1835 Market Street, Suite ~~3575~~

2601

(Registrant’s Telephone Number, Including Area Code)

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

Securities registered pursuant to section 12(b) of the Act:

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 ☐

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 ☐

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.

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.☐

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

As of October ~~30, 2017~~26, 2023 there were ~~83,518,602~~224,710,624 shares of the Registrant’s common stock issued and outstanding.

INDEPENDENCE REALTY TRUST, INC.

PART I—FINANCIAL INFORMATION

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)

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; 500,000,000 shares authorized,

224,695,566 and 224,064,940 shares issued and outstanding, including

281,650 and 232,134 unvested restricted common share awards, respectively

Common stock, $0.01 par value; 500,000,000 shares authorized,

224,695,566 and 224,064,940 shares issued and outstanding, including

281,650 and 232,134 unvested restricted common share awards, respectively

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

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,

2017

2016

2017

2016

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

-

Total revenue

40,066

38,364

118,769

115,357

EXPENSES:

Property operating expenses

16,196

16,107

48,106

47,588

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 expense

8,671

7,765

24,289

26,927

Total expenses

29,086

27,775

84,789

86,336

Operating income

10,980

10,589

33,980

29,021

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):

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:

Basic

$
0.02

$
0.05

$
0.34

$
0.66

Diluted

$
0.02

$
0.05

$
0.34

$
0.66

Weighted-average shares:

Basic

71,972,394

47,215,918

69,875,802

47,164,543

Diluted

72,144,544

47,314,629

70,105,571

47,190,139


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
REVENUE:
Rental and other property revenue	$	168,375	$	160,300	$	493,111	$	464,921
Other revenue	232		300		826		805
Total revenue	168,607		160,600		493,937		465,726
EXPENSES:
Property operating expenses	63,300		59,967		184,627		174,825
Property management expenses	7,232		5,744		20,421		17,440
General and administrative expenses	3,660		5,625		17,724		20,521
Depreciation and amortization expense	55,546		49,722		163,066		200,688

Casualty losses (gains), net	35		(191)		866		(7,176)
Total expenses	129,773		120,867		386,704		406,298
Interest expense	(22,033)		(22,093)		(66,383)		(63,618)
(Loss on impairment) gain on sale of real estate assets, net	(11,268)		—		(10,284)		94,712
Merger and integration costs	—		(275)		—		(3,477)
Other (loss) income, net	(369)		765		(348)		1,501
Loss from investments in unconsolidated real estate entities	(1,178)		(1,477)		(3,158)		(2,411)
Restructuring costs	—		—		(3,213)		—
Net income:	3,986		16,653		23,847		86,135
Income allocated to noncontrolling interest	(56)		(430)		(559)		(2,517)
Net income allocable to common shares	$	3,930	$	16,223	$	23,288	$	83,618
Earnings per share:
Basic	$	0.02	$	0.07	$	0.10	$	0.38
Diluted	$	0.02	$	0.07	$	0.10	$	0.38
Weighted-average shares:
Basic	224,498,374		221,960,609		224,383,590		221,312,261
Diluted	225,140,555		222,867,546		225,103,475		222,359,585

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

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,
	2023		2022		2023		2022
Net income	$	3,986	$	16,653	$	23,847	$	86,135
Other comprehensive income:
Change in fair value of interest rate hedges	14,761		19,439		26,681		54,318
Realized (gains) losses on interest rate hedges reclassified to earnings	(5,433)		214		(13,559)		(3,408)
Total other comprehensive income	9,328		19,653		13,122		50,910
Comprehensive income before allocation to noncontrolling interests	13,314		36,306		36,969		137,045
Allocation to noncontrolling interests	(297)		(944)		(873)		(3,918)
Comprehensive income	$	13,017	$	35,362	$	36,096	$	133,127

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

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

(Unaudited and dollars in thousands, except share information)

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

(Unaudited and dollars in thousands, except share information)

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

statements

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

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

statements

Table of Contents

Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~As of~~

September 30, ~~2017~~

2023

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

NOTE 1: Organization

Independence Realty Trust, Inc., ~~or IRT,~~a Maryland corporation (“IRT”), is a self-administered and self-managed real estate investment trust (“REIT”) which was formed on March 26, ~~2009 as a Maryland corporation that has elected to be taxed as a real estate investment trust, or REIT, commencing with~~2009. We are primarily engaged in the ~~taxable year ended December 31, 2011.~~ownership, operation, management, improvement, and acquisition of multifamily apartment communities in non-gateway markets. As of September 30, ~~2017,~~2023, we owned and operated 120 (unaudited) multifamily apartment properties (including one consolidated joint venture) that contain 35,427 (unaudited) units across non-gateway U.S. markets including Atlanta, Columbus, Dallas, Denver, Houston, Indianapolis, Nashville, Oklahoma City, Raleigh-Durham, and Tampa. In addition, as of September 30, 2023, we owned two investments in real estate under development in Denver, Colorado that will, upon completion, contain an aggregate of 621 (unaudited) units. As of September 30, 2023, we also owned interests in four unconsolidated joint ventures, two that own and operate 50 multifamily apartment ~~properties, totaling 13,729~~communities that contain an aggregate of 810 (unaudited) units ~~across non-gateway U.S markets, including Louisville, Memphis, Atlanta~~ and ~~Raleigh. Our investment strategy is focused on gaining scale within key amenity rich submarkets~~two that offer good school districts, high-quality retail and major employment centers. 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.are developing multifamily apartment communities that will, upon completion, contain an aggregate of 653 (unaudited) units. 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,~~a Delaware limited partnership (“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.~~IRT and, as required by context, IROP and ~~their~~its subsidiaries.

NOTE 2: Summary of Significant Accounting Policies

a. Basis of Presentation

The accompanying unaudited interim condensed 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 condensed consolidated financial statements should be read in conjunction with our audited financial statements as of and for the year ended December 31, ~~2016~~2022 included in our 2022 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 condensed consolidated financial position and condensed 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 condensed 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 ~~FASB~~the 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.

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.

Table of Contents

Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~As of~~

September 30, ~~2017~~

2023

(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.

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, ~~2017~~2023 and December 31, ~~2016,~~2022, we had ~~$6,665~~$31,772 and ~~$5,518,~~$27,933, 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, necessary approvals are obtained, 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”.~~(“ASC 805”), we evaluate our real estate acquisitions to determine if they should be accounted for as a business or as a group of assets. The evaluation includes an initial screen to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single asset or group of similar assets. If the screen is met, the acquisition is not a business. The properties we have acquired met the screen test and are accounted for as asset acquisitions. Under asset acquisition accounting, the costs to acquire real estate, ~~acquired is~~including 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 intangible~~individual 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 on~~upon 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~~these intangible ~~asset~~assets is amortized over the assumed lease up period, typically six months. During each of the three and nine months ended September 30, 2023 we consolidated a former unconsolidated real estate entity and recognized in-place leases with a value of $398. For the three and nine months ended September 30, ~~2017,~~2023, we recorded ~~$416~~$133 and ~~$664,~~$532, respectively, of amortization ~~expense~~ for intangible assets. For the three and

~~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,~~2022, we recorded $0$79 and ~~$3,735,~~$53,367, respectively, of amortization ~~expense~~ for intangible assets. For the three and nine months ended September 30, 2023, we wrote-off fully amortized intangible assets of $0 and $1,099, respectively. For the three and nine months ended September 30, 2022, we wrote-off fully amortized intangible assets of $0 and $58,048, respectively. As of September 30, ~~2017,~~2023, we expect to record additional amortization expense on current in-place intangible assets of ~~$795~~$199 for the remainder of ~~2017.~~

2023.

Business Combinations

For properties we acquire or transactions we enter 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 of the acquisition date, and the recognition and measurement, at fair value, of the assets acquired and liabilities assumed. To

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Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2023

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

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. Our merger with Steadfast Apartment REIT, Inc. on December 16, 2021 was accounted for as a business combination. For the three and nine months ended September 30, 2022, we incurred merger and integration costs of $275 and $3,477, respectively. These amounts were expensed as incurred, and are included in the condensed consolidated statements of operations in the item titled “Merger and integration costs”, and primarily consist of technology migration and implementation, consulting and professional fees. We incurred no merger and integration costs for the three and nine months ended September 30, 2023.

Impairment of Long-Lived Assets

Management evaluates the recoverability of our ~~investment~~investments 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 ~~its~~our long-lived assets on an ongoing basis, taking into consideration both quantitative and qualitative factors, 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 (e.g., hold period) and our views of market and economic conditions. The estimates consider matters such as current and historical rental rates and collection levels, occupancies for the respective and/or comparable properties, age and condition of the 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.

We recorded impairment charges of $11,268, for each of the three and nine months ended September 30, 2023, on account of real estate classified as held for sale, and recorded no impairment charges for the three and nine months ended September 30, 2022.

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 ~~equipment~~furniture, fixtures, and ~~fixtures.~~equipment. For the three and nine months ended September 30, ~~2017,~~2023, we recorded ~~$8,255~~$55,083 and ~~$23,625~~$161,670 of depreciation expense, respectively. For the three and nine months ended September 30, ~~2016,~~2022, we recorded ~~$7,765~~$49,268 and ~~$23,192~~$146,222 of depreciation expense, respectively.

During the three and nine months ended September 30, 2023, we wrote-off fully depreciated fixed assets of $7,563 and $15,596, 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 losses (gains), net when the proceeds are received. During the three and nine months ended September 30, 2023, we recorded $35 and $866 of net casualty losses, respectively. During the three and nine months ended September 30, 2022, we recorded $191 and $7,176 of net casualty gains, 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. For the three and nine months ended September 30, 2023, we recorded $1,926 and $5,094, respectively, of capitalized interest expense, on our

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Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2023

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

investments in real estate under development. For the three and nine months ended September 30, 2022, we recorded $618 and $1,404, respectively, of capitalized interest expense, on our two investments in real estate under development.

As of September 30, 2023 and December 31, 2022, the carrying value of our two investments in real estate under development in Denver, Colorado totaled $83,547 and $105,518, respectively, net of $77,520 and $0 placed in service, respectively, and was recorded as a separate line item in our condensed consolidated balance sheets.

h. Investments in Unconsolidated Real Estate Entities

We have entered into joint ventures with unrelated third parties to acquire, develop, own, operate, and manage real estate assets. Our joint ventures are funded with a combination of debt and equity. We consolidate entities that we control as well as any variable interest entity ("VIE") where we are the primary beneficiary. Under the VIE model, we 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 analyzed the initial accounting for each of our four investments in unconsolidated real estate entities and concluded that each is a voting interest entity and is not a VIE. Our equity interest varies for each of our four investments in unconsolidated real estate entities between 50% and 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 control these joint ventures through our ownership interests, they are accounted for under the equity method of accounting, and are included in investments in unconsolidated real estate entities on the condensed consolidated balance sheets. Under the equity method of accounting, the investments are carried at cost plus our share of net earnings or losses. For the three and nine months ended September 30, 2023, we recorded $1,176 and $3,271 of capitalized interest expense, on our investments in unconsolidated real estate entities in our condensed consolidated balance sheets. For the three and nine months ended September 30, 2022, we recorded $484 and $969 of capitalized interest expense, on our investments in unconsolidated real estate entities in our condensed consolidated balance sheets.

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” (“ASC 842”) with respect to our accounting for rental income. We primarily lease ~~apartments~~apartment 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 adjustments~~We have elected to account for ~~concessions~~lease (i.e. fixed payments including base rent) and ~~vacancy loss. Tenant reimbursement income represents reimbursement from tenants for utility charges while~~non-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.~~

~~For~~for the ~~three and nine months ended September 30, 2017, we recognized revenues~~amount 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.

~~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.

Table of Contents

Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2023

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

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 condensed 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.

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 condensed 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.

•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.

