UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~FORM 10-Q~~

~~(Mark One)~~

☒

FORM 10-Q

(Mark One)


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

For the quarterly period ended March 31, ~~2021~~

2022


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

For the transition period from _________ to

_________

Commission file number 001-36041

INDEPENDENCE REALTY TRUST, INC.

~~(Exact Name of Registrant as Specified in Its Charter)~~

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


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

1835 Market Street, Suite 2601 Philadelphia, PA			19103
(Address of Principal Executive Offices)			(Zip Code)

(267) 270-4800

(Registrant’s Telephone Number, Including Area Code)

N/A

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

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock

IRT

NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒x No ☐o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒x No ☐o

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

~~Large Accelerated filer~~

☒

~~Accelerated filer~~

☐

~~Non-Accelerated filer~~

☐

~~Smaller reporting company~~

☐

Large Accelerated filer

Accelerated filer

Non-Accelerated filer

Smaller reporting company

Emerging growth company

☐o

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

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 April ~~27, 2021~~25, 2022 there were ~~102,147,512~~221,161,162 shares of the Registrant’s common stock issued and outstanding.

Table of Contents

INDEPENDENCE REALTY TRUST, INC.

INDEX

		~~Page~~
					Page

PART I—FINANCIAL INFORMATION				3

Item 1.			Financial Statements (unaudited)		3

			Condensed Consolidated Balance Sheets as of March 31, ~~2021~~2022 and December 31, ~~2020~~202 1		3

			Condensed Consolidated Statements of Operations for the Three Months ended March 31, ~~2021~~2022 and March 31, ~~2020~~202 1		4

			Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months ended March 31, ~~2021~~2022 and March 31 ~~2020~~, 2021		5

			Condensed Consolidated Statements of Changes in Equity for the Three Months ended March 31, 2022 and March 31, 2021 ~~and March 31, 2020~~		6

			Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2022 and March 31, 2021 ~~and March 31, 2020~~		7

			Notes to Condensed Consolidated Financial Statements as of March 31, ~~2021~~2022		8

Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations		17 19

Item 3.			Quantitative and Qualitative Disclosures About Market Risk		24 29

Item 4.			Controls and Procedures		24 29

PART II—OTHER INFORMATION

Item 1.			Legal Proceedings		24 30

Item 1A.			Risk Factors		24 30

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		25 30

Item 3.			Defaults Upon Senior Securities		25 30

Item 4.			Mine Safety Disclosures		25 30

Item 5.			Other Information		25 30

Item 6.	Exhibits		~~Exhibits~~31		25

Signatures				26 32

Table of Contents

PART I—FINANCIAL INFORMATION

~~Item 1.~~

~~Financial Statements (unaudited)~~

Item 1. Financial Statements

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

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


	As of March 31, 2021			As of December 31, 2020				As of March 31, 2022		As of December 31, 2021
ASSETS:							ASSETS:
Investments in real estate:							Investments in real estate:
Investments in real estate, at cost	$	1,922,071		$	1,916,770		Investments in real estate, at cost	$	6,382,324	$	6,462,355
Accumulated depreciation		(223,187	)		(208,618	)	Accumulated depreciation	(283,666)		(243,475)
Investments in real estate, net		1,698,884			1,708,152		Investments in real estate, net	6,098,658		6,218,880
Real estate held for sale							Real estate held for sale	80,992		61,560
Investment in real estate under development							Investment in real estate under development	48,959		41,777
Cash and cash equivalents		8,653			8,751		Cash and cash equivalents	23,971		35,972
Restricted cash		4,449			4,864		Restricted cash	26,789		29,699
Investments in unconsolidated real estate entities							Investments in unconsolidated real estate entities	43,541		24,999
Other assets		12,824			12,338		Other assets	27,281		38,052
Derivative assets		2,810			—		Derivative assets	12,944		2,488
Intangible assets, net of accumulated amortization of $396 and $0, respectively		396			792
Intangible assets, net of accumulated amortization of $33,861 and $4,779, respectively							Intangible assets, net of accumulated amortization of $33,861 and $4,779, respectively	24,187		53,269
Total Assets	$	1,728,016		$	1,734,897		Total Assets	$	6,387,322	$	6,506,696
LIABILITIES AND EQUITY:							LIABILITIES AND EQUITY:
Indebtedness, net of unamortized deferred financing costs of $3,844 and $4,208, respectively	$	947,631		$	945,686
Indebtedness, net							Indebtedness, net	$	2,495,410	$	2,705,336
Indebtedness associated with real estate held for sale							Indebtedness associated with real estate held for sale	46,678		—
Accounts payable and accrued expenses		24,535			25,416		Accounts payable and accrued expenses	81,498		106,332
Accrued interest payable		1,888			1,976		Accrued interest payable	6,955		7,175
Dividends payable		12,293			12,257		Dividends payable	27,345		16,792
Derivative liabilities		19,540			29,842		Derivative liabilities	128		11,896
Other liabilities		6,991			6,949		Other liabilities	15,921		17,089
Total Liabilities		1,012,878			1,022,126		Total Liabilities	2,673,935		2,864,620
Equity:							Equity:
Stockholders’ equity:							Stockholders’ equity:
Preferred stock, $0.01 par value; 50,000,000 shares authorized, 0 and 0 shares issued and outstanding, respectively		—			—		Preferred stock, $0.01 par value; 50,000,000 shares authorized, 0 and 0 shares issued and outstanding, respectively	—		—
Common stock, $0.01 par value; 300,000,000 shares authorized, 102,033,732 and 101,803,762 shares issued and outstanding, including 267,296 and 339,468 unvested restricted common share awards, respectively		1,018			1,018
Common stock, $0.01 par value; 500,000,000 shares authorized, 221,162,658 and 220,753,735 shares issued and outstanding, including 261,538 and 269,622 unvested restricted common share awards, respectively							Common stock, $0.01 par value; 500,000,000 shares authorized, 221,162,658 and 220,753,735 shares issued and outstanding, including 261,538 and 269,622 unvested restricted common share awards, respectively	2,212		2,208
Additional paid-in capital		920,042			919,615		Additional paid-in capital	3,678,478		3,678,903
Accumulated other comprehensive income (loss)		(20,497	)		(33,822	)	Accumulated other comprehensive income (loss)	9,958		(11,940)
Retained earnings (accumulated deficit)		(190,151	)		(178,751	)	Retained earnings (accumulated deficit)	(140,643)		(188,410)
Total stockholders’ equity		710,412			708,060		Total stockholders’ equity	3,550,005		3,480,761
Noncontrolling interests		4,726			4,711		Noncontrolling interests	163,382		161,315
Total Equity		715,138			712,771		Total Equity	3,713,387		3,642,076
Total Liabilities and Equity	$	1,728,016		$	1,734,897		Total Liabilities and Equity	$	6,387,322	$	6,506,696

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

Table of Contents

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

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


	For the Three Months Ended March 31,							For the Three Months Ended March 31,
	2021			2020				2022		2021
REVENUE:							REVENUE:
Rental and other property revenue	$	54,811		$	51,156		Rental and other property revenue	$	149,977	$	54,811
Other revenue		301			194		Other revenue	385		301
Total revenue		55,112			51,350		Total revenue	150,362		55,112
EXPENSES:							EXPENSES:
Property operating expenses		20,838			19,737		Property operating expenses	55,883		20,838
Property management expenses		1,943			2,156		Property management expenses	5,556		1,943
General and administrative expenses		5,942			5,376		General and administrative expenses	7,928		5,942
Depreciation and amortization expense		16,552			14,828		Depreciation and amortization expense	78,174		16,552
Abandoned deal costs		—			130
Casualty losses		359			—

Casualty (gains) losses, net							Casualty (gains) losses, net	(1,393)		359
Total expenses		45,634			42,227		Total expenses	146,148		45,634
Other income (expense), net							Other income (expense), net	380		—
Interest expense		(8,385	)		(9,497	)	Interest expense	(20,531)		(8,385)
Net income (loss):		1,093			(374	)
(Income) loss allocated to noncontrolling interest		(7	)		2
Net income (loss) allocable to common shares	$	1,086		$	(372	)
Gain on sale of real estate assets, net							Gain on sale of real estate assets, net	94,712		—
Merger and integration costs							Merger and integration costs	(1,895)		—
Net income:							Net income:	76,880		1,093
Income allocated to noncontrolling interest							Income allocated to noncontrolling interest	(2,280)		(7)
Net income allocable to common shares							Net income allocable to common shares	$	74,600	$	1,086
Earnings per share:							Earnings per share:
Basic	$	0.01		$ 0.00			Basic	$	0.34	$	0.01
Diluted	$	0.01		$ 0.00			Diluted	$	0.34	$	0.01
Weighted-average shares:							Weighted-average shares:
Basic		101,678,865			90,895,488		Basic	220,798,692		101,678,865
Diluted		102,763,106			90,895,488		Diluted	222,045,286		102,763,106

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

Table of Contents

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited and dollars in thousands)

For the Three Months Ended March 31,

2021

2020

Net income (loss)

$
1,093

$
(374
)
Other comprehensive income (loss):

Change in fair value of interest rate hedges

15,173

(23,422
)
Realized (losses) gains on interest rate hedges reclassified to earnings

(1,760
)

(418
)
Total other comprehensive income (loss)

13,413

(23,840
)
Comprehensive income (loss) before allocation to noncontrolling interests

14,506

(24,214
)
Allocation to noncontrolling interests

(95
)

191

Comprehensive income (loss)

$
14,411

$
(24,023
)


	For the Three Months Ended March 31,
	2022		2021
Net income	$	76,880	$	1,093
Other comprehensive income (loss):
Change in fair value of interest rate hedges	24,710		15,173
Realized gains (losses) on interest rate hedges reclassified to earnings	(2,120)		(1,760)
Total other comprehensive income	22,590		13,413
Comprehensive income before allocation to noncontrolling interests	99,470		14,506


Allocation to noncontrolling interests	(2,972)		(95)
Comprehensive income	$	96,498	$	14,411

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

Table of Contents

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

(Unaudited and dollars in thousands, except share information)

Common
Shares

Par
Value
Common
Shares

Additional
Paid In
Capital

Accumulated Other Comprehensive Income (loss)

Retained
Earnings
(Deficit)

Total
Stockholders’
Equity

Noncontrolling
Interests

Total
Equity

Balance, December 31, 2020

101,803,762

$
1,018

$
919,615

$
(33,822
)

$
(178,751
)

$
708,060

$
4,711

$
712,771

Net income (loss)

—

—

—

—

1,086

1,086

7

1,093

Other comprehensive income (loss)

—

—

—

13,325

—

13,325

88

13,413

Stock compensation

286,647

2

3,346

—

—

3,348

—

3,348

Issuance of common shares, net

—

—

(59
)

—

—

(59
)

—

(59
)
Repurchase of shares related to equity award tax withholding

(56,677
)

(2
)

(2,860
)

—

—

(2,862
)

—

(2,862
)
Common dividends declared ($0.12 per share)

—

—

—

—

(12,486
)

(12,486
)

—

(12,486
)
Distribution to noncontrolling interest declared ($0.12 per unit)

—

—

—

—

—

—

(80
)

(80
)
Balance, March 31, 2021

102,033,732

$
1,018

$
920,042

$
(20,497
)

$
(190,151
)

