EX-99.2 3 irt-ex992_6.htm EX-99.2 irt-ex992_6.htm

Exhibit 99.2

Talison Row at Daniel Island, South Carolina

 

EARNINGS RELEASE & SUPPLEMENTAL INFORMATION

Q1 2020

 

 

NYSE: IRT

WWW.IRTLIVING.COM

 

 

1

 

TABLE OF CONTENTS

 

Company Information

 

3

 

 

 

Forward-Looking Statements

 

4

 

 

 

Earnings Release Text

 

5

 

 

 

Financial & Operating Highlights

 

10

 

 

 

Balance Sheets

 

11

 

 

 

Statements of Operations, FFO & CORE FFO

 

 

Trailing Five Quarters

 

12

Three Months Ended March 31, 2020 and 2019

 

13

 

 

 

Adjusted EBITDA Reconciliations and Coverage Ratio

 

 

Trailing Five Quarters

 

14

 

 

 

 

 

 

Same-Store Portfolio Net Operating Income

 

 

Trailing Five Quarters

 

15

Three Months Ended March 31, 2020 and 2019

 

16

 

 

 

Net Operating Income Bridge

 

17

 

 

 

Same-Store Portfolio Net Operating Income by Market

 

18

 

 

 

Total Portfolio NOI Exposure by Market

 

19

 

 

 

Value Add Summary

 

20

 

 

 

Capital Recycling Activity

 

21

 

 

 

Debt Summary

 

22

 

 

 

Debt Covenant & Unencumbered Asset Statistics

 

23

 

 

 

Definitions

 

24

 

2

 

Independence Realty Trust

March 31, 2020

Company Information:

 

Independence Realty Trust, Inc. (NYSE: IRT) is a real estate investment trust that owns and operates multifamily apartment properties across non-gateway U.S. markets, including Atlanta, Louisville, Memphis, and Raleigh. 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 at www.irtliving.com.

 

Corporate Headquarters

 

1835 Market Street, Suite 2601

 

 

Philadelphia, PA 19103

 

 

267.270.4800

 

 

Trading Symbol

 

NYSE: “IRT”

 

 

Investor Relations Contact

 

Edelman Financial Communications & Capital Markets

 

 

Ted McHugh and Lauren Torres

 

 

212-704-8112

 

 

IRT@edelman.com

 

 

 

 

 


3

 

Forward-Looking Statements

This supplemental information 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, IRT’s expectations with respect to capital allocations, including as to the timing and amount of future dividends. Because such statements include risks, uncertainties and contingencies, 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 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. Risks and uncertainties that might cause IRT’s actual results and/or future dividends to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: risks related to the impact of COVID-19 and other potential future outbreaks of infectious diseases on the financial condition, results of operations, cash flows and performance of IRT and its tenants as well as on the economy and real estate and financial markets; 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; uncertainty and volatility in capital and credit markets, including changes that reduce availability, and increase costs, of capital; inability of tenants to meet their rent and other lease obligations; legislative restrictions that may delay or limit collections of past due rents; risks endemic to real estate and the real estate industry generally; the effects of natural and other disasters; 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; unexpected costs of REIT qualification compliance; costs and disruptions as the result of a cybersecurity incident or other technology disruption; and share price fluctuations. Please refer to the documents filed by the Company with the SEC, specifically the Company's Annual Report on Form 10-K for the year ended December 31, 2019, as it may be updated or supplemented in the Company's Quarterly Reports on Form 10-Q and the Company's other filings with the SEC, which identify additional risk factors that could cause actual results to differ from those contained in forward-looking statements. IRT undertakes 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. For these reasons, as well as others, there can be no assurance that dividends in the future will be equal or similar to the expected amount of the quarterly dividend described in this supplemental information.

 


4

 

Independence Realty Trust Announces First Quarter 2020 Financial Results

 

 

PHILADELPHIA – (BUSINESS WIRE) – May 6, 2020 — Independence Realty Trust, Inc. (“IRT”) (NYSE: IRT), a multifamily apartment REIT, today announced its first quarter 2020 financial results.

 

First Quarter Highlights

 

 

•

Net loss allocable to common shares of $0.4 million for the quarter ended March 31, 2020 as compared to net income of $2.5 million for the quarter ended March 31, 2019.

 

 

•

Earnings per diluted share of $0.00 for the quarter ended March 31, 2020, as compared to $0.03 for the quarter ended March 31, 2019.

 

 

•

Same store net operating income (“NOI”) growth of 7.0% for the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019.

 

 

•

Core Funds from Operations (“CFFO”) of $17.6 million for the quarter ended March 31, 2020 as compared to $16.0 million for the quarter ended March 31, 2019. CFFO per share was $0.19 for the first quarter of 2020 as compared to $0.18 for the first quarter of 2019.

 

 

•

Adjusted EBITDA of $24.1 million for the quarter ended March 31, 2020 as compared to $24.7 million for the quarter ended March 31, 2019.

 

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 under GAAP.

 

Management Commentary

“I am proud of all the efforts taken by the IRT team during this unprecedented time. We continue to take significant steps to maintain the health and well-being of our employees and residents, while also swiftly rolling out measures to ease the financial burden of those tenants directly affected by the COVID-19 crisis,” said Scott Schaeffer, Chairman and CEO of IRT. “At the same time, we demonstrated strong performance across the portfolio, including first quarter 2020 same store NOI growth of 7.0%.”

 

“While we have been encouraged by recent trends, which include a 92.7% occupancy rate as of April 30th and a 98% April rental receipt collections rate, after payment plans, we must prudently manage the portfolio as we work through COVID-19 headwinds. We have been focused on capital preservation, including temporarily pausing efforts on our capital recycling program and on a portion of our value add initiative.

 

Lastly, the resilience of our real estate platform and strengthened balance sheet, including approximately $258 million in total liquidity, provides us with the confidence to respond to this fluid situation and take further action to protect long-term value of the enterprise.”

 

 

 

 

 

 


5

 

Same Store Property Operating Results

 

First Quarter 2020 Compared to First Quarter 2019(1)

Rental and other property revenue

4.7% increase

Property operating expenses

1.3% increase

Net operating income (“NOI”)

7.0% increase

Portfolio average occupancy

10 bps decrease to 92.7%

Portfolio average rental rate

4.9% increase to $1,089

NOI Margin

130 bps increase to 61.5%

 

 

(1)

Same store portfolio for the three months ended March 31, 2020 includes 54 properties, which represent 14,748 units.

 

Same Store Property Operating Results, Excluding Value Add

The same store portfolio results below exclude 16 communities that are both part of the same store portfolio and were actively undergoing Value Add renovations during the three months ended March 31, 2020.

 

 

 

First Quarter 2020 Compared to First Quarter 2019(1)

Rental and other property revenue

3.6% increase

Property operating expenses

1.5% decrease

Net operating income (“NOI”)

7.0% increase

Portfolio average occupancy

30 bps increase to 94.0%

Portfolio average rental rate

3.4% increase to $1,072

NOI Margin

200 bps increase to 61.7%

 

 

(1)

Same store portfolio, excluding value add, for the three months ended March 31, 2020 includes 38 properties, which represent 9,680 units.

