Independence Realty Trust Q3 net income rises to $25.7M
Centerspace common shareholders would receive 3.800 newly issued IRT shares each, subject to required approvals and other closing conditions.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Independence Realty Trust, Inc. (IRT) reported third-quarter 2026 revenue of $172.1 million and net income of $25.7 million, versus $167.1 million and $7.0 million a year earlier. Diluted earnings per share were $0.11, compared with $0.03. Results included a $26.5 million gain on a real estate sale and $6.2 million of merger and integration costs.
IRT’s proposed merger with Centerspace would convert each outstanding Centerspace common share into 3.800 newly issued IRT shares, with cash in lieu of fractional shares. The transaction is subject to customary closing conditions, including approval by IRT stockholders and Centerspace shareholders; IRT currently expects closing as early as the end of the fourth quarter of 2026. IRT will be the accounting acquiror under the acquisition method.
As of September 30, 2026, IRT owned and operated 115 multifamily properties with 33,398 units, and portfolio occupancy was 94.9%. During the first nine months of 2026, it repurchased and retired 1,839,460 shares at a weighted-average price of $16.24. The board declared a $0.18-per-share dividend, a 5.9% increase over the prior quarterly rate of $0.17, paid October 23, 2026.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter net income was $25.7 million, versus $7.0 million a year earlier.
- Minor pointThe quarterly dividend increased 5.9% to $0.18 per share.
Negative
- None.
Filing Explained
The merger remains pending, and this 10-Q also describes its partnership-level terms: Centerspace operating-partnership Series D and E preferred units would convert into IRT partnership Series A and B units, exchangeable by holders for common units at 1.37931 or 1.20482 times the 3.800 exchange ratio, respectively.
Key Figures
Key Terms
acquisition method financial
equity method of accounting financial
cash flow hedges financial
weighted average effective rate financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much did IRT earn in the third quarter of 2026?
What is the exchange ratio in the proposed IRT-Centerspace merger?
How many shares did IRT repurchase in 2026?
How would Centerspace operating partnership units be treated in the merger?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
|
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________ to _________
Commission file number
INDEPENDENCE REALTY TRUST, INC.
(Exact Name of Registrant as Specified in Its Charter) |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
|
|
(Address of Principal Executive Offices) | (Zip Code) |
(
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
|
|
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Table of Contents
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ |
| Accelerated filer | ☐ | |
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Non-Accelerated filer | ☐ |
| Smaller reporting company | |
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Emerging growth company |
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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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of October 28, 2026 there were
|
Table of Contents
INDEPENDENCE REALTY TRUST, INC.
INDEX
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Page |
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PART I—FINANCIAL INFORMATION |
3 |
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Item 1. |
Financial Statements (unaudited) |
3 |
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Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025 |
3 |
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Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2026 and September 30, 2025 |
4 |
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Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months ended September 30, 2026 and September 30, 2025 |
5 |
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Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months ended September 30, 2026 and September 30, 2025 |
6 |
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Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2026 and September 30, 2025 |
8 |
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Notes to Condensed Consolidated Financial Statements as of September 30, 2026 |
9 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
28 |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
42 |
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Item 4. |
Controls and Procedures |
42 |
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PART II—OTHER INFORMATION |
43 |
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Item 1. |
Legal Proceedings |
43 |
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Item 1A. |
Risk Factors |
44 |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
55 |
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Item 3. |
Defaults Upon Senior Securities |
55 |
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Item 4. |
Mine Safety Disclosures |
55 |
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Item 5. |
Other Information |
55 |
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Item 6. |
Exhibits |
56 |
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Signatures |
57 |
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Table of Contents
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Independence Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited and dollars in thousands, except share and per share data)
|
| As of |
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| As of |
| ||
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| September 30, 2026 |
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| December 31, 2025 |
| ||
ASSETS: |
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Investments in real estate: |
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Investments in real estate, at cost |
| $ |
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| $ |
| ||
Accumulated depreciation |
|
| ( | ) |
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| ( | ) |
Investments in real estate, net |
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Real estate held for sale |
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Investments in real estate under development |
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Cash and cash equivalents |
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Restricted cash |
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Investments in unconsolidated real estate entities |
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Other assets |
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Derivative assets |
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Intangible assets, net of accumulated amortization of $586 and $3,257, respectively |
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Total Assets |
| $ |
|
| $ |
| ||
LIABILITIES AND EQUITY: |
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| |
Indebtedness, net |
| $ |
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| $ |
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Accounts payable and accrued expenses |
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Accrued interest payable |
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Dividends payable |
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Derivative liabilities |
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Other liabilities |
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Total Liabilities |
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Equity: |
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Stockholders’ equity: |
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Preferred stock, $0.01 par value; 50,000,000 shares authorized, 0 and 0 shares issued and outstanding, respectively |
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Common stock, $0.01 par value; 500,000,000 shares authorized, 235,723,073 and 237,234,750 shares issued and outstanding, including 405,665 and 382,337 unvested restricted common share awards, respectively |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
|
| ( | ) |
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| ( | ) |
Total stockholders’ equity |
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Noncontrolling interests |
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Total Equity |
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Total Liabilities and Equity |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited and dollars in thousands, except share and per share data)
|
| For the Three Months Ended |
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| For the Nine Months Ended |
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| September 30, |
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| September 30, |
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| 2026 |
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| 2025 |
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| 2026 |
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| 2025 |
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REVENUE: |
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Rental and other property revenue |
| $ |
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| $ |
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| $ |
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| $ |
| ||||
Other revenue |
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Total revenue |
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EXPENSES: |
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Property operating expenses |
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Property management expenses |
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General and administrative expenses |
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Depreciation and amortization expense |
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Casualty losses, net |
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Total expenses |
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Interest expense |
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| ( | ) |
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| ( | ) |
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| ( | ) |
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| ( | ) |
Gain on sale (loss on impairment) of real estate assets, net |
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| ( | ) |
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| ( | ) | ||
Loss on extinguishment of debt |
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| ( | ) | |||
Merger and integration costs |
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| ( | ) |
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| ( | ) |
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Other loss |
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| ( | ) |
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| ( | ) |
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| ( | ) |
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| ( | ) |
(Loss) income from unconsolidated real estate entities |
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| ( | ) |
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| ( | ) |
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Net income: |
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Income allocated to noncontrolling interest |
|
| ( | ) |
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| ( | ) |
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| ( | ) |
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| ( | ) |
Net income allocable to common shares |
| $ |
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| $ |
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| $ |
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| $ |
| ||||
Earnings per share: |
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Basic |
| $ |
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| $ |
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| $ |
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| $ |
| ||||
Diluted |
| $ |
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| $ |
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| $ |
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| $ |
| ||||
Weighted-average shares: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited and dollars in thousands)
|
| For the Three Months Ended |
|
| For the Nine Months Ended |
| ||||||||||
|
| September 30, |
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| September 30, |
| ||||||||||
|
| 2026 |
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| 2025 |
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| 2026 |
|
| 2025 |
| ||||
Net income |
| $ |
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| $ |
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| $ |
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| $ |
| ||||
Other comprehensive income (loss): |
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Change in fair value of interest rate hedges |
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| ( | ) | |||
Realized gains on interest rate hedges reclassified to earnings |
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| ( | ) |
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| ( | ) |
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| ( | ) |
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| ( | ) |
Total other comprehensive income (loss) |
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| ( | ) |
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Comprehensive income before allocation to noncontrolling interests |
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Allocation to noncontrolling interests |
|
| ( | ) |
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| ( | ) |
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| ( | ) |
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| |
Comprehensive income |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Equity
(Unaudited and dollars in thousands, except share and per share data)
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| Accumulated |
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| Retained |
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| Par Value |
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| Additional |
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| Other |
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| Earnings |
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| Total |
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| Common |
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| Common |
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| Paid In |
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| Comprehensive |
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| (Accumulated |
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| Stockholders’ |
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| Noncontrolling |
|
| Total |
| ||||||||
|
| Shares |
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| Shares |
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| Capital |
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| Income (Loss) |
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| Deficit) |
|
| Equity |
|
| Interests |
|
| Equity |
| ||||||||
Balance, December 31, 2025 |
|
|
|
| $ |
|
| $ |
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| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
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| $ |
| |||||||
Net loss |
|
| — |
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| ( | ) |
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| ( | ) |
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| ( | ) |
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| ( | ) | |||
Common dividends declared ($0.17 per share) |
|
| — |
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| ( | ) |
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| ( | ) |
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| ( | ) | ||||
Other comprehensive income |
|
| — |
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Stock compensation |
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Repurchase of shares related to equity award tax withholding |
|
| ( | ) |
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| ( | ) |
|
| ( | ) |
|
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| ( | ) |
|
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| ( | ) | |||
Repurchase of common stock, including repurchase costs |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
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| ( | ) |
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| ( | ) | |||
Distribution to noncontrolling interest declared ($0.17 per share) |
|
| — |
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| ( | ) |
|
| ( | ) | |||||
Balance, March 31, 2026 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
| |||||||
Net income |
|
| — |
|
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| |||||||
Common dividends declared ($0.18 per share) |
|
| — |
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|
|
|
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| ( | ) |
|
| ( | ) |
|
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| ( | ) | ||||
Other comprehensive income |
|
| — |
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| |||||||
Stock compensation |
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| ||||||||
Repurchase of shares related to equity award tax withholding |
|
| ( | ) |
|
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| ( | ) |
|
|
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| ( | ) |
|
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| ( | ) | ||||
Issuance of common shares, net |
|
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| ( | ) |
|
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| ( | ) |
|
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| ( | ) | |||||
Distribution to noncontrolling interest declared ($0.18 per share) |
|
| — |
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
| ( | ) |
|
| ( | ) | |||||
Balance, June 30, 2026 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
| |||||||
Net income |
|
| — |
|
|
|
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|
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| |||||||
Common dividends declared ($0.18 per share) |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
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| ( | ) | ||||
Other comprehensive income |
|
| — |
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| |||||||
Stock compensation |
|
| ( | ) |
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| |||||||
Repurchase of shares related to equity award tax withholding |
|
| ( | ) |
|
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| ( | ) |
|
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| ( | ) |
|
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| ( | ) | ||||
Issuance of common shares, net |
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| ( | ) |
|
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| ( | ) |
|
|
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| ( | ) | |||||
Distribution to noncontrolling interest declared ($0.18 per share) |
|
| — |
|
|
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|
|
|
|
|
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|
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|
|
| ( | ) |
|
| ( | ) | |||||
Balance, September 30, 2026 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
| |||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Equity
(Unaudited and dollars in thousands, except share and per share data)
|
|
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| |
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| |
| Accumulated |
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| Retained |
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| |
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| |
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| | ||
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| |
| Par Value |
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| Additional |
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| Other |
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| Earnings |
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| Total |
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| |
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| | |||||
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| Common |
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| Common |
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| Paid In |
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| Comprehensive |
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| (Accumulated |
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| Stockholders’ |
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| Noncontrolling |
|
| Total |
| ||||||||
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| Shares |
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| Shares |
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| Capital |
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| Income (Loss) |
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| Deficit) |
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| Equity |
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| Interests |
|
| Equity |
| ||||||||
Balance, December 31, 2024 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
| |||||||
Net income |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Common dividends declared ($0.16 per share) |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | ||||
Other comprehensive loss |
|
| — |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | |||
Stock compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Repurchase of shares related to equity award tax withholding |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||||
Issuance of common shares, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Distribution to noncontrolling interest declared ($0.16 per share) |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||||
Balance, March 31, 2025 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
| |||||||
Net income |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Common dividends declared ($0.17 per share) |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | ||||
Other comprehensive loss |
|
| — |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | |||
Stock compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Repurchase of shares related to equity award tax withholding |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||||
Issuance of common shares, net |
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||||
Distribution to noncontrolling interest declared ($0.17 per share) |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||||
Balance, June 30, 2025 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
| |||||||
Net income |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Common dividends declared ($0.17 per share) |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | ||||
Other comprehensive loss |
|
| — |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | |||
Stock compensation |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Repurchase of shares related to equity award tax withholding |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||||
Issuance of common shares, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Distribution to noncontrolling interest declared ($0.17 per share) |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||||
Balance, September 30, 2025 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
| |||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited and dollars in thousands)
|
| For the Nine Months Ended |
| |||||
|
| September 30, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
Cash flows from operating activities: |
|
|
| |
|
|
| |
Net income |
| $ |
|
| $ |
| ||
Adjustments to reconcile net income to cash flow from operating activities: |
|
|
| |
|
|
| |
Depreciation and amortization |
|
|
|
|
|
| ||
Accretion of loan discounts and premiums, net |
|
| ( | ) |
|
| ( | ) |
Amortization of deferred financing costs, net |
|
|
|
|
|
| ||
Stock compensation expense |
|
|
|
|
|
| ||
(Gain on sale) loss on impairment of real estate assets, net |
|
| ( | ) |
|
|
| |
Loss on extinguishment of debt |
|
|
|
|
|
| ||
Amortization related to derivative instruments |
|
|
|
|
|
| ||
Non-cash casualty losses |
|
|
|
|
|
| ||
Equity in loss (income) from investments in unconsolidated real estate entities |
|
|
|
|
| ( | ) | |
Other loss |
|
|
|
|
|
| ||
Changes in assets and liabilities: |
|
|
| |
|
|
| |
Other assets |
|
| ( | ) |
|
| ( | ) |
Accounts payable and accrued expenses |
|
|
|
|
|
| ||
Accrued interest payable |
|
|
|
|
|
| ||
Other liabilities |
|
| ( | ) |
|
| ( | ) |
Cash flow provided by operating activities |
|
|
|
|
|
| ||
Cash flows from investing activities: |
|
|
| |
|
|
| |
Acquisition of real estate properties |
|
| ( | ) |
|
| ( | ) |
Cash acquired in consolidation of unconsolidated real estate entity |
|
|
|
|
|
| ||
Investments in unconsolidated real estate entities |
|
| ( | ) |
|
| ( | ) |
Return of investment in unconsolidated real estate entities |
|
|
|
|
|
| ||
Proceeds from dispositions of real estate properties, net |
|
|
|
|
|
| ||
Capital expenditures |
|
| ( | ) |
|
| ( | ) |
Real estate development expenditures |
|
| ( | ) |
|
| ( | ) |
Proceeds from insurance claims |
|
|
|
|
|
| ||
Cash flow used in investing activities |
|
| ( | ) |
|
| ( | ) |
Cash flows from financing activities: |
|
|
| |
|
|
| |
(Costs) proceeds from issuance of common stock, net |
|
| ( | ) |
|
|
| |
Proceeds from unsecured revolver and term loan |
|
|
|
|
|
| ||
Unsecured revolver, secured credit facility and term loan repayments |
|
| ( | ) |
|
| ( | ) |
Mortgage principal repayments and payoffs |
|
| ( | ) |
|
| ( | ) |
Payment for deferred financing costs |
|
| ( | ) |
|
| ( | ) |
Distributions on common stock |
|
| ( | ) |
|
| ( | ) |
Distributions to noncontrolling interests |
|
| ( | ) |
|
| ( | ) |
Repurchase of shares related to equity award tax withholding |
|
| ( | ) |
|
| ( | ) |
Repurchase of common stock, including repurchase costs |
|
| ( | ) |
|
|
| |
Cash flow used in financing activities |
|
| ( | ) |
|
| ( | ) |
Net change in cash, cash equivalents, and restricted cash |
|
| ( | ) |
|
|
| |
Cash, cash equivalents, and restricted cash, beginning of period |
|
|
|
|
|
| ||
Cash, cash equivalents, and restricted cash, end of the period |
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Reconciliation of cash, cash equivalents, and restricted cash to the Condensed Consolidated Balance Sheets |
|
|
| |
|
|
| |
Cash and cash equivalents |
| $ |
|
| $ |
| ||
Restricted cash |
|
|
|
|
|
| ||
Total cash, cash equivalents, and restricted cash, end of period |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
NOTE 1: Organization
Independence Realty Trust, Inc. (“IRT”), is a self-administered and self-managed Maryland corporation that was formed on March 26, 2009 and 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 September 30, 2026, we owned and operated
As used herein, the terms “we,” “our,” “us” and the “Company” refer to IRT and, as required by context, IROP and its subsidiaries.
Pending Merger
On September 8, 2026, we, IROP and Islanders OP Sub, LLC, a wholly-owned subsidiary of IROP (“IROP Merger Sub”), entered into an agreement and plan of merger with Centerspace (“CSR”), and its operating partnership, Centerspace, LP (“CSR OP”). On September 22, 2026, Islanders Sub, LLC, a wholly-owned subsidiary of IRT (“IRT Merger Sub”), was added as a party by joinder, and the parties entered into an amendment to the agreement and plan of merger pursuant to which IRT elected to implement an alternative structure with respect to the Company Merger (as defined below) (as amended, the “Merger Agreement”).