$
710,412

$
4,726

$
715,138


	Common Shares	Par Value Common Shares		Additional Paid In Capital		Accumulated Other Comprehensive Income (loss)		Retained Earnings (Deficit)		Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
Balance, December 31, 2021	220,753,735	$	2,208	$	3,678,903	$	(11,940)	$	(188,410)	$	3,480,761	$	161,315	$	3,642,076
Net income	—	—		—		—		74,600		74,600		2,280		76,880
Common dividends declared ($0.12 per share)	—	—		—		—		(26,833)		(26,833)		—		(26,833)
Other comprehensive income	—	—		—		21,898		—		21,898		692		22,590
Stock compensation	395,029	3		3,535		—		—		3,538		—		3,538

Repurchase of shares related to equity award tax withholding	(48,452)	—		(3,183)		—		—		(3,183)		—		(3,183)
Conversion of noncontrolling interest to common shares	10,848	—		68		—		—		68		(68)		—
Issuance of common shares, net	51,498	1		(845)		—		—		(844)		—		(844)
Distribution to noncontrolling interest declared ($0.12 per unit)	—	—		—		—		—		—		(837)		(837)
Balance, March 31, 2022	221,162,658	$	2,212	$	3,678,478	$	9,958	$	(140,643)	$	3,550,005	$	163,382	$	3,713,387

Common
Shares

Par
Value
Common
Shares

Additional
Paid In
Capital

Accumulated Other Comprehensive Income (loss)

Retained
Earnings
(Deficit)

Total
Stockholders’
Equity

Noncontrolling
Interests

Total
Equity

Balance, December 31, 2019

91,070,637

$
911

$
765,992

$
(12,099
)

$
(141,525
)

$
613,279

$
6,478

$
619,757

Net income (loss)

—

—

—

—

(372
)

(372
)

(2
)

(374
)
Other comprehensive income (loss)

—

—

—

(23,651
)

—

(23,651
)

(189
)

(23,840
)
Stock compensation

183,940

2

2,642

—

—

2,644

—

2,644

Issuance of common shares, net

3,406,000

35

49,729

—

—

49,764

—

49,764

Repurchase of shares related to equity award tax withholding

(51,128
)

(1
)

(1,489
)

—

—

(1,490
)

—

(1,490
)
Conversion of noncontrolling interest to common shares

82,357

—

627

—

-

627

(627
)

-

Common dividends declared ($0.18 per share)

—

—

—

—

(17,148
)

(17,148
)

-

(17,148
)
Distribution to noncontrolling interest declared ($0.18 per unit)

—

—

—

—

—

—

(142
)

(142
)
Balance, March 31, 2020

94,691,806

$
947

$
817,501

$
(35,750
)

$
(159,045
)

$
623,653

$
5,518

$
629,171


	Common Shares	Par Value Common Shares		Additional Paid In Capital		Accumulated Other Comprehensive Income (loss)		Retained Earnings (Deficit)		Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
Balance, December 31, 2020	101,803,762	$	1,018	$	919,615	$	(33,822)	$	(178,751)	$	708,060	$	4,711	$	712,771
Net income (loss)	—	—		—		—		1,086		1,086		7		1,093
Common dividends declared ($0.12 per share)	—	—		—		—		(12,486)		(12,486)		—		(12,486)
Other comprehensive income (loss)	—	—		—		13,325		—		13,325		88		13,413
Stock compensation	286,647	2		3,346		—		—		3,348		—		3,348

Repurchase of shares related to equity award tax withholding	(56,677)	(2)		(2,860)		—		—		(2,862)		—		(2,862)

Issuance of common shares, net	—	—		(59)		—		—		(59)		—		(59)
Distribution to noncontrolling interest declared ($0.12 per unit)	—	—		—		—		—		—		(80)		(80)
Balance, March 31, 2021	102,033,732	$	1,018	$	920,042	$	(20,497)	$	(190,151)	$	710,412	$	4,726	$	715,138

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

Table of Contents

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited and dollars in thousands)


	For the Three Months Ended March 31,							For the Three Months Ended March 31,
	2021			2020				2022		2021
Cash flows from operating activities:							Cash flows from operating activities:
Net income	$	1,093		$	(374	)	Net income	$	76,880	$	1,093
Adjustments to reconcile net income to cash flow from operating activities:							Adjustments to reconcile net income to cash flow from operating activities:
Depreciation and amortization		16,552			14,828		Depreciation and amortization	78,174		16,552
Amortization of deferred financing costs		364			361
Stock compensation		3,326			2,627
Casualty losses		359			—
Accretion of loan discounts and premiums, net							Accretion of loan discounts and premiums, net	(2,754)		—
Amortization of deferred financing costs, net							Amortization of deferred financing costs, net	919		364
Stock compensation expense							Stock compensation expense	3,498		3,326
Gain on sale of real estate assets, net							Gain on sale of real estate assets, net	(94,712)		—

Amortization related to derivative instruments		302			280		Amortization related to derivative instruments	314		302
Casualty (gains) losses							Casualty (gains) losses	(1,393)		359
Other income (expense), net							Other income (expense), net	(380)		—
Changes in assets and liabilities:							Changes in assets and liabilities:
Other assets		(90	)		(875	)	Other assets	4,538		(90)
Accounts payable and accrued expenses		(1,321	)		(5,171	)	Accounts payable and accrued expenses	(23,326)		(1,321)
Accrued interest payable		(88	)		(59	)	Accrued interest payable	(220)		(88)
Other liabilities		141			67		Other liabilities	(958)		141
Cash flow provided by operating activities		20,638			11,684		Cash flow provided by operating activities	40,580		20,638
Cash flows from investing activities:							Cash flows from investing activities:
Acquisition of real estate properties		(365	)		(50,598	)	Acquisition of real estate properties	—		(365)
Investments in unconsolidated real estate entities							Investments in unconsolidated real estate entities	(18,605)		—
Disposition of real estate properties, net							Disposition of real estate properties, net	155,639		—
Capital expenditures		(6,916	)		(8,572	)	Capital expenditures	(11,798)		(6,916)
Cash flow used in investing activities		(7,281	)		(59,170	)
Additions to real estate under development							Additions to real estate under development	(8,040)		—
Proceeds from insurance claims							Proceeds from insurance claims	9,870		—
Cash flow provided by (used in) investing activities							Cash flow provided by (used in) investing activities	127,066		(7,281)
Cash flows from financing activities:							Cash flows from financing activities:
Proceeds (costs) from issuance of common stock							Proceeds (costs) from issuance of common stock	(844)		(59)
Proceeds from unsecured credit facility and term loans		9,500			65,501		Proceeds from unsecured credit facility and term loans	16,500		9,500
Unsecured credit facility repayments							Unsecured credit facility repayments	(176,000)		—
Mortgage principal repayments		(7,918	)		(1,843	)	Mortgage principal repayments	(1,864)		(7,918)
Payments for deferred financing costs		—			(50	)	Payments for deferred financing costs	(49)		—
Proceeds from issuance of common stock, net		(59	)		49,764
Distributions on common stock		(12,450	)		(16,493	)	Distributions on common stock	(16,916)		(12,450)
Distributions to noncontrolling interests		(81	)		(160	)	Distributions to noncontrolling interests	(201)		(81)

Repurchase of shares related to equity award tax withholding		(2,862	)		(1,490	)	Repurchase of shares related to equity award tax withholding	(3,183)		(2,862)
Cash flow (used in) provided by financing activities		(13,870	)		95,229
Cash flow used in financing activities							Cash flow used in financing activities	(182,557)		(13,870)
Net change in cash and cash equivalents, and restricted cash		(513	)		47,743		Net change in cash and cash equivalents, and restricted cash	(14,911)		(513)
Cash and cash equivalents, and restricted cash, beginning of period		13,615			14,433		Cash and cash equivalents, and restricted cash, beginning of period	65,671		13,615
Cash and cash equivalents, and restricted cash, end of the period	$	13,102		$	62,176		Cash and cash equivalents, and restricted cash, end of the period	$	50,760	$	13,102
Reconciliation of cash, cash equivalents, and restricted cash to the Consolidated Balance Sheet							Reconciliation of cash, cash equivalents, and restricted cash to the Consolidated Balance Sheet
Cash and cash equivalents	$	8,653		$	57,436		Cash and cash equivalents	$	23,971	$	8,653
Restricted cash		4,449			4,740		Restricted cash	26,789		4,449
Total cash, cash equivalents, and restricted cash, end of period	$	13,102		$	62,176		Total cash, cash equivalents, and restricted cash, end of period	$	50,760	$	13,102

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~~

March 31, ~~2021~~

2022

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

NOTE 1: Organization

Independence Realty Trust, Inc. (“IRT”), is a self-administered and self-managed Maryland real estate investment trust (“REIT”) which was formed on March 26, 2009. Our primary purposes are to acquire, own, operate, improve and manage multifamily apartment communities in non-gateway markets. As of March 31, ~~2021,~~2022, we owned and operated 56119 multifamily apartment properties that contain ~~15,667~~35,498 units across non-gateway ~~U.S~~U.S. markets including Atlanta, Columbus,

Dallas, Denver, Houston, Indianapolis, Louisville, Memphis, Oklahoma City, and Raleigh. We own all of our assets and conduct substantially all of our operations through Independence Realty Operating Partnership, LP (“IROP”), of which we are the sole general partner. As of March 31, 2021, IRT owned 99.3% interest in IROP. The remaining 0.7% consists of common units of limited partnership interest issued to third parties in exchange for contributions of properties to IROP.

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

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

NOTE 2: Summary of Significant Accounting Policies

a. Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared by management in accordance with generally accepted accounting principles in the United States (“GAAP”). Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe that the included disclosures are adequate to make the information presented not misleading. The unaudited interim consolidated financial statements should be read in conjunction with our audited financial statements as of and for the year ended December 31, ~~2020~~2021 included in our ~~2020~~2021 Annual Report on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position and consolidated results of operations and cash flows are included. The results of operations for the interim periods presented are not necessarily indicative of the results for the full year.

b. Principles of Consolidation

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

c. Use of Estimates

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

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

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Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

March 31, 2022

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

Insurance Corporation deposit insurance limit of $250 per institution. We mitigate credit risk by placing cash and cash equivalents with major financial institutions. To date, we have not experienced any losses on cash and cash equivalents.

e. Restricted Cash

Restricted cash includes escrows of our funds ~~in escrow~~ 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 March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had ~~$4,449~~$26,789 and ~~$4,864,~~$29,699, respectively, of restricted cash.

f. Investments in Real Estate

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

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

Allocation of Purchase Price of Acquired Assets

~~The~~

In accordance with FASB ASC Topic 805, the properties we acquire are generally accounted for as asset acquisitions. Under asset acquisition accounting, the costs to acquire real estate, including transaction costs related to the acquisition, are accumulated and then allocated to the individual assets and liabilities acquired based upon their relative fair value. T~~ransaction~~Transaction costs and fees incurred related to the financing of an acquisition are capitalized and amortized over the life of the related financing.

We estimate the fair value of acquired tangible assets (consisting of land, building and improvements), 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.

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. The value assigned to in-place lease assets is amortized over the assumed lease up period, typically six months. During the three months ended March 31, ~~2021,~~2022, we did not acquire any in-place leases. For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, we recorded ~~$396~~$29,082 and ~~$371,~~$396, respectively, of amortization expense for intangible ~~assets.~~assets acquired in the STAR Merger. For the three months ended March 31, 2022 and 2021, ~~and 2020,~~ we ~~wrote-off~~did not write-off any fully amortized intangible ~~assets of $0 and $447, respectively.~~assets. As of March 31, ~~2021,~~2022, we expect to record additional amortization expense on current in-place intangible assets of ~~$396~~$24,187 for the remainder of ~~2021.~~

2022.

