Independence Realty Trust, Inc.: Form 10-Q for the period ended Mar 31, 2026

Forward-Looking Statements

The Securities and Exchange Commission (the “SEC”), encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report contains or incorporates by reference such “forward-looking statements” within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements.

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act. Such forward-looking statements include, but are not limited to, our expectations with respect to the timing and terms of sales, if any, with respect to the two properties which are classified as held for sale as of March 31, 2026, the assumptions underlying the determination of the fair value of our impairment charge for one of our properties held for sale as of March 31, 2026 and our expectations with respect to future acquisitions and dispositions. All statements in this Quarterly Report on Form 10-Q 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 increased 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, delays in the completion of, and failure to achieve anticipated benefits of, our projects with our joint venture partners, 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, inability or failure to achieve anticipated benefits from future acquisitions and dispositions, 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, new and/or 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, economic conditions, including inflation and recessionary conditions and their related impacts on the real estate industry, U.S. and global trade policies and tensions, including changes in, or the imposition of, tariffs and/or trade barriers and the economic impacts, volatility and uncertainty resulting therefrom, the impacts from the U.S. government shutdown, the impacts from existing and/or future U.S. foreign policy decisions including the involvement of the U.S. in foreign disputes and foreign wars, 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, including but not limited to a third party's unauthorized access to our data or the data of our residents, 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 2025 Annual Report, 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 Quarterly Report on Form 10-Q 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.

Overview

Our Company

We are a self-administered and self-managed Maryland corporation that has elected to be taxed as a real estate investment trust (“REIT”). We are primarily engaged in the ownership, operation, management, improvement, and acquisition of multifamily apartment communities in non-gateway markets. As of March 31, 2026, we owned and operated 115 multifamily apartment properties (including one owned through a consolidated joint venture) that contain an aggregate of 33,602 units. Our properties are located in Alabama, Colorado, Florida, Georgia, Indiana, Kentucky, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee and Texas. In addition, as of March 31, 2026, we owned two newly developed properties, including one in Denver, Colorado, that contains 296 units and one in Austin, Texas that contains 378 units. As of March 31, 2026, we also owned interests in three unconsolidated joint ventures, one of which owns and operates a multifamily apartment community that contains 275 units and two of which that are developing multifamily apartment communities that will contain, upon completion, an aggregate of 642 units. We do not have any foreign operations and our business is not seasonal.

Our Business Objective and Investment Strategies

Our primary business objective is to maximize stockholder value through diligent portfolio management, strong operational performance, and a consistent return of capital through distributions and capital appreciation. Our investment strategy is focused on the following:

• gaining scale within key amenity rich submarkets of non-gateway cities that offer good school districts, high-quality retail and major employment centers and are unlikely to experience substantial new apartment construction in the foreseeable future;
• increasing cash flows at our existing apartment properties through prudent property management and strategic renovation projects; and
• acquiring additional properties that have strong and stable occupancies and support a rise in rental rates or that have the potential for repositioning through capital expenditures or tailored management strategies.

Consolidated Property Portfolio (1)

As of March 31, 2026, we owned and consolidated 115 multifamily apartment properties, totaling 33,602 units. Below is a summary of our consolidated property portfolio by market.

(Dollars in thousands, except per unit data)

(1) Excludes our development properties. See Non-GAAP financial measures for the definition of a development property.

(2) Includes properties in our Fort Collins, CO and Colorado Springs, CO markets.

(3) Includes one property that was held for sale as of March 31, 2026.

Current Developments

Acquisitions

On January 15, 2026, we acquired The Retreat at Canal in Columbus, Ohio, a 140-unit community for $29.5 million. The acquisition increased our exposure in Columbus, Ohio from 2,510 units to 2,650 units.

Investments in Unconsolidated Real Estate Entities

To create another avenue for accretive capital allocation and to increase our options for capital investment, we have partnered with, and may in the future partner with, developers through preferred equity investments and joint venture relationships focused on new multifamily development.

On January 20, 2026, we acquired our joint venture partner's 10% membership interest and assumed full operational control and 100% equity ownership of the Tisdale at Lakeline Station property underlying this joint venture. The property is a newly constructed 378-unit community in Austin, Texas and was consolidated into our financial results effective January 20, 2026. The property will be classified as a development property until reaching 90% occupancy.