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~~of our unsecured credit facility, term loans, and ~~our former secured credit facility 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, 2023. 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

Financial Instrument

Carrying
Amount

Estimated
Fair Value

Carrying
Amount

Estimated
Fair Value

Assets

Cash and cash equivalents

$
10,128

$
10,128

$
20,892

$
20,892

Restricted cash

6,665

6,665

5,518

5,518

Derivative assets

3,581

3,581

3,867

3,867

Liabilities

Debt:

Secured credit facility

-

-

147,280

150,000

Unsecured credit facility

157,163

159,690

-

-

Mortgages

574,462

565,954

596,537

588,523

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Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2023

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


	As of September 30, 2023				As of December 31, 2022
Financial Instrument	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets
Cash and cash equivalents	$	17,216	$	17,216	$	16,084	$	16,084
Restricted cash	31,772		31,772		27,933		27,933
Derivative assets	53,258		53,258		41,109		41,109

Liabilities
Debt:
Unsecured Revolver	240,235		242,468		164,283		169,842
Unsecured Term loans	597,390		601,772		596,612		611,265
Secured credit facilities	638,204		565,371		660,542		580,332
Mortgages (1)	1,239,881		1,116,377		1,210,208		1,088,579

(1)Includes indebtedness associated with real estate held for sale of $40,593.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, we record assets and liabilities at fair value on a nonrecurring basis as required by U.S. GAAP. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. As discussed further in Note 3 “Investments in Real Estate”, we recognized an impairment charge of $11,268 during the three months ended September 30, 2023 at the property classified as held for sale as of September 30, 2023. The impairment charge was determined by comparing the fair value of the property to its carrying value. The fair value was based on an internally prepared valuation whose principal assumptions were unobservable cap rates that ranged from 6.0% - 6.5% and was determined to be a Level 3 fair value measurement within the fair value hierarchy.

l. Deferred Financing Costs

~~Costs~~

Under the effective interest method, 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~~agreements.

In accordance with FASB ASC Topic ~~835, “Interest” which~~842, “Leases”, lessees are required ~~deferred financing costs~~ to ~~be presented~~recognize 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 options, but that do not include any residual value guarantees or restrictive covenants. As of September 30, 2023 and December 31, 2022, we had $2,579 and $3,079, respectively, of operating lease right-of-use assets and $2,882 and $3,401, respectively, 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 condensed consolidated balance sheets. During the three and nine months ended September 30, 2023, we recorded $219 and $631, respectively, of total operating lease expense which was recorded within property management expenses and general and administrative expenses in our condensed consolidated statements of operations. During the three and nine months ended September 30, 2022, we recorded $252 and $1,096, respectively, of total operating lease expense which was recorded within property management expenses and general and administrative expenses in our condensed consolidated statements of operations.

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, ~~2017~~2023 and ~~2016.~~

2022.

Table of Contents

Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~As of~~

September 30, ~~2017~~

2023

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

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.

o. Employee Retention Credit

Under the terms of the March 27, 2020 Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), we were 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, in accordance with GAAP, by analogizing to International Accounting Standard 20 “Accounting for Government Grants” to recognize employee retention credits as a reimbursement of payroll related expenses within property operating expenses, property management expenses, and general and administrative expenses in our condensed consolidated statements of operations. During the six months ended December 31, 2022, we received employee retention credit refunds totaling $6,238 and recognized $3,006 in reimbursements of previously paid employer payroll taxes and retention costs in our condensed consolidated statements of operations. The remainder was included in accounts payable and accrued expenses in our condensed consolidated balance sheets and is being 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 the macroeconomic environment. During the three and nine months ended September 30, 2023, we recognized reimbursements of payroll related expenses of $593 and $2,170, respectively, in property operating expenses, $189 and $579, respectively, in property management expenses and $74 and $221, respectively, in general and administrative expenses.

p. Restructuring Costs

During the three months ended March 31, 2023, we reorganized certain departments in our organization impacting a limited number of employees. The impacted employees were provided severance packages that included cash severance payments and the accelerated vesting of performance share units and restricted stock awards, as applicable. In accordance with ASC 712 “Compensation – Nonretirement Postemployment Benefits”, we recognized the full amount of restructuring costs of $3,213 during the three months ended March 31, 2023, which was presented in the restructuring costs line on the condensed consolidated statement of operations. No restructuring costs were recognized during the three months ended September 30, 2023.

q. Recent Accounting Pronouncements

Below is a brief description of recent accounting pronouncements that could have a material effect on our condensed consolidated financial statements.

Adopted Within these Condensed Consolidated Financial Statements

In March ~~2016,~~2020, 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.848, “Reference Rate Reform.” 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~~update contain practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASC 848 is ~~permitted. Management is currently evaluating~~optional and may be elected over time as reference rate reform activities occur. Beginning in the first quarter of 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We will continue to evaluate 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~~guidance and may apply other elections as applicable as additional changes in the ~~settlement~~market occur.

Table 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.

ContentsIn 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

Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~As of~~

September 30, ~~2017~~

2023

(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,~~December 2022, the FASB issued ~~an accounting standard update under FASB ASC~~ASU 2022-06, Deferral of the Sunset Date of Topic ~~718, “Compensation – Stock Compensation.” The amendments in this update provide guidance about~~848 (“ASU 2022-06”) which ~~changes~~was issued to defer the ~~terms or conditions~~sunset date of ~~a share-based payment award require an entity~~Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform to ~~apply modification accounting in Topic 718. As a result,~~December 31, 2024. ASU 2022-06 is effective immediately for all companies. ASU 2022-06 has no impact on 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 ourCompany’s condensed consolidated financial ~~statements.~~

~~In August 2017,~~statements for the ~~FASB issued an accounting standard update under FASB ASC Topic 815, “Derivatives~~three 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 transac~~tions~~ 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.

nine months ended September 30, 2023. R

NOTE 3: Investments in Real Estate

As of September 30, ~~2017,~~2023, our investments in real estate consisted of 50120 apartment properties ~~with 13,729 units.~~(unaudited, including one consolidated joint venture) that contain 35,427 units (unaudited). The following table ~~below~~ summarizes our investments in real ~~estate:~~

estate, excluding one property we classified as held for sale:

As of September 30, ~~2017~~2023, we owned one property, The Meadows at River Run, with 374 units (unaudited) in Chicago, Illinois that we initially classified as held for sale as of June 30, 2023 and ~~December 31, 2016, we had investments in real estate with a carrying value of $22,031 and $60,786, respectively,~~that continued to be classified as held for sale.

~~Acquisitions~~

~~The below table summarizes~~ Based on ongoing negotiations, we recognized a $11,268 impairment charge during the ~~acquisitions for the nine~~three 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

2023 due to the carrying value exceeding the expected sales price less transaction costs. We expect the sale to close in the fourth quarter of 2023 and expect to extinguish $40,593 of mortgage debt in connection with the sale.

~~(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.

Dispositions

On February 28, 2023, we sold Eagle Lake Landing apartments located in Indianapolis, Indiana for $37,300 and recognized a gain on sale of $985.

Portfolio Optimization and Deleveraging Strategy

On October 26, 2023, our Board of Directors approved a plan, which we refer to as our Portfolio Optimization and Deleveraging Strategy, to exit or reduce our presence in certain markets while also deleveraging our balance sheet. Our Portfolio Optimization and Deleveraging Strategy targets sales of up to 10 properties that are located in seven markets including the one property in Chicago, Illinois that was previously identified and continues to be held for sale as of September 30, 2023.

Under the plan, certain properties may be sold for proceeds that are less than the current carrying value. This could result in the recognition of an impairment loss in the fourth quarter 2023 with respect to some of these properties based on the outcome of sale negotiations. During the fourth quarter of 2023, we will continuously reevaluate the properties covered by our Portfolio Optimization and Deleveraging Strategy under the held for sale guidance as additional information becomes available during the sales process. If circumstances indicate a held for sale classification is appropriate for any of these properties, we will classify the identified properties as held for sale as of December 31, 2023 at the lower of carrying value or the expected sales price less transaction costs. The proceeds of these contemplated sales will be utilized to delever the balance sheet.

We are in various stages of marketing, negotiations, and buyer due diligence with respect to the properties targeted for sale. There can be no assurance that any of the sales will be consummated at expected pricing levels, within expected time frames, or at all.

Table of Contents

Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~As of~~

September 30, ~~2017~~

2023

(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.~~

NOTE 4: Investments in Unconsolidated Real Estate

As of September 30, 2023, our investments in unconsolidated real estate entities had aggregate land, building, and construction in progress costs capitalized of $240,940 and aggregate construction debt of $125,065. We have not guaranteed 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 net earnings or losses of the joint ventures. We recognized losses of $1,178 and $3,158, respectively, from equity method investments during the three and nine months ended September 30, 2023 and $1,477 and $2,411, respectively, during the three and nine months ended September 30, 2022, and these losses were recorded in loss from investments in unconsolidated real estate entities in our condensed consolidated statements of operations.

The following table summarizes our investments in unconsolidated real estate entities as of September 30, 2023 and December 31, 2022:


					Carrying Value As Of
Investments in Unconsolidated Real Estate Entities	Location	Units (1) (Unaudited)	IRT Ownership Interest		September 30, 2023		December 31, 2022
Metropolis at Innsbrook (2)	Richmond, VA	402	84.8	%	$	17,576	$	17,331
Views of Music City II / The Crockett (3)	Nashville, TN	408	50.0	%	11,632		11,363
Lakeline Station	Austin, TX	378	90.0	%	31,585		25,292
The Mustang	Dallas, TX	275	85.0	%	26,799		11,812
Virtuoso (4)	Huntsville, AL	—	90.0	%	—		14,422
Total		1,463			$	87,592	$	80,220

(1)Represents the ~~aggregate fair value~~total number of units after development is complete and each property is placed in service.

(2)Operations commenced during the three months ended June 30, 2023 with 172 units (unaudited) placed in service. The remaining 230 units (unaudited) were placed in service during the three months ended September 30, 2023.

(3)Views of Music City phase II had 121 units (unaudited) placed in service during the three months ended September 30, 2023 and became an operating property consisting of 209 total units (unaudited) as of October 2, 2023. The Crockett is an operating property consisting of 199 units (unaudited) delivered during the three months ended March 31, 2023. We have one year from their respective delivery dates to exercise our purchase options on The Crockett and Views of Music City phase II.

(4)An amendment to the Virtuoso joint venture agreement on August 1, 2023 provided us with control over the major decisions that most significantly impact the joint venture and removed our joint venture partner’s rights to a promote interest. This caused us to reassess the accounting for Virtuoso, a former unconsolidated real estate entity that consists of 178 units (unaudited) in Huntsville, Alabama, during the quarter ended September 30, 2023. Because we concluded that Virtuoso is a voting interest entity and that we now control the major decisions that most significantly impact the joint venture through our 90% voting interest, we began consolidating the assets and liabilities ~~associated with the properties acquired during the nine-month period ended September 30, 2017, on the date of acquisition, accounted for under FASB ASC Topic 805.~~

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

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

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

The table below represents the revenue, net income and earnings per share effect 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 theoperating results of ~~operations for future periods.~~

Virtuoso effective August 1, 2023. In accordance with FASB Topic ASC 805, upon consolidation, we recognized the assets and liabilities of Virtuoso at carryover basis, allocating the individual assets and liabilities based upon their relative fair values on our condensed consolidated balance sheets.

Table of Contents

Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~As of~~

September 30, ~~2017~~

2023

(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

~~We did not make any purchase price allocation adjustments during the nine-month period ended September 30, 2017.~~

On October 25, 2017, we acquired a 264 unit residential community located in Baton Rouge, LA, known as Live Oak Trace, for $28,501. This acquisition was part of the nine-property portfolio acquisition announced on September 5, 2017.