On the terms, and subject to the conditions of, the Merger Agreement, CSR will merge with and into IRT Merger Sub (the “Company Merger”), with IRT Merger Sub surviving the Company Merger; and immediately thereafter, IROP Merger Sub will merge with and into CSR OP (the “Partnership Merger” and, together with the Company Merger, the “Mergers”), with CSR OP surviving the Partnership Merger.
In the Company Merger, each outstanding share of CSR common stock will be converted into
In conjunction with the Mergers, we have incurred approximately $
9
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
NOTE 2: Summary of Significant Accounting Policies
a. Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements have been prepared by management in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and the applicable rules and regulations of the SEC. Accordingly, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe that the included disclosures are adequate to make the information presented not misleading. The unaudited interim condensed consolidated financial statements should be read in conjunction with our audited financial statements as of and for the year ended December 31, 2025 included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”). In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our condensed consolidated financial position and condensed consolidated results of operations and cash flows are included. The results of operations for the interim periods presented are not necessarily indicative of the results for the full year. The Company evaluated subsequent events through the date its financial statements were issued. No significant recognized or non-recognized subsequent events were noted other than those described in the footnotes.
b. Principles of Consolidation
The condensed consolidated financial statements reflect our accounts and the accounts of IROP and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Pursuant to the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification Topic 810, “Consolidation”, IROP is considered a variable interest entity of which we are the primary beneficiary. As our significant asset is our investment in IROP, substantially all of our assets and liabilities represent the assets and liabilities of IROP.
10
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
c. Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
d. Cash and Cash Equivalents
Cash and cash equivalents include cash held in banks and highly liquid investments with original maturities of three months or less when purchased. Cash, including amounts restricted, may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit of $250 per institution. We mitigate credit risk by placing cash and cash equivalents with major financial institutions. To date, we have not experienced any losses on cash and cash equivalents.
e. Restricted Cash
Restricted cash includes escrows of our funds held by lenders to fund certain expenditures, such as real estate taxes and insurance, or to be released at our discretion upon the occurrence of certain pre-specified events. As of September 30, 2026 and December 31, 2025, we had $
f. Investments in Real Estate
Investments in real estate are recorded at cost less accumulated depreciation. Costs, including internal costs, that both add value and appreciably extend the useful life of an asset are capitalized. Expenditures for repairs and maintenance are expensed as incurred.
Investments in real estate are classified as held for sale in the period in which certain criteria are met including when the sale of the asset is probable, necessary approvals are obtained, and actions required to complete the plan of sale indicate that it is unlikely that significant changes to the plan of sale will be made or the plan of sale will be withdrawn.
Allocation of Purchase Price of Acquired Assets
In accordance with FASB ASC Topic 805 (“ASC 805”), we evaluate our real estate acquisitions to determine if they should be accounted for as a business or as a group of assets. The evaluation includes an initial screen to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single asset or group of similar assets. If the screen is met, the acquisition is not a business. The properties we have acquired met the screen test and are accounted for as asset acquisitions. Under asset acquisition accounting, the costs to acquire real estate, including transaction costs related to the acquisition, are accumulated and then allocated to the individual assets and liabilities acquired based upon their relative fair value. Transaction costs and fees incurred related to the financing of an acquisition are capitalized and amortized over the life of the related financing.
11
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
We estimate the fair value of acquired tangible assets (consisting of land, building and improvements), identified intangible assets (consisting of in-place leases), and assumed debt at the date of acquisition, based on the evaluation of information and estimates available at that date.
The aggregate value of in-place leases is determined by evaluating various factors, including the terms of the leases that are in place and assumed lease-up periods. The value assigned to these intangible assets is amortized over the assumed lease up period, typically nine months. During the three and nine months ended September 30, 2026, we acquired in-place leases with a value of $
Impairment of Long-Lived Assets
Management evaluates the recoverability of our investments in real estate assets, including related identifiable intangible assets, in accordance with FASB ASC Topic 360, “Property, Plant and Equipment”. This accounting standard requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that recoverability of the assets is not assured.
We review our long-lived assets on an ongoing basis and evaluate the recoverability of the carrying value when there is an indicator of impairment. An impairment charge is recognized when it is determined that the carrying value of the asset exceeds the fair value. The estimated cash flows and estimated fair value used in the impairment analysis are determined based on our plans for the respective assets, including the expected hold period, and our assessment of market and economic conditions. The estimates consider matters such as current and historical rental rates and collection levels, occupancies for the respective and/or comparable properties, and recent sales data for comparable properties. Changes in our plans or views of market and economic conditions may result in adjustments to estimated future cash flows, which could lead to recognition of impairment losses. These losses, as guided by the applicable accounting standards, could be significant. For the nine months ended September 30, 2026, we recorded
Depreciation Expense
Depreciation expense for real estate assets is computed using a straight-line method based on a life of
12
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
Casualty Related Costs
Occasionally, we incur losses at our communities from wind storms, floods, fires and similar hazards. In these cases, we estimate the carrying value of the damaged property and record a casualty loss for the difference between the estimated carrying value and the insurance proceeds, if any. Any amount of insurance recovery in excess of the amount of the losses incurred is considered a gain contingency and is recorded in casualty losses, net when the proceeds are received. During the three and nine months ended September 30, 2026, we recorded $
g. Investments in Real Estate Under Development
We capitalize direct and indirect project costs incurred during the development period such as construction, insurance, architectural, legal, interest costs, and real estate taxes. At such time as the development is considered substantially complete, the capitalization of certain indirect costs such as real estate taxes, interest costs, and all project-related costs in real estate under development are reclassified to investments in real estate. For the three and nine months ended September 30, 2026, we recorded $
As of September 30, 2026 and December 31, 2025, the carrying value of our investments in real estate under development in Denver, Colorado and Austin, Texas, as applicable, totaled $
h. Investments in Unconsolidated Real Estate Entities
We have entered into joint ventures with unrelated third parties to acquire, develop, own, operate, and manage real estate assets. Our joint ventures are funded with a combination of debt and equity. We will consolidate entities that we control as well as any variable interest entity ("VIE") where we are the primary beneficiary. Under the VIE model, we consolidate an entity when we have the ability to direct the activities of the VIE and the obligations to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, we consolidate an entity when we control the entity through ownership of a majority voting interest. We separately analyzed the initial accounting for each of our investments in unconsolidated real estate entities and concluded that each investment is a voting interest entity. Our equity interest varies for each of our investments in unconsolidated real estate entities between
13
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
i. Revenue and Expenses
Rental and Other Property Revenue
We apply FASB ASC Topic 842, “Leases” (“ASC 842”) with respect to our accounting for rental income. We primarily lease apartment units under operating leases generally with terms of one year or less. Rental payments are generally due monthly and rental revenues are recognized on an accrual basis when earned. We have elected to account for lease (i.e., fixed payments including base rent) and non-lease components (i.e., tenant reimbursements and certain other service fees) as a single combined operating lease component since (1) the timing and pattern of transfer of the lease and non-lease components is the same, (2) the lease component is the predominant element, and (3) the combined single lease component would be classified as an operating lease.
We make ongoing estimates of the collectability of our base rents, tenant reimbursements, and other service fees included within rental and other property revenue. If collectability is not probable, we adjust rental and other property income for the amount of uncollectible revenue.
j. Derivative Instruments
We may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with our borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with our operating and financial structure, as well as to hedge specific anticipated transactions. While these instruments may impact our periodic cash flows, they benefit us by minimizing the risks and/or costs previously described. The counterparties to these contractual arrangements are major financial institutions with which we, and our affiliates, may also have other financial relationships. In the event of nonperformance by the counterparties, we are potentially exposed to credit loss. However, because of the high credit ratings of the counterparties, we do not anticipate that any of the counterparties will fail to meet their obligations.
In accordance with FASB ASC Topic 815, “Derivatives and Hedging”, we measure each derivative instrument at fair value and record such amounts in our condensed consolidated balance sheets as either an asset or liability. For derivatives designated as cash flow hedges, the changes in the fair value of the effective portions of the derivative are reported in other comprehensive income and changes in the fair value of the ineffective portions of cash flow hedges, if any, are recognized in earnings. For derivatives not designated as hedges, the changes in fair value of the derivative instrument are recognized in earnings. Any derivatives that we designate in hedge relationships are done so at inception. At inception, we determine whether or not the derivative is highly effective in offsetting changes in the designated interest rate risk associated with the identified indebtedness using regression analysis. At each reporting period, we update our regression analysis and use the hypothetical derivative method to measure any ineffectiveness.
k. Fair Value of Financial Instruments
In accordance with FASB ASC Topic 820, “Fair Value Measurements and Disclosures”, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity for disclosure purposes. Assets and liabilities recorded at fair value in our condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined in FASB ASC Topic 820, “Fair Value Measurements and Disclosures” and directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities, are as follows:
| • | Level 1: Valuations are based on unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. The types of assets carried at Level 1 fair value generally are equity securities listed in active markets. As such, valuations of these investments do not entail a significant degree of judgment. |
14
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
| • | Level 2: Valuations are based on quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or for which all significant inputs are observable, either directly or indirectly. |
| • | Level 3: Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. |
FASB ASC Topic 825, “Financial Instruments” requires disclosure of the fair value of financial instruments for which it is practicable to estimate that value. Given that cash and cash equivalents and restricted cash are short term in nature with limited fair value volatility, the carrying amount is deemed to be a reasonable approximation of fair value and the fair value input is classified as a Level 1 fair value measurement. The fair value input for derivatives is classified as a Level 2 fair value measurement within the fair value hierarchy. The fair value of our unsecured revolver, term loans, and mortgage indebtedness is based on a discounted cash flows valuation technique. As this technique utilizes current credit spreads, which are generally unobservable, this is classified as a Level 3 fair value measurement within the fair value hierarchy. We determine appropriate credit spreads based on the type of debt and its maturity. There were no transfers between levels in the fair value hierarchy for the nine months ended September 30, 2026. The following table summarizes the carrying amount and the fair value of our financial instruments as of the periods indicated:
|
| As of September 30, 2026 |
|
| As of December 31, 2025 |
| ||||||||||
|
| Carrying |
|
| Estimated |
|
| Carrying |
|
| Estimated |
| ||||
Financial Instrument |
| Amount |
|
| Fair Value |
|
| Amount |
|
| Fair Value |
| ||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Restricted cash |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Derivative assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Unsecured revolver |
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Unsecured term loans |
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Secured credit facilities |
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Mortgages |
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Unsecured notes |
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Derivative liabilities |
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l. Deferred Financing Costs
Costs incurred in connection with debt financing are deferred and classified within indebtedness and charged to interest expense over the terms of the related debt agreements, under the effective interest method.
15
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
m. Office Leases
In accordance with FASB ASC Topic 842, “Leases”, lessees are required to recognize a right-of-use asset and a lease liability on the balance sheet at the lease commencement date for all leases, except those leases with terms of less than a year. We lease corporate office space under leases with terms of up to
n. Income Taxes
We have elected to be taxed as a REIT. Accordingly, we recorded
To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our ordinary taxable income to stockholders. As a REIT, we generally are not subject to federal income tax on taxable income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to stockholders; however, we believe that we are organized and operate in such a manner as to qualify and maintain treatment as a REIT and intend to operate in such a manner so that we will remain qualified as a REIT for federal income tax purposes.
o. Recent Accounting Pronouncements
Below is a brief description of recent accounting pronouncements that could have a material effect on our condensed consolidated financial statements.
In December 2025, the Financial Accounting Standards Board (“FASB”) issued ASU 2025-12, Codification Improvements, as part of its ongoing project to clarify, correct and improve various topics within the Accounting Standards Codification (“ASC”). The amendments cover 33 specific issues, two of which are particularly relevant to REITs, (i) clarifications on the calculation of diluted earnings per share when a loss from continuing operations exists (Topic 260), and (ii) the exclusion of certain lease receivables from enhanced credit loss disclosures (Topic 310). The standard is effective for the Company for annual reporting periods beginning after December 15, 2026, and interim periods within those years. Early adoption is permitted on an issue-by-issue basis. The Company is currently evaluating the impact of ASU 2025-12 on its consolidated financial position, results of operations and disclosures.
In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. The update is designed to better align hedge accounting with an entity's risk management activities by making targeted improvements to the hedge accounting model. Key amendments include, Similar Risk Assessment, which replaces the “shared risk exposure” requirement for grouping forecasted transactions in a cash flow hedge with a “similar risk exposure” requirement, permitting broader aggregation of hedged risks, Choose-Your-Rate Debt which introduces a model for hedging interest payments on variable-rate borrowings where the borrower can change reference rates without automatically triggering hedge de-designation, and Net Written Options which clarifies that certain instruments, such as, interest rate swaps with floors, may qualify as hedging instruments without being subject to the net written option test, provided. The standard is effective for the Company for annual reporting periods beginning after December 15, 2026, and interim periods within those years. Early adoption is permitted. The guidance is generally required to be applied on a prospective basis. The Company is currently evaluating the impact of ASU 2025-09 on its consolidated financial position, results of operations and disclosures.
16
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which requires disclosure of information about specific cost and expense categories in the notes to the financial statements. This ASU is effective for the Company for annual reporting periods beginning after December 15, 2026, and for interim reporting periods commencing in 2028 and may be applied either prospectively or retrospectively. The Company is currently evaluating the effect that the ASU will have on its consolidated financial position, results of operations and disclosures.
NOTE 3: Investments in Real Estate
As of September 30, 2026, our investments in real estate consisted of
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| As of September 30, 2026 |
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| As of December 31, 2025 |
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| Depreciable Lives (In years) |
| |||
Land |
| $ |
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| $ |
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| — |
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Building |
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Furniture, fixtures and equipment |
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Total investments in real estate |
| $ |
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| $ |
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Accumulated depreciation |
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| ( | ) |
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Investments in real estate, net |
| $ |
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| $ |
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The following table summarizes our properties held for sale as of September 30, 2026:
Property |
| Market |
| Units |
|
| Carrying Value |
| ||
Bella Terra at City Center |
| Denver, CO |
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|
| $ |
| ||
Acquisitions
The following table summarizes our asset acquisition for the nine months ended September 30, 2026:
Property |
| Date Acquired |
| Market |
| Units |
|
| Purchase Price |
| ||
The Retreat at Canal |
| 1/15/2026 |
| Columbus, OH |
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| $ |
| ||
The following table summarizes the relative fair value of the assets and liabilities associated with acquisitions during the nine months ended September 30, 2026, on the date of acquisition accounted for under FASB ASC Topic 805-50-15-3.
|
| Fair Value of Assets and Liabilities Acquired During the |
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| Nine Months Ended |
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| September 30, 2026 |
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Assets acquired: |
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Investments in real estate |
| $ |
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Other assets |
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Intangible assets |
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Total assets acquired |
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Liabilities assumed: |
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Accounts payable and accrued expenses |
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Other liabilities |
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Total liabilities assumed |
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Estimated fair value of net assets acquired |
| $ |
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Dispositions
The following table summarizes our dispositions for the nine months ended September 30, 2026.
