. From inception of our value add program in January 2018 through September 30, 2022, we completed renovations on 4,660 of the 9,233 ongoing and completed units, achieving a return on investment of 21.6% (and approximately 24.1% on the interior portion of such renovation costs) an average monthly rental increase of 23.9%. We compute return on cost by using the rent premium per unit per month, multiplied by 12, divided by the applicable renovation costs per unit and we compute the rent premium as the difference between the rental rate on the renovated unit and the market rent for a comparable unrenovated unit as of the date presented, as determined by management consistent with its customary rent-setting and evaluation procedures. We added 10 properties totaling 11,676 units.  See “Non-GAAP Financial Measures – Same Store Portfolio Net Operating Income” below for our definitioncomprised of same store and definitions and reconciliations related3,350 units to our value add program with renovations expected to begin during the three months ended December 31, 2022. We expect to complete the remaining value add projects at the selected communities throughout 2022 and 2023.
Capital Markets
Forward Sale Agreements
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 $150,000 (the “ATM Program”) in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended. 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. For more information on our forward sale agreements, see Note 7 (Stockholders' Equity and Noncontrolling Interests). On September 28, 2022, we physically settled in full 2,000,000 shares that were previously sold on a forward basis under the ATM Program. The forward shares were settled at the current weighted average sales price of $24.97 per share and we received proceeds, net operating income and net operating income margin. 

Property Operations

Duringof sales commissions of approximately $49,935. No forward sale transactions under the ATM Program were entered into during the three months ended September 30, 2017,2022 and there were no forward sale transactions that had not settled as of September 30, 2022.

New $400 Million Term Loan
On July 25, 2022, we saw strong operational results.  Onentered into the Fourth Amended, Restated and Consolidated Credit Agreement (the “Restated Credit Agreement”) which amends and restates in its entirety the Third Amended and Restated Credit Agreement dated as of December 14, 2021 (the "Prior Credit Agreement"). The Restated Credit Agreement provides for an aggregate amount available for borrowing of $1.1 billion, which represents an increase of $100 million over the Prior Credit Agreement. The Prior Credit Agreement provided for a same-store$500 million unsecured revolving credit facility (the “Revolving Credit Facility”) with a January 31, 2026 scheduled maturity date and three unsecured term loans, specifically: (i) a $200 million term loan with a May 18, 2026 maturity date (the “2026 Term Loan”); (ii) a $200 million term loan with a January 17, 2024 maturity date (the “January 2024 Term Loan”); and (iii) a $100 million term loan with a November 20, 2024 maturity date (the “November 2024 Term Loan” and, together with the January 2024 Term Loan, the “2024 Term Loans”). The Restated Credit Agreement provides for a new $400 million term loan with a January 28, 2028 maturity date (the “2028 Term Loan”). Proceeds of the new 2028 Term Loan were used to (i) repay and retire the 2024 Term Loans, and (ii) reduce $100 million of outstanding borrowings under the Revolving Credit Facility. In addition, the Restated Credit Agreement changes the LIBOR interest rate option to SOFR. The Restated Credit Agreement otherwise continues, without material change, the 2026 Term Loan and the Revolving Credit Facility. We recognized the restructuring of the Restated Credit Agreement as a modification of debt for all lenders except for one and incurred deferred financing costs of $1,477 associated with the transaction. We recognized the portion of debt associated with the lender no longer participating in the Restated Credit Agreement as an extinguishment of debt and wrote off their de minimis deferred financing costs.
Borrowings under the 2028 Term Loan bear interest at a rate equal to either (i) the SOFR rate plus a margin of 115 to 180 basis points, or (ii) a base rate plus a margin of 15 to 80 basis points. These margins represent a 5-basis point decrease from those applicable to the term loans that were repaid and retired. The margin for borrowings under the Revolving Credit Facility and the 2026 Term Loan remained unchanged, with (1) Revolving Credit Facility borrowings bearing interest at a rate equal to either (i) the SOFR rate plus a margin of 125 to 200 basis points, or (ii) a base rate plus a margin of 25 to 100 basis points; and (2) 2026 Term Loan borrowings bearing interest at a rate equal to either (i) the SOFR rate plus a margin of 120 to 190 basis points, or (ii) a base rate plus a margin of 20 to 90 basis points. The applicable margin will be determined based upon IROP’s consolidated leverage ratio. At the time of closing, based on IROP’s
25
consolidated leverage ratio, the applicable margin was 125 basis points for the Revolving Credit Facility, 120 basis points for the 2026 Term Loan and 115 basis points for the 2028 Term Loan.
IROP has the right to request an increase in the aggregate amount of the Restated Credit Agreement from $1.1 billion to up to $1.5 billion, subject to certain terms and conditions, including receipt of commitments from one or more lenders, whether or not currently parties to the Restated Credit Agreement, to provide such increased amounts, which increase may be allocated, at IROP’s option, to the Revolving Credit Facility and/or to one or more of the Term Loans, in accordance with the Restated Credit Agreement.

26
Results of Operations
As of September 30, 2022, we owned and consolidated 122 multifamily apartment properties, of which 113 comprised the Combined Same-Store Portfolio. We discuss below, under "Non-GAAP Financial Measures," our methodology for categorizing our 122 properties, as applicable, into IRT Same-Store Portfolio (48 properties as of September 30, 2022), STAR Same-Store Portfolio (65 properties as of September 30, 2022) and Combined Same-Store Portfolio (113 properties as of September 30, 2022). Because of substantial changes in our total revenues were up 3.0%property portfolio as compared to the third quarter of 2016 driven by higher average effective monthly rents and higher average occupancy.  Revenue growth was especially strong in the Columbus, OH and Atlanta, GA markets driven by steady occupancy and higher average effective rent per unit in the third quarter of 2017 as compared to the third quarter of 2016.   

Same-store net operating income increased 4.0% during the third quarter of 2017 as compared to the same period in the prior year driven by the higher revenues and operating expenses that increased just 1.5% as we continued to focus on expense management.  For the nine months ended September 30, 2017, our same-store total revenues were 4.0% higher and our same-store net operating income was 4.9% higher than for the nine months ended September 30, 2016.

Other Matters

On June 20, 2017, we completed our use of shared services previously provided by RAIT and fully completed our previously disclosed management internalization. The shared services previously provided included certain transitional services such as information technology, human resources, insurance, investor relations, legal, tax and accounting.

23

On July 31, 2017, we transferred the listing of our common stock to the New York Stock Exchange (“NYSE”) from the NYSE MKT. Our common stock continues to trade under the ticker symbol “IRT”. 

On September 3, 2017, IRT reached an agreement to acquire a portfolio of nine communities (the “HPI Portfolio”), totaling 2,353 units, for a gross purchase price of $228.1 million. The acquisition accelerates IRT’s penetration into a number of core existing markets, including Columbus, OH, Indianapolis, IN and Atlanta, GA, while providing entry into two new markets. The portfolio contains nine communities that were built or renovated between 2000 and 2011, had period end occupancy of 95% as of July 31, 2017, and had an average effective rent per unit of $884 for the three months ended July 31, 2017. On September 26, 2017, IRT closed on the acquisition of four of these multifamily apartment communities, aggregating 917 units, representing the consummation of the first phase of the portfolio acquisition. The acquisition of the remaining five communities are expected to close in succession during the fourth quarter of 2017, after and subject to the satisfaction of customary closing conditions, as well as the debt assumption process on three of the five. On October 25, 2017, we acquired one of the remaining five communities, a 264 unit community located in Baton Rouge, LA, known as Live Oak Trace for $28,501.

On September 11, 2017, IRT announced the closing of its public offering of 12,500,000 shares of its common stock at a public offering price of $9.25 per share. IRT also closed on the underwriters’ option to purchase an additional 1,875,000 shares of common stock at the public offering price. As a result of the offeringSTAR Merger that closed on December 16, 2021, the financial data presented below show significant changes in revenue and the exercise of the underwriters’ option, IRT received approximately $126.1 million in net proceeds, after deducting the underwriting discount and estimated offering expenses. IRT is using the net proceedsexpenses from the offering to pay a portion of the purchase price for the HPI portfolio. Any remaining proceeds will be used for general corporate purposes.

Results of Operations

period-to-period.

