Current Report Filing (8-k)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

  

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): December 2, 2014

 

 

Independence Realty Trust, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Maryland		001-36041		26-4567130
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

Cira Centre, 2929 Arch Street, 17th Floor, Philadelphia, Pennsylvania		19104
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: [phone]

Not Applicable

Former name or former address, if changed since last report

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 7.01 Regulation FD Disclosure.

The slide presentation attached hereto as Exhibit 99.1, and incorporated herein by reference may be used by Independence Realty Trust, Inc. in various presentations to investors beginning December 2, 2014. The information in this Current Report, including the exhibit hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits.

 

(d)

Exhibits.

The exhibit furnished as part of this Current Report on Form 8-K is identified in the Exhibit Index immediately following the signature page of this report. Such Exhibit Index is incorporated herein by reference.

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SIGNATURES

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

 

				Independence Realty Trust, Inc.
December 2, 2014				By:		/s/ James J. Sebra
				Name:		James J. Sebra
				Title:		Chief Financial Officer and Treasurer

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Exhibit Index

 

Exhibit No.		Description
99.1		Slide Presentation

Independence Realty Trust, Inc. December 2014 Exhibit 99.1

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Forward Looking Statements, Non-GAAP Financial Measures and Disclaimers 2 This document and the related presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about Independence Realty Trust, Inc.’s (“IRT”) plans, objectives, expectations and intentions with respect to future operations, projected acquisitions of properties under contract or in IRT’s pipeline and other statements that are not historical facts. Forward-looking statements are sometimes identified by the words “may”, “will”, “should”, “potential”, “predict”, “continue”, “project”, “guide”, or other similar words or expressions.  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. IRT does not guarantee that the assumptions underlying such forward looking statements are free from errors. Actual results may differ materially from the anticipated results discussed in these forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: the risk factors and other disclosure contained in filings by IRT with the Securities and Exchange Commission (“SEC”), including, without limitation, IRT’s most recent annual and quarterly reports filed with SEC. IRT’s SEC filings are available on IRT’s website at www.irtreit.com. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. All subsequent written and oral forward-looking statements attributable to IRT or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this document and the related presentation. Except to the extent required by applicable law or regulation, IRT undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events. This document and the related presentation may contain non-U.S. generally accepted accounting principles (“GAAP”) financial measures.  A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure is included in this document and/or IRT’s most recent annual and quarterly reports.  This presentation is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of IRT.

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– Listed on the NYSE MKT in August 2013 – “IRT” – Targets markets with strong demographic and employment trends with minimal new supply – 22 properties in 13 states representing 6,470 units at September 30, 2014 – Focused on delivering strong risk-adjusted returns – Monthly common dividend of $0.06 or $0.72 annually representing a 7.6% yield with a $9.44 stock price at November 28, 2014 – IRT is externally managed by a subsidiary of RAIT Financial Trust (NYSE: RAS) – a multi-strategy commercial real estate company with a vertically integrated platform and significant experience owning and lending against apartment properties – Seasoned external manager with significant resources for IRT’s benefit Who are we? 3 • IRT is an apartment REIT focused on building a portfolio of well-located apartment properties in supply constrained secondary and tertiary markets which generate attractive current returns with the potential for rent increases and improved operating efficiency.

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Attractive Apartment Industry Dynamics Support Strong Demand 4 Positive Trends Data Source: U.S. Census Bureau, National Multifamily Housing Council (NMHC), Economy.com, RAIT Financial Trust IRT expects conditions will remain favorable for apartment fundamentals for the foreseeable future in secondary markets. • Positive Demographic Factors. The Echo boom generation (born early 80’s – ’00’s), which is significantly larger than Gen X (born early 60’s – 80’s), is entering the rental market.  Harvard research suggests that renters could make up half of all new households by 2020.  This equates to up to 7 million new renter households this decade. • Supply Shortage. Supply has been constrained since the recession; U.S. needs 300,000 new apartments every year to meet demand.  Supply is still playing catch-up from the impacts of the recession.  In 2010, there were only 100,804 new apartments built.  In 2013, 133,388  new apartments were built.  Through the first three quarters of 2014, 114,262 new apartments were built. The majority of new developments since the downturn have been focused on primary markets. • Low homeownership. Changing demographic factors and lifestyles plus stringent mortgage lending standards and competition from own- to-rent investors have resulted in the homeownership rate at levels last seen in the mid-1990s