Property |
| Market |
| Units |
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| Sale Date |
| Sale Price |
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| Gain on Sale |
| |||
Stonebridge Crossing |
| Memphis, TN |
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| 9/10/2026 |
| $ |
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| $ |
| |||
17
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
NOTE 4: Investments in Unconsolidated Real Estate
As of September 30, 2026, our investments in unconsolidated real estate entities had aggregate land, building, and capitalized construction in progress costs of $
The following table summarizes our investments in unconsolidated real estate entities as of September 30, 2026 and December 31, 2025:
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| Carrying Value As Of |
| |||||
Investments in Unconsolidated Real Estate Entities |
| Location |
| Units (1) |
|
| IRT Ownership Interest |
|
| September 30, 2026 |
|
| December 31, 2025 |
| ||||
Lakeline Station (2) |
| Austin, TX |
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| $ |
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The Mustang (3) |
| Dallas, TX |
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Nexton Pine Hollow |
| Charleston, SC |
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The Approach |
| Indianapolis, IN |
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Total |
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| $ |
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| (1) | Represents the total number of units after development is complete and each property is placed in service. |
| (2) | On January 20, 2026, we acquired our joint venture partner's |
| (3) | The Mustang is an operating property consisting of |
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Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
The following table summarizes the assets and liabilities recognized upon the consolidation of Tisdale at Lakeline Station, our former unconsolidated real estate entity during the nine months ended September 30, 2026 on the date of consolidation of January 20, 2026.
|
| Assets and Liabilities Consolidated During the |
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| Nine Months Ended |
| |
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| September 30, 2026 |
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Assets: |
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Cash and cash equivalents |
| $ |
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Restricted cash |
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Other assets |
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Investments in real estate |
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Investments in real estate under development |
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Total assets |
| $ |
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Liabilities: |
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Accounts payable and accrued expenses |
| $ |
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Other liabilities |
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Mortgage loan (1) |
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Total liabilities |
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Derecognition of investments in unconsolidated real estate entities |
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Total liabilities and equity |
| $ |
| |
| (1) | The mortgage loan was repaid using proceeds from our unsecured revolver, concurrently with acquiring our joint venture partner's |
19
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
NOTE 5: Indebtedness
Unsecured Revolver and Term Loans
On February 11, 2026, IROP entered into the Sixth Amended and Restated Credit Agreement (the “Sixth Restated Credit Agreement”) by and among IROP, as borrower, IRT 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 $
The Sixth Restated Credit Agreement increased the aggregate amount of borrowings under the credit agreement to $
The following tables contain summary information concerning our consolidated indebtedness as of September 30, 2026:
Consolidated Debt: |
| Outstanding Principal |
|
| Unamortized Debt Issuance Costs |
|
| Unamortized Loan (Discount)/Premiums |
|
| Carrying Amount |
|
| Type |
| Weighted Average Contractual Rate (2) |
|
| Weighted Average Effective Rate (3) |
|
| Weighted Average Maturity (in years) |
| |||||||
Unsecured revolver (1) |
| $ |
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| $ | ( | ) |
| $ |
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| $ |
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| Floating |
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| % |
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| % |
|
| 2.3 |
| |||||
Unsecured term loans |
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| ( | ) |
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| Floating |
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| % |
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| 4.0 | % |
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| 2.3 |
| ||||
Secured credit facilities |
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| ( | ) |
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| Fixed |
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| % |
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| 4.4 | % |
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| 2.2 |
| ||||
Mortgages |
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| ( | ) |
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| Fixed |
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| % |
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| 4.0 | % |
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| 2.9 |
| ||||
Unsecured notes |
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| ( | ) |
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| Fixed |
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| % |
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| 5.6 | % |
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| 6.5 |
| ||||
Total Consolidated Debt |
| $ |
|
| $ | ( | ) |
| $ |
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| $ |
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| % |
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| 4.3 | % |
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| 2.7 |
| ||||
| (1) | The unsecured revolver total capacity is $ |
| (2) | Represents the weighted average of the contractual interest rates in effect as of September 30, 2026, without regard to any interest rate swaps or collars. |
| (3) | Represents the weighted average effective interest rates for the three months ended September 30, 2026, including the impact of interest rate swaps and collars, the amortization of hedging costs, and deferred financing costs, but excluding the impact of loan premium amortization, discount accretion, and interest capitalization. |
20
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
|
| Scheduled maturities on our consolidated indebtedness outstanding as of September 30, 2026 |
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Consolidated Debt: |
| 2026 |
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| 2027 |
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| 2028 |
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| 2029 |
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| 2030 |
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| Thereafter |
| ||||||
Unsecured revolver |
| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
| ||||||
Unsecured term loans |
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Secured credit facilities |
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Mortgages |
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Unsecured notes |
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| ||||||
Total |
| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
| ||||||
The following table contains summary information concerning our consolidated indebtedness as of December 31, 2025:
Consolidated Debt: |
| Outstanding Principal |
|
| Unamortized Debt Issuance Costs |
|
| Unamortized Loan (Discount)/Premiums |
|
| Carrying Amount |
|
| Type |
| Weighted Average Contractual Rate (2) |
|
| Weighted Average Effective Rate (3) |
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| Weighted Average Maturity (in years) |
| |||||||
Unsecured revolver (1) |
| $ |
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| $ | ( | ) |
| $ |
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| $ |
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| Floating |
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| % |
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| % |
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| ||||||
Unsecured term loans |
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| ( | ) |
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| Floating |
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| % |
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| % |
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Secured credit facilities |
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| ( | ) |
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| Fixed |
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| % |
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| % |
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Mortgages |
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| ( | ) |
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| Fixed |
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| % |
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| % |
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Unsecured notes |
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| ( | ) |
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| Fixed |
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| % |
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| % |
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Total Consolidated Debt |
| $ |
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| $ | ( | ) |
| $ |
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| $ |
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| % |
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| % |
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| ||||||
| (1) | The unsecured revolver total capacity was $ |
| (2) | Represents the weighted average of the contractual interest rates in effect as of year-end December 31, 2025, without regard to any interest rate swaps or collars. |
| (3) | Represents the total weighted average effective interest rate for the three months ended December 31, 2025, including the impact of interest rate swaps and collars, the amortization of hedging costs, and deferred financing costs, but excluding the impact of loan premium amortization, discount accretion, and interest capitalization. |
As of September 30, 2026, we were in compliance with all financial covenants contained in our consolidated indebtedness.
21
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
NOTE 6: Derivative Financial Instruments
The following table summarizes the aggregate notional amounts and estimated net fair values of our derivative instruments as of September 30, 2026 and December 31, 2025:
|
| As of September 30, 2026 |
|
| As of December 31, 2025 |
| ||||||||||||||||||
|
| Notional |
|
| Fair Value of Assets |
|
| Fair Value of Liabilities |
|
| Notional |
|
| Fair Value of Assets |
|
| Fair Value of Liabilities |
| ||||||
Cash flow hedges: |
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Interest rate swaps |
| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
| ||||||
Interest rate collars |
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| ||||||
Forward interest rate swap |
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Total |
| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
| ||||||
Effective interest rate swaps and collars are reported in accumulated other comprehensive income, and the fair value of these hedge agreements is recorded as derivative assets or liabilities on the face of our condensed consolidated balance sheets.
For our interest rate swaps and collars that are considered highly effective hedges, we reclassified realized gains of $
NOTE 7: Stockholders' Equity and Noncontrolling Interests
Stockholders’ Equity
On September 8, 2026, our board of directors declared a dividend of $
On May 13, 2026, our board of directors declared a dividend of $
On March 9, 2026, our board of directors declared a dividend of $
22
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
ATM Program
On July 28, 2023, we entered into an equity distribution agreement pursuant to which we were permitted from time to time to offer and sell shares of our common stock under our prior shelf registration statement having an aggregate offering price of up to $
Stock Repurchase Program
On May 18, 2022, our board of directors authorized a common stock repurchase program (the "Stock Repurchase Program") covering up to $
Noncontrolling Interest
During the nine months ended September 30, 2026, no holders of IROP Common Units exchanged units for shares of our common stock. As of September 30, 2026,
On September 8, 2026, our board of directors declared a dividend of $
On May 13, 2026, our board of directors declared a dividend of $
On March 9, 2026, our board of directors declared a dividend of $
23
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
NOTE 8: Equity Compensation Plans
Long Term Incentive Plan
On May 18, 2022, our stockholders approved our 2022 Long Term Incentive Plan (the “2022 Incentive Plan”). The 2022 Incentive Plan provides for grants of equity and equity-based awards to our employees, officers, directors, consultants and other service providers, and such awards may take the form of restricted or unrestricted shares of common stock, non-qualified stock options, incentive stock options, restricted stock units (“RSUs”), stock appreciation rights (“SARs”), dividend equivalents and other equity and cash-based awards. A maximum of
The restricted shares and RSUs granted under the Incentive Plan generally vest or vested over a two- to four-year period. In addition, we have granted unrestricted shares to our non-employee directors. These awards generally vest or vested immediately. A summary of restricted and unrestricted common share awards and RSU activity is presented below.
|
| 2026 |
| |||||
|
| Number of Shares |
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| Weighted Average Grant Date Fair Value Per Share |
| ||
Balance, January 1, |
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| $ |
| ||
Granted |
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Vested |
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| ( | ) |
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Forfeited |
|
| ( | ) |
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| |
Balance, September 30, (1) |
|
|
|
| $ |
| ||
| (1) | The outstanding award balances above include |
On February 3, 2026, our compensation committee awarded
During the nine months ended September 30, 2026 and 2025, a portion of the RSUs and PSUs granted were issued to employees who are retirement eligible. The fact that the grantees are retirement eligible resulted in immediate recognition of the associated stock-based compensation expense totaling $
24
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
NOTE 9: Earnings Per Share
The following table presents a reconciliation of basic and diluted earnings per share for the three and nine months ended September 30, 2026 and 2025:
|
| For the Three Months Ended |
|
| For the Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2026 |
|
| 2025 |
|
| 2026 |
|
| 2025 |
| ||||
Net income |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Income allocated to noncontrolling interest |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Income allocable to common shares |
| $ |
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| $ |
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| $ |
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| $ |
| ||||
Weighted-average shares outstanding—Basic |
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Weighted-average shares outstanding—Diluted |
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| ||||
Earnings per share—Basic |
| $ |
|
| $ |
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| $ |
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| $ |
| ||||
Earnings per share—Diluted |
| $ |
|
| $ |
|
| $ |
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| $ |
| ||||
Certain IROP Common Units and RSUs were excluded from the earnings per share computation because their effect would have been anti-dilutive, totaling
NOTE 10: Segment Reporting
Each of our multifamily properties is considered an operating segment that earns revenues through the leasing of apartment homes and incurs associated expenses. We aggregate our multifamily properties on a same-store and non same-store basis, and as a result, have identified two reportable segments.
| • | Same-Store includes properties that were owned and not a development property as of January 1, 2025, and that have not been sold or identified as held for sale. |
| • | Non Same-Store includes properties that did not meet the definition of a same-store property as of January 1, 2025. |
GAAP guidance requires that segment disclosures present the measures used by the Chief Operating Decision Maker (“CODM”) to decide how to allocate resources and for purposes of assessing segment performance. The CODM uses net operating income (“NOI”) as the primary financial measure to evaluate operating results of our multifamily properties, including analyses compared to prior periods and budgeted operating results. NOI is defined 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, net gains on sale of assets and merger and integration costs.
Segment assets consist of real estate held for investment, real estate held for sale and investments in real estate under development. Non-segment assets consist of assets in the Company’s other non-reportable segments and corporate non-segment assets, which are comprised of cash and cash equivalents, restricted cash, investments in unconsolidated real estate entities, other assets, derivative assets and intangible assets. Reportable segment asset information is not provided to the CODM as the CODM does not use segment asset information to evaluate the business and allocate resources.
25
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
The following table details NOI for our two reportable segments for the three and nine months ended September 30, 2026 and 2025, and reconciles NOI to Net income on the condensed consolidated statements of operations. The segments are classified as same-store or non same-store based on the individual property’s status as of September 30, 2026.
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2026 |
|
| 2025 |
|
| 2026 |
|
| 2025 |
| ||||
Revenue: |
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| |
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|
| |
Same-store (1) rental and other property revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Non same-store (1) rental and other property revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total reportable segments revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other income |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total consolidated revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating Expenses: |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Same-store |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Real estate taxes |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Property insurance |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Personnel expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Utilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Repairs and maintenance |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Contract services |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Advertising expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other property operating expenses (2) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total same-store operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Non same-store |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Total non same-store operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total reportable segments operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Operating Income: |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Same-store NOI |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Non same-store NOI |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total reportable segments NOI |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Adjustments: |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Other revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Property management expenses |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
General and administrative expenses |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Depreciation and amortization |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Casualty losses, net |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Interest expense |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Gain on sale (loss on impairment) of real estate assets, net |
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||
Loss on extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
| ( | ) | |||
Other loss |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
(Loss) income from investments in unconsolidated real estate entities |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| ||
Merger and integration costs |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| ||
Net income |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
| (1) | Same-store portfolio consists of |
| (2) | Other property operating expenses includes property office, administrative and legal costs. |
26
Table of Contents
Independence Realty Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited and dollars in thousands, except share and per share data)
NOTE 11: Other Disclosures
Litigation
We are subject to various legal proceedings and claims that arise in the ordinary course of our business operations. Matters which arise out of allegations of bodily injury, property damage, employment practices and professional liability are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, we currently believe the final outcome of such matters will not have a material adverse effect on our financial position, results of operations or cash flows.
Starting around November 2022, putative class action representatives began filing complaints in various United States District Courts across the country naming as defendants RealPage, Inc. (“RealPage”), a seller of revenue management products, and approximately 50 defendants who own and/or manage multifamily residential rental housing, alleging that the defendants conspired to fix, raise, maintain, and stabilize rent prices in violation of Section 1 of the Sherman Act. Some of the complaints, including one filed on November 14, 2022, in the U.S. District Court for the Northern District of Illinois, named us as one of the defendants, and others did not. The actions were consolidated for pretrial proceedings in the Middle District of Tennessee. Fact discovery has ended in the litigation, and the Court will be hearing and deciding motions concerning expert testimony and class certification early next year. We have recorded a loss contingency representing our estimate of the probable loss. We deny all allegations of wrongdoing, and we intend to continue to defend against these claims vigorously.
On July 2, 2025, the Attorney General of Kentucky filed a complaint against RealPage and nine other defendants who own and/or manage multifamily residential rental housing, including IRT, on behalf of the Commonwealth of Kentucky, also alleging that the defendants conspired to fix, raise, maintain, and stabilize rent prices in violation of Section 1 of the Sherman Act. On September 15, 2025, IRT and other defendants in the complaint filed motions to dismiss the case. On February 2, 2026, the court denied the motions to dismiss. This proceeding is in the early stages, and it is not possible for IRT to predict the outcome nor is it possible to estimate the amount of loss, if any, which may be associated with an adverse decision in this matter. We deny all allegations of wrongdoing in connection with the complaint and intend to defend against these claims vigorously. See Part II, Item 1, Legal Proceedings, for additional information regarding our legal proceedings.
Other Matters
To the extent that a natural disaster or similar event occurs with more than a remote risk of having a material impact on the consolidated financial statements, we will disclose the estimated range of possible outcomes, and, if an outcome is probable, accrue an appropriate liability.
Loss Contingencies
We record an accrual for loss contingencies when a loss is probable and the amount of the loss can be reasonably estimated. Management reviews these accruals quarterly and makes revisions based on changes in facts and circumstances. When a loss contingency is not both probable and reasonably estimable, management does not accrue the loss. However, if the loss (or an additional loss in excess of an earlier accrual) is at least a reasonable possibility and material, then management discloses a reasonable estimate of the possible loss, or range of loss, if such reasonable estimate can be made. If we cannot make a reasonable estimate of the possible loss, or range of loss, then a statement to that effect is disclosed.
The loss contingencies are presented in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets. When we expect the losses to be covered by insurance, the related insurance recovery receivables are presented in other assets in the accompanying condensed consolidated balance sheets.
27
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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 Quarterly Report on Form 10-Q 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 Exchange Act. Such forward-looking statements include, but are not limited to, statements regarding the proposed Mergers with CSR, including the expected timing of closing of the Mergers, the anticipated benefits of the Mergers, the merger-related costs we expect to incur and the expected ownership of the combined company, our expectations with respect to the timing and terms of sales, if any, with respect to the one property which is classified as held for sale as of September 30, 2026, our expectations with respect to projects scheduled to start in 2027, our expectations with respect to future acquisitions and dispositions and the completion of our joint venture development projects and our expectations regarding any future ATM program. 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 IRT’s and CSR’s ability to complete the Mergers on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary stockholder and shareholder approvals and satisfaction of other closing conditions to consummate the Mergers, 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, delays in completing the Mergers, the possibility that the anticipated benefits of the Mergers 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 CSR and IRT do business, the possibility that the Mergers may be more expensive to complete than anticipated, including as a result of unexpected factors or events, the ability of CSR and IRT to meet expectations regarding the timing, completion and accounting and tax treatment of the Mergers, potential adverse reactions or changes to business, customer or employee relationships, including those resulting from the announcement or completion of the Mergers, the loss of key personnel and the diversion of management’s attention, restrictions under the Merger Agreement on the conduct of our business, including the payment of dividends, pending completion of the Mergers, litigation relating to the Mergers, the ability to complete the Mergers and integration of CSR and IRT successfully, the increase in our indebtedness and the availability of financing on anticipated terms in connection with the Mergers, limitations under tax protection agreements we expect to assume in the Mergers, unknown liabilities of CSR and potential impairment charges following the Mergers, the dilution caused by IRT’s issuance of additional shares of its capital stock in connection with the Mergers, our ability to continue to pay dividends at current rates following the Mergers, changes in market demand for rental apartment homes and pricing pressures, including from competitors, that could lead to declines in occupancy and rent levels, uncertainty and volatility in capital and credit markets, including changes that reduce availability, and increase costs, of capital, unexpected changes in our intention or ability to repay certain debt prior to maturity, increased costs on account of inflation, increased competition in the labor market, 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 Programs and failure to achieve rent increases and occupancy levels on account of the Value Add Programs, 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, 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, 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, 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.
