Independence Realty Trust, Inc. (IRT)

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Independence Realty Trust (IRT)

Q4 2013 Earnings Conference Call

February 26, 2014, 09:00 AM ET

Executives

Andres Viroslav - Director, Investor Relations

Scott Schaeffer - Chairman, President and Chief Executive Officer

James Sebra - Treasurer and Chief Financial Officer

Farrell Ender - President, Independence Realty Advisors

Analysts

Brian Hogan - William Blair

Wilkes Graham - Compass Point

Dan Donlan - Ladenburg Thalmann

Doug Weiss - DSW Investment

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the fourth quarter 2013 Independence Realty Trust Inc. earnings conference call. My name is Shantelle and I will be your facilitator for today's call. (Operator Instructions) I would now like to turn the call over to your host for today, Mr. Andres Viroslav. Please proceed, sir.

Andres Viroslav

Thank you, operator, and good morning to everyone. Thank you for joining us today to review Independent Realty Trust's fourth quarter and fiscal 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 be 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 92995354.

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

Thanks, Andres, and thank you all for joining our call today. I'd like to start with the financial highlights of 2013 as compared to 2012. Total revenues for the quarter grew 29% to $5.8 million. Operating income for the quarter increased 44% to $1.3 million. Core funds from operations per share increased 11% to $0.20 for the fourth quarter.

During the fourth quarter, we acquired a property in Jackson, Mississippi and subsequently to quarter end we acquired a property in Illinois. In addition, we expect to close the Oklahoma City portfolio acquisition shortly. Subsequent to yearend we raised $67 million through the sale of 8 million shares of common stock to close on properties we have under contract and also to fund our pipeline of opportunities.

We continue to see solid opportunities to purchase stable apartment properties in submarkets with strong rental demand and limited additions to supply, which results in the potential for rent increases and improved operating efficiencies. The financing for these properties also remains very favorable.

As a result of our progress and performance of the portfolio, IRT's board announced monthly dividend increase to $0.06 or $0.18 per quarter for the first quarter of 2014, a 12.5% increase from the prior monthly dividend rate.

At this point, I'd like to turn the call over to Jim Sebra to go through the financial numbers. Jim?

James Sebra

Thanks, Scott. During Q4 2013, core FFO was $0.20 per share, up from $0.18 per share in Q4 2012. Note that our weighted average shares outstanding were 9.6 million shares this quarter as compared to a fully diluted 5.6 million shares in Q4 2012. This increase is due entirely to the 4 million shares we issued in our August public offering.

Earnings per share was $0.03 this quarter, up from $0.01 loss per share during Q4 2012. For 2013 core FFO was $0.81, a 14% increase from $0.71 in 2012 on higher weighted average shares. We reported GAAP earnings per share of $0.12, up from a loss of $0.02 per share in 2012.

A few items of note on the annual income statement. Revenue was up $3.3 million in 2013 as compared to 2012. This increase breaks down into $2.8 million of revenue from additional properties that were acquired in 2013 or present for full year in 2013 as compared to 2012 and $500,000 of additional revenue from improved occupancies and increase in rental rates during 2013.

Property operating expenses increased $1.4 million in 2013 as compared to 2012. This increase breaks down into $1.2 million from new properties in 2013 as compared to 2012 and $100,000 from increased expenses for real estate taxes, utilities and property insurance.

As a result, property NOI was $10.5 million for the year, up 23% or $2.0 million compared to 2012. Occupancy at the same-store properties was 93.9% at yearend compared to 91.7% at December 31, 2012. The average rental rate for the same-store properties was $779 per unit per month in the fourth quarter as compared to $755 per unit per month during the Q4 last year.

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