 

COVID-19 Metrics (1)(2)

(Dollars in thousands, except per unit data)

 

 

Rent collections (3)

April 2020

April 2019

1Q 2020

Rent collected for the period presented, as a percentage of rent billed

97.3%

98.6%

98.1%

 

 

 

 

Deferred payment plans: (4)

 

 

 

Number of deferred payment plans

139

-

-

Amount of monthly rent deferred for period presented

$94

-

-

Amount of monthly rent deferred for the period presented, as a percentage of rent collected

0.6%

0.0%

0.0%

 

 

 

 

Rent collected, after the effect of signed payment plans, as a percentage of rent billed

97.9%

98.6%

98.1%

 

 

 

 

 

 

 

6

 

 

Operating statistics

April 2020

April 2019

1Q 2020

Average occupancy

92.7%

94.1%

92.5%

Average effective monthly rent per unit

$1,106

$1,048

$1,100

Resident retention rate

53.8%

49.0%

51.2%

 

 

(1)

All metrics presented are for our total portfolio in the period presented.

 

(2)

All metrics are based on IRT’s internal data, which management uses to monitor property performance on a daily or weekly basis.

 

(3)

As of the last day of the period presented.

 

(4)

Payment plans allow residents to defer between 25% and 75% of their monthly rent for between 1 and 3 months. Residents must provide evidence of hardship and commit to a full 12-month lease term, which allows deferred payments to be repaid over a longer remaining lease term. As of May 5, 2020: (1) 139 payment plans were signed for April and 35 payment plans were signed for May; (2) on average residents are deferring 56% of their monthly rent for an average period of 2.7 months with an average repayment period of 9.3 months; and (3) there were 121 residents who have applied for payment plans that were pending approval.

 

Expected Dividend Reduction

IRT expects to reduce its quarterly common stock dividend, beginning with the dividend for the second quarter of 2020, from $0.18 per share (an annual rate of $0.72 per share) to $0.12 per share (an annual rate of $0.48 per share).

 

Mr. Schaeffer further commented, “Given our track record of NOI growth delivered through a combination of organic rent growth and the continued execution of our value add initiative, we were well positioned to achieve a normalized dividend payout ratio of 70-75% over time. Given market uncertainty, along with our decision to pause a portion of our value add program, we believe it is prudent at this time to adjust our dividend payout ratio to be more in line with our peers beginning in the second quarter of 2020.  The rightsized dividend increases our financial flexibility and will allow us to accelerate our deleveraging efforts as we will be retaining approximately $23 million annually.”

 

Atlanta Portfolio Letter of Intent Expiration  

Subsequent to the quarter end, on April 9, 2020, IRT announced that it had allowed the non-binding letter of intent related to the acquisition of three Class A communities in Atlanta, GA to expire, without realizing any financial penalty.

 

Public Stock Offering

On February 24, 2020, IRT closed a public offering of 10,350,000 shares of common stock at a public offering price of $15.30 per share, including 1,350,000 shares sold pursuant to the exercise in full of the underwriters’ option to purchase additional shares of common stock. In connection with the offering, IRT entered into forward sale agreements.

 

On March 31, 2020, IRT settled $50 million of its forward sale agreements by issuing 3.406 million shares. After this settlement, IRT had 6.944 million shares remaining to be issued under the forward sale agreements for gross proceeds of approximately $102 million.

 

Financial Flexibility

As of March 31, 2020, IRT had a total liquidity position of approximately $258 million, which includes unrestricted cash, as well as additional capacity through our unsecured line of credit and remaining proceeds from the forward equity offering.

 

 

 


7

 

Capital Recycling

On February 11, 2020, IRT acquired a 251-unit community in Dallas, TX for $51.2 million. This is a newly constructed community within close proximity of one of our existing communities. At the time of acquisition, the community was in lease up with average rent per unit of $1,553.

 

Capital Expenditures

For the three months ended March 31, 2020, recurring capital expenditures for the total portfolio were $1.3 million, or $84 per unit.

 

Distributions

On March 16, 2020, IRT’s Board of Directors declared a quarterly cash dividend of $0.18 per share of IRT common stock, payable on April 24, 2020 to stockholders of record at the close of business on April 2, 2020.

 

2020 EPS and CFFO Guidance

On March 26, 2020, IRT suspended its fiscal 2020 guidance, given the uncertainty around the length and depth of the coronavirus crisis and its impact on the economy. At this time, IRT believes it is prudent to keep its guidance suspended.

    

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

IRT discloses 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 IRT’s reported net income to its FFO and CFFO, a reconciliation of IRT’s same store NOI to its reported net income, a reconciliation of IRT’s 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, May 7, 2020 from the investor relations section of the IRT website at www.irtliving.com or by dialing 1.844.775.2542, access code 4097673. 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, May 14, 2020 by dialing 1.855.859.2056, access code 4097673.

 

Supplemental Information

IRT produces 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 the Company's 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 across non-gateway U.S. markets, including Atlanta, Louisville, Memphis, and Raleigh. 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 at www.irtliving.com.

 


8

 

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, IRT’s

expectations with respect to capital allocations, including as to timing and amount of future dividends. Because such statements include risks, uncertainties and contingencies, 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 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. Risks and uncertainties that might cause IRT’s actual results and/or future dividends to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: risks related to the impact of COVID-19 and other potential future outbreaks of infectious diseases on the financial condition, results of operations, cash flows and performance of IRT and its tenants as well as on the economy and real estate and financial markets; 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; uncertainty and volatility in capital and credit markets, including changes that reduce availability, and increase costs, of capital; inability of tenants to meet their rent and other lease obligations; legislative restrictions that may delay or limit collections of past due rents; risks endemic to real estate and the real estate industry generally; the effects of natural and other disasters; 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; unexpected costs of REIT qualification compliance; costs and disruptions as the result of a cybersecurity incident or other technology disruption; and share price fluctuations. Please refer to the documents filed by the Company with the SEC, specifically the Company's Annual Report on Form 10-K for the year ended December 31, 2019, as it may be updated or supplemented in the Company's Quarterly Reports on Form 10-Q and the Company's other filings with the SEC, which identify additional risk factors that could cause actual results to differ from those contained in forward-looking statements. IRT undertakes 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. For these reasons,

as well as others, there can be no assurance that dividends in the future will be equal or similar to the expected amount of

the quarterly dividend described in this press release.

 

Independence Realty Trust, Inc. Contact

Edelman Financial Communications & Capital Markets

Ted McHugh and Lauren Torres

212.704.8112

IRT@edelman.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

FINANCIAL & OPERATING HIGHLIGHTS

Dollars in thousands, except share and per share data

 

 

 

For the Three Months Ended

 

 

 

March 31, 2020

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

 

March 31,

2019

 

Selected Financial Information:

 

 

 

 

 

 

 

 

 

 

 

Operating Statistics:

 

 

 

 

 

 

 

 

 

 

 

Net income available to common shares

 

$(372)

 

$23,784

 

$4,863

 

$14,709

 

$2,540

 

Earnings (loss) per share -- diluted

 

$0.00

 

$0.26

 

$0.05

 

$0.16

 

$0.03

 

Rental and other property revenue

 

$51,156

 

$51,250

 

$51,057

 

$50,848

 

$49,465

 

Property operating expenses

 

$19,737

 

$19,064

 

$20,546

 

$20,072

 

$19,886

 

Net operating income

 

$31,419

 

$32,186

 

$30,511

 

$30,776

 

$29,579

 

NOI margin

 

61.4%

 

62.8%

 

59.8%

 

60.5%

 

59.8%

 

Adjusted EBITDA

 

$24,081

 

$27,427

 

