Centerspace agrees all-stock merger with IRT at 3.8x ratio
Centerspace agreed to an all-stock merger with Independence Realty Trust that is projected to be leverage-neutral and modestly accretive to 2027 Core FFO.
Rhea-AI Filing Summary
Centerspace (CSR) agreed to be acquired by Independence Realty Trust (IRT) in an all-stock merger creating a multifamily REIT with about $8.1 billion enterprise value and 44,354 units across 163 communities. Centerspace shareholders will receive 3.8 IRT shares for each Centerspace share, and common OP unitholders will receive 3.8 IROP units per Centerspace OP unit, implying issuance of about 67.6 million IRT shares/OP units and pro forma ownership of roughly 78% IRT stockholders and 22% Centerspace shareholders.
The transaction is expected to be approximately 5% accretive to 2027E Core FFO per share on a leverage-neutral basis, supported by about $24 million of anticipated annual synergies (around $19 million corporate-level and $5 million property-level). IRT expects to maintain its quarterly dividend of $0.18 per share, while Centerspace may pay up to $0.77 per share in regular quarterly dividends until closing, plus a prorated $0.09 stub dividend in the closing quarter.
Closing, targeted as early as the end of the fourth quarter of 2026, is subject to shareholder approvals, effectiveness of an S-4 registration statement, NYSE listing of new IRT shares, lender consents tied to Centerspace debt, tax and REIT-status opinions, and other customary conditions. The merger agreement includes reciprocal termination rights and fees of $45 million payable by Centerspace or $60 million payable by IRT under specified circumstances, and an amendment to Centerspace’s operating partnership agreement aligns unitholder treatment in combinations.
Positive
- All-stock sale at a fixed 3.8x exchange ratio gives Centerspace shareholders ongoing participation in a larger REIT with an expected pro forma equity market cap of about $5.0 billion and broader geographic diversification.
- Management projects the combination to be ~5% accretive to 2027E Core FFO per share on a leverage-neutral basis, driven by roughly $24 million in anticipated annual cost and operating synergies.
Negative
- The merger carries execution and approval risk: closing depends on shareholder votes, lender consents, regulatory clearances, and tax and REIT-status opinions, any of which could delay or prevent completion.
- The merger agreement includes substantial termination fees: about $45 million payable by Centerspace or $60 million by IRT in certain scenarios, which could influence strategic flexibility if competing proposals arise.
Filing Explained
Preferred-unit continuity, award conversions, and governance changes add structural terms while the merger remains uncompleted and approval-dependent.
The September 8, 2026 Form 8-K records an executed but not-yet-completed merger and, beyond the common-share exchange, Centerspace’s Series D preferred units would become one IROP Series A preferred unit and Series E units would become one IROP Series B preferred unit, with substantially similar rights and optional exchange formulas tied to the 3.8 exchange ratio.
The proposed issuance of IRT shares and partnership units would increase the combined share count, so existing IRT holders would own a smaller percentage of the combined company absent offsetting changes; that is a dilution mechanism, not a completed issuance.
At closing, specified unvested restricted stock units would vest, be canceled, and convert into IRT shares, while other service-based restricted stock units and stock options would generally convert and retain their existing vesting terms, subject to stated acceleration provisions.
The agreement also provides for two Centerspace independent-trustee nominees on IRT’s board at the effective time, subject to IRT’s nominating committee process, and the partnership-agreement amendment requires eligible Company OP holders to receive or be offered consideration equal in value to the greatest consideration received for comparable partnership units in a combination. The parties may elect alternative merger directions before filing the definitive Form S-4 and joint proxy statement, which is the next specified document for resolving that structural choice.
8-K Event Classification
3 items: 1.01, 7.01, 9.01
3 items
Item 1.01
Entry into a Material Definitive Agreement
Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 7.01
Regulation FD Disclosure
Disclosure
Material non-public information disclosed under Regulation Fair Disclosure, often investor presentations or guidance.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, or exhibit attachments filed with this report.
Key Figures
Exchange Ratio: 3.8 IRT shares per Centerspace share
IRT Shares/Units Issued: 67.6 million shares and OP units
Pro Forma Enterprise Value: $8.1 billion
+5 more
8 metrics
Exchange Ratio
3.8 IRT shares per Centerspace share
Consideration for each Centerspace common share at the merger effective time
IRT Shares/Units Issued
67.6 million shares and OP units
Approximate aggregate IRT equity securities to be issued in the combination
Pro Forma Enterprise Value
$8.1 billion
Combined multifamily REIT enterprise value from the joint investor materials
Equity Market Capitalization
$5.0 billion
Expected pro forma equity market cap of the combined company
2027E Core FFO Accretion
Approximately 5%
Projected Core FFO per share accretion on a leverage-neutral basis
Annual Synergies
$24 million
Expected annual cost and operating synergies, including corporate and property-level
Centerspace Termination Fee
$45 million
Fee payable by Centerspace to IRT upon certain terminations of the merger agreement
IRT Termination Fee
$60 million
Fee payable by IRT to Centerspace upon certain terminations of the merger agreement
Key Terms
Exchange Ratio, Partnership Merger, Series D Preferred Unit, REIT Dividend, +2 more
6 terms
Exchange Ratio financial
"will be converted into the right to receive 3.8...shares of common stock"
The exchange ratio is the number used to decide how many shares of one company you get for each share you own in another company during a merger or acquisition. It’s like a recipe that tells you how to swap shares fairly, ensuring both companies’ values are balanced. This ratio matters because it determines how ownership divides between the companies' shareholders.
Partnership Merger financial
"IROP Merger Sub will merge with and into the Company OP (the “Partnership Merger”)"
Series D Preferred Unit financial
"each partnership interest in the Company OP designated as a “Series D Preferred Unit”"
REIT Dividend financial
"either party makes a dividend in order for such party to continue to qualify as a REIT"
Core FFO financial
"Approximately 5% accretive to 2027E Core FFO per share on a leverage neutral basis"
Core FFO (Core Funds From Operations) is a real estate industry measure of a property owner's recurring cash earnings calculated by starting with net income and removing non-cash accounting items and one-time gains or losses so the number reflects ongoing operating performance. Investors use it like a trimmed-down paycheck: it helps compare cash-generating ability across periods and companies by focusing on the stable, repeatable income rather than temporary or accounting-driven swings.
tax-free reorganization regulatory
"The transaction is expected to qualify as a tax-free reorganization for U.S. federal income tax purposes"
A tax-free reorganization is a corporate restructuring—such as a merger, acquisition, or stock-for-stock exchange—structured so that shareholders do not have to pay immediate income tax on gains from the transaction. Think of it like swapping houses under a rule that lets you avoid a tax bill until you later sell; it matters to investors because it affects the timing of taxes, the adjusted cost basis of their holdings, and the net economic benefit they actually receive from the deal.
