IRT 8-K
Independence Realty Trust, Inc. (IRT)
8-K
2024-03-01
For: 2024-02-28
View Original
Added on
April 09, 2026
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________________________
FORM 8-K
_____________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 28, 2024
_____________________________________________
(Exact name of registrant as specified in its charter)
_____________________________________________
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||
(Address of Principal Executive Office) (Zip Code)
(267 ) 270-4800
(Registrant’s telephone number, including area code)
N/A
Former name or former address, if changed since last report
_____________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 1.01 Entry into a Material Definitive Agreement.
Item 5.02 of this Current Report on Form 8-K contains a description of the material terms of a Cooperation Agreement, which description is incorporated by reference in this Item 1.01.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 29, 2024, the Board of Directors (the “Board”) of Independence Realty Trust, Inc. (the “Company”) increased the size of the Board from 9 to 10 directors and appointed Craig Macnab, an additional independent director, to fill the newly created vacancy and whose term will expire at the Company’s 2024 annual meeting of stockholders (“2024 Annual Meeting”), or until his earlier death, resignation, disqualification or removal.
Mr. Macnab has an extensive history of leading a publicly held REIT in the retail sector. Currently, Mr. Macnab has served on the Board of VICI Properties Inc. (NYSE: VICI) since 2017, as the Chairman of its Compensation Committee since 2019, and as a member of its Audit Committee since 2020. Mr. Macnab has also served on the board of directors of American Tower Corporation (NYSE: AMT) since 2014 and as the Chairman of the Compensation Committee since 2018. Prior to these appointments, Mr. Macnab served as chief executive officer of National Retail Properties, Inc. (NYSE: NNN) for 13 years and Chairman for nine years. He also served as a director of Cadillac Fairview Corporation (a private company) from September 2011 through December 2022 and Forest City Realty Trust, Inc. (formerly NYSE: FCEA) from 2017 to 2018, Eclipsys Corporation (formerly NASDAQ: ECLP) from 2008 to 2014, and DDR Corp. (formerly NYSE: DDR) from 2003 to 2015. Previously, Mr. Macnab was the Chief Executive Officer and President of JDN Realty (formerly NYSE: JDN), a publicly traded real estate investment trust, from 2000 to 2003. Mr. Macnab holds a Bachelor of Commerce degree in Economics and Accounting from the University of the Witwatersrand and a Master of Business Administration from Drexel University. The Board determined that Mr. Macnab is independent as defined in the Company’s governing documents and under applicable law. Mr. Macnab does not have any family relationship with any officer or director of the Company. Other than as provided under the Cooperation Agreement described below, there are no arrangements or understandings pursuant to which Mr. Macnab was elected as a director, and Mr. Macnab has not been involved in any related transactions or relationships with the Company as defined in Item 404(a) of Regulation S-K.
In connection with Mr. Macnab’s appointment as a member of the Board, Mr. Macnab will be entitled to receive the same compensation as other non-employee directors, which compensation amount shall reflect the pro rata portion for Mr. Macnab’s partial period of service between the date of his appointment and the 2024 Annual Meeting. In addition, Mr. Macnab will enter into an indemnification agreement with the Company in the form attached as Exhibit 10.13 to the Company’s annual report on Form 10-K for the year ended December 31, 2023.
In connection with the appointment, the Company entered into a Cooperation Agreement (the “Cooperation Agreement”) with Argosy-Lionbridge Real Estate Securities, L.P. (“ALM”) and certain other persons and entities listed on Schedule A thereto (together with ALM, the “Investor Group”), and solely with respect to certain sections of the Cooperation Agreement, Samuel Foster and Marion Kirwin. Pursuant to the Cooperation Agreement, the Investor Group has agreed not to conduct a proxy contest or engage in any solicitation of proxies regarding the election of directors with respect to the 2024 Annual Meeting and, subject to certain conditions, the Company’s 2025 annual meeting of stockholders.
Under the Cooperation Agreement, the Investor Group also agreed to abide by certain voting commitments, customary standstill obligations and mutual non-disparagement provisions which remain in effect 30 calendar days prior to the last day of the advance notice period for the submission by stockholders of non-proxy access director nominations for the Company’s 2025 annual meeting of stockholders, which will automatically be extended to the Company’s 2026 annual meeting of stockholders subject to certain conditions set forth in the Cooperation Agreement (the “Standstill Period”). The scope of the Investor Group’s commitments, obligations, provisions and other terms are set forth in full in the Cooperation Agreement.
The Cooperation Agreement further provides that, during the Standstill Period, if Mr. Macnab is unable to serve as an independent director due to his death or permanent incapacitation and so long as the Investor Group continuously beneficially owns in the aggregate at least the lesser of (i) 0.3% of the then-outstanding common shares of the Company, par value $0.01 per share (“Common Shares”), and (ii) 700,938 Common Shares, the Investor Group and the Company shall mutually agree on a replacement director nominee who meets various requirements as set forth in the Cooperation Agreement, including to qualify as “independent” as defined by the listing standards of the New York Stock Exchange and by the Securities and Exchange Commission and who is unaffiliated with (and independent of) the Investor Group.
The foregoing summary of the Cooperation Agreement is qualified in its entirety by reference to the text of the Cooperation Agreement, which is attached as Exhibit 10.1 to this Form 8-K and is incorporated by reference into this Item 5.02.
5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On February 28, 2024, the Board approved a resolution that prohibits the Company from electing to be subject to the provisions of Subtitle 8 of Title 3 of the Maryland General Corporation Law (the “MGCL”), commonly referred to as the Maryland Unsolicited Takeovers Act, or MUTA, contained in Section 3-803, unless such election is first approved by the stockholders of the Company by the affirmative vote of at least a majority of the votes cast on the matter by stockholders entitled to vote generally in the election of directors. The Company will file Articles Supplementary documenting the resolution of the Board with the Maryland State Department of Assessments and Taxation of Maryland on March 4, 2024. As a result of the Articles Supplementary and the resolutions of the Board, the Company will be prohibited from electing to be subject to Section 3-803 of the MGCL, which would permit the Company to classify the Board without stockholder approval, and such prohibition may not be repealed unless first approved by the Company’s stockholders by the affirmative vote of at least a majority of the votes cast on the matter by stockholders entitled to vote generally in the election of directors.
The foregoing summary information set forth in this Current Report on Form 8-K regarding the Articles Supplementary is qualified in its entirety by reference to the full text of the Articles Supplementary, a copy of which is attached as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On March 1, 2024, the Company issued a press release announcing the appointment of Craig Macnab to the Board and related information. A copy of such press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The slide presentation attached hereto as Exhibit 99.2, and incorporated herein by reference, may be used by the Company in various presentations to investors beginning March 1, 2024.
Item 9.01 Financial Statements and Exhibits.
(d)Exhibits.
| 3.1 | ||||||||
| 10.1 | ||||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Independence Realty Trust, Inc. | ||||||||
| March 1, 2024 | By: | /s/ James J. Sebra | ||||||
| Name: | James J. Sebra | |||||||
| Title: | Chief Financial Officer and Treasurer | |||||||
Exhibit 3.1
ARTICLES SUPPLEMENTARY
OF
INDEPENDENCE REALTY TRUST, INC.
INDEPENDENCE REALTY TRUST, INC., a Maryland corporation (the “Company”), hereby certifies to the State Department of Assessments and Taxation of Maryland, that:
FIRST: Pursuant to Sections 3-802(c) of the Maryland General Corporation Law (the “MGCL”), the Board of Directors of the Company (the “Board”), by resolution duly adopted at a meeting of the Board duly called and held, prohibited the Company from electing to be subject to the provisions of Section 3-803 of the MGCL, unless such election is first approved by the stockholders of the Company by the affirmative vote of at least a majority of the votes cast on the matter by stockholders entitled to vote generally in the election of directors.
SECOND: The foregoing election is made by resolution of the Board of the Company, and stockholder approval is not required for the filing of these Articles Supplementary.
THIRD: The undersigned officer acknowledges these Articles Supplementary to be the corporate act of the Company and, as to all matters or facts required to be verified under oath, the undersigned officer acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, the Company has caused these Articles Supplementary to be executed in its name and on its behalf by its Chief Financial Officer and Treasurer and witnessed by its General Counsel and Secretary on March 4, 2024.
WITNESS: /s/ Shelle Weisbaum________ Name: Shelle Weisbau Title: General Counsel and Secretar | INDEPENDENCE REALTY TRUST, INC. | |||||||
| /s/ Shelle Weisbaum | /s/ James Sebra | |||||||
| Name: Shelle Weisbaum | Name: James J. Sebra | |||||||
| Title: General Counsel and Secretary | Title: Chief Financial Officer and Treasurer | |||||||
Exhibit 10.1
COOPERATION AGREEMENT
This COOPERATION AGREEMENT (the “Agreement”), dated as of February 29, 2024, is made and entered into by and among INDEPENDENCE REALTY TRUST, INC., a Maryland corporation (the “Company”), ARGOSY-LIONBRIDGE REAL ESTATE SECURITIES, L.P. (“ALM”) and the other persons and entities listed on Schedule A hereto (collectively and together with ALM, the “Investor Group”), SAMUEL FOSTER, an individual, and MARION KIRWIN, an individual, each solely with respect to Sections 7 through 26 (together, the “Limited Purpose Parties”). The Company and the Investor Group are each herein referred to as a “party” and collectively, as the “parties”.
WHEREAS, the Company and the Investor Group have engaged in discussions regarding various matters concerning the Company, including matters concerning the Board of Directors of the Company (the “Board”); and
WHEREAS, the Company and the Investor Group believe that the best interests of the Company would be served at this time by, among other things, coming to an agreement with respect to the matters covered in this Agreement and by the Company and the Investor Group agreeing to the other covenants and obligations contained herein.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties to this Agreement, intending to be legally bound by this Agreement, agree as follows:
1.Representations and Warranties of the Company. The Company represents and warrants to ALM that (a) the Company has the corporate power and authority to execute the Agreement and to bind the Company to this Agreement; (b) as promptly as practicable and within thirty (30) days of the date hereof, the Company shall take all steps necessary under applicable law to prohibit the Company from electing to be subject to the provisions of Title 3, Subtitle 8 of the Maryland General Corporation Law (the “MGCL”), commonly referred to as the Maryland Unsolicited Takeovers Act, or MUTA, contained in Section 3-803, unless such election is first approved by the shareholders of the Company by the affirmative vote of at least a majority of the votes cast on the matter by shareholders entitled to vote generally in the election of directors; (c) this Agreement has been duly and validly authorized, executed and delivered by the Company, constitutes a valid and binding obligation and agreement of the Company, and is enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles; and (d) the execution, delivery and performance of this Agreement by the Company does not violate or conflict with (i) any law, rule, regulation, order, judgment or decree applicable to it, or (ii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both could become a default) under or pursuant to, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, or any material agreement, contract, commitment, understanding or arrangement to which the Company is a party or by which it is bound.
2.Representations and Warranties of the Investor Group. The Investor Group, jointly and severally represents and warrants to the Company that (a)(i) as of the date of this Agreement, the Investor Group and each Related Person (as defined below) beneficially own, directly or indirectly, only the number of common shares of the Company, par value $0.01 per share (the “Common Shares”) as described opposite its name on Schedule A to this Agreement and such schedule includes each Investor Group member and all Related Persons that beneficially own any Common Shares; (a)(ii) as of the date of this Agreement, other than as disclosed opposite its name on Schedule A to this Agreement, the Investor Group and each Related Person does not currently have, and does not currently have any right to acquire, any interest in any other equity or debt securities of the Company or its subsidiaries (or any rights, options or other securities convertible into or exercisable or exchangeable (whether or not convertible, exercisable or exchangeable immediately or only after the passage of time or the occurrence of a
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specified event) for such securities or, any Synthetic Position (as defined below), or any other obligations measured by the price or value of any securities of the Company or any of its controlled Affiliates, including any swaps or other derivative arrangements designed to produce economic benefits and risks that correspond to the ownership of Common Shares, whether or not any of the foregoing would give rise to beneficial ownership (as determined under Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), and whether or not to be settled by delivery of Common Shares, payment of cash or by other consideration, and without regard to any short position under any such contract or arrangement) or any other interest in the Company or its subsidiaries described in Sections 5(a)(vii) and 5(a)(viii) and such schedule includes each Investor Group member and all Related Persons that have any interest of the type described in this clause (a)(ii); (b) this Agreement has been duly and validly authorized, executed and delivered by each member of the Investor Group, and constitutes a valid and binding obligation and agreement of each such member, enforceable against the such member in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles; (c) each member of the Investor Group has the authority to execute this Agreement on behalf of itself and to bind such member to the terms of this Agreement, including by virtue of having sole voting and dispositive power over all Common Shares and other interests in the Company and its subsidiaries as set forth opposite the name of such member of the Investor Group on Schedule A to this Agreement, if applicable; (d) each member of the Investor Group shall cause each of its Related Persons to comply with the terms of this Agreement; and (e) the execution, delivery and performance of this Agreement by each member of the Investor Group does not violate or conflict with (i) any law, rule, regulation, order, judgment or decree applicable to it, or (ii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both could become a default) under or pursuant to, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to which such member is a party or by which it is bound. The Investor Group jointly and severally represents and warrants that no member of the Investor Group and no Related Person has any voting commitments (written or oral) with the New Independent Director (as defined below) as of the date hereof and agrees that no member of the Investor Group and no Related Person shall compensate or otherwise incentivize the New Independent Director for service or action on the Board or enter into voting commitments (written or oral) relating to the Company with any director or officer of the Company. The Investor Group jointly and severally represents and warrants that no member of the Investor Group and no Related Person has, directly or indirectly, any agreements, arrangements or understandings with any person (other than such agreements, arrangements or understandings among the Investor Group and its Related Persons previously disclosed to the Company in its notice of intention to nominate candidates to serve as directors of the Company and related materials, dated November 22, 2023 (the “Nomination Notice,” including any attachments and supplements made thereto) that are terminated pursuant to their terms automatically and concurrently with the execution of this Agreement) with respect to its investment in the Company or its subsidiaries, any strategic, capital, management or other operational matter with respect to the Company or its subsidiaries, any potential transaction involving the Company or its subsidiaries, or the acquisition, voting or disposition of any securities of the Company or its subsidiaries. The Investor Group jointly and severally represents and warrants that no member of the Investor Group and no Related Person has any control or influence over any compensation or other monetary payments to be received by the New Independent Director in connection with service as a director of the Company and that no member of the Investor Group and no Related Person is aware of any facts or circumstances that will prevent the New Independent Director from exercising independent judgment with respect to any matter involving the Company or items that may come before the Board or any of its committees. The Investor Group jointly and severally represents and warrants that the information previously provided to the Company by any member of the Investor Group or any Related Person, including all information in the Nomination Notice, is true, accurate and complete in all material respects.