$25,739

 

$25,284

 

$24,734

 

CORE FFO per share

 

$0.19

 

$0.20

 

$0.19

 

$0.19

 

$0.18

 

Dividends per share

 

$0.18

 

$0.18

 

$0.18

 

$0.18

 

$0.18

 

CORE FFO payout ratio

 

94.7%

 

90.0%

 

94.7%

 

94.7%

 

100.0%

 

Portfolio Data:

 

 

 

 

 

 

 

 

 

 

 

Total gross assets

 

$1,949,494

 

$1,841,738

 

$1,821,173

 

$1,817,207

 

$1,807,955

 

Total number of properties

 

58

 

57

 

57

 

58

 

58

 

Total units

 

15,805

 

15,554

 

15,536

 

15,734

 

15,880

 

Period end occupancy

 

92.7%

 

92.5%

 

92.8%

 

94.0%

 

93.9%

 

Total portfolio average occupancy

 

92.5%

 

92.5%

 

93.5%

 

94.4%

 

92.9%

 

Total portfolio average effective monthly rent, per

   unit

 

$1,100

 

$1,088

 

$1,084

 

$1,058

 

$1,042

 

Same store period end occupancy (a)

 

93.0%

 

92.5%

 

92.8%

 

94.0%

 

93.8%

 

Same store portfolio average occupancy (a)

 

92.7%

 

92.4%

 

93.4%

 

94.2%

 

92.8%

 

Same store portfolio average effective monthly rent,

   per unit (a)

 

$1,089

 

$1,083

 

$1,077

 

$1,056

 

$1,038

 

Capitalization:

 

 

 

 

 

 

 

 

 

 

 

Total debt

 

$1,049,541

 

$985,572

 

$979,330

 

$989,499

 

$990,920

 

Common share price, period end

 

$8.94

 

$14.08

 

$14.31

 

$11.57

 

$10.79

 

Market equity capitalization

 

$853,600

 

$1,294,545

 

$1,313,311

 

$1,050,712

 

$978,825

 

Total market capitalization

 

$1,903,141

 

$2,280,117

 

$2,292,641

 

$2,040,211

 

$1,969,745

 

Total debt/total gross assets

 

53.8%

 

53.5%

 

53.8%

 

54.5%

 

54.8%

 

Net debt to Adjusted EBITDA (pro forma) (b)

 

9.0x

 

8.9x

 

9.0x

 

9.2x

 

9.2x

 

Interest coverage

 

2.5x

 

2.8x

 

2.6x

 

2.6x

 

2.5x

 

Common shares and OP Units:

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding

 

94,691,806

 

91,070,637

 

90,894,656

 

89,932,418

 

89,834,793

 

OP units outstanding

 

789,134

 

871,491

 

881,107

 

881,107

 

881,107

 

Common shares and OP units outstanding

 

95,480,939

 

91,942,128

 

91,775,763

 

90,813,525

 

90,715,900

 

Weighted average common shares and units

 

91,737,113

 

91,526,726

 

90,908,646

 

90,394,212

 

89,870,556

 

 

 

(a)

Same store portfolio consists of 54 properties, which represent 14,748 units.

 

(b)

Reflects pro forma net debt to Adjusted EBITDA for each period presented, which includes adjustments for the timing of acquisitions, the full quarter effect of current value add initiatives, the completion of capital recycling activities including paydown of associated indebtedness, and the normalization of one-time items impacting quarterly EBITDA. Actual net debt to Adjusted EBITDA for the five quarters ended March 31, 2020 was 10.3x, 8.9x, 9.4x, 9.7x, and 9.9x, respectively.

 

 

 

10

 

BALANCE SHEETS

Dollars in thousands, except per share data

 

 

 

As of

 

 

March 31, 2020

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

 

March 31,

2019

Assets:

 

 

 

 

 

 

 

 

 

 

Investments in real estate at cost

 

$1,856,760

 

$1,796,365

 

$1,732,392

 

$1,704,769

 

$1,669,875

Less: accumulated depreciation

 

(172,789)

 

(158,435)

 

(145,075)

 

(136,488)

 

(124,107)

Investments in real estate, net

 

1,683,971

 

1,637,930

 

1,587,317

 

1,568,281

 

1,545,768

Real estate held for sale

 

—

 

—

 

32,381

 

50,494

 

77,430

Cash and cash equivalents

 

57,436

 

9,888

 

6,587

 

11,060

 

9,030

Restricted cash

 

4,740

 

4,545

 

8,960

 

7,780

 

7,122

Other assets

 

10,731

 

10,380

 

16,439

 

16,364

 

10,984

Derivative assets

 

—

 

953

 

982

 

1,558

 

5,327

Intangible assets, net

 

260

 

410

 

351

 

210

 

188

Total assets

 

$1,757,138

 

$1,664,106

 

$1,653,017

 

$1,655,747

 

$1,655,849

Liabilities and Equity:

 

 

 

 

 

 

 

 

 

 

Indebtedness, net

 

$1,049,541

 

$985,572

 

$979,330

 

$989,499

 

$990,920

Accounts payable and accrued expenses

 

21,250

 

25,399

 

32,249

 

26,374

 

22,092

Accrued interest payable

 

2,099

 

2,196

 

794

 

691

 

681

Dividends payable

 

17,128

 

16,491

 

16,460

 

16,285

 

16,267

Derivative liabilities

 

30,937

 

7,769

 

12,415

 

7,394

 

1,460

Other liabilities

 

7,012

 

6,922

 

7,399

 

7,595

 

7,355

Total liabilities

 

1,127,967

 

1,044,349

 

1,048,647

 

1,047,838

 

1,038,775

Equity:

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity:

 

 

 

 

 

 

 

 

 

 

Preferred shares, $0.01 par value per share

 

—

 

—

 

—

 

—

 

—

Common shares, $0.01 par value per share

 

947

 

911

 

909

 

899

 

898

Additional paid in capital

 

817,501

 

765,992

 

762,933

 

749,552

 

747,731

Accumulated other comprehensive income (loss)

 

(35,750)

 

(12,099)

 

(17,097)

 

(11,769)

 

(2,308)

Retained earnings (deficit)

 

(159,045)

 

(141,525)

 

(148,977)

 

(137,539)

 

(136,120)

Total shareholders' equity

 

623,653

 

613,279

 

597,768

 

601,143

 

610,201

Noncontrolling Interests

 

5,518

 

6,478

 

6,602

 

6,766

 

6,873

Total equity

 

629,171

 

619,757

 

604,370

 

607,909

 

617,074

Total liabilities and equity

 

$1,757,138

 

$1,664,106

 

$1,653,017

 

$1,655,747

 

$1,655,849

11

 

STATEMENTS OF OPERATIONS, FFO & CORE FFO

TRAILING FIVE QUARTERS

Dollars in thousands, except per share data

 

 

For the Three Months Ended

 

 

March 31, 2020

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

 

March 31,

2019

Revenue:

 

 

 

 

 

 

 

 

 

 

Rental and other property revenue

 

$51,156

 

$51,250

 

$51,057

 

$50,848

 

$49,465

Other revenue

 

194

 

178

 

242

 

108

 

75

Total revenue

 

51,350

 

51,428

 

51,299

 

50,956

 

49,540

Expenses:

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

19,737

 

19,064

 

20,546

 

20,072

 

19,886

Property management expenses

 

2,156

 

1,950

 

1,901

 

2,062

 

