Independence Realty Trust Announces Second Quarter 2014 Financial Results
PHILADELPHIA, PA — August 1, 2014 — Independence Realty Trust, Inc. (“IRT”) (NYSE MKT: IRT) today announced second quarter 2014 financial results.
Highlights
•
Core funds from operations (“CFFO”) increased 160% to $3.4 million for the quarter ended June 30, 2014 from $1.3 million for the quarter ended June 30, 2013.
•
Operating income increased 47% to $1.8 million for the quarter ended June 30, 2014 from $1.2 million for the quarter ended June 30, 2013.
•
Total revenues grew 148% to $11.6 million for the quarter ended June 30, 2014 from $4.7 million for the quarter ended June 30, 2013.
•
On July 21, 2014, IRT completed its underwritten public offering selling 8,050,000 shares of IRT common stock for $9.50 per share raising gross proceeds of $76.5 million. RAIT Financial Trust (“RAIT”), IRT’s largest stockholder and the parent company of IRT’s external advisor, purchased 300,000 shares of common stock in the offering, at the public offering price, for which no underwriting discounts and commissions were paid to the underwriters. After giving effect to this offering, the percent of IRT’s outstanding common stock held by RAIT was reduced from 39.4% to 28.2%.
•
IRT acquired 2 properties totaling 372 units for $41.8 million during the quarter ended June 30, 2014.
Financial Results
IRT reported CFFO, a non-GAAP financial measure, for the three-month period ended June 30, 2014 of $3.4 million, or $0.19 per share — diluted based on 17.7 million weighted-average shares outstanding – diluted, as compared to CFFO for the three-month period ended June 30, 2013 of $1.3 million, or $0.23 per share – diluted based on 5.6 million weighted-average shares outstanding – diluted. IRT reported a net loss allocable to common stock for the three-month period ended June 30, 2014 of $(0.1) million, or $(0.01) per share — diluted based on 17.7 million weighted-average shares outstanding – diluted, as compared to net income allocable to common stock for the three-month period ended June 30, 2013 of $0.05 million, or $0.01 per share – diluted based on 5.6 million weighted-average shares outstanding – diluted.
IRT reported CFFO for the six-month period ended June 30, 2014 of $5.9 million, or $0.36 per share — diluted based on 16.5 million weighted-average shares outstanding – diluted, as compared to CFFO for the six-month period ended June 30, 2013 of $2.6 million, or $0.46 per share – diluted based on 5.6 million weighted-average shares outstanding – diluted. IRT reported a net income allocable to common stock for the six-month period ended June 30, 2014 of $2.8 million, or $0.17 per share — diluted based on 16.5 million weighted-average shares outstanding – diluted, as compared to net income allocable to common stock for the six-month period ended June 30, 2013 of $0.05 million, or $0.01 per share – diluted based on 5.6 million weighted-average shares outstanding – diluted.
A reconciliation of IRT’s reported net income (loss) to its funds from operations (“FFO”) and CFFO is included as Schedule I to this release. Schedule I also includes management’s rationale for the usefulness of each of these non-GAAP financial measures.
Distributions
On July 10, 2014, IRT’s Board of Directors declared monthly cash dividends for the third quarter of 2014 on IRT’s shares of common stock in the amount of $0.06 per share per month. The monthly dividends total $0.18 per share for the third quarter. The month for which each dividend was declared is set forth below, with the relevant amount per share, record date and payment date set forth opposite the month:
Month
Amount
Record Date
Payment Date
June 2014
$
0.06
7/31/2014
8/15/2014
July 2014
$
0.06
8/29/2014
9/16/2014
August 2014
$
0.06
9/30/2014
10/15/2014
Key Statistics (Unaudited and dollars in thousands, except per share and per unit information)
As of or For the Three-Month Periods Ended
June 30, 2014
March 31, 2014
December 31, 2013
September 30, 2013
June 30, 2013
Financial Statistics:
Total revenue
$
11,649
$
8,135
$
5,768
$
4,787
$
4,700
Earnings (loss) per share-diluted
$
(0.01
)
$
0.19
$
0.03
$
0.03
$
0.01
Funds from Operations (“FFO”) per share
$
0.18
$
0.33
$
0.17
$
0.17
$
0.23
Core funds from operations (“CFFO”) per share
$
0.19
$
0.17
$
0.20
$
0.17
$
0.23
Dividends declared per common share
$
0.18
$
0.18
$
0.16
$
0.16
$
0.16
Total Shares Outstanding
17,751,540
17,742,540
9,652,540
9,643,540
5,643,540
Apartment Property Portfolio:
Reported investments in real estate at cost
$
362,323
$
320,437
$
190,096
$
166,665
$
154,040
Net operating income
$
6,064
$
4,147
$
3,159
$
2,373
$
2,459
Number of properties owned
19
17
10
9
8
Multifamily units owned
5,342
4,970
2,790
2,358
2,004
Portfolio weighted average occupancy
93.1
%
93.9
%
94.6
%
94.4
%
94.2
%
Weighted average monthly effective rent per unit (1)
$
764
$
730
$
765
$
784
$
784
(1)
Weighted average monthly effective rent per occupied unit represents the average monthly rent collected for all occupied units after giving effect to tenant concessions. We do not report average effective rent per unit in the month of acquisition as it is not representative of a full month of operations. Same Store weighted average effective rent per unit was $798, $795, $792, $784 and $784 for the periods presented above, respectively.