~~Dispositions~~

The following table ~~below~~ summarizes the ~~dispositions for~~assets and liabilities recognized upon the consolidation of Virtuoso, our former unconsolidated real estate entity during the nine months ended September 30, ~~2017 and also presents each property’s contribution to net income (loss) allocable to common shares, excluding~~2023, on the ~~impact~~date of ~~the gain (loss) on sale:~~

consolidation.

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

	~~(1)~~	~~The gain (loss) on sale for these properties is net~~
			Assets and Liabilities Consolidated During the Nine Months Ended September 30, 2023
Assets:
Investments in real estate			$	49,939
Cash and cash equivalents			817
Restricted cash			1,329
Other assets			395
Intangible assets			398
Total assets			$	52,878
Liabilities:
Indebtedness			$	39,281
Accounts payable and accrued expenses			255
Accrued interest payable			283
Other liabilities			111
Total liabilities			39,931
Noncontrolling interest			256
Derecognition of ~~$2,748 of defeasance costs. All properties were previously classified as held for sale.~~ investments in unconsolidated real estate entities			12,691
Total Liabilities and equity			$	52,878

NOTE 4:5: Indebtedness

The following tables contain summary information concerning our consolidated 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

2023:

~~(1)~~

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


Consolidated Debt:	Outstanding Principal		Unamortized Debt Issuance Costs		Unamortized Loan (Discount)/Premiums		Carrying Amount		Type	Weighted Average Rate (3)	Weighted Average Maturity (in years)
Unsecured revolver (1)	$	241,479	$	(1,244)	$	—	$	240,235	Floating	6.6%	2.3
Unsecured term loans	600,000		(2,610)		—		597,390		Floating	6.5%	3.8
Secured credit facilities	617,114		(2,158)		23,248		638,204		Floating/Fixed	4.3%	5.2
Mortgages (2)	1,218,462		(6,105)		27,524		1,239,881		Fixed	4.0%	4.4
Total Consolidated Debt	$	2,677,055	$	(12,117)	$	50,772	$	2,715,710		4.9%	4.2

~~(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.

(1)The unsecured revolver total capacity is $500,000, of which $241,479 was outstanding as of September 30, 2023.

(2)Includes indebtedness associated with real estate held for sale of $40,593.

(3)Represents the weighted average of the contractual interest rates in effect as of quarter end without regard to any interest rate swaps or collars. Our total weighted average effective interest rate for the three months ended September 30, 2023, after giving effect to the impact of interest rate swaps and collars, and excluding the impact of loan premium amortization, discount accretion, and interest capitalization was 4.2%.

Table of Contents

Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~As of~~

September 30, ~~2017~~

2023

(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

The following table contains summary information concerning our consolidated indebtedness as of September 30, 2023:


	Scheduled maturities on our consolidated indebtedness outstanding as of September 30, 2023
Consolidated Debt:	2023		2024		2025		2026		2027		Thereafter
Unsecured revolver	$	—	$	—	$	—	$	241,479	$	—	$	—
Unsecured term loans	—		—		—		200,000		—		400,000
Secured credit facilities	—		—		3,525		10,493		11,462		591,634
Mortgages (1)	2,873		68,318		214,667		144,949		15,946		771,709
Total	$	2,873	$	68,318	$	218,192	$	596,921	$	27,408	$	1,763,343

(1)Includes indebtedness associated with real estate held for sale.

The following table contains summary information concerning our consolidated indebtedness as of December 31, 2022:


Consolidated Debt:	Outstanding Principal		Unamortized Debt Issuance Costs		Unamortized Loan (Discount)/Premiums		Carrying Amount		Type	Weighted Average Rate (3)	Weighted Average Maturity (in years)
Unsecured revolver (1)	$	165,978	$	(1,695)	$	—	$	164,283	Floating	4.9%	3.1
Unsecured term loans	600,000		(3,388)		—		596,612		Floating	5.1%	4.5
Secured credit facilities	635,128		(2,256)		27,670		660,542		Floating/Fixed	4.3%	5.9
Mortgages (2)	1,185,246		(7,305)		32,267		1,210,208		Fixed	3.9%	5.2
Total Consolidated Debt	$	2,586,352	$	(14,644)	$	59,937	$	2,631,645		4.5%	5.1

(1)The unsecured revolver total capacity was $500,000, of which $165,978 was outstanding as of December 31, 2022.

(2)Includes indebtedness associated with real estate held for sale.

(3)Represents the weighted average of the contractual interest rates in effect as of quarter end without regard to any interest rate swaps or collars. Our total weighted average effective interest rate as of the year ended December 31, 2022, after giving effect to the impact of interest rate swaps and collars, and excluding the impact of loan premium amortization and discount accretion was 4.1%.

As of September 30, ~~2017,~~2023, we were in compliance with all financial covenants contained in the documents governing our indebtedness.

~~The following table contains summary information concerning our indebtedness as~~

Table of ~~December 31, 2016:~~

Contents

Debt:

Outstanding Principal

Unamortized Discount and Debt Issuance Costs

Carrying Amount

Type

Weighted 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

Total Debt

$
750,188

$
(6,371
)

$
743,817

3.6%

5.7

~~(1)~~

~~The secured credit facility total capacity was $312,500, of which $150,000 was outstanding as of December 31, 2016.~~

~~In February 2017, IROP drew down $22,000 on the secured credit facility in connection with the Lakes of Northdale acquisition.~~

~~On May 1, 2017, we closed on a new $300,000 unsecured credit facility, refinancing~~Independence Realty Trust, Inc. and ~~terminating the previous secured credit facility. The new facility is comprised of a $50,000 term loan and a revolving commitment of up~~Subsidiaries

Notes to $250,000. 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. We recognized the refinance as a partial extinguishment of our prior secured credit facility and recognized a loss on extinguishment of debt of $572.

~~In May 2017,~~ ~~IROP drew down $9,000 on the unsecured credit facility in connection 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 ended~~ Condensed Consolidated Financial Statements

September 30, ~~2017, we extinguished, through defeasance, property mortgages totaling $20,586.~~

2023

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

NOTE 5:6: Derivative Financial Instruments

~~We may use~~

The following table summarizes the aggregate notional amounts and estimated net fair values of our derivative ~~financial~~ instruments ~~to hedge all or a portion~~as of ~~the~~September 30, 2023 and December 31, 2022:


	As of September 30, 2023						As of December 31, 2022
	Notional		Fair Value of Assets		Fair Value of Liabilities		Notional		Fair Value of Assets		Fair Value of Liabilities
Cash flow hedges:
Interest rate swaps	$	500,000	$	36,985	$	—	$	300,000	$	26,099	$	—
Interest rate collars	250,000		5,069		—		250,000		8,317		—
Forward interest rate collars	200,000		11,204		—		200,000		6,693		—
Total	$	950,000	$	53,258	—		$	750,000	$	41,109	$	—

Effective interest rate ~~risk associated with~~swaps and caps are reported in accumulated other comprehensive income, and the fair value of these hedge agreements is recorded as derivative assets or liabilities on the face of our ~~borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with~~condensed consolidated balance sheets.

For 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~~swaps and ancollars that are considered highly effective hedges, we reclassified realized gains of $5,433 and $13,559 to earnings within interest ~~rate swap contract~~expense for the three and nine months ended September 30, 2023, and we expect gains of $20,461 to ~~hedge~~be reclassified out of accumulated other comprehensive income to earnings over the next 12 months. For the three and nine months ended September 30, 2022, we reclassified realized gains of $214 and realized losses of $3,408 to earnings within interest ~~rate exposure on floating rate indebtedness.~~

expense.

On ~~June 24, 2016,~~March 16, 2023, we entered into an interest rate swap contract with a notional value of ~~$150,000,~~$200,000, a strike rate of ~~1.145%~~3.39% and a maturity date of ~~June~~March 17, ~~2021.~~2030. We designated this ~~interest rate swap as a cash flow hedge at inception and determined that the hedge~~

~~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~~

NOTE 7: Stockholders' Equity and Noncontrolling Interests

Stockholders’ Equity

On September 12, 2023, our board of directors declared a dividend of $0.16 per shares on our common stock, which was paid on October 20, 2023 to common stockholders of record as of September 29, 2023.

On May 10, 2023, our board of directors declared a dividend of $0.16 per share on our common stock, which was paid on July 21, 2023 to common stockholders of record as of June 30, 2023.

On March 14, 2023, our board of directors declared a dividend of $0.14 per share on our common stock, which was paid on April 21, 2023 to common stockholders of record as of March 31, 2023.

On May 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 ~~fair value~~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 ~~swap~~purchases will depend on a number of factors, including the 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 ~~inception of the hedging relationship was not zero, we expect some ineffectiveness to be recognized over the life of the instrument.~~any time. During the three and nine months ended September 30, ~~2017,~~2023, and 2022, we ~~recognized $(12) and $0~~had no repurchases of ~~ineffectiveness based on~~shares under the ~~hypothetical derivative method. Our interest rate cap is not designated as a cash flow hedge.~~

~~The following table summarizes the aggregate notional amount and estimated net fair value of our derivative instruments as~~Stock Repurchase Program. As of September 30, ~~2017~~2023, we had $250,000 in shares of our common stock remaining authorized for purchase under the Stock Repurchase Program.

On November 13, 2020, we entered into an equity distribution agreement pursuant to which we may have from time to time offered and ~~December 31, 2016:~~

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

$
—

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

~~For~~ our ~~interest rate swap that is considered a highly effective hedge, we reclassified realized gains~~common stock under our previous shelf registration statement having an

Table of $27 and losses of $156 to earnings within interest expense for the three and nine months ended September 30, 2017, respectively, and we expect $471 to be reclassified out of accumulated other comprehensive income to earnings over the next 12 months.

~~NOTE 6: Shareholder Equity and Noncontrolling Interests~~

~~Stockholder Equity~~

~~Our board of directors has declared the following dividends in 2017:~~

Contents

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~~

~~During the three and nine months ended September 30, 2017, we also paid $0 and $126, respectively, of dividends on restricted common share awards that vested during the period.~~

Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~As of~~

September 30, ~~2017~~

2023

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

aggregate offering price of up to $150,000 (the “Previous 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 (the “Securities Act”). Under the Previous ATM Program, we may also have entered into one or more forward sale transactions for the sale of shares of our common stock on a forward basis. There were no forward sale transactions that had not settled as of September 30, 2023 and no shares of our common stock were sold under the Previous ATM Program during the three and nine months ended September 30, 2023.

On ~~August 4, 2017,~~June 14, 2023, we replaced our previous shelf registration statement with our new shelf registration statement. On July 28, 2023, we entered into an ~~At-the-Market Issuance Sales Agreement (the “Sales Agreement”) with various sales agents. Pursuant~~equity 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,~~under our shelf registration statement having an aggregate offering price of up to ~~$150,000, from time~~$450,000 (the “2023 ATM Program”) in negotiated transactions or transactions that are deemed to ~~time through~~be “at the ~~sales agents. The sales agents are entitled to compensation~~market” 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 time~~Rule 415 under the ~~Sales Agreement. We have no obligation to sell any~~Securities Act. Under the 2023 ATM Program, we may also enter into one or more forward sale transactions for the sale of ~~the shares under 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 as of September 30, 2017.~~

~~On September 11, 2017, we issued 12,500,000~~ shares of our common stock aton a ~~public offering price~~forward basis. There were no forward sale transactions as of ~~$9.25 per share. We also closed on the underwriters’ option to purchase an additional 1,875,000~~September 30, 2023, and no 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 in Real Estate~~stock were sold under the 2023 ATM Program during the three and nine months ended September 30, 2023.

Noncontrolling Interest

During the three and nine months ended September 30, 2023, holders of IROP units exchanged 0 and 144,600 units for ~~details on the property acquisition.~~

0 and 144,600 shares of our common stock, respectively. As of September 30, ~~2017, 3,035,654~~2023, 5,946,571 IROP units held by unaffiliated third parties remain ~~outstanding with~~outstanding.