As of March 31, 2026 and December 31, 2025, we had investments in unconsolidated real estate entities of $66.6 million and $98.3 million, respectively.

Investments in Real Estate Under Development

As of March 31, 2026, we had two investments in real estate under development of $127.8 million, which contain an aggregate of 674 units and are currently in lease-up.

Value Add Initiative

Strategically renovating communities where there is the potential for outsized rent growth (our "Value Add Initiative") provides us with the opportunity to improve long-term growth through targeted unit and/or common area investments. We completed renovations on 426 units during the three months ended March 31, 2026. From inception of our Value Add Initiative in January 2018 through March 31, 2026, we completed renovations on 11,871 of the 18,788 units currently in our Value Add Initiative, achieving a return on investment of 16.1% (and approximately 18.1% on the interior portion of such renovation costs). We compute return on investment by using the rent premium per unit per month, multiplied by 12, divided by the applicable renovation costs per unit and we compute the rent premium as the difference between the rental rate on the renovated unit (excluding the impact of concessions) and the market rent for a comparable unrenovated unit as of the date presented, as determined by management consistent with its customary rent-setting and evaluation procedures.

Capital Markets

Unsecured Revolver and Term Loans

On February 11, 2026, Independence Realty Operating Partnership, LP (“IROP”) entered into the Sixth Amended and Restated Credit Agreement (the “Sixth Restated Credit Agreement”) by and among IROP, as borrower, Independence Realty Trust, Inc., as parent guarantor, KeyBank National Association, as administrative agent, and the other agents and lender parties thereto, which amended and restated in its entirety the Fifth Amended and Restated Credit Agreement dated as of January 8, 2025 (the “Fifth Restated Credit Agreement”). The Fifth Restated Credit Agreement provided for a $750.0 million unsecured revolving credit facility (the “Unsecured Revolver”) with a January 8, 2029 scheduled maturity date and two unsecured term loans, specifically: (i) a $200.0 million term loan with a May 18, 2026 maturity date (the “2026 Term Loan”) and (ii) a $400.0 million term loan with a January 28, 2028 maturity date (the “2028 Term Loan”). The Sixth Restated Credit Agreement provides for a new $350.0 million unsecured term loan with a maturity date of February 11, 2030, subject to a one year extension option (the “2030 Term Loan”). A portion of the proceeds from the 2030 Term Loan were used to pay off outstanding borrowings under the 2026 Term Loan.

The Sixth Restated Credit Agreement also increases the aggregate amount of borrowings under the credit agreement to $1.5 billion and permits IROP to request the capacity be further increased to $2.0 billion subject to certain terms and conditions, including receipt of commitments from one or more lenders, whether or not currently parties to the Sixth Restated Credit Agreement, to provide such increased amounts, which increase may be allocated, at IROP’s option, to the Unsecured Revolver and/or to one or more of the Term Loans, in accordance with the Sixth Restated Credit Agreement.

ATM Program

On July 28, 2023, we entered into an equity distribution agreement pursuant to which we may from time to time offer and sell shares of our common stock under our shelf registration statement having an aggregate offering price of up to $450.0 million (the “ATM Program”) in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”). Under the ATM Program, we may also enter into one or more forward sale transactions for the sale of shares of our common stock on a forward basis. There were no forward sale transactions and no shares of our common stock were sold under the ATM Program during the three months ended March 31, 2026. As of March 31, 2026, approximately $342.4 million remained available for issuance under the ATM Program.

Stock Repurchase Program

On May 18, 2022, our board of directors authorized a common stock repurchase program (the "Stock Repurchase Program") covering up to $250.0 million in shares of our common stock. Under the Stock Repurchase Program, we, in our discretion, may purchase our shares from time to time in the open market or in privately negotiated transactions. The amount and timing of the purchases will depend on a number of factors, including the price and availability of our shares, trading volumes and general market conditions. The Stock Repurchase Program has no time limit and may be suspended or discontinued at any time. During the three months ended March 31, 2026, we repurchased and retired 1.8 million shares of common stock under our Stock Repurchase Program at a weighted average price of $16.24 per share at a total cost of $29.9 million. As of March 31, 2026, $190.1 million in shares of our common stock remained authorized for repurchase under our Stock Repurchase Program.

