Steadfast Apartment REIT Inc., a publicly registered non-traded real estate investment trust, has agreed to merge with publicly traded REIT, Independence Realty Trust Inc. (NYSE: IRT).
Upon completion of the merger, the company will retain the Independence Realty Trust name and will trade under the ticker symbol “IRT.” The transaction is expected to close during the fourth quarter of 2021.
The combined company will own a portfolio of 131 apartment communities with approximately 38,000 units across 16 states, concentrated in the Sunbelt and Midwest. It is expected to have a pro forma equity market capitalization of approximately $4 billion and a pro forma total enterprise value of approximately $7 billion.
The company is expected to maintain its multifamily investment focus with an emphasis on value-add Class B properties.
Under the terms of the merger agreement, each share of Steadfast Apartment REIT will be converted into 0.905 shares of newly issued Independence Realty Trust common stock, including cash in lieu of fractional shares.
Following the merger, Independence Realty Trust and Steadfast stockholders will each own approximately 50 percent of the combined company’s equity.
“The combination of…highly complementary portfolios will create a leading multifamily REIT in the attractive Sunbelt region, that we believe will be well-positioned to unlock significant value and improve our market diversification,” said Scott Schaeffer, Independence Realty Trust’s chairman and chief executive officer. “We expect to realize notable economies of scale and synergies, develop a more competitive operating platform and further capitalize on our redevelopment initiative.”
The companies believe that annual gross savings are estimated to be approximately $28 million, including $20 million of annual general, administrative and property management savings through the elimination of duplicative costs associated with back-office functions and property management administration.
In addition, through enhanced scale and leveraging of the combined company’s technology and operating systems, Independence Realty Trust expects the combined company to capture $8 million in operational savings annually.
Upon closing, the size of Independence Realty Trust’s board will increase to 10 members, comprised of five incumbent directors of each Steadfast and Independence Realty Trust.
Schaeffer will continue to serve as chairman and CEO of the combined company. James Sebra will continue to serve as chief financial officer, and Farrell Ender will continue to serve as president.
Jessica Norman, currently Independence Realty Trust’s executive vice president and general counsel, will serve as chief legal officer of the combined company. Ella Neyland, currently Steadfast’s Apartment REIT’s president, chief financial officer, and treasurer, will serve as chief operating officer.
Independence Realty Trust intends to maintain its current dividend level post-closing. According to MarketBeat, the company pays an annual dividend of $0.48 per share, with a dividend yield of 2.4 percent. Its most recent quarterly dividend payment was made to shareholders of record on Friday, July 23.
Shares of Independence Realty Trust closed at $19.91 on Monday, down 0.45 percent from the previous day’s close. Afterhours, shares dropped an additional $0.81 to $19.10, a decline of 4.07 percent from the previous close.
Independence Realty Trust owns and operates multifamily apartment properties across non-gateway U.S. markets, including Atlanta, Dallas, Louisville, Memphis, Raleigh and Tampa. The company’s investment strategy is focused on “gaining scale within key amenity rich submarkets that offer good school districts, high-quality retail and major employment centers.”
Steadfast Apartment REIT invests in apartment communities in targeted markets throughout the United States that have demonstrated high occupancy and income levels across market cycles. The REIT owns and/or manages a $3.4 billion portfolio of 70 apartment communities in 14 states. In March 2020, Steadfast Apartment REIT completed its mergers with affiliated non-traded REITs, Steadfast Income REIT Inc. and Steadfast Apartment REIT III Inc. The post-merger entity had a net asset value per share of $15.23, as of March 6, 2020.