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Key Statistics - Strong Momentum in the Business 5 • Since September 30, 2013, IRT has more than doubled its portfolio by number of units and properties   As of or For the Three-Month Periods Ended     September 30, 2014   June 30, 2014   March 31, 2014   December 31, 2013   September 30, 2013   Financial Statistics:           Total revenue $ 13,057  $ 11,649  $ 8,135  $ 5,768  $ 4,787  Earnings (loss) per share-diluted $ (0.00) $ (0.01) $ 0.19  $ 0.03  $ 0.03  Funds from Operations (“FFO”) per share $ 0.14  $ 0.18  $ 0.33  $ 0.17  $ 0.17  Core funds from operations (“CFFO”) per share $ 0.17  $ 0.19  $ 0.17  $ 0.20  $ 0.17  Dividends declared per common share $ 0.18  $ 0.18  $ 0.18  $ 0.16  $ 0.16  Total Shares Outstanding 25,801,540  17,751,540  17,742,540  9,652,540  9,643,540  Apartment Property Portfolio:           Reported investments in real estate at cost $ 444,050  $ 362,323  $ 320,437  $ 190,096  $ 166,665  Net operating income $ 6,905  $ 6,064  $ 4,147  $ 3,159  $ 2,373  Number of properties owned  22  19  17  10  9 Multifamily units owned 6,470  5,342  4,970  2,790  2,358  Portfolio weighted average occupancy 92.6% 93.1% 93.9% 94.6% 94.4% Weighted average monthly effective rent per unit $ 791  $ 764  $ 730  $ 765  $ 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 $814, $798, $795, $792, and $784 for the periods presented above, respectively. Same Store is defined as properties in the portfolio as of June 30, 2013 through September 30, 2014. (1)

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• IRT seeks to acquire well-located, stable apartment properties in secondary and tertiary markets Where we are? 6 (1) Figures are as of September 30, 2014. Geographic Diversity (by units) (1) National Footprint (1) – IRT owned 22 apartment properties totaling 6,470 units in 13 states at September 30, 2014 – IRT corporate office – Philadelphia, PA

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IRT Portfolio - Sampling 7 Raindance Apts Oklahoma City, Oklahoma Tresa at Arrowhead Phoenix, Arizona Augusta Apts Oklahoma City, Oklahoma Belle Creek Henderson, Colorado Invitational Apts Oklahoma City, Oklahoma Centrepoint Tucson, Arizona Heritage Park Apts Oklahoma City, Oklahoma Cumberland Glen Smyrna, Georgia Windrush Edmund, Oklahoma Crestmont Marietta, Georgia The Reserve at Eagle Ridge Waukegan, Illinois At September 30, 2014 Runaway Bay Indianapolis, Indiana Heritage Trace Newport News, Virginia Copper Mill Austin, Texas The Crossings Jackson, Mississippi Berkshire Square Indianapolis, Indiana King’s Landing Creve Coeur, Missouri Arbors at the Reservoir Ridgeland, Mississippi Carrington Park Little Rock, Arkansas

