Independence Realty Trust Receives Investment Grade Credit Rating from Fitch

Rhea-AI Summary

Independence Realty Trust, Inc. (IRT) received an investment grade rating of 'BBB' from Fitch Ratings, a significant milestone for the company. The rating reflects IRT's solid balance sheet, stable property performance, and successful execution of its Portfolio Optimization and Deleveraging Strategy. This achievement will enhance IRT's cost of capital, provide access to additional capital sources, and support the company's business plan and portfolio investments.

Insights

Financial Analyst

Achieving an investment grade rating from Fitch Ratings is a significant event for Independence Realty Trust, Inc. (IRT), as it often leads to a lower cost of borrowing. This, in turn, can enhance the company's financial flexibility. The 'BBB' rating with a stable outlook implies that Fitch views IRT as having a good credit quality with a low expectation of default risk. Credit ratings are critical in the capital markets as they affect the interest rates that companies pay on their debt. A higher rating typically allows for borrowing at more favorable terms, which can lead to cost savings on interest payments.

IRT's focus on leveraging its balance sheet through its Portfolio Optimization and Deleveraging Strategy likely contributed to this positive assessment. A strong balance sheet with controlled leverage is a key indicator of financial health, which can support sustainable earnings growth. For investors, this rating upgrade could signal a more robust financial position and potentially lead to an increased investor base, including conservative institutional investors who mandate investment-grade holdings.

However, it is important to monitor how IRT utilizes this improved financial standing. While access to cheaper capital can facilitate growth and portfolio investment, it also requires disciplined capital management to ensure that the additional resources are allocated effectively to generate shareholder value.

Market Research Analyst

The upgrade to an investment grade rating may also be indicative of broader industry trends, where real estate investment trusts (REITs) are increasingly focusing on balance sheet strength and strategic portfolio management. For IRT, a stable property performance suggests effective asset management and a potentially attractive real estate portfolio. This could reflect well on the company's operational capabilities and strategic direction.

From a market perspective, the rating is a signal to current and prospective shareholders that the company is perceived as a lower risk investment. This can influence stock market performance positively, as market participants may reprice the risk associated with the company's shares. It is also a testament to the company's management team, indicating that their strategic initiatives are aligned with shareholder value creation.

Long-term, the benefits of an investment grade rating and a stable outlook from Fitch could manifest in sustained access to capital at competitive rates, facilitating IRT's ability to execute on its business plan and potentially leading to growth in its property portfolio, which could drive revenue and earnings growth.

Economist

The broader economic implications of a REIT like IRT securing an investment grade rating are multifaceted. On a macroeconomic level, investment grade entities contribute to the overall stability of financial markets by offering lower-risk investment opportunities. This can be particularly appealing in times of economic uncertainty, where investors may seek shelter in more stable, income-generating assets like REITs.

IRT's improved rating may also reflect underlying economic conditions, such as a stable real estate market and favorable interest rate environment, which can facilitate the company's growth strategies. However, it is essential to consider the cyclical nature of real estate and interest rate risks that could affect the company's performance and ability to maintain its credit rating.

Overall, the assignment of an investment grade rating to IRT by Fitch Ratings is a positive development for the company and its stakeholders, indicating a solid financial position and the potential for future growth, while also contributing to the stability of the broader financial market.

PHILADELPHIA--(BUSINESS WIRE)-- Independence Realty Trust, Inc. (NYSE: IRT) (“IRT” or the “Company”) announced today that the Company received an investment grade rating from Fitch Ratings (“Fitch”). Fitch has assigned a Long-Term Issuer Default Rating of ‘BBB’ to IRT with a stable outlook. In addition, Fitch has assigned a rating of ‘BBB’ to the company's subsidiary, Independence Realty Operating Partnership, LP and its senior unsecured debt, which includes credit facilities and unsecured term loans.

“We’re proud to have achieved an investment grade credit rating, a significant milestone for IRT,” said Scott Schaeffer, Chairman and Chief Executive Officer of IRT. “This reflects our efforts to fundamentally reset our leverage profile through profitable growth and the successful execution of our Portfolio Optimization and Deleveraging Strategy. An investment grade credit rating will help us further improve our cost of capital and give IRT access to additional capital sources, to implement our business plan and invest in our portfolio. We are well positioned to deliver sustainable earnings growth and create long-term value for our shareholders.”