1,813

General and administrative expenses (a)

 

5,376

 

2,987

 

3,113

 

3,538

 

3,107

Depreciation and amortization expense

 

14,828

 

14,213

 

13,434

 

12,721

 

12,447

Abandoned deal costs

 

130

 

—

 

—

 

—

 

—

Total expenses

 

42,227

 

38,214

 

38,994

 

38,393

 

37,253

Interest expense

 

(9,497)

 

(9,873)

 

(9,783)

 

(9,849)

 

(9,721)

Net gains (losses) on sale of assets

 

—

 

20,679

 

2,390

 

12,142

 

—

Net income (loss)

 

(374)

 

24,020

 

4,912

 

14,856

 

2,566

(Income) loss allocated to noncontrolling interests

 

2

 

(236)

 

(49)

 

(147)

 

(26)

Net income (loss) available to common shares

 

$(372)

 

$23,784

 

$4,863

 

$14,709

 

$2,540

EPS - basic

 

$0.00

 

$0.26

 

$0.05

 

$0.16

 

$0.03

Weighted-average shares outstanding - Basic

 

90,895,488

 

90,646,142

 

90,027,540

 

89,513,105

 

88,989,450

EPS - diluted

 

$0.00

 

$0.26

 

$0.05

 

$0.16

 

$0.03

Weighted-average shares outstanding - Diluted

 

90,895,488

 

91,409,854

 

90,691,368

 

90,019,909

 

89,516,224

Funds From Operations (FFO):

 

 

 

 

 

 

 

 

 

 

Net Income (loss)

 

$(374)

 

$24,020

 

$4,912

 

$14,856

 

$2,566

Add-Back (Deduct):

 

 

 

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

14,725

 

14,175

 

13,313

 

12,675

 

12,318

Net (gains) losses on sale of assets excluding debt extinguishment costs

 

—

 

(22,862)

 

(5,594)

 

(14,171)

 

—

FFO

 

$14,351

 

$15,333

 

$12,631

 

$13,360

 

$14,884

FFO per share

 

$0.16

 

$0.17

 

$0.14

 

$0.15

 

$0.17

CORE Funds From Operations (CFFO):

 

 

 

 

 

 

 

 

 

 

FFO

 

$14,351

 

$15,333

 

$12,631

 

$13,360

 

$14,884

Add-Back (Deduct):

 

 

 

 

 

 

 

 

 

 

Stock compensation expense (a)

 

2,627

 

717

 

692

 

1,086

 

622

Amortization of deferred financing costs

 

361

 

370

 

351

 

362

 

339

Other depreciation and amortization

 

103

 

38

 

121

 

46

 

129

Abandoned deal costs

 

130

 

—

 

—

 

—

 

—

Debt extinguishment costs included in net gains (losses) on sale of assets

 

—

 

2,184

 

3,204

 

2,029

 

—

CFFO

 

$17,572

 

$18,642

 

$16,999

 

$16,883

 

$15,974

CFFO per share

 

$0.19

 

$0.20

 

$0.19

 

$0.19

 

$0.18

Weighted-average shares and units outstanding

 

91,737,113

 

91,526,726

 

90,908,646

 

90,394,212

 

89,870,556

 

 

(a)

Included in the three-months ended March 31, 2020 is $1.7 million of stock compensation expense recorded with respect to stock awards granted during the period to retirement eligible employees.

 

12

 

STATEMENTS OF OPERATIONS, FFO & CORE FFO

THREE MONTHS ENDED MARCH 31, 2020 and 2019

Dollars in thousands, except per share data

 

 

For the Three Months Ended March 31,

 

 

2020

 

2019

Revenue:

 

 

 

 

Rental and other property revenue

 

$51,156

 

$49,465

Other revenue

 

194

 

75

Total revenue

 

51,350

 

49,540

Expenses:

 

 

 

 

Property operating expenses

 

19,737

 

19,886

Property management expenses

 

2,156

 

1,813

General and administrative expenses (a)

 

5,376

 

3,107

Depreciation and amortization expense

 

14,828

 

12,447

Abandoned deal costs

 

130

 

—

Total expenses

 

42,227

 

37,253

Interest expense

 

(9,497)

 

(9,721)

Net income (loss)

 

(374)

 

2,566

(Income) loss allocated to noncontrolling interests

 

2

 

(26)

Net income (loss) available to common shares

 

$(372)

 

$2,540

EPS - basic

 

$0.00

 

$0.03

Weighted-average shares outstanding - Basic

 

90,895,488

 

88,989,450

EPS - diluted

 

$0.00

 

$0.03

Weighted-average shares outstanding - Diluted

 

90,895,488

 

89,516,224

 

 

 

 

 

Funds From Operations (FFO):

 

 

 

 

Net Income (loss)

 

$(374)

 

$2,566

Adjustments:

 

 

 

 

Real estate depreciation and amortization

 

14,725

 

12,318

Net (gains) losses on sale of assets excluding debt extinguishment costs

 

—

 

—

Funds From Operations

 

$14,351

 

$14,884

FFO per share

 

$0.16

 

$0.17

Core Funds From Operations (CFFO):

 

 

 

 

Funds From Operations

 

$14,351

 

$14,884

Adjustments:

 

 

 

 

Stock compensation expense (a)

 

2,627

 

622

Amortization of deferred financing costs

 

361

 

339

Other depreciation and amortization

 

103

 

129

Abandoned deal costs

 

130

 

—

Core Funds From Operations

 

$17,572

 

$15,974

CFFO per share

 

$0.19

 

$0.18

Weighted-average shares and units outstanding

 

91,737,113

 

89,870,556

 

 

(a)

Included in the three-months ended March 31, 2020 is $1.7 million of stock compensation expense recorded with respect to stock awards granted during the period to retirement eligible employees.

 

 

 

13

 

ADJUSTED EBITDA RECONCILIATION AND COVERAGE RATIO

Dollars in thousands

 

 

 

Three Months Ended

 

ADJUSTED EBITDA:

 

March 31, 2020

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

 

March 31,

2019

 

Net income (loss)

 

$(374)

 

$24,020

 

$4,912

 

$14,856

 

$2,566

 

Add-Back (Deduct):

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

14,828

 

14,213

 

13,434

 

12,721

 

12,447

 

Interest expense

 

9,497

 

9,873

 

9,783

 

9,849

 

9,721

 

Net (gains) losses on sale of assets

 

—

 

(20,679)

 

(2,390)

 

(12,142)

 

—

 

Abandoned deal costs

 

130

 

—

 

—

 

—

 

—

 

Adjusted EBITDA

 

$24,081

 

$27,427

 

$25,739

 

$25,284

 

$24,734

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST COST:

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

$9,497

 

$9,873

 

$9,783

 

$9,849

 

$9,721

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST COVERAGE:

 

2.5x

 

2.8x

 

2.6x

 

2.6x

 

2.5x

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

SAME STORE PORTFOLIO NET OPERATING INCOME

TRAILING FIVE QUARTERS

Dollars in thousands, except per unit data

 

 

 

For the Three-Months Ended (a)

 

 

March 31, 2020

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

 

March 31,

2019

Revenue:

 

 

 

 

 

 

 

 

 

 

Rental and other property revenue

 

$47,893

 

$47,433

 

$48,006

 

$47,389

 

$45,746

Property Operating Expenses:

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

5,921

 

5,457

 

5,951

 

5,937

 

6,092

Property insurance

 