28
Table of Contents
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 REIT. We are primarily engaged in the ownership, operation, management, improvement, and acquisition of multifamily apartment communities in non-gateway markets. As of September 30, 2026, we owned and operated 115 multifamily apartment properties (including one owned through a consolidated joint venture) that contain an aggregate of 33,398 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 September 30, 2026, we owned one newly developed property in Austin, Texas that contains 378 units. As of September 30, 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. |
29
Table of Contents
Consolidated Property Portfolio (1)
As of September 30, 2026, we owned and consolidated 115 multifamily apartment properties, totaling 33,398 units. Below is a summary of our consolidated property portfolio by market.
(Dollars in thousands, except per unit data) |
|
As of September 30, 2026 |
|
|
For the Three Months Ended September 30, 2026 |
|
||||||||||||||||||||||
Market |
|
Number of Properties |
|
|
Units |
|
|
Gross Real Estate Assets |
|
|
Period End Occupancy |
|
|
Average Effective Monthly Rent per Unit |
|
|
Net Operating Income |
|
|
% of NOI |
|
|||||||
Atlanta, GA |
|
|
13 |
|
|
|
5,180 |
|
|
$ | 1,157,193 |
|
|
|
94.1 | % |
|
$ | 1,595 |
|
|
$ | 16,029 |
|
|
|
15.0 | % |
Dallas, TX |
|
|
14 |
|
|
|
4,007 |
|
|
|
913,580 |
|
|
|
95.0 | % |
|
|
1,804 |
|
|
|
14,162 |
|
|
|
13.3 | % |
Columbus, OH |
|
|
11 |
|
|
|
2,650 |
|
|
|
418,412 |
|
|
|
94.8 | % |
|
|
1,590 |
|
|
|
8,227 |
|
|
|
7.7 | % |
Indianapolis, IN |
|
|
8 |
|
|
|
2,259 |
|
|
|
370,099 |
|
|
|
95.0 | % |
|
|
1,507 |
|
|
|
7,044 |
|
|
|
6.6 | % |
Denver, CO (2)(3) |
|
|
8 |
|
|
|
2,018 |
|
|
|
626,877 |
|
|
|
95.0 | % |
|
|
1,764 |
|
|
|
6,757 |
|
|
|
6.3 | % |
Tampa-St. Petersburg, FL |
|
|
6 |
|
|
|
1,791 |
|
|
|
399,341 |
|
|
|
95.9 | % |
|
|
1,903 |
|
|
|
6,625 |
|
|
|
6.2 | % |
Oklahoma City, OK |
|
|
8 |
|
|
|
2,147 |
|
|
|
356,121 |
|
|
|
96.0 | % |
|
|
1,298 |
|
|
|
5,848 |
|
|
|
5.5 | % |
Nashville, TN |
|
|
5 |
|
|
|
1,508 |
|
|
|
382,902 |
|
|
|
95.6 | % |
|
|
1,630 |
|
|
|
5,360 |
|
|
|
5.0 | % |
Raleigh - Durham, NC |
|
|
6 |
|
|
|
1,690 |
|
|
|
263,859 |
|
|
|
94.6 | % |
|
|
1,548 |
|
|
|
5,148 |
|
|
|
4.8 | % |
Orlando, FL |
|
|
4 |
|
|
|
1,260 |
|
|
|
285,126 |
|
|
|
94.0 | % |
|
|
1,825 |
|
|
|
4,004 |
|
|
|
3.7 | % |
Charlotte, NC |
|
|
4 |
|
|
|
1,014 |
|
|
|
263,981 |
|
|
|
95.6 | % |
|
|
1,662 |
|
|
|
3,448 |
|
|
|
3.2 | % |
Houston, TX |
|
|
5 |
|
|
|
1,308 |
|
|
|
220,837 |
|
|
|
95.3 | % |
|
|
1,464 |
|
|
|
3,427 |
|
|
|
3.2 | % |
Lexington, KY |
|
|
3 |
|
|
|
886 |
|
|
|
172,211 |
|
|
|
94.8 | % |
|
|
1,582 |
|
|
|
3,235 |
|
|
|
3.0 | % |
Huntsville, AL |
|
|
4 |
|
|
|
1,051 |
|
|
|
245,130 |
|
|
|
94.4 | % |
|
|
1,401 |
|
|
|
3,116 |
|
|
|
2.9 | % |
Memphis, TN |
|
|
3 |
|
|
|
883 |
|
|
|
124,991 |
|
|
|
92.7 | % |
|
|
1,546 |
|
|
|
2,920 |
|
|
|
2.7 | % |
Louisville, KY |
|
|
3 |
|
|
|
794 |
|
|
|
99,289 |
|
|
|
96.3 | % |
|
|
1,386 |
|
|
|
2,304 |
|
|
|
2.2 | % |
Cincinnati, OH |
|
|
2 |
|
|
|
542 |
|
|
|
129,279 |
|
|
|
96.7 | % |
|
|
1,764 |
|
|
|
2,013 |
|
|
|
1.9 | % |
Greenville, SC |
|
|
1 |
|
|
|
702 |
|
|
|
128,748 |
|
|
|
96.0 | % |
|
|
1,299 |
|
|
|
1,808 |
|
|
|
1.7 | % |
Charleston, SC |
|
|
2 |
|
|
|
518 |
|
|
|
87,776 |
|
|
|
94.2 | % |
|
|
1,852 |
|
|
|
1,796 |
|
|
|
1.7 | % |
Myrtle Beach, SC - Wilmington, NC |
3 |
|
|
|
628 |
|
|
|
70,552 |
|
|
|
93.3 | % |
|
|
1,386 |
|
|
|
1,720 |
|
|
|
1.6 | % | ||
Austin, TX (1) |
|
|
1 |
|
|
|
256 |
|
|
|
62,410 |
|
|
|
96.1 | % |
|
|
1,756 |
|
|
|
905 |
|
|
|
0.9 | % |
San Antonio, TX |
|
|
1 |
|
|
|
306 |
|
|
|
58,313 |
|
|
|
96.7 | % |
|
|
1,451 |
|
|
|
881 |
|
|
|
0.9 | % |
Total/Weighted Average |
|
|
115 |
|
|
|
33,398 |
|
|
$ | 6,837,027 |
|
|
|
94.9 | % |
|
$ | 1,610 |
|
|
$ | 106,777 |
|
|
|
100.0 | % |
|
(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 September 30, 2026. |
30
Table of Contents
Current Developments
Pending Merger
On September 8, 2026, we, IROP and Islanders OP Sub, LLC, a wholly-owned subsidiary of IROP (“IROP Merger Sub”), entered into an agreement and plan of merger with Centerspace (“CSR”), and its operating partnership, Centerspace, LP (“CSR OP”). On September 22, 2026, Islanders Sub, LLC, a wholly-owned subsidiary of IRT (“IRT Merger Sub”), was added as a party by joinder, and the parties entered into an amendment to the agreement and plan of merger pursuant to which IRT elected to implement an alternative structure with respect to the Company Merger (as defined below) (as amended, the “Merger Agreement”).
On the terms, and subject to the conditions of, the Merger Agreement, CSR will merge with and into IRT Merger Sub (the “Company Merger”), with IRT Merger Sub surviving the Company Merger; and immediately thereafter, IROP Merger Sub will merge with and into CSR OP (the “Partnership Merger” and, together with the Company Merger, the “Mergers”), with CSR OP surviving the Partnership Merger.
In the Company Merger, each outstanding share of CSR common stock will be converted into 3.800 (the “Exchange Ratio”) newly issued shares of IRT common stock, par value $0.01 per share (“IRT common stock”), with cash paid in lieu of any fractional shares. In the Partnership Merger, each outstanding common unit of CSR OP will be converted into the right to receive a number of newly issued common units of IROP (each, an “IROP common unit”) equal to the Exchange Ratio, and each outstanding Series D Preferred Unit and Series E Preferred Unit of CSR OP will be converted into one Series A Preferred Unit and one Series B Preferred Unit of IROP, respectively, with each series A Preferred Unit holder and Series B Preferred Unit holder having the right to exchange them into a number of IROP common units equal to 1.37931 or 1.20482, respectively, multiplied by the Exchange Ratio. Consummation of the Mergers is subject to customary closing conditions, including, among others, receipt of IRT stockholder approval and CSR shareholder approval. We currently expect the Mergers to close as early as the end of the fourth quarter of 2026.
In conjunction with the Mergers, we have incurred approximately $6.2 million in merger-related transaction costs during the three and nine months ended September 30, 2026. The costs incurred to date primarily consist of advisory fees, attorney fees, accountant fees and SEC filing fees and are presented in a separate line item on the face of the condensed consolidated statements of operations. IRT will be treated as the accounting acquiror in the Mergers, which will be accounted for under the acquisition method, with any excess of the purchase price over the fair value of the net assets acquired allocated to goodwill.
Dispositions
On September 10, 2026, we sold one multifamily apartment community in Memphis, TN for a gross sale price of $55.8 million, resulting in a gain of $26.5 million.
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.
On October 1, 2026, we acquired our joint venture partner's 15% membership interest for $7.5 million and assumed full operational control and 100% equity ownership of The Mustang, the property underlying the joint venture. The Mustang is a 275-unit operating community in Dallas, Texas, which was 94% occupied, with an average effective monthly rent per occupied unit of $3,071, as of September 30, 2026. We will consolidate the property into our financial results effective October 1, 2026.
31
Table of Contents
As of September 30, 2026 and December 31, 2025, we had investments in unconsolidated real estate entities of $77.8 million and $98.3 million, respectively.
Investments in Real Estate Under Development
As of September 30, 2026, we had one investment in real estate under development of $59.2 million, which contains an aggregate of 378 units and is currently in lease-up. During the three months ended June 30, 2026, our previously disclosed development property in Denver, Colorado was completed and transitioned into our stabilized operating portfolio, and is included in the multifamily apartment properties.
Value Add Program
Strategically renovating communities where there is the potential for outsized rent growth (our "Value Add Program") provides us with the opportunity to improve long-term growth through targeted unit and/or common area investments. We completed renovations on 744 units during the three months ended September 30, 2026. From inception of our Value Add Program in January 2018 through September 30, 2026, we completed renovations on 13,212 of the 18,592 units currently in our Value Add Program, achieving a return on investment of 15.8% (and approximately 17.9% 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, 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.
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 nine months ended September 30, 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. No shares were repurchased under our Stock Repurchase Program during the three months ended September 30, 2026. As of September 30, 2026, $190.1 million in shares of our common stock remained authorized for repurchase under our Stock Repurchase Program.
32
Table of Contents
Results of Operations
As of September 30, 2026, we owned and consolidated 115 multifamily apartment properties, of which 109 comprised the Same-Store Portfolio.
Three Months Ended September 30, 2026 compared to the Three Months Ended September 30, 2025
|
|
SAME-STORE PORTFOLIO |
|
|
NON SAME-STORE PORTFOLIO |
|
|
CONSOLIDATED |
|
|||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) |
|
Three Months Ended September 30, |
|
|
Three Months Ended September 30, |
|
|
Three Months Ended September 30, |
|
|||||||||||||||||||||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
Increase (Decrease) |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
|
Increase (Decrease) |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
|
Increase (Decrease) |
|
|
% Change |
|
||||||||||||
Property Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of properties (1) |
|
|
109 |
|
|
|
109 |
|
|
|
— |
|
|
|
— |
|
|
|
6 |
|
|
|
6 |
|
|
|
— |
|
|
|
0.0 |
% |
|
|
115 |
|
|
|
115 |
|
|
|
— |
|
|
|
0.0 |
% |
Number of units (1) |
|
|
31,735 |
|
|
|
31,735 |
|
|
|
— |
|
|
|
— |
|
|
|
1,663 |
|
|
|
2,083 |
|
|
|
(420) |
|
|
|
(20.2 |
)% |
|
|
33,398 |
|
|
|
33,818 |
|
|
|
(420) |
|
|
|
(1.2 |
)% |
Average occupancy (1) |
|
|
95.0% |
|
|
|
95.4% |
|
|
|
(0.4)% |
|
|
|
— |
|
|
|
93.2% |
|
|
|
89.4% |
|
|
|
3.8% |
|
|
|
— |
|
|
|
94.8% |
|
|
|
94.9% |
|
|
|
(0.1)% |
|
|
|
— |
|
Average effective monthly rent, per unit (1) |
|
$ | 1,605 |
|
|
$ | 1,595 |
|
|
$ | 10 |
|
|
|
0.6 |
% |
|
$ | 1,651 |
|
|
$ | 1,609 |
|
|
$ | 42 |
|
|
|
2.6 |
% |
|
$ | 1,610 |
|
|
$ | 1,593 |
|
|
$ | 17 |
|
|
|
1.1 |
% |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and other property revenue |
|
$ | 161,319 |
|
|
$ | 158,216 |
|
|
$ | 3,103 |
|
|
|
2.0 |
% |
|
$ | 10,638 |
|
|
$ | 8,672 |
|
|
$ | 1,966 |
|
|
|
22.7 |
% |
|
$ | 171,957 |
|
|
$ | 166,888 |
|
|
$ | 5,069 |
|
|
|
3.0 |
% |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating expenses |
|
|
59,370 |
|
|
|
57,905 |
|
|
|
1,465 |
|
|
|
2.5 |
% |
|
|
4,970 |
|
|
|
3,794 |
|
|
|
1,176 |
|
|
|
31.0 |
% |
|
|
64,340 |
|
|
|
61,699 |
|
|
|
2,641 |
|
|
|
4.3 |
% |
Net Operating Income |
|
$ | 101,949 |
|
|
$ | 100,311 |
|
|
$ | 1,638 |
|
|
|
1.6 |
% |
|
$ | 5,668 |
|
|
$ | 4,878 |
|
|
$ | 790 |
|
|
|
16.2 |
% |
|
$ | 107,617 |
|
|
$ | 105,189 |
|
|
$ | 2,428 |
|
|
|
2.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | 152 |
|
|
$ | 250 |
|
|
$ | (98 |
) |
|
|
(39.2 |
)% |
Corporate and other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property management expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,662 |
|
|
|
7,891 |
|
|
|
(229) |
|
|
|
(2.9 |
)% |
|||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,983 |
|
|
|
4,905 |
|
|
|
78 |
|
|
|
1.6 |
% |
||||||
Depreciation and amortization expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,874 |
|
|
|
61,735 |
|
|
|
4,139 |
|
|
|
6.7 |
% |
|||||||
Casualty losses, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
498 |
|
|
|
419 |
|
|
|
79 |
|
|
|
18.9 |
% |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(22,723) |
|
|
|
(20,455 |
) |
|
|
(2,268) |
|
|
|
11.1 |
% |
Gain on sale (loss on impairment) of real estate assets, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,474 |
|
|
|
(12,841) |
|
|
|
39,315 |
|
|
|
(306.2 |
)% |
|||||||||
Merger and integration costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,200) |
|
|
|
— |
|
|
|
(6,200) |
|
|
|
100.0 |
% |
|||||||||
Other loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(29) |
|
|
|
(12) |
|
|
|
(17) |
|
|
|
141.7 |
% |
|||||||||
(Loss) income from investments in unconsolidated real estate entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(555) |
|
|
|
9,814 |
|
|
|
(10,369) |
|
|
|
(105.7 |
)% |
|||||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | 25,719 |
|
|
$ | 6,995 |
|
|
$ | 18,724 |
|
|
|
267.7 |
% |
Income allocated to noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(573) |
|
|
|
(102 |
) |
|
|
(471) |
|
|
|
461.8 |
% |
|||||||
Net income available to common shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | 25,146 |
|
|
$ | 6,893 |
|
|
$ | 18,253 |
|
|
|
264.8 |
% |
|||||||||
|
(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 $5.1 million to $172.0 million for the three months ended September 30, 2026 from $166.9 million for the three months ended September 30, 2025. The increase was attributable to a $3.1 million, or 2.0% increase in same-store rental and other property revenue driven by higher other income from the rollout of the Wi-Fi program of $2.3 million, lower bad debt and higher average monthly rent compared to the prior year period and a $2.0 million increase in non same-store rental and other property revenue primarily driven by two newly developed properties and the acquisition of two properties since September 30, 2025 earning a full quarter of rental and other property revenue in 2026.
