Exhibit 99.2
TABLE OF CONTENTS Company Information 3 Forward-Looking Statements 4 Earnings Release Text 5 Financial Highlights 8 Balance Sheets 9 Statements of Operations, FFO & CORE FFO Trailing 5 Quarters 10 Three and Nine Months Ended September 30, 2015 11 Adjusted EBITDA Reconciliations Trailing 5 Quarters 12 Three and Nine Months Ended September 30, 2015 12 Same-Store Portfolio Net Operating Income Trailing 5 Quarters 13 Three and Nine Months Ended September 30, 2015 14 Net Operating Income Bridge 15 Debt and Capitalization Overview 16 Property Summary 17 NOI Exposure by Market 18 Definitions 19
2
Independence Realty Trust
September 30, 2015
Company Information:
Independence Realty Trust, Inc. (NYSE MKT: IRT) is a real estate investment trust that seeks to own well-located apartment properties in geographic submarkets that it believes support strong occupancy and the potential for growth in rental rates. IRT seeks to provide stockholders with attractive risk-adjusted returns, with an emphasis on distributions and capital appreciation. IRT is externally advised by a wholly-owned subsidiary of RAIT Financial Trust (NYSE: RAS).
| | |
| Corporate Headquarters | | 2929 Arch Street |
| | 17thFloor, Cira Centre |
| | Philadelphia, Pa 19104 |
| | 215.243.9000 |
| |
| Trading Symbol | | NYSE MKT: “IRT” |
| |
| Investor Relations Contact | | Andres Viroslav |
| | 2929 Arch Street |
| | 17thFloor, Cira Centre |
| | Philadelphia, Pa 19104 |
| | 215.243.9000 |
Investor Information:
| | | | | | | | | | | | | | | | | | | | |
| | | For the Three-Months Ended | |
| | | September 30, | | | June 30, | | | March 31, | | | December 31, | | | September 30, | |
| | | 2015 | | | 2015 | | | 2015 | | | 2014 | | | 2014 | |
Common Shares & Units: | | | | | | | | | | | | | | | | | | | | |
Share Price, period end | | $ | 7.21 | | | $ | 7.53 | | | $ | 9.49 | | | $ | 9.31 | | | $ | 9.68 | |
Share Price, high | | $ | 8.57 | | | $ | 9.65 | | | $ | 9.78 | | | $ | 10.29 | | | $ | 10.84 | |
Share Price, low | | $ | 6.95 | | | $ | 7.45 | | | $ | 9.07 | | | $ | 8.96 | | | $ | 9.40 | |
Dividends declared | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.18 | |
Dividend yield, period end | | | 10.0 | % | | | 9.6 | % | | | 7.6 | % | | | 7.7 | % | | | 7.4 | % |
3
Forward-Looking Statements
This supplemental information may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “trend”, “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” “seek,” “outlook,” “project,” “guidance” or other similar words. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These forward looking statements are based upon the current beliefs and expectations of IRT’s management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally not within IRT’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. These risks, uncertainties and contingencies include, but are not limited to, those disclosed in IRT’s filings with the Securities and Exchange Commission. IRT undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required by law.
4
Independence Realty Trust Announces Third Quarter 2015 Financial Results and Provides Quarterly Supplemental Information
PHILADELPHIA, PA — October 30, 2015 — Independence Realty Trust, Inc. (“IRT”) (NYSE MKT: IRT) today announced its third quarter 2015 financial results. All per share results are reported on a diluted basis.
Results for the Quarter
| | • | | Core Funds from Operations (“CFFO”) per share increased 18% to $0.20 for the quarter ended September 30, 2015 from $0.17 for the quarter ended September 30, 2014. |
| | • | | Earnings per share (“EPS”) was $0.68 for the quarter ended September 30, 2015 as compared to $0.00 for the quarter ended September 30, 2014. |
| | • | | Earnings before interest, taxes, depreciation and amortization and before acquisition expenses (“Adjusted EBITDA”), increased 89% to $11.7 million for the quarter ended September 30, 2015 from $6.2 million for the quarter ended September 30, 2014. |
| | • | | On September 17, 2015, IRT completed the acquisition of Trade Street Residential, Inc. (“TSRE”) adding nineteen properties or 4,989 units to its portfolio |
Results for the Nine Months
| | • | | CFFO per share increased 7.5% to $0.57 for the nine-months ended September 30, 2015 from $0.53 for the nine-months ended September 30, 2014. |
| | • | | EPS was $0.71 for the nine-months ended September 30, 2015 as compared to $0.14 for the nine-months ended September 30, 2014. |
| | • | | Adjusted EBITDA increased 111% to $32.1 million for the nine months ended September 30, 2015 from $15.2 million for the nine months ended September 30, 2014. |
Scott Schaeffer, IRT’s Chairman and CEO said, “During the quarter we completed the acquisition of Trade Street Residential which added 19 properties and grew the portfolio to over $1.4 billion. We remain focused on maximizing the operating performance of the portfolio and reducing leverage.”
Same-Store Property Operating Results
| | | | |
| | | Third Quarter 2015 Compared | | Nine-Months Ended 9/30/15 Compared |
| | | to Third Quarter 2014(1) | | to Nine-Months Ended 9/30/14(2) |
| | |
Rental income | | 4.7% increase | | 4.2% increase |
| | |
Total revenues | | 5.2% increase | | 4.6% increase |
| | |
Property level operating expenses | | 8.8% increase | | 3.9% increase |
| | |
Net operating income (“NOI”) | | 2.0% increase | | 5.4% increase |
| | |
Portfolio average occupancy | | 93.8%, or a 1.4% increase | | 94.3%, or a 0.3% decrease |
| | |
Portfolio average rental rate | | 3.6% increase to $811 | | 4.9% increase to $807 |
| (1) | For 19 properties containing 5,342 apartment units owned since July 1, 2014. |
| (2) | For 10 properties containing 2,790 apartment units owned since January 1, 2014. |
5
Capital Expenditures
For the three months ended September 30, 2015, our recurring capital expenditures for the total portfolio was $1.5 million, or $140 per unit. For the nine months ended September 30, 2015, our recurring capital expenditures for the total portfolio was $3.4 million, or $354 per unit.
Selected Financial Information
See Schedule I to this Release for selected financial information for IRT.
Trade Street Acquisition
On September 17, 2015, IRT completed the acquisition of TSRE adding nineteen high-quality properties or 4,989 units to its portfolio. As a result of the acquisition, each outstanding share of TSRE common stock was automatically converted into (a) $3.80 in cash and (b) 0.4108 shares of IRT common stock. In connection with the acquisition, IRT paid approximately $139.8 million in cash and issued approximately 15.1 million shares of common stock to former TSRE stockholders. On a fully diluted basis following the closing of the merger, legacy IRT stockholders owned approximately 68% of the combined company, and former TSRE stockholders owned approximately 32% of the combined company. In addition, in connection with the merger, the holder of all TSRE operating partnership common units not held by TSRE contributed those units to IRT’s operating partnership in exchange for approximately 1.9 million IRT operating partnership common units exchangeable for a like number of shares of IRT common stock.
Non-GAAP Financial Measures and Definitions
IRT discloses the following non-GAAP financial measures in this release: funds from operations (“FFO”), CFFO, Adjusted EBITDA and NOI. A reconciliation of IRT’s reported net income (loss) allocable to common shares to its FFO and CFFO is included as Schedule II to this release. A reconciliation of IRT’s same store NOI to its reported net income (loss) allocable to common shares is included as Schedule III to this release. A reconciliation of IRT’s Adjusted EBITDA, to net income (loss) is included as Schedule IV to this release. See Schedule V to this release for management’s respective definitions and rationales for the usefulness of each of these non-GAAP financial measures and other definitions used in this release.
Distributions
On October 19, 2015, IRT’s Board of Directors declared monthly cash dividends for the fourth quarter of 2015 on IRT’s shares of common stock in the amount of $0.06 per share per month. The monthly dividends total $0.18 per share for the fourth quarter. The month for which each dividend was declared is set forth below, with the relevant amount per share, record date and payment date set forth opposite the month:
| | | | | | | | | | | | |
Month | | Amount | | | Record Date | | | Payment Date | |
October 2015 | | $ | 0.06 | | | | 10/30/2015 | | | | 11/16/2015 | |
November 2015 | | $ | 0.06 | | | | 11/30/2015 | | | | 12/15/2015 | |
December 2015 | | $ | 0.06 | | | | 12/31/2015 | | | | 01/15/2016 | |
6
Conference Call
All interested parties can listen to the live conference call webcast at 9:00 AM ET on Friday, October 30, 2015 from the investor relations section of the IRT website at www.irtreit.com or by dialing 1.877.787.3988, access code 58477002. For those who are not available to listen to the live call, the replay will be available shortly following the live call on IRT’s website and telephonically until Friday, November 6, 2015, by dialing 855.859.2056, access code 58477002.