FAQ
What is Centerspace (CSR) receiving in the merger with Independence Realty Trust?
Centerspace shareholders will receive 3.8 shares of IRT common stock for each Centerspace share, and holders of Centerspace common OP units will receive 3.8 IROP units per common OP unit, with cash paid only in lieu of fractional shares.
What size company will the combined IRT and Centerspace (CSR) be?
The combined company is expected to have a pro forma equity market capitalization of about $5.0 billion and a total enterprise value of about $8.1 billion, with 44,354 units across 163 multifamily communities in 17 states.
When is the Centerspace (CSR) merger with IRT expected to close?
The merger is expected to close as early as the end of the fourth quarter of 2026, subject to approval by shareholders of both companies, timing of lender consents, effectiveness of IRT’s Form S-4, NYSE listing of new shares, and other customary conditions.
What termination fees apply in the Centerspace (CSR) and IRT merger agreement?
Under specified circumstances, Centerspace may owe IRT a $45 million termination fee, and IRT may owe Centerspace a $60 million termination fee, including if the merger is not completed by June 30, 2027 or required shareholder approvals are not obtained.
How will governance change for Centerspace (CSR) after the merger?
After closing, Centerspace will be a wholly owned subsidiary of IRT. IRT’s board will expand to 11 directors, including two independent trustees from the Centerspace board, with IRT retaining its corporate name and NYSE ticker “IRT.”
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
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): September 8, 2026
(Exact name of Registrant as specified in its charter)
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(State or Other Jurisdiction
of Incorporation or Organization)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices) (Zip code)
(701 ) 837-4738
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed from last report)
Check the appropriate box below if the form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the
following provisions:
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Written communications pursuant to Rule 425 under the Securities Act
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
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Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
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Title of each class
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Exchange
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the
Securities Exchange Act of 1934.
Emerging growth company ☐
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. ☐
| Item 1.01 |
Entry into a Material Definitive Agreement.
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Merger Agreement
On September 8, 2026, Centerspace, a North Dakota real estate investment trust (“Centerspace” or the “Company”), entered into an Agreement and Plan of
Merger (the “Merger Agreement”) with Independence Realty Trust, Inc., a Maryland corporation (“IRT”), Independence Realty Operating Partnership, LP, a Delaware limited partnership (“IROP”), Islanders OP Sub, LLC, a Delaware limited liability company
and direct wholly owned subsidiary of IROP (“IROP Merger Sub”), and Centerspace, LP, a North Dakota limited partnership (the “Company OP”).
The Merger Agreement provides for the acquisition of Centerspace by IRT in an all-stock transaction upon the terms and subject to the conditions set
forth in the Merger Agreement. The board of trustees of Centerspace and the board of directors of IRT have each unanimously approved the Merger Agreement and the transactions contemplated thereby.
The Company Merger. Upon the terms and subject to the
conditions set forth in the Merger Agreement, a wholly owned subsidiary of IRT to be added to the Merger Agreement by joinder (“IRT Merger Sub”) will merge with and into Centerspace (the “Company Merger”), with Centerspace surviving the Company
Merger as a wholly owned subsidiary of IRT. At the effective time of the Company Merger (the “Effective Time”), each share of beneficial interest of Centerspace, no par value (“Centerspace Common Stock”), outstanding immediately prior to the
Effective Time (other than certain excluded shares) will be converted into the right to receive 3.8 (as may be adjusted pursuant to the Merger Agreement, the “Exchange Ratio”) shares of common stock, par value $0.01 per share, of IRT (“IRT Common
Stock”), with cash paid in lieu of fractional shares.
The Partnership Merger. Upon the terms and subject to the
conditions set forth in the Merger Agreement, following the Company Merger, IROP Merger Sub will merge with and into the Company OP (the “Partnership Merger”), with the Company OP surviving the Partnership Merger as a subsidiary of IROP. At the
effective time of the Partnership Merger (the “Partnership Merger Effective Time”), (i) each partnership interest in the Company OP (excluding any partnership interest designated as a “Preferred Unit”) (each, a “Company OP Common Unit”) issued and
outstanding immediately prior to the Partnership Merger Effective Time will be converted into the right to receive a number of common units of IROP (“IROP Common Units”) equal to the Exchange Ratio, rounded up to the nearest whole IROP Common Unit
(for each holder of Company OP Common Units, after aggregation of all fractional IROP Common Units otherwise to be received by such holder), (ii) each partnership interest in the Company OP designated as a “Series D Preferred Unit” (a “Series D
Preferred Unit”) issued and outstanding immediately prior to the Partnership Merger Effective Time will be converted into one newly issued preferred unit of IROP designated as a “Series A Preferred Unit” (an “IROP Series A Preferred Unit”), which
will have rights, powers, duties and preferences that are substantially similar to the rights, powers, duties and preferences of the Series D Preferred Units (and each IROP Series A Preferred Unit may be exchanged at the option of its holder into a
number of IROP Common Units equal to 1.37931 multiplied by the Exchange Ratio, subject to the terms and conditions of the designation of preferences for the IROP Series A Preferred Units) and (iii) each partnership interest in the Company OP
designated as a “Series E Preferred Unit” (a “Series E Preferred Unit”) issued and outstanding immediately prior to the Partnership Merger Effective Time will be converted into one newly issued preferred unit of IROP designated as a “Series B
Preferred Unit” (an “IROP Series B Preferred Unit”), which will have rights, powers, duties and preferences that are substantially similar to the rights, powers, duties and preferences of the Series E Preferred Units (and each IROP Series B Preferred
Unit may be exchanged at the option of its holder into a number of IROP Common Units equal to 1.20482 multiplied by the Exchange Ratio, subject to the terms and conditions of the designation of preferences for the IROP Series B Preferred Units).
Alternative Structure. Prior to the date on which the definitive Form S-4 and joint proxy statement are filed with the Securities and Exchange Commission (the “SEC”), and subject to certain conditions being met, IRT
may elect to modify (i) the structure of the Company Merger so that Centerspace merges with and into IRT Merger Sub, with IRT Merger Sub surviving (rather than IRT Merger Sub merging with and into Centerspace), and/or (ii) the structure of the
Partnership Merger so that the Company OP merges with and into IROP, with IROP surviving (rather than IROP Merger Sub merging with and into the Company OP).