33
Table of Contents
Expenses
Property operating expenses. Property operating expenses increased $2.6 million to $64.3 million for the three months ended September 30, 2026 from $61.7 million for the three months ended September 30, 2025. The increase was primarily driven by a $1.5 million increase in same-store operating expenses due to higher contract services, real estate taxes and advertising expenses, partially offset by lower insurance expenses. In addition, non same-store operating expenses increased $1.2 million due to the acquisition of two properties since September 30, 2025 incurring a full quarter of operating expenses in 2026.
Property management expenses. Property management expenses decreased $0.2 million to $7.7 million for the three months ended September 30, 2026 from $7.9 million for the three months ended September 30, 2025. The decrease was driven by lower legal fees and meeting and conferences costs, partially offset by higher salary and stock-based compensation.
Depreciation and amortization expense. Depreciation and amortization expense increased $4.1 million to $65.9 million for the three months ended September 30, 2026 from $61.7 million for the three months ended September 30, 2025. The increase was primarily due to our Value Add Program and properties acquired or placed in service since January 1, 2025, partially offset by our held for sale and sold properties for which depreciation ceased.
Interest expense. Interest expense increased $2.3 million to $22.7 million for the three months ended September 30, 2026, from $20.4 million for the three months ended September 30, 2025. The increase during the three months ended September 30, 2026, was primarily driven by a higher average debt balance resulting from borrowings on our lines of credit to fund our 2026 acquisitions and a mortgage assumed in connection with one of those acquisitions, and a decrease in capitalized interest associated with our real estate under development, partially offset by lower SOFR rates.
Gain on sale (loss on impairment) of real estate assets, net. During the three months ended September 30, 2026, we recorded a gain on sale of $26.5 million for the sale of one multi-family property. During the three months ended September 30, 2025, we recorded a loss on impairment of $12.8 million for one multi-family property held for sale.
Merger and integration costs. In connection with the proposed Mergers with CSR, we incurred approximately $6.2 million of merger-related transaction costs during the three months ended September 30, 2026. The merger-related costs incurred to date primarily consist of advisory fees, attorney fees, accountant fees and SEC filing fees.
(Loss) income from investments in unconsolidated real estate entities. (Loss) income from investments in unconsolidated real estate entities changed by $10.4 million to a loss of $0.6 million for the three months ended September 30, 2026 from income of $9.8 million for the three months ended September 30, 2025. The change was primarily driven by the $10.4 million gain recorded during the three months ended September 30, 2025 related to the sale by our joint venture partner of the Metropolis at Innsbrook property and higher depreciation expense from our unconsolidated real estate entities during the three months ended September 30, 2026 compared to the three months ended September 30, 2025.
34
Table of Contents
Results of Operations
As of September 30, 2026, we owned and consolidated 115 multifamily apartment properties, of which 109 comprised the Same-Store Portfolio.
Nine Months Ended September 30, 2026 compared to the Nine Months Ended September 30, 2025
|
|
SAME-STORE PORTFOLIO |
|
|
NON SAME-STORE PORTFOLIO |
|
|
CONSOLIDATED |
|
|||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) |
|
Nine Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Increase |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase |
|
|
|
|
|
|||
|
|
2026 |
|
|
2025 |
|
|
(Decrease) |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
|
(Decrease) |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
|
(Decrease) |
|
|
% Change |
|
||||||||||||
Property Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of properties (1) |
|
|
109 |
|
|
|
109 |
|
|
|
— |
|
|
|
— |
|
|
|
6 |
|
|
|
6 |
|
|
|
— |
|
|
|
0.0 |
% |
|
|
115 |
|
|
|
115 |
|
|
|
— |
|
|
|
0.0 |
% |
Number of units (1) |
|
|
31,735 |
|
|
|
31,735 |
|
|
|
— |
|
|
|
— |
|
|
|
1,663 |
|
|
|
2,083 |
|
|
|
(420) |
|
|
|
(20.2 |
)% |
|
|
33,398 |
|
|
|
33,818 |
|
|
|
(420) |
|
|
|
(1.2 |
)% |
Average occupancy (1) |
|
|
95.1% |
|
|
|
95.4% |
|
|
|
(0.3)% |
|
|
|
— |
|
|
|
88.4% |
|
|
|
91.4% |
|
|
|
(3.0)% |
|
|
|
— |
|
|
|
94.8% |
|
|
|
94.9% |
|
|
|
(0.1)% |
|
|
|
— |
|
Average effective monthly rent, per unit (1) |
|
$ | 1,599 |
|
|
$ | 1,590 |
|
|
$ | 9 |
|
|
|
0.6 |
% |
|
$ | 1,702 |
|
|
$ | 1,601 |
|
|
$ | 101 |
|
|
|
6.3 |
% |
|
$ | 1,601 |
|
|
$ | 1,588 |
|
|
$ | 13 |
|
|
|
0.8 |
% |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and other property revenue |
|
$ | 474,490 |
|
|
$ | 467,832 |
|
|
$ | 6,658 |
|
|
|
1.4 |
% |
|
$ | 29,806 |
|
|
$ | 21,852 |
|
|
$ | 7,954 |
|
|
|
36.4 |
% |
|
$ | 504,296 |
|
|
$ | 489,684 |
|
|
$ | 14,612 |
|
|
|
3.0 |
% |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating expenses |
|
|
175,850 |
|
|
|
172,969 |
|
|
|
2,881 |
|
|
|
1.7 |
% |
|
|
13,989 |
|
|
|
8,928 |
|
|
|
5,061 |
|
|
|
56.7 |
% |
|
|
189,839 |
|
|
|
181,897 |
|
|
|
7,942 |
|
|
|
4.4 |
% |
Net Operating Income |
|
$ | 298,640 |
|
|
$ | 294,863 |
|
|
$ | 3,777 |
|
|
|
1.3 |
% |
|
$ | 15,817 |
|
|
$ | 12,924 |
|
|
$ | 2,893 |
|
|
|
22.4 |
% |
|
$ | 314,457 |
|
|
$ | 307,787 |
|
|
$ | 6,670 |
|
|
|
2.2 |
% |
Other Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | 376 |
|
|
$ | 885 |
|
|
$ | (509 |
) |
|
|
(57.5 |
)% |
Corporate and other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property management expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,830 |
|
|
|
23,433 |
|
|
|
397 |
|
|
|
1.7 |
% |
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,181 |
|
|
|
19,293 |
|
|
|
(112) |
|
|
|
(0.6 |
)% |
Depreciation and amortization expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
195,367 |
|
|
|
180,256 |
|
|
|
15,111 |
|
|
|
8.4 |
% |
Casualty losses, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22 |
|
|
|
559 |
|
|
|
(537 |
) |
|
|
(96.1 |
)% |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(65,037) |
|
|
|
(58,575 |
) |
|
|
(6,462) |
|
|
|
11.0 |
% |
Gain on sale (loss on impairment) of real estate assets, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,474 |
|
|
|
(11,344) |
|
|
|
37,818 |
|
|
|
(333.4 |
)% |
Loss on extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
(67 |
) |
|
|
67 |
|
|
|
(100.0 |
)% |
Merger and integration costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,200) |
|
|
|
— |
|
|
|
(6,200) |
|
|
|
100.0 |
% |
Other loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(220) |
|
|
|
(115 |
) |
|
|
(105) |
|
|
|
91.3 |
% |
(Loss) income from investments in unconsolidated real estate entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,438) |
|
|
|
8,663 |
|
|
|
(11,101) |
|
|
|
(128.1 |
)% |
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | 29,012 |
|
|
$ | 23,693 |
|
|
$ | 5,319 |
|
|
|
22.4 |
% |
Income allocated to noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(541) |
|
|
|
(401 |
) |
|
|
(140) |
|
|
|
34.9 |
% |
Net income available to common shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | 28,471 |
|
|
$ | 23,292 |
|
|
$ | 5,179 |
|
|
|
22.2 |
% |
|
(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 $14.6 million to $504.3 million for the nine months ended September 30, 2026 from $489.7 million for the nine months ended September 30, 2025. The increase was attributable to a $6.6 million, or 1.4%, increase in same-store rental and other property revenue driven by higher other income from the rollout of the Wi-Fi program of $2.8 million, lower bad debt and higher average monthly rent compared to the prior year period and an $8.0 million increase in non same-store rental and other property revenue primarily driven by two newly developed properties and the acquisition of three properties in 2025 earning rental and other property revenue for the full period in 2026.
35
Table of Contents
Expenses
Property operating expenses. Property operating expenses increased $7.9 million to $189.8 million for the nine months ended September 30, 2026 from $181.9 million for the nine months ended September 30, 2025. The increase was primarily driven by a $2.9 million increase in same-store operating expenses due to higher payroll costs, utilities and contract services, partially offset by lower insurance expenses. In addition, non same-store operating expenses increased $5.1 million due to two newly developed properties and the acquisition of three properties in 2025 incurring operating expenses for the full period in 2026.
Property management expenses. Property management expenses increased $0.4 million to $23.8 million for the nine months ended September 30, 2026 from $23.4 million for the nine months ended September 30, 2025. The increase was primarily driven by $0.4 million of costs associated with an expanded new hire training program that was launched in mid-2025, but operated for all of the nine months ended September 30, 2026, partially offset by lower software costs, meeting and conference costs and legal fees.
Depreciation and amortization expense. Depreciation and amortization expense increased $15.1 million to $195.4 million for the nine months ended September 30, 2026 from $180.3 million for the nine months ended September 30, 2025. The increase was primarily due to our Value Add Program and properties acquired or placed in service since January 1, 2025, partially offset by our held for sale and sold properties for which depreciation ceased.
Casualty losses, net. During the nine months ended September 30, 2026 and 2025, we incurred casualty losses, net, of less than $0.1 million and $0.6 million, respectively. The decrease was primarily due to insurance recoveries in excess of the amount of losses incurred for casualty events during the nine months ended September 30, 2026, primarily related to the settlement of several prior-period fire claims.
Interest expense. Interest expense increased $6.5 million to $65.0 million for the nine months ended September 30, 2026, from $58.5 million for the nine months ended September 30, 2025. The increase during the nine months ended September 30, 2026, was primarily driven by a higher average debt balance resulting from borrowings on our lines of credit to fund our 2026 acquisitions and a mortgage assumed in connection with one of those acquisitions, and a decrease in capitalized interest associated with our real estate under development, partially offset by lower SOFR rates.
Gain on sale (loss on impairment) of real estate assets, net. During the nine months ended September 30, 2026, we recorded a gain on sale of $26.5 million for one multi-family property. During the nine months ended September 30, 2025, we recorded an impairment loss of $12.8 million on one property held for sale, partially offset by the sale of one multi-family property at a gain of $1.5 million.
Merger and integration costs. In connection with the proposed Mergers with CSR, we incurred approximately $6.2 million of merger-related transaction costs during the nine months ended September 30, 2026. The merger-related costs incurred to date primarily consist of advisory fees, attorney fees, accountant fees and SEC filing fees.
(Loss) income from investments in unconsolidated real estate entities. (Loss) income from investments in unconsolidated real estate entities changed by $11.1 million to a loss of $2.4 million for the nine months ended September 30, 2026 from income of $8.7 million for the nine months ended September 30, 2025. The change was primarily driven by the $10.4 million gain recorded during the nine months ended September 30, 2025 related to the sale by our joint venture partner of the Metropolis at Innsbrook property and higher depreciation expense from our unconsolidated real estate entities during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
36
Table of Contents
Non-GAAP Financial Measures
Funds from Operations (FFO) and Core Funds from Operations (CFFO)
We believe that funds from operations (“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, 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.
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, non-operating gains or losses or non-recurring items related to items such as merger and integration costs, which are cash costs that we do not consider indicative of our ongoing operations, 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.
37
Table of Contents
Set forth below is a reconciliation of net income to FFO and CFFO for the three and nine months ended September 30, 2026 and 2025 (in thousands, except share and per share information):
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
||||||||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||||
|
|
Amount |
|
|
Per Share(1) |
|
|
Amount |
|
|
Per Share(2) |
|
|
Amount |
|
|
Per Share(1) |
|
|
Amount |
|
|
Per Share(2) |
|
||||||||
Net income |
|
$ | 25,719 |
|
|
$ | 0.11 |
|
|
$ | 6,995 |
|
|
$ | 0.03 |
|
|
$ | 29,012 |
|
|
$ | 0.12 |
|
|
$ | 23,693 |
|
|
$ | 0.10 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate depreciation and amortization |
|
|
65,300 |
|
|
|
0.27 |
|
|
|
61,282 |
|
|
|
0.26 |
|
|
|
193,733 |
|
|
|
0.80 |
|
|
|
178,964 |
|
|
|
0.75 |
|
Our share of real estate depreciation and amortization from investments in unconsolidated real estate entities |
|
|
886 |
|
|
|
— |
|
|
|
375 |
|
|
|
— |
|
|
|
2,593 |
|
|
|
0.01 |
|
|
|
1,289 |
|
|
|
0.01 |
|
(Gain on sale) loss on impairment of real estate assets, net, excluding prepayment gains |
|
|
(26,474) |
|
|
|
(0.11) |
|
|
|
12,841 |
|
|
|
0.05 |
|
|
|
(26,474) |
|
|
|
(0.11) |
|
|
|
12,914 |
|
|
|
0.05 |
|
Gain on sale of real estate associated with unconsolidated real estate entities |
|
|
— |
|
|
|
— |
|
|
|
(10,389) |
|
|
|
(0.04) |
|
|
|
— |
|
|
|
— |
|
|
|
(10,389) |
|
|
|
(0.04) |
|
FFO |
|
$ | 65,431 |
|
|
$ | 0.27 |
|
|
$ | 71,104 |
|
|
$ | 0.30 |
|
|
$ | 198,864 |
|
|
$ | 0.82 |
|
|
$ | 206,471 |
|
|
$ | 0.87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO |
|
$ | 65,431 |
|
|
$ | 0.27 |
|
|
$ | 71,104 |
|
|
$ | 0.30 |
|
|
$ | 198,864 |
|
|
$ | 0.82 |
|
|
$ | 206,471 |
|
|
$ | 0.87 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other depreciation and amortization |
|
|
574 |
|
|
|
— |
|
|
|
453 |
|
|
|
— |
|
|
|
1,634 |
|
|
|
0.01 |
|
|
|
1,292 |
|
|
|
0.01 |
|
Casualty losses, net |
|
|
498 |
|
|
|
— |
|
|
|
419 |
|
|
|
— |
|
|
|
22 |
|
|
|
— |
|
|
|
559 |
|
|
|
— |
|
Loan (premium accretion) discount amortization, net |
|
|
(2,018) |
|
|
|
(0.01) |
|
|
|
(2,001) |
|
|
|
(0.01) |
|
|
|
(6,055) |
|
|
|
(0.03) |
|
|
|
(6,015) |
|
|
|
(0.03) |
|
Prepayment (gains) losses on asset dispositions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,570) |
|
|
|
(0.01) |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
67 |
|
|
|
— |
|
Other loss |
|
|
29 |
|
|
|
— |
|
|
|
12 |
|
|
|
— |
|
|
|
220 |
|
|
|
— |
|
|
|
115 |
|
|
|
— |
|
Merger and integration costs |
|
|
6,200 |
|
|
|
0.03 |
|
|
|
— |
|
|
|
— |
|
|
|
6,200 |
|
|
|
0.03 |
|
|
|
— |
|
|
|
— |
|
CFFO |
|
$ | 70,714 |
|
|
$ | 0.29 |
|
|
$ | 69,987 |
|
|
$ | 0.29 |
|
|
$ | 200,885 |
|
|
$ | 0.83 |
|
|
$ | 200,919 |
|
|
$ | 0.84 |
|
|
(1) |
Based on 241,365,153 and 241,690,156 weighted-average shares and units outstanding for the three and nine months ended September 30, 2026. |
|
(2) |
Based on 239,576,189 and 238,570,560 weighted-average shares and units outstanding for the three and nine months ended September 30, 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, merger and integration costs, 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 a supplemental measure of our financial performance and should not be considered as an alternative to net income or any other GAAP measure.
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.