Supplemental Information
IRT produces supplemental information that includes details regarding the performance of the portfolio, financial information, non-GAAP financial measures, same-store information and other useful information for investors. The supplemental information is available via the Company’s website,www.irtreit.com, through the “Investor Relations” section.
About Independence Realty Trust, Inc.
Independence Realty Trust, Inc. (NYSE MKT: IRT) is a real estate investment trust that seeks to own well-located apartment properties in geographic submarkets that it believes support strong occupancy and the potential for growth in rental rates. IRT seeks to provide stockholders with attractive risk-adjusted returns, with an emphasis on distributions and capital appreciation. IRT is externally advised by a wholly-owned subsidiary of RAIT Financial Trust (NYSE: RAS).
Forward-Looking Statements
This press release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “trend”, “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” “seek,” “outlook,” “project,” “guidance” or other similar words. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These forward looking statements are based upon the current beliefs and expectations of IRT’s management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally not within IRT’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. These risks, uncertainties and contingencies include, but are not limited to, those disclosed in IRT’s filings with the Securities and Exchange Commission. IRT undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required by law.
Independence Realty Trust, Inc. Contact
Andres Viroslav
215.243.9000
aviroslav@irtreit.com
7
FINANCIAL HIGHLIGHTS
Dollars in thousands, except per share data
| | | | | | | | | | | | | | | | | | | | |
| | | For the Three-Months Ended | |
| | | September 30,
2015 | | | June 30,
2015 | | | March 31,
2015 | | | December 31,
2014 | | | September 30,
2014 | |
Selected Financial Information: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Operating Statistics: | | | | | | | | | | | | | | | | | | | | |
Total revenue | | $ | 25,492 | | | $ | 22,718 | | | $ | 21,657 | | | $ | 16,349 | | | $ | 13,049 | |
Total property operating expenses | | $ | 11,945 | | | $ | 10,517 | | | $ | 10,095 | | | $ | 7,689 | | | $ | 6,144 | |
Net operating income | | $ | 13,547 | | | $ | 12,201 | | | $ | 11,562 | | | $ | 8,660 | | | $ | 6,905 | |
NOI margin | | | 53.1 | % | | | 53.7 | % | | | 53.4 | % | | | 53.0 | % | | | 52.9 | % |
Adjusted EBITDA | | $ | 11,742 | | | $ | 10,518 | | | $ | 9,851 | | | $ | 7,673 | | | $ | 6,212 | |
Net income available to common shares | | $ | 24,015 | | | $ | 337 | | | $ | (233 | ) | | $ | 189 | | | $ | (56 | ) |
Earnings per share — diluted | | $ | 0.68 | | | $ | 0.01 | | | $ | (0.01 | ) | | $ | 0.01 | | | $ | — | |
FFO per share — diluted | | $ | 0.86 | | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.14 | | | $ | 0.14 | |
CORE FFO per share — diluted | | $ | 0.20 | | | $ | 0.19 | | | $ | 0.19 | | | $ | 0.17 | | | $ | 0.17 | |
Dividends per share | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.18 | |
CORE FFO payout ratio | | | 90.0 | % | | | 94.7 | % | | | 94.7 | % | | | 105.9 | % | | | 105.9 | % |
| | | | | |
Portfolio Data: | | | | | | | | | | | | | | | | | | | | |
Total gross assets (total assets plus accumulated depreciation) | | $ | 1,448,559 | | | $ | 754,347 | | | $ | 721,293 | | | $ | 717,526 | | | $ | 489,871 | |
Total number of properties | | | 50 | | | | 31 | | | | 30 | | | | 30 | | | | 22 | |
Total units | | | 14,044 | | | | 9,055 | | | | 8,819 | | | | 8,819 | | | | 6,470 | |
Total portfolio average occupancy | | | 94.0 | % | | | 93.6 | % | | | 93.5 | % | | | 91.9 | % | | | 93.1 | % |
Total portfolio average effective monthly rent, per unit | | $ | 950 | | | $ | 840 | | | $ | 827 | | | $ | 792 | | | $ | 791 | |
Same store portfolio average occupancy(a) | | | 93.8 | % | | | 93.5 | % | | | 93.3 | % | | | 92.3 | % | | | 92.4 | % |
Same store portfolio average effective monthly rent, per unit(a) | | $ | 811 | | | $ | 807 | | | $ | 793 | | | $ | 788 | | | $ | 783 | |
| | | | | |
Capitalization: | | | | | | | | | | | | | | | | | | | | |
Total debt | | $ | 993,908 | | | $ | 457,202 | | | $ | 422,613 | | | $ | 418,901 | | | $ | 253,833 | |
Common share price, period end | | $ | 7.21 | | | $ | 7.53 | | | $ | 9.49 | | | $ | 9.31 | | | $ | 9.68 | |
Market equity capitalization | | $ | 362,127 | | | $ | 249,915 | | | $ | 314,852 | | | $ | 307,998 | | | $ | 253,238 | |
Total market capitalization | | $ | 1,356,035 | | | $ | 707,117 | | | $ | 737,465 | | | $ | 726,899 | | | $ | 507,071 | |
Total debt/total gross assets | | | 68.6 | % | | | 60.6 | % | | | 58.6 | % | | | 58.4 | % | | | 51.8 | % |
Net debt (b) / total market capitalization | | | 72.0 | % | | | 61.6 | % | | | 54.7 | % | | | 55.6 | % | | | 43.2 | % |
Net debt (b) to adjusted EBITDA | | | 12.4x | (c) | | | 10.4x | | | | 10.2x | | | | 13.2x | | | | 8.8x | |
Interest coverage | | | 2.1x | (c) | | | 2.5x | | | | 2.4x | | | | 2.6x | | | | 2.7x | |
| | | | | |
Common shares and OP Units: | | | | | | | | | | | | | | | | | | | | |
Shares outstanding | | | 47,070,678 | | | | 31,933,218 | | | | 31,894,751 | | | | 31,800,076 | | | | 25,801,540 | |
OP units outstanding | | | 3,154,936 | | | | 1,255,983 | | | | 1,282,450 | | | | 1,282,450 | | | | 359,423 | |
| | | | | | | | | | | | | | | | | | | | |
Common shares - diluted | | | 50,225,614 | | | | 33,189,201 | | | | 33,177,201 | | | | 33,082,526 | | | | 26,160,963 | |
Weighted average common shares, diluted | | | 35,472,807 | | | | 33,066,770 | | | | 31,768,468 | | | | 28,578,949 | | | | 24,011,540 | |
| (a) | Same store includes 19 properties which represents 5,342 units. |
| (b) | Net debt equals total debt less cash and cash equivalents. |
| (c) | Annualized assuming the TSRE merger occurred at the beginning of the period. |
8
BALANCE SHEETS
Dollars in thousands, except per share data
| | | | | | | | | | | | | | | | | | | | |
| | | As of | |
| | | September 30, | | | June 30, | | | March 31, | | | December 31, | | | September 30, | |
| | | 2015 | | | 2015 | | | 2015 | | | 2014 | | | 2014 | |
Assets | | | | | | | | | | | | | | | | | | | | |
Investments in real estate at cost | | $ | 1,400,892 | (a) | | $ | 716,581 | | | $ | 689,867 | | | $ | 689,112 | | | $ | 444,050 | |
Less: accumulated depreciation | | | (35,304 | ) | | | (31,188 | ) | | | (27,261 | ) | | | (23,376 | ) | | | (20,848 | ) |
| | | | | | | | | | | | | | | | | | | | |
Investments in real estate, net | | | 1,365,588 | | | | 685,393 | | | | 662,606 | | | | 665,736 | | | | 423,202 | |
Cash and cash equivalents | | | 16,939 | | | | 21,568 | | | | 19,084 | | | | 14,763 | | | | 34,786 | |
Restricted cash | | | 7,330 | | | | 6,335 | | | | 6,228 | | | | 5,206 | | | | 4,870 | |
Accounts receivable and other assets | | | 5,153 | | | | 6,689 | | | | 1,818 | | | | 2,270 | | | | 2,748 | |