Treatment of Centerspace Equity Awards. At the Effective Time,
each outstanding and unvested restricted stock unit in respect of Centerspace Common Stock that is not subject to performance-based vesting conditions and is held by a non-employee trustee of the board of trustees of Centerspace or an employee whose
employment will terminate immediately following the Effective Time will fully vest and be canceled and converted into a number of shares of IRT Common Stock based on the Exchange Ratio, together with a cash payment in respect of accrued and unpaid
dividend equivalents. Each other outstanding and unvested restricted stock unit in respect of Centerspace Common Stock that is not subject to performance-based vesting conditions will be converted into a restricted stock unit in respect of IRT
Common Stock based on the Exchange Ratio, and will generally remain subject to the same terms and conditions, including service-based vesting terms, as applied immediately prior to the Effective Time, subject to accelerated vesting and settlement
upon certain severance-qualifying terminations of employment.
Each outstanding and unvested performance-based restricted stock unit of Centerspace will fully vest, with performance-based vesting conditions deemed
achieved at the target level, and be canceled and converted into a number of shares of IRT Common Stock based on the Exchange Ratio, together with a cash payment in respect of accrued and unpaid dividend equivalents. Each outstanding stock option
covering Centerspace Common Stock, whether vested or unvested, will be converted into a stock option covering IRT Common Stock, with the number of underlying shares and exercise price adjusted based on the Exchange Ratio, and will generally remain
subject to the same terms and conditions, including vesting and exercisability terms, as applied immediately prior to the Effective Time, except that such options will vest in full and become exercisable upon certain severance-qualifying terminations
of employment occurring within twelve months following the Effective Time. All payments and issuances in respect of Company equity awards will be subject to applicable withholding taxes.
Post-Closing Governance. The Merger Agreement provides that, at the Effective Time, IRT will cause its board of directors to include two of the individuals who are serving as independent trustees on the Centerspace board of
trustees immediately prior to the date of the Merger Agreement (the “Company Nominees”), subject to the evaluation and recommendation by the Nominating and Governance Committee of IRT’s board of directors (the “Nominating and Governance Committee”)
in its good faith discretion in accordance with such committee’s charter. If a Company Nominee initially selected and recommended by the Nominating and Governance Committee is unable or unwilling to serve, the Nominating and Governance Committee
will select and recommend another Company Nominee, provided that Centerspace notifies IRT of such change at least ten (10) business days prior to the date on which the definitive Form S-4 and joint proxy statement are filed with the SEC. IRT will
take all actions necessary to ensure that the Company Nominees who are actually included on the IRT board of directors at the Effective Time will be provided with the same benefits (including indemnification agreements and arrangements for
reimbursement of expenses) as IRT generally makes available to the other members of its board of directors.
Closing Conditions. The closing of the Merger is subject to
conditions, including: (i) adoption by holders of Centerspace Common Stock of the Merger Agreement and approval by holders of IRT Common Shares of the issuance of
shares of IRT Common Stock in the Merger; (ii) no injunction or law prohibiting the transactions contemplated by the Merger Agreement; (iii) the effectiveness of a registration statement on Form S-4 that will be filed by IRT for the issuance of
shares of IRT Common Stock in the Merger; (iv) the authorization of the listing of the shares of IRT Common Stock to be issued in the Merger on the New York Stock Exchange (the “NYSE”), subject only to official notice of issuance; (v) the accuracy of
the representations and warranties of Centerspace and IRT (subject to certain qualifications); (vi) material compliance with each party’s covenants; (vii) the
receipt by Centerspace of a tax opinion that the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and (viii) the receipt by each of Centerspace and IRT of opinions relating to the status of the other party as a real estate investment
trust (“REIT”) under the Code. In addition, IRT is not required to close until the earlier of (x) ten (10) business days after consents to the transactions contemplated by the Merger Agreement are obtained from certain of Centerspace’s
existing lenders and (y) the tenth (10th) Business Day prior to June 30, 2027.
Termination. The Merger Agreement contains provisions granting
each of Centerspace and IRT the right to terminate the Merger Agreement under specified circumstances, including: (i) if the Merger is not completed by June 30, 2027; (ii) if either IRT’s shareholders fail to approve the share issuance in connection
with the Merger or Centerspace’s shareholders fail to adopt the Merger Agreement; (iii) if a governmental entity of competent jurisdiction has issued or enacted a final and non-appealable law permanently restraining, enjoining or otherwise
prohibiting the consummation of the Merger; (iv) if the other party has breached its representations, warranties or covenants in the Merger Agreement, subject to certain conditions; (v) if the other party’s board of trustees or directors has changed
its recommendation in connection with the Merger; or (vi) in the case of Centerspace, if Centerspace, concurrently with such termination, enters into an alternative acquisition agreement in respect of a superior acquisition proposal. Upon a termination of the Merger Agreement, under certain circumstances, Centerspace will be required to pay a termination fee to IRT of $45 million. Upon a termination of the Merger Agreement, under certain circumstances, IRT will be required to
pay a termination fee to Centerspace of $60 million.
Dividends. Prior to the Effective Time and subject to the
terms and conditions of the Merger Agreement, Centerspace and IRT may pay regular quarterly cash dividends (in the case of Centerspace, not in excess of $0.77 per share of Centerspace Common Stock per quarter, and in the case of IRT, not in excess of
$0.18 per share of IRT Common Stock per quarter, except that, for the calendar quarter in which the closing date will occur, Centerspace may not pay such regular quarterly cash dividend, but instead may pay a one-time cash dividend up to an amount of
$0.09 per share of Centerspace Common Stock, prorated based on the number of days elapsed in such quarter prior to the closing date, to be paid to holders of record as of the close of business on the business day immediately preceding the closing
date and payable on the closing date). The Company OP and IROP may generally pay corresponding dividends to their respective unitholders. Additionally, the Company and IRT will each coordinate their record and payment dates for their regular
quarterly dividends to ensure that the holders of Company Common Stock do not receive more than one dividend, or fail to receive one dividend, in any calendar quarter with respect to their shares of Company Common Stock and the shares of IRT Common
Stock that such holders receive in exchange therefor in the Company Merger. For any calendar quarter in which the closing date will occur, IRT may not make, declare or set aside any dividend or other distribution to its stockholders with a record
date prior to the date that is at least one business day following the closing date, and IROP may not make, declare or set aside any dividend or other distribution to its partners with a record date prior to the date that is at least one business day
following the closing date, in each case without the prior written consent of Centerspace in its sole discretion.
Special Dividends and Adjustment to Exchange Ratio.
Centerspace and IRT have agreed that the Exchange Ratio will be adjusted if, in addition to the foregoing dividends, either party makes a dividend in order for such party to continue to qualify as a REIT under the Code and/or to avoid the incurrence
of income or excise tax (a “REIT Dividend”). Any REIT Dividend must be payable only in cash. If IRT declares a REIT Dividend with a record date on or prior to the Closing, the Exchange Ratio will be increased by an amount equal to the product of (x)
the then-applicable Exchange Ratio prior to the adjustment multiplied by (y) the quotient obtained by dividing (A) the amount of such REIT Dividend per share of IRT Common Stock by (B) the excess of $16.09 over such REIT Dividend per share of IRT
Common Stock. If the Company declares a REIT Dividend with a record date on or prior to the Closing, the Exchange Ratio will be reduced by an amount equal to the quotient obtained by dividing the amount of such REIT Dividend per share of Company
Common Stock by $16.09.