Properties
The following table presents an overview of our apartment portfolio as of June 30, 2014:
Average Monthly
Year
Effective
Property Name
Location
Acquisition
Built or
Physical
Rent per
Date
Renovated(1)
Units(2)
Occupancy(3)
Occupied Unit(4)
Belle Creek
Henderson, Colorado
4/29/2011
2011
162(5)
97.5%
$989
Copper Mill
Austin, Texas
4/29/2011
2010
320
97.5
%
786
Crestmont
Marietta, Georgia
4/29/2011
2010
228
99.1
%
716
Cumberland Glen
Smyrna, Georgia
4/29/2011
2010
222
96.4
%
704
Heritage Trace
Newport News, Virginia
4/29/2011
2010
200
90.5
%
687
Tresa at Arrowhead
Phoenix, Arizona
4/29/2011
2006
360
95.0
%
821
Centrepoint
Tucson, Arizona
12/16/2011
2006
320
95.9
%
816
Runaway Bay
Indianapolis, Indiana
10/11/2012
2002
192
95.3
%
909
Berkshire Square
Indianapolis, Indiana
9/19/2013
2012
354
92.1
%
584
The Crossings
Jackson, Mississippi
11/22/2013
2006
432
92.4
%
735
Reserve at Eagle Ridge
Waukegan, Illinois
1/31/2014
2008
370
94.6
%
934
Windrush
Edmond, Oklahoma
2/28/2014
2011
160
85.6
%
775
Heritage Park
Oklahoma City, Oklahoma
2/28/2014
2011
453
90.5
%
619
Raindance
Oklahoma City, Oklahoma
2/28/2014
2011
504
90.5
%
532
Augusta
Oklahoma City, Oklahoma
2/28/2014
2011
197
82.2
%
724
Invitational
Oklahoma City, Oklahoma
2/28/2014
2011
344
93.0
%
673
King’s Landing
Creve Coeur, Missouri
3/31/2014
2005
152
93.6
%
1,460
Carrington Park
Little Rock, Arkansas
5/07/2014
1999
202
92.6
%
1,066
Arbors at the Reservoir
Ridgeland, Mississippi
6/04/2014
2000
170
93.5
%
— (6)
Total/Weighted Average
5,342
93.1
%
$
764
��
(1)
All dates are for the year in which a significant renovation program was completed, except for Runaway Bay, Arbors at the Reservoir and King’s Landing, which is the year construction was completed.
(2)
Units represents the total number of apartment units available for rent at June 30, 2014.
(3)
Physical occupancy for each of our properties is calculated as (i) total units rented as of June 30, 2014 divided by (ii) total units available as of June 30, 2014, expressed as a percentage.
(4)
Average monthly effective rent per occupied unit represents the average monthly rent for all occupied units for the three-month period ended June 30, 2014.
(5)
Includes 6,256 square feet of retail space in six units, of which 1,010 square feet of space is occupied by RAIT Residential for use as the leasing office. The remaining 5,246 square feet of space is 86% occupied by four tenants with an average monthly base rent of $1,603, or $16 per square foot per year. These four tenants are principally engaged in the following businesses: grocery, retail and various retail services.
(6)
We do not report average effective rent per unit in the month of acquisition as it is not representative of a full month of operations. As of June 2014, the average monthly effective rent per occupied unit was $1,064.