Results of Operations

As of March 31, 2026, we owned and consolidated 115 multifamily apartment properties, of which 109 comprised the Same-Store Portfolio.

Three Months Ended March 31, 2026 compared to the Three Months Ended March 31, 2025

(Dollars in thousands)

(1) Excludes our development projects. See Non-GAAP Financial Measures for our definition of a development property and our methodology for determining same-store properties.

Revenue

Rental and other property revenue. Revenue from rental and other property revenue of the consolidated portfolio increased $4.3 million to $165.2 million for the three months ended March 31, 2026 from $160.9 million for the three months ended March 31, 2025. The increase was attributable to a $2.2 million increase in non same-store rental and other property revenue primarily driven by the acquisition of three properties in 2025 earning a full quarter of rental and other property revenue in 2026 and a $2.1 million increase in same-store rental and other property revenue driven by higher other income, lower bad debt and higher average monthly rent compared to the prior year period.

Expenses

Property operating expenses. Property operating expenses increased $2.9 million to $62.1 million for the three months ended March 31, 2026 from $59.3 million for the three months ended March 31, 2025. The increase was primarily driven by a $1.7 million increase in non same-store operating expenses due to the acquisition of three properties in 2025 incurring a full quarter of operating expenses in 2026. In addition, the $1.1 million increase in same-store operating expenses was due to higher payroll costs, utilities and contract services, partially offset by lower insurance expenses.

Property management expenses. Property management expenses increased $0.4 million to $8.2 million for the three months ended March 31, 2026 from $7.8 million for the three months ended March 31, 2025. The increase was primarily driven by the timing of property management expenses in 2025 compared to 2026 and due to an increase in new hire training costs during the three months ended March 31, 2026, compared to the same prior year period.

Depreciation and amortization expense. Depreciation and amortization expense increased $5.9 million to $64.6 million for the three months ended March 31, 2026 from $58.7 million for the three months ended March 31, 2025. The increase was primarily due to depreciation expenses driven by capital expenditures related to our Value Add Initiative and higher intangible asset amortization expenses from our recent property acquisitions in 2025 and 2026 compared to the same prior year period.

Interest expense. Interest expense increased $1.4 million to $20.7 million for the three months ended March 31, 2026 from $19.3 million for the three months ended March 31, 2025. The increase during the three months ended March 31, 2026, was primarily driven by the higher average debt balance associated with our acquisitions and a decrease in capitalized interest associated with our real estate under development.

Gain on sale of real estate assets, net. During the three months ended March 31, 2025, we sold one multi-family property resulting in a gain on sale of $1.5 million.

Loss from investments in unconsolidated real estate entities. Loss from investments in unconsolidated real estate entities increased $0.4 million to $1.0 million for the three months ended March 31, 2026 from $0.6 million for the three months ended March 31, 2025. The increase in loss from investments in unconsolidated real estate entities is primarily driven by an increase in depreciation expense from our unconsolidated real estate entities during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Non-GAAP Financial Measures

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, loan premium accretion and discount amortization and debt extinguishment 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.

Set forth below is a reconciliation of net income to FFO and CFFO for the three months ended March 31, 2026 and 2025 (in thousands, except share and per share information):

(1) Based on 242,374,371 weighted-average shares and units outstanding for the three months ended March 31, 2026.

(2) Based on 236,665,226 weighted-average shares and units outstanding for the three months ended March 31, 2025.

Same-Store Portfolio Net Operating Income

We believe that Net Operating Income (“NOI”), a non-GAAP financial measure, is a useful supplemental measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding interest expenses, depreciation and amortization, casualty related costs and gains, property management expenses, general and administrative expense 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 our 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 and not a development property at the beginning of the previous year. Properties that are held for sale or have been sold are excluded from the same-store portfolio.

Non Same-Store Properties and Non Same-Store Portfolio

Properties that did not meet the definition of a same-store property as of the beginning of the previous year are added into the non same-store portfolio.

Set forth below is a reconciliation of GAAP net income to Same-Store Portfolio NOI for the three months ended March 31, 2026 and 2025 (in thousands):

(a) Same-Store Portfolio for the three months ended March 31, 2026 and 2025 included 109 properties containing 31,735 units.

Set forth below is Same-Store Portfolio (a) NOI for the three months ended March 31, 2026 and 2025 (in thousands, except per unit data):

(a) Same-Store Portfolio for the three months ended March 31, 2026 and 2025 included 109 properties containing 31,735 units.