Representations, Warranties and Covenants. The Merger
Agreement contains representations and warranties from each of Centerspace and IRT. Additionally, the Merger Agreement provides for pre-closing covenants of each of Centerspace and IRT, including (i) to use commercially reasonable efforts to carry on
their respective businesses in the ordinary course consistent with past practice (subject to certain exceptions); (ii) to cooperate with respect to seeking regulatory approvals subject to specified limitations; (iii) to hold a meeting of its
shareholders to obtain the requisite shareholder approvals contemplated by the Merger Agreement, as applicable; (iv) not to solicit proposals relating to alternative business combination transactions; and (v) subject to certain exceptions, not to
enter into any discussion concerning, or provide confidential information in connection with, alternative business combination transactions.
Amendment to Limited Partnership Agreement
On September 8, 2026, Centerspace, Inc. (the “General Partner”), as the general partner of the Company OP, amended (the “LPA Amendment”) the Amended
and Restated Agreement of Limited Partnership of the Company OP (the “Partnership Agreement”) to provide for certain powers of the General Partner and to provide that the General Partner and the Company OP may engage in a merger, consolidation,
reorganization or other combination in certain circumstances, including if each holder of a partnership unit in the Company OP (excluding any partnership interest designated as a “Preferred Unit”) (other than the Company and the General Partner) will
receive, or will be given the option to receive, for each such partnership unit held by such holder consideration equal in value to the greatest consideration received in such a merger, consolidation, reorganization or other combination in respect of
one partnership unit held by the Company and the General Partner.
The foregoing descriptions of the Merger Agreement and the transactions contemplated thereby and the LPA Amendment do not purport to be complete and
are subject to and qualified in its entirety by reference to the Merger Agreement and the LPA Amendment, copies of which as attached hereto as Exhibit 2.1 and Exhibit 10.1, respectively, and which are incorporated by reference herein.
The Merger Agreement has been included to provide security holders and investors with information regarding its terms. It is not intended to provide
any other factual information about Centerspace, IRT or any other person. The representations, warranties and covenants contained in the Merger Agreement were made solely for purposes of the Merger Agreement and as of specific dates, were solely for
the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties
to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to security holders. Security holders and investors are not
third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Centerspace or IRT. Moreover,
information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in Centerspace’s or IRT’s public disclosures.
| Item 7.01 |
Regulation FD Disclosure.
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Joint Investor Presentation
IRT and Centerspace have prepared a joint investor presentation with respect to the proposed merger transaction. Directors, trustees,
officers and other representatives of IRT and/or Centerspace will present some or all of this investor presentation at various conferences and meetings in the coming months. A copy of the investor presentation is furnished as Exhibit 99.1 hereto
and is incorporated into this Item 7.01 by reference. The investor presentation shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
otherwise subject to the liabilities of that Section. The information in this Item 7.01, including Exhibit 99.1, shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or
the Exchange Act regardless of any general incorporation language in the filing.
Joint Press Release
On September 9, 2026, IRT and Centerspace issued a joint press release announcing the execution of the Merger Agreement. A copy of the
press release is furnished as Exhibit 99.2 hereto and is incorporated into this Item 7.01 by reference. The press release shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Exchange Act or otherwise subject
to the liabilities of that Section. The information in this Item 7.01, including Exhibit 99.2, shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act regardless of any general incorporation
language in the filing.
Cautionary Statement Regarding Forward-Looking Information
The information contained or incorporated by reference into this Current Report on Form 8-K may contain certain forward-looking statements, within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act, including, but not limited to, certain plans, expectations, goals, projections, and statements about the benefits of the proposed transaction, the plans, objectives, expectations and
intentions of Centerspace and IRT, the expected timing of completion of the proposed transaction, and other statements that are not historical facts. Such statements are subject to numerous assumptions, risks, estimates, uncertainties and other
important factors that change over time and could cause actual results to differ materially from any results, performance, or events expressed or implied by such forward-looking statements, including as a result of the factors referenced below.
Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Forward-looking statements are typically identified by the use of terms
such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “assumes,” “may,” “projects,” “outlook,” “future,” and variations of those words and similar expressions. These forward-looking statements involve known
and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial condition, or plans expressed or implied by the forward-looking
statements. Although we believe the expectations reflected in these forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be achieved. Any statements contained herein that are not
statements of historical fact should be deemed forward-looking statements. As a result, undue reliance should not be placed on these forward-looking statements, as these statements are subject to known and unknown risks, uncertainties, and other
factors beyond our control and could differ materially from actual results and performance.
The forward-looking statements in this filing are not guarantees of future performance and involve a number of known and unknown risks, uncertainties and assumptions that
are difficult to assess and are subject to change based on factors which are, in many instances, beyond Centerspace’s and IRT’s control.
The following factors, among others, could cause our future results to differ materially from those expressed in the forward-looking statements:
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IRT’s and Centerspace’s ability to complete the transaction on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the
necessary stockholder approvals and satisfaction of other closing conditions to consummate the transaction;
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the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the Merger Agreement between Centerspace and
IRT;
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the outcome of any legal proceedings that may be instituted against Centerspace or IRT;
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delays in completing the proposed transaction involving Centerspace and IRT;
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the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the
integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Centerspace and IRT do business;
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the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events;
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the ability of Centerspace and IRT to meet expectations regarding the timing, completion and accounting and tax treatment of the transaction;
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diversion of IRT’s and Centerspace’s management’s attention from ongoing business operations and opportunities;
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potential adverse reactions or changes to business, customer or employee relationships, including those resulting from the announcement or completion of the transaction;
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the ability to complete the transaction and integration of Centerspace and IRT successfully;
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the dilution caused by IRT’s issuance of additional shares of its capital stock in connection with the transaction;
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financing risks, including IRT’s and Centerspace’s potential inability to meet existing covenants in IRT’s and Centerspace’s existing credit facilities or to obtain new debt or
equity financing on favorable terms, or at all;
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uncertain global macro-economic and political conditions, the impact of actual or threatened wars or other international conflicts, such as in Ukraine, the Middle East, and South
America, including sanctions imposed by the U.S. and other countries, on inflation, trade, and general economic conditions;
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deteriorating economic conditions and rising unemployment rates, energy costs, and inflation, in the markets where we own apartment communities or in which we may invest in the
future;
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rental conditions in IRT’s and Centerspace’s markets, including occupancy levels and rental rates, IRT’s and Centerspace’s potential inability to renew residents or obtain new
residents upon expiration of existing leases, IRT’s and Centerspace’s ability to identify and consummate attractive acquisitions and dispositions on favorable terms, IRT’s and Centerspace’s ability to reinvest sales proceeds successfully,
IRT’s and Centerspace’s inability to accommodate any significant decline in the market value of real estate serving as collateral for IRT’s and Centerspace’s debt and mortgage obligations; changes in tax and housing laws, including rent
control laws, or other factors;
|
| • |
timely access to material and labor required to renovate and maintain apartment communities;
|
| • |
adverse changes in IRT’s and Centerspace’s markets, including future demand for apartment homes in those markets, barriers of entry into new markets, limitations on IRT’s and
Centerspace’s ability to increase rental rates, IRT’s and Centerspace’s ability to identify and consummate attractive acquisitions and dispositions on favorable terms, IRT’s and Centerspace’s ability to reinvest sales proceeds successfully,
and inability to accommodate any significant decline in market value of real estate serving as collateral for IRT’s and Centerspace’s debt and mortgage obligations;
|
| • |
the ability of Centerspace to complete its proposed dispositions on a timely basis, or at all and risks that Centerspace’s recently completed or proposed dispositions disrupt current
plans and operations; and
|
| • |
other factors that may affect the future results of Centerspace and IRT.