38
Table of Contents
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 and nine months ended September 30, 2026 and 2025 (in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
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||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
% change |
|
|
2026 |
|
|
2025 |
|
|
% change |
|
||||||
Net income |
|
$ | 25,719 |
|
|
$ | 6,995 |
|
|
|
267.7 | % |
|
$ | 29,012 |
|
|
$ | 23,693 |
|
|
|
22.4 | % |
Other revenue |
|
|
(152) |
|
|
|
(250 | ) |
|
|
(39.2 | )% |
|
|
(376) |
|
|
|
(885 | ) |
|
|
(57.5 | )% |
Property management expenses |
|
|
7,662 |
|
|
|
7,891 |
|
|
|
(2.9 | )% |
|
|
23,830 |
|
|
|
23,433 |
|
|
|
1.7 | % |
General and administrative expenses |
|
|
4,983 |
|
|
|
4,905 |
|
|
|
1.6 | % |
|
|
19,181 |
|
|
|
19,293 |
|
|
|
(0.6 | )% |
Depreciation and amortization expense |
|
|
65,874 |
|
|
|
61,735 |
|
|
|
6.7 | % |
|
|
195,367 |
|
|
|
180,256 |
|
|
|
8.4 | % |
Casualty losses, net |
|
|
498 |
|
|
|
419 |
|
|
|
18.9 | % |
|
|
22 |
|
|
|
559 |
|
|
|
(96.1 | )% |
Interest expense |
|
|
22,723 |
|
|
|
20,455 |
|
|
|
11.1 | % |
|
|
65,037 |
|
|
|
58,575 |
|
|
|
11.0 | % |
(Gain on sale) loss on impairment of real estate assets, net |
|
|
(26,474) |
|
|
|
12,841 |
|
|
|
(306.2 | )% |
|
|
(26,474) |
|
|
|
11,344 |
|
|
|
(333.4 | )% |
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
0.0 | % |
|
|
— |
|
|
|
67 |
|
|
|
(100.0 | )% |
Other loss |
|
|
29 |
|
|
|
12 |
|
|
|
141.7 | % |
|
|
220 |
|
|
|
115 |
|
|
|
91.3 | % |
Loss (income) from investments in unconsolidated real estate entities |
|
|
555 |
|
|
|
(9,814) |
|
|
|
(105.7 | )% |
|
|
2,438 |
|
|
|
(8,663) |
|
|
|
(128.1 | )% |
Merger and integration costs |
|
|
6,200 |
|
|
|
— |
|
|
|
100.0 | % |
|
|
6,200 |
|
|
|
— |
|
|
|
100.0 | % |
NOI |
|
|
107,617 |
|
|
|
105,189 |
|
|
|
2.3 | % |
|
|
314,457 |
|
|
|
307,787 |
|
|
|
2.2 | % |
Less: Non same-store portfolio NOI |
|
|
5,668 |
|
|
|
4,878 |
|
|
|
16.2 | % |
|
|
15,817 |
|
|
|
12,924 |
|
|
|
22.4 | % |
Same-store portfolio (a) NOI |
|
$ | 101,949 |
|
|
$ | 100,311 |
|
|
|
1.6 | % |
|
$ | 298,640 |
|
|
$ | 294,863 |
|
|
|
1.3 | % |
|
(a) |
Same-Store Portfolio for the three and nine months ended September 30, 2026 and 2025 included 109 properties containing 31,735 units. |
Set forth below is Same-Store Portfolio (a) NOI for the three and nine months ended September 30, 2026 and 2025 (in thousands, except per unit data):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
% change |
|
|
2026 |
|
|
2025 |
|
|
% change |
|
||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and other property revenue |
|
$ | 161,319 |
|
|
$ | 158,216 |
|
|
|
2.0 | % |
|
$ | 474,490 |
|
|
$ | 467,832 |
|
|
|
1.4 | % |
Property Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate taxes |
|
|
17,830 |
|
|
|
17,308 |
|
|
|
3.0 | % |
|
|
56,023 |
|
|
|
55,377 |
|
|
|
1.2 | % |
Property insurance |
|
|
2,714 |
|
|
|
3,264 |
|
|
|
(16.9 | )% |
|
|
9,003 |
|
|
|
10,712 |
|
|
|
(16.0 | )% |
Personnel expenses |
|
|
13,210 |
|
|
|
13,432 |
|
|
|
(1.7 | )% |
|
|
38,872 |
|
|
|
37,756 |
|
|
|
3.0 | % |
Utilities |
|
|
8,280 |
|
|
|
8,027 |
|
|
|
3.2 | % |
|
|
24,110 |
|
|
|
23,221 |
|
|
|
3.8 | % |
Repairs and maintenance |
|
|
5,732 |
|
|
|
5,591 |
|
|
|
2.5 | % |
|
|
15,790 |
|
|
|
15,758 |
|
|
|
0.2 | % |
Contract services |
|
|
6,961 |
|
|
|
6,078 |
|
|
|
14.5 | % |
|
|
19,700 |
|
|
|
18,007 |
|
|
|
9.4 | % |
Advertising expenses |
|
|
2,961 |
|
|
|
2,571 |
|
|
|
15.2 | % |
|
|
7,422 |
|
|
|
7,190 |
|
|
|
3.2 | % |
Other expenses |
|
|
1,682 |
|
|
|
1,634 |
|
|
|
2.9 | % |
|
|
4,930 |
|
|
|
4,948 |
|
|
|
(0.4 | )% |
Total property operating expenses |
|
|
59,370 |
|
|
|
57,905 |
|
|
|
2.5 | % |
|
|
175,850 |
|
|
|
172,969 |
|
|
|
1.7 | % |
Same-store portfolio NOI |
|
$ | 101,949 |
|
|
$ | 100,311 |
|
|
|
1.6 | % |
|
$ | 298,640 |
|
|
$ | 294,863 |
|
|
|
1.3 | % |
Same-store portfolio NOI Margin |
|
|
63.2% |
|
|
|
63.4% |
|
|
|
(0.2 | )% |
|
|
62.9% |
|
|
|
63.0% |
|
|
|
(0.1 | )% |
Average Occupancy |
|
|
95.0 | % |
|
|
95.4 | % |
|
|
(0.4 | )% |
|
|
95.1 | % |
|
|
95.4 | % |
|
|
(0.3 | )% |
Average effective monthly rent, per unit |
|
$ | 1,605 |
|
|
$ | 1,595 |
|
|
|
0.6 | % |
|
$ | 1,599 |
|
|
$ | 1,590 |
|
|
|
0.6 | % |
|
(a) |
Same-Store Portfolio for the three and nine months ended September 30, 2026 and 2025 included 109 properties containing 31,735 units. |
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Table of Contents
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:
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• |
make investments to continue our value add programs 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 $15.9 million as of September 30, 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 any future ATM program we intend to put in place. |
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Table of Contents
Cash Flows
As of September 30, 2026 and 2025, we maintained cash and cash equivalents, and restricted cash of approximately $43.3 million and $50.9 million, respectively. Our cash and cash equivalents were generated from the following activities (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30, |
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|||||
|
|
2026 |
|
|
2025 |
|
||
Cash flow provided by operating activities |
|
$ | 217,426 |
|
|
$ | 221,959 |
|
Cash flow used in investing activities |
|
|
(112,624) |
|
|
|
(152,975 | ) |
Cash flow used in financing activities |
|
|
(109,118) |
|
|
|
(61,507 | ) |
Net change in cash and cash equivalents, and restricted cash |
|
|
(4,316) |
|
|
|
7,477 |
|
Cash and cash equivalents, and restricted cash, beginning of period |
|
|
47,622 |
|
|
|
43,452 |
|
Cash and cash equivalents, and restricted cash, end of the period |
|
$ | 43,306 |
|
|
$ | 50,929 |
|
Our cash inflows from operating activities during the nine months ended September 30, 2026 and 2025 were primarily driven by ongoing operations of our properties. The $4.5 million decrease in cash inflows from operating activities during the nine months ended September 30, 2026 was primarily driven by $9.2 million in timing of real estate tax payments and $2.2 million in prepaid rents.
Our cash outflows from investing activities during the nine months ended September 30, 2026 were primarily due to the acquisition of one multifamily property in the amount of $29.4 million, $107.6 million of capital expenditures, $25.2 million of investments in unconsolidated real estate entities and $5.6 million of investments in real estate under development, partially offset by $54.4 million of proceeds from the disposition of one property. Our cash outflows from investing activities during the nine months ended September 30, 2025 were primarily due to the acquisition of three multifamily properties in the amount of $152.7 million, $101.4 million of capital expenditures, $24.4 million of investments in unconsolidated real estate entities and $16.3 million of investments in real estate under development, partially offset by $109.2 million of proceeds from the disposition of one property, $31.1 million of proceeds from the return of investment in unconsolidated real estate entities and $1.5 million of proceeds from insurance claims.
Our cash outflows from financing activities during the nine months ended September 30, 2026 were primarily due to $165.7 million of mortgage principal repayments and payoffs, the payment of dividends on our common stock and noncontrolling interests of $126.1 million and repurchases of common stock under the Stock Repurchase Program in an aggregate amount of $29.9 million, partially offset by $218.6 million of net proceeds from our unsecured revolver and term loan. Our cash outflows from financing activities during the nine months ended September 30, 2025 were primarily due to mortgage principal repayments of $97.4 million, payment of dividends on our common stock and noncontrolling interests of $116.7 million and payments for deferred financing costs of $6.2 million, partially offset by the $150.7 million issuance of common stock from our forward equity transactions.
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Table of Contents
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 nine months ended September 30, 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.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
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 nine months ended September 30, 2026 from the disclosures included in our 2025 Annual Report.
Item 4. Controls and Procedures.
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 September 30, 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 September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Table of Contents
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
We are subject to various legal proceedings and claims that arise in the ordinary course of our business operations. Matters which arise out of allegations of bodily injury, property damage, employment practices and professional liability are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, we currently believe the final outcome of such matters will not have a material adverse effect on our financial position, results of operations or cash flows.
Starting around November 2022, putative class action representatives began filing complaints in various United States District Courts across the country naming as defendants RealPage, Inc. (“RealPage”), a seller of revenue management products, and approximately 50 defendants who own and/or manage multifamily residential rental housing, alleging that the defendants conspired to fix, raise, maintain, and stabilize rent prices in violation of Section 1 of the Sherman Act. Some of the complaints, including one filed on November 14, 2022, in the U.S. District Court for the Northern District of Illinois, named us as one of the defendants, and others did not. The actions were consolidated for pretrial proceedings in the Middle District of Tennessee. Fact discovery has ended in the litigation, and the Court will be hearing and deciding motions concerning expert testimony and class certification early next year. We have recorded a loss contingency representing our estimate of the probable loss. We deny all allegations of wrongdoing, and we intend to continue to defend against these claims vigorously.
On July 2, 2025, the Attorney General of Kentucky filed a complaint against RealPage and nine other defendants who own and/or manage multifamily residential rental housing, including IRT, on behalf of the Commonwealth of Kentucky, also alleging that the defendants conspired to fix, raise, maintain, and stabilize rent prices in violation of Section 1 of the Sherman Act. On September 15, 2025, IRT and other defendants in the complaint filed motions to dismiss the case. On February 2, 2026, the court denied the motions to dismiss. This proceeding is in the early stages, and it is not possible for IRT to predict the outcome nor is it possible to estimate the amount of loss, if any, which may be associated with an adverse decision in this matter. We deny all allegations of wrongdoing in connection with the complaint and intend to defend against these claims vigorously.
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Table of Contents
Item 1A. Risk Factors.
Except as set forth below, there have not been any material changes from the risk factors disclosed in Part I, Item 1A of our 2025 Annual Report.
Risks Relating to the Mergers
The Mergers may not be consummated on the terms or timeline currently contemplated, or at all. Consummation of the Mergers is subject to many conditions and if these conditions are not satisfied or waived, the Mergers will not be consummated, which could adversely affect the business of IRT and, in certain circumstances, result in IRT being required to pay a termination fee to CSR.
Consummation of the Mergers is subject to certain conditions, including: (1) the receipt of required approvals from IRT’s stockholders and from CSR’s shareholders; (2) approval for listing on the New York Stock Exchange (the “NYSE”), subject to official notice of issuance, of the shares of IRT Common Stock to be issued in the Mergers, including shares of IRT Common Stock issuable upon conversion of IROP Common Units, IROP Series A Preferred Units and IROP Series B Preferred Units issued in the Partnership Merger; (3) the absence of a court order or other legal restraint preventing the consummation of the Mergers; (4) accuracy of each party’s representations and warranties, subject in most cases to materiality or material adverse effect qualifications; (5) material compliance with each party’s covenants; (6) receipt by CSR of an opinion to the effect that the Company Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”); (7) receipt by IRT of an opinion of counsel to CSR that CSR qualifies as a REIT under the Code, and receipt by CSR of an opinion of counsel to IRT that IRT qualifies as a REIT under the Code; and (8) the absence of any continuing material adverse effect on CSR or IRT since the date of the Merger Agreement.
IRT cannot provide assurance that the conditions to consummation of the Mergers will be satisfied or waived, and accordingly, that the Mergers will be consummated on the terms or timeline that the parties anticipate, or at all. IRT or CSR may terminate the Merger Agreement under certain circumstances, including, among other reasons, if the Mergers are not consummated on or before June 30, 2027.
Failure to consummate the Mergers may adversely affect IRT’s results of operations, financial condition and business prospects for many reasons, including, among others:
• |
IRT may experience negative reactions from the financial markets, including negative impacts on the market price of IRT Common Stock; |
• |
IRT will have incurred substantial costs relating to the Mergers, such as legal, accounting, financial advisor, filing, printing and mailing fees and integration costs that have already been incurred or will continue to be incurred until consummation of the Mergers, which could adversely affect IRT’s financial conditions, results of operations and ability to make distributions to its stockholders and to pay the principal of and interest on its outstanding indebtedness; |
• |
the Mergers, whether or not they close, will divert the attention of the management of IRT instead of enabling them to more fully pursue other opportunities that could be beneficial to IRT, without realizing any of the benefits of having consummated the Mergers or the other transactions contemplated by the Merger Agreement; |
• |
IRT may experience negative reactions from employees; and |
• |
any reputational harm due to the adverse perception of any failure to successfully consummate the Mergers. |
• |
Upon a termination of the Merger Agreement, under certain circumstances specified therein, IRT may be required to pay CSR a termination fee of $60.0 million. |
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Table of Contents
The Exchange Ratio will not be adjusted in the event of any change in the price of IRT Common Stock or in the relative values of IRT and CSR.
At the Company Merger Effective Time, each issued and outstanding share of CSR Common Stock (other than certain shares set forth in the Merger Agreement) will be automatically converted into the right to receive newly issued shares of IRT Common Stock equal to the Exchange Ratio, with cash paid in lieu of fractional shares. At the Partnership Merger Effective Time, each issued and outstanding common unit of CSR OP will be automatically converted into the right to receive a number of IROP Common Units equal to the Exchange Ratio, rounded up to the nearest whole unit (for each holder of common units of CSR OP, after aggregation of all fractional IROP Common Units otherwise to be received by such holder). The Exchange Ratio will not be adjusted for changes in the market price of IRT Common Stock or in the relative values of IRT and CSR. It may be adjusted for stock splits, reverse stock splits, combinations, subdivisions or reclassifications of IRT Common Stock and CSR Common Stock and for cash dividends or other cash distributions reasonably determined in good faith to be necessary to maintain IRT’s or CSR’s qualification as a REIT or to avoid the incurrence of income or excise taxes (“REIT Dividends”) declared before the closing date of the Mergers, as provided in the Merger Agreement. The price of IRT Common Stock at the closing of the Mergers may vary from its price on September 8, 2026, the date the Original Merger Agreement was executed. Changes in the price of IRT Common Stock prior to consummation of the Mergers will affect the market value of the merger consideration, which may be more or less than the fair value of CSR’s net assets on the closing date of the Mergers. Changes in IRT Common Stock price may result from a variety of factors (many of which are beyond the control of IRT), including the following factors:
• |
changes in IRT’s business, operations, assets, liabilities or prospects; |
• |
changes in market assessments of the business, operations, financial position and prospects of IRT and CSR; |
• |
market assessments of the likelihood that the Mergers will be consummated; |
• |
interest rates, general market and economic conditions and other factors generally affecting the price of IRT Common Stock; |
• |
federal, state and local legislation, governmental regulation and legal developments in the businesses in which IRT operates; and |
• |
other factors beyond the control of IRT or CSR, including those described under this heading “Risk Factors.” |
The pendency of the Mergers could adversely affect the business and operations of IRT and CSR.