Intangible assets, net | | | 7,544 | | | | 182 | | | | 1,342 | | | | 3,251 | | | | 1,327 | |
Deferred costs, net | | | 10,701 | | | | 2,992 | | | | 2,954 | | | | 2,924 | | | | 2,090 | |
| | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 1,413,255 | | | $ | 723,159 | | | $ | 694,032 | | | $ | 694,150 | | | $ | 469,023 | |
| | | | | | | | | | | | | | | | | | | | |
Liabilities and Equity | | | | | | | | | | | | | | | | | | | | |
Total indebtedness | | $ | 993,908 | | | $ | 457,202 | | | $ | 422,613 | | | $ | 418,901 | | | $ | 253,833 | |
Accounts payable and accrued expenses | | | 18,724 | | | | 10,922 | | | | 10,691 | | | | 8,353 | | | | 7,407 | |
Accrued interest payable | | | 558 | | | | 30 | | | | 31 | | | | 49 | | | | 30 | |
Dividends payable | | | 2,427 | | | | 1,982 | | | | 1,982 | | | | 1,982 | | | | 1,567 | |
Other liabilities | | | 3,183 | | | | 1,893 | | | | 1,860 | | | | 1,831 | | | | 1,205 | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities | | | 1,018,800 | | | | 472,029 | | | | 437,177 | | | | 431,116 | | | | 264,042 | |
| | | | | |
Equity | | | | | | | | | | | | | | | | | | | | |
Shareholders’ Equity: | | | | | | | | | | | | | | | | | | | | |
Preferred shares, $0.01 par value per share | | | — | | | | — | | | | — | | | | — | | | | — | |
Common shares, $0.01 par value per share | | | 471 | | | | 318 | | | | 318 | | | | 318 | | | | 258 | |
Additional paid in capital | | | 377,989 | | | | 267,566 | | | | 267,695 | | | | 267,683 | | | | 213,006 | |
Accumulated other comprehensive income (loss) | | | 5 | | | | — | | | | — | | | | — | | | | — | |
Retained earnings (deficit) | | | (10,174 | ) | | | (28,065 | ) | | | (22,680 | ) | | | (16,728 | ) | | | (11,560 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total shareholders’ equity | | | 368,291 | | | | 239,819 | | | | 245,333 | | | | 251,273 | | | | 201,704 | |
Noncontrolling Interests | | | 26,164 | | | | 11,311 | | | | 11,522 | | | | 11,761 | | | | 3,277 | |
| | | | | | | | | | | | | | | | | | | | |
Total equity | | | 394,455 | | | | 251,130 | | | | 256,855 | | | | 263,034 | | | | 204,981 | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities and equity | | $ | 1,413,255 | | | $ | 723,159 | | | $ | 694,032 | | | $ | 694,150 | | | $ | 469,023 | |
| | | | | | | | | | | | | | | | | | | | |
| (a) | Includes $3,283 of a parcel of land acquired with the TSRE merger. |
9
STATEMENTS OF OPERATIONS, FFO & CORE FFO
TRAILING 5 QUARTERS
Dollars in thousands, except per share data
| | | | | | | | | | | | | | | | | | | | |
| | | For the Three-Months Ended | |
| | | September 30, | | | June 30, | | | March 31, | | | December 31, | | | September 30, | |
| | | 2015 | | | 2015 | | | 2015 | | | 2014 | | | 2014 | |
Revenue: | | | | | | | | | | | | | | | | | | | | |
Rental income | | $ | 22,758 | | | $ | 20,268 | | | $ | 19,443 | | | $ | 14,996 | | | $ | 11,872 | |
Reimbursement and other income | | | 2,734 | | | | 2,450 | | | | 2,214 | | | | 1,353 | | | | 1,177 | |
| | | | | | | | | | | | | | | | | | | | |
Total revenue | | | 25,492 | | | | 22,718 | | | | 21,657 | | | | 16,349 | | | | 13,049 | |
Expenses: | | | | | | | | | | | | | | | | | | | | |
Real estate operating expenses | | | 11,945 | | | | 10,517 | | | | 10,095 | | | | 7,689 | | | | 6,144 | |
General and administrative expense | | | 546 | | | | 423 | | | | 499 | | | | 343 | | | | 248 | |
Asset management fees - Base | | | 1,259 | | | | 1,046 | | | | 1,001 | | | | 644 | | | | 445 | |
Asset management fees - Incentive | | | — | | | | 214 | | | | 211 | | | | — | | | | — | |
Acquisition expense | | | 12,830 | | | | 168 | | | | 33 | | | | 641 | | | | 687 | |
Depreciation and amortization expense | | | 4,704 | | | | 5,720 | | | | 6,038 | | | | 3,856 | | | | 3,309 | |
| | | | | | | | | | | | | | | | | | | | |
Total expenses | | | 31,284 | | | | 18,088 | | | | 17,877 | | | | 13,173 | | | | 10,833 | |
| | | | | | | | | | | | | | | | | | | | |
Operating Income (loss) | | | (5,792 | ) | | | 4,630 | | | | 3,780 | | | | 3,176 | | | | 2,216 | |
Interest expense | | | (5,094 | ) | | | (4,277 | ) | | | (4,022 | ) | | | (2,986 | ) | | | (2,281 | ) |
Interest income | | | 18 | | | | — | | | | 1 | | | | 5 | | | | 7 | |
TSRE financing extinguishment and employee separation expenses | | | (27,508 | ) | | | — | | | | — | | | | — | | | | — | |
Gains (losses) on TSRE merger and property acquisitions | | | 64,012 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Net income (loss) | | | 25,636 | | | | 353 | | | | (241 | ) | | | 195 | | | | (58 | ) |
(Income) loss allocated to noncontrolling interests | | | (1,621 | ) | | | (16 | ) | | | 8 | | | | (6 | ) | | | 2 | |
| | | | | | | | | | | | | | | | | | | | |
Net income (loss) available to common shares | | $ | 24,015 | | | $ | 337 | | | $ | (233 | ) | | $ | 189 | | | $ | (56 | ) |
| | | | | | | | | | | | | | | | | | | | |
EPS - basic | | $ | 0.71 | | | $ | 0.01 | | | $ | (0.01 | ) | | $ | 0.01 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | |
Weighted-average shares outstanding - Basic | | | 33,962,015 | | | | 31,794,822 | | | | 31,768,468 | | | | 28,174,568 | | | | 24,011,540 | |
| | | | | | | | | | | | | | | | | | | | |
EPS - diluted | | $ | 0.68 | | | $ | 0.01 | | | $ | (0.01 | ) | | $ | 0.01 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | |
Weighted-average shares outstanding - Diluted | | | 35,472,807 | | | | 33,066,770 | | | | 31,768,468 | | | | 28,578,949 | | | | 24,011,540 | |
| | | | | | | | | | | | | | | | | | | | |
Funds From Operations (FFO): | | | | | | | | | | | | | | | | | | | | |
Net Income (loss) | | $ | 25,636 | | | $ | 353 | | | $ | (241 | ) | | $ | 195 | | | $ | (58 | ) |
Add-Back (Deduct): | | | | | | | | | | | | | | | | | | | | |
Income allocated to preferred units | | | — | | | | — | | | | — | | | | (6 | ) | | | 2 | |
Depreciation | | | 4,704 | | | | 5,720 | | | | 6,038 | | | | 3,856 | | | | 3,309 | |
| | | | | | | | | | | | | | | | | | | | |
FFO | | $ | 30,340 | | | $ | 6,073 | | | $ | 5,797 | | | $ | 4,045 | | | $ | 3,253 | |
| | | | | | | | | | | | | | | | | | | | |
FFO per share—diluted | | $ | 0.86 | | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.14 | | | $ | 0.14 | |
| | | | | | | | | | | | | | | | | | | | |
CORE Funds From Operations (CFFO): | | | | | | | | | | | | | | | | | | | | |
FFO | | $ | 30,340 | | | $ | 6,073 | | | $ | 5,797 | | | $ | 4,045 | | | $ | 3,253 | |
Add-Back (Deduct): | | | | | | | | | | | | | | | | | | | | |
Equity based compensation | | | 217 | | | | 10 | | | | 70 | | | | 32 | | | | 31 | |
Amortization of deferred financing costs | | | 121 | | | | 120 | | | | 117 | | | | 95 | | | | 68 | |
Acquisition expenses | | | 12,830 | | | | 168 | | | | 33 | | | | 641 | | | | 687 | |
TSRE financing extinguishment and employee separation expenses | | | 27,508 | | | | — | | | | — | | | | — | | | | — | |
(Gains) losses on TSRE merger and property acquisitions | | | (64,012 | ) | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
CFFO | | $ | 7,004 | | | $ | 6,371 | | | $ | 6,017 | | | $ | 4,813 | | | $ | 4,039 | |
| | | | | | | | | | | | | | | | | | | | |
