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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 001-36041

 

INDEPENDENCE REALTY TRUST, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Maryland

26-4567130

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

 

 

1835 Market Street, Suite 2601

Philadelphia, PA

19103

(Address of Principal Executive Offices)

(Zip Code)

(267) 270-4800

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to section 12(b) of the Act:

 

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common stock

 

IRT

 

NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated filer

Accelerated filer

 

 

 

 

 

 

Non-Accelerated filer

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of October 28, 2019 there were 90,894,656 shares of the Registrant’s common stock issued and outstanding.

 

 

 


INDEPENDENCE REALTY TRUST, INC.

INDEX

 

 

 

 

 

Page

 

 

 

 

 

PART I—FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements (unaudited)

 

3

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2019 and September 30, 2018

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months ended September 30, 2019 and September 30, 2018

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months ended September 30, 2019 and September 30, 2018

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2019 and September 30, 2018

 

8

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements as of September 30, 2019

 

9

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

20

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

29

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

29

 

 

 

 

 

PART II—OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

29

 

 

 

 

 

Item 1A.

 

Risk Factors

 

29

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

29

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

29

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

29

 

 

 

 

 

Item 5.

 

Other Information

 

30

 

 

 

 

 

Item 6.

 

Exhibits

 

30

 

 

 

 

 

Signatures

 

31

 

 

 


PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited and dollars in thousands, except share and per share data)

 

 

 

As of

September 30, 2019

 

 

As of

December 31, 2018

 

ASSETS:

 

 

 

 

 

 

 

 

Investments in real estate:

 

 

 

 

 

 

 

 

Investments in real estate, at cost

 

$

1,732,392

 

 

$

1,660,423

 

Accumulated depreciation

 

 

(145,075

)

 

 

(112,270

)

Investments in real estate, net

 

 

1,587,317

 

 

 

1,548,153

 

Real estate held for sale

 

 

32,381

 

 

 

77,285

 

Cash and cash equivalents

 

 

6,587

 

 

 

9,316

 

Restricted cash

 

 

8,960

 

 

 

6,729

 

Other assets

 

 

16,439

 

 

 

8,802

 

Derivative assets

 

 

982

 

 

 

8,307

 

Intangible assets, net of accumulated amortization of $412 and $787, respectively

 

 

351

 

 

 

744

 

Total Assets

 

$

1,653,017

 

 

$

1,659,336

 

LIABILITIES AND EQUITY:

 

 

 

 

 

 

 

 

Indebtedness, net of unamortized deferred financing costs of $5,686 and $5,927, respectively

 

$

979,330

 

 

$

985,488

 

Accounts payable and accrued expenses

 

 

32,249

 

 

 

22,815

 

Accrued interest payable

 

 

794

 

 

 

719

 

Dividends payable

 

 

16,460

 

 

 

16,162

 

Derivative liabilities

 

 

12,415

 

 

 

 

Other liabilities

 

 

7,399

 

 

 

4,107

 

Total Liabilities

 

 

1,048,647

 

 

 

1,029,291

 

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, 90,894,656 and 89,184,443 shares issued and outstanding, including 328,875 and 303,819 unvested restricted common share awards, respectively

 

 

909

 

 

 

892

 

Additional paid-in capital

 

 

762,933

 

 

 

742,429

 

Accumulated other comprehensive income (loss)

 

 

(17,097

)

 

 

2,016

 

Retained earnings (accumulated deficit)

 

 

(148,977

)

 

 

(122,342

)

Total stockholders’ equity

 

 

597,768

 

 

 

622,995

 

Noncontrolling interests

 

 

6,602

 

 

 

7,050

 

Total Equity

 

 

604,370

 

 

 

630,045

 

Total Liabilities and Equity

 

$

1,653,017

 

 

$

1,659,336

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

3


Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited and dollars in thousands, except share and per share data)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental and other property revenue

 

$

51,057

 

 

$

48,644

 

 

$

151,370

 

 

$

140,994

 

Other revenue

 

 

242

 

 

 

135

 