3.Withdrawal of Nomination Notice and Related Matters. Effective immediately upon the execution of this Agreement:
(a)The Investor Group agrees that, during the Standstill Period (as defined below), it will not, and will cause its Related Persons not to, directly or indirectly, (i) nominate or recommend for nomination any person for election to the Board at any Election Meeting (as defined below), (ii) submit any proposal for consideration at, or bring any other business before, any meeting of shareholders of the Company, (iii) initiate,
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encourage or participate in any “vote no,” “withhold” or other campaign with respect to any meeting of shareholders of the Company, or (iv) publicly or privately encourage or support any other shareholder to take any of the actions described in this Section 3(a).
(b)The Investor Group, on behalf of itself and its Related Persons irrevocably withdraws (and shall be deemed to have so withdrawn) all director nominations and candidates and any related materials or notices submitted to the Company in connection therewith or related thereto, including the Nomination Notice; provided, that no such withdrawal shall invalidate or amend any representation or warranty with respect to the Nomination Notice or such other materials contained in this Agreement.
(c)The Investor Group, on behalf of itself and its Related Persons, hereby agrees that it will, and that it will cause its Related Persons to, immediately cease (and not resume) any and all efforts, direct or indirect, in furtherance of any solicitation (including any negative solicitation efforts) in connection with the 2024 Annual Meeting, the Company or the Company’s business, except for voting or directing the voting of Common Shares as permitted by Section 6 of this Agreement.
(d)The Investor Group, on behalf of itself and its Related Persons, hereby acknowledges that each of the agreements referenced in the Nomination Notice terminate pursuant to their terms automatically and concurrently with the execution of this Agreement and all counterparties to such agreements are released, including the New Independent Director, from their obligations therein (and shall be deemed upon execution of this Agreement to have so terminated and released). The Investor Group jointly and severally represents and warrants that there does not exist any other agreement with the New Independent Director or other proposed candidates for election which relate to the nomination or solicitation of proxies of director candidates for election or other matters to be considered at the 2024 Annual Meeting of Shareholders of the Company (the “2024 Annual Meeting”).
4.Board Matters.
(a)Board Matters. The Company agrees that promptly following the execution of this Agreement, and in any event no later than two (2) business days following the execution of this Agreement, the Board and the Nominating and Governance Committee of the Board shall take all necessary actions to increase the size of the Board from nine (9) directors to ten (10) directors and, in connection therewith, appoint Craig Macnab (the “New Independent Director”) to the Board as an independent director to fill the vacancy created by the expansion of the Board (the “Appointment Date”).
(b)Company Nomination of New Independent Director. During the Standstill Period, the Board, and all applicable committees of the Board, shall take all necessary actions to nominate and recommend the New Independent Director (or any Replacement Director (as defined below)) as a candidate for election to the Board at each meeting of shareholders of the Company at which directors are to be elected (an “Election Meeting”), and the Company agrees to recommend, support and solicit proxies for the election of the New Independent Director (or Replacement Director) at each such Election Meeting in a manner no less rigorous and favorable than the manner in which the Company supports the Board’s other nominees.
(c)Service on Board Committees. The Board shall, subject to compliance with all applicable stock exchange rules, consider appropriate appointments for the New Independent Director (or Replacement Director) to applicable Board committees as it would consider such appointments for other Board candidates, taking into account the composition of the Board, committee assignments and the needs and independence and eligibility requirements of the committees.
(d)Board Policies and Procedures. Each party acknowledges that the New Independent Director (or Replacement Director) shall be governed by (i) all applicable laws and regulations, and (ii) all of the same policies, processes, procedures, codes, rules, standards and guidelines applicable to members of the Board and shall be required to adhere strictly to the policies on confidentiality, insider trading and conflicts of interest imposed on all members of the Board. Each party acknowledges that the New Independent Director shall be required to provide the Company with such information and authorizations as reasonably requested from all members of the
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Board as is required to be disclosed under applicable law or stock exchange regulations, in each case as promptly as necessary to enable the timely and accurate filing of the Company’s proxy statement and other periodic reports or legally required disclosures with the Securities and Exchange Commission (the “SEC”) and to applicable stock exchanges and regulatory authorities. The Company agrees that the New Independent Director shall receive the same compensation for service as a director as the compensation received by other non-management directors on the Board. The Company agrees that, upon appointment to the Board, the New Independent Director shall receive (i) the same benefits of director and officer insurance as all other non-management directors on the Board, (ii) the same compensation for his service as a director as the compensation received by other non-management directors on the Board and (iii) such other benefits on the same basis as all other non-management directors on the Board.
(e)Director Replacements. During the Standstill Period, if the New Independent Director is, solely due to his death or permanent incapacitation, no longer serving or able to serve as a director, and so long as the Investor Group continuously beneficially owns in the aggregate at least the lesser of (i) 0.3% of the then-outstanding Common Shares and (ii) 700,938 Common Shares (subject to adjustment for stock splits, reclassifications, combinations and similar adjustments), then the Company and the Investor Group shall cooperate in good faith to identify and mutually agree upon a substitute director (any such substitute director, a “Replacement Director”), and the Board shall take such actions as are necessary to appoint such Replacement Director to serve as a director of the Company for the remainder of the New Independent Director’s term. As a condition to such Replacement Director’s appointment to the Board, such Replacement Director shall (i) qualify as “independent” pursuant to the NYSE’s listing standards, the Company’s Corporate Governance Guidelines, and SEC rules and regulations, (ii) not be an employee of, and shall be independent from, any member of the Investor Group or its Related Persons, (iii) not be an individual who was previously nominated for election to the Board pursuant to the Nomination Notice, and (iv) if the Company desires, (a) submit to the Company a fully completed copy of the Company’s standard director & officer questionnaire, (b) consent to a customary background check. The Board shall, subject to compliance with all applicable stock exchange rules, consider appropriate appointments for the Replacement Director to applicable Board committees as it would consider such appointments for other Board candidates, taking into account the composition of the Board, committee assignments and the needs and independence and eligibility requirements of the committees. Any Replacement Director designated pursuant to this Section 4(e) replacing the New Independent Director prior to the mailing or delivery by notice and access of the Company’s definitive proxy statement for the 2024 Annual Meeting shall stand for election at the 2024 Annual Meeting together with the Company’s other director nominees. Upon a Replacement Director’s appointment to the Board, such Replacement Director shall be deemed to be the New Independent Director for all purposes under this Agreement.
5.Standstill.
(a)Except as otherwise set forth in or permitted by this Agreement, from the date of this Agreement until the expiration of the Standstill Period (as defined below), each member of the Investor Group shall not, and shall cause its respective Affiliates, Associates, principals, directors, general partners, officers, employees and, to the extent acting on behalf or at the direction of any of the foregoing, agents and other representatives (collectively, the “Related Persons” and each a “Related Person”) not to, directly or indirectly, without the prior written approval of the Board:
(i)engage in any solicitation of proxies or written consents to vote (or withhold the vote of) any voting securities of the Company, or conduct any binding or nonbinding referendum with respect to any voting securities of the Company, or assist or participate in any other way, directly or indirectly, in any solicitation of proxies (or written consents) with respect to any voting securities of the Company, or otherwise become a “participant” in a “solicitation,” as such terms are defined in Instruction 3 of Item 4 of Schedule 14A and Rule 14a-1 of Regulation 14A, respectively, under the Exchange Act, to vote (or withhold the vote of) any securities of the Company;
(ii)grant any proxy, consent or other authority to vote with respect to any matters (other than to the named proxies included in the Company’s proxy card for any annual meeting or
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special meeting of shareholders) or deposit any voting securities of the Company in a voting trust or subject them to a voting agreement or other arrangement of similar effect (excluding customary brokerage accounts, margin accounts, prime brokerage accounts and the like);
(iii)engage in any course of conduct with the purpose of causing shareholders of the Company to vote contrary to the recommendation of the Board on any matter presented to the Company’s shareholders for their vote at any meeting of the Company’s shareholders or by written consent;
(iv)call or seek to call, or request the call of, alone or in concert with others, any meeting of shareholders, or action by consent resolutions, whether or not such a meeting or consent is permitted by the Articles of Restatement of the Company, as amended (the “Articles”) or the Amended and Restated Bylaws of the Company (the “Bylaws”), including any “town hall meeting”;
(v)act, seek, facilitate or encourage any person to submit nominations or proposals, whether in furtherance of a “contested solicitation” or otherwise, for the appointment, election or removal of directors or otherwise with respect to the Company or seek, facilitate, encourage or take any other action with respect to the appointment, election or removal of any directors;
(vi)make any announcement or proposal with respect to, or offer, seek, propose or indicate an interest in, separately or in conjunction with any other person in which it is or proposes to be either a principal, partner or financing source or is acting or proposes to act as broker or agent for compensation submit a proposal or offer for, or make any communication in opposition to (A) any form of business combination or acquisition or other transaction relating to assets or securities of the Company or any of its subsidiaries, (B) any form of restructuring, recapitalization or similar transaction with respect to the Company or any of its subsidiaries, (C) any form of tender or exchange offer for the Common Shares, whether or not such transaction involves a change of control of the Company, or any securities or debt of any of the Company’s subsidiaries, (D) any financing transaction involving the Company or any of its subsidiaries, or (E) any liquidation or dissolution of the Company or any of its subsidiaries;
(vii)(A) purchase or otherwise acquire, or offer, seek, propose or agree to acquire, through swap or hedging transactions or other Synthetic Position, or otherwise (the taking of any such action, an “Acquisition”), any ownership (including beneficial ownership as defined in Rule 13d-3 under the Exchange Act) of, or interest in, any securities or assets of the Company such that after giving effect to any such Acquisition, the Investor Group or any of its Related Persons holds, directly or indirectly, in excess of a 2.0% interest in the then-outstanding securities of the Company, (B) purchase or otherwise acquire, or offer, seek, propose or agree to acquire, any interest in any indebtedness of the Company, or (C) purchase or otherwise acquire, or offer, seek, propose or agree to acquire, ownership (including beneficial ownership) of any assets or liabilities of the Company or any right or option to acquire any such asset or liabilities from any person, in each case in this clause (C) other than securities of the Company, and in each case in this paragraph (vii), other than by way of distributions or offerings made available to holders of Common Shares generally on a pro rata basis or pursuant to an Extraordinary Transaction (as defined in Section 6).
(viii)engage in any short sale, forward contract or any purchase, sale or grant of any option, warrant, convertible security, stock appreciation right or other similar right (including any put or call option or “swap” transaction) with respect to any security (other than a broad-
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based market basket or index) that includes, relates to or derives any significant part of its value from a decline in the market price or value of the securities of the Company;
(ix)seek to advise, encourage, support or influence any person with respect to the voting of (or execution of a written consent in respect of), acquisition of or disposition of any securities of the Company or its subsidiaries;
(x)other than in open market sale transactions whereby the identity of the purchaser is not known, sell, offer or agree to sell, directly or indirectly, through swap or hedging transactions or otherwise, the securities of the Company or any rights decoupled from the underlying securities of the Company held by the Investor Group or any Related Person to any Third Party that, to the Investor Group’s knowledge (after due inquiry, it being understood that such knowledge shall be deemed to exist with respect to any publicly available information, including, but not limited to, information in documents filed with the SEC), (A) is an Activist Shareholder or (B) would result in such Third Party, together with its Affiliates and Associates, owning, controlling or otherwise having any beneficial or other ownership of, in the aggregate, more than 4.9% of the shares of voting securities of the Company outstanding at such time or would increase the beneficial ownership interest of any Third Party who, collectively with its Affiliates and Associates, has a beneficial or other ownership interest of, in the aggregate, more than 4.9% of the shares of voting securities of the Company outstanding at such time, except for Schedule 13G filers that are mutual funds, pension funds, index funds or investment fund managers with no known history of activism or known plans to engage in activism;
(xi)take any action in support of or make any proposal or request that constitutes (or would constitute if taken), or make any statement or have a discussion with any known shareholder of the Company concerning or with the effect of: (A) advising, controlling, changing or influencing the Board or management of the Company and its subsidiaries, including any plans or proposals to change the voting standard with respect to director elections, number or term of directors or to fill any vacancies on the Board, (B) any change in the capitalization, stock repurchase programs and practices, capital allocation programs and practices, or dividend policy of the Company or its subsidiaries, (C) any other change in the Company’s or its subsidiaries’ management, business, or corporate structure, (D) seeking to have the Company waive or make amendments or modifications to the Articles or Bylaws, or other actions that may impede or facilitate the acquisition of control of the Company by any person, (E) causing a class of securities of the Company to be delisted from, or to cease to be authorized to be quoted on, any securities exchange, or (F) causing a class of securities of the Company to become eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act;
(xii)pursuant to Rule 14a-1(l)(2)(iv) under the Exchange Act, communicate with shareholders of the Company or others;
(xiii)form, join or in any other way participate in any partnership, limited partnership, syndicate or “group” (within the meaning of Section 13(d)(3) of the Exchange Act or otherwise) with respect to the Company or its securities (other than with members of the Investor Group);
(xiv)demand a copy of the Company’s list of shareholders or its other books and records or make any request under Sections 2-512 and 2-513 of the MGCL or other applicable legal provisions regarding inspection of books and records or other materials (including stocklist materials) of the Company or any of its subsidiaries;
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(xv)commence, encourage, join as a party, solicit or support any litigation, arbitration, derivative action in the name of the Company or any class action or other proceeding against or involving the Company or any of its current or former Company Related Persons (as defined below);
(xvi)make or publicly advance any request or submit any proposal, directly or indirectly, to amend, modify or waive the terms of this Section 5 other than through non-public communications with the Company, which the Company may accept or reject in its sole and absolute discretion, that would not trigger public disclosure obligations for any member of the Investor Group or its Related Persons or reasonably be expected to trigger public disclosure obligations for the Company or any Company Related Persons; or
(xvii)enter into any discussions, negotiations, agreements or understandings with any person or entity with respect to any action the Investor Group is prohibited from taking pursuant to this Section 5, or advise, assist, knowingly encourage or seek to persuade any person or entity to take any action or make any statement with respect to any such action, or otherwise take or cause any action or make any statement inconsistent with any of the foregoing.