Fitch stated that IRT’s BBB rating reflects the Company’s solid balance sheet, stable property performance and anticipated execution of its Portfolio Optimization and Deleveraging Strategy.

About Independence Realty Trust, Inc.

Independence Realty Trust, Inc. (NYSE: IRT) is a real estate investment trust that owns and operates multifamily communities, across non-gateway U.S. markets including Atlanta, GA, Dallas, TX, Denver, CO, Columbus, OH, Indianapolis, IN, Raleigh-Durham, NC, Oklahoma City, OK, Nashville, TN, Houston, TX, and Tampa, FL. IRT’s investment strategy is focused on gaining scale near major employment centers within key amenity rich submarkets that offer good school districts and high-quality retail. IRT aims to provide stockholders with attractive risk-adjusted returns through diligent portfolio management, strong operational performance, and a consistent return on capital through distributions and capital appreciation. More information may be found on the Company’s website www.irtliving.com.

Forward-Looking Statements

This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, but are not limited to, increased financial flexibility, growth opportunities and related benefits that we expect to realize through our Portfolio Optimization and Deleveraging Strategy and value add program. All statements in this release that address financial and operating performance, events or developments that we expect or anticipate will occur or be achieved in the future are forward-looking statements. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with the safe harbor provisions.

Our forward-looking statements are not guarantees of future performance and involve estimates, projections, forecasts, strategies and assumptions, including as to matters that are not within our control, and are subject to risks and uncertainties including, without limitation, risks and uncertainties related to changes in market demand for rental apartment homes and pricing pressures, including from competitors, that could lead to declines in occupancy and rent levels, uncertainty and volatility in capital and credit markets, including changes that reduce availability, and increase costs, of capital, unexpected changes in our intention or ability to repay certain debt prior to maturity, increased costs on account of inflation, increased competition in the labor market, failure to realize cost savings, efficiencies and other benefits that we expect to result from our Portfolio Optimization and Deleveraging Strategy, inability to sell certain assets, including those assets designated as held for sale, within the time frames or at the pricing levels expected, failure to achieve expected benefits from the redeployment of proceeds from asset sales, delays in completing, and cost overruns incurred in connection with, our value add initiatives and failure to achieve rent increases and occupancy levels on account of the value add initiatives, unexpected impairments or impairments in excess of our estimates, increased regulations generally and specifically on the rental housing market, including legislation that may regulate rents and fees or delay or limit our ability to evict non-paying residents, risks endemic to real estate and the real estate industry generally, the impact of potential outbreaks of infectious diseases and measures intended to prevent the spread or address the effects thereof, the effects of natural and other disasters, unknown or unexpected liabilities, including the cost of legal proceedings, costs and disruptions as the result of a cybersecurity incident or other technology disruption, unexpected capital needs, inability to obtain appropriate insurance coverages at reasonable rates, or at all, or losses from catastrophes in excess of our insurance coverages, and share price fluctuations. Please refer to the documents filed by us with the SEC, including specifically the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2023, and our other filings with the SEC, which identify additional factors that could cause actual results to differ from those contained in forward-looking statements.

These forward-looking statements are based upon the beliefs and expectations of our management at the time of this release and our actual results, including our ability to execute on our Portfolio Optimization and Deleveraging Strategy and other strategies, may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. We undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240303964140/en/

Independence Realty Trust, Inc.

Edelman Smithfield

Lauren Torres

917-365-7979

IRT@edelman.com

Source: Independence Realty Trust, Inc.

FAQ

What investment grade rating did Independence Realty Trust, Inc. (IRT) receive from Fitch Ratings?

IRT received a Long-Term Issuer Default Rating of 'BBB' from Fitch Ratings.

Who is the Chairman and Chief Executive Officer of IRT?

Scott Schaeffer is the Chairman and Chief Executive Officer of IRT.

What benefits does an investment grade credit rating provide to IRT?

An investment grade credit rating will help IRT improve its cost of capital, access additional capital sources, implement its business plan, and invest in its portfolio.

What factors contributed to IRT receiving a BBB rating from Fitch?

IRT's solid balance sheet, stable property performance, and successful execution of its Portfolio Optimization and Deleveraging Strategy were key factors in receiving the BBB rating from Fitch.