Independence Realty Trust Announces Fourth Quarter and Full Year 2021 Financial Results

Introduces Full Year 2022 Guidance

PHILADELPHIA–(BUSINESS WIRE)–Independence Realty Trust, Inc. (“IRT”) (NYSE: IRT), a multifamily apartment REIT, today announced its fourth quarter and full year 2021 financial results.

Fourth Quarter Highlights

• Net income available to common shares of $28.6 million for the quarter ended December 31, 2021 compared to $13.3 million for the quarter ended December 31, 2020.

• Earnings per diluted share of $0.23 for the quarter ended December 31, 2021 compared to $0.14 for the quarter ended December 31, 2020.

• Same store net operating income (“NOI”) growth of 15.1% for the quarter ended December 31, 2021 compared to the quarter ended December 31, 2020.

• Core Funds from Operations (“CFFO”) of $31.0 million for the quarter ended December 31, 2021 compared to $19.7 million for the quarter ended December 31, 2020. CFFO per share was $0.24 for the fourth quarter of 2021, as compared to $0.21 for the fourth quarter of 2020.

• Adjusted EBITDA of $42.3 million for the quarter ended December 31, 2021 compared to $28.5 million for the quarter ended December 31, 2020.

• Completed our strategic merger with Steadfast Apartment REIT, Inc. (“STAR”) on December 16, 2021, adding 68 properties aggregating 21,394 rentable units and two development properties aggregating 621 rentable units.

Full Year Highlights

• Since the inception of our value add program in January 2018 through December 31, 2021, IRT has completed renovations at 4,672 units, achieving a weighted average return on investment of 20.2% on interior renovations and 18.0% on total renovation costs.

• Net income available to common shares of $44.6 million for the year ended December 31, 2021 compared to $14.8 million for the year ended December 31, 2020.

• Earnings per diluted share of $0.41 for the year ended December 31, 2021 compared to $0.16 for the year ended December 31, 2020.

• Same store net operating income (“NOI”) growth of 11.4% for the year ended December 31, 2021 compared to the year ended December 31, 2020.

• Core Funds from Operations (“CFFO”) of $92.0 million for the year ended December 31, 2021 compared to $68.9 million for the year ended December 31, 2020. CFFO per share was $0.84 for the full year 2021, as compared to $0.73 for the full year 2020.

• Adjusted EBITDA of $128.9 million for the year ended December 31, 2021 compared to $105.3 million for the year ended December 31, 2020.

2022 Guidance Highlights

• Introduced 2022 guidance including CFFO per share of $1.02 at the mid-point of our guidance range.

• 2022 same store NOI growth of 11.0% at the mid-point of our guidance range.

Included later in this press release are definitions of NOI, CFFO, Adjusted EBITDA and other Non-GAAP financial measures and reconciliations of such measures to their most comparable financial measures as calculated and presented in accordance with GAAP.

Management Commentary

“2021 was an exceptional year for IRT underscored by outsized organic growth across the portfolio, as well as the completion of the STAR merger that cements our position as a leading multifamily REIT focused on the high growth U.S. Sunbelt region,” said Scott Schaeffer, Chairman and CEO of IRT. “We delivered fourth quarter and full year same store NOI growth of 15.1% and 11.4%, respectively, supported by improvements in average occupancy rates and rental income. In addition, we continued to advance our high return value add program and drive accretive growth through asset acquisitions and dispositions, as well as joint venture relationships in new multifamily development.”

“Looking ahead, we are excited for our next phase of growth, having doubled our property and unit count through our merger with STAR. Our integration efforts remain on-track, with our property and revenue management systems now fully implemented across all properties. In addition, we expect to achieve at least $28 million in annual synergies and effectively improve our leverage position. These advancements, along with our plans to continue to drive strong operating results, well position IRT to realize attractive growth in the multifamily sector for years to come.”

Same Store Property Operating Results

Same Store Property Operating Results, Excluding Value Add

The same store portfolio results below exclude 18 communities that are both part of the same store portfolio and were actively undergoing Value Add renovations during the three and twelve months ended December 31, 2021.