Notwithstanding the foregoing, nothing in this Section 5 or elsewhere in this Agreement shall prohibit or restrict the Investor Group or its Related Persons from (A) communicating privately with members of the Board or executive officers of the Company regarding any matter, so long as such communications are not intended to and would not require any public disclosure of such communications; or (B) privately communicating to any of the Investor Group’s current investors publicly available factual information regarding the Company (it being understood by the Investor Group and its current investors that such communications are to be confidential communications). The Investor Group shall not, and shall cause its Related Persons not to, seek to do, directly or indirectly, through any director of the Company or other individual, anything that would be prohibited under this Agreement if done by the Investor Group or any Related Person.
(b) For purposes of this Agreement:
(i)“Activist Shareholder” shall mean, as of any date of determination, a person that has, directly or indirectly through its Affiliates or Associates, whether individually or as a member of a group (within the meaning of Section 13(d)(3) of the Exchange Act or otherwise), within the three-year period immediately preceding such date of determination: (1) called or publicly sought to call a meeting of the shareholders or other equityholders of any person not publicly approved (at the time of the first such action) by the board of directors or similar governing body of such person, (2) publicly initiated any proposal for action by shareholders or other equityholders of any person initially publicly opposed by the board of directors or similar governing body of such person, (3) publicly sought election to, or to place a director or representative on, the board of directors or similar governing body of a person, or publicly sought the removal of a director or other representative from such board of directors or similar governing body, in each case which election or removal was not recommended or approved publicly (at the time such election or removal is first sought) by the board of directors or similar governing body of a person, or (4) publicly disclosed any intention, plan or arrangement to do any of the foregoing;
(ii)“Affiliate” shall mean any “Affiliate” as defined in Rule 12b-2 promulgated by the SEC under the Exchange Act;
(iii)“Associate” shall mean any “Associate” as defined in Rule 12b-2 promulgated by the SEC under the Exchange Act;
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(iv)“beneficial owner” and “beneficial ownership” shall have the same meanings as set forth in Rule 13d-3 promulgated by the SEC under the Exchange Act;
(v)“person” or “persons” shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature;
(vi)“Standstill Period” shall mean the period commencing on the date of this Agreement and ending on the date that is thirty (30) calendar days prior to the last day of the advance notice period for the submission by shareholders of non-proxy access director nominations for the Company’s 2025 Annual Meeting of Shareholders (the “2025 Annual Meeting”) pursuant to the Bylaws; provided, however¸ that the Standstill Period shall automatically be extended until the date that is thirty (30) days prior to the last day of the advance notice period for the submission by shareholders of non-proxy access director nominations for the Company’s 2026 Annual Meeting of Shareholders pursuant to the Bylaws unless (1) the New Independent Director has been since the Appointment Date and is a member of the Board as of the date that is forty-five (45) calendar days prior to the last day of the advance notice period for the submission by shareholders of non-proxy access director nominations for the 2025 Annual Meeting pursuant to the Bylaws (the “Recertification Date”), (2) the New Independent Director has been since the Appointment Date and is as of the Recertification Date in strict compliance with the obligations set forth in Section 4(d), (3) the New Independent Director has, on or before the Recertification Date, certified in writing to the Company that the New Independent Director is willing to stand for election at the 2025 Annual Meeting and to serve as a director for an entire term if elected, and (4) if the conditions set forth in subsections (1), (2) and (3) above have been satisfied, on or before the date that is ten (10) days after the Recertification Date the Board has not committed in writing to nominate the New Independent Director as part of the Company’s slate of director for election at the 2025 Annual Meeting. For the avoidance of doubt, the automatic extension shall apply if the New Independent Director fails to be elected at the 2024 Annual Meeting or the 2025 Annual Meeting, resigns from the Board, fails to serve an entire term or is no longer a member of the Board due to death (subject to Section 4(e)), permanent incapacitation (subject to Section 4(e)), resignation, disqualification, removal or any other reason;
(vii)“Synthetic Position” shall mean any derivative, swap or other transaction or series of transactions engaged in, directly or indirectly, by such person, the purpose or effect of which is to give such person economic risk similar to ownership of equity securities of any class or series of the Company, including due to the fact that the value of such derivative, swap or other transactions are determined by reference to the price, value or volatility of any shares of any class or series of the Company’s equity securities, or which derivative, swap or other transactions provide the opportunity to profit from any increase in the price or value of shares of any class or series of the Company’s equity securities, without regard to whether (i) the derivative, swap or other transactions convey any voting rights in such equity securities to such person; (ii) the derivative, swap or other transactions are required to be, or are capable of being, settled through delivery of such equity securities; or (iii) such person may have entered into other transactions that hedge or mitigate the economic effect of such derivative, swap or other transactions; and
(viii)“Third Party” shall mean any person that is not (A) a party to this Agreement, (B) a member of the Board, (C) an officer of the Company or (D) an Affiliate or Associate of the Investor Group who has previously executed a joinder to this Agreement agreeing to all obligations of the Investor Group hereunder and providing all the representations and warranties and corresponding disclosure of the Investor Group hereunder.
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(c) Within five (5) business days of the end of each fiscal quarter during the Standstill Period and at any time during the Standstill Period within five (5) business days of a written request from the Company to the Investor Group, the Investor Group will provide the Company with information (including the date of acquisition or disposition) regarding the amount of any debt and equity securities of the Company and its subsidiaries beneficially owned by each member of the Investor Group and each Related Person or any other interest in the Company or its subsidiaries described in Section 5(a)(vii).
6.Voting. At each annual and special meeting of shareholders held prior to the expiration of the Standstill Period (and at any action taken by consent of shareholders during such period), the Investor Group agrees to (i) appear at such shareholders’ meeting or otherwise cause all Common Shares beneficially owned by the Investor Group and its Related Persons to be counted as present for purposes of establishing a quorum; (ii) vote, or cause to be voted, all Common Shares beneficially owned by the Investor Group and its Related Persons on the Company’s proxy card or voting instruction form (a) in favor of each of the directors nominated by the Board and recommended by the Board in the election of directors and against any proposals to remove any such members of the Board, (b) against any nominees to serve on the Board that have not been recommended by the Board, and (c) with respect to all other matters other than a Voting Exempt Matter, in accordance with the Board’s recommendations as identified in the Company’s proxy statement; and (iii) not execute any proxy card or voting instruction form in respect of such shareholders’ meeting other than the proxy card and related voting instruction form being solicited by or on behalf of the Board (such proxy card and/or form, the “Company’s Card”); provided, that with respect to any Voting Exempt Matter, Investor Group shall have the ability to vote freely on the Company’s Card, so long as the Investor Group does not publicly disclose such vote. For purposes of this Section 6, a “Voting Exempt Matter” means any tender offer, exchange offer, merger, consolidation, acquisition, business combination, sale, recapitalization, restructuring, or other transaction with a person that, in each case, results in a change in control of the Company or the sale of substantially all of the Company’s and its subsidiaries’ aggregate assets. During the Standstill Period, not later than five (5) business days prior to each of the Company’s meetings of shareholders, the Investor Group shall vote in accordance with this Section 6 and shall not revoke or change any such vote.
7.Mutual Non-Disparagement.
(a)The Investor Group and the Limited Purpose Parties agree that, until the expiration of the Standstill Period, the Investor Group and the Limited Purpose Parties will not, and the Investor Group will cause each of its Related Persons not to, directly or indirectly, in any capacity or manner, make, express, transmit, speak, write, verbalize or otherwise communicate in any way (or cause, further, assist, solicit, encourage, support or participate in any of the foregoing), any remark, comment, message, information, declaration, communication or other statement of any kind, whether verbal, in writing, electronically transferred or otherwise, that might reasonably be construed to be derogatory towards, or critical of, the Company or any of its past or present directors, officers, Affiliates, subsidiaries, employees, agents or representatives (collectively, the “Company Related Persons”), or that reveals, discloses, incorporates, is based upon, discusses, includes or otherwise involves any confidential or proprietary information of the Company or the Company Related Persons, or to malign, harm, disparage, defame or damage the reputation or good name of the Company, any Company Related Person or the Company’s business; provided, however, that the foregoing shall not prevent the Investor Group, its Related Persons or the Limited Purpose Parties from privately communicating to the Board factual information based on publicly available information.
(b)The Company agrees that, until the expiration of the Standstill Period, it will not, and it will cause the Company Related Persons not to, directly or indirectly, in any capacity or manner, make, express, transmit, speak, write, verbalize or otherwise communicate in any way (or cause, further, assist, solicit, encourage, support or participate in any of the foregoing), any remark, comment, message, information, declaration, communication or other statement of any kind, whether verbal, in writing, electronically transferred or otherwise, or take any action that is intended to result in a public statement of any kind, that might reasonably be construed to be derogatory towards, or critical of, the Investor Group or any of its Related Persons, or the Limited Purpose Parties, or that reveals, discloses, incorporates, is based upon, discusses, includes or otherwise involves any confidential or proprietary information of the Investor Group or its Related Persons, or the Limited Purpose Parties, or to malign,
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harm, disparage, defame or damage the reputation or good name of the Investor Group, any Related Person, the Limited Purpose Parties or the Investor Group’s or its Related Persons’ or the Limited Purpose Parties’ businesses; provided, however, that the foregoing shall not prevent private communications to the Investor Group or its Related Persons of factual information based on publicly available information.
(c)Notwithstanding the foregoing, nothing in Section 5, this Section 7, Section 8 or elsewhere in this Agreement shall prohibit any party to this Agreement from making any statement or disclosure required under the federal securities laws or other applicable laws, rules or regulations so long as such requirement is not due to a breach by any party of this Agreement or to comply with any subpoena or other legal process or respond to a request for information from any governmental authority with jurisdiction over the party from whom information is sought; provided, that (i) such party must, to the extent legally permissible, (x) provide written notice to the other party at least five (5) business days prior to making any such statement or disclosure, (y) shall reasonably consider any comments of the other party and (ii) the disclosing party may in its sole discretion (and at its cost) seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement, and the other party will reasonably cooperate with the Company to obtain any such protective order or other remedy. The limitations set forth in Sections 7(a) and 7(b) shall not prevent any party to this Agreement or any Limited Purpose Party from responding to any public statement made by the other party or any Limited Purpose Party of the nature described in Sections 7(a) and 7(b) if such statement by the other party or Limited Purpose Party was made in breach of this Agreement.
8.Public Announcements.
(a)No later than the first business day following the execution of this Agreement, the Company shall issue a press release mutually agreed by the Company and ALM (the “Press Release”) announcing this Agreement, substantially in the form attached to this Agreement as Exhibit A. Prior to the issuance of the Press Release, the Company shall not and shall cause the Company Related Persons not to and the Investor Group shall not and shall cause the Related Persons not to, and the Limited Purpose Parties shall not, issue any press release or make any public announcement regarding this Agreement or take any action that would require public disclosure relating to such action without the prior written consent of the Company or ALM, as applicable. The Company shall not, and shall cause the Company Related Persons not to, and the Investor Group shall not, and shall cause the Related Persons not to, and the Limited Purpose Parties shall not make any public statement (including, without limitation, in any filing required under the Exchange Act) concerning the subject matter of this Agreement inconsistent with the Press Release or the terms of this Agreement.
(b)No later than four (4) business days following the execution of this Agreement, the Company shall file a Current Report on Form 8-K with the SEC reporting the appointment of the New Independent Director and appending or incorporating by reference this Agreement as an exhibit.
(c)The Investor Group and Limited Purpose Parties shall not, and the Investor Group shall cause its Related Persons not to, during the Standstill Period, (i) issue a press release regarding the Company or in connection with this Agreement or the actions contemplated by this Agreement or (ii) otherwise make any public disclosure or announcement with respect to the Company or this Agreement or the actions contemplated by this Agreement that is inconsistent with the terms of this Agreement or in violation of the obligations set forth in Section 5 or Section 7, in each case without the prior written consent of the Company, which may be withheld at the Company’s sole discretion.
9.Specific Performance. It is understood and agreed that money damages would not be an adequate remedy for any breach of this Agreement by any party to this Agreement or the Limited Purpose Parties and the non-breaching party to this Agreement or the Limited Purpose Parties shall be entitled to equitable relief, including, without limitation, injunction and specific performance, as a remedy for any such actual or potential breach. Such remedies shall not be deemed to be the exclusive remedies for a breach by the non-breaching parties or the Limited Purpose Parties, but shall be in addition to all other remedies available at law or equity to the non-breaching party or the Limited Purpose Parties. The parties to this Agreement and the Limited Purpose Parties further agree not to raise as a defense or objection to the request or granting of such relief that any breach of this Agreement is or would be
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compensable by an award of money damages, and the parties to this Agreement and the Limited Purpose Parties agree to waive any requirements for the securing or posting of any bond in connection with such remedy.
10.Related Persons. The Investor Group shall cause any Related Persons to comply with the terms of this Agreement and shall be responsible for any breach of this Agreement by any such Related Person. A breach of this Agreement by any Related Person, if such Related Person is not a party to this Agreement, shall be deemed to occur if such Related Person engages in conduct that would constitute a breach of this Agreement if such Related Person was a party to the same extent as any member of the Investor Group.
11.Termination.
(a)Unless otherwise mutually agreed in writing by each party, this Agreement shall terminate on the earliest to occur of (i) the termination of the Standstill Period and (ii) the consummation of an Extraordinary Transaction.
(b)If this Agreement is terminated in accordance with this Section 11, this Agreement shall forthwith become null and void, but no termination shall relieve a party from liability for any breach of this Agreement prior to such termination.
(c)Notwithstanding the foregoing terms of this Section 11, Section 9 and Section 12 through Section 26 shall survive the termination of this Agreement.
12.Notice. Any notices, consents, determinations, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by email (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party), provided that such email notice is accompanied by a notice delivered pursuant to either clause (i) or (iii) within twenty-four (24) hours of email receipt; or (iii) one (1) business day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and email addresses for such communications shall be:
If to the Company:
Independence Realty Trust, Inc.
1835 Market Street, Suite 2601
Philadelphia, Pennsylvania 19103
Attention: Shelle Weisbaum, General Counsel
Email: [email protected]
with copies (which shall not constitute notice) to:
Latham & Watkins
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
Attn: Christopher R. Drewry
Email: [email protected]
Troutman Pepper Hamilton Sanders LLP
Two Logan Square
Eighteen and Arch Streets
Philadelphia, PA 19103
Attention: Michael Friedman, Esq.