Conference Call
All interested parties can listen to the live conference call webcast at 9:00 AM ET on
Friday, August 1, 2014 from the investor relations section of the IRT website at www.irtreit.com or by dialing 877.280.4956, access code 81504352. For those who are not available to listen to the live call, the replay will be available shortly following the live call on IRT’s website and telephonically until Friday, August 8, 2014, by dialing 888.286.8010, access code 49252720.
About Independence Realty Trust, Inc.
Independence Realty Trust, Inc. (NYSE MKT: IRT) is a real estate investment trust that seeks to own well-located apartment properties in geographic submarkets that it believes support strong occupancy and the potential for growth in rental rates. IRT seeks to provide stockholders with attractive risk-adjusted returns, with an emphasis on distributions and capital appreciation. IRT is externally advised by a wholly-owned subsidiary of RAIT Financial Trust (NYSE: RAS).
Forward-Looking Statements
This press release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “trend”, “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” “seek” or other similar words. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to, those disclosed in IRT’s filings with the Securities and Exchange Commission. IRT undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required by law.
Independence Realty Trust, Inc. Contact Andres Viroslav 215.243.9000 aviroslav@irtreit.com
1
Independence Realty Trust, Inc. Consolidated Statements of Operations (Dollars in thousands, except share and per share information) (unaudited)
For the Three-Month
For the Six-Month
Period Ended
Period Ended
June 30
June 30
2014
2013
2014
2013
Revenues:
Rental income
$
10,613
$
4,218
$
17,966
$
8,396
Tenant reimbursement income
436
220
802
443
Other income
600
262
1,016
549
Total revenue
11,649
4,700
19,784
9,388
Expenses:
Property operating expenses
5,585
2,241
9,573
4,406
General and administrative expenses
378
94
546
271
Asset management fees
501
79
647
161
Acquisition expenses
152
—
514
—
Depreciation and amortization
3,232
1,063
5,355
2,099
Total expenses
9,848
3,477
16,635
6,937
Operating income
1,801
1,223
3,149
2,451
Interest expense
(1,930
)
(899
)
(3,229
)
(1,787
)
Interest income
1
—
5
—
Gain (loss) on assets
—
—
2,882
—
Net income (loss):
(128
)
324
2,807
664
(Income) loss allocated to preferred stock
—
(4
)
—
(8
)
(Income) loss allocated to non-controlling interests
—
(272
)
—
(604
)
Net income (loss) allocable to common stock
$
(128
)
$
48
$
2,807
$
52
Earnings (loss) per share:
Basic
$
(0.01
)
$
0.01
$
0.17
$
0.03
Diluted
$
(0.01
)
$
0.01
$
0.17
$
0.03
Weighted-average shares:
Basic
17,707,287
3,556,349
16,459,623
1,959,998
Diluted
17,707,287
3,556,349
16,484,357
1,959,998
Dividends declared per common share
$
0.18
$
0.16
$
0.36
$
0.31
2
Independence Realty Trust, Inc. Consolidated Balance Sheets (Dollars in thousands, except share and per share information) (unaudited)
As of
As of
June 30,
December 31,
2014
2013
Assets:
Investments in real estate:
Investments in real estate at cost
$
362,323
$
190,096
Accumulated depreciation
(18,804
)
(15,775
)
Investments in real estate, net
343,519
174,321
Cash and cash equivalents
8,054
3,334
Restricted cash
2,698
1,122
Accounts receivable and other assets
2,682
1,731
Intangible assets, net of accumulated amortization of $2,513 and $569, respectively
1,126
517
Deferred costs, net of accumulated amortization of $293 and $151, respectively
1,568
846
Total assets
$
359,647
$
181,871
Liabilities and Equity:
Indebtedness
$
215,628
$
103,303
Accounts payable and accrued expenses
5,725
2,374
Accrued interest payable
30
63
Dividends payable
1,076
515
Other liabilities
946
708
Total liabilities
223,405
106,963
Equity:
Stockholders’ equity:
—
—
Preferred stock, $0.01 par value; 50,000,000 shares authorized, 0 and 0 shares issued and outstanding, respectively
Common stock, $0.01 par value; 300,000,000 shares authorized, 17,751,540 and 9,652,540 shares issued and outstanding, including 40,000 unvested restricted common share awards as of June 30, 2014
177
96
Additional paid-in capital
140,973
78,112
Retained earnings (accumulated deficit)
(6,867
)
(3,300
)
Total shareholders’ equity
134,283
74,908
Non-controlling interests
1,959
—
Total Equity