IRT and STAR Merger

On December 16, 2021, we completed our merger with STAR. Through the STAR Merger, we acquired 68 apartment communities that contain 21,394 units and two apartment communities that are under development and approved for 621 units in the aggregate. We acquired assets totaling $4.8 billion, assumed liabilities totaling $1.9 billion, and issued an aggregate of 99,720,948 shares of common stock and 6,429,481 IROP units in our merger with STAR. Leading up to and after the closing of the STAR Merger, we also successfully delevered the combined balance sheet through a combination of our July forward equity raise of $271 million on 16.1 million shares, the disposition of three STAR properties in November 2021 for a total sales price of $107 million, and the disposition of six IRT properties between December 2021 and February 2022 for a total sales price of $297 million.

Same Store Comparisons and STAR

As discussed above, we completed our merger with STAR, which more than doubled our property and unit counts. We will continue to follow our previous definition of same store and will formally add STAR to the same store pool on January 1, 2023 in accordance with our current same store definition. However, in 2022 we will begin presenting a Combined Same Store portfolio to help investors understand the larger same store portfolio. We’ve included two new appendices this quarter. Appendix A shows the impact of consolidating STAR’s business for 2021. To aid in future modeling, we have added Appendix B, which provides the 2021 quarterly property operating results for the 2022 Combined Same Store portfolio. The following Operating Metrics and 2022 Guidance are presented considering these new same store portfolios. See the Definitions section of this release for full definitions of these new same store portfolios.

Operating Metrics

The table below summarizes operating metrics for the noted same store portfolios for the applicable periods.

Value Add Program

We completed renovations on 253 units and 953 units during the quarter ended and year ended December 31, 2021, respectively. From inception of our value add program in January 2018 through December 31, 2021, we completed renovations on 4,672 units, achieving a return on investment of 18.0% (20.2% on interior renovation costs) and an average monthly rental increase of 19.6%.

Dispositions/Property Held for Sale:

In connection with our merger with STAR, we completed the following dispositions and used net proceeds from these sales to repay debt of the combined company.

• Crestmont in Atlanta, GA: sold on December 13, 2021 and recognized a gain on disposition of $33.1 million.
• Creekside Corner in Atlanta, GA: sold on December 16, 2021 and recognized a gain on disposition of $43.1 million.
• Riverchase in Indianapolis, IN: sold on January 18, 2022 and expect to recognize a gain on disposition of $13.0 million.
• Haverford Place in Louisville, KY: sold on February 2, 2022 and expect to recognize a gain on disposition of $16.8 million.
• Heritage Park in Oklahoma City, OK: sold on February 2, 2022 and expect to recognize a gain on disposition of $31.5 million.
• Raindance in Oklahoma City, OK: sold on February 2, 2022 and expect to recognize a gain on disposition of $33.9 million.

Capital Expenditures

For the three months ended December 31, 2021, recurring capital expenditures for the total portfolio were $1.8 million, or $112 per unit. For the year ended December 31, 2021, recurring capital expenditures for the total portfolio were $6.8 million, or $422 per unit.

Distributions

On December 2, 2021, our Board of Directors declared two prorated quarterly cash dividends based on IRT’s current quarterly dividend rate of $0.12 per share of our common stock. The first prorated dividend was $0.09913 and was paid on January 14, 2022 to stockholders of record as of the close of business on December 15, 2021. The second prorated dividend was $0.02087 and was paid on January 21, 2022 to stockholders of record as of the close of business on December 30, 2021.

2022 EPS and CFFO Guidance

We are introducing 2022 full year guidance. Earnings per diluted share is projected to be in the range of $0.32 to $0.36. A reconciliation of IRT’s projected net income allocable to common shares to its projected CFFO per share is included below. See the schedules and definitions at the end of this release for further information regarding how IRT calculates CFFO and for management’s definition and rationale for the usefulness of CFFO.

2022 Guidance Assumptions

Our key guidance assumptions for 2022 are enumerated below. Note, the same store portfolio assumptions reflect the expected composition of the same store portfolio in 2022 as indicated. See definitions at the end of this release for further information regarding our same store definitions. See also, Appendix B, which includes 2021 property operating results for the 2022 Combined Same Store portfolio.

Selected Financial Information

See the schedules at the end of this earnings release for selected financial information for IRT.

Non-GAAP Financial Measures and Definitions

We disclose the following non-GAAP financial measures in this earnings release: FFO, CFFO, NOI and Adjusted EBITDA. Included at the end of this release are definitions of these non-GAAP financial measures and a reconciliation of our reported net income to our FFO and CFFO, a reconciliation of our same store NOI to our reported net income, a reconciliation of our Adjusted EBITDA to net income, and management’s rationales for the usefulness of each of these and other non-GAAP financial measures used in this release.