Email: [email protected]
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If to the Investor Group or the Limited Purpose Parties:
Argosy-Lionbridge Management, LLC
230 Park Avenue, Suite 922
New York, NY 10169
Attention: Greg Morillo
Email: [email protected]
with copies (which shall not constitute notice) to:
Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, NY 10019
Attn: Andrew M. Freedman
Ian Engoron
Email: [email protected]
13.Governing Law. This Agreement and any claim, controversy or dispute arising under or related to this Agreement, the relationship of the parties, and/or the interpretation and enforcement of the rights and duties of the parties shall be governed by and construed and enforced in accordance with the laws of the State of Maryland, without regard to any conflict of laws provisions thereof.
14.Jurisdiction. Each party to this Agreement agrees, on behalf of itself and its Affiliates and Associates, that any actions, suits or proceedings arising out of or relating to this Agreement or the transactions contemplated by this Agreement will be brought solely and exclusively in any state or federal court in the State of Maryland (and the parties agree not to commence any action, suit or proceeding relating to this Agreement or the transactions contemplated by this Agreement except in such courts), and further agrees that service of any process, summons, notice or document by U.S. registered mail to the respective addresses set forth in Section 12 will be effective service of process for any such action, suit or proceeding brought against any party in any such Maryland court. Each party, on behalf of itself and its Affiliates and Associates, irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated by this Agreement, in any state or federal court in the State of Maryland, and further irrevocably and unconditionally waives and agrees not to plead or claim in any such Maryland court that any such action, suit or proceeding brought in any such Maryland court has been brought in an improper or inconvenient forum.
15.Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 15.
16.Entire Agreement. This Agreement constitutes the full and entire understanding and agreement among the parties with regard to the subject matter of this Agreement, and supersedes all prior and contemporaneous agreements, understandings and representations, whether oral or written, of the parties with respect to the subject
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matter of this Agreement. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings, oral or written, between the parties other than those expressly set forth in this Agreement.
17.Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
18.Waiver. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy under this Agreement shall operate as a waiver of such right, power or remedy, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise of such right, power or remedy or the exercise of any other right, power or remedy.
19.Remedies. All remedies under this Agreement are cumulative and are not exclusive of any other remedies provided by law or equity.
20.Construction. Each of the parties to this Agreement acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded the execution of this Agreement, and that it has executed the same with the advice of said independent counsel. Each party and its counsel cooperated and participated in the drafting and preparation of this Agreement and the documents referred to herein, and any and all drafts relating thereto exchanged among the parties shall be deemed the work product of all of the parties and may not be construed against any party by reason of its drafting or preparation. Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against any party that drafted or prepared it is of no application and is hereby expressly waived by each of the parties hereto, and any controversy over interpretations of this Agreement shall be decided without regards to events of drafting or preparation. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement, unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” and “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “will” shall be construed to have the same meaning as the word “shall.” The words “dates hereof” will refer to the date of this Agreement. The word “or” is not exclusive. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms. Any agreement, instrument, law, rule or statute defined or referred to herein means, unless otherwise indicated, such agreement, instrument, law, rule or statute as from time to time amended, modified or supplemented.
21.Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable. The parties further agree to replace such invalid or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the purposes of such invalid or unenforceable provision.
22.Amendment. This Agreement may be modified, amended or otherwise changed only in a writing signed by the Company, on the one hand, and ALM, on the other hand.
23.Successors and Assigns. The terms and conditions of this Agreement shall be binding upon and be enforceable solely by the parties hereto and successors thereto. No party may assign (by operation of law or otherwise) this Agreement or any rights or obligations hereunder without, with respect to any member of the Investor Group, the express prior written consent of the Company, and with respect to the Company, the prior written consent of ALM, and any assignment in contravention of the foregoing shall be null and avoid. Prior to entering into any agreement, arrangement or understanding with respect to, or effecting, any form of business combination or acquisition or other transaction relating to assets or securities of any member of the Investor Group, any form of restructuring, recapitalization or similar transaction with respect to any member of the Investor Group, any form of tender or exchange offer of any member of the Investor Group, or any liquidation of dissolution of any
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member of the Investor Group, in each case in one or a series of transactions, that does not directly result in the assumption of the obligations of the Investor Group under this Agreement, ALM will notify the Company and will arrange in connection therewith alternative means of providing for the obligations of the Investor Group in this Agreement, including by the assumption of such obligations by another party.
24.No Third-Party Beneficiaries. The representations, warranties and agreements of the parties contained herein are intended solely for the benefit of the party to whom such representations, warranties or agreements are made, and shall confer no rights, benefits, remedies, obligations, or liabilities hereunder, whether legal or equitable, in any other person or entity, and no other person or entity shall be entitled to rely thereon.
25.Counterparts; Facsimile / Electronic Signatures. This Agreement and any amendments hereto may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to this Agreement and/or any document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
26.Expenses. Each of the Company, the Investor Group, and the Limited Purpose Parties shall be responsible for its own fees and expenses incurred in connection with the negotiation, execution, and effectuation of this Agreement and the matters contemplated hereby, including, but not limited to attorneys’ fees incurred in connection with the negotiation and execution of this Agreement and all other activities related to the foregoing; provided, however, that the Company shall reimburse the Investor Group for its reasonable documented out-of-pocket fees and expenses incurred in connection with the Investor Group’s involvement with the Company prior to the date hereof and the negotiation and execution of this Agreement in an amount not to exceed $100,000.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement as of the date first above written.
INDEPENDENCE REALTY TRUST, INC.
| By: | /s/ Scott Schaeffer | ||||
| Name: | Scott Schaeffer | ||||
| Title: | Chief Executive Officer and President | ||||
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ALM PARTIES:
Argosy-Lionbridge Real Estate Securities L.P.
| By: | Argosy-Lionsbridge GP, LLC, its general partner | ||||
| By: | /s/ Gregory Morillo | ||||
| Name: | Gregory Morillo | ||||
| Title: | Managing Member | ||||
Lionbridge Capital, LP
| By: | Lionbridge GP, LLC, its general partner | ||||
| By: | /s/ Gregory Morillo | ||||
| Name: | Gregory Morillo | ||||
| Title: | Managing Member | ||||
Lionbridge Capital I, LP
| By: | Lionbridge Capital GP, LLC, its general partner | ||||
| By: | /s/ Gregory Morillo | ||||
| Name: | Gregory Morillo | ||||
| Title: | Managing Member | ||||
Lionbridge Capital Offshore Fund LTD
| By: | Lionbridge Capital GP, LLC, its general partner | ||||
| By: | /s/ Gregory Morillo | ||||
| Name: | Gregory Morillo | ||||
| Title: | Managing Member | ||||
Argosy-Lionbridge GP, LLC
| By: | /s/ Gregory Morillo | ||||
| Name: | Gregory Morillo | ||||
| Title: | Managing Member | ||||
Lionbridge GP, LLC
| By: | /s/ Gregory Morillo | ||||
| Name: | Gregory Morillo | ||||
| Title: | Managing Member | ||||
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Lionbridge Capital GP, LLC
| By: | /s/ Gregory Morillo | ||||
| Name: | Gregory Morillo | ||||
| Title: | Managing Member | ||||
Argosy-Lionbridge Management, LLC
| By: | /s/ Gregory Morillo | ||||
| Name: | Gregory Morillo | ||||
| Title: | Managing Member | ||||
| /s/ John Kirwin, III | ||
| John Kirwin, III | ||
| /s/ David Butler | ||
| David Butler | ||
| /s/ Gregory Morillo | ||
| Gregory Morillo | ||
| /s/ Andrew Stewart | ||
| Andrew Stewart | ||
Limited Purpose Parties
| /s/ Samuel Foster | ||
| Samuel Foster | ||
| /s/ Marion Kirwin | ||
| Marion Kirwin | ||
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SCHEDULE A
ALM PARTIES
Party | Beneficial Ownership | ||||
Argosy-Lionbridge Real Estate Securities, L.P. | 185,210 Common Shares directly beneficially owned | ||||
Lionbridge Capital, LP | 0 Common Shares beneficially owned | ||||
Lionbridge Capital I, LP | 114,000 Common Shares directly beneficially owned | ||||
Lionbridge GP, LLC | 0 Common Shares beneficially owned | ||||
Lionbridge Capital GP, LLC | 114,000 Common Shares beneficially owned | ||||
Lionbridge Capital Offshore Fund LTD | 114,000 Common Shares beneficially owned | ||||
Argosy Real Estate Partners V, L.P. | 368,465 Common Shares directly beneficially owned | ||||
Argosy Real Estate Partners V GP, LLC | 368,465 Common Shares beneficially owned | ||||
Argosy-Lionbridge GP, LLC | 185,210 Common Shares beneficially owned | ||||
Argosy-Lionbridge Management, LLC | 1,401,875 Common Shares beneficially owned | ||||
David Butler | 1,401,875 Common Shares beneficially owned | ||||
Gregory Morillo | 1,401,875 Common Shares beneficially owned | ||||
Andrew Stewart | 1,401,875 Common Shares beneficially owned | ||||
John Kirwin, III | 570,475 Common Shares beneficially owned (including 16,800 Common Shares directly beneficially owned)* *Mr. Kirwin’s spouse is the beneficial owner of an additional 11,280 Common Shares | ||||
18
EXHIBIT A
FORM OF PRESS RELEASE
NOT FOR IMMEDIATE RELEASE
(See attached)
19
Exhibit 99.1
Independence Realty Trust Appoints Craig Macnab to its Board of Directors
Waives Option to Classify Board Under Maryland Law
PHILADELPHIA – Independence Realty Trust, Inc. (NYSE: IRT) (“IRT” or the “Company”) today announced the appointment of Craig Macnab to its Board of Directors (the “Board”), effective February 29, 2024. Mr. Macnab brings over 20 years of experience to IRT’s Board after serving in various executive and board roles in the REIT industry, including most recently as CEO of National Retail Properties, Inc. (NYSE: NNN) for 13 years. Mr. Macnab’s appointment increases the size of IRT’s Board to 10 members, including 8 independent directors. In connection with this announcement, the Company has entered into a cooperation agreement with Argosy-Lionbridge Management, LLC (“ALM”), an IRT stockholder.
IRT also announced that its Board has reaffirmed the Company’s commitment to leadership in corporate governance practices by waiving the option to classify its Board under provisions of the Maryland Unsolicited Takeover Act, or MUTA, unless first approved by the stockholders of the Company by a majority of the votes cast on the matter.
“We are pleased to welcome Craig to the IRT Board,” said Scott Schaeffer, Chairman and CEO of IRT. “Craig’s appointment broadens the experience and diversity of perspectives represented on our Board, and we are confident he will bring invaluable skills and expertise from his decades of leadership in the REIT industry. The Board’s decision to opt out of MUTA reinforces our objective of maintaining leading governance and delivering value to our stockholders.”
“I’m honored to be joining IRT’s Board,” said Craig Macnab. “IRT has created a compelling and differentiated real estate platform, underpinned by its focus on creating a scaled portfolio of high-quality assets across core Sunbelt and Midwest markets that are well positioned to support long-term growth. I look forward to partnering with my fellow Board members and the management team to continue driving the organization’s track record of success into the future.”
Greg Morillo, CIO & Managing Partner of ALM, said “Craig’s appointment and our agreement with the Company is the result of a constructive dialogue with IRT’s Board and management team over several quarters. We see significant opportunity for value creation at IRT, as the Company increases its financial flexibility through its previously announced Portfolio Optimization and Deleveraging Strategy, and believe Craig’s deep industry experience will contribute to the Company’s execution of this strategy. We are also pleased with the actions taken by the Company to opt out of MUTA.”
ALM has agreed to abide by certain customary standstill and voting commitments, including supporting the Board’s slate of directors, subject to limited exceptions. The cooperation agreement will be filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) as an exhibit to a related Current Report on Form 8-K.
Citigroup served as financial advisor and Latham & Watkins served as legal advisor to the Company.
About Craig Macnab
Craig Macnab has served on the Board of VICI Properties Inc. (NYSE: VICI) since 2017, as the Chairman of the Compensation Committee since 2019, and as a member of the Audit Committee since 2020. He has also served on the Board of American Tower Corporation (NYSE: AMT) since 2014 and as the Chairman of the Compensation Committee since 2018. Prior to these appointments, he served as CEO of National Retail Properties, Inc. (NYSE: NNN) for 13 years and Chairman for nine years. He has also sat
on the Boards of Forest City Realty Trust, Inc. (formerly NYSE: FCEA), DDR Corporation (formerly NYSE: DDR), Eclipsys Corporation (formerly NASDAQ: ECLP), JDN Realty Corporation (formerly NYSE: JDN) and Per-Se Technologies, Inc. (formerly NASDAQ: PSTI). Mr. Macnab earned his Bachelor of Commerce degree in Economics and Accounting from the University of Witwatersrand and a Master of Business Administration from Drexel University.
About Independence Realty Trust, Inc.
Independence Realty Trust, Inc. (NYSE: IRT) is a real estate investment trust that owns and operates multifamily communities, across non-gateway U.S. markets including Atlanta, GA, Dallas, TX, Denver, CO, Columbus, OH, Indianapolis, IN, Raleigh-Durham, NC, Oklahoma City, OK, Nashville, TN, Houston, TX, and Tampa, FL. IRT’s investment strategy is focused on gaining scale near major employment centers within key amenity rich submarkets that offer good school districts and high-quality retail. 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 www.irtliving.com.
Forward-Looking Statements
This 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 include, but are not limited to, increased financial flexibility, growth opportunities and related benefits that we expect to realize through our Portfolio Optimization and Deleveraging Strategy and value add program. All statements in this release that address financial and operating performance, events or developments that we expect or anticipate will occur or be achieved in the future are forward-looking statements. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with the safe harbor provisions.