On September 12, 2023, our board of directors declared a ~~redemption value~~dividend of ~~$30,873, based~~$0.16 per IROP unit, which was paid on ~~IRT’s stock price~~October 20, 2023 to unit holders of ~~$10.17~~record as of September 29, ~~2017.~~

~~Our~~2023.

On May 10, 2023, our board of directors ~~has~~ declared ~~the following distributions~~a dividend of $0.16 per IROP unit, which was paid on ~~IROP’s LP units in 2017:~~

July 21, 2023 to IROP unit holders of record as of June 30, 2023.

NOTE 7:8: Equity Compensation Plans

Long Term Incentive Plan

On May ~~2016,~~18, 2022, our ~~shareholders~~stockholders approved ~~and~~ our ~~board of directors adopted an amended and restated~~2022 Long Term Incentive Plan ~~or the incentive plan,~~(the "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 advisor~~other service providers, and ~~its affiliates or to entities that provide services to our former advisor. The incentive plan authorizes~~such awards may take the ~~grant~~form of restricted or unrestricted shares of ~~our~~ common stock, non-qualified ~~and~~stock options, incentive stock options, restricted stock units (“RSUs"), stock appreciation rights, dividend equivalents and other ~~stock- or~~equity and cash-based awards. ~~In conjunction with the amendment, the number~~A 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 increased~~2016 Long Term Incentive Plan, (the "Prior Plan") are recycled into the 2022 Incentive Plan) may be awarded, subject to ~~4,300,000~~customary adjustment for stock splits, reverse stock splits and similar corporate events or transactions affecting shares of our common stock.

Under the 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, to our employees and employees of our former advisor.~~PSUs. These awards generally vest or vested over a ~~three-year~~two-to four-year period. In addition, we have granted unrestricted shares to our non-employee directors. These awards generally vest or vested immediately.

A summary of restricted and unrestricted common share awards and RSU activity is presented below.

Table of Contents

Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~As of~~

September 30, ~~2017~~

2023

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


	2023
	Number of Shares	Weighted Average Grant Date Fair Value Per Share
Balance, January 1,	395,482	$	18.67
Granted	327,630	18.46
Vested	(253,400)	17.80
Forfeited	(60,073)	18.71
Balance, September 30,(1)	409,639	$	19.03


(1)			The outstanding award balances above include 127,989 and 163,348 RSUs as of September 30, 2023 and December 31, 2022, respectively.

On February ~~28, 2017,~~7, 2023, 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, or216,795 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 ~~awarded~~earned 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 value~~actual 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 under~~granted. 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 received~~end 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 ~~aggregate~~additional 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 for~~service.

During the nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, a portion of the RSUs and PSUs granted were issued to employees who are retirement eligible. The fact that the grantees are retirement eligible resulted in immediate recognition of the associated stock-based compensation expense totaling $2,677 and $2,422, respectively. ~~These fees are included within general~~

NOTE 9: Earnings Per Share

The following table presents a reconciliation of basic and ~~administrative expenses in our consolidated statements of operations.~~

~~For~~diluted earnings per share 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~~2023 and ~~2016, respectively. These fees are included within general~~2022:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Net income	$	3,986	$	16,653	$	23,847	$	86,135
Income allocated to noncontrolling interest	(56)		(430)		(559)		(2,517)
Net income allocable to common shares	$	3,930	$	16,223	$	23,288	$	83,618
Weighted-average shares outstanding—Basic	224,498,374		221,960,609		224,383,590		221,312,261
Weighted-average shares outstanding—Diluted	225,140,555		222,867,546		225,103,475		222,359,585
Earnings per share—Basic	$	0.02	$	0.07	$	0.10	$	0.38
Earnings per share—Diluted	$	0.02	$	0.07	$	0.10	$	0.38

Certain IROP units, PSUs, RSUs and ~~administrative expenses in our consolidated statements of operations.~~

~~For~~restricted stocks awards were excluded from the earnings per share computation because their effect would have been anti-dilutive, totaling 6,588,751 and 6,666,456 for the three and nine months ended September 30, ~~2017~~2023, respectively. Certain IROP units and ~~2016, we incurred costs of $727~~forward sale agreements were excluded from the earnings per share computation because their effect would have been anti-dilutive, totaling 6,091,171 and ~~$0, respectively, with respect to our shared services agreement with our former advisor. The term~~6,091,171 for each of the ~~agreement was from December 21, 2016 to June 20, 2017~~three and ~~the associated fees are included within general and administrative expenses in our consolidated statements 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,~~2022, respectively.

Table 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.

Contents

Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~As of~~

September 30, ~~2017~~

2023

(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, 2017 and 2016:~~

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

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 3,035,654 for the three and nine months ended September 30, 2017, and 2,915,008 and 3,091,380 for the three and nine months ended September 30, 2016, respectively.

NOTE 10: Other Disclosures

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~~

We record an accrual for loss contingencies when a loss is probable and the ~~extent that~~amount 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 disaster~~loss 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.

Item 2. Management’s Discussion and ~~if an outcome is probable, accrue an appropriate liability.~~

Analysis of Financial Condition and Results of Operations

~~Item 2.~~

M~~anagement’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,~~

This Quarterly report on Form 10-Q contains certain forward-looking statements within 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~~meaning of Section 27A of the ~~safe harbor for~~Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such 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, certain actions that we expect or seek to take in connection with our portfolio optimization and deleveraging strategy and anticipated enhancements to our financial results and future growth from this strategy. All statements ~~about future~~in this Quarterly report on Form 10-Q that address financial and operating ~~results~~performance, events or developments that we expect or anticipate will occur or be achieved in the future are forward-looking statements.

Our forward-looking statements are not guarantees of future performance and ~~performance, statements about our plans, objectives, expectations~~involve estimates, projections, forecasts and ~~intentions with respect~~assumptions, including as to ~~future operations, products and services, and other statements~~matters that are not ~~historical facts.~~ within our control, and are subject to risks and uncertainties including, without limitation, risks and uncertainties related to changes in market demand for rental apartment homes and pricing pressures, including from competitors, that could lead to declines in occupancy and rent levels, uncertainty and volatility in capital and credit markets, including changes that reduce availability, and increase costs, of capital, unexpected changes in our intention or ability to repay certain debt prior to maturity, increased costs on account of inflation, increased competition in the labor market, failure to realize cost savings, efficiencies and other benefits that we expect to result from our portfolio optimization and deleveraging strategy, inability to sell certain assets, including those assets designated as held for sale, within the time frames or at the pricing levels expected, failure to achieve expected benefits from the redeployment of proceeds from asset sales, delays in completing, and cost overruns incurred in connection with, our value add initiatives and failure to achieve rent increases and occupancy levels on account of the value add initiatives, unexpected impairments or impairments in excess of our estimates, increased regulations generally and specifically on the rental housing market, including legislation that may regulate rents or delay or limit our ability to evict non-paying residents, risks endemic to real estate and the real estate industry generally, the impact of potential outbreaks of infectious diseases and measures intended to prevent the spread or address the effects thereof, the effects of natural and other disasters, unknown or unexpected liabilities, including the cost of legal proceedings, costs and disruptions as the result of a cybersecurity incident or other technology disruption, unexpected capital needs, inability to obtain appropriate insurance coverages at reasonable rates, or at all, or losses from catastrophes in excess of our insurance coverages, and share price fluctuations. Please refer to the documents filed by us with the SEC, including specifically the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2022, and our other filings with the SEC, which identify additional factors that could cause actual results to differ from those contained in forward-looking statements.

These forward-looking statements are based upon the ~~current~~ beliefs and expectations of our management at the time of this Quarterly report on Form 10-Q 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~~actual results may differ materially from the ~~anticipated results discussed in these forward-looking statements.~~

~~The risk factors discussed and identified in Item 1A~~expectations, intentions, beliefs, plans or predictions of ~~our 2016 Annual Report on Form 10-K, this Report and in other of our public filings with~~ the ~~SEC, among others, could cause actual results to differ materially from the anticipated results~~future expressed or ~~other expectations expressed in the~~implied by such 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. 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 filing~~hereof or to reflect the occurrence of unanticipated ~~events.~~

events, except as may be required by law.

Overview

~~General~~

We are a self-administered and self-managed Maryland corporation that ~~owns~~has elected to be taxed as a real estate investment trust (“REIT”). We are primarily engaged in the ownership, operation, management, improvement, and ~~operates~~acquisition of multifamily apartment communities in non-gateway markets. As of September 30, 2023, we owned and operated 120 multifamily apartment properties ~~across non-gateway U.S. markets, including Louisville, Memphis, Atlanta~~(including one consolidated joint venture) that contain 35,427 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, 2023, we owned and

consolidated two investments in real estate development in Colorado that will, upon completion, contain an aggregate of 621 units. As of September 30, 2023, we also owned interests in four unconsolidated joint ventures, two that own and operate multifamily apartment communities that contain an aggregate of 810 units and two that are developing multifamily apartment communities that will contain, upon completion, an aggregate of 653 units. We do not have any foreign operations and our business is not seasonal.

Our ~~investment strategy~~Business 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 returns~~maximize stockholder value through diligent portfolio management, strong operational performance, and a consistent return of capital through distributions and capital appreciation. ~~We elected~~Our 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 opportunities~~rental 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.

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

Table of Contents

Property Portfolio

(1)

As of September 30, ~~2017,~~2023, we owned 50and consolidated 120 multifamily apartment properties, totaling ~~13,729~~35,427 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, 2023						For the Three Months Ended September 30, 2023
Market	Number of Properties	Units	Gross Real Estate Assets		Period End Occupancy		Average Effective Monthly Rent per Unit		Net Operating Income		% of NOI
Atlanta, GA	13	5,180	$	1,086,056	92.3	%	$	1,643	$	15,635	14.9	%
Dallas, TX	14	4,007	863,869		94.3	%	1,807		13,415		12.8	%
Denver, CO (2)	9	2,292	610,637		95.4	%	1,716		7,912		7.3	%
Columbus, OH	10	2,510	373,832		94.4	%	1,406		6,352		6.1	%
Raleigh - Durham, NC	6	1,690	255,277		95.4	%	1,551		5,166		4.9	%
Oklahoma City, OK	8	2,147	327,074		95.3	%	1,177		5,125		4.9	%
Tampa-St. Petersburg, FL	5	1,452	307,400		95.4	%	1,825		5,124		4.9	%
Nashville, TN	5	1,508	370,731		94.3	%	1,624		5,044		4.8	%
Houston, TX (2)	7	1,932	324,821		95.3	%	1,444		4,830		4.6	%
Indianapolis, IN	7	1,979	293,011		93.7	%	1,366		4,819		4.6	%
Memphis, TN	4	1,383	162,123		92.8	%	1,521		4,130		3.9	%
Huntsville, AL (3)	4	1,051	241,013		94.5	%	1,529		3,057		2.9	%
Birmingham, AL	2	1,074	233,604		93.7	%	1,469		2,798		2.7	%
Charlotte, NC	3	714	189,550		95.8	%	1,767		2,789		2.7	%
Louisville, KY	4	1,150	147,848		95.6	%	1,275		2,782		2.7	%
Lexington, KY	3	886	160,777		96.7	%	1,310		2,639		2.5	%
Myrtle Beach, SC - Wilmington, NC	3	628	68,543		95.8	%	1,420		1,843		1.8	%
Cincinnati, OH	2	542	123,081		95.6	%	1,589		1,742		1.7	%
Greenville, SC	1	702	124,027		93.9	%	1,279		1,667		1.6	%
Charleston, SC	2	518	81,529		94.4	%	1,678		1,574		1.5	%
Chicago, IL (2)(4)	1	374	79,158		93.6	%	1,847		1,282		1.2	%
Orlando, FL	1	297	50,306		96.3	%	1,816		977		0.9	%
Asheville, NC (2)	1	252	29,349		96.4	%	1,553		837		0.8	%
San Antonio, TX	1	306	57,269		97.7	%	1,480		811		0.8	%
Austin, TX	1	256	58,568		92.9	%	1,804		788		0.8	%
Norfolk, VA (2)	1	183	54,297		97.3	%	1,913		666		0.6	%
Fort Wayne, IN (2)	1	222	44,506		95.5	%	1,428		658		0.6	%
Chattanooga, TN (2)	1	192	37,336		91.1	%	1,412		481		0.5	%
Total/Weighted Average	120	35,427	$	6,755,592	94.4	%	$	1,556	$	104,943	100.0	%

(1)Excludes our development properties. See Non-GAAP financial measures for the definition of a development property.

