Independence Realty Trust (IRT) and Steadfast Apartment REIT Announce Strategic Merger

July 26, 2021 4:34 PM EDT

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Independence Realty Trust, Inc. (NYSE: IRT) (“IRT”) and Steadfast Apartment REIT, Inc. (“STAR”) today announced that they have entered into a definitive merger agreement under which STAR will merge with and into IRT, with IRT surviving as the continuing public company. The merger will join together two high-quality portfolios with complementary geographic footprints in the highly desirable Sunbelt region of the United States. On a pro forma basis, the combined company will own a portfolio of 131 apartment communities comprising approximately 38,000 units across 16 states. The combined company 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.

Under the terms of the merger agreement, each STAR common share will be converted into 0.905 shares of newly issued IRT common stock, including cash in lieu of fractional shares. On a pro forma basis, following the merger, IRT stockholders are expected to own approximately 50% of the combined company’s equity, and STAR stockholders are expected to own approximately 50%. The parties currently expect the transaction to close during the fourth quarter of 2021, subject to customary closing conditions, including approval of both IRT and STAR stockholders. This strategic transaction was unanimously approved by the Board of Directors of IRT and the Board of Directors of STAR.

The proposed merger will create a portfolio of 131 multifamily apartment properties comprising approximately 38,000 units in urban and suburban locations in Georgia, North Carolina, Tennessee, Kentucky, Ohio, Oklahoma, Indiana, Texas, Florida, South Carolina, Missouri, Alabama, Colorado, Kansas, Illinois, and Virginia. The combined company’s ten largest markets by unit count would be Atlanta, Dallas/Ft. Worth, Denver, Oklahoma City, Louisville, Columbus, Indianapolis, Raleigh-Durham, Houston, and Memphis.

Commenting on the proposed merger, Scott F. Schaeffer, IRT’s Chairman and CEO, said, “The combination of IRT and STAR’s 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. We expect to realize notable economies of scale and synergies, develop a more competitive operating platform and further capitalize on our redevelopment initiative. We’re excited to partner with STAR and welcome their team, as we together plan to capture many opportunities in our high-growth markets and deliver value for our stakeholders for years to come.”

Rodney F. Emery, STAR’s CEO, stated “The STAR team is excited for this milestone, as we engage in this strategic partnership with IRT. We believe that our business combination will allow us to more effectively compete in the multifamily sector and realize greater earnings potential. 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.”

Summary of Strategic Benefits

The merger of IRT and STAR is expected to create a number of operational and financial benefits, including:

  • Enhanced Portfolio Reach and Diversification Across High-Growth Sunbelt Markets: The transaction will strengthen IRT’s diversification across the high-growth Sunbelt region, which has and is expected to continue to experience strong population and employment growth trends. The combined company will own and operate 131 multifamily communities in non-gateway MSAs in 16 states, increase IRT’s exposure to core markets including Atlanta and Dallas, and expand its presence into attractive new markets including Denver and Nashville. The combination will also add to the portfolios’ Class B mid-market communities that continue to demonstrate strong resident demand throughout all points of economic and real estate cycles.
  • Expanded Value Add Pipeline Leading to Significant Organic Growth and Value Creation Opportunities: The combined company will have a pipeline of approximately 20,000 units available for future redevelopment through IRT’s proven and robust value add program that has generated a historical weighted average return on investment in excess of 17%. The continued execution of this expanded redevelopment opportunity is expected to enable IRT to deliver greater NOI and earnings growth over time.
  • Unlock Corporate Synergies and Operational Savings: The combination of IRT and STAR will create a stronger and more competitive operating platform through the integration of best practices from both companies. Annual gross synergies are estimated to be approximately $28 million, including $20 million of annual general, administrative and property management synergies 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, IRT expects the combined company to capture $8 million in operational synergies annually. These enhancements are expected to be realized upon full integration, which is expected to occur over the 12-month period following the closing of the merger.
  • Immediately Accretive: The transaction is expected to be immediately accretive to IRT’s Core FFO per share and provide the combined company with an attractive growth profile. Further, the transaction allows IRT to maintain one of the lowest payout ratios amongst peers.
  • Increased Scale Delivers Value Across Portfolio: The transaction will create a leading publicly-traded multifamily REIT, with a combined portfolio of approximately 38,000 units in 131 communities. The combined company is well-positioned to increase cash flow at the property level due to economies of scale, including enhanced pricing leverage with strategic partners and vendors. Further, the increased scale will support IRT’s ongoing efforts to retain top talent, increase brand recognition in the multifamily industry, and more effectively compete for acquisition and development opportunities.
  • Increased Financial Strength and Flexibility: Larger scale is expected to improve IRT’s access to capital markets and lower its cost of capital over the long-term, with the combined company benefitting from an expanded investor base through enhanced trading liquidity.

Leadership and Organization

The combined company is committed to retaining a strong, highly qualified and diverse board of directors that has the requisite skills, knowledge and experience to oversee the company and its long-term strategic growth and performance. Upon completion of the merger, the size of the board of directors of IRT will be expanded to 10 members, comprised of five incumbent directors of IRT and five incumbent directors of STAR. Scott F. Schaeffer will continue to serve as Chairman of the Board of Directors of the combined company.

Mr. Schaeffer will continue to lead the combined company as Chief Executive Officer. James J. Sebra will continue to serve as Chief Financial Officer of the combined company. Farrell Ender will continue to serve as President of the combined company. Jessica Norman, currently IRT’s Executive Vice President and General Counsel, will serve as Chief Legal Officer of the combined company. Ella S. Neyland, currently STAR’s President, Chief Financial Officer and Treasurer, will join the combined company as its Chief Operating Officer.

Upon completion of the merger, the company will retain the Independence Realty Trust name and will trade under the ticker symbol “IRT” (NYSE).

Dividend Policy and Declaration

The timing of the pre-closing dividends of IRT and STAR will be coordinated such that, if one set of stockholders receives their dividend for a particular period prior to the closing of the merger, the other set of stockholders will also receive their dividend for such period.

IRT intends to maintain its current dividend level post-closing.


Barclays is acting as lead financial advisor and BMO Capital Markets is acting as financial advisor, and Troutman Pepper Hamilton Sanders LLP is acting as legal advisor to IRT. RBC Capital Markets and Robert A. Stanger & Co. are acting as financial advisors, and Morrison & Foerster LLP is acting as legal advisor to STAR.

Conference Call and Webcast

All interested parties can listen to a conference call webcast to discuss the proposed merger on Monday, July 26, 2021 at 5:00 p.m. ET from the investor relations section of the IRT website at or by dialing 1.833.789.1330. Participants will include IRT’s CEO and CFO.

For those who are not available to listen at 5:00 p.m. ET, a replay will be available shortly following the call from the investor relations section of IRT’s website and telephonically until Monday, August 2, 2021 by dialing 1.800.585.8367.

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