Our forward-looking statements are not guarantees of future performance and involve estimates, projections, forecasts, strategies and assumptions, including as to matters that are not within our control, and are subject to risks and uncertainties including, without limitation, risks and uncertainties related to changes in market demand for rental apartment homes and pricing pressures, including from competitors, 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, unexpected changes in our intention or ability to repay certain debt prior to maturity, increased costs on account of inflation, increased competition in the labor market, failure to realize cost savings, efficiencies and other benefits that we expect to result from our Portfolio Optimization and Deleveraging Strategy, inability to sell certain assets, including those assets designated as held for sale, within the time frames or at the pricing levels expected, failure to achieve expected benefits from the redeployment of proceeds from asset sales, delays in completing, and cost overruns incurred in connection with, our value add initiatives and failure to achieve rent increases and occupancy levels on account of the value add initiatives, unexpected impairments or impairments in excess of our estimates, increased regulations generally and specifically on the rental housing market, including legislation that may regulate rents and fees or delay or limit our ability to evict non-paying residents, risks endemic to real estate and the real estate industry generally, the impact of potential outbreaks of infectious diseases and measures intended to prevent the spread or address the effects thereof, the effects of natural and other disasters, unknown or unexpected liabilities, including the cost of legal proceedings, costs and disruptions as the result of a cybersecurity incident or other technology disruption, unexpected capital needs, inability to obtain appropriate insurance coverages at reasonable rates, or at all, or losses from catastrophes in excess of our insurance coverages, and share price fluctuations. Please refer to the documents filed by us with the SEC, including specifically the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2023, and our other filings with the SEC, which identify additional factors that could cause actual results to differ from those contained in forward-looking statements.
These forward-looking statements are based upon the beliefs and expectations of our management at the time of this release and our actual results, including our ability to execute on our Portfolio Optimization and Deleveraging Strategy and other strategies, may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. We undertake 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.
Independence Realty Trust, Inc.
Edelman Smithfield
Lauren Torres
917-365-7979
INVESTOR PRESENTATION March 2024 Reveal on Cumberland Fishers, IN
1 Table of Contents Overview 2 Recent Operating Metrics 3 Company History and Performance 4 – 6 Current Priorities / Business Plan 7 – 18 Differentiated Portfolio in Attractive Markets 19 – 24 Path to Long-Term Growth 25 Appendix 2024 Guidance 27 ESG Initiatives 28 Market Statistics 29 Value Add Summary 30 Demographic Profile 31 Market Profiles 32 – 46 End Notes 47 – 48 Definitions and Non-GAAP Financial Measure Reconciliations 49 – 51 Forward-Looking Statement 52
2 IRT Overview OWN AND OPERATE Sunbelt Exposure 75% of NOI 110 Communities 32,685 Units 6.4%(2) 2023 Portfolio Average Rental Rate Growth PORTFOLIO SUMMARY (1) SAME STORE HIGHLIGHTS Full Year 2023 (2) • Revenue growth: +5.7% Y-o-Y • Avg occupancy: -70bps to 94.0% • NOI growth: 5.7% Y-o-Y UPSIDE FROM VALUE ADD • Projects to date have generated a 19.5% unlevered return on interior costs and an avg rental increase of 19.4% (3) • ~17,000 units available for value add renovation $6.2B In gross assets FL GAALTX CO OK IL IN OH KY TN SC NC VA 2024 GUIDANCE • Same Store property revenue growth of 3.75% and NOI growth of 2.5% at the midpoint of our guided range(4) • Core FFO per share guidance range of $1.12-$1.16 All notations throughout this presentation appear as “End Notes” on pages 47-48. IRT’s Operating Communities Communities sold or to be sold as part of Portfolio Optimization Strategy
3 Strong Performance Across Key Operating Metrics Same Store Excluding Value Add Note: As of February 28, 2024, same-store portfolio occupancy was 94.5%, same-store portfolio excluding ongoing value add occupancy was 94.9% and value add occupancy was 93.4%. All notations throughout this presentation appear as “End Notes” on pages 47-48. Same Store Total (1)Same Store Value Add O cc u p an cy Sa m e St o re T o ta l Le as e o ve r Le as e R en t G ro w th ( 2 ) New Leases Renewals Blended 93.7% 94.6% 95.0% 94.9% 94.6% 85% 90% 95% 100% Q1 23 Q2 23 Q3 23 Q4 23 Q1 QTD 24 90.5% 92.5% 92.8% 93.3% 93.3% Q1 23 Q2 23 Q3 23 Q4 23 Q1 QTD 24 93.0% 94.1% 94.5% 94.5% 94.3% Q1 23 Q2 23 Q3 23 Q4 23 Q1 QTD 24 (3) (4) 2.7% 2.7% 0.6% -4.2% -2.3% -5% -4% -3% -2% -1% 0% 1% 2% 3% 4% Q1 23 Q2 23 Q3 23 Q4 23 Q1 QTD 24 5.0% 2.4% 4.9% 4.8% 4.5% 0% 1% 2% 3% 4% 5% 6% Q1 23 Q2 23 Q3 23 Q4 23 Q1 QTD 24 3.8% 2.5% 3.0% 0.2% 1.6% 0% 1% 2% 3% 4% 5% 6% Q1 23 Q2 23 Q3 23 Q4 23 Q1 QTD 24 (3)
4 Trade Street Acquisition Steadfast Acquisition Company History To ta l N u m b e r o f O p er at in g U n it s (2 ) Aug. 2013 Completes IPO; begins trading on the NYSE Sep. 2015 Acquires Trade Street Residential (NASDAQ: TSRE) for $264 mm Dec. 2016 Completes internalization of management (1) Apr. 2018 Commences first phase of value-add renovations initiative Dec. 2021 Acquires Steadfast Apartment REIT (“STAR”) for $2.6bn Oct. 2023 Announces Portfolio Optimization and Deleveraging Strategy Acquired 19 properties 4,989 units Acquired 68 properties 21,394 units (3) 2,790 8,819 13,724 12,982 14,017 15,880 15,554 15,667 35,498 35,526 34,431 32,685 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2023 Pro Forma ⁽⁴⁾
5 Source: Company reports; coastal peer group includes AVB, EQR, ESS, and UDR; non-gateway peer group includes CPT, CSR, MAA, and NXRT. Same store NOI growth and CFFO per share metrics are based on the definitions used by the peer group companies and may not be comparable. IRT is Delivering Industry Leading Operating Performance Relative to peers in non-gateway and coastal markets, IRT outpaced industry growth over the past few years and momentum is expected to continue due to our attractive location in sunbelt markets, as well as our investments in value add renovations and new development initiatives Same Store NOI Growth CFFO per Share Growth IRT Non-Gateway Coastal Peer Group 90 95 100 105 110 115 120 125 130 135 140 145 2019 2020 2021 2022 2023 2024 Guidance (Mid-Point) IRT Non-Gateway Coastal Peer Group IRT Non-Gateway Coastal Peer Group 90 95 100 105 110 115 120 125 130 135 140 145 150 155 2019 2020 2021 2022 2023 2024 Guidance (Mid-Point) IRT Non-Gateway Coastal Peer Group
6 Source: Bloomberg Market data as of February 22, 2024. Note: Represents compound total return, with dividends reinvested. Track Record of Value Creation IRT has a proven track record of outperforming its peers 1-Year 3-Year 5-Year Since IPO (1) 4% 15% 23% 99% -5% 5% 17% 141% -13% 17% 81% 240% -50% 0% 50% 100% 150% 200% 250% 300% RMS Multifamily Index IRT
7 Continue value add renovations at ~2,500 annually Current Priorities / Business Plan 1 Complete on-balance sheet and joint venture developments 2 Complete Portfolio Optimization & Deleveraging Strategy by exiting lower growth, single asset markets 3 Use free cash flow to further delever the balance sheet to ~5.0x 4 Drive on-site efficiencies through the use of technology 5 Los Robles San Antonio, TX Brunswick Point Leland, NC
8 In-Place Program Identified 2024 Starts Future Pipeline Total Units to Renovate 13,281 1,893 9,409 24,583 Units Renovated-to-Date (7,771) - - (7,771) Remaining Units to Renovate 5,510 1,893 9,409 16,812 Remaining Renovation Costs (3) $83 - $88 $28 - $30 $141 - $151 $252 - $269 Incremental NOI (4) $15- $16 $5- $5 $25 - $27 $45 - $48 Incremental Value Creation (5) $183 - $196 $63 - $67 $313 - $334 $559 - $597 Value Add Program: Improving Our Growth Profile Sizeable ~17,000 unit value add pipeline providing up to ~$600 million of incremental shareholder value Value Add Pipeline (2) ($ in millions) All notations throughout this presentation appear as “End Notes” on pages 47-48. IRT’s historical projects have generated an 17.7% return on investment across approximately 7,771 units, resulting in around $270 million of incremental value creation (1) 1
9 Value-Add Case Study: Avalon Oaks – Project Overview Before After Columbus, OH community acquired for $23.0mm in February 2018 ▪ Middle market community with 235 units that at the time of acquisition helped to increase our scale in the Columbus market ▪ Attractive Columbus submarket insulated from the new Class A construction ▪ Opportunity to reposition the community through value-add renovation – 97% occupied at acquisition – In-place asking rents approximately 7% below submarket competitive set – Strong demand for upgraded community – Potential for operating cost savings Added to our value-add program in February 2020 Upgrades include: ▪ Stainless steel appliances ▪ Painted cabinet boxes with new doors and resurfaced countertops ▪ Washers and dryers in each unit ▪ Clubhouse redesign with addition of business center ▪ New layout for fitness center and upgraded playground ▪ Laundry room conversion to pet spa As of December 2023, we have invested $6.2mm in the property including approximately $2.7mm through our value-add program and renovations are 89% complete 1
10 Value-Add Case Study: Avalon Oaks – The Economics $23.0 $6.2 $19.0 $48.2 Purchase Price Invested Capital Value Created Total Value At Acquisition (2/27/2018) 12/31/2023 Change Revenue (TTM) $2.6mm $4.0mm +52% NOI (TTM) $1.4mm $2.6mm +89% NOI Margin 52.6% 66.9% +1,430 bps Average Effective Monthly Rent $868 $1,376 +59% Achieved outsized value creation ▪ Post renovation community is valued at $48.2mm(1), representing an increase of 109% from acquisition ▪ Incremental value creation of $19.0mm, after renovation investment. On an equivalent cap rate basis, incremental value creation represents an 83% increase from acquisition. ▪ Enhanced resident profile, resulting in a 58.6% average effective monthly rental rate increase as of December 2023 ▪ Generated unlevered ROI of 30% on total renovation costs ____________________ Note: Dollars in millions except average monthly rental rate. (1) Assumes exit cap rate of 5.25% 1
11 Value-Add Case Study: Rocky Creek – Project Overview Before After Acquired in July 2019 for $48.0mm this was our 3rd community in Tampa, FL market ▪ Located in West Tampa, this property was built in 1999 and has 264 units ▪ Convenient access to major employment centers including Westshore area to the south, Carillon Office Park in St. Petersburg and downtown Tampa ▪ Value-add opportunity allows for the community to notably increase – 96% occupied prior to renovations – Proven demand for upgraded product with renovated unit average rents below competing new construction but above older communities Renovations began March 2021 Upgrades include: ▪ Clubhouse renovation including courtyard ▪ New pool house with enhanced grilling stations, putting green and fire pit ▪ Updated kitchens and bathrooms ▪ New vinyl plank flooring ▪ Washers and dryers in every unit As of December 2023, we have invested $6.7mm in the property include approximately $3.3mm through our value-add program and renovations are 81% complete 1
12 Value-Add Case Study: Rocky Creek – The Economics $48.0 $6.7 $18.7 $73.4 Purchase Price Invested Capital Value Created Total Value At Acquisition (7/11/2019) 12/31/2023 Change Revenue (TTM) $4.2mm $6.1mm +45% NOI (TTM) $2.6mm $3.9mm +52% NOI Margin 61.1% 63.4% +230 bps Average Effective Monthly Rent $1,256 $1,875 +49% Achieved outsized value creation ▪ Post renovation community is valued at $73.4mm(1), representing an increase of 53% from acquisition ▪ Incremental value creation of $18.7mm, after renovation investment. On an equivalent cap rate basis, incremental value creation represents a 39% increase from acquisition. ▪ Enhanced resident profile, resulting in a 49% average effective monthly rental rate increase as of December 2023 ▪ Generated unlevered ROI of 34% on total renovation costs ____________________ Note: Dollars in millions except average monthly rental rate. (1) Assumes exit cap rate of 5.0% 1
13 Real Estate Under Development: Expected to Generate Strong NOI Total Projected Development Spend ~$103M Q1 2025 Construction Starts Q3 2021 Delivery period Q4 2023 Est. Stabilization 53% Occupied(1) Feb 2024 Flatirons Apartment Denver, CO Costs NOI In Place NOI – Q4 2023 $271k / In lease-up # of Units 325 At Stabilization ~$6.9m/yr Destination at Arista Denver, CO Total Projected Development Spend ~$120M Q1 2026 Construction Starts Projected delivery Q4 2024 Est. Stabilization In Place – Q4 2023 $0 / In Development Q4 2022 # of Units 296 At Stabilization ~$6.8m/yr Costs NOI Q2 2023 2
14 Joint Venture Communities: Selected Case Studies ▪ Year Built: 2023 ▪ Status: In lease up ▪ Units: 402 units ▪ Rents have increased 10% since we underwrote the community The Mustang (2) Dallas, TX The Crockett Nashville, TN Metropolis at Innsbrook Richmond, VA ▪ Year Built: 2023 ▪ Status: In lease up ▪ Units: 199 units (1) ▪ Rents have increased 12% since we underwrote the community ▪ Year Built: Delivery expected in 4Q 2024 ▪ Status: Under Construction ▪ Units: 275 units ▪ Located in a master planned community with office and retail offerings, including several Fortune 500 company headquarters We invest in communities that allow us to enter and grow in a target market at a superior cost per unit. We identify local developers with the expertise to complete the developments and only invest when the ground is fully approved and the community is ready for development. 2
15 12/31/2023 Actual 12/31/2023 Pro Forma Consolidated Operating Communities(2) 116 110 Total Operating Units(3) 34,431 32,685 Average Effective Monthly Rent(4) $1,558 $1,555 Net Debt / TEV(5) 42% 39% Net Debt / LOA Adjusted EBITDA(6) 6.7x 6.2x Portfolio Optimization and Deleveraging Strategy ▪ Strategy was announced in October 2023 ▪ Disposition of 10 non-core properties (~2,750 units) in 7 markets ▪ 9 communities acquired in 2021 as part of the STAR merger ▪ Aggregate gross sales proceeds of approximately $525mm to be utilized to immediately pay down ~$519mm of debt ▪ ~$196mm of debt paid down in 2023 and the following repayment amounts are expected in 1Q 2024: – ~$122mm of property level secured debt – ~$53mm of other secured debt – ~$148mm of outstanding borrowings on the line of credit ▪ Weighted average disposition economic cap rate of 5.80% (1) ▪ Key elements of the disposition rationale: – Exit selected markets – Improve portfolio operating efficiencies – Accelerate deleveraging path while reducing secured debt and near-term maturities – Repay amounts outstanding on the revolving line of credit thereby increasing financial flexibility and liquidity – Improve unencumbered asset pool and related ratios – Expected to breakeven on a cash flow basis after accounting for the annual cap ex requirements on these assets ▪ As of February 15, 2024, 6 communities have been sold (including 4 communities sold in December 2023) and 4 communities are under contract for sale and expected to be sold in the remainder of 1Q 2024 Selected Impact to Portfolio & Balance Sheet Note: Pro forma for the completion of the Portfolio Optimization and Deleveraging Strategy $6.2B In gross assets GA TX CO IL IN NC VA Communities Identified for Sale 3