(2)Includes properties included in our Portfolio Optimization and Deleveraging Strategy. In the case of Denver, CO includes three properties comprised of 895 units, in aggregate, and in the case of Houston, TX includes two properties comprised of 624 units, in the aggregate.

(3)Includes the Virtuoso joint venture consolidated beginning August 1, 2023 as a result of an amendment to the joint venture agreement.

(4)Property held for sale as of September 30, 2023.

Table of Contents

Current Developments

Capital Recycling and Portfolio Optimization and Deleveraging Strategy

During the three months ended March 31, 2023, we sold one multifamily apartment community for a gross sales price of $37.3 million and recognized a gain on sale of $1.0 million. Proceeds from the sale were used to reduce indebtedness.

Investments in Unconsolidated Real Estate Entities

To create another avenue for accretive capital allocation and to increase our options for capital investment, we have partnered with, and may in the future partner with, developers through preferred equity investments and joint venture relationships focused on new multifamily development.

An amendment to the Virtuoso joint venture agreement on August 1, 2023 provided us with control over the major decisions that most significantly impact the joint venture and removed our joint venture partner’s rights to a promote interest. This caused us to reassess the accounting for Virtuoso, a former unconsolidated real estate entity, that consists of 178 units (unaudited) in Huntsville, Alabama, during the quarter ended September 30, 2023. Because we concluded that Virtuoso is a voting interest entity and that we now control the major decisions that most significantly impact the joint venture through our 90% voting interest, we began consolidating the assets and liabilities and operating results of Virtuoso effective August 1, 2023. In accordance with FASB Topic ASC 805, upon consolidation, we recognized the assets and liabilities of Virtuoso at carryover basis, allocating the individual assets and liabilities based upon their relative fair values on our condensed consolidated balance sheets.

No new investments in unconsolidated real estate entities were made during the three and nine months ended September 30, 2023. However, we continued to fund commitments to our existing investments in unconsolidated real estate entities. As of September 30, ~~2017,~~2023 and December 31, 2022, we had investments in unconsolidated real estate of $87,592 and $80,220, respectively.

Investments in Real Estate Under Development

As part of our ~~same-store portfolio consisted~~merger with Steadfast Apartment REIT, Inc. (“STAR Merger”), we acquired two land parcels in Denver, Colorado that are being developed into multifamily properties that will contain 621 units, in the aggregate, upon completion. As of ~~42 multifamily apartment properties, totaling 11,676 units. See “Non-GAAP Financial Measures – Same Store Portfolio Net Operating Income” below~~September 30, 2023 and December 31, 2022, we had investments in real estate under development of $83,547 and $105,518, respectively, net of $77,520 and $0 placed in service, respectively.

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 ~~our definition~~outsized rent growth.

Table of ~~same store and definitions and reconciliations related to our net operating income and net operating income margin.~~

~~Property Operations~~

~~During~~Contents

We completed renovations on 709 units during the three months ended September 30, ~~2017,~~2023. From inception of our value add program in January 2018 through September 30, 2023, we ~~saw strong operational results. On~~completed renovations on 7,285 of the 11,856 units currently in our value add program, achieving a ~~same-store basis, our total revenues were up 3.0% as compared to~~return on investment of 17.9% (and approximately 19.5% on the ~~third quarter~~interior portion of ~~2016 driven~~such renovation costs). We compute return on cost by ~~higher average effective monthly rents and higher average occupancy. Revenue growth was especially strong in~~using the ~~Columbus, OH and Atlanta, GA markets driven by steady occupancy and higher average effective~~ 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.

Capital Markets

Shelf Registration Statement

On June 14, 2023, we replaced our previous shelf registration statement with our new shelf registration statement. On July 28, 2023, we entered into an equity distribution agreement pursuant to which we may from time to time offer and sell shares of our common stock under our shelf registration statement having an aggregate offering price of up to $450,000 (the “2023 ATM Program”) in negotiated transactions or transactions that are deemed to be “at the ~~third quarter~~market” offerings as defined in Rule 415 under the Securities Act. Under the 2023 ATM Program, we may also enter into one or more forward sale transactions for the sale of ~~2017~~shares of our common stock on a forward basis. There were no forward sale transactions as ~~compared to~~of September 30, 2023, and no shares of our common stock were sold under the ~~third quarter of 2016.~~

~~Same-store net operating income increased 4.0%~~2023 ATM Program during the ~~third quarter of 2017 as compared to the same period in the prior year driven by the higher revenues~~three 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~~2023.

Swap Agreement

On March 16, 2023, we entered into an interest rate swap contract with a notional value of $200,000, a strike rate of 3.39% and ~~our same-store net operating income was 4.9% higher than for~~a maturity date of March 17, 2030. We designated this interest rate swap as a cash flow hedge at inception and determined that the ~~nine months ended~~hedge is highly effective in offsetting interest rate fluctuations associated with the identified indebtedness.

Table of Contents

Results of Operations

As of September 30, ~~2016.~~

~~Other~~ ~~Matters~~

~~On June 20, 2017,~~2023, we ~~completed our use of shared services previously provided by RAIT~~owned 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.

~~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 theseconsolidated 120 multifamily apartment ~~communities, aggregating 917 units, representing~~properties, of which 115 comprised 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 offering 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 proceeds 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~~

Same-Store Portfolio.

Three Months Ended September 30, ~~2017~~2023 compared to the Three Months Ended September 30, ~~2016~~

2022

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
%


	SAME-STORE PORTFOLIO								NON SAME-STORE PORTFOLIO								CONSOLIDATED
(Dollars in thousands)	Three Months Ended September 30,								Three Months Ended September 30,								Three Months Ended September 30,
	2023		2022		Increase (Decrease)		% Change		2023		2022		Increase (Decrease)		% Change		2023		2022		Increase (Decrease)		% Change
Property Data:
Number of properties (1)	115		115		—		—%		5		7		(2)		(28.6)%		120		122		(2)		-1.6%
Number of units (1)	34,197		34,197		—		—%		1,230		1,979		(749)		(37.8)%		35,427		36,176		(749)		(2.1)%
Average occupancy (1)	94.6%		94.2%		0.4%		—		94.1%		93.0%		1.1%		—		94.6%		94.2%		0.4%		—
Average effective monthly rent, per unit (1)	$1,549		$1,484		$65		4.4%		$1,751		$1,095		$655		59.8%		$1,556		$1,484		$72		4.9%
Revenue:
Rental and other property revenue	$	161,811	$	153,584	$	8,227	5.4	%	$	6,564	$	6,716	$	(152)	(2.3)	%	$	168,375	$	160,300	$	8,075	5.0	%
Expenses:
Property operating expenses	60,799		57,188		3,611		6.3	%	2,501		2,779		(278)		(10.0)	%	63,300		59,967		3,333		5.6	%
Net Operating Income	$	101,012	$	96,396	$	4,616	4.8	%	$	4,063	$	3,937	$	126	3.2	%	$	105,075	$	100,333	$	4,742	4.7	%

Other Revenue:
Other revenue																	$	232	$	300	$	(68)	(22.7)	%
Corporate and other expenses:
Property management expenses																	7,232		5,744		1,488		25.9	%
General and administrative expenses																	3,660		5,625		(1,965)		(34.9)	%
Depreciation and amortization expense																	55,546		49,722		5,824		11.7	%

Casualty losses (gains), net																	35		(191)		226		(118.3)	%

Other (loss) income, net																	(369)		765		(1,134)		(148.2)	%
Loss from investments in unconsolidated real estate entities																	(1,178)		(1,477)		299		(20.2)	%
Merger and integration costs																	—		(275)		275		(100.0)	%
Interest expense																	(22,033)		(22,093)		60		(0.3)	%
(Loss on impairment) gain on sale of real estate assets, net																	(11,268)		—		(11,268)		100.0	%

Net income																	$	3,986	$	16,653	$	(12,667)	(76.1)	%
Income allocated to noncontrolling interests																	(56)		(430)		374		(87.0)	%
Net income available to common shares																	$	3,930	$	16,223	$	(12,293)	(75.8)	%

(1)Excludes our development projects. See Non-GAAP Financial Measures for our definition of a development property and our methodology for determining same-store properties.

Table of Contents

Revenue

Rental ~~income~~and other property revenue. ~~Rental~~Revenue from rental and other property revenue of the consolidated portfolio increased ~~$1.2~~$8.1 million to ~~$35.5~~$168.4 million for the three months ended September 30, ~~2017~~2023 from ~~$34.3~~$160.3 million for the three months ended September 30, ~~2016.~~2022. The increase was primarily attributable to a ~~$0.8~~$8.2 million increase in ~~same store~~same-store rental ~~income~~and other property revenue driven by ~~higher~~an 4.4% increase in average effective monthly rents and ~~higher~~0.4% increase in average occupancy ~~than~~compared 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.

~~Reimbursement and other income~~period.

Expenses

Property operating expenses. ~~Reimbursement and other income~~Property operating expenses increased ~~$0.3~~$3.3 million to ~~$4.3~~$63.3 million for the three months ended September 30, ~~2017~~2023 from ~~$4.0~~$60.0 million for the three months ended September 30, ~~2016.~~2022. The increase was due to a $3.6 million increase in same-store property operating expense, primarily due to ~~a $0.3 million increase~~inflationary pressures resulting in ~~same store reimbursement~~higher insurance premiums and ~~other income attributable to our continued focus on driving non-rental revenue~~contract services, personnel expenses, real estate taxes, and ~~fee income.~~

advertising expenses.

Property management ~~income.~~ expenses. Property management ~~income was $0.2~~expenses increased $1.5 million to $7.2 million for the three months ended September 30, ~~2017 compared to $0.0~~2023 from $5.7 million for the three months ended September 30, ~~2016. This was~~2022 primarily due to ~~third party~~higher personnel costs and stock compensation due to the centralization of staff at the property management ~~income that we received for managing~~level who support multiple properties, ~~on behalf~~along with costs related to the rollout of ~~third parties during~~community call centers, compared to the ~~current period. This service did not exist~~ prior ~~to our management internalization in December 2016.~~

~~Expenses~~

~~Real estate operating~~year.

General and administrative expenses. General and administrative expenses~~. Property operating expenses increased $0.1~~ decreased $2.0 million to ~~$16.2~~$3.7 million for the three months ended September 30, ~~2017~~2023 from ~~$16.1~~$5.7 million for the three months ended September 30, ~~2016.~~

~~Property management expenses.~~ ~~Property management expenses~~2022. The decrease was primarily due to lower personnel costs from executive departures in 2023 compared to prior year.

Depreciation and amortization expense. Depreciation and amortization expense increased ~~$0.1~~$5.8 million to ~~$1.3~~$55.5 million for the three months ended September 30, ~~2017~~2023 from ~~$1.2~~$49.7 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 for the three months ended September 30, 2016.~~2022. The increase was primarily attributable to ~~$0.4 million of in-place lease intangible amortization recognized~~higher depreciation expenses during the three months ended September 30, ~~2017 related~~2023 compared 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~~2022 as a result of timing of properties acquired and depreciated.

