Independence Realty Trust, Inc. · NYSE:IRT
Independence Realty Trust — Investor Presentation (November 2016)
34 slides from Independence Realty Trust's investor presentation, Nov 14, 2016
Slide 1: Independence Realty Trust – November 2016
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Slide 2: Forward-looking statements
This presentation may include “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. These forward-looking statements are based on current expectations, estimates and projections ab
Slide 3: IRT Highlights
Track Record of Value Creation with High Quality Portfolio of Scale Attractive Total Return Investment Highly Attractive Industry and Market Fundamentals IRT Highlights Bolstered Balance Sheet with Reduced Leverage Management Internalization in Progress
Slide 4: Attractive Total Return Investment
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Slide 5: IRT is a REIT focused on well-located apartment properties
IRT is a REIT focused on building a portfolio of well-located apartment properties which generate attractive risk adjusted returns, stable occupancy and the potential for property appreciation through rent increases and improved operating efficiency 8.4% dividend yield (1); listed on the NYSE MKT in
Slide 6: Corporate History
Corporate History Aug. 2013 IRT IPOs on NYSE MKT, raising $34mm of proceeds Proceeds used to redeem Series A preferred stock and Series B preferred OP units and to fund property acquisitions May 2015 Announced definitive merger agreement to acquire Trade Street Residential (NASDAQ:TSRE) Sep. 2015 Cl
Slide 7: Strong Third Quarter 2016 Financial Results
Strong Third Quarter 2016 Financial Results Results for the Quarter Earnings per share (“EPS”) was $0.05 for the quarter ended September 30, 2016 as compared to $0.71 for the quarter ended September 30, 2015. Core Funds from Operations (“CFFO”) per share increased 5.0% to $0.21 for the quarter ended
Slide 8: Management Internalization in Progress
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Slide 9: Internalization Transaction Overview
Internalization Transaction Overview On September 27, 2016, IRT entered into an agreement to complete a management internalization and separation from RAIT and certain affiliates The Internalization consists of two parts: The acquisition of IRT’s external advisor, Independence Realty Advisors, LLC,
Slide 10: Internalization Transaction Overview: Description & Rationale
Internalization Transaction Overview Transaction Description & Rationale Acquire External Advisor Eliminates all asset management fees Eliminates advisory agreement termination fee, equal to 4x the average annual base management and incentive fees earned by IRA during the eight full calendar quarter
Slide 11: Financial Impact of Internalization
Financial Impact of Internalization OLD ─ Externally Managed Structure NEW ─ Internally Managed Structure Corporate Management Independence Realty Advisors Asset Management Fees Quarterly fee of 0.375% of cumulative equity raised $6.8mm paid over the twelve months ended September 30, 2016 None Incen
Slide 12: Track Record of Value Creation with High Quality Portfolio of Scale
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Slide 13: High Quality Portfolio of Scale
High Quality Portfolio of Scale Source: Company filings and CoStar. Average Monthly Effective Rent per Occupied Unit. Last Twelve Months (“LTM”). Weighted by LTM Net Operating Income at point in time. At IPO (August 16, 2013) Pre TSRE Merger (September 30, 2015, excludes TSRE) Today (September 30, 2
Slide 14: Economies of Scale in Targeted Markets
Economies of Scale in Targeted Markets Raindance Apartments Oklahoma City, OK Aston Wake Forest, NC Runaway Bay Indianapolis, IN Oxmoor Apartment Homes Louisville, KY Bayview Club Indianapolis, IN Augusta Apartments Oklahoma City, OK Meadows Apartment Homes Louisville, KY Avenues at Craig Ranch McKi
Slide 15: Track Record of Value Creation and Prudent Capital Allocation
Track Record of Value Creation and Prudent Capital Allocation Successfully captured value creation through recent dispositions Identified opportunities for repositioning or updating through capital expenditures Attracted and retained residents and executed rent increases Took advantage of favorable
Slide 16: Disciplined Approach to Acquisitions
Sourcing Disciplined Approach to Acquisitions 2 Assets 3 Acquire properties that have significant prospects for increased occupancy and rental revenue growth Mid-rise/garden style (150–500 units) with good amenities Acquire at less than replacement cost in the $15-50 million price range with a 5-15
Slide 17: Affordable B/B+ Grade Positioning Highly Defensive
Affordable B/B+ Grade Positioning Highly Defensive A B C Homeownership rates declining Higher income tenants move down in a recession Renters move down to Class B as aggressive rent increases outstrip income growth Capture households moving down in a recession Capture seniors who sell homes to fund
Slide 18: Stable Cash Flow Profile
Stable Cash Flow Profile Historic Rent / Unit Growth IRT Markets (1) vs Gateway Markets Source: Company filings and REIS. Weighted by number of units. Rent growth data for the IRT markets of Asheville NC, Jackson MS, and Huntsville AL not available. Data not available for 1,075 units, representing 8
Slide 19: Bolstered Balance Sheet with Reduced Leverage
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Slide 20: Stock Offering Uses and Benefits
Stock Offering Uses and Benefits IRT received approximately $245.8 million of net proceeds before offering expenses and after underwriting discounts and commissions from the issuance of 28.75 million common shares in a stock offering which priced at $9.00 per share on September 29, 2016 IRT used the
Slide 21: Bolstered Balance Sheet with Reduced Leverage
Bolstered Balance Sheet with Reduced Leverage Net Debt to Gross Assets Pro Forma Debt Maturity Schedule ($s in millions) (2) Non-GAAP. Net debt equals total debt less cash and cash equivalents. Adjusted EBITDA represents 3Q 2016 results, annualized. See Appendix for definitions and reconciliations.