16 Deleveraging: Where We Are and Where We Are Going • Organic NOI growth from stabilized portfolio consistent with long-term historical growth rates • Higher NOI from ongoing value add renovations consistent with historical track record • Incremental NOI from delivery of two Denver, CO development projects • Completion of our Portfolio Optimization and Deleveraging Strategy to exit single-asset markets and pay down debt Net Debt to Adjusted EBITDA Progressing Towards Our Accelerated Target of Low-5’s by Year-End 2025 Through the Following Drivers: 8.2x 7.7x 6.9x 6.7x High-5’s Low-5’s Q4 2020 Q4 2021 Q4 2022 Q4 2023 Q4 2024e Q4 2025e 4
17 58.1% 41.9% Maintain a Simple Capital Structure $6.1bn Common Equity Debt • Simple capital structure consisting of secured and unsecured debt • Maintain conservative financial and credit policies and expect to further deliver the balance sheet through organic NOI & EBITDA growth and excess cash flows. • Transitioning to a predominantly unsecured capital structure • 97% of debt is fixed rate (or hedged), further de-risking the balance sheet • Minimal near-term maturities with a focus on improving our leverage profile and achieving an investment grade rating Total Capitalization (1) Balance Sheet Highlights Debt Maturity Schedule All notations throughout this presentation appear as “End Notes” on pages 47-48. $67 $139 $588 $25 $1,055 $642 $22 $138 $439 $23 $1,040 $531 2024 2025 2026 2027 2028 Thereafter Actual Debt Proforma Debt ($ in millions) ~8% of IRT’s debt matures through end-2025, lowest among public peers % of total 3% 1% 6% 6% 23% 20% 1% 1% 42% 47% 26% 24% 4
18 Continuing Our Efforts in Technology Business Intelligence For Property Managers Value Add ERP Platform Incident Reporting App Month-End Close Automation Property Phone System Standardization & Consolidation Our Goals Offer a Superior Prospect & Resident Experience Automate Processes to Lower Operating Expenses Improve Sustainability & Social Responsibility Create Empowered, Efficient, Engaged On-Site Teams Current Priorities Leverage Data for Learning & Prediction AI & Self-Service Tools for Applicants, Residents & Collections Technology Enablement for Centralization of Property Operations Property Support Task Routing & Automation Platform Machine Learning, Artificial Intelligence, & Predictive Analytics Data Platform: Development & Integration Next-Gen Automated Income Screening Data Platform: Design & Engineering Unit Amenity Audit App AI Invoice & PO Processing Next-Gen Automated Identity Verification Leasing & Property Management Centralization Pilot Punch-Out Catalog Purchasing ML Models: Debt Prediction, Intent Analysis, & Fraud Detection Significant Accomplishments Last 12 Months 5
19 75% Class B community profile is highly defensive during times of economic stress Established a Differentiated Portfolio in Attractive Markets Benefit from favorable resident demographics Focused on the high growth Sunbelt & Midwest regions Possess a unique hedge against new supply Well-positioned in markets that support rental demand The Enclave at Tranquility Lake Riverview, FL Destination at Arista Broomfield, CO 1 2 3 4 5
20 Defensive Middle Market Communities, Positioned to Perform Even in Tough Economic Times A B C • Higher income residents move down in a recession • Renters move down to Class B as rent increases outstrip income growth • Capture households moving down in a recession • Capture seniors who sell homes to fund retirement • Capture individuals/families moving up with career progression • Lower income residents move up as income grows Sample Resident Demographic: • Value driven • Middle income category • Renters by necessity Residents Require Accommodations That Are: • Affordable • Well maintained, spacious, comfortable, clean and modern • Equipped with state-of-the-art amenities • Conveniently located Class B Positioning: • Most opportunity to consistently increase rents • Less exposure to homeownership • Less likely to be impacted from new construction Multifamily exposure is a natural inflation hedge due to our ability to reset rents annually. Our portfolio of 75% Class B communities is highly defensive during recessionary periods. 1
21 IRT’s Resident Demographic Trends Are Favorable Recent residents in IRT’s top 10 markets are in their mid-30s and make an average annual income of ~$85,000, resulting in a ~22% rent to income(1) Market Resident Average Age(1) 1 Atlanta, GA 38 2 Dallas, TX 37 3 Denver, CO 37 4 Columbus, OH 38 5 Raleigh-Durham, NC 37 6 Indianapolis, IN 37 7 Oklahoma City, OK 36 8 Tampa-St. Petersburg, FL 35 9 Nashville, TN 40 10 Houston, TX 41 PORTFOLIO AVERAGE 37 Market Rent/ Income(1) 1 Atlanta, GA 22.6% 2 Dallas, TX 22.5% 3 Denver, CO 28.0% 4 Columbus, OH 19.7% 5 Raleigh-Durham, NC 22.1% 6 Indianapolis, IN 21.2% 7 Oklahoma City, OK 18.4% 8 Tampa-St. Petersburg, FL 22.6% 9 Nashville, TN 21.5% 10 Houston, TX 21.3% PORTFOLIO AVERAGE 21.5% Top 10 IRT Markets by NOI 130 Communities 37,828Units $6.2B In gross assets TBU Desktop GA TX CO OK IN OH FL TN NC Market Average Income 1 2 3 4 5 1 Atlanta, GA $84,530 2 Dallas, TX $92,793 3 Denver, CO $77,698 4 Columbus, OH $89,815 5 Indianapolis, IN $79,596 6 Raleigh-Durham, NC $83,658 7 Oklahoma City, OK $81,429 8 Tampa-St. Petersburg, FL $90,617 9 Nashville, TN $89,402 10 Houston, TX $83,401 PORTFOLIO AVERAGE $86,352 Top 5 Employment Sectors(1) Services/Retail Professional Healthcare Technology Sales Engineering Self Employed Construction Student/Education Hospitality Key 2
22 TOP 10 MARKETS Our Portfolio is Focused On the High Growth Sunbelt & Midwest Regions PORTFOLIO SUMMARY IRT owns 110 communities and has 2 communities under development across resilient, high growth markets Geographic Distribution Operating Communities • Strong presence in high growth metros including Atlanta, Charlotte, Tampa, Dallas, Denver and Nashville; exited markets with slower growth and higher costs • Sunbelt and Midwest regions have exhibited strong fundamentals with favorable population migration trends due to a lower cost of living, better tax policy and growing economic opportunity (2) Average community age (2) 22 years 130 Communities 37,828Units $6.2B In gross assets TBU Desktop FL GAALTX CO OK IL IN OH KY TN SC NC VA Sunbelt Exposure Communities | 78 Units | 24,221 % of NOI | 75% (1) Market Units % Unit % NOI Atlanta 5,180 16% 15% Dallas 4,007 12% 14% Nashville 2,147 7% 5% Denver 1,397 4% 5% 1,979 Raleigh-Durham 6% 5%Indianapolis 1,690 8% 7%Columbus 2,510 5% 5% Houston 1,308 4% 3% Tampa 1,452 4% 5% Total 23,178 71% 71% Note: Sunbelt markets defined as AL, FL, GA, NC, OK, SC, TN and TX. Oklahoma City 1,508 5%5% Communities to be sold as part of Portfolio Optimization Strategy (1) 3
23 The Impact of New Supply on IRT Will Not Be Significant Estimated new apartment deliveries from 2024 through 2026 in IRT's markets, as a percentage of existing apartment inventory, are expected to decline over this 3-year period IRT's Class B communities do not directly compete with new Class A development On average, IRT’s rent vs. new construction suburban rent was lower by ~$660 per month or 30%(2) (1) ~ ~ ~ 3.7% 3.6% 4.8% 3.1% 2.3% 2.0% 2021 2022 2023 2024 E 2025 E 2026 E New Deliveries as a % of Existing Inventory $0 $500 $1,000 $1,500 $2,000 $2,500 Atlanta Dallas - Fort Worth Columbus Denver Oklahoma City Indianapolis Tampa Nashville Memphis Houston IRT Top 10 Markets Avg IRT In Place Rents New Construction Rents 30% lower rents 4
24 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 Atlanta - GA Columbus - OH Dallas-Fort Worth - TX Denver - CO Houston - TX Indianapolis - IN Memphis - TN Nashville - TN Oklahoma City - OK Tampa - FL IRT Top 10 Markets WAV IRT In-Place Monthly Rent Homeownership Cost Rent vs. Buy Differential Will Support Rental Demand in 2024 • Median home price is approximately $425,000(1) across IRT’s top 10 markets(2) weighted by NOI at the zip code level • With interest rates expected to remain higher for longer, mortgage rates will remain high and support rental demand • Monthly Cost Premium to buy and own a home today ranges from 33% - 187% higher than IRT’s top 10 markets’ rents • Monthly Ownership Costs(3) assume a 20% down payment and monthly estimates for insurance and real estate taxes Home Ownership Monthly Cost(2) vs IRT In-Place Rents On Average, Ownership Costs are 33% - 187% higher than IRT’s Rent 87% more to own a home 5
25 Compelling Investment Opportunity With a Path to Long-Term Growth Leading Multifamily REIT, Well-Positioned in Class B Communities, Focused on the High-Growth U.S. Sunbelt Region Talison Row at Daniel Island Charleston, SC Eleven10 at Farmers Market Dallas, TX North Park at Eagle’s Landing Stockbridge, GA Investing in Technology to Create Operational Efficiencies and Focusing on Our ESG Initiatives in Support of Our People & Communities Strong Long-Term Growth Profile Supported by a Value Add Pipeline, New Development Initiatives and Joint Ventures Continuing to Improve Leverage Through Organic Growth and Reinvestment of Excess Cash Flow IRT Has Built a Company that is Well-Positioned at All Points of Market Cycles and Able to Capture Future Growth Opportunities
Appendix & Definitions Oxmoor Louisville, KY
27 Low High Earnings per share $0.40 $0.44 Adjustments: Depreciation and amortization 0.87 0.87 Gains on sale of real estate assets (3) (0.11) (0.11) FFO per share 1.16 1.20 Loan (premium accretion) discount amortization, net (0.04) (0.04) CORE FFO per share $1.12 $1.16 CORE FFO ($s in millions) Same Store Communities 2024 Outlook (4) Number of communities/units 109 communities/32,507 units Property revenue growth 3.0% to 4.5% Controllable operating expense growth 4.9% to 5.9% Real estate tax and insurance expense growth 6.1% to 7.1% Total operating expense growth 5.4% to 6.4% Property NOI growth 1.0% to 4.0% Key Operating Assumptions Corporate Expenses General & administrative expenses and Property management expenses $51.5 to $54.5 million Capital Expenditures Recurring $21 to $23 million Value add & non-recurring $83 to $85 million Development $54.5 to $55.5 million Transaction/Investment Volume Acquisition volume None Disposition volume (6) $324 million Interest expense (5) $83.0 to $85.0 million Full Year 2024 Guidance All notations throughout this presentation appear as “End Notes” on pages 47-48. 2024 Full Year EPS and CFFO Guidance (1)(2) 68.5 75.9 92.0 247.4 263.9 263.2 2019 2020 2021 2022 2023 2024E
28 Focusing on Our ESG Initiatives Find out more on the Sustainability page of IRT’s Investor Relations website at http://investors.irtliving.com. Diversity, Equity and Inclusion Committee formed to ensure a culture of understanding and respect as representation across gender, race, age and sexual orientation are all important factors to our success Sustainability Committee’s efforts protect and create a positive impact on the environment, specifically water conservation, energy management, reduced consumption, waste management, electric vehicle chargers Charitable and Philanthropic Initiatives with participation in organizations fighting against poverty and homelessness Our Board’s Guidelines reflect a strong commitment to the strength and success of the Company; Promote Shareholder Engagement Provide a Residence Proud to Call Home, with enhanced amenities, a robust maintenance program and resident & community events We believe that operating multifamily real estate can be conducted with a conscious regard for the environment and wider society
29 Assets Demonstrate Attractive Apartment Industry Dynamics Low Homeownership More Insulated from New Supply ◼ The national Class B vacancy rate remains resilient to supply and demand shocks with 2024 projected spreads in vacancy rates between Class A & B, with Class B at 7.2% and Class A at 9.6% o The majority of new supply remains concentrated in gateway markets, and competes with existing Class A communities for renters by choice compared to renters by necessity in Class B communities Homeownership Data Source: U.S Census Bureau as of Q4 2023. New Completions (Supply) Data Source: CoStar Q4 2023 Data Release. ◼ Growth in households increases the pool of renters, even more so during periods of reduced homeownership o The homeownership rate was 65.7% in Q4 2023 down from an uptick in Q2 2020 to 67.9% and the 69.2% in Q4 2004 (the peak) ◼ Homeownership affordability remains challenging for many households, especially first-time buyers. Lack of for-sale housing inventory, elevated mortgage rates and rising insurance costs continue to make homeownership unattainable or unattractive to many households. The Favorable Fundamentals of Our Markets Drive Demand for Our Assets 60.0% 61.0% 62.0% 63.0% 64.0% 65.0% 66.0% 67.0% 68.0% 69.0% 70.0% 0 250 500 750 1,000 1,250 1,500 1,750 2,000 2,250 1 9 81 1 9 83 1 9 85 1 9 87 1 9 89 1 9 91 1 9 93 1 9 95 1 9 97 1 9 99 2 0 01 2 0 03 2 0 05 2 0 07 2 0 09 2 0 11 2 0 13 2 0 15 2 0 17 2 0 19 2 0 21 H o m e o w n e rs h ip R at e U n it s C o m p le te d Single Family Multifamily Homeownership Rate 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 0 25,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000 225,000 250,000 275,000 300,000 325,000 350,000 375,000 400,000 425,000 450,000 475,000 500,000 525,000 550,000 575,000 600,000 625,000 2 0 05 2 0 06 2 0 07 2 0 08 2 0 09 2 0 10 2 0 11 2 0 12 2 0 13 2 0 14 2 0 15 2 0 16 2 0 17 2 0 18 2 0 19 2 0 20 2 0 21 2 0 22 2 0 23 2 0 24 V ac an cy R at e ( % ) C o m p le ti o n s (U n it s) Completions Projected Completions Class A Vacancy Class BC Vacancy
30 IRT Value Add Summary Project Life to Date as of December 31, 2023 Renovation Costs per Unit (2) Market Total Properties Total Units To Be Renovated Units Complete Units Leased Rent Premium (1) % Rent Increase Interior Exterior Total ROI - Interior Costs (3) ROI - Total Costs (3) Ongoing Memphis, TN 1 362 283 276 384 33.8% 15,547 807 16,354 29.7% 28.2% Indianapolis, IN 1 236 184 178 282 24.0% 15,583 1,484 17,067 21.7% 19.8% Raleigh-Durham, NC 1 318 228 228 217 16.0% 15,942 1,046 16,988 16.4% 15.4% Tampa-St. Petersburg, FL 2 612 364 373 368 23.6% 16,183 1,481 17,664 27.3% 25.0% Austin, TX 1 256 151 153 240 14.1% 17,742 1,486 19,228 16.2% 15.0% Atlanta, GA (4) 4 1,920 1,123 1,112 258 17.5% 16,660 1,824 18,484 18.5% 16.7% Nashville, TN 1 418 241 230 160 8.9% 16,316 1,321 17,637 11.7% 10.9% Oklahoma City, OK 3 793 427 411 155 16.3% 17,535 1,521 19,056 10.6% 9.8% Dallas, TX 4 1,199 498 481 287 17.7% 19,071 2,102 21,173 18.1% 16.3% Columbus, OH 4 1,098 356 340 289 20.7% 14,134 1,023 15,157 24.5% 22.9% Total/Weighted Average 22 7,212 3,855 3,782 $265 19.0% $16,635 $1,548 $18,183 19.1% 17.5% Future (5) Atlanta, GA 2 648 - - - - - - - - - Oklahoma City, OK 1 294 - - - - - - - - - Dallas, TX 1 263 - - - - - - - - - Denver, CO 1 252 - - - - - - - - - Lexington. KY 1 436 - - - - - - - - - Total/Weighted Average 6 1,893 - - - - - - - - - Completed (6) Wilmington, NC 1 288 288 287 77 7.2% 8,120 56 8,176 11.4% 11.3% Raleigh-Durham, NC 1 328 325 323 195 18.0% 14,648 2,108 16,756 15.9% 13.9% Louisville, KY 2 728 719 773 218 23.7% 15,472 2,173 17,645 16.9% 14.8% Memphis, TN 2 691 646 643 189 18.6% 11,773 974 12,747 19.3% 17.8% Columbus, OH 3 763 694 688 207 22.4% 10,162 666 10,828 24.5% 23.0% Atlanta, GA 2 754 682 679 210 20.1% 9,129 1,398 10,527 27.6% 24.0% Tampa-St. Petersburg, FL 2 624 562 560 227 19.1% 13,373 1,482 14,855 20.4% 18.3% Total/Weighted Average 13 4,176 3,916 3,953 $199 19.8% $11,906 $1,305 $13,211 20.1% 18.1% Grand Total/Weighted Average 41 13,281 7,771 7,735 $231 19.4% $14,241 $1,475 $15,716 19.5% 17.7% All notations throughout this presentation appear as “End Notes” on pages 47-48.
