Independence Realty Trust, Inc. (IRT)

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Independence Realty Trust, Inc. (IRT)

Q3 2013 Earnings Conference Call

November 1, 2013 09:00 ET

Executives

Andres Viroslav - Director, Corporate Communications

Scott Schaeffer - Chief Executive Officer

Jim Sebra - Chief Financial Officer

Farrell Ender - President, Independent Realty Advisors

Analysts

Wilkes Graham - Compass Point

Bob Napoli - William Blair

Daniel Donlan - Ladenburg Thalmann

Presentation

Operator

Good day, ladies and gentlemen and welcome to the Third Quarter 2013 Independence Realty Trust Incorporated Earnings Conference Call. My name is Towanda and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to Mr. Andres Viroslav, Director of Corporate Communications. Please proceed, sir.

Andres Viroslav - Director, Corporate Communications

Thank you, Towanda and good morning to everyone. Thank you for joining us today to review Independent Realty Trust’s third quarter 2013 financial results. On the call with me today are Scott Schaeffer, IRT’s Chief Executive Officer; Jim Sebra, IRT’s Chief Financial Officer; and Farrell Ender, President of Independent Realty Advisors.

This morning’s call is being webcast on our website at www.irtreit.com. There will a replay of the call available via webcast on our website and telephonically beginning at approximately 1:00 PM Eastern Time today. The dial-in for the replay is 888-286-8010 with a confirmation code of 36182789.

Before I turn the call over to Scott, I would like to remind everyone that there may be forward-looking statements made in this call. These forward-looking statements reflect IRT’s current views with respect to future events and financial performance. Actual results could differ substantially and materially from what IRT has projected. Such statements are made in good faith pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Please refer to IRT’s press release and filings with the SEC for factors that could affect the accuracy of our expectations or cause our future results to differ materially from those expectations.

Participants may discuss non-GAAP financial measures in this call. A copy of IRT’s press release containing financial information, other statistical information and a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure is attached to IRT’s most recent current report on Form 8-K available at IRT’s website, www.irtreit.com under Investor Relations. IRT’s other SEC filings are also available through this link. IRT does not undertake to update forward-looking statements in this call or with respect to matters described herein, except as maybe required by the law.

Now, I would like to turn the call over to IRT’s Chief Executive Officer, Scott Schaeffer. Scott?

Scott Schaeffer - Chief Executive Officer

Thanks, Andres and thank you all for joining our call today. Welcome to the inaugural IRT earnings conference call. We are pleased to report that since our August equity offering and public listing on the NYSE MKT Exchange, we have made excellent progress towards deploying the $34 million of gross offering proceeds. As of this call, we have effectively deployed or committed all of the capital raised in the offering. We have acquired one property in Indianapolis and under contract regarding our other acquisitions including an agreement to acquire portfolio of five properties located around Oklahoma City.

As expected, we have sourced these acquisitions through RAIT Financial Trust commercial real estate platform and relationships. In addition, we recently entered into a $20 million secured revolving credit agreement with Huntington National Bank to be used to fund acquisitions. We continue to see solid opportunities to purchase stable apartment properties in sub-markets with strong rental demand and limited supply enhancing the potential for rent increases and improved operating efficiencies.

And at this point, I would like to turn the call over to Jim Sebra to go through the numbers.

Jim Sebra - Chief Financial Officer

Thanks, Scott. During Q3, 2013, core FFO was $0.17 per share, up from $0.16 per share in Q3 2012. Please note that our weighted average shares outstanding were 7.6 million shares this quarter as compared to 5.6 million shares in Q3 of last year. This increase is due entirely to the 4 million shares we issued in our August public offering. Earnings per share was $0.03 per share this quarter, up from a $0.09 loss per share during Q3 of last year.

A few items of note on the income statement. Revenue was up $746,000 in Q3 this year as compared to Q3 last year. This increase was primarily from improved occupancies and the acquisition of Runaway Bay in October of last year. Property operating expenses increased by $315,000 in Q3 this year due primarily to the acquisition of Runaway Bay as previously mentioned. As a result, property NOI was $2.4 million for the quarter, up $431,000 compared to Q3 of last year. Occupancy at our same store properties was 94.3% this quarter compared to 92.4% last year. The average rental rate for the same store properties was $770 per unit per month this quarter as compared to $759 per unit per month during Q3 last year.

Our Heritage Trace asset continues to improve after the close last year reduced its occupancy for the first half of 2013. In order to accelerate occupancy growth at this asset we have reduced our asking rents into occupancy returns to a more stabilized level. Other expenses including asset management fees and G&A are down primarily due to the movement of our transfer agent from DST to American stock transfer in May of this year. Interest expense increased by $97,000 this quarter due to $10 million of agency financing we used to purchase Runaway Bay in October of last year. The annual coupon of that financing is 3.6%.

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