In connection with the pending Mergers, current and prospective employees of IRT and CSR may experience uncertainty about their future roles with IRT following the Mergers, which may materially adversely affect the ability of each of IRT and CSR to attract and retain key personnel during the pendency of the Mergers. If IRT is unable to retain personnel who are critical to the future operations of the companies, IRT could face disruptions in its operations, loss of existing residents, loss of key information, expertise or know-how and unanticipated additional recruitment and training costs. In addition, the loss of key IRT and CSR personnel could diminish the anticipated benefits of the Mergers. No assurance can be given that the combined company will be able to retain or attract employees to the same extent that IRT and CSR have previously been able to retain or attract their own employees. In addition, due to operating covenants in the Merger Agreement, IRT may be unable (without the other party’s prior written consent), during the pendency of the Mergers, to pursue strategic transactions, undertake significant capital projects, undertake certain significant financing transactions and otherwise pursue other actions, even if such actions would prove beneficial. Similarly, some current or prospective operators or vendors of each of IRT and CSR may delay or defer decisions, which could adversely affect the revenues, earnings, funds from operations, cash flows and expenses of IRT and CSR, regardless of whether the Mergers are consummated.
IRT stockholders will be diluted by the Mergers.
The Mergers will dilute the ownership position of IRT stockholders. IRT may also issue additional shares of common stock or preferred stock in the future and IROP may issue additional units of limited partnership in the future and such issuances would create further dilution. Consequently, IRT stockholders, as a general matter, will have less influence over the management and policies of IRT after consummation of the Mergers than they currently exercise.
Management’s attention may be diverted from ongoing business operations and opportunities during the pendency of the Mergers.
The Mergers may divert management’s attention from ongoing business operations and opportunities. Completion of the Mergers will require a significant amount of time and focus from the management teams of IRT, which may divert attention from day-to-day operations and the execution of other strategic initiatives. The diversion of management’s attention and any difficulties encountered in the transition and integration process could adversely affect the business, financial results and stock price of IRT.
The Mergers and related transactions are subject to approval by stockholders of both IRT and CSR.
In order for the Mergers to be consummated, CSR shareholders must approve the Company Merger, which requires the affirmative vote of the holders of at least a majority of the outstanding shares of CSR Common Stock entitled to vote on such proposal. In addition, IRT stockholders must approve the issuance of IRT Common Stock by the affirmative vote of at least a majority of the votes cast on such proposal. This approval by IRT stockholders is required under applicable NYSE rules.
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The Merger Agreement contains provisions that could discourage a potential competing acquiror of CSR or could result in any competing proposal being at a lower price than it might otherwise be.
The Merger Agreement contains provisions that, subject to limited exceptions, restrict CSR from soliciting, initiating, knowingly encouraging or facilitating competing third-party proposals to effect, among other things, a merger, reorganization, share sale, share exchange, asset sale, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving any purchase or sale of 20% or more of the consolidated assets of CSR or 20% or more of the outstanding CSR Common Stock, and contains mirrored restrictions applicable to IRT with respect to competing proposals involving IRT. IRT generally has an opportunity to offer to modify the terms of the Merger Agreement in response to any competing acquisition proposal before the board of trustees of CSR may withdraw or modify its recommendation or terminate the Merger Agreement to enter into such a competing acquisition proposal, and CSR has a mirrored opportunity with respect to any competing proposal involving IRT (except that IRT may not terminate the Merger Agreement to accept a competing acquisition proposal). In some circumstances, on termination of the Merger Agreement, CSR may be required to pay IRT a termination fee of $45.0 million, or IRT may be required to pay CSR a termination fee of $60.0 million.
These provisions could discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of CSR or IRT from considering or proposing such an acquisition, even if it were prepared to pay or offer consideration with a higher value than the value expected to be received or realized in the Mergers, or might result in a potential competing acquiror proposing to offer less consideration or less favorable terms than it might otherwise have proposed because of the added expense of the termination fee that may become payable in certain circumstances under the Merger Agreement.
An adverse outcome in any litigation or other legal proceedings relating to the Merger Agreement, or the transactions contemplated thereby, could have a material adverse impact on the businesses of IRT and CSR and their ability to consummate the transactions contemplated by the Merger Agreement.
Transactions similar to the Mergers are frequently the subject of litigation or other legal proceedings, including actions alleging that either party’s board of directors or board of trustees, as applicable, breached their respective duties by entering into a merger agreement or any other claims (contractual or otherwise) arising out of a merger or the transactions related thereto. If litigation or other legal proceedings are brought against IRT, CSR, the board of directors of IRT, the board of trustees of CSR or their respective subsidiaries in connection with the Merger Agreement, or the transactions contemplated thereby, the respective parties to the proceeding intend to defend against such actions but they might not be successful in doing so. An adverse outcome in such matters, as well as the costs and efforts of a defense even if successful, could have a material adverse effect on IRT’s or CSR’s ability to consummate the Mergers or their respective business, results of operations or financial position, including through the possible diversion of either company’s resources or distraction of key personnel.
IRT may finance a portion of the transactions contemplated by the Merger Agreement, including the refinancing of indebtedness of CSR and its subsidiaries, and pay related costs, fees and expenses, with the Merger Term Loan.
IRT may finance a portion of the transactions contemplated by the Merger Agreement, including the refinancing of indebtedness of CSR and its subsidiaries, and pay related costs, fees and expenses, with the Merger Term Loan (as defined below). To this end, IROP entered into a commitment letter, dated as of September 8, 2026 (the “Debt Commitment Letter”), with Royal Bank of Canada, pursuant to which Royal Bank of Canada committed to provide, on the terms and subject to the conditions set forth in the Debt Commitment Letter, on the closing date of the Mergers, up to $716,000,000 under a senior unsecured term loan facility (the “Merger Term Loan”). In the event the Merger Term Loan contemplated by the Debt Commitment Letter is not available on the anticipated terms, there is a risk that other financing may not be available on acceptable terms, in a timely manner or at all.
Risks Relating to IRT Following Consummation of the Mergers
IRT expects to incur substantial expenses related to the Mergers and the transactions contemplated by the Merger Agreement.
IRT expects to incur substantial expenses in consummating the Mergers and integrating the business, operations, networks, systems, technologies, policies and procedures of IRT and CSR. There are a large number of systems that must be integrated or separated in connection with the Mergers, and the other transactions contemplated by the Merger Agreement, including leasing, billing, management information, purchasing, accounting and finance, sales, payroll and benefits, fixed asset, lease administration and regulatory compliance. While IRT has assumed that a certain level of transaction and integration expenses would be incurred, there are a number of factors beyond its control that could affect the total amount or the timing of its integration expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. The expenses in connection with the Mergers and the transactions contemplated by the Merger Agreement are expected to be significant, although the aggregate amount and timing of such charges are uncertain at present.
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Following consummation of the Mergers, IRT may be unable to integrate the business of CSR successfully or realize the anticipated synergies and related benefits of the Mergers and the transactions contemplated by the Merger Agreement or do so within the anticipated time frame.
The Mergers involve the combination of IRT and CSR, two companies which currently operate as independent companies. In addition, CSR recently completed a series of transactions to provide for the internalization of its previously externalized management functions. IRT will be required to devote significant management attention and resources to integrating their business practices and operations. Potential difficulties that IRT may encounter in the integration process include the following:
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the inability to successfully combine the businesses of IRT and CSR in a manner that permits the combined company to achieve the synergies and cost savings anticipated to result from the Mergers, which would result in some anticipated benefits of the Mergers not being realized in the time frame currently anticipated or at all; |
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loss of revenue as a result of certain residents of either of IRT or CSR deciding not to do business with IRT; |
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the complexities associated with managing the combined company out of multiple locations and integrating personnel from the two companies; |
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the additional complexities of combining two companies with different histories, markets and customer bases; |
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the failure to retain key employees of either of IRT or CSR; |
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potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the Mergers and the transactions contemplated by the Merger Agreement; |
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legislative, regulatory and economic developments, including the level of new multifamily community construction and development, government regulations and competition, that may restrict or adversely impact the combined company’s business operations, including expansion of rent control, rent stabilization, eviction moratoriums or other regulations that restrict the methods and strategies of the combined company’s business; and |
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performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by consummating the Mergers and integrating IRT’s and CSR’s operations into the combined company. |
For all these reasons, it is possible that the integration process could result in the distraction of the combined company’s management, the disruption of the combined company’s ongoing business or inconsistencies in the combined company’s services, standards, controls, procedures and policies, any of which could adversely affect the ability of the combined company to maintain relationships with residents, customers, vendors, joint venture partners and employees or to achieve the anticipated benefits of the Mergers, or could otherwise adversely affect the business and financial results of the combined company. Furthermore, while it is anticipated that certain expenses will be incurred to achieve synergies, cost savings and related benefits of the Mergers, such expenses are difficult to estimate accurately, and may exceed current estimates. Accordingly, the benefits expected to be realized from the Mergers may be offset by costs incurred to, or delays in, integrating the businesses of IRT and CSR.
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IRT’s level of indebtedness will increase upon consummation of the Mergers and may increase the related risks IRT now faces.
Upon consummation of the Mergers, IRT intends to assume and/or refinance certain indebtedness of CSR, CSR OP and their subsidiaries and, as a result, IRT’s consolidated indebtedness will increase and it will be subject to increased risks associated with debt financing, including an increased risk that IRT’s cash flows could be insufficient to meet required payments on its indebtedness or to continue to pay dividends on its common stock. On September 30, 2026, IRT had consolidated indebtedness of approximately $2.401 billion, net of approximately $10.941 million of unamortized deferred financing costs and $15.795 million of loan premiums, net. Taking into account CSR’s consolidated indebtedness of approximately $812.607 million, net of approximately $31.212 million of unamortized deferred financing costs, premiums and discounts, on September 30, 2026, the total consolidated indebtedness of the combined company (excluding fair value adjustments) as of September 30, 2026 would have been approximately $3.214 billion, net of unamortized deferred financing costs, premiums and discounts.
The combined company’s increased indebtedness could have important consequences to holders of its common stock, including:
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increasing the combined company’s vulnerability to general adverse economic and industry conditions; |
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limiting the combined company’s ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements; |
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requiring the combined company to use a portion of its cash flow from operations for the payment of principal and interest on its indebtedness, thereby reducing its ability to use cash flow to fund working capital, acquisitions, capital expenditures and general corporate requirements; |
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limiting the combined company’s flexibility in planning for, or reacting to, changes in its business and its industry and economic conditions; and |
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putting the combined company at a disadvantage compared to its competitors with less indebtedness. |
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Additionally, if the combined company defaults under a debt instrument, it will automatically be in default under any other debt instrument that has cross-default provisions and the holders of all such indebtedness may be entitled to demand its immediate repayment. If the combined company defaults under a secured debt instrument, it may lose any property securing that indebtedness. |
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IRT anticipates that the leverage profile of the combined company will be comparable to IRT’s current standalone leverage over time, taking into account IRT’s planned recycling of capital from targeted asset sales to reduce debt, subject to market conditions and the timing of such sales. There can be no assurance, however, that these deleveraging objectives will be achieved on the anticipated timeline or at all, and actual leverage of the combined company may be higher than targeted. |
IRT may incur additional indebtedness in the future.
In connection with executing its business strategy following the Mergers, IRT expects to evaluate the possibility of acquiring additional properties and making strategic investments, and it may elect to finance these transactions by incurring additional indebtedness. The amount of such indebtedness could have material adverse consequences for the combined company following the Mergers, including hindering its ability to adjust to changing market, industry or economic conditions; limiting its ability to access the capital markets to refinance maturing debt or to fund acquisitions; limiting the amount of cash flow available for future operations, acquisitions, dividends, stock repurchases or other uses; making the combined company more vulnerable to economic or industry downturns, including interest rate increases; and placing the combined company at a competitive disadvantage compared to less leveraged competitors.
Tax protection agreements could limit the combined company’s ability to sell or otherwise dispose of certain properties and are expected to require the combined company to maintain certain debt levels that otherwise would not be required to operate its business.
In connection with the Mergers, the combined company is expected to succeed to or assume tax protection agreements that provide that if the combined company or IROP sells, exchanges, transfers, conveys or otherwise disposes of certain properties in a taxable transaction for a specified period of time, the combined company or IROP will indemnify certain protected partners against certain tax liabilities attributable to built-in gain that existed with respect to such properties at the time of their acquisition by CSR OP, together with a gross up for tax liabilities incurred as a result of such indemnification payment. Therefore, although it may be in the combined company’s stockholders’ best interest for the combined company to sell one or more of these properties, it may be economically prohibitive for the combined company to do so because of these indemnity obligations. Moreover, the combined company is expected to be required to maintain certain minimum levels of indebtedness, and in certain cases to provide certain protected partners with the opportunity to guarantee qualifying indebtedness, in each case, in order to enable such protected partners to continue to defer certain tax liabilities. These obligations are expected to require the combined company to maintain more or different indebtedness than it would otherwise require for its business. If IROP is unable to maintain the minimum levels or appropriate types of indebtedness required under the tax protection agreements, IRT or IROP may be required to indemnify certain protected partners in amounts determined by reference to the gain recognized by such protected partners as a result of such failure, together with a gross up for tax liabilities incurred as a result of such indemnification payment. As a result, these tax protection agreements may restrict the combined company’s ability to take actions or make decisions that otherwise would be in its best interests, including in connection with any future strategic transaction.
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The Mergers will result in changes to IRT’s board of directors that may affect its strategy and operations.
Upon consummation of the Mergers, IRT’s board of directors will be comprised of the nine incumbent directors of IRT’s board of directors and two incumbent trustees of CSR’s board of trustees. IRT will cause its board of directors to include two of the individuals then serving as independent members of CSR’s board of trustees, subject to the evaluation and recommendation by the Nominating and Governance Committee of IRT’s board of directors in its sole discretion in accordance with such committee’s charter. Scott F. Schaeffer, currently IRT’s Chairman of the board of directors and Chief Executive Officer, will continue in these positions. This new composition of IRT’s board of directors may affect IRT’s business strategy and operating decisions following consummation of the Mergers. In addition, there can be no assurances that the new board of directors will function effectively as a team and that there will not be any adverse effects on IRT’s business as a result.
IRT will depend on key personnel for its future success, and the loss of key personnel or inability to attract and retain personnel could harm the combined company’s business.
The success of the combined company following consummation of the Mergers will depend in part upon its ability to retain key IRT and CSR executives and other employees. Key executives and other employees may depart either before or after consummation of the Mergers because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the combined company following consummation of the Mergers. Accordingly, no assurance can be given that IRT or, following consummation of the Mergers, the combined company, will be able to retain key executives or other employees to the same extent as in the past.
The future results of IRT will suffer if IRT does not effectively manage its operations following consummation of the Mergers and the transactions contemplated by the Merger Agreement.
Following the Mergers, IRT expects to continue to expand its operations through additional acquisitions, development opportunities and other strategic transactions, some of which involve complex challenges. The future success of the combined company will depend, in part, upon the ability of the combined company to manage its expansion opportunities, which pose substantial challenges for the combined company to integrate new operations into its existing business in an efficient and timely manner, to successfully monitor its operations, costs, regulatory compliance and service quality and to maintain other necessary internal controls. IRT cannot assure you that following consummation of the Mergers, the combined company’s expansion or acquisition opportunities will be successful, or that the combined company will realize its expected operating efficiencies, cost savings, revenue enhancements, synergies or other benefits.
The combined company may be subject to environmental liabilities and the cost of remediating contamination may be substantial.
Under various federal, state and local environmental, health and safety laws and regulations, a current or former owner or operator of real property may be liable for the cost of removal, remediation or disposal of hazardous or toxic substances on, under or in such property. These laws typically impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of the hazardous or toxic substances. The costs of investigation, removal or remediation of hazardous or toxic substances may be substantial, and the presence of such substances, or the failure to properly remediate such substances, may adversely affect the owner’s or operator’s ability to sell or rent the affected property or to borrow using the property as collateral. Environmental laws may impose restrictions on the manner in which property may be used or transferred, or in which businesses may be operated, and may require expenditures to bring the property into compliance. Persons who arrange for the disposal of hazardous or toxic substances at a disposal site may be liable for the costs of removal or remediation of hazardous substances at that disposal site. In addition, certain environmental laws may impose liability for releases of hazardous substances into the air or water from a property, including asbestos-containing materials, and third parties may seek recovery from owners or operators of real property for personal injury or property damage associated with exposure to released hazardous substances. The combined company cannot provide assurance that it will be able to identify all potential environmental liabilities prior to its acquisition of CSR or that the combined company will not incur material environmental liabilities in the future.
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The combined company may be required to record impairment charges or write-downs of CSR’s assets following the Mergers.
The combined company will be required to account for the Mergers using the acquisition method of accounting. Under this method of accounting, the combined company will record the assets acquired and liabilities assumed by it in connection with the Mergers at their estimated fair values as of the closing date of the Mergers. The estimated fair values of acquired assets may be affected by changes in the operations of the properties, changes in local, regional and national market conditions and other factors such as changes in interest rates. Following the Mergers, the combined company may be required to write-down or record impairment charges with respect to CSR’s assets if their carrying values exceed their estimated fair values or such assets are otherwise determined to be impaired. Any such write-down or impairment charges could have a material adverse effect on the combined company’s business, financial condition and results of operations.
