Independence Realty Trust and Steadfast Apartment REIT to Merge, Creating $7B Multifamily Owner

by John Nelson

PHILADELPHIA AND IRVINE, CALIF. — Independence Realty Trust Inc. (NYSE: IRT), a publicly traded apartment REIT based in Philadelphia, has agreed to acquire Irvine-based Steadfast Apartment REIT Inc.

On a pro-forma basis, the combined company is expected to have a total enterprise value of approximately $7 billion and be equally owned by shareholders of both firms. Post-merger, the company will operate under the Independence Realty Trust banner and trade under the same stock symbol. The portfolio will total 131 apartment communities comprising approximately 38,000 units across 16 states.

The combined company’s 10 largest markets by unit count would be Atlanta, Dallas-Fort Worth, Denver, Oklahoma City, Louisville, Columbus, Indianapolis, Raleigh-Durham, Houston and Memphis.

According to an investor presentation, the portfolio averages $1,231 in effective rent per month and is 96.2 percent occupied.

The combined company would rank at No. 26 on the National Multifamily Housing Council’s (NMHC) 2021 ranking of the top 50 apartment owners. Neither Independence Realty Trust nor Steadfast Apartment REIT is on the NMHC Top 50 Owners ranking for 2021.

Both companies expect the transaction to close during the fourth quarter of 2021, subject to customary closing conditions, including approval of both companies’ stockholders. The boards of directors of the two companies unanimously approved the transaction.

“We believe that our business combination will allow us to more effectively compete in the multifamily sector and realize greater earnings potential,” says Rodney Emery, CEO of Steadfast Apartment REIT. “This is a natural combination that is expected to uniquely position us to strengthen our presence in U.S. communities where we see substantial room for growth.”

The combined company will have a pipeline of approximately 20,000 units available for future redevelopment through Independence Realty Trust’s value-add program, which has historically generated a weighted average return on investment exceeding 17 percent. The pipeline includes 12,000 Steadfast Apartment REIT units that could be renovated over the next six to seven years.

Annual gross synergies are estimated to be approximately $28 million, including $20 million of annual general, administrative and property management synergies. Additionally, the companies have identified non-core communities in the portfolio to market for sale for an estimated value of $340 million, the proceeds of which the combined company will use to repay existing debt.

Upon completion of the merger, the size of the board of directors of Independence Realty Trust will be expanded to 10 members, comprising five incumbent directors for both firms. Independence Realty Trust’s chairman and CEO Scott Schaeffer will serve as chairman of the board of directors of the combined company.

Barclays is acting as lead financial advisor to Independence Realty Trust, BMO Capital Markets is serving as its financial advisor and Troutman Pepper Hamilton Sanders LLP is acting as legal advisor.

RBC Capital Markets and Robert A. Stanger & Co. are serving as financial advisors to Steadfast Apartment REIT, and Morrison & Foerster LLP is acting as legal advisor.

— John Nelson

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