Business Combinations

For properties we acquire or transactions we entered into that are accounted for as business combinations, we apply the acquisition method of accounting under ASC 805, which requires the identification of the acquiror, the determination date, and the recognition and measurement, at fair value, of the assets acquired and liabilities assumed. To the extent that the fair value of net assets acquired differs from the fair value of consideration paid, ASC 805 requires the recognition of goodwill or a gain from a bargain purchase price, if any. For the three months ended March 31, 2022, we incurred merger and integration costs of $1,895. These amounts were expensed as incurred, and are included in the consolidated statements of operations in the item titled "Merger and integration costs", and primarily consist of advisory fees, employee severance costs, and attorneys fees.

Impairment of Long-Lived Assets

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

Management reviews our long-lived assets on an ongoing basis and evaluates the recoverability of the carrying value when there is an indicator of impairment. An impairment charge is recorded when it is determined that the carrying

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Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

March 31, 2022

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

value of the asset exceeds the fair value. The estimated cash flows used for the impairment analysis and the determination of estimated fair value are based on our plans for the respective assets and our views of market and economic conditions. The estimates consider matters such as current and historical rental rates, occupancies for the respective and/or comparable properties, and recent sales data for comparable properties. Changes in estimated future cash flows due to changes in our plans or views of market and economic conditions could result in recognition of impairment losses, which, under the applicable accounting guidance, could be substantial.

Depreciation Expense

Depreciation expense for real estate assets is computed using a straight-line method based on a life of 40 years for buildings and improvements and five to ten years for ~~equipment~~furniture, fixtures, and ~~fixtures.~~equipment. For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, we recorded ~~$16,156~~$49,092 and ~~$14,457~~$16,156 of depreciation expense, respectively. For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, we wrote-off fully depreciated fixed assets of $1,160 and $1,506, ~~and $0,~~ respectively.

Casualty ~~Loss~~

Related Costs

Occasionally, we incur losses at our communities from wind storms, floods, fires and similar hazards. ASometimes, 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 other income when the proceeds are received. During the three months ended March 31, 2022 and 2021, we recorded $1,393 of net casualty gains and incurred $359 of casualty losses, respectively.

g. Investments in Real Estate Under Development

We capitalize direct and indirect project costs incurred during the development period such as construction, insurance, architectural, legal, interest costs, and real estate taxes. At such time as the development is considered substantially complete, the capitalization of certain indirect costs such as real estate taxes, interest costs, and all project-related costs in real estate under development are reclassified to investments in real estate.

As of March 31, 2022 and December 31, 2021, the carrying value of our investments in real estate under development totaled $48,959 and $41,777, respectively, and was recorded as a separate line item on the face of our consolidated balance sheet.

h. Investments in Unconsolidated Real Estate Entities

We invest in joint ventures in which we exercise significant influence but do not control the major decisions of the joint venture. Therefore, we account for these investments using the equity method of accounting. Under the equity method of accounting, the investments are carried at cost plus our share of net earnings or losses.

As of March 31, 2022 and December 31, 2021, the carrying value of our investments in joint ventures totaled $43,541 and $24,999, respectively, and were recorded as a separate line item on the face of our consolidated balance sheet. We recognized losses of $63 and $0 from equity method investments during the three months ended March 31, 2022 and 2021, respectively, and these losses were recorded in other income (expense), net on the face of our consolidated statements of operations. For more information on our investments in unconsolidated real estate entities, see Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations – Current Developments – Capital Recycling."

g.i. Revenue and Expenses

Rental and ~~other property revenue~~

Other Property Revenue

We apply FASB ASC Topic 842, “Leases” with respect to our accounting for rental income. We primarily lease 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. We have elected to account for lease (i.e. fixed payments including base rent) and 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.

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Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

March 31, 2022

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

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 for the amount of uncollectible revenue.

Due to the COVID-19 pandemic, some of our residents have experienced difficulty making rent payments and, as a result, our rent receivables have increased compared to historical levels. This caused us to further evaluate collectability and we recorded a $47 provision for bad debts during the three months ended March 31, 2021 to appropriately reflect management’s estimate for uncollectible accounts. The provision for bad debts was recorded as a reduction to rental and other property income in our consolidated statements of operations. ~~The total adjustment to rental and other property income for the three months ended March 31, 2021 and 2020 were $433 and $337, respectively.~~

To support our residents that were economically impacted and unable to pay their rent in full during 2020, we offered residents deferred rent payment plans whereby the resident could defer between 25% and 75% of their monthly rent for between one and three months. Residents were required to provide evidence of financial hardship and commit to a full 12-month lease term, which provided a longer period over which the deferred rent could be repaid. We accounted for the deferred payment plans as if no change had been made to the original lease agreement and continued to recognize rental income while increasing lease receivables from residents. As of March 31, 2021, deferred rents receivable from residents totaled $41.

Advertising Expenses

For the three months ended March 31, ~~2021~~2022 and ~~2020, we recognized gains of $23 and $3, respectively, related to recoveries of lost rental revenue due to natural disasters and other insurable events from our insurance providers.~~

~~Advertising Expenses~~

~~For the three months ended March 31,~~ 2021, ~~and 2020,~~ we incurred ~~$544~~$1,272 and ~~$608~~$544 of advertising expenses, respectively.

j. Derivative Instruments

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

In accordance with FASB ASC Topic 815, “Derivatives and Hedging”, we measure each derivative instrument at fair value and record such amounts in our consolidated balance sheets as either an asset or liability. For derivatives designated as cash flow hedges, the changes in the fair value of the effective portions of the derivative are reported in other comprehensive income and changes in the fair value of the ineffective portions of cash flow hedges, if any, are recognized in earnings. For derivatives not designated as hedges (or designated as fair value hedges), 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.

i.k. Fair Value of Financial Instruments

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

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

•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 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.

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

~~Fair value is a market-based measure considered from the perspective of a market participant who holds~~ the asset or ~~owes~~liability. In certain cases, the ~~liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, our own assumptions are set~~inputs used to ~~reflect those~~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

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Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

March 31, 2022

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

level input that ~~management believes market participants would use~~is significant to the fair value measurement in ~~pricing~~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 at the measurement date. We use prices and inputs that management believes are current as of the measurement date, including during periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition could cause an instrument to be transferred from Level 1 to Level 2 or Level 2 to Level 3.

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

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 our unsecured credit facility and term loans are classified as Level 2 fair value measurements within the fair value hierarchy. The fair value of mortgage indebtedness is based on a discounted cash flows valuation technique. As this technique utilizes current credit spreads, which are generally unobservable, this is classified as a Level 3 fair value measurement within the fair value hierarchy. We determine appropriate credit spreads based on the type of debt and its maturity. There were 0no transfers between levels in the fair value hierarchy for the three months ended March 31, ~~2021.~~2022. The following table summarizes the carrying amount and the fair value of our financial instruments as of the periods indicated:


	As of March 31, 2021				As of December 31, 2020					As of March 31, 2022				As of December 31, 2021
Financial Instrument	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value		Financial Instrument	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets									Assets
Cash and cash equivalents	$	8,653	$	8,653	$	8,751	$	8,751	Cash and cash equivalents	$	23,971	$	23,971	$	35,972	$	35,972
Restricted cash		4,449		4,449		4,864		4,864	Restricted cash	26,789		26,789		29,699		29,699
Derivative assets		2,810		2,810		-		-	Derivative assets	12,944		12,944		2,488		2,488

Liabilities									Liabilities
Debt:									Debt:
Unsecured credit facility		192,782		194,302		183,110		184,802	Unsecured credit facility	114,733		114,479		274,109		274,109
Term loans		298,846		300,000		298,759		300,000
Mortgages		456,003		470,234		463,817		479,929
Unsecured term loans									Unsecured term loans	498,103		498,513		497,951		497,951
Secured credit facilities									Secured credit facilities	663,646		631,435		664,618		668,352
Mortgages(1)									Mortgages(1)	1,265,606		1,213,026		1,268,658		1,282,495
Derivative liabilities		19,540		19,540		29,842		29,842	Derivative liabilities	128		128		11,896		11,896


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

l. Deferred Financing Costs

Costs incurred in connection with debt financing are deferred and classified within indebtedness and charged to interest expense over the terms of the related debt agreements, under the effective interest method.

m. Office Leases

In accordance with FASB ASC Topic 842, “Leases”, lessees are required to recognize a right-of-use asset and a lease liability on the balance sheet at the lease commencement date for all leases, except those leases with terms of less than a 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 March 31, ~~2021,~~2022, we have ~~$2,553~~$2,808 of operating lease right-of-use assets and ~~$2,903~~$3,139 of operating lease liabilities related to our corporate office leases. The operating lease right-of-use assets are presented within other assets and the operating lease liabilities are presented within other liabilities in our consolidated balance sheet. We recorded ~~$172~~$461 of total operating lease expense during the three months ended March 31, ~~2021,~~2022, which is recorded within property management expense and general and administrative expenses in our condensed consolidated statements of operations.

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Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

March 31, 2022

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

n. Income Taxes

We have elected to be taxed as a REIT. Accordingly, we recorded 0no income tax expense for the three months ended March 31, ~~2021~~2022 and ~~2020.~~

2021.

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

o. R

~~m. Recent Accounting Pronouncements~~

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

~~Adopted Within these Financial Statements~~

In March 2020, the FASB issued an accounting standard classified under FASB ASC Topic 848, “Reference Rate Reform.” The amendments in this update contain practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASC 848 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, we have 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 of the guidance and may apply other elections as applicable as additional changes in the market occur.

NOTE 3: Investments in Real Estate

As of March 31, ~~2021,~~2022, our investments in real estate consisted of 56119 apartment properties that contain ~~15,667~~35,498 units. The following table summarizes our investments in real estate:


	As of March 31, 2021			As of December 31, 2020			Depreciable Lives (In years)			As of March 31, 2022		As of December 31, 2021		Depreciable Lives (In years)
Land	$	251,425		$	251,365			—	Land	$	557,926	$	567,507	—
Building		1,527,535			1,527,535			40	Building	5,550,022		5,622,492		40
Furniture, fixtures and equipment		143,111			137,870		5-10		Furniture, fixtures and equipment	274,376		272,356		5-10
Total investment in real estate	$	1,922,071		$	1,916,770				Total investment in real estate	$	6,382,324	$	6,462,355
Accumulated depreciation		(223,187	)		(208,618	)			Accumulated depreciation	(283,666)		(243,475)
Investments in real estate, net	$	1,698,884		$	1,708,152				Investments in real estate, net	$	6,098,658	$	6,218,880

As of March 31, 2022, we owned 2 properties that were classified as held for sale. We expect the sale of these properties to close in the second half of 2022. The table below summarizes our held for sale properties.


Property Name	Net Carrying Value		Units (unaudited)
Meadows Apartments - Louisville, KY	$	35,594	400
Sycamore Terrace - Terra Haute, IN	45,398		250
Total	$	80,992	650

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Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

March 31, 2022

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

Acquisitions

On April 6, 2022, we acquired Views of Music City (phase I), a 96-unit property located in Nashville, TN for $25,440. We purchased this property from one of our unconsolidated joint ventures. See Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations – Current Developments – Capital Recycling."