 

 

425

 

 

 

429

 

Total revenue

 

 

51,299

 

 

 

48,779

 

 

 

151,795

 

 

 

141,423

 

EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

 

20,546

 

 

 

19,792

 

 

 

60,504

 

 

 

56,913

 

Property management expenses

 

 

1,901

 

 

 

1,661

 

 

 

5,776

 

 

 

4,936

 

General and administrative expenses

 

 

3,113

 

 

 

2,578

 

 

 

9,758

 

 

 

8,184

 

Depreciation and amortization expense

 

 

13,434

 

 

 

10,783

 

 

 

38,602

 

 

 

33,590

 

Total expenses

 

 

38,994

 

 

 

34,814

 

 

 

114,640

 

 

 

103,623

 

Interest expense

 

 

(9,783

)

 

 

(9,129

)

 

 

(29,353

)

 

 

(26,063

)

Other income

 

 

 

 

 

 

 

 

 

 

 

144

 

Gain on sale of assets

 

 

2,390

 

 

 

 

 

 

14,532

 

 

 

 

Net income:

 

 

4,912

 

 

 

4,836

 

 

 

22,334

 

 

 

11,881

 

Income allocated to noncontrolling interest

 

 

(49

)

 

 

(49

)

 

 

(222

)

 

 

(173

)

Net income allocable to common shares

 

$

4,863

 

 

$

4,787

 

 

$

22,112

 

 

$

11,708

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.05

 

 

$

0.05

 

 

$

0.25

 

 

$

0.14

 

Diluted

 

$

0.05

 

 

$

0.05

 

 

$

0.25

 

 

$

0.13

 

Weighted-average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

90,027,540

 

 

 

87,702,078

 

 

 

89,513,834

 

 

 

86,559,294

 

Diluted

 

 

90,691,368

 

 

 

88,046,311

 

 

 

90,234,840

 

 

 

86,818,337

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

4


Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited and dollars in thousands)

 

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income

 

$

4,912

 

 

$

4,836

 

 

$

22,334

 

 

$

11,881

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of interest rate hedges

 

 

(5,633

)

 

 

1,072

 

 

 

(20,583

)

 

 

5,959

 

Realized (gains) losses on interest rate hedges reclassified to earnings

 

 

251

 

 

 

(382

)

 

 

1,277

 

 

 

(862

)

Total other comprehensive income (loss)

 

 

(5,382

)

 

 

690

 

 

 

(19,306

)

 

 

5,097

 

Comprehensive income (loss) before allocation to noncontrolling interests

 

 

(470

)

 

 

5,526

 

 

 

3,028

 

 

 

16,978

 

Allocation to noncontrolling interests

 

 

5

 

 

 

(54

)

 

 

(29

)

 

 

(108

)

Comprehensive income (loss)

 

$

(465

)

 

$

5,472

 

 

$

2,999

 

 

$

16,870

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

5


Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

(Unaudited and dollars in thousands, except share information) 

 

 

Common

Shares

 

 

Par

Value

Common

Shares

 

 

Additional

Paid In

Capital

 

 

Accumulated Other Comprehensive Income (loss)

 

 

Retained

Earnings

(Deficit)

 

 

Total

Stockholders’

Equity

 

 

Noncontrolling

Interests

 

 

Total

Equity

 

Balance, December 31, 2018

 

 

89,184,443

 

 

$

892

 

 

$

742,429

 

 

$

2,016

 

 

$

(122,342

)

 

$

622,995

 

 

$

7,050

 

 

$

630,045

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,540

 

 

 

2,540

 

 

 

26

 

 

 

2,566

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

(4,324

)

 

 

 

 

 

(4,324

)

 

 

(44

)

 

 

(4,368

)

Stock compensation expense

 

 

189,986

 

 

 

1

 

 

 

633

 

 

 

 

 

 

 

 

 

634

 

 

 

 

 

 

634

 

Issuance of common shares

 

 

510,000

 

 

 

5

 

 

 

5,304

 

 

 

 

 

 

 

 

 

5,309

 