Slide 22: Highly Attractive Industry and Market Fundamentals
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Slide 23: Attractive Apartment Industry Dynamics Support Strong Demand
Attractive Apartment Industry Dynamics Support Strong Demand Positive Demographic Factors Demand for rental housing is expected to remain strong as a result of a strengthening job market and positive household formation growth Population growth in IRT’s markets are expected to grow by 1.24% by the e
Slide 24: Strong Fundamentals for the Multifamily Market
Data Source: REIS Data. Strong Fundamentals for the Multifamily Market US. Housing Units Completed & Homeownership Rate U.S. Multifamily Completions & Vacancy Data Source: U.S. Census Bureau. 2016 includes Q1 through Q3 only.
Slide 25: Positive Demographics Migration Outpacing New Supply
Positive Demographics Migration Outpacing New Supply Projected Net Migration / Projected Completions Represents the number of people migrating to markets for every one unit delivered Population Growth Source: REIS Data. Note: 2016 and 2017 figures are projections as reported by REIS as of 3Q 2016. I
Slide 26: Employment Outlook
Employment Outlook Projected Jobs / Projected Completions Source: REIS Data. Note: 2016 and 2017 figures are projections as reported by REIS as of 3Q 2016. IRT weighted averages are based on the company’s owned properties as of 3Q 2016. Completions data for the IRT markets of Asheville NC, Jackson M
Slide 27: IRT Highlights
Track Record of Value Creation with High Quality Portfolio of Scale Attractive Total Return Investment Highly Attractive Industry and Market Fundamentals IRT Highlights Bolstered Balance Sheet with Reduced Leverage Management Internalization in Progress
Slide 28: Appendix
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Slide 29: Financial & Operational Highlights
Financial & Operational Highlights (a)Same store includes 26 properties which represents 7,757 units. (b)Annualized assuming the TSRE merger which closed September 17, 2015 occurred at the beginning of the period. On September 29, 2016, IRT priced a $25 million common share offering at $9.00 per sha
Slide 30: Reconciliation of NOI to GAAP net income (loss)
Reconciliation of NOI to GAAP net income (loss) (a)Same store includes 26 properties which represents 7,757 units. (Dollars in thousands, except share and per share amounts) For the Three-Months Ended September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2015 Property reven
Slide 31: Reconciliation of Net Income to FFO and Core FFO
Reconciliation of Net Income (loss) to Funds From Operations and Core Funds From Operations (Dollars in thousands, except share and per share amounts) For the Three-Months Ended September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2015 Funds From Operations (FFO): Net Inco
Slide 32: Reconciliation of Adjusted EBITDA to Net Income
Reconciliation of Adjusted EBITDA, Before Acquisition Expenses to Net Income (loss) (Dollars in thousands, except share and per share amounts) For the Three Months Ended Nine Months Ended September 30, ADJUSTED EBITDA: September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2
Slide 33: Definitions
Definitions Average Effective Monthly Rent per Unit Average effective rent per unit represents the average of gross rent amounts, divided by the average occupancy (in units) for the period presented. We believe average effective rent is a helpful measurement in evaluating average pricing. This metri
Slide 34: Definitions Continued
Definitions Continued Net Debt Net debt, a non-GAAP measure, equals total debt less cash and cash equivalents as these captions are reported on the consolidated balance sheet. The following table provides a reconciliation of total debt to net debt. As of September 30, 2016 March 31, 2016 March 31, 2
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