Independence Realty Trust Announces First Quarter 2019 Financial Results

PHILADELPHIA–(BUSINESS WIRE)–Independence Realty Trust, Inc. (“IRT”) (NYSE:IRT), a multifamily
apartment REIT, today announced its first quarter 2019 financial results.

First Quarter Highlights

• Net income allocable to common shares of $2.5 million for the quarter
  ended March 31, 2019 as compared to $3.4 million for the quarter ended
  March 31, 2018. Earnings per diluted share of $0.03 for the quarter
  ended March 31, 2019 as compared to $0.04 for the quarter ended March
  31, 2018.
• Core Funds from Operations (“CFFO”) of $16.0 million for the quarter
  ended March 31, 2019 as compared to $15.6 million for the quarter
  ended March 31, 2018. CFFO per share was $0.18 for the first quarter
  of 2019 and for the first quarter of 2018.
• Same store NOI growth of 5.1% for the quarter ended March 31, 2019
  compared to the quarter ended March 31, 2018.
• Adjusted EBITDA of $24.7 million for the quarter ended March 31, 2019
  as compared to $23.0 million for the quarter ended March 31, 2018.
• Since the inception of the value add program, IRT has completed
  renovations in 1,590 units, achieving a weighted average return on
  investment of 16%.

Included later in this press release are definitions of 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:

“We are pleased with our Q1 performance as the value add renovation
program is producing tangible results,” said Scott Schaeffer, IRT’s
Chairman and CEO. “Our strategic decision to allocate capital and invest
in upgrading the interiors and exteriors of these communities is
increasing their value. This is only the beginning. In addition, we are
also seeing sizable lease-over-lease rent growth in the balance of our
portfolio. As we look ahead, we will continue to execute on our business
plan, which will drive NOI growth and increase shareholder value.”

Same Store Property Operating Results

(1) Same store portfolio for the three months ended March 31, 2019
includes 50 properties, which represent 13,697 units.

Same Store Property Operating Results, Excluding Value Add

The same store portfolio results below exclude twelve communities that
are both part of the same store portfolio and are actively undergoing
Value Add renovations during the three months ended March 31, 2019.

(1) Same store portfolio, excluding value add, includes 38 properties,
which represent 9,748 units for the three months ended March 31, 2019.

(2) As communicated previously, this increase is primarily the result of
increased real estate taxes. Please refer to the 2019 EPS and CFFO
Guidance section for additional details on the change in property level
operating expenses.

Capital Recycling

Acquisitions:

• On April 30, 2019, IRT acquired a 224-unit community in Atlanta for
  $28.0 million. As of April 17, 2019, the community was 98.2% occupied
  with average rent per unit of $990.

Dispositions:

• As of March 31, 2019, IRT had three properties in its portfolio that
  were identified as held for sale. Subsequent to quarter-end, on April
  30, 2019, IRT sold a 370-unit community located outside of Chicago,
  Illinois for $42.0 million. Associated with this disposition, IRT
  repaid indebtedness totaling $38 million and expects to record a gain
  on sale of approximately $12.5 million.
• The two remaining communities held for sale in Little Rock, Arkansas
  are under contract at a price of $56.5 million, and IRT expects the
  sales to close by the end of the second quarter in 2019. IRT intends
  to use the net proceeds of the sales to repay indebtedness.

At-the-Market Offering

During the first quarter of 2019, IRT issued 510,000 shares of common
stock under its at-the-market sales program at a weighted average per
share price of $10.61, yielding net proceeds of approximately $5.3
million.

Capital Expenditures

For the three months ended March 31, 2019, recurring capital
expenditures for the total portfolio were $1.8 million, or $115 per unit.

Distributions

On March 18, 2019, IRT’s Board of Directors declared a quarterly cash
dividend for the first quarter of 2019 of $0.18 per share of IRT common
stock, payable on April 25, 2019 to stockholders of record on March 29,
2019.

2019 EPS and CFFO Guidance

IRT is reiterating 2019 full year guidance. EPS per diluted share is
projected to be in a range of $0.76 to $0.80. CFFO per diluted share, a
non-GAAP financial measure, is projected to be in the range of $0.74 to
$0.78. A reconciliation of IRT’s projected net income allocable to
common shares to its projected CFFO per share, is included below. Also,
included below are the primary assumptions underlying these estimates.
See the schedules and definitions at the end of this release for further
information regarding how IRT calculates CFFO and for management’s
definition and rationale for the usefulness of CFFO.