917

 

998

 

987

 

963

 

953

Personnel expenses

 

4,385

 

4,416

 

4,706

 

4,512

 

4,308

Utilities

 

2,766

 

3,185

 

3,167

 

2,922

 

2,578

Repairs and maintenance

 

1,500

 

1,243

 

1,970

 

1,955

 

1,499

Contract services

 

1,751

 

1,175

 

1,219

 

1,311

 

1,652

Advertising expenses

 

535

 

526

 

528

 

522

 

464

Other expenses

 

663

 

623

 

649

 

652

 

664

Total property operating expenses

 

18,438

 

17,623

 

19,177

 

18,774

 

18,210

Same-store net operating income (a)

 

$29,455

 

$29,810

 

$28,829

 

$28,615

 

$27,536

Same-store NOI margin

 

61.5%

 

62.8%

 

60.1%

 

60.4%

 

60.2%

Average occupancy

 

92.7%

 

92.4%

 

93.4%

 

94.2%

 

92.8%

Average effective monthly rent, per unit

 

$1,089

 

$1,083

 

$1,077

 

$1,056

 

$1,038

Reconciliation of same-store net operating

   income to net income (loss)

 

 

 

 

 

 

 

 

 

 

Same-store net operating income

 

$29,455

 

$29,810

 

$28,829

 

$28,615

 

$27,536

Non same-store net operating income

 

1,964

 

2,376

 

1,682

 

2,161

 

2,043

Other revenue

 

194

 

178

 

242

 

108

 

75

Property management expenses

 

(2,156)

 

(1,950)

 

(1,901)

 

(2,062)

 

(1,813)

General and administrative expenses

 

(5,376)

 

(2,987)

 

(3,113)

 

(3,538)

 

(3,107)

Depreciation and amortization expense

 

(14,828)

 

(14,213)

 

(13,434)

 

(12,721)

 

(12,447)

Abandoned deal costs

 

(130)

 

—

 

—

 

—

 

—

Interest expense

 

(9,497)

 

(9,873)

 

(9,783)

 

(9,849)

 

(9,721)

Net gains (losses) on sale of assets

 

—

 

20,679

 

2,390

 

12,142

 

—

Net income (loss)

 

$(374)

 

$24,020

 

$4,912

 

$14,856

 

$2,566

 

(a)

Same store portfolio consists of 54 properties, which represent 14,748 units.

15

 

SAME STORE PORTFOLIO NET OPERATING INCOME

THREE MONTHS ENDED MARCH 31, 2020 and 2019

Dollars in thousands, except per unit data

 

 

 

For the Three Months Ended March 31,

 

 

2020

 

2019

 

% change

Revenue:

 

 

 

 

 

Rental and other property revenue

 

$47,893

 

$45,746

 

4.7%

Property Operating Expenses:

 

 

 

 

 

Real estate taxes

 

5,921

 

6,092

 

-2.8%

Property insurance

 

917

 

953

 

-3.8%

Personnel expenses

 

4,385

 

4,308

 

1.8%

Utilities

 

2,766

 

2,578

 

7.3%

Repairs and maintenance

 

1,500

 

1,499

 

0.1%

Contract services

 

1,751

 

1,652

 

6.0%

Advertising expenses

 

535

 

464

 

15.3%

Other expenses

 

663

 

664

 

-0.2%

Total property operating expenses

 

18,438

 

18,210

 

1.3%

Same-store net operating income (a)

 

$29,455

 

$27,536

 

7.0%

Same-store NOI margin

 

61.5%

 

60.2%

 

1.3%

Average occupancy

 

92.7%

 

92.8%

 

-0.1%

Average effective monthly rent, per unit

 

$1,089

 

$1,038

 

4.9%

Reconciliation of same-store net operating

   income to net income (loss)

 

 

 

 

 

 

Same-store portfolio net operating income

 

$29,455

 

$27,536

 

 

Non same-store net operating income

 

1,964

 

2,043

 

 

Other revenue

 

194

 

75

 

 

Property management expenses

 

(2,156)

 

(1,813)

 

 

General and administrative expenses

 

(5,376)

 

(3,107)

 

 

Depreciation and amortization expense

 

(14,828)

 

(12,447)

 

 

Interest expense

 

(9,497)

 

(9,721)

 

 

Abandoned deal costs

 

(130)

 

—

 

 

Net income (loss)

 

$(374)

 

$2,566

 

 

(a)

Same store portfolio consists of 54 properties, which represent 14,748 units.

16

 

NET OPERATING INCOME (NOI) BRIDGE

TRAILING FIVE QUARTERS

Dollars in thousands

 

 

For the Three-Months Ended

 

 

March 31, 2020

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

 

March 31,

2019

Rental and other property revenue

 

 

 

 

 

 

 

 

 

 

Same store (a)

 

$47,893

 

$47,433

 

$48,006

 

$47,389

 

$45,746

Non same-store

 

3,263

 

3,817

 

3,051

 

3,459

 

3,719

Total rental and other property revenue

 

51,156

 

51,250

 

51,057

 

50,848

 

49,465

Property operating expenses

 

 

 

 

 

 

 

 

 

 

Same store (a)

 

18,438

 

17,623

 

19,177

 

18,774

 

18,210

Non same-store

 

1,299

 

1,441

 

1,369

 

1,298

 

1,676

Total property operating expenses

 

19,737

 

19,064

 

20,546

 

20,072

 

19,886

Net operating income

 

 

 

 

 

 

 

 

 

 

Same-store (a)

 

29,455

 

29,810

 

28,829

 

28,615

 

27,536

Non same-store

 

1,964

 

2,376

 

1,682

 

2,161

 

2,043

Total property net operating income

 

$31,419

 

$32,186

 

$30,511

 

$30,776

 

$29,579

Reconciliation of NOI to net income (loss)

 

 

 

 

 

 

 

 

 

 

Total property net operating income

 

$31,419

 

$32,186

 

$30,511

 

$30,776

 

$29,579

Other revenue

 

194

 

178

 

242

 

108

 

75

Property management expenses

 

(2,156)

 

(1,950)

 

(1,901)

 

(2,062)

 

(1,813)

General and administrative expenses

 

(5,376)

 

(2,987)

 

(3,113)

 

(3,538)

 

(3,107)

Depreciation and amortization expense

 

(14,828)

 

(14,213)

 

(13,434)

 

(12,721)

 

(12,447)

Interest expense

 

(9,497)

 

(9,873)

 

(9,783)

 

(9,849)

 

(9,721)

Abandoned deal costs

 

(130)

 

—

 

—

 

—

 

—

Net gains (losses) on sale of assets

 

—

 

20,679

 

2,390

 

12,142

 

—

Net income (loss)

 

$(374)

 

$24,020

 

$4,912

 

$14,856

 

$2,566

 

(a)

Same store portfolio consists of 54 properties, which represent 14,748 units.