Three Months Ended September 30, 20172022 compared to the Three Months Ended September 30, 2016

2021

 

 

SAME STORE PROPERTIES

 

 

NON SAME STORE PROPERTIES

 

 

CONSOLIDATED

 

(Dollars in thousands)

 

Three Months Ended September 30,

 

 

Three Months Ended September 30,

 

 

Three Months Ended September 30,

 

 

 

2017

 

 

2016

 

 

Increase (Decrease)

 

 

% Change

 

 

2017

 

 

2016

 

 

Increase (Decrease)

 

 

% Change

 

 

2017

 

 

2016

 

 

Increase (Decrease)

 

 

% Change

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

32,483

 

 

$

31,698

 

 

$

785

 

 

 

2.5

%

 

$

3,048

 

 

$

2,635

 

 

$

413

 

 

 

15.7

%

 

$

35,531

 

 

$

34,333

 

 

$

1,198

 

 

 

3.5

%

Reimbursement and other income

 

 

3,913

 

 

 

3,645

 

 

 

268

 

 

 

7.4

%

 

 

420

 

 

 

386

 

 

 

34

 

 

 

8.8

%

 

 

4,333

 

 

 

4,031

 

 

 

302

 

 

 

7.5

%

Total revenue

 

 

36,396

 

 

 

35,343

 

 

 

1,053

 

 

 

3.0

%

 

 

3,468

 

 

 

3,021

 

 

 

447

 

 

 

14.8

%

 

 

39,864

 

 

 

38,364

 

 

 

1,500

 

 

 

3.9

%

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate operating expenses

 

 

14,744

 

 

 

14,520

 

 

 

224

 

 

 

1.5

%

 

 

1,452

 

 

 

1,587

 

 

 

(135

)

 

 

-8.5

%

 

 

16,196

 

 

 

16,107

 

 

 

89

 

 

 

0.6

%

Net Operating Income

 

$

21,652

 

 

$

20,823

 

 

$

829

 

 

 

4.0

%

 

$

2,016

 

 

$

1,434

 

 

$

582

 

 

 

40.6

%

 

$

23,668

 

 

$

22,257

 

 

$

1,411

 

 

 

6.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property management and other income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

202

 

 

 

-

 

 

 

202

 

 

NM

 

Total other income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

202

 

 

 

-

 

 

 

202

 

 

NM

 

Corporate and other expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property management expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,328

 

 

 

1,219

 

 

 

109

 

 

 

8.9

%

General and administrative expenses

 

 

 

2,322

 

 

 

2,665

 

 

 

(343

)

 

 

-12.9

%

Acquisition and integration expenses

 

 

 

569

 

 

 

19

 

 

 

550

 

 

NM

 

Depreciation and amortization expense

 

 

 

8,671

 

 

 

7,765

 

 

 

906

 

 

 

11.7

%

Total corporate and other expenses

 

 

 

12,890

 

 

 

11,668

 

 

 

1,222

 

 

 

10.5

%

Operating Income (loss)

 

 

 

10,980

 

 

 

10,589

 

 

 

391

 

 

 

3.7

%

Interest expense

 

 

 

(6,963

)

 

 

(8,820

)

 

 

1,857

 

 

 

21.1

%

Hedge ineffectiveness

 

 

 

12

 

 

 

-

 

 

 

12

 

 

N/M

 

Other income (expense)

 

 

 

-

 

 

 

(2

)

 

 

2

 

 

N/M

 

Net gains (losses) on sale of assets

 

 

 

(92

)

 

 

(1

)

 

 

(91

)

 

NM

 

Gains (losses) on extinguishment of debt

 

 

 

-

 

 

 

-

 

 

 

-

 

 

N/M

 

Acquisition related debt extinguishment expenses

 

 

 

(2,781

)

 

 

-

 

 

 

(2,781

)

 

N/M

 

Gains (losses) on TSRE merger and property acquisitions

 

 

 

-

 

 

 

641

 

 

 

(641

)

 

 

-100.0

%

Net income (loss)

 

 

 

1,156

 

 

 

2,407

 

 

 

(1,251

)

 

 

-51.97

%

(Income) loss allocated to noncontrolling interests

 

 

 

(59

)

 

 

(140

)

 

 

81

 

 

 

57.9

%

Net income (loss) available to common shares

 

 

$

1,097

 

 

$

2,267

 

 

$

(1,170

)

 

 

-51.61

%

COMBINED SAME-STORE PORTFOLIOCOMBINED NON SAME-STORE PORTFOLIO
Q3 2021 Pre-Merger STAR Portfolio(1)
CONSOLIDATED
(Dollars in thousands)Three Months Ended September 30,Three Months Ended September 30,Three Months Ended September 30,
20222021Increase (Decrease)% Change20222021Increase (Decrease)% Change20222021Increase (Decrease)% Change
Property Data:
Number of properties113113——%911(2)(18.2)%(67)1225765114.0%
Number of units33,80433,804——%2,3723,257(885)(27.2)%(20,952)36,17616,10920,067124.6%
Average occupancy94.2%96.5%(2.3)%NM94.3%96.9%(2.6)%NMNM94.2%96.1%(1.9)%NM
Average effective monthly rent, per
  unit		1,4791,30517413.3%1,5521,15439834.5%NM1,4841,21227222.4%
Revenue:
Rental and other property revenue151,030136,56314,46710.6%9,27012,517(3,247)(25.9)%$(88,488)$160,300$60,592$99,708164.6%
 Expenses:
Property operating expenses56,46451,7574,7079.1%3,5035,463(1,960)(35.9)%(34,056)59,96723,16436,803158.9%
Net Operating Income$94,566$84,806$9,76011.5%$5,767$7,054$(1,287)(18.2)%$(54,432)$100,333$37,428$62,905168.1%
Other Revenue:
Other revenue$300$188$11259.6%
Corporate and other expenses:
Property management expenses5,7442,1993,545161.2%
General and administrative expenses5,6253,9851,64041.2%
Depreciation and amortization expense49,72217,38432,338186.0%
Casualty (gains) losses, net(191)—(191)100.0%
Other income (expense)765—765100.0%
Loss from investments in unconsolidated real estate entities1,477—1,477100.0%
Interest expense(22,093)(8,700)(13,393)153.9%
Merger and integration costs(275)(5,276)5,001(94.8)%
Gain on sale of real estate assets, net—11,492(11,492)(100.0)%
Net income$16,653$11,564$5,08944.0%
Income allocated to noncontrolling interests(430)(62)(368)593.5%
Net income available to common shares$16,223$11,502$4,72141.0%

(1)Represents metrics of the STAR Portfolio for the three months ended September 30, 2021, the period of ownership prior to the consummation of the STAR Merger on December 16, 2021 and is presented for the purpose of reconciling combined same-store portfolio results to the consolidated results for the three months ended September 30, 2021.
27
Revenue

Rental incomeand other property revenue. RentalRevenue from rental and other property revenue of the consolidated portfolio increased $1.2$99.7 million to $35.5$160.3 million for the three months ended September 30, 20172022 from $34.3$60.6 million for the three months ended September 30, 2016.2021. The increase was primarily attributable to the STAR Merger, which contributed a $0.8pre-merger revenue base of $88.5 million. In addition, there was year-over-year rental and other property revenue growth of $14.5 million, primarily driven by a $13.1 million increase in same store rental incomerevenue, driven by highera 13.3% increase in average effective monthly rents and higherpartially offset by lower average occupancy thancompared to the prior year period and a $0.4 million increase in non same store rental income. The non same store increase was due to the number of properties included in each period being different as a result of the timing of property sales and acquisitions.

24

Reimbursement and other incomeperiod.


Expenses
Property operating expenses. Reimbursement and other incomeProperty operating expenses increased $0.3$36.8 million to $4.3$60.0 million for the three months ended September 30, 20172022 from $23.2 million for the three months ended September 30, 2021. The increase was primarily due to the STAR Merger, which contributed a pre-merger property operating expense base of $34.1 million.
Property management expenses. Property management expenses increased $3.5 million to $5.7 million for the three months ended September 30, 2022 from $2.2 million for the three months ended September 30, 2021 as a result of higher costs associated with employees that joined IRT in connection with the STAR Merger.
General and administrative expenses. General and administrative expenses increased $1.6 million to $5.6 million for the three months ended September 30, 2022 from $4.0 million for the three months ended September 30, 2016. The2021. This increase was primarily due to a $0.3 millionthe increase in same store reimbursementcosts associated with the employees that joined IRT in connection with the STAR Merger.
Depreciation and other income attributableamortization expense. Depreciation and amortization expense increased $32.3 million to our continued focus on driving non-rental revenue and fee income.

Property management income. Property management income was $0.2$49.7 million for the three months ended September 30, 2017 compared to $0.02022 from $17.4 million for the three months ended September 30, 2016.  This2021. The increase was dueprimarily attributable to third party property management income thathigher depreciation and amortization from properties acquired in the STAR Merger.