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Stable, Geographically Diversified Portfolio 8 Property Name Location Acquisition Date Purchase Price Debt Year Built or Renovated(1) Units(2) Physical Occupancy(3) Average Monthly Effective Rent per Occupied Unit(4)       Belle Creek Henderson, Colorado 4/29/2011 14,100 $           10,575 $       2011 162           (5)   96.3% 1,024 $                           Copper Mill Austin, Texas 4/29/2011 14,715              7,223            2010 320           94.7% 812                                 Crestmont Marietta, Georgia 4/29/2011 13,500              6,633            2010 228           96.5% 737                                 Cumberland Smyrna, Georgia 4/29/2011 13,800              6,781            2010 222           95.5% 711                                 Heritage Trace Newport News, Virginia 4/29/2011 11,000              5,405            2010 200           87.5% 695                                 Tresa Phoenix, Arizona 4/29/2011 36,675              27,500          2006 360           96.1% 828                                 Centrepoint Tucson, Arizona 12/16/2011 29,500              17,600          2006 320           91.6% 833                                 Runaway Bay Indianapolis, Indiana 10/11/2012 15,750              10,081          2002 192           95.8% 916                                 Berkshire Square Indianapolis, Indiana 9/19/2013 13,250              8,612            2012 354           91.2% 572                                 The Crossings Jackson, Mississippi 11/22/2013 23,000              15,313          2012 432           83.8% 778                                 Reserve at Eagle Ridge Waukegan, Illinois 1/31/2014 29,000              18,850          2008 370           91.6% 942                                 Augusta Oklahoma City, Oklahoma 2/28/2014 65,000              (6)     45,189          (7)   2011 197           90.9% 683                                 Heritage Park Oklahoma City, Oklahoma 2/28/2014 -                     (6)     -                 (7)   2011 453           92.5% 636                                 Invitational Oklahoma City, Oklahoma 2/28/2014 -                     (6)     -                 (7)   2011 344           89.5% 686                                 Raindance Oklahoma City, Oklahoma 2/28/2014 -                     (6)     -                 (7)   2011 504           92.1% 527                                 Windrush Edmond, Oklahoma 2/28/2014 -                     (6)     -                 (7)   2011 160           95.0% 783                                 King's Landing Creve Coeur, Missouri 3/31/2014 32,700              21,200          2005 152           89.7% 1,493                              Carrington Park Little Rock, Arkansas 5/07/2014 21,500              14,235          1999 202           90.1% 1,000                               Arbors at the Reservoir Ridgeland, Mississippi 6/4/2014 20,250              13,150          2000 170           95.3% 1,062                              Walnut Hill Cordova, Tennessee 8/28/2014 27,900              18,650          2001 360           95.8% 919                                  Lenoxplace Raleigh, North Carolina 9/5/2014 24,250              15,991          (9)   2012 268           95.9% -                            (8)          Stonebridge Cordova, Tennessee 9/15/2014 29,800              -                 1994 500           94.8% -                            (8)   Sub-total/Weighted Average 435,690 $         262,988 $     6,470        92.6% 791 $                        Recent acquisitions     Columbus Property Groveport, Ohio 11/24/2014 17,500              11,375          2008 240           99.2% 804                           Properties under contract        South East Portfolio Louisville, Kentucky TBD 162,500            105,300        (9)   Various 1,549        91.4% 770                                  Little Rock Property Little Rock, Arkansas TBD 32,000              -                 (9)   2005 260           95.8% 847                           Sub-total/Weighted Average 194,500 $         105,300 $     1,809        92.0% 781 $                        Total/Weighted Average 647,690 $         379,663 $     8,519        92.7% 789 $                        At September 30, 2014  ($ in thousands, except per unit data) (1) All dates are for the year in which a significant renovation program was completed, except for Runaway Bay, King's Landing, Carrington Park, Walnut Hill, Stonebridge and Arbors at the Reservoir, which is the year construction was completed. (2) Units represents the total number of apartment units available for rent at September 30, 2014 (3) Physical occupancy for each of our properties is calculated as (i) total units rented as of September 30, 2014 divided by (ii) total units available as of September 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 September 30, 2014. (5) Does not include 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 $1,623, or $16 per square foot per year. These five tenants engaged in the following businesses: grocery, retail and various retail services. (6) Acquired as part of the Oklahoma City Portfolio for an aggregate purchase price of $65,000. (7) Assumed as part of the Oklahoma City Portfolio and currently has an aggregate carrying amount of $47,025. (8) 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. (9) The Southeast Portfolio purchase price is expected to be funded with $57.2 million of cash and mortgage debt of $105.3 million. The Little Rock Property purchase price is expected to be funded with $17.0 million of cash and revolver draw of $15.0 million. No assurances can be given that these acquisitions will be completed. Financing for Lenoxplace secured on October 24, 2014.