 

17

 

SAME-STORE PORTFOLIO NET OPERATING INCOME BY MARKET

Dollars in thousands, except rent per unit

 

 

 

 

 

 

Rental and Other Property Revenue

 

Property Operating Expenses

 

Net Operating Income

 

Average Occupancy

 

Average

Effective

Monthly Rent

per Unit

Market

 

Number of Properties

 

Units

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

Atlanta, GA

 

5

 

1,796

 

$6,469

 

$6,037

 

7.2%

 

$2,218

 

$2,184

 

1.6%

 

$4,251

 

$3,853

 

10.3%

 

93.9%

 

94.3%

 

-0.4%

 

$1,210

 

$1,136

 

6.5%

Raleigh - Durham, NC

 

5

 

1,372

 

4,993

 

4,653

 

7.3%

 

1,784

 

1,762

 

1.2%

 

3,209

 

2,891

 

11.0%

 

93.6%

 

91.5%

 

2.1%

 

1,200

 

1,140

 

5.2%

Louisville, KY

 

6

 

1,710

 

5,145

 

4,895

 

5.1%

 

2,090

 

1,989

 

5.1%

 

3,055

 

2,906

 

5.1%

 

89.5%

 

88.9%

 

0.6%

 

1,009

 

977

 

3.3%

Columbus, OH

 

6

 

1,547

 

4,708

 

4,383

 

7.4%

 

2,004

 

1,924

 

4.2%

 

2,704

 

2,459

 

10.0%

 

93.0%

 

91.9%

 

1.0%

 

1,032

 

974

 

6.0%

Memphis, TN

 

4

 

1,383

 

4,475

 

4,467

 

0.2%

 

1,776

 

1,676

 

6.0%

 

2,699

 

2,791

 

-3.3%

 

88.4%

 

92.3%

 

-3.9%

 

1,151

 

1,083

 

6.3%

Oklahoma City, OK

 

5

 

1,658

 

3,492

 

3,332

 

4.8%

 

1,383

 

1,338

 

3.4%

 

2,109

 

1,994

 

5.8%

 

95.8%

 

94.8%

 

1.0%

 

681

 

660

 

3.2%

Indianapolis, IN

 

4

 

916

 

2,872

 

2,697

 

6.5%

 

1,133

 

1,213

 

-6.6%

 

1,739

 

1,484

 

17.2%

 

94.1%

 

93.5%

 

0.6%

 

1,030

 

980

 

5.1%

Tampa-St. Petersburg, FL

 

3

 

840

 

2,911

 

2,927

 

-0.5%

 

1,189

 

1,281

 

-7.2%

 

1,722

 

1,646

 

4.6%

 

87.6%

 

94.3%

 

-6.7%

 

1,234

 

1,158

 

6.5%

Dallas, TX

 

3

 

734

 

2,677

 

2,662

 

0.6%

 

1,115

 

1,141

 

-2.3%

 

1,562

 

1,521

 

2.7%

 

95.9%

 

96.5%

 

-0.6%

 

1,202

 

1,179

 

1.9%

Myrtle Beach, SC - Wilmington, NC

 

3

 

628

 

1,864

 

1,830

 

1.9%

 

626

 

613

 

2.1%

 

1,238

 

1,217

 

1.7%

 

89.9%

 

93.0%

 

-3.1%

 

1,037

 

968

 

7.1%

Charleston, SC

 

2

 

518

 

2,133

 

2,022

 

5.5%

 

915

 

886

 

3.3%

 

1,218

 

1,136

 

7.2%

 

94.6%

 

93.7%

 

0.8%

 

1,316

 

1,263

 

4.2%

Orlando, FL

 

1

 

297

 

1,357

 

1,310

 

3.6%

 

490

 

458

 

7.0%

 

867

 

852

 

1.8%

 

96.1%

 

97.4%

 

-1.3%

 

1,496

 

1,448

 

3.3%

Charlotte, NC

 

1

 

208

 

1,068

 

976

 

9.4%

 

328

 

360

 

-8.9%

 

740

 

616

 

20.1%

 

98.1%

 

93.4%

 

4.7%

 

1,564

 

1,510

 

3.6%

Asheville, NC

 

1

 

252

 

883

 

855

 

3.3%

 

262

 

252

 

4.0%

 

621

 

603

 

3.0%

 

96.0%

 

96.9%

 

-0.9%

 

1,157

 

1,113

 

4.0%

Chattanooga, TN

 

2

 

295

 

914

 

857

 

6.7%

 

417

 

425

 

-1.9%

 

497

 

432

 

15.0%

 

97.2%

 

94.2%

 

2.9%

 

994

 

968

 

2.7%

St. Louis, MO

 

1

 

152

 

710

 

723

 

-1.8%

 

247

 

254

 

-2.8%

 

463

 

469

 

-1.3%

 

97.6%

 

95.8%

 

1.7%

 

1,553

 

1,435

 

8.3%

Huntsville, AL

 

1

 

178

 

588

 

535

 

9.9%

 

204

 

188

 

8.5%

 

384

 

347

 

10.7%

 

97.8%

 

97.0%

 

0.8%

 

1,010

 

931

 

8.5%

Baton Rouge, LA

 

1

 

264

 

634

 

585

 

8.4%

 

257

 

266

 

-3.4%

 

377

 

319

 

18.2%

 

82.7%

 

71.5%

 

11.2%

 

908

 

945

 

-3.9%

Total/Weighted Average

 

54

 

14,748

 

$47,893

 

$45,746

 

4.7%

 

$18,438

 

$18,210

 

1.3%

 

$29,455

 

$27,536

 

7.0%

 

92.7%

 

92.8%

 

-0.1%

 

$1,089

 

$1,038

 

4.9%


 

18

 

TOTAL PORTFOLIO NOI EXPOSURE BY MARKET

Dollars in thousands, except rent per unit

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2020

Market

 

Number of Properties

 

Units

 

Gross Real

Estate

Assets

 

Period End

Occupancy

 

Average

Effective

Monthly Rent

per Unit

 

Net Operating

Income

 

% of NOI

Atlanta, GA

 

6

 

2,020

 

$256,395

 

93.1%

 

$1,194

 

$4,720

 

15.0%

Raleigh - Durham, NC

 

6

 

1,690

 

244,133

 

93.4%

 

1,181

 

3,842

 

12.2%

Louisville, KY

 

6

 

1,710

 

199,428

 

89.2%

 

1,009

 

3,056

 

9.7%

Memphis, TN

 

4

 

1,383

 

146,932

 

89.1%

 

1,151

 

2,699

 

8.6%

Columbus, OH

 

6

 

1,547

 

153,819

 

93.5%

 

1,032

 

2,703

 

8.6%

Tampa-St. Petersburg, FL

 

4

 

1,104

 

176,353

 

89.8%

 

1,252

 

2,373

 

7.5%

Oklahoma City, OK

 

5

 

1,658

 

78,628

 

97.2%

 

681

 

2,108

 

6.7%

Indianapolis, IN

 

4

 

916

 

91,375

 

95.9%

 

1,030

 

1,740

 

5.5%

Dallas, TX

 

4

 

985

 

139,320

 

91.8%

 

1,298

 

1,806

 

5.7%

Myrtle Beach, SC - Wilmington, NC

 

3

 

628

 

64,118

 

90.0%

 

1,037

 

1,234

 

3.9%

Charleston, SC

 

2

 

518

 

80,036

 

94.4%

 

1,316

 

1,223

 

3.9%

Orlando, FL

 

1

 

297

 

48,829

 

96.0%

 

1,496

 

868

 

2.8%

Charlotte, NC

 

1

 

208

 

42,194

 

95.7%

 

1,564

 

740

 

2.4%

Asheville, NC

 

1

 

252

 

28,738

 

96.4%

 

1,157

 

620

 

2.0%

Chattanooga, TN

 

2

 

295

 

27,455

 

96.6%

 

994

 

497

 

1.6%

St. Louis, MO

 

