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| 8-K - FORM 8-K - INDEPENDENCE REALTY TRUST, INC. | d829370d8k.htm |
 Independence
Realty Trust, Inc. December 2014
Exhibit 99.1 |
 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.
|
 –
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.
|
 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 |
 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) |
 •
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 |
 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 |
 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.
|
 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 |
 •
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) |
 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 |
 •
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
$156
million
of
real
estate
–
Low management fee (75 bps of gross real estate assets) on properties acquired after August
2013 –
Incentive fee (20% over a Core FFO yield of 7% (annualized)) |
 Scott F.
Schaeffer Management Team
13
Chairman and CEO –
Independence Realty Trust, Inc. and Chairman and CEO –
RAIT Financial
Trust
CEO and Manager –
Independent Realty Advisors, LLC
Over 28 year career in real estate
James J. Sebra
CFO and Treasurer –
Independence Realty Trust, Inc. and CFO and Treasurer –
RAIT Financial
Trust
Treasurer –
Independent Realty Advisors, LLC
17 years of real estate experience
Farrell M. Ender
President –
Independence Realty Trust, Inc. and Senior Vice President –
RAIT Financial Trust
President –
Independent Realty Advisors, LLC
Over 10 years experience in the acquisition/disposition, property management, construction
management of apartment properties
Raphael Licht
Manager –
Independent Realty Advisors, LLC and General Counsel–
RAIT Financial Trust
17 years of real estate experience |
 Attractive
Dividend 14
(1)
Dividend yields based on share price as of 11/28/2014 and most recently declared quarterly
dividend annualized, except for IRT, which is based on most recently declared monthly
dividend annualized. Dividend Yield
(1)
(%) |
 Core FFO per
Share IRT Financial Highlights
15
Revenue
NOI
Dividends per Share
($ in millions, except per share data)
Note:
Refer
to
slide
22
for
reconciliation
of
Core
FFO
and
NOI
to
GAAP
net
income
(loss). |
 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 |
 Appendix
|
 Income
Statement 18
At September 30, 2014 ($ in millions, except per unit data) |
 Balance
Sheet 19
At September 30, 2014 ($ in millions, except per unit data) |
 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. |
 Non-GAAP
Financial Measures: FFO and CFFO (1)
21
At September 30, 2014 ($ in millions, except per unit data) |