]Loss from investments in unconsolidated real estate entities. During the three months ended September 30, 2022, we received for managing propertiesrecognized $1.5 million of losses on behalfinvestments in unconsolidated real estate, which was primarily driven by $1.4 million of third parties duringdepreciation and amortization recognized by the current period.  This service did not exist prior to our management internalization in December 2016.  

Expenses

Realunconsolidated real estate operating expensesentities.

Interest expense. Property operating expensesInterest expense increased $0.1$13.4 million to $16.2$22.1 million for the three months ended September 30, 20172022 from $16.1 million for the three months ended September 30, 2016.

Property management expenses. Property management expenses increased $0.1 million to $1.3 million for the three months ended September 30, 2017 from $1.2 million for the three months ended September 30, 2016. This increase coincides with the above-mentioned increase in property management income driven by our management internalization.  After our management internalization, property management expenses include costs incurred to directly support on-site management. Prior to this, property management expenses included property and construction management fees paid to our former property manager.

General and administrative expenses. General and administrative expenses decreased $0.4 million to $2.3 million for the three months ended September 30, 2017 from $2.7 million for the three months ended September 30, 2016. The decrease was due to cost savings from our management internalization.

Acquisition and integration expenses. Acquisition and integration expenses were $0.6 million for the three months ended September 30, 2017 compared to $0.0 million for the three months ended September 30, 2016. This increase was due to our acquisition of the HPI Portfolio. Acquisition and integration expenses include costs to identify, underwrite, close, and integrate new acquisitions.

Depreciation and amortization expense. Depreciation and amortization expense increased $0.9 million to $8.7 million for the three months ended September 30, 2017 from $7.8 million for2021 primarily due to the assumption of debt in connection with the STAR Merger.

Gain on sale of real estate assets, net. During the three months ended September 30, 2016. The increase2021, one multi-family property was primarily attributable to $0.4 millionsold resulting in a gain of in-place lease intangible amortization recognized during the three months ended September 30, 2017 related to 2017 property acquisitions and a $0.5 million increase in depreciation expense due to property acquisitions during 2017.

Interest expense. Interest expense decreased $1.8 million to $7.0 million for the three months ended September 30, 2017 from $8.8 million for the three months ended September 30, 2016. The decrease was due to debt reductions during 2016 when our term loan was fully repaid and our credit facility balance decreased by $121.5$11.5 million.

Acquisition related debt extinguishment expenses. Acquisition related debt extinguishment expenses were $2.8 million for the three months ended September 30, 2017 due to defeasance related costs incurred in connection with the HPI portfolio acquisitions.

25

28

Results of Operations
Nine Months Ended September 30, 20172022 compared to the Nine Months Ended September 30, 2016

2021

 

 

SAME STORE PROPERTIES

 

 

NON SAME STORE PROPERTIES

 

 

CONSOLIDATED

 

(Dollars in thousands)

 

Nine Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2017

 

 

2016

 

 

Increase (Decrease)

 

 

% Change

 

 

2017

 

 

2016

 

 

Increase (Decrease)

 

 

% Change

 

 

2017

 

 

2016

 

 

Increase (Decrease)

 

 

% Change

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

96,587

 

 

$

93,313

 

 

$

3,274

 

 

 

3.5

%

 

$

8,857

 

 

$

9,958

 

 

$

(1,101

)

 

 

-11.1

%

 

$

105,444

 

 

$

103,271

 

 

$

2,173

 

 

 

2.1

%

Reimbursement and other income

 

 

11,513

 

 

 

10,640

 

 

 

873

 

 

 

8.2

%

 

 

1,233

 

 

 

1,446

 

 

 

(213

)

 

 

-14.7

%

 

 

12,746

 

 

 

12,086

 

 

 

660

 

 

 

5.5

%

Total revenue

 

 

108,100

 

 

 

103,953

 

 

 

4,147

 

 

 

4.0

%

 

 

10,090

 

 

 

11,404

 

 

 

(1,314

)

 

 

-11.5

%

 

 

118,190

 

 

 

115,357

 

 

 

2,833

 

 

 

2.5

%

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate operating expenses

 

 

43,297

 

 

 

42,199

 

 

 

1,098

 

 

 

2.6

%

 

 

4,809

 

 

 

5,389

 

 

 

(580

)

 

 

-10.8

%

 

 

48,106

 

 

 

47,588

 

 

 

518

 

 

 

1.1

%

Net Operating Income

 

$

64,803

 

 

$

61,754

 

 

$

3,049

 

 

 

4.9

%

 

$

5,281

 

 

$

6,015

 

 

$

(734

)

 

 

-12.2

%

 

$

70,084

 

 

$

67,769

 

 

$

2,315

 

 

 

3.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property management and other income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

579

 

 

 

-

 

 

 

579

 

 

 

-

 

Total other income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

579

 

 

 

-

 

 

 

579

 

 

 

-

 

Corporate and other expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property management expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,310

 

 

 

3,710

 

 

 

600

 

 

 

16.2

%

General and administrative expenses

 

 

 

7,128

 

 

 

8,074

 

 

 

(946

)

 

 

-11.7

%

Acquisition and integration expenses

 

 

 

956

 

 

 

37

 

 

 

919

 

 

NM

 

Depreciation and amortization expense

 

 

 

24,289

 

 

 

26,927

 

 

 

(2,638

)

 

 

-9.8

%

Total corporate and other expenses

 

 

 

36,683

 

 

 

38,748

 

 

 

(2,065

)

 

 

-5.3

%

Operating Income (loss)

 

 

 

33,980

 

 

 

29,021

 

 

 

4,959

 

 

 

17.1

%

Interest expense

 

 

 

(21,573

)

 

 

(27,815

)

 

 

6,242

 

 

 

22.4

%

Hedge ineffectiveness

 

 

 

-

 

 

 

-

 

 

 

-

 

 

N/M

 

Other income (expense)

 

 

 

(5

)

 

 

(2

)

 

 

(3

)

 

 

150.0

%

Net gains (losses) on sale of assets

 

 

 

15,873

 

 

 

31,773

 

 

 

(15,900

)

 

 

-50.0

%

Gains (losses) on extinguishment of debt

 

 

 

(572

)

 

 

(558

)

 

 

(14

)

 

 

2.5

%

Acquisition related debt extinguishment expenses

 

 

 

(2,781

)

 

 

-

 

 

 

(2,781

)

 

N/M

 

Gains (losses) on TSRE merger and property acquisitions

 

 

 

-

 

 

 

732

 

 

 

(732

)

 

N/M

 

Net income (loss)

 

 

 

24,922

 

 

 

33,151

 

 

 

(8,229

)

 

 

-24.82

%

(Income) loss allocated to noncontrolling interests

 

 

 

(1,009

)

 

 

(1,972

)

 

 

963

 

 

 

48.8

%

Net income (loss) available to common shares

 

 

$

23,913

 

 

$

31,179

 

 

$

(7,266

)

 

 

-23.30

%

COMBINED SAME-STORE PORTFOLIOCOMBINED NON SAME-STORE PORTFOLIO
2021 Pre-Merger STAR Portfolio(1)
CONSOLIDATED
(Dollars in thousands)Nine Months Ended September 30,Nine Months Ended September 30,Nine Months Ended September 30,
20222021Increase (Decrease)% Change20222021Increase (Decrease)% Change20222021Increase (Decrease)% Change
Property Data:
Number of properties113113——%911(2)(18.2)%(67)1225765114.0%
Number of units33,80433,804——%2,3723,257(885)(27.2)%(20,952)36,17616,10920,067124.6%
Average occupancy95.0%96.0%(1.0)%NM93.0%96.5%(3.5)%NMNM94.9%95.8%(0.9)%NM
Average effective monthly rent, per
  unit		1,4211,27015111.9%1,5011,10040136.5%NM1,4261,17525121.4%
Revenue:
Rental and other property revenue439,292395,77443,51811.0%25,62930,056(4,427)(14.7)%$(253,141)$464,921$172,689$292,232169.2%
 Expenses:
Property operating expenses164,822154,9069,9166.4%10,00313,018(3,015)(23.2)%(101,624)174,82566,300108,525163.7%
Net Operating Income$274,470$240,868$33,60214.0%$15,626$17,038$(1,412)(8.3)%$(151,517)$290,096$106,389$183,707172.7%
Other Revenue:
Other revenue$805$647$15824.4%
Corporate and other expenses:
Property management expenses17,4406,31811,122176.0%
General and administrative expenses20,52114,1686,35344.8%
Depreciation and amortization expense200,68850,699149,989295.8%
Casualty (gains) losses, net(7,176)359(7,535)(2098.9)%
Other income (expense)1,501—1,501100.0%
Loss from investments in unconsolidated real estate entities2,411—2,411100.0%
Interest expense(63,618)(25,644)(37,974)148.1%
Merger and integration costs(3,477)(5,276)1,799(34.1)%
Gain on sale of real estate assets, net94,71211,49283,220724.2%
Net income$86,135$16,064$70,071436.2%
Income allocated to noncontrolling interests(2,517)(90)(2,427)2696.7%
Net income available to common shares$83,618$15,974$67,644423.5%