31 IRT Resident Demographics at a Glance(1) All notations throughout this presentation appear as “End Notes” on pages 47-48. 47% 53% Gender Breakdown 79% 21% Marital Status Average Resident Age: 37 Residents make up a diverse job pool Top Industries of Residents: 1. Services 2. Medical Services 3. Professional 4. Technology 5. Sales Male Female Single Married Residents moving to our communities: 18% are from out-of-state 27% of those from out-of-state are from either the West Coast, IL or the Northeast Young, growing resident population benefiting from amenity-rich communities without overextending on rent Average Rent to Income of Our Newest Residents(2) 22%
32 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators Communities located within 5 min. of major highways Communities located in top school districts Benefiting from suburban sprawl, well-positioned in MSA with growing ancillary job markets Major company presence in Atlanta include: Our Markets | Atlanta(1) Footnotes: (1) CoStar 2023 Q4 Data Release (2) New units estimated to be delivered as a percentage of total supply in IRT submarkets (3) 2023 Full Year Financials Atlanta represents 16.1% of IRT’s Proforma NOI (3) Pointe at Canyon Ridge Sandy Springs, GA Waterstone at Big Creek Alpharetta, GA 0.93% 3.83% 1.70% 2021 2022 2023 0.80% 2.11% 1.21% 2021 2022 2023 2.95% 2.91% 4.63% 2021 2022 2023
33 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators 9th largest city in the U.S. by population 4 The Dallas MSA has had the largest population growth within the past 10 years 5 Dallas accounts for nearly 8% of all financial service jobs in the Southwest region6 Major employers include: Our Markets | Dallas(1) Footnotes: (1) CoStar 2023 Q4 Data Release (2) New units estimated to be delivered as a percentage of total supply in IRT submarkets (3) 2023 Full Year Financials (4) 2020 Census Data (5) Freddie Mac Report as of January 2021 (6) Fannie Mae Multifamily Metro Outlook 2021 Q3 Dallas represents 12.8% of IRT’s Proforma NOI (3) Avenues at Craig Ranch Dallas, TX Vue at Knoll Trail Dallas, TX 5.46% 2.84% 4.47% 2021 2022 2023 1.61% 3.67% 1.07% 2021 2022 2023 2.88% 6.07% 3.26% 2021 2022 2023
34 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators Population growth in the metro area is expected to exceed 5.5% over the next five years4 The MSA had the 10th largest population increases from 2010-20195 Major employers include: Our Markets | Denver(1) Footnotes: (1) CoStar 2023 Q4 Data Release (2) New units estimated to be delivered as a percentage of total supply in IRT submarkets (3) 2023 Full Year Financials (4) Fannie Mae Multifamily Metro Outlook 2021 Q3 (5) Freddie Mac Report as of January 2021 Denver represents 5.5% of IRT’s Proforma NOI (3) Destination at Arista Broomfield, CO Bristol Village Aurora, CO 2.40% 2.70% 1.09% 2021 2022 2023 0.26% 0.67% 1.10% 2021 2022 2023 -0.02% 2.99% 0.33% 2021 2022 2023
35 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators 14th largest city in the U.S. by population4 Strong accessibility to major highway I-270 Near thriving employment hubs such as Rickenbacker International airport Class B communities insulated from new Class A construction Major employers, and companies with headquarter-presence include: Our Markets | Columbus (1) Footnotes: (1) CoStar 2023 Q4 Data Release (2) New units estimated to be delivered as a percentage of total supply in IRT submarkets (3) 2023 Full Year Financials (4) 2020 Census Data Columbus represents 7.0% of IRT’s Proforma NOI (3) Bennington Pond Apartments Groveport, OH Schirm Farms Canal Winchester, OH -2.59% 3.61% 2.54% 2021 2022 2023 -0.74% -1.11% 0.14% 2021 2022 2023 1.88% 1.43% 4.23% 2021 2022 2023
36 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators Located within 5 min. of major highways Benefiting from the proximity to growing industrial footprint Each community is in a top school district in the market Burgeoning tourism hub Major employers include: 5.08% 0.00% 0.00% 2021 2022 2023 Our Markets | Louisville(1) Footnotes: (1) CoStar 2023 Q4 Data Release (2) New units estimated to be delivered as a percentage of total supply in IRT submarkets (3) 2023 Full Year Financials Louisville represents 5.6% of IRT’s Proforma NOI (3) Prospect Park Apartment Homes Louisville, KY Meadows Apartment Homes Louisville, KY -0.09% 0.04% 0.29% 2021 2022 2023 -1.21% 2.45% 1.25% 2021 2022 2023
37 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators 15th largest city in the U.S. by population Communities located in top school districts Experienced outsized job growth in health care and retail trade industries Major employers include: Our Markets | Indianapolis(1) Indianapolis represents 5.4% of IRT’s Proforma NOI (3) Bayview Club Apartments Indianapolis, IN Reveal on Cumberland Indianapolis, IN Footnotes: (1) CoStar 2023 Q4 Data Release (2) New units estimated to be delivered as a percentage of total supply in IRT submarkets (3) 2023 Full Year Financials 2.09% 2.93% 1.28% 2021 2022 2023 0.66% 1.25% 0.46% 2021 2022 2023 0.54% 4.39% 1.79% 2021 2022 2023
38 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators Communities located within 5 min. of major throughways Easy access to local retail centers Concentration around Research Triangle Park Many companies have a strong presence in the area, including: Our Markets | Raleigh–Durham(1) Footnotes: (1) CoStar 2023 Q4 Data Release (2) New units estimated to be delivered as a percentage of total supply in IRT submarkets (3) 2023 Full Year Financials Raleigh-Durham represents 5.6% of IRT’s Proforma NOI (3) Creekstone at RTP Durham, NC Waterstone at Brier Creek Raleigh, NC 1.40% 3.86% 7.49% 2021 2022 2023 2.14% 3.97% 1.09% 2021 2022 2023 3.27% 4.11% 3.68% 2021 2022 2023
39 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators The metro’s population grew 0.5% this year, which was above the 0.2% national average4 Actively executing the redevelopment of its downtown area5 Located within 5 min. of major highways and retail Major employers include: Our Markets | Oklahoma City(1) Footnotes: (1) CoStar 2023 Q4 Data Release (2) New units estimated to be delivered as a percentage of total supply in IRT submarkets (3) 2023 Full Year Financials (4) Fannie Mae Multifamily Metro Outlook 2021 Q3 Oklahoma City represents 5.4% of IRT’s Proforma NOI (3) Windrush Oklahoma City, OK Augusta Oklahoma City, OK 0.90% 1.69% 2.93% 2021 2022 2023 0.98% 1.99% 0.45% 2021 2022 2023-1.62% 3.61% 1.35% 2021 2022 2023
40 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators Job growth is expected to be 2.7% annually through 2025, compared to 1.7% nationally4 Houston sits at #2 for the Top ten MSAs by population growth (2010-2019)5 Major employers include: Our Markets | Houston(1) Footnotes: (1) CoStar 2023 Q4 Data Release (2) New units estimated to be delivered as a percentage of total supply in IRT submarkets (3) 2023 Full Year Financials (4) Fannie Mae Multifamily Metro Outlook 2021 Q3 (5) Freddie Mac Report as of January 2021 Houston represents 3.2% of IRT’s Proforma NOI (3) Carrington Park at Huffmeister Houston, TX Carrington Place Houston, TX -1.01% 5.05% 2.16% 2021 2022 2023 1.21% 2.95% 1.26% 2021 2022 2023 5.68% 3.77% 5.79% 2021 2022 2023
41 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators $3 billion Water Street mixed-use investment backed by Jeff Vinik and Bill Gates is underway downtown Major companies have committed to a major presence in the market such as: Our Markets | Tampa(1) Footnotes: (1) CoStar 2023 Q4 Data Release (2) New units estimated to be delivered as a percentage of total supply in IRT submarkets (3) 2023 Full Year Financials Tampa represents 5.3% of IRT’s Proforma NOI (3) Lucerne Tampa, FL Vantage on Hillsborough Tampa, FL 2.78% 5.08% 2.09% 2021 2022 2023 1.45% 3.22% 0.88% 2021 2022 2023 1.76% 3.39% 3.58% 2021 2022 2023
42 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators Metro area job growth expected to outpace the national rate through 20254 Oracle plans to expand in the market. Adding 8,500 jobs and will invest $1.2 billion in the new project Major employers include: Our Markets | Nashville(1) Footnotes: (1) CoStar 2023 Q4 Data Release (2) New units estimated to be delivered as a percentage of total supply in IRT submarkets (3) 2023 Full Year Financials (4) Fannie Mae Multifamily Metro Outlook 2021 Q3 Nashville represents 5.1% of IRT’s Proforma NOI (3) Landings of Brentwood Brentwood, TN Stoneridge Farms Smyrna, TN 2.33% 6.04% 2.45% 2021 2022 2023 0.98% 2.67% 1.14% 2021 2022 2023 4.09% 6.35% 5.08% 2021 2022 2023
43 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators Memphis has all the amenities of a large city with a cost of living more than 20% below the national average4 Tennessee is one of the lowest-taxed states per capita in the nation4 Major employers include: Our Markets | Memphis(1) Footnotes: (1) CoStar 2023 Q4 Data Release (2) New units estimated to be delivered as a percentage of total supply in IRT submarkets (3) 2023 Full Year Financials (4) Greater Memphis Chamber of Commerce Memphis represents 4.4% of IRT’s Proforma NOI (3) Walnut Hill Memphis, TN Stonebridge Crossing Memphis, TN 0.89% 1.16% 0.71% 2021 2022 2023 -1.15% 2.93% -0.10% 2021 2022 2023 -0.24% -0.36% 0.19% 2021 2022 2023
44 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators Metro area ranked 1st in 2020 projected rent growth of the top 100 metros by population1 Major employers include: Our Markets | Huntsville(1) Footnotes: (1) CoStar 2023 Q4 Data Release (2) New units estimated to be delivered as a percentage of total supply in IRT submarkets (3) 2023 Full Year Financials Huntsville represents 3.4% of IRT’s Proforma NOI (3) Bridgepoint Huntsville, AL Legacy at Jones Farm Huntsville, AL 3.47% 4.40% 3.30% 2021 2022 2023 1.92% 3.81% 1.01% 2021 2022 2023 7.92% 4.54% 10.51% 2021 2022 2023
45 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators 16th largest city in the U.S. by population4 Long-term demand fundamentals are favorable with outsized population growth projected in the key age group of 20-34 5 Job growth driven by an economic shift away from a manufacturing economy toward a service economy Major employers include: Our Markets | Charlotte(1) Footnotes: (1) CoStar 2023 Q4 Data Release (2) New units estimated to be delivered as a percentage of total supply in IRT submarkets (3) 2023 Full Year Financials (4) 2020 Census Data (5) Fannie Mae Multifamily Metro Outlook 2021 Q3 Charlotte represents 2.9% of IRT’s Proforma NOI (3) Fountains Southend Charlotte, NC Vesta City Park Charlotte, NC 1.64% 3.51% 3.54% 2021 2022 2023 1.53% 3.34% 1.44% 2021 2022 2023 6.06% 4.08% 7.66% 2021 2022 2023
46 Community Map Job Growth Population Growth Supply Growth 2 2023 Job Growth National Average 1.28% Gateway Markets 1.37% 2023 Population Growth National Average 0.43% Gateway Markets 1.02% Differentiators Established tourism hub Centrally located in FL, easily accessible to drive to and from close markets Job growth is expected to be at 3.4% annually through 2025, compared to 1.7% nationally4 Major employers include: Our Markets | Orlando(1) Footnotes: (1) CoStar 2023 Q4 Data Release (2) New units estimated to be delivered as a percentage of total supply in IRT submarkets (3) 2023 Full Year Financials (4) Fannie Mae Multifamily Metro Outlook 2021 Q3 Orlando represents 1.0% of IRT’s Proforma NOI (3) 202320222021 Millenia 700 Orlando, FL -0.02% 6.01% 2.23% 1.12% 3.44% 1.61% 2021 2022 2023 1.71% 2.67% 1.19% 2021 2022 2023
47 Slide 2 (1) Portfolio Summary data is as of December 31, 2023 or full year 2023, as applicable, and is pro forma for completion of property sales included in our Portfolio Optimization Strategy. (2) Highlights are for the IRT same store portfolio for the twelve months ended December 31, 2023 vs. the twelve months ended December 31, 2022. NOI is a non-GAAP financial measure. See slides 49-51 for definitions and reconciliations. (3) Return on investment or ROI throughout this presentation is calculated as rent premium per unit per month, multiplied by 12 months, dividend by interior renovation costs or total renovation costs, as applicable. Rent premium reflects the per unit per month difference between the rental rate on the renovated unit excluding the impact of upfront concessions, if any, and the market rent for an unrenovated unit. Project results are through December 31, 2023. (4) This guidance, including the underlying assumptions, constitutes forward-looking information. Actual full year 2024 CFFO could vary significantly from the projections presented. See “Forward- Looking Statement” at the end of this presentation. Slide 3 (1) Same-store portfolio includes 106 properties, which represent 31,829 units. (2) Lease-over-lease effective rent growth represents the change in effective monthly rent, as adjusted for concessions, for each unit that had a prior lease and current lease that are for a term of 9- 13 months. (3) 1Q 2024 QTD average occupancy is through February 28, 2024. 1Q 2024 QTD new lease and renewal rates are for leases commencing during 1Q 2024 that were signed as of February 28, 2024. (4) As of February 28, 2024, same-store portfolio occupancy was 94.5%, same-store portfolio excluding ongoing value add occupancy was 94.9% and value add occupancy was 93.4%. Slide 4 (1) A wholly-owned subsidiary of RAIT Financial Trust (NYSE: RAS) acted as IRT’s external advisor until IRT internalized the advisor in December 2016. (2) Number of operating units reflects all consolidated properties, at 100%, excluding properties under development. (3) Excludes acquisition of 2 properties (621 units) under development. (4) Pro forma for the completion of the Portfolio Optimization and Deleveraging Strategy. See page 26 and Appendix for further detail. Slide 6 (1) IPO date of August 13, 2013. Slide 8 (1) Calculated as incremental NOI, divided by a 5.5% cap rate, net of capital investment. Incremental NOI of $21.5 million equates to total units completed to date of 7,771 multiplied by $231 rent premium annualized. Total costs-to-date of $122.1 million equates to total units completed to date multiplied cost per unit of $15,716. (2) Value add pipeline data is as of December 31, 2023. These projections constitute forward-looking information. See “Forward-Looking Statement” at the end of this presentation. (3) Illustrative estimated cost / unit ranging from $15,000 to $16,000. (4) Illustrative 17.7% annual ROI based on IRT’s historical returns. (5) Calculated as incremental NOI, divided by 5.5% cap rate net of capital invested. Slide 13 (1) Occupancy % is calculated using the leased or occupied units, as applicable, divided by the number of delivered units. Slide 14 (1) Excludes 209 units from Views of Music City phase II. (2) Image represents a rendering of the community. Slide 15 (1) Calculated using forward twelve-month NOI after recurring Cap Ex. (2) Including one consolidated joint venture operating community and excluding properties under development. (3) Includes 178 consolidated joint venture operating units at 100%. Excludes 621 consolidated units under development and 653 unconsolidated joint venture units under development. (4) For the consolidated portfolio for the three months ended December 31, 2023. Excludes development projects. (5) Stock price as of February 9, 2024. (6) LQA EBITDA for 2023 is excluding EBITDA generated from 4 properties that were sold in 4Q 2023 as part of the Portfolio Optimization and Deleveraging Strategy. End Notes