CFFO per share—diluted | | $ | 0.20 | | | $ | 0.19 | | | $ | 0.19 | | | $ | 0.17 | | | $ | 0.17 | |
| | | | | | | | | | | | | | | | | | | | |
10
STATEMENT OF OPERATIONS, FFO & CORE FFO
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015
Dollars in thousands, except per share data
| | | | | | | | | | | | | | | | |
| | | Three-Months Ended September 30 | | | Nine-Months Ended September 30 | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
Revenue: | | | | | | | | | | | | | | | | |
Rental income | | $ | 22,758 | | | | 11,872 | | | $ | 62,469 | | | | 29,838 | |
Reimbursement and other income | | | 2,734 | | | | 1,177 | | | | 7,398 | | | | 2,984 | |
| | | | | | | | | | | | | | | | |
Total revenue | | | 25,492 | | | | 13,049 | | | | 69,867 | | | | 32,822 | |
Expenses: | | | | | | | | | | | | | | | | |
Real estate operating expenses | | | 11,945 | | | | 6,144 | | | | 32,557 | | | | 15,706 | |
General and administrative expense | | | 546 | | | | 248 | | | | 1,468 | | | | 794 | |
Asset management fees - Base | | | 1,259 | | | | 445 | | | | 3,306 | | | | 1,092 | |
Asset management fees - Incentive | | | — | | | | — | | | | 425 | | | | — | |
Acquisition expense | | | 12,830 | | | | 687 | | | | 13,031 | | | | 1,201 | |
Depreciation and amortization expense | | | 4,704 | | | | 3,309 | | | | 16,462 | | | | 8,664 | |
| | | | | | | | | | | | | | | | |
Total expenses | | | 31,284 | | | | 10,833 | | | | 67,249 | | | | 27,457 | |
| | | | | | | | | | | | | | | | |
Operating Income (loss) | | | (5,792 | ) | | | 2,216 | | | | 2,618 | | | | 5,365 | |
Interest expense | | | (5,094 | ) | | | (2,281 | ) | | | (13,393 | ) | | | (5,510 | ) |
Interest income | | | 18 | | | | 7 | | | | 19 | | | | 12 | |
TSRE financing extinguishment and employee separation expenses | | | (27,508 | ) | | | — | | | | (27,508 | ) | | | — | |
Gains (losses) on TSRE merger and property acquisitions | | | 64,012 | | | | — | | | | 64,012 | | | | 2,882 | |
| | | | | | | | | | | | | | | | |
Net income (loss) | | | 25,636 | | | | (58 | ) | | | 25,748 | | | | 2,749 | |
(Income) loss allocated to noncontrolling interests | | | (1,621 | ) | | | 2 | | | | (1,629 | ) | | | 2 | |
| | | | | | | | | | | | | | | | |
Net income (loss) available to common shares | | $ | 24,015 | | | $ | (56 | ) | | $ | 24,119 | | | $ | 2,751 | |
| | | | | | | | | | | | | | | | |
EPS - basic | | $ | 0.71 | | | $ | — | | | $ | 0.74 | | | $ | 0.14 | |
| | | | | | | | | | | | | | | | |
Weighted-average shares outstanding - Basic | | | 33,962,015 | | | | 24,011,540 | | | | 32,516,470 | | | | 19,004,591 | |
| | | | | | | | | | | | | | | | |
EPS - diluted | | $ | 0.68 | | | $ | — | | | $ | 0.71 | | | $ | 0.14 | |
| | | | | | | | | | | | | | | | |
Weighted-average shares outstanding - Diluted | | | 35,472,807 | | | | 24,011,540 | | | | 33,874,170 | | | | 19,040,301 | |
| | | | | | | | | | | | | | | | |
Funds From Operations (FFO): | | | | | | | | | | | | | | | | |
Net Income (loss) | | $ | 25,636 | | | $ | (58 | ) | | $ | 25,748 | | | $ | 2,749 | |
Add-Back (Deduct): | | | | | | | | | | | | | | | | |
Income allocated to preferred units | | | — | | | | 2 | | | | — | | | | 2 | |
Depreciation | | | 4,704 | | | | 3,309 | | | | 16,462 | | | | 8,664 | |
| | | | | | | | | | | | | | | | |
FFO | | $ | 30,340 | | | $ | 3,253 | | | $ | 42,210 | | | $ | 11,415 | |
| | | | | | | | | | | | | | | | |
FFO per share—diluted | | $ | 0.86 | | | $ | 0.14 | | | $ | 1.25 | | | $ | 0.60 | |
| | | | | | | | | | | | | | | | |
CORE Funds From Operations (CFFO): | | | | | | | | | | | | | | | | |
FFO | | $ | 30,340 | | | $ | 3,253 | | | $ | 42,210 | | | $ | 11,415 | |
Add-Back (Deduct): | | | | | | | | | | | | | | | | |
Equity based compensation | | | 217 | | | | 31 | | | | 297 | | | | 174 | |
Amortization of deferred financing costs | | | 121 | | | | 68 | | | | 358 | | | | 171 | |
Acquisition expenses | | | 12,830 | | | | 687 | | | | 13,031 | | | | 1,201 | |
TSRE financing extinguishment and employee separation expenses | | | 27,508 | | | | — | | | | 27,508 | | | | — | |
(Gains) losses on TSRE merger and property acquisitions | | | (64,012 | ) | | | — | | | | (64,012 | ) | | | (2,882 | ) |
| | | | | | | | | | | | | | | | |
CFFO | | $ | 7,004 | | | $ | 4,039 | | | $ | 19,392 | | | $ | 10,079 | |
| | | | | | | | | | | | | | | | |
CFFO per share—diluted | | $ | 0.20 | | | $ | 0.17 | | | $ | 0.57 | | | $ | 0.53 | |
| | | | | | | | | | | | | | | | |
11
ADJUSTED EBITDA RECONCILIATIONS
Dollars in thousands, except per share data
| | | | | | | | | | | | | | | | |
| | | Three-Months Ended | | | Nine-Months Ended | |
| | | September 30 | | | September 30 | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
Net income (loss) | | $ | 25,636 | | | $ | (58 | ) | | $ | 25,748 | | | $ | 2,749 | |
Add-Back (Deduct): | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 4,704 | | | | 3,309 | | | | 16,462 | | | | 8,664 | |
Interest expense | | | 5,094 | | | | 2,281 | | | | 13,393 | | | | 5,510 | |
Interest Income | | | (18 | ) | | | (7 | ) | | | (19 | ) | | | (12 | ) |
Acquisition expense | | | 12,830 | | | | 687 | | | | 13,031 | | | | 1,201 | |
TSRE financing extinguishment and employee separation expenses | | | 27,508 | | | | — | | | | 27,508 | | | | — | |
(Gains) losses on TSRE merger and property acquisitions | | | (64,012 | ) | | | — | | | | (64,012 | ) | | | (2,882 | ) |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 11,742 | | | $ | 6,212 | | | $ | 32,111 | | | $ | 15,230 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | For the Three-Months Ended | |
| | | September 30, | | | June 30, | | | March 31, | | | December 31, | | | September 30, | |
| | | 2015 | | | 2015 | | | 2015 | | | 2014 | | | 2014 | |
Net income (loss) | | $ | 25,636 | | | $ | 353 | | | $ | (241 | ) | | $ | 195 | | | $ | (58 | ) |
Add-Back (Deduct): | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 4,704 | | | | 5,720 | | | | 6,038 | | | | 3,856 | | | | 3,309 | |
Interest expense | | | 5,094 | | | | 4,277 | | | | 4,022 | | | | 2,986 | | | | 2,281 | |
Interest Income | | | (18 | ) | | | — | | | | (1 | ) | | | (5 | ) | | | (7 | ) |
Acquisition expense | | | 12,830 | | | | 168 | | | | 33 | | | | 641 | | | | 687 | |
TSRE financing extinguishment and employee separation expenses | | | 27,508 | | | | — | | | | — | | | | — | | | | — | |
(Gains) losses on TSRE merger and property acquisitions | | | (64,012 | ) | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 11,742 | | | $ | 10,518 | | | $ | 9,851 | | | $ | 7,673 | | | $ | 6,212 | |
| | | | | | | | | | | | | | | | | | | | |
12
SAME-STORE PORTFOLIO NET OPERATING INCOME
TRAILING 5 QUARTERS
Dollars in thousands, except per share data
| | | | | | | | | | | | | | | | | | | | |
| | | For the Three-Months Ended (a) | |
| | | September 30, | | | June 30, | | | March 31, | | | December 31, | | | September 30, | |
| | | 2015 | | | 2015 | | | 2015 | | | 2014 | | | 2014 | |
Revenue: | | | | | | | | | | | | | | | | | | | | |
Rental income | | $ | 11,612 | | | $ | 11,521 | | | $ | 11,325 | | | $ | 11,119 | | | $ | 11,089 | |