(1)Represents metrics of the STAR Portfolio for the nine months ended September 30, 2021, the period of ownership prior to the consummation of the STAR Merger on December 16, 2021 and is presented for the purpose of reconciling combined same-store portfolio results to the consolidated results for the nine months ended September 30, 2021.
29
Revenue

Rental income. Rentaland other property revenue. Revenue from rental and other property revenue of the consolidated portfolio increased $2.2$292.2 million to $105.4$464.9 million for the nine months ended September 30, 20172022 from $103.3$172.7 million for the nine months ended September 30, 2016.2021. The increase was primarily attributable to the STAR Merger, which contributed a $3.3pre-merger revenue base of $253.1 million. In addition, there was year-over-year rental and other property revenue growth of $43.5 million, driven primarily by a 11.9% increase in same store rental income driven by higher average effective monthly rents and higher occupancy than the year-ago period. This increase was partially offset by $1.1 million of lower non same store rental income duea 1% decrease in average occupancy compared to the number of properties included in each period being different as a result of the timing of property sales and acquisitions.

Reimbursement and other incomeprior year period.


Expenses
Property operating expenses. Reimbursement and other incomeProperty operating expenses increased $0.6$108.5 million to $12.7$174.8 million for the nine months ended September 30, 20172022 from $12.1$66.3 million for the nine months ended September 30, 2016.2021. The increase was primarily due to the STAR Merger, which contributed a $0.9pre-merger property operating expense base of $101.6 million. In addition, there was a year-over-year same-store property operating expenses increase of $9.9 million, driven primarily by a 6.2% increase in same store reimbursement and other income attributable to our continued focus on driving non-rental revenue and fee incomereal estate taxes and a $0.3 million14.4% increase in reimbursementrepairs and other income due to the seven properties acquired during 2017. These increases were partially offset bymaintenance as a $0.6 million decrease in reimbursement and other income due to six properties sold in 2017 and 2016.

result of inflationary pressures.

Property management income. expenses. Property management income was $0.6expenses increased $11.1 million to $17.4 million for the nine months ended September 30, 2017 compared to $0.02022 from $6.3 million for the nine months ended September 30, 2016. This was due to third party property management income2021 as a result of higher costs associated with employees that we received for managing properties on behalf of third parties duringjoined IRT in connection with the current period.  This service did not exist prior to our management internalization in December 2016.

Expenses

Real estate operatingSTAR Merger.

General and administrative expenses. Property operatingGeneral and administrative expenses increased $0.5$6.4 million to $48.1$20.5 million for the nine months ended September 30, 20172022 from $47.6$14.2 million for the nine months ended September 30, 2016. The2021. This increase was primarily due to higher personnel and real estate tax expenses, which drove a $1.1 millionthe increase in real estate operating expenses at our same store properties partially offset by lower non-same store real estate operating expenses due to sold properties.

26

Property management expenses: Property management expensescosts associated with the employees that joined IRT in connection with the STAR Merger.

Depreciation and amortization expense. Depreciation and amortization expense increased $0.6$150.0 million to $4.3$200.7 million for the nine months ended September 30, 20172022 from $3.7$50.7 million for the nine months ended September 30, 2016. This2021. The increase coincides withwas primarily attributable to higher depreciation and amortization, including approximately $53.3 million of amortization of in-place lease intangibles, from properties acquired in the above-mentioned increaseSTAR Merger.
Casualty (gains) losses, net. During the nine months ended September 30, 2022, we recognized net casualty gains of $7.2 million as a result of receiving insurance proceeds in property managementexcess of losses incurred. During the nine months ended September 30, 2021, we incurred casualty losses incurred of $0.4 million related to severe winter storms at our Texas and Oklahoma properties.
Other income (expense). For the nine months ended September 30, 2022, other income (expense) consisted primarily of the change in fair value of our interest rate caps of $1.2 million.
Loss from unconsolidated joint venture. During the nine months ended September 30, 2022, we incurred losses of $2.4 on investments in unconsolidated joint ventures, which was primarily driven by our management internalization.  After our management internalization, property management expenses include costs incurred to directly support on-site management. Prior to this, property management expenses included property$1.9 million of depreciation and construction management fees paid to our former property manager.

General and administrative expensesamortization recognized by the unconsolidated real estate entities.

Interest expense. General and administrative expenses decreased $1.0Interest expense increased $38.0 million to $7.1$63.6 million for the nine months ended September 30, 20172022 from $8.1$25.6 million for the nine months ended September 30, 2016. The decrease was2021 primarily due to cost savings from our management internalization.

Acquisitionthe assumption of debt in connection with the STAR Merger.


Merger and integration expenses. Acquisition andcosts. We incurred approximately $3.5 million of STAR merger-related integration expenses were $1.0 million forcosts during the nine months ended September 30, 20172022 compared to $0.0$5.2 million forduring the nine months ended September 30, 2016. This increase was2021. These costs primarily due to our acquisitionconsist of the HPI Portfolio. Acquisitiontechnology migration and integration expenses include costs to identify, underwrite, close,implementation, consulting and integrate new acquisitions.

Depreciationprofessional fees and amortization expense. Depreciation and amortization expense decreased $2.6 million to $24.3 million foremployee severance costs.

Gain on sale of real estate assets, net. During the nine months ended September 30, 2017 from $26.9 million for2022, four multi-family properties were sold resulting in gains of $94.7 million. During the nine months ended September 30, 2016. The decrease2021, one multi-family property was primarily due tosold resulting in a $3.7 million decrease in amortizationgain of in-place leases related to 2015 property acquisitions as they were fully amortized during 2016. This was partially offset by a $0.7 million increase in amortization$11.5 million.
30
Table of in-place leases for acquisitions in 2017.

Interest expense. Interest expense decreased $6.2 million to $21.6 million for the nine months ended September 30, 2017 from $27.8 million for the nine months ended September 30, 2016. The decrease was due to debt reductions during 2016 when our term loan was fully repaid and our credit facility balance decreased by $121.5 million.

Net gains (losses) on sale of assets. Net gains on sale of assets decreased $15.9 million to $15.9 million for the nine months ended September 30, 2017 from $31.8 million for the nine months ended September 30, 2016.  The 2017 net gains were driven primarily by a $15.6 million gain on the sale of Copper Mill, a 320-unit apartment property in Austin, TX.  The 2016 net gains were driven primarily by gains of $15.1 million and $14.2 million realized upon the sales of Tresa at Arrowhead and Belle Creek.

Gains (losses) on extinguishment of debt. Loss on extinguishment of debt was $0.6 million from the partial extinguishment of our prior secured credit facility.  

Acquisition related debt extinguishment expenses. Acquisition related debt extinguishment expenses were $2.8 million for the nine months ended September 30, 2017 due to defeasance related costs incurred in connection with the HPI portfolio acquisitions.

Contents

Non-GAAP Financial Measures

Funds from Operations (FFO) and Core Funds from Operations (CFFO)

We believe that FFO and CFFO,Core FFO (“CFFO”), each of which is a non-GAAP financial measure, are additional appropriate measures of the operating performance of a REIT and IRTus in particular. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts or NAREIT,(“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.

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 hedge ineffectiveness, defeasance costs we incur when we sell a property subject to secured debt, asset sales, debt extinguishments, acquisition relatedcasualty (gains) losses, loan premium accretion and discount amortization, debt extinguishment expenses, gains on the TSREcosts, and merger and management internalization expenses,integration costs from the determination of FFO. IRT incurs acquisition expenses in connection with acquisitions of real estate properties and expenses those costs when incurred in accordance with U.S. GAAP. As these expenses are one-time and reflective of investing activities rather than operating performance, IRT adds back these costs to FFO in determining CFFO.  

Our calculation of CFFO differsmay differ from the methodology used for calculating CFFO by certain 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 IRT’sour 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 that may not accurately compare 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.

27

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.