48 End Notes (continued) Slide 17 (1) Market data as of December 31, 2023. Slide 21 (1) All resident demographic data is self-reported by residents. Average age, average income, and rent-to-income ratio are for residents that have moved in during the three months ending December 31, 2023. Employment sector data is for all residents as of December 31, 2023. Slide 22 (1) Portfolio Summary as of December 31, 2023, NOI for 4Q 2023 and total communities as of December 31, 2023. (2) Includes communities located in Denver, Fort Collins, Colorado Springs and Loveland, CO. Slide 23 (1) New deliveries as a % of existing inventory are from CoStar’s Q4 2023 data release and are specific to IRT’s markets. (2) IRT’s average asking rent vs. new construction suburban rent for two-bedroom apartments; reflects Yardi Matrix data. Slide 24 (1) Median home prices from Redfin for the month of December 2023 for actual sale prices for All Home types (Single family, Townhomes and Condos). (2) Top 10 IRT Markets weighted based on NOI Exposure for IRT Budget-Actuals. (3) Homeownership Monthly Costs are calculated using Median Home Values by market are based on the zip code in which IRT’s communities are located within, PMI comes from Bank of America mortgage Calculator as of February 6, 2024. Insurance premiums and real estate taxes from Bankrate as of February 6, 2024. Slide 27 (1) This guidance, including the underlying assumptions presented in the table below, constitutes forward-looking information. Actual full year 2024 EPS, FFO, and CFFO could vary significantly from the projections presented. See “Forward-Looking Statements”. Our guidance is based on the key guidance assumptions. (2) Per share guidance is based on 230.9 million weighted average shares and units outstanding. (3) Gain on sale of real estate assets includes a gain expected to be realized in Q1 2024 related to the sale of one of the properties identified as held for sale as of December 31, 2023. (4) This guidance, including the underlying assumptions, constitutes forward-looking information. Actual results could vary significantly from the projections presented. See “Forward-Looking Statements”. (5) Interest expense includes amortization of deferred financing costs but excludes loan premium accretion, net. As a result of purchase accounting, we recorded loan premiums, net, that are accreted into and reduce GAAP interest expense over the remaining term of the associated debt. However, loan premium accretion is excluded from CFFO. (6) Includes $128 million related to the sale of two of the six properties identified as held for sale as of December 31, 2023 and $196 million related to the other four properties, which are under contract and expected to be sold in Q1 2024. We continue to evaluate our portfolio for capital recycling opportunities so actual acquisition and disposition volume could vary significantly from our projections. We undertake no duty to update these assumptions. See “Forward-Looking Statements”. Slide 30 (1) The rent premium reflects the per unit per month difference between the rental rate on the renovated unit excluding the impact of upfront concessions, if any, 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. The weighted average Rent Premium including the impact of concessions was $216. (2) Renovation costs per unit 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. (3) ROI is calculated using the Rent Premium per unit per month, multiplied by 12, divided by the interior renovation costs per unit or the total renovation costs, as applicable. (4) Renovations at one property comprised of 496 units in Atlanta, Georgia remain paused given current market conditions. (5) Renovation projects expected to commence during the first half of 2024. (6) We consider value add projects completed when over 85% of the property’s units to be renovated have been completed. We continue to renovate remaining unrenovated units as leases expire until we complete 100% of the property’s units. Slide 31 (1) All resident demographic data is self-reported by residents. Data as of December 31, 2023. (2) Data as of the last 90 days ending December 31, 2023.
49 Definitions and Non-GAAP Financial Measure Reconciliations This presentation may contain non-U.S. generally accepted accounting principals (“GAAP”) financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is included in this document and/or IRT’s reports filed or furnished with the SEC available at IRT’s website www.IRTLIVING.com under Investor Relations. IRT’s other SEC filings are also available through this website. 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 per unit is a helpful measurement in evaluating average pricing. This metric, when presented, reflects the average effective rent per month. Same-Store Average Occupancy Same-store 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, casualty losses, 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 nonoperating 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”) We believe that FFO and Core FFO (“CFFO”), each of which is a non-GAAP financial measure, are additional appropriate measures of the operating performance of a REIT and us in particular. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”), as net income or loss allocated to common shares (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. While our calculation of FFO is in accordance with NAREIT’s definition, it may differ from the methodology for calculating FFO utilized by other REITs and, accordingly, may not be comparable to FFO computations of such other REITs. 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 depreciation and amortization of other items not included in FFO, and other non-cash or non-operating gains or losses related to items such as casualty (gains) losses, abandoned deal costs, loan premium accretion and discount amortization, debt extinguishment costs, and merger and integration costs from the determination of FFO. Our calculation of CFFO may differ from the methodology used for calculating CFFO by other REITs and, accordingly, our CFFO may not be comparable to CFFO reported by other REITs. Our management utilizes FFO and CFFO as measures of our operating performance, and believe they are also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash or non-recurring items that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and our operating performance between periods. Furthermore, although FFO, CFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we believe that FFO and CFFO may provide us and our investors with an additional useful measure to compare our 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. Accordingly, FFO and CFFO do not measure whether cash flow is sufficient to fund all of our cash needs, including principal amortization and capital improvements. Neither FFO nor CFFO should be considered as an alternative to net income or any other GAAP measurement as an indicator of our operating performance or as an alternative to cash flow from operating, investing, and financing activities as a measure of our liquidity.
50 Net Operating Income We believe that Net Operating Income (“NOI”), a non-GAAP financial measure, is a useful supplemental measure of its operating performance. We define NOI as total property revenues less total property operating expenses, excluding depreciation and amortization, casualty related costs and gains, property management expenses, and general and administrative expenses, interest expenses, and net gains on sale of assets. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. We believe 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. We use 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 our financial performance. Same Store Properties and Same Store Portfolio We review our 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. We may also refer to the Same Store Portfolio as the IRT 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). Interest Coverage is a ratio computed by dividing Adjusted EBITDA by interest expense Net Debt, a non-GAAP financial measure, equals total consolidated debt less cash and cash equivalents and loan premiums and discounts. The following table provides a reconciliation of total consolidated debt to net debt (Dollars in thousands). We present net debt and net debt to Adjusted EBITDA because management believes it is a useful measure of our credit position and progress toward reducing leverage. The calculation is limited because we may not always be able to use cash to repay debt on a dollar for dollar basis. Definitions and Non-GAAP Financial Measure Reconciliations
51 Definitions and Non-GAAP Financial Measure Reconciliations December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 Reconciliation of same-store net operating income to net income (loss) Same-store net operating income 95,907$ 93,779$ 91,076$ 90,783$ 92,868$ Non same-store net operating income 11,120 11,296 10,454 11,097 12,175 Pre-Merger STAR Portfolio NOI - - - - - Other revenue 316 232 354 239 306 Other income (expense), net (1,409) (1,547) (1,277) (683) 299 Property management expenses (6,660) (7,232) (6,818) (6,371) (6,593) General and administrative expenses (5,043) (3,660) (5,910) (8,154) (5,739) Depreciation and amortization expense (55,902) (55,546) (53,984) (53,536) (52,161) Casualty gains (losses), net (59) (35) (680) (151) 1,690 Interest expense (23,537) (22,033) (22,227) (22,124) (23,337) Gain on sale (loss on impairment) of real estate assets, net (56,263) (11,268) — 985 17,044 Gain (loss) on extinguishment of debt (124) — — — — Restructuring costs — — — (3,213) — Merger and integration costs — — — — (2,028) Net income (loss) $ (41,654) $ 3,986 $ 10,988 $ 8,872 $ 34,524 (a) Same store portfolio includes 106 properties, which represents 31,829 units. For the Three-Months Ended (a) Independence Realty Trust Inc. Reconciliation of Same-Store Net Operating Income to Net Income (loss) (Dollars in thousands)
52 Forward-Looking Statement This presentation 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 include, but are not limited to, our earnings guidance and certain actions that we expect or seek to take in connection with our portfolio optimization and deleveraging strategy and anticipated enhancements to our financial results and future growth from this strategy. All statements in this release that address financial and operating performance, events or developments that we expect or anticipate will occur or be achieved in the future are forward-looking statements. Our forward-looking statements are not guarantees of future performance and involve estimates, projections, forecasts and assumptions, including as to matters that are not within our control, and are subject to risks and uncertainties including, without limitation, risks and uncertainties related to changes in market demand for rental apartment homes and pricing pressures, including from competitors, 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, unexpected changes in our intention or ability to repay certain debt prior to maturity, increased costs on account of inflation, increased competition in the labor market, failure to realize cost savings, efficiencies and other benefits that we expect to result from our portfolio optimization and deleveraging strategy, inability to sell certain assets, including those assets designated as held for sale, within the time frames or at the pricing levels expected, failure to achieve expected benefits from the redeployment of proceeds from asset sales, delays in completing, and cost overruns incurred in connection with, our value add initiatives and failure to achieve rent increases and occupancy levels on account of the value add initiatives, unexpected impairments or impairments in excess of our estimates, increased regulations generally and specifically on the rental housing market, including legislation that may regulate rents or delay or limit our ability to evict non-paying residents, risks endemic to real estate and the real estate industry generally, the impact of potential outbreaks of infectious diseases and measures intended to prevent the spread or address the effects thereof, the effects of natural and other disasters, unknown or unexpected liabilities, including the cost of legal proceedings, costs and disruptions as the result of a cybersecurity incident or other technology disruption, unexpected capital needs, inability to obtain appropriate insurance coverages at reasonable rates, or at all, or losses from catastrophes in excess of our insurance coverages, and share price fluctuations. Please refer to the documents filed by us with the SEC, including specifically the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2023, and our other filings with the SEC, which identify additional factors that could cause actual results to differ from those contained in forward-looking statements. These forward-looking statements are based upon the beliefs and expectations of our management at the time of this release and our actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. We undertake 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.