Reimbursement and other income | | | 1,302 | | | | 1,271 | | | | 1,219 | | | | 1,143 | | | | 1,183 | |
| | | | | | | | | | | | | | | | | | | | |
Total revenue | | | 12,914 | | | | 12,792 | | | | 12,544 | | | | 12,262 | | | | 12,272 | |
| | | | | |
Operating Expenses: | | | | | | | | | | | | | | | | | | | | |
Real estate taxes | | | 1,176 | | | | 1,009 | | | | 1,126 | | | | 1,123 | | | | 1,106 | |
Property insurance | | | 383 | | | | 391 | | | | 383 | | | | 385 | | | | 374 | |
Personnel expenses | | | 1,549 | | | | 1,452 | | | | 1,395 | | | | 1,435 | | | | 1,401 | |
Utilities | | | 1,122 | | | | 999 | | | | 1,098 | | | | 1,058 | | | | 1,046 | |
Repairs and maintenance | | | 639 | | | | 618 | | | | 410 | | | | 498 | | | | 545 | |
Management fees | | | 481 | | | | 463 | | | | 471 | | | | 450 | | | | 454 | |
Contract services | | | 362 | | | | 364 | | | | 357 | | | | 357 | | | | 388 | |
Advertising expenses | | | 183 | | | | 198 | | | | 201 | | | | 176 | | | | 183 | |
Other expenses | | | 480 | | | | 508 | | | | 431 | | | | 403 | | | | 364 | |
| | | | | | | | | | | | | | | | | | | | |
Total operating expenses | | | 6,375 | | | | 6,002 | | | | 5,872 | | | | 5,885 | | | | 5,861 | |
| | | | | | | | | | | | | | | | | | | | |
Net operating income | | $ | 6,539 | | | $ | 6,790 | | | $ | 6,672 | | | $ | 6,377 | | | $ | 6,411 | |
| | | | | | | | | | | | | | | | | | | | |
NOI Margin | | | 50.6 | % | | | 53.1 | % | | | 53.2 | % | | | 52.0 | % | | | 52.2 | % |
Average Occupancy | | | 93.8 | % | | | 93.5 | % | | | 93.3 | % | | | 92.3 | % | | | 92.4 | % |
Average effective monthly rent, per unit | | $ | 811 | | | $ | 807 | | | $ | 793 | | | $ | 788 | | | $ | 783 | |
| | | | | |
Reconciliation of Same-Store Net Operating Income to Net Income (loss) | | | | | | | | | | | | | | | | | | | | |
Same-store net operating income(a) | | $ | 6,539 | | | $ | 6,790 | | | $ | 6,672 | | | $ | 6,377 | | | $ | 6,411 | |
Non same-store net operating income | | | 7,008 | | | | 5,411 | | | | 4,890 | | | | 2,283 | | | | 494 | |
Asset management fees | | | (1,259 | ) | | | (1,260 | ) | | | (1,212 | ) | | | (644 | ) | | | (445 | ) |
General and administrative expenses | | | (546 | ) | | | (423 | ) | | | (499 | ) | | | (343 | ) | | | (248 | ) |
Acquisition expenses | | | (12,830 | ) | | | (168 | ) | | | (33 | ) | | | (641 | ) | | | (687 | ) |
Depreciation and amortization | | | (4,704 | ) | | | (5,720 | ) | | | (6,038 | ) | | | (3,856 | ) | | | (3,309 | ) |
Interest expense | | | (5,094 | ) | | | (4,277 | ) | | | (4,022 | ) | | | (2,986 | ) | | | (2,281 | ) |
Interest income | | | 18 | | | | — | | | | 1 | | | | 5 | | | | 7 | |
TSRE financing extinguishment and employee separation expenses | | | (27,508 | ) | | | — | | | | — | | | | — | | | | — | |
Gains (losses) on TSRE merger and property acquisitions | | | 64,012 | | | | — | | | | — | | | | — | | | | — | |
(Income) loss allocated to noncontrolling interests | | | (1,621 | ) | | | (16 | ) | | | 8 | | | | (6 | ) | | | 2 | |
| | | | | | | | | | | | | | | | | | | | |
Net income (loss) available to common shares | | $ | 24,015 | | | $ | 337 | | | $ | (233 | ) | | $ | 189 | | | $ | (56 | ) |
| | | | | | | | | | | | | | | | | | | | |
| (a) | Same store includes 19 properties which represents 5,342 units. |
13
SAME-STORE PORTFOLIO NET OPERATING INCOME
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015
Dollars in thousands, except per share data
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three-Months Ended September 30 (a) | | | Nine-Months Ended September 30 (b) | |
| | | | | | | | | % | | | | | | | | | % | |
| | | 2015 | | | 2014 | | | change | | | 2015 | | | 2014 | | | change | |
Revenue: | | | | | | | | | | | | | | | | | | | | | | | | |
Rental income | | $ | 11,612 | | | $ | 11,089 | | | | 4.7 | % | | $ | 17,915 | | | $ | 17,191 | | | | 4.2 | % |
Reimbursement and other income | | | 1,302 | | | | 1,183 | | | | 10.1 | % | | | 2,297 | | | | 2,124 | | | | 8.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total revenue | | | 12,914 | | | | 12,272 | | | | 5.2 | % | | | 20,212 | | | | 19,315 | | | | 4.6 | % |
| | | | | | |
Operating Expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate taxes | | | 1,176 | | | | 1,106 | | | | 6.3 | % | | | 1,715 | | | | 1,756 | | | | -2.3 | % |
Property insurance | | | 383 | | | | 374 | | | | 2.4 | % | | | 550 | | | | 576 | | | | -4.5 | % |
Personnel expenses | | | 1,549 | | | | 1,401 | | | | 10.6 | % | | | 2,268 | | | | 2,138 | | | | 6.1 | % |
Utilities | | | 1,122 | | | | 1,046 | | | | 7.3 | % | | | 2,024 | | | | 1,951 | | | | 3.7 | % |
Repairs and maintenance | | | 639 | | | | 545 | | | | 17.2 | % | | | 936 | | | | 933 | | | | 0.3 | % |
Management fees | | | 481 | | | | 454 | | | | 5.9 | % | | | 799 | | | | 764 | | | | 4.6 | % |
Contract services | | | 362 | | | | 388 | | | | -6.7 | % | | | 522 | | | | 561 | | | | -7.0 | % |
Advertising expenses | | | 183 | | | | 183 | | | | 0.0 | % | | | 281 | | | | 264 | | | | 6.4 | % |
Other expenses | | | 480 | | | | 364 | | | | 31.9 | % | | | 857 | | | | 637 | | | | 34.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total operating expenses | | | 6,375 | | | | 5,861 | | | | 8.8 | % | | | 9,952 | | | | 9,580 | | | | 3.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net operating income | | $ | 6,539 | | | $ | 6,411 | | | | 2.0 | % | | $ | 10,260 | | | $ | 9,735 | | | | 5.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
NOI Margin | | | 50.6 | % | | | 52.2 | % | | | -1.6 | % | | | 50.8 | % | | | 50.4 | % | | | 0.4 | % |
Average Occupancy | | | 93.8 | % | | | 92.4 | % | | | 1.4 | % | | | 94.3 | % | | | 94.6 | % | | | -0.3 | % |
Average effective monthly rent, per unit | | $ | 811 | | | $ | 783 | | | | 3.6 | % | | $ | 807 | | | $ | 769 | | | | 4.9 | % |
| | | | | | |
Reconciliation of Same-Store Net Operating Income to Net Income (loss) | | | | | | | | | | | | | | | | | | | | | | | | |
Same-store portfolio net operating income(a) (b) | | $ | 6,539 | | | $ | 6,411 | | | | | | | $ | 10,260 | | | $ | 9,735 | | | | | |
Non same-store net operating income | | | 7,008 | | | | 494 | | | | | | | | 27,050 | | | | 7,381 | | | | | |
Asset management fees | | | (1,259 | ) | | | (445 | ) | | | | | | | (4,156 | ) | | | (1,092 | ) | | | | |
General and administrative expenses | | | (546 | ) | | | (248 | ) | | | | | | | (1,043 | ) | | | (794 | ) | | | | |
Acquisition expenses | | | (12,830 | ) | | | (687 | ) | | | | | | | (13,031 | ) | | | (1,201 | ) | | | | |
Depreciation and amortization | | | (4,704 | ) | | | (3,309 | ) | | | | | | | (16,462 | ) | | | (8,664 | ) | | | | |
Interest expense | | | (5,094 | ) | | | (2,281 | ) | | | | | | | (13,393 | ) | | | (5,510 | ) | | | | |
Interest income | | | 18 | | | | 7 | | | | | | | | 19 | | | | 12 | | | | | |
TSRE financing extinguishment and employee separation expenses | | | (27,508 | ) | | | — | | | | | | | | (27,508 | ) | | | — | | | | | |
Gains (losses) on merger with TSRE and property acquisitions | | | 64,012 | | | | — | | | | | | | | 64,012 | | | | 2,882 | | | | | |