136,242
74,908
Total liabilities and equity
$
359,647
$
181,871
3
Schedule I Independence Realty Trust, Inc. Reconciliation of Net income (loss) Allocable to Common Stock and Funds From Operations (“FFO”) and Core Funds From Operations (“CFFO”) (1) (Dollars in thousands, except share and per share amounts) (unaudited)
For the Three-Month Period Ended
For the Six-Month Period Ended
June 30,
June 30,
2014
2013
2014
2013
Amount
Per Share (2)
Amount
Per Share (3)
Amount
Per Share (2)
Amount
Per Share (3)
Funds From Operations:
Net income (loss)
$
(128
)
$
(0.01
)
$
324
$
0.06
$
2,807
$
0.17
$
664
$
0.12
Adjustments:
Income allocated to preferred shares
—
—
(4
)
0.00
—
—
(8
)
0.00
Income allocated to preferred units
—
—
(88
)
(0.02
)
—
—
(175
)
(0.03
)
Real estate depreciation and amortization
3,232
0.19
1,063
0.19
5,355
0.32
2,099
0.37
Funds From Operations
$
3,104
$
0.18
$
1,295
$
0.23
$
8,162
$
0.49
$
2,580
$
0.46
Core Funds From Operations:
Funds From Operations
$
3,104
$
0.18
$
1,295
$
0.23
$
8,162
$
0.49
$
2,580
$
0.46
Adjustments:
Acquisition fees and expenses
152
0.01
—
—
514
0.03
—
—
Equity based compensation
112
0.00
—
—
142
0.01
—
—
(Gains) losses on assets
—
—
—
—
(2,882
)
(0.17
)
—
—
Core Funds From Operations
$
3,368
$
0.19
$
1,295
$
0.23
$
5,936
$
0.36
$
2,580
$
0.46
(1)
IRT believes that FFO and Core FFO, each of which is a non-GAAP measure, are additional appropriate measures of the operating performance of a REIT and IRT in particular. IRT computes FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, as net income or loss allocated to common stock (computed in accordance with GAAP), excluding real estate-related depreciation and amortization expense, gains or losses on sales of real estate and the cumulative effect of changes in accounting principles.
Core FFO is a computation made by analysts and investors to measure a real estate company’s operating performance by removing the effect of items that do not reflect ongoing property operations, including acquisition expenses, expensed costs related to the issuance of shares of our common stock, gains or losses on real estate transactions and equity-based compensation expenses, from the determination of FFO. IRT incurs acquisition expenses in connection with acquisitions of real estate properties and expenses those costs when incurred in accordance with U.S. GAAP. As these expenses are one-time and reflective of investing activities rather than operating performance, IRT adds back these costs to FFO in determining Core FFO.
IRT’s calculation of Core FFO differs from the methodology used for calculating Core FFO by certain other REITs and, accordingly, IRT’s Core FFO may not be comparable to Core FFO reported by other REITs. IRT’s management utilizes FFO and Core FFO as measures of IRT’s operating performance, and believes they are also useful to investors, because they facilitate an understanding of IRT’s operating performance after adjustment for certain non-cash items, such as depreciation and amortization expenses, and acquisition expenses and pursuit costs that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare IRT’s operating performance between periods. Furthermore, although FFO, Core FFO and other supplemental performance measures are defined in various ways throughout the REIT industry, IRT also believes that FFO and Core FFO may provide IRT and our investors with an additional useful measure to compare IRT’s financial performance to certain other REITs. IRT also uses Core FFO for purposes of determining the quarterly incentive fee, if any, payable to our advisor beginning with the second quarter of 2013.Neither FFO nor Core FFO is equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and Core FFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor Core FFO should be considered as an alternative to net income as an indicator of IRT’s operating performance or as an alternative to cash flow from operating activities as a measure of IRT’s liquidity.
(2)
Based on 17,707,287 and 16,484,357 weighted-average shares outstanding-diluted for the three and six-month periods ended June 30, 2014.
(3)
Based on 5,643,122 and 5,632,028 weighted-average shares outstanding-diluted for the three and six-month periods ended June 30, 2013.
4
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