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Disciplined Approach to Acquisitions 9 • Focus on acquiring  assets in supply constrained submarkets – Secondary and tertiary markets – Sub-markets with no substantial new apartment construction – Stable resident bases and occupancy rates – Positive net migration trends – Markets with strong employment drivers • Source acquisitions through existing relationships and established channels – Existing RAIT relationships – Existing property manager relationships – Brokerage community – Off-market transactions – TIC Syndicates • Target Profile for Acquisitions Markets Sourcing Assets 1 2 3 – Mid-rise/garden style (150-500 units) with good amenities – Acquire at less than replacement cost in the $10 - $35M price range; with 5 to 15 year operating track record – In-place cash flow with room to grow rents – Operating efficiencies through professional property management – Well-located property with good access and favorable local work force conditions

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• In addition to the properties under contract and recent acquisitions described below, IRT has an acquisition pipeline of approximately 754 units with an estimated aggregate purchase price of $80.3 million as of November 17, 2014 (1) • On November 24, 2014, IRT completed the acquisition of a 240 unit property in Groveport, Ohio, described below, for $17,500,000 • IRT has entered into agreements to acquire the Southeast Portfolio and the Little Rock Property described below Pipeline, Properties Under Contract & Recent Acquisitions 10 (1) No assurances can be given that these acquisitions will be completed. (2) Each acquisition is subject to customary terms and closing conditions. No assurances can be given that these acquisitions will be completed. (3) Consists of five properties. Purchase Date TBD (In Contract) MSA Louisville, KY Year Built / Renovated Various Number of Units 1,549 Acquisition Price $162.5 million Average Monthly Effective Rent/Unit $770 Occupancy 91.4% Purchase Date TBD (In Contract) MSA Little Rock, AR Year Built / Renovated 2005 Number of Units 260 Acquisition Price $32.0 million Average Monthly Effective Rent/Unit $847 Occupancy 95.8% Purchase Date November  24, 2014 MSA Columbus, OH Year Built / Renovated 2008 Number of Units 240 Acquisition Price $17.5 million Average Monthly Effective Rent/Unit $804 Occupancy 99.2% Southeast Portfolio (2) (3) Columbus Property Little Rock Property (2)

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Sponsor: RAIT Financial Trust (NYSE: RAS) 11 • RAIT is a multi-strategy commercial real estate company organized as an internally-managed REIT with $5.4 billion of assets under management as of September 30, 2014 • Scalable “in-house” commercial real estate platform with more than 700 employees, including property management personnel • Seasoned executive team with extensive real estate equity and debt experience • Substantial expertise lending to, owning and managing multifamily assets • Extensive networks of contacts in the apartment industry • RAIT Residential, a property management company that is majority-owned by RAIT, manages over 13,500 apartments in 17 states – RAIT’s IPO – January 1998 – Offices in Philadelphia, New York, Chicago, and Charlotte – Since its inception, RAIT has originated in excess of $1.8 billion of multifamily loans and has owned more than $1.1 billion of apartment properties – Allows RAIT to source attractive, off-market acquisition opportunities – Provides significant competitive advantage in targeting geographically diversified portfolios

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• RAIT is the largest stockholder in IRT with 7.3 million shares or approximately 23.0%  of IRT’s outstanding common stock as of November 25, 2014 • RAIT controls entities that advise and manage IRT and its properties • Management agreement structured to incentivize performance Strong Alignment of Interests Between Sponsor and Stockholders 12 – Externally managed by Independence Realty Advisors, a wholly-owned subsidiary of RAIT – Properties managed by RAIT Residential, a full-service apartment property manager that is majority-owned by RAIT with approximately 350 employees – No acquisition, disposition, or financing fees and no management fees on shareholder equity – No management fee on 8 properties acquired prior to August 2013; approximately $156 million of real estate – Low management fee (75 bps of gross real estate assets) on properties acquired after August 2013 – Incentive fee (20% over a Core FFO yield of 7% (annualized))

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Scott F. Schaeffer Management Team 13 Chairman and CEO – Independence Realty Trust, Inc. and Chairman and CEO – RAIT Financial Trust CEO and Manager – Independent Realty Advisors, LLC Over 28 year career in real estate James J. Sebra CFO and Treasurer – Independence Realty Trust, Inc. and CFO and Treasurer – RAIT Financial Trust Treasurer – Independent Realty Advisors, LLC 17 years of real estate experience Farrell M. Ender President – Independence Realty Trust, Inc. and Senior Vice President – RAIT Financial Trust President – Independent Realty Advisors, LLC Over 10 years experience in the acquisition/disposition, property management, construction management of apartment properties Raphael Licht Manager – Independent Realty Advisors, LLC and General Counsel– RAIT Financial Trust 17 years of real estate experience