Conference Call

All interested parties can listen to the live conference call webcast at 9:00 AM ET on Thursday, February 17, 2022 from the investor relations section of the IRT website at www.irtliving.com or by dialing 1.844.200.6205, access code 873786. For those who are not available to listen to the live call, the replay will be available shortly following the live call from the investor relations section of IRT’s website and telephonically until Thursday, February 24, 2022 by dialing 1.866.813.9403, access code 506270.

Supplemental Information

We produce 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 our website, www.irtliving.com, through the “Investor Relations” section.

About Independence Realty Trust, Inc.

Independence Realty Trust, Inc. (NYSE: IRT) is a real estate investment trust that owns and operates multifamily apartment properties in 119 communities, across non-gateway U.S. markets including Atlanta, GA, Dallas, TX, Denver, CO, Columbus, OH, Indianapolis, IN, Oklahoma City, OK, Raleigh-Durham, NC, Houston, TX , Nashville, TN, and Memphis, TN. IRT’s investment strategy is focused on gaining scale within key amenity rich submarkets that offer good school districts, high-quality retail and major employment centers. IRT aims to provide stockholders attractive risk-adjusted returns through diligent portfolio management, strong operational performance, and a consistent return on capital through distributions and capital appreciation. More information may be found on the Company’s website www.irtliving.com.

Forward-Looking Statements

This press release contains 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 “will,” “strategy,” “expects,” “seeks,” “believes,” “potential,” or other similar words. These forward-looking statements include, without limitation, our expectations with respect to our operating performance and financial results, including our 2022 earnings guidance, timing and amount of future dividends, timing and terms of property acquisitions, dispositions, joint venture investments, developments and redevelopments and other capital expenditures, timing and terms of capital raising and other financing activity, lease pricing, revenue and expense growth, occupancy levels, supply levels, job growth, interest rates and other economic expectations, and anticipated benefits of our recently completed merger (the “STAR Merger”) with Steadfast Apartment REIT, Inc. (“STAR”), including as to the amount of synergies from the STAR Merger. Such forward-looking statements involve risks, uncertainties, estimates and assumptions and our 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 our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and not within 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. Risks and uncertainties that might cause our future actual results and/or future dividends to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: (i) risks related to the impact of COVID-19 and other potential outbreaks of infectious diseases on our financial condition, results of operations, cash flows and the impact of such risks on the financial condition of our residents and their ability to pay rent; (ii) the nature and duration of measures taken by federal, state and local government authorities to combat the spread of disease; (iii) changes in market demand for rental apartment homes and pricing pressures, including from competitors, that could limit our ability to lease units or increase rents or that could lead to declines in occupancy and rent levels; (iv) uncertainty and volatility in capital and credit markets, including changes that reduce availability, and increase costs, of capital; (v) increased costs on account of inflation; (vi) inability of tenants to meet their rent and other lease obligations and charge-offs in excess of our allowance for bad debt; (vii) legislative restrictions that may regulate rents or delay or limit collections of past due rents; (viii) risks endemic to real estate and the real estate industry generally; (ix) impairment charges; (x) the effects of natural and other disasters; (xi) delays in completing, and cost overruns incurred in connection with, our value add initiatives and failure to achieve projected rent increases and occupancy levels on account of the initiatives; (xii) failure to realize the cost savings, synergies and other benefits expected to result from the STAR Merger; (xiii) unexpected costs or delays in integration of the IRT and STAR businesses; (xiv) unknown or unexpected liabilities related to the STAR Merger; (xv) unexpected costs of REIT qualification compliance; (xvi) unexpected changes in our intention or ability to repay certain debt prior to maturity; (xvii) inability to sell certain assets within the time frames or at the pricing levels expected; (xviii) costs and disruptions as the result of a cybersecurity incident or other technology disruption; and (xix) and share price fluctuations. Please refer to the documents filed by us with the SEC, including specifically the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2020, our subsequently filed quarterly reports on Form 10-Q and our other filings with the SEC, which identify additional factors that could cause actual results to differ from those contained in forward-looking statements. We undertake 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. In addition, the declaration of dividends on our common stock is subject to the discretion of our Board of Directors and depends upon a broad range of factors, including our results of operations, financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code of 1986, as amended, applicable legal requirements and such other factors as our Board of Directors may from time to time deem relevant.

Contacts

Independence Realty Trust, Inc. Contact
Edelman Financial Communications & Capital Markets

Ted McHugh and Lauren Torres

917-365-7979

[email protected]

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