Average Effective Monthly Rent per Unit

Average effective rent per unit represents the average of net rent amounts, after concessions amortized over the life of the lease, divided by the average occupancy (in units) for the period presented. We believe average effective rent is a helpful measurement in evaluating average pricing. This metric, when presented, reflects the average effective rent per month.

Average Occupancy

Average occupancy represents the average occupied units for the reporting period divided by the average of total units available for rent for the reporting period.

Development Property

A development property is a property that is either currently under development or is in lease-up prior to reaching overall occupancy of 90%.

Liquidity and Capital Resources

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain investments, pay distributions and other general business needs. We believe our available cash balances, financing arrangements and cash flows from operations will be sufficient to fund our liquidity requirements with respect to our existing portfolio for the next twelve months and the foreseeable future.

Our primary cash requirements are to:

• make investments to continue our value add initiatives to improve the quality and performance of our properties;
• repay our indebtedness;
• fund costs necessary to maintain our properties;
• pay our operating expenses; and
• distribute a minimum of 90% of our REIT taxable income (determined without regard to the deduction for dividends paid and excluding net capital gain) and to make investments in a manner that enables us to maintain our qualification as a REIT.

We intend to meet our liquidity requirements primarily through a combination of one or more of the following:

• the use of our cash and cash equivalents of $23.3 million as of March 31, 2026;
• existing and future unsecured financing, including advances under our unsecured revolver, and financing secured directly or indirectly by the apartment properties in our portfolio;
• cash generated from operating activities;
• net cash proceeds from property sales, including sales undertaken as part of our capital recycling strategy and other sales; and
• proceeds from the sales of our common stock and other equity securities, including common stock that may be sold under the ATM program.

Cash Flows

As of March 31, 2026 and 2025, we maintained cash and cash equivalents, and restricted cash of approximately $43.3 million and $48.3 million, respectively. Our cash and cash equivalents were generated from the following activities (dollars in thousands):

Our cash inflows from operating activities during the three months ended March 31, 2026 and 2025 were primarily driven by ongoing operations of our properties. The $5.0 million decrease in cash inflows from operating activities during the three months ended March 31, 2026 was primarily driven by the timing of real estate tax payments.

Our cash outflows from investing activities during the three months ended March 31, 2026 were primarily due to the acquisition of one multifamily property in the amount of $29.4 million, $23.6 million of capital expenditures and $11.6 of investments in unconsolidated real estate entities. Our cash inflows from investing activities during the three months ended March 31, 2025 were primarily due to $109.2 million of proceeds from the disposition of one property, partially offset by $58.6 million to acquire one multifamily property, $21.5 million of capital expenditures, $10.3 of investments in unconsolidated real estate entities and $7.1 million of investments in real estate under development.

Our cash inflows from financing activities during the three months ended March 31, 2026 were primarily due to $150.0 million of net proceeds from the refinancing of our credit agreement, partially offset by $76.2 million of mortgage loan repayments and payoffs, the payment of dividends on our common stock and noncontrolling interests of $41.6 million and repurchases of common stock under the Stock Repurchase Program in an aggregate amount of $29.9 million. Our cash outflows from financing activities during the three months ended March 31, 2025 were primarily due to mortgage principal repayments of $74.4 million and payment of dividends on our common stock and noncontrolling interests of $38.1 million, partially offset by the $50.0 million issuance of common stock from our forward equity transactions.

Contractual Obligations

Our 2025 Annual Report includes a table of contractual obligations. There were no material changes to these obligations since the filing of our 2025 Annual Report.

Off-Balance Sheet Arrangements

There were no off-balance sheet arrangements during the three months ended March 31, 2026 that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our interests.

Critical Accounting Estimates and Policies

Our 2025 Annual Report contains a discussion of our critical accounting policies. Management discusses our critical accounting policies and management’s judgments and estimates with the audit committee of our board of directors. There were no material changes to our critical accounting policies since the filing of our 2025 Annual Report.

Our 2025 Annual Report contains a discussion of qualitative and quantitative market risks. There have been no material changes in quantitative and qualitative market risks during the three months ended March 31, 2026 from the disclosures included in our 2025 Annual Report.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Effective as of March 31, 2026, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by us in our Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation referred to above during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.