|
Additional factors that could cause results to differ materially from those described above can be found in Centerspace’s Annual Report on Form 10-K for the year ended
December 31, 2025 and in its subsequent Quarterly Reports on Form 10-Q, including for the quarter ended June 30, 2026, each of which is on file with the SEC and available on the “Investor Relations” section of Centerspace’s website,
www.centerspacehomes.com, under the heading “Investors” and in other documents Centerspace files with the SEC, and in IRT’s Annual Report on Form 10-K for the year ended December 31, 2025 and in its subsequent Quarterly Reports on Form 10-Q,
including for the quarter ended June 30, 2026, each of which is on file with the SEC and available on IRT’s website, www.irtliving.com, under the heading “Investors” and in other documents IRT files with the SEC.
All forward-looking statements are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the date
they are made and are based on information available at that time. Neither Centerspace nor IRT assume any obligation to update forward-looking statements to reflect actual results, new information or future events, changes in assumptions or changes
in circumstances or other factors affecting forward-looking statements that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. If
Centerspace or IRT updates one or more forward-looking statements, no inference should be drawn that Centerspace or IRT will make additional updates with respect to those or other forward-looking statements. As forward-looking statements involve
significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
Important Additional Information about the Proposed Transaction and Where to Find It
In connection with the proposed transaction, IRT will file with the SEC a registration statement on Form S-4 that will include a joint proxy statement of Centerspace and
IRT and a prospectus of IRT, as well as other relevant documents concerning the proposed transaction. The proposed transaction involving Centerspace and IRT will be submitted to Centerspace’s shareholders and IRT’s shareholders for their
consideration. This filing does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. INVESTORS, SHAREHOLDERS OF CENTERSPACE AND STOCKHOLDERS OF IRT ARE URGED TO READ THE REGISTRATION STATEMENT AND THE
JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and stockholders will be able to obtain the registration statement and the definitive joint proxy statement/prospectus free of charge from the SEC’s website or from Centerspace or IRT. The documents filed by Centerspace with the SEC may be
obtained free of charge at Centerspace’s website at www.centerspacehomes.com or at the SEC’s website at www.sec.gov. The documents filed by IRT with the SEC may be obtained free of charge at IRT’s website at www.irtliving.com or at the SEC’s website
at www.sec.gov. References to either of IRT’s or CSR’s websites do not constitute incorporation by reference of the information contained on the websites and is not, and should not be, deemed part of this filing.
Participants in the Solicitation
Centerspace, IRT, and certain of their respective trustees or directors, as applicable, and executive officers may be deemed to be participants in the solicitation of
proxies from the shareholders of Centerspace and stockholders of IRT in connection with the proposed transaction. Information regarding the interests of the trustees or directors, as applicable, and executive officers of Centerspace and IRT and
other persons who may be deemed to be participants in the solicitation of shareholders of Centerspace and IRT in connection with the transaction and a description of their direct and indirect interests, by security holdings or otherwise, will be
included in the definitive joint proxy statement/prospectus related to the transaction, which will be filed by Centerspace with the SEC. Information regarding Centerspace’s trustees and executive officers is available in its definitive joint proxy
statement relating to its 2026 Annual Meeting of Shareholders, which was filed with the SEC on April 3, 2026, and other documents filed by Centerspace with the SEC. Information regarding IRT’s directors and executive officers is available in its
definitive proxy statement relating to its 2026 Annual Meeting of Stockholders, which was filed with the SEC on March 19, 2026, and other documents filed by IRT with the SEC. Other information regarding the participants in the proxy solicitation and
a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC by Centerspace and IRT, respectively. Free copies of
these documents may be obtained as described above under “Important Additional Information.”
| Item 9.01 |
Financial Statements and Exhibits.
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(d) Exhibits.
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Exhibit
No.
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Description
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|
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2.1
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Agreement and Plan of Merger, dated September 8, 2026, among Independence Realty Trust, Inc., Independence Realty Operating Partnership, LP, Islanders Sub, LLC,
Islanders OP Sub, LLC, Centerspace and Centerspace, LP.†
|
|
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10.1
|
Third Amendment to Amended and Restated Agreement of Limited Partnership of Centerspace, LP, dated September 8, 2026.
|
|
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99.1
|
Joint Investor Presentation, dated September 9, 2026.
|
|
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99.2
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Joint Press Release, dated September 9, 2026.
|
|
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104
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
† Schedules (or similar attachments) have been omitted pursuant to Item
601(a)(5) of Regulation S-K. Centerspace hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the Securities and Exchange Commission.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of l934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
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Centerspace
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||
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By:
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/s/ Anne Olson
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|
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Anne Olson
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||
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Date: September 9, 2026
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President and Chief Executive Officer
|
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Exhibit 99.1
Exhibit 99.2
 |
 |
PRESS RELEASE
September 9, 2026
Independence Realty Trust and Centerspace to Merge in $8.1 Billion Combination
Creating a leading middle-market apartment REIT with greater scale, broader geographic diversification, and an expanded value-add growth pipeline — positioned to deliver attractive risk-adjusted returns with no
additional leverage.