Dispositions

The following table summarizes our dispositions for the three months ended March 31, 2022:


Property Name	Date of Sale	Sale Price		Gain on sale
Riverchase	01/18/2022	$	31,000	$	12,901
Heritage Park	02/02/2022	48,500		31,366
Raindance	02/02/2022	47,500		33,748
Haverford	02/02/2022	31,050		16,697
Total		$	158,050	$	94,712

NOTE 4: Indebtedness

The following tables contain summary information concerning our indebtedness as of March 31, ~~2021:~~

2022:

Debt:

Outstanding Principal

Unamortized Debt Issuance Costs

Carrying Amount

Type

Weighted Average Rate

Weighted Average Maturity (in years)

Unsecured credit facility (1)

$
194,302

$
(1,520
)

$
192,782

Floating

1.6%

2.1

Unsecured term loans

300,000

(1,154
)

298,846

Floating

1.5%

3.1

Mortgages

457,173

(1,170
)

456,003

Fixed

3.8%

3.0

Total Debt

$
951,475

$
(3,844
)

$
947,631

2.6%

2.8


Debt:	Outstanding Principal		Unamortized Debt Issuance Costs		Unamortized Loan (Discount)/Premiums		Carrying Amount		Type	Weighted Average Rate	Weighted Average Maturity (in years)
Unsecured revolver(1)	$	117,503	$	(2,770)	$	—	$	114,733	Floating	1.7%	3.8
Unsecured term loans	500,000		(1,897)		—		498,103		Floating	1.6%	2.9
Secured credit facilities	635,128		(2,660)		31,178		663,646		Floating/Fixed	4.0%	6.7
Mortgages(2)	1,236,748		(8,796)		37,654		1,265,606		Fixed	3.9%	5.9
Total Debt	$	2,489,379	$	(16,123)	$	68,832	$	2,542,088		3.4%	5.4


(1)			The unsecured ~~credit facility total~~revolver's maximum borrowing capacity is ~~$350,000,~~$500,000, of which ~~$194,302~~$117,503 was outstanding as of March 31, ~~2021.~~ 2022.
(2)			Includes indebtedness associated with real estate held for sale.

The following table contains summary information concerning our indebtedness as of March ~~1, 2021, we drew down on~~31, 2022:


	Scheduled maturities on our indebtedness outstanding as of March 31, 2022
Debt:	2022		2023		2024		2025		2026		Thereafter
Unsecured revolver	$	—	$	—	$	—	$	—	$	117,503	$	—
Unsecured term loans	—		—		300,000		—		200,000		—
Secured credit facilities	—		—		—		3,525		10,493		621,110
Mortgages(1)	7,879		10,998		107,848		168,767		131,417		809,839
Total	$	7,879	$	10,998	$	407,848	$	172,292	$	459,413	$	1,430,949


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

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Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

March 31, 2022

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

The following table contains summary information concerning our ~~unsecured credit facility to extinguish a property mortgage totaling $5,975. The property mortgage had a weighted-average rate~~indebtedness as of ~~5.7%.~~

On April 5, 2021, we drew down on our unsecured credit facility to extinguish a property mortgage and made partial paydowns on other mortgages totaling $13,666. The property mortgages had a weighted-average rate of 4.2%.

December 31, 2021:


Debt:	Outstanding Principal		Unamortized Debt Issuance Costs		Unamortized Loan (Discount)/Premiums		Carrying Amount		Type	Weighted Average Rate	Weighted Average Maturity (in years)
Unsecured revolver(1)	$	277,003	$	(2,894)	$	—	$	274,109	Floating	1.5%	4.1
Unsecured term loans	500,000		(2,049)		—		497,951		Floating	1.4%	3.2
Secured credit facilities	635,128		(2,840)		32,330		664,618		Floating/Fixed	4.0%	6.9
Mortgages	1,238,612		(9,210)		39,256		1,268,658		Fixed	3.9%	6.2
Total Debt	$	2,650,743	$	(16,993)	$	71,586	$	2,705,336		3.2%	5.6


(1)			The unsecured revolver's maximum borrowing capacity was $500,000, of which $277,003 was outstanding as of December 31, 2021.

As of March 31, ~~2021,~~2022, we were in compliance with all financial covenants contained in the documents governing our indebtedness.

Scheduled maturities on or before March 31,

Debt:

2021

2022

2023

2024

2025

Thereafter

     Unsecured credit facility

$
—

$
—

$
194,302

$
—

$
—

$
—

     Unsecured term loans

—

—

—

300,000

—

—

     Mortgages

42,489

66,311

107,056

36,798

161,741

42,778

Total

$
42,489

$
66,311

$
301,358

$
336,798

$
161,741

$
42,778

~~The following table contains summary information concerning our indebtedness as of December 31, 2020:~~

Debt:

Outstanding Principal

Unamortized Debt Issuance Costs

Carrying Amount

Type

Weighted
Average Rate

Weighted
Average
Maturity
(in years)

Unsecured credit facility (1)

$
184,802

$
(1,692
)

$
183,110

Floating

1.6%

2.4

Unsecured term loans

300,000

(1,241
)

298,759

Floating

1.5%

3.3

Mortgages

465,092

(1,275
)

463,817

Fixed

3.9%

3.2

Total Debt

$
949,894

$
(4,208
)

$
945,686

2.7%

3.1

~~(1)~~

~~The unsecured credit facility total capacity was $350,000, of which $184,802 was outstanding as of December 31, 2020.~~

NOTE 5: Derivative Financial Instruments

The following table summarizes the aggregate notional amounts and estimated net fair values of our derivative instruments as of March 31, ~~2021~~2022 and December 31, ~~2020:~~

2021:


	As of March 31, 2021						As of December 31, 2020							As of March 31, 2022					As of December 31, 2021
	Notional		Fair Value of Assets		Fair Value of Liabilities		Notional		Fair Value of Assets		Fair Value of Liabilities			Notional		Fair Value of Assets		Fair Value of Liabilities	Notional		Fair Value of Assets		Fair Value of Liabilities
Cash flow hedges:													Cash flow hedges:
Interest rate swap	$	150,000	$	—		326	$	150,000	$	—	$	694	Interest rate swap	$	150,000	$	—	—	$	150,000	$	—	$	6,463
Interest rate collars		250,000		—		10,570		250,000		—		13,331	Interest rate collars	250,000		—		128	250,000		—		5,433
Forward interest rate swaps		—		2,810		8,644		—		—		15,817	Forward interest rate swaps	—		12,944		—	—		2,488		—
Total	$	400,000	$	2,810		19,540	$	400,000	$	—	$	29,842	Total	$	400,000	$	12,944	128	$	400,000	$	2,488	$	11,896

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

liabilities on the face of our consolidated balance sheet.

For our interest rate swap and collars that are considered highly effective hedges, we reclassified realized ~~gains~~losses of ~~$1,458~~$1,805 to earnings within interest expense for the three months ended March 31, ~~2021,~~2022, and we expect ~~($8,294)~~$1,295 to be reclassified out of accumulated other comprehensive income ~~(loss) into~~to earnings over the next 12 months.

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Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

March 31, 2022

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

NOTE 6: Stockholders’ Equity and Noncontrolling Interests

Stockholders’ Equity

On March ~~15, 2021,~~14, 2022, our board of directors declared a dividend of $0.12 per share on our common stock, which was paid on April ~~23, 2021~~22, 2022 to common stockholders of record as of April ~~2, 2021.~~

~~During the three months ended March 31, 2021, we also paid $274 of dividends on restricted common share awards that vested during the period.~~

1, 2022.

On November 13, 2020, we entered into an equity distribution agreement pursuant to which we may from time to time offer and sell shares of our common stock having an aggregate offering price of up to $150,000 (the “ATM Program”) in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended. Under the ATM Program, we may also enter into one or more forward sale transactions for the sale of shares of our common stock on a forward basis. We entered into forward sale transactions under the ATM Program on November 1, 2021 and on March 7, 2022 each for the forward sale of 1,000,000 shares of our common stock. Neither of the forward sale transactions has settled as of March 31, 2022. Subject to our right to elect net share settlement, we expect to physically settle the forward sale transactions by their respective maturity dates of December 15, 2022 and March 31, 2023. As of March 31, 2022, approximately $56,836 remained available for issuance under the ATM Program.

The following table summarizes our unsettled sales transactions under the ATM Program ~~activity, including associated forward sale transactions, since inception.~~

as of March 31, 2022.

During the three months ended

Number of Shares Sold

Current forward price

Net proceeds

Expiration Date of Forward Contract
December 31, 2020

900

$
13.53

$
12,177

December 13, 2021
March 31, 2021

2,000

14.50

29,000

March 31, 2022
Total

2,900

$
14.20

$
41,177


During the Three Months Ended	Number of Shares Sold	Current Forward Price		Estimated Net Proceeds		Expiration Date of Forward Contract
December 31, 2021	676,500	$	23.59	$	15,956	December 15, 2022
December 31, 2021	323,500	24.19		7,827		December 15, 2022
March 31, 2022	1,000,000	26.45		26,455		March 31, 2023
Total	2,000,000			$	50,238

We evaluated the accounting for the forward sale transactions under FASB ASC Topic 480 “Distinguishing Liabilities from Equity” and FASB ASC Topic 815 “Derivatives and Hedging”. As the forward sale transactions are considered indexed to our own equity and since they meet the equity classification conditions in ASC 815-40-25, the forward sale transactions have been classified as equity.

Noncontrolling Interest

During the three months ended March 31, ~~2021, 0~~2022, holders of IROP ~~unitholders~~units exchanged ~~any~~10,848 units for 10,848 shares of our common ~~stock or cash. Subsequent to the three months ended~~stock. As of March 31, ~~2021,~~2022, 6,970,993 IROP ~~unit holders exchanged 110,938~~ units ~~for 110,938 shares of our common stock.~~

held by unaffiliated third parties remain outstanding.

On March ~~15, 2021,~~14, 2022, our board of directors declared a dividend of $0.12 per unit, which was paid on April ~~23, 2021~~22, 2022 to IROP LP ~~unitholders~~unit holders of record as of April ~~2, 2021.~~

1, 2022.

NOTE 7: Equity Compensation Plans

Long Term Incentive Plan

In May 2016, our ~~stockholders~~shareholders approved and our board of directors adopted an amended and restated Long Term Incentive Plan (the “Incentive Plan”), which provides for the grants of awards to our ~~directors,~~ employees, officers, ~~and consultants.~~directors, trustees, consultants or advisors (and those of our affiliates). The Incentive Plan authorizes the grant of ~~time-vested~~ restricted or unrestricted shares of our common stock, performance-based restricted share units (“PSUs”), non-qualified and incentive stock options, restricted stock units (“RSUs”), stock appreciation rights (“SARs”), dividend equivalents and other stock- or cash-based awards. In conjunction with the amendment, the number of shares of common stock issuable under the Incentive Plan was increased to 4,300,000 shares and the term of the incentive plan was extended to May 12, 2026.

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Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

March 31, 2022

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

Under the Incentive Plan, we have granted restricted shares, RSUs, and PSUs to our employees. These awards generally vest or vested over a ~~two- to~~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 common share award and RSU activity is presented below.


	2021						2022
	Number of Shares			Weighted Average Grant Date Fair Value Per Share			Number of Shares	Weighted Average Grant Date Fair Value Per Share
Balance, January 1,		406,849		$	11.68	Balance, January 1,	404,988	$	13.75
Granted		171,059			14.01	Granted	199,008	23.80
Vested		(165,632	)		11.21	Vested	(167,845)	12.26
Forfeited		(9,614	)		12.33	Forfeited	(11,264)	15.25
Balance, March 31, (1)		402,662		$	12.84	Balance, March 31, (1)	424,887	$	19.00


(1)			The outstanding award ~~balance~~balances above ~~included 135,366~~include 163,348 and 67,381 RSUs as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

On February ~~18, 2021,~~8, 2022, our compensation committee awarded ~~254,493~~198,099 PSUs to our ~~named~~ executive officers. The number of PSUs earned will be based on attainment of certain performance criteria over a three-year period, with the actual number of shares issuable ranging between 00% and 150% of the number of PSUs granted. Half of any PSUs earned will vest, and shares will be issued in respect thereof, immediately following the 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 additional one-year period of service.