Set forth below is a reconciliation of net income (loss) to FFO and CFFO for the three and nine months ended September 30, 20172022 and 20162021 (in thousands, except share and per share information):

 

 

For the Three Months Ended September 30, 2017

 

 

For the Three Months Ended September 30, 2016

 

 

 

Amount

 

 

Per Share (1)

 

 

Amount

 

 

Per Share (2)

 

Funds From Operations (FFO):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

1,156

 

 

$

0.02

 

 

$

2,407

 

 

$

0.05

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

 

8,645

 

 

 

0.11

 

 

 

7,765

 

 

 

0.15

 

Net (gains) losses on sale of assets excluding defeasance costs

 

 

92

 

 

 

-

 

 

 

1

 

 

 

-

 

Funds From Operations (FFO)

 

$

9,893

 

 

$

0.13

 

 

$

10,173

 

 

$

0.20

 

Core Funds From Operations (CFFO):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds From Operations (FFO)

 

$

9,893

 

 

$

0.13

 

 

$

10,173

 

 

$

0.20

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock compensation expense

 

 

422

 

 

 

0.01

 

 

 

247

 

 

 

0.01

 

Amortization of deferred financing costs

 

 

282

 

 

 

-

 

 

 

597

 

 

 

0.01

 

Acquisition and integration expenses

 

 

569

 

 

 

0.01

 

 

 

19

 

 

 

-

 

Other depreciation and amortization

 

 

26

 

 

 

-

 

 

 

-

 

 

 

-

 

Hedge ineffectiveness

 

 

(12

)

 

 

-

 

 

 

-

 

 

 

-

 

Defeasance costs included in net gains (losses) on sale of assets

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

(Gains) losses on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

(641

)

 

 

(0.01

)

Acquisition related debt extinguishment expenses

 

 

2,781

 

 

 

0.04

 

 

 

-

 

 

 

-

 

Core Funds From Operations (CFFO)

 

$

13,961

 

 

$

0.19

 

 

$

10,395

 

 

$

0.21

 

 

 

For the Nine Months Ended September 30, 2017

 

 

For the Nine Months Ended September 30, 2016

 

 

 

Amount

 

 

Per Share (1)

 

 

Amount

 

 

Per Share (2)

 

Funds From Operations (FFO):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

24,922

 

 

$

0.34

 

 

$

33,151

 

 

$

0.66

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

 

24,227

 

 

 

0.34

 

 

 

26,927

 

 

 

0.54

 

Net (gains) losses on sale of assets excluding defeasance costs

 

 

(18,621

)

 

 

(0.26

)

 

 

(33,169

)

 

 

(0.66

)

Funds From Operations (FFO)

 

$

30,528

 

 

$

0.42

 

 

$

26,909

 

 

$

0.54

 

Core Funds From Operations (CFFO):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds From Operations (FFO)

 

$

30,528

 

 

$

0.42

 

 

$

26,909

 

 

$

0.54

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock compensation expense

 

 

1,548

 

 

 

0.02

 

 

 

832

 

 

 

0.02

 

Amortization of deferred financing costs

 

 

1,160

 

 

 

0.01

 

 

 

2,543

 

 

 

0.05

 

Acquisition and integration expenses

 

 

956

 

 

 

0.01

 

 

 

37

 

 

 

-

 

Other depreciation and amortization

 

 

62

 

 

 

-

 

 

 

-

 

 

 

-

 

Hedge ineffectiveness

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Defeasance costs included in net gains (losses) on sale of assets

 

 

2,748

 

 

 

0.04

 

 

 

1,396

 

 

 

0.03

 

(Gains) losses on extinguishment of debt

 

 

572

 

 

 

0.01

 

 

 

558

 

 

 

0.01

 

Acquisition related debt extinguishment expenses

 

 

2,781

 

 

 

0.04

 

 

 

-

 

 

 

-

 

(Gains) losses on TSRE merger and property acquisitions

 

 

-

 

 

 

-

 

 

 

(732

)

 

 

(0.02

)

Core Funds From Operations (CFFO)

 

$

40,355

 

 

$

0.55

 

 

$

31,543

 

 

$

0.63

 

28

(1)

Based on 75,009,859 and 72,801,899 weighted-average shares and units outstanding for the three and nine months ended September 30, 2017, respectively.

(2)

Based on 50,229,637 and 50,105,147 weighted-average shares and units outstanding for the three and nine months ended September 30, 2016, respectively.

For the Three Months Ended September 30, 2022For the Three Months Ended September 30, 2021
Amount
Per Share(1)
Amount
Per Share(2)
Funds From Operations (FFO):
Net income$16,653 $0.07 $11,564 $0.11 
Adjustments:
Real estate depreciation and amortization49,347 0.22 17,263 0.16 
Real estate depreciation and amortization from investments
  in unconsolidated real estate entities		1,388 0.01 — — 
Net gain on sale of real estate assets excluding debt
   extinguishment costs		— — (11,788)(0.11)
FFO$67,388 $0.30 $17,039 $0.16 
Core Funds From Operations (CFFO):
FFO$67,388 $0.30 $17,039 $0.16 
Adjustments:
Other depreciation and amortization375 — 121 — 
Casualty (gains) losses, net(191)— — — 
Loan (premium accretion) discount amortization, net(2,750)(0.01)— — 
Prepayment penalties on asset dispositions— — 295 — 
Other (income) expense(765)(0.01)— — 
Merger and integration costs275 — 5,276 0.05 
CFFO$64,332 $0.28 $22,731 $0.21 

Same Store

31
For the Nine Months Ended September 30, 2022For the Nine Months Ended September 30, 2021
Amount
Per Share(1)
Amount
Per Share(2)
Funds From Operations (FFO):
Net income$86,135 $0.38 $16,064 $0.16 
Adjustments:
Real estate depreciation and amortization199,588 0.88 50,418 0.49 
Real estate depreciation and amortization from investments
  in unconsolidated real estate entities		1,904 0.01 — — 
Net gain on sale of real estate assets excluding debt
  extinguishment costs		(94,712)(0.42)(11,788)(0.12)
FFO192,915 $0.85 54,694 $0.53 
Core Funds From Operations (CFFO):
FFO$192,915 $0.85 $54,694 $0.53 
Adjustments:
Other depreciation and amortization1,100 — 281 — 
Casualty (gains) losses, net(7,176)(0.03)359 0.01 
Loan (premium accretion) discount amortization, net(8,245)(0.04)— — 
Prepayment penalties on asset dispositions— — 295 — 
Other (income) expense(1,438)(0.01)— — 
Merger and integration costs3,477 0.02 5,276 0.05 
CFFO$180,633 $0.79 $60,905 $0.59 
(1)Based on 228,051,780 and 227,933,320 weighted-average shares and units outstanding for the three and nine months ended September 30, 2022.
(2)Based on 107,094,044 and 103,511,115weighted-average shares and units outstanding for the three and nine months ended September 30, 2021.
Same-Store Portfolio Net Operating Income

We believe that Net Operating Income (“NOI”), a non-GAAP financial measure, is a useful supplemental measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding interest expenses, depreciation and amortization, asset management fees, property management fees, acquisition expenses, and general and administrative expenses. In connection with our management internalization, which was completed in the fourth quarter of 2016, we modified our calculation of NOI to exclude property management expenses. We retrospectively adjusted previously reported NOI to conform to this change. 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.income insofar as the measure reflects only operating income and expense at the property level. We use NOI to evaluate our performance on a same storesame-store and non-same storenon 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.

29

Same-Store Properties and Same-Store Portfolio
We review our same store properties orsame-store portfolio at the beginning of each calendar year. Properties are added into the same storesame-store portfolio if they were owned at the beginning of the previous year. Properties that are held-for-sale or have been sold or are classified as held for sale are excluded from the same storesame-store portfolio.

Because our portfolio of properties changed significantly as the result of our STAR Merger, which closed on December 16, 2021, we present, as described below, information on the IRT Same-Store Portfolio, STAR Same-Store Portfolio and Combined Same-Store Portfolio.