Transaction Highlights
| ● |
Creates a leading public residential REIT with a pro forma equity market capitalization of approximately $5.0 billion and an enterprise value of approximately $8.1 billion, with more than 44,000 apartment units in the combined portfolio
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| ● |
Increases geographic diversification across high-growth markets, with 58% of pro forma NOI derived from Sunbelt markets, 27% from Midwest markets, and 15% from Mountain West markets
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| ● |
Expands margins by scaling proven operational initiatives and innovations — including technology, new Wi-Fi revenue streams, and broader value-add initiatives — across a larger portfolio
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| ● |
Accretive to both IRT and Centerspace stockholders with estimated uplift of approximately 5% to 2027 Core FFO per share, supported by approximately $24 million of annualized synergies
|
| ● |
Increases market capitalization and free float by 28% and 27% to $5.0 billion and $4.8 billion, respectively, resulting in an increased weighting within the MSCI US REIT Index, FTSE NAREIT All Equity REITs Index, S&P MidCap 400
Index, and other related benchmarks
|
PHILADELPHIA, PA and MINNEAPOLIS, MN (September 9, 2026) — Independence Realty Trust, Inc. (NYSE: IRT) (“IRT”) and Centerspace (NYSE: CSR) (“Centerspace”) today announced that they have entered into a definitive merger agreement under which
Centerspace and IRT will combine in an all-stock transaction, creating a leading middle-market multifamily REIT focused on high-growth, non-gateway markets. The combined company is expected to have a pro forma equity market capitalization of
approximately $5.0 billion and a total enterprise value of approximately $8.1 billion.
Scott Schaeffer, Chairman and CEO of IRT, said, “We are excited to bring together two highly complementary portfolios in a transaction that strengthens the growth profile of the combined company. By pairing our high-growth Sunbelt portfolio —
which remains our largest exposure and primary growth engine — with Centerspace’s stable Midwest and recovering Mountain West communities, we are building a platform in markets that have historically delivered above-average NOI growth with lower
volatility. We expect the added scale to compound that advantage: greater efficiency across a larger operating base, and an expanded value-add renovation program and other income initiatives across a larger platform.”
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|
Anne Olson, President and CEO of Centerspace, stated, “This transaction delivers compelling value for Centerspace shareholders, who will benefit from participation in a larger, more efficient enterprise with enhanced access to capital markets,
and a meaningful reduction in leverage. Our complementary portfolio of high-quality Midwest and Mountain West apartment communities is located in markets experiencing accelerating migration and strong employment growth — this is a natural fit with
IRT’s scaled operating platform and proven value creation strategies. We are excited for our shareholders to participate in the long-term upside of the combined company.”
Under the terms of the merger agreement, which has been unanimously approved by the Board of Directors of both IRT and Centerspace, Centerspace shareholders will receive 3.800 shares of IRT common stock for each share of Centerspace common stock
owned and holders of common units in Centerspace’s operating partnership will receive 3.800 common units in IRT’s operating partnership, subject to certain adjustments. This will result in the aggregate issuance of approximately 67.6 million IRT
shares and common partnership units. At closing, IRT will assume Centerspace’s outstanding preferred units. Upon closing, IRT stockholders will own approximately 78% and Centerspace shareholders will own approximately 22% of the combined company’s
equity on a fully diluted basis, excluding preferred units.
The transaction is expected to close as early as the end of the fourth quarter of 2026, subject to approval by each of IRT’s stockholders and Centerspace’s shareholders, the timing of lender consents, and satisfaction of other customary closing
conditions. The transaction is expected to qualify as a tax-free reorganization for U.S. federal income tax purposes.
Summary of Strategic Rationale
The merger of IRT and Centerspace is expected to create a number of operational and financial benefits, including:
| ● |
Enhanced Portfolio Diversification Across High-Growth Markets: The transaction will strengthen IRT’s diversification across
Sunbelt, Midwest, and Mountain West markets demonstrating outsized population and employment growth trends. The combined company will own and operate 163 multifamily communities across 17 states, with 58% of pro forma NOI derived from
Sunbelt markets, 27% from Midwest markets, and 15% from Mountain West markets. Approximately 80% of pro forma NOI is derived from markets with top-quartile projected population growth. Importantly, the combined portfolio is expected to
deliver above-average NOI growth with lower volatility compared with the U.S. average. The combination maintains IRT’s high-growth Sunbelt focus, while adding low-volatility Midwest and Mountain West markets, where there is strong
population-driven growth in demand.
|
|
|
| ● |
Greater Scale Delivers Value Across Portfolio: The transaction will create a leading publicly traded multifamily REIT with a
combined portfolio of 44,354 units. The combined company is expected to be well-positioned to increase cash flow at the property level due to economies of scale. Further, the combined company’s larger operating base is expected to support
IRT’s ongoing efforts to retain top talent and increase brand recognition in the multifamily sector.
|
| ● |
Expanded Value-Add Pipeline Leading to Significant Organic Growth: The combined company is expected to have an expanded
pipeline of units available for future redevelopment through IRT’s proven and robust value-add program, which has generated historical return on investment of approximately 16%. In addition, the rollout of IRT’s Wi-Fi initiative across
the Centerspace portfolio is expected to enable IRT to deliver greater NOI and earnings growth over time.
|
| ● |
Unlocking Synergies and Operational Savings: The combination of IRT and Centerspace will create a stronger and more
competitive operating platform through the integration of best practices from both companies. Annualized synergies are estimated to be approximately $24 million. In addition, through enhanced scale and leveraging of the combined company’s
technology and operating systems, the combined company is expected to capture additional operational synergies. These enhancements are expected to be realized upon full integration, which is expected to occur over the 12-month period
following the closing of the merger.
|
| ● |
Immediately Accretive: The transaction is expected to be approximately 5% accretive to IRT’s 2027 Core FFO per share on a
leverage neutral basis.
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| ● |
Increased Free Float and Improved Trading Liquidity: The combined company’s enhanced equity market capitalization and free
float are expected to result in increased weighting within the MSCI US REIT Index, FTSE NAREIT All Equity REITs Index, S&P MidCap 400 Index, and other related benchmarks. The combined company is expected to have increased average
daily trading volume, enhancing institutional accessibility and index-tracking efficiency.
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| ● |
Robust Financial Strength and Improved Flexibility: The combined company is expected to retain its investment grade credit
ratings of BBB/BBB (S&P/Fitch) and a well-laddered debt maturity profile. The enhanced scale is expected to further improve IRT’s access to capital markets and lower its cost of capital over the long term, with the combined company
benefitting from an expanded investor base through enhanced trading liquidity. In addition, the combined company is expected to benefit from improved cost efficiencies, with pro forma G&A load as a percentage of assets ratio of 0.37%
— reflecting a reduction of 24% and 57% over stand-alone IRT and Centerspace, respectively.
