PHILADELPHIA--(BUSINESS WIRE)--Independence Realty Trust, Inc. (NYSE: IRT), a multifamily apartment REIT, today announced its third quarter 2018 financial results.

Third Quarter Highlights

• Since the inception of the value add program, IRT has completed renovations in 847 units, achieving a weighted average return on investment of 18%.
• Net income allocable to common shares of $4.8 million for the quarter ended September 30, 2018 as compared to $1.1 million for the quarter ended September 30, 2017. Earnings per diluted share of $0.05 for the quarter ended September 30, 2018 as compared to $0.02 for the quarter ended September 30, 2017.
• Core Funds from Operations (“CFFO”) of $16.5 million for the quarter ended September 30, 2018 as compared to $14.0 million for the quarter ended September 30, 2017. CFFO per share was $0.19 for the third quarter of 2018.
• Adjusted EBITDA of $24.7 million for the quarter ended September 30, 2018 as compared to $20.2 million for the quarter ended September 30, 2017.

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:

“The third quarter was highlighted by continued momentum in rental rate growth across the portfolio, as well as the ongoing execution of our accretive capital recycling initiative,” said Scott Schaeffer, IRT’s Chairman and CEO. “Since the beginning of the third quarter, we have identified four high quality communities across key markets that are a perfect fit with our investment thesis. We have completed the acquisition of three of these properties and expect to close on the fourth acquisition and the sales of four of our held for sale assets in the fourth quarter of 2018.”

Schaeffer continued, “Our return on investment from the value add program remains on track with strong demand for renovated units generating rental rate growth of 19% since inception. We have experienced a greater than anticipated near-term impact to occupancy at four of our 14 value add communities as a result of disruption from the renovations. Despite the near-term occupancy impact, we still expect same store NOI growth to accelerate in the fourth quarter. This growth is driven by a larger contribution from the value add program and strong NOI growth in our non-value add communities. As we look ahead to 2019 and beyond, we are confident that this multi-phased approach to value add provides us with a clear roadmap to deliver outsized returns and will be a key driver of our long-term growth profile.”

Capital Recycling

As previously announced, during the third quarter, IRT commenced a capital recycling initiative aimed to dispose of assets in markets that lack scale, in order to invest in attractive non-gateway markets where scale has been, or can be, achieved. As part of this capital recycling initiative, we have identified four acquisitions in our target markets. We completed two of those acquisitions in July 2018, one in October 2018, and we expect to complete the fourth acquisition in November 2018.

• On July 11, 2018, IRT acquired a 348-unit community in Tampa, FL for $43.0 million. As of July 6, 2018, the community was 94.5% occupied with average rent per unit of $1,029.
• On July 26, 2018, IRT acquired a 232-unit community in Columbus, OH for $21.2 million. As of July 25, 2018, the community was 97.0% occupied with average rent per unit of $850.
• On October 11, 2018, IRT acquired a 260-unit community in Atlanta, GA for $30.5 million. As of October 9, 2018, the community was 94.2% occupied with average rent per unit of $993.
• In September 2018, we entered into an agreement to acquire a 276-unit community located in Tampa, FL for a purchase price of $47.0 million. We expect this acquisition to close in November 2018. As of October 22, 2018, the community was 95.3% occupied with average rent per unit of $1,220.

IRT closed these acquisitions using proceeds from its line of credit in advance of completing sales associated with IRT’s capital recycling initiative.

Term Loan Agreement

On October 30, 2018, IRT entered into a five-year, $200 million unsecured term loan that will mature in January 2024. The proceeds were used to paydown borrowings outstanding under the revolving portion of IRT’s $300.0 million unsecured credit facility. The term loan bears interest at a spread over LIBOR, based on IRT’s overall leverage. At closing, the spread to LIBOR was 145 basis points. To continue IRT’s practice of reducing exposure to floating interest rates, IRT purchased a collar that caps LIBOR at 2.50%, subject to a floor on LIBOR of 2.25%, during the five-year term.

At-the-Market Offering

During the third quarter of 2018, IRT issued 1,861,508 shares of common stock under IRT’s at-the-market sales program at a weighted average per share price of $10.32, yielding net proceeds of approximately $18.8 million.

Capital Expenditures

For the three months ended September 30, 2018, recurring capital expenditures for the total portfolio were $2.3 million, or $146 per unit. For the nine months ended September 30, 2018, recurring capital expenditures for the total portfolio were $5.4 million, or $344 per unit.

Revised 2018 EPS and CFFO Guidance

Following IRT’s performance for the first nine months of 2018 and the expected impact of the value add program during the fourth quarter of 2018, the Company is revising its 2018 full year EPS and CFFO guidance. EPS per diluted share is now projected to be in a range of $0.38 to $0.42. CFFO per diluted share, a non-GAAP financial measure, is now projected to be in the range of $0.74 to $0.75. 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.

About Independence Realty Trust, Inc.

Independence Realty Trust (NYSE: IRT) is a real estate investment trust that currently owns and operates 59 multifamily apartment properties, totaling 16,120 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.