IRT Same-Store Portfolio
IRT Same-Store Portfolio represents the 48 properties that IRT owned and consolidated as of January 1, 2021 and through September 30, 2022 (other than properties held for sale as of September 30, 2022).
32
STAR Same-Store Portfolio
STAR Same-Store Portfolio represents the 65 properties that STAR owned and consolidated as of January 1, 2021 and that, following the consummation of the Merger on December 16, 2021, continued to be owned and consolidated by IRT through September 30, 2022 (other than properties held for sale as of September 30, 2022).
Combined Same-Store Portfolio
Combined Same-Store Portfolio represents the combination of the IRT Same-Store Portfolio and the STAR Same-Store Portfolio considered as a single portfolio of 113 properties which represent 33,804 units.
Combined Non Same-Store Portfolio
Combined Non Same-Store Portfolio represents the combination of six IRT non same-store properties and three STAR non same-store properties considered as a single non same-store portfolio of nine properties which represent 2,372 units acquired after January 1, 2021 (includes two properties held for sale as of September 30, 2022).
Pre-Merger STAR Portfolio NOI
In order to reconcile Combined Same-Store NOI to net income for periods prior to our December 16, 2021 merger with STAR, our reconciliation excludes NOI generated by the STAR Portfolio because IRT did not own these properties prior to December 16, 2021.
33
Set forth below is a reconciliation of same storeCombined Same-Store Portfolio net operating income to net income (loss) available to common shares for the three and nine months ended September 30, 20172022 and 20162021 (in thousands, except per unit data):

 

Three Months Ended September 30, (a)

 

Nine Months Ended September 30, (a)

 

 

2017

 

 

2016

 

 

% change

 

2017

 

 

2016

 

 

% change

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

$

32,483

 

 

$

31,698

 

 

 

2.5

%

 

 

$

96,587

 

 

$

93,313

 

 

 

3.5

%

Reimbursement and other income

 

3,913

 

 

 

3,645

 

 

 

7.4

%

 

 

 

11,513

 

 

 

10,640

 

 

 

8.2

%

Total revenue

 

36,396

 

 

 

35,343

 

 

 

3.0

%

 

 

 

108,100

 

 

 

103,953

 

 

 

4.0

%

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

4,388

 

 

 

4,280

 

 

 

2.5

%

 

 

 

13,153

 

 

 

12,845

 

 

 

2.4

%

Property insurance

 

747

 

 

 

748

 

 

 

-0.1

%

 

 

 

2,348

 

 

 

2,254

 

 

 

4.2

%

Personnel expenses

 

3,573

 

 

 

3,449

 

 

 

3.6

%

 

 

 

10,456

 

 

 

10,038

 

 

 

4.2

%

Utilities

 

2,353

 

 

 

2,280

 

 

 

3.2

%

 

 

 

6,699

 

 

 

6,540

 

 

 

2.4

%

Repairs and maintenance

 

1,550

 

 

 

1,460

 

 

 

6.2

%

 

 

 

4,117

 

 

 

3,816

 

 

 

7.9

%

Contract services

 

1,074

 

 

 

1,060

 

 

 

1.3

%

 

 

 

3,207

 

 

 

3,254

 

 

 

-1.4

%

Advertising expenses

 

397

 

 

 

399

 

 

 

-0.5

%

 

 

 

1,161

 

 

 

1,198

 

 

 

-3.1

%

Other expenses

 

662

 

 

 

844

 

 

 

-21.6

%

 

 

 

2,156

 

 

 

2,254

 

 

 

-4.3

%

Total operating expenses

 

14,744

 

 

 

14,520

 

 

 

1.5

%

 

 

 

43,297

 

 

 

42,199

 

 

 

2.6

%

Net operating income

$

21,652

 

 

$

20,823

 

 

 

4.0

%

 

 

$

64,803

 

 

$

61,754

 

 

 

4.9

%

NOI Margin

 

59.5

%

 

 

58.9

%

 

 

0.6

%

 

 

 

59.9

%

 

 

59.4

%

 

 

0.5

%

Average Occupancy

 

94.7

%

 

 

94.3

%

 

 

0.4

%

 

 

 

94.5

%

 

 

93.5

%

 

 

1.0

%

Average effective monthly rent, per unit

$

1,020

 

 

$

999

 

 

 

2.2

%

 

 

$

1,014

 

 

$

984

 

 

 

3.0

%

Reconciliation of Same-Store Net Operating Income to Net Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-store portfolio net operating income (a)

$

21,652

 

 

$

20,823

 

 

 

 

 

 

 

$

64,803

 

 

$

61,754

 

 

 

 

 

Non same-store net operating income

 

2,016

 

 

 

1,434

 

 

 

 

 

 

 

 

5,281

 

 

 

6,015

 

 

 

 

 

Property management income

 

202

 

 

 

-

 

 

 

 

 

 

 

 

579

 

 

 

-

 

 

 

 

 

Property management expenses

 

(1,328

)

 

 

(1,219

)

 

 

 

 

 

 

 

(4,310

)

 

 

(3,710

)

 

 

 

 

General and administrative expenses

 

(2,322

)

 

 

(2,665

)

 

 

 

 

 

 

 

(7,128

)

 

 

(8,074

)

 

 

 

 

Acquisition and integration expenses

 

(569

)

 

 

(19

)

 

 

 

 

 

 

 

(956

)

 

 

(37

)

 

 

 

 

Depreciation and amortization

 

(8,671

)

 

 

(7,765

)

 

 

 

 

 

 

 

(24,289

)

 

 

(26,927

)

 

 

 

 

Interest expense

 

(6,963

)

 

 

(8,820

)

 

 

 

 

 

 

 

(21,573

)

 

 

(27,815

)

 

 

 

 

Hedge ineffectiveness

 

12

 

 

 

-

 

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

Other income (expense)

 

-

 

 

 

(2

)

 

 

 

 

 

 

 

(5

)

 

 

(2

)

 

 

 

 

Net gains (losses) on sale of assets

 

(92

)

 

 

(1

)

 

 

 

 

 

 

 

15,873

 

 

 

31,773

 

 

 

 

 

Gains (losses) on extinguishment of debt

 

-

 

 

 

-

 

 

 

 

 

 

 

 

(572

)

 

 

(558

)

 

 

 

 

Acquisition related debt extinguishment expenses

 

(2,781

)

 

 

-

 

 

 

 

 

 

 

 

(2,781

)

 

 

-

 

 

 

 

 

Gains (losses) on TSRE merger

 

-

 

 

 

641

 

 

 

 

 

 

 

 

-

 

 

 

732

 

 

 

 

 

Net income (loss) available to common shares

$

1,156

 

 

$

2,407

 

 

 

 

 

 

 

$

24,922

 

 

$

33,151

 

 

 

 

 

(a)

Same store portfolio for the three and nine months ended September 30, 2017 and 2016 included 42 properties containing 11,676 units.

 
Three Months Ended September 30,(a)
Nine Months Ended September 30,(a)
 20222021% change20222021% change
Revenue:   
Rental and other property revenue$151,030 $136,563 10.6 %$439,292 $395,774 11.0 %
Property Operating Expenses
Real estate taxes18,399 16,143 14.0 %56,476 53,192 6.2 %
Property insurance3,523 3,170 11.1 %9,310 8,542 9.0 %
Personnel expenses(b)
11,921 12,064 (1.2)%36,221 35,282 2.7 %
Utilities8,007 7,244 10.5 %22,393 21,170 5.8 %
Repairs and maintenance6,037 5,399 11.8 %16,278 14,223 14.4 %
Contract services5,317 4,915 8.2 %15,165 14,006 8.3 %
Advertising expenses1,459 1,334 9.4 %3,861 3,900 (1.0)%
Other expenses1,801 1,488 21.0 %5,118 4,591 11.5 %
Total property operating expenses56,464 51,757 9.1 %164,822 154,906 6.4 %
Net operating income$94,566 $84,806 11.5 %$274,470 $240,868 14.0 %

NOI Margin62.6 %62.1 %0.5 %62.5 %60.9 %1.6 %
Average Occupancy94.2 %96.5 %(2.3)%95.0 %96.0 %(1.0)%
Average effective monthly rent, per unit$1,479 $1,305 13.3 %$1,421 $1,270 11.9 %
Reconciliation of Combined Same-Store Portfolio NOI to Net Income:
Combined same-store portfolio NOI(a)
$94,566 $84,806 $274,470 $240,868 
Combined non same-store portfolio NOI5,767 7,054 15,626 17,038 
Pre-Merger STAR Portfolio NOI(c)
— (54,432)— (151,517)
Other revenue300 188 805 647 
Property management expenses(5,744)(2,199)(17,440)(6,318)
General and administrative expenses(5,625)(3,985)(20,521)(14,168)
Depreciation and amortization(49,722)(17,384)(200,688)(50,699)
Casualty gains (losses), net191 — 7,176 (359)
Interest expense(22,093)(8,700)(63,618)(25,644)
Gain on sale of real estate assets, net— 11,492 94,712 11,492 
Other income (expense)765 — 1,501 — 
Loss from investments in unconsolidated
  real estate entities		(1,477)— (2,411)— 
Merger and integration costs(275)(5,276)(3,477)(5,276)
Net income$16,653 $11,564 $86,135 $16,064 
(a)Combined Same-Store Portfolio for the three and nine months ended September 30, 2022 and 2021 included 113 properties containing 33,804 units.
(b)Included in the three and nine months ended September 30, 2022 is a refund of previously paid employer payroll taxes of $0.7 million from a portion of an employee retention credit received.
(c)Represents NOI of the STAR Portfolio for periods prior to the consummation of the STAR Merger on December 16, 2021.
34
Liquidity and Capital Resources

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain investments, pay distributions and other general business needs. We believe our available cash balances, financing arrangements and cash flows from operations will be sufficient to fund our liquidity requirements with respect to our existing portfolio for the next 12twelve months and the foreseeable future.