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|
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| ● |
Continued Commitment to Responsible Governance Practices: The combined company will have an expanded independent board
majority and will continue to advance energy efficiency and sustainability initiatives across the portfolio.
|
Leadership and Organization
IRT’s management team will continue to lead the combined company. Scott Schaeffer will serve as Chairman and Chief Executive Officer, and James Sebra will serve as President and Chief Financial Officer. Upon completion of the merger, the Board
of Directors of IRT will be expanded to 11 members, including nine directors from IRT and two directors from Centerspace. Corporate headquarters will remain in Philadelphia, PA.
The combined company will retain the Independence Realty Trust name and will continue to trade under the ticker symbol “IRT” on the New York Stock Exchange.
Dividend Policy
IRT currently expects to continue to pay its quarterly dividend of $0.18 per share of common stock following the closing. Both companies intend to maintain regular quarterly dividend payments through completion of the transaction, except that,
in the quarter in which the closing occurs, Centerspace will declare and pay a stub cash dividend of $0.09, prorated for the number of days elapsed in such quarter prior to closing.
Advisors
RBC Capital Markets and Rothschild & Co. are acting as financial advisors and Troutman Pepper Locke LLP is acting as legal advisor to IRT. BMO Capital Markets Corp. is acting as financial advisor, and Wachtell, Lipton, Rosen & Katz is
acting as legal advisor to Centerspace.
Conference Call and Webcast
IRT and Centerspace will host a joint investor conference call on September 9, 2026 at 9:00 AM ET. Interested parties can join the live webcast by accessing the Investor Relations section of IRT’s website at www.irtliving.com or by dialing
1.833.461.5787, access code 674326343.
For those who are not available to listen, a replay will be available shortly following the call from the Investor section of IRT’s website, https://investors.irtliving.com.
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|
About Independence Realty Trust
Independence Realty Trust, Inc. (NYSE: IRT), an S&P MidCap 400 Company, is a real estate investment trust (“REIT”) that owns and operates multifamily communities across non-gateway U.S. markets. 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’s main investment objective is to provide attractive risk-adjusted returns to shareholders 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.
About Centerspace
Centerspace (NYSE: CSR) is an owner and operator of apartment communities committed to providing great homes by focusing on integrity and serving others. Founded in 1970, as of September 9, 2026, Centerspace owned 47 apartment communities
consisting of 10,456 units located in Colorado, Minnesota, Montana, Nebraska, North Dakota, and Utah. Centerspace was named a Top Workplace in 2026 by USA Today and for the seventh consecutive year in 2026 by the Minnesota Star Tribune. For more
information, please visit www.centerspacehomes.com.
IRT Investor Relations Contact
Stephanie Krewson-Kelly
267.270.4815
SKrewson@IRTLiving.com
Cautionary Statement Regarding Forward-Looking Information
The information contained or incorporated by reference into this press release may contain certain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including, but not limited to, certain plans, expectations, goals, projections, and statements about the benefits of the proposed transaction, the plans, objectives, expectations
and intentions of Centerspace and IRT, the expected timing of completion of the proposed transaction, and other statements that are not historical facts. Such statements are subject to numerous assumptions, risks, estimates, uncertainties and
other important factors that change over time and could cause actual results to differ materially from any results, performance, or events expressed or implied by such forward-looking statements, including as a result of the factors referenced
below. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Forward-looking statements are typically identified by the use
of terms such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “assumes,” “may,” “projects,” “outlook,” “future,” and variations of those words and similar expressions. These forward-looking statements
involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial condition, or plans expressed or implied by the
forward-looking statements. Although we believe the expectations reflected in these forward-looking statements are based upon reasonable assumptions, we can give no assurance that IRT’s and Centerspace’s expectations will be achieved. Any
statements contained herein that are not statements of historical fact should be deemed forward-looking statements. As a result, undue reliance should not be placed on these forward-looking statements, as these statements are subject to known and
unknown risks, uncertainties, and other factors beyond IRT’s and Centerspace’s control and could differ materially from actual results and performance.
|
|
The forward-looking statements in this filing are not guarantees of future performance and involve a number of known and unknown risks, uncertainties and assumptions that are difficult to assess and are subject to change based on factors which
are, in many instances, beyond Centerspace’s and IRT’s control.
The following factors, among others, could cause IRT’s and Centerspace’s future results to differ materially from those expressed in the forward-looking statements:
| ● |
IRT’s and Centerspace’s ability to complete the transaction on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary stockholder approvals and satisfaction of
other closing conditions to consummate the transaction;
|
| ● |
the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement between Centerspace and IRT;
|
| ● |
the outcome of any legal proceedings that may be instituted against Centerspace or IRT;
|
| ● |
delays in completing the proposed transaction involving Centerspace and IRT;
|
| ● |
the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the
strength of the economy and competitive factors in the areas where Centerspace and IRT do business;
|
| ● |
the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events;
|
| ● |
the ability of Centerspace and IRT to meet expectations regarding the timing, completion and accounting and tax treatment of the transaction;
|
| ● |
diversion of IRT’s and Centerspace’s management’s attention from ongoing business operations and opportunities;
|
| ● |
potential adverse reactions or changes to business, customer or employee relationships, including those resulting from the announcement or completion of the transaction;
|
| ● |
the ability to complete the transaction and integration of Centerspace and IRT successfully;
|
| ● |
the dilution caused by IRT’s issuance of additional shares of its capital stock in connection with the transaction;
|
|
|
| ● |
financing risks, including IRT’s and Centerspace’s potential inability to meet existing covenants in IRT’s and Centerspace’s existing credit facilities or to obtain new debt or equity financing on favorable terms, or at all;
|
| ● |
uncertain global macro-economic and political conditions, the impact of actual or threatened wars or other international conflicts, such as in Ukraine, the Middle East, and South America, including sanctions imposed by the U.S. and other
countries, on inflation, trade, and general economic conditions;
|
| ● |
deteriorating economic conditions and rising unemployment rates, energy costs, and inflation, in the markets where we own apartment communities or in which we may invest in the future;
|
| ● |
rental conditions in IRT’s and Centerspace’s markets, including occupancy levels and rental rates, IRT’s and Centerspace’s potential inability to renew residents or obtain new residents upon expiration of existing leases, IRT’s and
Centerspace’s ability to identify and consummate attractive acquisitions and dispositions on favorable terms, IRT’s and Centerspace’s ability to reinvest sales proceeds successfully, IRT’s and Centerspace’s inability to accommodate any
significant decline in the market value of real estate serving as collateral for IRT’s and Centerspace’s debt and mortgage obligations; changes in tax and housing laws, including rent control laws, or other factors;
|
| ● |
timely access to material and labor required to renovate and maintain apartment communities;
|
| ● |
adverse changes in IRT’s and Centerspace’s markets, including future demand for apartment homes in those markets, barriers of entry into new markets, limitations on IRT’s and Centerspace’s ability to increase rental rates, IRT’s and
Centerspace’s ability to identify and consummate attractive acquisitions and dispositions on favorable terms, IRT’s and Centerspace’s ability to reinvest sales proceeds successfully, and inability to accommodate any significant decline in
market value of real estate serving as collateral for IRT’s and Centerspace’s debt and mortgage obligations;
|
| ● |
the ability of Centerspace to complete its proposed dispositions on a timely basis, or at all;
|
| ● |
risks that Centerspace’s recently completed or proposed dispositions disrupt current plans and operations; and
|
| ● |
other factors that may affect the future results of Centerspace and IRT.