1

 

152

 

33,602

 

98.0%

 

1,466

 

463

 

1.5%

Huntsville, AL

 

1

 

178

 

16,495

 

98.9%

 

1,010

 

383

 

1.2%

Baton Rouge, LA

 

1

 

264

 

28,910

 

84.1%

 

908

 

377

 

1.2%

Total/Weighted Average

 

58

 

15,805

 

$1,856,760

 

92.7%

 

$1,100

 

$31,452

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


19

 

VALUE ADD SUMMARY

PROJECT LIFE TO DATE AS OF MARCH 31, 2020

 

 

 

 

 

 

 

 

 

Renovation Costs per Unit (b)

 

 

Property

Market

Percentage Complete

 

Total

Units To Be Renovated

Units Complete

Units

Leased

Rent Premium (a)

% Rent Increase

Interior

Exterior

Total

ROI - Interior Costs(c)

ROI - Total Costs (d)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ongoing

 

 

 

 

 

 

 

 

 

 

 

 

 

The Village at Auburn

Raleigh-Durham, NC

87.5%

 

328

287

256

179

17.3%

14,445

2,108

16,553

14.9%

13.0%

Pointe at Canyon Ridge

Atlanta, GA

72.1%

 

494

356

352

182

19.0%

8,938

1,773

10,711

24.4%

20.3%

Haverford

Lexington, KY

77.5%

 

160

124

122

85

10.0%

5,402

798

6,200

18.9%

16.4%

Crestmont

Atlanta, GA

91.8%

 

208

191

185

147

15.8%

12,258

7,742

20,000

14.4%

8.8%

The Commons at Canal Winchester

Columbus, OH

51.9%

 

264

137

114

191

22.1%

10,274

402

10,675

22.4%

21.5%

Creekside Corners

Atlanta, GA

63.1%

 

444

280

267

180

19.3%

8,932

1,314

10,246

24.2%

21.1%

Stonebridge Crossing

Memphis, TN

66.4%

 

500

332

297

130

15.5%

9,723

1,131

10,855

16.0%

14.4%

Arbors River Oaks

Memphis, TN

58.6%

 

191

112

100

239

20.6%

9,494

561

10,055

30.2%

28.5%

Vantage at Hillsborough

Tampa, FL

37.6%

 

348

131

111

194

18.7%

12,958

2,155

15,113

18.0%

15.4%

Waterford Landing

Atlanta, GA

13.5%

 

260

35

32

201

20.6%

8,994

685

9,678

26.9%

25.0%

North Park

Atlanta, GA

13.8%

 

224

31

25

194

20.3%

8,866

268

9,134

26.2%

25.4%

Avalon Oaks

Columbus, OH

2.6%

 

235

6

12

273

27.4%

10,793

1,021

11,815

30.3%

27.7%

Total/Weighted Average

 

 

 

3,656

2,022

1,873

$169

17.7%

$10,273

$2,009

$12,282

19.7%

16.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

On hold (e)

 

 

 

 

 

 

 

 

 

 

 

 

 

Jamestown

Louisville, KY

70.2%

 

356

250

238

281

34.0%

16,148

5,161

21,309

20.9%

15.8%

Oxmoor

Louisville, KY

61.8%

 

432

267

258

190

21.3%

16,188

127

16,314

14.1%

14.0%

Brunswick Point

Wilmington, NC

67.7%

 

288

195

167

64

6.5%

6,775

56

6,830

11.4%

11.3%

Schirm Farms

Columbus, OH

73.1%

 

264

193

187

79

9.2%

7,709

613

8,322

12.3%

11.4%

Lucerne

Tampa, FL

35.5%

 

276

98

78

270

24.7%

13,141

634

13,775

24.6%

23.5%

Rocky Creek

Tampa, FL

0.0%

 

264

0

0

-

0.0%

-

-

-

0.0%

0.0%

Meadows

Louisville, KY

0.0%

 

400

0

0

-

0.0%

-

-

-

0.0%

0.0%

Westmont Commons

Asheville, NC

0.0%

 

252

0

0

-

0.0%

-

-

-

0.0%

0.0%

Walnut Hill

Memphis, TN

0.0%

 

362

0

0

-

0.0%

-

-

-

0.0%

0.0%

Lenoxplace

Raleigh-Durham, NC

0.0%

 

268

0

0

-

0.0%

-

-

-

0.0%

0.0%

Thornhill

Raleigh-Durham, NC

0.0%

 

318

0

0

-

0.0%

-

-

-

0.0%

0.0%

Total/Weighted Average

 

 

 

3,480

1,003

928

$175

19.7%

$12,519

$1,546

$14,064

16.8%

14.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grand Total/Weighted Average

 

 

 

7,136

3,025

2,801

$171

18.3%

$11,017

$1,568

$12,585

18.6%

16.3%

 

 

(a)

The rent premium reflects the per unit per month difference between the rental rate on the renovated unit and the market rent for an unrenovated unit as of the date presented, as determined by management consistent with its customary rent-setting and evaluation procedures.

 

(b)

Includes all costs to renovate the interior units and make certain exterior renovations, including clubhouses and amenities.  Interior costs per unit are based on units leased.  Exterior costs per unit are based on total units at the community. Excludes overhead costs to support and manage the value add program as those costs relate to the entire program and cannot be allocated to individual projects.

 

(c)

Calculated using the rent premium per unit per month, multiplied by 12, divided by the interior renovation costs per unit.

 

(d)

Calculated using the rent premium per unit per month, multiplied by 12, divided by the total renovation costs per unit.

 

(e)

Renovations at these properties have been paused or otherwise delayed as we evaluate market conditions amid the COVID-19 pandemic.

 

 

20

 

 

CAPITAL RECYCLING

Dollars in thousands with respect to Contract Price and Price per Unit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions to Date 2020

 

Market

 

Units

 

Acquisition Date

 

Contract Price

 

Price per Unit

 

Average Rent Per Unit

The Adley at Craig Ranch

 

Dallas, TX

 

251

 

February 11, 2020

 

$51,204

 

$204

 

$1,552

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

251

 

 

 

$51,204

 

$204

 

$1,552

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21

 

DEBT SUMMARY AS OF MARCH 31, 2020

Dollars in thousands

 

 

Amount

 

Weighted Average Rate

 

Type

 

Weighted

Average

Maturity

(in years)

 

Debt:

 

 

 

 

 

 

 

 

 

Unsecured credit facility (a)

 

$251,802

 

2.3%

 

Floating

 

3.1

 

Unsecured term loans (b)

 

300,000

 

2.2%

 

Floating

 

4.1

 

Mortgages

 

503,033

 

3.9%

 

Fixed

 

3.7

 

Unamortized deferred financing costs

 

(5,294)

 

 

 

 

 

 

 

Total Debt

 

1,049,541

 

3.0%

 

 

 

3.7

 

Market Equity Capitalization, at period end

 

853,600

 

 

 

 

 

 

 

Total Capitalization

 

$1,903,140

 

 

 

 

 

 

 

 

(a)

Credit facility total capacity is $350,000, comprised entirely of an unsecured revolving line of credit, of which $251,802 was drawn as of March 31, 2020. The maturity date of borrowings under the revolving line of credit is May 9, 2023.

 

(b)

Comprised of a $200,000 unsecured term loan with a maturity date of January 17, 2024 and a $100,000 unsecured term loan with a maturity date of November 20, 2024.