(Income) loss allocated to noncontrolling interests | | | (1,621 | ) | | | 2 | | | | | | | | (1,629 | ) | | | 2 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) available to common shares | | $ | 24,015 | | | $ | (56 | ) | | | | | | $ | 24,119 | | | $ | 2,751 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | Same store portfolio for the three months ended September 30, 2015 and 2014 includes 19 properties which represents 5,342 units. |
14
NET OPERATING INCOME (NOI) BRIDGE
Dollars in thousands, except per share data
| | | | | | | | | | | | | | | | | | | | |
| | | For the Three-Months Ended | |
| | | September 30, | | | June 30, | | | March 31, | | | December 31, | | | September 30, | |
| | | 2015 | | | 2015 | | | 2015 | | | 2014 | | | 2014 | |
Property revenue | | | | | | | | | | | | | | | | | | | | |
Same store (a) | | $ | 12,914 | | | $ | 12,792 | | | $ | 12,544 | | | $ | 12,262 | | | $ | 12,272 | |
Non same store | | | 12,578 | | | | 9,926 | | | | 9,113 | | | | 4,087 | | | | 777 | |
Other | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total property revenue | | | 25,492 | | | | 22,718 | | | | 21,657 | | | | 16,349 | | | | 13,049 | |
| | | | | |
Property expenses | | | | | | | | | | | | | | | | | | | | |
Same store (a) | | | 6,375 | | | | 6,002 | | | | 5,872 | | | | 5,885 | | | | 5,861 | |
Non same store | | | 5,570 | | | | 4,515 | | | | 4,223 | | | | 1,804 | | | | 283 | |
Other | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total property expenses | | | 11,945 | | | | 10,517 | | | | 10,095 | | | | 7,689 | | | | 6,144 | |
| | | | | |
Net operating income | | | | | | | | | | | | | | | | | | | | |
Same store (a) | | | 6,539 | | | | 6,790 | | | | 6,672 | | | | 6,377 | | | | 6,411 | |
Non same store | | | 7,008 | | | | 5,411 | | | | 4,890 | | | | 2,283 | | | | 494 | |
Other | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total property net operating income | | $ | 13,547 | | | $ | 12,201 | | | $ | 11,562 | | | $ | 8,660 | | | $ | 6,905 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Reconciliation of NOI to GAAP net income (loss) | | | | | | | | | | | | | | | | | | | | |
Total property net operating income | | $ | 13,547 | | | $ | 12,201 | | | $ | 11,562 | | | $ | 8,660 | | | $ | 6,905 | |
General and administrative expense | | | (546 | ) | | | (423 | ) | | | (499 | ) | | | (343 | ) | | | (248 | ) |
Asset management fees - base | | | (1,259 | ) | | | (1,046 | ) | | | (1,001 | ) | | | (644 | ) | | | (445 | ) |
Asset management fees - incentive | | | — | | | | (214 | ) | | | (211 | ) | | | — | | | | — | |
Acquisition expense | | | (12,830 | ) | | | (168 | ) | | | (33 | ) | | | (641 | ) | | | (687 | ) |
Depreciation and amortization expense | | | (4,704 | ) | | | (5,720 | ) | | | (6,038 | ) | | | (3,856 | ) | | | (3,309 | ) |
Interest expense | | | (5,094 | ) | | | (4,277 | ) | | | (4,022 | ) | | | (2,986 | ) | | | (2,281 | ) |
Interest income | | | 18 | | | | — | | | | 1 | | | | 5 | | | | 7 | |
TSRE financing extinguishment and employee separation expenses | | | (27,508 | ) | | | — | | | | — | | | | — | | | | — | |
Gains (losses) on TSRE merger and property acquisitions | | | 64,012 | | | | — | | | | — | | | | — | | | | — | |
Income (loss) allocated to noncontrolling interest | | | (1,621 | ) | | | (16 | ) | | | 8 | | | | (6 | ) | | | 2 | |
| | | | | | | | | | | | | | | | | | | | |
Net income (loss) allocable to common shares | | $ | 24,015 | | | $ | 337 | | | $ | (233 | ) | | $ | 189 | | | $ | (56 | ) |
| | | | | | | | | | | | | | | | | | | | |
| (a) | Same store portfolio includes 19 properties which represents 5,342 units. |
15
DEBT AND CAPITALIZATION SUMMARY Dollars in thousands, except per share data Amount Rate Type Weighted Average Maturity (in years) Debt: Credit facility (a) $ 271,500 2.6% Floating (b) 3.0 Bridge term loan 120,000 5.2% Floating (b) 1.5 (c) Mortgages-Fixed rate 563,720 3.8% Fixed 7.0 Mortgages-Floating rate 38,075 2.4% Floating 5.6 Unamortized debt premiums 613 Total Debt 993,908 3.6% 5.2 Market Equity Capitalization, at period end 362,127 Total Capitalization $ 1,356,035 (a) Credit facility total capacity is $325.0 million, of which $271.5 million was drawn as of September 30, 2015. (b) As of September 30, 2015, IRT maintained an LIBOR interest rate cap. The interest rate cap agreement caps LIBOR at 3.0% on $200 million in notional. The remaining term is 2 years. (c) Includes a 6 month extension term included in the bridge term loan. 56.8% 43.2% Fixed v. Floating (b) Fixed Floating $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 2015 2016 (c) 2017 (c) 2018 2019 2020 Thereafter $498 $45,385 $123,267 $275,579 $20,245 $4,143 $524,178 Debt Maturity Schedule 73.3% 26.7% Capitalization Debt Market Equity Capitalization
16
PROPERTY SUMMARY
Dollars in thousands, except per share data
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | Average | |
| | | | | | | Year | | | | | | | | | | | Effective | |
| | | | | | | Built or | | | | | Period End | | | Average | | | Monthly | |
| | | | | Acquisition | | Renovated | | Units | | | Occupancy | | | Occupancy | | | Rent, per | |
Property Name | | Location | | Date | | (a) | | (b) | | | (c) | | | (d) | | | unit (e) | |
Belle Creek | | Henderson, CO | | 4/29/2011 | | 2011 | | | 162 | | | | 96.9 | % | | | 96.4 | % | | $ | 1,154 | |
Copper Mill | | Austin, TX | | 4/29/2011 | | 2010 | | | 320 | | | | 95.0 | % | | | 97.2 | % | | | 888 | |
Crestmont | | Marietta, GA | | 4/29/2011 | | 2010 | | | 228 | | | | 86.0 | % | | | 92.6 | % | | | 811 | |
Cumberland Glen | | Smyrna, GA | | 4/29/2011 | | 2010 | | | 222 | | | | 96.4 | % | | | 95.6 | % | | | 768 | |
Heritage Trace | | Newport News, VA | | 4/29/2011 | | 2010 | | | 200 | | | | 98.0 | % | | | 91.8 | % | | | 685 | |
Tresa | | Phoenix, AZ | | 4/29/2011 | | 2006 | | | 360 | | | | 96.4 | % | | | 96.7 | % | | | 872 | |
CentrePoint | | Tucson, AZ | | 12/16/2011 | | 2006 | | | 320 | | | | 95.9 | % | | | 96.0 | % | | | 843 | |
Runaway Bay | | Indianapolis, IN | | 10/11/2012 | | 2002 | | | 192 | | | | 97.4 | % | | | 94.7 | % | | | 944 | |
Berkshire Square | | Indianapolis, IN | | 9/19/2013 | | 2012 | | | 354 | | | | 93.3 | % | | | 92.3 | % | | | 596 | |
The Crossings | | Jackson, MS | | 11/22/2013 | | 2012 | | | 432 | | | | 95.4 | % | | | 93.4 | % | | | 786 | |
Reserve at Eagle Ridge | | Waukegan, IL | | 1/31/2014 | | 2008 | | | 370 | | | | 94.3 | % | | | 95.4 | % | | | 953 | |
Windrush | | Edmond, OK | | 2/28/2014 | | 2011 | | | 160 | | | | 93.8 | % | | | 91.8 | % | | | 790 | |
Heritage Park | | Oklahoma City, OK | | 2/28/2014 | | 2011 | | | 453 | | | | 88.5 | % | | | 88.1 | % | | | 686 | |
Raindance | | Oklahoma City, OK | | 2/28/2014 | | 2011 | | | 504 | | | | 93.1 | % | | | 94.1 | % | | | 559 | |
Augusta | | Oklahoma City, OK | | 2/28/2014 | | 2011 | | | 197 | | | | 94.4 | % | | | 94.3 | % | | | 733 | |
Invitational | | Oklahoma City, OK | | 2/28/2014 | | 2011 | | | 344 | | | | 93.9 | % | | | 92.3 | % | | | 654 | |