The trading price of shares of IRT Common Stock following consummation of the Mergers may be affected by factors different from those affecting the price of shares of IRT Common Stock before consummation of the Mergers.
If the Mergers are consummated, then, based on the shares of IRT Common Stock and CSR Common Stock outstanding as of October 2, 2026, legacy IRT stockholders and holders of IROP Common Units are estimated to own approximately 78% of the issued and outstanding shares of IRT Common Stock and IROP Common Units, and legacy CSR shareholders and holders of common units of CSR OP will own approximately 22% of the issued and outstanding shares of IRT Common Stock and IROP Common Units. The results of operations of IRT, as well as the trading price of IRT Common Stock, after consummation of the Mergers may be affected by factors different from those currently affecting the trading prices of IRT Common Stock. These different factors include:
• |
greater number of shares of IRT Common Stock and IROP Common Units outstanding, as compared to the number of shares of IRT Common Stock and IROP Common Units currently outstanding; |
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different stockholders in IRT; |
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IRT’s increased level of indebtedness; and |
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IRT owning different assets and maintaining different capitalizations. |
Accordingly, the historical trading prices of IRT Common Stock and the historical financial results of IRT and CSR may not be indicative of these matters for IRT after the Mergers.
Holders of outstanding indebtedness of CSR and its subsidiaries, and other third parties, may exercise contractual rights under the respective debt agreements in connection with the Mergers.
CSR and its subsidiaries are party to debt agreements that give the holders of indebtedness under such agreements certain rights following a merger or change of control, including the right to demand immediate repayment upon the merger or change of control absent a waiver or consent by the applicable holders of indebtedness. Debt agreements covering substantially all of CSR’s indebtedness include such provisions. While IRT is working to gain holder waivers and/or consents required to assume certain indebtedness of CSR’s subsidiaries that carries such provisions to avoid the risk of accelerated repayment, there is no assurance that any or all of the holders of such indebtedness will provide requested waivers or consents and if they do not, and such indebtedness and any other indebtedness of CSR and its subsidiaries that carries such provisions is not refinanced at or prior to the consummation of the Mergers, then the aggregate amount of indebtedness that would become due and payable upon consummation of the Mergers would be substantial and could result in a material adverse effect on IRT. To mitigate the risk of the need to refinance indebtedness of CSR and its subsidiaries, IROP has entered into the Debt Commitment Letter to provide short-term liquidity, if needed.
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The completion of the Mergers may also trigger change-in-control, right of first refusal or other provisions in other agreements to which CSR is a party. If CSR is unable to negotiate waivers of those provisions, the counterparties may exercise their rights and remedies under the applicable agreements, including in some instances potentially terminating the agreements or seeking monetary damages. Even if CSR is able to negotiate waivers, the counterparties may require a fee for such waivers or seek to renegotiate the agreements on terms less favorable to the combined company.
IRT has the right to defer the closing of the Mergers if consent to the transactions contemplated by the Merger Agreement has not been obtained from the holders of certain indebtedness of CSR’s subsidiaries.
IRT has the right, in its sole discretion and by written notice to CSR, to defer the closing of the Mergers until the earliest of (i) the tenth business day after, with respect to each designated mortgage loan of CSR’s subsidiaries that has not been repaid, refinanced or defeased in accordance with the Merger Agreement, the applicable lender has granted the required lender consent to the transactions contemplated by the Merger Agreement or has indicated that it is ready, willing and able to grant that consent subject only to the closing of the Mergers and satisfaction of conditions thereto that by their nature are to be satisfied at the closing of the Mergers and all other conditions to the effectiveness of that consent have been satisfied or waived, and (ii) the tenth business day before June 30, 2027. Any such deferral could delay consummation of the Mergers and increase the risk that the Mergers will not be consummated before June 30, 2027, the outside date under the Merger Agreement.
Risks Relating to REIT Status and Certain Tax Matters
IRT may incur adverse tax consequences if IRT or CSR has failed or fails to qualify as a REIT for U.S. federal income tax purposes.
Each of IRT and CSR has operated in a manner that it believes has allowed it to qualify as a REIT for U.S. federal income tax purposes under the Code and intends to continue to do so through the time of the Mergers. IRT intends to continue operating in such a manner following the Mergers. Neither IRT nor CSR has requested or plans to request a ruling from the Internal Revenue Service (the “IRS”) that it qualifies as a REIT. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within the control of IRT or CSR may affect each company’s ability to qualify as a REIT. In order to qualify as a REIT, each of IRT and CSR must satisfy a number of requirements, including requirements regarding the ownership of its stock and the composition of its gross income and assets. Also, a REIT must make distributions to stockholders aggregating annually at least 90% of its net taxable income, excluding any net capital gains.
Consummation of the Mergers is conditioned on receipt by IRT of an opinion from Hunton Andrews Kurth LLP (or other nationally recognized tax counsel) generally to the effect that CSR, during the period commencing with its taxable year ended April 30, 2016 and ending with its taxable year ended December 31, 2025, was organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and, with respect to any taxable year of CSR beginning on or after January 1, 2026 and ending on or prior to the closing date of the Mergers, was organized and operated in conformity with such requirements without regard to the distribution requirement described in Section 857(a)(1) of the Code for such taxable year. Consummation of the Mergers is also conditioned on receipt by CSR of an opinion from Troutman Pepper Locke LLP (or other nationally recognized tax counsel) to the effect that IRT, commencing with its taxable year ended December 31, 2016, was organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code and its current and proposed method of operation will enable it to continue to qualify for taxation as a REIT through the end of the taxable year that includes the closing date of the Mergers.
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The foregoing REIT opinions will be based on factual representations provided by IRT and CSR to counsel and limited by the assumptions set forth therein, and are not a guarantee that IRT or CSR, in fact, has qualified, or, in the case of IRT, will continue to qualify as a REIT, nor are such opinions binding on the IRS. Moreover, as noted above, neither IRT nor CSR has requested or plans to request a ruling from the IRS that it qualifies as a REIT.
If IRT loses its REIT status, or is determined to have lost its REIT status in a prior year, it will face serious tax consequences that would substantially reduce its cash available for distribution, including cash available to pay dividends to its stockholders, because:
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it would be subject to U.S. federal income tax on its net income at regular corporate rates for the years it did not qualify for taxation as a REIT (and, for such years, would not be allowed a deduction for dividends paid to stockholders in computing its taxable income); |
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it could be subject to increased state and local taxes for such periods; |
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unless it is entitled to relief under applicable statutory provisions, neither it nor any “successor” company could elect to be taxed as a REIT until the fifth taxable year following the year during which it was disqualified; and |
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for five years following re-election of REIT status, upon a taxable disposition of an asset owned as of such re-election, it could be subject to corporate level tax with respect to any built-in gain inherent in such asset at the time of re-election. |
Even if IRT retains its REIT status, if CSR is determined to have lost its REIT status for a taxable year ending on or before the Mergers, IRT would be subject to adverse tax consequences. This could substantially reduce IRT’s cash available for distribution, including cash available to pay dividends to its stockholders, because, assuming that IRT otherwise maintains its REIT qualification:
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IRT generally would be subject to corporate level tax with respect to the built-in gain on each asset of CSR existing at the time of the Mergers if IRT were to dispose of the CSR asset during the five-year period following the Mergers; |
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IRT would succeed to any earnings and profits accumulated by CSR for taxable periods that it did not qualify as a REIT, and IRT would have to pay a special dividend and/or employ applicable deficiency dividend procedures (including interest payments to the IRS) to eliminate such earnings and profits (or if IRT does not timely distribute those earnings and profits, IRT could fail to qualify as a REIT); and |
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if CSR incurred any unpaid tax liabilities prior to the Mergers, those tax liabilities would be transferred to IRT as a result of the Mergers. |
If there is an adjustment to CSR’s taxable income or dividends paid deductions for taxable years ending on or prior to the Mergers, IRT could elect to use the deficiency dividend procedure in order to maintain CSR’s REIT status for such taxable years. That deficiency dividend procedure could require IRT to make significant distributions to its stockholders and to pay significant interest to the IRS.
As a result of all these factors, IRT’s or CSR’s failure to qualify as a REIT could impair IRT’s ability to expand its business and raise capital, and would materially adversely affect the market value of its common stock. In addition, for years in which IRT does not qualify as a REIT, it would not otherwise be required to make distributions to stockholders.
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Risks Relating to an Investment in Common Stock of IRT following Consummation of the Mergers and the Transactions Contemplated by the Merger Agreement
The market price of IRT Common Stock may decline as a result of the Mergers and the transactions contemplated by the Merger Agreement.
The market price of IRT Common Stock may fluctuate significantly following completion of the Mergers, and holders of IRT Common Stock could lose some or all of the value of their investment. In particular, the market price of IRT Common Stock may decline as a result of the Mergers and the transactions contemplated by the Merger Agreement if, among other things, IRT does not achieve the perceived benefits of the Mergers and the transactions contemplated by the Merger Agreement or the effect of the Mergers and the transactions contemplated by the Merger Agreement on IRT’s results of operations or financial condition is not consistent with the expectations of financial or industry analysts.
In addition, upon consummation of the Mergers and the transactions contemplated by the Merger Agreement, IRT stockholders will own interests in IRT, which will operate an expanded business with a different mix of properties, risks and liabilities. Stockholders of IRT may not wish to continue to invest in IRT, or may wish to dispose of some or all of their shares of IRT Common Stock. If, following the effective time of the Mergers or while the Mergers are pending, large amounts of IRT Common Stock are sold, the market price of IRT Common Stock could decline, perhaps substantially.
Following consummation of the Mergers and the transactions contemplated by the Merger Agreement, IRT may not continue to pay dividends at the rate currently paid by IRT.
Following consummation of the Mergers, IRT may not pay dividends at the same level at which IRT currently pays dividends, or with the same frequency, including because of factors such as the following:
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IRT may not have enough cash to pay such dividends due to changes in IRT’s cash requirements, capital spending plans, cash flow or financial position; |
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decisions on whether, when and in what amounts to pay any future dividends will remain at all times entirely at the discretion of IRT’s board of directors, which reserves the right to change IRT’s dividend practices at any time and for any reason; and |
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the amount of dividends that IRT’s subsidiaries may distribute to IRT may be subject to restrictions imposed by state law and restrictions imposed by the terms of any current or future indebtedness that these subsidiaries may incur. |
Stockholders of IRT will have no contractual or other legal right to dividends that have not been declared by IRT’s board of directors.
Each of IRT and CSR may have liabilities that are not known to the other party, or that may materialize in a manner not consistent with the other party’s expectations.
Each of IRT and CSR may have liabilities that the other party failed, or was unable, to discover in the course of performing its respective due diligence investigations. IRT and CSR may learn additional information about the other party that materially adversely affects it, such as unknown or contingent liabilities and liabilities related to compliance with applicable laws. As a result of these factors, the combined company may incur additional costs and expenses and may be forced to later write-down or write-off assets, restructure operations or incur impairment or other charges that could result in the combined company reporting losses. Even if IRT’s and CSR’s respective due diligence has identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with its expectations. If any of these risks materialize, this could adversely affect the combined company’s financial condition and results of operations and could contribute to negative market perceptions about, or price movements of, IRT Common Stock following the Mergers.
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Other Risks
The unaudited pro forma condensed consolidated financial statements filed with the SEC do not purport to be indicative of IRT’s results after consummation of the Mergers and the transactions contemplated by the Merger Agreement, and accordingly, you will have limited financial information on which to evaluate the future performance of IRT.
The unaudited pro forma condensed consolidated financial statements filed with the SEC were presented for informational purposes only and do not purport to be indicative of the financial position or results of operations that actually would have occurred had the Mergers and the transactions contemplated by the Merger Agreement been consummated as of the dates indicated, nor do they purport to be indicative of the future operating results or financial position of IRT after the Mergers and the transactions contemplated by the Merger Agreement. The unaudited pro forma condensed consolidated financial statements reflect adjustments, which are based upon preliminary estimates, to allocate the purchase price to CSR’s assets and liabilities.
In addition, the unaudited pro forma condensed consolidated financial statements do not reflect other future events that may occur after consummation of the Mergers, including the costs related to the planned integration of IRT and CSR and any future non-recurring charges resulting from the Mergers and the transactions contemplated by the Merger Agreement, and do not consider potential impacts of current market conditions on revenues or expense efficiencies. The unaudited pro forma condensed consolidated financial statements filed with the SEC were based in part on certain estimates and assumptions (including the estimated purchase price allocation described above) regarding the Mergers and the transactions contemplated by the Merger Agreement that IRT and CSR believe are reasonable under the circumstances. IRT cannot assure you that the estimates and assumptions will prove to be appropriate.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three and nine months ended September 30, 2026, no holders of IROP Common Units exchanged units for shares of our common stock. The issuance of shares upon exchange of units is exempt from registration under the Securities Act, pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act. As of September 30, 2026, 5,941,643 IROP Common Units held by unaffiliated third parties remained outstanding.
During the three months ended September 30, 2026, we withheld shares of common stock to satisfy employee tax withholding obligations payable upon the vesting of restricted common stock awards as follows:
Period |
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Total Number of Shares Purchased |
|
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Average Price Paid per Share (1) |
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
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Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) (2) |
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July 1 - 31, 2026 |
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1,310 |
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$ | 17.16 |
|
|
|
— |
|
|
$ | 190,087 |
|
August 1 - 31, 2026 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
190,087 |
|
September 1 - 30, 2026 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
190,087 |
|
Total |
|
|
1,310 |
|
|
$ | 17.16 |
|
|
|
— |
|
|
|
|
|
|
(1) |
The price reported is the average price paid per share using our closing price on the NYSE on the vesting date of the relevant award. |
|
(2) |
On May 18, 2022, our Board of Directors approved the Stock Repurchase Program covering up to $250 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. |
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
During the three and nine months ended September 30, 2026, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K). During the three and nine months ended September 30, 2026, the Company did not adopt, terminate or modify a Rule 10b5-1 trading arrangement.
55
Table of Contents
Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
2.1
|
Agreement and Plan of Merger, dated as of September 8, 2026, by and among Independence Realty Trust, Inc., Independence Realty Operating Partnership, LP, Islanders OP Sub, LLC, Centerspace and Centerspace, LP, incorporated by reference to Exhibit 2.1 to IRT's Current Report on Form 8-K filed on September 9, 2026, as amended by IRT’s Current Report on Form 8-K/A filed on September 23, 2026.* |
|
|
2.2 |
Amendment to Agreement and Plan of Merger, dated as of September 22, 2026, by and among Independence Realty Trust, Inc., Independence Realty Operating Partnership, LP, Islanders Sub, LLC, Islanders OP Sub, LLC, Centerspace and Centerspace, LP, incorporated by reference to Exhibit 2.1 to IRT's Current Report on Form 8-K filed on September 23, 2026. |
|
|
10.1 |
Summary of Non-Employee Director Compensation, effective as of October 1, 2026, filed herewith. |
|
|
31.1 |
Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith. |
|
|
31.2 |
Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith. |
|
|
32.1 |
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith. |
|
|
32.2 |
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith. |
|
|
101 |
iXBRL (Inline eXtensible Business Reporting Language). The following materials, formatted in iXBRL: (i) Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025, (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2026 and 2025, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2026 and 2025, (iv) Condensed Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2026 and 2025, (v) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2026 and 2025 and (vi) notes to the condensed consolidated financial statements as of September 30, 2026. |
|
|
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
* Schedules (or similar attachments) have been omitted pursuant to Item 601(a)(5) of Regulation S-K. IRT agrees to furnish supplementally to the SEC a copy of any omitted schedule upon request by the SEC.
56
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
Independence Realty Trust, Inc. |
|
|
|
|
Date: November 3, 2026 |
By: |
/s/ SCOTT F. SCHAEFFER |
|
|
Scott F. Schaeffer |
|
|
Chairman of the Board and Chief Executive Officer |
|
|
(Principal Executive Officer) |
|
|
|
Date: November 3, 2026 |
By: |
/s/ JAMES J. SEBRA |
|
|
James J. Sebra |
|
|
President and Chief Financial Officer |
|
|
(Principal Financial Officer) |
|
|
|
Date: November 3, 2026 |
By: |
/s/ JASON R. DELOZIER |
|
|
Jason R. Delozier |
|
|
Chief Accounting Officer |
|
|
(Principal Accounting Officer) |
57