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Attractive Dividend 14 (1) Dividend yields based on share price as of 11/28/2014 and most recently declared quarterly dividend annualized, except for IRT, which is based on most recently declared monthly dividend annualized. Dividend Yield (1) (%)

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Core FFO per Share IRT Financial Highlights 15 Revenue NOI Dividends per Share ($ in millions, except per share data) Note: Refer to slide 22 for reconciliation of Core FFO and NOI to GAAP net income (loss).

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Highlights 16 Strong Momentum in the Business 1 Disciplined Acquisition Strategy with Robust Pipeline 2 Strong Sponsorship and Alignment of Interest with IRT Stockholders 3 Attractive Dividend 4 5 Stable Portfolio in Supply-Constrained Markets

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Appendix

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Income Statement 18 At September 30, 2014  ($ in millions, except per unit data)

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Balance Sheet 19 At September 30, 2014  ($ in millions, except per unit data)

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Mortgage Indebtedness 20 At September 30, 2014  ($ in millions, except per unit data)   Outstanding Principal   Carrying Amount   Effective Interest Rate   Maturity Date   Belle Creek Apartments $ 10,575 $ 10,575 2.4%(1) April 28, 2021 Berkshire Square Apartments 8,612 8,612 4.4%(3) January 1, 2021 Centrepoint Apartments 17,600 17,600 3.7%(2) January 1, 2019 Copper Mill Apartments 7,223 7,223 5.7% May 1, 2021 Crestmont Apartments 6,633 6,633 5.7% May 1, 2021 Cumberland Glen Apartments 6,781 6,781 5.7% May 1, 2021 Heritage Trace Apartments 5,405 5,405 5.7% May 1, 2021 Runaway Bay Apartments 10,081 10,081 3.6% November 1, 2022 Tresa at Arrowhead 27,500 27,500 2.4%(1) April 28, 2021 Reserve at Eagle Ridge 18,850 18,850 4.7% March 1, 2024 OKC Portfolio 45,189 47,025 2.8%(5) April 1, 2016 Kings’ Landing 21,200 21,200 4.0%(6) June 1, 2021 Crossings 15,313 15,313 3.9% June 1, 2024 Carrington Park 14,235 14,235 4.0% August 1, 2024 Arbors at the Reservoir 13,150 13,150 4.0% August 1, 2024 Walnut Hill 18,650 18,650 3.4% October 1, 2021   Total mortgage debt/Weighted- Average $ 246,997 $ 248,833 3.7%   Secured Credit Facility 5,000 5,000 2.7%(4) October 25, 2016   Total indebtedness /Weighted- Average $ 251,997 $ 253,833 3.7%     (1)      Floating rate at 225 basis points over 30-day LIBOR. As of September 30, 2014, 30-day LIBOR was 0.15%. Interest only payments are due monthly. These mortgages are held by RAIT. (2)      Fixed rate. Interest only payments are due monthly. Beginning February 1, 2015, principal and interest payments are required based on a 30-year amortization schedule. (3)      Fixed Rate. Interest only payments are due monthly. Beginning February 1, 2016, principal and interest payments are required based on a 30-year amortization schedule. (4)      Floating rate at 250 basis points over 30-day LIBOR. As of September 30, 2014, 30-day LIBOR was 0.15%. Interest only payments are due monthly. As of September 30, 2014, we were in compliance with all financial covenants contained in the credit facility. (5)      Contractual interest rate is 5.6%. The debt was assumed and recorded at a premium that will be amortized to interest expense over the remaining term. Principal and interest payments are required based on a 30-year amortization schedule. (6)      Fixed Rate. Interest only payments are due monthly. Beginning June 1, 2017, principal and interest payments are required based on a 30-year amortization schedule.

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Non-GAAP Financial Measures: FFO and CFFO (1) 21 At September 30, 2014  ($ in millions, except per unit data)