King’s Landing | | Creve Coeur, MO | | 3/31/2014 | | 2005 | | | 152 | | | | 91.0 | % | | | 95.2 | % | | | 1,400 | |
Carrington Park | | Little Rock, AR | | 5/7/2014 | | 1999 | | | 202 | | | | 91.6 | % | | | 91.5 | % | | | 1,005 | |
Arbors at the Reservoir | | Ridgeland, MS | | 6/4/2014 | | 2000 | | | 170 | | | | 98.2 | % | | | 96.8 | % | | | 1,105 | |
| | | | | | | | | | | | | | | | | | | | | | |
Same Store | | | | | | | | | 5,342 | | | | 93.9 | % | | | 93.8 | % | | $ | 811 | |
| | | | | | | | | | | | | | | | | | | | | | |
Walnut Hill | | Cordova, TN | | 8/28/2014 | | 2001 | | | 360 | | | | 90.6 | % | | | 90.7 | % | | | 921 | |
Lenoxplace | | Raleigh, NC | | 9/5/2014 | | 2012 | | | 268 | | | | 92.9 | % | | | 95.5 | % | | | 857 | |
Stonebridge Crossing | | Cordova, TN | | 9/15/2014 | | 1994 | | | 500 | | | | 89.6 | % | | | 92.5 | % | | | 768 | |
Bennington Pond | | Groveport, OH | | 11/24/2014 | | 2000 | | | 240 | | | | 95.0 | % | | | 95.7 | % | | | 816 | |
Prospect Park | | Louisville, KY | | 12/8/2014 | | 1990 | | | 138 | | | | 89.9 | % | | | 94.7 | % | | | 898 | |
Brookside | | Louisville, KY | | 12/8/2014 | | 1987 | | | 224 | | | | 94.2 | % | | | 96.0 | % | | | 794 | |
Jamestown | | Louisville, KY | | 12/8/2014 | | 1970 | | | 355 | | | | 91.6 | % | | | 94.6 | % | | | 968 | |
Meadows | | Louisville, KY | | 12/8/2014 | | 1988 | | | 400 | | | | 96.0 | % | | | 96.4 | % | | | 781 | |
Oxmoor | | Louisville, KY | | 12/8/2014 | | 1999-2000 | | | 432 | | | | 85.9 | % | | | 88.9 | % | | | 1,032 | |
Stonebridge at the Ranch | | Little Rock, AR | | 12/16/2014 | | 2005 | | | 260 | | | | 93.1 | % | | | 92.0 | % | | | 885 | |
Iron Rock Ranch | | Austin, TX | | 12/30/2014 | | 2001-2002 | | | 300 | | | | 95.0 | % | | | 95.5 | % | | | 1,182 | |
Bayview Club | | Indianapolis, IN | | 5/1/2015 | | 2004 | | | 236 | | | | 87.3 | % | | | 78.2 | % | | | 940 | |
Arbors River Oaks | | Memphis, TN | | 9/17/2015 | | 1990 | | | 191 | | | | 90.1 | % | | | 94.5 | % | | | 1,195 | |
Aston | | Wake Forest, NC | | 9/17/2015 | | 2013 | | | 288 | | | | 95.1 | % | | | 95.8 | % | | | 1,036 | |
Avenues at Craig Ranch | | McKinneuy, TX | | 9/17/2015 | | 2013 | | | 334 | | | | 96.4 | % | | | 95.6 | % | | | 1,216 | |
Bridge Pointe | | Huntsville, AL | | 9/17/2015 | | 2002 | | | 178 | | | | 96.1 | % | | | 95.5 | % | | | 839 | |
Creekstone at RTP | | Durham, NC | | 9/17/2015 | | 2012 | | | 256 | | | | 94.9 | % | | | 96.1 | % | | | 1,130 | |
Fountains Southend | | Charlotte, NC | | 9/17/2015 | | 2013 | | | 208 | | | | 93.8 | % | | | 96.0 | % | | | 1,356 | |
Fox Trails | | Plano, TX | | 9/17/2015 | | 1981 | | | 286 | | | | 97.6 | % | | | 96.4 | % | | | 991 | |
Lakeshore on the Hill | | Chattanooga, TN | | 9/17/2015 | | 1969 | | | 123 | | | | 95.9 | % | | | 97.2 | % | | | 923 | |
Millenia 700 | | Orlando, FL | | 9/17/2015 | | 2012 | | | 297 | | | | 97.3 | % | | | 97.1 | % | | | 1,321 | |
Miller Creek at German Town | | Memphis, TN | | 9/17/2015 | | 2013 | | | 330 | | | | 94.9 | % | | | 95.4 | % | | | 1,223 | |
Pointe at Canyon Ridge | | Atlanta, GA | | 9/17/2015 | | 1986 | | | 494 | | | | 91.5 | % | | | 92.4 | % | | | 916 | |
St James at Goose Creek | | Goose Creek, SC | | 9/17/2015 | | 2009 | | | 244 | | | | 94.3 | % | | | 96.1 | % | | | 1,067 | |
Talison Row at Daniel Island | | Daniel Island, SC | | 9/17/2015 | | 2013 | | | 274 | | | | 97.8 | % | | | 97.6 | % | | | 1,534 | |
The Aventine Greenville | | Greenville, SC | | 9/17/2015 | | 2013 | | | 346 | | | | 92.8 | % | | | 93.5 | % | | | 1,152 | |
Trails at Signal Mountain | | Chattanooga, TN | | 9/17/2015 | | 1972 | | | 172 | | | | 98.8 | % | | | 96.2 | % | | | 910 | |
Vue at Knoll Trail | | Dallas, TX | | 9/17/2015 | | 1991 | | | 114 | | | | 93.9 | % | | | 95.0 | % | | | 886 | |
Waterstone at Brier Creek | | Raleigh, NC | | 9/17/2015 | | 2014 | | | 232 | | | | 93.5 | % | | | 94.1 | % | | | 1,218 | |
Waterstone Big Creek | | Alpharetta, GA | | 9/17/2015 | | 2014 | | | 370 | | | | 96.5 | % | | | 95.3 | % | | | 1,331 | |
Westmont Commons | | Asheville, NC | | 9/17/2015 | | 2003 | | | 252 | | | | 94.4 | % | | | 96.3 | % | | | 1,005 | |
| | | | | | | | | | | | | | | | | | | | | | |
Non Same Store | | | | | | | | | 8,702 | | | | 93.5 | % | | | 94.2 | % | | $ | 1,036 | |
| | | | | | | | | | | | | | | | | | | | | | |
TOTAL | | | | | | | | | 14,044 | | | | 93.8 | % | | | 94.0 | % | | $ | 950.40 | |
| | | | | | | | | | | | | | | | | | | | | | |
| (a) | All dates are for the year in which a significant renovation program was completed, except for Runaway Bay, Arbors at the Reservoir, King’s Landing, Walnut Hill, Stonebridge, Bennington Pond, Prospect Park, Brookside, Jamestown, Meadows, Oxmoor, Stonebridge at the Ranch and Iron Rock Ranch which is the year construction was completed. |
| (b) | Units represent the total number of apartment units available for rent at September 30, 2015. |
| (c) | Physical occupancy for each of our properties is calculated as (i) total units rented as of September 30, 2015 divided by (ii) total units available as of September 30, 2015, expressed as a percentage. |
| (d) | Average occupancy represents the daily average occupied units for the three-month period ended September 30, 2015. |
| (e) | Average monthly effective monthly rent, per unit, represents the average monthly rent for all occupied units for the three-month period ended September 30, 2015. |
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NOI EXPOSURE BY MARKET
Dollars in thousands, except per share data
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | For the Three Months Ended September 30, 2015 | |
| | | | | | | | | | | | Average | | | | | | | |
| | | | | | | | | | | | Effective | | | | | | | |
| | | | | | Gross Real
Estate | | | Period End | | | Monthly Rent | | | Net Operating | | | | |
Market | | Units | | | Assets | | | Occupancy | | | per Unit | | | Income | | | % of NOI | |
Louisville. KY | | | 1,549 | | | $ | 159,028 | | | | 91.4 | % | | $ | 906 | | | $ | 2,316 | | | | 17.1 | % |
Oklahoma City, OK | | | 1,658 | | | | 68,100 | | | | 92.2 | % | | | 656 | | | | 1,415 | | | | 10.4 | % |
Memphis, TN | | | 1,381 | | | | 134,024 | | | | 91.2 | % | | | 976 | | | | 1,220 | | | | 9.0 | % |
Austin, TX | | | 620 | | | | 49,328 | | | | 95.0 | % | | | 1,030 | | | | 1,002 | | | | 7.4 | % |
Jackson, MS | | | 602 | | | | 42,077 | | | | 98.2 | % | | | 876 | | | | 870 | | | | 6.4 | % |
Atlanta, GA | | | 1,314 | | | | 145,422 | | | | 92.8 | % | | | 990 | | | | 788 | | | | 5.8 | % |
Indianapolis, IN | | | 782 | | | | 52,649 | | | | 92.5 | % | | | 830 | | | | 709 | | | | 5.2 | % |
Little Rock, AR | | | 462 | | | | 51,631 | | | | 92.4 | % | | | 938 | | | | 695 | | | | 5.1 | % |
Raleigh, NC | | | 1,044 | | | | 138,405 | | | | 94.1 | % | | | 1,053 | | | | 675 | | | | 5.0 | % |
Phoenix, AZ | | | 360 | | | | 31,325 | | | | 96.4 | % | | | 872 | | | | 583 | | | | 4.3 | % |
Chicago, IL | | | 370 | | | | 27,766 | | | | 94.3 | % | | | 953 | | | | 581 | | | | 4.3 | % |
Tucson, AZ | | | 320 | | | | 25,455 | | | | 95.9 | % | | | 843 | | | | 486 | | | | 3.6 | % |