Other (loss) income, net. During the three months ended September 30, ~~2016. The decrease was due~~2023 we recorded $0.4 million of loss from the change in fair value of our interest rates compared to ~~debt reductions~~a $0.8 million gain during ~~2016 when our term loan was fully repaid and our credit facility balance decreased by $121.5 million.~~

~~Acquisition related debt extinguishment expenses.~~ ~~Acquisition related debt extinguishment expenses were $2.8 million for~~ the three months ended September 30, ~~2017 due~~2022.

Loss from investments in unconsolidated real estate entities. During the three months ended September 30, 2023, we recognized $1.2 million of losses on investments in unconsolidated real estate primarily attributable to ~~defeasance related~~interest and depreciation expenses of one investment which began operations during the period. During the three months ended September 30, 2022, we recognized $1.5 million of losses in unconsolidated real estate primarily driven by interest and depreciation expenses recognized during the period.

(Loss on impairment) gain on sale of real estate assets, net. During the three months ended June 30, 2023, we classified one of our properties (The Meadows at River Run, with 374 units (unaudited) in Chicago, Illinois) as held for sale. Initially, we expected the sale to close in the second half of 2023 and at a sales price, less transaction costs, ~~incurred~~ in excess of our carrying value for this property. In connection with the ~~HPI portfolio acquisitions.~~

results of our sales activity associated with this property during the three months ended September 30, 2023, we recorded a $11.3 million impairment charge during the three months ended September 30, 2023.

Table of Contents

Results of Operations

Nine Months Ended September 30, ~~2017~~2023 compared to the Nine Months Ended September 30, ~~2016~~

2022

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
%


	SAME-STORE PORTFOLIO							NON SAME-STORE PORTFOLIO							CONSOLIDATED
(Dollars in thousands)	Nine Months Ended September 30,							Nine Months Ended September 30,							Nine Months Ended September 30,
	2023		2022		Increase (Decrease)		% Change	2023		2022		Increase (Decrease)		% Change	2023		2022		Increase (Decrease)		% Change
Property Data:
Number of properties (1)	115		115		—		—%	5		7		(2)		(28.6)%	120		122		(2)		-1.6%
Number of units (1)	34,197		34,197		—		—%	1,230		1,979		(749)		(37.8)%	35,427		36,176		(749)		(2.1)%
Average occupancy (1)	93.9%		95.1%		(1.2)%		—%	93.8%		93.6%		0.2%		—%	93.9%		94.9%		(1.0)%		—%
Average effective monthly rent, per unit (1)	$1,536		$1,426		$110		7.7%	$1,578		$1,350		$228		16.9%	$1,552		$1,426		$126		8.8%
Revenue:
Rental and other property revenue	$	474,751	$	446,460	$	28,291	6.3%	$	18,360	$	18,461	$	(101)	(0.5)%	$	493,111	$	464,921	$	28,190	6.1%
Expenses:
Property operating expenses	177,533		167,123		10,410		6.2%	7,094		7,702		(608)		(7.9)%	184,627		174,825		9,802		5.6%
Net Operating Income	$	297,218	$	279,337	$	17,881	6.4%	$	11,266	$	10,759	$	507	4.7%	$	308,484	$	290,096	$	18,388	6.3%

Other Revenue:
Other revenue															$	826	$	805	$	21	2.6	%
Corporate and other expenses:
Property management expenses															20,421		17,440		2,981		17.1	%
General and administrative expenses															17,724		20,521		(2,797)		(13.6)	%
Depreciation and amortization expense															163,066		200,688		(37,622)		(18.7)	%

Casualty losses (gains), net															866		(7,176)		8,042		(112.1)	%
Interest expense															(66,383)		(63,618)		(2,765)		4.3	%
(Loss on impairment) gain on sale of real estate assets, net															(10,284)		94,712		(104,996)		(110.9)	%

Merger and integration costs															—		(3,477)		3,477		(100.0)	%
Other (loss) income, net															(348)		1,501		(1,849)		(123.2)	%
Loss from investments in unconsolidated real estate entities															(3,158)		(2,411)		(747)		31.0	%
Restructuring costs															(3,213)		—		(3,213)		100.0	%
Net income															$23,847		$86,135		$(62,288)		(72.3)%
Income allocated to noncontrolling interests															(559)		(2,517)		1,958		(77.8)	%
Net income available to common shares															$23,288		$83,618		$(60,330)		(72.1)%

(1)Excludes our development projects. See Non-GAAP Financial Measures for our definition of a development property and our methodology for determining same-store properties.

Table of Contents

Revenue

Rental ~~income.~~ ~~Rental~~and other property revenue. Revenue from rental and other property revenue of the consolidated portfolio increased ~~$2.2~~$28.2 million to ~~$105.4~~$493.1 million for the nine months ended September 30, ~~2017~~2023 from ~~$103.3~~$464.9 million for the nine months ended September 30, ~~2016.~~2022. The increase was primarily attributable to a ~~$3.3~~$28.3 million increase in ~~same store~~same-store rental ~~income~~and other property revenue driven by ~~higher~~a 7.7% increase in 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 due~~a 1.2% 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 income~~prior year period.

Expenses

Property operating expenses. ~~Reimbursement and other income~~Property operating expenses increased ~~$0.6~~$9.8 million to ~~$12.7~~$184.6 million for the nine months ended September 30, ~~2017~~2023 from ~~$12.1~~$174.8 million for the nine months ended September 30, ~~2016.~~2022. The increase was primarily due to ~~a $0.9~~the $10.4 million increase in ~~same store reimbursement and other income attributable to our continued focus on driving non-rental revenue and fee income and a $0.3 million increase in reimbursement and other income~~same-store property operating expense, primarily due to ~~the seven properties acquired during 2017. These increases were partially offset by a $0.6 million decrease~~inflationary pressures resulting in ~~reimbursement~~higher insurance premiums and ~~other income due to six properties sold in 2017~~contract services, repairs and ~~2016.~~

maintenance, advertising, and utilities.

Property management ~~income.~~ expenses. Property management ~~income was $0.6~~expenses increased $3.0 million to $20.4 million for the nine months ended September 30, ~~2017 compared to $0.0~~2023 from $17.4 million for the nine months ended September 30, ~~2016. This was~~2022 primarily due to ~~third party~~higher personnel costs and stock compensation due to the centralization of staff at the property management ~~income that we received for managing~~level who support multiple properties, ~~on behalf~~along with costs related to the rollout of ~~third parties during~~community call centers, compared to the ~~current period. This service did not exist~~ prior ~~to our management internalization in December 2016.~~

~~Expenses~~

~~Real estate operating~~year.

General and administrative expenses. ~~Property operating~~General and administrative expenses ~~increased $0.5~~decreased $2.8 million to ~~$48.1~~$17.7 million for the nine months ended September 30, ~~2017~~2023 from ~~$47.6~~$20.5 million for the nine months ended September 30, ~~2016.~~2022. The ~~increase~~decrease was primarily due to ~~higher~~lower personnel costs from the departure of executives in 2023, including from the forfeiture of their bonus and real estate tax expenses, which drove a $1.1 million 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.

~~Property management expenses:~~ ~~Property management expensesincreased $0.6~~stock awards.

Depreciation and amortization expense. Depreciation and amortization expense decreased $37.6 million to ~~$4.3~~$163.1 million for the nine months ended September 30, ~~2017~~2023 from ~~$3.7~~$200.7 million for the nine months ended September 30, ~~2016. This increase coincides with~~2022. The decrease was primarily attributable to lower intangible asset amortization expenses during the ~~above-mentioned increase~~nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 as a result of the intangible assets acquired in ~~property management income driven by our management internalization. After our management internalization, property management expenses include costs~~the STAR Merger being fully amortized.

Casualty losses (gains), net. During the nine months ended September 30, 2023, we incurred $0.9 million in casualty losses due to ~~directly support on-site management. Prior~~fires at three properties where the carrying value of the damage exceeded insurance proceeds due to ~~this, property management expenses included property and construction management fees paid to our former property manager.~~

~~General and administrative expenses~~policy deductible levels. 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 excess of the carrying value of losses incurred.

Interest expense. ~~General and administrative expenses decreased $1.0~~Interest expense increased $2.8 million to ~~$7.1~~$66.4 million for the nine months ended September 30, ~~2017~~2023 from ~~$8.1~~$63.6 million for the nine months ended September 30, ~~2016. The decrease was~~2022 primarily due to ~~cost savings from~~higher interest rates impacting our ~~management internalization.~~

~~Acquisition and integration expenses. Acquisition and integration expenses were $1.0 million for~~variable rate loans.

(Loss on impairment) gain on sale of real estate assets, net. During the nine months ended September 30, ~~2017 compared~~2023, one multi-family property was sold resulting in gains of $1.0 million and we recorded a $11.3 million impairment charge due to ~~$0.0 million for~~the carrying value exceeding the expected sales price less transaction costs of our Chicago, Illinois property. During the nine months ended September 30, ~~2016. This increase was primarily due to our acquisition~~2022, four multi-family properties were sold resulting in a gain of ~~the HPI Portfolio. Acquisition~~$94.7 million.

Merger and integration ~~expenses include~~costs. We incurred approximately $3.5 million of STAR merger-related integration costs ~~to identify, underwrite, close, and integrate new acquisitions.~~

~~Depreciation and amortization expense. Depreciation and amortization expense decreased $2.6 million to $24.3 million for~~during the nine months ended September 30, ~~2017 from $26.9 million for~~2022. These costs primarily consist of technology migration and implementation, consulting and professional fees and employee severance costs.

Restructuring costs. During the nine months ended September 30, ~~2016. The decrease was primarily due to a $3.7~~2023, we incurred approximately $3.2 million ~~decrease in amortization~~ of ~~in-place leases~~severance costs related to ~~2015 property acquisitions as they were fully amortized during 2016. This was partially offset by~~the reorganization of certain departments that impacted a ~~$0.7 million increase in amortization~~limited number 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~~employees.

Table 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 ~~IRT~~us 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 related~~casualty (gains) losses, loan premium accretion and discount amortization, debt extinguishment ~~expenses, gains on the TSRE~~costs, merger and ~~management internalization expenses,~~integration costs, and restructuring 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 ~~differs~~may 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’s~~our operating performance after adjustment for certain non-cash or non-recurring items that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and ~~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.

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.

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Set forth below is a reconciliation of net income ~~(loss)~~ to FFO and CFFO for the three and nine months ended September 30, ~~2017~~2023 and ~~2016~~2022 (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

~~(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,								For the Nine Months Ended September 30,
	2023				2022				2023				2022
	Amount		Per Share(1)		Amount		Per Share(2)		Amount		Per Share(1)		Amount		Per Share(2)
Net income	$	3,986	$	0.02	$	16,653	$	0.07	$	23,847	$	0.10	$	86,135	$	0.38
Adjustments:
Real estate depreciation and amortization	55,217		0.24		49,347		0.22		162,205		0.70		199,588		0.88
Our share of real estate depreciation and amortization from investments in unconsolidated real estate entities	486		—		1,388		0.01		1,479		0.01		1,904		0.01
Loss on impairment (gain on sale) of real estate assets net, excluding prepayment gains	11,268		0.05		—		—		10,954		0.05		(94,712)		(0.42)
FFO	$	70,957	$	0.31	$	67,388	$	0.30	$	198,485	$	0.86	$	192,915	$	0.85

FFO	$	70,957	$	0.31	$	67,388	$	0.30	$	198,485	$	0.86	$	192,915	$	0.85
Adjustments:
Other depreciation and amortization	329		—		375		—		860		0.01		1,100		—

Casualty losses (gains), net	35		—		(191)		—		866		0.01		(7,176)		(0.03)
Loan (premium accretion) discount amortization, net	(2,747)		(0.01)		(2,750)		(0.01)		(8,239)		(0.04)		(8,245)		(0.04)
Prepayment (gains) losses on asset dispositions	—		—		—		—		(670)		—		—		—

Other expense (income)	429		—		(765)		(0.01)		663		—		(1,438)		(0.01)
Merger and integration costs	—		—		275		—		—		—		3,477		0.02
Restructuring costs	—		—		—		—		3,213		0.01		—		—
CFFO	$	69,003	$	0.30	$	64,332	$	0.28	$	195,178	$	0.85	$	180,633	$	0.79

~~Same Store~~

(1)Based on 230,444,945 and 230,334,398 weighted-average shares and units outstanding for the three and nine months ended September 30, 2023.