30

Our primary cash requirements are to:

•make investments to continue our value add initiatives to improve the quality and fund the associated costs;

performance of our properties;

•repay our indebtedness;

•fund costs necessary to maintain our properties;

•pay our operating expenses; and

•distribute a minimum of 90% of our REIT taxable income (determined without regard to the deduction for dividends paid and excluding net capital gain) and to make investments in a manner that enables us to maintain our qualification as a REIT.

We intend to meet theseour liquidity requirements primarily through:

through a combination of one or more of the following:

•the use of our cash and cash equivalent balanceequivalents of $10.1$23.8 million as of September 30, 2017;

2022;

•existing and future unsecured financing, including advances under our unsecured credit facility, and financing secured directly or indirectly by the apartment properties in our portfolio;

•cash generated from operating activities;

•net cash proceeds from property sales, implementingincluding sales undertaken as part of our capital recycling strategy and other sales;

and

•proceeds from the salesales of our common stock;stock and

other equity securities, including common stock that we expect to issue in settlement of our forward sale agreement.
Stock Repurchase Program

if required, proceeds from future borrowings and offerings.

On May 1, 2017,18, 2022, our Board of Directors authorized a common stock repurchase program (the "Stock Repurchase Program") covering up to $250,000 in shares of our common stock. Under the Stock Repurchase Program, we, closedin our discretion, may purchase our shares from time to time in the open market or in privately negotiated transactions. The amount and timing of the purchases will depend on a new $300.0 million unsecured credit facility, refinancingnumber of factors, including the price and terminating the previous secured credit facility.availability of our shares, trading volumes and general market conditions. The new facility is comprised of a $50.0 million term loanStock Repurchase Program has no time limit and a revolving commitment of up to $250.0 million. The maturity date on the new term loan is May 1, 2022, and the maturity date on borrowings outstanding under the revolving commitment is May 1, 2021, extending the September 17, 2018 maturity of the previous secured credit facility. Based on our current leverage levels, our annual interest cost is LIBOR plus 145 basis points under the term loan and LIBOR plus 150 basis points for borrowings outstanding under the revolving commitments, an annual savings of approximately 35 to 40 basis points from our previous secured credit facility.

may be suspended or discontinued at any time.

Cash Flows

As of September 30, 20172022 and 2016,2021, we maintained cash and cash equivalents, and restricted cash of approximately $10.1$59.6 million and $29.2$14.9 million, respectively. Our cash and cash equivalents were generated from the following activities (dollars in thousands):

For the Nine Months Ended September 30,
20222021
Cash flow provided by operating activities$191,241 $73,725 
Cash flow (used in) investing activities(174,162)(145,437)
Cash flow (used in) provided by financing activities(23,168)72,955 
Net change in cash and cash equivalents, and restricted cash(6,089)1,243 
Cash and cash equivalents, and restricted cash, beginning of period65,671 13,615 
Cash and cash equivalents, and restricted cash, end of the period$59,582 $14,858 

 

 

For the Nine Months Ended September 30,

 

 

 

2017

 

 

2016

 

Cash flow provided by operating activities

 

$

45,056

 

 

$

33,330

 

Cash flow (used in) provided by investing activities

 

 

(145,884

)

 

 

29,036

 

Cash flow (used in) provided by financing activities

 

 

90,064

 

 

 

(71,420

)

Net change in cash and cash equivalents

 

 

(10,764

)

 

 

(9,054

)

Cash and cash equivalents at beginning of period

 

 

20,892

 

 

 

38,301

 

Cash and cash equivalents at end of period

 

$

10,128

 

 

$

29,247

 

35

The increase in our

Our cash flowinflows from operating activities during the nine months ended September 30, 2017 was2022 and 2021 were primarily driven by the increased performanceongoing operations of our property portfolio.

properties.

Our cash outflowoutflows from investing activities during the nine months ended September 30, 2017 was2022 were primarily due to seven property$201.8 million of acquisitions of real estate properties, $55.6 million of capital expenditures, $51.4 million of investments in unconsolidated real estate entities, and $40.0 million of investments in real estate under development partially offset by three$155.6 million of proceeds from four property dispositions.dispositions and proceeds from insurance claims of $15.7 million. Our cash inflowoutflows from investing activities during the nine months ended September 30, 2016 was2021 were primarily due to $139.2 million of cash used to acquire two properties and $31.8 million of capital expenditures partially offset by $39.2 million of proceeds from the disposition of three properties.  

one property.

Our cash inflowoutflows from financing activities during the nine months ended September 30, 2017 was2022 were primarily due to drawscredit facility and term loan repayments of $666.5 million and payment of dividends on our currentcommon stock and previous credit facilities related to the acquisitionsnoncontrolling interests of seven properties,$76.4 million partially offset by the$687.5 million of proceeds from unsecured credit facilities and term loan restructurings and $48.8 million of proceeds from the issuance of our common stock. Our cash outflowinflows from financing activities during the nine months ended September 30, 2016 was2021 were primarily due to repayments of mortgage indebtedness and the interim facility with proceeds from the three property dispositions.  

As a REIT, we evaluate our dividend coverage basedunsecured credit facility and term loans of $387.5 million partially offset by credit facility repayments of $234.8 million, mortgage principal repayments of $79.6 million and dividends on our cash flow from operating activities, excluding acquisition and integration expenses and changes in other assets and liabilities.  During the nine months ended September 30, 2017, we paid

31

distributions to our common stockholdersstock and noncontrolling interests of $38.9 million and generated cash flow from operating activities excluding acquisition and integration expenses and$37.5 million.

Contractual Commitments
Our 2021 Annual Report on Form 10-K includes a table of contractual commitments. There were no material changes in other assets and liabilitiesto these commitments since the filing of $40.4 million.

our Annual Report on Form 10-K except for the Restated Credit Agreement entered into on July 25, 2022. See —Note 5 (Indebtedness) for details of our Restated Credit Agreement.

Off-Balance Sheet Arrangements

There were no off-balance sheet arrangements during the nine months ended September 30, 20172022 that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our interests.

Critical Accounting Estimates and Policies

Our 20162021 Annual Report on Form 10-K contains a discussion of our critical accounting policies. On January 1, 2016, we adopted three new accounting pronouncements and revised our accounting policies as described in Note 2 to the Consolidated Financial Statements included in Part I, Item 1 of this report. Management discusses our critical accounting policies and management’s judgments and estimates with the audit committee of our board of directors.

There were no material changes to our critical accounting policies since the filing of our Annual Report on form 10-K.

Item 3.

Item 3.    Quantitative and Qualitative and Quantitative Disclosure About Market Risk.

Market risk is the adverse effectRisk.

Our 2021 Annual Report on the valueForm 10-K contains a discussion of a financial instruments that results from a change in interest rates. We may be exposed to interest rate changes primarily as a result of long-term debt used to maintain liquidity, fund capital expendituresqualitative and expand our real estate investment portfolio and operations. Market fluctuations in real estate financing may affect the availability and cost of funds needed to expand our investment portfolio. In addition, restrictions upon the availability of real estate financing or high interest rates for real estate loans could adversely affect our ability to dispose of real estate in the future. We seek to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. We may use derivative financial instruments to hedge exposures to changes in interest rates on loans secured by our assets. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. With regard to variable rate financing, we assess our interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. We maintain risk management control systems to monitor interest rate cash flow risk attributable to both our outstanding and forecasted debt obligations as well as our potential offsetting hedge positions. While this hedging strategy is designed to minimize the impact on our net income and funds from operations of changes in interest rates, the overall returns on any investment in our securities may be reduced. We currently have limited exposure to financialquantitative market risks.