(1) This guidance, including the underlying assumptions presented in the
table below, constitutes forward-looking information. Actual full year
2019 EPS and CFFO could vary significantly from the projections
presented. See “Forward-Looking Statements” below.

(2) Per share guidance is based on weighted average shares and units
outstanding of 90.2 million.

(1) In 2019, IRT is expecting increases in real estate tax expense at
several recently acquired communities that are new to the same store
portfolio. IRT’s underwriting contemplates tax increases due to
re-assessments, however, the ultimate timing is difficult to predict.

(2) Acquisition volume includes the April 2019 acquisition and potential
additional capital recycling acquisitions in 2019.

(3) Dispositions include the April 2019 disposition, the two pending
dispositions referred to above, and potential additional capital
recycling dispositions in 2019.

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, Adjusted EBITDA and NOI. Included at the end of this
release is 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 respective definitions and rationales for the usefulness of
each of these non-GAAP financial measures and other definitions 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 2, 2019 from the investor relations section
of the IRT website at www.irtliving.com
or by dialing 1.844.775.2542, access code 7240939. 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 9, 2019 by dialing
1.855.859.2056, access code 7240939.

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 (NYSE: IRT) is a real estate investment trust
that currently owns and operates 58 multifamily apartment properties,
totaling 15,880 units, 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 of capital through distributions and capital
appreciation.

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 “may,” “will,” “expect,” “intend,”
“anticipate,” “estimate,” “believe,” “seek,” “outlook,” “assumption,”
“projected,” “strategy”, “guidance” or other, similar words. Because
such forward-looking statements involve significant risks, uncertainties
and contingencies, many of which are not within IRT’s control, actual
results may differ materially from the expectations, intentions,
beliefs, plans or predictions of the future expressed or implied by such
statements. These forward-looking statements are based upon the current
judgements and expectations of IRT’s management. Risks and uncertainties
that might cause IRT’s actual results to differ materially from those
expressed or implied by forward-looking statements include, but are not
limited to: adverse changes in national, regional and local economic
climates; changes in market demand for rental apartment homes and
pricing pressures from competitors that could limit our ability to lease
units or increase rents; competition that could adversely affect our
ability to acquire additional properties; volatility in capital and
credit markets, including changes that reduce availability, and increase
costs, of capital; unexpected changes in the assumptions underlying our
2019 EPS, CFFO and same store NOI growth guidance; 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; risks associated with pursuit of strategic
acquisitions, including risks associated with the need to raise
additional capital to fund the acquisitions and failure of acquisitions
to produce expected returns; unexpected costs of REIT qualification
compliance; costs and disruptions as the result of a cybersecurity
incident or other technology disruption; and share price fluctuations.
Additional risks and uncertainties that could cause our actual results
to differ materially from those expressed or implied by the
forward-looking statements in this press release are discussed in IRT’s
filings with the Securities and Exchange Commission (“SEC”), including
those under the heading “Risk Factors” in IRT’s most recently filed
Annual Report on Form 10-K. Dividends are subject to the discretion of
IRT’s Board of Directors, and will depend on IRT’s financial condition,
results of operations, capital requirements, compliance with applicable
laws and agreements and any other factors deemed relevant by IRT’s
Board. 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.

(a) Same store portfolio consists of 50 properties, which represent
13,697 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, and the
projected completion of the announced capital recycling activities
including paydown of associated indebtedness. Actual net debt to
adjusted EBITDA for the five quarters ended March 31, 2019 was 9.9x,
9.5x, 9.7x, 9.5x, and 9.7x, respectively.

(a) Same store portfolio includes 50 properties, which represent 13,697
units.

Schedule V
Independence Realty Trust, Inc.
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 of the daily physical occupancy
for the period presented.

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 acquisition and integration expenses, asset sales, debt
extinguishments and acquisition related debt extinguishment expenses.
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, acquisition
and integration expenses, and other non-cash or non-operating gains or
losses related to items such as defeasance costs IRT incurs when it
sells a property subject to secured debt, asset sales, debt
extinguishments, and acquisition related debt extinguishment expenses
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.

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).

Contacts

Independence Realty Trust, Inc.
Edelman Financial
Communications & Capital Markets
Ted McHugh and Lauren Tarola
917.530.7792
[email protected]

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