As of December 31, 2021, 2019 PSU awards were earned at 150% of target. These units constitute 50% of the earned 2019 PSUs, which generally remain subject to service-based vesting until December 31, 2022. The other 50% of the earned 2019 PSUs were distributable immediately following the end of the performance period.

During the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, 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 $2,422 and $2,112, ~~and $1,667,~~ respectively.

NOTE 8: Earnings Per Share

The following table presents a reconciliation of basic and diluted earnings (loss) per share for the three months ended March 31, ~~2021~~2022 and ~~2020:~~

2021:

	For the Three Months Ended March 31,
	2021			2020				For the Three Months Ended
Net income (loss)	$	1,093		$	(374	)
(Income) loss allocated to noncontrolling interest		(7	)		2
Net income (loss) allocable to common shares		1,086			(372	)
								March 31,
								2022		2021
Net income							Net income	$	76,880	$	1,093
Income allocated to noncontrolling interest							Income allocated to noncontrolling interest	(2,280)		(7)
Net income allocable to common shares							Net income allocable to common shares	$	74,600	$	1,086
Weighted-average shares outstanding—Basic		101,678,865			90,895,488		Weighted-average shares outstanding—Basic	220,798,692		101,678,865
Weighted-average shares outstanding—Diluted		102,763,106			90,895,488		Weighted-average shares outstanding—Diluted	222,045,286		102,763,106
Earnings per share—Basic	$	0.01		$ 0.00			Earnings per share—Basic	$	0.34	$	0.01
Earnings per share—Diluted	$	0.01		$ 0.00			Earnings per share—Diluted	$	0.34	$	0.01

Certain IROP units, restricted stock awards, ~~RSUs, PSUs,~~ and forward sale agreements were excluded from the earnings (loss) per share computation because their effect would have been anti-dilutive, totaling ~~3,574,515~~8,994,165 and ~~9,009,167~~3,574,515 for the three months ended March 31, 2022 and 2021, respectively.

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Independence Realty Trust, Inc. and ~~2020, respectively.~~ Subsidiaries

Notes to Condensed Consolidated Financial Statements

March 31, 2022

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

NOTE 9: Other Disclosures

~~Risks and Uncertainties~~

Currently, one of the most significant risks and uncertainties is the duration and scope of the ongoing COVID-19 pandemic, which has disrupted businesses and slowed economic activity. In response to the COVID-19 pandemic, we have made operational and policy changes to: (1) comply with governmental mandates, including eviction moratoria, on a jurisdiction by jurisdiction basis; (2) protect our employees, residents, and prospective residents; and (3) minimize the adverse financial impact to us. The extent to which the COVID-19 pandemic impacts our business, operations and financial results will depend on numerous evolving factors, many of which are not within management’s control, and that we are unable to predict at this time, including but not limited to: (1) the duration and scope of the pandemic; (2) the pandemic’s impact on current and future economic activity; and (3) the actions of governments, businesses and individuals in response to the COVID-19 pandemic.

Litigation

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

Loss Contingencies

We record an accrual for loss contingencies when a loss is probable and the 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 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 range of loss, if such reasonable estimate can be made. If we cannot make a reasonable estimate of the possible loss, or range of loss, then a statement to that effect is disclosed.

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~~Item 2.~~

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

Forward-Looking Statements

The Securities and Exchange Commission (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, and Section 21E of the Securities Exchange Act of 1934, as 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.

We claim the protection of the safe harbor for forward-looking statements provided in the Private Securities Litigation Reform Act of 1995. These statements may be made directly in this report and they may also be incorporated by reference in this report to other documents filed with the SEC, and include, without limitation, statements about future financial and operating results and performance, statements about our plans, objectives, expectations and intentions with respect to future operations, products and services, and other statements that are not historical facts. These forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the anticipated results discussed in these forward-looking statements.

The risk factors discussed and identified in Item 1A of our ~~2020~~2021 Annual Report on Form 10-K and in Part II, Item 1A of this Quarterly Report, and in other of our public filings with the SEC, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements. We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated ~~events.~~

events

Overview

Our Company

We are a self-administered and self-managed Maryland real estate investment trust (“REIT”), that acquires, owns, operates, improves and manages multifamily apartment communities across non-gateway U.S. markets. As of March 31, ~~2021,~~2022, we owned and operated 56119 multifamily apartment properties that contain ~~15,667~~35,498 units. Our properties are located in Alabama, Colorado, Florida, Georgia, Illinois, Indiana, Kentucky, North Carolina, ~~Tennessee, Kentucky,~~ Ohio, Oklahoma, ~~Indiana, Texas, Florida,~~ South Carolina, ~~Missouri,~~Tennessee, Texas, and ~~Alabama.~~Virginia. In addition, as of March 31, 2022, we owned interests in three unconsolidated joint ventures that are developing multifamily apartment communities that will contain, in aggregate, 1,306 units upon completion. We do not have any foreign operations and our business is not seasonal. Our executive offices are located at 1835 Market Street, Suite 2601, Philadelphia, Pennsylvania 19103 and our telephone number is (267) 270-4800. We have offices in Philadelphia, Pennsylvania and Chicago, Illinois.

Our Business Objective and Investment Strategies

Our primary business objective is to maximize stockholder value through diligent portfolio management, strong operational performance, and a consistent return of capital through distributions and capital appreciation. 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 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•

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 experience substantial new apartment construction in the foreseeable future;

•acquiring additional properties that have strong and stable occupancies and support a rise in rental rates or that have the potential for repositioning through capital expenditures or tailored management strategies.•

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

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acquiring additional properties that have strong and stable occupancies and support a rise in rental rates or that have the potential for repositioning through capital expenditures or tailored management strategies.

Property Portfolio

As of March 31, ~~2021,~~2022, we owned 56119 multifamily apartment properties, totaling ~~15,667~~35,498 units. Below is a summary of our property portfolio by market.


(Dollars in thousands, except per unit data)	As of March 31, 2021									For the Three Months Ended March 31, 2021							(Dollars in thousands, except per unit data)	As of March 31, 2022						For the Three Months Ended March 31,
Market	Number of Properties		Units		Gross Real Estate Assets		Period End Occupancy			Average Effective Monthly Rent per Unit		Net Operating Income		% of NOI			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		6		2,020	$	262,107		96.2	%	$	1,243	$	5,083		14.9	%	Atlanta, GA	13	5,180	$	1,048,599	94.3	%	$	1,459	$	14,650	15.6	%
Dallas, TX																	Dallas, TX	14	4,007	842,070		96.0	%	1,609		11,333		12.1	%
Denver, CO																	Denver, CO	9	2,292	599,241		96.3	%	1,559		7,519		8.0	%
Columbus, OH																	Columbus, OH	10	2,510	359,129		96.0	%	1,236		5,855		6.3	%
Indianapolis, IN																	Indianapolis, IN	8	2,256	320,547		95.6	%	1,192		5,135		5.5	%
Oklahoma City, OK																	Oklahoma City, OK	8	2,147	311,974		95.6	%	1,057		4,631		4.9	%
Raleigh - Durham, NC		6		1,690		246,802		95.9	%		1,207		4,215		12.4	%	Raleigh - Durham, NC	6	1,690	251,966		95.6	%	1,322		4,298		4.6	%
Houston, TX																	Houston, TX	7	1,932	320,307		95.1	%	1,337		4,166		4.4	%
Nashville, TN																	Nashville, TN	4	1,412	337,784		96.0	%	1,456		4,157		4.4	%
Memphis, TN		4		1,383		149,703		97.3	%		1,207		3,315		9.7	%	Memphis, TN	4	1,383	155,310		94.1	%	1,372		3,651		3.9	%
Louisville, KY		6		1,710		202,289		92.7	%		1,020		3,144		9.2	%	Louisville, KY	5	1,550	191,543		94.5	%	1,102		3,145		3.4	%
Columbus, OH		6		1,547		157,729		95.0	%		1,082		2,812		8.3	%
Tampa-St. Petersburg, FL		4		1,104		182,026		92.9	%		1,308		2,492		7.3	%	Tampa-St. Petersburg, FL	4	1,104	188,646		94.8	%	1,539		3,107		3.3	%
Dallas, TX		4		985		140,505		95.3	%		1,316		2,143		6.3	%
Oklahoma City, OK		5		1,658		79,516		96.9	%		703		2,098		6.2	%
Birmingham, AL																	Birmingham, AL	2	1,074	231,035		94.9	%	1,338		2,965		3.2	%
Huntsville, AL		2		599		33,657		98.0	%		1,275		1,855		5.5	%	Huntsville, AL	3	873	189,757		94.6	%	1,442		2,665		2.8	%
Indianapolis, IN		4		916		110,057		97.2	%		1,070		1,788		5.3	%
Lexington, KY																	Lexington, KY	3	886	159,099		96.4	%	1,164		2,170		2.3	%
Cincinnati, OH																	Cincinnati, OH	2	542	121,391		96.0	%	1,370		1,603		1.7	%
Myrtle Beach, SC - Wilmington, NC		3		628		91,977		94.6	%		1,058		1,343		3.9	%	Myrtle Beach, SC - Wilmington, NC	3	628	66,381		95.5	%	1,184		1,577		1.7	%
Charlotte, NC																	Charlotte, NC	2	480	109,233		95.2	%	1,530		1,544		1.6	%
Greenville, SC																	Greenville, SC	1	702	122,606		97.2	%	1,129		1,491		1.6	%
Charleston, SC		2		518		64,953		95.0	%		1,320		1,210		3.6	%	Charleston, SC	2	518	80,793		96.3	%	1,418		1,342		1.4	%
Chicago, IL																	Chicago, IL	1	374	89,785		95.2	%	1,649		1,107		1.2	%
Orlando, FL		1		297		80,246		95.6	%		1,438		756		2.2	%	Orlando, FL	1	297	49,972		97.3	%	1,539		810		0.9	%
Charlotte, NC		1		208		49,194		95.7	%		1,519		708		2.1	%
San Antonio, TX																	San Antonio, TX	1	306	56,955		95.8	%	1,455		828		0.9	%
Terra Haute, IN																	Terra Haute, IN	1	250	45,795		90.0	%	1,390		659		0.7	%
Norfolk, VA																	Norfolk, VA	1	183	53,876		96.2	%	1,728		670		0.7	%
Asheville, NC		1		252		42,325		96.8	%		1,148		625		1.8	%	Asheville, NC	1	252	29,123		97.2	%	1,274		705		0.8	%
St. Louis, MO		1		152		28,985		97.4	%		1,467		443		1.3	%
Austin, TX																	Austin, TX	1	256	54,374		97.6	%	1,569		733		0.8	%
Fort Wayne, IN																	Fort Wayne, IN	1	222	43,920		95.5	%	1,316		613		0.7	%
Chattanooga, TN																	Chattanooga, TN	1	192	36,772		95.8	%	1,338		495		0.5	%
Total/Weighted Average		56		15,667	$	1,922,071		95.5	%	$	1,142	$	34,030		100.0	%	Total/Weighted Average	119	35,498	$	6,467,983	95.4	%	$	1,374	$	93,624	100.0	%

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Current Developments

STAR Merger

On December 16, 2021, we completed our merger with STAR and STAR OP.Through the STAR Merger, we acquired 68 apartment communities that contained 21,394 units and two apartment communities that are under development and that will contain upon completion 621 units. Leading up to and shortly after the closing of the STAR Merger, we delevered our combined balance sheet through a combination of transactions totaling $600 million including the July 2021 underwritten offering, the disposition of three STAR properties prior to merger closing, and the disposition of two properties in late 2021 and four properties in Q1 2022 as described below.