We may also be exposed to credit risk in derivative contracts we may use. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty will owe us, which creates credit risk for us. If the fair value of a derivative contract is negative, we will owe the counterparty and, therefore, do not have credit risk. We seek to minimize the credit risk in derivative instruments by entering into transactions with high-quality counterparties.

There have been no material changes in quantitative and qualitative market risks during the nine months ended September 30, 20172022 from the disclosures included in our 20162021 Annual Report on Form 10-K.

Item 4.

Item 4.    Controls and Procedures.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officerChief Executive Officer and our chief financial officer,Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating
Effective as of September 30, 2022, we carried out an evaluation, under the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision of our chief executive officer and chief financial officer and with the participation of our disclosure committee, we have carried out an evaluationChief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.procedures. Based uponon that evaluation, our chief executive officerChief Executive Officer and chief financial officerChief Financial Officer concluded that ourthe disclosure controls and procedures are effective atto ensure that information required to be disclosed by us in our Exchange Act filings is recorded, processed, summarized and reported within the reasonable assurance level.

32

time periods specified in the SEC’s rules and forms.
36

Table of Contents
Changes in Internal Control Over Financial Reporting

There has beenwere no changechanges in our internal control over financial reporting oridentified in other factorsconnection with the evaluation referred to above during the quarter ended September 30, 2017,2022 that have materially affected, or wereare reasonably likely to materially affect, our internal control over financial reporting.

37
Table of Contents
PART II—OTHER INFORMATION

Item 1.

Item 1.    Legal Proceedings.

We are subject to various legal proceedings and claims that arise in the ordinary course of our business operations. Matters which arise out of allegations of bodily injury, property damage, and employment practices are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, we currently believe the final outcome of such matters will not have a material adverse effect on our financial position, results of operations or cash flows.

flows.

Item 1A.

Item 1A.    Risk Factors.

There have not been any material changes from the risk factors previously disclosed in Part 1, Item 1A—“Risk Factors” in1A of our 20162021 Annual Report on Form 10-K.

Item 2.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

We have previously disclosed four “UPREIT” transactions completed in May 2014, August 2014, November 2014 and December 2014 whereinUse of Proceeds.

During the three months ended September 30, 2022, no holders of IROP issued, inunits exchanged shares of our common stock or cash. The exchange of units for shares and the aggregate, 1,282,449 common units, or units, to unaffiliated entities or persons in order to acquire properties. In addition, we have previously disclosed that in September 2015, IROP issued 1,925,419 units, plus cash in lieuissuance of fractional TSR OP units, in a transaction related to the TSRE acquisition.  In June 2017, IROP issued 166,604 units in connection with our acquisition of South Terrace. All such issuances wereshares is exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act. No underwriters were involved with such issuances. As previously disclosed, these units are subject to exchange agreements containing the terms and conditions under which the units could be exchanged for cash in an amount equal to the value of an equivalent number of shares of our common stock as of the date IROP receives the holder’s notice of its desire to exchange the units for cash or, at IROP’s option, for the equivalent number of shares of our common stock. During the first half of 2017, IROP exchanged 39,899 units for 39,899 shares of our common stock (with fractional units being settled in cash). At September 30, 2017, there were 3,035,6542022, 6,091,171 IROP units held by unaffiliated third parties remained outstanding.
During the three months ended September 30, 2022, we withheld shares of common stock to satisfy employee tax withholding obligations payable upon the vesting of restricted common stock awards as follow:
PeriodTotal Number of Shares Purchased
Price Paid per Share (1)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2)
July 2022999 $19.18 — $250,000 
August 202222 20.03 — 250,000 
September 2022— — — 250,000 
Total1,021 $19.18 — 
(1)The issuanceprice reported is the average price paid per share using our closing price on the NYSE on the vesting date of the relevant award.
(2)On May 18, 2022, our Board of Directors approved the Stock Repurchase Program covering up to $250,000 in shares of our common stockstock. Under the Stock Repurchase Program, we, in these exchanges was exemptour discretion, may purchase our shares from registration pursuanttime to Section 4(a)(2)time in the open market or in privately negotiated transactions. The amount and timing of the Securities Actpurchases will depend on a number of factors, including the price and Rule 506availability of Regulation D; all the persons receiving suchour shares, were accredited investors. No underwriters were involved with such issuances.

trading volumes and general market conditions. The Stock Repurchase Program has no time limit and may be suspended or discontinued at any time.

Item 3.

Item 3.    Defaults Upon Senior Securities.

None.

Item 4.

Item 4.    Mine Safety Disclosures.

None.

Item 5.

Item 5.    Other Information.

None.

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Table of Contents

Item 6.

Item 6.    Exhibits.

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

10.1

HPI Purchase and Sale Agreement dated September 3, 2017, filed herewith.

2.1

10.2

First Amendment to HPI Purchase and Sale Agreement dated September 25, 2017, filed herewith.

10.1

Fourth Amended, Restated and Consolidated Credit Agreement (the “Credit Agreement”), dated as of July 25, 2022, by and among the Independence Realty Operating Partnership, LP as borrower, Independence Realty Trust, Inc., and the other guarantors party thereto, collectively, as guarantors, Citibank, N.A. (together with any successor in interest, “Citibank”) and KeyBank National Association (together with any successor in interest, “KeyBank”), as initial Lenders, Issuing Lenders and Swing Loan Lenders, the other lending institutions which are parties to the Credit Agreement as “Lenders”, the other lending institutions that may become parties to the Credit Agreement and KeyBank, as administrative agent for Lenders, with Citibank, and The Huntington National Bank, as Revolving Facility Co-Syndication Agents, Regions Bank, and Capital One, National Association, as 2021 Term Loan Co-Syndication Agents, Capital One, National Association and PNC Bank, National Association, as 2022 Term Loan Co-Syndication Agents, Bank Of America, N.A., Capital One, National Association, Citizens Bank, PNC Bank, National Association, Regions Bank, BMO Harris Bank, N.A., The Huntington National Bank and Truist Bank (successor by merger to SunTrust Bank), as Co-Documentation Agents, Citibank, and KeyBanc Capital Markets, as Revolving Facility and 2021 Term Loan Joint Bookrunners, KeyBanc Capital Markets, Capital One, National Association, and The Huntington National Bank, as 2022 Term Loan Joint Bookrunners, and KeyBanc Capital Markets, Citibank, and The Huntington National Bank, as Revolving Facility Joint Lead Arrangers, and KeyBanc Capital Markets, Capital One, National Association, and Regions Capital Markets, as 2021 Term Loan Joint Lead Arrangers, KeyBanc Capital Markets, Capital One, National Association, and The Huntington National Bank, as 2022 Term Loan Joint Lead Arrangers, incorporated by reference to Exhibit 10.1 to IRT's Current Report on Form 8-K filed on July 27, 2022.

10.3

Second Amendment to HPI Purchase and Sale Agreement dated October 24, 2017, filed herewith.

31.1

12.1

Statements regarding computation of ratios as of September 30, 2017, filed herewith.

33

31.1

Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

31.2

32.1

32.2

101

XBRL (eXtensibleiXBRL (Inline eXtensible Business Reporting Language). The following materials, formatted in XBRL:iXBRL: (i) Consolidated Balance Sheets as of September 30, 20172022 and December 31, 2016,2021, (ii) Consolidated Statements of Operations for the three and nine months ended September 30, 20172022 and 2016,2021, (iii) Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30, 20172022 and 2016,2021, (iv) Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2017,2022 and 2021, (v) Consolidated Statements of Cash Flows for the nine months ended September 30, 20172022 and 20162021 and (vi) notes to the consolidated financial statements as of September 30, 2017.

2022.
104Cover Page Interactive Data File (embedded within the Inline XBRL document).

34

* Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. IRT agrees to furnish supplementally to the SEC a copy of any omitted schedule upon request by the SEC.
**Management agreement or compensatory plan or arrangement.
39

Table of ContentsSIGNATURES

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Independence Realty Trust, Inc.

Date: October 31, 2017

27, 2022

By:

By:

/s/ Scott f. Schaeffer

SCOTT F. SCHAEFFER

Scott F. Schaeffer

ChairmanChair of the Board and Chief Executive Officer

(Principal Executive Officer)

Date: October 31, 2017

27, 2022

By:

By:

/s/ JAMES J. SEBRA

James J. Sebra

James J. Sebra

Chief Financial Officer and Treasurer

(Principal Financial Officer)

Date: October 27, 2022By:/s/ JASON R. DELOZIER
Jason R. Delozier
Chief Accounting Officer and
(Principal Accounting Officer)

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