(2)Based on 228,051,780 and 227,933,320weighted-average shares and units outstanding for the three and nine months ended September 30, 2022.

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,~~casualty related costs and gains, property management ~~fees, acquisition~~ expenses, ~~and~~ general and administrative ~~expenses. In connection with our management internalization, which was completed in the fourth quarter~~expense, net gains on sale of ~~2016, we modified our calculation of NOI to exclude property management expenses. We retrospectively adjusted previously reported NOI to conform to this change.~~assets, merger and integration costs, and restructuring costs. 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 store~~same-store and ~~non-same store~~non same-store basis because NOI measures the core operations of property performance by excluding corporate level expenses, financing expenses, and other items not related to property operating performance and captures trends in rental housing and property operating expenses. However, NOI should only be used as an alternative measure of our financial performance.

Same-Store Properties and Same-Store Portfolio

We review our ~~same store properties or~~same-store portfolio at the beginning of each calendar year. Properties are added into the ~~same store~~same-store portfolio if they were owned and not a development property 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 store~~same-store portfolio.

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Non Same-Store Properties and Non Same-Store Portfolio

Properties that did not meet the definition of a same-store property as of the beginning of the previous year are added into the non same-store portfolio.

Development Property

A development property is a property that is either currently under development or is in lease-up prior to reaching overall occupancy of 90%.

Set forth below is a reconciliation of ~~same store~~GAAP net ~~operating~~ income to ~~net income (loss) available to common shares~~Same-Store Portfolio NOI for the three and nine months ended September 30, ~~2017~~2023 and ~~2016~~2022 (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023		2022		% change		2023		2022		% change
Net income	$	3,986	$	16,653	(76.1)	%	$	23,847	$	86,135	(72.3)	%

Other revenue	(232)		(300)		(22.7)	%	(826)		(805)		2.6	%
Property management expenses	7,232		5,744		25.9	%	20,421		17,440		17.1	%
General and administrative expenses	3,660		5,625		(34.9)	%	17,724		20,521		(13.6)	%
Depreciation and amortization expense	55,546		49,722		11.7	%	163,066		200,688		(18.7)	%

Casualty losses (gains), net	35		(191)		(118.3)	%	866		(7,176)		(112.1)	%
Interest expense	22,033		22,093		(0.3)	%	66,383		63,618		4.3	%
Loss on impairment (gain on sale) of real estate assets, net	11,268		—		100.0	%	10,284		(94,712)		(110.9)	%

Other loss (income), net	369		(765)		(148.2)	%	348		(1,501)		(123.2)	%
Loss from investments in unconsolidated real estate entities	1,178		1,477		(20.2)	%	3,158		2,411		31.0	%
Merger and integration costs	—		275		(100.0)	%	—		3,477		(100.0)	%
Restructuring costs	—		—		—	%	3,213		—		100.0	%
NOI	105,075		100,333		4.7	%	308,484		290,096		6.3	%
Less: Non same-store portfolio NOI	4,063		3,937		3.2	%	11,266		10,759		4.7	%
Same-store portfolio NOI (a)	$	101,012	$	96,396	4.8	%	$	297,218	$	279,337	6.4	%

(a)Same-Store Portfolio for the three and nine months ended September 30, 2023 and 2022 included 115 properties containing 34,197 units.

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Set forth below is Same-Store Portfolio NOI for the three and nine months ended September 30, 2023 and 2022 (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)
	2023		2022		% change		2023		2022		% change
Revenue:
Rental and other property revenue	$	161,811	$	153,584	5.4	%	$	474,751	$	446,460	6.3	%
Property Operating Expenses
Real estate taxes	19,381		18,727		3.5	%	58,325		57,630		1.2	%
Property insurance	4,344		3,536		22.9	%	11,351		9,343		21.5	%
Personnel expenses	12,828		12,103		6.0	%	37,313		36,752		1.5	%
Utilities	8,165		8,021		1.8	%	23,576		22,419		5.2	%
Repairs and maintenance	6,389		6,013		6.3	%	18,726		16,315		14.8	%
Contract services	5,936		5,391		10.1	%	17,630		15,362		14.8	%
Advertising expenses	2,042		1,487		37.3	%	5,087		3,947		28.9	%
Other expenses	1,714		1,910		(10.3)	%	5,525		5,355		3.2	%
Total property operating expenses	60,799		57,188		6.3	%	177,533		167,123		6.2	%
Same-store portfolio NOI	$	101,012	$	96,396	4.8	%	$	297,218	$	279,337	6.4	%


Same-store portfolio NOI Margin	62.4	%	62.8	%	(0.4)	%	62.6	%	62.6	%	—	%
Average Occupancy	94.6	%	94.2	%	0.4	%	93.9	%	95.1	%	(1.2)	%


Average effective monthly rent, per unit			$	1,549					$	1,484					4.4		%				$	1,536					$	1,426					7.7		%

(a)Same-Store Portfolio for the three and nine months ended September 30, 2023 and 2022 included 115 properties containing 34,197 units.

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.

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;

•continue funding our current real estate developments until completion;

•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 ~~these~~our liquidity requirements primarily ~~through:~~

through a combination of one or more of the following:

•the use of our cash and cash ~~equivalent balance~~equivalents of ~~$10.1~~$17.2 million as of September 30, ~~2017;~~

2023;

•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;

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•cash generated from operating activities;

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

and

•proceeds from the ~~sale~~sales of our common ~~stock;~~stock and

other equity securities, including common stock that may be sold under our ATM program.

~~if required, proceeds from future borrowings and offerings.~~

On May 1, 2017, we closed on a new $300.0 million unsecured credit facility, refinancing and terminating the previous secured credit facility. The new facility is comprised of a $50.0 million term loan 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.

Cash Flows

As of September 30, ~~2017~~2023 and ~~2016,~~2022, we maintained cash and cash equivalents, and restricted cash of approximately ~~$10.1~~$49.0 million and ~~$29.2~~$59.6 million, respectively. Our cash and cash equivalents were generated from the following activities (dollars in thousands):


	For the Nine Months Ended September 30,
	2023		2022
Cash flow provided by operating activities	$	202,992	$	191,241
Cash flow used in investing activities	(142,617)		(174,162)
Cash flow used in financing activities	(55,404)		(23,168)
Net change in cash and cash equivalents, and restricted cash	4,971		(6,089)
Cash and cash equivalents, and restricted cash, beginning of period	44,017		65,671
Cash and cash equivalents, and restricted cash, end of the period	$	48,988	$	59,582

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

~~The increase in our~~Our cash ~~flow~~inflows from operating activities during the nine months ended September 30, ~~2017 was~~2023 and 2022 were primarily driven by ~~the increased performance~~ongoing operations of our ~~property portfolio.~~

properties.

Our cash ~~outflow~~outflows from investing activities during the nine months ended September 30, ~~2017 was~~2023 were primarily due to ~~seven property acquisitions~~$111.9 million of capital expenditures, $23.2 million of investments in unconsolidated real estate entities, and $48.5 million of investments in real estate under development, partially offset by ~~three~~$35.6 million of proceeds from one property ~~dispositions.~~disposition. Our cash ~~inflow~~outflows from investing activities during the nine months ended September 30, ~~2016 was~~2022 were primarily due ~~to the disposition~~$201.8 million of ~~three properties.~~

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 $155.6 million of proceeds from four property dispositions and proceeds from insurance claims of $15.7 million.

Our cash ~~inflow~~outflows from financing activities during the nine months ended September 30, ~~2017 was~~2023 were primarily due to payment of dividends on our common stock and noncontrolling interests of $101.6 million partially offset by $57.5 million of net draws on our ~~current and previous credit facilities related to the acquisitions of seven properties, partially offset by the proceeds from the issuance of our common stock.~~unsecured revolver. Our cash ~~outflow~~outflows from financing activities during the nine months ended September 30, ~~2016 was~~2022 were primarily due to credit facility and term loan repayments of ~~mortgage indebtedness~~$666.5 million and ~~the interim facility with proceeds from the three property dispositions.~~

~~As a REIT, we evaluate our dividend coverage based~~payment of 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~~

~~distributions to our~~ common ~~stockholders~~stock and noncontrolling interests of ~~$38.9~~$76.4 million partially offset by $687.5 million of proceeds from unsecured credit facilities and ~~generated cash flow~~term loan restructurings and $48.8 million of proceeds from ~~operating activities excluding acquisition and integration expenses and~~the issuance of common stock.

Contractual Obligations

Our 2022 Annual Report on Form 10-K includes a table of contractual obligations. There were no material changes ~~in other assets and liabilities~~to these obligations since the filing of ~~$40.4 million.~~

our 2022 Annual Report on Form 10-K.

Off-Balance Sheet Arrangements

There were no off-balance sheet arrangements during the nine months ended September 30, ~~2017~~2023 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.

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Critical Accounting Estimates and Policies

Our ~~2016~~2022 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 2022 Annual Report on Form 10-K.

~~Item 3.~~

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

Market ~~risk is the adverse effect~~Risk.

Our 2022 Annual Report on ~~the value~~Form 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, ~~2017~~2023 from the disclosures included in our ~~2016~~2022 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 officer~~Chief 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, 2023, 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 evaluation~~Chief 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 ~~upon~~on that evaluation, our ~~chief executive officer~~Chief Executive Officer and ~~chief financial officer~~Chief Financial Officer concluded that ~~our~~the 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.~~

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

Changes in Internal Control Over Financial Reporting

There ~~has been~~were no ~~change~~changes in our internal control over financial reporting oridentified in ~~other factors~~connection with the evaluation referred to above during the quarter ended September 30, ~~2017,~~2023 that have materially affected, or ~~were~~are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II—OTHER INFORMATION

~~Item 1.~~

Item 1. Legal Proceedings.

The Company has been named as a party in certain litigation filed in the U.S. District Court for the Middle District of Tennessee on behalf of putative classes of consumers alleging collusion among RealPage, Inc. ("RealPage"), us, and 46 other defendants who own or manage multifamily rental housing, to fix, raise, maintain, and stabilize multifamily rental housing pricing in violation of Section 1 of the Sherman Act. We deny all allegations of wrongdoing and will continue to vigorously defend the action.

Item 1A. Risk Factors.

There have not been any material changes from the risk factors ~~previously~~ disclosed in Part 1, Item ~~1A—“Risk Factors” in~~1A of our ~~2016~~2022 Annual Report on Form 10-K.

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

During the three and nine months ended September 30, 2023, holders of IROP ~~issued, in~~units exchanged 0 and 144,600 units, respectively, for 0 and 144,600 shares, respectively, of our common stock. 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 were~~shares 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 3,035,654~~2023, 5,946,571 IROP units held by unaffiliated third parties remained outstanding.