2022 Property Sales

During the three months ended March 31, 2022, we sold four communities for a gross sales price of $158.0 million and recognized a gain on sale of $94.7 million.

Capital Recycling

Our capital recycling program consists of disposing of assets in markets where we lack scale and/or markets where management believes that growth is slowing.

As of March 31, 2022, we had two properties that were classified as held for sale. We expect the sale of these properties to close in the second half of 2022.

On April 6, 2022, we purchased, for $25.4 million, the Views of Music City (Phase 1), a 96-unit community in Nashville, TN, from one of our unconsolidated joint ventures (discussed below). On account of our equity interest in this joint venture, we received $4.4 million of the sales proceeds, comprised of $3.4 million as a return of capital and $1.0 million as a preferred return on capital.

Investment in Unconsolidated Real Estate Entities

To create another avenue for accretive capital allocation and to increase our options for capital investment, we are exploring preferred equity investments and joint venture relationships, focused on new multifamily development.

In June 2021, our same-store portfolio consisted of 54 multifamily apartment properties, totaling 14,995 units. See “Non-GAAP Financial Measures – Same Store Portfolio Net Operating Income” below for our definition of same store and definitions and reconciliations relatedwe closed on a joint venture to ~~our net operating income and net operating income margin.~~

~~COVID-19 Pandemic~~

~~In 2020,~~develop a 402-unit community in Richmond, VA. We expect the ~~outbreak of COVID-19 disrupted businesses and slowed economic activity. We were and continue~~development to be ~~impacted by~~completed in the COVID-19 pandemic and, in response, made numerous operational and policy changes to: (1) comply with governmental mandates on a jurisdiction by jurisdiction basis; (2) protect our employees, residents, and prospective residents; and (3) minimize the financial impact to us.

In 2021, we continue to manage our business in response to the COVID-19 pandemic by seeking to maintain occupancy levels and by maximizing collections while supporting residents impacted by the COVID-19 pandemic. Our supportfirst half of ~~residents included entering into 278 deferred payment plans, mostly during 2020, under which residents deferred $0.5 million of rent payments.~~2023. As of March 31, 2022, we had fully funded our equity commitment to this project in the amount of $16.8 million.

In September 2021, ~~there were 104 active deferred payment plans remaining with $0.1 million~~we formed a joint venture to acquire and own the Views of ~~deferred rent receivables outstanding.~~

~~Value Add~~

~~Value add initiatives,~~Music City (comprised of Phase 1 and Phase 2) and The Jackson, each a multifamily community in Nashville, TN. As discussed above, on April 6, 2022, we purchased Phase 1 of the Views of Music City (comprised of 96 units), following completion of its development, from the joint venture. We expect Phase 2 of the Views of Music City development (comprised of 209 units) to be completed in the fourth quarter of 2023. We expect development of The Jackson (comprised of 199 units) to be completed by year-end 2022.

On March 31, 2022, we formed a joint venture to acquire and own a project comprised of ~~renovations~~400 single family home rental units in Huntsville, AL. Development of phase one of this project (comprised of 178 homes) was completed in 2021. Upon acquisition of phase one by the joint venture, 85% of the homes were leased. We expect phase two of the project (comprised of 222 homes) to be completed during the second quarter of 2022. We have committed to invest an aggregate $37.1 million in this joint venture, and, ~~upgrades at selected communities to drive increased rental rates, remain a core component of our longer-term growth strategy. As~~as of March 31, ~~2021, we~~2022, had ~~identified 7,076 units across 23 properties for renovations and upgrades as part~~funded $16.4 million on account of ~~our~~this commitment.

Value Add

Our value add ~~initiative. During 2020, we temporarily paused projects~~program provides us with the opportunity to improve long-term growth through targeted unit renovations at ~~1,864~~communities where there is the potential for outsized rent growth.

We completed renovations on 143 units ~~due to~~during the ~~COVID-19 pandemic and expect to resume renovations and upgrades at these properties in 2021. These changes reflect the flexibility~~quarter ended March 31, 2022. From inception of our value add program ~~and allowed us to build occupancy. As of~~in January 2018 through March ~~31, 2021,~~2022, we ~~had incurred an aggregate of $13.0 million in renovation costs at 3,861~~completed renovations on 4,815 of the ~~7,076~~10,445 units, ~~and achieved~~achieving a

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return on ~~our total renovation costs for these units~~investment of ~~16.1%~~18.8% (and approximately ~~18.5%~~22.2% on the interior portion of such renovation costs) an average monthly rental increase of 21.4%. We compute return on cost by using the rent premium per unit per month, multiplied by 12, divided by the applicable renovation costs per unit and we compute the rent premium as the difference between the rental rate on the renovated unit and the market rent for a comparable unrenovated unit as of the date presented, as determined by management consistent with its customary rent-setting and evaluation procedures. We expect to complete the remaining value add projects at the selected communities throughout ~~2021~~2022 and ~~2022.~~

2023.

Capital Markets

Forward Sale Agreements

On November 13, 2020, we entered into an equity distribution agreement pursuant to which we may from time to time offer and sell shares of our common stock having an aggregate offering price of up to ~~$150.0 million~~$150,000 (the “ATM Program”) in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as ~~amended (the “Securities Act”).~~amended. Under the ATM Program, we may also enter into one or more forward sale transactions for the sale of shares of our common stock on a forward basis. ~~The following table summarizes~~For more information on our ~~ATM Program activity, including associated~~ forward sale ~~transactions, since inception.~~

agreements, see Note 6 (Stockholders' Equity and Noncontrolling Interests).

(Dollars in thousands)

During the three months ended

Number of Shares Sold

Current forward price

Net proceeds

Expiration Date of Forward Contract
December 31, 2020

900

$
13.53

$
12,177

December 13, 2021
March 31, 2021

2,000

14.50

29,000

March 31, 2022
Total

2,900

$
14.20

$
41,177

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Results of Operations

As of March 31, 2022, we owned and consolidated 119 multifamily apartment properties, of which 113 comprised the Combined Same-Store Portfolio. We discuss below, under "Non-GAAP Financial Measures," our methodology for categorizing our 119 properties, as applicable, into IRT Same-Store Portfolio (48 properties as of March 31, 2022), STAR Same-Store Portfolio (65 properties as of March 31, 2022) and Combined Same-Store Portfolio (113 properties as of March 31, 2022). Because of substantial changes in our total property portfolio as the result of the STAR Merger that closed on December 16, 2021, the financial data presented below show significant changes in revenue and expenses from period-to-period.

Three Months Ended March 31, ~~2021~~2022 compared to the Three Months Ended March 31, ~~2020~~

2021


		SAME STORE PROPERTIES												NON SAME STORE PROPERTIES												CONSOLIDATED													COMBINED SAME-STORE PROPERTIES				COMBINED NON SAME-STORE PROPERTIES				Q1 2021 Pre-Merger STAR Portfolio(1)		CONSOLIDATED
(Dollars in thousands)		Three Months Ended March 31,												Three Months Ended March 31,												Three Months Ended March 31,												(Dollars in thousands)	Three Months Ended March 31,				Three Months Ended March 31,					Three Months Ended March 31,
		2021			2020			Increase (Decrease)			% Change			2021			2020			Increase (Decrease)			% Change			2021			2020			Increase (Decrease)			% Change				2022	2021	Increase (Decrease)	% Change	2022	2021	Increase (Decrease)	% Change		2022		2021		Increase (Decrease)		% Change
Property Data:																																						Property Data:
Number of properties		54			54									2			4				(2	)		-50.0	%	56			58				(2	)		-3.4	%	Number of properties	113	113	—	—%	6	10	(4)	(40.0)%		(67)		119		56		63		112.5%
Number of units			14,995			14,995									672			810			(138	)		-17.0	%		15,667			15,805			(138	)		-0.9	%	Number of units	33,804	33,804	—	—%	1,694	2,831	(1,137)	(40.2)%	(20,968)		35,498		15,667		19,831		126.6%
Average occupancy			95.3	%		92.7	%		2.6	%	n/a				96.8	%		89.9	%		6.9	%	n/a				95.4	%		92.5	%		2.8	%	n/a			Average occupancy	95.4%	95.3%	0.1%	0.1%	93.1%	93.2%	0.1%	—%	NM		95.2%		95.4%		(0.2)%		(0.2)%
Average effective monthly rent, per unit			1,129			1,097			32			2.9	%		1,441			1,147			294			25.6	%		1,142			1,100			42			3.8	%	Average effective monthly rent, per unit	1,373	1,244	129	10.4%	1,397	898	499	55.6%	NM		1,374		1,142		232		20.3%
Revenue:																																						Revenue:
Rental and other property revenue			51,878			49,121			2,757			5.6	%		2,933			2,035			898			44.1	%	$	54,811		$	51,156		$	3,655			7.1	%	Rental and other property revenue	141,706	127,667	14,039	11.0%	8,271	8,279	(8)	(0.1)%	$(81,135)		$149,977		$54,811		$95,166		173.6%
Expenses:																																						Expenses:
Property operating expenses			19,955			18,791			1,164			6.2	%		883			946			(63	)		-6.7	%	$	20,838		$	19,737			1,101			5.6	%	Property operating expenses	52,537	50,920	1,617	3.2%	3,346	3,474	(128)	(3.7)%	(33,556)		55,883		20,838		35,045		168.2%
Net Operating Income			31,923			30,330			1,593			5.3	%		2,050			1,089			961			88.2	%	$	33,973		$	31,419		$	2,554			8.1	%	Net Operating Income	$89,169	$76,747	$12,422	16.2%	$4,925	$4,805	$120	2.5%	$(47,579)		$94,094		$33,973		$60,121		177.0%

Other Revenue:	Other Revenue:																																					Other Revenue:
Other revenue	Other revenue																									$	301		$	194		$	107			55.2	%	Other revenue											$385		$301		$84		27.9%
Corporate and other expenses:	Corporate and other expenses:																																					Corporate and other expenses:
Property management expenses	Property management expenses																									$	1,943		$	2,156			(213	)		-9.9	%	Property management expenses											5,556		1,943		3,613		185.9%
Other (income) expense, net																																						Other (income) expense, net											(380)		—		(380)		100.0%
General and administrative expenses	General and administrative expenses																									$	5,942		$	5,376			566			10.5	%	General and administrative expenses											7,928		5,942		1,986		33.4%
Depreciation and amortization expense	Depreciation and amortization expense																									$	16,552		$	14,828			1,724			11.6	%	Depreciation and amortization expense											78,174		16,552		61,622		372.3%
Abandoned deal costs																										$	-		$	130			(130	)		-100.0	%
Casualty losses																										$	359		$	-			359		nm

Casualty (gains) losses, net																																						Casualty (gains) losses, net											(1,393)		359		(1,752)		(488.0)%
Total corporate and other expenses	Total corporate and other expenses																									$	24,796		$	22,490			2,306			10.3	%	Total corporate and other expenses											$89,885		$24,796		$65,089		262.5%
Interest expense	Interest expense																									$	(8,385	)	$	(9,497	)		1,112			11.7	%	Interest expense											(20,531)		(8,385)		(12,146)		144.9%
Merger and integration costs																																						Merger and integration costs											(1,895)		—		(1,895)		100.0%
Gain on sale of real estate assets, net																																						Gain on sale of real estate assets, net											94,712		—		94,712		100.0%
Net income	Net income																									$	1,093		$	(374	)		1,467			392.2	%	Net income											$76,880		$1,093		$75,787		6933.9%
Income allocated to noncontrolling interests	Income allocated to noncontrolling interests																									$	(7	)	$	2			(9	)		-450.0	%	Income allocated to noncontrolling interests											(2,280)		(7)		(2,273)		32471.4%
Net income available to common shares	Net income available to common shares																									$	1,086		$	(372	)	$	1,458			391.9	%	Net income available to common shares											$74,600		$1,086		$73,514		6769.2%

(1)Represents metrics of the STAR Portfolio for the three months ended March 31, 2021, the period of ownership prior to the consummation of the STAR Merger on December 16, 2021 and is presented for the purpose of reconciling combined same-store results to the consolidated results for the three months ended March 31, 2021.