    

 

(c)

As of March 31, 2020, IRT maintained a float-to-fixed interest swap with a $150,000 notional amount. This swap, which expires on June 17, 2021 and has a fixed rate of 1.1325%, has converted $150,000 of floating rate debt to fixed rate debt. IRT also maintains: (1) an interest rate collar with a $100,000 notional amount, which expires on November 20, 2024, has a floor of 1.25% and a cap of 2.00%, and (2) an interest rate collar with a $150,000 notional amount, which expires on January 17, 2024, has a floor of 2.25% and a cap of 2.50%. These collars have converted $250,000 of floating rate debt to fixed rate debt when LIBOR is above the cap rate or below the floor rate.  


22

 

 

DEBT COVENANT AND UNENCUMBERED ASSET STATS AS OF MARCH 31, 2020

Dollars in thousands

 

Debt Covenant Summary (a)

Requirement

Actual

Compliance

Consolidated leverage ratio

≤ 60%

47.9%

Yes

Consolidated fixed charge coverage ratio

≥ 1.5x

2.0x

Yes

Unsecured leverage ratio

≤ 60%

48.9%

Yes

Unencumbered asset debt service ratio

≥ 1.3x

1.7x

Yes

 

(a)

For a complete listing of all debt covenants along with definitions of each covenant calculation see the Unsecured Credit Facility and Unsecured Term Loan Agreements included as exhibits 10.20, 10.6, and 10.15 of IRT’s 2019 Form 10-K.

Encumbered & Unencumbered Statistics

 

 

Total Units

 

% of Total

 

Gross Assets

 

% of Total

 

Q1 2020 NOI

 

% of Total

   Unencumbered assets

 

 

8,790

 

55.6%

 

$1,052,691

 

54.0%

 

$16,140

 

51.4%

   Encumbered assets

 

 

7,015

 

44.4%

 

896,803

 

46.0%

 

15,279

 

48.6%

 

 

 

15,805

 

100.0%

 

$1,949,494

 

100.0%

 

$31,419

 

100.0%

23

 

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.  IRT believes average effective rent is a helpful measurement in evaluating average pricing.  This metric, when presented, reflects the average effective rent per month.

Average Occupancy

Average occupancy represents the average occupied units for the reporting period divided by the average of total units available for rent for the reporting period.

EBITDA and Adjusted EBITDA

EBITDA is defined as net income before interest expense including amortization of deferred financing costs, income tax expense, and depreciation and amortization expenses. Adjusted EBITDA is EBITDA before certain other non-cash or non-operating gains or losses related to items such as asset sales, debt extinguishments and acquisition related debt extinguishment expenses, and abandoned deal costs. EBITDA and Adjusted EBITDA are each non-GAAP measures.  IRT considers each of EBITDA and Adjusted EBITDA to be an appropriate supplemental measure of performance because it eliminates interest, income taxes, depreciation and amortization, and other non-cash or non-operating gains and losses, which permits investors to view income from operations without these non-cash or non-operating items. IRT’s calculation of Adjusted EBITDA differs from the methodology used for calculating Adjusted EBITDA by certain other REITs and, accordingly, IRT’s Adjusted EBITDA may not be comparable to Adjusted EBITDA reported by other REITs.

Funds From Operations (“FFO”) and Core Funds From Operations (“CFFO”)

IRT believes that FFO and CFFO, each of which is a non-GAAP financial measure, are additional appropriate measures of the operating performance of a REIT and IRT in particular. IRT computes FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, as net income or loss (computed in accordance with GAAP), excluding real estate-related depreciation and amortization expense, gains or losses on sales of real estate and the cumulative effect of changes in accounting principles.

CFFO is a computation made by analysts and investors to measure a real estate company’s operating performance by removing the effect of items that do not reflect ongoing property operations, including stock compensation expense, depreciation and amortization of other items not included in FFO, amortization of deferred financing costs, and other non-cash or non-operating gains or losses related to items such as abandoned deal costs from the determination of FFO.

IRT’s calculation of CFFO differs from the methodology used for calculating CFFO by certain other REITs and, accordingly, IRT’s CFFO may not be comparable to CFFO reported by other REITs. IRT’s management utilizes FFO and CFFO as measures of IRT’s operating performance, and believes they are also useful to investors, because they facilitate an understanding of IRT’s operating performance after adjustment for certain non-cash or non-operating items that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare IRT’s operating performance between periods. Furthermore, although FFO, CFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, IRT believes that FFO and CFFO provide investors with additional useful measures to compare IRT’s financial performance to certain other REITs. Neither FFO nor CFFO is equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and CFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor CFFO should be considered as an alternative to net income as an indicator of IRT’s operating performance or as an alternative to cash flow from operating activities as a measure of IRT’s liquidity.

Interest Coverage

Interest coverage is a ratio computed by dividing Adjusted EBITDA by interest expense.

24

 

Net Debt

Net debt, a non-GAAP financial measure, equals total debt less cash and cash equivalents. The following table provides a reconciliation of total debt to net debt (Dollars in thousands).

 

As of

 

March 31, 2020

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

 

March 31,

2019

Total debt

$1,049,541

 

$985,572

 

$979,330

 

$989,499

 

$990,920

Less: cash and cash equivalents

(57,436)

 

(9,888)

 

(6,587)

 

(11,060)

 

(9,030)

Total net debt

$992,105

 

$975,684

 

$972,743

 

$978,439

 

$981,890

 

 

 

 

 

 

 

 

 

 

IRT presents net debt because management believes it is a useful measure of IRT’s credit position and progress toward reducing leverage.  The calculation is limited because IRT may not always be able to use cash to repay debt on a dollar for dollar basis.

Net Operating Income

IRT believes that Net Operating Income (“NOI”), a non-GAAP financial measure, is a useful supplemental measure of its operating performance. IRT defines NOI as total property revenues less total property operating expenses, excluding interest expenses, depreciation and amortization, property management expenses, and general and administrative expenses. Other REITs may use different methodologies for calculating NOI, and accordingly, IRT’s NOI may not be comparable to other REITs. IRT believes that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income insofar as the measure reflects only operating income and expense at the property level. IRT uses NOI to evaluate performance on a same store and non-same store basis because NOI measures the core operations of property performance by excluding corporate level expenses, financing expenses, and other items not related to property operating performance and captures trends in rental housing and property operating expenses. However, NOI should only be used as an alternative measure of IRT’s financial performance.

Same Store Properties and Same Store Portfolio

IRT reviews its same store portfolio at the beginning of each calendar year.  Properties are added into the same store portfolio if they were owned at the beginning of the previous year.  Properties that are held-for-sale or have been sold are excluded from the same store portfolio.

Total Gross Assets

Total Gross Assets equals total assets plus accumulated depreciation and accumulated amortization, including fully depreciated or amortized real estate and real estate related assets.  The following table provides a reconciliation of total assets to total gross assets (Dollars in thousands).

 

As of

 

March 31, 2020

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

 

March 31,

2019

Total assets

$1,757,138

 

$1,664,106

 

$1,653,017

 

$1,655,747

 

$1,655,849

Plus: accumulated depreciation

172,789

 

158,435

 

148,924

 

141,965

 

132,448

Plus: accumulated amortization

19,567

 

19,197

 

19,232

 

19,495

 

19,658

Total gross assets

$1,949,494

 

$1,841,738

 

$1,821,173

 

$1,817,207

 

$1,807,955

 

 

25