During the three months ended September 30, 2023, we withheld shares of common stock to satisfy employee tax withholding obligations payable upon the vesting of restricted common stock awards as follow:


Period	Total 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)
Jul 2023	1,478	$	17.68	—	$	250,000
Aug 2023	—	—		—	250,000
Sep 2023	—	—		—	250,000
Total	1,478	$	17.68	—

(1)The ~~issuance~~price 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 ~~stock~~stock. Under the Stock Repurchase Program, we, in ~~these exchanges was exempt~~our discretion, may purchase our shares from ~~registration pursuant~~time to ~~Section 4(a)(2)~~time in the open market or in privately negotiated transactions. The amount and timing of the ~~Securities Act~~purchases will depend on a number of factors, including the price and ~~Rule 506~~availability of ~~Regulation D; all the persons receiving such~~our 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. Defaults Upon Senior Securities.

Item 4. Mine Safety Disclosures.

Item 5. Other Information.


~~31.1~~	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

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

32.1			Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.2			Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

101			~~XBRL (eXtensible~~iXBRL (Inline eXtensible Business Reporting Language). The following materials, formatted in ~~XBRL:~~iXBRL: (i) Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2023 and December 31, ~~2016,~~2022, (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, (iii) Condensed Consolidated ~~Statement~~Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, (iv) Condensed Consolidated Statements of Changes in Equity for the three and nine months ended September 30, ~~2017,~~2023 and 2022, (v) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2017~~2023 and ~~2016~~2022 and (vi) notes to the condensed consolidated financial statements as of September 30, ~~2017.~~ 2023.

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

* 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.

Table of Contents S~~IGNATURES~~

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~~ 2023	By:		~~By:~~	/s/ ~~Scott~~ f~~. Schaeffer~~ SCOTT F. SCHAEFFER
				Scott F. Schaeffer
				Chairman of the Board and Chief Executive Officer
				(Principal Executive Officer)

Date: October 31, ~~2017~~ 2023	By:		~~By:~~	/s/ JAMES J. SEBRA
			James J. Sebra
				~~James J. Sebra~~
		Chief Financial Officer and Treasurer
				(Principal Financial Officer)

Date: October 31, 2023	By:		/s/ JASON R. DELOZIER
			Jason R. Delozier
			Chief Accounting Officer ~~and~~
			(Principal Accounting Officer)


Maryland			26-4567130
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

~~Two Liberty Place~~ ~~50 S. 16~~^th 1835 Market Street, Suite ~~3575~~ 2601 Philadelphia, PA			~~19102~~ 19103
(Address of Principal Executive Offices)			(Zip Code)

	~~Page~~
				Page

PART I—FINANCIAL INFORMATION			3

Item 1.		Financial Statements (unaudited)		3

		Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2023 and December 31, ~~201~~20226		3

		Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, ~~2017~~2023 and September 30, ~~201~~20226		4

		Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the Three and Nine Months ended September 30, ~~2017~~2023 and September 30, ~~2016~~2022		5

		Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months ended September 30, ~~201~~2023 and 7 September 30, 2022		6

		Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, ~~2017~~2023 and September 30, ~~2016~~2022		7 8

		~~Condensed~~ Notes to Condensed Consolidated Financial Statements as of September 30, ~~2017~~2023		8 9

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		22 24

Item 3.		Quantitative and Qualitative Disclosures About Market Risk		32 38

Item 4.		Controls and Procedures		32 38

PART II—OTHER INFORMATION			33

Item 1.		Legal Proceedings		33 39

Item 1A.		Risk Factors		33 39

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		33 39

Item 3.		Defaults Upon Senior Securities		33 39

Item 4.		Mine Safety Disclosures		33 39

Item 5.		Other Information		33 40

Item 6.		Exhibits		33 40

Signatures			35 41


	As of September 30, 2017			As of December 31, 2016				As of September 30, 2023		As of December 31, 2022
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	$	6,754,022	$	6,615,243
Accumulated depreciation		(75,084	)		(51,511	)	Accumulated depreciation	(567,200)		(425,034)
Investments in real estate, net		1,351,973			1,197,845		Investments in real estate, net	6,186,822		6,190,209
Real estate held for sale		22,031			60,786		Real estate held for sale	75,392		35,777
Investments in real estate under development							Investments in real estate under development	83,547		105,518
Cash and cash equivalents		10,128			20,892		Cash and cash equivalents	17,216		16,084
Restricted cash		6,665			5,518		Restricted cash	31,772		27,933
Accounts receivable and other assets		9,416			5,211
Investments in unconsolidated real estate entities							Investments in unconsolidated real estate entities	87,592		80,220
Other assets							Other assets	41,926		34,846
Derivative assets		3,581			3,867		Derivative assets	53,258		41,109
Intangible assets, net of accumulated amortization of $664 and $0, respectively		1,418			118
Intangible assets, net of accumulated amortization of $133 and $700, respectively							Intangible assets, net of accumulated amortization of $133 and $700, respectively	265		399
Total Assets	$	1,405,212		$	1,294,237		Total Assets	$	6,577,790	$	6,532,095
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, net							Indebtedness, net	$	2,675,117	$	2,631,645
Indebtedness associated with real estate held for sale							Indebtedness associated with real estate held for sale	40,593		—
Accounts payable and accrued expenses		23,236			14,028		Accounts payable and accrued expenses	138,549		109,677
Accrued interest payable		134			491		Accrued interest payable	8,275		7,713
Dividends payable		5,176			4,297		Dividends payable	36,858		32,189

Other liabilities		3,063			2,913		Other liabilities	10,642		13,004
Total Liabilities		763,234			765,546		Total Liabilities	2,910,034		2,794,228
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, 224,695,566 and 224,064,940 shares issued and outstanding, including 281,650 and 232,134 unvested restricted common share awards, respectively							Common stock, $0.01 par value; 500,000,000 shares authorized, 224,695,566 and 224,064,940 shares issued and outstanding, including 281,650 and 232,134 unvested restricted common share awards, respectively	2,247		2,241
Additional paid-in capital		691,550			564,633		Additional paid-in capital	3,751,001		3,751,056
Accumulated other comprehensive income		3,466			3,683		Accumulated other comprehensive income	47,910		35,102
Retained earnings (accumulated deficit)		(76,419	)		(62,181	)
Accumulated deficit							Accumulated deficit	(271,982)		(191,735)
Total stockholders’ equity		619,432			506,825		Total stockholders’ equity	3,529,176		3,596,664
Noncontrolling interests		22,546			21,866		Noncontrolling interests	138,580		141,203
Total Equity		641,978			528,691		Total Equity	3,667,756		3,737,867
Total Liabilities and Equity	$	1,405,212		$	1,294,237		Total Liabilities and Equity	$	6,577,790	$	6,532,095

	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


	For the Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net income	$	23,847	$	86,135
Adjustments to reconcile net income to cash flow from operating activities:
Depreciation and amortization	163,066		200,688
Accretion of loan discounts and premiums, net	(8,239)		(8,245)
Amortization of deferred financing costs, net	2,534		2,727
Stock compensation expense	6,781		6,238
Loss on impairment (gain on sale) of real estate assets, net	10,284		(94,712)

Amortization related to derivative instruments	973		958
Casualty losses (gains), net	866		(7,176)
Equity in loss from investments in unconsolidated real estate entities	3,158		2,411
Other loss (income)	1,261		(1,249)

Changes in assets and liabilities:
Other assets	(9,276)		(2,266)
Accounts payable and accrued expenses	9,352		5,507
Accrued interest payable	279		3,844
Other liabilities	(1,894)		(3,619)
Cash flow provided by operating activities	202,992		191,241
Cash flows from investing activities:
Acquisition of real estate properties	—		(201,777)

Cash, cash equivalents and restricted cash acquired in consolidation of unconsolidated joint venture	2,145		—
Investments in unconsolidated real estate entities	(23,221)		(51,426)
Return of investment in unconsolidated real estate entities	—		3,406
Disposition of real estate properties, net	35,557		155,639
Capital expenditures	(111,872)		(55,648)
Additions to real estate under development	(48,491)		(40,009)
Proceeds from insurance claims	3,265		15,653
Cash flow used in investing activities	(142,617)		(174,162)
Cash flows from financing activities:
(Costs) proceeds from issuance of common stock, net	(421)		48,751
Proceeds from unsecured credit facility and term loans	185,000		687,500
Unsecured credit facility, secured credit facility and term loan repayments	(127,513)		(666,525)
Mortgage principal repayments	(6,067)		(5,514)
Payments for deferred financing costs	(60)		(1,654)
Distributions on common stock	(98,965)		(74,479)
Distributions to noncontrolling interests	(2,639)		(1,891)

Repurchase of shares related to equity award tax withholding	(4,739)		(5,881)
Payments for interest rate collars	—		(3,475)
Cash flow used in financing activities	(55,404)		(23,168)
Net change in cash and cash equivalents, and restricted cash	4,971		(6,089)
Cash and cash equivalents, and restricted cash, beginning of period	44,017		65,671
Cash and cash equivalents, and restricted cash, end of the period	$	48,988	$	59,582

Reconciliation of cash, cash equivalents, and restricted cash to the Condensed Consolidated Balance Sheets
Cash and cash equivalents	$	17,216	$	23,753
Restricted cash	31,772		35,829
Total cash, cash equivalents, and restricted cash, end of period	$	48,988	$	59,582


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

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

~~Maryland~~	~~26-4567130~~
(Exact Name of Registrant as Specified in Its Charter)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
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			-
Total revenue		40,066			38,364			118,769			115,357
EXPENSES:
Property operating expenses		16,196			16,107			48,106			47,588
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 expense		8,671			7,765			24,289			26,927
Total expenses		29,086			27,775			84,789			86,336
Operating income		10,980			10,589			33,980			29,021
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):		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:
Basic	$	0.02		$	0.05		$	0.34		$	0.66
Diluted	$	0.02		$	0.05		$	0.34		$	0.66
Weighted-average shares:
Basic		71,972,394			47,215,918			69,875,802			47,164,543
Diluted		72,144,544			47,314,629			70,105,571			47,190,139


	As of September 30, 2017			As of December 31, 2016			Depreciable Lives (In years)			As of September 30, 2023		As of December 31, 2022		Depreciable Lives (In years)
Land	$	187,935		$	165,120			—	Land	$	586,361	$	579,094	—
Building		1,211,985			1,066,611			40	Building	5,728,541		5,695,711		40
Furniture, fixtures and equipment		27,137			17,625		5-10		Furniture, fixtures and equipment	439,120		340,438		5-10
Total investment in real estate	$	1,427,057		$	1,249,356
Total investments in real estate									Total investments in real estate	$	6,754,022	$	6,615,243
Accumulated depreciation		(75,084	)		(51,511	)			Accumulated depreciation	(567,200)		(425,034)
Investments in real estate, net	$	1,351,973		$	1,197,845				Investments in real estate, net	$	6,186,822	$	6,190,209

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

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

	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

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

							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

☒

FORM 10-Q

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

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

	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	%

	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

~~10.1~~
2.1		~~HPI Purchase~~Agreement and ~~Sale~~Plan of Merger, dated as of July 26, 2021, by and among Independence Realty Trust, Inc., Independence Realty Operating Partnership, LP, IRSTAR Sub, LLC, LLC, Steadfast Apartment REIT, Inc. and Steadfast Apartment REIT Operating Partnership, L.P., incorporated by reference to Exhibit 2.1 to IRT’s Current Report on Form 8-K filed on July 26, 2021.*

10.1		Equity Distribution Agreement, dated ~~September 3, 2017,~~July 28, 2023, by and among Independence Realty Trust, Inc.,Independence Realty Operating Partnership, L.P., the Managers and the Forward Purchasers (including the form of Confirmation), incorporated by reference to Exhibit 1.1 to IRT’s Current Report on Form 8-K filed ~~herewith.~~ on July 28, 2023.

~~10.2~~ 31.1			~~First Amendment to HPI Purchase and Sale Agreement dated September 25, 2017, filed herewith.~~

~~10.3~~	~~Second Amendment to HPI Purchase and Sale Agreement dated October 24, 2017, filed herewith.~~

~~12.1~~	~~Statements regarding computation of ratios as of September 30, 2017, filed herewith.~~