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Revenue

Rental and other property revenue. Revenue from rental and other property revenue of the consolidated portfolio increased ~~$3.6~~$95.2 million to $150.0 million for the three months ended March 31, 2022 from $54.8 million for the three months ended March 31, ~~2021 from $51.2~~2021. The increase was primarily attributable to the STAR Merger, which contributed a pre-merger revenue base of $81.1 million. In addition, there was year-over-year rental and other property revenue growth of $14.0 million, driven primarily by a 10.4% increase in average effective monthly rents and higher other property revenue compared to the prior year period.

Expenses

Property operating expenses. Property operating expenses increased $35.0 million to $55.9 million for the three months ended March 31, 2020. The increase was primarily attributable to a $2.8 million increase in same store rental and other property revenue driven by a 2.6% increase in average occupancy and a 2.9% increase in average effective monthly rents compared to the prior year period. In addition, there was a $0.8 million increase in non-same store rental and other property revenue primarily driven by our recent property acquisitions having a higher average effective rent per unit and higher occupancy than recent property dispositions.

~~Expenses~~

~~Property operating expenses. Property operating expenses increased $1.1 million to~~2022 from $20.8 million for the three months ended March 31, ~~2021 from $19.7~~2021. The increase was primarily due to the STAR Merger, which contributed a pre-merger property operating expense base of $33.6 million.

Property management expenses. Property management expenses increased $3.6 million to $5.5 million for the three months ended March 31, ~~2020. The increase was primarily due to a $1.2 million increase in same store property operating expenses, primarily due to an increase in real estate taxes and property insurance.~~

~~Property management expenses.~~ ~~Property management expenses decreased $0.3 million to~~2022 from $1.9 million for the three months ended March 31, 2021 ~~from $2.2~~as a result of higher costs associated with employees that joined IRT in connection with the STAR Merger.

General and administrative expenses. General and administrative expenses increased $2.0 million to $7.9 million for the three months ended March 31, ~~2020. This decrease was primarily due to lower personnel costs and lower professional fees compared to the prior year.~~

~~General and administrative expenses.~~ ~~General and administrative expenses increased $0.5 million to~~2022 from $5.9 million for the three months ended March 31, ~~2021 from $5.4~~2021. This increase was primarily due to the increase in costs associated with the employees that joined IRT in connection with the STAR Merger.

Depreciation and amortization expense. Depreciation and amortization expense increased $61.6 million to $78.2 million for the three months ended March 31, 2020. This increase was primarily due to a $0.6 million increase in stock based compensation expense driven by our higher stock price and a higher volatility assumption used in valuing the performance share units awarded during the three months ended March 31, 2021.

~~Depreciation and amortization expense. Depreciation and amortization expense increased $1.8 million to~~2022 from $16.6 million for the three months ended March 31, ~~2021~~2021. The increase was primarily attributable to higher depreciation and amortization, including approximately $20.0 million of amortization of in-place lease intangibles, from ~~$14.8 million for~~properties acquired in the STAR Merger.

Casualty (gains) losses, net. During the three months ended March 31, ~~2020. The increase was primarily attributable to~~2022, we recognized net casualty gains of $1,393 as a ~~$1.0 million increase~~result of receiving insurance proceeds in depreciation expense at our value add properties for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 and $0.7 million in depreciation expense for properties acquired since the prior year.

~~Casualty~~excess of losses. incurred. During the three months ended March 31, 2021, we incurred ~~$0.4 million in~~ casualty losses ~~due~~incurred of $359 related to severe ~~snow~~winter storms at our Texas and Oklahoma properties.

Interest expense. Interest expense ~~decreased $1.1~~increased $12.1 million to $20.5 million for the three months ended March 31, 2022 from $8.4 million for the three months ended March 31, 2021 ~~from $9.5 million for~~primarily due to the assumption of debt in connection with the STAR merger.

Gain on sale of real estate assets, net.During the three months ended March 31, ~~2020. The decrease was primarily due to lower interest rates~~2022, four multi-family properties were sold resulting in gains of $94.7 million.

Merger and integration costs. We incurred approximately $1.9 million of STAR merger-related integration costs during the three months ended March 31, ~~2021 compared to the three months ended March 31, 2020.~~2022. These costs primarily consist of payroll and severance costs for transitional employees, IT merger costs, and other migration and integration costs.

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Non-GAAP Financial Measures

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

We believe that FFO and Core FFO (“CFFO”), each of which is a non-GAAP financial measure, are additional appropriate measures of the operating performance of a REIT and us in particular. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”), as net income or loss allocated to common shares (computed in accordance with GAAP), excluding real estate-related depreciation and amortization expense, gains or losses on sales of real estate and the cumulative effect of changes in accounting principles. While our calculation of FFO is in accordance with NAREIT’s definition, it may differ from the methodology for calculating FFO utilized by other REITs and, accordingly, may not be comparable to FFO computations of such other REITs.

~~We updated our definition of CFFO during the three months ended March 31, 2021 to the definition described below. All prior periods have been adjusted to conform to the current CFFO definition.~~

CFFO is a computation made by analysts and investors to measure a real estate company’s operating performance by removing the effect of items that do not reflect ongoing property operations, including depreciation and amortization of other items not included in FFO, and other non-cash or non-operating gains or losses related to items such as merger and integration costs, casualty losses, abandoned deal costs and debt extinguishment costs from the determination of FFO.

Our calculation of CFFO may differ from the methodology used for calculating CFFO by other REITs and, accordingly, our CFFO may not be comparable to CFFO reported by other REITs. Our management utilizes FFO and CFFO as measures of our operating performance, and believe they are also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash or non-recurring items that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and our operating performance between periods. Furthermore, although FFO, CFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we believe that FFO and CFFO may provide us and our investors with an additional useful measure to compare our financial performance to certain other REITs. Neither FFO nor CFFO is equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and CFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Accordingly, FFO and CFFO do not measure whether cash flow is sufficient to fund all of our cash needs, including principal amortization and capital improvements. Neither FFO nor CFFO should be considered as an alternative to net income or any other GAAP measurement as an indicator of our operating performance or as an alternative to cash flow from operating, investing, and financing activities as a measure of our liquidity.

Set forth below is a reconciliation of net income ~~(loss)~~ to FFO and CFFO for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 (in thousands, except share and per share information):

For the Three Months Ended March 31, 2021

For the Three Months Ended March 31, 2020

Amount

Per Share (1)

Amount

Per Share (2)

Funds From Operations (FFO):

Net income (loss)

$
1,093

$
0.01

$
(374
)

$
0.00

Adjustments:

Real estate depreciation and amortization

16,472

0.16

14,725

0.16

FFO

$
17,565

$
0.17

$
14,351

$
0.16

Core Funds From Operations (CFFO):

FFO

$
17,565

$
0.17

$
14,351

$
0.16

Adjustments:

Other depreciation and amortization

80

—

103

—

Casualty losses

359

0.01

—

—

Abandoned deal costs

—

—

130

—

CFFO

$
18,004

$
0.18

$
14,584

$
0.16

~~(1)~~

~~Based on 102,353,380 weighted-average shares and units outstanding for the three months ended March 31, 2021.~~


	For the Three Months Ended March 31, 2022				For the Three Months Ended March 31, 2021
	Amount		Per Share (1)		Amount		Per Share (2)
Funds From Operations (FFO):
Net income	$	76,880	$	0.34	$	1,093	$	0.01
Adjustments:
Real estate depreciation and amortization	77,943		0.34		16,472		0.16
Net gain on sale of real estate assets excluding debt extinguishment costs	(94,712)		(0.42)		—		—
FFO	$	60,111	$	0.26	$	17,565	$	0.17
Core Funds From Operations (CFFO):
FFO	$	60,111	$	0.26	$	17,565	$	0.17
Adjustments:
Other depreciation and amortization	231		—		80		—

Casualty (gains) losses, net	(1,393)		—		359		0.01
Loan (premium accretion) discount amortization, net	(2,754)		(0.01)		—		—


Other (income) expense, net	(380)		—		—		—
Merger and integration costs	1,895		—		—		—
CFFO	$	57,710	$	0.25	$	18,004	$	0.18

~~(2)~~

~~Based on 91,737,113 weighted-average shares and units outstanding for the three months ended March 31, 2020.~~

(1)Based on 227,778,484 weighted-average shares and units outstanding for the three ended March 31, 2022.

~~Same Store~~

(2)Based on 102,353,380weighted-average shares and units outstanding for the three ended March 31, 2021.

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Same-Store Portfolio Net Operating Income

We believe that Net Operating Income (“NOI”), a non-GAAP financial measure, is ~~an additional~~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, ~~casualty related costs,~~ property management expenses, and general and administrative expenses. 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 insofar as the measure reflects only operating income and ~~net income as determined in accordance with GAAP.~~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 ~~supplemental~~ 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 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.

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

IRT Same-Store Portfolio

IRT Same-Store Portfolio represents the 48 properties that IRT owned and consolidated as of January 1, 2021 and through March 31, 2022 (other than properties held for sale as of March 31, 2022).

STAR Same-Store Portfolio

STAR Same-Store Portfolio represents the 65 properties that STAR owned and consolidated as of January 1, 2021 and that, following the consummation of the Merger on December 16, 2021, continued to be owned and consolidated by IRT through March 31, 2022 (other than properties held for sale as of March 31, 2022).

Combined Same-Store Portfolio

Combined Same-Store Portfolio represents the combination of the IRT Same-Store Portfolio and the STAR Same-Store Portfolio considered as a single portfolio of 113 properties.

Pre-Merger STAR Portfolio NOI

In order to reconcile Combined Same-Store NOI to net income for periods prior to our December 16, 2021 merger with STAR, our reconciliation excludes NOI generated by the STAR Portfolio because IRT did not own these properties prior to December 16, 2021.