 

 

 

 

 

5,309

 

Repurchase of shares related to equity award tax withholding

 

 

(49,636

)

 

 

 

 

 

(635

)

 

 

 

 

 

 

 

 

(635

)

 

 

 

 

 

(635

)

Common dividends declared ($0.18 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,318

)

 

 

(16,318

)

 

 

 

 

 

(16,318

)

Distribution to noncontrolling interest declared ($0.18 per unit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(159

)

 

 

(159

)

Balance, March 31, 2019

 

 

89,834,793

 

 

$

898

 

 

$

747,731

 

 

$

(2,308

)

 

$

(136,120

)

 

$

610,201

 

 

$

6,873

 

 

$

617,074

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,709

 

 

 

14,709

 

 

 

147

 

 

 

14,856

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

(9,461

)

 

 

 

 

 

(9,461

)

 

 

(95

)

 

 

(9,556

)

Stock compensation expense

 

 

32,155

 

 

 

 

 

 

1,099

 

 

 

 

 

 

 

 

 

1,099

 

 

 

 

 

 

1,099

 

Issuance of common shares

 

 

65,704

 

 

 

1

 

 

 

722

 

 

 

 

 

 

 

 

 

723

 

 

 

 

 

 

723

 

Repurchase of shares related to equity award tax withholding

 

 

(234

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common dividends declared ($0.18 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,128

)

 

 

(16,128

)

 

 

 

 

 

(16,128

)

Distribution to noncontrolling interest declared ($0.18 per unit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(159

)

 

 

(159

)

Balance, June 30, 2019

 

 

89,932,418

 

 

$

899

 

 

$

749,552

 

 

$

(11,769

)

 

$

(137,539

)

 

$

601,143

 

 

$

6,766

 

 

$

607,909

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,863

 

 

 

4,863

 

 

 

49

 

 

 

4,912

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

(5,328

)

 

 

 

 

 

(5,328

)

 

 

(54

)

 

 

(5,382

)

Stock compensation expense

 

 

(10,591

)

 

 

 

 

 

704

 

 

 

 

 

 

 

 

 

704

 

 

 

 

 

 

704

 

Issuance of common shares

 

 

972,887

 

 

 

10

 

 

 

12,684

 

 

 

 

 

 

 

 

 

12,694

 

 

 

 

 

 

12,694

 

Repurchase of shares related to equity award tax withholding

 

 

(58

)

 

 

 

 

 

(7

)

 

 

 

 

 

 

 

 

(7

)

 

 

 

 

 

(7

)

Common dividends declared ($0.18 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,301

)

 

 

(16,301

)

 

 

 

 

 

(16,301

)

Distribution to noncontrolling interest declared ($0.18 per unit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(159

)

 

 

(159

)

Balance, September 30, 2019

 

 

90,894,656

 

 

$

909

 

 

$

762,933

 

 

$

(17,097

)

 

$

(148,977

)

 

$

597,768

 

 

$

6,602

 

 

$

604,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

(Unaudited and dollars in thousands, except share information)

 

 

Common

Shares

 

 

Par

Value

Common

Shares

 

 

Additional

Paid In

Capital

 

 

Accumulated Other Comprehensive Income

 

 

Retained

Earnings

(Deficit)

 

 

Total

Stockholders’

Equity

 

 

Noncontrolling

Interests

 

 

Total

Equity

 

Balance, December 31, 2017

 

 

84,708,551

 

 

$

846

 

 

$

703,849

 

 

$

4,626

 

 

$

(85,221

)

 

$

624,100

 

 

$

22,019

 

 

$

646,119

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,412

 

 

 

3,412

 

 

 

88

 

 

 

3,500

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

3,264

 

 

 

 

 

 

3,264

 

 

 

(83

)

 

 

3,181

 

Stock compensation expense

 

 

194,622

 

 

 

1

 

 

 

469

 

 

 

 

 

 

 

 

 

470

 

 

 

 

 

 

470

 

Repurchase of shares related to equity award tax withholding

 

 

(41,912

)

 

 

-