Doubling Up on REIT Independence Realty Trust

July 7, 2015   4:30 pm

Following through on our plans to invest when special bargains present themselves we have doubled our portfolio position in REIT Independence Realty Trust (ticker:IRT).

IRT is a apartment REIT which came public approximately 2 years ago and had 8 buildings and quarterly revenue of $4.7 million. Now they are up to 30 buildings and had quarterly revenue of $21.7 million.  The company had an initial monthly dividend of 5.333 cents/share which is now up to 6 cents/share. The dividend has been fully earned each quarter.

Since the end of the quarter the company has acquired 1 additional community and announced a merger with apartment REIT Trade Street Residential (ticker:TSRE).  TSRE brings 19 apartment communities to the merger, primarily in the southeast, which is also a prime area for Independece Realty Trust although IRT has properties in Oklahoma and Arizona as well.  IRT claims that the merger will be immediately accretive.  TSRE’s portfolio of properties are a bit newer than those owned by IRT, but generally their properties are similar. This merger should bring about some efficiencies of scale to IRT.

Note that IRT is affiliated with Rait Realty Trust (a REIT), a commercial lender (and owner) who also manages IRT. While external management can be a slight negative to a REIT they have done fairly well to date and we are going to trust that they will continue to do well.

With todays closing price of $7.72 IRT has a current yield of 9.33% and we think IRT can move up to back over $9/share this year–assuming the merger comes off cleanly.