Saint Louis, MO | | | 152 | | | | 31,325 | | | | 91.0 | % | | | 1,400 | | | | 418 | | | | 3.1 | % |
Denver, CO | | | 162 | | | | 8,396 | | | | 96.9 | % | | | 1,154 | | | | 326 | | | | 2.4 | % |
Charleston, SC | | | 518 | | | | 78,366 | | | | 96.2 | % | | | 1,314 | | | | 305 | | | | 2.3 | % |
Columbus, OH | | | 240 | | | | 17,076 | | | | 95.0 | % | | | 816 | | | | 296 | | | | 2.2 | % |
Dallas, TX | | | 734 | | | | 84,374 | | | | 96.5 | % | | | 1,077 | | | | 227 | | | | 1.7 | % |
Greenville, SC | | | 346 | | | | 48,055 | | | | 92.8 | % | | | 1,152 | | | | 118 | | | | 0.9 | % |
Norfolk, VA | | | 200 | | | | 11,613 | | | | 98.0 | % | | | 685 | | | | 117 | | | | 0.9 | % |
Orlando, FL | | | 297 | | | | 47,252 | | | | 97.3 | % | | | 1,321 | | | | 114 | | | | 0.8 | % |
Charlotte, NC | | | 208 | | | | 41,622 | | | | 93.8 | % | | | 1,356 | | | | 89 | | | | 0.7 | % |
Asheville, NC | | | 252 | | | | 27,975 | | | | 94.4 | % | | | 1,005 | | | | 81 | | | | 0.6 | % |
Chattanooga, TN | | | 295 | | | | 25,232 | | | | 97.6 | % | | | 915 | | | | 72 | | | | 0.5 | % |
Huntsville, AL | | | 178 | | | | 15,809 | | | | 96.1 | % | | | 839 | | | | 44 | | | | 0.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total/Weighted Average | | | 14,044 | | | $ | 1,362,305 | | | | 93.8 | % | | $ | 950 | | | $ | 13,547 | | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
18
DEFINITIONS
Average Effective Monthly Rent per Unit
Average effective rent per unit represents the average of gross rent amounts, divided by the average occupancy (in units) for the period presented. We believe average effective rent is a helpful measurement in evaluating average pricing. This metric, when presented, reflects the average effective rent per month.
Average Occupancy
Average occupancy represents the average of the daily physical occupancy for the period presented.
Adjusted EBITDA
EBITDA is defined as net income before gains or losses on asset sales, gains or losses on debt extinguishments, depreciation and amortization expenses, interest expense, income taxes, and amortization of deferred financing costs. Adjusted EBITDA is EBITDA before acquisition expenses and gains. EBITDA and Adjusted EBITDA are each non-GAAP measures. We consider EBITDA and Adjusted EBITDA to be an appropriate supplemental measure of our performance because it eliminates depreciation, income taxes, interest and acquisition expenses and gains relating to IRT’s acquisition of TSRE, which permits investors to view income from operations without non-cash items such as depreciation, amortization, the cost of debt or items specific to the TSRE acquisition. The table is a reconciliation of net income applicable to common stockholders to Adjusted EBITDA. IRT’s calculation of Adjusted EBITDA differs from the methodology used for calculating Adjusted EBITDA by certain other REITs and, accordingly, IRT’s Adjusted EBITDA may not be comparable to Adjusted EBITDA reported by other REITs.
Funds From Operations (“FFO”) and Core Funds From Operations (“CFFO”)
IRT believes that FFO and CFFO, each of which is a non-GAAP measure, are additional appropriate measures of the operating performance of a REIT and IRT in particular. IRT computes FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, as net income or loss allocated to common stock (computed in accordance with GAAP), excluding real estate-related depreciation and amortization expense, gains or losses on sales of real estate and the cumulative effect of changes in accounting principles.
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 acquisition expenses, expensed costs related to the issuance of shares of our common stock, gains or losses on real estate transactions and equity-based compensation expenses, from the determination of FFO. IRT incurs acquisition expenses in connection with acquisitions of real estate properties and expenses those costs when incurred in accordance with U.S. GAAP. As these expenses are one-time and reflective of investing activities rather than operating performance, IRT adds back these costs to FFO in determining CFFO. In connection with the TSRE transaction, IRT modified the calculation of CFFO to adjust for amortization of deferred financing costs and TSRE financing extinguishment and employee separation expenses because these are non-cash items or reflective of investing activities rather than operating performance similar to the other CFFO adjustments. The effect of these modifications on prior periods is reflected in the reconciliation of IRT’s reported net income (loss) allocable to common shares to its FFO and CFFO included herein.
IRT’s calculation of CFFO differs from the methodology used for calculating CFFO by certain other REITs and, accordingly, IRT’s CFFO may not be comparable to CFFO reported by other REITs. IRT’s management utilizes FFO and CFFO as measures of IRT’s operating performance, and believes they are also useful to investors, because they facilitate an understanding of IRT’s operating performance after adjustment for certain non-cash items, such as depreciation and amortization expenses, equity based compensation, amortization of deferred financing costs, and acquisition expenses, TSRE financing extinguishment and employee separation expenses, gain on TSRE merger and property acquisitions and pursuit costs that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare IRT’s operating performance between periods. Furthermore, although FFO, CFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, IRT also believes that FFO and CFFO may provide IRT and our investors with an additional useful measure to compare IRT’s financial performance to certain other REITs. IRT also uses CFFO for purposes of determining the quarterly incentive fee, if any, payable to our advisor. 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. Neither FFO nor CFFO should be considered as an alternative to net income as an indicator of IRT’s operating performance or as an alternative to cash flow from operating activities as a measure of IRT’s liquidity.
19
Net Operating Income
IRT believes that Net Operating Income (“NOI”), a non-GAAP measure, is a useful measure of its operating performance. IRT defines NOI as total property revenues less total property operating expenses, excluding depreciation and amortization, asset management fees, acquisition expenses and general 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. We use NOI to evaluate our performance on a same store and non-same store basis because NOI measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance and captures trends in rental housing and property operating expenses. However, NOI should only be used as an alternative measure of our financial performance.
Same Store Properties and Same Store Portfolio
IRT defines same store properties or portfolio as conventional multifamily residential apartments which were owned and operational for the entire periods presented, including each comparative period.
20