Table of Contents

Set forth below is a reconciliation of ~~same store~~Combined Same-Store Portfolio net operating income to net income (loss) available to common shares for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 (in thousands, except per unit data):

Three Months Ended March 31, (a)

2021

2020

% change

Revenue:

Rental and other property revenue
$
51,878

$
49,121

5.6
%
Property Operating Expenses

Real estate taxes

6,457

6,018

7.3
%
Property insurance

1,188

916

29.7
%
Personnel expenses

4,593

4,464

2.9
%
Utilities

2,920

2,793

4.5
%
Repairs and maintenance

1,653

1,547

6.9
%
Contract services

2,029

1,849

9.7
%
Advertising expenses

525

532

-1.3
%
Other expenses

590

672

-12.2
%
Total property operating expenses

19,955

18,791

6.2
%
Net operating income
$
31,923

$
30,330

5.3
%
NOI Margin

61.5
%

61.7
%

-0.2
%
Average Occupancy

95.3
%

92.7
%

2.6
%
Average effective monthly rent, per unit
$
1,129

$
1,097

2.9
%
Reconciliation of Same-Store Net Operating Income to Net Income (Loss)

Same-store portfolio net operating income (a)
$
31,923

$
30,330

Non same-store net operating income

2,050

1,089

Other revenue

301

194

Property management expenses

(1,943
)

(2,156
)

General and administrative expenses

(5,942
)

(5,376
)

Depreciation and amortization

(16,552
)

(14,828
)

Abandoned deal costs

—

(130
)

Casualty losses

(359
)

—

Interest expense

(8,385
)

(9,497
)

Net income (loss)
$
1,093

$
(374
)

~~(a)~~

~~Same store portfolio included 54 properties containing 14,995 units.~~


	Three Months Ended March 31, (a)
	2022		2021		% change
Revenue:
Rental and other property revenue	$	141,706	$	127,667	11.0	%
Property Operating Expenses
Real estate taxes	18,726		18,132		3.3	%
Property insurance	2,784		2,660		4.7	%
Personnel expenses	12,052		11,460		5.2	%
Utilities	7,308		7,207		1.4	%
Repairs and maintenance	4,209		4,250		(1.0)	%
Contract services	4,722		4,365		8.2	%
Advertising expenses	1,180		1,258		(6.2)	%
Other expenses	1,556		1,588		(2.0)	%
Total property operating expenses	52,537		50,920		3.2	%
Net operating income	89,169		76,747		16.2	%


NOI Margin	62.9	%	60.1	%	2.8	%
Average Occupancy	95.4	%	95.3	%	0.1	%


Average effective monthly rent, per unit	$	1,373	$	1,244	10.4	%
Reconciliation of Combined Same-Store Net Operating Income to Net Income (Loss)
Combined Same-Store Portfolio net operating income(a)	$	89,169	$	76,747
Combined non same-store net operating income	4,925		4,805
Pre-Merger STAR Portfolio NOI(b)	—		(47,579)
Other revenue	385		301
Other income (expense), net	380		—
Property management expenses	(5,556)		(1,943)
General and administrative expenses	(7,928)		(5,942)
Depreciation and amortization	(78,174)		(16,552)

Casualty gains (losses), net	1,393		(359)
Interest expense	(20,531)		(8,385)
Gain on sale (loss on impairment) of real estate assets, net	94,712		—

Merger and integration costs	(1,895)		—
Net income	$	76,880	$	1,093

(a)Combined Same-Store Portfolio for the three months ended March 31, 2022 and 2021 included 113 properties containing 33,804 units.

(b)Represents NOI of the STAR Portfolio for periods prior to the consummation of the STAR Merger on December 16, 2021.

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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 twelve months and the foreseeable future.

Our primary cash requirements are to:

•

~~make investments and fund the associated costs, including expenditures to continue our value add initiatives to improve the quality and performance of our properties;~~

•make investments to continue our value add initiatives to improve the quality and performance of our properties;•

~~repay our indebtedness;~~

•repay our indebtedness;•

~~fund recurring maintenance necessary to maintain our properties;~~

•fund costs necessary to maintain our properties;•

~~pay our operating expenses; and~~

•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.

•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 our liquidity requirements primarily through a combination of one or more of the following:

•

~~the use of our cash and cash equivalents of $8.7 million as of March 31, 2021;~~

•the use of our cash and cash equivalents of $24.0 million as of March 31, 2022;•

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

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

~~cash generated from operating activities;~~

•cash generated from operating activities;•

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

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

~~proceeds from the sales of our common stock and other equity securities, including common stock that may be sold under our ATM Program and/or issued on a forward basis.~~

•proceeds from the sales of our common stock and other equity securities, including common stock that we expect to issue in settlement of our forward sale agreement.

Cash Flows

As of March 31, ~~2021~~2022 and ~~2020,~~2021, we maintained cash and cash equivalents, and restricted cash of approximately ~~$13.1~~$50.8 million and ~~$62.1~~$13.1 million, respectively. Our cash and cash equivalents were generated from the following activities (dollars in thousands):


	For the Three Months Ended March 31,
	2022		2021
Cash flow from operating activities	$	40,580	$	20,638
Cash flow from investing activities	127,066		(7,281)
Cash flow from financing activities	(182,557)		(13,870)
Net change in cash and cash equivalents, and restricted cash	(14,911)		(513)
Cash and cash equivalents, and restricted cash, beginning of period	65,671		13,615
Cash and cash equivalents, and restricted cash, end of the period	$	50,760	$	13,102

For the Three Months Ended March 31,

2021

2020

Cash flow from operating activities

$
20,638

$
11,684

Cash flow from investing activities

(7,281
)

(59,170
)
Cash flow from financing activities

(13,870
)

95,229

Net change in cash and cash equivalents, and restricted cash

(513
)

47,743

Cash and cash equivalents, and restricted cash, beginning of period

13,615

14,433

Cash and cash equivalents, and restricted cash, end of the period

$
13,102

$
62,176

Our cash ~~inflow~~inflows from operating activities during the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 were primarily driven by ongoing operations of our properties.

Our cash ~~outflow~~inflows from investing activities during the three months ended March 31, 2022 were primarily due to $155.6 million of proceeds from four property dispositions and proceeds from insurance claims of $9.9 million, partially offset by $18.6 million of investments in unconsolidated real estate entities, $11.8 million of capital expenditures and $8.0

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million of investments in real estate under development. Our cash outflows from investing activities during the three months ended March 31, 2021 ~~was~~were primarily due to ~~our~~ capital expenditures.

Our cash ~~outflow~~outflows from ~~investing~~financing activities during the three months ended March 31, ~~2020 was~~2022 were primarily due to a ~~property acquisition~~$176.0 million paydown of the unsecured revolver and $17.1 million payment of dividends on our ~~capital expenditures.~~

common stock and noncontrolling interests, partially offset by $16.5 million of new borrowings under our unsecured revolver. Our cash ~~outflow~~outflows from financing activities during the three months ended March 31, 2021 ~~was~~were primarily due to ~~the distribution~~payments of dividends ofon our common ~~stock. Our cash inflow from financing activities during the three months ended March 31, 2020 was primarily due to $65.5 million of draws on our unsecured credit facility~~stock and ~~a $50.0 million settlement on our forward sale agreements, partially offset by the distribution of dividends of our common stock.~~

noncontrolling interests.

Contractual Commitments

Our ~~2020~~2021 Annual Report on Form 10-K includes a table of contractual commitments. There were no material changes to these commitments since the filing of our Annual Report on Form 10-K.

Off-Balance Sheet Arrangements

There were no off-balance sheet arrangements during the three months ended March 31, ~~2021~~2022 that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our interests.

Critical Accounting Estimates and Policies

Our ~~2020~~2021 Annual Report on Form 10-K contains a discussion of our critical accounting policies. Management discusses our critical accounting policies and management’s judgments and estimates with the audit committee of our board of directors. There were no material changes to our critical accounting policies since the filing of our Annual Report on ~~Form~~form 10-K.

~~Item 3.~~

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

Our ~~2020~~2021 Annual Report on Form 10-K contains a discussion of qualitative and quantitative market risks. There have been no material changes in quantitative and qualitative market risks during the three months ended March 31, ~~2021~~2022 from the disclosures included in our ~~2020~~2021 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 and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Effective as of March 31, ~~2021,~~2022, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by us in our Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation referred to above during the quarter ended March 31, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

~~Item 1.~~

Item 1. Legal Proceedings.

flows.

~~Item 1A.~~

Item 1A. Risk Factors.

There have not been any material changes from the risk factors disclosed in Part 1, Item A1A of our ~~2020~~2021 Annual Report on Form 10-K.

~~Item 2.~~

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

During the three months ended March 31, ~~2021, no~~2022, holders of IROP ~~unitholders~~units exchanged ~~any~~10,848 units for 10,848 shares of our common ~~stock or cash.~~

stock. The exchange of the 10,848 units for 10,848 shares occurred on March 15, 2022 and the issuance of the shares was 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. As of March 31, 2022, 6,970,993 IROP units held by unaffiliated third parties remained outstanding.

During the three months ended March 31, ~~2021,~~2022, we withheld shares of common stock to satisfy employee tax withholding obligations payable upon the vesting of restricted common stock awards, restricted stock units, and performance-based restricted share units as ~~follows:~~

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

01/01/2021 to 01/31/2021

8,537

$
13.43

—

—

02/01/2021 to 02/28/2021

22,649

14.25

—

—

03/01/2021 to 03/31/2021

25,491

14.62

—

—

Total

56,677

$
14.30

—

—

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
01/01/2022 to 01/31/2022	6,139	$	23.28	N/A	N/A
02/01/2022 to 02/28/2022	10,694	24.11		N/A	N/A
03/01/2022 to 03/31/2022	31,619	25.99		N/A	N/A
Total	48,452	$	23.28	—	N/A

(1)

The price reported is the average price paid per share using our closing price on the NYSE on the vesting date of the relevant award.

~~Item 3.~~

Item 3. Defaults Upon Senior Securities.

None.

~~Item 4.~~

Item 4. Mine Safety Disclosures.

None.

~~Item 5.~~

Item 5. Other Information.

None.

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~~Item 6.~~

Item 6. Exhibits.

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

~~31.1~~
2.1	Agreement and 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.*

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		iXBRL (Inline eXtensible Business Reporting Language). The following materials, formatted in iXBRL: (i) Consolidated Balance Sheets as of March ~~31, 2021~~31,2022 and December 31, ~~2020,~~2021, (ii) Consolidated Statements of Operations for the three months ended March ~~31,~~31,2022 and 2021, ~~and 2020,~~ (iii) Consolidated Statement of Comprehensive Income (Loss) for the three months ended March ~~31,~~31,2022 and 2021, ~~and 2020,~~ (iv) Consolidated Statements of Changes in Equity for the three months ended March ~~31,~~31,2022 and 2021, ~~and 2020,~~ (v) Consolidated Statements of Cash Flows for the three months March ~~31,~~31,2022 and 2021 ~~and 2020~~ and (vi) notes to the consolidated financial statements as of March ~~31, 2021.~~ 31,2022.

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.

**Management agreement or compensatory plan or arrangement.

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SIGNATURES

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


	Independence Realty Trust, Inc.

Date: ~~April 30, 2021~~ May 4, 2022	By:		~~By:~~	/s/ ~~Scott~~ SCOTT F. SCHAEFFERf~~. Schaeffer~~
				Scott F. Schaeffer
				~~Chairman~~Chair of the Board and Chief Executive Officer
				(Principal Executive Officer)

Date: ~~April 30, 2021~~ May 4, 2022	By:		~~By:~~	/s/ JAMES J. SEBRA
			James J. Sebra
				~~James J. Sebra~~
		Chief Financial Officer and Treasurer
				(Principal Financial Officer)

Date: ~~April 30, 2021~~ May 4, 2022	By:		~~By:~~	/s/ JASON R. DELOZIER
			Jason R. Delozier
				~~Jason R. Delozier~~
		Chief Accounting Officer
				(Principal Accounting Officer)