|
Additional factors that could cause results to differ materially from those described above can be found in Centerspace’s Annual Report on Form 10-K for the year ended December 31, 2025 and in its subsequent Quarterly Reports on Form 10-Q,
including for the quarter ended June 30, 2026, each of which is on file with the Securities and Exchange Commission (the “SEC”) and available on the “Investor Relations” section of Centerspace’s website, www.centerspacehomes.com, under the heading
“Investors” and in other documents Centerspace files with the SEC, and in IRT’s Annual Report on Form 10-K for the year ended December 31, 2025 and in its subsequent Quarterly Reports on Form 10-Q, including for the quarter ended June 30, 2026,
each of which is on file with the SEC and available on IRT’s website, www.irtliving.com, under the heading “Investors” and in other documents IRT files with the SEC.
|
|
All forward-looking statements are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the date they are made and are based on information available at that time.
Neither Centerspace nor IRT assume any obligation to update forward-looking statements to reflect actual results, new information or future events, changes in assumptions or changes in circumstances or other factors affecting forward-looking
statements that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. If Centerspace or IRT updates one or more forward-looking statements,
no inference should be drawn that Centerspace or IRT will make additional updates with respect to those or other forward-looking statements. As forward-looking statements involve significant risks and uncertainties, caution should be exercised
against placing undue reliance on such statements.
Important Additional Information about the Proposed Transaction and Where to Find It
In connection with the proposed transaction, IRT will file with the SEC a registration statement on Form S-4 that will include a joint proxy statement of Centerspace and IRT and a prospectus of IRT, as well as other
relevant documents concerning the proposed transaction. The proposed transaction involving Centerspace and IRT will be submitted to Centerspace’s shareholders and IRT’s shareholders for their consideration. This filing does not constitute an
offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such jurisdiction. INVESTORS, SHAREHOLDERS OF CENTERSPACE AND STOCKHOLDERS OF IRT ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE
TRANSACTION WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and stockholders will be able to
obtain the registration statement and the definitive joint proxy statement/prospectus free of charge from the SEC’s website or from Centerspace or IRT. The documents filed by Centerspace with the SEC may be obtained free of charge at Centerspace’s
website at www.centerspacehomes.com or at the SEC’s website at www.sec.gov. The documents filed by IRT with the SEC may be obtained free of charge at IRT’s website at www.irtliving.com or at the SEC’s website at www.sec.gov.
|
|
Participants in the Solicitation
Centerspace, IRT, and certain of their respective trustees or directors, as applicable, and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Centerspace and stockholders of IRT in
connection with the proposed transaction. Information regarding the interests of the trustees or directors, as applicable, and executive officers of Centerspace and IRT and other persons who may be deemed to be participants in the solicitation of
shareholders of Centerspace and IRT in connection with the transaction and a description of their direct and indirect interests, by security holdings or otherwise, will be included in the definitive joint proxy statement/prospectus related to the
transaction, which will be filed by Centerspace with the SEC. Information regarding Centerspace’s trustees and executive officers is available in its definitive joint proxy statement relating to its 2026 Annual Meeting of Shareholders, which was
filed with the SEC on April 3, 2026, and other documents filed by Centerspace with the SEC. Information regarding IRT’s directors and executive officers is available in its definitive proxy statement relating to its 2026 Annual Meeting of
Stockholders, which was filed with the SEC on March 19, 2026, and other documents filed by IRT with the SEC. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC by Centerspace and IRT, respectively. Free copies of these documents may be obtained as described above under
“Important Additional Information.”
No Offer or Solicitation
This filing shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of
1933, as amended.
Definitions
EBITDA and Adjusted EBITDA
Each of EBITDA and Adjusted EBITDA is a non-GAAP financial measure. 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 loss on impairment (gain on sale) of real estate, debt extinguishments and acquisition related debt extinguishment expenses, casualty
(gains) losses and income (loss) from investments in unconsolidated real estate entities. We consider 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 non-operating gains and losses, which permits investors to view income from operations without these non-cash or non-operating items. Our calculation of Adjusted EBITDA differs from the
methodology used for calculating Adjusted EBITDA by certain other REITs and, accordingly, our Adjusted EBITDA may not be comparable to Adjusted EBITDA reported by other REITs.
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|
Funds From Operations (“FFO”) and Core Funds From Operations (“Core FFO”)
We believe that FFO and Core FFO, 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, loss on impairment (gain on
sale) of real estate and unconsolidated real estate entities, 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.
Core FFO 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 Core FFO may differ from the methodology used for calculating Core FFO by other REITs and, accordingly, our Core FFO may not be comparable to Core FFO reported by other REITs. Our management utilizes FFO and Core FFO as
measures of our operating performance, management believes 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, Core FFO and other supplemental performance measures are defined in various ways
throughout the REIT industry, we believe that FFO and Core FFO may provide us and our investors with an additional useful measure to compare our financial performance to certain other REITs. Neither FFO nor Core FFO is equivalent to net income or
cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and Core FFO 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 Core FFO do not measure whether cash flow is sufficient to fund all of our cash needs, including principal amortization and capital improvements. Neither FFO nor Core FFO
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.
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General and Administrative Expense Load (“G&A Load”)
G&A load is defined as general and administrative expenses plus property management expenses less an estimate of normalized property management expenses (3% of revenue) divided by total assets, where total assets is calculated by dividing
forward 12-month NOI by an applicable capitalization rate.
Net Operating Income (“NOI”)
We believe that NOI, a non-GAAP financial measure, is a useful measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding interest expense, depreciation and amortization,
casualty related costs and gains, property management expenses, general and administrative 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. 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 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.
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.
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.
Rent Premium on Value-Add Renovations
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. We believe excluding the impact of upfront concessions from our rental rates when comparing to the market rental rates for unrenovated units makes the comparison most
relevant and the resulting premium provides management with an indicator of the increased rent generated by the unit renovation.
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Renovation Costs per Unit
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.
Return on Investment (“ROI”) on Value-Add Renovations
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. We use ROI on value-add renovation projects to measure the
profitability of a renovation project relative to other projects or relative to other uses of our capital.